Belgian-French financial services group Dexia's third-quarter net profit took a sharp hit due to the liquidity crisis in global markets and the underlying figure was below expectations.
Net profit fell 28 percent to 439 million euros ($642.2 million), with steep mark-to-market losses on its derivatives holdings of 74 million euros in its treasury and financial markets division, Dexia said on Friday. Net profit was in line with expectations.
Net profit excluding exceptional items fell 1.3 percent to was 481 million euros, below the average forecast of 542 million euros from a Reuters poll of 17 analysts.
Dexia's U.S unit Financial Security Assurance (FSA) had already reported a third-quarter net loss of $121.8 million with mark-to-market losses of $190.9 million.
Dexia said it had made credit losses due to changes in the daily market valuation (mark-to-market) of some securities it holds but that these losses would be reversed.
However, it said that its exposure to the subprime mortgages was and remained well protected.
We do not expect to incur material economic losses on their account, Dexia said.
It also said it remained confident in its ability to achieve its objectives, particularly with regard to share buybacks, dividend per share policy and medium-term growth.
The company has previously said it expected annual average growth in net profit per share to be 10 percent in 2005 to 2009.
(Reporting by Philip Blenkinsop, Editing by Erica Billingham)