Fortis NV posted first-quarter results which showed a drop in net profit due to a €380 million impact from the credit market turmoil, with the CEO saying the current financial environment is “challenging”.
Net profit fell to €808 million from €1.167 billion last year, missing analyst estimates of €953 million to €1.141 billion.
Banking division profit fell to €721 million from €903 million last year, squeezing into analyst estimates of €709 to €918 million.
Insurance net profit was €219 million against €352 million, again missing estimates of €282 to €417 million.
CEO Jean-Paul Votron said: "We believe that the environment will continue to be challenging for the foreseeable future," adding that increased volatility on capital markets had led to the group taking additional writedowns.
The impact of credit market turmoil was €380 million before tax, Mr Votron added.
He said the integration of the asset management activities of ABN Amro NV, which the group bought as part of a consortium last year, was proceeding according to plan.
He added the group is making "good headway" on the announced sale of certain parts of ABN's Dutch activities under the agreed European Commission remedies.
On the group's partnership with Chinese insurer Ping An, Mr Votron welcomed Louis Cheung to the board and said the move would enable Fortis to expand its offer in the Asian market.
Fortis' structured credit portfolio was worth €43.3 billion at the end of the first quarter, down €4.9 billion from the end of 2007 due to repayments, changes in exchange rates, some selective sales and additional write downs, the group said.
The impairments at the banking division came to €366 million before tax, with two-thirds of this amount due to collateralised debt obligations (CDOs) with sub-prime exposure, the group added.
Agencies