Lower rates lift Fortis

August 27, 2001 Posted: 1226 GMT

LONDON (CNN) -- Lower interest rates helped Fortis report a healthy second quarter, and the European financial firm forecast it would meet its 2001 targets. 

A bank and insurer with share listings in the Netherlands and Belgium, Fortis said net profit for the quarter was 760.1 million ($692 million) excluding one-time gains, an increase of 14 percent from a year earlier. 

The company added that as long as the economic environment does not worsen, it could deliver its earlier pledge to raise net operating profit per share by 12 percent in the 2001 financial year.

The surge in earnings was led by the insurance business, where profit was up 22 percent from a year earlier. The figure was helped by a big turnaround in the result from financial market trading, which bounced into the black after a big loss in the second quarter of 2000.  

On the banking side, sharply lower borrowing costs led to an increase of nearly 10 percent in pretax profit, but the division's bottom line was lower than a year earlier, hit by a bigger tax bill and a one-time gain that lifted the result for the same quarter of 2000.

Including one-time gains amounting to 277.6 million, net profit for the quarter rose 47 percent to 1.04 billion.

For the first half of the current year, profit excluding exceptional items rose 4 percent to 1.54 billion, while profit per share was slightly lower than a year ago at 1.19.

Analysts polled by Reuters expected an average net operating profit for the first six months of 1.46 billion and operating earnings per share of 1.13.

Fortis hailed a big expansion in its insurance arm, where gross premium income from life insurance policies leaped 36 percent in the half-year to 6.354 billion. Excluding acquisitions, disposals and changes in exchange rates, the increase was 23 percent.

Fortis, which has been the centre of merger speculation with the likes of Dutch banking rival ABN Amro and Britain's Lloyds TSB (LLOY), said it plans to take an active part in any consolidation in the European financial sector.

Chief Executive Anton van Rossum told a news conference: "If the environment changes we want to play a pro-active role in the consolidation process... like everybody else we talk to colleagues in the industry."

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