UK Wealth Managers Optimistic About Business Growth – Lloyds Bank

Lloyds Bank has just released its ninth “Financial Institutions Sentiment Survey,” which examines how banks, wealth and asset managers, insurers, and financial sponsors view economic growth, their investments and expansion plans.

UK financial institutions – including wealth managers – are
stepping up investments and accelerating expansion plans,
according to the latest Financial Institutions Sentiment
Survey by Lloyds Bank. It found
that economic conditions have improved compared with 12 months
ago.

The annual survey, which interviewed over 100 senior
decision-makers at banks, wealth and asset managers, insurers,
and financial sponsors, opened in April and ran until June 2024,
just before the 4 July UK general election. 

There was a big increase in positive sentiment compared with 12
months ago. Almost half of respondents think economic growth
will improve, an increase from 21 per cent in 2023 and 7 per cent
in 2022, marking a two-year high. Similarly, 43 per cent expect
growth in the financial sector, up from 27 per cent in 2023 and
12 per cent in 2022.

Confidence is also strong when looking longer-term. Over
two-thirds of financial institutions are optimistic about the UK
economy beyond 2025, and nearly two-thirds share a similar
optimism for growth in the financial services sector
specifically, the survey showed. 

This improving confidence in the macroeconomic environment is
helping to bolster financial institutions’ own growth prospects.
The survey indicates that over half of institutions are more
optimistic about their growth over the next 12 months. To support
these ambitions, respondents are planning to expand in existing
markets and enter new markets, and launch new products
and services.

Factors creating this optimism include easing rates of
inflation and the expectation that rate reductions will come
later this year.

“This year”s survey has revealed a significant shift towards
optimism in both the UK economy and the financial services
sector. This is in line with what we are hearing and seeing
directly from our clients,” Lisa Francis, managing director,
institutional coverage, Lloyds Bank Corporate &
Institutional Banking, said. “Deal activity is ahead of last
year and there’s positive momentum as this renewed optimism is
fuelling our clients’ growth ambitions, whether by expanding into
new and existing markets or launching new products and
services.” 

“Overall, this paints an exciting picture for the UK’s financial
services industry, which is crucial to the UK’s economy and our
position on the global stage,” she continued.

The survey also revealed growing confidence in London’s status as
a leading global financial hub. Sixty three per cent of
respondents believe that the capital will retain its position on
the global stage, up from 50 per cent in 2023. Forty three per
cent of UK financial institutions believe that initiatives to
encourage foreign direct investment into the UK would help
increase London’s status.

However, financial institutions are cautious about barriers to
expansion, with 62 per cent of respondents apprehensive about
geopolitical uncertainty, a significant increase from 22 per cent
in 2023. A third of financial institutions saw global trade
barriers as a key obstacle to economic performance over the next
year, while 41 per cent acknowledged the productivity challenges
facing the UK.