The news is by your side.

Financial services optimism wanes for second consecutive quarter Magazine

- Advertisement -


Optimism amongst firms from the financial services sector fell to your second consecutive quarter from the with three months to June, amid stronger competition, rising uncertainty about demand and slowing profits growth, as per the latest CBI/PwC Financial Services Survey.

The quarterly survey of 111 financial services firms learned that banks, securities traders and investment management firms were less optimistic regarding the general business situation than ninety days earlier, but sentiment in other sectors either improved or was stable.

Overall business volumes continued to improve with a healthy rate, in line with expectations, plus the outlook is perfect for a similar expansion next quarter. Banking remains a notable exception, with business volumes having been broadly stable the past year-and-a-half, and no change expected on the next quarter.

Profitability expanded at the weakest pace for a few years inside the 90 days to June, although profits growth is expected to accelerate next quarter.

Costs edged higher reflecting increases in a very many sectors. Interest and investment income remained unchanged, but rising business volumes and also a modest boost in prices has supported revenues from fees and commissions. Looking ahead to the following quarter, firms really don’t don’t be surprised to raise charges further amid the strongest competitive pressures for nine years.

Rain Newton-Smith, CBI Chief Economist, pictured, said: “There’s a mood of caution amongst financial services firms while using the vote on our EU membership rapidly approaching and global economic waters still choppy.

“When talking to financial services firms, it’s clear which the low interest rate rate environment, increasing competition and regulatory pressure carry on and weigh on profitability.

“But from a volatile come to the season usually there are some positive signs, with business volumes continuing to expand and overall employment levels supporting.”

Overall employment was stable inside the quarter to June, right after a modest improvement in a few of the months to March. Headcount is anticipated to improve a little further during the 90 days to September, reflecting hiring across the most of sectors.

Investment intentions remain mixed: expected increase marketing also it budgets strengthened a little bit within the last few quarter, but firms still plan to reduce other kinds of capital spending, although pace of decline has eased. However, the share of firms saying demand uncertainty could limit investment rose to a three-and-a-half-year high.

Andrew Kail, UK financial services leader at PwC, said: “The UK now stands on the crossroads of continued EU membership C the final results shall be keenly awaited by financial services firms.

“Financial services are very important for your UK economy – generating jobs, income, investment and exports. Finance and insurance generated 65bn in export earnings to the UK last year, nearly 2,500 per UK household, PwC analysis has demonstrated.

“Technological advances are proving to be game changers, and increasing level of competition is causing industry heavyweights to overhaul the way that they react to changing customer needs.

“We are usually attending a flattening of your landscape as banks, asset managers and insurers converge.

“The lack of key skills ought to be addressed, but institutions should employ this as being an opportunity to evolve instead of millstone that you will find carried.”

Leave A Reply

Your email address will not be published.