(Updates with sub-prime details, ABN forecast)
BRUSSELS (Thomson Financial) - Fortis NV posted fourth quarter results which
just missed analyst estimates, though the Belgo-Dutch bancassurer said it chose
to use "very stringent" models to calculate its sub-prime exposure.
For the fourth quarter, net profit including exceptionals fell to 414 mln
eur from 749 mln last year, below estimates of 480-1,304 mln eur seen by
analysts polled by Thomson Financial News.
Over the full year, net profit slipped to 3.994 bln eur from 4.352 bln, in
line with forecasts of 3.08-4.11 bln.
The group said it applied a 1.5 bln writedown to its full-year profit due to
its "prudent approach to impairments".
However, it booked a 947 mln eur capital gain on the sale of Spanish joint
venture CaiFor to its partner La Caixa SA.
"Fortis... was not immune to the impact of the turmoil in global credit
markets, and, as highlighted in January, our financial results carry the burden
of impairments on our subprime CDO portfolio," CEO Jean-Paul Votron said in a
statement.
Fortis said its total structured credit portfolio, excluding write-downs,
was worth 48 bln eur at the end of 2007.
Of this, its US sub-prime CDO portfolio represents 2.9 bln eur.
The bank booked total sub-prime impairments of 2.7 bln eur, before tax, over
the year, whilst insurance saw 0.3 bln eur impact from the credit crunch, based
on both impairments and changes in fair value.
Vorton confirmed his confidence in the group's solvency and liquidity
position.
He told broadcaster CNBC that indications for the US economy are "not
great", which is why Fortis has decided to take the provisions now.
He added that there will be some improvement this year, but "not very soon"
and that there is evidence that markets in the US remain under stress.
But the CEO stressed that Fortis can absorb "quite a lot of the shocks".
Votron also said the group will make divestments and seek outside financing
priorities in 2008 in order to fund its buy of Dutch peer ABN Amro NV, noting
that it has "slightly adjusted the targeted financing mix".
"Divestitures and outside participation in the capital of some of our
businesses will form a substantial part of the completion of the financing and
strengthening of our capital position... This is one of my key priorities for
2008," Votron said.
It said the ABN businesses posted an underlying net profit of 1.355 mln eur.
"The transition and integration process is fully on track, assumptions
regarding synergies and profit contribution have been confirmed," Fortis said.
It confirmed planned synergies of 1.3 bln eur, with a full impact as from
2010. Total estimated integration costs, too, are in line with the original
figure of around 1.5 bln eur, the bank added.
tf.TFN-Europe_newsdesk@thomson.com+frances.robinson@thomson.com
fr/lam/fr/hjp
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