Now, where do we go from here? This is the ultimate question after seeing interim reports from the big four come out with some good news. Profitability was present in all four of them, but below average Loan to Value ratios in regard to mortgages and lending to small to medium sized companies to help move recovery forward, continue to be issues that need further attention.

The big four banks on high street are RBS, Lloyds Group, HSBC and Barclays, respectively. All four have returned to profitability, and are showing signs of regaining a healthy look to them. Certain policies set forth by the Government have helped them and some policies have stifled growth. It is time to examine what worked and where do the banks go from here.

Two factors have been the driving force behind the improved performance of these banks. First of all, since defaults are steadily decreasing in number there has been less loan impairment charges handed out. This has changed the overall status for any borrower in a positive way. If a borrower is constantly being issued late charges or default fees, it turns into a lose-lose arrangement. Banks need to have repayments for mortgages, remortgages or personal loans to come in on time and be in the correct amount. This helps banks preserve the day to day process and keeps borrowers in good standing with not only the bank, but also the credit reporting agencies.

Second, a thriving retail and commercial business has amounted to a surge in net interest income. Investment banking is the one weak spot through the past few months. Barclays revenues have decreased 38 per cent compared with the same time last year. Barclays president held the UK elections responsible, along with change in US financial regulations.

Private investors and taxpayers are in better shaped since the beginning of the credit crisis. Borrowers on the other hand, are not happy. Tough terms in regards to lending have resulted in the decline of several loans from small and medium sized businesses.

What is most important though, is the rescue worked. Banks which are still in business today have several government policies to thank including: the special liquidity scheme, taxpayer funded equity injections, the Exchequer’s Credit Guarantee Scheme for bank liabilities, to name a few.

As some of the new policies have proven successful for most banks, the government should take note. To move forward and see banks gain further strength means to continue with sensible reform and increase competition between banks, but at the same time limit exposure to rick for clients.