Britain’s largest banks are set to report robust third-quarter results this week, underscoring the sector’s continued profitability amid an anticipated tax increase. Chancellor John Healey is expected to introduce higher taxes on banks in his first budget, scheduled for Wednesday, targeting lenders benefiting from sustained higher interest rates.

The expected tax rise comes at a politically sensitive moment, as banks have seen significant profit growth, prompting calls for increased levies. However, the banking industry contends that it already faces a substantial tax burden, including two bank-specific taxes, and critics of higher levies argue that these measures could impact future lending and economic growth.

The earnings reports arriving before and after the budget may amplify scrutiny on the sector. Barclays led the earnings season last week with a 12 percent increase in pre-tax profits, reaching £2.3 billion. HSBC, which has a significant presence in Asia, is scheduled to announce its results on Tuesday and is projected to report a 33 percent rise in profits to $9.7 billion.

On Thursday, Lloyds Banking Group is expected to report pre-tax profits of £2.3 billion, nearly double the £1.2 billion recorded in the same period last year. Last year’s figures were adversely affected by Lloyds’ decision to allocate an additional £800 million to compensate customers mis-sold motor finance products. On Friday, NatWest is anticipated to report a modest increase in profits to £2.2 billion.

Standard Chartered, with a strong focus on emerging markets, is forecast to post a 13 percent rise in profits to nearly £2 billion when it reports on Wednesday.

This wave of strong earnings will draw attention to the banking sector’s resilience amid changing economic conditions while intensifying debate over the proposed tax increases. The chancellor’s move to raise taxes comes as part of broader fiscal measures expected to address the government’s revenue needs. How the industry responds to higher levies, given its recent profitability and existing tax commitments, will be closely watched by investors and policymakers alike.