Britain’s major four banks collectively generated nearly £14 billion in profit during the first quarter of this year. HSBC recently revealed its own impressive profit of £6.9 billion, joining Barclays, NatWest, and Lloyds Banking Group in the list of banks with strong financial results. The banking sector’s profitability has been boosted by the anticipation of prolonged high interest rates stemming from the economic repercussions of the conflict in the Middle East. In 2025, the big four banks accumulated profits amounting to £45.7 billion.
The Trade Union Congress (TUC) seized on the substantial profit surge to advocate for an increase in the bank surcharge tax, asserting that it could yield significant revenue in the upcoming years to enhance public finances. The surcharge, which is an additional 3% corporation tax imposed on banking companies with taxable profits exceeding £100 million, was reduced from 8% by the Conservative government in April 2023.
According to the TUC, the banks have benefited from higher net interest rates and interest payments on reserves held at the Bank of England. The TUC suggests that raising the bank surcharge could generate £9 billion over the next four years by reversing the previous cut, potentially reaching anywhere from £35 billion to £60 billion if set at 35%, equal to the windfall tax imposed on energy firms by the Conservatives.
The total profits of £13.8 billion for the first quarter of this year also include a notable surge to £2 billion for Lloyds Banking Group. TUC General Secretary Paul Nowak emphasized the importance of taxing banks more fairly on their profits amid their substantial earnings and the economic challenges faced by the general population.
HSBC revised its net interest income forecast to £34 billion for the year, attributing the adjustment to an improved interest rate outlook. Although its first-quarter profits experienced a marginal 1% decline, this was partly due to setting aside funds to mitigate potential losses from loans impacted by the ongoing conflict in the Middle East.
Sara Hall, co-executive director at Positive Money, criticized the strategy of maintaining higher interest rates for an extended period, highlighting the significant financial transfers from the public to banks. She proposed implementing a windfall tax on banks’ record profits to offset the costs incurred by the Treasury and address borrowing-related concerns effectively.
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