Writedowns dent more bank profits

By Steve Slater

LONDON (Reuters) - Profits fell at a slew of major banks as they took more writedowns on risky assets and braced for tough times well into 2009.

Barclays (BARC.L), Germany's Dresdner (ALVG.DE) and Belgian KBC (KBC.BR) unveiled over $5 billion (2.57 billion pounds) more in asset writedowns on Thursday. A year into a global credit crunch, banks have lost over $400 billion from their exposure to risky assets, forcing them to raise funds and top up capital.

The banks predicted difficult conditions would persist but a few were also optimistic that opportunities would arise from the turmoil sending some bank shares higher.

Barclays shares closed up 1.6 percent as investors looked past a $4 billion writedown on risky assets and its prediction of challenging markets continuing through 2009. The DJ Stoxx European banking index .SX7P fell 0.6 percent.

Barclays' income proved resilient and the bank showed it could grab market share as rivals retreat from areas like mortgages or U.S. investment banking.

"This is as tough an environment as we have operated in and I have been 25 years in the business," said Bob Diamond, president of Barclays and head of its Barclays Capital investment bank arm.

"We recognise how difficult the conditions are out there and the need to be cautious ... but we're not without focus on opportunities," Diamond added.

Austria's Raiffeisen International (RIBH.VI) said it was also well positioned in the downturn. Its quarterly profit rose 49 percent as growth continued in the emerging markets of eastern Europe it targets and it held bad debts in check. Its shares added 1.3 percent.  Continued...