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Domestic credit now attainable – Deloitte CFO Survey

CFO optimism remains buoyant despite marketplace uncertainty

2 August 2013 - The average cost of a cybercrime incident for Irish organisations over the past year was €135,000. The Deloitte 2013 Irish Information Security and Cybercrime survey, in association with EMC, released today, also shows that cybercrime costs Irish organisations, on average, 2.7% of annual turnover.

The findings of the Q2 Deloitte CFO Survey show that there has been an improvement of 52% in the net perception of the availability of domestic credit – the first time since the survey began that more CFOs believe domestic credit to be easily attainable than not. Perceptions around the cost of funding from Irish banks have also improved – a net 27% of respondents believe that new credit is costly, down from 53% in Q1 2013. 31% of respondents expect bank borrowings to increase over the next 12 months.

The survey findings also show that marketplace uncertainty remains a concern for Irish CFOs. Six out of 10 (59%) respondents cited the level of external financial and economic uncertainty facing their businesses as high or very high. Furthermore, this quarter’s results also show that market uncertainty ranks first amongst Irish CFOs in relation to negative influences on company investment plans in the next 12 months – 63% believe market uncertainty will have a negative impact on company investment plans.

Despite concerns about  the external trading environment, overall CFO optimism has remained buoyant this quarter – a net 36% of respondents indicated that they are optimistic about the financial prospects of their company, an increase of 3% on Q1 2013.

Results also indicate that the majority of Irish CFOs (56%) consider their corporate strategy to be expansionary. However, this has fallen somewhat from the first quarter of the year when 69% of respondents were following an expansionary course.

Encouragingly, eight out of 10 CFOs surveyed believe their firm’s revenues will increase over the next 12 months, up from 65% in the last quarter. The outlook for operating cash flows amongst CFOs is also positive. A substantial proportion of CFOs surveyed expect revenues to increase (81%), and operating costs to decline (52%).

Commenting on the survey findings, Shane Mohan, Partner, Deloitte commented: 

“This quarter’s findings show that CFOs are more positive on the availability and cost of credit than at any time since the survey began in 2009. It is apparent that the domestic capital market is now a more attractive source of funding. Respondents indicated that they expect bank borrowings to increase which should further help in improving the cash flow positions within companies. This is encouraging in light of the fact that the second quarter of the year saw the Irish economy slip back into recession, with the contraction in many of Ireland’s main export markets having a significant impact on economic activity here. Despite the rise in market uncertainty however, CFO sentiment is remaining buoyant, a signal that Irish CFOs are becoming more adept at managing this challenge.”

When quizzed on what areas Government should prioritise to further stimulate economic growth and recovery, job creation emerged as the number one area of focus, as identified by 35% of respondents. Encouraging FDI (24%) and enhancing the flow of credit to businesses were also deemed important (22%).  While CFO opinion on whether the Haddington Road Agreement will deliver the desired savings is divided, a majority of respondents, 62%, believe it will lead to an increase in productivity.

In advance of the deadline of February 2014 for the Single Euro Payments Area (SEPA) Directive, 11% of respondents indicated that all required changes had been implemented, while 54% indicated they are currently implementing changes. 80% believe the directive will have no impact on their business. 13% believe it will have somewhat of a negative impact.
Ends

About the survey
This is the sixteenth in a series of quarterly surveys by Deloitte of Chief Financial Officers of major Irish based companies. The survey was conducted in June 2013. The Deloitte CFO Survey is the only survey that seeks to establish the views of CFOs in relation to the financial markets, economic outlook and business trends on a quarterly basis.

Many of the charts in the Deloitte CFO Survey show the results in the form of a net balance. This is the percentage of respondents reporting, for instance, that bank credit is available less the percentage saying bank credit is unavailable.

CFO survey: Q2 2013
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