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Financial services firms 'enjoy recovery'


The ongoing recovery in the UK's economy has been reflected by the performance of many of its leading financial services firms, according to a new report from PwC and the Confederation for British Industry (CBI).

While the last few years have been characterised by pessimism and economic gloom, the beginning of 2014 has seen improvement on a number of crucial metrics, much to the delight of government and business chiefs.

Optimism among financial services leaders is at its highest point since 1989, with business volumes and profitability both expected to grow over the coming quarter, the survey revealed.

CBI director for competitive markets Matthew Fell said: "As the recovery takes root in the wider economy, it is beginning to feed through to financial services firms. Things are starting to look more 'normal' after five years of volatility."

In addition to the welcome boost for short-term figures such as profitability, longer-term metrics such as marketing spend, investment spend and employment have also improved, he revealed.

"It's also telling that financial services firms are now less worried by levels of demand and regulation and are instead concerned about a skills crunch, their systems capacity and
stronger competition," he added.

Firms' capital spending intentions for the next 12 months are positive across all categories for the first time since the financial crisis, PwC and the CBI indicated.

Incomes from fees, commissions or premiums increased in the three months to January by 36 per cent, the highest rate noted since the 43 per cent growth recorded in June 2012.

Average spreads remained relatively stable, while profits increased for an encouraging fifth consecutive quarter, highlighting that this improvement appears to be sustainable rather than a flash in the pan caused by better economic indicators.

PwC's UK financial services leader Kevin Burrowes added that the figures suggest companies are getting to grips with the regulatory agenda, which is placing more pressure on them than ever before as governments across the globe clamp down on dodgy dealing in the industry.

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