Macquarie Group chief executive Nicholas Moore said yesterday the group would stick with its controversial methodology for valuing its co-investments in listed funds.When the group reported impairment charges and provisions of $1.1 billion for the September half it included $684 million of write-downs on Macquarie holdings in Macquarie-managed listed funds.The write-down on the listed assets could have been more. Macquarie Infrastructure Group was listed with a book value of $854 million, despite having a market value of $733 million at September 30 - a $121 million difference.At the time, Moore said the MIG valuation was based on multiples achieved in recent toll road sales.Speaking at an operational update yesterday Moore said the group would take the same approach to valuing its investments in such assets as MIG and Macquarie Airports when it produced its full-year financial report.He foreshadowed a net profit for the year to March of $900 million, down from $1.8 billion last year. Operational income was down only 15 per cent. The key factor in the big fall is impairment charges.Macquarie will add another $900 million of charges to first half charges for an anticipated total of $2 billion in write-downs and impairment charges.Moore said the losses would come from much the same sources as those reported in the first half - revaluations of holdings in listed funds and other equity investments, impairment of holdings of asset backed securities, CDOs and CLOs, and provisions on mortgage.Moore said the treatment of listed investments was that a "significant or prolonged decline" in market value below carrying value was a trigger for impairment review. Associates would be written down to market price at balance date unless there was "strong evidence of underlying asset value from recent comparable asset sales."Moore said there had been an increase in mortgage arrears. Arrears on the Australian book are 1.1 per cent, and on the US book 2.9 per cent.The carrying value of asset-backed securities is $US156 million and of CDOs and CLOs is $US160 million. He emphasised the amount of work Macquarie has done to strengthen its balance sheet. The value of cash and liquid assets rose from 28 per cent of the funded balance sheet last March to 34 per cent in September and will be around 41 per cent at year end (to calculate its "funded balance sheet" Macquarie removes statutory balance sheet items such as derivatives and broker settlements that are match funded).Moore said that cash on the balance sheet exceeded short-term borrowings.The group has shifted more of its debt funding to longer-term maturities. Debt maturing beyond 12 months has increased from 22 per cent of the funded balance sheet last March to an anticipated 35 per cent at year end.There was some questioning from analysts of the stability of retail deposits, which have made a big contribution to the increase in cash holdings over the past year.Group head of risk management Nick Minogue said Macquarie had metrics for working out the "degree of engagement" of depositors. He said: "Some clients with