UK financial institutions (FIs) are boosting investment and speeding up expansion plans, according to Lloyds Bank’s ninth Financial Institutions Sentiment Survey, which reports improved economic conditions compared to a year ago.
The annual survey gathered responses from over 100 senior decision-makers at banks, wealth and asset managers, insurers, and financial sponsors.
The survey highlights a notable rise in positive sentiment. Almost half (48%) of respondents expect economic growth to improve, up from 21% in 2023 and 7% in 2022, reaching a two-year high.
Similarly, 43% anticipate growth in the financial sector, an increase from 27% in 2023 and 12% in 2022.
Long-term confidence is also evident, the report noted. Over two-thirds (68%) of financial institutions are optimistic about the UK economy beyond 2025, and nearly two-thirds (62%) are optimistic about growth in the financial services sector specifically.
Lloyds Bank also noted that this rising confidence in the macroeconomic environment is enhancing financial institutions’ own growth prospects. The survey indicates that over half (59%) of institutions are more optimistic about their growth in the next 12 months.
To support these ambitions, 63% of respondents plan to expand in existing markets, 50% aim to enter new markets, and another 50% intend to launch new products and services.
Factors driving this optimism include easing inflation and expectations of rate reductions in the latter half of the year (62%).
The survey also reveals growing confidence in London’s status as a leading global financial hub. Most respondents (63%) believe the capital will maintain its global position, up from 50% in 2023.
Additionally, 43% of UK financial institutions think initiatives to encourage foreign direct investment into the UK would further enhance London's status.
Despite this optimism, financial institutions remain cautious about expansion barriers. Three-fifths (62%) of respondents expressed concern about geopolitical uncertainty, a notable increase from 22% in 2023.
A third (34%) identified global trade barriers as a key obstacle to economic performance over the next year, and 41% acknowledged the productivity challenges facing the UK.
Lisa Francis (pictured above), head of institutional coverage at Lloyds Bank Corporate & Institutional Banking, noted that the survey shows 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. 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,” Francis said.
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