The Wall Street Journal-20080215-Credit Crunch- DBS Takes Further Write-Downs Related to Its Portfolio of CDOs

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Credit Crunch: DBS Takes Further Write-Downs Related to Its Portfolio of CDOs

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SINGAPORE -- DBS Group Holdings Ltd. said its fourth-quarter net profit fell 18% on further write-downs related to its portfolio of collateralized debt obligations and its stake in a struggling Thai lender.

Southeast Asia's largest bank by market capitalization said it made additional allowances for 1.21 billion Singapore dollars (US$853.4 million) of investment CDOs.

DBS reported charges of S$170 million in the quarter over its S$267 million CDO portfolio with some exposure to U.S. subprime mortgages. The latest markdown brings cumulative allowances for such CDOs to S$240 million, or 90% of the total.

For the remaining S$944 million of investment CDOs, S$30 million was taken as general allowances during the quarter "as a prudential measure," DBS said in a statement.

The bank also reported a mark-to-market loss of S$91 million charged to net trading income related to CDOs held by a fully consolidated conduit, Red Orchid Secured Assets.

The company reported a fourth-quarter net profit of S$491 million, or S$1.37 a share, for the three months ended Dec. 31, down from S$596 million, or S$1.44 a share, in the year-ago period.

In addition, the bank recorded a charge of S$67 million for its 6.8% stake in struggling Thai lender TMB Bank PCL to reflect current market valuation for the investment.