Fortis reports 31-percent fall in Q1 earnings
The bank and insurance company reports net profit of EUR 808 million, down from EUR 1.167 billion from the same period in 2007.13 May 2008
AMSTERDAM - The bank and insurance company Fortis NV said Tuesday its first-quarter earnings fell by 31 percent, as its investments soured and assets declined in value.
Fortis reported net profit of EUR 808 million, down from EUR 1.167 billion from the same period in 2007, while total income fell 4 percent to EUR 30.7 billion.
In all, the company says it suffered EUR 380 million in losses due to "credit market turmoil".
Fortis had booked EUR 2.7 billion in impairments on mortgage-related investments in the fourth quarter.
It said Tuesday it had additional impairments of EUR 231 million on "structured credit products" in the first quarter and warned of a "further deterioration of financial markets in the second half of March 2008."
"While it is clear that the U.S. economy is suffering, it is still uncertain how the crisis will impact other economies, which in turn could affect commercial activity," said Chief Executive Jean-Paul Votron in a statement.
Votron noted that Fortis was profitable in the quarter despite the write-downs - a contrast with some peers such as UBS AG of Switzerland - and said the earnings "reflect the benefits of our strategy of having a significant presence in the Benelux countries (Belgium, The Netherlands and Luxembourg), a region with a very strong credit history and relatively low volatility in earnings."
Shares fell 0.2 percent to EUR 16.90 in early Amsterdam trading.
Fortis, with dual headquarters in Brussels, Belgium, and Utrecht, The Netherlands, became one of Europe's largest financial companies after it bought EUR 24 billion worth of operations from ABN Amro last year, including its large Dutch retail banking operations.
Fortis' share price was cut in half over the past year as it issued shares, took on debt, and sold operations in order to finance the deal.
It said Tuesday the ABN Amro operations it bought had a pro-forma net profit of EUR 279 million in the quarter, down 23 percent.
Fortis said profits at its banking arm fell 20 percent to EUR 721 million, while profits at its insurance arm were down 38 percent to EUR 219 million.
The main reason for the fall at the banking arm was the impairments, while insurance operations suffered from investment losses. The underlying insurance operations grew, Fortis said.
[AP / Expatica]