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Confidence and profits rise for UK financial services

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Office building of PricewaterhouseCoopers in London - Image: Christian Mueller / Shutterstock.com

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31 March 2015

PricewaterhouseCoopers
The Office building of PricewaterhouseCoopers in London

The state of our financial services

  • 59% of financial services firms said they were more optimistic than three months ago;
  • 31% said business volumes increased, while 7% said they fell;
  • Next quarter 37% of firms expect business volumes to increase, while 3% expect them to decrease;
  • 60% of firms said that profits increased, while 11% said they decreased;
  • 23% of financial services firms said they had increased employment, while 46% said headcount had fallen, driven by the banking sector;
  • The latest data from the ONS showed that employment in financial and insurance activities fell for a second quarter running in the final three months of 2014, edging down by 1,000, to 1.12M.

FINANCIAL services’ confidence and profits rose strongly in the first quarter of 2015, according to the latest Financial Services Survey from the Confederation of British Industry (CBI) and PricewaterhouseCooper (PwC).

However, despite overall business volumes continuing to increase, the pace of growth was the slowest in a year.

Volumes were flat in banking and with building societies, which stabilised following a sharp fall last quarter.

Income from commissions, fees and premiums and from net interest, investment and trading both rose solidly this quarter, offsetting the increase in costs to deliver another robust rise in profits.

Overall employment in financial services fell for a second quarter, weighed down by banks downscaling their activities. In contrast, employment in other sectors either rose or was broadly stable.

Financial services firms expect to reduce investment in land and buildings, vehicles, plant and machinery, and marketing over the next twelve months while continuing to plan strong increases in IT spending.

The main drivers of capital expenditure authorisations over the year ahead are the need to increase efficiency/speed and to provide new services. Companies reported that they would be focusing their growth strategies on retaining and cross-selling to existing customers, more than acquiring new ones.

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