DBS Group profit down

DBS Group, Southeast Asia's biggest bank, said Friday fourth quarter net profit fell 18 percent from the previous year as it set aside additional provisions to cover its exposure to risky US mortgages.
Net profit for the three months to December 2007 came in at 491 million Singapore dollars (347.15 million US), down from 596 million dollars in the same period in 2006, the bank said in a statement. DBS said its full-year net profit was 2.28 billion dollars, little changed from the 2.27 billion dollars the year before.
Revenue rose 15 percent to 6.16 billion dollars for the year, boosted by higher income from interest and fees. For the fourth quarter, revenue was up 10 percent to 1.53 billion dollars. DBS set aside an additional 170 million dollars in the fourth quarter to cover its exposure to US subprime assets, where massive defaults have triggered turmoil in global financial markets.
Including the 70 million dollars in allowances it set aside in the third quarter, provisions now total 240 million dollars, or 90 percent of the 267 million dollars of collateralised debt obligations (CDOs) with exposure to risky US assets, it said.
"With the additional allowances we took this quarter, we are well covered for risks associated with US subprime assets," said DBS chairman Koh Boon Hwee. "I believe that despite the turmoil in the global financial market today, banks in Asia are much less affected. At DBS, we will continue to stay vigilant and strengthen our risk management capabilities."
He said the bank's balance sheet is "strong and I remain cautiously optimistic about the year ahead." Another 30 million dollars was set aside for 944 million dollars in CDOs backed by top-grade loans and bonds, the bank said.
CDOs are securities supported by a range of assets including bonds, loans and their derivatives, including corporate loans, high-grade mortgages, subprime mortgages, car loans and credit card debt.
DBS on Wednesday named Richard Stanley, 47, from Citigroup as its new chief executive officer to replace Jackson Tai who announced in September that he was stepping down for family reasons. Investors dumped DBS shares at one point last year after the bank said it had more exposure to credit derivative than earlier thought.
But the market on Friday approved its decision to raise provisions for its exposure to the US subprime credit market and in afternoon trade DBS shares were trading at 17.68 dollars apiece, up 38 cents, from Thursday.