Despite the tough conditions afflicting the rest of the economy, Britain's financial services sector is enjoying a resurgence in business, jobs and profits after a year of shrinking or stable volumes.
According to the latest quarterly Financial Services Survey by the CBI and PricewaterhouseCoopers, the sector grew rapidly in the three months to September – a stark contrast to a year ago when volumes were the lowest since December 1992.
Employment in the sector is also expanding. A quarter more firms took on employees than shed them and one in three expect to recruit in the next quarter as business volumes are forecast to grow again.
While increased competition for staff led to a higher wage bill, forcing up overall costs (a balance of 21 per cent of companies reported a rise), the increased volume of business meant that average costs per transaction fell.
And despite increased costs, a balance of 21 per cent of firms also recorded a rise in overall profitability.
Overall, the survey found, five out of eight sectors in financial services are optimistic about their prospects for the next quarter and this confidence is reflected in the fact that firms expect to invest more in IT, land and buildings over the next 12 months and increase their marketing too.
But Ian McCafferty, the CBI's Chief Economic Adviser, warned that it was important to remember that the factors behind financial services growth are different to those affecting the rest of the economy where conditions remain tough.
"In particular, the financial services sector is boosted by consumer decisions to save as well as borrow," he said.
"Some firms have also benefited from rising stock markets. It would be very satisfying if this survey turned out to be the signal for a revival in the wider economy - but the odds are stacked against it."
John Hitchins, UK Banking Leader at PricewaterhouseCoopers, said: "The survey shows that the recovery in business activity is gathering pace across most parts of the financial services industry.
"Optimism, however, was muted reflecting concerns over the fragile state of the economy in the short term. Looking longer term, strengthening trends in marketing and investment intentions suggest a stronger underlying confidence."