The Financial Services Roundtable recently released another iteration of it’s Fast Facts, reliable, bullet-point research about issues facing the financial services industry. This series is the The Financial Services Roundtable’s first bi-annual Financial Executive Economic Outlook Report, which shows positive expectations for company profitability and capital reserves, despite an increase in compliance costs.
FACT: In a survey of Roundtable member leadership, ninety percent of financial services executives expect their companies’ profitability to increase (58%) or stay the same (32%) during the next six months.
- 10% expect their companies’ profitability to decrease.
FACT: Roundtable executives are optimistic about employment: nearly three-quarters of executives expect employment to stay the same (36%) or increase (38%) during the next six months, while one-quarter (26%) expect employment at their firms to decrease.
FACT: Capital reserves are at historic highs, and are expected to continue rising.
- Nearly all financial services executives expect capital reserves to increase (72%) or stay the same (25%) during the next six months.
- Banks’ average Tier 1 capital ratio set a new record of 13.25% in the third quarter of 2012, according to FDIC data, and bank capital is at $1.6 trillion – the highest level in history.
FACT: Overwhelmingly, financial services executives expect compliance costs to increase during the next six months.
- 84% of industry executives expect compliance costs to increase during the next six months; 15% expect compliance costs to stay the same; and only 1.6% expect compliance costs to decrease.
FACT: Government regulation and fiscal uncertainty are the largest challenges hindering company growth.
- Top policy issues are split between capital and liquidity rules (30%) and the Consumer Financial Protection Bureau (28%).