Major lender HSBC's profits up 32% as higher bank tax expected in budget

Another of the UK's biggest banks has posted billions in profits in part thanks to higher interest rates.

HSBC's profit before tax reached $9.6bn (£7.14bn) in the three months to September this year, up 32% from the same period in 2025.

It's the latest UK bank to see profits rise by billions.

Last week, Barclays reported £2.3bn in third-quarter profits, up 12% from the same period last year.

It comes the day before Chancellor John Healey is widely reported to be announcing a budget day bank tax hike.

Lenders have benefitted in general from higher interest rates since 2022.

And since the war in Iran, typical mortgage rates have gone up and fossil fuel costs soared, bringing up the pace of inflation.

While the Bank of England has held the base borrowing rate so far, the expectation of increases has brought up mortgage rates.

Click on the Sky News Economic Pressure Tracker below for live numbers and charts on the impact of the war in Iran.

A November hike to the base rate is now priced in by traders, according to London Stock Exchange Group (LSEG) data.

A combination of higher interest rates while UK economic growth remains among the highest in the G7 has boosted banks.

Why are HSBC profits up?

This was borne out by HSBC, Europe's largest lender, which is UK-based but largely Asia-focused.

The gap between what the bank paid savers and charged borrowers, known as the net interest margin, rose slightly.

Profits were boosted by higher revenue, mainly from the increased gap between interest it took in from loans and mortgages and paid out on deposits.

Also helping were lower expected credit losses and credit impairments, meaning borrowers are more financially stable than the bank had thought.

In a further sign of HSBC's good financial health, it announced it is to buy back $1bn (£740m) of shares.

What could a bank tax hike look like?

A possible way of implementing a higher bank tax is to reverse the reduction in the banks' surcharge announced by Conservative chancellor Jeremy Hunt back in 2022.

Such a reversal would bring the levy back to 8% from the current 3%.

Banks pay this charge in addition to corporation tax of 25%.

The Trades Union Congress (TUC) has called for the surcharge to be increased to 35%, which it said would be the same level as the windfall tax the Conservatives imposed on energy companies and would deliver £60bn over four years.These extra taxes are opposed by the business group CBI (Confederation of British Industry) and the banking trade association UK Finance.

(c) Sky News 2026: Major lender HSBC's profits up 32% as higher bank tax expected in budget