Lloyds is making loads of profit from the war on Iran

It’s not just fossil fuel giant BP, which doubled its profits in the first quarter of 2026. The war on Iran has meant interest rate rises. These have increased Lloyds Bank profits by more than 30% over the same period.

War on Iran is inflationary – and Lloyds is making a killing

The US-Israel war on Iran has led to higher inflation. When that happens, the Bank of England raises interest rates, meaning private banks make more money from their loans.

The thing is, loans should be interest-free in order to stimulate the economy and facilitate small and medium-sized businesses. Private banks have long been absolutely failing such enterprises. As 50 economists and experts warned in a letter to Reeves in 2024:

Lending to the real economy has consistently made up around just 10% of bank lending in recent decades. The vast majority – around 80% – of bank lending goes towards inflating the price of pre-existing property and other assets.

Unprecedented economic disparity means the super-rich are simply trading assets between each other, inflating the price each time. An example of this is the housing bubble, where necessary shelter is treated as an asset that keeps rising in price.

Where’s Labour?

Nonetheless, Labour has refused to even reinstate a cap on bankers’ bonuses, aligning with Liz Truss who scrapped the cap during her brief stint as prime minister. The cap itself was already minimal – at 100% of a bankers’ entire annual salary.

openDemocracy had already revealed that bankers and city-linked firms handed Labour £2m in donations in the two years up until they refused to introduce a bankers’ bonus cap.

It gets worse. The public purse subsidises commercial banks through the Bank of England paying interest on reserves it holds for them. From 2023-2028, public funds will have forked out £180bn to private banks in order to pay the interest on the reserves they hold with the central bank. As a public entity the Bank of England shouldn’t be paying such interest.

Fran Boait, former Co-Executive Director at Positive Money, has said:

The good times just keep on rolling for banks. Not only are they still profiting off the public thanks to higher borrowing costs, but their share prices are soaring off the back of those profits. But the size of bank profits will wane as rates start to come down, and so the longer the government waits to place a windfall tax on banks, the less money it will be able to claw back for the public.

Featured image via the Canary