‘Very good news’ for Jersey as finance profits soar

  • Finance industry net profits soared by 25% last year
  • The total net profit was £1.47 billion
  • The lion’s share – 81%, totalling £1.19bn – came from the banking sector

FINANCE industry net profits soared by 25% last year after several years of stagnation – a boost that has been described as ‘very good news’ by Assistant Chief Minister Philip Ozouf.

According to figures released yesterday by the States statistics unit, total net profit was £1.47 billion.

The lion’s share – 81%, totalling £1.19bn – came from the banking sector, followed by trust and company administration (£140 million), the legal sector (£81m), fund management (£35m) and accountancy (£26m).

According to the annual survey of financial institutions, total revenue went up 2%, to £2.39bn.

However, the amount firms spent on salary and benefits packages last year went down by two per cent, averaging £61,000 per employee.

Average bonuses were also down, dropping 14% last year to £4,900 compared to £5,900 in 2013.

The survey was completed by 54% of the Island’s finance firms, including most of the banks.

Meanwhile, in 2014, 80 more Island school and college leavers were taken on than in the previous year, totalling 390 full-time posts – the highest number recorded since the survey began in the 1990s.

Overall, finance firms also spent more in the Island last year on goods and services – 47% of a total £740m, compared to 35% in 2013.

Commenting on the survey, Senator Ozouf – who has ministerial responsibility for the finance industry – said: ‘I said when I was Treasury Minister that the best was yet to come, but people didn’t believe it.

‘I see this as the vindication of what we have been saying.

‘We have been working on the financial services strategy for the last three years and I was expecting these numbers to be positive.

‘I had detected about 18 months ago that things were beginning to be more positive in outlook, after a very severe financial downturn.

‘This is very good news – a really very positive result for our most important industry.’

The minister said that the industry had diversified geographically as well as by product. ‘Profitability is not all down to banking – a lot of the activity has come through the trust and funds sectors,’ he said.

‘It is because the 12,500 people who work in financial services – under enormous pressure, because of the downturn – have been working hard.’

The statistics show that the average net profit made from each employee – an indicator of productivity – leapt by more than a fifth (22%) during the year, to around £124,000 for every full-time post.

The biggest increase was in banking (up 36%, to £262,000), followed by legal (13%), fund management (5%), and trust (3%).

Chief statistician Duncan Gibaut said that this was the first ‘tangible measure’ of growth in the economy, following on from the recent manpower survey, which showed that the number of people employed has increased by almost 2,000.

The statisticians say the net profit increase was ‘strongly driven’ by the banking sector, which benefited from increases in net profit of between ten and 15 per cent across the board, as well as a ‘complete swing’ in the fortunes of a few of the larger players who had reported losses in the previous year.

Although revenue stayed flat, the need for capital expenditure on restructuring fell away last year.

In the legal sector, statisticians report that the increase was driven by a number of significant deals.

The trust sector has also seen an upturn, with recruitment particularly buoyant last year.

The trust and legal sectors now employ around 6,000 workers, with around 5,000 in the banking sector.

SENATOR Philip Ozouf is right today when he says that the latest figures to emerge from the finance sector are good news for Jersey.

Profits have increased significantly and – although average ‘earnings’, including bonuses and benefits, of £61,000 are down on last year – far more jobs are being created for young Islanders.

During the difficult years of downturn, many sectors of this main limb of our economy have regrouped and are now more efficient and more productive.

The industry has also, by necessity, diversified and expanded into new markets.

Growth is now being reported in the funds sector.

Amid the arguments over population, the new International Finance Centre and the black hole, ministers – including Senators Gorst, Ozouf and Bailhache, who have clocked up thousands of air miles promoting Jersey around the world – deserve credit for the welcome news announced today.

Trips to the Middle East and China are often scoffed at, but the hard work put in in these places is now paying dividends which should benefit the whole community.

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