Quinn warns Hunt: ‘Don’t tax the banks’
As HSBC makes billions from interest rate rises...
HSBC pushed back against calls for a windfall tax as it reported bumper profits.
The banking giant raked in £2.7bn over the third quarter of the year – around £610m more than analysts had expected – as higher interest rates meant the bank could charge its customers more.
HSBC upgraded the amount it expects to make from so- called net interest income – the difference between the interest rates it charges borrowers and it pays to savers – to £28bn for the full year.
But boss Noel Quinn rejected suggestions that banks should temporarily pay more tax to help the UK plug the hole in its finances caused by the pandemic and the cost of living crisis.
‘I would hope there isn’t a windfall tax, but that’s a matter for the Chancellor to decide,’ he said.
Jeremy Hunt, who replaced Kwasi Kwarteng as Chancellor earlier this month, has been suggesting further levies on banks as he attempts to claw back more money for the public purse through tax grabs and spending cuts.
One option could be to keep the bank surcharge, which was levied on lenders following the financial crisis, at 8pc even when corporation tax rises to 25pc next year – taking the total to 33pc.
Previously, the bank surcharge was due to fall when corporation tax rose, so lenders would pay the current effective tax rate of 27pc.
Another option could be to tax the profits that lenders are making on the money they have stored with the Bank of England.
Either option would be unpopular in the City, where bosses are urging the Chancellor to ease the tax burden and boost growth.
Overall, HSBC’s profits were down 43pc from last year. But this was largely due to a £2.1bn charge relating to the sale of its French business.
HSBC – which makes most of its money in Asia – admitted that a chunk of the money related to China’s property crash. The bank has just under £17bn worth of exposure to Chinese commercial property, which has been tumbling in value as the country pursues its zero-Covid policy.
But around £262m related to the UK business, where HSBC is preparing for a ‘mild recession’.
HSBC also faced questions over its leadership team after revealing the unexpected departure of finance boss Ewen Stevenson at the end of the year. Stevenson, 56, evaded questions on whether he actually wanted to leave on a call with journalists on Tuesday.
He will be replaced by Georges Elhedery, 48, HSBC’s co-head of global banking and markets. The bank is also trying to smooth over tensions with its largest shareholder, China’s Ping An.
The insurer has been trying to persuade HSBC to split its profitable Asian arm from the Western operations, which Ping An claims is dragging down its value.
But Quinn said that he saw the matter as ‘closed’, after telling Ping An that HSBC was better off as one business connecting East and West.