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Approved by the Board of directors on 26 February 2026 and signed on its behalf by
David Thorburn
Chair of the Board
Stephen Hughes
Chief Executive
Lee Raybould
Chief Financial Officer
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"value": "2941000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:InterestPaidClassifiedAsOperatingActivities", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00", "unit": "iso4217:GBP" } }, "f-302": { "value": "2555000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:InterestPaidClassifiedAsOperatingActivities", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "f-303": { "value": "
Basis of preparation
These accounts have been prepared in accordance with UK adopted International Accounting Standards in accordance with
the requirements of the Building Societies Act 1986, the Disclosure and Transparency Rules of the Financial Conduct
Authority (FCA) and with those parts of the Building Societies (Accounts and Related Provisions) Regulations 1998 that are
applicable to the Group.
The accounts comprise the standalone financial statements of the Society and the consolidated financial statements of the
Group. They have been prepared on a historical cost basis, as modified by the revaluation of financial instruments which
are measured at fair value. As stated in the Directors\u2019 Report, the directors consider that it is appropriate to continue to
adopt the going concern basis in preparing the accounts.
A summary of the Group's accounting policies is set out within this note. These accounting policies have been applied
consistently throughout the current and prior year (where applicable). Further information on judgements in the
application of accounting policies and significant accounting estimates is set out within note 2.
These accounts are presented in pounds sterling and, except where otherwise stated, all figures in the financial statements
have been rounded to the nearest million pounds (\u00a31 million).
Basis of consolidation
The assets, liabilities and results of the Society and its consolidated subsidiaries and structured entities are included in the
financial statements of the Group.
The Group consolidates an entity from the date on which it: (a) has power over the entity; (b) is exposed to, or has the
right to, variable returns from its involvement with the entity; and (c) has the ability to affect those returns through the
exercise of its powers. Upon consolidation, intra-group transactions, balances and unrealised gains and losses are
eliminated.
The Group reassesses whether it controls an entity if facts and circumstances indicate that there are changes in one or
more of these three elements. The Group deconsolidates entities from the date that control ceases.
A structured entity is an entity in which voting or similar rights are not the dominant factor in deciding control.
Structured entities are consolidated when the substance of the relationship indicates control. In making this judgement,
the Group considers factors such as the purpose and design of the entity, size and exposure to variability of returns and the
nature of the relationship, including power over the structured entity.
The Society's investment in shares in its subsidiaries is recognised on the Balance Sheet at cost less any provision for
impairment.
Unconsolidated structured entities
Within the Group, the Bank is the sponsor of one unconsolidated structured entity, Warwick Finance Residential Mortgages
Number Three plc. This structured entity is therefore not included within the consolidated results of the Group as its
ongoing interest represents a less than de minimis variability of return. The Group will reassess its requirement to
consolidate this entity on an annual basis.
Changes in accounting standards
Adoption of new and revised standards
There are no amendments to standards effective from 1 January 2025 that apply to and have a material impact on the
Group.
Future accounting developments
Amendments to the Classification and Measurement of Financial Instruments - Amendments to IFRS 9 and IFRS 7 is
effective for accounting periods beginning on or after 1 January 2026. The amendments provide clarification to the
derecognition criteria for financial liabilities when using an electronic payment system and guidance on the classification of
financial assets that contain contractual terms that change the timing or amount of contractual cash flows. The impact of
these amendments is currently being assessed but is not expected to have a material impact to the Group.
IFRS 18 Presentation and Disclosure in Financial Statements is effective for accounting periods beginning on or after 1
January 2027 and was endorsed for use in the UK in December 2025. This standard replaces IAS 1 Presentation of Financial
Statements. Whilst much of IAS 1 is retained in IFRS 18, the standard sets out updated principles for the presentation and
disclosures of information in the financial statements, in particular the income statement. The requirements and impacts
are currently being assessed and whilst it is expected that the presentation of information will be potentially amended, it is
not expected to affect underlying recognition or measurement criteria.
Derecognition of financial assets and liabilities
The Group derecognises financial assets where the right to receive cash flows has expired, or where the assets are
transferred with substantially all the risks and rewards of ownership. Where the transfer does not result in the transfer of
cash flows, but the Group assumes an obligation to pay the cash flows to the transferee, the financial assets are also
derecognised.
The Group derecognises financial liabilities when the obligation is discharged, cancelled or has expired.
Financial assets and liabilities are derecognised and a new instrument recognised where a renegotiated or new agreement is
established on substantially different terms; an example of this would be a product port to a new property on a mortgage
loan.
Securitisation and covered bond transactions
The Group has securitised certain mortgage loans by transferring the loans to structured entities controlled by the Group.
These securitisations enable the issuance of debt to investors, who take security in the underlying assets as collateral.
Where it is determined that the Group has control over the entity, the structured entities are fully consolidated into the
Group accounts.
Transfers of mortgage loans to the structured entities are not treated as sales and the loans are not derecognised but
remain on the transferor's own Balance Sheet as it retains substantially all the risks and rewards of the mortgage loans. In
the accounts of the transferor, the proceeds received from the transfer of mortgage loans to structured entities are
accounted for as a deemed loan from the structured entity and are disclosed within Other liabilities on the Balance Sheet.
For covered bonds, the transferring entity, and not the structured entity, issues the covered bonds and then lends the
proceeds to the structured entity on back to back terms. The structured entity then uses these proceeds as consideration
for the loans transferred from the Society or the Bank. In the accounts of the Society, neither the loan to the structured
entity nor the consideration for the transfer of mortgage loans is recognised separately as an additional asset and liability.
The Group has also issued debt to be used as collateral for central government schemes or for use in sale and repurchase
agreements (repos) and similar transactions. Some or all of the debt issuances may be retained by the Group.
Investments in such self-issued debt and the associated deemed loan, together with the related income, expenditure and
cash flows, are not recognised in the Society's financial statements.
To manage interest rate risk, the Group enters into derivative transactions with its structured entities, receiving a rate of
interest based on the securitised mortgages and paying a rate inherent in the debt issuances. In accordance with IFRS 9,
these internal derivatives are treated as part of the deemed loan and not separately measured at fair value because the
relevant mortgage loans are not derecognised. All other derivatives relating to securitisations and covered bonds are
explained in the derivatives and hedge accounting policy below.
Sale and repurchase agreements (repos)
Securities sold subject to a commitment to repurchase them are retained on the Balance Sheet when substantially all the
risks and rewards of ownership remain within the Group. The counterparty liability is included separately on the Balance
Sheet, as appropriate. The difference between the sale and repurchase price is accrued over the life of the agreements
using the Effective Interest Rate (EIR) method.
Interest receivable and interest payable
For instruments measured at amortised cost, the EIR method is used to measure the carrying value of a financial asset or a
liability and to allocate associated interest income or expense and transaction costs over the relevant period. The EIR is the
rate that discounts the estimated future cash payments or receipts over the expected life of the financial instrument or,
when appropriate, a shorter period, to the net carrying amount of the financial asset. Interest income on fair value through
other comprehensive income (FVOCI) debt is also included on an EIR basis.
In calculating the EIR, the Group estimates cash flows considering all contractual terms of the financial instrument. For
assets that are in default and assessed as stage 3 under IFRS 9, interest is calculated by applying the EIR to the expected
recoverable amount. The EIR calculation includes all directly attributable fees received and paid and costs borne and all
other premiums above or below market rates.
Fees and commissions
Fees and commissions receivable and payable that are not spread across expected asset lives under the EIR method are
taken to income on an accruals basis as the related obligations are satisfied.
Leases
The majority of the Group\u2019s leases relate to property including branches, head office buildings and data centres. The Group
also has other leases that relate to cars and office equipment.
Where the Group enters into a lease or contract that meets the criteria for lease classification under IFRS 16, the Group
recognises an asset representing its right to use the leased item and a corresponding liability on the Balance Sheet.
The lease liability is measured at the present value of the lease payments including any incentives, additional lease
components and lease extension or termination options where they are reasonably certain to be exercised.
These payments are discounted using the Group's incremental borrowing rate since no interest rates are specified in the
Group's leases.
The right-of-use asset is measured at cost including the lease liability and any initial direct costs.
The right-of-use asset is depreciated over the shorter of its useful life or the lease term on a straight line basis through the
Income Statement, and the interest charge on the lease liability is recognised within Interest payable. In the Cash Flow
Statement, the interest paid on lease liabilities is included in Interest paid on lease liabilities, and the principal element of
the lease payments is included in Principal elements of lease payments.
Expenses relating to leases that are for less than 12 months, of low value or relate to intangibles such as software are
recognised in the Income Statement as charged.
On an ongoing basis the Group reviews the right-of-use asset and lease liability for any modifications that would require
remeasurement and makes an assessment for impairment as required.
Taxation including deferred tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities, based on tax rates and laws that are enacted or substantively enacted by the Balance Sheet date.
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. Deferred tax assets are recognised only to the extent that it is probable that
future taxable profits will be available against which they can be utilised and is supported by a Board approved financial
plan.
Deferred tax assets and liabilities are measured on a non-discounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, and based on tax rates and laws that have been enacted or substantively
enacted at the reporting date. Deferred tax assets and liabilities are offset when there is both a legally enforceable right
and an intention to settle on a net basis.
Current and deferred tax is charged or credited directly to the Statement of Comprehensive Income if it relates to items
that are credited or charged to the Statement of Comprehensive Income. Otherwise corporation tax is recognised in the
Income Statement.
Business combinations
The acquisition of the Bank represents a business combination under IFRS 3 and is accounted for using the acquisition
method. Identifiable assets and liabilities as well as consideration are measured at their fair value at the date of
acquisition. Goodwill is measured as the difference between the fair value determined for the acquired assets and
liabilities and the fair value of consideration paid. Where the goodwill arising is negative, it is recognised in the income
statement as a gain on date of acquisition. Other intangible assets arising as a result of the business combination and day
one fair value adjustments arising are amortised over the estimated useful life.
Segmental reporting
The Board is responsible for allocating resources and assessing the performance of the business and is therefore identified
as the chief operating decision maker.
With effect from 1 January 2025, subsequent to the acquisition of the Bank, the Group has determined that it has two
reportable segments as the Board reviews performance and makes decisions based on this information. The Group operates
solely within the United Kingdom and therefore there is no segmental analysis on a geographical basis.
Financial assets
Financial assets comprise cash and balances with the Bank of England, loans and advances to credit institutions, debt
securities, loans and advances to customers, derivative financial instruments and investment in equity shares.
At initial recognition, the Group measures financial assets at their fair value. Subsequently, financial assets are classified in
one of the following measurement categories:
\u2022 Amortised cost.
\u2022 Fair value through other comprehensive income (FVOCI).
\u2022 Fair value through profit and loss (FVTPL).
Financial assets are classified based on an assessment of the Group\u2019s business model for managing the assets and their
contractual cash flow characteristics.
Amortised cost
Financial assets held to collect contractual cash flows and where contractual terms comprise solely payment of principal
and interest are classified as amortised cost. This category of financial asset includes cash and balances with the Bank of
England, loans and advances to credit institutions, loans and advances to customers, and a small portfolio of debt
securities.
Financial assets within this category are recognised on either the receipt of cash or deposit of funds into one of the Group\u2019s
bank accounts or when the funds are advanced to borrowers. After initial recognition, the assets are measured at amortised
cost using the EIR method, less provision for expected credit losses.
Assets acquired through a business combination or portfolio acquisition are recognised at fair value at the acquisition date.
The fair value at acquisition becomes the opening amortised cost for acquired assets. Fair value adjustments are made to
reflect both credit risk and interest yield associated with the acquired loan assets. Any discount between the amount due
and the fair value is subsequently recognised in interest receivable and similar income using the EIR method.
Fair value through other comprehensive income (FVOCI)
Financial assets held with the intent of collecting contractual cash flows or selling, where contractual terms comprise solely
payment of principal and interest, are classified and measured at FVOCI. This category of financial asset includes most of
the Group\u2019s debt securities which are held to manage liquidity.
Assets are measured at fair value based on quoted market prices or prices obtained from market intermediaries where
available. In cases where quoted market prices are not available, discounted cash flow valuations are used.
Interest on FVOCI assets is recognised in Interest receivable and similar income in the Income Statement, using the EIR
method.
Unrealised gains and losses arising from changes in fair value are recognised directly in Other comprehensive income,
except for impairment losses and foreign exchange gains and losses, which are recognised in the Income Statement. Gains
and losses arising on the sale of FVOCI assets, including any cumulative gains or losses previously recognised in Other
comprehensive income, are recognised in the Income Statement.
Fair value through profit and loss (FVTPL)
FVTPL is the default category for financial assets which do not meet the criteria for amortised cost or FVOCI assets. Assets
that are classified as FVTPL include derivative financial instruments, investments in equity shares and for the Society,
investments in group undertakings that are debt instruments with write-down features.
These assets are carried at fair value and are initially recognised at the trade date.
Interest income and changes in the fair value of derivatives other than the effective portion of those in cash flow hedge
accounting relationships are recognised in the Income Statement. The impact of hedging on the measurement of financial
assets and liabilities is detailed in the derivatives and hedge accounting policy.
Dividends and changes in the fair value of equity instruments are recognised in the Income Statement.
Impairment of financial assets
The Group assesses, on a forward-looking basis, the expected credit loss (ECL) associated with its financial assets carried at
amortised cost and FVOCI and its mortgage pipeline commitments. Financial assets held at FVTPL are not subject to
impairment under IFRS 9.
IFRS 9 requires the Group to categorise its financial assets into one of four stages at the reporting date.
Assets that are performing are shown in stage 1; assets where there has been a significant increase in credit risk since
initial recognition are in stage 2; assets that were not credit impaired or in default at origination but have since become so
are in stage 3; and assets that were Purchased or Originated Credit Impaired are classed as POCI. The Group is required to
recognise a 12 month ECL allowance on all stage 1 assets and a lifetime ECL allowance on all stage 2, 3 and POCI assets.
Whilst stage 2 or 3 assets may cure and revert to stage 1, POCI assets always attract a lifetime ECL until derecognition.
Purchased assets that are not POCI are initially allocated to stage 1 on recognition by the Group.
The Group\u2019s treasury assets are investment grade and therefore assumed to be in stage 1, as permitted by IFRS 9.
Accordingly, due to the extremely low probability of default (PD) of these instruments, the resulting ECL is immaterial to
the financial statements.
Loans and advances to customers
Significant accounting judgements \u2013 identifying significant increase in credit risk
The Group considers a loan to have experienced a significant increase in credit risk when one or more of the following
qualitative, quantitative or backstop criteria have been met.
Qualitative criteria
The qualitative measures used to allocate a loan to stage 2 are aligned to the Group\u2019s underwriting and forbearance
practices. In some cases, the qualitative measures will be evident before the borrower\u2019s credit score is impacted and they
are therefore lead indicators of a deteriorating credit risk. These qualitative measures can be assessed as part the Group's
underlying ECL model methodology, or applied as judgemental adjustments. Further information on the application of these
judgemental adjustments is disclosed in Note 16.
Other criteria include county court judgements, bankruptcy (with no arrears), temporary transfer to interest only or poor
external credit bureau data that exceeds the Group\u2019s underwriting policy at the reporting date, even if the loan is currently
performing. For business and commercial exposures, the main trigger would be moving to a \u2018watchlist\u2019 status. Qualitative
criteria are monitored and reviewed periodically for appropriateness.
Quantitative criteria
The Group uses internal credit risk gradings that reflect its assessment of the PD of individual borrowers and
counterparties. Given the Group\u2019s very low risk loan book, a deterioration in internal risk grade rating may still result in a
very low PD. Therefore in order for the loan to be assessed as stage 2, the portfolio-specific relative PD deterioration is
typically subject to a minimum PD floor.
Backstop criteria
In addition, a loan is considered to have experienced a significant increase in credit risk if it is more than one month past
due. Loans subject to this backstop measure will typically continue to be classified as stage 2 for a period of 12 months
from the date that the arrears fall below one current monthly repayment.
Default
The Group considers a loan to be in default when the loan is three months or more in arrears i.e. current arrears balances
are equal to three or more current monthly repayments. Alternatively, a loan is considered to be in default if certain
qualitative criteria are met, which can include the following unlikeliness to pay indicators:
\u2022 The customer is bankrupt and the account is in arrears, or the customer has had an individual voluntary arrangement in
the last three years at the bureau or with internal bankruptcy.
\u2022 Litigation proceedings against the borrower have begun and the account is in arrears.
\u2022 The loan is interest only and has gone three months past the scheduled term date, or 12 months past the contractual
trigger event for equity release loans.
\u2022 The loan is interest only and has delayed the repayment of capital or extended the term of their interest only mortgage
for forbearance reasons or under the new temporary FCA guidance.
These definitions where relevant align to the Group's internal definition of arrears for risk management and collection
purposes.
Inputs, assumptions and estimation techniques
A loan is considered to no longer be in default (i.e. to have been cured) when a consecutive period of 12 months has passed
since it met any of the above qualitative and quantitative criteria (cure period).
The measurement of expected credit loss reflects:
\u2022 An unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes.
\u2022 The time value of money.
\u2022 Reasonable and supportable information that is available without undue cost or effort at the reporting date about past
events, current conditions and forecasts of future economic conditions.
Inputs, assumptions and estimation techniques (continued)
Expected credit losses (ECLs), being forward-looking, are discounted back to the reporting date and are calculated by
multiplying the probability of default (PD), exposure at default (EAD) and loss given default (LGD) where:
\u2022 The PD represents the likelihood of a borrower defaulting over either the next 12 months or over the remaining lifetime
of the mortgage (being the contractual lifetime).
\u2022 EAD is the amount the Group expects to be owed at the time of default.
\u2022 LGD represents the Group\u2019s expectation of the extent of loss on a default and takes account of available collateral,
likely sales cost and potential discount needed to secure a sale.
More information on the forward-looking information incorporated in the ECL calculations is included in note 16.
Post model adjustments
The Group applies post model adjustments (PMAs) to reflect ECLs relating to items that cannot be adequately captured by
existing models and as a result, management judgement and estimation are required in order to reflect the underlying risk.
The assumptions used in calculating ECLs are regularly reviewed and model outputs and components of ECL estimates are
assessed by management in line with internal policy. This is used across all aspects of the model including the assessment
of the predicted PD or LGD of an account against the actual outturn.
ECL allowance on acquired portfolios
Following an acquisition, the acquiree, i.e. the Group, is required under IFRS 9 to recognise a new ECL allowance against
the acquired non-credit impaired financial assets. Therefore all of the Bank's non-credit impaired assets were initially
recognised by the Group in stage 1. Loans that are credit impaired on acquisition are classed as purchased or originated
credit-impaired ('POCI'), with any credit risk against these assets covered by the fair value adjustment recognised against
the assets. Such credit impaired loans remain categorised as POCI throughout their life, irrelevant of any significant
improvement in credit quality.
Governance of Expected Credit Losses
Governance over ECLs is carried out by the Group's ECL Working Group (ECLG), which meets on a regular basis, at least
quarterly. ECLG is made up of members from the Finance and Credit Risk functions in addition to members from the second
and third lines of defence. They are responsible for the review of key assumptions and judgements within the ECL
calculations such as the staging criteria or need for post model adjustments and does this by review of key management
information and assessing existing and future risks to the portfolio. Assumptions and judgements are approved by the ECLG
with oversight performed by the Board Audit Committee.
Governance over the IFRS 9 ECL models is carried out by the Model Risk Committee and includes assessments of model
performance, model monitoring and model validation at regular intervals and on an ad hoc basis where significant model
enhancements are carried out. See the Risk Management Report for more information on model risk.
ECLs for loans and advances to customers reduce the carrying amount of these assets in the Balance Sheet and the
movement in ECLs is included in Impairment charge in the Income Statement. For mortgage pipeline exposures and
undrawn facilities, the provision is included in the ECL provision in the Balance Sheet.
Further information on PMA in place at the year end can be found in note 16.
Calculation of expected credit loss under IFRS 9 \u2013 loans with group undertakings
Loans with group undertakings are valued at cost less any provision for impairment. These balances are reviewed annually
for evidence of potential impairment or significant increase in credit risk with any impairment recognised in the Income
Statement. No impairment has been identified.
Write-off policy
The Group writes off financial assets when it has exhausted all practical recovery efforts and has concluded that there is no
reasonable expectation of recovery.
Derivative financial instruments
The Group holds derivative financial instruments only to manage the risks associated with its non-variable rate assets and
liabilities and its foreign currency transactions, and not for speculative or trading purposes.
All external derivative financial instruments are carried at fair value. Derivatives are principally valued by discounting cash
flows using yield curves that are based on observable market data. In measuring fair value, separate adjustments are made
for credit risk to the extent not already included in the valuation.
Hedge accounting
The Group applies the requirements of IAS 39 for hedge accounting. Where the documentation, eligibility and testing
criteria for hedge accounting set out in IAS 39 are met, the Group applies hedge accounting and designates the hedging
derivative as either hedging fair value or cash flow risks. The Group undertakes this on both an individual and a portfolio
hedge accounting basis.
The acquisition of the Bank included a portfolio of non-interest bearing balances (NIBBs), which are financial instruments
that have not been previously held within the Group. The Group has relied on the provisions of UK-adopted IAS 39 that
allows an effective hedge accounting relationship to be designated for the interest rate exposure arising from stable, non-
interest bearing current accounts based on behavioural modelling of their expected duration.
Fair value hedges
Changes in the fair value of derivatives that are designated in fair value hedge relationships are recorded in the Income
Statement under Net gains/losses from derivative financial instruments in the period in which the movement occurs,
together with the change in fair value of the hedged asset or liability that is attributable to the hedged risk (interest rate
risk). This also applies if the hedged item is classified as an FVOCI financial asset.
Cash flow hedges
Gains and losses on derivative financial instruments hedging the variability in cash flows of a designated asset or liability
are recognised directly through the Statement of Comprehensive Income in the cash flow hedge reserve. The relevant
portion of the gain or loss on the hedging instrument is recognised in the Income Statement immediately to the extent that
the hedge is deemed ineffective under IAS 39. Any amounts deferred to the cash flow hedge reserve are subsequently
recycled to the Income Statement when the underlying asset or liability being hedged impacts the Income Statement, for
example, when foreign exchange movements occur.
Intangible assets
Intangible assets are stated at cost less accumulated amortisation and any accumulated impairment. Maintenance costs
associated with the operation of these intangibles are charged to the Income Statement as incurred. Amortisation is
charged to the Income Statement on a straight line basis over the useful life of the asset commencing from the date the
asset is ready for use.
The useful life of computer software is reviewed by management at each financial year end and is currently between three
and eight years for assets which are currently in use.
Software development costs, both internal and external, and purchased software that is not an integral part of a related
hardware purchase are recognised as an intangible asset if it is probable that: (a) the asset is controlled by the Group; (b) it
is separately identifiable; and (c) it will generate future economic benefits. For each significant project undertaken by the
Group, an assessment of capitalisation criteria including future economic benefit is performed by the relevant business area
and reviewed in accordance with agreed governance processes.
Intangible assets held by the Group also includes a core deposit relationship asset recognised as part of business
combinations and is held at cost (equivalent to fair value at acquisition) less accumulated amortisation and impairment.
This is amortised over an estimated useful life of five years on a straight line basis.
Intangible assets, including assets in the course of construction, are reviewed for impairment at each reporting date or
whenever events or changes in circumstances indicate that the carrying amount may exceed the recoverable amount.
Where impairment is identified, the asset is written down immediately to the estimated recoverable amount and the
impairment amount is charged to the Income Statement.
1. Accounting policies continued
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment.
The carrying values of property, plant and equipment are reviewed at each reporting date for impairment or whenever
events or changes in circumstances indicate that the carrying value may not be recoverable. Where this is the case, the
asset is written down immediately to the estimated recoverable amount.
Gains and losses on disposals are determined by comparing the net disposal proceeds with the carrying value of the asset
and are included within the Income Statement.
Depreciation commences when the asset is ready for use and is provided on a straight line basis over the anticipated useful
life of the asset, which is typically as follows:
Freehold and long leasehold buildings
Over a period of 50 years
Leasehold adaptations
Shorter of remaining term of the lease and useful life
Equipment, fixtures and fittings
Three to eight years
Employee benefits
Pensions
The Group operates both defined benefit and defined contribution pension schemes for employees.
Contributions to the defined contribution pension schemes are recognised as an expense in the Income Statement as
incurred, on an accruals basis.
The Group's net obligations under each defined benefit pension scheme are assessed annually by independent qualified
actuaries. The net obligations are calculated as the difference between the fair value of the schemes' assets and the
amount of future entitlements earned by the schemes' members from service in prior periods, discounted back to present
values using a rate based on an index of long-dated AA rated corporate bonds for each separate scheme. This calculation
allows the net obligation of each scheme to be expressed as either a surplus or a deficit, which is recognised as either an
asset or a liability respectively in the Group's accounts at the Balance Sheet date.
Gains or losses arising from the remeasurement of the defined benefit pension schemes are recognised in full, in the year
they occur, in the Statement of Comprehensive Income.
Other long-term employee benefits
The cost of bonuses payable 12 months or more after the end of the financial years in which they are earned is recognised
in the year in which the employees render the related service.
Short-term employee benefits
The cost of short-term employee benefits, including wages and salaries, social security costs, bonuses payable within 12
months and healthcare, is recognised in the year of service.
Financial liabilities
Financial liabilities include shares, customer accounts, bank and other deposits, debt securities in issue, derivative financial
instruments, subordinated liabilities and subscribed capital. The Group classifies its financial liabilities into the following
categories:
Amortised cost
Financial liabilities, other than those classified as fair value through profit and loss, are measured on an amortised cost
basis reflecting their face value adjusted for any unamortised premiums, discounts and transaction costs directly
attributable to the acquisition or issue.
Amortisation is recognised in Interest payable and similar charges at the Effective Interest Rate of the liability.
Fair value through profit and loss
All derivatives are carried at fair value. Changes in the fair value of derivatives other than those in cash flow hedge
accounting relationships are recognised in the Income Statement. The impact of hedging on the measurement of financial
assets and liabilities is detailed in the derivatives and hedge accounting policy above. For changes in the fair value of
derivatives in cash flow hedge accounting relationships, see the accounting policy for cash flow hedges.
In the Society only, specific debt securities in issue and subordinated liabilities have been designated at fair value in order
to avoid an accounting mismatch where the financial instruments have been downstreamed to the Bank on a like-for-like
basis and the corresponding internal assets have been mandatorily classified at fair value. As this mismatch does not persist
at the Group level, these instruments are classified at amortised cost on the Group balance sheet.
1. Accounting policies continued
Provisions and contingent liabilities
A provision is recognised when there is a present obligation as a result of a past event, it is probable that the obligation will
be settled and the amount can be estimated reliably.
Contingent liabilities are potential obligations from past events which will only be confirmed by future events. Contingent
liabilities are not recognised within the Balance Sheet.
Equity instruments
Financial instruments are classified as equity instruments where the contractual arrangements with the holder do not result
in the Group having a present obligation to deliver cash, another financial asset or a variable number of equity instruments.
Where the Group does have a present obligation, the instrument is classified as a financial liability.
The proceeds of the issuance of equity instruments are included in equity net of the costs directly attributable to the
issuance.
Distributions to holders of equity instruments are recognised when they become irrevocable and are deducted from the
general reserve.
Foreign currency translation
The consolidated financial statements are presented in pounds sterling, which is the functional currency of the Group.
Foreign currency transactions are translated into sterling using the exchange rates prevailing at the dates of the
transactions. Monetary items denominated in foreign currencies are re-translated at the rate prevailing at the Balance
Sheet date. Foreign exchange gains and losses resulting from re-translation and settlement are recognised on a net basis in
the Income Statement within Interest payable and similar charges.
Cash and cash equivalents
Cash and cash equivalents in the Statement of Cash Flows comprise balances with less than three months\u2019 maturity from
the date of acquisition, including cash and non-restricted balances with central banks, and loans and advances to credit
institutions. Restricted balances such as cash collateral are excluded from cash and cash equivalents.
IFRS disclosure
For ease of reference, certain audited IFRS disclosures related to credit, market and liquidity and funding risks are included
within the Risk Management Report.
A maturity analysis for all assets and liabilities is presented in the Liquidity and Funding section of the Risk Management
Report.
Audited information is also included within the Directors\u2019 Remuneration Report. These disclosures, where marked as
'audited', are covered by the Independent Auditors' Report.
", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-304": { "value": "
Basis of preparation
These accounts have been prepared in accordance with UK adopted International Accounting Standards in accordance with
the requirements of the Building Societies Act 1986, the Disclosure and Transparency Rules of the Financial Conduct
Authority (FCA) and with those parts of the Building Societies (Accounts and Related Provisions) Regulations 1998 that are
applicable to the Group.
The accounts comprise the standalone financial statements of the Society and the consolidated financial statements of the
Group. They have been prepared on a historical cost basis, as modified by the revaluation of financial instruments which
are measured at fair value. As stated in the Directors\u2019 Report, the directors consider that it is appropriate to continue to
adopt the going concern basis in preparing the accounts.
A summary of the Group's accounting policies is set out within this note. These accounting policies have been applied
consistently throughout the current and prior year (where applicable). Further information on judgements in the
application of accounting policies and significant accounting estimates is set out within note 2.
These accounts are presented in pounds sterling and, except where otherwise stated, all figures in the financial statements
have been rounded to the nearest million pounds (\u00a31 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-305": { "value": "
These accounts have been prepared in accordance with UK adopted International Accounting Standards in accordance with
the requirements of the Building Societies Act 1986, the Disclosure and Transparency Rules of the Financial Conduct
Authority (FCA) and with those parts of the Building Societies (Accounts and Related Provisions) Regulations 1998 that are
applicable to the Group.", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-306": { "value": "
The accounts comprise the standalone financial statements of the Society and the consolidated financial statements of the
Group. They have been prepared on a historical cost basis, as modified by the revaluation of financial instruments which
are measured at fair value. As stated in the Directors\u2019 Report, the directors consider that it is appropriate to continue to
adopt the going concern basis in preparing the accounts.", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-307": { "value": "
These accounts are presented in pounds sterling and, except where otherwise stated, all figures in the financial statements
have been rounded to the nearest million pounds (\u00a31 million).", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-308": { "value": "
Basis of consolidation
The assets, liabilities and results of the Society and its consolidated subsidiaries and structured entities are included in the
financial statements of the Group.
The Group consolidates an entity from the date on which it: (a) has power over the entity; (b) is exposed to, or has the
right to, variable returns from its involvement with the entity; and (c) has the ability to affect those returns through the
exercise of its powers. Upon consolidation, intra-group transactions, balances and unrealised gains and losses are
eliminated.
The Group reassesses whether it controls an entity if facts and circumstances indicate that there are changes in one or
more of these three elements. The Group deconsolidates entities from the date that control ceases.
A structured entity is an entity in which voting or similar rights are not the dominant factor in deciding control.
Structured entities are consolidated when the substance of the relationship indicates control. In making this judgement,
the Group considers factors such as the purpose and design of the entity, size and exposure to variability of returns and the
nature of the relationship, including power over the structured entity.
The Society's investment in shares in its subsidiaries is recognised on the Balance Sheet at cost less any provision for
impairment.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-309": { "value": "
The assets, liabilities and results of the Society and its consolidated subsidiaries and structured entities are included in the
financial statements of the Group.
The Group consolidates an entity from the date on which it: (a) has power over the entity; (b) is exposed to, or has the
right to, variable returns from its involvement with the entity; and (c) has the ability to affect those returns through the
exercise of its powers. Upon consolidation, intra-group transactions, balances and unrealised gains and losses are
eliminated.
The Group reassesses whether it controls an entity if facts and circumstances indicate that there are changes in one or
more of these three elements. The Group deconsolidates entities from the date that control ceases.
A structured entity is an entity in which voting or similar rights are not the dominant factor in deciding control.
Structured entities are consolidated when the substance of the relationship indicates control. In making this judgement,
the Group considers factors such as the purpose and design of the entity, size and exposure to variability of returns and the
nature of the relationship, including power over the structured entity.
The Society's investment in shares in its subsidiaries is recognised on the Balance Sheet at cost less any provision for
impairment.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-310": { "value": "
Unconsolidated structured entities
Within the Group, the Bank is the sponsor of one unconsolidated structured entity, Warwick Finance Residential Mortgages
Number Three plc. This structured entity is therefore not included within the consolidated results of the Group as its
ongoing interest represents a less than de minimis variability of return. The Group will reassess its requirement to
consolidate this entity on an annual basis.", "dimensions": { "concept": "ifrs-full:DisclosureOfUnconsolidatedStructuredEntitiesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-311": { "value": "
Changes in accounting standards
Adoption of new and revised standards
There are no amendments to standards effective from 1 January 2025 that apply to and have a material impact on the
Group.
Future accounting developments
Amendments to the Classification and Measurement of Financial Instruments - Amendments to IFRS 9 and IFRS 7 is
effective for accounting periods beginning on or after 1 January 2026. The amendments provide clarification to the
derecognition criteria for financial liabilities when using an electronic payment system and guidance on the classification of
financial assets that contain contractual terms that change the timing or amount of contractual cash flows. The impact of
these amendments is currently being assessed but is not expected to have a material impact to the Group.
IFRS 18 Presentation and Disclosure in Financial Statements is effective for accounting periods beginning on or after 1
January 2027 and was endorsed for use in the UK in December 2025. This standard replaces IAS 1 Presentation of Financial
Statements. Whilst much of IAS 1 is retained in IFRS 18, the standard sets out updated principles for the presentation and
disclosures of information in the financial statements, in particular the income statement. The requirements and impacts
are currently being assessed and whilst it is expected that the presentation of information will be potentially amended, it is
not expected to affect underlying recognition or measurement criteria.
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-313": { "value": "
Derecognition of financial assets and liabilities
The Group derecognises financial assets where the right to receive cash flows has expired, or where the assets are
transferred with substantially all the risks and rewards of ownership. Where the transfer does not result in the transfer of
cash flows, but the Group assumes an obligation to pay the cash flows to the transferee, the financial assets are also
derecognised.
The Group derecognises financial liabilities when the obligation is discharged, cancelled or has expired.
Financial assets and liabilities are derecognised and a new instrument recognised where a renegotiated or new agreement is
established on substantially different terms; an example of this would be a product port to a new property on a mortgage
loan.
Financial assets
Financial assets comprise cash and balances with the Bank of England, loans and advances to credit institutions, debt
securities, loans and advances to customers, derivative financial instruments and investment in equity shares.
At initial recognition, the Group measures financial assets at their fair value. Subsequently, financial assets are classified in
one of the following measurement categories:
\u2022 Amortised cost.
\u2022 Fair value through other comprehensive income (FVOCI).
\u2022 Fair value through profit and loss (FVTPL).
Financial assets are classified based on an assessment of the Group\u2019s business model for managing the assets and their
contractual cash flow characteristics.
Amortised cost
Financial assets held to collect contractual cash flows and where contractual terms comprise solely payment of principal
and interest are classified as amortised cost. This category of financial asset includes cash and balances with the Bank of
England, loans and advances to credit institutions, loans and advances to customers, and a small portfolio of debt
securities.
Financial assets within this category are recognised on either the receipt of cash or deposit of funds into one of the Group\u2019s
bank accounts or when the funds are advanced to borrowers. After initial recognition, the assets are measured at amortised
cost using the EIR method, less provision for expected credit losses.
Assets acquired through a business combination or portfolio acquisition are recognised at fair value at the acquisition date.
The fair value at acquisition becomes the opening amortised cost for acquired assets. Fair value adjustments are made to
reflect both credit risk and interest yield associated with the acquired loan assets. Any discount between the amount due
and the fair value is subsequently recognised in interest receivable and similar income using the EIR method.
Fair value through other comprehensive income (FVOCI)
Financial assets held with the intent of collecting contractual cash flows or selling, where contractual terms comprise solely
payment of principal and interest, are classified and measured at FVOCI. This category of financial asset includes most of
the Group\u2019s debt securities which are held to manage liquidity.
Assets are measured at fair value based on quoted market prices or prices obtained from market intermediaries where
available. In cases where quoted market prices are not available, discounted cash flow valuations are used.
Interest on FVOCI assets is recognised in Interest receivable and similar income in the Income Statement, using the EIR
method.
Unrealised gains and losses arising from changes in fair value are recognised directly in Other comprehensive income,
except for impairment losses and foreign exchange gains and losses, which are recognised in the Income Statement. Gains
and losses arising on the sale of FVOCI assets, including any cumulative gains or losses previously recognised in Other
comprehensive income, are recognised in the Income Statement.
Fair value through profit and loss (FVTPL)
FVTPL is the default category for financial assets which do not meet the criteria for amortised cost or FVOCI assets. Assets
that are classified as FVTPL include derivative financial instruments, investments in equity shares and for the Society,
investments in group undertakings that are debt instruments with write-down features.
These assets are carried at fair value and are initially recognised at the trade date.
Interest income and changes in the fair value of derivatives other than the effective portion of those in cash flow hedge
accounting relationships are recognised in the Income Statement. The impact of hedging on the measurement of financial
assets and liabilities is detailed in the derivatives and hedge accounting policy.
Dividends and changes in the fair value of equity instruments are recognised in the Income Statement.
Impairment of financial assets
The Group assesses, on a forward-looking basis, the expected credit loss (ECL) associated with its financial assets carried at
amortised cost and FVOCI and its mortgage pipeline commitments. Financial assets held at FVTPL are not subject to
impairment under IFRS 9.
IFRS 9 requires the Group to categorise its financial assets into one of four stages at the reporting date.
Assets that are performing are shown in stage 1; assets where there has been a significant increase in credit risk since
initial recognition are in stage 2; assets that were not credit impaired or in default at origination but have since become so
are in stage 3; and assets that were Purchased or Originated Credit Impaired are classed as POCI. The Group is required to
recognise a 12 month ECL allowance on all stage 1 assets and a lifetime ECL allowance on all stage 2, 3 and POCI assets.
Whilst stage 2 or 3 assets may cure and revert to stage 1, POCI assets always attract a lifetime ECL until derecognition.
Purchased assets that are not POCI are initially allocated to stage 1 on recognition by the Group.
Derivative financial instruments
The Group holds derivative financial instruments only to manage the risks associated with its non-variable rate assets and
liabilities and its foreign currency transactions, and not for speculative or trading purposes.
All external derivative financial instruments are carried at fair value. Derivatives are principally valued by discounting cash
flows using yield curves that are based on observable market data. In measuring fair value, separate adjustments are made
for credit risk to the extent not already included in the valuation.
Hedge accounting
The Group applies the requirements of IAS 39 for hedge accounting. Where the documentation, eligibility and testing
criteria for hedge accounting set out in IAS 39 are met, the Group applies hedge accounting and designates the hedging
derivative as either hedging fair value or cash flow risks. The Group undertakes this on both an individual and a portfolio
hedge accounting basis.
The acquisition of the Bank included a portfolio of non-interest bearing balances (NIBBs), which are financial instruments
that have not been previously held within the Group. The Group has relied on the provisions of UK-adopted IAS 39 that
allows an effective hedge accounting relationship to be designated for the interest rate exposure arising from stable, non-
interest bearing current accounts based on behavioural modelling of their expected duration.
Fair value hedges
Changes in the fair value of derivatives that are designated in fair value hedge relationships are recorded in the Income
Statement under Net gains/losses from derivative financial instruments in the period in which the movement occurs,
together with the change in fair value of the hedged asset or liability that is attributable to the hedged risk (interest rate
risk). This also applies if the hedged item is classified as an FVOCI financial asset.
Cash flow hedges
Gains and losses on derivative financial instruments hedging the variability in cash flows of a designated asset or liability
are recognised directly through the Statement of Comprehensive Income in the cash flow hedge reserve. The relevant
portion of the gain or loss on the hedging instrument is recognised in the Income Statement immediately to the extent that
the hedge is deemed ineffective under IAS 39. Any amounts deferred to the cash flow hedge reserve are subsequently
recycled to the Income Statement when the underlying asset or liability being hedged impacts the Income Statement, for
example, when foreign exchange movements occur.
Intangible assets
Intangible assets are stated at cost less accumulated amortisation and any accumulated impairment. Maintenance costs
associated with the operation of these intangibles are charged to the Income Statement as incurred. Amortisation is
charged to the Income Statement on a straight line basis over the useful life of the asset commencing from the date the
asset is ready for use.
The useful life of computer software is reviewed by management at each financial year end and is currently between three
and eight years for assets which are currently in use.
Software development costs, both internal and external, and purchased software that is not an integral part of a related
hardware purchase are recognised as an intangible asset if it is probable that: (a) the asset is controlled by the Group; (b) it
is separately identifiable; and (c) it will generate future economic benefits. For each significant project undertaken by the
Group, an assessment of capitalisation criteria including future economic benefit is performed by the relevant business area
and reviewed in accordance with agreed governance processes.
Intangible assets held by the Group also includes a core deposit relationship asset recognised as part of business
combinations and is held at cost (equivalent to fair value at acquisition) less accumulated amortisation and impairment.
This is amortised over an estimated useful life of five years on a straight line basis.
Intangible assets, including assets in the course of construction, are reviewed for impairment at each reporting date or
whenever events or changes in circumstances indicate that the carrying amount may exceed the recoverable amount.
Where impairment is identified, the asset is written down immediately to the estimated recoverable amount and the
impairment amount is charged to the Income Statement.
1. Accounting policies continued
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-312": { "value": "
Derecognition of financial assets and liabilities
The Group derecognises financial assets where the right to receive cash flows has expired, or where the assets are
transferred with substantially all the risks and rewards of ownership. Where the transfer does not result in the transfer of
cash flows, but the Group assumes an obligation to pay the cash flows to the transferee, the financial assets are also
derecognised.
The Group derecognises financial liabilities when the obligation is discharged, cancelled or has expired.
Financial assets and liabilities are derecognised and a new instrument recognised where a renegotiated or new agreement is
established on substantially different terms; an example of this would be a product port to a new property on a mortgage
loan.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-314": { "value": "
Securitisation and covered bond transactions
The Group has securitised certain mortgage loans by transferring the loans to structured entities controlled by the Group.
These securitisations enable the issuance of debt to investors, who take security in the underlying assets as collateral.
Where it is determined that the Group has control over the entity, the structured entities are fully consolidated into the
Group accounts.
Transfers of mortgage loans to the structured entities are not treated as sales and the loans are not derecognised but
remain on the transferor's own Balance Sheet as it retains substantially all the risks and rewards of the mortgage loans. In
the accounts of the transferor, the proceeds received from the transfer of mortgage loans to structured entities are
accounted for as a deemed loan from the structured entity and are disclosed within Other liabilities on the Balance Sheet.
For covered bonds, the transferring entity, and not the structured entity, issues the covered bonds and then lends the
proceeds to the structured entity on back to back terms. The structured entity then uses these proceeds as consideration
for the loans transferred from the Society or the Bank. In the accounts of the Society, neither the loan to the structured
entity nor the consideration for the transfer of mortgage loans is recognised separately as an additional asset and liability.
The Group has also issued debt to be used as collateral for central government schemes or for use in sale and repurchase
agreements (repos) and similar transactions. Some or all of the debt issuances may be retained by the Group.
Investments in such self-issued debt and the associated deemed loan, together with the related income, expenditure and
cash flows, are not recognised in the Society's financial statements.
To manage interest rate risk, the Group enters into derivative transactions with its structured entities, receiving a rate of
interest based on the securitised mortgages and paying a rate inherent in the debt issuances. In accordance with IFRS 9,
these internal derivatives are treated as part of the deemed loan and not separately measured at fair value because the
relevant mortgage loans are not derecognised. All other derivatives relating to securitisations and covered bonds are
explained in the derivatives and hedge accounting policy below.
", "dimensions": { "concept": "cbs:DescriptionOfAccountingPolicyForSecuritisationAndCoveredBondTransactions", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-315": { "value": "
Sale and repurchase agreements (repos)
Securities sold subject to a commitment to repurchase them are retained on the Balance Sheet when substantially all the
risks and rewards of ownership remain within the Group. The counterparty liability is included separately on the Balance
Sheet, as appropriate. The difference between the sale and repurchase price is accrued over the life of the agreements
using the Effective Interest Rate (EIR) method.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRepurchaseAndReverseRepurchaseAgreementsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-318": { "value": "
Interest receivable and interest payable
For instruments measured at amortised cost, the EIR method is used to measure the carrying value of a financial asset or a
liability and to allocate associated interest income or expense and transaction costs over the relevant period. The EIR is the
rate that discounts the estimated future cash payments or receipts over the expected life of the financial instrument or,
when appropriate, a shorter period, to the net carrying amount of the financial asset. Interest income on fair value through
other comprehensive income (FVOCI) debt is also included on an EIR basis.
In calculating the EIR, the Group estimates cash flows considering all contractual terms of the financial instrument. For
assets that are in default and assessed as stage 3 under IFRS 9, interest is calculated by applying the EIR to the expected
recoverable amount. The EIR calculation includes all directly attributable fees received and paid and costs borne and all
other premiums above or below market rates.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceCostsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-317": { "value": "
Interest receivable and interest payable
For instruments measured at amortised cost, the EIR method is used to measure the carrying value of a financial asset or a
liability and to allocate associated interest income or expense and transaction costs over the relevant period. The EIR is the
rate that discounts the estimated future cash payments or receipts over the expected life of the financial instrument or,
when appropriate, a shorter period, to the net carrying amount of the financial asset. Interest income on fair value through
other comprehensive income (FVOCI) debt is also included on an EIR basis.
In calculating the EIR, the Group estimates cash flows considering all contractual terms of the financial instrument. For
assets that are in default and assessed as stage 3 under IFRS 9, interest is calculated by applying the EIR to the expected
recoverable amount. The EIR calculation includes all directly attributable fees received and paid and costs borne and all
other premiums above or below market rates.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-316": { "value": "
Interest receivable and interest payable
For instruments measured at amortised cost, the EIR method is used to measure the carrying value of a financial asset or a
liability and to allocate associated interest income or expense and transaction costs over the relevant period. The EIR is the
rate that discounts the estimated future cash payments or receipts over the expected life of the financial instrument or,
when appropriate, a shorter period, to the net carrying amount of the financial asset. Interest income on fair value through
other comprehensive income (FVOCI) debt is also included on an EIR basis.
In calculating the EIR, the Group estimates cash flows considering all contractual terms of the financial instrument. For
assets that are in default and assessed as stage 3 under IFRS 9, interest is calculated by applying the EIR to the expected
recoverable amount. The EIR calculation includes all directly attributable fees received and paid and costs borne and all
other premiums above or below market rates.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-319": { "value": "
Fees and commissions
Fees and commissions receivable and payable that are not spread across expected asset lives under the EIR method are
taken to income on an accruals basis as the related obligations are satisfied.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFeeAndCommissionIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-320": { "value": "
Leases
The majority of the Group\u2019s leases relate to property including branches, head office buildings and data centres. The Group
also has other leases that relate to cars and office equipment.
Where the Group enters into a lease or contract that meets the criteria for lease classification under IFRS 16, the Group
recognises an asset representing its right to use the leased item and a corresponding liability on the Balance Sheet.
The lease liability is measured at the present value of the lease payments including any incentives, additional lease
components and lease extension or termination options where they are reasonably certain to be exercised.
These payments are discounted using the Group's incremental borrowing rate since no interest rates are specified in the
Group's leases.
The right-of-use asset is measured at cost including the lease liability and any initial direct costs.
The right-of-use asset is depreciated over the shorter of its useful life or the lease term on a straight line basis through the
Income Statement, and the interest charge on the lease liability is recognised within Interest payable. In the Cash Flow
Statement, the interest paid on lease liabilities is included in Interest paid on lease liabilities, and the principal element of
the lease payments is included in Principal elements of lease payments.
Expenses relating to leases that are for less than 12 months, of low value or relate to intangibles such as software are
recognised in the Income Statement as charged.
On an ongoing basis the Group reviews the right-of-use asset and lease liability for any modifications that would require
remeasurement and makes an assessment for impairment as required.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-322": { "value": "
Taxation including deferred tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities, based on tax rates and laws that are enacted or substantively enacted by the Balance Sheet date.
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. Deferred tax assets are recognised only to the extent that it is probable that
future taxable profits will be available against which they can be utilised and is supported by a Board approved financial
plan.
Deferred tax assets and liabilities are measured on a non-discounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, and based on tax rates and laws that have been enacted or substantively
enacted at the reporting date. Deferred tax assets and liabilities are offset when there is both a legally enforceable right
and an intention to settle on a net basis.
Current and deferred tax is charged or credited directly to the Statement of Comprehensive Income if it relates to items
that are credited or charged to the Statement of Comprehensive Income. Otherwise corporation tax is recognised in the
Income Statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-321": { "value": "
Taxation including deferred tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities, based on tax rates and laws that are enacted or substantively enacted by the Balance Sheet date.
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. Deferred tax assets are recognised only to the extent that it is probable that
future taxable profits will be available against which they can be utilised and is supported by a Board approved financial
plan.
Deferred tax assets and liabilities are measured on a non-discounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, and based on tax rates and laws that have been enacted or substantively
enacted at the reporting date. Deferred tax assets and liabilities are offset when there is both a legally enforceable right
and an intention to settle on a net basis.
Current and deferred tax is charged or credited directly to the Statement of Comprehensive Income if it relates to items
that are credited or charged to the Statement of Comprehensive Income. Otherwise corporation tax is recognised in the
Income Statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-324": { "value": "
Business combinations
The acquisition of the Bank represents a business combination under IFRS 3 and is accounted for using the acquisition
method. Identifiable assets and liabilities as well as consideration are measured at their fair value at the date of
acquisition. Goodwill is measured as the difference between the fair value determined for the acquired assets and
liabilities and the fair value of consideration paid. Where the goodwill arising is negative, it is recognised in the income
statement as a gain on date of acquisition. Other intangible assets arising as a result of the business combination and day
one fair value adjustments arising are amortised over the estimated useful life.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-323": { "value": "
Business combinations
The acquisition of the Bank represents a business combination under IFRS 3 and is accounted for using the acquisition
method. Identifiable assets and liabilities as well as consideration are measured at their fair value at the date of
acquisition. Goodwill is measured as the difference between the fair value determined for the acquired assets and
liabilities and the fair value of consideration paid. Where the goodwill arising is negative, it is recognised in the income
statement as a gain on date of acquisition. Other intangible assets arising as a result of the business combination and day
one fair value adjustments arising are amortised over the estimated useful life.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-325": { "value": "
Segmental reporting
The Board is responsible for allocating resources and assessing the performance of the business and is therefore identified
as the chief operating decision maker.
With effect from 1 January 2025, subsequent to the acquisition of the Bank, the Group has determined that it has two
reportable segments as the Board reviews performance and makes decisions based on this information. The Group operates
solely within the United Kingdom and therefore there is no segmental analysis on a geographical basis.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-326": { "value": "
Financial assets
Financial assets comprise cash and balances with the Bank of England, loans and advances to credit institutions, debt
securities, loans and advances to customers, derivative financial instruments and investment in equity shares.
At initial recognition, the Group measures financial assets at their fair value. Subsequently, financial assets are classified in
one of the following measurement categories:
\u2022 Amortised cost.
\u2022 Fair value through other comprehensive income (FVOCI).
\u2022 Fair value through profit and loss (FVTPL).
Financial assets are classified based on an assessment of the Group\u2019s business model for managing the assets and their
contractual cash flow characteristics.
Amortised cost
Financial assets held to collect contractual cash flows and where contractual terms comprise solely payment of principal
and interest are classified as amortised cost. This category of financial asset includes cash and balances with the Bank of
England, loans and advances to credit institutions, loans and advances to customers, and a small portfolio of debt
securities.
Financial assets within this category are recognised on either the receipt of cash or deposit of funds into one of the Group\u2019s
bank accounts or when the funds are advanced to borrowers. After initial recognition, the assets are measured at amortised
cost using the EIR method, less provision for expected credit losses.
Assets acquired through a business combination or portfolio acquisition are recognised at fair value at the acquisition date.
The fair value at acquisition becomes the opening amortised cost for acquired assets. Fair value adjustments are made to
reflect both credit risk and interest yield associated with the acquired loan assets. Any discount between the amount due
and the fair value is subsequently recognised in interest receivable and similar income using the EIR method.
Fair value through other comprehensive income (FVOCI)
Financial assets held with the intent of collecting contractual cash flows or selling, where contractual terms comprise solely
payment of principal and interest, are classified and measured at FVOCI. This category of financial asset includes most of
the Group\u2019s debt securities which are held to manage liquidity.
Assets are measured at fair value based on quoted market prices or prices obtained from market intermediaries where
available. In cases where quoted market prices are not available, discounted cash flow valuations are used.
Interest on FVOCI assets is recognised in Interest receivable and similar income in the Income Statement, using the EIR
method.
Unrealised gains and losses arising from changes in fair value are recognised directly in Other comprehensive income,
except for impairment losses and foreign exchange gains and losses, which are recognised in the Income Statement. Gains
and losses arising on the sale of FVOCI assets, including any cumulative gains or losses previously recognised in Other
comprehensive income, are recognised in the Income Statement.
Fair value through profit and loss (FVTPL)
FVTPL is the default category for financial assets which do not meet the criteria for amortised cost or FVOCI assets. Assets
that are classified as FVTPL include derivative financial instruments, investments in equity shares and for the Society,
investments in group undertakings that are debt instruments with write-down features.
These assets are carried at fair value and are initially recognised at the trade date.
Interest income and changes in the fair value of derivatives other than the effective portion of those in cash flow hedge
accounting relationships are recognised in the Income Statement. The impact of hedging on the measurement of financial
assets and liabilities is detailed in the derivatives and hedge accounting policy.
Dividends and changes in the fair value of equity instruments are recognised in the Income Statement.
Impairment of financial assets
The Group assesses, on a forward-looking basis, the expected credit loss (ECL) associated with its financial assets carried at
amortised cost and FVOCI and its mortgage pipeline commitments. Financial assets held at FVTPL are not subject to
impairment under IFRS 9.
IFRS 9 requires the Group to categorise its financial assets into one of four stages at the reporting date.
Assets that are performing are shown in stage 1; assets where there has been a significant increase in credit risk since
initial recognition are in stage 2; assets that were not credit impaired or in default at origination but have since become so
are in stage 3; and assets that were Purchased or Originated Credit Impaired are classed as POCI. The Group is required to
recognise a 12 month ECL allowance on all stage 1 assets and a lifetime ECL allowance on all stage 2, 3 and POCI assets.
Whilst stage 2 or 3 assets may cure and revert to stage 1, POCI assets always attract a lifetime ECL until derecognition.
Purchased assets that are not POCI are initially allocated to stage 1 on recognition by the Group.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-327": { "value": "
At initial recognition, the Group measures financial assets at their fair value. Subsequently, financial assets are classified in
one of the following measurement categories:
\u2022 Amortised cost.
\u2022 Fair value through other comprehensive income (FVOCI).
\u2022 Fair value through profit and loss (FVTPL).
Financial assets are classified based on an assessment of the Group\u2019s business model for managing the assets and their
contractual cash flow characteristics.
Amortised cost
Financial assets held to collect contractual cash flows and where contractual terms comprise solely payment of principal
and interest are classified as amortised cost. This category of financial asset includes cash and balances with the Bank of
England, loans and advances to credit institutions, loans and advances to customers, and a small portfolio of debt
securities.
Financial assets within this category are recognised on either the receipt of cash or deposit of funds into one of the Group\u2019s
bank accounts or when the funds are advanced to borrowers. After initial recognition, the assets are measured at amortised
cost using the EIR method, less provision for expected credit losses.
Assets acquired through a business combination or portfolio acquisition are recognised at fair value at the acquisition date.
The fair value at acquisition becomes the opening amortised cost for acquired assets. Fair value adjustments are made to
reflect both credit risk and interest yield associated with the acquired loan assets. Any discount between the amount due
and the fair value is subsequently recognised in interest receivable and similar income using the EIR method.
The Group\u2019s treasury assets are investment grade and therefore assumed to be in stage 1, as permitted by IFRS 9.
Accordingly, due to the extremely low probability of default (PD) of these instruments, the resulting ECL is immaterial to
the financial statements.
Loans and advances to customers
Significant accounting judgements \u2013 identifying significant increase in credit risk
The Group considers a loan to have experienced a significant increase in credit risk when one or more of the following
qualitative, quantitative or backstop criteria have been met.
