NEWS | The Big Stories
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EY helps
Red Nose
R
ed Nose Day,
which has raised
more than £73
million so far, was
helped along the way
by accountants at EY
who processed all the
fundraising cheques
and cash to make sure
every penny raised goes
to the people who need
it. It’s a partnership
that goes back
16 years
and is an
essential
cog in
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operation. Q
4
Financial services boosted
by optimistic start to year
T
he financial services sector stabilised in
the first three months of the year having
deteriorated throughout 2016, according to
the latest CBI/PwC Financial Services Survey.
The quarterly report of 98 firms found that
optimism about the overall business situation
continued to vary across sectors. Sentiment was
unchanged in the banking sector, but this followed
four consecutive quarters of decline. Building
societies, life insurers, insurance brokers and
investment managers all felt more optimistic than
in the previous quarter, while finance houses and
general insurers felt less optimistic.
Business volumes saw healthy growth in the first
quarter of 2017, expanding at a faster pace than
expected in the previous survey. Building societies
and investment managers in particular reported
a solid expansion of activity. However, growth in
overall business volumes is expected to slow over
the summer, suggesting firms remain cautious over
the outlook.
The rise in business volumes drove robust
growth in profits, in line with expectations,
although profitability is expected to improve more
moderately in the quarter ahead.
Combatting the threat of cyber crime is a
growing imperative for financial services firms, with
over four fifths planning to invest in preventative
technology and IT systems, and to test their defence
and response mechanisms over the year ahead.
Turning to the pressing issue of diversity, more
than two thirds of businesses already have formal
succession plans and leadership programmes
and over half have appointed a senior executive
responsible for diversity and inclusion.
Rain Newton-Smith, CBI chief economist,
said: “It’s great that financial services firms have
begun the year with a spring in their step –
notwithstanding Brexit uncertainty – with volumes
DIRECTOR OF FINANCE
expanding at a robust pace, profitability improving
and hiring on the up. Underlying business in the
sector is holding up well, and optimism about
global markets, along with stronger global growth,
is having a positive knock on effect. However, whilst
demand in the wider UK economy has proven
resilient, growth is likely to slow as the year goes on,
amid broader uncertainty and higher inflation.”
Andrew Kail, head of financial services at PwC,
said: “Financial services companies are having
to demonstrate their resilience in the current
environment to cope with intense competition,
technological advancements, the war for talent,
regulatory change and planning for Brexit. The
level and pace of change may feel unprecedented,
but invariably businesses are still doing well while
having to work harder and smarter to achieve the
same outcomes.”
KEY FINDINGS:
➤ Optimism in the financial services sector was
broadly stable, following four consecutive
quarters of declining sentiment (the longest
period of falling sentiment since the global
financial crisis of 2008)
➤ 33% of firms said they were more optimistic
about the overall business situation compared
with three months ago, whilst 29% were less
optimistic, giving a balance of +4% (compared
with -35% in the quarter to December)
➤ 34% of firms said that business volumes were
up, while 17% said they were down, giving a
rounded balance of +18%. This compares with
+2% in December
➤ Looking ahead to the quarter to June, growth
in business volumes is expected to slow
somewhat: 23% of firms expect volumes to
rise next quarter, and 14% expect them to fall,
giving a balance of +9% Q
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