You are here: Home - Investing -

UK’s top banks back in the black for first time since 2010

0
Written by:
19/08/2013
The five major UK banks all recorded a profit in the first half of the year for the first time since 2010, a report has found.

The combined profits of the UK headquartered banks – Barclays, HSBC, Lloyds Banking Group, RBS and Standard Chartered – were £16.5bn for the six months to June.

However, the banking industry emerging is very different to how it was before the crisis and bank business models are “unlikely ever to be the same again”, the KPMG study said.

Despite this better performance, the accountancy firm said real threats and uncertainties remain for the banking sector.

While overall lending was up – including mortgage lending up by 0.8% or £5bn – and customer deposits grew by 6% or £135bn during the period, return on equity (ROE) remains in single digits.

ROE has roughly halved compared to 2005 levels, from near 20% to under 10% now. This is unlikely to reverse in the near-term, the report said.

Almost 20% of first half statutory profits were wiped out by the continuing need to set money aside against PPI claims (£2.3bn) and interest rate hedging products (£700m).

The need to make cost and efficiency savings is also restraining performance, with £1.9bn spent on integration and restructuring costs in H1 2013.

Bill Michael, EMA head of financial services at KPMG, said: “While it is great that the most recent bank results are in the black, there remains real uncertainty on the shape of their business models in the future. We have reached an inflection point. Capital requirements are going to put huge pressure on banks to deleverage. The fear is that we will end up with a UK banking sector with very narrow choice, where individuals will not be able to get the products they need. We have to get the balance right between prudence and growth.”

Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Employment at 15-year high but pay inflation weak

Employment hit a 15-year high in the private sector, although an economist confirmed wages have failed to keep pace with...

Close