Credit conditions deteriorating, crunch-hit Fortis warns

4 August 2008

Fortis has issued a gloomy new profits forecast, claiming that credit conditions are worsening for financial firms.

Belgium's largest bank suffered a 41 per cent drop in net income for the first six months of 2008, with just $2.5 billion declared.

The bank also wrote off $921 million of assets due to the credit crunch over the period.

Further strain has been placed on Fortis' balance sheet due to its having formed part of the consortium, along with RBS and the Spanish financial group Santander, which bought out Dutch lender ABN Amro last year - just before the credit crisis hit.

The firm has also lost its chief executive and has been forced into launching a $13 billion rights issue since the onset of the crunch.

Acting chief executive Herman Verwilst commented: "Most of the commercial activities were still able to grow underlying revenues. At the same time, costs were well controlled.

"But we observe that the environment is becoming more difficult on different fronts."

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