Qualitative criteria
The qualitative measures used to allocate a loan to stage 2 are aligned to the Group\u2019s underwriting and forbearance
practices. In some cases, the qualitative measures will be evident before the borrower\u2019s credit score is impacted and they
are therefore lead indicators of a deteriorating credit risk. These qualitative measures can be assessed as part the Group's
underlying ECL model methodology, or applied as judgemental adjustments. Further information on the application of these
judgemental adjustments is disclosed in Note 16.
Other criteria include county court judgements, bankruptcy (with no arrears), temporary transfer to interest only or poor
external credit bureau data that exceeds the Group\u2019s underwriting policy at the reporting date, even if the loan is currently
performing. For business and commercial exposures, the main trigger would be moving to a \u2018watchlist\u2019 status. Qualitative
criteria are monitored and reviewed periodically for appropriateness.
Quantitative criteria
The Group uses internal credit risk gradings that reflect its assessment of the PD of individual borrowers and
counterparties. Given the Group\u2019s very low risk loan book, a deterioration in internal risk grade rating may still result in a
very low PD. Therefore in order for the loan to be assessed as stage 2, the portfolio-specific relative PD deterioration is
typically subject to a minimum PD floor.
Backstop criteria
In addition, a loan is considered to have experienced a significant increase in credit risk if it is more than one month past
due. Loans subject to this backstop measure will typically continue to be classified as stage 2 for a period of 12 months
from the date that the arrears fall below one current monthly repayment.
Default
The Group considers a loan to be in default when the loan is three months or more in arrears i.e. current arrears balances
are equal to three or more current monthly repayments. Alternatively, a loan is considered to be in default if certain
qualitative criteria are met, which can include the following unlikeliness to pay indicators:
\u2022 The customer is bankrupt and the account is in arrears, or the customer has had an individual voluntary arrangement in
the last three years at the bureau or with internal bankruptcy.
\u2022 Litigation proceedings against the borrower have begun and the account is in arrears.
\u2022 The loan is interest only and has gone three months past the scheduled term date, or 12 months past the contractual
trigger event for equity release loans.
\u2022 The loan is interest only and has delayed the repayment of capital or extended the term of their interest only mortgage
for forbearance reasons or under the new temporary FCA guidance.
These definitions where relevant align to the Group's internal definition of arrears for risk management and collection
purposes.
Inputs, assumptions and estimation techniques
A loan is considered to no longer be in default (i.e. to have been cured) when a consecutive period of 12 months has passed
since it met any of the above qualitative and quantitative criteria (cure period).
The measurement of expected credit loss reflects:
\u2022 An unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes.
\u2022 The time value of money.
\u2022 Reasonable and supportable information that is available without undue cost or effort at the reporting date about past
events, current conditions and forecasts of future economic conditions.
Inputs, assumptions and estimation techniques (continued)
Expected credit losses (ECLs), being forward-looking, are discounted back to the reporting date and are calculated by
multiplying the probability of default (PD), exposure at default (EAD) and loss given default (LGD) where:
\u2022 The PD represents the likelihood of a borrower defaulting over either the next 12 months or over the remaining lifetime
of the mortgage (being the contractual lifetime).
\u2022 EAD is the amount the Group expects to be owed at the time of default.
\u2022 LGD represents the Group\u2019s expectation of the extent of loss on a default and takes account of available collateral,
likely sales cost and potential discount needed to secure a sale.
More information on the forward-looking information incorporated in the ECL calculations is included in note 16.
Post model adjustments
The Group applies post model adjustments (PMAs) to reflect ECLs relating to items that cannot be adequately captured by
existing models and as a result, management judgement and estimation are required in order to reflect the underlying risk.
The assumptions used in calculating ECLs are regularly reviewed and model outputs and components of ECL estimates are
assessed by management in line with internal policy. This is used across all aspects of the model including the assessment
of the predicted PD or LGD of an account against the actual outturn.
ECL allowance on acquired portfolios
Following an acquisition, the acquiree, i.e. the Group, is required under IFRS 9 to recognise a new ECL allowance against
the acquired non-credit impaired financial assets. Therefore all of the Bank's non-credit impaired assets were initially
recognised by the Group in stage 1. Loans that are credit impaired on acquisition are classed as purchased or originated
credit-impaired ('POCI'), with any credit risk against these assets covered by the fair value adjustment recognised against
the assets. Such credit impaired loans remain categorised as POCI throughout their life, irrelevant of any significant
improvement in credit quality.
Governance of Expected Credit Losses
Governance over ECLs is carried out by the Group's ECL Working Group (ECLG), which meets on a regular basis, at least
quarterly. ECLG is made up of members from the Finance and Credit Risk functions in addition to members from the second
and third lines of defence. They are responsible for the review of key assumptions and judgements within the ECL
calculations such as the staging criteria or need for post model adjustments and does this by review of key management
information and assessing existing and future risks to the portfolio. Assumptions and judgements are approved by the ECLG
with oversight performed by the Board Audit Committee.
Governance over the IFRS 9 ECL models is carried out by the Model Risk Committee and includes assessments of model
performance, model monitoring and model validation at regular intervals and on an ad hoc basis where significant model
enhancements are carried out. See the Risk Management Report for more information on model risk.
ECLs for loans and advances to customers reduce the carrying amount of these assets in the Balance Sheet and the
movement in ECLs is included in Impairment charge in the Income Statement. For mortgage pipeline exposures and
undrawn facilities, the provision is included in the ECL provision in the Balance Sheet.
Further information on PMA in place at the year end can be found in note 16.
Calculation of expected credit loss under IFRS 9 \u2013 loans with group undertakings
Loans with group undertakings are valued at cost less any provision for impairment. These balances are reviewed annually
for evidence of potential impairment or significant increase in credit risk with any impairment recognised in the Income
Statement. No impairment has been identified.
Write-off policy
The Group writes off financial assets when it has exhausted all practical recovery efforts and has concluded that there is no
reasonable expectation of recovery.
2. Judgement in applying accounting policies and significant
accounting estimates
In the process of applying accounting policies, the Group makes various judgements, estimates and assumptions that have
had a significant effect on the amounts recognised in the financial statements. The Group has also made assumptions and
estimates that could affect the reported amount of assets and liabilities both in the accounts and in the following financial
years.
In relation to the acquisition of the Bank on 1 January 2025, the Group made significant judgements and estimates in
respect of valuation techniques, modelling assumptions and estimates of market inputs used to determine the fair value of
identifiable assets acquired and liabilities assumed. This resulted in the recognition of a gain on acquisition of \u00a3584 million.
Further information is included in note 38.
Other significant judgements, assumptions and estimates are disclosed in the following notes:
Significant accounting policy judgements
Notes
Determining a significant increase in credit risk (SICR) under IFRS 9
1
Significant accounting assumptions and estimates
Measurement of deferred tax assets in respect of future taxable profits
23
The significant accounting policy judgements included the classification and measurement of equity release loans in the
prior year. As a result of this being a small residual and closed portfolio in run off, this is no longer classed as a significant
accounting policy judgment.
In the prior year, the significant accounting assumptions and estimates included, in relation to expected credit loss
provision on loans and advances to customers, the application of post model adjustments and forward-looking information
incorporated in the ECL models. As a result of the nature of risk in the lending portfolio in the context of the Group
financial statements, these are no longer classed as a significant accounting assumption and estimate.\u00a0
pplication of judgemental adjustments
The table below presents the judgemental adjustments that have been recognised within the ECL provision outside of core
modelled ECLs where the Group\u2019s models do not fully capture the associated risks of future credit loss.
2025
2024
Retail
secured
\u00a3m
Retail
unsecured
\u00a3m
Business
and
commercial
\u00a3m
Total
\u00a3m
Retail
secured
\u00a3m
Retail
unsecured
\u00a3m
Business
and
commercial
\u00a3m
Total
\u00a3m
Core modelled ECL
26
5
6
37
18
\u2014
\u2014
18
Judgemental adjustments
6
\u2014
1
7
6
\u2014
\u2014
6
Total reported ECL
32
5
7
44
24
\u2014
\u2014
24
At 31 December 2025, the Group held total judgemental adjustments of \u00a37 million (2024: \u00a36 million).
This includes a residual cost of living affordability PMA of \u00a32 million (2024: \u00a32 million), additional adjustments for negative
equity accounts, which are identified through using automated valuation models (AVM), stale collateral valuations on
corporate real estate exposures and fraud.
Movements in gross exposure and ECL provision
A reconciliation of movements in gross exposures and ECL provision split by IFRS 9 stage from 1 January 2025 to 31
December 2025 is set out below for the Group and Society.
Stage 1
Stage 2
Stage 3
Total
Group
Gross
balance
\u00a3m
Provision
12 month
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
\u00a3m
At 1 January 2025
46,203
2
5,243
11
350
11
51,796
24
Loans recognised on acquisition
20,347
9
\u2014
\u2014
120
\u2014
20,467
9
Movements with Income
Statement impact
Transfers from Stage 1 to Stage 2
(2,438)
(1)
2,438
4
\u2014
\u2014
\u2014
3
Transfers from Stage 1 to Stage 3
(133)
\u2014
\u2014
\u2014
133
11
\u2014
11
Transfers from Stage 2 to Stage 3
\u2014
\u2014
(134)
\u2014
134
\u2014
\u2014
\u2014
Transfers from Stage 3 to Stage 2
\u2014
\u2014
46
1
(46)
(1)
\u2014
\u2014
Transfers from Stage 3 to Stage 1
12
\u2014
\u2014
\u2014
(12)
\u2014
\u2014
\u2014
Transfers from Stage 2 to Stage 1
1,753
\u2014
(1,753)
(1)
\u2014
\u2014
\u2014
(1)
Net movement arising from
transfer of stages
(806)
(1)
597
4
209
10
\u2014
13
New loans originated
10,529
5
24
\u2014
\u2014
\u2014
10,553
5
Remeasurement of ECL due to
changes in risk parameters
\u2014
1
\u2014
(1)
\u2014
5
\u2014
5
Increase/(decrease) in post model
adjustments
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Loans derecognised in the period
(6,823)
(3)
(463)
(1)
(118)
(2)
(7,404)
(6)
Net write offs
(2)
(3)
\u2014
\u2014
(3)
(3)
(5)
(6)
Income Statement charge for the
period
8
2
10
20
Repayment and charges
(2,369)
\u2014
(101)
\u2014
(9)
\u2014
(2,479)
\u2014
At 31 December 2025
67,079
10
5,300
13
549
21
72,928
44
Forward-looking information incorporated in the ECL models
Formulation of economic scenarios and governance
The economic scenarios used by the Group reflect management\u2019s best estimate of the future economic conditions under a
range of scenarios, including a weighting reflecting the loss distribution on the occurrence of each scenario.
The assumptions in each of the four (2024: four) scenarios evolve, reflecting latest expectations with the base scenario
representing the most likely outcome, complemented by one upside and two downside scenarios based on potential
economic developments. These alternative scenarios are built using management judgement and are calibrated to
statistical views of economic cycles ranging from periods of five to ten years from the beginning of an overall expansion
phase to the end of the contraction phase and the beginning of the next initial recovery phase. Available data from the last
50 years has been analysed to draw out the normal range through to extreme outcomes that could be expected to be
observed. Outside of these extreme outcomes, the severe downside scenario is based on a deliberately extreme case used
for stress testing, the severity of which has not been experienced in the last 50 years.
Beyond the five year forecast horizon which aligns to the Strategic Plan period, long-term averages for each economic
assumption variable are used. The severe downside scenario transitions to the long-term average level over a period of ten
years, reflecting the negativity of the scenario. The other three scenarios transition over a five year period. These long-
term averages hold true throughout various financial and economic crises, and are therefore used until the end of the 35
year forecast.
Scenarios and accompanying weightings are determined following analysis of economic news, forecasts, peer benchmarking,
scientific developments and results. By their nature, a significant degree of estimation is involved in determining the
scenario weightings.
Formulation of economic scenarios and governance continued
These scenarios and weightings are developed within the Group's Treasury function and are reviewed and approved
quarterly by the Asset and Liability Committee with further approval at reporting periods by the Board Audit Committee.
Current year scenarios and weightings
During the year, the weightings for each scenario were reviewed, resulting in a small rebalancing between the base and
upside scenarios. The weightings used at the year end reflect the Group\u2019s view of the range of potential future economic
conditions at the Balance Sheet date. An explanation of each scenario and its relative weighting in calculating ECL is set out
below:
Scenario
Weighting
2025
2024
Base
The central scenario used to support the business planning of the Group. Unemployment remains
elevated for a while following restrictive monetary policy, with GDP growth remaining steady.
Whilst domestic inflationary pressures take longer to unwind than they did to emerge, CPI is
expected to return close to the 2% target in the near term, allowing bank rate to decrease. This
easing of conditions supports house prices which return to modest growth.
50%
55%
Downside
Inflation rebounds following renewed geopolitical tensions, and the Bank of England increases
interest rates again to contain it. There is an economic contraction resulting from further cost of
living deterioration which drives up unemployment, and house prices weaken considerably. Inflation
returns to target within the first 5 years and monetary policy begins to ease.
25%
25%
Severe downside
Following the Bank of England\u2019s Bank Capital Stress Test, in which deep simultaneous recessions in
the UK and global economies sees large falls in asset prices and higher global interest rates. GDP
contracts 5% as unemployment reaches 8.5%. Bank rate rises to 8% to tackle inflation of 10% and
house prices consequently fall 28%.
10%
10%
Upside
Inflation dissipates and unemployment reduces, underpinning robust economic growth and rising
house prices. The Bank of England lowers bank rate further in response to the easing inflation
environment.
15%
10%
Macroeconomic assumptions
The Group's ECL calculation incorporates four key economic assumptions: unemployment rate, house price index (HPI), GDP
and the Bank of England Base Rate. While all feed into the economic forecasts and impact the final ECL provision, the
models are particularly sensitive to changes in the following assumptions in each scenario:
\u2022 Unemployment rate, given its impact on borrowers\u2019 ability to meet their loan repayments.
\u2022 HPI, given the significant impact it has on mortgage collateral valuations.
Inflation impacts are also reflected within all four scenarios as the effect has become embedded within economic forecasts.
The following graphs show these two key economic assumptions used in the scenarios over a five year forecast period:
Key economic assumptions as at 31 December 2025
While the Group's ECL calculation is particularly sensitive to unemployment and HPI movements, GDP and the Bank of
England Base Rate remain key drivers of the provision calculation and the forward economic outlook. The rates applied to
all key measures are shown below for the five year forecast period:
Scenario/
weighting
2026
%
2027
%
2028
%
2029
%
2030
%
Peak to
trough
%
Range
%
Average to
31 Dec 2030
%
Unemployment
5.2
5.3
5.1
4.9
4.9
0.6
4.7 - 5.3
4.9
Base
HPI
2.5
3.0
3.0
3.0
3.0
15.2
0.2 - 15.4
2.9
50%
GDP
1.4
1.5
1.5
1.5
1.5
7.5
0.1 - 7.6
1.5
Base Rate
3.25
3.25
3.25
3.25
3.25
0.50
3.25 - 3.75
3.3
Unemployment
5.5
6.0
5.7
5.5
5.5
1.0
5.0 - 6.0
5.5
Downside
HPI
(1.1)
(8.0)
(5.0)
4.0
4.5
13.5
(13.6) - (0.1)
(1.2)
25%
GDP
0.0
(0.9)
1.4
1.4
1.5
4.3
(0.9) - 3.4
0.7
Base Rate
5.00
5.25
4.50
4.00
4.00
1.50
3.75 - 5.25
4.5
Severe
downside
10%
Unemployment
6.3
8.2
8.1
7.3
6.5
3.6
4.9 - 8.5
7.1
HPI
(9.4)
(12.1)
(9.5)
7.4
6.9
27.9
(28.0) - (0.1)
(3.8)
GDP
(4.3)
0.0
1.4
1.4
1.4
4.9
(5.0) - (0.1)
(0.1)
Base Rate
8.00
6.75
5.25
4.00
3.00
5.00
3.00 - 8.00
5.6
Unemployment
4.4
4.0
4.0
4.0
4.0
1.0
4.0 - 5.0
4.2
Upside
HPI
3.8
5.0
5.0
5.0
5.0
25.9
0.3 - 26.2
4.8
15%
GDP
2.0
2.5
2.5
2.5
2.5
12.4
0.2 - 12.6
2.4
Base Rate
3.25
2.75
2.75
2.75
2.75
1.00
2.75 - 3.75
2.9
1. HPI change and GDP change average to 31 December 2030 are shown as the annual compound growth rates.
A significant degree of estimation relates to the relative weightings of the scenarios, incorporating different views of the
house price index and the unemployment rate as indicated above. In order to demonstrate this sensitivity, the impact of
applying 100% of a particular scenario on the reported IFRS 9 ECL provision is shown below. For example, if the provision
was wholly calculated on the base scenario, it would decrease by \u00a311 million, or 25% (2024: \u00a36 million, 25%) compared with
the reported provision. If a 100% weighting was attributed to the severe downside scenario, ECLs would increase by \u00a351
million or 116% (2024: \u00a322 million, 92%).
Group
31 December 2025
31 December 2024
Scenario
IFRS 9
provision
\u00a3m
(Decrease)/
increase
%
IFRS 9
provision
\u00a3m
(Decrease)/
increase
%
IFRS 9 weighted average
44
\u2014
24
\u2014
Base scenario
33
(25)
18
(25)
Downside scenario
53
21
32
33
Severe downside scenario
95
116
46
92
Upside scenario
30
(32)
16
(33)
The above sensitivities are presented on a Group basis, as the retail secured portfolio, which is the majority of the balance,
is the driver of the sensitivity impact.
The ECL calculated above for 100% of each scenario multiplied by the scenario probability will not reconcile to the overall
provision. This is due to the staging of loans within each scenario varying, but being allocated to a single stage in the
overall provision calculation and having a weighted average 12 month or lifetime PD applied taking into account the
economic scenarios. The probability weighted ECL is then calculated based on this staging allocation. The estimated ECL
provision is determined using an uplift to account for non-linearity in modelling of unemployment rates beyond 8.5%.
Sensitivity assessment
As at 31 December 2025, a decrease to the annual HPI assumption by 10% combined with an increase in the unemployment
rate assumption of 10% throughout the forecast period would have the impact of increasing the core modelled ECL provision
by \u00a315 million from \u00a344 million to \u00a359 million. This is driven by the retail secured portfolio, representing the majority of
the overall lending assets.
Group
2025
2024
Sensitivity impacts on ECL
Retail
secured
\u00a3m
Retail
unsecured
\u00a3m
Business and
commercial
\u00a3m
Total
\u00a3m
Retail
secured
\u00a3m
Retail
unsecured
\u00a3m
Business and
commercial
\u00a3m
Total
\u00a3m
Underlying ECL
32
5
7
44
24
\u2014
\u2014
24
Sensitised ECL
47
5
7
59
43
\u2014
\u2014
43
Difference
15
\u2014
\u2014
15
19
\u2014
\u2014
19
In practise, multi-factor sensitivities such as the above have limitations; the impacts of the above might be reasonably
modified by the application (or removal) of judgemental adjustments by management.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-328": { "value": "
Fair value through other comprehensive income (FVOCI)
Financial assets held with the intent of collecting contractual cash flows or selling, where contractual terms comprise solely
payment of principal and interest, are classified and measured at FVOCI. This category of financial asset includes most of
the Group\u2019s debt securities which are held to manage liquidity.
Assets are measured at fair value based on quoted market prices or prices obtained from market intermediaries where
available. In cases where quoted market prices are not available, discounted cash flow valuations are used.
Interest on FVOCI assets is recognised in Interest receivable and similar income in the Income Statement, using the EIR
method.
Unrealised gains and losses arising from changes in fair value are recognised directly in Other comprehensive income,
except for impairment losses and foreign exchange gains and losses, which are recognised in the Income Statement. Gains
and losses arising on the sale of FVOCI assets, including any cumulative gains or losses previously recognised in Other
comprehensive income, are recognised in the Income Statement.
Fair value through profit and loss (FVTPL)
FVTPL is the default category for financial assets which do not meet the criteria for amortised cost or FVOCI assets. Assets
that are classified as FVTPL include derivative financial instruments, investments in equity shares and for the Society,
investments in group undertakings that are debt instruments with write-down features.
These assets are carried at fair value and are initially recognised at the trade date.
Interest income and changes in the fair value of derivatives other than the effective portion of those in cash flow hedge
accounting relationships are recognised in the Income Statement. The impact of hedging on the measurement of financial
assets and liabilities is detailed in the derivatives and hedge accounting policy.
Dividends and changes in the fair value of equity instruments are recognised in the Income Statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-329": { "value": "
Fair value through profit and loss (FVTPL)
FVTPL is the default category for financial assets which do not meet the criteria for amortised cost or FVOCI assets. Assets
that are classified as FVTPL include derivative financial instruments, investments in equity shares and for the Society,
investments in group undertakings that are debt instruments with write-down features.
These assets are carried at fair value and are initially recognised at the trade date.
Interest income and changes in the fair value of derivatives other than the effective portion of those in cash flow hedge
accounting relationships are recognised in the Income Statement. The impact of hedging on the measurement of financial
assets and liabilities is detailed in the derivatives and hedge accounting policy.
Dividends and changes in the fair value of equity instruments are recognised in the Income Statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-331": { "value": "
Impairment of financial assets
The Group assesses, on a forward-looking basis, the expected credit loss (ECL) associated with its financial assets carried at
amortised cost and FVOCI and its mortgage pipeline commitments. Financial assets held at FVTPL are not subject to
impairment under IFRS 9.
IFRS 9 requires the Group to categorise its financial assets into one of four stages at the reporting date.
Assets that are performing are shown in stage 1; assets where there has been a significant increase in credit risk since
initial recognition are in stage 2; assets that were not credit impaired or in default at origination but have since become so
are in stage 3; and assets that were Purchased or Originated Credit Impaired are classed as POCI. The Group is required to
recognise a 12 month ECL allowance on all stage 1 assets and a lifetime ECL allowance on all stage 2, 3 and POCI assets.
Whilst stage 2 or 3 assets may cure and revert to stage 1, POCI assets always attract a lifetime ECL until derecognition.
Purchased assets that are not POCI are initially allocated to stage 1 on recognition by the Group.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment.
The carrying values of property, plant and equipment are reviewed at each reporting date for impairment or whenever
events or changes in circumstances indicate that the carrying value may not be recoverable. Where this is the case, the
asset is written down immediately to the estimated recoverable amount.
Gains and losses on disposals are determined by comparing the net disposal proceeds with the carrying value of the asset
and are included within the Income Statement.
Depreciation commences when the asset is ready for use and is provided on a straight line basis over the anticipated useful
life of the asset, which is typically as follows:
Freehold and long leasehold buildings
Over a period of 50 years
Leasehold adaptations
Shorter of remaining term of the lease and useful life
Equipment, fixtures and fittings
Three to eight years
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-330": { "value": "
Impairment of financial assets
The Group assesses, on a forward-looking basis, the expected credit loss (ECL) associated with its financial assets carried at
amortised cost and FVOCI and its mortgage pipeline commitments. Financial assets held at FVTPL are not subject to
impairment under IFRS 9.
IFRS 9 requires the Group to categorise its financial assets into one of four stages at the reporting date.
Assets that are performing are shown in stage 1; assets where there has been a significant increase in credit risk since
initial recognition are in stage 2; assets that were not credit impaired or in default at origination but have since become so
are in stage 3; and assets that were Purchased or Originated Credit Impaired are classed as POCI. The Group is required to
recognise a 12 month ECL allowance on all stage 1 assets and a lifetime ECL allowance on all stage 2, 3 and POCI assets.
Whilst stage 2 or 3 assets may cure and revert to stage 1, POCI assets always attract a lifetime ECL until derecognition.
Purchased assets that are not POCI are initially allocated to stage 1 on recognition by the Group.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-332": { "value": "
ECL allowance on acquired portfolios
Following an acquisition, the acquiree, i.e. the Group, is required under IFRS 9 to recognise a new ECL allowance against
the acquired non-credit impaired financial assets. Therefore all of the Bank's non-credit impaired assets were initially
recognised by the Group in stage 1. Loans that are credit impaired on acquisition are classed as purchased or originated
credit-impaired ('POCI'), with any credit risk against these assets covered by the fair value adjustment recognised against
the assets. Such credit impaired loans remain categorised as POCI throughout their life, irrelevant of any significant
improvement in credit quality.", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-334": { "value": "
Derivative financial instruments
The Group holds derivative financial instruments only to manage the risks associated with its non-variable rate assets and
liabilities and its foreign currency transactions, and not for speculative or trading purposes.
All external derivative financial instruments are carried at fair value. Derivatives are principally valued by discounting cash
flows using yield curves that are based on observable market data. In measuring fair value, separate adjustments are made
for credit risk to the extent not already included in the valuation.
Hedge accounting
The Group applies the requirements of IAS 39 for hedge accounting. Where the documentation, eligibility and testing
criteria for hedge accounting set out in IAS 39 are met, the Group applies hedge accounting and designates the hedging
derivative as either hedging fair value or cash flow risks. The Group undertakes this on both an individual and a portfolio
hedge accounting basis.
The acquisition of the Bank included a portfolio of non-interest bearing balances (NIBBs), which are financial instruments
that have not been previously held within the Group. The Group has relied on the provisions of UK-adopted IAS 39 that
allows an effective hedge accounting relationship to be designated for the interest rate exposure arising from stable, non-
interest bearing current accounts based on behavioural modelling of their expected duration.
Fair value hedges
Changes in the fair value of derivatives that are designated in fair value hedge relationships are recorded in the Income
Statement under Net gains/losses from derivative financial instruments in the period in which the movement occurs,
together with the change in fair value of the hedged asset or liability that is attributable to the hedged risk (interest rate
risk). This also applies if the hedged item is classified as an FVOCI financial asset.
Cash flow hedges
Gains and losses on derivative financial instruments hedging the variability in cash flows of a designated asset or liability
are recognised directly through the Statement of Comprehensive Income in the cash flow hedge reserve. The relevant
portion of the gain or loss on the hedging instrument is recognised in the Income Statement immediately to the extent that
the hedge is deemed ineffective under IAS 39. Any amounts deferred to the cash flow hedge reserve are subsequently
recycled to the Income Statement when the underlying asset or liability being hedged impacts the Income Statement, for
example, when foreign exchange movements occur.
Intangible assets
Intangible assets are stated at cost less accumulated amortisation and any accumulated impairment. Maintenance costs
associated with the operation of these intangibles are charged to the Income Statement as incurred. Amortisation is
charged to the Income Statement on a straight line basis over the useful life of the asset commencing from the date the
asset is ready for use.
The useful life of computer software is reviewed by management at each financial year end and is currently between three
and eight years for assets which are currently in use.
Software development costs, both internal and external, and purchased software that is not an integral part of a related
hardware purchase are recognised as an intangible asset if it is probable that: (a) the asset is controlled by the Group; (b) it
is separately identifiable; and (c) it will generate future economic benefits. For each significant project undertaken by the
Group, an assessment of capitalisation criteria including future economic benefit is performed by the relevant business area
and reviewed in accordance with agreed governance processes.
Intangible assets held by the Group also includes a core deposit relationship asset recognised as part of business
combinations and is held at cost (equivalent to fair value at acquisition) less accumulated amortisation and impairment.
This is amortised over an estimated useful life of five years on a straight line basis.
Intangible assets, including assets in the course of construction, are reviewed for impairment at each reporting date or
whenever events or changes in circumstances indicate that the carrying amount may exceed the recoverable amount.
Where impairment is identified, the asset is written down immediately to the estimated recoverable amount and the
impairment amount is charged to the Income Statement.
1. Accounting policies continued
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-333": { "value": "
Derivative financial instruments
The Group holds derivative financial instruments only to manage the risks associated with its non-variable rate assets and
liabilities and its foreign currency transactions, and not for speculative or trading purposes.
All external derivative financial instruments are carried at fair value. Derivatives are principally valued by discounting cash
flows using yield curves that are based on observable market data. In measuring fair value, separate adjustments are made
for credit risk to the extent not already included in the valuation.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-335": { "value": "
Hedge accounting
The Group applies the requirements of IAS 39 for hedge accounting. Where the documentation, eligibility and testing
criteria for hedge accounting set out in IAS 39 are met, the Group applies hedge accounting and designates the hedging
derivative as either hedging fair value or cash flow risks. The Group undertakes this on both an individual and a portfolio
hedge accounting basis.
The acquisition of the Bank included a portfolio of non-interest bearing balances (NIBBs), which are financial instruments
that have not been previously held within the Group. The Group has relied on the provisions of UK-adopted IAS 39 that
allows an effective hedge accounting relationship to be designated for the interest rate exposure arising from stable, non-
interest bearing current accounts based on behavioural modelling of their expected duration.
Fair value hedges
Changes in the fair value of derivatives that are designated in fair value hedge relationships are recorded in the Income
Statement under Net gains/losses from derivative financial instruments in the period in which the movement occurs,
together with the change in fair value of the hedged asset or liability that is attributable to the hedged risk (interest rate
risk). This also applies if the hedged item is classified as an FVOCI financial asset.
Cash flow hedges
Gains and losses on derivative financial instruments hedging the variability in cash flows of a designated asset or liability
are recognised directly through the Statement of Comprehensive Income in the cash flow hedge reserve. The relevant
portion of the gain or loss on the hedging instrument is recognised in the Income Statement immediately to the extent that
the hedge is deemed ineffective under IAS 39. Any amounts deferred to the cash flow hedge reserve are subsequently
recycled to the Income Statement when the underlying asset or liability being hedged impacts the Income Statement, for
example, when foreign exchange movements occur.
Intangible assets
Intangible assets are stated at cost less accumulated amortisation and any accumulated impairment. Maintenance costs
associated with the operation of these intangibles are charged to the Income Statement as incurred. Amortisation is
charged to the Income Statement on a straight line basis over the useful life of the asset commencing from the date the
asset is ready for use.
The useful life of computer software is reviewed by management at each financial year end and is currently between three
and eight years for assets which are currently in use.
Software development costs, both internal and external, and purchased software that is not an integral part of a related
hardware purchase are recognised as an intangible asset if it is probable that: (a) the asset is controlled by the Group; (b) it
is separately identifiable; and (c) it will generate future economic benefits. For each significant project undertaken by the
Group, an assessment of capitalisation criteria including future economic benefit is performed by the relevant business area
and reviewed in accordance with agreed governance processes.
Intangible assets held by the Group also includes a core deposit relationship asset recognised as part of business
combinations and is held at cost (equivalent to fair value at acquisition) less accumulated amortisation and impairment.
This is amortised over an estimated useful life of five years on a straight line basis.
Intangible assets, including assets in the course of construction, are reviewed for impairment at each reporting date or
whenever events or changes in circumstances indicate that the carrying amount may exceed the recoverable amount.
Where impairment is identified, the asset is written down immediately to the estimated recoverable amount and the
impairment amount is charged to the Income Statement.
1. Accounting policies continued
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-337": { "value": "
Intangible assets
Intangible assets are stated at cost less accumulated amortisation and any accumulated impairment. Maintenance costs
associated with the operation of these intangibles are charged to the Income Statement as incurred. Amortisation is
charged to the Income Statement on a straight line basis over the useful life of the asset commencing from the date the
asset is ready for use.
The useful life of computer software is reviewed by management at each financial year end and is currently between three
and eight years for assets which are currently in use.
Software development costs, both internal and external, and purchased software that is not an integral part of a related
hardware purchase are recognised as an intangible asset if it is probable that: (a) the asset is controlled by the Group; (b) it
is separately identifiable; and (c) it will generate future economic benefits. For each significant project undertaken by the
Group, an assessment of capitalisation criteria including future economic benefit is performed by the relevant business area
and reviewed in accordance with agreed governance processes.
Intangible assets held by the Group also includes a core deposit relationship asset recognised as part of business
combinations and is held at cost (equivalent to fair value at acquisition) less accumulated amortisation and impairment.
This is amortised over an estimated useful life of five years on a straight line basis.
Intangible assets, including assets in the course of construction, are reviewed for impairment at each reporting date or
whenever events or changes in circumstances indicate that the carrying amount may exceed the recoverable amount.
Where impairment is identified, the asset is written down immediately to the estimated recoverable amount and the
impairment amount is charged to the Income Statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-336": { "value": "
Intangible assets
Intangible assets are stated at cost less accumulated amortisation and any accumulated impairment. Maintenance costs
associated with the operation of these intangibles are charged to the Income Statement as incurred. Amortisation is
charged to the Income Statement on a straight line basis over the useful life of the asset commencing from the date the
asset is ready for use.
The useful life of computer software is reviewed by management at each financial year end and is currently between three
and eight years for assets which are currently in use.
Software development costs, both internal and external, and purchased software that is not an integral part of a related
hardware purchase are recognised as an intangible asset if it is probable that: (a) the asset is controlled by the Group; (b) it
is separately identifiable; and (c) it will generate future economic benefits. For each significant project undertaken by the
Group, an assessment of capitalisation criteria including future economic benefit is performed by the relevant business area
and reviewed in accordance with agreed governance processes.
Intangible assets held by the Group also includes a core deposit relationship asset recognised as part of business
combinations and is held at cost (equivalent to fair value at acquisition) less accumulated amortisation and impairment.
This is amortised over an estimated useful life of five years on a straight line basis.
Intangible assets, including assets in the course of construction, are reviewed for impairment at each reporting date or
whenever events or changes in circumstances indicate that the carrying amount may exceed the recoverable amount.
Where impairment is identified, the asset is written down immediately to the estimated recoverable amount and the
impairment amount is charged to the Income Statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-340": { "value": "
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment.
The carrying values of property, plant and equipment are reviewed at each reporting date for impairment or whenever
events or changes in circumstances indicate that the carrying value may not be recoverable. Where this is the case, the
asset is written down immediately to the estimated recoverable amount.
Gains and losses on disposals are determined by comparing the net disposal proceeds with the carrying value of the asset
and are included within the Income Statement.
Depreciation commences when the asset is ready for use and is provided on a straight line basis over the anticipated useful
life of the asset, which is typically as follows:
Freehold and long leasehold buildings
Over a period of 50 years
Leasehold adaptations
Shorter of remaining term of the lease and useful life
Equipment, fixtures and fittings
Three to eight years
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-339": { "value": "
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment.
The carrying values of property, plant and equipment are reviewed at each reporting date for impairment or whenever
events or changes in circumstances indicate that the carrying value may not be recoverable. Where this is the case, the
asset is written down immediately to the estimated recoverable amount.
Gains and losses on disposals are determined by comparing the net disposal proceeds with the carrying value of the asset
and are included within the Income Statement.
Depreciation commences when the asset is ready for use and is provided on a straight line basis over the anticipated useful
life of the asset, which is typically as follows:
Freehold and long leasehold buildings
Over a period of 50 years
Leasehold adaptations
Shorter of remaining term of the lease and useful life
Equipment, fixtures and fittings
Three to eight years
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-338": { "value": "
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment.
The carrying values of property, plant and equipment are reviewed at each reporting date for impairment or whenever
events or changes in circumstances indicate that the carrying value may not be recoverable. Where this is the case, the
asset is written down immediately to the estimated recoverable amount.
Gains and losses on disposals are determined by comparing the net disposal proceeds with the carrying value of the asset
and are included within the Income Statement.
Depreciation commences when the asset is ready for use and is provided on a straight line basis over the anticipated useful
life of the asset, which is typically as follows:
Freehold and long leasehold buildings
Over a period of 50 years
Leasehold adaptations
Shorter of remaining term of the lease and useful life
Equipment, fixtures and fittings
Three to eight years
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-341": { "value": "
Employee benefits
Pensions
The Group operates both defined benefit and defined contribution pension schemes for employees.
Contributions to the defined contribution pension schemes are recognised as an expense in the Income Statement as
incurred, on an accruals basis.
The Group's net obligations under each defined benefit pension scheme are assessed annually by independent qualified
actuaries. The net obligations are calculated as the difference between the fair value of the schemes' assets and the
amount of future entitlements earned by the schemes' members from service in prior periods, discounted back to present
values using a rate based on an index of long-dated AA rated corporate bonds for each separate scheme. This calculation
allows the net obligation of each scheme to be expressed as either a surplus or a deficit, which is recognised as either an
asset or a liability respectively in the Group's accounts at the Balance Sheet date.
Gains or losses arising from the remeasurement of the defined benefit pension schemes are recognised in full, in the year
they occur, in the Statement of Comprehensive Income.
Other long-term employee benefits
The cost of bonuses payable 12 months or more after the end of the financial years in which they are earned is recognised
in the year in which the employees render the related service.
Short-term employee benefits
The cost of short-term employee benefits, including wages and salaries, social security costs, bonuses payable within 12
months and healthcare, is recognised in the year of service.
Financial liabilities
Financial liabilities include shares, customer accounts, bank and other deposits, debt securities in issue, derivative financial
instruments, subordinated liabilities and subscribed capital. The Group classifies its financial liabilities into the following
categories:
Amortised cost
Financial liabilities, other than those classified as fair value through profit and loss, are measured on an amortised cost
basis reflecting their face value adjusted for any unamortised premiums, discounts and transaction costs directly
attributable to the acquisition or issue.
Amortisation is recognised in Interest payable and similar charges at the Effective Interest Rate of the liability.
Fair value through profit and loss
All derivatives are carried at fair value. Changes in the fair value of derivatives other than those in cash flow hedge
accounting relationships are recognised in the Income Statement. The impact of hedging on the measurement of financial
assets and liabilities is detailed in the derivatives and hedge accounting policy above. For changes in the fair value of
derivatives in cash flow hedge accounting relationships, see the accounting policy for cash flow hedges.
In the Society only, specific debt securities in issue and subordinated liabilities have been designated at fair value in order
to avoid an accounting mismatch where the financial instruments have been downstreamed to the Bank on a like-for-like
basis and the corresponding internal assets have been mandatorily classified at fair value. As this mismatch does not persist
at the Group level, these instruments are classified at amortised cost on the Group balance sheet.
1. Accounting policies continued
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-342": { "value": "
Financial liabilities
Financial liabilities include shares, customer accounts, bank and other deposits, debt securities in issue, derivative financial
instruments, subordinated liabilities and subscribed capital. The Group classifies its financial liabilities into the following
categories:
Amortised cost
Financial liabilities, other than those classified as fair value through profit and loss, are measured on an amortised cost
basis reflecting their face value adjusted for any unamortised premiums, discounts and transaction costs directly
attributable to the acquisition or issue.
Amortisation is recognised in Interest payable and similar charges at the Effective Interest Rate of the liability.
Fair value through profit and loss
All derivatives are carried at fair value. Changes in the fair value of derivatives other than those in cash flow hedge
accounting relationships are recognised in the Income Statement. The impact of hedging on the measurement of financial
assets and liabilities is detailed in the derivatives and hedge accounting policy above. For changes in the fair value of
derivatives in cash flow hedge accounting relationships, see the accounting policy for cash flow hedges.
In the Society only, specific debt securities in issue and subordinated liabilities have been designated at fair value in order
to avoid an accounting mismatch where the financial instruments have been downstreamed to the Bank on a like-for-like
basis and the corresponding internal assets have been mandatorily classified at fair value. As this mismatch does not persist
at the Group level, these instruments are classified at amortised cost on the Group balance sheet.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-345": { "value": "
Provisions and contingent liabilities
A provision is recognised when there is a present obligation as a result of a past event, it is probable that the obligation will
be settled and the amount can be estimated reliably.
Contingent liabilities are potential obligations from past events which will only be confirmed by future events. Contingent
liabilities are not recognised within the Balance Sheet.
", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-344": { "value": "
Provisions and contingent liabilities
A provision is recognised when there is a present obligation as a result of a past event, it is probable that the obligation will
be settled and the amount can be estimated reliably.
Contingent liabilities are potential obligations from past events which will only be confirmed by future events. Contingent
liabilities are not recognised within the Balance Sheet.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-343": { "value": "
Provisions and contingent liabilities
A provision is recognised when there is a present obligation as a result of a past event, it is probable that the obligation will
be settled and the amount can be estimated reliably.
Contingent liabilities are potential obligations from past events which will only be confirmed by future events. Contingent
liabilities are not recognised within the Balance Sheet.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-346": { "value": "
Equity instruments
Financial instruments are classified as equity instruments where the contractual arrangements with the holder do not result
in the Group having a present obligation to deliver cash, another financial asset or a variable number of equity instruments.
Where the Group does have a present obligation, the instrument is classified as a financial liability.
The proceeds of the issuance of equity instruments are included in equity net of the costs directly attributable to the
issuance.
Distributions to holders of equity instruments are recognised when they become irrevocable and are deducted from the
general reserve.
", "dimensions": { "concept": "cbs:DescriptionOfAccountingPolicyForEquityInstruments", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-348": { "value": "
Foreign currency translation
The consolidated financial statements are presented in pounds sterling, which is the functional currency of the Group.
Foreign currency transactions are translated into sterling using the exchange rates prevailing at the dates of the
transactions. Monetary items denominated in foreign currencies are re-translated at the rate prevailing at the Balance
Sheet date. Foreign exchange gains and losses resulting from re-translation and settlement are recognised on a net basis in
the Income Statement within Interest payable and similar charges.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-347": { "value": "
Foreign currency translation
The consolidated financial statements are presented in pounds sterling, which is the functional currency of the Group.
Foreign currency transactions are translated into sterling using the exchange rates prevailing at the dates of the
transactions. Monetary items denominated in foreign currencies are re-translated at the rate prevailing at the Balance
Sheet date. Foreign exchange gains and losses resulting from re-translation and settlement are recognised on a net basis in
the Income Statement within Interest payable and similar charges.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-350": { "value": "
Cash and cash equivalents
Cash and cash equivalents in the Statement of Cash Flows comprise balances with less than three months\u2019 maturity from
the date of acquisition, including cash and non-restricted balances with central banks, and loans and advances to credit
institutions. Restricted balances such as cash collateral are excluded from cash and cash equivalents.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-349": { "value": "
Cash and cash equivalents
Cash and cash equivalents in the Statement of Cash Flows comprise balances with less than three months\u2019 maturity from
the date of acquisition, including cash and non-restricted balances with central banks, and loans and advances to credit
institutions. Restricted balances such as cash collateral are excluded from cash and cash equivalents.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-351": { "value": "
IFRS disclosure
For ease of reference, certain audited IFRS disclosures related to credit, market and liquidity and funding risks are included
within the Risk Management Report.
A maturity analysis for all assets and liabilities is presented in the Liquidity and Funding section of the Risk Management
Report.
Audited information is also included within the Directors\u2019 Remuneration Report. These disclosures, where marked as
'audited', are covered by the Independent Auditors' Report.
", "dimensions": { "concept": "cbs:DescriptionOfAccountingPolicyForIFRSDisclosure", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-352": { "value": "
The significant accounting policy judgements included the classification and measurement of equity release loans in the
prior year. As a result of this being a small residual and closed portfolio in run off, this is no longer classed as a significant
accounting policy judgment.
In the prior year, the significant accounting assumptions and estimates included, in relation to expected credit loss
provision on loans and advances to customers, the application of post model adjustments and forward-looking information
incorporated in the ECL models. As a result of the nature of risk in the lending portfolio in the context of the Group
financial statements, these are no longer classed as a significant accounting assumption and estimate.", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-353": { "value": "Segmental reporting
Coventry Building Society and its subsidiaries all operate in the United Kingdom and therefore no further geographical
analysis has been presented.
The chief operating decision maker has been identified as the Group Board. The Board reviews the Group's internal
reporting in order to assess performance and allocate resources. Operating segments are reported in a manner consistent
with the internal reporting provided to the Board.
The Group operates with the following two segments:
Society sub-group: Provides retail financial services across mortgages and savings products to individual members and
customers. Includes all income and costs associated with Coventry Building Society, Godiva Mortgages Ltd, ITL Mortgages
Ltd and the consolidated Special Purpose Vehicles (SPV), (namely Coventry Building Society Covered Bonds LLP, Coventry
Godiva Covered Bonds LLP and Economic Master Issuer plc).
Bank sub-group: Provides retail and business banking services across mortgages, savings, current accounts and unsecured
lending products to individual, business and commercial customers. Includes all income and costs associated with The Co-
operative Bank Holdings p.l.c., The Co-operative Bank p.l.c. and their subsidiaries and the consolidated SPV Moorland
Covered Bonds LLP.
In addition to the two segments identified above, certain other financial adjustments arise at a consolidated level as a
result of combining the two organisation segments together. These have been classified separately as a consolidation
category.
3. Segmental reporting continued
There is no comparative segmental reporting disclosed for the prior period. Prior to the acquisition of the Bank, the Group
had no separately identified segments, being a wholly UK operating retail financial services organisation under one banking
licence.
Society sub-group
2025
\u00a3m
Bank sub-group
2025
\u00a3m
Consolidation
2025
\u00a3m
Group
2025
\u00a3m
Net interest income1
611
431
102
1,144
Other non-interest (expense)/ income
(21)
52
(90)
(59)
Total income
590
483
12
1,085
Administrative expenses
(301)
(372)
\u2014
(673)
Acquisition & integration related costs
(58)
(9)
\u2014
(67)
Amortisation and depreciation
(29)
(45)
(30)
(104)
Impairment charge
(2)
(4)
(18)
(24)
Gain on acquisition of a subsidiary
\u2014
\u2014
584
584
Profit before tax
200
53
548
801
Total assets
64,618
24,981
(1,360)
88,239
Total liabilities
60,962
23,629
(641)
83,950
1. Net interest income of Society sub-group and Bank sub-group includes intercompany interest of \u00a317m paid by the Bank to the Society, which is eliminated in the Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-355": { "value": "
4. Interest receivable and similar income
[]
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
On financial assets measured at amortised cost:
Loans and advances to customers
2,795
1,846
1,262
1,145
Connected undertakings
\u2014
\u2014
546
555
Interest on other liquid assets1
562
496
420
490
Interest and other income on debt securities measured at FVOCI
96
60
7
56
Net income on financial instruments in a qualifying hedge relationship
539
892
448
892
Total interest receivable and similar income calculated using the EIR
method
3,992
3,294
2,683
3,138
Interest income on derivatives not in a designated hedging relationship
1
\u2014
\u2014
\u2014
Total interest receivable and similar income
3,993
3,294
2,683
3,138
1. Interest on other liquid assets includes \u00a3526 million for the Group and \u00a3407 million for the Society (2024: \u00a3470 million, Group and Society) in respect of interest on reserve balances
with the Bank of England.
5. Interest payable and similar charges
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
On shares held by individuals
1,844
1,935
1,844
1,935
On customer accounts
400
\u2014
\u2014
\u2014
On subscribed capital
5
5
5
5
On other deposits and borrowings
Subordinated liabilities
16
1
9
1
Debt securities in issue
317
229
182
150
Loans from connected undertakings
\u2014
\u2014
119
128
Other1
192
241
114
241
Net expense from hedging instruments
74
204
42
182
Foreign currency losses
1
\u2014
2
\u2014
Total interest payable and similar charges
2,849
2,615
2,317
2,642
1. Other interest payable includes \u00a3104 million for the Group and \u00a343 million for the Society (2024: \u00a3154 million, Group and Society) relating to interest on balances drawn under the
Term Funding Scheme and \u00a323 million for the Group and \u00a320 million for the Society (2024: \u00a351 million,Group and Society) of interest on collateral in respect of swap agreements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-354": { "value": "
4. Interest receivable and similar income
[]
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
On financial assets measured at amortised cost:
Loans and advances to customers
2,795
1,846
1,262
1,145
Connected undertakings
\u2014
\u2014
546
555
Interest on other liquid assets1
562
496
420
490
Interest and other income on debt securities measured at FVOCI
96
60
7
56
Net income on financial instruments in a qualifying hedge relationship
539
892
448
892
Total interest receivable and similar income calculated using the EIR
method
3,992
3,294
2,683
3,138
Interest income on derivatives not in a designated hedging relationship
1
\u2014
\u2014
\u2014
Total interest receivable and similar income
3,993
3,294
2,683
3,138
1. Interest on other liquid assets includes \u00a3526 million for the Group and \u00a3407 million for the Society (2024: \u00a3470 million, Group and Society) in respect of interest on reserve balances
with the Bank of England.
5. Interest payable and similar charges
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
On shares held by individuals
1,844
1,935
1,844
1,935
On customer accounts
400
\u2014
\u2014
\u2014
On subscribed capital
5
5
5
5
On other deposits and borrowings
Subordinated liabilities
16
1
9
1
Debt securities in issue
317
229
182
150
Loans from connected undertakings
\u2014
\u2014
119
128
Other1
192
241
114
241
Net expense from hedging instruments
74
204
42
182
Foreign currency losses
1
\u2014
2
\u2014
Total interest payable and similar charges
2,849
2,615
2,317
2,642
1. Other interest payable includes \u00a3104 million for the Group and \u00a343 million for the Society (2024: \u00a3154 million, Group and Society) relating to interest on balances drawn under the
Term Funding Scheme and \u00a323 million for the Group and \u00a320 million for the Society (2024: \u00a351 million,Group and Society) of interest on collateral in respect of swap agreements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-357": { "value": "
4. Interest receivable and similar income
[]
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
On financial assets measured at amortised cost:
Loans and advances to customers
2,795
1,846
1,262
1,145
Connected undertakings
\u2014
\u2014
546
555
Interest on other liquid assets1
562
496
420
490
Interest and other income on debt securities measured at FVOCI
96
60
7
56
Net income on financial instruments in a qualifying hedge relationship
539
892
448
892
Total interest receivable and similar income calculated using the EIR
method
3,992
3,294
2,683
3,138
Interest income on derivatives not in a designated hedging relationship
1
\u2014
\u2014
\u2014
Total interest receivable and similar income
3,993
3,294
2,683
3,138
1. Interest on other liquid assets includes \u00a3526 million for the Group and \u00a3407 million for the Society (2024: \u00a3470 million, Group and Society) in respect of interest on reserve balances
with the Bank of England.", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-356": { "value": "
4. Interest receivable and similar income
[]
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
On financial assets measured at amortised cost:
Loans and advances to customers
2,795
1,846
1,262
1,145
Connected undertakings
\u2014
\u2014
546
555
Interest on other liquid assets1
562
496
420
490
Interest and other income on debt securities measured at FVOCI
96
60
7
56
Net income on financial instruments in a qualifying hedge relationship
539
892
448
892
Total interest receivable and similar income calculated using the EIR
method
3,992
3,294
2,683
3,138
Interest income on derivatives not in a designated hedging relationship
1
\u2014
\u2014
\u2014
Total interest receivable and similar income
3,993
3,294
2,683
3,138
1. Interest on other liquid assets includes \u00a3526 million for the Group and \u00a3407 million for the Society (2024: \u00a3470 million, Group and Society) in respect of interest on reserve balances
with the Bank of England.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-360": { "value": "
5. Interest payable and similar charges
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
On shares held by individuals
1,844
1,935
1,844
1,935
On customer accounts
400
\u2014
\u2014
\u2014
On subscribed capital
5
5
5
5
On other deposits and borrowings
Subordinated liabilities
16
1
9
1
Debt securities in issue
317
229
182
150
Loans from connected undertakings
\u2014
\u2014
119
128
Other1
192
241
114
241
Net expense from hedging instruments
74
204
42
182
Foreign currency losses
1
\u2014
2
\u2014
Total interest payable and similar charges
2,849
2,615
2,317
2,642
1. Other interest payable includes \u00a3104 million for the Group and \u00a343 million for the Society (2024: \u00a3154 million, Group and Society) relating to interest on balances drawn under the
Term Funding Scheme and \u00a323 million for the Group and \u00a320 million for the Society (2024: \u00a351 million,Group and Society) of interest on collateral in respect of swap agreements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-359": { "value": "
5. Interest payable and similar charges
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
On shares held by individuals
1,844
1,935
1,844
1,935
On customer accounts
400
\u2014
\u2014
\u2014
On subscribed capital
5
5
5
5
On other deposits and borrowings
Subordinated liabilities
16
1
9
1
Debt securities in issue
317
229
182
150
Loans from connected undertakings
\u2014
\u2014
119
128
Other1
192
241
114
241
Net expense from hedging instruments
74
204
42
182
Foreign currency losses
1
\u2014
2
\u2014
Total interest payable and similar charges
2,849
2,615
2,317
2,642
1. Other interest payable includes \u00a3104 million for the Group and \u00a343 million for the Society (2024: \u00a3154 million, Group and Society) relating to interest on balances drawn under the
Term Funding Scheme and \u00a323 million for the Group and \u00a320 million for the Society (2024: \u00a351 million,Group and Society) of interest on collateral in respect of swap agreements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-358": { "value": "
5. Interest payable and similar charges
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
On shares held by individuals
1,844
1,935
1,844
1,935
On customer accounts
400
\u2014
\u2014
\u2014
On subscribed capital
5
5
5
5
On other deposits and borrowings
Subordinated liabilities
16
1
9
1
Debt securities in issue
317
229
182
150
Loans from connected undertakings
\u2014
\u2014
119
128
Other1
192
241
114
241
Net expense from hedging instruments
74
204
42
182
Foreign currency losses
1
\u2014
2
\u2014
Total interest payable and similar charges
2,849
2,615
2,317
2,642
1. Other interest payable includes \u00a3104 million for the Group and \u00a343 million for the Society (2024: \u00a3154 million, Group and Society) relating to interest on balances drawn under the
Term Funding Scheme and \u00a323 million for the Group and \u00a320 million for the Society (2024: \u00a351 million,Group and Society) of interest on collateral in respect of swap agreements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingCostsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-361": { "value": "
6. Fees and commissions receivable
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Mortgage related administration fees
8
3
2
2
Current accounts
58
\u2014
\u2014
\u2014
Credit cards
7
\u2014
\u2014
\u2014
Other fees and commissions
2
1
\u2014
1
Total
75
4
2
3
Group fees and commissions receivable for current accounts represents income for merchant interchange and added value
accounts.
7. Fees and commissions payable
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Mortgage related administration fees
6
4
3
3
Current accounts
31
\u2014
\u2014
\u2014
Credit cards
4
\u2014
\u2014
\u2014
Other fees and commissions
6
6
6
6
Total
47
10
9
9
Group fees and commissions payable for current accounts represents costs for provided added value accounts as well as
access to payment networks.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFeeAndCommissionIncomeExpenseExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-363": { "value": "
8. Ot her operating income
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Investment in equity shares
5
2
3
2
Foreign exchange gains
8
\u2014
\u2014
\u2014
Other
2
\u2014
1
\u2014
Total
15
2
4
2
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-362": { "value": "
8. Ot her operating income
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Investment in equity shares
5
2
3
2
Foreign exchange gains
8
\u2014
\u2014
\u2014
Other
2
\u2014
1
\u2014
Total
15
2
4
2
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-365": { "value": "
9. Net losses from derivative financial instruments
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Derivatives designated as fair value hedges
Losses on derivatives designated as fair value hedges
(753)
(119)
(625)
(119)
Movement in fair value of hedged items attributable to hedged risk
549
(16)
508
(16)
Derivatives designated as fair value hedges
(204)
(135)
(117)
(135)
Derivatives designated as cash flow hedges
Interest rate
108
126
108
126
Derivatives designated as cash flow hedges
108
126
108
126
Losses on other derivatives
(6)
(2)
(9)
(2)
Total
(102)
(11)
(18)
(11)
Further information on the Group\u2019s risk management strategy and how it hedges interest rate and foreign exchange risk is
included in note 26.
Losses on other derivatives where hedge accounting relief has not been obtained are \u00a36 million over the year for the Group
and \u00a39 million for the Society (2024: \u00a32 million loss Group and Society).
The gains and losses recognised represent both the impact of early termination of derivative instruments and timing
differences, which are expected to reverse over the remaining life of the derivatives, although further volatility may also
be experienced. Within losses on derivatives designated as fair value hedges reported in the year, \u00a399 million is included
which arose from the restart of the hedging programme against the acquired Bank's mortgage portfolio and non-interest
bearing liabilities as well as liquidity instruments.
9. Net losses from derivative financial instruments continued
Foreign exchange losses of \u00a3128 million (2024: \u00a378 million gains) have been recognised in the Income Statement relating to
the principal amount of financial instruments held at amortised cost. This is offset by foreign exchange gains of \u00a3127 million
(2024: \u00a381 million loss) on derivative financial instruments held at fair value.
