The Financial Resilience Survey data

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We asked firms to report their level of liquidity resources as of 29 September 2023. For this question, we defined liquidity as cash, committed facilities and other high-quality liquid assets (HQLA). Figure 1 shows the median liquidity per market. While liquidity resources may indicate the level of financial resilience, these should be considered in conjunction with the liquidity needs. The data shows that the Sell-side market reported the highest median levels of liquid resources at around £2.2m, almost twice that of the next highest market, Buy-side, at around £1.1m. Consumer finance firms reported the overall lowest median levels of liquid resources, at around £73,000.

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We asked firms to provide us with their expected cash inflows and estimated cash needs (defined as including fixed costs and known variable costs) between 1 October 2023 and 29 December 2023. Figure 2 shows these inflows and estimated cash needs (or outflows). The cash figures presented are based on forward-looking estimates for a 3-month period. Buy-side firms had the greatest median expected cash inflows at around £711,000 and median estimated cash needs of around £526,000. Consumer finance firms had the lowest median expected cash inflows of around £50,000, and median estimated cash needs of around £33,000.

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Figure 3 shows the difference between median cash inflows and cash outflows across different markets. This margin, along with the level of liquidity resources, can provide an indication of a firm’s ability to meet its short-term costs. A marked excess of inflows over outflows may position firms to manage unforeseen cash outflows more effectively. Buy-side firms reported the greatest difference between cash inflows and outflows, at around £185,000. Consumer finance firms had the narrowest margin at around £17,000.

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Question 2a provides a view of the minimum cash required for a firm to cover short-term costs. Figure 4 shows the difference between the median cash inflows and fixed-costs outflows by market.

The data shows that Buy-side firms reported the greatest difference at around £333,000. Non-bank lenders & administrators had the narrowest margin at around £22,000.

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We asked firms to provide a view of their cash inflows which were contractually committed as of 1 October 2023. Figure 5 displays the data, comparing the median contractually committed inflows to the median expected cash inflows.

The data highlights large variations across markets. Buy-side firms reported the highest median contractual inflows at around £500,000, more than double the figure for Infrastructure & exchanges, which is at around £218,000. But when viewed as a percentage of median inflows, Infrastructure & exchanges leads at 72.7%, with Buy-side closely trailing at 70.3%. In contrast, Payment & digital assets and Sell-side firms reported the smallest proportion of contractually committed inflows, constituting 4.9% and 5.8% of their median inflows, respectively.

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Figure 6 shows under 1% of respondents engaged in such negotiations. It also shows that less than 3% of firms in any market negotiated extensions or delayed payments.

The data shows that Payment & digital assets had the highest proportion of firms negotiating extensions with creditors/delayed payments at around 2.8%, followed by Consumer finance at around 1.4%.

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We asked firms for their profit or loss for the 3 months ending 29 September 2023. Figures 7 and 8 provide a summary of the responses, categorising firms as profitable, unprofitable, or non-responsive. The data shows that almost 80% of respondents were profitable. It is important to note that this assessment only covers a 3-month period which could influence the profitability of certain businesses due to seasonal factors.

Figure 8 shows that Non-bank lenders & administrators had the highest proportion of unprofitable firms at 44%. But it is important to note that this market has a small number of firms. For the 3 largest markets (Consumer finance; Consumer investments; Insurance intermediaries & brokers), the average proportion of unprofitable firms was under 20%.

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Figure 9 shows that under 20% of firms indicated an expectation of reduced profits. The Non-bank lenders & administrators and Consumer finance markets reported the highest proportion of firms anticipating a reduction in profits, each around 30%. In contrast, the Insurance (intermediaries & brokers) and Sell-side markets reported the lowest proportion of firms expecting a decrease in profits, each below 15%.

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Figure 10 shows that just over 80% of firms who answered this question anticipated either no further decreases or a reduction in profits of up to 25%. A smaller fraction, just 6.4% of firms, expected a significant drop in profits, exceeding 75%. The Non-bank lenders & administrators market reported the highest proportion of firms, at 20%, expecting this substantial decrease in profits.

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We asked firms to estimate the impact of the macroeconomic environment on their business models as of October 2023. While interpretations of ‘positive’, ‘neutral’ and ‘negative’ impacts are subjective, the responses can provide a sense of market sentiment. Figure 11 shows that under a quarter of the respondents consider that macroeconomic environment negatively impacted their business model while 72.4% reported a neutral impact. The Non-bank lenders & administrators market reported the highest aggregate negative impact at 43%.

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We asked firms for their most recent revenue, regardless of whether they have been audited. Figure 12 presents the median figures for each market. But it is important to recognise that while revenue can be an indicator of size it does not, on its own, provide adequate information about the level of financial resilience. Figure 12 shows that Buy-side firms reported the highest median revenue, at just under £3m. Consumer finance firms reported the lowest median revenue at around £234k.

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Significant reliance on government-backed loan schemes may indicate weak financial resilience, highlighting potential challenges in a firm’s ability to meet short-term liabilities using its own cash flows.

Figure 13 shows that 17.9% of surveyed firms have received government support. Consumer finance has the highest proportion of firms receiving support at 26.9% followed by Insurance (intermediaries & brokers) and Consumer investments with 21% and 17.8% respectively. These 3 markets collectively account for the majority of firms that received support under a government-backed loan scheme.