UPDATE 2-DBS forecasts stable loan growth this year after record 2018 profit

* Q4 net profit S$1.32 bln vs average estimate of S$1.34 bln

* Full-year profit rises 28 pct to a record S$5.63 bln

* Q4 net interest margin expands 9 basis points to 1.87 pct

* Sector faces tougher times after 3 years of robust growth

* DBS forecasts mid-single-digit loans growth for 2019 (Recasts; Adds CEO comments, exports data)

By Anshuman Daga

SINGAPORE, Feb 18 (Reuters) - DBS Group Holdings Ltd , Southeast Asia's biggest lender, forecast stable loans growth for 2019 after a robust increase in net interest margin drove an 8 percent rise in quarterly profit and a record annual profit.

After three years of strong loans growth, Singapore's banks face tougher times as the city-state's export-reliant economy slows, partly due to a trade war between China and the United States.

Data released on Monday showed Singapore's exports fell 10.1 percent in January from a year earlier, the biggest drop in over two years.

DBS, nearly 30 percent owned by state investor Temasek Holdings, forecast mid-single-digit loans growth and high single-digit income growth for this year. Loans grew 6 percent in constant-currency terms to S$345 billion ($254.4 billion) last year.

The bank reported a net profit of S$1.32 billion for October-December versus S$1.22 billion a year earlier, and in line with an average estimate of S$1.34 billion from three analysts, according to data from Refinitiv.

Full-year profit jumped 28 percent to a record S$5.63 billion as Singapore banks benefited from higher interest rates.

"We believe the result reads well for peers, for which street expectations are a lot lower," Jefferies analyst Krishna Guha said in a report, referring to the quarterly numbers.

DBS kicked off the reporting season for Singapore banks, with smaller peers Oversea-Chinese Banking Corp and United Overseas Bank reporting results on Friday.

CEO Piyush Gupta said in a statement that DBS's return on equity of 12.1 percent for 2018 was near its historical high of 2007, when interest rates were twice the current levels and capital requirements were less stringent.

DBS's shift towards high-returns businesses and moves to boost profitability of its franchises would help it "navigate the challenges of the coming year", he said.

The bank's net interest margin, a key gauge of profitability, improved by nine basis points to 1.87 percent in the latest quarter. Total income rose 6 percent as loan growth and a rise in net interest margin were moderated by a decline in treasury markets income, DBS said.

Its shares climbed 1.7 percent on Monday morning, outperforming the broader market which was up 0.9 percent. ($1 = 1.3559 Singapore dollars) (Reporting by Anshuman Daga; Editing by Stephen Coates and Muralikumar Anantharaman)