UK banks prepare for profit reports amid potential tax hike

Major British high street banks, including Lloyds Banking Group, HSBC, NatWest Group, and Santander, are scheduled to release third-quarter financial results next week. These announcements coincide with Chancellor John Healey’s autumn Budget statement on October 28.

There is widespread speculation that the government may increase the surcharge on bank profits from 3% to 8%, reversing a previous tax cut. Barclays, which reported a 12% increase in pre-tax profits to £2.3 billion, stated that such a tax hike would be “bearable” due to its significant international revenue. Alongside its earnings, Barclays announced plans to cut approximately 5,000 staff members, representing 5% of its workforce, as part of cost-saving measures and increased investment in artificial intelligence.

Lloyds Banking Group is projected by analysts to report a near-doubling of its third-quarter pre-tax profit to £2.3 billion, compared to £1.2 billion the previous year. Last year's figures were notably affected by a £1.95 billion provision related to a Financial Conduct Authority compensation scheme for mis-sold car loans, a matter currently facing legal challenges.