Page | 2 Annual Report & Accounts 2025 Nottingham Building Society

Key Highlights

6,668

New mortgage

customers

£4.3

Total mortgage

assets

Delivering a resilient performance

while strengthening our f

oundations

for sustainable, long‑term growth

1.62%

Net interest

margin

bps

ECL

coverage ratio

(2024:

12bps)

In 2025, we maintained excellent

member service, whilst moderating

lending to focus on investment and

strengthen resilience for future growth

64.3%

Net promoter

score

£4.6

Total

savings

balance

Delivering increased value for our

members, with higher savings

balances and greater interest paid

throughout the year

3,938

hrs

Colleague

volunteering

£16.7

Profit before tax

(2024: £13.9m)

£20.9

Underlying profit

before tax

Another record year of giving back,

as colleagues continued to increase

their volunteering commitment

across our communities

14.1%

5.1%

236%

Positive movement

Adverse movement

Stable

CET1 ratio

Leverage ratio

Average LCR

(2024: 13.7%)

(2024: 4.9%)

(2024: 172%)

4.8

Trustpilot

Score

£883m

Gross new lending

(2024: £1,215m)

£164.3m

Total interest paid to

savers

(2024: £154.6m)

Page | 3 Annual Report & Accounts 2025 Nottingham Building Society

Contents

Chair’s Statement

Chief Executive’s Review

Strategic Report

Stakeholder Engagement Report

Corporate Responsibility Report

Sustainability Report

Your Board of Directors

Directors’ Report

Nomination Committee Report

Risk Management Report

Board Risk Committee Report

Corporate Governance Report

Board Audit Committee Report

Directors’ Remuneration Report

Independent Auditor’s Report

Income Statements

Statements of Comprehensive Income

Statements of Financial Position

Statements of Changes in Members’ Interests

Cash Flow Statements

Notes to the Accounts

Annual Business Statement

Glossary

Page | 4 Annual Report & Accounts 2025 Nottingham Building Society

Chair’s Statement

Chairman’s Introduction 2025

2025 has been a year of consolidation and intentional enhancement for

Nottingham Building Society (“NBS” or “the Society”) as we continued to embed

the foundations laid in recent years. Against this backdrop, I am pleased to

introduce the Annual Report and Accounts for the year ended 2025.

In 2026, focus moves from strengthening our core foundations to preparing the

organisation for growth.

Staying resilient amid shifting global tides

During 2025, global uncertainty increased as markets responded to new US

administration policies and tariff developments as well as ongoing wars which

played out both physically and technologically. Domestically, the 2025 Autumn

Budget added further unpredictability, contributing to a more subdued mortgage

market.

Despite these challenges, NBS delivered a resilient performance, with total assets

reaching £5.4bn. Entering the year on the back of two consecutive years of strong

double-digit growth, the Society targeted lower levels of lending in 2025. This has

allowed us to consolidate the substantial technology and service investments

made to date, ensuring we remain well positioned for sustainable, long-term

growth.

During 2025, we operated in a highly competitive savings market, with funding

costs continuing to reprice and mortgage demand remaining subdued. Against

that backdrop, we remained disciplined in managing margins, so that we could

reward savers fairly while ensuring our lending remained responsible and

sustainable for borrowers. In practice, this meant continuing to offer

competitive savings rates and a secure home for members’ deposits, while

applying prudent pricing and underwriting standards across our mortgage

book. The strength of this approach is evident in our exceptionally low arrears

levels, underpinned by the resilience of our members and the care we take in

lending decisions.

We also remained mindful of the need to manage our capital prudently, and our

disciplined approach this year reflects the importance of protecting our capital

buffers whilst investing in core capabilities and maintaining strategic momentum.

Alongside navigating the external pressures, we continued to progress the long-

term improvements that will define the Society we aim to be in the years ahead.

Building the modern mutual our members deserve

Putting members first remains central to our role as a mutual. Throughout 2025,

we continued to embed the Financial Conduct Authority’s Consumer Duty

requirements across our governance, culture, and decision-making. Our

commitment to delivering good outcomes for savers and borrowers is

unwavering.

To achieve that, our focus moved towards building on and maintaining a robust,

secure, and flexible operating model that is essential for the future of the Society.

Throughout the year, the Board oversaw major investment in NBS’s cyber

security, resilience and core banking capability. Good progress was made in 2025

and will continue in 2026 in upgrading our core banking platform and laying the

foundations for our future cloud and data architecture.

Alongside this, we continued the rollout of our refreshed brand identity, following

its launch in late 2024. The opening of our flagship branch on Clumber Street, the

busiest high street in Nottingham, and the rebranding of branches in St Albans,

Arnold, and West Bridgford has strengthened our presence on the high street and

supported increased recognition across our digital estate. The process of

rebranding our branches will continue in 2026, starting with our branches in North

Hykeham and Mansfield, and beyond.

Much of the work we have undertaken this year ensures we have the agility,

resilience, and capability required to achieve that and to operate successfully in a

sector undergoing rapid change and a period of consolidation.

Lastly, we also continued supporting members affected by the Philips Trust

Corporation (‘PTC’), working closely with the administrators as the process enters

its final stages.

Making a measurable difference in our communities

Whilst much of our transformation has focused on strengthening our foundations,

our purpose as a mutual extends far beyond systems and processes. I am proud

of the meaningful difference NBS continued to make in our communities in 2025.

Our ongoing partnerships with Emmanuel House, Shelter, and ThinkForward

reflect our commitment to tackling homelessness, improving social mobility, and

supporting young people across Nottinghamshire.

Colleague volunteering reached 3,938 hours, reflecting another record-breaking

year. Within the Society, engagement scores remained resilient, demonstrating

the passion and dedication our colleagues bring to their roles. We were also

delighted that the Society was shortlisted for the Community Impact Award at

the East Midlands Business of the Year Awards in October 2025, a recognition

that belongs entirely to our colleagues and the lengths they have gone to in order

to make an impact for our members and wider communities.

Looking ahead with confidence and caution, but also purpose

As we look to 2026 and beyond, the Board recognises the need for optionality

and the ability to respond at pace as opportunities and challenges emerge whilst

also retaining a real focus on the strategy.

The outlook for the mutual sector remains encouraging, and we are working

closely with the Building Societies Association (‘BSA’) in terms of the government

agenda to double the size of the mutual sector. There are tailwinds which also

make us optimistic with strong housing demand and growing consumer

appreciation of the value mutuals offer.

Further to this, we welcomed the joint statement from the Financial Conduct

Authority (‘FCA’) and Prudential Regulation Authority (‘PRA’) outlining their

commitment to doubling the size of the mutuals sector and introducing

measures to support long-term growth. Initiatives such as the new FCA Scale-

up Unit and the Mutual Societies Development Unit, alongside broader

simplification of the prudential framework, signal a more supportive policy

environment for building societies. This regulatory direction aligns strongly

with our purpose and reinforces the role mutuals play in promoting financial

resilience, inclusion and consumer trust.

However, we are not immune to the challenges ahead, which include evolving

regulatory requirements. This includes the introduction of the new Small

Domestic Deposit Taker (‘SDDT’) framework by the PRA and Bank of England

(‘BoE’), designed to simplify the prudential regime for small domestic deposit

takers, ahead of the wider capital regime coming into effect in January 2027.

These developments, together with heightened cyber risks, the pace of

technological change, and increased competition, require continued vigilance

and an ability to keep pace with evolving expectations. Government-led efforts

to stimulate growth may also accelerate competitive activity across the

mortgage market.

The Board remains focused on steering the Society through these pressures with

prudence and clarity of purpose. We will continue advocating for regulation that

reflects the size and risk profile of building societies, enabling us to invest

confidently in innovation and service.

This was my first full year as Chair, and I would like to finish by acknowledging

the continued professionalism and commitment of our colleagues. Their

dedication to our members throughout a period of significant change reflects

the very best of our mutual values. I also extend our thanks to Simon Linares,

who stepped down from the Board in November after six years, and wish him

well for the future. We were pleased to welcome Chris Sparks as Chair of Board

Risk Committee (‘BRC’) and Clodagh Gunnigle as Chair of the Remuneration

Committee (‘RemCo’) during the year. Their extensive banking, risk,

transformation, and people leadership expertise further strengthens our Board

for the future.

I also announce that Anthony Murphy has decided to step down as Chief

Financial Officer to spend more time with his family in Ireland. He will leave the

Board and the Society in May 2026. The process to appoint his successor is

under way, with an update to follow in due course. On behalf of the Board, I

would like to thank Anthony for his notable contribution. The Society he leaves

behind is stronger and better positioned to achieve sustainable, long-term

growth for our members both today and in the future.

To conclude, on behalf of the Board, I would like to thank our members for their

continued loyalty and trust in NBS. As Chair, I remain committed to ensuring our

members stay at the heart of our Society and at the forefront of every decision

we make.

Robin Ashton

Chair

March 2026

Page | 5 Annual Report & Accounts 2025 Nottingham Building Society

Chief Executive’s Review

Chief Executive’s Review 2025

I would like to start by recognising and thanking our fantastic colleagues,

whose commitment and hard work has been central to everything we have

achieved this year.

I am proud of the way they have supported our members through a period

of significant operational and technological change. I would also like to thank

our three hundred thousand members for their loyalty and trust, and

acknowledge the contribution of our valued partners, particularly all of our

mortgage intermediaries, Gen H, and MQube, who all played a vital role in

helping homebuyers secure the funding they need.

I am also proud of the Executive and Leadership team and the teams they

lead in terms of what they are delivering for all of our members on our

transformation journey. In terms of the Executive, we said farewell to Paul

Howley who has led much of our transformation and Praven Subbramoney

who led our lending business.

During the year, we welcomed Russ Thornton who has immense technology

delivery capability and Aaron Shinwell who has picked up the mantle of

delivering to our future lending segments. In addition, we saw Harriet

Guevara move to leading our savings offering and Sally Gaudion to lead

customer and operational resilience.

We welcomed Riaan Thiart as our new Head of Audit which is a strategically

important role to ensure we are robust and thorough in assessing all of our

key risks. He and the new audit team are a significant support to the delivery

of our agenda and holding us all to account.

I would like to thank Anthony Murphy for his significant contribution. During

his time, we achieved strong profitable growth, significantly enhanced the

rigour and quality of our financial management and regulatory reporting, and

established our partnership with Gen H. We also delivered our inaugural

public Residential Mortgage‑Backed Securitisation (‘RMBS’) issuance, a

landmark transaction that demonstrated the increasing sophistication of our

treasury capabilities. I have greatly valued our close working relationship and

wish Anthony the very best for the future.

Finally, thank you to our Board for their continued stewardship, advice, and

support.

A look back at a year of consolidation, discipline, and delivery

2025 has been a year of deliberate consolidation for the Society, following

two years of strong double‑digit growth. We made a conscious decision to

moderate lending while continuing to prioritise substantial investments in

our technology, systems, processes, and capabilities to strengthen

long‑term resilience and enhance our operating foundations.

This ongoing programme builds on the transformation of recent years and

ensures the Society is prepared for its next phase of purposeful innovation

and sustainable growth. The pricing of new lending has reflected the

increasingly specialist nature of our proposition, and the new capability will

enable us to scale this further. Despite the conscious decision to curtail

growth, the Society has delivered a robust set of results, with statutory

profit before tax increasing to £16.7m (2024: £13.9m).

Consolidation with intent

Concluding this year of consolidation marks the natural next phase of the

strategy, where the focus moves from building core foundations to preparing

the organisation for a further period of purposeful innovation and growth and

the next stage of our evolution as a specialist residential lender. The focus on

consolidation shaped every aspect of our activity during the year, particularly

across our lending business.

Lending with purpose as we navigated turbulence and embedded

transformation

As we strengthened our technology and foundations, we also continued to

move towards the specialist lending segments that sit at the heart of our long-

term strategy, particularly our Extra Ordinary Borrowers (“EOBs”).

Operating in a volatile environment

The external environment this year presented significant challenges. Global

markets reacted unpredictably to policy shifts from the new US

administration, including tariff developments, whilst in the UK, the 2025

Budget in November contributed to more cautious borrowing and subdued

activity in the mortgage market.

The growing threat of cyber-attacks represents significant challenges across all

sectors and continents, and we should all expect this to increase. We need to

continue to ensure we are as prepared as possible to deal with that threat, with

significant focus put on maintaining our operational resilience capabilities. At

some point, all organisations can expect to be impacted and their ability to

respond and recover is one of the most important things any organisation can

prepare for.

Even with this heightened level of uncertainty and the need to put additional

emphasis on our foundations, our core principles remained unchanged,

and we remained firmly focused on delivering strong member service and offering

great value products.

Embedding capability to support specialist lending

In 2025, we report that new mortgage lending totalled £0.9bn, compared to

£1.2bn in 2024. This deliberate reduction enabled us to implement, embed, and

start to scale a new mortgage platform, delivered in partnership with MQube,

which supported nearly half of our residential lending in December 2025. We are

proud to be the first building society to have partnered with MQube to bring this

technology to the intermediary market.

The new mortgage platform has already started to transform our lending service

with significantly shorter time to offer a mortgage. For brokers, the new platform

represents a step change. The platform allows us to respond more quickly to

market needs, supporting increased capacity without increasing cost-to-serve,

and the delivery of smarter, more personalised mortgage options for a wider

range of members. The integrated Artificial Intelligence (‘AI’) allows us to analyse

documents efficiently, enabling lending decisions and supporting more difficult

lending cases. Further steps are being taken to enhance this with new decisioning

capability and to scale further in 2026, with key integrations taking place to further

enhance the service we deliver to our intermediary partners.

Building momentum in specialist markets

Our aim for 2026 is to build further momentum and impact in these specialist

segments, increasing our market share whilst maintaining a responsible and

sustainable approach that has differentiated our lending to date. The progress we

have made in specialist lending, even prior to the new capability being delivered,

reinforces our belief in the long-term opportunity these borrowers and

intermediaries represent.

We continued to develop and grow our specialist lending proposition through our

partnership with Gen H. To date, this partnership has resulted in the creation of

over 5,000 new homeowners funded by approximately £1.0 billion of forward-

flow funding. We will also consider further inorganic partnerships in 2026 to

support our growth.

Our mortgage book performed strongly throughout the year, with strong margins

in new business and arrears levels remaining exceptionally low. These outcomes

reinforce our confidence that we can continue to outperform peers in the markets

where we choose to compete.

A standout year for savings performance

Strength in our mortgage performance was matched by continued momentum

across our savings franchise. Savings performance remained robust, with total

interest paid to savers reaching £164.3m, compared to £154.6m in 2024.

Strengthening our funding and resilience

We successfully navigated intense funding competition in the market following

the industry-wide repayment of the Term Funding Scheme with additional

incentives for Small and Medium sized Enterprises (‘TFSME’). Leveraging our

debut Public RMBS, we secured £350m of additional funding, which enabled us to

complete the repayment of our own TFSME facilities whilst managing margin

pressure responsibly. This transaction demonstrates our growing sophistication in

funding and further diversifies our funding base.

Delivering value and choice for savers

During the first half of 2025, we delivered a record Individual Savings Account

(‘ISA’) season. We delivered more than double the figure recorded in 2024,

generating £80 million Fixed ISA deposits in the month of April (2024: £38m). This

represents an incredible effort across both our branch and digital channels.

Our work this year also reinforced the importance of deepening relationships

across both savings and mortgage members, something we will continue to focus

on as part of our long-term member strategy.

Page | 6 Annual Report & Accounts 2025 Nottingham Building Society

Chief Executive’s Review

Throughout 2025, we lobbied against proposed Cash ISA reforms. After two

delays earlier in the year, the Government made the decision to reduce the

annual tax-free Cash ISA allowance from £20,000 to £12,000 from April 2027

for the under 65s. This was a significant development for both savers and

lenders. Whilst we recognise the ambition to encourage a stronger

investment culture in the UK, our view remains that this should not come at

the expense of saver choice or financial confidence. Cash ISAs continue to

play a vital role for millions of households as a low-risk way to build financial

resilience, highlighted by the fact that our data showed us that two-thirds of

our own Cash ISA members had used the full £20,000 allowance last year.

We will continue to engage constructively with government and industry to

ensure that the interests of savers are fully reflected in future decisions, and

to advocate for a framework that supports both long-term financial wellbeing

and the strength of the mutual sector.

On the point of optionality, we know passbooks are valued by our members.

We also understand that the ability to see balances online is important, so we

have built the capability to have both – both physical and digital passbooks.

We began the process of implementing this at the end of 2025 and will

continue to roll this out to all members over the coming months. As a building

society, we’re committed to what our members value most. Our members

want passbooks, and we will continue to support that by offering all types.

More recently, we were pleased to be selected as part of the first cohort of

the Prudential Regulation Authority and Financial Conduct Authority’s new

Scale-up Unit. This initiative supports the Government’s wider growth agenda

and reflects the importance of creating the right regulatory conditions for

firms to scale sustainably. For Nottingham Building Society, this aligns closely

with our ambition as a modern mutual to grow at pace while maintaining

strong standards and long-term resilience.

A brand that reflects our ambition

Our brand evolution continued to take shape through 2025, most notably by

opening of our new flagship branch on Clumber Street. This was our first new

branch opening in eight years and marked a significant milestone for us and

our continued investment in the high street. The branch brought our

refreshed new brand to life in a physical and visible way for the first time,

showcasing our ambition to be a modern, accessible, and future-focused

mutual whilst maintaining the roots of our building society heritage. At the

same time, it reaffirmed our deep connection to Nottingham and our

presence in the heart of the city.

Every element of the new branch on Clumber Street was designed using

insight and feedback from the people who use it, reflecting how our members

want to bank today and tomorrow. Following the launch of the Clumber

Street branch, we have since rebranded our branches in St Albans, Arnold,

and West Bridgford, further strengthening our presence across the network.

The process of rolling the new branding out across our branch network will

continue throughout 2026.

Member feedback has been overwhelmingly positive, supported by

consistently strong Trustpilot ratings, while brand awareness continues to

grow across our digital channels and high street footprint, reinforcing our

position as a modern mutual.

Technology foundations that power the future

Underpinning progress across both lending and savings is the continued

transformation of our technology and operating platforms. 2025 was a

pivotal year for embedding our technology investments. We made strong

progress across:

• New mortgage platform and decisioning systems;

• Upgrades to existing systems;

• Resilience and cyber security enhancements;

• New Cloud environment to support innovation and data capability;

• AI adoption across broker and internal processes; and

• Change Excellence, which has now been shortlisted for two national

awards by The Learning Awards and The Learning Excellence Awards.

Taken together, this marks the transition from foundational modernisation to a

more innovation-led phase, where data, cloud capability, and AI will increasingly

shape the way we deliver a first-class service to members and brokers. This will

always be combined with passionate and member led colleagues in order to truly

achieve the best experience for all our members and intermediaries. These

investments are enabling us to operate with greater agility, insight and reliability.

Delivering a service that sets us apart

We were delighted to maintain our excellent 4.8 Trustpilot score from over 5,000

reviews, ensuring we continue to be ranked as one of the highest-rated building

societies on this platform. This reflects the dedication of colleagues across our

branches, digital services, and mortgage teams. Member service remains one of

our strongest differentiators and will continue to be a central focus.

Listening, learning, and improving

One of those differentiators includes the opening of our Colleague and Member

meeting room at our Head Office, a comfortable space for intermediaries,

members and colleagues to share their experiences and support us in our journey

to deliver the best member experience possible.

During 2025, we invited over 80 colleagues and customers into this space to

share their feedback with us directly, all with the aim of further developing and

improving our best-in-class customer experience.

Those strong service standards, especially during periods of transformation,

remain one of our most important differentiators in an increasingly competitive

and fast-moving lending and savings market.

Our ability to deliver for members is only possible because of the people who

bring our strategy to life every day.

Supporting our colleagues

Behind all of this are our colleagues, who are central to the success of our

transformation. As with previous reports, we have highlighted the need to

continue to review the key skills and capabilities we need and to both attract and

retain the right talent to take us through our transformation.

Building capability for the future

This year we invested significantly in building capability across the organisation,

supported by initiatives such as Change Excellence, a people-first, Society-wide

programme designed to equip all our colleagues with the skills, confidence, and

resilience to lead, deliver, and thrive through change.

The step change in the level of investment and focus we are putting on the

development of our colleagues has been marked in 2025 with the outcome being

better delivery for all of our members and a real improvement in our colleague

capability. This investment will continue in 2026 and beyond to ensure we are able

to deliver for our members and Intermediaries and the challenges and

opportunities we face.

Engagement scores remained stable during a period of considerable change. It’s

pleasing to see attrition levels reduce markedly, whilst we continued to see strong

participation in all of our development programmes.

These changes, alongside our shift towards more agile and streamlined ways of

working, ensure we continue to build the capability required for the next phase of

our strategy.

Showing up for our community in meaningful ways

In 2025, we contributed a total of £144,000 into our communities, almost 1% of

our 2024 pre-tax profit, and we’re proud of the positive impact that’s helped us

create together, with our partnerships with Emmanuel House, Shelter, and

ThinkForward continuing to grow this year.

The volunteering hours our colleagues continue to contribute is a reflection of the

Society we are and our commitment to our charity partnerships and communities.

Our branch colleagues gave an astonishing 3,125 hours of volunteer time, more

than ever before and 47% more than 2024. Our branch commitment is to have a

positive, lasting impact in all the local communities we serve.

Alongside our branch teams, colleagues across all locations gave working time to

charities and non-profits, too. 48% of our colleagues gave their working time to

support non-profit organisations, which accumulated to 3,938 hours (2024: 3,522

hours) of volunteer time. We’re proud of the year-on-year growth we’ve seen in

colleague contributions, truly living our mutual ethos and showing up for our local

communities.

Page | 7 Annual Report & Accounts 2025 Nottingham Building Society

Chief Executive’s Review

Scaling our social impact

In 2024, we were proud to be a sponsor of the annual Notts Pride event. We

reaffirmed that commitment to inclusion and community by sponsoring the

event for a second successive year. We also expanded on that by becoming

the lead sponsor of the Belper Pride event for the first time, an initiative that

was driven forward by many of our colleagues in our internal Pride network.

As a culmination of all of our community initiatives, we were proud to be

shortlisted for the Community Impact Award at the East Midlands Business

of the Year Awards in October 2025, and we continued to support young

people through mentoring, events, and insight sessions.

As we look ahead to 2026, we are ambitious to further scale our Social Impact

programmes both through our charity relationships, our branch locations and

by continuing to support colleagues to have a lasting, meaningful impact on

our communities.

Looking to the future

Looking ahead, we expect continued economic uncertainty, including

subdued economic growth forecasts and further impacts from geopolitical

developments. We anticipate additional Bank Rate reductions, which will

require careful management of our Net Interest Margin (‘NIM’).

Our priorities for 2026 include:

• Delivering and scaling our specialist lending proposition and

continuing to increase our savings membership to support this;

• Continuing to improve the experience for members across every

channel;

• Embedding key technology investments;

• Further strengthening our operational resilience; and

• Progressing our data strategy and cloud foundations.

Optionality will remain important as we balance growth, resilience, and pace,

ensuring we can respond quickly to opportunities as the market evolves.

We entered 2026 as a modern mutual with strong delivery momentum and

a fabulous team having delivered significant change and progress. By

remaining disciplined, investing wisely and keeping members at the heart of

our decisions, we are well positioned to achieve sustainable, long-term

growth.

I would like to finish as I started, by thanking our members for their support

and trust, and our colleagues for the exceptional commitment they provide

every day.

Sue Hayes

Chief Executive Officer

March 2026

Page | 8 Annual Report & Accounts 2025 Nottingham Building Society

Strategic Report

Our blueprint for the future

In 2025 we undertook a further full strategic review to ensure the strategy

we set in 2022 was still relevant. It has served us well with sector leading

growth and with increasing financial margins for new mortgage business

however with a changing world we wanted to ensure it was still the right one

for the next few years. We concluded it continues to be the right strategy,

supporting the delivery of the best outcomes for members.

The need for strategic clarity has become more critical in the face of

economic challenges, marked in recent years by higher inflation and interest

rates.

These challenges have been compounded by global instability,

including the ongoing war in Ukraine, as well as the emerging conflict in Iran,

which risks spilling over into a wider regional confrontation. Together, these

developments disrupt supply chains, drive volatility in global energy markets

and intensify wider economic uncertainty.

Building societies are the original purpose‑led financial services

organisations, and our 2025 strategic review reaffirmed the importance of

remaining anchored to that purpose. While the strategy established in 2022

continues to serve us well, redefining and clarifying our purpose ensures we

remain focused and resilient, enabling us to keep delivering meaningful value

for members despite the significant shifts in the economic and geopolitical

landscape

We have continued with our strategic blueprint that consists of three

elements:

• Our purpose - the role we play in our members’ lives;

• Our strategic drivers - what we need to prioritise; and

• Our behaviours - how we all need to operate.

Our purpose

We know home ownership is a life changing milestone, with the potential to

provide happiness, security and opportunity for generations to come. Whilst

we have been helping people buy houses for over 175 years, we know that

home ownership is becoming increasingly difficult for significant parts of the

population and as a Society we want to be there to support people to achieve

this milestone.

