Britain’s financial services sector suffered a drop in profits and a spike in bad debts even before the coronavirus prompted a countrywide lockdown.
The latest CBI/PwC financial services survey paints a disappointing picture for the sector, with banks, insurers and fund managers already reporting a drop in optimism over the three months to March – and rising concerns about the Covid-19 pandemic.
The report, which polled 103 firms, found that profitability fell slightly: 27% of firms reported a drop in profits versus 24% which reported a rise, giving a rounded-up balance of -4%. The value of non-performing loans rose at the fastest pace since September 2009, with a somewhat slower increase expected over the coming quarter.
A jump in bad debts could be worrying for banks, which are on the frontline of the Treasury’s coronavirus rescue plans. Those plans include doling out up to £330bn worth of cheap loans to