Singapore's DBS profit falls 18 pct, still beats forecast

SINGAPORE, Feb 15 (Reuters) - DBS Group Holdings (DBSM.SI: Quote, Profile, Research), Southeast Asia's biggest bank, posted an 18 percent drop in fourth-quarter profit, but still beat market expectations, as strong loan growth offset writedowns linked to the global credit turmoil.

The Singapore-based bank, in which state investor Temasek Holdings [TEM.UL] has a 28 percent stake, reported on Friday net profit of S$491 million ($347 million) for its fourth quarter from October to December, compared with S$596 million a year earlier.

Four analysts had expected DBS to post profit of S$466 million, according to Reuters Estimates two days before the result.

The bank, which this week named Richard Stanley from Citigroup as its new chief executive to replace Jackson Tai who resigned last year, said it was "cautiously optimistic" for 2008.

Singapore's banking loans grew by 20 percent in 2007, the highest pace since the end of September 1995, according to official data, boosted by a property boom and rebounding construction sector.

But analysts have become cautious about the sector this year because of fears that the credit crisis, which began with defaults in U.S. subprime mortgages, may lead to a global economic slowdown.

Singapore's central bank warned in December that the worsening of the recent credit squeeze or a sharp slowdown in the U.S. economy may hurt profits of Singapore banks in 2008.

Investors punished DBS shares in the second half of last year when it disclosed it had more direct exposure to credit derivatives than earlier thought.

DBS ended the year 8.4 percent lower, trailing United Overseas Bank (UOBH.SI: Quote, Profile, Research), which rose 2.6 percent while shares of Oversea-Chinese Banking Corp (OCBC.SI: Quote, Profile, Research) jumped 7.7 percent.