We also recognise that treating traditional borrowers in a consistent and fair

way is something that we and the mainstream banks can do well. This has

meant that those audiences are well catered for by mainstream banks who

operate at scale and building societies therefore need to compete on service

and differentiation. We are focused on supporting people who want to buy

their own homes but find it hard to get onto the housing ladder because they

don’t have regular monthly incomes or have hit bumps in the road but are

fundamentally good financial risks. This Extra Ordinary group has grown

significantly over the last few years and so offers a real opportunity for us to

meet the true mutual purpose and to pay our savers appropriate rates for

supplying the funding to help them. As a result, our purpose continues to be:

“Together we fight for the Extra Ordinary to own their own home.”

We define Extra Ordinary as hard-working people with circumstances that

many lenders might view as out of the ordinary - from self-employed

professionals to those who have had a setback in their career or financial

history. We believe this community has a right to be understood and that

their needs and circumstances are known so they can achieve their dream of

owning a home. This is something that is worth us all fighting for and we

commit to going the extra mile to do this.

This purpose lives at the core of our blueprint for the future. To support

delivery of this, we have also given clear direction of what we need to do to

deliver this through our strategic drivers and the behaviours our team needs

to embrace.

Our strategic drivers

To achieve our purpose, our decisions will be driven by these strategic drivers:

• Mighty Foundations - the right foundations for our business are in place. The

processes, governance, people and technology will underpin our Society to

ensure we are strong and resilient now and in the future;

• Extra Ordinary Depth - to help our members and partners including brokers, we

must build a deep and ongoing understanding of them and their circumstances.

A journey of deep listening, learning and adjusting using internal and external

data to help us;

• Purposeful Innovation - we want to create and deliver leading propositions and

member experiences that will support long term sustainable advantage to lead in

these markets and to enable us to deliver our purpose; and

• 10X Allies - we want our allies to be crucial partners who are passionate about

our purpose and work with us to accelerate and multiply the impacts we can

make. We want to create a movement of people who are on the journey with us

to help more and more people own their own home. We demonstrate this in both

the way we partner with people and the 100% intermediary led approach we take

for lending.

Our behaviours

As a mutual, it is in our DNA to understand the power of working together and

we know our purpose cannot be achieved in isolation. We will identify the

partners and like-minded allies that will join us in pursuit of our purpose. This

includes our saving community who are integral to the movement that will enable

home ownership for thousands of people every year. It also includes our

colleagues, and through our behaviours we will build a culture where our purpose

can be realised.

We encourage them to:

• Have the brave conversation - we create an environment where people feel

confident to speak up and challenge with the intent to support ongoing

improvements in what we do and how we do it;

• Make the bold leap - we take action. We lean into the change and drive it

forward, challenging the status quo to continuously make things better; and

• Seek the big insight - we demonstrate curiosity, leaving no stone unturned

to find different perspectives and to understand problems and opportunities

equally.

Page | 9 Annual Report & Accounts 2025 Nottingham Building Society

Strategic Report

Business model and Group strategy

NBS is a Top Ten UK building society with Total Assets in excess of £5bn. The

Society operates under three membership hubs:

• Mortgages - via our intermediary-led lending hub, offering a wide variety

of mortgages and more recently through our partnership with Gen H;

• Branches - via our regional presence of 31 locations across 8 counties; and

• Digital - our online platform and mobile app, providing access to digital

savings accounts.

Mortgages

Building on our 2024 progress, we continued to expand into new niche

market segments, including tailored solutions for foreign nationals seeking

to purchase property in the UK. As our technology, data insights, and

underwriting expertise evolve, we expect to serve a growing number of

members whose lifestyle, employment, or financial circumstances require a

more personalised lending approach.

In 2025, we successfully launched our Inviting Difference In (‘IDI’) Broker

Portal in July, which has supported the majority of processed mortgage

applications since implementation. This is already transforming our lending

operations by reducing time to offer, improving decisioning capability and

significantly enhancing broker experience, marking a key milestone in our

evolution as a specialist residential lender and positioning us strongly as we

scale further into specialist segments in 2026.

Branches

We provide traditional branch services to serve those who prefer face-to-

face propositions, offering branch-based savings accounts alongside financial

planning for those that would like those services. Our colleagues strive to

provide members with an excellent member service and ensure their

financial needs are met as well as serve their local communities.

Digital

The NBS app, is the Society’s online and mobile app proposition providing

savings accounts to members who prefer to manage their savings

themselves, but also supported by our online web chat and telephony

member advocates. This also allows us to support a wider range of needs and

of locations.

The digital membership hub offers several tax-free and taxable savings

products and provides several advice partnerships, accessible on the

platform, to help first-time buyers achieve their home purchase goals

including access to mortgage advice, conveyancing services and ways to help

manage and improve their credit scores.

Overall business performance

The Group’s business activities are focused within the UK and predominantly

relate to mortgage lending which is funded through a mixture of retail

domestic deposits and wholesale funding. Both the Chair’s Statement and

Chief Executive’s Review included a summary of factors affecting our

performance in 2025 and should be read in conjunction with this report.

The economic environment in the UK remained challenging across 2025.

Throughout this period of economic instability, we have continued to deliver

on our purpose and stay focused on the long-term sustainability of the

Society, whilst balancing the interests of both savings and mortgage

members throughout.

Throughout the year, we continued to serve our members with a range of

mortgage products. While the mortgage market began the year subdued due

to higher interest rates and cost-of-living pressures, these challenges

gradually eased during 2025; however, demand remained lower than historic

levels and competitive pressures continued to compound. Nevertheless,

against this backdrop we have sustained a total asset position of £5.4bn

(2024: £5.2bn), supported by organic and inorganic mortgage lending.

Our savings members are of utmost importance to the delivery of our strategy as

their deposits support borrowers achieve their goal of home ownership. We

remain committed to providing savers with secure propositions that offer easy

access to their savings and competitive interest rates. We have maintained our

network at 31 branches, whilst expanding and improving our online digital

proposition to ensure an excellent experience for our members when accessing

their savings through their preferred channel.

Overall financial performance

This section is presented on a Group basis only and primarily reflects the

consolidated results of Nottingham Building Society and its two subsidiaries,

Arrow Mortgage Finance No.1 Ltd and Lace Funding 2025‑1 PLC. Management

assesses the Group’s financial performance at this consolidated level, which is

appropriate given the relatively straightforward structure of the Group.

Our financial performance is reviewed regularly by the Board using a range of

measures, including statutory profit before tax and underlying profit before tax.

Underlying profit represents an alternative performance measure that excludes

items such as fair value volatility and significant one-off charges which do not

reflect the Group’s core operating activities. The Board considers underlying

profit before tax to be a more representative measure of the underlying

performance of the business.

The presentation of underlying profit before tax remains consistent with prior

years. Further detail is provided within this Strategic Report, including a

reconciliation of underlying profit to statutory profit on Page 10.

Page | 10 Annual Report & Accounts 2025 Nottingham Building Society

Strategic Report

KEY PERFORMANCE INDICATORS

Total Group basis

Gross new lending

£883m

2024: £1,215m

Total mortgage assets

£4.3bn

2024: £4.2bn

ECL coverage ratio

11bps

2024: 12bps

Total savings balance

£4.6bn

2024: £4.4bn

Interest paid to savers

£164.3m

2024: £154.6m

Net interest margin

1.62%

2024: 1.72%

Cost to income ratio

78.2%

2024: 72.7%

Profit before tax

£16.7m

2024: £13.9m

Underlying profit before tax

£20.9m

2024: £22.8m

CET1 ratio

14.1%

2024: 13.7%

Leverage ratio

5.1%

2024: 4.9%

Average LCR

236%

2024: 172%

Financial highlights

As a mutual organisation, we do not pay dividends to external shareholders;

our profit requirements are driven by the need to maintain strong capital to

support our activities. This ensures resilience against severe economic

stresses and enables continued investment to help more members in the

future.

In 2025, the key financial highlights included:

• Statutory profit before tax of £16.7m (2024: £13.9m), reflecting

disciplined margin management and strategic cost investment;

• Underlying profit before tax decreased to £20.9m (2024: £22.8m), driven

by income growth offset by higher operating costs;

• Interest receivable and similar income increased to £289.6m (2024:

£267.3m), supported by mortgage balance growth in recent years, while

NIM reduced to 1.62% (2024: 1.72%) due to rising funding costs;

• Gross mortgage balances remained broadly stable at £4.3bn (2024:

£4.2bn), with member deposit balances also steady at £4.6bn (2024:

£4.4bn);

• Cost-to-income ratio of 78.2% (2024: 72.7%) and underlying cost-to-

income ratio increased to 76.4% (2024: 73.0%), as cost growth outpaced

net interest income;

• Underlying management expenses rose to £66.5m, an increase of £4.8m

versus 2024, largely reflecting higher people costs and investment in

brand and transformation programmes;

• A £0.4m impairment provision credit was recognised (2024: £nil), resulting

in a provision balance of £4.6m (2024: £5.2m), driven by sustained low

arrears and an improving macroeconomic outlook, despite ongoing

affordability pressures; and

• Common Equity Tier 1 (‘CET1’) and Leverage Ratio increased to 14.1% and

5.1% respectively (2024: 13.7% and 4.9%), primarily due to an increase in

CET1 capital.

The results have been prepared in accordance with UK-adopted

International Financial Reporting Standards (‘IFRS’), as set out in Note 1 to

the Financial Statements. Underlying results are presented opposite,

together with a reconciliation to statutory results.

Income Statement review

INCOME STATEMENT

TOTAL GROUP BASIS

Group

2025

£m

Group

2024

£m

Net interest income

86.7

83.6

Net fees and commissions receivable

0.3

0.9

Net income

87.0

84.5

Underlying management expenses

(66.5)

(61.7)

Impairment credit on loans and advances to members

0.4

Underlying profit before tax

20.9

22.8

(Losses) / gains from derivative financial instruments

(3.0)

3.9

Voluntary payment expense associated with Philips

Trust Corporation

0.4

(11.2)

Recoveries against Philips Trust Corporation expense

0.1

1.0

Movement in Equity Investment Fair Value

(1.1)

Net strategic investment costs

(1.4)

(2.6)

Profit on disposal of freehold land and buildings 0.8

Profit before tax

16.7

13.9

Profitability

In 2025, the Group delivered a statutory profit before tax of £16.7m (2024:

£13.9m) and an underlying profit before tax of £20.9m (2024: £22.8m). The

reduction in underlying profit primarily reflects an increase in management

expenses, driven by continued investment in people and transformation

activities, alongside higher Gen H fees. Net interest income increased during

the year, supported by mortgage book growth in recent years and

disciplined margin management, which helped offset the impact of rising

funding costs.

On a statutory basis, profit in 2025 was impacted by losses on derivative

financial instruments, compared to gains in the prior year. Profitability in

2024 was also affected by the proactive and voluntary support provided in

relation to issues surrounding PTC.

Profit after tax remains our primary source of new capital and is essential to

ensuring long-term security for members and meeting regulatory capital

requirements. We continue to operate from a position of financial strength,

adopting a prudent approach to safeguard the interests of our members,

colleagues and the communities we serve.

Page | 11 Annual Report & Accounts 2025 Nottingham Building Society

Strategic Report

Total Income and Net Interest Margin

2025

2024

Net Interest Margin

1.62%

1.72%

Statutory net interest income was £86.7m (2024: £83.6m), representing an

increase of £3.1m year-on-year. This growth reflects higher income levels,

alongside a reduction in NIM to 1.62% (2024: 1.72%) due to rising funding

costs.

The reduction in NIM is primarily attributable to increased funding costs, as

maturing fixed-term deposits continued to reprice at higher rates

throughout 2025. In addition, the Society’s liability hedging strategy,

resulted in higher interest payable during the year but provides protection

against potential future reductions in interest rates.

The average rate paid to our savers exceeded the market average by 53bps

(2024: 49bps), rewarding members with an additional £23.2m in interest

(2024: £19.0m). Savings rates increased in response to a competitive market

and higher average interest rates, supported by additional savings balances

to fund growth and enable repayment of funding received through the

TFSME. The Society remains committed to rewarding depositors

appropriately and continues to offer competitive rates to members.

Other Income

Net fees and commissions receivable comprise fees, commissions and other

operating income generated from the Group’s activities. These reduced

during the year, primarily due to our decision to reduce mortgage

redemption fees to £nil.

Management Expenses

The Group’s management expenses include administrative costs,

depreciation and amortisation, and strategic investment expenditure. A

breakdown is provided below:

2025

£m

2024

£m

Underlying administrative expenses

61.7

56.8

Depreciation and amortisation – underlying

4.8

4.9

Management expenses – underlying

66.5

61.7

Strategic investment costs

1.4

2.6

Total management expenses

67.9

64.3

Represents:

Administrative expenses

63.1

59.4

Depreciation & amortisation

4.8

4.9

67.9

64.3

Management expenses have risen due to ongoing investment in both

technology and people to support the Society in achieving its strategic goals.

We continue to invest in a multi-year transformation programme to

improve the experience for our members. We have focused on operating

the Society efficiently with close control over our costs and associated ratios

which remain important measures as we work to deliver our strategy.

As a result of these investments, management expenses have increased by

5.7%, with underlying management expenses increasing by 7.8% compared

to the prior year. We continue to manage our costs carefully in line with

internal targets and are continuously looking to identify appropriate

efficiencies, whilst at the same time investing for the long-term future of

the Society.

Impact of Philips Trust Corporation

In 2024, the Society incurred net expenditure of £10.2m, reflecting

voluntary payments to impacted members, net of recoveries. Further

details are provided in Note 27 to the Financial Statements.

Strategic Investment Costs

Strategic investment costs totalled £1.4m (2024: £2.6m) and primarily

relate to planned organisational changes linked to the development of the

Society’s target operating model, including staff-related measures and

other directly attributable expenditure necessary to position the

organisation for future growth. Further details are provided in Note 27 to

the Financial Statements.

Movement in Equity Investment Fair Value

The £1.1m reduction in equity investment fair value to £nil reflects an

updated assessment of the Gen H investment valuation, resulting in a

prudent downward adjustment to the carrying amount. Gen H is an

early‑stage fintech mortgage startup, and the updated valuation

incorporates the impact of dilution arising from a recent share issuance,

together with the inherent uncertainty associated with businesses at this

stage of development.

(Losses) / gains from derivative financial instruments

The Society utilises derivative financial instruments to manage interest rate

risk arising from fixed-rate mortgage, treasury assets and savings accounts,

applying hedge accounting where possible. Movements in fair value

primarily reflect timing differences, which typically reverse as the

underlying asset or liability reaches maturity.

During the year, fair value losses totalled £3.0m (2024: gains of £3.9m),

comprising:

2025

£m

2024

£m

Fair value movements on swaps held against the

mortgage pipeline

(0.1)

2.1

Amortisation gains from the reversal of losses recognised

in both the prior and current periods

0.9

0.8

Movements in the ineffectiveness of the hedge

accounting portfolio

(3.6)

0.8

Fair value movements on swaps associated with the

secured funding vehicle

(0.2)

0.2

(Losses) / gains from derivative financial instruments

(3.0)

3.9

More detail on the fair value gains and losses in the period is available in

Note 5.

Impairment Credit on Loans and Advances to Members

The Society maintains provisions for expected credit losses across all loans,

based on the probability of default and potential loss, taking into account a

range of assumptions about future economic scenarios and whether credit

risk has increased significantly since origination.

Despite ongoing affordability pressures, borrower resilience remains

strong, with the proportion of accounts in arrears by 30 days or more at

0.75% as at 31

December 2025 (December 2024: 0.55%).

An impairment credit of £0.4m was recognised in 2025 (2024: £nil),

reflecting an improved macroeconomic outlook and resulting in a slightly

lower coverage ratio of 0.11% (2024: 0.12%). Total impairment provisions

at 31

December 2025 stood at £4.5m (December 2024: £5.2m).

The Society’s cost of risk for the year was (0.01)%, broadly stable year on

year (2024: 0.0%). This favourable cost of risk reflects the net impairment

credit recognised in the period, driven by the release of provisions following

an improved forward‑looking economic outlook. The metric continues to

indicate strong underlying credit performance, with losses remaining low

relative to the size and risk profile of the mortgage book.

Further details on the key judgements and estimates involved in calculating

impairment provisions, including the use of Post-Model Adjustments,

(‘PMA’) are provided in Note 15 to the Financial Statements.

Taxation

The tax charge for the year was £6.0m (2024: £4.6m), reflecting the higher

level of profitability within the Society as a standalone entity. Further details

are provided in Note 8 to the Financial Statements.

We manage our tax obligations to ensure full compliance with all statutory

requirements and do not intentionally structure transactions to achieve a

tax outcome contrary to the intentions of Parliament. The Society maintains

an open and transparent relationship with His Majesty’s Revenue and

Customs (‘HMRC’), and our Tax Policy is reviewed annually by the Board

Audit Committee (‘BAC’). This policy provides a framework for the

operation, planning, and oversight of tax and tax risk, ensuring compliance

with relevant legislation. The policy has been adhered to throughout the

year.

Page | 12 Annual Report & Accounts 2025 Nottingham Building Society

Strategic Report

Statement of Other Comprehensive Income

review

The Defined Benefit Pension Scheme’s liabilities are effectively hedged by

the scheme’s assets, reflecting the robust hedging strategy implemented by

the Society. This approach ensures that movements in liabilities are largely

offset by corresponding movements in assets. This can be observed in both

2025 and 2024, where gains or losses on the scheme’s liabilities have been

appropriately counterbalanced by losses or gains on the scheme’s assets,

minimising volatility in the overall funding position.

Statement of Financial Position review

Group

2025

£m

Group

2024

£m

Loans and advances to members

4,305.0

4,201.8

Liquid assets

1,071.1

917.0

Other assets

60.2

107.9

TOTAL ASSETS

5,436.3

5,226.7

Retail & wholesale funding

5,096.7

4,908.3

Other liabilities

72.9

65.1

Reserves

266.7

253.3

TOTAL LIABILITIES & RESERVES

5,436.3

5,226.7

The Society provides residential mortgages across the UK through a network

of approved mortgage intermediaries. Mortgage lending is primarily funded

by members’ savings, offered through a range of competitive channels. The

remainder is sourced from wholesale markets and other financial

institutions, including Central Bank facilities, secured on competitive terms.

This diversified funding approach supports balance sheet resilience and

ensures continued capacity to meet member needs.

Mortgage lending

Gross balances

2025

£m

2024

£m

Residential mortgages 3,569.9 3,650.3

Secured business lending 716.8 589.5

Total

4,286.7

4,239.8

Total gross mortgage balances closed the year at £4.3bn (2024: £4.2bn). Net

lending was £46.9m (2024: £647.4m). While balance growth of 18% in the

prior year was driven by increased exposure to owner-occupied residential

mortgages through both organic and inorganic channels, in 2025 we made

a deliberate decision to moderate growth to 1.1%, focusing on embedding

significant investments in systems, processes and capabilities to strengthen

long-term resilience.

Residential mortgage balances, including owner-occupied and traditional

Buy-to-Let (‘BTL’), decreased to £3.6bn (2024: £3.7bn), while Secured

Business Lending (‘SBL’) balances, including commercial lending and

portfolio BTL, increased to £0.7bn (2024: £0.6bn). BTL remains an important

part of our lending mix, complementing our core focus on supporting

extraordinary borrowers, balancing risk and enhancing financial resilience.

We recognise the vital role of quality rental housing as a stepping stone to

homeownership. The Society is also executing a planned exit from the

commercial segment.

Our lending policy continues to strike a balance between supporting

homeownership and safeguarding borrowers and the Society. In 2025, we

maintained this approach while enhancing lending through optimised

scorecards and strategies within our risk appetite. Average loan-to-value

(‘LTV’) for new lending was 70.0% for Residential and 63.7% for BTL (2024:

69.7% and 61.0%), with overall book indexed LTV at 53.0% and 49.7%,

respectively (2024: 52.4% and 50.0%).

The mortgage portfolio is well distributed throughout England and Wales

and is predominantly focused in the three broad areas of East Midlands,

Yorkshire & Humberside and London & South-East.

Retail and wholesale funding

The Society funds its mortgages through a combination of retail savings and

wholesale funds.

Gross balances

2025

£m

2024

£m

Branch savings

3,498.3

3,188.4

Non-branch savings

1,132.9

1,162.1

Retail savings

4,631.2

4,350.5

Secured wholesale

409.0

494.5

Unsecured wholesale

56.5

45.4

Collateral liabilities

17.9

Retail & Wholesale funding

5,096.7

4,908.3

The Society operates a diverse funding strategy to maintain an optimal mix

and duration of retail and wholesale funding. Retail savings remain the

cornerstone of our funding model, complemented by secured and

unsecured wholesale funding sourced from financial institutions and capital

markets.

As a mutual, we are committed to providing savers with a secure home for

their deposits, offering competitive products through both online channels

and our branch network, which continues to play a vital role in our strategy.

Savings balances closed the year at £4.6bn (2024: £4.4bn), supported by

market-leading rates offered during 2025. In a challenging environment, we

aim to reward members with attractive rates while prudently managing

current and future financial risks.

Total wholesale funding at 31

December 2025 was £0.5bn (2024: £0.6bn),

representing 9.1% (2024: 11.4%) of total funding. The movement reflects a

£180m early repayment of BoE TFSME drawings ahead of contractual

maturity, alongside the Society’s debut RMBS issuance of £350m.

Subsequent events

Subsequent to the year end, Anthony Murphy resigned from his position as

the Society’s CFO. He will continue to stand for re‑election and remain in

post until his planned departure in May 2026.

There have been no other material events after the Balance Sheet date that

would require adjustment to, or disclosure in, these Annual Report and

Accounts. The Society continues to monitor developments in the economic

and regulatory environment to ensure any emerging risks or opportunities

are appropriately addressed.

Liquid assets

NBS maintains a prudent level of high-quality liquid resources to meet its

financial obligations as they fall due under both normal and stressed

conditions. This is reflected in a strong Liquid Asset Ratio of 21.0% at 31

December 2025 (2024: 18.7%).

Liquidity requirements are monitored closely, incorporating forecasted and

stressed outflows on a dynamic basis. The Society’s liquidity position

remains robust, providing both protection and flexibility in an uncertain

economic environment.

The Group’s liquidity resources comprise a combination of on-balance sheet

liquid assets and access to contingent funding from the Bank of England,

secured against approved mortgage portfolios. By holding liquid resources

of the highest quality, which can be readily converted into cash, the Group

is able to manage liquidity efficiently.

The composition of On-Balance Sheet liquidity is as follows:

2025

£m

2024

£m

Balances held with the Bank of England

297.0

443.3

Multilateral Development Banks

131.5

60.4

UK Gilts & T-Bills

244.6

109.8

Mortgage-backed securities

129.1

70.3

Covered Bonds

199.6

159.4

Other

69.3

73.8

Liquid assets

1,071.1

917.0

Page | 13 Annual Report & Accounts 2025 Nottingham Building Society

Strategic Report

At 31

December 2025, the Society’s liquidity included £1.1 billion of High-

Quality Liquid Assets (‘HQLA’) (2024: £0.9 billion), comprising cash or assets

readily realisable as cash when required. 100% of our liquidity portfolio was

rated A or above (2024: 100%), reflecting our commitment to maintaining a

high-quality liquidity position.

Liquidity is monitored by the PRA under the Capital Requirements

Regulation (‘CRR’) framework, with the Liquidity Coverage Ratio (‘LCR’)

being the primary measure. The Society remained comfortably above the

regulatory minimum throughout the year, reporting weighted-average LCR

of 236% for 2025 (2024: 172%).

Capital

The Society remains focused on maintaining strong capital ratios to protect

members’ interests, with all regulatory capital requirements comfortably

exceeded throughout the year.

Our regulatory capital primarily comprises accumulated retained profits

within the general reserve and subscribed capital provided through

Permanent Interest-Bearing Shares (‘PIBS’). Capital serves as a vital buffer

against unexpected losses, safeguarding depositors and other creditors.

The Regulator requires the Society to hold a minimum level of capital

against its assets, known as the Total Capital Requirement (‘TCR’). As at 31

December 2025, the TCR was set at 8.4% (2024: 8.4%) of Risk Weighted

Assets (‘RWAs’), equivalent to £152.9m (2024: £151.2m).

Total regulatory capital increased by £10.1m during 2025 to £278.6m (2024:

£268.5m), primarily driven by retained profits added to the general reserve.

Growth in the mortgage book resulted in RWAs increasing by £20.9m during

the year. Consequently, the Common Equity Tier 1 (‘CET1’) ratio, increased

to 14.1% (2024: 13.7%).

The composition of regulatory capital as at 31

December is shown below:

2025

2024

Transitional

CRD

Transitional

CRD

CAPITAL RESOURCES £m £m

COMMON EQUITY TIER 1 CAPITAL

General reserves

264.0

253.2

Revaluation reserve

2.7

Fair value reserves

0.1

Regulatory adjustments & deductions

(12.0)

(8.7)

TOTAL COMMON EQUITY TIER 1 CAPITAL 254.7 244.6

TOTAL ADDITIONAL TIER 1 CAPITAL

TIER 2 CAPITAL

Permanent Interest Bearing Shares

23.9

TOTAL TIER 2 CAPITAL

23.9

TOTAL REGULATORY CAPITAL 278.6 268.5

RISK WEIGHTED ASSETS

1,811.3

1,790.4

CAPITAL RATIOS

Common Equity Tier 1 (‘CET1’) ratio

14.1

13.7

Total Tier 1 ratio

14.1

13.7

Total Capital ratio

15.4

15.0

Leverage ratio

5.1

4.9

Capital requirements

• The Society maintains a robust capital framework to ensure resilience

and compliance with regulatory standards, while adapting to an

evolving regulatory environment. Our capital requirements comprise

the following components: Pillar 1 – capital held to meet minimum

requirements for credit risk, operational risk, and market risk.

