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Finance services firms look on the bright side
07 October 2013
Optimism has risen this year across the sector
According to the latest CBI/PwC quarterly financial services survey, optimism across the financial services sector has strengthened steadily over the past year.
Optimism rose at its fastest rate since the mid-1990s during the three months to September on the back of improved profitability in the banking sector in particular.
Wider spreads helped support income and tight cost control enabled banks to report a solid increase in profits despite lower business volumes.
Business volumes across the financial services sector were broadly flat – the first time that they have not grown since June 2012 - but investment managers expected volumes, incomes and profits to recover in the final quarter of the year after incomes stalled and profits declined between July and September. Business was flat for finance houses with only a marginal increase in profits.
Paula Smith, PwC’s UK asset management leader says investment manager optimism is fuelled by hopes for European equity markets and the positive tone of UK economic recovery.
“Investment managers see product development as an increasing priority, which reflects changes to regulation including the Retail Distribution Review, the birth of the FCA and a variety of European initiatives. However, it is also driven by the rapidly changing economic and investment outlook.”
Industry headcount continued to increase strongly and perceptions of financial market conditions have improved since June, although the new regulatory architecture is generally seen as increasing regulatory costs. Regulatory compliance remains an important driver of recruitment activity.