CFS Financial Center Index at a stable level
The CFS Financial Center Index dropped by only 0.9 point to 107.5 since the last reporting. This demonstrates that business climate in the German financial sector remains stable in the first quarter of 2012. In the prior quarter, the change was more dramatic as the index sunk by 5.5 points. Both the assessment of the performance in the last quarter (107.5), as well as the outlook for the current developments (107.3) indicate a stable situation in all surveyed enterprises. The overall index lies at 107.5, i.e. it clearly remains as before in positive territory. The reasons for this minor drop are decreasing sales and shrinking employment levels.
Financial sector is stabilising
In the previous quarter the business climate improved a little bit (+1.5 point) in the group of financial institutions and brokerage firms. The main reason for it is an unexpected increase in profits (+11.4 points). Moreover, the survey showed that the financial institutions and brokerage firms expect their profits to increase in the current quarter (+5.4 points), while sales should slightly decrease (-1.8 points). Additionally, a majority of the respondents from this group expect a reduction in employment (-3.6 points). The situation in the group of financial sector service providers deteriorated in the last quarter (-3.2 points). Although profits were assessed positively (+4.1 points), the group showed at the same time a significant decline in sales and employment numbers (-4.4 points and -5.6 points respectively). However, the expectations about business as a whole are still positive (+1.7 points). The respondents from this group of enterprises hope for higher profits (+2.5 points), an increase in employment (+2.0 points) as well as rising investments (+4.7 points). The situation for the group supervisory and academic institutions deteriorated over the last months (-3.7 points). The main reason for that is a significant fall in employment (-14.2 points). The outlook for the current quarter is not positive either in terms of overall business climate (-7.6 points). The majority of firms in this group expect falling profits and investment levels. As a whole, all groups consider the future international importance of Frankfurt as a financial center to be more positive than three months ago (+2.3 points).
Sovereign debt believed to be the main reason for the euro crisis
Answers to the question as to whether sovereign debt or the instability of the banking sector is responsible for the crisis revealed that the majority of respondents lay the blame on the public finances (sovereign debt was allocated 69% of the blame while the instability of the banking sector only 31%). This view was shared by banks as well as non-banks, and was also found to be stable among various juridical forms of the banks.
More information of the current Financial Centre Index can be found at:
