Banking group Dah Sing Financial Holdings expects the economic malaise to slow mortgage growth rates to single digits this year. Dah Sing managing director Ronald Carstairs told shareholders at the group's annual meeting that the difficult operating conditions from the last quarter of last year had extended to the first quarter of this year. 'These are very difficult conditions to operate under,' he said. 'Banks will have to be more cautious in monitoring existing lending and new lending.' Mr Carstairs said demand for new mortgage loans was small in the first quarter of this year. 'Growth was flat in the first quarter . . . and the entire year's net increase in our mortgage books will probably not be over 5 per cent,' he said. Mr Carstairs said the group was expecting its non-performing loans ratio to reach 0.4 or 0.5 per cent this year, up from 0.2 per cent last year. 'Our loan quality is quite good and hasn't shown any major deterioration,' he said. On the mortgage front, Dah Sing had yet to foreclose on a property since the downturn began, he said. Mr Carstairs said total property-sector exposure for the group was small, with only 39 per cent of its loan book in property. Of that, only about 30 per cent was mortgage lending. 'Some small and medium-sized businesses are having some difficulties though,' he said. The group also said its workforce was pared down by 10 per cent - mostly through natural attrition - last year to cut operating costs. Group financial controller Gary Wang said there were no immediate plans for further reductions in Dah Sing's 1,500-employee workforce. He said the group would continue to look for more ways to cut costs. 'We may add a few people to the information technology department staff, but for the remainder we will freeze hiring and further reduce staff through natural attrition,' he said. Salary costs increased about 5 per cent last year, Mr Wang said. Dah Sing had previously announced net earnings of $663.2 million for the year which ended on December 31.