Confidence amongst British banks and financial institutions is at a 17-year high, according to the latest CBI/PwC financial services survey. The survey covers the three months up until early September found 59 per cent of financial firms said they were optimistic with only 6 per cent saying they were not optimistic.
The positive outlook is the highest since December 1996 despite falling business volumes during the period surveyed. The slew of positive economic data over recent months has helped to revive confidence amongst financial institutions. The industry has seen the largest rise in employment in six years, with 10,000 jobs created in the third quarter and 2000 projected for the current quarter.
Kevin Burrowes, PwC’s UK financial services leader, said:
Banks’ optimism is increasingly buoyant despite seeing a slight seasonal blip in commercial and industrial volumes. Activity and profitability are expected to grow as the economy recovers, and investment in new products and infrastructure is increasing.
A reduction in industrial and commercial business down to the quiet summer was expected and is not an indication of a long-term trend. Regulation continues to be the sector’s greatest source of uncertainty, particularly as UK macroeconomic concerns start to fall away.
We expect the full effect of the UK’s economic recovery to be reflected in bank performance in the coming months, and their solid profitability is supported by predicted cost reductions and increasing focus on growth.
The Prudential Regulatory Authority and the Financial Conduct Authority were cited as barriers to future growth.