DBS Group CEO Piyush Gupta mentioned the bank’s wealth administration and capital markets companies proceed to see “headwinds,” regardless of the bank reporting strong 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 informed CNBC’s “Capital Connection” following the discharge of the bank’s outcomes 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 web price revenue fell 12% within the second quarter on account of decrease contributions from wealth administration and funding banking in contrast with a yr in the past.
First-half web price revenue declined 9% from a yr in the past to 1.66 billion Singapore {dollars} ($1.2 billion). Wealth administration charges declined 21% to S$745 million as weaker market situations led to decrease funding product gross sales, DBS mentioned. Funding banking charges additionally declined by 36% to S$73 million as capital market exercise slowed.
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Unsure outlook
Gupta mentioned the outlook for the wealth administration enterprise stays unsure given the present 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 more active,” the CEO mentioned.
“But like I said, at this point in time, I’m not holding my breath on that happening,” he added.
On Thursday, DBS reported web revenue rose to S$1.82 billion in the course of the April to June interval from S$1.7 billion a yr earlier. That is larger than the typical forecast of S$1.69 billion, in response to information from Refinitiv.
The bank’s web curiosity margin elevated to 1.58% within the quarter, up from 1.45% a yr in the past.
“Net interest margin, which had been declining since 2019, rose in the first quarter with the start of interest rate hikes, and the improvement accelerated in the second quarter. Net interest margin for the first half was 1.52%, five basis points higher than a year ago,” DBS mentioned in its report.
Gupta mentioned the rise within the web curiosity margin was the “biggest story,” noting the sharp improve. He famous projections for web curiosity margin “in the third and fourth quarter are quite robust.”
“And if that is the case, then yes, it is the story of net interest margin increases that will propel the business along,” Gupta mentioned.
DBS mentioned the board has declared an interim one-tier tax-exempt dividend of 36 cents for every DBS abnormal share for the second quarter of 2022 .