• Pillar 2A – Additional capital required by the PRA to cover risks not

captured under Pillar 1. At 31

December 2025, this requirement was

0.4% of RWAs, representing a point-in-time assessment by the PRA.

• Capital Buffers – we hold capital buffers designed to absorb the impact

of stress scenarios, including:

- A sector-wide Capital Conservation Buffer of 2.5%;

- A Countercyclical Capital Buffer, currently set at 2.0% of RWAs for UK

exposures; and

- Additional requirements determined through the Internal Capital

Adequacy Assessment Process (‘ICAAP’) to ensure alignment with our

risk appetite and capacity to withstand severe but plausible stress

scenarios.

The ICAAP is reviewed by the PRA when setting the Society’s Total Capital

Requirement (Pillar 1 and Pillar 2A). We conduct regular stress testing on our

capital base, which consistently demonstrates a surplus above regulatory

requirements after applying management actions.

The Leverage Ratio, calculated as Tier 1 capital divided by total balance sheet

exposure, increased to 5.1%. This increase primarily reflects growth in capital

in excess of growth in asset exposures.

Further details on the Society’s capital management approach can be found in

our Pillar 3 Report, available at https://www.thenottingham.com.

Risks and uncertainties

The Society continues to identify new or evolving risks through its Risk

Management Framework (‘RMF’). Looking ahead, and taking note of the

external environment, the Society is conscious of economic uncertainties and

other horizon risks. Continued pressure on cost-of-living in the UK, with a

continuing period of heightened inflation, two consecutive tax-raising budgets,

conflicts in Ukraine and Iran, as well as the continued volatile interest rate

environment, give rise to a number of risks and uncertainties. Added to this,

the ever-competitive trading environment, the increasing rate of change of

technology, and the continued evolution of the regulatory environment, give

rise to further challenges which must be navigated in the pursuit of the

Society’s strategy.

Economic uncertainties

The BoE has continued to reduce the Bank Rate over time; however, early

reductions in inflation have somewhat stalled. Offsetting this, wage growth has

continued and cost-of-living pressures for UK homeowners seem to have

somewhat ceased. The Society continues to be mindful of the effect of

sustained higher inflation on credit risk in retail mortgage portfolios.

The reducing interest rate environment does, however, give rise to downside

risks of margin compression, and market risks due to uncertainty around the

quantum and timing of rate changes.

In addition, heightened geopolitical uncertainty continues, with wars in Ukraine

and Iran giving rise to significant global economic risks. This, added to changes

in the foreign policy posture of the US under the current administration and US

economic policy (a more protectionist stance, tariffs etc), gives rise to

significant economic uncertainty.

Domestically, the UK government has delivered its second Budget, with some

significant changes, the economic impact of which have yet to be seen. In

particular, changes to salary sacrifice rules for pension contributions, the cut to

the cash ISA limit, and the so-called ‘mansion tax’ could each have second-

order impacts on demand in this sector.

While changes to fiscal policy do give rise to some uncertainty, the government

continues to deliver positive messages on its support of the mutual sector and

financial services more broadly, seeing the sector as a key driver of its growth

agenda going forward.

As always, the Society remains mindful of these sources of economic

uncertainty, and it continues to maintain significant surpluses of financial

resources, both capital and liquidity, to navigate through any turbulence. The

Society has historically had low levels of arrears and defaults, and its mortgage

book has proved extremely resilient during economic turbulence over the past

several years.

The Society remains ever vigilant, and undertakes regular stress-testing,

conducts an ICAAP, regularly assesses the levels of provisions held against bad

debts and sets a capital appetite requirement at a level that is designed to be

more than adequate to absorb credit losses should they arise. The Society

maintains a capital position in excess of its regulatory capital requirement.

Lending decision-making is supported by models which are reviewed regularly

and overseen as part of the governance framework to ensure they remain

relevant in an uncertain macroeconomic environment. The Society will

continue to take a prudent approach both in its assessment of house prices and

in its forecast of arrears levels.

NBS will also continue to monitor closely all relevant economic forecasts to

ensure that all emerging risks and shifts in dynamics are considered.

Page | 14 Annual Report & Accounts 2025 Nottingham Building Society

Strategic Report

Trading environment

Trading conditions continue to be challenging as the mortgages and savings

markets remain highly competitive.

On the mortgages side, the Society’s strategy and business plan is seeking

to increase margin, while growing the Balance Sheet, the combination of

which is only possible by identifying and catering for underserved niches in

the market. NBS has been successful in this regard in recent years, having

significantly grown its Balance Sheet while delivering strong lending margins

on new business. However, to maintain this trajectory, the Society will need

to continue to innovate and develop its underlying capabilities in credit

decisioning, operations and technology more broadly.

On the savings side, as rates continue to fall, there is a risk of margin

compression, and the retail savings market continues to be highly

competitive.

Noting the challenges of this environment, the Society continues to make

developments in several areas that should help to offset some of these risks.

NBS continues to enhance digital and branch propositions under the unified

Nottingham Building Society brand with enhancements to functionality and

customer experience anticipated to provide some differentiation and

benefit on the savings side, with improved capabilities around proposition

development and pricing continuing to provide benefit on the lending side.

Strategy risk

As the Society continues on its journey to modernise its capabilities,

proposition and enhance its model to build a sustainable business for the

long-term, there continue to be risks to the delivery of this vision.

The Society is particularly focused on the risk that we do not realise the

lending margins anticipated in the plan, that cost of funds is higher than we

anticipate, that costs related to transformation are higher than anticipated.

With these risks in mind, the Society has clear guidelines within which the

business is required to operate to ensure that any deviations from expected

outcomes are identified early and addressed. These guidelines ensure that

as we grow and transform the business, we are doing so in a measured,

deliberate and stable manner.

Funding risk

Volatile markets and elevated interest rates have resulted in increases to

the cost of funds and balancing the reward of saving members with margin

management will need continued careful consideration. The elevated

interest rate environment in recent times has led to an increasingly

competitive landscape.

The Society has continued to develop its capabilities and diversify its mix of

retail and wholesale funding and delivered its debut public securitisation

transaction to the market in February 2025.

NBS possesses a diverse mix of funding options to allow it to secure retail

funding at competitive rates, including the digital capability provided by the

app, and has worked to enhance capabilities and funding options over the

past year. Liquidity is assessed as part of the Internal Liquidity Adequacy

Assessment Process (‘ILAAP’) which includes robust stress testing.

Partnerships risk

NBS works closely with key partners who provide services to members on

its behalf. As the Society explores new ways of meeting the needs of its

members, it is likely that the number of key strategic partners will continue

to increase.

The Society has existing relationships with a number of key strategic

partners who support elements of the strategy, such as a forward-flow

lending partner, lending and decisioning platform providers, a core-banking

platform provider, and infrastructure and networking providers.

NBS recognises that working with external parties requires close oversight,

and has a framework and controls in place to support this. The Society

manages such relationships through oversight, contractual requirements

and service delivery standards. Partners are monitored to ensure that their

services meet the Society’s high standards, and metrics on service delivery

are reviewed regularly and for critical suppliers reported to management

committees.

Transformation risk

The Society continues to make significant investment in its IT infrastructure,

to both enhance operational resilience and provide enhanced capability to

facilitate its strategic goals.

The inherent risks associated with technological change, including potential

business disruption and / or operational loss, will be at heightened levels

during this transformation. This has been recognised by the Society and is

being managed appropriately using a defined change framework, with

additional investment in change management capabilities, including the

appointment of several suitably experienced professionals.

Cyber risk

In tandem with the Society’s increasing digital presence, cyber security risk

continues to rank highly on the agenda and over recent years NBS has

observed an increase in the volume of external cyber-attacks. This,

combined with the increasing technological and organisational

sophistication of malicious actors, represents an increasing challenge and

threat to the business, in common with the reported experience of other

businesses across all sectors.

Work is constantly undertaken to enhance and monitor the effectiveness of

risk management in this space. The investment of resources to support this

will continue, with the support of third parties who are working closely with

the Society to ensure information security controls remain robust against

the fluid external threat environment.

NBS remains proactive and will continue to invest in its cyber capabilities as

this ‘arms race’ continues. Technical expertise is complemented with

education and awareness activities to ensure that employees are equipped

to recognise and manage the risks associated with cyber activity. The

capability to respond to and recover from cyber events is kept under

continuous review including contingency planning, crisis management and

disaster recovery plans.

Operational resilience risk

Operational resilience remains a significant focus, reflecting the important

role that the Society plays in its members’ lives and the potential impact on

members due to disruption to our services. In addition, operational

resilience remains a key regulatory focus.

NBS has worked to develop a clear understanding of its most important

business services which, if significantly disrupted, have the potential to

cause intolerable harm to its members. In parallel with broader

transformation and change activities, the Society continues to invest in

improvements to the reliability and resilience of its business services

generally, with a particular focus on those that could have a detrimental

impact to its members.

Climate change risk

Enhancement of the Society’s approach to climate-related risks continues

with greater definition around responsibility frameworks for climate risk

and metrics to monitor objectives related to carbon neutrality and Net Zero.

Risks remain around interpreting the impact of climate on the Society’s

assets and members with modelling and the sourcing of reliable data being

an industry-wide challenge.

Page | 15 Annual Report & Accounts 2025 Nottingham Building Society

Strategic Report

Regulatory and legal risk

Several regulatory requirements are currently being delivered. Operational

Resilience continues to be a significant focus for the Society, while the

impact of incoming Basel 3.1 and associated SDDT requirements is a key

consideration for the Society.

Activities related to recent regulatory developments in areas such as

Climate Risk, Operational Resilience and Consumer Duty are enduring and

require continued dedication of resources to facilitate effective embedding,

evolution of approaches and ongoing monitoring and management.

The Society monitors the regulatory environment actively to ensure that it

can comply fully with all new and changing regulatory requirements.

Horizon scanning is a key process that supports the work of the Legal and

Regulatory Risk Committee (‘LRC’), which oversees the Society’s approach

to developing new processes in line with regulatory changes.

Anthony Murphy

Chief Financial Officer

March 2026

Page | 16 Annual Report & Accounts 2025 Nottingham Building Society

Stakeholder Engagement Report

The Board acknowledges the variety of stakeholders we have and the significance of evaluating and comprehending their requirements. We have established

communication channels for each stakeholder group to guarantee that their perspectives are considered in the overall decision-making process.

The table below outlines our primary stakeholder groups and how we engage with them:

Stakeholder

Who they are

What is expected from us?

How do we listen and engage?

Members

• Retail borrowers

• Retail savers

• Offer mortgages that are affordable and

fairly priced;

• offer good value savings accounts;

• provide a friendly, efficient service;

• tailor help for vulnerable members; and

• support broader societal goals.

• AGM;

• member newsletter;

• member panels;

• focus groups and panels;

• Society’s website;

• face-to-face;

• telephone;

• e-mails; and

• volunteering.

Colleagues

• Colleagues

• Contractors

• Implement equitable reward and

remuneration policies;

• support a good work-life balance;

• encourage and support personal

development and training;

• foster an inclusive culture that values

diversity and celebrates it;

• prioritise the well-being of physical, mental,

and financial aspects;

• demonstrate empathy, respect, and fairness

in all interactions;

• show genuine concern for the physical,

mental, and financial well-being of

colleagues; and

• show empathy, respect, and fairness to all.

• Engagement via leadership;

• colleague surveys;

• provide engagement via leadership

teams;

• connect through colleague networks;

• keep colleagues up to date on all things

Society related; and

• data analytics and monitoring activities

on key engagement and employee value

proposition key performance indicators.

Community

• Local communities

• Charities and community

groups

• Dedicate resources to promote the economic

well-being of communities;

• actively contribute to broader societal goals;

• cultivate an inclusive culture that values and

celebrates diversity; and

• operate as a sustainable business while

embodying social responsibility.

• Advocacy on matters important to

stakeholders;

• addressing climate change,

encompassing carbon footprint

reduction and achieving Net Zero

emissions;

• supporting local community initiatives;

and

• charity donations and charity days for

staff to volunteer their time.

Partners

• Brokers

• Suppliers

• Auditors

• Industry bodies

• Investors

• Ensure ease of interaction and simplicity in

dealings;

• collaborate as trusted partners to achieve

shared success;

• provide helpful, efficient, and approachable

service; and

• take tangible steps to contribute to broader

societal goals.

• Direct engagement through specialist

teams;

• direct engagement through face-to-face

meetings and events;

• Annual Report and Accounts;

• Regulatory News Service

announcements; and

• investor reporting.

Regulators

• Central and local

governments

• PRA

• FCA

• Swiftly and proactively resolve member

issues;

• act within the law and regulations and in the

interests of our members;

• operate in line with the requirements of

Consumer Duty, ensuring products are fit-

for-purpose and represent fair value;

• be financially strong and secure by

maintaining adequate resources, including

capital and liquidity;

• act with integrity and transparency; and

•

prioritise operational resilience.

• Operate in accordance with the law and

regulations, prioritising the well-being

of our members and customers;

• quickly and pre-emptively address

member concerns; and

• ensure financial strength and security

by upholding sufficient resources,

including capital and liquidity.

Page | 17 Annual Report & Accounts 2025 Nottingham Building Society

Corporate Responsibility Report

As a mutual building society, our commitment to making a real and lasting

difference in the communities we’re part of remains priority. That includes the

areas around our 31 branches, our Nottingham head office, and even where

our colleagues live and work. Our community support manifests in lots of

different ways - from the time our colleagues spend volunteering, to

fundraising and donating goods, as well as the financial support given to

charities and non-profit organisations to power their work.

In 2025, we invested a total of £144,511 into our communities - that’s 1.0%

of our 2024 pre-tax profit - and we’re really proud of the positive impact

that’s helped us create together. We’re also thrilled to have been a finalist in

2025’s East Midlands Business of the Year Awards, in the ‘Community

Impact’ category for our social impact work.

Our ongoing commitment to supporting people who are homeless and at

risk

Our Social Impact programme continues to focus on helping people who are

homeless or at risk of losing their home, making sure they can access both

emergency support and long-term solutions that lead to a safe and stable

place to live.

In 2025, we proudly continued our partnerships with Emmanuel House and

Shelter, supporting people in need across our city, Nottingham, through

Emmanuel House and those seeking support across England through Shelter.

In our third year of funding for each charity, we’ve supported Emmanuel

House’s accommodation provisions and Shelter’s emergency Webchat

service. Our colleagues have continued to raise funds, host donation drives

and bring awareness to each charity and the valuable work they do.

We’ve focused over the past three years to truly entwine our charitable

partnerships into the Society and one way this manifested in 2025 is through

our Management Development Programme. 23 colleagues have been

enrolled onto an accredited programme to build their leadership skills and we

challenged them to raise funds for both charities. Colleagues were split into

five groups and tasked with raising vital donations for either Emmanuel House

or Shelter over a ten-week sprint. Each given £100 for resources, the groups

had to work to come up with creative fundraising ideas, manage budgets,

write communications and work as team to deliver in the hope of being the

most fruitful fundraisers in the challenge. From physical challenges like cycling

and walking 500 miles as well as plunging into ice cold water through to

community centred events like bake sales, an in-branch Santa’s grotto and hot

chocolate stations, our teams went big with their passion to raise a combined

£108k for Emmanuel House and Shelter.

Amplifying the voice of future talent

It’s important to us to show young people in Nottingham that the city can

provide fruitful careers and that financial services hosts many career

opportunities. In 2025 we continued working with young people identified as

at risk of becoming Not in Education, Employment or Training (‘NEET’) when

they leave secondary education through the charity ThinkForward. A key

programme was Business Mentoring, where 18 colleague volunteers hosted

18 young people, for two hours per week, for six weeks. The programme aims

to build confidence, self-awareness, communication skills and equip the

students with their first CV as well as having practiced interviews in a safe,

workplace environment. Feedback from our colleague volunteers included “I

enjoyed the entire experience especially getting to know the young people a

little, seeing them grow in confidence and getting an insight into their views

and opinions”. This was our fourth year supporting the programme and we

intend to continue our support in 2026.

At the heart of our communities

Our 31 branch locations are empowered to contribute to our work with

Emmanuel House and Shelter, as well as receiving the autonomy to support

causes most important to their local area. In 2025, our branch colleagues gave

3,125 hours of volunteer time, more than ever before and 47% more than

2024.

Our teams continue to invite members and non-members in their local area

to events in branch, aimed at education, building community and charity

awareness and fundraising. As we rebrand branches, we’re considering how

each location’s design can complement these events for our local

communities.

Growing impact

Alongside our branch teams, colleagues across all locations gave working time

to charities and non-profits needing support in 2025. 48% of our colleagues

gave their working time to support non-profit organisations, which

accumulated in 3,938 hours (2024: 3,522 hours) of volunteer time. We’re

proud of the year-on-year growth we’ve seen in colleague contributions, truly

living our mutual ethos and showing up for our local communities.

As we look ahead to 2026, we are ambitious in further scaling up our Social

Impact programmes both through our charity relationships, our branch

locations and by continuing to support colleagues to have a lasting,

meaningful impact on our communities.

Building a different kind of Society

Our people define our success as a Society, so supporting them to do their best

work to benefit our customers and communities is really important to us.

Creating an inclusive workplace is a journey we remain fully committed to. In

2025, our five colleague inclusion networks played even more of a key role

with awareness, education and celebration of our differences. Collectively our

networks produced over 100 pieces of content for our intranet site, ‘Our Place’

and ran various events such as ‘SummerFest’, an in-office celebration of

culture where each network held a stall to share their progress as a group and

invite new members. They also championed ‘Boost Boxes’ sent to every

branch to celebrate National Inclusion week. Each network pulled

together a

‘must read, must watch and must listen’ recommendation list alongside an

item that represented them such as balance tea from the Hormonal Health

Hub and rainbow merchandise from our Pride network. We were proud to

sponsor Notts Pride for a second year running and even more proud to have

colleague representation double compared to 2024 attendance. We value the

opportunity to publicly stand for our colleagues and communities, no matter

someone’s personal characteristics.

Beyond our inclusion networks, in 2025 we sharpened our focus on investing

in our colleagues and their personal development. We saw an increase in

engagement with our e-learning platform, (introduced in 2024), offered 117

hours of leadership coaching and enrolled 23 colleagues onto our

Management Development programme; of which 84% are female leaders.

Ten colleagues were given memberships to Women in Banking and Finance

resources to aid their development with webinars, teaching and networking

opportunities.

We also joined Progress Together, a financial services membership

organisation that will support us to ensure we’re a socio-economic inclusive

workplace in a sector that can still be perceived as exclusive. We’re looking

forward to sharing more of this in 2026. All this activity has accumulated with

a finalist position at The Learning Awards under the category ‘Learning Impact

Award’ where the winner will be announced in 2026.

How we support the development of our colleagues and our local

communities is high on our priority list and in 2026 we will continue our

investment into both groups to further grow our impact as a Society.

Page | 18 Annual Report & Accounts 2025 Nottingham Building Society

Sustainability Report

The Financial Stability Board created the Task Force on Climate-Related

Financial Disclosures (‘TCFD’) to improve and increase consistent reporting

of climate-related financial information. The following Sustainability Report

presents the Society’s climate-related disclosures under the TCFD

requirements.

Governance

NBS’s Board is ultimately accountable for all climate change related matters.

The Executive Committee (‘ExCo’) is responsible for deriving the Society’s

strategic response to climate change and overseeing day to day

management of climate-related activities. It provides the focal point for

climate-related decision-making and is supported by Subject Matter Experts

from across the Society. The BRC and the Executive Risk Committee (‘ERC’)

are responsible for oversight of climate-related risks.

The ExCo has ultimate responsibility for co-ordinating all climate-related

risks and assessing them collectively as part of the quarterly review of the

Strategy Risk dashboard, of which climate risk is a component. BRC (under

delegated authority from the Board) has been fully engaged with the

Society’s response to climate change.

NBS operates a ‘three lines of defence’ model for risk management, in

common with many financial sector firms. Responsibility for identifying,

managing and reporting risks, including climate-related risks, resides with

the first line of defence. The second line of defence is responsible for

providing challenge and oversight over the first line, the risks being assessed

and modelled and oversight of the reporting of them to ensure it remains

comprehensive. The third line of defence is responsible for providing

independent assurance and assessment of the impacts of climate-related

risks.

In addition, NBS has several policies and procedures in place, which define

the Society’s approach to climate change and ensure that activities are

performed consistently and in accordance with the Board’s stated

objectives and goals.

Strategy

Throughout 2025 we have targeted the reduction in our Scope 1 and 2

emissions as a priority underpinned with a commitment to reduce our

overall Stage 1 and 2 emissions by a minimum 10% over the year versus

2024. As detailed in our 2024 report this approach was agreed due to Scope

1 and 2 being more within our direct control.

During 2025 we have focused on continued deployment of various energy

efficient and emission reduction initiatives throughout the business,

through our in-house Facilities team. In recent years, temperature control

devices have been installed in our branches and we have removed all gas

boilers from our estate. Additionally, we have rolled out smart meters and

introduced passive infrared light sensors across the entire estate. Energy

infrastructure has been integrated with an energy analysis portal that allows

us to identify when we have spikes in usage, which we can then take steps

to address.

Working closely with our energy consultants and supplier base we will

continue to explore new energy efficient and emission reduction initiatives

as the market evolves with new products and technology.

Risk management

Identification

NBS recognises that climate change is far reaching across its business and

to capture all the material touchpoints, climate risk is embedded within the

Society enterprise-wide. Alongside the scenario analysis, the Society

recognises that climate risk can manifest across a broad range of areas.

NBS has eight principal risk categories and climate risk is included as a

subcategory under the Society’s Strategy Risk Principal Risk Type (‘PRT’).

This provides an elevated and centralised view of climate related risks. The

risk appetite statement states that the Society has a low-risk appetite for

not meeting the statutory requirements of climate change and our own

stated climate change related goals.

Climate change scenario analysis

The Society assesses climate change risk across two main categories.

Physical risk considers the impact of physical effects of climate change or

weather-related events such as flooding. Transitional risk assesses the

transition to a low-carbon and climate resilient future such as changes in

policy and regulation.

To ensure strategic decisions are informed appropriately, a range of

scenario analyses are performed in relation to climate change. These

included the impact of flooding across the mortgage portfolio as well as

transitional risks of an increase in minimum Energy Performance Certificate

(‘EPC’) ratings and the potential costs this could incur.

Scenario Framework and Assumptions

Scenario analysis is undertaken in line with the Bank of England’s Climate

Biennial Exploratory Scenario (‘CBES’) published in 2022. Three pathways

are assessed, each with different policy, economic and physical‑risk

assumptions:

Early policy action:

• An orderly transition, with policies introduced gradually;

• Energy prices stabilise as decarbonisation progresses smoothly;

• House prices experience limited disruption; and

• Global warming is limited to 2°C, resulting in a moderate increases in

Physical Risk.

Late policy action:

• Climate policy is delayed until 2031, prompting a more abrupt and

disorderly transition;

• A short‑term macroeconomic shock is assumed, including a fall in

property prices and higher unemployment;

• Energy costs rise more sharply due to delayed investment and

disruption; and

• Warming remains limited to 2°C, though transition impacts are more

severe.

No additional policy action:

• No further climate‑related policy intervention beyond what is already

enacted;

• Energy costs remain volatile and are assumed to increase over time;

• House prices are affected by progressively higher Physical Risk; and

• Global warming increases to around 3°C, leading to a significant rise in

the frequency and severity of climate‑related events such as flooding.

These scenarios incorporate assumptions relating to:

• Increases in borrower costs arising from energy‑efficiency

improvements (EPC upgrades) and the transition to low‑carbon

heating;

• Potential declines in collateral values where transition costs reduce

net property value or where properties face heightened physical‑risk

exposure;

• Higher credit losses where properties become “stranded” due to

either inability to meet minimum EPC standards or very high flood risk

leading to uninsurability; and

• Macroeconomic impacts, particularly in the Late Policy Action

scenario, feeding through to Probability of Defaults (‘PD’) and Loss

Given Defaults (‘LGD’).

ICAAP Conclusions

The outputs of these scenarios are used to inform the Society’s ICAAP and

are considered across the relevant risk categories within the Risk

Management Framework (‘RMF’). Based on current modelling and

assumptions, the ICAAP assessment concluded that no additional capital is

required to cover climate‑related risks.

Page | 19 Annual Report & Accounts 2025 Nottingham Building Society

Sustainability Report

Mitigation

Informed by its Climate Risk assessment and scenario analysis, the Society

has identified key areas of focus to further strengthen its management of

climate‑related risks:

• Enhanced underwriting and monitoring: improving the identification

and ongoing reporting of properties with heightened Physical or

Transition Climate Risk;

• Refinement of Risk Appetite and Credit Policy: considering specific

limits for lending on higher‑risk properties; and

• Product development: reviewing opportunities to support members in

improving energy efficiency and transitioning to a low‑carbon

economy.

