The four major U.K. banks - HSBC Holdings PLC (HBC), Lloyds Banking Group PLC (LYG), Royal Bank of Scotland Group PLC (RBS) and Barclays PLC (BCS) - are predicted to post second-half losses in their retail banking arms, accounting firm KPMG said in a report Wednesday, as rising loan impairments wipe out profits in the units.

In a review of the banks' first-half results, KPMG said: "Retail banking is still just profitable at lower levels, but with rising impairments. It seems probable that it will fall into loss making in the second half of the year."

Earlier this month, HSBC reported loan impairments of $13.9 billion (GBP8.46 billion) for the first six months of the year, Lloyds reported GBP13.4 billion in impairments, RBS' were GBP7.52 billion and Barclays' were GBP4.56 billion.

All four banks posted first-half pretax profits in their retail arms, but each was just a fraction of those in the same 2008 period because of the sharp rise in problem loans.

"It is expected that a high level of impairments is likely to continue for the foreseeable future," KPMG said, citing rises in unemployment and some mortgage holders resetting to higher rates.

Strong first-half performances in investment banking divisions from higher client volumes in fixed income and currencies may also prove to be unsustainable in the second half, KPMG added.

Company Web site: www.kpmg.com

-By Margot Patrick, Dow Jones Newswires; +44 (0)20 7842 9451; margot.patrick@dowjones.com