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.

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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