The financial services industry in Scotland expects business prospects to continue to improve, the Scottish Financial Enterprise Quarterly Survey of Scotland’s Financial Services Industry said.
The survey shows that most businesses are optimistic about the overall outlook for the year ahead, with 71% of respondents confirming increased confidence in their company’s business prospects, and 67% expecting volumes to increase over the next quarter. Profitability was up on the last three months, but there is less certainty that increased volumes will be translated into improved margins in the third quarter of this year.
Over the second quarter, increases in turnover were broadly driven by growth across all of the main geographical markets that the industry services from Scotland (Scotland, the rest of the UK, the rest of Europe, the US, Asia and other regions of the world). However Scotland and the US are expected to offer the lowest prospects for growth in Q3 2005. Business investment increased slightly over the second quarter and is expected to remain steady over the next, while half of the respondents believe employment levels will rise.
The main factors likely to impact on business development over the next 12 months are seen to be level of demand and customer confidence. The ability to raise funds, competition and statutory legislation and regulation have emerged as more significant factors since the survey was undertaken three months ago.
Amanda Harvie, Chief Executive of Scottish Financial Enterprise (SFE), said: “The large majority of our members across the industry have reported increased confidence in their business prospects for the year ahead and expect an increase in business volume over the next three months. The asset servicing sector is particularly bullish about growth expectations and investment managers are the most confident of increasing employment levels during this quarter. There are many pressures on business development but the overall short-term outlook bodes well for the continuing growth of Scotland’s financial services industry.”
John Duncanson, Managing Director of Capgemini in Scotland, added:”The financial services industry is very important to Scotland and to Capgemini. It is encouraging to see such a positive outlook across the industry and its different sectors as the survey reveals. Clearly confidence and optimism are strong with businesses based in Scotland looking to both UK and overseas markets for growth. We look forward to continuing to work with Scottish Financial Enterprise on this valuable initiative to provide an insight into financial services business expectations.”
The survey, sponsored by Capgemini provides a snapshot of the views of financial services businesses based in Scotland about their performance over the second quarter of this year (April to June 2005) and how this may change in the third quarter (July to September 2005).