13 October 2014
The UK’s financial services firms have seen the fastest growth since 2007 in business volumes in the three months to September according to the 100th CBI/PwC survey.
The survey reveals that business volumes grew at their fastest rate since 2007 and the momentum is expected to continue into the coming quarter. Rising volumes helped push up overall profitability, which bounced back after the previous quarter’s contraction, and business volumes are predicted to grow strongly again in the next quarter.
Profits rose robustly despite a spike in costs and are expected to grow at a similar rate in the next quarter. But while costs rose at a record pace, this was off-set by a drop in the value of non-performing loans, which fell at the fastest rate since 1996.
Looking ahead, firms say statutory legislation/regulation and competition are likely to be the biggest constraints on business over the coming year, while concerns about level of demand have dropped off sharply.
Rain Newton-Smith, CBI Director for Economics said: ‘The UK’s financial services sector is enjoying its strongest run of growth since 2007, with activity rising across all categories of customer and profitability bouncing back.
‘With competition one of the top concerns for the coming year, the sector could be moving to a new phase in the recovery where firms are feeling more assured about the level of demand, and are now shifting their gaze to competing for new customers and business. This is reflected in their expectation that sales to new customers will be the main driver of growth in the coming quarter.’
Kevin Burrowes, UK financial services leader at PwC, said: ‘The [survey] paints a picture of improving confidence and profitability. There is an increasing focus on new services and technology-enabled growth … There are hints of a new ‘war for talent’ and tighter monetary policy in 2015 could also pose a challenge.’