Britain’s major banks collectively generated almost £14 billion in profits during the initial quarter of this year. HSBC contributed to this strong performance by recording profits of £6.9 billion. Other banks such as Barclays, NatWest, and Lloyds Banking Group also reported significant profits, largely driven by anticipated prolonged high interest rates resulting from the ongoing Iran conflict. In 2025, these top four banks amassed total profits of £45.7 billion.
The Trade Union Congress (TUC) seized on the substantial profit windfall to advocate for an increase in the bank surcharge tax. The TUC argued that raising this tax, which is an extra 3% corporation tax applicable to banking companies with taxable profits exceeding £100 million, could yield substantial revenue over the upcoming years to bolster public finances. The TUC suggested that reinstating the bank surcharge to its previous level of 8% could generate £9 billion over four years, and potentially much more if set at 35%, similar to the tax imposed on energy firms by the Conservatives.
Additionally, the banks reported a combined profit of £13.8 billion in the first quarter, with Lloyds Banking Group alone securing £2 billion, representing a significant increase. TUC General Secretary Paul Nowak emphasized the importance of imposing fair taxes on banks amid their soaring profits, especially during times of economic uncertainty caused by international conflicts such as the Iran war.
HSBC adjusted its net interest income forecast to £34 billion for the year, citing an improved interest rate outlook. Despite a 1% decline in profits for the first quarter, partly due to setting aside provisions for potential loan losses related to the Iran war, HSBC remains optimistic about its financial performance.
Sara Hall, co-executive director at Positive Money, criticized the decision to maintain higher interest rates for an extended period, highlighting the substantial cost to the public and the Treasury. Hall suggested that implementing a windfall tax on banks, given their record profits, could help mitigate the financial burden on the public and demonstrate government accountability to its constituents.