Banking woes take toll on Michael Page profits

RECRUITMENT heavyweight Michael Page International warned on Wednesday that the hiring freeze in the turbulent banking sector was likely to continue as it posted a dip in UK profits.

The firm said fees in banking, which accounts for just under a tenth of group profit, fell 12 per cent in the first quarter, with financial clients slow to begin hiring again in an uncertain economic climate.

Europe’s banks have been hit by increased regulation to tough trading conditions, forcing many firms to trim their headcounts and keep a lid on hiring.

Page experienced a 50 per cent year-on-year slide in profits from UK banking recruitment in the first quarter, leading to a 3.7 per cent decline for its wider UK business to £30.6 million.

The group described the overall UK market as “very challenging and highly competitive”, but said this was offset by stronger performances in other countries, including France and Germany. Overall group profits rose 6.9 per cent, year on year, to £136m and chief executive Steve Ingham said he was pleased with the company’s recent performance.

“Markets continue to be weak and visibility remains limited, however, the group remains financially strong,” he stressed.

“Our conclusion on March was that banking remains difficult and certain geographies remain more challenging than others,” Ingham added.

Switching his recommendation to “hold” from “buy”, Investec Securities analyst Robert Morton said: “The recruitment sector will clearly face some choppy waters in the very short term, but we still believe that the underlying structural recovery and growth story for the sector remains intact.”

Panmure Gordon analysts retained a “sell” rating on the stock, saying: “Macro pressure suggests to us little prospect for market improvements in 2012.”