HSBC accused of ‘making hay’ out of high interest rates after profits boom

Published

1 year ago

August 1, 2023

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HSBC has been accused of benefiting from higher interest rates while not fully passing them on to savers – after its pre-tax profits this year more than doubled to £16.9bn.

The banking giant’s results, for the first six months of 2023, are sharply up on the £6.6bn it reported during the same period a year ago.

Chief executive Noel Quinn said it had been “trying to get the balance right between savings and mortgages” and insisted the bank was considerate of the financial pressures many of its customers were under.

More than 80% of HSBC’s profits were generated outside of its UK business, including in China, Hong Kong, and the Middle East. The bank also benefited from its takeover of Silicon Valley Bank UK earlier this year.

However, Mr Quinn said the improvement in performance had been “aided by the interest rate environment”.

The Bank of England has raised interest rates 13 times in a row, most recently to 5% last month as it battles to bring down inflation. Other countries, including the US and across Europe have also seen rate rises this year.

Critics said HSBC’s profits boom was the latest example of a major bank benefiting from rising borrowing costs, including with mortgages.

Fran Boait, co-executive director of campaign group Positive Money, said: “Make no mistake: the growth in HSBC’s profits is a direct result of the higher interest rates its suffering customers are struggling to pay on their loans.”

She also accused the government of a “staggering lack of leadership” and said it should have acted quicker to make banks pass higher rates on to savers.

Watchdog the Financial Conduct Authority (FCA) said on Monday that most savers were not feeling the full benefit of rate rises and announced new measures which will force banks to justify offering low savings rates.

Harriett Baldwin MP, the chair of the Treasury Committee, said: “This morning, we have further evidence that high street banks are making hay out of high-interest rates while still offering little to loyal savers.

“The FCA promised action yesterday under the Consumer Duty and we will be monitoring progress carefully.

“This isn’t just important to savers, it is important to the whole economy.”

Writing in HSBC’s interim report, Mr Quinn said: “In the UK, we have seen limited signs of stress in the mortgage book, although we are acutely aware of the day-to-day financial challenges that some of our customers face.

“With more mortgage customers due to roll off fixed-term deals in the next six months, and further rate rises expected, tougher times are ahead.

“We will continue to communicate regularly with our customers, listen to their concerns, seek to offer them help should they want it and ensure they are aware of the range of products available to them.”

UK

Gatwick Airport: Police release two people who were detained amid security incident as South Terminal reopens

Published

2 hours ago

November 23, 2024

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Gatwick Airport: Police release two people who were detained amid security incident as South Terminal reopens

Two people detained during a security incident at Gatwick Airport have been allowed to continue their journeys after a suspect package saw a “large part” of the South Terminal evacuated.

The terminal was closed for hours after the discovery of a “suspected prohibited item” in a passenger’s luggage sparked an emergency response. It reopened at around 3.45pm.

Officers from the EOD (Explosive Ordnance Disposal) team “made the package safe” before handing the airport back to its operator, Sussex Police said.

Their statement continued: “Two people who were detained while enquiries were ongoing have subsequently been allowed to continue their journeys.

“There will remain an increased police presence in the area to assist with passengers accessing the South Terminal for onward travel.”

The force also thanked the public and airport staff for their patience while the incident was ongoing.

Earlier the airport, which is the UK’s second busiest, said the terminal was evacuated after a “security incident”.

“The earlier security alert has now been resolved and cleared by police,” it later said in a statement on Friday afternoon.

“The South Terminal is reopening to staff and will be open to passengers shortly.”

Gatwick said some flights were cancelled while others were delayed.

It said passengers should contact their airlines for any updates on flights.

Footage on social media taken outside the airport showed crowds of travellers heading away from the terminal building.

“Arrived at London Gatwick for routine connection. Got through customs to find out they’re evacuating the entire airport,” one passenger said.

“Even people through security are being taken outside. Trains shut down,” another passenger added, who said “thousands” of people were forced to leave.

Another passenger said people near the gates were being told to stay there and not go back to the departure lounge.

People outside the airport were handed blankets and water, passengers told Sky News.

The airport said its North Terminal was still operating normally.

Gatwick Express said its trains did not call at Gatwick Airport during the police response, but the airport said trains would start calling there again once the terminal was fully reopened.

More than 600 flights were due to take off or land at Gatwick on Friday, amounting to more than 121,000 passenger seats, according to aviation analytics firm Cirium.

UK

Starmer says UK will ‘set out a path’ to raise defence spending to 2.5%

Published

5 hours ago

November 23, 2024

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Starmer says UK will 'set out a path' to raise defence spending to 2.5%

The UK will “set out a path” to lift defence spending to 2.5% of national income in the spring, the prime minister has said, finally offering a timeframe for an announcement on the long-awaited hike after mounting criticism.

Sir Keir Starmer gave the date during a phone call with Mark Rutte, the secretary general of NATO, in the wake of threats by Moscow to target UK and US military facilities following a decision by London and Washington to let Ukraine fire their missiles inside Russia.

There was no clarity though on when the 2.5% level will be achieved. The UK says it currently spends around 2.3% of GDP on defence.

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A spokeswoman for Downing Street said that the two men “began by discussing the situation in Ukraine and reiterated the importance of putting the country in the strongest possible position going into the winter”.

They also talked about the deployment of thousands of North Korean soldiers to fight alongside Russia.

“The prime minister underscored the need for all NATO countries to step up in support of our collective defence and updated on the government’s progress on the strategic defence review,” the spokeswoman said.

“His government would set out the path to 2.5% in the spring.”

The defence review will also be published in the spring.

While a date for an announcement on 2.5% will be welcomed by the Ministry of Defence, analysts have long warned that such an increase is still well below the amount that is needed to rebuild the armed forces after decades of decline to meet growing global threats from Russia, an increasingly assertive China, North Korea and Iran.

They say the UK needs to be aiming to hit at least 3% – probably higher.

With Donald Trump returning to the White House, there will be significantly more pressure on the UK and other European NATO allies to accelerate increases in defence spending.