The ratings on The Development Bank of Singapore Ltd. (DBS Bank) reflect its strong banking franchise in its core Singapore market, sound liquidity and funding, and satisfactory profitability. The ratings also acknowledge the efforts made by the bank to rein in problem loans, although this will prove difficult in coming years because of the inherently riskier operating environment. Although the bank's "out-of-market" strategy, if executed properly, could yield dividends, it will need to be more cautious and prudent to carry the potentially higher credit and business risks. Capital has been diluted following the acquisition of Dao Heng Bank (DHB), but is still within the limits of the likely risk profile of the merged group. The bank will also need to
