HSBC quarterly profit surge sparks fresh calls for bank tax hike in Budget

A top HSBC executive has said the bank is not under pressure to relocate from the UK, despite a surge in its quarterly profit sparking fresh calls for the Chancellor to hike bank taxes in the Budget. Pam Kaur, the banking group’s chief financial officer, said there was “no pressure” on the bank despite facing the prospect of higher costs. It comes after HSBC reported a pre-tax profit of 9.6 billion US dollars (£7.2 billion) for the three months to September, which was 32% higher than the same period last year.

This was partly driven by an increase in net interest income, which is the difference between what banks make from loans and what they pay out in deposits, amid UK interest rates staying higher for longer. Earnings were also bolstered by lower expected credit losses and a smaller provision for legal costs than the same period last year. HSBC also announced it would be handing up to one billion dollars (£750 million) to shareholders as part of a new share buyback scheme.

The results announcement comes a day before John Healey is due to deliver his Budget, where reports have said he could increase the surcharge on bank profits from 3% to 8%, reversing a tax cut implemented by the former Conservative government. Ms Kaur said she would not speculate on the Budget given it was a day away. Households and businesses are going to need more support - and it's time for the Chancellor to make the banks pay a fairer share Paul Nowak, TUC general secretary But asked about whether higher taxes could raise the pressure to shift its headquarters away from the UK, she said the bank was “very comfortable”, adding: “We are domiciled in the UK and we remain in the UK so that question is just not on the table.

“Irrespective of what happens on taxes, we are there to support our customers and that is what we will do.” She added that there was “no pressure because we are doing well, we are meeting all our targets”. Industry groups have warned that higher taxes on the financial services sector could divert investment, jobs and businesses away from the UK. But HSBC’s financial results on Tuesday sparked fresh calls to the Chancellor to target banks in order to raise more money for the Treasury.

Paul Nowak, general secretary of Trades Union Congress (TUC), said the profits make it “blatantly obvious banks can afford to contribute more”, also referring to a Barclays reporting a 12% jump in its quarterly profit last week. “Households and businesses are going to need more support – and it’s time for the Chancellor to make the banks pay a fairer share,” he said. TUC said reversing the Tory tax cut and setting the surcharge at 8% would raise £9 billion over four years, while setting the surcharge at 16% could deliver £24 billion over the same period.

Sara Hall, the co-executive director of campaign group Positive Money, accused banks of “blowing billions of pounds” on bonuses and payouts to shareholders, adding: “The Chancellor should claw back some of these lost billions with a windfall tax on bank profits this week, to show the public that this Government will put the public interest ahead of corporate ones.” Chancellor John Healey will deliver his autumn Budget statement on Wednesday Credit: Peter Byrne/PA Meanwhile, HSBC said it had made cost savings worth 1.9 billion dollars (£1.4 billion) under chief executive Georges Elhedery’s cost-cutting drive.

It expects this to reach two billion dollars (£1.5 billion) by the end of the year – exceeding the 1.5 billion dollar (£1.1 billion) target that was originally set. Ms Kaur said the cost savings have come from “a range of places” including the “deduplication of roles” which particularly impacted more senior positions. She also said the bank was encouraging its staff to build their AI skills and be “future ready”. “And that’s so important for us because, in our judgment, what’s most important for an AI strategy to work is to keep the human accountability, judgment and decision-making very much at the core of what we do,” she said.

“So AI is there to help humans, not necessarily to replace humans. “We know that AI will change how work is done across industries and of course it will impact some roles, it will transform other roles, while creating entirely new roles.” It comes as reports said the bank was preparing to cut jobs in its UK wealth management business as part of efforts to ramp up the use of AI to serve wealthy customers more efficiently, according to the Financial Times.

Ms Kaur said she would not comment on the speculation about job losses but that the bank “absolutely focuses on the workforce we have, both in terms of skilling it and building on it”.