Singapore's DBS bank reports surprise second-quarter loss

Jul 30, 2010, 7:34 GMT

Singapore - DBS Group Friday posted an unexpected 300-million-Singapore-dollar (220-million-US-dollar) net loss, caused by a 748-million-US-dollar impairment charge for its Hong Kong branch, South-East Asia's largest bank said.

Profits before the one-off charge were 718 million Singapore dollars, up from 552 million Singapore dollars the year before.

The bank booked the Hong Kong charge as interest rates are expected to continue to fall because of 'noticeable and persistent strains' in wholesale funding markets.

Net interest income, the difference between what the bank pays on deposits and its earnings from lending, was 1.07 billion Singapore dollars, down 4 per cent year on year, while non-interest income was up 10 per cent to 748 million Singapore dollars.

DBS chief executive Piyush Gupta was optimistic over the bank's prospects for Hong Kong and China, despite Hong Kong earnings declining 34 per cent to 65 million Singapore dollars in the second quarter.

'DBS' core earnings reached a record high this quarter, reflecting the strong growth in underlying drivers in line with our strategic direction,' Gupta said.

DBS's net loans increased by 14 per cent to 146.1 billion Singapore dollars compared with the previous year.