Banks’ profits soared in 2023 to eye-watering levels, as Lloyds and HSBC announce a bonanza of bungs for their executives and shareholders. Of course, all this is partly thanks to Conservative Party government policy – while the rest of us grappled with the so-called cost of living crisis (or ‘class war’, if you prefer).

Lloyds: surging profits

First, on Thursday 22 February Lloyds Bank announced a surge in its profits. Its profit after tax jumped 46% to £4.9bn in 2023 compared with 2022. Chief executive Charlie Nunn was laughing all the way to the bank – saying:

The group delivered a robust financial performance in 2023, meeting our guidance. Income growth has been supported by a higher banking net interest margin and good momentum in underlying other income. We continued to manage costs tightly despite ongoing inflationary pressures.

That is, Lloyds has made a huge amount of money off the back of the government and Bank of England’s mismanagement of the economy – and the resulting cost of living crisis for the rest of us.

Banks in the UK and elsewhere are gaining from higher interest rates as central hiked borrowing costs substantially from late 2021 through to the second half of last year in a bid to cool soaring inflation. Retail lenders have in turn raised their own rates, benefitting savers but also hugely increasing banks’ returns on loans such as mortgages.

Lloyds is not the only bank to reap the rewards of Tory policy, though.

HSBC: encapsulating the banks’ profits scandal

HSBC said on Wednesday 21 February it achieved “record profit” in 2023. Its pre-tax profits soared by nearly 80% to $30.3 billion, up from $17.1 billion in 2022. Profit after tax increased by $8.3 billion, to $24.6 billion. Its chief executive Noel Quinn was also laughing, saying

Our record profit performance in 2023 enabled us to reward our shareholders with our highest full-year dividend since 2008. This reflected four years of hard work and the strength of our balance sheet in a higher interest rate environment

“Hard work” would be hilarious if it wasn’t so sick – because the only people benefitting from HSBC windfall off the backs of the rest of us are shareholders – to the tune of $2 billion, on top of $7 billion in share buybacks in 2023.

Of course, these banks’ profits are a direct result of Tory government policy.

Banks’ profits: ‘eye-watering’

The Trades Union Congress (TUC) noted that:

Cutting the banking surcharge from 8% to 3% last April has allowed banks to make huge profits from rising interest rates and cushioned them from the increase in corporation tax rates that came in this year.

While other businesses have seen their corporation tax rates rise by up to 6%, banks have seen an extremely modest rise of 1% thanks to the cut in the surcharge.

The TUC estimates (based on the latest OBR forecasts) that Treasury will lose £10bn over the next five years as result of the banking surcharge being cut.

The decision to cut the surcharge was taken by Rishi Sunak when he was Chancellor.

Its general secretary Paul Nowak said:

These eye-watering profits will be met with disbelief – especially when millions are struggling to make ends meet.

The government has allowed banks to cash in on sky-high interest rates and to benefit from people’s mortgage misery.

Rishi Sunak’s decision to slash the banking surcharge has been a huge gift to the City.

Instead of fixing our crumbling schools and hospitals the PM has handed banks a monster tax break.

This is an act of folly.

Of course, this is exactly what the Tories knew would happen – and wanted to happen. Aside from them being the party of the rich, it’s also a general election year. Courting banks is the preserve of the Conservative Party – and it’s always at the expense of the rest of us.

Additional reporting via Agence France-Presse

Featured image via pexels

By Steve Topple

This post was originally published on Canary.