12. Classification and measurement of financial instruments
The following tables summarise the classification of carrying amounts of the Group and Society\u2019s financial assets and
liabilities at the reporting date.
2025
2024
Group
Amortised
cost
\u00a3m
Fair value
through other
comprehensive
income
\u00a3m
Fair value
through
profit and
loss
\u00a3m
Total
\u00a3m
Amortised
cost
\u00a3m
Fair value
through other
comprehensive
income
\u00a3m
Fair value
through profit
and loss
\u00a3m
Total
\u00a3m
Financial assets
Cash and balances with
the Bank of England
11,948
\u2014
\u2014
11,948
9,893
\u2014
\u2014
9,893
Loans and advances to
credit institutions
383
\u2014
\u2014
383
329
\u2014
\u2014
329
Debt securities
26
1,536
3
1,565
\u2014
502
\u2014
502
Loans and advances to
customers
72,936
\u2014
\u2014
72,936
51,801
\u2014
\u2014
51,801
Hedge accounting
adjustment
169
\u2014
\u2014
169
(448)
\u2014
\u2014
(448)
Derivative financial
instruments
\u2014
\u2014
533
533
\u2014
\u2014
1,084
1,084
Investment in equity
shares
\u2014
\u2014
5
5
\u2014
\u2014
9
9
Total financial assets
85,462
1,536
541
87,539
61,575
502
1,093
63,170
Other non-financial assets
700
\u2014
\u2014
700
861
\u2014
\u2014
861
Total assets
86,162
1,536
541
88,239
62,436
502
1,093
64,031
Financial liabilities
Shares
50,830
\u2014
\u2014
50,830
49,343
\u2014
\u2014
49,343
Customer accounts
20,892
\u2014
\u2014
20,892
82
\u2014
\u2014
82
Deposits from banks
3,009
\u2014
\u2014
3,009
3,932
\u2014
\u2014
3,932
Debt securities in issue
8,307
\u2014
\u2014
8,307
6,543
\u2014
\u2014
6,543
Hedge accounting
adjustment
29
\u2014
\u2014
29
(68)
\u2014
\u2014
(68)
Derivative financial
instruments
\u2014
\u2014
320
320
\u2014
\u2014
305
305
Subordinated liabilities
248
\u2014
\u2014
248
15
\u2014
\u2014
15
Subscribed capital
42
\u2014
\u2014
42
42
\u2014
\u2014
42
Total financial liabilities
83,357
\u2014
320
83,677
59,889
\u2014
305
60,194
Other non-financial
liabilities
273
\u2014
\u2014
273
209
\u2014
\u2014
209
Total liabilities
83,630
\u2014
320
83,950
60,098
\u2014
305
60,403
2025
2024
Society
Amortised
cost
\u00a3m
Fair value
through other
comprehensive
income
\u00a3m
Fair value
through
profit and
loss
\u00a3m
Total
\u00a3m
Amortised
cost
\u00a3m
Fair value
through other
comprehensive
income
\u00a3m
Fair value
through profit
and loss
\u00a3m
Total
\u00a3m
Financial assets
Cash and balances with
the Bank of England
8,912
\u2014
\u2014
8,912
9,818
\u2014
\u2014
9,818
Loans and advances to
credit institutions
261
\u2014
\u2014
261
329
\u2014
\u2014
329
Debt securities
\u2014
440
\u2014
440
\u2014
442
\u2014
442
Loans and advances to
customers
33,941
\u2014
\u2014
33,941
33,458
\u2014
\u2014
33,458
Hedge accounting
adjustment
118
\u2014
\u2014
118
(448)
\u2014
\u2014
(448)
Derivative financial
instruments
\u2014
\u2014
424
424
\u2014
\u2014
1,082
1,082
Loans with Group
undertakings
18,263
\u2014
446
18,709
17,583
\u2014
\u2014
17,583
Investment in equity
shares
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
9
9
Total financial assets
61,495
440
870
62,805
60,740
442
1,091
62,273
Other non-financial assets
904
\u2014
\u2014
904
869
\u2014
\u2014
869
Total assets
62,399
440
870
63,709
61,609
442
1,091
63,142
Financial liabilities
Shares
50,830
\u2014
\u2014
50,830
49,343
\u2014
\u2014
49,343
Customer accounts
187
\u2014
\u2014
187
234
\u2014
\u2014
234
Deposits from banks
2,055
\u2014
\u2014
2,055
3,932
\u2014
\u2014
3,932
Debt securities in issue
5,408
\u2014
207
5,615
4,930
\u2014
\u2014
4,930
Hedge accounting
adjustment
7
\u2014
\u2014
7
(68)
\u2014
\u2014
(68)
Derivative financial
instruments
\u2014
\u2014
252
252
\u2014
\u2014
254
254
Subordinated liabilities
15
\u2014
239
254
15
\u2014
\u2014
15
Subscribed capital
42
\u2014
\u2014
42
42
\u2014
\u2014
42
Total financial liabilities
58,544
\u2014
698
59,242
58,428
\u2014
254
58,682
Other non-financial
liabilities
1,836
\u2014
\u2014
1,836
1,738
\u2014
\u2014
1,738
Total liabilities
60,380
\u2014
698
61,078
60,166
\u2014
254
60,420
13. Cash and cash equivalents
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Cash and balances at central banks
11,948
9,893
8,912
9,818
Loans and advances to credit institutions repayable in 3 months or less
56
\u2014
(18)
\u2014
Total cash and cash equivalents
12,004
9,893
8,894
9,818
Included within loans and advances to credit institutions at 31 December 2025 is \u00a3327 million for the Group and \u00a3279 million
for the Society (2024: \u00a3329 million, Group and Society) which relates to collateral pledged as part of the Group's
involvement in transactional payment schemes, pension scheme arrangements and derivative clearing that is not classified
as cash and cash equivalents due to restrictions to its access.
At 31 December 2025, \u00a326 million (2024: \u00a3nil) of cash in transit is included within loans and advances to credit institutions
for the Society.
14. Debt securities
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Amortised cost:
Mortgage backed securities
26
\u2014
\u2014
\u2014
Total amortised cost
26
\u2014
\u2014
\u2014
Fair value through other comprehensive income:
UK Government investment securities
789
483
440
423
Other listed transferable debt securities
747
19
\u2014
19
Total fair value through other comprehensive income
1,536
502
440
442
Fair value through profit and loss:
Mortgage backed securities
3
\u2014
\u2014
\u2014
Total fair value through profit and loss
3
\u2014
\u2014
\u2014
Total debt securities
1,565
502
440
442
2025
2024
Group
Amortised
cost
\u00a3m
FVOCI
\u00a3m
FVTPL
\u00a3m
Total
\u00a3m
Amortised
cost
\u00a3m
FVOCI
\u00a3m
FVTPL
\u00a3m
Total
\u00a3m
As at 1 January 2025
\u2014
502
\u2014
502
\u2014
1,564
\u2014
1,564
Recognised on acquisition
47
1,587
3
1,637
\u2014
\u2014
\u2014
\u2014
Additions
\u2014
182
\u2014
182
\u2014
844
\u2014
844
Maturities and disposals
(21)
(765)
\u2014
(786)
\u2014
(1,902)
\u2014
(1,902)
Change in fair value
\u2014
30
\u2014
30
\u2014
(4)
\u2014
(4)
As at 31 December 2025
26
1,536
3
1,565
\u2014
502
\u2014
502
2025
2024
Society
Amortised
cost
\u00a3m
FVOCI
\u00a3m
FVTPL
\u00a3m
Total
\u00a3m
Amortised
cost
\u00a3m
FVOCI
\u00a3m
FVTPL
\u00a3m
Total
\u00a3m
As at 1 January 2025
\u2014
442
\u2014
442
\u2014
1,515
\u2014
1,515
Additions
\u2014
16
\u2014
16
\u2014
718
\u2014
718
Maturities and disposals
\u2014
(35)
\u2014
(35)
\u2014
(1,787)
\u2014
(1,787)
Change in fair value
\u2014
17
\u2014
17
\u2014
(4)
\u2014
(4)
As at 31 December 2025
\u2014
440
\u2014
440
\u2014
442
\u2014
442
A maturity analysis of the Group debt securities is included in the Liquidity and Funding section of the Risk Management
Report. Of the \u00a3440 million relating to the Society at 31 December 2025, \u00a3127 million are due in less than one year, \u00a3313
million in more than one year.
At the 31\u00a0December 2025, debt securities totalling \u00a310 million for the Group and \u00a3nil for the Society had been sold under
sale and repurchase agreements (2024: \u00a3112 million Group, \u00a3112 million Society).
25. Debt securities in issue
The changes in debt securities issued by the Group are as follows :
2025
2024
Group
Medium
term notes
\u00a3m
Covered
bonds
\u00a3m
Residential
Mortgage
Backed
Securities
\u00a3m
Total
\u00a3m
Medium
term notes
\u00a3m
Covered
bonds
\u00a3m
Residential
Mortgage
Backed
Securities
\u00a3m
Total
\u00a3m
As at 1 January
2,067
2,866
1,610
6,543
1,145
2,955
1,278
5,378
Recognised on acquisition
678
499
\u2014
1,177
\u2014
\u2014
\u2014
\u2014
Cash flows
(345)
697
117
469
910
(15)
331
1,226
Non-cash flows
Foreign exchange movements
24
104
\u2014
128
(2)
(76)
\u2014
(78)
Change in accrued interest
(6)
(1)
(1)
(8)
12
\u2014
\u2014
12
Amortisation
4
3
1
8
2
2
1
5
Unwind of fair value on acquisition
(10)
\u2014
\u2014
(10)
\u2014
\u2014
\u2014
\u2014
As at 31 December
2,412
4,168
1,727
8,307
2,067
2,866
1,610
6,543
The changes in debt securities issued by the Society are as follows:
2025
2024
Society
Medium
term notes
\u00a3m
Covered
bonds
\u00a3m
Residential
Mortgage
Backed
Securities
\u00a3m
Total
\u00a3m
Medium
term notes
\u00a3m
Covered
bonds
\u00a3m
Residential
Mortgage
Backed
Securities
\u00a3m
Total
\u00a3m
As at 1 January
2,067
2,866
(3)
4,930
1,145
2,955
(3)
4,097
Cash flows
(145)
697
\u2014
552
910
(15)
\u2014
895
Non-cash flows
Foreign exchange movements
24
104
\u2014
128
(2)
(76)
\u2014
(78)
Change in accrued interest
(3)
(1)
\u2014
(4)
12
\u2014
\u2014
12
Amortisation
2
3
\u2014
5
2
2
\u2014
4
Change in fair value through profit
and loss
4
\u2014
\u2014
4
\u2014
\u2014
\u2014
\u2014
As at 31 December
1,949
3,669
(3)
5,615
2,067
2,866
(3)
4,930
Debt securities in issue are repayable in the ordinary course of business as follows:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Accrued interest
39
31
32
30
Other debt securities
In not more than one year
1,795
1,052
1,272
849
In more than one year
6,473
5,460
4,311
4,051
Total
8,307
6,543
5,615
4,930
26. Derivative financial instruments
The Group elected to continue to apply the hedge accounting requirements of IAS 39 as permitted under IFRS 9.
Risk management strategy
Derivative financial instruments, predominantly interest rate and cross currency swaps, are held solely for the purposes of
mitigating interest rate risk, foreign exchange risk or interest rate and foreign exchange risk together, as explained in the
Risk Management Report. Where appropriate, they are designated as hedging instruments within either fair value or cash
flow hedge relationships under the terms of UK-adopted IAS 39. Derivatives can hedge specific assets or liabilities such as
liquidity or wholesale instruments (sometimes referred to as \u2018micro\u2019 hedges) or portions of a portfolio of fixed rate
products (sometimes referred to as \u2018macro\u2019 hedges).
For micro hedges, the Group establishes the hedging ratio by comparing the notional amount of the derivatives with the
principal of the instruments being hedged. For macro hedges, the Group establishes the hedging ratio by matching the
notional amount of the derivatives with the principal of that portion of the portfolio being hedged and manages this on a
monthly basis by entering into interest rate swaps.
Where interest rate risk is hedged, only the interest rate risk element of the underlying position is designated as the hedged
item and therefore other risks, such as credit risk, which are managed but not hedged by the Group, are excluded.
The interest rate risk element is determined with regard to the fixed rate that represents the benchmark rate of interest
being hedged. Where foreign exchange risk is hedged, the foreign currency risk component is determined as the change in
cash flows of the foreign currency debt arising solely from changes in the relevant forward exchange rates.
For fair value hedges, the effectiveness of the hedge relationship is assessed by comparing changes in the fair value of the
hedged item attributable to changes in the benchmark rate of interest with changes in the fair value of the derivative.
For cash flow hedges, effectiveness is assessed by comparing the changes in the fair value of the derivative with changes in
the fair value of the hedged item attributable to the hedged risk, using the hypothetical derivative method.
Possible sources of ineffectiveness are as follows:
\u2022 Differences in the benchmark rates of interest used to value the hedged item and the hedging instrument, such as when
cash collateralised interest rate swaps are discounted using SONIA but this is not the benchmark rate of interest for the
hedged item.
\u2022 Differences in timing of cash flows between the derivative and the hedged item.
\u2022 Differences in weighted average rate between the derivatives and the hedged item per monthly time buckets in a
portfolio hedge.
\u2022 Differences between the expected and actual volume of prepayments where a portfolio is being hedged, as the hedging
ratio is calculated with regard to expected repayment dates, taking account of expected prepayments based on past
experience.
\u2022 Hedging derivatives with a non-zero fair value at the date of initial designation as a hedging instrument.
\u2022 Counterparty credit risk which impacts the fair value of uncollateralised swaps but not the hedged item.
Hedging instruments
The following tables contain details of the hedging instruments used in the Group\u2019s hedging strategies. The notional amount
indicates the amount on which payment flows are derived at the Balance Sheet date and do not represent risk. Derivative
assets and liabilities are included in the Balance Sheet at fair value.
2025
2024
Group
Notional
amount
\u00a3m
Fair value
assets
\u00a3m
Fair value
liabilities
\u00a3m
Notional
amount
\u00a3m
Fair value
assets
\u00a3m
Fair value
liabilities
\u00a3m
Derivatives designated as fair value hedges:
Interest rate risk
69,401
457
291
55,893
1,057
201
Derivatives designated as cash flow hedges:
Interest rate risk
9,238
18
12
9,916
23
43
Foreign exchange risk1
1,940
30
11
1,941
2
51
Foreign exchange and interest rate risk 1
417
16
\u2014
417
\u2014
8
Other derivatives
Interest rate risk
1,257
12
6
972
2
2
Foreign exchange risk
14
\u2014
\u2014
\u2014
\u2014
\u2014
Total derivatives
82,267
533
320
69,139
1,084
305
1. Cash flows are expected to occur over a four year period (2024: five).
2025
2024
Society
Notional
amount
\u00a3m
Fair value
assets
\u00a3m
Fair value
liabilities
\u00a3m
Notional
amount
\u00a3m
Fair value
assets
\u00a3m
Fair value
liabilities
\u00a3m
Derivatives designated as fair value hedges:
Interest rate risk
56,784
389
240
55,893
1,057
201
Derivatives designated as cash flow hedges:
Interest rate risk
9,238
18
12
9,916
23
43
Foreign exchange and interest rate risk
417
16
\u2014
417
\u2014
8
Other derivatives
Interest rate risk
482
1
\u2014
972
2
2
Total derivatives
66,921
424
252
67,198
1,082
254
The following tables set out the maturity profile and average interest and foreign exchange rates of the hedging
instruments used in the Group\u2019s hedging strategy at 31\u00a0December 2025. Derivative contractual maturities are included in
the Risk Management Report.
The following table contains details of fair value hedged exposures at 31\u00a0December 2025:
Maturity
2025
Group
Up to one
month
\u00a3m
One to three
months
\u00a3m
Three months
to one year
\u00a3m
One to five
years
\u00a3m
More than five
years
\u00a3m
Interest rate risk:
Contract/ notional amount
1,278
1,795
25,710
47,266
3,847
Average fixed interest rate
1.9%
3.4%
3.7%
3.4%
3.6%
Foreign exchange risk:
Contract/ notional amount
2
\u2014
891
1,061
\u2014
Average fixed interest rate
\u2014%
\u2014%
2.9%
2.3%
\u2014%
Average \u00a3/\u20ac exchange rate
1.2
\u2014
0.9
0.9
\u2014
Foreign exchange and interest rate risk:
Contract/ notional amount
\u2014
\u2014
\u2014
417
\u2014
Average fixed interest rate
\u2014%
\u2014%
\u2014%
3.1%
\u2014%
Average \u00a3/\u20ac exchange rate
\u2014
\u2014
\u2014
0.8
\u2014
Maturity
2025
Society
Up to one
month
\u00a3m
One to three
months
\u00a3m
Three months
to one year
\u00a3m
One to five
years
\u00a3m
More than five
years
\u00a3m
Interest rate risk:
Contract/ notional amount
232
961
22,822
39,697
2,792
Average fixed interest rate
1.3%
3.4%
3.7%
3.4%
3.6%
Foreign exchange and interest rate risk:
Contract/ notional amount
\u2014
\u2014
\u2014
417
\u2014
Average fixed interest rate
\u2014%
\u2014%
\u2014%
3.1%
\u2014%
Average \u00a3/\u20ac exchange rate
\u2014
\u2014
\u2014
0.8
\u2014
Maturity
2024
Group
Up to one
month
\u00a3m
One to three
months
\u00a3m
Three months
to one year
\u00a3m
One to five
years
\u00a3m
More than five
years
\u00a3m
Interest rate risk:
Contract/ notional amount
184
792
23,453
38,961
3,392
Average fixed interest rate
0.4%
2.3%
4.0%
3.4%
3.4%
Foreign exchange risk:
Contract/ notional amount
\u2014
\u2014
\u2014
1,940
\u2014
Average fixed interest rate
\u2014
\u2014
\u2014
2.6%
\u2014
Average \u00a3/\u20ac exchange rate
\u2014
\u2014
\u2014
1.0
\u2014
Foreign exchange and interest rate risk:
Contract/ notional amount
\u2014
\u2014
\u2014
417
\u2014
Average fixed interest rate
\u2014
\u2014
\u2014
3.1%
\u2014
Average \u00a3/\u20ac exchange rate
\u2014
\u2014
\u2014
0.8
\u2014
Maturity
2024
Society
Up to one
month
\u00a3m
One to three
months
\u00a3m
Three months
to one year
\u00a3m
One to five
years
\u00a3m
More than five
years
\u00a3m
Interest rate risk:
Contract/ notional amount
184
792
23,453
38,961
3,392
Average fixed interest rate
0.4%
2.3%
4.0%
3.4%
3.4%
Foreign exchange and interest rate risk:
Contract/ notional amount
\u2014
\u2014
\u2014
417
\u2014
Average fixed interest rate
\u2014
\u2014
\u2014
3.1%
\u2014
Average \u00a3/\u20ac exchange rate
\u2014
\u2014
\u2014
0.8
\u2014
Hedged items
The following table contains details of fair value hedged exposures at 31 December:
2025
2024
Carrying amount of hedged
item
Accumulated amount of fair
value adjustments on the
hedged item
Carrying amount of hedged
item
Accumulated amount of fair
value adjustments on the
hedged item
Group
Assets
\u00a3m
Liabilities
\u00a3m
Assets
\u00a3m
Liabilities
\u00a3m
Assets
\u00a3m
Liabilities
\u00a3m
Assets
\u00a3m
Liabilities
\u00a3m
Fair value hedges:
Interest rate 1,2
67,047
(22,739)
107
(29)
46,473
(23,042)
(494)
68
2025
2024
Carrying amount of hedged
item
Accumulated amount of fair
value adjustments on the
hedged item
Carrying amount of hedged
item
Accumulated amount of fair
value adjustments on the
hedged item
Society
Assets
\u00a3m
Liabilities
\u00a3m
Assets
\u00a3m
Liabilities
\u00a3m
Assets
\u00a3m
Liabilities
\u00a3m
Assets
\u00a3m
Liabilities
\u00a3m
Fair value hedges:
Interest rate 1,2
48,489
(19,394)
88
(7)
46,473
(23,042)
(494)
68
1. Assets presented in Loans and advances to customers and Debt securities in the Balance Sheet.
2. Liabilities presented in Shares, Customer accounts and Debt securities in issue in the Balance Sheet.
Of the \u00a3107 million increase (2024: \u00a3494 million decrease) total accumulated fair value adjustments on the hedged asset,
\u00a3169 million increase (2024: \u00a3448 million decrease) relates to hedging instruments for loans and advances to customers.
The remainder relates to hedges in place against treasury instruments.
The following tables provide additional information on cash flow hedges:
Changes in Fair Value
Amounts reclassified from
reserves to Income Statement
2025
Group
Hedging
derivative
\u00a3m
Hedged item
for
ineffectiveness
assessment
\u00a3m
Gains/(losses)
recognised in
OCI
\u00a3m
Hedged cash
flows will no
longer occur
\u00a3m
Hedged item
for affected
Income
Statement
\u00a3m
Recognised in
Income
Statement1
\u00a3m
Derivatives designated as cash flow hedges:
Foreign exchange
68
68
68
\u2014
106
\u2014
Foreign exchange and interest rate
22
23
22
\u2014
22
\u2014
Interest rate
17
17
17
107
\u2014
108
1. Ineffectiveness is shown in note 9 Net (losses)/gains from derivatives and hedge accounting.
Changes in Fair Value
Amounts reclassified from
reserves to Income Statement
2025
Society
Hedging
derivative
\u00a3m
Hedged item
for
ineffectiveness
assessment
\u00a3m
Gains/(losses)
recognised in
OCI
\u00a3m
Hedged cash
flows will no
longer occur
\u00a3m
Hedged item
for affected
Income
Statement
\u00a3m
Recognised in
Income
Statement1
\u00a3m
Derivatives designated as cash flow hedges:
Foreign exchange
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Foreign exchange and interest rate
22
23
22
\u2014
22
\u2014
Interest rate
17
17
17
107
\u2014
108
1. Ineffectiveness is shown in note 9 Net losses from derivative financial instruments.
As at 31\u00a0December 2025, balances remaining in the cash flow hedge reserve, gross of tax, are a \u00a315 million gain for
continuing hedges and \u00a3149 million gain for discontinued hedges (2024: \u00a330 million gain, \u00a3261 million gain respectively).
Changes in Fair Value
Amounts reclassified from
reserves to Income Statement
2024
Group
Hedging
derivative
\u00a3m
Hedged item
for
ineffectiveness
assessment
\u00a3m
Gains/(losses)
recognised in
OCI
\u00a3m
Hedged cash
flows will no
longer occur
\u00a3m
Hedged item
for affected
Income
Statement
\u00a3m
Recognised in
Income
Statement1
\u00a3m
Derivatives designated as cash flow hedges:
Foreign exchange
(38)
(38)
(38)
\u2014
(77)
\u2014
Foreign exchange and interest rate
(4)
(4)
(4)
\u2014
(4)
\u2014
Interest rate
31
31
31
126
\u2014
126
1. Ineffectiveness is shown in note 9 Net losses from derivative financial instruments.
Changes in Fair Value
Amounts reclassified from
reserves to Income Statement
2024
Society
Hedging
derivative
\u00a3m
Hedged item
for
ineffectiveness
assessment
\u00a3m
Gains/(losses)
recognised in
OCI
\u00a3m
Hedged cash
flows will no
longer occur
\u00a3m
Hedged item
for affected
Income
Statement
\u00a3m
Recognised in
Income
Statement1
\u00a3m
Derivatives designated as cash flow hedges:
Foreign exchange
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Foreign exchange and interest rate
(4)
(4)
(4)
\u2014
(4)
\u2014
Interest rate
31
31
31
126
\u2014
126
1. Ineffectiveness is shown in note 9 Net (losses)/gains from derivatives and hedge accounting.
33. Financial instruments \u2013 fair value of financial assets and liabilities
For the purpose of calculating fair values, fair value is assessed as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants in the principal or, in its absence, the most
advantageous market to which the Group has access at that date. The Group measures fair value using the following fair
value hierarchy that reflects the significance of the inputs used in making the measurements:
\u2022 Level 1: unadjusted quoted prices in active markets for identical instruments.
\u2022 Level 2: valuation techniques for which all significant inputs are based on observable market data.
\u2022 Level 3: valuation techniques for which significant inputs are not based on observable market data.
Where applicable, the Group measures fair value using the quoted price in an active market for that instrument. A market
is regarded as active if transactions take place with sufficient frequency and volume to provide pricing information on an
ongoing basis. Where this is not applicable, the Group determines fair values using other valuation techniques.
Fair value of assets and liabilities held at amortised cost
The following table summarises the fair value of the Group's and Society's financial assets and liabilities measured at
amortised cost in the Group's and Society's Balance Sheet.
2025
Group
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
383
\u2014
383
\u2014
383
Loans and advances to customers
72,936
\u2014
\u2014
73,266
73,266
Debt securities
26
\u2014
\u2014
27
27
Financial liabilities
Shares
50,830
\u2014
\u2014
50,480
50,480
Customer accounts
20,892
\u2014
42
20,841
20,883
Deposits from banks
3,009
\u2014
2,993
16
3,009
Debt securities in issue
8,307
\u2014
8,301
\u2014
8,301
Subordinated liabilities
248
\u2014
258
\u2014
258
Subscribed capital
42
79
\u2014
\u2014
79
2025
Society
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
261
\u2014
261
\u2014
261
Loans and advances to customers
33,941
\u2014
\u2014
34,167
34,167
Debt securities
\u2014
\u2014
\u2014
\u2014
\u2014
Loans with Group undertakings
18,263
\u2014
3,873
14,298
18,171
Financial liabilities
Shares
50,830
\u2014
\u2014
50,480
50,480
Customer accounts
187
\u2014
187
\u2014
187
Deposits from banks
2,055
\u2014
2,055
\u2014
2,055
Debt securities in issue
5,408
\u2014
5,393
\u2014
5,393
Subordinated liabilities
15
\u2014
19
\u2014
19
Subscribed capital
42
79
\u2014
\u2014
79
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at amortised cost continued
2024
Group
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
329
\u2014
329
\u2014
329
Loans and advances to customers
51,801
\u2014
\u2014
51,593
51,593
Debt securities
\u2014
\u2014
\u2014
\u2014
\u2014
Financial liabilities
Shares
49,343
\u2014
\u2014
49,268
49,268
Customer accounts
82
\u2014
82
\u2014
82
Deposits from banks
3,932
\u2014
3,932
\u2014
3,932
Debt securities in issue
6,543
\u2014
6,441
\u2014
6,441
Subordinated liabilities
15
\u2014
19
\u2014
19
Subscribed capital
42
67
\u2014
\u2014
67
2024
Society
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
329
\u2014
329
\u2014
329
Loans and advances to customers
33,458
\u2014
\u2014
33,416
33,416
Debt securities
\u2014
\u2014
\u2014
\u2014
\u2014
Loans with Group undertakings
17,583
\u2014
4,634
12,810
17,444
Financial liabilities
Shares
49,343
\u2014
\u2014
49,268
49,268
Customer accounts
234
\u2014
234
\u2014
234
Deposits from banks
3,932
\u2014
3,932
\u2014
3,932
Debt securities in issue
4,930
\u2014
4,831
\u2014
4,831
Subordinated liabilities
15
\u2014
19
\u2014
19
Subscribed capital
42
67
\u2014
\u2014
67
Loans and advances to credit institutions
The fair value of loans and advances to credit institutions over the longer term is estimated by discounting expected cash
flows at a market discount rate. Amounts maturing in the short term are valued at carrying amount.
Loans and advances to customers
The fair value of loans and advances to customers is assessed as the value of the expected future cash flows, projected
using contractual interest payments and repayments and the expected prepayment behaviour of borrowers. Assumptions
are applied regarding expected levels of customer prepayments and the risk of defaults. The estimated future cash flows
are discounted at current market rates for the loan types and adjusted where necessary to reflect any observable market
conditions. The majority of the loans and advances to customers are on a fixed rate product, and therefore interest rate
swap derivative instruments are in place against these assets. Hedge accounting related fair value adjustments of \u00a3169
million increase at Group and \u00a3118 million increase at Society (31 December 2024: \u00a3448 million decrease, Group and
Society) are excluded from the carrying value and fair value.
Debt securities
Debt securities for which no market price or executable bid is available at the year end date are valued by one of two
methods. Where there are recent market prices or executable bids for the security, these are used as the basis for
establishing a valuation. Otherwise, a security is valued based on its relative value to comparable bonds.
Loans with Group undertakings
Loans with Group undertakings are made up of intercompany loan balances. Intercompany loan balances repayable on
demand are classed as level 3. Intercompany loans due in relation to the covered bond programmes are valued by reference
to the to the fair value of the underlying covered bond and are classed as level 2.\u00a0
Shares and customer accounts
The fair value of shares and customer accounts available on demand approximates to the carrying value. The fair value of
fixed term or restricted access deposits is determined from the estimated projected cash flows discounted at the current
market rates for those types of deposit. The estimated fair value of deposits with no stated maturity, which includes non-
interest bearing deposits, is the amount repayable on demand. Hedge accounting fair value adjustments to the share
balance of \u00a325 million increase (31 December 2024: \u00a318 million) are excluded from the carrying value and fair value. Hedge
accounting fair value adjustments to customer accounts of \u00a322 million increase (31 December 2024: \u00a3nil) are excluded from
the carrying value and fair value.
Deposits from banks
The fair value of deposits taken from wholesale counterparties over the longer term is estimated by discounting expected
cash flows at a market discount rate. Amounts maturing in the short term are valued at carrying amount.
Debt securities in issue, subordinated liabilities and subscribed capital
The estimated fair value of longer-dated liabilities is calculated based on quoted market prices where available or using
similar issues as a proxy for those liabilities that are not of sufficient size or liquidity to have an active market quote. For
those liabilities where quoted market prices are not available, a discounted cash flow model is used based on a current
yield curve appropriate to the remaining term to maturity.
Fair value of assets and liabilities held at fair value
The following table summarises the fair value of the Group's financial assets and liabilities measured at fair value on the
face of the Group and Society's Balance Sheet by fair value hierarchy and product type.
2025
Group
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
488
\u2014
488
Cross currency swaps
\u2014
45
\u2014
45
Total
\u2014
533
\u2014
533
Debt securities:
UK Government investment securities
789
\u2014
\u2014
789
Other listed transferable debt securities
747
\u2014
3
750
Total
1,536
\u2014
3
1,539
Investment in equity shares:
Investment in equity shares
\u2014
\u2014
5
5
Total
\u2014
\u2014
5
5
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
308
1
309
Cross currency swaps
\u2014
11
\u2014
11
Total
\u2014
319
1
320
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at fair value continued
2025
Society
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
409
\u2014
409
Cross currency swaps
\u2014
15
\u2014
15
Total
\u2014
424
\u2014
424
Debt securities:
UK Government investment securities
440
\u2014
\u2014
440
Other listed transferable debt securities
\u2014
\u2014
\u2014
\u2014
Total
440
\u2014
\u2014
440
Loans with Group undertakings:
Loans with Group undertakings
\u2014
446
\u2014
446
Total
\u2014
446
\u2014
446
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
251
1
252
Cross currency swaps
\u2014
\u2014
\u2014
\u2014
Total
\u2014
251
1
252
Debt securities in issue:
Medium term notes
\u2014
207
\u2014
207
Total
\u2014
207
\u2014
207
Subordinated liabilities:
Subordinated liabilities
\u2014
239
\u2014
239
Total
\u2014
239
\u2014
239
2024
Group
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
1,082
\u2014
1,082
Cross currency swaps
\u2014
2
\u2014
2
Total
\u2014
1,084
\u2014
1,084
Debt securities:
UK Government investment securities
483
\u2014
\u2014
483
Other listed transferable debt securities
19
\u2014
\u2014
19
Total
502
\u2014
\u2014
502
Investment in equity shares:
Investment in equity shares
1
\u2014
8
9
Total
1
\u2014
8
9
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
245
1
246
Cross currency swaps
\u2014
59
\u2014
59
Total
\u2014
304
1
305
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at fair value continued
2024
Society
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
1,082
\u2014
1,082
Cross currency swaps
\u2014
\u2014
\u2014
\u2014
Total
\u2014
1,082
\u2014
1,082
Debt securities:
UK Government investment securities
423
\u2014
\u2014
423
Other listed transferable debt securities
19
\u2014
\u2014
19
Total
442
\u2014
\u2014
442
Investment in equity shares:
Investment in equity shares
1
\u2014
8
9
Total
1
\u2014
8
9
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
245
1
246
Cross currency swaps
\u2014
8
\u2014
8
Total
\u2014
253
1
254
Financial instruments recorded at fair value
The determination of fair value for financial instruments that are recorded at fair value using valuation techniques is
described below, including the assumptions that a market participant would be expected to make when valuing the
instruments:
Level 1: Debt securities \u2013 fair value through other comprehensive income \u2013 Listed
Market prices have been used to determine the fair value of listed debt securities.
Level 1: Investment in equity shares \u2013 fair value through profit and loss \u2013 Listed
Market prices have been used to determine the fair value of listed equity shares.
Level 2: Derivatives
Derivative products utilise observable market inputs for interest rate swaps and cross currency swaps. Valuations are
generated by swap models which use present value calculations and incorporate assumptions for interest rate curves and
foreign exchange spot and forward rates.
Level 2: Loans with Group undertakings - Unlisted
This reflects a back-to-back arrangement between the Society and the Bank in respect of listed debt securities in issue and
subordinated liabilities, market prices of the these instruments have been used to to determine the fair value.
Level 2 - Debt securities - fair value through other comprehensive income - Unlisted
Where quoted market prices are not available at the valuation date, valuations of securities are based on their relative
value to comparable securities.
Level 2 - Debt securities in issue - fair value through profit and loss - Listed
Market prices have been used to determine the fair value of listed debt securities in issue.
Level 2 - Subordinated liabilities - Listed
Market prices have been used to determine the fair value of listed subordinated liabilities.
Level 3 - Debt securities - Unlisted
Represents a 5% risk retention holding of residual certificates issued by Warwick Finance Residential Mortgages Number
Three plc. The remaining 95% is privately held, therefore there is no available market prices. An in-house model is used
that sources independent market data for disclosure purposes only.
Level 3: Investment in equity shares \u2013 fair value through profit and loss \u2013 Unlisted
The Group has a small balance of investments in equity shares, including a residual holding in Visa Inc. shares. These shares
are valued based on future cash consideration which the Group expects to receive on sale of these instruments, or the
underlying market value.
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Financial instruments recorded at fair value continued
Level 3: Derivatives
The item included within Level 3 is a balance tracking swap, which remained in place during the year. It is valued using
present value calculations based on market interest rate curves. The unobservable inputs relate to the projection of the
swap notional amount, which changes over time to match the balance of the underlying mortgage portfolio. Projected
mortgage prepayment amounts are used in the modelling of the mortgage portfolio profile. The changes in the projection of
interest and prepayment rates of the underlying mortgage portfolio affect both the unbounded swap and hedged item so
that the net Income Statement and Balance Sheet impact would be minimal.
The following table analyses fair value movements in the Level 3 portfolio for both the Group and the Society:
2025
2024
Group
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
As at 1 January
8
(1)
\u2014
6
(2)
\u2014
Recognised on acquisition
6
\u2014
14
Gains/(losses) recognised in the
Income Statement
Net unrealised gains/ (losses)
(1)
\u2014
\u2014
2
1
\u2014
Settlements
(8)
\u2014
(11)
\u2014
\u2014
\u2014
As at 31 December
5
(1)
3
8
(1)
\u2014
2025
2024
Society
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
As at 1 January
8
(1)
\u2014
6
(2)
\u2014
Gains/(losses) recognised in the
Income Statement
Net unrealised gains/ (losses)
3
\u2014
\u2014
2
1
\u2014
Settlements
(11)
\u2014
\u2014
\u2014
\u2014
\u2014
As at 31 December
\u2014
(1)
\u2014
8
(1)
\u2014
No sensitivities have been performed with regards the level 3 instruments as the balances are immaterial to the financial
statements.
Transfers between fair value levels
Transfers between fair value levels only occur when either it becomes possible to value a financial instrument using a
method that is higher up the valuation hierarchy or it is no longer possible to value it using the current method and it must
instead be valued using a method lower down the hierarchy. Transfers are considered to have occurred at the end of the
reporting period for the purposes of this disclosure.
34. Offsetting financial assets and liabilities
The Group and Society do not have any financial assets or financial liabilities that are offset with the net amount presented
in the Balance Sheets. IAS 32 Financial Instruments: Presentation states that there should be both an enforceable right to
set-off and the intention either to settle on a net basis or to realise the asset and settle the liability simultaneously to
apply this treatment, and neither of these conditions is met.
The Group has entered into master netting arrangements such as International Swaps and Derivatives Association (ISDA)
master agreements for its derivatives, other than derivatives held by Coventry Building Society Covered Bonds LLP.
Credit Support Annexes (CSAs) are executed in conjunction with these ISDA master agreements, which typically provide for
the exchange of collateral to mitigate net mark-to-market credit exposure.
The Group has also entered into Global Master Repurchase Agreements, including margin collateralisation arrangements,
whereby outstanding transactions with the same counterparty can be settled net following a default or other
predetermined event.
Coventry Building Society Covered Bonds LLP does not enter into a master netting agreement due to the structure of the
covered bond programme. However, it has entered into a separate ISDA agreement in respect of each of the derivatives it
has transacted with external counterparties. Each agreement includes a CSA which provides for full collateralisation of the
swap exposure, with exposure thresholds in place for a single agreement before collateral is exchanged. The \u00a335 million net
derivative credit exposure in the table below is in respect of an arrangement that will only be fully collateralised if the
counterparty is downgraded to below its specified credit rating (2024: \u00a32 million).
The table below shows the net exposure for sale and repurchase agreements or derivative contracts after any netting
benefits and collateral. At the end of the year the Group did not hold any reverse sale and repurchase agreements with
respect to Gilts (2024: \u00a3nil), with \u00a32,015 million of sale and repurchase agreements being held on the balance sheet as at
31 December 2025 (2024: \u00a3602 million). The Group did not enter into securities lending (2024: \u00a3nil) during the year.
2025
Group
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net amount
\u00a3m
Financial assets
Derivative financial instruments
533
(309)
(189)
35
Reverse Repurchase Agreements
\u2014
\u2014
\u2014
\u2014
Total financial assets
533
(309)
(189)
35
Financial liabilities
Derivative financial instruments
320
(309)
(1)
10
Repurchase agreements
2,015
\u2014
(2,015)
\u2014
Total financial liabilities
2,335
(309)
(2,016)
10
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
2025
Society
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net amount
\u00a3m
Financial assets
Derivative financial instruments
424
(251)
(172)
1
Reverse Repurchase Agreements
250
\u2014
(250)
\u2014
Total financial assets
674
(251)
(422)
1
Financial liabilities
Derivative financial instruments
252
(251)
(1)
\u2014
Repurchase agreements
1,358
\u2014
(1,358)
\u2014
Total financial liabilities
1,610
(251)
(1,359)
\u2014
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
34. Offsetting financial assets and liabilities continued
2024
Group
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net amount
\u00a3m
Financial assets
Derivative financial instruments
1,084
(245)
(837)
2
Reverse Repurchase Agreements
\u2014
\u2014
\u2014
\u2014
Total financial assets
1,084
(245)
(837)
2
Financial liabilities
Derivative financial instruments
305
(245)
(7)
53
Repurchase agreements
602
\u2014
(602)
\u2014
Total financial liabilities
907
(245)
(609)
53
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
2024
Society
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net
amount
\u00a3m
Financial assets
Derivative financial instruments
1,083
(246)
(837)
\u2014
Reverse Repurchase Agreements
\u2014
\u2014
\u2014
\u2014
Total financial assets
1,083
(246)
(837)
\u2014
Financial liabilities
Derivative financial instruments
254
(246)
(7)
1
Repurchase agreements
602
\u2014
(602)
\u2014
Total financial liabilities
856
(246)
(609)
1
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
For derivative financial assets, collateral received can be in the form of cash and UK Government investment securities.
Where cash is received, it is included as a liability within Deposits from banks (note 24). Where UK Government investment
securities are received, these are not recognised on the Balance Sheet, as the Group does not obtain the risks and rewards
of ownership.
For derivative financial liabilities, collateral paid is in the form of cash and is included as an asset in Loans and advances to
credit institutions.
For sale and repurchase agreements (repos), collateral provided is predominantly in UK Government investment securities
with the remainder in cash. Again, cash paid is included as an asset in Loans and advances to credit institutions.
UK Government investment securities are not derecognised as the Group retains substantially all the risks and rewards of
ownership.
Cash collateral held and cash collateral pledged are not restricted and are returned at the end of the contract.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-364": { "value": "
9. Net losses from derivative financial instruments
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Derivatives designated as fair value hedges
Losses on derivatives designated as fair value hedges
(753)
(119)
(625)
(119)
Movement in fair value of hedged items attributable to hedged risk
549
(16)
508
(16)
Derivatives designated as fair value hedges
(204)
(135)
(117)
(135)
Derivatives designated as cash flow hedges
Interest rate
108
126
108
126
Derivatives designated as cash flow hedges
108
126
108
126
Losses on other derivatives
(6)
(2)
(9)
(2)
Total
(102)
(11)
(18)
(11)
Further information on the Group\u2019s risk management strategy and how it hedges interest rate and foreign exchange risk is
included in note 26.
Losses on other derivatives where hedge accounting relief has not been obtained are \u00a36 million over the year for the Group
and \u00a39 million for the Society (2024: \u00a32 million loss Group and Society).
The gains and losses recognised represent both the impact of early termination of derivative instruments and timing
differences, which are expected to reverse over the remaining life of the derivatives, although further volatility may also
be experienced. Within losses on derivatives designated as fair value hedges reported in the year, \u00a399 million is included
which arose from the restart of the hedging programme against the acquired Bank's mortgage portfolio and non-interest
bearing liabilities as well as liquidity instruments.
9. Net losses from derivative financial instruments continued
Foreign exchange losses of \u00a3128 million (2024: \u00a378 million gains) have been recognised in the Income Statement relating to
the principal amount of financial instruments held at amortised cost. This is offset by foreign exchange gains of \u00a3127 million
(2024: \u00a381 million loss) on derivative financial instruments held at fair value.
26. Derivative financial instruments
The Group elected to continue to apply the hedge accounting requirements of IAS 39 as permitted under IFRS 9.
Risk management strategy
Derivative financial instruments, predominantly interest rate and cross currency swaps, are held solely for the purposes of
mitigating interest rate risk, foreign exchange risk or interest rate and foreign exchange risk together, as explained in the
Risk Management Report. Where appropriate, they are designated as hedging instruments within either fair value or cash
flow hedge relationships under the terms of UK-adopted IAS 39. Derivatives can hedge specific assets or liabilities such as
liquidity or wholesale instruments (sometimes referred to as \u2018micro\u2019 hedges) or portions of a portfolio of fixed rate
products (sometimes referred to as \u2018macro\u2019 hedges).
For micro hedges, the Group establishes the hedging ratio by comparing the notional amount of the derivatives with the
principal of the instruments being hedged. For macro hedges, the Group establishes the hedging ratio by matching the
notional amount of the derivatives with the principal of that portion of the portfolio being hedged and manages this on a
monthly basis by entering into interest rate swaps.
Where interest rate risk is hedged, only the interest rate risk element of the underlying position is designated as the hedged
item and therefore other risks, such as credit risk, which are managed but not hedged by the Group, are excluded.
The interest rate risk element is determined with regard to the fixed rate that represents the benchmark rate of interest
being hedged. Where foreign exchange risk is hedged, the foreign currency risk component is determined as the change in
cash flows of the foreign currency debt arising solely from changes in the relevant forward exchange rates.
For fair value hedges, the effectiveness of the hedge relationship is assessed by comparing changes in the fair value of the
hedged item attributable to changes in the benchmark rate of interest with changes in the fair value of the derivative.
For cash flow hedges, effectiveness is assessed by comparing the changes in the fair value of the derivative with changes in
the fair value of the hedged item attributable to the hedged risk, using the hypothetical derivative method.
Possible sources of ineffectiveness are as follows:
\u2022 Differences in the benchmark rates of interest used to value the hedged item and the hedging instrument, such as when
cash collateralised interest rate swaps are discounted using SONIA but this is not the benchmark rate of interest for the
hedged item.
\u2022 Differences in timing of cash flows between the derivative and the hedged item.
\u2022 Differences in weighted average rate between the derivatives and the hedged item per monthly time buckets in a
portfolio hedge.
\u2022 Differences between the expected and actual volume of prepayments where a portfolio is being hedged, as the hedging
ratio is calculated with regard to expected repayment dates, taking account of expected prepayments based on past
experience.
\u2022 Hedging derivatives with a non-zero fair value at the date of initial designation as a hedging instrument.
\u2022 Counterparty credit risk which impacts the fair value of uncollateralised swaps but not the hedged item.
Hedging instruments
The following tables contain details of the hedging instruments used in the Group\u2019s hedging strategies. The notional amount
indicates the amount on which payment flows are derived at the Balance Sheet date and do not represent risk. Derivative
assets and liabilities are included in the Balance Sheet at fair value.
2025
2024
Group
Notional
amount
\u00a3m
Fair value
assets
\u00a3m
Fair value
liabilities
\u00a3m
Notional
amount
\u00a3m
Fair value
assets
\u00a3m
Fair value
liabilities
\u00a3m
Derivatives designated as fair value hedges:
Interest rate risk
69,401
457
291
55,893
1,057
201
Derivatives designated as cash flow hedges:
Interest rate risk
9,238
18
12
9,916
23
43
Foreign exchange risk1
1,940
30
11
1,941
2
51
Foreign exchange and interest rate risk 1
417
16
\u2014
417
\u2014
8
Other derivatives
Interest rate risk
1,257
12
6
972
2
2
Foreign exchange risk
14
\u2014
\u2014
\u2014
\u2014
\u2014
Total derivatives
82,267
533
320
69,139
1,084
305
1. Cash flows are expected to occur over a four year period (2024: five).
2025
2024
Society
Notional
amount
\u00a3m
Fair value
assets
\u00a3m
Fair value
liabilities
\u00a3m
Notional
amount
\u00a3m
Fair value
assets
\u00a3m
Fair value
liabilities
\u00a3m
Derivatives designated as fair value hedges:
Interest rate risk
56,784
389
240
55,893
1,057
201
Derivatives designated as cash flow hedges:
Interest rate risk
9,238
18
12
9,916
23
43
Foreign exchange and interest rate risk
417
16
\u2014
417
\u2014
8
Other derivatives
Interest rate risk
482
1
\u2014
972
2
2
Total derivatives
66,921
424
252
67,198
1,082
254
The following tables set out the maturity profile and average interest and foreign exchange rates of the hedging
instruments used in the Group\u2019s hedging strategy at 31\u00a0December 2025. Derivative contractual maturities are included in
the Risk Management Report.
The following table contains details of fair value hedged exposures at 31\u00a0December 2025:
Maturity
2025
Group
Up to one
month
\u00a3m
One to three
months
\u00a3m
Three months
to one year
\u00a3m
One to five
years
\u00a3m
More than five
years
\u00a3m
Interest rate risk:
Contract/ notional amount
1,278
1,795
25,710
47,266
3,847
Average fixed interest rate
1.9%
3.4%
3.7%
3.4%
3.6%
Foreign exchange risk:
Contract/ notional amount
2
\u2014
891
1,061
\u2014
Average fixed interest rate
\u2014%
\u2014%
2.9%
2.3%
\u2014%
Average \u00a3/\u20ac exchange rate
1.2
\u2014
0.9
0.9
\u2014
Foreign exchange and interest rate risk:
Contract/ notional amount
\u2014
\u2014
\u2014
417
\u2014
Average fixed interest rate
\u2014%
\u2014%
\u2014%
3.1%
\u2014%
Average \u00a3/\u20ac exchange rate
\u2014
\u2014
\u2014
0.8
\u2014
Maturity
2025
Society
Up to one
month
\u00a3m
One to three
months
\u00a3m
Three months
to one year
\u00a3m
One to five
years
\u00a3m
More than five
years
\u00a3m
Interest rate risk:
Contract/ notional amount
232
961
22,822
39,697
2,792
Average fixed interest rate
1.3%
3.4%
3.7%
3.4%
3.6%
Foreign exchange and interest rate risk:
Contract/ notional amount
\u2014
\u2014
\u2014
417
\u2014
Average fixed interest rate
\u2014%
\u2014%
\u2014%
3.1%
\u2014%
Average \u00a3/\u20ac exchange rate
\u2014
\u2014
\u2014
0.8
\u2014
Maturity
2024
Group
Up to one
month
\u00a3m
One to three
months
\u00a3m
Three months
to one year
\u00a3m
One to five
years
\u00a3m
More than five
years
\u00a3m
Interest rate risk:
Contract/ notional amount
184
792
23,453
38,961
3,392
Average fixed interest rate
0.4%
2.3%
4.0%
3.4%
3.4%
Foreign exchange risk:
Contract/ notional amount
\u2014
\u2014
\u2014
1,940
\u2014
Average fixed interest rate
\u2014
\u2014
\u2014
2.6%
\u2014
Average \u00a3/\u20ac exchange rate
\u2014
\u2014
\u2014
1.0
\u2014
Foreign exchange and interest rate risk:
Contract/ notional amount
\u2014
\u2014
\u2014
417
\u2014
Average fixed interest rate
\u2014
\u2014
\u2014
3.1%
\u2014
Average \u00a3/\u20ac exchange rate
\u2014
\u2014
\u2014
0.8
\u2014
Maturity
2024
Society
Up to one
month
\u00a3m
One to three
months
\u00a3m
Three months
to one year
\u00a3m
One to five
years
\u00a3m
More than five
years
\u00a3m
Interest rate risk:
Contract/ notional amount
184
792
23,453
38,961
3,392
Average fixed interest rate
0.4%
2.3%
4.0%
3.4%
3.4%
Foreign exchange and interest rate risk:
Contract/ notional amount
\u2014
\u2014
\u2014
417
\u2014
Average fixed interest rate
\u2014
\u2014
\u2014
3.1%
\u2014
Average \u00a3/\u20ac exchange rate
\u2014
\u2014
\u2014
0.8
\u2014
Hedged items
The following table contains details of fair value hedged exposures at 31 December:
2025
2024
Carrying amount of hedged
item
Accumulated amount of fair
value adjustments on the
hedged item
Carrying amount of hedged
item
Accumulated amount of fair
value adjustments on the
hedged item
Group
Assets
\u00a3m
Liabilities
\u00a3m
Assets
\u00a3m
Liabilities
\u00a3m
Assets
\u00a3m
Liabilities
\u00a3m
Assets
\u00a3m
Liabilities
\u00a3m
Fair value hedges:
Interest rate 1,2
67,047
(22,739)
107
(29)
46,473
(23,042)
(494)
68
2025
2024
Carrying amount of hedged
item
Accumulated amount of fair
value adjustments on the
hedged item
Carrying amount of hedged
item
Accumulated amount of fair
value adjustments on the
hedged item
Society
Assets
\u00a3m
Liabilities
\u00a3m
Assets
\u00a3m
Liabilities
\u00a3m
Assets
\u00a3m
Liabilities
\u00a3m
Assets
\u00a3m
Liabilities
\u00a3m
Fair value hedges:
Interest rate 1,2
48,489
(19,394)
88
(7)
46,473
(23,042)
(494)
68
1. Assets presented in Loans and advances to customers and Debt securities in the Balance Sheet.
2. Liabilities presented in Shares, Customer accounts and Debt securities in issue in the Balance Sheet.
Of the \u00a3107 million increase (2024: \u00a3494 million decrease) total accumulated fair value adjustments on the hedged asset,
\u00a3169 million increase (2024: \u00a3448 million decrease) relates to hedging instruments for loans and advances to customers.
The remainder relates to hedges in place against treasury instruments.
The following tables provide additional information on cash flow hedges:
Changes in Fair Value
Amounts reclassified from
reserves to Income Statement
2025
Group
Hedging
derivative
\u00a3m
Hedged item
for
ineffectiveness
assessment
\u00a3m
Gains/(losses)
recognised in
OCI
\u00a3m
Hedged cash
flows will no
longer occur
\u00a3m
Hedged item
for affected
Income
Statement
\u00a3m
Recognised in
Income
Statement1
\u00a3m
Derivatives designated as cash flow hedges:
Foreign exchange
68
68
68
\u2014
106
\u2014
Foreign exchange and interest rate
22
23
22
\u2014
22
\u2014
Interest rate
17
17
17
107
\u2014
108
1. Ineffectiveness is shown in note 9 Net (losses)/gains from derivatives and hedge accounting.
Changes in Fair Value
Amounts reclassified from
reserves to Income Statement
2025
Society
Hedging
derivative
\u00a3m
Hedged item
for
ineffectiveness
assessment
\u00a3m
Gains/(losses)
recognised in
OCI
\u00a3m
Hedged cash
flows will no
longer occur
\u00a3m
Hedged item
for affected
Income
Statement
\u00a3m
Recognised in
Income
Statement1
\u00a3m
Derivatives designated as cash flow hedges:
Foreign exchange
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Foreign exchange and interest rate
22
23
22
\u2014
22
\u2014
Interest rate
17
17
17
107
\u2014
108
1. Ineffectiveness is shown in note 9 Net losses from derivative financial instruments.
As at 31\u00a0December 2025, balances remaining in the cash flow hedge reserve, gross of tax, are a \u00a315 million gain for
continuing hedges and \u00a3149 million gain for discontinued hedges (2024: \u00a330 million gain, \u00a3261 million gain respectively).
Changes in Fair Value
Amounts reclassified from
reserves to Income Statement
2024
Group
Hedging
derivative
\u00a3m
Hedged item
for
ineffectiveness
assessment
\u00a3m
Gains/(losses)
recognised in
OCI
\u00a3m
Hedged cash
flows will no
longer occur
\u00a3m
Hedged item
for affected
Income
Statement
\u00a3m
Recognised in
Income
Statement1
\u00a3m
Derivatives designated as cash flow hedges:
Foreign exchange
(38)
(38)
(38)
\u2014
(77)
\u2014
Foreign exchange and interest rate
(4)
(4)
(4)
\u2014
(4)
\u2014
Interest rate
31
31
31
126
\u2014
126
1. Ineffectiveness is shown in note 9 Net losses from derivative financial instruments.
Changes in Fair Value
Amounts reclassified from
reserves to Income Statement
2024
Society
Hedging
derivative
\u00a3m
Hedged item
for
ineffectiveness
assessment
\u00a3m
Gains/(losses)
recognised in
OCI
\u00a3m
Hedged cash
flows will no
longer occur
\u00a3m
Hedged item
for affected
Income
Statement
\u00a3m
Recognised in
Income
Statement1
\u00a3m
Derivatives designated as cash flow hedges:
Foreign exchange
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Foreign exchange and interest rate
(4)
(4)
(4)
\u2014
(4)
\u2014
Interest rate
31
31
31
126
\u2014
126
1. Ineffectiveness is shown in note 9 Net (losses)/gains from derivatives and hedge accounting.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-369": { "value": "
10. Administrative expenses
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Employee costs
Wages and salaries
252
137
119
137
Social security costs
33
15
18
15
Pension costs
17
9
9
9
302
161
146
161
Other expenses
Information systems
162
52
35
52
Training, recruitment and other employee costs
12
13
8
13
Premises and facilities
21
9
10
9
Legal, professional and consultancy
67
36
26
36
Marketing and communications
16
9
12
9
Other operating expenses (include project costs)
93
27
62
26
Intercompany management charge
\u2014
\u2014
(53)
(52)
Total
673
307
246
254
Acquisition and integration related costs
67
26
58
26
Total administrative expenses
740
333
304
280
Acquisition and integration related costs includes the residual legal, professional and consultancy fees in relation to the
purchase of the Bank as well as the one off costs relating to the bringing together of people, systems and processes.
The intercompany management charge reflects a contribution to operational costs by Godiva Mortgages Limited and ITL
Mortgages Limited to the Society in respect of management and servicing of their mortgage portfolios. There is no
management recharge for services between the Society and Bank in the year.
