Belgian-French financial services group Dexia third-quarter net profit took a sharp hit due to the liquidity crisis in global markets and the underlying figure was below expectations.
Bottom line net profit was sharply lower, down 28.3 percent at 439 million euros, with steep mark-to-market losses on its derivatives holdings of 74 million euros in its treasury and financial markets division, Dexia said on Friday.
The figure was bang in line with expectations.
Furthermore, Dexia's U.S unit Financial Security Assurance (FSA) had already reported a third-quarter net loss of $121.8 million with mark-to-market losses of $190.9 million.
Dexia's net profit excluding exceptional items, was 481 million euros, down 1.3 percent year-on-year and below the average forecast of 542 million euros from a Reuters poll of 17 analysts.
Dexia said it had made credit losses due to changes in the daily market valuation (mark-to-market) of some securities it holds but that these losses would be reversed.
However, it said that its exposure to the subprime mortgages was and remained well protected.
"We do not expect to incur material economic losses on their account," Dexia said in a statement.
Mark-to-market is an accounting principle used at the end of each trading day to measure the value of securities contracts based on their present market value.