Actions

Several targets and metrics have been developed, which support the risk

appetite. These have been informed by several factors, including multiple

scenario analyses. The targets considered for 2025 include:

Short-term (1-3 years)

• Reduce Scope 1 and Scope 2 greenhouse gas emissions by 10% by the

end of 2025, relative to the 2024 baseline. This aligns with annual

business planning cycles and short‑term operational viability

assessments;

• Refinement of Risk Appetite and Credit Policy: considering the

introduction of specific limits for lending on higher‑risk properties;

and

• Product development: reviewing opportunities to support members in

improving energy efficiency and transitioning to a low‑carbon

economy.

Medium-term (3-10 years)

• Interim reduction milestones (to be confirmed through annual review

cycles) will inform strategic planning, capital investment decisions and

assessment of resilience under plausible climate transition pathways.

Long-term (10-30 years+)

• Achieve Net Zero greenhouse gas emissions across Scopes 1, 2, and

material Scope 3 categories by 2050, with annual review of short‑term

pathways. This supports long‑term strategy and viability assessments

and aligns with recognised national and international transition

pathways.

The metrics and risk appetite are formally assessed by risk oversight

committees (at least quarterly). In addition, climate-related risks are

assessed as part of the half-year forecast and corporate planning processes,

to ensure that the current assessment of climate-related risks and strategic

objectives are aligned and the activities co-ordinated.

NBS recognises that the identification, measurement and forecasting of

climate-related risks present unique challenges, not least because of the

longer-term nature of the risks, the uncertainty around when and how they

will manifest and challenges around accessing reliable data and modelling it

effectively, all of which are common, to a lesser or greater extent, to

organisations. The Society’s approach to climate change and the effective

management of associated risks will inevitably evolve, as internal and

external understanding and approaches develop.

The most material climate-related risks identified are as follows:

• Credit risk and the impact of climate change on NBS’s existing and

future lending books from both a physical and transitional risk

perspective;

• Operational risks including impacts on how the Society and its third

parties and strategic partners operate and conduct business; and

• Legal, regulatory & conduct risks arising from the need to comply with

challenge laws and regulations and the impacts of them on our

business operations.

As the most material risks, these will form the focus of the Society’s

response to climate risk management in the short-term.

Metrics and targets

Carbon Footprint

We have strengthened our relationship with our long-standing utilities

partner, Inspired Energy, during 2025 and they will continue to support us

in developing our carbon strategy. Deliverables as a direct result of our work

with Inspired are as follows:

• Quarterly assessment and reporting of our Scope 1 and 2 emissions;

• Completion of selected site surveys to understand our current

emissions and opportunities for reduction;

• Options for carbon offset projects;

• Proposal to Reduce Energy Consumption and Cost with HVAC and

Heating Controls;

• Integration of an energy analysis portal within the Estates and

Facilities team;

• Annual review of our performance against targets; and

• Completion of Energy Savings Opportunity Scheme (‘ESOS’) Phase 3.

During 2025 we set a target to reduce our Scope 1 and 2 by a minimum of

10% against 2024 full year on a consistent basis. The introduction and

implementation of various energy efficient and emission reduction

initiatives throughout the year have contributed to Scope 1 and 2 emissions

reduction by 16.5%.

We also set out to reduce our electricity usage in 2025 and have achieved a

17.5% reduction through several measures including the completion of the

rollout of temperature controls across our branch estate and the increased

analysis of our energy usage via the data portal that we now utilise, which

has supported us in taking localised actions where anomalies have been

identified.

Whilst our core objective will be to ensure that the business meets the

Government’s Net Zero target date of 2050, we will be seeking to

understand our pathway and whether we can deliver aspects ahead of that

date.

Key to that understanding has been the establishment of our Carbon

Balance Sheet, which details our emissions against Scope 1, 2 and 3. This

has been updated and we now have five years of data to support us to

monitor trends and performance against targets.

Our internal data has been married with UK Government approved BEIS

greenhouse gas emission conversion factors for calculating carbon

emissions for a range of activities and processes.

Results of the 2025 data analysis show that we continue to generate over

99.6% of our emissions due to Scope 3 which covers indirect emission

sources. Within our Scope 3 emissions over 92.1% are in relation to the

carbon generated by properties where the mortgages that we have granted

provide part of the funding, but where we do not have direct control over

the carbon neutrality or otherwise of those buildings.

In the short-term we have continued to focus on addressing on our Scope 1

and 2 emissions. We report our greenhouse gas emissions in accordance

with the Greenhouse Gas (‘GHG’) Protocol using an operational control

boundary. This means we include all emissions from activities and sources

over which we have direct operational control.

Page | 20 Annual Report & Accounts 2025 Nottingham Building Society

Sustainability Report

The data included in our Carbon Balance Sheet, summarised in the table

below, therefore reflects our Scope 1, Scope 2 and relevant Scope 3

emissions expressed in tonnes of CO₂ equivalent:

2025

C02 in tonnes

2024

CO2 in tonnes

Scope 1 emissions

Direct emissions from owned or controlled sources

Gas

Other Fuels

Travel

Scope 2 emissions

Indirect emissions from purchased energy

Electricity

198

240

Total directly attributable

emissions

207 0.4% 248 0.5%

Scope 3 emissions

Other indirect emissions that occur in an entity’s value chain

Investments (mortgage

portfolio)

43,930 44,299

Purchased Goods and

Services

2,324 2,396

Capital Goods 662 392

Other

784

755

Total indirect emissions

47,700

99.6%

47,842

99.5%

Total emissions

47,907

48,090

CO2 per £’m of loans and

advances to members

11.1 11.4

1. Scope 1 – Direct Emissions

Scope 1 emissions are calculated using fuel consumption data measured in

litres. The methodology for both Scope 1 and Scope 2 CO₂e emissions aligns

with recognised standards, including the GHG Protocol (Corporate Standard

and Scope 2 Guidance), ISO 14064‑1 and ISO 14064‑2, and the UK

Environmental Reporting Guidelines.

2. Scope 2 – Indirect Energy Emissions (Location‑Based)

Scope 2 emissions are derived from electricity consumption as evidenced by

electricity invoices. The location‑based method is applied, using average

grid emissions intensity factors for the region where the electricity is

consumed. Emission calculations use the UK Government Emissions Factor

Database 2025, incorporating the published gross calorific values (kWh) and

associated CO₂e emission factors.

3. Scope 3 – Indirect Value Chain Emissions (Market‑Based Electricity)

Scope 3 emissions include those associated with electricity consumption

calculated using the market‑based method. This approach reflects

emissions from electricity products that the organisation has chosen (or not

chosen), drawing on emission factors derived from contractual instruments

such as bundled energy‑attribute contracts or unbundled attribute claims.

Market‑based emissions are reported in tonnes of CO₂. For this report,

market‑based emissions have been calculated using REGO‑backed

electricity contract emission factors.

4. Other Scope 3 Categories

The “Other” category includes emissions arising from business travel

(including grey fleet), employee commuting, and leased assets.

Physical risk metrics

Flood risk

Key metrics of physical risk are potential surface water risk, river and sea

flood risk. This is assessed based on publicly available flood risk data

published by the Environment Agency. The data below categorises our

mortgage exposures by annual flood probability as at 31

December 2025

and 2024:

Balance by annual flood probability

December 2025

Total

£m

High

(>3.3%)

45.5

1.06

Medium

(>1.1%-3.3%)

63.4

1.48

Low

(0.1%-1.1%)

87.9

2.05

Negligible

(<0.1%)

4,006.6

93.47

Unable to categorise

N/A

83.3

1.94

Total

4,286.7 100

Balance by annual flood probability

December 2024

Total

£m

High

(>3.3%)

89.5

2.11

Medium

(>1.1%-3.3%)

111.5

2.63

Low

(0.1%-1.1%)

505.4

11.92

Negligible

(<0.1%)

3,428.8

80.87

Unable to categorise

N/A

104.7

2.47

Total

4,239.8 100

Subsidence risk

Our exposure to high-risk subsidence areas remains low, consistent with

previous assessments. This reflects our prudent approach to property risk

management, which considers factors such as geological conditions,

historical claims data, and underwriting controls. We continue to monitor

this risk closely and will integrate any relevant insights into future

assessments to ensure a comprehensive understanding of our portfolio's

resilience.

Transitional risk metrics

As part of understanding transition risks, The Society’s lending portfolio has

been broken down by EPC rating. This will also allow the Society to work

closely with its members to help manage any impact as potential policy and

regulatory changes occur. The table below reflects current EPC ratings taken

from the England and Wales EPC register across the Residential and BTL

portfolios (including Ltd Co BTL).

Energy Performance Certificate Data

As at 31

December 2025

Number

Exposure

£m

EPC Rating A-C

7,631

1,391.0

EPC Rating D-E

12,181

2,019.0

EPC Rating below E

991

168.0

No EPC available

4,197

708.7

Total

25,000

4,286.7

Energy Performance Certificate Data

As at 31

December 2024

Number

Exposure

£m

EPC Rating A-C

7,436

1,211.0

EPC Rating D-E

12,236

1,808.5

EPC Rating below E

859

138.2

No EPC available

5,148

1,082.1

Total

25,679

4,239.8

EPC data provides an understanding of the energy efficiency of properties,

with an A rating denoting the most energy efficient. This information also

informs the Society’s scenario analysis for transitional risks.

Page | 21 Annual Report & Accounts 2025 Nottingham Building Society

Your Board of Directors

Non-Executive Directors

Chris Sparks

Chair of the Risk Committee

Chris was appointed to the Board as a Non-

Executive Director on 1

March 2025. He is a non-

Executive Director and Chair of the Risk Committee

of Unity Trust Bank PLC. Chris spent 9 years at

challenger bank Atom as a member of the Executive

Committee, ensuring risk management excellence

and enabling the successful growth of the bank.

Prior to Atom, Chris had a distinguished leadership

career in the UK Retail Banking sector where he

specialised in finance, data and risk management at

HSBC, GE Capital, RBS and Virgin Money.

Clodagh Gunnigle

Chair of the Remuneration Committee

Clodagh was appointed to the Board as a Non-

Executive Director on 22

September 2025. She

currently serves as a Non-Executive Director of Alpha

Bank London, where she Chairs the Remuneration

Committee; and Admiral Financial Services. She is

also a Non-Executive Director of a domestic violence

charity in Ireland. Clodagh is a chartered accountant

with extensive experience in consumer financial

services across finance, credit and risk. Her executive

career included senior leadership positions at GE

Capital and Arrow Global PLC, where she gained

significant expertise in governance, transformation,

and mergers and acquisitions.

Peter O’Donnell

Chair of the Audit Committee

Peter joined the Board in January 2021. Peter is a

Non-Executive Director at Queen Victoria Hospital

Foundation Trust and is a Member of the Board of

One Family, a mutual insurance company based in

Brighton. He has over 30 years’ experience in

financial services and worked in a variety of senior

finance roles at Prudential, RSA and Aviva. His last

executive role was as Executive Vice President at

Unum, a Fortune 500 company where he was also

CEO of its UK business and Chairman of Unum

Poland. Peter has a Bachelor of Commerce Degree

from University College Dublin, is a fellow of

Chartered Institute of Management Accounting

(‘CIMA’) and has significant experience of both

international and UK financial services markets.

Robin Ashton

Chair of the Board and the Nomination

Committee

Robin joined the Board as a Non-Executive

Director in December 2023 and was appointed

Chair of the Board in July 2024. He is also a Non-

Executive Director and Chair of the Audit & Risk

Committee of Domestic & General Limited,

Member of the Audit & Risk Committee of

Domestic & General Insurance plc and Deputy

Chair of the supervisory board of Domestic &

General Insurance Europe AG. Robin brings sector

knowledge and extensive leadership experience

to the table, having served as Chair of Leeds

Building Society for over seven years and as a

Non-Executive Director and Senior Independent

Director at Shawbrook Group plc.

Kerry Spooner

Senior Independent Director

Kerry joined the Board as a Non-Executive Director

in September 2016. Kerry is also independent Non-

Executive Chair of the Remuneration Committee of

The Bank of Nova Scotia, London Branch and Non-

Executive Chair of the Remuneration Committee of

ANZ Banking Group UK Branch. She had 10 years of

financial services experience in the Building Society

sector before joining the Board. Kerry acted as a

Non-Executive Director at two other building

societies and has experience as Vice Chair, Senior

Independent Director and Chair of Board Risk

Committees. Prior to that she worked as a solicitor

for 20 years, the last nine years as a Corporate

Finance Partner of the international law firm A&O

Shearman.

Kavita Patel

Non-Executive Director

Kavita joined the Board at the beginning of 2017

and is the Board Consumer Duty Champion. Kavita

is also a Non-Executive Director and Deputy Chair

of Foresight Enterprise VCT plc. She was previously

a Partner and Head of Investment Funds at the law

firm, Shakespeare Martineau. Kavita has a wealth

of experience gained during her 25 years at

Shakespeare Martineau advising clients in the

financial services sector, both in the retail and

institutional space, on corporate, regulatory and

governance matters.

Page | 22 Annual Report & Accounts 2025 Nottingham Building Society

Your Board of Directors

Executive Directors

Changes to the Board in the year to 31

December 2025

Chris Sparks was appointed to the Board on 1

March 2025.

Clodagh Gunnigle was appointed to the Board on 22

September 2025.

Simon Linares retired from the Board on 30

November 2025 following a six-year term with the Society.

Board Committees

Risk

Audit

Nomination

Remuneration

Chris Sparks (Chair)

Peter O’Donnell (Chair)

Robin Ashton (Chair)

Clodagh Gunnigle (Chair)

Clodagh Gunnigle

Peter O’Donnell

Robin Ashton

Peter O’Donnell

Kavita Patel

Kerry Spooner

Kavita Patel

Chris Sparks

Kerry Spooner

Sue Hayes

Chief Executive Officer

Sue joined the Society in January 2022 and was

appointed as CEO in March 2022. Sue has

focused her career in Retail and Business Banking

and has held senior positions at Lloyds, HBOS,

NatWest, Santander and Barclays. Sue joined

challenger bank Aldermore in 2018 and more

recently was CEO at GB Bank, a new entrant

challenger, which she took through to the first

stage of the banking licence and raised additional

funding. Sue previously sat on the UK Finance

Mortgage Board as Deputy Chair and has been

nominated to the UK Finance Mortgage Board

again as a Mutual representative. Sue holds an

Executive MBA from Cranfield Business School.

Simon Baum

Chief Risk Officer

Simon joined the Board as a Non-Executive Director

in June 2018, moving to be appointed as an

Executive Director and Chief Risk Officer (‘CRO’) of

the Society in May 2023. Simon has spent over 35

years specialising in risk management within the

financial services sector, holding several senior

positions at Experian, Alliance & Leicester and

Santander, both within the UK and overseas. His

previous roles included Director of Mortgage Risk at

Santander.

Anthony Murphy

Chief Financial Officer

Anthony joined the Society in March 2023 as CFO.

He is also a Council Member of the University of

Nottingham and Chair of Audit and Risk Committee.

Anthony was previously CFO of Tandem, a digital

challenger bank, playing a pivotal role in their

strategic transformation and journey towards

profitability. His prior experience includes CFO

positions in a listed regional bank in the United Arab

Emirates and senior roles in finance and strategy at

Lloyds Banking Group, notably as Finance Director

of its Middle East Business and supported its sale to

HSBC in 2012. Anthony's extensive international

and domestic experience in challenger and

established banks continues to support NBS

ongoing transformation. Anthony is also a member

of CIMA.

Page | 23 Annual Report & Accounts 2025 Nottingham Building Society

Directors’ Report

The Directors’ Report should be read in

conjunction with the Chair’s Statement, the Chief

Executive’s Review and the Strategic Report on

pages 4 to 15.

Business objectives and activities

NBS is a strong and successful mutual building society, which builds upon its

regional foundations, and has a track record of serving members for over

175 years. At the Society, together we fight for the Extra Ordinary to own

their own home.

Information on the Group’s business objectives and activities are provided

in the Strategic Report on pages 8 to 15.

Business review, future developments and key

performance indicators

The Group’s business activities and future plans are reviewed in the

Strategic Report section of the Annual Report and Accounts on pages 8 to

15. Additionally, within the Strategic Report, we comment upon the

financial (and other) key performance indicators used by the Board during

the year to assist its control, direction and drive for business results.

Principal risks and uncertainties

The principal risks and uncertainties faced by the Group and our approach

to managing these risks can be found in the Risk Management Report on

pages 26 to 30.

Financial risk management objectives and policies

As a result of its normal business activities, the Group is exposed to a variety

of risks, including credit, market and liquidity risk. The Group’s objective is

to minimise the impact of these risks, as well as financial risk, upon its

performance. The Risk Management Report considers this in detail. A

further explanation of the financial risks and the controls in place to manage

them (including the use of derivatives), is given in Note 31 to the Annual

Report and Accounts. Derivatives, including the impact on the 2024 results,

are disclosed in the Strategic Report on page 11.

Results

Group statutory profit before tax for the year was £16.7m (2024: £13.9m).

The Group profit after tax for the year transferred to general reserves

amounted to £10.7m (2024: profit after tax of £9.3m). As at 31

December

2025, total Group reserves and equity amounted to £266.7m (2024:

£253.3m).

Capital

Group gross capital as at 31

December 2025 was £290.8m, (2024:

£277.1m) representing 5.7% (2024: 5.7%) of total shares and borrowings.

Free capital, as at the same date, amounted to £266.3m (2024: £265.8m)

and 5.2% (2024: 5.3%) of total shares and borrowings.

The Annual Business Statement set out on page 94 gives the explanation of

these ratios. The Board remains committed to maintaining a capital position

in excess of its regulatory capital requirement.

Loans and advances

During 2025, total new lending was £883m (2024: £1,215m) with the

average advance being £211,717 (2024: £236,405) and the average debt at

the end of the year being £175,486 (2024: £165,109). As at 31

December

2025, there were fourteen cases (2024: sixteen cases) of properties being

12 or more months in arrears or in possession. The total amount of balances

outstanding in those cases was £1,786,136 (2024: £1,636,782), with arrears

of £240,630 (2024: £190,229).

Mortgage losses realised during the year totalled £0.3m (2024: £nil).

Provisions for expected credit losses total £4.5m (2024: £5.2m),

representing 0.11% of mortgage balances (2024: 0.12%).

The Group offers several different forbearance options to members

including reduced payment concessions, payment plans, capitalisations and

mortgage term extensions. As at 31

December 2025, the Group had 91

loans (2024: 76) subject to some form of forbearance.

Supplier payment policy

The Group is committed to deal responsibly with suppliers. The policy is that

payment will be made 30 days from the receipt of the invoice, provided that

the supplier has complied with all relevant terms and conditions. Variation

of the 30 day policy can be agreed at the time an order is placed.

As at 31

December 2025, the total amount owed to suppliers was

equivalent to 15 days’ credit (2024: 27 days).

Charitable and political donations

During the year, the Group made charitable donations of £144,511 (2024:

£124,437). No contributions were made for political purposes.

Country-by-country reporting

The Capital Requirements (Country-by-Country Reporting) Regulations

place certain reporting obligations on financial institutions within scope of

the Capital Requirements Directive.

The nature of the activities of the Society are set out under business

objectives of this report and for each of the Society’s subsidiaries in Note 16

to the Annual Report and Accounts. All the activities of the Society and its

subsidiaries are conducted in the UK and therefore 100% of the total

income, statutory profit before tax and tax shown in the Income Statement

as well as employee figures disclosed in Note 7, are related to the UK. The

Society and its subsidiaries have not received any public subsidies.

Environment & sustainability

The Sustainability Report on pages 18 to 20 outlines the Society’s position

in line with the requirements of the Financial Stability Board’s TCFD.

Directors’ responsibilities in respect of the Annual

Report, the Annual Business Statement, the

Directors’ Report and the Annual Accounts

The Directors are responsible for preparing the Annual Report, Annual

Business Statement, Directors' Report and the Annual Accounts in

accordance with applicable law and regulations. The Building Societies Act

1986 (‘the Act’) requires the Directors to prepare Group and Society Annual

Accounts for each financial year. Under that law they are required to

prepare the Group Annual Accounts in accordance with UK adopted

International Accounting Standards (‘IAS’) and applicable law and have

elected to prepare the Society Annual Accounts on the same basis.

The Group and Society Annual Accounts are required by law and UK adopted

IAS to present fairly the financial position and the performance of the Group

and the Society; the Act provides in relation to such Annual Accounts that

references in the relevant part of that Act to Annual Accounts giving a true

and fair view are references to their achieving a fair presentation.

In preparing each of the Group and Society Annual Accounts, the Directors

are required to:

• select suitable accounting policies in accordance with International

Accounting Standard 8: Accounting Polices, Changes in Accounting

Estimates and Errors and apply them consistently;

• present information, including accounting policies, in a manner that

provides relevant, reliable, comparable and understandable

information;

• state whether they have been prepared in accordance with UK

adopted IAS and those parts of the Building Societies Act 1986 and

Building Societies (Accounts and Related Provisions) Regulations 1998

applicable to societies reporting under UK adopted IAS; and

• prepare the Annual Accounts on the going concern basis unless it is

inappropriate to presume that the Group and Society will continue in

business.

Page | 24 Annual Report & Accounts 2025 Nottingham Building Society

Directors’ Report

In addition to the Annual Accounts, the Act requires the Directors to

prepare, for each financial year, an Annual Business Statement and a

Directors' Report, each containing prescribed information relating to the

business of the Group.

Directors’ responsibilities for accounting records

and internal control

The Directors are responsible for ensuring that the Group:

• keeps proper accounting records that disclose with reasonable

accuracy, at any time, the financial position of the Group and Society,

in accordance with the Act; and

• takes reasonable care to establish, maintain, document and review

such systems and controls as are appropriate to its business in

accordance with the rules made by the FCA and the PRA under the

Financial Services and Markets Act 2000.

The Directors have general responsibility for taking such steps as are

reasonably open to them to safeguard the assets of the Group and to

prevent and detect fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the

corporate and financial information included on the Society's website.

Legislation in the UK governing the preparation and dissemination of

Financial Statements may differ from legislation in other jurisdictions.

The Directors who held office at the date of approval of this Directors’

Report confirm that, so far as each of them is aware, there is no relevant

audit information of which the Group’s auditor is unaware, and each

director has taken all the steps that they ought to have taken as directors to

make themselves aware of any relevant information and to establish that

the Group’s auditor is aware of that information.

Directors’ statement pursuant to the UK

Corporate Governance Code

As required by the UK Corporate Governance Code, the Directors confirm

their opinion that the Annual Report and Accounts, taken as a whole, are

fair, balanced and understandable and provide the information necessary

for members to assess the performance, strategy and business model of the

Society. Details of the governance procedures that have been implemented

to support this can be found in the BAC Report on pages 35 and 36.

Going concern and viability

Going concern

In preparing the Annual Accounts the Directors must satisfy themselves that

it is reasonable to adopt the going concern basis.

The Directors have considered the risks and uncertainties discussed on

pages 13 to 15 and 26 to 30, and the extent to which they might affect the

preparation of the Annual Report and Accounts on a going concern basis.

Key to this consideration were the risks associated to regulatory capital,

liquidity and financial performance, together with the potential effects of

prevailing interest rates, inflationary pressures and climate-related factors.

The Group’s business activities and future plans are reviewed in the Chair’s

Statement and Chief Executive’s Review on pages 4 to 7. In addition, Note

31 to the Annual Report and Accounts includes the Group’s policies and

processes for managing financial instrument risk such as liquidity risk,

interest rate risk and credit risk.

As with many other financial institutions, the Group meets its day-to-day

liquidity requirements through prudent management of its retail and

wholesale funding sources. It ensures it maintains sufficient liquidity to

meet both normal business demands and those that may arise in stressed

circumstances. The Society has a surplus to regulatory capital requirements

and is forecasting this to remain across the going concern assessment

period.

Furthermore, the Group’s forecasts and plans, taking account of current and

possible future operating conditions, including stress tests and scenario

analysis, which have considered income, expenses and overall quality of the

mortgage portfolio, indicate that the Group has sufficient operating liquidity

and capital for the foreseeable future, and specifically for the going concern

assessment period to 4

March 2027, covering a period of at least twelve

months from the date of the approval of the Annual Report and Accounts.

As such, the Directors are satisfied that the Group has adequate resources

to continue in business and to use the going concern basis in preparing the

accounts.

Viability statement

In accordance with the 2024 Guidance to the UK Corporate Governance

Code, the Board has also assessed the prospects of the Society over a period

longer than the 12-months required by the going concern provision. The

Board has conducted this review for a period of five years. This is consistent

with the planning horizon used for corporate planning.

The corporate plan considers the Group’s profitability, cash flows, liquidity

and capital requirements as well as other key financial ratios over the

period. These ratios are subject to sensitivity analysis and stress testing,

which involves varying the main assumptions of the forecast, both

individually and in unison. Where appropriate, this stress testing is carried

out to evaluate the potential impact of the Group’s principal risks occurring

(which are outlined in the Risk Management Report on page 26).

