(Updates with further breakdown)
BRUSSELS (Thomson Financial) - Belgo-French financial services group Dexia SA posted third-quarter results which show a sharp decline in net profit due to the 121.8 mln usd loss posted by its US subsidiary FSA, with underlying profit weaker due to investment in international expansion, the group said.
Underlying net profit was marginally weaker at 481 mln eur after 487 mln (adjusted pro forma from 469.7 mln) last year, below the 491.0-553.1 mln eur forecast by analysts polled by Thomson Financial News.
Net profit, which includes the non-operating mark-to-market loss on FSA's insured derivative portfolio, fell to 439 mln eur from 612 mln, ahead of analyst estimates of 392.2-437.0 mln eur.
Sales rose to 1.622 bln eur from 1.605 bln, at the low end of analyst forecasts of 1.615-1.739 bln.
'The current crisis has obviously created new opportunities but also a higher volatility which must be dealt with in financial reporting and which implies a continuing surveillance of asset quality and liquidity situations,' said group CEO Axel Miller.
He reiterated the group's medium-term growth targets and said he is confident about share buy-back schemes.
'We remain confident on our ability to achieve our objectives, as stated in the past, particularly with regards to share buybacks, dividend per share policy and medium-term growth,' he said in a statement.
The group is aiming for underlying net profit and earnings per share growth of an average 10 pct annually to 2009.
Miller also reiterated Dexia's reassurances on sub-prime mortgages issued in recent weeks. 'The exposure of Dexia to the sub-prime mortgages is and remains well protected, and we do not expect to incur material economic losses on their account,' he said.
On underlying results, the group said these had been affected by ongoing investment in expansion. Underlying sales went up 7.4 pct, whilst underlying costs rose 7.1 pct, the latter reflecting continued investment in many business developments, the group said.
They added that the main investment areas were Public/Project Finance, international expansion, a strong increase of originations at FSA, and increased presence in Turkey.
Dexia said US subsidiary FSA reported a negative mark-to-market valuation earlier this month (of 121.8 mln usd). The group reiterated that 'negative marks this quarter should not be treated as real or continuing'.
There was also a 74 mln eur mark-to-market loss at treasury and financial markets (TFM).
The group added that for treasury and financial markets, 'the negative marks made during this quarter on the above portfolio, which have no cash impact, will reverse over time,' unless there is a major unforeseen credit event. frances.robinson@thomson.com fr/ra/fr/ak COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