The remuneration of the external auditors, PricewaterhouseCoopers LLP, (excluding VAT) is set out below:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Audit of the Group and Society annual accounts
1.3
1.4
1.3
1.4
Audit of Group subsidiaries
2.6
0.2
\u2014
\u2014
Audit related assurance services
0.3
0.1
0.3
0.1
Other non-audit services
0.3
0.3
0.2
0.3
Total
4.5
2.0
1.8
1.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-368": { "value": "
10. Administrative expenses
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Employee costs
Wages and salaries
252
137
119
137
Social security costs
33
15
18
15
Pension costs
17
9
9
9
302
161
146
161
Other expenses
Information systems
162
52
35
52
Training, recruitment and other employee costs
12
13
8
13
Premises and facilities
21
9
10
9
Legal, professional and consultancy
67
36
26
36
Marketing and communications
16
9
12
9
Other operating expenses (include project costs)
93
27
62
26
Intercompany management charge
\u2014
\u2014
(53)
(52)
Total
673
307
246
254
Acquisition and integration related costs
67
26
58
26
Total administrative expenses
740
333
304
280
Acquisition and integration related costs includes the residual legal, professional and consultancy fees in relation to the
purchase of the Bank as well as the one off costs relating to the bringing together of people, systems and processes.
The intercompany management charge reflects a contribution to operational costs by Godiva Mortgages Limited and ITL
Mortgages Limited to the Society in respect of management and servicing of their mortgage portfolios. There is no
management recharge for services between the Society and Bank in the year.
The remuneration of the external auditors, PricewaterhouseCoopers LLP, (excluding VAT) is set out below:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Audit of the Group and Society annual accounts
1.3
1.4
1.3
1.4
Audit of Group subsidiaries
2.6
0.2
\u2014
\u2014
Audit related assurance services
0.3
0.1
0.3
0.1
Other non-audit services
0.3
0.3
0.2
0.3
Total
4.5
2.0
1.8
1.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-367": { "value": "
10. Administrative expenses
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Employee costs
Wages and salaries
252
137
119
137
Social security costs
33
15
18
15
Pension costs
17
9
9
9
302
161
146
161
Other expenses
Information systems
162
52
35
52
Training, recruitment and other employee costs
12
13
8
13
Premises and facilities
21
9
10
9
Legal, professional and consultancy
67
36
26
36
Marketing and communications
16
9
12
9
Other operating expenses (include project costs)
93
27
62
26
Intercompany management charge
\u2014
\u2014
(53)
(52)
Total
673
307
246
254
Acquisition and integration related costs
67
26
58
26
Total administrative expenses
740
333
304
280
Acquisition and integration related costs includes the residual legal, professional and consultancy fees in relation to the
purchase of the Bank as well as the one off costs relating to the bringing together of people, systems and processes.
The intercompany management charge reflects a contribution to operational costs by Godiva Mortgages Limited and ITL
Mortgages Limited to the Society in respect of management and servicing of their mortgage portfolios. There is no
management recharge for services between the Society and Bank in the year.
The remuneration of the external auditors, PricewaterhouseCoopers LLP, (excluding VAT) is set out below:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Audit of the Group and Society annual accounts
1.3
1.4
1.3
1.4
Audit of Group subsidiaries
2.6
0.2
\u2014
\u2014
Audit related assurance services
0.3
0.1
0.3
0.1
Other non-audit services
0.3
0.3
0.2
0.3
Total
4.5
2.0
1.8
1.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-366": { "value": "
10. Administrative expenses
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Employee costs
Wages and salaries
252
137
119
137
Social security costs
33
15
18
15
Pension costs
17
9
9
9
302
161
146
161
Other expenses
Information systems
162
52
35
52
Training, recruitment and other employee costs
12
13
8
13
Premises and facilities
21
9
10
9
Legal, professional and consultancy
67
36
26
36
Marketing and communications
16
9
12
9
Other operating expenses (include project costs)
93
27
62
26
Intercompany management charge
\u2014
\u2014
(53)
(52)
Total
673
307
246
254
Acquisition and integration related costs
67
26
58
26
Total administrative expenses
740
333
304
280
Acquisition and integration related costs includes the residual legal, professional and consultancy fees in relation to the
purchase of the Bank as well as the one off costs relating to the bringing together of people, systems and processes.
The intercompany management charge reflects a contribution to operational costs by Godiva Mortgages Limited and ITL
Mortgages Limited to the Society in respect of management and servicing of their mortgage portfolios. There is no
management recharge for services between the Society and Bank in the year.
The remuneration of the external auditors, PricewaterhouseCoopers LLP, (excluding VAT) is set out below:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Audit of the Group and Society annual accounts
1.3
1.4
1.3
1.4
Audit of Group subsidiaries
2.6
0.2
\u2014
\u2014
Audit related assurance services
0.3
0.1
0.3
0.1
Other non-audit services
0.3
0.3
0.2
0.3
Total
4.5
2.0
1.8
1.8
19. Intangible assets
Group
Externally
acquired
2025
\u00a3m
Internally
developed
2025
\u00a3m
Core deposit
intangible
2025
\u00a3m
Total
2025
\u00a3m
Externally
acquired
2024
\u00a3m
Internally
developed
2024
\u00a3m
Core deposit
intangible
2025
\u00a3m
Total
2024
\u00a3m
Cost
At 1 January
5
99
\u2014
104
5
87
\u2014
92
Recognised on acquisition
17
93
143
253
\u2014
\u2014
\u2014
\u2014
Additions
13
27
\u2014
40
\u2014
20
\u2014
20
Disposals
(4)
(14)
\u2014
(18)
\u2014
(8)
\u2014
(8)
At 31 December
31
205
143
379
5
99
\u2014
104
Amortisation
At 1 January
4
45
\u2014
49
4
39
\u2014
43
Charge for the year
4
46
29
79
\u2014
14
\u2014
14
Disposals
(4)
(14)
\u2014
(18)
\u2014
(8)
\u2014
(8)
At 31 December
4
77
29
110
4
45
\u2014
49
Net book value at 31 December
27
128
114
269
1
54
\u2014
55
Included within the Group charge for the year is \u00a38 million (2024: \u00a3nil) of additional amortisation charges recognised as a
result of integration decisions made during the year.
Further information relating to the recognition of the core deposit intangible asset is included in note 38.
Externally acquired and internally developed assets at 31 December 2025 include \u00a323 million and \u00a316 million respectively
(2024: externally acquired \u00a3nil, internally developed \u00a37 million) of assets in the course of construction. These assets relate
mainly to the Group\u2019s investment in new systems and platforms to meet the future needs of the business. To the extent
that these new systems and platforms are not yet ready for use by the business, no amortisation has been charged against
these assets.
19. Intangible assets continued
Society
Externally
acquired
2025
\u00a3m
Internally
developed
2025
\u00a3m
Total
2025
\u00a3m
Externally
acquired
2024
\u00a3m
Internally
developed
2024
\u00a3m
Total
2024
\u00a3m
Cost
At 1 January
5
99
104
5
87
92
Additions
\u2014
11
11
\u2014
20
20
Disposals
\u2014
(5)
(5)
\u2014
(8)
(8)
At 31 December
5
105
110
5
99
104
Amortisation
At 1 January
4
45
49
4
39
43
Charge for the year
\u2014
18
18
\u2014
14
14
Disposals
\u2014
(5)
(5)
\u2014
(8)
(8)
At 31 December
4
58
62
4
45
49
Net book value at 31 December
1
47
48
1
54
55
Intangible assets primarily consist of externally acquired and internally developed software that is not an integral part of a
related hardware purchase.
Internally developed assets at 31 December 2025 include \u00a33 million (2024: \u00a37 million) of assets in the course of
construction. These assets relate mainly to investment in new systems and platforms to meet the future needs of the
business. To the extent that these new systems and platforms are not yet ready for use by the business, no amortisation has
been charged against these assets.
20. Property, plant and equipment
Group
Land and
buildings
2025
\u00a3m
Equipment,
fixtures and
fittings
2025
\u00a3m
Right-of-
use
assets
2025
\u00a3m
Total
2025
\u00a3m
Land and
buildings
2024
\u00a3m
Equipment,
fixtures
and fittings
2024
\u00a3m
Right-of-
use
assets
2024
\u00a3m
Total
2024
\u00a3m
Cost
At 1 January
15
69
23
107
15
63
27
105
Recognised on acquisition
10
15
31
56
\u2014
\u2014
\u2014
\u2014
Additions1
\u2014
10
23
33
\u2014
7
1
8
Disposals1
(15)
(8)
(5)
(28)
\u2014
(1)
(5)
(6)
At 31 December
10
86
72
168
15
69
23
107
Depreciation
At 1 January
4
42
14
60
4
34
15
53
Charge for the year
4
13
8
25
\u2014
9
3
12
Depreciation on disposals
(8)
(8)
(2)
(18)
\u2014
(1)
(4)
(5)
At 31 December
\u2014
47
20
67
4
42
14
60
Net book value at 31 December
10
39
52
101
11
27
9
47
1. During the year, certain long leasehold assets totalling \u00a37m were reclassified as right of use assets.
Included within the Group charge for the year is \u00a34 million (2024: \u00a3nil) of additional depreciation recognised against
property as a result of integration decisions made during the year.
20. Property, plant and equipment continued
Society
Land and
buildings
2025
\u00a3m
Equipment,
fixtures and
fittings
2025
\u00a3m
Right-of-
use
assets
2025
\u00a3m
Total
2025
\u00a3m
Land and
buildings
2024
\u00a3m
Equipment,
fixtures
and fittings
2024
\u00a3m
Right-of-
use
assets
2024
\u00a3m
Total
2024
\u00a3m
Cost
At 1 January
15
69
23
107
15
63
27
105
Additions1
\u2014
6
16
22
\u2014
7
1
8
Disposals1
(8)
(3)
(2)
(13)
\u2014
(1)
(5)
(6)
At 31 December
7
72
37
116
15
69
23
107
Depreciation
At 1 January
4
42
14
60
4
34
15
53
Charge for the year
\u2014
9
3
12
\u2014
9
3
12
Depreciation on disposals
(1)
(3)
(2)
(6)
\u2014
(1)
(4)
(5)
At 31 December
3
48
15
66
4
42
14
60
Net book value at 31 December
4
24
22
50
11
27
9
47
1. During the year, certain long leasehold assets totalling \u00a37m were reclassified as right of use assets.
The net book value of land and buildings owned by and occupied by the Group for its own activities is shown below. This
therefore excludes any right-of-use assets.
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Net book value
8
11
4
11
Right-of-use assets additions includes new leases entered into during the year and additions related to lease modifications
following changes in lease agreements during the period. These changes do not constitute a new agreement but adaptations
or amendments to an existing contract.
Disposals relate to assets that were retired during the year.
The net book value of right-of-use assets above relates to the following types of assets:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Property
50
7
20
7
Enhanced data infrastructure
2
2
2
2
Total
52
9
22
9
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-370": { "value": "
The remuneration of the external auditors, PricewaterhouseCoopers LLP, (excluding VAT) is set out below:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Audit of the Group and Society annual accounts
1.3
1.4
1.3
1.4
Audit of Group subsidiaries
2.6
0.2
\u2014
\u2014
Audit related assurance services
0.3
0.1
0.3
0.1
Other non-audit services
0.3
0.3
0.2
0.3
Total
4.5
2.0
1.8
1.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-371": { "value": "
11. Employee numbers
The average number of persons employed during the year (including executive directors) was:
Group
2025
Group
2024
Society
2025
Society
2024
Full time
4,598
2,358
2,957
2,358
Part time
1,354
722
781
722
Total
5,952
3,080
3,738
3,080
Head office and administrative centres
5,052
2,516
3,190
2,516
Branches
900
564
548
564
Total
5,952
3,080
3,738
3,080
The average number of employees of the Group on a full time equivalent basis was 5,520 (2024: 2,821) and all of these are
employed within the United Kingdom.
During the year, a number of Bank head office employees were legally transferred to the Society. These individuals have
continued to deliver activities to the Bank during 2025 and therefore their costs are recognised in the Bank and not the
Society.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-374": { "value": "
12. Classification and measurement of financial instruments
The following tables summarise the classification of carrying amounts of the Group and Society\u2019s financial assets and
liabilities at the reporting date.
2025
2024
Group
Amortised
cost
\u00a3m
Fair value
through other
comprehensive
income
\u00a3m
Fair value
through
profit and
loss
\u00a3m
Total
\u00a3m
Amortised
cost
\u00a3m
Fair value
through other
comprehensive
income
\u00a3m
Fair value
through profit
and loss
\u00a3m
Total
\u00a3m
Financial assets
Cash and balances with
the Bank of England
11,948
\u2014
\u2014
11,948
9,893
\u2014
\u2014
9,893
Loans and advances to
credit institutions
383
\u2014
\u2014
383
329
\u2014
\u2014
329
Debt securities
26
1,536
3
1,565
\u2014
502
\u2014
502
Loans and advances to
customers
72,936
\u2014
\u2014
72,936
51,801
\u2014
\u2014
51,801
Hedge accounting
adjustment
169
\u2014
\u2014
169
(448)
\u2014
\u2014
(448)
Derivative financial
instruments
\u2014
\u2014
533
533
\u2014
\u2014
1,084
1,084
Investment in equity
shares
\u2014
\u2014
5
5
\u2014
\u2014
9
9
Total financial assets
85,462
1,536
541
87,539
61,575
502
1,093
63,170
Other non-financial assets
700
\u2014
\u2014
700
861
\u2014
\u2014
861
Total assets
86,162
1,536
541
88,239
62,436
502
1,093
64,031
Financial liabilities
Shares
50,830
\u2014
\u2014
50,830
49,343
\u2014
\u2014
49,343
Customer accounts
20,892
\u2014
\u2014
20,892
82
\u2014
\u2014
82
Deposits from banks
3,009
\u2014
\u2014
3,009
3,932
\u2014
\u2014
3,932
Debt securities in issue
8,307
\u2014
\u2014
8,307
6,543
\u2014
\u2014
6,543
Hedge accounting
adjustment
29
\u2014
\u2014
29
(68)
\u2014
\u2014
(68)
Derivative financial
instruments
\u2014
\u2014
320
320
\u2014
\u2014
305
305
Subordinated liabilities
248
\u2014
\u2014
248
15
\u2014
\u2014
15
Subscribed capital
42
\u2014
\u2014
42
42
\u2014
\u2014
42
Total financial liabilities
83,357
\u2014
320
83,677
59,889
\u2014
305
60,194
Other non-financial
liabilities
273
\u2014
\u2014
273
209
\u2014
\u2014
209
Total liabilities
83,630
\u2014
320
83,950
60,098
\u2014
305
60,403
2025
2024
Society
Amortised
cost
\u00a3m
Fair value
through other
comprehensive
income
\u00a3m
Fair value
through
profit and
loss
\u00a3m
Total
\u00a3m
Amortised
cost
\u00a3m
Fair value
through other
comprehensive
income
\u00a3m
Fair value
through profit
and loss
\u00a3m
Total
\u00a3m
Financial assets
Cash and balances with
the Bank of England
8,912
\u2014
\u2014
8,912
9,818
\u2014
\u2014
9,818
Loans and advances to
credit institutions
261
\u2014
\u2014
261
329
\u2014
\u2014
329
Debt securities
\u2014
440
\u2014
440
\u2014
442
\u2014
442
Loans and advances to
customers
33,941
\u2014
\u2014
33,941
33,458
\u2014
\u2014
33,458
Hedge accounting
adjustment
118
\u2014
\u2014
118
(448)
\u2014
\u2014
(448)
Derivative financial
instruments
\u2014
\u2014
424
424
\u2014
\u2014
1,082
1,082
Loans with Group
undertakings
18,263
\u2014
446
18,709
17,583
\u2014
\u2014
17,583
Investment in equity
shares
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
9
9
Total financial assets
61,495
440
870
62,805
60,740
442
1,091
62,273
Other non-financial assets
904
\u2014
\u2014
904
869
\u2014
\u2014
869
Total assets
62,399
440
870
63,709
61,609
442
1,091
63,142
Financial liabilities
Shares
50,830
\u2014
\u2014
50,830
49,343
\u2014
\u2014
49,343
Customer accounts
187
\u2014
\u2014
187
234
\u2014
\u2014
234
Deposits from banks
2,055
\u2014
\u2014
2,055
3,932
\u2014
\u2014
3,932
Debt securities in issue
5,408
\u2014
207
5,615
4,930
\u2014
\u2014
4,930
Hedge accounting
adjustment
7
\u2014
\u2014
7
(68)
\u2014
\u2014
(68)
Derivative financial
instruments
\u2014
\u2014
252
252
\u2014
\u2014
254
254
Subordinated liabilities
15
\u2014
239
254
15
\u2014
\u2014
15
Subscribed capital
42
\u2014
\u2014
42
42
\u2014
\u2014
42
Total financial liabilities
58,544
\u2014
698
59,242
58,428
\u2014
254
58,682
Other non-financial
liabilities
1,836
\u2014
\u2014
1,836
1,738
\u2014
\u2014
1,738
Total liabilities
60,380
\u2014
698
61,078
60,166
\u2014
254
60,420
33. Financial instruments \u2013 fair value of financial assets and liabilities
For the purpose of calculating fair values, fair value is assessed as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants in the principal or, in its absence, the most
advantageous market to which the Group has access at that date. The Group measures fair value using the following fair
value hierarchy that reflects the significance of the inputs used in making the measurements:
\u2022 Level 1: unadjusted quoted prices in active markets for identical instruments.
\u2022 Level 2: valuation techniques for which all significant inputs are based on observable market data.
\u2022 Level 3: valuation techniques for which significant inputs are not based on observable market data.
Where applicable, the Group measures fair value using the quoted price in an active market for that instrument. A market
is regarded as active if transactions take place with sufficient frequency and volume to provide pricing information on an
ongoing basis. Where this is not applicable, the Group determines fair values using other valuation techniques.
Fair value of assets and liabilities held at amortised cost
The following table summarises the fair value of the Group's and Society's financial assets and liabilities measured at
amortised cost in the Group's and Society's Balance Sheet.
2025
Group
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
383
\u2014
383
\u2014
383
Loans and advances to customers
72,936
\u2014
\u2014
73,266
73,266
Debt securities
26
\u2014
\u2014
27
27
Financial liabilities
Shares
50,830
\u2014
\u2014
50,480
50,480
Customer accounts
20,892
\u2014
42
20,841
20,883
Deposits from banks
3,009
\u2014
2,993
16
3,009
Debt securities in issue
8,307
\u2014
8,301
\u2014
8,301
Subordinated liabilities
248
\u2014
258
\u2014
258
Subscribed capital
42
79
\u2014
\u2014
79
2025
Society
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
261
\u2014
261
\u2014
261
Loans and advances to customers
33,941
\u2014
\u2014
34,167
34,167
Debt securities
\u2014
\u2014
\u2014
\u2014
\u2014
Loans with Group undertakings
18,263
\u2014
3,873
14,298
18,171
Financial liabilities
Shares
50,830
\u2014
\u2014
50,480
50,480
Customer accounts
187
\u2014
187
\u2014
187
Deposits from banks
2,055
\u2014
2,055
\u2014
2,055
Debt securities in issue
5,408
\u2014
5,393
\u2014
5,393
Subordinated liabilities
15
\u2014
19
\u2014
19
Subscribed capital
42
79
\u2014
\u2014
79
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at amortised cost continued
2024
Group
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
329
\u2014
329
\u2014
329
Loans and advances to customers
51,801
\u2014
\u2014
51,593
51,593
Debt securities
\u2014
\u2014
\u2014
\u2014
\u2014
Financial liabilities
Shares
49,343
\u2014
\u2014
49,268
49,268
Customer accounts
82
\u2014
82
\u2014
82
Deposits from banks
3,932
\u2014
3,932
\u2014
3,932
Debt securities in issue
6,543
\u2014
6,441
\u2014
6,441
Subordinated liabilities
15
\u2014
19
\u2014
19
Subscribed capital
42
67
\u2014
\u2014
67
2024
Society
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
329
\u2014
329
\u2014
329
Loans and advances to customers
33,458
\u2014
\u2014
33,416
33,416
Debt securities
\u2014
\u2014
\u2014
\u2014
\u2014
Loans with Group undertakings
17,583
\u2014
4,634
12,810
17,444
Financial liabilities
Shares
49,343
\u2014
\u2014
49,268
49,268
Customer accounts
234
\u2014
234
\u2014
234
Deposits from banks
3,932
\u2014
3,932
\u2014
3,932
Debt securities in issue
4,930
\u2014
4,831
\u2014
4,831
Subordinated liabilities
15
\u2014
19
\u2014
19
Subscribed capital
42
67
\u2014
\u2014
67
Loans and advances to credit institutions
The fair value of loans and advances to credit institutions over the longer term is estimated by discounting expected cash
flows at a market discount rate. Amounts maturing in the short term are valued at carrying amount.
Loans and advances to customers
The fair value of loans and advances to customers is assessed as the value of the expected future cash flows, projected
using contractual interest payments and repayments and the expected prepayment behaviour of borrowers. Assumptions
are applied regarding expected levels of customer prepayments and the risk of defaults. The estimated future cash flows
are discounted at current market rates for the loan types and adjusted where necessary to reflect any observable market
conditions. The majority of the loans and advances to customers are on a fixed rate product, and therefore interest rate
swap derivative instruments are in place against these assets. Hedge accounting related fair value adjustments of \u00a3169
million increase at Group and \u00a3118 million increase at Society (31 December 2024: \u00a3448 million decrease, Group and
Society) are excluded from the carrying value and fair value.
Debt securities
Debt securities for which no market price or executable bid is available at the year end date are valued by one of two
methods. Where there are recent market prices or executable bids for the security, these are used as the basis for
establishing a valuation. Otherwise, a security is valued based on its relative value to comparable bonds.
Loans with Group undertakings
Loans with Group undertakings are made up of intercompany loan balances. Intercompany loan balances repayable on
demand are classed as level 3. Intercompany loans due in relation to the covered bond programmes are valued by reference
to the to the fair value of the underlying covered bond and are classed as level 2.\u00a0
Shares and customer accounts
The fair value of shares and customer accounts available on demand approximates to the carrying value. The fair value of
fixed term or restricted access deposits is determined from the estimated projected cash flows discounted at the current
market rates for those types of deposit. The estimated fair value of deposits with no stated maturity, which includes non-
interest bearing deposits, is the amount repayable on demand. Hedge accounting fair value adjustments to the share
balance of \u00a325 million increase (31 December 2024: \u00a318 million) are excluded from the carrying value and fair value. Hedge
accounting fair value adjustments to customer accounts of \u00a322 million increase (31 December 2024: \u00a3nil) are excluded from
the carrying value and fair value.
Deposits from banks
The fair value of deposits taken from wholesale counterparties over the longer term is estimated by discounting expected
cash flows at a market discount rate. Amounts maturing in the short term are valued at carrying amount.
Debt securities in issue, subordinated liabilities and subscribed capital
The estimated fair value of longer-dated liabilities is calculated based on quoted market prices where available or using
similar issues as a proxy for those liabilities that are not of sufficient size or liquidity to have an active market quote. For
those liabilities where quoted market prices are not available, a discounted cash flow model is used based on a current
yield curve appropriate to the remaining term to maturity.
Fair value of assets and liabilities held at fair value
The following table summarises the fair value of the Group's financial assets and liabilities measured at fair value on the
face of the Group and Society's Balance Sheet by fair value hierarchy and product type.
2025
Group
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
488
\u2014
488
Cross currency swaps
\u2014
45
\u2014
45
Total
\u2014
533
\u2014
533
Debt securities:
UK Government investment securities
789
\u2014
\u2014
789
Other listed transferable debt securities
747
\u2014
3
750
Total
1,536
\u2014
3
1,539
Investment in equity shares:
Investment in equity shares
\u2014
\u2014
5
5
Total
\u2014
\u2014
5
5
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
308
1
309
Cross currency swaps
\u2014
11
\u2014
11
Total
\u2014
319
1
320
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at fair value continued
2025
Society
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
409
\u2014
409
Cross currency swaps
\u2014
15
\u2014
15
Total
\u2014
424
\u2014
424
Debt securities:
UK Government investment securities
440
\u2014
\u2014
440
Other listed transferable debt securities
\u2014
\u2014
\u2014
\u2014
Total
440
\u2014
\u2014
440
Loans with Group undertakings:
Loans with Group undertakings
\u2014
446
\u2014
446
Total
\u2014
446
\u2014
446
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
251
1
252
Cross currency swaps
\u2014
\u2014
\u2014
\u2014
Total
\u2014
251
1
252
Debt securities in issue:
Medium term notes
\u2014
207
\u2014
207
Total
\u2014
207
\u2014
207
Subordinated liabilities:
Subordinated liabilities
\u2014
239
\u2014
239
Total
\u2014
239
\u2014
239
2024
Group
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
1,082
\u2014
1,082
Cross currency swaps
\u2014
2
\u2014
2
Total
\u2014
1,084
\u2014
1,084
Debt securities:
UK Government investment securities
483
\u2014
\u2014
483
Other listed transferable debt securities
19
\u2014
\u2014
19
Total
502
\u2014
\u2014
502
Investment in equity shares:
Investment in equity shares
1
\u2014
8
9
Total
1
\u2014
8
9
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
245
1
246
Cross currency swaps
\u2014
59
\u2014
59
Total
\u2014
304
1
305
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at fair value continued
2024
Society
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
1,082
\u2014
1,082
Cross currency swaps
\u2014
\u2014
\u2014
\u2014
Total
\u2014
1,082
\u2014
1,082
Debt securities:
UK Government investment securities
423
\u2014
\u2014
423
Other listed transferable debt securities
19
\u2014
\u2014
19
Total
442
\u2014
\u2014
442
Investment in equity shares:
Investment in equity shares
1
\u2014
8
9
Total
1
\u2014
8
9
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
245
1
246
Cross currency swaps
\u2014
8
\u2014
8
Total
\u2014
253
1
254
Financial instruments recorded at fair value
The determination of fair value for financial instruments that are recorded at fair value using valuation techniques is
described below, including the assumptions that a market participant would be expected to make when valuing the
instruments:
Level 1: Debt securities \u2013 fair value through other comprehensive income \u2013 Listed
Market prices have been used to determine the fair value of listed debt securities.
Level 1: Investment in equity shares \u2013 fair value through profit and loss \u2013 Listed
Market prices have been used to determine the fair value of listed equity shares.
Level 2: Derivatives
Derivative products utilise observable market inputs for interest rate swaps and cross currency swaps. Valuations are
generated by swap models which use present value calculations and incorporate assumptions for interest rate curves and
foreign exchange spot and forward rates.
Level 2: Loans with Group undertakings - Unlisted
This reflects a back-to-back arrangement between the Society and the Bank in respect of listed debt securities in issue and
subordinated liabilities, market prices of the these instruments have been used to to determine the fair value.
Level 2 - Debt securities - fair value through other comprehensive income - Unlisted
Where quoted market prices are not available at the valuation date, valuations of securities are based on their relative
value to comparable securities.
Level 2 - Debt securities in issue - fair value through profit and loss - Listed
Market prices have been used to determine the fair value of listed debt securities in issue.
Level 2 - Subordinated liabilities - Listed
Market prices have been used to determine the fair value of listed subordinated liabilities.
Level 3 - Debt securities - Unlisted
Represents a 5% risk retention holding of residual certificates issued by Warwick Finance Residential Mortgages Number
Three plc. The remaining 95% is privately held, therefore there is no available market prices. An in-house model is used
that sources independent market data for disclosure purposes only.
Level 3: Investment in equity shares \u2013 fair value through profit and loss \u2013 Unlisted
The Group has a small balance of investments in equity shares, including a residual holding in Visa Inc. shares. These shares
are valued based on future cash consideration which the Group expects to receive on sale of these instruments, or the
underlying market value.
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Financial instruments recorded at fair value continued
Level 3: Derivatives
The item included within Level 3 is a balance tracking swap, which remained in place during the year. It is valued using
present value calculations based on market interest rate curves. The unobservable inputs relate to the projection of the
swap notional amount, which changes over time to match the balance of the underlying mortgage portfolio. Projected
mortgage prepayment amounts are used in the modelling of the mortgage portfolio profile. The changes in the projection of
interest and prepayment rates of the underlying mortgage portfolio affect both the unbounded swap and hedged item so
that the net Income Statement and Balance Sheet impact would be minimal.
The following table analyses fair value movements in the Level 3 portfolio for both the Group and the Society:
2025
2024
Group
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
As at 1 January
8
(1)
\u2014
6
(2)
\u2014
Recognised on acquisition
6
\u2014
14
Gains/(losses) recognised in the
Income Statement
Net unrealised gains/ (losses)
(1)
\u2014
\u2014
2
1
\u2014
Settlements
(8)
\u2014
(11)
\u2014
\u2014
\u2014
As at 31 December
5
(1)
3
8
(1)
\u2014
2025
2024
Society
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
As at 1 January
8
(1)
\u2014
6
(2)
\u2014
Gains/(losses) recognised in the
Income Statement
Net unrealised gains/ (losses)
3
\u2014
\u2014
2
1
\u2014
Settlements
(11)
\u2014
\u2014
\u2014
\u2014
\u2014
As at 31 December
\u2014
(1)
\u2014
8
(1)
\u2014
No sensitivities have been performed with regards the level 3 instruments as the balances are immaterial to the financial
statements.
Transfers between fair value levels
Transfers between fair value levels only occur when either it becomes possible to value a financial instrument using a
method that is higher up the valuation hierarchy or it is no longer possible to value it using the current method and it must
instead be valued using a method lower down the hierarchy. Transfers are considered to have occurred at the end of the
reporting period for the purposes of this disclosure.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-373": { "value": "
12. Classification and measurement of financial instruments
The following tables summarise the classification of carrying amounts of the Group and Society\u2019s financial assets and
liabilities at the reporting date.
2025
2024
Group
Amortised
cost
\u00a3m
Fair value
through other
comprehensive
income
\u00a3m
Fair value
through
profit and
loss
\u00a3m
Total
\u00a3m
Amortised
cost
\u00a3m
Fair value
through other
comprehensive
income
\u00a3m
Fair value
through profit
and loss
\u00a3m
Total
\u00a3m
Financial assets
Cash and balances with
the Bank of England
11,948
\u2014
\u2014
11,948
9,893
\u2014
\u2014
9,893
Loans and advances to
credit institutions
383
\u2014
\u2014
383
329
\u2014
\u2014
329
Debt securities
26
1,536
3
1,565
\u2014
502
\u2014
502
Loans and advances to
customers
72,936
\u2014
\u2014
72,936
51,801
\u2014
\u2014
51,801
Hedge accounting
adjustment
169
\u2014
\u2014
169
(448)
\u2014
\u2014
(448)
Derivative financial
instruments
\u2014
\u2014
533
533
\u2014
\u2014
1,084
1,084
Investment in equity
shares
\u2014
\u2014
5
5
\u2014
\u2014
9
9
Total financial assets
85,462
1,536
541
87,539
61,575
502
1,093
63,170
Other non-financial assets
700
\u2014
\u2014
700
861
\u2014
\u2014
861
Total assets
86,162
1,536
541
88,239
62,436
502
1,093
64,031
Financial liabilities
Shares
50,830
\u2014
\u2014
50,830
49,343
\u2014
\u2014
49,343
Customer accounts
20,892
\u2014
\u2014
20,892
82
\u2014
\u2014
82
Deposits from banks
3,009
\u2014
\u2014
3,009
3,932
\u2014
\u2014
3,932
Debt securities in issue
8,307
\u2014
\u2014
8,307
6,543
\u2014
\u2014
6,543
Hedge accounting
adjustment
29
\u2014
\u2014
29
(68)
\u2014
\u2014
(68)
Derivative financial
instruments
\u2014
\u2014
320
320
\u2014
\u2014
305
305
Subordinated liabilities
248
\u2014
\u2014
248
15
\u2014
\u2014
15
Subscribed capital
42
\u2014
\u2014
42
42
\u2014
\u2014
42
Total financial liabilities
83,357
\u2014
320
83,677
59,889
\u2014
305
60,194
Other non-financial
liabilities
273
\u2014
\u2014
273
209
\u2014
\u2014
209
Total liabilities
83,630
\u2014
320
83,950
60,098
\u2014
305
60,403
2025
2024
Society
Amortised
cost
\u00a3m
Fair value
through other
comprehensive
income
\u00a3m
Fair value
through
profit and
loss
\u00a3m
Total
\u00a3m
Amortised
cost
\u00a3m
Fair value
through other
comprehensive
income
\u00a3m
Fair value
through profit
and loss
\u00a3m
Total
\u00a3m
Financial assets
Cash and balances with
the Bank of England
8,912
\u2014
\u2014
8,912
9,818
\u2014
\u2014
9,818
Loans and advances to
credit institutions
261
\u2014
\u2014
261
329
\u2014
\u2014
329
Debt securities
\u2014
440
\u2014
440
\u2014
442
\u2014
442
Loans and advances to
customers
33,941
\u2014
\u2014
33,941
33,458
\u2014
\u2014
33,458
Hedge accounting
adjustment
118
\u2014
\u2014
118
(448)
\u2014
\u2014
(448)
Derivative financial
instruments
\u2014
\u2014
424
424
\u2014
\u2014
1,082
1,082
Loans with Group
undertakings
18,263
\u2014
446
18,709
17,583
\u2014
\u2014
17,583
Investment in equity
shares
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
9
9
Total financial assets
61,495
440
870
62,805
60,740
442
1,091
62,273
Other non-financial assets
904
\u2014
\u2014
904
869
\u2014
\u2014
869
Total assets
62,399
440
870
63,709
61,609
442
1,091
63,142
Financial liabilities
Shares
50,830
\u2014
\u2014
50,830
49,343
\u2014
\u2014
49,343
Customer accounts
187
\u2014
\u2014
187
234
\u2014
\u2014
234
Deposits from banks
2,055
\u2014
\u2014
2,055
3,932
\u2014
\u2014
3,932
Debt securities in issue
5,408
\u2014
207
5,615
4,930
\u2014
\u2014
4,930
Hedge accounting
adjustment
7
\u2014
\u2014
7
(68)
\u2014
\u2014
(68)
Derivative financial
instruments
\u2014
\u2014
252
252
\u2014
\u2014
254
254
Subordinated liabilities
15
\u2014
239
254
15
\u2014
\u2014
15
Subscribed capital
42
\u2014
\u2014
42
42
\u2014
\u2014
42
Total financial liabilities
58,544
\u2014
698
59,242
58,428
\u2014
254
58,682
Other non-financial
liabilities
1,836
\u2014
\u2014
1,836
1,738
\u2014
\u2014
1,738
Total liabilities
60,380
\u2014
698
61,078
60,166
\u2014
254
60,420
33. Financial instruments \u2013 fair value of financial assets and liabilities
For the purpose of calculating fair values, fair value is assessed as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants in the principal or, in its absence, the most
advantageous market to which the Group has access at that date. The Group measures fair value using the following fair
value hierarchy that reflects the significance of the inputs used in making the measurements:
\u2022 Level 1: unadjusted quoted prices in active markets for identical instruments.
\u2022 Level 2: valuation techniques for which all significant inputs are based on observable market data.
\u2022 Level 3: valuation techniques for which significant inputs are not based on observable market data.
Where applicable, the Group measures fair value using the quoted price in an active market for that instrument. A market
is regarded as active if transactions take place with sufficient frequency and volume to provide pricing information on an
ongoing basis. Where this is not applicable, the Group determines fair values using other valuation techniques.
Fair value of assets and liabilities held at amortised cost
The following table summarises the fair value of the Group's and Society's financial assets and liabilities measured at
amortised cost in the Group's and Society's Balance Sheet.
2025
Group
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
383
\u2014
383
\u2014
383
Loans and advances to customers
72,936
\u2014
\u2014
73,266
73,266
Debt securities
26
\u2014
\u2014
27
27
Financial liabilities
Shares
50,830
\u2014
\u2014
50,480
50,480
Customer accounts
20,892
\u2014
42
20,841
20,883
Deposits from banks
3,009
\u2014
2,993
16
3,009
Debt securities in issue
8,307
\u2014
8,301
\u2014
8,301
Subordinated liabilities
248
\u2014
258
\u2014
258
Subscribed capital
42
79
\u2014
\u2014
79
2025
Society
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
261
\u2014
261
\u2014
261
Loans and advances to customers
33,941
\u2014
\u2014
34,167
34,167
Debt securities
\u2014
\u2014
\u2014
\u2014
\u2014
Loans with Group undertakings
18,263
\u2014
3,873
14,298
18,171
Financial liabilities
Shares
50,830
\u2014
\u2014
50,480
50,480
Customer accounts
187
\u2014
187
\u2014
187
Deposits from banks
2,055
\u2014
2,055
\u2014
2,055
Debt securities in issue
5,408
\u2014
5,393
\u2014
5,393
Subordinated liabilities
15
\u2014
19
\u2014
19
Subscribed capital
42
79
\u2014
\u2014
79
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at amortised cost continued
2024
Group
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
329
\u2014
329
\u2014
329
Loans and advances to customers
51,801
\u2014
\u2014
51,593
51,593
Debt securities
\u2014
\u2014
\u2014
\u2014
\u2014
Financial liabilities
Shares
49,343
\u2014
\u2014
49,268
49,268
Customer accounts
82
\u2014
82
\u2014
82
Deposits from banks
3,932
\u2014
3,932
\u2014
3,932
Debt securities in issue
6,543
\u2014
6,441
\u2014
6,441
Subordinated liabilities
15
\u2014
19
\u2014
19
Subscribed capital
42
67
\u2014
\u2014
67
2024
Society
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
329
\u2014
329
\u2014
329
Loans and advances to customers
33,458
\u2014
\u2014
33,416
33,416
Debt securities
\u2014
\u2014
\u2014
\u2014
\u2014
Loans with Group undertakings
17,583
\u2014
4,634
12,810
17,444
Financial liabilities
Shares
49,343
\u2014
\u2014
49,268
49,268
Customer accounts
234
\u2014
234
\u2014
234
Deposits from banks
3,932
\u2014
3,932
\u2014
3,932
Debt securities in issue
4,930
\u2014
4,831
\u2014
4,831
Subordinated liabilities
15
\u2014
19
\u2014
19
Subscribed capital
42
67
\u2014
\u2014
67
Loans and advances to credit institutions
The fair value of loans and advances to credit institutions over the longer term is estimated by discounting expected cash
flows at a market discount rate. Amounts maturing in the short term are valued at carrying amount.
Loans and advances to customers
The fair value of loans and advances to customers is assessed as the value of the expected future cash flows, projected
using contractual interest payments and repayments and the expected prepayment behaviour of borrowers. Assumptions
are applied regarding expected levels of customer prepayments and the risk of defaults. The estimated future cash flows
are discounted at current market rates for the loan types and adjusted where necessary to reflect any observable market
conditions. The majority of the loans and advances to customers are on a fixed rate product, and therefore interest rate
swap derivative instruments are in place against these assets. Hedge accounting related fair value adjustments of \u00a3169
million increase at Group and \u00a3118 million increase at Society (31 December 2024: \u00a3448 million decrease, Group and
Society) are excluded from the carrying value and fair value.
Debt securities
Debt securities for which no market price or executable bid is available at the year end date are valued by one of two
methods. Where there are recent market prices or executable bids for the security, these are used as the basis for
establishing a valuation. Otherwise, a security is valued based on its relative value to comparable bonds.
Loans with Group undertakings
Loans with Group undertakings are made up of intercompany loan balances. Intercompany loan balances repayable on
demand are classed as level 3. Intercompany loans due in relation to the covered bond programmes are valued by reference
to the to the fair value of the underlying covered bond and are classed as level 2.\u00a0
Shares and customer accounts
The fair value of shares and customer accounts available on demand approximates to the carrying value. The fair value of
fixed term or restricted access deposits is determined from the estimated projected cash flows discounted at the current
market rates for those types of deposit. The estimated fair value of deposits with no stated maturity, which includes non-
interest bearing deposits, is the amount repayable on demand. Hedge accounting fair value adjustments to the share
balance of \u00a325 million increase (31 December 2024: \u00a318 million) are excluded from the carrying value and fair value. Hedge
accounting fair value adjustments to customer accounts of \u00a322 million increase (31 December 2024: \u00a3nil) are excluded from
the carrying value and fair value.
Deposits from banks
The fair value of deposits taken from wholesale counterparties over the longer term is estimated by discounting expected
cash flows at a market discount rate. Amounts maturing in the short term are valued at carrying amount.
Debt securities in issue, subordinated liabilities and subscribed capital
The estimated fair value of longer-dated liabilities is calculated based on quoted market prices where available or using
similar issues as a proxy for those liabilities that are not of sufficient size or liquidity to have an active market quote. For
those liabilities where quoted market prices are not available, a discounted cash flow model is used based on a current
yield curve appropriate to the remaining term to maturity.
Fair value of assets and liabilities held at fair value
The following table summarises the fair value of the Group's financial assets and liabilities measured at fair value on the
face of the Group and Society's Balance Sheet by fair value hierarchy and product type.
2025
Group
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
488
\u2014
488
Cross currency swaps
\u2014
45
\u2014
45
Total
\u2014
533
\u2014
533
Debt securities:
UK Government investment securities
789
\u2014
\u2014
789
Other listed transferable debt securities
747
\u2014
3
750
Total
1,536
\u2014
3
1,539
Investment in equity shares:
Investment in equity shares
\u2014
\u2014
5
5
Total
\u2014
\u2014
5
5
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
308
1
309
Cross currency swaps
\u2014
11
\u2014
11
Total
\u2014
319
1
320
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at fair value continued
2025
Society
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
409
\u2014
409
Cross currency swaps
\u2014
15
\u2014
15
Total
\u2014
424
\u2014
424
Debt securities:
UK Government investment securities
440
\u2014
\u2014
440
Other listed transferable debt securities
\u2014
\u2014
\u2014
\u2014
Total
440
\u2014
\u2014
440
Loans with Group undertakings:
Loans with Group undertakings
\u2014
446
\u2014
446
Total
\u2014
446
\u2014
446
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
251
1
252
Cross currency swaps
\u2014
\u2014
\u2014
\u2014
Total
\u2014
251
1
252
Debt securities in issue:
Medium term notes
\u2014
207
\u2014
207
Total
\u2014
207
\u2014
207
Subordinated liabilities:
Subordinated liabilities
\u2014
239
\u2014
239
Total
\u2014
239
\u2014
239
2024
Group
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
1,082
\u2014
1,082
Cross currency swaps
\u2014
2
\u2014
2
Total
\u2014
1,084
\u2014
1,084
Debt securities:
UK Government investment securities
483
\u2014
\u2014
483
Other listed transferable debt securities
19
\u2014
\u2014
19
Total
502
\u2014
\u2014
502
Investment in equity shares:
Investment in equity shares
1
\u2014
8
9
Total
1
\u2014
8
9
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
245
1
246
Cross currency swaps
\u2014
59
\u2014
59
Total
\u2014
304
1
305
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at fair value continued
2024
Society
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
1,082
\u2014
1,082
Cross currency swaps
\u2014
\u2014
\u2014
\u2014
Total
\u2014
1,082
\u2014
1,082
Debt securities:
UK Government investment securities
423
\u2014
\u2014
423
Other listed transferable debt securities
19
\u2014
\u2014
19
Total
442
\u2014
\u2014
442
Investment in equity shares:
Investment in equity shares
1
\u2014
8
9
Total
1
\u2014
8
9
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
245
1
246
Cross currency swaps
\u2014
8
\u2014
8
Total
\u2014
253
1
254
Financial instruments recorded at fair value
The determination of fair value for financial instruments that are recorded at fair value using valuation techniques is
described below, including the assumptions that a market participant would be expected to make when valuing the
instruments:
Level 1: Debt securities \u2013 fair value through other comprehensive income \u2013 Listed
Market prices have been used to determine the fair value of listed debt securities.
Level 1: Investment in equity shares \u2013 fair value through profit and loss \u2013 Listed
Market prices have been used to determine the fair value of listed equity shares.
Level 2: Derivatives
Derivative products utilise observable market inputs for interest rate swaps and cross currency swaps. Valuations are
generated by swap models which use present value calculations and incorporate assumptions for interest rate curves and
foreign exchange spot and forward rates.
Level 2: Loans with Group undertakings - Unlisted
This reflects a back-to-back arrangement between the Society and the Bank in respect of listed debt securities in issue and
subordinated liabilities, market prices of the these instruments have been used to to determine the fair value.
Level 2 - Debt securities - fair value through other comprehensive income - Unlisted
Where quoted market prices are not available at the valuation date, valuations of securities are based on their relative
value to comparable securities.
Level 2 - Debt securities in issue - fair value through profit and loss - Listed
Market prices have been used to determine the fair value of listed debt securities in issue.
Level 2 - Subordinated liabilities - Listed
Market prices have been used to determine the fair value of listed subordinated liabilities.
Level 3 - Debt securities - Unlisted
Represents a 5% risk retention holding of residual certificates issued by Warwick Finance Residential Mortgages Number
Three plc. The remaining 95% is privately held, therefore there is no available market prices. An in-house model is used
that sources independent market data for disclosure purposes only.
Level 3: Investment in equity shares \u2013 fair value through profit and loss \u2013 Unlisted
The Group has a small balance of investments in equity shares, including a residual holding in Visa Inc. shares. These shares
are valued based on future cash consideration which the Group expects to receive on sale of these instruments, or the
underlying market value.
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Financial instruments recorded at fair value continued
Level 3: Derivatives
The item included within Level 3 is a balance tracking swap, which remained in place during the year. It is valued using
present value calculations based on market interest rate curves. The unobservable inputs relate to the projection of the
swap notional amount, which changes over time to match the balance of the underlying mortgage portfolio. Projected
mortgage prepayment amounts are used in the modelling of the mortgage portfolio profile. The changes in the projection of
interest and prepayment rates of the underlying mortgage portfolio affect both the unbounded swap and hedged item so
that the net Income Statement and Balance Sheet impact would be minimal.
The following table analyses fair value movements in the Level 3 portfolio for both the Group and the Society:
2025
2024
Group
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
As at 1 January
8
(1)
\u2014
6
(2)
\u2014
Recognised on acquisition
6
\u2014
14
Gains/(losses) recognised in the
Income Statement
Net unrealised gains/ (losses)
(1)
\u2014
\u2014
2
1
\u2014
Settlements
(8)
\u2014
(11)
\u2014
\u2014
\u2014
As at 31 December
5
(1)
3
8
(1)
\u2014
2025
2024
Society
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
As at 1 January
8
(1)
\u2014
6
(2)
\u2014
Gains/(losses) recognised in the
Income Statement
Net unrealised gains/ (losses)
3
\u2014
\u2014
2
1
\u2014
Settlements
(11)
\u2014
\u2014
\u2014
\u2014
\u2014
As at 31 December
\u2014
(1)
\u2014
8
(1)
\u2014
No sensitivities have been performed with regards the level 3 instruments as the balances are immaterial to the financial
statements.
Transfers between fair value levels
Transfers between fair value levels only occur when either it becomes possible to value a financial instrument using a
method that is higher up the valuation hierarchy or it is no longer possible to value it using the current method and it must
instead be valued using a method lower down the hierarchy. Transfers are considered to have occurred at the end of the
reporting period for the purposes of this disclosure.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-372": { "value": "
12. Classification and measurement of financial instruments
The following tables summarise the classification of carrying amounts of the Group and Society\u2019s financial assets and
liabilities at the reporting date.
2025
2024
Group
Amortised
cost
\u00a3m
Fair value
through other
comprehensive
income
\u00a3m
Fair value
through
profit and
loss
\u00a3m
Total
\u00a3m
Amortised
cost
\u00a3m
Fair value
through other
comprehensive
income
\u00a3m
Fair value
through profit
and loss
\u00a3m
Total
\u00a3m
Financial assets
Cash and balances with
the Bank of England
11,948
\u2014
\u2014
11,948
9,893
\u2014
\u2014
9,893
Loans and advances to
credit institutions
383
\u2014
\u2014
383
329
\u2014
\u2014
329
Debt securities
26
1,536
3
1,565
\u2014
502
\u2014
502
Loans and advances to
customers
72,936
\u2014
\u2014
72,936
51,801
\u2014
\u2014
51,801
Hedge accounting
adjustment
169
\u2014
\u2014
169
(448)
\u2014
\u2014
(448)
Derivative financial
instruments
\u2014
\u2014
533
533
\u2014
\u2014
1,084
1,084
Investment in equity
shares
\u2014
\u2014
5
5
\u2014
\u2014
9
9
Total financial assets
85,462
1,536
541
87,539
61,575
502
1,093
63,170
Other non-financial assets
700
\u2014
\u2014
700
861
\u2014
\u2014
861
Total assets
86,162
1,536
541
88,239
62,436
502
1,093
64,031
Financial liabilities
Shares
50,830
\u2014
\u2014
50,830
49,343
\u2014
\u2014
49,343
Customer accounts
20,892
\u2014
\u2014
20,892
82
\u2014
\u2014
82
Deposits from banks
3,009
\u2014
\u2014
3,009
3,932
\u2014
\u2014
3,932
Debt securities in issue
8,307
\u2014
\u2014
8,307
6,543
\u2014
\u2014
6,543
Hedge accounting
adjustment
29
\u2014
\u2014
29
(68)
\u2014
\u2014
(68)
Derivative financial
instruments
\u2014
\u2014
320
320
\u2014
\u2014
305
305
Subordinated liabilities
248
\u2014
\u2014
248
15
\u2014
\u2014
15
Subscribed capital
42
\u2014
\u2014
42
42
\u2014
\u2014
42
Total financial liabilities
83,357
\u2014
320
83,677
59,889
\u2014
305
60,194
Other non-financial
liabilities
273
\u2014
\u2014
273
209
\u2014
\u2014
209
Total liabilities
83,630
\u2014
320
83,950
60,098
\u2014
305
60,403
2025
2024
Society
Amortised
cost
\u00a3m
Fair value
through other
comprehensive
income
\u00a3m
Fair value
through
profit and
loss
\u00a3m
Total
\u00a3m
Amortised
cost
\u00a3m
Fair value
through other
comprehensive
income
\u00a3m
Fair value
through profit
and loss
\u00a3m
Total
\u00a3m
Financial assets
Cash and balances with
the Bank of England
8,912
\u2014
\u2014
8,912
9,818
\u2014
\u2014
9,818
Loans and advances to
credit institutions
261
\u2014
\u2014
261
329
\u2014
\u2014
329
Debt securities
\u2014
440
\u2014
440
\u2014
442
\u2014
442
Loans and advances to
customers
33,941
\u2014
\u2014
33,941
33,458
\u2014
\u2014
33,458
Hedge accounting
adjustment
118
\u2014
\u2014
118
(448)
\u2014
\u2014
(448)
Derivative financial
instruments
\u2014
\u2014
424
424
\u2014
\u2014
1,082
1,082
Loans with Group
undertakings
18,263
\u2014
446
18,709
17,583
\u2014
\u2014
17,583
Investment in equity
shares
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
9
9
Total financial assets
61,495
440
870
62,805
60,740
442
1,091
62,273
Other non-financial assets
904
\u2014
\u2014
904
869
\u2014
\u2014
869
Total assets
62,399
440
870
63,709
61,609
442
1,091
63,142
Financial liabilities
Shares
50,830
\u2014
\u2014
50,830
49,343
\u2014
\u2014
49,343
Customer accounts
187
\u2014
\u2014
187
234
\u2014
\u2014
234
Deposits from banks
2,055
\u2014
\u2014
2,055
3,932
\u2014
\u2014
3,932
Debt securities in issue
5,408
\u2014
207
5,615
4,930
\u2014
\u2014
4,930
Hedge accounting
adjustment
7
\u2014
\u2014
7
(68)
\u2014
\u2014
(68)
Derivative financial
instruments
\u2014
\u2014
252
252
\u2014
\u2014
254
254
Subordinated liabilities
15
\u2014
239
254
15
\u2014
\u2014
15
Subscribed capital
42
\u2014
\u2014
42
42
\u2014
\u2014
42
Total financial liabilities
58,544
\u2014
698
59,242
58,428
\u2014
254
58,682
Other non-financial
liabilities
1,836
\u2014
\u2014
1,836
1,738
\u2014
\u2014
1,738
Total liabilities
60,380
\u2014
698
61,078
60,166
\u2014
254
60,420
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-377": { "value": "
13. Cash and cash equivalents
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Cash and balances at central banks
11,948
9,893
8,912
9,818
Loans and advances to credit institutions repayable in 3 months or less
56
\u2014
(18)
\u2014
Total cash and cash equivalents
12,004
9,893
8,894
9,818
Included within loans and advances to credit institutions at 31 December 2025 is \u00a3327 million for the Group and \u00a3279 million
for the Society (2024: \u00a3329 million, Group and Society) which relates to collateral pledged as part of the Group's
involvement in transactional payment schemes, pension scheme arrangements and derivative clearing that is not classified
as cash and cash equivalents due to restrictions to its access.
At 31 December 2025, \u00a326 million (2024: \u00a3nil) of cash in transit is included within loans and advances to credit institutions
for the Society.", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndBankBalancesAtCentralBanksExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-376": { "value": "
13. Cash and cash equivalents
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Cash and balances at central banks
11,948
9,893
8,912
9,818
Loans and advances to credit institutions repayable in 3 months or less
56
\u2014
(18)
\u2014
Total cash and cash equivalents
12,004
9,893
8,894
9,818
Included within loans and advances to credit institutions at 31 December 2025 is \u00a3327 million for the Group and \u00a3279 million
for the Society (2024: \u00a3329 million, Group and Society) which relates to collateral pledged as part of the Group's
involvement in transactional payment schemes, pension scheme arrangements and derivative clearing that is not classified
as cash and cash equivalents due to restrictions to its access.
At 31 December 2025, \u00a326 million (2024: \u00a3nil) of cash in transit is included within loans and advances to credit institutions
for the Society.", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-375": { "value": "
13. Cash and cash equivalents
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Cash and balances at central banks
11,948
9,893
8,912
9,818
Loans and advances to credit institutions repayable in 3 months or less
56
\u2014
(18)
\u2014
Total cash and cash equivalents
12,004
9,893
8,894
9,818
Included within loans and advances to credit institutions at 31 December 2025 is \u00a3327 million for the Group and \u00a3279 million
for the Society (2024: \u00a3329 million, Group and Society) which relates to collateral pledged as part of the Group's
involvement in transactional payment schemes, pension scheme arrangements and derivative clearing that is not classified
as cash and cash equivalents due to restrictions to its access.
At 31 December 2025, \u00a326 million (2024: \u00a3nil) of cash in transit is included within loans and advances to credit institutions
for the Society.", "dimensions": { "concept": "ifrs-full:DisclosureOfRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-378": { "value": "
14. Debt securities
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Amortised cost:
Mortgage backed securities
26
\u2014
\u2014
\u2014
Total amortised cost
26
\u2014
\u2014
\u2014
Fair value through other comprehensive income:
UK Government investment securities
789
483
440
423
Other listed transferable debt securities
747
19
\u2014
19
Total fair value through other comprehensive income
1,536
502
440
442
Fair value through profit and loss:
Mortgage backed securities
3
\u2014
\u2014
\u2014
Total fair value through profit and loss
3
\u2014
\u2014
\u2014
Total debt securities
1,565
502
440
442
2025
2024
Group
Amortised
cost
\u00a3m
FVOCI
\u00a3m
FVTPL
\u00a3m
Total
\u00a3m
Amortised
cost
\u00a3m
FVOCI
\u00a3m
FVTPL
\u00a3m
Total
\u00a3m
As at 1 January 2025
\u2014
502
\u2014
502
\u2014
1,564
\u2014
1,564
Recognised on acquisition
47
1,587
3
1,637
\u2014
\u2014
\u2014
\u2014
Additions
\u2014
182
\u2014
182
\u2014
844
\u2014
844
Maturities and disposals
(21)
(765)
\u2014
(786)
\u2014
(1,902)
\u2014
(1,902)
Change in fair value
\u2014
30
\u2014
30
\u2014
(4)
\u2014
(4)
As at 31 December 2025
26
1,536
3
1,565
\u2014
502
\u2014
502
2025
2024
Society
Amortised
cost
\u00a3m
FVOCI
\u00a3m
FVTPL
\u00a3m
Total
\u00a3m
Amortised
cost
\u00a3m
FVOCI
\u00a3m
FVTPL
\u00a3m
Total
\u00a3m
As at 1 January 2025
\u2014
442
\u2014
442
\u2014
1,515
\u2014
1,515
Additions
\u2014
16
\u2014
16
\u2014
718
\u2014
718
Maturities and disposals
\u2014
(35)
\u2014
(35)
\u2014
(1,787)
\u2014
(1,787)
Change in fair value
\u2014
17
\u2014
17
\u2014
(4)
\u2014
(4)
As at 31 December 2025
\u2014
440
\u2014
440
\u2014
442
\u2014
442
A maturity analysis of the Group debt securities is included in the Liquidity and Funding section of the Risk Management
Report. Of the \u00a3440 million relating to the Society at 31 December 2025, \u00a3127 million are due in less than one year, \u00a3313
million in more than one year.
