U.K. Banks See Falling Profit Amid Tougher Rules, Survey Finds

British banks expect to be less profitable because of increasing competition and investment needed to meet tougher regulations, according to a survey.

A gauge measuring confidence in profitability over the next three months based on a survey of 15 lenders fell to minus 89 in June from plus five in March, the Confederation of British Industry and PwC said in a report on Monday. The survey found competition and regulation as “potential brakes” on growth.

The U.K.’s largest banks are seeking to boost profits as they adapt to tough new rules such as Bank of England demands for firewalls around consumer operations. Lenders such as Barclays Plc and HSBC Holdings Plc both lag behind return on equity targets, a measure of profitability.

“Regulatory uncertainty, the EU referendum and other macro-economic factors have dampened the outlook,” Kevin Burrowes, U.K. financial-services leader at PwC, said in a statement. Levels of optimism were little changed from a quarter earlier, which is “a little surprising as we had expected to see a bounce from the election result and the greater encouragement for financial services from the new government.”

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