Profit per customer at UK banks rose 13.3% last year to �75 from �66.20 in 2004, Group 1 Software's report found.

But it warned defection rates have risen to 17.5% from below 10% and banks will have to monitor their quality of service to maintain profit growth.

The news comes as the reporting season for UK banks is in full swing.

Lloyds TSB, Britain's fifth biggest bank, reported on Wednesday a 4% rise in half-year pre-tax profits to �1.78bn, helped by strong cost controls.

Earlier in the week, bigger rival HSBC unveiled an 18% rise in pre-tax profits to $12.5bn, while HBOS said pre-tax profits had risen 17% to �2.65bn.

Strong profits

Lloyds TSB, Barclays and Royal Bank of Scotland unveil their profits later this week.

According to Group 1, a software company, banks have the highest annual profit per customer figure than any other UK industry - �75 per year compared with �59.10 for utility firms and �43.20 for mobile phone companies.

"This demonstrates their (banks) success in an ever competitive environment, where for every bricks-and-mortar business on the High Street there is an online equivalent," said Andrew Greenyer, vice-president of Group 1 international marketing.

"Good news for the UK economy but less so for the consumer."

Business demands

But, banking analyst James Hamilton of West LB said that making profits is what a company must do.

BANK PROFITS IN EUROPE* Italy - 131.60 euros per customer Spain - 123.60 euros per customer UK - 109.80 euros per customer France - 98.40 euros per customer Germany - 98.20 euros per customer *SOURCE: Group 1 - Average banking profit per customer

"They're in business to make a profit, if they were making a loss - and it was big enough - depositors would not be safe," he said.

Mr Hamilton added that although the study highlighted profits per customer, most UK banks are now diversifying and making most of their money in the international market or outside their retail operations - for example 80% of HSBC's profit is made outside the UK, he pointed out.

"In fact margins are being compressed in UK customer banking. Business has declined at things like Barclaycard - we've got to wait for Barclays' results, but I suspect business will be down again," Mr Hamilton added.

Meanwhile, the study also found that UK customers were not the most lucrative for banks.

Banks in Italy and Spain make more money per customer - 131.60 euros (�89.94) and 123.60 euros (�84.48) respectively - than High Street banks in the UK.