“Credit crunch pain continues with sharp falls in profitability and business activity for financial services,” says a recently released Financial Services Survey from the Confederation of British Industry (CBI).
The impact of the credit crunch on the UK financial services industry “has worsened over the past quarter, as profitability fell at a record pace and business volumes fell at the fastest rate in 17 years,” the survey concluded.
The study, conducted jointly by the CBI and PricewaterhouseCoopers LLP, “also showed that credit remains expensive and in short supply with the gap between lending and borrowing rates widening more than at any time in the survey’s history.”
In addition it found that, “job cuts have continued and business has been lost across all customer bases. Although the credit crunch has already been underway for ten months, nine out of ten firms (91 percent) think it will take more than six months for market conditions to return to normal.”
The CBI surveyed “volume trends for a number of businesses in the three months up to early June. “20 per cent of firms said they had risen, while 55 per cent said they had decreased. The resulting balance of -35 percent was in line with expectations,” said the CBI. “But was the weakest result since March 1991 (-44 percent). The outlook for the coming three months is bleaker still, with a balance of 44 per cent expecting business volumes to fall.
“Financial services firms had expected profitability in the sector to remain stable but instead it dived sharply, with a balance of 44 percent reporting a fall, compared with 18 percent in March. This is the fastest rate of decline in profitability since the survey began in late 1989, and another heavy fall is anticipated over the next quarter.”
Source: Confederation of British Industry – www.cbi.org.uk
Was this article valuable?
Here are more articles you may enjoy.