HSBC boss Noel Quinn warns Hunt ‘Don’t tax the banks’… as his firm reaps billions from rising interest rates
HSBC shrugged off calls for a windfall tax as it reported strong profits.
The banking giant made a profit of £2.7bn in the third quarter of the year – around £610m more than analysts expected – as higher interest rates meant the bank could charge its customers more.
HSBC has increased the amount it expects to make from so-called net interest income – the difference between the interest rates it charges borrowers and pays depositors – to £28bn for the full year.
HSBC chief executive Noel Quinn has rejected suggestions that banks should temporarily pay more tax to help Britain plug the hole in its finances
But boss Noel Quinn rejected suggestions that banks should temporarily pay more tax to help Britain plug the hole in its finances caused by the pandemic and cost-of-living crisis.
“I hope there will be no windfall tax, but that is a matter for the chancellor to decide,” he said.
Jeremy Hunt, who replaced Kwasi Kwarteng as chancellor earlier this month, proposed additional bank levies in an attempt to get more money back into the public purse through tax and spending cuts.
One option would be to keep the bank surcharge levied on lenders since the financial crisis at 8 percent, even if corporation tax rises to 25 percent next year – bringing the total to 33 percent.
Previously, bank surcharges were supposed to fall when corporation tax rose, so lenders paid the current effective tax rate of 27 percent.
Another option would be to tax the profits lenders make on the money they keep at the Bank of England.
Either option would be unpopular in the city, where bosses are calling on the chancellor to ease the tax burden and boost growth.
Overall, HSBC’s profits were down 43% year-on-year. But this was mainly due to £2.1bn of costs related to the sale of the French business.
HSBC, which makes most of its money in Asia, has admitted that some of the money is linked to the property slump in China.
The bank has just under £17 billion of Chinese commercial real estate, which is falling in value as the country pursues a zero-spread policy for COVID-19.
But around £262m is linked to the UK business, where HSBC is bracing for a “mild recession”.
HSBC also faced questions about its leadership after the surprise departure of finance chief Ewan Stephenson at the end of the year.
Stephenson, 56, dodged questions about whether he really wanted to leave when speaking to reporters on Tuesday.
He will be replaced by 48-year-old Georges Elkhedery, 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 separate its profitable Asian unit from its western operations, which Ping An claims reduces its value.
But Quinn said he saw the issue as “closed” after telling Ping An that HSBC was better off as a single business connecting East and West.
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