Britain's financial service sector continued to grow over the past three months, but underperformed on experts' expectations, the Confederation of British Industry (CBI) said in a report on Monday.
In the sector, a total of 32 percent said their business volumes rose in the three months to December, while 28 percent said the volumes fell.
Meanwhile, banks and securities traders did not expect the growth in business volumes they had seen over the past three months to be maintained in the coming quarter.
A balance of 13 percent of firms polled expected a reduction in business volumes during the coming quarter,representing the bleakest outlook since December 2008, which marked one of
the toughest periods of the recession.
"The bounce in UK financial services activity over the past six months is not expected to last as we enter 2010,"said Ian McCafferty, CBI chief economic adviser. "Firms see their business volumes falling back again, with no
further improvement in profitability over the next three months."
In the banking sector, business volumes rose for the first time since September 2007, but growth is not expected to be sustained next quarter due primarily to a fall in business with
private individuals. Profitability rose strongly,
unexpectedly and for the first time since September 2007 as spreads widened, costs were reduced and income values rose, according to the report.
"Banks are continuing their run of confidence as business volumes and income levels have grown. However, the sector's short term outlook is less encouraging," said John Hitchins,
partner at PricewaterhouseCoopers.
"Activity and revenues are expected to decline over the coming quarter, predictions for demand remain weak and an uncertain regulatory future continues to temper the banks' growing
confidence with caution. On a positive note, the sector reports growing headcount for the first time in two years and average spreads have increased," he said.