UK financial services companies are confident about their prospects for the third quarter despite flat growth over the April to June period, according to a survey by the Confederation of British Industry (CBI) and accountants PriceWaterhouseCoopers (PwC). The quarterly survey showed that banks, insurers and fund managers expect income growth to pick up over the next three months, with most planning increased levels of investment in IT, marketing, and property refurbishment. A balance of 6 pct of respondents expects business volumes to increase, while a balance of 14 pct believes profits will also rise. The sector's upbeat expectations come despite a worse than expected performance in the second quarter, with a balance of minus 7 pct of respondents reporting a fall in profitability. Most companies in the sector had been expecting modest profits growth. "Subdued activity has combined with weakening pricing power to depress profitability despite financial services firms continuing to keep a tight grip on costs," said CBI head of economic analysis Doug Godden. "But looking ahead, firms in this sector seem reasonably confident." There was a sharp divergence in the fortunes of the different sub-sectors within the industry over the second quarter, with building societies and insurers reporting income growth at multi-year highs, while securities traders experienced the sharpest fall in income for six years.