By SIOW LI SEN

DBS Group Holdings will stand by its customers and expects to grow its loan book this year, chairman Koh Boon Hwee said yesterday.

He also said that the bank has received many loan applications from small businesses and is processing them as fast as it can.

Speaking on the sidelines of a client event, Mr Koh said DBS - which raised $4 billion through a recent rights issue - will use the proceeds to 'stand by our customers in this difficult period'.

'Customers who have a long-term relationship with DBS, where we are their primary banker, and who have not been dealing with DBS in a transaction mode, who are open and transparent in sharing their business challenges with us, therefore allowing us to work things out together with you, at DBS we pledge to stand by you, our loyal customers in good times and in times like these,' he said.

'But if you come to us only in times of need, or you are already in trouble, please understand that there are much greater constraints on what we can do.'

Elaborating on the pledge to help customers, Mr Koh said DBS bankers have been told to look at each company individually and not draw blanket conclusions.

'Blanket conclusions mean industry X is in trouble so we will start reducing lines to companies in industry X,' he said.

'That is rather what I call a blunt kind of instrument. What we really want our people to do, our relationship managers and our credit managers, is to work individually with each of our customers, evaluate the conditions they are in.'

Companies should be transparent about the problems they face, he said. 'What we want to know is that this downturn is affecting their business temporarily. We understand that. So no pre-emptive strikes, no blanket broad brush that 'this is a bad industry to be in'. Everything has to be done very specifically.'

On extending credit to smaller companies, Mr Koh says DBS has added resources to handle applications from small and medium enterprises (SMEs). DBS takes the government's risk sharing plan on credit to SMEs seriously, he said.

Companies have said that banks have tightened lending despite the government stepping in to share the risks.

But Mr Koh said: 'Government plans for risk sharing, we take that very seriously. We have got a lot of applications. We are increasing our resources so that they are processed as expeditiously as possible.

'We fully expect to increase our loan portfolio. Obviously we have to be cautious because companies are under stress, and we also have to ensure the pricing reflects the credit risks that are the new reality in the world. This applies to everyone. We do fully expect to have loans growth this year.'

A DBS spokeswoman said later that applications for government loan schemes have risen three times since last month.

'Loans approved have increased, and we have also doubled the number of staff, seconded from other departments, to evaluate these applications and handle loan requests,' she said.

Mr Koh also said that while the economy is in for a tough time, Asia's banking industry overall is in a much better position than that in the US and Europe.

'I find all banks in Singapore quite well-capitalised,' he said. 'We certainly are very well-capitalised now, and while it will not be what I call a great year for banks, I do not see it being an extraordinarily bad year.'

This article was first published in The Business Times on January 23, 2009.