HSBC posts £7.2bn profit as Budget windfall tax row intensifies

HSBC is making the equivalent of just over £900 a second, according to the Mirror ^[1]. Europe’s biggest bank revealed pre-tax profits rocketed by 32 per cent to $9.6billion in the third quarter, bringing the global total to £7.2billion. The massive earnings have intensified pressure on Chancellor John Healey to introduce a windfall tax on banks in his upcoming Budget.

The Daily Mail reported ^[2] that HSBC has also slashed its UK GDP growth forecast from 1.4 per cent to 1.1 per cent. The bank warned the economic outlook has deteriorated due to higher inflation and interest rates dampening consumer spending. Despite the gloomy forecast, HSBC announced plans to return more cash to investors, including a $1billion share buyback.

Mr Healey is expected to raise the surcharge on bank profits over £100million from 3 per cent to 8 per cent. This would reverse a tax cut introduced by former Chancellor Jeremy Hunt. The TUC and campaign groups argue banks have enjoyed a profit bonanza thanks to higher-for-longer interest rates. Paul Nowak, general secretary of the TUC, stated that banks can afford to contribute more, noting the big four lenders have made over £200billion in profit in five years.

However, the banking sector is fighting back. UK Finance warned that UK banks are already taxed at 46.5 per cent, significantly higher than in Frankfurt or New York. They argue a tax hike could push up mortgage rates and reduce competitiveness. Analysts suggest HSBC might be insulated compared to high-street rivals like Lloyds and NatWest, as it generates most of its profit outside the UK.

HSBC group chief financial officer Pam Kaur dismissed suggestions that the bank might move its headquarters. She insisted that remaining domiciled in the UK is "not on the table" and that tax changes would not deter investment. Meanwhile, Barclays reported a 12 per cent rise in profits and plans to cut 5,000 jobs, highlighting the broader trend of profitability driven by volatile markets and AI efficiency rather than customer service improvements.