The Society maintains continuous monitoring of the external environment

to identify both current and emerging risks. This includes assessing the

implications of changes in the interest rate environment, alongside the

potential impacts of other risks such as those associated with climate change

and operational resilience. We continue to develop and strengthen our key

financial crime and cyber controls to safeguard our customers and services,

while ensuring ongoing compliance with all regulatory obligations.

Based on the reviews completed, the Board considers that the Society is

viable over the medium-term.

Directors

The names of the Directors of the Society who served during the year and

up to the date of signing the accounts, their roles and membership of board

committees are detailed in the Governance section on pages 32 to 34. Other

business interests are shown in the Annual Business Statement. None of the

Directors have any beneficial interest in, or any rights to subscribe for shares

in, or debentures of, any connected undertaking of the Society, as at 31

December 2025.

Subsequent to the year end, Anthony Murphy resigned from his position as

the Society’s CFO. He will continue to stand for re‑election and remain in

post until his planned departure in May 2026.

Auditor

A resolution to reappoint Ernst and Young LLP as auditors of the Society will

be proposed at the AGM.

On behalf of the Board,

Robin Ashton

Chair

March 2026

Page | 25 Annual Report & Accounts 2025 Nottingham Building Society

Nomination Committee Report

Statement by the Chair of the Nomination

Committee

I am pleased to introduce our 2025 Nomination Committee (‘NomCo’)

report, offering an overview and summary of our actions throughout the

calendar year. This report also provides details regarding the Committee's

role and duties.

Committee responsibilities

The NomCo plays a vital role in building a capable and diverse leadership

team and fostering the organisation's long-term success.

• Oversight of succession planning and pipeline development for

Directors and Senior Management, ensuring an appropriate focus on

the balance of skills, knowledge, experience and diversity;

• Succession planning for the board and its committees;

• Oversight of the appointment and induction process for Board

candidates;

• Agreeing the approach and coordination of the annual Board

Performance Review;

• Review of the Directors Conflicts of Interest Policy, including

monitoring any potential, perceived or actual conflicts of interest; and

• Ongoing assessment of the independence and time commitment of

Non-Executive Directors.

Committee structure and operations

The Committee membership on 31

December 2025 comprised:

Robin Ashton (Chair)

Non-Executive Director and Chair of the

Board

Peter O’Donnell

Non-Executive Director and Chair of the

BAC

Kerry Spooner

Non-Executive Director, Senior

Independent Director

The detail of the skills and experience of the Committee members can be

found in their biographies on pages 21 to 22.

The Committee met on six occasions during the year. After each meeting,

the Committee Chair reports to the Board the activities of the NomCo,

highlighting significant decisions made.

Appointments

In November 2025, Simon Linares stepped down from his role as Non-

Executive Director, Chair of the Remuneration Committee and member of

this Committee. To ensure a suitable ongoing membership of the

Committee, Peter O’Donnell, Chair of the BAC, was invited to join NomCo

upon Simon’s departure.

Committee activities

The following outlines the Committee’s activities and areas of focus during

the year:

Appointments

• Recommended the appointment of two Non-

Executive Directors –

Chris Sparks and Clodagh

Gunnigle. These appointments were

subject to

extensive external checks and regulatory approval;

• Recommended the appointment of an Interim CFO

due to cover a period of illness for Anthony Murphy, and

the permanent appointments of the Society’s Chief

Customer Officer (‘CCO’), Chief Savings Officer (‘CSO’)

and Chief Technology Officer (‘CTO’);

• Received updates from management on the status of

Senior Management Function applications; and

Reviewed and approved the Society’s Management

Responsibilities Map under the Senior Manager &

Certification Regime.

Succession

Planning

• Reviewed the succession plans for both the Board and

Senior Management; and

• Agreed a candidate profile and engaged a third-party

to begin searching for a new Non-Executive Director.

Board

Composition &

Development

• Reviewed the size and composition of the Board and

its committees;

• Engaged a third-party to facilitate its triennial external

Board Performance Review, the results of which will be

reported in the 2026 Annual Report & Accounts;

• Reviewed the independence of Non-Executive

Directors; and

• Continued a Board development plan and associated

activities to support it.

Independence

The Committee monitors the independence and tenures of the Society’s Non-

Executive Directors, and makes recommendations to the Board on such

matters.

Kerry Spooner reached the end of her nine-year term as a Non-Executive

Director on 1

September 2025. NomCo reviewed her independence and

tenure, and the Board concluded that she should remain as an independent

Non-Executive Director until the 2026 AGM. To provide continuity of

leadership for the benefit of the Society and its members, the Board invited

Kerry to seek re-election as a non-independent Non-Executive Director at the

2026 AGM for a further year. To ensure the highest standards of independence

expected by the Code, Peter O’Donnell was invited to become the Senior

Independent Director from the conclusion of the 2026 AGM, subject to

regulatory approval.

Kavita Patel reached the end of her nine-year term as a Non-Executive Director

on 1

January 2026. NomCo reviewed her independence and tenure and the

Board concluded that she should remain as an independent Non-Executive

Director until the 2026 AGM. Kavita will not seek re-election at the AGM.

Equity, diversity and inclusion

The Committee's role is to ensure that both the Board and the Senior

Leadership team mirror the Society's goal of ‘Inviting Difference In’, by valuing

and embracing all colleagues and their unique perspectives.

Diversity encompasses various dimensions, including a well-rounded mix of

skills, experiences, backgrounds and qualifications in our workforce. We

recognise the substantial benefits that diversity brings, particularly in decision-

making. Our commitment to diversity and inclusion extends beyond numerical

targets. Our Diversity, Equity and Inclusion (‘DE&I’) strategy forms the basis for

engaging all colleagues, from the Board to the branch network.

We remain a signatory to the HM Treasury Women in Finance Charter; we

achieved our gender diversity target of 42% this year, with a total of 43% of

women in Senior Management positions. We have also set ourselves an

ambitious target of 50% representation of women in Senior Management

positions for 2026.

We continue to support five employee representation Groups which promote

women in business, wellbeing and inclusivity of race and ethnicity, namely:

‘Women in NBS’, ‘Mental Health & Wellbeing’, ‘Hormonal Health’, ‘Pride’ and

‘Embrace’. These influential groups represent various viewpoints, experiences

and communities who generate thought-provoking work and education to

enhance our business and workplace, creating a sense of belonging and

opportunities for all.

Other matters

Subsequent to the year end, Anthony Murphy has formally resigned from his

position as the Society’s Chief Financial Officer. He will continue to stand for

re‑election and remain in post until his planned departure in May 2026. The

Society has commenced a formal recruitment process to appoint his successor,

and this process is currently underway.

Robin Ashton

Chair of the Nomination Committee

March 2026

Page | 26 Annual Report & Accounts 2025 Nottingham Building Society

Risk Management Report

NBS recognises risk as a natural consequence of its business activities and

environment. It endeavours, through positive risk strategies, to manage

these in a manner that ensures delivery of its strategic objectives and

business plan, whilst protecting members’ interests and its financial

resources.

The Board is responsible for ensuring that an effective framework is in place

to promote and embed a risk-aware culture that identifies, appropriately

mitigates and manages the risks the Group and Society face while delivering

its strategic objectives. This includes both current risks and future risks,

including those associated with the implementation of strategy.

The Board reviews and approves key risk management policies annually,

including the RMF, Risk Appetite, ICAAP, ILAAP, Recovery and Resolution

Plan (‘RRP’), Solvent Exit Analysis (‘SEA’) and Solvent Wind Down Plan

(‘SWDP’).

In pursuing its strategy, the Board ensures there are appropriate capabilities

and resources available, along with sufficient capital strength to succeed.

This includes focusing on risk and reward to ensure both remain at an

acceptable level.

The Society operates a committee governance structure which enables

focused oversight and has clear lines of accountability and alignment to

responsibilities allocated under the Senior Managers and Certification

Regime (‘SMCR’).

The Risk Management Framework

NBS is a low-risk, UK-based organisation and, in common with other financial

institutions, the nature of the business results in several unavoidable or

inherent risks. The Society captures the most material risks to which it is

exposed within eight Principal Risks as follows:

Strategy &

Business Model

Risk

The risk that NBS does not have an appropriate strategy

and Corporate Plan to deliver sustainable long-term

value to members and / or fails to effectively implement

and execute the strategy. Strategy Risk includes

consideration of climate related risks.

Capital

Management

The risk that NBS does not maintain sufficient capital to

meet regulatory requirements, absorb unexpected

losses, or support its operations effectively. This

includes NBS’s ability to allocate capital effectively and

manage it prudently across a range of business and

economic environments, ensuring resilience to financial

stresses and compliance with regulatory standards.

Market &

Interest Rate

The risk to NBS’s net interest income and economic

value arising from changes in market interest rates and

mismatches in the Society’s Balance Sheet.

Retail Credit

The risk of loss stemming from a borrower’s failure to

repay a loan or otherwise meet a contractual obligation.

[Note: wholesale credit risk is covered under Liquidity

and Funding Risk].

Liquidity &

Funding

The risk that NBS, although solvent, does not have

sufficient financial resources available to meet its

obligations as they fall due.

Legal &

Regulatory

Legal & Regulatory Risk is the risk that NBS: fails to

comply with legal and regulatory requirements;

fails to enter into legally effective contracts; and/or

acts in a way that leads to litigation being commenced

against it.

Customer &

Conduct

The risk associated with failure to deliver good

outcomes for NBS’s members.

Operational

Risk of losses or impact on customers, reputation or

resilience, resulting from inadequate or failed

procedures, systems and controls, including those

resulting from disruption or damage to technology, poor

implementation of software or cyber/data breaches.

The RMF is an integral part of the Group’s formal structure, assisting the

Board in overseeing all aspects of risk management. BRC reviews and

approves policy statements, risk appetite statements, and risk management

committee terms of reference. It receives summary management

information and minutes from the individual risk management committees.

The RMF is reviewed annually by the BRC and recommended to the Board

for approval. It is based on the ‘three lines of defence’ model (described on

page 34) and focuses on:

• Clear accountability and ownership;

• Defined roles and responsibilities;

• Identification and definition of PRTs;

• Definition of Risk Appetite Framework;

• Establishment of the generic risk management cycle (Identify, Assess,

Manage, Report);

• Articulation of the respective roles of the three lines of defence; and

• Approach for monitoring and reporting on risk.

Day-to-day risk management is the responsibility of the ERC, which oversees

the Society’s risk committees, as detailed in the diagram below:

Page | 27 Annual Report & Accounts 2025 Nottingham Building Society

Risk Management Report

Committee Structure

Day-to-day risk management is the responsibility of the ERC, which oversees

the Society’s risk committees, as detailed in the diagram below:

Board Risk Committee

As detailed on page 31, the membership of the BRC comprises of Non-

Executive Directors. It is responsible for ensuring:

• Key risks are identified and appropriate steps taken by Management

to mitigate them;

• New and emerging risks are identified and reviewed through the

horizon scanning process;

• Due consideration is given to all significant matters relating to

governance, control, regulatory and compliance issues;

• Capital and liquidity are maintained to address the Group’s key risk

exposures, both to ensure regulatory compliance and to support the

achievement of strategic goals;

• All conduct risks (including Consumer Duty) are properly considered,

to ensure regulatory compliance and the achievement of good

outcomes for all our members;

• NBS has considered the risks to operational resiliency and mitigated

them to within approved tolerances;

• Climate related financial risks have been appropriately identified,

managed and mitigated; and

• The effective monitoring of the Group’s key risks and controls.

BRC meets at least four times per year to review risk management activities

and consolidated management information regarding existing and

emerging areas of risk.

The scope of the BRC extends to all types of risk faced by the Group with

the management of certain risks being delegated to the ERC, ExCo and

relevant management committees. The responsibilities of these

committees are described on the following page.

Executive Committee

The ExCo is responsible for acting on behalf of the Board in formulating

strategy, the business plan and for organising the Society’s assets and

resources to deliver value to members in a fair and appropriate manner. The

Committee is chaired by the CEO and comprises all Executive team

members.

Strategic Risk

When discussing future strategy, the ExCo and ultimately the Board takes

care to ensure that risks associated with maintaining a sustainable society

are evaluated and that plans are in place to affect any required risk

mitigation. These include risks associated with changes to the external and

economic environment, regulatory and statutory developments, people

and resources, strategic partnerships and alliances and change execution.

The ExCo oversees the detailed evaluation and monitoring of these risks.

The Committee also oversees the management of risks relating to changes

in the external environment, which have the potential to affect the Group’s

business model either through the level of demand for products and

services and / or its ability to meet that demand. This includes responsibility

for monitoring the macroeconomic environment and formulating NBS’s

strategic response to regulatory changes relating to climate change,

operational resilience and Consumer Duty.

The Committee looks to mitigate this exposure through regular review of its

Group corporate plan, ensuring activities remain within risk appetites.

Executive Risk Committee

The ERC is responsible for acting on behalf of the Board and the BRC in the

management and oversight of NBS’s principal risks. It reviews relevant

policies to ensure that the Society acts in such a way as to organise, manage

and protect the Society’s assets to deliver value to members through the

provision of savings and mortgages, whilst remaining within legal,

regulatory and agreed Board risk appetites.

The Committee enables the BRC to fulfil its role by ensuring that:

• There is executive level oversight of the RMF;

• Accountability and responsibility for managing risk is clearly defined;

• The risk culture of the Society is defined and embedded;

• The nature and extent of the most material risks to NBS are

determined and understood, including the eight PRTs and any

thematic risks;

• Appropriate risk appetites are defined and documented;

• NBS, at all times, operates within stated risk appetites;

• Processes are in place to consistently identify, measure, assess,

monitor and control risks;

• The risk event process is effectively capturing and reporting on

operational failures;

• The horizon scanning process is identifying emerging risks and

regulatory themes;

Page | 28 Annual Report & Accounts 2025 Nottingham Building Society

Risk Management Report

• NBS is compliant with regulatory requirements, including the ICAAP

and ILAAP process;

• The Society operates within its impact tolerance statements for its

important business services and remains operationally resilient;

• NBS maintains an up to date and adequate RRP which fully reflects

the requirements of the Board and regulators; and

• Conduct related risks are appropriately identified, managed and

reported to the BRC.

The Committee is provided with regular updates on the principal risk

categories by first line management.

To ensure the effective monitoring and reporting of risk, NBS maintains a

risk register to help management assess the probability and impact of the

risks identified, and the effectiveness of mitigating controls.

The Committee is chaired by the CRO and includes all Executive SMFs, risk

owners and other senior colleagues.

Assets and Liabilities Committee

The Assets and Liabilities Committee (‘ALCo’) is responsible for overseeing

NBS’s liquidity risk, market and interest rate risk, wholesale credit risk and

its capital risk. In addition, ALCo reviews treasury activity for compliance

with approved treasury policies and procedures. The Committee is chaired

by the CFO and the membership is made up of relevant senior executives

including but not limited to the CEO and CRO; the Head of Treasury; and

other relevant senior managers.

Market and Interest Rate Risk

The Society defines market and interest rate risk as the risk to net interest

income and economic value arising from changes in market interest rates

and mismatches in the Society’s Balance Sheet. Economic value is the

present value of the Society’s future cash flows.

As the uncertain economic environment persists, the Society continues to

actively monitor its position against its interest risk appetite to mitigate the

impact that any future change to interest rates might have in adversely

affecting the Society’s interest margin.

The Society’s limits for the management of market and interest rate risk are

documented in the Market & Interest Rate Risk policy, which is developed,

defined and recommended by ALCo and considered and approved

ultimately by the BRC.

Basis, gap and repricing risk are all elements of interest rate risk captured

by the market and interest rate risk category.

The Treasury Middle Office team measures the levels of interest rate risk in

the Society’s Balance Sheet, as well as subjecting the Balance Sheet to stress

tests designed to measure the likely impact of a sudden change in interest

rates. This is assessed weekly for stresses to economic value and monthly

for stresses to net interest income and monitored against the Board

approved risk appetite.

The Treasury team is responsible for day-to-day management of the

Society’s interest rate risk exposures within the approved risk appetites.

Typically interest rate risk is managed by taking advantage of natural

hedging opportunities within our Balance Sheet or using appropriate

hedging instruments.

ALCo is responsible for reviewing Treasury activity, performance and

compliance with the approved policy and risk appetites.

Liquidity Risk

The Society defines liquidity risk as the risk that the Society, although

solvent, does not have available sufficient financial resources to enable it to

meet its obligations as they fall due. This risk is managed through holding

cash and other high quality liquid assets and maintaining wholesale funding

facilities.

ALCo develops, defines and recommends the liquidity risk appetite, which

is considered and approved by the Board and documented in the Liquidity

Risk policy. The liquidity risk appetite helps to ensure that the management

of the liquidity portfolio by the Treasury team supports the corporate plan.

The Liquidity policy sets the framework for the day-to-day activities of the

Treasury team to ensure that all liquidity management activities are

conducted within approved risk appetites. The Society maintains a diverse

funding base and ensures compliance with applicable regulatory

requirements. Defined control limits determine the overall level of liquidity

to be maintained. The base level and composition of the Society’s liquidity

is subject to PRA guidance and regular stress testing and is also documented

as part of its ILAAP, as required by the PRA.

The Society is required to be compliant with the LCR, which measures the

amount of HQLA relative to modelled net stressed cash outflows within a

30-day period.

The Society also maintains a funding profile in line with the Retail Deposit

Ratio, which ensures that a sufficient proportion of our lending is supported

by stable retail deposits, reflecting our focus on sustainable,

member‑funded growth.

Based on our current and forecast liquidity positions, the liquidity portfolio

held by the Society comfortably exceeds the minimum requirements of the

LCR. Similarly, the funding profile exceeds the future requirements under

the NSFR.

The Society has documented an RRP, which describes those metrics that

would indicate an emerging market-wide or Society-specific stress event.

The Plan includes a range of options available to the Society should such a

stress event crystalise to ensure adequate levels of liquidity and capital are

maintained.

Regular stress testing is performed to confirm that the Society’s available

liquidity is adequate, within risk appetite and is sufficient to support

extreme levels of net cash outflows.

Responsibility for the day-to-day operational management of liquidity risk

lies with the Head of Treasury, with operational oversight provided by the

Treasury Middle Office team and reported to ALCo. A detailed analysis of

the Society’s liquidity profile can be found on page 12.

Wholesale Credit Risk

Wholesale credit risk arises from counterparties who may be unable to

repay loans and other financial instruments that the Society holds as part of

its liquidity portfolio.

The Society’s risk of counterparty default is relatively low due to the high

proportion of total liquidity held in UK Sovereign debt securities and the BoE

Reserve Account. The composition of the treasury assets can be found on

page 12.

The Society’s Liquidity policy sets out the amounts, products and

counterparties under which Treasury liquid assets can be held. Credit

worthiness of counterparties is assessed using several factors including

minimum acceptable credit ratings approved by the BRC, together with

lending limits. The policy also allows for investments in multilateral

development banks, covered bonds and RMBS, subject to criteria set by the

BRC. The Board does not permit any lending directly to sovereign states,

other than the UK Government, and all lending is in Sterling.

The Board, via the approved policy, further restricts the level of risk by

placing limits on the amount of exposure that can be taken in relation to

one counterparty or group of counterparties, and to industry sectors and

geographical regions.

The Society’s Treasury team has day-to-day responsibility for operating

within Board approved credit limits. Monitoring and oversight, including

assessment of counterparty credit worthiness, is undertaken by the

Treasury team to ensure all exposures remain within risk appetite. This

information is shared with ALCo.

Capital Risk

Page | 29 Annual Report & Accounts 2025 Nottingham Building Society

Risk Management Report

NBS conducts timely evaluations of its capital adequacy and financial

resources to determine the level of capital required to support current and

future risks contained within its strategic plan. This process, which is a

regulatory requirement, is known as the ICAAP.

The ICAAP assesses NBS’s future capital requirements by considering

changes to business volumes, the type and mix of assets, and business

activities within the context of current and future anticipated risks and

stress scenarios. The ICAAP also incorporates the Capital Requirement

Directive requirements.

The PRA uses the ICAAP during its Supervisory Review and Evaluation

Process (‘SREP’) through which it determines the amount of capital it

requires NBS to hold.

The Board monitors the current and future level of capital held by the

Society in relation to its TCR on a regular basis. The Society’s current and

future capital levels remain well in excess of the PRA requirements. An

analysis of the components of NBS’s current capital position can be found

in the Strategic report on page 13.

Pricing Committee

The Pricing Committee is a sub-committee of the ALCo. The Committee is

responsible for managing the Society’s Mortgage and Savings pricing with

reference to target Risk adjusted Return on Capital, Margins and volumes

to achieve the strategy outlined by the Board-approved Business Plan.

The Committee reviews appropriate Management Information (‘MI’) in

relation to the Society’s mortgages and savings in order to assess volume

and profitability performance and initiate any required actions to remediate

underperformance or deliver overperformance against the key customer

balance sheet and income lines. The Committee has the ability to approve

pricing changes to support business plan objectives

Retail Credit Committee

RCC is comprised of relevant executives and senior managers and chaired

by the CRO. It is responsible for oversight of the Society’s retail credit risks,

which includes exposures to residential and BTL mortgages, limited

company BTL mortgages and SBL.

Retail Credit Risk

The Society defines retail credit risk as the risk of loss stemming from a

borrower’s failure to repay a loan or otherwise meet a contractual

obligation. As a building society, this is most likely to arise through the

inability of borrowers to repay a mortgage. The Society’s exposure to retail

credit risk is limited to the provision of loans secured on property within

England and Wales.

A Retail Credit Risk Framework and associated credit risk appetite is

developed and proposed by the RCC, reviewed by ERC and considered and

approved by the BRC (with risk appetite being reserved for approval by the

Board). The Society manages the level of credit risk it undertakes by

applying various control disciplines, the objectives of which are to maintain

asset quality in line with approved risk appetite. The Board receives regular

monthly information on risk appetite limits.

Exposure to retail credit risk is carefully monitored by the RCC. Day-to-day

retail credit risk is managed through the application of prudent lending

policies, which are aligned to the stated risk appetites. This ongoing

monitoring provides assurance that current and future exposures, such as

LTV levels, geographic concentration and probability of default, are

managed within the risk appetite limits set by the Board.

The Society remains committed to promoting home ownership and its risk

appetite allows lending to first time buyers, but it restricts the overall level

of high loan-to-value lending to limit concentration risk. Similarly, NBS

continues to follow its long-term policy of also offering interest-only

products to a small number of borrowers, which are covered by strict

policies and monitoring procedures.

The Society regularly stress tests the mortgage portfolio to detect any signs

of potential payment stress or sensitivity for its borrowers to the impact of

future rate rises. The mortgage portfolio shows resilience to the impact of

recent rate rises, but the Society ensures adequate monitoring and analysis

are in place to ensure early detection of any potential deterioration.

Considering recent regulatory developments, the Society has also designed

a stress testing framework for the potential effects of climate change on

property values. This will be an area of increased focus in future years for

the Society, the wider sector and the regulators.

All mortgage loan applications are reviewed by an individual underwriter

supported using application scorecards. Credit reference bureau data is

obtained on all applications, which in turn supports our responsible lending

requirements. The Society also shares account performance data with the

selected bureaux. The Society’s lending has become increasingly

geographically diversified throughout England and Wales over the last few

years with no one area dominating the portfolio.

The Society continues to be a responsible lender and its approach to lending

is based on making sure that members can afford to meet their mortgage

repayments from the outset, using a prudent affordability calculator, as well

as our manual underwriting processes. Should members find themselves in

financial difficulty, the Society responds with appropriate forbearance and

collections activities to ensure good member outcomes. It also supports

members who experience temporary financial difficulties by providing the

assistance they require to enable them to regularise their financial

arrangements. Only as a matter of last resort does the Society seek to take

a property into possession.

The Society is committed to providing support to those members who are

experiencing difficulties in meeting their mortgage payments due to the

impacts of the cost-of-living crisis. We will continue to ensure that members

receive good outcomes and offer appropriate forbearance activities

throughout the cost-of-living crisis and beyond.

The Society does not have any exposure to the sub-prime mortgage market,

it lends only to ‘prime’ customers and has never written ‘self-certified’

lending business.

Legal and Regulatory Risk Committee

The Society, being a provider of mortgage and savings, is regulated by both

the FCA and the PRA.

The LRC oversees how NBS manages legal and regulatory risk so that

services are conducted in line with relevant legislation and statutory

requirements.

The Committee is chaired by the General Counsel & Society Secretary,

supported by relevant senior managers.

Each business area is responsible for ensuring that all regulatory and

statutory requirements are complied with on a day-to-day basis. Formal

oversight is provided by the Compliance Function through a programme of

compliance monitoring.

NBS has a very low appetite for breaches of regulation or for any activity

that may breach its legal obligations

Page | 30 Annual Report & Accounts 2025 Nottingham Building Society

Risk Management Report

Operational Risk Committee

ORC is responsible for actively overseeing the management of operational

risk across NBS. It is also responsible for ensuring that the Society maintains

sufficient operational resilience to ensure the ongoing delivery of key

services to members.

The Committee is chaired by the CTO supported by relevant senior

managers.

