Financial services conditions show signs of stabilising in Q3 - CBI Financial Services Survey

Business volumes in the financial services sector fell at a modest pace in the three months to September, following a rapid decline in Q2. 

The quarterly survey, conducted between 1 and 17 September 2026, also found that both sentiment and profitability among FS firms fell at slower rates in the three months to September. Headcount in the sector rose at a fast pace over the same period.

Looking ahead, FS firms expect business volumes to be broadly flat next quarter. Firms anticipate increasing investment in IT and land & buildings, while cutting back capex on vehicles, plant & machinery.

Key findings:

·       Business volumes declined at a substantially slower pace in the quarter to September (-5% from -58% in June). Firms expect volumes to be broadly flat over the next quarter (-1%).

·       Sentiment among FS firms fell at a modest rate in the three months to September (weighted balance of -7% from -34% in June).

·       Average spreads narrowed at a slower, albeit still firm, rate over Q3 (-26% from -51% in June). Spreads are expected to be flat over the next three months (0%).

·       The value of non-performing loans fell at a fast pace in the quarter to September (-37% from +4% in June). However, their value is set to grow at a steep rate over the next quarter (+49%).

·       Profitability contracted at a modest pace in the quarter to September (-6% from -65% in June). FS firms expect profitability to increase at a firm rate next quarter (+35%).

·       Headcount grew quickly over the three months to September (+49% from +14% in June). Firms expect to expand headcount at a more moderate pace in the next three months (+13%).

·       FS firms expect to increase investment in land & buildings and IT over the next twelve months (compared to the previous twelve), while capex on vehicles, plant & machinery is set to decline.

 Louise Hellem, CBI Chief Economist, said:

“Financial services firms reported some stabilisation in business conditions after a gloomy Q2. The fall in business volumes eased substantially over Q3, which was mirrored by a slower decline in sentiment. Looking ahead to the next quarter, firms expect business volumes to be broadly flat, while headcount is set to grow for a third consecutive quarter.

“The easing downturn matters because the financial services sector is vital to driving investment, innovation and business growth across the economy. Government has set the right direction through its Financial Services Growth and Competitiveness Strategy and the Leeds Reforms; the priority now is delivery.

“The Autumn Budget should set the agenda for a competitive and predictable environment that turns those reforms into tangible progress, unlocking domestic investment, deepening UK capital markets and helping more firms to scale and grow. It should also avoid measures that would undermine competitiveness or weaken incentives to invest. With the business tax contribution already at a record share of receipts, that means avoiding further sector-specific taxation, including on a banking sector already facing a higher tax rate than competing international financial centres.”