SINGAPORE lender DBS Group Holdings Ltd said yesterday its profit in the first quarter fell 2 percent from a year ago on trading losses amid the global financial market turmoil.

Southeast Asia's largest bank by market capitalization reported a net profit of S$603 million (US$443 million) for the three months ending March 31, down from S$617 million in the same period last year.

The trading losses were offset by gains in interest and fee income.

"Despite the challenging trading and capital markets environment, we continued to grow our customer franchise and increase business volumes, while remaining prudent and vigilant on costs," DBS Chairman Koh Boon Hwee said.

The lender said net interest income rose 9 percent from a year ago to S$1.06 billion. Loans grew 21 percent to S$114.2 billion, largely from corporate borrowing, it said.

Net fee income rose 14 percent to S$353 million from a year ago, largely due to a 55 percent increase in loan syndication fees. Fee income was down 7 percent from the previous quarter on weaker capital market activities such as wealth management, investment banking and stockbroking, it said.

The bank lost S$161 million in trading in the first quarter, compared with a trading profit of S$171 million a year ago.

The losses were blamed on a "weaker credit environment" and a S$86 million loss related to collateralized debt obligations held by Red Orchid Secured Assets, a conduit which the bank decided to liquidate earlier this year.

DBS's new chief executive, Richard Stanley, said the bank's focus would continue to be on organic growth in key markets. Stanley, who started at DBS last Thursday, was formerly Citigroup Inc's top China manager.

"Clearly, we have a tremendous opportunity to build on our business in some of the key markets in the region. In Hong Kong, prospects are great; China is important, and so is India and Indonesia" Stanley said.