PREVIEW-Singapore banks Q2 dented by bad debts, outlook improves

* What: Singapore's Q2 earnings, Malaysia's Maybank's Q4

* When: Singapore Aug 3-7, Malaysia late Aug

* Bad debt charges, slowing loans to hit profits

* Analysts to look at qtr/qtr trends as economy improves

By Saeed Azhar

SINGAPORE, July 29 (Reuters) - Singapore's three banks
could post sharp declines in quarterly profits from a year
earlier, hit by bad debt charges and lower trading income.

But analysts may focus more on the quarter-on-quarter
numbers and look for forward-looking trends as the April-June
period saw Singapore's economy pulling out of its worst
recession ever.

The situation is similar in Malaysia, where the banks'
year-on-year performance is likely to be mixed and the
spotlight will be on the quarterly trend as lending picks up.

Malaysian banks are expected to report better earnings for
the quarter as loans likely grew on the back of the
government's economic stimulus measures, and non-performing
loans and provisioning charges dropped as business conditions
improved.

"While most still expect elevated credit costs, we think
this could well come down from the first quarter, which we
think was the peak," Goldman Sachs analyst David Ng said in a
note.

"Should asset quality prove to be more resilient, we see
this potentially driving major earnings upgrades by consensus
post result season."

JPMorgan analyst Harsh Wardhan Modi said three things have
changed in the six months -- liquidity is ample, the capital
base is strong and systemic risks have diminished.

But that may also lead to weaker interest rate margins for
Singapore banks going forward and may lower yields on loans.

"While second quarter margins should be resilient due to
lagged impact of wide loan spreads and deposit rate cuts, the
outlook for net interest margins in the second half remains
poor," Wardhan said.

DBS Group Holdings (DBSM.SI), Southeast Asia's biggest
bank, could see its profit slide 30 percent in the April-June
period from a year earlier, according to an average estimate by
six analysts in a Thomson Reuters poll.

Analysts in Malaysia do not provide quarterly forecasts,
but outlook has certainly improved from the first quarter.

"We expect CIMB Bank's BUCM.KL) second-quarter results to
be on par or better than its first-quarter performance," said
Danny Goh, analyst at Credit Suisse in Kuala Lumpur.
Maybank's (MBBM.KL) results are expected to reflect goodwill
impairment charges of about 2-3 billion ringgit from its
acquisition of Bank Internasional Indonesia (BNII.JK) and MCB
Bank (MCB.KA) in Pakistan, said Bank of America/Merrill Lynch
analyst Loo Kar Weng.

Public Bank (PUBM.KL), the first Malaysian bank to announce
quarterly earnings, said last week net profit grew by 2.9
percent to 610.74 million ringgit ($172.2 million) in the
second quarter from a year ago. [ID:nKLR221818]

SINGAPORE - ESTIMATED Q2 NET PROFIT AVG (S$ mln)

Q2 2009 CHANGE (PCT) VS Q2 2008 ANALYSTS

DBS 455 -30 652 6

UOB 441 -27 601 6

OCBC 356 -16 425 6

(Data based on a Reuters poll)

MALAYSIA FULL YEAR FORECAST (bln ringgit)

2009 CHANGE (PCT) VS 2008
ANALYSTS

Maybank 2.2 -25 2.93 18*

Bumiputra-Commerce 2.2 +13 1.95 20

* Maybank's financial year runs from July to June.

(Estimates based on Thomson Reuters' First Call estimates)
(Additional reporting by Julie Goh in Kuala Lumpur; Editing by
Lincoln Feast)