Shaw & Co, the specialist corporate finance advisory firm, has launched its second annual in-depth report into the Banking, Financial & Insurance Services (BFIS) industry, the latest in its regular series of reports that offer business leaders a powerful sector overview and benchmarking tool to aid their decision making.

The report segments over 1,800 businesses with earnings in excess of £1m by size and subsector to track their performance, profitability, debt levels and M&A activity. Key findings include:

• Scale is King: 14% of the 1,817 companies analysed account for 72% of total turnover and achieve Ebitda of over £30m. Achieving scale opens more options to borrow, grow and win market share.

• 253 M&A Deals: Deal appetite remains high, particularly in the Financial Services sub-sector, which comprised 77% of the deals completed during this period.

• The Financial Services and Banking sectors have been protected as bank base rate rises have gone up - this has improved net interest income, margins and profitability. The Insurance sector, meanwhile, has held up robustly through the last year, and it has been able to pass back any increase in overheads to its markets.

• This positions the industry well post-pandemic, but with the onslaught of energy price inflation and continuing supply chain interruptions, we can expect volatility in sector performance in the coming period. The sector will be aware and alive to the risk of bad loans as interest and energy costs rise.

• Private equity appetite has become more risk-averse, amid increased pressure on returns from the rising cost of capital. However, consolidators in the industry are maintaining their buy-and-build strategies.

A full copy of the report is available here