The combined profits of the UK headquartered banks – Barclays, HSBC, Lloyds Banking Group, RBS and Standard Chartered – were £16.5bn for the six months to June.
However, the banking industry emerging is very different to how it was before the crisis and bank business models are “unlikely ever to be the same again”, the KPMG study said.
Despite this better performance, the accountancy firm said real threats and uncertainties remain for the banking sector.
While overall lending was up – including mortgage lending up by 0.8% or £5bn – and customer deposits grew by 6% or £135bn during the period, return on equity (ROE) remains in single digits.
ROE has roughly halved compared to 2005 levels, from near 20% to under 10% now. This is unlikely to reverse in the near-term, the report said.
Almost 20% of first half statutory profits were wiped out by the continuing need to set money aside against PPI claims (£2.3bn) and interest rate hedging products (£700m).
The need to make cost and efficiency savings is also restraining performance, with £1.9bn spent on integration and restructuring costs in H1 2013.
Bill Michael, EMA head of financial services at KPMG, said: “While it is great that the most recent bank results are in the black, there remains real uncertainty on the shape of their business models in the future. We have reached an inflection point. Capital requirements are going to put huge pressure on banks to deleverage. The fear is that we will end up with a UK banking sector with very narrow choice, where individuals will not be able to get the products they need. We have to get the balance right between prudence and growth.”