* Q1 bad debt charges almost triple, may rise further
* DBS confident as sees Singapore, HK economies bottoming
* Shares rise 3.2 percent to add to week's 30 pct rally
(Adds quotes from chairman, update on CEO plans)
By Saeed Azhar
SINGAPORE, May 8 (Reuters) - DBS Group <DBSM.SI>, Southeast Asia's biggest bank, voiced optimism about its outlook on signs the financial crisis was easing, even as it expected bad debts to rise further.
DBS, which posted a smaller-than-expected 28 percent drop in first-quarter profit on Friday, and other Singapore banks are benefitting from the turmoil by seizing market share for loans and bonds from foreign banks who are scaling back from Asia.
"We have moved away from a systemic financial crisis," DBS chairman Koh Boon Hwee told reporters. "The problems are known, governments all over the world are working, and therefore, in that sense, financial risk has significantly moved over."
DBS shares were up 3.2 percent by 0630 GMT, outperforming a 1.7 percent rise in the benchmark Straits Times Index <.FTSTI>. This took gains for the week to around 30 percent.
Smaller rivals, United Overseas Bank <UOBH.SI> and Oversea-Chinese Banking Corp <OCBC.SI>, had reported a 23 percent and 12 percent drop in quarterly profits, respectively, two days ago, which too were smaller than expected.
DBS saw loan growth of 14 percent in the first quarter from the year-ago period, the fastest among the three listed Singapore banks, but bad debt charges almost tripled to S$414 million. The non-performing loan ratio rose to 2 percent from 1.5 percent in the fourth quarter.
"Certainly, it's still quite a difficult environment, there will continue to be credit problems," said Brian Hunsaker, an analyst at brokerage firm Fox-Pitt Kelton in Hong Kong. "I don't think we can say the first quarter was the peak for non-performing loans."
Jan-March net profit fell to S$433 million ($294 million) from S$603 million a year ago, the bank said. Analysts had forecast a net profit of S$321 million, according to the average of five forecasts compiled by Reuters.
DBS generates about 90 percent of its earnings from Singapore and Hong Kong.
Goldman Sachs, which has DBS on its "conviction buy" list, said in a note that provisioning for bad debts may have peaked after Singapore's worst economic performance in the first quarter, when the economy tanked 11.5 percent.
NO DECISION ON CEO YET
Koh, who has been running the bank since January, said DBS has not made a decision about its next chief executive after Richard Stanley died of cancer last month. Koh said he was not a candidate for the post. For a story on DBS's CEO options click on [ID:nSIN443441].
DBS said quarterly net interest income rose 2 percent to almost S$1.1 billion but trading gains helped boost non-interest income by 76 percent to S$269 million despite a 10 percent drop in fee and commission income as capital markets faltered.
DBS shares have risen around 45 percent since the start of the year, fired up by a recent rally in banking shares around the world. Shares of UOB are up 20 percent and OCBC has gained 46 percent over the same period, while the benchmark Straits Times Index <.FTSTI> is up 29 percent. ($1=1.471 Singapore Dollar)
