HSBC reported a 32% jump in quarterly profit and is returning $2.7bn to shareholders. The results landed a day before the UK budget, where Chancellor John Healey has reportedly decided to raise more revenue from banks. The TUC says the figures make it obvious that banks can afford more tax.
HSBC handed $2.7bn to shareholders after a 32% surge in profits, which the Guardian says will further assure the Treasury that the UK's top banks can shoulder a tax hike in tomorrow's budget. Healey is putting the finishing touches to that budget.
Profit growth comes from more than interest rates
The London-headquartered bank said profits grew nearly a third to $9.6bn in the July to September quarter, slightly below consensus estimates. Higher interest rates, lower loan losses and smaller legal provisions all helped.
The payout includes a $1bn share buyback and an interim dividend of $0.1 per share, which the bank said would distribute another $1.71bn to investors.
Net interest income, however, explains only a small part of the gain. It rose by 6%, or $500m, to $9.3bn. Operating expenses fell by 12%, or $1.3bn, to $8.8bn, and a $1.4bn drop in legal provisions also helped, reflecting a sum set aside last year for a claim tied to Bernie Madoff's Ponzi scheme.
HSBC profits prompt fresh calls for bank taxes
The TUC wants the bank surcharge raised beyond a reversal of Jeremy Hunt's cut from 8% to 3%. It argues that a 16% surcharge would deliver £24bn over four years, while a 35% surcharge would yield £60bn.
TUC general secretary Paul Nowak said, according to the Guardian: "these results make it blatantly obvious banks can afford to contribute more".
At the New Economics Foundation (NEF), economist Abhijay Sood said NEF analysis suggests restoring the surcharge to 8% would raise just £1.8bn a year, and that the chancellor should also claw back a stealth subsidy that taxpayers provide via the Bank of England because of quantitative easing.
HSBC declines to discuss job cuts
HSBC CFO Pam Kaur said the bank is very encouraged by the government's growth agenda. She declined to comment on press speculation about job losses in the UK wealth management business, which the Financial Times reported earlier this month.
Source: The Guardian
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