Partner Article

Financial services increase profits, despite volumes decline

Financial services firms’ profits increased in the three months to December, despite a fall in business volumes.

According to a CBI/PwC survey of 94 companies, 30% of firms reported a fall in business volumes. 25% saw business volumes rise, and the result balance of -5% represented a second consecutive quarterly decline.

Growth in volumes is expected to resume next quarter, and an increase in income values from fees, commissions and premiums, net interest, investment and trading is also expected.

As employment levels in the financial services sector fell, staffing constraints became more noticeable. 32% of respondents suggested the availability of professional staff would be a limiting factor in the level of business over the next year.

Matthew Fell, CBI Director for Competitive Markets, said: “Companies managed to increase profits this quarter even though business volumes fell slightly.

“It’s encouraging that firms are more optimistic about their business situation than they were last quarter and expect volumes to rebound strongly in the three months ahead.

“However, there is rising concern that staff shortages are likely to limit business and investment over the next year, as well as the challenge of raising finance.”

Companies’ IT investment plans were scaled back over the past year, and firms also planned to spend less on land and buildings; vehicles, plant and machinery.

The research showed securities traders were the most downbeat respondents, due largely to uncertain demand.

Investment managers remained optimistic, although regulatory uncertainty was seen to be a barrier to growth.

Life insurers were buoyed by strong performance in the run up to the retail distribution review.

This was posted in Bdaily's Members' News section by Tom Keighley .