The ratings on The Development Bank of Singapore Ltd. (DBS) are supported by its good banking franchise in the core Singapore market, as well as its sound liquidity and funding. The consolidation with Dao Heng Bank (DHB) has bolstered DBS' presence in Hong Kong, making it the fourth-largest bank there, with a 4% market share. The ratings also acknowledge the efforts made by the bank to rein in problem loans, notwithstanding the credit risk assumed from DHB, which is largely represented by the less risky consumer receivables. These advantages, however, are counterbalanced by a weakening in operating profit performance, which has been dragged down by the bank's high cost structure. With limited growth prospect in the region, DBS' ability to
