BRITAIN’S biggest banks may never again achieve the same level of profitability that they enjoyed before the financial crisis, consultants at KPMG warned in a major report out this morning.
Although all five of the largest lenders are now making money, the rising tide of regulations and increased caution since the crisis mean they will only make more modest incomes in future.
Increased capital buffers and tougher constraints on lending are intended to reduce the risks banks take, but also hold back credit volumes and profits.
The top five banks recorded total profits of £16.5bn for the first half of 2013, but return on equity overall is below 10 per cent – less than half the 20 per cent seen pre-crash.
And although banks may now be safer from a financial point of view, they could be vulnerable to cyber attacks and systems meltdowns, KPMG believes.
“Cyber attacks could be the next systemic shock – banks’ ability to combat future security threats is increasingly debateable,” said the report. “After years of improvement, UK banks suffered a 12 per cent increase in online account fraud last year. Furthermore, the motivation for cyber assaults is shifting, from financial crime to political and ideological attacks.”