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Banks will report bumper third quarter earnings over the next two weeks as the Chancellor threatens to raise taxes in the budget.<\/p>\n
The five biggest banks are also returning significant amounts to shareholders, including last month\u2019s distribution of \u00a34.25 billion in dividend payments.<\/p>\n
Speculation over a tax hike, alongside weakening loan demand and funding costs, have weighed on bank shares in recent weeks, though NatWest heads into the third-quarter results with the potential for a 2026 income guidance upgrade, says Interactive Investor.<\/p>\n
Even so its shares dipped from 722.8p in August to currently trading around 640p. Lloyds fell from August\u2019s multi-year high of 117.1p to near 100p over the same period.<\/p>\n
Bank of America said it had been a resilient quarter for the domestic banks and the use of structural hedges to smooth out interest rate volatility has already provided a significant sector-wide income boost.<\/p>\n
BofA said UK loan growth remained resilient, although mortgage approvals have fallen in recent months and the deposit market continues to be competitive.<\/p>\n
The bank has a neutral stance on Barclays, which kicks off the reporting season with third-quarter figures on Thursday. The shares were as high as 522p in August after forecast-beating second-quarter results included an upgrade to its 2026 income target.<\/p>\n
Lloyds announces figures the day after the budget and NatWest two days afterwards and both will give their verdicts on any decision by the Chancellor.<\/p>\n Nigel Green, CEO of financial adviser DeVere, says a Budget tax raid on Britain\u2019s banks would land on every mortgage holder, saver and small business in the country, and hand rival financial centres a prize they\u2019ve spent years chasing.<\/p>\n \u201cRaising bank taxes might look like an easy win on a Treasury spreadsheet, but it\u2019s a tax on lending, and lending is how Britain grows,\u201d he says.<\/p>\n \u201cEvery extra pound taken from the banks is a pound that doesn\u2019t go into a first-time buyer\u2019s mortgage, a growing firm\u2019s overdraft, or the tech that keeps UK finance ahead of the world.<\/p>\n \u201cYou can\u2019t call the banks the crown jewels of the economy one week and reach for their wallets the next.\u201d<\/p>\n He states that the he sector is hardly undertaxed. Tax paid by banks rose 8.5% to \u00a339.1bn in the 2025\/26 tax year. On top of standard corporation tax, lenders pay a 3% surcharge on profits above \u00a3100m, taking their rate to 28%, as well as a separate levy on their balance sheets.<\/p>\n The Chancellor\u2019s options include restoring the surcharge to 8%, where it stood before a 2023 cut that coincided with corporation tax jumping from 19% to 25%. Trade unions estimate the move would raise \u00a39bn over four years. He could also lift the bank levy.<\/p>\n Supporters of a raid point to the roughly \u00a315bn in profit the four biggest lenders made in the first half of this year, much of it driven by the wider gap between lending and savings rates.<\/p>\n Mr Green says: \u201cBank margins swell and shrink with the interest rate cycle. A tax rise set during the fat years stays in place through the lean ones. Locking in a permanent burden on the back of cyclical profits is poor policy, however tempting the numbers look today.<\/p>\n \u201cCapital has never been more mobile. Global banks decide where to book business, hire people and deploy capital by comparing jurisdictions down to the decimal point.<\/p>\n \u201cFinancial centres in the US, the Gulf and Asia are actively courting the talent and investment London has spent decades building. Britain shouldn\u2019t be making their pitch for them.\u201d<\/p>\n Daily Business Bulletin<\/strong>:\u00a0Subscribe here for our free morning bulletin of breaking news<\/em><\/strong><\/p>\n \t <\/div>\n![\"John](\"https:\/\/dailybusinessgroup.co.uk\/wp-content\/uploads\/2026\/09\/John-Healey-2026-09-28-at-12.33.19.png\")