Asset managers predict profit growth will slow


Investment managers expect business volumes to dip in the three months to September causing profits growth to slow, says research from the CBI and PwC.

Competition and the level of demand were the most common barriers to business expansion over the next 12 months, the financial services quarterly survey found, while the number stating regulation was a barrier had fallen “significantly” the report found.

Investment management firms’ total operating costs rose for a fifth consecutive quarter.

The survey found investment managers’ optimism about the general business environment fell in the three months to June.

The industry saw new products and services launches as increasingly important to growth strategies in the year ahead, with a focus on retaining existing customers.

Employment rose further in the three months to June marking four years of uninterrupted growth, but is expected to slow in the following quarter.

Across the financial services sector, including banks, securities traders and investment managers, optimism was down in the three months to June, according to the survey. Thirteen per cent of firms were more optimistic while 29 per cent were less optimistic.

Overall, 28 per cent of firms said profits had increased and 20 per cent said they had fallen over the period.

CBI chief economist Rain Newton-Smith says there is a “mood of caution” in the financial services industry as the Brexit vote next week rapidly approaches.

“When talking to financial services firms, it’s clear that the low interest rate environment, increasing competition and regulatory pressure continue to weigh on profitability.”

UK financial services leader at PwC Andrew Kail says there is a “flattening of the landscape” as banks, asset managers and insurers converge.