At the 31\u00a0December 2025, debt securities totalling \u00a310 million for the Group and \u00a3nil for the Society had been sold under
sale and repurchase agreements (2024: \u00a3112 million Group, \u00a3112 million Society).
25. Debt securities in issue
The changes in debt securities issued by the Group are as follows :
2025
2024
Group
Medium
term notes
\u00a3m
Covered
bonds
\u00a3m
Residential
Mortgage
Backed
Securities
\u00a3m
Total
\u00a3m
Medium
term notes
\u00a3m
Covered
bonds
\u00a3m
Residential
Mortgage
Backed
Securities
\u00a3m
Total
\u00a3m
As at 1 January
2,067
2,866
1,610
6,543
1,145
2,955
1,278
5,378
Recognised on acquisition
678
499
\u2014
1,177
\u2014
\u2014
\u2014
\u2014
Cash flows
(345)
697
117
469
910
(15)
331
1,226
Non-cash flows
Foreign exchange movements
24
104
\u2014
128
(2)
(76)
\u2014
(78)
Change in accrued interest
(6)
(1)
(1)
(8)
12
\u2014
\u2014
12
Amortisation
4
3
1
8
2
2
1
5
Unwind of fair value on acquisition
(10)
\u2014
\u2014
(10)
\u2014
\u2014
\u2014
\u2014
As at 31 December
2,412
4,168
1,727
8,307
2,067
2,866
1,610
6,543
The changes in debt securities issued by the Society are as follows:
2025
2024
Society
Medium
term notes
\u00a3m
Covered
bonds
\u00a3m
Residential
Mortgage
Backed
Securities
\u00a3m
Total
\u00a3m
Medium
term notes
\u00a3m
Covered
bonds
\u00a3m
Residential
Mortgage
Backed
Securities
\u00a3m
Total
\u00a3m
As at 1 January
2,067
2,866
(3)
4,930
1,145
2,955
(3)
4,097
Cash flows
(145)
697
\u2014
552
910
(15)
\u2014
895
Non-cash flows
Foreign exchange movements
24
104
\u2014
128
(2)
(76)
\u2014
(78)
Change in accrued interest
(3)
(1)
\u2014
(4)
12
\u2014
\u2014
12
Amortisation
2
3
\u2014
5
2
2
\u2014
4
Change in fair value through profit
and loss
4
\u2014
\u2014
4
\u2014
\u2014
\u2014
\u2014
As at 31 December
1,949
3,669
(3)
5,615
2,067
2,866
(3)
4,930
Debt securities in issue are repayable in the ordinary course of business as follows:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Accrued interest
39
31
32
30
Other debt securities
In not more than one year
1,795
1,052
1,272
849
In more than one year
6,473
5,460
4,311
4,051
Total
8,307
6,543
5,615
4,930
", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-379": { "value": "
15. Loans and advances to customers
Notes
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Retail
Secured: owner-occupier
50,758
32,422
32,663
32,114
Secured: buy to let
20,933
19,374
1,258
1,319
Unsecured1
223
\u2014
\u2014
\u2014
Business and commercial
1,014
\u2014
\u2014
\u2014
Total Gross loans and advances to customers (contractual amounts)
72,928
51,796
33,921
33,433
Impairment
16
(44)
(24)
(13)
(11)
Total Net loans and advances to customers (contractual amounts)
72,884
51,772
33,908
33,422
EIR, fair value and other adjustments
52
29
33
36
Total
72,936
51,801
33,941
33,458
1. Unsecured represents credit cards, personal loans and overdraft facilities provided.
Off balance sheet exposures
Following the acquisition of the Bank, the Group now has customers across new lending areas, namely retail unsecured
(comprising primarily credit cards and overdraft facilities) as well as business and commercial lending. As a result, the
Group now has off balance sheet exposures to undrawn credit facilities of \u00a33,946 million at 31\u00a0December 2025, including
the mortgage pipeline. This is in addition to the on balance sheet lending exposures presented above. All expected credit
loss provisions are based on the gross exposure rather than the balance drawn, which is recognised on balance sheet.
Maturity analysis
The remaining contractual maturity of loans and advances to customers at the Balance Sheet date is as follows:
Notes
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Repayable in less than one year
4,796
3,636
2,109
2,071
Repayable in more than one year
68,184
48,189
31,845
31,398
72,980
51,825
33,954
33,469
Impairment provision
16
(44)
(24)
(13)
(11)
Total
72,936
51,801
33,941
33,458
Actual redemption levels experienced by the Group or Society may differ from the contractual analysis.
Pledged assets \u2013 loans and advances to customers
Certain loans and advances to customers have been pledged to the Group's asset backed funding programmes or utilised as
whole mortgage loan pools with the Bank of England to enable the Group to obtain secured funding. Loans and advances to
customers pledged to support secured funding and the notes in issue are as follows:
Notes in issue 1
2025
Group
Mortgages
pledged
\u00a3m
Held by third
parties
\u00a3m
Held by the
Group
pledged
\u00a3m
Held by the
Group
unpledged
\u00a3m
Total
\u00a3m
Loans and advances to customers
Covered bond programme \u2013 Coventry Building Society Covered
Bonds LLP
7,703
3,674
1,132
218
5,024
Covered bond programme \u2013 Coventry Godiva Covered Bonds LLP
4,294
\u2014
\u2014
3,000
3,000
Covered bond programme \u2013 Moorland Covered Bonds LLP
2,519
500
455
545
1,500
Securitisation programme \u2013 Economic Master Issuer plc
2,332
1,730
\u2014
\u2014
1,730
Whole mortgage loan pools2
3,857
\u2014
1,776
2,081
3,857
Total
20,705
5,904
3,363
5,844
15,111
15. Loans and advances to customers continued
Pledged assets \u2013 loans and advances to customers continued
Notes in issue 1
2024
Group
Mortgages
pledged
\u00a3m
Held by third
parties
\u00a3m
Held by the
Group
pledged
\u00a3m
Held by the
Group
unpledged
\u00a3m
Total
\u00a3m
Loans and advances to customers
Covered bond programme \u2013 Coventry Building Society Covered
Bonds LLP
6,912
2,873
1,346
4
4,223
Covered bond programme \u2013 Coventry Godiva Covered Bonds LLP
5,393
\u2014
1,000
3,000
4,000
Securitisation programme \u2013 Economic Master Issuer plc
2,496
1,611
232
\u2014
1,843
Whole mortgage loan pools2
4,495
\u2014
2,075
2,420
4,495
Total
19,296
4,484
4,653
5,424
14,561
1. Notes in issue exclude Class Z securitisation notes (2025: \u00a3286 million, 2024: \u00a3314 million), which represent either the first loss tranche in the structure or a required liquidity reserve,
and the Economic Master Issuer plc Sellers Notes (2025: \u00a3369 million, 2024: \u00a3405 million). All of these notes are held by the Group unpledged.
2. The whole mortgage loan pools are pre-positioned at the Bank of England. Pools are pledged to the Bank of England when drawings are made directly against the eligible collateral, for
example, under TFSME, subject to a \u2018haircut\u2019 as defined by the Bank of England. The amounts under notes in issue are the outstanding balances of mortgages.
Mortgages pledged are not derecognised from the Group or Society Balance Sheets as the Group has retained substantially
all the risks and rewards of ownership. No gain or loss has been recognised on pledging the mortgages to the programmes.
Notes in issue and held by third parties are included within debt securities in issue (note 25).
Notes in issue, held by the Group and pledged, include debt securities issued under the covered bond programmes and
retained by the Group and whole mortgage loan pools, all pledged as collateral.
Notes in issue, held by the Group and unpledged, are other debt securities issued by the programmes to the Group, and
mortgage loan pools that have been pre-positioned at the Bank of England but not utilised. These are held to provide
collateral for potential future use in sale and repurchase agreements or central bank operations.
Notes in issue, and held by the Group, are not recognised on the Group or Society Balance Sheets, thus preventing
inappropriate \u2018grossing up\u2019 of the Group and Society Balance Sheets.
Covered bond programmes
The Group operates three covered bond programmes which it uses to provide security for issues of retained and externally
issued covered bonds. Securities issued under the programmes are secured through certain mortgage loans of Coventry
Building Society, Godiva Mortgages Limited or of The Co-operative Bank p.l.c., the Originators. The loans are retained on
the Originators' Balance Sheets as they retain substantially all the risks and rewards relating to the loans.
At the reporting date, the Group has overcollateralised these programmes as set out in the table above to secure the
ratings of the covered bonds and to provide operational flexibility. The Group maintains the overcollaterisation by adding
loans to the loan portfolios throughout the period. From time to time, the obligation of the Group to provide collateral may
increase due to the formal requirements of the covered bond programmes and the value of the collateral would depend
upon conditions at that time. The Group may also voluntarily contribute collateral to support the covered bond ratings; no
such contributions were made during 2025 or 2024. The Group undertakes various roles in these programmes, including
acting as cash manager and servicer as well as acting as the bank account provider for Coventry Godiva Covered Bonds LLP
(Godiva LLP) and Moorland Covered Bond LLP (MCB LLP).
Coventry Building Society Covered Bonds LLP
Coventry Building Society Covered Bonds LLP (CBS LLP) was established in 2008 and provides security for issued notes
secured against certain loans of Coventry Building Society. As at 31\u00a0December 2025, the Society had \u00a33,050 million (2024:
\u00a32,350 million) and \u20ac2,250 million (2024: \u20ac2,250 million) of covered bonds in issue, of which \u00a31,350 million (2024: \u00a31,350
million) were retained by the Group.
During the period, the Society voluntarily repurchased \u00a3105 million (2024: \u00a3129 million) of mortgages from CBS LLP to
maintain the quality of the pool and minimise the overcollateralisation requirement.
Coventry Godiva Covered Bonds LLP
Coventry Godiva Covered Bonds LLP was established in 2020 and provides security for issued notes secured against certain
mortgage loans of Godiva Mortgages Limited. As at 31\u00a0December 2025, the Society had \u00a33,000 million (2024: \u00a34,000 million)
of covered bonds in issue of which all were retained by the Group.
During the period, the Society voluntarily repurchased \u00a31,166 million (2024: \u00a359 million) of mortgages from Godiva LLP to
maintain the quality of the pool and minimise the overcollateralisation requirement.
15. Loans and advances to customers continued
Pledged assets \u2013 loans and advances to customers continued
Moorland Covered Bonds LLP
Moorland Covered Bonds LLP was established in 2009 and provides security for issued notes secured against certain
mortgage loans of the Bank. As at 31\u00a0December 2025, the Bank had \u00a3 1,500 million of covered bonds in issue, of which
\u00a31,000 million were retained by the Group.
Securitisation
During the period, the Group operated one securitisation vehicle which it uses to obtain collateral and source funding
through the internal and external issuances of listed debt securities secured through certain mortgage loans of Coventry
Building Society, the Originator. The loans are retained on the Originator\u2019s Balance Sheet as it retains substantially all the
risks and rewards relating to the loans. The Society undertakes various roles in these transactions, including acting as cash
manager and servicer as well as acting as the bank account provider for Economic Master Issuer plc.
Economic Master Issuer PLC
Economic Master Issuer plc (EMI) was established in 2019 and has subsequently issued \u00a32,950 million of listed debt securities
secured against certain mortgage loans of Coventry Building Society. At 31\u00a0December 2025, there are no (2024: \u00a3232
million) notes retained by the Group and \u00a31,730 million (2024: \u00a31,611 million) are held by parties external to the Group.
The Society retains a beneficial interest in the pool through its holding of the Sellers Note in the structure and its
obligations in respect of this securitisation vehicle are limited to transferring cash flows from the underlying assets and
maintaining its required minimum sellers share in accordance with the rules of programme.
The fair values of assets that have been pledged and their associated liabilities where recourse is limited to the underlying
asset are presented in the table below:
Fair value assets
pledged
2025
\u00a3m
Fair value
liabilities
2025
\u00a3m
Fair value net
position
2025
\u00a3m
Fair value assets
pledged
2024
\u00a3m
Fair value
liabilities
2024
\u00a3m
Fair value net
position
2024
\u00a3m
Securitisation programme \u2013 Economic
Master Issuer plc
2,336
1,730
606
2,474
1,610
864
", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToCustomersExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-380": { "value": "
16. Impairment on loans and advances to customers
Under IFRS 9, impairment provisions or expected credit losses (ECLs) are required to be calculated on assets held at
amortised cost and fair value through other comprehensive income. For the Group, this includes loans and advances to
customers and undrawn commitments to lend (such as mortgage pipeline and undrawn credit cards balances). Expected
credit loss provisions have been deducted from the associated asset values on the balance sheet. Further information on
the credit quality of these loans is included in the Risk Management Report.
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Income statement
(Charge) / release for the year1
(20)
18
(2)
11
Net (write offs)/recoveries of amounts previously written off
(4)
\u2014
\u2014
\u2014
Total (charge)/ release to the Income Statement
(24)
18
(2)
11
1. Included in the Group charge for the year in 2025 is \u00a39 million reset Expected Credit Loss allowance for Bank acquired loans & advances to customers
The tables below shows gross loans and advances to customers, ECL provision and resulting coverage ratio split by IFRS 9
stage at 31\u00a0December 2025 and at 31\u00a0December 2024 for both the Group and Society. For loans in stages 2 and 3, or those
classed as \u2018Purchased or Originated Credit Impaired\u2019 (\u2018POCI\u2019), further analysis of accounts which are past due and not past
due is also presented.
16. Impairment on loans and advances to customers continued
Group
Stage 1
'Performing'
Stage 2 'Deteriorating'
Stage 3 'Default' and POCI
'Acquired defaulted'
As at 31 December 2025
\u00a3m
Not past due
\u00a3m
Past due
\u00a3m
Not past due
\u00a3m
Past due
\u00a3m
Total
\u00a3m
Gross balances
Retail secured
65,908
4,991
269
155
368
71,691
Retail unsecured
212
5
2
1
3
223
Business and commercial
959
33
\u2014
22
\u2014
1,014
Total
67,079
5,029
271
178
371
72,928
ECL
Retail secured
6
10
2
4
10
32
Retail unsecured
2
1
\u2014
\u2014
2
5
Business and commercial
2
\u2014
\u2014
5
\u2014
7
Total
10
11
2
9
12
44
ECL coverage as a % of total balance
Retail secured
0.01
0.20
0.74
2.58
2.72
0.04
Retail unsecured
0.94
20.00
\u2014
\u2014
66.67
2.24
Business and commercial
0.21
\u2014
\u2014
22.73
\u2014
0.69
Total coverage
0.01
0.22
0.74
5.06
3.23
0.06
Society
Stage 1
\u2018Performing\u2019
Stage 2 \u2018Deteriorating\u2019
Stage 3 'Default' and POCI
'Acquired defaulted'
As at 31 December 2025
\u00a3m
Not past due
\u00a3m
Past due
\u00a3m
Not past due
\u00a3m
Past due
\u00a3m
Total
\u00a3m
Gross balances
Retail secured
30,911
2,609
144
64
193
33,921
Retail unsecured
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Business and commercial
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Total
30,911
2,609
144
64
193
33,921
ECL
Retail secured
1
3
1
3
5
13
Retail unsecured
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Business and commercial
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Total
1
3
1
3
5
13
ECL coverage as a % of total balance
Retail secured
0.01
0.11
0.69
4.69
2.59
0.04
Retail unsecured
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Business and commercial
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Total coverage
\u2014
0.11
0.69
4.69
2.59
0.04
16. Impairment on loans and advances to customers continued
Group
Stage 1
'Performing'
Stage 2 'Deteriorating'
Stage 3 'Default' and POCI
'Acquired defaulted'
As at 31 December 2024
\u00a3m
Not past due
\u00a3m
Past due
\u00a3m
Not past due
\u00a3m
Past due
\u00a3m
Total
\u00a3m
Gross balances
Retail secured
46,203
5,038
205
91
259
51,796
Retail unsecured
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Business and commercial
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Total
46,203
5,038
205
91
259
51,796
ECL
Retail secured
2
10
1
5
6
24
Retail unsecured
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Business and commercial
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Total
2
10
1
5
6
24
ECL coverage as a % of total balance
Retail secured
\u2014
0.20
0.49
5.49
2.32
0.05
Retail unsecured
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Business and commercial
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Total coverage
\u2014
0.20
0.49
5.49
2.32
0.05
Society
Stage 1
\u2018Performing\u2019
Stage 2 \u2018Deteriorating\u2019
Stage 3 'Default' and POCI
'Acquired defaulted'
As at 31 December 2024
\u00a3m
Not past due
\u00a3m
Past due
\u00a3m
Not past due
\u00a3m
Past due
\u00a3m
Total
\u00a3m
Gross balances
Retail secured
30,236
2,861
121
52
163
33,433
Retail unsecured
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Business and commercial
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Total
30,236
2,861
121
52
163
33,433
ECL
Retail secured
2
3
\u2014
3
3
11
Retail unsecured
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Business and commercial
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Total
2
3
\u2014
3
3
11
ECL coverage as a % of total balance
Retail secured
0.01
0.10
\u2014
5.77
1.84
0.03
Retail unsecured
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Business and commercial
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Total coverage
0.01
0.10
\u2014
5.77
1.84
0.03
Included within the Group ECL is \u00a31 million (2024: \u00a3nil) associated with undrawn balances, primarily being mortgage
pipeline and undrawn credit card balances.
The Group\u2019s lending strategy is predominately focused on high quality low-risk residential mortgages, reflected in the low
loan to value of the mortgage book and low levels of arrears and possessions. As a result of the acquisition of the Bank, the
Group now has two smaller portfolios of business & commercial and retail unsecured lending, which contribute less than 2%
to the overall lending balances. At the reporting date 92% of loans are in stage 1 with 7% in stage 2 and 1% in stage 3 or
POCI (31 December 2024: 89%, 10% and 1%). The proportion in stage 1 increased, and correspondingly the proportion in
stage 2 decreased, during the year as a result of recognising the acquired Bank non-credit impaired loans in stage 1 at the
date of acquistion.
Unless specified otherwise, further disclosure on the Group's impairment on loans and advances to customers is presented
on a portfolio rather than entity basis as this best reflects the underlying risk.
16. Impairment on loans and advances to customers continued
The table below provides more analysis on the reason for presence within stage 2 under the Group's SICR criteria. Where a
loan meets more than one of these criteria at the Balance Sheet date, it has been included in only one category, being the
first which applied and led to its movement into stage 2:
Group
2025
2024
Basis of stage 2 classification
Retail
secured
\u00a3m
Retail
unsecured
\u00a3m
Business
and
commercial
\u00a3m
Total
\u00a3m
Retail
secured
\u00a3m
Retail
unsecured
\u00a3m
Business and
commercial
\u00a3m
Total
\u00a3m
Gross balances
Quantitative criteria
1,346
3
18
1,367
1,182
\u2014
\u2014
1,182
Qualitative criteria
3,646
2
15
3,663
3,829
\u2014
\u2014
3,829
30 days past due backstop
268
2
\u2014
270
232
\u2014
\u2014
232
Total
5,260
7
33
5,300
5,243
\u2014
\u2014
5,243
ECL
Quantitative criteria
3
1
\u2014
4
2
\u2014
\u2014
2
Qualitative criteria
9
\u2014
\u2014
9
9
\u2014
\u2014
9
30 days past due backstop
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Total
12
1
\u2014
13
11
\u2014
\u2014
11
Cure periods are applied to accounts in stages 2 and 3 which have hit certain quantitative triggers such as arrears. These
cure periods delay transition of loans to a lower credit risk classification (i.e. from stage 3 to stage 2 or from stage 2 to
stage 1) by requiring 12 months of sustained performance before a loan is reassessed. As a result, loans can be recorded in
stage 2 or stage 3 despite otherwise performing at the reporting date.
See note 1 to the accounts for more information on the quantitative and qualitative SICR criteria applied for stage 2
allocation.
The table below provides more analysis on the reason for presence within stage 3 under the Group's definition of default
criteria. Where a loan meets more than one of these criteria at the Balance Sheet date, it has been included in only one
category, being the first which applied and led to its movement into stage 3 unless the exposure is no longer in default and
is in a cure period:
Group
2025
2024
Basis of stage 3 and POCI classification
Retail
secured
\u00a3m
Retail
unsecured
\u00a3m
Business
and
commercial
\u00a3m
Total
\u00a3m
Retail
secured
\u00a3m
Retail
unsecured
\u00a3m
Business and
commercial
\u00a3m
Total
\u00a3m
Acquired impaired (POCI)
74
2
5
81
\u2014
\u2014
\u2014
\u2014
Qualitative criteria
117
\u2014
\u2014
117
93
\u2014
\u2014
93
90 days past due backstop
90
\u2014
17
107
69
\u2014
\u2014
69
In cure period
242
2
\u2014
244
188
\u2014
\u2014
188
Total
523
4
22
549
350
\u2014
\u2014
350
ECL
Acquired impaired (POCI)
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Qualitative criteria
2
\u2014
\u2014
2
1
\u2014
\u2014
1
90 days past due backstop
7
1
5
13
7
\u2014
\u2014
7
In cure period
5
1
\u2014
6
3
\u2014
\u2014
3
Total
14
2
5
21
11
\u2014
\u2014
11
As at 31 December 2025, the number of properties in possession remained low. A total of \u00a315 million of stage 3 and POCI
loans are in possession (31 December 2024: \u00a38 million), representing 67 individual properties (31 December 2024: 36
properties). In 2025, this includes possession cases in the acquired Bank portfolios.
pplication of judgemental adjustments
The table below presents the judgemental adjustments that have been recognised within the ECL provision outside of core
modelled ECLs where the Group\u2019s models do not fully capture the associated risks of future credit loss.
2025
2024
Retail
secured
\u00a3m
Retail
unsecured
\u00a3m
Business
and
commercial
\u00a3m
Total
\u00a3m
Retail
secured
\u00a3m
Retail
unsecured
\u00a3m
Business
and
commercial
\u00a3m
Total
\u00a3m
Core modelled ECL
26
5
6
37
18
\u2014
\u2014
18
Judgemental adjustments
6
\u2014
1
7
6
\u2014
\u2014
6
Total reported ECL
32
5
7
44
24
\u2014
\u2014
24
At 31 December 2025, the Group held total judgemental adjustments of \u00a37 million (2024: \u00a36 million).
This includes a residual cost of living affordability PMA of \u00a32 million (2024: \u00a32 million), additional adjustments for negative
equity accounts, which are identified through using automated valuation models (AVM), stale collateral valuations on
corporate real estate exposures and fraud.
Movements in gross exposure and ECL provision
A reconciliation of movements in gross exposures and ECL provision split by IFRS 9 stage from 1 January 2025 to 31
December 2025 is set out below for the Group and Society.
Stage 1
Stage 2
Stage 3
Total
Group
Gross
balance
\u00a3m
Provision
12 month
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
\u00a3m
At 1 January 2025
46,203
2
5,243
11
350
11
51,796
24
Loans recognised on acquisition
20,347
9
\u2014
\u2014
120
\u2014
20,467
9
Movements with Income
Statement impact
Transfers from Stage 1 to Stage 2
(2,438)
(1)
2,438
4
\u2014
\u2014
\u2014
3
Transfers from Stage 1 to Stage 3
(133)
\u2014
\u2014
\u2014
133
11
\u2014
11
Transfers from Stage 2 to Stage 3
\u2014
\u2014
(134)
\u2014
134
\u2014
\u2014
\u2014
Transfers from Stage 3 to Stage 2
\u2014
\u2014
46
1
(46)
(1)
\u2014
\u2014
Transfers from Stage 3 to Stage 1
12
\u2014
\u2014
\u2014
(12)
\u2014
\u2014
\u2014
Transfers from Stage 2 to Stage 1
1,753
\u2014
(1,753)
(1)
\u2014
\u2014
\u2014
(1)
Net movement arising from
transfer of stages
(806)
(1)
597
4
209
10
\u2014
13
New loans originated
10,529
5
24
\u2014
\u2014
\u2014
10,553
5
Remeasurement of ECL due to
changes in risk parameters
\u2014
1
\u2014
(1)
\u2014
5
\u2014
5
Increase/(decrease) in post model
adjustments
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Loans derecognised in the period
(6,823)
(3)
(463)
(1)
(118)
(2)
(7,404)
(6)
Net write offs
(2)
(3)
\u2014
\u2014
(3)
(3)
(5)
(6)
Income Statement charge for the
period
8
2
10
20
Repayment and charges
(2,369)
\u2014
(101)
\u2014
(9)
\u2014
(2,479)
\u2014
At 31 December 2025
67,079
10
5,300
13
549
21
72,928
44
Stage 1
Stage 2
Stage 3 & POCI
Total
Society
Gross
balance
\u00a3m
Provision
12 month
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
\u00a3m
At 1 January 2025
30,236
2
2,982
3
215
6
33,433
11
Movements with Income
Statement impact
Transfers from Stage 1 to Stage 2
(1,210)
\u2014
1,210
1
\u2014
\u2014
\u2014
1
Transfers from Stage 1 to Stage 3
(47)
\u2014
\u2014
\u2014
47
1
\u2014
1
Transfers from Stage 2 to Stage 3
\u2014
\u2014
(81)
\u2014
81
\u2014
\u2014
\u2014
Transfers from Stage 3 to Stage 2
\u2014
\u2014
27
\u2014
(27)
\u2014
\u2014
\u2014
Transfers from Stage 3 to Stage 1
8
\u2014
\u2014
\u2014
(8)
\u2014
\u2014
\u2014
Transfers from Stage 2 to Stage 1
1,025
\u2014
(1,025)
\u2014
\u2014
\u2014
\u2014
\u2014
Net movement arising from
transfer of stages
(224)
\u2014
131
1
93
1
\u2014
2
New loans originated
5,103
1
16
\u2014
\u2014
\u2014
5,119
1
Remeasurement of ECL due to
changes in risk parameters
\u2014
(1)
\u2014
\u2014
\u2014
2
\u2014
1
Increase/(decrease) in post model
adjustments
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Loans derecognised in the period
(2,649)
(1)
(286)
\u2014
(45)
(1)
(2,980)
(2)
Net write offs
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Income Statement charge for the
period
(1)
1
2
\u2014
2
Repayment and charges
(1,555)
\u2014
(90)
\u2014
(6)
\u2014
(1,651)
\u2014
At 31 December 2025
30,911
1
2,753
4
257
8
33,921
13
A reconciliation of movements in gross exposures and impairment provision split by IFRS 9 stage from 1 January 2024 to 31
December 2024 is set out in the following table for the Group and Society.
Stage 1
Stage 2
Stage 3 & POCI
Total
Group
Gross
balance
\u00a3m
Provision
12 month
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
\u00a3m
At 1 January 2024
42,720
2
7,319
29
268
11
50,307
42
Movements with Income
Statement impact
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Transfers from Stage 1 to Stage 2
(2,193)
\u2014
2,193
2
\u2014
\u2014
\u2014
2
Transfers from Stage 1 to Stage 3
(71)
\u2014
\u2014
\u2014
71
1
\u2014
1
Transfers from Stage 2 to Stage 3
\u2014
\u2014
(134)
(1)
134
1
\u2014
\u2014
Transfers from Stage 3 to Stage 2
\u2014
\u2014
29
\u2014
(29)
\u2014
\u2014
\u2014
Transfers from Stage 3 to Stage 1
9
\u2014
\u2014
\u2014
(9)
\u2014
\u2014
\u2014
Transfers from Stage 2 to Stage 1
3,592
\u2014
(3,592)
(1)
\u2014
\u2014
\u2014
(1)
Net movement arising from
transfer of stages
1,337
\u2014
(1,504)
\u2014
167
2
\u2014
2
New loans originated
7,057
2
17
\u2014
\u2014
\u2014
7,074
2
Remeasurement of ECL due to
changes in risk parameters
\u2014
(1)
\u2014
(1)
\u2014
2
\u2014
\u2014
Increase/(decrease) in post model
adjustments
\u2014
\u2014
\u2014
(16)
\u2014
(2)
\u2014
(18)
Loans derecognised in the period
(3,084)
(1)
(481)
(1)
(77)
(1)
(3,642)
(3)
Net write offs
\u2014
\u2014
\u2014
\u2014
(1)
(1)
(1)
(1)
Income Statement charge for the
period
\u2014
(18)
\u2014
(18)
Repayment and charges
(1,827)
\u2014
(108)
\u2014
(7)
\u2014
(1,942)
\u2014
At 31 December 2024
46,203
2
5,243
11
350
11
51,796
24
Stage 1
Stage 2
Stage 3
Total
Society
Gross
balance
\u00a3m
Provision 12
month ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime ECL
\u00a3m
Gross
balance
\u00a3m
Provision
\u00a3m
At 1 January 2024
27,383
1
4,456
15
161
6
32,000
22
Movements with Income
Statement impact
Transfers from Stage 1 to Stage 2
(1,297)
\u2014
1,297
1
\u2014
\u2014
\u2014
1
Transfers from Stage 1 to Stage 3
(41)
\u2014
\u2014
\u2014
41
1
\u2014
1
Transfers from Stage 2 to Stage 3
\u2014
\u2014
(82)
\u2014
82
\u2014
\u2014
\u2014
Transfers from Stage 3 to Stage 2
\u2014
\u2014
19
\u2014
(19)
\u2014
\u2014
\u2014
Transfers from Stage 3 to Stage 1
6
\u2014
\u2014
\u2014
(6)
\u2014
\u2014
\u2014
Transfers from Stage 2 to Stage 1
2,288
\u2014
(2,288)
(1)
\u2014
\u2014
\u2014
(1)
Net movement arising from
transfer of stages
956
\u2014
(1,054)
\u2014
98
1
\u2014
1
New loans originated
5,510
2
12
\u2014
\u2014
\u2014
5,522
2
Remeasurement of ECL due to
changes in risk parameters
\u2014
\u2014
\u2014
\u2014
\u2014
1
\u2014
\u2014
Increase/(decrease) in post model
adjustments
\u2014
\u2014
\u2014
(11)
\u2014
(1)
\u2014
(12)
Loans derecognised in the period
(2,045)
(1)
(336)
\u2014
(39)
\u2014
(2,420)
(1)
Net write offs
\u2014
\u2014
\u2014
\u2014
(1)
(1)
(1)
(1)
Income Statement charge for the
period
1
(12)
\u2014
(11)
Repayment and charges
(1,568)
\u2014
(96)
\u2014
(4)
\u2014
(1,668)
\u2014
At 31 December 2024
30,236
2
2,982
3
215
6
33,433
11
Forward-looking information incorporated in the ECL models
Formulation of economic scenarios and governance
The economic scenarios used by the Group reflect management\u2019s best estimate of the future economic conditions under a
range of scenarios, including a weighting reflecting the loss distribution on the occurrence of each scenario.
The assumptions in each of the four (2024: four) scenarios evolve, reflecting latest expectations with the base scenario
representing the most likely outcome, complemented by one upside and two downside scenarios based on potential
economic developments. These alternative scenarios are built using management judgement and are calibrated to
statistical views of economic cycles ranging from periods of five to ten years from the beginning of an overall expansion
phase to the end of the contraction phase and the beginning of the next initial recovery phase. Available data from the last
50 years has been analysed to draw out the normal range through to extreme outcomes that could be expected to be
observed. Outside of these extreme outcomes, the severe downside scenario is based on a deliberately extreme case used
for stress testing, the severity of which has not been experienced in the last 50 years.
Beyond the five year forecast horizon which aligns to the Strategic Plan period, long-term averages for each economic
assumption variable are used. The severe downside scenario transitions to the long-term average level over a period of ten
years, reflecting the negativity of the scenario. The other three scenarios transition over a five year period. These long-
term averages hold true throughout various financial and economic crises, and are therefore used until the end of the 35
year forecast.
Scenarios and accompanying weightings are determined following analysis of economic news, forecasts, peer benchmarking,
scientific developments and results. By their nature, a significant degree of estimation is involved in determining the
scenario weightings.
Formulation of economic scenarios and governance continued
These scenarios and weightings are developed within the Group's Treasury function and are reviewed and approved
quarterly by the Asset and Liability Committee with further approval at reporting periods by the Board Audit Committee.
Current year scenarios and weightings
During the year, the weightings for each scenario were reviewed, resulting in a small rebalancing between the base and
upside scenarios. The weightings used at the year end reflect the Group\u2019s view of the range of potential future economic
conditions at the Balance Sheet date. An explanation of each scenario and its relative weighting in calculating ECL is set out
below:
Scenario
Weighting
2025
2024
Base
The central scenario used to support the business planning of the Group. Unemployment remains
elevated for a while following restrictive monetary policy, with GDP growth remaining steady.
Whilst domestic inflationary pressures take longer to unwind than they did to emerge, CPI is
expected to return close to the 2% target in the near term, allowing bank rate to decrease. This
easing of conditions supports house prices which return to modest growth.
50%
55%
Downside
Inflation rebounds following renewed geopolitical tensions, and the Bank of England increases
interest rates again to contain it. There is an economic contraction resulting from further cost of
living deterioration which drives up unemployment, and house prices weaken considerably. Inflation
returns to target within the first 5 years and monetary policy begins to ease.
25%
25%
Severe downside
Following the Bank of England\u2019s Bank Capital Stress Test, in which deep simultaneous recessions in
the UK and global economies sees large falls in asset prices and higher global interest rates. GDP
contracts 5% as unemployment reaches 8.5%. Bank rate rises to 8% to tackle inflation of 10% and
house prices consequently fall 28%.
10%
10%
Upside
Inflation dissipates and unemployment reduces, underpinning robust economic growth and rising
house prices. The Bank of England lowers bank rate further in response to the easing inflation
environment.
15%
10%
Macroeconomic assumptions
The Group's ECL calculation incorporates four key economic assumptions: unemployment rate, house price index (HPI), GDP
and the Bank of England Base Rate. While all feed into the economic forecasts and impact the final ECL provision, the
models are particularly sensitive to changes in the following assumptions in each scenario:
\u2022 Unemployment rate, given its impact on borrowers\u2019 ability to meet their loan repayments.
\u2022 HPI, given the significant impact it has on mortgage collateral valuations.
Inflation impacts are also reflected within all four scenarios as the effect has become embedded within economic forecasts.
The following graphs show these two key economic assumptions used in the scenarios over a five year forecast period:
Key economic assumptions as at 31 December 2025
While the Group's ECL calculation is particularly sensitive to unemployment and HPI movements, GDP and the Bank of
England Base Rate remain key drivers of the provision calculation and the forward economic outlook. The rates applied to
all key measures are shown below for the five year forecast period:
Scenario/
weighting
2026
%
2027
%
2028
%
2029
%
2030
%
Peak to
trough
%
Range
%
Average to
31 Dec 2030
%
Unemployment
5.2
5.3
5.1
4.9
4.9
0.6
4.7 - 5.3
4.9
Base
HPI
2.5
3.0
3.0
3.0
3.0
15.2
0.2 - 15.4
2.9
50%
GDP
1.4
1.5
1.5
1.5
1.5
7.5
0.1 - 7.6
1.5
Base Rate
3.25
3.25
3.25
3.25
3.25
0.50
3.25 - 3.75
3.3
Unemployment
5.5
6.0
5.7
5.5
5.5
1.0
5.0 - 6.0
5.5
Downside
HPI
(1.1)
(8.0)
(5.0)
4.0
4.5
13.5
(13.6) - (0.1)
(1.2)
25%
GDP
0.0
(0.9)
1.4
1.4
1.5
4.3
(0.9) - 3.4
0.7
Base Rate
5.00
5.25
4.50
4.00
4.00
1.50
3.75 - 5.25
4.5
Severe
downside
10%
Unemployment
6.3
8.2
8.1
7.3
6.5
3.6
4.9 - 8.5
7.1
HPI
(9.4)
(12.1)
(9.5)
7.4
6.9
27.9
(28.0) - (0.1)
(3.8)
GDP
(4.3)
0.0
1.4
1.4
1.4
4.9
(5.0) - (0.1)
(0.1)
Base Rate
8.00
6.75
5.25
4.00
3.00
5.00
3.00 - 8.00
5.6
Unemployment
4.4
4.0
4.0
4.0
4.0
1.0
4.0 - 5.0
4.2
Upside
HPI
3.8
5.0
5.0
5.0
5.0
25.9
0.3 - 26.2
4.8
15%
GDP
2.0
2.5
2.5
2.5
2.5
12.4
0.2 - 12.6
2.4
Base Rate
3.25
2.75
2.75
2.75
2.75
1.00
2.75 - 3.75
2.9
1. HPI change and GDP change average to 31 December 2030 are shown as the annual compound growth rates.
A significant degree of estimation relates to the relative weightings of the scenarios, incorporating different views of the
house price index and the unemployment rate as indicated above. In order to demonstrate this sensitivity, the impact of
applying 100% of a particular scenario on the reported IFRS 9 ECL provision is shown below. For example, if the provision
was wholly calculated on the base scenario, it would decrease by \u00a311 million, or 25% (2024: \u00a36 million, 25%) compared with
the reported provision. If a 100% weighting was attributed to the severe downside scenario, ECLs would increase by \u00a351
million or 116% (2024: \u00a322 million, 92%).
Group
31 December 2025
31 December 2024
Scenario
IFRS 9
provision
\u00a3m
(Decrease)/
increase
%
IFRS 9
provision
\u00a3m
(Decrease)/
increase
%
IFRS 9 weighted average
44
\u2014
24
\u2014
Base scenario
33
(25)
18
(25)
Downside scenario
53
21
32
33
Severe downside scenario
95
116
46
92
Upside scenario
30
(32)
16
(33)
The above sensitivities are presented on a Group basis, as the retail secured portfolio, which is the majority of the balance,
is the driver of the sensitivity impact.
The ECL calculated above for 100% of each scenario multiplied by the scenario probability will not reconcile to the overall
provision. This is due to the staging of loans within each scenario varying, but being allocated to a single stage in the
overall provision calculation and having a weighted average 12 month or lifetime PD applied taking into account the
economic scenarios. The probability weighted ECL is then calculated based on this staging allocation. The estimated ECL
provision is determined using an uplift to account for non-linearity in modelling of unemployment rates beyond 8.5%.
Sensitivity assessment
As at 31 December 2025, a decrease to the annual HPI assumption by 10% combined with an increase in the unemployment
rate assumption of 10% throughout the forecast period would have the impact of increasing the core modelled ECL provision
by \u00a315 million from \u00a344 million to \u00a359 million. This is driven by the retail secured portfolio, representing the majority of
the overall lending assets.
Group
2025
2024
Sensitivity impacts on ECL
Retail
secured
\u00a3m
Retail
unsecured
\u00a3m
Business and
commercial
\u00a3m
Total
\u00a3m
Retail
secured
\u00a3m
Retail
unsecured
\u00a3m
Business and
commercial
\u00a3m
Total
\u00a3m
Underlying ECL
32
5
7
44
24
\u2014
\u2014
24
Sensitised ECL
47
5
7
59
43
\u2014
\u2014
43
Difference
15
\u2014
\u2014
15
19
\u2014
\u2014
19
In practise, multi-factor sensitivities such as the above have limitations; the impacts of the above might be reasonably
modified by the application (or removal) of judgemental adjustments by management.
Other credit risk information
This section provides further information of the Group's lending assets at a portfolio level, which best reflects the
underlying risk of the portfolio. Additional information relating to the credit risk profile of the Group\u2019s lending portfolios, is
also included in the credit risk section of the Risk Management Report.
Retail secured
A reconciliation of movements in gross balances and ECL provision for the Group retail secured portfolio split by IFRS 9
stage from 1 January 2025 to 31 December 2025 is set out below. For the 2024 Group movement, please refer to the total
Group table on page 160 as in 2024 the Group only had retail secured exposures. For the equivalent Society disclosure,
please refer to the Society tables included in the wider loans and advances to customers reconciliation tables disclosed
earlier in this note, as the Society only has retail secured exposures.
Stage 1
Stage 2
Stage 3 & POCI
Total
Group
Gross
balance
\u00a3m
Provision
12 month
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
\u00a3m
At 1 January 2025
46,203
2
5,243
11
350
11
51,796
24
Loans recognised on acquisition
19,135
5
\u2014
\u2014
101
\u2014
19,236
5
Movements with Income
Statement impact
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Transfers from Stage 1 to Stage 2
(2,398)
(1)
2,398
3
\u2014
\u2014
\u2014
2
Transfers from Stage 1 to Stage 3
(114)
\u2014
\u2014
\u2014
114
3
\u2014
3
Transfers from Stage 2 to Stage 3
\u2014
\u2014
(134)
\u2014
134
\u2014
\u2014
\u2014
Transfers from Stage 3 to Stage 2
\u2014
\u2014
46
1
(46)
(1)
\u2014
\u2014
Transfers from Stage 3 to Stage 1
12
\u2014
\u2014
\u2014
(12)
\u2014
\u2014
\u2014
Transfers from Stage 2 to Stage 1
1,753
\u2014
(1,753)
(1)
\u2014
\u2014
\u2014
(1)
Net movement arising from
transfer of stages
(747)
(1)
557
3
190
2
\u2014
4
New loans originated
10,315
3
24
\u2014
\u2014
\u2014
10,339
3
Remeasurement of ECL due to
changes in risk parameters
\u2014
\u2014
\u2014
(1)
\u2014
3
\u2014
2
Loans derecognised in the period
(6,715)
(2)
(463)
(1)
(110)
(2)
(7,288)
(5)
Net write offs
\u2014
(1)
\u2014
\u2014
\u2014
\u2014
\u2014
(1)
Income Statement charge for the
period
4
1
3
8
Repayment and charges
(2,283)
\u2014
(101)
\u2014
(8)
\u2014
(2,392)
\u2014
At 31 December 2025
65,908
6
5,260
12
523
14
71,691
32
The Group updates its security values using the Nationwide Building Society quarterly regional HPI. Part of the risk
assessment of the portfolio also includes an initial individual revaluation of security using automated valuation model (AVM)
values.
The LTV distribution of the Group retail secured book by IFRS 9 stage widened slightly during 2025, with 85% of the
mortgage book having an LTV of 75% or lower (2024: 88%). The slight increase in the higher LTV bandings was driven
primarily by the acquisition of the Bank. However, the overall average LTV (balance weighted) of the book remained stable
at 55% (2024: 54%) during the year. This is shown by IFRS 9 stage below:
As at 31 December 2025
Indexed loan to value
Stage 1
\u00a3m
Stage 2
\u00a3m
Stage 3 & POCI
\u00a3m
Total
\u00a3m
ECL
\u00a3m
<50%
26,208
836
211
27,255
5
50% to 65%
19,734
1,882
158
21,774
6
65% to 75%
10,099
1,734
84
11,917
6
75% to 85%
6,478
614
42
7,134
6
85% to 95%
3,313
189
21
3,523
6
95% to 100%
61
1
\u2014
62
\u2014
> 100%
15
4
7
26
3
Total
65,908
5,260
523
71,691
32
As at 31 December 2024
Indexed loan to value
Stage 1
\u00a3m
Stage 2
\u00a3m
Stage 3 & POCI
\u00a3m
Total
\u00a3m
ECL
\u00a3m
<50%
20,028
723
140
20,891
2
50% to 65%
14,474
1,930
115
16,519
8
65% to 75%
6,175
1,761
57
7,993
5
75% to 85%
3,614
665
24
4,303
4
85% to 95%
1,887
161
9
2,057
3
95% to 100%
25
2
1
28
\u2014
> 100%
\u2014
1
4
5
2
Total
46,203
5,243
350
51,796
24
2025
2024
Society
Indexed loan to value
Stage 1
\u00a3m
Stage 2
\u00a3m
Stage 3
\u00a3m
Total
\u00a3m
ECL
\u00a3m
Stage 1
\u00a3m
Stage 2
\u00a3m
Stage 3
\u00a3m
Total
\u00a3m
ECL
\u00a3m
<50%
13,422
495
102
14,019
1
13,618
471
87
14,176
1
50% to 65%
8,108
810
71
8,989
2
7,623
877
64
8,564
2
65% to 75%
4,065
836
35
4,936
2
3,876
887
33
4,796
2
75% to 85%
3,283
477
27
3,787
4
3,208
585
21
3,814
4
85% to 95%
2,006
134
19
2,159
2
1,886
160
8
2,054
2
95% to 100%
27
1
\u2014
28
\u2014
25
2
1
28
\u2014
> 100%
\u2014
\u2014
3
3
2
\u2014
\u2014
1
1
\u2014
Total
30,911
2,753
257
33,921
13
30,236
2,982
215
33,433
11
The credit quality of the Group retail secured book remains high, and performance continues to be strong.
The table below analyses the credit risk exposure by probability of default (PD) of retail secured mortgages. All PDs are
calculated using the Internal Ratings Based (IRB) approach under CRD IV (12-month PDs). Further information on SICR
criteria and the differences between the IFRS 9 ECL calculation and regulatory expected losses can be found in note 1 to
the accounts.
Group
As at 31 December 2025
Risk grades
Gross balance
Stage 1
\u00a3m
Gross balance
Stage 2
\u00a3m
Gross balance
Stage 3 & POCI 2
\u00a3m
Total
\u00a3m
ECL
\u00a3m
0.0 to <0.25%
34,282
621
4
34,907
1
0.25 to <0.75%
27,096
2,106
7
29,209
4
0.75 to <2.50%
3,483
969
6
4,458
4
2.50 to <10.00%
830
887
3
1,720
1
10.00 to <100%
88
646
22
756
3
100% (default)
\u2014
\u2014
477
477
14
Other1
129
31
4
164
5
Total
65,908
5,260
523
71,691
32
Society
As at 31 December 2025
Risk grades
Gross balance
Stage 1
\u00a3m
Gross balance
Stage 2
\u00a3m
Gross balance
Stage 3 & POCI 2
\u00a3m
Total
\u00a3m
ECL
\u00a3m
0.0 to <0.25%
17,944
379
\u2014
18,323
\u2014
0.25 to <0.75%
11,564
1,163
\u2014
12,727
2
0.75 to <2.50%
1,062
475
\u2014
1,537
1
2.50 to <10.00%
311
436
\u2014
747
1
10.00 to <100%
11
298
\u2014
309
1
100% (default)
\u2014
\u2014
257
257
7
Other1
19
2
\u2014
21
1
Total
30,911
2,753
257
33,921
13
Group
As at 31 December 2024
Risk grades
Gross balance
Stage 1
\u00a3m
Gross balance
Stage 2
\u00a3m
Gross balance
Stage 3 & POCI2
\u00a3m
Total
\u00a3m
ECL
\u00a3m
0.0 to <0.25%
26,378
745
\u2014
27,123
1
0.25 to <0.75%
17,196
2,278
\u2014
19,474
3
0.75 to <2.50%
1,846
843
\u2014
2,689
1
2.50 to <10.00%
617
842
\u2014
1,459
1
10.00 to <100%
22
503
\u2014
525
1
100% (default)
\u2014
\u2014
345
345
10
Other1
144
32
5
181
7
Total
46,203
5,243
350
51,796
24
Society
As at 31 December 2024
Risk grades
Gross balance
Stage 1
\u00a3m
Gross balance
Stage 2
\u00a3m
Gross balance
Stage 3 & POCI2
\u00a3m
Total
\u00a3m
ECL
\u00a3m
0.0 to <0.25%
18,122
476
\u2014
18,598
\u2014
0.25 to <0.75%
10,874
1,349
\u2014
12,223
2
0.75 to <2.50%
943
479
\u2014
1,422
1
2.50 to <10.00%
271
430
\u2014
701
1
10.00 to <100%
5
245
\u2014
250
1
100% (default)
\u2014
\u2014
215
215
5
Other1
21
3
\u2014
24
1
Total
30,236
2,982
215
33,433
11
1. Other includes equity release mortgages and other loans where credit risk is assessed using alternative calculation methods and their respective ECLs or where ECLs are not directly
attributable to underlying accounts and therefore are not allocated across risk grades or to default.
2. Stage 3 and POCI balances with PDs <100% relate to POCI accounts that have cured, but remain classed as POCI.
16. Impairment on loans and advances to customers continued
Other credit risk information continued
In the following retail unsecured portfolio disclosures, no comparative information has been disclosed as this portfolio was
acquired on 1 January 2025. No Society-specific disclosures have been provided as the portfolio sits solely within The Co-
operative Bank p.l.c.
Retail unsecured
A reconciliation of movements in gross balances and ECL provision for the retail unsecured portfolio split by IFRS 9 stage
from 1 January 2025 to 31 December 2025 is set out below for the Group:
Stage 1
Stage 2
Stage 3 & POCI
Total
Group
Gross
balance
\u00a3m
Provision
12 month
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
\u00a3m
At 1 January 2025
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Loans recognised on acquisition
226
2
\u2014
\u2014
4
\u2014
230
2
Movements with Income
Statement impact
Transfers from Stage 1 to Stage 2
(7)
\u2014
7
1
\u2014
\u2014
\u2014
1
Transfers from Stage 1 to Stage 3
(3)
\u2014
\u2014
\u2014
3
2
\u2014
2
Net movement arising from
transfer of stages
(10)
\u2014
7
1
3
2
\u2014
3
New loans originated
9
1
\u2014
\u2014
\u2014
\u2014
9
1
Remeasurement of ECL due to
changes in risk parameters
\u2014
1
\u2014
\u2014
\u2014
2
\u2014
3
Loans derecognised in the period
(8)
\u2014
\u2014
\u2014
\u2014
\u2014
(8)
\u2014
Net write offs
(2)
(2)
\u2014
\u2014
(2)
(2)
(4)
(4)
Income Statement charge for the
period
2
1
2
5
Repayment and charges
(3)
\u2014
\u2014
\u2014
(1)
\u2014
(4)
\u2014
At 31 December 2025
212
2
7
1
4
2
223
5
The table below analyses the credit risk exposure by PD of retail unsecured products. All PDs are calculated using the
Internal Ratings Based (IRB) approach under CRD IV (12-month PDs). The majority of the book has a PD of less than 0.75%.
Group
As at 31 December 2025
Risk grades
Gross balance
Stage 1
\u00a3m
Gross balance
Stage 2
\u00a3m
Gross balance
Stage 3 & POCI
\u00a3m
Total
\u00a3m
ECL
\u00a3m
0.0 to <0.15%
25
\u2014
\u2014
25
\u2014
0.15 to <0.25%
44
\u2014
\u2014
44
\u2014
0.25 to <0.50%
38
\u2014
\u2014
38
\u2014
0.50 to <0.75%
1
\u2014
\u2014
1
\u2014
0.75 to <2.50%
26
\u2014
\u2014
26
\u2014
2.50 to <10.00%
38
1
\u2014
39
1
10.00 to <100%
40
6
\u2014
46
2
100% (default)
\u2014
\u2014
4
4
2
Total
212
7
4
223
5
16. Impairment on loans and advances to customers continued
Other credit risk information continued
Business and commercial lending
A reconciliation of movements in gross balances and ECL provision for the business and commercial portfolio split by IFRS 9
stage from 1 January 2025 to 31 December 2025 is set out below for the Group. No comparative information has been
presented as this portfolio was acquired by the Group on 1 January 2025.
Stage 1
Stage 2
Stage 3 & POCI
Total
Group
Gross
balance
\u00a3m
Provision
12 month
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
\u00a3m
At 1 January 2025
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Loans recognised on acquisition
986
2
\u2014
\u2014
15
\u2014
1,001
2
Movements with Income
Statement impact
Transfers from Stage 1 to Stage 2
(33)
\u2014
33
\u2014
\u2014
\u2014
\u2014
\u2014
Transfers from Stage 1 to Stage 3
(16)
\u2014
\u2014
\u2014
16
6
\u2014
6
Net movement arising from
transfer of stages
(49)
\u2014
33
\u2014
16
6
\u2014
6
New loans originated
205
1
\u2014
\u2014
\u2014
\u2014
205
1
Remeasurement of ECL due to
changes in risk parameters
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Loans derecognised in the period
(100)
(1)
\u2014
\u2014
(8)
\u2014
(108)
(1)
Net write offs
\u2014
\u2014
\u2014
\u2014
(1)
(1)
(1)
(1)
Income Statement charge for the
period
2
\u2014
5
7
Repayment and charges
(83)
\u2014
\u2014
\u2014
\u2014
\u2014
(83)
\u2014
At 31 December 2025
959
2
33
\u2014
22
5
1,014
7
The table below analyses the credit risk exposure by regulatory slotting credit grade of loans to business and commercial
customers.
Group
As at 31 December 2025
Risk grades
Gross balance
Stage 1
\u00a3m
Gross balance
Stage 2
\u00a3m
Gross balance
Stage 3 & POCI
\u00a3m
Total
\u00a3m
ECL
\u00a3m
Strong
275
\u2014
\u2014
275
\u2014
Good
231
3
\u2014
234
1
Satisfactory
13
15
\u2014
28
\u2014
Weak
2
1
1
4
\u2014
Default
2
\u2014
19
21
5
Other
436
14
2
452
1
Total
959
33
22
1,014
7
", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-381": { "value": "
Other credit risk information
This section provides further information of the Group's lending assets at a portfolio level, which best reflects the
underlying risk of the portfolio. Additional information relating to the credit risk profile of the Group\u2019s lending portfolios, is
also included in the credit risk section of the Risk Management Report.
Retail secured
A reconciliation of movements in gross balances and ECL provision for the Group retail secured portfolio split by IFRS 9
stage from 1 January 2025 to 31 December 2025 is set out below. For the 2024 Group movement, please refer to the total
Group table on page 160 as in 2024 the Group only had retail secured exposures. For the equivalent Society disclosure,
please refer to the Society tables included in the wider loans and advances to customers reconciliation tables disclosed
earlier in this note, as the Society only has retail secured exposures.
Stage 1
Stage 2
Stage 3 & POCI
Total
Group
Gross
balance
\u00a3m
Provision
12 month
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
lifetime
ECL
\u00a3m
Gross
balance
\u00a3m
Provision
\u00a3m
At 1 January 2025
46,203
2
5,243
11
350
11
51,796
24
Loans recognised on acquisition
19,135
5
\u2014
\u2014
101
\u2014
19,236
5
Movements with Income
Statement impact
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
\u2014
Transfers from Stage 1 to Stage 2
(2,398)
(1)
2,398
3
\u2014
\u2014
\u2014
2
Transfers from Stage 1 to Stage 3
(114)
\u2014
\u2014
\u2014
114
3
\u2014
3
Transfers from Stage 2 to Stage 3
\u2014
\u2014
(134)
\u2014
134
\u2014
\u2014
\u2014
Transfers from Stage 3 to Stage 2
\u2014
\u2014
46
1
(46)
(1)
\u2014
\u2014
Transfers from Stage 3 to Stage 1
12
\u2014
\u2014
\u2014
(12)
\u2014
\u2014
\u2014
Transfers from Stage 2 to Stage 1
1,753
\u2014
(1,753)
(1)
\u2014
\u2014
\u2014
(1)
Net movement arising from
transfer of stages
(747)
(1)
557
3
190
2
\u2014
4
New loans originated
10,315
3
24
\u2014
\u2014
\u2014
10,339
3
Remeasurement of ECL due to
changes in risk parameters
\u2014
\u2014
\u2014
(1)
\u2014
3
\u2014
2
Loans derecognised in the period
(6,715)
(2)
(463)
(1)
(110)
(2)
(7,288)
(5)
Net write offs
\u2014
(1)
\u2014
\u2014
\u2014
\u2014
\u2014
(1)
Income Statement charge for the
period
4
1
3
8
Repayment and charges
(2,283)
\u2014
(101)
\u2014
(8)
\u2014
(2,392)
\u2014
At 31 December 2025
65,908
6
5,260
12
523
14
71,691
32
16. Impairment on loans and advances to customers continued
Other credit risk information continued
Retail secured continued
The Group updates its security values using the Nationwide Building Society quarterly regional HPI. Part of the risk
assessment of the portfolio also includes an initial individual revaluation of security using automated valuation model (AVM)
values.
