Financial services conditions show signs of stabilising in Q3

Conditions across the UK financial services sector showed signs of stabilising during the third quarter, with declines in business volumes, sentiment and profitability easing significantly compared with Q2, according to the latest CBI Financial Services Survey.

Business volumes fell at a modest pace in the three months to September, recording a weighted balance of -5%, compared with the sharp -58% decline reported in June.

Financial services firms expect volumes to be broadly flat during the next three months, with a balance of -1%.

The survey, conducted between 1 and 17 September 2026, also found that sentiment continued to decline, but at a much slower rate. The balance improved to -7% from -34% in June.

Profitability followed a similar pattern, with the balance improving substantially from -65% in June to -6% in September. Firms are more optimistic about the next quarter, forecasting profitability growth at a balance of +35%.

“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.”

Financial services firms increase headcount

Employment provided another positive signal during the quarter, with headcount growing at a fast pace. The balance rose to +49% from +14% in June.

Businesses expect recruitment to continue during the next three months, although at a more moderate rate of +13%.

Average spreads continued to narrow during Q3, but the pace slowed from -51% in June to -26%. Firms expect spreads to remain unchanged over the coming quarter.

The value of non-performing loans also fell sharply, recording a balance of -37%, compared with +4% in June. However, firms expect this trend to reverse over the next three months, with the value of non-performing loans forecast to increase at a balance of +49%.

Investment intentions were mixed. Financial services businesses expect to increase spending on IT and land and buildings over the next 12 months compared with the previous year, while investment in vehicles, plant and machinery is expected to decline.

Hellem added: “The easing downturn matters because the financial services sector is vital to driving investment, innovation and business growth across the economy.

“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.”