It warned on Thursday that 2008 could be a year of economic uncertainty. Earnings growth this year is threatened by a likely US economic recession, which could slow global economic growth, curb loan demand, roil markets and increase bad debts.

'Given the ongoing concerns over the effects of the US subprime crisis and a possible US recession, the economic outlook for 2008 is uncertain,' Chief Executive David Conner said.

The bank took another charge of S$10 million in the fourth quarter on risky debt, but this was sharply below the S$221 million charge in the previous quarter when OCBC's writedowns on asset-backed debt widely exceeded those made by its two Singapore-listed rival banks.

'We will nevertheless continue to work hard to deliver growth by expanding our customer franchise throughout the region,' Mr Conner said in a statement.

The bank reported net profit of S$428 million for the October-December period, down from S$510 million a year ago when the bottomline was boosted by an investment gain from the sale of assets.

Excluding exceptionals fourth quarter net profit was S$425 million.

Analysts were expecting OCBC to post full-year net profit of S$2.039 billion, according to average forecasts from 15 analysts in Reuters Estimates, which implied a fourth-quarter net profit of S$397 million.

DBS Group, Southeast Asia's biggest lender by assets, earlier this month reported an 18 per cent fall in quarterly profits due to further writedowns linked to the global credit crisis.

OCBC's net interest income grew 25 per cent from a year earlier, boosted by a 19 per cent growth in loans, benefiting from Singapore's property and construction boom.

Singapore banks enjoyed strong profits last year, driven by the industry's 20 per cent loan growth - the fastest in 13 years - while buoyant capital markets boosted fee incomes.

OCBC, which also enjoyed strong fee income from its wealth management business and insurance arm last year, may face a slowdown in non-interest income this year amid rocky markets.

'As capital-market related returns sputter, investment-related gains could be at risk for OCBC, given that wealth management and insurance are larger fee contributors for the bank,' Kenneth Ng, an analyst at CIMB-GK, said before the results.

Singapore's central bank warned in December that the worsening of the recent credit squeeze or a sharp slowdown in the US economy may hurt profits of Singapore banks in 2008.

OCBC shares performed better than its two rivals last year last year when concerns about the worsening credit crunch battered DBS shares, but they have fallen this year amid a broader stock market correction.

OCBC shares rose 7.7 per cent last year, while United Overseas Bank rose 2.6 per cent and DBS fell 8.4 per cent.

OCBC shares are down about 8.7 this year, less than the 12 per cent decline in the index that tracks Singapore's financial stocks. -- REUTERS