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Material accounting policies
Basis of preparation
The Annual Accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) as
adopted in the UK and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC)
and in accordance with the Building Societies Act 1986 and the Building Societies (Accounts and Related Provisions)
Regulations 1998 as applicable to building societies reporting under IFRS.
The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain
financial instruments measured at fair value at the end of each reporting period. The Directors\u2019 going concern review
considered the Group\u2019s and Society\u2019s forecasts, including different possible scenarios based on possible internal and
external developments and arising risks. Together with regular stress testing, the forecasts show that the Group and
Society will be able to maintain adequate levels of both liquidity and capital for at least the next 12 months while meeting
all relevant regulatory requirements.
After making enquiries, the Directors are therefore satisfied that both the Group and the Society has adequate
resources to continue in business for at least the next 12 months and therefore it is appropriate to adopt the going
concern basis of accounting in preparing these financial statements. The Directors have concluded that there are no
material uncertainties that may cast significant doubt upon the Group and Society\u2019s ability to continue to apply the
going concern basis of accounting.
The Group has chosen to present the financial statements in pound Sterling, which is the Group\u2019s functional currency. All
figures in the financial statements are rounded to the nearest hundreds of thousands of pound Sterling (\u00a30.0m), unless
otherwise stated.
The ultimate controlling party and parent to the Group is Newcastle Building Society.
A summary of the Group\u2019s principal accounting policies is set out below.
Basis of consolidation
The Group Accounts include the results of the Society, its subsidiary undertakings and other entities which it is deemed
to control, all of which have accounting periods ending 31 December. Subsidiaries and other controlled entities are
entities over which the Society has the power to control financial and operating policies so as to obtain benefits from
their activities. Subsidiaries are consolidated from the date on which control is transferred to the Group and are
deconsolidated from the date that control ceases. Upon consolidation, inter-company transactions, balances and
unrealised gains or losses on transactions are eliminated. The accounting policies of subsidiaries are consistent with
Group accounting policies.
Securitisations
The Group securitises mortgage loans by transferring the beneficial ownership of a mortgage pool to a Special Purpose
Vehicle (SPV), which issues debt secured on the transferred mortgage loans. The Society is deemed to control the SPV,
and therefore the SPV is fully consolidated into the Group accounts under IFRS 10, Consolidated Financial Statements.
Since the Society is entitled to any residual profits or losses of the SPV, it retains substantively all risks and rewards of
holding the mortgage loans. As a result, the transfer of the beneficial ownership of the mortgage loans to the SPV does
not meet the criteria for derecognising the mortgages from the Society\u2019s Balance Sheet under IFRS 9, Financial
Instruments. The Society therefore continues to recognise the securitised mortgage loans on its Balance Sheet. The
proceeds received by the Society from the transfer of the mortgage pool are accounted for as a deemed loan from the
SPV. Any loan notes retained by the Society are netted off the deemed loan.
The transaction includes an interest rate hedging structure to the effect that the mortgage cash flows transferred to the
SPV are based on a floating interest rate.
Income recognition
Interest income and expense
Interest receivable and interest payable for all interest bearing financial instruments are recognised within \u2018Interest
receivable and similar income\u2019 and \u2018Interest payable and similar charges\u2019 in the consolidated Income Statements, using
the effective interest rate method (EIRM).
EIRM is used to calculate the amortised cost of financial instruments and to recognise interest receivable or payable
over the relevant period. The effective interest rate is the rate that exactly discounts estimated cash flows (excluding
credit losses) to zero, through the expected life of the instrument. In calculating the effective interest rate, all
contractual terms of the financial instrument are taken into account. Historical and forecast mortgage redemption data
and management judgement are used to estimate the expected lives of mortgage assets.
Fees and commissions income and charges
Fees and commissions relating to originating loans and advances to customers are deferred and spread using the EIRM
and included in interest income. Other fees and commissions are recognised as \u2018Other income\u2019 on the accruals basis as
services are provided.
Other income
Other income relates to income from contracts with customers recognised under IFRS 15, Revenue from Contracts with
Customers. Revenue is measured as the fair value of consideration specified in the contract with a customer. The Group
recognises revenue at both point in time and over time depending on the nature of the performance obligations in the
contract with the customer.
Savings management services and savings management project and change services
Savings management services and savings management project and change services are provided by the Society\u2019s
subsidiary, Newcastle Strategic Solutions Limited (NSSL).
Significant work may be required to implement the requirements of a new customer, to implement changes required by
existing customers or to decommission NSSL\u2019s services. Revenue relating to such services are recognised as savings
management project and change services and is recognised over time. Each contractual milestone being a
performance obligation has a corresponding transaction price
which represents the portion of the service provided to
the customer.
Revenue for savings management services is recognised over time in discrete monthly amounts which are calculated
based on actual work completed in the relevant month. The amount of revenue recognised for ongoing savings
management is spread evenly throughout the contractual term, consistent with the pattern of transfer of the service to
the customer. Where the Group is reimbursed for certain external costs incurred on behalf of clients, the company acts
as agent with the costs contractually directed by the clients.
IT services
NSSL provide managed IT services to the Group and external customers, which includes managed IT solutions for
savings management and client account systems, and data storage services. The amount of revenue recognised for
savings management systems and data storage services is spread evenly throughout the contractual term, recognised
on a monthly basis, consistent with the pattern of transfer of the service to the customer. The amount of revenue
recognised for client account systems is calculated based on the actual asset balance held by a customer in the
relevant month.
Regulated advice services
Regulated advice services are provided by the Society\u2019s subsidiary, Newcastle Financial Advisers Limited (NFAL). All
services derive from NFAL\u2019s principal activity, the provision of financial planning services, and include regulated advice,
ongoing advice, and life protection plans. NFAL is an appointed representative of Openwork Limited and provides
services on behalf of Openwork Limited. For the purposes of IFRS 15, Openwork Limited is the sole customer of NFAL
and all consideration for the services provided by NFAL is received from Openwork Limited.
Revenue for regulated advice and protection plans is recognised when confirmation of the investment or plan is
received by Openwork Limited, and the service is complete. Revenue for ongoing advice is recognised on a straight-
line basis at the end of each month the service is in place. Consideration for regulated advice and protection plans is
calculated using contractually stated and agreed rates, on an ad valorem basis for regulated advice, and dependent
upon specific product lines for protection plans. Consideration for ongoing service is calculated on an annual basis as a
percentage of an investment portfolio.
Third party services
Third party services are provided by the Society through its branch network and online. The Society introduces
customers to third parties who provide mortgage related services such as conveyancing. The Society is the principal
in the relationship with each third party provider and has no contractual relationship for the third party service with
the customer.
The service provided of introducing or referring customers to a third party is complete once the third party provider has
agreed a sale with the customer. Revenue is recognised when cash is received, which in all instances is in line with, or
shortly after, completion of the contract in line with contractual payment terms. Consideration for all services is
calculated based on discrete, and contractually agreed, transaction prices which are noted as a commission amount to
the Society. All payments received relate to performance completed up to the invoice date.
All services
Due to the nature of services provided, IFRS 15 is more material to NSSL and NFAL than to the Society. Details of
transactions which are not material to the Group, but are material to the individual subsidiaries, can be found in the
specific subsidiary\u2019s annual report and accounts.
The transaction prices for all services provided by the Group are calculated using contractually stated and agreed rates.
There are no elements of variable consideration, no significant payment terms and no critical judgements in allocating
the transaction price. There is little judgement in the recognition of this revenue as transaction prices are agreed
upfront, the timing and scope of work is agreed as part of each customer\u2019s contract.
Financial assets
In accordance with IFRS 9 the Group classifies its financial assets into the following categories:
Financial assets held at amortised cost
Under IFRS 9, assets may be held at amortised cost, where the assets contractual cash flows reflect solely payments of
principal and interest on the principal amount outstanding (SPPI) and the business model is to hold the asset to collect
the contractual cash flows. In this case, income is recognised under the EIRM.
In assessing the business model applicable to its financial assets, the Group has considered how financial asset
performance is evaluated and reported to senior management, the key risks affecting this performance, how these are
managed, and how managers of the business are compensated in respect of asset performance.
Loans and advances to customers
The Group\u2019s mortgage lending, other than equity release mortgages, meets the definition of SPPI as the Group
originates the mortgages with the intention to hold the asset until maturity, collecting contractual cash flows. Mortgage
assets are recognised on the Balance Sheet as \u2018loans and advances to customers\u2019. Interest is recognised in accordance
with the EIRM.
Loans and advances to credit institutions
The Group\u2019s non-mortgage lending, typically loans and advances to credit institutions, is similarly undertaken with a
view to recovery of contractual cash flows and with interest charged that meets the SPPI requirements.
Cash
The Group\u2019s cash balances, where interest generative, are held to collect contractual interest flows and to ensure
appropriate liquidity is available to meet the Group\u2019s liabilities as they fall due.
Trade receivables
The Group\u2019s trade receivables, held within other assets on the Balance Sheet, whether due from third parties or intra-
group companies, are held to collect the contractual cash balances as they fall due. The Group does not engage in debt
factoring activities.
Financial assets held at fair value through other comprehensive income
Under IFRS 9, where the contractual cash flow characteristics of an asset reflect SPPI, an asset may be classified as \u2018fair
value through other comprehensive income\u2019 (FVOCI), where the assets are held to collect contractual cash flows or to
sell. In this case, the fair value of the asset is recognised on the Balance Sheet, whilst the fair value movement is
recognised in \u2018other comprehensive income\u2019. Interest received on these assets continues to be recognised in the
Income Statement using the EIRM.
Debt securities
The Group holds a portfolio of debt securities for liquidity management purposes, primarily consisting of covered
bonds, residential mortgage-backed securities (RMBS), supranational bonds, treasury bills and government gilts. These
instruments meet the definition of SPPI but may be sold if liquidity is required. They are therefore held at FVOCI.
Financial assets held at fair value through pro
fit and loss
Under IFRS 9, where the contractual cash flow characteristics of an asset do not reflect SPPI, or where assets are neither
held for sale or to collect contractual cash flows, the asset is classified at \u2018fair value through profit or loss\u2019 (FVTPL), with
fair value movements recognised through the Income Statement.
Derivative \ufb01nancial instruments
The Group holds derivative financial instruments to hedge its exposures relating to interest rates and foreign exchange
rates. Derivative financial instruments are recognised at fair value on the date the derivative contract is entered into and
subsequently re-measured at their fair value with changes in fair value being recognised in the Income Statement. In
accordance with the Group\u2019s Treasury Policy and the Building Societies Act 1986, the Group does not hold or issue
derivative financial instruments for trading purposes. The need for credit valuation adjustments is considered in the
determination of the fair value of derivatives.
Fair value hedge accounting
Derivative financial instruments may be designated in formal accounting hedge relationships. At the Balance Sheet
date, this included micro fair value hedges accounted for under IFRS 9, and portfolio macro fair value hedges accounted
for under IAS 39, Financial Instruments: Recognition and Measurement.
The fair value of the hedged risk is included on the Balance Sheet under the heading \u2018fair value adjustments for hedged
risk\u2019. Any gain or loss arising from hedge ineffectiveness is recognised immediately in the Income Statement in the \u2018fair
value gains less losses on financial instruments and hedge accounting\u2019 line.
Micro fair value hedges are assessed before the hedge is incepted and regularly thereafter, ensuring there continues to
be an economic relationship between the hedged item and the hedging derivative and that value changes are not
primarily due to credit risk, as required by IFRS 9.
The hedge effectiveness of macro hedges is assessed both pro- and retrospectively. In accordance with IAS 39 only
highly effective hedges are incepted or continued.
When a hedging instrument is terminated or no longer meets the criteria for hedge accounting, and the underlying asset
or liability remains on the Balance Sheet, hedge accounting is discontinued. Cumulative hedge adjustments are
amortised to the Income Statement within \u2018net interest income\u2019.
Cash \ufb02ow hedge accounting
Derivatives may also be designated into formal cash flow hedge relationships under IFRS 9. The effective portion of
changes in the fair value of designated derivatives are recognised in \u2018other comprehensive income\u2019 and accumulated in
the cash flow hedging reserve, limited to the cumulative change in fair value of the hedged item from inception of the
hedge. The gain or loss relating to the ineffective portion is recognised immediately in the Income Statement and is
included in the 'fair value gains less losses on financial instruments and hedge accounting' line item.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to the
Income Statement in the periods when the hedged item affects profit or loss and are included in the 'fair value gains less
losses on financial instruments and hedge accounting' line. This transfer does not affect other comprehensive income.
Furthermore, if the Group expects that some or all of the loss accumulated in the cash flow hedging reserve will not be
recovered in the future, that amount is immediately reclassified to the Income Statement.
The Group discontinues cash flow hedge accounting only when the hedging relationship (or a part thereof) ceases to
meet the qualifying criteria. This includes instances when the hedging instrument expires or is sold, terminated or
exercised. The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive
income and accumulated in cash flow hedge reserve at that time remains in equity and is reclassified to profit or loss
when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss
accumulated in the cash flow hedge reserve is reclassified immediately to profit or loss and is included in the 'fair value
gains less losses on financial instruments and hedge accounting' line item.
Mortgage assets held at fair value through pro\ufb01t or loss
The Group\u2019s equity release mortgage assets contractual cash flows are not solely payments of principal and interest
and are therefore classified as fair value through profit and loss (FVTPL). Assets classified as FVTPL are initially
recognised at fair value with any subsequent changes in fair value recognised immediately in the Income Statement.
The fair value is the present value of the forecast contractual cash flows less the value of the no-negative equity
guarantee, which is calculated using an option pricing model, discounted using a suitable market rate at the reporting
date. Inputs are market driven, or where no market driven data is available, are based on management judgement
informed by observable data to the greatest extent possible. Interest on equity release mortgages is recognised in
accordance with the EIRM, based on contractual interest rates or market interest rates as at the time of the loan\u2019s
acquisition where applicable.
Included in the equity release mortgage assets is a fixed reversion book. For this book, the repayment amount is
determined at mortgage completion, but the timing of redemption is uncertain. Interest on fixed reversion loans is
recognised based on the interest rate implicit in the mortgage contract.
O\ufb00setting
The Group has financial assets and liabilities for which there is a practical right to offset the recognised amounts, and
which are settled net in practice. However, the netting arrangements do not result in an offset of balance sheet assets
and liabilities for accounting purposes as the right to offset is not unconditional in all circumstances. There are no
financial assets or liabilities which are offset with the net amount presented on the Balance Sheet.
Cash and cash equivalents
For the purpose of the Cash Flow Statements, \u2018cash and cash equivalents\u2019 comprises cash in hand, balances with the
Bank of England, loans and advances to credit institutions available on demand or with original maturities of three
months or less and debt securities with a maturity period of three months or less i.e. highly liquid assets readily
convertible into cash. For operational purposes, the Group\u2019s debt security portfolio is maintained for liquidity purposes
with the assets therein demonstrably convertible into cash regardless of maturity. The Group does not include
encumbered assets in its cash and cash equivalents.
The Group does not consider the timing of derivative collateral inflows to be sufficiently reliably estimated to include
such collateral placed with counterparties as a liquid asset for cash flow presentation.
Impairment of \ufb01nancial assets
Loss allowances for expected credit losses are recognised on all financial assets held at either amortised cost or FVOCI,
with loss allowances recognised in the Income Statement.
Under IFRS 9, the Group conducts a forward-looking assessment of impairment. Expected credit losses are recognised
across applicable financial assets based on whether there has been a significant increase in credit risk since the asset\u2019s
origination. Internal provisioning models are used to determine expected credit losses for each individual asset, based
on four different economic scenarios (base, upside, downside and stressed downside). The four scenarios are assigned
a probability weighting to determine the loss allowance recognised. Where an asset has not seen a significant increase
in credit risk since its origination (\u2018stage 1 assets\u2019), 12 month expected credit losses are recognised as a loss allowance.
These are the portion of lifetime expected credit losses that result from default events on the asset expected within the
12 months after the reporting date.
Where an asset has seen a significant increase in credit risk since origination, but there is no objective evidence of
impairment at the reporting date (\u2018stage 2 assets\u2019), lifetime expected credit losses are recognised.
Where an asset has seen significant increase in credit risk since origination and there is objective evidence of
impairment at the reporting date (\u2018stage 3 assets\u2019), lifetime expected credit losses are recognised and interest income
is to be calculated against the net carrying amount of the financial asset, rather than the gross amount.
Where lifetime probabilities of default are not available on acquired books, the Group uses comparable customer credit
ratings and loan to value information to assess a suitable provision for that lending.
De\ufb01nition of default
A loan is considered to be in default and is allocated to stage 3 if the loan is in more than three months arrears, is in
possession, certain forbearance measures have been granted or meets internal \u201cunlikely to pay\u201d criteria such as
bankruptcy. Loans can move between stages subject to a curing period once the loan no longer meets the criteria for
its staging.
Residential and buy-to-let mortgages
Signi\ufb01cant increase in credit risk since origination
At the application stage, a prospective borrower\u2019s credit risk is assessed. The Group does not lend to customers who
are determined as high risk but will lend to customers who can fall under a range of application scores - based on a wide
variety of factors including affordability, credit history and committed monthly spend. A borrower\u2019s application score
gives a quantified assessment of borrower risk \u2013 a risk score. On a quarterly basis, the Group receives borrower credit
scores. This data is mapped internally to a new borrower risk score \u2013 allowing continuous assessment of the movement
in borrower risk since origination. The Group apply the below criteria when assessing whether there has been a
significant increase in credit risk for residential and buy-to-let mortgages:
Stage 1 borrowers:
\u25a0
Risk score is suitably consistent between origination date and reported date.
Stage 2 borrowers:
\u25a0
Risk score increases past pre-defined internal thresholds but has not defaulted; or
\u25a0
Have fallen into more than one month arrears.
Stage 3 borrowers:
\u25a0
Have defaulted (assessed against a range of internal qualitative and quantitative criteria); or
\u25a0
Have fallen into more than three months arrears.
Commercial and other legacy books
Signi\ufb01cant increase in credit risk since origination
An assessment of the risk of loss against the Group\u2019s legacy mortgage books is carried out on a case-by-case basis,
with the exception of serviced apartments that are assessed using a similar methodology as residential lending. Across
the highest risk exposures, this includes the annual completion of a tailored risk grade scorecard designed to
encompass the key characteristics contributing to underlying risk. Each of the scorecard risks are weighted to provide a
final weighted risk score for the loan, which categorises the loan in terms of likelihood of failure in a moderate or severe
recessionary scenario. The risks that carry the highest weightings relate to tenant failure and serviceability. Due to the
low number of remaining commercial borrowers, all borrowers are closely monitored. All payments due are monitored
on a real-time basis. In the event of a late payment, the position is reviewed immediately and appropriate action taken.
The Group apply the below criteria when assessing whether there has been a significant increase in credit risk for
commercial and legacy mortgages:
Stage 1 borrowers:
\u25a0
Risk score is suitably consistent between origination date and reported date.
Stage 2 borrowers:
\u25a0
Risk score increases past pre-defined internal thresholds, or where the commercial lending department flags that
credit risk has increased significantly, but a borrower has not otherwise defaulted; or
\u25a0
Have fallen into more than one month arrears.
Stage 3 borrowers:
\u25a0
Have defaulted (assessed against a range of internal qualitative and quantitative criteria); or
\u25a0
Have fallen into more than three months arrears.
Purchased or originated credit impaired (POCI)
Loans that are either purchased or originated credit impaired (POCI) are classified as stage 3 assets at initial recognition
and cannot be transferred to stage 1 or 2 even if the credit quality of these assets improves. The Group has a portfolio of
loans acquired as part of the Manchester Building Society\u2019s transfer of engagements that meets this definition. Any
change in the credit quality of the asset at each reporting date is reflected in the Income Statement.
Modifications
The Group grants forbearance to commercial borrowers in the form of extending the loan term on maturity, capitalising
arrears as part of a wider exercise to get a borrower back on track with a revised debt repayment plan and adjusting the
interest rate to aid serviceability particularly where a fixed rate has expired. Generally, the Group expects commercial
investment loans to be repaid on maturity given the stated strategy of winding down the portfolio, but the Group will
grant forbearance when this is also in the best interests of the Group, e.g. providing the borrower with more time to sell
the security property following a tenant renewal. The Group occasionally grants forbearance to other borrowers (in
similar forms to commercial) where this is expected to improve the ultimate recovery on loans advanced.
The requirement to grant forbearance is considered an objective indicator that an asset has suffered a significant
increase in credit risk since origination. As such, while forbearance may mitigate a selection of the Group\u2019s other
indications of default, the granting of forbearance will not result in a preferential staging (Stage 1 or 2) being applied to
any forborne asset. While benefitting from any revised terms that forbearance may bring, an asset is not able to move to
a lower staging. Only once forbearance has been lifted can an asset qualify for a reduced staging with the Group
operating a six month curing policy: deferring the reduction in staging until a six month period has passed in which no
other indicators of default or heightened credit risk have presented themselves.
Other assets
The Group has elected to take advantage of IFRS 9's practical expedient when assessing the accounting impairment
applied to its trade receivables. Lifetime expected credit losses are therefore provided against all trade receivables. A
provisions matrix approach, where provisions against receivables are calculated as an increasing percentage of the
receivable balance, rising as receivables fall further overdue, has been adopted.
Assessment of the appropriate provision percentages has been made in line with the Group\u2019s historic trade receivable
recovery. Where appropriate, forward-looking views to recovery are also incorporated.
See note 38 for details on the Group\u2019s provisioning methodology.
Financial liabilities
All financial liabilities are initially measured at fair value, being the issue proceeds, net of premia, discounts and
transaction costs incurred.
Derivative financial liabilities remain accounted for at fair value on the Balance Sheet date. Hedged risk fair value
adjustments are also held on the Balance Sheet at fair value. The remaining Group financial liabilities including shares,
deposits, Permanent Interest Bearing Shares (subscribed capital) and subordinated loan notes and are subsequently
measured at amortised cost, using the EIRM.
Investments in subsidiaries
Investments in subsidiaries are held on the Balance Sheet at cost less impairment, for cost of shares and amortised cost
for loans to subsidiaries. Investments in subsidiaries are assessed for impairment on an annual basis.
Property, equipment and intangible assets
Intangible Assets
Intangible assets relate to computer software purchased from third parties, development costs for internally generated
software, and customer lists acquired from third parties. An intangible asset is recognised to the extent it is probable
that expected future economic benefits will flow from it and the costs can be measured reliably.
For development costs for internally generated software, where all capitalisation criteria specified in IAS 38, Intangible
Assets, are met, the expenditure directly attributable to a project is capitalised. Any expenditure related to
development of internally generated software that does not meet these criteria is recognised in the Income Statement
in the period in which it is incurred.
Computer software and development costs are initially recognised at cost, which includes the original purchase price
of the asset and the costs directly attributable to acquiring the asset and bringing it into working condition for its
intended use. Customer lists are initially recognised at fair value. Subsequently, intangible assets are recognised at their
initial value less accumulated amortisation and any provisions for impairment.
Amortisation of intangible assets commences when they are ready for their intended use and is provided at rates
calculated to write down the assets to their estimated residual values over the course of their anticipated useful lives, on
the following bases:
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Computer software
- 5 to 7 years
Development costs
- 5 to 7 years
Customer lists
- 5 to 7 years
\n
At each Balance Sheet date, the Group reviews the carrying value of its intangible assets to determine whether there is
any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable value of
the asset is estimated to determine the extent of the impairment loss (if any). If the recoverable value of an asset is
estimated to be less than the current carrying value, the carrying value of the asset is reduced to its recoverable value.
Where an impairment loss subsequently reverses, the carrying value of the asset is increased to the revised estimate of
its recoverable value.
Software as a service (SaaS)
A SaaS arrangement is a type of cloud computing in which the supplier provides the customer with access to application
software residing on the supplier\u2019s infrastructure. These arrangements can include other services, such as technical
support, implementation and data migration. The customer typically pays a fee on a periodic basis and implementation
costs may be incurred at the inception of the arrangement.
Where the Group enters into a SaaS arrangement, the Group recognises a software asset only if such an intangible asset
or a software lease is received at commencement of the arrangement, otherwise, the arrangement is accounted for as a
service contract.
When accounting for a SaaS arrangement as a service contract, fees paid by the Group are spread over the period to
which they relate. Implementation costs associated with configuration and customisation of the software are
prepaid over the contractual period where they relate to configuration or customisation services performed by the
software supplier (or its agent) and where the services received are not distinct from the right to receive access to the
supplier\u2019s software.
All other costs associated with implementation, including internal time and resources, are expensed to the Income
Statement as incurred.
Freehold property and equipment
Freehold property and equipment are stated at cost less accumulated depreciation and any provisions for impairment.
Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working
condition for its intended use.
Depreciation on assets commences when they are ready for their intended use and is provided at rates calculated to
write down the assets to their estimated residual values over the course of their anticipated useful lives, on the
following bases:
Freehold buildings
\u25a0
2% per annum, straight line
Equipment, \ufb01xtures and \ufb01ttings and motor vehicles
Refurbishment expenditure:
\u25a0
6.67% to 10% per annum, straight line
Equipment, fixtures and fittings:
\u25a0
10% per annum, straight line
Motor vehicles:
\u25a0
20% per annum, straight line
Computer equipment:
\u25a0
20% to 33% per annum, straight line
Gains and losses on disposals are determined by comparing the net disposal proceeds with the carrying amount of the
asset and are included in the Income Statement in the period in which they arise.
Leasehold property
Leased property and equipment is accounted for in accordance with IFRS 16, Leases. The standard requires the lessee
to recognise a right of use asset and a corresponding liability on the Balance Sheet for all leases, with the exception of
short-term leases or leases of a low value asset. The liability is initially measured by discounting variable and fixed lease
payments, as well as other payments inherent to the lease, to its present value. Where possible, the discount rate used is
the rate implicit in the lease. However, where this cannot be readily determined, the Group\u2019s incremental borrowing rate
is used. The incremental borrowing rate is set using the Society\u2019s base funding cost and the costs of any asset buffers
required. The right of use asset is initially measured at cost, including the amount of the initial measurement of the lease
liability, any lease payments made before the commencement date of the lease, less any incentives received, any initial
direct costs and any restoration costs. Where a change to lease payments is agreed, the lease liability is re-measured,
and a corresponding adjustment is made to the right of use asset.
Leasehold buildings are depreciated on the following basis:
Leasehold with terms greater than 50 years:
\u25a0
2% per annum, straight line
Other leasehold buildings:
\u25a0
over the term of the lease
Interest charged on the lease liability is calculated based on the rate used as the discount factor to calculate the lease
liability and is included in interest payable and similar charges.
Impairments of property and equipment
At each Balance Sheet date, the Group reviews the carrying value of its property and equipment to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
value of the asset is estimated to determine the extent of the impairment loss (if any). If the recoverable value of an asset
is estimated to be less than the current carrying value, the carrying value of the asset is reduced to its recoverable value.
Where an impairment loss subsequently reverses, the carrying value of the asset is increased to the revised estimate of
its recoverable value.
Taxation
Corporation tax is charged on profits adjusted for tax purposes. Deferred tax on temporary differences arising between
the tax bases and carrying amounts of assets and liabilities is provided in full, using the liability method. Deferred tax is
determined using tax rates (and laws) that have been enacted or substantially enacted by the Balance Sheet date and
that are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is
settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Pension scheme costs
The Society operates a defined contribution scheme on behalf of Executive Directors and colleagues. For the defined
contribution scheme, contributions are charged to the Income Statements, as they become payable, in accordance
with the rules of the scheme.
The Society historically operated a defined benefit scheme; this was closed to future accrual from 30 November 2010
and was funded by contributions partly from colleagues and partly from the Society at rates determined by an
independent actuary. These contributions are invested separately from the Group\u2019s assets.
Under IAS 19, Employee Benefits, the defined benefit scheme assets are measured at bid value at each Balance Sheet
date, and the obligations are measured by an independent actuary using the projected unit valuation method,
discounted using a high quality corporate bond rate.
The Group does not recognise IAS 19 pensions surpluses on its Balance Sheet as the Society does not have an
unconditional contractual right to benefit economically from the surplus. IAS 19 pension deficits are recognised
immediately with relevant actuarial re-measurements recognised in the Statement of Comprehensive Income. IAS 19
service costs are recognised in the Income Statement.
Provisions
A provision is recognised when there is a present obligation as a result of a past event, it is probable that the obligation
will be settled, and it can be reliably estimated. The amount recognised as a provision is the best estimate of the net
present value of the consideration required to settle the obligation, taking into account the risks and uncertainties
surrounding the obligation.
Contingent liabilities have not been recognised. A contingent liability is a possible obligation which is not probable or
not reliably measurable.
Contingent assets have not been recognised. A contingent asset is a possible asset that arises from past events and
whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events.
Segment information
The operating segments disclosed in note 9 are those used in the Group\u2019s management and internal reporting
structures (for the chief operating decision maker) in accordance with IFRS 8, Operating Segments. No segment
information is presented on geographical lines, because substantially all of the Group\u2019s activities are in the
United Kingdom.
Equity instruments
Equity instruments issued by the Group are Additional Tier 1 (AT 1) instruments. Financial instruments are classified as
equity instruments where the contractual arrangements with the instrument holder do not result in the Group having a
present obligation to deliver cash, another financial asset or a variable number of equity instruments. The proceeds of
the issuance of AT 1 instruments are included in reserves in \u2018other equity instruments\u2019, with the costs of issuance included
in the general reserves. Distributions to holders of equity instruments are recognised when they become irrevocable
and are deducted from the general reserve.
Accounting developments
At the date of approval of these financial statements there are no amendments to International Financial Reporting
Standards relevant to these Annual Accounts that are mandatory for the first time for the financial year beginning 1
January 2025.
Developments and standards issued but not yet e\ufb00ective
There are a number of new or amended standards which become effective in 2026 and beyond. Early adoption is
permitted, but the Group does not intend to adopt the standards before their mandatory date. The new and updated
accounting standards listed below are not expected to have a significant impact on the Annual Accounts.
\u25a0
Amendments to the Classification and Measurement of Financial Instruments \u2013 Amendments to IFRS 9, Financial
Instruments and IFRS 7, Financial Instruments are effective from 1 January 2026.
\u25a0
IFRS 19 Subsidiaries without Public Accountability: Disclosures, effective from 1 January 2027.
IFRS 18, Presentation and Disclosure in Financial Statements
IFRS 18, Presentation and Disclosure in Financial Statements was issued in April 2024 replacing the existing requirements
under IAS 1, Presentation of Financial Statements, and introduces a revised structure and presentation of the financial
statements, including:
\u25a0
The requirement to present three defined categories in the statement of profit or loss: operating, investing,
and financing.
\u25a0
New requirements for disaggregation of information in the notes to improve comparability and transparency.
\u25a0
Additional disclosures about management-defined performance measures when presented in the
financial statements.
IFRS 18 is effective for annual reporting periods beginning on or after 1 January 2027, with early application permitted.
The Group has not early adopted the standard.
The Group is currently assessing the impact of IFRS 18 on its financial reporting and expects that the adoption of IFRS 18
will result in changes to the presentation of its Income Statement and related disclosures but does not anticipate the
standard to have an impact on the financial position or performance of the Group or any change to the underlying
recognition or measurement criteria currently applied to the Group Financial Statements.
Critical accounting estimates and judgements in applying accounting policies
The Group has to make judgements in applying its accounting policies, which affect the amounts recognised in the
Annual Accounts. These judgements are based on management\u2019s best knowledge, but the eventual outcome may
differ from them. In addition, estimates and assumptions are made that could affect the reported amounts of
assets and liabilities within the following year. The most significant areas where judgements and estimates are made are
as follows.
Estimates
Fair value of the equity release mortgage assets
The valuation of the Group\u2019s equity release mortgage assets depends on a range of assumptions, including the most
appropriate discount rate and property price growth rates and volatility. Key assumptions and sensitivity analysis are
outlined in note 32.
Impairment of financial assets
The impairment of mortgage assets is determined by a weighted average of the expected credit losses of four different
possible economic scenarios. Each scenario is based on a range of assumptions, including property price growth rates
and unemployment rates. The scenario weightings are based on management\u2019s current expectation about the future
probability of each economic scenario. Further detail and sensitivity analysis are provided in notes 38 to 40.
De\ufb01ned bene\ufb01t pension scheme
In estimating the value of the pension scheme surplus or deficit, management rely on a range of assumptions including
the most appropriate discount rate and mortality rates, inflation, take up of the Pension Increase Exchange offer and
future salary increases. The Board receives independent external advice from actuarial consultants in arriving at the
scheme assumptions, which are outlined together with sensitivity analysis in note 19.
In addition, the Society is aware of the 2023 ruling in the Virgin Media vs NTL Pension Trustee legal case and subsequent
Court of Appeal ruling published in July 2024. The UK government announced on 5 June 2025 that legislation will be
introduced enabling retrospective actuarial certification to validate historic amendments. While this legislative solution
is anticipated to remove the requirement for provisions related to void benefit changes, neither the timing nor precise
scope are confirmed. Until enacted, there remains uncertainty as to whether the judgements will result in additional
liabilities for UK pension schemes and the Society cannot be certain of the potential implications (if any) and therefore a
sufficiently reliable estimate of any effect on the obligation cannot be made, however it is possible that the defined
benefit pension obligation could be increased. Further detail is found in note 19.
Judgements
Fair value of derivatives and \ufb01nancial assets
Fair values of derivatives and financial assets are determined in line with the three level valuation hierarchy as defined
within IFRS 13, Fair Value Measurement. Judgement can be required to determine the classification of valuations into the
different levels. Further detail is provided in note 32.
Impairment of \ufb01nancial assets
The modelling of impairment of mortgage assets includes a range of management judgements, including the Society\u2019s
definition of default, significant increase in credit risk and the use of post model adjustments. Further detail is provided
in note 38.
Securitised assets
Management has judged in relation to securitised assets that the transfer of the beneficial interest in the loans
transferred from the Society to the Group\u2019s SPV entities does not result in a transfer of the risks and rewards in relation to
these loans. Therefore, the transfer of the beneficial interest is not recognised as a sale by the Society, and the loans
continue to be recognised within the Society\u2019s Statement of Financial Position, with the proceeds received from the
transfer accounted for as a deemed loan repayable to the SPV. Further detail is provided in note 14.
Impact of climate change
The Group has considered the impact of climate change on the valuation of the assets and liabilities held on its Balance
Sheet and assessed that its impact is immaterial to the current balance sheet position when considering the potential
physical and transitional risks to the Group\u2019s operations. A post model adjustment in relation to the impact of climate
change on expected credit loss on loans and advances to customers has been recognised. Further detail is provided in
note 38.", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00211": { "value": "Basis of preparation
The Annual Accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) as
adopted in the UK and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC)
and in accordance with the Building Societies Act 1986 and the Building Societies (Accounts and Related Provisions)
Regulations 1998 as applicable to building societies reporting under IFRS.
The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain
financial instruments measured at fair value at the end of each reporting period. The Directors\u2019 going concern review
considered the Group\u2019s and Society\u2019s forecasts, including different possible scenarios based on possible internal and
external developments and arising risks. Together with regular stress testing, the forecasts show that the Group and
Society will be able to maintain adequate levels of both liquidity and capital for at least the next 12 months while meeting
all relevant regulatory requirements.
After making enquiries, the Directors are therefore satisfied that both the Group and the Society has adequate
resources to continue in business for at least the next 12 months and therefore it is appropriate to adopt the going
concern basis of accounting in preparing these financial statements. The Directors have concluded that there are no
material uncertainties that may cast significant doubt upon the Group and Society\u2019s ability to continue to apply the
going concern basis of accounting.
The Group has chosen to present the financial statements in pound Sterling, which is the Group\u2019s functional currency. All
figures in the financial statements are rounded to the nearest hundreds of thousands of pound Sterling (\u00a30.0m), unless
otherwise stated.
The ultimate controlling party and parent to the Group is Newcastle Building Society.
A summary of the Group\u2019s principal accounting policies is set out below.", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00212": { "value": "The Annual Accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) as
adopted in the UK and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC)
and in accordance with the Building Societies Act 1986 and the Building Societies (Accounts and Related Provisions)
Regulations 1998 as applicable to building societies reporting under IFRS.", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00213": { "value": "The Directors\u2019 going concern review
considered the Group\u2019s and Society\u2019s forecasts, including different possible scenarios based on possible internal and
external developments and arising risks. Together with regular stress testing, the forecasts show that the Group and
Society will be able to maintain adequate levels of both liquidity and capital for at least the next 12 months while meeting
all relevant regulatory requirements.", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00214": { "value": "The Group has chosen to present the financial statements in pound Sterling, which is the Group\u2019s functional currency.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00147": { "value": "Newcastle Building Society", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00150": { "value": "Newcastle Building Society", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00215": { "value": "Basis of consolidation
The Group Accounts include the results of the Society, its subsidiary undertakings and other entities which it is deemed
to control, all of which have accounting periods ending 31 December. Subsidiaries and other controlled entities are
entities over which the Society has the power to control financial and operating policies so as to obtain benefits from
their activities. Subsidiaries are consolidated from the date on which control is transferred to the Group and are
deconsolidated from the date that control ceases. Upon consolidation, inter-company transactions, balances and
unrealised gains or losses on transactions are eliminated. The accounting policies of subsidiaries are consistent with
Group accounting policies. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00216": { "value": "Income recognition
Interest income and expense
Interest receivable and interest payable for all interest bearing financial instruments are recognised within \u2018Interest
receivable and similar income\u2019 and \u2018Interest payable and similar charges\u2019 in the consolidated Income Statements, using
the effective interest rate method (EIRM).
EIRM is used to calculate the amortised cost of financial instruments and to recognise interest receivable or payable
over the relevant period. The effective interest rate is the rate that exactly discounts estimated cash flows (excluding
credit losses) to zero, through the expected life of the instrument. In calculating the effective interest rate, all
contractual terms of the financial instrument are taken into account. Historical and forecast mortgage redemption data
and management judgement are used to estimate the expected lives of mortgage assets.
Fees and commissions income and charges
Fees and commissions relating to originating loans and advances to customers are deferred and spread using the EIRM
and included in interest income. Other fees and commissions are recognised as \u2018Other income\u2019 on the accruals basis as
services are provided.
Other income
Other income relates to income from contracts with customers recognised under IFRS 15, Revenue from Contracts with
Customers. Revenue is measured as the fair value of consideration specified in the contract with a customer. The Group
recognises revenue at both point in time and over time depending on the nature of the performance obligations in the
contract with the customer.
Savings management services and savings management project and change services
Savings management services and savings management project and change services are provided by the Society\u2019s
subsidiary, Newcastle Strategic Solutions Limited (NSSL).
Significant work may be required to implement the requirements of a new customer, to implement changes required by
existing customers or to decommission NSSL\u2019s services. Revenue relating to such services are recognised as savings
management project and change services and is recognised over time. Each contractual milestone being a
performance obligation has a corresponding transaction price
which represents the portion of the service provided to
the customer.
Revenue for savings management services is recognised over time in discrete monthly amounts which are calculated
based on actual work completed in the relevant month. The amount of revenue recognised for ongoing savings
management is spread evenly throughout the contractual term, consistent with the pattern of transfer of the service to
the customer. Where the Group is reimbursed for certain external costs incurred on behalf of clients, the company acts
as agent with the costs contractually directed by the clients.
IT services
NSSL provide managed IT services to the Group and external customers, which includes managed IT solutions for
savings management and client account systems, and data storage services. The amount of revenue recognised for
savings management systems and data storage services is spread evenly throughout the contractual term, recognised
on a monthly basis, consistent with the pattern of transfer of the service to the customer. The amount of revenue
recognised for client account systems is calculated based on the actual asset balance held by a customer in the
relevant month.
Regulated advice services
Regulated advice services are provided by the Society\u2019s subsidiary, Newcastle Financial Advisers Limited (NFAL). All
services derive from NFAL\u2019s principal activity, the provision of financial planning services, and include regulated advice,
ongoing advice, and life protection plans. NFAL is an appointed representative of Openwork Limited and provides
services on behalf of Openwork Limited. For the purposes of IFRS 15, Openwork Limited is the sole customer of NFAL
and all consideration for the services provided by NFAL is received from Openwork Limited.
Revenue for regulated advice and protection plans is recognised when confirmation of the investment or plan is
received by Openwork Limited, and the service is complete. Revenue for ongoing advice is recognised on a straight-
line basis at the end of each month the service is in place. Consideration for regulated advice and protection plans is
calculated using contractually stated and agreed rates, on an ad valorem basis for regulated advice, and dependent
upon specific product lines for protection plans. Consideration for ongoing service is calculated on an annual basis as a
percentage of an investment portfolio.
Third party services
Third party services are provided by the Society through its branch network and online. The Society introduces
customers to third parties who provide mortgage related services such as conveyancing. The Society is the principal
in the relationship with each third party provider and has no contractual relationship for the third party service with
the customer.
The service provided of introducing or referring customers to a third party is complete once the third party provider has
agreed a sale with the customer. Revenue is recognised when cash is received, which in all instances is in line with, or
shortly after, completion of the contract in line with contractual payment terms. Consideration for all services is
calculated based on discrete, and contractually agreed, transaction prices which are noted as a commission amount to
the Society. All payments received relate to performance completed up to the invoice date.
All services
Due to the nature of services provided, IFRS 15 is more material to NSSL and NFAL than to the Society. Details of
transactions which are not material to the Group, but are material to the individual subsidiaries, can be found in the
specific subsidiary\u2019s annual report and accounts.
The transaction prices for all services provided by the Group are calculated using contractually stated and agreed rates.
There are no elements of variable consideration, no significant payment terms and no critical judgements in allocating
the transaction price. There is little judgement in the recognition of this revenue as transaction prices are agreed
upfront, the timing and scope of work is agreed as part of each customer\u2019s contract.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00217": { "value": "Interest income and expense
Interest receivable and interest payable for all interest bearing financial instruments are recognised within \u2018Interest
receivable and similar income\u2019 and \u2018Interest payable and similar charges\u2019 in the consolidated Income Statements, using
the effective interest rate method (EIRM).
EIRM is used to calculate the amortised cost of financial instruments and to recognise interest receivable or payable
over the relevant period. The effective interest rate is the rate that exactly discounts estimated cash flows (excluding
credit losses) to zero, through the expected life of the instrument. In calculating the effective interest rate, all
contractual terms of the financial instrument are taken into account. Historical and forecast mortgage redemption data
and management judgement are used to estimate the expected lives of mortgage assets.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00218": { "value": "Fees and commissions income and charges
Fees and commissions relating to originating loans and advances to customers are deferred and spread using the EIRM
and included in interest income. Other fees and commissions are recognised as \u2018Other income\u2019 on the accruals basis as
services are provided.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFeeAndCommissionIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00219": { "value": "Financial assets
In accordance with IFRS 9 the Group classifies its financial assets into the following categories:
Financial assets held at amortised cost
Under IFRS 9, assets may be held at amortised cost, where the assets contractual cash flows reflect solely payments of
principal and interest on the principal amount outstanding (SPPI) and the business model is to hold the asset to collect
the contractual cash flows. In this case, income is recognised under the EIRM.
In assessing the business model applicable to its financial assets, the Group has considered how financial asset
performance is evaluated and reported to senior management, the key risks affecting this performance, how these are
managed, and how managers of the business are compensated in respect of asset performance.
Loans and advances to customers
The Group\u2019s mortgage lending, other than equity release mortgages, meets the definition of SPPI as the Group
originates the mortgages with the intention to hold the asset until maturity, collecting contractual cash flows. Mortgage
assets are recognised on the Balance Sheet as \u2018loans and advances to customers\u2019. Interest is recognised in accordance
with the EIRM.
Loans and advances to credit institutions
The Group\u2019s non-mortgage lending, typically loans and advances to credit institutions, is similarly undertaken with a
view to recovery of contractual cash flows and with interest charged that meets the SPPI requirements.
Cash
The Group\u2019s cash balances, where interest generative, are held to collect contractual interest flows and to ensure
appropriate liquidity is available to meet the Group\u2019s liabilities as they fall due.
Trade receivables
The Group\u2019s trade receivables, held within other assets on the Balance Sheet, whether due from third parties or intra-
group companies, are held to collect the contractual cash balances as they fall due. The Group does not engage in debt
factoring activities.
Financial assets held at fair value through other comprehensive income
Under IFRS 9, where the contractual cash flow characteristics of an asset reflect SPPI, an asset may be classified as \u2018fair
value through other comprehensive income\u2019 (FVOCI), where the assets are held to collect contractual cash flows or to
sell. In this case, the fair value of the asset is recognised on the Balance Sheet, whilst the fair value movement is
recognised in \u2018other comprehensive income\u2019. Interest received on these assets continues to be recognised in the
Income Statement using the EIRM.
Debt securities
The Group holds a portfolio of debt securities for liquidity management purposes, primarily consisting of covered
bonds, residential mortgage-backed securities (RMBS), supranational bonds, treasury bills and government gilts. These
instruments meet the definition of SPPI but may be sold if liquidity is required. They are therefore held at FVOCI.
Financial assets held at fair value through pro
fit and loss
Under IFRS 9, where the contractual cash flow characteristics of an asset do not reflect SPPI, or where assets are neither
held for sale or to collect contractual cash flows, the asset is classified at \u2018fair value through profit or loss\u2019 (FVTPL), with
fair value movements recognised through the Income Statement.
Derivative \ufb01nancial instruments
The Group holds derivative financial instruments to hedge its exposures relating to interest rates and foreign exchange
rates. Derivative financial instruments are recognised at fair value on the date the derivative contract is entered into and
subsequently re-measured at their fair value with changes in fair value being recognised in the Income Statement. In
accordance with the Group\u2019s Treasury Policy and the Building Societies Act 1986, the Group does not hold or issue
derivative financial instruments for trading purposes. The need for credit valuation adjustments is considered in the
determination of the fair value of derivatives.
Fair value hedge accounting
Derivative financial instruments may be designated in formal accounting hedge relationships. At the Balance Sheet
date, this included micro fair value hedges accounted for under IFRS 9, and portfolio macro fair value hedges accounted
for under IAS 39, Financial Instruments: Recognition and Measurement.
The fair value of the hedged risk is included on the Balance Sheet under the heading \u2018fair value adjustments for hedged
risk\u2019. Any gain or loss arising from hedge ineffectiveness is recognised immediately in the Income Statement in the \u2018fair
value gains less losses on financial instruments and hedge accounting\u2019 line.
Micro fair value hedges are assessed before the hedge is incepted and regularly thereafter, ensuring there continues to
be an economic relationship between the hedged item and the hedging derivative and that value changes are not
primarily due to credit risk, as required by IFRS 9.
The hedge effectiveness of macro hedges is assessed both pro- and retrospectively. In accordance with IAS 39 only
highly effective hedges are incepted or continued.
When a hedging instrument is terminated or no longer meets the criteria for hedge accounting, and the underlying asset
or liability remains on the Balance Sheet, hedge accounting is discontinued. Cumulative hedge adjustments are
amortised to the Income Statement within \u2018net interest income\u2019.
Cash \ufb02ow hedge accounting
Derivatives may also be designated into formal cash flow hedge relationships under IFRS 9. The effective portion of
changes in the fair value of designated derivatives are recognised in \u2018other comprehensive income\u2019 and accumulated in
the cash flow hedging reserve, limited to the cumulative change in fair value of the hedged item from inception of the
hedge. The gain or loss relating to the ineffective portion is recognised immediately in the Income Statement and is
included in the 'fair value gains less losses on financial instruments and hedge accounting' line item.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to the
Income Statement in the periods when the hedged item affects profit or loss and are included in the 'fair value gains less
losses on financial instruments and hedge accounting' line. This transfer does not affect other comprehensive income.
Furthermore, if the Group expects that some or all of the loss accumulated in the cash flow hedging reserve will not be
recovered in the future, that amount is immediately reclassified to the Income Statement.
The Group discontinues cash flow hedge accounting only when the hedging relationship (or a part thereof) ceases to
meet the qualifying criteria. This includes instances when the hedging instrument expires or is sold, terminated or
exercised. The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive
income and accumulated in cash flow hedge reserve at that time remains in equity and is reclassified to profit or loss
when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss
accumulated in the cash flow hedge reserve is reclassified immediately to profit or loss and is included in the 'fair value
gains less losses on financial instruments and hedge accounting' line item.
Mortgage assets held at fair value through pro\ufb01t or loss
The Group\u2019s equity release mortgage assets contractual cash flows are not solely payments of principal and interest
and are therefore classified as fair value through profit and loss (FVTPL). Assets classified as FVTPL are initially
recognised at fair value with any subsequent changes in fair value recognised immediately in the Income Statement.
The fair value is the present value of the forecast contractual cash flows less the value of the no-negative equity
guarantee, which is calculated using an option pricing model, discounted using a suitable market rate at the reporting
date. Inputs are market driven, or where no market driven data is available, are based on management judgement
informed by observable data to the greatest extent possible. Interest on equity release mortgages is recognised in
accordance with the EIRM, based on contractual interest rates or market interest rates as at the time of the loan\u2019s
acquisition where applicable.
Included in the equity release mortgage assets is a fixed reversion book. For this book, the repayment amount is
determined at mortgage completion, but the timing of redemption is uncertain. Interest on fixed reversion loans is
recognised based on the interest rate implicit in the mortgage contract.
O\ufb00setting
The Group has financial assets and liabilities for which there is a practical right to offset the recognised amounts, and
which are settled net in practice. However, the netting arrangements do not result in an offset of balance sheet assets
and liabilities for accounting purposes as the right to offset is not unconditional in all circumstances. There are no
financial assets or liabilities which are offset with the net amount presented on the Balance Sheet.
Cash and cash equivalents
For the purpose of the Cash Flow Statements, \u2018cash and cash equivalents\u2019 comprises cash in hand, balances with the
Bank of England, loans and advances to credit institutions available on demand or with original maturities of three
months or less and debt securities with a maturity period of three months or less i.e. highly liquid assets readily
convertible into cash. For operational purposes, the Group\u2019s debt security portfolio is maintained for liquidity purposes
with the assets therein demonstrably convertible into cash regardless of maturity. The Group does not include
encumbered assets in its cash and cash equivalents.
The Group does not consider the timing of derivative collateral inflows to be sufficiently reliably estimated to include
such collateral placed with counterparties as a liquid asset for cash flow presentation. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00220": { "value": "Financial assets held at fair value through pro
fit and loss
Under IFRS 9, where the contractual cash flow characteristics of an asset do not reflect SPPI, or where assets are neither
held for sale or to collect contractual cash flows, the asset is classified at \u2018fair value through profit or loss\u2019 (FVTPL), with
fair value movements recognised through the Income Statement.
Derivative \ufb01nancial instruments
The Group holds derivative financial instruments to hedge its exposures relating to interest rates and foreign exchange
rates. Derivative financial instruments are recognised at fair value on the date the derivative contract is entered into and
subsequently re-measured at their fair value with changes in fair value being recognised in the Income Statement. In
accordance with the Group\u2019s Treasury Policy and the Building Societies Act 1986, the Group does not hold or issue
derivative financial instruments for trading purposes. The need for credit valuation adjustments is considered in the
determination of the fair value of derivatives.
Fair value hedge accounting
Derivative financial instruments may be designated in formal accounting hedge relationships. At the Balance Sheet
date, this included micro fair value hedges accounted for under IFRS 9, and portfolio macro fair value hedges accounted
for under IAS 39, Financial Instruments: Recognition and Measurement.
The fair value of the hedged risk is included on the Balance Sheet under the heading \u2018fair value adjustments for hedged
risk\u2019. Any gain or loss arising from hedge ineffectiveness is recognised immediately in the Income Statement in the \u2018fair
value gains less losses on financial instruments and hedge accounting\u2019 line.
Micro fair value hedges are assessed before the hedge is incepted and regularly thereafter, ensuring there continues to
be an economic relationship between the hedged item and the hedging derivative and that value changes are not
primarily due to credit risk, as required by IFRS 9.
The hedge effectiveness of macro hedges is assessed both pro- and retrospectively. In accordance with IAS 39 only
highly effective hedges are incepted or continued.
When a hedging instrument is terminated or no longer meets the criteria for hedge accounting, and the underlying asset
or liability remains on the Balance Sheet, hedge accounting is discontinued. Cumulative hedge adjustments are
amortised to the Income Statement within \u2018net interest income\u2019.Mortgage assets held at fair value through pro\ufb01t or loss
The Group\u2019s equity release mortgage assets contractual cash flows are not solely payments of principal and interest
and are therefore classified as fair value through profit and loss (FVTPL). Assets classified as FVTPL are initially
recognised at fair value with any subsequent changes in fair value recognised immediately in the Income Statement.
The fair value is the present value of the forecast contractual cash flows less the value of the no-negative equity
guarantee, which is calculated using an option pricing model, discounted using a suitable market rate at the reporting
date. Inputs are market driven, or where no market driven data is available, are based on management judgement
informed by observable data to the greatest extent possible. Interest on equity release mortgages is recognised in
accordance with the EIRM, based on contractual interest rates or market interest rates as at the time of the loan\u2019s
acquisition where applicable.
Included in the equity release mortgage assets is a fixed reversion book. For this book, the repayment amount is
determined at mortgage completion, but the timing of redemption is uncertain. Interest on fixed reversion loans is
recognised based on the interest rate implicit in the mortgage contract.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00223": { "value": "Derivative \ufb01nancial instruments
The Group holds derivative financial instruments to hedge its exposures relating to interest rates and foreign exchange
rates. Derivative financial instruments are recognised at fair value on the date the derivative contract is entered into and
subsequently re-measured at their fair value with changes in fair value being recognised in the Income Statement. In
accordance with the Group\u2019s Treasury Policy and the Building Societies Act 1986, the Group does not hold or issue
derivative financial instruments for trading purposes. The need for credit valuation adjustments is considered in the
determination of the fair value of derivatives. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00222": { "value": "Derivative \ufb01nancial instruments
The Group holds derivative financial instruments to hedge its exposures relating to interest rates and foreign exchange
rates. Derivative financial instruments are recognised at fair value on the date the derivative contract is entered into and
subsequently re-measured at their fair value with changes in fair value being recognised in the Income Statement. In
accordance with the Group\u2019s Treasury Policy and the Building Societies Act 1986, the Group does not hold or issue
derivative financial instruments for trading purposes. The need for credit valuation adjustments is considered in the
determination of the fair value of derivatives.
Fair value hedge accounting
Derivative financial instruments may be designated in formal accounting hedge relationships. At the Balance Sheet
date, this included micro fair value hedges accounted for under IFRS 9, and portfolio macro fair value hedges accounted
for under IAS 39, Financial Instruments: Recognition and Measurement.
The fair value of the hedged risk is included on the Balance Sheet under the heading \u2018fair value adjustments for hedged
risk\u2019. Any gain or loss arising from hedge ineffectiveness is recognised immediately in the Income Statement in the \u2018fair
value gains less losses on financial instruments and hedge accounting\u2019 line.
Micro fair value hedges are assessed before the hedge is incepted and regularly thereafter, ensuring there continues to
be an economic relationship between the hedged item and the hedging derivative and that value changes are not
primarily due to credit risk, as required by IFRS 9.
The hedge effectiveness of macro hedges is assessed both pro- and retrospectively. In accordance with IAS 39 only
highly effective hedges are incepted or continued.
When a hedging instrument is terminated or no longer meets the criteria for hedge accounting, and the underlying asset
or liability remains on the Balance Sheet, hedge accounting is discontinued. Cumulative hedge adjustments are
amortised to the Income Statement within \u2018net interest income\u2019.
Cash \ufb02ow hedge accounting
Derivatives may also be designated into formal cash flow hedge relationships under IFRS 9. The effective portion of
changes in the fair value of designated derivatives are recognised in \u2018other comprehensive income\u2019 and accumulated in
the cash flow hedging reserve, limited to the cumulative change in fair value of the hedged item from inception of the
hedge. The gain or loss relating to the ineffective portion is recognised immediately in the Income Statement and is
included in the 'fair value gains less losses on financial instruments and hedge accounting' line item.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to the
Income Statement in the periods when the hedged item affects profit or loss and are included in the 'fair value gains less
losses on financial instruments and hedge accounting' line. This transfer does not affect other comprehensive income.
Furthermore, if the Group expects that some or all of the loss accumulated in the cash flow hedging reserve will not be
recovered in the future, that amount is immediately reclassified to the Income Statement.
The Group discontinues cash flow hedge accounting only when the hedging relationship (or a part thereof) ceases to
meet the qualifying criteria. This includes instances when the hedging instrument expires or is sold, terminated or
exercised. The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive
income and accumulated in cash flow hedge reserve at that time remains in equity and is reclassified to profit or loss
when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss
accumulated in the cash flow hedge reserve is reclassified immediately to profit or loss and is included in the 'fair value
gains less losses on financial instruments and hedge accounting' line item.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00224": { "value": "Fair value hedge accounting
Derivative financial instruments may be designated in formal accounting hedge relationships. At the Balance Sheet
date, this included micro fair value hedges accounted for under IFRS 9, and portfolio macro fair value hedges accounted
for under IAS 39, Financial Instruments: Recognition and Measurement.
The fair value of the hedged risk is included on the Balance Sheet under the heading \u2018fair value adjustments for hedged
risk\u2019. Any gain or loss arising from hedge ineffectiveness is recognised immediately in the Income Statement in the \u2018fair
value gains less losses on financial instruments and hedge accounting\u2019 line.
Micro fair value hedges are assessed before the hedge is incepted and regularly thereafter, ensuring there continues to
be an economic relationship between the hedged item and the hedging derivative and that value changes are not
primarily due to credit risk, as required by IFRS 9.
The hedge effectiveness of macro hedges is assessed both pro- and retrospectively. In accordance with IAS 39 only
highly effective hedges are incepted or continued.
When a hedging instrument is terminated or no longer meets the criteria for hedge accounting, and the underlying asset
or liability remains on the Balance Sheet, hedge accounting is discontinued. Cumulative hedge adjustments are
amortised to the Income Statement within \u2018net interest income\u2019.
Cash \ufb02ow hedge accounting
Derivatives may also be designated into formal cash flow hedge relationships under IFRS 9. The effective portion of
changes in the fair value of designated derivatives are recognised in \u2018other comprehensive income\u2019 and accumulated in
the cash flow hedging reserve, limited to the cumulative change in fair value of the hedged item from inception of the
hedge. The gain or loss relating to the ineffective portion is recognised immediately in the Income Statement and is
included in the 'fair value gains less losses on financial instruments and hedge accounting' line item.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to the
Income Statement in the periods when the hedged item affects profit or loss and are included in the 'fair value gains less
losses on financial instruments and hedge accounting' line. This transfer does not affect other comprehensive income.
Furthermore, if the Group expects that some or all of the loss accumulated in the cash flow hedging reserve will not be
recovered in the future, that amount is immediately reclassified to the Income Statement.
The Group discontinues cash flow hedge accounting only when the hedging relationship (or a part thereof) ceases to
meet the qualifying criteria. This includes instances when the hedging instrument expires or is sold, terminated or
exercised. The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive
income and accumulated in cash flow hedge reserve at that time remains in equity and is reclassified to profit or loss
when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss
accumulated in the cash flow hedge reserve is reclassified immediately to profit or loss and is included in the 'fair value
gains less losses on financial instruments and hedge accounting' line item.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00221": { "value": "O\ufb00setting
The Group has financial assets and liabilities for which there is a practical right to offset the recognised amounts, and
which are settled net in practice. However, the netting arrangements do not result in an offset of balance sheet assets
and liabilities for accounting purposes as the right to offset is not unconditional in all circumstances. There are no
financial assets or liabilities which are offset with the net amount presented on the Balance Sheet.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForOffsettingOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00225": { "value": "Cash and cash equivalents
For the purpose of the Cash Flow Statements, \u2018cash and cash equivalents\u2019 comprises cash in hand, balances with the
Bank of England, loans and advances to credit institutions available on demand or with original maturities of three
months or less and debt securities with a maturity period of three months or less i.e. highly liquid assets readily
convertible into cash. For operational purposes, the Group\u2019s debt security portfolio is maintained for liquidity purposes
with the assets therein demonstrably convertible into cash regardless of maturity. The Group does not include
encumbered assets in its cash and cash equivalents.
The Group does not consider the timing of derivative collateral inflows to be sufficiently reliably estimated to include
such collateral placed with counterparties as a liquid asset for cash flow presentation.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00226": { "value": "Cash and cash equivalents
For the purpose of the Cash Flow Statements, \u2018cash and cash equivalents\u2019 comprises cash in hand, balances with the
Bank of England, loans and advances to credit institutions available on demand or with original maturities of three
months or less and debt securities with a maturity period of three months or less i.e. highly liquid assets readily
convertible into cash. For operational purposes, the Group\u2019s debt security portfolio is maintained for liquidity purposes
with the assets therein demonstrably convertible into cash regardless of maturity. The Group does not include
encumbered assets in its cash and cash equivalents.
The Group does not consider the timing of derivative collateral inflows to be sufficiently reliably estimated to include
such collateral placed with counterparties as a liquid asset for cash flow presentation.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCashFlowsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00227": { "value": "Impairment of \ufb01nancial assets
Loss allowances for expected credit losses are recognised on all financial assets held at either amortised cost or FVOCI,
with loss allowances recognised in the Income Statement.
Under IFRS 9, the Group conducts a forward-looking assessment of impairment. Expected credit losses are recognised
across applicable financial assets based on whether there has been a significant increase in credit risk since the asset\u2019s
origination. Internal provisioning models are used to determine expected credit losses for each individual asset, based
on four different economic scenarios (base, upside, downside and stressed downside). The four scenarios are assigned
a probability weighting to determine the loss allowance recognised. Where an asset has not seen a significant increase
in credit risk since its origination (\u2018stage 1 assets\u2019), 12 month expected credit losses are recognised as a loss allowance.
These are the portion of lifetime expected credit losses that result from default events on the asset expected within the
12 months after the reporting date.
Where an asset has seen a significant increase in credit risk since origination, but there is no objective evidence of
impairment at the reporting date (\u2018stage 2 assets\u2019), lifetime expected credit losses are recognised.
Where an asset has seen significant increase in credit risk since origination and there is objective evidence of
impairment at the reporting date (\u2018stage 3 assets\u2019), lifetime expected credit losses are recognised and interest income
is to be calculated against the net carrying amount of the financial asset, rather than the gross amount.
Where lifetime probabilities of default are not available on acquired books, the Group uses comparable customer credit
ratings and loan to value information to assess a suitable provision for that lending.
De\ufb01nition of default
A loan is considered to be in default and is allocated to stage 3 if the loan is in more than three months arrears, is in
possession, certain forbearance measures have been granted or meets internal \u201cunlikely to pay\u201d criteria such as
bankruptcy. Loans can move between stages subject to a curing period once the loan no longer meets the criteria for
its staging.
Residential and buy-to-let mortgages
Signi\ufb01cant increase in credit risk since origination
At the application stage, a prospective borrower\u2019s credit risk is assessed. The Group does not lend to customers who
are determined as high risk but will lend to customers who can fall under a range of application scores - based on a wide
variety of factors including affordability, credit history and committed monthly spend. A borrower\u2019s application score
gives a quantified assessment of borrower risk \u2013 a risk score. On a quarterly basis, the Group receives borrower credit
scores. This data is mapped internally to a new borrower risk score \u2013 allowing continuous assessment of the movement
in borrower risk since origination. The Group apply the below criteria when assessing whether there has been a
significant increase in credit risk for residential and buy-to-let mortgages:
Stage 1 borrowers:
\u25a0
Risk score is suitably consistent between origination date and reported date.
Stage 2 borrowers:
\u25a0
Risk score increases past pre-defined internal thresholds but has not defaulted; or
\u25a0
Have fallen into more than one month arrears.
Stage 3 borrowers:
\u25a0
Have defaulted (assessed against a range of internal qualitative and quantitative criteria); or
\u25a0
Have fallen into more than three months arrears.
Commercial and other legacy books
Signi\ufb01cant increase in credit risk since origination
An assessment of the risk of loss against the Group\u2019s legacy mortgage books is carried out on a case-by-case basis,
with the exception of serviced apartments that are assessed using a similar methodology as residential lending. Across
the highest risk exposures, this includes the annual completion of a tailored risk grade scorecard designed to
encompass the key characteristics contributing to underlying risk. Each of the scorecard risks are weighted to provide a
final weighted risk score for the loan, which categorises the loan in terms of likelihood of failure in a moderate or severe
recessionary scenario. The risks that carry the highest weightings relate to tenant failure and serviceability. Due to the
low number of remaining commercial borrowers, all borrowers are closely monitored. All payments due are monitored
on a real-time basis. In the event of a late payment, the position is reviewed immediately and appropriate action taken.
The Group apply the below criteria when assessing whether there has been a significant increase in credit risk for
commercial and legacy mortgages:
Stage 1 borrowers:
\u25a0
Risk score is suitably consistent between origination date and reported date.
Stage 2 borrowers:
\u25a0
Risk score increases past pre-defined internal thresholds, or where the commercial lending department flags that
credit risk has increased significantly, but a borrower has not otherwise defaulted; or
\u25a0
Have fallen into more than one month arrears.
Stage 3 borrowers:
\u25a0
Have defaulted (assessed against a range of internal qualitative and quantitative criteria); or
\u25a0
Have fallen into more than three months arrears.
Purchased or originated credit impaired (POCI)
Loans that are either purchased or originated credit impaired (POCI) are classified as stage 3 assets at initial recognition
and cannot be transferred to stage 1 or 2 even if the credit quality of these assets improves. The Group has a portfolio of
loans acquired as part of the Manchester Building Society\u2019s transfer of engagements that meets this definition. Any
change in the credit quality of the asset at each reporting date is reflected in the Income Statement.
Modifications
The Group grants forbearance to commercial borrowers in the form of extending the loan term on maturity, capitalising
arrears as part of a wider exercise to get a borrower back on track with a revised debt repayment plan and adjusting the
interest rate to aid serviceability particularly where a fixed rate has expired. Generally, the Group expects commercial
investment loans to be repaid on maturity given the stated strategy of winding down the portfolio, but the Group will
grant forbearance when this is also in the best interests of the Group, e.g. providing the borrower with more time to sell
the security property following a tenant renewal. The Group occasionally grants forbearance to other borrowers (in
similar forms to commercial) where this is expected to improve the ultimate recovery on loans advanced.
The requirement to grant forbearance is considered an objective indicator that an asset has suffered a significant
increase in credit risk since origination. As such, while forbearance may mitigate a selection of the Group\u2019s other
indications of default, the granting of forbearance will not result in a preferential staging (Stage 1 or 2) being applied to
any forborne asset. While benefitting from any revised terms that forbearance may bring, an asset is not able to move to
a lower staging. Only once forbearance has been lifted can an asset qualify for a reduced staging with the Group
operating a six month curing policy: deferring the reduction in staging until a six month period has passed in which no
other indicators of default or heightened credit risk have presented themselves.
Other assets
The Group has elected to take advantage of IFRS 9's practical expedient when assessing the accounting impairment
applied to its trade receivables. Lifetime expected credit losses are therefore provided against all trade receivables. A
provisions matrix approach, where provisions against receivables are calculated as an increasing percentage of the
receivable balance, rising as receivables fall further overdue, has been adopted.
Assessment of the appropriate provision percentages has been made in line with the Group\u2019s historic trade receivable
recovery. Where appropriate, forward-looking views to recovery are also incorporated.
See note 38 for details on the Group\u2019s provisioning methodology.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00228": { "value": "Financial liabilities
All financial liabilities are initially measured at fair value, being the issue proceeds, net of premia, discounts and
transaction costs incurred.
Derivative financial liabilities remain accounted for at fair value on the Balance Sheet date. Hedged risk fair value
adjustments are also held on the Balance Sheet at fair value. The remaining Group financial liabilities including shares,
deposits, Permanent Interest Bearing Shares (subscribed capital) and subordinated loan notes and are subsequently
measured at amortised cost, using the EIRM. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00229": { "value": "Intangible Assets
Intangible assets relate to computer software purchased from third parties, development costs for internally generated
software, and customer lists acquired from third parties. An intangible asset is recognised to the extent it is probable
that expected future economic benefits will flow from it and the costs can be measured reliably.
For development costs for internally generated software, where all capitalisation criteria specified in IAS 38, Intangible
Assets, are met, the expenditure directly attributable to a project is capitalised. Any expenditure related to
development of internally generated software that does not meet these criteria is recognised in the Income Statement
in the period in which it is incurred.
Computer software and development costs are initially recognised at cost, which includes the original purchase price
of the asset and the costs directly attributable to acquiring the asset and bringing it into working condition for its
intended use. Customer lists are initially recognised at fair value. Subsequently, intangible assets are recognised at their
initial value less accumulated amortisation and any provisions for impairment.
Amortisation of intangible assets commences when they are ready for their intended use and is provided at rates
calculated to write down the assets to their estimated residual values over the course of their anticipated useful lives, on
the following bases:
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Computer software
- 5 to 7 years
Development costs
- 5 to 7 years
Customer lists
- 5 to 7 years
\n
At each Balance Sheet date, the Group reviews the carrying value of its intangible assets to determine whether there is
any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable value of
the asset is estimated to determine the extent of the impairment loss (if any). If the recoverable value of an asset is
estimated to be less than the current carrying value, the carrying value of the asset is reduced to its recoverable value.
Where an impairment loss subsequently reverses, the carrying value of the asset is increased to the revised estimate of
its recoverable value.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00252": { "value": "For development costs for internally generated software, where all capitalisation criteria specified in IAS 38, Intangible
Assets, are met, the expenditure directly attributable to a project is capitalised. Any expenditure related to
development of internally generated software that does not meet these criteria is recognised in the Income Statement
in the period in which it is incurred.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00250": { "value": "Freehold property and equipment
Freehold property and equipment are stated at cost less accumulated depreciation and any provisions for impairment.
Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working
condition for its intended use.
Depreciation on assets commences when they are ready for their intended use and is provided at rates calculated to
write down the assets to their estimated residual values over the course of their anticipated useful lives, on the
following bases:
Freehold buildings
\u25a0
2% per annum, straight line
Equipment, \ufb01xtures and \ufb01ttings and motor vehicles
Refurbishment expenditure:
\u25a0
6.67% to 10% per annum, straight line
Equipment, fixtures and fittings:
\u25a0
10% per annum, straight line
Motor vehicles:
\u25a0
20% per annum, straight line
Computer equipment:
\u25a0
20% to 33% per annum, straight line
Gains and losses on disposals are determined by comparing the net disposal proceeds with the carrying amount of the
asset and are included in the Income Statement in the period in which they arise.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00251": { "value": "Depreciation on assets commences when they are ready for their intended use and is provided at rates calculated to
write down the assets to their estimated residual values over the course of their anticipated useful lives, on the
following bases:
Freehold buildings
\u25a0
2% per annum, straight line
Equipment, \ufb01xtures and \ufb01ttings and motor vehicles
Refurbishment expenditure:
\u25a0
6.67% to 10% per annum, straight line
Equipment, fixtures and fittings:
\u25a0
10% per annum, straight line
Motor vehicles:
\u25a0
20% per annum, straight line
Computer equipment:
\u25a0
20% to 33% per annum, straight line
Gains and losses on disposals are determined by comparing the net disposal proceeds with the carrying amount of the
asset and are included in the Income Statement in the period in which they arise.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00253": { "value": "Leasehold property
Leased property and equipment is accounted for in accordance with IFRS 16, Leases. The standard requires the lessee
to recognise a right of use asset and a corresponding liability on the Balance Sheet for all leases, with the exception of
short-term leases or leases of a low value asset. The liability is initially measured by discounting variable and fixed lease
payments, as well as other payments inherent to the lease, to its present value. Where possible, the discount rate used is
the rate implicit in the lease. However, where this cannot be readily determined, the Group\u2019s incremental borrowing rate
is used. The incremental borrowing rate is set using the Society\u2019s base funding cost and the costs of any asset buffers
required. The right of use asset is initially measured at cost, including the amount of the initial measurement of the lease
liability, any lease payments made before the commencement date of the lease, less any incentives received, any initial
direct costs and any restoration costs. Where a change to lease payments is agreed, the lease liability is re-measured,
and a corresponding adjustment is made to the right of use asset.
Leasehold buildings are depreciated on the following basis:
Leasehold with terms greater than 50 years:
\u25a0
2% per annum, straight line
Other leasehold buildings:
\u25a0
over the term of the lease
Interest charged on the lease liability is calculated based on the rate used as the discount factor to calculate the lease
liability and is included in interest payable and similar charges. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00254": { "value": "Taxation
Corporation tax is charged on profits adjusted for tax purposes. Deferred tax on temporary differences arising between
the tax bases and carrying amounts of assets and liabilities is provided in full, using the liability method. Deferred tax is
determined using tax rates (and laws) that have been enacted or substantially enacted by the Balance Sheet date and
that are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is
settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00255": { "value": "Taxation
Corporation tax is charged on profits adjusted for tax purposes. Deferred tax on temporary differences arising between
the tax bases and carrying amounts of assets and liabilities is provided in full, using the liability method. Deferred tax is
determined using tax rates (and laws) that have been enacted or substantially enacted by the Balance Sheet date and
that are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is
settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00291": { "value": "Pension scheme costs
The Society operates a defined contribution scheme on behalf of Executive Directors and colleagues. For the defined
contribution scheme, contributions are charged to the Income Statements, as they become payable, in accordance
with the rules of the scheme.
The Society historically operated a defined benefit scheme; this was closed to future accrual from 30 November 2010
and was funded by contributions partly from colleagues and partly from the Society at rates determined by an
independent actuary. These contributions are invested separately from the Group\u2019s assets.
Under IAS 19, Employee Benefits, the defined benefit scheme assets are measured at bid value at each Balance Sheet
date, and the obligations are measured by an independent actuary using the projected unit valuation method,
discounted using a high quality corporate bond rate.
The Group does not recognise IAS 19 pensions surpluses on its Balance Sheet as the Society does not have an
unconditional contractual right to benefit economically from the surplus. IAS 19 pension deficits are recognised
immediately with relevant actuarial re-measurements recognised in the Statement of Comprehensive Income. IAS 19
service costs are recognised in the Income Statement.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00292": { "value": "Provisions
A provision is recognised when there is a present obligation as a result of a past event, it is probable that the obligation
will be settled, and it can be reliably estimated. The amount recognised as a provision is the best estimate of the net
present value of the consideration required to settle the obligation, taking into account the risks and uncertainties
surrounding the obligation.
Contingent liabilities have not been recognised. A contingent liability is a possible obligation which is not probable or
not reliably measurable.
Contingent assets have not been recognised. A contingent asset is a possible asset that arises from past events and
whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00293": { "value": "Segment information
The operating segments disclosed in note 9 are those used in the Group\u2019s management and internal reporting
structures (for the chief operating decision maker) in accordance with IFRS 8, Operating Segments. No segment
information is presented on geographical lines, because substantially all of the Group\u2019s activities are in the
United Kingdom. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00312": { "value": "At the date of approval of these financial statements there are no amendments to International Financial Reporting
Standards relevant to these Annual Accounts that are mandatory for the first time for the financial year beginning 1
January 2025.", "dimensions": { "concept": "ifrs-full:DisclosureOfFirstTimeAdoptionExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00313": { "value": "Critical accounting estimates and judgements in applying accounting policies
The Group has to make judgements in applying its accounting policies, which affect the amounts recognised in the
Annual Accounts. These judgements are based on management\u2019s best knowledge, but the eventual outcome may
differ from them. In addition, estimates and assumptions are made that could affect the reported amounts of
assets and liabilities within the following year. The most significant areas where judgements and estimates are made are
as follows.
Estimates
Fair value of the equity release mortgage assets
The valuation of the Group\u2019s equity release mortgage assets depends on a range of assumptions, including the most
appropriate discount rate and property price growth rates and volatility. Key assumptions and sensitivity analysis are
outlined in note 32.
Impairment of financial assets
The impairment of mortgage assets is determined by a weighted average of the expected credit losses of four different
possible economic scenarios. Each scenario is based on a range of assumptions, including property price growth rates
and unemployment rates. The scenario weightings are based on management\u2019s current expectation about the future
probability of each economic scenario. Further detail and sensitivity analysis are provided in notes 38 to 40.
De\ufb01ned bene\ufb01t pension scheme
In estimating the value of the pension scheme surplus or deficit, management rely on a range of assumptions including
the most appropriate discount rate and mortality rates, inflation, take up of the Pension Increase Exchange offer and
future salary increases. The Board receives independent external advice from actuarial consultants in arriving at the
scheme assumptions, which are outlined together with sensitivity analysis in note 19.
In addition, the Society is aware of the 2023 ruling in the Virgin Media vs NTL Pension Trustee legal case and subsequent
Court of Appeal ruling published in July 2024. The UK government announced on 5 June 2025 that legislation will be
introduced enabling retrospective actuarial certification to validate historic amendments. While this legislative solution
is anticipated to remove the requirement for provisions related to void benefit changes, neither the timing nor precise
scope are confirmed. Until enacted, there remains uncertainty as to whether the judgements will result in additional
liabilities for UK pension schemes and the Society cannot be certain of the potential implications (if any) and therefore a
sufficiently reliable estimate of any effect on the obligation cannot be made, however it is possible that the defined
benefit pension obligation could be increased. Further detail is found in note 19.
Judgements
Fair value of derivatives and \ufb01nancial assets
Fair values of derivatives and financial assets are determined in line with the three level valuation hierarchy as defined
within IFRS 13, Fair Value Measurement. Judgement can be required to determine the classification of valuations into the
different levels. Further detail is provided in note 32.
Impairment of \ufb01nancial assets
The modelling of impairment of mortgage assets includes a range of management judgements, including the Society\u2019s
definition of default, significant increase in credit risk and the use of post model adjustments. Further detail is provided
in note 38.
Securitised assets
Management has judged in relation to securitised assets that the transfer of the beneficial interest in the loans
transferred from the Society to the Group\u2019s SPV entities does not result in a transfer of the risks and rewards in relation to
these loans. Therefore, the transfer of the beneficial interest is not recognised as a sale by the Society, and the loans
continue to be recognised within the Society\u2019s Statement of Financial Position, with the proceeds received from the
transfer accounted for as a deemed loan repayable to the SPV. Further detail is provided in note 14.
Impact of climate change
The Group has considered the impact of climate change on the valuation of the assets and liabilities held on its Balance
Sheet and assessed that its impact is immaterial to the current balance sheet position when considering the potential
physical and transitional risks to the Group\u2019s operations. A post model adjustment in relation to the impact of climate
change on expected credit loss on loans and advances to customers has been recognised. Further detail is provided in
note 38.", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00157": { "value": "2. Interest receivable and similar income
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
On \ufb01nancial assets held at amortised cost:
\u00a0 \u00a0 \u00a0 \u00a0
On loans fully secured on residential property
249.2
220.5
249.1
220.4
On other loans and advances:
\u00a0 \u00a0 \u00a0 \u00a0
To subsidiary undertakings
-
-
2.4
2.3
Other
0.4
1.4
18.0
9.0
On other liquid assets
18.0
32.3
16.9
31.5
On \ufb01nancial assets held at Fair Value Through Other Comprehensive Income:
\u00a0 \u00a0 \u00a0 \u00a0
On debt securities
33.3
31.5
33.3
31.5
On \ufb01nancial assets held at Fair Value Through Pro\ufb01t or Loss:
\u00a0 \u00a0 \u00a0 \u00a0
Interest recognised in respect of mortgages held at fair value
11.2
11.4
11.2
11.4
Net income on derivatives hedging assets
23.0
38.6
17.9
30.7
\u00a0
335.1
335.7
348.8
336.8
\n
Interest receivable and other income includes \u00a313.6m (2024: \u00a35.3m) from fixed income securities. Other than \u00a31.5m
(2024: \u00a32.0m) generated on loans originated in Spain and \u00a32.4m (2024: \u00a31.6m) interest income on supranational bonds,
all interest receivable and other similar income has been generated within the United Kingdom.", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00159": { "value": "2. Interest receivable and similar income
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
On \ufb01nancial assets held at amortised cost:
\u00a0 \u00a0 \u00a0 \u00a0
On loans fully secured on residential property
249.2
220.5
249.1
220.4
On other loans and advances:
\u00a0 \u00a0 \u00a0 \u00a0
To subsidiary undertakings
-
-
2.4
2.3
Other
0.4
1.4
18.0
9.0
On other liquid assets
18.0
32.3
16.9
31.5
On \ufb01nancial assets held at Fair Value Through Other Comprehensive Income:
\u00a0 \u00a0 \u00a0 \u00a0
On debt securities
33.3
31.5
33.3
31.5
On \ufb01nancial assets held at Fair Value Through Pro\ufb01t or Loss:
\u00a0 \u00a0 \u00a0 \u00a0
Interest recognised in respect of mortgages held at fair value
11.2
11.4
11.2
11.4
Net income on derivatives hedging assets
23.0
38.6
17.9
30.7
\u00a0
335.1
335.7
348.8
336.8
\n
Interest receivable and other income includes \u00a313.6m (2024: \u00a35.3m) from fixed income securities. Other than \u00a31.5m
(2024: \u00a32.0m) generated on loans originated in Spain and \u00a32.4m (2024: \u00a31.6m) interest income on supranational bonds,
all interest receivable and other similar income has been generated within the United Kingdom.
3. Interest payable and similar charges
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
On \ufb01nancial liabilities held at amortised cost:
\u00a0 \u00a0 \u00a0 \u00a0
On amounts due to Members
201.8
205.0
201.8
205.0
On subscribed capital
3.4
3.4
3.4
3.4
On subordinated liabilities
2.6
1.3
2.6
1.3
On deposits and other borrowings
24.7
32.5
36.9
31.7
On finance leases
0.4
0.3
0.4
0.3
\u00a0
232.9
242.5
245.1
241.7
On \ufb01nancial liabilities held at Fair Value Through Pro\ufb01t or Loss:
\u00a0 \u00a0 \u00a0 \u00a0
Net expense on derivatives hedging liabilities
0.8
1.3
0.8
1.3
\u00a0
233.7
243.8
245.9
243.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00158": { "value": "3. Interest payable and similar charges
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
On \ufb01nancial liabilities held at amortised cost:
\u00a0 \u00a0 \u00a0 \u00a0
On amounts due to Members
201.8
205.0
201.8
205.0
On subscribed capital
3.4
3.4
3.4
3.4
On subordinated liabilities
2.6
1.3
2.6
1.3
On deposits and other borrowings
24.7
32.5
36.9
31.7
On finance leases
0.4
0.3
0.4
0.3
\u00a0
232.9
242.5
245.1
241.7
On \ufb01nancial liabilities held at Fair Value Through Pro\ufb01t or Loss:
\u00a0 \u00a0 \u00a0 \u00a0
Net expense on derivatives hedging liabilities
0.8
1.3
0.8
1.3
\u00a0
233.7
243.8
245.9
243.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00160": { "value": "4. Other income and charges
\u00a0\u00a0
Group
Society
\u00a0\u00a0
2025
2024
2025
2024
\u00a0
Note
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Other income
\u00a0\u00a0\u00a0\u00a0\u00a0
Savings management income
\u00a0
51.0
47.3
-
-
Regulated advice services
\u00a0
8.7
6.8
-
-
Fee and commission income
\u00a0
0.9
1.8
0.9
1.8
Income recognised under IFRS 15
5
60.6
55.9
0.9
1.8
Other operating income
\u00a0
0.1
0.2
17.4
12.4
\u00a0\u00a0
60.7
56.1
18.3
14.2
\n
Other income includes income from contracts with customers of \u00a360.6m (2024: \u00a355.9m) which is recognised under
IFRS 15. Further detail is included in note 5.
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Other charges
\u00a0 \u00a0 \u00a0 \u00a0
Fee and commission expense
0.6
0.2
0.5
0.2
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Dividend income
\u00a0\u00a0\u00a0\u00a0
Received from equity investments
1.1
0.2
-
-
Received from subsidiary undertakings
-
-
1.4
1.6
\u00a0
1.1
0.2
1.4
1.6
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00162": { "value": "5. Revenue from contracts with customers
1. Disaggregation of revenue from contracts with customers
The Group and Society derive revenue from the transfer of services at a point in time and over time in the following
business segments and service areas, excluding intragroup income.
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Solutions Business
\u00a0\u00a0\u00a0\u00a0
Savings management services recognised over time
48.9
45.6
-
-
Savings management project and change services recognised over time
1.6
1.5
-
-
IT services recognised over time
0.5
0.2
-
-
\u00a0
51.0
47.3
-
-
Member Business
\u00a0\u00a0\u00a0\u00a0
Regulated advice services recognised at a point in time
3.4
2.6
-
-
Regulated advice services recognised over time
5.3
4.2
-
-
Third party services recognised at a point in time
0.8
1.7
0.8
1.7
Other services recognised over time
0.1
0.1
0.1
0.1
\u00a0
9.6
8.6
0.9
1.8
Total revenue from contracts with customers
60.6
55.9
0.9
1.8
\n
In accordance with IFRS 8 the Group reports the following segments: Member business and Solutions business. The
\u2018Solutions\u2019 business segment (also referred to as Newcastle Strategic Solutions) provides business to business services
through people, processes and technology; for more detail on the reportable segments, see note 9. When the Group
prepares financial information for management, it disaggregates revenue by segment and service type.
Details of intercompany income for the Society are included in note 30.
2. Unsatis\ufb01ed long-term service contracts
The following table shows partially unsatisfied performance obligations resulting from fixed-price long-term contracts
at 31 December 2025 where the contract ends after the balance sheet date:
\u00a0
Group
Solutions
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Aggregate amount of transaction price allocated to long-term savings
\u00a0 \u00a0 \u00a0 \u00a0
management projects
4.9
2.6
5.9
5.0
Aggregate amount of transaction price allocated to long-term IT services
0.1
0.7
0.1
0.7
\u00a0
5.0
3.3
6.0
5.7
\n
In relation to savings management contracts, the Group expects to recognise approximately \u00a31.7m of the unearned
amount in 2026, and \u00a33.2m thereafter. In relation to IT contracts, the Group expects to recognise approximately \u00a30.1m
of the unearned amount in 2026.
3. Assets and liabilities related to contracts with customers
No contract assets or liabilities have been recognised by the Group (2024: \u00a3nil).", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueFromContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00161": { "value": "5. Revenue from contracts with customers
1. Disaggregation of revenue from contracts with customers
The Group and Society derive revenue from the transfer of services at a point in time and over time in the following
business segments and service areas, excluding intragroup income.
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Solutions Business
\u00a0\u00a0\u00a0\u00a0
Savings management services recognised over time
48.9
45.6
-
-
Savings management project and change services recognised over time
1.6
1.5
-
-
IT services recognised over time
0.5
0.2
-
-
\u00a0
51.0
47.3
-
-
Member Business
\u00a0\u00a0\u00a0\u00a0
Regulated advice services recognised at a point in time
3.4
2.6
-
-
Regulated advice services recognised over time
5.3
4.2
-
-
Third party services recognised at a point in time
0.8
1.7
0.8
1.7
Other services recognised over time
0.1
0.1
0.1
0.1
\u00a0
9.6
8.6
0.9
1.8
Total revenue from contracts with customers
60.6
55.9
0.9
1.8
\n
In accordance with IFRS 8 the Group reports the following segments: Member business and Solutions business. The
\u2018Solutions\u2019 business segment (also referred to as Newcastle Strategic Solutions) provides business to business services
through people, processes and technology; for more detail on the reportable segments, see note 9. When the Group
prepares financial information for management, it disaggregates revenue by segment and service type.
Details of intercompany income for the Society are included in note 30.
2. Unsatis\ufb01ed long-term service contracts
The following table shows partially unsatisfied performance obligations resulting from fixed-price long-term contracts
at 31 December 2025 where the contract ends after the balance sheet date:
\u00a0
Group
Solutions
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Aggregate amount of transaction price allocated to long-term savings
\u00a0 \u00a0 \u00a0 \u00a0
management projects
4.9
2.6
5.9
5.0
Aggregate amount of transaction price allocated to long-term IT services
0.1
0.7
0.1
0.7
\u00a0
5.0
3.3
6.0
5.7
\n
In relation to savings management contracts, the Group expects to recognise approximately \u00a31.7m of the unearned
amount in 2026, and \u00a33.2m thereafter. In relation to IT contracts, the Group expects to recognise approximately \u00a30.1m
of the unearned amount in 2026.
3. Assets and liabilities related to contracts with customers
No contract assets or liabilities have been recognised by the Group (2024: \u00a3nil).", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00164": { "value": "6. Administrative expenses
\u00a0\u00a0
Group
Society
\u00a0\u00a0
2025
2024
2025
2024
\u00a0
Note
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Staff costs:
\u00a0\u00a0\u00a0\u00a0\u00a0
Wages and salaries
\u00a0
67.9
63.2
33.2
44.3
Social security costs
\u00a0
8.8
6.9
4.3
3.5
Pension costs for defined contribution scheme
\u00a0
9.7
8.9
4.7
4.6
Short term leases for land and buildings:
\u00a0\u00a0\u00a0\u00a0\u00a0
Payable to third parties
17
-
0.1
-
0.1
Other administrative expenses
\u00a0
37.3
29.4
41.0
23.0
IT transformation costs
\u00a0
0.6
2.6
0.6
2.6
\u00a0\u00a0
124.3
111.1
83.8
78.1
\n
During the year the Group reviewed its allocation of internal staff costs, resulting in a reallocation of staff costs from the
Society to Solutions, as well as a reallocation between staff costs and other administrative expenses within the Society.
Had the same approach been applied in the prior period 2024, staff costs for the Society as shown in the table above
would have decreased by \u00a312.8m with a corresponding increase in other administrative expenses within the Society
only, and staff costs for the Group would have decreased by \u00a31.6m with a corresponding increase in other administrative
expenses. There is no impact on total administrative expenses of the Group or profit for the period.
Directors\u2019 emoluments are disclosed in the Remuneration Committee Report. Total Directors\u2019 emoluments for 2025
amount to \u00a32.4m (2024: \u00a32.3m).
The Group's key management personnel are the Group's Material Risk Takers, the compensation of which is included
within the Remuneration Committee Report and totals \u00a36.0m (2024: \u00a35.6m).
During the year the Group and Society obtained the following services from the Society\u2019s External Auditor, and these are
included in other administrative expenses.
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Fees payable to the Society's auditors for the audit of Society and
\u00a0 \u00a0 \u00a0 \u00a0
consolidated financial statements
0.8
0.8
0.8
0.8
Fees payable for the audit of subsidiaries
0.1
0.1
-
-
Fees payable for other audit related assurance services
0.1
0.1
0.1
0.1
Fees payable for non-audit services
-
0.1
-
0.1
\u00a0
1.0
1.1
0.9
1.0
\n
Other audit related assurance services primarily consist of the half year review, interim profit verifications and client
money assurance engagements.
The fees payable to the Society\u2019s External Auditor above are presented excluding VAT.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00163": { "value": "6. Administrative expenses
\u00a0\u00a0
Group
Society
\u00a0\u00a0
2025
2024
2025
2024
\u00a0
Note
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Staff costs:
\u00a0\u00a0\u00a0\u00a0\u00a0
Wages and salaries
\u00a0
67.9
63.2
33.2
44.3
Social security costs
\u00a0
8.8
6.9
4.3
3.5
Pension costs for defined contribution scheme
\u00a0
9.7
8.9
4.7
4.6
Short term leases for land and buildings:
\u00a0\u00a0\u00a0\u00a0\u00a0
Payable to third parties
17
-
0.1
-
0.1
Other administrative expenses
\u00a0
37.3
29.4
41.0
23.0
IT transformation costs
\u00a0
0.6
2.6
0.6
2.6
\u00a0\u00a0
124.3
111.1
83.8
78.1
\n
During the year the Group reviewed its allocation of internal staff costs, resulting in a reallocation of staff costs from the
Society to Solutions, as well as a reallocation between staff costs and other administrative expenses within the Society.
Had the same approach been applied in the prior period 2024, staff costs for the Society as shown in the table above
would have decreased by \u00a312.8m with a corresponding increase in other administrative expenses within the Society
only, and staff costs for the Group would have decreased by \u00a31.6m with a corresponding increase in other administrative
expenses. There is no impact on total administrative expenses of the Group or profit for the period.
Directors\u2019 emoluments are disclosed in the Remuneration Committee Report. Total Directors\u2019 emoluments for 2025
amount to \u00a32.4m (2024: \u00a32.3m).
The Group's key management personnel are the Group's Material Risk Takers, the compensation of which is included
within the Remuneration Committee Report and totals \u00a36.0m (2024: \u00a35.6m).
During the year the Group and Society obtained the following services from the Society\u2019s External Auditor, and these are
included in other administrative expenses.
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Fees payable to the Society's auditors for the audit of Society and
\u00a0 \u00a0 \u00a0 \u00a0
consolidated financial statements
0.8
0.8
0.8
0.8
Fees payable for the audit of subsidiaries
0.1
0.1
-
-
Fees payable for other audit related assurance services
0.1
0.1
0.1
0.1
Fees payable for non-audit services
-
0.1
-
0.1
\u00a0
1.0
1.1
0.9
1.0
\n
Other audit related assurance services primarily consist of the half year review, interim profit verifications and client
money assurance engagements.
The fees payable to the Society\u2019s External Auditor above are presented excluding VAT.", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00165": { "value": "During the year the Group and Society obtained the following services from the Society\u2019s External Auditor, and these are
included in other administrative expenses.
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Fees payable to the Society's auditors for the audit of Society and
\u00a0 \u00a0 \u00a0 \u00a0
consolidated financial statements
0.8
0.8
0.8
0.8
Fees payable for the audit of subsidiaries
0.1
0.1
-
-
Fees payable for other audit related assurance services
0.1
0.1
0.1
0.1
Fees payable for non-audit services
-
0.1
-
0.1
\u00a0
1.0
1.1
0.9
1.0
\n
Other audit related assurance services primarily consist of the half year review, interim profit verifications and client
money assurance engagements.
The fees payable to the Society\u2019s External Auditor above are presented excluding VAT.", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00166": { "value": "7. Employee numbers
The monthly average number of persons employed, including Executive Directors, during the year was:
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
Full time
1,508
1,468
604
604
Part time
304
305
164
163
\u00a0
1,812
1,773
768
767
Head Office
1,569
1,539
556
562
Branch
243
234
212
205
\u00a0
1,812
1,773
768
767
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00167": { "value": "The monthly average number of persons employed, including Executive Directors, during the year was:
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
Full time
1,508
1,468
604
604
Part time
304
305
164
163
\u00a0
1,812
1,773
768
767
Head Office
1,569
1,539
556
562
Branch
243
234
212
205
\u00a0
1,812
1,773
768
767
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00168": { "value": "8. Tax expenses
\u00a0 \u00a0
Group
Society
\u00a0
Note
2025
2024
2025
2024
\u00a0 \u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Current tax
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Current year
\u00a0
1.5
1.9
2.7
0.8
Adjustments in respect of previous years
\u00a0
(0.5)
(0.9)
0.5
(0.7)
Total current tax
\u00a0
1.0
1.0
3.2
0.1
Deferred tax
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Current year
\u00a0
3.0
(2.0)
3.0
(2.3)
Adjustments in respect of prior years
\u00a0
0.6
0.2
0.8
(0.1)
Total deferred tax
18
3.6
(1.8)
3.8
(2.4)
Total taxation expense / (credit) in Income Statements
\u00a0
4.6
(0.8)
7.0
(2.3)
\n
Analysis of taxation for the year
The tax on the Group and Society profit before taxation differs from the theoretical amount that would arise using the tax
rate applicable to profits as follows:
\u00a0
Group
Society
Analysis of taxation expense for the year
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Profit for the year before taxation
22.6
15.7
27.6
15.7
Profit before taxation at the standard rate of corporation tax in the UK of
\u00a0 \u00a0 \u00a0 \u00a0
25.00% (2024: 25.00%)
5.7
3.9
6.9
3.9
E\ufb00ects of:
\u00a0 \u00a0 \u00a0 \u00a0
Non-taxable dividend income received
(0.3)
-
(0.4)
(0.4)
Expenses not deductible for tax
0.8
0.7
0.8
0.1
Distributions to Additional Tier 1 capital holders allowable deductions
(1.4)
-
(1.4)
-
Transfer pricing adjustment
-
-
(0.2)
(0.7)
Timing differences
(0.2)
-
-
-
Recognition of deferred tax asset*
-
(4.0)
-
(4.0)
Non-taxable income
(0.1)
(0.7)
-
(0.4)
Adjustments in respect of prior years
0.1
(0.7)
1.3
(0.8)
\u00a0
4.6
(0.8)
7.0
(2.3)
\n
*Section 4(4) of The Mutual Societies (Transfers of Business) (Tax) Regulations 2009, which governs the tax treatment of building society mergers was
updated during 2024. The change allowed for post-April 2017 tax losses to be available for set off within merged building societies and resulted in
post-April 2017 tax losses within Manchester Building Society being able to be utilised within the Newcastle Building Society Group. This resulted in a
recognition of \u00a34.0m of deferred tax assets in 2024.
Factors a\ufb00ecting future tax charges
The Society has brought forward trading losses for tax purposes which are expected to affect future taxable profits. See
further details in note 18. ", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00169": { "value": "9. Segment information
The chief operating decision maker has been identified as the Board of Directors (\"the Board\"). The Board reviews the
Group\u2019s internal reporting in order to assess performance and allocate resources. Management has determined the
operating segments based on these reports.
Following the management approach of IFRS 8, Operating Segments are reported in accordance with the internal
reporting provided to the Board. The Operating Segments used by the Group meet the definition of a reportable
segment under IFRS 8.
The \u2018Member business\u2019 segment provides mortgage, savings, investment and insurance products to Members and
customers. The \u2018Solutions business\u2019 segment (also referred to as Newcastle Strategic Solutions) provides business to
business services through people, processes and technology. The Board assesses performance based on profit before
tax after the allocation of all central costs. Operating profit before impairments and provisions is also assessed as this
provides information on underlying business performance.
Income and directly attributable costs are allocated to each segment and support costs are apportioned, based on
direct salary costs and detailed allocations by budget holders.
Year to 31 December 2025
\n\n\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0
Member
Solutions
Consolidation
\u00a0
\u00a0
Business
Business
adjustments
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Net interest income / (expense)
103.8
(2.4)
-
101.4
Other income and charges
26.6
71.3
(36.7)
61.2
Fair value gains less losses on financial instruments and hedge accounting
(6.5)
-
-
(6.5)
Administrative expenses
(92.3)
(68.7)
36.7
(124.3)
Depreciation and amortisation
(3.0)
(5.4)
-
(8.4)
Operating pro\ufb01t / (loss) before impairments and provisions
28.6
(5.2)
-
23.4
Impairment reversals on loans and advances to customers
0.7
-
-
0.7
Provisions for liabilities and charges
(0.9)
(0.4)
-
(1.3)
Profit / (loss) on disposal of non current assets
0.4
(0.6)
-
(0.2)
Pro\ufb01t / (loss) before taxation
28.8
(6.2)
-
22.6
Taxation expense
\u00a0 \u00a0 \u00a0
(4.6)
Pro\ufb01t after taxation for the \ufb01nancial period
\u00a0 \u00a0 \u00a0
18.0
\n
Amounts relating to consolidation adjustments include the elimination of intra-group transactions such as
intercompany fees.
Year to 31 December 2024
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0
Member
Solutions
Consolidation
\u00a0
\u00a0
Business
Business
adjustments
Total
\u00a0
Restated
Restated
Restated
Restated
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Net interest income / (expense)
94.0
(2.1)
-
91.9
Other income and charges
20.5
65.1
(29.5)
56.1
Fair value gains less losses on financial instruments and hedge accounting
4.9
-
-
4.9
Administrative expenses
(83.2)
(57.4)
29.5
(111.1)
Depreciation and amortisation
(2.6)
(5.0)
-
(7.6)
Operating pro\ufb01t before impairments and provisions
33.6
0.6
-
34.2
Impairment reversals on loans and advances to customers
2.5
-
-
2.5
Provisions for liabilities and charges
(20.7)
(0.3)
-
(21.0)
Pro\ufb01t before taxation
15.4
0.3
-
15.7
Taxation credit
\u00a0 \u00a0 \u00a0
0.8
Pro\ufb01t after taxation for the \ufb01nancial period
\u00a0 \u00a0 \u00a0
16.5
\n
During the year the Group revised its segmental reporting structure to present the Member and Solutions segments
excluding intra-group eliminations and consolidation adjustments to better reflect the performance of the individual
segments, consistent with management reporting. Comparative information for 2024 has been restated on a
consistent basis to reflect this revised presentation. The restatement has no impact on the Group's consolidated results
or financial position. ", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00170": { "value": "10. Loans and advances to credit institutions
Repayable from the date of the Balance Sheet in the ordinary course of business as follows:
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
On demand
53.2
21.6
4.5
4.9
In not more than 3 months
93.0
80.2
93.0
80.2
\u00a0
146.2
101.8
97.5
85.1
\n
There are no provisions held against loans and advances to credit institutions (2024: \u00a3nil). Included within loans and
advances to credit institutions is collateral of \u00a393.3m (2024: \u00a380.6m).", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToBanksExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00171": { "value": "11. Debt securities \n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0
Group & Society
\u00a0
2025
2024
Movement in transferable debt securities
\u00a3m
\u00a3m
At 1 January
602.3
615.0
Additions
432.2
475.6
Disposals
(5.0)
(42.2)
Maturities
(177.0)
(443.2)
Movement in fair value
6.7
(2.9)
At 31 December
859.2
602.3
Transferable debt securities
\u00a0 \u00a0
Issued by UK Government - listed
325.3
252.6
Issued by other borrowers - listed
533.9
349.7
\u00a0
859.2
602.3
\n
Securities issued by other borrowers are AAA rated holdings of residential mortgage-backed securities, covered bonds
and supranational bonds.
The Directors consider that the primary purpose of holding securities is to comply with prudential requirements. All
transferrable debt securities are held with the intention of use on a continuing basis in the Group\u2019s activities. They are
designated by management on initial recognition as assets held at fair value with changes recognised in other
comprehensive income.
There are no provisions held against debt securities (2024: \u00a3nil).
In addition to the securities above, the Society has retained debt security notes issued by Tyne Funding No.1 PLC and
Hadrian Funding 2025-1 PLC, entities controlled by the Group. These are presented net of the deemed loans from the
issuing Special Purpose Vehicles. See note 14 for details on the deemed loan.", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00172": { "value": "12.
Loans and advances to customers
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Loans fully secured on residential property
5,687.5
5,259.3
5,686.2
5,257.7
Loans fully secured on land
21.0
26.7
21.0
26.7
Other loans
0.9
1.0
0.9
1.1
Gross loans and advances
5,709.4
5,287.0
5,708.1
5,285.5
Allowance for losses on loans and advances
(6.3)
(6.6)
(6.4)
(6.6)
Micro fair value hedge adjustments
2.9
2.2
2.9
2.2
Effective interest rate adjustments
7.7
6.5
7.7
6.5
Fair value adjustments
0.5
0.2
0.6
0.2
\u00a0
5,714.2
5,289.3
5,712.9
5,287.8
\n
At 31 December 2025 the Group had \u20ac29.3m of loans denominated in Euros (2024: \u20ac30.1m) with a carrying value of
\u00a325.5m (2024: \u00a324.9m).
Effective interest rate adjustments include a \u00a30.9m liability relating to the fair value discount applied to acquired credit
impaired books (2024: \u00a31.5m).
Impairment provisions for loans and advances to customers
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0
Loans fully
\u00a0\u00a0
\u00a0
secured on
Loans fully
\u00a0
\u00a0
residential
secured on
\u00a0
\u00a0
property
land
Total
Group
\u00a3m
\u00a3m
\u00a3m
Balance at 1 January 2025
4.3
2.3
6.6
Credit for the year
-
(0.7)
(0.7)
Utilised during the year
0.4
-
0.4
\u00a0
4.7
1.6
6.3
\n
Balance at 31 December 2025
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0
Loans fully
\u00a0 \u00a0
\u00a0
secured on
Loans fully
\u00a0
\u00a0
residential
secured on
\u00a0
\u00a0
property
land
Total
Group
\u00a3m
\u00a3m
\u00a3m
Balance at 1 January 2024
6.2
1.4
7.6
(Credit) / charge for the year
(1.9)
0.9
(1.0)
Balance at 31 December 2024
4.3
2.3
6.6
\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0
Loans fully
\u00a0 \u00a0
\u00a0
secured on
Loans fully
\u00a0
\u00a0
residential
secured on
\u00a0
\u00a0
property
land
Total
Society
\u00a3m
\u00a3m
\u00a3m
Balance at 1 January 2025
4.3
2.3
6.6
Charge / (credit) for the year
0.1
(0.7)
(0.6)
Utilised during the year
0.4
-
0.4
Balance at 31 December 2025
4.8
1.6
6.4
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0
Loans fully
\u00a0 \u00a0
\u00a0
secured on
Loans fully
\u00a0
\u00a0
residential
secured on
\u00a0
\u00a0
property
land
Total
Society
\u00a3m
\u00a3m
\u00a3m
Balance at 1 January 2024
6.0
1.4
7.4
(Credit) / charge for the year
(1.7)
0.9
(0.8)
Balance at 31 December 2024
4.3
2.3
6.6
\n
Equity release mortgage assets denominated in \u00a3
Included in loans and advances to customers secured on residential property is a balance of \u00a3137.4m (2024: \u00a3146.7m)
relating to equity release mortgages secured on properties in the UK.
Equity release mortgage assets denominated in \u20ac
Included in loans and advances to customers secured on residential property is a balance of \u00a325.5m (2024: \u00a324.9m)
relating to equity release mortgages secured on properties in Spain. This book was acquired as part of the transfer of
engagements from Manchester Building Society.
Equity release mortgages are held at fair value through profit or loss. Details on the balances and valuation of the equity
release portfolio are included in notes 13 and 32.
Loans and advances to customers - securitisation
In 2021, the Society transferred beneficial ownership of a pool of mortgages of \u00a3282.7m to Tyne Funding No.1 PLC and
during the year, transferred beneficial ownership of a pool of mortgages of \u00a3711.4m to Hadrian Funding 2025-1 PLC, the
Group\u2019s securitisation vehicles.
The Society continues to be exposed to all risk and rewards of ownership of these mortgages, and therefore the
mortgages continue to be recognised on the Society\u2019s Balance Sheet. See note 14 for details.
Loans and advances to customers - write o\ufb00s
There were \u00a30.4m loans and advances to customers written off during the period (2024: \u00a3nil).
Further details of the Group\u2019s provisioning methodology is given in note 38 and detailed analysis of expected credit
losses is provided in note 39. ", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToCustomersExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00173": { "value": "13. Mortgages held at fair value through pro\ufb01t and loss
The Group\u2019s equity release mortgage assets are accounted for as fair value through profit or loss. The mortgages were
advanced as indeterminate length fixed interest rate contracts, to be repaid in full at maturity through sale of the
mortgaged properties. Most equity release contracts contain a no-negative-equity guarantee; that is, where the value
of a mortgaged property at the point of sale falls short of the contractual amount due to the Group, the shortfall is
written off. Equity release mortgages are presented at fair value on the Balance Sheet as part of the Group\u2019s loans and
advances to customers.
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0
Group and Society
\u00a0
2025
2024
\u00a0
Gross
\u00a0
Fair value
Gross
\u00a0
Fair value
\u00a0
mortgage
Fair value
presented on
mortgage
Fair value
presented on
\u00a0
balances
adjustment
Balance Sheet
balances
adjustment
Balance Sheet
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Denominated in \u00a3
137.5
(0.1)
137.4
143.8
2.9
146.7
Denominated in \u20ac
42.0
(16.5)
25.5
40.7
(15.8)
24.9
Total
179.5
(16.6)
162.9
184.5
(12.9)
171.6
\n
The gross mortgage balances above reflect the Group\u2019s maximum pre collateral exposure to credit risk at 31 December.
The Group typically expects its equity release mortgages to be repaid through sale of the underlying properties.
Property collateral of \u00a3289.5m (2024: \u00a3323.6m) is held against the Group\u2019s equity release exposures denominated in
Sterling. By their nature, equity release mortgages are not considered to hold a pre-determined maturity date.
At 31 December 2025 the Group had \u20ac48.1m (2024: \u20ac49.2m) of equity release mortgages denominated in Euros,
against which \u20ac53.5m (2024: \u20ac54.2m) collateral is held.
The fair value is the present value of the forecast portfolio cash flows less the value of the no-negative equity guarantee,
which is calculated using an option pricing model. See note 32 for details of the movement in the fair value adjustment.
Against equity release assets, the following income and charges have been recognised through the Income Statement:
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0
Group and Society
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
Interest income
11.2
11.4
Fair value change
(1.3)
(5.8)
\n
The Group recognises interest income on a per asset basis using the effective interest rate method. The gross mortgage
balances, as presented above, reflect the amortised cost of the Group\u2019s equity release mortgages. Changes in the fair
value are included in the Income Statement within fair value gains less losses on financial instruments, further details are
given in note 32.
For fixed reversion contracts, the effective interest rate is considered to be the rate implicit in the mortgage contract.
The balances recognised in respect of fixed reversion mortgages included in the total above are as follows:
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0
Group and Society
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
Reversion value
4.6
9.2
Book value
6.2
7.3
Interest income
0.3
0.5
\n
The Group\u2019s equity release books are closed to new entrants with limited further advances available to existing
customers at the discretion of the Group.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00174": { "value": "14. Deemed loan
In 2021, the Society securitised a pool of mortgage loans with a book value of \u00a3282.7m, by transferring their beneficial
ownership at net book value to Tyne Funding No.1 PLC. Tyne Funding No. 1 PLC issued debt securities (loan notes) with a
total value of \u00a3282.7m secured on the transferred mortgage loans.
During the year, the Society securitised a pool of mortgages with a book value of \u00a3711.4m, by transferring their beneficial
ownership at net book value to Hadrian Funding 2025-1 PLC. Hadrian Funding 2025-1 PLC issued loan notes with a total
value of \u00a3711.4m secured on the transferred mortgage loans.
All loan notes issued by Tyne Funding No.1 PLC (\u00a3282.7m) were purchased and retained by the Society and \u00a3361.4m of
loan notes issued by Hadrian Funding 2025-1 PLC have been purchased and retained by the Society. The retained loan
notes are available as security for repurchase agreements with the Bank of England or third parties. Since the securitised
mortgage loans do not meet the criteria for de-recognition from the Society\u2019s Balance Sheet, they continue to be held
on the Society\u2019s Balance Sheet. The consideration received from Tyne Funding No.1 PLC and Hadrian Funding 2025-1
PLC is accounted for as a deemed loan. As permissible under IFRS 9, the Society has elected to present the deemed
loan net of the loan notes issued, as the loan notes constitute essentially the same asset as the transferred mortgages
and presenting them gross results effectively in presenting the same assets twice on the Society\u2019s Balance Sheet. The
carrying value of the notes reduces as coupons are paid on a quarterly basis whilst the consideration received for
transfer of mortgages is repaid on a daily basis.
The deemed loan asset presented on the Balance Sheet consists of the following items:
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0
Society
\u00a0
2025
2024
Deemed loan asset in respect of Tyne Funding
\u00a3m
\u00a3m
Retained loan notes
152.6
190.2
Consideration received for transfer of mortgages
(146.4)
(183.6)
Net value of derivatives integral to transaction
(0.5)
8.1
\u00a0
5.7
14.7
\n
The deemed loan liability presented on the Balance Sheet consists of the following items:
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0
Society
\u00a0
2025
2024
Deemed loan liability in respect of Hadrian Funding
\u00a3m
\u00a3m
Retained loan notes
341.1
-
Consideration received for transfer of mortgages
(644.8)
-
Net value of derivatives integral to transaction
(0.3)
-
Subordinated loan to the SPV integral to the transaction
9.8
-
\u00a0
(294.2)
-
\n
At the Balance Sheet date, the securitised mortgage loans transferred to Tyne Funding No.1 PLC had a book value of
\u00a3146.4m (2024: \u00a3183.6m) and the securitised mortgage loans transferred to Hadrian Funding 2025-1 PLC had a book
value of \u00a3644.8m.
Class A notes issued by Tyne Funding No. 1 PLC have a coupon rate of SONIA + 58bps and a call date of 25 November
2026; class A notes issued by Hadrian Funding 2025-1 PLC have a coupon rate of SONIA + 50bps and a call date of 20
May 2030.
In the Group Accounts, any derivatives associated with the transaction are presented gross in assets and liabilities within
derivative financial instruments.", "dimensions": { "concept": "nbsr:DisclosureOfDeemedLoanAssetExplanatoryTextBlock", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00175": { "value": "15. Investments \n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Equities
1.4
1.6
0.2
0.1
Investment in subsidiary undertakings
-
-
47.2
42.6
\u00a0
1.4
1.6
47.4
42.7
\n
Investments in equities
Equity investments for the Group relate to Newcastle Financial Advisers\u2019 holding in units in Openwork LLP, a network of
independent financial advisers, under the licence of which it operates. Equity investments are held at fair value through
profit or loss.
Investments in subsidiaries
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Society
Shares
Loans
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
Cost
\u00a0 \u00a0 \u00a0
At 1 January 2025
5.9
36.7
42.6
Additions
-
4.6
4.6
Capital contribution
10.0
(10.0)
-
Balance at 31 December 2025
15.9
31.3
47.2
Provisions
\u00a0 \u00a0 \u00a0
At 1 January 2025 and 31 December 2025
-
-
-
Net book amount at 31 December 2025
15.9
31.3
47.2
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Society
Shares
Loans
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
Cost
\u00a0 \u00a0 \u00a0
At 1 January 2024
5.9
35.7
41.6
Additions
-
1.3
1.3
Repayments received
-
(0.3)
(0.3)
Balance at 31 December 2024
5.9
36.7
42.6
Provisions
\u00a0 \u00a0 \u00a0
At 1 January 2024 and 31 December 2024
-
-
-
Net book amount at 31 December 2024
5.9
36.7
42.6
During the year the Society waived \u00a310m of loans due from its subsidiary undertakings, reducing the loan amounts in the
table above. The amount waived is recognised as a capital contribution from the Society to the subsidiary undertaking
and is recognised in the above tables as investment in subsidiary undertaking; shares.
The Society directly holds 100% of the issued ordinary share capital of all its subsidiary undertakings.
The Directors believe that the carrying value of the investments in subsidiary undertakings is supported by their
underlying net assets.
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Name of principal subsidiary undertakings
Principal activity
Newcastle Financial Advisers Limited
Provision of
financial services
Newcastle Mortgage Loans (Jersey) Limited
Mortgage lending
Newcastle Strategic Solutions Limited
Provision of specialised savings management and IT services
MBS (Mortgages) Limited
Mortgage lending
\n
Newcastle Mortgage Loans (Jersey) Limited is incorporated and operates in Jersey. All of the other subsidiary
undertakings are incorporated in England and Wales and operate in the United Kingdom. The registered address for
these entities is: 1 Cobalt Park Way, Wallsend, NE28 9EJ.
MBS (Mortgages) Limited and Newcastle Financial Advisers Limited are entitled to audit exemption under section 479a
of the Companies Act 2006 and no Members have required them to obtain an audit of their accounts.
Further information on transactions between Group entities can be found in Note 30 Related Parties.
During the year, the Society received dividends from subsidiary undertakings totalling \u00a31.4m (2024: \u00a31.6m) which were
recognised in the Income Statement.
Other controlled entities
The following entity is deemed to be controlled by the Society. Although the Society does not have a controlling
shareholding, it has the right of variable returns from the entity and is able to influence these returns. In substance, the
entity is therefore no different than if it was wholly owned by the Society. As a result, it is consolidated into the Group
accounts. The carrying value of the entity in the Society\u2019s Balance Sheet is \u00a3nil.
Tyne Funding No.1 PLC
Tyne Funding No.1 PLC was incorporated on 30 September 2021. It is a Special Purpose Vehicle to facilitate the
securitisation of a mortgage pool previously owned by the Society, see note 14 for details. The entity\u2019s financial period
end is 31 December. Its registered office is: 1 Bartholomew Lane, London, EC2N 2AX.
Hadrian Funding 2025-1 PLC
Hadrian Funding 2025-1 PLC was incorporated on 30 January 2025. It is a Special Purpose Vehicle to facilitate the
securitisation of a mortgage pool previously owned by the Society, see note 14 for details. The entity\u2019s financial period
end is 31 December. Its registered office is: 1 Bartholomew Lane, London, EC2N 2AX.", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00176": { "value": "Investments in subsidiaries \n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Society
Shares
Loans
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
Cost
\u00a0 \u00a0 \u00a0
At 1 January 2025
5.9
36.7
42.6
Additions
-
4.6
4.6
Capital contribution
10.0
(10.0)
-
Balance at 31 December 2025
15.9
31.3
47.2
Provisions
\u00a0 \u00a0 \u00a0
At 1 January 2025 and 31 December 2025
-
-
-
Net book amount at 31 December 2025
15.9
31.3
47.2
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Society
Shares
Loans
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
Cost
\u00a0 \u00a0 \u00a0
At 1 January 2024
5.9
35.7
41.6
Additions
-
1.3
1.3
Repayments received
-
(0.3)
(0.3)
Balance at 31 December 2024
5.9
36.7
42.6
Provisions
\u00a0 \u00a0 \u00a0
At 1 January 2024 and 31 December 2024
-
-
-
Net book amount at 31 December 2024
5.9
36.7
42.6
During the year the Society waived \u00a310m of loans due from its subsidiary undertakings, reducing the loan amounts in the
table above. The amount waived is recognised as a capital contribution from the Society to the subsidiary undertaking
and is recognised in the above tables as investment in subsidiary undertaking; shares.
The Society directly holds 100% of the issued ordinary share capital of all its subsidiary undertakings.
The Directors believe that the carrying value of the investments in subsidiary undertakings is supported by their
underlying net assets.
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
Name of principal subsidiary undertakings
Principal activity
Newcastle Financial Advisers Limited
Provision of
financial services
Newcastle Mortgage Loans (Jersey) Limited
Mortgage lending
Newcastle Strategic Solutions Limited
Provision of specialised savings management and IT services
MBS (Mortgages) Limited
Mortgage lending
\n
Newcastle Mortgage Loans (Jersey) Limited is incorporated and operates in Jersey. All of the other subsidiary
undertakings are incorporated in England and Wales and operate in the United Kingdom. The registered address for
these entities is: 1 Cobalt Park Way, Wallsend, NE28 9EJ.
MBS (Mortgages) Limited and Newcastle Financial Advisers Limited are entitled to audit exemption under section 479a
of the Companies Act 2006 and no Members have required them to obtain an audit of their accounts.
Further information on transactions between Group entities can be found in Note 30 Related Parties.
During the year, the Society received dividends from subsidiary undertakings totalling \u00a31.4m (2024: \u00a31.6m) which were
recognised in the Income Statement. ", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00177": { "value": "16. Intangible assets
Group
\n\n\n \n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Internally
Internally
\u00a0 \u00a0
\u00a0 \u00a0
developed
development
\u00a0 \u00a0
\u00a0
Purchased
software: work
software: in
Acquired
\u00a0
\u00a0
software
in progress
use
customer lists
Total
Cost
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2025
11.5
2.3
14.1
0.7
28.6
Additions
0.1
2.4
-
0.2
2.7
Transfers
-
(3.5)
3.5
-
-
Disposals
(0.8)
-
(1.1)
-
(1.9)
At 31 December 2025
10.8
1.2
16.5
0.9
29.4
Accumulated depreciation
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
At 1 January 2025
8.7
-
5.6
0.5
14.8
Charge for the year
1.0
-
3.1
0.1
4.2
Disposals
(0.6)
-
(0.7)
-
(1.3)
At 31 December 2025
9.1
-
8.0
0.6
17.7
Net book amount 31 December 2025
1.7
1.2
8.5
0.3
11.7
\n
Group
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0
Internally
\u00a0 \u00a0 \u00a0
\u00a0 \u00a0
developed
Internally
\u00a0 \u00a0
\u00a0
Purchased
software: work
development
Acquired
\u00a0
\u00a0
software
in progress
software: in use
customer lists
Total
Cost
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
12.7
3.1
9.5
0.4
25.7
Additions
0.5
3.8
-
0.3
4.6
Transfers
-
(4.6)
4.6
-
-
Disposals
(1.7)
-
-
-
(1.7)
At 31 December 2024
11.5
2.3
14.1
0.7
28.6
Accumulated depreciation
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
At 1 January 2024
9.3
-
3.2
0.4
12.9
Charge for the year
1.1
-
2.4
0.1
3.6
Disposals
(1.7)
-
-
-
(1.7)
At 31 December 2024
8.7
-
5.6
0.5
14.8
Net book amount 31 December 2024
2.8
2.3
8.5
0.2
13.8
Society
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0
Internally
Internally
\u00a0 \u00a0
\u00a0 \u00a0
developed
development
\u00a0 \u00a0
\u00a0
Purchased
software: work
software: in
Acquired
\u00a0
\u00a0
software
in progress
use
customer lists
Total
Cost
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2025
2.8
-
-
-
2.8
Additions
3.1
-
-
-
3.1
Transfers
-
-
-
-
-
Disposals
(0.2)
-
-
-
(0.2)
At 31 December 2025
5.7
-
-
-
5.7
Accumulated depreciation
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
At 1 January 2025
1.3
-
-
-
1.3
Charge for the year
0.5
-
-
-
0.5
Disposals
(0.2)
-
-
-
(0.2)
At 31 December 2025
1.6
-
-
-
1.6
Net book amount 31 December 2025
4.1
-
-
-
4.1
\n
Society
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0\u00a0
Internally
\u00a0\u00a0\u00a0
\u00a0\u00a0
developed
Internally
\u00a0\u00a0
\u00a0
Purchased
software: work
development
Acquired
\u00a0
\u00a0
software
in progress
software: in use
customer lists
Total
Cost
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
4.0
-
-
-
4.0
Additions
0.5
-
-
-
0.5
Disposals
(1.7)
-
-
-
(1.7)
At 31 December 2024
2.8
-
-
-
2.8
Accumulated depreciation
\u00a0\u00a0\u00a0\u00a0\u00a0
At 1 January 2024
2.7
-
-
-
2.7
Charge for the year
0.3
-
-
-
0.3
Disposals
(1.7)
-
-
-
(1.7)
At 31 December 2024
1.3
-
-
-
1.3
Net book amount 31 December 2024
1.5
-
-
-
1.5
\n
Purchased software
Purchased software relates to IT systems purchased from external providers, with a useful economic life longer than
one year.
Internally developed software
Internally developed software relates to capitalised staff costs for developing new IT systems or enhancing the
functionality of existing ones. The software is either used by the Group or licenses are sold to third parties. Internally
developed software assets are classified as work in progress until the software is ready to use. Once it is ready to use, it
is reclassified as internally developed software in use and amortised over its useful economic life.
Acquired customer lists
Acquired customer lists relate to customer lists acquired by Newcastle Financial Advisers. During the year, the customer
list of Orchard Financial Consulting Limited was acquired and integrated into Newcastle Financial Advisors. In 2024, the
customer list of Keith Dyson Financial Consulting was acquired and integrated into Newcastle Financial Advisors.", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00178": { "value": "17. Property, plant and equipment \n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0\u00a0\u00a0
Equipment,
\u00a0\u00a0
Group
\u00a0\u00a0
\ufb01xtures,
\u00a0\u00a0
\u00a0
Freehold
Leasehold land
\ufb01ttings and
Investment
\u00a0
\u00a0
buildings
and buildings
motor vehicles
property
Total
Cost
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2025
3.1
28.5
26.7
0.7
59.0
Additions
-
0.9
6.5
-
7.4
Lease remeasurement
-
0.1
-
-
0.1
Disposals
(0.6)
(1.7)
(1.1)
(0.7)
(4.1)
At 31 December 2025
2.5
27.8
32.1
-
62.4
Accumulated depreciation
\u00a0\u00a0\u00a0\u00a0\u00a0
At 1 January 2025
1.1
7.8
15.5
0.6
25.0
Charge for the year
-
1.6
2.6
-
4.2
Disposals
(0.2)
(1.7)
(0.9)
(0.6)
(3.4)
At 31 December 2025
0.9
7.7
17.2
-
25.8
\u00a0
1.6
20.1
14.9
-
36.6
\n
Net book amount 31 December 2025
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0\u00a0\u00a0
Equipment,
\u00a0\u00a0
Group
\u00a0\u00a0
\ufb01xtures, \ufb01ttings
\u00a0\u00a0
\u00a0
Freehold
Leasehold land
and motor
Investment
\u00a0
\u00a0
buildings
and buildings
vehicles
property
Total
Cost
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
3.1
26.7
29.0
1.1
59.9
Additions
-
2.1
4.7
-
6.8
Lease remeasurement
-
(0.3)
-
-
(0.3)
Disposals
-
-
(7.0)
(0.4)
(7.4)
At 31 December 2024
3.1
28.5
26.7
0.7
59.0
Accumulated depreciation
\u00a0\u00a0\u00a0\u00a0\u00a0
At 1 January 2024
1.1
6.3
20.0
1.0
28.4
Charge for the year
-
1.6
2.4
-
4.0
Impairment
-
(0.1)
-
-
(0.1)
Disposals
-
-
(6.9)
(0.4)
(7.3)
At 31 December 2024
1.1
7.8
15.5
0.6
25.0
Net book amount 31 December 2024
2.0
20.7
11.2
0.1
34.0
\u00a0 \u00a0 \u00a0
Equipment,
\u00a0 \u00a0
Society
\u00a0 \u00a0
\ufb01xtures,
\u00a0 \u00a0
\u00a0
Freehold
Leasehold land
\ufb01ttings and
Investment
\u00a0
\u00a0
buildings
and buildings
motor vehicles
property
Total
Cost
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2025
3.1
13.6
14.2
0.7
31.6
Additions
-
0.8
5.0
-
5.8
Lease remeasurement
-
0.1
-
-
0.1
Disposals
(0.6)
(1.7)
(0.9)
(0.7)
(3.9)
At 31 December 2025
2.5
12.8
18.3
-
33.6
Accumulated depreciation
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
At 1 January 2025
1.2
6.0
8.2
0.6
16.0
Charge for the year
-
1.3
1.1
-
2.4
Disposals
(0.2)
(1.7)
(0.8)
(0.6)
(3.3)
At 31 December 2025
1.0
5.6
8.5
-
15.1
Net book amount 31 December 2025
1.5
7.2
9.8
-
18.5
\u00a0\u00a0\u00a0
Equipment,
\u00a0\u00a0
Society
\u00a0\u00a0
\ufb01xtures, \ufb01ttings
\u00a0\u00a0
\u00a0
Freehold
Leasehold land
and motor
Investment
\u00a0
\u00a0
buildings
and buildings
vehicles
property
Total
Cost
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January 2024
3.1
11.8
15.3
1.1
31.3
Additions
-
2.1
2.9
-
5.0
Lease remeasurement
-
(0.3)
-
-
(0.3)
Disposals
-
-
(4.0)
(0.4)
(4.4)
At 31 December 2024
3.1
13.6
14.2
0.7
31.6
Accumulated depreciation
\u00a0\u00a0\u00a0\u00a0\u00a0
At 1 January 2024
1.1
4.8
11.4
1.0
18.3
Charge for the year
0.1
1.3
0.8
-
2.2
Impairment
-
(0.1)
-
-
(0.1)
Disposals
-
-
(4.0)
(0.4)
(4.4)
At 31 December 2024
1.2
6.0
8.2
0.6
16.0
Net book amount 31 December 2024
1.9
7.6
6.0
0.1
15.6
\n
Leases
The right of use assets recognised for branch and operational property leases is included in the table above as
\u2018Leasehold land and buildings\u2019. The corresponding lease liability is included in note 23, Other liabilities.
Lease liabilities are expected to amortise as follows:
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Within one year
0.9
1.1
0.9
1.1
In one to five year
2.6
3.0
2.6
3.0
In more than five years
4.2
3.4
4.2
3.4
\u00a0
7.7
7.5
7.7
7.5
\n
The following charges are included in the Income Statement in respect right of use asset leases:
\u00a0
Note
Group
Society
\u00a0 \u00a0
2025
2024
2025
2024
\u00a0 \u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Depreciation of right of use assets included in administrative
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
expenses
\u00a0
1.3
1.2
1.3
1.2
Interest charges on lease liabilities
29
0.4
0.3
0.4
0.3
Expenses relating to short term and low value leases included
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
in administrative expenses - payable to third parties
6
-
0.1
-
0.1
\u00a0 \u00a0
1.7
1.6
1.7
1.6
\n
There is no expense recognised in the Income Statement in respect of variable lease payments that are not included in
the measurement of the lease liabilities. The carrying value of lease liabilities is approximately the fair value of the lease
liabilities. Total cash payments in respect of leases was \u00a31.5m (2024: \u00a32.3m). ", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00179": { "value": "Leases
The right of use assets recognised for branch and operational property leases is included in the table above as
\u2018Leasehold land and buildings\u2019. The corresponding lease liability is included in note 23, Other liabilities.
Lease liabilities are expected to amortise as follows:
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Within one year
0.9
1.1
0.9
1.1
In one to five year
2.6
3.0
2.6
3.0
In more than five years
4.2
3.4
4.2
3.4
\u00a0
7.7
7.5
7.7
7.5
\n
The following charges are included in the Income Statement in respect right of use asset leases:
\u00a0
Note
Group
Society
\u00a0 \u00a0
2025
2024
2025
2024
\u00a0 \u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Depreciation of right of use assets included in administrative
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
expenses
\u00a0
1.3
1.2
1.3
1.2
Interest charges on lease liabilities
29
0.4
0.3
0.4
0.3
Expenses relating to short term and low value leases included
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
in administrative expenses - payable to third parties
6
-
0.1
-
0.1
\u00a0 \u00a0
1.7
1.6
1.7
1.6
\n
There is no expense recognised in the Income Statement in respect of variable lease payments that are not included in
the measurement of the lease liabilities. The carrying value of lease liabilities is approximately the fair value of the lease
liabilities. Total cash payments in respect of leases was \u00a31.5m (2024: \u00a32.3m). ", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00180": { "value": "18. Deferred tax
The movement on the deferred tax account is shown below.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
At 1 January
6.8
5.8
8.4
7.0
Income Statement expense
(3.0)
2.0
(3.0)
2.3
Prior year adjustment
(0.6)
(0.2)
(0.8)
0.1
Credited on items recognised in equity
1.6
(1.1)
1.6
(1.1)
Other
(0.1)
0.3
-
0.1
At 31 December
4.7
6.8
6.2
8.4
Deferred tax assets
\u00a0\u00a0\u00a0\u00a0
Deferred tax asset to be recovered in less than 12 months
0.7
0.3
1.0
0.3
Deferred tax asset to be recovered in more than 12 months
7.5
8.1
7.1
8.1
\u00a0
8.2
8.4
8.1
8.4
Deferred tax liabilities
\u00a0\u00a0\u00a0\u00a0
Deferred tax liabilities to be recovered in less than 12 months
-
(0.2)
-
-
Deferred tax liabilities to be recovered in more than 12 months
(3.5)
(1.4)
(1.9)
-
\u00a0
(3.5)
(1.6)
(1.9)
-
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0
Charge to
Other
\u00a0
Group
\u00a0
Income
Comprehensive
\u00a0
\u00a0
2024
Statement
Income
2025
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trading losses
5.8
(1.4)
-
4.4
Temporary timing differences
(1.2)
(1.5)
-
(2.7)
Adjustments relating to historic changes in accounting policies
4.2
(0.8)
-
3.4
Equity investments held at fair value through the income statement
(0.3)
-
-
(0.3)
Cash flow hedge accounting held at fair value through other comprehensive
\u00a0 \u00a0 \u00a0 \u00a0
income
(1.7)
-
1.6
(0.1)
\u00a0
6.8
(3.7)
1.6
4.7
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0
Charge to
Other
\u00a0
Society
\u00a0
Income
Comprehensive
\u00a0
\u00a0
2024
Statement
Income
2025
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Trading losses
5.8
(1.4)
-
4.4
Temporary timing differences
-
(1.6)
-
(1.6)
Adjustments relating to historic changes in accounting policies
4.3
(0.8)
-
3.5
Cash flow hedge accounting held at fair value through other comprehensive
\u00a0 \u00a0 \u00a0 \u00a0
income
(1.7)
-
1.6
(0.1)
\u00a0
8.4
(3.8)
1.6
6.2
\n
Adjustments relating to historic changes in accounting policies unwind over a period of 10 years from the change in
accounting policy. Deferred tax arising from losses acquired through the transfer of engagements from Manchester
Building Society are unwound as taxable profits allocatable to Manchester Building Society\u2019s trade is generated.
Deferred tax adjustments arising on fair value adjustments arising as a result of the transfer of engagements with
Manchester Building Society are unwound over a period of six years from the merger date. No changes to the rate of
corporation tax have been announced.
In the prior year, Section 4(4) of The Mutual Societies (Transfers of Business) (Tax) Regulations 2009, which governs the
tax treatment of building society mergers, was updated and allowed for post-April 2017 tax losses to be available for set
off within merged building societies. The amendment took effect from May 2024 and resulted in post-April 2017 tax
losses within Manchester Building Society being able to be utilised within the Group. This resulted in a recognition of
\u00a34.0m of deferred tax assets in the Society\u2019s Balance Sheet in 2024.
Unrecognised deferred tax assets
The following table summarises the unrecognised deferred tax assets.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Unrecognised deferred tax assets
2.0
2.0
-
-
\n
MBS (Mortgages) Limited, a 100% owned subsidiary of the Society acquired as part of the merger with Manchester
Building Society, has deferred tax losses of \u00a38.0m, corresponding to an unrecognised deferred tax asset of \u00a32.0m. The
Society has not recognised any deferred tax assets relating to this subsidiary, as it is not currently profitable, and future
profits that the tax losses could be offset against are not currently considered sufficiently certain to justify the
recognition of the deferred tax in the Consolidated Financial Statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00181": { "value": "19. Retirement Bene\ufb01t Obligations
Group and Society pension schemes
The Society operates a UK registered trust-based pension scheme, Newcastle Building Society Pension and Assurance
Scheme (the Scheme) that provides defined benefits. The Scheme was closed to new entrants in 2000 and closed to
the future accrual of benefits in 2010. Pension benefits are linked to the members\u2019 final pensionable salaries and service
at their retirement (or date of leaving if earlier).
The Trustees of the Scheme are responsible for running the Scheme in accordance with the Scheme\u2019s Trust Deed and
Rules, which sets out their powers. The Trustees of the Scheme are required to act in the best interests of the
beneficiaries of the Scheme. There is a requirement that at least one-third of the Trustees are nominated by the
members of the Scheme.
There are two categories of pension scheme members:
\u25a0
Deferred members: current and former employees of the Society who are not in receipt of a Scheme pension; and
\u25a0
Pensioner members: former employees of the Society who are in receipt of Scheme pension.
The defined benefit obligation is valued by projecting the best estimate of future benefit obligations (allowing for
revaluation to retirement for deferred members and annual pension increases for all members) and then discounting to
the Balance Sheet date. Some benefits receive increases linked to inflation (subject to a cap of no more than 5% pa).
The valuation method used is known as the Projected Unit Method.
The approximate overall duration of the Scheme\u2019s defined benefit obligation at 31 December 2025 was 11 years (2024: 11
years).
Future funding obligation
The Trustees are required to carry out an actuarial valuation every 3 years. The last actuarial valuation of the Scheme was
performed by the Scheme Actuary for the Trustees at 30 June 2022, with the latest valuation at 30 June 2025 being
underway. The 2022 valuation revealed the Scheme had no funding deficit relative to the Scheme\u2019s statutory funding
objective and so no deficit reduction contributions are payable. However, the Society has agreed to pay contributions
of \u00a3300k per annum in respect of Scheme expenses and levies. The Society does not recognise a surplus for the
reasons set out in Note 1.
Assumptions
The results of the actuarial valuation at 30 June 2022 have been updated to 31 December 2025 by a qualified
independent actuary. The assumptions used for the IAS 19, Employment Benefits, year end valuation are as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Signi\ufb01cant actuarial assumptions
2025
2024
Discount rate
5.55%
5.50%
RPI Inflation
2.85%
3.15%
CPI Inflation:
\u00a0 \u00a0
Before 2030
RPI less 1.0% pa
RPI less 1.0% pa
From 2030
RPI less 0.2% pa
RPI less 0.0% pa
Mortality assumptions
\u00a0 \u00a0
\u00a0
S3PMA / S3PFA
S3PMA/S3PFA
Mortality (post-retirement)
CMI_2024 [1.25%]
CMI_2023 [1.25%]
Other actuarial assumptions
\u00a0 \u00a0
RPI pension increases:
\u00a0 \u00a0
RPI max 5% pa
2.80%
3.05%
RPI min 3%, max 5% pa
3.45%
-
Pension increases in deferment
2.05%
2.65%
Life expectancies (in years)
\u00a0 \u00a0
For an individual aged 62
\u00a0 \u00a0
Male
24.6 years
24.0 years
Female
27.1 years
26.7 years
At 62 for an individual aged 42 in 2025
\u00a0 \u00a0
Male
26.0 years
25.4 years
Female
28.5 years
28.1 years
\n
Risks
Through the Scheme, the Society is exposed to a number of risks:
\u25a0
Asset volatility: The Scheme\u2019s defined benefit obligation is calculated using a discount rate set with reference to
corporate bond yields, however the Scheme invests in some growth assets. These assets are expected to
outperform corporate bonds in the long term but provide volatility and risk in the short term.
\u25a0
Changes in bond yields: A decrease in corporate bond yields would increase the Scheme\u2019s defined benefit
obligations. The Scheme invests in Liability Driven Investments (LDI) assets, which are designed to offset the impact
of changes to market yields. Changes in bond yields are therefore not expected to be a significant source of
Balance Sheet volatility other than significant changes in credit spreads.
\u25a0
Inflation risks: A significant proportion of the Scheme\u2019s defined benefit obligation is linked to inflation, therefore
higher inflation will result in a higher defined benefit obligation (subject to the appropriate caps in place), although
the Scheme\u2019s LDI holding is expected to offset the impact of inflation rate changes.
\u25a0
Mortality risk: If Scheme members live longer than expected, the Scheme\u2019s benefits will need to be paid for longer,
increasing the Scheme\u2019s defined benefit obligation.
The Trustees and Society manage risks in the Scheme through the following strategies:
\u25a0
Diversification: Investments are well diversified, such that the failure of any single investment would not have a
material impact on the overall level of assets.
\u25a0
Investment strategy: The Trustees are required to review their investment strategy on a regular basis.
\u25a0
LDI: The Scheme invests in LDI assets, whose long-term investment returns are expected to partially hedge interest
rate and inflation rate movements.
\u25a0
Pension increase exchange: The Trustees currently offer retiring members an option to exchange future pension
increases for a higher immediate pension. This has reduced the Scheme liabilities for retired members who have
already taken up the option and, based upon the assumption of future take up, for deferred members who will retire
in future.
The sensitivity of the defined benefit obligation to the assumptions used are shown below; the sensitivities applied
represent reasonably possible changes in key actuarial assumptions.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0\u00a0
Change in de\ufb01ned bene\ufb01t
Change in de\ufb01ned bene\ufb01t
Sensitivity Analysis
Change in assumption
obligations (%)
obligations (\u00a3m)
Assumptions
\u00a0\u00a0\u00a0
Discount rate
+/- 0.5% pa
-5 / +5
(3.3) / 3.3
Inflation
+/- 0.5% pa
+2 / -2
1.3 / (1.3)
Assumed life expectancy
+/- 1 year
+3 / -3
2.0 / (2.0)
\n
Limitations of the sensitivity analysis
These calculations provide an approximate guide to the sensitivity of results and may not be as accurate as a full
valuation carried out on these assumptions. Each assumption change is considered in isolation, which in practice is
unlikely to occur, as changes in some of the assumptions are correlated.
Asset class at market value
The assets of the Scheme were invested as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Asset class at market value
2025
2024
\u00a0
%
%
Equities
13.0
12.0
Diversified growth funds
12.0
11.0
Corporate bonds
28.0
29.0
Fixed interest and index linked gilts
46.0
45.0
Annuities
-
1.0
Cash
1.0
2.0
Total
100.0
100.0
Actual return on assets over the period
3.8
(3.4)
\n
All assets listed above are held as Legal and General Pooled Investment Vehicles with the exception of the small amount
in the Trustees bank account. The multi asset class consists of a single diversified fund with underlying assets of equities,
bonds, commodities and listed infrastructure, property, private equity and global real estate companies.
Reconciliations to the Balance Sheet
2025
2024
\u00a0
\u00a3m
\u00a3m
Total value of assets
66.8
68.1
Present value of defined benefit obligations
(64.9)
(64.2)
Funded status
1.9
3.9
Adjustment in respect of minimum funding requirement
(1.9)
(3.9)
Pension asset recognised in the Balance Sheet before allowance for deferred tax
-
-
Analysis of changes in the value of the de\ufb01ned bene\ufb01t obligation over the period
2025
2024
\u00a0
\u00a3m
\u00a3m
Value of defined benefit obligations at start of the period
64.2
71.9
Interest cost
3.8
3.2
Past service cost
0.4
-
Benefits paid
(4.3)
(4.1)
Actuarial losses / (gains):
experience differing from that assumed
1.0
(0.4)
Actuarial losses / (gains): changes in demographic assumptions
1.4
(0.1)
Actuarial gains: changes in financial assumptions
(1.6)
(6.3)
\u00a0
64.9
64.2
\n
Value of defined benefit obligation at end of period
Analysis of changes in the value of the Scheme assets over the period
2025
2024
\u00a0
\u00a3m
\u00a3m
Market value of assets at start of period
68.1
76.2
Interest income
3.6
3.4
Actual return on assets less interest
0.2
(6.8)
Employer contributions
0.3
0.3
Benefits paid
(4.3)
(4.1)
Administration costs
(1.1)
(0.9)
Market value of assets at end of period
66.8
68.1
Amount recognised in Income Statements
2025
2024
\u00a0
\u00a3m
\u00a3m
Administration costs
0.3
0.3
Past service cost
0.4
-
Amount charged to Income Statement
0.7
0.3
Amount recognised in Other Comprehensive Income
2025
2024
\u00a0
\u00a3m
\u00a3m
Actuarial losses on defined benefit obligation
(0.8)
6.8
Actual return on assets less interest
0.2
(7.4)
Limit on recognition of assets less interest
1.0
0.6
Amounts recognised in Statement of Comprehensive Income
0.4
-
\n
The total administration costs, including current service costs, incurred during the year totalled \u00a31.1m (2024: \u00a30.9m), of
which \u00a30.3m (2024: \u00a30.3m) was paid for by the Society and therefore recognised in the Society\u2019s Income Statement.
The remaining \u00a30.8m (2024: \u00a30.6m) was met from a surplus in the Scheme assets. As the Scheme\u2019s surplus is not
recognised on the Society\u2019s Balance Sheet, this balance does not impact the Society\u2019s financial statements.
Insured members
The pension obligation for some members of the Scheme is insured by a third party. The pension liability relating to
insured members and the corresponding insurance assets in respect of these members always net to \u00a3nil. At 30 June
2025 (being the latest data available), they were estimated to be \u00a30.3m (2024: \u00a30.4m). They have no effect on any
primary financial statement. The pension liability and pension asset have been presented including the insured pension
liability and related insurance asset (previously presented net).
Virgin Media Limited v NTL Pension Trustees II Limited
The Society is aware of the 2023 ruling in the Virgin Media vs NTL Pension Trustee legal case and subsequent Court of
Appeal ruling published in July 2024. The UK government announced on 5 June 2025 that legislation will be introduced
enabling retrospective actuarial certification to validate historic amendments. While this legislative solution is
anticipated to remove the requirement for provisions related to void benefit changes, neither the timing nor precise
scope are confirmed. Until enacted, there remains significant uncertainty as to whether the judgements will result in
additional liabilities for UK pension schemes and as outlined in note 1, the Society cannot be certain of the potential
implications (if any) and therefore a sufficiently reliable estimate of any effect on the obligation cannot be made,
however it is possible that the defined benefit pension obligation could be increased.", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00183": { "value": "20. Other assets
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Receivable from subsidiary undertakings
-
-
0.9
8.9
Prepayments and accrued income
12.9
11.5
3.4
3.6
Other receivables
4.9
5.5
0.3
0.5
\u00a0
17.8
17.0
4.6
13.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00182": { "value": "20. Other assets
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Receivable from subsidiary undertakings
-
-
0.9
8.9
Prepayments and accrued income
12.9
11.5
3.4
3.6
Other receivables
4.9
5.5
0.3
0.5
\u00a0
17.8
17.0
4.6
13.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00184": { "value": "21. Due to Members
\u00a0
Group and Society
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
Held by individuals
5,882.6
5,432.6
Other shares
0.1
0.1
\u00a0
5,882.7
5,432.7
", "dimensions": { "concept": "nbsr:DisclosureOfAmountDueToMembersExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00185": { "value": "22.Debt securities in issue
\u00a0
Group
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
Residential mortgage backed securities
323.4
-
\n
The underlying security for the residential mortgage backed securities (RMBS) is certain loans and advances
to customers.
In July 2025 the Group issued \u00a3711.4m of RMBS through its special purpose vehicle Hadrian Funding 2025-1 PLC, of
which \u00a3361.4m was retained by the Society, which have a call date of 20 May 2030.", "dimensions": { "concept": "nbsr:DisclosureOfDebtSecuritiesInIssueTextBlock", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00187": { "value": "23. Other liabilities
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Amounts payable to subsidiary undertakings
-
-
3.7
9.0
Lease liabilities
7.7
7.5
7.7
7.5
Other creditors
6.0
3.7
3.5
2.1
Accruals and deferred income
10.2
11.4
6.4
7.6
\u00a0
23.9
22.6
21.3
26.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00186": { "value": "23. Other liabilities
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Amounts payable to subsidiary undertakings
-
-
3.7
9.0
Lease liabilities
7.7
7.5
7.7
7.5
Other creditors
6.0
3.7
3.5
2.1
Accruals and deferred income
10.2
11.4
6.4
7.6
\u00a0
23.9
22.6
21.3
26.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00188": { "value": "24. Provisions for liabilities and charges
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Opening provision at 1 January
11.2
0.6
11.2
0.5
New provisions for the year
2.3
22.2
1.9
21.9
Amounts utilised / transferred during the year
(11.3)
(11.6)
(10.9)
(11.2)
Closing provision at 31 December
2.2
11.2
2.2
11.2
\n
During 2024 the Group committed to providing voluntary financial support to help customers whose trusts were
affected by the actions and subsequent collapse of Philips Trust. The support offered was entirely voluntary and there is
no legal or regulatory requirement to provide financial support. A provision of \u00a321.2m was recognised during 2024 in
respect of this.
During the year, payments of \u00a39.3m have been made to affected customers (2024: \u00a310.1m). Included within amounts
utilised during the 12 months to 31 December 2025 is \u00a30.2m of costs incurred in respect of the administration of the
scheme (2024: \u00a30.6m).
In addition, \u00a31.0m has been received from the administrators of Philips Trust during the year from the recoveries made
from Philips Trust investments (2024: \u00a31.2m). The amounts received as recoveries from the administrators are
recognised within \u2018Provisions for liabilities and charges\u2019 within the Income Statement but does not reduce the provision
for liabilities amount held on the Balance Sheet, in line with accounting standards.
At 31 December 2025, the remaining provision being held in respect of the support scheme was \u00a31.0m.
Included within new provisions for the year was \u00a32.1m of costs relating to termination benefits associated with an
ongoing review and deployment of the new Group target operating model (2024: \u00a30.9m). At 31 December 2025 \u00a30.2m
of these costs remain within provisions for liabilities (2024: \u00a3nil).
Included within the remaining \u00a31.2m of provisions is an estimate of \u00a30.5m of the costs of potential consumer
redress costs.", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00189": { "value": "25. Subordinated liabilities
\u00a0
Group and Society
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
Fixed rate subordinated notes 2034 \u2013 12.25%
19.6
20.2
\n
All subordinated liabilities are denominated in Sterling. Coupons are paid on a fixed basis semi-annually.
In June 2024, \u00a320.0m of callable subordinated loan notes were issued by the Group, with a maturity date of September
2034 and an optional call date of September 2029.
The notes rank behind all other creditors of the Society and the claims of shareholding Members, other than holders of
permanent interest bearing shares (PIBS).", "dimensions": { "concept": "ifrs-full:DisclosureOfSubordinatedLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00190": { "value": "26. Subscribed capital
\u00a0
Group and Society
\u00a0
2025
2024
Presented as liabilities
\u00a3m
\u00a3m
12.625% permanent interest bearing shares
10.0
10.0
10.750% permanent interest bearing shares
10.0
10.0
6.750% permanent interest bearing shares
9.6
9.6
8.000% permanent interest bearing shares
5.1
5.2
\u00a0
34.7
34.8
\n
The 12.625%, 10.750% and 8.000% subscribed capital issues were issued for an indeterminate period and are only
repayable in the event of the winding up of the Society. The 6.750% subscribed capital issue has a call date of April 2030
at the discretion of the Society. The Society\u2019s permanent interest bearing shares (PIBS) rank equally with each other. The
6.750% and 8.000% PIBS were acquired from Manchester Building Society on merger and have notional values of \u00a310m
and \u00a35m respectively.
On winding up or dissolution of the Society, the claims of holders of the PIBS rank behind all other creditors of the
Society including the claims of shareholding members for both principal and interest. The holders of PIBS are not
entitled to any surplus upon winding up or final dissolution of the Society. Where the PIBS have no fixed maturity, they
are classified as financial liabilities as their terms do not grant the Directors discretion to avoid the payment of interest,
as the only instance where interest could not be paid on the instruments would be where capital levels are insufficient to
allow such a payment to be made. The PIBS are carried at amortised cost", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00198": { "value": "27. Other equity instruments
In 2024 the Society issued \u00a340m of perpetual contingent convertible additional tier 1 (AT 1) capital securities.
These AT 1 instruments pay a fully discretionary, non-cumulative fixed coupon at an initial rate of 14% per annum. The rate
will reset on 6 June 2030 and every five years thereafter. Coupons are paid semi-annually in June and December and are
treated as distributions to the instrument holders and so will be recognised directly in the Society\u2019s general reserve.
During the year \u00a35.6m distributions were made to instrument holders (2024: \u00a3nil).
The instruments are perpetual, having no fixed maturity date and are repayable at the option of the Society. If the
applicable Common Equity Tier 1 ratio for the Group falls below 7%, they convert to core capital deferred shares (CCDS)
at the rate of one CCDS for every \u00a367 of AT 1 instrument held.
On winding up or dissolution of the Society, the AT 1 instruments rank junior to all other creditors of the Society including
subordinated liabilities and the claims of shareholding Members for both principal and interest. The holders are not
entitled to any share in any final surplus upon a winding up or final dissolution of the Society.31. Categories of \ufb01nancial instruments
The following table analyses the financial assets and liabilities in the Balance Sheet by the class of financial instrument to
which they are assigned and by the measurement basis. Detail on the classifications of financial assets and liabilities are
found in note 1.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Group at 31 December 2025
\u00a0
Amortised cost
FVOCI
FVTPL
Total
\u00a0
Note
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial assets
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Cash in hand and balances with the Bank of England
\u00a0
177.3
-
-
177.3
Loans and advances to credit institutions*
10
146.2
-
-
146.2
Debt securities
11
-
859.2
-
859.2
Derivative financial instruments
35
-
-
16.9
16.9
Loans and advances to customers
12
5,551.3
-
162.9
5,714.2
Investments
15
-
-
1.4
1.4
Other assets, of which financial
20
4.9
-
-
4.9
Total \ufb01nancial assets
\u00a0
5,879.7
859.2
181.2
6,920.1
Financial liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Due to Members
21
5,882.7
-
-
5,882.7
Due to other customers
\u00a0
163.8
-
-
163.8
Amounts owed to credit insitutions
\u00a0
158.9
-
-
158.9
Debt securities in issue
22
323.4
-
-
323.4
Derivative financial instruments
35
-
-
44.5
44.5
Subordinated liabilities
25
19.6
-
-
19.6
Subscribed capital
26
34.7
-
-
34.7
Other liabilities, of which financial
23
9.7
\u00a0 \u00a0
9.7
Total \ufb01nancial liabilities
\u00a0
6,592.8
-
44.5
6,637.3
\n
*Loans and advances to credit institutions includes \u00a348.7m (2024: \u00a316.7m) in cash held by the Society\u2019s subsidiary entities.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Group at 31 December 2024
\u00a0
Amortised cost
FVOCI
FVTPL
Total
\u00a0
Note
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial assets
\u00a0\u00a0\u00a0\u00a0\u00a0
Cash in hand and balances with the Bank of England
\u00a0
451.5
-
-
451.5
Loans and advances to credit institutions*
10
101.8
-
-
101.8
Debt securities
11
-
602.3
-
602.3
Derivative financial instruments
35
-
-
56.6
56.6
Loans and advances to customers
12
5,117.7
-
171.6
5,289.3
Investments
15
-
-
1.6
1.6
Other assets, of which financial
20
5.2
-
-
5.2
Total \ufb01nancial assets
\u00a0
5,676.2
602.3
229.8
6,508.3
Financial liabilities
\u00a0\u00a0\u00a0\u00a0\u00a0
Due to Members
21
5,432.7
-
-
5,432.7
Due to other customers
\u00a0
241.0
-
-
241.0
Deposits from credit institutions
\u00a0
417.6
-
-
417.6
Derivative financial instruments
35
-
-
29.4
29.4
Subordinated liabilities
25
20.2
-
-
20.2
Subscribed capital
26
34.8
-
-
34.8
Other liabilities, of which financial
23
9.0
-
-
9.0
Total \ufb01nancial liabilities
\u00a0
6,155.3
-
29.4
6,184.7
\n
All of the Group\u2019s FVTPL financial assets and liabilities are mandatorily measured at fair value under IFRS 9. The Group has
not elected to hold any financial assets or liabilities at FVTPL under IFRS 9 that could otherwise have been held at
amortised cost or at FVOCI. The Group has not reclassified any financial assets during the year.
32. Financial instruments held at fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing
parties in an arm\u2019s length transaction.
Fair value hierarchy and summary of assets and liabilities held at fair value
For assets held at fair value, the following table summarises the basis for measuring the fair value, using the three levels
defined in IFRS 13, Fair Value Measurement:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0
2025
2024
Financial assets
Level
\u00a3m
\u00a3m
Debt securities at FVOCI
1
859.2
602.3
Listed equity investments
1
0.2
0.1
Derivative financial instruments
2
12.7
47.9
Derivative financial instruments
3
4.2
8.7
Unlisted equity investments
3
1.2
1.5
Loans and advances to customers held at fair value
3
162.9
171.6
Financial liabilities
\u00a0 \u00a0 \u00a0
Derivative financial instruments
2
40.3
20.6
Derivative financial instruments
3
4.2
8.8
\n
Level 1:
Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2:
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly
(i.e. as price) or indirectly (i.e. derived from prices).
Level 3:
Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Mortgage assets held at fair value through pro\ufb01t or loss
The Group\u2019s equity release mortgage assets are accounted for as fair value through profit or loss.
The fair value of the equity release portfolio is calculated using a model that estimates the future cash flows expected from
the portfolio. The timing of those cash flows are determined with reference to mortality tables overlaid by expected
prepayments. The model discounts these cash flows to their present value, using a discount rate based on interest rates
for new equity release mortgages available at the Balance Sheet date, adjusted for the specific characteristics of the
Society\u2019s portfolio. The model further calculates a value for the \u2018no-negative equity guarantee\u2019 provided to the customer
using an option pricing method.
The valuation uses a number of inputs which require estimation, such as mortality and prepayment rates, discount rate,
property price volatility and the haircut applied to individual sales prices.
The key estimates used in the model and the basis of estimation are summarised below:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Assumption
Basis of estimation
Discount rate
Interest rates for equity release mortgages available at the Balance Sheet date,
\u00a0
adjusted for speci
fic characteristics o
f the Society\u2019s portfolio
Long-term property price growth
Analysis of historic long-term property price growth
Sales discount on collateral
Analysis of historic sales discounts
Property price volatility
Analysis of historic property price volatility and third party research
\n
At 31 December 2025 the fair value of the equity release mortgage assets was \u00a3162.9m (2024: \u00a3171.6m). The sensitivity of
this value to the estimates shown above is as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0
31 December
31 December
\u00a0 \u00a0
2025
2024
\u00a0 \u00a0
(Decrease) /
(Decrease) /
Assumption
Change in
increase in fair
increase in fair
\u00a0
assumption
value
value
\u00a0 \u00a0
\u00a3m
\u00a3m
Discount rate
+/- 1%
(8.8) / 9.8
(9.6) / 10.8
Long term property price growth
+/- 2%
3.4 / (3.8)
4.0 / (4.8)
Sales discount on collateral
+/- 2.5%
(1.5) / 1.3
(1.5) / 1.5
Property price volatility
+/- 3%
(3.7) / 3.4
(2.9) / 2.9
\n
The following table provides a reconciliation of the equity release portfolio\u2019s opening and closing fair value.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
At 1 January
171.6
188.4
Interest accrued
8.8
12.2
Redemptions
(18.1)
(21.8)
Changes in economic assumptions - recorded in profit and loss
3.5
-
Changes in discount rate \u2013 recorded in profit and loss
(4.2)
(6.0)
Changes in exchange rates \u2013 recorded in profit and loss
1.3
(1.2)
At 31 December
162.9
171.6
\n
The Society hedges fair value movements on the equity release portfolio due to market interest rate movements using
interest rate swaps. There was a reduction in fair value adjustment on the equity release portfolio during the year of
\u00a31.3m, with the remaining movements being due to movements in loan balances. The value of interest rate swaps
decreased by \u00a30.6m, resulting in a net loss of \u00a31.9m in the year included in the Income Statement.
Derivative \ufb01nancial instruments
The Group\u2019s securitisation programme involves the transfer of beneficial ownership of pools of mortgage loans to the
securitisation Special Purpose Vehicles which are controlled by the Society. The transaction creates interest rate risk in
the Society and Special Purpose Vehicles, which is hedged with balance guarantee swaps traded with external
counterparties. The notional of the balance guarantee swaps adjusts to match the outstanding balance of the
transferred mortgage loans as the mortgage loans are repaid by the borrower.
The fair value of the balance guarantee swaps is calculated using a model that estimates the future cash flows from the
swaps. The timing and amount of those cash flows are uncertain but are estimated with reference to expected
prepayments of the mortgages, retention rates of maturing mortgages and future expected interest rates applied to
the retained mortgages, to determine the future expected notional profile of the mortgages within the pools used as
collateral for the securitisation. The model applies the overnight indexed swap yield curve to discount these cash flows
to their present value. The model further calculates a value for the optionality inherent in the adjustable notional profile
of the balance guarantee swaps applying an option pricing method.
The key estimates used in the model and the basis of estimation are summarised below:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Assumption
Basis of estimation
Prepayments
Analysis of historic customer behaviour
Retention rate
Analysis of historic customer behaviour
Future mortgage interest rates
Analysis of historic mortgage and swap rates
Interest rate volatility
Analysis of historic interest rate volatility
At 31 December 2025 the fair value of the balance guarantee swaps in respect of the Group\u2019s securitisation issuances
was \u00a34.2m (2024: \u00a38.8m). The sensitivity of this value to the estimates shown above is as follows:
\u00a0 \u00a0
31 December
31 December
\u00a0 \u00a0
2025
2024
\u00a0 \u00a0
(Decrease) /
(Decrease) /
Assumption
Change in
Increase in fair
increase in fair
\u00a0
assumption
value
value
\u00a0 \u00a0
\u00a3m
\u00a3m
Prepayments
+/- 5%
(0.1) / 0.3
(0.2) / 0.2
Retention rate
+/- 10%
0.2 / (0.1)
0.3 / (0.2)
Future mortgage interest rates
+/- 0.1%
(0.9) / 1.0
-
Interest rate volatility
+/- 3%
0.2 / (0.2)
-
\n
The following table provides a reconciliation of the balance guarantee swaps opening and closing fair value.
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
At 1 January
8.8
10.3
Interest accrued
0.1
(0.2)
Changes in fair value
(4.7)
(1.3)
At 31 December
4.2
8.8
\n
The interest rate swaps in place for the securitisation issuances are back-to-back swaps, where by equal and opposite
swaps are traded between the SPV and the external counterparty and between the Society and the external
counterparty. Therefore, for the above sensitivities, there would be an equal and opposite movement in the fair value of
the swap within the Society\u2019s financial statements and the financial statements of the SPV.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00194": { "value": "28. Guarantees, contingent liabilities and commitments
Commitments
The Society has no capital commitments for the acquisition of property, plant, and equipment at 31 December 2025
(2024: \u00a32.2m). Commitments in respect of leases classified as short term or small under IFRS 16, Leases are disclosed in
note 17.
In addition, since 2012 the Society has provided a commitment that liabilities arising from Newcastle Financial Advisers\u2019
current banking arrangements with a financial institution are met. There are no outstanding liabilities arising from this
arrangement (2024: \u00a3nil).
Furthermore, there are a small number of legacy Newcastle Strategic Solutions client contracts that include a parental
guarantee from the Society to guarantee payment of sums owed by Newcastle Strategic Solutions to the client set out
under the contract.
The Society has also committed to provide mortgage loans at the Balance Sheet date that have not yet completed
as follows:
\u00a0
Group and Society
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
Irrevocable undrawn committed loan facilities
348.5
291.2
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialGuaranteesExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00193": { "value": "28. Guarantees, contingent liabilities and commitments
Commitments
The Society has no capital commitments for the acquisition of property, plant, and equipment at 31 December 2025
(2024: \u00a32.2m). Commitments in respect of leases classified as short term or small under IFRS 16, Leases are disclosed in
note 17.
In addition, since 2012 the Society has provided a commitment that liabilities arising from Newcastle Financial Advisers\u2019
current banking arrangements with a financial institution are met. There are no outstanding liabilities arising from this
arrangement (2024: \u00a3nil).
Furthermore, there are a small number of legacy Newcastle Strategic Solutions client contracts that include a parental
guarantee from the Society to guarantee payment of sums owed by Newcastle Strategic Solutions to the client set out
under the contract.
The Society has also committed to provide mortgage loans at the Balance Sheet date that have not yet completed
as follows:
\u00a0
Group and Society
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
Irrevocable undrawn committed loan facilities
348.5
291.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00191": { "value": "28. Guarantees, contingent liabilities and commitments
Commitments
The Society has no capital commitments for the acquisition of property, plant, and equipment at 31 December 2025
(2024: \u00a32.2m). Commitments in respect of leases classified as short term or small under IFRS 16, Leases are disclosed in
note 17.
In addition, since 2012 the Society has provided a commitment that liabilities arising from Newcastle Financial Advisers\u2019
current banking arrangements with a financial institution are met. There are no outstanding liabilities arising from this
arrangement (2024: \u00a3nil).
Furthermore, there are a small number of legacy Newcastle Strategic Solutions client contracts that include a parental
guarantee from the Society to guarantee payment of sums owed by Newcastle Strategic Solutions to the client set out
under the contract.
The Society has also committed to provide mortgage loans at the Balance Sheet date that have not yet completed
as follows:
\u00a0
Group and Society
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
Irrevocable undrawn committed loan facilities
348.5
291.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00192": { "value": "Commitments
The Society has no capital commitments for the acquisition of property, plant, and equipment at 31 December 2025
(2024: \u00a32.2m). Commitments in respect of leases classified as short term or small under IFRS 16, Leases are disclosed in
note 17.
In addition, since 2012 the Society has provided a commitment that liabilities arising from Newcastle Financial Advisers\u2019
current banking arrangements with a financial institution are met. There are no outstanding liabilities arising from this
arrangement (2024: \u00a3nil).
Furthermore, there are a small number of legacy Newcastle Strategic Solutions client contracts that include a parental
guarantee from the Society to guarantee payment of sums owed by Newcastle Strategic Solutions to the client set out
under the contract.
The Society has also committed to provide mortgage loans at the Balance Sheet date that have not yet completed
as follows:
\u00a0
Group and Society
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
Irrevocable undrawn committed loan facilities
348.5
291.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00196": { "value": "29. Notes to the Cash \ufb02ow Statements \n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
Reconciliation of pro\ufb01t before taxation to net cash \ufb02ows from operating
\u00a0 \u00a0 \u00a0 \u00a0
activities
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Pro\ufb01t before taxation
22.6
15.7
27.6
15.7
Depreciation and amortisation
8.4
7.6
2.9
2.5
Movement in fair value of derivative financial instruments
51.0
(30.9)
42.3
(32.5)
Interest charge on subscribed capital and subordinated liabilities
6.0
4.7
6.0
4.7
Interest charge / (credit) for finance lease arrangements
0.4
(0.3)
0.4
(0.3)
Interest charge for debt securities in issue
8.0
-
-
-
Loss / (gain) on disposal of non-current assets
0.2
-
(0.4)
-
Net cash \ufb02ows before changes in operating assets and liabilities
96.6
(3.2)
78.8
(9.9)
Increase in loans and advances to customers
(428.3)
(429.5)
(428.5)
(431.0)
(Increase) / decrease in fair value adjustments for hedged risk
(36.9)
8.7
(36.9)
8.7
(Increase) / decrease in cash collateral pledged
(12.7)
6.7
(12.7)
6.7
Decrease in cash ratio deposits
-
14.5
-
14.5
Increase in shares
450.0
418.4
450.0
418.4
Decrease
in amounts due to other customers and deposits from credit
(335.9)
(142.4)
(335.9)
(142.4)
institutions
\u00a0 \u00a0 \u00a0 \u00a0
(Increase) / decrease in other assets, prepayments and accrued income
(0.8)
3.2
(0.5)
(2.3)
Increase / (decrease) in other liabilities
1.0
(0.2)
(5.1)
6.1
(Decrease) / increase in provisions for liabilities
(9.0)
10.6
(9.0)
10.7
Other non-cash movements
(6.5)
2.6
(6.7)
3.5
Net cash \ufb02ows from operating activities
(282.5)
(110.6)
(306.5)
(117.0)
Reconciliation from Balance Sheet to Cash and cash equivalents
\u00a0 \u00a0 \u00a0 \u00a0
Cash and cash equivalents
\u00a0 \u00a0 \u00a0 \u00a0
Cash and balances with the Bank of England
177.3
451.5
177.3
451.5
Loans and advances to banks repayable on demand
52.9
21.2
4.2
4.5
At 31 December
230.2
472.7
181.5
456.0
\n
Cash and cash equivalents comprise cash in hand, balances with the Bank of England, loans and advances to credit
institutions available on demand or with original maturities of three months or less and investment securities with a
maturity period of three months or less i.e. highly liquid assets readily convertible into cash.", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00195": { "value": "29. Notes to the Cash \ufb02ow Statements \n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
Reconciliation of pro\ufb01t before taxation to net cash \ufb02ows from operating
\u00a0 \u00a0 \u00a0 \u00a0
activities
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Pro\ufb01t before taxation
22.6
15.7
27.6
15.7
Depreciation and amortisation
8.4
7.6
2.9
2.5
Movement in fair value of derivative financial instruments
51.0
(30.9)
42.3
(32.5)
Interest charge on subscribed capital and subordinated liabilities
6.0
4.7
6.0
4.7
Interest charge / (credit) for finance lease arrangements
0.4
(0.3)
0.4
(0.3)
Interest charge for debt securities in issue
8.0
-
-
-
Loss / (gain) on disposal of non-current assets
0.2
-
(0.4)
-
Net cash \ufb02ows before changes in operating assets and liabilities
96.6
(3.2)
78.8
(9.9)
Increase in loans and advances to customers
(428.3)
(429.5)
(428.5)
(431.0)
(Increase) / decrease in fair value adjustments for hedged risk
(36.9)
8.7
(36.9)
8.7
(Increase) / decrease in cash collateral pledged
(12.7)
6.7
(12.7)
6.7
Decrease in cash ratio deposits
-
14.5
-
14.5
Increase in shares
450.0
418.4
450.0
418.4
Decrease
in amounts due to other customers and deposits from credit
(335.9)
(142.4)
(335.9)
(142.4)
institutions
\u00a0 \u00a0 \u00a0 \u00a0
(Increase) / decrease in other assets, prepayments and accrued income
(0.8)
3.2
(0.5)
(2.3)
Increase / (decrease) in other liabilities
1.0
(0.2)
(5.1)
6.1
(Decrease) / increase in provisions for liabilities
(9.0)
10.6
(9.0)
10.7
Other non-cash movements
(6.5)
2.6
(6.7)
3.5
Net cash \ufb02ows from operating activities
(282.5)
(110.6)
(306.5)
(117.0)
Reconciliation from Balance Sheet to Cash and cash equivalents
\u00a0 \u00a0 \u00a0 \u00a0
Cash and cash equivalents
\u00a0 \u00a0 \u00a0 \u00a0
Cash and balances with the Bank of England
177.3
451.5
177.3
451.5
Loans and advances to banks repayable on demand
52.9
21.2
4.2
4.5
At 31 December
230.2
472.7
181.5
456.0
\n
Cash and cash equivalents comprise cash in hand, balances with the Bank of England, loans and advances to credit
institutions available on demand or with original maturities of three months or less and investment securities with a
maturity period of three months or less i.e. highly liquid assets readily convertible into cash.
