U.K. Bank Profitability Remains Below Crash Levels, KPMG Says

City of London

City of London

Photographer: Simon Dawson/Bloomberg

Five years after the financial crisis, profitability at the largest U.K. banks remains lower than in 2009 and bad loans higher, according to KPMG LLP.

Britain’s five biggest lenders -- Royal Bank of Scotland Group Plc, Lloyds Banking Group Plc, HSBC Holdings Plc, Barclays Plc and Standard Chartered Plc -- posted a 62 percent annual gain in combined pretax profits in 2014, London-based KPMG said in a statement on Tuesday. But average return on equity, a measure of profitability, remained lower than in 2009.

“The banks are in a period of transition as they adapt their business plans to respond to the shifting regulatory landscape,” Pamela McIntyre, KPMG’s head of banking audit, said in the statement. “The long-term outlook is still uncertain, but our report reveals there’s clear evidence of change.”

Combined pretax profit was 20.6 billion pounds ($30.6 billion) in 2014 compared with 12.7 billion pounds a year earlier, according to KPMG. However, average return on equity was 8 percent compared with 11.6 percent in 2009, while the level of impaired loans as a percentage of total lending was 3.4 percent, double the pre-crisis level of 1.6 percent, it said.

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