Advertisement
UK markets closed
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • FTSE 250

    19,884.73
    +74.07 (+0.37%)
     
  • AIM

    743.26
    +1.15 (+0.15%)
     
  • GBP/EUR

    1.1703
    +0.0010 (+0.08%)
     
  • GBP/USD

    1.2639
    +0.0016 (+0.13%)
     
  • Bitcoin GBP

    55,591.28
    -414.73 (-0.74%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CRUDE OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD FUTURES

    2,254.80
    +16.40 (+0.73%)
     
  • NIKKEI 225

    40,369.44
    +201.37 (+0.50%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • CAC 40

    8,205.81
    +1.00 (+0.01%)
     

New British banks seeing better returns and lending more-KPMG

* New (KOSDAQ: 160550.KQ - news) banks increased lending by 16 percent in 2014

* New banks average return on equity better than 'Big Five'

LONDON, May 22 (Reuters) - Britain's new banks are achieving superior returns than larger rivals, picking up customers shunned by bigger lenders since the 2007-9 financial crisis, consultancy KPMG said on Friday.

Britain has seen the emergence of several new banks since the financial crisis, looking to pick up customers as bigger rivals slim down in order to bolster their balance sheets and meet tougher regulatory requirements.

The KPMG report showed new British banks increased lending by 16 percent last year, compared with a decline of 2.1 percent at Britain's 'Big Five' retail players - Lloyds Banking Group , Royal Bank of Scotland (LSE: RBS.L - news) , Barclays (LSE: BARC.L - news) , HSBC and Santander UK.

ADVERTISEMENT

KPMG noted, however, that the combined loans of the five largest challenger banks are still equivalent to just 5 percent of lending provided by the 'Big Five' and it is therefore easier for them to achieve higher levels of growth.

The research found that smaller 'challenger banks', such as Metro Bank, OneSavings Bank (LSE: OSB.L - news) and the UK business of Sweden's Handlesbanken were growing at the most rapid rate, with larger challengers such as Virgin Money, TSB and the Post Office showing slower growth.

However, Britain's competition body, which is investigating the industry, has warned moves to improve competition have yet to have the desired effect.

"Although the overall 'challenger' banking sector is growing rapidly and securing greater returns, it is the small challengers who are driving its growth," said Warren Mead, head of challenger banking and alternative finance at KPMG.

The research showed that smaller challengers achieved an average return on equity, a key measure of profitability, of 18.2 percent, last year. That compared with 2.1 percent at larger 'challenger' banks and 2.8 percent at the 'Big Five'.

"If this trend were to continue, as the challengers grow and benefit from economies of scale, it poses an interesting question for the 'Big Five' as to whether too big to fail becomes to big to compete," said Mead.

(Reporting by Matt Scuffham Editing by Jeremy Gaunt)