To allow the Committee to focus on the key elements of operational risk

(which includes ‘people risk’ in respect of our own colleagues and ‘third

party risk’ in respect of reliance on third parties and partners to deliver key

elements of our proposition and our operational resilience framework), the

Committee meets monthly.

NBS defines operational risk as the risk of loss resulting from human factors,

inadequate or failed internal processes and systems, or from external

events. Operational risk exists in every aspect of NBS’s business activities.

Proactive management of operational risk is essential in helping NBS

achieve both short-term operational objectives and longer-term strategic

goals.

To ensure that NBS’s services are operationally resilient, the Committee is

also responsible for ensuring that processes are in place to prevent, adapt,

respond to, recover and learn from operational disruptions. The Committee

oversees the process by which the Society identifies its important business

services, understands and remediates any potential weaknesses in the

supporting processes, ensures that appropriate business continuity plans

are in place and verifies that third party suppliers can meet our members’

needs at all times.

One of the key processes that support the effective identification and

management of operational risk is the risk event process, which provides a

mechanism for operational incidents to be reported, their impacts assessed,

remediation to be performed and root cause analysis to be undertaken,

thereby reducing the risk of recurrence.

The Committee also continues to work on embedding the Society’s

approach to operational resilience, in response to the Regulator’s increased

focus in this area.

Customer and Conduct Risk Committee

Customer & Conduct Risk Committee (‘CCRC’) is charged with overseeing

customer and conduct risks across all relevant business activities and is

chaired by the Chief Customer Officer. It has general responsibility for

monitoring the Society’s alignment with the Consumer Duty to support

good outcomes for members.

The Committee reviews relevant management information and reporting

on customer impacting matters, including but not limited to: Complaints MI,

customer impacting risk events, performance data on customer facing

processes and has general oversight of the impact of product and pricing on

members.

The Committee also exercises specific focus on regulatory obligations to

members around affordability and vulnerability.

Change Committee

Change Committee (‘CC’) is chaired by the CTO and is responsible for the

oversight and management of Transformation and Change risk; for which it

reports to ExCo. It is also responsible for ensuring that transformation and

change activity supports the effective delivery of the Society’s strategy. The

CC acts on behalf of the ExCo, monitoring delivery execution and

operational tolerance impact of transformational, large and small business

change for the Society through the effective control of a portfolio of change

activity. The CC is informed by the Group corporate plan and specifically

owns the change execution plan on behalf of the ExCo, ensuring effective

delivery, balancing risk and benefit in the achievement of the Society’s

strategy.

Page | 31 Annual Report & Accounts 2025 Nottingham Building Society

Board Risk Committee Report

Board Risk Committee

The BRC is tasked with ensuring fit for purpose risk management

arrangements are in place and for reviewing the Society’s risk exposures on

an ongoing basis, on behalf of the Board. It assesses applicable policies to

ensure that the Society operates in a manner that safeguards and efficiently

administers the Society’s assets, delivering benefits to members via savings

and mortgages, all while adhering to legal requirements, regulations, and

the agreed-upon risk appetites of the Board.

Committee structure

The BRC is a Board Committee and at 31

December 2025, the Committee

membership was made up as follows:

Chris Sparks (Chair)

Non-Executive Director and Chair of BRC

Kerry Spooner

Non-Executive Director, Senior Independent

Director

Peter O’Donnell

Non-Executive Director and Chair of the BAC

Kavita Patel

Non-Executive Director

Clodagh Gunnigle

Non-Executive Director and Chair of RemCo

The detail of the skills and experience of the Committee members can be

found in their biographies on pages 21 to 22.

The Committee met on eight occasions during the year. After each meeting,

the Committee Chair reports to the Board the activities of the BRC

highlighting significant decisions made.

Appointments

On 1

March 2025, Chris Sparks was appointed to the Board as a Non-

Executive Director and a member of the BRC. Subsequently Chris was

appointed Chair of the Board Risk Committee and chaired his first meeting

on 6

June.

Kerry Spooner stood down as Chair of Board Risk Committee and chaired

her final meeting on 28

April 2025. She continues as a member of the

Committee. Simon Linares retired from the Board on 30

November 2025.

He stood down as a member of BRC on 6

November 2025.

Committee responsibilities

The BRC monitors the Society’s overall risk exposure. The BRC fulfils its role

by ensuring:

• There is executive-level oversight of RMF;

• Accountability and responsibility for managing risk are clearly defined;

• The risk culture of the Society is defined and embedded;

• The nature and extent of the most significant risks to the Society are

determined and understood, including the eight principal risk types

and any thematic risks;

• Appropriate risk appetites are defined and documented;

• NBS, at all times, operates within stated risk appetites;

• Processes are in place to consistently identify, measure, assess,

monitor, and control risks;

• The risk event process is effectively capturing and reporting on

operational failures;

• The horizon scanning process is identifying emerging risks and

regulatory themes;

• The Society is compliant with regulatory requirements, including the

ICAAP and ILAAP process;

• The Society operates within its impact tolerance statements for its

important business services and remains operationally resilient;

• The Society maintains an up-to-date and adequate RRP;

• Conduct-related risks are appropriately identified, managed, and

reported (including Consumer Duty related); and

• Climate related financial risks are appropriately identified, managed

and mitigated.

Committee activities

The following outlines the Committee’s activities and areas of focus during

the year:

Strategy &

Risk Appetite

• Review of strategic risk appetite statements;

• Review of operational resilience self-assessment; and

• Review of strategic risk dashboards.

Policy

• Review and update to the Society’s RMF;

• Review and update to the Society’s Operational Risk

Management Framework;

• Annual review and approval of Capital Adequacy and

Liquidity and Funding Risk Policies;

• Annual approval of Compliance Monitoring Plan; and

• Approval of Financial Crime Policy.

Stress

Testing

• Review and recommendation of the ICAAP to the Board;

• Review and recommendation of the ILAAP to the Board;

• Review and recommendation of the RRP to the Board;

• Review and recommendation of Pillar 3 Disclosures to the

Board; and

• Review and recommendation of the Solvent Exit Plan to

the Board.

Risk

Management

• Review of credit risk profile of mortgage portfolios; and

• Review of annual Money Laundering Reporting Officer’s

report.

Risk

Monitoring

• Review of risk exposure relative to appetite and

tolerance measures;

• Review of CRO’s report;

• Horizon scanning;

• O

versight of ERC and subsidiary risk management

committees;

• Review of compliance and conduct risk monitoring

activity (including Consumer Duty); and

• In tandem with the RemCo, review the management of

key risks in determining the variable pay awards due to the

Executive Directors and Senior Management.

Governance

• Review and recommendation of BRC Terms of Reference

to the Board;

• Approval of ERC Terms of Reference; and

• Review of committee performance.

Chris Sparks

Chair of the Board Risk Committee

March 2026

Page | 32 Annual Report & Accounts 2025 Nottingham Building Society

Corporate Governance Report

Nottingham Building Society is committed to best

practice in corporate governance and has

considered the requirements of the UK Corporate

Governance Code.

The Board has reviewed the Society’s corporate governance practices

against the UK Corporate Governance Code 2024 (the ‘Code’), which is

intended to apply to listed companies, to the extent that it is relevant to a

building society. In the interest of transparency, each building society is

encouraged to explain in its Annual Report and Accounts whether, and to

what extent, it adheres to the Code. The Board is committed to complying

with best practice in corporate governance.

This report sets out how the Board has operated in 2025 and complied with

the provisions of the Code and concludes that the Board has identified that

it is fully compliant in all material respects with the Code.

The Board has considered the additional requirements introduced by

Provision 29 of the UK Corporate Governance Code, which take effect from

January 2026. These requirements will be addressed and reported in the

Society’s 2026 Annual Report and Accounts.

Leadership

The Board

As at 31

December 2025, the Board consisted of six Non-Executive

Directors (including the Chair) and three Executive Directors, providing a

complementary balance of skills and expertise.

The Board held 11 meetings and one strategy review and business planning

meeting during 2025. In addition, the Non-Executive Directors meet

periodically, without the Executive Directors present, and consider all

aspects of Board responsibilities, governance and performance.

In line with Code principles, the Board is collectively responsible for the

long-term sustainable success of the Society and ensuring that the

necessary resources are in place for the Society to meet its objectives and

measure performance against them. It has a schedule of reserved matters

and its principal function is to focus on how it has considered and addressed

the opportunities and risks to the future success of the Society, the

sustainability of the Society’s business model, and how its governance

enables the delivery of its strategy.

Additionally, it ensures the appropriate financial and business systems and

controls are in place to safeguard members’ interests, maintain effective

corporate governance and measure business performance. All Executive

and Non-Executive Directors can obtain independent professional advice, at

the Society’s expense, should that be necessary in the fulfilment of their

duties, and have access to the services and advice of the General Counsel &

Society Secretary.

Division of responsibilities

The roles of the Chair of the Board and the CEO are held by different people

and are distinct in their purpose, with division of responsibility set out in

writing.

The CEO has direct charge of the Society on a day-to-day basis and is

accountable to the Board for the financial and operational performance of

the Society, as well as for the formation of its strategy.

The Chair, who is elected by the Board annually, leads the Board in

approving its strategy and in the achievement of its objectives. The Chair is

responsible for organising the business of the Board, ensuring its

effectiveness and setting its agenda.

Non-Executive Directors

Independent Non-Executive Directors play a vital role in challenging and

helping develop strategy for the Society, whilst providing independent

judgement, knowledge and experience.

The Board considers all Non-Executive Directors to be independent and free

of any relationship or circumstances that could interfere with the exercise

of their independent judgement. Kerry Spooner reached the end of her

nine‑year term on 1

September 2025, and following a review by the

Nominations Committee, the Board agreed that she should remain an

independent Non‑Executive Director until the 2026 AGM.

One of the independent Non-Executive Directors is appointed as the Senior

Independent Director, to provide a sounding board for the Chair and to

serve as an intermediary for the other Directors, as necessary. The Senior

Independent Director is identified on page 21.

Effectiveness

Composition of the Board

The names of the Directors together with brief biographical details are set

out on pages 21 to 22.

The Board has four committees (BRC; NomCo; RemCo; and BAC) to help it

discharge its duties. The terms of reference for these committees are

reviewed annually and are available on the Society’s website.

The four committees meet regularly and current membership of these

committees is shown on page 22.

The table below shows the attendance of each director at the relevant

Board and Board committee meetings. The number to the left is the number

of meetings attended; the number to the right is the number of meetings

the Director was eligible to attend during 2025.

Director

Board

Risk

Nomination

Remuneration

Audit

R Ashton

11/11

6/6

5/5

S Baum

11/11

C Gunnigle

3/3

1/1

2/2

S Hayes

11/11

S Linares

10/10

7/7

4/4

5/5

A Murphy

6/11

P O’Donnell

11/11

8/8

2/2

6/6

K Patel

11/11

8/8

5/5

6/6

C Sparks

10/10

7/7

6/6

K Spooner

11/11

8/8

6/6

5/5

6/6

1 C Gunnigle was appointed to the Board on 22

September 2025.

2 S Linares retired from the Board on 30

November 2025.

3 A Murphy was not available to attend certain Board meetings during 2025 due to illness.

4 C Sparks was appointed to the Board on 1

March 2025.

The minutes of committee meetings are available to the Board. The Board

also receives reports from the Chair of each of the committees on matters

arising from the meetings they chair.

In addition to the four Board committees noted above, ExCo, ERC and ALCo

are delegated authority by the Board to manage the day-to-day operations

of the Society. Each of these committees generally meet once a month and

the membership of each committee is made up of both Executive Directors

and Senior Management. Together, the committees are responsible for

acting on behalf of the Board in organising, managing and protecting the

Society’s assets to deliver value to members, whilst ensuring the Society

operates within the law, regulation and clearly agreed Board risk appetites.

Together they are therefore responsible for ensuring the management and

delivery of four key areas on behalf of the Board: Strategy, Risk

Management, Business Planning, and Operational Oversight. The Risk

Management Report on pages 26 to 30 covers these committees in further

detail.

Page | 33 Annual Report & Accounts 2025 Nottingham Building Society

Corporate Governance Report

Appointments to the Board

Specialist third party recruitment consultants are engaged to assist with all

Board recruitment activities, whether Executive or Non-Executive

appointments.

The NomCo assists the Board by making recommendations on the Board

and Executive succession plan, recruitment and composition and other

relevant matters. The NomCo considers, annually, the competence and

suitability of those Directors seeking election or re-election at each AGM

The NomCo meets at least twice a year. Additional meetings may be

convened as necessary.

Appointments to the Board are made on merit and against objective criteria

balancing skills, experience, independence and knowledge on the Board.

The Society considers diversity, inclusion and equal opportunity both at

Board-level and in recruitment throughout the business. Candidates for

both Executive and Non-Executive Directorships are recommended by the

NomCo to the Board for approval, with the assistance of external

consultants.

All Directors must meet the requirements of the Senior Managers and

Certification Regime prescribed by the FCA and PRA including, where

appropriate, receiving regulatory approval.

Commitment

Prior to appointment, Non-Executive Directors are required to disclose their

other significant commitments. In addition, Non-Executive Directors

undertake that they will have sufficient time to meet what is expected of

them, recognising the need for availability in the event of crises. In addition,

throughout their tenure with the Society, Directors are required to inform

the Board in advance of any other positions they wish to take up so the time

commitment and any potential conflicts of interest can be considered.

Development

Upon appointment, Directors receive a formal and tailored induction and

throughout their tenure all Directors receive timely and appropriate training

to enable them to properly fulfil their roles. The information and training

requirements of all Directors are reviewed annually.

Information and support

The Chair ensures that all Directors receive accurate, timely and clear

information.

The Society has in place appropriate insurance cover in respect of the

Directors.

Evaluation

Executive Directors are evaluated using the Performance Management

Framework for all employees. The CEO is appraised by the Chair. The

performance of the Non-Executive Directors is reviewed annually by the

Chair. The Senior Independent Director conducts interviews with each

Director to appraise the performance of the Chair, the results of which are

discussed with the Chair.

Each year the Board and each of its committees undertake a review of their

performance during the year. The Code also prescribes that a review should

be undertaken by an independent external party at least every three years,

the last review having been commenced by Linstock in late 2025 and will

continue in early 2026. Both the latest internal review and previous external

reviews confirmed that the Board and its committees operated effectively.

Further details of the 2025 externally-facilitated Board performance review

will be reported in the 2026 Annual Report and Accounts.

Re-election

In 2026, all Directors will submit themselves for election or re-election at

the AGM in accordance with the Code, except for Kavita Patel who will not

seek re-election to the Board.

Anthony Murphy resigned from his position as the Society’s CFO. He will

continue to stand for re‑election and remain in post until his planned

departure in May 2026.

Non-Executive Directors can serve up to a maximum of three three-year

terms, unless an extension is approved by the Board.

The Code requires that the independence of all Non-Executive Directors is

considered as part of the Annual Report of the Society. It is confirmed that,

all the Non-Executive Directors are currently considered to be independent,

and in particular (noting the requirements of the Code) Non-Executive

Directors are required to attest to their independence against the specific

criteria set out in the Code. Please see the NomCo Report on page 25 for

additional details.

The NomCo makes recommendations for the Board concerning the re-

appointment of any Non-Executive Director at the conclusion of their

specified term of office, having due regard to their performance and ability

to continue to contribute to the Board considering knowledge, skills and

experience required.

Accountability and audit

Financial and business reporting

The Directors’ Report on pages 23 to 24 details the responsibilities of the

Directors in preparing the Society’s accounts.

This includes ensuring suitable accounting policies are followed, that a true

and fair view of the Society’s financial position is given and that the Society’s

business is a going concern.

The Board has responsibility to present a fair, balanced and understandable

assessment of the Society’s performance and financial position, business

model and strategy, consideration of which is contained within the Chief

Executive’s Review on pages 5 to 7, the Strategic Report on pages 8 to 15

and within the Annual Report and Accounts taken as a whole.

Viability statement

In accordance with the Guidance to the Code, the Board has assessed the

prospects of the Society over a period longer than the 12-months required

by the going concern provision. The Viability Statement is considered on

page 24 within the Directors’ Report.

Page | 34 Annual Report & Accounts 2025 Nottingham Building Society

Corporate Governance Report

Risk management and internal control

The responsibilities and activities of the BRC are outlined within the Board

Risk Committee Report on page 31.

The Society’s RMF (approved by the Board) sets out the principal risks facing

the Group, including those that would threaten the business model, future

performance, solvency and liquidity. Principal risks and further information

on risk management is provided in the Risk Management Report on pages

26 to 30.

In accordance with the Code, the Board is committed to maintaining sound

systems and controls to safeguard both its own assets and those of its

members and there is an annual review of risk management and internal

control systems.

The operation of these three lines of defence is embodied in the terms of

reference of the Society’s risk committees. The BRC ensures (on behalf of

the Board) that there are appropriate risk management frameworks and

policies in place for the appropriate identification, assessment, monitoring

and control of all the main sources of risk that the Society faces.

Where weaknesses in controls are identified by the three lines of defence,

the Board monitors the steps taken to remedy the issues and to ensure that

the Society responds to changing external threats and economic

circumstances and to the changing regulatory environment.

Remuneration

Policy and procedures

The level and make-up of Director remuneration and the procedure for

developing policy on executive remuneration, (including fixing the

remuneration packages of individual Directors), is considered by the

RemCo.

The RemCo’s work and the Society’s compliance with the Code principles

relating to remuneration is covered in the Directors’ Remuneration Report

on pages 37 to 40.

Relations with members

Dialogue with members

Engagement with members is undertaken in various ways including

member events, social media, customer panels, regular literature and

mainstream media.

The Society is keen to find out its members’ views so that it can continually

improve. It provides them with several ways and opportunities to give their

feedback. It surveys a selection of its members on a regular basis through

its member satisfaction survey. The results of this feedback are shared in

Board and committee meetings. The Society also encourages its members

to attend its AGM where they can ask questions and voice their opinions.

During 2025, for the first time in the Society’s history and to encourage

broad engagement, members were invited to attend the meeting either in-

person or virtually and invited to pre-submit questions.

Furthermore, each year, the Society produces a Members’ Newsletter,

including the Summary Financial Statement, which provides an abridged

version of information contained within the Annual Report and Accounts.

The Members’ Newsletter is provided to all members as part of its AGM

ancillary documentation.

Constructive use of the AGM

Each year, notice of the AGM is given to all members who are eligible to

vote. Members are sent voting forms and are encouraged to vote online, by

post, at a local branch or by person or proxy at the AGM.

All postal and proxy votes are counted using independent scrutineers.

All members of the Board are present at the AGM each year (unless,

exceptionally, their absence is unavoidable) and the Chairs of the BAC,

NomCo, BRC and RemCo are, therefore, available to answer members’

questions.

The Notice of the AGM and related papers are sent at least 21 days before

the AGM in accordance with the Society’s Rules and the Building Societies

Act 1986.

First Line:

Focus: Control

Day-to-day management and control of risk by the

business. Results reported to Management and BRC

Second Line:

Focus: Oversight

Development and maintenance of coherent Risk

Management Frameworks and ongoing oversight and

challenge of first line risk management and controls.

Results reported to Management and BRC

Third Line:

Focus: Assurance

Independent assurance of effectiveness of risk control

and risk oversight. Results reported to Management

and BAC

Page | 35 Annual Report & Accounts 2025 Nottingham Building Society

Board Audit Committee Report

Board Audit Committee

The principal role of the BAC is providing support to the Board in its

oversight of financial reporting and the financial control environment across

the Society. The Committee’s primary functions are:

• To monitor the integrity of the Financial Statements and any formal

announcements relating to the Society’s financial performance,

reviewing any significant financial reporting judgements which they

contain including that of the Society’s going concern status;

• To keep under review the Society’s financial control systems and

processes that manage and monitor financial risks;

• To review and approve the statements to be included in the Annual

Report and Accounts concerning internal controls, financial risk

management and the Viability Statement;

• To review the Society’s procedures for detecting fraud and its systems

and controls for the prevention of bribery;

• To monitor and review the effectiveness of the Internal Audit function;

• To approve and review progress of the annual Internal Audit Plan;

• Prior to the members’ vote at the AGM, to make recommendations to

the Board for appointment, re-appointment and / or removal of the

external auditor;

• To review and monitor the external auditor’s independence and

objectivity and the effectiveness of the audit process, taking into

consideration relevant UK law, regulation and applicable ethical

standards;

• To approve the remuneration and terms of engagement of the

Society’s external auditor;

• To develop and implement policy on the engagement of the external

auditor to supply non-audit services, considering relevant ethical

guidance regarding the provision of non-audit services by the external

audit firm; and

• To report to the Board on how the Committee has discharged its

responsibilities.

Committee structure and attendance

The BAC is a Board Committee and at 31

December 2025, the Committee

membership was made up as follows:

Peter O’Donnell (Chair)

Non-Executive Director and Chair of BAC

Kerry Spooner

Non-Executive Director, Senior

Independent Director

Chris Sparks

Non-Executive Director and Chair of the BRC

Kavita Patel

Non-Executive Director

Clodagh Gunnigle

Non-Executive Director and Chair of RemCo

The detail of the skills and experience of the Committee members can be

found in their biographies on pages 21 to 22. Members have a broad range

of skills, experience and knowledge relevant to the building society and

financial services sector.

The General Counsel & Society Secretary acts as Secretary to the

Committee, supported by the Deputy Society Secretary. Other individuals

such as the CEO, CFO, CRO, Chief Internal Audit Officer (‘CIAO’) and Finance

Director may be invited to attend all or part of any meeting as and when

appropriate. The external auditor was invited to attend all the Committee’s

meetings held in 2025.

The Committee met on eight occasions during the year. After each meeting,

the Committee Chair reports to the Board the activities of the BRC

highlighting significant decisions made.

Private meetings are held at least once a year with the external auditor and

with the CIAO in the absence of Management to enable issues to be raised

directly if necessary. The Committee Chair meets with the CIAO and the

external auditor on a regular basis.

Following each committee meeting, the minutes of the meeting are

distributed to the Board, and the Committee Chair provides an update at

the next Board meeting on key matters discussed by the Committee.

Meeting frequency and reporting

The Committee met six times in 2025 and during the year:

• Reviewed the results and Annual Report and Accounts for the year

ended 31

December 2024;

• Challenged the key loan provision assumptions and judgements,

underlying the analysis of ECL losses proposed by Management;

• Reviewed the going concern and viability statement assumptions and

all key issues and areas of judgement relating to the financial

statement reporting;

• Reviewed reports from the external auditor, including the

Management Letter highlighting system and control

recommendations, key accounting and audit issues and conclusions

for the interim and full year financial statement reporting;

• Reviewed the Annual and Interim Financial Statements and draft press

releases, with consideration of the fair, balanced and understandable

requirements of the UK Corporate Governance Code;

• Received and reviewed reports from Internal Audit on tracking progress

against their plan;

• Reviewed and approved (working with BRC) the statements to be

included in the Annual Report and Accounts concerning internal control,

financial risk management and the Viability Statement; and

• Carried out a review of the Committee’s own performance and terms of

reference

Significant matters in relation to the Financial

Statements

The Committee considers a wide range of matters in relation to the Financial

Statements, which relate mainly to key judgements, accounting policies and

estimates which Management must make during the preparation of the

statements, particularly in respect of large or unusual transactions. During

2025, the significant matters considered by the Committee included:

Expected Credit Loss

(‘ECL’) Provisioning

The Society reviews the IFRS 9 model outputs to

estimate the level of impairment provision

required across the mortgage portfolio, which

uses historical default and loss experience as

well as applying judgement. The Committee

reviewed and challenged the ap

proach to

calculating the provisions and to post-model

adjustments, with the Committee’s assessment

supported by peer benchmarking.

Effective Interest Rate

(‘EIR’) Methodology

The Committee reviewed and challenged the

key assumptions applied within the EIR models,

including expected behavioural life and early

repayment charges.

Hedge Accounting

The Committee reviewed assumptions and

reviewed the change in risk level applied by the

external auditor.

Property Valuation

Methodology

The Committee reviewed Management’s

proposal to move from a Cost to the Revaluation

basis for freehold property, and challenged the

timing and impact on reserves and disclosures.

Going Concern

Assessment & Viability

Statement

The Committee evaluated whether the going

concern basis of accounting was appropriate by

considering forecast profitability, liquidity,

funding availability and regulatory capital

positions. The review also considered stress

testing and scenario analysis,

and the

Committee challenged M

anagement on

scenario weightings and resilience under

combined stress events.

Page | 36 Annual Report & Accounts 2025 Nottingham Building Society

Board Audit Committee Report

Fair, Balanced &

Understandable

The Committee reviewed the integrity of the

Financial Statements and any formal

announcements. The content of the Annual

Report and Accounts was reviewed and the

Committee advised the Board that, in its view,

and taken as a whole, it is fair, balanced and

understandable and provides the information

necessary for members to assess the Society’s

performance, business model and strategy. The

Committee therefore recommended that the

Board approve the Annual Report and Accounts.

Corporate Governance

Code

The Committee reviewed the impacts on the

Financial Statements of the UK Corporate

Governance Code 2024, and challenged

anagement’s plan for compliance with

Provision 29.

