HSBC CFO Denies London Exit Plans Amid Profit Surge and Looming Tax Hike

HSBC generated $9.6bn in third-quarter profits, a 32% increase over the same period last year. The figure, equivalent to £7.2bn, underscores the bank's financial health even as political pressure mounts over potential tax increases.

Pam Kaur, the bank's chief financial officer, addressed speculation about a potential headquarters move on a media call Tuesday. She stated there was "no pressure" to leave London, specifically noting that shareholders in Hong Kong did not push for a relocation. Kaur affirmed that the bank is domiciled in the UK and remains comfortable with its current base.

The earnings report included plans to return $2.7bn to shareholders through dividends and share buybacks. Higher interest rates, lower loan losses, and reduced legal provisions contributed to the profit jump. Net interest income rose to $9.3bn from $8.8bn a year earlier, driven by hedging strategies and deposit growth in Hong Kong, while UK deposits remained flat.

Despite the strong financial performance, HSBC's UK-listed shares dropped nearly 6% on Tuesday morning. The decline threatens the bank's standing as the largest company on the FTSE 100. Kaur suggested investors may have anticipated stronger forecasts for net interest income, a key metric for lenders.

Wednesday's budget is expected to introduce new bank taxes. Chancellor John Healey plans to reverse cuts to the bank surcharge enacted by the previous Conservative government. Lobby groups have warned that higher tax bills could prompt banks to shift jobs and operations to rival financial centers.

Jamie Dimon, chief executive of JP Morgan, recently indicated he might cancel plans for a new £3bn London headquarters if the UK becomes "hostile" to banks. HSBC faces similar scrutiny, having considered a move to Hong Kong in 2015 due to regulatory burdens and a new bank levy. In 2022, the bank faced calls to split its Asian business after canceling dividends during the first Covid lockdown.

Paul Nowak, general secretary of the Trades Union Congress, stated the results made it "blatantly obvious banks can afford to contribute more." Abhijay Sood, an economist at the New Economics Foundation, noted the profits would be "difficult news to swallow for households struggling with rising mortgage costs," arguing that upcoming tax changes may not go far enough.

Kaur expressed support for the government's growth agenda, saying the bank would "just have to see how businesses and customers react" to policy shifts. The bank aims to support its customers regardless of the final tax structure announced in the budget.