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British financial services return to optimism: survey


13:13, January 22, 2013

LONDON, Jan. 21 (Xinhua) -- Financial services firms in Britain posted an increase of profits in the three months to December last year with optimism improved, despite a further fall in business volumes, said a survey on Monday.

According to a survey jointly conducted by the Confederation of British Industry (CBI) and PwC, business were more optimistic about the overall business situation in their sector than they were three months ago, with sentiment rising for the first time since March.

However, Business volumes decline for the second consecutive quarter, although at a slower rate than in the previous survey.

Of the 94 companies that responded to the survey, 25 percent saw business volumes rise, and 30 percent reported a fall.

Matthew Fell, CBI Director for Competitive Markets, said: "Companies managed to increase profits this quarter even though business volumes fell slightly.

"It's encouraging that firms are more optimistic about their business situation than they were last quarter and expect volumes to rebound strongly in the three months ahead.

"However, there is rising concern that staff shortages are likely to limit business and investment over the next year, as well as the challenge of raising finance," Fell pointed out.

Optimism among investment managers in the sector rose for the fourth successive quarter as business volumes and incomes grew again. Numbers employed also increased, for the third quarter running.

Robert Mellor, Hedge Fund Practice Leader at PwC, said: "Investment managers remain remarkably optimistic. Overseas business is growing, but it remains to be seen if predicted retail growth will materialize.

"In the current environment of economic uncertainty, but comparatively stable financial markets, it will be interesting to see if retail sales can improve on 2012's disappointing figures. The first quarter of 2013 will be crucial if the sector is to justify the strong optimism that has been its hallmark throughout 2012," said Mellor.

However, the majority respondents of the survey (91 percent) held that regulatory uncertainty is exceptionally high and is seen as a barrier to growth, which is regarded as a striking response and the highest figure in more than 20 years of survey data.

The sector also faces a particularly high level of uncertainty over the impact of new regulations.

The final implementation of the alternative investment fund managers directive (AIFMD) remains frustratingly unclear, firms are waiting to see how the RDR reforms will affect their business, and the sector faces a range of emerging initiatives such as the EU's proposals on shadow banking.

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