Banks report 'normal' business after four years of decline, survey finds

The level of business in the financial services was regarded as "normal" in the last three months of 2011 following less than usual amounts of activity for more than four years, according to a survey published on Monday. But the quarterly survey by employers' body the CBI and accountants PriceWaterhouseCoopers also found that optimism was waning and that the crisis in the eurozone was continuing to create uncertainty in the sector. More job losses could come and, unusually, firms also said they plan to invest less on marketing over the same period. Even so the survey found that the volume of business in UK financial services at its fastest pace since June 2007 and that business levels were now regarded as "normal", after being regarded less than normal since September 2007. As Ian McCafferty, CBI chief economic adviser, said it had been a "strong quarter", though he quickly warned: ""Firms are less optimistic, employment is down and investment intentions for next year are weaker, as concerns about the global recovery and troubles in the eurozone create uncertainty". The survey is based on a balance of responses. Of the 106 financial companies surveyed, 53% said volumes rose in the quarter to December, while 24% reported a fall. The resulting balance of +29% is the highest since June 2007 (+51%) and higher than expectations of +5%. Banking reported strong growth in business volumes and income values in the past three months, and considered the volume of business to be above normal for the first time since June 2007. Kevin Burrowes, UK financial services leader at PwC said: "These latest results show pessimism for the coming months although banks have responded that they have seen high levels of business volumes and income over the recent period. We anticipate that this pessimism will translate into increasing concern over non-performing loans in 2012." But he pointed to tougher times to come. "Further job losses across the sector seem inevitable as banks seek to manage their cost base. So eurozone turmoil, uncertainty in the global economy, UK austerity, weak household incomes, increased competition, significant regulatory changes, and reducing headcount, not to mention the fight for funding, all point to a challenging year for bank management," Burrowes said. The latest survey is stronger than had been expected in October when the CBI had detected that the mood in the industry was weakening and firms were expecting growth to slow .