Strong improvement in revenues and profitability, CBI&PwC asset management survey says

Investment managers believe regulation is the biggest challenge to the sector’s growth, PwC’s Paula Smith says.

Investment management

Business volumes grew robustly for the fourth consecutive quarter, according to the latest CBI/PwC Financial Services Survey focused on asset management.

However, the survey also highlights that growth is predicted to ease over the next quarter, with expectations at their lowest since December 2011. Profitability rose at one of the fastest rates in the survey’s history.

Securities trading

Looking at securities trading, the survey reveals that business volumes increased at a solid pace for a second consecutive quarter, though a small decline is expected next quarter. Firms expect to spend less on compliance in the year ahead, for the first time since the data began in 2006.

Paula Smith, PwC’s UK asset management leader, said:  “Investment managers are more optimistic due to strong improvement in revenues and profitability, with the latter increasing for the sixth consecutive quarter. Firms continue to benefit from the comparative stability of financial markets, as well as the year-long recovery in equity values.

“Encouraged by this, investment managers continue to allow operating costs to climb, although the pace of growth appears to have slowed with employment levels being the highest since 2010.

However, Smith also stressed that, despite the gradually improving clarity around supervisory changes, investment managers think regulation is the biggest obstacle to the sector’s growth.

“The proposed EU bonus cap is of particular concern with investment managers expecting the proposal to make staffing costs less flexible and increase difficulty in retaining talent,” she concluded.

 

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