Southeast Asia's largest bank says wealth management, capital markets business face challenges

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DBS Group CEO Piyush Gupta said the bank's wealth management and capital markets businesses continue to see «headwinds,» despite the bank reporting robust second-quarter earnings.

«Business momentum is a bit mixed. Our corporate lending activities are actually doing quite well. And so the balance sheets continue to grow,» Gupta told CNBC's «Capital Connection» following the release of the bank's results Thursday.

«Private banking customers have been reluctant to put money to work, that obviously is a challenge. The headwinds on wealth management and capital markets mean that the overall fee incomes … are down year-on-year,» he added.

DBS, Southeast Asia's largest bank, reported net fee income fell 12% in the second quarter due to lower contributions from wealth management and investment banking compared with a year ago.

First-half net fee income declined 9% from a year ago to 1.66 billion Singapore dollars ($1.2 billion). Wealth management fees declined 21% to S$745 million as weaker market conditions led to lower investment product sales, DBS said. Investment banking fees also declined by 36% to S$73 million as capital market activity slowed.

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Gupta said the outlook for the wealth management business remains uncertain given the current market sentiment. 

«If the markets do start turning around and you start seeing more animal spirits, we can get some more capital markets deals done — and wealth management, private banking customers could get