Macquarie Group, Australia's top listed investment bank, named Nicholas Moore as its new chief executive to replace outgoing CEO Allan Moss, and forecast a record full-year profit.
The bank also reiterated it had no unusual trading exposures arising from the global credit market turmoil, which has forced many other big lenders around the world to post hefty writedowns and punished share prices of financial institutions.
But it added that funding costs had risen and warned that it was facing some likely losses on its real estate portfolio as nervous investors pulled back from riskier assets.
Macquarie said its profit for the year ending in March would be at least A$1.8 billion ($1.6 billion), up 23 percent from the year before.
"Macquarie remains very profitable, well capitalised and well funded," Moss said in a statement, ahead of the company's operational briefing.
"Our holdings of cash and liquid securities are currently more than three times normal liquidity levels. We continue to record strong market shares," he added.
Moss, who has been the CEO for almost 15 years, will hand over the reins to Moore, who heads the investment banking division. Moore, who was widely seen as Moss's successor, will take charge from May 24, 2008.
If Macquarie earns its forecast profit for fiscal 2008, the group's earnings would have grown thirty-fold during Moss's tenure as CEO.
"It's a bit surprise to see Allan go this soon. But it's no surprise to see Nicholas Moore take over," said Rob Patterson, managing director of Argo Investments, which holds Macquarie shares worth A$246 million.
"It's a relief to see Macquarie reiterate its forecasts," Argo's Patterson added.
Macquarie shares tumbled more than 8 percent in early trade on Wednesday, partly dragged down by heightened worries about a recession in the United States and also hurt by Moss's comments on the property sector.
Moss said credit market conditions remained challenging and have affected Macquarie's listed real estate funds. He said if all the unrealised losses on the real estate funds are recognised the impact on full-year net profit would be about A$70 million.
Moss said he was surprised by the sell off in real estate investments trusts globally.
Shares in Macquarie's smaller rival Babcock & Brown fell 6.5 percent, while the broader market dropped more than 2 percent.
The global credit crisis has forced global banks to writedown billions of dollars tied to their exposure to distressed U.S. subprime mortgage loans.
Macquarie, which manages about A$228 billion globally, has not been hit as hard by the credit crisis, but rising credit costs and volatile equity markets have cast doubt on its ability to pursue deals.
"Overall activity remained reasonable during the quarter despite volatile market conditions. Macquarie continues to pursue strategic growth initiatives," Moss said.
Still, in a report released on last Friday, Citigroup cut its forecasts for Macquarie's fiscal 2009 and 2010 profits due to a bearish outlook for equity markets and mergers.
Macquarie buys airports, toll roads and utility assets across the globe and bundles them into listed and unlisted funds and earns fees for managing the assets.
Citigroup said it expected broking and trading businesses to benefit from high volatility in financial markets in the December quarter, but added that base fees will be adversely impacted by a recent drop in equity markets.
Macquarie shares are down about 19 percent so far in 2008, compared with 10 percent fall in the benchmark index.