Changes of liabilities arising from financing liabilities in the year were as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
GROUP
SOCIETY
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Subordinated liabilities and subscribed capital
\u00a0 \u00a0 \u00a0 \u00a0
At 1 January
55.7
35.2
55.7
35.2
Cash movements:
\u00a0 \u00a0 \u00a0 \u00a0
Interest payments
(5.9)
(4.0)
(5.9)
(4.0)
Proceeds from issuance
-
19.8
-
19.8
Non cash movements:
\u00a0 \u00a0 \u00a0 \u00a0
Accrued interest
6.0
4.7
6.0
4.7
At 31 December
55.8
55.7
55.8
55.7
Lease liabilities
\u00a0 \u00a0 \u00a0 \u00a0
At 1 January
7.2
7.7
7.2
7.7
Cash movements:
\u00a0 \u00a0 \u00a0 \u00a0
Capital repayments
(1.1)
(2.3)
(1.1)
(2.3)
Interest payments
(0.4)
(0.3)
(0.4)
(0.3)
Non cash movements:
\u00a0 \u00a0 \u00a0 \u00a0
Interest charge
0.4
0.3
0.4
0.3
New leases
1.3
2.1
1.3
2.1
Dilapidations
0.4
-
0.4
-
Lease remeasurement*
-
(0.3)
-
(0.3)
Lease disposal
(0.1)
-
(0.1)
-
At 31 December
7.7
7.2
7.7
7.2
Debt securities in issue
\u00a0 \u00a0 \u00a0 \u00a0
At 1 January
-
-
-
-
Cash movements:
\u00a0 \u00a0 \u00a0 \u00a0
Proceeds from issuance
349.3
-
-
-
Principal repayments
(27.0)
-
-
-
Interest payments
(6.3)
-
-
-
Non cash movements:
\u00a0 \u00a0 \u00a0 \u00a0
Interest charge
8.0
-
-
-
Issue costs
(0.6)
-
-
-
At 31 December
323.4
-
-
-
\n
* Lease remeasurements relate to changes in the contractual lease payments due being reflected in the lease liability.
Opening and closing balance sheet positions include applicable accrued interest. The Group's financing liabilities (lease
liabilities, subordinated liabilities, subscribed capital and debt securities in issue) are held on Balance Sheet at their
amortised cost under IFRS 9, except for leases which are held at amortised cost under IFRS 16 and are denominated in
Sterling. Accordingly, the accounting value of the Group's financing liabilities has not been impacted by changes in fair
value or foreign exchange rates during the years to 31 December 2025 or 2024.", "dimensions": { "concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00197": { "value": "30. Related parties
The Group is controlled by Newcastle Building Society which is registered in England and Wales and operates in the
United Kingdom. See note 15 for further details of subsidiary undertakings.
Transactions with Directors and their close family members
Directors and their close family members have entered into the following transactions with Newcastle Building Society
in the normal course of business.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Group and Society
\u00a0
2025
2024
\u00a0
\u00a3000
\u00a3000
Loans to Directors and close family members
33
43
Deposits and investments held by Directors and their close family members
510
559
\n
Loans to Directors and close family members are made on normal commercial terms and a register of them is available
for inspection at the Principal Office for a period of 15 days up to and including the Annual General Meeting.
Amounts deposited by Directors and members of their close families earn interest on the same terms and conditions
applicable to other customers. There were no other transactions with Directors or their close family members during
2025 or 2024.
Termination payments for key management personnel
During the year, the following termination payments were made to key management personnel. The Group's key
management personnel are the Group's Material Risk Takers.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Group and Society
\u00a0
2025
2024
\u00a0
\u00a3000
\u00a3000
Termination payments
728
253
\n
Transactions with other Group undertakings
The Society receives managed IT, property and business support services from Newcastle Strategic Solutions, a wholly
owned subsidiary of the Society. The Society provides financial and administrative services to Newcastle Strategic
Solutions and Newcastle Financial Advisers.
During the year, the following transactions were carried out with related parties:
(a) Sales of \ufb01nancial and administrative services
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Society
\u00a0
2025
2024
\u00a0
\u00a3000
\u00a3000
Newcastle Financial Advisers Limited
1,465
-
Newcastle Strategic Solutions Limited
14,878
11,774
\n
Sales of services are negotiated with related parties on commercial terms.
(b) Purchases of services
Business Support Services
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Society
\u00a0
2025
2024
\u00a0
\u00a3000
\u00a3000
Newcastle Strategic Solutions Limited
14,426
17,758
\n
Purchased services are negotiated with related parties on commercial terms.
At 31 December 2025 the following unsecured trading balances remained outstanding with related parties:
(c) Outstanding balances
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Amounts owed to Society
Amounts owed by Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3000
\u00a3000
\u00a3000
\u00a3000
Newcastle Strategic Solutions Limited
857
7,097
1,726
4,287
Newcastle Financial Advisers Limited
-
-
303
1,530
Newcastle Mortgage Loans (Jersey) Limited
-
12
72
-
MBS (Mortgages) Limited
-
46
1,648
1,461
\n
At 31 December 2025 the following borrowings and cash deposits remained outstanding with related parties:
(d) Borrowings
/ cash deposits
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Amounts borrowed from Society
Amounts deposited with Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3000
\u00a3000
\u00a3000
\u00a3000
Newcastle Strategic Solutions Limited
28,588
33,940
-
-
Newcastle Mortgage Loans (Jersey) Limited
150
122
-
-
Tyne Funding No.1 plc
2,544
2,544
-
-
Hadrian Funding 2025-1 PLC
9,828
-
\u00a0 \u00a0
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Interest paid to Society
Interest paid by Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3000
\u00a3000
\u00a3000
\u00a3000
Newcastle Strategic Solutions Limited
2,355
2,292
-
-
Newcastle Mortgage Loans (Jersey) Limited
14
46
-
-
Tyne Funding No.1 plc
13
13
-
-
Hadrian Funding 2025-1 PLC
25
-
\u00a0 \u00a0
\n
The loan from the Society to Newcastle Strategic Solutions is made up of three tranches, each on a rolling basis. The
interest rate on the loans is the Society\u2019s standard variable rate (SVR) +1% and SVR -2%.
The loan between the Society and Newcastle Mortgage Loans (Jersey) Limited has an interest rate of SONIA +0.12% and
will mature when the company\u2019s underlying mortgage book redeems.
The loans to Tyne Funding No.1 Plc have an interest rate of 0.5%. The loans are subordinate to all other obligations of
Tyne Funding No.1 Plc and are repayable at the maturity of the notes detailed in Note 14.
The loans to Hadrian Funding 2025-1 PLC have an interest rate of 0.5%. The loans are subordinate to all other obligations
of Hadrian Funding 2025-1 PLC and are repayable at the maturity of the notes detailed in Note 14. The loan to Hadrian
Funding 2025-1 PLC is presented within the deemed loan liability in the Society Balance Sheet, as outlined in note 14.", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00199": { "value": "32. Financial instruments held at fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing
parties in an arm\u2019s length transaction.
Fair value hierarchy and summary of assets and liabilities held at fair value
For assets held at fair value, the following table summarises the basis for measuring the fair value, using the three levels
defined in IFRS 13, Fair Value Measurement:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0
2025
2024
Financial assets
Level
\u00a3m
\u00a3m
Debt securities at FVOCI
1
859.2
602.3
Listed equity investments
1
0.2
0.1
Derivative financial instruments
2
12.7
47.9
Derivative financial instruments
3
4.2
8.7
Unlisted equity investments
3
1.2
1.5
Loans and advances to customers held at fair value
3
162.9
171.6
Financial liabilities
\u00a0 \u00a0 \u00a0
Derivative financial instruments
2
40.3
20.6
Derivative financial instruments
3
4.2
8.8
\n
Level 1:
Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2:
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly
(i.e. as price) or indirectly (i.e. derived from prices).
Level 3:
Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Mortgage assets held at fair value through pro\ufb01t or loss
The Group\u2019s equity release mortgage assets are accounted for as fair value through profit or loss.
The fair value of the equity release portfolio is calculated using a model that estimates the future cash flows expected from
the portfolio. The timing of those cash flows are determined with reference to mortality tables overlaid by expected
prepayments. The model discounts these cash flows to their present value, using a discount rate based on interest rates
for new equity release mortgages available at the Balance Sheet date, adjusted for the specific characteristics of the
Society\u2019s portfolio. The model further calculates a value for the \u2018no-negative equity guarantee\u2019 provided to the customer
using an option pricing method.
The valuation uses a number of inputs which require estimation, such as mortality and prepayment rates, discount rate,
property price volatility and the haircut applied to individual sales prices.
The key estimates used in the model and the basis of estimation are summarised below:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Assumption
Basis of estimation
Discount rate
Interest rates for equity release mortgages available at the Balance Sheet date,
\u00a0
adjusted for speci
fic characteristics o
f the Society\u2019s portfolio
Long-term property price growth
Analysis of historic long-term property price growth
Sales discount on collateral
Analysis of historic sales discounts
Property price volatility
Analysis of historic property price volatility and third party research
\n
At 31 December 2025 the fair value of the equity release mortgage assets was \u00a3162.9m (2024: \u00a3171.6m). The sensitivity of
this value to the estimates shown above is as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0
31 December
31 December
\u00a0 \u00a0
2025
2024
\u00a0 \u00a0
(Decrease) /
(Decrease) /
Assumption
Change in
increase in fair
increase in fair
\u00a0
assumption
value
value
\u00a0 \u00a0
\u00a3m
\u00a3m
Discount rate
+/- 1%
(8.8) / 9.8
(9.6) / 10.8
Long term property price growth
+/- 2%
3.4 / (3.8)
4.0 / (4.8)
Sales discount on collateral
+/- 2.5%
(1.5) / 1.3
(1.5) / 1.5
Property price volatility
+/- 3%
(3.7) / 3.4
(2.9) / 2.9
\n
The following table provides a reconciliation of the equity release portfolio\u2019s opening and closing fair value.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
At 1 January
171.6
188.4
Interest accrued
8.8
12.2
Redemptions
(18.1)
(21.8)
Changes in economic assumptions - recorded in profit and loss
3.5
-
Changes in discount rate \u2013 recorded in profit and loss
(4.2)
(6.0)
Changes in exchange rates \u2013 recorded in profit and loss
1.3
(1.2)
At 31 December
162.9
171.6
\n
The Society hedges fair value movements on the equity release portfolio due to market interest rate movements using
interest rate swaps. There was a reduction in fair value adjustment on the equity release portfolio during the year of
\u00a31.3m, with the remaining movements being due to movements in loan balances. The value of interest rate swaps
decreased by \u00a30.6m, resulting in a net loss of \u00a31.9m in the year included in the Income Statement.
Derivative \ufb01nancial instruments
The Group\u2019s securitisation programme involves the transfer of beneficial ownership of pools of mortgage loans to the
securitisation Special Purpose Vehicles which are controlled by the Society. The transaction creates interest rate risk in
the Society and Special Purpose Vehicles, which is hedged with balance guarantee swaps traded with external
counterparties. The notional of the balance guarantee swaps adjusts to match the outstanding balance of the
transferred mortgage loans as the mortgage loans are repaid by the borrower.
The fair value of the balance guarantee swaps is calculated using a model that estimates the future cash flows from the
swaps. The timing and amount of those cash flows are uncertain but are estimated with reference to expected
prepayments of the mortgages, retention rates of maturing mortgages and future expected interest rates applied to
the retained mortgages, to determine the future expected notional profile of the mortgages within the pools used as
collateral for the securitisation. The model applies the overnight indexed swap yield curve to discount these cash flows
to their present value. The model further calculates a value for the optionality inherent in the adjustable notional profile
of the balance guarantee swaps applying an option pricing method.
The key estimates used in the model and the basis of estimation are summarised below:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Assumption
Basis of estimation
Prepayments
Analysis of historic customer behaviour
Retention rate
Analysis of historic customer behaviour
Future mortgage interest rates
Analysis of historic mortgage and swap rates
Interest rate volatility
Analysis of historic interest rate volatility
At 31 December 2025 the fair value of the balance guarantee swaps in respect of the Group\u2019s securitisation issuances
was \u00a34.2m (2024: \u00a38.8m). The sensitivity of this value to the estimates shown above is as follows:
\u00a0 \u00a0
31 December
31 December
\u00a0 \u00a0
2025
2024
\u00a0 \u00a0
(Decrease) /
(Decrease) /
Assumption
Change in
Increase in fair
increase in fair
\u00a0
assumption
value
value
\u00a0 \u00a0
\u00a3m
\u00a3m
Prepayments
+/- 5%
(0.1) / 0.3
(0.2) / 0.2
Retention rate
+/- 10%
0.2 / (0.1)
0.3 / (0.2)
Future mortgage interest rates
+/- 0.1%
(0.9) / 1.0
-
Interest rate volatility
+/- 3%
0.2 / (0.2)
-
\n
The following table provides a reconciliation of the balance guarantee swaps opening and closing fair value.
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
At 1 January
8.8
10.3
Interest accrued
0.1
(0.2)
Changes in fair value
(4.7)
(1.3)
At 31 December
4.2
8.8
\n
The interest rate swaps in place for the securitisation issuances are back-to-back swaps, where by equal and opposite
swaps are traded between the SPV and the external counterparty and between the Society and the external
counterparty. Therefore, for the above sensitivities, there would be an equal and opposite movement in the fair value of
the swap within the Society\u2019s financial statements and the financial statements of the SPV.
33. Fair value of assets held at amortised cost
The following table summarises the carrying amounts and fair values of those financial assets and liabilities not
presented on the Group\u2019s or Society's Balance Sheets at their fair value. These assets and liabilities are held at values
reflecting their intended use. In all cases, this is via collection of contractual amounts due and not through disposal. This
is deemed to also reflect their best use. If the Group's intended use of an asset or liability changes, the accounting
adopted for the item is revisited for reclassification. The carrying values below reflect the Group's maximum exposure to
counterparty credit risk.
Group
\u00a0 \u00a0
Carrying value
Fair value
\u00a0 \u00a0 \u00a0
2025
2024
2025
2024
Financial assets
Note
Level*
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cash and balances with the Bank of England
\u00a0
1
177.3
451.5
177.3
451.5
Loans and advances to credit institutions
10
1
146.2
101.8
146.2
101.8
Loans and advances to customers
12
3
5,551.3
5,117.7
5,571.2
5,095.3
Other assets, of which financial
\u00a0
3
4.9
5.2
4.9
5.2
Financial liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Due to Members
21
3
5,882.7
5,432.7
5,888.0
5,435.4
Due to other customers
\u00a0
3
163.8
241.0
163.8
241.0
Deposits from credit institutions
\u00a0
3
158.9
417.6
158.9
417.9
Debt securities in issue
22
1
323.4
-
323.4
-
Subordinated liabilities
25
1
19.6
20.2
22.9
20.9
Subscribed capital
26
1
34.7
34.8
50.1
48.2
Other liabilities, of which financial
\u00a0
3
9.7
9.0
9.7
9.0
\n
*Levels are defined in note 32.
The Group does not trade in financial instruments for speculative purposes. Against level 3 assets there is no
expectation that a deferred gain or loss on initial recognition will be recognised in future periods: the transaction price at
inception is considered to reflect an appropriate day one fair value. For short term receivables and payables within other
assets and other liabilities, the carrying value of amounts due and owed is considered to approximate the fair value of
the amounts due and owed. IFRS 9 based impairment allowances against other assets are not material. There were no
gains or losses arising from financial assets or liabilities held at amortised cost.
Cash and balances with the Bank of England
The fair value of floating rate and overnight deposits is their carrying amount.
Loans and advances to credit institutions
The fair value of floating rate and overnight deposits is their carrying amount. The fair value of fixed interest bearing
deposits is based on discounted cash flows using prevailing money-market interest rates for debts with similar
credit risk and remaining maturity.
Loans and advances to customers
Loans and advances to customers are net of provisions for impairment. The estimated fair value of loans and advances
represents the discounted amount of estimated future cash flows expected to be received. Expected cash flows are
discounted at current market rates to determine fair value.
Due to Members and due to other customers
The fair value of shares and balances due to other customers represents the discounted amount of estimated future
cash flows paid to Members and other customers.
Deposits from credit institutions
The estimated fair value of deposits with no stated maturity, which includes non-interest bearing deposits, is the amount
repayable on demand. The estimated fair value of fixed interest-bearing deposits and other borrowings without market
price is based on discounted cash flows using interest rates for new debts with similar remaining maturity.
Debt securities in issue
The fair value of the Group\u2019s debt securities in issue is calculated based on public market prices on the Balance
Sheet date.
Subordinated liabilities and subscribed capital
The fair value of subordinated liabilities and subscribed capital is calculated based on public market prices on the
Balance Sheet date.", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00200": { "value": "Fair value hierarchy and summary of assets and liabilities held at fair value
For assets held at fair value, the following table summarises the basis for measuring the fair value, using the three levels
defined in IFRS 13, Fair Value Measurement:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0 \u00a0
2025
2024
Financial assets
Level
\u00a3m
\u00a3m
Debt securities at FVOCI
1
859.2
602.3
Listed equity investments
1
0.2
0.1
Derivative financial instruments
2
12.7
47.9
Derivative financial instruments
3
4.2
8.7
Unlisted equity investments
3
1.2
1.5
Loans and advances to customers held at fair value
3
162.9
171.6
Financial liabilities
\u00a0 \u00a0 \u00a0
Derivative financial instruments
2
40.3
20.6
Derivative financial instruments
3
4.2
8.8
\n
Level 1:
Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2:
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly
(i.e. as price) or indirectly (i.e. derived from prices).
Level 3:
Inputs for the asset or liability that are not based on observable market data (unobservable inputs).", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00204": { "value": "34. Interest rate risk
The table below presents the impact of interest rate shocks on the Group\u2019s economic value, including the Groups
hedging positions. The shocks calculate the impact on the discounted present value of future cash flows via changing
the yield curve by a fixed amount across all future points. The adverse economic value impact (EVE) shock is a parallel
shock up, resulting in a reduction in market value of \u00a318.4m. This is largely due to the exclusion of the Group's general
reserves in these shocks; typically, the Group offsets fixed mortgages against the general reserves to manage interest
income volatility and to protect against margin compression as rates fall. The remainder of the reduction is due to timing
differences of hedging fixed rate mortgages and savings at a tranche level.
\u00a0
2025
2024
\u00a0
+2.5%
-2.5%
+2.5%
-2.5%
Economic value impact At 31 December
(18.4)
16.8
(17.0)
15.2
\n
The EVE results throughout 2025 remained below the outlier test threshold set by the regulator.
Please see notes 35 and 37 for details about instruments used for managing interest rate risk.
The exposure to interest rate risk due to the Group\u2019s defined benefit pension scheme is detailed in note 19.36. Encumbered assets
Certain financial assets have been utilised as collateral to support the wholesale funding initiatives of the Group and are
used as security for funding with the Bank of England or other third parties. Alternatively, assets may be used as
collateral in line with Credit Support Annexes relating to derivatives, as detailed in note 35. Assets that are used for such
purposes are classified as encumbered and cannot be used for other purposes.
The following table provides an overview of the Group\u2019s encumbered and unencumbered financial assets.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2025
2024
Group
Encumbered
Unencumbered
Encumbered
Unencumbered
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cash and balances with the Bank of England
-
177.3
-
451.5
Loans and advances to credit institutions
93.3
52.9
80.9
20.9
Debt securities
140.0
719.2
-
602.3
Loans and advances to customers*
1,283.4
4,430.8
773.3
4,516.0
Derivative financial instruments
-
16.9
-
56.6
Other assets
-
98.1
-
54.7
Total
1,516.7
5,495.2
854.2
5,702.0
\n
*\u00a3791.3m of encumbered loans and advances to customers relate to mortgage assets used as a security in the Group\u2019s securitisation programmes. Loan
notes secured on these mortgage assets totalling \u00a3490.3m (2024: \u00a3190.2m) have been retained by the Group, as outlined in note 14. These notes are not
presented on the Group Balance sheet and are unencumbered; \u00a3396.2m of these loan notes are available as securities to the Group and could be used
as collateral.
37. Hedge accounting
The Group is exposed to interest rate risk across its fixed interest rate financial assets and liabilities.
The Society\u2019s core business is to provide mortgage and savings products to its customers and Members. Deposits by
Members fund the Society\u2019s mortgage lending, with the Society paying an interest charge in return for deposited funds,
while borrowers pay an interest charge to the Society in return for the funds they have borrowed.
Mortgage contracts attracting a fixed rate of interest are typically the most popular of the Society\u2019s mortgage offerings,
with a fixed rate usually agreed for a term of two to five years. By contrast, most of the Society\u2019s deposits are made
under short term agreements, with deposits often repayable \u2018on demand\u2019. This introduces \u2018interest rate risk\u2019 to the
Society\u2019s business, as when market-wide interest rates move, the return received on mortgage assets adjusts more
slowly than the return paid on Member deposits.
To address this risk, the Society enters into interest rate swap agreements with external counterparties. These contracts
protect against interest rate risk by \u2018swapping\u2019 a portion of the Society\u2019s fixed interest rate exposure to a variable rate:
the Society agrees to pay a fixed rate to a financial counterparty for a period of time in exchange for receipt of a variable
interest rate against a notional balance. The resulting variable interest income received matches the Society\u2019s variable
interest expense, locking in interest margin.
Derivative financial instruments, including interest rate swaps, are held at fair value. The fair value changes when market
interest rates change, with this change reflected in the Income Statement. However, most of the fixed rate exposures
that the interest rate swaps are used to hedge are held at amortised cost as required by accounting standards, and thus
their value on the Society\u2019s Balance Sheet does not change in line with market interest rates. The Society applies fair
value hedge accounting and cash flow hedge accounting to address this mismatch. Hedge accounting allows the
Society to post an adjustment for the value change in the hedged risk; and the movement of this adjustment is reflected
in the Income Statement. If the hedge is effective, the adjustment in relation to the swaps\u2019 fair value change and the
hedged risks\u2019 fair value change net off.
The Society also uses swap contracts in order to hedge exposures that are not yet on its Balance Sheet, for example
fixed rate mortgages that have been offered but have not yet completed. To avoid volatility in the Society\u2019s Income
Statement as a result of this hedging activity, the Society utilises cash flow hedge accounting.
Cash flow hedge accounting allows fair value adjustments to derivatives designated in a cash flow hedge to be posted
through Other Comprehensive Income rather than the Income Statement to the extent the hedge is effective. Hedge
effectiveness is measured by comparing the derivative fair value movement to that of a hypothetical derivative
representing the hedged risk. The fair value movement represented in Other Comprehensive Income is restricted to the
cumulative fair value movement of the hypothetical derivative. Hedge ineffectiveness is recognised in the Income
Statement where fair value movements in the hedging instrument exceed those in the hypothetical derivative.
The Society makes use of the following different types of accounting hedges:
\u25a0
The hedged item in a fair value micro hedge is a specific mortgage contract or a specific group of such contracts. It
could also be a specified treasury asset (e.g. a fixed rate gilt) or treasury liability.
\u25a0
The hedged item in a fair value macro hedge is a defined portion of a mortgage or savings book, but this portion is
re-designated on a regular basis to reflect changes in the hedged portfolio, such as mortgage prepayments or new
mortgage contracts.
\u25a0
The hedged item in a cashflow hedge is usually a forecast floating rate liability, such as Term Funding Scheme or
future securitisation funding. This is primarily used to hedge wholesale funding that will economically hedge the
mortgage pipeline and swaps that have been transacted during the month. These swaps are designated into a
macro fair value hedge at the beginning of the month following the drawdown of hedged loans.
The Society enters into derivative contracts for hedging purposes only. However, not all interest rate swaps may be
designated in accounting hedge relationships. This could be the case if the hedged item is held at fair value, and there is
therefore no mismatch to be addressed by hedge accounting, or if the restrictive accounting rules do not allow for a
hedge to be designated or make it impractical to do so.
The Society uses foreign exchange forwards to protect against foreign exchange risk by fixing the exchange rate on a
portion of the Society\u2019s Euro exposure. These foreign exchange forwards are not designated in accounting hedge
relationships. There is no mismatch to be addressed by hedge accounting as the Society\u2019s euro-denominated equity
release book is held at fair value.
Maturity analysis of hedging instruments
The maturity profile of the Group\u2019s hedging instruments at 31 December 2025 is as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0\u00a0
Between 3 and
Between 1 and
\u00a0\u00a0
\u00a0
Up to 3 months
12 months
5 years
Over 5 years
Total
Interest rate swaps designated in macro fair value hedge relationships
\u00a0\u00a0\u00a0\u00a0\u00a0
Nominal amount
-
1,354.5
2,786.0
56.8
4,197.3
Average fixed interest rate
-
3.56%
3.66%
3.68%
3.63%
Fair value of assets
-
4.1
6.2
0.3
10.6
Fair value of liabilities
-
(2.3)
(18.9)
(0.3)
(21.5)
Interest rate swaps designated in cash\ufb02ow hedge relationships
\u00a0\u00a0\u00a0\u00a0\u00a0
Nominal amount
-
-
182.5
76.3
258.8
Average fixed interest rate
-
-
3.51%
3.63%
3.54%
Fair value of assets
-
-
-
0.2
0.2
Fair value of liabilities
-
-
(0.3)
(0.2)
(0.5)
Interest rate swaps designated in micro fair value hedge relationships
\u00a0\u00a0\u00a0\u00a0\u00a0
Nominal amount
5.0
12.5
286.7
131.1
435.3
Average fixed interest rate
3.85%
1.71%
3.76%
4.23%
3.84%
Fair value of assets
-
0.3
0.1
-
0.4
Fair value of liabilities
-
-
(2.4)
(4.5)
(6.9)
Interest rate swaps utilised in securitisations
\u00a0\u00a0\u00a0\u00a0\u00a0
Nominal amount
-
137.4
-
616.9
754.3
Average fixed interest rate
-
1.54%
-
4.53%
3.99%
Nominal liability amount
-
137.4
-
616.9
754.3
Average fixed interest rate
-
1.49%
-
4.51%
3.96%
Fair value of assets
-
3.0
-
1.2
4.2
Fair value of liabilities
-
(3.0)
-
(1.2)
(4.2)
Interest rate swaps in economic hedge relationships but not designated in accounting hedge relationships
\u00a0\u00a0\u00a0\u00a0\u00a0
Nominal amount
346.4
805.0
146.5
163.2
1,461.1
Average fixed interest rate
3.80%
3.95%
3.53%
4.83%
3.97%
Fair value of assets
0.7
0.8
-
-
1.5
Fair value of liabilities
-
(0.1)
-
(11.2)
(11.3)
Total interest rate swaps
\u00a0\u00a0\u00a0\u00a0\u00a0
Nominal amount
351.4
2,446.8
3,401.7
1,661.2
7,861.1
Average \ufb01xed interest rate
1.53%
2.15%
2.89%
4.18%
3.79%
Fair value of assets
0.7
8.2
6.3
1.7
16.9
Fair value of liabilities
-
(5.4)
(21.6)
(17.4)
(44.4)
Foreign exchange forwards in economic hedge relationships but not designated in accounting hedge relationships
\u00a0\u00a0\u00a0\u00a0\u00a0
Nominal amount
9.9
15.1
-
-
25.0
Average GBP/EUR exchange rate
1.155
1.138
-
-
1.145
Fair value of assets
-
-
-
-
-
Fair value of liabilities
(0.1)
-
-
-
(0.1)
The maturity profile of the Group\u2019s hedging instruments at 31 December 2024 is as follows:
\n \n
Between 3 and
Between 1 and
Up to 3 months
12 months
5 years
Over 5 years
Total
Interest rate swaps designated in macro fair value hedge relationships
Nominal amount
-
827.9
2,051.6
28.0
2,907.5
Average fixed interest rate
-
4.26%
3.42%
3.63%
3.66%
Fair value of assets
-
3.7
36.6
0.8
41.1
Fair value of liabilities
-
(0.6)
(4.0)
(0.1)
(4.7)
Interest rate swaps designated in cash\ufb02ow hedge relationships
Nominal amount
-
-
191.0
106.5
297.5
Average fixed interest rate
-
-
3.77%
3.73%
3.75%
Fair value of assets
-
-
1.7
1.3
3.0
Fair value of liabilities
-
-
-
-
-
Interest rate swaps designated in micro fair value hedge relationships
Nominal amount
-
47.9
172.9
136.7
357.5
Average fixed interest rate
-
3.16%
3.70%
4.25%
3.84%
Fair value of assets
-
0.4
1.8
0.4
2.6
Fair value of liabilities
-
-
(0.2)
(3.8)
(4.0)
Interest rate swaps utilised in securitisations
Nominal amount
-
-
-
162.1
162.1
Average fixed interest rate
-
-
-
1.54%
1.54%
Nominal liability amount
-
-
-
162.1
162.1
Average fixed interest rate
-
-
-
1.49%
1.49%
Fair value of assets
-
-
-
8.7
8.7
Fair value of liabilities
-
-
-
(8.8)
(8.8)
Interest rate swaps in economic hedge relationships but not designated in accounting hedge relationships
Nominal amount
287.5
60.0
208.5
175.5
731.5
Average fixed interest rate
4.80%
4.56%
4.21%
4.80%
4.61%
Fair value of assets
0.4
-
0.3
0.1
0.8
Fair value of liabilities
(0.5)
-
-
(11.4)
(11.9)
Total interest rate swaps
Nominal amount
287.5
935.8
2,624.0
770.9
4,618.2
Average fixed interest rate
0.96%
2.39%
3.02%
3.59%
3.48%
Fair value of assets
0.4
4.1
40.4
11.3
56.2
Fair value of liabilities
(0.5)
(0.6)
(4.2)
(24.1)
(29.4)
Foreign exchange forwards in economic hedge relationships but not designated in accounting hedge relationships
Nominal amount
11.1
16.6
-
-
27.7
Average GBP / EUR exchange rate
1.17
1.19
-
-
1.2
Fair value of assets
0.3
0.1
-
-
0.4
Fair value of liabilities
-
-
-
-
-
Swap assets and liabilities are held at their fair value on Balance Sheet as derivative financial instruments.
Summary of hedged items in designated hedge relationships
\n \n
Fair value hedges
2025
2024
Carrying amount of
Accumulated
Change in fair
Carrying amount of
Accumulated
Change in fair
Interest rate risk
hedged items
amount of
value of hedged
hedged items
amount of
value of hedged
fair value
items in the
fair value
items in the
adjustments
year used for
adjustments
year used for
on the hedged
ine\ufb00ectiveness
on the hedged
ine\ufb00ectiveness
Assets
Liabilities
item
measurement
Assets
Liabilities
item
measurement
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Fixed rate mortgages
3,417.1
-
16.6
37.8
2,289.6
-
(21.9)
(11.5)
Fixed rate customer
deposits
-
766.1
(1.6)
(1.6)
-
716.3
-
-
Fixed rate customer
loans individually
109.3
-
2.9
0.7
118.0
-
2.2
(7.1)
hedged
Fixed rate FVOCI debt
instruments
372.5
-
2.0
3.6
239.3
-
(1.6)
(3.7)
\n \n
Cash \ufb02ow hedges
2025
2024
Interest rate risk
Change in fair
Cash flow hedge reserve
Change in fair
Cash \ufb02ow hedge reserve
value of hedged
value of hedged
item in the year
item in the year
used for hedge
used for hedge
ine\ufb00ectiveness
Discontined
ine\ufb00ectiveness
Discontined
measurement
Continuing hedges
hedges
measurement
Continuing hedges
hedges
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Gross floating rate
liabilities*
3.8
(0.3)
0.6
(7.1)
2.3
4.6
\n \n
Cash \ufb02ow hedges
2025
2024
Interest rate risk
Reclassified to Income
E\ufb00ective
Reclassi\ufb01ed to Income
Hedge
E\ufb00ective portion
Statement
Hedge
portion
Statement
ine\ufb00ectivness
recognised
ine\ufb00ectivness
recognised
recognised
in other
Net
Non-
recognised
in other
Non-
in Income
comprehensive
interest
interest
in Income
comprehensive
Net interest
interest
Statement
income
income
income
Statement
income
income
income
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Gross floating rate
liabilities*
-
(3.8)
-
2.7
-
7.1
-
2.1
* Highly probable future cash flows arising from loans and advances to customers
Hedge ine\ufb00ectiveness
By design, the Society\u2019s hedges are expected to be economically effective, with notional balances, durations and rates
on interest rate swaps agreed only where they are expected to be a good fit to the same characteristics of the
underlying assets that are to be hedged. Hedge ineffectiveness can nonetheless arise from early asset repayments,
imperfectly matched key terms, differences in the timing of cash flows of hedged items and hedging instruments,
different interest rate curves applied to discount the hedged items and hedging instruments and the effect of changes
in counterparties\u2019 credit risk on the fair values of hedging instruments. The table below provides details of the hedge
ineffectiveness during the year.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
(Losses) / gains on micro hedging accounting
\u00a0 \u00a0
Interest rate swaps
(4.6)
10.6
Mortgage assets (loans and advances to customers)
4.3
(10.8)
(Losses) / gains on cash\ufb02ow hedge accounting
\u00a0 \u00a0
Interest rate swaps
(3.8)
7.1
Floating rate liabilities
6.5
(5.0)
(Losses) / gains on macro hedging accounting
\u00a0 \u00a0
Interest rate swaps
(40.7)
6.7
Fair value adjustment for hedged risk on mortgages and savings
36.2
(11.5)
Total ine\ufb00ectiveness recognised in the Income Statement
(2.1)
(2.9)
\n
Hedging gains and losses are recognised in the Income Statement within 'gains less losses on financial instruments and
hedge accounting\u2019. There were no unexpected sources of hedge ineffectiveness during the year.
Fair value gains less losses on \ufb01nancial instruments and hedge accounting recognised in the
income statement
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Fair value movement on loans and advances to customers held at FVTPL
(1.3)
(5.8)
(1.3)
(5.8)
Fair value movement on derivative financial instruments in economic
\u00a0 \u00a0 \u00a0 \u00a0
relationship with loans and advances to customers held at FVTPL but not in
(0.6)
10.7
(0.6)
10.7
accounting hedge relationships
\u00a0 \u00a0 \u00a0 \u00a0
Interest expense on derivative financial instruments in economic relationship
\u00a0 \u00a0 \u00a0 \u00a0
with loans and advances to customers held at FVTPL but not in accounting
(1.3)
-
(1.3)
-
hedge relationships
\u00a0 \u00a0 \u00a0 \u00a0
Fair value movement on derivative financial instruments in other economic but
(1.1)
3.3
(2.6)
3.3
not in accounting hedge relationships
\u00a0 \u00a0 \u00a0 \u00a0
Hedge ineffectiveness on accounting hedges
(2.1)
(2.9)
(2.1)
(2.9)
Revaluation of investments
(0.1)
(0.4)
-
-
Fair value gains less losses on \ufb01nancial instruments and hedge accounting
(6.5)
4.9
(7.9)
5.3
\n
Cash \ufb02ow hedging reserve
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Group and Society
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
Balance at 1 January
5.1
1.4
Reclassification of hedging losses to Income Statement
(2.0)
(2.1)
Reclassification of hedging gains to income statement for which the hedged future cashflows are no longer
\u00a0 \u00a0
expected to occur
(0.7)
-
Fair value changes recognised in equity
(3.8)
7.1
Deferred tax on cash flow hedges
1.6
(1.3)
Balance at 31 December
0.2
5.1
\n
All transactions and balances included within the cash flow hedging reserve are related to interest rate swaps.
38. Credit risk: Impairment methodologies
Credit risk is the risk that a customer or counterparty is unable to honour their repayment of obligations as they fall due.
The credit risk to which the Group is exposed is described in the Risk Management Report.
The Group\u2019s policy with respect to accounting for impairment of financial assets is given in Note 1. This note describes
the practical application of this policy.
The Group Risk Committee maintain oversight of the Credit Risk Committee. The Credit Risk Committee is responsible
for the monitoring of the Group\u2019s exposure to credit risk. Model Risk Committee is charged with oversight of the Group\u2019s
IFRS 9 models and assessment and approval of its key model inputs.
Credit risk mainly arises from commercial and customer loans and advances and loan commitments arising from lending
activities but also arises from the Group's investment in debt securities and exposure to third party (financial and
non-financial) debtors.
Provisioning methodology
The Group monitors its lending in two tranches, Prime residential and buy-to-let lending which is in line with current
lending policies and legacy lending which includes lending to housing associations, credit impaired lending, other
commercial and legacy books.
Impairment calculation
The Group calculates for each mortgage exposure a forward view as to how likely that mortgage is to default at some
point over its expected life. For stage 1 assets, the Group provides for losses resulting from events that may occur in the
following 12 months. For stage 2 and stage 3 assets, the Group provides for losses that may occur at any time in the life
of the mortgage.
12 months and lifetime expected credit losses are calculated by the Group as the discrete losses that would likely be
incurred (considering mortgage exposure against the expected sale value of the mortgaged property) if a mortgage
defaulted on any of a large range of future dates. Each discrete provision needs to be assigned a probability of default
weighting in order to calculate one overall lifetime expected credit loss. As such, a continuous forward view to the
probability of default is calculated.
Prime residential and buy-to-let
Key impairment model inputs, assumptions and estimation techniques
The Group calculates its probability of default (PD) as follows:
\u25a0
The Group has undertaken a detailed assessment of more than 12 years of its internal credit risk data to determine
the core factors that lead to borrower default.
\u25a0
Default indicators identified include granting of forbearance, evidence of mortgage fraud, borrowers falling into
more than 3 months arrears, borrower insolvency or bankruptcy and voluntary repossession of property. These are
used in the staging assessment above to assist in the classification of borrowers as stage 1, stage 2 or stage 3.
\u25a0
The Group\u2019s assessment also considers wider patterns of default, analysing historic borrower defaults by their
maturity (how long a mortgage had been held by the Group), vintage (during which original time period the Group
lent to a borrower) and considering exogenous factors in play at the time of default (external factors including the
interest rate environment, unemployment rates, UK (nominal) GDP and house price index).
\u25a0
The exogenous, maturity and vintage (EMV) factors are used to derive point in time and forward-looking probability
of default curves: projecting historical information about defaults suffered under known \u2018EMV conditions\u2019 forward in
combination with the Group forward views on the wider macroeconomic environment (as this will influence the
forward view on how exogenous factors may develop over time). In combination, these curves form the Group\u2019s
forward-looking probability of default curve, as calculated under the EMV model.
The Group calculates its exposure at default (EAD) as follows:
\u25a0
The Group projects mortgage balances forward to give an estimate of each borrower\u2019s mortgage balance over
time. This factors in forecast interest additions and expected borrower payments alongside an estimate of the value
of each borrower\u2019s property collateral throughout a long-term forecast. An adjustment is made to uplift the Group\u2019s
exposure to borrowers to simulate a typical borrower default of 3 missed monthly payments plus typical fees
associated with arrears.
\u25a0
The output is a per-mortgage forward projection of mortgage balances.
The Group calculates its expected loss given default (LGD) as follows:
\u25a0
The Group calculates a per-mortgage LGD, an estimate of the proportion of each mortgage loan exposure that is
believed to be at risk if the borrower defaults on their obligation to repay the outstanding capital and interest and
the property is subsequently possessed and sold.
\u25a0
LGD is calculated as the probability of possession given the default of a borrower (PPD) which estimates the
likelihood of possession following default multiplied by the expected shortfall on each mortgage: an estimation of
the difference between the exposure at default (as discussed above) and the sale price of the property, net of
relevant sales costs.
The Group calculates expected credit loss provisions as PD * EAD * LGD:
\u25a0
The Group calculates a final provision for each mortgage as the probability of default multiplied by the amount the
Group expects to lose in the event of a default.
\u25a0
As discussed above, this is not static or a point in time loss: the Group calculates PD, EAD and LGD across a
continuous forward planning horizon. The final provision number is not a singular PD*EAD*LGD, it reflects the
discounted overall expected loss that could be incurred over the life of each mortgage: a weighted average of
multiple possible future loss events.
Multiple economic scenarios
IFRS 9 expects more than one scenario to be considered when calculating expected credit losses. The Group applies
this principle by assessing the provisions required under four separate macroeconomic forecasts. These
macroeconomic forecasts feed into the exogenous component of the Group\u2019s EMV models.
The Group runs:
\u25a0
Base scenario: uses as a reference the average HM Treasury short term forecast for the UK economy for the first 2
years and then the medium term forecasts for 2026 onwards.
\u25a0
Upside scenario: uses as a reference the most positive HM Treasury short and medium term forecasts for the
UK economy.
\u25a0
Downside scenario: uses the most negative short and medium term HM treasury forecasts.
\u25a0
Stress scenario: a severely negative scenario, developed with reference to the Bank of England\u2019s annual concurrent
stress test scenarios for the largest UK banks and building societies.
The Group\u2019s final expected credit losses are the losses calculated under each discrete scenario, multiplied by a
likelihood factor, or scenario weighting. The weightings at 31 December 2025 were as follows:
\n \n
Scenario weightings
Upside
Base
Downside
Stress
2025
10%
40%
40%
10%
2024
10%
40%
40%
10%
Key macroeconomic information
The Group considers the following to be the key macroeconomic and forward view inputs to its impairment models:
\u25a0
UK unemployment rate
\u25a0
UK house price index
\u25a0
UK household income
\u25a0
Bank of England base rate
\u25a0
UK nominal gross domestic product
The Group\u2019s assessments as to which variables are key has not changed in the current year. Quarterly updates to the
variables themselves to reflect the most recent market information have been reflected in the Group\u2019s
impairment results.
Changes to Economic scenarios
Against the uncertainty in the UK economy, the Group have developed new economic scenarios for the credit loss
provision model, using the most recent industry data, forecasts and benchmarks available at the time of development.
The Group\u2019s IFRS 9 model is most sensitive to forecasted house price growth and unemployment, which are
summarised below.
\n \n
31 December 2025
Scenario
Economic measure
2025
2026
2027
2028
2029
2030
Upside
Unemployment rate, %
4.6
4.1
3.7
3.6
3.6
3.9
House price growth, % pa
3.6
3.6
5.5
7.6
6.5
6.7
Base
Unemployment rate, %
4.7
5.0
4.9
4.8
4.7
4.7
House price growth, % pa
3.0
1.7
2.6
3.1
3.8
3.0
Downside
Unemployment rate, %
5.3
6.3
6.8
6.7
6.4
6.5
House price growth, % pa
-
(5.2)
(1.8)
1.9
7.0
2.7
Severe downside
Unemployment rate, %
6.0
6.7
7.4
7.3
7.0
7.0
House price growth, % pa
(1.2)
(8.5)
(4.8)
(0.4)
7.3
1.1
Weighted*
Unemployment rate, %
5.1
5.6
5.8
5.7
5.5
5.6
House price growth, % pa
1.5
(1.9)
0.4
2.7
5.7
3.0
\n \n
31 December 2024
Scenario
Economic measure
2024
2025
2026
2027
2028
2029
Upside
Unemployment rate, %
4.2
3.5
3.1
3.0
3.1
3.1
House price growth, % pa
2.2
4.2
4.2
4.4
4.1
4.1
Base
Unemployment rate, %
4.2
4.4
4.4
4.3
4.1
4.1
House price growth, % pa
1.7
2.3
2.0
2.6
2.7
2.7
Downside
Unemployment rate, %
4.5
6.4
6.9
6.6
6.3
6.3
House price growth, % pa
1.7
(3.3)
(7.1)
(3.6)
3.5
3.5
Severe downside
Unemployment rate, %
4.5
7.9
9.7
8.2
7.4
7.4
House price growth, % pa
(0.4)
(12.6)
(11.5)
(2.5)
2.7
2.7
Weighted*
Unemployment rate, %
4.4
5.4
5.8
5.5
5.2
5.2
House price growth, % pa
1.5
(1.2)
(2.7)
(0.2)
3.1
3.1
*Expected credit losses are calculated for each loan in each scenario and then probability weighted, so the weighted figure presented above is for
illustrative purposes only.
