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The Deloitte CFO Survey: 2009 Q1 results

Amid the gloom, glimmers of hope: 2009 Q1 results


CFO Survey

The latest Deloitte Chief Financial Officer survey, published on 7th April 2009, picked up signs of an improvement in credit conditions and financial prospects of corporates. Nonetheless, cost cutting measures are now almost universal among major UK corporates. Leverage is profoundly out of favour while CFOs now see equity as the most attractive form of finance for their business.

Credit conditions: Tough, but tentative signs of improvement
The 2009 first quarter survey shows that credit conditions remain tough, with an overwhelming majority of CFOs rating credit as expensive and hard to obtain. However, credit pricing and availability have improved slightly, the latter registering its first improvement in seven quarters.

The net balance of CFOs who are more optimistic about financial prospects has increased significantly this quarter, although it still remains in negative territory at -30% (-59% in 2008 Q4).

Government policy
Cuts in base rates by the Bank of England are starting to feed through to the corporate sector, at least for existing bank borrowing. 64% of CFOs report that lower base rates have been either very or quite effective in reducing interest rates on existing bank borrowing.

But policy action to ease credit conditions appears, so far, to have had little effect in terms of improving the price and availability of new credit. 80% of CFOs said rate cuts had little or no effect on new borrowing costs. Moreover, most CFOs report that the provision of capital and liquidity to the banking system by the Treasury and the Bank of England has had little or no impact on credit conditions for corporates.

Nor do CFOs expect a quick improvement in credit conditions. Only 10% of CFOs expect an improvement in the price and availability of credit this year. 59% see things improving in 2010. The rest, almost a third, see credit conditions improving only in 2011 or later.

From debt to equity
CFOs take the view that the end of the credit boom is likely to usher in a profound change in corporates’ balance sheets. The dominant view among CFOs is that corporates should be aiming to reduce debt levels and a majority of CFOs saying that they plan to reduce debt levels in the next 12 months.

85% of CFOs say it is likely that the current downturn will reverse the process of de-equitisation seen in recent years. The implication is that, in future, corporates are likely to run on lower levels of debt and higher levels of equity.

Plans and prospects
Cost cutting has become an almost universal strategy for corporates. The first quarter 2009 CFO Survey found that:

  • 95% of CFOs plan to cut or have already cut discretionary spending
  • 86% of CFOs are reducing or have already reduced hiring
  • 81% of CFOs expect to cut or have already cut current employee numbers
  • 81% of CFOs plan to reduce or have already reduced capital spending

The severity of the crisis has also significantly changed many corporates’ plans to pay dividends. 30% of CFOs are planning to or have already cut dividends.

Download the full report: The Deloitte CFO Survey 2009 Q1 results (PDF, 469 KB)

For more information on the survey, please contact Ian Stewart, Chief Economist at Deloitte Research on


Related information
The Deloitte CFO Survey in the media


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