Britain’s top four banks collectively generated close to £14 billion in profits during the first quarter of this year. HSBC rounded out the group’s strong performance by announcing a profit of £6.9 billion. Barclays, NatWest, and Lloyds Banking Group also reported significant profits, largely driven by anticipated prolonged high interest rates resulting from the aftermath of the Iran conflict. In total, the big four banks amassed profits of £45.7 billion in 2025.
The Trade Union Congress (TUC) seized on the substantial profit windfall to advocate for an increase in the bank surcharge tax, suggesting that it could yield substantial revenues in the coming years to bolster public finances. The surcharge, a 3% corporation tax on banking sector 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 both higher net interest margins and interest earned on reserves held at the Bank of England. They argue that raising the bank surcharge could generate £9 billion over the next four years by reversing the previous cut, potentially reaching between £35 billion and £60 billion if set at 35%, equivalent to the windfall tax imposed on energy companies by the Conservatives.
The total profits for the first quarter of this year amount to £13.8 billion, including a substantial increase of £2 billion for Lloyds Banking Group, representing a 33% surge.
TUC General Secretary Paul Nowak emphasized the importance of taxing banks more fairly given their substantial profits, especially during challenging times for the country. With economic disruptions caused by global conflicts, such as the Iran war, Nowak emphasized the necessity of using bank profits to shield households and businesses from adverse impacts.
HSBC raised its net interest income forecast to £34 billion for the year due to an improved interest rate outlook. Despite a 1% decrease in profits for the first quarter, attributed in part to provisioning for potential loan losses related to the Iran conflict, HSBC remains optimistic about its financial performance.
Sara Hall, co-executive director at Positive Money, criticized the prolonged high interest rates, highlighting the significant financial transfers from the public to banks. Hall suggested that a windfall tax on banks’ record profits, rather than extending high interest rates, could address borrowing costs and demonstrate government prioritization of citizens over corporate interests.
The call for more substantial taxation on banking profits comes amidst ongoing economic uncertainties and challenges, with various stakeholders advocating for measures to ensure financial stability and equitable distribution of resources.