Changes to Accounting

Standards & other

Relevant

Developments

The Committee is kept up to date with changes

to accounting standards and relevant

developments in financial reporting and

applicable law. In addition, as appropriate

members are invited to Society-run teach-ins,

and attend relevant seminars and conferences

provided by external bodies.

Independence and effectiveness of external

auditor

In 2023, the Society tendered its external audit relationship in line with best

practice and Ernst & Young LLP were re-engaged and therefore have now been

in post for eleven years as at 31

December 2025.

In advance of the commencement of the annual audit, the Committee reviewed

a report presented by the external auditor detailing the audit plan, planning

materiality, areas of audit focus, terms of engagement and fees payable.

Following the review of the Interim Financial Statements and the audit of the

Annual Financial Statements, the Committee received a report detailing the

work performed in areas of significant risk, and a summary of misstatements

and internal control related issues identified. The Committee considered the

matters set out in these reports as part of recommending the Interim and

Annual Financial Statements for approval.

To monitor and assess any threats to the independence of the Auditor, the

Committee reviews a report on the level of spend with the auditor on audit and

non-audit services. The Committee has a framework on the Society’s use of the

external auditor for non-audit work, to ensure their continued independence

and objectivity. The external auditor undertook a six-monthly review of the

Society’s interim results, an audit related assurance service, conducted in

accordance with this policy, and details of any fees paid for these services are

outlined in Note 6 to the accounts.

The Committee considered the performance of Ernst & Young LLP as external

auditor for 2025, and is satisfied with their objectivity, independence and

effectiveness and therefore recommended that they be re-appointed at the

AGM for the current year.

Oversight and effectiveness of internal audit

The Committee receives regular reports from the CIAO setting out the results

of assurance activity, proposed changes to the approved Audit Plan and the

level of resource available. Significant findings and themes identified were

considered by the Committee, alongside Management’s response and the

tracking and completion of outstanding actions. In addition to approving the

annual plan and budget, throughout the year the Committee reviewed and

approved amendments to the Internal Audit Plan and resources.

The Committee regularly monitors whether Internal Audit has delivered its

reports in accordance with the agreed plan and to the expected standard. The

CIAO also carries out an annual review of the effectiveness of the Society’s

system of internal control and reports on the outcome of this review to the

Committee. The CIAO reported an adequate level of assurance in relation to

the Group’s arrangements for risk management, control infrastructure,

governance and fraud prevention controls. The Committee therefore regards

the Internal Audit function to be effective.

Audit Committee performance and effectiveness

As outlined in the Corporate Governance Report on pages 32 to 34, the Board

and each of the committees formally evaluate their own performance annually.

The Committee discussed the results of the 2024 review in October 2025 and

concluded that, overall, the Committee continued to be effective and was

adequately discharging its responsibilities.

Peter O’Donnell

Chair of the Board Audit Committee

March 2026

Page | 37 Annual Report & Accounts 2025 Nottingham Building Society

Director’s Remuneration Report

Statement by the Chair of the Remuneration

Committee

On behalf of the Committee, I am pleased to present the annual Directors’

Remuneration Report, which sets out the Remuneration Policy and details

of the Directors’ remuneration in the year ended 31

December 2025.

NBS is committed to best practice in its remuneration of directors. This

report explains how the Society applies the relevant principles and

requirements of the remuneration regulations and Codes. The report has

two sections:

• Remuneration Policy, which sets out the Society’s Remuneration

Policy for directors; and

• Annual Remuneration Report, which outlines how the policy was

implemented in 2025.

Committee structure

In 2025, the Remuneration Committee membership was made up as

follows:

Simon Linares

Non-Executive Director and Chair of RemCo

(Retired from the Board on 30

November 2025)

Clodagh Gunnigle

Non-Executive Director and Chair of RemCo

(Joined the Board on 22

September 2025 and was

appointed the Chair of Remco role following Simon

Linares retirement in November 2025)

Robin Ashton

Non-Executive Director and Chair of the Board

Kerry Spooner

Non-Executive Director, Senior Independent

Director

Kavita Patel

Non-Executive Director

2025 performance and awards

The Chair’s Statement, Chief Executive’s Review and Strategic Report on

pages 4 to 7 describe 2025 as a period of disciplined consolidation and

strong performance despite volatile economic conditions. Nottingham

Building Society remained a top‑ten mutual with total assets of £5.4bn,

strengthening its foundations while embedding major technology and

operational investments. The Society sharpened its purpose around

specialist residential mortgages and continued to provide a safe, valued

home for savers. Capital ratios remained robust, supported by enhanced

funding resilience. Service quality also remained sector‑leading, with a 4.8

Trustpilot score from over 5,000 reviews, alongside national recognition for

transformation through the Change Excellence programme.

In this context, NBS is pleased to confirm its Annual Bonus Plan for 2025.

The bonus for 2025 is determined by the Society's financial and strategic

performance, as well as each employee's individual achievements.

Additionally, the existing Medium-Term Incentive Plan (‘MTIP’) was

replaced with a new MTIP that continues to support our EOB strategy and

engages and retains the leaders in charge of delivering it, whilst recognising

an enhanced focus on key programmes of investment. The new MTIP spans

a three-year performance period, with rigorous performance conditions

and benchmarks. The Directors’ variable compensation will be tied

exclusively to the Annual Bonus Plan and new MTIP.

It is in this context that the payments to Executive Directors have been

determined and are detailed in this report. In 2025, the Committee

reviewed and approved payment of the deferred element of the 2021

Bonus Plan.

Remuneration Committee

The primary objective of the RemCo, under delegated authority from the

Board, is to make recommendations to the Board on the general

Remuneration Policy of NBS and specifically on the remuneration of

Executive Directors and other Remuneration Code staff (including Material

Risk Takers), ensuring that remuneration is in line with the Society’s

business drivers, values and ambitions and adheres to the Remuneration

Policy. In addition, the Committee is responsible for approving the variable

pay, reward principles, compliance with the Remuneration Code and policy

statement.

The Committee is made up of a minimum of three Non-Executive Directors, as

detailed within the table above. The CEO, CPO, General Counsel & Society

Secretary attend the meetings by invitation.

NBS adheres to the requirements of the Remuneration Code applicable to a

Level 3 firm as defined by the Regulator. Non-Executive Directors do not receive

variable remuneration. Information on Nottingham Building Society’s other

Remuneration Code Staff is set out in the Pillar 3 disclosures published on our

website www.thenottingham.com, along with the Committee terms of

reference.

Committee activities

The Committee met five times in 2025, with activities including:

Remuneration

Policy

• Review of the Remuneration Policy for 2025 and

recommending it to the Board for approval;

• Reviewing and approving the Remuneration Policy

Statement ensuring its compliance with the

Remuneration Code; and

• Reviewing regulatory updates and assessing the

impact on NBS.

Fixed

Remuneration

• Oversight of the activities undertaken by the ExCo

in relation to reward;

• Considering the annual pay review for all eligible

employees;

• Agreeing the terms for any appointments and

leavers for executive level and other

Remuneration Code staff (including Material Risk

Takers);

• Consideration of additional provision of employer

pension contributions for all colleagues; and

•

Agreeing Financial Coaching Provision for all

colleagues.

Variable

Remuneration

• Agreeing the release of 2021 bonus deferrals;

• Agreeing a new Annual Bonus Plan for 2025; and

• Review of the MTIP.

RemCo intends to review the construct of the Annual Bonus Plan in 2026.

Remuneration Policy

NBS’s Remuneration Policy reflects its objectives for good governance,

appropriate risk management and acting in the long-term best interests of

members. The policy is there to ensure that:

• Remuneration should be sufficient to attract, reward, retain and motivate

high quality leaders and employees to run the Society successfully,

delivering value for our members whilst avoiding paying more than is

necessary for this purpose in line with our mutual ethos; and

• Remuneration is structured to strike the right balance between fixed and

variable pay. Variable pay schemes are designed to incentivise and reward

appropriate behaviour and performance, aligned with Nottingham

Building Society’s position on risk; rewards are only attributed to the

delivery of success and achievement of objectives.

NBS is classified as a level 3 firm and seeks to apply appropriate remuneration

best practice for all Remuneration Code staff and other staff.

All pay is benchmarked using externally provided data and the approach to pay

reviews is consistently applied to all colleagues across the Society, regardless

of position.

Recruitment policy for Executive Directors

NBS’s approach to recruitment is to remain competitive in the market while

ensuring we pay no more than is necessary to attract and retain the right talent

for roles across the business, including Executive positions. Any new Executive

Director’s remuneration package will be consistent with our Remuneration

Policy as outlined in this report. Any payments made to Executive Directors on

joining the Society to compensate them for forfeited remuneration from their

previous employer will be compliant with the provisions of the Remuneration

Code and will be approved by the RemCo.

Page | 38 Annual Report & Accounts 2025 Nottingham Building Society

Director’s Remuneration Report

Service contracts

All Executive Directors, in line with best practice, have service contracts

outlining their duties and terms and conditions of employment. The CEO’s

contract is terminable at any time by the Society on 12 months’ notice and

by the CEO on 12 months’ notice. The contracts for the other Executive

Directors are terminable at any time by the Society on six months’ notice

and by the individual on six months’ notice. Unless notice to terminate is

given by either party, all contracts continue automatically.

Payment for loss of office of Executive Directors

Any compensation in the event of early termination is subject to RemCo

recommendation and Board approval. Pension contributions cease on

termination under the rules of the pension scheme.

Other directorships

None of the Executive Directors currently hold any paid external

directorships.

Executive Directors’ total remuneration

Executive Directors’ emoluments comprise a basic salary, variable pay,

entitlement and other taxable benefits as outlined on pages 39 to 40.

The total remuneration received by Executive Directors is detailed on page

40. The information has been audited and shows remuneration for the years

ended 31

December 2025 and 31

December 2024 as required under the

Building Societies (Accounts and Related Provisions) Regulations 1998.

The remuneration of Executive Directors is considered annually by the

RemCo attended by NBS’s CEO, who (except in respect of their own

remuneration) makes recommendations regarding executive pay and

agreed recommendations are referred to the Board.

The CEO is the Society’s highest paid employee and no employee earns

more than the CEO.

The salary of Executive Directors increased by 2.0% in 2025. This is in line

with the wider Society, with the basic salary increase for colleagues ranging

from 2.5% to 3.0% depending on grade, with minimum salaries

implemented to reflect the Living Wage.

Chief Executive Officer pay ratio

The CEO pay ratio is presented as follows to promote transparency and

encourage good governance. The CEO is the highest paid person within the

organisation, and this is compared with the 25

, 50

and 75

percentile

employees to calculate the CEO pay ratio. This uses a single total figure of

remuneration which includes total salary, variable pay, pension and taxable

benefits.

The Society has chosen to publish the CEO pay ratio using the recommended

and government preferred approach (Option A). Option A involves

calculating the actual full time equivalent remuneration for all relevant

employees for the financial year in question.

These values are then listed in order from lowest to highest and the values

at the three percentile points identified as disclosed below:

Year 25

percentile Median 75

percentile

2025 19:1 14:1 7:1

2024 21:1 15:1 8:1

percentile

Median 75

percentile

2025

Total remuneration £26,648 £37,873 £69,025

Salary £23,815 £34,028 £60,618

2024

Total remuneration £25,486 £35,034 £64,630

Salary £22,829 £31,130 £56,116

Employee data includes full time equivalent total remuneration for Society

employees as at 31

December.

Non-Executive Directors

The Chair and other Non-Executive Directors each receive an annual fee

reflective of the time commitment and responsibilities of the role. Fees for

Non-Executive Directors are set by reference to benchmark information

from a building society comparator group, agreed with the Board and take

into consideration the principles underpinning the annual salary review.

The Non-Executive Directors’ fees are reviewed by the Chair together with

the Executive Directors before recommendations are referred to the Board.

Remuneration of the Chair is considered by the RemCo, together with the

Society’s CEO, without the Chair being present.

Non-Executive Directors do not receive variable pay or pensions to

encourage their independence.

Non-Executive Directors are reimbursed for reasonable expenses incurred

during their work on the Society’s business.

Remuneration Code staff (Material risk takers)

The remuneration of all Remuneration Code staff is overseen directly by the

RemCo. Fixed and variable pay decisions (including appointment packages)

for Remuneration Code Staff (excluding the CIAO where the decision is

made by the Chair of the BAC and approved by the RemCo), are proposed

by the Executive and all decisions are recommended to the RemCo for

approval.

The Society’s Remuneration Code staff are informed of their status through

written communication. This communication includes the implications of

their status including the potential for remuneration that does not comply

with certain requirements of the Remuneration Code to be rendered void

and recoverable by the Society.

Page | 39 Annual Report & Accounts 2025 Nottingham Building Society

Director’s Remuneration Report

Component Purpose Operation Performance measures Opportunity

Basic salary

Fixed remuneration set to

attract and retain

executives of appropriate

calibre and experience.

Basic salary is assessed by

reference to roles carrying

similar responsibilities in

comparable organisations. A

comparator group is used

that consists of Executive

Director positions within

banks and building societies

of a similar size and

complexity.

Reviewed annually and linked to personal

performance and market sector

benchmarking, including Willis Towers

Watson benchmark data.

Increases based on:

• Overall employee pay increases in the

Group;

• Benchmarking comparisons;

• Personal performance; and

• Role and experience.

The base salaries of Executive

Directors are reviewed as for any

other employee in accordance

with the reward matrix, except in

circumstances where:

•

market peer benchmarking

indicates that remuneration is

moving out of line of the

appropriate peer group; and /

•

there has been a material

increase in scope or

responsibility of the Executive

Director’s role.

Variable pay

Annual

Bonus Plan

Linked to the delivery of the

Society and personal

objectives. Used to reward

Executive Directors within

the context of achieving the

Society’s goals and

objectives.

Payments under the variable

pay schemes are not

pensionable.

The bonus will only be awarded if the

threshold criteria for both Society and

individual performance targets are met and

a payment is triggered in the Annual Bonus

Plan.

50% of the bonus is deferred for three years

and payment is subject to meeting Society

and individual performance threshold

criteria in each of the years from award to

payment.

The Committee has the discretion to reduce

or withhold the deferred element if it

becomes apparent that the basis on which

the variable pay award was made was

wrong or that financial performance has

deteriorated materially since the award.

The deferred payment, prior to the 2022

performance period, is subject to clawback

for a period of three years after payment.

For performance periods from 2022

onwards, the deferred payment is subject

to clawback for a period of 7 years after

payment.

The scheme is based upon three elements:

• Financial adequacy - achievement of a

minimum level of adjusted Profit Before

Tax before any bonus is payable.

• Annual Bonus Plan measures Society

performance against four strategic

pillars:

 growing & rewarding membership;

 responsible society;

 strategic reinvention; and

 safe & secure.

• Individual performance including

achievement of strategic objectives.

Personal performance objectives,

appropriate to the responsibilities of the

Executive Director, including the

achievement of appropriate strategic

progress are set at the start of each year.

Objectives are set within board risk appetite

and regulatory requirements.

The maximum award possible is

50% of basic salary, payable with

50% of the award deferred for

three years.

Variable pay

Medium-

term

Incentive

Plan (‘MTIP’)

One-off incentive used to

reward, engage and retain

Executive Directors to

deliver the Society’s

strategy.

Payments under the variable

pay schemes are not

pensionable.

The incentive will only be awarded if the

threshold criteria and Society performance

targets are met once the performance

period of three years (2025 to 2027) has

concluded.

50% of the incentive payment will be made

in March 2028 with the remaining 50%

deferred until September 2028. Payment is

subject to meeting Society and individual

performance threshold criteria from award

to payment.

The Committee has the discretion to reduce

or withhold the payment if it becomes

apparent that the basis on which the

variable pay award was made was wrong or

that financial performance has deteriorated

materially since the award.

The payment is subject to clawback for a

period of seven years after payment.

The scheme is based upon three elements:

• Financial adequacy - achievement of a

minimum level of adjusted underlying

Profit Before Tax before any incentive is

payable.

• MTIP measures performance against

the delivery of the Society’s strategic

objectives, focusing on three key

indicators:

 net interest margin;

 proportion of EOB lending; and

 delivery of key programmes of

investment (including operational

resilience, core banking and lending

platform initiatives).

• Risk appetite - performance objectives

were set within board risk appetite and

regulatory requirements. Any payment

is subject to achieving the same risk

targets as the annual bonus plan for

plan years 2025, 2026 and 2027.

The maximum award possible is a

cash lump sum of £500,000 for

the CEO and £250,000 for the

other Executive Directors, payable

at the end of the performance

period in December 2027,

deferred 50% until March 2028

and 50% until September 2028.

Pension or

pension

allowance

A part of fixed remuneration

to attract and retain

Executives of appropriate

calibre and experience.

Executive Directors are invited to join the

Society’s defined contribution pension plan,

or, as an alternative, be provided with an

equivalent cash allowance.

Not applicable.

Pension contributions for new

Executive Directors appointed

post 1

January 2020 will be

aligned with the contribution

matrix for all employees.

Benefits

A part of fixed remuneration

to attract and retain

executives of appropriate

calibre and experience.

The benefits received by Executive

Directors are private medical insurance and

a car allowance.

Not applicable.

Set at a level considered

appropriate for each Executive

Director by the Remuneration

Committee in line with market

practice.

Page | 40 Annual Report & Accounts 2025 Nottingham Building Society

Director’s Remuneration Report

Annual Report on remuneration

Executive Director remuneration

2025

2024

Audited

Sue

Hayes

Anthony

Murphy

Simon

Baum

Total

Sue

Hayes

Anthony

Murphy

Simon

Baum

Total

Society

£000

Fixed remuneration

Salary

400

305

259

964

391

297

253

941

Benefits

Variable remuneration

Annual bonus

160

128

481

383

312

1,176

454

367

300

1,121

Pension contribution

Payments in lieu of pension

513

398

338

1,249

485 382 326 1,193

The Directors can sacrifice elements of their salary and variable pay for pension contributions. All figures disclosed in the table above are presented pre-sacrifice.

The annual bonus figure reflects the amounts awarded in the year, which are not subject to deferral, and any deferred amount from previous financial years,

paid in year. The remaining element, which is subject to deferral and the achievement of threshold criteria, will be disclosed in the year of payment.

The unpaid deferred elements of the annual bonus scheme are as follows:

Executive Directors

Due 2026

Due

2027

Due

2028

Due 2029

Total Deferred

Performance Year

2022

2023

2024

2025

£000

Paul Astruc

Simon Baum

105

Sue Hayes

242

David Marlow

Anthony Murphy

136

113

147

128

160

548

Non-Executive Directors

2025 2024

£000

Robin Ashton (Chair)

132

Simon Linares (Retired from the Board on 30

November)

Clodagh Gunnigle (Joined the Board on 22

September 2025)

Peter O’Donnell

Kavita Patel

Kerry Spooner

Chris Sparks (Joined the Board on 1

March 2025)

Paul Astruc (retired from the Board on 6

April 2024)

Andrew Neden (retired from the Board on 1

July 2024)

Total emoluments for services as directors

492

489

Clodagh Gunnigle

Chair of the Remuneration Committee

March 2026

Page | 41 Annual Report & Accounts 2025 Nottingham Building Society

Independent Auditor’s Report

Independent Auditor’s Report to the members of Nottingham Building Society

Opinion

In our opinion:

• the Financial Statements of Nottingham Building Society (the “Society”) and its subsidiaries (together the “Group”) give a true and fair view of the state of

the Group’s and the Society’s affairs as at 31 December 2025 and of the Group’s and the Society’s income and expenditure for the year then ended;

• the Financial Statements have been properly prepared in accordance with UK adopted international accounting standards; and

• the Financial Statements have been prepared in accordance with the requirements of the Building Societies Act 1986

We have audited the Financial Statements (as defined in the table below) of the Group and Society for the year ended 31 December 2025, which comprise:

Group Society

Income Statement for the year ended 31 December 2025 Income Statement for the year ended 31 December 2025

Statement of Comprehensive Income for the year ended 31 December 2025 Statement of Comprehensive Income for the year ended 31 December 2025

Statement of Financial Position for the year ended 31 December 2025 Statement of Financial Position as at 31 December 2025

Statement of Changes in Members’ Interests for the year ended 31 December

2025

Statement of Changes in Members’ Interests for the year ended 31 December

2025

Cash Flow Statements for the year ended 31 December 2025 Cash Flow Statement for the year ended 31 December 2025

Related notes 1 to 36 to the Financial Statements, including material accounting policy information.

Directors’ remuneration report tables identified as “audited”.

The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) and applicable law. Our responsibilities under those standards are further

described in the Auditor’s responsibilities for the audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Group and the Society in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in the

UK, including the FRC’s Ethical Standard as applied to public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these

requirements.

The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Society and we remain independent of the Group and the

Society in conducting the audit.

Conclusions relating to going concern

In auditing the Financial Statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the Financial

Statements is appropriate. Our evaluation of the Directors’ assessment of the Group’s and the Society’s ability to continue to adopt the going concern basis of

accounting included the following procedures:

• We confirmed our understanding of the Directors’ going concern assessment process, including the Financial Statement Close Process.

• We obtained the Directors’ going concern assessment, which covers a period until 4

March 2027, being 12 months from the date of approval of the

Annual Report and Accounts.

• We compared the historical budgeted financial information with actual results, in order to form a view on the reliability of the forecasting process.

• We assessed the reasonableness of the Group and the Society’s funding plans, including capital and liquidity requirements. We considered the Group and

Society’s current funding position and availability of additional capital and liquidity should it be required. We also evaluated the Group and Society’s ability

to replace maturing debt instruments over the going concern period to manage regulatory capital requirements.

• We assessed the results of the Group’s stress and reverse stress testing, including considering the impact of ongoing macroeconomic uncertainty. We

evaluated the feasibility of Management’s planned future actions should stress scenarios materialise.

• We considered whether there were other events subsequent to the balance sheet date which could have a bearing on the going concern conclusion.

• We reviewed regulatory correspondence, committee and board meeting minutes, and met with the Prudential Regulation Authority, in order to identify

events or conditions that may impact the Group and Society’s ability to continue as a going concern.

• We reviewed the going concern disclosures included in the annual report in order to assess whether the disclosures were appropriate and in conformity

with the reporting standards.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast

significant doubt on the Group’s and Society’s ability to continue as a going concern until 4 March 2027, being a period of 12 months from the data of approval of

the Annual Report and Accounts.

Page | 42 Annual Report & Accounts 2025 Nottingham Building Society

Independent Auditor’s Report

In relation to the Group’s and the Society’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw

attention to in relation to the Directors’ statement in the Financial Statements about whether the directors considered it appropriate to adopt the going concern

basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. However, because

not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s and the Society’s ability to continue as a going concern.

Overview of our audit approach

Audit scope

• We performed an audit of the complete financial information of the Group and the Society

Key audit matters

• Expected credit loss provisions

• Risk of of fraud in recognition of income under Effective Interest Rate Accounting

Materiality

• Overall Group materiality of £2.0m (2024: £1.4m) which represents 0.75% (2024: 0.55%) of members’ interests.

An overview of the scope of the Society and the Group audits

Tailoring the scope

The Society is managed from one location in Nottingham. All audit work performed for the purposes of the audit was undertaken by a single audit team based in

the UK.

We have followed a risk-based approach when developing our audit approach to obtain sufficient appropriate audit evidence on which to base our audit opinion.

We performed risk assessment procedures to identify and assess risks of material misstatement of the Group and Society Financial Statements and identified

significant accounts and disclosures. When identifying the extent to which audit work needed to be performed to respond to the identified risks of material

misstatement of the Group and Society Financial Statements, we considered our understanding of the Group and its business environment, the potential impact

of climate change, the applicable financial framework, the Group’s system of internal control at the entity level, applications and relevant internal audit results.

Our scoping to address the risk of material misstatement for each key audit matter is set out in the key audit matters section of our report.

Climate change

Stakeholders are increasingly interested in how climate change will impact the Group and the Society. The Group and Society has determined that the most

significant future impacts from climate change on their operations will be from physical and transition risks. These are explained on pages 18 to 20 in the

Sustainability Report, including their commitments to achieve net zero emissions by 2050. All of these disclosures form part of the “Other Information,” rather

than the audited Financial Statements. Our procedures on these unaudited disclosures therefore consisted solely of considering whether they are materially

inconsistent with the Financial Statements or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated, in line with our

responsibilities on “Other Information”.

In planning and performing our audit we assessed the potential impacts of climate change on the Group and Society’s business and any consequential material

impact on its Financial Statements.

The Group and Society has explained in Note 1, Accounting policies, how they have reflected the impact of climate change in their Financial Statements. These

disclosures also explain where governmental and societal responses to climate change risks are still developing, and where the degree of certainty of these changes

means that they cannot be taken into account when determining asset and liability valuations under the requirements of UK adopted international accounting

standards.

Our audit effort in considering the impact of climate change on the Financial Statements was focused on evaluating management’s assessment of the impact of

climate risk, physical and transition, their climate commitments, the effects of material climate risks disclosed in Note 1 and whether these have been

appropriately reflected in asset and liability values, where these are impacted by future cash flows, following the requirements of UK adopted international

accounting standards. As part of this evaluation, we performed our own risk assessment, supported by our climate change specialists, to determine the risks of

material misstatement in the Financial Statements from climate change which needed to be considered in our audit.

