According to a recent study high-street banks are coming under increased pressure as profits are slumping by a massive 40%.
The advisory body KPMG recently released its annual report, and has outlined that a combination of factors such as: mis-selling costs, changing regulations, low interest and the rising uneasiness over the EU referendum are apparently contributing to this unsettled pattern.
The combined loss of the big five banks in Britain – Barclays, HSBC, Lloyds, RBS and Standard Chartered – totalled £12.4bn. This is a return to levels not seen since 2013.
At the moment the outlook for investors is looking gloomy. Compensation is high and the costs are not dropping at the expected rate because of projected ringfencing.
It wasn’t a surprise to see that the main reason for hits on profitability was the PPI refund scandal, which has gone on for longer than anyone could have predicted.
Nearly £15bn was set aside in 2015 for refunds which represents a massive 35% increase from 2014. Five years from 2011, redress costs reached £55bn, accounting for 72 per cent of banks’ profits during that period.