Member Article

Mixed attitudes among financial services

Financial service firms in the UK have expressed mixed sentiments in the joint survey from Pricewaterhouse Coopers and CBI.

The report showed that while there was a sharp decline in confidence, individuals were still positive about their own institutions.

Most industries said volumes were growing, however a lack of confidence may be down to economic uncertainty and “renewed volatility” in in eurozone’s financial market.

Confidence in financial services fell 45% to -13%, while the most significant drop occurred in the building society sector, as confidence plummeted from +34% to -91%.

Building societies have said that competition is a major concern and future concerns have severely damaged confidence, despite a more positive outlook in the previous quarter.

PwC and CBI said: “The industry’s mixture of collective concern and individual confidence is
generating some contrasting approaches to cost control.

“Most sectors seem content to hold their costs at current levels, but life insurers and investment managers are allowing total expenses to rise.”

Banks have bucked the trend and said they felt increasingly confident as revenue, spreads and profitability all continue to rise, although regulations are still a concern.

PwC and CBI highlighted that the survey was taken prior to Sir Mervyn King’s damning 14th June speech, and attitudes in banking may have changed since this date.

Firms in the life insurance sector have seen growth in personal and corporate businesses, although sentiment has fallen slightly.

Small life insurance companies have struggled in the quarter against large scale competition, although the survey suggested that these businesses would survive by finding a niche area to occupy.

Security traders have been hit hard, and the financial report showed the most significant decline in volumes for any financial services sector.

CBI and PwC commented: “It should be possible to trade in a falling market, but the sector
is struggling to make money in the current atmosphere of politically influenced volatility.”

The organisations urgently called for greater market stability, as uncertainty continues to damage confidence across all sectors.

This was posted in Bdaily's Members' News section by Miranda Dobson .