Continuingly projected low interest rates, mounting regulatory requirements, redress costs and the uncertainty of the European Union (EU) referendum have contributed to a 40% decrease in profit before tax.
The results come from KPMG’s annual Bank Benchmark report which also found there was no evidence of revenue growth thanks to low interest rates and fierce competition.
Compensation costs were found to be the second highest expense for banks, growing to £38bn from £37.9bn, as Tim Howarth, KPMG Banking Partner said it was clear that banks were still fighting the problems of the past.
“Legal fees, fines and compensation costs are making an enormous dent in profits and I don’t expect to see a let-up any time soon.
“Banks are finding it harder to make money whilst the costs just keep coming.”
Tim felt that 2016 looked set to be an interesting year with UK banks keeping relatively quiet on the EU referendum debate in their annual reports.
“I expect to see a continuation of cost cutting measures like branch closures and headcount reduction but I hope to see more detailed and structured investment in technology.
“Throughout 2015 banks have been frantically investing in technology to offer a better services more cheaply, but so far there’s little evidence of successful cost cutting and the detail on technology investment is vague.”
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