Fortis, the Belgian financial services firm that ousted its chief executive officer last month, said second-quarter profit declined 49 percent because of credit writedowns.
Net income was 830 million euros (US$1.29 billion), or 0.38 euro a share, down from 1.62 billion euros a year earlier, the Brussels and Amsterdam-based company said in a statement yesterday. That beat the 692 million-euro median estimate of 12 analysts surveyed by Bloomberg. Fortis said it may record a loss of as much as 900 million euros on the sale of commercial banking units to Deutsche Bank AG.
Fortis wrote down 342 million euros on structured investments, adding to first-quarter markdowns of 380 million euros. The company also took charges from buying part of ABN Amro Holding NV last year for 24.2 billion euros.
The takeover strained the company’s capital and forced former CEO Jean-Paul Votron to cut the first-half dividend in June.
“The environment has become more difficult and will probably remain that way,” CEO Herman Verwilst, who replaced Votron last month, said in an interview.
“That refers to the more pessimistic outlook on the economy in general, the impact of the credit turmoil continuing for the sector and also to the acceleration of inflation in Europe,” Verwilst said.
Fortis is down more than 65 percent in Brussels trading since Votron announced plans in April last year to buy the consumer bank and asset-management unit of Amsterdam-based ABN Amro just as the US subprime mortgage market started to collapse.
Verwilst has said winning back shareholders and customers’ trust is his “first priority.”
The company made a second top-level change last week, demoting Gilbert Mittler, the group executive committee member responsible for finance, risk and general counsel. Mittler will now be “special adviser” to Verwilst, Fortis said on Friday.
Chairman Maurice Lippens and Verwilst, 60, agreed last week to meet investors in Belgium and the Netherlands to improve dialogue. Investor groups, including the VEB, have asked for an extraordinary meeting.
Votron angered shareholders by cutting the dividend and selling stock and assets to raise 8.3 billion euros to bolster capital. That followed a share sale in October last year to raise 13.4 billion euros to help pay for the ABN Amro units.
Banks and brokerages worldwide have reported US$480 billion in losses and raised US$355 billion in capital following the collapse.
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