Finance sector expects profits and regulatory headaches in 2013

The financial industry expects 2013 to be a boon for profits, but continues to fret about the damage Washington could do.

A new study conducted by the Financial Services Roundtable found that 58 percent of institutions surveyed expect their profits to climb in the coming year. But nearly two-thirds identify Washington policies — or the lack thereof— as the single biggest threat to their continued growth.

The Roundtable, which represents some of the largest financial institutions in the world, found that 36 percent of those surveyed identified increased government regulation as hindering growth, while another 26 percent said fiscal uncertainty was the biggest drag. Only 23 percent pegged a weak economy as the largest threat.

Eighty-three percent of institutions expect their costs for complying with new rules, many stemming from the Dodd-Frank financial reform law, will climb, compared to just two percent who expect them to fall.

On the policy front, new increased capital and liquidity requirements were identified as the single biggest issue facing institutions, as nearly 28 percent singled them out. Coming up in a close second was the new Consumer Financial Protection Bureau, as 26 percent of those surveyed identified it as the biggest hurdle.

Big banks and other financial institutions are looking to 2013 to boost their bottom line, but that does not mean they are expecting a major jump in hiring as well. Only 38 percent of those surveyed expect to increase hiring in the coming year, while roughly one-quarter plan on actually trimming staff.

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