“The current rather gloomy outlook for the real economy naturally also leads to uncertainty in the financial industry,” comments Prof Dr Rainer Klump, Director of the Center for Financial Studies, on the results.
The assessment of the future international importance of Germany as a financial centre fell in the second quarter of 2024. With a drop of -6.2 points, the current index value stands at 93.0 points. Both the financial institutions and their service providers assess the situation as declining, with sentiment among service providers now turning negative again at -9.1 points after a sharp rise in the first quarter (+14.8).
“The current economic mood is also having an impact on the financial centre. However, the glass is actually half full, as the fundamental data does not justify the cautious expectations. It is true that people are currently saving more out of caution, which is being clearly felt by service providers in particular. Nevertheless, we are seeing a renewed upward trend overall,” explains Gerhard Wiesheu, President of Frankfurt Main Finance.
Mixed sales and earnings growth for financial institutions and service providers / employee growth declines
Turnover growth at financial institutions fell by -5.7 points to 112.1 points in the second quarter of 2024, while service providers recorded a clear increase in turnover growth of +14.2 points to 116.4 points. Compared to the same quarter of the previous year, this still represents an increase of +7.1 points, while financial institutions are down -2.6 points on the previous year. In terms of revenue growth in the fourth quarter of 2024, the expectations of the entire financial sector are moderately negative.
In terms of revenue growth, the financial institutions surveyed are almost on a par with service providers at 114.6 points and 114.7 points respectively. However, it is striking that the financial institutions reached this level with a negative development of minus -4.5 points, while the service providers reported positive growth of +15.5 points in the third quarter of 2024. Compared to the previous year, earnings growth among service providers rose by +9.4 points. For financial institutions, it fell by -3.8 points compared to the previous year. Both groups are expecting a decline in the current quarter.
The financial institutions recorded a slight loss in employee growth of -2.0 points to 110.8 points. However, service companies in the financial sector are having to lay off employees. This is reflected in the decline in growth by -10.6 points below the reference level of 100 to 96.6 points. Compared to the previous year, financial institutions have hired slightly more staff, while service providers are down -2.9 points year-on-year. Both employer groups expect this trend to continue in the current quarter.
Growth in the investment volume of service providers reached the neutral level of 100 points in the third quarter
Growth in the volume of investment in product and process innovations by financial institutions rose by +3.5 points to 107.9 points, which is +3.0 points above the previous year’s level. Service providers report a decline of -3.0 points to 100.0 points, which corresponds to the previous year’s level. Service providers expect a noticeable increase in investment growth for the current quarter.
Skills shortage in the financial sector
Source: CFS press release from 12/09/2024
