SOCIETE Generale, Fortis and Credit Agricole, three of Europe's biggest banks, said yesterday that first-quarter earnings had declined after losses in the credit markets.
Net income at Paris-based Societe Generale fell 23 percent to 1.1 billion euros (US$1.71 billion), and Fortis, based in Amsterdam and Brussels, said earnings declined 31 percent to 808 million euros. Credit Agricole reported a 66 percent drop in profit and also announced plans to raise 5.9 billion euros to replenish capital.
Societe Generale disclosed earnings as Frederic Oudea succeeded Daniel Bouton as chief executive officer and the company tries to recover from 3.35 billion euros of fourth-quarter losses caused by alleged unauthorized stock trades. Fortis has lost 39 percent of market value since it announced plans last year to buy part of ABN Amro.
Fortis sold 13.4 billion euros of stock to help finance the ABN Amro takeover. While funding is complete, Fortis is seeking as much as 3.5 billion euros to strengthen its capital by selling assets and notes, Chief Financial Officer Gilbert Mittler said.
Fortis, formed in 1990 through the merger of the Dutch insurance company NV Amev, Belgian insurer AG Group and Dutch bank VSB, fell 1.7 percent to 16.66 euros in Brussels, valuing the company at 37 billion euros. First-quarter profit missed the 1.06 billion-euro median estimate of analysts surveyed by Bloomberg. Results from banking fell 20 percent and earnings at the insurance unit dropped 38 percent.
"While it is clear the US economy is suffering, it is still uncertain how the crisis will impact other economies, which in turn could affect commercial activity," Chief Executive Officer Jean-Paul Votron said.
At Societe Generale, credit market markdowns were 1.45 billion euros in the first quarter. It had 2.05 billion euros of subprime-related writedowns and provisions in the fourth quarter.
Societe Generale dropped 1.09 euros, or 1.5 percent, to 70.41 euros at 12:45 p.m. in Paris. They declined 27 percent this year, compared to the 9.2 percent drop at BNP Paribas and a 15 percent slump in Credit Agricole. Credit Agricole fell as much as 7.1 percent after the company said first-quarter profit slumped to 892 million euros from a year earlier.