Leading UK banks made more in pre-tax profits than their counterparts in any other country in Western Europe, analysis shows.
Figures show that UK banks generated 18.93 per cent of total pre-tax income among top banks in western Europe, while in France, Spain, Italy and Germany lenders generated 16.7 per cent, 12.96 per cent, 8.6 per cent and 6.24 per cent respectively.
The data includes profits from the UK’s “big six” banks – Barclays, HSBC, Lloyds, Nationwide, NatWest and Santander – as well as 20 other British organisations inside The Banker’s Top 1000 banks globally.
Banks in the UK recorded $52.7bn (£41.1bn) in aggregate pre-tax profits (PTP) in 2022, compared to $46.5bn for France.
The Top 1000 list was compiled based on “Tier 1 capital”, which is a broad measure of their financial strength.
Those in the list include high-street names such as HSBC, which ranks highest among British banks, and others such as the Close Brothers Group.
All the big six UK banks experienced declines in Tier 1 capital in 2022, and five have dropped down the main Top 1000 ranking as a result. The Banker said this is because of a strong US dollar and most UK banks doing their reporting in pounds sterling.
Joy Macknight, the title’s editor, said: “Despite general declines, the UK banks have generated more profit than their European rivals.
“With the exception of HSBC and Standard Chartered, which report in US dollars, the downward trend can be mainly attributed to the strong US dollar, the currency in which The Banker’s Top 1,000 World Banks ranking is denominated.”
The profits were calculated before tax to make them comparable across different countries.
Among UK banks, the highest figure came from HSBC, which made $17.5bn, Barclays, which made $8.4bn and Lloyds Banking Group, which made $8.3bn.
Each of these banks actually recorded a decline in pre-tax profits compared to the previous year, with Nationwide seeing the largest increase amongst the big names – seeing a rise of 86 per cent to $0.2bn.
The analysis does not look at how banks made their profits, and includes non-retail routes, but it comes as they face scrutiny over not passing on higher savings rates to consumers, while raising their rates for savings customers.
The Treasury Committee of MPs wrote to financial bosses on Monday asking if they felt they were treating savers fairly with current savings rates.
Analysis by i last month found that the biggest lenders collectively raked in £4.8bn in additional profits during 2022, as a result of rising interest rates.
Since December 2021, the Bank of England has raised its base rate from 0.1 per cent to 5 per cent in an attempt to curb soaring inflation and interest rates on mortgages have increased to the highest rates seen in more than 15 years.
But savings rates have not increased at the same rate. The average easy-access savings account paid a rate of 2.32 per cent in June, whereas the average for standard variable rate mortgages (SVR) was 7.52 per cent, according to analytics company Moneyfacts.
Several banks told i that they increased rates following the recent base rate rise.
HSBC, the top UK bank in the Top 1,000 list, said it had increased savings rates “more than a dozen times” since the beginning of 2022, including some increases last Friday.
Nationwide, the big six member with biggest profit increase, said it was still considering its savings rates in response to the latest Bank Rate change and would announce any changes in due course.
