Fortis Posts 79% Increase in Nine Month Net Op. Profits; Raises Full-Year Forecast

November 29, 2004

Jean-Paul Votron, who became the new CEO of Belgian-Dutch financial giant Fortis at the beginning of October, has inherited a very successful company from his predecessor Anton van Rossum.

Fortis posted a 79 percent increase in net operating profits to 2.466 billion euros ($3.27 billion) for the first nine months of 2004, compared to 1.376 billion euros ($1.82 billion) in the same period last year.

Other highlights, noted in the company’s earnings report, included the following:
— Net profit doubled from 1.348 billion euros ($1.78 billion) to 2.716 billion euros ($3.6 billion), benefiting from 250 million euros ($331 million) in non-operating items, mainly in respect of gains realized on the sale of 65 percent of Assurant and of Seguros Bilbao. Earnings per share amounted to 2.09 euros ($2.77) compared with 1.04 euros ($1.378) last year. Based on the last twelve months, return on equity came to 29.1 percent.

— The Banking business’s net operating profit increased by 40 percent to 1.591 billion euros ($2.1 billion). Substantial increases in net interest income (+7 percent) and commissions (+10 percent) were offset by lower net realized capital gains and a lower trading result within other revenues. A 3 percent reduction in operating expenses together with sharply lower value adjustments to loans were the main drivers of the strong improvement in results.

–The Insurance business’s net operating profit more than doubled from 411 million euros ($544.5 million) to 996 million euros ($1.32 billion). Excluding Assurant and Seguros Bilbao, net operating profit increased from 150 million euros ($1.99 million) to 915 million euros ($1.21 billion). Value adjustments to the equity portfolio added 225 million euros ($298 million) to net operating profit, whereas last year they depressed it by 592 million euros ($784 million).

— Net realized capital gains came down by 154 million euros ($204 million). Excluding Assurant and Seguros Bilbao, net operating profit before realized capital gains increased by 18 percent as a result of a continued good performance at Life and an excellent performance at Non-life.

Votron commented: “Although I only joined Fortis at the start of the fourth quarter, I am very pleased to present this set of good results. In the first nine months of 2004, net operating profit before realized capital gains increased by 33 percent compared with the challenging 2003. The main drivers of the strong operating improvement were tight cost control, lower value adjustments on loans and very strong technical results at Non-life insurance.”

He then observed that “barring unforeseen circumstances and with the stock markets remaining at today’s levels, this should result in at least a 30 percent increase in net operating profit for Fortis as a whole in 2004.

“After almost seven weeks in office, I am even more excited about my new job than I was at the start. The Fortis people I have met in that period have strengthened my conviction of being part of a dynamic company with many opportunities. After a period of integration with strict cost and risk control, our key focus in the years ahead will be on profitable revenue growth, while maintaining our efficiency discipline. The current strategy will be the basis for this, although it will have a sharpened focus on the key axes of our future development. I look forward to discussing my views and plans with you at the end of January 2005.”

The full report is available on the company’s Web site at:

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