Major UK commercial banks’ profitability has fallen quite significantly since the global financial crisis.

Low profitability reduces the ability of commercial banks to generate fresh capital internally and reduces their resilience to future domestic and external shocks.

Key factors:

1. Significant rise in regulatory costs
2. Lower interest rates on loans has reduced trading incomes – for example, a steep fall in mortgage rates
3. Financial cost of previous misconduct - UK banks put side another £15 billion relating to past misconduct in their 2015 results, reducing pre-tax profits by around 50%. This includes the costs of miss-selling PPI
4. Commercial banks are now making less money from investment banking services such as currency & commodities trading. Retail banking is traditionally less profitable than the higher risk investment banking side

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Number of complaints regarding payment protection insurance (PPI) submitted to the Financial Ombudsman in the United Kingdom (UK) from 2010 to 2015

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