The UK’s financial services industry – including wealth management – saw its fortunes rise in the three months to March from the autumn and winter of last year, according to a quarterly barometer of business performance and sentiment.

The Confederation of British Industry/PricewaterhouseCoopers report on financial services said in banking, business volumes, income values and the number of people employed rose over the three-month period. Optimism rose for the second quarter in a row. Data came from 94 respondents and the survey was carried out between 20 February and 7 March.

(The data is not broken down to include a separate category for wealth management. The segments are: banking; building societies; life insurance; general insurance and brokerage; securities trading and investment management.) 

Among financial services as a whole, when asked about the trend in the volume of business, excluding seasonal variations, for the next three months, there was a positive balance of 27 per cent, down from 34 per cent in December 2012 but up from 12 per cent in September. As for the value of fee, commission and premium income, a positive balance of 18 per cent indicated a rising trend, against 13 per cent giving the same answer 12 months earlier.

“Investment managers remain remarkably confident, thanks to good equity market performance and particularly strong retail business.  Profitability continues to improve despite rising investment, marketing costs and headcount,” Paula Smith, PwC partner and UK asset management leader, said.

“The wave of new regulation is the only cloud on the horizon where although concern about the impact has fallen slightly, a large number of investment managers plan to spend more on compliance during the coming year,” Smith, referring to concerns about red tape in the report, added.

On employment, a net 19 per cent indicated a positive trend in terms of numbers, sharply contrasting with -31 per cent in December 2012 and -40 per cent in September last year. Looking forward to the next three months, financial firms were also more optimistic in their hiring plans than in December and September last year.

Some 64 per cent of firms questioned said demand – or the lack of it – was a constraint on developing business over the next 12 months, compared with 90 per cent giving this answer in December. Another large reason (51 per cent) for holding back on development is regulation, the report showed.