HSBC chief executive Georges Elhedery has urged Prime Minister Andy Burnham not to impose a windfall tax on Britain's banks, warning that the move would damage economic growth.
Elhedery's comments came as HSBC, Britain's biggest quoted company, reported a 23 per cent rise in profits to £14.5billion for the first half of the year, helped by strong growth in its wealth management business in Asia.
"Growth requires strong banks," Elhedery said. "For growth to manifest, you need businesses to be confident and invest. For businesses to invest, you need them to have access to financing. And banks are the preferred financing mechanism for these businesses."
The bank also revealed that profits at its UK arm had grown by 7.7 per cent to £2.9billion.
Echoes NatWest's warning
Elhedery's remarks echoed comments made by NatWest boss Paul Thwaite last week, who called for "consistency of policies so businesses can plan."
Banks currently pay a 3 per cent surcharge on top of the standard 25 per cent corporation tax rate, following a cut introduced in 2023.
Restoring the levy to 8 per cent would raise £9billion over four years, according to the Trades Union Congress, which is pushing for higher bank taxes.
Lenders have gained from higher-for-longer interest rates, which have boosted their net interest income, the difference between what they pay savers and charge borrowers.
Economy is 'outstandingly resilient'
Elhedery, who was born in Lebanon, described the UK economy as "outstandingly resilient," despite "all the challenges we've seen lately," notably the Middle East conflict, which has sent energy prices sharply higher.
"The UK remains a very attractive international investment hub and we continue to see foreign direct investment in the UK creating jobs, in all parts," he added.
Elhedery avoided suggestions that HSBC could review its commitment to its London headquarters if banks faced higher taxes, instead pointing to the bank's lending across the country.
"More than 60 per cent of our loan portfolio is to businesses outside of London and the South East," he said.
HSBC has substantial operations in Edinburgh, Swansea, Leeds, Sheffield and Chester, while its retail bank headquarters is in Birmingham. The bulk of the bank's activities, however, remain in Asia, particularly Hong Kong and China, which account for more than two-thirds of its profits.
Buyback resumes and bonus pool considered
HSBC also announced it would resume its $1billion share buyback scheme after pausing it late last year following its takeover of Hong Kong's Hang Seng Bank.
The bank is also considering boosting its bonus pool for bankers after a cap on their bonuses was lifted.
Elhedery said the bank had exited 15 non-strategic businesses since 2025, most recently selling its Singapore insurance arm to Germany's Allianz.
Shares slip despite profit surge
HSBC shares fell yesterday by 0.8 per cent, or 12.8p, to 1584.6p, having risen more than 70 per cent over the past 12 months.
Analysts expect HSBC and the four other big UK-based banks, Lloyds, NatWest, Barclays and Standard Chartered, to rack up combined profits this year of more than £60billion.
