Finance directors more willing to take on risk – Deloitte

RISK appetite among the chief financial officers (CFOs) of the UK’s largest companies has reached a seven year high, according to a third quarter survey by accountancy group Deloitte.
 
The report, which gauged the views of 118 CFOs of FTSE 350 and other large private UK companies, suggests that appetite for risk is being supported by a rebound in the US economy, UK growth and easy access to finance.
 
Some 72% of CFOs say now is a good time to take risk onto their balance sheets, up from 65% in Q2 2014 and three times the level seen in Q3 2012.
 
However, CFOs’ sense of economic uncertainty rose during the period for the first time in two years, with 56% saying the level of financial and economic uncertainty facing their business was above normal, high or very high, up from 49% in Q2 2014.

Deloitte suggested Scotland’s independence referendum was a factor as perceptions of risk amongst CFOs completing the survey before the result were twice as high as for those who responded after.

Richard Bell, practice senior partner at Deloitte in the North West, said: “With a resurgent US economy, good growth in the UK and plentiful liquidity, CFOs have shrugged off the effects of rising uncertainty and weakness in Europe, sending corporate risk appetite to a seven year high. Expectations for corporate revenues and margins remain close to the four year high seen in Q2.
 
“Large corporates face few obstacles to raising finance, credit is cheaper, and more available, than at any time in the last seven years. In reversal of the situation during the credit crunch, CFOs say that financing conditions are one of the key factors enabling companies to raise investment spending. CFOs have become more positive about official policy – from government, regulators and the Bank of England. Confidence has risen in eleven separate areas of policy, and most markedly on public spending, tax policy, immigration and financial regulation.
 
“But it’s not all plain sailing for the corporate sector, perceptions of economic and financial uncertainty rose for the first time in two years. Weakness in the euro area economy, events in the Middle East and Ukraine and, particularly, the Scottish referendum have created new uncertainties. Political risk has eclipsed worries about the economy as concerns for CFOs.”