Post model adjustments
The Group recognises post model adjustments when it identifies risks which are not addressed by its core impairment
model. Emerging risks are regularly considered by the Group Risk Committee and if necessary, a post model adjustment
is recognised. During the year post model adjustments in relation to fire safety and cladding risk and affordability were
removed; the risks associated with these matters do not materially increase the risk of losses (2024: \u00a30.3m and
\u00a30.6m, respectively).
Climate change
There have been no observed climate change related defaults and therefore no identifiable increases in credit risk. A
post model adjustment of \u00a30.2m (2024: \u00a30.1m) has been recognised for the risk of losses from reduction in property
values that are most at risk due to climate change.
Commercial and other legacy books
Commercial and other legacy books are managed by the commercial lending department and includes properties
secured on commercial property, buy-to-let customers which would now be outside of the Group\u2019s lending policy and
loans secured on serviced apartments.
Impairment calculation and key impairment model inputs
The calculation used to determine the provisions for legacy mortgage contracts is similar to that used for the prime
residential book. Provisions are determined as probability of default (PD) * exposure at default (EAD) * loss given default
(LGD). Please see explanations of each of these terms above.
The main difference between the prime residential and the legacy books consists in the way model inputs are
determined. Due to the nature and the small size of the legacy books, the most significant model inputs are determined
manually on a mortgage-by-mortgage basis or for small groups of mortgages.
For each mortgage contract, the Group applies its specific knowledge of the customer and the property on an
individual basis, as well as its understanding of the sector to determine a forward view as to how likely that mortgage is
to default at some point over its expected life for stage 2 mortgages, or due to events occurring in the following 12
months in the case of stage 1 accounts.
Loss given default is calculated based on a sector specific discount to the property\u2019s current indexed valuation. The
discount reflects management\u2019s confidence about the sector\u2019s prospects in the current and projected future
economic environment. The valuation takes into account the individual property\u2019s circumstance and the local
market conditions.
Economic scenarios
The provisions booked in respect of legacy books are based on four economic scenarios, consistent with those
scenarios used for residential provisioning.
The impairment provision is most sensitive to the borrower specific probability of default and the sector or property
specific discount to indexed valuations at the time of disposal.
Future legacy property prices are highly uncertain and depend on the future prosperity of the UK in general, the
individual sector the property can be used for, local economic conditions, the remaining duration of the current lease
agreement, and the strength of the current tenant.
For loans secured on legacy lending properties, the following (increases) / reductions to valuations were applied:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
31 December 2025
Sector
Upside
Base
Downside
Stress
Retail
10%
20%
30%
60%
Leisure
40%
50%
55%
65%
Residential
0%
0%
7-10%
14-17%
Serviced apartments
(6%)
15%
30%
60%
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
31 December 2024
Sector
Upside
Base
Downside
Stress
Retail
10%
20%
30%
60%
Leisure
40%
50%
55%
65%
Residential
1%
1%
14-17%
27-29%
Serviced apartments
(6%)
15%
30%
60%
\n
Housing associations
Loans to housing associations are monitored with a range of management information used to assess the Group\u2019s
ongoing exposure (which, while of extremely high credit quality remains of significant size). An open dialogue is
maintained with borrowers, with the Group appraised of their status, financial results and position, and numerous other
financial and risk metrics. Lending is contingent on compliance with a number of financial commitments and covenants.
The Group actively monitors for potential breaches of contractual positions.
Housing associations are historically a nil loss, nil default sector and are widely considered to be Government backed in
the case of financial stress. Housing association exposures have proven to be of the lowest credit risk throughout a
volatile and extended recession period. The Group has no internal history of loss to draw on with respect to housing
association exposures and cannot supplement its own data with loss data of its peers.
The combined effect of a well collateralised set of exposures, in an environment where the demand for housing is only
increasing, with no history of default on the part of any borrower and a sincere expectation that any theoretical default
would be addressed by the jurisdictional Government, leads to a conclusion that no material impairment of housing
association exposures is plausibly expected.
Purchased or originated credit impaired (POCI)
It is not the Group\u2019s practice to acquire or originate POCI assets, the POCI assets held arose on the transfer of
engagement from Manchester Building Society in 2023.
Debt securities
The Group monitors the external credit ratings applied to its debt security investments on a daily basis.
The Group\u2019s debt security holdings are all of investment grade or higher. The Group has therefore assessed that the
credit risk on its debt security exposures has not increased significantly since initial recognition.
The Treasury Risk department runs very severe annual stressed scenarios over the residential mortgage backed
securities (RMBS). The Group\u2019s policy to allow only investment grade and senior secured exposures leaves the Group
highly insensitive to stressed scenarios as the waterfall structure of RMBS payments ensures continued receipt of
contractual cash flows even through significantly stressed scenarios.
The Group\u2019s covered bond exposures are similarly resilient: the Group is only exposed to regulated UK covered bonds
with the regulations providing for the full segregation of covered bond asset pools from the bond issuer. The regulations
introduce numerous investor protections including mandatory over-collateralisation, an extensive initial application
process and regular regulatory stress testing and supervisory monitoring.
39. Credit risk: Expected credit losses
\n
Quantitative impairment impact
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Loss allowance
Increases due
Decreases
Transition
Changes in
Loss allowance
Reconciliation table
at 1 January
to orgination
due to
between
credit risk
at 31 December
\u00a0
2025
and acquisition
derecognition
stages
\u00a0
2025
\u00a0
\u00a3000
\u00a3000
\u00a3000
\u00a3000
\u00a3000
\u00a3000
Prime residential
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 1
498.6
243.3
(90.8)
715.9
(787.8)
579.2
Stage 2
2,534.5
775.5
(221.0)
(727.6)
(434.7)
1,926.7
Stage 3
1,751.0
34.6
(132.6)
11.7
773.6
2,438.3
Total
4,784.1
1,053.4
(444.4)
-
(448.9)
4,944.2
Buy-to-let
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 1
29.5
7.1
(10.1)
27.1
(26.7)
26.9
Stage 2
218.9
16.4
(8.2)
6.8
(184.5)
49.4
Stage 3
141.0
-
(93.0)
(33.9)
8.4
22.5
Total
389.4
23.5
(111.3)
-
(202.8)
98.8
Legacy lending
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 1
20.0
-
(2.8)
99.1
(102.8)
13.5
Stage 2
449.2
-
(1.5)
(99.8)
(113.2)
234.7
Stage 3
1,003.8
-
(133.2)
0.7
210.5
1,081.8
Total
1,473.0
-
(137.5)
-
(5.5)
1,330.0
Purchased credit impaired lending
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 1
-
-
-
-
-
-
Stage 2
-
-
-
-
-
-
Stage 3
-
-
-
-
(98.7)
(98.7)
Total
-
-
-
-
(98.7)
(98.7)
Housing association
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 1
-
-
-
-
-
-
Stage 2
-
-
-
-
-
-
Stage 3
-
-
-
-
-
-
Total
-
-
-
-
-
-
Total
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0
Stage 1
548.1
250.4
(103.7)
842.1
(917.3)
619.6
Stage 2
3,202.6
791.9
(230.7)
(820.6)
(732.4)
2,210.8
Stage 3
2,895.8
34.6
(358.8)
(21.5)
893.8
3,443.9
Total
6,646.5
1,076.9
(693.2)
-
(755.9)
6,274.3
\n
Provisions of less than \u00a30.1m (2024: provisions of \u00a30.2m) above relate to loans and advances to customers made by a subsidiary company, secured on
\n
prime residential property.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Gross
Increases due
Decreases
Transition
Gross
Reconciliation table
exposure at 1
to orgination
due to
between
exposure at
\u00a0
January 2025
and acquisition
derecognition
stages
31 December
\u00a0\u00a0\u00a0\u00a0\u00a0
2025
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Prime residential
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
3,798.4
942.5
(600.1)
121.2
4,262.0
Stage 2
655.2
192.3
(55.0)
(140.6)
651.9
Stage 3
68.0
0.7
(11.8)
19.4
76.3
Total
4,521.6
1,135.5
(666.9)
-
4,990.2
Buy-to-let
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
300.0
30.5
(53.1)
42.0
319.4
Stage 2
78.8
4.9
(3.7)
(42.5)
37.5
Stage 3
5.9
-
(3.2)
0.5
3.2
Total
384.7
35.4
(60.0)
-
360.1
Legacy lending
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
19.2
-
(3.4)
0.3
16.1
Stage 2
3.7
-
(0.1)
(0.5)
3.1
Stage 3
1.7
-
(0.3)
0.2
1.6
Total
24.6
-
(3.8)
-
20.8
Purchased credit impaired lending
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
-
-
-
-
-
Stage 2
-
-
-
-
-
Stage 3
5.3
-
(1.2)
-
4.1
Total
5.3
-
(1.2)
-
4.1
Housing association
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
179.2
-
(7.9)
-
171.3
Stage 2
-
-
-
-
-
Stage 3
-
-
-
-
-
Total
179.2
-
(7.9)
-
171.3
Total
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
4,296.8
973.0
(664.5)
163.5
4,768.8
Stage 2
737.7
197.2
(58.8)
(183.6)
692.5
Stage 3
80.9
0.7
(16.5)
20.1
85.2
Total
5,115.4
1,170.9
(739.8)
-
5,546.5
\n \n
Transition
Loss allowance
Reconciliation table
Loss allowance
Increases due
Decreases
between
at 31 December
at 1 January
to orgination
due to
stages
Changes in
2024
2024
and acquisition
derecognition
Restated*
credit risk
Restated*
\u00a3000
\u00a3000
\u00a3000
\u00a3000
\u00a3000
\u00a3000
Prime residential
Stage 1
705.6
273.5
(267.5)
939.2
(1,152.2)
498.6
Stage 2
3,224.3
890.4
(239.9)
(982.1)
(358.2)
2,534.5
Stage 3
1,261.1
190.9
(100.4)
42.9
356.5
1,751.0
Total
5,191.0
1,354.8
(607.8)
-
(1,153.9)
4,784.1
Buy-to-let
Stage 1
114.8
45.4
(36.9)
(54.5)
(39.3)
29.5
Stage 2
301.4
31.9
(7.2)
56.8
(164.0)
218.9
Stage 3
225.7
-
(197.4)
(2.3)
115.0
141.0
Total
641.9
77.3
(241.5)
-
(88.3)
389.4
Legacy lending
Stage 1
95.5
-
(80.6)
86.3
(81.2)
20.0
Stage 2
1,114.9
-
(292.8)
(86.3)
(286.6)
449.2
Stage 3
343.6
575.4
(1.5)
-
86.3
1,003.8
Total
1,554.0
575.4
(374.9)
-
(281.5)
1,473.0
Purchased credit impaired lending
Stage 1
-
-
-
-
-
-
Stage 2
-
-
-
-
-
-
Stage 3
244.7
-
(26.8)
-
(217.9)
-
Total
244.7
-
(26.8)
-
(217.9)
-
Housing association
Stage 1
-
-
-
-
-
-
Stage 2
-
-
-
-
-
-
Stage 3
-
-
-
-
-
-
Total
-
-
-
-
-
-
Total
Stage 1
915.9
318.9
(385.0)
971.0
(1,272.7)
548.1
Stage 2
4,640.6
922.3
(539.9)
(1,011.6)
(808.8)
3,202.6
Stage 3
2,075.1
766.3
(326.1)
40.6
339.9
2,895.8
Total
7,631.6
2,007.5
(1,251.0)
-
(1,741.6)
6,646.5
\n
*The above balances have been re-presented since 31 December 2024 due to a misallocation of post model adjustments between the different stages.
\n
This results in a decrease in prime residential stage 1 loss allowances of \u00a3221,000, with a corresponding increase to prime residential stage 2 loss
\n
allowances and a decrease in buy-to-let stage 1 loss allowances of \u00a395,700 with a corresponding increase to buy-to-let stage 2 loss allowances. There is
\n
no impact on the total loss allowance.
\n\n \n
Decreases
Transition
Gross exposure
Reconciliation table
Gross exposure
Increases due
due to
between
at 31 December
at 1 January
to orgination
derecognition
stages
2024
2024
and acquisition
Restated (1)
Restated (2)
Restated
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Prime residential
Stage 1
3,248.4
922.1
(539.8)
167.7
3,798.4
Stage 2
720.8
171.2
(47.4)
(189.4)
655.2
Stage 3
50.6
2.9
(7.2)
21.7
68.0
Total
4,019.8
1,096.2
(594.4)
-
4,521.6
Buy-to-let
Stage 1
292.6
40.4
(53.2)
20.2
300.0
Stage 2
90.4
10.0
(1.4)
(20.2)
78.8
Stage 3
6.6
-
(0.7)
-
5.9
Total
389.6
50.4
(55.3)
-
384.7
Legacy lending
Stage 1
27.4
-
(9.8)
1.6
19.2
Stage 2
6.9
-
(1.6)
(1.6)
3.7
Stage 3
1.0
0.7
-
-
1.7
Total
35.3
0.7
(11.4)
-
24.6
Purchased credit impaired lending
Stage 1
-
-
-
-
-
Stage 2
-
-
-
-
-
Stage 3
7.7
-
(2.4)
-
5.3
Total
7.7
-
(2.4)
-
5.3
Housing association
Stage 1
211.9
-
(32.7)
-
179.2
Stage 2
-
-
-
-
-
Stage 3
-
-
-
-
-
Total
211.9
-
(32.7)
-
179.2
Total
Stage 1
3,780.3
962.5
(635.5)
189.5
4,296.8
Stage 2
818.1
181.2
(50.4)
(211.2)
737.7
Stage 3
65.9
3.6
(10.3)
21.7
80.9
Total
4,664.3
1,147.3
(696.2)
-
5,115.4
\n
1.
The above balances have been re-presented since 31 December 2024 to reclassify \u00a31.9m of gross loan balances in
\n
legacy lending and prime residential mortgages, resulting in a \u00a31.9m decrease to prime residential stage 1
\n
mortgages and a corresponding increase to stage 1 legacy lending mortgages. There is no impact on total gross
\n
mortgage balances.
\n
2.
The above balances have been re-presented since 31 December 2024 due to a misallocation of post model
\n
adjustments between the different stages. This results in an increase in prime residential stage 1 mortgages of
\n
\u00a3226.3m with a corresponding decrease to prime residential stage 2 mortgages and an increase in buy-to-let stage
\n
1 mortgages of \u00a350.7m with a corresponding decrease to buy-to-let stage 2 mortgages. There is no impact on the
\n
total gross mortgage balances.
\n
The gross carrying values above reflect the Group\u2019s maximum exposure to credit risk at 31 December 2025 and 31
\n
December 2024 without taking into account any collateral held or provisions made against expected loss.
\n
There has been no material movement in loss allowances held against other financial assets during 2025. Debt securities
\n
held remain of very high credit quality at 31 December 2025 and the Group is not exposed to any significant value or
\n
volume of overdue trade receivables.
Risk exposures by credit grade for residential lending
Across the Group\u2019s prime residential and buy-to-let mortgage exposures, provisions may be disaggregated by detailed
probability of default ranges as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
2025
Exposure
Provision
Provision coverage ratio
Lifetime PD %
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3000
\u00a3000
\u00a3000
%
%
%
0.0% - 1.0%
44.4
-
-
0.3
-
-
-
-
-
1.0% - 2.0%
1,874.2
0.2
-
131.5
-
-
0.01
-
-
2.0% - 3.0%
1,746.0
0.1
-
305.5
-
-
0.02
-
-
3.0% - 4.0%
147.7
0.1
-
3.1
-
-
-
-
-
4.0% - 5.0%
517.1
-
-
124.7
-
-
0.02
-
-
5.0% - 6.0%
17.8
0.1
-
0.6
-
-
-
-
-
6.0% - 7.0%
4.3
0.6
-
-
-
-
-
-
-
7.0% - 8.0%
1.9
0.3
-
-
-
-
-
-
-
8.0% - 9.0%
5.6
5.3
-
0.6
0.7
-
0.01
0.01
-
9.0% - 10.0%
6.5
21.7
-
0.1
1.0
-
-
-
-
10.0% - 100.0%
186.8
654.8
69.6
139.1
1,972.4
2,084.1
0.07
0.30
2.99
Total
4,552.3
683.2
69.6
705.5
1,974.1
2,084.1
0.02
0.29
2.99
\n
The table above excludes gross mortgage balances of \u00a345.2m with a provision of \u00a30.3m for which no lifetime probability of default is available. This
includes \u00a343.0m of mortgages originating in Manchester Building Society, for which probability of default bands were estimated based on external
credit data.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
2024
Exposure
Provision
Provision coverage ratio
Lifetime PD %
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
\u00a0
Restated (1)
Restated (1)
\u00a0
Restated (2)
Restated (2)
\u00a0
Restated
Restated
\u00a0
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3000
\u00a3000
\u00a3000
%
%
%
0.0% - 1.0%
48.8
0.5
-
0.3
0.9
-
-
0.18
-
1.0% - 2.0%
1,713.4
41.9
-
112.5
77.6
-
0.01
0.19
-
2.0% - 3.0%
1,582.9
55.5
-
184.2
116.8
-
0.01
0.21
-
3.0% - 4.0%
132.4
10.0
-
7.2
9.1
-
0.01
0.09
-
4.0% - 5.0%
422.6
24.1
-
111.5
77.7
-
0.03
0.32
-
5.0% - 6.0%
3.4
-
-
0.1
-
-
-
-
-
6.0% - 7.0%
2.9
0.3
-
0.1
-
-
-
-
-
7.0% - 8.0%
5.6
0.3
-
-
-
-
-
-
-
8.0% - 9.0%
4.0
6.3
-
0.1
2.3
-
-
0.04
-
9.0% - 10.0%
12.1
23.0
-
1.5
12.6
-
0.01
0.05
-
10.0% - 100.0%
135.9
564.6
58.3
110.0
2,456.4
1,216.5
0.08
0.44
2.09
Total
4,064.0
726.5
58.3
527.5
2,753.4
1,216.5
0.01
0.38
2.09
\n
1.
The above balances have been re-presented since 31 December 2024 to reclassify gross mortgage balances between stages, resulting in a \u00a3275.1m
increase in stage 1 gross mortgage balance and a \u00a3277.0m decrease in stage 2 gross mortgage balances.
2.
The above balances have been re-presented since 31 December 2024 to reclassify provisions between stages, resulting in a \u00a3317,000 decrease in
stage 1 provisions and a corresponding decrease in stage 2 provisions.
The provision coverage ratios for stage 1 and stage 2 have been restated following the above re-presentations.
The table above excludes gross mortgage balances of \u00a357.5m, with a provision of \u00a30.7m for which no lifetime probability of default is available. This
includes \u00a352.0m of mortgages originating in Manchester Building Society, for which probability of default bands were estimated based on external
credit data.
Lifetime probability of default indicates the percentage change that a loan will trigger any of the stage 3 indicators, as
detailed above, over the life of the loan and does not alone indicate a likeliness that the default will result in any
significant loss to the Group.
The comparatively small provisions coverage reflects the capacity for property collateral to effectively mitigate the
Group\u2019s ultimate exposure to loss.
Provisions against other financial assets are not considered to be sufficiently material to warrant further
detailed analysis.
Provisions against commercial and legacy buy-to-let mortgages are not presented by risk grade as legacy exposures
are assessed for impairment on an individual basis by the commercial lending department.
Sensitivity of the credit loss provisions to key assumptions
The Group\u2019s residential and buy-to-let mortgage provisions are most sensitive to forecasted house price growth and
unemployment rates. A 5% increase / decrease to house price growth assumptions over the next two years would result
in a \u00a30.2m / \u00a3(0.3)m decrease / increase on the residential and buy-to-let provisions balances at 31 December 2025. A
2% increase / decrease to unemployment rate assumptions over the next two years would have a \u00a30.2m / \u00a3(0.2)m
increase / decrease on the residential and buy-to-let provisions balances at 31 December 2025.
The Group\u2019s mortgage provisions reflect probability weighted scenarios run across its mortgage books and are
sensitive to the probabilities applied accordingly. Provisions are most sensitive to increases in the downside and stress
scenarios probabilities; the tables below outline the sensitivity of the credit loss provisions to 100% weighted
economic scenarios:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
2025
Residential and
\u00a0
\u00a0
buy-to-let
Legacy lending
\u00a0
\u00a3m
\u00a3m
Actual
5.0
1.2
Upside
2.8
0.8
Base
3.7
1.1
Downside
5.7
1.3
Stress
7.6
1.9
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
2024
Residential and
\u00a0
\u00a0
buy-to-let
Legacy lending
\u00a0
\u00a3m
\u00a3m
Actual
5.2
1.4
Upside
2.9
0.6
Base
3.5
1.1
Downside
5.8
1.6
Stress
10.0
2.4
\n
Equity release portfolio
The Group\u2019s equity release portfolio is accounted for at fair value. Its fair value includes any allowances for credit risk.
Further information on the fair value of the equity release portfolio, including sensitivity analysis is included in notes 13
and 32.
40. Credit quality
The Group's mortgage lending is all secured with a first charge registered against the collateral property. This includes
the Group\u2019s equity release mortgages. The average loan to value of the Group's loan portfolios at 31 December 2025 is
68.1% (2024: 67.7%) as detailed in the Strategic Report. Quarterly regional Halifax House Price Index data is used to
monitor the value of residential collateral. The contractual capacity to recover defaulted mortgage contracts through
the sale of property collateral acts significantly to reduce the Group\u2019s risk of loss.
The credit quality of the Group's residential loans is considered to be excellent with the loans continuing to perform and
arrears being below industry averages. At 31 December 2025 there were 45 loans in 12 months arrears or more with
balances of \u00a38.9m (2024: 42 loans totalling \u00a34.3m).
The percentage of mortgages in arrears by 3 months or more remains at low levels for 2025. Overall, by number of loans
in arrears we have seen a decrease of 0.11% to 0.83%, and by balance we have seen an increase of 0.02% to 0.86%.
The Group's non-impaired commercial loan assets are also considered to be of a good credit quality.
Further specifics by type of mortgage lending are as follows:
Prime residential mortgage book
The prime residential mortgage book consists of traditional residential loans. No sub-prime or self-certification lending
has been undertaken.
\n \n
2024
2024
2025
2025
Restated
Restated
Loan to value (indexed)
\u00a3m
%
\u00a3m
%
<70%
2,698.7
54.2
2,555.1
56.4
70% - <80%
880.4
17.6
758.2
16.8
80% - <90%
1,004.8
20.1
802.9
17.8
>90%
406.3
8.1
405.4
9.0
4,990.2
100.0
4,521.6
100.0
\n \n
2024
2024
2025
2025
Restated
Restated
Payment status
\u00a3m
%
\u00a3m
%
Not past due
4,896.5
98.1
4,446.1
98.3
Past due up to 3 months
47.8
1.0
41.1
0.9
3 to 6 months past due
16.6
0.3
18.0
0.4
Over 6 months past due
26.8
0.5
15.5
0.3
In possession
2.5
0.1
0.9
0.1
4,990.2
100.0
4,521.6
100.0
*The above balances have been re-presented since 31 December 2024 to reclassify \u00a31.9m of gross loan balances in legacy lending and prime residential
mortgages, resulting in a \u00a31.9m decrease to prime residential mortgages and a corresponding increase to legacy lending mortgages. There is no impact
on total gross mortgage balances.
The Group continued to experience a low level of possessions on residential loans and Law of Property Act (LPA) receiver
appointments. At the end of 2025 the Group had 16 prime residential properties in possession or subject to LPA
receivership (2024: five possession properties).
Against past due and possession cases, \u00a3178.6m (2024: \u00a3152.4m) collateral is held. No loans that would be past due or
impaired have had their terms renegotiated.
The Group offers a range of forbearance measures to customers such as payment breaks and reductions, transfers to
interest only products and other support. The Group granted forbearance against 154 residential loans in 2025 (2024:
168), with no alteration made to the contractual rates of interest and balances totalling \u00a327.4m at 31 December 2025
(2024: \u00a327.2m), this did not lead to any modification gain or loss a result of short-term forbearance granted. Provisions
of \u00a30.4m (2024: \u00a30.7m) are held against residential mortgages that were granted forbearance during the year.
The increase in indexed loan to value in the prime residential mortgage book is due to reductions in house prices since
the origination of the mortgages.
Retail buy-to-let mortgage book
The retail buy-to-let (BTL) mortgage book consists of buy-to-let to individuals <\u00a31m.
\n \n
2025
2025
2024
2024
Loan to value (indexed)
\u00a3m
%
\u00a3m
%
<70%
266.1
73.9
300.8
78.2
70% - <80%
82.1
22.8
72.9
18.9
80% - <90%
11.7
3.2
10.0
2.6
>90%
0.2
0.1
1.0
0.3
360.1
100.0
384.7
100.0
\n \n
2025
2025
2024
2024
Payment status
\u00a3m
%
\u00a3m
%
Not past due
354.1
98.3
377.3
98.0
Past due up to 3 months
4.1
1.1
4.2
1.1
3 to 6 months past due
0.6
0.2
0.6
0.2
Over 6 months past due
1.3
0.4
2.4
0.6
In possession / LPA receivership
-
-
0.2
0.1
360.1
100.0
384.7
100.0
At the end of 2025 the Group had no BTL possession properties or poperties whose exposure was being managed by a
Law of Property Act receiver (2024: one).
Against past due and possession cases, \u00a311.4m (2024: \u00a316.8m) collateral is held.
No loans that would be past due or impaired have had their terms renegotiated.
The Group offers a range of forbearance measures to customers such as payment breaks and reductions, transfers to
interest only products and other support. The Group granted forbearance against three retail BTL loans in 2025 (2024:
five loans). With no alteration made to the contractual rates of interest and balances totalling \u00a30.9m at 31 December
2025 (2024: \u00a31.3m) leading to no modification gain or loss recorded as a result of short-term forbearance granted. No
provisions are held against BTL mortgages that were granted forbearance during the year (2024: \u00a3nil).
Equity release mortgages denominated in \u00a3
The below analysis shows gross loan balances of equity release mortgage lending excluding fair value adjustments.
\n \n
2025
2025
2024
2024
Loan to value (indexed)
\u00a3m
%
\u00a3m
%
<70%
127.4
92.6
135.7
94.4
70% - <80%
6.4
4.7
4.4
3.1
80% - <90%
2.1
1.5
1.5
1.0
>90%
1.6
1.2
2.2
1.5
137.5
100.0
143.8
100.0
\n \n
2025
2025
2024
2024
Payment status
\u00a3m
%
\u00a3m
%
Not past due
136.7
99.4
143.5
99.8
Over 6 months past due
0.4
0.3
-
-
In possession / LPA receivership
0.4
0.3
0.3
0.2
137.5
100.0
143.8
100.0
At the end of 2025 the Group had three possession properties in relation to equity release mortgages (2024: three).
Equity release mortgages denominated in \u20ac
The below analysis shows gross loan balances of equity release mortgage lending excluding fair value adjustments.
\n \n
2025
2025
2024
2024
Loan to value (indexed)
\u20acm
%
\u20acm
%
<70%
4.0
9.5
3.4
8.4
70% - <80%
5.5
13.1
4.9
12.0
80% - <90%
7.6
18.1
5.2
12.8
>90%
24.9
59.3
27.2
66.8
42.0
100.0
40.7
100.0
\n \n
2025
2025
2024
2024
Payment status
\u20acm
%
\u20acm
%
Not past due
42.0
100.0
40.7
100.0
42.0
100.0
40.7
100.0
Legacy lending books
The legacy lending books comprises the following:
\n \n
2025
2025
2024
2024
Restated*
Restated*
Legacy Lending
\u00a3m
%
\u00a3m
%
Commercial property
3.5
1.8
3.9
1.9
Serviced apartments
12.5
6.3
13.9
6.7
Legacy buy-to-let
3.9
2.0
5.8
2.8
Policy loans
0.9
0.5
1.0
0.5
20.8
10.6
24.6
11.9
Purchased credit impaired
4.1
2.1
5.3
2.5
Loans to housing associations
171.3
87.3
179.2
85.6
196.2
100.0
209.1
100.0
*These balances have been re-presented to reclassify \u00a31.9m of gross loan balances, as outlined on page 167.
\n \n
Legacy Lending
2025
2025
2024
2024
Restated*
Restated*
Loan to value (indexed)
\u00a3m
%
\u00a3m
%
<70%
9.0
43.3
12.2
49.6
70% - <80%
6.9
33.1
7.4
30.1
80% - <90%
3.9
18.8
5.0
20.3
>90%
1.0
4.8
-
-
20.8
100.0
24.6
100.0
\n \n
2025
2025
2024
2024
Restated*
Restated*
Payment status
\u00a3m
%
\u00a3m
%
Not past due
19.8
95.2
23.7
96.4
Past due up to 3 months
-
-
0.4
1.6
LPA receivership
1.0
4.8
0.5
2.0
20.8
100.0
24.6
100.0
*These balances have been re-presented to reclassify \u00a31.9m of gross loan balances, as outlined on page 167.
\n \n
2025
2025
2024
2024
Restated*
Restated*
Diversi\ufb01cation by industry type
\u00a3m
%
\u00a3m
%
Hotel / leisure
0.2
1.0
1.3
5.3
Specialist buy-to-let
3.9
18.8
5.8
23.6
Serviced Apartments
12.5
60.0
13.9
56.5
Other
4.2
20.2
3.6
14.6
20.8
100.0
24.6
100.0
*These balances have been re-presented to reclassify \u00a31.9m of gross loan balances, as outlined on page 167.
At 31 December 2025, the Group had \u00a31.0m of legacy lending loans in arrears of 3 months or more (2024: \u00a30.9m). No
loan that would be past due or impaired had their terms renegotiated.
The Group had three legacy loans in possession or subject to LPA receivership at the end of 2025 (2024: two).
The Group did not grant forbearance against any loans secured on property in 2025 (2024: none).
Loans to housing associations
\n \n
2025
2025
2024
2024
Loan to value (indexed)
\u00a3m
%
\u00a3m
%
<70%
82.6
48.2
66.9
37.3
70% - <80%
88.7
51.8
112.3
62.7
171.3
100.0
179.2
100.0
Loans to housing associations are secured on residential property. No housing association loans are past due
or impaired.
Purchased or originated credit impaired loans (POCI)
The below analysis shows the status of the Group\u2019s POCI loans and how they are distributed across loan to value bands.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2025
2025
2024
2024
\u00a0
\u00a3m
%
\u00a3m
%
Gross exposure
7.8
100.0
7.4
100.0
Fair value adjustment
(3.7)
(47.3)
(2.1)
(28.4)
\u00a0
4.1
52.7
5.3
71.6
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2025
2025
2024
2024
Loan to value (indexed)
\u00a3m
%
\u00a3m
%
<70%
1.7
41.5
2.8
52.8
70% - <80%
0.1
2.4
-
-
80% - <90%
1.5
36.6
1.4
26.4
>90%
0.8
19.5
1.1
20.8
\u00a0
4.1
100.0
5.3
100.0
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2025
2025
2024
2024
Payment status
\u00a3m
%
\u00a3m
%
Not past due
1.6
39.0
2.2
41.5
3 to 6 months past due
-
-
0.1
1.9
Over 6 months past due
1.8
43.9
1.8
34.0
In possession / LPA receivership
0.7
17.1
1.2
22.6
\u00a0
4.1
100.0
5.3
100.0
\n
The Group had two POCI loans in possession or subject to LPA receivership at the end of 2025 (2024: two).
POCI loans relate to legacy residential and commercial lending which was acquired credit impaired as part of the
merger with Manchester Building Society.
Geographical split of lending
The table below provides a breakdown of the geographic concentration of the Group\u2019s prime residential and buy-to-let
mortgage portfolios at 31 December 2025. The Group\u2019s mortgage portfolio is diversified across the UK.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Prime
\u00a0 \u00a0 \u00a0
\u00a0
Residential
Buy-to-let
Total
Total
Region
\u00a3m
\u00a3m
\u00a3m
%
North East
494.7
7.5
502.2
9.4
East of England
413.5
39.8
453.3
8.5
East Midlands
351.0
14.4
365.4
6.8
Northern Ireland
1.4
0.1
1.5
-
North West
580.9
21.1
602.0
11.3
Scotland
558.5
7.8
566.3
10.6
South East
668.9
66.8
735.7
13.7
South West
414.3
22.5
436.8
8.2
Wales
168.4
6.5
174.9
3.3
West Midlands
372.3
16.8
389.1
7.3
Yorkshire
422.7
12.0
434.7
8.1
London
539.4
144.8
684.2
12.7
Other
4.2
-
4.2
0.1
Total
4,990.2
360.1
5,350.3
100.00
\n
41. Liquidity risk
Liquidity risk is the risk that the Group has insufficient funds to meet its obligations as they fall due. This risk is managed
on a Group basis (including all subsidiary entities) with day-to-day responsibility delegated to the Group\u2019s Treasury
department with oversight by the Assets and Liabilities Committee, the Group Risk Committee and the Board.
Management of Liquidity risk
The Group ensures it holds sufficient quality and quantity of liquidity to remain liquid after a severe but plausible stress.
In addition, it assesses its liquidity position and risks through an annual Internal Liquidity Adequacy Assessment Process
(ILAAP) in line with regulatory requirements. Cash flow forecasts are used to forecast liquidity, ensuring future
compliance with limits set by the Board. Wherever appropriate, the Group ensures it takes any necessary steps to
ensure it has access to any available Bank of England Schemes designed to support financial institutions.
Liquidity resources
The Group\u2019s liquidity resources include funds in cash accounts held in the Bank of England reserve account and other
easily marketable assets and contingent liquidity. The Group monitors the requirements of the Liquidity Coverage Ratio
(LCR), which measures unencumbered high quality liquid assets as a percentage of net cash outflows over a 30 day
stress period, on a weekly basis for compliance against the regulatory minimum of 100%. At 31 December 2025 the LCR
was 180% (2024: 229%).
Contractual maturity pro\ufb01le of \ufb01nancial assets and liability
The table below analyses the contractual cash flows of financial assets and financial liabilities based on the remaining
contractual life to the maturity date. The contractual maturity will differ to actual payments; for example, most on
demand customer deposits will be repaid later than the earliest date on which repayment can be requested and
mortgages may be repaid ahead of their contractual maturity.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
At 31 December 2025
Repayable on
\u00a0 \u00a0 \u00a0
More than 5
\u00a0
\u00a0
demand
Up to 3 months
3-12 months
1-5 years
years
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Cash and balances with the Bank of England
177.3
-
-
-
-
177.3
Loans and advances to credit institutions
146.2
-
-
-
-
146.2
Debt securities
-
17.5
38.3
744.4
59.0
859.2
Derivative financial instruments
-
0.7
8.1
6.4
1.7
16.9
Loans and advances to customers
-
17.8
17.9
247.5
5,431.0
5,714.2
Other financial assets
-
4.9
-
-
-
4.9
Total \ufb01nancial assets
323.5
40.9
64.3
998.3
5,491.7
6,918.7
Liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Due to Members
5,172.1
167.5
381.5
161.3
0.3
5,882.7
Due to other customers
87.5
47.2
27.1
2.0
-
163.8
Deposits from credit institutions
1.4
40.1
117.4
-
-
158.9
Derivative financial instruments
-
0.1
5.4
21.5
17.5
44.5
Debt securities in issue
-
1.7
-
-
321.7
323.4
Other financial liabilities
-
2.2
0.7
2.6
4.2
9.7
Total financial liabilities
5,261.0
258.8
532.1
187.4
343.7
6,583.0
Net liquidity gap (contractual)
(4,937.5)
(217.9)
(467.8)
810.9
5,148.0
335.7
At 31 December 2024
Repayable on
\u00a0 \u00a0 \u00a0
More than 5
\u00a0
\u00a0
demand
Up to 3 months
3-12 months
1-5 years
years
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Cash and balances with the Bank of England
451.5
-
-
-
-
451.5
Loans and advances to credit institutions
101.8
-
-
-
-
101.8
Debt securities
-
36.1
95.8
426.3
44.1
602.3
Derivative financial instruments
-
0.7
4.2
40.5
11.2
56.6
Loans and advances to customers
-
12.9
45.3
260.3
4,970.8
5,289.3
Other financial assets
-
4.3
0.6
0.3
-
5.2
Total \ufb01nancial assets
553.3
54.0
145.9
727.4
5,026.1
6,506.7
Liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Due to Members
4,728.4
152.7
378.2
173.4
-
5,432.7
Due to other customers
131.7
78.0
30.3
1.0
-
241.0
Deposits from credit institutions
31.0
100.8
285.8
-
-
417.6
Derivative financial instruments
-
0.5
0.7
4.1
24.1
29.4
Other financial liabilities
-
1.8
0.8
3.0
3.4
9.0
Total \ufb01nancial liabilities
4,891.1
333.8
695.8
181.5
27.5
6,129.7
Net liquidity gap (contractual)
(4,337.8)
(279.8)
(549.9)
545.9
4,998.6
377.0
\n
42. Capital Risk
Capital risk is the risk that the Group is or becomes inadequately capitalised to address the risks to which it is exposed.
Management of Capital
The Group\u2019s policy is to maintain a strong capital base to maintain Member, creditor and market confidence and to
sustain the future growth of the Group. The Group has complied with all externally imposed capital requirements and
internally set limits throughout the year.
Day to day capital management is delegated to the Chief Financial Officer with oversight by the Assets and Liabilities
Committee, the Group Risk Committee and the Board.
The Group assesses its capital position and risks regularly. Capital planning is an integrated part of business planning
and capital forecasts and scenario analysis are performed regularly as part of business as usual.
An Internal Capital Adequacy Assessment Process (ICAAP) is produced in line with regulatory requirements. The ICAAP
considers the key capital risks and the amount of capital it should retain. These requirements are assessed against the
current position and throughout any forward planning. The Prudential Regulation Authority sets and monitors capital
requirements for the Group. Capital adequacy is measured by comparing both current and forecast capital resources to
capital requirements.
Capital stress testing is also performed as part of the ICAAP and makes sure that the Group is resilient to a range of
stresses, assessing whether capital requirements would be met under severe but plausible stress scenarios and
considers what mitigating actions are available to management. The Society\u2019s Recovery Plan details management
actions that could be taken in case of unexpected capital shortfalls and stresses. The Recovery Plan is tested and
updated regularly.
For more information on how the Group is meeting its objectives for managing capital, see the capital section of the
Strategic Report and the capital risk section of the Risk Management Report.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00201": { "value": "35. Derivative \ufb01nancial instruments
The Group uses interest rate swaps to hedge against interest rate risk and forward contracts to manage foreign
exchange risk. Offsetting collateral is pledged and received in line with underlying Credit Support Annexes (CSA) with
the Group's financial counterparties. The table below shows the fair value of the Group\u2019s and Society\u2019s derivative
portfolios, and the collateral pledged/received against these.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Group as at 31 December 2025
\u00a0 \u00a0 \u00a0 \u00a0
\u00a0 \u00a0
Master netting
Financial
\u00a0
\u00a0
Gross amount
arrangements
collateral
Net amount
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial assets
\u00a0 \u00a0 \u00a0 \u00a0
Derivative assets
16.9
(12.7)
(1.3)
2.9
Financial liabilities
\u00a0 \u00a0 \u00a0 \u00a0
Derivative liabilities
(44.5)
12.7
28.6
(3.2)
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Group as at 31 December 2024
\u00a0 \u00a0 \u00a0 \u00a0
\u00a0 \u00a0
Master netting
Financial
\u00a0
\u00a0
Gross amount
arrangements
collateral
Net amount
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial assets
\u00a0 \u00a0 \u00a0 \u00a0
Derivative assets
56.6
(18.2)
(29.5)
8.9
Financial liabilities
\u00a0 \u00a0 \u00a0 \u00a0
Derivative liabilities
(29.4)
18.2
10.8
(0.4)
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Society as at 31 December 2025
\u00a0 \u00a0 \u00a0 \u00a0
\u00a0 \u00a0
Master netting
Financial
\u00a0
\u00a0
Gross amount
arrangements
collateral
Net amount
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial assets
\u00a0 \u00a0 \u00a0 \u00a0
Derivative assets
12.7
(12.7)
-
-
Financial liabilities
\u00a0 \u00a0 \u00a0 \u00a0
Derivative liabilities
(40.3)
12.7
25.6
(2.0)
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
Society as at 31 December 2024
\u00a0 \u00a0 \u00a0 \u00a0
\u00a0 \u00a0
Master netting
Financial
\u00a0
\u00a0
Gross amount
arrangements
collateral
Net amount
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Financial assets
\u00a0 \u00a0 \u00a0 \u00a0
Derivative assets
47.9
(18.2)
(29.5)
0.2
Financial liabilities
\u00a0 \u00a0 \u00a0 \u00a0
Derivative liabilities
(29.4)
18.2
10.8
(0.4)
\n
Cash collateral is posted and received on a daily basis to minimise the Group\u2019s and the counterparty\u2019s exposure to
counterparty credit risk. Collateral posted is measured against counterparty mark-to-market values and may not reflect
the Group's internal valuation of its financial instruments.
The Group has entered into International Swaps and Derivatives Association (ISDA) Master agreements with financial
counterparties in line with standard industry practice. Netting agreements contained within are not alone considered
sufficient to satisfy the offsetting criteria of IAS 32. The netting agreements are intended to protect the Group against
fair value loss in the unlikely future event of counterparty default.
The Group has continued to make use of the London Clearing House (LCH), minimising its exposure to non-LCH
counterparties. The protected manner of LCH collateral placements mitigates counterparty credit risk with respect to
collateral that would otherwise be pledged to non-centralised derivative counterparties.
Financial collateral of \u00a363.9m (2024: \u00a368.9m) has been placed with LCH with respect to 'initial margin': an amount
calculated by central counterparties to protect against potential future exposures that could arise from valuation
changes. This is in addition to the 'variation margin', covering LCH's current net exposure to the Group. The Group's
collateral pledged against initial margin requirements is not included in the collateral column above, but it is included in
note 36.
The Group has two one way collateralisation swap agreements as part of the securitisation programmes, the exposure
under these agreements is \u00a31.7m (2024: \u00a38.7m). The remaining under collateralisation of \u00a32.0m (2024: over
collateralisation of \u00a30.9m) relates to initial bilateral margin, changes in the valuation since the last margin call, minimum
transfer amounts and differences between internal valuations used for reporting purposes and counterparty valuations
which collateral is based on.
