Britain’s major banks collectively generated close to £14 billion in profit during the first quarter of this year. Among them, HSBC reported a significant profit of £6.9 billion, joining the likes of Barclays, NatWest, and Lloyds Banking Group in posting robust financial results. These profits have been attributed to the anticipation of prolonged high interest rates resulting from the economic aftermath of the conflict in the Middle East. In total, the big four banks recorded a profit of £45.7 billion in 2025.
The Trade Union Congress (TUC) seized on the substantial profit windfall to advocate for an increase in the bank surcharge tax, asserting that this measure could generate substantial revenue over the next few years to bolster public finances. The surcharge, which is an additional 3% corporation tax imposed on banking sector companies with taxable profits exceeding £100 million, was reduced from 8% in April 2023 by the Conservative government.
According to the TUC, banks have benefited from higher net interest margins and interest earnings from reserves held at the Bank of England. The TUC proposed that raising the bank surcharge could yield £9 billion over the next four years by reversing the previous cut and potentially up to £60 billion if set at 35%, similar to the windfall tax imposed on energy companies.
The total profit of £13.8 billion for the first quarter also includes a substantial £2 billion contribution from Lloyds Banking Group, marking a notable increase. TUC General Secretary Paul Nowak emphasized the need for banks to pay a fair share of taxes on their profits, especially in light of their substantial earnings during challenging times. The TUC urged for measures to shield households and businesses from the economic impacts of global conflicts.
HSBC revised 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, attributed in part to provisions for potential loan losses due to geopolitical tensions, HSBC remains optimistic about its financial performance.
Sara Hall, co-executive director at Positive Money, criticized the strategy of maintaining high interest rates for an extended period, highlighting the significant financial burden this places on the public in favor of banks. Hall suggested that the government should consider implementing a windfall tax on banks to offset the costs associated with elevated interest rates, emphasizing the need to prioritize public interests over corporate profits.
