UK Banks' Retail Arms Seen Making 2nd Half Losses - KPMG
August 19 2009 - 10:38AM
Dow Jones News
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