This comes after 21 months of falls. The survey also shows that optimism about the overall business situation has risen for the first time in two years; banking, however, remains under pressure.
Although the three months to June saw levels of business, income and profitability continue to fall, this was at a much slower pace than earlier this year. This suggests the industry may now be on a gradual path towards recovery, though differences between the sectors remain.
Insurance companies are the most optimistic about growth in business over the coming quarter, while banks also expect volumes to rise. Building societies have experienced extremely tough business conditions since early 2008, but are now hopeful that volumes, income and profitability will stabilise in the next quarter. By contrast, securities traders and investment managers expect the recent improvement in their business to be short-lived, with volume declines expected to resume next quarter.
Ian McCafferty, CBI chief economic adviser, said: “Having seen business volumes tumble continuously for 21 months, some parts of the financial services sector look like they may be starting to come through the worst. The pace of decline in incomes and profitability is slowing, and business volumes are expected to rise in the next quarter.
“However, conditions remain challenging, particularly for the banks. Although demand looks like it is beginning to recover, it is doing so from a very low base. We can still expect lower profitability, significant job losses and cuts to investment in the coming months. The rising levels of bad debt are a further worry for the industry.”
