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Forecast hit on DBS 1st quarter earnings

Forecast hit on DBS 1st quarter earnings

(Singapore) - First quarter earnings of South Asia's largest bank, DBS Group, are expected to be hit by the weak operating environment of its Hong Kong unit Dao Heng Bank, according to market analysts. Average net profit forecasts of S$252 million (US$139 million) for the March 31 2002 quarter are lying within a range of S$200-325 million.

Many are expecting provisions to climb over the fourth quarter's S$87 million as a result of the lag effect in non-performing loans on the Banks' balance sheets, with one analyst suggesting up to S$115 million may be provisioned.

Dao Heng has high credit card defaults and housing loan problems, largely due to Hong Kong's high current unemployment rates, softened by static property values.

DBS' Thai unit DBS Thai Danu Bank DTDB, however, has just reported an 81 percent rise in first quarter profit to 59.7 million baht (US$1.38 million) and contributions from the 20 percent owned Bank of the Philippine Island BPI, should also be larger than Dao Heng.

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