DBS net falls 15.6 percent in first half


DBS Banking Group, based in Singapore, is the largest in Southeast Asia

SINGAPORE (CNN) -- First-half net profit for Southeast Asia's largest bank, DBS Group Holdings, fell 15.6 percent to S$531 million ($305 million) after goodwill amortization, the company said.

But income before operating expenses rose 32.1 percent to S$2.0 billion ($1.15 billion), compared with the same period last year.

The bank said Monday that was primarily due to its operations in Hong Kong.

It said regional trading conditions were likely to remain difficult, but it was "well positioned" for an economic recovery.

DBS, which is 37 percent owned by the Singapore government, bought Hong Kong-based Dao Heng Bank in May last year for $5.4 billion. It also has operations in Thailand, Indonesia and the Philippines.

'Twin hubs'

DBS chief executive Jackson Tai, said the group was on course to build a strong pan-Asian financial services franchise, focused on the "twin hubs" of Singapore and Hong Kong.

Shares in DBS Group are 0.8 percent lower at S$12.60 in early trade Tuesday in Singapore. The broader market, measured by the Straits Times index, is 1.1 percent higher at 1552.99.

DBS said its operating profit before goodwill amortisation rose 41.1 percent to S$1.1 billion ($632 million), while net profit before goodwill amortisation rose 6.1 percent to S$668 million ($384 million).

This was despite an increase in provisions to S$201 million from S$47 million in the same period last year.

The bank said its total volume of non-performing loans fell again to S$4.4 billion at the end of June, compared to S$4.5 billion at the end of the March 2002 quarter.

It said the volume of non-performing loans (excluding those from Dao Heng) has fallen 54 percent from its peak in December 1999.

DBS said that Dao Heng's revenues for the first half of 2002 fell 9.8 percent to S$414 million compared to the second half of 2001 due to weaker market conditions. Dao Heng is Hong Kong's fourth largest bank.

Dao Heng's contribution to group net profit fell over this period by 55 percent to S$64 million, due mainly to increased provisions.

But DBS said Dao Heng continued to earn interest margins more than 20 percent higher than the rest of the group, and operated at a cost to income ratio (43.8 percent) that was less than that for DBS overall.

DBS said the integration of its Hong Kong operations, including Dao Heng and DBS Kwong On Bank, was largely complete.

The Singapore-based banking group also announced the appointment of Hong Kong businessman C.Y. Leung to its board.

Leung is chairman of the Asian property services company DTZ Debenham Tie Lung Global and has just been re-appointed a non-official member of the Hong Kong Executive Council.