Financial Services Hit By Record Drops
By Claire West
The UK financial services sector has been hit by record drops in income levels while business volumes have continued to fall sharply, a new survey said today (Monday).
The industry has cut jobs at the fastest rate since 1993 to try and trim costs and alleviate steep falls in profitability. Investment plans have also been heavily scaled back.
Asked how their business volumes fared in the three months to early March, 9 per cent of firms responding to the latest CBI / PWC Financial Services Survey said that volumes rose, while 56 per cent said they fell.
The ensuing balance of -47% marked a sixth quarter of steep declines and was worse than firms had expected (-25%). A balance of 10% expects volumes to drop further over the next three months.
A balance of 47% of firms reported a decline in profitability, which reflected a slight easing back from December’s record drop (-55%), and a further slowing in the decline is expected over the three months ahead (-27%).
The values of two income categories both fell at the fastest rate since the survey began in December 1989. A net 53% of firms reported a drop in fee, commission and premium incomes, while a balance of 54% saw falls in net interest, investment and trading incomes. Falls in both measures are forecast over the next three months, but a more moderate rate is expected for fee, commission and premium incomes.
Business was lost among all customer categories, although the rate of fall in volumes of business slowed for all customers except overseas customers. Firms expect volumes of business with industrial & commercial companies and private individuals to contract again over the next three months, though at a slower rate.