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Highlights:
- With chancellor Jeremy Hunt working to plug the hole in public finances, banks may have to face a windfall tax, according to reports.
- One report has also claimed that Hunt is due to announce major taxes during his 31 October fiscal statement.
After new chancellor Jeremy Hunt announced a major U-turn in the government's tax cut measures, British lenders are bracing for a new challenge. According to reports, the banks may be facing a windfall tax by stealth as Hunt attempts to find ways to plug the £40 billion hole in the public finances.
One of the announcements from Hunt on Monday was the reversal on corporation tax. The tax is now set to rise to 25% from 19% in April 2023. This rise was cancelled by the previous chancellor Kwasi Kwarteng in September but has been reinstated again now.
Image source: © Cornelius20 | Megapixl.com
Last year, the then chancellor Rishi Sunak had pledged to support banks by slashing a sector-specific tax called the banking surcharge. The surcharge was supposed to be cut from 8% to 3% to compensate for the planned rise in corporation tax. However, there has been no commitment from Hunt to do so. City lobbyists are reportedly worried that the lenders may not be compensated for the latest U-turn on corporation tax.
Besides, a new report from the Financial Express has claimed that Hunt's fiscal statement scheduled for 31 October is due to include major tax rises. The earnings of lenders, as well as the oil and gas companies, are also expected to be targeted, the report cited the chancellor's allies as saying.
In the wake of this information, Kalkine Media® explores a few banking stocks.
Lloyds Banking Group Plc (LON: LLOY)
Lloyds Group owns several brands like Lloyds, Halifax, and Bank of Scotland. It is one of the country's largest banking and financial services providers. The group enjoys a market cap of £28,699.12 million and has an EPS of 0.08. The FTSE 100 constituent's stock price has fallen over 16% in the past 52 weeks and by more than 14% on a year-to-date or YTD basis. As of 1:58 pm GMT+1 on Wednesday, LLOY shares were trading 3.80% lower at GBX 40.99.
HSBC Holdings Plc (LON: HSBA)
HSBC is among the world's largest banking and financial services providers. Its market cap presently stands at £93,002.23 million, and the EPS is at 0.62. The stock's 52-week return is 9.69%, while the YTD return is slightly lower at 5.82%. Shares of HSBA were trading at GBX 474.75, 1.93% higher at 2:02 pm GMT+1 on Wednesday.
Standard Chartered Plc (LON: STAN)
Standard Chartered is a leading international banking group, and it belongs to the FTSE 100 index. Holding a market cap of £16,164.28 million, the lender's share value has increased by nearly 14% in the past 52 weeks. On a year-to-date basis, the stock has given a return of 25.42%. STAN shares were trading at GBX 562.20, 0.68%, higher as of 2:05 pm GMT+1 on Wednesday.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
