Oversea-Chinese Banking Corp. Wednesday said its fourth-quarter net profit fell 30% on a sharp drop in non-interest income and higher loan allowances.

Net profit for the three months ended Dec. 31 was S$301 million, or 30 Singapore cents a share, down from S$428 million, or 53.1 cents a share, a year earlier, Singapore's third-largest bank by assets said in a statement.

The result was lower than the average estimate of S$312 million by four analysts polled by Dow Jones Newswires.

Non-interest income fell 44% to S$259 million from S$464 million as income from fees and life assurance dropped. The bank also reported net losses from foreign exchange, and securities and derivatives trading.

Net interest income, however, grew 28% to S$783 million from S$613 million.

The group's loan book increased by 12% on year to S$81.34 billion as of Dec. 31 - but was little changed from a S$81.32 billion book Sept. 30, indicating lending is slowing down.

Meanwhile, its nonperforming loan ratio increased to 1.5% at Dec. 31, from 1.3% in September.

OCBC said it set aside S$159 million in specific allowances for loans in the quarter, bringing net allowances to S$243 million, up from S$13 million a year earlier.

"Our results for the year, particularly in the last quarter, were impacted by the global financial crisis and economic downturn," Chief Executive David Conner said. "The current recession is expected to continue throughout 2009."

Conner said the bank will manage expenses "more tightly" and maintain a high alert for risk management given the uncertain outlook.

OCBC said it will pay a final dividend of 14 Singapore cents a share, which can be paid by cash or shares.