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Singapore’s DBS reports fall in Q4 net profit, increases allowances for bad loans

Singapore’s top lender DBS Group said Thursday that its fourth quarter 2016 net profit fell after it set aside 87 percent more money for bad loans coming mainly from the oil and gas industry.

:The DBS Group Holdings Ltd. logo is displayed atop the company's DBS Asia Hub building in Singapore, on Thursday, Feb. 9, 2012.

The bank’s net profit in the fourth quarter of 2016 fell nearly 9 percent from the year-earlier period to S$913 million ($644 million), the bank said in an earnings release before the Singapore market opens. It set aside S$462 million ($326 million) in provisions for the quarter, up from S$247 million ($174 million) a year ago.

Full-year earnings came in at S$4.24 billion ($3 billion), falling 2 percent from a year earlier “as a stronger operating performance was offset by higher allowances.”

After three consecutive days of decline, DBS shares opened 0.4 percent higher on Thursday morning. Its smaller rivals, Oversea-Chinese Banking Corp (OCBC) and United Overseas Bank (UOB), opened 0.1 percent higher and flat, respectively.

In the quarter, net interest income fell 2 percent to S$1.82 billion ($1.3 billion) as the net interest margin fell 13 basis points to 1.71 percent. Non-interest income rose 19 percent to S$952 million ($671 million).

The non-performing loan rate climbed to 1.4 percent, up from 0.9 percent in the year-earlier quarter.

“A significant part of the increase in non-performing loans and specific allowances for the full year and fourth quarter was due to stresses in the oil and gas support services sector,” the bank said in the release.