London: An increase in profits at the big five UK banks was wiped out by a mix of regulation and their own mistakes, a report has claimed.
According to the report by KPMG report says combined core profits of the banks, Barclays, HSBC, Lloyds Banking Group, RBS and Standard Chartered, were 31.5 billion pounds last year.
The audit firm's report said that the profits were, however, eliminated by the "cost of past mistakes and increased creditworthiness of their own debt,” the BBC reports.
According to the report, this development meant that the major banks actually saw their statutory profits slump 40 percent on the previous year, at 11.7 billion pounds, KPMG added.
The banks, it says, were hit by PPI costs of 7.4 billion pounds, up from 5.7 billion pounds in 2011.
In addition, there were other fines and penalties from regulators and "redress provisions" of 4.7 billion pounds, and a 12.8 billion pounds accounting hit for losses caused by the revaluation of "own debt", "reflecting the credit markets'' more positive view on bank issuers and interest rate movements".
According to the report, Bill Michael of KPMG said that banks had a better performance year in 2012, but their improved core profits were eaten up by fines and other exceptional items, leaving them down on 2011.