Uncertainty in bank sector hits Michael Page division

ONE of the UK’s leading recruitment firms warned that hiring freezes and recent turbulence in the financial markets have hit its banking arm.

Michael Page International, which employs over 1,300 people in the UK, said the strong growth in bank placements in the first six months of 2011 had slowed in recent weeks due to a block on new recruitment.

Recent weeks have seen big job cuts announced by Lloyds Banking, HSBC, Barclays and Royal Bank of Scotland as conditions in both retail and investment markets have become more difficult.

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Banks are also waiting to see the outcome of the Independent Commission on Banking’s final report in September, which is tipped to recommend a ring-fence between retail and investment banks.

The bank sector accounts for 10 per cent of Michael Page’s profits overall but despite the slowdown and a UK market described as “challenging”, the recruiter said it still expects to make progress this year.

Underlying profits rose by 38 per cent to £45.5m in the half-year to June, with growth in both permanent and temporary placements.

Revenues rose by 26 per cent to £502m.

Investec Securities said the performance represented a strong recovery in the first half, but that profits were still “a little behind our expectations”.

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Analyst Robert Morton added: “Whilst these are a strong set of figures, prospects will clearly be affected by the recent market turmoil and we are reducing our full year forecasts.”

He has lowered his guidance for this year by £8m to £108m, while cutting the following year’s figure by £10m to £150m.

In the UK, profits grew by 8.1 per cent to £10.4m in a market the company described as “tough”, with growth in the private sector offset by the impact of public sector cutbacks. First half revenues in the UK rose by 14.2 per cent to £163m and only modest progress is expected in the second half.

Profits improved due to better productivity, Page said, as staff numbers were flat.

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The UK accounted for a quarter of Page’s profits in the latest half year, but the improvement came from Europe, Middle East, Latin America and Asia where Page has been investing heavily and adding more staff.

Chief executive Steve Ingham said: “In Europe, we expect to continue our progress and our outlook for Asia and Latin America remains strong.”