HSBC Profits Hit £7.5bn: Calls for UK Bank Windfall Tax Grow 2026

HSBC profits hit £7.5bn in the second quarter, reigniting calls for a UK bank windfall tax to fund cost of living support. Campaigners argue that a £19bn levy on the banking sector could ease financial strain for millions of households.

Record Profits at UK's Largest Banks

HSBC reported a 60% year-on-year profit surge to $10.1bn (£7.5bn) for Q2 2024, driven by wealth management fees and higher interest rates. The bank's CEO, Georges Elhedery, hinted at increased banker bonuses and a restart of share buy-backs, which had been paused since last year.

Combined, the UK's four largest banks—HSBC, NatWest, Barclays, and Lloyds—have generated £29.2bn in profits in the first half of 2024. This windfall has put lenders under renewed scrutiny from campaign groups like Positive Money and the Trades Union Congress.

Why a Windfall Tax on Banks?

Positive Money calculates that a 38% tax on UK banking revenues above £800m could raise £19bn annually, mirroring Spain's levy and the UK's energy profits tax. This revenue could fund vital cost of living measures, including:

• VAT cut on electricity bills (saving households £850m)
• £2 cap on bus fares (worth £500m)
• Business rates relief for pubs and music venues (worth £100m)

The proposed tax would cover these measures more than 13 times over, according to campaigners.

Bank Shareholder Payouts vs. Public Needs

Banks have pledged nearly half their profits—£13.7bn—to shareholders through dividends and buy-backs. Critics argue that such generosity proves the sector can afford a windfall tax without harming economic stability.

Political and Public Support

Andy Burnham, Mayor of Greater Manchester, has long advocated for a bank windfall tax to fund social programs. The October budget presents an opportunity for the government to act, with public support for taxing banks at a record high.

However, banking lobbyists continue to resist, warning of potential impacts on lending and competitiveness. Yet, similar taxes in Spain and Italy have not caused significant disruption. The background to this story is set out in Condé Nast UK Profits Fall 36% as Sale of Vogue Publisher Is Ruled.

Key Takeaways

• HSBC's Q2 profits surged 60% to £7.5bn, boosting the UK's big four bank profits to £29.2bn.
• A 38% windfall tax on UK banking revenues above £800m could raise £19bn.
• Funds could cover cost of living measures like VAT cuts and bus fare caps.
• Campaigners urge the government to act in the October budget.

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