The LTV distribution of the Group retail secured book by IFRS 9 stage widened slightly during 2025, with 85% of the
mortgage book having an LTV of 75% or lower (2024: 88%). The slight increase in the higher LTV bandings was driven
primarily by the acquisition of the Bank. However, the overall average LTV (balance weighted) of the book remained stable
at 55% (2024: 54%) during the year. This is shown by IFRS 9 stage below:
As at 31 December 2025
Indexed loan to value
Stage 1
\u00a3m
Stage 2
\u00a3m
Stage 3 & POCI
\u00a3m
Total
\u00a3m
ECL
\u00a3m
<50%
26,208
836
211
27,255
5
50% to 65%
19,734
1,882
158
21,774
6
65% to 75%
10,099
1,734
84
11,917
6
75% to 85%
6,478
614
42
7,134
6
85% to 95%
3,313
189
21
3,523
6
95% to 100%
61
1
\u2014
62
\u2014
> 100%
15
4
7
26
3
Total
65,908
5,260
523
71,691
32
As at 31 December 2024
Indexed loan to value
Stage 1
\u00a3m
Stage 2
\u00a3m
Stage 3 & POCI
\u00a3m
Total
\u00a3m
ECL
\u00a3m
<50%
20,028
723
140
20,891
2
50% to 65%
14,474
1,930
115
16,519
8
65% to 75%
6,175
1,761
57
7,993
5
75% to 85%
3,614
665
24
4,303
4
85% to 95%
1,887
161
9
2,057
3
95% to 100%
25
2
1
28
\u2014
> 100%
\u2014
1
4
5
2
Total
46,203
5,243
350
51,796
24
2025
2024
Society
Indexed loan to value
Stage 1
\u00a3m
Stage 2
\u00a3m
Stage 3
\u00a3m
Total
\u00a3m
ECL
\u00a3m
Stage 1
\u00a3m
Stage 2
\u00a3m
Stage 3
\u00a3m
Total
\u00a3m
ECL
\u00a3m
<50%
13,422
495
102
14,019
1
13,618
471
87
14,176
1
50% to 65%
8,108
810
71
8,989
2
7,623
877
64
8,564
2
65% to 75%
4,065
836
35
4,936
2
3,876
887
33
4,796
2
75% to 85%
3,283
477
27
3,787
4
3,208
585
21
3,814
4
85% to 95%
2,006
134
19
2,159
2
1,886
160
8
2,054
2
95% to 100%
27
1
\u2014
28
\u2014
25
2
1
28
\u2014
> 100%
\u2014
\u2014
3
3
2
\u2014
\u2014
1
1
\u2014
Total
30,911
2,753
257
33,921
13
30,236
2,982
215
33,433
11
The credit quality of the Group retail secured book remains high, and performance continues to be strong.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-382": { "value": "
The table below analyses the credit risk exposure by PD of retail unsecured products. All PDs are calculated using the
Internal Ratings Based (IRB) approach under CRD IV (12-month PDs). The majority of the book has a PD of less than 0.75%.
Group
As at 31 December 2025
Risk grades
Gross balance
Stage 1
\u00a3m
Gross balance
Stage 2
\u00a3m
Gross balance
Stage 3 & POCI
\u00a3m
Total
\u00a3m
ECL
\u00a3m
0.0 to <0.15%
25
\u2014
\u2014
25
\u2014
0.15 to <0.25%
44
\u2014
\u2014
44
\u2014
0.25 to <0.50%
38
\u2014
\u2014
38
\u2014
0.50 to <0.75%
1
\u2014
\u2014
1
\u2014
0.75 to <2.50%
26
\u2014
\u2014
26
\u2014
2.50 to <10.00%
38
1
\u2014
39
1
10.00 to <100%
40
6
\u2014
46
2
100% (default)
\u2014
\u2014
4
4
2
Total
212
7
4
223
5
The table below analyses the credit risk exposure by regulatory slotting credit grade of loans to business and commercial
customers.
Group
As at 31 December 2025
Risk grades
Gross balance
Stage 1
\u00a3m
Gross balance
Stage 2
\u00a3m
Gross balance
Stage 3 & POCI
\u00a3m
Total
\u00a3m
ECL
\u00a3m
Strong
275
\u2014
\u2014
275
\u2014
Good
231
3
\u2014
234
1
Satisfactory
13
15
\u2014
28
\u2014
Weak
2
1
1
4
\u2014
Default
2
\u2014
19
21
5
Other
436
14
2
452
1
Total
959
33
22
1,014
7
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExposureExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-383": { "value": "
17. Taxation
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Current tax
UK corporation tax
26
72
(21)
37
UK corporation tax \u2013 adjustment in respect of prior years
(1)
32
(1)
32
Total current tax charge / (credit)
25
104
(22)
69
Deferred tax
Current year
(34)
4
(2)
4
Adjustment in respect of prior years
(2)
(32)
(2)
(30)
Total deferred tax credit
(36)
(28)
(4)
(26)
Total (credit) / charge
(11)
76
(26)
43
A reconciliation between the actual tax credit (2024: charge) and tax that would be due if the UK standard corporation tax
rate of 25% (2024 : 25%) was applied to the profit before tax without adjustment is as follows:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Profit before tax (PBT)
801
323
9
186
Tax at UK standard rate of corporation tax on PBT of 25%
200
81
2
46
Surcharge on banking profits1
\u2014
1
\u2014
1
Tax credit on Additional Tier 1 capital distribution 2
(15)
(12)
(15)
(12)
Expenses/income not deductible for tax purposes 3
4
6
(10)
6
Gain on acquisition
(146)
\u2014
\u2014
\u2014
Recognition of deferred tax asset in relation to tax losses
(46)
\u2014
\u2014
\u2014
Utilisation of unrecognised deferred tax assets
(2)
\u2014
\u2014
\u2014
Deferred tax arising from surcharge rate
(3)
\u2014
\u2014
\u2014
Adjustments in respect of prior years
(3)
\u2014
(3)
2
Total (credit)/ charge
(11)
76
(26)
43
1. Banking companies and building societies are required to pay a surcharge of 3% on their taxable profits in addition to the main rate of corporation tax, subject to an annual allowance
of \u00a3100 million. The Society and its subsidiary The Co-operative Bank p.l.c. are subject to the surcharge.
2. The Society's AT 1 capital instrument is categorised as a Hybrid Capital Instrument (HCI) and is taxable under the HCI regime. Under the HCI regime, the distributions made to holders
of the Society\u2019s AT 1 instruments are deductible for tax purposes.
3. Some business expenses, or income, although entirely appropriate for inclusion the Group\u2019s accounts, are not allowed as a deduction against taxable income when calculating the tax
liability. Examples of these expenses include include transaction costs and depreciation on assets not qualifying for capital allowances.
The Group has an effective tax rate for the year of minus 1.4% (2024: 23.6%). The effective tax rates are below the UK
standard corporation tax rate largely due to the accounting gain on acquisition recognised in the year, which is not subject
to taxation in individual entities within the Group as it arose only on consolidation. The tax credit in relation to
distributions to holders of the Society\u2019s AT 1 instrument of \u00a315 million (2024: \u00a312 million) and deferred tax asset
recognition in relation to tax losses of \u00a346 million (2024: \u00a3nil) also contribute to a lower effective tax rate than the UK
standard rate.
The Society has an effective tax rate for the year of minus 288.9% (2024: 23.1%). This rate is below (2024: below) the UK
standard corporation tax rate primarily due to the tax credit in relation to distributions to holders of the Society's AT 1
instrument of \u00a315 million (2024: \u00a312 million), and a further tax credit of \u00a310 million (2024: \u00a36 million charge) for expenses/
income not deductible for tax purposes.
With a UK corporation tax rate of 25% alongside the Bank Corporation Tax Surcharge of 3% (chargeable on banking profits in
excess of \u00a3100 million), the combined rate of tax on banking profits in excess of \u00a3100 million is 28%. Deferred tax assets
and liabilities at 31 December 2025 have been calculated on these rates, reflecting the expected timing of reversal of the
related timing differences.
The Group is liable to pay a domestic top-up tax for the difference between its global anti-base erosion effective tax rate in
the UK and the 15% minimum rate as a result of the UK Government enacting Pillar 2 legislation. There is also a temporary
exception in place regarding the accounting for forward-looking deferred taxes on application of the Pillar 2 rules. The
Group has assessed the impact of the legislation with support from its tax advisers and it is not subject to a top-up tax and
does not expect an impact on current or deferred taxes.
The Group publishes its tax strategy on the website at www.thecoventry.co.uk.
Further information on the Group's deferred tax position is disclosed in note 23.
Tax on items reported through the Statements of Comprehensive Income is as follows:
Statements of Comprehensive Income
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Tax credit on remeasurement of defined benefit pension plan
(1)
(2)
(1)
(2)
Tax credit on fair value through other comprehensive income
\u2014
(1)
\u2014
(1)
Tax credit on cash flow hedges
(36)
(16)
(24)
(27)
Total
(37)
(19)
(25)
(30)
23. Deferred tax
Deferred tax assets and liabilities are attributable to the following items:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Deferred tax assets
\u00a0 Other derivatives
\u2014
(1)
(1)
(1)
\u00a0 Defined benefit pension plan obligation
\u2014
(1)
(2)
(1)
\u00a0 Excess of capital allowances over depreciation
(46)
(2)
(2)
(2)
\u00a0 Provisions and other temporary differences
\u2014
(1)
(1)
(1)
\u00a0 Tax losses
(243)
\u2014
\u2014
\u2014
Total deferred tax assets
(289)
(5)
(6)
(5)
Deferred tax liabilities
\u00a0 Cash flow hedges
45
81
44
69
\u00a0 Defined benefit pension plan surplus
6
\u2014
\u2014
\u2014
\u00a0 Investment in equity shares
1
4
\u2014
4
\u00a0 Research and development intangible assets
6
6
6
6
\u00a0 Transfer of engagements \u2013 fair value adjustments
26
\u2014
\u2014
\u2014
Total deferred tax liabilities
84
91
50
79
Net deferred tax (asset)/liability
(205)
86
44
74
Deferred tax liabilities have been offset against deferred tax assets in the Balance Sheet where there is a legal right of
offset. The deferred tax balances at 31\u00a0December 2025 reflect tax rates enacted at the Balance Sheet date, being
corporation tax of 25% and banking surcharge of 3% where it applies.
Deferred tax assets are recognised where they have arisen on the basis that sufficient future taxable trading profits will be
available to utilise the deferred tax assets and are recognised only to the extent that the Group expects to utilise them
against future profits based on current UK tax laws.
The Group has recognised deferred tax assets of \u00a3243 million (2024: \u00a3nil) in respect of historical trading losses of \u00a32,353
million (2024: \u00a3nil), which relate wholly to the Bank. Whilst there is no expiry date for the utilisation of tax losses, it is
restricted to 50% or 25% of taxable profits depending on when those tax losses were incurred.
Deferred tax assets are recognised only to the extent that the Group expects to utilise them against future profits based on
current UK tax laws. The deferred tax asset recognised is based on the Board-approved strategic plan which incorporates
assumptions about the Bank\u2019s trade and profitability over the five year plan period.
Measurement of deferred tax assets in respect of future taxable profits is a significant accounting estimate for the Group.
The five year planning period and five year period beyond the financial plan, where haircuts are applied for future
uncertainty, all inform the asset recognised. A range of plausible scenarios are considered to determine the deferred tax
asset recognised and the time period over which it will be recovered. This approach is considered appropriate given the
sensitivity of forecast profitability to macroeconomic conditions and the Group\u2019s ability to achieve its financial and
strategic targets.
A movement of 10% in the haircut applied to the outer years beyond the approved financial plan results in a \u00a321 million
movement in the deferred tax asset balance.
A 5% reduction (or increase) in the profitability forecast for the financial plan period and outer years results in a \u00a312m
decrease (or increase) in the deferred tax asset balance.
A further \u00a3364 million (2024: \u00a3nil) of deferred tax assets in relation to the Bank's historic trading losses have not been
recognised at 31 December 2025, as they have not yet met the assessment level for expected future utilisation. The Group
also has an unrecognised deferred tax asset of \u00a314 million (2024: \u00a3nil) relating to other temporary differences.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-385": { "value": "18. Investment in Group undertakings
Society
Shares
\u00a3m
Loans
\u00a3m
Total
\u00a3m
At 1 January 2025
8
17,583
17,591
Movements
745
1,126
1,871
At 31 December 2025
753
18,709
19,462
The Society has the following consolidated subsidiary undertakings, all of which operate in the United Kingdom.
Active subsidiary undertakings
Address
reference
Principal activity
Group
shareholding
Godiva Mortgages Limited
1
Mortgage lending
100%
ITL Mortgages Limited
1
Mortgage lending
100%
The Co-operative Bank Holdings p.l.c.
2
Intermediary holding company
100%
The Co-operative Bank Finance p.l.c.
2
Intermediary holding company
100%
The Co-operative Bank p.l.c.
2
Provider of banking operations
100%
Mortgage Agency Services Number One Ltd
2
Former mortgage and syndicated lending
100%
Mortgage Agency Services Number Two Ltd
2
Former mortgage lending
100%
Mortgage Agency Services Number Four Ltd
2
Former mortgage lending
100%
Mortgage Agency Services Number Five Ltd
2
Former mortgage lending
100%
Mortgage Agency Services Number Six Ltd
2
Former mortgage lending
100%
Platform Funding Ltd
2
Former mortgage lending
100%
Second Roodhill Leasing Ltd
2
Inactive
100%
Third Roodhill Leasing Ltd
2
Inactive
100%
Fourth Roodhill Leasing Ltd
2
Inactive
100%
Co-operative Bank Financial Advisers Ltd
2
Inactive
100%
Britannia Pension Trustees Ltd
2
Dormant
100%
BPS Principal Employer Ltd
2
Dormant
100%
The Co-operative Bank Pension Trust Ltd
2
Dormant
100%
Britannia New Homes (Scotland) Ltd
5
Dormant
50%
Consolidated structured entities
A structured entity is an entity in which voting or similar rights are not the dominant factor in deciding control. Structured
entities are consolidated when the substance of the relationship indicates control in accordance with the accounting policy
set out in note 1.
The following structured entities are consolidated into the Group financial statements:
Consolidated structured entities
Address
reference
Principal activity
Coventry Building Society Covered Bonds LLP
3
Mortgage acquisition and guarantor of covered bonds
Coventry Godiva Covered Bonds LLP
3
Mortgage acquisition and guarantor of covered bonds
Economic Master Issuer plc
4
Funding vehicle
Moorland Covered Bonds LLP
2
Mortgage acquisition and guarantor of covered bonds
The nature and risks associated with the Society's investments in these entities (including obligations of financial support)
are disclosed in note 15.
18. Investments in Group undertakings continued
The below table shows the addresses of all subsidiaries in the tables above.
Address
reference
Address
1
Coventry House, Harry Weston Road, Binley, Coventry CV3 2TQ
2
1 Balloon Street, Manchester, M4 4BE
3
Oakfield House, Harry Weston Road, Coventry CV3 2TQ
4
10th Floor, 5 Churchill Place, London E14 5HU
5
Blairton House, Old Aberdeen Road, Balmedie, Aberdeenshire, AB23 8SH
Unconsolidated structured entities
The Group is the sponsor for Warwick Finance Residential Mortgages Number Three plc, an unconsolidated structured entity
established for the purposes of selling Bank Group legacy retail secured mortgages in a capital efficient manner in 2017.
The Group does not consolidate this entity as it has no substantive power over the entity and is unable to meaningfully
influence its exposure to variable returns from its continuing involvement with the entity.
As sponsor, the Group holds amortised cost rated notes of \u00a326 million and FVTPL residual certificates of \u00a33 million, both
classed as debt securities. The maximum exposure to loss associated with the Group's continuing involvement with this
entity is the carrying value of the securities.
During the year, income of \u00a34 million was recognised in association with the Group's ongoing involvement with the entity,
made up of a combination of interest income on the rated notes, fair value movements on the residual certificates and a
fee income for legal title holder services provided. The Group no longer holds legal title to the securitised mortgages as at
31 December 2025.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-384": { "value": "18. Investment in Group undertakings
Society
Shares
\u00a3m
Loans
\u00a3m
Total
\u00a3m
At 1 January 2025
8
17,583
17,591
Movements
745
1,126
1,871
At 31 December 2025
753
18,709
19,462
The Society has the following consolidated subsidiary undertakings, all of which operate in the United Kingdom.
Active subsidiary undertakings
Address
reference
Principal activity
Group
shareholding
Godiva Mortgages Limited
1
Mortgage lending
100%
ITL Mortgages Limited
1
Mortgage lending
100%
The Co-operative Bank Holdings p.l.c.
2
Intermediary holding company
100%
The Co-operative Bank Finance p.l.c.
2
Intermediary holding company
100%
The Co-operative Bank p.l.c.
2
Provider of banking operations
100%
Mortgage Agency Services Number One Ltd
2
Former mortgage and syndicated lending
100%
Mortgage Agency Services Number Two Ltd
2
Former mortgage lending
100%
Mortgage Agency Services Number Four Ltd
2
Former mortgage lending
100%
Mortgage Agency Services Number Five Ltd
2
Former mortgage lending
100%
Mortgage Agency Services Number Six Ltd
2
Former mortgage lending
100%
Platform Funding Ltd
2
Former mortgage lending
100%
Second Roodhill Leasing Ltd
2
Inactive
100%
Third Roodhill Leasing Ltd
2
Inactive
100%
Fourth Roodhill Leasing Ltd
2
Inactive
100%
Co-operative Bank Financial Advisers Ltd
2
Inactive
100%
Britannia Pension Trustees Ltd
2
Dormant
100%
BPS Principal Employer Ltd
2
Dormant
100%
The Co-operative Bank Pension Trust Ltd
2
Dormant
100%
Britannia New Homes (Scotland) Ltd
5
Dormant
50%
Consolidated structured entities
A structured entity is an entity in which voting or similar rights are not the dominant factor in deciding control. Structured
entities are consolidated when the substance of the relationship indicates control in accordance with the accounting policy
set out in note 1.
The following structured entities are consolidated into the Group financial statements:
Consolidated structured entities
Address
reference
Principal activity
Coventry Building Society Covered Bonds LLP
3
Mortgage acquisition and guarantor of covered bonds
Coventry Godiva Covered Bonds LLP
3
Mortgage acquisition and guarantor of covered bonds
Economic Master Issuer plc
4
Funding vehicle
Moorland Covered Bonds LLP
2
Mortgage acquisition and guarantor of covered bonds
The nature and risks associated with the Society's investments in these entities (including obligations of financial support)
are disclosed in note 15.
18. Investments in Group undertakings continued
The below table shows the addresses of all subsidiaries in the tables above.
Address
reference
Address
1
Coventry House, Harry Weston Road, Binley, Coventry CV3 2TQ
2
1 Balloon Street, Manchester, M4 4BE
3
Oakfield House, Harry Weston Road, Coventry CV3 2TQ
4
10th Floor, 5 Churchill Place, London E14 5HU
5
Blairton House, Old Aberdeen Road, Balmedie, Aberdeenshire, AB23 8SH
Unconsolidated structured entities
The Group is the sponsor for Warwick Finance Residential Mortgages Number Three plc, an unconsolidated structured entity
established for the purposes of selling Bank Group legacy retail secured mortgages in a capital efficient manner in 2017.
The Group does not consolidate this entity as it has no substantive power over the entity and is unable to meaningfully
influence its exposure to variable returns from its continuing involvement with the entity.
As sponsor, the Group holds amortised cost rated notes of \u00a326 million and FVTPL residual certificates of \u00a33 million, both
classed as debt securities. The maximum exposure to loss associated with the Group's continuing involvement with this
entity is the carrying value of the securities.
During the year, income of \u00a34 million was recognised in association with the Group's ongoing involvement with the entity,
made up of a combination of interest income on the rated notes, fair value movements on the residual certificates and a
fee income for legal title holder services provided. The Group no longer holds legal title to the securitised mortgages as at
31 December 2025.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-386": { "value": "
The Society has the following consolidated subsidiary undertakings, all of which operate in the United Kingdom.
Active subsidiary undertakings
Address
reference
Principal activity
Group
shareholding
Godiva Mortgages Limited
1
Mortgage lending
100%
ITL Mortgages Limited
1
Mortgage lending
100%
The Co-operative Bank Holdings p.l.c.
2
Intermediary holding company
100%
The Co-operative Bank Finance p.l.c.
2
Intermediary holding company
100%
The Co-operative Bank p.l.c.
2
Provider of banking operations
100%
Mortgage Agency Services Number One Ltd
2
Former mortgage and syndicated lending
100%
Mortgage Agency Services Number Two Ltd
2
Former mortgage lending
100%
Mortgage Agency Services Number Four Ltd
2
Former mortgage lending
100%
Mortgage Agency Services Number Five Ltd
2
Former mortgage lending
100%
Mortgage Agency Services Number Six Ltd
2
Former mortgage lending
100%
Platform Funding Ltd
2
Former mortgage lending
100%
Second Roodhill Leasing Ltd
2
Inactive
100%
Third Roodhill Leasing Ltd
2
Inactive
100%
Fourth Roodhill Leasing Ltd
2
Inactive
100%
Co-operative Bank Financial Advisers Ltd
2
Inactive
100%
Britannia Pension Trustees Ltd
2
Dormant
100%
BPS Principal Employer Ltd
2
Dormant
100%
The Co-operative Bank Pension Trust Ltd
2
Dormant
100%
Britannia New Homes (Scotland) Ltd
5
Dormant
50%
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-387": { "value": "
A structured entity is an entity in which voting or similar rights are not the dominant factor in deciding control. Structured
entities are consolidated when the substance of the relationship indicates control in accordance with the accounting policy
set out in note 1.
The following structured entities are consolidated into the Group financial statements:
Consolidated structured entities
Address
reference
Principal activity
Coventry Building Society Covered Bonds LLP
3
Mortgage acquisition and guarantor of covered bonds
Coventry Godiva Covered Bonds LLP
3
Mortgage acquisition and guarantor of covered bonds
Economic Master Issuer plc
4
Funding vehicle
Moorland Covered Bonds LLP
2
Mortgage acquisition and guarantor of covered bonds
The nature and risks associated with the Society's investments in these entities (including obligations of financial support)
are disclosed in note 15.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutConsolidatedStructuredEntitiesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-390": { "value": "
19. Intangible assets
Group
Externally
acquired
2025
\u00a3m
Internally
developed
2025
\u00a3m
Core deposit
intangible
2025
\u00a3m
Total
2025
\u00a3m
Externally
acquired
2024
\u00a3m
Internally
developed
2024
\u00a3m
Core deposit
intangible
2025
\u00a3m
Total
2024
\u00a3m
Cost
At 1 January
5
99
\u2014
104
5
87
\u2014
92
Recognised on acquisition
17
93
143
253
\u2014
\u2014
\u2014
\u2014
Additions
13
27
\u2014
40
\u2014
20
\u2014
20
Disposals
(4)
(14)
\u2014
(18)
\u2014
(8)
\u2014
(8)
At 31 December
31
205
143
379
5
99
\u2014
104
Amortisation
At 1 January
4
45
\u2014
49
4
39
\u2014
43
Charge for the year
4
46
29
79
\u2014
14
\u2014
14
Disposals
(4)
(14)
\u2014
(18)
\u2014
(8)
\u2014
(8)
At 31 December
4
77
29
110
4
45
\u2014
49
Net book value at 31 December
27
128
114
269
1
54
\u2014
55
Included within the Group charge for the year is \u00a38 million (2024: \u00a3nil) of additional amortisation charges recognised as a
result of integration decisions made during the year.
Further information relating to the recognition of the core deposit intangible asset is included in note 38.
Externally acquired and internally developed assets at 31 December 2025 include \u00a323 million and \u00a316 million respectively
(2024: externally acquired \u00a3nil, internally developed \u00a37 million) of assets in the course of construction. These assets relate
mainly to the Group\u2019s investment in new systems and platforms to meet the future needs of the business. To the extent
that these new systems and platforms are not yet ready for use by the business, no amortisation has been charged against
these assets.
19. Intangible assets continued
Society
Externally
acquired
2025
\u00a3m
Internally
developed
2025
\u00a3m
Total
2025
\u00a3m
Externally
acquired
2024
\u00a3m
Internally
developed
2024
\u00a3m
Total
2024
\u00a3m
Cost
At 1 January
5
99
104
5
87
92
Additions
\u2014
11
11
\u2014
20
20
Disposals
\u2014
(5)
(5)
\u2014
(8)
(8)
At 31 December
5
105
110
5
99
104
Amortisation
At 1 January
4
45
49
4
39
43
Charge for the year
\u2014
18
18
\u2014
14
14
Disposals
\u2014
(5)
(5)
\u2014
(8)
(8)
At 31 December
4
58
62
4
45
49
Net book value at 31 December
1
47
48
1
54
55
Intangible assets primarily consist of externally acquired and internally developed software that is not an integral part of a
related hardware purchase.
Internally developed assets at 31 December 2025 include \u00a33 million (2024: \u00a37 million) of assets in the course of
construction. These assets relate mainly to investment in new systems and platforms to meet the future needs of the
business. To the extent that these new systems and platforms are not yet ready for use by the business, no amortisation has
been charged against these assets.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-389": { "value": "
19. Intangible assets
Group
Externally
acquired
2025
\u00a3m
Internally
developed
2025
\u00a3m
Core deposit
intangible
2025
\u00a3m
Total
2025
\u00a3m
Externally
acquired
2024
\u00a3m
Internally
developed
2024
\u00a3m
Core deposit
intangible
2025
\u00a3m
Total
2024
\u00a3m
Cost
At 1 January
5
99
\u2014
104
5
87
\u2014
92
Recognised on acquisition
17
93
143
253
\u2014
\u2014
\u2014
\u2014
Additions
13
27
\u2014
40
\u2014
20
\u2014
20
Disposals
(4)
(14)
\u2014
(18)
\u2014
(8)
\u2014
(8)
At 31 December
31
205
143
379
5
99
\u2014
104
Amortisation
At 1 January
4
45
\u2014
49
4
39
\u2014
43
Charge for the year
4
46
29
79
\u2014
14
\u2014
14
Disposals
(4)
(14)
\u2014
(18)
\u2014
(8)
\u2014
(8)
At 31 December
4
77
29
110
4
45
\u2014
49
Net book value at 31 December
27
128
114
269
1
54
\u2014
55
Included within the Group charge for the year is \u00a38 million (2024: \u00a3nil) of additional amortisation charges recognised as a
result of integration decisions made during the year.
Further information relating to the recognition of the core deposit intangible asset is included in note 38.
Externally acquired and internally developed assets at 31 December 2025 include \u00a323 million and \u00a316 million respectively
(2024: externally acquired \u00a3nil, internally developed \u00a37 million) of assets in the course of construction. These assets relate
mainly to the Group\u2019s investment in new systems and platforms to meet the future needs of the business. To the extent
that these new systems and platforms are not yet ready for use by the business, no amortisation has been charged against
these assets.
19. Intangible assets continued
Society
Externally
acquired
2025
\u00a3m
Internally
developed
2025
\u00a3m
Total
2025
\u00a3m
Externally
acquired
2024
\u00a3m
Internally
developed
2024
\u00a3m
Total
2024
\u00a3m
Cost
At 1 January
5
99
104
5
87
92
Additions
\u2014
11
11
\u2014
20
20
Disposals
\u2014
(5)
(5)
\u2014
(8)
(8)
At 31 December
5
105
110
5
99
104
Amortisation
At 1 January
4
45
49
4
39
43
Charge for the year
\u2014
18
18
\u2014
14
14
Disposals
\u2014
(5)
(5)
\u2014
(8)
(8)
At 31 December
4
58
62
4
45
49
Net book value at 31 December
1
47
48
1
54
55
Intangible assets primarily consist of externally acquired and internally developed software that is not an integral part of a
related hardware purchase.
Internally developed assets at 31 December 2025 include \u00a33 million (2024: \u00a37 million) of assets in the course of
construction. These assets relate mainly to investment in new systems and platforms to meet the future needs of the
business. To the extent that these new systems and platforms are not yet ready for use by the business, no amortisation has
been charged against these assets.
", "dimensions": { "concept": "ifrs-full:DisclosureOfResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-388": { "value": "
19. Intangible assets
Group
Externally
acquired
2025
\u00a3m
Internally
developed
2025
\u00a3m
Core deposit
intangible
2025
\u00a3m
Total
2025
\u00a3m
Externally
acquired
2024
\u00a3m
Internally
developed
2024
\u00a3m
Core deposit
intangible
2025
\u00a3m
Total
2024
\u00a3m
Cost
At 1 January
5
99
\u2014
104
5
87
\u2014
92
Recognised on acquisition
17
93
143
253
\u2014
\u2014
\u2014
\u2014
Additions
13
27
\u2014
40
\u2014
20
\u2014
20
Disposals
(4)
(14)
\u2014
(18)
\u2014
(8)
\u2014
(8)
At 31 December
31
205
143
379
5
99
\u2014
104
Amortisation
At 1 January
4
45
\u2014
49
4
39
\u2014
43
Charge for the year
4
46
29
79
\u2014
14
\u2014
14
Disposals
(4)
(14)
\u2014
(18)
\u2014
(8)
\u2014
(8)
At 31 December
4
77
29
110
4
45
\u2014
49
Net book value at 31 December
27
128
114
269
1
54
\u2014
55
Included within the Group charge for the year is \u00a38 million (2024: \u00a3nil) of additional amortisation charges recognised as a
result of integration decisions made during the year.
Further information relating to the recognition of the core deposit intangible asset is included in note 38.
Externally acquired and internally developed assets at 31 December 2025 include \u00a323 million and \u00a316 million respectively
(2024: externally acquired \u00a3nil, internally developed \u00a37 million) of assets in the course of construction. These assets relate
mainly to the Group\u2019s investment in new systems and platforms to meet the future needs of the business. To the extent
that these new systems and platforms are not yet ready for use by the business, no amortisation has been charged against
these assets.
19. Intangible assets continued
Society
Externally
acquired
2025
\u00a3m
Internally
developed
2025
\u00a3m
Total
2025
\u00a3m
Externally
acquired
2024
\u00a3m
Internally
developed
2024
\u00a3m
Total
2024
\u00a3m
Cost
At 1 January
5
99
104
5
87
92
Additions
\u2014
11
11
\u2014
20
20
Disposals
\u2014
(5)
(5)
\u2014
(8)
(8)
At 31 December
5
105
110
5
99
104
Amortisation
At 1 January
4
45
49
4
39
43
Charge for the year
\u2014
18
18
\u2014
14
14
Disposals
\u2014
(5)
(5)
\u2014
(8)
(8)
At 31 December
4
58
62
4
45
49
Net book value at 31 December
1
47
48
1
54
55
Intangible assets primarily consist of externally acquired and internally developed software that is not an integral part of a
related hardware purchase.
Internally developed assets at 31 December 2025 include \u00a33 million (2024: \u00a37 million) of assets in the course of
construction. These assets relate mainly to investment in new systems and platforms to meet the future needs of the
business. To the extent that these new systems and platforms are not yet ready for use by the business, no amortisation has
been charged against these assets.
20. Property, plant and equipment
Group
Land and
buildings
2025
\u00a3m
Equipment,
fixtures and
fittings
2025
\u00a3m
Right-of-
use
assets
2025
\u00a3m
Total
2025
\u00a3m
Land and
buildings
2024
\u00a3m
Equipment,
fixtures
and fittings
2024
\u00a3m
Right-of-
use
assets
2024
\u00a3m
Total
2024
\u00a3m
Cost
At 1 January
15
69
23
107
15
63
27
105
Recognised on acquisition
10
15
31
56
\u2014
\u2014
\u2014
\u2014
Additions1
\u2014
10
23
33
\u2014
7
1
8
Disposals1
(15)
(8)
(5)
(28)
\u2014
(1)
(5)
(6)
At 31 December
10
86
72
168
15
69
23
107
Depreciation
At 1 January
4
42
14
60
4
34
15
53
Charge for the year
4
13
8
25
\u2014
9
3
12
Depreciation on disposals
(8)
(8)
(2)
(18)
\u2014
(1)
(4)
(5)
At 31 December
\u2014
47
20
67
4
42
14
60
Net book value at 31 December
10
39
52
101
11
27
9
47
1. During the year, certain long leasehold assets totalling \u00a37m were reclassified as right of use assets.
Included within the Group charge for the year is \u00a34 million (2024: \u00a3nil) of additional depreciation recognised against
property as a result of integration decisions made during the year.
20. Property, plant and equipment continued
Society
Land and
buildings
2025
\u00a3m
Equipment,
fixtures and
fittings
2025
\u00a3m
Right-of-
use
assets
2025
\u00a3m
Total
2025
\u00a3m
Land and
buildings
2024
\u00a3m
Equipment,
fixtures
and fittings
2024
\u00a3m
Right-of-
use
assets
2024
\u00a3m
Total
2024
\u00a3m
Cost
At 1 January
15
69
23
107
15
63
27
105
Additions1
\u2014
6
16
22
\u2014
7
1
8
Disposals1
(8)
(3)
(2)
(13)
\u2014
(1)
(5)
(6)
At 31 December
7
72
37
116
15
69
23
107
Depreciation
At 1 January
4
42
14
60
4
34
15
53
Charge for the year
\u2014
9
3
12
\u2014
9
3
12
Depreciation on disposals
(1)
(3)
(2)
(6)
\u2014
(1)
(4)
(5)
At 31 December
3
48
15
66
4
42
14
60
Net book value at 31 December
4
24
22
50
11
27
9
47
1. During the year, certain long leasehold assets totalling \u00a37m were reclassified as right of use assets.
The net book value of land and buildings owned by and occupied by the Group for its own activities is shown below. This
therefore excludes any right-of-use assets.
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Net book value
8
11
4
11
Right-of-use assets additions includes new leases entered into during the year and additions related to lease modifications
following changes in lease agreements during the period. These changes do not constitute a new agreement but adaptations
or amendments to an existing contract.
Disposals relate to assets that were retired during the year.
The net book value of right-of-use assets above relates to the following types of assets:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Property
50
7
20
7
Enhanced data infrastructure
2
2
2
2
Total
52
9
22
9
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-392": { "value": "
20. Property, plant and equipment
Group
Land and
buildings
2025
\u00a3m
Equipment,
fixtures and
fittings
2025
\u00a3m
Right-of-
use
assets
2025
\u00a3m
Total
2025
\u00a3m
Land and
buildings
2024
\u00a3m
Equipment,
fixtures
and fittings
2024
\u00a3m
Right-of-
use
assets
2024
\u00a3m
Total
2024
\u00a3m
Cost
At 1 January
15
69
23
107
15
63
27
105
Recognised on acquisition
10
15
31
56
\u2014
\u2014
\u2014
\u2014
Additions1
\u2014
10
23
33
\u2014
7
1
8
Disposals1
(15)
(8)
(5)
(28)
\u2014
(1)
(5)
(6)
At 31 December
10
86
72
168
15
69
23
107
Depreciation
At 1 January
4
42
14
60
4
34
15
53
Charge for the year
4
13
8
25
\u2014
9
3
12
Depreciation on disposals
(8)
(8)
(2)
(18)
\u2014
(1)
(4)
(5)
At 31 December
\u2014
47
20
67
4
42
14
60
Net book value at 31 December
10
39
52
101
11
27
9
47
1. During the year, certain long leasehold assets totalling \u00a37m were reclassified as right of use assets.
Included within the Group charge for the year is \u00a34 million (2024: \u00a3nil) of additional depreciation recognised against
property as a result of integration decisions made during the year.
20. Property, plant and equipment continued
Society
Land and
buildings
2025
\u00a3m
Equipment,
fixtures and
fittings
2025
\u00a3m
Right-of-
use
assets
2025
\u00a3m
Total
2025
\u00a3m
Land and
buildings
2024
\u00a3m
Equipment,
fixtures
and fittings
2024
\u00a3m
Right-of-
use
assets
2024
\u00a3m
Total
2024
\u00a3m
Cost
At 1 January
15
69
23
107
15
63
27
105
Additions1
\u2014
6
16
22
\u2014
7
1
8
Disposals1
(8)
(3)
(2)
(13)
\u2014
(1)
(5)
(6)
At 31 December
7
72
37
116
15
69
23
107
Depreciation
At 1 January
4
42
14
60
4
34
15
53
Charge for the year
\u2014
9
3
12
\u2014
9
3
12
Depreciation on disposals
(1)
(3)
(2)
(6)
\u2014
(1)
(4)
(5)
At 31 December
3
48
15
66
4
42
14
60
Net book value at 31 December
4
24
22
50
11
27
9
47
1. During the year, certain long leasehold assets totalling \u00a37m were reclassified as right of use assets.
The net book value of land and buildings owned by and occupied by the Group for its own activities is shown below. This
therefore excludes any right-of-use assets.
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Net book value
8
11
4
11
Right-of-use assets additions includes new leases entered into during the year and additions related to lease modifications
following changes in lease agreements during the period. These changes do not constitute a new agreement but adaptations
or amendments to an existing contract.
Disposals relate to assets that were retired during the year.
The net book value of right-of-use assets above relates to the following types of assets:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Property
50
7
20
7
Enhanced data infrastructure
2
2
2
2
Total
52
9
22
9
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-391": { "value": "
20. Property, plant and equipment
Group
Land and
buildings
2025
\u00a3m
Equipment,
fixtures and
fittings
2025
\u00a3m
Right-of-
use
assets
2025
\u00a3m
Total
2025
\u00a3m
Land and
buildings
2024
\u00a3m
Equipment,
fixtures
and fittings
2024
\u00a3m
Right-of-
use
assets
2024
\u00a3m
Total
2024
\u00a3m
Cost
At 1 January
15
69
23
107
15
63
27
105
Recognised on acquisition
10
15
31
56
\u2014
\u2014
\u2014
\u2014
Additions1
\u2014
10
23
33
\u2014
7
1
8
Disposals1
(15)
(8)
(5)
(28)
\u2014
(1)
(5)
(6)
At 31 December
10
86
72
168
15
69
23
107
Depreciation
At 1 January
4
42
14
60
4
34
15
53
Charge for the year
4
13
8
25
\u2014
9
3
12
Depreciation on disposals
(8)
(8)
(2)
(18)
\u2014
(1)
(4)
(5)
At 31 December
\u2014
47
20
67
4
42
14
60
Net book value at 31 December
10
39
52
101
11
27
9
47
1. During the year, certain long leasehold assets totalling \u00a37m were reclassified as right of use assets.
Included within the Group charge for the year is \u00a34 million (2024: \u00a3nil) of additional depreciation recognised against
property as a result of integration decisions made during the year.
20. Property, plant and equipment continued
Society
Land and
buildings
2025
\u00a3m
Equipment,
fixtures and
fittings
2025
\u00a3m
Right-of-
use
assets
2025
\u00a3m
Total
2025
\u00a3m
Land and
buildings
2024
\u00a3m
Equipment,
fixtures
and fittings
2024
\u00a3m
Right-of-
use
assets
2024
\u00a3m
Total
2024
\u00a3m
Cost
At 1 January
15
69
23
107
15
63
27
105
Additions1
\u2014
6
16
22
\u2014
7
1
8
Disposals1
(8)
(3)
(2)
(13)
\u2014
(1)
(5)
(6)
At 31 December
7
72
37
116
15
69
23
107
Depreciation
At 1 January
4
42
14
60
4
34
15
53
Charge for the year
\u2014
9
3
12
\u2014
9
3
12
Depreciation on disposals
(1)
(3)
(2)
(6)
\u2014
(1)
(4)
(5)
At 31 December
3
48
15
66
4
42
14
60
Net book value at 31 December
4
24
22
50
11
27
9
47
1. During the year, certain long leasehold assets totalling \u00a37m were reclassified as right of use assets.
The net book value of land and buildings owned by and occupied by the Group for its own activities is shown below. This
therefore excludes any right-of-use assets.
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Net book value
8
11
4
11
Right-of-use assets additions includes new leases entered into during the year and additions related to lease modifications
following changes in lease agreements during the period. These changes do not constitute a new agreement but adaptations
or amendments to an existing contract.
Disposals relate to assets that were retired during the year.
The net book value of right-of-use assets above relates to the following types of assets:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Property
50
7
20
7
Enhanced data infrastructure
2
2
2
2
Total
52
9
22
9
", "dimensions": { "concept": "ifrs-full:DisclosureOfQuantitativeInformationAboutRightofuseAssetsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-393": { "value": "
The net book value of land and buildings owned by and occupied by the Group for its own activities is shown below. This
therefore excludes any right-of-use assets.
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Net book value
8
11
4
11
Right-of-use assets additions includes new leases entered into during the year and additions related to lease modifications
following changes in lease agreements during the period. These changes do not constitute a new agreement but adaptations
or amendments to an existing contract.
Disposals relate to assets that were retired during the year.
The net book value of right-of-use assets above relates to the following types of assets:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Property
50
7
20
7
Enhanced data infrastructure
2
2
2
2
Total
52
9
22
9
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-394": { "value": "
21. Other assets
At 31 December 2024, the Group and Society held a balance of \u00a3725 million in other assets, which related to inaccessible
funds held with independent paying agents in readiness for the purchase completion of The Co-operative Bank Holdings
p.l.c. on 1 January 2025. At 31 December 2025, the balance is \u00a3nil following completion of the acquisition.
23. Deferred tax
Deferred tax assets and liabilities are attributable to the following items:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Deferred tax assets
\u00a0 Other derivatives
\u2014
(1)
(1)
(1)
\u00a0 Defined benefit pension plan obligation
\u2014
(1)
(2)
(1)
\u00a0 Excess of capital allowances over depreciation
(46)
(2)
(2)
(2)
\u00a0 Provisions and other temporary differences
\u2014
(1)
(1)
(1)
\u00a0 Tax losses
(243)
\u2014
\u2014
\u2014
Total deferred tax assets
(289)
(5)
(6)
(5)
Deferred tax liabilities
\u00a0 Cash flow hedges
45
81
44
69
\u00a0 Defined benefit pension plan surplus
6
\u2014
\u2014
\u2014
\u00a0 Investment in equity shares
1
4
\u2014
4
\u00a0 Research and development intangible assets
6
6
6
6
\u00a0 Transfer of engagements \u2013 fair value adjustments
26
\u2014
\u2014
\u2014
Total deferred tax liabilities
84
91
50
79
Net deferred tax (asset)/liability
(205)
86
44
74
Deferred tax liabilities have been offset against deferred tax assets in the Balance Sheet where there is a legal right of
offset. The deferred tax balances at 31\u00a0December 2025 reflect tax rates enacted at the Balance Sheet date, being
corporation tax of 25% and banking surcharge of 3% where it applies.
Deferred tax assets are recognised where they have arisen on the basis that sufficient future taxable trading profits will be
available to utilise the deferred tax assets and are recognised only to the extent that the Group expects to utilise them
against future profits based on current UK tax laws.
The Group has recognised deferred tax assets of \u00a3243 million (2024: \u00a3nil) in respect of historical trading losses of \u00a32,353
million (2024: \u00a3nil), which relate wholly to the Bank. Whilst there is no expiry date for the utilisation of tax losses, it is
restricted to 50% or 25% of taxable profits depending on when those tax losses were incurred.
Deferred tax assets are recognised only to the extent that the Group expects to utilise them against future profits based on
current UK tax laws. The deferred tax asset recognised is based on the Board-approved strategic plan which incorporates
assumptions about the Bank\u2019s trade and profitability over the five year plan period.
Measurement of deferred tax assets in respect of future taxable profits is a significant accounting estimate for the Group.
The five year planning period and five year period beyond the financial plan, where haircuts are applied for future
uncertainty, all inform the asset recognised. A range of plausible scenarios are considered to determine the deferred tax
asset recognised and the time period over which it will be recovered. This approach is considered appropriate given the
sensitivity of forecast profitability to macroeconomic conditions and the Group\u2019s ability to achieve its financial and
strategic targets.
A movement of 10% in the haircut applied to the outer years beyond the approved financial plan results in a \u00a321 million
movement in the deferred tax asset balance.
A 5% reduction (or increase) in the profitability forecast for the financial plan period and outer years results in a \u00a312m
decrease (or increase) in the deferred tax asset balance.
A further \u00a3364 million (2024: \u00a3nil) of deferred tax assets in relation to the Bank's historic trading losses have not been
recognised at 31 December 2025, as they have not yet met the assessment level for expected future utilisation. The Group
also has an unrecognised deferred tax asset of \u00a314 million (2024: \u00a3nil) relating to other temporary differences.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-397": { "value": "
22. Pension scheme
The Group operates both funded and unfunded defined benefit and defined contribution pension schemes.
Defined benefit schemes
The Society sponsors one defined benefit pension scheme; Coventry Building Society Superannuation Scheme (CBS Scheme).
Following the acquisition of the Bank, the Group now sponsors a further two defined benefit pension schemes; The Bank
Section of The Co-operative Pension Scheme (Pace DB) and the Britannia Pension Scheme (BPS). The Group also has a
further \u00a35 million unfunded liabilities from legacy Bank arrangements.
22. Pension scheme continued
Defined benefit schemes continued
All of the schemes are overseen by separate trustee companies that are legally separate from the Group. The trustees of
the schemes are required to act in the best interests of the scheme members. The appointment of the trustees is
determined by each scheme\u2019s trust documentation. All schemes are closed to new members and future service accrual.
Annual increases on pensions in payment for all defined benefit schemes are applied in line with their respective scheme
rules. Further detail on the individual schemes are provided below.
The schemes typically expose the Group to actuarial risks such as investment risk, interest rate risk, inflation risk and
longevity risk. These could impact the Balance Sheet and may give rise to increased charges in future periods. In Pace DB
and BPS, this effect is substantially mitigated by the specialist insurance contracts the schemes hold, which are designed to
fully offset changes in liabilities arising from principal investment and longevity risks. In the CBS Scheme, the effect would
be partially mitigated by an increase in the value of the bonds and liability matched investments.
CBS Scheme
The CBS Scheme has been closed to new members since December 2001. It provides benefits based on final pensionable
salary and was closed to future service accrual from 31 December 2012. The latest full actuarial valuation of the CBS
Scheme was carried out as at 30 September 2022. This showed a deficit and, since it is closed to future service accrual, no
contributions were made in respect of members\u2019 pensionable salaries. There have been no further deficit contributions and
none are planned ahead of the next actuarial valuation. The Society continues to meet the Scheme's expenses through
contributions, including levies to the Pension Protection Fund. The deficit is expected to be recovered in future periods
through investment performance.
Overall, the balance has remained in a liability position in the year, standing at \u00a38 million at 31\u00a0December 2025 (2024: \u00a35
million deficit). Market movements, or the resulting increase in corporate bond yields compared to the prior year, has
resulted in a slightly higher discount rate applied. Whilst this has reduced the value of the CBS Scheme liabilities, there has
been a greater offsetting impact on the yields and overall asset values, resulting in an increased net obligation balance.
The Society will be able to reduce this obligation in the future either through future changes to the CBS Scheme valuation
or through increased contributions.
The CBS Scheme employs a Liability Driven Investment (LDI) investment strategy. Each fund holds a portfolio of assets that
are sensitive to changes in interest rates and/or inflation expectations. The particular funds chosen are selected so that,
when combined, the value of the CBS Scheme's assets are expected to move proportionately to that of the liabilities for a
given change in interest rates and/or inflation expectations. The funds will principally hold a combination of gilt repos,
interest rate swaps, inflation swaps, gilt total return swaps and physical gilts. The leverage of each fund will vary with
changes in interest rates and inflation and the fund manager will follow a recapitalisation process, if the leverage in any
individual fund reaches a heightened level and follow a re-leveraging process if the leverage in any individual fund
decreases to a depressed level.
The average duration of the defined benefit obligation at the period ended 31\u00a0December 2025 is 13 years (2024: 13 years).
Pace DB
Pace DB has been closed to new members and future accrual since October 2015, with benefits provided on career average
revalued earnings basis. This means that benefits earned by a member were dependent on length of service and average
earnings over the length of service. The latest full actuarial valuation of Pace DB was carried out as at April 2022. In 2022,
the Pace Trustee completed a full \u201cbuy-in\u201d transaction to insure scheme benefits through purchase of a bulk annuity
insurance policy from scheme assets, having previously completed a partial \u201cbuy-in\u201d transaction in April 2020. Through
these \u201cbuy-in\u201d transactions materially all liabilities in respect of pension benefits are matched by insurance assets of
equivalent value. As above, this means the principal risks associated with the scheme are substantially mitigated, and there
is the potential to complete a full \u201cbuy-out\u201d in the future, through issuance of individual annuity policies to members, and
subsequent wind-up of the schemes.
22. Pension scheme continued
Defined benefit schemes continued
Pace DB continued
As at 5 April 2022, the date of the most recent completed triennial funding valuation, the surplus for Pace DB was \u00a3232
million and subsequently the full \u201cbuy-in\u201d was completed, which insured scheme benefits through a bulk annuity insurance
policy with residual risk cover. The annual funding update as at 5 April 2024 indicated a \u00a327 million surplus, with the
reduction relative to the 5 April 2022 valuation including the premium paid by the Pace Trustee in the \u201cbuy-in\u201d transaction.
No deficit recovery contributions are in place, but the Pace Trustee retains a security interest in \u00a325 million of cash in an
escrow arrangement under the terms of a Payment Agreement in the event of Bank insolvency and in limited other
circumstances.
The Group has recognised a net pension asset of \u00a313 million in respect of Pace DB. The average duration of the defined
benefit obligation at the period ended 31\u00a0December 2025 is 13 years.
BPS
BPS has been closed to new members since 2001, and to future accrual since October 2012. The latest full actuarial
valuation of BPS was carried out as at April 2023. The BPS Trustee completed a full \u201cbuy-in\u201d transaction in December 2024,
also with the potential to complete a full \u201cbuy-out\u201d of the scheme in the future, through issuance of individual annuity
policies to members, and subsequent wind-up of the scheme.
The actuarial valuation of BPS as at 5 April 2023, showed BPS had a surplus of \u00a366 million and no deficit recovery or other
contributions are required.
The Group has recognised a net pension asset of \u00a315 million in respect of BPS for the year ended 31 December 2025. The
average duration of the defined benefit obligation at the period ended 31\u00a0December 2025 is 11 years.
Pension benefit/(obligation)
The assumptions used are across the schemes are shown below. There have been no changes in the valuation methodology
adopted for this period's disclosures compared with the prior period's disclosures. Group comparative positions will include
the CBS Scheme only, due to the acquisition of the Bank on 1 January 2025.
The costs of the schemes were assessed in accordance with the advice of a qualified actuary on the basis of valuations using
the projected unit credit method.
The present value of the schemes' liabilities is measured by discounting the best estimate of future cash flows to be paid
out by the schemes using the projected unit credit method. The value calculated in this way is deducted from the fair value
of scheme assets and the net (surplus/(obligation) is presented on the Balance Sheet as shown below:
2025
2024
Asset
Obligation
Net
Asset
Obligation
Net
Scheme
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
CBS Scheme
127
(135)
(8)
132
(137)
(5)
Society total
127
(135)
(8)
132
(137)
(5)
Pace DB
794
(781)
13
\u2014
\u2014
\u2014
BPS
403
(388)
15
\u2014
\u2014
\u2014
Total funded surplus/(obligation)
1,324
(1,304)
20
132
(137)
(5)
Unfunded Obligation
\u2014
(5)
(5)
\u2014
\u2014
\u2014
Net surplus/(obligation)
1,324
(1,309)
15
132
(137)
(5)
Shown as
Pension benefit surplus
28
\u2014
Pension benefit obligation
(13)
(5)
22. Pension scheme continued
Movement in funded pension benefit/(obligation)
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Present value of obligation
As at 1 January
(137)
(149)
(137)
(149)
Recognised on acquisition
(1,209)
\u2014
\u2014
\u2014
Interest expense
(73)
(7)
(8)
(7)
Benefit payments from plan assets
81
7
8
7
Remeasurements:
\u2014
\u2014
\u2014
\u2014
Effects of changes in demographic assumptions
6
\u2014
(1)
\u2014
Effects of changes in financial assumptions
34
12
3
12
Effects of experience adjustments
(6)
\u2014
\u2014
\u2014
As at 31 December
(1,304)
(137)
(135)
(137)
Fair value of plan assets
As at 1 January
132
153
132
153
Recognised on acquisition
1,241
\u2014
\u2014
\u2014
Interest income
75
7
8
7
Benefit payments from plan assets
(81)
(7)
(8)
(7)
Return on assets
(37)
(21)
(5)
(21)
Administrative Expenses
(6)
\u2014
0
\u2014
As at 31 December
1,324
132
127
132
Funded pension benefit (obligation)/surplus
20
(5)
(8)
(5)
The movement is analysed below:
Pension benefit (obligation)/surplus as at 1 January
(5)
4
(5)
4
Recognised on acquisition
32
\u2014
\u2014
\u2014
Amount recognised in the income statement
(4)
\u2014
\u2014
\u2014
Remeasurement losses
(3)
(9)
(3)
(9)
Funded pension benefit (obligation)/surplus as at 31 December
20
(5)
(8)
(5)
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Amount recognised in Other Comprehensive Income:
Return on plan assets
(37)
(21)
(5)
(21)
Effect of changes in demographic assumptions
6
\u2014
(1)
\u2014
Effect of changes in financial assumptions
34
12
3
12
Effect of experience adjustments
(6)
\u2014
\u2014
\u2014
Remeasurement loss of pension benefit surplus
(3)
(9)
(3)
(9)
Amount recognised in the income statement:
Administrative Expenses
(6)
\u2014
\u2014
\u2014
Net Interest expense on defined benefit obligation
2
\u2014
\u2014
\u2014
Net expense
(4)
\u2014
\u2014
\u2014
22. Pension scheme continued
The major categories of plan assets are:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Quoted
Corporate bonds and liability matching
43
14
43
14
Equities
\u2014
1
\u2014
1
Unit trusts
5
\u2014
5
\u2014
Unquoted
Annuities
1,162
\u2014
\u2014
\u2014
Cash
19
3
\u2014
3
Corporate bonds and liability matching
6
36
6
36
Direct lending
19
4
3
4
Diversified growth funds
8
11
8
11
Property
\u2014
9
\u2014
9
Unit trusts
62
55
62
55
Total
1,324
133
127
133
The principal weighted average actuarial assumptions used are as follows:
Financial assumptions
2025
%
2024
%
Discount rate
5.60
5.55
Rate of pensionable salary increase
\u2014
\u2014
Rates of inflation (Retail Prices Index)
2.80 - 2.90
3.10
Rates of inflation (Consumer Prices Index)
2.30 - 2.45
2.55
2025
2024
Life expectancy for mortality tables used to determine benefit obligation
Male
Female
Male
Female
Member age 60 (current life expectancy)
24.7 - 26.2
27.6 - 28.8
25.9
28.7
Member age 40 (life expectancy at age 60)
25.9 - 27.7
28.8 - 30.3
27.4
30.2
The assumptions on mortality are based on the actuarial table known as the S3PxA table. For the CBS Scheme, the
assumptions are 101% of the S3PxA table with CMI 2024 projections with a 1.25% p.a. long-term improvement rate (2024:
101% S3PxA with CMI 2023 projections with a 1.25% p.a. long-term improvement rate). For Pace DB and BPS, the
assumptions are 117% of the S3PxA table with CMI 2023 projections with a 1.00% p.a. long-term improvement rate.
The Group has to make assumptions on the discount rate, inflation and life expectancy when valuing the schemes' balances
and changes in these assumptions could affect the reported balance. The sensitivity of the defined benefit obligation of the
Society to changes in the weighted principal assumptions is indicated below for isolated changes in assumptions; in reality,
it is likely that assumptions will be related to each other and impact simultaneously.
Sensitivity analysis has been presented separately for the CBS Scheme. This is due to the buy-in arrangements in place for
the Pace DB and BPS schemes resulting in them being subject to less variability.
