New survey shows rising optimism in UK financial services
Survey illustrates that optimism in UK financial services is on the up.
Financial firms in the UK are becoming more optimistic, according to a recent CBI/PwC survey.
It showed that optimism in these firms increased strongly in the three months to March and coincided with an improvement in profitability in most sectors.
The survey from the Confederation of British Industry and PricewaterhouseCoopers showed that a balance of 50 per cent of all financial services firms said they were more optimistic than three months ago, the strongest reading since December 2013.
Adding to the overall positive outlook, a balance of 24 per cent noted that business volumes had increased.
Growing confidence in banks
Looking ahead, the balance of firms that expect business volumes to increase came in at 34 per cent.
“UK banks are reporting growing confidence, steep revenues growth and increasing profitability,” said Kevin Burrowes, UK financial services leader at PwC.
In terms of profits, 60 per cent of firms noted an increase and 11 per cent said they had decreased, giving an overall balance of 49 per cent. Income from fees, commissions and premiums was noted to have increased in the three months to March from a balance of 46 per cent, but an even greater balance (60 per cent) expect it to grow more strongly in the next quarter.
Increasing investment in IT and cyber security
CBI’s director of economics Rain Newton-Smith noted that “firms remained upbeat as profits held up” and that going forward growth strategies would focus on retaining and cross-selling to existing customers, more than acquiring new ones.
“Firms plan to cut their marketing spend and increase their IT investment over the next year, as they focus on increasing efficiency and selling to existing customers, rather than trying to win new business,” added Newton-Smith.
Two-year lows were noted in the balances for investment plans in land and buildings; vehicles, plants and machinery; and marketing. However, a balance of 72 per cent of companies planned to increase investment in IT infrastructure and cyber security.
“Banks are also building new digital platforms to remain competitive and respond to changing customer needs,” added Mr Burrowes.