Dexia denies exposure to subprime losses
31 August 2007, BRUSSELS (AP) - Dexia SA, Belgium's third-largest bank, reported a 35 percent increase in net profit Thursday, as the bank tried to soothe investors by claiming it would not incur losses if the U.S. housing market deteriorates.
31 August 2007
BRUSSELS (AP) - Dexia SA, Belgium's third-largest bank, reported a 35 percent increase in net profit Thursday, as the bank tried to soothe investors by claiming it would not incur losses if the U.S. housing market deteriorates.
Dexia posted a EUR 787 million profit for the three months ending 30 June, compared with EUR 584 million for the same period a year ago. It credited an increase in arranging loans for companies and public authorities in western Europe as the economy picked up in the early part of this year.
The bank pulled in revenue of EUR 1.9 billion in the second quarter, up 17 percent from last year.
The Belgian-French financial services group insisted it was "very well protected" against a rising number of defaults on U.S. subprime mortgages to borrowers with bad credit history. It said the bank and its U.S. subsidiary, Financial Security Assurance Holdings Ltd., or FSA, had expected problems to emerge and had kept well away from that part of the market.
Dexia's shares have slipped 5 percent since the beginning of the year as analysts worried about its exposure to the subprime market. It has invested in mortgage securities and credit guarantees for municipalities that have invested in asset-backed securities where it is difficult to assess the risk of defaults.
In a step that will increase the value of its shares, Dexia said it would buy back EUR 500 million of its shares until May 2008.
This helped its stock climb almost 1 percent in Brussels to EUR 19.73.
Dexia plays a strong role in securing loans for cities and regions and said it was one of the largest arrangers of deals for renewable energy during the first half of the year, securing EUR 880 billion. It finances wind farms in France, Belgium and Spain as well as social housing in Britain.
[Copyright AP 2007]
Subject: Belgian news