British recruitment firm Michael Page International warned its banking business has begun to slow as the recent turmoil in global financial markets adds to hiring freezes that are starting to bite.
Major European banks such as Barclays, HSBC, Lloyds and UBS have announced thousands of job cuts over the last two months, as the industry grapples with tougher regulation and the impact of the spreading Eurozone sovereign debt crisis on investment banking operations.
On top of that, recent sharp falls in world stock markets on global growth fears, have prompted banks to hold off any hiring decisions, said Michael Page chief executive Steve Ingham.
Michael Page, which finds jobs for people in finance, accounting and legal services, makes about 10 per cent of its gross profit through its banking business.
Article continues below
"Since this turmoil has arisen in the last few weeks these announcements have meant that a lot of our banking clients have just held their breath and slowed down on recruitment and therefore our growth has slowed a little," Ingham said yesterday.
Shares in the company, which raised its half-year dividend by 12.8 per cent to 3.25 pence, were down 12 per cent at 1015 GMT in London.
Michael Page said on Monday that pre-tax profit in the first six months to June 30 rose 38 per cent to £45.5 million (Dh273.39 million) on group gross profit of £275.1 million, missing analysts' forecasts. Altium Securities cited a pretax profit consensus of £51.5 million.
Investec analyst Robert Morton, who had forecast pretax profit of £48.5 million, said he would be reducing full-year forecasts:
"The group has seen further strong recovery in the first half of the year, albeit not quite up to our expectations. In addition, the recent turmoil in world financial markets will have some impact on global growth rates," he wrote in a note.
Shares in Michael Page had already dropped by nearly 25 per cent in the last month as investors reacted to a report from fellow recruiter Hays of a weak UK market with the financial services sector slowing down.
Michael Page said it expected growth in its European, Asian and Latin America businesses, while the UK market would remain challenging although there would be modest growth there.
"We see Asia and Latin America remaining strong, we are clearly cautious in terms of the UK, North America and parts of Europe but at the moment our growth in Europe is very strong with growth in every country," Ingham said.
"We will continue to invest in the second half as well and assuming things don't radically change, and there is no reason to think that right now. It wouldn't be unlikely that our headcount growth would be similar to that of the first half [around 600]."
The group, which makes 76 per cent of gross profit from outside the UK, said that apart from the banking sector slowdown, trading in July had been strong.