May 15 (Bloomberg) -- Natixis SA, France's fourth-biggest bank, had its biggest gain in Paris trading after posting an unexpected first-quarter profit and saying provisions tied to the U.S. subprime-mortgage collapse may be ``nearing an end.''

Natixis surged 1.82 euros, or 17 percent, to 12.44 euros, the largest advance since it began trading in December 2006. The stock has fallen 5 percent this year, giving the company a market value of 15.2 billion euros ($23.5 billion).

Natixis's corporate and investment banking arm had 431 million euros of asset writedowns linked to the subprime crisis in the first quarter, pushing the unit to a loss of 145 million euros from a profit of 289 million euros a year earlier. Chief Executive Officer Dominique Ferrero said today that its provisions related to the collapse may be coming to a close.

``This is a prudent conviction, but a conviction,'' Ferrero said today in an interview on BFM radio.

The bank's first-quarter net income dropped 88 percent to 69 million euros, the French company said in a statement today. Analysts surveyed by Bloomberg had estimated the company would post an 8 million-euro loss.

``These aren't good results at all but the details Natixis gave on the way it managed the crisis during the first quarter'' seems to confirm ``the idea that maybe the worst is behind us,'' said Pierre-Yves Gauthier, a founding partner at Alphavalue in Paris.

Cost Cuts

Natixis, formed through the merger of the investment- banking activities of France's Groupe Banque Populaire and Groupe Caisse d'Epargne, said it plans to cut costs by 400 million euros, or 10 percent, through ``a sizeable reduction in the use of external service providers and a decrease in internal headcount.''

Natixis suffered the largest drop in quarterly profit among France's four biggest banks, which all reported earnings this week. BNP Paribas SA, the largest, said profit fell 21 percent, while net income declined 23 percent at Societe Generale SA. Credit Agricole SA repeated today that it will seek 5.9 billion euros in a rights offer after earnings slid 66 percent.

The world's largest banks are seeking about $249 billion from investors after the collapse of the U.S. market for subprime mortgages roiled credit markets globally, leading to $337 billion of markdowns.

Ferrero also said today the bank's financing business is doing ``very well'' and that he ``doesn't see why we should reduce this business.''

``For Natixis, I see no credit crunch,'' Ferrero said on BFM.

To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fbenedettiva@bloomberg.net.

Last Updated: May 15, 2008 11:39 EDT