The Financial Services Survey found 59% of financial services firms said they were more optimistic than three months ago, while 9% said they were less optimistic, giving a balance of +50% - the strongest since December 2013 (+68%).

However, despite overall business volumes continuing to increase, the pace of growth was the slowest in a year and overall employment in financial services fell for a second quarter.

While firms plan strong increases in spending on IT, with a focus on efficiency and speed improvements, investment is likely to be cut back in other areas over the next twelve months. Companies reported that they would be focusing their growth strategies on retaining and cross-selling to existing customers, more than acquiring new ones.

Rain Newton-Smith, CBI director of economics, said: ‘This quarter was a mixed picture for the financial services sector. Firms remained upbeat as profits held up, despite weak growth in business volumes in some sectors, especially banking.

‘The overall headcount in financial services fell for a second consecutive quarter, driven by banks cutting staff as they make their business operations leaner, refocusing activities as a result of new capital rules and regulatory requirements.’

Kevin Burrowes, UK financial services leader at PwC, said: ‘Looking at the UK’s regulatory environment, banks are most concerned about cost and proportionality. Even so, the sector currently has a good grip on its regulatory agenda, and regulation is seen as less of an obstacle to growth than at any point last year.’