We also challenged the Directors’ considerations of climate change risks in their assessment of going concern and associated disclosures. Where considerations

of climate change were relevant to our assessment of going concern, these are described above.

Based on our work, whilst we have not identified the impact of climate change on the Financial Statements to be a standalone key audit matter, we have

considered the impact of climate change to principally impact ‘Expected credit loss provisions’ key audit matter. Details of the impact, our procedures and

findings are included in our explanation of the expected credit loss provisions key audit matters below.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial Statements of the current period

and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had

the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were

addressed in the context of our audit of the Financial Statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these

matters.

Page | 43 Annual Report & Accounts 2025 Nottingham Building Society

Independent Auditor’s Report

Risk

Our response to the risk

Expected credit loss (“ECL”) provisions

As at 31 December 2025, the Group and Society reported gross loans and

advances to customers of £4,286.7m (2024: £4,239.8m) and related ECL

provisions of £4.6m (2024: £5.2m).

Refer to the Board Audit Committee Report (pages 35-36); Accounting

policies (pages 55 and 56); and Note 15 of the Consolidated Financial

Statements (page 64)

Valuation and completeness of expected credit loss (ECL) provisions is an

area of estimation that requires management judgement. The continuing

higher rate environment has an impact on the level of uncertainty in the

valuation of expected credit loss provisions, particularly in relation to the

application of macro-economic scenarios and the estimation of the

probability of default of customers in the future.

Key judgements and estimates include:

• Accounting interpretations and modelling assumptions used to build

the credit models and calculate the ECL.

• The appropriateness of staging criteria selected to determine

whether a significant increase in credit risk (“SICR”) has occurred.

• The application of multiple macro-economic scenarios including the

appropriateness of the probability weightings assigned to the various

scenarios.

• The completeness and valuation of post model adjustments.

There is also judgement in considering the potential consequences of climate

change and the impact of this on the ECL provision.

Due to the degree of judgement that needs to be exercised in determining

the key assumptions used in calculating ECL provisions, we considered this to

be a key audit matter. The heightened levels of estimation uncertainty also

gave rise to an increased risk of management override of controls.

We understood and evaluated the design effectiveness of key controls over the

ECL process and adopted a substantive approach.

With the support of EY credit risk modelling specialists, we risk assessed the

models used to generate the ECL provisions. Based on this risk assessment we

tailored our procedures, which included:

• Testing the appropriateness of the Society’s updated model methodology

through inspection of model design documentation.

• Independently replicating the Society’s modelled ECL as at 31 December

2025. This included recalculation of PDs, LGDs, EADs and overall ECL.

• Performing sensitivity analysis to determine the impact of changes in key

assumptions to the ECL provision.

• Benchmarking assumptions to observable market data where applicable.

We assessed whether the SICR criteria used by the Society provided appropriate

leading indicators of increased credit risk in the mortgage portfolio. With the

support of EY credit risk modelling specialists, we also independently tested

whether the mortgage portfolio had been appropriately staged in line with the

Society’s stated criteria.

With the support of EY economists, we assessed the base case and alternative

macro-economic scenarios through comparison to other scenarios from external

sources. This testing also included benchmarking of the probability weightings

used by the Society.

We assessed the completeness of post-

model adjustments, including

considerations to climate change risk, using our knowledge and experience

across the UK lending sector and with the involvement of our credit risk

modelling specialists we independently recalculated the additional ECL provision

adjustment applied by management.

We performed a stand-back analysis to assess the overall adequacy of the ECL

provisions. This included utilising our understanding of the Society and the UK

mortgage market to perform analytical procedures, assessing whether any

contradictory evidence had been obtained from other parts of the audit, and

considering the Society’s provision coverage ratios in comparison to other

lenders using available benchmarking data.

Key observations communicated to the Audit Committee

• We communicated that we were satisfied that the Society’s ECL provisions were reasonably estimated and in compliance with the requirements of IFRS 9.

• We highlighted to the Committee that there remains increased uncertainty in determining forecast losses due to the prevailing uncertain economic

environment.

• We considered that the application of staging criteria was materially appropriate and aligned to the requirements of IFRS 9.

• We considered the multiple economic scenarios, and associated weightings, incorporated in the IFRS 9 models to be materially appropriate.

Risk

Our response to the risk

Risk of fraud in the recognition of income under EIR (“EIR”) Accounting

As at 31 December 2025, the Group and Society reported gross loans and

advances to customers of £4,286.7m (2024: £4,239.8m) and related EIR

accounting adjustments of £9.2m (2024: £5.2m).

Refer to the Board Audit Committee Report (pages 35-36); Accounting policies

(pages 53 and 54); and Note 3 of the Consolidated Financial Statements (page

59)

The EIR method of revenue recognition involves management judgement and

several calculations in the allocation of lending fees and the amortisation of

these fees over the behavioural life of the underlying mortgage.

We understood and evaluated the design effectiveness of key controls over the

EIR accounting process and adopted a substantive approach.

We critically assessed the accounting policies in relation to revenue recognition

under IFRS 9 effective interest rate accounting.

We validated and challenged assumptions used in the EIR models, including the

accounting decisions and assumptions in relation to fees and charges, the

behavioural lives of assets and the allocation of lending fees to loan products.

Our challenge included a comparison of customer redemption assumptions

with recent customer behaviours observable in the Group’s portfolios, and an

assessment of the inclusion of lending fees within the EIR model.

We tested the accuracy of the EIR calculations by independently recalculating

the EIR adjustment as at 31 December 2025.

Page | 44 Annual Report & Accounts 2025 Nottingham Building Society

Independent Auditor’s Report

The most sensitive inputs to the Society’s EIR accounting are driven by the

allocation of lending fees against relevant loan products , the behavioural life

assumption used for the deferral period for the fees, and estimations related

to future early redemption charges. These may be measured incorrectly due to

the use of inaccurate or incomplete data, erroneous formulae or inappropriate

assumptions.

Due to the degree of judgement that needs to be exercised by the Directors in

calculating the EIR adjustment, we considered this to be a key audit matter.

This also represents a risk of fraud in revenue recognition and through

management override of internal controls.

We performed data integrity testing on the key data fields used within the EIR

calculations by vouching a sample of data points through to supporting

evidence.

Key observations communicated to the Audit Committee

We communicated that we were satisfied that the selection and application of accounting policies, including the application of effective interest rate

accounting, was appropriate under the requirements of IFRS 9.

We concluded that the assumptions informing the EIR calculations as at 31 December 2025 were reasonable and that these resulted in EIR adjustments which

were appropriately derived from complete and accurate data.

In the prior year, our auditor’s report included a key audit matter in relation to the ‘Application of hedge accounting’. During the current period, we have

assessed the risk of material misstatement and considered those matters which were of most significance to our audit of the financial statements and no longer

consider this to be a key audit matter.

Page | 45 Annual Report & Accounts 2025 Nottingham Building Society

Independent Auditor’s Report

Our application of materiality

We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit

opinion.

Materiality

The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users

of the Financial Statements. Materiality provides a basis for determining the nature and extent of our audit procedures.

We determined materiality for the Group and Society to be £2.0m (2024: £1.4m), which is 0.75% (2024: 0.55%) of total members’ interests. We increased the

percentage applied to total members' interests in the year based on a consideration of results of the Group and Society and benchmarking to relevant organisations.

We consider total members’ interests provides us with an appropriate measure of materiality given this is a key focus area for the Society’s members and regulators

and is more relevant to users in an uncertain economic environment where profitability and the temporary impact of matters impacting financial reporting is less

predictable.

Performance materiality

The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the

aggregate of uncorrected and undetected misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that performance materiality

was 75% (2024: 75%) of our planning materiality, namely £1.5m (2024: £1.05m). We have set performance materiality at this percentage after considering our

experience in the prior year, our assessment of an effective control environment and including our perspectives from the current year audit. As a result, we

determined that the higher of our permissible thresholds for our performance materiality was appropriate.

Reporting threshold

An amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £0.1m (2024: £0.07m), which is set at 5% of

planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative

considerations in forming our opinion.

Other information

The Other Information comprises the information included in the Annual Report and Accounts set out on pages 2 to 40 and 94 to 97, including, Key highlights,

Chairman’s statement, Chief Executive’s review, Strategic Report, Stakeholder Engagement Report, Corporate Responsibility Report, Sustainability Report, Your

Board of Directors, Directors’ Report, Nomination Committee Report, Risk Management Report, Board Risk Committee Report, Corporate Governance Report,

Board Audit Committee Report, Directors’ Remuneration Report, Annual Business Statement and Glossary, other than the Financial Statements and our auditor’s

report thereon. The Directors are responsible for the Other Information contained within the annual report.

Our opinion on the Financial Statements does not cover the “Other Information” and, except to the extent otherwise explicitly stated in this report, we do not

express any form of assurance conclusion thereon.

Our responsibility is to read the “Other Information” and, in doing so, consider whether the other information is materially inconsistent with the Financial

Statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or

apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the Financial Statements themselves. If,

based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

Opinion on other matters prescribed by the Building Societies Act 1986

In our opinion:

• The Annual Business Statement and the Directors’ Report have been prepared in accordance with the requirements of the Building Societies Act 1986;

• the information given in the Directors’ Report for the financial year for which the Financial Statements are prepared is consistent with the Financial

Statements; and

• the information given in the Annual Business Statement (other than the information upon which we are not required to report) gives a true representation

of the matters in respect of which it is given.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Building Societies Act 1986 requires us to report to you if, in our opinion:

• Proper accounting records have not been kept by the Society; or

• the Group or Society’s Financial Statements are not in agreement with the accounting records; or

• we have not received all the information and explanations and access to documents we require for our audit.

Page | 46 Annual Report & Accounts 2025 Nottingham Building Society

Independent Auditor’s Report

Corporate Governance Statement

We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the

Group and the Society’s voluntary compliance with the provisions of the UK Corporate Governance Code specified for our review by the UK Listing Rules.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement are materially

consistent with the Financial Statements or our knowledge obtained during the audit:

• Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set

out on page 24;

• Directors’ explanation as to its assessment of the Society’s prospects, the period this assessment covers and why the period is appropriate set out on page

24;

• Directors’ statement on fair, balanced and understandable set out on page 24;

• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 23;

• the section of the Annual Report that describes the review of effectiveness of risk management and internal control systems set out on page 24; and

• the section describing the work of the Audit Committee set out on page 35.

Directors’ Remuneration Report

The Society voluntarily prepares a Report of the directors on remuneration in accordance with the provisions of the Companies Act 2006. The directors have

requested that we audit the part of the Report of the directors on remuneration specified by the Companies Act 2006 to be audited as if the Society were a quoted

company.

In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.

Responsibilities of Directors

As explained more fully in the Directors’ responsibilities statement set out on pages 23 to 24 of the Annual Report and Accounts, the Directors are responsible for

the preparation of the Financial Statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is

necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the Financial Statements, the Directors are responsible for assessing the Group’s and the Society’s ability to continue as a going concern, disclosing,

as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the

Society or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud

or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted

in accordance with International Standards on Auditing (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error

and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis

of these financial statements.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined below,

to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from

error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our

procedures are capable of detecting irregularities, including fraud is detailed below.

However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the Group and management.

• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most significant are the

regulations, licence conditions and supervisory requirements of the Prudential Regulation Authority (PRA), the Financial Conduct Authority (FCA) and the

Building Societies Act 1986.

• We understood how Group and Society are complying with those frameworks by making enquiries of management, internal audit, and those responsible

for legal and compliance matters. We also reviewed correspondence between the Group and UK regulatory bodies; reviewed minutes of the Board and

Board Risk Committee; and gained an understanding of the Group’s approach to governance, demonstrated by the Board’s approval of the Group’s

governance framework and the Board’s review of the Group’s Operational Risk Framework and internal control processes.

• We assessed the susceptibility of the Group and the Society’s Financial Statements to material misstatement, including how fraud might occur by

considering the controls that the Group and Society have established to address risks identified by the entity, or that otherwise seek to prevent, deter or

detect fraud.

• Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved

enquiries of legal counsel, executive management, internal audit, and focused testing as referred to in the Key Audit Matters section above.

• The Group and Society operate in the financial services sector which is a highly regulated environment. As such the Senior Statutory Auditor considered

the experience and expertise of the engagement team to ensure that the team had the appropriate competence and capabilities, which included the use

of specialists where appropriate.

A further description of our responsibilities for the audit of the Financial Statements is located on the

Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Page | 47 Annual Report & Accounts 2025 Nottingham Building Society

Independent Auditor’s Report

Other matters we are required to address

• Following the recommendation from the Audit Committee, we were appointed by the Society on 24 March 2015 to audit the Financial Statements for the

year ending 31 December 2015 and subsequent financial periods.

• The period of total uninterrupted engagement including previous renewals and reappointments is eleven years, covering the years ending 31 December

2015 to 31 December 2025.

• The audit opinion is consistent with the additional report to the Audit Committee.

Use of our report

This report is made solely to the Society’s members, as a body, in accordance with Section 78 of the Building Societies Act 1986. Our audit work has been

undertaken so that we might state to the Society’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To

the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Society and the Society’s members as a body, for our

audit work, for this report, or for the opinions we have formed.

Blake Adlem (Senior Statutory Auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor

Edinburgh

March 2026

Page | 48 Annual Report & Accounts 2025 Nottingham Building Society

Income Statements

for the years ended 31

December 2025 and 31

December 2024

The Income Statements only included income and expenditure from continuing operations.

The notes on pages 53 to 93 form part of these accounts.

		Group	Group	Society	Society
		2025	2024	2025	2024
	Notes	£m	£m	£m	£m
Interest receivable and similar income
Calculated using the effective interest rate method	3	280.7	267.3	283.4	271.3
On derivatives not in a hedge accounting relationship	3	8.9	10.7	0.4	1.3
Interest receivable and similar income		289.6	278.0	283.8	272.6
Interest payable and similar charges	4	(202.9)	(194.4)	(199.2)	(189.0)
Net interest income		86.7	83.6	84.6	83.6
Fees and commissions receivable		1.8	2.0	1.8	2.0
Fees and commissions payable		(1.5)	(1.1)	(1.5)	(1.1)
Net (losses) / gains from derivative financial instruments	5	(3.0)	3.9	4.7	7.4
Total net income		84.0	88.4	89.6	91.9
Administrative expenses	6	(63.1)	(59.4)	(62.6)	(59.2)
Depreciation and amortisation	17,18,19	(4.8)	(4.9)	(4.8)	(4.9)
Operating profit before impairment and other non-operating items		16.1	24.1	22.2	27.8
Impairment credit - loans and advances to members	15	0.4	-	0.4	-
Voluntary payment expense associated with Philips Trust Corporation	27	0.4	(11.2)	0.4	(11.2)
Recoveries against Philips Trust Corporation expense	27	0.1	1.0	0.1	1.0
Movement in Equity Investment Fair Value		(1.1)	-	(1.1)	-
Profit on disposal of freehold land and buildings		0.8	-	0.8	-
Profit before tax		16.7	13.9	22.8	17.6
Tax charge	8	(6.0)	(4.6)	(6.0)	(4.6)
Profit after tax for the financial year		10.7	9.3	16.8	13.0

Page | 49 Annual Report & Accounts 2025 Nottingham Building Society

Statement of Comprehensive Income

for the years ended 31

December 2025 and 31

December 2024

		Group	Group	Society	Society
		2025	2024	2025	2024
	Notes	£m	£m	£m	£m
Profit for the financial year		10.7	9.3	16.8	13.0
Items that will not be re-classified to the Income Statement
Remeasurements of defined benefit obligation	28	-	0.9	-	0.9
Revaluation of freehold land and buildings		2.8	-	2.8	-
Tax on items that will not be re-classified	8	(0.1)	(0.2)	(0.1)	(0.2)
Items that may subsequently be re-classified to the Income Statement
Fair Value through Other Comprehensive Income reserve
Valuation (losses) / gains taken to reserves	12	(2.0)	(0.5)	(2.0)	(0.5)
Amounts transferred to the Income Statement on micro hedge		2.0	0.3	2.0	0.3
relationships
Tax on items that may subsequently be reclassified	8	-	-	-	-
Other comprehensive income for the year net of income tax		2.7	0.5	2.7	0.5
Total comprehensive income for the year		13.4	9.8	19.5	13.5

Both the profit for the financial year and total comprehensive income for the year are attributable to the members of the Society.

The Notes on pages 53 to 93 form part of these accounts.

Page | 50 Annual Report & Accounts 2025 Nottingham Building Society

Statements of Financial Position

as at 31

December 2025 and 31

December 2024

		Group	Group	Society	Society
		2025	2024	2025	2024
	Notes	£m	£m	£m	£m
Assets
Cash in hand and balances with the Bank of England	9	297.0	441.2	297.0	441.2
Loans and advances to credit institutions	10	69.3	21.6	40.1	12.4
Debt securities	12	704.8	454.2	704.8	454.2
Derivative financial instruments	13	29.4	80.9	25.6	69.5
Loans and advances to members	14	4,305.0	4,201.8	4,305.0	4,201.8
Convertible loan notes		-	1.1	-	1.1
Amounts due from subsidiary undertakings	16	-	-	77.4	33.4
Other assets		5.8	6.7	5.8	5.3
Property, plant and equipment	17	11.4	8.0	11.4	8.0
Right of use assets	18	1.9	2.0	1.9	2.0
Intangible assets	19	11.2	8.8	11.2	8.8
Deferred tax assets	20	0.5	0.4	0.5	0.4
Total assets		5,436.3	5,226.7	5,480.7	5,238.1
Liabilities
Shares	21	4,631.2	4,350.5	4,631.2	4,350.5
Amounts owed to credit institutions	22	0.1	327.1	0.1	327.1
Amounts owed to other members	23	56.5	45.4	56.5	45.4
Amounts owed to subsidiary undertakings	24	-	-	457.7	208.2
Debt securities in issue	25	408.9	184.7	-	-
Derivative financial instruments	13	31.2	22.9	31.2	22.9
Other liabilities and accruals	26	10.9	13.2	10.8	11.7
Lease liabilities	18	2.2	2.4	2.2	2.4
Provisions for liabilities	27	1.0	2.0	1.0	2.0
Current tax liabilities		3.6	1.2	3.6	1.2
Retirement benefit obligations	28	-	-	-	-
Subscribed capital	29	24.0	24.0	24.0	24.0
Total liabilities		5,169.6	4,973.4	5,218.3	4,995.4
Reserves
General reserve		264.0	253.3	259.6	242.7
Fair value reserve	30	-	-	-	-
Revaluation reserve		2.7	-	2.7	-
Total reserves attributable to members of the Society		266.7	253.3	262.3	242.7
Total reserves and liabilities		5,436.3	5,226.7	5,480.6	5,238.1

Society

The Notes on pages 53 to 93 form part of these accounts.

These accounts were approved by the Board of Directors on 4

March 2026 and signed on its behalf by:

Robin Ashton Sue Hayes Anthony Murphy

Chair Chief Executive Officer Chief Financial Officer

Page | 51 Annual Report & Accounts 2025 Nottingham Building Society

Statement of Changes in Members’ Interests

for the years ended 31

December 2025 and 31

December 2024

The Notes on pages 53 to 93 form part of these accounts.

General

Reserve

Fair value

reserve

Revaluation

Reserve

Total

Group 2025	£m	£m	£m	£m
Balance as at 1 st January 2025	253.3	-	-	253.3
Profit for the year	10.7	-	-	10.7
Other comprehensive income for the year (net of tax)
Net gains from changes in fair value	-	-	2.7	2.7
Total other comprehensive income	-	-	2.7	2.7
Total comprehensive income for the year	10.7	-	2.7	13.4
Balance as at 31 st December 2025	264.0	-	2.7	266.7
Group 2024
Balance as at 1 st January 2024	243.3	0.2	-	243.5
Profit for the year	9.3	-	-	9.3
Other comprehensive income for the year (net of tax)
Net gains / (losses) from changes in fair value	0.7	(0.2)	-	0.5
Total other comprehensive income	0.7	(0.2)	-	0.5
Total comprehensive income / (expense) for the year	10.0	(0.2)	-	9.8
Balance as at 31 st December 2024	253.3	-	-	253.3

Society 2025

Balance as at 1

January 2025

242.7

Profit for the year

16.8

Other comprehensive income for the year (net of tax)

Net gains from changes in fair value

2.7

Total other comprehensive income - - 2.7 2.7

Total comprehensive income for the year

16.8

2.7

19.5

Balance as at 31

December 2025

259.5

2.7

262.2

Society 2024

Balance as at 1

January 2024

229.0

0.2

229.2

Profit for the year

13.0

Other comprehensive income for the year (net of tax)

Net gains / (losses) from changes in fair value

0.7

(0.2)

0.5

Total other comprehensive income / (expense)

0.7

(0.2)

0.5

Total comprehensive income / (expense) for the year

13.7

(0.2)

13.5

Balance as at 31

December 2024

242.7

Page | 52 Annual Report & Accounts 2025 Nottingham Building Society

Cash Flow Statements

for the years ended 31

December 2025 and 31

December 2024

		Group	Group	Society	Society
		2025	2024	2025	2024
	Notes	£m	£m	£m	£m
Cash flows from operating activities
Profit before tax from continuing operations		16.7	13.9	22.8	17.6
Depreciation and amortisation		4.8	5.1	4.8	5.1
Profit on disposal of freehold land and buildings		(0.8)	-	(0.8)	-
Interest on subscribed capital	34	1.9	1.9	1.9	1.9
Interest on lease payments	18	0.1	0.1	0.1	0.1
Amortisation of discounts and premiums on debt securities		(0.1)	-	(0.1)	-
Impairment credit - loans and advances to members	15	(0.4)	-	(0.4)	-
		22.2	21.0	28.3	24.7
Changes in operating assets and liabilities
(Increase) / decrease in loans and advances to credit institutions		(26.5)	8.8	(27.3)	9.8
Increase in loans and advances to members		(102.8)	(657.9)	(102.8)	(657.9)
Movement in equity investment		1.1	-	1.1	-
Decrease / (increase) in other assets		50.4	22.9	290.9	(38.2)
Increase in amounts owed by Group undertakings		-	-	(44.0)	-
Increase in shares	21	280.7	784.6	280.7	784.6
(Decrease) / increase in amounts owed to other credit institutions and other members	22,23	(315.9)	35.6	(315.9)	35.6
Increase / (decrease) in debt securities in issue	25	224.2	(61.5)	-	-
Increase / (decrease) in accruals and other liabilities		5.0	(17.2)	6.4	(18.5)
Movement in retirement benefit obligation	28	-	(0.6)	-	(0.6)
Taxation paid		(3.5)	-	(3.5)	-
Net cash generated from operating activities		134.8	135.7	113.9	139.5
Cash flows from investing activities
Purchase of convertible loan note		-	(1.1)	-	(1.1)
Purchase of debt securities	12	(488.9)	(268.1)	(488.9)	(268.1)
Disposal of debt securities	12	240.2	153.5	240.2	153.5
(Disposal) / purchase of property, plant and equipment		(0.9)	(0.7)	(0.9)	(0.7)
Purchase of intangible assets	19	(5.8)	(6.5)	(5.8)	(6.5)
Net cash used in investing activities		(255.4)	(122.9)	(255.4)	(122.9)
Cash flows from financing activities
Interest paid on subscribed capital	34	(1.9)	(1.9)	(1.9)	(1.9)
Principal element of lease payments		(0.5)	(0.5)	(0.5)	(0.5)
Net increase		(123.0)	10.4	(143.9)	14.2
Cash and cash equivalents at 1 st January		449.6	439.1	441.3	427.1
Cash and cash equivalents at 31 st December	11	326.6	449.5	297.4	441.3

Total interest received was £203.9m (2024: £165.9m) and total interest paid was £161.4m (2024: £13 3.5m).

The Notes on pages 53 to 93 form part of these accounts.

Page | 53 Annual Report & Accounts 2025 Nottingham Building Society

Notes to the Accounts

for the years ended 31

December 2025 and 31

December 2024

1 Accounting policies

The principal accounting policies adopted in the preparation of these

Financial Statements are set out below.

Basis of preparation

Both the Society and Group Annual Accounts are prepared and approved by

the Directors in accordance with UK adopted international accounting

standards (‘IAS’) and those parts of the Building Societies Act 1986 and

Building Societies (Accounts and Related Provisions) Regulations 1998

applicable to societies reporting under UK adopted IAS. The Annual

Accounts are prepared under the historical cost convention, modified for

assets and liabilities held at fair value.

The Financial Statements are prepared in pounds sterling, which is the

functional currency of the Group, and have been rounded to the nearest

one hundred thousand pounds.

Governmental and societal responses to climate change risks are still

developing, and are interdependent upon each other, and consequently

Financial Statements cannot capture all possible future outcomes as these

are not yet known nor capable of reasonable estimation. The degree of

uncertainty of these changes may also mean that they cannot be

conclusively considered when determining asset and liability valuations and

the timing of future cash flows under the requirements of applicable

accounting standards. At 31

December 2025, the Group considers its

present financial exposure to climate-related risk to the best of its

knowledge to be immaterial, including with respect of the climate change

commitments made in the Sustainability Report on pages 18 to 20. As such,

no material adjustments have been made to the valuation of assets and

liabilities in these Financial Statements.