By Patricia Kowsmann 
    Of DOW JONES NEWSWIRES 
 

TAKING THE PULSE: Singapore's three main banks are likely to report a fall in second-quarter net profit from a year earlier on rising bad debt, but the results should provide some hope that the worst may be over, analysts say.

"We see upside surprise for the second quarter in two main areas: lower provisions as the nonperforming-loan cycle appears to be far more benign than first thought, and a lift to book value per share from positive revaluation of available-for-sale investments," Citigroup said in a note.

According to Goldman Sachs, earnings upgrades following the results are likely if asset quality proves to be more resilient than thought.

"While most still expect elevated credit costs, we think this could well come down, versus the first quarter, which we think was peak," the firm said in a note.

Singapore, which is grappling with its worst recession on record, recently gave a more optimistic assessment of the economy after it grew faster than expected in the second quarter.

The government now expects 2009 gross domestic product to shrink between 4% and 6%, less severe than the contraction of between 6% and 9% previously forecast.

DBS Group Holdings Ltd. (D05.SG) - Aug. 7

Market Expectations: Seven analysts polled by Dow Jones Newswires expect a second-quarter net profit of S$459 million, down 30% from S$652 million a year ago.

Key Issues: Loan growth is expected to be the highest among the banks, as the company pushes for organic expansion in the region. Investors will also look for clues on DBS' next chief executive, following Richard Stanley's death earlier this year.

United Overseas Bank (U11.SG) - Aug. 5

Market Expectations: Seven analysts polled by Dow Jones Newswires put net profit at S$421 million, down 30% from S$601 million a year earlier.

Key Issues: Analysts expect the bank to show the best book value growth following a strong recovery of equity and debt market pricing since March. UOB's book value saw the steepest fall among the banks since the fourth quarter.

Oversea-Chinese Banking Corp. (O39.SG) - Aug. 3

Market Expectations: Seven analysts polled by Dow Jones Newswires forecast net profit of S$387 million, down 9% from S$425 million a year earlier.

Key Issues: The bank is the only one expected to report lower net profit on quarter. According to analysts, OCBC could see further deterioration in asset quality following an aggressive expansion in its SME loan portfolio during the boom years.