Responses to the current survey are some of the most confident since the start of the financial crisis. The industry’s improving sentiment is now matched by a recovery in business, revenues and profitability. Firms are also taking a more balanced approach to expenses, illustrated by the reversal of the staffing reductions seen in recent quarters.
It is good to see that the survey’s strong results are spread across all customer segments and several sectors of the industry. Worries over the impact of weak demand have fallen to their lowest level since 2008. There seems to be a view that the industry is emerging from its recent restructuring more able to capitalise on any improvement in customer confidence.
The positive outlook for business is encouraging firms to release their purse strings. As well as employing more staff, those surveyed expect to increase their investment in developing new products. These are welcome signs of recovery, but firms will need to be careful not to let spending run ahead of revenue growth.
The 94th CBI PwC Financial Survey shows that responses are the most confident we have had since the beginning of the financial crisis.
That increased improvement in financial services sentiment is also matched by an improvement in business volumes, in revenues and in profitability.
At the same time we are starting to see financial services companies start to ease off some of the restriction on expenses and actually allowing expenses to rise, and we see that most in the reversal of the historic fall in staff employment numbers, and in some cases actually employment is starting to rise.
It is good to see that the survey’s strong results are actually spread across all customer segments and across most areas of financial services, other than insurers. In particular concerns about demand are at their lowest since 2008. That feeling of optimism from the survey is slightly tempered though by on-going concerns about low investment returns and the ever increasing cost of regulatory compliance.
The survey shows actually that increased improvement in sentiment is continued into the next quarter. And we see it in the loosening of the purse strings as well. So not only in increasing employment but also companies are starting to invest more heavily in new products, accessing customers, improving efficiency. And generally that spend is around IT and capital and expenditure around IT. There seems to be a more general feeling that the industry has done and has addressed many of the major issues and the restructuring that needed to be done post financial crisis, and they are now starting to position themselves so they can take advantage of any uptake in consumer demand.
The CBI/PwC Financial Services Survey is a quarterly trends report that discusses the health, perceptions and plans of the UK financial services industry.