Optimism among financial services firms down for fourth quarter in a row, CBI/PwC survey reveals
- Credit: Archant
Sentiment amongst financial services firms deteriorated further in the three months to December, but there are signs of an improvement in business conditions over the next quarter for some sectors, according to the latest CBI/PwC Financial Services Survey.
Optimism about the overall business situation fell for a fourth consecutive quarter, the longest period of declining sentiment since the financial crisis of 2008, and the sharpest fall since December 2008.
The more pessimistic mood was particularly prevalent among banks, with general insurers and finance houses also less optimistic. However, investment managers, life insurers and insurance brokers were more optimistic than they had been three months earlier.
Overall business volumes were flat in the last quarter of 2016, but are expected to pick up somewhat in the first three months of 2017, with stronger demand in the life insurance and investment management sectors contrasting with a more challenging environment expected by banks and building societies.
Growth in profits was also unchanged in the three months to December, but profitability is expected to improve across financial services in the current quarter, with the exception of building societies, as cost pressures continue to ease.
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Rain Newton-Smith, CBI chief economist, said: “Despite feeling uncertain about the near future, it’s encouraging to see the financial services sector charting a steady course, with firms expecting to raise investment and step up the pace of hiring, while continuing to deliver improvements to the bottom line.”
Andrew Kail, head of financial services at PwC, added: “Financial services companies face many challenges to their business models from competition, regulation, technology and Brexit and, as a consequence, are having to take some big decisions about their future strategy.
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“While companies are relatively positive about short term business volumes and profitability, they continue to need to make significant investments to protect their future. The first quarter of 2017 and beyond will see many start to fine tune and activate their Brexit contingency plans as the reality of life outside the single market and the EU begins to dawn.”