Fortis, the Belgium bank that last year joined with Britain's Royal Bank of Scotland (RBS) to buy ABN Amro, today warned that the trading environment is becoming "more difficult" after reporting profits fell by 41 per cent during the first six months of the year.

Profits tumbled from €2.7 billion (£2.1 billion) in the first half of last year to €1.6 billion in 2008 after the bank took a €591 million hit on "credit market turmoil".

Fortis's banking division bore the brunt of the writedowns, taking a total €409 million hit, reducing profits from €2 billion in the first six months of 2007 to €1.1 billion this year.

The lender's insurance business reported profits down 16 per cent to €642 million on last year.

However, during the second quarter of the year, profits within the insurance division improved from €219 million in the first three months of the year to €423 million, which Fortis attributed to "better technical results".

Last year, Fortis was one of a trio of banks, including RBS and Spain's Santander, which owns Abbey, that beat Barclays to acquire ABN Amro, the Dutch lender, for €71 billion.

However, Fortis, like RBS, was forced to raise additional funds through a rights issue to prop up its balance sheet due to the worsening effects of the credit crunch and the strain put on its balance sheet by the ABN Amro deal.

The rights issue, which raised €8.3 billion for the bank, claimed the scalp of Fortis's chief executive, Jean-Paul Votron, who stepped down last month "with immediate effect" after four years at the helm.

Fortis said today that its capital position "remains sound" and with core funding of €24.6 billion, it has a Tier one capital ratio of 7.4 per cent. Tier one capital is a core measure of a bank's financial strength.

Mr Votron’s interim replacement, Herman Verwilst, said today: "Most of the commercial activities were still able to grow underlying revenues. At the same time, costs were well controlled.

"But we observe that the environment is becoming more difficult on different fronts."

He added that the bank "continued to be impacted by the credit market turmoil" but said it is focusing on selling off non-core Fortis and ABN Amro assets.

Fortis said that this will have a "substantial impact" on its results in the second half but it will allow it to absorb the full consolidation of ABN Amro by the end of 2009.

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