UK financial sector volumes continue to grow

The volume of business in UK financial services continues to grow despite a fall in sentiment and employment levels this quarter.

The UK financial services sector grew for the seventh quarter running and at the fastest pace since June 2007, in the three months to December, according to the latest CBI/PwC Financial Services Survey. The level of business was also seen as being normal, after being regarded as below normal since September 2007, says the CBI/PwC survey. 

Financial services firms expect business to continue growing, over the next three months, though at a slightly slower pace. However, this positive picture is tempered by a fall in sentiment and employment levels in this quarter. Firms also say that they plan to invest less over the coming year.

Of the 106 financial companies surveyed, 53% saw volumes rise in the quarter to December, and 24% reported a fall. The resulting balance of +29% is the highest since June 2007 (+51%) and above expectations (+5%). Firms expect volumes to continue to increase next quarter (+19%), but at a slower pace.

Both the value of fee, commission and premium income (+28%) and the value of income from net interest, investment and trading (+24%) grew in the three months to December, at the fastest pace since June 2006 (+28%) and December 2005 (+26%) respectively. Both types of income are expected to grow in the next quarter.

At the same time, the average spreads and the average commissions, fees and premiums paid both increased strongly (+43% and +33%). A further increase in both is expected over the next three months.

The rise in volumes and income helped push up profitability for the tenth consecutive survey: 36% of firms reported a rise in profitability and 22% a fall, giving a balance of +14%. This compared with +16% in September, completed a year of above average growth in profitability (+11%).

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