HSBC's pre-tax profits surged 32 per cent to $9.6 billion in the third quarter, reigniting calls for a windfall tax on banks as the Chancellor prepares to deliver his first Budget. The FTSE 100 lender plans to hand out $1 billion in shareholder buybacks, while campaigners and trade unions have urged John Healey to use the announcement to justify raising the bank surcharge from its current 3 per cent level. The Chancellor is expected to increase the surcharge to 8 per cent in Wednesday's Budget announcement.
Banks' recent profit bumps have been driven by elevated interest rates, which have widened net interest margins - the gap between what they pay savers and charge borrowers. For HSBC UK, net interest income rose 6 per cent year-on-year to $3.2 billion in the third quarter. The UK arm posted profits of $1.8 billion in the same period, bringing its nine-month total to $5.2 billion, up 8 per cent compared with the same period in 2025. Across the group, net interest income reached $9.3 billion, while overall revenue climbed 5 per cent to $18.6 billion, though this missed analyst estimates.
Paul Nowak, general secretary of the Trade Union Congress, argued that bank profits demonstrate the sector's capacity to contribute more to the public purse. He noted that Barclays announced bumper profits last week and that Britain's big four banks have made more than £200bn in profit over the last five years. The TUC is calling for the government to raise the surcharge to 16 per cent. However, HSBC finance chief Pam Kaur dismissed suggestions the bank might relocate its headquarters from London due to tax concerns, stating 'that's just not on the table'.
The results come as concerns mount about the economic impact of higher bank levies. Any increase to the surcharge could be passed on to consumers through higher mortgage rates and other lending costs, UK Finance warned last month. Banks might also cut interest rates on savings accounts to protect profit margins, while those relying on dividend income from UK banks could face reduced payouts. HSBC is expected to be less affected than rivals such as Lloyds and Natwest because it makes most of its money outside the UK, with the UK arm accounting for around a fifth of its total profit of $29.2 billion this year.
Last week, Barclays reported a 12 per cent rise in pre-tax profits to £2.3 billion for the three months to September 30, boosted by trading volatility and higher interest rates. The bank also announced plans to cut 5,000 jobs by the end of this year as it accelerates the replacement of staff. Meanwhile, HSBC's performance was tempered by weakness in its wealth division, where revenue remained flat at $2.7 billion compared with 15 per cent and 23 per cent growth in the first two quarters, causing the bank's Hong Kong-listed shares to fall 5 per cent.