May 6 (Bloomberg) -- United Overseas Bank Ltd., Singapore’s second-largest lender, reported first-quarter profit fell 23 percent after loan impairment charges nearly quadrupled following the global economic slump.

Net income declined to S$409 million ($276 million) from S$529 million a year earlier, the bank said in a statement to the Singapore stock exchange today. That’s more than the S$384 million mean estimate of six analysts in a Bloomberg survey.

Singapore’s three biggest banks last month had the outlook on their financial strength ratings cut by Moody’s Investors Service, which cited the global recession’s impact on earnings and asset quality. The city-state’s economy may shrink as much as 9 percent this year, the most since independence in 1965, the trade ministry predicted on April 14.

“We believe margins overall should remain under a bit of pressure” for the banks, JPMorgan Chase & Co. analyst Harsh Wardhan Modi wrote in a report yesterday. He rates United Overseas and rival Oversea-Chinese Banking Corp. as “neutral.”

Impairment charges rose to S$378 million from S$89 million during the quarter, the bank said in today’s statement. That was partly compensated by a rise in operating income, it said.

Net interest income, or revenue from lending minus interest paid to depositors, rose 11 percent from a year earlier to S$949 million, fueled by loan growth and lower funding costs, while fee and commission income advanced 4.9 percent to S$434 million.

United Overseas shares fell 0.9 percent to S$13.04 today. The stock has dropped 39 percent in the past 12 months.

To contact the reporter on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net

Last Updated: May 6, 2009 01:12 EDT