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Banks go back to black
2:00am Monday 19th August 2013 in Business
ALL five major UK banks recorded a profit in the first half of the year, for the first time since 2010, new research has revealed.
Combined profits of some £16.5bn, modest lending growth and falling impairments all show that the banking sector is, at last, starting to get back on track after the financial crisis. However, the industry emerging is very different to how it was before the crisis started and is adjusting to a future in which, KPMG says, bank business models are “unlikely ever to be the same again.”
KPMG’s Bank Performance Benchmarking Report explores the key trends in the first half results of the big five UK headquartered banks – Barclays, HSBC, Lloyds Banking Group, RBS and Standard Chartered – and warns that, despite this better performance, real threats and uncertainties remain.
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.”
Mr Michael concluded: “Clearly we are witnessing a sector that is going through rehabilitation. The banks are working very hard to change what they do and how they do it. Only when they are fully rehabilitated will they get full access to the top table of economic discussion and debate – and only then will there be a fully coherent strategy for banking and economic growth.
"In the meantime, the future is looking a little brighter for the banks, but is still heavily tinged with uncertainties and threats. Not least of these remains the Eurozone, despite the major lift in bank share prices from the actions of the ECB in defending the euro.”
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