DBS Q3 falls on bad debts; to cut 900 jobs

By Saeed Azhar and Kevin Lim

SINGAPORE (Reuters) - DBS Group, Southeast Asia's biggest bank, said it will cut 900 jobs, or 6 percent of its staff, after posting a bigger-than-expected drop in quarterly profit as losses from bad debts quadrupled.

DBS and its peers in Asia such as Bank of China, which largely escaped the credit market meltdown that crippled Western banks, are now hit by slowing economies, sliding property prices and a sharp fall in capital market activity.

DBS shares, which slumped nearly 9 percent in early trade after it said profits fell 38 percent, recovered to close up 2.7 percent. DBS shares have almost halved this year, falling more than its rivals.

"DBS confronts a challenging outlook -- we have a weak macroeconomic and credit cycle and brand damage from structured products," said Matthew Wilson, an analyst at Morgan Stanley in Singapore.

Richard Stanley, who took over as DBS chief executive in May after a career at Citibank, said 900 jobs, most of them in Singapore and Hong Kong, will be axed in a move to cut costs.

"The job cuts will be across businesses and functions and at all levels," he told a news conference. "The reasons for these cuts is to allow DBS to be a much leaner and more streamlined organisation for many years to come."

The job cuts were the biggest for the Singapore bank, which shed 200 staff in 2001. Crosstown rival United Overseas Bank said it would cut jobs only as a last resort, while Oversea-Chinese Banking Corp said cuts were not on its agenda.

Stanley said DBS will continue to review its costs and organisational structure, but was comfortable with its capital position after raising S$1.5 billion in May and its latest cost-cutting initiatives.