Investment management in the UK saw increased business volumes, profitability and employment figures while the overall profitability of financial firms continued to flounder and employment numbers for the sector were down over the last quarter of 2010.
Consultancy PwC, together with the Confederation of British Industry, carried out a financial services survey for the last quarter of last year.
The results revealed that activity in the UK grew for the second quarter in a row. However, profitability grew at the slowest pace for 18 months and the number of people employed in the sector fell at the fastest pace for 17 years.
Of the respondents, 50% said their business volumes increased over the three months to December 2010 while 23% said they fell over the same period.
Due to a number of reasons, such as additional cost pressure and a lack of movement in spreads, firms’ profitability rose at a slower rate than in the past year. Slightly faster growth in profitability is predicted in the coming quarter, said PwC.
But the profitability of the investment management firms questioned grew strongly for the sixth consecutive quarter.
Despite this positive result, plans for capital spending in the year ahead have generally weakened; in particular, investment managers plan to authorise less spending on IT relative to the past year, for the first time since June 2009.
Pars Purewal, UK asset management leader at PwC, said: "Investment managers have enjoyed another good quarter, as volumes of business, profitability and numbers employed have all increased. Due to the strong quarter, the sector is now looking to invest in distribution and develop new products and services. Regulatory compliance will also be a major driver of costs during 2011 as investment managers seek to comply with the range of new regulation that will hit the sector.”
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