HSBC Chief Executive Georges Elhedery has urged the UK Prime Minister not to impose a windfall tax on banks, arguing that such a levy would negatively impact economic growth and business investment. Elhedery's remarks came as HSBC reported a 23% rise in profits to £14.5 billion in the first half of the year, driven by strong performance in its Asian wealth management division and a 7.7% increase in profits from its UK operations, which reached £2.9 billion.
"Growth requires strong banks," Elhedery stated, emphasizing the crucial role banks play in providing financing for businesses to invest and expand. He noted that businesses need access to financing to be confident and invest, with banks serving as the primary mechanism for this. This perspective aligns with recent comments from NatWest CEO Paul Thwaite, who called for policy consistency to enable business planning.
The banking sector in the UK currently faces a 3% surcharge on top of the standard 25% corporation tax. The Trades Union Congress has advocated for restoring this levy to 8%, which they estimate could generate £9 billion over four years. Banks have seen increased profits in recent periods, partly due to sustained higher interest rates that have boosted their net interest income.
Despite global economic challenges, including the Middle East conflict and its impact on energy prices, Elhedery described the UK economy as "outstandingly resilient" and a "very attractive international investment hub." He highlighted ongoing foreign direct investment in the UK contributing to job creation across various sectors.
Elhedery also addressed HSBC's commitment to its London headquarters and its nationwide operations, stating that over 60% of the bank's loan portfolio is allocated to businesses outside of London and the South East. The bank maintains significant operations in cities such as Edinburgh, Swansea, Leeds, Sheffield, and Chester, with its retail bank headquarters located in Birmingham. However, the majority of HSBC's business activities, accounting for over two-thirds of its profits, are centered in Asia, particularly in Hong Kong and China.
In addition to the profit announcement, HSBC plans to resume its $1 billion share buyback program, which was temporarily paused following its acquisition of Hang Seng Bank. The bank is also considering an increase in its bonus pool for bankers, following the lifting of a cap on bonuses. Since 2025, HSBC has divested 15 non-strategic businesses, most recently selling its Singapore insurance arm to Allianz.
HSBC shares experienced a slight decrease of 0.8% on the day of the announcement, closing at 1584.6p, though the stock has seen a rise of over 70% in the past 12 months. Analysts project that HSBC and other major UK banks, including Lloyds, NatWest, Barclays, and Standard Chartered, will collectively report profits exceeding £60 billion this year.