CBS Scheme
Impact on present value of obligation:
Change in
assumption
Increase in
assumption
%
Increase in
assumption
\u00a3m
Decrease in
assumption
%
Decrease in
assumption
\u00a3m
Discount rate
0.50%
(0.06)
(7.5)
0.06
8.4
Rates of inflation (Retail Prices Index and Consumer
Prices Index)
0.25%
0.02
2.8
(0.02)
(2.7)
Life expectancy
1 year
0.03
3.5
(0.03)
(3.4)
Pace DB and BPS
Impact on present value of obligation:
Change in
assumption
Increase in
assumption
%
Increase in
assumption
\u00a3m
Decrease in
assumption
%
Decrease in
assumption
\u00a3m
Discount rate
0.50%
(0.06)
(68.4)
0.06
75.4
Rates of inflation (Retail Prices Index and Consumer
Prices Index)
0.50%
0.05
54.3
(0.04)
(51.4)
Life expectancy
1 year
0.03
33.9
(0.03)
(34.4)
Consideration of recent UK High Court case appeal (Virgin Media Ltd v NTL Pension Trustees II Ltd)
In July 2024, the UK High Court upheld on appeal a case decision which concerned the validity of amendments made to
pension schemes that were contracted-out of the state pension system between the period of April 1997 to April 2016. In
2025, the Government committed to introduce legislation to allow pension schemes to retrospectively obtain written
actuarial confirmation that historic benefit changes met the necessary standards. Therefore, whilst a review is ongoing at
the date of approval of these financial statements as to whether the Group schemes are affected, there is not expected to
be any material impact.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDefinedContributionPlansExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-396": { "value": "
22. Pension scheme
The Group operates both funded and unfunded defined benefit and defined contribution pension schemes.
Defined benefit schemes
The Society sponsors one defined benefit pension scheme; Coventry Building Society Superannuation Scheme (CBS Scheme).
Following the acquisition of the Bank, the Group now sponsors a further two defined benefit pension schemes; The Bank
Section of The Co-operative Pension Scheme (Pace DB) and the Britannia Pension Scheme (BPS). The Group also has a
further \u00a35 million unfunded liabilities from legacy Bank arrangements.
22. Pension scheme continued
Defined benefit schemes continued
All of the schemes are overseen by separate trustee companies that are legally separate from the Group. The trustees of
the schemes are required to act in the best interests of the scheme members. The appointment of the trustees is
determined by each scheme\u2019s trust documentation. All schemes are closed to new members and future service accrual.
Annual increases on pensions in payment for all defined benefit schemes are applied in line with their respective scheme
rules. Further detail on the individual schemes are provided below.
The schemes typically expose the Group to actuarial risks such as investment risk, interest rate risk, inflation risk and
longevity risk. These could impact the Balance Sheet and may give rise to increased charges in future periods. In Pace DB
and BPS, this effect is substantially mitigated by the specialist insurance contracts the schemes hold, which are designed to
fully offset changes in liabilities arising from principal investment and longevity risks. In the CBS Scheme, the effect would
be partially mitigated by an increase in the value of the bonds and liability matched investments.
CBS Scheme
The CBS Scheme has been closed to new members since December 2001. It provides benefits based on final pensionable
salary and was closed to future service accrual from 31 December 2012. The latest full actuarial valuation of the CBS
Scheme was carried out as at 30 September 2022. This showed a deficit and, since it is closed to future service accrual, no
contributions were made in respect of members\u2019 pensionable salaries. There have been no further deficit contributions and
none are planned ahead of the next actuarial valuation. The Society continues to meet the Scheme's expenses through
contributions, including levies to the Pension Protection Fund. The deficit is expected to be recovered in future periods
through investment performance.
Overall, the balance has remained in a liability position in the year, standing at \u00a38 million at 31\u00a0December 2025 (2024: \u00a35
million deficit). Market movements, or the resulting increase in corporate bond yields compared to the prior year, has
resulted in a slightly higher discount rate applied. Whilst this has reduced the value of the CBS Scheme liabilities, there has
been a greater offsetting impact on the yields and overall asset values, resulting in an increased net obligation balance.
The Society will be able to reduce this obligation in the future either through future changes to the CBS Scheme valuation
or through increased contributions.
The CBS Scheme employs a Liability Driven Investment (LDI) investment strategy. Each fund holds a portfolio of assets that
are sensitive to changes in interest rates and/or inflation expectations. The particular funds chosen are selected so that,
when combined, the value of the CBS Scheme's assets are expected to move proportionately to that of the liabilities for a
given change in interest rates and/or inflation expectations. The funds will principally hold a combination of gilt repos,
interest rate swaps, inflation swaps, gilt total return swaps and physical gilts. The leverage of each fund will vary with
changes in interest rates and inflation and the fund manager will follow a recapitalisation process, if the leverage in any
individual fund reaches a heightened level and follow a re-leveraging process if the leverage in any individual fund
decreases to a depressed level.
The average duration of the defined benefit obligation at the period ended 31\u00a0December 2025 is 13 years (2024: 13 years).
Pace DB
Pace DB has been closed to new members and future accrual since October 2015, with benefits provided on career average
revalued earnings basis. This means that benefits earned by a member were dependent on length of service and average
earnings over the length of service. The latest full actuarial valuation of Pace DB was carried out as at April 2022. In 2022,
the Pace Trustee completed a full \u201cbuy-in\u201d transaction to insure scheme benefits through purchase of a bulk annuity
insurance policy from scheme assets, having previously completed a partial \u201cbuy-in\u201d transaction in April 2020. Through
these \u201cbuy-in\u201d transactions materially all liabilities in respect of pension benefits are matched by insurance assets of
equivalent value. As above, this means the principal risks associated with the scheme are substantially mitigated, and there
is the potential to complete a full \u201cbuy-out\u201d in the future, through issuance of individual annuity policies to members, and
subsequent wind-up of the schemes.
22. Pension scheme continued
Defined benefit schemes continued
Pace DB continued
As at 5 April 2022, the date of the most recent completed triennial funding valuation, the surplus for Pace DB was \u00a3232
million and subsequently the full \u201cbuy-in\u201d was completed, which insured scheme benefits through a bulk annuity insurance
policy with residual risk cover. The annual funding update as at 5 April 2024 indicated a \u00a327 million surplus, with the
reduction relative to the 5 April 2022 valuation including the premium paid by the Pace Trustee in the \u201cbuy-in\u201d transaction.
No deficit recovery contributions are in place, but the Pace Trustee retains a security interest in \u00a325 million of cash in an
escrow arrangement under the terms of a Payment Agreement in the event of Bank insolvency and in limited other
circumstances.
The Group has recognised a net pension asset of \u00a313 million in respect of Pace DB. The average duration of the defined
benefit obligation at the period ended 31\u00a0December 2025 is 13 years.
BPS
BPS has been closed to new members since 2001, and to future accrual since October 2012. The latest full actuarial
valuation of BPS was carried out as at April 2023. The BPS Trustee completed a full \u201cbuy-in\u201d transaction in December 2024,
also with the potential to complete a full \u201cbuy-out\u201d of the scheme in the future, through issuance of individual annuity
policies to members, and subsequent wind-up of the scheme.
The actuarial valuation of BPS as at 5 April 2023, showed BPS had a surplus of \u00a366 million and no deficit recovery or other
contributions are required.
The Group has recognised a net pension asset of \u00a315 million in respect of BPS for the year ended 31 December 2025. The
average duration of the defined benefit obligation at the period ended 31\u00a0December 2025 is 11 years.
Pension benefit/(obligation)
The assumptions used are across the schemes are shown below. There have been no changes in the valuation methodology
adopted for this period's disclosures compared with the prior period's disclosures. Group comparative positions will include
the CBS Scheme only, due to the acquisition of the Bank on 1 January 2025.
The costs of the schemes were assessed in accordance with the advice of a qualified actuary on the basis of valuations using
the projected unit credit method.
The present value of the schemes' liabilities is measured by discounting the best estimate of future cash flows to be paid
out by the schemes using the projected unit credit method. The value calculated in this way is deducted from the fair value
of scheme assets and the net (surplus/(obligation) is presented on the Balance Sheet as shown below:
2025
2024
Asset
Obligation
Net
Asset
Obligation
Net
Scheme
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
CBS Scheme
127
(135)
(8)
132
(137)
(5)
Society total
127
(135)
(8)
132
(137)
(5)
Pace DB
794
(781)
13
\u2014
\u2014
\u2014
BPS
403
(388)
15
\u2014
\u2014
\u2014
Total funded surplus/(obligation)
1,324
(1,304)
20
132
(137)
(5)
Unfunded Obligation
\u2014
(5)
(5)
\u2014
\u2014
\u2014
Net surplus/(obligation)
1,324
(1,309)
15
132
(137)
(5)
Shown as
Pension benefit surplus
28
\u2014
Pension benefit obligation
(13)
(5)
22. Pension scheme continued
Movement in funded pension benefit/(obligation)
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Present value of obligation
As at 1 January
(137)
(149)
(137)
(149)
Recognised on acquisition
(1,209)
\u2014
\u2014
\u2014
Interest expense
(73)
(7)
(8)
(7)
Benefit payments from plan assets
81
7
8
7
Remeasurements:
\u2014
\u2014
\u2014
\u2014
Effects of changes in demographic assumptions
6
\u2014
(1)
\u2014
Effects of changes in financial assumptions
34
12
3
12
Effects of experience adjustments
(6)
\u2014
\u2014
\u2014
As at 31 December
(1,304)
(137)
(135)
(137)
Fair value of plan assets
As at 1 January
132
153
132
153
Recognised on acquisition
1,241
\u2014
\u2014
\u2014
Interest income
75
7
8
7
Benefit payments from plan assets
(81)
(7)
(8)
(7)
Return on assets
(37)
(21)
(5)
(21)
Administrative Expenses
(6)
\u2014
0
\u2014
As at 31 December
1,324
132
127
132
Funded pension benefit (obligation)/surplus
20
(5)
(8)
(5)
The movement is analysed below:
Pension benefit (obligation)/surplus as at 1 January
(5)
4
(5)
4
Recognised on acquisition
32
\u2014
\u2014
\u2014
Amount recognised in the income statement
(4)
\u2014
\u2014
\u2014
Remeasurement losses
(3)
(9)
(3)
(9)
Funded pension benefit (obligation)/surplus as at 31 December
20
(5)
(8)
(5)
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Amount recognised in Other Comprehensive Income:
Return on plan assets
(37)
(21)
(5)
(21)
Effect of changes in demographic assumptions
6
\u2014
(1)
\u2014
Effect of changes in financial assumptions
34
12
3
12
Effect of experience adjustments
(6)
\u2014
\u2014
\u2014
Remeasurement loss of pension benefit surplus
(3)
(9)
(3)
(9)
Amount recognised in the income statement:
Administrative Expenses
(6)
\u2014
\u2014
\u2014
Net Interest expense on defined benefit obligation
2
\u2014
\u2014
\u2014
Net expense
(4)
\u2014
\u2014
\u2014
22. Pension scheme continued
The major categories of plan assets are:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Quoted
Corporate bonds and liability matching
43
14
43
14
Equities
\u2014
1
\u2014
1
Unit trusts
5
\u2014
5
\u2014
Unquoted
Annuities
1,162
\u2014
\u2014
\u2014
Cash
19
3
\u2014
3
Corporate bonds and liability matching
6
36
6
36
Direct lending
19
4
3
4
Diversified growth funds
8
11
8
11
Property
\u2014
9
\u2014
9
Unit trusts
62
55
62
55
Total
1,324
133
127
133
The principal weighted average actuarial assumptions used are as follows:
Financial assumptions
2025
%
2024
%
Discount rate
5.60
5.55
Rate of pensionable salary increase
\u2014
\u2014
Rates of inflation (Retail Prices Index)
2.80 - 2.90
3.10
Rates of inflation (Consumer Prices Index)
2.30 - 2.45
2.55
2025
2024
Life expectancy for mortality tables used to determine benefit obligation
Male
Female
Male
Female
Member age 60 (current life expectancy)
24.7 - 26.2
27.6 - 28.8
25.9
28.7
Member age 40 (life expectancy at age 60)
25.9 - 27.7
28.8 - 30.3
27.4
30.2
The assumptions on mortality are based on the actuarial table known as the S3PxA table. For the CBS Scheme, the
assumptions are 101% of the S3PxA table with CMI 2024 projections with a 1.25% p.a. long-term improvement rate (2024:
101% S3PxA with CMI 2023 projections with a 1.25% p.a. long-term improvement rate). For Pace DB and BPS, the
assumptions are 117% of the S3PxA table with CMI 2023 projections with a 1.00% p.a. long-term improvement rate.
The Group has to make assumptions on the discount rate, inflation and life expectancy when valuing the schemes' balances
and changes in these assumptions could affect the reported balance. The sensitivity of the defined benefit obligation of the
Society to changes in the weighted principal assumptions is indicated below for isolated changes in assumptions; in reality,
it is likely that assumptions will be related to each other and impact simultaneously.
Sensitivity analysis has been presented separately for the CBS Scheme. This is due to the buy-in arrangements in place for
the Pace DB and BPS schemes resulting in them being subject to less variability.
CBS Scheme
Impact on present value of obligation:
Change in
assumption
Increase in
assumption
%
Increase in
assumption
\u00a3m
Decrease in
assumption
%
Decrease in
assumption
\u00a3m
Discount rate
0.50%
(0.06)
(7.5)
0.06
8.4
Rates of inflation (Retail Prices Index and Consumer
Prices Index)
0.25%
0.02
2.8
(0.02)
(2.7)
Life expectancy
1 year
0.03
3.5
(0.03)
(3.4)
Pace DB and BPS
Impact on present value of obligation:
Change in
assumption
Increase in
assumption
%
Increase in
assumption
\u00a3m
Decrease in
assumption
%
Decrease in
assumption
\u00a3m
Discount rate
0.50%
(0.06)
(68.4)
0.06
75.4
Rates of inflation (Retail Prices Index and Consumer
Prices Index)
0.50%
0.05
54.3
(0.04)
(51.4)
Life expectancy
1 year
0.03
33.9
(0.03)
(34.4)
Consideration of recent UK High Court case appeal (Virgin Media Ltd v NTL Pension Trustees II Ltd)
In July 2024, the UK High Court upheld on appeal a case decision which concerned the validity of amendments made to
pension schemes that were contracted-out of the state pension system between the period of April 1997 to April 2016. In
2025, the Government committed to introduce legislation to allow pension schemes to retrospectively obtain written
actuarial confirmation that historic benefit changes met the necessary standards. Therefore, whilst a review is ongoing at
the date of approval of these financial statements as to whether the Group schemes are affected, there is not expected to
be any material impact.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-395": { "value": "
22. Pension scheme
The Group operates both funded and unfunded defined benefit and defined contribution pension schemes.
Defined benefit schemes
The Society sponsors one defined benefit pension scheme; Coventry Building Society Superannuation Scheme (CBS Scheme).
Following the acquisition of the Bank, the Group now sponsors a further two defined benefit pension schemes; The Bank
Section of The Co-operative Pension Scheme (Pace DB) and the Britannia Pension Scheme (BPS). The Group also has a
further \u00a35 million unfunded liabilities from legacy Bank arrangements.
22. Pension scheme continued
Defined benefit schemes continued
All of the schemes are overseen by separate trustee companies that are legally separate from the Group. The trustees of
the schemes are required to act in the best interests of the scheme members. The appointment of the trustees is
determined by each scheme\u2019s trust documentation. All schemes are closed to new members and future service accrual.
Annual increases on pensions in payment for all defined benefit schemes are applied in line with their respective scheme
rules. Further detail on the individual schemes are provided below.
The schemes typically expose the Group to actuarial risks such as investment risk, interest rate risk, inflation risk and
longevity risk. These could impact the Balance Sheet and may give rise to increased charges in future periods. In Pace DB
and BPS, this effect is substantially mitigated by the specialist insurance contracts the schemes hold, which are designed to
fully offset changes in liabilities arising from principal investment and longevity risks. In the CBS Scheme, the effect would
be partially mitigated by an increase in the value of the bonds and liability matched investments.
CBS Scheme
The CBS Scheme has been closed to new members since December 2001. It provides benefits based on final pensionable
salary and was closed to future service accrual from 31 December 2012. The latest full actuarial valuation of the CBS
Scheme was carried out as at 30 September 2022. This showed a deficit and, since it is closed to future service accrual, no
contributions were made in respect of members\u2019 pensionable salaries. There have been no further deficit contributions and
none are planned ahead of the next actuarial valuation. The Society continues to meet the Scheme's expenses through
contributions, including levies to the Pension Protection Fund. The deficit is expected to be recovered in future periods
through investment performance.
Overall, the balance has remained in a liability position in the year, standing at \u00a38 million at 31\u00a0December 2025 (2024: \u00a35
million deficit). Market movements, or the resulting increase in corporate bond yields compared to the prior year, has
resulted in a slightly higher discount rate applied. Whilst this has reduced the value of the CBS Scheme liabilities, there has
been a greater offsetting impact on the yields and overall asset values, resulting in an increased net obligation balance.
The Society will be able to reduce this obligation in the future either through future changes to the CBS Scheme valuation
or through increased contributions.
The CBS Scheme employs a Liability Driven Investment (LDI) investment strategy. Each fund holds a portfolio of assets that
are sensitive to changes in interest rates and/or inflation expectations. The particular funds chosen are selected so that,
when combined, the value of the CBS Scheme's assets are expected to move proportionately to that of the liabilities for a
given change in interest rates and/or inflation expectations. The funds will principally hold a combination of gilt repos,
interest rate swaps, inflation swaps, gilt total return swaps and physical gilts. The leverage of each fund will vary with
changes in interest rates and inflation and the fund manager will follow a recapitalisation process, if the leverage in any
individual fund reaches a heightened level and follow a re-leveraging process if the leverage in any individual fund
decreases to a depressed level.
The average duration of the defined benefit obligation at the period ended 31\u00a0December 2025 is 13 years (2024: 13 years).
Pace DB
Pace DB has been closed to new members and future accrual since October 2015, with benefits provided on career average
revalued earnings basis. This means that benefits earned by a member were dependent on length of service and average
earnings over the length of service. The latest full actuarial valuation of Pace DB was carried out as at April 2022. In 2022,
the Pace Trustee completed a full \u201cbuy-in\u201d transaction to insure scheme benefits through purchase of a bulk annuity
insurance policy from scheme assets, having previously completed a partial \u201cbuy-in\u201d transaction in April 2020. Through
these \u201cbuy-in\u201d transactions materially all liabilities in respect of pension benefits are matched by insurance assets of
equivalent value. As above, this means the principal risks associated with the scheme are substantially mitigated, and there
is the potential to complete a full \u201cbuy-out\u201d in the future, through issuance of individual annuity policies to members, and
subsequent wind-up of the schemes.
22. Pension scheme continued
Defined benefit schemes continued
Pace DB continued
As at 5 April 2022, the date of the most recent completed triennial funding valuation, the surplus for Pace DB was \u00a3232
million and subsequently the full \u201cbuy-in\u201d was completed, which insured scheme benefits through a bulk annuity insurance
policy with residual risk cover. The annual funding update as at 5 April 2024 indicated a \u00a327 million surplus, with the
reduction relative to the 5 April 2022 valuation including the premium paid by the Pace Trustee in the \u201cbuy-in\u201d transaction.
No deficit recovery contributions are in place, but the Pace Trustee retains a security interest in \u00a325 million of cash in an
escrow arrangement under the terms of a Payment Agreement in the event of Bank insolvency and in limited other
circumstances.
The Group has recognised a net pension asset of \u00a313 million in respect of Pace DB. The average duration of the defined
benefit obligation at the period ended 31\u00a0December 2025 is 13 years.
BPS
BPS has been closed to new members since 2001, and to future accrual since October 2012. The latest full actuarial
valuation of BPS was carried out as at April 2023. The BPS Trustee completed a full \u201cbuy-in\u201d transaction in December 2024,
also with the potential to complete a full \u201cbuy-out\u201d of the scheme in the future, through issuance of individual annuity
policies to members, and subsequent wind-up of the scheme.
The actuarial valuation of BPS as at 5 April 2023, showed BPS had a surplus of \u00a366 million and no deficit recovery or other
contributions are required.
The Group has recognised a net pension asset of \u00a315 million in respect of BPS for the year ended 31 December 2025. The
average duration of the defined benefit obligation at the period ended 31\u00a0December 2025 is 11 years.
Pension benefit/(obligation)
The assumptions used are across the schemes are shown below. There have been no changes in the valuation methodology
adopted for this period's disclosures compared with the prior period's disclosures. Group comparative positions will include
the CBS Scheme only, due to the acquisition of the Bank on 1 January 2025.
The costs of the schemes were assessed in accordance with the advice of a qualified actuary on the basis of valuations using
the projected unit credit method.
The present value of the schemes' liabilities is measured by discounting the best estimate of future cash flows to be paid
out by the schemes using the projected unit credit method. The value calculated in this way is deducted from the fair value
of scheme assets and the net (surplus/(obligation) is presented on the Balance Sheet as shown below:
2025
2024
Asset
Obligation
Net
Asset
Obligation
Net
Scheme
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
CBS Scheme
127
(135)
(8)
132
(137)
(5)
Society total
127
(135)
(8)
132
(137)
(5)
Pace DB
794
(781)
13
\u2014
\u2014
\u2014
BPS
403
(388)
15
\u2014
\u2014
\u2014
Total funded surplus/(obligation)
1,324
(1,304)
20
132
(137)
(5)
Unfunded Obligation
\u2014
(5)
(5)
\u2014
\u2014
\u2014
Net surplus/(obligation)
1,324
(1,309)
15
132
(137)
(5)
Shown as
Pension benefit surplus
28
\u2014
Pension benefit obligation
(13)
(5)
22. Pension scheme continued
Movement in funded pension benefit/(obligation)
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Present value of obligation
As at 1 January
(137)
(149)
(137)
(149)
Recognised on acquisition
(1,209)
\u2014
\u2014
\u2014
Interest expense
(73)
(7)
(8)
(7)
Benefit payments from plan assets
81
7
8
7
Remeasurements:
\u2014
\u2014
\u2014
\u2014
Effects of changes in demographic assumptions
6
\u2014
(1)
\u2014
Effects of changes in financial assumptions
34
12
3
12
Effects of experience adjustments
(6)
\u2014
\u2014
\u2014
As at 31 December
(1,304)
(137)
(135)
(137)
Fair value of plan assets
As at 1 January
132
153
132
153
Recognised on acquisition
1,241
\u2014
\u2014
\u2014
Interest income
75
7
8
7
Benefit payments from plan assets
(81)
(7)
(8)
(7)
Return on assets
(37)
(21)
(5)
(21)
Administrative Expenses
(6)
\u2014
0
\u2014
As at 31 December
1,324
132
127
132
Funded pension benefit (obligation)/surplus
20
(5)
(8)
(5)
The movement is analysed below:
Pension benefit (obligation)/surplus as at 1 January
(5)
4
(5)
4
Recognised on acquisition
32
\u2014
\u2014
\u2014
Amount recognised in the income statement
(4)
\u2014
\u2014
\u2014
Remeasurement losses
(3)
(9)
(3)
(9)
Funded pension benefit (obligation)/surplus as at 31 December
20
(5)
(8)
(5)
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Amount recognised in Other Comprehensive Income:
Return on plan assets
(37)
(21)
(5)
(21)
Effect of changes in demographic assumptions
6
\u2014
(1)
\u2014
Effect of changes in financial assumptions
34
12
3
12
Effect of experience adjustments
(6)
\u2014
\u2014
\u2014
Remeasurement loss of pension benefit surplus
(3)
(9)
(3)
(9)
Amount recognised in the income statement:
Administrative Expenses
(6)
\u2014
\u2014
\u2014
Net Interest expense on defined benefit obligation
2
\u2014
\u2014
\u2014
Net expense
(4)
\u2014
\u2014
\u2014
22. Pension scheme continued
The major categories of plan assets are:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Quoted
Corporate bonds and liability matching
43
14
43
14
Equities
\u2014
1
\u2014
1
Unit trusts
5
\u2014
5
\u2014
Unquoted
Annuities
1,162
\u2014
\u2014
\u2014
Cash
19
3
\u2014
3
Corporate bonds and liability matching
6
36
6
36
Direct lending
19
4
3
4
Diversified growth funds
8
11
8
11
Property
\u2014
9
\u2014
9
Unit trusts
62
55
62
55
Total
1,324
133
127
133
The principal weighted average actuarial assumptions used are as follows:
Financial assumptions
2025
%
2024
%
Discount rate
5.60
5.55
Rate of pensionable salary increase
\u2014
\u2014
Rates of inflation (Retail Prices Index)
2.80 - 2.90
3.10
Rates of inflation (Consumer Prices Index)
2.30 - 2.45
2.55
2025
2024
Life expectancy for mortality tables used to determine benefit obligation
Male
Female
Male
Female
Member age 60 (current life expectancy)
24.7 - 26.2
27.6 - 28.8
25.9
28.7
Member age 40 (life expectancy at age 60)
25.9 - 27.7
28.8 - 30.3
27.4
30.2
The assumptions on mortality are based on the actuarial table known as the S3PxA table. For the CBS Scheme, the
assumptions are 101% of the S3PxA table with CMI 2024 projections with a 1.25% p.a. long-term improvement rate (2024:
101% S3PxA with CMI 2023 projections with a 1.25% p.a. long-term improvement rate). For Pace DB and BPS, the
assumptions are 117% of the S3PxA table with CMI 2023 projections with a 1.00% p.a. long-term improvement rate.
The Group has to make assumptions on the discount rate, inflation and life expectancy when valuing the schemes' balances
and changes in these assumptions could affect the reported balance. The sensitivity of the defined benefit obligation of the
Society to changes in the weighted principal assumptions is indicated below for isolated changes in assumptions; in reality,
it is likely that assumptions will be related to each other and impact simultaneously.
Sensitivity analysis has been presented separately for the CBS Scheme. This is due to the buy-in arrangements in place for
the Pace DB and BPS schemes resulting in them being subject to less variability.
CBS Scheme
Impact on present value of obligation:
Change in
assumption
Increase in
assumption
%
Increase in
assumption
\u00a3m
Decrease in
assumption
%
Decrease in
assumption
\u00a3m
Discount rate
0.50%
(0.06)
(7.5)
0.06
8.4
Rates of inflation (Retail Prices Index and Consumer
Prices Index)
0.25%
0.02
2.8
(0.02)
(2.7)
Life expectancy
1 year
0.03
3.5
(0.03)
(3.4)
Pace DB and BPS
Impact on present value of obligation:
Change in
assumption
Increase in
assumption
%
Increase in
assumption
\u00a3m
Decrease in
assumption
%
Decrease in
assumption
\u00a3m
Discount rate
0.50%
(0.06)
(68.4)
0.06
75.4
Rates of inflation (Retail Prices Index and Consumer
Prices Index)
0.50%
0.05
54.3
(0.04)
(51.4)
Life expectancy
1 year
0.03
33.9
(0.03)
(34.4)
Consideration of recent UK High Court case appeal (Virgin Media Ltd v NTL Pension Trustees II Ltd)
In July 2024, the UK High Court upheld on appeal a case decision which concerned the validity of amendments made to
pension schemes that were contracted-out of the state pension system between the period of April 1997 to April 2016. In
2025, the Government committed to introduce legislation to allow pension schemes to retrospectively obtain written
actuarial confirmation that historic benefit changes met the necessary standards. Therefore, whilst a review is ongoing at
the date of approval of these financial statements as to whether the Group schemes are affected, there is not expected to
be any material impact.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDefinedBenefitPlansExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-400": { "value": "
23. Deferred tax
Deferred tax assets and liabilities are attributable to the following items:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Deferred tax assets
\u00a0 Other derivatives
\u2014
(1)
(1)
(1)
\u00a0 Defined benefit pension plan obligation
\u2014
(1)
(2)
(1)
\u00a0 Excess of capital allowances over depreciation
(46)
(2)
(2)
(2)
\u00a0 Provisions and other temporary differences
\u2014
(1)
(1)
(1)
\u00a0 Tax losses
(243)
\u2014
\u2014
\u2014
Total deferred tax assets
(289)
(5)
(6)
(5)
Deferred tax liabilities
\u00a0 Cash flow hedges
45
81
44
69
\u00a0 Defined benefit pension plan surplus
6
\u2014
\u2014
\u2014
\u00a0 Investment in equity shares
1
4
\u2014
4
\u00a0 Research and development intangible assets
6
6
6
6
\u00a0 Transfer of engagements \u2013 fair value adjustments
26
\u2014
\u2014
\u2014
Total deferred tax liabilities
84
91
50
79
Net deferred tax (asset)/liability
(205)
86
44
74
Deferred tax liabilities have been offset against deferred tax assets in the Balance Sheet where there is a legal right of
offset. The deferred tax balances at 31\u00a0December 2025 reflect tax rates enacted at the Balance Sheet date, being
corporation tax of 25% and banking surcharge of 3% where it applies.
Deferred tax assets are recognised where they have arisen on the basis that sufficient future taxable trading profits will be
available to utilise the deferred tax assets and are recognised only to the extent that the Group expects to utilise them
against future profits based on current UK tax laws.
The Group has recognised deferred tax assets of \u00a3243 million (2024: \u00a3nil) in respect of historical trading losses of \u00a32,353
million (2024: \u00a3nil), which relate wholly to the Bank. Whilst there is no expiry date for the utilisation of tax losses, it is
restricted to 50% or 25% of taxable profits depending on when those tax losses were incurred.
Deferred tax assets are recognised only to the extent that the Group expects to utilise them against future profits based on
current UK tax laws. The deferred tax asset recognised is based on the Board-approved strategic plan which incorporates
assumptions about the Bank\u2019s trade and profitability over the five year plan period.
Measurement of deferred tax assets in respect of future taxable profits is a significant accounting estimate for the Group.
The five year planning period and five year period beyond the financial plan, where haircuts are applied for future
uncertainty, all inform the asset recognised. A range of plausible scenarios are considered to determine the deferred tax
asset recognised and the time period over which it will be recovered. This approach is considered appropriate given the
sensitivity of forecast profitability to macroeconomic conditions and the Group\u2019s ability to achieve its financial and
strategic targets.
A movement of 10% in the haircut applied to the outer years beyond the approved financial plan results in a \u00a321 million
movement in the deferred tax asset balance.
A 5% reduction (or increase) in the profitability forecast for the financial plan period and outer years results in a \u00a312m
decrease (or increase) in the deferred tax asset balance.
A further \u00a3364 million (2024: \u00a3nil) of deferred tax assets in relation to the Bank's historic trading losses have not been
recognised at 31 December 2025, as they have not yet met the assessment level for expected future utilisation. The Group
also has an unrecognised deferred tax asset of \u00a314 million (2024: \u00a3nil) relating to other temporary differences.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-399": { "value": "
23. Deferred tax
Deferred tax assets and liabilities are attributable to the following items:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Deferred tax assets
\u00a0 Other derivatives
\u2014
(1)
(1)
(1)
\u00a0 Defined benefit pension plan obligation
\u2014
(1)
(2)
(1)
\u00a0 Excess of capital allowances over depreciation
(46)
(2)
(2)
(2)
\u00a0 Provisions and other temporary differences
\u2014
(1)
(1)
(1)
\u00a0 Tax losses
(243)
\u2014
\u2014
\u2014
Total deferred tax assets
(289)
(5)
(6)
(5)
Deferred tax liabilities
\u00a0 Cash flow hedges
45
81
44
69
\u00a0 Defined benefit pension plan surplus
6
\u2014
\u2014
\u2014
\u00a0 Investment in equity shares
1
4
\u2014
4
\u00a0 Research and development intangible assets
6
6
6
6
\u00a0 Transfer of engagements \u2013 fair value adjustments
26
\u2014
\u2014
\u2014
Total deferred tax liabilities
84
91
50
79
Net deferred tax (asset)/liability
(205)
86
44
74
Deferred tax liabilities have been offset against deferred tax assets in the Balance Sheet where there is a legal right of
offset. The deferred tax balances at 31\u00a0December 2025 reflect tax rates enacted at the Balance Sheet date, being
corporation tax of 25% and banking surcharge of 3% where it applies.
Deferred tax assets are recognised where they have arisen on the basis that sufficient future taxable trading profits will be
available to utilise the deferred tax assets and are recognised only to the extent that the Group expects to utilise them
against future profits based on current UK tax laws.
The Group has recognised deferred tax assets of \u00a3243 million (2024: \u00a3nil) in respect of historical trading losses of \u00a32,353
million (2024: \u00a3nil), which relate wholly to the Bank. Whilst there is no expiry date for the utilisation of tax losses, it is
restricted to 50% or 25% of taxable profits depending on when those tax losses were incurred.
Deferred tax assets are recognised only to the extent that the Group expects to utilise them against future profits based on
current UK tax laws. The deferred tax asset recognised is based on the Board-approved strategic plan which incorporates
assumptions about the Bank\u2019s trade and profitability over the five year plan period.
Measurement of deferred tax assets in respect of future taxable profits is a significant accounting estimate for the Group.
The five year planning period and five year period beyond the financial plan, where haircuts are applied for future
uncertainty, all inform the asset recognised. A range of plausible scenarios are considered to determine the deferred tax
asset recognised and the time period over which it will be recovered. This approach is considered appropriate given the
sensitivity of forecast profitability to macroeconomic conditions and the Group\u2019s ability to achieve its financial and
strategic targets.
A movement of 10% in the haircut applied to the outer years beyond the approved financial plan results in a \u00a321 million
movement in the deferred tax asset balance.
A 5% reduction (or increase) in the profitability forecast for the financial plan period and outer years results in a \u00a312m
decrease (or increase) in the deferred tax asset balance.
A further \u00a3364 million (2024: \u00a3nil) of deferred tax assets in relation to the Bank's historic trading losses have not been
recognised at 31 December 2025, as they have not yet met the assessment level for expected future utilisation. The Group
also has an unrecognised deferred tax asset of \u00a314 million (2024: \u00a3nil) relating to other temporary differences.
32. Other liabilities
Items presented on the Balance Sheet within other liabilities as shown below:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Other taxation and social security
13
7
4
7
Amounts due to beneficiary banks
23
\u2014
\u2014
Lease liabilities
44
12
13
12
Amounts due to connected undertakings
\u2014
\u2014
1,671
1,546
Other
28
9
15
9
Total
108
28
1,703
1,574
Amounts due to connected undertakings reflects the deemed loan to Economic Master Issuer plc.
Lease liabilities
The table below shows the maturity profile of the gross contractual cash flows, including interest charge, of the lease
liabilities held. This analysis differs from the lease liabilities balance, above which represents the discounted future cash
flows of the operations.
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Amounts falling due:
Less than three months
2
1
1
1
Greater than three months and less than one year
7
3
3
3
Between one and five years
24
7
9
7
After five years
15
1
1
1
Total
48
12
14
12
The Group has elected to adopt the exemption for short-term leases or leases of low value, and these leases are recognised
in the Income Statement as an expense. There were no items expensed in 2025 (2024: \u00a3nil). Variable lease payments are
not included as lease liabilities and are expensed as incurred, and they amount to \u00a3nil for the year (2024: \u00a31 million). The
Group sublets 12 (2024: three) of its leased properties. The income received from this is negligible and is recognised as
rental income.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-398": { "value": "
23. Deferred tax
Deferred tax assets and liabilities are attributable to the following items:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Deferred tax assets
\u00a0 Other derivatives
\u2014
(1)
(1)
(1)
\u00a0 Defined benefit pension plan obligation
\u2014
(1)
(2)
(1)
\u00a0 Excess of capital allowances over depreciation
(46)
(2)
(2)
(2)
\u00a0 Provisions and other temporary differences
\u2014
(1)
(1)
(1)
\u00a0 Tax losses
(243)
\u2014
\u2014
\u2014
Total deferred tax assets
(289)
(5)
(6)
(5)
Deferred tax liabilities
\u00a0 Cash flow hedges
45
81
44
69
\u00a0 Defined benefit pension plan surplus
6
\u2014
\u2014
\u2014
\u00a0 Investment in equity shares
1
4
\u2014
4
\u00a0 Research and development intangible assets
6
6
6
6
\u00a0 Transfer of engagements \u2013 fair value adjustments
26
\u2014
\u2014
\u2014
Total deferred tax liabilities
84
91
50
79
Net deferred tax (asset)/liability
(205)
86
44
74
Deferred tax liabilities have been offset against deferred tax assets in the Balance Sheet where there is a legal right of
offset. The deferred tax balances at 31\u00a0December 2025 reflect tax rates enacted at the Balance Sheet date, being
corporation tax of 25% and banking surcharge of 3% where it applies.
Deferred tax assets are recognised where they have arisen on the basis that sufficient future taxable trading profits will be
available to utilise the deferred tax assets and are recognised only to the extent that the Group expects to utilise them
against future profits based on current UK tax laws.
The Group has recognised deferred tax assets of \u00a3243 million (2024: \u00a3nil) in respect of historical trading losses of \u00a32,353
million (2024: \u00a3nil), which relate wholly to the Bank. Whilst there is no expiry date for the utilisation of tax losses, it is
restricted to 50% or 25% of taxable profits depending on when those tax losses were incurred.
Deferred tax assets are recognised only to the extent that the Group expects to utilise them against future profits based on
current UK tax laws. The deferred tax asset recognised is based on the Board-approved strategic plan which incorporates
assumptions about the Bank\u2019s trade and profitability over the five year plan period.
Measurement of deferred tax assets in respect of future taxable profits is a significant accounting estimate for the Group.
The five year planning period and five year period beyond the financial plan, where haircuts are applied for future
uncertainty, all inform the asset recognised. A range of plausible scenarios are considered to determine the deferred tax
asset recognised and the time period over which it will be recovered. This approach is considered appropriate given the
sensitivity of forecast profitability to macroeconomic conditions and the Group\u2019s ability to achieve its financial and
strategic targets.
A movement of 10% in the haircut applied to the outer years beyond the approved financial plan results in a \u00a321 million
movement in the deferred tax asset balance.
A 5% reduction (or increase) in the profitability forecast for the financial plan period and outer years results in a \u00a312m
decrease (or increase) in the deferred tax asset balance.
A further \u00a3364 million (2024: \u00a3nil) of deferred tax assets in relation to the Bank's historic trading losses have not been
recognised at 31 December 2025, as they have not yet met the assessment level for expected future utilisation. The Group
also has an unrecognised deferred tax asset of \u00a314 million (2024: \u00a3nil) relating to other temporary differences.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-401": { "value": "Deposits from banks
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Bank of England - TFSME
264
2,065
\u2014
2,065
Sale and repurchase agreements (repos) in relation to:
Covered bond programme
1,358
504
1,358
504
Debt securities
1,160
500
503
500
Other1
227
863
194
863
Total deposits from banks
3,009
3,932
2,055
3,932
1. Other deposits from banks includes the collateral received held against derivative financial assets.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepositsFromBanksExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-402": { "value": "
Risk management strategy
Derivative financial instruments, predominantly interest rate and cross currency swaps, are held solely for the purposes of
mitigating interest rate risk, foreign exchange risk or interest rate and foreign exchange risk together, as explained in the
Risk Management Report. Where appropriate, they are designated as hedging instruments within either fair value or cash
flow hedge relationships under the terms of UK-adopted IAS 39. Derivatives can hedge specific assets or liabilities such as
liquidity or wholesale instruments (sometimes referred to as \u2018micro\u2019 hedges) or portions of a portfolio of fixed rate
products (sometimes referred to as \u2018macro\u2019 hedges).
For micro hedges, the Group establishes the hedging ratio by comparing the notional amount of the derivatives with the
principal of the instruments being hedged. For macro hedges, the Group establishes the hedging ratio by matching the
notional amount of the derivatives with the principal of that portion of the portfolio being hedged and manages this on a
monthly basis by entering into interest rate swaps.
Where interest rate risk is hedged, only the interest rate risk element of the underlying position is designated as the hedged
item and therefore other risks, such as credit risk, which are managed but not hedged by the Group, are excluded.
The interest rate risk element is determined with regard to the fixed rate that represents the benchmark rate of interest
being hedged. Where foreign exchange risk is hedged, the foreign currency risk component is determined as the change in
cash flows of the foreign currency debt arising solely from changes in the relevant forward exchange rates.
For fair value hedges, the effectiveness of the hedge relationship is assessed by comparing changes in the fair value of the
hedged item attributable to changes in the benchmark rate of interest with changes in the fair value of the derivative.
For cash flow hedges, effectiveness is assessed by comparing the changes in the fair value of the derivative with changes in
the fair value of the hedged item attributable to the hedged risk, using the hypothetical derivative method.
Possible sources of ineffectiveness are as follows:
\u2022 Differences in the benchmark rates of interest used to value the hedged item and the hedging instrument, such as when
cash collateralised interest rate swaps are discounted using SONIA but this is not the benchmark rate of interest for the
hedged item.
\u2022 Differences in timing of cash flows between the derivative and the hedged item.
\u2022 Differences in weighted average rate between the derivatives and the hedged item per monthly time buckets in a
portfolio hedge.
\u2022 Differences between the expected and actual volume of prepayments where a portfolio is being hedged, as the hedging
ratio is calculated with regard to expected repayment dates, taking account of expected prepayments based on past
experience.
\u2022 Hedging derivatives with a non-zero fair value at the date of initial designation as a hedging instrument.
\u2022 Counterparty credit risk which impacts the fair value of uncollateralised swaps but not the hedged item.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-403": { "value": "
27. Provisions for liabilities and charges
During the normal course of business, the Group receives complaints from customers in relation to past sales and ongoing
administration. The Group is also subject to enquiries from and discussions with its regulators, including the Financial
Ombudsman Service (FOS), on a range of matters.
The Group continues to monitor ongoing legal cases and makes assessment on potential exposure based on available
information and expected outcomes. The Group does not expect the ultimate resolution of any current complaints,
threatened or actual legal proceedings, regulatory or other matters to have a material adverse impact on its financial
position.
Therefore there are no matters which require disclosure as a contingent liability or provisions recognised at the balance
sheet date.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-404": { "value": "
28. Subordinated liabilities
Issue date
Call date
Maturity
date
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Subordinated liabilities owed to note holders are as follows:
Fixed rate subordinated notes 2032 - 7.54%
Aug 2009
Aug 2027
Aug 2032
15
15
15
15
Fixed rate subordinated notes 2034 - 11.75%
Nov 2023
May 2029
May 2034
233
\u2014
239
\u2014
Total
248
15
254
15
The 2023 issued subordinated notes were transferred to the Society from The Co-operative Bank Holdings p.l.c., the original
issuer, during the year as part of simplifying the Group funding structure.
All the subordinated liabilities are denominated in sterling and are repayable in the years stated, or earlier in accordance
with their terms at the option of the issuer, subject to prior consent of the Prudential Regulation Authority (PRA).
The subordinated notes rank equally with each other and behind all other creditors of the Society and the claims of
Shareholding Members, other than holders of Permanent Interest Bearing Shares (PIBS) and Perpetual Capital Securities
(PCS), for both principal and interest.
The fixed rate subordinated notes 2032 \u2013 7.54% can be called at the option of the Society in August 2027 in accordance with
their terms, subject to prior consent of the PRA.
The fixed rate subordinated notes 2034 \u2013 11.75% can be called at the option of the Society in May 2029 in accordance with
their terms, subject to prior consent of the PRA.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSubordinatedLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-406": { "value": "
29. Subscribed capital
Group and Society
2025
\u00a3m
2024
\u00a3m
Subscribed capital owed to permanent interest holding members is as follows:
Permanent Interest Bearing Shares - 1992 - 12 1/8%
42
42
Total
42
42
Subscribed capital comprises the Society's Permanent Interest Bearing Shares (PIBS) issued in 1992 which are only repayable
in the event of the winding up of the Society. Interest is paid in arrears in half yearly instalments at 12 1/8% per annum.
PIBS rank equally with each other. They rank behind all other creditors of the Society including subordinated liabilities and
the claims of Shareholding Members (other than holders of PCS, which rank behind PIBS) for both principal and interest. The
holders of PIBS are not entitled to any share in any final surplus upon a winding up or final dissolution of the Society.
30. Other equity instruments
In June 2024, the Society issued \u00a3665 million Perpetual Capital Securities (PCS). This is also known as Additional Tier 1
Capital. This PCS issuance pays a fully discretionary, non-cumulative fixed coupon at an initial rate of 8.750% per annum.
The rate will reset on 11 December 2029 and every five years thereafter to the prevailing rate on a benchmark gilt plus
4.727%. Coupons are paid semi-annually in June and December. The cost of issuance of \u00a37 million (net of tax) has been
recognised within the Society\u2019s general reserve.
The returns paid to holders of PCS are treated as an appropriation of profit after tax, reflecting their categorisation as
equity instruments, distributed directly from the general reserve. During 2025, coupon payments of \u00a358 million (2024: \u00a350
million) have been recognised in the Consolidated Statement of Change in Members\u2019 Interests and Equity. The 2024
payments include the interest relating to the 2019 issuance which was settled as part of the tender process.
The 2024 instruments have no maturity date. They are repayable at the option of the Society in 2029 and on every fifth
anniversary thereafter, but only with the prior consent of the PRA. If the end-point Common Equity Tier 1 ratio for the
Group, on either an individual consolidated or a consolidated basis, falls below 7% they convert to Core Capital Deferred
Shares (CCDS) at the rate of one CCDS for every \u00a367 PCS held.
The PCS rank behind all other creditors of the Society including Subordinated liabilities and the claims of Shareholding
Members (other than PIBS), for both principal and interest. The holders of PCS are not entitled to any share in any final
surplus upon a winding up or final dissolution of the Society.
In the prior year, a tender offer for previously issued PCS instruments was completed, with \u00a3388 million of the \u00a3415 million
PCS repurchased for \u00a3390 million (net of tax). A residual \u00a327 million was redeemed by the Society in September 2024 on the
optional redemption date of the bonds.
", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-405": { "value": "
29. Subscribed capital
Group and Society
2025
\u00a3m
2024
\u00a3m
Subscribed capital owed to permanent interest holding members is as follows:
Permanent Interest Bearing Shares - 1992 - 12 1/8%
42
42
Total
42
42
Subscribed capital comprises the Society's Permanent Interest Bearing Shares (PIBS) issued in 1992 which are only repayable
in the event of the winding up of the Society. Interest is paid in arrears in half yearly instalments at 12 1/8% per annum.
PIBS rank equally with each other. They rank behind all other creditors of the Society including subordinated liabilities and
the claims of Shareholding Members (other than holders of PCS, which rank behind PIBS) for both principal and interest. The
holders of PIBS are not entitled to any share in any final surplus upon a winding up or final dissolution of the Society.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-408": { "value": "
30. Other equity instruments
In June 2024, the Society issued \u00a3665 million Perpetual Capital Securities (PCS). This is also known as Additional Tier 1
Capital. This PCS issuance pays a fully discretionary, non-cumulative fixed coupon at an initial rate of 8.750% per annum.
The rate will reset on 11 December 2029 and every five years thereafter to the prevailing rate on a benchmark gilt plus
4.727%. Coupons are paid semi-annually in June and December. The cost of issuance of \u00a37 million (net of tax) has been
recognised within the Society\u2019s general reserve.
The returns paid to holders of PCS are treated as an appropriation of profit after tax, reflecting their categorisation as
equity instruments, distributed directly from the general reserve. During 2025, coupon payments of \u00a358 million (2024: \u00a350
million) have been recognised in the Consolidated Statement of Change in Members\u2019 Interests and Equity. The 2024
payments include the interest relating to the 2019 issuance which was settled as part of the tender process.
The 2024 instruments have no maturity date. They are repayable at the option of the Society in 2029 and on every fifth
anniversary thereafter, but only with the prior consent of the PRA. If the end-point Common Equity Tier 1 ratio for the
Group, on either an individual consolidated or a consolidated basis, falls below 7% they convert to Core Capital Deferred
Shares (CCDS) at the rate of one CCDS for every \u00a367 PCS held.
The PCS rank behind all other creditors of the Society including Subordinated liabilities and the claims of Shareholding
Members (other than PIBS), for both principal and interest. The holders of PCS are not entitled to any share in any final
surplus upon a winding up or final dissolution of the Society.
In the prior year, a tender offer for previously issued PCS instruments was completed, with \u00a3388 million of the \u00a3415 million
PCS repurchased for \u00a3390 million (net of tax). A residual \u00a327 million was redeemed by the Society in September 2024 on the
optional redemption date of the bonds.
", "dimensions": { "concept": "cbs:DisclosureOfOtherEquityInstruments", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-407": { "value": "
30. Other equity instruments
In June 2024, the Society issued \u00a3665 million Perpetual Capital Securities (PCS). This is also known as Additional Tier 1
Capital. This PCS issuance pays a fully discretionary, non-cumulative fixed coupon at an initial rate of 8.750% per annum.
The rate will reset on 11 December 2029 and every five years thereafter to the prevailing rate on a benchmark gilt plus
4.727%. Coupons are paid semi-annually in June and December. The cost of issuance of \u00a37 million (net of tax) has been
recognised within the Society\u2019s general reserve.
The returns paid to holders of PCS are treated as an appropriation of profit after tax, reflecting their categorisation as
equity instruments, distributed directly from the general reserve. During 2025, coupon payments of \u00a358 million (2024: \u00a350
million) have been recognised in the Consolidated Statement of Change in Members\u2019 Interests and Equity. The 2024
payments include the interest relating to the 2019 issuance which was settled as part of the tender process.
The 2024 instruments have no maturity date. They are repayable at the option of the Society in 2029 and on every fifth
anniversary thereafter, but only with the prior consent of the PRA. If the end-point Common Equity Tier 1 ratio for the
Group, on either an individual consolidated or a consolidated basis, falls below 7% they convert to Core Capital Deferred
Shares (CCDS) at the rate of one CCDS for every \u00a367 PCS held.
The PCS rank behind all other creditors of the Society including Subordinated liabilities and the claims of Shareholding
Members (other than PIBS), for both principal and interest. The holders of PCS are not entitled to any share in any final
surplus upon a winding up or final dissolution of the Society.
In the prior year, a tender offer for previously issued PCS instruments was completed, with \u00a3388 million of the \u00a3415 million
PCS repurchased for \u00a3390 million (net of tax). A residual \u00a327 million was redeemed by the Society in September 2024 on the
optional redemption date of the bonds.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-409": { "value": "-58000000.0", "decimals": -6, "dimensions": { "concept": "cbs:DistributionToAdditionalTier1CapitalHolders", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00", "unit": "iso4217:GBP" } }, "f-410": { "value": "-50000000.0", "decimals": -6, "dimensions": { "concept": "cbs:DistributionToAdditionalTier1CapitalHolders", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "f-412": { "value": "
31. Financial commitments
The table below shows commitments arising from customer transactions.
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Advances in respect of loans and advances to customers for mortgages
approved but not yet completed
2,722
1,915
1,196
1,429
Loan facilities for business and commercial customers
296
\u2014
\u2014
\u2014
Unused credit card and overdraft limits
928
\u2014
\u2014
\u2014
Total commitments arising from customer transactions
3,946
1,915
1,196
1,429
32. Other liabilities
Items presented on the Balance Sheet within other liabilities as shown below:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Other taxation and social security
13
7
4
7
Amounts due to beneficiary banks
23
\u2014
\u2014
Lease liabilities
44
12
13
12
Amounts due to connected undertakings
\u2014
\u2014
1,671
1,546
Other
28
9
15
9
Total
108
28
1,703
1,574
Amounts due to connected undertakings reflects the deemed loan to Economic Master Issuer plc.
Lease liabilities
The table below shows the maturity profile of the gross contractual cash flows, including interest charge, of the lease
liabilities held. This analysis differs from the lease liabilities balance, above which represents the discounted future cash
flows of the operations.
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Amounts falling due:
Less than three months
2
1
1
1
Greater than three months and less than one year
7
3
3
3
Between one and five years
24
7
9
7
After five years
15
1
1
1
Total
48
12
14
12
The Group has elected to adopt the exemption for short-term leases or leases of low value, and these leases are recognised
in the Income Statement as an expense. There were no items expensed in 2025 (2024: \u00a3nil). Variable lease payments are
not included as lease liabilities and are expensed as incurred, and they amount to \u00a3nil for the year (2024: \u00a31 million). The
Group sublets 12 (2024: three) of its leased properties. The income received from this is negligible and is recognised as
rental income.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-411": { "value": "
31. Financial commitments
The table below shows commitments arising from customer transactions.
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Advances in respect of loans and advances to customers for mortgages
approved but not yet completed
2,722
1,915
1,196
1,429
Loan facilities for business and commercial customers
296
\u2014
\u2014
\u2014
Unused credit card and overdraft limits
928
\u2014
\u2014
\u2014
Total commitments arising from customer transactions
3,946
1,915
1,196
1,429
32. Other liabilities
Items presented on the Balance Sheet within other liabilities as shown below:
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Other taxation and social security
13
7
4
7
Amounts due to beneficiary banks
23
\u2014
\u2014
Lease liabilities
44
12
13
12
Amounts due to connected undertakings
\u2014
\u2014
1,671
1,546
Other
28
9
15
9
Total
108
28
1,703
1,574
Amounts due to connected undertakings reflects the deemed loan to Economic Master Issuer plc.
Lease liabilities
The table below shows the maturity profile of the gross contractual cash flows, including interest charge, of the lease
liabilities held. This analysis differs from the lease liabilities balance, above which represents the discounted future cash
flows of the operations.
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Amounts falling due:
Less than three months
2
1
1
1
Greater than three months and less than one year
7
3
3
3
Between one and five years
24
7
9
7
After five years
15
1
1
1
Total
48
12
14
12
The Group has elected to adopt the exemption for short-term leases or leases of low value, and these leases are recognised
in the Income Statement as an expense. There were no items expensed in 2025 (2024: \u00a3nil). Variable lease payments are
not included as lease liabilities and are expensed as incurred, and they amount to \u00a3nil for the year (2024: \u00a31 million). The
Group sublets 12 (2024: three) of its leased properties. The income received from this is negligible and is recognised as
rental income.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-413": { "value": "
31. Financial commitments
The table below shows commitments arising from customer transactions.
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
Advances in respect of loans and advances to customers for mortgages
approved but not yet completed
2,722
1,915
1,196
1,429
Loan facilities for business and commercial customers
296
\u2014
\u2014
\u2014
Unused credit card and overdraft limits
928
\u2014
\u2014
\u2014
Total commitments arising from customer transactions
3,946
1,915
1,196
1,429
", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-415": { "value": "
33. Financial instruments \u2013 fair value of financial assets and liabilities
For the purpose of calculating fair values, fair value is assessed as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants in the principal or, in its absence, the most
advantageous market to which the Group has access at that date. The Group measures fair value using the following fair
value hierarchy that reflects the significance of the inputs used in making the measurements:
\u2022 Level 1: unadjusted quoted prices in active markets for identical instruments.
\u2022 Level 2: valuation techniques for which all significant inputs are based on observable market data.
\u2022 Level 3: valuation techniques for which significant inputs are not based on observable market data.
Where applicable, the Group measures fair value using the quoted price in an active market for that instrument. A market
is regarded as active if transactions take place with sufficient frequency and volume to provide pricing information on an
ongoing basis. Where this is not applicable, the Group determines fair values using other valuation techniques.
Fair value of assets and liabilities held at amortised cost
The following table summarises the fair value of the Group's and Society's financial assets and liabilities measured at
amortised cost in the Group's and Society's Balance Sheet.
