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Financial services leaders are less confident about profitability in the second quarter of 2025 when compared with the first quarter, as they expect geopolitics to increasingly weigh on revenues over the next five years, according to KPMG’s Financial Services Sentiment survey.
While the quarterly poll found that confidence about profitability dipped by 5% to 89% in Q2, confidence about overall business growth has remained stable – with around nine in 10 leaders continuing to feel upbeat about growth prospects for Q2.
In addition, leaders are still more upbeat than they were 12 months ago, with 89% feeling about the coming quarter to 87% in the same period last year.
Most leaders expressed their concerns about inflation pressures (48%), interest rates (41%) and cost pressures (36%). Geopolitical risks have also risen as one of the biggest challenges over the last 12 months, with almost 30% of leaders citing geopolitical risks as one of the biggest challenges facing their businesses in Q2.
As a result, six in 10 are investing more of total revenues in risk-proofing against current geopolitical events. They expect to invest on average 8% of total revenues this financial year, rising to an average of 10% by 2030.
Some 28% of business leaders also expect to invest more than 15% of total revenues by 2030 in areas such as business continuity planning and cyber resilience.
Karim Haji, global and UK head of financial services at KPMG, said: “We are in the most volatile geopolitical and economic environment since 2008 and the stability that the sector thrives on is in short supply. The most significant threat to future growth and lower inflation is the fragile state of geopolitics, shifting the focus of investment from efficiency to resilience.
“While investment in risk-proofing is going to increasingly put pressure on revenues, if done in the right way, it will not only drive a better understanding of geopolitical risk exposure to inform business preparedness and response planning but will help firms achieve both resilience and opportunities for growth.”
