Financial services bounces back – survey

THE financial services sector rebounded strongly in the three months to March, with a robust rise in business volumes and an increase in profits.

That’s according to the latest national survey by the employers’ group the Confederation of British Industry and the accountancy firm PwC.

Profit growth was driven mainly by an increase in income from fees, commissions and premiums. But the pace of growth was slower than expected, in part because of a surprise rise in costs, particularly staff costs, following an unexpected rise in employment.

Financial services companies said they were more optimistic about their overall business situation and business volumes and profits are both expected to grow again in the next quarter. However, regulation and compliance costs are likely to remain a drag on business.  

Matthew Fell, CBI director for competitive markets, said: “This has been a strong quarter for the financial services sector, with robust growth in business volumes, an increase in profitability and upbeat investment intentions.

“Concerns over the lack of availability of professional staff have eased since January and overall employment rose unexpectedly this quarter. But recent problems in Cyprus risk reigniting concerns about Eurozone stability. At the same time, regulation and compliance are still likely to be significant drags on business throughout this year.”

Some 48% of firms said business volumes increased and 17% reported a fall. Business volumes grew in all customer categories: industrial and commercial (+20%), financial institutions (+12%), private individuals (+16%), and overseas customers (+8%).