Britain’s top four banks collectively generated a profit of nearly £14 billion in the first quarter of this year. HSBC recently announced its own impressive profit of £6.9 billion, joining Barclays, NatWest, and Lloyds Banking Group in the profitable streak. These profits have been fueled by expectations of prolonged high interest rates resulting from the economic repercussions of the Iran conflict. In 2025, the big four banks amassed a total profit of £45.7 billion.
The Trade Union Congress (TUC) has seized on this massive profit surge to advocate for an increase in the bank surcharge tax, which could potentially generate substantial revenue for the public coffers over the coming years. This surcharge, an additional 3% corporation tax applied to banking 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 paid on reserves held at the Bank of England. They propose that raising the bank surcharge could yield anywhere from £9 billion over the next four years by reversing the previous cut to potentially £35-60 billion if set at 35%, mirroring the windfall tax imposed on energy companies by the Conservatives.
The total profits of £13.8 billion in the first quarter of this year include a significant increase of £2 billion for Lloyds Banking Group, marking a 33% surge. TUC General Secretary Paul Nowak emphasizes the necessity of taxing banks fairly on their profits, particularly during times of economic upheaval caused by international conflicts. The TUC urges for a restoration of the bank surcharge tax to shield households and businesses from the adverse impacts of such crises.
HSBC has revised its net interest income forecast to £34 billion for the year, citing an improved interest rate outlook. Despite a 1% dip in profits for the first quarter due in part to provisions set aside for potential loan losses from the Iran conflict, HSBC remains optimistic about its financial performance.
Sara Hall, co-executive director at Positive Money, criticizes the prolonged high interest rates, highlighting the significant financial transfers from the public to banks. She advocates for a windfall tax on the record profits of banks to offset the costs borne by the Treasury. This policy, she argues, would demonstrate the government’s commitment to prioritizing the interests of the public over corporate entities like banks.
