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| Singapore's two biggest banks record falls in profits
SINGAPORE, Aug 1 (AFP) - Singapore's two biggest banks recorded falls in their second quarter net profits on Friday, with the weak domestic economy and stiff competition taking a heavy toll. DBS Group Holdings, Singapore and Southeast Asia's biggest bank, posted a profit of 187 million Singapore dollars (106 million US) in the three months to June, a 27.5 percent fall year-on-year and 33 percent less than the first quarter. Serious business, investment and technology intelligence for a serious advantage - BizVantage! Net profit for the first half was 466 million dollars, down 13.1 percent from the 536 million dollars on the year. The decline was worse than market expectations, with analysts forecasting in a poll by financial news wire AFX-Asia a net profit range of 475-563 million dollars. United Overseas Bank (UOB) said its net profit slumped 12.6 percent in the second quarter year-on-year from 274.75 million to 240.12 million dollars. First half net profit was 520.91 million dollars, in line with analysts' expectations in an AFX-Asia poll of between 460.78 and 557.78 million dollars. The banks gave varying specific reasons for the profit slumps, but the overarching factor was the poor overall state of Singapore's economy, which contracted 4.3 percent on the year in the June quarter. UOB said in a statement that the half yearly result was mainly due to higher provision charges for loans and a lower share of associates' profits. The group's provision charges increased 68.5 percent to 265 million dollars year-on-year. "The increase was mainly attributed to higher specific provisions made for loans, necessitated by the difficult and uncertain economic conditions as well as lower collateral value in a continued weak property market," UOB said. DBS chief executive Jackson Tai said the fall was due to higher provisions for possible bad loans and credit card losses. Low interest rates also hurt business as competition squeezed margins for home loans, he said. Provision charges soared 60.7 percent to 172 million dollars on the year in the June quarter. In the first half, provision charges climbed 41.4 percent to 287 million dollars from the year earlier. "Our dominant Singapore deposit base, which can be a strategic advantage, was difficult to manage in today's low rate environment," Tai said. "Moreover, intense competition continued to squeeze interest margins on our mortgages, and we set aside higher provisions in the view of the low turbulent environment." DBS said its operations in Hong Kong, where it acquired Dao Heng Bank and Kwong On Bank, was more resilient than in Singapore. DBS Hong Kong posted net profit of 81 million Singapore dollars in the second quarter, up from 54 million dollars from a year ago. For the first half, the wholly-owned subsidiary recorded a net profit of 184 million dollars, up 13.19 percent. "DBS Hong Kong results were resilient despite the difficult environment, but we saw heavy interest margin pressure in Singapore. Interest margins in Hong Kong have remain healthy and... better than that for Singapore," Tai said. "The economic environment in Hong Kong is challenging, but we are pleased our investments have exceeded our expectations in terms of new revenue opportunities." DBS Hong Kong chairman Frank Wong said business confidence was returning to the Chinese Special Administrative Region after Severe Acute Respiratory Syndrome was contained. "We see confidence coming back... I believe that the worst is over." kma-mba/dv Singapore-banking-DBS-UOB-company-results
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