Banking chiefs have launched a last ditch effort to persuade Chancellor John Healey to ditch a tax hike on lenders in the Budget
HSBC has announced profits surged by 32% in the three months to September(Image: Getty)
HSBC has fuelled calls for a Budget windfall tax on banks after revealing its profits rocketed by a third.
Europe’s biggest bank – and a major high street lender in the UK – made an eye-watering £7.2billion globally in the past three months – or equivalent to just over £900 a second. It took profits this year to almost £22billion. HSBC is so awash with cash it announced another £750million plan to buy back a chunk of its own shares, in a boost to investors.
The bumper sums come on the eve of the Budget, in which Chancellor John Healey is expected to announce a tax hike on banks’ UK profits.
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The banking sector has staged a last ditch effort to try to persuade Mr Healey to ditch the move, warning the industry is already heavily taxed compared with ribal financial centres around the world.
However, insiders quietly accept a tax rise in likely given the profit bonanza banks have enjoyed for higher-for-longer interest rates on the back of increasing inflation which is hammering ordinary households.
Mr Healey is thought to be considering increasing a surcharge on banks’ profits over £100million from 3% to 8% — reversing a tax cut introduced by former Conservative chancellor Jeremy Hunt.
Abhijay Sood, economist at the New Economics Foundation, said: “It’s not surprising that HSBC have made such significant profits in the last quarter, but it will be difficult news to swallow for households struggling with rising mortgage costs.
“Like other big banks, its profitability has depended on keeping interest rates on savings accounts low, and a “stealth subsidy” from taxpayers via the Bank of England due to quantitative easing.
“While the rumours of a bank tax change in the Budget are welcome, it is unlikely to go far enough. While banks are making over a billion pounds a week of profit, NEF analysis suggests that the restoration of the bank surcharge to 8% would raise just £1.8bn a year from them. The chancellor should go further by clawing back the stealth subsidy, and use this to fund inflation-busting investment and keep the essentials of life affordable for ordinary people.”
Sara Hall, co-executive director of the group Positive Money, said: “HSBC’s profits have surged because of higher interest rates, not because of any improvements to the products or services they offer customers.
“Banks are blowing billions of pounds on bonuses not seen since the financial crash and massive payouts to shareholders, rather than investing in UK businesses or communities. The Chancellor should claw back some of these lost billions with a windfall tax on bank profits this week, to show the public that this government will put the public interest ahead of corporate ones.”
It comes as the Mirror revealed fat cat bosses running Britain’s big four banks raked in more in just two days than a typical worker earned all year.
Trade union body the TUC claimed the pay bonanza — which saw chief executives pocket an average £8.9million each last year — was yet another reason why Mr Healey should slap a windfall tax on banks.
TUC General Secretary Paul Nowak said: “Some in the finance lobby have tried every which way to stop tax rises in the Budget. But these results make it blatantly obvious banks can afford to contribute more.
“It’s not just HSBC. Barclays announced bumper profits last week too. And Britain’s big four banks have made more than £200billion in profit over the last five years.
“With Trump and Putin’s illegal wars rumbling on, working people have another cold, hard winter ahead. Households and businesses are going to need more support – and it’s time for the Chancellor to make the banks pay a fairer share.”
Pam Kaur, HSBC’s group chief financial officer, declined to comment on the prospect of a windfall tax but hinted that any such move would not deter its investment decisions. She also confirmed that it was committed to keeping its UK headquarters, despite pressure in the past to shift more of its focus to Hong Kong and its Asian arm.
“We have said we are very comfortable we are domiciled in the UK, so that question is not on the table” Ms Kaur insisted. She added: “Irrespective of what happens with taxes, we are there to support our customers and that is what we will do.”
