Singapore's DBS Quarterly Net Profit Rebounds on Loan Growth

DBS Group Holdings, Southeast Asia's largest bank, on Thursday rebounded from a quarterly loss in 2005 to post net profit in line with market expectations, buoyed by strong loan growth.

The bank said it made a fourth-quarter net profit of S$556 million (US$362 million), compared with a loss of S$441 million a year ago and against an average forecast of S$550.25 million by four analysts polled by Reuters.

DBS posted a full-year net profit of S$2.18 billion, in line with a mean forecast of S$2.186 billion made by 17 analysts surveyed by Reuters Estimates before the earnings announcement.

The loss in the year-ago period was due to an impairment charge, which DBS took to write off some of the goodwill it paid to acquire Hong Kong's Dao Heng Bank in 2001.

The result compares with a profit of S$384 million the previous year, excluding the one-off charge.

DBS, in which state investor Temasek Holdings has a 28% stake, has a stock market value of about $22 billion. It is the biggest among the three Singapore banks and derives about one third of its earnings from Hong Kong, where it also has around a third of its assets.

DBS shares rose 37% in 2006, more than the shares of the bank's two local rivals, United Overseas Bank, up around 33%, and Oversea-Chinese Banking Corp., up over 15%. The Straits Times Index rose 27% last year.

Analysts expect loan growth to accelerate further in 2007, spurred by higher activity in the construction sector and strong demand for mortgages. But net interest margins, which rose sharply last year, may have peaked as U.S. rates are on hold.