2025
Group
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
383
\u2014
383
\u2014
383
Loans and advances to customers
72,936
\u2014
\u2014
73,266
73,266
Debt securities
26
\u2014
\u2014
27
27
Financial liabilities
Shares
50,830
\u2014
\u2014
50,480
50,480
Customer accounts
20,892
\u2014
42
20,841
20,883
Deposits from banks
3,009
\u2014
2,993
16
3,009
Debt securities in issue
8,307
\u2014
8,301
\u2014
8,301
Subordinated liabilities
248
\u2014
258
\u2014
258
Subscribed capital
42
79
\u2014
\u2014
79
2025
Society
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
261
\u2014
261
\u2014
261
Loans and advances to customers
33,941
\u2014
\u2014
34,167
34,167
Debt securities
\u2014
\u2014
\u2014
\u2014
\u2014
Loans with Group undertakings
18,263
\u2014
3,873
14,298
18,171
Financial liabilities
Shares
50,830
\u2014
\u2014
50,480
50,480
Customer accounts
187
\u2014
187
\u2014
187
Deposits from banks
2,055
\u2014
2,055
\u2014
2,055
Debt securities in issue
5,408
\u2014
5,393
\u2014
5,393
Subordinated liabilities
15
\u2014
19
\u2014
19
Subscribed capital
42
79
\u2014
\u2014
79
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at amortised cost continued
2024
Group
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
329
\u2014
329
\u2014
329
Loans and advances to customers
51,801
\u2014
\u2014
51,593
51,593
Debt securities
\u2014
\u2014
\u2014
\u2014
\u2014
Financial liabilities
Shares
49,343
\u2014
\u2014
49,268
49,268
Customer accounts
82
\u2014
82
\u2014
82
Deposits from banks
3,932
\u2014
3,932
\u2014
3,932
Debt securities in issue
6,543
\u2014
6,441
\u2014
6,441
Subordinated liabilities
15
\u2014
19
\u2014
19
Subscribed capital
42
67
\u2014
\u2014
67
2024
Society
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
329
\u2014
329
\u2014
329
Loans and advances to customers
33,458
\u2014
\u2014
33,416
33,416
Debt securities
\u2014
\u2014
\u2014
\u2014
\u2014
Loans with Group undertakings
17,583
\u2014
4,634
12,810
17,444
Financial liabilities
Shares
49,343
\u2014
\u2014
49,268
49,268
Customer accounts
234
\u2014
234
\u2014
234
Deposits from banks
3,932
\u2014
3,932
\u2014
3,932
Debt securities in issue
4,930
\u2014
4,831
\u2014
4,831
Subordinated liabilities
15
\u2014
19
\u2014
19
Subscribed capital
42
67
\u2014
\u2014
67
Loans and advances to credit institutions
The fair value of loans and advances to credit institutions over the longer term is estimated by discounting expected cash
flows at a market discount rate. Amounts maturing in the short term are valued at carrying amount.
Loans and advances to customers
The fair value of loans and advances to customers is assessed as the value of the expected future cash flows, projected
using contractual interest payments and repayments and the expected prepayment behaviour of borrowers. Assumptions
are applied regarding expected levels of customer prepayments and the risk of defaults. The estimated future cash flows
are discounted at current market rates for the loan types and adjusted where necessary to reflect any observable market
conditions. The majority of the loans and advances to customers are on a fixed rate product, and therefore interest rate
swap derivative instruments are in place against these assets. Hedge accounting related fair value adjustments of \u00a3169
million increase at Group and \u00a3118 million increase at Society (31 December 2024: \u00a3448 million decrease, Group and
Society) are excluded from the carrying value and fair value.
Debt securities
Debt securities for which no market price or executable bid is available at the year end date are valued by one of two
methods. Where there are recent market prices or executable bids for the security, these are used as the basis for
establishing a valuation. Otherwise, a security is valued based on its relative value to comparable bonds.
Loans with Group undertakings
Loans with Group undertakings are made up of intercompany loan balances. Intercompany loan balances repayable on
demand are classed as level 3. Intercompany loans due in relation to the covered bond programmes are valued by reference
to the to the fair value of the underlying covered bond and are classed as level 2.\u00a0
Shares and customer accounts
The fair value of shares and customer accounts available on demand approximates to the carrying value. The fair value of
fixed term or restricted access deposits is determined from the estimated projected cash flows discounted at the current
market rates for those types of deposit. The estimated fair value of deposits with no stated maturity, which includes non-
interest bearing deposits, is the amount repayable on demand. Hedge accounting fair value adjustments to the share
balance of \u00a325 million increase (31 December 2024: \u00a318 million) are excluded from the carrying value and fair value. Hedge
accounting fair value adjustments to customer accounts of \u00a322 million increase (31 December 2024: \u00a3nil) are excluded from
the carrying value and fair value.
Deposits from banks
The fair value of deposits taken from wholesale counterparties over the longer term is estimated by discounting expected
cash flows at a market discount rate. Amounts maturing in the short term are valued at carrying amount.
Debt securities in issue, subordinated liabilities and subscribed capital
The estimated fair value of longer-dated liabilities is calculated based on quoted market prices where available or using
similar issues as a proxy for those liabilities that are not of sufficient size or liquidity to have an active market quote. For
those liabilities where quoted market prices are not available, a discounted cash flow model is used based on a current
yield curve appropriate to the remaining term to maturity.
Fair value of assets and liabilities held at fair value
The following table summarises the fair value of the Group's financial assets and liabilities measured at fair value on the
face of the Group and Society's Balance Sheet by fair value hierarchy and product type.
2025
Group
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
488
\u2014
488
Cross currency swaps
\u2014
45
\u2014
45
Total
\u2014
533
\u2014
533
Debt securities:
UK Government investment securities
789
\u2014
\u2014
789
Other listed transferable debt securities
747
\u2014
3
750
Total
1,536
\u2014
3
1,539
Investment in equity shares:
Investment in equity shares
\u2014
\u2014
5
5
Total
\u2014
\u2014
5
5
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
308
1
309
Cross currency swaps
\u2014
11
\u2014
11
Total
\u2014
319
1
320
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at fair value continued
2025
Society
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
409
\u2014
409
Cross currency swaps
\u2014
15
\u2014
15
Total
\u2014
424
\u2014
424
Debt securities:
UK Government investment securities
440
\u2014
\u2014
440
Other listed transferable debt securities
\u2014
\u2014
\u2014
\u2014
Total
440
\u2014
\u2014
440
Loans with Group undertakings:
Loans with Group undertakings
\u2014
446
\u2014
446
Total
\u2014
446
\u2014
446
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
251
1
252
Cross currency swaps
\u2014
\u2014
\u2014
\u2014
Total
\u2014
251
1
252
Debt securities in issue:
Medium term notes
\u2014
207
\u2014
207
Total
\u2014
207
\u2014
207
Subordinated liabilities:
Subordinated liabilities
\u2014
239
\u2014
239
Total
\u2014
239
\u2014
239
2024
Group
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
1,082
\u2014
1,082
Cross currency swaps
\u2014
2
\u2014
2
Total
\u2014
1,084
\u2014
1,084
Debt securities:
UK Government investment securities
483
\u2014
\u2014
483
Other listed transferable debt securities
19
\u2014
\u2014
19
Total
502
\u2014
\u2014
502
Investment in equity shares:
Investment in equity shares
1
\u2014
8
9
Total
1
\u2014
8
9
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
245
1
246
Cross currency swaps
\u2014
59
\u2014
59
Total
\u2014
304
1
305
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at fair value continued
2024
Society
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
1,082
\u2014
1,082
Cross currency swaps
\u2014
\u2014
\u2014
\u2014
Total
\u2014
1,082
\u2014
1,082
Debt securities:
UK Government investment securities
423
\u2014
\u2014
423
Other listed transferable debt securities
19
\u2014
\u2014
19
Total
442
\u2014
\u2014
442
Investment in equity shares:
Investment in equity shares
1
\u2014
8
9
Total
1
\u2014
8
9
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
245
1
246
Cross currency swaps
\u2014
8
\u2014
8
Total
\u2014
253
1
254
Financial instruments recorded at fair value
The determination of fair value for financial instruments that are recorded at fair value using valuation techniques is
described below, including the assumptions that a market participant would be expected to make when valuing the
instruments:
Level 1: Debt securities \u2013 fair value through other comprehensive income \u2013 Listed
Market prices have been used to determine the fair value of listed debt securities.
Level 1: Investment in equity shares \u2013 fair value through profit and loss \u2013 Listed
Market prices have been used to determine the fair value of listed equity shares.
Level 2: Derivatives
Derivative products utilise observable market inputs for interest rate swaps and cross currency swaps. Valuations are
generated by swap models which use present value calculations and incorporate assumptions for interest rate curves and
foreign exchange spot and forward rates.
Level 2: Loans with Group undertakings - Unlisted
This reflects a back-to-back arrangement between the Society and the Bank in respect of listed debt securities in issue and
subordinated liabilities, market prices of the these instruments have been used to to determine the fair value.
Level 2 - Debt securities - fair value through other comprehensive income - Unlisted
Where quoted market prices are not available at the valuation date, valuations of securities are based on their relative
value to comparable securities.
Level 2 - Debt securities in issue - fair value through profit and loss - Listed
Market prices have been used to determine the fair value of listed debt securities in issue.
Level 2 - Subordinated liabilities - Listed
Market prices have been used to determine the fair value of listed subordinated liabilities.
Level 3 - Debt securities - Unlisted
Represents a 5% risk retention holding of residual certificates issued by Warwick Finance Residential Mortgages Number
Three plc. The remaining 95% is privately held, therefore there is no available market prices. An in-house model is used
that sources independent market data for disclosure purposes only.
Level 3: Investment in equity shares \u2013 fair value through profit and loss \u2013 Unlisted
The Group has a small balance of investments in equity shares, including a residual holding in Visa Inc. shares. These shares
are valued based on future cash consideration which the Group expects to receive on sale of these instruments, or the
underlying market value.
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Financial instruments recorded at fair value continued
Level 3: Derivatives
The item included within Level 3 is a balance tracking swap, which remained in place during the year. It is valued using
present value calculations based on market interest rate curves. The unobservable inputs relate to the projection of the
swap notional amount, which changes over time to match the balance of the underlying mortgage portfolio. Projected
mortgage prepayment amounts are used in the modelling of the mortgage portfolio profile. The changes in the projection of
interest and prepayment rates of the underlying mortgage portfolio affect both the unbounded swap and hedged item so
that the net Income Statement and Balance Sheet impact would be minimal.
The following table analyses fair value movements in the Level 3 portfolio for both the Group and the Society:
2025
2024
Group
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
As at 1 January
8
(1)
\u2014
6
(2)
\u2014
Recognised on acquisition
6
\u2014
14
Gains/(losses) recognised in the
Income Statement
Net unrealised gains/ (losses)
(1)
\u2014
\u2014
2
1
\u2014
Settlements
(8)
\u2014
(11)
\u2014
\u2014
\u2014
As at 31 December
5
(1)
3
8
(1)
\u2014
2025
2024
Society
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
As at 1 January
8
(1)
\u2014
6
(2)
\u2014
Gains/(losses) recognised in the
Income Statement
Net unrealised gains/ (losses)
3
\u2014
\u2014
2
1
\u2014
Settlements
(11)
\u2014
\u2014
\u2014
\u2014
\u2014
As at 31 December
\u2014
(1)
\u2014
8
(1)
\u2014
No sensitivities have been performed with regards the level 3 instruments as the balances are immaterial to the financial
statements.
Transfers between fair value levels
Transfers between fair value levels only occur when either it becomes possible to value a financial instrument using a
method that is higher up the valuation hierarchy or it is no longer possible to value it using the current method and it must
instead be valued using a method lower down the hierarchy. Transfers are considered to have occurred at the end of the
reporting period for the purposes of this disclosure.
34. Offsetting financial assets and liabilities
The Group and Society do not have any financial assets or financial liabilities that are offset with the net amount presented
in the Balance Sheets. IAS 32 Financial Instruments: Presentation states that there should be both an enforceable right to
set-off and the intention either to settle on a net basis or to realise the asset and settle the liability simultaneously to
apply this treatment, and neither of these conditions is met.
The Group has entered into master netting arrangements such as International Swaps and Derivatives Association (ISDA)
master agreements for its derivatives, other than derivatives held by Coventry Building Society Covered Bonds LLP.
Credit Support Annexes (CSAs) are executed in conjunction with these ISDA master agreements, which typically provide for
the exchange of collateral to mitigate net mark-to-market credit exposure.
The Group has also entered into Global Master Repurchase Agreements, including margin collateralisation arrangements,
whereby outstanding transactions with the same counterparty can be settled net following a default or other
predetermined event.
Coventry Building Society Covered Bonds LLP does not enter into a master netting agreement due to the structure of the
covered bond programme. However, it has entered into a separate ISDA agreement in respect of each of the derivatives it
has transacted with external counterparties. Each agreement includes a CSA which provides for full collateralisation of the
swap exposure, with exposure thresholds in place for a single agreement before collateral is exchanged. The \u00a335 million net
derivative credit exposure in the table below is in respect of an arrangement that will only be fully collateralised if the
counterparty is downgraded to below its specified credit rating (2024: \u00a32 million).
The table below shows the net exposure for sale and repurchase agreements or derivative contracts after any netting
benefits and collateral. At the end of the year the Group did not hold any reverse sale and repurchase agreements with
respect to Gilts (2024: \u00a3nil), with \u00a32,015 million of sale and repurchase agreements being held on the balance sheet as at
31 December 2025 (2024: \u00a3602 million). The Group did not enter into securities lending (2024: \u00a3nil) during the year.
2025
Group
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net amount
\u00a3m
Financial assets
Derivative financial instruments
533
(309)
(189)
35
Reverse Repurchase Agreements
\u2014
\u2014
\u2014
\u2014
Total financial assets
533
(309)
(189)
35
Financial liabilities
Derivative financial instruments
320
(309)
(1)
10
Repurchase agreements
2,015
\u2014
(2,015)
\u2014
Total financial liabilities
2,335
(309)
(2,016)
10
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
2025
Society
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net amount
\u00a3m
Financial assets
Derivative financial instruments
424
(251)
(172)
1
Reverse Repurchase Agreements
250
\u2014
(250)
\u2014
Total financial assets
674
(251)
(422)
1
Financial liabilities
Derivative financial instruments
252
(251)
(1)
\u2014
Repurchase agreements
1,358
\u2014
(1,358)
\u2014
Total financial liabilities
1,610
(251)
(1,359)
\u2014
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
34. Offsetting financial assets and liabilities continued
2024
Group
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net amount
\u00a3m
Financial assets
Derivative financial instruments
1,084
(245)
(837)
2
Reverse Repurchase Agreements
\u2014
\u2014
\u2014
\u2014
Total financial assets
1,084
(245)
(837)
2
Financial liabilities
Derivative financial instruments
305
(245)
(7)
53
Repurchase agreements
602
\u2014
(602)
\u2014
Total financial liabilities
907
(245)
(609)
53
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
2024
Society
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net
amount
\u00a3m
Financial assets
Derivative financial instruments
1,083
(246)
(837)
\u2014
Reverse Repurchase Agreements
\u2014
\u2014
\u2014
\u2014
Total financial assets
1,083
(246)
(837)
\u2014
Financial liabilities
Derivative financial instruments
254
(246)
(7)
1
Repurchase agreements
602
\u2014
(602)
\u2014
Total financial liabilities
856
(246)
(609)
1
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
For derivative financial assets, collateral received can be in the form of cash and UK Government investment securities.
Where cash is received, it is included as a liability within Deposits from banks (note 24). Where UK Government investment
securities are received, these are not recognised on the Balance Sheet, as the Group does not obtain the risks and rewards
of ownership.
For derivative financial liabilities, collateral paid is in the form of cash and is included as an asset in Loans and advances to
credit institutions.
For sale and repurchase agreements (repos), collateral provided is predominantly in UK Government investment securities
with the remainder in cash. Again, cash paid is included as an asset in Loans and advances to credit institutions.
UK Government investment securities are not derecognised as the Group retains substantially all the risks and rewards of
ownership.
Cash collateral held and cash collateral pledged are not restricted and are returned at the end of the contract.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-414": { "value": "
33. Financial instruments \u2013 fair value of financial assets and liabilities
For the purpose of calculating fair values, fair value is assessed as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants in the principal or, in its absence, the most
advantageous market to which the Group has access at that date. The Group measures fair value using the following fair
value hierarchy that reflects the significance of the inputs used in making the measurements:
\u2022 Level 1: unadjusted quoted prices in active markets for identical instruments.
\u2022 Level 2: valuation techniques for which all significant inputs are based on observable market data.
\u2022 Level 3: valuation techniques for which significant inputs are not based on observable market data.
Where applicable, the Group measures fair value using the quoted price in an active market for that instrument. A market
is regarded as active if transactions take place with sufficient frequency and volume to provide pricing information on an
ongoing basis. Where this is not applicable, the Group determines fair values using other valuation techniques.
Fair value of assets and liabilities held at amortised cost
The following table summarises the fair value of the Group's and Society's financial assets and liabilities measured at
amortised cost in the Group's and Society's Balance Sheet.
2025
Group
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
383
\u2014
383
\u2014
383
Loans and advances to customers
72,936
\u2014
\u2014
73,266
73,266
Debt securities
26
\u2014
\u2014
27
27
Financial liabilities
Shares
50,830
\u2014
\u2014
50,480
50,480
Customer accounts
20,892
\u2014
42
20,841
20,883
Deposits from banks
3,009
\u2014
2,993
16
3,009
Debt securities in issue
8,307
\u2014
8,301
\u2014
8,301
Subordinated liabilities
248
\u2014
258
\u2014
258
Subscribed capital
42
79
\u2014
\u2014
79
2025
Society
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
261
\u2014
261
\u2014
261
Loans and advances to customers
33,941
\u2014
\u2014
34,167
34,167
Debt securities
\u2014
\u2014
\u2014
\u2014
\u2014
Loans with Group undertakings
18,263
\u2014
3,873
14,298
18,171
Financial liabilities
Shares
50,830
\u2014
\u2014
50,480
50,480
Customer accounts
187
\u2014
187
\u2014
187
Deposits from banks
2,055
\u2014
2,055
\u2014
2,055
Debt securities in issue
5,408
\u2014
5,393
\u2014
5,393
Subordinated liabilities
15
\u2014
19
\u2014
19
Subscribed capital
42
79
\u2014
\u2014
79
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at amortised cost continued
2024
Group
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
329
\u2014
329
\u2014
329
Loans and advances to customers
51,801
\u2014
\u2014
51,593
51,593
Debt securities
\u2014
\u2014
\u2014
\u2014
\u2014
Financial liabilities
Shares
49,343
\u2014
\u2014
49,268
49,268
Customer accounts
82
\u2014
82
\u2014
82
Deposits from banks
3,932
\u2014
3,932
\u2014
3,932
Debt securities in issue
6,543
\u2014
6,441
\u2014
6,441
Subordinated liabilities
15
\u2014
19
\u2014
19
Subscribed capital
42
67
\u2014
\u2014
67
2024
Society
Carrying
amount
\u00a3m
Fair value
Level 1
\u00a3m
Fair value
Level 2
\u00a3m
Fair value
Level 3
\u00a3m
Fair value
Total
\u00a3m
Financial assets
Loans and advances to credit institutions
329
\u2014
329
\u2014
329
Loans and advances to customers
33,458
\u2014
\u2014
33,416
33,416
Debt securities
\u2014
\u2014
\u2014
\u2014
\u2014
Loans with Group undertakings
17,583
\u2014
4,634
12,810
17,444
Financial liabilities
Shares
49,343
\u2014
\u2014
49,268
49,268
Customer accounts
234
\u2014
234
\u2014
234
Deposits from banks
3,932
\u2014
3,932
\u2014
3,932
Debt securities in issue
4,930
\u2014
4,831
\u2014
4,831
Subordinated liabilities
15
\u2014
19
\u2014
19
Subscribed capital
42
67
\u2014
\u2014
67
Loans and advances to credit institutions
The fair value of loans and advances to credit institutions over the longer term is estimated by discounting expected cash
flows at a market discount rate. Amounts maturing in the short term are valued at carrying amount.
Loans and advances to customers
The fair value of loans and advances to customers is assessed as the value of the expected future cash flows, projected
using contractual interest payments and repayments and the expected prepayment behaviour of borrowers. Assumptions
are applied regarding expected levels of customer prepayments and the risk of defaults. The estimated future cash flows
are discounted at current market rates for the loan types and adjusted where necessary to reflect any observable market
conditions. The majority of the loans and advances to customers are on a fixed rate product, and therefore interest rate
swap derivative instruments are in place against these assets. Hedge accounting related fair value adjustments of \u00a3169
million increase at Group and \u00a3118 million increase at Society (31 December 2024: \u00a3448 million decrease, Group and
Society) are excluded from the carrying value and fair value.
Debt securities
Debt securities for which no market price or executable bid is available at the year end date are valued by one of two
methods. Where there are recent market prices or executable bids for the security, these are used as the basis for
establishing a valuation. Otherwise, a security is valued based on its relative value to comparable bonds.
Loans with Group undertakings
Loans with Group undertakings are made up of intercompany loan balances. Intercompany loan balances repayable on
demand are classed as level 3. Intercompany loans due in relation to the covered bond programmes are valued by reference
to the to the fair value of the underlying covered bond and are classed as level 2.\u00a0
Shares and customer accounts
The fair value of shares and customer accounts available on demand approximates to the carrying value. The fair value of
fixed term or restricted access deposits is determined from the estimated projected cash flows discounted at the current
market rates for those types of deposit. The estimated fair value of deposits with no stated maturity, which includes non-
interest bearing deposits, is the amount repayable on demand. Hedge accounting fair value adjustments to the share
balance of \u00a325 million increase (31 December 2024: \u00a318 million) are excluded from the carrying value and fair value. Hedge
accounting fair value adjustments to customer accounts of \u00a322 million increase (31 December 2024: \u00a3nil) are excluded from
the carrying value and fair value.
Deposits from banks
The fair value of deposits taken from wholesale counterparties over the longer term is estimated by discounting expected
cash flows at a market discount rate. Amounts maturing in the short term are valued at carrying amount.
Debt securities in issue, subordinated liabilities and subscribed capital
The estimated fair value of longer-dated liabilities is calculated based on quoted market prices where available or using
similar issues as a proxy for those liabilities that are not of sufficient size or liquidity to have an active market quote. For
those liabilities where quoted market prices are not available, a discounted cash flow model is used based on a current
yield curve appropriate to the remaining term to maturity.
Fair value of assets and liabilities held at fair value
The following table summarises the fair value of the Group's financial assets and liabilities measured at fair value on the
face of the Group and Society's Balance Sheet by fair value hierarchy and product type.
2025
Group
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
488
\u2014
488
Cross currency swaps
\u2014
45
\u2014
45
Total
\u2014
533
\u2014
533
Debt securities:
UK Government investment securities
789
\u2014
\u2014
789
Other listed transferable debt securities
747
\u2014
3
750
Total
1,536
\u2014
3
1,539
Investment in equity shares:
Investment in equity shares
\u2014
\u2014
5
5
Total
\u2014
\u2014
5
5
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
308
1
309
Cross currency swaps
\u2014
11
\u2014
11
Total
\u2014
319
1
320
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at fair value continued
2025
Society
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
409
\u2014
409
Cross currency swaps
\u2014
15
\u2014
15
Total
\u2014
424
\u2014
424
Debt securities:
UK Government investment securities
440
\u2014
\u2014
440
Other listed transferable debt securities
\u2014
\u2014
\u2014
\u2014
Total
440
\u2014
\u2014
440
Loans with Group undertakings:
Loans with Group undertakings
\u2014
446
\u2014
446
Total
\u2014
446
\u2014
446
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
251
1
252
Cross currency swaps
\u2014
\u2014
\u2014
\u2014
Total
\u2014
251
1
252
Debt securities in issue:
Medium term notes
\u2014
207
\u2014
207
Total
\u2014
207
\u2014
207
Subordinated liabilities:
Subordinated liabilities
\u2014
239
\u2014
239
Total
\u2014
239
\u2014
239
2024
Group
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
1,082
\u2014
1,082
Cross currency swaps
\u2014
2
\u2014
2
Total
\u2014
1,084
\u2014
1,084
Debt securities:
UK Government investment securities
483
\u2014
\u2014
483
Other listed transferable debt securities
19
\u2014
\u2014
19
Total
502
\u2014
\u2014
502
Investment in equity shares:
Investment in equity shares
1
\u2014
8
9
Total
1
\u2014
8
9
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
245
1
246
Cross currency swaps
\u2014
59
\u2014
59
Total
\u2014
304
1
305
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at fair value continued
2024
Society
Level 1
\u00a3m
Level 2
\u00a3m
Level 3
\u00a3m
Total
\u00a3m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
\u2014
1,082
\u2014
1,082
Cross currency swaps
\u2014
\u2014
\u2014
\u2014
Total
\u2014
1,082
\u2014
1,082
Debt securities:
UK Government investment securities
423
\u2014
\u2014
423
Other listed transferable debt securities
19
\u2014
\u2014
19
Total
442
\u2014
\u2014
442
Investment in equity shares:
Investment in equity shares
1
\u2014
8
9
Total
1
\u2014
8
9
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
\u2014
245
1
246
Cross currency swaps
\u2014
8
\u2014
8
Total
\u2014
253
1
254
Financial instruments recorded at fair value
The determination of fair value for financial instruments that are recorded at fair value using valuation techniques is
described below, including the assumptions that a market participant would be expected to make when valuing the
instruments:
Level 1: Debt securities \u2013 fair value through other comprehensive income \u2013 Listed
Market prices have been used to determine the fair value of listed debt securities.
Level 1: Investment in equity shares \u2013 fair value through profit and loss \u2013 Listed
Market prices have been used to determine the fair value of listed equity shares.
Level 2: Derivatives
Derivative products utilise observable market inputs for interest rate swaps and cross currency swaps. Valuations are
generated by swap models which use present value calculations and incorporate assumptions for interest rate curves and
foreign exchange spot and forward rates.
Level 2: Loans with Group undertakings - Unlisted
This reflects a back-to-back arrangement between the Society and the Bank in respect of listed debt securities in issue and
subordinated liabilities, market prices of the these instruments have been used to to determine the fair value.
Level 2 - Debt securities - fair value through other comprehensive income - Unlisted
Where quoted market prices are not available at the valuation date, valuations of securities are based on their relative
value to comparable securities.
Level 2 - Debt securities in issue - fair value through profit and loss - Listed
Market prices have been used to determine the fair value of listed debt securities in issue.
Level 2 - Subordinated liabilities - Listed
Market prices have been used to determine the fair value of listed subordinated liabilities.
Level 3 - Debt securities - Unlisted
Represents a 5% risk retention holding of residual certificates issued by Warwick Finance Residential Mortgages Number
Three plc. The remaining 95% is privately held, therefore there is no available market prices. An in-house model is used
that sources independent market data for disclosure purposes only.
Level 3: Investment in equity shares \u2013 fair value through profit and loss \u2013 Unlisted
The Group has a small balance of investments in equity shares, including a residual holding in Visa Inc. shares. These shares
are valued based on future cash consideration which the Group expects to receive on sale of these instruments, or the
underlying market value.
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Financial instruments recorded at fair value continued
Level 3: Derivatives
The item included within Level 3 is a balance tracking swap, which remained in place during the year. It is valued using
present value calculations based on market interest rate curves. The unobservable inputs relate to the projection of the
swap notional amount, which changes over time to match the balance of the underlying mortgage portfolio. Projected
mortgage prepayment amounts are used in the modelling of the mortgage portfolio profile. The changes in the projection of
interest and prepayment rates of the underlying mortgage portfolio affect both the unbounded swap and hedged item so
that the net Income Statement and Balance Sheet impact would be minimal.
The following table analyses fair value movements in the Level 3 portfolio for both the Group and the Society:
2025
2024
Group
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
As at 1 January
8
(1)
\u2014
6
(2)
\u2014
Recognised on acquisition
6
\u2014
14
Gains/(losses) recognised in the
Income Statement
Net unrealised gains/ (losses)
(1)
\u2014
\u2014
2
1
\u2014
Settlements
(8)
\u2014
(11)
\u2014
\u2014
\u2014
As at 31 December
5
(1)
3
8
(1)
\u2014
2025
2024
Society
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
Investment in
equity shares
\u00a3m
Derivative
financial
instruments
\u00a3m
Debt securities
\u00a3m
As at 1 January
8
(1)
\u2014
6
(2)
\u2014
Gains/(losses) recognised in the
Income Statement
Net unrealised gains/ (losses)
3
\u2014
\u2014
2
1
\u2014
Settlements
(11)
\u2014
\u2014
\u2014
\u2014
\u2014
As at 31 December
\u2014
(1)
\u2014
8
(1)
\u2014
No sensitivities have been performed with regards the level 3 instruments as the balances are immaterial to the financial
statements.
Transfers between fair value levels
Transfers between fair value levels only occur when either it becomes possible to value a financial instrument using a
method that is higher up the valuation hierarchy or it is no longer possible to value it using the current method and it must
instead be valued using a method lower down the hierarchy. Transfers are considered to have occurred at the end of the
reporting period for the purposes of this disclosure.
34. Offsetting financial assets and liabilities
The Group and Society do not have any financial assets or financial liabilities that are offset with the net amount presented
in the Balance Sheets. IAS 32 Financial Instruments: Presentation states that there should be both an enforceable right to
set-off and the intention either to settle on a net basis or to realise the asset and settle the liability simultaneously to
apply this treatment, and neither of these conditions is met.
The Group has entered into master netting arrangements such as International Swaps and Derivatives Association (ISDA)
master agreements for its derivatives, other than derivatives held by Coventry Building Society Covered Bonds LLP.
Credit Support Annexes (CSAs) are executed in conjunction with these ISDA master agreements, which typically provide for
the exchange of collateral to mitigate net mark-to-market credit exposure.
The Group has also entered into Global Master Repurchase Agreements, including margin collateralisation arrangements,
whereby outstanding transactions with the same counterparty can be settled net following a default or other
predetermined event.
Coventry Building Society Covered Bonds LLP does not enter into a master netting agreement due to the structure of the
covered bond programme. However, it has entered into a separate ISDA agreement in respect of each of the derivatives it
has transacted with external counterparties. Each agreement includes a CSA which provides for full collateralisation of the
swap exposure, with exposure thresholds in place for a single agreement before collateral is exchanged. The \u00a335 million net
derivative credit exposure in the table below is in respect of an arrangement that will only be fully collateralised if the
counterparty is downgraded to below its specified credit rating (2024: \u00a32 million).
The table below shows the net exposure for sale and repurchase agreements or derivative contracts after any netting
benefits and collateral. At the end of the year the Group did not hold any reverse sale and repurchase agreements with
respect to Gilts (2024: \u00a3nil), with \u00a32,015 million of sale and repurchase agreements being held on the balance sheet as at
31 December 2025 (2024: \u00a3602 million). The Group did not enter into securities lending (2024: \u00a3nil) during the year.
2025
Group
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net amount
\u00a3m
Financial assets
Derivative financial instruments
533
(309)
(189)
35
Reverse Repurchase Agreements
\u2014
\u2014
\u2014
\u2014
Total financial assets
533
(309)
(189)
35
Financial liabilities
Derivative financial instruments
320
(309)
(1)
10
Repurchase agreements
2,015
\u2014
(2,015)
\u2014
Total financial liabilities
2,335
(309)
(2,016)
10
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
2025
Society
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net amount
\u00a3m
Financial assets
Derivative financial instruments
424
(251)
(172)
1
Reverse Repurchase Agreements
250
\u2014
(250)
\u2014
Total financial assets
674
(251)
(422)
1
Financial liabilities
Derivative financial instruments
252
(251)
(1)
\u2014
Repurchase agreements
1,358
\u2014
(1,358)
\u2014
Total financial liabilities
1,610
(251)
(1,359)
\u2014
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
34. Offsetting financial assets and liabilities continued
2024
Group
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net amount
\u00a3m
Financial assets
Derivative financial instruments
1,084
(245)
(837)
2
Reverse Repurchase Agreements
\u2014
\u2014
\u2014
\u2014
Total financial assets
1,084
(245)
(837)
2
Financial liabilities
Derivative financial instruments
305
(245)
(7)
53
Repurchase agreements
602
\u2014
(602)
\u2014
Total financial liabilities
907
(245)
(609)
53
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
2024
Society
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net
amount
\u00a3m
Financial assets
Derivative financial instruments
1,083
(246)
(837)
\u2014
Reverse Repurchase Agreements
\u2014
\u2014
\u2014
\u2014
Total financial assets
1,083
(246)
(837)
\u2014
Financial liabilities
Derivative financial instruments
254
(246)
(7)
1
Repurchase agreements
602
\u2014
(602)
\u2014
Total financial liabilities
856
(246)
(609)
1
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
For derivative financial assets, collateral received can be in the form of cash and UK Government investment securities.
Where cash is received, it is included as a liability within Deposits from banks (note 24). Where UK Government investment
securities are received, these are not recognised on the Balance Sheet, as the Group does not obtain the risks and rewards
of ownership.
For derivative financial liabilities, collateral paid is in the form of cash and is included as an asset in Loans and advances to
credit institutions.
For sale and repurchase agreements (repos), collateral provided is predominantly in UK Government investment securities
with the remainder in cash. Again, cash paid is included as an asset in Loans and advances to credit institutions.
UK Government investment securities are not derecognised as the Group retains substantially all the risks and rewards of
ownership.
Cash collateral held and cash collateral pledged are not restricted and are returned at the end of the contract.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-416": { "value": "
Shares and customer accounts
The fair value of shares and customer accounts available on demand approximates to the carrying value. The fair value of
fixed term or restricted access deposits is determined from the estimated projected cash flows discounted at the current
market rates for those types of deposit. The estimated fair value of deposits with no stated maturity, which includes non-
interest bearing deposits, is the amount repayable on demand. Hedge accounting fair value adjustments to the share
balance of \u00a325 million increase (31 December 2024: \u00a318 million) are excluded from the carrying value and fair value. Hedge
accounting fair value adjustments to customer accounts of \u00a322 million increase (31 December 2024: \u00a3nil) are excluded from
the carrying value and fair value.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepositsFromCustomersExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-417": { "value": "
Financial instruments recorded at fair value
The determination of fair value for financial instruments that are recorded at fair value using valuation techniques is
described below, including the assumptions that a market participant would be expected to make when valuing the
instruments:
Level 1: Debt securities \u2013 fair value through other comprehensive income \u2013 Listed
Market prices have been used to determine the fair value of listed debt securities.
Level 1: Investment in equity shares \u2013 fair value through profit and loss \u2013 Listed
Market prices have been used to determine the fair value of listed equity shares.
Level 2: Derivatives
Derivative products utilise observable market inputs for interest rate swaps and cross currency swaps. Valuations are
generated by swap models which use present value calculations and incorporate assumptions for interest rate curves and
foreign exchange spot and forward rates.
Level 2: Loans with Group undertakings - Unlisted
This reflects a back-to-back arrangement between the Society and the Bank in respect of listed debt securities in issue and
subordinated liabilities, market prices of the these instruments have been used to to determine the fair value.
Level 2 - Debt securities - fair value through other comprehensive income - Unlisted
Where quoted market prices are not available at the valuation date, valuations of securities are based on their relative
value to comparable securities.
Level 2 - Debt securities in issue - fair value through profit and loss - Listed
Market prices have been used to determine the fair value of listed debt securities in issue.
Level 2 - Subordinated liabilities - Listed
Market prices have been used to determine the fair value of listed subordinated liabilities.
Level 3 - Debt securities - Unlisted
Represents a 5% risk retention holding of residual certificates issued by Warwick Finance Residential Mortgages Number
Three plc. The remaining 95% is privately held, therefore there is no available market prices. An in-house model is used
that sources independent market data for disclosure purposes only.
Level 3: Investment in equity shares \u2013 fair value through profit and loss \u2013 Unlisted
The Group has a small balance of investments in equity shares, including a residual holding in Visa Inc. shares. These shares
are valued based on future cash consideration which the Group expects to receive on sale of these instruments, or the
underlying market value.
33. Financial instruments \u2013 fair value of financial assets and liabilities
continued
Financial instruments recorded at fair value continued
Level 3: Derivatives
The item included within Level 3 is a balance tracking swap, which remained in place during the year. It is valued using
present value calculations based on market interest rate curves. The unobservable inputs relate to the projection of the
swap notional amount, which changes over time to match the balance of the underlying mortgage portfolio. Projected
mortgage prepayment amounts are used in the modelling of the mortgage portfolio profile. The changes in the projection of
interest and prepayment rates of the underlying mortgage portfolio affect both the unbounded swap and hedged item so
that the net Income Statement and Balance Sheet impact would be minimal.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsDesignatedAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-419": { "value": "
34. Offsetting financial assets and liabilities
The Group and Society do not have any financial assets or financial liabilities that are offset with the net amount presented
in the Balance Sheets. IAS 32 Financial Instruments: Presentation states that there should be both an enforceable right to
set-off and the intention either to settle on a net basis or to realise the asset and settle the liability simultaneously to
apply this treatment, and neither of these conditions is met.
The Group has entered into master netting arrangements such as International Swaps and Derivatives Association (ISDA)
master agreements for its derivatives, other than derivatives held by Coventry Building Society Covered Bonds LLP.
Credit Support Annexes (CSAs) are executed in conjunction with these ISDA master agreements, which typically provide for
the exchange of collateral to mitigate net mark-to-market credit exposure.
The Group has also entered into Global Master Repurchase Agreements, including margin collateralisation arrangements,
whereby outstanding transactions with the same counterparty can be settled net following a default or other
predetermined event.
Coventry Building Society Covered Bonds LLP does not enter into a master netting agreement due to the structure of the
covered bond programme. However, it has entered into a separate ISDA agreement in respect of each of the derivatives it
has transacted with external counterparties. Each agreement includes a CSA which provides for full collateralisation of the
swap exposure, with exposure thresholds in place for a single agreement before collateral is exchanged. The \u00a335 million net
derivative credit exposure in the table below is in respect of an arrangement that will only be fully collateralised if the
counterparty is downgraded to below its specified credit rating (2024: \u00a32 million).
The table below shows the net exposure for sale and repurchase agreements or derivative contracts after any netting
benefits and collateral. At the end of the year the Group did not hold any reverse sale and repurchase agreements with
respect to Gilts (2024: \u00a3nil), with \u00a32,015 million of sale and repurchase agreements being held on the balance sheet as at
31 December 2025 (2024: \u00a3602 million). The Group did not enter into securities lending (2024: \u00a3nil) during the year.
2025
Group
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net amount
\u00a3m
Financial assets
Derivative financial instruments
533
(309)
(189)
35
Reverse Repurchase Agreements
\u2014
\u2014
\u2014
\u2014
Total financial assets
533
(309)
(189)
35
Financial liabilities
Derivative financial instruments
320
(309)
(1)
10
Repurchase agreements
2,015
\u2014
(2,015)
\u2014
Total financial liabilities
2,335
(309)
(2,016)
10
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
2025
Society
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net amount
\u00a3m
Financial assets
Derivative financial instruments
424
(251)
(172)
1
Reverse Repurchase Agreements
250
\u2014
(250)
\u2014
Total financial assets
674
(251)
(422)
1
Financial liabilities
Derivative financial instruments
252
(251)
(1)
\u2014
Repurchase agreements
1,358
\u2014
(1,358)
\u2014
Total financial liabilities
1,610
(251)
(1,359)
\u2014
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
34. Offsetting financial assets and liabilities continued
2024
Group
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net amount
\u00a3m
Financial assets
Derivative financial instruments
1,084
(245)
(837)
2
Reverse Repurchase Agreements
\u2014
\u2014
\u2014
\u2014
Total financial assets
1,084
(245)
(837)
2
Financial liabilities
Derivative financial instruments
305
(245)
(7)
53
Repurchase agreements
602
\u2014
(602)
\u2014
Total financial liabilities
907
(245)
(609)
53
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
2024
Society
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net
amount
\u00a3m
Financial assets
Derivative financial instruments
1,083
(246)
(837)
\u2014
Reverse Repurchase Agreements
\u2014
\u2014
\u2014
\u2014
Total financial assets
1,083
(246)
(837)
\u2014
Financial liabilities
Derivative financial instruments
254
(246)
(7)
1
Repurchase agreements
602
\u2014
(602)
\u2014
Total financial liabilities
856
(246)
(609)
1
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
For derivative financial assets, collateral received can be in the form of cash and UK Government investment securities.
Where cash is received, it is included as a liability within Deposits from banks (note 24). Where UK Government investment
securities are received, these are not recognised on the Balance Sheet, as the Group does not obtain the risks and rewards
of ownership.
For derivative financial liabilities, collateral paid is in the form of cash and is included as an asset in Loans and advances to
credit institutions.
For sale and repurchase agreements (repos), collateral provided is predominantly in UK Government investment securities
with the remainder in cash. Again, cash paid is included as an asset in Loans and advances to credit institutions.
UK Government investment securities are not derecognised as the Group retains substantially all the risks and rewards of
ownership.
Cash collateral held and cash collateral pledged are not restricted and are returned at the end of the contract.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-418": { "value": "
34. Offsetting financial assets and liabilities
The Group and Society do not have any financial assets or financial liabilities that are offset with the net amount presented
in the Balance Sheets. IAS 32 Financial Instruments: Presentation states that there should be both an enforceable right to
set-off and the intention either to settle on a net basis or to realise the asset and settle the liability simultaneously to
apply this treatment, and neither of these conditions is met.
The Group has entered into master netting arrangements such as International Swaps and Derivatives Association (ISDA)
master agreements for its derivatives, other than derivatives held by Coventry Building Society Covered Bonds LLP.
Credit Support Annexes (CSAs) are executed in conjunction with these ISDA master agreements, which typically provide for
the exchange of collateral to mitigate net mark-to-market credit exposure.
The Group has also entered into Global Master Repurchase Agreements, including margin collateralisation arrangements,
whereby outstanding transactions with the same counterparty can be settled net following a default or other
predetermined event.
Coventry Building Society Covered Bonds LLP does not enter into a master netting agreement due to the structure of the
covered bond programme. However, it has entered into a separate ISDA agreement in respect of each of the derivatives it
has transacted with external counterparties. Each agreement includes a CSA which provides for full collateralisation of the
swap exposure, with exposure thresholds in place for a single agreement before collateral is exchanged. The \u00a335 million net
derivative credit exposure in the table below is in respect of an arrangement that will only be fully collateralised if the
counterparty is downgraded to below its specified credit rating (2024: \u00a32 million).
The table below shows the net exposure for sale and repurchase agreements or derivative contracts after any netting
benefits and collateral. At the end of the year the Group did not hold any reverse sale and repurchase agreements with
respect to Gilts (2024: \u00a3nil), with \u00a32,015 million of sale and repurchase agreements being held on the balance sheet as at
31 December 2025 (2024: \u00a3602 million). The Group did not enter into securities lending (2024: \u00a3nil) during the year.
2025
Group
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net amount
\u00a3m
Financial assets
Derivative financial instruments
533
(309)
(189)
35
Reverse Repurchase Agreements
\u2014
\u2014
\u2014
\u2014
Total financial assets
533
(309)
(189)
35
Financial liabilities
Derivative financial instruments
320
(309)
(1)
10
Repurchase agreements
2,015
\u2014
(2,015)
\u2014
Total financial liabilities
2,335
(309)
(2,016)
10
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
2025
Society
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net amount
\u00a3m
Financial assets
Derivative financial instruments
424
(251)
(172)
1
Reverse Repurchase Agreements
250
\u2014
(250)
\u2014
Total financial assets
674
(251)
(422)
1
Financial liabilities
Derivative financial instruments
252
(251)
(1)
\u2014
Repurchase agreements
1,358
\u2014
(1,358)
\u2014
Total financial liabilities
1,610
(251)
(1,359)
\u2014
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
34. Offsetting financial assets and liabilities continued
2024
Group
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net amount
\u00a3m
Financial assets
Derivative financial instruments
1,084
(245)
(837)
2
Reverse Repurchase Agreements
\u2014
\u2014
\u2014
\u2014
Total financial assets
1,084
(245)
(837)
2
Financial liabilities
Derivative financial instruments
305
(245)
(7)
53
Repurchase agreements
602
\u2014
(602)
\u2014
Total financial liabilities
907
(245)
(609)
53
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
2024
Society
Gross amounts
\u00a3m
Master netting
arrangements
\u00a3m
Financial
collateral1
\u00a3m
Net
amount
\u00a3m
Financial assets
Derivative financial instruments
1,083
(246)
(837)
\u2014
Reverse Repurchase Agreements
\u2014
\u2014
\u2014
\u2014
Total financial assets
1,083
(246)
(837)
\u2014
Financial liabilities
Derivative financial instruments
254
(246)
(7)
1
Repurchase agreements
602
\u2014
(602)
\u2014
Total financial liabilities
856
(246)
(609)
1
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
For derivative financial assets, collateral received can be in the form of cash and UK Government investment securities.
Where cash is received, it is included as a liability within Deposits from banks (note 24). Where UK Government investment
securities are received, these are not recognised on the Balance Sheet, as the Group does not obtain the risks and rewards
of ownership.
For derivative financial liabilities, collateral paid is in the form of cash and is included as an asset in Loans and advances to
credit institutions.
For sale and repurchase agreements (repos), collateral provided is predominantly in UK Government investment securities
with the remainder in cash. Again, cash paid is included as an asset in Loans and advances to credit institutions.
UK Government investment securities are not derecognised as the Group retains substantially all the risks and rewards of
ownership.
Cash collateral held and cash collateral pledged are not restricted and are returned at the end of the contract.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-420": { "value": "
35. Capital management
As at 31 December 2025, and throughout the year, the Group complied in full with the capital requirements that were in
force. Further information on the Group's capital resources and capital management can be found in the Capital risk section
of the Risk Management Report.
", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-422": { "value": "
36. Related party transactions
The Group is controlled by Coventry Building Society registered in England and Wales, which is also considered to be the
ultimate parent.
Transactions with related undertakings
Transactions are entered into with related parties in the normal course of business. These include loans, deposits, and the
payment and recharge of interest and administrative expenses. Where these charges are associated to Group subsidiaries,
they are settled through the intercompany accounts.
Interest on outstanding loans and deposits accrues at a rate agreed between the Society and its subsidiaries in the normal
course of business.
Loans and deposits payable by the Society to Group undertakings relate to amounts owing to the Society's structured
entities, in accordance with the accounting policy set out in note 1. These intercompany balances have been presented
within Other liabilities on the Society Balance Sheet.
2025
\u00a3m
2024
\u00a3m
Loans payable to the Society
Loans outstanding as at 1 January
17,583
17,668
Movement during the year
1,879
(85)
Loans outstanding as at 31 December
19,462
17,583
Loans and deposits payable by the Society
Deposits outstanding at 1 January
1,546
1,231
Movement during the year1
125
315
Deposits outstanding at 31 December
1,671
1,546
Net interest income
Interest receivable
546
555
Interest payable
(119)
(128)
Total
427
427
Other income and expenses
Fees and expenses paid to the Society
53
52
1. Includes loans and deposits received from connected undertakings in respect of securitisation transactions during the year
Transactions with key management
Transactions with key management are on the same terms and conditions applicable to members and other employees
within the Group. The Board of directors is considered to be the only 'key management' for the purposes of the related
party transactions disclosures under IAS 24 Related Party Disclosures. No director has any interest in the shares or
debentures of any connected undertaking of the Society. See the Directors\u2019 Remuneration Report in the Governance section
for information on directors\u2019 remuneration for 2025.
In accordance with Section 68 of the Building Societies Act 1986, the Society maintains a register of loans falling within
Section 65 made to directors and connected persons. A statement containing requisite particulars of such transactions may
be inspected by members at the Society's Annual General Meeting (AGM) or at the Principal Office of the Society during the
period 15 days prior to the AGM.
No. of directors
and persons
connected to them
Amount in relation
to directors and
persons connected
to them
No. of directors
and persons
connected to them
Amount in relation
to directors and
persons connected
to them
2025
Number
2025
\u00a3m
2024
Number
2024
\u00a3m
Loans and advances
Net movement
\u2014
\u2014
\u2014
(0.1)
Balance outstanding
2
0.3
2
0.3
Share and deposit accounts
Net movement
3
0.1
1
\u2014
Balance outstanding
16
0.5
13
0.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-421": { "value": "
36. Related party transactions
The Group is controlled by Coventry Building Society registered in England and Wales, which is also considered to be the
ultimate parent.
Transactions with related undertakings
Transactions are entered into with related parties in the normal course of business. These include loans, deposits, and the
payment and recharge of interest and administrative expenses. Where these charges are associated to Group subsidiaries,
they are settled through the intercompany accounts.
Interest on outstanding loans and deposits accrues at a rate agreed between the Society and its subsidiaries in the normal
course of business.
Loans and deposits payable by the Society to Group undertakings relate to amounts owing to the Society's structured
entities, in accordance with the accounting policy set out in note 1. These intercompany balances have been presented
within Other liabilities on the Society Balance Sheet.
2025
\u00a3m
2024
\u00a3m
Loans payable to the Society
Loans outstanding as at 1 January
17,583
17,668
Movement during the year
1,879
(85)
Loans outstanding as at 31 December
19,462
17,583
Loans and deposits payable by the Society
Deposits outstanding at 1 January
1,546
1,231
Movement during the year1
125
315
Deposits outstanding at 31 December
1,671
1,546
Net interest income
Interest receivable
546
555
Interest payable
(119)
(128)
Total
427
427
Other income and expenses
Fees and expenses paid to the Society
53
52
1. Includes loans and deposits received from connected undertakings in respect of securitisation transactions during the year
Transactions with key management
Transactions with key management are on the same terms and conditions applicable to members and other employees
within the Group. The Board of directors is considered to be the only 'key management' for the purposes of the related
party transactions disclosures under IAS 24 Related Party Disclosures. No director has any interest in the shares or
debentures of any connected undertaking of the Society. See the Directors\u2019 Remuneration Report in the Governance section
for information on directors\u2019 remuneration for 2025.
In accordance with Section 68 of the Building Societies Act 1986, the Society maintains a register of loans falling within
Section 65 made to directors and connected persons. A statement containing requisite particulars of such transactions may
be inspected by members at the Society's Annual General Meeting (AGM) or at the Principal Office of the Society during the
period 15 days prior to the AGM.
No. of directors
and persons
connected to them
Amount in relation
to directors and
persons connected
to them
No. of directors
and persons
connected to them
Amount in relation
to directors and
persons connected
to them
2025
Number
2025
\u00a3m
2024
Number
2024
\u00a3m
Loans and advances
Net movement
\u2014
\u2014
\u2014
(0.1)
Balance outstanding
2
0.3
2
0.3
Share and deposit accounts
Net movement
3
0.1
1
\u2014
Balance outstanding
16
0.5
13
0.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfTransactionsBetweenRelatedPartiesExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-423": { "value": "Coventry Building Society", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-424": { "value": "Coventry Building Society", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-425": { "value": "Coventry Building Society", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-426": { "value": "England and Wales", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-427": { "value": "
Transactions with key management
Transactions with key management are on the same terms and conditions applicable to members and other employees
within the Group. The Board of directors is considered to be the only 'key management' for the purposes of the related
party transactions disclosures under IAS 24 Related Party Disclosures. No director has any interest in the shares or
debentures of any connected undertaking of the Society. See the Directors\u2019 Remuneration Report in the Governance section
for information on directors\u2019 remuneration for 2025.
In accordance with Section 68 of the Building Societies Act 1986, the Society maintains a register of loans falling within
Section 65 made to directors and connected persons. A statement containing requisite particulars of such transactions may
be inspected by members at the Society's Annual General Meeting (AGM) or at the Principal Office of the Society during the
period 15 days prior to the AGM.
No. of directors
and persons
connected to them
Amount in relation
to directors and
persons connected
to them
No. of directors
and persons
connected to them
Amount in relation
to directors and
persons connected
to them
2025
Number
2025
\u00a3m
2024
Number
2024
\u00a3m
Loans and advances
Net movement
\u2014
\u2014
\u2014
(0.1)
Balance outstanding
2
0.3
2
0.3
Share and deposit accounts
Net movement
3
0.1
1
\u2014
Balance outstanding
16
0.5
13
0.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-428": { "value": "
37. Cash flows from financing activities
For the purposes of the Statements of Cash Flows, debt securities in issue, subordinated liabilities and subscribed capital
are classified as liabilities arising from financing activities. The table below provides a reconciliation of movements in
liabilities arising from financing activities.
Group
2025
\u00a3m
Group
2024
\u00a3m
Society
2025
\u00a3m
Society
2024
\u00a3m
At 1 January
6,600
5,435
4,986
4,153
Recognised on acquisition
1,404
\u2014
\u2014
\u2014
Cash flows:
Net proceeds form issue of debt securities
1,701
1,824
1,201
1,324
Repayment of debt securities in issue
(1,232)
(598)
(850)
(430)
Interest paid on subordinated liabilities
(24)
\u2014
(13)
\u2014
Non-cash flows:
Amortisation of premium/ discount on issue
6
5
6
5
Intercompany transfer
\u2014
\u2014
443
\u2014
Accrued interest movements
12
12
5
12
Change in FVTPL
4
\u2014
4
\u2014
Foreign exchange movements
126
(78)
129
(78)
At 31 December
8,597
6,600
5,911
4,986
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-429": { "value": "
38. The acquisition of The Co-operative Bank Holdings p.l.c.
On 1 January 2025, the Society acquired the entire issued share capital of The Co-operative Bank Holdings p.l.c. (the
ultimate holding company of The Co-operative Bank p.l.c.) for a total cash consideration of \u00a3745 million following receipt
of regulatory approvals.\u00a0
The Bank provides a range of banking products and services to both retail, business and commercial customers. As outlined
further on page 13, the acquisition deepens the enlarged group\u2019s existing presence in mortgages and savings and extends
the Society\u2019s propositions. The Society's Board believes that the acquisition of the Bank was in the best interests of the
Society and its current and future members.
In accordance with IFRS 3, an assessment of the fair value of the net assets acquired and the cash consideration paid has
been completed at the date of acquisition and is detailed below. The 12 month measurement period closed on 31 December
2025 and the fair values on acquisition are concluded.
The consideration was fully settled in cash on completion, subject to a small residual holdback which is payable subject to
satisfactory conclusion of the closing accounts process which is due for conclusion later in 2026. \u00a3125 million of the total
\u00a3745 million cash consideration is deferred and held in escrow for a period of 3 years from completion in line with the
terms of the share purchase agreement.
The fair value of loans and advances to customers of \u00a320,404 million was calculated using a discounted cash flow method,
at an individual account or suitable segmented level taking into account interest, market and credit risk for the acquired
loans. The gross contractual amount of the loans and advances receivable from the customers was \u00a320,476 million. The best
estimate of the amounts not expected to be collected was \u00a329 million.
For other assets and liabilities held at amortised cost, suitable valuation techniques were used to assess fair value.
38. The acquisition of The Co-operative Bank Holdings p.l.c. continued
The main fair value adjustments determined and recognised by the Group on acquisition related to loans and advances to
customers and treasury funding liability instruments. These adjustments are being written down over approximately 2.5
years for loans and advances to customers, representing the weighted average life of the acquired portfolio and over 1 - 4.5
years for the treasury funding liabilities, determined by the relevant maturity date.
Intangible assets recognised on acquisition relate to a core deposit intangible of \u00a3143 million. This relates to the value
derived from access to a stable source of low cost, on-demand deposit balance funding when compared to the cost of
alternative funding available to a typical market participant. The intangible asset represents the present value of the cost
savings expected to be realised over the expected remaining useful life of the deposits and is being amortised over a life of
five years.
Deferred tax at the rate of 28% has been recognised on all fair value adjustments arising.
Since 1 January 2025 (the date representing both the acquisition date and the start of the financial year), total income of
\u00a3496 million and profit after tax of \u00a349 million (excluding the gain on acquisition) has been included in the consolidated
Income Statement for the year.
Gain on acquisition
As the fair value of the identifiable net assets acquired were greater than the fair value of consideration paid, negative
goodwill arises. For accounting purposes, this is considered a bargain purchase. The acquisition has resulted in a gain on
acquisition of \u00a3584 million which is recognised and presented separately in the consolidated Income Statement as at the
acquisition date. The purchase of the Bank resulted in a gain due to the macroeconomic conditions in the post financial
crisis period and the surplus liquidity positions held by market participants, like the Society. Therefore the Society is in a
better position to realise the fair value of the net assets acquired compared with the Seller.
Acquisition costs
Acquisition costs of \u00a328 million have been incurred by the Society in relation to the acquisition. Of this, \u00a322 million was
recognised within acquisition and integration-related costs in the financial year ended 31 December 2024. A further \u00a36
million of costs arose on completion in the 2025 reporting period.
Net cash on acquisition
On acquisition of the Bank, the Group acquired \u00a32,586 million of cash balances. This was offset by the consideration paid of
\u00a3745 million, resulting in a net cash inflow of \u00a31,841 million.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-430": { "value": "Coventry Building Society is a building society", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-431": { "value": "United Kingdom", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-432": { "value": "United Kingdom", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "f-433": { "value": "Coventry House, Harry Weston Road, Binley, Coventry CV3 2TQ", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:2138004G59FXEAZ6IO10", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } } } }