UK financial institutions are positioning themselves for significant expansion, with more than half expecting their businesses to grow over the next 12 months, according to Lloyds' latest Financial Institutions Sentiment Survey.

The survey, which interviewed over 100 senior decision-makers at banks, asset and wealth managers, insurers and financial sponsors, found that 55 per cent of institutions anticipate business growth within the coming year. This optimism extends further into the future, with 83 per cent of firms expecting growth within their own businesses over a five-year period.

To support these ambitious growth plans, institutions are increasing their capital expenditure commitments. More than a third (37 per cent) plan to boost capital spending over the next year, with investment focused on artificial intelligence, innovation and workforce development.

The survey reveals that financial services firms are pursuing multiple strategic priorities to deliver growth. Nearly half (46 per cent) of institutions are looking to expand in existing markets, whilst 42 per cent are investing in emerging technologies such as AI and automation. Over a third (37 per cent) are developing new products and services.

Investment priorities reflect the sector's focus on digital transformation and future-proofing operations. Capital expenditure is being channelled into digital transformation (47 per cent), workforce development (46 per cent) and AI applications (37 per cent).

Despite current economic uncertainties, long-term confidence remains robust across the sector. A majority of institutions expect growth in both the UK economy (58 per cent) and the financial services sector (56 per cent) over the next five years.

Lisa Francis, head of institutional coverage at Lloyds, said: "This year's survey paints a clear picture of a sector that is resilient, ambitious and ready to invest. Despite headwinds, financial institutions are continuing to focus on what matters: delivering for clients, investing in people and embracing new technologies."

The survey also highlighted the UK's position as a global financial centre, with three-fifths (60 per cent) of respondents believing the UK will retain its international financial hub status. However, institutions recognise that continued reform and investment will be essential to maintaining this leadership position.

Francis added: "At Lloyds, we're seeing this momentum across our customers and investors. There is a tangible sense of long-term opportunity, with the UK's financial sector continuing to be well positioned to support sustainable growth and deliver great benefits for our clients and for the wider economy."

The findings suggest the financial services sector is maintaining a stable outlook, with 58 per cent of firms expecting to maintain their current trajectory whilst 25 per cent anticipate further expansion within financial services.

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