Bank reports strong first-half results while facing calls for higher taxes on earnings
HSBC has reported a sharp increase in profits for the first half of the year, with its chief executive saying that a strong banking sector is essential to supporting economic growth in the UK.
The bank recorded a pre-tax profit of $19.5 billion (£14.5 billion) during the first six months of the year, representing a 23% increase compared with the same period a year earlier. The results also exceeded analyst expectations, which had forecast profits of around $18.9 billion (£14.1 billion).
The strong performance follows a positive reporting season for major UK banks, with Lloyds, Barclays and NatWest also reporting higher annual profits and results above market expectations.
Calls grow for higher taxes on bank profits
HSBC’s results have renewed debate over whether the UK government should increase taxes on banks to raise additional revenue.
The Trades Union Congress (TUC) argued that combined first-half profits of nearly £29 billion among the four major banks showed that the sector could afford to contribute more through taxation.
The union is calling for an increase in the corporation tax surcharge on banks from the current 3% rate to at least 8%, which it estimates could raise £9 billion over four years.
HSBC chief executive Georges Elhedery said taxation decisions were ultimately a matter for the government but emphasized the importance of maintaining strong banks to support investment.
“For growth to be able to manifest, you need businesses to be confident and invest,” Elhedery said, adding that companies need access to financing and that banks play a key role in providing that support.
HSBC launches new share buyback programme
Alongside its financial results, HSBC announced plans to launch a new share buyback programme worth up to $1 billion (£740 million).
The bank said operating expenses increased during the first half due to continued investment in technology and the impact of inflation. However, these costs were partly offset by its simplification strategy, which has already removed around $1.5 billion (£1.12 billion) in expenses ahead of schedule.
Profit growth was supported by stronger net interest income and higher fee revenue, particularly from wealth management and banking services.
Growth in wealth management and premium banking
HSBC added around 86,000 active customers to its Premier banking account during the first half, bringing the total number of customers using the service to 1.2 million.
The Premier account is available to UK customers with annual income of at least £100,000 or customers holding £100,000 in savings or investments with the bank.
The increase reflects a broader industry trend, with major banks expanding wealth management services aimed at affluent and high-net-worth customers.
HSBC highlights UK economic resilience
The bank’s results were partly affected by higher expected credit losses, which reached $2.4 billion (£1.79 billion). This included a $400 million (£298 million) exposure linked to fraud at a UK lender, as well as expected losses related to geopolitical uncertainty and higher trade tariffs.
Despite these challenges, Elhedery said the UK economy had shown strong resilience and that HSBC remained confident in the outlook for British businesses.
“We remain very confident in the resilience of our businesses in the UK,” he said, adding that the bank was ready to support companies looking to invest and grow.
SME lending continues to expand
HSBC reported that lending to small and medium-sized businesses increased by 11% year-on-year, with customers using various forms of financing including asset and trade finance.
The bank’s business banking division also saw strong customer growth, with new customers increasing by 48% to around 680,000.
