(RTTNews) - Retail arms of the British banks are likely to fall into losses in the second half of the year, reports said Wednesday, citing results of the latest KPMG survey.

Despite a slight increase in profits in the first six months of the year, increases in bad loans would lead to losses in the second half, the KPMG UK Banks Performance Benchmarking Survey revealed.

U.K.’s Barclays, Lloyds and the Royal Bank of Scotland were managed to make slight profits in the first half, but they were hit by rising bad debts.

“Retail banking is just profitable at lower levels, but with rising impairments. It seems probable that it will fall into loss making in the second half of the year,” reports said quoting KPMG.

According to the firm, increased competition and higher cost of inter-bank lending also impacted retail banking.

KPMG said losses from unsecured loans will not peak “until 2010 or beyond.”

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