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CBI predicts one-off profit spike for UK asset managers

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  • CBI predicts one-off profit spike for UK asset managers

UK - Asset managers are likely to see their profits grow this quarter, but it will be a one-off spike, the Confederation of British Industry (CBI) has warned.

Speaking about the shape of the UK asset management industry at the launch of the CBI and PricewaterhouseCoopers' joint quarterly financial services survey, PwC's Rob Mellor said that while the industry had been cutting costs during the downturn, profit growth may be confined to this quarter.

Mellor, PwC's UK financial services tax and hedge fund leader, said: "They've seen a bit of an uptake in income, so for once they've spiked in profitability.

"I do describe it as a spike because, going forward, it may prove to be a one-off."

He said the companies were looking toward non-domestic markets for growth, but that this would require "boots on the ground" and that asset managers would therefore begin employing again.

Industry-wide growth was slightly better, with financial services registering the fourth consecutive increase in profitability, and a net of 9% of all companies expecting business volumes to grow, the most positive assessment since September 2007.

Investment management also witnessed a positive second quarter, with fee income on the rise as well as growing profitability.

"Unfortunately," Mellor warned, "predictions for the coming months are not as positive, with fee income expected to fall and operating costs likely to increase."

Additionally, the threat of regulation and its effects remained a concern for many of those surveyed, Mellor added, citing UCITS IV and the AIFM directive.

However, concerns about regulation were not confined to a single sector, according to John Cridland, the CBI's deputy director-general.

"A high proportion of firms is worried about the impact of prospective regulation on their business, and many remain concerned red tape will hamper growth prospects in the year ahead," he said.

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