* DBS Q1 core net profit S$1.03 bln vs average f'cast S$857 mln
* OCBC Q1 net profit S$899 mln vs average forecast S$727 mln
* UOB Q1 net profit S$788 mln vs average forecast S$740 mln
* DBS shares hit three-month high, OCBC, UOB also gain (Adds UOB's result, share price milestone for DBS)
By Saeed Azhar and Anshuman Daga
SINGAPORE, April 30 (Reuters) - Singapore's three listed banks led by DBS Group Holdings reported record first-quarter profit that topped market forecasts, powered by double-digit loan growth and improved margins.
The results also showed the asset quality of DBS, Oversea-Chinese Banking Corp and United Overseas Bank has not been affected by deteriorating bad debt problems in China and came despite slower growth in Singapore's housing market.
DBS's Hong Kong unit is the city's sixth-biggest bank by assets while OCBC's China exposure is set to grow after it agreed to acquire mid-sized Wing Hang Bank Ltd for $5 billion last month.
Quarterly core net profit for DBS rose 9 percent to S$1.03 billion ($823 million) over the same period a year earlier. It was also 20 percent higher than an average forecast from six analysts polled by Reuters which called for a profit decline.
DBS said its interest rate margin - the difference between interest paid on deposits and charged on loans - rose to 1.66 percent, the highest in six quarters.
"There was no stress on (DBS') China trade book, one of the key reasons for the stock's year-to-date weakness," Harsh Wardhan Modi, analyst at JPMorgan wrote in a note after the results, adding that the bank's ability to manage risk had improved significantly under its current leadership team.
DBS shares rose as much as 2.7 percent after the results reaching S$17.31, the highest in more than three months. They closed 0.6 percent higher in line with the broader market, and the shares are now down 0.9 percent year-to-date.
Shares of OCBC rose as much as 3.2 percent to a high of S$9.77, the highest since April 9. The stock has underperformed this year because of concern about its acquisition of Hong Kong's Wing Hang. UOB also rose as much as 3.4 percent.
Bad loans at China banks rose for a ninth straight quarter as of December to the highest level since 2008 as the economy slows after blistering growth over the past decade. But DBS Chief Executive Piyush Gupta told a news briefing he was quite comfortable with the quality of the bank's book in China.
"We really have no exposure to any shadow banking. We have no exposure to any trusts. We have no exposure to any companies which are heavily indebted to shadow banking or to the trusts business," he said at a news briefing.
OCBC Chief Executive Samuel Tsien said the bank is selective in choosing companies and sectors in China and so far has not seen any impact on its business. Its non-performing loan ratio in China is only 0.3 percent, lower than that of entire group's 0.7 percent as at March 31, he added.
RECORD NET INTEREST INCOME
All three banks saw improvement in interest rate margins from a year earlier helping them post record net interest income.
CIMB banking analyst Kenneth Ng said Singapore's banks certainly look like a clear sector to be overweight in a rising rate environment as the U.S. Federal Reserve unwinds its massive stimulus.
Net profit for DBS including special items, climbed 30 percent to a record S$1.23 billion, boosted by a one-off gain from the sale of a stake in a Philippine lender.
Net profit for OCBC jumped 29 percent to a record S$899 million for the quarter, above an average forecast of S$727 million from four analysts.
UOB said net profit for January-March reached S$788 million from S$722 million in the same period a year earlier.
The housing market, however, remains a key concern for Singapore's banks after loans to the sector slowed to a growth rate of 7.9 percent in March from a year earlier. That compares with a compound annual growth rate of 15 percent in the past five years.
Gupta said new housing loan applications at the bank were down 45 percent in the first quarter from a year earlier, but he expects housing loans will still grow this year albeit at a slower pace. (Additional reporting by Andrew Toh and Eveline Danubrata; Editing by Edwina Gibbs)