Southeast Asia's biggest bank DBS Group said yesterday net profit fell 15 per cent in the June quarter from a year ago, beating expectations, but analysts voiced concern over growing non-performing loans.

DBS earned 552 million Singapore dollars ($384.35 million) in the three months leadding to June compared with 652 million in the same quarter last year.

Analysts polled by Dow Jones Newswires had expected net profit to come in at $459 million.

Revenue for the quarter was up 12 per cent to 1.79 billion dollars, the bank said in a statement.

DBS said the rise was due primarily to exposure to the shipping industry and Middle East companies and institutions.

It said net interest income, or revenue from borrowers minus interest paid to depositors, climbed five per cent to $1.11 billion.

Non-interest income grew 25.70 per cent to $680 million as revenues from stockbroking, investment banking and wealth management rose due to improved conditions in the capital markets.

But the bank's non-performing loan ratio increased to 2.8 per cent in June from two per cent in March and 1.4 per cent the year before.

A foreign house dealer was quoted by Dow Jones Newswires as saying: "On first glance, the headline profit figure looks okay, but the spike in allowances and bad loans is something to look out for."

"I think non-performing loans (NPLs) will continue rising in the coming quarters, but at a slower rate as the economy turns around," an analyst with a Singapore-based US brokerage said.

"If you take the view that NPL growth will slow down, allowances should also fall."

DBS said it took allowances for credit and other losses of $466 million during the June quarter, up from $56 million a year ago and $414 million in the first quarter.