6
Oct
Banks 'show first recovery signs'
Financial firms may be recovering, with business volumes growing
for the first time in two years, a survey has shown.
Business increased in three months to early September, said 7%
of those surveyed by PricewaterhouseCoopers and business
organisation the CBI. But building societies returned to feeling
"downbeat" and business levels were weak in other areas, suggesting
the recovery still has a way to go. "Future demand is still a major
concern," said the researchers.
'Upswing'
On balance, 36% of financial services firms are more optimistic
about the general business situation than in June.
"For the first time since June 2007, banks are experiencing an
upswing in confidence," said Andrew Gray, head of financial
services consulting at PricewaterhouseCoopers.
"Confidence is, in part, offset by concerns of further impairments
and the impact of 'tougher' regulation." The UK's five largest
banks recently accepted curbs on bonuses agreed by G20 leaders at
the recent Pittsburgh summit, and stronger rules on overall banking
are likely to follow.
Building societies
Building societies were feeling downbeat about their prospects,
partly because of difficulties with funding. The survey found that
profitability at building societies was "broadly flat" over the
three months, with a resumption of declines expected in the current
quarter. "Signs of stabilisation in the housing market, however,
have provided some cause for 'cautious cheer'," the report said.
But it added that almost all societies were cutting operating costs
and staff.
'Happy' traders
Securities trading - behind much of the toxic waste that almost
brought down the financial system last year - rose, driven by a
record level of growth in dealings with financial institutions and
"healthy" growth in business with overseas customers. "Securities
traders are enjoying life again," said Pars Purewal, who looks
after UK asset management at PricewaterhouseCoopers. "For the first
time in the survey's 20-year history, all respondents are feeling
optimistic about their business situation, a reflection of the
rebound in equity markets." Mr Purewal said caution remained over
the "threat of regulation" and whether demand would keep holding
up.
Service sector
There was also upbeat news for the whole of the service sector
on Monday from the purchasing managers' survey of the sector, which
showed that it expanded at its fastest rate for two years in
September. The figure for the sector rose to 55.3 in September from
54.1 in August, according to the Chartered Institute of Purchasing
and Supply (CIPS). It was the fifth month in a row that the figure
was above 50, which indicates expansion.
BBC News. (2009). Banks 'show first recovery signs'.
[Online]. Available from: http://news.bbc.co.uk/1/hi/business/8289407.stm
Accessed 6th October 2009.