Where the Group holds multiple financial assets and liabilities with a single counterparty, and a master netting
agreement is in effect, the net fair value exposure for each counterparty is calculated. Net exposures placed with
counterparties are consolidated into the financial asset\u2019s disclosure above, net exposures received from counterparties
are similarly consolidated into the financial liabilities.", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00202": { "value": "36. Encumbered assets
Certain financial assets have been utilised as collateral to support the wholesale funding initiatives of the Group and are
used as security for funding with the Bank of England or other third parties. Alternatively, assets may be used as
collateral in line with Credit Support Annexes relating to derivatives, as detailed in note 35. Assets that are used for such
purposes are classified as encumbered and cannot be used for other purposes.
The following table provides an overview of the Group\u2019s encumbered and unencumbered financial assets.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2025
2024
Group
Encumbered
Unencumbered
Encumbered
Unencumbered
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Cash and balances with the Bank of England
-
177.3
-
451.5
Loans and advances to credit institutions
93.3
52.9
80.9
20.9
Debt securities
140.0
719.2
-
602.3
Loans and advances to customers*
1,283.4
4,430.8
773.3
4,516.0
Derivative financial instruments
-
16.9
-
56.6
Other assets
-
98.1
-
54.7
Total
1,516.7
5,495.2
854.2
5,702.0
\n
*\u00a3791.3m of encumbered loans and advances to customers relate to mortgage assets used as a security in the Group\u2019s securitisation programmes. Loan
notes secured on these mortgage assets totalling \u00a3490.3m (2024: \u00a3190.2m) have been retained by the Group, as outlined in note 14. These notes are not
presented on the Group Balance sheet and are unencumbered; \u00a3396.2m of these loan notes are available as securities to the Group and could be used
as collateral.", "dimensions": { "concept": "nbsr:DisclosureOfEncumberedAssetsExplanatoryTextBlock", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00203": { "value": "37. Hedge accounting
The Group is exposed to interest rate risk across its fixed interest rate financial assets and liabilities.
The Society\u2019s core business is to provide mortgage and savings products to its customers and Members. Deposits by
Members fund the Society\u2019s mortgage lending, with the Society paying an interest charge in return for deposited funds,
while borrowers pay an interest charge to the Society in return for the funds they have borrowed.
Mortgage contracts attracting a fixed rate of interest are typically the most popular of the Society\u2019s mortgage offerings,
with a fixed rate usually agreed for a term of two to five years. By contrast, most of the Society\u2019s deposits are made
under short term agreements, with deposits often repayable \u2018on demand\u2019. This introduces \u2018interest rate risk\u2019 to the
Society\u2019s business, as when market-wide interest rates move, the return received on mortgage assets adjusts more
slowly than the return paid on Member deposits.
To address this risk, the Society enters into interest rate swap agreements with external counterparties. These contracts
protect against interest rate risk by \u2018swapping\u2019 a portion of the Society\u2019s fixed interest rate exposure to a variable rate:
the Society agrees to pay a fixed rate to a financial counterparty for a period of time in exchange for receipt of a variable
interest rate against a notional balance. The resulting variable interest income received matches the Society\u2019s variable
interest expense, locking in interest margin.
Derivative financial instruments, including interest rate swaps, are held at fair value. The fair value changes when market
interest rates change, with this change reflected in the Income Statement. However, most of the fixed rate exposures
that the interest rate swaps are used to hedge are held at amortised cost as required by accounting standards, and thus
their value on the Society\u2019s Balance Sheet does not change in line with market interest rates. The Society applies fair
value hedge accounting and cash flow hedge accounting to address this mismatch. Hedge accounting allows the
Society to post an adjustment for the value change in the hedged risk; and the movement of this adjustment is reflected
in the Income Statement. If the hedge is effective, the adjustment in relation to the swaps\u2019 fair value change and the
hedged risks\u2019 fair value change net off.
The Society also uses swap contracts in order to hedge exposures that are not yet on its Balance Sheet, for example
fixed rate mortgages that have been offered but have not yet completed. To avoid volatility in the Society\u2019s Income
Statement as a result of this hedging activity, the Society utilises cash flow hedge accounting.
Cash flow hedge accounting allows fair value adjustments to derivatives designated in a cash flow hedge to be posted
through Other Comprehensive Income rather than the Income Statement to the extent the hedge is effective. Hedge
effectiveness is measured by comparing the derivative fair value movement to that of a hypothetical derivative
representing the hedged risk. The fair value movement represented in Other Comprehensive Income is restricted to the
cumulative fair value movement of the hypothetical derivative. Hedge ineffectiveness is recognised in the Income
Statement where fair value movements in the hedging instrument exceed those in the hypothetical derivative.
The Society makes use of the following different types of accounting hedges:
\u25a0
The hedged item in a fair value micro hedge is a specific mortgage contract or a specific group of such contracts. It
could also be a specified treasury asset (e.g. a fixed rate gilt) or treasury liability.
\u25a0
The hedged item in a fair value macro hedge is a defined portion of a mortgage or savings book, but this portion is
re-designated on a regular basis to reflect changes in the hedged portfolio, such as mortgage prepayments or new
mortgage contracts.
\u25a0
The hedged item in a cashflow hedge is usually a forecast floating rate liability, such as Term Funding Scheme or
future securitisation funding. This is primarily used to hedge wholesale funding that will economically hedge the
mortgage pipeline and swaps that have been transacted during the month. These swaps are designated into a
macro fair value hedge at the beginning of the month following the drawdown of hedged loans.
The Society enters into derivative contracts for hedging purposes only. However, not all interest rate swaps may be
designated in accounting hedge relationships. This could be the case if the hedged item is held at fair value, and there is
therefore no mismatch to be addressed by hedge accounting, or if the restrictive accounting rules do not allow for a
hedge to be designated or make it impractical to do so.
The Society uses foreign exchange forwards to protect against foreign exchange risk by fixing the exchange rate on a
portion of the Society\u2019s Euro exposure. These foreign exchange forwards are not designated in accounting hedge
relationships. There is no mismatch to be addressed by hedge accounting as the Society\u2019s euro-denominated equity
release book is held at fair value.
Maturity analysis of hedging instruments
The maturity profile of the Group\u2019s hedging instruments at 31 December 2025 is as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0\u00a0
Between 3 and
Between 1 and
\u00a0\u00a0
\u00a0
Up to 3 months
12 months
5 years
Over 5 years
Total
Interest rate swaps designated in macro fair value hedge relationships
\u00a0\u00a0\u00a0\u00a0\u00a0
Nominal amount
-
1,354.5
2,786.0
56.8
4,197.3
Average fixed interest rate
-
3.56%
3.66%
3.68%
3.63%
Fair value of assets
-
4.1
6.2
0.3
10.6
Fair value of liabilities
-
(2.3)
(18.9)
(0.3)
(21.5)
Interest rate swaps designated in cash\ufb02ow hedge relationships
\u00a0\u00a0\u00a0\u00a0\u00a0
Nominal amount
-
-
182.5
76.3
258.8
Average fixed interest rate
-
-
3.51%
3.63%
3.54%
Fair value of assets
-
-
-
0.2
0.2
Fair value of liabilities
-
-
(0.3)
(0.2)
(0.5)
Interest rate swaps designated in micro fair value hedge relationships
\u00a0\u00a0\u00a0\u00a0\u00a0
Nominal amount
5.0
12.5
286.7
131.1
435.3
Average fixed interest rate
3.85%
1.71%
3.76%
4.23%
3.84%
Fair value of assets
-
0.3
0.1
-
0.4
Fair value of liabilities
-
-
(2.4)
(4.5)
(6.9)
Interest rate swaps utilised in securitisations
\u00a0\u00a0\u00a0\u00a0\u00a0
Nominal amount
-
137.4
-
616.9
754.3
Average fixed interest rate
-
1.54%
-
4.53%
3.99%
Nominal liability amount
-
137.4
-
616.9
754.3
Average fixed interest rate
-
1.49%
-
4.51%
3.96%
Fair value of assets
-
3.0
-
1.2
4.2
Fair value of liabilities
-
(3.0)
-
(1.2)
(4.2)
Interest rate swaps in economic hedge relationships but not designated in accounting hedge relationships
\u00a0\u00a0\u00a0\u00a0\u00a0
Nominal amount
346.4
805.0
146.5
163.2
1,461.1
Average fixed interest rate
3.80%
3.95%
3.53%
4.83%
3.97%
Fair value of assets
0.7
0.8
-
-
1.5
Fair value of liabilities
-
(0.1)
-
(11.2)
(11.3)
Total interest rate swaps
\u00a0\u00a0\u00a0\u00a0\u00a0
Nominal amount
351.4
2,446.8
3,401.7
1,661.2
7,861.1
Average \ufb01xed interest rate
1.53%
2.15%
2.89%
4.18%
3.79%
Fair value of assets
0.7
8.2
6.3
1.7
16.9
Fair value of liabilities
-
(5.4)
(21.6)
(17.4)
(44.4)
Foreign exchange forwards in economic hedge relationships but not designated in accounting hedge relationships
\u00a0\u00a0\u00a0\u00a0\u00a0
Nominal amount
9.9
15.1
-
-
25.0
Average GBP/EUR exchange rate
1.155
1.138
-
-
1.145
Fair value of assets
-
-
-
-
-
Fair value of liabilities
(0.1)
-
-
-
(0.1)
The maturity profile of the Group\u2019s hedging instruments at 31 December 2024 is as follows:
\n \n
Between 3 and
Between 1 and
Up to 3 months
12 months
5 years
Over 5 years
Total
Interest rate swaps designated in macro fair value hedge relationships
Nominal amount
-
827.9
2,051.6
28.0
2,907.5
Average fixed interest rate
-
4.26%
3.42%
3.63%
3.66%
Fair value of assets
-
3.7
36.6
0.8
41.1
Fair value of liabilities
-
(0.6)
(4.0)
(0.1)
(4.7)
Interest rate swaps designated in cash\ufb02ow hedge relationships
Nominal amount
-
-
191.0
106.5
297.5
Average fixed interest rate
-
-
3.77%
3.73%
3.75%
Fair value of assets
-
-
1.7
1.3
3.0
Fair value of liabilities
-
-
-
-
-
Interest rate swaps designated in micro fair value hedge relationships
Nominal amount
-
47.9
172.9
136.7
357.5
Average fixed interest rate
-
3.16%
3.70%
4.25%
3.84%
Fair value of assets
-
0.4
1.8
0.4
2.6
Fair value of liabilities
-
-
(0.2)
(3.8)
(4.0)
Interest rate swaps utilised in securitisations
Nominal amount
-
-
-
162.1
162.1
Average fixed interest rate
-
-
-
1.54%
1.54%
Nominal liability amount
-
-
-
162.1
162.1
Average fixed interest rate
-
-
-
1.49%
1.49%
Fair value of assets
-
-
-
8.7
8.7
Fair value of liabilities
-
-
-
(8.8)
(8.8)
Interest rate swaps in economic hedge relationships but not designated in accounting hedge relationships
Nominal amount
287.5
60.0
208.5
175.5
731.5
Average fixed interest rate
4.80%
4.56%
4.21%
4.80%
4.61%
Fair value of assets
0.4
-
0.3
0.1
0.8
Fair value of liabilities
(0.5)
-
-
(11.4)
(11.9)
Total interest rate swaps
Nominal amount
287.5
935.8
2,624.0
770.9
4,618.2
Average fixed interest rate
0.96%
2.39%
3.02%
3.59%
3.48%
Fair value of assets
0.4
4.1
40.4
11.3
56.2
Fair value of liabilities
(0.5)
(0.6)
(4.2)
(24.1)
(29.4)
Foreign exchange forwards in economic hedge relationships but not designated in accounting hedge relationships
Nominal amount
11.1
16.6
-
-
27.7
Average GBP / EUR exchange rate
1.17
1.19
-
-
1.2
Fair value of assets
0.3
0.1
-
-
0.4
Fair value of liabilities
-
-
-
-
-
Swap assets and liabilities are held at their fair value on Balance Sheet as derivative financial instruments.
Summary of hedged items in designated hedge relationships
\n \n
Fair value hedges
2025
2024
Carrying amount of
Accumulated
Change in fair
Carrying amount of
Accumulated
Change in fair
Interest rate risk
hedged items
amount of
value of hedged
hedged items
amount of
value of hedged
fair value
items in the
fair value
items in the
adjustments
year used for
adjustments
year used for
on the hedged
ine\ufb00ectiveness
on the hedged
ine\ufb00ectiveness
Assets
Liabilities
item
measurement
Assets
Liabilities
item
measurement
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Fixed rate mortgages
3,417.1
-
16.6
37.8
2,289.6
-
(21.9)
(11.5)
Fixed rate customer
deposits
-
766.1
(1.6)
(1.6)
-
716.3
-
-
Fixed rate customer
loans individually
109.3
-
2.9
0.7
118.0
-
2.2
(7.1)
hedged
Fixed rate FVOCI debt
instruments
372.5
-
2.0
3.6
239.3
-
(1.6)
(3.7)
\n \n
Cash \ufb02ow hedges
2025
2024
Interest rate risk
Change in fair
Cash flow hedge reserve
Change in fair
Cash \ufb02ow hedge reserve
value of hedged
value of hedged
item in the year
item in the year
used for hedge
used for hedge
ine\ufb00ectiveness
Discontined
ine\ufb00ectiveness
Discontined
measurement
Continuing hedges
hedges
measurement
Continuing hedges
hedges
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Gross floating rate
liabilities*
3.8
(0.3)
0.6
(7.1)
2.3
4.6
\n \n
Cash \ufb02ow hedges
2025
2024
Interest rate risk
Reclassified to Income
E\ufb00ective
Reclassi\ufb01ed to Income
Hedge
E\ufb00ective portion
Statement
Hedge
portion
Statement
ine\ufb00ectivness
recognised
ine\ufb00ectivness
recognised
recognised
in other
Net
Non-
recognised
in other
Non-
in Income
comprehensive
interest
interest
in Income
comprehensive
Net interest
interest
Statement
income
income
income
Statement
income
income
income
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Gross floating rate
liabilities*
-
(3.8)
-
2.7
-
7.1
-
2.1
* Highly probable future cash flows arising from loans and advances to customers
Hedge ine\ufb00ectiveness
By design, the Society\u2019s hedges are expected to be economically effective, with notional balances, durations and rates
on interest rate swaps agreed only where they are expected to be a good fit to the same characteristics of the
underlying assets that are to be hedged. Hedge ineffectiveness can nonetheless arise from early asset repayments,
imperfectly matched key terms, differences in the timing of cash flows of hedged items and hedging instruments,
different interest rate curves applied to discount the hedged items and hedging instruments and the effect of changes
in counterparties\u2019 credit risk on the fair values of hedging instruments. The table below provides details of the hedge
ineffectiveness during the year.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
(Losses) / gains on micro hedging accounting
\u00a0 \u00a0
Interest rate swaps
(4.6)
10.6
Mortgage assets (loans and advances to customers)
4.3
(10.8)
(Losses) / gains on cash\ufb02ow hedge accounting
\u00a0 \u00a0
Interest rate swaps
(3.8)
7.1
Floating rate liabilities
6.5
(5.0)
(Losses) / gains on macro hedging accounting
\u00a0 \u00a0
Interest rate swaps
(40.7)
6.7
Fair value adjustment for hedged risk on mortgages and savings
36.2
(11.5)
Total ine\ufb00ectiveness recognised in the Income Statement
(2.1)
(2.9)
\n
Hedging gains and losses are recognised in the Income Statement within 'gains less losses on financial instruments and
hedge accounting\u2019. There were no unexpected sources of hedge ineffectiveness during the year.
Fair value gains less losses on \ufb01nancial instruments and hedge accounting recognised in the
income statement
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Group
Society
\u00a0
2025
2024
2025
2024
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Fair value movement on loans and advances to customers held at FVTPL
(1.3)
(5.8)
(1.3)
(5.8)
Fair value movement on derivative financial instruments in economic
\u00a0 \u00a0 \u00a0 \u00a0
relationship with loans and advances to customers held at FVTPL but not in
(0.6)
10.7
(0.6)
10.7
accounting hedge relationships
\u00a0 \u00a0 \u00a0 \u00a0
Interest expense on derivative financial instruments in economic relationship
\u00a0 \u00a0 \u00a0 \u00a0
with loans and advances to customers held at FVTPL but not in accounting
(1.3)
-
(1.3)
-
hedge relationships
\u00a0 \u00a0 \u00a0 \u00a0
Fair value movement on derivative financial instruments in other economic but
(1.1)
3.3
(2.6)
3.3
not in accounting hedge relationships
\u00a0 \u00a0 \u00a0 \u00a0
Hedge ineffectiveness on accounting hedges
(2.1)
(2.9)
(2.1)
(2.9)
Revaluation of investments
(0.1)
(0.4)
-
-
Fair value gains less losses on \ufb01nancial instruments and hedge accounting
(6.5)
4.9
(7.9)
5.3
\n
Cash \ufb02ow hedging reserve
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Group and Society
\u00a0
2025
2024
\u00a0
\u00a3m
\u00a3m
Balance at 1 January
5.1
1.4
Reclassification of hedging losses to Income Statement
(2.0)
(2.1)
Reclassification of hedging gains to income statement for which the hedged future cashflows are no longer
\u00a0 \u00a0
expected to occur
(0.7)
-
Fair value changes recognised in equity
(3.8)
7.1
Deferred tax on cash flow hedges
1.6
(1.3)
Balance at 31 December
0.2
5.1
\nAll transactions and balances included within the cash flow hedging reserve are related to interest rate swaps.", "dimensions": { "concept": "ifrs-full:DisclosureOfHedgeAccountingExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00206": { "value": "38. Credit risk: Impairment methodologies
Credit risk is the risk that a customer or counterparty is unable to honour their repayment of obligations as they fall due.
The credit risk to which the Group is exposed is described in the Risk Management Report.
The Group\u2019s policy with respect to accounting for impairment of financial assets is given in Note 1. This note describes
the practical application of this policy.
The Group Risk Committee maintain oversight of the Credit Risk Committee. The Credit Risk Committee is responsible
for the monitoring of the Group\u2019s exposure to credit risk. Model Risk Committee is charged with oversight of the Group\u2019s
IFRS 9 models and assessment and approval of its key model inputs.
Credit risk mainly arises from commercial and customer loans and advances and loan commitments arising from lending
activities but also arises from the Group's investment in debt securities and exposure to third party (financial and
non-financial) debtors.
Provisioning methodology
The Group monitors its lending in two tranches, Prime residential and buy-to-let lending which is in line with current
lending policies and legacy lending which includes lending to housing associations, credit impaired lending, other
commercial and legacy books.
Impairment calculation
The Group calculates for each mortgage exposure a forward view as to how likely that mortgage is to default at some
point over its expected life. For stage 1 assets, the Group provides for losses resulting from events that may occur in the
following 12 months. For stage 2 and stage 3 assets, the Group provides for losses that may occur at any time in the life
of the mortgage.
12 months and lifetime expected credit losses are calculated by the Group as the discrete losses that would likely be
incurred (considering mortgage exposure against the expected sale value of the mortgaged property) if a mortgage
defaulted on any of a large range of future dates. Each discrete provision needs to be assigned a probability of default
weighting in order to calculate one overall lifetime expected credit loss. As such, a continuous forward view to the
probability of default is calculated.
Prime residential and buy-to-let
Key impairment model inputs, assumptions and estimation techniques
The Group calculates its probability of default (PD) as follows:
\u25a0
The Group has undertaken a detailed assessment of more than 12 years of its internal credit risk data to determine
the core factors that lead to borrower default.
\u25a0
Default indicators identified include granting of forbearance, evidence of mortgage fraud, borrowers falling into
more than 3 months arrears, borrower insolvency or bankruptcy and voluntary repossession of property. These are
used in the staging assessment above to assist in the classification of borrowers as stage 1, stage 2 or stage 3.
\u25a0
The Group\u2019s assessment also considers wider patterns of default, analysing historic borrower defaults by their
maturity (how long a mortgage had been held by the Group), vintage (during which original time period the Group
lent to a borrower) and considering exogenous factors in play at the time of default (external factors including the
interest rate environment, unemployment rates, UK (nominal) GDP and house price index).
\u25a0
The exogenous, maturity and vintage (EMV) factors are used to derive point in time and forward-looking probability
of default curves: projecting historical information about defaults suffered under known \u2018EMV conditions\u2019 forward in
combination with the Group forward views on the wider macroeconomic environment (as this will influence the
forward view on how exogenous factors may develop over time). In combination, these curves form the Group\u2019s
forward-looking probability of default curve, as calculated under the EMV model.
The Group calculates its exposure at default (EAD) as follows:
\u25a0
The Group projects mortgage balances forward to give an estimate of each borrower\u2019s mortgage balance over
time. This factors in forecast interest additions and expected borrower payments alongside an estimate of the value
of each borrower\u2019s property collateral throughout a long-term forecast. An adjustment is made to uplift the Group\u2019s
exposure to borrowers to simulate a typical borrower default of 3 missed monthly payments plus typical fees
associated with arrears.
\u25a0
The output is a per-mortgage forward projection of mortgage balances.
The Group calculates its expected loss given default (LGD) as follows:
\u25a0
The Group calculates a per-mortgage LGD, an estimate of the proportion of each mortgage loan exposure that is
believed to be at risk if the borrower defaults on their obligation to repay the outstanding capital and interest and
the property is subsequently possessed and sold.
\u25a0
LGD is calculated as the probability of possession given the default of a borrower (PPD) which estimates the
likelihood of possession following default multiplied by the expected shortfall on each mortgage: an estimation of
the difference between the exposure at default (as discussed above) and the sale price of the property, net of
relevant sales costs.
The Group calculates expected credit loss provisions as PD * EAD * LGD:
\u25a0
The Group calculates a final provision for each mortgage as the probability of default multiplied by the amount the
Group expects to lose in the event of a default.
\u25a0
As discussed above, this is not static or a point in time loss: the Group calculates PD, EAD and LGD across a
continuous forward planning horizon. The final provision number is not a singular PD*EAD*LGD, it reflects the
discounted overall expected loss that could be incurred over the life of each mortgage: a weighted average of
multiple possible future loss events.
Multiple economic scenarios
IFRS 9 expects more than one scenario to be considered when calculating expected credit losses. The Group applies
this principle by assessing the provisions required under four separate macroeconomic forecasts. These
macroeconomic forecasts feed into the exogenous component of the Group\u2019s EMV models.
The Group runs:
\u25a0
Base scenario: uses as a reference the average HM Treasury short term forecast for the UK economy for the first 2
years and then the medium term forecasts for 2026 onwards.
\u25a0
Upside scenario: uses as a reference the most positive HM Treasury short and medium term forecasts for the
UK economy.
\u25a0
Downside scenario: uses the most negative short and medium term HM treasury forecasts.
\u25a0
Stress scenario: a severely negative scenario, developed with reference to the Bank of England\u2019s annual concurrent
stress test scenarios for the largest UK banks and building societies.
The Group\u2019s final expected credit losses are the losses calculated under each discrete scenario, multiplied by a
likelihood factor, or scenario weighting. The weightings at 31 December 2025 were as follows:
\n \n
Scenario weightings
Upside
Base
Downside
Stress
2025
10%
40%
40%
10%
2024
10%
40%
40%
10%
Key macroeconomic information
The Group considers the following to be the key macroeconomic and forward view inputs to its impairment models:
\u25a0
UK unemployment rate
\u25a0
UK house price index
\u25a0
UK household income
\u25a0
Bank of England base rate
\u25a0
UK nominal gross domestic product
The Group\u2019s assessments as to which variables are key has not changed in the current year. Quarterly updates to the
variables themselves to reflect the most recent market information have been reflected in the Group\u2019s
impairment results.
Changes to Economic scenarios
Against the uncertainty in the UK economy, the Group have developed new economic scenarios for the credit loss
provision model, using the most recent industry data, forecasts and benchmarks available at the time of development.
The Group\u2019s IFRS 9 model is most sensitive to forecasted house price growth and unemployment, which are
summarised below.
\n \n
31 December 2025
Scenario
Economic measure
2025
2026
2027
2028
2029
2030
Upside
Unemployment rate, %
4.6
4.1
3.7
3.6
3.6
3.9
House price growth, % pa
3.6
3.6
5.5
7.6
6.5
6.7
Base
Unemployment rate, %
4.7
5.0
4.9
4.8
4.7
4.7
House price growth, % pa
3.0
1.7
2.6
3.1
3.8
3.0
Downside
Unemployment rate, %
5.3
6.3
6.8
6.7
6.4
6.5
House price growth, % pa
-
(5.2)
(1.8)
1.9
7.0
2.7
Severe downside
Unemployment rate, %
6.0
6.7
7.4
7.3
7.0
7.0
House price growth, % pa
(1.2)
(8.5)
(4.8)
(0.4)
7.3
1.1
Weighted*
Unemployment rate, %
5.1
5.6
5.8
5.7
5.5
5.6
House price growth, % pa
1.5
(1.9)
0.4
2.7
5.7
3.0
\n \n
31 December 2024
Scenario
Economic measure
2024
2025
2026
2027
2028
2029
Upside
Unemployment rate, %
4.2
3.5
3.1
3.0
3.1
3.1
House price growth, % pa
2.2
4.2
4.2
4.4
4.1
4.1
Base
Unemployment rate, %
4.2
4.4
4.4
4.3
4.1
4.1
House price growth, % pa
1.7
2.3
2.0
2.6
2.7
2.7
Downside
Unemployment rate, %
4.5
6.4
6.9
6.6
6.3
6.3
House price growth, % pa
1.7
(3.3)
(7.1)
(3.6)
3.5
3.5
Severe downside
Unemployment rate, %
4.5
7.9
9.7
8.2
7.4
7.4
House price growth, % pa
(0.4)
(12.6)
(11.5)
(2.5)
2.7
2.7
Weighted*
Unemployment rate, %
4.4
5.4
5.8
5.5
5.2
5.2
House price growth, % pa
1.5
(1.2)
(2.7)
(0.2)
3.1
3.1
*Expected credit losses are calculated for each loan in each scenario and then probability weighted, so the weighted figure presented above is for
illustrative purposes only.
Post model adjustments
The Group recognises post model adjustments when it identifies risks which are not addressed by its core impairment
model. Emerging risks are regularly considered by the Group Risk Committee and if necessary, a post model adjustment
is recognised. During the year post model adjustments in relation to fire safety and cladding risk and affordability were
removed; the risks associated with these matters do not materially increase the risk of losses (2024: \u00a30.3m and
\u00a30.6m, respectively).
Climate change
There have been no observed climate change related defaults and therefore no identifiable increases in credit risk. A
post model adjustment of \u00a30.2m (2024: \u00a30.1m) has been recognised for the risk of losses from reduction in property
values that are most at risk due to climate change.
Commercial and other legacy books
Commercial and other legacy books are managed by the commercial lending department and includes properties
secured on commercial property, buy-to-let customers which would now be outside of the Group\u2019s lending policy and
loans secured on serviced apartments.
Impairment calculation and key impairment model inputs
The calculation used to determine the provisions for legacy mortgage contracts is similar to that used for the prime
residential book. Provisions are determined as probability of default (PD) * exposure at default (EAD) * loss given default
(LGD). Please see explanations of each of these terms above.
The main difference between the prime residential and the legacy books consists in the way model inputs are
determined. Due to the nature and the small size of the legacy books, the most significant model inputs are determined
manually on a mortgage-by-mortgage basis or for small groups of mortgages.
For each mortgage contract, the Group applies its specific knowledge of the customer and the property on an
individual basis, as well as its understanding of the sector to determine a forward view as to how likely that mortgage is
to default at some point over its expected life for stage 2 mortgages, or due to events occurring in the following 12
months in the case of stage 1 accounts.
Loss given default is calculated based on a sector specific discount to the property\u2019s current indexed valuation. The
discount reflects management\u2019s confidence about the sector\u2019s prospects in the current and projected future
economic environment. The valuation takes into account the individual property\u2019s circumstance and the local
market conditions.
Economic scenarios
The provisions booked in respect of legacy books are based on four economic scenarios, consistent with those
scenarios used for residential provisioning.
The impairment provision is most sensitive to the borrower specific probability of default and the sector or property
specific discount to indexed valuations at the time of disposal.
Future legacy property prices are highly uncertain and depend on the future prosperity of the UK in general, the
individual sector the property can be used for, local economic conditions, the remaining duration of the current lease
agreement, and the strength of the current tenant.
For loans secured on legacy lending properties, the following (increases) / reductions to valuations were applied:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
31 December 2025
Sector
Upside
Base
Downside
Stress
Retail
10%
20%
30%
60%
Leisure
40%
50%
55%
65%
Residential
0%
0%
7-10%
14-17%
Serviced apartments
(6%)
15%
30%
60%
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
31 December 2024
Sector
Upside
Base
Downside
Stress
Retail
10%
20%
30%
60%
Leisure
40%
50%
55%
65%
Residential
1%
1%
14-17%
27-29%
Serviced apartments
(6%)
15%
30%
60%
\n
Housing associations
Loans to housing associations are monitored with a range of management information used to assess the Group\u2019s
ongoing exposure (which, while of extremely high credit quality remains of significant size). An open dialogue is
maintained with borrowers, with the Group appraised of their status, financial results and position, and numerous other
financial and risk metrics. Lending is contingent on compliance with a number of financial commitments and covenants.
The Group actively monitors for potential breaches of contractual positions.
Housing associations are historically a nil loss, nil default sector and are widely considered to be Government backed in
the case of financial stress. Housing association exposures have proven to be of the lowest credit risk throughout a
volatile and extended recession period. The Group has no internal history of loss to draw on with respect to housing
association exposures and cannot supplement its own data with loss data of its peers.
The combined effect of a well collateralised set of exposures, in an environment where the demand for housing is only
increasing, with no history of default on the part of any borrower and a sincere expectation that any theoretical default
would be addressed by the jurisdictional Government, leads to a conclusion that no material impairment of housing
association exposures is plausibly expected.
Purchased or originated credit impaired (POCI)
It is not the Group\u2019s practice to acquire or originate POCI assets, the POCI assets held arose on the transfer of
engagement from Manchester Building Society in 2023.
Debt securities
The Group monitors the external credit ratings applied to its debt security investments on a daily basis.
The Group\u2019s debt security holdings are all of investment grade or higher. The Group has therefore assessed that the
credit risk on its debt security exposures has not increased significantly since initial recognition.
The Treasury Risk department runs very severe annual stressed scenarios over the residential mortgage backed
securities (RMBS). The Group\u2019s policy to allow only investment grade and senior secured exposures leaves the Group
highly insensitive to stressed scenarios as the waterfall structure of RMBS payments ensures continued receipt of
contractual cash flows even through significantly stressed scenarios.
The Group\u2019s covered bond exposures are similarly resilient: the Group is only exposed to regulated UK covered bonds
with the regulations providing for the full segregation of covered bond asset pools from the bond issuer. The regulations
introduce numerous investor protections including mandatory over-collateralisation, an extensive initial application
process and regular regulatory stress testing and supervisory monitoring.", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00205": { "value": "38. Credit risk: Impairment methodologies
Credit risk is the risk that a customer or counterparty is unable to honour their repayment of obligations as they fall due.
The credit risk to which the Group is exposed is described in the Risk Management Report.
The Group\u2019s policy with respect to accounting for impairment of financial assets is given in Note 1. This note describes
the practical application of this policy.
The Group Risk Committee maintain oversight of the Credit Risk Committee. The Credit Risk Committee is responsible
for the monitoring of the Group\u2019s exposure to credit risk. Model Risk Committee is charged with oversight of the Group\u2019s
IFRS 9 models and assessment and approval of its key model inputs.
Credit risk mainly arises from commercial and customer loans and advances and loan commitments arising from lending
activities but also arises from the Group's investment in debt securities and exposure to third party (financial and
non-financial) debtors.
Provisioning methodology
The Group monitors its lending in two tranches, Prime residential and buy-to-let lending which is in line with current
lending policies and legacy lending which includes lending to housing associations, credit impaired lending, other
commercial and legacy books.
Impairment calculation
The Group calculates for each mortgage exposure a forward view as to how likely that mortgage is to default at some
point over its expected life. For stage 1 assets, the Group provides for losses resulting from events that may occur in the
following 12 months. For stage 2 and stage 3 assets, the Group provides for losses that may occur at any time in the life
of the mortgage.
12 months and lifetime expected credit losses are calculated by the Group as the discrete losses that would likely be
incurred (considering mortgage exposure against the expected sale value of the mortgaged property) if a mortgage
defaulted on any of a large range of future dates. Each discrete provision needs to be assigned a probability of default
weighting in order to calculate one overall lifetime expected credit loss. As such, a continuous forward view to the
probability of default is calculated.
Prime residential and buy-to-let
Key impairment model inputs, assumptions and estimation techniques
The Group calculates its probability of default (PD) as follows:
\u25a0
The Group has undertaken a detailed assessment of more than 12 years of its internal credit risk data to determine
the core factors that lead to borrower default.
\u25a0
Default indicators identified include granting of forbearance, evidence of mortgage fraud, borrowers falling into
more than 3 months arrears, borrower insolvency or bankruptcy and voluntary repossession of property. These are
used in the staging assessment above to assist in the classification of borrowers as stage 1, stage 2 or stage 3.
\u25a0
The Group\u2019s assessment also considers wider patterns of default, analysing historic borrower defaults by their
maturity (how long a mortgage had been held by the Group), vintage (during which original time period the Group
lent to a borrower) and considering exogenous factors in play at the time of default (external factors including the
interest rate environment, unemployment rates, UK (nominal) GDP and house price index).
\u25a0
The exogenous, maturity and vintage (EMV) factors are used to derive point in time and forward-looking probability
of default curves: projecting historical information about defaults suffered under known \u2018EMV conditions\u2019 forward in
combination with the Group forward views on the wider macroeconomic environment (as this will influence the
forward view on how exogenous factors may develop over time). In combination, these curves form the Group\u2019s
forward-looking probability of default curve, as calculated under the EMV model.
The Group calculates its exposure at default (EAD) as follows:
\u25a0
The Group projects mortgage balances forward to give an estimate of each borrower\u2019s mortgage balance over
time. This factors in forecast interest additions and expected borrower payments alongside an estimate of the value
of each borrower\u2019s property collateral throughout a long-term forecast. An adjustment is made to uplift the Group\u2019s
exposure to borrowers to simulate a typical borrower default of 3 missed monthly payments plus typical fees
associated with arrears.
\u25a0
The output is a per-mortgage forward projection of mortgage balances.
The Group calculates its expected loss given default (LGD) as follows:
\u25a0
The Group calculates a per-mortgage LGD, an estimate of the proportion of each mortgage loan exposure that is
believed to be at risk if the borrower defaults on their obligation to repay the outstanding capital and interest and
the property is subsequently possessed and sold.
\u25a0
LGD is calculated as the probability of possession given the default of a borrower (PPD) which estimates the
likelihood of possession following default multiplied by the expected shortfall on each mortgage: an estimation of
the difference between the exposure at default (as discussed above) and the sale price of the property, net of
relevant sales costs.
The Group calculates expected credit loss provisions as PD * EAD * LGD:
\u25a0
The Group calculates a final provision for each mortgage as the probability of default multiplied by the amount the
Group expects to lose in the event of a default.
\u25a0
As discussed above, this is not static or a point in time loss: the Group calculates PD, EAD and LGD across a
continuous forward planning horizon. The final provision number is not a singular PD*EAD*LGD, it reflects the
discounted overall expected loss that could be incurred over the life of each mortgage: a weighted average of
multiple possible future loss events.
Multiple economic scenarios
IFRS 9 expects more than one scenario to be considered when calculating expected credit losses. The Group applies
this principle by assessing the provisions required under four separate macroeconomic forecasts. These
macroeconomic forecasts feed into the exogenous component of the Group\u2019s EMV models.
The Group runs:
\u25a0
Base scenario: uses as a reference the average HM Treasury short term forecast for the UK economy for the first 2
years and then the medium term forecasts for 2026 onwards.
\u25a0
Upside scenario: uses as a reference the most positive HM Treasury short and medium term forecasts for the
UK economy.
\u25a0
Downside scenario: uses the most negative short and medium term HM treasury forecasts.
\u25a0
Stress scenario: a severely negative scenario, developed with reference to the Bank of England\u2019s annual concurrent
stress test scenarios for the largest UK banks and building societies.
The Group\u2019s final expected credit losses are the losses calculated under each discrete scenario, multiplied by a
likelihood factor, or scenario weighting. The weightings at 31 December 2025 were as follows:
\n \n
Scenario weightings
Upside
Base
Downside
Stress
2025
10%
40%
40%
10%
2024
10%
40%
40%
10%
Key macroeconomic information
The Group considers the following to be the key macroeconomic and forward view inputs to its impairment models:
\u25a0
UK unemployment rate
\u25a0
UK house price index
\u25a0
UK household income
\u25a0
Bank of England base rate
\u25a0
UK nominal gross domestic product
The Group\u2019s assessments as to which variables are key has not changed in the current year. Quarterly updates to the
variables themselves to reflect the most recent market information have been reflected in the Group\u2019s
impairment results.
Changes to Economic scenarios
Against the uncertainty in the UK economy, the Group have developed new economic scenarios for the credit loss
provision model, using the most recent industry data, forecasts and benchmarks available at the time of development.
The Group\u2019s IFRS 9 model is most sensitive to forecasted house price growth and unemployment, which are
summarised below.
\n \n
31 December 2025
Scenario
Economic measure
2025
2026
2027
2028
2029
2030
Upside
Unemployment rate, %
4.6
4.1
3.7
3.6
3.6
3.9
House price growth, % pa
3.6
3.6
5.5
7.6
6.5
6.7
Base
Unemployment rate, %
4.7
5.0
4.9
4.8
4.7
4.7
House price growth, % pa
3.0
1.7
2.6
3.1
3.8
3.0
Downside
Unemployment rate, %
5.3
6.3
6.8
6.7
6.4
6.5
House price growth, % pa
-
(5.2)
(1.8)
1.9
7.0
2.7
Severe downside
Unemployment rate, %
6.0
6.7
7.4
7.3
7.0
7.0
House price growth, % pa
(1.2)
(8.5)
(4.8)
(0.4)
7.3
1.1
Weighted*
Unemployment rate, %
5.1
5.6
5.8
5.7
5.5
5.6
House price growth, % pa
1.5
(1.9)
0.4
2.7
5.7
3.0
\n \n
31 December 2024
Scenario
Economic measure
2024
2025
2026
2027
2028
2029
Upside
Unemployment rate, %
4.2
3.5
3.1
3.0
3.1
3.1
House price growth, % pa
2.2
4.2
4.2
4.4
4.1
4.1
Base
Unemployment rate, %
4.2
4.4
4.4
4.3
4.1
4.1
House price growth, % pa
1.7
2.3
2.0
2.6
2.7
2.7
Downside
Unemployment rate, %
4.5
6.4
6.9
6.6
6.3
6.3
House price growth, % pa
1.7
(3.3)
(7.1)
(3.6)
3.5
3.5
Severe downside
Unemployment rate, %
4.5
7.9
9.7
8.2
7.4
7.4
House price growth, % pa
(0.4)
(12.6)
(11.5)
(2.5)
2.7
2.7
Weighted*
Unemployment rate, %
4.4
5.4
5.8
5.5
5.2
5.2
House price growth, % pa
1.5
(1.2)
(2.7)
(0.2)
3.1
3.1
*Expected credit losses are calculated for each loan in each scenario and then probability weighted, so the weighted figure presented above is for
illustrative purposes only.
Post model adjustments
The Group recognises post model adjustments when it identifies risks which are not addressed by its core impairment
model. Emerging risks are regularly considered by the Group Risk Committee and if necessary, a post model adjustment
is recognised. During the year post model adjustments in relation to fire safety and cladding risk and affordability were
removed; the risks associated with these matters do not materially increase the risk of losses (2024: \u00a30.3m and
\u00a30.6m, respectively).
Climate change
There have been no observed climate change related defaults and therefore no identifiable increases in credit risk. A
post model adjustment of \u00a30.2m (2024: \u00a30.1m) has been recognised for the risk of losses from reduction in property
values that are most at risk due to climate change.
Commercial and other legacy books
Commercial and other legacy books are managed by the commercial lending department and includes properties
secured on commercial property, buy-to-let customers which would now be outside of the Group\u2019s lending policy and
loans secured on serviced apartments.
Impairment calculation and key impairment model inputs
The calculation used to determine the provisions for legacy mortgage contracts is similar to that used for the prime
residential book. Provisions are determined as probability of default (PD) * exposure at default (EAD) * loss given default
(LGD). Please see explanations of each of these terms above.
The main difference between the prime residential and the legacy books consists in the way model inputs are
determined. Due to the nature and the small size of the legacy books, the most significant model inputs are determined
manually on a mortgage-by-mortgage basis or for small groups of mortgages.
For each mortgage contract, the Group applies its specific knowledge of the customer and the property on an
individual basis, as well as its understanding of the sector to determine a forward view as to how likely that mortgage is
to default at some point over its expected life for stage 2 mortgages, or due to events occurring in the following 12
months in the case of stage 1 accounts.
Loss given default is calculated based on a sector specific discount to the property\u2019s current indexed valuation. The
discount reflects management\u2019s confidence about the sector\u2019s prospects in the current and projected future
economic environment. The valuation takes into account the individual property\u2019s circumstance and the local
market conditions.
Economic scenarios
The provisions booked in respect of legacy books are based on four economic scenarios, consistent with those
scenarios used for residential provisioning.
The impairment provision is most sensitive to the borrower specific probability of default and the sector or property
specific discount to indexed valuations at the time of disposal.
Future legacy property prices are highly uncertain and depend on the future prosperity of the UK in general, the
individual sector the property can be used for, local economic conditions, the remaining duration of the current lease
agreement, and the strength of the current tenant.
For loans secured on legacy lending properties, the following (increases) / reductions to valuations were applied:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
31 December 2025
Sector
Upside
Base
Downside
Stress
Retail
10%
20%
30%
60%
Leisure
40%
50%
55%
65%
Residential
0%
0%
7-10%
14-17%
Serviced apartments
(6%)
15%
30%
60%
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
31 December 2024
Sector
Upside
Base
Downside
Stress
Retail
10%
20%
30%
60%
Leisure
40%
50%
55%
65%
Residential
1%
1%
14-17%
27-29%
Serviced apartments
(6%)
15%
30%
60%
\n
Housing associations
Loans to housing associations are monitored with a range of management information used to assess the Group\u2019s
ongoing exposure (which, while of extremely high credit quality remains of significant size). An open dialogue is
maintained with borrowers, with the Group appraised of their status, financial results and position, and numerous other
financial and risk metrics. Lending is contingent on compliance with a number of financial commitments and covenants.
The Group actively monitors for potential breaches of contractual positions.
