Britain’s major four banks collectively generated close to £14 billion in profits during the first quarter of this year. HSBC concluded this streak by announcing a £6.9 billion profit on Tuesday. This success was mirrored by Barclays, NatWest, and Lloyds Banking Group, all benefiting from rising interest rates due to economic repercussions from the ongoing Iran conflict. In 2025, the big four banks amassed profits totaling £45.7 billion.
The Trade Union Congress (TUC) seized on this lucrative profit surge to advocate for an increase in the bank surcharge tax, emphasizing the potential to significantly boost public funds. The surcharge, a 3% corporation tax on banking companies’ profits exceeding £100 million, had been reduced from 8% in April 2023 by the Conservative government.
TUC highlighted that banks have profited from higher net interest margins and interest earned on reserves held at the Bank of England. They proposed that raising the bank surcharge could generate £9 billion over the next four years by reverting to the pre-cut level. Setting it at 35%, equivalent to the windfall tax imposed on energy firms, could potentially yield between £35 billion and £60 billion.
The total profits of £13.8 billion for the first quarter of this year also include a notable £2 billion increase for Lloyds Banking Group, marking a 33% surge.
TUC General Secretary Paul Nowak emphasized the necessity of fair taxation on banks’ substantial profits, particularly during times of economic strain. He highlighted the need to shield households and businesses from the negative impacts of ongoing conflicts and economic instability.
HSBC revised its net interest income forecast to £34 billion for the year, attributing this to an optimistic interest rate outlook. Despite a 1% decline in profits for the first quarter, partly due to provisions set aside for potential loan losses linked to the Iran conflict, HSBC remains confident in its financial outlook.
Sara Hall, co-executive director at Positive Money, expressed concerns over the implications of prolonged high interest rates, stressing the potential financial burden on the public and the government. She suggested that implementing a windfall tax on banks’ record profits could alleviate some of these economic pressures and garner public support.
By prioritizing policies that address borrowing costs and redistribute profits from banks, the government could demonstrate a commitment to supporting the interests of the public over corporate entities.