Fortis 1Q profits fall 31 percent on asset decline

Fortis reported net profit of 808 million euros ($1.25 billion), down from 1.167 billion euros from the same period a year ago, while total income fell 4 percent to 30.7 billion euros ($47.7 billion).

In all, the company says it suffered 380 million euros ($590 million) in losses due to "credit market turmoil."

Fortis had booked 2.7 billion euros in impairments on mortgage-related investments in the fourth quarter.

It said Tuesday it had additional impairments of 231 million euros ($356 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 16.90 euros ($26.25) in early trading.

Fortis, with dual headquarters in Brussels, Belgium, and Utrecht, Netherlands, became one of Europe's largest financial companies after it bought 24 billion euros 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 279 million euros ($433 million) in the quarter, down 23 percent.

Fortis said profits at its banking arm fell 20 percent to 721 million euros ($1.12 billion), while profits at its insurance arm were down 38 percent to 219 million euros ($340 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.