Dexia reports 7.9-pct profit fall, sees opportunity in credit crisis 03/03/2008 00:00

French-Belgian bank Dexia, which specialises in financing local authorities, reported a 7.9-percent fall in net profit.

PARIS, March 3, 2008  - The French-Belgian bank Dexia, which
specialises in financing local authorities, reported a 7.9-percent fall in net
profit on Friday but said it had been little affected by the US home-loan
subprime crisis.
   Dexia, saying it could benefit from new conditions on troubled markets,
reported a net profit of 2.533 billion euros (3.85 billion dollars).
   This was more than the figure of 2.296 billion euros expected by analysts
polled by Thomson Financial.
   Chief executive Axel Miller said: "The financial crisis has created a new
environment from which only banks with an optimal level of liquidity, asset
quality and capital will be able to draw benefit.
   "In view of these results and events in 2007, Dexia is showing that it is
one of these banks."
   Dexia forecast average annual dividend growth of 10.0 percent and said it
was recommending a 12.3-percent rise in the dividend for 2007 to 91 cents per
share.
   Sales fell by 1.6 percent to 6.896 billion euros, which was slightly more
than forecast by analysts.
   But in the fourth quarter of the year, net profit fell by 25.3 percent to
587 million euros and sales by 10.0 percent to 1.695 billion euros.
   Dexia said that the results demonstrated its financial strength and said:
"The subprime mortgage crisis (in the United States) and in the financial
sector has not had a significant impact on the quality of the group's assets."
   It added that it had steered clear of the collateralised debt market at the
root of the subprime crisis and that "the credit risk arising from subprime
mortgage loans does not particularly worry Dexia."
   Many banks have had to write off billions of dollars from their assets
because they were exposed through securitised debt to a collapse of the US
subprime market.
   However, Dexia said that some of its assets had lost value in connection
with its subsidiary FSA involved in underwriting debt, and that its treasury
activities and activity on financial markets had also had some setbacks.
   For these asset reductions it gave a figure of 75 million euros in the
fourth quarter, but said that this was a purely book-keeping figure because
the assets remained fundamentally sound and would recover.
   Financial Security Assurance (FSA) had also announced on February 22 that
it had written down its portfolio of assets by 418 million dollars.
   Dexia said that further writedowns might become necessary for the first
quarter of this year.

AFP