Reacting to the Bank of England stress test results
Reacting to the Bank of England stress test results, Rob Smith, Banking Partner, KPMG UK says:
“UK banks are robustly capitalised and as a result none of them this year needed to resubmit their capital plans. However, the ‘pass’ headline masks the fact that six out of the seven banks experienced higher losses than last year and regulatory capital buffers need to be increased reducing some of the excess capital in the system.
“The risks surrounding consumer credit really comes to light in these results. Over half the impairment losses come from consumer credit. Higher interest rates provide a £23bn boost to bank revenues which will ultimately be borne by the man and woman on the street through higher payments on mortgages and credit cards. For investors and bank staff there are some important headline figures. Under the stress, dividends diminish with £26bn held back in the first two years, this is a significantly bigger cut than we saw last year. Looking at remuneration it’s a similar picture, with banks forecasting a material reduction in their variable remuneration from £9bn over 2017-2018 to £0.5bn under the stress scenario.”
On IFRS9 Steven Hall, Partner, KPMG UK added:
“On the cusp of transition to the new accounting standard, IFRS9, it is conspicuous by its absence in today’s publication. Whilst the BOE always said it wouldn’t publish individual bank IFRS9 impacts, the fact they get no mention at all, even in aggregate, suggests that the impact on the key consumer lending credit card portfolio could be more significant than feared.”
Notes to editor:
For further information please contact:
Christina Bridge, KPMG UK
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KPMG Press office
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