Housing associations are historically a nil loss, nil default sector and are widely considered to be Government backed in
the case of financial stress. Housing association exposures have proven to be of the lowest credit risk throughout a
volatile and extended recession period. The Group has no internal history of loss to draw on with respect to housing
association exposures and cannot supplement its own data with loss data of its peers.
The combined effect of a well collateralised set of exposures, in an environment where the demand for housing is only
increasing, with no history of default on the part of any borrower and a sincere expectation that any theoretical default
would be addressed by the jurisdictional Government, leads to a conclusion that no material impairment of housing
association exposures is plausibly expected.
Purchased or originated credit impaired (POCI)
It is not the Group\u2019s practice to acquire or originate POCI assets, the POCI assets held arose on the transfer of
engagement from Manchester Building Society in 2023.
Debt securities
The Group monitors the external credit ratings applied to its debt security investments on a daily basis.
The Group\u2019s debt security holdings are all of investment grade or higher. The Group has therefore assessed that the
credit risk on its debt security exposures has not increased significantly since initial recognition.
The Treasury Risk department runs very severe annual stressed scenarios over the residential mortgage backed
securities (RMBS). The Group\u2019s policy to allow only investment grade and senior secured exposures leaves the Group
highly insensitive to stressed scenarios as the waterfall structure of RMBS payments ensures continued receipt of
contractual cash flows even through significantly stressed scenarios.
The Group\u2019s covered bond exposures are similarly resilient: the Group is only exposed to regulated UK covered bonds
with the regulations providing for the full segregation of covered bond asset pools from the bond issuer. The regulations
introduce numerous investor protections including mandatory over-collateralisation, an extensive initial application
process and regular regulatory stress testing and supervisory monitoring.
39. Credit risk: Expected credit losses
\n
Quantitative impairment impact
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Loss allowance
Increases due
Decreases
Transition
Changes in
Loss allowance
Reconciliation table
at 1 January
to orgination
due to
between
credit risk
at 31 December
\u00a0
2025
and acquisition
derecognition
stages
\u00a0
2025
\u00a0
\u00a3000
\u00a3000
\u00a3000
\u00a3000
\u00a3000
\u00a3000
Prime residential
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 1
498.6
243.3
(90.8)
715.9
(787.8)
579.2
Stage 2
2,534.5
775.5
(221.0)
(727.6)
(434.7)
1,926.7
Stage 3
1,751.0
34.6
(132.6)
11.7
773.6
2,438.3
Total
4,784.1
1,053.4
(444.4)
-
(448.9)
4,944.2
Buy-to-let
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 1
29.5
7.1
(10.1)
27.1
(26.7)
26.9
Stage 2
218.9
16.4
(8.2)
6.8
(184.5)
49.4
Stage 3
141.0
-
(93.0)
(33.9)
8.4
22.5
Total
389.4
23.5
(111.3)
-
(202.8)
98.8
Legacy lending
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 1
20.0
-
(2.8)
99.1
(102.8)
13.5
Stage 2
449.2
-
(1.5)
(99.8)
(113.2)
234.7
Stage 3
1,003.8
-
(133.2)
0.7
210.5
1,081.8
Total
1,473.0
-
(137.5)
-
(5.5)
1,330.0
Purchased credit impaired lending
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 1
-
-
-
-
-
-
Stage 2
-
-
-
-
-
-
Stage 3
-
-
-
-
(98.7)
(98.7)
Total
-
-
-
-
(98.7)
(98.7)
Housing association
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 1
-
-
-
-
-
-
Stage 2
-
-
-
-
-
-
Stage 3
-
-
-
-
-
-
Total
-
-
-
-
-
-
Total
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0
Stage 1
548.1
250.4
(103.7)
842.1
(917.3)
619.6
Stage 2
3,202.6
791.9
(230.7)
(820.6)
(732.4)
2,210.8
Stage 3
2,895.8
34.6
(358.8)
(21.5)
893.8
3,443.9
Total
6,646.5
1,076.9
(693.2)
-
(755.9)
6,274.3
\n
Provisions of less than \u00a30.1m (2024: provisions of \u00a30.2m) above relate to loans and advances to customers made by a subsidiary company, secured on
\n
prime residential property.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Gross
Increases due
Decreases
Transition
Gross
Reconciliation table
exposure at 1
to orgination
due to
between
exposure at
\u00a0
January 2025
and acquisition
derecognition
stages
31 December
\u00a0\u00a0\u00a0\u00a0\u00a0
2025
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Prime residential
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
3,798.4
942.5
(600.1)
121.2
4,262.0
Stage 2
655.2
192.3
(55.0)
(140.6)
651.9
Stage 3
68.0
0.7
(11.8)
19.4
76.3
Total
4,521.6
1,135.5
(666.9)
-
4,990.2
Buy-to-let
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
300.0
30.5
(53.1)
42.0
319.4
Stage 2
78.8
4.9
(3.7)
(42.5)
37.5
Stage 3
5.9
-
(3.2)
0.5
3.2
Total
384.7
35.4
(60.0)
-
360.1
Legacy lending
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
19.2
-
(3.4)
0.3
16.1
Stage 2
3.7
-
(0.1)
(0.5)
3.1
Stage 3
1.7
-
(0.3)
0.2
1.6
Total
24.6
-
(3.8)
-
20.8
Purchased credit impaired lending
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
-
-
-
-
-
Stage 2
-
-
-
-
-
Stage 3
5.3
-
(1.2)
-
4.1
Total
5.3
-
(1.2)
-
4.1
Housing association
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
179.2
-
(7.9)
-
171.3
Stage 2
-
-
-
-
-
Stage 3
-
-
-
-
-
Total
179.2
-
(7.9)
-
171.3
Total
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
4,296.8
973.0
(664.5)
163.5
4,768.8
Stage 2
737.7
197.2
(58.8)
(183.6)
692.5
Stage 3
80.9
0.7
(16.5)
20.1
85.2
Total
5,115.4
1,170.9
(739.8)
-
5,546.5
\n \n
Transition
Loss allowance
Reconciliation table
Loss allowance
Increases due
Decreases
between
at 31 December
at 1 January
to orgination
due to
stages
Changes in
2024
2024
and acquisition
derecognition
Restated*
credit risk
Restated*
\u00a3000
\u00a3000
\u00a3000
\u00a3000
\u00a3000
\u00a3000
Prime residential
Stage 1
705.6
273.5
(267.5)
939.2
(1,152.2)
498.6
Stage 2
3,224.3
890.4
(239.9)
(982.1)
(358.2)
2,534.5
Stage 3
1,261.1
190.9
(100.4)
42.9
356.5
1,751.0
Total
5,191.0
1,354.8
(607.8)
-
(1,153.9)
4,784.1
Buy-to-let
Stage 1
114.8
45.4
(36.9)
(54.5)
(39.3)
29.5
Stage 2
301.4
31.9
(7.2)
56.8
(164.0)
218.9
Stage 3
225.7
-
(197.4)
(2.3)
115.0
141.0
Total
641.9
77.3
(241.5)
-
(88.3)
389.4
Legacy lending
Stage 1
95.5
-
(80.6)
86.3
(81.2)
20.0
Stage 2
1,114.9
-
(292.8)
(86.3)
(286.6)
449.2
Stage 3
343.6
575.4
(1.5)
-
86.3
1,003.8
Total
1,554.0
575.4
(374.9)
-
(281.5)
1,473.0
Purchased credit impaired lending
Stage 1
-
-
-
-
-
-
Stage 2
-
-
-
-
-
-
Stage 3
244.7
-
(26.8)
-
(217.9)
-
Total
244.7
-
(26.8)
-
(217.9)
-
Housing association
Stage 1
-
-
-
-
-
-
Stage 2
-
-
-
-
-
-
Stage 3
-
-
-
-
-
-
Total
-
-
-
-
-
-
Total
Stage 1
915.9
318.9
(385.0)
971.0
(1,272.7)
548.1
Stage 2
4,640.6
922.3
(539.9)
(1,011.6)
(808.8)
3,202.6
Stage 3
2,075.1
766.3
(326.1)
40.6
339.9
2,895.8
Total
7,631.6
2,007.5
(1,251.0)
-
(1,741.6)
6,646.5
\n
*The above balances have been re-presented since 31 December 2024 due to a misallocation of post model adjustments between the different stages.
\n
This results in a decrease in prime residential stage 1 loss allowances of \u00a3221,000, with a corresponding increase to prime residential stage 2 loss
\n
allowances and a decrease in buy-to-let stage 1 loss allowances of \u00a395,700 with a corresponding increase to buy-to-let stage 2 loss allowances. There is
\n
no impact on the total loss allowance.
\n\n \n
Decreases
Transition
Gross exposure
Reconciliation table
Gross exposure
Increases due
due to
between
at 31 December
at 1 January
to orgination
derecognition
stages
2024
2024
and acquisition
Restated (1)
Restated (2)
Restated
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Prime residential
Stage 1
3,248.4
922.1
(539.8)
167.7
3,798.4
Stage 2
720.8
171.2
(47.4)
(189.4)
655.2
Stage 3
50.6
2.9
(7.2)
21.7
68.0
Total
4,019.8
1,096.2
(594.4)
-
4,521.6
Buy-to-let
Stage 1
292.6
40.4
(53.2)
20.2
300.0
Stage 2
90.4
10.0
(1.4)
(20.2)
78.8
Stage 3
6.6
-
(0.7)
-
5.9
Total
389.6
50.4
(55.3)
-
384.7
Legacy lending
Stage 1
27.4
-
(9.8)
1.6
19.2
Stage 2
6.9
-
(1.6)
(1.6)
3.7
Stage 3
1.0
0.7
-
-
1.7
Total
35.3
0.7
(11.4)
-
24.6
Purchased credit impaired lending
Stage 1
-
-
-
-
-
Stage 2
-
-
-
-
-
Stage 3
7.7
-
(2.4)
-
5.3
Total
7.7
-
(2.4)
-
5.3
Housing association
Stage 1
211.9
-
(32.7)
-
179.2
Stage 2
-
-
-
-
-
Stage 3
-
-
-
-
-
Total
211.9
-
(32.7)
-
179.2
Total
Stage 1
3,780.3
962.5
(635.5)
189.5
4,296.8
Stage 2
818.1
181.2
(50.4)
(211.2)
737.7
Stage 3
65.9
3.6
(10.3)
21.7
80.9
Total
4,664.3
1,147.3
(696.2)
-
5,115.4
\n
1.
The above balances have been re-presented since 31 December 2024 to reclassify \u00a31.9m of gross loan balances in
\n
legacy lending and prime residential mortgages, resulting in a \u00a31.9m decrease to prime residential stage 1
\n
mortgages and a corresponding increase to stage 1 legacy lending mortgages. There is no impact on total gross
\n
mortgage balances.
\n
2.
The above balances have been re-presented since 31 December 2024 due to a misallocation of post model
\n
adjustments between the different stages. This results in an increase in prime residential stage 1 mortgages of
\n
\u00a3226.3m with a corresponding decrease to prime residential stage 2 mortgages and an increase in buy-to-let stage
\n
1 mortgages of \u00a350.7m with a corresponding decrease to buy-to-let stage 2 mortgages. There is no impact on the
\n
total gross mortgage balances.
\n
The gross carrying values above reflect the Group\u2019s maximum exposure to credit risk at 31 December 2025 and 31
\n
December 2024 without taking into account any collateral held or provisions made against expected loss.
\n
There has been no material movement in loss allowances held against other financial assets during 2025. Debt securities
\n
held remain of very high credit quality at 31 December 2025 and the Group is not exposed to any significant value or
\n
volume of overdue trade receivables.
Risk exposures by credit grade for residential lending
Across the Group\u2019s prime residential and buy-to-let mortgage exposures, provisions may be disaggregated by detailed
probability of default ranges as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
2025
Exposure
Provision
Provision coverage ratio
Lifetime PD %
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3000
\u00a3000
\u00a3000
%
%
%
0.0% - 1.0%
44.4
-
-
0.3
-
-
-
-
-
1.0% - 2.0%
1,874.2
0.2
-
131.5
-
-
0.01
-
-
2.0% - 3.0%
1,746.0
0.1
-
305.5
-
-
0.02
-
-
3.0% - 4.0%
147.7
0.1
-
3.1
-
-
-
-
-
4.0% - 5.0%
517.1
-
-
124.7
-
-
0.02
-
-
5.0% - 6.0%
17.8
0.1
-
0.6
-
-
-
-
-
6.0% - 7.0%
4.3
0.6
-
-
-
-
-
-
-
7.0% - 8.0%
1.9
0.3
-
-
-
-
-
-
-
8.0% - 9.0%
5.6
5.3
-
0.6
0.7
-
0.01
0.01
-
9.0% - 10.0%
6.5
21.7
-
0.1
1.0
-
-
-
-
10.0% - 100.0%
186.8
654.8
69.6
139.1
1,972.4
2,084.1
0.07
0.30
2.99
Total
4,552.3
683.2
69.6
705.5
1,974.1
2,084.1
0.02
0.29
2.99
\n
The table above excludes gross mortgage balances of \u00a345.2m with a provision of \u00a30.3m for which no lifetime probability of default is available. This
includes \u00a343.0m of mortgages originating in Manchester Building Society, for which probability of default bands were estimated based on external
credit data.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
2024
Exposure
Provision
Provision coverage ratio
Lifetime PD %
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
\u00a0
Restated (1)
Restated (1)
\u00a0
Restated (2)
Restated (2)
\u00a0
Restated
Restated
\u00a0
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3000
\u00a3000
\u00a3000
%
%
%
0.0% - 1.0%
48.8
0.5
-
0.3
0.9
-
-
0.18
-
1.0% - 2.0%
1,713.4
41.9
-
112.5
77.6
-
0.01
0.19
-
2.0% - 3.0%
1,582.9
55.5
-
184.2
116.8
-
0.01
0.21
-
3.0% - 4.0%
132.4
10.0
-
7.2
9.1
-
0.01
0.09
-
4.0% - 5.0%
422.6
24.1
-
111.5
77.7
-
0.03
0.32
-
5.0% - 6.0%
3.4
-
-
0.1
-
-
-
-
-
6.0% - 7.0%
2.9
0.3
-
0.1
-
-
-
-
-
7.0% - 8.0%
5.6
0.3
-
-
-
-
-
-
-
8.0% - 9.0%
4.0
6.3
-
0.1
2.3
-
-
0.04
-
9.0% - 10.0%
12.1
23.0
-
1.5
12.6
-
0.01
0.05
-
10.0% - 100.0%
135.9
564.6
58.3
110.0
2,456.4
1,216.5
0.08
0.44
2.09
Total
4,064.0
726.5
58.3
527.5
2,753.4
1,216.5
0.01
0.38
2.09
\n
1.
The above balances have been re-presented since 31 December 2024 to reclassify gross mortgage balances between stages, resulting in a \u00a3275.1m
increase in stage 1 gross mortgage balance and a \u00a3277.0m decrease in stage 2 gross mortgage balances.
2.
The above balances have been re-presented since 31 December 2024 to reclassify provisions between stages, resulting in a \u00a3317,000 decrease in
stage 1 provisions and a corresponding decrease in stage 2 provisions.
The provision coverage ratios for stage 1 and stage 2 have been restated following the above re-presentations.
The table above excludes gross mortgage balances of \u00a357.5m, with a provision of \u00a30.7m for which no lifetime probability of default is available. This
includes \u00a352.0m of mortgages originating in Manchester Building Society, for which probability of default bands were estimated based on external
credit data.
Lifetime probability of default indicates the percentage change that a loan will trigger any of the stage 3 indicators, as
detailed above, over the life of the loan and does not alone indicate a likeliness that the default will result in any
significant loss to the Group.
The comparatively small provisions coverage reflects the capacity for property collateral to effectively mitigate the
Group\u2019s ultimate exposure to loss.
Provisions against other financial assets are not considered to be sufficiently material to warrant further
detailed analysis.
Provisions against commercial and legacy buy-to-let mortgages are not presented by risk grade as legacy exposures
are assessed for impairment on an individual basis by the commercial lending department.
Sensitivity of the credit loss provisions to key assumptions
The Group\u2019s residential and buy-to-let mortgage provisions are most sensitive to forecasted house price growth and
unemployment rates. A 5% increase / decrease to house price growth assumptions over the next two years would result
in a \u00a30.2m / \u00a3(0.3)m decrease / increase on the residential and buy-to-let provisions balances at 31 December 2025. A
2% increase / decrease to unemployment rate assumptions over the next two years would have a \u00a30.2m / \u00a3(0.2)m
increase / decrease on the residential and buy-to-let provisions balances at 31 December 2025.
The Group\u2019s mortgage provisions reflect probability weighted scenarios run across its mortgage books and are
sensitive to the probabilities applied accordingly. Provisions are most sensitive to increases in the downside and stress
scenarios probabilities; the tables below outline the sensitivity of the credit loss provisions to 100% weighted
economic scenarios:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
2025
Residential and
\u00a0
\u00a0
buy-to-let
Legacy lending
\u00a0
\u00a3m
\u00a3m
Actual
5.0
1.2
Upside
2.8
0.8
Base
3.7
1.1
Downside
5.7
1.3
Stress
7.6
1.9
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
2024
Residential and
\u00a0
\u00a0
buy-to-let
Legacy lending
\u00a0
\u00a3m
\u00a3m
Actual
5.2
1.4
Upside
2.9
0.6
Base
3.5
1.1
Downside
5.8
1.6
Stress
10.0
2.4
\n
Equity release portfolio
The Group\u2019s equity release portfolio is accounted for at fair value. Its fair value includes any allowances for credit risk.
Further information on the fair value of the equity release portfolio, including sensitivity analysis is included in notes 13
and 32. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00207": { "value": "39. Credit risk: Expected credit losses
Quantitative impairment impact
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Loss allowance
Increases due
Decreases
Transition
Changes in
Loss allowance
Reconciliation table
at 1 January
to orgination
due to
between
credit risk
at 31 December
\u00a0
2025
and acquisition
derecognition
stages
\u00a0
2025
\u00a0
\u00a3000
\u00a3000
\u00a3000
\u00a3000
\u00a3000
\u00a3000
Prime residential
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 1
498.6
243.3
(90.8)
715.9
(787.8)
579.2
Stage 2
2,534.5
775.5
(221.0)
(727.6)
(434.7)
1,926.7
Stage 3
1,751.0
34.6
(132.6)
11.7
773.6
2,438.3
Total
4,784.1
1,053.4
(444.4)
-
(448.9)
4,944.2
Buy-to-let
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 1
29.5
7.1
(10.1)
27.1
(26.7)
26.9
Stage 2
218.9
16.4
(8.2)
6.8
(184.5)
49.4
Stage 3
141.0
-
(93.0)
(33.9)
8.4
22.5
Total
389.4
23.5
(111.3)
-
(202.8)
98.8
Legacy lending
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 1
20.0
-
(2.8)
99.1
(102.8)
13.5
Stage 2
449.2
-
(1.5)
(99.8)
(113.2)
234.7
Stage 3
1,003.8
-
(133.2)
0.7
210.5
1,081.8
Total
1,473.0
-
(137.5)
-
(5.5)
1,330.0
Purchased credit impaired lending
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 1
-
-
-
-
-
-
Stage 2
-
-
-
-
-
-
Stage 3
-
-
-
-
(98.7)
(98.7)
Total
-
-
-
-
(98.7)
(98.7)
Housing association
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Stage 1
-
-
-
-
-
-
Stage 2
-
-
-
-
-
-
Stage 3
-
-
-
-
-
-
Total
-
-
-
-
-
-
Total
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0
Stage 1
548.1
250.4
(103.7)
842.1
(917.3)
619.6
Stage 2
3,202.6
791.9
(230.7)
(820.6)
(732.4)
2,210.8
Stage 3
2,895.8
34.6
(358.8)
(21.5)
893.8
3,443.9
Total
6,646.5
1,076.9
(693.2)
-
(755.9)
6,274.3
\n
Provisions of less than \u00a30.1m (2024: provisions of \u00a30.2m) above relate to loans and advances to customers made by a subsidiary company, secured on
\n
prime residential property.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
\u00a0
Gross
Increases due
Decreases
Transition
Gross
Reconciliation table
exposure at 1
to orgination
due to
between
exposure at
\u00a0
January 2025
and acquisition
derecognition
stages
31 December
\u00a0\u00a0\u00a0\u00a0\u00a0
2025
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Prime residential
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
3,798.4
942.5
(600.1)
121.2
4,262.0
Stage 2
655.2
192.3
(55.0)
(140.6)
651.9
Stage 3
68.0
0.7
(11.8)
19.4
76.3
Total
4,521.6
1,135.5
(666.9)
-
4,990.2
Buy-to-let
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
300.0
30.5
(53.1)
42.0
319.4
Stage 2
78.8
4.9
(3.7)
(42.5)
37.5
Stage 3
5.9
-
(3.2)
0.5
3.2
Total
384.7
35.4
(60.0)
-
360.1
Legacy lending
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
19.2
-
(3.4)
0.3
16.1
Stage 2
3.7
-
(0.1)
(0.5)
3.1
Stage 3
1.7
-
(0.3)
0.2
1.6
Total
24.6
-
(3.8)
-
20.8
Purchased credit impaired lending
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
-
-
-
-
-
Stage 2
-
-
-
-
-
Stage 3
5.3
-
(1.2)
-
4.1
Total
5.3
-
(1.2)
-
4.1
Housing association
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
179.2
-
(7.9)
-
171.3
Stage 2
-
-
-
-
-
Stage 3
-
-
-
-
-
Total
179.2
-
(7.9)
-
171.3
Total
\u00a0\u00a0\u00a0\u00a0\u00a0
Stage 1
4,296.8
973.0
(664.5)
163.5
4,768.8
Stage 2
737.7
197.2
(58.8)
(183.6)
692.5
Stage 3
80.9
0.7
(16.5)
20.1
85.2
Total
5,115.4
1,170.9
(739.8)
-
5,546.5
\n \n
Transition
Loss allowance
Reconciliation table
Loss allowance
Increases due
Decreases
between
at 31 December
at 1 January
to orgination
due to
stages
Changes in
2024
2024
and acquisition
derecognition
Restated*
credit risk
Restated*
\u00a3000
\u00a3000
\u00a3000
\u00a3000
\u00a3000
\u00a3000
Prime residential
Stage 1
705.6
273.5
(267.5)
939.2
(1,152.2)
498.6
Stage 2
3,224.3
890.4
(239.9)
(982.1)
(358.2)
2,534.5
Stage 3
1,261.1
190.9
(100.4)
42.9
356.5
1,751.0
Total
5,191.0
1,354.8
(607.8)
-
(1,153.9)
4,784.1
Buy-to-let
Stage 1
114.8
45.4
(36.9)
(54.5)
(39.3)
29.5
Stage 2
301.4
31.9
(7.2)
56.8
(164.0)
218.9
Stage 3
225.7
-
(197.4)
(2.3)
115.0
141.0
Total
641.9
77.3
(241.5)
-
(88.3)
389.4
Legacy lending
Stage 1
95.5
-
(80.6)
86.3
(81.2)
20.0
Stage 2
1,114.9
-
(292.8)
(86.3)
(286.6)
449.2
Stage 3
343.6
575.4
(1.5)
-
86.3
1,003.8
Total
1,554.0
575.4
(374.9)
-
(281.5)
1,473.0
Purchased credit impaired lending
Stage 1
-
-
-
-
-
-
Stage 2
-
-
-
-
-
-
Stage 3
244.7
-
(26.8)
-
(217.9)
-
Total
244.7
-
(26.8)
-
(217.9)
-
Housing association
Stage 1
-
-
-
-
-
-
Stage 2
-
-
-
-
-
-
Stage 3
-
-
-
-
-
-
Total
-
-
-
-
-
-
Total
Stage 1
915.9
318.9
(385.0)
971.0
(1,272.7)
548.1
Stage 2
4,640.6
922.3
(539.9)
(1,011.6)
(808.8)
3,202.6
Stage 3
2,075.1
766.3
(326.1)
40.6
339.9
2,895.8
Total
7,631.6
2,007.5
(1,251.0)
-
(1,741.6)
6,646.5
\n
*The above balances have been re-presented since 31 December 2024 due to a misallocation of post model adjustments between the different stages.
\n
This results in a decrease in prime residential stage 1 loss allowances of \u00a3221,000, with a corresponding increase to prime residential stage 2 loss
\n
allowances and a decrease in buy-to-let stage 1 loss allowances of \u00a395,700 with a corresponding increase to buy-to-let stage 2 loss allowances. There is
\n
no impact on the total loss allowance.
\n\n \n
Decreases
Transition
Gross exposure
Reconciliation table
Gross exposure
Increases due
due to
between
at 31 December
at 1 January
to orgination
derecognition
stages
2024
2024
and acquisition
Restated (1)
Restated (2)
Restated
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Prime residential
Stage 1
3,248.4
922.1
(539.8)
167.7
3,798.4
Stage 2
720.8
171.2
(47.4)
(189.4)
655.2
Stage 3
50.6
2.9
(7.2)
21.7
68.0
Total
4,019.8
1,096.2
(594.4)
-
4,521.6
Buy-to-let
Stage 1
292.6
40.4
(53.2)
20.2
300.0
Stage 2
90.4
10.0
(1.4)
(20.2)
78.8
Stage 3
6.6
-
(0.7)
-
5.9
Total
389.6
50.4
(55.3)
-
384.7
Legacy lending
Stage 1
27.4
-
(9.8)
1.6
19.2
Stage 2
6.9
-
(1.6)
(1.6)
3.7
Stage 3
1.0
0.7
-
-
1.7
Total
35.3
0.7
(11.4)
-
24.6
Purchased credit impaired lending
Stage 1
-
-
-
-
-
Stage 2
-
-
-
-
-
Stage 3
7.7
-
(2.4)
-
5.3
Total
7.7
-
(2.4)
-
5.3
Housing association
Stage 1
211.9
-
(32.7)
-
179.2
Stage 2
-
-
-
-
-
Stage 3
-
-
-
-
-
Total
211.9
-
(32.7)
-
179.2
Total
Stage 1
3,780.3
962.5
(635.5)
189.5
4,296.8
Stage 2
818.1
181.2
(50.4)
(211.2)
737.7
Stage 3
65.9
3.6
(10.3)
21.7
80.9
Total
4,664.3
1,147.3
(696.2)
-
5,115.4
\n
1.
The above balances have been re-presented since 31 December 2024 to reclassify \u00a31.9m of gross loan balances in
\n
legacy lending and prime residential mortgages, resulting in a \u00a31.9m decrease to prime residential stage 1
\n
mortgages and a corresponding increase to stage 1 legacy lending mortgages. There is no impact on total gross
\n
mortgage balances.
\n
2.
The above balances have been re-presented since 31 December 2024 due to a misallocation of post model
\n
adjustments between the different stages. This results in an increase in prime residential stage 1 mortgages of
\n
\u00a3226.3m with a corresponding decrease to prime residential stage 2 mortgages and an increase in buy-to-let stage
\n
1 mortgages of \u00a350.7m with a corresponding decrease to buy-to-let stage 2 mortgages. There is no impact on the
\n
total gross mortgage balances.
\n
The gross carrying values above reflect the Group\u2019s maximum exposure to credit risk at 31 December 2025 and 31
\n
December 2024 without taking into account any collateral held or provisions made against expected loss.
\n
There has been no material movement in loss allowances held against other financial assets during 2025. Debt securities
\n
held remain of very high credit quality at 31 December 2025 and the Group is not exposed to any significant value or
\n
volume of overdue trade receivables.
Risk exposures by credit grade for residential lending
Across the Group\u2019s prime residential and buy-to-let mortgage exposures, provisions may be disaggregated by detailed
probability of default ranges as follows:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
2025
Exposure
Provision
Provision coverage ratio
Lifetime PD %
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3000
\u00a3000
\u00a3000
%
%
%
0.0% - 1.0%
44.4
-
-
0.3
-
-
-
-
-
1.0% - 2.0%
1,874.2
0.2
-
131.5
-
-
0.01
-
-
2.0% - 3.0%
1,746.0
0.1
-
305.5
-
-
0.02
-
-
3.0% - 4.0%
147.7
0.1
-
3.1
-
-
-
-
-
4.0% - 5.0%
517.1
-
-
124.7
-
-
0.02
-
-
5.0% - 6.0%
17.8
0.1
-
0.6
-
-
-
-
-
6.0% - 7.0%
4.3
0.6
-
-
-
-
-
-
-
7.0% - 8.0%
1.9
0.3
-
-
-
-
-
-
-
8.0% - 9.0%
5.6
5.3
-
0.6
0.7
-
0.01
0.01
-
9.0% - 10.0%
6.5
21.7
-
0.1
1.0
-
-
-
-
10.0% - 100.0%
186.8
654.8
69.6
139.1
1,972.4
2,084.1
0.07
0.30
2.99
Total
4,552.3
683.2
69.6
705.5
1,974.1
2,084.1
0.02
0.29
2.99
\n
The table above excludes gross mortgage balances of \u00a345.2m with a provision of \u00a30.3m for which no lifetime probability of default is available. This
includes \u00a343.0m of mortgages originating in Manchester Building Society, for which probability of default bands were estimated based on external
credit data.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
2024
Exposure
Provision
Provision coverage ratio
Lifetime PD %
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
\u00a0
Restated (1)
Restated (1)
\u00a0
Restated (2)
Restated (2)
\u00a0
Restated
Restated
\u00a0
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3000
\u00a3000
\u00a3000
%
%
%
0.0% - 1.0%
48.8
0.5
-
0.3
0.9
-
-
0.18
-
1.0% - 2.0%
1,713.4
41.9
-
112.5
77.6
-
0.01
0.19
-
2.0% - 3.0%
1,582.9
55.5
-
184.2
116.8
-
0.01
0.21
-
3.0% - 4.0%
132.4
10.0
-
7.2
9.1
-
0.01
0.09
-
4.0% - 5.0%
422.6
24.1
-
111.5
77.7
-
0.03
0.32
-
5.0% - 6.0%
3.4
-
-
0.1
-
-
-
-
-
6.0% - 7.0%
2.9
0.3
-
0.1
-
-
-
-
-
7.0% - 8.0%
5.6
0.3
-
-
-
-
-
-
-
8.0% - 9.0%
4.0
6.3
-
0.1
2.3
-
-
0.04
-
9.0% - 10.0%
12.1
23.0
-
1.5
12.6
-
0.01
0.05
-
10.0% - 100.0%
135.9
564.6
58.3
110.0
2,456.4
1,216.5
0.08
0.44
2.09
Total
4,064.0
726.5
58.3
527.5
2,753.4
1,216.5
0.01
0.38
2.09
\n
1.
The above balances have been re-presented since 31 December 2024 to reclassify gross mortgage balances between stages, resulting in a \u00a3275.1m
increase in stage 1 gross mortgage balance and a \u00a3277.0m decrease in stage 2 gross mortgage balances.
2.
The above balances have been re-presented since 31 December 2024 to reclassify provisions between stages, resulting in a \u00a3317,000 decrease in
stage 1 provisions and a corresponding decrease in stage 2 provisions.
The provision coverage ratios for stage 1 and stage 2 have been restated following the above re-presentations.
The table above excludes gross mortgage balances of \u00a357.5m, with a provision of \u00a30.7m for which no lifetime probability of default is available. This
includes \u00a352.0m of mortgages originating in Manchester Building Society, for which probability of default bands were estimated based on external
credit data.
Lifetime probability of default indicates the percentage change that a loan will trigger any of the stage 3 indicators, as
detailed above, over the life of the loan and does not alone indicate a likeliness that the default will result in any
significant loss to the Group.
The comparatively small provisions coverage reflects the capacity for property collateral to effectively mitigate the
Group\u2019s ultimate exposure to loss.
Provisions against other financial assets are not considered to be sufficiently material to warrant further
detailed analysis.
Provisions against commercial and legacy buy-to-let mortgages are not presented by risk grade as legacy exposures
are assessed for impairment on an individual basis by the commercial lending department.
Sensitivity of the credit loss provisions to key assumptions
The Group\u2019s residential and buy-to-let mortgage provisions are most sensitive to forecasted house price growth and
unemployment rates. A 5% increase / decrease to house price growth assumptions over the next two years would result
in a \u00a30.2m / \u00a3(0.3)m decrease / increase on the residential and buy-to-let provisions balances at 31 December 2025. A
2% increase / decrease to unemployment rate assumptions over the next two years would have a \u00a30.2m / \u00a3(0.2)m
increase / decrease on the residential and buy-to-let provisions balances at 31 December 2025.
The Group\u2019s mortgage provisions reflect probability weighted scenarios run across its mortgage books and are
sensitive to the probabilities applied accordingly. Provisions are most sensitive to increases in the downside and stress
scenarios probabilities; the tables below outline the sensitivity of the credit loss provisions to 100% weighted
economic scenarios:
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
2025
Residential and
\u00a0
\u00a0
buy-to-let
Legacy lending
\u00a0
\u00a3m
\u00a3m
Actual
5.0
1.2
Upside
2.8
0.8
Base
3.7
1.1
Downside
5.7
1.3
Stress
7.6
1.9
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
2024
Residential and
\u00a0
\u00a0
buy-to-let
Legacy lending
\u00a0
\u00a3m
\u00a3m
Actual
5.2
1.4
Upside
2.9
0.6
Base
3.5
1.1
Downside
5.8
1.6
Stress
10.0
2.4
\n
Equity release portfolio
The Group\u2019s equity release portfolio is accounted for at fair value. Its fair value includes any allowances for credit risk.
Further information on the fair value of the equity release portfolio, including sensitivity analysis is included in notes 13
and 32. ", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00208": { "value": "41. Liquidity risk
Liquidity risk is the risk that the Group has insufficient funds to meet its obligations as they fall due. This risk is managed
on a Group basis (including all subsidiary entities) with day-to-day responsibility delegated to the Group\u2019s Treasury
department with oversight by the Assets and Liabilities Committee, the Group Risk Committee and the Board.
Management of Liquidity risk
The Group ensures it holds sufficient quality and quantity of liquidity to remain liquid after a severe but plausible stress.
In addition, it assesses its liquidity position and risks through an annual Internal Liquidity Adequacy Assessment Process
(ILAAP) in line with regulatory requirements. Cash flow forecasts are used to forecast liquidity, ensuring future
compliance with limits set by the Board. Wherever appropriate, the Group ensures it takes any necessary steps to
ensure it has access to any available Bank of England Schemes designed to support financial institutions.
Liquidity resources
The Group\u2019s liquidity resources include funds in cash accounts held in the Bank of England reserve account and other
easily marketable assets and contingent liquidity. The Group monitors the requirements of the Liquidity Coverage Ratio
(LCR), which measures unencumbered high quality liquid assets as a percentage of net cash outflows over a 30 day
stress period, on a weekly basis for compliance against the regulatory minimum of 100%. At 31 December 2025 the LCR
was 180% (2024: 229%).
Contractual maturity pro\ufb01le of \ufb01nancial assets and liability
The table below analyses the contractual cash flows of financial assets and financial liabilities based on the remaining
contractual life to the maturity date. The contractual maturity will differ to actual payments; for example, most on
demand customer deposits will be repaid later than the earliest date on which repayment can be requested and
mortgages may be repaid ahead of their contractual maturity.
\n\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\n\t\n
\u00a0 \u00a0
At 31 December 2025
Repayable on
\u00a0 \u00a0 \u00a0
More than 5
\u00a0
\u00a0
demand
Up to 3 months
3-12 months
1-5 years
years
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Cash and balances with the Bank of England
177.3
-
-
-
-
177.3
Loans and advances to credit institutions
146.2
-
-
-
-
146.2
Debt securities
-
17.5
38.3
744.4
59.0
859.2
Derivative financial instruments
-
0.7
8.1
6.4
1.7
16.9
Loans and advances to customers
-
17.8
17.9
247.5
5,431.0
5,714.2
Other financial assets
-
4.9
-
-
-
4.9
Total \ufb01nancial assets
323.5
40.9
64.3
998.3
5,491.7
6,918.7
Liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Due to Members
5,172.1
167.5
381.5
161.3
0.3
5,882.7
Due to other customers
87.5
47.2
27.1
2.0
-
163.8
Deposits from credit institutions
1.4
40.1
117.4
-
-
158.9
Derivative financial instruments
-
0.1
5.4
21.5
17.5
44.5
Debt securities in issue
-
1.7
-
-
321.7
323.4
Other financial liabilities
-
2.2
0.7
2.6
4.2
9.7
Total financial liabilities
5,261.0
258.8
532.1
187.4
343.7
6,583.0
Net liquidity gap (contractual)
(4,937.5)
(217.9)
(467.8)
810.9
5,148.0
335.7
At 31 December 2024
Repayable on
\u00a0 \u00a0 \u00a0
More than 5
\u00a0
\u00a0
demand
Up to 3 months
3-12 months
1-5 years
years
Total
\u00a0
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m
Assets
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Cash and balances with the Bank of England
451.5
-
-
-
-
451.5
Loans and advances to credit institutions
101.8
-
-
-
-
101.8
Debt securities
-
36.1
95.8
426.3
44.1
602.3
Derivative financial instruments
-
0.7
4.2
40.5
11.2
56.6
Loans and advances to customers
-
12.9
45.3
260.3
4,970.8
5,289.3
Other financial assets
-
4.3
0.6
0.3
-
5.2
Total \ufb01nancial assets
553.3
54.0
145.9
727.4
5,026.1
6,506.7
Liabilities
\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0
Due to Members
4,728.4
152.7
378.2
173.4
-
5,432.7
Due to other customers
131.7
78.0
30.3
1.0
-
241.0
Deposits from credit institutions
31.0
100.8
285.8
-
-
417.6
Derivative financial instruments
-
0.5
0.7
4.1
24.1
29.4
Other financial liabilities
-
1.8
0.8
3.0
3.4
9.0
Total \ufb01nancial liabilities
4,891.1
333.8
695.8
181.5
27.5
6,129.7
Net liquidity gap (contractual)
(4,337.8)
(279.8)
(549.9)
545.9
4,998.6
377.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00209": { "value": "42. Capital Risk
Capital risk is the risk that the Group is or becomes inadequately capitalised to address the risks to which it is exposed.
Management of Capital
The Group\u2019s policy is to maintain a strong capital base to maintain Member, creditor and market confidence and to
sustain the future growth of the Group. The Group has complied with all externally imposed capital requirements and
internally set limits throughout the year.
Day to day capital management is delegated to the Chief Financial Officer with oversight by the Assets and Liabilities
Committee, the Group Risk Committee and the Board.
The Group assesses its capital position and risks regularly. Capital planning is an integrated part of business planning
and capital forecasts and scenario analysis are performed regularly as part of business as usual.
An Internal Capital Adequacy Assessment Process (ICAAP) is produced in line with regulatory requirements. The ICAAP
considers the key capital risks and the amount of capital it should retain. These requirements are assessed against the
current position and throughout any forward planning. The Prudential Regulation Authority sets and monitors capital
requirements for the Group. Capital adequacy is measured by comparing both current and forecast capital resources to
capital requirements.
Capital stress testing is also performed as part of the ICAAP and makes sure that the Group is resilient to a range of
stresses, assessing whether capital requirements would be met under severe but plausible stress scenarios and
considers what mitigating actions are available to management. The Society\u2019s Recovery Plan details management
actions that could be taken in case of unexpected capital shortfalls and stresses. The Recovery Plan is tested and
updated regularly.
For more information on how the Group is meeting its objectives for managing capital, see the capital section of the
Strategic Report and the capital risk section of the Risk Management Report.", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00210": { "value": "43. Country-by-Country Reporting
The reporting obligations set out in Article 89 of the European Union\u2019s Capital Requirements Directive IV (CRD IV) have
been implemented in the UK by the Capital Requirements (Country-by-Country Reporting) Regulations.
Newcastle Building Society is the largest building society in the North East and the 7th largest in the UK with assets of
\u00a37.0 billion (2024: \u00a36.6 billion).
As a mutual organisation, the Society\u2019s primary focus is its Members, and it aims to provide mortgage and savings
products supported by excellent customer service. Additionally, the Society offers financial advice, as an appointed
representative of Openwork, through Newcastle Financial Advisers. Outsourcing of financial services and information
technology services are provided through Newcastle Strategic Solutions.
The consolidated financial statements of the Newcastle Building Society Group include the audited results of the
Society and its subsidiary undertakings. The consolidated entities, their principal activities and countries of
incorporation, are detailed in Note 15 to the Annual Report and Accounts.
Basis of preparation
a) Country
All of the consolidated entities were incorporated in the United Kingdom, with the exception of Newcastle Mortgage
Loans (Jersey) Limited, which is incorporated and operates with no employees in Jersey.
b) Total operating income and profit be
fore taxation
Total operating income and profit before taxation are compiled from the Newcastle Building Society Group
consolidated financial statements for the year ended 31 December 2025, which are prepared in accordance with
International Financial Reporting Standards (IFRS). Total operating income represents the sum of the Group's net
interest income, other income, other charges and gains less losses on financial instruments and hedge accounting.
Group total operating income was \u00a3156.1m (2024: \u00a3152.9m), the proportion not arising from UK-based activity is not
considered material for the purpose of this disclosure.
c) Corporation tax paid
Corporation tax paid represents the net cash taxes paid to the tax authority, HMRC, during 2025. Corporation tax
paid is reported on a cash basis and will normally differ from the tax expense recorded for accounting purposes
due to:
\u25a0
Timing differences in the accrual of tax charge. The Group makes quarterly payments on account to HMRC.
Payments are made in July, October, January, and April. As the Group's accounting year runs from January to
December, payments made in any financial year will not align with tax due in that financial year.
\u25a0
The Society brought forward into 2025 tax losses from previous years that were used to extinguish a portion of its
taxable profits in 2025.
\u25a0
Other differences between when income and expenses are accounted for under IFRSs and when they
become taxable.
During 2025 the Group paid \u00a35.0m in corporation tax (2024: \u00a32.9m).
d) Full-time equivalent employees
The average number of Group full time equivalent employees was 1,716.2 (2024: 1,671.4) all of which were employed in
the UK.
e) Group profit be
fore taxation
Group profit before taxation was \u00a322.6m (2024: \u00a315.7m) with a tax charge of \u00a34.6m (2024: \u00a30.8m tax credit). The
profit before taxation and the taxation during the year relates to UK-based activity and the UK tax jurisdiction.", "dimensions": { "concept": "ifrs-full:DisclosureOfGeographicalAreasExplanatory", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00144": { "value": "Newcastle Building Society", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00153": { "value": "building society", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00152": { "value": "United Kingdom", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00148": { "value": "United Kingdom", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00145": { "value": "United Kingdom", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "TagsThatMustBeAppliedIfCorrespondingInformationIsPresentInAReport_Label_00146": { "value": "1 Cobalt Park Way, Wallsend, NE28 9EJ.", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:549300T1JIP3LZ5TZ694", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } } } }