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"period": "2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-402": { "value": "3294300000.0", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2024-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-403": { "value": "100000.0", "decimals": -5, "dimensions": { "concept": "skiptonbuilding:DecreaseInImpairmentLossAllowanceOnCashAndCashEquivalents", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-404": { "value": "0.0", "decimals": -5, "dimensions": { "concept": "skiptonbuilding:DecreaseInImpairmentLossAllowanceOnCashAndCashEquivalents", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-405": { "value": "1449000000.0", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": 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"fact-410": { "value": "123100000.0", "decimals": -5, "dimensions": { "concept": "skiptonbuilding:LoansAndAdvancesToCreditInstitutionsClassifiedAsCashAndCashEquivalents", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-411": { "value": "1449000000.0", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2026-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-412": { "value": "2053700000.0", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-415": { "value": "
The material accounting policy information relevant to these consolidated Annual Accounts is set out below.
a) Basis of preparation
The Annual Accounts of the Group and the Society are prepared in accordance with UK-adopted International
Accounting Standards in accordance with the requirements of the Building Societies Act 1986 and with those
parts of the Building Societies (Accounts and Related Provisions) Regulations 1998 that are applicable.
The Annual Accounts have been prepared under the historical cost convention as modified by the application
of fair value measurements required or allowed by relevant accounting standards.
Governmental and societal responses to climate change risks continue to develop, and are interdependent
upon each other, and consequently financial statements cannot capture all possible future outcomes as these
are not yet known. The degree of uncertainty of these changes may also mean that they cannot be taken into
account when determining asset and liability valuations and the timing of future cash flows under the
requirements of applicable accounting standards. We have considered the impact of transitioning to a low-
carbon economy and the physical risks from climate change on key estimates in the financial statements.
Consideration was given, in particular, to the impact of climate risks on areas of estimation, and our going
concern assessment. While the Group continues to enhance its ability to assess climate-related risks and given
the uncertainties on the extent and timing of the manifestation of climate-related risks, the Group is currently
unable to determine the full future economic impact on our business model, operational plans and our
customers, and therefore the potential future impacts are not fully incorporated in these financial statements.
The Group continues to monitor emerging regulatory expectations and is assessing how to enhance its
capabilities over time, in line with material risk exposure.
In accordance with the Group\u2019s approach to net zero, initiatives continue to be progressed across the Group to
reduce emissions and to support wider Environmental, Social and Governance (ESG) areas; progress made
against emission reduction targets is monitored by management. As set out in the Strategic Report, during
2025 the Group has continued activity to raise awareness of the need to decarbonise UK homes; this includes
our Energy Performance Certificate (EPC) Plus scheme that offers free EPC reports to Society members and
colleagues, and sharing our experiences as we completed the Big Retrofit project near our Head Office in
Skipton. Reaching the Group\u2019s net zero target depends on many external factors, including government
policies, suppliers and customers. While these uncertainties may impact or challenge the Group in meeting its
climate-related targets, the focus remains on reducing emissions within its control. Long tail climate risk
scenarios have been considered by management and the Board and are factored into the Group\u2019s planning.
The Annual Accounts are presented in pounds Sterling and, except where otherwise indicated, have been
rounded to the nearest one hundred thousand pounds.
b) Going Concern
The Annual Accounts are prepared on a going concern basis (see Directors\u2019 Report).
c) Changes to material accounting policies and other prior period adjustments
There have been no changes during the year to material accounting policies.
Prior period adjustments
i) During the year ended 31 December 2025, the Group reviewed its application in prior periods of the
requirements of IFRS 7
Financial Instruments \u2013 Disclosures
with respect to the disclosure of analyses of
the carrying value of financial assets and financial liabilities into relevant maturity groupings, based on
the remaining maturity period at the reporting date to the contractual maturity. This review identified
misstatements where amounts previously reported by the Group (and Society) were not correctly
allocated to the appropriate maturity grouping. This matter impacts only the tables of maturity analysis
for the Group and Society that are presented for disclosure purposes in Note 43 Liquidity Risk. There is no
impact for affected periods on the Group or Society\u2019s Income Statements, Statements of Financial
Position or Statements of Cash Flows. In accordance with IAS 8
Accounting Policies, Changes in
Accounting Estimates and Errors
, comparative amounts are restated as set out in the tables below.
Note 43 Liquidity risk, year ended 31 December 2024
Group Repayable Up to 3 3 -12 1 - 5 Over 5 No
\u00a3m on demand months months years years
specified
Total
maturity
Previously reported:
Debt securities in issue
5.1
0.8
1,938.7
490.7
-
-
2,435.3
Total financial liabilities
12,335.2
4,469.8
13,220.5
5,009.1
485.1
598.9
36,118.6
Net liquidity gap
(10,041.4)
(3,876.3)
(12,219.3)
(1,261.1)
30,004.7
(291.4)
2,315.2
Adjustments:
Debt securities in issue
(5.1)
5.1
(1,938.7)
1,938.7
-
-
-
Total financial liabilities
(5.1)
5.1
(1,938.7)
1,938.7
-
-
-
Net liquidity gap
(5.1)
5.1
(1,938.7)
1,938.7
-
-
-
Restated:
Debt securities in issue
-
5.9
-
2,429.4
-
-
2,435.3
Total financial liabilities
12,330.1
4,474.9
11,281.8
6,947.8
485.1
598.9
36,118.6
Net liquidity gap
(10,036.3)
(3,881.4)
(10,280.6)
(3,199.8)
30,004.7
(291.4)
2,315.2
Note 43 Liquidity risk, year ended 31 December 2024
Society Repayable Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m on demand months months years years
specified
Total
maturity
Previously reported:
Debt securities in issue
5.1
-
1,925.0
-
-
-
1,930.1
Total financial liabilities
11,909.7
3,993.1
12,173.2
5,145.4
458.8
598.9
34,279.1
Net liquidity gap
(9,515.2)
(3,658.2)
(11,231.2)
(1,172.6)
27,984.5
(256.1)
2,151.2
Adjustments:
Debt securities in issue
(5.1)
5.1
(1,925.0)
1,925.0
-
-
-
Total financial liabilities
(5.1)
5.1
(1,925.0)
1,925.0
-
-
-
Net liquidity gap
(5.1)
5.1
(1,925.0)
1,925.0
-
-
-
Restated:
Debt securities in issue
-
5.1
-
1,925.0
-
-
1,930.1
Total financial liabilities
11,904.6
3,998.2
10,248.2
7,070.4
458.8
598.9
34,279.1
Net liquidity gap
(9,510.1)
(3,663.3)
(9,306.2)
(3,097.6)
27,984.5
(256.1)
2,151.2
ii) During the year ended 31 December 2025, the Society reviewed its application in prior periods of the requirements of IFRS 7 Financial Instruments \u2013 Disclosures with respect to the disclosure of interest amounts associated with intra-Group swaps between the Society and its subsidiary undertakings. This review determined that such amounts would most appropriately be presented within interest payable and similar charges on financial instruments held at FVTPL, specifically within \u2018Net expense on derivative financial instruments held for hedging liabilities\u2019. In prior periods such amounts were included by the Society within interest payable and similar charges on financial liabilities held at amortised cost, specifically within \u2018Deposits and other borrowings - subsidiary undertakings\u2019. In accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, comparative amounts are restated as set out in the tables below. There is no impact for affected periods on the Society\u2019s Income Statements, Statements of Financial Position or Statements of Cash Flows. Note 3 Interest payable and similar charges, year ended 31 December 2024
Society
\u00a3m
Previously reported:
On financial liabilities held at amortised cost:
On deposits and other borrowings \u2013 subsidiary undertakings
71.1
Total on financial liabilities held at amortised cost
1,392.1
On financial instruments held at FVTPL:
Net expense on derivative financial instruments held for hedging liabilities
138.3
Total interest payable and similar charges
1,676.3
Adjustments:
On financial liabilities held at amortised cost:
On deposits and other borrowings \u2013 subsidiary undertakings
(46.7)
Total on financial liabilities held at amortised cost
(46.7)
On financial instruments held at FVTPL:
Net expense on derivative financial instruments held for hedging liabilities
46.7
Total interest payable and similar charges
-
Restated:
On financial liabilities held at amortised cost:
On deposits and other borrowings \u2013 subsidiary undertakings
24.4
Total on financial liabilities held at amortised cost
1,345.4
On financial instruments held at FVTPL:
Net expense on derivative financial instruments held for hedging liabilities
185.0
Total interest payable and similar charges
1,676.3
d) Basis of consolidation
Subsidiary undertakings
Subsidiary undertakings are entities controlled by the Group. Control exists when the Group is exposed, or has
rights, to variable returns from its involvement with an entity and has the ability to affect those returns through
its power over the entity. In assessing control, only substantive rights (i.e. rights that can be practically
exercised) are taken into account.
Investments in subsidiary undertakings
Investments in subsidiary undertakings are recorded in the Society\u2019s Statement of Financial Position at cost,
less any provision for impairment. The Group Accounts consolidate the financial statements of the Society and
all its subsidiary undertakings, eliminating intra-Group transactions and balances.
The Group accounts for business combinations using the acquisition method when control is transferred to
the Group. The consideration transferred in the acquisition is measured at fair value, as are the separately
identifiable net assets acquired. Any goodwill arising is accounted for in accordance with the Group\u2019s
accounting policy for goodwill (see Note 1e)). Any gain on a bargain purchase is recognised in profit or loss
immediately. All transaction or acquisition costs are written off to the Income Statement as incurred.
In accordance with International Financial Reporting Standard (IFRS) 3
Business Combinations (2008)
,
goodwill is accounted for only upon the acquisition of a subsidiary undertaking or as a result of a business
combination. Subsequent changes in the Group\u2019s interest in a subsidiary undertaking, where control is retained,
are recognised in equity. In accordance with IFRS 10
Consolidated Financial Statements (2011)
, for business
combinations which have taken place from 1 January 2010 onwards, all transactions relating to ownership
interests with non-controlling interests are recorded in equity if there has been no change in control.
When the Group loses control over a subsidiary, through disposal or other changes in circumstances, it
derecognises the assets and liabilities of the subsidiary and any associated goodwill, as well as any related
non-controlling interest and other components of equity. Any resulting gain or loss is recognised in the Income
Statement.
Put options
Within a number of subsidiary undertakings where the Group has less than 100% ownership, there is an option
for the non-controlling shareholders to require the Group to purchase their shares at some point in the future.
In accordance with IAS 32
Financial Instruments: Presentation
, the Group recognises the present value of
these options as a financial obligation, along with recognition of further goodwill on the future purchase of
remaining non-controlling interests. Under this accounting policy the Group consolidates 100% of the results of
such subsidiary undertakings to reflect the 100% implicit ownership in the recording of the future purchase of
the non-controlling interests\u2019 shareholdings (i.e. the put option liability).
Any changes in the valuation of a put option obligation in respect of an entity acquired after 1 January 2010
are credited or charged through the Income Statement line \u2018Fair value (losses) / gains on financial instruments
mandatorily held at FVTPL\u2019. Put options issued prior to 1 January 2010 are accounted for in accordance with
IAS 27
Consolidated and Separate Financial Statements (2003)
and IFRS 3
Business Combinations (2004)
and
any adjustment to the Group\u2019s estimation of the present value of the put option liability results in an
adjustment to goodwill. Dividends paid to the non-controlling interests are charged through the \u2018Administrative
expenses\u2019 line in the Income Statement. The change in fair value of the liability due to the accretion of the
discount of the liability is expensed through the Income Statement line \u2018Interest payable and similar charges\u2019.
Joint ventures
A joint venture is an undertaking in which the Group has joint control and has rights to the net assets of the
arrangement.
The results and assets and liabilities of joint ventures are accounted for in these consolidated financial
statements using the equity method of accounting. Investments in joint ventures are carried within the
Statement of Financial Position at cost, as adjusted by post-acquisition changes in the Group\u2019s share of the net
assets of the joint venture, less any impairment in the value of individual investments.
Equity share investments
An equity share investment is an investment in the share capital of a company where the Group does not have
significant influence.
Unconsolidated structured entities
The Group invests in structured entities where the principal purpose of the structured entity is to provide
investors with access to specific portfolios of assets and also provide the investor liquidity through the
securitising of financial assets. A structured entity is one that has been set up so that any voting rights or
similar rights are not the determining factor in deciding which party controls the entity, such as when any
voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual
arrangements.
A structured entity often has some or all of the following characteristics:
\u2022 Restricted activities;
\u2022 A narrow and well-defined objective;
\u2022 Insufficient equity to permit the structured entity to finance its activities without subordinated financial
support.
Third party funding entities
The Group invests in structured entities through the purchase of issued mortgage backed securities, as
disclosed in Note 14. These structured funding entities are not consolidated into the Group Accounts because
the Group does not have the ability to direct the activities of the entities in question and does not control these
entities through voting rights, contractual rights, funding agreements or any other means. The Group\u2019s
involvement is in relation to investment activity only.
Interests in unconsolidated structured entities
The Group\u2019s interests in unconsolidated structured entities refer to involvement that exposes the Group to
variability of returns from the performance of the structured entities.
Income derived from involvement with unconsolidated structured entities
Interest income on funding provided to unconsolidated structured entities is recognised within the Income
Statement line \u2018Interest receivable and similar income\u2019.
Special purpose funding vehicles
The Society has transferred the beneficial interest in certain portfolios of loans and advances to customers to
special purpose funding vehicles (SPVs). These SPVs enable the subsequent raising of debt, either by the SPVs
or the Society, to investors who gain the security of the underlying assets as collateral. The SPVs are fully
consolidated into the Group Accounts in accordance with IFRS 10.
The transfers of the beneficial interest in these loans to the SPVs are not treated as sales by the Society and
are not derecognised. The Society continues to recognise these assets within its own Statement of Financial
Position after the transfer because it retains substantially all the risks and rewards of these mortgage
portfolios through the receipt of interest income and deferred consideration from the SPVs for the transfer of
the beneficial interest in the mortgage loans. For securitisations, in the accounts of the Society, the proceeds
received from the transfer of mortgage loans are accounted for as a deemed loan repayable to the SPV and
are included in \u2018Amounts owed to other customers\u2019 within the Society\u2019s Statement of Financial Position.
Where the Society issues the debt, as is the case for the covered bonds (see Note 20a)), it then lends the
proceeds on back-to-back terms to Skipton Covered Bonds Limited Liability Partnership (LLP); the proceeds
lent to the LLP are known as the \u2018term advance\u2019. Some or all of the proceeds from the term advance are then
paid to the Society from the LLP as consideration for the beneficial interest in the mortgage pool and this is
accounted for as a deemed loan repayable to the LLP. In the accounts of the Society, the term advance and the
deemed loan are not recognised separately as additional assets and liabilities; the difference between the term
advance and the deemed loan are shown net within the Society\u2019s Statement of Financial Position as an amount
owed from subsidiary undertakings. This is to avoid the \u2018grossing up\u2019 of the Statement of Financial Position.
To manage interest rate risk, the Society enters into interest rate swap arrangements with the LLP; the Society
receives interest payments from the LLP relating to receipts on the mortgages in the pool and pays a floating
rate of interest to the LLP. In accordance with IFRS 9 these swap arrangements are treated as part of the
deemed loan and not separately fair valued because the relevant mortgage loans to which the interest swaps
relate are not derecognised. All other derivatives relating to securitisations are treated as explained in Note 1f).
To manage currency risk arising from the Euro-denominated covered bond issuances, the LLP has entered into
a cross-currency swap transaction. The derivative is designated in a hedge accounting relationship against the
term advance, which mirrors the conditions of the debt issued, effectively hedging the debt issued by the
Society. In accordance with IFRS 9, any cost for currency basis spread priced within the cross-currency swap is
permitted to be excluded from the hedge relationship and is recognised directly in reserves (the cost of
hedging reserve). The Group has elected to apply this treatment for this hedge relationship. See Note 1f) for
further details.
Further details on the nature and amount of the beneficial interest transferred to the SPVs can be found in
Note 16 to these financial statements.
e) Intangible assets
Goodwill
Goodwill arising on the acquisition of Group undertakings or other businesses represents the excess of the fair
value of the consideration paid over the fair value of separately identifiable net assets acquired at the date of
acquisition. Goodwill arising on the acquisition of subsidiary undertakings is included in the \u2018Intangible assets\u2019
line within the Statement of Financial Position. Goodwill arising on the acquisition of joint ventures, associates
or other businesses is included within the carrying value of the underlying investment within the Statement of
Financial Position.
Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated
impairment losses, and is reviewed for impairment, at least, at each reporting date. Any impairment is
recognised in the Income Statement.
For the purposes of impairment testing, goodwill is allocated to each of the Group\u2019s cash generating units
(CGUs), or groups of CGUs, that is expected to benefit from the synergies of combination. Each unit or group
of units to which the goodwill is so allocated shall a) represent the lowest level at which the goodwill is
monitored for internal management purposes and b) not be larger than an operating segment; at Skipton
Group level, the allocation of goodwill typically reflects the Group\u2019s operating segments.
The impairment test compares the carrying value of the CGU (or group of CGUs), being its net assets plus
associated goodwill, to its associated value in use. The value in use calculations are carried out by discounting
the forecast future cash flows of the CGU (or group of CGUs) to present value (see Note 25). Future cash flows
are ordinarily based upon the corporate plans of the CGUs for the next five years and assumed growth
thereafter, generally in line with long-term growth rates. The cash flows are extrapolated for subsequent years
indefinitely (or a specific number of years where circumstances dictate), to reflect the fact that CGUs are held
for the long-term. The Group estimates discount rates based upon the weighted average cost of capital which
is adjusted to take account of the market risks associated with each CGU.
Goodwill arising on acquisitions before the transition to IFRS on 1 January 2005 has been retained at its
previous UK GAAP amount and is reviewed for impairment, at least, at each reporting date, as above.
Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of
any goodwill allocated to the CGU (or group of CGUs), and then to reduce the carrying amounts of the other
assets in the CGUs on a pro-rata basis.
Computer software, databases, brands and customer contracts
In accordance with IAS 38
Intangible Assets
, computer software, databases, brands and customer contracts
are recognised as an intangible asset if, and only if, the cost incurred leads to the creation of an identifiable
asset whose cost can be measured reliably and it is probable that the asset created will generate future
economic benefits which will flow to the Group. Furthermore, brands and customer contracts are only eligible
to be recognised as an intangible asset when purchased externally or when acquired as part of a business
combination; internally generated brands and customer contracts are not capitalised. Expenditure incurred to
maintain existing levels of performance is recognised as an expense as incurred.
Intangible assets are initially recognised at cost, or at fair value when acquired as part of a business
combination, and subsequently amortised from the date they are available for use using the straight-line
method over their estimated useful economic lives (unless deemed to have an indefinite economic life), which
can be up to 10 years. Amortisation methods, useful lives and residual values are reviewed at each reporting
date and adjusted if appropriate.
Intangible assets are tested for impairment at each reporting date or when there is an indication of
impairment. The Group identifies impairment by comparing the future economic benefit to the Group against
the carrying value of the asset. The assessment of future economic benefit includes value in use calculations
to determine recoverable amounts for cash generating units.
f) Financial assets
In accordance with IFRS 9, the financial assets of the Group are each classified into one of three categories
(amortised cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss
(FVTPL)), further details of which are provided below.
In classifying each financial asset, the Group assesses:
\u2022 The objective of the business model in which the financial asset is held; and
\u2022 Whether the contractual cash flows of the financial asset are \u2018solely payments of principal and interest\u2019
(SPPI).
Financial assets are reclassified when, and only when, the Group changes its business model for managing the
assets.
Business model assessment
The Group\u2019s business model assessment is made at a portfolio level as this best reflects the way the business
is managed and how information is provided to management. The information considered includes:
\u2022 The stated policies and objectives for the portfolio and the operation of those policies in practice. These
include whether management\u2019s strategy focuses on earning contractual interest income, matching the
duration of the financial assets to the duration of any related liabilities or realising cash flows through the
sale of the assets;
\u2022 How the performance of the portfolio is evaluated and reported to the Group\u2019s management;
\u2022 The risks that affect the performance of the business model (and the financial assets held within that
business model) and how those risks are managed;
\u2022 The frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales
and expectations about future sales activity. Transfers of financial assets to third parties in transactions
that do not qualify for derecognition are not considered sales for this purpose, consistent with the Group\u2019s
continuing recognition of the assets.
Solely Payment of Principal and Interest (SPPI) assessment
For the purposes of the Group\u2019s SPPI assessment, \u2018principal\u2019 is defined as the fair value of the financial asset
on initial recognition. \u2018Interest\u2019 is defined as consideration for the time value of money and for the credit risk
associated with the principal amount outstanding during a particular period of time and for other basic lending
risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Group
considers the contractual terms of the instrument. This includes assessing whether the financial asset
contains a contractual term that could change the timing or amount of contractual cash flows such that it
would not meet this condition. In making this assessment, the Group considers:
\u2022 Terms that may adjust the contractual coupon rate, including variable-rate features;
\u2022 Contingent events that would change the amount or timing of cash flows;
\u2022 Prepayment and extension features; and
\u2022 Terms that limit the Group\u2019s claim to cash flows from specified assets (e.g. non-recourse features).
As a result of the assessments outlined above, the financial assets of the Group have been classified as
follows:
At amortised cost
A financial asset is measured at amortised cost only if it meets both of the following conditions and is not
designated as at fair value through profit or loss (FVTPL):
\u2022 It is held within a business model whose objective is to hold assets to collect contractual cash flows (\u2018held
to collect\u2019 business model); and
\u2022 Its contractual terms give rise on specified dates to cash flows that are \u2018solely payments of principal and
interest\u2019 (SPPI) on the principal amount outstanding.
The following have been assessed by the Group to be in a \u2018held to collect\u2019 business model and to have cash
flows that pass the SPPI test:
\u2022 Loans and advances to customers (except for a small number of loans held at FVTPL)
\u2022 Cash balances
\u2022 Loans and advances to credit institutions
\u2022 Trade receivables
\u2022 Loans to subsidiary undertakings (in the Society\u2019s Statement of Financial Position)
The Group\u2019s financial assets measured at amortised cost are initially recognised at fair value less any directly
attributable transaction costs. The assets are subsequently measured at amortised cost using the effective
interest method, less impairment loss allowances. The effective interest method calculates an interest rate
which exactly discounts the forecast cash flows of an asset over its expected life back to its carrying value.
For financial assets that are not credit-impaired (see Note 1h)), interest revenue is calculated by applying the
effective interest rate to the gross carrying amount of the asset. For financial assets that are credit-impaired,
interest revenue is calculated by applying the effective interest rate to the amortised cost of the asset.
In accordance with the effective interest method, directly attributable upfront costs and fees such as
cashbacks, mortgage premia paid or discounts received on acquisition of mortgage books, lending charges
paid by customers, procuration fees and completion fees are deferred and recognised over the expected life of
mortgage assets. Upfront costs that are attributable to a mortgage asset\u2019s fixed interest rate period are
amortised over that fixed rate period (or shorter period, if deemed appropriate). Historical and forecast
mortgage redemption data and management judgement of future performance are used to estimate the
expected lives of mortgage assets.
A change to management\u2019s estimate of expected mortgage lives results in an immediate adjustment to the
carrying amount of the mortgage asset (discounted at its effective interest rate) at the point this change is
made, which recalculates the carrying value to account for the revised assumptions.
Included in loans and advances to customers of the Society are balances which have been used to secure
funding issued by the Group\u2019s special purpose funding vehicles which are consolidated into the Group
Accounts, further details of which are included in Note 20a). The beneficial interest in the underlying loans has
been transferred to these entities. The loans are retained within the Society\u2019s Statement of Financial Position
as the Society retains substantially all the risks and rewards relating to the loans.
In accordance with IFRS 9, an impairment loss allowance is determined for financial assets at amortised cost
in relation to expected credit losses (ECLs; see Note 1h) for details on measurement of ECLs). The movement
in the impairment loss allowance recognised during the period is charged or credited to the Income Statement.
At fair value through other comprehensive income (FVOCI)
A financial asset is measured at FVOCI only if it meets both of the following conditions and is not designated
as at FVTPL:
\u2022 It is held within a business model whose objective is achieved by both collecting contractual cash flows and
selling financial assets (\u2018held to collect and sell\u2019 business model); and
\u2022 Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
The majority of the Group\u2019s debt securities, which are held to manage liquidity requirements, have been
assessed by the Group to be in a \u2018held to collect and sell\u2019 business model and to have cash flows that pass the
SPPI test.
Financial assets held at FVOCI are initially recognised at fair value plus directly attributable transaction costs,
with subsequent changes in fair value recognised in equity. The majority of fair values of financial assets held
at FVOCI are based on quoted prices, which represent the bid price. Where debt securities held at FVOCI do not
have quoted prices available, the fair value is based on the present value of discounted cashflows using
market observable inputs.
In accordance with IFRS 9, an impairment loss allowance is determined for debt securities measured at FVOCI
in relation to ECLs. For debt instruments measured at FVOCI, the impairment loss allowance is not deducted
from the carrying amount of the asset; instead the loss allowance is recognised through other comprehensive
income. The movement in the impairment loss allowance recognised during the period is charged or credited
to the Income Statement.
Interest income is recognised in the Income Statement on an effective interest basis. When the debt
instruments are derecognised, the accumulated gains or losses within equity are reclassified to the Income
Statement.
The premia and discounts arising on the purchase of these assets are amortised over the period to the
maturity date of the security on an effective interest basis. Any amounts amortised are charged or credited to
the Income Statement in the relevant financial periods.
At fair value through profit or loss (FVTPL)
All financial assets which are not classified as either amortised cost or FVOCI, as described above, are
measured at FVTPL. This includes all derivative financial assets. On initial recognition the Group may
irrevocably designate as FVTPL a financial asset that otherwise meets the requirements to be measured at
either amortised cost or FVOCI, if so doing eliminates or significantly reduces an accounting mismatch that
would otherwise arise.
Loans and advances to customers
A small number of loans are held at FVTPL because they contain contractual cash flows which do not pass the
SPPI test. These loans consist mainly of certain lifetime mortgages. The fair value of these loans is
determined by discounting future expected cash flows. Where the portfolio is so small that a probabilistic
methodology to estimate future cash flows is not appropriate, management assumes that voluntary
prepayments will be 100% in year one.
Equity release portfolio
The Group holds an equity release portfolio. The mortgage products within this portfolio provide the customer
with a \u2018no negative equity guarantee\u2019 (NNEG), which is an embedded derivative. Under IFRS 9, the equity
release portfolio and the NNEG are assessed together as a hybrid financial instrument. The Group assessed
the characteristics of the equity release cash flows and concluded that the contractual terms do not give rise
on specified dates to cash flows that are solely payments of principal and interest. As a result, the equity
release portfolio is classified as FVTPL.
The existence of the NNEG means that the Group\u2019s maximum return on redemption of these loans is limited to
the value of the customer\u2019s property at that time. The Group\u2019s exposure to potential losses as a result of the
NNEG is limited in part by a guarantee provided to the Group by a third party for the longevity element of this
risk. Due to the structured nature of the portfolio there is no single industry pricing methodology and
assumptions for valuing these products differ by institution. Further complexity arises on a portion of the
portfolio due to the customer interest rate being linked to the Retail Price Index (RPI).
A stochastic model was chosen and devised internally for the purpose of valuing this portfolio. The model
uses inputs including mortality rates, voluntary prepayment rates, estimates of future RPI and a House Price
Index (HPI) to predict future cash flows on the portfolio. These are then discounted back to present value
using a discount curve based on a Sterling Overnight Index Average (SONIA) curve plus an illiquidity spread.
The illiquidity spread reflects the fact that no repayments are made by the customer until the product redeems
which may be many years into the future.
Where possible the inputs are market-driven or, where no market-driven data is available, based on
management judgement that is informed by observable data wherever possible. Due to the high level of
variability within these inputs, the model also runs several thousand scenarios for both the RPI and HPI inputs.
The Group has robust control procedures in place regarding all the inputs to the valuation model.
As this valuation technique uses one or more significant inputs that are not based on observable market data,
it is classed as a Level 3 valuation technique. For further details on the different levels of the fair value
hierarchy, see Note 46b). The impact of applying reasonably possible alternative assumptions of certain inputs
into the valuation of the portfolio is found in Note 1v).
Interest income on the equity release portfolio is recognised in the Income Statement on an effective interest
basis. Fair value gains or losses on the portfolio are recognised within the Income Statement line \u2018Fair value
(losses) / gains on financial instruments mandatorily held at FVTPL\u2019. Realised losses recognised on
redemption of loans within the portfolio are recognised within the Income Statement line \u2018Impairment and
provisions\u2019.
Derivative financial instruments
The Group\u2019s derivative financial instruments, which are held solely for hedging purposes, are measured and
held at fair value within the Statement of Financial Position. The Group has elected to adopt the hedge
accounting requirements of IFRS 9 for all hedge relationships covered by those requirements. As permitted
under IFRS 9, the Group continues to apply the requirements of IAS 39 for derivatives designated in a portfolio
fair value hedge. For all other derivatives designated in a hedging relationship, the Group applies the
requirements of IFRS 9.
The Group uses derivative financial instruments to hedge its exposure to market risks (for example, interest
rate risk) arising from operational, financing and investment activities. In accordance with its treasury policy
and the Building Societies Act 1986, the Group does not hold or issue derivative financial instruments for
trading purposes. In line with accounting standards, the changes in fair value of derivatives used to hedge
particular risks can either be offset in the Income Statement or deferred to equity.
There are two types of hedge accounting strategies that the Group undertakes and these are summarised
below:
\u2022 Fair value hedges - Where a derivative financial instrument hedges the changes in fair value of a recognised
asset or liability (or portion of a recognised asset or liability), any gain or loss on the hedging instrument is
recognised in the Income Statement. To the extent that there is an effective hedge relationship, the
associated hedged items (for example, mortgage assets) are stated at fair value in respect of the hedged
risk, with any gain or loss also recognised in the Income Statement. As a result, fair value movements in the
hedging instrument and in the hedged items offset each other and reduce income statement volatility. Any
residual fair value hedge ineffectiveness is also recognised in the Income Statement. In order to calculate
the fair value in respect of hedged risk in relation to mortgage assets and some retail savings, the Group
applies estimated prepayment assumptions using historical analysis. For fair value hedge relationships
where ineffectiveness would arise as a result of foreign currency basis spread, movements are recognised
in other comprehensive income (OCI) through the cost of hedging reserve (see below) in accordance with
IFRS 9.
\u2022 Cash flow hedges - Where a derivative financial instrument is designated as a hedge of the variability in
cash flows of a recognised asset or liability (or portion of a recognised asset or liability) or a highly
probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is
recognised in OCI and deferred in a separate reserve. The effective portion recognised in OCI is limited to
the cumulative change in fair value of the hedged item, determined on a present value basis, from inception
of the hedge. Any ineffective portion of the gain or loss on the hedging instrument is recognised in the
Income Statement immediately.
In accordance with IFRS 9, where foreign currency basis spread arises in fair value hedge relationships, this is
separated and excluded from the designation of a financial instrument as the hedging instrument; movements
relating to the foreign currency basis spread are recognised in OCI through the cost of hedging reserve. The
Group calculates the value of the foreign currency basis spread by comparing the change in value of the actual
foreign currency hedging instrument (excluding fees not relating to the hedge relationship) and the value of a
hypothetical instrument derived and valued using market data excluding foreign currency basis spread.
Hedge accounting relationships within the scope of IFRS 9 require hedge accounting to only be discontinued
when the qualifying criteria are no longer met. Additionally, if the hedge no longer meets the qualifying criteria
due to a mismatch in the hedge ratio, the relationship must be rebalanced if possible, rather than discontinuing
hedge accounting.
Fair values are determined by the three tier valuation hierarchy as defined in IFRS 13
Fair Value Measurement
and Amendments to IFRS 7
Financial Instruments: Disclosures
and as described in Note 46b). All derivatives
are carried as assets when their fair value is positive and as liabilities when their fair value is negative.
In valuing derivatives used to hedge our mortgage and savings portfolios, the Group has not valued them as
one net pool for market risk and credit risk management purposes as permitted under IFRS 13, but has valued
each derivative individually.
Interest on derivatives is included within interest receivable where the derivative economically hedges an asset
and within interest expense where the derivative economically hedges a liability, to align the recognition with
its economic purpose.
Fair value gains and losses on derivatives and hedged items that are posted to the Income Statement are
recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held
at FVTPL\u2019.
To the extent that the hedge is effective, unrealised fair value gains and losses on cash flow hedging
derivatives are recognised in the cash flow hedging reserve.
Where the Group enters into a cross-currency swap, as is the case for the issuance of Euro-denominated
covered bonds (see page 147), the Group recognises the movement in the fair value of these derivatives as
follows:
\u2022 Foreign exchange movements are recognised in the Income Statement line \u2018Interest payable and similar
charges\u2019;
\u2022 Movements due to interest rate risk are recognised in the Income Statement line \u2018Fair value (losses) / gains
on financial instruments mandatorily held at FVTPL\u2019; and
\u2022 Movements due to foreign currency basis spread are recognised directly in the cost of hedging reserve as
permitted by IFRS 9.
Equity share investments
Under IFRS 9 equity share investments are measured at FVTPL, except where an election is made at initial
recognition to irrevocably designate an equity share investment that is not held for trading to be classified as
FVOCI. The FVOCI election can be made on an instrument-by-instrument basis. The Group has made no FVOCI
elections in respect of its existing equity share investments; the Group\u2019s equity share investments are therefore
held at FVTPL. They are initially recognised at fair value, with subsequent changes in fair value being
recognised in the Income Statement. Transaction costs are expensed to the Income Statement.
Share warrants
Within other assets of the Group are amounts recognised in respect of share warrants held, or vested, in
unlisted entities. Amounts are also recognised, where appropriate, for certain put options associated with
these share warrants; these put options contain conditional contractual rights for the Group to put the
warrants back to the counterparty at a future date in exchange for cash. The Group assessed for these assets
the characteristics of the related cash flows and concluded that the contractual terms fail the SPPI test; these
assets are therefore classified by the Group as FVTPL. The fair value of share warrants is determined by
reference to information included in independent third-party valuations. The fair value of related put options is
based on management\u2019s assessment of the likelihood that criteria to receive payment will be met and is
discounted for the weighted average cost of capital.
Loan to defined benefit pension scheme
The Group holds a loan to the Skipton Building Society (2015) Group Pension Scheme. The loan is held at
FVTPL because it fails the SPPI test due to prepayment features that are contractually linked to the maturity
and value of specific illiquid assets held by the scheme. The fair value of this loan is determined by discounting
future expected cash flows. See Note 1v) for further details.
Debt securities
The Society holds in its Statement of Financial Position residential mortgage backed securities that were
issued in previous periods by the Group\u2019s securitisation vehicles. Junior tranches of these securities are held at
FVTPL because they fail the SPPI test due to an elevated level of credit risk relative to other tranches.
g) Financial liabilities
In accordance with IFRS 9, the financial liabilities of the Group are classified as measured at either amortised
cost or FVTPL. A financial liability is classified as at FVTPL if it meets the definition of \u2018held for trading\u2019, which
includes derivatives (except for derivatives that are financial guarantee contracts or which are designated and
effective hedging instruments). On initial recognition the Group may irrevocably designate as FVTPL a financial
liability that otherwise meets the requirements to be measured at amortised cost if so doing results in more
relevant information; this can be either because it eliminates or significantly reduces an accounting mismatch
that would otherwise arise, or because a group of financial liabilities is managed and evaluated on a fair value
basis.
Financial liabilities at FVTPL are measured at fair value. Gains and losses, including any interest expense, are
recognised in profit or loss unless the financial liability is one that was designated as FVTPL, in which case fair
value changes are presented as follows:
\u2022 The amount of fair value change that is attributable to changes in the credit risk of the liability is presented
in other comprehensive income (except where this would create or enlarge an accounting mismatch in
profit or loss); and
\u2022 The remaining amount of fair value change is presented in profit or loss.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method,
with any interest expense being recognised in profit or loss. Any gain or loss on derecognition is also
recognised in profit or loss.
The financial liabilities of the Group have been classified as set out below:
Borrowings, comprising shares, deposits and debt securities in issue, and subordinated liabilities are
recognised initially at fair value, being the amounts deposited or proceeds issued, net of premia, discounts and
transaction costs incurred. Borrowings and subordinated liabilities are subsequently measured at amortised
cost using the effective interest method. Derivative liabilities and the fair value of the put option obligation are
measured at fair value through profit or loss.
Permanent Interest-Bearing Shares (PIBS) with no fixed maturity are classified as financial liabilities as
opposed to equity instruments since their terms do not permit the Directors discretion to avoid the payment of
interest, as the only instance where interest could not be paid on these instruments would be where capital
levels are insufficient to allow such a payment to be made. PIBS are carried at amortised cost.
Where financial liabilities are hedged, the Group elects to use fair value hedging for those hedged financial
liabilities. This treatment has been adopted to reduce the volatility that would otherwise exist given that the
interest rate risk element of the underlying liabilities is economically hedged by derivatives which are held at
fair value through profit or loss.
Within the Society\u2019s Statement of Financial Position, the deemed loan to the Society from Darrowby No. 6 plc is
measured at amortised cost; management considers that amortised cost best reflects the economic value of
the deemed loan, which is based on the value of the pool of mortgages that is used as collateral for the
securitisation transaction (and this pool is also held at amortised cost).
h) Impairment of financial assets
Under IFRS 9, impairment of financial assets is assessed using a forward-looking expected credit loss (ECL)
model. This model applies to financial assets measured at either amortised cost or FVOCI (except any equity
share investments held as such, as set out in Note 1f)). The Group recognises impairment loss allowances for
ECLs on the following financial assets that are not measured at FVTPL:
\u2022 Loans and advances to customers;
\u2022 Loan commitments (where a firm offer has been made to the customer);
\u2022 Trade receivables;
\u2022 Treasury assets, which comprise debt securities held at FVOCI, cash in hand and balances with the Bank of
England and loans and advances to credit institutions; and
\u2022 Loans to subsidiary undertakings (within the Society\u2019s Statement of Financial Position) and firm
commitments made in relation to such loans.
Measurement of Expected Credit Losses (ECLs)
ECLs are an unbiased probability-weighted estimate of the present value of credit losses, taking account of
forward-looking information that includes a range of possible economic outcomes. ECLs are measured as the
difference between contractual cash flows and expected cash flows, discounted at the asset's effective
interest rate. The assessment of impairment requires a number of estimates and assumptions, details of
which are included in Note 1v). The maximum period considered when estimating ECLs is the maximum
contractual period over which the Group is exposed to credit risk. The Group typically assesses ECLs on an
individual asset basis.
IFRS 9 requires an impairment loss allowance to be recognised at an amount equal to either 12-month ECLs
(\u2018stage 1\u2019 ECLs) or lifetime ECLs. Lifetime ECLs are ECLs that result from all possible default events over the
expected life of a financial instrument. 12-month ECLs are ECLs that result from default events that are
possible within the 12 months after the reporting date.
The Group measures impairment loss allowances at an amount equal to lifetime ECLs, except for the following
which are measured as 12-month ECLs:
\u2022 treasury assets that are determined to have low credit risk at the reporting date. The Group considers a
treasury asset to have low credit risk when its credit rating is equivalent to the globally understood
definition of 'investment grade'; and
\u2022 other financial assets on which credit risk has not increased significantly since their initial recognition
(except trade receivables, for which the Group will always recognise lifetime ECLs in accordance with the
simplified approach in IFRS 9).
Lifetime ECLs are required where the credit risk on a financial asset has increased significantly since initial
recognition (except for investment grade treasury assets, as noted above).
For the measurement of ECLs relating to residential mortgages and to treasury assets, the Group typically
assesses the probability of default, the expected exposure at the time of default, and the loss that is expected
to arise on default. The probabilities of default are adjusted to take account of expected customer
redemptions.
For commercial mortgages, the Group applies an average loss rate approach. A lifetime coverage ratio is
calculated, based on cumulative losses to date divided by the total value of loan balances redeemed over that
period. The lifetime coverage ratio is applied to accounts held in stage 2 and stage 3, discounted at each
account\u2019s EIR, to determine expected lifetime losses. For stage 1 accounts, a 12-month coverage ratio is
applied, discounted at each account\u2019s EIR, to determine expected 12-month losses. For accounts held in stage
3, additional account-specific impairment is typically held based on management judgement. Due
consideration is given to the impact of forward-looking information, including a range of possible future
economic scenarios; where appropriate, the level of impairment held is adjusted accordingly.
For debt factoring advances, stage 1 ECLs are based on an average 12-month loss rate as adjusted for
forward-looking assessments and other pertinent factors. For accounts held in stage 2 / stage 3, account-
specific allowances are held based on management judgement.
For trade receivables, the Group typically applies a simplified approach whereby, as permitted by IFRS 9, the
level of impairment held is always based on lifetime ECLs. This approach includes the use of provision
matrices based on historical credit loss experience, as adjusted for forward-looking factors.
For loan commitments where a firm offer has been made, ECLs are measured by the Group at 12-month losses
for the percentage of such commitments expected to convert from an outstanding customer offer into a
completed customer loan. The conversion factors applied are based on actual trends observed for the Group
and are aligned with the Group\u2019s Internal Ratings-Based (IRB) approach for regulatory capital purposes.
Financial assets that are subject to the impairment requirements of IFRS 9 are described according to their
ECL \u2018stage\u2019 as follows:
\u2022 \u2018Stage 1\u2019 - Assets for which a 12-month ECL is recognised;
\u2022 \u2018Stage 2\u2019 - Assets for which a lifetime ECL is recognised where there has been a \u2018significant increase in credit
risk\u2019 but which are not credit-impaired;
\u2022 \u2018Stage 3\u2019 - Assets for which a lifetime ECL is recognised and which are \u2018credit-impaired\u2019.
The Group\u2019s definitions of \u2018significant increase in credit risk\u2019 and \u2018credit-impaired\u2019 are detailed below. IFRS 9
includes specific requirements for financial assets that are credit-impaired when initially purchased or
originated (POCI assets). For POCI assets, an entity recognises only the cumulative change in lifetime ECLs
since initial recognition, discounted by the credit-adjusted effective interest rate. For POCI assets, interest
revenue is accounted for using the credit-adjusted effective interest rate. The Group had no POCI assets during
the current or prior period.
Forward-looking information
The Group incorporates forward-looking information into both its assessment of whether the credit risk of a
financial asset has increased significantly since initial recognition and its measurement of ECLs. The time
period over which the Group assesses forward-looking information is the maximum period over which the
Group is exposed to credit risk. The Group determines a range of representative scenarios for the possible
future direction of key economic variables; this includes forecasts of quarterly movements in these variables
for years one to five, followed by phased transition assumptions for years six to ten, arriving at a view of long-
run averages from year eleven onwards. The scenarios are derived by reference to external information where
this is publicly available and appropriate, together with internally generated views. A probability-weighting,
based on management judgement, is assigned to each scenario.
The Group\u2019s 'central' scenario represents a view of the most likely outcome and is aligned with information
used by the Group for other purposes such as strategic planning and budgeting. The selection of alternative
scenarios is intended to model the non-linear impact of economic factors on ECLs for the Group\u2019s financial
assets.
For UK mortgage impairment, including SIL\u2019s UK buy-to-let portfolio, the Group typically considers three
scenarios; this includes the central scenario, together with an upside scenario (more optimistic than the central
scenario) and a downside scenario (more pessimistic than the central scenario). For non-UK mortgage
impairment and for treasury asset impairment, the Group typically considers a central scenario and a downside
scenario. Further details are included in Note 1v).
Significant increase in credit risk
The Group monitors all financial assets and loan commitments that are subject to IFRS 9\u2019s impairment
requirements to assess whether there has been a significant increase in credit risk since initial recognition of
the asset. IFRS 9 includes a rebuttable presumption that credit risk has significantly increased when
contractual payments are more than 30 days past due.
For relevant models, the Group uses internal credit risk metrics that reflect its assessment of the probability of
default (PD) of individual counterparties. The credit risk of each exposure is assessed at initial recognition,
based on the available information about the counterparty. For loans and advances to customers, the credit
risk at initial recognition is typically assessed by reference to information as at the loan drawdown date; this
information is not always held by the Group for loans drawn down prior to 2007, in which case the Group uses
the earliest available information as a proxy (which is typically January 2007 data for pre-2007 loans that were
originated by the Society). Exposures are monitored and the credit risk assessment is updated to reflect
current information on an ongoing basis.
For residential mortgages, the Group considers that credit risk has significantly increased if one or more of the
following criteria are met:
\u2022 the remaining lifetime PD as at the reporting date, as compared to the remaining lifetime PD for this point in
time that was estimated on initial recognition of the asset, exceeds pre-determined thresholds which are set by
the Group and reviewed periodically. The thresholds applied will depend on the credit quality at initial
recognition, with a lower percentage change in PD being required for higher risk accounts. The use of an
absolute lifetime PD hurdle for residential mortgages is also applied where lifetime PD goes above 25%.
Further details are included in Note 1v);
\u2022 the account is forborne (page 158);
\u2022 the account is in arrears (no minimum);
\u2022 the account term has expired; or
\u2022 the account has a temporary arrangement in place, arranged via the Mortgage Charter Scheme, to repay
interest only.
For commercial mortgages, the Group considers that credit risk has significantly increased when an account is
in arrears (no minimum) or is forborne.
For residential and commercial mortgages, the above criteria for assessing significant increase in credit risk
ensures compliance with IFRS 9\u2019s backstop of more than 30 days past due.
For debt factoring advances, the Group considers that credit risk has significantly increased when an account
is placed on a watchlist.
For treasury assets, the Group applies criteria that consider the relative increase in the asset\u2019s lifetime PD, by
reference to external credit ratings where available. Notwithstanding these criteria, the Group considers that
credit risk has not increased significantly for any treasury asset that is determined to have 'low' credit risk at
the reporting date. The Group considers a treasury asset to have low credit risk when its credit rating is
equivalent to the globally understood definition of \u2018investment grade\u2019.
The Society\u2019s Statement of Financial Position includes loans to subsidiary undertakings that are repayable on
demand. For these loans, the Society considers that credit risk has significantly increased when the subsidiary
undertaking no longer has sufficient liquid assets to repay the loan if demanded at the reporting date or where
other factors indicate that, in the judgement of management, a significant increase in credit risk has occurred;
this assessment takes into account the specific characteristics of each subsidiary loan and the subsidiary\u2019s
own business.
Definition of default
For residential mortgages, the Group\u2019s definition of default is aligned with its existing IRB definition of default
for regulatory capital purposes. For IFRS 9 accounting purposes, stage 3 loans which no longer meet any of
the default criteria are subject to a six month minimum probation period before they become eligible for
transfer out of stage 3. Default occurs when one or more of the following criteria is met:
\u2022 The borrower is 90 days or more past due on their contractual payments.
\u2022 The borrower meets unlikeliness to pay criteria, which indicates the borrower is in significant financial
difficulty. The instances are:
\u2022 the loan is in repossession;
\u2022 the borrower has filed for bankruptcy;
\u2022 at least two payments are in arrears and forbearance activity has been applied; or
\u2022 other evidence is available that the customer is not going to be able to meet their loan
commitments.
For commercial mortgages, stage 3 loans which no longer meet any of the default criteria are subject to a
three month minimum probation period before they become eligible for transfer out of stage 3. Default occurs
when one or more of the following criteria is met:
\u2022 The borrower is 90 days or more past due on their contractual payments;
\u2022 The loan is in repossession;
\u2022 A receiver has been appointed;
\u2022 The mortgage term has expired; or
\u2022 Other evidence is available that the customer is not going to be able to meet their loan commitments.
For debt factoring advances, the Group considers that an account is in default when there is no reasonable
expectation of recovery, typically due to financial difficulties of the customer.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets (other than those held at FVTPL) are
credit-impaired. For those assets that have become credit-impaired, interest revenue is subsequently
calculated by applying the effective interest rate to the amortised cost of the asset.
A financial asset is 'credit-impaired' when one or more events have occurred that have a detrimental impact on
the estimated future cash flows of the financial asset. Evidence that a financial asset is credit-impaired
includes the following:
\u2022 a breach of contract such as a default; or
\u2022 the disappearance of an active market for a security because of financial difficulties.
For residential and commercial mortgages, the Group considers that a loan that meets the definition of default
is credit-impaired. For loans to no longer be considered credit-impaired, consistently good repayments must be
demonstrated over a period of time, being not less than six months for residential loans and not less than
three months for commercial loans.
For debt factoring advances, the Group considers that an account is credit-impaired when there is no
reasonable expectation of recovery, typically due to financial difficulties of the customer.
To assess whether sovereign and corporate debt instruments are credit-impaired, the Group considers factors
such as bond yields, credit ratings and the ability of the borrower to raise funding.
To assess whether trade receivables are credit-impaired, the Group considers factors such as the ageing
profile, historical default rates and specific case knowledge.
Forbearance
In certain circumstances, the Group renegotiates loans to customers in financial difficulties (referred to as
forbearance activities) to maximise collection opportunities and minimise the risk of default whilst ensuring
the best outcome for the customer. Under the Group\u2019s forbearance policy, loan forbearance is granted on a
selective basis if the customer is currently in default on their loan or if there is a high risk of default, there is
evidence that the customer made all reasonable efforts to pay under the original contractual terms and the
customer is expected to be able to meet the revised terms.
The revised terms typically include extending the maturity of the loan, changing the timing of interest payments
or amending the terms of loan covenants. Both retail and commercial loans are subject to the forbearance
policy. The Retail Credit Committee regularly reviews reports on forbearance activities.
For the purposes of disclosures in these financial statements, loans with renegotiated terms are defined as
loans that have been restructured due to a deterioration in the borrower\u2019s financial position, for which the
Group has made concessions by agreeing to terms and conditions that are more favourable for the borrower
than the Group had provided initially and that it would not otherwise consider.
Write-offs
A financial asset is written off (in full or in part) when the Group judges there to be no reasonable expectation
that the asset can be recovered (in full or in part). This is typically the case when the Group determines that the
borrower does not have assets or sources of income that could generate sufficient cash flows to repay the
amounts subject to the write-off. This assessment is performed at the individual asset level. The related
impairment loss allowance is also written off once all the necessary procedures have been completed and the
loss amount has crystallised. Financial assets that are written off could still be subject to enforcement
activities and subsequent recoveries of amounts previously written off decrease the amount of impairment
losses recorded in the Income Statement.
i) Financial assets and liabilities \u2013 modification, derecognition and offsetting
Modification
The Group sometimes renegotiates or otherwise modifies the contractual cash flows of loans to customers.
When this happens, the Group assesses whether or not the new cash flows are substantially different to the
original cash flows.
If the cash flows are substantially different, then the contractual rights to cash flows from the original loan are
deemed to have expired. In this case, the original loan is derecognised (as discussed below) and a new loan is
recognised initially at fair value. Where impairment is held against the original loan (i.e. the loan is not held at
FVTPL), the original loan is derecognised from its existing impairment stage (which may be stage 1, stage 2 or
stage 3) and the new loan is initially recognised in stage 1 with its new origination date. Thereafter, the
assessment of whether there has been a significant increase in credit risk is made by reference to changes in
credit risk for the new loan starting from the new origination date. Examples of loan modification events for
which the Group typically applies derecognition include an existing borrower switching to a new mortgage
product and an existing borrower porting their loan to a new property.
If the cash flows of a modified loan carried at amortised cost are not substantially different, then the
modification does not result in derecognition of the loan (an example of a loan modification event for which
the Group typically does not apply derecognition is the application of forbearance strategies). In this case, the
Group recalculates the gross carrying amount of the loan and recognises the amount arising from adjusting
the gross carrying amount as a modification gain or loss in the Income Statement. If such a modification is
carried out because of financial difficulties of the borrower, the gain or loss is presented together with
impairment losses. In other cases, it is presented within interest income. For residential mortgages, the Group
assesses whether there has been a significant increase in credit risk by comparing the remaining lifetime PD
as at the reporting date (based on the modified contractual terms) to the remaining lifetime PD for this point in
time that was estimated at initial recognition (based on the original, unmodified contractual terms).
Derecognition
The Group derecognises a financial asset when the contractual rights to receive the asset\u2019s cash flows expire
(including deemed expiry arising from a modification with substantially different terms as discussed above), or
when the contractual rights have been transferred and either i) the Group transfers substantially all the risks
and rewards of ownership, or ii) the Group neither transfers nor retains substantially all the risks and rewards
of ownership and the Group has not retained control.
On derecognition of a financial asset, the difference between the carrying amount of the asset and the sum of
i) the consideration received (including any new asset obtained less any new liability assumed) and ii) any
cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or
loss.
The Society has not derecognised the loans transferred to the Group\u2019s special purpose funding vehicles
because substantially all the risks and rewards are retained by the Society as detailed in Note 1d).
Financial liabilities are derecognised only when the obligation is discharged, cancelled or has expired.
Offsetting
Financial assets and financial liabilities are offset and the net amount presented within the Statement of
Financial Position when, and only when, the Group has a legally enforceable right to offset the amounts and it
intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
Income and expenses are presented on a net basis only when permitted under IFRS. With the exception of
bank balances included within \u2018Loans and advances to credit institutions\u2019, there are no other financial assets or
liabilities which are offset within the Statement of Financial Position and all other financial assets and liabilities
are presented on a gross basis. The Group has a cash-pooling arrangement in place with one of its banking
counterparties between its subsidiaries and the Society. At the reporting date, the Group has a legally
enforceable right to offset balances in these bank accounts and so, in accordance with IAS 32, the net
presentation more appropriately reflects the substance of the arrangement. At 31 December 2025 the Group
has offset \u00a320.0m (31 December 2024: \u00a318.0m) of balances against \u2018Loans and advances to credit
institutions\u2019 that would otherwise be shown within \u2018Amounts owed to credit institutions\u2019 within the Statement
of Financial Position.
j) Foreign currency transactions
Transactions in foreign currencies are translated into the respective functional currencies of Group entities
using the exchange rates prevailing at the dates of the transactions. At the reporting date, monetary assets
and liabilities denominated in foreign currencies are translated into the functional currency at the closing rate
of exchange. Exchange differences are taken to the Income Statement as they arise.
On consolidation, the income statements of subsidiary undertakings with non-Sterling functional currencies
are translated into Sterling (the Group\u2019s presentational currency) at the monthly average rates for the period
and their assets and liabilities are translated into Sterling at the closing rate of exchange at the reporting date.
Any exchange differences arising on the translation of net assets of overseas subsidiary undertakings are
taken to reserves as a separate component of equity and disclosed in the Statement of Comprehensive
Income, except to the extent that the translation difference is allocated to the non-controlling interests.
Where a foreign operation is disposed of in its entirety, or partially disposed of such that control is lost, the
cumulative amount of translation differences recognised as a separate component of equity is reclassified to
the Income Statement as part of the gain or loss on disposal.
k) Taxation
The income tax expense or credit on the profit or loss for the year comprises current tax and deferred tax.
Income tax is recognised in the Income Statement except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity and disclosed in the Statement of Comprehensive
Income.
Current tax is the expected tax payable or receivable on the taxable income or expenditure for the year, using
tax rates in force during the period, and any adjustments to tax payable in respect of previous years. Current
tax assets and current tax liabilities are offset within the Statement of Financial Position if, and only if, the
Group has a legally enforceable right to offset the recognised amounts and intends either to settle the taxes in
question on a net basis or to realise the asset and settle the liability simultaneously.
Deferred tax recognises temporary differences between the carrying amounts of assets and liabilities for
accounting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the
following temporary differences: the initial recognition of goodwill, the initial recognition of assets and
liabilities in a transaction that is not a business combination and that affects neither accounting nor income
and expenditure, and differences relating to investments in subsidiary undertakings, associates and joint
arrangements to the extent that it is probable they will not reverse in the foreseeable future. Deferred tax is
measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which
temporary differences reverse, based on tax rates and laws enacted or substantively enacted at the reporting
date.
A deferred tax asset is only recognised to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised. Deferred tax assets are reviewed at least annually and are
reduced to the extent that it is no longer probable that the related tax benefit will be realised; in making this
assessment, consideration is given to the likelihood of recovery within a reasonably foreseeable timeframe,
typically the Group\u2019s five year corporate planning period. Deferred tax assets and deferred tax liabilities are
offset if, and only if, the deferred tax assets and deferred tax liabilities relate to income taxes levied by the
same taxation authority and the Group has a legally enforceable right to offset the related current tax assets
against the related current tax liabilities.
Pillar Two Model Rules
In December 2021 the Organisation for Economic Co-operation and Development (OECD) published detailed
rules to assist in the development of a landmark reform to the international tax system, including \u2018Pillar Two\u2019
tax rules which apply to multinational enterprises with consolidated annual revenues of more than \u20ac750m and
which seek to impose a minimum effective tax rate of 15% on each tax jurisdiction in which those enterprises
operate.
IAS 12
Income Taxes
does not offer specific guidance on accounting for Pillar Two income taxes; it is unclear
whether the Pillar Two model rules create additional temporary differences, whether to remeasure deferred
taxes for the Pillar Two model rules and which tax rate to use to measure deferred taxes. Further, the tax rate
that will apply to an entity\u2019s excess profit in future periods depends on a number of factors that are difficult to
forecast reliably.
In May 2023 the IASB published
International Tax Reform \u2014 Pillar Two Model Rules (Amendments to IAS 12)
.
The Amendments introduced a temporary mandatory exception from accounting for deferred taxes that arise
from the Pillar Two model rules and a requirement to disclose that the exception has been applied. The Group
has, for the years ended 31 December 2025 and 31 December 2024, applied the aforementioned exception
from accounting for deferred taxes that arise from the Pillar Two model rules.
l) Leases
Definition of a lease
Under IFRS 16 a contract is a lease, or contains a lease, if the contract conveys a right to control the use of an
identified asset for a period of time in exchange for consideration.
On transition to IFRS 16, the Group elected to apply the following practical expedient permitted by the
standard:
\u2022 For the purposes of identifying leases held by the Group, the Group elected to retain the assessments
previously made by the Group under IAS 17 and IFRIC 4; IFRS 16 was therefore initially applied at 1 January
2019 only to those contracts that were previously identified as leases under IAS 17 and IFRIC 4. Contracts
existing at 1 January 2019 that were not previously identified as leases under IAS 17 and IFRIC 4 were not
reassessed. The new IFRS 16 definition of a lease is therefore applied by the Group only to contracts
entered into, or changed, on or after 1 January 2019.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying
asset becomes available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities.
The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred
and lease payments made at or before the commencement date, less any lease incentives received. Where an
obligation is incurred by the Group, the cost also includes an estimate of costs for dismantling and removing
the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition
required by the terms and conditions of the lease.
If the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the
recognised right-of-use asset is depreciated over the useful life of the underlying asset. Otherwise, the right-of-
use asset is depreciated on a straight-line basis over the shorter of the estimated useful life of the right-of-use
asset and the lease term. In accordance with IAS 36
Impairment of Assets
, right-of-use assets are regularly
reviewed, at least annually, for indications of impairment. Any impairment identified is charged to the Income
Statement.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value
of lease payments to be made over the lease term. The lease payments for this purpose include fixed
payments (including in-substance fixed payments but deducting lease incentives receivable), variable lease
payments that depend on an index or a rate and amounts expected to be paid under residual value guarantees.
The lease payments also include the exercise price of a purchase option where reasonably certain to be
exercised by the Group, and payments of penalties for terminating a lease (if the lease term reflects the Group
exercising the option to terminate). Variable lease payments that do not depend on an index or a rate are
recognised as an expense in the period in which the event or condition that triggers the payment occurs.
The present value of lease payments is determined using an appropriate discount rate. The Group uses the
interest rate implicit in the lease where this can be readily determined; otherwise (and generally), the Group
uses its incremental borrowing rate at the lease commencement date.
After the commencement date, the lease liability is increased to reflect the accretion of interest and is reduced
for lease payments made. In addition, the lease liability is remeasured if there is a modification, a change in
lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the
underlying asset.
Exempt leases
The Group has elected to take the recognition exemption for short-term leases, except for property leases that
are short-term by virtue of being under renegotiation. Short-term leases are those which, at the
commencement date, have a lease term of not more than twelve months and do not contain a purchase
option.
Except for leases of motor vehicles, the Group has elected to take the recognition exemption for leases for
which the underlying asset is of low value when new. The Group considers an underlying asset to be of low
value where its value, when new, is not more than approximately \u00a34,000.
For exempt leases, the Group expenses lease rentals to the Income Statement on a straight-line basis over the
lease term.
Other practical expedients
Certain of the Group\u2019s lease contracts contain non-lease components (e.g. service charges). Except for
property leases, the Group has elected not to separate out the non-lease components and therefore to account
for these as part of the lease component. For property leases, the Group accounts separately for lease
components and non-lease components.
m) Employee benefits
Defined contribution pension arrangements
Obligations for contributions to defined contribution pension arrangements are recognised as an expense in
the Income Statement as incurred.
Defined benefit schemes
The Group currently operates three defined benefit pension schemes. Each scheme is administered by a
corporate Trustee and the funds of these schemes are separate from those of the Group.
Included within the Statement of Financial Position are the Group\u2019s net obligations in respect of the defined
benefit pension schemes. The obligation of each scheme is calculated separately by estimating the amount of
future benefit that employees have earned in return for their service in the current and prior periods.
That benefit is discounted to determine its present value, and the fair value of any scheme assets is deducted.
The discount rate is based on the average yield available from AA-rated corporate bonds of appropriate
duration. The calculation is performed by a qualified actuary using the projected unit credit method.
Net interest income for the defined benefit schemes comprises interest income on plan assets, less the
interest cost on the scheme liabilities, and interest on the effect of the asset ceiling. Net interest income
relating to the defined benefit pension schemes is recognised in \u2018Other operating income\u2019 in the Income
Statement.
Remeasurements of retirement benefit obligations, which comprise actuarial gains or losses (arising from the
differences between previous actuarial assumptions and actual experience), the return on plan assets
(excluding interest) and the effect of the asset ceiling (if any, excluding interest) are recognised in the
Statement of Comprehensive Income.
Service costs are recognised immediately in the Income Statement. When a plan is curtailed, the resulting gain
or loss on settlement is also recognised immediately in the Income Statement. The Group recognises gains or
losses on the settlement of a retirement benefit obligation when the settlement occurs.
Contributions are transferred to the schemes on a regular basis to secure the benefits provided under the rules
of the schemes. Pension contributions are assessed in accordance with the advice of a professionally-
qualified actuary.
n) Fees and commissions
The Group recognises fees and commissions receivable in accordance with IFRS 15
Revenue from Contracts
with Customers
. Revenue is measured based on the consideration specified in a contract with a customer.
Financial advice fees and commissions
Fees and commissions receivable from financial advice are recognised when both the customer has formally
accepted and all of the advice within their case has been contracted in the financial markets. A provision for
future clawbacks is made for repayment in the event of early termination by the customer.
Estate agency services
Estate agency commissions earned on the sales of properties and land and auction income are recognised on
the date contracts are exchanged unconditionally. Property management income is typically recognised when
the cash is received, which reflects the point at which income is earned and contractual obligations have been
fulfilled; an element of lettings income has been assessed as transferred over time, in line with the
performance obligations in the contract. Insurance commission is recognised upon fulfilment of contractual
obligations with a provision for future clawback repayment in the event of early termination by the customer.
Survey and valuation revenue is recognised on the date the survey or valuation report is completed, which
reflects the point at which all contractual obligations have been fulfilled; revenue and costs are recognised
gross of sub-contracted panel fees. Mortgage origination income is typically recognised on completion of the
mortgage transaction; an element of this income has been assessed as transferred over time, in line with the
performance obligations in the contract. Asset management commission is recognised on exchange of
contracts and additional services are recognised upon completion of work, both of which reflect the point at
which all performance obligations are considered to have been fulfilled.
Commercial property services
Income from commercial property services includes consultancy and advisory services, property management
and valuation services. Income is recognised either at a point in time when services have been fully provided,
or over a period of time as activity progresses and reflecting the satisfaction of performance obligations.
Under certain service contracts, the Group manages client expenditure and is obliged to purchase goods and
services from suppliers that are recharged to the customer at cost; such items are excluded from the amounts
reported by the Group for revenue and for expenses.
Software products and services
Revenue from software licence fees is recognised when access to the software has been made available to
the customer to enable implementation. Revenue from implementation and consulting services is recognised
in proportion to the stage of completion, typically in accordance with the achievement of contract milestones
or days expended. Customer support revenue and systems management revenue are recognised on a straight-
line basis over the period of the service rendered. The amount of revenue recognised is adjusted for expected
returns. Fees and commissions payable are generally recognised on an accruals basis as services are
received.
o) Property, plant and equipment Property, plant and equipment is measured at historical cost less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of those items. Depreciation is calculated to write down the cost of items of property, plant and equipment to their estimated residual values over their estimated useful lives as set out below on a straight-line basis unless stated otherwise. Land is not depreciated. Major items of property, plant and equipment purchased are depreciated on a monthly basis from the date the asset is available for utilisation. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted where appropriate. In accordance with IAS 36Impairment of Assets , all items of property, plant and equipment are regularly reviewed, at least annually, for indications of impairment. Any impairment identified is charged to the Income Statement. Subsequent expenditure on items of property, plant and equipment is capitalised only if the subsequent expenditure increases the item\u2019s revenue generating capabilities and it is probable that future economic benefits associated with the expenditure will flow to the Group. Any gain or loss on disposal of an item of property, plant and equipment is recognised in \u2018Other operating income\u2019 in the Income Statement. p) Segmental reporting In accordance with IFRS 8 Operating Segments , each operating segment is determined according to distinguishable operating components of the Group for which discrete financial information is available. The chief operating decision maker, the Board, regularly reviews internal reporting for each segment to appropriately allocate resources and assess their performance. The Group does not aggregate any of its operating segments for the purposes of financial reporting. q) Cash and cash equivalents For the purposes of the Statements of Cash Flows, cash comprises cash in hand and unrestricted loans and advances to credit institutions repayable on demand; it excludes the mandatory deposit the Society is required to place with the Bank of England. Cash equivalents comprise highly liquid unrestricted investments, typically with original maturities of less than three months, that are readily convertible into known amounts of cash with an insignificant risk of changes in value. The Statements of Cash Flows have been prepared using the indirect method. r) Investment properties Properties held by the Group for capital appreciation or which earn rentals are recognised as investment properties at cost less depreciation and impairment losses. The depreciation policy for investment properties is consistent with the policy for property, plant and equipment. Investment properties are regularly reviewed for indications of impairment and any impairment identified is charged to the Income Statement. Rental income from investment property is recognised over the term of the lease and is included in \u2018Other operating income\u2019 in the Income Statement. Any gain or loss on disposal of investment property is also recognised in \u2018Other operating income\u2019.
Freehold and long leasehold buildings
50 to 100 years
Special purpose freehold head office facilities
40 years
Refurbishment of freehold and long leasehold buildings
5 to 10 years
Short leasehold buildings
Period of lease
Equipment, fixtures and fittings
2 to 10 years
Motor vehicles
25% reducing balance
s) Sale and repurchase agreements
Investments and other securities may be lent or sold subject to a commitment to repurchase them (a \u2018repo\u2019).
Such securities are retained within the Statement of Financial Position when substantially all the risks and
rewards of ownership remain with the Group and the liability associated with the cash advanced is included
separately within the Statement of Financial Position.
The difference between the sale and repurchase price is accrued over the life of the agreement and recognised
within net interest income.
t) Provisions for liabilities
Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable
that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of
the obligation. The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at the reporting date. Further details can be found in Note 33.
u) Software as a service (SaaS)
A SaaS arrangement is a type of cloud computing arrangement, in which the supplier provides the customer
with access to application software residing on the supplier\u2019s cloud infrastructure; this infrastructure typically
comprises a collection of hardware and software, including networks, servers, operating systems and storage.
SaaS arrangements can include other services, such as technical support, implementation, data migration,
business process mapping, training and project management. The customer typically pays an all-inclusive fee
on a periodic basis. In addition, implementation costs may be incurred at inception of the arrangement.
Where the Group enters into a SaaS arrangement, the Group recognises a software asset only if such an asset
is received at commencement of the arrangement, either in the form of an intangible asset or a software lease,
and only from the date on which the Group obtains control of the software; 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 prepaid and
amortised on a systematic basis over the period to which they relate. Subject to the terms of the arrangement,
implementation costs associated with configuration and customisation of the software may also, where
appropriate, be prepaid over the period to which they relate. All other costs associated with implementation,
including internal time and resources, are expensed to the Income Statement as incurred.
v) Critical accounting judgements and estimates in applying accounting policies
Critical judgements
The Group has to make judgements in applying its accounting policies which affect the amounts recognised in
the financial statements. The key judgements management has made in applying the Group\u2019s accounting
policies are set out below.
Impairment of mortgage loans and advances
Assessing loan impairment in accordance with IFRS 9 requires the following key judgements:
\u2022 determining whether credit risk has significantly increased since the loan was initially recognised; and
\u2022 the definition of default.
Residential mortgages
For residential mortgages, management judges that significant increase in credit risk is determined by
reference to certain quantitative and qualitative criteria. The quantitative criteria involve measuring the relative
increase in lifetime probability of default (PD) for the loan. The qualitative criteria include the loan being in
forbearance, in arrears, term expired or has a temporary arrangement in place (via the Mortgage Charter
Scheme) to repay interest only. Management has further judged that the definition of default should align with
the Group\u2019s existing IRB definition for regulatory capital purposes. For IFRS 9 accounting purposes, stage 3
loans which no longer meet any of the default criteria are subject to a six month minimum probation period
before they become eligible for transfer out of stage 3. Further details are found in Note 1h).
Commercial loans
For commercial mortgages, management judges that credit risk has significantly increased when an account
is in arrears (no minimum) or has a live forbearance arrangement in place. When there is other evidence
available that the borrower will be unable to meet their loan commitments, the account is deemed to be in
default and thus transfers to Stage 3; in such cases, account specific impairment is held based on
management judgement. For IFRS 9 accounting purposes, stage 3 loans which no longer meet any of the
default criteria are subject to a three month minimum probation period before they become eligible for transfer
out of stage 3. Further details are found in Note 1h).
IFRS 16
When accounting for leases in accordance with IFRS 16 the Group makes the following key judgements that
have an effect on the reported amounts of assets and liabilities:
Lease term
The Group determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease where this is reasonably certain to be exercised, or any periods
covered by an option to terminate the lease where this is reasonably certain not to be exercised.
Many of the Group\u2019s leases, particularly property leases, contain options for the Group to extend and / or
terminate the lease term. The Group applies judgement in evaluating whether it is reasonably certain to
exercise these options, taking account of all relevant factors that create an economic incentive for it to do so.
After the lease commencement date, the Group reassesses the lease term if there has been a significant event
or change in circumstances that is within its control and which affects its ability to exercise (or not to exercise)
the option to renew and / or to terminate (e.g. a change in business strategy).
Critical estimates
The Group also makes estimates and assumptions that affect the reported amounts of assets and liabilities
within the next financial year.
Estimates and assumptions are evaluated on an ongoing basis and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances. The key estimates and assumptions are set out below.
Impairment of residential mortgages
The estimation of credit exposures for risk management purposes is complex and requires the use of models,
a number of inputs into which are sources of estimation and require the Group to apply judgement. Key
sources of estimation the Group uses to measure ECLs include:
\u2022 Probability of Default (PD) \u2013 the probability at a point in time that a customer will default;
\u2022 Exposure at Default (EAD) \u2013 the expected outstanding loan amount at the time of default;
\u2022 Loss Given Default (LGD) \u2013 the loss that is expected to arise on default, taking account of expected
recoveries from collateral held;
\u2022 Thresholds to determine whether credit risk has significantly increased; and
\u2022 Use of forward-looking information.
For residential mortgages, ECLs are measured by multiplying together the PD, EAD and LGD, and are
discounted using the loan\u2019s original effective interest rate. EAD is derived by adjusting the current outstanding
loan amount for expected cashflows to the date of default. LGD is estimated on a discounted cash flow basis
using the effective interest rate. The Group\u2019s LGD models consider factors including historical recovery rates
and possible future property price changes.
Credit risk information is collected by the Group, based on a range of qualitative and quantitative data
considered to be predictive of the risk of default and applying experienced credit judgement. The nature of the
exposure and type of borrower are taken into account in the analysis. The Group\u2019s PD models use the relevant
information to generate estimates of the remaining lifetime PD of exposures and how these are expected to
change over time. The PDs are adjusted to take account of expected customer redemptions and also for the
impact of forward-looking information.
The following data is typically used to monitor the Group's exposure to credit risk:
\u2022 Payment record, including payment ageing analysis;
\u2022 Forbearance activity;
\u2022 Changes in business, financial and economic conditions;
\u2022 Credit reference information supplied by external agencies; and
\u2022 Internally generated data of customer behaviour, affordability metrics etc.
For residential mortgages, the assessment of whether credit risk has significantly increased includes
assessing the degree by which the remaining lifetime PD at the reporting date has increased compared to
initial estimates. The Group determines thresholds for this purpose, expressed as a multiple of the initial PD
estimate. The thresholds vary according to the credit quality of the loan at initial recognition and they are set
with the aim of identifying accounts with significant increase in credit risk (SICR) before the borrower misses a
payment. The Group periodically reviews the effectiveness of the SICR criteria in achieving this objective. As a
result of this review, the multiples applied by the Group have been revised during the year in order to enhance
effectiveness; details of the changes, which do not materially impact these financial statements, are set out
below.
The Group also applies an absolute lifetime PD hurdle for residential mortgages where lifetime PD goes above 25%. These accounts are considered to meet SICR and will automatically be migrated to Stage 2. The review of SICR criteria also resulted in a change to the qualitative SICR criteria, to align the probation period for forborne accounts with that used in certain regulatory reporting standards. Impairment of commercial loans For commercial loans, the Group applies a Loss Rate method to measure ECLs; 12-month and lifetime loss rates are calculated based on the Group\u2019s average commercial losses since closure of the portfolio in 2008. Management considers the most critical estimates and assumptions to be the lifetime loss rate and any account-specific impairment based on management judgement. Forward-looking information The Group incorporates forward-looking information into both its assessment of whether the credit risk of a financial asset has increased significantly since initial recognition and its measurement of ECLs. In accordance with IFRS 9, the Group\u2019s estimate of ECLs is an unbiased and probability-weighted amount that reflects a range of possible outcomes. As outlined in Note 1h), the Group determines a range of representative scenarios for the possible future direction of key economic variables and a probability-weighting is assigned to each scenario. The Group\u2019s central scenario represents a view of the most likely outcome and is aligned with information used by the Group for other purposes such as strategic planning and budgeting. In addition, the Group incorporates an upside scenario (representing a more optimistic view than the central scenario) and a downside scenario (representing a more pessimistic view than the central scenario); the selection of these alternative scenarios is intended to model the non-linear impact of economic factors on ECLs for the Group\u2019s mortgage portfolios. The scenarios applied by the Group as at 31 December 2025 were determined with due consideration to the significant economic uncertainties arising from continuing geopolitical tensions and conflicts. Multiple by which remaining lifetime PD has increased compared with initial estimate
Lifetime PD band at initial recognition
Applied at 31 December 2025
Applied at 31 December 2024
Slight risk
Initial estimate x 8
Initial estimate x 9
Low risk
Initial estimate x 4
Initial estimate x 5
Medium risk
Initial estimate x 3
Initial estimate x 4
High risk
Initial estimate x 1
Initial estimate x 1
The Group\u2019s central scenario as at 31 December 2025 assumes minimal growth in 2026 and 2027, constrained
by increases in UK government taxation. Geopolitical tensions continue into 2026, keeping pressure on
inflation. Whilst a period of real wages growth has given some respite to households, pressures remain; UK
government policy announced in the Autumn 2025 budget will weigh further on household income.
Unemployment peaks in 2026, but by historical standards remains relatively low into the medium-term.
Businesses continue to feel the impacts of inflation and rising wage bills, including the increase to the National
Minimum / Living Wage. Inflation peaked in 2025 and continues to run generally above the 2% target until mid-
2027. After a Base Rate cut in Q2 2026, the Bank of England holds rates at 3.50% until mid-2029; rates then
increase again from late 2029. House prices grow in 2026, though UK government policies then constrain the
housing market into the medium-term.
The Group\u2019s upside scenario as at 31 December 2025 assumes the economy grows strongly in 2026 and 2027,
allowing the UK government to reduce / remove some fiscally-constraining policies in the medium-term.
Inflation falls swiftly, aided by de-escalation of tensions in Ukraine and the Middle East; in response, the Bank
of England reduces Base Rate to 3.00% by Q2 2026 and holds into the medium-term. Consumer confidence
rises and unemployment reduces to 4.0%. There is strong house price growth into the medium-term.
The Group\u2019s downside scenario as at 31 December 2025 assumes significant escalation of geopolitical
tensions in eastern Europe. Oil prices swiftly increase and inflation spikes, with particular impact on energy and
food prices. Further pressures come from climate change and UK government fiscal constraints. The impacts
on disposable income and investment are felt by households and businesses respectively. Unemployment
increases and remains elevated throughout the forecast period. The Bank of England swiftly increases Base
Rate and this remains higher for a sustained period. The impact on affordability is significant and house prices
fall in 2026 and 2027; recovery is slow such that the overall impact on the housing market is severe.
The key economic variables considered by the Group when developing the forecast scenarios are set out
below for the first five years of each of the Group\u2019s scenarios. For years six to ten the Group applies phased
transition assumptions, arriving at a view of long-run averages from year eleven onwards; the Group\u2019s view of
long-run averages can differ from the historical long-term mean and is derived by reference to both external
information, where this is publicly available and appropriate, and internally generated views. As noted above,
the assumptions assigned to each scenario have been revised during the year taking account of significant
economic uncertainties.
The graphs below show the historical and forecasted UK Bank Base Rate, unemployment rate and indexed
residential house prices for the Group\u2019s three economic scenarios as at 31 December 2025, along with the
prior year central scenario for context (as forecasted at 31 December 2024). The indexed residential house
price graph uses a starting value of 100 in the fourth quarter of 2024 for illustrative purposes, to show how a
property value moves over time when the annual house price inflation (UK) assumptions are applied.
UK Bank Base Rate (%) Unemployment rate (%) Indexed residential house price 2.0 3.0 4.0 5.0 6.0 7.0 8.0 Q4 2024 Q4 2025 Q4 2026 Q4 2027 Q4 2028 Q4 2029 Q4 2030 2.00 3.00 4.00 5.00 6.00 7.00 Q4 2024 Q4 2025 Q4 2026 Q4 2027 Q4 2028 Q4 2029 Q4 2030 70 80 90 100 110 120 130 140 Q4 2024 Q4 2025 Q4 2026 Q4 2027 Q4 2028 Q4 2029 Q4 2030 Upside Central Downside Prior Central Economic Variables
As at 31 December 2025
Notes
Scenario
2026
2027
2028
2029
2030
Upside
3.00
3.00
3.00
3.00
3.00
Bank of England Base Rate (%)
A
Central
3.50
3.50
3.50
3.75
4.00
Downside
6.00
5.25
5.00
4.75
4.50
Upside
4.0
4.0
4.0
4.0
4.0
Unemployment (%)
A
Central
5.0
4.8
4.7
4.5
4.5
Downside
7.0
6.0
6.0
6.0
6.0
Upside
4.2
4.2
4.2
4.2
4.2
UK House price inflation (%)
B
Central
2.5
2.0
1.5
2.5
3.0
Downside
(10.6)
(3.0)
1.0
4.0
4.0
Notes A. The Bank of England Base Rates and unemployment rates are the position at 31 December each year. B. House price inflation is the annual growth rate in each year. In addition to house price inflation, the Group\u2019s residential impairment calculations also include a \u2018forced sale discount\u2019 reflecting the likely reduction in property price when selling a repossessed property. The forced sale discount is calculated at account level, taking into account the specific circumstances of each account and the property in question.
As at 31 December 2024
Notes
Scenario
2025
2026
2027
2028
2029
Upside
3.50
3.50
3.50
3.50
3.50
Bank of England Base Rate (%)
A
Central
4.00
3.75
3.75
3.75
3.75
Downside
6.00
6.00
5.00
5.00
5.00
Upside
4.0
4.0
4.0
4.0
4.0
Unemployment (%)
A
Central
4.1
4.3
4.4
4.4
4.2
Downside
6.7
6.0
6.0
6.0
6.0
Upside
4.2
4.2
4.2
4.2
4.2
UK House price inflation (%)
B
Central
3.0
3.5
2.5
3.0
4.0
Downside
(1.0)
(11.5)
(1.0)
1.0
4.0
Notes A. Bank of England Base Rate is showing the lowest/highest rate that occurs at any time during the 5 year forecast period. B. Unemployment is showing the highest rate that occurs at any time during the 5 year forecast period. C. House price inflation is showing the largest cumulative growth/fall from 1 January 2026 (2024: from 1 January 2025) over the 5 year forecast period. The relative weightings assigned to each scenario have also been reviewed during the year taking into account the basis of each scenario and also the level of uncertainty over the economic outlook, both domestic and global. The Group\u2019s scenario weightings as at 31 December 2025 are 55% for the central scenario, 15% for the upside scenario and 30% for the downside scenario (31 December 2024: central scenario 60%, upside scenario 10%, downside scenario 30%). Whilst actual loan cash flows and the level of losses realised are unaffected by IFRS 9\u2019s expected credit loss approach, the level of loan impairment accounted for by the Group under IFRS 9 can be volatile; this is due to the inherent uncertainty when incorporating forward-looking information. IFRS 9 impairment is expected to vary as expectations of economic conditions become either more pessimistic (which is likely to increase ECLs) or more optimistic (which is likely to reduce ECLs). Management assesses the performance of the Group\u2019s ECL estimation process by comparison of actual and expected model outputs; some component outputs are back-tested for lifetime outcomes and some component outputs are back-tested for 12-month outcomes. Additional assurance is gained from validation of the composite sub-models. The ECL calculation is subject to formal quarterly monitoring, with outputs reported to the Society\u2019s Model Risk Committee for review, challenge and approval. In addition, the ECL calculation and all sub-components are subject to regular first-line review and independent validation. Where necessary, judgmental adjustments are included within ECLs to reflect identified risks not captured in model outputs; these adjustments are made through either: \u2022 Post-model adjustments (PMAs) \u2013 adjustments to the ECL model output which are typically calculated, and allocated, at a granular level through modelled analysis; or \u2022 Overlays \u2013 adjustments to the ECL model output that have been made outside the detailed ECL calculation and reporting process; overlays are likely not to meet the definition of PMAs (for example, they may not be calculated at a granular level through modelled analysis). Each material judgmental adjustment is subject to approval by the Retail Credit Committee and subject to oversight by the Board Audit Committee. Economic variables (peak or trough over 5 year forecast period)
Notes
Scenario
2025 2024
Upside
3.00 / 3.75
3.50 / 4.25
Bank of England Base Rate (%)
A Central
3.50 / 4.00
3.75 / 4.75
Downside
3.75 / 6.00
4.75 / 6.00
Upside
4.8
4.1
Unemployment (%)
B Central
5.2
4.4
Downside
7.5
7.0
Upside
22.6 / 0.0
22.6 / 0.0
UK House price inflation (%)
C Central
12.1 / 0.0
17.2 / 0.0
Downside
0.0 / (13.3)
0.0 / (13.3)
With respect to mortgage loan impairment, the Group and the Society held judgmental adjustments as follows: Notes A. This PMA is held to address model risk in the downturn scenario where key assumptions are expected to behave differently in a recession; there is currently insufficient data available to establish, and thus to model, robust relationships for these assumptions. The PMA was derived by considering the reduction in redemption rates and reduction in cure rates (following default) as observed during the global financial crisis 2007-2008; these were applied to the model, on a judgement basis, to understand the impact to model outputs. B. This PMA is held to reflect the risks associated with flats subject to fire safety risks such as unsuitable cladding. Due to limited available data to identify affected properties individually, an assumption is made, in line with UK market exposure estimates, regarding the affected proportion of flats in the Group / Society\u2019s residential portfolio; assumptions relating to property values have also been applied. ECLs\u2013 Judgmental adjustments
Group
Society
\u00a3m
Notes
2025
2024 2025
2024
Residential mortgages
Model Risk
\u2013 downturn
A
2.7
1.3
2.7
1.3
Flats subject to fire safety risks
B
2.1
1.4
2.1
1.4
4.8
2.7
4.8
2.7
To give an indication of the sensitivity of ECLs to different economic scenarios, the tables below show what the ECL would be if a 100% weighting is applied to each scenario. The tables also show for each scenario what percentage share of gross loan exposures would be held in each of Stage 1 and Stage 2.
Scenario ECL (\u00a3m)
Share of Gross
2025
Notes
weighting (%) (Note A)
Exposures (%)
(Note B)
Upside
Central
Downside
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Residential
Actual probability weighted ECL
15
55
30
8.6
5.4
7.6
21.6
97.8
1.8
100% upside
100
-
-
2.8
2.2
6.1
11.1
98.3
1.3
100% central
-
100
-
3.8
3.3
6.9
14.0
98.0
1.6
100% downside
-
-
100
11.7
13.1
13.1
37.9
95.6
4.0
Commercial
Actual probability weighted ECL
15
55
30
0.4
0.3
1.9
2.6
80.9
9.9
100% upside
C, D
100
-
-
0.4
0.3
1.9
2.6
80.9
9.9
100% central
C, D
-
100
-
0.4
0.3
1.9
2.6
80.9
9.9
100% downside
C, D
-
-
100
0.4
0.3
1.9
2.6
80.9
9.9
Scenario ECL (\u00a3m)
Share of Gross
2024
Notes
weighting (%) (Note A)
Exposures (%)
(Note B)
Upside
Downside
Stage 1
Central
Stage 2
Stage 3
Total
Stage 1
Stage 2
Residential
Actual probability weighted ECL
10
60
30
4.5
2.5
6.5
13.5
98.5
1.1
100% upside
100
-
-
2.2
1.1
4.7
8.0
98.6
1.0
100% central
-
100
-
2.7
1.3
5.0
9.0
98.6
1.0
100% downside
-
-
100
8.1
5.4
8.6
22.1
98.2
1.4
Commercial
Actual probability weighted ECL
10
60
30
0.2
0.2
4.3
4.7
82.2
5.2
100% upside
C, D
100
-
-
0.2
0.2
4.3
4.7
82.2
5.2
100% central
C, D
-
100
-
0.2
0.2
4.3
4.7
82.2
5.2
100% downside
C, D
-
-
100
0.2
0.2
4.3
4.7
82.2
5.2
Notes A. For the purposes of calculating each scenario\u2019s 100% weighted ECL, each loan is allocated to a stage by considering only that scenario. For the purposes of the actual probability-weighted ECL, each loan\u2019s stage allocation is based on a weighted average PD (that takes account of all scenarios) and this stage allocation is held constant across the scenarios; a probability-weighted 12-month or lifetime ECL (which also takes account of all scenarios) is then calculated for each loan based on that stage allocation. B. For the purposes of this analysis, gross exposures include the off-balance sheet loan commitments for which the Group holds ECLs (see Note 1h)). C. For the Commercial portfolio, the Group applies a Loss Rate approach to assessing impairment (see Note 1h)). Under this approach, commercial ECLs do not vary according to scenario weightings. D. For the Commercial portfolio, the staging of gross exposures is driven by factors that do not include scenario weightings (such as arrears and sector factors); the share of gross exposures held in each stage does not therefore vary according to scenario weightings. The following tables outline the impact on the impairment loss allowance for the residential and commercial loan portfolios of possible alternative assumptions of certain estimates used in calculating the ECLs. Each sensitivity shown considers one change in isolation and the combined impact on the impairment loss allowance of more than one sensitivity occurring would not necessarily be the sum of the impact of the individual sensitivities. Similarly, the impacts of each sensitivity should not be extrapolated due to the likely non-linear effects. Notes A. This sensitivity shows the impact of an increase of 10% to the probability weighting assigned to the downside scenario, from 30% to 40% (2024: from 30% to 40%), with a relative decrease to the probability weighting assigned to each of the central and upside scenarios. B. As outlined above, the assessment of whether credit risk has significantly increased since initial recognition includes the degree by which the remaining lifetime PD at the reporting date has increased compared to initial estimates. This sensitivity shows the impact of simultaneously reducing each multiplier threshold by 25%. C. This sensitivity shows the impact if annual house price inflation in each future year was 0.5% higher / lower than the assumptions applied by the Group or Society. D. This sensitivity shows the impact if unemployment rates in each future year were 0.5% higher / lower than the assumptions applied by the Group or Society. Notes A. This sensitivity shows the impact of an increase / decrease of 1% to the Lifetime Loss Rate. B. The table above does not include a sensitivity for account-specific impairment based on management judgement (see page 168); this element of impairment is, by nature, a discrete assessment for which there is no meaningful or representative variable. At 31 December 2025 the total commercial impairment allowance held included \u00a31.8m (Group and Society) in respect of account-specific impairment based on management judgement (2024: Group and Society \u00a34.2m). Impairment of treasury assets The Group incorporates forward-looking information into its ECL assessment for treasury assets. In addition to the central scenario, the Group also considers the impact of an extreme economic downturn such as a two- notch downgrade on the entire portfolio. At 31 December 2025, the relative weightings assigned to each scenario were 95% for the central scenario and 5% for the downside scenario (2024: central scenario 95%; downside scenario 5%). mpact on impairment loss allowance of changes to assumptions Residential
Group
Society
\u00a3m
Notes
Changes to assumption
Increase / (decrease) in impairment loss allowance
2025
2024
2025
2024
Downside scenario
A
Absolute increase of 10%
1.6
0.7
1.5
0.7
weighting
Significant increase in credit
B
Relative reduction by 25%
0.4
0.1
0.4
0.1
risk criteria
Future house price inflation
C
+ / - 0.5% pa
(0.9) / 1.0
(0.5) / 0.6
(0.9) / 1.0
(0.4) / 0.5
Unemployment
D
+ / - 0.5% pa
0.9 / (0.8)
0.5 / (0.4)
0.9 / (0.8)
0.5 / (0.4)
Commercial
Group
Society
\u00a3m
Notes
Changes to assumption Increase / (decrease) in impairment loss allowance
2025
2024
2025
2024
Lifetime Loss Rate
A
+ / - 1%
0.2 / (0.2)
0.1 / (0.1)
0.1 / (0.1)
0.2 / (0.2)
The following table outlines the impact on the impairment loss allowance for treasury assets of possible
alternative assumptions of certain estimates used in calculating the ECLs.
Valuation of equity release portfolio
The valuation of the equity release portfolio relies on the calculation of future cash flows. The size and timing
of these can vary depending on a number of different factors. These factors include future expected house
prices, future expected inflation, mortality rates, anticipated redemption profiles (arising due to voluntary
redemption, death or a move to long-term care) and market driven yield curves.
Some of the factors are based on market expectations (e.g. market-implied RPI swap prices are used to
construct a forward-looking inflation curve in order to forecast future expected cash flows receivable from the
portfolio), whilst others are derived from historical trends on the portfolio (e.g. anticipated future voluntary
redemptions). However, where market prices are not available and historical trends are not deemed to be
appropriate the Group uses management judgement; this is the case for future house price index (HPI) growth
and property price volatility. Management has reviewed these expectations during the year with due
consideration to the uncertainties in the current economic environment.
The expectations of the economic inputs that require management judgement are in line with the economic
environment that forms the central scenario as outlined on pages 168 and 169; further detail on the
movements in the portfolio in the year can be found in Note 18.
The Group uses an expectation of HPI growth that is aligned to that used for the central path of the ECL model
and corporate planning as set out above, reverting to a long run expectation of an average of 3% (2024: long
run average of 4%). This is considerably lower than long-term historical levels and reflects management\u2019s view.
A volatility assumption is also used within the model, which allows for an expected range of realised growth
around the central HPI growth figure.
A property volatility assumption of 13% (2024: 13%) is used; the property volatility assumption considers index
volatility, adjustments for autocorrelation, basis risk and concentration risk, and is not used in conjunction with
a dilapidation assumption.
At 31 December 2025 the equity release portfolio is held in the Statement of Financial Position (Group and
Society) at fair value of \u00a3263.1m (2024: \u00a3277.2m). The table below outlines the impact of reasonably possible
alternative assumptions of key inputs which rely on management judgement and are not market observable.
For each of the above sensitivities there would be a corresponding charge / credit to the Income Statement
within the line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019, arising from the
decrease / increase in the fair value of the portfolio.
Impact on impairment allowance of changes to assumptions
Group (\u00a3m)
Society (\u00a3m)
Assumption
Change to current assumption
Increase in impairment allowance
2025
2024
2025
2024
Downside scenario weighting
Absolute increase of 10%
0.1
0.1
0.1
0.1
Downside scenario weighting
Increase to 100%
1.1
1.1
1.1
1.1
Impact on fair value of portfolio of changes to assumptions
Group and Society (\u00a3m)
Assumption
Change to current assumption
Increase / (Decrease) in portfolio fair value
2025
2024
Redemption rates
+ /
- 1% pa
(0.4) / 0.5
0.4 / (0.5)
Illiquidity premia
+ /
- 0.2% pa
(4.3) / 4.4
(3.7) / 3.8
HPI forecast
+ /
- 0.5% pa
4.0 / (4.3)
4.4 / (4.7)
Property volatility
+ /
- 1% pa
(2.6) / 2.6
(2.4) / 2.4
RPI volatility
+ /
- 0.5% pa
(1.0) / 0.6
(0.2) / 0.0
The sensitivities are calculated by comparing the fair value of the portfolio, as reported within the Statement of
Financial Position, to the value of the portfolio at the reporting date when each input is adjusted as listed
above, as per the valuation model. Each sensitivity shown considers one change in isolation and the combined
impact on the valuation of the portfolio of all sensitivities occurring would not necessarily be the sum of the
impact of the individual sensitivities.
Analysis has been undertaken to identify the impact of climate-related risks on the Group\u2019s equity release
portfolio. This includes scenario analysis assessing the potential impact of alternative paths for the key inputs
of the HPI forecast and yield curves. The results of these assessments did not lead to a change in carrying
amounts as at 31 December 2025 or 31 December 2024. The future impact of climate-related risks on the
Group\u2019s equity release portfolio is uncertain, and the Group will continue to monitor developments in future
periods.
The Group holds derivative financial instruments to hedge the movements in the equity release portfolio, which
offsets to some extent the movements in the valuation of the portfolio, further details of which are found
below.
Derivative financial instruments held to hedge the equity release portfolio
The Group holds derivatives which are used to hedge the Group\u2019s interest rate risk and inflation risk arising
from the equity release portfolio. These derivatives are valued using discounted cash flow models using
market observable benchmark rates consistent with accepted market methodologies for pricing financial
instruments. As the notional values of the derivatives are intended to match the balance of the underlying
mortgage assets, they also include estimated redemption profiles (arising where a customer voluntarily
prepays, moves permanently into long-term care or has died) that are based on historical data (reviewed
periodically against actuals) and published mortality tables. These redemption profiles are not market
observable; an element of management judgement is therefore applied based on historical performance of
redemptions.
In order to value these derivatives, the Group uses market-implied RPI swap prices to construct a forward-
looking inflation curve to forecast future expected cash flows relating to these derivatives. The model used to
value the derivatives incorporates multiple scenarios for RPI in order to take account of the uncertainty and
volatility of future RPI rates. The range of multiple scenarios used is based on management judgement and so
is not market observable. The Group has robust control procedures in place regarding the inputs to the
valuation that are based on management judgement.
The effect on the fair value of these derivatives of reasonably possible alternative assumptions is outlined
below.
Note
A. There would be a corresponding charge / credit to the Income Statement within the line \u2018Fair value (losses) / gains on financial
instruments mandatorily held at FVTPL\u2019, arising from the decrease / increase in the fair value of the derivative liabilities.
Any change in fair value of the derivative liabilities is offset to some extent by a corresponding but opposite
change in the value of the equity release portfolio. The characteristics and the valuation requirements differ
slightly between the derivatives and the equity release portfolio resulting in the changes in fair value not
offsetting completely.
Impact on liability of changes to assumptions
Group & Society (\u00a3m)
Assumption
Notes
Change to current assumption
(Decrease) / increase in liability
2025
2024
Redemption rates
A
+ / - 1% pa
(0.0) / 0.0
(0.6) / 0
.6
RPI volatility
A
+ / - 0.5% pa
(0.9) / 0.6
(2.0) /
1.5
Goodwill
The carrying value of goodwill is assessed against value in use calculations. The key assumptions for the
value in use calculations are those regarding cash flows, discount rates and growth rates. These assumptions
are reviewed on a regular basis, at least at every reporting date, by senior management.
The forecasted cash flows of the cash generating units (CGUs) are based on the latest detailed five year
corporate plans available and are sensitive to, inter alia, assumptions regarding the long-term growth pattern
thereafter. The cash flows reflect management\u2019s view of future business prospects at the time of the
assessment, which take into account management\u2019s most recent view of key economic indicators as well as
wider prevailing circumstances. Further details regarding the key drivers of these cash flows, for each
reportable segment to which goodwill has been allocated, are included in Note 25.
The discount rate used to discount the future expected cash flows is based on the cost of capital assigned to
each reportable segment (see Note 25) and can have a significant effect on the underlying valuation. The cost
of capital is derived from a weighted average cost of capital calculation which incorporates a number of inputs
including the risk-free interest rate and a premium to reflect the inherent risk of the business being evaluated.
These variables are subject to fluctuations in external markets and economic conditions which are not within
management control; these inputs are therefore determined on the basis of management judgement.
Profit and cash flow forecasts are subject to inherent uncertainties, such as the impacts of physical and
transition risks of climate change on the creditworthiness of borrowers, asset values, and other indirect effects
including the erosion of the Group\u2019s competitiveness, profitability, or reputation.
Sensitivity disclosures are provided in Note 25.
Other intangible assets
Other intangible assets (see Note 25) such as computer software, databases, brands and customer contracts
are regularly reviewed for indicators of impairment. Brands, which are regarded to have an indefinite life and
are therefore not amortised, are tested for impairment at the end of each reporting period (or when there is an
indication of impairment), using a similar methodology as described above for goodwill.
Brands are held by the Estate agency division (see Note 25) and are judged by management to have an
indefinite life. Management considers that the brands held have long and successful histories and have shown
their ability to adapt to changing market trends. Further, continued investment in the brands by Connells helps
to protect their value.
Where brands exist, the impairment test compares the carrying amount of the cash generating unit (CGU)
(which comprises the CGU\u2019s net assets, plus any brands relating to that CGU and any goodwill allocated to that
CGU) against its recoverable amount. Recoverable amount is determined as the higher of its fair value less
costs to sell and its value in use.
As described above, the key assumptions for the value in use calculations are those regarding cash flows,
discount rates and growth rates. These assumptions are reviewed on a regular basis, at least at every
reporting date, by senior management and further detail on the key drivers of the underlying cash flows is
shown in Note 25.
Other intangible assets, which are regarded to have a finite life, are tested for impairment whenever there is an
indication that the intangible asset may be impaired.
An impairment charge of \u00a32.8m (Group) and \u00a3nil (Society) was recognised against other intangible assets for
the year ended 31 December 2025 (year ended 31 December 2024: Group \u00a30.7m; Society \u00a3nil).
Loan to defined benefit pension scheme The valuation of the loan to the defined benefit pension scheme is dependent upon the estimation of future cash flows, the amount and timing of which can vary according to a number of different factors. These factors include the timing of future cash flows expected from the maturities of illiquid assets held by the scheme; estimated prepayment amounts, determined by available proceeds upon asset maturity; a credit-adjusted discount rate, incorporating an illiquidity premium; and the Scheme\u2019s credit characteristics. The following table outlines the impact of reasonably possible alternative assumptions of key inputs which rely on management judgement and are not market observable: Note A. There would be a corresponding charge / credit to the Income Statement within the line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019, arising from the decrease / increase in the fair value of the loan. The sensitivity is not applicable to the comparative year shown as the loan was originated during 2025. Retirement benefit obligations The defined benefit pension schemes expose the Group to actuarial risks such as investment risk, interest rate risk, inflation risk and longevity risk. In conjunction with its actuaries the Group makes key financial assumptions that are used in the actuarial valuation of the defined benefit pension obligation and, therefore, changes to these assumptions have an impact on the pension obligation shown within the Statement of Financial Position. These assumptions include inflation and discount rates, life expectancy, commutation allowances and the rate of salary growth; see Note 36 for further details on these assumptions. A decrease in gilt / corporate bond yields, a rise in inflation or an increase in life expectancy would result in an increase to scheme liabilities. This would impact the Statement of Financial Position adversely and may give rise to increased charges in future years\u2019 Income Statements. This effect would be partially offset by an increase in the value of the schemes\u2019 gilt and bond holdings and caps on inflationary increases also exist to protect the schemes against high levels of inflation. Approximate sensitivities of the principal assumptions are set out in the table below which shows the increase or reduction in the scheme liabilities that would result. The methods used for calculating the sensitivities are the same as those used to determine the valuation of the defined benefit obligation as set out in Note 36. Each sensitivity shown considers one change in isolation. The rate of salary growth has no impact on the pension liabilities as the schemes are closed to future accrual of benefit. Impact on liabilities of changes to assumptions
Group (\u00a3m)
Society (\u00a3m)
Assumption
Changes to assumption
(Decrease) / increase in liabilities
2025
2024
2025
2024
Discount rate
+ / -0.25% pa
(4.6) / 4.8
(5.5) / 5.7
(2.4) / 2.6
(2.5) / 2.7
Rate of inflation
+ / -0.5% pa
3.8 / (3.6)
3.9 / (3.7)
1.8 / (1.7)
1.9 / (1.8)
Commutation allowance
+ / -10% pa
0.0 / 0.1
(0.1) / 0.1
0.0 / 0.1
-
Life expectancy
+ / -1 year
4.6 / (4.5)
6.0 / (6.2)
2.5 / (2.4)
2.4 / (2.4)
Impact on loan fair value of changes to assumptions
Group & Society (\u00a3m)
Assumption
Notes
Change to current assumption
(Decrease) / increase in loan fair value
2025
2024
Discount rate
A
+ / - 1% pa
(0.1) / 0.1
N/A
Value of illiquid assets
A
+ / - 10% expected proceeds
1.1 / (1.1)
N/A
", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-416": { "value": "a) Basis of preparation The Annual Accounts of the Group and the Society are prepared in accordance with UK-adopted International Accounting Standards in accordance with the requirements of the Building Societies Act 1986 and with those parts of the Building Societies (Accounts and Related Provisions) Regulations 1998 that are applicable. The Annual Accounts have been prepared under the historical cost convention as modified by the application of fair value measurements required or allowed by relevant accounting standards. Governmental and societal responses to climate change risks continue to develop, and are interdependent upon each other, and consequently financial statements cannot capture all possible future outcomes as these are not yet known. The degree of uncertainty of these changes may also mean that they cannot be taken into account when determining asset and liability valuations and the timing of future cash flows under the requirements of applicable accounting standards. We have considered the impact of transitioning to a low- carbon economy and the physical risks from climate change on key estimates in the financial statements. Consideration was given, in particular, to the impact of climate risks on areas of estimation, and our going concern assessment. While the Group continues to enhance its ability to assess climate-related risks and given the uncertainties on the extent and timing of the manifestation of climate-related risks, the Group is currently unable to determine the full future economic impact on our business model, operational plans and our customers, and therefore the potential future impacts are not fully incorporated in these financial statements. The Group continues to monitor emerging regulatory expectations and is assessing how to enhance its capabilities over time, in line with material risk exposure. In accordance with the Group\u2019s approach to net zero, initiatives continue to be progressed across the Group to reduce emissions and to support wider Environmental, Social and Governance (ESG) areas; progress made against emission reduction targets is monitored by management. As set out in the Strategic Report, during 2025 the Group has continued activity to raise awareness of the need to decarbonise UK homes; this includes our Energy Performance Certificate (EPC) Plus scheme that offers free EPC reports to Society members and colleagues, and sharing our experiences as we completed the Big Retrofit project near our Head Office in Skipton. Reaching the Group\u2019s net zero target depends on many external factors, including government policies, suppliers and customers. While these uncertainties may impact or challenge the Group in meeting its climate-related targets, the focus remains on reducing emissions within its control. Long tail climate risk scenarios have been considered by management and the Board and are factored into the Group\u2019s planning. The Annual Accounts are presented in pounds Sterling and, except where otherwise indicated, have been rounded to the nearest one hundred thousand pounds.
The Group adopted during the year the following new accounting standards and amendments to existing
accounting standards, none of which had a material impact on these consolidated financial statements:
\u2022
Lack of exchangeability
(Amendments to IAS 21).
Standards issued but not yet effective
The new and amended accounting standards and interpretations set out below will be effective for future
reporting periods (subject to UK endorsement for some) and have not been early adopted by the Group in
preparing these consolidated financial statements:
i.
Amendments to Classification and Measurement of Financial Instruments
(Amendments to IFRS 9 and
IFRS 7)
The Amendments, which are effective for accounting periods commencing on or after 1 January 2026, include:
\u2022 Clarifications of the requirements for recognition and derecognition of financial assets and liabilities
\u2022 A clarification that a financial liability is derecognised on the \u2018settlement date\u2019 and introduce an accounting
policy choice (if specific conditions are met) to derecognise financial liabilities settled using an electronic
payment system before the settlement date
\u2022 Additional guidance on how the contractual cash flows for financial assets with environmental, social and
corporate governance (ESG) and similar features should be assessed
\u2022 Clarifications on what constitute \u2018non-recourse features\u2019 and what are the characteristics of contractually-
linked instruments
\u2022 The introduction of disclosures for financial instruments with contingent features and additional disclosure
requirements for equity instruments classified at FVOCI
With respect to the amendments on the derecognition of financial liabilities that are settled through an
electronic payment system, the Group has performed an initial impact assessment. There is a limited number
of electronic payment systems used by the Group that do not result in real-time settlement. In response to the
Amendments, the Group is establishing any revisions required to existing accounting practices; the impact on
the Group\u2019s annual consolidated financial statements is not currently expected to be material.
ii. IFRS 18
Presentation and Disclosure in Financial Statements
IFRS 18 replaces IAS 1
Presentation of Financial Statements
and becomes effective for accounting periods
commencing on or after 1 January 2027. IFRS 18 introduces new requirements for presentation within the
statement of profit or loss, including specified totals and subtotals. Furthermore, entities are required to
classify all income and expenses within the statement of profit or loss into one of five categories; operating,
investing, financing, income taxes and discontinued operations, whereof the first three are new. There are also
other changes, including specific presentation requirements and options for entities, such as the Society, that
provide finance to customers.
The Group is currently assessing the impacts for the Group\u2019s primary financial statements and notes to the
financial statements.
iii. Other, none of which are currently expected to have a material impact on the Group\u2019s consolidated
financial statements:
\u2022 IFRS 19
Subsidiaries without Public Accountability: Disclosures
;
\u2022
Annual Improvements to IFRS Accounting Standards \u2013 Volume 11
; and
\u2022
Contracts Referencing Nature-dependent Electricity
(Amendments to IFRS 9 and IFRS 7).
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-470": { "value": "The Annual Accounts of the Group and the Society are prepared in accordance with UK-adopted International Accounting Standards in accordance with the requirements of the Building Societies Act 1986 and with those parts of the Building Societies (Accounts and Related Provisions) Regulations 1998 that are applicable. ", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-418": { "value": "b) Going Concern The Annual Accounts are prepared on a going concern basis (see Directors\u2019 Report). ", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-417": { "value": "c) Changes to material accounting policies and other prior period adjustments There have been no changes during the year to material accounting policies. Prior period adjustments i) During the year ended 31 December 2025, the Group reviewed its application in prior periods of the requirements of IFRS 7 Financial Instruments \u2013 Disclosures with respect to the disclosure of analyses of the carrying value of financial assets and financial liabilities into relevant maturity groupings, based on the remaining maturity period at the reporting date to the contractual maturity. This review identified misstatements where amounts previously reported by the Group (and Society) were not correctly allocated to the appropriate maturity grouping. This matter impacts only the tables of maturity analysis for the Group and Society that are presented for disclosure purposes in Note 43 Liquidity Risk. There is no impact for affected periods on the Group or Society\u2019s Income Statements, Statements of Financial Position or Statements of Cash Flows. In accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, comparative amounts are restated as set out in the tables below. Note 43 Liquidity risk, year ended 31 December 2024
Group Repayable Up to 3 3 -12 1 - 5 Over 5 No
\u00a3m on demand months months years years
specified
Total
maturity
Previously reported:
Debt securities in issue
5.1
0.8
1,938.7
490.7
-
-
2,435.3
Total financial liabilities
12,335.2
4,469.8
13,220.5
5,009.1
485.1
598.9
36,118.6
Net liquidity gap
(10,041.4)
(3,876.3)
(12,219.3)
(1,261.1)
30,004.7
(291.4)
2,315.2
Adjustments:
Debt securities in issue
(5.1)
5.1
(1,938.7)
1,938.7
-
-
-
Total financial liabilities
(5.1)
5.1
(1,938.7)
1,938.7
-
-
-
Net liquidity gap
(5.1)
5.1
(1,938.7)
1,938.7
-
-
-
Restated:
Debt securities in issue
-
5.9
-
2,429.4
-
-
2,435.3
Total financial liabilities
12,330.1
4,474.9
11,281.8
6,947.8
485.1
598.9
36,118.6
Net liquidity gap
(10,036.3)
(3,881.4)
(10,280.6)
(3,199.8)
30,004.7
(291.4)
2,315.2
Note 43 Liquidity risk, year ended 31 December 2024
Society Repayable Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m on demand months months years years
specified
Total
maturity
Previously reported:
Debt securities in issue
5.1
-
1,925.0
-
-
-
1,930.1
Total financial liabilities
11,909.7
3,993.1
12,173.2
5,145.4
458.8
598.9
34,279.1
Net liquidity gap
(9,515.2)
(3,658.2)
(11,231.2)
(1,172.6)
27,984.5
(256.1)
2,151.2
Adjustments:
Debt securities in issue
(5.1)
5.1
(1,925.0)
1,925.0
-
-
-
Total financial liabilities
(5.1)
5.1
(1,925.0)
1,925.0
-
-
-
Net liquidity gap
(5.1)
5.1
(1,925.0)
1,925.0
-
-
-
Restated:
Debt securities in issue
-
5.1
-
1,925.0
-
-
1,930.1
Total financial liabilities
11,904.6
3,998.2
10,248.2
7,070.4
458.8
598.9
34,279.1
Net liquidity gap
(9,510.1)
(3,663.3)
(9,306.2)
(3,097.6)
27,984.5
(256.1)
2,151.2
ii) During the year ended 31 December 2025, the Society reviewed its application in prior periods of the requirements of IFRS 7 Financial Instruments \u2013 Disclosures with respect to the disclosure of interest amounts associated with intra-Group swaps between the Society and its subsidiary undertakings. This review determined that such amounts would most appropriately be presented within interest payable and similar charges on financial instruments held at FVTPL, specifically within \u2018Net expense on derivative financial instruments held for hedging liabilities\u2019. In prior periods such amounts were included by the Society within interest payable and similar charges on financial liabilities held at amortised cost, specifically within \u2018Deposits and other borrowings - subsidiary undertakings\u2019. In accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, comparative amounts are restated as set out in the tables below. There is no impact for affected periods on the Society\u2019s Income Statements, Statements of Financial Position or Statements of Cash Flows. Note 3 Interest payable and similar charges, year ended 31 December 2024
Society
\u00a3m
Previously reported:
On financial liabilities held at amortised cost:
On deposits and other borrowings \u2013 subsidiary undertakings
71.1
Total on financial liabilities held at amortised cost
1,392.1
On financial instruments held at FVTPL:
Net expense on derivative financial instruments held for hedging liabilities
138.3
Total interest payable and similar charges
1,676.3
Adjustments:
On financial liabilities held at amortised cost:
On deposits and other borrowings \u2013 subsidiary undertakings
(46.7)
Total on financial liabilities held at amortised cost
(46.7)
On financial instruments held at FVTPL:
Net expense on derivative financial instruments held for hedging liabilities
46.7
Total interest payable and similar charges
-
Restated:
On financial liabilities held at amortised cost:
On deposits and other borrowings \u2013 subsidiary undertakings
24.4
Total on financial liabilities held at amortised cost
1,345.4
On financial instruments held at FVTPL:
Net expense on derivative financial instruments held for hedging liabilities
185.0
Total interest payable and similar charges
1,676.3
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-419": { "value": "d) Basis of consolidation Subsidiary undertakings Subsidiary undertakings are entities controlled by the Group. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with an entity and has the ability to affect those returns through its power over the entity. In assessing control, only substantive rights (i.e. rights that can be practically exercised) are taken into account. Investments in subsidiary undertakings Investments in subsidiary undertakings are recorded in the Society\u2019s Statement of Financial Position at cost, less any provision for impairment. The Group Accounts consolidate the financial statements of the Society and all its subsidiary undertakings, eliminating intra-Group transactions and balances. The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is measured at fair value, as are the separately identifiable net assets acquired. Any goodwill arising is accounted for in accordance with the Group\u2019s accounting policy for goodwill (see Note 1e)). Any gain on a bargain purchase is recognised in profit or loss immediately. All transaction or acquisition costs are written off to the Income Statement as incurred. In accordance with International Financial Reporting Standard (IFRS) 3 Business Combinations (2008), goodwill is accounted for only upon the acquisition of a subsidiary undertaking or as a result of a business combination. Subsequent changes in the Group\u2019s interest in a subsidiary undertaking, where control is retained, are recognised in equity. In accordance with IFRS 10 Consolidated Financial Statements (2011), for business combinations which have taken place from 1 January 2010 onwards, all transactions relating to ownership interests with non-controlling interests are recorded in equity if there has been no change in control. When the Group loses control over a subsidiary, through disposal or other changes in circumstances, it derecognises the assets and liabilities of the subsidiary and any associated goodwill, as well as any related non-controlling interest and other components of equity. Any resulting gain or loss is recognised in the Income Statement. Put options Within a number of subsidiary undertakings where the Group has less than 100% ownership, there is an option for the non-controlling shareholders to require the Group to purchase their shares at some point in the future. In accordance with IAS 32 Financial Instruments: Presentation, the Group recognises the present value of these options as a financial obligation, along with recognition of further goodwill on the future purchase of remaining non-controlling interests. Under this accounting policy the Group consolidates 100% of the results of such subsidiary undertakings to reflect the 100% implicit ownership in the recording of the future purchase of the non-controlling interests\u2019 shareholdings (i.e. the put option liability). Any changes in the valuation of a put option obligation in respect of an entity acquired after 1 January 2010 are credited or charged through the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. Put options issued prior to 1 January 2010 are accounted for in accordance with IAS 27 Consolidated and Separate Financial Statements (2003) and IFRS 3 Business Combinations (2004) and any adjustment to the Group\u2019s estimation of the present value of the put option liability results in an adjustment to goodwill. Dividends paid to the non-controlling interests are charged through the \u2018Administrative expenses\u2019 line in the Income Statement. The change in fair value of the liability due to the accretion of the discount of the liability is expensed through the Income Statement line \u2018Interest payable and similar charges\u2019. Joint ventures A joint venture is an undertaking in which the Group has joint control and has rights to the net assets of the arrangement. The results and assets and liabilities of joint ventures are accounted for in these consolidated financial statements using the equity method of accounting. Investments in joint ventures are carried within the Statement of Financial Position at cost, as adjusted by post-acquisition changes in the Group\u2019s share of the net assets of the joint venture, less any impairment in the value of individual investments. Equity share investments An equity share investment is an investment in the share capital of a company where the Group does not have significant influence. Unconsolidated structured entities The Group invests in structured entities where the principal purpose of the structured entity is to provide investors with access to specific portfolios of assets and also provide the investor liquidity through the securitising of financial assets. A structured entity is one that has been set up so that any voting rights or similar rights are not the determining factor in deciding which party controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements. A structured entity often has some or all of the following characteristics: \u2022 Restricted activities; \u2022 A narrow and well-defined objective; \u2022 Insufficient equity to permit the structured entity to finance its activities without subordinated financial support. Third party funding entities The Group invests in structured entities through the purchase of issued mortgage backed securities, as disclosed in Note 14. These structured funding entities are not consolidated into the Group Accounts because the Group does not have the ability to direct the activities of the entities in question and does not control these entities through voting rights, contractual rights, funding agreements or any other means. The Group\u2019s involvement is in relation to investment activity only. Interests in unconsolidated structured entities The Group\u2019s interests in unconsolidated structured entities refer to involvement that exposes the Group to variability of returns from the performance of the structured entities. Income derived from involvement with unconsolidated structured entities Interest income on funding provided to unconsolidated structured entities is recognised within the Income Statement line \u2018Interest receivable and similar income\u2019. Special purpose funding vehicles The Society has transferred the beneficial interest in certain portfolios of loans and advances to customers to special purpose funding vehicles (SPVs). These SPVs enable the subsequent raising of debt, either by the SPVs or the Society, to investors who gain the security of the underlying assets as collateral. The SPVs are fully consolidated into the Group Accounts in accordance with IFRS 10. The transfers of the beneficial interest in these loans to the SPVs are not treated as sales by the Society and are not derecognised. The Society continues to recognise these assets within its own Statement of Financial Position after the transfer because it retains substantially all the risks and rewards of these mortgage portfolios through the receipt of interest income and deferred consideration from the SPVs for the transfer of the beneficial interest in the mortgage loans. For securitisations, in the accounts of the Society, the proceeds received from the transfer of mortgage loans are accounted for as a deemed loan repayable to the SPV and are included in \u2018Amounts owed to other customers\u2019 within the Society\u2019s Statement of Financial Position. Where the Society issues the debt, as is the case for the covered bonds (see Note 20a)), it then lends the proceeds on back-to-back terms to Skipton Covered Bonds Limited Liability Partnership (LLP); the proceeds lent to the LLP are known as the \u2018term advance\u2019. Some or all of the proceeds from the term advance are then paid to the Society from the LLP as consideration for the beneficial interest in the mortgage pool and this is accounted for as a deemed loan repayable to the LLP. In the accounts of the Society, the term advance and the deemed loan are not recognised separately as additional assets and liabilities; the difference between the term advance and the deemed loan are shown net within the Society\u2019s Statement of Financial Position as an amount owed from subsidiary undertakings. This is to avoid the \u2018grossing up\u2019 of the Statement of Financial Position. To manage interest rate risk, the Society enters into interest rate swap arrangements with the LLP; the Society receives interest payments from the LLP relating to receipts on the mortgages in the pool and pays a floating rate of interest to the LLP. In accordance with IFRS 9 these swap arrangements are treated as part of the deemed loan and not separately fair valued because the relevant mortgage loans to which the interest swaps relate are not derecognised. All other derivatives relating to securitisations are treated as explained in Note 1f). To manage currency risk arising from the Euro-denominated covered bond issuances, the LLP has entered into a cross-currency swap transaction. The derivative is designated in a hedge accounting relationship against the term advance, which mirrors the conditions of the debt issued, effectively hedging the debt issued by the Society. In accordance with IFRS 9, any cost for currency basis spread priced within the cross-currency swap is permitted to be excluded from the hedge relationship and is recognised directly in reserves (the cost of hedging reserve). The Group has elected to apply this treatment for this hedge relationship. See Note 1f) for further details. Further details on the nature and amount of the beneficial interest transferred to the SPVs can be found in Note 16 to these financial statements. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-471": { "value": "Subsidiary undertakings Subsidiary undertakings are entities controlled by the Group. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with an entity and has the ability to affect those returns through its power over the entity. In assessing control, only substantive rights (i.e. rights that can be practically exercised) are taken into account. Investments in subsidiary undertakings Investments in subsidiary undertakings are recorded in the Society\u2019s Statement of Financial Position at cost, less any provision for impairment. The Group Accounts consolidate the financial statements of the Society and all its subsidiary undertakings, eliminating intra-Group transactions and balances. The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is measured at fair value, as are the separately identifiable net assets acquired. Any goodwill arising is accounted for in accordance with the Group\u2019s accounting policy for goodwill (see Note 1e)). Any gain on a bargain purchase is recognised in profit or loss immediately. All transaction or acquisition costs are written off to the Income Statement as incurred. In accordance with International Financial Reporting Standard (IFRS) 3 Business Combinations (2008), goodwill is accounted for only upon the acquisition of a subsidiary undertaking or as a result of a business combination. Subsequent changes in the Group\u2019s interest in a subsidiary undertaking, where control is retained, are recognised in equity. In accordance with IFRS 10 Consolidated Financial Statements (2011), for business combinations which have taken place from 1 January 2010 onwards, all transactions relating to ownership interests with non-controlling interests are recorded in equity if there has been no change in control. When the Group loses control over a subsidiary, through disposal or other changes in circumstances, it derecognises the assets and liabilities of the subsidiary and any associated goodwill, as well as any related non-controlling interest and other components of equity. Any resulting gain or loss is recognised in the Income Statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-507": { "value": "Joint ventures A joint venture is an undertaking in which the Group has joint control and has rights to the net assets of the arrangement. The results and assets and liabilities of joint ventures are accounted for in these consolidated financial statements using the equity method of accounting. Investments in joint ventures are carried within the Statement of Financial Position at cost, as adjusted by post-acquisition changes in the Group\u2019s share of the net assets of the joint venture, less any impairment in the value of individual investments. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-472": { "value": "Joint ventures A joint venture is an undertaking in which the Group has joint control and has rights to the net assets of the arrangement. The results and assets and liabilities of joint ventures are accounted for in these consolidated financial statements using the equity method of accounting. Investments in joint ventures are carried within the Statement of Financial Position at cost, as adjusted by post-acquisition changes in the Group\u2019s share of the net assets of the joint venture, less any impairment in the value of individual investments. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-420": { "value": "e) Intangible assets Goodwill Goodwill arising on the acquisition of Group undertakings or other businesses represents the excess of the fair value of the consideration paid over the fair value of separately identifiable net assets acquired at the date of acquisition. Goodwill arising on the acquisition of subsidiary undertakings is included in the \u2018Intangible assets\u2019 line within the Statement of Financial Position. Goodwill arising on the acquisition of joint ventures, associates or other businesses is included within the carrying value of the underlying investment within the Statement of Financial Position. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses, and is reviewed for impairment, at least, at each reporting date. Any impairment is recognised in the Income Statement. For the purposes of impairment testing, goodwill is allocated to each of the Group\u2019s cash generating units (CGUs), or groups of CGUs, that is expected to benefit from the synergies of combination. Each unit or group of units to which the goodwill is so allocated shall a) represent the lowest level at which the goodwill is monitored for internal management purposes and b) not be larger than an operating segment; at Skipton Group level, the allocation of goodwill typically reflects the Group\u2019s operating segments. The impairment test compares the carrying value of the CGU (or group of CGUs), being its net assets plus associated goodwill, to its associated value in use. The value in use calculations are carried out by discounting the forecast future cash flows of the CGU (or group of CGUs) to present value (see Note 25). Future cash flows are ordinarily based upon the corporate plans of the CGUs for the next five years and assumed growth thereafter, generally in line with long-term growth rates. The cash flows are extrapolated for subsequent years indefinitely (or a specific number of years where circumstances dictate), to reflect the fact that CGUs are held for the long-term. The Group estimates discount rates based upon the weighted average cost of capital which is adjusted to take account of the market risks associated with each CGU. Goodwill arising on acquisitions before the transition to IFRS on 1 January 2005 has been retained at its previous UK GAAP amount and is reviewed for impairment, at least, at each reporting date, as above. Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or group of CGUs), and then to reduce the carrying amounts of the other assets in the CGUs on a pro-rata basis. Computer software, databases, brands and customer contracts In accordance with IAS 38 Intangible Assets, computer software, databases, brands and customer contracts are recognised as an intangible asset if, and only if, the cost incurred leads to the creation of an identifiable asset whose cost can be measured reliably and it is probable that the asset created will generate future economic benefits which will flow to the Group. Furthermore, brands and customer contracts are only eligible to be recognised as an intangible asset when purchased externally or when acquired as part of a business combination; internally generated brands and customer contracts are not capitalised. Expenditure incurred to maintain existing levels of performance is recognised as an expense as incurred. Intangible assets are initially recognised at cost, or at fair value when acquired as part of a business combination, and subsequently amortised from the date they are available for use using the straight-line method over their estimated useful economic lives (unless deemed to have an indefinite economic life), which can be up to 10 years. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Intangible assets are tested for impairment at each reporting date or when there is an indication of impairment. The Group identifies impairment by comparing the future economic benefit to the Group against the carrying value of the asset. The assessment of future economic benefit includes value in use calculations to determine recoverable amounts for cash generating units. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-518": { "value": "Goodwill Goodwill arising on the acquisition of Group undertakings or other businesses represents the excess of the fair value of the consideration paid over the fair value of separately identifiable net assets acquired at the date of acquisition. Goodwill arising on the acquisition of subsidiary undertakings is included in the \u2018Intangible assets\u2019 line within the Statement of Financial Position. Goodwill arising on the acquisition of joint ventures, associates or other businesses is included within the carrying value of the underlying investment within the Statement of Financial Position. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses, and is reviewed for impairment, at least, at each reporting date. Any impairment is recognised in the Income Statement. For the purposes of impairment testing, goodwill is allocated to each of the Group\u2019s cash generating units (CGUs), or groups of CGUs, that is expected to benefit from the synergies of combination. Each unit or group of units to which the goodwill is so allocated shall a) represent the lowest level at which the goodwill is monitored for internal management purposes and b) not be larger than an operating segment; at Skipton Group level, the allocation of goodwill typically reflects the Group\u2019s operating segments. The impairment test compares the carrying value of the CGU (or group of CGUs), being its net assets plus associated goodwill, to its associated value in use. The value in use calculations are carried out by discounting the forecast future cash flows of the CGU (or group of CGUs) to present value (see Note 25). Future cash flows are ordinarily based upon the corporate plans of the CGUs for the next five years and assumed growth thereafter, generally in line with long-term growth rates. The cash flows are extrapolated for subsequent years indefinitely (or a specific number of years where circumstances dictate), to reflect the fact that CGUs are held for the long-term. The Group estimates discount rates based upon the weighted average cost of capital which is adjusted to take account of the market risks associated with each CGU. Goodwill arising on acquisitions before the transition to IFRS on 1 January 2005 has been retained at its previous UK GAAP amount and is reviewed for impairment, at least, at each reporting date, as above. Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or group of CGUs), and then to reduce the carrying amounts of the other assets in the CGUs on a pro-rata basis. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-473": { "value": "Goodwill Goodwill arising on the acquisition of Group undertakings or other businesses represents the excess of the fair value of the consideration paid over the fair value of separately identifiable net assets acquired at the date of acquisition. Goodwill arising on the acquisition of subsidiary undertakings is included in the \u2018Intangible assets\u2019 line within the Statement of Financial Position. Goodwill arising on the acquisition of joint ventures, associates or other businesses is included within the carrying value of the underlying investment within the Statement of Financial Position. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses, and is reviewed for impairment, at least, at each reporting date. Any impairment is recognised in the Income Statement. For the purposes of impairment testing, goodwill is allocated to each of the Group\u2019s cash generating units (CGUs), or groups of CGUs, that is expected to benefit from the synergies of combination. Each unit or group of units to which the goodwill is so allocated shall a) represent the lowest level at which the goodwill is monitored for internal management purposes and b) not be larger than an operating segment; at Skipton Group level, the allocation of goodwill typically reflects the Group\u2019s operating segments. The impairment test compares the carrying value of the CGU (or group of CGUs), being its net assets plus associated goodwill, to its associated value in use. The value in use calculations are carried out by discounting the forecast future cash flows of the CGU (or group of CGUs) to present value (see Note 25). Future cash flows are ordinarily based upon the corporate plans of the CGUs for the next five years and assumed growth thereafter, generally in line with long-term growth rates. The cash flows are extrapolated for subsequent years indefinitely (or a specific number of years where circumstances dictate), to reflect the fact that CGUs are held for the long-term. The Group estimates discount rates based upon the weighted average cost of capital which is adjusted to take account of the market risks associated with each CGU. Goodwill arising on acquisitions before the transition to IFRS on 1 January 2005 has been retained at its previous UK GAAP amount and is reviewed for impairment, at least, at each reporting date, as above. Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or group of CGUs), and then to reduce the carrying amounts of the other assets in the CGUs on a pro-rata basis. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-525": { "value": "Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses, and is reviewed for impairment, at least, at each reporting date. Any impairment is recognised in the Income Statement. For the purposes of impairment testing, goodwill is allocated to each of the Group\u2019s cash generating units (CGUs), or groups of CGUs, that is expected to benefit from the synergies of combination. Each unit or group of units to which the goodwill is so allocated shall a) represent the lowest level at which the goodwill is monitored for internal management purposes and b) not be larger than an operating segment; at Skipton Group level, the allocation of goodwill typically reflects the Group\u2019s operating segments. The impairment test compares the carrying value of the CGU (or group of CGUs), being its net assets plus associated goodwill, to its associated value in use. The value in use calculations are carried out by discounting the forecast future cash flows of the CGU (or group of CGUs) to present value (see Note 25). Future cash flows are ordinarily based upon the corporate plans of the CGUs for the next five years and assumed growth thereafter, generally in line with long-term growth rates. The cash flows are extrapolated for subsequent years indefinitely (or a specific number of years where circumstances dictate), to reflect the fact that CGUs are held for the long-term. The Group estimates discount rates based upon the weighted average cost of capital which is adjusted to take account of the market risks associated with each CGU. Goodwill arising on acquisitions before the transition to IFRS on 1 January 2005 has been retained at its previous UK GAAP amount and is reviewed for impairment, at least, at each reporting date, as above. Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or group of CGUs), and then to reduce the carrying amounts of the other assets in the CGUs on a pro-rata basis. h) Impairment of financial assets Under IFRS 9, impairment of financial assets is assessed using a forward-looking expected credit loss (ECL) model. This model applies to financial assets measured at either amortised cost or FVOCI (except any equity share investments held as such, as set out in Note 1f)). The Group recognises impairment loss allowances for ECLs on the following financial assets that are not measured at FVTPL: \u2022 Loans and advances to customers; \u2022 Loan commitments (where a firm offer has been made to the customer); \u2022 Trade receivables; \u2022 Treasury assets, which comprise debt securities held at FVOCI, cash in hand and balances with the Bank of England and loans and advances to credit institutions; and \u2022 Loans to subsidiary undertakings (within the Society\u2019s Statement of Financial Position) and firm commitments made in relation to such loans. Measurement of Expected Credit Losses (ECLs) ECLs are an unbiased probability-weighted estimate of the present value of credit losses, taking account of forward-looking information that includes a range of possible economic outcomes. ECLs are measured as the difference between contractual cash flows and expected cash flows, discounted at the asset's effective interest rate. The assessment of impairment requires a number of estimates and assumptions, details of which are included in Note 1v). The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. The Group typically assesses ECLs on an individual asset basis. IFRS 9 requires an impairment loss allowance to be recognised at an amount equal to either 12-month ECLs (\u2018stage 1\u2019 ECLs) or lifetime ECLs. Lifetime ECLs are ECLs that result from all possible default events over the expected life of a financial instrument. 12-month ECLs are ECLs that result from default events that are possible within the 12 months after the reporting date. The Group measures impairment loss allowances at an amount equal to lifetime ECLs, except for the following which are measured as 12-month ECLs: \u2022 treasury assets that are determined to have low credit risk at the reporting date. The Group considers a treasury asset to have low credit risk when its credit rating is equivalent to the globally understood definition of 'investment grade'; and \u2022 other financial assets on which credit risk has not increased significantly since their initial recognition (except trade receivables, for which the Group will always recognise lifetime ECLs in accordance with the simplified approach in IFRS 9). Lifetime ECLs are required where the credit risk on a financial asset has increased significantly since initial recognition (except for investment grade treasury assets, as noted above). For the measurement of ECLs relating to residential mortgages and to treasury assets, the Group typically assesses the probability of default, the expected exposure at the time of default, and the loss that is expected to arise on default. The probabilities of default are adjusted to take account of expected customer redemptions. For commercial mortgages, the Group applies an average loss rate approach. A lifetime coverage ratio is calculated, based on cumulative losses to date divided by the total value of loan balances redeemed over that period. The lifetime coverage ratio is applied to accounts held in stage 2 and stage 3, discounted at each account\u2019s EIR, to determine expected lifetime losses. For stage 1 accounts, a 12-month coverage ratio is applied, discounted at each account\u2019s EIR, to determine expected 12-month losses. For accounts held in stage 3, additional account-specific impairment is typically held based on management judgement. Due consideration is given to the impact of forward-looking information, including a range of possible future economic scenarios; where appropriate, the level of impairment held is adjusted accordingly. For debt factoring advances, stage 1 ECLs are based on an average 12-month loss rate as adjusted for forward-looking assessments and other pertinent factors. For accounts held in stage 2 / stage 3, account- specific allowances are held based on management judgement. For trade receivables, the Group typically applies a simplified approach whereby, as permitted by IFRS 9, the level of impairment held is always based on lifetime ECLs. This approach includes the use of provision matrices based on historical credit loss experience, as adjusted for forward-looking factors. For loan commitments where a firm offer has been made, ECLs are measured by the Group at 12-month losses for the percentage of such commitments expected to convert from an outstanding customer offer into a completed customer loan. The conversion factors applied are based on actual trends observed for the Group and are aligned with the Group\u2019s Internal Ratings-Based (IRB) approach for regulatory capital purposes. Financial assets that are subject to the impairment requirements of IFRS 9 are described according to their ECL \u2018stage\u2019 as follows: \u2022 \u2018Stage 1\u2019 - Assets for which a 12-month ECL is recognised; \u2022 \u2018Stage 2\u2019 - Assets for which a lifetime ECL is recognised where there has been a \u2018significant increase in credit risk\u2019 but which are not credit-impaired; \u2022 \u2018Stage 3\u2019 - Assets for which a lifetime ECL is recognised and which are \u2018credit-impaired\u2019. The Group\u2019s definitions of \u2018significant increase in credit risk\u2019 and \u2018credit-impaired\u2019 are detailed below. IFRS 9 includes specific requirements for financial assets that are credit-impaired when initially purchased or originated (POCI assets). For POCI assets, an entity recognises only the cumulative change in lifetime ECLs since initial recognition, discounted by the credit-adjusted effective interest rate. For POCI assets, interest revenue is accounted for using the credit-adjusted effective interest rate. The Group had no POCI assets during the current or prior period. Forward-looking information The Group incorporates forward-looking information into both its assessment of whether the credit risk of a financial asset has increased significantly since initial recognition and its measurement of ECLs. The time period over which the Group assesses forward-looking information is the maximum period over which the Group is exposed to credit risk. The Group determines a range of representative scenarios for the possible future direction of key economic variables; this includes forecasts of quarterly movements in these variables for years one to five, followed by phased transition assumptions for years six to ten, arriving at a view of long- run averages from year eleven onwards. The scenarios are derived by reference to external information where this is publicly available and appropriate, together with internally generated views. A probability-weighting, based on management judgement, is assigned to each scenario. The Group\u2019s 'central' scenario represents a view of the most likely outcome and is aligned with information used by the Group for other purposes such as strategic planning and budgeting. The selection of alternative scenarios is intended to model the non-linear impact of economic factors on ECLs for the Group\u2019s financial assets. For UK mortgage impairment, including SIL\u2019s UK buy-to-let portfolio, the Group typically considers three scenarios; this includes the central scenario, together with an upside scenario (more optimistic than the central scenario) and a downside scenario (more pessimistic than the central scenario). For non-UK mortgage impairment and for treasury asset impairment, the Group typically considers a central scenario and a downside scenario. Further details are included in Note 1v). Significant increase in credit risk The Group monitors all financial assets and loan commitments that are subject to IFRS 9\u2019s impairment requirements to assess whether there has been a significant increase in credit risk since initial recognition of the asset. IFRS 9 includes a rebuttable presumption that credit risk has significantly increased when contractual payments are more than 30 days past due. For relevant models, the Group uses internal credit risk metrics that reflect its assessment of the probability of default (PD) of individual counterparties. The credit risk of each exposure is assessed at initial recognition, based on the available information about the counterparty. For loans and advances to customers, the credit risk at initial recognition is typically assessed by reference to information as at the loan drawdown date; this information is not always held by the Group for loans drawn down prior to 2007, in which case the Group uses the earliest available information as a proxy (which is typically January 2007 data for pre-2007 loans that were originated by the Society). Exposures are monitored and the credit risk assessment is updated to reflect current information on an ongoing basis. For residential mortgages, the Group considers that credit risk has significantly increased if one or more of the following criteria are met: \u2022 the remaining lifetime PD as at the reporting date, as compared to the remaining lifetime PD for this point in time that was estimated on initial recognition of the asset, exceeds pre-determined thresholds which are set by the Group and reviewed periodically. The thresholds applied will depend on the credit quality at initial recognition, with a lower percentage change in PD being required for higher risk accounts. The use of an absolute lifetime PD hurdle for residential mortgages is also applied where lifetime PD goes above 25%. Further details are included in Note 1v); \u2022 the account is forborne (page 158); \u2022 the account is in arrears (no minimum); \u2022 the account term has expired; or \u2022 the account has a temporary arrangement in place, arranged via the Mortgage Charter Scheme, to repay interest only. For commercial mortgages, the Group considers that credit risk has significantly increased when an account is in arrears (no minimum) or is forborne. For residential and commercial mortgages, the above criteria for assessing significant increase in credit risk ensures compliance with IFRS 9\u2019s backstop of more than 30 days past due. For debt factoring advances, the Group considers that credit risk has significantly increased when an account is placed on a watchlist. For treasury assets, the Group applies criteria that consider the relative increase in the asset\u2019s lifetime PD, by reference to external credit ratings where available. Notwithstanding these criteria, the Group considers that credit risk has not increased significantly for any treasury asset that is determined to have 'low' credit risk at the reporting date. The Group considers a treasury asset to have low credit risk when its credit rating is equivalent to the globally understood definition of \u2018investment grade\u2019. The Society\u2019s Statement of Financial Position includes loans to subsidiary undertakings that are repayable on demand. For these loans, the Society considers that credit risk has significantly increased when the subsidiary undertaking no longer has sufficient liquid assets to repay the loan if demanded at the reporting date or where other factors indicate that, in the judgement of management, a significant increase in credit risk has occurred; this assessment takes into account the specific characteristics of each subsidiary loan and the subsidiary\u2019s own business. Definition of default For residential mortgages, the Group\u2019s definition of default is aligned with its existing IRB definition of default for regulatory capital purposes. For IFRS 9 accounting purposes, stage 3 loans which no longer meet any of the default criteria are subject to a six month minimum probation period before they become eligible for transfer out of stage 3. Default occurs when one or more of the following criteria is met: \u2022 The borrower is 90 days or more past due on their contractual payments. \u2022 The borrower meets unlikeliness to pay criteria, which indicates the borrower is in significant financial difficulty. The instances are: \u2022 the loan is in repossession; \u2022 the borrower has filed for bankruptcy; \u2022 at least two payments are in arrears and forbearance activity has been applied; or \u2022 other evidence is available that the customer is not going to be able to meet their loan commitments. For commercial mortgages, stage 3 loans which no longer meet any of the default criteria are subject to a three month minimum probation period before they become eligible for transfer out of stage 3. Default occurs when one or more of the following criteria is met: \u2022 The borrower is 90 days or more past due on their contractual payments; \u2022 The loan is in repossession; \u2022 A receiver has been appointed; \u2022 The mortgage term has expired; or \u2022 Other evidence is available that the customer is not going to be able to meet their loan commitments. For debt factoring advances, the Group considers that an account is in default when there is no reasonable expectation of recovery, typically due to financial difficulties of the customer. Credit-impaired financial assets At each reporting date, the Group assesses whether financial assets (other than those held at FVTPL) are credit-impaired. For those assets that have become credit-impaired, interest revenue is subsequently calculated by applying the effective interest rate to the amortised cost of the asset. A financial asset is 'credit-impaired' when one or more events have occurred that have a detrimental impact on the estimated future cash flows of the financial asset. Evidence that a financial asset is credit-impaired includes the following: \u2022 a breach of contract such as a default; or \u2022 the disappearance of an active market for a security because of financial difficulties. For residential and commercial mortgages, the Group considers that a loan that meets the definition of default is credit-impaired. For loans to no longer be considered credit-impaired, consistently good repayments must be demonstrated over a period of time, being not less than six months for residential loans and not less than three months for commercial loans. For debt factoring advances, the Group considers that an account is credit-impaired when there is no reasonable expectation of recovery, typically due to financial difficulties of the customer. To assess whether sovereign and corporate debt instruments are credit-impaired, the Group considers factors such as bond yields, credit ratings and the ability of the borrower to raise funding. To assess whether trade receivables are credit-impaired, the Group considers factors such as the ageing profile, historical default rates and specific case knowledge. Forbearance In certain circumstances, the Group renegotiates loans to customers in financial difficulties (referred to as forbearance activities) to maximise collection opportunities and minimise the risk of default whilst ensuring the best outcome for the customer. Under the Group\u2019s forbearance policy, loan forbearance is granted on a selective basis if the customer is currently in default on their loan or if there is a high risk of default, there is evidence that the customer made all reasonable efforts to pay under the original contractual terms and the customer is expected to be able to meet the revised terms. The revised terms typically include extending the maturity of the loan, changing the timing of interest payments or amending the terms of loan covenants. Both retail and commercial loans are subject to the forbearance policy. The Retail Credit Committee regularly reviews reports on forbearance activities. For the purposes of disclosures in these financial statements, loans with renegotiated terms are defined as loans that have been restructured due to a deterioration in the borrower\u2019s financial position, for which the Group has made concessions by agreeing to terms and conditions that are more favourable for the borrower than the Group had provided initially and that it would not otherwise consider. Write-offs A financial asset is written off (in full or in part) when the Group judges there to be no reasonable expectation that the asset can be recovered (in full or in part). This is typically the case when the Group determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. This assessment is performed at the individual asset level. The related impairment loss allowance is also written off once all the necessary procedures have been completed and the loss amount has crystallised. Financial assets that are written off could still be subject to enforcement activities and subsequent recoveries of amounts previously written off decrease the amount of impairment losses recorded in the Income Statement. If the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use asset is depreciated over the useful life of the underlying asset. Otherwise, the right-of- use asset is depreciated on a straight-line basis over the shorter of the estimated useful life of the right-of-use asset and the lease term. In accordance with IAS 36 Impairment of Assets , right-of-use assets are regularly reviewed, at least annually, for indications of impairment. Any impairment identified is charged to the Income Statement.
Land is not depreciated. Major items of property, plant and equipment purchased are depreciated on a monthly
basis from the date the asset is available for utilisation. Depreciation methods, useful lives and residual values
are reviewed at each reporting date and adjusted where appropriate. In accordance with IAS 36
Impairment of
Assets
, all items of property, plant and equipment are regularly reviewed, at least annually, for indications of
impairment. Any impairment identified is charged to the Income Statement.
Properties held by the Group for capital appreciation or which earn rentals are recognised as investment properties at cost less depreciation and impairment losses. The depreciation policy for investment properties is consistent with the policy for property, plant and equipment. Investment properties are regularly reviewed for indications of impairment and any impairment identified is charged to the Income Statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-474": { "value": "Computer software, databases, brands and customer contracts In accordance with IAS 38 Intangible Assets, computer software, databases, brands and customer contracts are recognised as an intangible asset if, and only if, the cost incurred leads to the creation of an identifiable asset whose cost can be measured reliably and it is probable that the asset created will generate future economic benefits which will flow to the Group. Furthermore, brands and customer contracts are only eligible to be recognised as an intangible asset when purchased externally or when acquired as part of a business combination; internally generated brands and customer contracts are not capitalised. Expenditure incurred to maintain existing levels of performance is recognised as an expense as incurred. Intangible assets are initially recognised at cost, or at fair value when acquired as part of a business combination, and subsequently amortised from the date they are available for use using the straight-line method over their estimated useful economic lives (unless deemed to have an indefinite economic life), which can be up to 10 years. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Intangible assets are tested for impairment at each reporting date or when there is an indication of impairment. The Group identifies impairment by comparing the future economic benefit to the Group against the carrying value of the asset. The assessment of future economic benefit includes value in use calculations to determine recoverable amounts for cash generating units. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-508": { "value": "f) Financial assets In accordance with IFRS 9, the financial assets of the Group are each classified into one of three categories (amortised cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL)), further details of which are provided below. In classifying each financial asset, the Group assesses: \u2022 The objective of the business model in which the financial asset is held; and \u2022 Whether the contractual cash flows of the financial asset are \u2018solely payments of principal and interest\u2019 (SPPI). Financial assets are reclassified when, and only when, the Group changes its business model for managing the assets. Business model assessment The Group\u2019s business model assessment is made at a portfolio level as this best reflects the way the business is managed and how information is provided to management. The information considered includes: \u2022 The stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management\u2019s strategy focuses on earning contractual interest income, matching the duration of the financial assets to the duration of any related liabilities or realising cash flows through the sale of the assets; \u2022 How the performance of the portfolio is evaluated and reported to the Group\u2019s management; \u2022 The risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed; \u2022 The frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity. Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Group\u2019s continuing recognition of the assets. Solely Payment of Principal and Interest (SPPI) assessment For the purposes of the Group\u2019s SPPI assessment, \u2018principal\u2019 is defined as the fair value of the financial asset on initial recognition. \u2018Interest\u2019 is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin. In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers: \u2022 Terms that may adjust the contractual coupon rate, including variable-rate features; \u2022 Contingent events that would change the amount or timing of cash flows; \u2022 Prepayment and extension features; and \u2022 Terms that limit the Group\u2019s claim to cash flows from specified assets (e.g. non-recourse features). As a result of the assessments outlined above, the financial assets of the Group have been classified as follows: At amortised cost A financial asset is measured at amortised cost only if it meets both of the following conditions and is not designated as at fair value through profit or loss (FVTPL): \u2022 It is held within a business model whose objective is to hold assets to collect contractual cash flows (\u2018held to collect\u2019 business model); and \u2022 Its contractual terms give rise on specified dates to cash flows that are \u2018solely payments of principal and interest\u2019 (SPPI) on the principal amount outstanding. The following have been assessed by the Group to be in a \u2018held to collect\u2019 business model and to have cash flows that pass the SPPI test: \u2022 Loans and advances to customers (except for a small number of loans held at FVTPL) \u2022 Cash balances \u2022 Loans and advances to credit institutions \u2022 Trade receivables \u2022 Loans to subsidiary undertakings (in the Society\u2019s Statement of Financial Position) The Group\u2019s financial assets measured at amortised cost are initially recognised at fair value less any directly attributable transaction costs. The assets are subsequently measured at amortised cost using the effective interest method, less impairment loss allowances. The effective interest method calculates an interest rate which exactly discounts the forecast cash flows of an asset over its expected life back to its carrying value. For financial assets that are not credit-impaired (see Note 1h)), interest revenue is calculated by applying the effective interest rate to the gross carrying amount of the asset. For financial assets that are credit-impaired, interest revenue is calculated by applying the effective interest rate to the amortised cost of the asset. In accordance with the effective interest method, directly attributable upfront costs and fees such as cashbacks, mortgage premia paid or discounts received on acquisition of mortgage books, lending charges paid by customers, procuration fees and completion fees are deferred and recognised over the expected life of mortgage assets. Upfront costs that are attributable to a mortgage asset\u2019s fixed interest rate period are amortised over that fixed rate period (or shorter period, if deemed appropriate). Historical and forecast mortgage redemption data and management judgement of future performance are used to estimate the expected lives of mortgage assets. A change to management\u2019s estimate of expected mortgage lives results in an immediate adjustment to the carrying amount of the mortgage asset (discounted at its effective interest rate) at the point this change is made, which recalculates the carrying value to account for the revised assumptions. Included in loans and advances to customers of the Society are balances which have been used to secure funding issued by the Group\u2019s special purpose funding vehicles which are consolidated into the Group Accounts, further details of which are included in Note 20a). The beneficial interest in the underlying loans has been transferred to these entities. The loans are retained within the Society\u2019s Statement of Financial Position as the Society retains substantially all the risks and rewards relating to the loans. In accordance with IFRS 9, an impairment loss allowance is determined for financial assets at amortised cost in relation to expected credit losses (ECLs; see Note 1h) for details on measurement of ECLs). The movement in the impairment loss allowance recognised during the period is charged or credited to the Income Statement. At fair value through other comprehensive income (FVOCI) A financial asset is measured at FVOCI only if it meets both of the following conditions and is not designated as at FVTPL: \u2022 It is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets (\u2018held to collect and sell\u2019 business model); and \u2022 Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The majority of the Group\u2019s debt securities, which are held to manage liquidity requirements, have been assessed by the Group to be in a \u2018held to collect and sell\u2019 business model and to have cash flows that pass the SPPI test. Financial assets held at FVOCI are initially recognised at fair value plus directly attributable transaction costs, with subsequent changes in fair value recognised in equity. The majority of fair values of financial assets held at FVOCI are based on quoted prices, which represent the bid price. Where debt securities held at FVOCI do not have quoted prices available, the fair value is based on the present value of discounted cashflows using market observable inputs. In accordance with IFRS 9, an impairment loss allowance is determined for debt securities measured at FVOCI in relation to ECLs. For debt instruments measured at FVOCI, the impairment loss allowance is not deducted from the carrying amount of the asset; instead the loss allowance is recognised through other comprehensive income. The movement in the impairment loss allowance recognised during the period is charged or credited to the Income Statement. Interest income is recognised in the Income Statement on an effective interest basis. When the debt instruments are derecognised, the accumulated gains or losses within equity are reclassified to the Income Statement. The premia and discounts arising on the purchase of these assets are amortised over the period to the maturity date of the security on an effective interest basis. Any amounts amortised are charged or credited to the Income Statement in the relevant financial periods. At fair value through profit or loss (FVTPL) All financial assets which are not classified as either amortised cost or FVOCI, as described above, are measured at FVTPL. This includes all derivative financial assets. On initial recognition the Group may irrevocably designate as FVTPL a financial asset that otherwise meets the requirements to be measured at either amortised cost or FVOCI, if so doing eliminates or significantly reduces an accounting mismatch that would otherwise arise. Loans and advances to customers A small number of loans are held at FVTPL because they contain contractual cash flows which do not pass the SPPI test. These loans consist mainly of certain lifetime mortgages. The fair value of these loans is determined by discounting future expected cash flows. Where the portfolio is so small that a probabilistic methodology to estimate future cash flows is not appropriate, management assumes that voluntary prepayments will be 100% in year one. Equity release portfolio The Group holds an equity release portfolio. The mortgage products within this portfolio provide the customer with a \u2018no negative equity guarantee\u2019 (NNEG), which is an embedded derivative. Under IFRS 9, the equity release portfolio and the NNEG are assessed together as a hybrid financial instrument. The Group assessed the characteristics of the equity release cash flows and concluded that the contractual terms do not give rise on specified dates to cash flows that are solely payments of principal and interest. As a result, the equity release portfolio is classified as FVTPL. The existence of the NNEG means that the Group\u2019s maximum return on redemption of these loans is limited to the value of the customer\u2019s property at that time. The Group\u2019s exposure to potential losses as a result of the NNEG is limited in part by a guarantee provided to the Group by a third party for the longevity element of this risk. Due to the structured nature of the portfolio there is no single industry pricing methodology and assumptions for valuing these products differ by institution. Further complexity arises on a portion of the portfolio due to the customer interest rate being linked to the Retail Price Index (RPI). A stochastic model was chosen and devised internally for the purpose of valuing this portfolio. The model uses inputs including mortality rates, voluntary prepayment rates, estimates of future RPI and a House Price Index (HPI) to predict future cash flows on the portfolio. These are then discounted back to present value using a discount curve based on a Sterling Overnight Index Average (SONIA) curve plus an illiquidity spread. The illiquidity spread reflects the fact that no repayments are made by the customer until the product redeems which may be many years into the future. Where possible the inputs are market-driven or, where no market-driven data is available, based on management judgement that is informed by observable data wherever possible. Due to the high level of variability within these inputs, the model also runs several thousand scenarios for both the RPI and HPI inputs. The Group has robust control procedures in place regarding all the inputs to the valuation model. As this valuation technique uses one or more significant inputs that are not based on observable market data, it is classed as a Level 3 valuation technique. For further details on the different levels of the fair value hierarchy, see Note 46b). The impact of applying reasonably possible alternative assumptions of certain inputs into the valuation of the portfolio is found in Note 1v). Interest income on the equity release portfolio is recognised in the Income Statement on an effective interest basis. Fair value gains or losses on the portfolio are recognised within the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. Realised losses recognised on redemption of loans within the portfolio are recognised within the Income Statement line \u2018Impairment and provisions\u2019. Derivative financial instruments The Group\u2019s derivative financial instruments, which are held solely for hedging purposes, are measured and held at fair value within the Statement of Financial Position. The Group has elected to adopt the hedge accounting requirements of IFRS 9 for all hedge relationships covered by those requirements. As permitted under IFRS 9, the Group continues to apply the requirements of IAS 39 for derivatives designated in a portfolio fair value hedge. For all other derivatives designated in a hedging relationship, the Group applies the requirements of IFRS 9. The Group uses derivative financial instruments to hedge its exposure to market risks (for example, interest rate risk) arising from operational, financing and investment activities. In accordance with its treasury policy and the Building Societies Act 1986, the Group does not hold or issue derivative financial instruments for trading purposes. In line with accounting standards, the changes in fair value of derivatives used to hedge particular risks can either be offset in the Income Statement or deferred to equity. There are two types of hedge accounting strategies that the Group undertakes and these are summarised below: \u2022 Fair value hedges - Where a derivative financial instrument hedges the changes in fair value of a recognised asset or liability (or portion of a recognised asset or liability), any gain or loss on the hedging instrument is recognised in the Income Statement. To the extent that there is an effective hedge relationship, the associated hedged items (for example, mortgage assets) are stated at fair value in respect of the hedged risk, with any gain or loss also recognised in the Income Statement. As a result, fair value movements in the hedging instrument and in the hedged items offset each other and reduce income statement volatility. Any residual fair value hedge ineffectiveness is also recognised in the Income Statement. In order to calculate the fair value in respect of hedged risk in relation to mortgage assets and some retail savings, the Group applies estimated prepayment assumptions using historical analysis. For fair value hedge relationships where ineffectiveness would arise as a result of foreign currency basis spread, movements are recognised in other comprehensive income (OCI) through the cost of hedging reserve (see below) in accordance with IFRS 9. \u2022 Cash flow hedges - Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability (or portion of a recognised asset or liability) or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised in OCI and deferred in a separate reserve. The effective portion recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of the gain or loss on the hedging instrument is recognised in the Income Statement immediately. In accordance with IFRS 9, where foreign currency basis spread arises in fair value hedge relationships, this is separated and excluded from the designation of a financial instrument as the hedging instrument; movements relating to the foreign currency basis spread are recognised in OCI through the cost of hedging reserve. The Group calculates the value of the foreign currency basis spread by comparing the change in value of the actual foreign currency hedging instrument (excluding fees not relating to the hedge relationship) and the value of a hypothetical instrument derived and valued using market data excluding foreign currency basis spread. Hedge accounting relationships within the scope of IFRS 9 require hedge accounting to only be discontinued when the qualifying criteria are no longer met. Additionally, if the hedge no longer meets the qualifying criteria due to a mismatch in the hedge ratio, the relationship must be rebalanced if possible, rather than discontinuing hedge accounting. Fair values are determined by the three tier valuation hierarchy as defined in IFRS 13 Fair Value Measurement and Amendments to IFRS 7 Financial Instruments: Disclosures and as described in Note 46b). All derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. In valuing derivatives used to hedge our mortgage and savings portfolios, the Group has not valued them as one net pool for market risk and credit risk management purposes as permitted under IFRS 13, but has valued each derivative individually. Interest on derivatives is included within interest receivable where the derivative economically hedges an asset and within interest expense where the derivative economically hedges a liability, to align the recognition with its economic purpose. Fair value gains and losses on derivatives and hedged items that are posted to the Income Statement are recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. To the extent that the hedge is effective, unrealised fair value gains and losses on cash flow hedging derivatives are recognised in the cash flow hedging reserve. Where the Group enters into a cross-currency swap, as is the case for the issuance of Euro-denominated covered bonds (see page 147), the Group recognises the movement in the fair value of these derivatives as follows: \u2022 Foreign exchange movements are recognised in the Income Statement line \u2018Interest payable and similar charges\u2019; \u2022 Movements due to interest rate risk are recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; and \u2022 Movements due to foreign currency basis spread are recognised directly in the cost of hedging reserve as permitted by IFRS 9. Equity share investments Under IFRS 9 equity share investments are measured at FVTPL, except where an election is made at initial recognition to irrevocably designate an equity share investment that is not held for trading to be classified as FVOCI. The FVOCI election can be made on an instrument-by-instrument basis. The Group has made no FVOCI elections in respect of its existing equity share investments; the Group\u2019s equity share investments are therefore held at FVTPL. They are initially recognised at fair value, with subsequent changes in fair value being recognised in the Income Statement. Transaction costs are expensed to the Income Statement. Share warrants Within other assets of the Group are amounts recognised in respect of share warrants held, or vested, in unlisted entities. Amounts are also recognised, where appropriate, for certain put options associated with these share warrants; these put options contain conditional contractual rights for the Group to put the warrants back to the counterparty at a future date in exchange for cash. The Group assessed for these assets the characteristics of the related cash flows and concluded that the contractual terms fail the SPPI test; these assets are therefore classified by the Group as FVTPL. The fair value of share warrants is determined by reference to information included in independent third-party valuations. The fair value of related put options is based on management\u2019s assessment of the likelihood that criteria to receive payment will be met and is discounted for the weighted average cost of capital. Loan to defined benefit pension scheme The Group holds a loan to the Skipton Building Society (2015) Group Pension Scheme. The loan is held at FVTPL because it fails the SPPI test due to prepayment features that are contractually linked to the maturity and value of specific illiquid assets held by the scheme. The fair value of this loan is determined by discounting future expected cash flows. See Note 1v) for further details. Debt securities The Society holds in its Statement of Financial Position residential mortgage backed securities that were issued in previous periods by the Group\u2019s securitisation vehicles. Junior tranches of these securities are held at FVTPL because they fail the SPPI test due to an elevated level of credit risk relative to other tranches. h) Impairment of financial assets Under IFRS 9, impairment of financial assets is assessed using a forward-looking expected credit loss (ECL) model. This model applies to financial assets measured at either amortised cost or FVOCI (except any equity share investments held as such, as set out in Note 1f)). The Group recognises impairment loss allowances for ECLs on the following financial assets that are not measured at FVTPL: \u2022 Loans and advances to customers; \u2022 Loan commitments (where a firm offer has been made to the customer); \u2022 Trade receivables; \u2022 Treasury assets, which comprise debt securities held at FVOCI, cash in hand and balances with the Bank of England and loans and advances to credit institutions; and \u2022 Loans to subsidiary undertakings (within the Society\u2019s Statement of Financial Position) and firm commitments made in relation to such loans. Measurement of Expected Credit Losses (ECLs) ECLs are an unbiased probability-weighted estimate of the present value of credit losses, taking account of forward-looking information that includes a range of possible economic outcomes. ECLs are measured as the difference between contractual cash flows and expected cash flows, discounted at the asset's effective interest rate. The assessment of impairment requires a number of estimates and assumptions, details of which are included in Note 1v). The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. The Group typically assesses ECLs on an individual asset basis. IFRS 9 requires an impairment loss allowance to be recognised at an amount equal to either 12-month ECLs (\u2018stage 1\u2019 ECLs) or lifetime ECLs. Lifetime ECLs are ECLs that result from all possible default events over the expected life of a financial instrument. 12-month ECLs are ECLs that result from default events that are possible within the 12 months after the reporting date. The Group measures impairment loss allowances at an amount equal to lifetime ECLs, except for the following which are measured as 12-month ECLs: \u2022 treasury assets that are determined to have low credit risk at the reporting date. The Group considers a treasury asset to have low credit risk when its credit rating is equivalent to the globally understood definition of 'investment grade'; and \u2022 other financial assets on which credit risk has not increased significantly since their initial recognition (except trade receivables, for which the Group will always recognise lifetime ECLs in accordance with the simplified approach in IFRS 9). Lifetime ECLs are required where the credit risk on a financial asset has increased significantly since initial recognition (except for investment grade treasury assets, as noted above). For the measurement of ECLs relating to residential mortgages and to treasury assets, the Group typically assesses the probability of default, the expected exposure at the time of default, and the loss that is expected to arise on default. The probabilities of default are adjusted to take account of expected customer redemptions. For commercial mortgages, the Group applies an average loss rate approach. A lifetime coverage ratio is calculated, based on cumulative losses to date divided by the total value of loan balances redeemed over that period. The lifetime coverage ratio is applied to accounts held in stage 2 and stage 3, discounted at each account\u2019s EIR, to determine expected lifetime losses. For stage 1 accounts, a 12-month coverage ratio is applied, discounted at each account\u2019s EIR, to determine expected 12-month losses. For accounts held in stage 3, additional account-specific impairment is typically held based on management judgement. Due consideration is given to the impact of forward-looking information, including a range of possible future economic scenarios; where appropriate, the level of impairment held is adjusted accordingly. For debt factoring advances, stage 1 ECLs are based on an average 12-month loss rate as adjusted for forward-looking assessments and other pertinent factors. For accounts held in stage 2 / stage 3, account- specific allowances are held based on management judgement. For trade receivables, the Group typically applies a simplified approach whereby, as permitted by IFRS 9, the level of impairment held is always based on lifetime ECLs. This approach includes the use of provision matrices based on historical credit loss experience, as adjusted for forward-looking factors. For loan commitments where a firm offer has been made, ECLs are measured by the Group at 12-month losses for the percentage of such commitments expected to convert from an outstanding customer offer into a completed customer loan. The conversion factors applied are based on actual trends observed for the Group and are aligned with the Group\u2019s Internal Ratings-Based (IRB) approach for regulatory capital purposes. Financial assets that are subject to the impairment requirements of IFRS 9 are described according to their ECL \u2018stage\u2019 as follows: \u2022 \u2018Stage 1\u2019 - Assets for which a 12-month ECL is recognised; \u2022 \u2018Stage 2\u2019 - Assets for which a lifetime ECL is recognised where there has been a \u2018significant increase in credit risk\u2019 but which are not credit-impaired; \u2022 \u2018Stage 3\u2019 - Assets for which a lifetime ECL is recognised and which are \u2018credit-impaired\u2019. The Group\u2019s definitions of \u2018significant increase in credit risk\u2019 and \u2018credit-impaired\u2019 are detailed below. IFRS 9 includes specific requirements for financial assets that are credit-impaired when initially purchased or originated (POCI assets). For POCI assets, an entity recognises only the cumulative change in lifetime ECLs since initial recognition, discounted by the credit-adjusted effective interest rate. For POCI assets, interest revenue is accounted for using the credit-adjusted effective interest rate. The Group had no POCI assets during the current or prior period. Forward-looking information The Group incorporates forward-looking information into both its assessment of whether the credit risk of a financial asset has increased significantly since initial recognition and its measurement of ECLs. The time period over which the Group assesses forward-looking information is the maximum period over which the Group is exposed to credit risk. The Group determines a range of representative scenarios for the possible future direction of key economic variables; this includes forecasts of quarterly movements in these variables for years one to five, followed by phased transition assumptions for years six to ten, arriving at a view of long- run averages from year eleven onwards. The scenarios are derived by reference to external information where this is publicly available and appropriate, together with internally generated views. A probability-weighting, based on management judgement, is assigned to each scenario. The Group\u2019s 'central' scenario represents a view of the most likely outcome and is aligned with information used by the Group for other purposes such as strategic planning and budgeting. The selection of alternative scenarios is intended to model the non-linear impact of economic factors on ECLs for the Group\u2019s financial assets. For UK mortgage impairment, including SIL\u2019s UK buy-to-let portfolio, the Group typically considers three scenarios; this includes the central scenario, together with an upside scenario (more optimistic than the central scenario) and a downside scenario (more pessimistic than the central scenario). For non-UK mortgage impairment and for treasury asset impairment, the Group typically considers a central scenario and a downside scenario. Further details are included in Note 1v). Significant increase in credit risk The Group monitors all financial assets and loan commitments that are subject to IFRS 9\u2019s impairment requirements to assess whether there has been a significant increase in credit risk since initial recognition of the asset. IFRS 9 includes a rebuttable presumption that credit risk has significantly increased when contractual payments are more than 30 days past due. For relevant models, the Group uses internal credit risk metrics that reflect its assessment of the probability of default (PD) of individual counterparties. The credit risk of each exposure is assessed at initial recognition, based on the available information about the counterparty. For loans and advances to customers, the credit risk at initial recognition is typically assessed by reference to information as at the loan drawdown date; this information is not always held by the Group for loans drawn down prior to 2007, in which case the Group uses the earliest available information as a proxy (which is typically January 2007 data for pre-2007 loans that were originated by the Society). Exposures are monitored and the credit risk assessment is updated to reflect current information on an ongoing basis. For residential mortgages, the Group considers that credit risk has significantly increased if one or more of the following criteria are met: \u2022 the remaining lifetime PD as at the reporting date, as compared to the remaining lifetime PD for this point in time that was estimated on initial recognition of the asset, exceeds pre-determined thresholds which are set by the Group and reviewed periodically. The thresholds applied will depend on the credit quality at initial recognition, with a lower percentage change in PD being required for higher risk accounts. The use of an absolute lifetime PD hurdle for residential mortgages is also applied where lifetime PD goes above 25%. Further details are included in Note 1v); \u2022 the account is forborne (page 158); \u2022 the account is in arrears (no minimum); \u2022 the account term has expired; or \u2022 the account has a temporary arrangement in place, arranged via the Mortgage Charter Scheme, to repay interest only. For commercial mortgages, the Group considers that credit risk has significantly increased when an account is in arrears (no minimum) or is forborne. For residential and commercial mortgages, the above criteria for assessing significant increase in credit risk ensures compliance with IFRS 9\u2019s backstop of more than 30 days past due. For debt factoring advances, the Group considers that credit risk has significantly increased when an account is placed on a watchlist. For treasury assets, the Group applies criteria that consider the relative increase in the asset\u2019s lifetime PD, by reference to external credit ratings where available. Notwithstanding these criteria, the Group considers that credit risk has not increased significantly for any treasury asset that is determined to have 'low' credit risk at the reporting date. The Group considers a treasury asset to have low credit risk when its credit rating is equivalent to the globally understood definition of \u2018investment grade\u2019. The Society\u2019s Statement of Financial Position includes loans to subsidiary undertakings that are repayable on demand. For these loans, the Society considers that credit risk has significantly increased when the subsidiary undertaking no longer has sufficient liquid assets to repay the loan if demanded at the reporting date or where other factors indicate that, in the judgement of management, a significant increase in credit risk has occurred; this assessment takes into account the specific characteristics of each subsidiary loan and the subsidiary\u2019s own business. Definition of default For residential mortgages, the Group\u2019s definition of default is aligned with its existing IRB definition of default for regulatory capital purposes. For IFRS 9 accounting purposes, stage 3 loans which no longer meet any of the default criteria are subject to a six month minimum probation period before they become eligible for transfer out of stage 3. Default occurs when one or more of the following criteria is met: \u2022 The borrower is 90 days or more past due on their contractual payments. \u2022 The borrower meets unlikeliness to pay criteria, which indicates the borrower is in significant financial difficulty. The instances are: \u2022 the loan is in repossession; \u2022 the borrower has filed for bankruptcy; \u2022 at least two payments are in arrears and forbearance activity has been applied; or \u2022 other evidence is available that the customer is not going to be able to meet their loan commitments. Write-offs A financial asset is written off (in full or in part) when the Group judges there to be no reasonable expectation that the asset can be recovered (in full or in part). This is typically the case when the Group determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. This assessment is performed at the individual asset level. The related impairment loss allowance is also written off once all the necessary procedures have been completed and the loss amount has crystallised. Financial assets that are written off could still be subject to enforcement activities and subsequent recoveries of amounts previously written off decrease the amount of impairment losses recorded in the Income Statement. i) Financial assets and liabilities \u2013 modification, derecognition and offsetting Modification The Group sometimes renegotiates or otherwise modifies the contractual cash flows of loans to customers. When this happens, the Group assesses whether or not the new cash flows are substantially different to the original cash flows. If the cash flows are substantially different, then the contractual rights to cash flows from the original loan are deemed to have expired. In this case, the original loan is derecognised (as discussed below) and a new loan is recognised initially at fair value. Where impairment is held against the original loan (i.e. the loan is not held at FVTPL), the original loan is derecognised from its existing impairment stage (which may be stage 1, stage 2 or stage 3) and the new loan is initially recognised in stage 1 with its new origination date. Thereafter, the assessment of whether there has been a significant increase in credit risk is made by reference to changes in credit risk for the new loan starting from the new origination date. Examples of loan modification events for which the Group typically applies derecognition include an existing borrower switching to a new mortgage product and an existing borrower porting their loan to a new property. If the cash flows of a modified loan carried at amortised cost are not substantially different, then the modification does not result in derecognition of the loan (an example of a loan modification event for which the Group typically does not apply derecognition is the application of forbearance strategies). In this case, the Group recalculates the gross carrying amount of the loan and recognises the amount arising from adjusting the gross carrying amount as a modification gain or loss in the Income Statement. If such a modification is carried out because of financial difficulties of the borrower, the gain or loss is presented together with impairment losses. In other cases, it is presented within interest income. For residential mortgages, the Group assesses whether there has been a significant increase in credit risk by comparing the remaining lifetime PD as at the reporting date (based on the modified contractual terms) to the remaining lifetime PD for this point in time that was estimated at initial recognition (based on the original, unmodified contractual terms). Derecognition The Group derecognises a financial asset when the contractual rights to receive the asset\u2019s cash flows expire (including deemed expiry arising from a modification with substantially different terms as discussed above), or when the contractual rights have been transferred and either i) the Group transfers substantially all the risks and rewards of ownership, or ii) the Group neither transfers nor retains substantially all the risks and rewards of ownership and the Group has not retained control. On derecognition of a financial asset, the difference between the carrying amount of the asset and the sum of i) the consideration received (including any new asset obtained less any new liability assumed) and ii) any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. The Society has not derecognised the loans transferred to the Group\u2019s special purpose funding vehicles because substantially all the risks and rewards are retained by the Society as detailed in Note 1d). Financial liabilities are derecognised only when the obligation is discharged, cancelled or has expired. Offsetting Financial assets and financial liabilities are offset and the net amount presented within the Statement of Financial Position when, and only when, the Group has a legally enforceable right to offset the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under IFRS. With the exception of bank balances included within \u2018Loans and advances to credit institutions\u2019, there are no other financial assets or liabilities which are offset within the Statement of Financial Position and all other financial assets and liabilities are presented on a gross basis. The Group has a cash-pooling arrangement in place with one of its banking counterparties between its subsidiaries and the Society. At the reporting date, the Group has a legally enforceable right to offset balances in these bank accounts and so, in accordance with IAS 32, the net presentation more appropriately reflects the substance of the arrangement. At 31 December 2025 the Group has offset \u00a320.0m (31 December 2024: \u00a318.0m) of balances against \u2018Loans and advances to credit institutions\u2019 that would otherwise be shown within \u2018Amounts owed to credit institutions\u2019 within the Statement of Financial Position. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-421": { "value": "f) Financial assets In accordance with IFRS 9, the financial assets of the Group are each classified into one of three categories (amortised cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL)), further details of which are provided below. In classifying each financial asset, the Group assesses: \u2022 The objective of the business model in which the financial asset is held; and \u2022 Whether the contractual cash flows of the financial asset are \u2018solely payments of principal and interest\u2019 (SPPI). Financial assets are reclassified when, and only when, the Group changes its business model for managing the assets. Business model assessment The Group\u2019s business model assessment is made at a portfolio level as this best reflects the way the business is managed and how information is provided to management. The information considered includes: \u2022 The stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management\u2019s strategy focuses on earning contractual interest income, matching the duration of the financial assets to the duration of any related liabilities or realising cash flows through the sale of the assets; \u2022 How the performance of the portfolio is evaluated and reported to the Group\u2019s management; \u2022 The risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed; \u2022 The frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity. Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Group\u2019s continuing recognition of the assets. Solely Payment of Principal and Interest (SPPI) assessment For the purposes of the Group\u2019s SPPI assessment, \u2018principal\u2019 is defined as the fair value of the financial asset on initial recognition. \u2018Interest\u2019 is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin. In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers: \u2022 Terms that may adjust the contractual coupon rate, including variable-rate features; \u2022 Contingent events that would change the amount or timing of cash flows; \u2022 Prepayment and extension features; and \u2022 Terms that limit the Group\u2019s claim to cash flows from specified assets (e.g. non-recourse features). As a result of the assessments outlined above, the financial assets of the Group have been classified as follows: At amortised cost A financial asset is measured at amortised cost only if it meets both of the following conditions and is not designated as at fair value through profit or loss (FVTPL): \u2022 It is held within a business model whose objective is to hold assets to collect contractual cash flows (\u2018held to collect\u2019 business model); and \u2022 Its contractual terms give rise on specified dates to cash flows that are \u2018solely payments of principal and interest\u2019 (SPPI) on the principal amount outstanding. The following have been assessed by the Group to be in a \u2018held to collect\u2019 business model and to have cash flows that pass the SPPI test: \u2022 Loans and advances to customers (except for a small number of loans held at FVTPL) \u2022 Cash balances \u2022 Loans and advances to credit institutions \u2022 Trade receivables \u2022 Loans to subsidiary undertakings (in the Society\u2019s Statement of Financial Position) The Group\u2019s financial assets measured at amortised cost are initially recognised at fair value less any directly attributable transaction costs. The assets are subsequently measured at amortised cost using the effective interest method, less impairment loss allowances. The effective interest method calculates an interest rate which exactly discounts the forecast cash flows of an asset over its expected life back to its carrying value. For financial assets that are not credit-impaired (see Note 1h)), interest revenue is calculated by applying the effective interest rate to the gross carrying amount of the asset. For financial assets that are credit-impaired, interest revenue is calculated by applying the effective interest rate to the amortised cost of the asset. In accordance with the effective interest method, directly attributable upfront costs and fees such as cashbacks, mortgage premia paid or discounts received on acquisition of mortgage books, lending charges paid by customers, procuration fees and completion fees are deferred and recognised over the expected life of mortgage assets. Upfront costs that are attributable to a mortgage asset\u2019s fixed interest rate period are amortised over that fixed rate period (or shorter period, if deemed appropriate). Historical and forecast mortgage redemption data and management judgement of future performance are used to estimate the expected lives of mortgage assets. A change to management\u2019s estimate of expected mortgage lives results in an immediate adjustment to the carrying amount of the mortgage asset (discounted at its effective interest rate) at the point this change is made, which recalculates the carrying value to account for the revised assumptions. Included in loans and advances to customers of the Society are balances which have been used to secure funding issued by the Group\u2019s special purpose funding vehicles which are consolidated into the Group Accounts, further details of which are included in Note 20a). The beneficial interest in the underlying loans has been transferred to these entities. The loans are retained within the Society\u2019s Statement of Financial Position as the Society retains substantially all the risks and rewards relating to the loans. In accordance with IFRS 9, an impairment loss allowance is determined for financial assets at amortised cost in relation to expected credit losses (ECLs; see Note 1h) for details on measurement of ECLs). The movement in the impairment loss allowance recognised during the period is charged or credited to the Income Statement. At fair value through other comprehensive income (FVOCI) A financial asset is measured at FVOCI only if it meets both of the following conditions and is not designated as at FVTPL: \u2022 It is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets (\u2018held to collect and sell\u2019 business model); and \u2022 Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The majority of the Group\u2019s debt securities, which are held to manage liquidity requirements, have been assessed by the Group to be in a \u2018held to collect and sell\u2019 business model and to have cash flows that pass the SPPI test. Financial assets held at FVOCI are initially recognised at fair value plus directly attributable transaction costs, with subsequent changes in fair value recognised in equity. The majority of fair values of financial assets held at FVOCI are based on quoted prices, which represent the bid price. Where debt securities held at FVOCI do not have quoted prices available, the fair value is based on the present value of discounted cashflows using market observable inputs. In accordance with IFRS 9, an impairment loss allowance is determined for debt securities measured at FVOCI in relation to ECLs. For debt instruments measured at FVOCI, the impairment loss allowance is not deducted from the carrying amount of the asset; instead the loss allowance is recognised through other comprehensive income. The movement in the impairment loss allowance recognised during the period is charged or credited to the Income Statement. Interest income is recognised in the Income Statement on an effective interest basis. When the debt instruments are derecognised, the accumulated gains or losses within equity are reclassified to the Income Statement. The premia and discounts arising on the purchase of these assets are amortised over the period to the maturity date of the security on an effective interest basis. Any amounts amortised are charged or credited to the Income Statement in the relevant financial periods. At fair value through profit or loss (FVTPL) All financial assets which are not classified as either amortised cost or FVOCI, as described above, are measured at FVTPL. This includes all derivative financial assets. On initial recognition the Group may irrevocably designate as FVTPL a financial asset that otherwise meets the requirements to be measured at either amortised cost or FVOCI, if so doing eliminates or significantly reduces an accounting mismatch that would otherwise arise. Loans and advances to customers A small number of loans are held at FVTPL because they contain contractual cash flows which do not pass the SPPI test. These loans consist mainly of certain lifetime mortgages. The fair value of these loans is determined by discounting future expected cash flows. Where the portfolio is so small that a probabilistic methodology to estimate future cash flows is not appropriate, management assumes that voluntary prepayments will be 100% in year one. Equity release portfolio The Group holds an equity release portfolio. The mortgage products within this portfolio provide the customer with a \u2018no negative equity guarantee\u2019 (NNEG), which is an embedded derivative. Under IFRS 9, the equity release portfolio and the NNEG are assessed together as a hybrid financial instrument. The Group assessed the characteristics of the equity release cash flows and concluded that the contractual terms do not give rise on specified dates to cash flows that are solely payments of principal and interest. As a result, the equity release portfolio is classified as FVTPL. The existence of the NNEG means that the Group\u2019s maximum return on redemption of these loans is limited to the value of the customer\u2019s property at that time. The Group\u2019s exposure to potential losses as a result of the NNEG is limited in part by a guarantee provided to the Group by a third party for the longevity element of this risk. Due to the structured nature of the portfolio there is no single industry pricing methodology and assumptions for valuing these products differ by institution. Further complexity arises on a portion of the portfolio due to the customer interest rate being linked to the Retail Price Index (RPI). A stochastic model was chosen and devised internally for the purpose of valuing this portfolio. The model uses inputs including mortality rates, voluntary prepayment rates, estimates of future RPI and a House Price Index (HPI) to predict future cash flows on the portfolio. These are then discounted back to present value using a discount curve based on a Sterling Overnight Index Average (SONIA) curve plus an illiquidity spread. The illiquidity spread reflects the fact that no repayments are made by the customer until the product redeems which may be many years into the future. Where possible the inputs are market-driven or, where no market-driven data is available, based on management judgement that is informed by observable data wherever possible. Due to the high level of variability within these inputs, the model also runs several thousand scenarios for both the RPI and HPI inputs. The Group has robust control procedures in place regarding all the inputs to the valuation model. As this valuation technique uses one or more significant inputs that are not based on observable market data, it is classed as a Level 3 valuation technique. For further details on the different levels of the fair value hierarchy, see Note 46b). The impact of applying reasonably possible alternative assumptions of certain inputs into the valuation of the portfolio is found in Note 1v). Interest income on the equity release portfolio is recognised in the Income Statement on an effective interest basis. Fair value gains or losses on the portfolio are recognised within the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. Realised losses recognised on redemption of loans within the portfolio are recognised within the Income Statement line \u2018Impairment and provisions\u2019. Derivative financial instruments The Group\u2019s derivative financial instruments, which are held solely for hedging purposes, are measured and held at fair value within the Statement of Financial Position. The Group has elected to adopt the hedge accounting requirements of IFRS 9 for all hedge relationships covered by those requirements. As permitted under IFRS 9, the Group continues to apply the requirements of IAS 39 for derivatives designated in a portfolio fair value hedge. For all other derivatives designated in a hedging relationship, the Group applies the requirements of IFRS 9. The Group uses derivative financial instruments to hedge its exposure to market risks (for example, interest rate risk) arising from operational, financing and investment activities. In accordance with its treasury policy and the Building Societies Act 1986, the Group does not hold or issue derivative financial instruments for trading purposes. In line with accounting standards, the changes in fair value of derivatives used to hedge particular risks can either be offset in the Income Statement or deferred to equity. There are two types of hedge accounting strategies that the Group undertakes and these are summarised below: \u2022 Fair value hedges - Where a derivative financial instrument hedges the changes in fair value of a recognised asset or liability (or portion of a recognised asset or liability), any gain or loss on the hedging instrument is recognised in the Income Statement. To the extent that there is an effective hedge relationship, the associated hedged items (for example, mortgage assets) are stated at fair value in respect of the hedged risk, with any gain or loss also recognised in the Income Statement. As a result, fair value movements in the hedging instrument and in the hedged items offset each other and reduce income statement volatility. Any residual fair value hedge ineffectiveness is also recognised in the Income Statement. In order to calculate the fair value in respect of hedged risk in relation to mortgage assets and some retail savings, the Group applies estimated prepayment assumptions using historical analysis. For fair value hedge relationships where ineffectiveness would arise as a result of foreign currency basis spread, movements are recognised in other comprehensive income (OCI) through the cost of hedging reserve (see below) in accordance with IFRS 9. \u2022 Cash flow hedges - Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability (or portion of a recognised asset or liability) or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised in OCI and deferred in a separate reserve. The effective portion recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of the gain or loss on the hedging instrument is recognised in the Income Statement immediately. In accordance with IFRS 9, where foreign currency basis spread arises in fair value hedge relationships, this is separated and excluded from the designation of a financial instrument as the hedging instrument; movements relating to the foreign currency basis spread are recognised in OCI through the cost of hedging reserve. The Group calculates the value of the foreign currency basis spread by comparing the change in value of the actual foreign currency hedging instrument (excluding fees not relating to the hedge relationship) and the value of a hypothetical instrument derived and valued using market data excluding foreign currency basis spread. Hedge accounting relationships within the scope of IFRS 9 require hedge accounting to only be discontinued when the qualifying criteria are no longer met. Additionally, if the hedge no longer meets the qualifying criteria due to a mismatch in the hedge ratio, the relationship must be rebalanced if possible, rather than discontinuing hedge accounting. Fair values are determined by the three tier valuation hierarchy as defined in IFRS 13 Fair Value Measurement and Amendments to IFRS 7 Financial Instruments: Disclosures and as described in Note 46b). All derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. In valuing derivatives used to hedge our mortgage and savings portfolios, the Group has not valued them as one net pool for market risk and credit risk management purposes as permitted under IFRS 13, but has valued each derivative individually. Interest on derivatives is included within interest receivable where the derivative economically hedges an asset and within interest expense where the derivative economically hedges a liability, to align the recognition with its economic purpose. Fair value gains and losses on derivatives and hedged items that are posted to the Income Statement are recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. To the extent that the hedge is effective, unrealised fair value gains and losses on cash flow hedging derivatives are recognised in the cash flow hedging reserve. Where the Group enters into a cross-currency swap, as is the case for the issuance of Euro-denominated covered bonds (see page 147), the Group recognises the movement in the fair value of these derivatives as follows: \u2022 Foreign exchange movements are recognised in the Income Statement line \u2018Interest payable and similar charges\u2019; \u2022 Movements due to interest rate risk are recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; and \u2022 Movements due to foreign currency basis spread are recognised directly in the cost of hedging reserve as permitted by IFRS 9. Equity share investments Under IFRS 9 equity share investments are measured at FVTPL, except where an election is made at initial recognition to irrevocably designate an equity share investment that is not held for trading to be classified as FVOCI. The FVOCI election can be made on an instrument-by-instrument basis. The Group has made no FVOCI elections in respect of its existing equity share investments; the Group\u2019s equity share investments are therefore held at FVTPL. They are initially recognised at fair value, with subsequent changes in fair value being recognised in the Income Statement. Transaction costs are expensed to the Income Statement. Share warrants Within other assets of the Group are amounts recognised in respect of share warrants held, or vested, in unlisted entities. Amounts are also recognised, where appropriate, for certain put options associated with these share warrants; these put options contain conditional contractual rights for the Group to put the warrants back to the counterparty at a future date in exchange for cash. The Group assessed for these assets the characteristics of the related cash flows and concluded that the contractual terms fail the SPPI test; these assets are therefore classified by the Group as FVTPL. The fair value of share warrants is determined by reference to information included in independent third-party valuations. The fair value of related put options is based on management\u2019s assessment of the likelihood that criteria to receive payment will be met and is discounted for the weighted average cost of capital. Loan to defined benefit pension scheme The Group holds a loan to the Skipton Building Society (2015) Group Pension Scheme. The loan is held at FVTPL because it fails the SPPI test due to prepayment features that are contractually linked to the maturity and value of specific illiquid assets held by the scheme. The fair value of this loan is determined by discounting future expected cash flows. See Note 1v) for further details. Debt securities The Society holds in its Statement of Financial Position residential mortgage backed securities that were issued in previous periods by the Group\u2019s securitisation vehicles. Junior tranches of these securities are held at FVTPL because they fail the SPPI test due to an elevated level of credit risk relative to other tranches. g) Financial liabilities In accordance with IFRS 9, the financial liabilities of the Group are classified as measured at either amortised cost or FVTPL. A financial liability is classified as at FVTPL if it meets the definition of \u2018held for trading\u2019, which includes derivatives (except for derivatives that are financial guarantee contracts or which are designated and effective hedging instruments). On initial recognition the Group may irrevocably designate as FVTPL a financial liability that otherwise meets the requirements to be measured at amortised cost if so doing results in more relevant information; this can be either because it eliminates or significantly reduces an accounting mismatch that would otherwise arise, or because a group of financial liabilities is managed and evaluated on a fair value basis. Financial liabilities at FVTPL are measured at fair value. Gains and losses, including any interest expense, are recognised in profit or loss unless the financial liability is one that was designated as FVTPL, in which case fair value changes are presented as follows: \u2022 The amount of fair value change that is attributable to changes in the credit risk of the liability is presented in other comprehensive income (except where this would create or enlarge an accounting mismatch in profit or loss); and \u2022 The remaining amount of fair value change is presented in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with any interest expense being recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss. The financial liabilities of the Group have been classified as set out below: Borrowings, comprising shares, deposits and debt securities in issue, and subordinated liabilities are recognised initially at fair value, being the amounts deposited or proceeds issued, net of premia, discounts and transaction costs incurred. Borrowings and subordinated liabilities are subsequently measured at amortised cost using the effective interest method. Derivative liabilities and the fair value of the put option obligation are measured at fair value through profit or loss. Permanent Interest-Bearing Shares (PIBS) with no fixed maturity are classified as financial liabilities as opposed to equity instruments since their terms do not permit the Directors discretion to avoid the payment of interest, as the only instance where interest could not be paid on these instruments would be where capital levels are insufficient to allow such a payment to be made. PIBS are carried at amortised cost. Where financial liabilities are hedged, the Group elects to use fair value hedging for those hedged financial liabilities. This treatment has been adopted to reduce the volatility that would otherwise exist given that the interest rate risk element of the underlying liabilities is economically hedged by derivatives which are held at fair value through profit or loss. Within the Society\u2019s Statement of Financial Position, the deemed loan to the Society from Darrowby No. 6 plc is measured at amortised cost; management considers that amortised cost best reflects the economic value of the deemed loan, which is based on the value of the pool of mortgages that is used as collateral for the securitisation transaction (and this pool is also held at amortised cost). h) Impairment of financial assets Under IFRS 9, impairment of financial assets is assessed using a forward-looking expected credit loss (ECL) model. This model applies to financial assets measured at either amortised cost or FVOCI (except any equity share investments held as such, as set out in Note 1f)). The Group recognises impairment loss allowances for ECLs on the following financial assets that are not measured at FVTPL: \u2022 Loans and advances to customers; \u2022 Loan commitments (where a firm offer has been made to the customer); \u2022 Trade receivables; \u2022 Treasury assets, which comprise debt securities held at FVOCI, cash in hand and balances with the Bank of England and loans and advances to credit institutions; and \u2022 Loans to subsidiary undertakings (within the Society\u2019s Statement of Financial Position) and firm commitments made in relation to such loans. Measurement of Expected Credit Losses (ECLs) ECLs are an unbiased probability-weighted estimate of the present value of credit losses, taking account of forward-looking information that includes a range of possible economic outcomes. ECLs are measured as the difference between contractual cash flows and expected cash flows, discounted at the asset's effective interest rate. The assessment of impairment requires a number of estimates and assumptions, details of which are included in Note 1v). The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. The Group typically assesses ECLs on an individual asset basis. IFRS 9 requires an impairment loss allowance to be recognised at an amount equal to either 12-month ECLs (\u2018stage 1\u2019 ECLs) or lifetime ECLs. Lifetime ECLs are ECLs that result from all possible default events over the expected life of a financial instrument. 12-month ECLs are ECLs that result from default events that are possible within the 12 months after the reporting date. The Group measures impairment loss allowances at an amount equal to lifetime ECLs, except for the following which are measured as 12-month ECLs: \u2022 treasury assets that are determined to have low credit risk at the reporting date. The Group considers a treasury asset to have low credit risk when its credit rating is equivalent to the globally understood definition of 'investment grade'; and \u2022 other financial assets on which credit risk has not increased significantly since their initial recognition (except trade receivables, for which the Group will always recognise lifetime ECLs in accordance with the simplified approach in IFRS 9). Lifetime ECLs are required where the credit risk on a financial asset has increased significantly since initial recognition (except for investment grade treasury assets, as noted above). For the measurement of ECLs relating to residential mortgages and to treasury assets, the Group typically assesses the probability of default, the expected exposure at the time of default, and the loss that is expected to arise on default. The probabilities of default are adjusted to take account of expected customer redemptions. For commercial mortgages, the Group applies an average loss rate approach. A lifetime coverage ratio is calculated, based on cumulative losses to date divided by the total value of loan balances redeemed over that period. The lifetime coverage ratio is applied to accounts held in stage 2 and stage 3, discounted at each account\u2019s EIR, to determine expected lifetime losses. For stage 1 accounts, a 12-month coverage ratio is applied, discounted at each account\u2019s EIR, to determine expected 12-month losses. For accounts held in stage 3, additional account-specific impairment is typically held based on management judgement. Due consideration is given to the impact of forward-looking information, including a range of possible future economic scenarios; where appropriate, the level of impairment held is adjusted accordingly. For debt factoring advances, stage 1 ECLs are based on an average 12-month loss rate as adjusted for forward-looking assessments and other pertinent factors. For accounts held in stage 2 / stage 3, account- specific allowances are held based on management judgement. For trade receivables, the Group typically applies a simplified approach whereby, as permitted by IFRS 9, the level of impairment held is always based on lifetime ECLs. This approach includes the use of provision matrices based on historical credit loss experience, as adjusted for forward-looking factors. For loan commitments where a firm offer has been made, ECLs are measured by the Group at 12-month losses for the percentage of such commitments expected to convert from an outstanding customer offer into a completed customer loan. The conversion factors applied are based on actual trends observed for the Group and are aligned with the Group\u2019s Internal Ratings-Based (IRB) approach for regulatory capital purposes. Financial assets that are subject to the impairment requirements of IFRS 9 are described according to their ECL \u2018stage\u2019 as follows: \u2022 \u2018Stage 1\u2019 - Assets for which a 12-month ECL is recognised; \u2022 \u2018Stage 2\u2019 - Assets for which a lifetime ECL is recognised where there has been a \u2018significant increase in credit risk\u2019 but which are not credit-impaired; \u2022 \u2018Stage 3\u2019 - Assets for which a lifetime ECL is recognised and which are \u2018credit-impaired\u2019. The Group\u2019s definitions of \u2018significant increase in credit risk\u2019 and \u2018credit-impaired\u2019 are detailed below. IFRS 9 includes specific requirements for financial assets that are credit-impaired when initially purchased or originated (POCI assets). For POCI assets, an entity recognises only the cumulative change in lifetime ECLs since initial recognition, discounted by the credit-adjusted effective interest rate. For POCI assets, interest revenue is accounted for using the credit-adjusted effective interest rate. The Group had no POCI assets during the current or prior period. Forward-looking information The Group incorporates forward-looking information into both its assessment of whether the credit risk of a financial asset has increased significantly since initial recognition and its measurement of ECLs. The time period over which the Group assesses forward-looking information is the maximum period over which the Group is exposed to credit risk. The Group determines a range of representative scenarios for the possible future direction of key economic variables; this includes forecasts of quarterly movements in these variables for years one to five, followed by phased transition assumptions for years six to ten, arriving at a view of long- run averages from year eleven onwards. The scenarios are derived by reference to external information where this is publicly available and appropriate, together with internally generated views. A probability-weighting, based on management judgement, is assigned to each scenario. The Group\u2019s 'central' scenario represents a view of the most likely outcome and is aligned with information used by the Group for other purposes such as strategic planning and budgeting. The selection of alternative scenarios is intended to model the non-linear impact of economic factors on ECLs for the Group\u2019s financial assets. For UK mortgage impairment, including SIL\u2019s UK buy-to-let portfolio, the Group typically considers three scenarios; this includes the central scenario, together with an upside scenario (more optimistic than the central scenario) and a downside scenario (more pessimistic than the central scenario). For non-UK mortgage impairment and for treasury asset impairment, the Group typically considers a central scenario and a downside scenario. Further details are included in Note 1v). Significant increase in credit risk The Group monitors all financial assets and loan commitments that are subject to IFRS 9\u2019s impairment requirements to assess whether there has been a significant increase in credit risk since initial recognition of the asset. IFRS 9 includes a rebuttable presumption that credit risk has significantly increased when contractual payments are more than 30 days past due. For relevant models, the Group uses internal credit risk metrics that reflect its assessment of the probability of default (PD) of individual counterparties. The credit risk of each exposure is assessed at initial recognition, based on the available information about the counterparty. For loans and advances to customers, the credit risk at initial recognition is typically assessed by reference to information as at the loan drawdown date; this information is not always held by the Group for loans drawn down prior to 2007, in which case the Group uses the earliest available information as a proxy (which is typically January 2007 data for pre-2007 loans that were originated by the Society). Exposures are monitored and the credit risk assessment is updated to reflect current information on an ongoing basis. For residential mortgages, the Group considers that credit risk has significantly increased if one or more of the following criteria are met: \u2022 the remaining lifetime PD as at the reporting date, as compared to the remaining lifetime PD for this point in time that was estimated on initial recognition of the asset, exceeds pre-determined thresholds which are set by the Group and reviewed periodically. The thresholds applied will depend on the credit quality at initial recognition, with a lower percentage change in PD being required for higher risk accounts. The use of an absolute lifetime PD hurdle for residential mortgages is also applied where lifetime PD goes above 25%. Further details are included in Note 1v); \u2022 the account is forborne (page 158); \u2022 the account is in arrears (no minimum); \u2022 the account term has expired; or \u2022 the account has a temporary arrangement in place, arranged via the Mortgage Charter Scheme, to repay interest only. For commercial mortgages, the Group considers that credit risk has significantly increased when an account is in arrears (no minimum) or is forborne. For residential and commercial mortgages, the above criteria for assessing significant increase in credit risk ensures compliance with IFRS 9\u2019s backstop of more than 30 days past due. For debt factoring advances, the Group considers that credit risk has significantly increased when an account is placed on a watchlist. For treasury assets, the Group applies criteria that consider the relative increase in the asset\u2019s lifetime PD, by reference to external credit ratings where available. Notwithstanding these criteria, the Group considers that credit risk has not increased significantly for any treasury asset that is determined to have 'low' credit risk at the reporting date. The Group considers a treasury asset to have low credit risk when its credit rating is equivalent to the globally understood definition of \u2018investment grade\u2019. The Society\u2019s Statement of Financial Position includes loans to subsidiary undertakings that are repayable on demand. For these loans, the Society considers that credit risk has significantly increased when the subsidiary undertaking no longer has sufficient liquid assets to repay the loan if demanded at the reporting date or where other factors indicate that, in the judgement of management, a significant increase in credit risk has occurred; this assessment takes into account the specific characteristics of each subsidiary loan and the subsidiary\u2019s own business. Definition of default For residential mortgages, the Group\u2019s definition of default is aligned with its existing IRB definition of default for regulatory capital purposes. For IFRS 9 accounting purposes, stage 3 loans which no longer meet any of the default criteria are subject to a six month minimum probation period before they become eligible for transfer out of stage 3. Default occurs when one or more of the following criteria is met: \u2022 The borrower is 90 days or more past due on their contractual payments. \u2022 The borrower meets unlikeliness to pay criteria, which indicates the borrower is in significant financial difficulty. The instances are: \u2022 the loan is in repossession; \u2022 the borrower has filed for bankruptcy; \u2022 at least two payments are in arrears and forbearance activity has been applied; or \u2022 other evidence is available that the customer is not going to be able to meet their loan commitments. For commercial mortgages, stage 3 loans which no longer meet any of the default criteria are subject to a three month minimum probation period before they become eligible for transfer out of stage 3. Default occurs when one or more of the following criteria is met: \u2022 The borrower is 90 days or more past due on their contractual payments; \u2022 The loan is in repossession; \u2022 A receiver has been appointed; \u2022 The mortgage term has expired; or \u2022 Other evidence is available that the customer is not going to be able to meet their loan commitments. For debt factoring advances, the Group considers that an account is in default when there is no reasonable expectation of recovery, typically due to financial difficulties of the customer. Credit-impaired financial assets At each reporting date, the Group assesses whether financial assets (other than those held at FVTPL) are credit-impaired. For those assets that have become credit-impaired, interest revenue is subsequently calculated by applying the effective interest rate to the amortised cost of the asset. A financial asset is 'credit-impaired' when one or more events have occurred that have a detrimental impact on the estimated future cash flows of the financial asset. Evidence that a financial asset is credit-impaired includes the following: \u2022 a breach of contract such as a default; or \u2022 the disappearance of an active market for a security because of financial difficulties. For residential and commercial mortgages, the Group considers that a loan that meets the definition of default is credit-impaired. For loans to no longer be considered credit-impaired, consistently good repayments must be demonstrated over a period of time, being not less than six months for residential loans and not less than three months for commercial loans. For debt factoring advances, the Group considers that an account is credit-impaired when there is no reasonable expectation of recovery, typically due to financial difficulties of the customer. To assess whether sovereign and corporate debt instruments are credit-impaired, the Group considers factors such as bond yields, credit ratings and the ability of the borrower to raise funding. To assess whether trade receivables are credit-impaired, the Group considers factors such as the ageing profile, historical default rates and specific case knowledge. Forbearance In certain circumstances, the Group renegotiates loans to customers in financial difficulties (referred to as forbearance activities) to maximise collection opportunities and minimise the risk of default whilst ensuring the best outcome for the customer. Under the Group\u2019s forbearance policy, loan forbearance is granted on a selective basis if the customer is currently in default on their loan or if there is a high risk of default, there is evidence that the customer made all reasonable efforts to pay under the original contractual terms and the customer is expected to be able to meet the revised terms. The revised terms typically include extending the maturity of the loan, changing the timing of interest payments or amending the terms of loan covenants. Both retail and commercial loans are subject to the forbearance policy. The Retail Credit Committee regularly reviews reports on forbearance activities. For the purposes of disclosures in these financial statements, loans with renegotiated terms are defined as loans that have been restructured due to a deterioration in the borrower\u2019s financial position, for which the Group has made concessions by agreeing to terms and conditions that are more favourable for the borrower than the Group had provided initially and that it would not otherwise consider. Write-offs A financial asset is written off (in full or in part) when the Group judges there to be no reasonable expectation that the asset can be recovered (in full or in part). This is typically the case when the Group determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. This assessment is performed at the individual asset level. The related impairment loss allowance is also written off once all the necessary procedures have been completed and the loss amount has crystallised. Financial assets that are written off could still be subject to enforcement activities and subsequent recoveries of amounts previously written off decrease the amount of impairment losses recorded in the Income Statement. i) Financial assets and liabilities \u2013 modification, derecognition and offsetting Modification The Group sometimes renegotiates or otherwise modifies the contractual cash flows of loans to customers. When this happens, the Group assesses whether or not the new cash flows are substantially different to the original cash flows. If the cash flows are substantially different, then the contractual rights to cash flows from the original loan are deemed to have expired. In this case, the original loan is derecognised (as discussed below) and a new loan is recognised initially at fair value. Where impairment is held against the original loan (i.e. the loan is not held at FVTPL), the original loan is derecognised from its existing impairment stage (which may be stage 1, stage 2 or stage 3) and the new loan is initially recognised in stage 1 with its new origination date. Thereafter, the assessment of whether there has been a significant increase in credit risk is made by reference to changes in credit risk for the new loan starting from the new origination date. Examples of loan modification events for which the Group typically applies derecognition include an existing borrower switching to a new mortgage product and an existing borrower porting their loan to a new property. If the cash flows of a modified loan carried at amortised cost are not substantially different, then the modification does not result in derecognition of the loan (an example of a loan modification event for which the Group typically does not apply derecognition is the application of forbearance strategies). In this case, the Group recalculates the gross carrying amount of the loan and recognises the amount arising from adjusting the gross carrying amount as a modification gain or loss in the Income Statement. If such a modification is carried out because of financial difficulties of the borrower, the gain or loss is presented together with impairment losses. In other cases, it is presented within interest income. For residential mortgages, the Group assesses whether there has been a significant increase in credit risk by comparing the remaining lifetime PD as at the reporting date (based on the modified contractual terms) to the remaining lifetime PD for this point in time that was estimated at initial recognition (based on the original, unmodified contractual terms). Derecognition The Group derecognises a financial asset when the contractual rights to receive the asset\u2019s cash flows expire (including deemed expiry arising from a modification with substantially different terms as discussed above), or when the contractual rights have been transferred and either i) the Group transfers substantially all the risks and rewards of ownership, or ii) the Group neither transfers nor retains substantially all the risks and rewards of ownership and the Group has not retained control. On derecognition of a financial asset, the difference between the carrying amount of the asset and the sum of i) the consideration received (including any new asset obtained less any new liability assumed) and ii) any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. The Society has not derecognised the loans transferred to the Group\u2019s special purpose funding vehicles because substantially all the risks and rewards are retained by the Society as detailed in Note 1d). Financial liabilities are derecognised only when the obligation is discharged, cancelled or has expired. Offsetting Financial assets and financial liabilities are offset and the net amount presented within the Statement of Financial Position when, and only when, the Group has a legally enforceable right to offset the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under IFRS. With the exception of bank balances included within \u2018Loans and advances to credit institutions\u2019, there are no other financial assets or liabilities which are offset within the Statement of Financial Position and all other financial assets and liabilities are presented on a gross basis. The Group has a cash-pooling arrangement in place with one of its banking counterparties between its subsidiaries and the Society. At the reporting date, the Group has a legally enforceable right to offset balances in these bank accounts and so, in accordance with IAS 32, the net presentation more appropriately reflects the substance of the arrangement. At 31 December 2025 the Group has offset \u00a320.0m (31 December 2024: \u00a318.0m) of balances against \u2018Loans and advances to credit institutions\u2019 that would otherwise be shown within \u2018Amounts owed to credit institutions\u2019 within the Statement of Financial Position. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-519": { "value": "At fair value through other comprehensive income (FVOCI) A financial asset is measured at FVOCI only if it meets both of the following conditions and is not designated as at FVTPL: \u2022 It is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets (\u2018held to collect and sell\u2019 business model); and \u2022 Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The majority of the Group\u2019s debt securities, which are held to manage liquidity requirements, have been assessed by the Group to be in a \u2018held to collect and sell\u2019 business model and to have cash flows that pass the SPPI test. Financial assets held at FVOCI are initially recognised at fair value plus directly attributable transaction costs, with subsequent changes in fair value recognised in equity. The majority of fair values of financial assets held at FVOCI are based on quoted prices, which represent the bid price. Where debt securities held at FVOCI do not have quoted prices available, the fair value is based on the present value of discounted cashflows using market observable inputs. In accordance with IFRS 9, an impairment loss allowance is determined for debt securities measured at FVOCI in relation to ECLs. For debt instruments measured at FVOCI, the impairment loss allowance is not deducted from the carrying amount of the asset; instead the loss allowance is recognised through other comprehensive income. The movement in the impairment loss allowance recognised during the period is charged or credited to the Income Statement. Interest income is recognised in the Income Statement on an effective interest basis. When the debt instruments are derecognised, the accumulated gains or losses within equity are reclassified to the Income Statement. The premia and discounts arising on the purchase of these assets are amortised over the period to the maturity date of the security on an effective interest basis. Any amounts amortised are charged or credited to the Income Statement in the relevant financial periods. At fair value through profit or loss (FVTPL) All financial assets which are not classified as either amortised cost or FVOCI, as described above, are measured at FVTPL. This includes all derivative financial assets. On initial recognition the Group may irrevocably designate as FVTPL a financial asset that otherwise meets the requirements to be measured at either amortised cost or FVOCI, if so doing eliminates or significantly reduces an accounting mismatch that would otherwise arise. Loans and advances to customers A small number of loans are held at FVTPL because they contain contractual cash flows which do not pass the SPPI test. These loans consist mainly of certain lifetime mortgages. The fair value of these loans is determined by discounting future expected cash flows. Where the portfolio is so small that a probabilistic methodology to estimate future cash flows is not appropriate, management assumes that voluntary prepayments will be 100% in year one. Equity release portfolio The Group holds an equity release portfolio. The mortgage products within this portfolio provide the customer with a \u2018no negative equity guarantee\u2019 (NNEG), which is an embedded derivative. Under IFRS 9, the equity release portfolio and the NNEG are assessed together as a hybrid financial instrument. The Group assessed the characteristics of the equity release cash flows and concluded that the contractual terms do not give rise on specified dates to cash flows that are solely payments of principal and interest. As a result, the equity release portfolio is classified as FVTPL. The existence of the NNEG means that the Group\u2019s maximum return on redemption of these loans is limited to the value of the customer\u2019s property at that time. The Group\u2019s exposure to potential losses as a result of the NNEG is limited in part by a guarantee provided to the Group by a third party for the longevity element of this risk. Due to the structured nature of the portfolio there is no single industry pricing methodology and assumptions for valuing these products differ by institution. Further complexity arises on a portion of the portfolio due to the customer interest rate being linked to the Retail Price Index (RPI). A stochastic model was chosen and devised internally for the purpose of valuing this portfolio. The model uses inputs including mortality rates, voluntary prepayment rates, estimates of future RPI and a House Price Index (HPI) to predict future cash flows on the portfolio. These are then discounted back to present value using a discount curve based on a Sterling Overnight Index Average (SONIA) curve plus an illiquidity spread. The illiquidity spread reflects the fact that no repayments are made by the customer until the product redeems which may be many years into the future. Where possible the inputs are market-driven or, where no market-driven data is available, based on management judgement that is informed by observable data wherever possible. Due to the high level of variability within these inputs, the model also runs several thousand scenarios for both the RPI and HPI inputs. The Group has robust control procedures in place regarding all the inputs to the valuation model. As this valuation technique uses one or more significant inputs that are not based on observable market data, it is classed as a Level 3 valuation technique. For further details on the different levels of the fair value hierarchy, see Note 46b). The impact of applying reasonably possible alternative assumptions of certain inputs into the valuation of the portfolio is found in Note 1v). Interest income on the equity release portfolio is recognised in the Income Statement on an effective interest basis. Fair value gains or losses on the portfolio are recognised within the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. Realised losses recognised on redemption of loans within the portfolio are recognised within the Income Statement line \u2018Impairment and provisions\u2019. Derivative financial instruments The Group\u2019s derivative financial instruments, which are held solely for hedging purposes, are measured and held at fair value within the Statement of Financial Position. The Group has elected to adopt the hedge accounting requirements of IFRS 9 for all hedge relationships covered by those requirements. As permitted under IFRS 9, the Group continues to apply the requirements of IAS 39 for derivatives designated in a portfolio fair value hedge. For all other derivatives designated in a hedging relationship, the Group applies the requirements of IFRS 9. The Group uses derivative financial instruments to hedge its exposure to market risks (for example, interest rate risk) arising from operational, financing and investment activities. In accordance with its treasury policy and the Building Societies Act 1986, the Group does not hold or issue derivative financial instruments for trading purposes. In line with accounting standards, the changes in fair value of derivatives used to hedge particular risks can either be offset in the Income Statement or deferred to equity. There are two types of hedge accounting strategies that the Group undertakes and these are summarised below: \u2022 Fair value hedges - Where a derivative financial instrument hedges the changes in fair value of a recognised asset or liability (or portion of a recognised asset or liability), any gain or loss on the hedging instrument is recognised in the Income Statement. To the extent that there is an effective hedge relationship, the associated hedged items (for example, mortgage assets) are stated at fair value in respect of the hedged risk, with any gain or loss also recognised in the Income Statement. As a result, fair value movements in the hedging instrument and in the hedged items offset each other and reduce income statement volatility. Any residual fair value hedge ineffectiveness is also recognised in the Income Statement. In order to calculate the fair value in respect of hedged risk in relation to mortgage assets and some retail savings, the Group applies estimated prepayment assumptions using historical analysis. For fair value hedge relationships where ineffectiveness would arise as a result of foreign currency basis spread, movements are recognised in other comprehensive income (OCI) through the cost of hedging reserve (see below) in accordance with IFRS 9. \u2022 Cash flow hedges - Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability (or portion of a recognised asset or liability) or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised in OCI and deferred in a separate reserve. The effective portion recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of the gain or loss on the hedging instrument is recognised in the Income Statement immediately. In accordance with IFRS 9, where foreign currency basis spread arises in fair value hedge relationships, this is separated and excluded from the designation of a financial instrument as the hedging instrument; movements relating to the foreign currency basis spread are recognised in OCI through the cost of hedging reserve. The Group calculates the value of the foreign currency basis spread by comparing the change in value of the actual foreign currency hedging instrument (excluding fees not relating to the hedge relationship) and the value of a hypothetical instrument derived and valued using market data excluding foreign currency basis spread. Hedge accounting relationships within the scope of IFRS 9 require hedge accounting to only be discontinued when the qualifying criteria are no longer met. Additionally, if the hedge no longer meets the qualifying criteria due to a mismatch in the hedge ratio, the relationship must be rebalanced if possible, rather than discontinuing hedge accounting. Fair values are determined by the three tier valuation hierarchy as defined in IFRS 13 Fair Value Measurement and Amendments to IFRS 7 Financial Instruments: Disclosures and as described in Note 46b). All derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. In valuing derivatives used to hedge our mortgage and savings portfolios, the Group has not valued them as one net pool for market risk and credit risk management purposes as permitted under IFRS 13, but has valued each derivative individually. Interest on derivatives is included within interest receivable where the derivative economically hedges an asset and within interest expense where the derivative economically hedges a liability, to align the recognition with its economic purpose. Fair value gains and losses on derivatives and hedged items that are posted to the Income Statement are recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. To the extent that the hedge is effective, unrealised fair value gains and losses on cash flow hedging derivatives are recognised in the cash flow hedging reserve. Where the Group enters into a cross-currency swap, as is the case for the issuance of Euro-denominated covered bonds (see page 147), the Group recognises the movement in the fair value of these derivatives as follows: \u2022 Foreign exchange movements are recognised in the Income Statement line \u2018Interest payable and similar charges\u2019; \u2022 Movements due to interest rate risk are recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; and \u2022 Movements due to foreign currency basis spread are recognised directly in the cost of hedging reserve as permitted by IFRS 9. Equity share investments Under IFRS 9 equity share investments are measured at FVTPL, except where an election is made at initial recognition to irrevocably designate an equity share investment that is not held for trading to be classified as FVOCI. The FVOCI election can be made on an instrument-by-instrument basis. The Group has made no FVOCI elections in respect of its existing equity share investments; the Group\u2019s equity share investments are therefore held at FVTPL. They are initially recognised at fair value, with subsequent changes in fair value being recognised in the Income Statement. Transaction costs are expensed to the Income Statement. Share warrants Within other assets of the Group are amounts recognised in respect of share warrants held, or vested, in unlisted entities. Amounts are also recognised, where appropriate, for certain put options associated with these share warrants; these put options contain conditional contractual rights for the Group to put the warrants back to the counterparty at a future date in exchange for cash. The Group assessed for these assets the characteristics of the related cash flows and concluded that the contractual terms fail the SPPI test; these assets are therefore classified by the Group as FVTPL. The fair value of share warrants is determined by reference to information included in independent third-party valuations. The fair value of related put options is based on management\u2019s assessment of the likelihood that criteria to receive payment will be met and is discounted for the weighted average cost of capital. Loan to defined benefit pension scheme The Group holds a loan to the Skipton Building Society (2015) Group Pension Scheme. The loan is held at FVTPL because it fails the SPPI test due to prepayment features that are contractually linked to the maturity and value of specific illiquid assets held by the scheme. The fair value of this loan is determined by discounting future expected cash flows. See Note 1v) for further details. Debt securities The Society holds in its Statement of Financial Position residential mortgage backed securities that were issued in previous periods by the Group\u2019s securitisation vehicles. Junior tranches of these securities are held at FVTPL because they fail the SPPI test due to an elevated level of credit risk relative to other tranches. Financial liabilities at FVTPL are measured at fair value. Gains and losses, including any interest expense, are recognised in profit or loss unless the financial liability is one that was designated as FVTPL, in which case fair value changes are presented as follows: \u2022 The amount of fair value change that is attributable to changes in the credit risk of the liability is presented in other comprehensive income (except where this would create or enlarge an accounting mismatch in profit or loss); and \u2022 The remaining amount of fair value change is presented in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with any interest expense being recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-475": { "value": "At fair value through profit or loss (FVTPL) All financial assets which are not classified as either amortised cost or FVOCI, as described above, are measured at FVTPL. This includes all derivative financial assets. On initial recognition the Group may irrevocably designate as FVTPL a financial asset that otherwise meets the requirements to be measured at either amortised cost or FVOCI, if so doing eliminates or significantly reduces an accounting mismatch that would otherwise arise. Loans and advances to customers A small number of loans are held at FVTPL because they contain contractual cash flows which do not pass the SPPI test. These loans consist mainly of certain lifetime mortgages. The fair value of these loans is determined by discounting future expected cash flows. Where the portfolio is so small that a probabilistic methodology to estimate future cash flows is not appropriate, management assumes that voluntary prepayments will be 100% in year one. Equity release portfolio The Group holds an equity release portfolio. The mortgage products within this portfolio provide the customer with a \u2018no negative equity guarantee\u2019 (NNEG), which is an embedded derivative. Under IFRS 9, the equity release portfolio and the NNEG are assessed together as a hybrid financial instrument. The Group assessed the characteristics of the equity release cash flows and concluded that the contractual terms do not give rise on specified dates to cash flows that are solely payments of principal and interest. As a result, the equity release portfolio is classified as FVTPL. The existence of the NNEG means that the Group\u2019s maximum return on redemption of these loans is limited to the value of the customer\u2019s property at that time. The Group\u2019s exposure to potential losses as a result of the NNEG is limited in part by a guarantee provided to the Group by a third party for the longevity element of this risk. Due to the structured nature of the portfolio there is no single industry pricing methodology and assumptions for valuing these products differ by institution. Further complexity arises on a portion of the portfolio due to the customer interest rate being linked to the Retail Price Index (RPI). A stochastic model was chosen and devised internally for the purpose of valuing this portfolio. The model uses inputs including mortality rates, voluntary prepayment rates, estimates of future RPI and a House Price Index (HPI) to predict future cash flows on the portfolio. These are then discounted back to present value using a discount curve based on a Sterling Overnight Index Average (SONIA) curve plus an illiquidity spread. The illiquidity spread reflects the fact that no repayments are made by the customer until the product redeems which may be many years into the future. Where possible the inputs are market-driven or, where no market-driven data is available, based on management judgement that is informed by observable data wherever possible. Due to the high level of variability within these inputs, the model also runs several thousand scenarios for both the RPI and HPI inputs. The Group has robust control procedures in place regarding all the inputs to the valuation model. As this valuation technique uses one or more significant inputs that are not based on observable market data, it is classed as a Level 3 valuation technique. For further details on the different levels of the fair value hierarchy, see Note 46b). The impact of applying reasonably possible alternative assumptions of certain inputs into the valuation of the portfolio is found in Note 1v). Interest income on the equity release portfolio is recognised in the Income Statement on an effective interest basis. Fair value gains or losses on the portfolio are recognised within the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. Realised losses recognised on redemption of loans within the portfolio are recognised within the Income Statement line \u2018Impairment and provisions\u2019. Derivative financial instruments The Group\u2019s derivative financial instruments, which are held solely for hedging purposes, are measured and held at fair value within the Statement of Financial Position. The Group has elected to adopt the hedge accounting requirements of IFRS 9 for all hedge relationships covered by those requirements. As permitted under IFRS 9, the Group continues to apply the requirements of IAS 39 for derivatives designated in a portfolio fair value hedge. For all other derivatives designated in a hedging relationship, the Group applies the requirements of IFRS 9. The Group uses derivative financial instruments to hedge its exposure to market risks (for example, interest rate risk) arising from operational, financing and investment activities. In accordance with its treasury policy and the Building Societies Act 1986, the Group does not hold or issue derivative financial instruments for trading purposes. In line with accounting standards, the changes in fair value of derivatives used to hedge particular risks can either be offset in the Income Statement or deferred to equity. There are two types of hedge accounting strategies that the Group undertakes and these are summarised below: \u2022 Fair value hedges - Where a derivative financial instrument hedges the changes in fair value of a recognised asset or liability (or portion of a recognised asset or liability), any gain or loss on the hedging instrument is recognised in the Income Statement. To the extent that there is an effective hedge relationship, the associated hedged items (for example, mortgage assets) are stated at fair value in respect of the hedged risk, with any gain or loss also recognised in the Income Statement. As a result, fair value movements in the hedging instrument and in the hedged items offset each other and reduce income statement volatility. Any residual fair value hedge ineffectiveness is also recognised in the Income Statement. In order to calculate the fair value in respect of hedged risk in relation to mortgage assets and some retail savings, the Group applies estimated prepayment assumptions using historical analysis. For fair value hedge relationships where ineffectiveness would arise as a result of foreign currency basis spread, movements are recognised in other comprehensive income (OCI) through the cost of hedging reserve (see below) in accordance with IFRS 9. \u2022 Cash flow hedges - Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability (or portion of a recognised asset or liability) or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised in OCI and deferred in a separate reserve. The effective portion recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of the gain or loss on the hedging instrument is recognised in the Income Statement immediately. In accordance with IFRS 9, where foreign currency basis spread arises in fair value hedge relationships, this is separated and excluded from the designation of a financial instrument as the hedging instrument; movements relating to the foreign currency basis spread are recognised in OCI through the cost of hedging reserve. The Group calculates the value of the foreign currency basis spread by comparing the change in value of the actual foreign currency hedging instrument (excluding fees not relating to the hedge relationship) and the value of a hypothetical instrument derived and valued using market data excluding foreign currency basis spread. Hedge accounting relationships within the scope of IFRS 9 require hedge accounting to only be discontinued when the qualifying criteria are no longer met. Additionally, if the hedge no longer meets the qualifying criteria due to a mismatch in the hedge ratio, the relationship must be rebalanced if possible, rather than discontinuing hedge accounting. Fair values are determined by the three tier valuation hierarchy as defined in IFRS 13 Fair Value Measurement and Amendments to IFRS 7 Financial Instruments: Disclosures and as described in Note 46b). All derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. In valuing derivatives used to hedge our mortgage and savings portfolios, the Group has not valued them as one net pool for market risk and credit risk management purposes as permitted under IFRS 13, but has valued each derivative individually. Interest on derivatives is included within interest receivable where the derivative economically hedges an asset and within interest expense where the derivative economically hedges a liability, to align the recognition with its economic purpose. Fair value gains and losses on derivatives and hedged items that are posted to the Income Statement are recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. To the extent that the hedge is effective, unrealised fair value gains and losses on cash flow hedging derivatives are recognised in the cash flow hedging reserve. Where the Group enters into a cross-currency swap, as is the case for the issuance of Euro-denominated covered bonds (see page 147), the Group recognises the movement in the fair value of these derivatives as follows: \u2022 Foreign exchange movements are recognised in the Income Statement line \u2018Interest payable and similar charges\u2019; \u2022 Movements due to interest rate risk are recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; and \u2022 Movements due to foreign currency basis spread are recognised directly in the cost of hedging reserve as permitted by IFRS 9. Equity share investments Under IFRS 9 equity share investments are measured at FVTPL, except where an election is made at initial recognition to irrevocably designate an equity share investment that is not held for trading to be classified as FVOCI. The FVOCI election can be made on an instrument-by-instrument basis. The Group has made no FVOCI elections in respect of its existing equity share investments; the Group\u2019s equity share investments are therefore held at FVTPL. They are initially recognised at fair value, with subsequent changes in fair value being recognised in the Income Statement. Transaction costs are expensed to the Income Statement. Share warrants Within other assets of the Group are amounts recognised in respect of share warrants held, or vested, in unlisted entities. Amounts are also recognised, where appropriate, for certain put options associated with these share warrants; these put options contain conditional contractual rights for the Group to put the warrants back to the counterparty at a future date in exchange for cash. The Group assessed for these assets the characteristics of the related cash flows and concluded that the contractual terms fail the SPPI test; these assets are therefore classified by the Group as FVTPL. The fair value of share warrants is determined by reference to information included in independent third-party valuations. The fair value of related put options is based on management\u2019s assessment of the likelihood that criteria to receive payment will be met and is discounted for the weighted average cost of capital. Loan to defined benefit pension scheme The Group holds a loan to the Skipton Building Society (2015) Group Pension Scheme. The loan is held at FVTPL because it fails the SPPI test due to prepayment features that are contractually linked to the maturity and value of specific illiquid assets held by the scheme. The fair value of this loan is determined by discounting future expected cash flows. See Note 1v) for further details. Debt securities The Society holds in its Statement of Financial Position residential mortgage backed securities that were issued in previous periods by the Group\u2019s securitisation vehicles. Junior tranches of these securities are held at FVTPL because they fail the SPPI test due to an elevated level of credit risk relative to other tranches. Financial liabilities at FVTPL are measured at fair value. Gains and losses, including any interest expense, are recognised in profit or loss unless the financial liability is one that was designated as FVTPL, in which case fair value changes are presented as follows: \u2022 The amount of fair value change that is attributable to changes in the credit risk of the liability is presented in other comprehensive income (except where this would create or enlarge an accounting mismatch in profit or loss); and \u2022 The remaining amount of fair value change is presented in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with any interest expense being recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-526": { "value": "Loans and advances to customers A small number of loans are held at FVTPL because they contain contractual cash flows which do not pass the SPPI test. These loans consist mainly of certain lifetime mortgages. The fair value of these loans is determined by discounting future expected cash flows. Where the portfolio is so small that a probabilistic methodology to estimate future cash flows is not appropriate, management assumes that voluntary prepayments will be 100% in year one. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLoansAndReceivablesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-534": { "value": "Derivative financial instruments The Group\u2019s derivative financial instruments, which are held solely for hedging purposes, are measured and held at fair value within the Statement of Financial Position. The Group has elected to adopt the hedge accounting requirements of IFRS 9 for all hedge relationships covered by those requirements. As permitted under IFRS 9, the Group continues to apply the requirements of IAS 39 for derivatives designated in a portfolio fair value hedge. For all other derivatives designated in a hedging relationship, the Group applies the requirements of IFRS 9. The Group uses derivative financial instruments to hedge its exposure to market risks (for example, interest rate risk) arising from operational, financing and investment activities. In accordance with its treasury policy and the Building Societies Act 1986, the Group does not hold or issue derivative financial instruments for trading purposes. In line with accounting standards, the changes in fair value of derivatives used to hedge particular risks can either be offset in the Income Statement or deferred to equity. There are two types of hedge accounting strategies that the Group undertakes and these are summarised below: \u2022 Fair value hedges - Where a derivative financial instrument hedges the changes in fair value of a recognised asset or liability (or portion of a recognised asset or liability), any gain or loss on the hedging instrument is recognised in the Income Statement. To the extent that there is an effective hedge relationship, the associated hedged items (for example, mortgage assets) are stated at fair value in respect of the hedged risk, with any gain or loss also recognised in the Income Statement. As a result, fair value movements in the hedging instrument and in the hedged items offset each other and reduce income statement volatility. Any residual fair value hedge ineffectiveness is also recognised in the Income Statement. In order to calculate the fair value in respect of hedged risk in relation to mortgage assets and some retail savings, the Group applies estimated prepayment assumptions using historical analysis. For fair value hedge relationships where ineffectiveness would arise as a result of foreign currency basis spread, movements are recognised in other comprehensive income (OCI) through the cost of hedging reserve (see below) in accordance with IFRS 9. \u2022 Cash flow hedges - Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability (or portion of a recognised asset or liability) or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised in OCI and deferred in a separate reserve. The effective portion recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of the gain or loss on the hedging instrument is recognised in the Income Statement immediately. In accordance with IFRS 9, where foreign currency basis spread arises in fair value hedge relationships, this is separated and excluded from the designation of a financial instrument as the hedging instrument; movements relating to the foreign currency basis spread are recognised in OCI through the cost of hedging reserve. The Group calculates the value of the foreign currency basis spread by comparing the change in value of the actual foreign currency hedging instrument (excluding fees not relating to the hedge relationship) and the value of a hypothetical instrument derived and valued using market data excluding foreign currency basis spread. Hedge accounting relationships within the scope of IFRS 9 require hedge accounting to only be discontinued when the qualifying criteria are no longer met. Additionally, if the hedge no longer meets the qualifying criteria due to a mismatch in the hedge ratio, the relationship must be rebalanced if possible, rather than discontinuing hedge accounting. Fair values are determined by the three tier valuation hierarchy as defined in IFRS 13 Fair Value Measurement and Amendments to IFRS 7 Financial Instruments: Disclosures and as described in Note 46b). All derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. In valuing derivatives used to hedge our mortgage and savings portfolios, the Group has not valued them as one net pool for market risk and credit risk management purposes as permitted under IFRS 13, but has valued each derivative individually. Interest on derivatives is included within interest receivable where the derivative economically hedges an asset and within interest expense where the derivative economically hedges a liability, to align the recognition with its economic purpose. Fair value gains and losses on derivatives and hedged items that are posted to the Income Statement are recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. To the extent that the hedge is effective, unrealised fair value gains and losses on cash flow hedging derivatives are recognised in the cash flow hedging reserve. Where the Group enters into a cross-currency swap, as is the case for the issuance of Euro-denominated covered bonds (see page 147), the Group recognises the movement in the fair value of these derivatives as follows: \u2022 Foreign exchange movements are recognised in the Income Statement line \u2018Interest payable and similar charges\u2019; \u2022 Movements due to interest rate risk are recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; and \u2022 Movements due to foreign currency basis spread are recognised directly in the cost of hedging reserve as permitted by IFRS 9. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-533": { "value": "Derivative financial instruments The Group\u2019s derivative financial instruments, which are held solely for hedging purposes, are measured and held at fair value within the Statement of Financial Position. The Group has elected to adopt the hedge accounting requirements of IFRS 9 for all hedge relationships covered by those requirements. As permitted under IFRS 9, the Group continues to apply the requirements of IAS 39 for derivatives designated in a portfolio fair value hedge. For all other derivatives designated in a hedging relationship, the Group applies the requirements of IFRS 9. The Group uses derivative financial instruments to hedge its exposure to market risks (for example, interest rate risk) arising from operational, financing and investment activities. In accordance with its treasury policy and the Building Societies Act 1986, the Group does not hold or issue derivative financial instruments for trading purposes. In line with accounting standards, the changes in fair value of derivatives used to hedge particular risks can either be offset in the Income Statement or deferred to equity. There are two types of hedge accounting strategies that the Group undertakes and these are summarised below: \u2022 Fair value hedges - Where a derivative financial instrument hedges the changes in fair value of a recognised asset or liability (or portion of a recognised asset or liability), any gain or loss on the hedging instrument is recognised in the Income Statement. To the extent that there is an effective hedge relationship, the associated hedged items (for example, mortgage assets) are stated at fair value in respect of the hedged risk, with any gain or loss also recognised in the Income Statement. As a result, fair value movements in the hedging instrument and in the hedged items offset each other and reduce income statement volatility. Any residual fair value hedge ineffectiveness is also recognised in the Income Statement. In order to calculate the fair value in respect of hedged risk in relation to mortgage assets and some retail savings, the Group applies estimated prepayment assumptions using historical analysis. For fair value hedge relationships where ineffectiveness would arise as a result of foreign currency basis spread, movements are recognised in other comprehensive income (OCI) through the cost of hedging reserve (see below) in accordance with IFRS 9. \u2022 Cash flow hedges - Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability (or portion of a recognised asset or liability) or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised in OCI and deferred in a separate reserve. The effective portion recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of the gain or loss on the hedging instrument is recognised in the Income Statement immediately. In accordance with IFRS 9, where foreign currency basis spread arises in fair value hedge relationships, this is separated and excluded from the designation of a financial instrument as the hedging instrument; movements relating to the foreign currency basis spread are recognised in OCI through the cost of hedging reserve. The Group calculates the value of the foreign currency basis spread by comparing the change in value of the actual foreign currency hedging instrument (excluding fees not relating to the hedge relationship) and the value of a hypothetical instrument derived and valued using market data excluding foreign currency basis spread. Hedge accounting relationships within the scope of IFRS 9 require hedge accounting to only be discontinued when the qualifying criteria are no longer met. Additionally, if the hedge no longer meets the qualifying criteria due to a mismatch in the hedge ratio, the relationship must be rebalanced if possible, rather than discontinuing hedge accounting. Fair values are determined by the three tier valuation hierarchy as defined in IFRS 13 Fair Value Measurement and Amendments to IFRS 7 Financial Instruments: Disclosures and as described in Note 46b). All derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. In valuing derivatives used to hedge our mortgage and savings portfolios, the Group has not valued them as one net pool for market risk and credit risk management purposes as permitted under IFRS 13, but has valued each derivative individually. Interest on derivatives is included within interest receivable where the derivative economically hedges an asset and within interest expense where the derivative economically hedges a liability, to align the recognition with its economic purpose. Fair value gains and losses on derivatives and hedged items that are posted to the Income Statement are recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. To the extent that the hedge is effective, unrealised fair value gains and losses on cash flow hedging derivatives are recognised in the cash flow hedging reserve. Where the Group enters into a cross-currency swap, as is the case for the issuance of Euro-denominated covered bonds (see page 147), the Group recognises the movement in the fair value of these derivatives as follows: \u2022 Foreign exchange movements are recognised in the Income Statement line \u2018Interest payable and similar charges\u2019; \u2022 Movements due to interest rate risk are recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; and \u2022 Movements due to foreign currency basis spread are recognised directly in the cost of hedging reserve as permitted by IFRS 9. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-527": { "value": "Derivative financial instruments The Group\u2019s derivative financial instruments, which are held solely for hedging purposes, are measured and held at fair value within the Statement of Financial Position. The Group has elected to adopt the hedge accounting requirements of IFRS 9 for all hedge relationships covered by those requirements. As permitted under IFRS 9, the Group continues to apply the requirements of IAS 39 for derivatives designated in a portfolio fair value hedge. For all other derivatives designated in a hedging relationship, the Group applies the requirements of IFRS 9. The Group uses derivative financial instruments to hedge its exposure to market risks (for example, interest rate risk) arising from operational, financing and investment activities. In accordance with its treasury policy and the Building Societies Act 1986, the Group does not hold or issue derivative financial instruments for trading purposes. In line with accounting standards, the changes in fair value of derivatives used to hedge particular risks can either be offset in the Income Statement or deferred to equity. There are two types of hedge accounting strategies that the Group undertakes and these are summarised below: \u2022 Fair value hedges - Where a derivative financial instrument hedges the changes in fair value of a recognised asset or liability (or portion of a recognised asset or liability), any gain or loss on the hedging instrument is recognised in the Income Statement. To the extent that there is an effective hedge relationship, the associated hedged items (for example, mortgage assets) are stated at fair value in respect of the hedged risk, with any gain or loss also recognised in the Income Statement. As a result, fair value movements in the hedging instrument and in the hedged items offset each other and reduce income statement volatility. Any residual fair value hedge ineffectiveness is also recognised in the Income Statement. In order to calculate the fair value in respect of hedged risk in relation to mortgage assets and some retail savings, the Group applies estimated prepayment assumptions using historical analysis. For fair value hedge relationships where ineffectiveness would arise as a result of foreign currency basis spread, movements are recognised in other comprehensive income (OCI) through the cost of hedging reserve (see below) in accordance with IFRS 9. \u2022 Cash flow hedges - Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability (or portion of a recognised asset or liability) or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised in OCI and deferred in a separate reserve. The effective portion recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of the gain or loss on the hedging instrument is recognised in the Income Statement immediately. In accordance with IFRS 9, where foreign currency basis spread arises in fair value hedge relationships, this is separated and excluded from the designation of a financial instrument as the hedging instrument; movements relating to the foreign currency basis spread are recognised in OCI through the cost of hedging reserve. The Group calculates the value of the foreign currency basis spread by comparing the change in value of the actual foreign currency hedging instrument (excluding fees not relating to the hedge relationship) and the value of a hypothetical instrument derived and valued using market data excluding foreign currency basis spread. Hedge accounting relationships within the scope of IFRS 9 require hedge accounting to only be discontinued when the qualifying criteria are no longer met. Additionally, if the hedge no longer meets the qualifying criteria due to a mismatch in the hedge ratio, the relationship must be rebalanced if possible, rather than discontinuing hedge accounting. Fair values are determined by the three tier valuation hierarchy as defined in IFRS 13 Fair Value Measurement and Amendments to IFRS 7 Financial Instruments: Disclosures and as described in Note 46b). All derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. In valuing derivatives used to hedge our mortgage and savings portfolios, the Group has not valued them as one net pool for market risk and credit risk management purposes as permitted under IFRS 13, but has valued each derivative individually. Interest on derivatives is included within interest receivable where the derivative economically hedges an asset and within interest expense where the derivative economically hedges a liability, to align the recognition with its economic purpose. Fair value gains and losses on derivatives and hedged items that are posted to the Income Statement are recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. To the extent that the hedge is effective, unrealised fair value gains and losses on cash flow hedging derivatives are recognised in the cash flow hedging reserve. Where the Group enters into a cross-currency swap, as is the case for the issuance of Euro-denominated covered bonds (see page 147), the Group recognises the movement in the fair value of these derivatives as follows: \u2022 Foreign exchange movements are recognised in the Income Statement line \u2018Interest payable and similar charges\u2019; \u2022 Movements due to interest rate risk are recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; and \u2022 Movements due to foreign currency basis spread are recognised directly in the cost of hedging reserve as permitted by IFRS 9. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-528": { "value": "g) Financial liabilities In accordance with IFRS 9, the financial liabilities of the Group are classified as measured at either amortised cost or FVTPL. A financial liability is classified as at FVTPL if it meets the definition of \u2018held for trading\u2019, which includes derivatives (except for derivatives that are financial guarantee contracts or which are designated and effective hedging instruments). On initial recognition the Group may irrevocably designate as FVTPL a financial liability that otherwise meets the requirements to be measured at amortised cost if so doing results in more relevant information; this can be either because it eliminates or significantly reduces an accounting mismatch that would otherwise arise, or because a group of financial liabilities is managed and evaluated on a fair value basis. Financial liabilities at FVTPL are measured at fair value. Gains and losses, including any interest expense, are recognised in profit or loss unless the financial liability is one that was designated as FVTPL, in which case fair value changes are presented as follows: \u2022 The amount of fair value change that is attributable to changes in the credit risk of the liability is presented in other comprehensive income (except where this would create or enlarge an accounting mismatch in profit or loss); and \u2022 The remaining amount of fair value change is presented in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with any interest expense being recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss. The financial liabilities of the Group have been classified as set out below: Borrowings, comprising shares, deposits and debt securities in issue, and subordinated liabilities are recognised initially at fair value, being the amounts deposited or proceeds issued, net of premia, discounts and transaction costs incurred. Borrowings and subordinated liabilities are subsequently measured at amortised cost using the effective interest method. Derivative liabilities and the fair value of the put option obligation are measured at fair value through profit or loss. Permanent Interest-Bearing Shares (PIBS) with no fixed maturity are classified as financial liabilities as opposed to equity instruments since their terms do not permit the Directors discretion to avoid the payment of interest, as the only instance where interest could not be paid on these instruments would be where capital levels are insufficient to allow such a payment to be made. PIBS are carried at amortised cost. Where financial liabilities are hedged, the Group elects to use fair value hedging for those hedged financial liabilities. This treatment has been adopted to reduce the volatility that would otherwise exist given that the interest rate risk element of the underlying liabilities is economically hedged by derivatives which are held at fair value through profit or loss. Within the Society\u2019s Statement of Financial Position, the deemed loan to the Society from Darrowby No. 6 plc is measured at amortised cost; management considers that amortised cost best reflects the economic value of the deemed loan, which is based on the value of the pool of mortgages that is used as collateral for the securitisation transaction (and this pool is also held at amortised cost). i) Financial assets and liabilities \u2013 modification, derecognition and offsetting Modification The Group sometimes renegotiates or otherwise modifies the contractual cash flows of loans to customers. When this happens, the Group assesses whether or not the new cash flows are substantially different to the original cash flows. If the cash flows are substantially different, then the contractual rights to cash flows from the original loan are deemed to have expired. In this case, the original loan is derecognised (as discussed below) and a new loan is recognised initially at fair value. Where impairment is held against the original loan (i.e. the loan is not held at FVTPL), the original loan is derecognised from its existing impairment stage (which may be stage 1, stage 2 or stage 3) and the new loan is initially recognised in stage 1 with its new origination date. Thereafter, the assessment of whether there has been a significant increase in credit risk is made by reference to changes in credit risk for the new loan starting from the new origination date. Examples of loan modification events for which the Group typically applies derecognition include an existing borrower switching to a new mortgage product and an existing borrower porting their loan to a new property. If the cash flows of a modified loan carried at amortised cost are not substantially different, then the modification does not result in derecognition of the loan (an example of a loan modification event for which the Group typically does not apply derecognition is the application of forbearance strategies). In this case, the Group recalculates the gross carrying amount of the loan and recognises the amount arising from adjusting the gross carrying amount as a modification gain or loss in the Income Statement. If such a modification is carried out because of financial difficulties of the borrower, the gain or loss is presented together with impairment losses. In other cases, it is presented within interest income. For residential mortgages, the Group assesses whether there has been a significant increase in credit risk by comparing the remaining lifetime PD as at the reporting date (based on the modified contractual terms) to the remaining lifetime PD for this point in time that was estimated at initial recognition (based on the original, unmodified contractual terms). Derecognition The Group derecognises a financial asset when the contractual rights to receive the asset\u2019s cash flows expire (including deemed expiry arising from a modification with substantially different terms as discussed above), or when the contractual rights have been transferred and either i) the Group transfers substantially all the risks and rewards of ownership, or ii) the Group neither transfers nor retains substantially all the risks and rewards of ownership and the Group has not retained control. On derecognition of a financial asset, the difference between the carrying amount of the asset and the sum of i) the consideration received (including any new asset obtained less any new liability assumed) and ii) any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. The Society has not derecognised the loans transferred to the Group\u2019s special purpose funding vehicles because substantially all the risks and rewards are retained by the Society as detailed in Note 1d). Financial liabilities are derecognised only when the obligation is discharged, cancelled or has expired. Offsetting Financial assets and financial liabilities are offset and the net amount presented within the Statement of Financial Position when, and only when, the Group has a legally enforceable right to offset the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under IFRS. With the exception of bank balances included within \u2018Loans and advances to credit institutions\u2019, there are no other financial assets or liabilities which are offset within the Statement of Financial Position and all other financial assets and liabilities are presented on a gross basis. The Group has a cash-pooling arrangement in place with one of its banking counterparties between its subsidiaries and the Society. At the reporting date, the Group has a legally enforceable right to offset balances in these bank accounts and so, in accordance with IAS 32, the net presentation more appropriately reflects the substance of the arrangement. At 31 December 2025 the Group has offset \u00a320.0m (31 December 2024: \u00a318.0m) of balances against \u2018Loans and advances to credit institutions\u2019 that would otherwise be shown within \u2018Amounts owed to credit institutions\u2019 within the Statement of Financial Position. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-476": { "value": "h) Impairment of financial assets Under IFRS 9, impairment of financial assets is assessed using a forward-looking expected credit loss (ECL) model. This model applies to financial assets measured at either amortised cost or FVOCI (except any equity share investments held as such, as set out in Note 1f)). The Group recognises impairment loss allowances for ECLs on the following financial assets that are not measured at FVTPL: \u2022 Loans and advances to customers; \u2022 Loan commitments (where a firm offer has been made to the customer); \u2022 Trade receivables; \u2022 Treasury assets, which comprise debt securities held at FVOCI, cash in hand and balances with the Bank of England and loans and advances to credit institutions; and \u2022 Loans to subsidiary undertakings (within the Society\u2019s Statement of Financial Position) and firm commitments made in relation to such loans. Measurement of Expected Credit Losses (ECLs) ECLs are an unbiased probability-weighted estimate of the present value of credit losses, taking account of forward-looking information that includes a range of possible economic outcomes. ECLs are measured as the difference between contractual cash flows and expected cash flows, discounted at the asset's effective interest rate. The assessment of impairment requires a number of estimates and assumptions, details of which are included in Note 1v). The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. The Group typically assesses ECLs on an individual asset basis. IFRS 9 requires an impairment loss allowance to be recognised at an amount equal to either 12-month ECLs (\u2018stage 1\u2019 ECLs) or lifetime ECLs. Lifetime ECLs are ECLs that result from all possible default events over the expected life of a financial instrument. 12-month ECLs are ECLs that result from default events that are possible within the 12 months after the reporting date. The Group measures impairment loss allowances at an amount equal to lifetime ECLs, except for the following which are measured as 12-month ECLs: \u2022 treasury assets that are determined to have low credit risk at the reporting date. The Group considers a treasury asset to have low credit risk when its credit rating is equivalent to the globally understood definition of 'investment grade'; and \u2022 other financial assets on which credit risk has not increased significantly since their initial recognition (except trade receivables, for which the Group will always recognise lifetime ECLs in accordance with the simplified approach in IFRS 9). Lifetime ECLs are required where the credit risk on a financial asset has increased significantly since initial recognition (except for investment grade treasury assets, as noted above). For the measurement of ECLs relating to residential mortgages and to treasury assets, the Group typically assesses the probability of default, the expected exposure at the time of default, and the loss that is expected to arise on default. The probabilities of default are adjusted to take account of expected customer redemptions. For commercial mortgages, the Group applies an average loss rate approach. A lifetime coverage ratio is calculated, based on cumulative losses to date divided by the total value of loan balances redeemed over that period. The lifetime coverage ratio is applied to accounts held in stage 2 and stage 3, discounted at each account\u2019s EIR, to determine expected lifetime losses. For stage 1 accounts, a 12-month coverage ratio is applied, discounted at each account\u2019s EIR, to determine expected 12-month losses. For accounts held in stage 3, additional account-specific impairment is typically held based on management judgement. Due consideration is given to the impact of forward-looking information, including a range of possible future economic scenarios; where appropriate, the level of impairment held is adjusted accordingly. For debt factoring advances, stage 1 ECLs are based on an average 12-month loss rate as adjusted for forward-looking assessments and other pertinent factors. For accounts held in stage 2 / stage 3, account- specific allowances are held based on management judgement. For trade receivables, the Group typically applies a simplified approach whereby, as permitted by IFRS 9, the level of impairment held is always based on lifetime ECLs. This approach includes the use of provision matrices based on historical credit loss experience, as adjusted for forward-looking factors. For loan commitments where a firm offer has been made, ECLs are measured by the Group at 12-month losses for the percentage of such commitments expected to convert from an outstanding customer offer into a completed customer loan. The conversion factors applied are based on actual trends observed for the Group and are aligned with the Group\u2019s Internal Ratings-Based (IRB) approach for regulatory capital purposes. Financial assets that are subject to the impairment requirements of IFRS 9 are described according to their ECL \u2018stage\u2019 as follows: \u2022 \u2018Stage 1\u2019 - Assets for which a 12-month ECL is recognised; \u2022 \u2018Stage 2\u2019 - Assets for which a lifetime ECL is recognised where there has been a \u2018significant increase in credit risk\u2019 but which are not credit-impaired; \u2022 \u2018Stage 3\u2019 - Assets for which a lifetime ECL is recognised and which are \u2018credit-impaired\u2019. The Group\u2019s definitions of \u2018significant increase in credit risk\u2019 and \u2018credit-impaired\u2019 are detailed below. IFRS 9 includes specific requirements for financial assets that are credit-impaired when initially purchased or originated (POCI assets). For POCI assets, an entity recognises only the cumulative change in lifetime ECLs since initial recognition, discounted by the credit-adjusted effective interest rate. For POCI assets, interest revenue is accounted for using the credit-adjusted effective interest rate. The Group had no POCI assets during the current or prior period. Forward-looking information The Group incorporates forward-looking information into both its assessment of whether the credit risk of a financial asset has increased significantly since initial recognition and its measurement of ECLs. The time period over which the Group assesses forward-looking information is the maximum period over which the Group is exposed to credit risk. The Group determines a range of representative scenarios for the possible future direction of key economic variables; this includes forecasts of quarterly movements in these variables for years one to five, followed by phased transition assumptions for years six to ten, arriving at a view of long- run averages from year eleven onwards. The scenarios are derived by reference to external information where this is publicly available and appropriate, together with internally generated views. A probability-weighting, based on management judgement, is assigned to each scenario. The Group\u2019s 'central' scenario represents a view of the most likely outcome and is aligned with information used by the Group for other purposes such as strategic planning and budgeting. The selection of alternative scenarios is intended to model the non-linear impact of economic factors on ECLs for the Group\u2019s financial assets. For UK mortgage impairment, including SIL\u2019s UK buy-to-let portfolio, the Group typically considers three scenarios; this includes the central scenario, together with an upside scenario (more optimistic than the central scenario) and a downside scenario (more pessimistic than the central scenario). For non-UK mortgage impairment and for treasury asset impairment, the Group typically considers a central scenario and a downside scenario. Further details are included in Note 1v). Significant increase in credit risk The Group monitors all financial assets and loan commitments that are subject to IFRS 9\u2019s impairment requirements to assess whether there has been a significant increase in credit risk since initial recognition of the asset. IFRS 9 includes a rebuttable presumption that credit risk has significantly increased when contractual payments are more than 30 days past due. For relevant models, the Group uses internal credit risk metrics that reflect its assessment of the probability of default (PD) of individual counterparties. The credit risk of each exposure is assessed at initial recognition, based on the available information about the counterparty. For loans and advances to customers, the credit risk at initial recognition is typically assessed by reference to information as at the loan drawdown date; this information is not always held by the Group for loans drawn down prior to 2007, in which case the Group uses the earliest available information as a proxy (which is typically January 2007 data for pre-2007 loans that were originated by the Society). Exposures are monitored and the credit risk assessment is updated to reflect current information on an ongoing basis. For residential mortgages, the Group considers that credit risk has significantly increased if one or more of the following criteria are met: \u2022 the remaining lifetime PD as at the reporting date, as compared to the remaining lifetime PD for this point in time that was estimated on initial recognition of the asset, exceeds pre-determined thresholds which are set by the Group and reviewed periodically. The thresholds applied will depend on the credit quality at initial recognition, with a lower percentage change in PD being required for higher risk accounts. The use of an absolute lifetime PD hurdle for residential mortgages is also applied where lifetime PD goes above 25%. Further details are included in Note 1v); \u2022 the account is forborne (page 158); \u2022 the account is in arrears (no minimum); \u2022 the account term has expired; or \u2022 the account has a temporary arrangement in place, arranged via the Mortgage Charter Scheme, to repay interest only. For commercial mortgages, the Group considers that credit risk has significantly increased when an account is in arrears (no minimum) or is forborne. For residential and commercial mortgages, the above criteria for assessing significant increase in credit risk ensures compliance with IFRS 9\u2019s backstop of more than 30 days past due. For debt factoring advances, the Group considers that credit risk has significantly increased when an account is placed on a watchlist. For treasury assets, the Group applies criteria that consider the relative increase in the asset\u2019s lifetime PD, by reference to external credit ratings where available. Notwithstanding these criteria, the Group considers that credit risk has not increased significantly for any treasury asset that is determined to have 'low' credit risk at the reporting date. The Group considers a treasury asset to have low credit risk when its credit rating is equivalent to the globally understood definition of \u2018investment grade\u2019. The Society\u2019s Statement of Financial Position includes loans to subsidiary undertakings that are repayable on demand. For these loans, the Society considers that credit risk has significantly increased when the subsidiary undertaking no longer has sufficient liquid assets to repay the loan if demanded at the reporting date or where other factors indicate that, in the judgement of management, a significant increase in credit risk has occurred; this assessment takes into account the specific characteristics of each subsidiary loan and the subsidiary\u2019s own business. Definition of default For residential mortgages, the Group\u2019s definition of default is aligned with its existing IRB definition of default for regulatory capital purposes. For IFRS 9 accounting purposes, stage 3 loans which no longer meet any of the default criteria are subject to a six month minimum probation period before they become eligible for transfer out of stage 3. Default occurs when one or more of the following criteria is met: \u2022 The borrower is 90 days or more past due on their contractual payments. \u2022 The borrower meets unlikeliness to pay criteria, which indicates the borrower is in significant financial difficulty. The instances are: \u2022 the loan is in repossession; \u2022 the borrower has filed for bankruptcy; \u2022 at least two payments are in arrears and forbearance activity has been applied; or \u2022 other evidence is available that the customer is not going to be able to meet their loan commitments. For commercial mortgages, stage 3 loans which no longer meet any of the default criteria are subject to a three month minimum probation period before they become eligible for transfer out of stage 3. Default occurs when one or more of the following criteria is met: \u2022 The borrower is 90 days or more past due on their contractual payments; \u2022 The loan is in repossession; \u2022 A receiver has been appointed; \u2022 The mortgage term has expired; or \u2022 Other evidence is available that the customer is not going to be able to meet their loan commitments. For debt factoring advances, the Group considers that an account is in default when there is no reasonable expectation of recovery, typically due to financial difficulties of the customer. Credit-impaired financial assets At each reporting date, the Group assesses whether financial assets (other than those held at FVTPL) are credit-impaired. For those assets that have become credit-impaired, interest revenue is subsequently calculated by applying the effective interest rate to the amortised cost of the asset. A financial asset is 'credit-impaired' when one or more events have occurred that have a detrimental impact on the estimated future cash flows of the financial asset. Evidence that a financial asset is credit-impaired includes the following: \u2022 a breach of contract such as a default; or \u2022 the disappearance of an active market for a security because of financial difficulties. For residential and commercial mortgages, the Group considers that a loan that meets the definition of default is credit-impaired. For loans to no longer be considered credit-impaired, consistently good repayments must be demonstrated over a period of time, being not less than six months for residential loans and not less than three months for commercial loans. For debt factoring advances, the Group considers that an account is credit-impaired when there is no reasonable expectation of recovery, typically due to financial difficulties of the customer. To assess whether sovereign and corporate debt instruments are credit-impaired, the Group considers factors such as bond yields, credit ratings and the ability of the borrower to raise funding. To assess whether trade receivables are credit-impaired, the Group considers factors such as the ageing profile, historical default rates and specific case knowledge. Forbearance In certain circumstances, the Group renegotiates loans to customers in financial difficulties (referred to as forbearance activities) to maximise collection opportunities and minimise the risk of default whilst ensuring the best outcome for the customer. Under the Group\u2019s forbearance policy, loan forbearance is granted on a selective basis if the customer is currently in default on their loan or if there is a high risk of default, there is evidence that the customer made all reasonable efforts to pay under the original contractual terms and the customer is expected to be able to meet the revised terms. The revised terms typically include extending the maturity of the loan, changing the timing of interest payments or amending the terms of loan covenants. Both retail and commercial loans are subject to the forbearance policy. The Retail Credit Committee regularly reviews reports on forbearance activities. For the purposes of disclosures in these financial statements, loans with renegotiated terms are defined as loans that have been restructured due to a deterioration in the borrower\u2019s financial position, for which the Group has made concessions by agreeing to terms and conditions that are more favourable for the borrower than the Group had provided initially and that it would not otherwise consider. Write-offs A financial asset is written off (in full or in part) when the Group judges there to be no reasonable expectation that the asset can be recovered (in full or in part). This is typically the case when the Group determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. This assessment is performed at the individual asset level. The related impairment loss allowance is also written off once all the necessary procedures have been completed and the loss amount has crystallised. Financial assets that are written off could still be subject to enforcement activities and subsequent recoveries of amounts previously written off decrease the amount of impairment losses recorded in the Income Statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-477": { "value": "Derecognition The Group derecognises a financial asset when the contractual rights to receive the asset\u2019s cash flows expire (including deemed expiry arising from a modification with substantially different terms as discussed above), or when the contractual rights have been transferred and either i) the Group transfers substantially all the risks and rewards of ownership, or ii) the Group neither transfers nor retains substantially all the risks and rewards of ownership and the Group has not retained control. On derecognition of a financial asset, the difference between the carrying amount of the asset and the sum of i) the consideration received (including any new asset obtained less any new liability assumed) and ii) any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. The Society has not derecognised the loans transferred to the Group\u2019s special purpose funding vehicles because substantially all the risks and rewards are retained by the Society as detailed in Note 1d). Financial liabilities are derecognised only when the obligation is discharged, cancelled or has expired. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-478": { "value": "Offsetting Financial assets and financial liabilities are offset and the net amount presented within the Statement of Financial Position when, and only when, the Group has a legally enforceable right to offset the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under IFRS. With the exception of bank balances included within \u2018Loans and advances to credit institutions\u2019, there are no other financial assets or liabilities which are offset within the Statement of Financial Position and all other financial assets and liabilities are presented on a gross basis. The Group has a cash-pooling arrangement in place with one of its banking counterparties between its subsidiaries and the Society. At the reporting date, the Group has a legally enforceable right to offset balances in these bank accounts and so, in accordance with IAS 32, the net presentation more appropriately reflects the substance of the arrangement. At 31 December 2025 the Group has offset \u00a320.0m (31 December 2024: \u00a318.0m) of balances against \u2018Loans and advances to credit institutions\u2019 that would otherwise be shown within \u2018Amounts owed to credit institutions\u2019 within the Statement of Financial Position. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForOffsettingOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-423": { "value": "j) Foreign currency transactions Transactions in foreign currencies are translated into the respective functional currencies of Group entities using the exchange rates prevailing at the dates of the transactions. At the reporting date, monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the closing rate of exchange. Exchange differences are taken to the Income Statement as they arise. On consolidation, the income statements of subsidiary undertakings with non-Sterling functional currencies are translated into Sterling (the Group\u2019s presentational currency) at the monthly average rates for the period and their assets and liabilities are translated into Sterling at the closing rate of exchange at the reporting date. Any exchange differences arising on the translation of net assets of overseas subsidiary undertakings are taken to reserves as a separate component of equity and disclosed in the Statement of Comprehensive Income, except to the extent that the translation difference is allocated to the non-controlling interests. Where a foreign operation is disposed of in its entirety, or partially disposed of such that control is lost, the cumulative amount of translation differences recognised as a separate component of equity is reclassified to the Income Statement as part of the gain or loss on disposal. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-479": { "value": "Transactions in foreign currencies are translated into the respective functional currencies of Group entities using the exchange rates prevailing at the dates of the transactions. At the reporting date, monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the closing rate of exchange. Exchange differences are taken to the Income Statement as they arise. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-480": { "value": "k) Taxation The income tax expense or credit on the profit or loss for the year comprises current tax and deferred tax. Income tax is recognised in the Income Statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity and disclosed in the Statement of Comprehensive Income. Current tax is the expected tax payable or receivable on the taxable income or expenditure for the year, using tax rates in force during the period, and any adjustments to tax payable in respect of previous years. Current tax assets and current tax liabilities are offset within the Statement of Financial Position if, and only if, the Group has a legally enforceable right to offset the recognised amounts and intends either to settle the taxes in question on a net basis or to realise the asset and settle the liability simultaneously. Deferred tax recognises temporary differences between the carrying amounts of assets and liabilities for accounting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor income and expenditure, and differences relating to investments in subsidiary undertakings, associates and joint arrangements to the extent that it is probable they will not reverse in the foreseeable future. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which temporary differences reverse, based on tax rates and laws enacted or substantively enacted at the reporting date. A deferred tax asset is only recognised to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at least annually and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; in making this assessment, consideration is given to the likelihood of recovery within a reasonably foreseeable timeframe, typically the Group\u2019s five year corporate planning period. Deferred tax assets and deferred tax liabilities are offset if, and only if, the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority and the Group has a legally enforceable right to offset the related current tax assets against the related current tax liabilities. Pillar Two Model Rules In December 2021 the Organisation for Economic Co-operation and Development (OECD) published detailed rules to assist in the development of a landmark reform to the international tax system, including \u2018Pillar Two\u2019 tax rules which apply to multinational enterprises with consolidated annual revenues of more than \u20ac750m and which seek to impose a minimum effective tax rate of 15% on each tax jurisdiction in which those enterprises operate. IAS 12 Income Taxes does not offer specific guidance on accounting for Pillar Two income taxes; it is unclear whether the Pillar Two model rules create additional temporary differences, whether to remeasure deferred taxes for the Pillar Two model rules and which tax rate to use to measure deferred taxes. Further, the tax rate that will apply to an entity\u2019s excess profit in future periods depends on a number of factors that are difficult to forecast reliably. In May 2023 the IASB published International Tax Reform \u2014 Pillar Two Model Rules (Amendments to IAS 12). The Amendments introduced a temporary mandatory exception from accounting for deferred taxes that arise from the Pillar Two model rules and a requirement to disclose that the exception has been applied. The Group has, for the years ended 31 December 2025 and 31 December 2024, applied the aforementioned exception from accounting for deferred taxes that arise from the Pillar Two model rules. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-422": { "value": "k) Taxation The income tax expense or credit on the profit or loss for the year comprises current tax and deferred tax. Income tax is recognised in the Income Statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity and disclosed in the Statement of Comprehensive Income. Current tax is the expected tax payable or receivable on the taxable income or expenditure for the year, using tax rates in force during the period, and any adjustments to tax payable in respect of previous years. Current tax assets and current tax liabilities are offset within the Statement of Financial Position if, and only if, the Group has a legally enforceable right to offset the recognised amounts and intends either to settle the taxes in question on a net basis or to realise the asset and settle the liability simultaneously. Deferred tax recognises temporary differences between the carrying amounts of assets and liabilities for accounting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor income and expenditure, and differences relating to investments in subsidiary undertakings, associates and joint arrangements to the extent that it is probable they will not reverse in the foreseeable future. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which temporary differences reverse, based on tax rates and laws enacted or substantively enacted at the reporting date. A deferred tax asset is only recognised to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at least annually and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; in making this assessment, consideration is given to the likelihood of recovery within a reasonably foreseeable timeframe, typically the Group\u2019s five year corporate planning period. Deferred tax assets and deferred tax liabilities are offset if, and only if, the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority and the Group has a legally enforceable right to offset the related current tax assets against the related current tax liabilities. Pillar Two Model Rules In December 2021 the Organisation for Economic Co-operation and Development (OECD) published detailed rules to assist in the development of a landmark reform to the international tax system, including \u2018Pillar Two\u2019 tax rules which apply to multinational enterprises with consolidated annual revenues of more than \u20ac750m and which seek to impose a minimum effective tax rate of 15% on each tax jurisdiction in which those enterprises operate. IAS 12 Income Taxes does not offer specific guidance on accounting for Pillar Two income taxes; it is unclear whether the Pillar Two model rules create additional temporary differences, whether to remeasure deferred taxes for the Pillar Two model rules and which tax rate to use to measure deferred taxes. Further, the tax rate that will apply to an entity\u2019s excess profit in future periods depends on a number of factors that are difficult to forecast reliably. In May 2023 the IASB published International Tax Reform \u2014 Pillar Two Model Rules (Amendments to IAS 12). The Amendments introduced a temporary mandatory exception from accounting for deferred taxes that arise from the Pillar Two model rules and a requirement to disclose that the exception has been applied. The Group has, for the years ended 31 December 2025 and 31 December 2024, applied the aforementioned exception from accounting for deferred taxes that arise from the Pillar Two model rules. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-424": { "value": "l) Leases Definition of a lease Under IFRS 16 a contract is a lease, or contains a lease, if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. On transition to IFRS 16, the Group elected to apply the following practical expedient permitted by the standard: \u2022 For the purposes of identifying leases held by the Group, the Group elected to retain the assessments previously made by the Group under IAS 17 and IFRIC 4; IFRS 16 was therefore initially applied at 1 January 2019 only to those contracts that were previously identified as leases under IAS 17 and IFRIC 4. Contracts existing at 1 January 2019 that were not previously identified as leases under IAS 17 and IFRIC 4 were not reassessed. The new IFRS 16 definition of a lease is therefore applied by the Group only to contracts entered into, or changed, on or after 1 January 2019. Right-of-use assets The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset becomes available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred and lease payments made at or before the commencement date, less any lease incentives received. Where an obligation is incurred by the Group, the cost also includes an estimate of costs for dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease. If the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use asset is depreciated over the useful life of the underlying asset. Otherwise, the right-of- use asset is depreciated on a straight-line basis over the shorter of the estimated useful life of the right-of-use asset and the lease term. In accordance with IAS 36 Impairment of Assets , right-of-use assets are regularly reviewed, at least annually, for indications of impairment. Any impairment identified is charged to the Income Statement. Lease liabilities At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments for this purpose include fixed payments (including in-substance fixed payments but deducting lease incentives receivable), variable lease payments that depend on an index or a rate and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option where reasonably certain to be exercised by the Group, and payments of penalties for terminating a lease (if the lease term reflects the Group exercising the option to terminate). Variable lease payments that do not depend on an index or a rate are recognised as an expense in the period in which the event or condition that triggers the payment occurs. The present value of lease payments is determined using an appropriate discount rate. The Group uses the interest rate implicit in the lease where this can be readily determined; otherwise (and generally), the Group uses its incremental borrowing rate at the lease commencement date. After the commencement date, the lease liability is increased to reflect the accretion of interest and is reduced for lease payments made. In addition, the lease liability is remeasured if there is a modification, a change in lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset. Exempt leases The Group has elected to take the recognition exemption for short-term leases, except for property leases that are short-term by virtue of being under renegotiation. Short-term leases are those which, at the commencement date, have a lease term of not more than twelve months and do not contain a purchase option. Except for leases of motor vehicles, the Group has elected to take the recognition exemption for leases for which the underlying asset is of low value when new. The Group considers an underlying asset to be of low value where its value, when new, is not more than approximately \u00a34,000. For exempt leases, the Group expenses lease rentals to the Income Statement on a straight-line basis over the lease term. Other practical expedients Certain of the Group\u2019s lease contracts contain non-lease components (e.g. service charges). Except for property leases, the Group has elected not to separate out the non-lease components and therefore to account for these as part of the lease component. For property leases, the Group accounts separately for lease components and non-lease components. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-425": { "value": "m) Employee benefits Defined contribution pension arrangements Obligations for contributions to defined contribution pension arrangements are recognised as an expense in the Income Statement as incurred. Defined benefit schemes The Group currently operates three defined benefit pension schemes. Each scheme is administered by a corporate Trustee and the funds of these schemes are separate from those of the Group. Included within the Statement of Financial Position are the Group\u2019s net obligations in respect of the defined benefit pension schemes. The obligation of each scheme is calculated separately by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value, and the fair value of any scheme assets is deducted. The discount rate is based on the average yield available from AA-rated corporate bonds of appropriate duration. The calculation is performed by a qualified actuary using the projected unit credit method. Net interest income for the defined benefit schemes comprises interest income on plan assets, less the interest cost on the scheme liabilities, and interest on the effect of the asset ceiling. Net interest income relating to the defined benefit pension schemes is recognised in \u2018Other operating income\u2019 in the Income Statement. Remeasurements of retirement benefit obligations, which comprise actuarial gains or losses (arising from the differences between previous actuarial assumptions and actual experience), the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest) are recognised in the Statement of Comprehensive Income. Service costs are recognised immediately in the Income Statement. When a plan is curtailed, the resulting gain or loss on settlement is also recognised immediately in the Income Statement. The Group recognises gains or losses on the settlement of a retirement benefit obligation when the settlement occurs. Contributions are transferred to the schemes on a regular basis to secure the benefits provided under the rules of the schemes. Pension contributions are assessed in accordance with the advice of a professionally- qualified actuary. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-426": { "value": "n) Fees and commissions The Group recognises fees and commissions receivable in accordance with IFRS 15 Revenue from Contracts with Customers. Revenue is measured based on the consideration specified in a contract with a customer. Financial advice fees and commissions Fees and commissions receivable from financial advice are recognised when both the customer has formally accepted and all of the advice within their case has been contracted in the financial markets. A provision for future clawbacks is made for repayment in the event of early termination by the customer. Estate agency services Estate agency commissions earned on the sales of properties and land and auction income are recognised on the date contracts are exchanged unconditionally. Property management income is typically recognised when the cash is received, which reflects the point at which income is earned and contractual obligations have been fulfilled; an element of lettings income has been assessed as transferred over time, in line with the performance obligations in the contract. Insurance commission is recognised upon fulfilment of contractual obligations with a provision for future clawback repayment in the event of early termination by the customer. Survey and valuation revenue is recognised on the date the survey or valuation report is completed, which reflects the point at which all contractual obligations have been fulfilled; revenue and costs are recognised gross of sub-contracted panel fees. Mortgage origination income is typically recognised on completion of the mortgage transaction; an element of this income has been assessed as transferred over time, in line with the performance obligations in the contract. Asset management commission is recognised on exchange of contracts and additional services are recognised upon completion of work, both of which reflect the point at which all performance obligations are considered to have been fulfilled. Commercial property services Income from commercial property services includes consultancy and advisory services, property management and valuation services. Income is recognised either at a point in time when services have been fully provided, or over a period of time as activity progresses and reflecting the satisfaction of performance obligations. Under certain service contracts, the Group manages client expenditure and is obliged to purchase goods and services from suppliers that are recharged to the customer at cost; such items are excluded from the amounts reported by the Group for revenue and for expenses. Software products and services Revenue from software licence fees is recognised when access to the software has been made available to the customer to enable implementation. Revenue from implementation and consulting services is recognised in proportion to the stage of completion, typically in accordance with the achievement of contract milestones or days expended. Customer support revenue and systems management revenue are recognised on a straight- line basis over the period of the service rendered. The amount of revenue recognised is adjusted for expected returns. Fees and commissions payable are generally recognised on an accruals basis as services are received. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFeeAndCommissionIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-427": { "value": "o) Property, plant and equipment Property, plant and equipment is measured at historical cost less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of those items. Depreciation is calculated to write down the cost of items of property, plant and equipment to their estimated residual values over their estimated useful lives as set out below on a straight-line basis unless stated otherwise. Land is not depreciated. Major items of property, plant and equipment purchased are depreciated on a monthly basis from the date the asset is available for utilisation. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted where appropriate. In accordance with IAS 36Impairment of Assets , all items of property, plant and equipment are regularly reviewed, at least annually, for indications of impairment. Any impairment identified is charged to the Income Statement. Subsequent expenditure on items of property, plant and equipment is capitalised only if the subsequent expenditure increases the item\u2019s revenue generating capabilities and it is probable that future economic benefits associated with the expenditure will flow to the Group. Any gain or loss on disposal of an item of property, plant and equipment is recognised in \u2018Other operating income\u2019 in the Income Statement.
Freehold and long leasehold buildings
50 to 100 years
Special purpose freehold head office facilities
40 years
Refurbishment of freehold and long leasehold buildings
5 to 10 years
Short leasehold buildings
Period of lease
Equipment, fixtures and fittings
2 to 10 years
Motor vehicles
25% reducing balance
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-481": { "value": "Depreciation is calculated to write down the cost of items of property, plant and equipment to their estimated residual values over their estimated useful lives as set out below on a straight-line basis unless stated otherwise. Land is not depreciated. Major items of property, plant and equipment purchased are depreciated on a monthly basis from the date the asset is available for utilisation. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted where appropriate. In accordance with IAS 36Impairment of Assets , all items of property, plant and equipment are regularly reviewed, at least annually, for indications of impairment. Any impairment identified is charged to the Income Statement.
Freehold and long leasehold buildings
50 to 100 years
Special purpose freehold head office facilities
40 years
Refurbishment of freehold and long leasehold buildings
5 to 10 years
Short leasehold buildings
Period of lease
Equipment, fixtures and fittings
2 to 10 years
Motor vehicles
25% reducing balance
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-428": { "value": "
p) Segmental reporting
In accordance with IFRS 8
Operating Segments
, each operating segment is determined according to
distinguishable operating components of the Group for which discrete financial information is available. The
chief operating decision maker, the Board, regularly reviews internal reporting for each segment to
appropriately allocate resources and assess their performance. The Group does not aggregate any of its
operating segments for the purposes of financial reporting.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-429": { "value": "
q) Cash and cash equivalents
For the purposes of the Statements of Cash Flows, cash comprises cash in hand and unrestricted loans and
advances to credit institutions repayable on demand; it excludes the mandatory deposit the Society is required
to place with the Bank of England. Cash equivalents comprise highly liquid unrestricted investments, typically
with original maturities of less than three months, that are readily convertible into known amounts of cash with
an insignificant risk of changes in value.
The Statements of Cash Flows have been prepared using the indirect method.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-430": { "value": "
r) Investment properties
Properties held by the Group for capital appreciation or which earn rentals are recognised as investment
properties at cost less depreciation and impairment losses. The depreciation policy for investment properties
is consistent with the policy for property, plant and equipment. Investment properties are regularly reviewed for
indications of impairment and any impairment identified is charged to the Income Statement.
Rental income from investment property is recognised over the term of the lease and is included in \u2018Other
operating income\u2019 in the Income Statement.
Any gain or loss on disposal of investment property is also recognised in \u2018Other operating income\u2019.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentPropertyExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-431": { "value": "s) Sale and repurchase agreements Investments and other securities may be lent or sold subject to a commitment to repurchase them (a \u2018repo\u2019). Such securities are retained within the Statement of Financial Position when substantially all the risks and rewards of ownership remain with the Group and the liability associated with the cash advanced is included separately within the Statement of Financial Position. The difference between the sale and repurchase price is accrued over the life of the agreement and recognised within net interest income. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRepurchaseAndReverseRepurchaseAgreementsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-432": { "value": "t) Provisions for liabilities Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date. Further details can be found in Note 33. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-433": { "value": "u) Software as a service (SaaS) A SaaS arrangement is a type of cloud computing arrangement, in which the supplier provides the customer with access to application software residing on the supplier\u2019s cloud infrastructure; this infrastructure typically comprises a collection of hardware and software, including networks, servers, operating systems and storage. SaaS arrangements can include other services, such as technical support, implementation, data migration, business process mapping, training and project management. The customer typically pays an all-inclusive fee on a periodic basis. In addition, implementation costs may be incurred at inception of the arrangement. Where the Group enters into a SaaS arrangement, the Group recognises a software asset only if such an asset is received at commencement of the arrangement, either in the form of an intangible asset or a software lease, and only from the date on which the Group obtains control of the software; 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 prepaid and amortised on a systematic basis over the period to which they relate. Subject to the terms of the arrangement, implementation costs associated with configuration and customisation of the software may also, where appropriate, be prepaid over the period to which they relate. All other costs associated with implementation, including internal time and resources, are expensed to the Income Statement as incurred. ", "dimensions": { "concept": "skiptonbuilding:DescriptionOfAccountingPolicyForSoftwareAsAServiceSaaS", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-434": { "value": "v) Critical accounting judgements and estimates in applying accounting policies Critical judgements The Group has to make judgements in applying its accounting policies which affect the amounts recognised in the financial statements. The key judgements management has made in applying the Group\u2019s accounting policies are set out below. Impairment of mortgage loans and advances Assessing loan impairment in accordance with IFRS 9 requires the following key judgements: \u2022 determining whether credit risk has significantly increased since the loan was initially recognised; and \u2022 the definition of default. Residential mortgages For residential mortgages, management judges that significant increase in credit risk is determined by reference to certain quantitative and qualitative criteria. The quantitative criteria involve measuring the relative increase in lifetime probability of default (PD) for the loan. The qualitative criteria include the loan being in forbearance, in arrears, term expired or has a temporary arrangement in place (via the Mortgage Charter Scheme) to repay interest only. Management has further judged that the definition of default should align with the Group\u2019s existing IRB definition for regulatory capital purposes. For IFRS 9 accounting purposes, stage 3 loans which no longer meet any of the default criteria are subject to a six month minimum probation period before they become eligible for transfer out of stage 3. Further details are found in Note 1h). Commercial loans For commercial mortgages, management judges that credit risk has significantly increased when an account is in arrears (no minimum) or has a live forbearance arrangement in place. When there is other evidence available that the borrower will be unable to meet their loan commitments, the account is deemed to be in default and thus transfers to Stage 3; in such cases, account specific impairment is held based on management judgement. For IFRS 9 accounting purposes, stage 3 loans which no longer meet any of the default criteria are subject to a three month minimum probation period before they become eligible for transfer out of stage 3. Further details are found in Note 1h). IFRS 16 When accounting for leases in accordance with IFRS 16 the Group makes the following key judgements that have an effect on the reported amounts of assets and liabilities: Lease term The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease where this is reasonably certain to be exercised, or any periods covered by an option to terminate the lease where this is reasonably certain not to be exercised. Many of the Group\u2019s leases, particularly property leases, contain options for the Group to extend and / or terminate the lease term. The Group applies judgement in evaluating whether it is reasonably certain to exercise these options, taking account of all relevant factors that create an economic incentive for it to do so. After the lease commencement date, the Group reassesses the lease term if there has been a significant event or change in circumstances that is within its control and which affects its ability to exercise (or not to exercise) the option to renew and / or to terminate (e.g. a change in business strategy). Critical estimates The Group also makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and assumptions are evaluated on an ongoing basis and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The key estimates and assumptions are set out below. Impairment of residential mortgages The estimation of credit exposures for risk management purposes is complex and requires the use of models, a number of inputs into which are sources of estimation and require the Group to apply judgement. Key sources of estimation the Group uses to measure ECLs include: \u2022 Probability of Default (PD) \u2013 the probability at a point in time that a customer will default; \u2022 Exposure at Default (EAD) \u2013 the expected outstanding loan amount at the time of default; \u2022 Loss Given Default (LGD) \u2013 the loss that is expected to arise on default, taking account of expected recoveries from collateral held; \u2022 Thresholds to determine whether credit risk has significantly increased; and \u2022 Use of forward-looking information. For residential mortgages, ECLs are measured by multiplying together the PD, EAD and LGD, and are discounted using the loan\u2019s original effective interest rate. EAD is derived by adjusting the current outstanding loan amount for expected cashflows to the date of default. LGD is estimated on a discounted cash flow basis using the effective interest rate. The Group\u2019s LGD models consider factors including historical recovery rates and possible future property price changes. Credit risk information is collected by the Group, based on a range of qualitative and quantitative data considered to be predictive of the risk of default and applying experienced credit judgement. The nature of the exposure and type of borrower are taken into account in the analysis. The Group\u2019s PD models use the relevant information to generate estimates of the remaining lifetime PD of exposures and how these are expected to change over time. The PDs are adjusted to take account of expected customer redemptions and also for the impact of forward-looking information. The following data is typically used to monitor the Group's exposure to credit risk: \u2022 Payment record, including payment ageing analysis; \u2022 Forbearance activity; \u2022 Changes in business, financial and economic conditions; \u2022 Credit reference information supplied by external agencies; and \u2022 Internally generated data of customer behaviour, affordability metrics etc. For residential mortgages, the assessment of whether credit risk has significantly increased includes assessing the degree by which the remaining lifetime PD at the reporting date has increased compared to initial estimates. The Group determines thresholds for this purpose, expressed as a multiple of the initial PD estimate. The thresholds vary according to the credit quality of the loan at initial recognition and they are set with the aim of identifying accounts with significant increase in credit risk (SICR) before the borrower misses a payment. The Group periodically reviews the effectiveness of the SICR criteria in achieving this objective. As a result of this review, the multiples applied by the Group have been revised during the year in order to enhance effectiveness; details of the changes, which do not materially impact these financial statements, are set out below. The Group also applies an absolute lifetime PD hurdle for residential mortgages where lifetime PD goes above 25%. These accounts are considered to meet SICR and will automatically be migrated to Stage 2. The review of SICR criteria also resulted in a change to the qualitative SICR criteria, to align the probation period for forborne accounts with that used in certain regulatory reporting standards. Impairment of commercial loans For commercial loans, the Group applies a Loss Rate method to measure ECLs; 12-month and lifetime loss rates are calculated based on the Group\u2019s average commercial losses since closure of the portfolio in 2008. Management considers the most critical estimates and assumptions to be the lifetime loss rate and any account-specific impairment based on management judgement. Forward-looking information The Group incorporates forward-looking information into both its assessment of whether the credit risk of a financial asset has increased significantly since initial recognition and its measurement of ECLs. In accordance with IFRS 9, the Group\u2019s estimate of ECLs is an unbiased and probability-weighted amount that reflects a range of possible outcomes. As outlined in Note 1h), the Group determines a range of representative scenarios for the possible future direction of key economic variables and a probability-weighting is assigned to each scenario. The Group\u2019s central scenario represents a view of the most likely outcome and is aligned with information used by the Group for other purposes such as strategic planning and budgeting. In addition, the Group incorporates an upside scenario (representing a more optimistic view than the central scenario) and a downside scenario (representing a more pessimistic view than the central scenario); the selection of these alternative scenarios is intended to model the non-linear impact of economic factors on ECLs for the Group\u2019s mortgage portfolios. The scenarios applied by the Group as at 31 December 2025 were determined with due consideration to the significant economic uncertainties arising from continuing geopolitical tensions and conflicts. Multiple by which remaining lifetime PD has increased compared with initial estimate
Lifetime PD band at initial recognition
Applied at 31 December 2025
Applied at 31 December 2024
Slight risk
Initial estimate x 8
Initial estimate x 9
Low risk
Initial estimate x 4
Initial estimate x 5
Medium risk
Initial estimate x 3
Initial estimate x 4
High risk
Initial estimate x 1
Initial estimate x 1
The Group\u2019s central scenario as at 31 December 2025 assumes minimal growth in 2026 and 2027, constrained by increases in UK government taxation. Geopolitical tensions continue into 2026, keeping pressure on inflation. Whilst a period of real wages growth has given some respite to households, pressures remain; UK government policy announced in the Autumn 2025 budget will weigh further on household income. Unemployment peaks in 2026, but by historical standards remains relatively low into the medium-term. Businesses continue to feel the impacts of inflation and rising wage bills, including the increase to the National Minimum / Living Wage. Inflation peaked in 2025 and continues to run generally above the 2% target until mid- 2027. After a Base Rate cut in Q2 2026, the Bank of England holds rates at 3.50% until mid-2029; rates then increase again from late 2029. House prices grow in 2026, though UK government policies then constrain the housing market into the medium-term. The Group\u2019s upside scenario as at 31 December 2025 assumes the economy grows strongly in 2026 and 2027, allowing the UK government to reduce / remove some fiscally-constraining policies in the medium-term. Inflation falls swiftly, aided by de-escalation of tensions in Ukraine and the Middle East; in response, the Bank of England reduces Base Rate to 3.00% by Q2 2026 and holds into the medium-term. Consumer confidence rises and unemployment reduces to 4.0%. There is strong house price growth into the medium-term. The Group\u2019s downside scenario as at 31 December 2025 assumes significant escalation of geopolitical tensions in eastern Europe. Oil prices swiftly increase and inflation spikes, with particular impact on energy and food prices. Further pressures come from climate change and UK government fiscal constraints. The impacts on disposable income and investment are felt by households and businesses respectively. Unemployment increases and remains elevated throughout the forecast period. The Bank of England swiftly increases Base Rate and this remains higher for a sustained period. The impact on affordability is significant and house prices fall in 2026 and 2027; recovery is slow such that the overall impact on the housing market is severe. The key economic variables considered by the Group when developing the forecast scenarios are set out below for the first five years of each of the Group\u2019s scenarios. For years six to ten the Group applies phased transition assumptions, arriving at a view of long-run averages from year eleven onwards; the Group\u2019s view of long-run averages can differ from the historical long-term mean and is derived by reference to both external information, where this is publicly available and appropriate, and internally generated views. As noted above, the assumptions assigned to each scenario have been revised during the year taking account of significant economic uncertainties. The graphs below show the historical and forecasted UK Bank Base Rate, unemployment rate and indexed residential house prices for the Group\u2019s three economic scenarios as at 31 December 2025, along with the prior year central scenario for context (as forecasted at 31 December 2024). The indexed residential house price graph uses a starting value of 100 in the fourth quarter of 2024 for illustrative purposes, to show how a property value moves over time when the annual house price inflation (UK) assumptions are applied. UK Bank Base Rate (%) Unemployment rate (%) Indexed residential house price 2.0 3.0 4.0 5.0 6.0 7.0 8.0 Q4 2024 Q4 2025 Q4 2026 Q4 2027 Q4 2028 Q4 2029 Q4 2030 2.00 3.00 4.00 5.00 6.00 7.00 Q4 2024 Q4 2025 Q4 2026 Q4 2027 Q4 2028 Q4 2029 Q4 2030 70 80 90 100 110 120 130 140 Q4 2024 Q4 2025 Q4 2026 Q4 2027 Q4 2028 Q4 2029 Q4 2030 Upside Central Downside Prior Central
Economic Variables
As at 31 December 2025
Notes
Scenario
2026
2027
2028
2029
2030
Upside
3.00
3.00
3.00
3.00
3.00
Bank of England Base Rate (%)
A
Central
3.50
3.50
3.50
3.75
4.00
Downside
6.00
5.25
5.00
4.75
4.50
Upside
4.0
4.0
4.0
4.0
4.0
Unemployment (%)
A
Central
5.0
4.8
4.7
4.5
4.5
Downside
7.0
6.0
6.0
6.0
6.0
Upside
4.2
4.2
4.2
4.2
4.2
UK House price inflation (%)
B
Central
2.5
2.0
1.5
2.5
3.0
Downside
(10.6)
(3.0)
1.0
4.0
4.0
Notes
A. The Bank of England Base Rates and unemployment rates are the position at 31 December each year.
B. House price inflation is the annual growth rate in each year. In addition to house price inflation, the Group\u2019s residential impairment
calculations also include a \u2018forced sale discount\u2019 reflecting the likely reduction in property price when selling a repossessed property.
The forced sale discount is calculated at account level, taking into account the specific circumstances of each account and the
property in question.
As at 31 December 2024
Notes
Scenario
2025
2026
2027
2028
2029
Upside
3.50
3.50
3.50
3.50
3.50
Bank of England Base Rate (%)
A
Central
4.00
3.75
3.75
3.75
3.75
Downside
6.00
6.00
5.00
5.00
5.00
Upside
4.0
4.0
4.0
4.0
4.0
Unemployment (%)
A
Central
4.1
4.3
4.4
4.4
4.2
Downside
6.7
6.0
6.0
6.0
6.0
Upside
4.2
4.2
4.2
4.2
4.2
UK House price inflation (%)
B
Central
3.0
3.5
2.5
3.0
4.0
Downside
(1.0)
(11.5)
(1.0)
1.0
4.0
Notes
A. Bank of England Base Rate is showing the lowest/highest rate that occurs at any time during the 5 year forecast period.
B. Unemployment is showing the highest rate that occurs at any time during the 5 year forecast period.
C. House price inflation is showing the largest cumulative growth/fall from 1 January 2026 (2024: from 1 January 2025) over the 5 year
forecast period.
The relative weightings assigned to each scenario have also been reviewed during the year taking into account
the basis of each scenario and also the level of uncertainty over the economic outlook, both domestic and
global. The Group\u2019s scenario weightings as at 31 December 2025 are 55% for the central scenario, 15% for the
upside scenario and 30% for the downside scenario (31 December 2024: central scenario 60%, upside scenario
10%, downside scenario 30%).
Whilst actual loan cash flows and the level of losses realised are unaffected by IFRS 9\u2019s expected credit loss
approach, the level of loan impairment accounted for by the Group under IFRS 9 can be volatile; this is due to
the inherent uncertainty when incorporating forward-looking information. IFRS 9 impairment is expected to
vary as expectations of economic conditions become either more pessimistic (which is likely to increase ECLs)
or more optimistic (which is likely to reduce ECLs).
Management assesses the performance of the Group\u2019s ECL estimation process by comparison of actual and
expected model outputs; some component outputs are back-tested for lifetime outcomes and some
component outputs are back-tested for 12-month outcomes. Additional assurance is gained from validation of
the composite sub-models. The ECL calculation is subject to formal quarterly monitoring, with outputs
reported to the Society\u2019s Model Risk Committee for review, challenge and approval. In addition, the ECL
calculation and all sub-components are subject to regular first-line review and independent validation.
Where necessary, judgmental adjustments are included within ECLs to reflect identified risks not captured in
model outputs; these adjustments are made through either:
\u2022 Post-model adjustments (PMAs) \u2013 adjustments to the ECL model output which are typically calculated, and
allocated, at a granular level through modelled analysis; or
\u2022 Overlays \u2013 adjustments to the ECL model output that have been made outside the detailed ECL calculation
and reporting process; overlays are likely not to meet the definition of PMAs (for example, they may not be
calculated at a granular level through modelled analysis).
Each material judgmental adjustment is subject to approval by the Retail Credit Committee and subject to
oversight by the Board Audit Committee.
Economic variables (peak or trough over 5 year forecast period)
Notes
Scenario
2025 2024
Upside
3.00 / 3.75
3.50 / 4.25
Bank of England Base Rate (%)
A Central
3.50 / 4.00
3.75 / 4.75
Downside
3.75 / 6.00
4.75 / 6.00
Upside
4.8
4.1
Unemployment (%)
B Central
5.2
4.4
Downside
7.5
7.0
Upside
22.6 / 0.0
22.6 / 0.0
UK House price inflation (%)
C Central
12.1 / 0.0
17.2 / 0.0
Downside
0.0 / (13.3)
0.0 / (13.3)
With respect to mortgage loan impairment, the Group and the Society held judgmental adjustments as follows:
Notes
A. This PMA is held to address model risk in the downturn scenario where key assumptions are expected to behave differently in a
recession; there is currently insufficient data available to establish, and thus to model, robust relationships for these assumptions.
The PMA was derived by considering the reduction in redemption rates and reduction in cure rates (following default) as observed
during the global financial crisis 2007-2008; these were applied to the model, on a judgement basis, to understand the impact to
model outputs.
B. This PMA is held to reflect the risks associated with flats subject to fire safety risks such as unsuitable cladding. Due to limited
available data to identify affected properties individually, an assumption is made, in line with UK market exposure estimates, regarding
the affected proportion of flats in the Group / Society\u2019s residential portfolio; assumptions relating to property values have also been
applied.
ECLs
\u2013 Judgmental adjustments
Group
Society
\u00a3m
Notes
2025
2024 2025
2024
Residential mortgages
Model Risk
\u2013 downturn
A
2.7
1.3
2.7
1.3
Flats subject to fire safety risks
B
2.1
1.4
2.1
1.4
4.8
2.7
4.8
2.7
To give an indication of the sensitivity of ECLs to different economic scenarios, the tables below show what
the ECL would be if a 100% weighting is applied to each scenario. The tables also show for each scenario what
percentage share of gross loan exposures would be held in each of Stage 1 and Stage 2.
Scenario ECL (\u00a3m)
Share of Gross
2025
Notes
weighting (%) (Note A)
Exposures (%)
(Note B)
Upside
Central
Downside
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Residential
Actual probability weighted ECL
15
55
30
8.6
5.4
7.6
21.6
97.8
1.8
100% upside
100
-
-
2.8
2.2
6.1
11.1
98.3
1.3
100% central
-
100
-
3.8
3.3
6.9
14.0
98.0
1.6
100% downside
-
-
100
11.7
13.1
13.1
37.9
95.6
4.0
Commercial
Actual probability weighted ECL
15
55
30
0.4
0.3
1.9
2.6
80.9
9.9
100% upside
C, D
100
-
-
0.4
0.3
1.9
2.6
80.9
9.9
100% central
C, D
-
100
-
0.4
0.3
1.9
2.6
80.9
9.9
100% downside
C, D
-
-
100
0.4
0.3
1.9
2.6
80.9
9.9
Scenario ECL (\u00a3m)
Share of Gross
2024
Notes
weighting (%) (Note A)
Exposures (%)
(Note B)
Upside
Downside
Stage 1
Central
Stage 2
Stage 3
Total
Stage 1
Stage 2
Residential
Actual probability weighted ECL
10
60
30
4.5
2.5
6.5
13.5
98.5
1.1
100% upside
100
-
-
2.2
1.1
4.7
8.0
98.6
1.0
100% central
-
100
-
2.7
1.3
5.0
9.0
98.6
1.0
100% downside
-
-
100
8.1
5.4
8.6
22.1
98.2
1.4
Commercial
Actual probability weighted ECL
10
60
30
0.2
0.2
4.3
4.7
82.2
5.2
100% upside
C, D
100
-
-
0.2
0.2
4.3
4.7
82.2
5.2
100% central
C, D
-
100
-
0.2
0.2
4.3
4.7
82.2
5.2
100% downside
C, D
-
-
100
0.2
0.2
4.3
4.7
82.2
5.2
Notes
A. For the purposes of calculating each scenario\u2019s 100% weighted ECL, each loan is allocated to a stage by considering only that
scenario. For the purposes of the actual probability-weighted ECL, each loan\u2019s stage allocation is based on a weighted average PD
(that takes account of all scenarios) and this stage allocation is held constant across the scenarios; a probability-weighted 12-month
or lifetime ECL (which also takes account of all scenarios) is then calculated for each loan based on that stage allocation.
B. For the purposes of this analysis, gross exposures include the off-balance sheet loan commitments for which the Group holds ECLs
(see Note 1h)).
C. For the Commercial portfolio, the Group applies a Loss Rate approach to assessing impairment (see Note 1h)). Under this approach,
commercial ECLs do not vary according to scenario weightings.
D. For the Commercial portfolio, the staging of gross exposures is driven by factors that do not include scenario weightings (such as
arrears and sector factors); the share of gross exposures held in each stage does not therefore vary according to scenario weightings.
The following tables outline the impact on the impairment loss allowance for the residential and commercial
loan portfolios of possible alternative assumptions of certain estimates used in calculating the ECLs. Each
sensitivity shown considers one change in isolation and the combined impact on the impairment loss
allowance of more than one sensitivity occurring would not necessarily be the sum of the impact of the
individual sensitivities. Similarly, the impacts of each sensitivity should not be extrapolated due to the likely
non-linear effects.
Notes
A. This sensitivity shows the impact of an increase of 10% to the probability weighting assigned to the downside scenario, from 30% to
40% (2024: from 30% to 40%), with a relative decrease to the probability weighting assigned to each of the central and upside
scenarios.
B. As outlined above, the assessment of whether credit risk has significantly increased since initial recognition includes the degree by
which the remaining lifetime PD at the reporting date has increased compared to initial estimates. This sensitivity shows the impact
of simultaneously reducing each multiplier threshold by 25%.
C. This sensitivity shows the impact if annual house price inflation in each future year was 0.5% higher / lower than the assumptions
applied by the Group or Society.
D. This sensitivity shows the impact if unemployment rates in each future year were 0.5% higher / lower than the assumptions applied by
the Group or Society.
Notes
A. This sensitivity shows the impact of an increase / decrease of 1% to the Lifetime Loss Rate.
B. The table above does not include a sensitivity for account-specific impairment based on management judgement (see page 168); this
element of impairment is, by nature, a discrete assessment for which there is no meaningful or representative variable. At 31
December 2025 the total commercial impairment allowance held included \u00a31.8m (Group and Society) in respect of account-specific
impairment based on management judgement (2024: Group and Society \u00a34.2m).
Impairment of treasury assets
The Group incorporates forward-looking information into its ECL assessment for treasury assets. In addition to
the central scenario, the Group also considers the impact of an extreme economic downturn such as a two-
notch downgrade on the entire portfolio. At 31 December 2025, the relative weightings assigned to each
scenario were 95% for the central scenario and 5% for the downside scenario (2024: central scenario 95%;
downside scenario 5%).
Impact on impairment loss allowance of changes to assumptions
Residential
Group
Society
\u00a3m
Notes
Changes to assumption
Increase / (decrease) in impairment loss allowance
2025
2024
2025
2024
Downside scenario
A
Absolute increase of 10%
1.6
0.7
1.5
0.7
weighting
Significant increase in credit
B
Relative reduction by 25%
0.4
0.1
0.4
0.1
risk criteria
Future house price inflation
C
+ / - 0.5% pa
(0.9) / 1.0
(0.5) / 0.6
(0.9) / 1.0
(0.4) / 0.5
Unemployment
D
+ / - 0.5% pa
0.9 / (0.8)
0.5 / (0.4)
0.9 / (0.8)
0.5 / (0.4)
Commercial
Group
Society
\u00a3m
Notes
Changes to assumption Increase / (decrease) in impairment loss allowance
2025
2024
2025
2024
Lifetime Loss Rate
A
+ / - 1%
0.2 / (0.2)
0.1 / (0.1)
0.1 / (0.1)
0.2 / (0.2)
The following table outlines the impact on the impairment loss allowance for treasury assets of possible alternative assumptions of certain estimates used in calculating the ECLs. Valuation of equity release portfolio The valuation of the equity release portfolio relies on the calculation of future cash flows. The size and timing of these can vary depending on a number of different factors. These factors include future expected house prices, future expected inflation, mortality rates, anticipated redemption profiles (arising due to voluntary redemption, death or a move to long-term care) and market driven yield curves. Some of the factors are based on market expectations (e.g. market-implied RPI swap prices are used to construct a forward-looking inflation curve in order to forecast future expected cash flows receivable from the portfolio), whilst others are derived from historical trends on the portfolio (e.g. anticipated future voluntary redemptions). However, where market prices are not available and historical trends are not deemed to be appropriate the Group uses management judgement; this is the case for future house price index (HPI) growth and property price volatility. Management has reviewed these expectations during the year with due consideration to the uncertainties in the current economic environment. The expectations of the economic inputs that require management judgement are in line with the economic environment that forms the central scenario as outlined on pages 168 and 169; further detail on the movements in the portfolio in the year can be found in Note 18. The Group uses an expectation of HPI growth that is aligned to that used for the central path of the ECL model and corporate planning as set out above, reverting to a long run expectation of an average of 3% (2024: long run average of 4%). This is considerably lower than long-term historical levels and reflects management\u2019s view. A volatility assumption is also used within the model, which allows for an expected range of realised growth around the central HPI growth figure. A property volatility assumption of 13% (2024: 13%) is used; the property volatility assumption considers index volatility, adjustments for autocorrelation, basis risk and concentration risk, and is not used in conjunction with a dilapidation assumption. At 31 December 2025 the equity release portfolio is held in the Statement of Financial Position (Group and Society) at fair value of \u00a3263.1m (2024: \u00a3277.2m). The table below outlines the impact of reasonably possible alternative assumptions of key inputs which rely on management judgement and are not market observable. For each of the above sensitivities there would be a corresponding charge / credit to the Income Statement within the line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019, arising from the decrease / increase in the fair value of the portfolio. Impact on impairment allowance of changes to assumptions
Group (\u00a3m)
Society (\u00a3m)
Assumption
Change to current assumption
Increase in impairment allowance
2025
2024
2025
2024
Downside scenario weighting
Absolute increase of 10%
0.1
0.1
0.1
0.1
Downside scenario weighting
Increase to 100%
1.1
1.1
1.1
1.1
Impact on fair value of portfolio of changes to assumptions
Group and Society (\u00a3m)
Assumption
Change to current assumption
Increase / (Decrease) in portfolio fair value
2025
2024
Redemption rates
+ /
- 1% pa
(0.4) / 0.5
0.4 / (0.5)
Illiquidity premia
+ /
- 0.2% pa
(4.3) / 4.4
(3.7) / 3.8
HPI forecast
+ /
- 0.5% pa
4.0 / (4.3)
4.4 / (4.7)
Property volatility
+ /
- 1% pa
(2.6) / 2.6
(2.4) / 2.4
RPI volatility
+ /
- 0.5% pa
(1.0) / 0.6
(0.2) / 0.0
The sensitivities are calculated by comparing the fair value of the portfolio, as reported within the Statement of Financial Position, to the value of the portfolio at the reporting date when each input is adjusted as listed above, as per the valuation model. Each sensitivity shown considers one change in isolation and the combined impact on the valuation of the portfolio of all sensitivities occurring would not necessarily be the sum of the impact of the individual sensitivities. Analysis has been undertaken to identify the impact of climate-related risks on the Group\u2019s equity release portfolio. This includes scenario analysis assessing the potential impact of alternative paths for the key inputs of the HPI forecast and yield curves. The results of these assessments did not lead to a change in carrying amounts as at 31 December 2025 or 31 December 2024. The future impact of climate-related risks on the Group\u2019s equity release portfolio is uncertain, and the Group will continue to monitor developments in future periods. The Group holds derivative financial instruments to hedge the movements in the equity release portfolio, which offsets to some extent the movements in the valuation of the portfolio, further details of which are found below. Derivative financial instruments held to hedge the equity release portfolio The Group holds derivatives which are used to hedge the Group\u2019s interest rate risk and inflation risk arising from the equity release portfolio. These derivatives are valued using discounted cash flow models using market observable benchmark rates consistent with accepted market methodologies for pricing financial instruments. As the notional values of the derivatives are intended to match the balance of the underlying mortgage assets, they also include estimated redemption profiles (arising where a customer voluntarily prepays, moves permanently into long-term care or has died) that are based on historical data (reviewed periodically against actuals) and published mortality tables. These redemption profiles are not market observable; an element of management judgement is therefore applied based on historical performance of redemptions. In order to value these derivatives, the Group uses market-implied RPI swap prices to construct a forward- looking inflation curve to forecast future expected cash flows relating to these derivatives. The model used to value the derivatives incorporates multiple scenarios for RPI in order to take account of the uncertainty and volatility of future RPI rates. The range of multiple scenarios used is based on management judgement and so is not market observable. The Group has robust control procedures in place regarding the inputs to the valuation that are based on management judgement. The effect on the fair value of these derivatives of reasonably possible alternative assumptions is outlined below. Note A. There would be a corresponding charge / credit to the Income Statement within the line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019, arising from the decrease / increase in the fair value of the derivative liabilities. Any change in fair value of the derivative liabilities is offset to some extent by a corresponding but opposite change in the value of the equity release portfolio. The characteristics and the valuation requirements differ slightly between the derivatives and the equity release portfolio resulting in the changes in fair value not offsetting completely. Impact on liability of changes to assumptions
Group & Society (\u00a3m)
Assumption
Notes
Change to current assumption
(Decrease) / increase in liability
2025
2024
Redemption rates
A
+ / - 1% pa
(0.0) / 0.0
(0.6) / 0
.6
RPI volatility
A
+ / - 0.5% pa
(0.9) / 0.6
(2.0) /
1.5
Goodwill The carrying value of goodwill is assessed against value in use calculations. The key assumptions for the value in use calculations are those regarding cash flows, discount rates and growth rates. These assumptions are reviewed on a regular basis, at least at every reporting date, by senior management. The forecasted cash flows of the cash generating units (CGUs) are based on the latest detailed five year corporate plans available and are sensitive to, inter alia, assumptions regarding the long-term growth pattern thereafter. The cash flows reflect management\u2019s view of future business prospects at the time of the assessment, which take into account management\u2019s most recent view of key economic indicators as well as wider prevailing circumstances. Further details regarding the key drivers of these cash flows, for each reportable segment to which goodwill has been allocated, are included in Note 25. The discount rate used to discount the future expected cash flows is based on the cost of capital assigned to each reportable segment (see Note 25) and can have a significant effect on the underlying valuation. The cost of capital is derived from a weighted average cost of capital calculation which incorporates a number of inputs including the risk-free interest rate and a premium to reflect the inherent risk of the business being evaluated. These variables are subject to fluctuations in external markets and economic conditions which are not within management control; these inputs are therefore determined on the basis of management judgement. Profit and cash flow forecasts are subject to inherent uncertainties, such as the impacts of physical and transition risks of climate change on the creditworthiness of borrowers, asset values, and other indirect effects including the erosion of the Group\u2019s competitiveness, profitability, or reputation. Sensitivity disclosures are provided in Note 25. Other intangible assets Other intangible assets (see Note 25) such as computer software, databases, brands and customer contracts are regularly reviewed for indicators of impairment. Brands, which are regarded to have an indefinite life and are therefore not amortised, are tested for impairment at the end of each reporting period (or when there is an indication of impairment), using a similar methodology as described above for goodwill. Brands are held by the Estate agency division (see Note 25) and are judged by management to have an indefinite life. Management considers that the brands held have long and successful histories and have shown their ability to adapt to changing market trends. Further, continued investment in the brands by Connells helps to protect their value. Where brands exist, the impairment test compares the carrying amount of the cash generating unit (CGU) (which comprises the CGU\u2019s net assets, plus any brands relating to that CGU and any goodwill allocated to that CGU) against its recoverable amount. Recoverable amount is determined as the higher of its fair value less costs to sell and its value in use. As described above, the key assumptions for the value in use calculations are those regarding cash flows, discount rates and growth rates. These assumptions are reviewed on a regular basis, at least at every reporting date, by senior management and further detail on the key drivers of the underlying cash flows is shown in Note 25. Other intangible assets, which are regarded to have a finite life, are tested for impairment whenever there is an indication that the intangible asset may be impaired. An impairment charge of \u00a32.8m (Group) and \u00a3nil (Society) was recognised against other intangible assets for the year ended 31 December 2025 (year ended 31 December 2024: Group \u00a30.7m; Society \u00a3nil).
Loan to defined benefit pension scheme
The valuation of the loan to the defined benefit pension scheme is dependent upon the estimation of future
cash flows, the amount and timing of which can vary according to a number of different factors. These factors
include the timing of future cash flows expected from the maturities of illiquid assets held by the scheme;
estimated prepayment amounts, determined by available proceeds upon asset maturity; a credit-adjusted
discount rate, incorporating an illiquidity premium; and the Scheme\u2019s credit characteristics.
The following table outlines the impact of reasonably possible alternative assumptions of key inputs which rely
on management judgement and are not market observable:
Note
A. There would be a corresponding charge / credit to the Income Statement within the line \u2018Fair value (losses) / gains on financial
instruments mandatorily held at FVTPL\u2019, arising from the decrease / increase in the fair value of the loan. The sensitivity is not
applicable to the comparative year shown as the loan was originated during 2025.
Retirement benefit obligations
The defined benefit pension schemes expose the Group to actuarial risks such as investment risk, interest rate
risk, inflation risk and longevity risk. In conjunction with its actuaries the Group makes key financial
assumptions that are used in the actuarial valuation of the defined benefit pension obligation and, therefore,
changes to these assumptions have an impact on the pension obligation shown within the Statement of
Financial Position. These assumptions include inflation and discount rates, life expectancy, commutation
allowances and the rate of salary growth; see Note 36 for further details on these assumptions.
A decrease in gilt / corporate bond yields, a rise in inflation or an increase in life expectancy would result in an
increase to scheme liabilities. This would impact the Statement of Financial Position adversely and may give
rise to increased charges in future years\u2019 Income Statements. This effect would be partially offset by an
increase in the value of the schemes\u2019 gilt and bond holdings and caps on inflationary increases also exist to
protect the schemes against high levels of inflation.
Approximate sensitivities of the principal assumptions are set out in the table below which shows the increase
or reduction in the scheme liabilities that would result. The methods used for calculating the sensitivities are
the same as those used to determine the valuation of the defined benefit obligation as set out in Note 36. Each
sensitivity shown considers one change in isolation.
The rate of salary growth has no impact on the pension liabilities as the schemes are closed to future accrual
of benefit.
Impact on liabilities of changes to assumptions
Group (\u00a3m)
Society (\u00a3m)
Assumption
Changes to assumption
(Decrease) / increase in liabilities
2025
2024
2025
2024
Discount rate
+ / -0.25% pa
(4.6) / 4.8
(5.5) / 5.7
(2.4) / 2.6
(2.5) / 2.7
Rate of inflation
+ / -0.5% pa
3.8 / (3.6)
3.9 / (3.7)
1.8 / (1.7)
1.9 / (1.8)
Commutation allowance
+ / -10% pa
0.0 / 0.1
(0.1) / 0.1
0.0 / 0.1
-
Life expectancy
+ / -1 year
4.6 / (4.5)
6.0 / (6.2)
2.5 / (2.4)
2.4 / (2.4)
Impact on loan fair value of changes to assumptions
Group & Society (\u00a3m)
Assumption
Notes
Change to current assumption
(Decrease) / increase in loan fair value
2025
2024
Discount rate
A
+ / - 1% pa
(0.1) / 0.1
N/A
Value of illiquid assets
A
+ / - 10% expected proceeds
1.1 / (1.1)
N/A
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-435": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
On financial assets held at amortised cost:
On loans fully secured on residential property
1,399.3
1,207.2
1,291.7
1,102.0
On other loans and advances:
To subsidiary undertakings
-
-
129.9
122.6
Other
25.2
26.9
6.1
8.3
On other liquid assets
85.4
140.9
84.6
138.9
1,509.9
1,375.0
1,512.3
1,371.8
On financial assets held at FVOCI:
On debt securities
182.2
178.6
176.4
168.9
On financial instruments held at FVTPL:
Net income on derivative financial instruments held to hedge
243.6
516.2
243.6
516.2
assets in qualifying hedge accounting relationships
Interest receivable and similar income accounted for using
1,935.7
2,069.8
1,932.3
2,056.9
the effective interest rate method
On financial instruments held at FVTPL:
On loans and advances to customers
0.1
0.1
0.1
0.1
On equity release portfolio
21.8
19.4
21.8
19.4
On debt securities
-
-
3.3
4.1
On loan to defined benefit pension scheme
0.8
-
0.8
-
Net (expense) / income on derivative financial instruments held
to hedge assets in non-qualifying hedge accounting
(1.5)
13.0
(1.5)
3.0
relationships
Other interest and similar income
21.2
32.5
24.5
26.6
Total interest receivable and similar income
1,956.9
2,102.3
1,956.8
2,083.5
Group
Society
\u00a3m
2025
2024
2025
2024
restated*
On financial liabilities held at amortised cost:
On shares held by individuals
1,067.0
1,081.7
1,067.0
1,081.7
On shares held by others
8.7
8.7
8.7
8.7
On subscribed capital
4.3
4.5
4.3
4.5
On deposits and other borrowings:
Subordinated liabilities
27.8
29.6
27.8
29.6
Subsidiary undertakings
-
-
22.0
24.4
Wholesale and other funding
271.8
322.9
150.0
196.2
Lease liabilities
4.6
3.1
0.3
0.3
1,384.2
1,450.5
1,280.1
1,345.4
On financial instruments held at FVTPL:
Net expense on derivative financial instruments held for hedging
56.9
163.4
76.9
185.0
liabilities (note A)
Deemed loans from Group undertakings
-
-
157.5
145.9
Other
0.9
-
0.1
-
Total interest payable and similar charges
1,442.0
1,613.9
1,514.6
1,676.3
* The information shown above for the Society, for the year ended 31 December 2024, is restated to reflect the appropriate presentation of interest associated with intra-group swaps in the Society \u2013 see Note 1c) for details. There is no impact to \u2018Total interest payable and similar charges\u2019 for the year ended 31 December 2024. Note A. Net expense on derivative financial instruments held for hedging liabilities includes \u00a323.3m (2024: \u00a346.7m) for the Society in relation to interest associated with intra-group swaps.", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-482": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
On financial assets held at amortised cost:
On loans fully secured on residential property
1,399.3
1,207.2
1,291.7
1,102.0
On other loans and advances:
To subsidiary undertakings
-
-
129.9
122.6
Other
25.2
26.9
6.1
8.3
On other liquid assets
85.4
140.9
84.6
138.9
1,509.9
1,375.0
1,512.3
1,371.8
On financial assets held at FVOCI:
On debt securities
182.2
178.6
176.4
168.9
On financial instruments held at FVTPL:
Net income on derivative financial instruments held to hedge
243.6
516.2
243.6
516.2
assets in qualifying hedge accounting relationships
Interest receivable and similar income accounted for using
1,935.7
2,069.8
1,932.3
2,056.9
the effective interest rate method
On financial instruments held at FVTPL:
On loans and advances to customers
0.1
0.1
0.1
0.1
On equity release portfolio
21.8
19.4
21.8
19.4
On debt securities
-
-
3.3
4.1
On loan to defined benefit pension scheme
0.8
-
0.8
-
Net (expense) / income on derivative financial instruments held
to hedge assets in non-qualifying hedge accounting
(1.5)
13.0
(1.5)
3.0
relationships
Other interest and similar income
21.2
32.5
24.5
26.6
Total interest receivable and similar income
1,956.9
2,102.3
1,956.8
2,083.5
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-483": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
restated*
On financial liabilities held at amortised cost:
On shares held by individuals
1,067.0
1,081.7
1,067.0
1,081.7
On shares held by others
8.7
8.7
8.7
8.7
On subscribed capital
4.3
4.5
4.3
4.5
On deposits and other borrowings:
Subordinated liabilities
27.8
29.6
27.8
29.6
Subsidiary undertakings
-
-
22.0
24.4
Wholesale and other funding
271.8
322.9
150.0
196.2
Lease liabilities
4.6
3.1
0.3
0.3
1,384.2
1,450.5
1,280.1
1,345.4
On financial instruments held at FVTPL:
Net expense on derivative financial instruments held for hedging
56.9
163.4
76.9
185.0
liabilities (note A)
Deemed loans from Group undertakings
-
-
157.5
145.9
Other
0.9
-
0.1
-
Total interest payable and similar charges
1,442.0
1,613.9
1,514.6
1,676.3
* The information shown above for the Society, for the year ended 31 December 2024, is restated to reflect the appropriate presentation of interest associated with intra-group swaps in the Society \u2013 see Note 1c) for details. There is no impact to \u2018Total interest payable and similar charges\u2019 for the year ended 31 December 2024. Note A. Net expense on derivative financial instruments held for hedging liabilities includes \u00a323.3m (2024: \u00a346.7m) for the Society in relation to interest associated with intra-group swaps.", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-436": { "value": "
The tables below provide further information regarding the nature, amount and timing of fees and
commissions receivable. IFRS 15 requires that revenue is recognised by the Group in a way that depicts the
transfer of goods or services to customers; some revenue is therefore recognised at a point in time and some
revenue is recognised over a period of time. Further details as to the revenue recognition policies applied to
fees and commissions receivable by the Group are set out in Note 1n).
2025 2024
Products and
Products and
Products and
Products and
Group services services services services
\u00a3m transferred transferred Total transferred transferred Total
at a point in over time at a point in over time
time time
Mortgage origination fees
108.2
-
108.2
97.8
0.4
98.2
Other mortgage related
2.7
-
2.7
2.1
-
2.1
fees
General insurance income
80.4
0.5
80.9
77.5
1.0
78.5
Commissions earned on
property sales
350.1
-
350.1
320.4
-
320.4
Commissions earned on
property lettings
148.9
110.6
259.5
146.3
101.3
247.6
Commercial property
54.6
59.4
114.0
44.3
47.5
91.8
services fees
Survey and valuation fees
119.2
-
119.2
112.0
-
112.0
Asset management
27.2
0.2
27.4
20.8
0.2
21.0
commission
Conveyancing fees
73.5
-
73.5
64.6
-
64.6
Financial advice fees
35.6
-
35.6
33.9
-
33.9
Software and consultancy
-
16.9
16.9
-
16.8
16.8
fees
Factoring and invoice
16.9
-
16.9
15.5
-
15.5
discounting services
Other fees and
commissions
9.7
0.4
10.1
12.6
0.5
13.1
Total fees and
commissions
1,027.0
188.0
1,215.0
947.8
167.7
1,115.5
receivable
2025 2024
Products and
Products and
Products and
Products and
Society services services services services
\u00a3m transferred transferred Total transferred transferred Total
at a point in over time at a point in over time
time Time
Other mortgage related
2.5
-
2.5
1.9
-
1.9
fees
General insurance income
-
0.5
0.5
-
1.0
1.0
Financial advice fees
34.9
-
34.9
33.0
-
33.0
Other fees and
commissions
-
-
-
0.1
-
0.1
Total fees and
commissions
37.4
0.5
37.9
35.0
1.0
36.0
receivable
The table below provides a reconciliation of fees and commissions receivable by the Group to the amounts
presented by reportable segment in Note 47.
2025
Group (\u00a3m)
Society
SIL
Connells
Other^
Total
Mortgage origination fees
-
-
110.5
(2.3)
108.2
Other mortgage related fees
2.5
0.2
-
-
2.7
General insurance income
0.5
-
80.4
-
80.9
Commissions earned on property sales
-
-
350.1
-
350.1
Commissions earned on property lettings
-
-
259.5
-
259.5
Commercial property services fees
-
-
114.0
-
114.0
Survey and valuation fees
-
-
128.7
(9.5)
119.2
Asset management commission
-
-
27.4
-
27.4
Conveyancing fees
-
-
74.4
(0.9)
73.5
Financial advice fees
34.9
-
-
0.7
35.6
Software and consultancy fees
-
-
-
16.9
16.9
Factoring and invoice discounting services
-
-
-
16.9
16.9
Other fees and commissions
-
0.1
10.0
-
10.1
Fees and commissions receivable
37.9
0.3
1,155.0
21.8
1,215.0
Fees and commissions payable and other operating income
8.3
-
0.1
(10.8)
(2.4)
Net non
-interest income
46.2
0.3
1,155.1
11.0
1,212.6
2024
Group (\u00a3m)
Society
SIL
Connells
Other^
Total
Mortgage origination fees
-
-
100.6
(2.4)
98.2
Other mortgage related fees
1.9
0.3
-
(0.1)
2.1
General insurance income
1.0
-
77.5
-
78.5
Commissions earned on property sales
-
-
320.4
-
320.4
Commissions earned on property lettings
-
-
247.6
-
247.6
Commercial property services fees
-
-
91.1
0.7
91.8
Survey and valuation fees
-
-
119.4
(7.4)
112.0
Asset management commission
-
-
21.0
-
21.0
Conveyancing fees
-
-
65.6
(1.0)
64.6
Financial advice fees
33.0
-
-
0.9
33.9
Software and consultancy fees
-
-
-
16.8
16.8
Factoring and invoice discounting services
-
-
-
15.5
15.5
Other fees and commissions
0.1
-
13.0
-
13.1
Fees and commissions receivable
36.0
0.3
1,056.2
23.0
1,115.5
Fees and commissions payable and other operating income
7.9
-
(0.8)
(9.4)
(2.3)
Net non
-interest income
43.9
0.3
1,055.4
13.6
1,113.2
^ As described in Note 47, the \u2018Other\u2019 category comprises segments that are not separately reportable, together with the impact of Group
consolidation adjustments. The Other category therefore includes amounts relating to all Group entities except for the Society, SIL and
Connells. Amounts relating to Group consolidation adjustments includes intra-group adjustments in relation to intercompany trading.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFeeAndCommissionIncomeExpenseExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-437": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
Realised profits / (losses) on treasury assets held at FVOCI
0.3
(1.8)
0.3
(1.8)
Share of profits from joint ventures
2.0
1.4
-
-
Profit on disposal of subsidiary undertakings
10.8
-
-
-
Research and Development Expenditure Credit (RDEC)
1.8
-
1.5
-
Other
2.0
3.6
10.5
11.2
Total other operating income
16.9
3.2
12.3
9.4
Group
Society
\u00a3m
2025
2024
2025
2024
Equity release portfolio (Note 18)
(14.5)
(12.6)
(14.5)
(12.6)
Derivatives associated with equity release portfolio (Note 18)
8.1
21.9
8.1
21.9
Equity share investments (Note 20e))
0.4
1.1
-
-
Share warrants
5.6
5.9
-
-
Put options held by minority shareholders
(0.2)
(0.3)
-
-
Hedging instruments and hedged items
0.9
2.0
7.0
6.9
Loan to defined benefit pension scheme (Note 35)
(2.2)
-
(2.2)
-
Other financial instruments
-
-
3.3
(4.0)
Total
(1.9)
18.0
1.7
12.2
Group
Society
\u00a3m
2025
2024
2025
2024
Employee costs:
Wages and salaries
819.9
746.8
127.9
112.7
Social security costs
99.4
79.5
15.6
11.9
Pension costs:
Defined contribution arrangements (Note 36)
32.8
28.6
9.3
8.2
952.1
854.9
152.8
132.8
Other administrative expenses
471.3
457.4
114.4
134.2
Central administrative costs recharged to Group undertakings
-
-
(4.8)
(5.0)
Total administrative expenses
1,423.4
1,312.3
262.4
262.0
Other administrative expenses comprise:
Depreciation and amortisation (Notes 22, 23, 24 and 25)
68.2
70.0
8.7
8.5
Impairment losses on property, plant and equipment,
right-of-use assets, investment property and intangible assets
5.6
3.1
(0.1)
-
(Notes 22, 23, 24 and 25)
Impairment losses on trade receivables (Note 45c))
1.4
0.8
0.1
-
Lease expense \u2013 items exempt from IFRS 16:
Short-term leases
1.9
0.7
0.7
0.6
Other property and establishment costs
49.4
48.0
7.3
7.5
Postage and communications
8.3
6.9
8.0
6.6
IT costs
82.8
77.5
27.5
30.0
Marketing and advertising
75.6
69.6
17.4
15.6
Insurance
10.5
10.1
3.5
3.6
Legal, professional and consultancy
63.2
77.0
35.7
55.7
Training, recruitment and other employee related costs
61.9
59.7
5.3
5.4
Costs of Connells' management incentive scheme (Note 32)
-
(4.2)
-
-
Other
42.5
38.2
0.3
0.7
Total other administrative expenses
471.3
457.4
114.4
134.2
Included within legal, professional and consultancy costs above are amounts relating to external auditor
remuneration. The remuneration of the Group\u2019s external auditor, EY, is set out below (excluding VAT).
External auditor remuneration
Group
Society
\u00a3m
2025
2024
2025
2024
Audit of the Society and Group Annual Accounts
1.2
1.2
1.2
1.2
Audit of the Group\u2019s subsidiary undertakings\u2019 accounts pursuant to
legislation
2.6
2.5
-
-
Audit
-related assurance services
0.2
0.1
0.2
0.1
Other non
-audit services
-
0.1
-
0.1
Total external auditor remuneration
4.0
3.9
1.4
1.4
Group
Society
\u00a3m
2025
2024
2025
2024
Impairment (losses) / credits on loans and advances to customers
(10.1)
17.1
(9.8)
17.0
(Note 17)
Impairment credits on liquid assets
0.1
0.1
0.1
0.1
Realised losses on equity release portfolio (Note 18)
(1.3)
(1.8)
(1.3)
(1.8)
Provisions for liabilities (Note 33)
(0.9)
(3.7)
0.2
(4.9)
Total
(12.2)
11.7
(10.8)
10.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-484": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
Realised profits / (losses) on treasury assets held at FVOCI
0.3
(1.8)
0.3
(1.8)
Share of profits from joint ventures
2.0
1.4
-
-
Profit on disposal of subsidiary undertakings
10.8
-
-
-
Research and Development Expenditure Credit (RDEC)
1.8
-
1.5
-
Other
2.0
3.6
10.5
11.2
Total other operating income
16.9
3.2
12.3
9.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-509": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
Equity release portfolio (Note 18)
(14.5)
(12.6)
(14.5)
(12.6)
Derivatives associated with equity release portfolio (Note 18)
8.1
21.9
8.1
21.9
Equity share investments (Note 20e))
0.4
1.1
-
-
Share warrants
5.6
5.9
-
-
Put options held by minority shareholders
(0.2)
(0.3)
-
-
Hedging instruments and hedged items
0.9
2.0
7.0
6.9
Loan to defined benefit pension scheme (Note 35)
(2.2)
-
(2.2)
-
Other financial instruments
-
-
3.3
(4.0)
Total
(1.9)
18.0
1.7
12.2
The majority of debt securities held are highly liquid assets which are used on a continuing basis in the Group\u2019s activities.
Group
2025
2024
\u00a3m
FVOCI and Total
FVOCI and Total
Gilts
500.5
1,086.5
Fixed rate bonds
1,552.0
1,274.9
Floating rate notes
11.0
-
Treasury bills
773.4
598.2
Covered bonds
813.5
770.1
Residential mortgage backed securities
619.0
619.9
4,269.4
4,349.6
Debt securities have remaining maturities as follows:
In not more than three months
809.4
492.9
In more than three months but not more than one year
253.6
826.3
In more than one year but not more than five years
2,536.5
2,222.1
In more than five years
669.9
808.3
4,269.4
4,349.6
Transferable debt securities comprise:
Listed on a recognised investment exchange
4,269.4
4,349.6
4,269.4
4,349.6
Society
2025
2024
\u00a3m
FVOCI
FVTPL
Total
FVOCI
FVTPL
Total
Gilts
500.5
-
500.5
1,086.5
-
1,086.5
Fixed rate bonds
1,552.0
-
1,552.0
1,274.9
-
1,274.9
Treasury bills
557.0
-
557.0
321.2
-
321.2
Covered bonds
813.5
-
813.5
770.1
-
770.1
Residential mortgage backed securities
778.9
73.5
852.4
817.1
70.3
887.4
4,201.9
73.5
4,275.4
4,269.8
70.3
4,340.1
Debt securities have remaining maturities as follows:
In not more than three months
593.1
-
593.1
273.9
-
273.9
In more than three months but not more than one year
253.6
-
253.6
768.5
-
768.5
In more than one year but not more than five years
2,685.3
73.5
2,758.8
2,419.1
70.3
2,489.4
In more than five years
669.9
-
669.9
808.3
-
808.3
4,201.9
73.5
4,275.4
4,269.8
70.3
4,340.1
Transferable debt securities comprise:
Listed on a recognised investment exchange
4,201.9
73.5
4,275.4
4,269.8
70.3
4,340.1
4,201.9
73.5
4,275.4
4,269.8
70.3
4,340.1
Group
2025
2024
\u00a3m
FVOCI and Total
FVOCI and Total
At 1 January
4,349.6
3,337.7
Additions
2,274.6
4,402.0
Maturities and disposals
(2,416.3)
(3,376.3)
Changes in fair value
49.2
(28.5)
Other
12.3
14.7
At 31 December
4,269.4
4,349.6
Society
2025
2024
\u00a3m
FVOCI
FVTPL
Total
FVOCI
FVTPL
Total
At 1 January
4,269.8
70.3
4,340.1
3,143.4
63.1
3,206.5
Additions
1,410.3
-
1,410.1
3,908.8
77.8
3,986.6
Maturities and disposals
(1,537.4)
-
(1,537.4)
(2,765.3)
(66.6)
(2,831.9)
Changes in fair value
49.2
3.2
52.4
(28.7)
(4.0)
(32.7)
Other
10.0
-
10.0
11.6
-
11.6
At 31 December
4,201.9
73.5
4,275.4
4,269.8
70.3
4,340.1
The tables below provide further detail on the movement in the impairment loss allowance held in respect of
debt securities during the year. There were no amounts written off by the Group or Society during the current or
prior year.
Movement in impairment loss allowance
Group
Society
\u00a3m
2025
2024
2025
2024
Loss allowance at 1 January
0.2
0.2
0.3
0.3
Increases due to origination, acquisition and additions
0.1
0.2
0.1
0.2
Decrease due to derecognition, repayments and disposals
(0.1)
(0.2)
(0.1)
(0.2)
Loss allowance at 31 December
0.2
0.2
0.3
0.3
All balances for the Group and Society included in the table above are classified as FVOCI and held in stage 1 in
both the current and prior year.
Collateral
At 31 December 2025, \u00a3166.8m (2024: \u00a32.1m) of debt securities have been pledged by the Group, and \u00a3352.9m
(2024: \u00a3203.2m) have been pledged by the Society, as collateral in repurchase transactions. These
transactions are used to either obtain liquidity or to test the liquidity of the assets pledged as collateral. Where
debt securities are pledged as collateral in repurchase transactions, the debt securities are not derecognised
from the balance sheet and the transaction is accounted for as a secured loan.
Further detail on debt securities that have been pledged as collateral is found in the table below.
The collateral is pledged for the duration of the repurchase agreement, and is returned on maturity of the
agreement, subject to the repayment of the amount raised. The securities cannot be pledged again by the
Group until maturity of the repurchase agreement, however the recipient of the collateral is free to sell or further
repurchase the assets. As at 31 December 2025, the Group\u2019s repurchase agreements have a contractual period
of up to three months (2024: three months).
Securities pledged as collateral
Group
Society
\u00a3m
2025
2024
2025
2024
Gilts
8.0
-
8.0
201.1
Fixed rate bonds
7.9
2.1
21.0
2.1
Treasury bills
150.9
-
323.9
-
Total on
-balance sheet debt securities pledged as collateral
166.8
2.1
352.9
203.2
The tables below provide further detail on the movement in debt securities during the year.
There were no debt securities held by the Group or the Society at the end of 2025 or 2024 that were pledged as collateral by counterparties (known as \u2018reverse repurchase agreements\u2019). Residential mortgage backed securities The Group\u2019s investments in residential mortgage backed securities represent investments in unconsolidated structured entities, as described in Note 1d). The maximum exposure to losses from unconsolidated structured entities is equivalent to the book value plus accrued interest, determined by the carrying value of these investments plus any unrealised losses / less any unrealised gains recognised within the fair value reserve as shown below. During the year, the Group and Society received interest income of \u00a329.9m (2024: \u00a330.3m) from its investments in unconsolidated structured entities and incurred impairment charges of \u00a3nil (2024: \u00a3nil). In addition, unrealised gains recognised through the fair value reserve were \u00a30.6m (2024: \u00a31.1m loss). No collateral has been received by the Group in respect of the above third party funding entities. The total size of unconsolidated structured entities as shown in the table above is determined by reference to the Group\u2019s total notional exposure to the unconsolidated structured entities in question. The Group did not provide any non-contractual support, nor any contractual guarantees, during the current or prior year to unconsolidated structured entities and currently has no intentions to provide any such support. The Group is not required to absorb losses of any unconsolidated structured entities before other parties and the Group did not act as a sponsor to any unconsolidated structured entities during the current or prior year. The Group would, in general, be regarded as a sponsor of an unconsolidated structured entity if market participants would reasonably associate the entity with the Group. At 31 December 2025 the Society also held \u00a3159.9m (2024: \u00a3197.2m) of residential mortgage backed securities held at FVOCI and \u00a373.5m (2024: \u00a370.3m) of residential mortgage backed securities held at FVTPL that were issued by the Group\u2019s securitisation vehicle Darrowby No. 6 plc.
Group & Society
\u00a3m
2025
2024
Carrying value of assets
619.0
619.9
Cumulative unrealised gains recognised in fair value reserve
(0.9)
(0.3)
Maximum exposure to loss at 31 December
618.1
619.6
Movements during the year in the equity release portfolio are outlined below. Further details on how the valuation of the equity release portfolio is derived, including the key inputs into the calculation, are found in Note 1f) and Note 1v). The Group holds derivative financial instruments to economically hedge the movements in fair value of the equity release portfolio. The movement in fair value of the derivatives held to hedge the equity release portfolio during the year was a \u00a38.1m gain (2024: \u00a321.9m gain) and is included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. The equity release portfolio comprises loans against which collateral is held in the form of property in the UK. As at 31 December 2025 this collateral was valued at \u00a3480.4m (2024: \u00a3506.4m).
Group & Society
\u00a3m
2025
2024
At 1 January
277.2
293.3
Redemptions
(4.0)
(4.3)
Movements in fair value
(14.5)
(12.6)
Realised losses on redemption
(1.3)
(1.8)
Accrued interest
5.7
2.6
At 31 December
263.1
277.2
As outlined in Note 1f), the above loans consist mainly of certain lifetime mortgages that are required, under
IFRS 9, to be held at FVTPL.
Collateral is held against the above loans in the form of property in the UK and is valued as at 31 December
2025 at \u00a35.9m (2024: \u00a36.0m).
Movements during the year are outlined below:
Group & Society
\u00a3m
2025
2024
At 1 January
0.9
0.9
Repayments
(0.2)
(0.1)
Accrued interest
0.1
0.1
At 31 December
0.8
0.9
e) Equity share investments mandatorily held at FVTPL The Group\u2019s investments in equity shares mandatorily held at FVTPL is summarised below: The movement during the year in the Group\u2019s equity share investments mandatorily held at FVTPL is analysed in Note 46. Unlisted investments The carrying values of the Group\u2019s equity share investments mandatorily held at FVTPL are typically based on the amounts invested by the Group or, where appropriate, on third party valuations.
Group
\u00a3m
2025
2024
Unlisted investments
18.3
16.9
Total
18.3
16.9
Put option obligation
The movement in the fair value of the put option obligation is summarised below:
Group
\u00a3m
2025
2024
At 1 January
4.1
3.5
Additions
0.1
-
Exercise of put options by non-controlling shareholders
(4.2)
-
Revaluation of market values and changes to future exercise dates
1.0
0.6
At 31 December
1.0
4.1
On 31 January 2025, as part of a strategy to de-risk the Society\u2019s exposure to its defined benefit obligation, the Skipton Building Society (2015) Group Pension Scheme was subject to an insurer buy-in (further detailed in Note 36). In connection with the buy-in, the Society made a loan to the Scheme \u2013 originally advanced in January 2025 in Sterling but subsequently converted into a USD-denominated loan on 24 September 2025. In addition, the maturity date of the loan was extended from 31 December 2027 to 30 November 2028. The purchase of the insurance policy used the assets of the Scheme, except for \u00a314.6m of illiquid assets held by the Scheme (as of 31 January 2025) which were not acquired by the insurer and thus remain in the Scheme. A loan of \u00a314.6m was advanced by the Society to the Scheme in January 2025, to be repaid using the proceeds from the illiquid assets as they mature. Due however to the illiquid assets being entirely denominated in USD (through hedging arrangements within the fund itself), the GBP loan was repaid and replaced with one denominated in USD on 24 September 2025, to eliminate any foreign exchange risk arising from the USD-denominated proceeds from the fund. The Society sourced the USD required to fund this lending through utilising the existing repo agreement with SIL. At 31 December 2025 the fair value of the loan was \u00a310.9m, which includes a \u00a32.2m fair value loss recognised within the Income Statement line \u2018Fair value (losses)/gains on financial instruments mandatorily held at FVTPL\u2019. The valuation reflects management\u2019s estimate of the expected asset realisation profile, discounted using a rate that reflects credit and liquidity risk. The loan is categorised as a Level 3 instrument within the IFRS 13 fair value hierarchy, due to the use of unobservable inputs. The Group uses derivative financial instruments (derivatives) to manage the risks arising from its operations. The Board has authorised the use of derivatives by the Group to reduce the risk of loss arising from changes in market risks in accordance with Section 9A(4) of the Building Societies Act 1986 and derivatives are used by the Group for economic hedging purposes only. The Group does not run a trading book. The principal derivatives used by the Group are interest rate swaps, index swaps and cross currency swaps that are used to hedge Group exposures arising from fixed rate lending and savings products, funding and investment activities. The accounting policies for derivatives are described in Note 1f) to the Accounts. For the purpose of assessing hedge effectiveness, the Group determines the economic relationship between the hedged item and the hedging instrument by comparing the terms of each item, including reference rate, notional amount and maturity. Risk management strategy The Group has a formal structure for managing risk, including established risk limits, reporting requirements, mandates and other control procedures. This structure is reviewed regularly by the Asset & Liability Committee (ALCO). Interest rate risk The main market risk faced by the Group is interest rate risk. Interest rate risk is the risk that the fair values of financial assets or financial liabilities, or future cash flows receivable or payable on financial assets or financial liabilities, fluctuate as a result of changes in market interest rates. Interest rate risk predominantly arises on the fixed rate mortgages and savings products offered by the Group. Further detail on the Group\u2019s exposure to interest rate risk is found in Note 44. The Group uses the following derivatives to hedge its exposure to interest rate risk: Fair value hedges of interest rate risk Portfolio hedging The Group manages the interest rate risk arising from fixed rate mortgages and savings by entering into swaps on a frequent basis. The level of exposure from the mortgage portfolio frequently changes due to new loans being originated, contractual customer repayments and early customer repayments. As a result, the Group adopts a dynamic hedging strategy to hedge the interest rate risk component within the exposure profile by entering into new swap agreements each month. The Group uses a portfolio of fair value hedges of interest rate risk to recognise fair value changes related to changes in interest rate risk on fixed rate mortgages and savings products, to therefore reduce the profit or loss volatility that would otherwise occur from changes in the fair value of the interest rate swaps alone. The hedge relationship is reassessed prospectively each month in order that the hedging ratio is recalibrated to be close to 100%, thereby reducing hedge ineffectiveness. The hedging ratio is the level of hedged items designated in the portfolio against hedging instruments, taking into consideration the maturities of the hedge. Occasionally hedge ineffectiveness can arise, i.e. the derivative fails to hedge the interest rate risk to the extent that is expected. The Group assesses hedge ineffectiveness on an ongoing basis. Where the Group assesses that the hedge relationship has changed to such an extent that the existing hedge ratio is no longer suitable, the hedging relationship would be rebalanced to ensure hedge effectiveness. The main sources of ineffectiveness in fair value hedges of interest rate risk are: \u2022 Differences between the expected and actual volume of customer prepayments, as the Group hedges to the expected repayment date taking into account expected prepayments based on past experience; \u2022 Differences in the timing of cash flows from the mortgage loans and the interest rate swaps; and \u2022 Differences in the maturities of the interest rate swap and the mortgage loans. Micro hedging Fair value hedge relationships are also designated for hedging the interest rate risk component arising from the Group\u2019s liquidity portfolio, Medium Term Note (MTN) liabilities and wholesale deposits. For these items, a hedge is taken out specifically for the individual asset or liability, and therefore critical terms of the hedged item and hedging instrument match. Where critical terms match, the fair value adjustment on the hedged item offsets exactly the change in fair value of the hedging instrument. The Group assesses all of its micro fair value hedges of interest rate risk to have a hedge effectiveness ratio of 100%, as all derivatives hedge an amount of underlying instrument equal to the notional amount. Hedge ineffectiveness could potentially arise if critical terms do not exactly match, amendments were made to either the hedged item or the hedging instrument, or if there were significant changes in the credit rating of the hedged item or hedging instrument\u2019s counterparties; the Group has assessed the likelihood of this to be low. Cash flow hedges of interest rate risk The Group also has exposure to interest rate risk arising from its free reserves portfolio, which is composed of reserves held in excess of required reserves. The Group uses derivatives to hedge this risk component and accounts for these derivatives as cash flow hedges against variable rate instruments. The aim of cash flow hedging is to reduce the exposure to variability in cash flows arising from a financial asset or liability. The variable rate on the hedging instrument, i.e. the swap, offsets the hedged items, which are SONIA-linked financial assets or liabilities. Hedge ineffectiveness for cash flow hedges is assessed using the \u2018hypothetical derivative\u2019 method and ineffectiveness has been assessed as \u00a3nil (2024: \u00a3nil) for the Group\u2019s cash flow hedges. Hedge ineffectiveness could potentially arise if amendments were made to either the hedged item or the hedging instrument, or if there were significant changes in the credit rating of the hedged item or hedging instrument\u2019s counterparties; the Group has assessed the likelihood of this to be low. Currency risk Fair value hedges of currency risk The Group has entered into two (2024: one) cross-currency swap agreements to hedge the foreign currency risk and interest rate risk components arising from: the Society\u2019s Euro covered bond issuances: and loans to overseas subsidiaries. Currency risk on covered bond issuances Fixed rate Euro-denominated receipts are swapped to floating rate Sterling payments through these derivatives. The derivative is entered into by the LLP, with the hedged item being the term advance from the Society to the LLP, which mirrors the bond issued by the Society, effectively hedging the debt issued by the Society. Foreign currency basis spread is priced into the derivative but is excluded from the hedging relationship and any gain or loss arising from this is recognised directly in reserves in the cost of hedging reserve, as permitted by IFRS 9. Currency risk on loans to overseas subsidiaries Fixed rate receipts from the subsidiary are denominated in New Zealand dollars, these are swapped to sterling through this derivative. The derivative is entered into by the Society, with the hedged item being the intragroup loan to the subsidiary. Foreign currency basis spread is priced into the derivative but is excluded from the hedging relationship and any gain or loss arising from this is recognised directly in reserves in the cost of hedging reserve, as permitted by IFRS 9. The society receives 90% of the interest cash flows from the subsidiary with the remainder reclaimed from NZ Tax Authority due to double taxation treaties with New Zealand. As a result, only 90% of the cash flows on the hedged item is included in the hedge accounting relationship, resulting in some ineffectiveness in the income statement. Equity release portfolio In addition to the above, the Group holds derivative financial instruments to economically hedge the equity release portfolio which do not qualify as being in a designated hedging relationship for accounting purposes. As the derivatives held to hedge the equity release portfolio are not in a hedge accounting relationship, they are not included in the tables on pages 235 to 239. Further information on the derivatives held to hedge this portfolio can be found in Note 18.
2025
2024
Group
Up to 3 3 - 12 1 \u2013 5 Over Up to 3 3 - 12 1 \u2013 5 Over
months months years 5 years Months months years 5 years
Cash flow hedges
Interest rate swaps
Notional (\u00a3m)
-
-
2,152.0
760.0
-
-
2,291.5
571.5
Weighted average fixed
-
-
3.6%
3.7%
-
-
3.8%
3.8%
interest rate (%)
Fair value hedges
Interest rate swaps
Notional (\u00a3m)
3,376.3
11,414.5
20,293.2
1,087.3
3,988.3
13,699.0
16,872.2
1,538.5
Weighted average fixed
3.9%
3.3%
3.6%
3.1%
4.3%
3.7%
3.2%
3.2%
interest rate (%)
Cross currency swaps
Notional (\u00a3m)
-
-
431.9
-
-
-
421.3
-
Weighted average fixed
-
-
3.3%
-
-
-
3.3%
-
interest rate (%)
2025
2024
Society
Up to 3 3 - 12 1 \u2013 5 Over Up to 3 3 - 12 1 \u2013 5 Over
months months years 5 years months months years 5 years
Cash flow hedges
Interest rate swaps
Notional (\u00a3m)
40.2
325.0
2,936.3
776.7
23.0
145.0
3,214.3
571.5
Weighted average fixed
1.9%
2.6%
3.6%
3.7%
3.6%
2.6%
3.6%
3.8%
interest rate (%)
Fair value hedges
Interest rate swaps
Notional (\u00a3m)
3,416.8
11,530.8
20,695.2
1,087.3
4,110.7
13,813.2
17,205.5
1,538.5
Weighted average fixed
3.9%
3.3%
3.6%
3.1%
4.2%
3.6%
3.1%
3.2%
interest rate (%)
Cross currency swaps
Notional (\u00a3m)
-
-
10.7
-
-
-
-
-
Weighted average fixed
-
-
5.9%
-
-
-
-
-
interest rate (%)
Other derivatives not held in an accounting hedge Certain other derivatives cannot be accounted for in a fair value or cash flow hedge as the economic hedging relationship does not meet the criteria set out by IFRS 9. These derivatives are held at FVTPL and their change in fair value is included within the Income Statement line \u2018Fair value gains on financial instruments mandatorily held at FVTPL\u2019. Hedging instruments The following tables set out the maturity profile and average price and rate of the hedging instruments used in the Group\u2019s and Society\u2019s hedge accounting strategies. The tables below provide further detail on the Group\u2019s and Society\u2019s fair value hedges used in hedge accounting relationships: Notes A. The Statement of Financial Position lines that include these items are \u2018Derivative financial instruments\u2019. B. The change in fair value during the period that was used as the basis for calculating hedge ineffectiveness and which was recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. C. The amount of hedge ineffectiveness recognised in the Income Statement during the year. The Income Statement line that includes the hedge ineffectiveness recognised during the period is \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. D. In addition, \u00a31.4m of fair value gains (2024: \u00a31.2m losses) for the Group, and \u00a30.1m of fair value gains (2024: \u00a3nil) for the Society, were recognised directly in the cost of hedging reserve of the Group and Society respectively, due to ineffectiveness arising as a result of foreign currency basis spread as described in Note 1f). The tables below provide further detail on the Group\u2019s and Society\u2019s cash flow hedges used in hedge accounting relationships. Notes A. The Statement of Financial Position lines that include these items are \u2018Derivative financial instruments\u2019. B. The change in fair value during the period that was used as the basis for calculating hedge ineffectiveness and is recognised within the \u2018Cash flow hedging reserve: (Losses) / gains taken to equity\u2019 line of the Statement of Comprehensive Income. There was no hedge ineffectiveness recognised during either 2025 or 2024 in respect of the Group or Society\u2019s cashflow hedges.
Carrying amount (note A) Change in fair value
Losses reclassified from
\u00a3m
Notional
Assets
Liabilities
(charge) / credit
OCI to Income Statement
(note B)
2025
Group
Interest rate swaps
2,912.0
4.0
(22.1)
(13.5)
(6.0)
2025
Society
Interest rate swaps
4,078.2
10.6
(30.2)
15.7
(6.0)
2024
Group
Interest rate swaps
2,863.0
17.5
(22.1)
52.8
45.9
2024
Society
Interest rate swaps
3,953.8
20.1
(55.4)
47.0
45.9
Carrying amount (note A) Change in fair value Hedge ineffectiveness
(charge) / credit (credit) / charge
\u00a3m
Notional
Assets
Liabilities
(note B) (note C)
2025
Group
Interest rate swaps
36,171.3
296.4
(150.6)
(380.3)
(2.1)
Cross currency
D
431.9
29.0
-
19.3
0.1
swaps
2025
Society
Interest rate swaps
36,730.1
298.7
(161.4)
(366.2)
(2.1)
Cross currency
D
10.7
0.2
-
0.2
-
swaps
2024
Group
Interest rate swaps
36,068.0
697.4
(171.3)
(124.0)
5.7
Cross currency
D
421.3
8.3
-
33.1
(0.8)
swaps
2024
Society
Interest rate swaps
36,667.9
699.0
(195.5)
(105.1)
6.3
2024
Carrying amount Amount
Fair value
Change in fair
remaining on
adjustment on
value credit /
items de-
Group
Assets
Liabilities
hedged item
SoFP line (charge)
designated
\u00a3m
(note A) (note B)
from hedge
relationship
(note C)
Cash flow hedges
Floating rate assets
1,667.3
-
n/a
note D
n/a
37.6
Floating rate liabilities
-
1,195.7
n/a
note E
n/a
(10.0)
Fair value hedges
Fixed rate mortgages
21,210.0
-
(274.6)
note F
76.3
-
Debt securities
2,206.9
-
(79.2)
note D
(26.9)
-
Fixed rate savings
-
12,445.7
(1.8)
note G
1.5
-
Covered bonds
-
418.6
3.7
note E
26.5
-
Subordinated liabilities
-
705.8
(14.0)
note H
4.2
-
Hedged items The tables below provide further detail on the Group\u2019s and Society\u2019s hedged items: 2025
Carrying amount Amount
Fair value
remaining on
adjustment on
Change in fair
items de-
Group
Assets
Liabilities
hedged item
SoFP line value credit
designated
\u00a3m
(note A) (note B)
from hedge
relationship
(note C)
Cash flow hedges
Floating rate assets
670.5
-
n/a
note D
n/a
32.5
Floating rate liabilities
-
2,241.5
n/a
note E
n/a
(2.0)
Fair value hedges
Fixed rate mortgages
21,024.8
-
58.9
note F
333.5
-
Debt securities
2,049.9
-
(36.0)
note D
43.2
-
Fixed rate savings
-
11,617.6
56.5
note G
58.3
-
Covered bonds
-
442.7
22.3
note E
18.6
-
Due from Group companies
-
-
(0.1)
note I
(0.1)
-
Subordinated liabilities
-
354.1
3.1
note H
17.1
-
Notes A. Fair value adjustments on hedged items are included within the Statement of Financial Position (SoFP) as adjustments to the relevant SoFP line; see below notes for details. B. The change in fair value during the period that is used as the basis for calculating hedge ineffectiveness and is recognised within the Income Statement line \u2019Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Hedging instruments and hedged items\u2019. C. The accumulated amount of fair value hedge adjustments remaining (in the cash flow hedging reserve for cash flow hedges) for any hedged items that have ceased to be adjusted for hedging gains and losses. D. The SoFP lines that include these items are \u2018Debt securities\u2019 and \u2018Investments in subsidiary undertakings and joint ventures\u2019. E. The SoFP line that includes these items is \u2018Debt securities in issue\u2019. F. The SoFP line that includes these items is \u2018Loans and advances to customers held at amortised cost\u2019. G. The SoFP lines that include these items are \u2018Shares\u2019 (Group and Society) and \u2018Amounts owed to other customers\u2019 (Group only). H. The SoFP line that includes these items is \u2018Subordinated liabilities\u2019. I. The SoFP line that includes these items is \u2018Investments in subsidiary undertakings and joint ventures\u2019. 2024
Carrying amount Amount
Fair value
Change in fair
remaining on
adjustment on
value credit /
items de-
Society
Assets
Liabilities
hedged item
SoFP line (charge)
designated
\u00a3m
(note A) (note B)
from hedge
relationship
(note C)
Cash flow hedges
Floating rate assets
1,775.3
-
n/a
note D
n/a
37.6
Floating rate liabilities
-
2,178.5
n/a
note E
n/a
(10.1)
Fair value hedges
Fixed rate mortgages
21,325.2
-
(271.7)
note F
75.7
-
Debt securities
2,206.9
-
(79.3)
note D
(26.9)
-
Fixed rate savings
-
12,930.5
(16.2)
note G
14.6
-
Subordinated liabilities
-
705.8
(14.0)
note H
4.2
-
2025
Carrying amount Amount
Fair value
Change in fair
remaining on
adjustment on
value credit /
items de-
Society
Assets
Liabilities
hedged item
SoFP line (charge)
designated
\u00a3m
(note A) (note B)
from hedge
relationship
(note C)
Cash flow hedges
Floating rate assets
1,597.8
n/a
note D
n/a
32.5
Floating rate liabilities
2,480.4
n/a
note E
n/a
(4.2)
Fair value hedges
Fixed rate mortgages
21,024.8
-
60.9
note F
332.6
-
Debt securities
2,049.9
-
(36.1)
note D
43.2
-
Fixed rate savings
-
12,176.4
54.5
note G
70.7
-
Due from Group companies
10.7
-
(0.1)
note I
(0.1)
-
Subordinated liabilities
-
354.1
3.1
note H
17.1
-
2025
2024
Group
Cash flow Cost of Cash flow Cost of
\u00a3m
hedging hedging Total hedging hedging Total
reserve reserve reserve reserve
Balance at 1 January
16.6
(1.4)
15.2
4.9
(0.5)
4.4
Change in fair value of derivatives in effective hedging relationships:
Held to hedge interest rate
(6.3)
1.4
(4.9)
6.3
(1.2)
5.1
risk
Net amounts reclassified to profit or loss from derivatives:
Held to hedge interest rate
(3.1)
-
(3.1)
10.0
-
10.0
risk
Tax on movements in reserves
2.6
(0.4)
2.2
(4.6)
0.3
(4.3)
during the year
Balance at 31 December
9.8
(0.4)
9.4
16.6
(1.4)
15.2
2025
2024
Cash flow Cost of Cash flow Cost of
Society
hedging hedging Total hedging hedging Total
\u00a3m
reserve reserve reserve reserve
Balance at 1 January
1.3
-
1.3
(6.4)
-
(6.4)
Change in fair value of derivatives in effective hedging relationships:
Held to hedge interest rate
16.7
0.1
16.8
0.9
-
0.9
risk
Net amounts reclassified to profit or loss from derivatives:
Held to hedge interest rate
(5.2)
-
(5.2)
9.8
-
9.8
risk
Tax on movements in reserves
(3.2)
-
(3.2)
(3.0)
-
(3.0)
during the year
Balance at 31 December
9.6
0.1
9.7
1.3
-
1.3
Carrying amount Change in fair value
recognised in OCI:
Amount reclassified from
\u00a3m
Notional
Assets
Liabilities
credit / (charge)
OCI to Income Statement
(note A)
2025
Group
Cross currency
431.9
29.0
-
1.4
-
swaps
2025
Society
Cross currency
10.7
0.2
-
0.1
-
swaps
2024
Group
Cross currency
421.3
8.4
-
(1.2)
-
swaps
Note A. The change in fair value during the period is recognised within the \u2019Cash flow hedging reserve: (Losses) / gains taken to equity\u2019 line of the Statement of Comprehensive Income. a) Classification and measurement The tables below summarise the classification of the carrying amounts of the Group\u2019s and Society\u2019s financial assets and liabilities:
Group
Amortised
2025
Amortised
2024
\u00a3m
FVOCI
FVTPL
Total
FVOCI
FVTPL
Total
cost cost
Cash in hand and
balances with the
Bank of England
1,360.2
-
-
1,360.2
1,930.6
-
-
1,930.6
Loans and advances
353.3
-
-
353.3
414.6
-
-
414.6
to credit institutions
Debt securities
-
4,269.4
-
4,269.4
-
4,349.6
-
4,349.6
Derivative financial
-
-
350.8
350.8
-
-
752.1
752.1
Instruments
Loans and advances
33,378.9
-
0.8
33,379.7
30,601.1
-
0.9
30,602.0
to customers
Equity release
-
-
263.1
263.1
-
-
277.2
277.2
portfolio
Equity share
-
-
18.3
18.3
-
-
16.9
16.9
investments
Trade receivables
73.6
-
-
73.6
68.8
-
-
68.8
Share warrants
-
-
-
-
-
-
21.9
21.9
Loan to defined
benefit pension
-
-
10.9
10.9
-
-
-
-
scheme
Other assets
-
-
-
-
0.1
-
-
0.1
Total financial
35,166.0
4,269.4
643.9
40,079.3
33,015.2
4,349.6
1,069.0
38,433.8
assets
Other non
-financial
664.9
581.5
assets
Total assets
40,744.2
39,015.3
Shares
30,526.3
-
-
30,526.3
28,268.5
-
-
28,268.5
Amounts owed to
credit institutions
3,046.8
-
-
3,046.8
4,350.7
-
-
4,350.7
and other
customers
Debt securities in
issue
3,361.9
-
-
3,361.9
2,435.3
-
-
2,435.3
Derivative financial
-
-
186.2
186.2
-
-
225.1
225.1
Instruments
Lease liabilities
110.3
-
-
110.3
92.1
-
-
92.1
Trade payables
14.4
-
-
14.4
11.0
-
-
11.0
Fair value of put
-
-
1.0
1.0
-
-
4.1
4.1
option obligation
Subordinated
356.0
-
-
356.0
690.2
-
-
690.2
liabilities
Subscribed capital
15.2
-
-
15.2
41.6
-
-
41.6
Total financial
37,430.9
-
187.2
37,618.1
35,889.4
-
229.2
36,118.6
liabilities
Other non
-financial
261.5
229.3
liabilities
Total liabilities
37,879.6
36,347.9
All financial assets and liabilities in the tables above that are held as at FVTPL are mandatorily held as such. As outlined in Note 21, during the year, non-current assets with a total carrying value of \u00a33.7m (for the Group and Society) were reclassified as held for sale, and therefore presented separately within the Statement of Financial Position. In the above table, these amounts are included within \u2018Other non-financial assets\u2019.
Society
2025
2024
\u00a3m
Amortised
FVOCI
FVTPL
Total
Amortised
FVOCI
FVTPL
Total
cost cost
Cash in hand and
balances
1,360.2
-
-
1,360.2
1,930.6
-
-
1,930.6
with the Bank of
England
Loans and advances
304.7
-
-
304.7
397.8
-
-
397.8
to credit institutions
Debt securities
-
4,201.9
73.5
4,275.4
-
4,269.8
70.3
4,340.1
Derivative financial
-
-
333.1
333.1
-
-
743.0
743.0
instruments
Loans and advances
31,121.3
-
0.8
31,122.1
28,334.9
-
0.9
28,335.8
to customers
Equity release
-
-
263.1
263.1
-
-
277.2
277.2
portfolio
Loans to subsidiary
454.7
-
-
454.7
403.9
-
-
403.9
undertakings
Trade receivables
1.5
-
-
1.5
1.9
-
-
1.9
Loan to defined
benefit pension
-
-
10.9
10.9
-
-
-
-
scheme
Total financial
33,242.4
4,201.9
681.4
38,125.7
31,069.1
4,269.8
1,091.4
36,430.3
assets
Other non
-financial
201.2
198.0
assets
Total assets
38,326.9
36,628.3
Shares
30,524.3
-
-
30,524.3
28,254.1
-
-
28,254.1
Amounts owed to
credit institutions
1,685.0
-
-
1,685.0
3,069.5
-
-
3,069.5
and other
customers
Debt securities in
issue
2,955.0
-
-
2,955.0
1,930.1
-
-
1,930.1
Derivative financial
-
-
205.0
205.0
-
-
282.2
282.2
Instruments
Lease liabilities
8.2
-
-
8.2
8.6
-
-
8.6
Trade payables
3.4
-
-
3.4
2.8
-
-
2.8
Subordinated
356.0
-
-
356.0
690.2
-
-
690.2
liabilities
Subscribed capital
15.2
-
-
15.2
41.6
-
-
41.6
Total financial
35,547.1
-
205.0
35,752.1
33,996.9
-
282.2
34,279.1
liabilities
Other non
-financial
46.7
43.8
liabilities
Total liabilities
35,798.8
34,322.9
b) Valuation of financial instruments carried at fair value The Group holds certain financial assets and liabilities at fair value, grouped into Levels 1 to 3 of the fair value hierarchy as explained below. Valuation techniques Fair values are determined using the following fair value hierarchy that reflects the significance of the inputs used in measuring fair value. Level 1 The most reliable fair values of financial instruments are quoted market prices in an actively traded market. The Group\u2019s Level 1 portfolio mainly comprises the Group\u2019s debt securities, with the exception of certificates of deposits; for which traded prices are not readily available. Level 2 These are valuation techniques for which all significant inputs are taken from observable market data. These include valuation models used to calculate the present value of expected future cash flows and may be employed when no active market exists and quoted prices are available for similar instruments in active markets. Examples of Level 2 instruments are certificates of deposit and interest rate swaps. Level 3 These are valuation techniques for which one or more significant inputs are not based on observable market data. Valuation techniques include net present value by way of discounted cash flow models. Assumptions and market observable inputs used in valuation techniques include risk-free and benchmark interest rates, similar market products, foreign currency exchange rates and equity index prices. Critical judgement is applied by management in utilising unobservable inputs including expected price volatilities, expected mortality rates and prepayment rates, based on industry practice or historical observation. The objective of valuation techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the reporting date that would have been determined by market participants on an arm\u2019s-length basis. Transfers between levels The Group makes transfers between the different levels of the fair value hierarchy where the inputs used to measure the fair value of the financial instruments in question no longer satisfy the conditions required to be classified in a certain level within the hierarchy. Any such transfer between different levels of the fair value hierarchy is made at the date the event in question that results in a change in circumstances occurs. There were no transfers between different levels of the fair value hierarchy during the year ended 31 December 2025 or the year ended 31 December 2024. The following tables provide an analysis of financial assets and liabilities held within the Statement of Financial Position at fair value, grouped into Levels 1 to 3 of the fair value hierarchy.
Group
2025
2024
\u00a3m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets
Financial assets
held at FVOCI:
Debt securities
4,269.4
-
-
4,269.4
4,349.6
-
-
4,349.6
Financial assets at
FVTPL:
Equity share
-
-
18.3
18.3
-
-
16.9
16.9
investments
Derivative
financial
-
335.2
15.6
350.8
-
736.8
15.3
752.1
Instruments
Equity release
-
-
263.1
263.1
-
-
277.2
277.2
portfolio
Loans and
advances to
customers
-
-
0.8
0.8
-
-
0.9
0.9
Share warrants
-
-
-
-
-
-
21.9
21.9
Loan to defined
benefit pension
-
-
10.9
10.9
-
-
-
-
scheme
4,269.4
335.2
308.7
4,913.3
4,349.6
736.8
332.2
5,418.6
Financial liabilities
Financial liabilities
at FVTPL:
Derivative
financial
-
178.4
7.8
186.2
-
209.0
16.1
225.1
Instruments
Fair value of put
-
-
1.0
1.0
-
-
4.1
4.1
option Obligation
-
178.4
8.8
187.2
-
209.0
20.2
229.2
4,269.4
156.8
299.9
4,726.1
4,349.6
527.8
312.0
5,189.4
Society
2025
2024 (restated*)
\u00a3m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets
Financial assets
held at FVOCI:
Debt securities
4,201.9
-
-
4,201.9
4,269.8
-
-
4,269.8
Financial assets at
FVTPL:
Derivative
financial
-
315.1
18.0
333.1
-
727.7
15.3
743.0
Instruments
Debt securities*
-
-
73.5
73.5
-
-
70.3
70.3
Equity release
-
-
263.1
263.1
-
-
277.2
277.2
portfolio
Loans and
advances to
customers
-
-
0.8
0.8
-
-
0.9
0.9
Loan to defined
benefit pension
-
-
10.9
10.9
-
-
-
-
scheme
4,201.9
315.1
366.3
4,883.3
4,269.8
727.7
363.7
5,361.2
Financial liabilities
Financial liabilities
at FVTPL:
Derivative
financial
-
197.2
7.8
205.0
-
261.7
20.5
282.2
Instruments
-
197.2
7.8
205.0
-
261.7
20.5
282.2
4,201.9
117.9
358.5
4,678.3
4,269.8
466.0
343.2
5,079.0
* The information shown above for the year ended 31 December 2024, and the information for the year ended 31 December 2024 within the table on page 279, is restated to reflect the appropriate presentation of \u2018Financial assets at FVTPL: Debt securities\u2019. The valuation of these financial assets is determined using a discounted cashflow valuation model and is not based on observable market prices. Accordingly, all \u00a370.3m of Debt securities (at FVTPL) are now classified as Level 3 financial assets, rather than Level 1. There is no impact on the overall total amount reported for the year ended 31 December 2024. The tables below analyse the movements in the Level 3 portfolio during the year:
Group 2024
Equity Equity Loans and Derivative Fair value of Share
\u00a3m
share release advances financial put option warrants Total
Investments portfolio
to customers
instruments obligation
At 1 January
10.5
293.3
0.9
(22.7)
(3.5)
15.1
293.6
Gain / (loss)
recognised in
Income Statement
1.1
A
(12.6)
B
-
21.9
C
(0.3)
D
5.9
E
16.0
Revaluations to
goodwill
-
-
-
-
(0.3)
-
(0.3)
Accrued interest
-
2.6
G
0.1
G
-
-
2.7
Repayments
-
(4.3)
(0.1)
-
-
-
(4.4)
Realised losses
-
(1.8)
H
-
-
-
-
(1.8)
Additions / Disposals /
5.3
-
-
-
-
0.9
6.2
Other
At 31 December
16.9
277.2
0.9
(0.8)
(4.1)
21.9
312.0
Notes A. These are unrealised gains and are included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Equity share investments\u2019. B. These are unrealised losses and are included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Equity release portfolio\u2019. C. These are unrealised gains and are included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Derivatives associated with equity release portfolio\u2019. D. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Put options held by minority shareholders\u2019. E. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Share warrants\u2019. F. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Loan to defined benefit pension scheme\u2019. G. Included in the Income Statement line \u2018Interest receivable and similar income\u2019. H. Included in the Income Statement line \u2018Impairment and provisions\u2019; as presented within Note 8 line \u2018Realised losses on equity release portfolio\u2019.
Group 2025
Equity
Equity
Loans and Derivative
Fair value of
Share
Loan to defined
\u00a3m
share
release
advances financial put option
warrants
benefit pension
Total
investments
portfolio
to customers
instruments
obligation scheme
At 1 January
16.9
277.2
0.9
(0.8)
(4.1)
21.9
-
312.0
Gain / (loss)
recognised in Income
0.4
A
(14.5)
B
-
8.1
C
(0.2)
D
5.6
E
(2.2)
F
(2.8)
Statement
Revaluations to
goodwill
-
-
-
-
(0.8)
-
-
(0.8)
Accrued interest
-
5.7
G
0.1
G
0.5
G
-
-
0.8
G
7.1
Repayments
-
(4.0)
(0.2)
-
-
-
(2.3)
(6.5)
Realised losses
-
(1.3)
H
-
-
-
-
-
(1.3)
Exercise of put
options by non
-
controlling
-
-
-
-
4.2
-
-
4.2
shareholders
Additions / Disposals
1.0
-
-
-
(0.1)
(27.5)
14.6
(12.0)
/ Other
At 31 December
18.3
263.1
0.8
7.8
(1.0)
-
10.9
299.9
Loans and
Loan to
Society 2025
Equity
advances
Derivative Debt defined
\u00a3m
release
to financial
securities
benefit Total
portfolio
customers
instruments
pension
scheme
At 1 January
277.2
0.9
(5.2)
70.3
-
343.2
(Loss) / gain recognised in Income Statement
(14.5)
A
-
14.9
B
3.2
C
(2.2)
D
1.4
Accrued interest
5.7
E
0.1
E
0.5
E
-
0.8
E
7.1
Repayments
(4.0)
(0.2)
-
-
(2.3)
(6.5)
Realised losses
(1.3)
F
-
-
-
-
(1.3)
Additions
-
-
-
-
14.6
14.6
At 31 December
263.1
0.8
10.2
73.5
10.9
358.5
Society 2024 (restated*)
Equity Loans and
Derivative
Debt
\u00a3m
release advances
financial
securities*
Total
portfolio
to customers
instruments
At 1 January
293.3
0.9
(34.2)
-
260.0
(Loss) / gain recognised in Income Statement
(12.6)
A
-
29.0
B
(4.0)
C
12.4
Accrued interest
2.6
E
0.1
E
-
-
2.7
Repayments
(4.3)
(0.1)
-
-
(4.4)
Realised losses
(1.8)
F
-
-
-
(1.8)
Additions
-
-
-
74.3
74.3
At 31 December
277.2
0.9
(5.2)
70.3
343.2
* The information shown above for the year ended 31 December 2024 is restated to reflect the appropriate presentation of \u2018Debt securities\u2019 \u2013 see page 277 for details. Notes A. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Equity release portfolio\u2019. B. \u00a38.1m (2024: \u00a321.9m) is included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Derivatives associated with equity release portfolio\u2019. The remaining \u00a36.8m (2024: \u00a37.1m) is included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Hedging instruments and hedged items\u2019. C. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Other financial instruments\u2019. D. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Loan to defined benefit pension scheme\u2019. E. Included in the Income Statement line \u2018Interest receivable and similar income\u2019. F. Included in the Income Statement line \u2018Impairment and provisions\u2019; as presented within Note 8 line \u2018Realised losses on equity release portfolio\u2019. Equity share investments The valuation of the Group\u2019s unlisted investments is typically regarded as a Level 3 valuation technique as certain inputs are not market observable. Further details of the Group\u2019s equity share investments are found in Note 20e). Equity release portfolio The valuation of the equity release portfolio is regarded as a Level 3 valuation technique as certain inputs into the valuation are not market observable. Further details on the valuation techniques used are found in Note 1f). Further details on the inputs into the valuation and the impact of reasonably possible alternative assumptions of certain inputs into the valuation of the portfolio are found in Note 1v). Loans and advances to customers The valuation of these loans and advances to customers is regarded as a Level 3 valuation technique as certain inputs are not market observable. Further details are found in Note 1f). Derivative financial instruments The Level 3 derivative financial instruments included in the tables on pages 276 to 279 mostly comprise derivatives which are used to hedge the Group\u2019s interest rate risk and inflation risk arising from the equity release portfolio. The valuation of these derivatives is regarded as a Level 3 valuation technique as certain inputs into the valuation are not market observable. Further details on the inputs into the valuation and the impact of reasonably possible alternative assumptions of certain inputs into the valuation of these derivatives are found in Note 1v). Any change in fair value of the derivative liabilities is offset to some extent by a corresponding but opposite change in the value of the equity release portfolio. The characteristics and the valuation requirements differ slightly between the derivatives and the equity release portfolio resulting in the changes in fair value not offsetting completely. During the year the net impact to the Income Statement (Group and Society) was a debit of \u00a36.4m (2024: \u00a39.3m credit). Debt securities The valuation of the retained Darrowby 6 B Notes is regarded as a Level 3 valuation technique as the credit risk premium is a key input into the calculation and is not market observable. This input is based on the judgement of senior management and observed similar transactions within the market. Fair value of put option obligation A key input into the calculation of the fair value of the put option obligation is the estimate of the market value of the noncontrolling shareholding. As this input is based on the judgement of senior management, the valuation of the put option obligation is considered to be a Level 3 valuation technique. Share warrants and other assets These assets relate to share warrants held in unlisted entities and amounts recognised, where appropriate, for additional share warrants yet to be received. The valuation of these assets is regarded as a Level 3 valuation technique as certain inputs into the valuation are not market observable. Further details are found in Note 1f). Loan to defined benefit pension scheme The valuation of the loan to the defined benefit pension scheme is regarded as a Level 3 valuation technique as certain inputs into the valuation are not market observable. Further details on the inputs into the valuation of this loan, and the impact of reasonably possible alternative assumptions of certain inputs, are found in Note 1v). For the year ended 31 December 2025 the net impact to the Income Statement (Group and Society) was a debit of \u00a32.2m (2024: \u00a3nil). c) Fair values of financial instruments not carried at fair value The tables below summarise the carrying values and fair values of those financial assets and liabilities not presented within the Statement of Financial Position at fair value.
\u00a3m
Group 2025
Society 2025
Carrying Value
Fair Value
Carrying Value
Fair Value
Financial assets
Cash in hand and balances with the Bank of England
1,360.2
1,360.2
1,360.2
1,360.2
Loans and advances to credit institutions
353.3
353.3
304.7
304.7
Loans and advances to customers
33,378.9
33,609.2
31,121.3
31,324.5
Trade receivables
73.6
73.6
1.5
1.5
Loans to subsidiary undertakings
-
-
454.7
454.7
35,166.0
35,396.3
33,242.4
33,445.6
Financial liabilities
Shares
30,526.3
30,535.0
30,524.3
30,531.0
Amounts owed to credit institutions
327.2
327.2
513.1
513.1
Amounts owed to other customers
2,719.6
2,723.5
1,171.9
1,171.9
Debt securities in issue
3,361.9
3,349.8
2,955.0
2,950.6
Lease liabilities
110.3
110.3
8.2
8.2
Trade payables
14.4
14.4
3.4
3.4
Subordinated liabilities
356.0
364.1
356.0
364.1
Subscribed capital
15.2
21.1
15.2
21.1
37,430.9
37,445.4
35,547.1
35,563.4
\u00a3m
Group 2024
Society 2024
Carrying Value
Fair Value
Carrying Value
Fair Value
Financial assets
Cash in hand and balances with the Bank of England
1,930.6
1,930.6
1,930.6
1,930.6
Loans and advances to credit institutions
414.6
414.6
397.8
397.8
Loans and advances to customers
30,601.1
30,804.7
28,334.9
28,531.4
Trade receivables
68.8
68.8
1.9
1.9
Loans to subsidiary undertakings
-
-
403.9
403.9
Other assets
0.1
0.1
-
-
33,015.2
33,218.8
31,069.1
31,265.6
Financial liabilities
Shares
28,268.5
28,239.2
28,254.1
28,239.2
Amounts owed to credit institutions
1,599.6
1,599.6
1,800.6
1,800.6
Amounts owed to other customers
2,751.1
2,753.8
1,268.9
1,268.7
Debt securities in issue
2,435.3
2,423.1
1,930.1
1,930.9
Lease liabilities
92.1
92.1
8.6
8.6
Trade payables
11.0
11.0
2.8
2.8
Subordinated liabilities
690.2
700.4
690.2
700.4
Subscribed capital
41.6
61.8
41.6
61.8
35,889.4
35,881.0
33,996.9
34,013.0
Key considerations in the calculation of fair values of those financial assets and liabilities not presented within the Statement of Financial Position at fair value are set out below unless there is no significant difference between carrying value and fair value. Loans and advances to customers For fixed rate and tracker mortgage products, the Group has estimated the fair value of these products using discounted cash flows and has applied relevant current market product rates as discount rates in order to also incorporate an element of future expected credit losses. Fixed rate and tracker mortgages have been discounted using current market product rates that are specific to the particular market to which they relate. Market prices will generally have moved since the fixed or tracker rate was taken out, therefore the valuation of these products will change reflecting upwards or downwards movements in market rates. The valuation includes information and expectations regarding estimated redemption profiles which are regularly reviewed and updated in light of experience. As these redemption profiles are not considered to be observable by the market, the fair value of loans and advances to customers is considered to be derived by using Level 3 valuation techniques. For standard variable rate mortgage products, the interest rate on such products is equivalent to a current market product rate and as such the Group considers the fair value of these mortgages to be equal to their carrying value. Shares Savings products at variable rates are at current market rates and therefore the Group regards the fair value to be equal to the carrying value. The fair value of fixed rate savings products has been determined using discounted cash flows, discounted using a combined yield curve of cash and swap term rates. Changes in market prices since the product was taken out will result in increases or decreases in the fair value of the fixed rate savings products. The valuation includes information and expectations regarding estimated withdrawal profiles which are regularly reviewed and updated in light of experience. As these profiles are not considered to be observable by the market, the fair value of shares is considered to be derived by using Level 3 valuation techniques. Amounts owed to credit institutions and other customers Balances in these categories are valued using discounted cash flows which use only observable market inputs consisting of the combined yield curve of cash and swap term rates. All inputs to this valuation technique are market observable and as such they are categorised within Level 2 of the fair value hierarchy, with the exception of amounts owed to other customers in relation to retail deposits with SIL which uses information and expectations regarding estimated withdrawal profiles which are regularly reviewed and updated in light of experience. As these profiles are not considered to be observable by the market, this fair value is considered to be derived by using Level 3 valuation techniques. Debt securities in issue Where securities are actively traded in a recognised market, with readily available and quoted prices, these have been used to value the securities. These securities are therefore regarded as having Level 1 fair values. Where such prices are not available, discounted cash flows are used. Where only market observable inputs are used within these discounted cash flows, such as a combined yield curve of cash and swap term rates, theses securities are categorised as having Level 2 fair values. Securities valued using unobservable inputs are regarded as having Level 3 fair values. Subordinated liabilities and subscribed capital Prices are quoted for these instruments in actively traded markets and, as a result, these instruments are categorised as having Level 1 fair values. d) Fair values of non-financial assets and liabilities not carried at fair value The fair value of investment property, which is a non-financial asset, is disclosed in these financial statements. Note 24 provides details of the valuation techniques used in estimating this fair value, together with the resulting categorisation of these valuation techniques within the fair value hierarchy.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-520": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
Equity release portfolio (Note 18)
(14.5)
(12.6)
(14.5)
(12.6)
Derivatives associated with equity release portfolio (Note 18)
8.1
21.9
8.1
21.9
Equity share investments (Note 20e))
0.4
1.1
-
-
Share warrants
5.6
5.9
-
-
Put options held by minority shareholders
(0.2)
(0.3)
-
-
Hedging instruments and hedged items
0.9
2.0
7.0
6.9
Loan to defined benefit pension scheme (Note 35)
(2.2)
-
(2.2)
-
Other financial instruments
-
-
3.3
(4.0)
Total
(1.9)
18.0
1.7
12.2
As outlined in Note 1f), loans and advances to credit institutions are held at amortised cost. All amounts
shown in the table above were held in stage 1 for both the Group and Society at the end of the current and prior
year.
No amounts were written off during the current or prior year in either the Group or the Society. For further
details on the assessment of ECLs on liquid assets, see Note 1h).
The table below provides maturity information for the net carrying amounts.
Collateral
Cash is pledged and received as collateral against derivative contracts which are used by the Group to manage
its exposure to market risk. Collateral is pledged to derivative contract counterparties where there is a net
amount outstanding to the counterparty and collateral is received from derivative contract counterparties
where there is a net amount due to the Group.
Non-standardised and some legacy derivatives are collateralised based on bilateral Credit Support Annex
(CSA) agreements. Under the terms of a CSA, collateral is passed between parties to mitigate the credit risk of
counterparties which is inherent in the outstanding derivative contracts. Standardised derivatives are cleared
with a central clearing counterparty in accordance with the UK European Market Infrastructure Regulation (UK
EMIR). Under the arrangements for cleared derivatives, additional collateral is required to protect the central
clearing counterparty against credit risk of the counterparties and to cover intra-day market movements and
possible variations in the future valuations of the derivative contracts. At 31 December 2025 the Group and
Society pledged \u00a3254.6m (2024: \u00a3272.4m) of this additional collateral.
Collateral pledged and received is ring-fenced by all parties to the derivative contract for the sole purpose of
collateralisation of the contracts. All derivatives are marked to market on a daily basis, with collateral being
either returned or pledged based on the market valuation of the derivatives.
The Group\u2019s derivative contracts have an outstanding contractual period of up to 32 years (2024: 33 years).
Group
Society
\u00a3m
2025
2024
2025
2024
Gross carrying amount
353.4
414.7
304.8
397.9
Loss allowance
(0.1)
(0.1)
(0.1)
(0.1)
Net carrying amount
353.3
414.6
304.7
397.8
Group
Society
\u00a3m
2025
2024
2025
2024
Repayable on demand:
Cash and cash equivalents
88.8
121.5
31.2
54.0
88.8
121.5
31.2
54.0
In not more than three months:
Cash and cash equivalents
-
1.6
-
-
-
1.6
-
-
In more than three months but not more than one year:
Other loans and advances to credit institutions
-
1.0
-
1.0
-
1.0
-
1.0
No specified maturity:
Cash pledged as collateral
264.5
290.5
273.5
342.8
264.5
290.5
273.5
342.8
Total loans and advances to credit institutions
353.3
414.6
304.7
397.8
Total included within cash and cash equivalents
88.8
123.1
31.2
54.0
In addition, cash collateral can be pledged or received as repurchase agreement contracts. Repurchase agreements are funding arrangements which allow a party to sell a financial asset as security to raise funds and the borrower agrees to repurchase the financial asset at a later agreed date. Where there is a movement in valuation of the underlying financial asset used as security, the borrower is required to pledge cash (known as \u2018variation margin\u2019) to make up the shortfall in the value of the security. This valuation margin protects the counterparty against the risk that the security changes in value over time. Cash pledged in this way is ring- fenced for the sole purpose of collateralisation and is separate to the funds raised as part of the underlying repurchase agreement. At 31 December 2025 the Group has no cash (2024: \u00a3nil) pledged as collateral in repurchase arrangements. The majority of debt securities held are highly liquid assets which are used on a continuing basis in the Group\u2019s activities.
Group
2025
2024
\u00a3m
FVOCI and Total
FVOCI and Total
Gilts
500.5
1,086.5
Fixed rate bonds
1,552.0
1,274.9
Floating rate notes
11.0
-
Treasury bills
773.4
598.2
Covered bonds
813.5
770.1
Residential mortgage backed securities
619.0
619.9
4,269.4
4,349.6
Debt securities have remaining maturities as follows:
In not more than three months
809.4
492.9
In more than three months but not more than one year
253.6
826.3
In more than one year but not more than five years
2,536.5
2,222.1
In more than five years
669.9
808.3
4,269.4
4,349.6
Transferable debt securities comprise:
Listed on a recognised investment exchange
4,269.4
4,349.6
4,269.4
4,349.6
Society
2025
2024
\u00a3m
FVOCI
FVTPL
Total
FVOCI
FVTPL
Total
Gilts
500.5
-
500.5
1,086.5
-
1,086.5
Fixed rate bonds
1,552.0
-
1,552.0
1,274.9
-
1,274.9
Treasury bills
557.0
-
557.0
321.2
-
321.2
Covered bonds
813.5
-
813.5
770.1
-
770.1
Residential mortgage backed securities
778.9
73.5
852.4
817.1
70.3
887.4
4,201.9
73.5
4,275.4
4,269.8
70.3
4,340.1
Debt securities have remaining maturities as follows:
In not more than three months
593.1
-
593.1
273.9
-
273.9
In more than three months but not more than one year
253.6
-
253.6
768.5
-
768.5
In more than one year but not more than five years
2,685.3
73.5
2,758.8
2,419.1
70.3
2,489.4
In more than five years
669.9
-
669.9
808.3
-
808.3
4,201.9
73.5
4,275.4
4,269.8
70.3
4,340.1
Transferable debt securities comprise:
Listed on a recognised investment exchange
4,201.9
73.5
4,275.4
4,269.8
70.3
4,340.1
4,201.9
73.5
4,275.4
4,269.8
70.3
4,340.1
Group
2025
2024
\u00a3m
FVOCI and Total
FVOCI and Total
At 1 January
4,349.6
3,337.7
Additions
2,274.6
4,402.0
Maturities and disposals
(2,416.3)
(3,376.3)
Changes in fair value
49.2
(28.5)
Other
12.3
14.7
At 31 December
4,269.4
4,349.6
Society
2025
2024
\u00a3m
FVOCI
FVTPL
Total
FVOCI
FVTPL
Total
At 1 January
4,269.8
70.3
4,340.1
3,143.4
63.1
3,206.5
Additions
1,410.3
-
1,410.1
3,908.8
77.8
3,986.6
Maturities and disposals
(1,537.4)
-
(1,537.4)
(2,765.3)
(66.6)
(2,831.9)
Changes in fair value
49.2
3.2
52.4
(28.7)
(4.0)
(32.7)
Other
10.0
-
10.0
11.6
-
11.6
At 31 December
4,201.9
73.5
4,275.4
4,269.8
70.3
4,340.1
The tables below provide further detail on the movement in the impairment loss allowance held in respect of debt securities during the year. There were no amounts written off by the Group or Society during the current or prior year. Movement in impairment loss allowance
Group
Society
\u00a3m
2025
2024
2025
2024
Loss allowance at 1 January
0.2
0.2
0.3
0.3
Increases due to origination, acquisition and additions
0.1
0.2
0.1
0.2
Decrease due to derecognition, repayments and disposals
(0.1)
(0.2)
(0.1)
(0.2)
Loss allowance at 31 December
0.2
0.2
0.3
0.3
All balances for the Group and Society included in the table above are classified as FVOCI and held in stage 1 in both the current and prior year. Collateral At 31 December 2025, \u00a3166.8m (2024: \u00a32.1m) of debt securities have been pledged by the Group, and \u00a3352.9m (2024: \u00a3203.2m) have been pledged by the Society, as collateral in repurchase transactions. These transactions are used to either obtain liquidity or to test the liquidity of the assets pledged as collateral. Where debt securities are pledged as collateral in repurchase transactions, the debt securities are not derecognised from the balance sheet and the transaction is accounted for as a secured loan. Further detail on debt securities that have been pledged as collateral is found in the table below. The collateral is pledged for the duration of the repurchase agreement, and is returned on maturity of the agreement, subject to the repayment of the amount raised. The securities cannot be pledged again by the Group until maturity of the repurchase agreement, however the recipient of the collateral is free to sell or further repurchase the assets. As at 31 December 2025, the Group\u2019s repurchase agreements have a contractual period of up to three months (2024: three months). Securities pledged as collateral
Group
Society
\u00a3m
2025
2024
2025
2024
Gilts
8.0
-
8.0
201.1
Fixed rate bonds
7.9
2.1
21.0
2.1
Treasury bills
150.9
-
323.9
-
Total on
-balance sheet debt securities pledged as collateral
166.8
2.1
352.9
203.2
The tables below provide further detail on the movement in debt securities during the year. There were no debt securities held by the Group or the Society at the end of 2025 or 2024 that were pledged as collateral by counterparties (known as \u2018reverse repurchase agreements\u2019). Residential mortgage backed securities The Group\u2019s investments in residential mortgage backed securities represent investments in unconsolidated structured entities, as described in Note 1d). The maximum exposure to losses from unconsolidated structured entities is equivalent to the book value plus accrued interest, determined by the carrying value of these investments plus any unrealised losses / less any unrealised gains recognised within the fair value reserve as shown below. During the year, the Group and Society received interest income of \u00a329.9m (2024: \u00a330.3m) from its investments in unconsolidated structured entities and incurred impairment charges of \u00a3nil (2024: \u00a3nil). In addition, unrealised gains recognised through the fair value reserve were \u00a30.6m (2024: \u00a31.1m loss). No collateral has been received by the Group in respect of the above third party funding entities. The total size of unconsolidated structured entities as shown in the table above is determined by reference to the Group\u2019s total notional exposure to the unconsolidated structured entities in question. The Group did not provide any non-contractual support, nor any contractual guarantees, during the current or prior year to unconsolidated structured entities and currently has no intentions to provide any such support. The Group is not required to absorb losses of any unconsolidated structured entities before other parties and the Group did not act as a sponsor to any unconsolidated structured entities during the current or prior year. The Group would, in general, be regarded as a sponsor of an unconsolidated structured entity if market participants would reasonably associate the entity with the Group. At 31 December 2025 the Society also held \u00a3159.9m (2024: \u00a3197.2m) of residential mortgage backed securities held at FVOCI and \u00a373.5m (2024: \u00a370.3m) of residential mortgage backed securities held at FVTPL that were issued by the Group\u2019s securitisation vehicle Darrowby No. 6 plc.
Group & Society
\u00a3m
2025
2024
Carrying value of assets
619.0
619.9
Cumulative unrealised gains recognised in fair value reserve
(0.9)
(0.3)
Maximum exposure to loss at 31 December
618.1
619.6
Included in loans fully secured on residential property is a \u00a323.9m adjustment for Group (2024: \u00a316.5m) and a
\u00a341.9m adjustment for Society (2024: \u00a333.2m) due to applying the effective interest method of accounting for
these mortgages (see Note 1f) for further details).
Group
Society
\u00a3m
2025
2024
2025
2024
Loans fully secured on residential property
32,985.9
30,529.3
30,970.3
28,497.0
Loans fully secured on land
89.6
109.6
89.6
109.6
Other lending:
Debt factoring advances
199.2
188.6
-
-
Other loans
45.3
48.2
0.5
-
Fair value adjustment for hedged risk
58.9
(274.6)
60.9
(271.7)
33,378.9
30,601.1
31,121.3
28,334.9
The remaining maturity of loans and advances to customers from the reporting date is as follows:
On call and at short notice
196.8
188.5
3.0
3.2
In not more than three months
27.1
28.9
26.8
28.9
In more than three months but not more than one year
77.5
55.5
75.6
53.8
In more than one year but not more than five years
995.3
943.4
988.7
906.2
In more than five years
32,107.8
29,404.4
30,050.7
27,360.3
33,404.5
30,620.7
31,144.8
28,352.4
Less: Impairment (Note 17)
(25.6)
(19.6)
(23.5)
(17.5)
33,378.9
30,601.1
31,121.3
28,334.9
As outlined in Note 1d) the Society has transferred the beneficial interest in certain portfolios of loans and advances to customers to the Group\u2019s special purpose vehicles (SPVs) Darrowby No. 6 plc and Skipton Covered Bonds LLP, to enable the subsequent raising of debt to investors who gain the security of the underlying mortgage loans as collateral. The transfers of the beneficial interest in the mortgage loans to the SPVs are not treated as sales by the Society and are not derecognised. The Society continues to recognise these assets within its own Statement of Financial Position because it substantially retains the risks and rewards of these mortgage portfolios. The Society continues to operationally manage these mortgage loans in the same manner as the remainder of its mortgage portfolio and is exposed to the rewards of these assets, primarily through the receipt of interest income, and is exposed to the risks of these assets, which is primarily exposure to the credit risk associated with these mortgage loans. The underlying mortgage loans are ring-fenced and cannot be used for any purpose by the Society or the SPV other than as security for the debt raised. At 31 December 2025, loans and advances to customers held at amortised cost include \u00a35,153.8m (2024: \u00a33,980.3m) of balances for both the Group and Society which have been used in these secured funding arrangements, resulting in the beneficial interest in these loans being transferred to Darrowby No. 6 plc (\u00a3627.1m; 2024: \u00a3760.7m) and Skipton Covered Bonds LLP (\u00a34,526.7m; 2024: \u00a33,219.6m). These loans secure \u00a33,339.6m (2024: \u00a32,426.5m) of funding for the Group. The proceeds received from the transfer of mortgage loans are accounted for in the Society\u2019s books as a deemed loan repayable to the SPVs. At 31 December 2025 the balance on the deemed loan repayable to Darrowby No. 6 plc, which represents the proceeds received for the transferred financial assets, included by the Society within \u2018Amounts owed to other customers\u2019, was \u00a3627.1m (2024: \u00a3760.7m). At 31 December 2025 the deemed loan repayable to Skipton Covered Bonds LLP, which represents the proceeds received for the transferred financial assets, was included by the Society within \u2018Loans to subsidiary undertakings\u2019 and netted against the term advance between the Society and the LLP. The balance on the deemed loan at 31 December 2025 was \u00a32,812.1m (2024: \u00a31,816.1m). The Group\u2019s accounting policies for the derecognition of financial assets held at amortised cost are set out in Note 1i). During the year, no gains or losses arose in respect of loans and advances to customers held at amortised cost that were derecognised by the Group or Society. 2025
Group
Loans fully secured
Loans fully Other loans
\u00a3m on residential secured on and Total
Property land advances
Loss allowance at 1 January 2025
13.5
4.7
1.4
19.6
Amounts written off during the year, net of
recoveries
(1.5)
(2.4)
(0.2)
(4.1)
Income statement charge for the year
9.6
0.3
0.2
10.1
Loss allowance at 31 December 2025
21.6
2.6
1.4
25.6
2024
Group
Loans fully secured
Loans fully Other loans
\u00a3m on residential secured on and Total
Property land advances
Loss allowance at 1 January 2024
29.0
9.0
1.6
39.6
Amounts written off during the year, net of
recoveries
(1.0)
(1.4)
(0.5)
(2.9)
Income statement (credit) / charge for the year
(14.5)
(2.9)
0.3
(17.1)
Loss allowance at 31 December 2024
13.5
4.7
1.4
19.6
2025
Society
Loans fully secured Loans fully
\u00a3m on residential secured on Total
Property land
Loss allowance at 1 January 2025
12.8
4.7
17.5
Amounts written off during the year, net of
recoveries
(1.4)
(2.4)
(3.8)
Income statement charge for the year
9.5
0.3
9.8
Loss allowance at 31 December 2025
20.9
2.6
23.5
2024
Society
Loans fully secured Loans fully
\u00a3m on residential secured on Total
Property Land
Loss allowance at 1 January 2024
27.9
9.0
36.9
Amounts written off during the year, net of
recoveries
(1.0)
(1.4)
(2.4)
Income statement credit for the year
(14.1)
(2.9)
(17.0)
Loss allowance at 31 December 2024
12.8
4.7
17.5
Movements during the year in the equity release portfolio are outlined below. Further details on how the valuation of the equity release portfolio is derived, including the key inputs into the calculation, are found in Note 1f) and Note 1v). The Group holds derivative financial instruments to economically hedge the movements in fair value of the equity release portfolio. The movement in fair value of the derivatives held to hedge the equity release portfolio during the year was a \u00a38.1m gain (2024: \u00a321.9m gain) and is included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. The equity release portfolio comprises loans against which collateral is held in the form of property in the UK. As at 31 December 2025 this collateral was valued at \u00a3480.4m (2024: \u00a3506.4m).
Group & Society
\u00a3m
2025
2024
At 1 January
277.2
293.3
Redemptions
(4.0)
(4.3)
Movements in fair value
(14.5)
(12.6)
Realised losses on redemption
(1.3)
(1.8)
Accrued interest
5.7
2.6
At 31 December
263.1
277.2
As outlined in Note 1f), the above loans consist mainly of certain lifetime mortgages that are required, under IFRS 9, to be held at FVTPL. Collateral is held against the above loans in the form of property in the UK and is valued as at 31 December 2025 at \u00a35.9m (2024: \u00a36.0m). Movements during the year are outlined below:
Group & Society
\u00a3m
2025
2024
At 1 January
0.9
0.9
Repayments
(0.2)
(0.1)
Accrued interest
0.1
0.1
At 31 December
0.8
0.9
e) Equity share investments mandatorily held at FVTPL The Group\u2019s investments in equity shares mandatorily held at FVTPL is summarised below:
The movement during the year in the Group\u2019s equity share investments mandatorily held at FVTPL is analysed
in Note 46.
Unlisted investments
The carrying values of the Group\u2019s equity share investments mandatorily held at FVTPL are typically based on
the amounts invested by the Group or, where appropriate, on third party valuations.
Group
\u00a3m
2025
2024
Unlisted investments
18.3
16.9
Total
18.3
16.9
A maturity analysis of shares is included in Note 43. A maturity analysis of amounts owed to credit institutions is included in Note 43. In the year, the remaining \u00a31.0bn of the Bank of England\u2019s \u2018Term Funding Scheme with additional incentives for SMEs\u2019 (TFSME) was repaid (2024: \u00a30.35bn repaid). The Society no longer has any outstanding TFSME payable (2024: \u00a31.0bn). A maturity analysis of amounts owed to other customers is included in Note 43. Amounts owed to other customers by the Group relate primarily to retail deposits accepted through the Group\u2019s Channel Islands based subsidiary, SIL. At 31 December 2025 the amount of such deposits included above is \u00a32,368.5m (2024: \u00a32,417.7m).
Group
Society
\u00a3m
2025
2024
2025
2024
Trade receivables (Note 45c))
73.6
68.8
1.5
1.9
Prepayments
40.4
33.6
19.7
16.2
Accrued income
27.9
24.7
2.4
0.1
Equity share investments mandatorily held at FVTPL
18.3
16.9
-
-
(Note 20e))
Share warrants
-
21.9
-
-
Investment property (Note 24)
1.4
4.5
1.4
4.5
Other
16.1
10.8
1.5
0.2
177.7
181.2
26.5
22.9
Group
Society
\u00a3m
2025
2024
2025
2024
Held by individuals
30,167.9
27,943.5
30,167.9
27,943.5
Other shares
301.9
326.8
301.9
326.8
Fair value adjustment for hedged risk
56.5
(1.8)
54.5
(16.2)
30,526.3
28,268.5
30,524.3
28,254.1
Group
Society
\u00a3m
2025
2024
2025
2024
Amounts owed to subsidiary undertakings
-
-
186.0
201.0
Other
327.2
1,599.6
327.1
1,599.6
327.2
1,599.6
513.1
1,800.6
Group
Society
\u00a3m
2025
2024
2025
2024
Amounts owed to subsidiary undertakings
-
-
1,118.1
1,212.7
Other
2,719.6
2,751.1
53.8
56.2
2,719.6
2,751.1
1,171.9
1,268.9
A maturity analysis of debt securities in issue is included in Note 43. During 2025 the Society issued covered bonds of \u00a3500m in both May and September. Group debt securities in issue include \u00a33,339.6m (2024: \u00a32,426.5m) of funding secured on certain loans and advances to customers through the Group\u2019s securitisation vehicle Darrowby No. 6 plc and the special purpose vehicle Skipton Covered Bonds LLP.
Group
Society
\u00a3m
2025
2024
2025
2024
Certificates of deposit
-
5.1
-
5.1
Covered bonds
2,941.3
1,934.9
2,955.0
1,925.0
Securitisation
398.3
491.6
-
-
Fair value adjustment for hedged risk
22.3
3.7
-
-
3,361.9
2,435.3
2,955.0
1,930.1
A maturity analysis of lease liabilities is included in Note 43. For details of the Group\u2019s right-of-use assets, see Note 23. For further details of the Group\u2019s lease expenses in the year, see Note 7.
Group
Society
\u00a3m
2025
2024
2025
2024
At
1 January
92.1
103.0
8.6
10.3
Additions
40.7
18.1
1.7
0.7
Acquisition of subsidiary undertakings
4.0
-
-
-
Modifications / remeasurements of existing lease
14.7
11.2
-
-
Liabilities
Interest charged
4.6
3.1
0.3
0.3
Lease payments (including interest)
(43.9)
(42.4)
(2.4)
(2.6)
Disposals
(1.9)
(0.9)
-
(0.1)
At
31 December
110.3
92.1
8.2
8.6
Amounts owed to subsidiary undertakings by the Society include \u00a3627.1m (2024: \u00a3760.7m) in respect of a deemed loan from the special purpose vehicle Darrowby No. 6 plc which is held at amortised cost, in line with the accounting policy outlined in Note 1g). The deemed loan is an agreement to pay over the income received by the Society on the mortgage pool to the SPV and the only credit risk that arises is from the Society; however, the Society is not required to make up any shortfall (i.e. any bad debts from customers within the mortgage pool) as per the deemed loan contract, and therefore the credit risk on cash flows owed to Darrowby No. 6 plc is considered very low. On 31 January 2025, as part of a strategy to de-risk the Society\u2019s exposure to its defined benefit obligation, the Skipton Building Society (2015) Group Pension Scheme was subject to an insurer buy-in (further detailed in Note 36). In connection with the buy-in, the Society made a loan to the Scheme \u2013 originally advanced in January 2025 in Sterling but subsequently converted into a USD-denominated loan on 24 September 2025. In addition, the maturity date of the loan was extended from 31 December 2027 to 30 November 2028. The purchase of the insurance policy used the assets of the Scheme, except for \u00a314.6m of illiquid assets held by the Scheme (as of 31 January 2025) which were not acquired by the insurer and thus remain in the Scheme. A loan of \u00a314.6m was advanced by the Society to the Scheme in January 2025, to be repaid using the proceeds from the illiquid assets as they mature. Due however to the illiquid assets being entirely denominated in USD (through hedging arrangements within the fund itself), the GBP loan was repaid and replaced with one denominated in USD on 24 September 2025, to eliminate any foreign exchange risk arising from the USD-denominated proceeds from the fund. The Society sourced the USD required to fund this lending through utilising the existing repo agreement with SIL. At 31 December 2025 the fair value of the loan was \u00a310.9m, which includes a \u00a32.2m fair value loss recognised within the Income Statement line \u2018Fair value (losses)/gains on financial instruments mandatorily held at FVTPL\u2019. The valuation reflects management\u2019s estimate of the expected asset realisation profile, discounted using a rate that reflects credit and liquidity risk. The loan is categorised as a Level 3 instrument within the IFRS 13 fair value hierarchy, due to the use of unobservable inputs. The fixed rate reset notes are denominated in Sterling. Coupons are paid on a fixed basis semi-annually. The subordinated liabilities listed above were issued under the Society\u2019s \u00a32.0bn Euro Medium Term Note Programme. The \u00a3350m Senior non-preferred (SNP) notes due 2026 were called and redeemed at the optional redemption date of 2 October 2025. The \u00a3350m Senior non-preferred (SNP) notes due 2029 have a maturity date of 25 April 2029 and an optional redemption date of 25 April 2028. The optional redemptions, at 100% of the principal amount plus accrued and unpaid interest up to (but excluding) the date of redemption, are subject to certain conditions. The notes are junior in right of payment to all Senior Claims, pari passu with all other Senior Non-Preferred Claims, and in priority to all Subordinated Claims. Amounts shown in the above table represent the nominal value plus accrued interest, except for \u2018Unamortised discount on issue\u2019 which is the difference between face values and current book values. Senior non-preferred notes contribute to meeting the Society\u2019s MREL requirements.
Group & Society
\u00a3m
2025
2024
Fixed rate reset notes:
Senior non-preferred (SNP) notes due 2026
-
351.7
Senior non-preferred (SNP) notes due 2029
354.1
354.1
354.1
705.8
Unamortised discount on issue:
Senior non-preferred (SNP) notes due 2026
-
(0.2)
Senior non-preferred (SNP) notes due 2029
(1.2)
(1.4)
(1.2)
(1.6)
Fair value adjustment for hedged risk
3.1
(14.0)
356.0
690.2
In December 2025, the Society undertook a liability management exercise to buy back the 12.875% legacy Tier 2 eligible Permanent Interest-Bearing Shares (PIBS). The decision to redeem the PIBS resulted in a one-off charge of \u00a327.9m recognised in the Income Statement line \u2018Charge on buy-back of Permanent Interest-Bearing Shares\u2019, but will save \u00a33.2m in interest payments per year into perpetuity. All remaining PIBS are unsecured and rank pari passu with each other. They are deferred shares of the Society and rank behind the claims against the Society of all subordinated note holders, depositors, payables and investing members of the Society. These shares are measured at amortised cost.
Group & Society
\u00a3m
2025
2024
8.500% Sterling Permanent Interest
-Bearing Shares
15.2
15.2
12.875% Sterling Permanent Interest
-Bearing Shares
-
26.4
15.2
41.6
The Group uses derivative financial instruments (derivatives) to manage the risks arising from its operations. The Board has authorised the use of derivatives by the Group to reduce the risk of loss arising from changes in market risks in accordance with Section 9A(4) of the Building Societies Act 1986 and derivatives are used by the Group for economic hedging purposes only. The Group does not run a trading book. The principal derivatives used by the Group are interest rate swaps, index swaps and cross currency swaps that are used to hedge Group exposures arising from fixed rate lending and savings products, funding and investment activities. The accounting policies for derivatives are described in Note 1f) to the Accounts. For the purpose of assessing hedge effectiveness, the Group determines the economic relationship between the hedged item and the hedging instrument by comparing the terms of each item, including reference rate, notional amount and maturity. Risk management strategy The Group has a formal structure for managing risk, including established risk limits, reporting requirements, mandates and other control procedures. This structure is reviewed regularly by the Asset & Liability Committee (ALCO). Interest rate risk The main market risk faced by the Group is interest rate risk. Interest rate risk is the risk that the fair values of financial assets or financial liabilities, or future cash flows receivable or payable on financial assets or financial liabilities, fluctuate as a result of changes in market interest rates. Interest rate risk predominantly arises on the fixed rate mortgages and savings products offered by the Group. Further detail on the Group\u2019s exposure to interest rate risk is found in Note 44. The Group uses the following derivatives to hedge its exposure to interest rate risk: Fair value hedges of interest rate risk Portfolio hedging The Group manages the interest rate risk arising from fixed rate mortgages and savings by entering into swaps on a frequent basis. The level of exposure from the mortgage portfolio frequently changes due to new loans being originated, contractual customer repayments and early customer repayments. As a result, the Group adopts a dynamic hedging strategy to hedge the interest rate risk component within the exposure profile by entering into new swap agreements each month. The Group uses a portfolio of fair value hedges of interest rate risk to recognise fair value changes related to changes in interest rate risk on fixed rate mortgages and savings products, to therefore reduce the profit or loss volatility that would otherwise occur from changes in the fair value of the interest rate swaps alone. The hedge relationship is reassessed prospectively each month in order that the hedging ratio is recalibrated to be close to 100%, thereby reducing hedge ineffectiveness. The hedging ratio is the level of hedged items designated in the portfolio against hedging instruments, taking into consideration the maturities of the hedge. Occasionally hedge ineffectiveness can arise, i.e. the derivative fails to hedge the interest rate risk to the extent that is expected. The Group assesses hedge ineffectiveness on an ongoing basis. Where the Group assesses that the hedge relationship has changed to such an extent that the existing hedge ratio is no longer suitable, the hedging relationship would be rebalanced to ensure hedge effectiveness. The main sources of ineffectiveness in fair value hedges of interest rate risk are: \u2022 Differences between the expected and actual volume of customer prepayments, as the Group hedges to the expected repayment date taking into account expected prepayments based on past experience; \u2022 Differences in the timing of cash flows from the mortgage loans and the interest rate swaps; and \u2022 Differences in the maturities of the interest rate swap and the mortgage loans. Micro hedging Fair value hedge relationships are also designated for hedging the interest rate risk component arising from the Group\u2019s liquidity portfolio, Medium Term Note (MTN) liabilities and wholesale deposits. For these items, a hedge is taken out specifically for the individual asset or liability, and therefore critical terms of the hedged item and hedging instrument match. Where critical terms match, the fair value adjustment on the hedged item offsets exactly the change in fair value of the hedging instrument. The Group assesses all of its micro fair value hedges of interest rate risk to have a hedge effectiveness ratio of 100%, as all derivatives hedge an amount of underlying instrument equal to the notional amount. Hedge ineffectiveness could potentially arise if critical terms do not exactly match, amendments were made to either the hedged item or the hedging instrument, or if there were significant changes in the credit rating of the hedged item or hedging instrument\u2019s counterparties; the Group has assessed the likelihood of this to be low. Cash flow hedges of interest rate risk The Group also has exposure to interest rate risk arising from its free reserves portfolio, which is composed of reserves held in excess of required reserves. The Group uses derivatives to hedge this risk component and accounts for these derivatives as cash flow hedges against variable rate instruments. The aim of cash flow hedging is to reduce the exposure to variability in cash flows arising from a financial asset or liability. The variable rate on the hedging instrument, i.e. the swap, offsets the hedged items, which are SONIA-linked financial assets or liabilities. Hedge ineffectiveness for cash flow hedges is assessed using the \u2018hypothetical derivative\u2019 method and ineffectiveness has been assessed as \u00a3nil (2024: \u00a3nil) for the Group\u2019s cash flow hedges. Hedge ineffectiveness could potentially arise if amendments were made to either the hedged item or the hedging instrument, or if there were significant changes in the credit rating of the hedged item or hedging instrument\u2019s counterparties; the Group has assessed the likelihood of this to be low. Currency risk Fair value hedges of currency risk The Group has entered into two (2024: one) cross-currency swap agreements to hedge the foreign currency risk and interest rate risk components arising from: the Society\u2019s Euro covered bond issuances: and loans to overseas subsidiaries. Currency risk on covered bond issuances Fixed rate Euro-denominated receipts are swapped to floating rate Sterling payments through these derivatives. The derivative is entered into by the LLP, with the hedged item being the term advance from the Society to the LLP, which mirrors the bond issued by the Society, effectively hedging the debt issued by the Society. Foreign currency basis spread is priced into the derivative but is excluded from the hedging relationship and any gain or loss arising from this is recognised directly in reserves in the cost of hedging reserve, as permitted by IFRS 9. Currency risk on loans to overseas subsidiaries Fixed rate receipts from the subsidiary are denominated in New Zealand dollars, these are swapped to sterling through this derivative. The derivative is entered into by the Society, with the hedged item being the intragroup loan to the subsidiary. Foreign currency basis spread is priced into the derivative but is excluded from the hedging relationship and any gain or loss arising from this is recognised directly in reserves in the cost of hedging reserve, as permitted by IFRS 9. The society receives 90% of the interest cash flows from the subsidiary with the remainder reclaimed from NZ Tax Authority due to double taxation treaties with New Zealand. As a result, only 90% of the cash flows on the hedged item is included in the hedge accounting relationship, resulting in some ineffectiveness in the income statement. Equity release portfolio In addition to the above, the Group holds derivative financial instruments to economically hedge the equity release portfolio which do not qualify as being in a designated hedging relationship for accounting purposes. As the derivatives held to hedge the equity release portfolio are not in a hedge accounting relationship, they are not included in the tables on pages 235 to 239. Further information on the derivatives held to hedge this portfolio can be found in Note 18.
2025
2024
Group
Up to 3 3 - 12 1 \u2013 5 Over Up to 3 3 - 12 1 \u2013 5 Over
months months years 5 years Months months years 5 years
Cash flow hedges
Interest rate swaps
Notional (\u00a3m)
-
-
2,152.0
760.0
-
-
2,291.5
571.5
Weighted average fixed
-
-
3.6%
3.7%
-
-
3.8%
3.8%
interest rate (%)
Fair value hedges
Interest rate swaps
Notional (\u00a3m)
3,376.3
11,414.5
20,293.2
1,087.3
3,988.3
13,699.0
16,872.2
1,538.5
Weighted average fixed
3.9%
3.3%
3.6%
3.1%
4.3%
3.7%
3.2%
3.2%
interest rate (%)
Cross currency swaps
Notional (\u00a3m)
-
-
431.9
-
-
-
421.3
-
Weighted average fixed
-
-
3.3%
-
-
-
3.3%
-
interest rate (%)
2025
2024
Society
Up to 3 3 - 12 1 \u2013 5 Over Up to 3 3 - 12 1 \u2013 5 Over
months months years 5 years months months years 5 years
Cash flow hedges
Interest rate swaps
Notional (\u00a3m)
40.2
325.0
2,936.3
776.7
23.0
145.0
3,214.3
571.5
Weighted average fixed
1.9%
2.6%
3.6%
3.7%
3.6%
2.6%
3.6%
3.8%
interest rate (%)
Fair value hedges
Interest rate swaps
Notional (\u00a3m)
3,416.8
11,530.8
20,695.2
1,087.3
4,110.7
13,813.2
17,205.5
1,538.5
Weighted average fixed
3.9%
3.3%
3.6%
3.1%
4.2%
3.6%
3.1%
3.2%
interest rate (%)
Cross currency swaps
Notional (\u00a3m)
-
-
10.7
-
-
-
-
-
Weighted average fixed
-
-
5.9%
-
-
-
-
-
interest rate (%)
Other derivatives not held in an accounting hedge Certain other derivatives cannot be accounted for in a fair value or cash flow hedge as the economic hedging relationship does not meet the criteria set out by IFRS 9. These derivatives are held at FVTPL and their change in fair value is included within the Income Statement line \u2018Fair value gains on financial instruments mandatorily held at FVTPL\u2019. Hedging instruments The following tables set out the maturity profile and average price and rate of the hedging instruments used in the Group\u2019s and Society\u2019s hedge accounting strategies. The tables below provide further detail on the Group\u2019s and Society\u2019s fair value hedges used in hedge accounting relationships: Notes A. The Statement of Financial Position lines that include these items are \u2018Derivative financial instruments\u2019. B. The change in fair value during the period that was used as the basis for calculating hedge ineffectiveness and which was recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. C. The amount of hedge ineffectiveness recognised in the Income Statement during the year. The Income Statement line that includes the hedge ineffectiveness recognised during the period is \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. D. In addition, \u00a31.4m of fair value gains (2024: \u00a31.2m losses) for the Group, and \u00a30.1m of fair value gains (2024: \u00a3nil) for the Society, were recognised directly in the cost of hedging reserve of the Group and Society respectively, due to ineffectiveness arising as a result of foreign currency basis spread as described in Note 1f). The tables below provide further detail on the Group\u2019s and Society\u2019s cash flow hedges used in hedge accounting relationships. Notes A. The Statement of Financial Position lines that include these items are \u2018Derivative financial instruments\u2019. B. The change in fair value during the period that was used as the basis for calculating hedge ineffectiveness and is recognised within the \u2018Cash flow hedging reserve: (Losses) / gains taken to equity\u2019 line of the Statement of Comprehensive Income. There was no hedge ineffectiveness recognised during either 2025 or 2024 in respect of the Group or Society\u2019s cashflow hedges.
Carrying amount (note A) Change in fair value
Losses reclassified from
\u00a3m
Notional
Assets
Liabilities
(charge) / credit
OCI to Income Statement
(note B)
2025
Group
Interest rate swaps
2,912.0
4.0
(22.1)
(13.5)
(6.0)
2025
Society
Interest rate swaps
4,078.2
10.6
(30.2)
15.7
(6.0)
2024
Group
Interest rate swaps
2,863.0
17.5
(22.1)
52.8
45.9
2024
Society
Interest rate swaps
3,953.8
20.1
(55.4)
47.0
45.9
Carrying amount (note A) Change in fair value Hedge ineffectiveness
(charge) / credit (credit) / charge
\u00a3m
Notional
Assets
Liabilities
(note B) (note C)
2025
Group
Interest rate swaps
36,171.3
296.4
(150.6)
(380.3)
(2.1)
Cross currency
D
431.9
29.0
-
19.3
0.1
swaps
2025
Society
Interest rate swaps
36,730.1
298.7
(161.4)
(366.2)
(2.1)
Cross currency
D
10.7
0.2
-
0.2
-
swaps
2024
Group
Interest rate swaps
36,068.0
697.4
(171.3)
(124.0)
5.7
Cross currency
D
421.3
8.3
-
33.1
(0.8)
swaps
2024
Society
Interest rate swaps
36,667.9
699.0
(195.5)
(105.1)
6.3
2024
Carrying amount Amount
Fair value
Change in fair
remaining on
adjustment on
value credit /
items de-
Group
Assets
Liabilities
hedged item
SoFP line (charge)
designated
\u00a3m
(note A) (note B)
from hedge
relationship
(note C)
Cash flow hedges
Floating rate assets
1,667.3
-
n/a
note D
n/a
37.6
Floating rate liabilities
-
1,195.7
n/a
note E
n/a
(10.0)
Fair value hedges
Fixed rate mortgages
21,210.0
-
(274.6)
note F
76.3
-
Debt securities
2,206.9
-
(79.2)
note D
(26.9)
-
Fixed rate savings
-
12,445.7
(1.8)
note G
1.5
-
Covered bonds
-
418.6
3.7
note E
26.5
-
Subordinated liabilities
-
705.8
(14.0)
note H
4.2
-
Hedged items The tables below provide further detail on the Group\u2019s and Society\u2019s hedged items: 2025
Carrying amount Amount
Fair value
remaining on
adjustment on
Change in fair
items de-
Group
Assets
Liabilities
hedged item
SoFP line value credit
designated
\u00a3m
(note A) (note B)
from hedge
relationship
(note C)
Cash flow hedges
Floating rate assets
670.5
-
n/a
note D
n/a
32.5
Floating rate liabilities
-
2,241.5
n/a
note E
n/a
(2.0)
Fair value hedges
Fixed rate mortgages
21,024.8
-
58.9
note F
333.5
-
Debt securities
2,049.9
-
(36.0)
note D
43.2
-
Fixed rate savings
-
11,617.6
56.5
note G
58.3
-
Covered bonds
-
442.7
22.3
note E
18.6
-
Due from Group companies
-
-
(0.1)
note I
(0.1)
-
Subordinated liabilities
-
354.1
3.1
note H
17.1
-
Notes A. Fair value adjustments on hedged items are included within the Statement of Financial Position (SoFP) as adjustments to the relevant SoFP line; see below notes for details. B. The change in fair value during the period that is used as the basis for calculating hedge ineffectiveness and is recognised within the Income Statement line \u2019Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Hedging instruments and hedged items\u2019. C. The accumulated amount of fair value hedge adjustments remaining (in the cash flow hedging reserve for cash flow hedges) for any hedged items that have ceased to be adjusted for hedging gains and losses. D. The SoFP lines that include these items are \u2018Debt securities\u2019 and \u2018Investments in subsidiary undertakings and joint ventures\u2019. E. The SoFP line that includes these items is \u2018Debt securities in issue\u2019. F. The SoFP line that includes these items is \u2018Loans and advances to customers held at amortised cost\u2019. G. The SoFP lines that include these items are \u2018Shares\u2019 (Group and Society) and \u2018Amounts owed to other customers\u2019 (Group only). H. The SoFP line that includes these items is \u2018Subordinated liabilities\u2019. I. The SoFP line that includes these items is \u2018Investments in subsidiary undertakings and joint ventures\u2019. 2024
Carrying amount Amount
Fair value
Change in fair
remaining on
adjustment on
value credit /
items de-
Society
Assets
Liabilities
hedged item
SoFP line (charge)
designated
\u00a3m
(note A) (note B)
from hedge
relationship
(note C)
Cash flow hedges
Floating rate assets
1,775.3
-
n/a
note D
n/a
37.6
Floating rate liabilities
-
2,178.5
n/a
note E
n/a
(10.1)
Fair value hedges
Fixed rate mortgages
21,325.2
-
(271.7)
note F
75.7
-
Debt securities
2,206.9
-
(79.3)
note D
(26.9)
-
Fixed rate savings
-
12,930.5
(16.2)
note G
14.6
-
Subordinated liabilities
-
705.8
(14.0)
note H
4.2
-
2025
Carrying amount Amount
Fair value
Change in fair
remaining on
adjustment on
value credit /
items de-
Society
Assets
Liabilities
hedged item
SoFP line (charge)
designated
\u00a3m
(note A) (note B)
from hedge
relationship
(note C)
Cash flow hedges
Floating rate assets
1,597.8
n/a
note D
n/a
32.5
Floating rate liabilities
2,480.4
n/a
note E
n/a
(4.2)
Fair value hedges
Fixed rate mortgages
21,024.8
-
60.9
note F
332.6
-
Debt securities
2,049.9
-
(36.1)
note D
43.2
-
Fixed rate savings
-
12,176.4
54.5
note G
70.7
-
Due from Group companies
10.7
-
(0.1)
note I
(0.1)
-
Subordinated liabilities
-
354.1
3.1
note H
17.1
-
2025
2024
Group
Cash flow Cost of Cash flow Cost of
\u00a3m
hedging hedging Total hedging hedging Total
reserve reserve reserve reserve
Balance at 1 January
16.6
(1.4)
15.2
4.9
(0.5)
4.4
Change in fair value of derivatives in effective hedging relationships:
Held to hedge interest rate
(6.3)
1.4
(4.9)
6.3
(1.2)
5.1
risk
Net amounts reclassified to profit or loss from derivatives:
Held to hedge interest rate
(3.1)
-
(3.1)
10.0
-
10.0
risk
Tax on movements in reserves
2.6
(0.4)
2.2
(4.6)
0.3
(4.3)
during the year
Balance at 31 December
9.8
(0.4)
9.4
16.6
(1.4)
15.2
2025
2024
Cash flow Cost of Cash flow Cost of
Society
hedging hedging Total hedging hedging Total
\u00a3m
reserve reserve reserve reserve
Balance at 1 January
1.3
-
1.3
(6.4)
-
(6.4)
Change in fair value of derivatives in effective hedging relationships:
Held to hedge interest rate
16.7
0.1
16.8
0.9
-
0.9
risk
Net amounts reclassified to profit or loss from derivatives:
Held to hedge interest rate
(5.2)
-
(5.2)
9.8
-
9.8
risk
Tax on movements in reserves
(3.2)
-
(3.2)
(3.0)
-
(3.0)
during the year
Balance at 31 December
9.6
0.1
9.7
1.3
-
1.3
Carrying amount Change in fair value
recognised in OCI:
Amount reclassified from
\u00a3m
Notional
Assets
Liabilities
credit / (charge)
OCI to Income Statement
(note A)
2025
Group
Cross currency
431.9
29.0
-
1.4
-
swaps
2025
Society
Cross currency
10.7
0.2
-
0.1
-
swaps
2024
Group
Cross currency
421.3
8.4
-
(1.2)
-
swaps
Note A. The change in fair value during the period is recognised within the \u2019Cash flow hedging reserve: (Losses) / gains taken to equity\u2019 line of the Statement of Comprehensive Income. Liquidity risk is the risk that the Group is unable to meet its current and future financial obligations as they fall due, or is only able to do so at excessive cost. It is an inherent part of the Group\u2019s business as long-term mortgages are funded mainly by shorter term retail customer balances. Mortgages can have a contractual maturity date of, for example, 25 years but in practice are frequently repaid early; conversely retail deposits, nominally repayable on demand or with short notice periods, frequently remain with the Group beyond their contractual notice. It is this mismatch in the maturity profiles of retail assets and liabilities that creates liquidity risk. The Group\u2019s liquidity policy is designed to ensure the maintenance of sufficient liquid assets to cover statutory, regulatory and operational requirements. This is achieved through maintaining a sufficient level of liquid assets in realisable form to ensure the Group is able to meet its liabilities as they arise and to absorb potential cash flow requirements created by the maturity mismatches referred to above or by a liquidity stress scenario. ALCO manages liquidity under delegated authority, within risk appetite limits established by the Board, and also monitors the composition of liquidity in line with risk management objectives. The Group\u2019s liquidity is managed as follows: \u2022 the Board establishes limits over the quantity and quality of the Group\u2019s portfolio of liquid assets. The portfolio is monitored and managed by the Treasury function and overseen by ALCO under a series of delegated authorities; \u2022 the Treasury function conducts a series of weekly and monthly stress tests that are designed to ensure that the Group\u2019s liquidity is sufficient to meet its cash flow needs under any one of a number of adverse scenarios should they arise. The scenarios include both Group specific and general market events, and incorporate both severe retail savings outflows and the unavailability of wholesale funding; and \u2022 under the Regulatory liquidity regime, the Group is required to hold highly liquid assets (such as government and supranational debt securities and cash) to satisfy the Liquidity Coverage Ratio (LCR). There are two measures that the Group considers key to monitoring its liquidity position: \u2022 LCR \u2013 which analyses the amount of high quality liquidity that it is necessary to hold to survive a 30 day regulatory stress scenario; and \u2022 liquidity stress tests \u2013 whereby, as noted above, the Group models how far its liquid asset holdings would fall under a number of different stress scenarios. The tables below analyse the carrying value of financial assets and financial liabilities into relevant maturity groupings based on the remaining maturity period at the reporting date to the contractual maturity. In practice, customer deposits, i.e. shares, amounts owed to credit institutions and amounts owed to other customers, are likely to be repaid later than on the earliest date on which repayment can be required.
2025
Group
Repayable
Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m
on demand
months months years years
specified
Total
maturity
Assets
Cash in hand and balances with the
Bank of England
1,360.2
-
-
-
-
-
1,360.2
Loans and advances to credit
88.8
-
-
-
-
264.5
353.3
institutions
Debt securities
-
809.4
253.6
2,536.5
669.9
-
4,269.4
Derivative financial
-
17.3
75.6
179.9
78.0
-
350.8
instruments
Loans and advances to customers
196.6
27.1
77.4
994.5
32,083.3
-
33,378.9
held at amortised cost
Loans and advances to
customers held at FVTPL
0.8
-
-
-
-
-
0.8
Equity release portfolio at FVTPL
-
6.3
18.6
76.4
161.8
-
263.1
Equity share investments at FVTPL
-
-
-
-
-
18.3
18.3
Trade receivables
31.0
42.6
-
-
-
-
73.6
Total financial assets
1,677.4
902.7
425.2
3,787.3
32,993.0
282.8
40,068.4
Liabilities
Shares
13,614.8
2,843.4
8,787.9
5,193.4
86.8
-
30,526.3
Amounts owed to credit institutions
9.7
167.9
6.4
-
-
143.2
327.2
Amounts owed to other customers
820.3
559.9
1,229.5
109.9
-
-
2,719.6
Debt securities in issue
-
0.5
-
3,361.4
-
-
3,361.9
Derivative financial instruments
-
5.6
27.5
138.6
14.5
-
186.2
Lease liabilities
-
7.9
21.9
64.8
15.7
-
110.3
Trade payables
-
14.4
-
-
-
-
14.4
Fair value of put option obligation
-
-
0.7
0.3
-
-
1.0
Subordinated liabilities
-
-
-
356.0
-
-
356.0
Subscribed capital
-
-
-
-
-
15.2
15.2
Total financial liabilities
14,444.8
3,599.6
10,073.9
9,224.4
117.0
158.4
37,618.1
Net liquidity gap
(12,767.4)
(2,696.9)
(9,648.7)
(5,437.1)
32,876.0
124.4
2,450.3
2024 (restated*)
Group
Repayable
Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m
on demand
months months years years
specified
Total
maturity
Assets
Cash in hand and balances with the
Bank of England
1,930.6
-
-
-
-
-
1,930.6
Loans and advances to credit
121.5
1.6
1.0
-
-
290.5
414.6
institutions
Debt securities
-
492.9
826.3
2,222.1
808.3
-
4,349.6
Derivative financial
-
25.2
99.2
513.0
114.7
-
752.1
instruments
Loans and advances to customers
188.4
28.9
55.5
942.8
29,385.5
-
30,601.1
held at amortised cost
Loans and advances to
customers held at FVTPL
0.9
-
-
-
-
-
0.9
Equity release portfolio at FVTPL
-
6.6
19.2
70.1
181.3
-
277.2
Equity share investments at FVTPL
-
-
-
-
-
16.9
16.9
Trade receivables
30.5
38.3
-
-
-
-
68.9
Share warrants
21.9
-
-
-
-
-
21.9
Other assets
-
-
-
-
-
0.1
0.1
Total financial assets
2,293.8
593.5
1,001.2
3,748.0
30,489.8
307.5
38,433.8
Liabilities
Shares
11,415.2
3,715.1
9,162.4
3,889.0
86.8
-
28,268.5
Amounts owed to credit institutions
19.0
6.1
1,017.2
-
-
557.3
1,599.6
Amounts owed to other customers
895.9
715.4
1,018.2
121.6
-
-
2,751.1
Debt securities in issue
-
5.9
-
2,429.4
-
-
2,435.3
Derivative financial instruments
-
14.3
60.7
115.3
34.8
-
225.1
Lease liabilities
-
7.1
19.5
52.2
13.3
-
92.1
Trade payables
-
11.0
-
-
-
-
11.0
Fair value of put option obligation
-
-
3.8
0.3
-
-
4.1
Subordinated liabilities
-
-
-
340.0
350.2
-
690.2
Subscribed capital
-
-
-
-
-
41.6
41.6
Total financial liabilities
12,330.1
4,474.9
11,281.8
6,947.8
485.1
598.9
36,118.6
Net liquidity gap
(10,036.3)
(3,881.4)
(10,280.6)
(3,199.8)
30,004.7
(291.4)
2,315.2
* The information shown above for the year ended 31 December 2024 is restated to reflect the appropriate presentation of financial liabilities, specifically in relation to Debt securities in issue (see Note 1c) for details).
2025
Society
Repayable
Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m
on demand
months months years years
specified
Total
maturity
Assets
Cash in hand and balances with the
Bank of England
1,360.2
-
-
-
-
-
1,360.2
Loans and advances to credit
31.2
-
-
-
-
273.5
304.7
Institutions
Debt securities
-
593.1
253.6
2,758.8
669.9
-
4,275.4
Derivative financial
-
17.4
75.9
159.3
80.5
-
333.1
Instruments
Loans and advances to customers
3.0
26.8
75.5
988.0
30,028.0
-
31,121.3
held at amortised cost
Loans and advances to
customers held at FVTPL
0.8
-
-
-
-
-
0.8
Equity release portfolio at FVTPL
-
6.3
18.6
76.4
161.8
-
263.1
Loans to subsidiary undertakings
454.7
-
-
-
-
-
454.7
Trade receivables
1.5
-
-
-
-
-
1.5
Total financial assets
1,851.4
643.6
423.6
3,982.5
30,940.2
273.5
38,114.8
Liabilities
Shares
13,614.8
2,843.4
8,787.9
5,193.4
84.8
-
30,524.3
Amounts owed to credit institutions
9.7
353.8
6.4
-
-
143.2
513.1
Amounts owed to other customers
508.3
32.4
14.3
616.9
-
-
1,171.9
Debt securities in issue
-
-
-
2,955.0
-
-
2,955.0
Derivative financial instruments
-
8.2
34.1
148.2
14.5
-
205.0
Lease liabilities
-
0.5
1.4
5.2
1.1
-
8.2
Trade payables
-
3.4
-
-
-
-
3.4
Subordinated liabilities
-
-
-
356.0
-
-
356.0
Subscribed capital
-
-
-
-
-
15.2
15.2
Total financial liabilities
14,132.8
3,241.7
8,844.1
9,274.7
100.4
158.4
35,752.1
Net liquidity gap
(12,281.4)
(2,598.1)
(8,420.5)
(5,292.2)
30,839.8
115.1
2,362.7
* The information shown above for the year ended 31 December 2024 is restated to reflect the appropriate presentation of financial liabilities, specifically in relation to Debt securities in issue (see Note 1c) for details). With respect to loans and advances to customers presented within the tables above, each outstanding loan balance is allocated in full to a single maturity grouping according to that loan\u2019s contractual maturity date (regardless of any scheduled repayments that may be receivable prior to the contractual maturity date). Loans and advances to customers presented as repayable on demand represent those loans and advances that are on call and at short notice. With respect to the equity release portfolio, contractual maturity arises in the event of the borrower\u2019s voluntary redemption, death or move to long-term care. For the purposes of the tables above, amounts have been allocated to maturity groupings based on the anticipated redemption profiles applied in the Group\u2019s equity release portfolio valuation model (see Note 1f) and Note 1v) for further details). Group debt securities in issue include \u00a3398.3m (2024: \u00a3491.6m) of funding obtained through the Group\u2019s securitisation issuances carried out through Darrowby No. 6 plc. The final maturity dates of the securitisation notes are significantly out into the future however the Group can exercise a call option to repurchase the outstanding Darrowby No. 6 notes at a date within the next five years. As a result, all such amounts have been shown within 1 to 5 years in the tables above.
2024 (restated*)
Society
Repayable
Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m
on demand
months months years years
specified
Total
maturity
Assets
Cash in hand and balances with the
Bank of England
1,930.6
-
-
-
-
-
1,930.6
Loans and advances to credit
54.0
-
1.0
-
-
342.8
397.8
Institutions
Debt securities
-
273.9
768.5
2,489.4
808.3
-
4,340.1
Derivative financial
-
25.5
99.5
507.7
110.3
-
743.0
Instruments
Loans and advances to customers
3.2
28.9
53.8
905.6
27,343.4
-
28,334.9
held at amortised cost
Loans and advances to
customers held at FVTPL
0.9
-
-
-
-
-
0.9
Equity release portfolio at FVTPL
-
6.6
19.2
70.1
181.3
-
277.2
Loans to subsidiary undertakings
403.9
-
-
-
-
-
403.9
Trade receivables
1.9
-
-
-
-
-
1.9
Total financial assets
2,394.5
334.9
942.0
3,972.8
28,443.3
342.8
36,430.3
Liabilities
Shares
11,415.2
3,715.1
9,162.4
3,889.0
72.4
-
28,254.1
Amounts owed to credit institutions
19.0
207.1
1,017.2
-
-
557.3
1,800.6
Amounts owed to other customers
470.4
49.9
-
748.6
-
-
1,268.9
Debt securities in issue
-
5.1
-
1,925.0
-
-
1,930.1
Derivative financial instruments
-
17.7
67.1
162.6
34.8
-
282.2
Lease liabilities
-
0.5
1.5
5.2
1.4
-
8.6
Trade payables
-
2.8
-
-
-
-
2.8
Subordinated liabilities
-
-
-
340.0
350.2
-
690.2
Subscribed capital
-
-
-
-
-
41.6
41.6
Total financial liabilities
11,904.6
3,998.2
10,248.2
7,070.4
458.8
598.9
34,279.1
Net liquidity gap
(9,510.1)
(3,663.3)
(9,306.2)
(3,097.6)
27,984.5
(256.1)
2,151.2
The following table is an analysis of undiscounted gross contractual cash flows payable on financial liabilities: Note A. With respect to subscribed capital, gross contractual cash flows represent interest payable on the Group\u2019s Permanent Interest- Bearing Shares (PIBS) (see Note 38). Following buy-back of the 12.875% legacy Tier 2 eligible PIBS in the year, as described in Note 38, the undiscounted gross interest payable each year by the Group going forwards is \u00a31.3m per annum (2024: \u00a34.5m per annum). As the PIBS have no specified contractual maturity (as shown on pages 241 and 242), it is not possible to calculate the total amount of undiscounted gross interest that is payable beyond 5 years (i.e. into perpetuity). Also, as the PIBS have no specified contractual maturity, the amounts shown in the tables above do not anticipate any future repurchase of the PIBS by the Group. The undiscounted gross contractual cash flows of debt securities in issue that have been issued as securitisation funding in the tables above have been calculated on the assumption that the call options referred to on page 244 are exercised. The Group has off-balance sheet exposure from commitments to lend where a mortgage has been offered but not yet completed. The total amount of such loan commitments at 31 December 2025 is \u00a32,197.8m (2024: \u00a31,885.1m) which are due within 3 months.
2025
Group
Up to 3 3 - 12 1 - 5 Over 5 Total
\u00a3m
months months years years
Shares
16,471.6
9,003.6
5,592.3
87.9
31,155.4
Amounts owed to credit institutions, other customers and
debt securities in issue
1,382.3
1,752.0
3,634.3
-
6,768.6
Derivative financial instruments
8.9
51.9
132.0
0.1
192.9
Lease liabilities
8.4
27.8
73.4
23.2
132.8
Trade payables
14.4
-
-
-
14.4
Fair value of put option obligation
-
0.7
0.4
-
1.1
Subordinated liabilities
-
21.9
393.8
-
415.7
Subscribed capital
-
1.3
5.1
note A
6.4
Total
17,885.6
10,859.2
9,831.3
111.2
38,687.3
2024
Group
Up to 3 3 - 12 1 - 5 Over 5 Total
\u00a3m
months months years years
Shares
15,148.0
9,408.1
4,148.1
86.8
28,791.0
Amounts owed to credit institutions, other customers and
debt securities in issue
1,552.1
3,057.5
2,569.6
-
7,179.2
Derivative financial instruments
20.9
98.8
104.1
11.9
235.7
Lease liabilities
7.5
25.2
58.7
20.8
112.2
Trade payables
11.0
-
-
-
11.0
Fair value of put option obligation
-
3.9
0.4
-
4.3
Subordinated liabilities
-
28.9
769.1
-
798.0
Subscribed capital
1.6
2.9
18.0
note A
22.5
Total
16,741.1
12,625.3
7,668.0
119.5
37,153.9
Note
A. With respect to subscribed capital, gross contractual cash flows represent interest payable on the Society\u2019s Permanent Interest-
Bearing Shares (PIBS) (see Note 38). Following buy-back of the 12.875% legacy Tier 2 PIBS in the year, as described in Note 38, the
undiscounted gross interest payable each year by the Society going forwards is \u00a31.3m per annum (2024: \u00a34.5m per annum). As the
PIBS have no specified contractual maturity (as shown on pages 243 and 244, it is not possible to calculate the total amount of
undiscounted gross interest that is payable beyond 5 years (i.e. into perpetuity). Also, as the PIBS have no specified contractual
maturity, the amounts shown in the tables above do not anticipate any future repurchase of the PIBS by the Society.
Amounts owed to other customers in the Society tables above include a deemed loan from the Group\u2019s
securitisation vehicle Darrowby No. 6 plc, which arise from the funding transactions carried out through that
entity. The undiscounted gross contractual cash flows arising on this loan have been calculated on the
assumption that the call options referred to on page 244 are exercised.
The Society has off-balance sheet exposure from commitments to lend where a mortgage has been offered
but not yet completed. The total amount of such loan commitments at 31 December 2025 is \u00a32,155.4m (2024:
\u00a31,867.3m) which are due within 3 months.
Society
\u00a3m
2025
Up to 3 3 - 12 1 - 5 Over 5 Total
months months years years
Shares
16,471.6
9,003.6
5,592.3
85.9
31,153.4
Amounts owed to credit institutions, other customers and
debt securities in issue
758.9
566.7
3,796.7
-
5,122.3
Derivative financial instruments
8.9
60.5
134.7
0.1
204.2
Lease liabilities
0.6
1.5
5.8
1.2
9.1
Trade payables
3.4
-
-
-
3.4
Subordinated liabilities
-
21.9
393.8
-
415.7
Subscribed capital
-
1.3
5.1
note A
6.4
Total
17,243.4
9,655.5
9,928.4
87.2
36,914.5
Society
\u00a3m
2024
Up to 3 3 - 12 1 - 5 Over 5 Total
months months years years
Shares
15,148.0
9,408.1
4,148.1
72.4
28,776.6
Amounts owed to credit institutions, other customers and
debt securities in issue
653.0
1,944.9
2,925.1
-
5,523.0
Derivative financial instruments
35.5
122.7
130.5
11.9
300.6
Lease liabilities
0.6
1.6
5.6
1.5
9.3
Trade payables
2.8
-
-
-
2.8
Subordinated liabilities
-
28.9
769.1
-
798.0
Subscribed capital
1.6
2.9
18.0
note A
22.5
Total
15,841.5
11,509.1
7,996.4
85.8
35,432.8
Market risk is the risk that the value of, or income arising from, the Group\u2019s assets and liabilities changes as a result of changes in market prices; the principal elements being interest rate risk (including the use of derivatives) and foreign currency risk. The Group\u2019s Treasury function is responsible for managing the Group\u2019s exposure to all aspects of market risk within the operational limits set out in the Group\u2019s Treasury policy, which is reviewed and recommended by ALCO and approved by the Board. The Group\u2019s Treasury function measures and monitors adherence to the Treasury policy and reports regularly on all aspects of market risk exposure, including interest rate risk and foreign currency risk. a) Interest rate risk The main market risk faced by the Group is interest rate risk. The Group uses a number of different metrics to monitor interest rate risk and details of these are set out below. The Group monitors interest rate risk exposure against limits by determining the effect on the Group\u2019s current net notional value of assets and liabilities for a parallel shift in interest rates equivalent to 2% for all maturities, in line with regulatory requirements. These results are compared to the Board limit and operational trigger at least weekly, and are formally reported to ALCO and the Board monthly. Other interest rate risk metrics employed by the Group incorporate earnings-at-risk and market value methodologies. The market value exposure position is calculated using at least 250 monthly yield curve movements from, approximately, the last seven years. The earnings-at-risk methodology is calculated using at least 100 stochastically (randomly) generated rate paths. Both of these approaches employ 95% confidence intervals. The outputs of these interest rate risk measurement methodologies are compared to their respective Board limits and operational triggers at least weekly and are reported to ALCO and the Board monthly. All these measures are used to guide interest rate risk management decisions. The levels of Group interest rate risk exposures throughout the reporting period, based on measures taken at each month end, were as follows: Although these measures provide valuable insights into the market risk to which the Group is exposed, they need to be viewed in the context of the following limitations: \u2022 Historical data is not necessarily the best guide to future events, but is a reasonable proxy; \u2022 The use of 95% confidence levels, by definition, does not take account of changes that may occur beyond this level of confidence and therefore may not fully take into account the most extreme events; and \u2022 Exposures are calculated on static Statement of Financial Position positions and therefore future changes in the structure of the Statement of Financial Position are ignored. Other interest rate risk exposures, such as basis risk (the risk of loss arising from changes in the relationship between interest rates which have similar but not identical characteristics, for example SONIA and Bank of England Base Rate), are also monitored closely and regularly reported to ALCO. b) Currency risk The currency risk appetite of the Group is low and any instruments denominated in foreign currency are immediately swapped into Sterling. The Group has one regulated covered bond in Euros totalling \u20ac500m (2024: one bond, \u20ac500m). The exposure to foreign currency fluctuations on this bond is fully hedged as a derivative contract was taken out to swap the Euros into Sterling on issuance of the bond.
\u00a3m
As at 31 December
Average High Low
As at 31 December
2025 2025 2025 2025 2024
Static earnings
-at-risk
25.3
22.1
25.5
16.8
27.9
Historical value
-at-risk
3.3
5.1
7.1
2.1
3.5
2% parallel interest rate shift
8.8
14.5
21.8
4.1
20.8
The Group has one intragroup loan denominated in New Zealand Dollars totalling $25m (2024: nil). The exposure to foreign currency fluctuations on this bond is fully hedged as a derivative contract was taken out to swap the Dollars into Sterling on the same date funds were lent. The Group has investments in its subsidiary undertaking Jade, which are denominated in New Zealand dollars. The foreign currency fluctuations in relation to these investments are not hedged and are recognised in the Group\u2019s translation reserve. SIL holds deposits from customers denominated in US dollars (USD). SIL manages its foreign currency risk by holding cash and debt securities denominated in USD; the objective is to minimise mismatches between the balance and maturity profile of USD assets and USD liabilities, and also mismatches between the related interest income and interest expense on USD assets and liabilities. In addition, a number of the Group\u2019s businesses undertake transactions denominated in foreign currency as part of their normal business. Any amounts outstanding at 31 December 2025 are not material. c) Other price risk The Group also has exposure to market risk arising from the movement in the Retail Price Index and house price indices. In particular, movements in these indices impact on the valuation of the equity release portfolio, as outlined further in Note 1v). Credit risk is the risk of suffering financial loss should borrowers or counterparties default on their contractual obligations to the Group. The Group faces this risk from its lending to: \u2022 individual customers (retail mortgages); \u2022 businesses (through legacy commercial lending no longer originated and current debt factoring / invoice discounting); \u2022 wholesale counterparties (including other financial institutions). Credit risk within our treasury portfolio arises from the investments held by the Group in order to meet liquidity requirements and for general business purposes; and \u2022 other Group entities, for the Society only. Changes in the credit quality and the recoverability of loans and amounts due from counterparties influence the Group\u2019s exposure to the risk of credit losses. The Group\u2019s strategy is to maintain a cautious approach to credit risk and new lending. Adverse changes in the credit quality of counterparties, collateral values or deterioration in the wider economy, including rising unemployment, changes in interest rates, deterioration in household finances and any contraction in the UK property market leading to falling property values, could affect the recoverability and value of the Group\u2019s assets and influence its financial performance. The Group has embedded a comprehensive credit risk management framework with clear lines of accountability and oversight as part of its overall governance framework. The Group has policies and procedures to monitor, control, mitigate and manage credit risk within the Group\u2019s credit risk appetite. The Retail Credit Committee and the Group Wholesale Credit Committee provide oversight to the effectiveness of all credit management across the Group and the controls in place ensure lending is within the Board approved credit risk appetite. The reporting structure ensures timely and accurate reporting of all substantive risk matters to the Board and the Board Risk Committee. The Board receives monthly updates on the credit risk profile of the Group. Scenario analysis has been undertaken to identify the impact of climate-related risks on the Group\u2019s credit risk management. This includes assessing the residential lending portfolio at property level to determine the potential impact of key climate-related physical and transitional risks. The scenario analysis indicates that the most significant effects from climate change occur in the medium to long-term, with material financial impacts from transition risks expected to transpire before physical risks. Based on current UK Government policies, a delayed transition appears the most probable. Therefore, the most significant transition risks which may impact the Group are not expected to occur before the 2030s. The results of this assessment did not lead to a change in carrying amounts as at 31 December 2025 or 31 December 2024. The future impact of climate- related risks on credit risk is uncertain, and the Group will continue to monitor developments in future periods. Management makes use of the Group\u2019s IFRS 9 ECL information for purposes that include regulatory capital management, certain product pricing models and credit risk forecasting. The maximum exposure to credit risk for financial assets is represented by the carrying amount of each financial asset, except for the following: \u2022 A fair value adjustment debit for hedged risk of \u00a358.9m (2024: \u00a3274.6m credit) for the Group and \u00a360.9m (2024: \u00a3271.7m credit) for the Society is included within loans and advances to customers. This is indirectly exposed to credit risk through the relationship with the underlying loans covered by the Group\u2019s hedging strategy. \u2022 The Group has credit risk exposure from commitments to lend where a mortgage has been offered but not yet completed, which leads to the recognition of a financial asset (within loans and advances to customers) on completion of the mortgage. As outlined in Note 1h), an impairment loss allowance is held against these commitments in accordance with IFRS 9. The total amount of such loan commitments at 31 December 2025 is \u00a32,197.8m (2024: \u00a31,885.1m) for the Group and \u00a32,155.4m (2024: \u00a31,867.3m) for the Society and the impairment loss allowance held against these commitments is \u00a30.3m (2024: \u00a30.2m) for both the Group and the Society. Retail mortgage lending to customers The Group currently lends in the prime residential UK mortgage market, including buy-to-let, through the Society, whilst SIL lends in the Channel Islands and in the UK. The Board\u2019s credit risk appetite defines a number of limits regarding customer and collateral credit quality to which all lending activity must adhere. The credit decision process utilises automated credit scoring and policy rules with lending policy criteria supporting manual underwriting. All aspects of the credit decision process are subject to regular independent review and development ensuring they support decisions in line with the Board\u2019s credit risk appetite. Commercial lending to customers and businesses The Society\u2019s commercial mortgage portfolio was closed to new lending in November 2008. Other loans and advances These include advances made by our factored debt and invoice discounting business, SBF, which continue to be managed by appropriately skilled teams. In addition, other loans and advances include advances made to residential mortgage customers in Guernsey and Jersey by SIL; these are secured on shares in a property management company which owns the building in which the properties are located. These loans are monitored by appropriately skilled teams in SIL. Wholesale lending to other financial institutions Wholesale credit risk arises from the wholesale investments undertaken by the Group\u2019s Treasury function which is responsible for managing this aspect of credit risk in line with the Board approved credit risk appetite and wholesale credit policies. Wholesale counterparty limits are reviewed monthly by the Group Wholesale Credit Committee based on analyses of counterparties\u2019 financial performance, ratings and other market information to ensure that limits remain within our risk appetite. We regularly review and closely monitor the number of counterparties to whom we will lend and, for those counterparties to whom we have lent, we review both the amount and duration of any limits. A deterioration in wholesale credit markets could lead to volatility in the value of the Group\u2019s portfolio of treasury assets together with the risk of further impairment within our treasury investments portfolio. ALCO provides oversight to the effectiveness of wholesale credit risk management. Intra-Group lending Credit risk also arises on loans made by the Society to other Group entities, including any committed to but undrawn amounts. Intra-Group counterparty limits are reviewed monthly by, and any increases must be pre- approved by, the Group Wholesale Credit Committee. ^ Also known as commercial mortgages. For details on how the Group assesses ECLs see Note 1h).
2025
Fair value
Group
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
33,007.5
(21.6)
58.9
33,044.8
99.0
Loans fully secured on land^
92.2
(2.6)
-
89.6
0.3
Other lending:
Debt factoring advances
200.6
(1.4)
-
199.2
0.6
Other loans
45.3
-
-
45.3
0.1
Total
33,345.6
(25.6)
58.9
33,378.9
100.0
2024
Fair value
Group
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
30,542.8
(13.5)
(274.6)
30,254.7
98.8
Loans fully secured on land^
114.3
(4.7)
-
109.6
0.4
Other lending:
Debt factoring advances
190.0
(1.4)
-
188.6
0.6
Other loans
48.2
-
-
48.2
0.2
Total
30,895.3
(19.6)
(274.6)
30,601.1
100.0
2025
Fair value
Society
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
30,991.2
(20.9)
60.9
31,031.2
99.7
Loans fully secured on land^
92.2
(2.6)
-
89.6
0.3
Other lending
0.5
-
-
0.5
-
Total
31,083.9
(23.5)
60.9
31,121.3
100.0
2024
Fair value
Society
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
28,509.8
(12.8)
(271.7)
28,225.3
99.6
Loans fully secured on land^
114.3
(4.7)
-
109.6
0.4
Total
28,624.1
(17.5)
(271.7)
28,334.9
100.0
a) Credit risk - loans and advances to customers held at amortised cost The tables below show the breakdown of the Group and Society\u2019s loans and advances to customers held at amortised cost at the reporting date: The tables below provide information on movements in the gross carrying amount of residential loans and advances to customers during the year:
2025
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
32,216.6
468.4
19.8
32,704.8
30,212.1
465.1
19.8
30,697.0
Up to 30 days past due
-
104.5
3.3
107.8
-
101.9
3.3
105.2
31 to 60 days past due
-
49.9
7.8
57.7
-
47.1
7.8
54.9
61 to 90 days past due
-
23.8
11.2
35.0
-
23.1
11.2
34.3
Over 90 days past due
-
-
102.2
102.2
-
-
99.8
99.8
Total
32,216.6
646.6
144.3
33,007.5
30,212.1
637.2
141.9
30,991.2
2024
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
30,067.3
224.2
13.8
30,305.3
28,046.0
220.4
13.8
28,280.2
Up to 30 days past due
-
72.5
3.6
76.1
-
70.6
3.6
74.2
31 to 60 days past due
-
46.4
4.6
51.0
-
43.6
4.6
48.2
61 to 90 days past due
-
15.7
9.8
25.5
-
15.7
9.8
25.5
Over 90 days past due
-
-
84.9
84.9
-
-
81.7
81.7
Total
30,067.3
358.8
116.7
30,542.8
28,046.0
350.3
113.5
28,509.8
2025
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
30,067.3
358.8
116.7
30,542.8
28,046.0
350.3
113.5
28,509.8
Transfers due to changes in credit
risk (note A):
From stage 1 to stage 2
(379.9)
379.9
-
-
(373.3)
373.3
-
-
From stage 1 to stage 3
(17.5)
-
17.5
-
(16.6)
-
16.6
-
From stage 2 to stage 1
102.5
(102.5)
-
-
99.1
(99.1)
-
-
From stage 2 to stage 3
-
(16.5)
16.5
-
-
(16.5)
16.5
-
From stage 3 to stage 2
-
10.2
(10.2)
-
-
10.2
(10.2)
-
From stage 3 to stage 1
0.6
-
(0.6)
-
0.6
-
(0.6)
-
Modification of contractual
(99.4)
67.9
26.3
(5.2)
(99.4)
67.9
26.3
(5.2)
cashflows
Increases due to origination
6,960.1
19.3
2.1
6,981.5
6,772.4
19.3
2.1
6,793.8
Decrease due to derecognition and
repayments
(4,427.6)
(71.1)
(20.7)
(4,519.4)
(4,227.2)
(68.8)
(19.0)
(4,315.0)
Written off
-
(0.1)
(4.1)
(4.2)
-
(0.1)
(4.1)
(4.2)
Other movements
10.5
0.7
0.8
12.0
10.5
0.7
0.8
12.0
Gross carrying amount at
31 December
32,216.6
646.6
144.3
33,007.5
30,212.1
637.2
141.9
30,991.2
i) Residential mortgages The majority of loans and advances to customers are secured on UK residential properties and are geographically diverse. The tables below provide information on residential loans and advances by payment due status: As shown in the tables above, during 2025 there was a net increase in stage 2 loans of \u00a3287.8m for the Group and of \u00a3286.9m for the Society. As outlined in Note 1v), during 2025 the Group has revised its view of forward- looking economic indicators and the associated scenario weightings; this caused PDs to increase and, as a result, more accounts have migrated to stage 2. Gains and losses arising during the year from loan modifications that did not result in derecognition were not material. Amounts written off are in accordance with the Group\u2019s accounting policy for write-offs (see Note 1h)). Amounts presented within \u2018other movements\u2019 in the tables above include movements in the Group\u2019s effective interest rate asset as described in Note 1f). For residential mortgages, stage 3 loans which no longer meet any of the default criteria are subject to a six month minimum probation period before they become eligible for transfer out of stage 3. At 31 December 2025, stage 3 loans include \u00a336.7m (2024: \u00a323.3m) for the Group and Society being held in stage 3 under this probation period.
2024
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
27,485.7
628.6
78.0
28,192.3
25,412.6
624.3
77.1
26,114.0
Transfers due to changes in credit
risk (note A):
From stage 1 to stage 2
(180.2)
180.2
-
-
(171.8)
171.8
-
-
From stage 1 to stage 3
(14.8)
-
14.8
-
(11.7)
-
11.7
-
From stage 2 to stage 1
352.8
(352.8)
-
-
350.3
(350.3)
-
-
From stage 2 to stage 3
-
(15.5)
15.5
-
-
(15.5)
15.5
-
From stage 3 to stage 2
-
6.0
(6.0)
-
-
6.0
(6.0)
-
From stage 3 to stage 1
1.0
-
(1.0)
-
1.0
-
(1.0)
-
Modification of contractual
(26.8)
(8.5)
30.6
(4.7)
(26.8)
(8.5)
30.6
(4.7)
cashflows
Increases due to origination
5,996.7
15.1
0.7
6,012.5
5,833.8
15.1
0.7
5,849.6
Decrease due to derecognition and
repayments
(3,555.8)
(93.9)
(12.7)
(3,662.4)
(3,350.1)
(92.2)
(11.9)
(3,454.2)
Written off
(0.1)
(0.4)
(3.9)
(4.4)
(0.1)
(0.4)
(3.9)
(4.4)
Other movements
8.8
-
0.7
9.5
8.8
-
0.7
9.5
Gross carrying amount at
31 December
30,067.3
358.8
116.7
30,542.8
28,046.0
350.3
113.5
28,509.8
Note A. For the purposes of the analysis presented above, the amounts shown for \u2018transfers due to changes in credit risk\u2019 are based on account balances at the start of the reporting period (not account balances at the date of transfer). The table below provides information on movements in the impairment loss allowance for residential loans and advances to customers during the year:
2025
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance at 1 January
4.5
2.5
6.5
13.5
4.4
2.4
6.0
12.8
Transfers due to changes in credit
risk:
From stage 1 to stage 2
(0.1)
2.3
-
2.2
(0.1)
2.3
-
2.2
From stage 1 to stage 3
-
-
1.0
1.0
-
-
1.0
1.0
From stage 2 to stage 1
-
(0.2)
-
(0.2)
-
(0.2)
-
(0.2)
From stage 2 to stage 3
-
(0.3)
0.7
0.4
-
(0.3)
0.7
0.4
From stage 3 to stage 2
-
0.1
(0.1)
-
-
0.1
(0.1)
-
Remeasurements within existing
2.3
0.3
-
2.6
2.2
0.1
0.2
2.5
stage
Increases due to origination
2.4
0.3
-
2.7
2.5
0.3
-
2.8
Decrease due to derecognition and
repayments
(0.5)
(0.3)
(1.4)
(2.2)
(0.5)
(0.3)
(1.4)
(2.2)
Changes due to modification
-
0.7
1.5
2.2
-
0.7
1.5
2.2
without derecognition
Written off
-
-
(0.6)
(0.6)
-
-
(0.6)
(0.6)
Loss allowance at 31 December
8.6
5.4
7.6
21.6
8.5
5.1
7.3
20.9
2024
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance at 1 January
16.2
6.0
6.8
29.0
15.4
5.9
6.6
27.9
Transfers due to changes in credit
risk:
From stage 1 to stage 2
(0.1)
0.8
-
0.7
(0.1)
0.8
-
0.7
From stage 1 to stage 3
-
-
0.5
0.5
-
-
0.5
0.5
From stage 2 to stage 1
0.1
(1.6)
-
(1.5)
0.1
(1.6)
-
(1.5)
From stage 2 to stage 3
-
(0.4)
0.4
-
-
(0.4)
0.4
-
From stage 3 to stage 2
-
0.1
(0.2)
(0.1)
-
0.1
(0.2)
(0.1)
Remeasurements within existing
(11.0)
(0.8)
(0.4)
(12.2)
(10.4)
(0.9)
(0.7)
(12.0)
stage
Increases due to origination
1.2
0.1
0.1
1.4
1.1
0.1
0.1
1.3
Decrease due to derecognition and
repayments
(1.9)
(0.6)
(0.9)
(3.4)
(1.7)
(0.5)
(0.9)
(3.1)
Changes due to modification
-
(1.1)
0.9
(0.2)
-
(1.1)
0.9
(0.2)
without derecognition
Written off
-
-
(0.7)
(0.7)
-
-
(0.7)
(0.7)
Loss allowance at 31 December
4.5
2.5
6.5
13.5
4.4
2.4
6.0
12.8
The loss allowance at 31 December 2025 includes judgmental adjustments totalling \u00a34.8m (2024: \u00a32.7m) for the Group and \u00a34.8m (2024: \u00a32.7m) for the Society. Details of these judgmental adjustments are set out in Note 1v). The tables below provide information on residential loans and advances to customers grouped by credit risk rating (probability of default). For further details on how the probability of default (PD) affects the Group\u2019s assessment of ECLs, see Note 1h) and Note 1v). ECL coverage shows the level of loss allowance expressed as a percentage of the gross carrying amount. The PDs used by the Group for IFRS 9 accounting purposes are not directly comparable to the PDs used by the Group for IRB regulatory purposes; this is due to significant differences in the requirements and methodologies applied by the Group for IFRS 9 and for IRB respectively.
Group 2025 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
1,409.6
0.9
-
1,410.5
0.5
-
-
0.5
0.15%
- <0.25%
4,408.0
1.6
-
4,409.6
0.8
-
-
0.8
0.25%
- <0.5%
16,089.9
1.8
-
16,091.7
3.6
-
-
3.6
0.5%
- <0.75%
7,690.8
4.9
-
7,695.7
2.3
-
-
2.3
0.75%
- <2.5%
2,601.4
51.0
-
2,652.4
1.4
-
-
1.4
2.5%
- <10%
16.9
144.7
-
161.6
-
0.2
-
0.2
10%
- <100%
-
441.7
-
441.7
-
5.2
-
5.2
Default
-
-
144.3
144.3
-
-
7.6
7.6
Total
32,216.6
646.6
144.3
33,007.5
8.6
5.4
7.6
21.6
ECL coverage by stage (%)
0.03%
0.84%
5.27%
0.07%
Group 2024 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
4,841.6
0.4
-
4,842.0
0.6
-
-
0.6
0.15%
- <0.25%
11,387.8
0.4
-
11,388.2
1.5
-
-
1.5
0.25%
- <0.5%
10,752.9
5.7
-
10,758.6
1.8
-
-
1.8
0.5%
- <0.75%
2,647.4
13.0
-
2,660.4
0.4
-
-
0.4
0.75%
- <2.5%
430.9
65.3
-
496.2
0.2
-
-
0.2
2.5%
- <10%
6.7
59.4
-
66.1
-
0.1
-
0.1
10%
- <100%
-
214.6
-
214.6
-
2.4
-
2.4
Default
-
-
116.7
116.7
-
-
6.5
6.5
Total
30,067.3
358.8
116.7
30,542.8
4.5
2.5
6.5
13.5
ECL coverage by stage (%)
0.01%
0.70%
5.57%
0.04%
Society 2025 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
1,409.6
0.9
-
1,410.5
0.5
-
-
0.5
0.15%
- <0.25%
4,408.0
1.6
-
4,409.6
0.8
-
-
0.8
0.25%
- <0.5%
15,438.0
1.8
-
15,439.8
3.6
-
-
3.6
0.5%
- <0.75%
6,338.2
4.9
-
6,343.1
2.2
-
-
2.2
0.75%
- <2.5%
2,601.4
51.0
-
2,652.4
1.4
-
-
1.4
2.5%
- <10%
16.9
144.7
-
161.6
-
0.2
-
0.2
10%
- <100%
-
432.3
-
432.3
-
4.9
-
4.9
Default
-
-
141.9
141.9
-
-
7.3
7.3
Total
30,212.1
637.2
141.9
30,991.2
8.5
5.1
7.3
20.9
ECL coverage by stage (%)
0.03%
0.80%
5.14%
0.07%
Society 2024 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
4,841.6
0.4
-
4,842.0
0.6
-
-
0.6
0.15%
- <0.25%
11,387.7
0.4
-
11,388.1
1.5
-
-
1.5
0.25%
- <0.5%
10,063.3
5.7
-
10,069.0
1.8
-
-
1.8
0.5%
- <0.75%
1,315.8
13.0
-
1,328.8
0.3
-
-
0.3
0.75%
- <2.5%
430.9
65.3
-
496.2
0.2
-
-
0.2
2.5%
- <10%
6.7
59.4
-
66.1
-
0.1
-
0.1
10%
- <100%
-
206.1
-
206.1
-
2.3
-
2.3
Default
-
-
113.5
113.5
-
-
6.0
6.0
Total
28,046.0
350.3
113.5
28,509.8
4.4
2.4
6.0
12.8
ECL coverage by stage (%)
0.02%
0.69%
5.29%
0.04%
The tables below provide an analysis of residential loans held in stage 2 as at the balance sheet date, reflecting the reasons for inclusion in stage 2. For the purposes of this analysis, where a loan satisfies at the balance sheet date more than one of the stage 2 criteria, the loan is included below within one category only and in order of the categories as presented. The amounts presented below as \u2018Over 30 days past due\u2019 therefore include all stage 2 loans which are over 30 days past due as at the balance sheet date, including those where this was not the initial reason for being classified as stage 2. Stage 2 Analysis
2025
2024
Gross ECL ECL Gross ECL ECL
Group
carrying allowance coverage carrying allowance coverage
amount \u00a3m % amount \u00a3m %
\u00a3m \u00a3m
Over 30 days past due
73.7
2.1
2.8%
62.1
1.2
1.9%
In forbearance
130.2
1.1
0.8%
16.5
0.1
0.6%
In arrears
59.4
0.9
1.5%
66.8
0.6
0.9%
Term expired
15.7
-
-
18.6
-
-
Temporary transfer to interest only*
85.8
0.1
0.1%
103.5
0.1
0.1%
Increase in PD since origination
281.8
1.2
0.4%
91.3
0.5
0.5%
Total
646.6
5.4
0.8%
358.8
2.5
0.7%
*Temporary arrangement in place, via the Mortgage Charter Scheme, to repay interest only The tables below provide further information on the types of lending and geographical split: * Fast track relates to certain mortgages granted between 2007-2009 for which, subject to certain application criteria, the Society accepted reduced documentation from borrowers. ^ Sub-prime mortgages are defined as loans to borrowers that typically had weakened credit histories at the time the loan was advanced. Prior to 1 June 2021, these loans were held by the Group\u2019s specialist lending businesses Amber and NYM; these loans were hived-up into the Society with effect from 1 June 2021. Stage 2 Analysis
2025
2024
Gross ECL ECL Gross ECL ECL
Society
carrying allowance coverage carrying allowance coverage
amount \u00a3m % amount \u00a3m %
\u00a3m \u00a3m
Over 30 days past due
70.2
1.9
2.7%
59.3
1.1
1.9%
In forbearance
127.0
1.1
0.9%
12.6
0.1
0.8%
In arrears
56.7
0.8
1.4%
65.0
0.6
0.9%
Term expired
15.7
0.0
0.0%
18.6
-
-
Temporary transfer to interest only *
85.8
0.1
0.1%
103.5
0.1
0.1%
Increase in PD since origination
281.8
1.2
0.4%
91.3
0.5
0.5%
Total
637.2
5.1
0.8%
350.3
2.4
0.7%
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Prime:
Residential
26,835.0
513.2
109.0
27,457.2
24,273.8
288.6
80.1
24,642.5
Buy-to-let
5,239.7
91.4
19.4
5,350.5
5,608.3
42.1
18.3
5,668.7
Self build
7.5
0.9
0.7
9.1
8.6
0.8
1.0
10.4
Fast track*
7.8
0.4
0.2
8.4
9.2
0.6
0.1
9.9
Self certified
113.1
35.0
13.7
161.8
145.2
21.4
15.4
182.0
Sub
-prime^:
Residential
2.6
1.1
-
3.7
3.7
0.8
0.2
4.7
Buy-to-let
3.3
0.6
0.3
4.2
5.0
0.4
0.3
5.7
Self certified
7.6
4.0
1.0
12.6
13.5
4.1
1.3
18.9
Total
32,216.6
646.6
144.3
33,007.5
30,067.3
358.8
116.7
30,542.8
Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Prime:
Residential
26,183.1
511.2
109.0
26,803.3
23,584.1
285.0
79.8
23,948.9
Buy-to-let
3,887.1
84.0
17.0
3,988.1
4,276.7
37.2
15.4
4,329.3
Self build
7.5
0.9
0.7
9.1
8.6
0.8
1.0
10.4
Fast track*
7.8
0.4
0.2
8.4
9.2
0.6
0.1
9.9
Self certified
113.1
35.0
13.7
161.8
145.2
21.4
15.4
182.0
Sub
-prime^:
Residential
2.6
1.1
-
3.7
3.7
0.8
0.2
4.7
Buy-to-let
3.3
0.6
0.3
4.2
5.0
0.4
0.3
5.7
Self certified
7.6
4.0
1.0
12.6
13.5
4.1
1.3
18.9
Total
30,212.1
637.2
141.9
30,991.2
28,046.0
350.3
113.5
28,509.8
ndexed loan-to-value information on the Group\u2019s residential loan portfolio is set out below:
Group (\u00a3m)
2025
2024
Region
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
North
871.8
19.7
5.6
897.1
854.6
14.3
3.9
872.8
Yorkshire
2,445.7
50.8
9.8
2,506.3
2,332.1
30.2
9.8
2,372.1
East Midlands
2,199.7
52.1
8.2
2,260.0
2,035.7
26.7
7.2
2,069.6
East Anglia
3,186.6
69.6
16.2
3,272.4
2,836.3
43.8
11.3
2,891.4
London
6,211.9
110.9
29.4
6,352.2
5,732.7
54.4
22.6
5,809.7
South East
5,281.4
107.2
26.4
5,415.0
4,847.5
57.2
21.5
4,926.2
South West
2,804.1
51.9
9.5
2,865.5
2,695.6
29.2
6.9
2,731.7
West Midlands
2,625.2
55.8
10.0
2,691.0
2,381.5
31.1
7.4
2,420.0
North West
2,996.0
65.1
15.4
3,076.5
2,821.4
37.5
13.6
2,872.5
Wales
878.4
20.2
3.9
902.5
825.6
10.3
3.9
839.8
Scotland
2,012.4
39.7
8.6
2,060.7
1,959.1
19.8
6.7
1,985.6
Northern Ireland
8.7
1.4
1.3
11.4
11.2
0.8
1.3
13.3
Channel Islands
694.7
2.2
-
696.9
734.0
3.5
0.6
738.1
Total
32,216.6
646.6
144.3
33,007.5
30,067.3
358.8
116.7
30,542.8
Society (\u00a3m)
2025
2024
Region
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
North
867.8
19.7
5.6
893.1
850.3
14.3
3.9
868.5
Yorkshire
2,429.4
50.8
9.8
2,490.0
2,315.5
30.0
9.8
2,355.3
East Midlands
2,190.6
51.8
8.2
2,250.6
2,024.7
26.6
7.2
2,058.5
East Anglia
3,164.8
69.5
16.2
3,250.5
2,814.4
43.4
11.3
2,869.1
London
5,357.6
105.2
27.6
5,490.4
4,899.8
50.4
20.3
4,970.5
South East
5,145.1
107.2
26.0
5,278.3
4,705.0
57.0
21.5
4,783.5
South West
2,771.0
51.9
9.5
2,832.4
2,661.5
29.2
6.9
2,697.6
West Midlands
2,556.1
55.5
9.8
2,621.4
2,315.4
31.0
7.1
2,353.5
North West
2,863.3
64.6
15.4
2,943.3
2,698.9
37.5
13.6
2,750.0
Wales
873.0
19.9
3.9
896.8
819.6
10.3
3.9
833.8
Scotland
1,984.7
39.7
8.6
2,033.0
1,929.7
19.8
6.7
1,956.2
Northern Ireland
8.7
1.4
1.3
11.4
11.2
0.8
1.3
13.3
Total
30,212.1
637.2
141.9
30,991.2
28,046.0
350.3
113.5
28,509.8
Group (\u00a3m)
2025
2024
Loan
-to-value
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<40%
5,526.9
119.9
20.3
5,667.1
5,891.7
72.6
21.0
5,985.3
40%
- 50%
3,705.0
93.6
22.7
3,821.3
4,052.9
58.7
19.8
4,131.4
50%
- 60%
4,169.7
125.3
26.9
4,321.9
4,442.5
63.8
32.9
4,539.2
60%
- 70%
4,367.5
106.7
23.8
4,498.0
4,622.4
60.2
16.6
4,699.2
70%
- 80%
4,586.0
78.7
14.5
4,679.2
4,021.4
41.5
8.7
4,071.6
80%
- 90%
6,620.2
93.4
21.0
6,734.6
5,324.7
46.2
10.8
5,381.7
90%
- 100%
3,181.4
27.0
11.1
3,219.5
1,687.3
14.5
3.0
1,704.8
>100%
59.9
2.0
4.0
65.9
24.4
1.3
3.9
29.6
Total
32,216.6
646.6
144.3
33,007.5
30,067.3
358.8
116.7
30,542.8
The Group\u2019s policy for new mortgage lending is currently a maximum loan-to-value ratio of 100% for residential mortgages and 75% for buy-to-let lending. In addition, SIL lends up to 100% on its \u2018Next Generation\u2019 mortgages, for which a family member is required to provide a guarantee of up to 20% of the borrower\u2019s property value (to be supported by a bond over the guarantor\u2019s own suitable property in Guernsey or Jersey). There has been an increase in the volume of 80-100% LTV lending within the year as we continue to deliver on our purpose of helping more people have a home. This has resulted in an increase in the overall percentage of the book with an LTV greater than 80%; 31.8% at 31 December 2025 (2024: 24.5%) and an increase in the average indexed loan-to-value of the Society\u2019s new lending in 2025 to 68.4% (2024: 65.3%). The quality of the lending remains high, with a well-managed spread of risk, carried out in a controlled manner being cognisant of the economic challenges that lie ahead. This is represented by the proportion of Group residential mortgage accounts in arrears by three months or more which remained low at 0.30% (2024: 0.28%). At 31 December 2025, the average indexed loan-to-value of Group residential mortgages on a valuation weighted basis (calculated as the total outstanding balance divided by the total value of collateral held), was 48.8% (2024: 46.1%) and for Society residential mortgages was 48.7% (2024: 45.9%). Forbearance Where appropriate for customers, the Group applies a policy of forbearance. This may be applied where the actual or apparent financial stress of the customer is considered to be short-term with a potential to be recovered. Forbearance may involve arrears capitalisation, a reduction in the monthly payment (known as a concession), a conversion to interest only or a mortgage term extension. Forbearance is undertaken in order to achieve the best outcome for both the customer and the business through dealing with repayment difficulties at an early stage. Possession is generally considered only as a last resort, once all other options for the customer have been exhausted. Possession balances represent loans against which the Group has taken ownership of properties pending their sale. The Group does not occupy repossessed properties for business use or use assets acquired in its operations. All customer accounts are monitored to ensure that these strategies remain appropriate. Possessions For the Group, at 31 December 2025 the balance of residential loans where the property has been taken into possession was \u00a33.0m and represents less than 0.1% of total outstanding loans (2024: \u00a33.8m; less than 0.1%). For the Society, at 31 December 2025 the balance of residential loans where the property has been taken into possession was \u00a33.0m and represents less than 0.01% of total outstanding loans (2024: \u00a33.2m; less than 0.1%). All possessions balances are classified as stage 3. Forbearance activity The tables below provide further information on residential mortgages regarded as being in forbearance as at 31 December 2025, showing the type of account renegotiations applied. For the purposes of these forbearance tables, the Group applies the Bank of England Prudential Regulatory Authority (PRA) definition of forbearance (which is aligned to the European Banking Authority, EBA, definition).
Society (\u00a3m)
2025
2024
Loan
-to-value
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<40%
5,249.9
119.1
20.3
5,389.3
5,611.6
71.9
21.0
5,704.5
40%
- 50%
3,425.0
93.2
22.0
3,540.2
3,761.8
58.7
19.4
3,839.9
50%
- 60%
3,785.2
124.1
26.4
3,935.7
4,036.9
61.1
32.2
4,130.2
60%
- 70%
3,869.9
104.0
23.8
3,997.7
4,091.1
57.3
16.5
4,164.9
70%
- 80%
4,169.7
76.3
13.7
4,259.7
3,628.3
40.7
7.3
3,676.3
80%
- 90%
6,505.1
92.4
21.0
6,618.5
5,235.9
45.6
10.2
5,291.7
90%
- 100%
3,154.0
27.0
10.7
3,191.7
1,663.2
14.5
3.0
1,680.7
>100%
53.3
1.1
4.0
58.4
17.2
0.5
3.9
21.6
Total
30,212.1
637.2
141.9
30,991.2
28,046.0
350.3
113.5
28,509.8
Under the PRA definition, loans are required to meet certain payment and arrears criteria before they are deemed to exit forbearance; this includes a minimum two-year probation period following the forbearance event (extended to three years in certain situations). For the purposes of the tables below, the following loans are regarded as forborne as at 31 December 2025*: \u2022 any loan to which forbearance measures were applied within the two years prior to the reporting date (regardless of whether the loan remains on renegotiated terms at 31 December 2025); and \u2022 any loan to which forbearance measures were applied and which remains in the probation period following the forbearance event. For the purposes of the tables below, loans are presented according to the ECL stage they were held in as at the reporting date. * As noted in Note 1v), the SICR criteria applied by the Group was revised during the year, to align the probation period of forborne accounts with that used in regulatory reporting standards. For the purposes of the 2024 comparative tables below, information is therefore presented in accordance with the criteria that was applicable as at 31 December 2024 (as disclosed in Note 43a)(i) to the 2024 Annual Report and Accounts).
Reduced
Transfer to
Term Total renegotiations
Group
- 2025
Total
Capitalisation
Payment
interest only
Extension
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
32,216.6
-
-
-
-
-
-
32,216.6
-
-
-
-
-
-
Stage 2
Not past due
468.4
3.8
66.8
14.3
-
84.9
18.1
Past due up to 30 days
104.5
0.3
43.3
1.6
-
45.2
43.3
Over 30 days past due
73.7
-
24.4
2.2
-
26.6
36.1
646.6
4.1
134.5
18.1
-
156.7
24.2
Stage 3
Not past due
19.8
1.5
7.8
0.2
-
9.5
48.0
Past due up to 90 days
22.3
0.1
9.8
2.1
-
12.0
53.8
Over 90 days past due
102.2
0.7
53.9
7.5
-
62.1
60.8
144.3
2.3
71.5
9.8
-
83.6
57.9
Gross carrying amount
33,007.5
6.4
206.0
27.9
-
240.3
0.7
Loss allowance
(21.6)
(0.1)
(5.2)
(0.3)
-
(5.6)
25.9
32,985.9
6.3
200.8
27.6
-
234.7
0.7
Reduced
Transfer to
Term Total renegotiations
Group
\u2013 2024
Total
Capitalisation
Payment
interest only
Extension
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
30,067.3
0.3
27.8
6.0
-
34.1
0.1
30,067.3
0.3
27.8
6.0
-
34.1
0.1
Stage 2
Not past due
224.2
0.2
24.0
7.9
-
32.1
14.3
Past due up to 30 days
72.5
-
29.4
0.6
-
30.0
41.4
Over 30 days past due
62.1
0.3
24.4
1.4
-
26.1
42.0
358.8
0.5
77.8
9.9
-
88.2
24.6
Stage 3
Not past due
13.8
1.1
3.2
0.2
-
4.5
32.6
Past due up to 90 days
18.0
0.2
8.9
2.0
-
11.1
61.7
Over 90 days past due
84.9
0.2
46.8
5.9
-
52.9
62.3
116.7
1.5
58.9
8.1
-
68.5
58.7
Gross carrying amount
30,542.8
2.3
164.5
24.0
-
190.8
0.6
Loss allowance
(13.5)
(0.3)
(3.8)
(0.2)
-
(4.3)
31.9
30,529.3
2.0
160.7
23.8
-
186.5
0.6
Reduced
Transfer to
Term Total renegotiations
Society
- 2025
Total
Capitalisation
Payment
interest only
Extension
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
30,212.1
-
-
-
-
-
-
30,212.1
-
-
-
-
-
-
Stage 2
Not past due
465.1
3.2
64.3
14.2
-
81.7
17.6
Past due up to 30 days
101.9
0.3
43.3
1.6
-
45.2
44.4
Over 30 days past due
70.2
-
24.4
2.2
-
26.6
37.9
637.2
3.5
132.0
18.0
-
153.5
24.1
Stage 3
Not past due
19.8
1.5
7.8
0.2
-
9.5
48.0
Past due up to 90 days
22.3
0.1
9.8
2.1
-
12.0
53.8
Over 90 days past due
99.8
0.7
53.9
7.5
-
62.1
62.2
141.9
2.3
71.5
9.8
-
83.6
58.9
Gross carrying amount
30,991.2
5.8
203.5
27.8
-
237.1
0.8
Loss allowance
(20.9)
(0.1)
(5.2)
(0.3)
-
(5.6)
26.8
30,970.3
5.7
198.3
27.5
-
231.5
0.7
Collateral Collateral held consists of residential properties. The use of such collateral is in line with terms that are usual and customary to standard lending activities. Upon initial recognition of loans and advances, the fair value of collateral is based on valuation techniques commonly used for the corresponding assets. In subsequent periods, the fair value is updated by reference to market prices or indices of similar assets. Fair value of capped collateral held Some properties in the Group\u2019s mortgage book are in negative equity, which increases the possibility of the Group incurring a loss if the property is taken into possession. The fair value of residential property used to derive the figures in the table above is determined by reference to a recognised house price index. Movements in this index to the reporting date are applied to all properties in the portfolio on a regional basis. For the majority of the Group\u2019s loans, the Group holds excess collateral however this cannot be used to offset those instances where the loan amount exceeds the collateral held. The fair value of capped collateral in the table above therefore represents, on an individual loan basis, the lower of the value of the property and the outstanding loan amount. It does not reflect the overall value of properties against which the loans are secured. The total fair value of collateral held in respect of residential mortgages for the Group at 31 December 2025 is \u00a367,624.3m (2024: \u00a366,203.5m) and for the Society is \u00a363,600.6m (2024: \u00a362,133.0m).
Total
Capitalisation
Reduced
Transfer to
Term Total renegotiations
Society
- 2024
\u00a3m \u00a3m Payment
interest only
Extension
\u00a3m
%
\u00a3m \u00a3m \u00a3m
Stage 1
Not past due
28,046.0
0.3
27.8
6.0
-
34.1
0.1
28,046.0
0.3
27.8
6.0
-
34.1
0.1
Stage 2
Not past due
220.4
0.2
22.3
5.7
-
28.2
12.8
Past due up to 30 days
70.6
-
29.4
0.6
-
30.0
42.5
Over 30 days past due
59.3
0.3
24.4
1.4
-
26.1
44.0
350.3
0.5
76.1
7.7
-
84.3
24.1
Stage 3
Not past due
13.8
1.1
3.2
0.2
-
4.5
32.6
Past due up to 90 days
18.0
0.2
8.9
2.0
-
11.1
61.7
Over 90 days past due
81.7
0.2
46.8
5.9
-
52.9
64.7
113.5
1.5
58.9
8.1
-
68.5
60.4
Gross carrying amount
28,509.8
2.3
162.8
21.8
-
186.9
0.7
Loss allowance
(12.8)
(0.3)
(3.8)
(0.2)
-
(4.3)
33.6
28,497.0
2.0
159.0
21.6
-
182.6
0.6
\u00a3m
Group
Society
2025
2024
2025
2024
Stage 1
32,206.7
30,059.9
30,204.9
28,041.6
Stage 2
646.1
358.4
636.8
350.0
Stage 3
143.6
115.8
141.2
112.6
32,996.4
30,534.1
30,982.9
28,504.2
Gross loan balances
33,007.5
30,542.8
30,991.2
28,509.8
Negative equity
11.1
8.7
8.3
5.6
Capped collateral held in respect of
possessions (included in stage 3 above)
2.8
2.9
2.8
2.9
At 31 December 2025 the contractual amount outstanding on loans written off during the year due to there being no reasonable expectation of recovery, but which remain subject to enforcement activity, is \u00a30.8m (2024: \u00a30.7m) for the Group and for the Society. ii) Commercial mortgages The commercial mortgage portfolio (also known as loans fully secured on land) is currently closed to new business. The tables below provide information on commercial loans by payment due status.
Group & Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
74.6
2.6
2.7
79.9
93.9
0.4
11.3
105.6
Up to 30 days
-
2.8
-
2.8
-
2.3
-
2.3
31 to 60 days
-
2.7
-
2.7
-
2.1
-
2.1
61 to 90 days
-
1.0
-
1.0
-
1.1
0.7
1.8
Over 90 days
-
-
5.8
5.8
-
-
2.5
2.5
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
The table below provides information on movements in the gross carrying amount of commercial loans during the year.
Group & Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
93.9
5.9
14.5
114.3
91.0
37.8
6.4
135.2
Transfers due to changes in credit
risk (note A):
From stage 1 to stage 2
(2.5)
2.5
-
-
(1.1)
1.1
-
-
From stage 1 to stage 3
(2.0)
-
2.0
-
(1.4)
-
1.4
-
From stage 2 to stage 1
0.1
(0.1)
-
-
19.2
(19.2)
-
-
From stage 2 to stage 3
-
(0.8)
0.8
-
-
(3.4)
3.4
-
From stage 3 to stage 1
0.8
-
(0.8)
-
-
-
-
-
Modification of contractual
(3.2)
2.3
0.5
(0.4)
0.8
(8.0)
6.8
(0.4)
cashflows
Decrease due to derecognition and
repayments
(12.5)
(0.7)
(7.2)
(20.4)
(14.6)
(2.4)
(3.1)
(20.1)
Written off
-
-
(1.3)
(1.3)
-
-
(0.4)
(0.4)
Gross carrying amount at
31 December
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Note A. For the purposes of the analysis presented above, the amounts shown for \u2018transfers due to changes in credit risk\u2019 are based on account balances at the start of the reporting period (not account balances at the date of transfer). Gains and losses arising during the year from loan modifications that did not result in derecognition were not significant. Amounts written off are in accordance with the Group\u2019s accounting policy for write-offs (see Note 1h)). For commercial loans, stage 3 loans which no longer meet any of the default criteria are subject to a three month minimum probation period before they become eligible for transfer out of stage 3. At 31 December 2025, stage 3 loans include \u00a30.1m being held in stage 3 under this probation period (2024: \u00a3nil). The table below provides information on movements in the impairment loss allowance for commercial loans during the year.
Group & Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss
allowance at 1 January
0.2
0.2
4.3
4.7
0.6
6.6
1.8
9.0
Transfers due to changes in credit
risk:
From stage 1 to stage 2
-
0.1
-
0.1
-
-
-
-
From stage 1 to stage 3
-
-
0.6
0.6
-
-
-
-
From stage 2 to stage 1
-
-
-
-
-
(1.9)
-
(1.9)
From stage 2 to stage 3
-
-
-
-
-
(0.4)
0.4
-
Remeasurements within existing
0.2
-
0.1
0.3
(0.3)
(0.1)
-
(0.4)
stage
Decrease due to derecognition and
repayments
-
-
(0.1)
(0.1)
(0.1)
(0.9)
(1.1)
(2.1)
Changes due to modification
-
-
(0.1)
(0.1)
-
(3.1)
3.3
0.2
without derecognition
Written off
-
-
(2.9)
(2.9)
-
-
(0.1)
(0.1)
Loss allowance at 31 December
0.4
0.3
1.9
2.6
0.2
0.2
4.3
4.7
ECL coverage (%)
0.54%
3.30%
22.35%
2.82%
0.21%
3.39%
29.66%
4.11%
Given the size and nature of the Group\u2019s commercial portfolio, it is not meaningful to manage credit risk by reference to behavioural scores or PD percentages. Credit risk is predominantly managed by individual review of loans in accordance with certain criteria. To aid an understanding of significant credit risk concentrations for the Group\u2019s commercial portfolio, the tables below provide analyses of loans by industry type, by geography and by loan-to-value percentage.
Group & Society (\u00a3m)
2025
2024
Industry analysis
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Leisure and hotels
5.7
0.5
-
6.2
6.4
0.6
5.1
12.1
Retail
1.9
0.3
0.2
2.4
2.1
0.3
0.2
2.6
Nursing/residential homes
1.6
-
-
1.6
1.7
-
2.2
3.9
Offices
1.1
-
-
1.1
1.2
-
-
1.2
Commercial and industrial units
63.8
8.3
8.3
80.4
81.9
5.0
7.0
93.9
Miscellaneous
0.5
-
-
0.5
0.6
-
-
0.6
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Group & Society (\u00a3m)
2025
2024
Geographical analysis (Region)
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
North
1.3
1.7
-
3.0
2.9
0.3
-
3.2
Yorkshire
3.7
0.5
1.1
5.3
6.2
0.3
5.7
12.2
East Midlands
2.1
-
2.2
4.3
3.2
-
2.3
5.5
East Anglia
8.4
0.1
0.1
8.6
9.6
0.1
-
9.7
London
19.0
2.9
1.2
23.1
22.8
2.1
0.7
25.6
South East
12.4
1.6
0.4
14.4
15.5
1.2
-
16.7
South West
11.2
-
0.4
11.6
12.0
0.4
0.4
12.8
West Midlands
5.3
1.1
0.3
6.7
7.0
0.6
2.3
9.9
North West
8.7
1.2
2.0
11.9
10.5
0.9
2.1
13.5
Wales
2.3
-
0.5
2.8
2.4
-
0.7
3.1
Scotland
0.2
-
0.3
0.5
1.8
-
0.3
2.1
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Group & Society (\u00a3m)
2025
2024
Loan
-to-value
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<40%
24.4
2.5
1.2
28.1
27.4
1.0
2.0
30.4
40%
- 50%
12.7
1.4
1.2
15.3
18.5
1.1
0.6
20.2
50%
- 60%
14.3
1.2
-
15.5
16.6
1.2
1.2
19.0
60%
- 70%
5.1
1.9
0.2
7.2
6.3
1.4
0.1
7.8
70%
- 80%
6.0
0.9
-
6.9
7.4
0.5
1.3
9.2
80%
- 90%
8.7
1.2
0.8
10.7
9.3
0.3
-
9.6
90%
- 100%
2.2
-
-
2.2
5.4
0.4
-
5.8
>100%
1.2
-
5.1
6.3
3.0
-
9.3
12.3
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Forbearance The Group\u2019s policy on forbearance for commercial mortgages is the same as the policy for residential mortgages, which is set out in Note 45a)(i). At 31 December 2025 the balance of commercial mortgages where the property has been taken into possession was \u00a30.1m for the Group and Society (2024: \u00a3nil). Possessions balances are classified as stage 3. The tables below provide further information on commercial mortgages regarded as being in forbearance as at 31 December 2025, showing the type of account renegotiations applied. The tables below are presented on the same basis as the corresponding tables for residential mortgages, the basis for which is described on pages 259 and 260. Collateral The collateral held consists of properties held within the categories previously outlined. The use of such collateral is in line with terms that are usual and customary to standard lending activities. Fair value of capped collateral held An analysis of capped collateral, where the collateral is capped to the lower of the value of the property and the amount outstanding on an individual loan basis, is shown below.
2025
Group & Society
Reduced
Transfer to
Total renegotiations
Total
Capitalisation
Payment
interest only
\u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
74.6
-
-
-
-
-
74.6
-
-
-
-
-
Stage 2
Not past due
2.6
0.8
0.9
0.9
2.6
100.0
Past due up to 30 days
2.8
-
0.3
-
0.3
10.7
Over 30 days past due
3.7
0.8
-
-
0.8
21.6
9.1
1.6
1.2
0.9
3.7
40.7
Stage 3
Not past due
2.7
-
0.1
1.2
1.3
48.1
Past due up to 90 days
-
-
-
-
-
-
Over 90 days past due
5.8
-
1.0
2.8
3.8
65.5
8.5
-
1.1
4.0
5.1
60.0
Gross carrying amount
92.2
1.6
2.3
4.9
8.8
9.5
Loss allowance
(2.6)
(0.1)
(0.1)
(0.7)
(0.9)
34.6
89.6
1.5
2.2
4.2
7.9
8.8
2024
Group & Society
Reduced Transfer to Total renegotiations
Total
Capitalisation
Payment
interest only
\u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
93.9
0.9
0.4
0.5
1.8
1.9
93.9
0.9
0.4
0.5
1.8
1.9
Stage 2
Not past due
0.4
-
-
0.4
0.4
100.0
Past due up to 30 days
2.3
-
-
0.1
0.1
4.3
Over 30 days past due
3.2
0.9
0.5
-
1.4
43.8
5.9
0.9
0.5
0.5
1.9
32.2
Stage 3
Not past due
11.3
-
-
8.4
8.4
74.3
Past due up to 90 days
0.7
-
-
-
-
-
Over 90 days past due
2.5
-
0.6
0.7
1.3
52.0
14.5
-
0.6
9.1
9.7
66.9
Gross carrying amount
114.3
1.8
1.5
10.1
13.4
11.7
Loss allowance
(4.7)
-
-
(3.8)
(3.8)
80.9
109.6
1.8
1.5
6.3
9.6
8.8
The fair value of commercial property used to derive the figures in the table above is determined by reference to the latest external valuation of the properties in question. The total fair value of collateral held in respect of commercial loans for the Group and the Society at 31 December 2025 is \u00a3236.8m (2024: \u00a3270.5m). At 31 December 2025 the contractual amount outstanding on loans written off during the year due to there being no reasonable expectation of recovery, but which remain subject to enforcement activity, is \u00a30.2m (2024: \u00a30.2m) for the Group and the Society. iii) Other lending Other lending comprises the following: The table below provides information on movements in the gross carrying amount of other loans and advances during the year. Note: A. For the purposes of the analysis presented above, the amounts shown for \u2018transfers due to changes in credit risk\u2019 are based on account balances at the end of the reporting period (not account balances at the date of transfer).
Group & Society (\u00a3m)
2025
2024
Stage 1
74.4
93.2
Stage 2
9.1
5.9
Stage 3
7.0
12.3
Total
90.5
111.4
Gross loan balances
92.2
114.3
Negative equity
1.7
2.9
Capped collateral held in respect of possessions (included within stage 3 above)
0.1
-
2025
2024
Group
Gross ECL Net Gross ECL Net
\u00a3m
carrying Allowance carrying carrying allowance carrying
amount amount amount amount
Debt factoring advances
200.6
(1.4)
199.2
190.0
(1.4)
188.6
Other loans
45.3
-
45.3
48.2
-
48.2
Total
245.9
(1.4)
244.5
238.2
(1.4)
236.8
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
234.5
2.3
1.4
238.2
219.6
4.3
0.5
224.4
Transfers due to changes in
credit risk (note A):
From stage 1 to stage 2
(1.1)
1.1
-
-
(3.4)
3.4
-
-
From stage 1 to stage 3
-
-
-
-
(0.4)
-
0.4
-
From stage 2 to stage 1
1.0
(1.0)
-
-
2.3
(2.3)
-
-
From stage 2 to stage 3
-
(0.7)
0.7
-
-
(1.6)
1.6
-
From stage 3 to stage 2
-
1.0
(1.0)
-
-
0.3
(0.3)
-
From stage 3 to stage 1
0.4
-
(0.4)
-
0.3
-
(0.3)
-
Modification of contractual
-
-
-
-
-
-
-
-
cashflows
Increases due to origination
68.8
-
-
68.8
74.2
-
-
74.2
Decrease due to derecognition
(60.3)
(0.5)
-
(60.8)
(58.1)
(1.8)
-
(59.9)
and repayments
Write
-offs
-
-
(0.3)
(0.3)
-
-
(0.6)
(0.6)
Other movements
-
-
-
-
-
-
0.1
0.1
Gross carrying amount at 31
243.3
2.2
0.4
245.9
234.5
2.3
1.4
238.2
December
The table below provides information on movements in the impairment loss allowance for other loans and advances during the year. Debt factoring advances Debt factoring advances relate to amounts advanced to clients by SBF, the Group\u2019s debt factoring and invoice discounting business. Credit risk is predominantly managed by rigorous due diligence controls and regular monitoring of client accounts, and includes the use of concentration limits, credit reference checks and \u2018watchlists\u2019 on clients\u2019 debtors. Advances are typically made to clients only against notified invoices that are less than 90 days past due. Debt factoring and invoice discounting advances are typically secured via a legal charge against the relevant client\u2019s sales ledger. Additional security may also be taken in the form of an all assets debenture that may incorporate other unencumbered assets as well as personal guarantees. At 31 December 2025 and 31 December 2024, the fair value of the total collateral held by the Group against debt factoring and invoice discounting advances was in excess of the value of the total advances outstanding. Other loans The table below provides information on the gross carrying amount of other loans by payment due status. Other loans of \u00a344.8m (2024: \u00a348.2m), at a Group level, were advanced by SIL to customers in respect of residential properties owned by a property management holding company. The loans are secured on shares in that property management holding company and the fair value of the total collateral held is \u00a394.1m (2024: \u00a399.7m). b) Credit risk \u2013 balances with the Bank of England, debt securities and loans and advances to credit institutions The Group holds treasury investments in order to meet liquidity requirements and for general business purposes. The credit risk arising from these investments is closely monitored and managed by the Group. Collateral held for treasury assets is determined by the nature of the instrument. Loans and debt securities are generally unsecured with the exception of asset backed securities and covered bonds which are secured by pools of financial assets. For details of collateral held against debt securities see Note 14. For details of collateral held against loans and advances to credit institutions see Note 13. No collateral is held against balances with the Bank of England.
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance at 1 January
0.2
0.6
0.6
1.4
0.2
1.1
0.3
1.6
Transfers due to changes in
credit risk:
From stage 1 to stage 2
-
0.9
-
0.9
(0.1)
1.0
-
0.9
From stage 2 to stage 1
-
(0.2)
-
(0.2)
-
(0.3)
-
(0.3)
From stage 2 to stage 3
-
(0.7)
0.7
-
-
(1.0)
1.0
-
From stage 3 to stage 2
-
0.6
(0.6)
-
-
-
-
-
From stage 3 to stage 1
-
-
-
-
0.1
-
(0.1)
-
Remeasurements within existing
0.1
(0.5)
-
(0.4)
-
(0.2)
-
(0.2)
stage
Write
-offs
-
-
(0.3)
(0.3)
-
-
(0.6)
(0.6)
Loss allowance at 31 December
0.3
0.7
0.4
1.4
0.2
0.6
0.6
1.4
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Not past due
45.2
-
45.2
48.2
-
48.2
Up to 30 days
-
0.1
0.1
-
-
-
Total
45.2
0.1
45.3
48.2
-
48.2
At 31 December 2025 none of the Group or the Society\u2019s treasury assets were past due (2024: none past due). At 31 December 2025 the ECLs on the Group and the Society\u2019s treasury assets were all held as stage 1 (2024: all stage 1). At 31 December 2025 and 31 December 2024, all the Group and the Society\u2019s treasury investments, except for building society deposits (2025: \u00a3nil; 2024: \u00a30.1m) and certain collateral held (2025: \u00a3nil: 2024: \u00a30.1m), were assessed to have a probability of default (PD) of less than 3.5% (2024: 0.11%). The Group\u2019s accounting policies on impairment losses on treasury assets and how the Group assesses ECLs and PDs on treasury assets are detailed in Note 1h). At 31 December 2025 over 99.9% (2024: 99.9%) of the Group\u2019s treasury investment assets (including cash in hand and with the Bank of England and excluding exposures to a central clearing house used to clear derivatives to manage interest rate risk in line with regulation) were rated A3 or better, and for the Society over 99.9% (2024: 99.9%) were rated A3 or better. The table below provides further details of the credit ratings for both the Group and the Society\u2019s treasury investment portfolios: \u2018Unrated\u2019 in the above analysis includes an exposure to a central clearing house totalling \u00a3254.6m for the Group and Society (2024: \u00a3273.3m) used to clear derivatives to manage interest rate risk, as required by regulation, together with an exposure to subsidiary undertakings in the form of Credit Support Annex (CSA) collateral for the Society only, totalling \u00a39.0m (2024: \u00a352.2m). The Group also monitors exposure concentrations against a variety of criteria including industry sector / asset class and country of risk.
Group
Society
Rating
2025 2025 2024 2024 2025 2025 2024 2024
\u00a3m % \u00a3m % \u00a3m % \u00a3m %
Aaa
2,818.1
47.1
2,429.6
36.3
3,040.5
51.2
2,666.1
40.0
Aa1
212.6
3.6
268.2
4.0
179.2
3.0
268.2
4.0
Aa2
0.1
-
0.1
-
-
-
-
-
Aa3
2,611.1
43.6
3,605.1
53.8
2,416.1
40.7
3,336.4
50.0
A1
85.3
1.4
117.3
1.8
40.9
0.7
72.1
1.1
A2
1.1
-
1.0
-
-
-
-
-
Unrated
254.6
4.3
273.5
4.1
263.6
4.4
325.7
4.9
Total
5,982.9
100.0
6,694.8
100.0
5,940.3
100.0
6,668.5
100.0
Group
Society
Industry sector / asset class
2025 2025 2024 2024 2025 2025 2024 2024
\u00a3m % \u00a3m % \u00a3m % \u00a3m %
Cash in hand and balances with the
Bank of England
1,360.2
22.7
1,930.6
28.9
1,360.2
22.9
1,930.6
29.0
Loans and advances to banks and
building societies
353.3
5.9
414.6
6.2
304.7
5.1
397.8
6.0
Gilts
500.5
8.4
1,086.5
16.2
500.5
8.4
1,086.5
16.3
Certificates of deposit
-
-
-
-
-
-
-
-
Fixed rate bonds
1,552.0
26.0
1,274.9
19.0
1,552.0
26.2
1,274.9
19.1
Floating rate notes
11.0
0.2
-
-
-
-
-
-
Treasury bills
733.4
12.9
598.2
8.9
557.0
9.4
321.2
4.8
Covered bonds
813.5
13.6
770.1
11.5
813.5
13.7
770.1
11.5
Residential mortgage backed
619.0
10.3
619.9
9.3
852.4
14.3
887.4
13.3
securities
Total
5,982.9
100.0
6,694.8
100.0
5,940.3
100.0
6,668.5
100.0
c) Credit risk \u2013 trade receivables The tables below provide information on movements in trade receivables during the year. As outlined in Note 1h), the Group\u2019s accounting policy for trade receivables is to always recognise lifetime ECLs in accordance with the simplified approach in IFRS 9. Trade receivables are therefore not allocated to ECL stages.
Group
Society
Geographical exposure (Region)
2025 2025 2024 2024 2025 2025 2024 2024
\u00a3m % \u00a3m % \u00a3m % \u00a3m %
UK
4,344.1
72.7
5,331.5
79.7
4,388.2
73.8
5,393.6
81.0
Rest of Europe
419.7
7.0
327.9
4.9
389.7
6.6
293.3
4.4
Supranationals:
Europe
226.7
3.8
122.4
1.8
215.6
3.6
122.4
1.8
Global
504.5
8.4
528.4
7.9
504.5
8.5
528.4
7.9
Africa
56.1
0.9
28.4
0.4
56.1
0.9
28.4
0.4
Asia
163.4
2.7
135.2
2.0
163.4
2.8
135.2
2.0
South America
145.8
2.4
117.7
1.8
145.8
2.5
117.7
1.8
North America
118.8
2.0
100.2
1.5
77.0
1.3
49.5
0.7
Rest of World
3.8
0.1
3.1
-
-
-
-
-
Total
5,982.9
100.0
6,694.8
100.0
5,940.3
100.0
6,668.5
100.0
\u00a3m
Group
Society
2025
2024
2025
2024
Gross carrying amount
76.3
71.0
1.5
1.9
Loss allowance
(2.7)
(2.2)
-
-
Net carrying amount
73.6
68.8
1.5
1.9
\u00a3m
Group
Society
2025
2024
2025
2024
Loss allowance at 1 January
2.2
2.4
-
-
Net allowances made during the
year
1.4
0.8
0.1
-
Write
-offs
(0.9)
(1.0)
(0.1)
-
Loss allowance at 31 December
2.7
2.2
-
-
The table below provides information on the gross carrying amount of trade receivables by payment due status.
\u00a3m
Group
Society
2025
2024
2025
2024
Not past due
42.6
38.3
-
-
Up to 30 days past due
18.1
19.5
0.6
0.5
31 to 120 days past due
10.1
9.5
0.5
1.0
Over 120 days past due
5.5
3.7
0.4
0.4
Total
76.3
71.0
1.5
1.9
No collateral is held against trade receivables. At 31 December 2025 the contractual amount outstanding on trade receivables written off during the year due to there being no reasonable expectation of recovery, but which remain subject to enforcement activity, is \u00a3nil (2024: \u00a3nil) for the Group and \u00a3nil (2024: \u00a3nil) for the Society. d) Credit risk \u2013 derivative financial instruments A credit exposure could arise in respect of derivative contracts entered into by the Group if the counterparty was unable to fulfil its contractual obligations. The Group addresses the risks associated with these activities by monitoring counterparty credit exposure and requiring additional collateral to be posted or returned as necessary. For all but one derivative, the only form of collateral accepted by the Group in respect of derivatives is cash. Derivatives are either transacted under International Swaps and Derivatives Association (ISDA) Master Agreements or Cleared Derivatives Execution Agreements. For swaps that are cash collateralised, no Credit (CVA) or Debit (DVA) Value Adjustments have been made in respect of credit risk in determining the fair value of these derivatives as the risk is significantly mitigated. Credit Support Annexes executed with certain counterparties in conjunction with the ISDA Master Agreement require collateral to be posted regularly, as required by specific terms and conditions of the arrangements. Due to the frequency of the posting of collateral, there is no material exposure from these minimal timing differences that would require CVA or DVA adjustments. At 31 December 2025 the Group held one derivative (2024: one) that is not fully collateralised for cash; CVA and DVA adjustments are made to the valuation of this derivative. Netting arrangements do not necessarily result in an offset of Statement of Financial Position (SoFP) assets and liabilities, as transactions are usually settled on a gross basis. The Group\u2019s legal documentation for derivative transactions does grant legal rights of set-off for those transactions with the same counterparty. Accordingly, the credit risk associated with such contracts is reduced to the extent that negative mark to market valuations on derivatives will offset positive mark to market values on derivatives. The following tables provide further detail on the net exposure to derivative transaction counterparties.
Group
2024
\u00a3m
As reported Netting Cash Net amounts
within SoFP agreements collateral after offsetting
Financial assets
Derivative financial instruments
752.1
(204.2)
(557.3)
-
Financial liabilities
Derivative financial instruments
225.1
(204.2)
(18.1)
2.8
Society
2025
\u00a3m
As reported Netting Cash Net amounts
within SoFP agreements collateral after offsetting
Financial assets
Derivative financial instruments
333.1
(189.4)
(141.3)
2.4
Financial liabilities
Derivative financial instruments
205.0
(189.4)
(14.6)
1.0
Group
2025
\u00a3m
As reported Netting Cash Net amounts
within SoFP agreements collateral after offsetting
Financial assets
Derivative financial instruments
350.8
(180.5)
(141.5)
28.8
Financial liabilities
Derivative financial instruments
186.2
(180.5)
(5.7)
-
In respect of derivative assets, there is \u00a328.8m (2024: \u00a3nil) for the Group, and \u00a32.4m (2024: \u00a3nil) for the Society, after offsetting between the value of the derivatives and the cash collateral held. At a Group level, this predominantly relates to the collateral arrangements for the one cross currency derivative held by the Group where collateral is not required to be posted up to a threshold. In 2024, the cross currency derivative was in a net liability position. In respect of derivative liabilities, there is a net amount after offsetting of \u00a3nil (2024: \u00a32.8m) for the Group, and \u00a31.0m (2024: \u00a33.5m) for the Society, between the value of the derivatives and the cash collateral pledged.
Society
2024
\u00a3m
As reported Netting Cash Net amounts
within SoFP agreements collateral after offsetting
Financial assets
Derivative financial instruments
743.0
(208.3)
(557.3)
-
Financial liabilities
Derivative financial instruments
282.2
(208.3)
(70.4)
3.5
a) Classification and measurement The tables below summarise the classification of the carrying amounts of the Group\u2019s and Society\u2019s financial assets and liabilities:
Group
Amortised
2025
Amortised
2024
\u00a3m
FVOCI
FVTPL
Total
FVOCI
FVTPL
Total
cost cost
Cash in hand and
balances with the
Bank of England
1,360.2
-
-
1,360.2
1,930.6
-
-
1,930.6
Loans and advances
353.3
-
-
353.3
414.6
-
-
414.6
to credit institutions
Debt securities
-
4,269.4
-
4,269.4
-
4,349.6
-
4,349.6
Derivative financial
-
-
350.8
350.8
-
-
752.1
752.1
Instruments
Loans and advances
33,378.9
-
0.8
33,379.7
30,601.1
-
0.9
30,602.0
to customers
Equity release
-
-
263.1
263.1
-
-
277.2
277.2
portfolio
Equity share
-
-
18.3
18.3
-
-
16.9
16.9
investments
Trade receivables
73.6
-
-
73.6
68.8
-
-
68.8
Share warrants
-
-
-
-
-
-
21.9
21.9
Loan to defined
benefit pension
-
-
10.9
10.9
-
-
-
-
scheme
Other assets
-
-
-
-
0.1
-
-
0.1
Total financial
35,166.0
4,269.4
643.9
40,079.3
33,015.2
4,349.6
1,069.0
38,433.8
assets
Other non
-financial
664.9
581.5
assets
Total assets
40,744.2
39,015.3
Shares
30,526.3
-
-
30,526.3
28,268.5
-
-
28,268.5
Amounts owed to
credit institutions
3,046.8
-
-
3,046.8
4,350.7
-
-
4,350.7
and other
customers
Debt securities in
issue
3,361.9
-
-
3,361.9
2,435.3
-
-
2,435.3
Derivative financial
-
-
186.2
186.2
-
-
225.1
225.1
Instruments
Lease liabilities
110.3
-
-
110.3
92.1
-
-
92.1
Trade payables
14.4
-
-
14.4
11.0
-
-
11.0
Fair value of put
-
-
1.0
1.0
-
-
4.1
4.1
option obligation
Subordinated
356.0
-
-
356.0
690.2
-
-
690.2
liabilities
Subscribed capital
15.2
-
-
15.2
41.6
-
-
41.6
Total financial
37,430.9
-
187.2
37,618.1
35,889.4
-
229.2
36,118.6
liabilities
Other non
-financial
261.5
229.3
liabilities
Total liabilities
37,879.6
36,347.9
All financial assets and liabilities in the tables above that are held as at FVTPL are mandatorily held as such. As outlined in Note 21, during the year, non-current assets with a total carrying value of \u00a33.7m (for the Group and Society) were reclassified as held for sale, and therefore presented separately within the Statement of Financial Position. In the above table, these amounts are included within \u2018Other non-financial assets\u2019.
Society
2025
2024
\u00a3m
Amortised
FVOCI
FVTPL
Total
Amortised
FVOCI
FVTPL
Total
cost cost
Cash in hand and
balances
1,360.2
-
-
1,360.2
1,930.6
-
-
1,930.6
with the Bank of
England
Loans and advances
304.7
-
-
304.7
397.8
-
-
397.8
to credit institutions
Debt securities
-
4,201.9
73.5
4,275.4
-
4,269.8
70.3
4,340.1
Derivative financial
-
-
333.1
333.1
-
-
743.0
743.0
instruments
Loans and advances
31,121.3
-
0.8
31,122.1
28,334.9
-
0.9
28,335.8
to customers
Equity release
-
-
263.1
263.1
-
-
277.2
277.2
portfolio
Loans to subsidiary
454.7
-
-
454.7
403.9
-
-
403.9
undertakings
Trade receivables
1.5
-
-
1.5
1.9
-
-
1.9
Loan to defined
benefit pension
-
-
10.9
10.9
-
-
-
-
scheme
Total financial
33,242.4
4,201.9
681.4
38,125.7
31,069.1
4,269.8
1,091.4
36,430.3
assets
Other non
-financial
201.2
198.0
assets
Total assets
38,326.9
36,628.3
Shares
30,524.3
-
-
30,524.3
28,254.1
-
-
28,254.1
Amounts owed to
credit institutions
1,685.0
-
-
1,685.0
3,069.5
-
-
3,069.5
and other
customers
Debt securities in
issue
2,955.0
-
-
2,955.0
1,930.1
-
-
1,930.1
Derivative financial
-
-
205.0
205.0
-
-
282.2
282.2
Instruments
Lease liabilities
8.2
-
-
8.2
8.6
-
-
8.6
Trade payables
3.4
-
-
3.4
2.8
-
-
2.8
Subordinated
356.0
-
-
356.0
690.2
-
-
690.2
liabilities
Subscribed capital
15.2
-
-
15.2
41.6
-
-
41.6
Total financial
35,547.1
-
205.0
35,752.1
33,996.9
-
282.2
34,279.1
liabilities
Other non
-financial
46.7
43.8
liabilities
Total liabilities
35,798.8
34,322.9
b) Valuation of financial instruments carried at fair value The Group holds certain financial assets and liabilities at fair value, grouped into Levels 1 to 3 of the fair value hierarchy as explained below. Valuation techniques Fair values are determined using the following fair value hierarchy that reflects the significance of the inputs used in measuring fair value. Level 1 The most reliable fair values of financial instruments are quoted market prices in an actively traded market. The Group\u2019s Level 1 portfolio mainly comprises the Group\u2019s debt securities, with the exception of certificates of deposits; for which traded prices are not readily available. Level 2 These are valuation techniques for which all significant inputs are taken from observable market data. These include valuation models used to calculate the present value of expected future cash flows and may be employed when no active market exists and quoted prices are available for similar instruments in active markets. Examples of Level 2 instruments are certificates of deposit and interest rate swaps. Level 3 These are valuation techniques for which one or more significant inputs are not based on observable market data. Valuation techniques include net present value by way of discounted cash flow models. Assumptions and market observable inputs used in valuation techniques include risk-free and benchmark interest rates, similar market products, foreign currency exchange rates and equity index prices. Critical judgement is applied by management in utilising unobservable inputs including expected price volatilities, expected mortality rates and prepayment rates, based on industry practice or historical observation. The objective of valuation techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the reporting date that would have been determined by market participants on an arm\u2019s-length basis. Transfers between levels The Group makes transfers between the different levels of the fair value hierarchy where the inputs used to measure the fair value of the financial instruments in question no longer satisfy the conditions required to be classified in a certain level within the hierarchy. Any such transfer between different levels of the fair value hierarchy is made at the date the event in question that results in a change in circumstances occurs. There were no transfers between different levels of the fair value hierarchy during the year ended 31 December 2025 or the year ended 31 December 2024. The following tables provide an analysis of financial assets and liabilities held within the Statement of Financial Position at fair value, grouped into Levels 1 to 3 of the fair value hierarchy.
Group
2025
2024
\u00a3m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets
Financial assets
held at FVOCI:
Debt securities
4,269.4
-
-
4,269.4
4,349.6
-
-
4,349.6
Financial assets at
FVTPL:
Equity share
-
-
18.3
18.3
-
-
16.9
16.9
investments
Derivative
financial
-
335.2
15.6
350.8
-
736.8
15.3
752.1
Instruments
Equity release
-
-
263.1
263.1
-
-
277.2
277.2
portfolio
Loans and
advances to
customers
-
-
0.8
0.8
-
-
0.9
0.9
Share warrants
-
-
-
-
-
-
21.9
21.9
Loan to defined
benefit pension
-
-
10.9
10.9
-
-
-
-
scheme
4,269.4
335.2
308.7
4,913.3
4,349.6
736.8
332.2
5,418.6
Financial liabilities
Financial liabilities
at FVTPL:
Derivative
financial
-
178.4
7.8
186.2
-
209.0
16.1
225.1
Instruments
Fair value of put
-
-
1.0
1.0
-
-
4.1
4.1
option Obligation
-
178.4
8.8
187.2
-
209.0
20.2
229.2
4,269.4
156.8
299.9
4,726.1
4,349.6
527.8
312.0
5,189.4
Society
2025
2024 (restated*)
\u00a3m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets
Financial assets
held at FVOCI:
Debt securities
4,201.9
-
-
4,201.9
4,269.8
-
-
4,269.8
Financial assets at
FVTPL:
Derivative
financial
-
315.1
18.0
333.1
-
727.7
15.3
743.0
Instruments
Debt securities*
-
-
73.5
73.5
-
-
70.3
70.3
Equity release
-
-
263.1
263.1
-
-
277.2
277.2
portfolio
Loans and
advances to
customers
-
-
0.8
0.8
-
-
0.9
0.9
Loan to defined
benefit pension
-
-
10.9
10.9
-
-
-
-
scheme
4,201.9
315.1
366.3
4,883.3
4,269.8
727.7
363.7
5,361.2
Financial liabilities
Financial liabilities
at FVTPL:
Derivative
financial
-
197.2
7.8
205.0
-
261.7
20.5
282.2
Instruments
-
197.2
7.8
205.0
-
261.7
20.5
282.2
4,201.9
117.9
358.5
4,678.3
4,269.8
466.0
343.2
5,079.0
* The information shown above for the year ended 31 December 2024, and the information for the year ended 31 December 2024 within the table on page 279, is restated to reflect the appropriate presentation of \u2018Financial assets at FVTPL: Debt securities\u2019. The valuation of these financial assets is determined using a discounted cashflow valuation model and is not based on observable market prices. Accordingly, all \u00a370.3m of Debt securities (at FVTPL) are now classified as Level 3 financial assets, rather than Level 1. There is no impact on the overall total amount reported for the year ended 31 December 2024. The tables below analyse the movements in the Level 3 portfolio during the year:
Group 2024
Equity Equity Loans and Derivative Fair value of Share
\u00a3m
share release advances financial put option warrants Total
Investments portfolio
to customers
instruments obligation
At 1 January
10.5
293.3
0.9
(22.7)
(3.5)
15.1
293.6
Gain / (loss)
recognised in
Income Statement
1.1
A
(12.6)
B
-
21.9
C
(0.3)
D
5.9
E
16.0
Revaluations to
goodwill
-
-
-
-
(0.3)
-
(0.3)
Accrued interest
-
2.6
G
0.1
G
-
-
2.7
Repayments
-
(4.3)
(0.1)
-
-
-
(4.4)
Realised losses
-
(1.8)
H
-
-
-
-
(1.8)
Additions / Disposals /
5.3
-
-
-
-
0.9
6.2
Other
At 31 December
16.9
277.2
0.9
(0.8)
(4.1)
21.9
312.0
Notes A. These are unrealised gains and are included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Equity share investments\u2019. B. These are unrealised losses and are included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Equity release portfolio\u2019. C. These are unrealised gains and are included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Derivatives associated with equity release portfolio\u2019. D. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Put options held by minority shareholders\u2019. E. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Share warrants\u2019. F. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Loan to defined benefit pension scheme\u2019. G. Included in the Income Statement line \u2018Interest receivable and similar income\u2019. H. Included in the Income Statement line \u2018Impairment and provisions\u2019; as presented within Note 8 line \u2018Realised losses on equity release portfolio\u2019.
Group 2025
Equity
Equity
Loans and Derivative
Fair value of
Share
Loan to defined
\u00a3m
share
release
advances financial put option
warrants
benefit pension
Total
investments
portfolio
to customers
instruments
obligation scheme
At 1 January
16.9
277.2
0.9
(0.8)
(4.1)
21.9
-
312.0
Gain / (loss)
recognised in Income
0.4
A
(14.5)
B
-
8.1
C
(0.2)
D
5.6
E
(2.2)
F
(2.8)
Statement
Revaluations to
goodwill
-
-
-
-
(0.8)
-
-
(0.8)
Accrued interest
-
5.7
G
0.1
G
0.5
G
-
-
0.8
G
7.1
Repayments
-
(4.0)
(0.2)
-
-
-
(2.3)
(6.5)
Realised losses
-
(1.3)
H
-
-
-
-
-
(1.3)
Exercise of put
options by non
-
controlling
-
-
-
-
4.2
-
-
4.2
shareholders
Additions / Disposals
1.0
-
-
-
(0.1)
(27.5)
14.6
(12.0)
/ Other
At 31 December
18.3
263.1
0.8
7.8
(1.0)
-
10.9
299.9
Loans and
Loan to
Society 2025
Equity
advances
Derivative Debt defined
\u00a3m
release
to financial
securities
benefit Total
portfolio
customers
instruments
pension
scheme
At 1 January
277.2
0.9
(5.2)
70.3
-
343.2
(Loss) / gain recognised in Income Statement
(14.5)
A
-
14.9
B
3.2
C
(2.2)
D
1.4
Accrued interest
5.7
E
0.1
E
0.5
E
-
0.8
E
7.1
Repayments
(4.0)
(0.2)
-
-
(2.3)
(6.5)
Realised losses
(1.3)
F
-
-
-
-
(1.3)
Additions
-
-
-
-
14.6
14.6
At 31 December
263.1
0.8
10.2
73.5
10.9
358.5
Society 2024 (restated*)
Equity Loans and
Derivative
Debt
\u00a3m
release advances
financial
securities*
Total
portfolio
to customers
instruments
At 1 January
293.3
0.9
(34.2)
-
260.0
(Loss) / gain recognised in Income Statement
(12.6)
A
-
29.0
B
(4.0)
C
12.4
Accrued interest
2.6
E
0.1
E
-
-
2.7
Repayments
(4.3)
(0.1)
-
-
(4.4)
Realised losses
(1.8)
F
-
-
-
(1.8)
Additions
-
-
-
74.3
74.3
At 31 December
277.2
0.9
(5.2)
70.3
343.2
* The information shown above for the year ended 31 December 2024 is restated to reflect the appropriate presentation of \u2018Debt securities\u2019 \u2013 see page 277 for details. Notes A. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Equity release portfolio\u2019. B. \u00a38.1m (2024: \u00a321.9m) is included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Derivatives associated with equity release portfolio\u2019. The remaining \u00a36.8m (2024: \u00a37.1m) is included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Hedging instruments and hedged items\u2019. C. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Other financial instruments\u2019. D. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Loan to defined benefit pension scheme\u2019. E. Included in the Income Statement line \u2018Interest receivable and similar income\u2019. F. Included in the Income Statement line \u2018Impairment and provisions\u2019; as presented within Note 8 line \u2018Realised losses on equity release portfolio\u2019. Equity share investments The valuation of the Group\u2019s unlisted investments is typically regarded as a Level 3 valuation technique as certain inputs are not market observable. Further details of the Group\u2019s equity share investments are found in Note 20e). Equity release portfolio The valuation of the equity release portfolio is regarded as a Level 3 valuation technique as certain inputs into the valuation are not market observable. Further details on the valuation techniques used are found in Note 1f). Further details on the inputs into the valuation and the impact of reasonably possible alternative assumptions of certain inputs into the valuation of the portfolio are found in Note 1v). Loans and advances to customers The valuation of these loans and advances to customers is regarded as a Level 3 valuation technique as certain inputs are not market observable. Further details are found in Note 1f). Derivative financial instruments The Level 3 derivative financial instruments included in the tables on pages 276 to 279 mostly comprise derivatives which are used to hedge the Group\u2019s interest rate risk and inflation risk arising from the equity release portfolio. The valuation of these derivatives is regarded as a Level 3 valuation technique as certain inputs into the valuation are not market observable. Further details on the inputs into the valuation and the impact of reasonably possible alternative assumptions of certain inputs into the valuation of these derivatives are found in Note 1v). Any change in fair value of the derivative liabilities is offset to some extent by a corresponding but opposite change in the value of the equity release portfolio. The characteristics and the valuation requirements differ slightly between the derivatives and the equity release portfolio resulting in the changes in fair value not offsetting completely. During the year the net impact to the Income Statement (Group and Society) was a debit of \u00a36.4m (2024: \u00a39.3m credit). Debt securities The valuation of the retained Darrowby 6 B Notes is regarded as a Level 3 valuation technique as the credit risk premium is a key input into the calculation and is not market observable. This input is based on the judgement of senior management and observed similar transactions within the market. Fair value of put option obligation A key input into the calculation of the fair value of the put option obligation is the estimate of the market value of the noncontrolling shareholding. As this input is based on the judgement of senior management, the valuation of the put option obligation is considered to be a Level 3 valuation technique. Share warrants and other assets These assets relate to share warrants held in unlisted entities and amounts recognised, where appropriate, for additional share warrants yet to be received. The valuation of these assets is regarded as a Level 3 valuation technique as certain inputs into the valuation are not market observable. Further details are found in Note 1f). Loan to defined benefit pension scheme The valuation of the loan to the defined benefit pension scheme is regarded as a Level 3 valuation technique as certain inputs into the valuation are not market observable. Further details on the inputs into the valuation of this loan, and the impact of reasonably possible alternative assumptions of certain inputs, are found in Note 1v). For the year ended 31 December 2025 the net impact to the Income Statement (Group and Society) was a debit of \u00a32.2m (2024: \u00a3nil). c) Fair values of financial instruments not carried at fair value The tables below summarise the carrying values and fair values of those financial assets and liabilities not presented within the Statement of Financial Position at fair value.
\u00a3m
Group 2025
Society 2025
Carrying Value
Fair Value
Carrying Value
Fair Value
Financial assets
Cash in hand and balances with the Bank of England
1,360.2
1,360.2
1,360.2
1,360.2
Loans and advances to credit institutions
353.3
353.3
304.7
304.7
Loans and advances to customers
33,378.9
33,609.2
31,121.3
31,324.5
Trade receivables
73.6
73.6
1.5
1.5
Loans to subsidiary undertakings
-
-
454.7
454.7
35,166.0
35,396.3
33,242.4
33,445.6
Financial liabilities
Shares
30,526.3
30,535.0
30,524.3
30,531.0
Amounts owed to credit institutions
327.2
327.2
513.1
513.1
Amounts owed to other customers
2,719.6
2,723.5
1,171.9
1,171.9
Debt securities in issue
3,361.9
3,349.8
2,955.0
2,950.6
Lease liabilities
110.3
110.3
8.2
8.2
Trade payables
14.4
14.4
3.4
3.4
Subordinated liabilities
356.0
364.1
356.0
364.1
Subscribed capital
15.2
21.1
15.2
21.1
37,430.9
37,445.4
35,547.1
35,563.4
\u00a3m
Group 2024
Society 2024
Carrying Value
Fair Value
Carrying Value
Fair Value
Financial assets
Cash in hand and balances with the Bank of England
1,930.6
1,930.6
1,930.6
1,930.6
Loans and advances to credit institutions
414.6
414.6
397.8
397.8
Loans and advances to customers
30,601.1
30,804.7
28,334.9
28,531.4
Trade receivables
68.8
68.8
1.9
1.9
Loans to subsidiary undertakings
-
-
403.9
403.9
Other assets
0.1
0.1
-
-
33,015.2
33,218.8
31,069.1
31,265.6
Financial liabilities
Shares
28,268.5
28,239.2
28,254.1
28,239.2
Amounts owed to credit institutions
1,599.6
1,599.6
1,800.6
1,800.6
Amounts owed to other customers
2,751.1
2,753.8
1,268.9
1,268.7
Debt securities in issue
2,435.3
2,423.1
1,930.1
1,930.9
Lease liabilities
92.1
92.1
8.6
8.6
Trade payables
11.0
11.0
2.8
2.8
Subordinated liabilities
690.2
700.4
690.2
700.4
Subscribed capital
41.6
61.8
41.6
61.8
35,889.4
35,881.0
33,996.9
34,013.0
Key considerations in the calculation of fair values of those financial assets and liabilities not presented within the Statement of Financial Position at fair value are set out below unless there is no significant difference between carrying value and fair value. Loans and advances to customers For fixed rate and tracker mortgage products, the Group has estimated the fair value of these products using discounted cash flows and has applied relevant current market product rates as discount rates in order to also incorporate an element of future expected credit losses. Fixed rate and tracker mortgages have been discounted using current market product rates that are specific to the particular market to which they relate. Market prices will generally have moved since the fixed or tracker rate was taken out, therefore the valuation of these products will change reflecting upwards or downwards movements in market rates. The valuation includes information and expectations regarding estimated redemption profiles which are regularly reviewed and updated in light of experience. As these redemption profiles are not considered to be observable by the market, the fair value of loans and advances to customers is considered to be derived by using Level 3 valuation techniques. For standard variable rate mortgage products, the interest rate on such products is equivalent to a current market product rate and as such the Group considers the fair value of these mortgages to be equal to their carrying value. Shares Savings products at variable rates are at current market rates and therefore the Group regards the fair value to be equal to the carrying value. The fair value of fixed rate savings products has been determined using discounted cash flows, discounted using a combined yield curve of cash and swap term rates. Changes in market prices since the product was taken out will result in increases or decreases in the fair value of the fixed rate savings products. The valuation includes information and expectations regarding estimated withdrawal profiles which are regularly reviewed and updated in light of experience. As these profiles are not considered to be observable by the market, the fair value of shares is considered to be derived by using Level 3 valuation techniques. Amounts owed to credit institutions and other customers Balances in these categories are valued using discounted cash flows which use only observable market inputs consisting of the combined yield curve of cash and swap term rates. All inputs to this valuation technique are market observable and as such they are categorised within Level 2 of the fair value hierarchy, with the exception of amounts owed to other customers in relation to retail deposits with SIL which uses information and expectations regarding estimated withdrawal profiles which are regularly reviewed and updated in light of experience. As these profiles are not considered to be observable by the market, this fair value is considered to be derived by using Level 3 valuation techniques. Debt securities in issue Where securities are actively traded in a recognised market, with readily available and quoted prices, these have been used to value the securities. These securities are therefore regarded as having Level 1 fair values. Where such prices are not available, discounted cash flows are used. Where only market observable inputs are used within these discounted cash flows, such as a combined yield curve of cash and swap term rates, theses securities are categorised as having Level 2 fair values. Securities valued using unobservable inputs are regarded as having Level 3 fair values. Subordinated liabilities and subscribed capital Prices are quoted for these instruments in actively traded markets and, as a result, these instruments are categorised as having Level 1 fair values. d) Fair values of non-financial assets and liabilities not carried at fair value The fair value of investment property, which is a non-financial asset, is disclosed in these financial statements. Note 24 provides details of the valuation techniques used in estimating this fair value, together with the resulting categorisation of these valuation techniques within the fair value hierarchy.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-485": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
Employee costs:
Wages and salaries
819.9
746.8
127.9
112.7
Social security costs
99.4
79.5
15.6
11.9
Pension costs:
Defined contribution arrangements (Note 36)
32.8
28.6
9.3
8.2
952.1
854.9
152.8
132.8
Other administrative expenses
471.3
457.4
114.4
134.2
Central administrative costs recharged to Group undertakings
-
-
(4.8)
(5.0)
Total administrative expenses
1,423.4
1,312.3
262.4
262.0
Other administrative expenses comprise:
Depreciation and amortisation (Notes 22, 23, 24 and 25)
68.2
70.0
8.7
8.5
Impairment losses on property, plant and equipment,
right-of-use assets, investment property and intangible assets
5.6
3.1
(0.1)
-
(Notes 22, 23, 24 and 25)
Impairment losses on trade receivables (Note 45c))
1.4
0.8
0.1
-
Lease expense \u2013 items exempt from IFRS 16:
Short-term leases
1.9
0.7
0.7
0.6
Other property and establishment costs
49.4
48.0
7.3
7.5
Postage and communications
8.3
6.9
8.0
6.6
IT costs
82.8
77.5
27.5
30.0
Marketing and advertising
75.6
69.6
17.4
15.6
Insurance
10.5
10.1
3.5
3.6
Legal, professional and consultancy
63.2
77.0
35.7
55.7
Training, recruitment and other employee related costs
61.9
59.7
5.3
5.4
Costs of Connells' management incentive scheme (Note 32)
-
(4.2)
-
-
Other
42.5
38.2
0.3
0.7
Total other administrative expenses
471.3
457.4
114.4
134.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-510": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
Employee costs:
Wages and salaries
819.9
746.8
127.9
112.7
Social security costs
99.4
79.5
15.6
11.9
Pension costs:
Defined contribution arrangements (Note 36)
32.8
28.6
9.3
8.2
952.1
854.9
152.8
132.8
Other administrative expenses
471.3
457.4
114.4
134.2
Central administrative costs recharged to Group undertakings
-
-
(4.8)
(5.0)
Total administrative expenses
1,423.4
1,312.3
262.4
262.0
Other administrative expenses comprise:
Depreciation and amortisation (Notes 22, 23, 24 and 25)
68.2
70.0
8.7
8.5
Impairment losses on property, plant and equipment,
right-of-use assets, investment property and intangible assets
5.6
3.1
(0.1)
-
(Notes 22, 23, 24 and 25)
Impairment losses on trade receivables (Note 45c))
1.4
0.8
0.1
-
Lease expense \u2013 items exempt from IFRS 16:
Short-term leases
1.9
0.7
0.7
0.6
Other property and establishment costs
49.4
48.0
7.3
7.5
Postage and communications
8.3
6.9
8.0
6.6
IT costs
82.8
77.5
27.5
30.0
Marketing and advertising
75.6
69.6
17.4
15.6
Insurance
10.5
10.1
3.5
3.6
Legal, professional and consultancy
63.2
77.0
35.7
55.7
Training, recruitment and other employee related costs
61.9
59.7
5.3
5.4
Costs of Connells' management incentive scheme (Note 32)
-
(4.2)
-
-
Other
42.5
38.2
0.3
0.7
Total other administrative expenses
471.3
457.4
114.4
134.2
Included within legal, professional and consultancy costs above are amounts relating to external auditor remuneration. The remuneration of the Group\u2019s external auditor, EY, is set out below (excluding VAT). External auditor remuneration
Group
Society
\u00a3m
2025
2024
2025
2024
Audit of the Society and Group Annual Accounts
1.2
1.2
1.2
1.2
Audit of the Group\u2019s subsidiary undertakings\u2019 accounts pursuant to
legislation
2.6
2.5
-
-
Audit
-related assurance services
0.2
0.1
0.2
0.1
Other non
-audit services
-
0.1
-
0.1
Total external auditor remuneration
4.0
3.9
1.4
1.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-521": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
Employee costs:
Wages and salaries
819.9
746.8
127.9
112.7
Social security costs
99.4
79.5
15.6
11.9
Pension costs:
Defined contribution arrangements (Note 36)
32.8
28.6
9.3
8.2
952.1
854.9
152.8
132.8
Other administrative expenses
471.3
457.4
114.4
134.2
Central administrative costs recharged to Group undertakings
-
-
(4.8)
(5.0)
Total administrative expenses
1,423.4
1,312.3
262.4
262.0
Other administrative expenses comprise:
Depreciation and amortisation (Notes 22, 23, 24 and 25)
68.2
70.0
8.7
8.5
Impairment losses on property, plant and equipment,
right-of-use assets, investment property and intangible assets
5.6
3.1
(0.1)
-
(Notes 22, 23, 24 and 25)
Impairment losses on trade receivables (Note 45c))
1.4
0.8
0.1
-
Lease expense \u2013 items exempt from IFRS 16:
Short-term leases
1.9
0.7
0.7
0.6
Other property and establishment costs
49.4
48.0
7.3
7.5
Postage and communications
8.3
6.9
8.0
6.6
IT costs
82.8
77.5
27.5
30.0
Marketing and advertising
75.6
69.6
17.4
15.6
Insurance
10.5
10.1
3.5
3.6
Legal, professional and consultancy
63.2
77.0
35.7
55.7
Training, recruitment and other employee related costs
61.9
59.7
5.3
5.4
Costs of Connells' management incentive scheme (Note 32)
-
(4.2)
-
-
Other
42.5
38.2
0.3
0.7
Total other administrative expenses
471.3
457.4
114.4
134.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-529": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
Employee costs:
Wages and salaries
819.9
746.8
127.9
112.7
Social security costs
99.4
79.5
15.6
11.9
Pension costs:
Defined contribution arrangements (Note 36)
32.8
28.6
9.3
8.2
952.1
854.9
152.8
132.8
Other administrative expenses
471.3
457.4
114.4
134.2
Central administrative costs recharged to Group undertakings
-
-
(4.8)
(5.0)
Total administrative expenses
1,423.4
1,312.3
262.4
262.0
Other administrative expenses comprise:
Depreciation and amortisation (Notes 22, 23, 24 and 25)
68.2
70.0
8.7
8.5
Impairment losses on property, plant and equipment,
right-of-use assets, investment property and intangible assets
5.6
3.1
(0.1)
-
(Notes 22, 23, 24 and 25)
Impairment losses on trade receivables (Note 45c))
1.4
0.8
0.1
-
Lease expense \u2013 items exempt from IFRS 16:
Short-term leases
1.9
0.7
0.7
0.6
Other property and establishment costs
49.4
48.0
7.3
7.5
Postage and communications
8.3
6.9
8.0
6.6
IT costs
82.8
77.5
27.5
30.0
Marketing and advertising
75.6
69.6
17.4
15.6
Insurance
10.5
10.1
3.5
3.6
Legal, professional and consultancy
63.2
77.0
35.7
55.7
Training, recruitment and other employee related costs
61.9
59.7
5.3
5.4
Costs of Connells' management incentive scheme (Note 32)
-
(4.2)
-
-
Other
42.5
38.2
0.3
0.7
Total other administrative expenses
471.3
457.4
114.4
134.2
Included within legal, professional and consultancy costs above are amounts relating to external auditor remuneration. The remuneration of the Group\u2019s external auditor, EY, is set out below (excluding VAT). External auditor remuneration
Group
Society
\u00a3m
2025
2024
2025
2024
Audit of the Society and Group Annual Accounts
1.2
1.2
1.2
1.2
Audit of the Group\u2019s subsidiary undertakings\u2019 accounts pursuant to
legislation
2.6
2.5
-
-
Audit
-related assurance services
0.2
0.1
0.2
0.1
Other non
-audit services
-
0.1
-
0.1
Total external auditor remuneration
4.0
3.9
1.4
1.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-486": { "value": "Included within legal, professional and consultancy costs above are amounts relating to external auditor remuneration. The remuneration of the Group\u2019s external auditor, EY, is set out below (excluding VAT). External auditor remuneration
Group
Society
\u00a3m
2025
2024
2025
2024
Audit of the Society and Group Annual Accounts
1.2
1.2
1.2
1.2
Audit of the Group\u2019s subsidiary undertakings\u2019 accounts pursuant to
legislation
2.6
2.5
-
-
Audit
-related assurance services
0.2
0.1
0.2
0.1
Other non
-audit services
-
0.1
-
0.1
Total external auditor remuneration
4.0
3.9
1.4
1.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-487": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
Impairment (losses) / credits on loans and advances to customers
(10.1)
17.1
(9.8)
17.0
(Note 17)
Impairment credits on liquid assets
0.1
0.1
0.1
0.1
Realised losses on equity release portfolio (Note 18)
(1.3)
(1.8)
(1.3)
(1.8)
Provisions for liabilities (Note 33)
(0.9)
(3.7)
0.2
(4.9)
Total
(12.2)
11.7
(10.8)
10.4
The movements in provisions for liabilities during the year were as follows: Notes A. The charge / (credit) for the year is recognised within the Income Statement line \u2018Impairment and provisions\u2019. B. The provision for commission clawbacks include an expected future clawback on insurance commissions in the event of early termination by the customer. Insurance commission income is recognised net of these provisions, and therefore the charge for the year of \u00a315.5m (2024: \u00a38.8m charge) has been recognised against \u2018Fees and commissions receivable\u2019 in the Income Statement.
2025
Provision for
Survey and
Group
the costs of
Commission
valuation Customer Other Total
\u00a3m
surplus clawbacks claims
compensation
provisions
properties
At 1 January
4.0
17.9
3.7
0.6
5.6
31.8
Acquired on acquisition of
subsidiaries
0.1
-
0.2
-
-
0.3
Disposal of subsidiary
-
(0.1)
-
-
-
(0.1)
undertakings
Charge for the year
A
0.3
15.5
B
A
0.5
-
0.1
A
16.4
Utilised during the year
(0.5)
(14.5)
(0.6)
-
(0.2)
(15.8)
At 31 December
3.9
18.8
3.8
0.6
5.5
32.6
2024
Provision for
Survey and
Group
the costs of
Commission
valuation Customer Other Total
\u00a3m
surplus clawbacks claims
compensation
provisions
properties
At 1 January
5.6
17.0
5.2
0.3
1.3
29.4
(Credit) / charge for the year
(0.5)
A
8.9
B
(0.8)
A
0.4
A
4.5
A
12.5
Utilised during the year
(1.1)
(8.0)
(0.7)
(0.1)
(0.2)
(10.1)
At 31 December
4.0
17.9
3.7
0.6
5.6
31.8
2025
Society
Provision for the
Commission Customer Other
\u00a3m
costs of surplus
clawbacks
compensation
provisions Total
properties
At 1 January
-
-
0.5
4.8
5.3
Credit for the year
-
-
-
(0.2)
A
(0.2)
At 31 December
-
-
0.5
4.6
5.1
2024
Society
Provision for the
Commission Customer Other
\u00a3m
costs of surplus
clawbacks
compensation
provisions Total
properties
At 1 January
0.1
-
0.3
0.2
0.6
(Credit) / charge for the year
(0.1)
A
0.1
A
0.3
A
4.6
A
4.9
Utilised during the year
-
(0.1)
(0.1)
-
(0.2)
At 31 December
-
-
0.5
4.8
5.3
Provision for the costs of surplus properties This provision was booked prior to the introduction of IFRS 16 for properties with non-cancellable leases where the Group no longer occupies the property. The provision represents the rent to the end of the lease, less any rental income from subletting the properties. The provision for the costs of surplus properties is expected to reverse over the remaining life of the leases or period to anticipated date of disposal, if sooner. Commission clawbacks The commission clawback provision represents an estimate of the repayment of commission to suppliers as a result of cancelled policies sold by Connells and the financial advice activities of the Group. These are estimated based upon anticipated cancellation rates and arise in the normal course of business. Survey and valuation claims Provision is made for professional indemnity claims and potential claims that arise during the normal course of business in relation to surveys and valuations carried out by Connells. The provision is based upon the expected level of future professional indemnity claims relating to services already provided and the value provided on each claim is the lower of the professional indemnity insurance excess per claim or the estimated exposure. To assess the level of future claims, analysis is performed on the number of preliminary notifications expected to turn into future claims and on historical claim trends to forecast the number of future claims where a notification is yet to be received. Historical data on claims success frequency and value is also used to estimate the size of the liability. The professional indemnity claim provision is stated at the Directors\u2019 best estimate of the eventual liability, based on the information available at the time. Whilst the level of future claims is uncertain, the Group has robust processes in place that aim to restrict the number and magnitude of these. Due to the nature of the professional indemnity claims it is difficult to indicate approximate payment timescales or claims received in future years. The provision will be utilised as individual claims are settled. ", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-511": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
Impairment (losses) / credits on loans and advances to customers
(10.1)
17.1
(9.8)
17.0
(Note 17)
Impairment credits on liquid assets
0.1
0.1
0.1
0.1
Realised losses on equity release portfolio (Note 18)
(1.3)
(1.8)
(1.3)
(1.8)
Provisions for liabilities (Note 33)
(0.9)
(3.7)
0.2
(4.9)
Total
(12.2)
11.7
(10.8)
10.4
2025
Group
Loans fully secured
Loans fully Other loans
\u00a3m on residential secured on and Total
Property land advances
Loss allowance at 1 January 2025
13.5
4.7
1.4
19.6
Amounts written off during the year, net of
recoveries
(1.5)
(2.4)
(0.2)
(4.1)
Income statement charge for the year
9.6
0.3
0.2
10.1
Loss allowance at 31 December 2025
21.6
2.6
1.4
25.6
2024
Group
Loans fully secured
Loans fully Other loans
\u00a3m on residential secured on and Total
Property land advances
Loss allowance at 1 January 2024
29.0
9.0
1.6
39.6
Amounts written off during the year, net of
recoveries
(1.0)
(1.4)
(0.5)
(2.9)
Income statement (credit) / charge for the year
(14.5)
(2.9)
0.3
(17.1)
Loss allowance at 31 December 2024
13.5
4.7
1.4
19.6
2025
Society
Loans fully secured Loans fully
\u00a3m on residential secured on Total
Property land
Loss allowance at 1 January 2025
12.8
4.7
17.5
Amounts written off during the year, net of
recoveries
(1.4)
(2.4)
(3.8)
Income statement charge for the year
9.5
0.3
9.8
Loss allowance at 31 December 2025
20.9
2.6
23.5
2024
Society
Loans fully secured Loans fully
\u00a3m on residential secured on Total
Property Land
Loss allowance at 1 January 2024
27.9
9.0
36.9
Amounts written off during the year, net of
recoveries
(1.0)
(1.4)
(2.4)
Income statement credit for the year
(14.1)
(2.9)
(17.0)
Loss allowance at 31 December 2024
12.8
4.7
17.5
2025
2024
Group
Land and
Equipment,
Land and
Equipment,
\u00a3m buildings fixtures Total buildings fixtures Total
and fittings
and fittings
Cost
At 1 January
115.6
93.9
209.5
110.8
87.9
198.7
Additions
6.4
7.5
13.9
8.9
13.1
22.0
Disposals
(1.2)
(7.5)
(8.7)
(3.7)
(6.9)
(10.6)
Acquisition of subsidiary undertakings
0.1
0.5
0.6
-
-
-
Foreign exchange movements on
translation
-
-
-
-
(0.2)
(0.2)
Reclassification to assets held for sale
(0.8)
-
(0.8)
-
-
-
Reclassification to investment property
(0.1)
-
(0.1)
(0.4)
-
(0.4)
At 31 December
120.0
94.4
214.4
115.6
93.9
209.5
Depreciation
At 1 January
61.0
67.6
128.6
58.4
65.8
124.2
Charge for the year
6.4
9.0
15.4
5.9
8.4
14.3
Impairment charge
-
1.0
1.0
-
-
-
Disposals
(0.9)
(6.5)
(7.4)
(3.2)
(6.4)
(9.6)
Foreign exchange movements on
translation
-
(0.1)
(0.1)
-
(0.2)
(0.2)
Reclassification to assets held for sale
(0.2)
-
(0.2)
-
-
-
Reclassification to investment property
-
-
-
(0.1)
-
(0.1)
At 31 December
66.3
71.0
137.3
61.0
67.6
128.6
Net book value at 1 January
54.6
26.3
80.9
52.4
22.1
74.5
Net book value at 31 December
53.7
23.4
77.1
54.6
26.3
80.9
2025
2024
Society
Land and
Equipment,
Land and
Equipment,
\u00a3m buildings fixtures Total buildings fixtures Total
and fittings
and fittings
Cost
At 1 January
57.1
21.5
78.6
55.1
17.5
72.6
Additions
3.0
3.2
6.2
4.5
6.0
10.5
Disposals
(0.6)
(0.7)
(1.3)
(2.1)
(2.0)
(4.1)
Reclassification to assets held for sale
(0.8)
-
(0.8)
-
-
-
Reclassification to investment property
(0.1)
-
(0.1)
(0.4)
-
(0.4)
At 31 December
58.6
24.0
82.6
57.1
21.5
78.6
Depreciation
At 1 January
23.6
11.9
35.5
22.6
11.0
33.6
Charge for the year
2.8
3.5
6.3
2.8
2.9
5.7
Disposals
(0.6)
(0.7)
(1.3)
(1.7)
(2.0)
(3.7)
Reclassification to assets held for sale
(0.2)
-
(0.2)
-
-
-
Reclassification to investment property
-
-
-
(0.1)
-
(0.1)
At 31 December
25.6
14.7
40.3
23.6
11.9
35.5
Net book value at 1 January
33.5
9.6
43.1
32.5
6.5
39.0
Net book value at 31 December
33.0
9.3
42.3
33.5
9.6
43.1
Property, plant and equipment additions (Group and Society) include \u00a30.6m (2024: \u00a30.5m) in land and buildings and \u00a3nil (2024: \u00a3nil) in equipment, fixtures and fittings in relation to Capital Work in Progress (CWIP), relating mainly to branch refurbishment projects. As outlined in Note 21, during the year, property, plant and equipment with a total carrying value of \u00a30.6m was reclassified as held for sale, and therefore presented separately within the Statement of Financial Position. The net book value of land and buildings comprises:
Group
Society
\u00a3m
2025
2024
2025
2024
Freehold
36.7
38.3
25.0
25.6
Long leasehold
2.6
2.7
2.6
2.7
Short leasehold
14.4
13.6
5.4
5.2
Total
53.7
54.6
33.0
33.5
The Group\u2019s leases relate mainly to branch premises operated by the Society and by Connells. The Group\u2019s
leases are typically negotiated on an individual basis and thus include a wide variety of terms and conditions,
including options to extend or terminate. There are no significant restrictions or covenants, residual value
guarantees or sale and leaseback transactions. As at 31 December 2025, the lease liability (see Note 31) is
considered by the Group to represent a reliable estimate of the present value of the future cash outflows to
which the Group is exposed. A number of the Group\u2019s leased properties are sublet, in full or in part, by the
Group. For the year ended 31 December 2025, other operating income includes \u00a30.1m (2024: \u00a30.1m) (Group)
and \u00a3nil (2024: \u00a3nil) (Society) relating to the subleasing of properties accounted for as right-of-use assets. For
details of the Group\u2019s lease liabilities, see Note 31. For further details of the Group\u2019s lease expenses in the year,
see Note 7.
2025
2024
Group
Land and
Equipment,
Land and
Equipment,
\u00a3m buildings fixtures Total buildings fixtures Total
and fittings
and fittings
Cost
Balance at 1 January
163.8
22.6
186.4
160.4
21.3
181.7
Additions
25.2
15.7
40.9
17.1
2.2
19.3
Acquisition of subsidiary undertakings
4.0
-
4.0
-
-
-
Lease modifications and
remeasurements
13.7
1.0
14.7
11.2
-
11.2
Disposals
(30.6)
(0.2)
(30.8)
(24.7)
(0.9)
(25.6)
Foreign exchange movements on
translation
(0.1)
-
(0.1)
(0.2)
-
(0.2)
At 31 December
176.0
39.1
215.1
163.8
22.6
186.4
Depreciation
Balance at 1 January
81.3
14.7
96.0
70.9
9.9
80.8
Charge for the year
32.3
7.0
39.3
32.1
5.6
37.7
Impairment charge
1.8
0.1
1.9
2.3
0.1
2.4
Disposals
(28.8)
(0.2)
(29.0)
(23.8)
(0.9)
(24.7)
Foreign exchange movements on
translation
(0.1)
-
(0.1)
(0.2)
-
(0.2)
At 31 December
86.5
21.6
108.1
81.3
14.7
96.0
Net book value at 1 January
82.5
7.9
90.4
89.5
11.4
100.9
Net book value at 31 December
89.5
17.5
107.0
82.5
7.9
90.4
2025
2024
Society
Land and
Equipment,
Land and
Equipment,
\u00a3m buildings fixtures Total buildings fixtures Total
and fittings
and fittings
Cost
At 1 January
18.9
-
18.9
18.9
0.2
19.1
Additions
1.8
-
1.8
0.8
-
0.8
Disposals
(2.8)
-
(2.8)
(0.8)
(0.2)
(1.0)
At 31 December
17.9
-
17.9
18.9
-
18.9
Depreciation
At 1 January
10.6
-
10.6
9.0
0.1
9.1
Charge for the year
2.1
-
2.1
2.2
-
2.2
Disposals
(2.8)
-
(2.8)
(0.6)
(0.1)
(0.7)
At 31 December
9.9
-
9.9
10.6
-
10.6
Net book value at 1 January
8.3
-
8.3
9.9
0.1
10.0
Net book value at 31 December
8.0
-
8.0
8.3
-
8.3
All investment property relates to property purchased by the Society and is either unoccupied by the Society or
relates to branches where part of the property is subleased.
As outlined in Note 21, during the year, investment property with a total carrying value of \u00a33.1m was
reclassified as held for sale, and therefore presented separately within the Statement of Financial Position.
The amount of rental income from investment property recognised in the Income Statement during the year
was \u00a30.2m (2024: \u00a31.9m) for the Group and Society.
The aggregate estimated market value of investment properties is set out in the table below:
The estimated market value of the investment properties has been determined by an appropriately qualified
internal valuer, supported by external valuations where appropriate, in accordance with RICS Appraisal and
Valuation Standards and is an indication of fair value. This fair value measurement is categorised as a Level 3
fair value measurement, as described in Note 46b).
For the majority of the Group\u2019s investment properties, fair value is estimated using the market valuation
approach which uses prices and other relevant information generated by market transactions involving
comparable properties. Where comparable transactions may not be available, the Group may also consider a
discounted cash flow technique which considers the present value of the net cash flows to be generated from
the property, taking into account expected rental growth, void periods and rent-free periods. The expected net
cash flows are discounted using risk-adjusted discount rates.
The Directors have assessed the carrying value of the investment properties compared to their fair value and
have concluded that no impairment charge should be recognised for the year (2024: \u00a3nil).
Group & Society
\u00a3m
2025
2024
Cost
At 1 January
25.1
25.1
Additions
0.1
-
Disposals
(0.1)
(0.4)
Reclassification to assets held for sale
(22.8)
-
Reclassification from property, plant and equipment
0.1
0.4
At 31December
2.4
25.1
Depreciation
At 1 January
20.6
20.0
Charge for the year
0.3
0.6
Impairment credit
(0.1)
-
Disposals
(0.1)
(0.1)
Reclassification to assets held for sale
(19.7)
-
Reclassification from property, plant and equipment
-
0.1
At 31 December
1.0
20.6
Net book value at 1 January
4.5
5.1
Net book value at 31 December
1.4
4.5
Group & Society
\u00a3m
2025
2024
Market value of investment property
2.1
5.4
Goodwill acquired in a business combination is allocated at acquisition to the cash generating unit (CGU), or group of CGUs, that is expected to benefit from that business combination (as further described in Note 1e)); at Skipton Group level, the allocation of goodwill typically reflects the Group\u2019s operating segments. The Group\u2019s reportable segments are currently assessed and presented at the operating entity level and goodwill held by the Group is allocated accordingly; when testing goodwill held by the Group for impairment at the consolidated level, amounts relating to CGUs within the Connells business are therefore aggregated. The carrying value of goodwill held by the Group has been allocated as follows:
Group
Society
\u00a3m
2025
2024
2025
2024
Goodwill
249.9
218.5
-
-
Other intangible assets
127.7
92.9
8.3
4.2
Total intangible assets
377.6
311.4
8.3
4.2
Goodwill
Group
\u00a3m
2025
2024
Cost, less amortisation to 1 January 2004
At 1 January
231.0
230.2
Acquisitions of subsidiary undertakings and business units (Note 20b))
33.2
0.5
Revaluation of put options
0.8
0.3
Disposal of subsidiary undertakings
(2.6)
-
At 31 December
262.4
231.0
Impairment losses
At 1 January
12.5
12.5
At 31 December
12.5
12.5
Net book value at 1 January
218.5
217.7
Net book value at 31 December
249.9
218.5
Carrying value of goodwill
2025 (\u00a3m)
2024 (\u00a3m)
Operating Segment
Cost of
Accumulated
Carrying Cost of
Accumulated
Carrying
goodwill impairment value goodwill impairment value
Connells
244.9
7.5
237.4
219.7
7.5
212.2
Other
17.5
5.0
12.5
11.3
5.0
6.3
Total goodwill
262.4
12.5
249.9
231.0
12.5
218.5
Based upon the Directors\u2019 assessment of recoverable amounts, the Directors have concluded that no
impairment of goodwill or brands is required to be recognised in 2025 (2024: \u00a3nil). Sensitivity disclosures are
provided below.
The recoverable amounts of the operating segments are determined by consideration of value in use
calculations. The key assumptions for the value in use calculations are those regarding cash flows, discount
rates and growth rates.
The cash flows are derived from the most recent corporate plans for the next five years, which take into
account the risks inherent in each of the segments. The cash flows are extrapolated for subsequent years
indefinitely (or a specific number of years where circumstances dictate), to reflect that the underlying
businesses are held for long-term investment, based on a long-term growth rate of 3.0% (2024: 3.0%) or
specific growth rates where circumstances dictate.
The cash flows from the corporate plans are based upon the following key drivers:
In addition to the key drivers outlined above, the preparation of the corporate plan of Connells, the segment to
which the majority of goodwill held by the Group is allocated, requires the Directors to take into account
various other factors underpinning the UK housing market. These include, but are not limited to, expectations
of Connells\u2019 future market share and projected average fees achievable in relation to second hand house sales.
Connells\u2019 corporate plan is subject to robust scrutiny and challenge by the Connells and Society boards.
The Group estimates discount rates based upon the weighted average cost of capital which is adjusted to take
account of the market risks associated with each segment.
The pre-tax discount rates are as follows:
Sensitivity disclosures
For goodwill and brands held by the Group, the impairment assessment is typically carried out at the operating
segment level (as described in Note 1e)). For each segment to which goodwill and brands are allocated, the
impairment test compares the carrying value against the segment\u2019s recoverable amount. The segment\u2019s
recoverable amount is determined as the higher of a) its fair value less costs to sell and b) its value in use;
value in use is determined by discounting the forecast future cash flows of the segment to present value.
There is significant headroom in relation to all the CGUs and no reasonably possible alternative assumptions in
relation to any of the key inputs used would result in impairment.
Operating Segment
Key drivers
Connells
Volume of UK property transactions, house price inflation, level of unemployment and
interest rates
Other
Volume of new business, arrears levels, level of unemployment and interest rates
Operating Segment
2025 (%)
2024 (%)
Connells
16
17
Other
12
12
Other intangible asset additions include \u00a323.2m (2024: \u00a37.8m) for the Group and \u00a33.1m (2024: \u00a34.0m) for the Society in relation to Capital Work in Progress (CWIP), relating to the ongoing Digital Transformation project for the Society, specifically App and portal enhancements, and in relation to various projects to upgrade IT capability within Connells. The net book value of other intangible assets comprises: The following table provides a breakdown of the carrying value of brands (which are deemed to have an indefinite useful life) within the Connells and Other operating segments: Other intangible assets
Group
Society
\u00a3m
2025
2024
2025
2024
Cost
At 1 January
272.8
260.1
5.3
1.3
Acquisition of subsidiary undertakings
16.0
-
-
-
Acquisition of other business assets
1.4
1.1
-
-
Additions
33.8
14.9
4.1
4.0
Foreign exchange movements on translation
(1.4)
(3.1)
-
-
Disposals
(0.8)
(0.2)
-
-
Disposal of subsidiaries
(1.7)
-
-
-
At 31 December
320.1
272.8
9.4
5.3
Amortisation and impairment
At 1 January
179.9
164.6
1.1
1.1
Amortisation charge for the year
13.2
17.4
-
-
Impairment charge
2.8
0.7
-
-
Foreign exchange movements on translation
(1.0)
(2.6)
-
-
Disposals
(0.8)
(0.2)
-
-
Disposal of subsidiaries
(1.7)
-
-
-
At 31 December
192.4
179.9
1.1
1.1
Net book value at 1 January
92.9
95.5
4.2
0.2
Net book value at 31 December
127.7
92.9
8.3
4.2
Group
Society
\u00a3m
2025
2024
2025
2024
Brands
65.7
61.2
-
-
Customer contracts and relationships
11.0
10.5
-
-
Computer software and databases
51.0
21.2
8.3
4.2
Total
127.7
92.9
8.3
4.2
\u00a3m
2025
2024
Aspire Estate Agents Limited
1.5
-
Contec Group International Ltd
0.3
-
Countrywide Estate Agents Limited
42.6
42.6
Gascoigne Halman Group Limited
3.0
3.0
Lambert Smith Hampton Group Limited
12.1
12.1
Peter Alan Limited
2.3
2.3
RMS Estate Agents Limited
1.2
1.2
Ryden LLP
1.1
-
Stiles Harold Williams Partnership LLP
1.4
-
Tylers Property Partnership Limited
0.2
-
Total brands
65.7
61.2
Goodwill
249.9
218.5
Total goodwill and brands
315.6
279.7
", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-438": { "value": "
Group
Society
2025
2024
2025
2024
Society principal office
2,123
2,001
2,123
2,001
Society branches
452
423
452
423
Subsidiary undertakings
16,279
15,592
-
-
Total employee numbers
18,854
18,016
2,575
2,424
The average number of full and part-time persons employed during the year (including Executive Directors) was as follows:", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-439": { "value": "
Directors\u2019 emoluments are set out within the Directors\u2019 Remuneration Report.
Total Directors\u2019 emoluments for 2025 amounted to \u00a33.1m (2024: \u00a33.9m).
", "dimensions": { "concept": "skiptonbuilding:DisclosureOfDirectorsEmoluments", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-512": { "value": "
A number of transactions are entered into with related parties in the normal course of business; these are
detailed below.
Key management personnel
For the purposes of these disclosures, key management personnel comprises the Executive Directors and Non-
Executive Directors of the Society, plus all other members of the Society\u2019s Executive Committee. Executive
Committee members are, in addition to the Executive and Non-Executive Directors, responsible for ensuring the
Society meets its strategic and operational objectives.
The table below summarises the benefits awarded to key management personnel in the year:
The table below sets out the outstanding balances in relation to related party transactions with key
management personnel and persons who are connected with key management personnel:
Interest receivable and payable in relation to related party accounts during the year was as follows:
Loans and savings of key management personnel are at normal commercial rates. There are no provisions for
impairment against these loans.
Key management personnel loans and transactions
At 31 December 2025 there were two (2024: three) outstanding mortgage loans granted in the ordinary course
of business amounting in aggregate to \u00a31,603,367 (2024: \u00a3643,129) to two (2024: three) key management
personnel or persons who are connected with key management personnel. These mortgages are provided on
the same terms and conditions applicable to other employees within the Society and SBF. No amounts
have been waived or written off.
A register is maintained at the Principal Office of the Society which shows details of all loans, transactions and
arrangements with Directors and connected persons. A statement for the current financial year of the
appropriate details contained in the register will be available for inspection at the Principal Office for a period
of 15 days up to and including the Annual General Meeting.
Contributions to pension schemes
During the year, the Group and Society paid contributions of \u00a347.2m (2024: \u00a354.6m) and \u00a320.0m (2024:
\u00a331.2m) respectively to pension schemes.
Loan to pension scheme
The Skipton Building Society (2015) Group Pension Scheme was subject to an insurer buy-in during the year,
whereby the majority of the assets in the Scheme were used to purchase an insurance policy. The policy
insures the Trustee\u2019s obligation to provide certain benefits to members under the Scheme. In connection with
the buy-in, the Society made a loan to the Scheme \u2013 originally advanced in January 2025 in Sterling but
subsequently converted into a USD-denominated loan in September 2025. See Note 35 and Note 36 for further
details.
Group & Society
\u00a3m
2025
2024
Salary, benefits and annual performance pay
6.1
7.1
Employer pension contributions
0.6
0.3
6.7
7.4
Group & Society
\u00a3\u2019000
2025
2024
Interest receivable
18
29
Interest payable
41
37
Group & Society
\u00a3\u2019000
2025
2024
Mortgage loans outstanding at 31 December
1,603
643
Savings balances at 31 December
1,219
1,327
The loan\u2019s fair value as at 31 December 2025 is calculated at \u00a310.9m, compared to a principal and interest
balance of \u00a313.1m, resulting in a fair value adjustment charge of \u00a32.2m being recognised \u2013 included in the
Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019, for both
the Group and Society.
Loan to Jade
In November 2025 the Society provided a loan of NZ$25.0m to Jade in order the fund the acquisition of Contec
Group International Ltd. As at 31 December 2025, the sterling equivalent outstanding amount due from Jade to
the Society in respect of this loan was \u00a310.7m. For 2025, the interest receivable by the Society in respect of
this loan was \u00a30.1m; included within \u2018Interest receivable\u2019 presented in the table below.
The loan is held at amortised cost, and on consolidation at a Group level, the balance is eliminated in the
consolidated Statement of Financial Position. The loan is hedged by way of a cross-currency swap in order to
eliminate foreign exchange risk. The swap (hedging instrument) is external to the Group, but the loan (hedged
item; eliminated on consolidation) is not. See Note 20a) for further details.
Other related party transactions
During the year the Society had the following related party transactions with subsidiary undertakings:
Notes
A. Included within the Interest receivable line in the table above is an amount of \u00a30.8m for the year ended 31 December 2025 (2024: \u00a3nil)
in relation to the loan to defined benefit pension scheme (outlined on page 187).
B. These are fees payable by the Society to Connells for the above services, which are amortised through net interest receivable in the
Society\u2019s books on an effective interest basis.
All the above transactions were entered into on an arm\u2019s-length basis. For details of the relationships between
the Society and its principal subsidiary undertakings see Note 20a).
In 2021, Connells Limited acquired the entire share capital of Countrywide plc. In order to fund the transaction,
enable Connells to repay existing borrowings in Countrywide and provide working capital, the Society agreed to
provide a loan of \u00a3253.0m to Connells Limited on completion of the acquisition. As at 31 December 2025, the
outstanding amount due from Connells to the Society in respect of this loan was \u00a3114.3m (2024: \u00a3118.9m).
For 2025 the interest receivable by the Society in respect of this loan was \u00a38.4m (2024: \u00a39.6m); included within
interest receivable presented in the table above.
At 31 December 2025 the Society owed \u00a31,304.1m (2024: \u00a31,413.7m) to subsidiary undertakings and was
owed \u00a3454.7m (2024: \u00a3403.9m) by subsidiary undertakings. The total amount owed by subsidiary
undertakings as at 31 December 2025 includes the \u00a3114.3m (2024: \u00a3118.9m) outstanding in respect of the
loan to Connells Limited, as described above. Interest on intra-Group borrowings is charged at an appropriate
market rate. As at 31 December 2025 the Society recognised no impairment loss allowance in respect of loans
to subsidiary undertakings, on the grounds of immateriality (2024: \u00a3nil).
Society
\u00a3m
2025
2024
Rendering and receiving of services
0.1
0.1
Recharges of central costs
4.8
5.0
Interest receivable (note A)
130.7
122.6
Interest payable
(202.8)
(217.0)
Mortgage referral, valuation and legal fees (note B)
(10.5)
(10.2)
Other operating income
9.6
8.2
Collateral transferred to funding vehicles
2,194.4
1,147.2
Collateral transferred from funding vehicles
(54.3)
(67.0)
Repayment of debt securities
(37.3)
(119.4)
As disclosed in Note 20a), the Society has for the year ended 31 December 2025 provided guarantees over the
liabilities of Jade Software Corporation UK Limited, North Yorkshire Mortgages Limited, Skipton Group
Holdings Limited, Skipton Investments Limited and Skipton Trustees Limited. As at 31 December 2025 the
financial statements of these subsidiary undertakings include aggregate liabilities of \u00a364.8m (2024: \u00a341.6m),
of which \u00a357.7m (2024: \u00a337.0m) is intra-group liabilities.
At 31 December 2025 the Group was owed \u00a3nil (2024: \u00a3nil) by joint ventures and owed \u00a3nil (2024: \u00a3nil) to joint
ventures. At 31 December 2025 the Group was owed \u00a3nil (2024: \u00a30.1m) by entities in which the Group holds
equity share investments.
There were no provisions in respect of sales of goods and services or in respect of outstanding loans between
the Group or Society and its related parties as at 31 December 2025 or 31 December 2024.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-440": { "value": "A number of transactions are entered into with related parties in the normal course of business; these are detailed below. Key management personnel For the purposes of these disclosures, key management personnel comprises the Executive Directors and Non- Executive Directors of the Society, plus all other members of the Society\u2019s Executive Committee. Executive Committee members are, in addition to the Executive and Non-Executive Directors, responsible for ensuring the Society meets its strategic and operational objectives. The table below summarises the benefits awarded to key management personnel in the year: The table below sets out the outstanding balances in relation to related party transactions with key management personnel and persons who are connected with key management personnel: Interest receivable and payable in relation to related party accounts during the year was as follows: Loans and savings of key management personnel are at normal commercial rates. There are no provisions for impairment against these loans. Key management personnel loans and transactions At 31 December 2025 there were two (2024: three) outstanding mortgage loans granted in the ordinary course of business amounting in aggregate to \u00a31,603,367 (2024: \u00a3643,129) to two (2024: three) key management personnel or persons who are connected with key management personnel. These mortgages are provided on the same terms and conditions applicable to other employees within the Society and SBF. No amounts have been waived or written off. A register is maintained at the Principal Office of the Society which shows details of all loans, transactions and arrangements with Directors and connected persons. A statement for the current financial year of the appropriate details contained in the register will be available for inspection at the Principal Office for a period of 15 days up to and including the Annual General Meeting. Contributions to pension schemes During the year, the Group and Society paid contributions of \u00a347.2m (2024: \u00a354.6m) and \u00a320.0m (2024: \u00a331.2m) respectively to pension schemes. Loan to pension scheme The Skipton Building Society (2015) Group Pension Scheme was subject to an insurer buy-in during the year, whereby the majority of the assets in the Scheme were used to purchase an insurance policy. The policy insures the Trustee\u2019s obligation to provide certain benefits to members under the Scheme. In connection with the buy-in, the Society made a loan to the Scheme \u2013 originally advanced in January 2025 in Sterling but subsequently converted into a USD-denominated loan in September 2025. See Note 35 and Note 36 for further details.
Group & Society
\u00a3m
2025
2024
Salary, benefits and annual performance pay
6.1
7.1
Employer pension contributions
0.6
0.3
6.7
7.4
Group & Society
\u00a3\u2019000
2025
2024
Interest receivable
18
29
Interest payable
41
37
Group & Society
\u00a3\u2019000
2025
2024
Mortgage loans outstanding at 31 December
1,603
643
Savings balances at 31 December
1,219
1,327
The loan\u2019s fair value as at 31 December 2025 is calculated at \u00a310.9m, compared to a principal and interest balance of \u00a313.1m, resulting in a fair value adjustment charge of \u00a32.2m being recognised \u2013 included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019, for both the Group and Society. Loan to Jade In November 2025 the Society provided a loan of NZ$25.0m to Jade in order the fund the acquisition of Contec Group International Ltd. As at 31 December 2025, the sterling equivalent outstanding amount due from Jade to the Society in respect of this loan was \u00a310.7m. For 2025, the interest receivable by the Society in respect of this loan was \u00a30.1m; included within \u2018Interest receivable\u2019 presented in the table below. The loan is held at amortised cost, and on consolidation at a Group level, the balance is eliminated in the consolidated Statement of Financial Position. The loan is hedged by way of a cross-currency swap in order to eliminate foreign exchange risk. The swap (hedging instrument) is external to the Group, but the loan (hedged item; eliminated on consolidation) is not. See Note 20a) for further details. Other related party transactions During the year the Society had the following related party transactions with subsidiary undertakings: Notes A. Included within the Interest receivable line in the table above is an amount of \u00a30.8m for the year ended 31 December 2025 (2024: \u00a3nil) in relation to the loan to defined benefit pension scheme (outlined on page 187). B. These are fees payable by the Society to Connells for the above services, which are amortised through net interest receivable in the Society\u2019s books on an effective interest basis. All the above transactions were entered into on an arm\u2019s-length basis. For details of the relationships between the Society and its principal subsidiary undertakings see Note 20a). In 2021, Connells Limited acquired the entire share capital of Countrywide plc. In order to fund the transaction, enable Connells to repay existing borrowings in Countrywide and provide working capital, the Society agreed to provide a loan of \u00a3253.0m to Connells Limited on completion of the acquisition. As at 31 December 2025, the outstanding amount due from Connells to the Society in respect of this loan was \u00a3114.3m (2024: \u00a3118.9m). For 2025 the interest receivable by the Society in respect of this loan was \u00a38.4m (2024: \u00a39.6m); included within interest receivable presented in the table above. At 31 December 2025 the Society owed \u00a31,304.1m (2024: \u00a31,413.7m) to subsidiary undertakings and was owed \u00a3454.7m (2024: \u00a3403.9m) by subsidiary undertakings. The total amount owed by subsidiary undertakings as at 31 December 2025 includes the \u00a3114.3m (2024: \u00a3118.9m) outstanding in respect of the loan to Connells Limited, as described above. Interest on intra-Group borrowings is charged at an appropriate market rate. As at 31 December 2025 the Society recognised no impairment loss allowance in respect of loans to subsidiary undertakings, on the grounds of immateriality (2024: \u00a3nil).
Society
\u00a3m
2025
2024
Rendering and receiving of services
0.1
0.1
Recharges of central costs
4.8
5.0
Interest receivable (note A)
130.7
122.6
Interest payable
(202.8)
(217.0)
Mortgage referral, valuation and legal fees (note B)
(10.5)
(10.2)
Other operating income
9.6
8.2
Collateral transferred to funding vehicles
2,194.4
1,147.2
Collateral transferred from funding vehicles
(54.3)
(67.0)
Repayment of debt securities
(37.3)
(119.4)
As disclosed in Note 20a), the Society has for the year ended 31 December 2025 provided guarantees over the liabilities of Jade Software Corporation UK Limited, North Yorkshire Mortgages Limited, Skipton Group Holdings Limited, Skipton Investments Limited and Skipton Trustees Limited. As at 31 December 2025 the financial statements of these subsidiary undertakings include aggregate liabilities of \u00a364.8m (2024: \u00a341.6m), of which \u00a357.7m (2024: \u00a337.0m) is intra-group liabilities. At 31 December 2025 the Group was owed \u00a3nil (2024: \u00a3nil) by joint ventures and owed \u00a3nil (2024: \u00a3nil) to joint ventures. At 31 December 2025 the Group was owed \u00a3nil (2024: \u00a30.1m) by entities in which the Group holds equity share investments. There were no provisions in respect of sales of goods and services or in respect of outstanding loans between the Group or Society and its related parties as at 31 December 2025 or 31 December 2024.", "dimensions": { "concept": "ifrs-full:DisclosureOfTransactionsBetweenRelatedPartiesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-488": { "value": "Key management personnel For the purposes of these disclosures, key management personnel comprises the Executive Directors and Non- Executive Directors of the Society, plus all other members of the Society\u2019s Executive Committee. Executive Committee members are, in addition to the Executive and Non-Executive Directors, responsible for ensuring the Society meets its strategic and operational objectives. The table below summarises the benefits awarded to key management personnel in the year: The table below sets out the outstanding balances in relation to related party transactions with key management personnel and persons who are connected with key management personnel: Interest receivable and payable in relation to related party accounts during the year was as follows: Loans and savings of key management personnel are at normal commercial rates. There are no provisions for impairment against these loans. Key management personnel loans and transactions At 31 December 2025 there were two (2024: three) outstanding mortgage loans granted in the ordinary course of business amounting in aggregate to \u00a31,603,367 (2024: \u00a3643,129) to two (2024: three) key management personnel or persons who are connected with key management personnel. These mortgages are provided on the same terms and conditions applicable to other employees within the Society and SBF. No amounts have been waived or written off. A register is maintained at the Principal Office of the Society which shows details of all loans, transactions and arrangements with Directors and connected persons. A statement for the current financial year of the appropriate details contained in the register will be available for inspection at the Principal Office for a period of 15 days up to and including the Annual General Meeting.
Group & Society
\u00a3m
2025
2024
Salary, benefits and annual performance pay
6.1
7.1
Employer pension contributions
0.6
0.3
6.7
7.4
Group & Society
\u00a3\u2019000
2025
2024
Interest receivable
18
29
Interest payable
41
37
Group & Society
\u00a3\u2019000
2025
2024
Mortgage loans outstanding at 31 December
1,603
643
Savings balances at 31 December
1,219
1,327
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-441": { "value": "A reconciliation of the tax expense on profit before tax at the standard rate of corporation tax in the UK to the actual tax expense is as follows. Reconciliation of tax expense
Group
Society
\u00a3m
2025
2024
2025
2024
Profit before tax
275.2
318.6
272.1
245.9
Share of profits from joint ventures, net of tax
(2.0)
(1.4)
-
-
273.2
317.2
272.1
245.9
Tax calculated at the standard rate of corporation tax in the UK of
25.0% (2024: 25.0%)
68.3
79.3
68.0
61.5
Effects of:
Expenses not deductible for tax purposes
2.3
0.7
1.0
0.5
Adjustment to tax expense in respect of prior periods
(0.2)
0.5
0.5
(0.6)
Non-taxable dividend income
-
-
(20.7)
(9.0)
Other non-taxable income
(3.5)
(1.8)
(0.4)
(0.2)
Lower tax rates in other jurisdictions
(1.7)
(4.4)
-
-
Banking surcharge
2.3
3.3
2.6
3.3
Recognition of previously unrecognised tax losses
-
(0.9)
-
-
Pillar Two top-up taxes
0.7
1.5
-
1.5
Removal of deferred tax resulting from assets reclassified to
\u2018Assets held for sale\u2019
(1.8)
-
(1.8)
-
Other
(0.2)
(0.1)
0.3
(0.3)
Total tax expense
66.2
78.1
49.5
56.7
Group
Society
\u00a3m
2025
2024
2025
2024
Current tax:
Corporation tax on profits in the period
65.2
66.5
49.3
51.9
Adjustments in respect of previous periods
(1.5)
2.2
0.2
1.3
Pillar Two top-up taxes
0.7
1.5
-
1.5
64.4
70.2
49.5
54.7
Deferred tax
(Note 34):
Current year charge / (credit)
0.5
9.6
(0.3)
3.9
Adjustments in respect of previous periods
1.3
(1.7)
0.3
(1.9)
1.8
7.9
-
2.0
Total tax expense
66.2
78.1
49.5
56.7
The effective tax rate for the Group for the year ended 31 December 2025 is 24.2% (2024: 24.6%) compared
with the standard rate of UK corporation tax of 25.0% (2024: 25.0%). The Group\u2019s effective rate is lower than
the standard rate due to the impacts of non-taxable income and the lower tax rates in Guernsey and Jersey
which apply to the taxable profits of SIL. This is offset by the impact of the banking surcharge (see below),
additional tax due in respect of Pillar Two top-up taxes and expenditure disallowable for tax purposes.
The effective tax rate for the Society for the year ended 31 December 2025 is 18.2% (2024: 23.1%). The
Society\u2019s taxable profits above \u00a3100m are subject to a 3% banking surcharge. The effective rate of tax is also
impacted by non-taxable dividend income of \u00a382.8m (2024: \u00a336.0m) and, for 2024, additional tax due in
respect of Pillar Two top-up taxes.
OECD Pillar Two Model Rules
The Skipton Group is within the scope of the OECD Pillar Two model rules which came into effect in the UK and
Australia from 1 January 2024. The rules came into effect in Guernsey, Jersey and New Zealand from 1
January 2025. The rules are aimed at ensuring that large multinational groups are subject to a minimum
effective tax rate of 15% in each jurisdiction within which they operate. The Group has applied the mandatory
temporary exception to recognising and disclosing information about deferred tax assets and liabilities related
to Pillar Two income taxes, as provided in the amendments to IAS 12
Income Taxes
issued in May 2023.
The charge estimated by the Group in respect of Pillar Two for the year ended 31 December 2025 is \u00a30.7m (31
December 2024: \u00a31.5m) and this is included in the current tax expense. The estimated charge for both years
relates to top-up taxes in respect of profits of SIL. In 2025 the charge is expected to be incurred by SIL in
Guernsey and Jersey following the adoption of the Pillar Two rules in Guernsey and Jersey from 1 January
2025. The 2024 charge is expected to be incurred by the Society in the UK, due to the UK\u2019s earlier
implementation of the rules. The charge for each of 2024 and 2025 does not include any element of deferred
tax as the Group has applied the temporary exception issued by the IASB in May 2023. Both amounts continue
to be estimates as the Group is currently engaged with external tax specialists to implement a detailed
application of the rules and guidance. The date by which the Group is required to report and pay Pillar Two top-
up taxes in the UK is 30 June 2026. A final detailed calculation will be in place by this date.
Deferred tax is calculated on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes, using the enacted tax rate expected to apply in the relevant tax jurisdiction for the period when these differences are expected to reverse, which is 28.0% (2024: 28.0%) for the Society and 25.0% (2024: 25.0%) for most other Group companies. The rate for the Society is higher than for most other Group companies as the Society\u2019s taxable profits over \u00a3100m are subject to a 3% banking surcharge. The movement during the year in the overall net deferred tax (liability) / asset was as follows: Deferred tax assets and liabilities are individually attributable to the following items:
Group
Society
\u00a3m
2025
2024
2025
2024
Net deferred tax asset at 1 January
6.3
20.9
11.2
16.7
Income Statement charge (Note 12)
(1.8)
(7.9)
-
(2.0)
Items taken directly to other comprehensive income
(0.2)
(6.5)
(5.1)
(3.5)
Acquired on acquisition of subsidiaries
(4.1)
-
-
-
Acquired on acquisition of other business assets
(0.3)
(0.2)
-
-
Other movements
(0.1)
-
0.1
-
Net deferred tax (liability) / asset at 31 December
(0.2)
6.3
6.2
11.2
Deferred tax assets (net of associated deferred tax liabilities \u2013 see note A)
Group
Society
\u00a3m
2025
2024
2025
2024
Fixed asset temporary differences
-
3.8
(1.6)
(3.0)
Intangible asset temporary differences
(1.9)
(15.7)
-
-
Derivatives and loans (note B)
-
6.0
3.1
4.6
Pension obligations
-
5.6
3.3
3.5
Provisions
0.2
6.8
2.7
2.5
Corporation tax losses (note C)
2.1
2.1
-
-
Financial assets held at FVOCI
-
4.2
2.4
4.1
Cash flow hedges
-
(6.4)
(3.7)
(0.5)
Cost of hedging reserve
-
0.6
-
-
Gain deferred by rollover relief
-
(0.7)
-
-
Total
0.4
6.3
6.2
11.2
Deferred tax liabilities (net of associated deferred tax assets \u2013 see note A)
Group
Society
\u00a3m
2025
2024
2025
2024
Fixed asset temporary differences
(4.1)
-
-
-
Intangible asset temporary differences
22.8
-
-
-
Derivatives and loans (note B)
(7.3)
-
-
-
Pension obligations
(4.8)
-
-
-
Provisions
(6.9)
-
-
-
Corporation tax losses (note C)
(0.2)
-
-
-
Financial assets held at FVOCI
(2.5)
-
-
-
Cash flow hedges
3.8
-
-
-
Cost of hedging reserve
(0.2)
-
-
-
Total
0.6
-
-
-
Overall net deferred tax (liability) / asset
(0.2)
6.3
6.2
11.2
Notes
A. Deferred tax assets and liabilities relating to the same taxation authority are offset within the Statement of Financial Position where
there is a legally enforceable right of offset and the intention is to settle tax liabilities and assets on a net basis.
B. The Society amount above is in relation to the adoption of IFRS 9 in 2018; this resulted in an initial adjustment to the deferred tax
asset in the Society of \u00a313.3m which, as permitted by relevant accounting standards, is being released to the Income Statement over
a 10 year period.
C. The deferred tax assets shown above relating to corporation tax losses include \u00a30.2m in respect of certain Connells entities (2024:
\u00a30.2m), together with \u00a32.1m in respect of certain Jade entities (2024: \u00a31.9m). These deferred tax amounts were assessed by
reference to the Group\u2019s five-year corporate planning period. For Jade, management also considered the recent trading history of
relevant Jade entities.
D. As noted above, deferred tax assets and liabilities are offset within each jurisdiction where these criteria are met. The totals in the
final two tables on page 217 therefore represent the net deferred tax position after relevant offsetting on a jurisdictional basis, with
the total deferred tax asset of \u00a30.4m comprising those jurisdictions in a net deferred tax asset position and the total deferred tax
liability of \u00a30.6m comprising those jurisdictions in a net deferred tax liability position.
The deferred tax charge in the Income Statement comprises the following:
Deferred tax has not been recognised in relation to certain losses carried forward at 31 December 2025, which
comprise the following:
\u2022 Trading losses of \u00a31.3m for the Group (2024: \u00a31.5m) and \u00a3nil for the Society (2024: \u00a3nil);
\u2022 Capital losses of \u00a365.2m for the Group (2024: \u00a356.7m) and \u00a38.5m for the Society (2024: \u00a3nil); and
\u2022 Other tax losses of \u00a30.2m for the Group (2024: \u00a30.2m) and \u00a3nil for the Society (2024: \u00a3nil).
Trading losses relate to certain Jade entities and are based on the Group\u2019s five-year corporate plan as well as
the recent trading history of those entities. Capital losses relate primarily to Countrywide entities; in
determining the amounts to be unrecognised, management considered the likelihood of future capital gains
materialising against which these losses could be offset and recognised.
The majority of deferred tax assets are anticipated to be recoverable after one year. The Group\u2019s plans indicate
that the Group and Society will generate sufficient taxable profits over its five-year planning period to absorb
the corporation tax losses included within deferred tax at the reporting date, together with those other
temporary differences that are expected to reverse during that period.
Group
Society
\u00a3m
2025
2024
2025
2024
Fixed asset temporary differences
0.1
3.0
(1.3)
1.2
Intangible asset temporary differences
4.2
(1.8)
-
-
Provisions
(0.3)
(0.4)
(0.2)
(0.7)
Derivatives and loans
(1.3)
1.6
1.5
1.5
Corporation tax losses
(0.2)
3.9
-
-
Tax losses on IFRS 16 transitional adjustments
-
1.7
-
-
Other
(0.7)
(0.1)
-
-
Total
1.8
7.9
-
2.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-489": { "value": "OECD Pillar Two Model Rules The Skipton Group is within the scope of the OECD Pillar Two model rules which came into effect in the UK and Australia from 1 January 2024. The rules came into effect in Guernsey, Jersey and New Zealand from 1 January 2025. The rules are aimed at ensuring that large multinational groups are subject to a minimum effective tax rate of 15% in each jurisdiction within which they operate. The Group has applied the mandatory temporary exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 Income Taxes issued in May 2023. The charge estimated by the Group in respect of Pillar Two for the year ended 31 December 2025 is \u00a30.7m (31 December 2024: \u00a31.5m) and this is included in the current tax expense. The estimated charge for both years relates to top-up taxes in respect of profits of SIL. In 2025 the charge is expected to be incurred by SIL in Guernsey and Jersey following the adoption of the Pillar Two rules in Guernsey and Jersey from 1 January 2025. The 2024 charge is expected to be incurred by the Society in the UK, due to the UK\u2019s earlier implementation of the rules. The charge for each of 2024 and 2025 does not include any element of deferred tax as the Group has applied the temporary exception issued by the IASB in May 2023. Both amounts continue to be estimates as the Group is currently engaged with external tax specialists to implement a detailed application of the rules and guidance. The date by which the Group is required to report and pay Pillar Two top- up taxes in the UK is 30 June 2026. A final detailed calculation will be in place by this date. ", "dimensions": { "concept": "ifrs-full:DisclosureOfKnownOrReasonablyEstimableInformationAboutExposureToPillarTwoIncomeTaxesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-442": { "value": "As outlined in Note 1f), loans and advances to credit institutions are held at amortised cost. All amounts shown in the table above were held in stage 1 for both the Group and Society at the end of the current and prior year. No amounts were written off during the current or prior year in either the Group or the Society. For further details on the assessment of ECLs on liquid assets, see Note 1h). The table below provides maturity information for the net carrying amounts. Collateral Cash is pledged and received as collateral against derivative contracts which are used by the Group to manage its exposure to market risk. Collateral is pledged to derivative contract counterparties where there is a net amount outstanding to the counterparty and collateral is received from derivative contract counterparties where there is a net amount due to the Group. Non-standardised and some legacy derivatives are collateralised based on bilateral Credit Support Annex (CSA) agreements. Under the terms of a CSA, collateral is passed between parties to mitigate the credit risk of counterparties which is inherent in the outstanding derivative contracts. Standardised derivatives are cleared with a central clearing counterparty in accordance with the UK European Market Infrastructure Regulation (UK EMIR). Under the arrangements for cleared derivatives, additional collateral is required to protect the central clearing counterparty against credit risk of the counterparties and to cover intra-day market movements and possible variations in the future valuations of the derivative contracts. At 31 December 2025 the Group and Society pledged \u00a3254.6m (2024: \u00a3272.4m) of this additional collateral. Collateral pledged and received is ring-fenced by all parties to the derivative contract for the sole purpose of collateralisation of the contracts. All derivatives are marked to market on a daily basis, with collateral being either returned or pledged based on the market valuation of the derivatives. The Group\u2019s derivative contracts have an outstanding contractual period of up to 32 years (2024: 33 years).
Group
Society
\u00a3m
2025
2024
2025
2024
Gross carrying amount
353.4
414.7
304.8
397.9
Loss allowance
(0.1)
(0.1)
(0.1)
(0.1)
Net carrying amount
353.3
414.6
304.7
397.8
Group
Society
\u00a3m
2025
2024
2025
2024
Repayable on demand:
Cash and cash equivalents
88.8
121.5
31.2
54.0
88.8
121.5
31.2
54.0
In not more than three months:
Cash and cash equivalents
-
1.6
-
-
-
1.6
-
-
In more than three months but not more than one year:
Other loans and advances to credit institutions
-
1.0
-
1.0
-
1.0
-
1.0
No specified maturity:
Cash pledged as collateral
264.5
290.5
273.5
342.8
264.5
290.5
273.5
342.8
Total loans and advances to credit institutions
353.3
414.6
304.7
397.8
Total included within cash and cash equivalents
88.8
123.1
31.2
54.0
In addition, cash collateral can be pledged or received as repurchase agreement contracts. Repurchase
agreements are funding arrangements which allow a party to sell a financial asset as security to raise funds
and the borrower agrees to repurchase the financial asset at a later agreed date. Where there is a movement in
valuation of the underlying financial asset used as security, the borrower is required to pledge cash (known as
\u2018variation margin\u2019) to make up the shortfall in the value of the security. This valuation margin protects the
counterparty against the risk that the security changes in value over time. Cash pledged in this way is ring-
fenced for the sole purpose of collateralisation and is separate to the funds raised as part of the underlying
repurchase agreement. At 31 December 2025 the Group has no cash (2024: \u00a3nil) pledged as collateral in
repurchase arrangements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToBanksExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-443": { "value": "
The majority of debt securities held are highly liquid assets which are used on a continuing basis in the Group\u2019s
activities.
Group
2025
2024
\u00a3m
FVOCI and Total
FVOCI and Total
Gilts
500.5
1,086.5
Fixed rate bonds
1,552.0
1,274.9
Floating rate notes
11.0
-
Treasury bills
773.4
598.2
Covered bonds
813.5
770.1
Residential mortgage backed securities
619.0
619.9
4,269.4
4,349.6
Debt securities have remaining maturities as follows:
In not more than three months
809.4
492.9
In more than three months but not more than one year
253.6
826.3
In more than one year but not more than five years
2,536.5
2,222.1
In more than five years
669.9
808.3
4,269.4
4,349.6
Transferable debt securities comprise:
Listed on a recognised investment exchange
4,269.4
4,349.6
4,269.4
4,349.6
Society
2025
2024
\u00a3m
FVOCI
FVTPL
Total
FVOCI
FVTPL
Total
Gilts
500.5
-
500.5
1,086.5
-
1,086.5
Fixed rate bonds
1,552.0
-
1,552.0
1,274.9
-
1,274.9
Treasury bills
557.0
-
557.0
321.2
-
321.2
Covered bonds
813.5
-
813.5
770.1
-
770.1
Residential mortgage backed securities
778.9
73.5
852.4
817.1
70.3
887.4
4,201.9
73.5
4,275.4
4,269.8
70.3
4,340.1
Debt securities have remaining maturities as follows:
In not more than three months
593.1
-
593.1
273.9
-
273.9
In more than three months but not more than one year
253.6
-
253.6
768.5
-
768.5
In more than one year but not more than five years
2,685.3
73.5
2,758.8
2,419.1
70.3
2,489.4
In more than five years
669.9
-
669.9
808.3
-
808.3
4,201.9
73.5
4,275.4
4,269.8
70.3
4,340.1
Transferable debt securities comprise:
Listed on a recognised investment exchange
4,201.9
73.5
4,275.4
4,269.8
70.3
4,340.1
4,201.9
73.5
4,275.4
4,269.8
70.3
4,340.1
Group
2025
2024
\u00a3m
FVOCI and Total
FVOCI and Total
At 1 January
4,349.6
3,337.7
Additions
2,274.6
4,402.0
Maturities and disposals
(2,416.3)
(3,376.3)
Changes in fair value
49.2
(28.5)
Other
12.3
14.7
At 31 December
4,269.4
4,349.6
Society
2025
2024
\u00a3m
FVOCI
FVTPL
Total
FVOCI
FVTPL
Total
At 1 January
4,269.8
70.3
4,340.1
3,143.4
63.1
3,206.5
Additions
1,410.3
-
1,410.1
3,908.8
77.8
3,986.6
Maturities and disposals
(1,537.4)
-
(1,537.4)
(2,765.3)
(66.6)
(2,831.9)
Changes in fair value
49.2
3.2
52.4
(28.7)
(4.0)
(32.7)
Other
10.0
-
10.0
11.6
-
11.6
At 31 December
4,201.9
73.5
4,275.4
4,269.8
70.3
4,340.1
The tables below provide further detail on the movement in the impairment loss allowance held in respect of debt securities during the year. There were no amounts written off by the Group or Society during the current or prior year. Movement in impairment loss allowance
Group
Society
\u00a3m
2025
2024
2025
2024
Loss allowance at 1 January
0.2
0.2
0.3
0.3
Increases due to origination, acquisition and additions
0.1
0.2
0.1
0.2
Decrease due to derecognition, repayments and disposals
(0.1)
(0.2)
(0.1)
(0.2)
Loss allowance at 31 December
0.2
0.2
0.3
0.3
All balances for the Group and Society included in the table above are classified as FVOCI and held in stage 1 in both the current and prior year. Collateral At 31 December 2025, \u00a3166.8m (2024: \u00a32.1m) of debt securities have been pledged by the Group, and \u00a3352.9m (2024: \u00a3203.2m) have been pledged by the Society, as collateral in repurchase transactions. These transactions are used to either obtain liquidity or to test the liquidity of the assets pledged as collateral. Where debt securities are pledged as collateral in repurchase transactions, the debt securities are not derecognised from the balance sheet and the transaction is accounted for as a secured loan. Further detail on debt securities that have been pledged as collateral is found in the table below. The collateral is pledged for the duration of the repurchase agreement, and is returned on maturity of the agreement, subject to the repayment of the amount raised. The securities cannot be pledged again by the Group until maturity of the repurchase agreement, however the recipient of the collateral is free to sell or further repurchase the assets. As at 31 December 2025, the Group\u2019s repurchase agreements have a contractual period of up to three months (2024: three months). Securities pledged as collateral
Group
Society
\u00a3m
2025
2024
2025
2024
Gilts
8.0
-
8.0
201.1
Fixed rate bonds
7.9
2.1
21.0
2.1
Treasury bills
150.9
-
323.9
-
Total on
-balance sheet debt securities pledged as collateral
166.8
2.1
352.9
203.2
The tables below provide further detail on the movement in debt securities during the year.
There were no debt securities held by the Group or the Society at the end of 2025 or 2024 that were pledged as
collateral by counterparties (known as \u2018reverse repurchase agreements\u2019).
Residential mortgage backed securities
The Group\u2019s investments in residential mortgage backed securities represent investments in unconsolidated
structured entities, as described in Note 1d).
The maximum exposure to losses from unconsolidated structured entities is equivalent to the book value plus
accrued interest, determined by the carrying value of these investments plus any unrealised losses / less any
unrealised gains recognised within the fair value reserve as shown below.
During the year, the Group and Society received interest income of \u00a329.9m (2024: \u00a330.3m) from its
investments in unconsolidated structured entities and incurred impairment charges of \u00a3nil (2024: \u00a3nil). In
addition, unrealised gains recognised through the fair value reserve were \u00a30.6m (2024: \u00a31.1m loss).
No collateral has been received by the Group in respect of the above third party funding entities. The total size
of unconsolidated structured entities as shown in the table above is determined by reference to the Group\u2019s
total notional exposure to the unconsolidated structured entities in question.
The Group did not provide any non-contractual support, nor any contractual guarantees, during the current or
prior year to unconsolidated structured entities and currently has no intentions to provide any such support.
The Group is not required to absorb losses of any unconsolidated structured entities before other parties and
the Group did not act as a sponsor to any unconsolidated structured entities during the current or prior year.
The Group would, in general, be regarded as a sponsor of an unconsolidated structured entity if market
participants would reasonably associate the entity with the Group.
At 31 December 2025 the Society also held \u00a3159.9m (2024: \u00a3197.2m) of residential mortgage backed
securities held at FVOCI and \u00a373.5m (2024: \u00a370.3m) of residential mortgage backed securities held at FVTPL
that were issued by the Group\u2019s securitisation vehicle Darrowby No. 6 plc.
Group & Society
\u00a3m
2025
2024
Carrying value of assets
619.0
619.9
Cumulative unrealised gains recognised in fair value reserve
(0.9)
(0.3)
Maximum exposure to loss at 31 December
618.1
619.6
A maturity analysis of debt securities in issue is included in Note 43. During 2025 the Society issued covered bonds of \u00a3500m in both May and September. Group debt securities in issue include \u00a33,339.6m (2024: \u00a32,426.5m) of funding secured on certain loans and advances to customers through the Group\u2019s securitisation vehicle Darrowby No. 6 plc and the special purpose vehicle Skipton Covered Bonds LLP.
Group
Society
\u00a3m
2025
2024
2025
2024
Certificates of deposit
-
5.1
-
5.1
Covered bonds
2,941.3
1,934.9
2,955.0
1,925.0
Securitisation
398.3
491.6
-
-
Fair value adjustment for hedged risk
22.3
3.7
-
-
3,361.9
2,435.3
2,955.0
1,930.1
", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-444": { "value": "Included in loans fully secured on residential property is a \u00a323.9m adjustment for Group (2024: \u00a316.5m) and a \u00a341.9m adjustment for Society (2024: \u00a333.2m) due to applying the effective interest method of accounting for these mortgages (see Note 1f) for further details).
Group
Society
\u00a3m
2025
2024
2025
2024
Loans fully secured on residential property
32,985.9
30,529.3
30,970.3
28,497.0
Loans fully secured on land
89.6
109.6
89.6
109.6
Other lending:
Debt factoring advances
199.2
188.6
-
-
Other loans
45.3
48.2
0.5
-
Fair value adjustment for hedged risk
58.9
(274.6)
60.9
(271.7)
33,378.9
30,601.1
31,121.3
28,334.9
The remaining maturity of loans and advances to customers from the reporting date is as follows:
On call and at short notice
196.8
188.5
3.0
3.2
In not more than three months
27.1
28.9
26.8
28.9
In more than three months but not more than one year
77.5
55.5
75.6
53.8
In more than one year but not more than five years
995.3
943.4
988.7
906.2
In more than five years
32,107.8
29,404.4
30,050.7
27,360.3
33,404.5
30,620.7
31,144.8
28,352.4
Less: Impairment (Note 17)
(25.6)
(19.6)
(23.5)
(17.5)
33,378.9
30,601.1
31,121.3
28,334.9
2025
Group
Loans fully secured
Loans fully Other loans
\u00a3m on residential secured on and Total
Property land advances
Loss allowance at 1 January 2025
13.5
4.7
1.4
19.6
Amounts written off during the year, net of
recoveries
(1.5)
(2.4)
(0.2)
(4.1)
Income statement charge for the year
9.6
0.3
0.2
10.1
Loss allowance at 31 December 2025
21.6
2.6
1.4
25.6
2024
Group
Loans fully secured
Loans fully Other loans
\u00a3m on residential secured on and Total
Property land advances
Loss allowance at 1 January 2024
29.0
9.0
1.6
39.6
Amounts written off during the year, net of
recoveries
(1.0)
(1.4)
(0.5)
(2.9)
Income statement (credit) / charge for the year
(14.5)
(2.9)
0.3
(17.1)
Loss allowance at 31 December 2024
13.5
4.7
1.4
19.6
2025
Society
Loans fully secured Loans fully
\u00a3m on residential secured on Total
Property land
Loss allowance at 1 January 2025
12.8
4.7
17.5
Amounts written off during the year, net of
recoveries
(1.4)
(2.4)
(3.8)
Income statement charge for the year
9.5
0.3
9.8
Loss allowance at 31 December 2025
20.9
2.6
23.5
2024
Society
Loans fully secured Loans fully
\u00a3m on residential secured on Total
Property Land
Loss allowance at 1 January 2024
27.9
9.0
36.9
Amounts written off during the year, net of
recoveries
(1.0)
(1.4)
(2.4)
Income statement credit for the year
(14.1)
(2.9)
(17.0)
Loss allowance at 31 December 2024
12.8
4.7
17.5
As outlined in Note 1f), the above loans consist mainly of certain lifetime mortgages that are required, under IFRS 9, to be held at FVTPL. Collateral is held against the above loans in the form of property in the UK and is valued as at 31 December 2025 at \u00a35.9m (2024: \u00a36.0m). Movements during the year are outlined below:
Group & Society
\u00a3m
2025
2024
At 1 January
0.9
0.9
Repayments
(0.2)
(0.1)
Accrued interest
0.1
0.1
At 31 December
0.8
0.9
^ Also known as commercial mortgages.
For details on how the Group assesses ECLs see Note 1h).
2025
Fair value
Group
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
33,007.5
(21.6)
58.9
33,044.8
99.0
Loans fully secured on land^
92.2
(2.6)
-
89.6
0.3
Other lending:
Debt factoring advances
200.6
(1.4)
-
199.2
0.6
Other loans
45.3
-
-
45.3
0.1
Total
33,345.6
(25.6)
58.9
33,378.9
100.0
2024
Fair value
Group
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
30,542.8
(13.5)
(274.6)
30,254.7
98.8
Loans fully secured on land^
114.3
(4.7)
-
109.6
0.4
Other lending:
Debt factoring advances
190.0
(1.4)
-
188.6
0.6
Other loans
48.2
-
-
48.2
0.2
Total
30,895.3
(19.6)
(274.6)
30,601.1
100.0
2025
Fair value
Society
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
30,991.2
(20.9)
60.9
31,031.2
99.7
Loans fully secured on land^
92.2
(2.6)
-
89.6
0.3
Other lending
0.5
-
-
0.5
-
Total
31,083.9
(23.5)
60.9
31,121.3
100.0
2024
Fair value
Society
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
28,509.8
(12.8)
(271.7)
28,225.3
99.6
Loans fully secured on land^
114.3
(4.7)
-
109.6
0.4
Total
28,624.1
(17.5)
(271.7)
28,334.9
100.0
a) Credit risk - loans and advances to customers held at amortised cost
The tables below show the breakdown of the Group and Society\u2019s loans and advances to customers held at
amortised cost at the reporting date:
The tables below provide information on movements in the gross carrying amount of residential loans and
advances to customers during the year:
2025
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
32,216.6
468.4
19.8
32,704.8
30,212.1
465.1
19.8
30,697.0
Up to 30 days past due
-
104.5
3.3
107.8
-
101.9
3.3
105.2
31 to 60 days past due
-
49.9
7.8
57.7
-
47.1
7.8
54.9
61 to 90 days past due
-
23.8
11.2
35.0
-
23.1
11.2
34.3
Over 90 days past due
-
-
102.2
102.2
-
-
99.8
99.8
Total
32,216.6
646.6
144.3
33,007.5
30,212.1
637.2
141.9
30,991.2
2024
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
30,067.3
224.2
13.8
30,305.3
28,046.0
220.4
13.8
28,280.2
Up to 30 days past due
-
72.5
3.6
76.1
-
70.6
3.6
74.2
31 to 60 days past due
-
46.4
4.6
51.0
-
43.6
4.6
48.2
61 to 90 days past due
-
15.7
9.8
25.5
-
15.7
9.8
25.5
Over 90 days past due
-
-
84.9
84.9
-
-
81.7
81.7
Total
30,067.3
358.8
116.7
30,542.8
28,046.0
350.3
113.5
28,509.8
2025
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
30,067.3
358.8
116.7
30,542.8
28,046.0
350.3
113.5
28,509.8
Transfers due to changes in credit
risk (note A):
From stage 1 to stage 2
(379.9)
379.9
-
-
(373.3)
373.3
-
-
From stage 1 to stage 3
(17.5)
-
17.5
-
(16.6)
-
16.6
-
From stage 2 to stage 1
102.5
(102.5)
-
-
99.1
(99.1)
-
-
From stage 2 to stage 3
-
(16.5)
16.5
-
-
(16.5)
16.5
-
From stage 3 to stage 2
-
10.2
(10.2)
-
-
10.2
(10.2)
-
From stage 3 to stage 1
0.6
-
(0.6)
-
0.6
-
(0.6)
-
Modification of contractual
(99.4)
67.9
26.3
(5.2)
(99.4)
67.9
26.3
(5.2)
cashflows
Increases due to origination
6,960.1
19.3
2.1
6,981.5
6,772.4
19.3
2.1
6,793.8
Decrease due to derecognition and
repayments
(4,427.6)
(71.1)
(20.7)
(4,519.4)
(4,227.2)
(68.8)
(19.0)
(4,315.0)
Written off
-
(0.1)
(4.1)
(4.2)
-
(0.1)
(4.1)
(4.2)
Other movements
10.5
0.7
0.8
12.0
10.5
0.7
0.8
12.0
Gross carrying amount at
31 December
32,216.6
646.6
144.3
33,007.5
30,212.1
637.2
141.9
30,991.2
i) Residential mortgages
The majority of loans and advances to customers are secured on UK residential properties and are
geographically diverse.
The tables below provide information on residential loans and advances by payment due status:
As shown in the tables above, during 2025 there was a net increase in stage 2 loans of \u00a3287.8m for the Group
and of \u00a3286.9m for the Society. As outlined in Note 1v), during 2025 the Group has revised its view of forward-
looking economic indicators and the associated scenario weightings; this caused PDs to increase and, as a
result, more accounts have migrated to stage 2.
Gains and losses arising during the year from loan modifications that did not result in derecognition were not
material. Amounts written off are in accordance with the Group\u2019s accounting policy for write-offs (see Note
1h)). Amounts presented within \u2018other movements\u2019 in the tables above include movements in the Group\u2019s
effective interest rate asset as described in Note 1f).
For residential mortgages, stage 3 loans which no longer meet any of the default criteria are subject to a six
month minimum probation period before they become eligible for transfer out of stage 3. At 31 December
2025, stage 3 loans include \u00a336.7m (2024: \u00a323.3m) for the Group and Society being held in stage 3 under this
probation period.
2024
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
27,485.7
628.6
78.0
28,192.3
25,412.6
624.3
77.1
26,114.0
Transfers due to changes in credit
risk (note A):
From stage 1 to stage 2
(180.2)
180.2
-
-
(171.8)
171.8
-
-
From stage 1 to stage 3
(14.8)
-
14.8
-
(11.7)
-
11.7
-
From stage 2 to stage 1
352.8
(352.8)
-
-
350.3
(350.3)
-
-
From stage 2 to stage 3
-
(15.5)
15.5
-
-
(15.5)
15.5
-
From stage 3 to stage 2
-
6.0
(6.0)
-
-
6.0
(6.0)
-
From stage 3 to stage 1
1.0
-
(1.0)
-
1.0
-
(1.0)
-
Modification of contractual
(26.8)
(8.5)
30.6
(4.7)
(26.8)
(8.5)
30.6
(4.7)
cashflows
Increases due to origination
5,996.7
15.1
0.7
6,012.5
5,833.8
15.1
0.7
5,849.6
Decrease due to derecognition and
repayments
(3,555.8)
(93.9)
(12.7)
(3,662.4)
(3,350.1)
(92.2)
(11.9)
(3,454.2)
Written off
(0.1)
(0.4)
(3.9)
(4.4)
(0.1)
(0.4)
(3.9)
(4.4)
Other movements
8.8
-
0.7
9.5
8.8
-
0.7
9.5
Gross carrying amount at
31 December
30,067.3
358.8
116.7
30,542.8
28,046.0
350.3
113.5
28,509.8
Note
A. For the purposes of the analysis presented above, the amounts shown for \u2018transfers due to changes in credit risk\u2019 are based on
account balances at the start of the reporting period (not account balances at the date of transfer).
The table below provides information on movements in the impairment loss allowance for residential loans and advances to customers during the year:
2025
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance at 1 January
4.5
2.5
6.5
13.5
4.4
2.4
6.0
12.8
Transfers due to changes in credit
risk:
From stage 1 to stage 2
(0.1)
2.3
-
2.2
(0.1)
2.3
-
2.2
From stage 1 to stage 3
-
-
1.0
1.0
-
-
1.0
1.0
From stage 2 to stage 1
-
(0.2)
-
(0.2)
-
(0.2)
-
(0.2)
From stage 2 to stage 3
-
(0.3)
0.7
0.4
-
(0.3)
0.7
0.4
From stage 3 to stage 2
-
0.1
(0.1)
-
-
0.1
(0.1)
-
Remeasurements within existing
2.3
0.3
-
2.6
2.2
0.1
0.2
2.5
stage
Increases due to origination
2.4
0.3
-
2.7
2.5
0.3
-
2.8
Decrease due to derecognition and
repayments
(0.5)
(0.3)
(1.4)
(2.2)
(0.5)
(0.3)
(1.4)
(2.2)
Changes due to modification
-
0.7
1.5
2.2
-
0.7
1.5
2.2
without derecognition
Written off
-
-
(0.6)
(0.6)
-
-
(0.6)
(0.6)
Loss allowance at 31 December
8.6
5.4
7.6
21.6
8.5
5.1
7.3
20.9
2024
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance at 1 January
16.2
6.0
6.8
29.0
15.4
5.9
6.6
27.9
Transfers due to changes in credit
risk:
From stage 1 to stage 2
(0.1)
0.8
-
0.7
(0.1)
0.8
-
0.7
From stage 1 to stage 3
-
-
0.5
0.5
-
-
0.5
0.5
From stage 2 to stage 1
0.1
(1.6)
-
(1.5)
0.1
(1.6)
-
(1.5)
From stage 2 to stage 3
-
(0.4)
0.4
-
-
(0.4)
0.4
-
From stage 3 to stage 2
-
0.1
(0.2)
(0.1)
-
0.1
(0.2)
(0.1)
Remeasurements within existing
(11.0)
(0.8)
(0.4)
(12.2)
(10.4)
(0.9)
(0.7)
(12.0)
stage
Increases due to origination
1.2
0.1
0.1
1.4
1.1
0.1
0.1
1.3
Decrease due to derecognition and
repayments
(1.9)
(0.6)
(0.9)
(3.4)
(1.7)
(0.5)
(0.9)
(3.1)
Changes due to modification
-
(1.1)
0.9
(0.2)
-
(1.1)
0.9
(0.2)
without derecognition
Written off
-
-
(0.7)
(0.7)
-
-
(0.7)
(0.7)
Loss allowance at 31 December
4.5
2.5
6.5
13.5
4.4
2.4
6.0
12.8
The loss allowance at 31 December 2025 includes judgmental adjustments totalling \u00a34.8m (2024: \u00a32.7m) for the Group and \u00a34.8m (2024: \u00a32.7m) for the Society. Details of these judgmental adjustments are set out in Note 1v). The tables below provide information on residential loans and advances to customers grouped by credit risk rating (probability of default). For further details on how the probability of default (PD) affects the Group\u2019s assessment of ECLs, see Note 1h) and Note 1v). ECL coverage shows the level of loss allowance expressed as a percentage of the gross carrying amount. The PDs used by the Group for IFRS 9 accounting purposes are not directly comparable to the PDs used by the Group for IRB regulatory purposes; this is due to significant differences in the requirements and methodologies applied by the Group for IFRS 9 and for IRB respectively.
Group 2025 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
1,409.6
0.9
-
1,410.5
0.5
-
-
0.5
0.15%
- <0.25%
4,408.0
1.6
-
4,409.6
0.8
-
-
0.8
0.25%
- <0.5%
16,089.9
1.8
-
16,091.7
3.6
-
-
3.6
0.5%
- <0.75%
7,690.8
4.9
-
7,695.7
2.3
-
-
2.3
0.75%
- <2.5%
2,601.4
51.0
-
2,652.4
1.4
-
-
1.4
2.5%
- <10%
16.9
144.7
-
161.6
-
0.2
-
0.2
10%
- <100%
-
441.7
-
441.7
-
5.2
-
5.2
Default
-
-
144.3
144.3
-
-
7.6
7.6
Total
32,216.6
646.6
144.3
33,007.5
8.6
5.4
7.6
21.6
ECL coverage by stage (%)
0.03%
0.84%
5.27%
0.07%
Group 2024 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
4,841.6
0.4
-
4,842.0
0.6
-
-
0.6
0.15%
- <0.25%
11,387.8
0.4
-
11,388.2
1.5
-
-
1.5
0.25%
- <0.5%
10,752.9
5.7
-
10,758.6
1.8
-
-
1.8
0.5%
- <0.75%
2,647.4
13.0
-
2,660.4
0.4
-
-
0.4
0.75%
- <2.5%
430.9
65.3
-
496.2
0.2
-
-
0.2
2.5%
- <10%
6.7
59.4
-
66.1
-
0.1
-
0.1
10%
- <100%
-
214.6
-
214.6
-
2.4
-
2.4
Default
-
-
116.7
116.7
-
-
6.5
6.5
Total
30,067.3
358.8
116.7
30,542.8
4.5
2.5
6.5
13.5
ECL coverage by stage (%)
0.01%
0.70%
5.57%
0.04%
Society 2025 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
1,409.6
0.9
-
1,410.5
0.5
-
-
0.5
0.15%
- <0.25%
4,408.0
1.6
-
4,409.6
0.8
-
-
0.8
0.25%
- <0.5%
15,438.0
1.8
-
15,439.8
3.6
-
-
3.6
0.5%
- <0.75%
6,338.2
4.9
-
6,343.1
2.2
-
-
2.2
0.75%
- <2.5%
2,601.4
51.0
-
2,652.4
1.4
-
-
1.4
2.5%
- <10%
16.9
144.7
-
161.6
-
0.2
-
0.2
10%
- <100%
-
432.3
-
432.3
-
4.9
-
4.9
Default
-
-
141.9
141.9
-
-
7.3
7.3
Total
30,212.1
637.2
141.9
30,991.2
8.5
5.1
7.3
20.9
ECL coverage by stage (%)
0.03%
0.80%
5.14%
0.07%
Society 2024 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
4,841.6
0.4
-
4,842.0
0.6
-
-
0.6
0.15%
- <0.25%
11,387.7
0.4
-
11,388.1
1.5
-
-
1.5
0.25%
- <0.5%
10,063.3
5.7
-
10,069.0
1.8
-
-
1.8
0.5%
- <0.75%
1,315.8
13.0
-
1,328.8
0.3
-
-
0.3
0.75%
- <2.5%
430.9
65.3
-
496.2
0.2
-
-
0.2
2.5%
- <10%
6.7
59.4
-
66.1
-
0.1
-
0.1
10%
- <100%
-
206.1
-
206.1
-
2.3
-
2.3
Default
-
-
113.5
113.5
-
-
6.0
6.0
Total
28,046.0
350.3
113.5
28,509.8
4.4
2.4
6.0
12.8
ECL coverage by stage (%)
0.02%
0.69%
5.29%
0.04%
The tables below provide an analysis of residential loans held in stage 2 as at the balance sheet date, reflecting the reasons for inclusion in stage 2. For the purposes of this analysis, where a loan satisfies at the balance sheet date more than one of the stage 2 criteria, the loan is included below within one category only and in order of the categories as presented. The amounts presented below as \u2018Over 30 days past due\u2019 therefore include all stage 2 loans which are over 30 days past due as at the balance sheet date, including those where this was not the initial reason for being classified as stage 2. Stage 2 Analysis
2025
2024
Gross ECL ECL Gross ECL ECL
Group
carrying allowance coverage carrying allowance coverage
amount \u00a3m % amount \u00a3m %
\u00a3m \u00a3m
Over 30 days past due
73.7
2.1
2.8%
62.1
1.2
1.9%
In forbearance
130.2
1.1
0.8%
16.5
0.1
0.6%
In arrears
59.4
0.9
1.5%
66.8
0.6
0.9%
Term expired
15.7
-
-
18.6
-
-
Temporary transfer to interest only*
85.8
0.1
0.1%
103.5
0.1
0.1%
Increase in PD since origination
281.8
1.2
0.4%
91.3
0.5
0.5%
Total
646.6
5.4
0.8%
358.8
2.5
0.7%
*Temporary arrangement in place, via the Mortgage Charter Scheme, to repay interest only
The tables below provide further information on the types of lending and geographical split:
* Fast track relates to certain mortgages granted between 2007-2009 for which, subject to certain application criteria, the Society
accepted reduced documentation from borrowers.
^ Sub-prime mortgages are defined as loans to borrowers that typically had weakened credit histories at the time the loan was advanced.
Prior to 1 June 2021, these loans were held by the Group\u2019s specialist lending businesses Amber and NYM; these loans were hived-up into
the Society with effect from 1 June 2021.
Stage 2 Analysis
2025
2024
Gross ECL ECL Gross ECL ECL
Society
carrying allowance coverage carrying allowance coverage
amount \u00a3m % amount \u00a3m %
\u00a3m \u00a3m
Over 30 days past due
70.2
1.9
2.7%
59.3
1.1
1.9%
In forbearance
127.0
1.1
0.9%
12.6
0.1
0.8%
In arrears
56.7
0.8
1.4%
65.0
0.6
0.9%
Term expired
15.7
0.0
0.0%
18.6
-
-
Temporary transfer to interest only *
85.8
0.1
0.1%
103.5
0.1
0.1%
Increase in PD since origination
281.8
1.2
0.4%
91.3
0.5
0.5%
Total
637.2
5.1
0.8%
350.3
2.4
0.7%
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Prime:
Residential
26,835.0
513.2
109.0
27,457.2
24,273.8
288.6
80.1
24,642.5
Buy-to-let
5,239.7
91.4
19.4
5,350.5
5,608.3
42.1
18.3
5,668.7
Self build
7.5
0.9
0.7
9.1
8.6
0.8
1.0
10.4
Fast track*
7.8
0.4
0.2
8.4
9.2
0.6
0.1
9.9
Self certified
113.1
35.0
13.7
161.8
145.2
21.4
15.4
182.0
Sub
-prime^:
Residential
2.6
1.1
-
3.7
3.7
0.8
0.2
4.7
Buy-to-let
3.3
0.6
0.3
4.2
5.0
0.4
0.3
5.7
Self certified
7.6
4.0
1.0
12.6
13.5
4.1
1.3
18.9
Total
32,216.6
646.6
144.3
33,007.5
30,067.3
358.8
116.7
30,542.8
Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Prime:
Residential
26,183.1
511.2
109.0
26,803.3
23,584.1
285.0
79.8
23,948.9
Buy-to-let
3,887.1
84.0
17.0
3,988.1
4,276.7
37.2
15.4
4,329.3
Self build
7.5
0.9
0.7
9.1
8.6
0.8
1.0
10.4
Fast track*
7.8
0.4
0.2
8.4
9.2
0.6
0.1
9.9
Self certified
113.1
35.0
13.7
161.8
145.2
21.4
15.4
182.0
Sub
-prime^:
Residential
2.6
1.1
-
3.7
3.7
0.8
0.2
4.7
Buy-to-let
3.3
0.6
0.3
4.2
5.0
0.4
0.3
5.7
Self certified
7.6
4.0
1.0
12.6
13.5
4.1
1.3
18.9
Total
30,212.1
637.2
141.9
30,991.2
28,046.0
350.3
113.5
28,509.8
ndexed loan-to-value information on the Group\u2019s residential loan portfolio is set out below:
Group (\u00a3m)
2025
2024
Region
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
North
871.8
19.7
5.6
897.1
854.6
14.3
3.9
872.8
Yorkshire
2,445.7
50.8
9.8
2,506.3
2,332.1
30.2
9.8
2,372.1
East Midlands
2,199.7
52.1
8.2
2,260.0
2,035.7
26.7
7.2
2,069.6
East Anglia
3,186.6
69.6
16.2
3,272.4
2,836.3
43.8
11.3
2,891.4
London
6,211.9
110.9
29.4
6,352.2
5,732.7
54.4
22.6
5,809.7
South East
5,281.4
107.2
26.4
5,415.0
4,847.5
57.2
21.5
4,926.2
South West
2,804.1
51.9
9.5
2,865.5
2,695.6
29.2
6.9
2,731.7
West Midlands
2,625.2
55.8
10.0
2,691.0
2,381.5
31.1
7.4
2,420.0
North West
2,996.0
65.1
15.4
3,076.5
2,821.4
37.5
13.6
2,872.5
Wales
878.4
20.2
3.9
902.5
825.6
10.3
3.9
839.8
Scotland
2,012.4
39.7
8.6
2,060.7
1,959.1
19.8
6.7
1,985.6
Northern Ireland
8.7
1.4
1.3
11.4
11.2
0.8
1.3
13.3
Channel Islands
694.7
2.2
-
696.9
734.0
3.5
0.6
738.1
Total
32,216.6
646.6
144.3
33,007.5
30,067.3
358.8
116.7
30,542.8
Society (\u00a3m)
2025
2024
Region
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
North
867.8
19.7
5.6
893.1
850.3
14.3
3.9
868.5
Yorkshire
2,429.4
50.8
9.8
2,490.0
2,315.5
30.0
9.8
2,355.3
East Midlands
2,190.6
51.8
8.2
2,250.6
2,024.7
26.6
7.2
2,058.5
East Anglia
3,164.8
69.5
16.2
3,250.5
2,814.4
43.4
11.3
2,869.1
London
5,357.6
105.2
27.6
5,490.4
4,899.8
50.4
20.3
4,970.5
South East
5,145.1
107.2
26.0
5,278.3
4,705.0
57.0
21.5
4,783.5
South West
2,771.0
51.9
9.5
2,832.4
2,661.5
29.2
6.9
2,697.6
West Midlands
2,556.1
55.5
9.8
2,621.4
2,315.4
31.0
7.1
2,353.5
North West
2,863.3
64.6
15.4
2,943.3
2,698.9
37.5
13.6
2,750.0
Wales
873.0
19.9
3.9
896.8
819.6
10.3
3.9
833.8
Scotland
1,984.7
39.7
8.6
2,033.0
1,929.7
19.8
6.7
1,956.2
Northern Ireland
8.7
1.4
1.3
11.4
11.2
0.8
1.3
13.3
Total
30,212.1
637.2
141.9
30,991.2
28,046.0
350.3
113.5
28,509.8
Group (\u00a3m)
2025
2024
Loan
-to-value
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<40%
5,526.9
119.9
20.3
5,667.1
5,891.7
72.6
21.0
5,985.3
40%
- 50%
3,705.0
93.6
22.7
3,821.3
4,052.9
58.7
19.8
4,131.4
50%
- 60%
4,169.7
125.3
26.9
4,321.9
4,442.5
63.8
32.9
4,539.2
60%
- 70%
4,367.5
106.7
23.8
4,498.0
4,622.4
60.2
16.6
4,699.2
70%
- 80%
4,586.0
78.7
14.5
4,679.2
4,021.4
41.5
8.7
4,071.6
80%
- 90%
6,620.2
93.4
21.0
6,734.6
5,324.7
46.2
10.8
5,381.7
90%
- 100%
3,181.4
27.0
11.1
3,219.5
1,687.3
14.5
3.0
1,704.8
>100%
59.9
2.0
4.0
65.9
24.4
1.3
3.9
29.6
Total
32,216.6
646.6
144.3
33,007.5
30,067.3
358.8
116.7
30,542.8
The Group\u2019s policy for new mortgage lending is currently a maximum loan-to-value ratio of 100% for residential
mortgages and 75% for buy-to-let lending. In addition, SIL lends up to 100% on its \u2018Next Generation\u2019 mortgages,
for which a family member is required to provide a guarantee of up to 20% of the borrower\u2019s property value (to
be supported by a bond over the guarantor\u2019s own suitable property in Guernsey or Jersey).
There has been an increase in the volume of 80-100% LTV lending within the year as we continue to deliver on
our purpose of helping more people have a home. This has resulted in an increase in the overall percentage of
the book with an LTV greater than 80%; 31.8% at 31 December 2025 (2024: 24.5%) and an increase in the
average indexed loan-to-value of the Society\u2019s new lending in 2025 to 68.4% (2024: 65.3%). The quality of the
lending remains high, with a well-managed spread of risk, carried out in a controlled manner being cognisant of
the economic challenges that lie ahead. This is represented by the proportion of Group residential mortgage
accounts in arrears by three months or more which remained low at 0.30% (2024: 0.28%).
At 31 December 2025, the average indexed loan-to-value of Group residential mortgages on a valuation
weighted basis (calculated as the total outstanding balance divided by the total value of collateral held), was
48.8% (2024: 46.1%) and for Society residential mortgages was 48.7% (2024: 45.9%).
Forbearance
Where appropriate for customers, the Group applies a policy of forbearance. This may be applied where the
actual or apparent financial stress of the customer is considered to be short-term with a potential to be
recovered. Forbearance may involve arrears capitalisation, a reduction in the monthly payment (known as a
concession), a conversion to interest only or a mortgage term extension. Forbearance is undertaken in order to
achieve the best outcome for both the customer and the business through dealing with repayment difficulties
at an early stage.
Possession is generally considered only as a last resort, once all other options for the customer have been
exhausted. Possession balances represent loans against which the Group has taken ownership of properties
pending their sale. The Group does not occupy repossessed properties for business use or use assets
acquired in its operations. All customer accounts are monitored to ensure that these strategies remain
appropriate.
Possessions
For the Group, at 31 December 2025 the balance of residential loans where the property has been taken into
possession was \u00a33.0m and represents less than 0.1% of total outstanding loans (2024: \u00a33.8m; less than 0.1%).
For the Society, at 31 December 2025 the balance of residential loans where the property has been taken into
possession was \u00a33.0m and represents less than 0.01% of total outstanding loans (2024: \u00a33.2m; less than
0.1%). All possessions balances are classified as stage 3.
Forbearance activity
The tables below provide further information on residential mortgages regarded as being in forbearance as at
31 December 2025, showing the type of account renegotiations applied. For the purposes of these forbearance
tables, the Group applies the Bank of England Prudential Regulatory Authority (PRA) definition of forbearance
(which is aligned to the European Banking Authority, EBA, definition).
Society (\u00a3m)
2025
2024
Loan
-to-value
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<40%
5,249.9
119.1
20.3
5,389.3
5,611.6
71.9
21.0
5,704.5
40%
- 50%
3,425.0
93.2
22.0
3,540.2
3,761.8
58.7
19.4
3,839.9
50%
- 60%
3,785.2
124.1
26.4
3,935.7
4,036.9
61.1
32.2
4,130.2
60%
- 70%
3,869.9
104.0
23.8
3,997.7
4,091.1
57.3
16.5
4,164.9
70%
- 80%
4,169.7
76.3
13.7
4,259.7
3,628.3
40.7
7.3
3,676.3
80%
- 90%
6,505.1
92.4
21.0
6,618.5
5,235.9
45.6
10.2
5,291.7
90%
- 100%
3,154.0
27.0
10.7
3,191.7
1,663.2
14.5
3.0
1,680.7
>100%
53.3
1.1
4.0
58.4
17.2
0.5
3.9
21.6
Total
30,212.1
637.2
141.9
30,991.2
28,046.0
350.3
113.5
28,509.8
Under the PRA definition, loans are required to meet certain payment and arrears criteria before they are deemed to exit forbearance; this includes a minimum two-year probation period following the forbearance event (extended to three years in certain situations). For the purposes of the tables below, the following loans are regarded as forborne as at 31 December 2025*: \u2022 any loan to which forbearance measures were applied within the two years prior to the reporting date (regardless of whether the loan remains on renegotiated terms at 31 December 2025); and \u2022 any loan to which forbearance measures were applied and which remains in the probation period following the forbearance event. For the purposes of the tables below, loans are presented according to the ECL stage they were held in as at the reporting date. * As noted in Note 1v), the SICR criteria applied by the Group was revised during the year, to align the probation period of forborne accounts with that used in regulatory reporting standards. For the purposes of the 2024 comparative tables below, information is therefore presented in accordance with the criteria that was applicable as at 31 December 2024 (as disclosed in Note 43a)(i) to the 2024 Annual Report and Accounts).
Reduced
Transfer to
Term Total renegotiations
Group
- 2025
Total
Capitalisation
Payment
interest only
Extension
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
32,216.6
-
-
-
-
-
-
32,216.6
-
-
-
-
-
-
Stage 2
Not past due
468.4
3.8
66.8
14.3
-
84.9
18.1
Past due up to 30 days
104.5
0.3
43.3
1.6
-
45.2
43.3
Over 30 days past due
73.7
-
24.4
2.2
-
26.6
36.1
646.6
4.1
134.5
18.1
-
156.7
24.2
Stage 3
Not past due
19.8
1.5
7.8
0.2
-
9.5
48.0
Past due up to 90 days
22.3
0.1
9.8
2.1
-
12.0
53.8
Over 90 days past due
102.2
0.7
53.9
7.5
-
62.1
60.8
144.3
2.3
71.5
9.8
-
83.6
57.9
Gross carrying amount
33,007.5
6.4
206.0
27.9
-
240.3
0.7
Loss allowance
(21.6)
(0.1)
(5.2)
(0.3)
-
(5.6)
25.9
32,985.9
6.3
200.8
27.6
-
234.7
0.7
Reduced
Transfer to
Term Total renegotiations
Group
\u2013 2024
Total
Capitalisation
Payment
interest only
Extension
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
30,067.3
0.3
27.8
6.0
-
34.1
0.1
30,067.3
0.3
27.8
6.0
-
34.1
0.1
Stage 2
Not past due
224.2
0.2
24.0
7.9
-
32.1
14.3
Past due up to 30 days
72.5
-
29.4
0.6
-
30.0
41.4
Over 30 days past due
62.1
0.3
24.4
1.4
-
26.1
42.0
358.8
0.5
77.8
9.9
-
88.2
24.6
Stage 3
Not past due
13.8
1.1
3.2
0.2
-
4.5
32.6
Past due up to 90 days
18.0
0.2
8.9
2.0
-
11.1
61.7
Over 90 days past due
84.9
0.2
46.8
5.9
-
52.9
62.3
116.7
1.5
58.9
8.1
-
68.5
58.7
Gross carrying amount
30,542.8
2.3
164.5
24.0
-
190.8
0.6
Loss allowance
(13.5)
(0.3)
(3.8)
(0.2)
-
(4.3)
31.9
30,529.3
2.0
160.7
23.8
-
186.5
0.6
Reduced
Transfer to
Term Total renegotiations
Society
- 2025
Total
Capitalisation
Payment
interest only
Extension
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
30,212.1
-
-
-
-
-
-
30,212.1
-
-
-
-
-
-
Stage 2
Not past due
465.1
3.2
64.3
14.2
-
81.7
17.6
Past due up to 30 days
101.9
0.3
43.3
1.6
-
45.2
44.4
Over 30 days past due
70.2
-
24.4
2.2
-
26.6
37.9
637.2
3.5
132.0
18.0
-
153.5
24.1
Stage 3
Not past due
19.8
1.5
7.8
0.2
-
9.5
48.0
Past due up to 90 days
22.3
0.1
9.8
2.1
-
12.0
53.8
Over 90 days past due
99.8
0.7
53.9
7.5
-
62.1
62.2
141.9
2.3
71.5
9.8
-
83.6
58.9
Gross carrying amount
30,991.2
5.8
203.5
27.8
-
237.1
0.8
Loss allowance
(20.9)
(0.1)
(5.2)
(0.3)
-
(5.6)
26.8
30,970.3
5.7
198.3
27.5
-
231.5
0.7
Collateral
Collateral held consists of residential properties. The use of such collateral is in line with terms that are usual
and customary to standard lending activities.
Upon initial recognition of loans and advances, the fair value of collateral is based on valuation techniques
commonly used for the corresponding assets. In subsequent periods, the fair value is updated by reference to
market prices or indices of similar assets.
Fair value of capped collateral held
Some properties in the Group\u2019s mortgage book are in negative equity, which increases the possibility of the
Group incurring a loss if the property is taken into possession.
The fair value of residential property used to derive the figures in the table above is determined by reference to
a recognised house price index. Movements in this index to the reporting date are applied to all properties in
the portfolio on a regional basis. For the majority of the Group\u2019s loans, the Group holds excess collateral
however this cannot be used to offset those instances where the loan amount exceeds the collateral held. The
fair value of capped collateral in the table above therefore represents, on an individual loan basis, the lower of
the value of the property and the outstanding loan amount. It does not reflect the overall value of properties
against which the loans are secured. The total fair value of collateral held in respect of residential mortgages
for the Group at 31 December 2025 is \u00a367,624.3m (2024: \u00a366,203.5m) and for the Society is \u00a363,600.6m
(2024: \u00a362,133.0m).
Total
Capitalisation
Reduced
Transfer to
Term Total renegotiations
Society
- 2024
\u00a3m \u00a3m Payment
interest only
Extension
\u00a3m
%
\u00a3m \u00a3m \u00a3m
Stage 1
Not past due
28,046.0
0.3
27.8
6.0
-
34.1
0.1
28,046.0
0.3
27.8
6.0
-
34.1
0.1
Stage 2
Not past due
220.4
0.2
22.3
5.7
-
28.2
12.8
Past due up to 30 days
70.6
-
29.4
0.6
-
30.0
42.5
Over 30 days past due
59.3
0.3
24.4
1.4
-
26.1
44.0
350.3
0.5
76.1
7.7
-
84.3
24.1
Stage 3
Not past due
13.8
1.1
3.2
0.2
-
4.5
32.6
Past due up to 90 days
18.0
0.2
8.9
2.0
-
11.1
61.7
Over 90 days past due
81.7
0.2
46.8
5.9
-
52.9
64.7
113.5
1.5
58.9
8.1
-
68.5
60.4
Gross carrying amount
28,509.8
2.3
162.8
21.8
-
186.9
0.7
Loss allowance
(12.8)
(0.3)
(3.8)
(0.2)
-
(4.3)
33.6
28,497.0
2.0
159.0
21.6
-
182.6
0.6
\u00a3m
Group
Society
2025
2024
2025
2024
Stage 1
32,206.7
30,059.9
30,204.9
28,041.6
Stage 2
646.1
358.4
636.8
350.0
Stage 3
143.6
115.8
141.2
112.6
32,996.4
30,534.1
30,982.9
28,504.2
Gross loan balances
33,007.5
30,542.8
30,991.2
28,509.8
Negative equity
11.1
8.7
8.3
5.6
Capped collateral held in respect of
possessions (included in stage 3 above)
2.8
2.9
2.8
2.9
At 31 December 2025 the contractual amount outstanding on loans written off during the year due to there being no reasonable expectation of recovery, but which remain subject to enforcement activity, is \u00a30.8m (2024: \u00a30.7m) for the Group and for the Society. ii) Commercial mortgages The commercial mortgage portfolio (also known as loans fully secured on land) is currently closed to new business. The tables below provide information on commercial loans by payment due status.
Group & Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
74.6
2.6
2.7
79.9
93.9
0.4
11.3
105.6
Up to 30 days
-
2.8
-
2.8
-
2.3
-
2.3
31 to 60 days
-
2.7
-
2.7
-
2.1
-
2.1
61 to 90 days
-
1.0
-
1.0
-
1.1
0.7
1.8
Over 90 days
-
-
5.8
5.8
-
-
2.5
2.5
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
The table below provides information on movements in the gross carrying amount of commercial loans during the year.
Group & Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
93.9
5.9
14.5
114.3
91.0
37.8
6.4
135.2
Transfers due to changes in credit
risk (note A):
From stage 1 to stage 2
(2.5)
2.5
-
-
(1.1)
1.1
-
-
From stage 1 to stage 3
(2.0)
-
2.0
-
(1.4)
-
1.4
-
From stage 2 to stage 1
0.1
(0.1)
-
-
19.2
(19.2)
-
-
From stage 2 to stage 3
-
(0.8)
0.8
-
-
(3.4)
3.4
-
From stage 3 to stage 1
0.8
-
(0.8)
-
-
-
-
-
Modification of contractual
(3.2)
2.3
0.5
(0.4)
0.8
(8.0)
6.8
(0.4)
cashflows
Decrease due to derecognition and
repayments
(12.5)
(0.7)
(7.2)
(20.4)
(14.6)
(2.4)
(3.1)
(20.1)
Written off
-
-
(1.3)
(1.3)
-
-
(0.4)
(0.4)
Gross carrying amount at
31 December
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Note A. For the purposes of the analysis presented above, the amounts shown for \u2018transfers due to changes in credit risk\u2019 are based on account balances at the start of the reporting period (not account balances at the date of transfer). Gains and losses arising during the year from loan modifications that did not result in derecognition were not significant. Amounts written off are in accordance with the Group\u2019s accounting policy for write-offs (see Note 1h)). For commercial loans, stage 3 loans which no longer meet any of the default criteria are subject to a three month minimum probation period before they become eligible for transfer out of stage 3. At 31 December 2025, stage 3 loans include \u00a30.1m being held in stage 3 under this probation period (2024: \u00a3nil). The table below provides information on movements in the impairment loss allowance for commercial loans during the year.
Group & Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss
allowance at 1 January
0.2
0.2
4.3
4.7
0.6
6.6
1.8
9.0
Transfers due to changes in credit
risk:
From stage 1 to stage 2
-
0.1
-
0.1
-
-
-
-
From stage 1 to stage 3
-
-
0.6
0.6
-
-
-
-
From stage 2 to stage 1
-
-
-
-
-
(1.9)
-
(1.9)
From stage 2 to stage 3
-
-
-
-
-
(0.4)
0.4
-
Remeasurements within existing
0.2
-
0.1
0.3
(0.3)
(0.1)
-
(0.4)
stage
Decrease due to derecognition and
repayments
-
-
(0.1)
(0.1)
(0.1)
(0.9)
(1.1)
(2.1)
Changes due to modification
-
-
(0.1)
(0.1)
-
(3.1)
3.3
0.2
without derecognition
Written off
-
-
(2.9)
(2.9)
-
-
(0.1)
(0.1)
Loss allowance at 31 December
0.4
0.3
1.9
2.6
0.2
0.2
4.3
4.7
ECL coverage (%)
0.54%
3.30%
22.35%
2.82%
0.21%
3.39%
29.66%
4.11%
Given the size and nature of the Group\u2019s commercial portfolio, it is not meaningful to manage credit risk by reference to behavioural scores or PD percentages. Credit risk is predominantly managed by individual review of loans in accordance with certain criteria. To aid an understanding of significant credit risk concentrations for the Group\u2019s commercial portfolio, the tables below provide analyses of loans by industry type, by geography and by loan-to-value percentage.
Group & Society (\u00a3m)
2025
2024
Industry analysis
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Leisure and hotels
5.7
0.5
-
6.2
6.4
0.6
5.1
12.1
Retail
1.9
0.3
0.2
2.4
2.1
0.3
0.2
2.6
Nursing/residential homes
1.6
-
-
1.6
1.7
-
2.2
3.9
Offices
1.1
-
-
1.1
1.2
-
-
1.2
Commercial and industrial units
63.8
8.3
8.3
80.4
81.9
5.0
7.0
93.9
Miscellaneous
0.5
-
-
0.5
0.6
-
-
0.6
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Group & Society (\u00a3m)
2025
2024
Geographical analysis (Region)
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
North
1.3
1.7
-
3.0
2.9
0.3
-
3.2
Yorkshire
3.7
0.5
1.1
5.3
6.2
0.3
5.7
12.2
East Midlands
2.1
-
2.2
4.3
3.2
-
2.3
5.5
East Anglia
8.4
0.1
0.1
8.6
9.6
0.1
-
9.7
London
19.0
2.9
1.2
23.1
22.8
2.1
0.7
25.6
South East
12.4
1.6
0.4
14.4
15.5
1.2
-
16.7
South West
11.2
-
0.4
11.6
12.0
0.4
0.4
12.8
West Midlands
5.3
1.1
0.3
6.7
7.0
0.6
2.3
9.9
North West
8.7
1.2
2.0
11.9
10.5
0.9
2.1
13.5
Wales
2.3
-
0.5
2.8
2.4
-
0.7
3.1
Scotland
0.2
-
0.3
0.5
1.8
-
0.3
2.1
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Group & Society (\u00a3m)
2025
2024
Loan
-to-value
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<40%
24.4
2.5
1.2
28.1
27.4
1.0
2.0
30.4
40%
- 50%
12.7
1.4
1.2
15.3
18.5
1.1
0.6
20.2
50%
- 60%
14.3
1.2
-
15.5
16.6
1.2
1.2
19.0
60%
- 70%
5.1
1.9
0.2
7.2
6.3
1.4
0.1
7.8
70%
- 80%
6.0
0.9
-
6.9
7.4
0.5
1.3
9.2
80%
- 90%
8.7
1.2
0.8
10.7
9.3
0.3
-
9.6
90%
- 100%
2.2
-
-
2.2
5.4
0.4
-
5.8
>100%
1.2
-
5.1
6.3
3.0
-
9.3
12.3
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Forbearance The Group\u2019s policy on forbearance for commercial mortgages is the same as the policy for residential mortgages, which is set out in Note 45a)(i). At 31 December 2025 the balance of commercial mortgages where the property has been taken into possession was \u00a30.1m for the Group and Society (2024: \u00a3nil). Possessions balances are classified as stage 3. The tables below provide further information on commercial mortgages regarded as being in forbearance as at 31 December 2025, showing the type of account renegotiations applied. The tables below are presented on the same basis as the corresponding tables for residential mortgages, the basis for which is described on pages 259 and 260.
Collateral
The collateral held consists of properties held within the categories previously outlined. The use of such
collateral is in line with terms that are usual and customary to standard lending activities.
Fair value of capped collateral held
An analysis of capped collateral, where the collateral is capped to the lower of the value of the property and
the amount outstanding on an individual loan basis, is shown below.
2025
Group & Society
Reduced
Transfer to
Total renegotiations
Total
Capitalisation
Payment
interest only
\u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
74.6
-
-
-
-
-
74.6
-
-
-
-
-
Stage 2
Not past due
2.6
0.8
0.9
0.9
2.6
100.0
Past due up to 30 days
2.8
-
0.3
-
0.3
10.7
Over 30 days past due
3.7
0.8
-
-
0.8
21.6
9.1
1.6
1.2
0.9
3.7
40.7
Stage 3
Not past due
2.7
-
0.1
1.2
1.3
48.1
Past due up to 90 days
-
-
-
-
-
-
Over 90 days past due
5.8
-
1.0
2.8
3.8
65.5
8.5
-
1.1
4.0
5.1
60.0
Gross carrying amount
92.2
1.6
2.3
4.9
8.8
9.5
Loss allowance
(2.6)
(0.1)
(0.1)
(0.7)
(0.9)
34.6
89.6
1.5
2.2
4.2
7.9
8.8
2024
Group & Society
Reduced Transfer to Total renegotiations
Total
Capitalisation
Payment
interest only
\u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
93.9
0.9
0.4
0.5
1.8
1.9
93.9
0.9
0.4
0.5
1.8
1.9
Stage 2
Not past due
0.4
-
-
0.4
0.4
100.0
Past due up to 30 days
2.3
-
-
0.1
0.1
4.3
Over 30 days past due
3.2
0.9
0.5
-
1.4
43.8
5.9
0.9
0.5
0.5
1.9
32.2
Stage 3
Not past due
11.3
-
-
8.4
8.4
74.3
Past due up to 90 days
0.7
-
-
-
-
-
Over 90 days past due
2.5
-
0.6
0.7
1.3
52.0
14.5
-
0.6
9.1
9.7
66.9
Gross carrying amount
114.3
1.8
1.5
10.1
13.4
11.7
Loss allowance
(4.7)
-
-
(3.8)
(3.8)
80.9
109.6
1.8
1.5
6.3
9.6
8.8
The fair value of commercial property used to derive the figures in the table above is determined by reference to the latest external valuation of the properties in question. The total fair value of collateral held in respect of commercial loans for the Group and the Society at 31 December 2025 is \u00a3236.8m (2024: \u00a3270.5m). At 31 December 2025 the contractual amount outstanding on loans written off during the year due to there being no reasonable expectation of recovery, but which remain subject to enforcement activity, is \u00a30.2m (2024: \u00a30.2m) for the Group and the Society. iii) Other lending Other lending comprises the following: The table below provides information on movements in the gross carrying amount of other loans and advances during the year. Note: A. For the purposes of the analysis presented above, the amounts shown for \u2018transfers due to changes in credit risk\u2019 are based on account balances at the end of the reporting period (not account balances at the date of transfer).
Group & Society (\u00a3m)
2025
2024
Stage 1
74.4
93.2
Stage 2
9.1
5.9
Stage 3
7.0
12.3
Total
90.5
111.4
Gross loan balances
92.2
114.3
Negative equity
1.7
2.9
Capped collateral held in respect of possessions (included within stage 3 above)
0.1
-
2025
2024
Group
Gross ECL Net Gross ECL Net
\u00a3m
carrying Allowance carrying carrying allowance carrying
amount amount amount amount
Debt factoring advances
200.6
(1.4)
199.2
190.0
(1.4)
188.6
Other loans
45.3
-
45.3
48.2
-
48.2
Total
245.9
(1.4)
244.5
238.2
(1.4)
236.8
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
234.5
2.3
1.4
238.2
219.6
4.3
0.5
224.4
Transfers due to changes in
credit risk (note A):
From stage 1 to stage 2
(1.1)
1.1
-
-
(3.4)
3.4
-
-
From stage 1 to stage 3
-
-
-
-
(0.4)
-
0.4
-
From stage 2 to stage 1
1.0
(1.0)
-
-
2.3
(2.3)
-
-
From stage 2 to stage 3
-
(0.7)
0.7
-
-
(1.6)
1.6
-
From stage 3 to stage 2
-
1.0
(1.0)
-
-
0.3
(0.3)
-
From stage 3 to stage 1
0.4
-
(0.4)
-
0.3
-
(0.3)
-
Modification of contractual
-
-
-
-
-
-
-
-
cashflows
Increases due to origination
68.8
-
-
68.8
74.2
-
-
74.2
Decrease due to derecognition
(60.3)
(0.5)
-
(60.8)
(58.1)
(1.8)
-
(59.9)
and repayments
Write
-offs
-
-
(0.3)
(0.3)
-
-
(0.6)
(0.6)
Other movements
-
-
-
-
-
-
0.1
0.1
Gross carrying amount at 31
243.3
2.2
0.4
245.9
234.5
2.3
1.4
238.2
December
The table below provides information on movements in the impairment loss allowance for other loans and advances during the year. Debt factoring advances Debt factoring advances relate to amounts advanced to clients by SBF, the Group\u2019s debt factoring and invoice discounting business. Credit risk is predominantly managed by rigorous due diligence controls and regular monitoring of client accounts, and includes the use of concentration limits, credit reference checks and \u2018watchlists\u2019 on clients\u2019 debtors. Advances are typically made to clients only against notified invoices that are less than 90 days past due. Debt factoring and invoice discounting advances are typically secured via a legal charge against the relevant client\u2019s sales ledger. Additional security may also be taken in the form of an all assets debenture that may incorporate other unencumbered assets as well as personal guarantees. At 31 December 2025 and 31 December 2024, the fair value of the total collateral held by the Group against debt factoring and invoice discounting advances was in excess of the value of the total advances outstanding. Other loans The table below provides information on the gross carrying amount of other loans by payment due status. Other loans of \u00a344.8m (2024: \u00a348.2m), at a Group level, were advanced by SIL to customers in respect of residential properties owned by a property management holding company. The loans are secured on shares in that property management holding company and the fair value of the total collateral held is \u00a394.1m (2024: \u00a399.7m).
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance at 1 January
0.2
0.6
0.6
1.4
0.2
1.1
0.3
1.6
Transfers due to changes in
credit risk:
From stage 1 to stage 2
-
0.9
-
0.9
(0.1)
1.0
-
0.9
From stage 2 to stage 1
-
(0.2)
-
(0.2)
-
(0.3)
-
(0.3)
From stage 2 to stage 3
-
(0.7)
0.7
-
-
(1.0)
1.0
-
From stage 3 to stage 2
-
0.6
(0.6)
-
-
-
-
-
From stage 3 to stage 1
-
-
-
-
0.1
-
(0.1)
-
Remeasurements within existing
0.1
(0.5)
-
(0.4)
-
(0.2)
-
(0.2)
stage
Write
-offs
-
-
(0.3)
(0.3)
-
-
(0.6)
(0.6)
Loss allowance at 31 December
0.3
0.7
0.4
1.4
0.2
0.6
0.6
1.4
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Not past due
45.2
-
45.2
48.2
-
48.2
Up to 30 days
-
0.1
0.1
-
-
-
Total
45.2
0.1
45.3
48.2
-
48.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToCustomersExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-445": { "value": "
As outlined in Note 1d) the Society has transferred the beneficial interest in certain portfolios of loans and
advances to customers to the Group\u2019s special purpose vehicles (SPVs) Darrowby No. 6 plc and Skipton
Covered Bonds LLP, to enable the subsequent raising of debt to investors who gain the security of the
underlying mortgage loans as collateral.
The transfers of the beneficial interest in the mortgage loans to the SPVs are not treated as sales by the
Society and are not derecognised. The Society continues to recognise these assets within its own Statement
of Financial Position because it substantially retains the risks and rewards of these mortgage portfolios. The
Society continues to operationally manage these mortgage loans in the same manner as the remainder of its
mortgage portfolio and is exposed to the rewards of these assets, primarily through the receipt of interest
income, and is exposed to the risks of these assets, which is primarily exposure to the credit risk associated
with these mortgage loans.
The underlying mortgage loans are ring-fenced and cannot be used for any purpose by the Society or the SPV
other than as security for the debt raised.
At 31 December 2025, loans and advances to customers held at amortised cost include \u00a35,153.8m (2024:
\u00a33,980.3m) of balances for both the Group and Society which have been used in these secured funding
arrangements, resulting in the beneficial interest in these loans being transferred to Darrowby No. 6 plc
(\u00a3627.1m; 2024: \u00a3760.7m) and Skipton Covered Bonds LLP (\u00a34,526.7m; 2024: \u00a33,219.6m). These loans secure
\u00a33,339.6m (2024: \u00a32,426.5m) of funding for the Group.
The proceeds received from the transfer of mortgage loans are accounted for in the Society\u2019s books as a
deemed loan repayable to the SPVs. At 31 December 2025 the balance on the deemed loan repayable to
Darrowby No. 6 plc, which represents the proceeds received for the transferred financial assets, included by
the Society within \u2018Amounts owed to other customers\u2019, was \u00a3627.1m (2024: \u00a3760.7m).
At 31 December 2025 the deemed loan repayable to Skipton Covered Bonds LLP, which represents the
proceeds received for the transferred financial assets, was included by the Society within \u2018Loans to subsidiary
undertakings\u2019 and netted against the term advance between the Society and the LLP. The balance on the
deemed loan at 31 December 2025 was \u00a32,812.1m (2024: \u00a31,816.1m).
The Group\u2019s accounting policies for the derecognition of financial assets held at amortised cost are set out in
Note 1i). During the year, no gains or losses arose in respect of loans and advances to customers held at
amortised cost that were derecognised by the Group or Society.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTransfersOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-490": { "value": "2025
Group
Loans fully secured
Loans fully Other loans
\u00a3m on residential secured on and Total
Property land advances
Loss allowance at 1 January 2025
13.5
4.7
1.4
19.6
Amounts written off during the year, net of
recoveries
(1.5)
(2.4)
(0.2)
(4.1)
Income statement charge for the year
9.6
0.3
0.2
10.1
Loss allowance at 31 December 2025
21.6
2.6
1.4
25.6
2024
Group
Loans fully secured
Loans fully Other loans
\u00a3m on residential secured on and Total
Property land advances
Loss allowance at 1 January 2024
29.0
9.0
1.6
39.6
Amounts written off during the year, net of
recoveries
(1.0)
(1.4)
(0.5)
(2.9)
Income statement (credit) / charge for the year
(14.5)
(2.9)
0.3
(17.1)
Loss allowance at 31 December 2024
13.5
4.7
1.4
19.6
2025
Society
Loans fully secured Loans fully
\u00a3m on residential secured on Total
Property land
Loss allowance at 1 January 2025
12.8
4.7
17.5
Amounts written off during the year, net of
recoveries
(1.4)
(2.4)
(3.8)
Income statement charge for the year
9.5
0.3
9.8
Loss allowance at 31 December 2025
20.9
2.6
23.5
2024
Society
Loans fully secured Loans fully
\u00a3m on residential secured on Total
Property Land
Loss allowance at 1 January 2024
27.9
9.0
36.9
Amounts written off during the year, net of
recoveries
(1.0)
(1.4)
(2.4)
Income statement credit for the year
(14.1)
(2.9)
(17.0)
Loss allowance at 31 December 2024
12.8
4.7
17.5
Credit risk is the risk of suffering financial loss should borrowers or counterparties default on their contractual obligations to the Group. The Group faces this risk from its lending to: \u2022 individual customers (retail mortgages); \u2022 businesses (through legacy commercial lending no longer originated and current debt factoring / invoice discounting); \u2022 wholesale counterparties (including other financial institutions). Credit risk within our treasury portfolio arises from the investments held by the Group in order to meet liquidity requirements and for general business purposes; and \u2022 other Group entities, for the Society only. Changes in the credit quality and the recoverability of loans and amounts due from counterparties influence the Group\u2019s exposure to the risk of credit losses. The Group\u2019s strategy is to maintain a cautious approach to credit risk and new lending. Adverse changes in the credit quality of counterparties, collateral values or deterioration in the wider economy, including rising unemployment, changes in interest rates, deterioration in household finances and any contraction in the UK property market leading to falling property values, could affect the recoverability and value of the Group\u2019s assets and influence its financial performance. The Group has embedded a comprehensive credit risk management framework with clear lines of accountability and oversight as part of its overall governance framework. The Group has policies and procedures to monitor, control, mitigate and manage credit risk within the Group\u2019s credit risk appetite. The Retail Credit Committee and the Group Wholesale Credit Committee provide oversight to the effectiveness of all credit management across the Group and the controls in place ensure lending is within the Board approved credit risk appetite. The reporting structure ensures timely and accurate reporting of all substantive risk matters to the Board and the Board Risk Committee. The Board receives monthly updates on the credit risk profile of the Group. Scenario analysis has been undertaken to identify the impact of climate-related risks on the Group\u2019s credit risk management. This includes assessing the residential lending portfolio at property level to determine the potential impact of key climate-related physical and transitional risks. The scenario analysis indicates that the most significant effects from climate change occur in the medium to long-term, with material financial impacts from transition risks expected to transpire before physical risks. Based on current UK Government policies, a delayed transition appears the most probable. Therefore, the most significant transition risks which may impact the Group are not expected to occur before the 2030s. The results of this assessment did not lead to a change in carrying amounts as at 31 December 2025 or 31 December 2024. The future impact of climate- related risks on credit risk is uncertain, and the Group will continue to monitor developments in future periods. Management makes use of the Group\u2019s IFRS 9 ECL information for purposes that include regulatory capital management, certain product pricing models and credit risk forecasting. The maximum exposure to credit risk for financial assets is represented by the carrying amount of each financial asset, except for the following: \u2022 A fair value adjustment debit for hedged risk of \u00a358.9m (2024: \u00a3274.6m credit) for the Group and \u00a360.9m (2024: \u00a3271.7m credit) for the Society is included within loans and advances to customers. This is indirectly exposed to credit risk through the relationship with the underlying loans covered by the Group\u2019s hedging strategy. \u2022 The Group has credit risk exposure from commitments to lend where a mortgage has been offered but not yet completed, which leads to the recognition of a financial asset (within loans and advances to customers) on completion of the mortgage. As outlined in Note 1h), an impairment loss allowance is held against these commitments in accordance with IFRS 9. The total amount of such loan commitments at 31 December 2025 is \u00a32,197.8m (2024: \u00a31,885.1m) for the Group and \u00a32,155.4m (2024: \u00a31,867.3m) for the Society and the impairment loss allowance held against these commitments is \u00a30.3m (2024: \u00a30.2m) for both the Group and the Society. Retail mortgage lending to customers The Group currently lends in the prime residential UK mortgage market, including buy-to-let, through the Society, whilst SIL lends in the Channel Islands and in the UK. The Board\u2019s credit risk appetite defines a number of limits regarding customer and collateral credit quality to which all lending activity must adhere. The credit decision process utilises automated credit scoring and policy rules with lending policy criteria supporting manual underwriting. All aspects of the credit decision process are subject to regular independent review and development ensuring they support decisions in line with the Board\u2019s credit risk appetite. Commercial lending to customers and businesses The Society\u2019s commercial mortgage portfolio was closed to new lending in November 2008. Other loans and advances These include advances made by our factored debt and invoice discounting business, SBF, which continue to be managed by appropriately skilled teams. In addition, other loans and advances include advances made to residential mortgage customers in Guernsey and Jersey by SIL; these are secured on shares in a property management company which owns the building in which the properties are located. These loans are monitored by appropriately skilled teams in SIL. Wholesale lending to other financial institutions Wholesale credit risk arises from the wholesale investments undertaken by the Group\u2019s Treasury function which is responsible for managing this aspect of credit risk in line with the Board approved credit risk appetite and wholesale credit policies. Wholesale counterparty limits are reviewed monthly by the Group Wholesale Credit Committee based on analyses of counterparties\u2019 financial performance, ratings and other market information to ensure that limits remain within our risk appetite. We regularly review and closely monitor the number of counterparties to whom we will lend and, for those counterparties to whom we have lent, we review both the amount and duration of any limits. A deterioration in wholesale credit markets could lead to volatility in the value of the Group\u2019s portfolio of treasury assets together with the risk of further impairment within our treasury investments portfolio. ALCO provides oversight to the effectiveness of wholesale credit risk management. Intra-Group lending Credit risk also arises on loans made by the Society to other Group entities, including any committed to but undrawn amounts. Intra-Group counterparty limits are reviewed monthly by, and any increases must be pre- approved by, the Group Wholesale Credit Committee. ^ Also known as commercial mortgages. For details on how the Group assesses ECLs see Note 1h).
2025
Fair value
Group
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
33,007.5
(21.6)
58.9
33,044.8
99.0
Loans fully secured on land^
92.2
(2.6)
-
89.6
0.3
Other lending:
Debt factoring advances
200.6
(1.4)
-
199.2
0.6
Other loans
45.3
-
-
45.3
0.1
Total
33,345.6
(25.6)
58.9
33,378.9
100.0
2024
Fair value
Group
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
30,542.8
(13.5)
(274.6)
30,254.7
98.8
Loans fully secured on land^
114.3
(4.7)
-
109.6
0.4
Other lending:
Debt factoring advances
190.0
(1.4)
-
188.6
0.6
Other loans
48.2
-
-
48.2
0.2
Total
30,895.3
(19.6)
(274.6)
30,601.1
100.0
2025
Fair value
Society
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
30,991.2
(20.9)
60.9
31,031.2
99.7
Loans fully secured on land^
92.2
(2.6)
-
89.6
0.3
Other lending
0.5
-
-
0.5
-
Total
31,083.9
(23.5)
60.9
31,121.3
100.0
2024
Fair value
Society
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
28,509.8
(12.8)
(271.7)
28,225.3
99.6
Loans fully secured on land^
114.3
(4.7)
-
109.6
0.4
Total
28,624.1
(17.5)
(271.7)
28,334.9
100.0
a) Credit risk - loans and advances to customers held at amortised cost The tables below show the breakdown of the Group and Society\u2019s loans and advances to customers held at amortised cost at the reporting date: The tables below provide information on movements in the gross carrying amount of residential loans and advances to customers during the year:
2025
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
32,216.6
468.4
19.8
32,704.8
30,212.1
465.1
19.8
30,697.0
Up to 30 days past due
-
104.5
3.3
107.8
-
101.9
3.3
105.2
31 to 60 days past due
-
49.9
7.8
57.7
-
47.1
7.8
54.9
61 to 90 days past due
-
23.8
11.2
35.0
-
23.1
11.2
34.3
Over 90 days past due
-
-
102.2
102.2
-
-
99.8
99.8
Total
32,216.6
646.6
144.3
33,007.5
30,212.1
637.2
141.9
30,991.2
2024
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
30,067.3
224.2
13.8
30,305.3
28,046.0
220.4
13.8
28,280.2
Up to 30 days past due
-
72.5
3.6
76.1
-
70.6
3.6
74.2
31 to 60 days past due
-
46.4
4.6
51.0
-
43.6
4.6
48.2
61 to 90 days past due
-
15.7
9.8
25.5
-
15.7
9.8
25.5
Over 90 days past due
-
-
84.9
84.9
-
-
81.7
81.7
Total
30,067.3
358.8
116.7
30,542.8
28,046.0
350.3
113.5
28,509.8
2025
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
30,067.3
358.8
116.7
30,542.8
28,046.0
350.3
113.5
28,509.8
Transfers due to changes in credit
risk (note A):
From stage 1 to stage 2
(379.9)
379.9
-
-
(373.3)
373.3
-
-
From stage 1 to stage 3
(17.5)
-
17.5
-
(16.6)
-
16.6
-
From stage 2 to stage 1
102.5
(102.5)
-
-
99.1
(99.1)
-
-
From stage 2 to stage 3
-
(16.5)
16.5
-
-
(16.5)
16.5
-
From stage 3 to stage 2
-
10.2
(10.2)
-
-
10.2
(10.2)
-
From stage 3 to stage 1
0.6
-
(0.6)
-
0.6
-
(0.6)
-
Modification of contractual
(99.4)
67.9
26.3
(5.2)
(99.4)
67.9
26.3
(5.2)
cashflows
Increases due to origination
6,960.1
19.3
2.1
6,981.5
6,772.4
19.3
2.1
6,793.8
Decrease due to derecognition and
repayments
(4,427.6)
(71.1)
(20.7)
(4,519.4)
(4,227.2)
(68.8)
(19.0)
(4,315.0)
Written off
-
(0.1)
(4.1)
(4.2)
-
(0.1)
(4.1)
(4.2)
Other movements
10.5
0.7
0.8
12.0
10.5
0.7
0.8
12.0
Gross carrying amount at
31 December
32,216.6
646.6
144.3
33,007.5
30,212.1
637.2
141.9
30,991.2
i) Residential mortgages The majority of loans and advances to customers are secured on UK residential properties and are geographically diverse. The tables below provide information on residential loans and advances by payment due status: As shown in the tables above, during 2025 there was a net increase in stage 2 loans of \u00a3287.8m for the Group and of \u00a3286.9m for the Society. As outlined in Note 1v), during 2025 the Group has revised its view of forward- looking economic indicators and the associated scenario weightings; this caused PDs to increase and, as a result, more accounts have migrated to stage 2. Gains and losses arising during the year from loan modifications that did not result in derecognition were not material. Amounts written off are in accordance with the Group\u2019s accounting policy for write-offs (see Note 1h)). Amounts presented within \u2018other movements\u2019 in the tables above include movements in the Group\u2019s effective interest rate asset as described in Note 1f). For residential mortgages, stage 3 loans which no longer meet any of the default criteria are subject to a six month minimum probation period before they become eligible for transfer out of stage 3. At 31 December 2025, stage 3 loans include \u00a336.7m (2024: \u00a323.3m) for the Group and Society being held in stage 3 under this probation period.
2024
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
27,485.7
628.6
78.0
28,192.3
25,412.6
624.3
77.1
26,114.0
Transfers due to changes in credit
risk (note A):
From stage 1 to stage 2
(180.2)
180.2
-
-
(171.8)
171.8
-
-
From stage 1 to stage 3
(14.8)
-
14.8
-
(11.7)
-
11.7
-
From stage 2 to stage 1
352.8
(352.8)
-
-
350.3
(350.3)
-
-
From stage 2 to stage 3
-
(15.5)
15.5
-
-
(15.5)
15.5
-
From stage 3 to stage 2
-
6.0
(6.0)
-
-
6.0
(6.0)
-
From stage 3 to stage 1
1.0
-
(1.0)
-
1.0
-
(1.0)
-
Modification of contractual
(26.8)
(8.5)
30.6
(4.7)
(26.8)
(8.5)
30.6
(4.7)
cashflows
Increases due to origination
5,996.7
15.1
0.7
6,012.5
5,833.8
15.1
0.7
5,849.6
Decrease due to derecognition and
repayments
(3,555.8)
(93.9)
(12.7)
(3,662.4)
(3,350.1)
(92.2)
(11.9)
(3,454.2)
Written off
(0.1)
(0.4)
(3.9)
(4.4)
(0.1)
(0.4)
(3.9)
(4.4)
Other movements
8.8
-
0.7
9.5
8.8
-
0.7
9.5
Gross carrying amount at
31 December
30,067.3
358.8
116.7
30,542.8
28,046.0
350.3
113.5
28,509.8
Note A. For the purposes of the analysis presented above, the amounts shown for \u2018transfers due to changes in credit risk\u2019 are based on account balances at the start of the reporting period (not account balances at the date of transfer).
The table below provides information on movements in the impairment loss allowance for residential loans
and advances to customers during the year:
2025
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance at 1 January
4.5
2.5
6.5
13.5
4.4
2.4
6.0
12.8
Transfers due to changes in credit
risk:
From stage 1 to stage 2
(0.1)
2.3
-
2.2
(0.1)
2.3
-
2.2
From stage 1 to stage 3
-
-
1.0
1.0
-
-
1.0
1.0
From stage 2 to stage 1
-
(0.2)
-
(0.2)
-
(0.2)
-
(0.2)
From stage 2 to stage 3
-
(0.3)
0.7
0.4
-
(0.3)
0.7
0.4
From stage 3 to stage 2
-
0.1
(0.1)
-
-
0.1
(0.1)
-
Remeasurements within existing
2.3
0.3
-
2.6
2.2
0.1
0.2
2.5
stage
Increases due to origination
2.4
0.3
-
2.7
2.5
0.3
-
2.8
Decrease due to derecognition and
repayments
(0.5)
(0.3)
(1.4)
(2.2)
(0.5)
(0.3)
(1.4)
(2.2)
Changes due to modification
-
0.7
1.5
2.2
-
0.7
1.5
2.2
without derecognition
Written off
-
-
(0.6)
(0.6)
-
-
(0.6)
(0.6)
Loss allowance at 31 December
8.6
5.4
7.6
21.6
8.5
5.1
7.3
20.9
2024
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance at 1 January
16.2
6.0
6.8
29.0
15.4
5.9
6.6
27.9
Transfers due to changes in credit
risk:
From stage 1 to stage 2
(0.1)
0.8
-
0.7
(0.1)
0.8
-
0.7
From stage 1 to stage 3
-
-
0.5
0.5
-
-
0.5
0.5
From stage 2 to stage 1
0.1
(1.6)
-
(1.5)
0.1
(1.6)
-
(1.5)
From stage 2 to stage 3
-
(0.4)
0.4
-
-
(0.4)
0.4
-
From stage 3 to stage 2
-
0.1
(0.2)
(0.1)
-
0.1
(0.2)
(0.1)
Remeasurements within existing
(11.0)
(0.8)
(0.4)
(12.2)
(10.4)
(0.9)
(0.7)
(12.0)
stage
Increases due to origination
1.2
0.1
0.1
1.4
1.1
0.1
0.1
1.3
Decrease due to derecognition and
repayments
(1.9)
(0.6)
(0.9)
(3.4)
(1.7)
(0.5)
(0.9)
(3.1)
Changes due to modification
-
(1.1)
0.9
(0.2)
-
(1.1)
0.9
(0.2)
without derecognition
Written off
-
-
(0.7)
(0.7)
-
-
(0.7)
(0.7)
Loss allowance at 31 December
4.5
2.5
6.5
13.5
4.4
2.4
6.0
12.8
The loss allowance at 31 December 2025 includes judgmental adjustments totalling \u00a34.8m (2024: \u00a32.7m) for the Group and \u00a34.8m (2024: \u00a32.7m) for the Society. Details of these judgmental adjustments are set out in Note 1v). The tables below provide information on residential loans and advances to customers grouped by credit risk rating (probability of default). For further details on how the probability of default (PD) affects the Group\u2019s assessment of ECLs, see Note 1h) and Note 1v). ECL coverage shows the level of loss allowance expressed as a percentage of the gross carrying amount. The PDs used by the Group for IFRS 9 accounting purposes are not directly comparable to the PDs used by the Group for IRB regulatory purposes; this is due to significant differences in the requirements and methodologies applied by the Group for IFRS 9 and for IRB respectively.
Group 2025 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
1,409.6
0.9
-
1,410.5
0.5
-
-
0.5
0.15%
- <0.25%
4,408.0
1.6
-
4,409.6
0.8
-
-
0.8
0.25%
- <0.5%
16,089.9
1.8
-
16,091.7
3.6
-
-
3.6
0.5%
- <0.75%
7,690.8
4.9
-
7,695.7
2.3
-
-
2.3
0.75%
- <2.5%
2,601.4
51.0
-
2,652.4
1.4
-
-
1.4
2.5%
- <10%
16.9
144.7
-
161.6
-
0.2
-
0.2
10%
- <100%
-
441.7
-
441.7
-
5.2
-
5.2
Default
-
-
144.3
144.3
-
-
7.6
7.6
Total
32,216.6
646.6
144.3
33,007.5
8.6
5.4
7.6
21.6
ECL coverage by stage (%)
0.03%
0.84%
5.27%
0.07%
Group 2024 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
4,841.6
0.4
-
4,842.0
0.6
-
-
0.6
0.15%
- <0.25%
11,387.8
0.4
-
11,388.2
1.5
-
-
1.5
0.25%
- <0.5%
10,752.9
5.7
-
10,758.6
1.8
-
-
1.8
0.5%
- <0.75%
2,647.4
13.0
-
2,660.4
0.4
-
-
0.4
0.75%
- <2.5%
430.9
65.3
-
496.2
0.2
-
-
0.2
2.5%
- <10%
6.7
59.4
-
66.1
-
0.1
-
0.1
10%
- <100%
-
214.6
-
214.6
-
2.4
-
2.4
Default
-
-
116.7
116.7
-
-
6.5
6.5
Total
30,067.3
358.8
116.7
30,542.8
4.5
2.5
6.5
13.5
ECL coverage by stage (%)
0.01%
0.70%
5.57%
0.04%
Society 2025 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
1,409.6
0.9
-
1,410.5
0.5
-
-
0.5
0.15%
- <0.25%
4,408.0
1.6
-
4,409.6
0.8
-
-
0.8
0.25%
- <0.5%
15,438.0
1.8
-
15,439.8
3.6
-
-
3.6
0.5%
- <0.75%
6,338.2
4.9
-
6,343.1
2.2
-
-
2.2
0.75%
- <2.5%
2,601.4
51.0
-
2,652.4
1.4
-
-
1.4
2.5%
- <10%
16.9
144.7
-
161.6
-
0.2
-
0.2
10%
- <100%
-
432.3
-
432.3
-
4.9
-
4.9
Default
-
-
141.9
141.9
-
-
7.3
7.3
Total
30,212.1
637.2
141.9
30,991.2
8.5
5.1
7.3
20.9
ECL coverage by stage (%)
0.03%
0.80%
5.14%
0.07%
Society 2024 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
4,841.6
0.4
-
4,842.0
0.6
-
-
0.6
0.15%
- <0.25%
11,387.7
0.4
-
11,388.1
1.5
-
-
1.5
0.25%
- <0.5%
10,063.3
5.7
-
10,069.0
1.8
-
-
1.8
0.5%
- <0.75%
1,315.8
13.0
-
1,328.8
0.3
-
-
0.3
0.75%
- <2.5%
430.9
65.3
-
496.2
0.2
-
-
0.2
2.5%
- <10%
6.7
59.4
-
66.1
-
0.1
-
0.1
10%
- <100%
-
206.1
-
206.1
-
2.3
-
2.3
Default
-
-
113.5
113.5
-
-
6.0
6.0
Total
28,046.0
350.3
113.5
28,509.8
4.4
2.4
6.0
12.8
ECL coverage by stage (%)
0.02%
0.69%
5.29%
0.04%
The tables below provide an analysis of residential loans held in stage 2 as at the balance sheet date, reflecting the reasons for inclusion in stage 2. For the purposes of this analysis, where a loan satisfies at the balance sheet date more than one of the stage 2 criteria, the loan is included below within one category only and in order of the categories as presented. The amounts presented below as \u2018Over 30 days past due\u2019 therefore include all stage 2 loans which are over 30 days past due as at the balance sheet date, including those where this was not the initial reason for being classified as stage 2. Stage 2 Analysis
2025
2024
Gross ECL ECL Gross ECL ECL
Group
carrying allowance coverage carrying allowance coverage
amount \u00a3m % amount \u00a3m %
\u00a3m \u00a3m
Over 30 days past due
73.7
2.1
2.8%
62.1
1.2
1.9%
In forbearance
130.2
1.1
0.8%
16.5
0.1
0.6%
In arrears
59.4
0.9
1.5%
66.8
0.6
0.9%
Term expired
15.7
-
-
18.6
-
-
Temporary transfer to interest only*
85.8
0.1
0.1%
103.5
0.1
0.1%
Increase in PD since origination
281.8
1.2
0.4%
91.3
0.5
0.5%
Total
646.6
5.4
0.8%
358.8
2.5
0.7%
*Temporary arrangement in place, via the Mortgage Charter Scheme, to repay interest only The tables below provide further information on the types of lending and geographical split: * Fast track relates to certain mortgages granted between 2007-2009 for which, subject to certain application criteria, the Society accepted reduced documentation from borrowers. ^ Sub-prime mortgages are defined as loans to borrowers that typically had weakened credit histories at the time the loan was advanced. Prior to 1 June 2021, these loans were held by the Group\u2019s specialist lending businesses Amber and NYM; these loans were hived-up into the Society with effect from 1 June 2021. Stage 2 Analysis
2025
2024
Gross ECL ECL Gross ECL ECL
Society
carrying allowance coverage carrying allowance coverage
amount \u00a3m % amount \u00a3m %
\u00a3m \u00a3m
Over 30 days past due
70.2
1.9
2.7%
59.3
1.1
1.9%
In forbearance
127.0
1.1
0.9%
12.6
0.1
0.8%
In arrears
56.7
0.8
1.4%
65.0
0.6
0.9%
Term expired
15.7
0.0
0.0%
18.6
-
-
Temporary transfer to interest only *
85.8
0.1
0.1%
103.5
0.1
0.1%
Increase in PD since origination
281.8
1.2
0.4%
91.3
0.5
0.5%
Total
637.2
5.1
0.8%
350.3
2.4
0.7%
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Prime:
Residential
26,835.0
513.2
109.0
27,457.2
24,273.8
288.6
80.1
24,642.5
Buy-to-let
5,239.7
91.4
19.4
5,350.5
5,608.3
42.1
18.3
5,668.7
Self build
7.5
0.9
0.7
9.1
8.6
0.8
1.0
10.4
Fast track*
7.8
0.4
0.2
8.4
9.2
0.6
0.1
9.9
Self certified
113.1
35.0
13.7
161.8
145.2
21.4
15.4
182.0
Sub
-prime^:
Residential
2.6
1.1
-
3.7
3.7
0.8
0.2
4.7
Buy-to-let
3.3
0.6
0.3
4.2
5.0
0.4
0.3
5.7
Self certified
7.6
4.0
1.0
12.6
13.5
4.1
1.3
18.9
Total
32,216.6
646.6
144.3
33,007.5
30,067.3
358.8
116.7
30,542.8
Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Prime:
Residential
26,183.1
511.2
109.0
26,803.3
23,584.1
285.0
79.8
23,948.9
Buy-to-let
3,887.1
84.0
17.0
3,988.1
4,276.7
37.2
15.4
4,329.3
Self build
7.5
0.9
0.7
9.1
8.6
0.8
1.0
10.4
Fast track*
7.8
0.4
0.2
8.4
9.2
0.6
0.1
9.9
Self certified
113.1
35.0
13.7
161.8
145.2
21.4
15.4
182.0
Sub
-prime^:
Residential
2.6
1.1
-
3.7
3.7
0.8
0.2
4.7
Buy-to-let
3.3
0.6
0.3
4.2
5.0
0.4
0.3
5.7
Self certified
7.6
4.0
1.0
12.6
13.5
4.1
1.3
18.9
Total
30,212.1
637.2
141.9
30,991.2
28,046.0
350.3
113.5
28,509.8
Indexed loan-to-value information on the Group\u2019s residential loan portfolio is set out below:
Group (\u00a3m)
2025
2024
Region
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
North
871.8
19.7
5.6
897.1
854.6
14.3
3.9
872.8
Yorkshire
2,445.7
50.8
9.8
2,506.3
2,332.1
30.2
9.8
2,372.1
East Midlands
2,199.7
52.1
8.2
2,260.0
2,035.7
26.7
7.2
2,069.6
East Anglia
3,186.6
69.6
16.2
3,272.4
2,836.3
43.8
11.3
2,891.4
London
6,211.9
110.9
29.4
6,352.2
5,732.7
54.4
22.6
5,809.7
South East
5,281.4
107.2
26.4
5,415.0
4,847.5
57.2
21.5
4,926.2
South West
2,804.1
51.9
9.5
2,865.5
2,695.6
29.2
6.9
2,731.7
West Midlands
2,625.2
55.8
10.0
2,691.0
2,381.5
31.1
7.4
2,420.0
North West
2,996.0
65.1
15.4
3,076.5
2,821.4
37.5
13.6
2,872.5
Wales
878.4
20.2
3.9
902.5
825.6
10.3
3.9
839.8
Scotland
2,012.4
39.7
8.6
2,060.7
1,959.1
19.8
6.7
1,985.6
Northern Ireland
8.7
1.4
1.3
11.4
11.2
0.8
1.3
13.3
Channel Islands
694.7
2.2
-
696.9
734.0
3.5
0.6
738.1
Total
32,216.6
646.6
144.3
33,007.5
30,067.3
358.8
116.7
30,542.8
Society (\u00a3m)
2025
2024
Region
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
North
867.8
19.7
5.6
893.1
850.3
14.3
3.9
868.5
Yorkshire
2,429.4
50.8
9.8
2,490.0
2,315.5
30.0
9.8
2,355.3
East Midlands
2,190.6
51.8
8.2
2,250.6
2,024.7
26.6
7.2
2,058.5
East Anglia
3,164.8
69.5
16.2
3,250.5
2,814.4
43.4
11.3
2,869.1
London
5,357.6
105.2
27.6
5,490.4
4,899.8
50.4
20.3
4,970.5
South East
5,145.1
107.2
26.0
5,278.3
4,705.0
57.0
21.5
4,783.5
South West
2,771.0
51.9
9.5
2,832.4
2,661.5
29.2
6.9
2,697.6
West Midlands
2,556.1
55.5
9.8
2,621.4
2,315.4
31.0
7.1
2,353.5
North West
2,863.3
64.6
15.4
2,943.3
2,698.9
37.5
13.6
2,750.0
Wales
873.0
19.9
3.9
896.8
819.6
10.3
3.9
833.8
Scotland
1,984.7
39.7
8.6
2,033.0
1,929.7
19.8
6.7
1,956.2
Northern Ireland
8.7
1.4
1.3
11.4
11.2
0.8
1.3
13.3
Total
30,212.1
637.2
141.9
30,991.2
28,046.0
350.3
113.5
28,509.8
Group (\u00a3m)
2025
2024
Loan
-to-value
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<40%
5,526.9
119.9
20.3
5,667.1
5,891.7
72.6
21.0
5,985.3
40%
- 50%
3,705.0
93.6
22.7
3,821.3
4,052.9
58.7
19.8
4,131.4
50%
- 60%
4,169.7
125.3
26.9
4,321.9
4,442.5
63.8
32.9
4,539.2
60%
- 70%
4,367.5
106.7
23.8
4,498.0
4,622.4
60.2
16.6
4,699.2
70%
- 80%
4,586.0
78.7
14.5
4,679.2
4,021.4
41.5
8.7
4,071.6
80%
- 90%
6,620.2
93.4
21.0
6,734.6
5,324.7
46.2
10.8
5,381.7
90%
- 100%
3,181.4
27.0
11.1
3,219.5
1,687.3
14.5
3.0
1,704.8
>100%
59.9
2.0
4.0
65.9
24.4
1.3
3.9
29.6
Total
32,216.6
646.6
144.3
33,007.5
30,067.3
358.8
116.7
30,542.8
The Group\u2019s policy for new mortgage lending is currently a maximum loan-to-value ratio of 100% for residential mortgages and 75% for buy-to-let lending. In addition, SIL lends up to 100% on its \u2018Next Generation\u2019 mortgages, for which a family member is required to provide a guarantee of up to 20% of the borrower\u2019s property value (to be supported by a bond over the guarantor\u2019s own suitable property in Guernsey or Jersey). There has been an increase in the volume of 80-100% LTV lending within the year as we continue to deliver on our purpose of helping more people have a home. This has resulted in an increase in the overall percentage of the book with an LTV greater than 80%; 31.8% at 31 December 2025 (2024: 24.5%) and an increase in the average indexed loan-to-value of the Society\u2019s new lending in 2025 to 68.4% (2024: 65.3%). The quality of the lending remains high, with a well-managed spread of risk, carried out in a controlled manner being cognisant of the economic challenges that lie ahead. This is represented by the proportion of Group residential mortgage accounts in arrears by three months or more which remained low at 0.30% (2024: 0.28%). At 31 December 2025, the average indexed loan-to-value of Group residential mortgages on a valuation weighted basis (calculated as the total outstanding balance divided by the total value of collateral held), was 48.8% (2024: 46.1%) and for Society residential mortgages was 48.7% (2024: 45.9%). Forbearance Where appropriate for customers, the Group applies a policy of forbearance. This may be applied where the actual or apparent financial stress of the customer is considered to be short-term with a potential to be recovered. Forbearance may involve arrears capitalisation, a reduction in the monthly payment (known as a concession), a conversion to interest only or a mortgage term extension. Forbearance is undertaken in order to achieve the best outcome for both the customer and the business through dealing with repayment difficulties at an early stage. Possession is generally considered only as a last resort, once all other options for the customer have been exhausted. Possession balances represent loans against which the Group has taken ownership of properties pending their sale. The Group does not occupy repossessed properties for business use or use assets acquired in its operations. All customer accounts are monitored to ensure that these strategies remain appropriate. Possessions For the Group, at 31 December 2025 the balance of residential loans where the property has been taken into possession was \u00a33.0m and represents less than 0.1% of total outstanding loans (2024: \u00a33.8m; less than 0.1%). For the Society, at 31 December 2025 the balance of residential loans where the property has been taken into possession was \u00a33.0m and represents less than 0.01% of total outstanding loans (2024: \u00a33.2m; less than 0.1%). All possessions balances are classified as stage 3. Forbearance activity The tables below provide further information on residential mortgages regarded as being in forbearance as at 31 December 2025, showing the type of account renegotiations applied. For the purposes of these forbearance tables, the Group applies the Bank of England Prudential Regulatory Authority (PRA) definition of forbearance (which is aligned to the European Banking Authority, EBA, definition).
Society (\u00a3m)
2025
2024
Loan
-to-value
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<40%
5,249.9
119.1
20.3
5,389.3
5,611.6
71.9
21.0
5,704.5
40%
- 50%
3,425.0
93.2
22.0
3,540.2
3,761.8
58.7
19.4
3,839.9
50%
- 60%
3,785.2
124.1
26.4
3,935.7
4,036.9
61.1
32.2
4,130.2
60%
- 70%
3,869.9
104.0
23.8
3,997.7
4,091.1
57.3
16.5
4,164.9
70%
- 80%
4,169.7
76.3
13.7
4,259.7
3,628.3
40.7
7.3
3,676.3
80%
- 90%
6,505.1
92.4
21.0
6,618.5
5,235.9
45.6
10.2
5,291.7
90%
- 100%
3,154.0
27.0
10.7
3,191.7
1,663.2
14.5
3.0
1,680.7
>100%
53.3
1.1
4.0
58.4
17.2
0.5
3.9
21.6
Total
30,212.1
637.2
141.9
30,991.2
28,046.0
350.3
113.5
28,509.8
Under the PRA definition, loans are required to meet certain payment and arrears criteria before they are deemed to exit forbearance; this includes a minimum two-year probation period following the forbearance event (extended to three years in certain situations). For the purposes of the tables below, the following loans are regarded as forborne as at 31 December 2025*: \u2022 any loan to which forbearance measures were applied within the two years prior to the reporting date (regardless of whether the loan remains on renegotiated terms at 31 December 2025); and \u2022 any loan to which forbearance measures were applied and which remains in the probation period following the forbearance event. For the purposes of the tables below, loans are presented according to the ECL stage they were held in as at the reporting date. * As noted in Note 1v), the SICR criteria applied by the Group was revised during the year, to align the probation period of forborne accounts with that used in regulatory reporting standards. For the purposes of the 2024 comparative tables below, information is therefore presented in accordance with the criteria that was applicable as at 31 December 2024 (as disclosed in Note 43a)(i) to the 2024 Annual Report and Accounts).
Reduced
Transfer to
Term Total renegotiations
Group
- 2025
Total
Capitalisation
Payment
interest only
Extension
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
32,216.6
-
-
-
-
-
-
32,216.6
-
-
-
-
-
-
Stage 2
Not past due
468.4
3.8
66.8
14.3
-
84.9
18.1
Past due up to 30 days
104.5
0.3
43.3
1.6
-
45.2
43.3
Over 30 days past due
73.7
-
24.4
2.2
-
26.6
36.1
646.6
4.1
134.5
18.1
-
156.7
24.2
Stage 3
Not past due
19.8
1.5
7.8
0.2
-
9.5
48.0
Past due up to 90 days
22.3
0.1
9.8
2.1
-
12.0
53.8
Over 90 days past due
102.2
0.7
53.9
7.5
-
62.1
60.8
144.3
2.3
71.5
9.8
-
83.6
57.9
Gross carrying amount
33,007.5
6.4
206.0
27.9
-
240.3
0.7
Loss allowance
(21.6)
(0.1)
(5.2)
(0.3)
-
(5.6)
25.9
32,985.9
6.3
200.8
27.6
-
234.7
0.7
Reduced
Transfer to
Term Total renegotiations
Group
\u2013 2024
Total
Capitalisation
Payment
interest only
Extension
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
30,067.3
0.3
27.8
6.0
-
34.1
0.1
30,067.3
0.3
27.8
6.0
-
34.1
0.1
Stage 2
Not past due
224.2
0.2
24.0
7.9
-
32.1
14.3
Past due up to 30 days
72.5
-
29.4
0.6
-
30.0
41.4
Over 30 days past due
62.1
0.3
24.4
1.4
-
26.1
42.0
358.8
0.5
77.8
9.9
-
88.2
24.6
Stage 3
Not past due
13.8
1.1
3.2
0.2
-
4.5
32.6
Past due up to 90 days
18.0
0.2
8.9
2.0
-
11.1
61.7
Over 90 days past due
84.9
0.2
46.8
5.9
-
52.9
62.3
116.7
1.5
58.9
8.1
-
68.5
58.7
Gross carrying amount
30,542.8
2.3
164.5
24.0
-
190.8
0.6
Loss allowance
(13.5)
(0.3)
(3.8)
(0.2)
-
(4.3)
31.9
30,529.3
2.0
160.7
23.8
-
186.5
0.6
Reduced
Transfer to
Term Total renegotiations
Society
- 2025
Total
Capitalisation
Payment
interest only
Extension
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
30,212.1
-
-
-
-
-
-
30,212.1
-
-
-
-
-
-
Stage 2
Not past due
465.1
3.2
64.3
14.2
-
81.7
17.6
Past due up to 30 days
101.9
0.3
43.3
1.6
-
45.2
44.4
Over 30 days past due
70.2
-
24.4
2.2
-
26.6
37.9
637.2
3.5
132.0
18.0
-
153.5
24.1
Stage 3
Not past due
19.8
1.5
7.8
0.2
-
9.5
48.0
Past due up to 90 days
22.3
0.1
9.8
2.1
-
12.0
53.8
Over 90 days past due
99.8
0.7
53.9
7.5
-
62.1
62.2
141.9
2.3
71.5
9.8
-
83.6
58.9
Gross carrying amount
30,991.2
5.8
203.5
27.8
-
237.1
0.8
Loss allowance
(20.9)
(0.1)
(5.2)
(0.3)
-
(5.6)
26.8
30,970.3
5.7
198.3
27.5
-
231.5
0.7
Collateral Collateral held consists of residential properties. The use of such collateral is in line with terms that are usual and customary to standard lending activities. Upon initial recognition of loans and advances, the fair value of collateral is based on valuation techniques commonly used for the corresponding assets. In subsequent periods, the fair value is updated by reference to market prices or indices of similar assets. Fair value of capped collateral held Some properties in the Group\u2019s mortgage book are in negative equity, which increases the possibility of the Group incurring a loss if the property is taken into possession. The fair value of residential property used to derive the figures in the table above is determined by reference to a recognised house price index. Movements in this index to the reporting date are applied to all properties in the portfolio on a regional basis. For the majority of the Group\u2019s loans, the Group holds excess collateral however this cannot be used to offset those instances where the loan amount exceeds the collateral held. The fair value of capped collateral in the table above therefore represents, on an individual loan basis, the lower of the value of the property and the outstanding loan amount. It does not reflect the overall value of properties against which the loans are secured. The total fair value of collateral held in respect of residential mortgages for the Group at 31 December 2025 is \u00a367,624.3m (2024: \u00a366,203.5m) and for the Society is \u00a363,600.6m (2024: \u00a362,133.0m).
Total
Capitalisation
Reduced
Transfer to
Term Total renegotiations
Society
- 2024
\u00a3m \u00a3m Payment
interest only
Extension
\u00a3m
%
\u00a3m \u00a3m \u00a3m
Stage 1
Not past due
28,046.0
0.3
27.8
6.0
-
34.1
0.1
28,046.0
0.3
27.8
6.0
-
34.1
0.1
Stage 2
Not past due
220.4
0.2
22.3
5.7
-
28.2
12.8
Past due up to 30 days
70.6
-
29.4
0.6
-
30.0
42.5
Over 30 days past due
59.3
0.3
24.4
1.4
-
26.1
44.0
350.3
0.5
76.1
7.7
-
84.3
24.1
Stage 3
Not past due
13.8
1.1
3.2
0.2
-
4.5
32.6
Past due up to 90 days
18.0
0.2
8.9
2.0
-
11.1
61.7
Over 90 days past due
81.7
0.2
46.8
5.9
-
52.9
64.7
113.5
1.5
58.9
8.1
-
68.5
60.4
Gross carrying amount
28,509.8
2.3
162.8
21.8
-
186.9
0.7
Loss allowance
(12.8)
(0.3)
(3.8)
(0.2)
-
(4.3)
33.6
28,497.0
2.0
159.0
21.6
-
182.6
0.6
\u00a3m
Group
Society
2025
2024
2025
2024
Stage 1
32,206.7
30,059.9
30,204.9
28,041.6
Stage 2
646.1
358.4
636.8
350.0
Stage 3
143.6
115.8
141.2
112.6
32,996.4
30,534.1
30,982.9
28,504.2
Gross loan balances
33,007.5
30,542.8
30,991.2
28,509.8
Negative equity
11.1
8.7
8.3
5.6
Capped collateral held in respect of
possessions (included in stage 3 above)
2.8
2.9
2.8
2.9
At 31 December 2025 the contractual amount outstanding on loans written off during the year due to there being no reasonable expectation of recovery, but which remain subject to enforcement activity, is \u00a30.8m (2024: \u00a30.7m) for the Group and for the Society. ii) Commercial mortgages The commercial mortgage portfolio (also known as loans fully secured on land) is currently closed to new business. The tables below provide information on commercial loans by payment due status.
Group & Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
74.6
2.6
2.7
79.9
93.9
0.4
11.3
105.6
Up to 30 days
-
2.8
-
2.8
-
2.3
-
2.3
31 to 60 days
-
2.7
-
2.7
-
2.1
-
2.1
61 to 90 days
-
1.0
-
1.0
-
1.1
0.7
1.8
Over 90 days
-
-
5.8
5.8
-
-
2.5
2.5
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
The table below provides information on movements in the gross carrying amount of commercial loans during the year.
Group & Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
93.9
5.9
14.5
114.3
91.0
37.8
6.4
135.2
Transfers due to changes in credit
risk (note A):
From stage 1 to stage 2
(2.5)
2.5
-
-
(1.1)
1.1
-
-
From stage 1 to stage 3
(2.0)
-
2.0
-
(1.4)
-
1.4
-
From stage 2 to stage 1
0.1
(0.1)
-
-
19.2
(19.2)
-
-
From stage 2 to stage 3
-
(0.8)
0.8
-
-
(3.4)
3.4
-
From stage 3 to stage 1
0.8
-
(0.8)
-
-
-
-
-
Modification of contractual
(3.2)
2.3
0.5
(0.4)
0.8
(8.0)
6.8
(0.4)
cashflows
Decrease due to derecognition and
repayments
(12.5)
(0.7)
(7.2)
(20.4)
(14.6)
(2.4)
(3.1)
(20.1)
Written off
-
-
(1.3)
(1.3)
-
-
(0.4)
(0.4)
Gross carrying amount at
31 December
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Note A. For the purposes of the analysis presented above, the amounts shown for \u2018transfers due to changes in credit risk\u2019 are based on account balances at the start of the reporting period (not account balances at the date of transfer). Gains and losses arising during the year from loan modifications that did not result in derecognition were not significant. Amounts written off are in accordance with the Group\u2019s accounting policy for write-offs (see Note 1h)). For commercial loans, stage 3 loans which no longer meet any of the default criteria are subject to a three month minimum probation period before they become eligible for transfer out of stage 3. At 31 December 2025, stage 3 loans include \u00a30.1m being held in stage 3 under this probation period (2024: \u00a3nil). The table below provides information on movements in the impairment loss allowance for commercial loans during the year.
Group & Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss
allowance at 1 January
0.2
0.2
4.3
4.7
0.6
6.6
1.8
9.0
Transfers due to changes in credit
risk:
From stage 1 to stage 2
-
0.1
-
0.1
-
-
-
-
From stage 1 to stage 3
-
-
0.6
0.6
-
-
-
-
From stage 2 to stage 1
-
-
-
-
-
(1.9)
-
(1.9)
From stage 2 to stage 3
-
-
-
-
-
(0.4)
0.4
-
Remeasurements within existing
0.2
-
0.1
0.3
(0.3)
(0.1)
-
(0.4)
stage
Decrease due to derecognition and
repayments
-
-
(0.1)
(0.1)
(0.1)
(0.9)
(1.1)
(2.1)
Changes due to modification
-
-
(0.1)
(0.1)
-
(3.1)
3.3
0.2
without derecognition
Written off
-
-
(2.9)
(2.9)
-
-
(0.1)
(0.1)
Loss allowance at 31 December
0.4
0.3
1.9
2.6
0.2
0.2
4.3
4.7
ECL coverage (%)
0.54%
3.30%
22.35%
2.82%
0.21%
3.39%
29.66%
4.11%
Given the size and nature of the Group\u2019s commercial portfolio, it is not meaningful to manage credit risk by reference to behavioural scores or PD percentages. Credit risk is predominantly managed by individual review of loans in accordance with certain criteria. To aid an understanding of significant credit risk concentrations for the Group\u2019s commercial portfolio, the tables below provide analyses of loans by industry type, by geography and by loan-to-value percentage.
Group & Society (\u00a3m)
2025
2024
Industry analysis
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Leisure and hotels
5.7
0.5
-
6.2
6.4
0.6
5.1
12.1
Retail
1.9
0.3
0.2
2.4
2.1
0.3
0.2
2.6
Nursing/residential homes
1.6
-
-
1.6
1.7
-
2.2
3.9
Offices
1.1
-
-
1.1
1.2
-
-
1.2
Commercial and industrial units
63.8
8.3
8.3
80.4
81.9
5.0
7.0
93.9
Miscellaneous
0.5
-
-
0.5
0.6
-
-
0.6
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Group & Society (\u00a3m)
2025
2024
Geographical analysis (Region)
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
North
1.3
1.7
-
3.0
2.9
0.3
-
3.2
Yorkshire
3.7
0.5
1.1
5.3
6.2
0.3
5.7
12.2
East Midlands
2.1
-
2.2
4.3
3.2
-
2.3
5.5
East Anglia
8.4
0.1
0.1
8.6
9.6
0.1
-
9.7
London
19.0
2.9
1.2
23.1
22.8
2.1
0.7
25.6
South East
12.4
1.6
0.4
14.4
15.5
1.2
-
16.7
South West
11.2
-
0.4
11.6
12.0
0.4
0.4
12.8
West Midlands
5.3
1.1
0.3
6.7
7.0
0.6
2.3
9.9
North West
8.7
1.2
2.0
11.9
10.5
0.9
2.1
13.5
Wales
2.3
-
0.5
2.8
2.4
-
0.7
3.1
Scotland
0.2
-
0.3
0.5
1.8
-
0.3
2.1
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Group & Society (\u00a3m)
2025
2024
Loan
-to-value
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<40%
24.4
2.5
1.2
28.1
27.4
1.0
2.0
30.4
40%
- 50%
12.7
1.4
1.2
15.3
18.5
1.1
0.6
20.2
50%
- 60%
14.3
1.2
-
15.5
16.6
1.2
1.2
19.0
60%
- 70%
5.1
1.9
0.2
7.2
6.3
1.4
0.1
7.8
70%
- 80%
6.0
0.9
-
6.9
7.4
0.5
1.3
9.2
80%
- 90%
8.7
1.2
0.8
10.7
9.3
0.3
-
9.6
90%
- 100%
2.2
-
-
2.2
5.4
0.4
-
5.8
>100%
1.2
-
5.1
6.3
3.0
-
9.3
12.3
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Forbearance The Group\u2019s policy on forbearance for commercial mortgages is the same as the policy for residential mortgages, which is set out in Note 45a)(i). At 31 December 2025 the balance of commercial mortgages where the property has been taken into possession was \u00a30.1m for the Group and Society (2024: \u00a3nil). Possessions balances are classified as stage 3. The tables below provide further information on commercial mortgages regarded as being in forbearance as at 31 December 2025, showing the type of account renegotiations applied. The tables below are presented on the same basis as the corresponding tables for residential mortgages, the basis for which is described on pages 259 and 260. Collateral The collateral held consists of properties held within the categories previously outlined. The use of such collateral is in line with terms that are usual and customary to standard lending activities. Fair value of capped collateral held An analysis of capped collateral, where the collateral is capped to the lower of the value of the property and the amount outstanding on an individual loan basis, is shown below.
2025
Group & Society
Reduced
Transfer to
Total renegotiations
Total
Capitalisation
Payment
interest only
\u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
74.6
-
-
-
-
-
74.6
-
-
-
-
-
Stage 2
Not past due
2.6
0.8
0.9
0.9
2.6
100.0
Past due up to 30 days
2.8
-
0.3
-
0.3
10.7
Over 30 days past due
3.7
0.8
-
-
0.8
21.6
9.1
1.6
1.2
0.9
3.7
40.7
Stage 3
Not past due
2.7
-
0.1
1.2
1.3
48.1
Past due up to 90 days
-
-
-
-
-
-
Over 90 days past due
5.8
-
1.0
2.8
3.8
65.5
8.5
-
1.1
4.0
5.1
60.0
Gross carrying amount
92.2
1.6
2.3
4.9
8.8
9.5
Loss allowance
(2.6)
(0.1)
(0.1)
(0.7)
(0.9)
34.6
89.6
1.5
2.2
4.2
7.9
8.8
2024
Group & Society
Reduced Transfer to Total renegotiations
Total
Capitalisation
Payment
interest only
\u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
93.9
0.9
0.4
0.5
1.8
1.9
93.9
0.9
0.4
0.5
1.8
1.9
Stage 2
Not past due
0.4
-
-
0.4
0.4
100.0
Past due up to 30 days
2.3
-
-
0.1
0.1
4.3
Over 30 days past due
3.2
0.9
0.5
-
1.4
43.8
5.9
0.9
0.5
0.5
1.9
32.2
Stage 3
Not past due
11.3
-
-
8.4
8.4
74.3
Past due up to 90 days
0.7
-
-
-
-
-
Over 90 days past due
2.5
-
0.6
0.7
1.3
52.0
14.5
-
0.6
9.1
9.7
66.9
Gross carrying amount
114.3
1.8
1.5
10.1
13.4
11.7
Loss allowance
(4.7)
-
-
(3.8)
(3.8)
80.9
109.6
1.8
1.5
6.3
9.6
8.8
The fair value of commercial property used to derive the figures in the table above is determined by reference to the latest external valuation of the properties in question. The total fair value of collateral held in respect of commercial loans for the Group and the Society at 31 December 2025 is \u00a3236.8m (2024: \u00a3270.5m). At 31 December 2025 the contractual amount outstanding on loans written off during the year due to there being no reasonable expectation of recovery, but which remain subject to enforcement activity, is \u00a30.2m (2024: \u00a30.2m) for the Group and the Society. iii) Other lending Other lending comprises the following: The table below provides information on movements in the gross carrying amount of other loans and advances during the year. Note: A. For the purposes of the analysis presented above, the amounts shown for \u2018transfers due to changes in credit risk\u2019 are based on account balances at the end of the reporting period (not account balances at the date of transfer).
Group & Society (\u00a3m)
2025
2024
Stage 1
74.4
93.2
Stage 2
9.1
5.9
Stage 3
7.0
12.3
Total
90.5
111.4
Gross loan balances
92.2
114.3
Negative equity
1.7
2.9
Capped collateral held in respect of possessions (included within stage 3 above)
0.1
-
2025
2024
Group
Gross ECL Net Gross ECL Net
\u00a3m
carrying Allowance carrying carrying allowance carrying
amount amount amount amount
Debt factoring advances
200.6
(1.4)
199.2
190.0
(1.4)
188.6
Other loans
45.3
-
45.3
48.2
-
48.2
Total
245.9
(1.4)
244.5
238.2
(1.4)
236.8
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
234.5
2.3
1.4
238.2
219.6
4.3
0.5
224.4
Transfers due to changes in
credit risk (note A):
From stage 1 to stage 2
(1.1)
1.1
-
-
(3.4)
3.4
-
-
From stage 1 to stage 3
-
-
-
-
(0.4)
-
0.4
-
From stage 2 to stage 1
1.0
(1.0)
-
-
2.3
(2.3)
-
-
From stage 2 to stage 3
-
(0.7)
0.7
-
-
(1.6)
1.6
-
From stage 3 to stage 2
-
1.0
(1.0)
-
-
0.3
(0.3)
-
From stage 3 to stage 1
0.4
-
(0.4)
-
0.3
-
(0.3)
-
Modification of contractual
-
-
-
-
-
-
-
-
cashflows
Increases due to origination
68.8
-
-
68.8
74.2
-
-
74.2
Decrease due to derecognition
(60.3)
(0.5)
-
(60.8)
(58.1)
(1.8)
-
(59.9)
and repayments
Write
-offs
-
-
(0.3)
(0.3)
-
-
(0.6)
(0.6)
Other movements
-
-
-
-
-
-
0.1
0.1
Gross carrying amount at 31
243.3
2.2
0.4
245.9
234.5
2.3
1.4
238.2
December
The table below provides information on movements in the impairment loss allowance for other loans and advances during the year. Debt factoring advances Debt factoring advances relate to amounts advanced to clients by SBF, the Group\u2019s debt factoring and invoice discounting business. Credit risk is predominantly managed by rigorous due diligence controls and regular monitoring of client accounts, and includes the use of concentration limits, credit reference checks and \u2018watchlists\u2019 on clients\u2019 debtors. Advances are typically made to clients only against notified invoices that are less than 90 days past due. Debt factoring and invoice discounting advances are typically secured via a legal charge against the relevant client\u2019s sales ledger. Additional security may also be taken in the form of an all assets debenture that may incorporate other unencumbered assets as well as personal guarantees. At 31 December 2025 and 31 December 2024, the fair value of the total collateral held by the Group against debt factoring and invoice discounting advances was in excess of the value of the total advances outstanding. Other loans The table below provides information on the gross carrying amount of other loans by payment due status. Other loans of \u00a344.8m (2024: \u00a348.2m), at a Group level, were advanced by SIL to customers in respect of residential properties owned by a property management holding company. The loans are secured on shares in that property management holding company and the fair value of the total collateral held is \u00a394.1m (2024: \u00a399.7m). b) Credit risk \u2013 balances with the Bank of England, debt securities and loans and advances to credit institutions The Group holds treasury investments in order to meet liquidity requirements and for general business purposes. The credit risk arising from these investments is closely monitored and managed by the Group. Collateral held for treasury assets is determined by the nature of the instrument. Loans and debt securities are generally unsecured with the exception of asset backed securities and covered bonds which are secured by pools of financial assets. For details of collateral held against debt securities see Note 14. For details of collateral held against loans and advances to credit institutions see Note 13. No collateral is held against balances with the Bank of England.
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance at 1 January
0.2
0.6
0.6
1.4
0.2
1.1
0.3
1.6
Transfers due to changes in
credit risk:
From stage 1 to stage 2
-
0.9
-
0.9
(0.1)
1.0
-
0.9
From stage 2 to stage 1
-
(0.2)
-
(0.2)
-
(0.3)
-
(0.3)
From stage 2 to stage 3
-
(0.7)
0.7
-
-
(1.0)
1.0
-
From stage 3 to stage 2
-
0.6
(0.6)
-
-
-
-
-
From stage 3 to stage 1
-
-
-
-
0.1
-
(0.1)
-
Remeasurements within existing
0.1
(0.5)
-
(0.4)
-
(0.2)
-
(0.2)
stage
Write
-offs
-
-
(0.3)
(0.3)
-
-
(0.6)
(0.6)
Loss allowance at 31 December
0.3
0.7
0.4
1.4
0.2
0.6
0.6
1.4
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Not past due
45.2
-
45.2
48.2
-
48.2
Up to 30 days
-
0.1
0.1
-
-
-
Total
45.2
0.1
45.3
48.2
-
48.2
At 31 December 2025 none of the Group or the Society\u2019s treasury assets were past due (2024: none past due). At 31 December 2025 the ECLs on the Group and the Society\u2019s treasury assets were all held as stage 1 (2024: all stage 1). At 31 December 2025 and 31 December 2024, all the Group and the Society\u2019s treasury investments, except for building society deposits (2025: \u00a3nil; 2024: \u00a30.1m) and certain collateral held (2025: \u00a3nil: 2024: \u00a30.1m), were assessed to have a probability of default (PD) of less than 3.5% (2024: 0.11%). The Group\u2019s accounting policies on impairment losses on treasury assets and how the Group assesses ECLs and PDs on treasury assets are detailed in Note 1h). At 31 December 2025 over 99.9% (2024: 99.9%) of the Group\u2019s treasury investment assets (including cash in hand and with the Bank of England and excluding exposures to a central clearing house used to clear derivatives to manage interest rate risk in line with regulation) were rated A3 or better, and for the Society over 99.9% (2024: 99.9%) were rated A3 or better. The table below provides further details of the credit ratings for both the Group and the Society\u2019s treasury investment portfolios: \u2018Unrated\u2019 in the above analysis includes an exposure to a central clearing house totalling \u00a3254.6m for the Group and Society (2024: \u00a3273.3m) used to clear derivatives to manage interest rate risk, as required by regulation, together with an exposure to subsidiary undertakings in the form of Credit Support Annex (CSA) collateral for the Society only, totalling \u00a39.0m (2024: \u00a352.2m). The Group also monitors exposure concentrations against a variety of criteria including industry sector / asset class and country of risk.
Group
Society
Rating
2025 2025 2024 2024 2025 2025 2024 2024
\u00a3m % \u00a3m % \u00a3m % \u00a3m %
Aaa
2,818.1
47.1
2,429.6
36.3
3,040.5
51.2
2,666.1
40.0
Aa1
212.6
3.6
268.2
4.0
179.2
3.0
268.2
4.0
Aa2
0.1
-
0.1
-
-
-
-
-
Aa3
2,611.1
43.6
3,605.1
53.8
2,416.1
40.7
3,336.4
50.0
A1
85.3
1.4
117.3
1.8
40.9
0.7
72.1
1.1
A2
1.1
-
1.0
-
-
-
-
-
Unrated
254.6
4.3
273.5
4.1
263.6
4.4
325.7
4.9
Total
5,982.9
100.0
6,694.8
100.0
5,940.3
100.0
6,668.5
100.0
Group
Society
Industry sector / asset class
2025 2025 2024 2024 2025 2025 2024 2024
\u00a3m % \u00a3m % \u00a3m % \u00a3m %
Cash in hand and balances with the
Bank of England
1,360.2
22.7
1,930.6
28.9
1,360.2
22.9
1,930.6
29.0
Loans and advances to banks and
building societies
353.3
5.9
414.6
6.2
304.7
5.1
397.8
6.0
Gilts
500.5
8.4
1,086.5
16.2
500.5
8.4
1,086.5
16.3
Certificates of deposit
-
-
-
-
-
-
-
-
Fixed rate bonds
1,552.0
26.0
1,274.9
19.0
1,552.0
26.2
1,274.9
19.1
Floating rate notes
11.0
0.2
-
-
-
-
-
-
Treasury bills
733.4
12.9
598.2
8.9
557.0
9.4
321.2
4.8
Covered bonds
813.5
13.6
770.1
11.5
813.5
13.7
770.1
11.5
Residential mortgage backed
619.0
10.3
619.9
9.3
852.4
14.3
887.4
13.3
securities
Total
5,982.9
100.0
6,694.8
100.0
5,940.3
100.0
6,668.5
100.0
c) Credit risk \u2013 trade receivables
The tables below provide information on movements in trade receivables during the year.
As outlined in Note 1h), the Group\u2019s accounting policy for trade receivables is to always recognise lifetime
ECLs in accordance with the simplified approach in IFRS 9. Trade receivables are therefore not allocated to
ECL stages.
Group
Society
Geographical exposure (Region)
2025 2025 2024 2024 2025 2025 2024 2024
\u00a3m % \u00a3m % \u00a3m % \u00a3m %
UK
4,344.1
72.7
5,331.5
79.7
4,388.2
73.8
5,393.6
81.0
Rest of Europe
419.7
7.0
327.9
4.9
389.7
6.6
293.3
4.4
Supranationals:
Europe
226.7
3.8
122.4
1.8
215.6
3.6
122.4
1.8
Global
504.5
8.4
528.4
7.9
504.5
8.5
528.4
7.9
Africa
56.1
0.9
28.4
0.4
56.1
0.9
28.4
0.4
Asia
163.4
2.7
135.2
2.0
163.4
2.8
135.2
2.0
South America
145.8
2.4
117.7
1.8
145.8
2.5
117.7
1.8
North America
118.8
2.0
100.2
1.5
77.0
1.3
49.5
0.7
Rest of World
3.8
0.1
3.1
-
-
-
-
-
Total
5,982.9
100.0
6,694.8
100.0
5,940.3
100.0
6,668.5
100.0
\u00a3m
Group
Society
2025
2024
2025
2024
Gross carrying amount
76.3
71.0
1.5
1.9
Loss allowance
(2.7)
(2.2)
-
-
Net carrying amount
73.6
68.8
1.5
1.9
\u00a3m
Group
Society
2025
2024
2025
2024
Loss allowance at 1 January
2.2
2.4
-
-
Net allowances made during the
year
1.4
0.8
0.1
-
Write
-offs
(0.9)
(1.0)
(0.1)
-
Loss allowance at 31 December
2.7
2.2
-
-
The table below provides information on the gross carrying amount of trade receivables by payment due
status.
\u00a3m
Group
Society
2025
2024
2025
2024
Not past due
42.6
38.3
-
-
Up to 30 days past due
18.1
19.5
0.6
0.5
31 to 120 days past due
10.1
9.5
0.5
1.0
Over 120 days past due
5.5
3.7
0.4
0.4
Total
76.3
71.0
1.5
1.9
No collateral is held against trade receivables. At 31 December 2025 the contractual amount outstanding on
trade receivables written off during the year due to there being no reasonable expectation of recovery, but
which remain subject to enforcement activity, is \u00a3nil (2024: \u00a3nil) for the Group and \u00a3nil (2024: \u00a3nil) for the
Society.
d) Credit risk \u2013 derivative financial instruments A credit exposure could arise in respect of derivative contracts entered into by the Group if the counterparty was unable to fulfil its contractual obligations. The Group addresses the risks associated with these activities by monitoring counterparty credit exposure and requiring additional collateral to be posted or returned as necessary. For all but one derivative, the only form of collateral accepted by the Group in respect of derivatives is cash. Derivatives are either transacted under International Swaps and Derivatives Association (ISDA) Master Agreements or Cleared Derivatives Execution Agreements. For swaps that are cash collateralised, no Credit (CVA) or Debit (DVA) Value Adjustments have been made in respect of credit risk in determining the fair value of these derivatives as the risk is significantly mitigated. Credit Support Annexes executed with certain counterparties in conjunction with the ISDA Master Agreement require collateral to be posted regularly, as required by specific terms and conditions of the arrangements. Due to the frequency of the posting of collateral, there is no material exposure from these minimal timing differences that would require CVA or DVA adjustments. At 31 December 2025 the Group held one derivative (2024: one) that is not fully collateralised for cash; CVA and DVA adjustments are made to the valuation of this derivative. Netting arrangements do not necessarily result in an offset of Statement of Financial Position (SoFP) assets and liabilities, as transactions are usually settled on a gross basis. The Group\u2019s legal documentation for derivative transactions does grant legal rights of set-off for those transactions with the same counterparty. Accordingly, the credit risk associated with such contracts is reduced to the extent that negative mark to market valuations on derivatives will offset positive mark to market values on derivatives. The following tables provide further detail on the net exposure to derivative transaction counterparties.
Group
2024
\u00a3m
As reported Netting Cash Net amounts
within SoFP agreements collateral after offsetting
Financial assets
Derivative financial instruments
752.1
(204.2)
(557.3)
-
Financial liabilities
Derivative financial instruments
225.1
(204.2)
(18.1)
2.8
Society
2025
\u00a3m
As reported Netting Cash Net amounts
within SoFP agreements collateral after offsetting
Financial assets
Derivative financial instruments
333.1
(189.4)
(141.3)
2.4
Financial liabilities
Derivative financial instruments
205.0
(189.4)
(14.6)
1.0
Group
2025
\u00a3m
As reported Netting Cash Net amounts
within SoFP agreements collateral after offsetting
Financial assets
Derivative financial instruments
350.8
(180.5)
(141.5)
28.8
Financial liabilities
Derivative financial instruments
186.2
(180.5)
(5.7)
-
In respect of derivative assets, there is \u00a328.8m (2024: \u00a3nil) for the Group, and \u00a32.4m (2024: \u00a3nil) for the
Society, after offsetting between the value of the derivatives and the cash collateral held. At a Group level, this
predominantly relates to the collateral arrangements for the one cross currency derivative held by the Group
where collateral is not required to be posted up to a threshold. In 2024, the cross currency derivative was in a
net liability position.
In respect of derivative liabilities, there is a net amount after offsetting of \u00a3nil (2024: \u00a32.8m) for the Group, and
\u00a31.0m (2024: \u00a33.5m) for the Society, between the value of the derivatives and the cash collateral pledged.
Society
2024
\u00a3m
As reported Netting Cash Net amounts
within SoFP agreements collateral after offsetting
Financial assets
Derivative financial instruments
743.0
(208.3)
(557.3)
-
Financial liabilities
Derivative financial instruments
282.2
(208.3)
(70.4)
3.5
", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-446": { "value": "
Movements during the year in the equity release portfolio are outlined below.
Further details on how the valuation of the equity release portfolio is derived, including the key inputs into the
calculation, are found in Note 1f) and Note 1v).
The Group holds derivative financial instruments to economically hedge the movements in fair value of the
equity release portfolio. The movement in fair value of the derivatives held to hedge the equity release portfolio
during the year was a \u00a38.1m gain (2024: \u00a321.9m gain) and is included in the Income Statement line \u2018Fair value
(losses) / gains on financial instruments mandatorily held at FVTPL\u2019.
The equity release portfolio comprises loans against which collateral is held in the form of property in the UK.
As at 31 December 2025 this collateral was valued at \u00a3480.4m (2024: \u00a3506.4m).
Group & Society
\u00a3m
2025
2024
At 1 January
277.2
293.3
Redemptions
(4.0)
(4.3)
Movements in fair value
(14.5)
(12.6)
Realised losses on redemption
(1.3)
(1.8)
Accrued interest
5.7
2.6
At 31 December
263.1
277.2
", "dimensions": { "concept": "skiptonbuilding:DisclosureOfEquityReleasePortfolioHeldAtFVTPL", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-447": { "value": "
a) Subsidiary undertakings
The net movement in investments in subsidiary undertakings during the year was as follows:
In respect of loans provided by the Society to its subsidiary undertakings, limits in place define the maximum
amount that can be advanced to each subsidiary and any changes to these limits are required to be pre-
approved by the Group Wholesale Credit Committee.
At 31 December 2025, a credit of \u00a30.1m (2024: \u00a3nil) is included within \u2018Loans to subsidiary undertakings\u2019 in the
table above, in relation to the cross-currency swap (as outlined in Note 11) for the Society. This also applies to
the Group position, which comprises the external cross currency swap, being a credit of \u00a30.1m (2024: \u00a3nil),
together with investments in joint ventures totalling \u00a313.2m (2024: \u00a311.2m) (see page 204), which in
aggregate totals \u00a313.1m (2024: \u00a311.2m) as shown per the Statement of Financial Position line \u2018Investments in
subsidiary undertakings and joint ventures\u2019.
2025
Society
\u00a3m
Shares in subsidiary
Loans to subsidiary Total
undertakings undertakings
Cost
At
1 January
183.5
403.9
587.4
Additions
-
60.3
60.3
Repayments
-
(9.5)
(9.5)
At
31 December
183.5
454.7
638.2
Provisions
At
1 January
78.1
-
78.1
At
31 December
78.1
-
78.1
Net book value
at 31 December
105.4
454.7
560.1
2024
Society
\u00a3m
Shares in subsidiary
Loans to subsidiary Total
undertakings undertakings
Cost
At
1 January
183.5
372.7
556.2
Additions
-
37.1
37.1
Repayments
-
(5.9)
(5.9)
At
31 December
183.5
403.9
587.4
Provisions
At
1 January
78.1
-
78.1
At
31 December
78.1
-
78.1
Net book value
at 31 December
105.4
403.9
509.3
At the end of the current and preceding financial year the Group held a controlling interest in the following
principal trading subsidiary undertakings:
The Group also continues to hold 100% (2024: 100%) in the former lending entity North Yorkshire Mortgages
Limited, which ceased active trading in 2021.
On 1 January 2025, Jade acquired Northwest Investments NZ Limited, for consideration of \u00a30.2m, transferring
100% ownership at that date from Skipton Investments Limited. From 1 January 2025, Northwest Investments
NZ Limited is held indirectly through the Group\u2019s investment in Jade.
All the above entities are incorporated, registered and operate in the United Kingdom except for SIL, which is
incorporated and registered in Guernsey and operates in Guernsey, Jersey and the UK; and Jade, which is
incorporated and registered in New Zealand and operates worldwide.
For the year ended 31 December 2025, the Society has provided guarantees over the liabilities of the following
subsidiary undertakings; these are thereby exempt from audit for the year ended 31 December 2025, as
permitted by Section 479A of the Companies Act 2006:
Consolidation of special purpose vehicles (SPVs)
Darrowby No. 6 plc is a securitisation vehicle formed with only nominal share capital. Skipton Covered Bonds
LLP, of which the Society is a member, was formed to guarantee payments on covered bonds that the Society
issues to the wholesale market. These SPVs are funded through loans from the Society and their activities are
carried out under the direction of the Society, in line with the transaction documentation.
Ownership Interest (%)
Name of subsidiary
Principal business activity
Registered office
2025
2024
undertaking
Connells Limited and
Estate agency and related
Cumbria House, 16
-20 Hockliffe
subsidiary undertakings
businesses
Street, Leighton Buzzard,
100
100
Bedfordshire, LU71GN
Darrowby No. 6 plc
Funding vehicle
10
th
Floor, 5 Churchill Place,
(See below)
(See below)
London, E14 5HU
Jade Software Corporation
Provider of software
5 Sir Gil Simpson Drive,
Limited and subsidiary
development services
Christchurch 8053, New Zealand
100
100
undertakings
Skipton Business Finance
Provider of debt factoring
The Bailey, Skipton, North
100
100
Limited (SBF)
services
Yorkshire, BD23 1DN
Skipton Covered Bonds
Mortgage acquisition and
The Bailey, Skipton, North
(See below)
(See below)
Limited Liability Partnership
guarantor of covered bonds
Yorkshire, BD23 1DN
Skipton Financial Services
Financial adviser
The Bailey, Skipton, North
100
100
Limited
Yorkshire, BD23 1DN
Skipton Group Holdings
Intermediate holding
The Bailey, Skipton, North
100
100
Limited (SGHL)
company
Yorkshire, BD23 1DN
Skipton International
Offshore deposit taker and
Tudor House, Le Bordage, St Peter
100
100
Limited (SIL)
lender
Port, Guernsey, GY1 6DS
Skipton Trustees Limited
Estate administration
The Bailey, Skipton, North
100
100
services
Yorkshire, BD23 1DN
\u2022 Jade Software Corporation UK Limited
\u2022 North Yorkshire Mortgages Limited
\u2022 Skipton Group Holdings Limited
\u2022 Skipton Investments Limited
\u2022 Skipton Trustees Limited
The Society is exposed to variable returns from these entities and has the ability to affect those returns in line with the transaction documentation; these SPVs therefore pass the test of control under IFRS 10 and are fully consolidated into the Group Accounts. The Society has no contractual arrangements or intention to provide additional financial or other support to these SPVs. b) Acquisitions During the year the Group, via its subsidiaries, as part of a continued commitment to strategic expansion, acquired the entities outlined below for total cash consideration of \u00a348.2m. Of the total consideration, \u00a328.8m was paid in the year, with an element deferred / contingent. \u00a37.6m is payable on the first anniversary of the acquisitions, with the second and third anniversary payments totalling \u00a311.8m, subject to certain conditions. The fair value of the deferred / contingent consideration is not materially different to the cash consideration payable. The acquisitions have been accounted for as a business combination under IFRS 3 Business Combinations. \u2022 On 2 April 2025, Connells acquired 75% membership interest in Stiles Harold Williams Partnership LLP, a real estate advisory business; obtaining control in accordance with the LLP agreement and IFRS 10 Consolidated Financial Statements. \u2022 On 3 April 2025, Connells acquired 75% membership interest in Ryden LLP, a commercial property agency; obtaining control in accordance with the LLP agreement and IFRS 10Consolidated Financial Statements. \u2022 On 29 May 2025, Connells acquired the entire share capital, and took control, of Aspire Estate Agents Limited and its subsidiary undertakings; an estate agency business based in London. \u2022 On 28 November 2025, Jade acquired the entire share capital, and took control of, fellow Christchurch- based dairy supply chain management software company, Contec Group International Ltd. The table below sets out the aggregated fair values of the identifiable assets and liabilities acquired. In accordance with IFRS 3 Business Combinations, the acquisition accounting is subject to finalisation within 12 months of the acquisition date; the amounts shown below have been updated from the provisional values that were reported in the Group\u2019s half-yearly report for the period ended 30 June 2025, to reflect the best estimates available at the reporting date.
\u00a3m
Book value
FV
Accounting
Fair value
adjustments adjustments
Assets
Loans and advances to credit institutions (note A)
8.7
-
-
8.7
Trade and other receivables (note B)
10.9
(0.2)
(0.3)
10.4
Property, plant and equipment
0.6
-
-
0.6
Right-of-use assets (note C)
-
-
3.8
3.8
Intangible assets (note D)
-
13.9
-
13.9
Total assets
20.2
13.7
3.5
37.4
Liabilities
Trade and other payables
7.7
-
0.3
8.0
Provisions
1.2
-
0.1
1.3
Deferred tax liabilities (note E)
-
3.7
-
3.7
Lease liabilities (note C)
-
-
3.7
3.7
Total liabilities
8.9
3.7
4.1
16.7
Net assets / (liabilities)
11.3
10.0
(0.6)
20.7
Fair value of net assets 20.7
Non-controlling interest (note F) (3.3)
Goodwill arising on acquisition (note G) 30.8
Total consideration 48.2
Notes
A. With respect to \u2018Loans and advances to credit institutions\u2019, amounts acquired of \u00a38.7m includes cash and cash equivalents of
\u00a38.7m.
B. Receivables acquired were recognised at fair value based on expected recoverability.
C. The Group measured the acquired lease liabilities using the present value of the remaining lease payments at the date of acquisition,
resulting in an adjustment to increase lease liabilities by \u00a33.7m. The related right-of-use assets were measured at an amount broadly
equal to the lease liabilities, resulting in an adjustment to increase right-of-use assets by \u00a33.8m.
D. The total fair value of intangible assets represents amounts in respect of software, brands, and customer contracts and
relationships. The fair value adjustments totalling \u00a313.9m reflect management\u2019s assessments, using methodologies that are in line
with industry best practice.
E. The fair value adjustment of \u00a33.7m relates to the deferred tax impact of amounts recognised at acquisition in respect of intangible
assets (see note D above).
F. At the acquisition date, the Group recognised a non-controlling interest (NCI) representing 25% of the equity in Stiles Harold Wiliams
Partnership LLP and Ryden LLP, based on the ownership structure set out in the Share Purchase Agreement. The NCI was measured
using the \u2018proportionate share of net assets\u2019 method, resulting in a recognised NCI amount of \u00a33.3m.
G. The goodwill reflects synergies, the acquired workforce, new geographical locations and business expertise; of which none is
deductible for tax purposes.
Pre-acquisition profits for the period up to the date of acquisition have been excluded from Group consolidated
earnings, as required under acquisition accounting.
From the date of acquisition, the acquired businesses contributed total income of \u00a325.4m and profit before tax
of \u00a32.9m to the Skipton Group\u2019s consolidated Income Statement for the year ended 31 December 2025.
If the results of the acquisitions were consolidated for the full financial year, as if the acquisition had taken
place at 1 January 2025, the Skipton Group\u2019s total income for the year ended 31 December 2025 would have
been \u00a31,728.3m and Skipton Group profit before tax for the year ended 31 December 2025 would have been
\u00a3277.9m; these amounts have been determined assuming all other things being equal, including an
assumption that the fair values of assets acquired would not be materially different if the acquisition date had
been 1 January 2025.
Associated transaction costs of \u00a30.7m were incurred by the Group in relation to the acquisitions. These costs
were expensed to the Income Statement as incurred and are included within \u2018Administrative expenses\u2019.
Other acquisitions
During 2025 Connells purchased a further ten minor estate agency and or/ lettings businesses, that were
individually and collectively immaterial, for total consideration of \u00a36.5m (of which \u00a31.2m is deferred),
generating goodwill of \u00a32.6m. In addition, Connells also purchased non-controlling interests in an existing
subsidiary undertaking, The Asset Management Group Limited, during the year, for cash consideration of
\u00a34.5m, taking its shareholding to 100%.
In the prior year, Connells purchased a number of small businesses for total consideration of \u00a31.5m (of which
\u00a30.2m was deferred), generating goodwill of \u00a30.5m.
c) Disposals
During the year, Connells disposed of the following businesses: Mortgage Intelligence Limited; Mortgage Next
Network Limited; Life and Easy Limited; and the Just Wills group of entities*. These businesses generated
combined revenue of \u00a37.2m (2024: \u00a37.7m), representing 1% of Connells\u2019 group revenue. The disposals did not
constitute a separate major line of business or geographical area and were therefore not presented as
discontinued operations under IFRS 5
Non-current Assets Held for Sale and Discontinued Operations
. The
disposals resulted in a gain of \u00a310.8m, which is included in the Income Statement line \u2018Other operating
income\u2019.
* The Just Wills group of entities disposed of, comprises: Allguard Legal Services Ltd; Chancery Law Services Ltd; Executry Services
Scotland Ltd; Heritage Family Estates Limited; IHLS Ltd; In Home Legal Services Ltd; Just Wills Group Limited; Just Wills Holdings Limited;
Just Wills Limited; Legal Services Probate Ltd; Legal Services UK Ltd; Redstone Wills Limited; The Universal Trust Corporation; Willcraft
Services Ltd; Willmaster Ltd; and Willmaster Storage Ltd.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-491": { "value": "a) Subsidiary undertakings The net movement in investments in subsidiary undertakings during the year was as follows: In respect of loans provided by the Society to its subsidiary undertakings, limits in place define the maximum amount that can be advanced to each subsidiary and any changes to these limits are required to be pre- approved by the Group Wholesale Credit Committee. At 31 December 2025, a credit of \u00a30.1m (2024: \u00a3nil) is included within \u2018Loans to subsidiary undertakings\u2019 in the table above, in relation to the cross-currency swap (as outlined in Note 11) for the Society. This also applies to the Group position, which comprises the external cross currency swap, being a credit of \u00a30.1m (2024: \u00a3nil), together with investments in joint ventures totalling \u00a313.2m (2024: \u00a311.2m) (see page 204), which in aggregate totals \u00a313.1m (2024: \u00a311.2m) as shown per the Statement of Financial Position line \u2018Investments in subsidiary undertakings and joint ventures\u2019. 2025
Society
\u00a3m
Shares in subsidiary
Loans to subsidiary Total
undertakings undertakings
Cost
At
1 January
183.5
403.9
587.4
Additions
-
60.3
60.3
Repayments
-
(9.5)
(9.5)
At
31 December
183.5
454.7
638.2
Provisions
At
1 January
78.1
-
78.1
At
31 December
78.1
-
78.1
Net book value
at 31 December
105.4
454.7
560.1
2024
Society
\u00a3m
Shares in subsidiary
Loans to subsidiary Total
undertakings undertakings
Cost
At
1 January
183.5
372.7
556.2
Additions
-
37.1
37.1
Repayments
-
(5.9)
(5.9)
At
31 December
183.5
403.9
587.4
Provisions
At
1 January
78.1
-
78.1
At
31 December
78.1
-
78.1
Net book value
at 31 December
105.4
403.9
509.3
At the end of the current and preceding financial year the Group held a controlling interest in the following principal trading subsidiary undertakings: The Group also continues to hold 100% (2024: 100%) in the former lending entity North Yorkshire Mortgages Limited, which ceased active trading in 2021. On 1 January 2025, Jade acquired Northwest Investments NZ Limited, for consideration of \u00a30.2m, transferring 100% ownership at that date from Skipton Investments Limited. From 1 January 2025, Northwest Investments NZ Limited is held indirectly through the Group\u2019s investment in Jade. All the above entities are incorporated, registered and operate in the United Kingdom except for SIL, which is incorporated and registered in Guernsey and operates in Guernsey, Jersey and the UK; and Jade, which is incorporated and registered in New Zealand and operates worldwide. For the year ended 31 December 2025, the Society has provided guarantees over the liabilities of the following subsidiary undertakings; these are thereby exempt from audit for the year ended 31 December 2025, as permitted by Section 479A of the Companies Act 2006: Consolidation of special purpose vehicles (SPVs) Darrowby No. 6 plc is a securitisation vehicle formed with only nominal share capital. Skipton Covered Bonds LLP, of which the Society is a member, was formed to guarantee payments on covered bonds that the Society issues to the wholesale market. These SPVs are funded through loans from the Society and their activities are carried out under the direction of the Society, in line with the transaction documentation.
Ownership Interest (%)
Name of subsidiary
Principal business activity
Registered office
2025
2024
undertaking
Connells Limited and
Estate agency and related
Cumbria House, 16
-20 Hockliffe
subsidiary undertakings
businesses
Street, Leighton Buzzard,
100
100
Bedfordshire, LU71GN
Darrowby No. 6 plc
Funding vehicle
10
th
Floor, 5 Churchill Place,
(See below)
(See below)
London, E14 5HU
Jade Software Corporation
Provider of software
5 Sir Gil Simpson Drive,
Limited and subsidiary
development services
Christchurch 8053, New Zealand
100
100
undertakings
Skipton Business Finance
Provider of debt factoring
The Bailey, Skipton, North
100
100
Limited (SBF)
services
Yorkshire, BD23 1DN
Skipton Covered Bonds
Mortgage acquisition and
The Bailey, Skipton, North
(See below)
(See below)
Limited Liability Partnership
guarantor of covered bonds
Yorkshire, BD23 1DN
Skipton Financial Services
Financial adviser
The Bailey, Skipton, North
100
100
Limited
Yorkshire, BD23 1DN
Skipton Group Holdings
Intermediate holding
The Bailey, Skipton, North
100
100
Limited (SGHL)
company
Yorkshire, BD23 1DN
Skipton International
Offshore deposit taker and
Tudor House, Le Bordage, St Peter
100
100
Limited (SIL)
lender
Port, Guernsey, GY1 6DS
Skipton Trustees Limited
Estate administration
The Bailey, Skipton, North
100
100
services
Yorkshire, BD23 1DN
\u2022 Jade Software Corporation UK Limited \u2022 North Yorkshire Mortgages Limited \u2022 Skipton Group Holdings Limited \u2022 Skipton Investments Limited \u2022 Skipton Trustees Limited The Society is exposed to variable returns from these entities and has the ability to affect those returns in line with the transaction documentation; these SPVs therefore pass the test of control under IFRS 10 and are fully consolidated into the Group Accounts. The Society has no contractual arrangements or intention to provide additional financial or other support to these SPVs. b) Acquisitions During the year the Group, via its subsidiaries, as part of a continued commitment to strategic expansion, acquired the entities outlined below for total cash consideration of \u00a348.2m. Of the total consideration, \u00a328.8m was paid in the year, with an element deferred / contingent. \u00a37.6m is payable on the first anniversary of the acquisitions, with the second and third anniversary payments totalling \u00a311.8m, subject to certain conditions. The fair value of the deferred / contingent consideration is not materially different to the cash consideration payable. The acquisitions have been accounted for as a business combination under IFRS 3 Business Combinations. \u2022 On 2 April 2025, Connells acquired 75% membership interest in Stiles Harold Williams Partnership LLP, a real estate advisory business; obtaining control in accordance with the LLP agreement and IFRS 10 Consolidated Financial Statements. \u2022 On 3 April 2025, Connells acquired 75% membership interest in Ryden LLP, a commercial property agency; obtaining control in accordance with the LLP agreement and IFRS 10Consolidated Financial Statements. \u2022 On 29 May 2025, Connells acquired the entire share capital, and took control, of Aspire Estate Agents Limited and its subsidiary undertakings; an estate agency business based in London. \u2022 On 28 November 2025, Jade acquired the entire share capital, and took control of, fellow Christchurch- based dairy supply chain management software company, Contec Group International Ltd. The table below sets out the aggregated fair values of the identifiable assets and liabilities acquired. In accordance with IFRS 3 Business Combinations, the acquisition accounting is subject to finalisation within 12 months of the acquisition date; the amounts shown below have been updated from the provisional values that were reported in the Group\u2019s half-yearly report for the period ended 30 June 2025, to reflect the best estimates available at the reporting date.
\u00a3m
Book value
FV
Accounting
Fair value
adjustments adjustments
Assets
Loans and advances to credit institutions (note A)
8.7
-
-
8.7
Trade and other receivables (note B)
10.9
(0.2)
(0.3)
10.4
Property, plant and equipment
0.6
-
-
0.6
Right-of-use assets (note C)
-
-
3.8
3.8
Intangible assets (note D)
-
13.9
-
13.9
Total assets
20.2
13.7
3.5
37.4
Liabilities
Trade and other payables
7.7
-
0.3
8.0
Provisions
1.2
-
0.1
1.3
Deferred tax liabilities (note E)
-
3.7
-
3.7
Lease liabilities (note C)
-
-
3.7
3.7
Total liabilities
8.9
3.7
4.1
16.7
Net assets / (liabilities)
11.3
10.0
(0.6)
20.7
Fair value of net assets 20.7
Non-controlling interest (note F) (3.3)
Goodwill arising on acquisition (note G) 30.8
Total consideration 48.2
Notes A. With respect to \u2018Loans and advances to credit institutions\u2019, amounts acquired of \u00a38.7m includes cash and cash equivalents of \u00a38.7m. B. Receivables acquired were recognised at fair value based on expected recoverability. C. The Group measured the acquired lease liabilities using the present value of the remaining lease payments at the date of acquisition, resulting in an adjustment to increase lease liabilities by \u00a33.7m. The related right-of-use assets were measured at an amount broadly equal to the lease liabilities, resulting in an adjustment to increase right-of-use assets by \u00a33.8m. D. The total fair value of intangible assets represents amounts in respect of software, brands, and customer contracts and relationships. The fair value adjustments totalling \u00a313.9m reflect management\u2019s assessments, using methodologies that are in line with industry best practice. E. The fair value adjustment of \u00a33.7m relates to the deferred tax impact of amounts recognised at acquisition in respect of intangible assets (see note D above). F. At the acquisition date, the Group recognised a non-controlling interest (NCI) representing 25% of the equity in Stiles Harold Wiliams Partnership LLP and Ryden LLP, based on the ownership structure set out in the Share Purchase Agreement. The NCI was measured using the \u2018proportionate share of net assets\u2019 method, resulting in a recognised NCI amount of \u00a33.3m. G. The goodwill reflects synergies, the acquired workforce, new geographical locations and business expertise; of which none is deductible for tax purposes. Pre-acquisition profits for the period up to the date of acquisition have been excluded from Group consolidated earnings, as required under acquisition accounting. From the date of acquisition, the acquired businesses contributed total income of \u00a325.4m and profit before tax of \u00a32.9m to the Skipton Group\u2019s consolidated Income Statement for the year ended 31 December 2025. If the results of the acquisitions were consolidated for the full financial year, as if the acquisition had taken place at 1 January 2025, the Skipton Group\u2019s total income for the year ended 31 December 2025 would have been \u00a31,728.3m and Skipton Group profit before tax for the year ended 31 December 2025 would have been \u00a3277.9m; these amounts have been determined assuming all other things being equal, including an assumption that the fair values of assets acquired would not be materially different if the acquisition date had been 1 January 2025. Associated transaction costs of \u00a30.7m were incurred by the Group in relation to the acquisitions. These costs were expensed to the Income Statement as incurred and are included within \u2018Administrative expenses\u2019. Other acquisitions During 2025 Connells purchased a further ten minor estate agency and or/ lettings businesses, that were individually and collectively immaterial, for total consideration of \u00a36.5m (of which \u00a31.2m is deferred), generating goodwill of \u00a32.6m. In addition, Connells also purchased non-controlling interests in an existing subsidiary undertaking, The Asset Management Group Limited, during the year, for cash consideration of \u00a34.5m, taking its shareholding to 100%. In the prior year, Connells purchased a number of small businesses for total consideration of \u00a31.5m (of which \u00a30.2m was deferred), generating goodwill of \u00a30.5m. c) Disposals During the year, Connells disposed of the following businesses: Mortgage Intelligence Limited; Mortgage Next Network Limited; Life and Easy Limited; and the Just Wills group of entities*. These businesses generated combined revenue of \u00a37.2m (2024: \u00a37.7m), representing 1% of Connells\u2019 group revenue. The disposals did not constitute a separate major line of business or geographical area and were therefore not presented as discontinued operations under IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. The disposals resulted in a gain of \u00a310.8m, which is included in the Income Statement line \u2018Other operating income\u2019. * The Just Wills group of entities disposed of, comprises: Allguard Legal Services Ltd; Chancery Law Services Ltd; Executry Services Scotland Ltd; Heritage Family Estates Limited; IHLS Ltd; In Home Legal Services Ltd; Just Wills Group Limited; Just Wills Holdings Limited; Just Wills Limited; Legal Services Probate Ltd; Legal Services UK Ltd; Redstone Wills Limited; The Universal Trust Corporation; Willcraft Services Ltd; Willmaster Ltd; and Willmaster Storage Ltd.
d) Joint ventures
At 31 December 2025, the Group held interests in the following companies that are classed as joint ventures:
* Registered office is Bickerton House, Lloyd Drive, Ellesmere Port, Cheshire CH65 9HQ
The Group\u2019s combined share of net assets and the Group\u2019s combined share of profit after tax for the above
joint venture are presented within the Statement of Financial Position and the Income Statement respectively.
The Directors reviewed the carrying value of the joint venture during the year and considered that no
impairment adjustment was required (2024: \u00a3nil).
e) Equity share investments mandatorily held at FVTPL
The Group\u2019s investments in equity shares mandatorily held at FVTPL is summarised below:
The movement during the year in the Group\u2019s equity share investments mandatorily held at FVTPL is analysed in Note 46. Unlisted investments The carrying values of the Group\u2019s equity share investments mandatorily held at FVTPL are typically based on the amounts invested by the Group or, where appropriate, on third party valuations.
Group
\u00a3m
2025
2024
Unlisted investments
18.3
16.9
Total
18.3
16.9
Ownership Interest (%)
Carrying Value (\u00a3m)
Name of investment
Principle Business Activity
Class of shares held
2025
2024
2025
2024
Cybele Solutions
Conveyancing services
Ordinary
50.0
50.0
13.2
11.2
Holdings Limited*
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-530": { "value": "a) Subsidiary undertakings The net movement in investments in subsidiary undertakings during the year was as follows: In respect of loans provided by the Society to its subsidiary undertakings, limits in place define the maximum amount that can be advanced to each subsidiary and any changes to these limits are required to be pre- approved by the Group Wholesale Credit Committee. At 31 December 2025, a credit of \u00a30.1m (2024: \u00a3nil) is included within \u2018Loans to subsidiary undertakings\u2019 in the table above, in relation to the cross-currency swap (as outlined in Note 11) for the Society. This also applies to the Group position, which comprises the external cross currency swap, being a credit of \u00a30.1m (2024: \u00a3nil), together with investments in joint ventures totalling \u00a313.2m (2024: \u00a311.2m) (see page 204), which in aggregate totals \u00a313.1m (2024: \u00a311.2m) as shown per the Statement of Financial Position line \u2018Investments in subsidiary undertakings and joint ventures\u2019. 2025
Society
\u00a3m
Shares in subsidiary
Loans to subsidiary Total
undertakings undertakings
Cost
At
1 January
183.5
403.9
587.4
Additions
-
60.3
60.3
Repayments
-
(9.5)
(9.5)
At
31 December
183.5
454.7
638.2
Provisions
At
1 January
78.1
-
78.1
At
31 December
78.1
-
78.1
Net book value
at 31 December
105.4
454.7
560.1
2024
Society
\u00a3m
Shares in subsidiary
Loans to subsidiary Total
undertakings undertakings
Cost
At
1 January
183.5
372.7
556.2
Additions
-
37.1
37.1
Repayments
-
(5.9)
(5.9)
At
31 December
183.5
403.9
587.4
Provisions
At
1 January
78.1
-
78.1
At
31 December
78.1
-
78.1
Net book value
at 31 December
105.4
403.9
509.3
At the end of the current and preceding financial year the Group held a controlling interest in the following principal trading subsidiary undertakings: The Group also continues to hold 100% (2024: 100%) in the former lending entity North Yorkshire Mortgages Limited, which ceased active trading in 2021. On 1 January 2025, Jade acquired Northwest Investments NZ Limited, for consideration of \u00a30.2m, transferring 100% ownership at that date from Skipton Investments Limited. From 1 January 2025, Northwest Investments NZ Limited is held indirectly through the Group\u2019s investment in Jade. All the above entities are incorporated, registered and operate in the United Kingdom except for SIL, which is incorporated and registered in Guernsey and operates in Guernsey, Jersey and the UK; and Jade, which is incorporated and registered in New Zealand and operates worldwide. For the year ended 31 December 2025, the Society has provided guarantees over the liabilities of the following subsidiary undertakings; these are thereby exempt from audit for the year ended 31 December 2025, as permitted by Section 479A of the Companies Act 2006: Consolidation of special purpose vehicles (SPVs) Darrowby No. 6 plc is a securitisation vehicle formed with only nominal share capital. Skipton Covered Bonds LLP, of which the Society is a member, was formed to guarantee payments on covered bonds that the Society issues to the wholesale market. These SPVs are funded through loans from the Society and their activities are carried out under the direction of the Society, in line with the transaction documentation.
Ownership Interest (%)
Name of subsidiary
Principal business activity
Registered office
2025
2024
undertaking
Connells Limited and
Estate agency and related
Cumbria House, 16
-20 Hockliffe
subsidiary undertakings
businesses
Street, Leighton Buzzard,
100
100
Bedfordshire, LU71GN
Darrowby No. 6 plc
Funding vehicle
10
th
Floor, 5 Churchill Place,
(See below)
(See below)
London, E14 5HU
Jade Software Corporation
Provider of software
5 Sir Gil Simpson Drive,
Limited and subsidiary
development services
Christchurch 8053, New Zealand
100
100
undertakings
Skipton Business Finance
Provider of debt factoring
The Bailey, Skipton, North
100
100
Limited (SBF)
services
Yorkshire, BD23 1DN
Skipton Covered Bonds
Mortgage acquisition and
The Bailey, Skipton, North
(See below)
(See below)
Limited Liability Partnership
guarantor of covered bonds
Yorkshire, BD23 1DN
Skipton Financial Services
Financial adviser
The Bailey, Skipton, North
100
100
Limited
Yorkshire, BD23 1DN
Skipton Group Holdings
Intermediate holding
The Bailey, Skipton, North
100
100
Limited (SGHL)
company
Yorkshire, BD23 1DN
Skipton International
Offshore deposit taker and
Tudor House, Le Bordage, St Peter
100
100
Limited (SIL)
lender
Port, Guernsey, GY1 6DS
Skipton Trustees Limited
Estate administration
The Bailey, Skipton, North
100
100
services
Yorkshire, BD23 1DN
\u2022 Jade Software Corporation UK Limited \u2022 North Yorkshire Mortgages Limited \u2022 Skipton Group Holdings Limited \u2022 Skipton Investments Limited \u2022 Skipton Trustees Limited The Society is exposed to variable returns from these entities and has the ability to affect those returns in line with the transaction documentation; these SPVs therefore pass the test of control under IFRS 10 and are fully consolidated into the Group Accounts. The Society has no contractual arrangements or intention to provide additional financial or other support to these SPVs. b) Acquisitions During the year the Group, via its subsidiaries, as part of a continued commitment to strategic expansion, acquired the entities outlined below for total cash consideration of \u00a348.2m. Of the total consideration, \u00a328.8m was paid in the year, with an element deferred / contingent. \u00a37.6m is payable on the first anniversary of the acquisitions, with the second and third anniversary payments totalling \u00a311.8m, subject to certain conditions. The fair value of the deferred / contingent consideration is not materially different to the cash consideration payable. The acquisitions have been accounted for as a business combination under IFRS 3 Business Combinations. \u2022 On 2 April 2025, Connells acquired 75% membership interest in Stiles Harold Williams Partnership LLP, a real estate advisory business; obtaining control in accordance with the LLP agreement and IFRS 10 Consolidated Financial Statements. \u2022 On 3 April 2025, Connells acquired 75% membership interest in Ryden LLP, a commercial property agency; obtaining control in accordance with the LLP agreement and IFRS 10Consolidated Financial Statements. \u2022 On 29 May 2025, Connells acquired the entire share capital, and took control, of Aspire Estate Agents Limited and its subsidiary undertakings; an estate agency business based in London. \u2022 On 28 November 2025, Jade acquired the entire share capital, and took control of, fellow Christchurch- based dairy supply chain management software company, Contec Group International Ltd. The table below sets out the aggregated fair values of the identifiable assets and liabilities acquired. In accordance with IFRS 3 Business Combinations, the acquisition accounting is subject to finalisation within 12 months of the acquisition date; the amounts shown below have been updated from the provisional values that were reported in the Group\u2019s half-yearly report for the period ended 30 June 2025, to reflect the best estimates available at the reporting date.
\u00a3m
Book value
FV
Accounting
Fair value
adjustments adjustments
Assets
Loans and advances to credit institutions (note A)
8.7
-
-
8.7
Trade and other receivables (note B)
10.9
(0.2)
(0.3)
10.4
Property, plant and equipment
0.6
-
-
0.6
Right-of-use assets (note C)
-
-
3.8
3.8
Intangible assets (note D)
-
13.9
-
13.9
Total assets
20.2
13.7
3.5
37.4
Liabilities
Trade and other payables
7.7
-
0.3
8.0
Provisions
1.2
-
0.1
1.3
Deferred tax liabilities (note E)
-
3.7
-
3.7
Lease liabilities (note C)
-
-
3.7
3.7
Total liabilities
8.9
3.7
4.1
16.7
Net assets / (liabilities)
11.3
10.0
(0.6)
20.7
Fair value of net assets 20.7
Non-controlling interest (note F) (3.3)
Goodwill arising on acquisition (note G) 30.8
Total consideration 48.2
Notes A. With respect to \u2018Loans and advances to credit institutions\u2019, amounts acquired of \u00a38.7m includes cash and cash equivalents of \u00a38.7m. B. Receivables acquired were recognised at fair value based on expected recoverability. C. The Group measured the acquired lease liabilities using the present value of the remaining lease payments at the date of acquisition, resulting in an adjustment to increase lease liabilities by \u00a33.7m. The related right-of-use assets were measured at an amount broadly equal to the lease liabilities, resulting in an adjustment to increase right-of-use assets by \u00a33.8m. D. The total fair value of intangible assets represents amounts in respect of software, brands, and customer contracts and relationships. The fair value adjustments totalling \u00a313.9m reflect management\u2019s assessments, using methodologies that are in line with industry best practice. E. The fair value adjustment of \u00a33.7m relates to the deferred tax impact of amounts recognised at acquisition in respect of intangible assets (see note D above). F. At the acquisition date, the Group recognised a non-controlling interest (NCI) representing 25% of the equity in Stiles Harold Wiliams Partnership LLP and Ryden LLP, based on the ownership structure set out in the Share Purchase Agreement. The NCI was measured using the \u2018proportionate share of net assets\u2019 method, resulting in a recognised NCI amount of \u00a33.3m. G. The goodwill reflects synergies, the acquired workforce, new geographical locations and business expertise; of which none is deductible for tax purposes. Pre-acquisition profits for the period up to the date of acquisition have been excluded from Group consolidated earnings, as required under acquisition accounting. From the date of acquisition, the acquired businesses contributed total income of \u00a325.4m and profit before tax of \u00a32.9m to the Skipton Group\u2019s consolidated Income Statement for the year ended 31 December 2025. If the results of the acquisitions were consolidated for the full financial year, as if the acquisition had taken place at 1 January 2025, the Skipton Group\u2019s total income for the year ended 31 December 2025 would have been \u00a31,728.3m and Skipton Group profit before tax for the year ended 31 December 2025 would have been \u00a3277.9m; these amounts have been determined assuming all other things being equal, including an assumption that the fair values of assets acquired would not be materially different if the acquisition date had been 1 January 2025. Associated transaction costs of \u00a30.7m were incurred by the Group in relation to the acquisitions. These costs were expensed to the Income Statement as incurred and are included within \u2018Administrative expenses\u2019. Other acquisitions During 2025 Connells purchased a further ten minor estate agency and or/ lettings businesses, that were individually and collectively immaterial, for total consideration of \u00a36.5m (of which \u00a31.2m is deferred), generating goodwill of \u00a32.6m. In addition, Connells also purchased non-controlling interests in an existing subsidiary undertaking, The Asset Management Group Limited, during the year, for cash consideration of \u00a34.5m, taking its shareholding to 100%. In the prior year, Connells purchased a number of small businesses for total consideration of \u00a31.5m (of which \u00a30.2m was deferred), generating goodwill of \u00a30.5m. c) Disposals During the year, Connells disposed of the following businesses: Mortgage Intelligence Limited; Mortgage Next Network Limited; Life and Easy Limited; and the Just Wills group of entities*. These businesses generated combined revenue of \u00a37.2m (2024: \u00a37.7m), representing 1% of Connells\u2019 group revenue. The disposals did not constitute a separate major line of business or geographical area and were therefore not presented as discontinued operations under IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. The disposals resulted in a gain of \u00a310.8m, which is included in the Income Statement line \u2018Other operating income\u2019. * The Just Wills group of entities disposed of, comprises: Allguard Legal Services Ltd; Chancery Law Services Ltd; Executry Services Scotland Ltd; Heritage Family Estates Limited; IHLS Ltd; In Home Legal Services Ltd; Just Wills Group Limited; Just Wills Holdings Limited; Just Wills Limited; Legal Services Probate Ltd; Legal Services UK Ltd; Redstone Wills Limited; The Universal Trust Corporation; Willcraft Services Ltd; Willmaster Ltd; and Willmaster Storage Ltd. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCompositionOfGroupExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-448": { "value": "d) Joint ventures At 31 December 2025, the Group held interests in the following companies that are classed as joint ventures: * Registered office is Bickerton House, Lloyd Drive, Ellesmere Port, Cheshire CH65 9HQ The Group\u2019s combined share of net assets and the Group\u2019s combined share of profit after tax for the above joint venture are presented within the Statement of Financial Position and the Income Statement respectively. The Directors reviewed the carrying value of the joint venture during the year and considered that no impairment adjustment was required (2024: \u00a3nil).
Ownership Interest (%)
Carrying Value (\u00a3m)
Name of investment
Principle Business Activity
Class of shares held
2025
2024
2025
2024
Cybele Solutions
Conveyancing services
Ordinary
50.0
50.0
13.2
11.2
Holdings Limited*
", "dimensions": { "concept": "ifrs-full:DisclosureOfJointVenturesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-449": { "value": "The Statement of Financial Position includes the following amounts in respect of assets held for sale: On 1 March 2025 the Group reclassified freehold land and buildings to \u2018Assets held for sale\u2019 under IFRS 5Non- current Assets Held for Sale and Discontinued Operations. This property was previously held partly within \u2018Property, plant and equipment\u2019 and partly within \u2018Investment property\u2019. The property is being actively marketed for sale, which management expects to complete within 12 months. No gain or loss arose in the year as a result of this reclassification. The assets held for sale are presented within the \u2018Society\u2019 reportable segment for segmental reporting purposes.
Group
Society
\u00a3m
2025
2024
2025
2024
Assets held for sale
3.7
-
3.7
-
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-492": { "value": "The Statement of Financial Position includes the following amounts in respect of assets held for sale: On 1 March 2025 the Group reclassified freehold land and buildings to \u2018Assets held for sale\u2019 under IFRS 5Non- current Assets Held for Sale and Discontinued Operations. This property was previously held partly within \u2018Property, plant and equipment\u2019 and partly within \u2018Investment property\u2019. The property is being actively marketed for sale, which management expects to complete within 12 months. No gain or loss arose in the year as a result of this reclassification. The assets held for sale are presented within the \u2018Society\u2019 reportable segment for segmental reporting purposes.
Group
Society
\u00a3m
2025
2024
2025
2024
Assets held for sale
3.7
-
3.7
-
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncurrentAssetsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-450": { "value": "
2025
2024
Group
Land and
Equipment,
Land and
Equipment,
\u00a3m buildings fixtures Total buildings fixtures Total
and fittings
and fittings
Cost
At 1 January
115.6
93.9
209.5
110.8
87.9
198.7
Additions
6.4
7.5
13.9
8.9
13.1
22.0
Disposals
(1.2)
(7.5)
(8.7)
(3.7)
(6.9)
(10.6)
Acquisition of subsidiary undertakings
0.1
0.5
0.6
-
-
-
Foreign exchange movements on
translation
-
-
-
-
(0.2)
(0.2)
Reclassification to assets held for sale
(0.8)
-
(0.8)
-
-
-
Reclassification to investment property
(0.1)
-
(0.1)
(0.4)
-
(0.4)
At 31 December
120.0
94.4
214.4
115.6
93.9
209.5
Depreciation
At 1 January
61.0
67.6
128.6
58.4
65.8
124.2
Charge for the year
6.4
9.0
15.4
5.9
8.4
14.3
Impairment charge
-
1.0
1.0
-
-
-
Disposals
(0.9)
(6.5)
(7.4)
(3.2)
(6.4)
(9.6)
Foreign exchange movements on
translation
-
(0.1)
(0.1)
-
(0.2)
(0.2)
Reclassification to assets held for sale
(0.2)
-
(0.2)
-
-
-
Reclassification to investment property
-
-
-
(0.1)
-
(0.1)
At 31 December
66.3
71.0
137.3
61.0
67.6
128.6
Net book value at 1 January
54.6
26.3
80.9
52.4
22.1
74.5
Net book value at 31 December
53.7
23.4
77.1
54.6
26.3
80.9
2025
2024
Society
Land and
Equipment,
Land and
Equipment,
\u00a3m buildings fixtures Total buildings fixtures Total
and fittings
and fittings
Cost
At 1 January
57.1
21.5
78.6
55.1
17.5
72.6
Additions
3.0
3.2
6.2
4.5
6.0
10.5
Disposals
(0.6)
(0.7)
(1.3)
(2.1)
(2.0)
(4.1)
Reclassification to assets held for sale
(0.8)
-
(0.8)
-
-
-
Reclassification to investment property
(0.1)
-
(0.1)
(0.4)
-
(0.4)
At 31 December
58.6
24.0
82.6
57.1
21.5
78.6
Depreciation
At 1 January
23.6
11.9
35.5
22.6
11.0
33.6
Charge for the year
2.8
3.5
6.3
2.8
2.9
5.7
Disposals
(0.6)
(0.7)
(1.3)
(1.7)
(2.0)
(3.7)
Reclassification to assets held for sale
(0.2)
-
(0.2)
-
-
-
Reclassification to investment property
-
-
-
(0.1)
-
(0.1)
At 31 December
25.6
14.7
40.3
23.6
11.9
35.5
Net book value at 1 January
33.5
9.6
43.1
32.5
6.5
39.0
Net book value at 31 December
33.0
9.3
42.3
33.5
9.6
43.1
Property, plant and equipment additions (Group and Society) include \u00a30.6m (2024: \u00a30.5m) in land and
buildings and \u00a3nil (2024: \u00a3nil) in equipment, fixtures and fittings in relation to Capital Work in Progress (CWIP),
relating mainly to branch refurbishment projects.
As outlined in Note 21, during the year, property, plant and equipment with a total carrying value of \u00a30.6m was
reclassified as held for sale, and therefore presented separately within the Statement of Financial Position.
The net book value of land and buildings comprises:
Group
Society
\u00a3m
2025
2024
2025
2024
Freehold
36.7
38.3
25.0
25.6
Long leasehold
2.6
2.7
2.6
2.7
Short leasehold
14.4
13.6
5.4
5.2
Total
53.7
54.6
33.0
33.5
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-451": { "value": "The Group\u2019s leases relate mainly to branch premises operated by the Society and by Connells. The Group\u2019s leases are typically negotiated on an individual basis and thus include a wide variety of terms and conditions, including options to extend or terminate. There are no significant restrictions or covenants, residual value guarantees or sale and leaseback transactions. As at 31 December 2025, the lease liability (see Note 31) is considered by the Group to represent a reliable estimate of the present value of the future cash outflows to which the Group is exposed. A number of the Group\u2019s leased properties are sublet, in full or in part, by the Group. For the year ended 31 December 2025, other operating income includes \u00a30.1m (2024: \u00a30.1m) (Group) and \u00a3nil (2024: \u00a3nil) (Society) relating to the subleasing of properties accounted for as right-of-use assets. For details of the Group\u2019s lease liabilities, see Note 31. For further details of the Group\u2019s lease expenses in the year, see Note 7.
2025
2024
Group
Land and
Equipment,
Land and
Equipment,
\u00a3m buildings fixtures Total buildings fixtures Total
and fittings
and fittings
Cost
Balance at 1 January
163.8
22.6
186.4
160.4
21.3
181.7
Additions
25.2
15.7
40.9
17.1
2.2
19.3
Acquisition of subsidiary undertakings
4.0
-
4.0
-
-
-
Lease modifications and
remeasurements
13.7
1.0
14.7
11.2
-
11.2
Disposals
(30.6)
(0.2)
(30.8)
(24.7)
(0.9)
(25.6)
Foreign exchange movements on
translation
(0.1)
-
(0.1)
(0.2)
-
(0.2)
At 31 December
176.0
39.1
215.1
163.8
22.6
186.4
Depreciation
Balance at 1 January
81.3
14.7
96.0
70.9
9.9
80.8
Charge for the year
32.3
7.0
39.3
32.1
5.6
37.7
Impairment charge
1.8
0.1
1.9
2.3
0.1
2.4
Disposals
(28.8)
(0.2)
(29.0)
(23.8)
(0.9)
(24.7)
Foreign exchange movements on
translation
(0.1)
-
(0.1)
(0.2)
-
(0.2)
At 31 December
86.5
21.6
108.1
81.3
14.7
96.0
Net book value at 1 January
82.5
7.9
90.4
89.5
11.4
100.9
Net book value at 31 December
89.5
17.5
107.0
82.5
7.9
90.4
2025
2024
Society
Land and
Equipment,
Land and
Equipment,
\u00a3m buildings fixtures Total buildings fixtures Total
and fittings
and fittings
Cost
At 1 January
18.9
-
18.9
18.9
0.2
19.1
Additions
1.8
-
1.8
0.8
-
0.8
Disposals
(2.8)
-
(2.8)
(0.8)
(0.2)
(1.0)
At 31 December
17.9
-
17.9
18.9
-
18.9
Depreciation
At 1 January
10.6
-
10.6
9.0
0.1
9.1
Charge for the year
2.1
-
2.1
2.2
-
2.2
Disposals
(2.8)
-
(2.8)
(0.6)
(0.1)
(0.7)
At 31 December
9.9
-
9.9
10.6
-
10.6
Net book value at 1 January
8.3
-
8.3
9.9
0.1
10.0
Net book value at 31 December
8.0
-
8.0
8.3
-
8.3
", "dimensions": { "concept": "ifrs-full:DisclosureOfQuantitativeInformationAboutRightofuseAssetsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-452": { "value": "All investment property relates to property purchased by the Society and is either unoccupied by the Society or relates to branches where part of the property is subleased. As outlined in Note 21, during the year, investment property with a total carrying value of \u00a33.1m was reclassified as held for sale, and therefore presented separately within the Statement of Financial Position. The amount of rental income from investment property recognised in the Income Statement during the year was \u00a30.2m (2024: \u00a31.9m) for the Group and Society. The aggregate estimated market value of investment properties is set out in the table below: The estimated market value of the investment properties has been determined by an appropriately qualified internal valuer, supported by external valuations where appropriate, in accordance with RICS Appraisal and Valuation Standards and is an indication of fair value. This fair value measurement is categorised as a Level 3 fair value measurement, as described in Note 46b). For the majority of the Group\u2019s investment properties, fair value is estimated using the market valuation approach which uses prices and other relevant information generated by market transactions involving comparable properties. Where comparable transactions may not be available, the Group may also consider a discounted cash flow technique which considers the present value of the net cash flows to be generated from the property, taking into account expected rental growth, void periods and rent-free periods. The expected net cash flows are discounted using risk-adjusted discount rates. The Directors have assessed the carrying value of the investment properties compared to their fair value and have concluded that no impairment charge should be recognised for the year (2024: \u00a3nil).
Group & Society
\u00a3m
2025
2024
Cost
At 1 January
25.1
25.1
Additions
0.1
-
Disposals
(0.1)
(0.4)
Reclassification to assets held for sale
(22.8)
-
Reclassification from property, plant and equipment
0.1
0.4
At 31December
2.4
25.1
Depreciation
At 1 January
20.6
20.0
Charge for the year
0.3
0.6
Impairment credit
(0.1)
-
Disposals
(0.1)
(0.1)
Reclassification to assets held for sale
(19.7)
-
Reclassification from property, plant and equipment
-
0.1
At 31 December
1.0
20.6
Net book value at 1 January
4.5
5.1
Net book value at 31 December
1.4
4.5
Group & Society
\u00a3m
2025
2024
Market value of investment property
2.1
5.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentPropertyExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-453": { "value": "
Goodwill acquired in a business combination is allocated at acquisition to the cash generating unit (CGU), or
group of CGUs, that is expected to benefit from that business combination (as further described in Note 1e));
at Skipton Group level, the allocation of goodwill typically reflects the Group\u2019s operating segments. The Group\u2019s
reportable segments are currently assessed and presented at the operating entity level and goodwill held by
the Group is allocated accordingly; when testing goodwill held by the Group for impairment at the consolidated
level, amounts relating to CGUs within the Connells business are therefore aggregated.
The carrying value of goodwill held by the Group has been allocated as follows:
Group
Society
\u00a3m
2025
2024
2025
2024
Goodwill
249.9
218.5
-
-
Other intangible assets
127.7
92.9
8.3
4.2
Total intangible assets
377.6
311.4
8.3
4.2
Goodwill
Group
\u00a3m
2025
2024
Cost, less amortisation to 1 January 2004
At 1 January
231.0
230.2
Acquisitions of subsidiary undertakings and business units (Note 20b))
33.2
0.5
Revaluation of put options
0.8
0.3
Disposal of subsidiary undertakings
(2.6)
-
At 31 December
262.4
231.0
Impairment losses
At 1 January
12.5
12.5
At 31 December
12.5
12.5
Net book value at 1 January
218.5
217.7
Net book value at 31 December
249.9
218.5
Carrying value of goodwill
2025 (\u00a3m)
2024 (\u00a3m)
Operating Segment
Cost of
Accumulated
Carrying Cost of
Accumulated
Carrying
goodwill impairment value goodwill impairment value
Connells
244.9
7.5
237.4
219.7
7.5
212.2
Other
17.5
5.0
12.5
11.3
5.0
6.3
Total goodwill
262.4
12.5
249.9
231.0
12.5
218.5
Based upon the Directors\u2019 assessment of recoverable amounts, the Directors have concluded that no impairment of goodwill or brands is required to be recognised in 2025 (2024: \u00a3nil). Sensitivity disclosures are provided below. The recoverable amounts of the operating segments are determined by consideration of value in use calculations. The key assumptions for the value in use calculations are those regarding cash flows, discount rates and growth rates. The cash flows are derived from the most recent corporate plans for the next five years, which take into account the risks inherent in each of the segments. The cash flows are extrapolated for subsequent years indefinitely (or a specific number of years where circumstances dictate), to reflect that the underlying businesses are held for long-term investment, based on a long-term growth rate of 3.0% (2024: 3.0%) or specific growth rates where circumstances dictate. The cash flows from the corporate plans are based upon the following key drivers: In addition to the key drivers outlined above, the preparation of the corporate plan of Connells, the segment to which the majority of goodwill held by the Group is allocated, requires the Directors to take into account various other factors underpinning the UK housing market. These include, but are not limited to, expectations of Connells\u2019 future market share and projected average fees achievable in relation to second hand house sales. Connells\u2019 corporate plan is subject to robust scrutiny and challenge by the Connells and Society boards. The Group estimates discount rates based upon the weighted average cost of capital which is adjusted to take account of the market risks associated with each segment. The pre-tax discount rates are as follows: Sensitivity disclosures For goodwill and brands held by the Group, the impairment assessment is typically carried out at the operating segment level (as described in Note 1e)). For each segment to which goodwill and brands are allocated, the impairment test compares the carrying value against the segment\u2019s recoverable amount. The segment\u2019s recoverable amount is determined as the higher of a) its fair value less costs to sell and b) its value in use; value in use is determined by discounting the forecast future cash flows of the segment to present value. There is significant headroom in relation to all the CGUs and no reasonably possible alternative assumptions in relation to any of the key inputs used would result in impairment.
Operating Segment
Key drivers
Connells
Volume of UK property transactions, house price inflation, level of unemployment and
interest rates
Other
Volume of new business, arrears levels, level of unemployment and interest rates
Operating Segment
2025 (%)
2024 (%)
Connells
16
17
Other
12
12
Other intangible asset additions include \u00a323.2m (2024: \u00a37.8m) for the Group and \u00a33.1m (2024: \u00a34.0m) for the
Society in relation to Capital Work in Progress (CWIP), relating to the ongoing Digital Transformation project
for the Society, specifically App and portal enhancements, and in relation to various projects to upgrade IT
capability within Connells. The net book value of other intangible assets comprises:
The following table provides a breakdown of the carrying value of brands (which are deemed to have an
indefinite useful life) within the Connells and Other operating segments:
Other intangible assets
Group
Society
\u00a3m
2025
2024
2025
2024
Cost
At 1 January
272.8
260.1
5.3
1.3
Acquisition of subsidiary undertakings
16.0
-
-
-
Acquisition of other business assets
1.4
1.1
-
-
Additions
33.8
14.9
4.1
4.0
Foreign exchange movements on translation
(1.4)
(3.1)
-
-
Disposals
(0.8)
(0.2)
-
-
Disposal of subsidiaries
(1.7)
-
-
-
At 31 December
320.1
272.8
9.4
5.3
Amortisation and impairment
At 1 January
179.9
164.6
1.1
1.1
Amortisation charge for the year
13.2
17.4
-
-
Impairment charge
2.8
0.7
-
-
Foreign exchange movements on translation
(1.0)
(2.6)
-
-
Disposals
(0.8)
(0.2)
-
-
Disposal of subsidiaries
(1.7)
-
-
-
At 31 December
192.4
179.9
1.1
1.1
Net book value at 1 January
92.9
95.5
4.2
0.2
Net book value at 31 December
127.7
92.9
8.3
4.2
Group
Society
\u00a3m
2025
2024
2025
2024
Brands
65.7
61.2
-
-
Customer contracts and relationships
11.0
10.5
-
-
Computer software and databases
51.0
21.2
8.3
4.2
Total
127.7
92.9
8.3
4.2
\u00a3m
2025
2024
Aspire Estate Agents Limited
1.5
-
Contec Group International Ltd
0.3
-
Countrywide Estate Agents Limited
42.6
42.6
Gascoigne Halman Group Limited
3.0
3.0
Lambert Smith Hampton Group Limited
12.1
12.1
Peter Alan Limited
2.3
2.3
RMS Estate Agents Limited
1.2
1.2
Ryden LLP
1.1
-
Stiles Harold Williams Partnership LLP
1.4
-
Tylers Property Partnership Limited
0.2
-
Total brands
65.7
61.2
Goodwill
249.9
218.5
Total goodwill and brands
315.6
279.7
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-493": { "value": "Goodwill acquired in a business combination is allocated at acquisition to the cash generating unit (CGU), or group of CGUs, that is expected to benefit from that business combination (as further described in Note 1e)); at Skipton Group level, the allocation of goodwill typically reflects the Group\u2019s operating segments. The Group\u2019s reportable segments are currently assessed and presented at the operating entity level and goodwill held by the Group is allocated accordingly; when testing goodwill held by the Group for impairment at the consolidated level, amounts relating to CGUs within the Connells business are therefore aggregated. The carrying value of goodwill held by the Group has been allocated as follows:
Group
Society
\u00a3m
2025
2024
2025
2024
Goodwill
249.9
218.5
-
-
Other intangible assets
127.7
92.9
8.3
4.2
Total intangible assets
377.6
311.4
8.3
4.2
Goodwill
Group
\u00a3m
2025
2024
Cost, less amortisation to 1 January 2004
At 1 January
231.0
230.2
Acquisitions of subsidiary undertakings and business units (Note 20b))
33.2
0.5
Revaluation of put options
0.8
0.3
Disposal of subsidiary undertakings
(2.6)
-
At 31 December
262.4
231.0
Impairment losses
At 1 January
12.5
12.5
At 31 December
12.5
12.5
Net book value at 1 January
218.5
217.7
Net book value at 31 December
249.9
218.5
Carrying value of goodwill
2025 (\u00a3m)
2024 (\u00a3m)
Operating Segment
Cost of
Accumulated
Carrying Cost of
Accumulated
Carrying
goodwill impairment value goodwill impairment value
Connells
244.9
7.5
237.4
219.7
7.5
212.2
Other
17.5
5.0
12.5
11.3
5.0
6.3
Total goodwill
262.4
12.5
249.9
231.0
12.5
218.5
Based upon the Directors\u2019 assessment of recoverable amounts, the Directors have concluded that no impairment of goodwill or brands is required to be recognised in 2025 (2024: \u00a3nil). Sensitivity disclosures are provided below. The recoverable amounts of the operating segments are determined by consideration of value in use calculations. The key assumptions for the value in use calculations are those regarding cash flows, discount rates and growth rates. The cash flows are derived from the most recent corporate plans for the next five years, which take into account the risks inherent in each of the segments. The cash flows are extrapolated for subsequent years indefinitely (or a specific number of years where circumstances dictate), to reflect that the underlying businesses are held for long-term investment, based on a long-term growth rate of 3.0% (2024: 3.0%) or specific growth rates where circumstances dictate. The cash flows from the corporate plans are based upon the following key drivers: In addition to the key drivers outlined above, the preparation of the corporate plan of Connells, the segment to which the majority of goodwill held by the Group is allocated, requires the Directors to take into account various other factors underpinning the UK housing market. These include, but are not limited to, expectations of Connells\u2019 future market share and projected average fees achievable in relation to second hand house sales. Connells\u2019 corporate plan is subject to robust scrutiny and challenge by the Connells and Society boards. The Group estimates discount rates based upon the weighted average cost of capital which is adjusted to take account of the market risks associated with each segment. The pre-tax discount rates are as follows: Sensitivity disclosures For goodwill and brands held by the Group, the impairment assessment is typically carried out at the operating segment level (as described in Note 1e)). For each segment to which goodwill and brands are allocated, the impairment test compares the carrying value against the segment\u2019s recoverable amount. The segment\u2019s recoverable amount is determined as the higher of a) its fair value less costs to sell and b) its value in use; value in use is determined by discounting the forecast future cash flows of the segment to present value. There is significant headroom in relation to all the CGUs and no reasonably possible alternative assumptions in relation to any of the key inputs used would result in impairment.
Operating Segment
Key drivers
Connells
Volume of UK property transactions, house price inflation, level of unemployment and
interest rates
Other
Volume of new business, arrears levels, level of unemployment and interest rates
Operating Segment
2025 (%)
2024 (%)
Connells
16
17
Other
12
12
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-522": { "value": "Goodwill acquired in a business combination is allocated at acquisition to the cash generating unit (CGU), or group of CGUs, that is expected to benefit from that business combination (as further described in Note 1e)); at Skipton Group level, the allocation of goodwill typically reflects the Group\u2019s operating segments. The Group\u2019s reportable segments are currently assessed and presented at the operating entity level and goodwill held by the Group is allocated accordingly; when testing goodwill held by the Group for impairment at the consolidated level, amounts relating to CGUs within the Connells business are therefore aggregated. The carrying value of goodwill held by the Group has been allocated as follows:
Group
Society
\u00a3m
2025
2024
2025
2024
Goodwill
249.9
218.5
-
-
Other intangible assets
127.7
92.9
8.3
4.2
Total intangible assets
377.6
311.4
8.3
4.2
Goodwill
Group
\u00a3m
2025
2024
Cost, less amortisation to 1 January 2004
At 1 January
231.0
230.2
Acquisitions of subsidiary undertakings and business units (Note 20b))
33.2
0.5
Revaluation of put options
0.8
0.3
Disposal of subsidiary undertakings
(2.6)
-
At 31 December
262.4
231.0
Impairment losses
At 1 January
12.5
12.5
At 31 December
12.5
12.5
Net book value at 1 January
218.5
217.7
Net book value at 31 December
249.9
218.5
Carrying value of goodwill
2025 (\u00a3m)
2024 (\u00a3m)
Operating Segment
Cost of
Accumulated
Carrying Cost of
Accumulated
Carrying
goodwill impairment value goodwill impairment value
Connells
244.9
7.5
237.4
219.7
7.5
212.2
Other
17.5
5.0
12.5
11.3
5.0
6.3
Total goodwill
262.4
12.5
249.9
231.0
12.5
218.5
Based upon the Directors\u2019 assessment of recoverable amounts, the Directors have concluded that no impairment of goodwill or brands is required to be recognised in 2025 (2024: \u00a3nil). Sensitivity disclosures are provided below. The recoverable amounts of the operating segments are determined by consideration of value in use calculations. The key assumptions for the value in use calculations are those regarding cash flows, discount rates and growth rates. The cash flows are derived from the most recent corporate plans for the next five years, which take into account the risks inherent in each of the segments. The cash flows are extrapolated for subsequent years indefinitely (or a specific number of years where circumstances dictate), to reflect that the underlying businesses are held for long-term investment, based on a long-term growth rate of 3.0% (2024: 3.0%) or specific growth rates where circumstances dictate. The cash flows from the corporate plans are based upon the following key drivers: In addition to the key drivers outlined above, the preparation of the corporate plan of Connells, the segment to which the majority of goodwill held by the Group is allocated, requires the Directors to take into account various other factors underpinning the UK housing market. These include, but are not limited to, expectations of Connells\u2019 future market share and projected average fees achievable in relation to second hand house sales. Connells\u2019 corporate plan is subject to robust scrutiny and challenge by the Connells and Society boards. The Group estimates discount rates based upon the weighted average cost of capital which is adjusted to take account of the market risks associated with each segment. The pre-tax discount rates are as follows: Sensitivity disclosures For goodwill and brands held by the Group, the impairment assessment is typically carried out at the operating segment level (as described in Note 1e)). For each segment to which goodwill and brands are allocated, the impairment test compares the carrying value against the segment\u2019s recoverable amount. The segment\u2019s recoverable amount is determined as the higher of a) its fair value less costs to sell and b) its value in use; value in use is determined by discounting the forecast future cash flows of the segment to present value. There is significant headroom in relation to all the CGUs and no reasonably possible alternative assumptions in relation to any of the key inputs used would result in impairment.
Operating Segment
Key drivers
Connells
Volume of UK property transactions, house price inflation, level of unemployment and
interest rates
Other
Volume of new business, arrears levels, level of unemployment and interest rates
Operating Segment
2025 (%)
2024 (%)
Connells
16
17
Other
12
12
Other intangible asset additions include \u00a323.2m (2024: \u00a37.8m) for the Group and \u00a33.1m (2024: \u00a34.0m) for the Society in relation to Capital Work in Progress (CWIP), relating to the ongoing Digital Transformation project for the Society, specifically App and portal enhancements, and in relation to various projects to upgrade IT capability within Connells. The net book value of other intangible assets comprises: The following table provides a breakdown of the carrying value of brands (which are deemed to have an indefinite useful life) within the Connells and Other operating segments: Other intangible assets
Group
Society
\u00a3m
2025
2024
2025
2024
Cost
At 1 January
272.8
260.1
5.3
1.3
Acquisition of subsidiary undertakings
16.0
-
-
-
Acquisition of other business assets
1.4
1.1
-
-
Additions
33.8
14.9
4.1
4.0
Foreign exchange movements on translation
(1.4)
(3.1)
-
-
Disposals
(0.8)
(0.2)
-
-
Disposal of subsidiaries
(1.7)
-
-
-
At 31 December
320.1
272.8
9.4
5.3
Amortisation and impairment
At 1 January
179.9
164.6
1.1
1.1
Amortisation charge for the year
13.2
17.4
-
-
Impairment charge
2.8
0.7
-
-
Foreign exchange movements on translation
(1.0)
(2.6)
-
-
Disposals
(0.8)
(0.2)
-
-
Disposal of subsidiaries
(1.7)
-
-
-
At 31 December
192.4
179.9
1.1
1.1
Net book value at 1 January
92.9
95.5
4.2
0.2
Net book value at 31 December
127.7
92.9
8.3
4.2
Group
Society
\u00a3m
2025
2024
2025
2024
Brands
65.7
61.2
-
-
Customer contracts and relationships
11.0
10.5
-
-
Computer software and databases
51.0
21.2
8.3
4.2
Total
127.7
92.9
8.3
4.2
2025 2024 Aspire Estate Agents Limited 1.5 - Contec Group International Ltd 0.3 - Countrywide Estate Agents Limited 42.6 42.6 Gascoigne Halman Group Limited 3.0 3.0 Lambert Smith Hampton Group Limited 12.1 12.1 Peter Alan Limited 2.3 2.3 RMS Estate Agents Limited 1.2 1.2 Ryden LLP 1.1 - Stiles Harold Williams Partnership LLP 1.4 - Tylers Property Partnership Limited 0.2 - Total brands 65.7 61.2 Goodwill 249.9 218.5 Total goodwill and brands 315.6 279.7", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-454": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
Trade receivables (Note 45c))
73.6
68.8
1.5
1.9
Prepayments
40.4
33.6
19.7
16.2
Accrued income
27.9
24.7
2.4
0.1
Equity share investments mandatorily held at FVTPL
18.3
16.9
-
-
(Note 20e))
Share warrants
-
21.9
-
-
Investment property (Note 24)
1.4
4.5
1.4
4.5
Other
16.1
10.8
1.5
0.2
177.7
181.2
26.5
22.9
", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-513": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
Trade receivables (Note 45c))
73.6
68.8
1.5
1.9
Prepayments
40.4
33.6
19.7
16.2
Accrued income
27.9
24.7
2.4
0.1
Equity share investments mandatorily held at FVTPL
18.3
16.9
-
-
(Note 20e))
Share warrants
-
21.9
-
-
Investment property (Note 24)
1.4
4.5
1.4
4.5
Other
16.1
10.8
1.5
0.2
177.7
181.2
26.5
22.9
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-531": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
Trade receivables (Note 45c))
73.6
68.8
1.5
1.9
Prepayments
40.4
33.6
19.7
16.2
Accrued income
27.9
24.7
2.4
0.1
Equity share investments mandatorily held at FVTPL
18.3
16.9
-
-
(Note 20e))
Share warrants
-
21.9
-
-
Investment property (Note 24)
1.4
4.5
1.4
4.5
Other
16.1
10.8
1.5
0.2
177.7
181.2
26.5
22.9
Deferred tax is calculated on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes, using the enacted tax rate expected to apply in the relevant tax jurisdiction for the period when these differences are expected to reverse, which is 28.0% (2024: 28.0%) for the Society and 25.0% (2024: 25.0%) for most other Group companies. The rate for the Society is higher than for most other Group companies as the Society\u2019s taxable profits over \u00a3100m are subject to a 3% banking surcharge. The movement during the year in the overall net deferred tax (liability) / asset was as follows: Deferred tax assets and liabilities are individually attributable to the following items:
Group
Society
\u00a3m
2025
2024
2025
2024
Net deferred tax asset at 1 January
6.3
20.9
11.2
16.7
Income Statement charge (Note 12)
(1.8)
(7.9)
-
(2.0)
Items taken directly to other comprehensive income
(0.2)
(6.5)
(5.1)
(3.5)
Acquired on acquisition of subsidiaries
(4.1)
-
-
-
Acquired on acquisition of other business assets
(0.3)
(0.2)
-
-
Other movements
(0.1)
-
0.1
-
Net deferred tax (liability) / asset at 31 December
(0.2)
6.3
6.2
11.2
Deferred tax assets (net of associated deferred tax liabilities \u2013 see note A)
Group
Society
\u00a3m
2025
2024
2025
2024
Fixed asset temporary differences
-
3.8
(1.6)
(3.0)
Intangible asset temporary differences
(1.9)
(15.7)
-
-
Derivatives and loans (note B)
-
6.0
3.1
4.6
Pension obligations
-
5.6
3.3
3.5
Provisions
0.2
6.8
2.7
2.5
Corporation tax losses (note C)
2.1
2.1
-
-
Financial assets held at FVOCI
-
4.2
2.4
4.1
Cash flow hedges
-
(6.4)
(3.7)
(0.5)
Cost of hedging reserve
-
0.6
-
-
Gain deferred by rollover relief
-
(0.7)
-
-
Total
0.4
6.3
6.2
11.2
Deferred tax liabilities (net of associated deferred tax assets \u2013 see note A)
Group
Society
\u00a3m
2025
2024
2025
2024
Fixed asset temporary differences
(4.1)
-
-
-
Intangible asset temporary differences
22.8
-
-
-
Derivatives and loans (note B)
(7.3)
-
-
-
Pension obligations
(4.8)
-
-
-
Provisions
(6.9)
-
-
-
Corporation tax losses (note C)
(0.2)
-
-
-
Financial assets held at FVOCI
(2.5)
-
-
-
Cash flow hedges
3.8
-
-
-
Cost of hedging reserve
(0.2)
-
-
-
Total
0.6
-
-
-
Overall net deferred tax (liability) / asset
(0.2)
6.3
6.2
11.2
Notes A. Deferred tax assets and liabilities relating to the same taxation authority are offset within the Statement of Financial Position where there is a legally enforceable right of offset and the intention is to settle tax liabilities and assets on a net basis. B. The Society amount above is in relation to the adoption of IFRS 9 in 2018; this resulted in an initial adjustment to the deferred tax asset in the Society of \u00a313.3m which, as permitted by relevant accounting standards, is being released to the Income Statement over a 10 year period. C. The deferred tax assets shown above relating to corporation tax losses include \u00a30.2m in respect of certain Connells entities (2024: \u00a30.2m), together with \u00a32.1m in respect of certain Jade entities (2024: \u00a31.9m). These deferred tax amounts were assessed by reference to the Group\u2019s five-year corporate planning period. For Jade, management also considered the recent trading history of relevant Jade entities. D. As noted above, deferred tax assets and liabilities are offset within each jurisdiction where these criteria are met. The totals in the final two tables on page 217 therefore represent the net deferred tax position after relevant offsetting on a jurisdictional basis, with the total deferred tax asset of \u00a30.4m comprising those jurisdictions in a net deferred tax asset position and the total deferred tax liability of \u00a30.6m comprising those jurisdictions in a net deferred tax liability position. The deferred tax charge in the Income Statement comprises the following: Deferred tax has not been recognised in relation to certain losses carried forward at 31 December 2025, which comprise the following: \u2022 Trading losses of \u00a31.3m for the Group (2024: \u00a31.5m) and \u00a3nil for the Society (2024: \u00a3nil); \u2022 Capital losses of \u00a365.2m for the Group (2024: \u00a356.7m) and \u00a38.5m for the Society (2024: \u00a3nil); and \u2022 Other tax losses of \u00a30.2m for the Group (2024: \u00a30.2m) and \u00a3nil for the Society (2024: \u00a3nil). Trading losses relate to certain Jade entities and are based on the Group\u2019s five-year corporate plan as well as the recent trading history of those entities. Capital losses relate primarily to Countrywide entities; in determining the amounts to be unrecognised, management considered the likelihood of future capital gains materialising against which these losses could be offset and recognised. The majority of deferred tax assets are anticipated to be recoverable after one year. The Group\u2019s plans indicate that the Group and Society will generate sufficient taxable profits over its five-year planning period to absorb the corporation tax losses included within deferred tax at the reporting date, together with those other temporary differences that are expected to reverse during that period.
Group
Society
\u00a3m
2025
2024
2025
2024
Fixed asset temporary differences
0.1
3.0
(1.3)
1.2
Intangible asset temporary differences
4.2
(1.8)
-
-
Provisions
(0.3)
(0.4)
(0.2)
(0.7)
Derivatives and loans
(1.3)
1.6
1.5
1.5
Corporation tax losses
(0.2)
3.9
-
-
Tax losses on IFRS 16 transitional adjustments
-
1.7
-
-
Other
(0.7)
(0.1)
-
-
Total
1.8
7.9
-
2.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-455": { "value": "A maturity analysis of lease liabilities is included in Note 43. For details of the Group\u2019s right-of-use assets, see Note 23. For further details of the Group\u2019s lease expenses in the year, see Note 7.
Group
Society
\u00a3m
2025
2024
2025
2024
At
1 January
92.1
103.0
8.6
10.3
Additions
40.7
18.1
1.7
0.7
Acquisition of subsidiary undertakings
4.0
-
-
-
Modifications / remeasurements of existing lease
14.7
11.2
-
-
Liabilities
Interest charged
4.6
3.1
0.3
0.3
Lease payments (including interest)
(43.9)
(42.4)
(2.4)
(2.6)
Disposals
(1.9)
(0.9)
-
(0.1)
At
31 December
110.3
92.1
8.2
8.6
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-494": { "value": "Put option obligation The movement in the fair value of the put option obligation is summarised below:
Group
\u00a3m
2025
2024
At 1 January
4.1
3.5
Additions
0.1
-
Exercise of put options by non-controlling shareholders
(4.2)
-
Revaluation of market values and changes to future exercise dates
1.0
0.6
At 31 December
1.0
4.1
Group
Society
\u00a3m
2025
2024
2025
2024
Trade payables
14.4
11.0
3.4
2.8
Fair value of put option obligation
1.0
4.1
-
-
VAT and employment taxes
50.0
39.5
3.9
3.0
Other
43.9
32.0
5.3
5.2
109.3
86.6
12.6
11.0
Deferred tax is calculated on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes, using the enacted tax rate expected to apply in the relevant tax jurisdiction for the period when these differences are expected to reverse, which is 28.0% (2024: 28.0%) for the Society and 25.0% (2024: 25.0%) for most other Group companies. The rate for the Society is higher than for most other Group companies as the Society\u2019s taxable profits over \u00a3100m are subject to a 3% banking surcharge. The movement during the year in the overall net deferred tax (liability) / asset was as follows: Deferred tax assets and liabilities are individually attributable to the following items:
Group
Society
\u00a3m
2025
2024
2025
2024
Net deferred tax asset at 1 January
6.3
20.9
11.2
16.7
Income Statement charge (Note 12)
(1.8)
(7.9)
-
(2.0)
Items taken directly to other comprehensive income
(0.2)
(6.5)
(5.1)
(3.5)
Acquired on acquisition of subsidiaries
(4.1)
-
-
-
Acquired on acquisition of other business assets
(0.3)
(0.2)
-
-
Other movements
(0.1)
-
0.1
-
Net deferred tax (liability) / asset at 31 December
(0.2)
6.3
6.2
11.2
Deferred tax assets (net of associated deferred tax liabilities \u2013 see note A)
Group
Society
\u00a3m
2025
2024
2025
2024
Fixed asset temporary differences
-
3.8
(1.6)
(3.0)
Intangible asset temporary differences
(1.9)
(15.7)
-
-
Derivatives and loans (note B)
-
6.0
3.1
4.6
Pension obligations
-
5.6
3.3
3.5
Provisions
0.2
6.8
2.7
2.5
Corporation tax losses (note C)
2.1
2.1
-
-
Financial assets held at FVOCI
-
4.2
2.4
4.1
Cash flow hedges
-
(6.4)
(3.7)
(0.5)
Cost of hedging reserve
-
0.6
-
-
Gain deferred by rollover relief
-
(0.7)
-
-
Total
0.4
6.3
6.2
11.2
Deferred tax liabilities (net of associated deferred tax assets \u2013 see note A)
Group
Society
\u00a3m
2025
2024
2025
2024
Fixed asset temporary differences
(4.1)
-
-
-
Intangible asset temporary differences
22.8
-
-
-
Derivatives and loans (note B)
(7.3)
-
-
-
Pension obligations
(4.8)
-
-
-
Provisions
(6.9)
-
-
-
Corporation tax losses (note C)
(0.2)
-
-
-
Financial assets held at FVOCI
(2.5)
-
-
-
Cash flow hedges
3.8
-
-
-
Cost of hedging reserve
(0.2)
-
-
-
Total
0.6
-
-
-
Overall net deferred tax (liability) / asset
(0.2)
6.3
6.2
11.2
Notes A. Deferred tax assets and liabilities relating to the same taxation authority are offset within the Statement of Financial Position where there is a legally enforceable right of offset and the intention is to settle tax liabilities and assets on a net basis. B. The Society amount above is in relation to the adoption of IFRS 9 in 2018; this resulted in an initial adjustment to the deferred tax asset in the Society of \u00a313.3m which, as permitted by relevant accounting standards, is being released to the Income Statement over a 10 year period. C. The deferred tax assets shown above relating to corporation tax losses include \u00a30.2m in respect of certain Connells entities (2024: \u00a30.2m), together with \u00a32.1m in respect of certain Jade entities (2024: \u00a31.9m). These deferred tax amounts were assessed by reference to the Group\u2019s five-year corporate planning period. For Jade, management also considered the recent trading history of relevant Jade entities. D. As noted above, deferred tax assets and liabilities are offset within each jurisdiction where these criteria are met. The totals in the final two tables on page 217 therefore represent the net deferred tax position after relevant offsetting on a jurisdictional basis, with the total deferred tax asset of \u00a30.4m comprising those jurisdictions in a net deferred tax asset position and the total deferred tax liability of \u00a30.6m comprising those jurisdictions in a net deferred tax liability position. The deferred tax charge in the Income Statement comprises the following: Deferred tax has not been recognised in relation to certain losses carried forward at 31 December 2025, which comprise the following: \u2022 Trading losses of \u00a31.3m for the Group (2024: \u00a31.5m) and \u00a3nil for the Society (2024: \u00a3nil); \u2022 Capital losses of \u00a365.2m for the Group (2024: \u00a356.7m) and \u00a38.5m for the Society (2024: \u00a3nil); and \u2022 Other tax losses of \u00a30.2m for the Group (2024: \u00a30.2m) and \u00a3nil for the Society (2024: \u00a3nil). Trading losses relate to certain Jade entities and are based on the Group\u2019s five-year corporate plan as well as the recent trading history of those entities. Capital losses relate primarily to Countrywide entities; in determining the amounts to be unrecognised, management considered the likelihood of future capital gains materialising against which these losses could be offset and recognised. The majority of deferred tax assets are anticipated to be recoverable after one year. The Group\u2019s plans indicate that the Group and Society will generate sufficient taxable profits over its five-year planning period to absorb the corporation tax losses included within deferred tax at the reporting date, together with those other temporary differences that are expected to reverse during that period.
Group
Society
\u00a3m
2025
2024
2025
2024
Fixed asset temporary differences
0.1
3.0
(1.3)
1.2
Intangible asset temporary differences
4.2
(1.8)
-
-
Provisions
(0.3)
(0.4)
(0.2)
(0.7)
Derivatives and loans
(1.3)
1.6
1.5
1.5
Corporation tax losses
(0.2)
3.9
-
-
Tax losses on IFRS 16 transitional adjustments
-
1.7
-
-
Other
(0.7)
(0.1)
-
-
Total
1.8
7.9
-
2.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-456": { "value": "
Group
Society
\u00a3m
2025
2024
2025
2024
Trade payables
14.4
11.0
3.4
2.8
Fair value of put option obligation
1.0
4.1
-
-
VAT and employment taxes
50.0
39.5
3.9
3.0
Other
43.9
32.0
5.3
5.2
109.3
86.6
12.6
11.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-457": { "value": "
The movements in provisions for liabilities during the year were as follows:
Notes
A. The charge / (credit) for the year is recognised within the Income Statement line \u2018Impairment and provisions\u2019.
B. The provision for commission clawbacks include an expected future clawback on insurance commissions in the event of early
termination by the customer. Insurance commission income is recognised net of these provisions, and therefore the charge for the
year of \u00a315.5m (2024: \u00a38.8m charge) has been recognised against \u2018Fees and commissions receivable\u2019 in the Income Statement.
2025
Provision for
Survey and
Group
the costs of
Commission
valuation Customer Other Total
\u00a3m
surplus clawbacks claims
compensation
provisions
properties
At 1 January
4.0
17.9
3.7
0.6
5.6
31.8
Acquired on acquisition of
subsidiaries
0.1
-
0.2
-
-
0.3
Disposal of subsidiary
-
(0.1)
-
-
-
(0.1)
undertakings
Charge for the year
A
0.3
15.5
B
A
0.5
-
0.1
A
16.4
Utilised during the year
(0.5)
(14.5)
(0.6)
-
(0.2)
(15.8)
At 31 December
3.9
18.8
3.8
0.6
5.5
32.6
2024
Provision for
Survey and
Group
the costs of
Commission
valuation Customer Other Total
\u00a3m
surplus clawbacks claims
compensation
provisions
properties
At 1 January
5.6
17.0
5.2
0.3
1.3
29.4
(Credit) / charge for the year
(0.5)
A
8.9
B
(0.8)
A
0.4
A
4.5
A
12.5
Utilised during the year
(1.1)
(8.0)
(0.7)
(0.1)
(0.2)
(10.1)
At 31 December
4.0
17.9
3.7
0.6
5.6
31.8
2025
Society
Provision for the
Commission Customer Other
\u00a3m
costs of surplus
clawbacks
compensation
provisions Total
properties
At 1 January
-
-
0.5
4.8
5.3
Credit for the year
-
-
-
(0.2)
A
(0.2)
At 31 December
-
-
0.5
4.6
5.1
2024
Society
Provision for the
Commission Customer Other
\u00a3m
costs of surplus
clawbacks
compensation
provisions Total
properties
At 1 January
0.1
-
0.3
0.2
0.6
(Credit) / charge for the year
(0.1)
A
0.1
A
0.3
A
4.6
A
4.9
Utilised during the year
-
(0.1)
(0.1)
-
(0.2)
At 31 December
-
-
0.5
4.8
5.3
Provision for the costs of surplus properties
This provision was booked prior to the introduction of IFRS 16 for properties with non-cancellable leases where
the Group no longer occupies the property. The provision represents the rent to the end of the lease, less any
rental income from subletting the properties. The provision for the costs of surplus properties is expected to
reverse over the remaining life of the leases or period to anticipated date of disposal, if sooner.
Commission clawbacks
The commission clawback provision represents an estimate of the repayment of commission to suppliers as a
result of cancelled policies sold by Connells and the financial advice activities of the Group. These are
estimated based upon anticipated cancellation rates and arise in the normal course of business.
Survey and valuation claims
Provision is made for professional indemnity claims and potential claims that arise during the normal course
of business in relation to surveys and valuations carried out by Connells. The provision is based upon the
expected level of future professional indemnity claims relating to services already provided and the value
provided on each claim is the lower of the professional indemnity insurance excess per claim or the estimated
exposure. To assess the level of future claims, analysis is performed on the number of preliminary
notifications expected to turn into future claims and on historical claim trends to forecast the number of future
claims where a notification is yet to be received. Historical data on claims success frequency and value is also
used to estimate the size of the liability.
The professional indemnity claim provision is stated at the Directors\u2019 best estimate of the eventual liability,
based on the information available at the time. Whilst the level of future claims is uncertain, the Group has
robust processes in place that aim to restrict the number and magnitude of these.
Due to the nature of the professional indemnity claims it is difficult to indicate approximate payment
timescales or claims received in future years. The provision will be utilised as individual claims are settled.
The Society has confirmed it will provide continuing support to its subsidiary undertakings that have net
liabilities or which rely on it for ongoing funding.
SIL continues to undertake a review exercise following feedback from the Guernsey Financial Services
Commission (GFSC) in 2023 as part of the latter\u2019s PRISM (Probability Risk and Impact SysteM) approach to
supervision. As at 31 December 2025, SIL has assessed that it is probable that further costs may be incurred in
relation to this matter. However, at this stage, it is not possible to make a reliable estimate of the amount or
timing of any cost. Accordingly, no provision has been recognised in the financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-514": { "value": "Deferred tax is calculated on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes, using the enacted tax rate expected to apply in the relevant tax jurisdiction for the period when these differences are expected to reverse, which is 28.0% (2024: 28.0%) for the Society and 25.0% (2024: 25.0%) for most other Group companies. The rate for the Society is higher than for most other Group companies as the Society\u2019s taxable profits over \u00a3100m are subject to a 3% banking surcharge. The movement during the year in the overall net deferred tax (liability) / asset was as follows: Deferred tax assets and liabilities are individually attributable to the following items:
Group
Society
\u00a3m
2025
2024
2025
2024
Net deferred tax asset at 1 January
6.3
20.9
11.2
16.7
Income Statement charge (Note 12)
(1.8)
(7.9)
-
(2.0)
Items taken directly to other comprehensive income
(0.2)
(6.5)
(5.1)
(3.5)
Acquired on acquisition of subsidiaries
(4.1)
-
-
-
Acquired on acquisition of other business assets
(0.3)
(0.2)
-
-
Other movements
(0.1)
-
0.1
-
Net deferred tax (liability) / asset at 31 December
(0.2)
6.3
6.2
11.2
Deferred tax assets (net of associated deferred tax liabilities \u2013 see note A)
Group
Society
\u00a3m
2025
2024
2025
2024
Fixed asset temporary differences
-
3.8
(1.6)
(3.0)
Intangible asset temporary differences
(1.9)
(15.7)
-
-
Derivatives and loans (note B)
-
6.0
3.1
4.6
Pension obligations
-
5.6
3.3
3.5
Provisions
0.2
6.8
2.7
2.5
Corporation tax losses (note C)
2.1
2.1
-
-
Financial assets held at FVOCI
-
4.2
2.4
4.1
Cash flow hedges
-
(6.4)
(3.7)
(0.5)
Cost of hedging reserve
-
0.6
-
-
Gain deferred by rollover relief
-
(0.7)
-
-
Total
0.4
6.3
6.2
11.2
Deferred tax liabilities (net of associated deferred tax assets \u2013 see note A)
Group
Society
\u00a3m
2025
2024
2025
2024
Fixed asset temporary differences
(4.1)
-
-
-
Intangible asset temporary differences
22.8
-
-
-
Derivatives and loans (note B)
(7.3)
-
-
-
Pension obligations
(4.8)
-
-
-
Provisions
(6.9)
-
-
-
Corporation tax losses (note C)
(0.2)
-
-
-
Financial assets held at FVOCI
(2.5)
-
-
-
Cash flow hedges
3.8
-
-
-
Cost of hedging reserve
(0.2)
-
-
-
Total
0.6
-
-
-
Overall net deferred tax (liability) / asset
(0.2)
6.3
6.2
11.2
Notes A. Deferred tax assets and liabilities relating to the same taxation authority are offset within the Statement of Financial Position where there is a legally enforceable right of offset and the intention is to settle tax liabilities and assets on a net basis. B. The Society amount above is in relation to the adoption of IFRS 9 in 2018; this resulted in an initial adjustment to the deferred tax asset in the Society of \u00a313.3m which, as permitted by relevant accounting standards, is being released to the Income Statement over a 10 year period. C. The deferred tax assets shown above relating to corporation tax losses include \u00a30.2m in respect of certain Connells entities (2024: \u00a30.2m), together with \u00a32.1m in respect of certain Jade entities (2024: \u00a31.9m). These deferred tax amounts were assessed by reference to the Group\u2019s five-year corporate planning period. For Jade, management also considered the recent trading history of relevant Jade entities. D. As noted above, deferred tax assets and liabilities are offset within each jurisdiction where these criteria are met. The totals in the final two tables on page 217 therefore represent the net deferred tax position after relevant offsetting on a jurisdictional basis, with the total deferred tax asset of \u00a30.4m comprising those jurisdictions in a net deferred tax asset position and the total deferred tax liability of \u00a30.6m comprising those jurisdictions in a net deferred tax liability position. The deferred tax charge in the Income Statement comprises the following: Deferred tax has not been recognised in relation to certain losses carried forward at 31 December 2025, which comprise the following: \u2022 Trading losses of \u00a31.3m for the Group (2024: \u00a31.5m) and \u00a3nil for the Society (2024: \u00a3nil); \u2022 Capital losses of \u00a365.2m for the Group (2024: \u00a356.7m) and \u00a38.5m for the Society (2024: \u00a3nil); and \u2022 Other tax losses of \u00a30.2m for the Group (2024: \u00a30.2m) and \u00a3nil for the Society (2024: \u00a3nil). Trading losses relate to certain Jade entities and are based on the Group\u2019s five-year corporate plan as well as the recent trading history of those entities. Capital losses relate primarily to Countrywide entities; in determining the amounts to be unrecognised, management considered the likelihood of future capital gains materialising against which these losses could be offset and recognised. The majority of deferred tax assets are anticipated to be recoverable after one year. The Group\u2019s plans indicate that the Group and Society will generate sufficient taxable profits over its five-year planning period to absorb the corporation tax losses included within deferred tax at the reporting date, together with those other temporary differences that are expected to reverse during that period.
Group
Society
\u00a3m
2025
2024
2025
2024
Fixed asset temporary differences
0.1
3.0
(1.3)
1.2
Intangible asset temporary differences
4.2
(1.8)
-
-
Provisions
(0.3)
(0.4)
(0.2)
(0.7)
Derivatives and loans
(1.3)
1.6
1.5
1.5
Corporation tax losses
(0.2)
3.9
-
-
Tax losses on IFRS 16 transitional adjustments
-
1.7
-
-
Other
(0.7)
(0.1)
-
-
Total
1.8
7.9
-
2.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-523": { "value": "Deferred tax is calculated on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes, using the enacted tax rate expected to apply in the relevant tax jurisdiction for the period when these differences are expected to reverse, which is 28.0% (2024: 28.0%) for the Society and 25.0% (2024: 25.0%) for most other Group companies. The rate for the Society is higher than for most other Group companies as the Society\u2019s taxable profits over \u00a3100m are subject to a 3% banking surcharge. The movement during the year in the overall net deferred tax (liability) / asset was as follows: Deferred tax assets and liabilities are individually attributable to the following items:
Group
Society
\u00a3m
2025
2024
2025
2024
Net deferred tax asset at 1 January
6.3
20.9
11.2
16.7
Income Statement charge (Note 12)
(1.8)
(7.9)
-
(2.0)
Items taken directly to other comprehensive income
(0.2)
(6.5)
(5.1)
(3.5)
Acquired on acquisition of subsidiaries
(4.1)
-
-
-
Acquired on acquisition of other business assets
(0.3)
(0.2)
-
-
Other movements
(0.1)
-
0.1
-
Net deferred tax (liability) / asset at 31 December
(0.2)
6.3
6.2
11.2
Deferred tax assets (net of associated deferred tax liabilities \u2013 see note A)
Group
Society
\u00a3m
2025
2024
2025
2024
Fixed asset temporary differences
-
3.8
(1.6)
(3.0)
Intangible asset temporary differences
(1.9)
(15.7)
-
-
Derivatives and loans (note B)
-
6.0
3.1
4.6
Pension obligations
-
5.6
3.3
3.5
Provisions
0.2
6.8
2.7
2.5
Corporation tax losses (note C)
2.1
2.1
-
-
Financial assets held at FVOCI
-
4.2
2.4
4.1
Cash flow hedges
-
(6.4)
(3.7)
(0.5)
Cost of hedging reserve
-
0.6
-
-
Gain deferred by rollover relief
-
(0.7)
-
-
Total
0.4
6.3
6.2
11.2
Deferred tax liabilities (net of associated deferred tax assets \u2013 see note A)
Group
Society
\u00a3m
2025
2024
2025
2024
Fixed asset temporary differences
(4.1)
-
-
-
Intangible asset temporary differences
22.8
-
-
-
Derivatives and loans (note B)
(7.3)
-
-
-
Pension obligations
(4.8)
-
-
-
Provisions
(6.9)
-
-
-
Corporation tax losses (note C)
(0.2)
-
-
-
Financial assets held at FVOCI
(2.5)
-
-
-
Cash flow hedges
3.8
-
-
-
Cost of hedging reserve
(0.2)
-
-
-
Total
0.6
-
-
-
Overall net deferred tax (liability) / asset
(0.2)
6.3
6.2
11.2
Notes A. Deferred tax assets and liabilities relating to the same taxation authority are offset within the Statement of Financial Position where there is a legally enforceable right of offset and the intention is to settle tax liabilities and assets on a net basis. B. The Society amount above is in relation to the adoption of IFRS 9 in 2018; this resulted in an initial adjustment to the deferred tax asset in the Society of \u00a313.3m which, as permitted by relevant accounting standards, is being released to the Income Statement over a 10 year period. C. The deferred tax assets shown above relating to corporation tax losses include \u00a30.2m in respect of certain Connells entities (2024: \u00a30.2m), together with \u00a32.1m in respect of certain Jade entities (2024: \u00a31.9m). These deferred tax amounts were assessed by reference to the Group\u2019s five-year corporate planning period. For Jade, management also considered the recent trading history of relevant Jade entities. D. As noted above, deferred tax assets and liabilities are offset within each jurisdiction where these criteria are met. The totals in the final two tables on page 217 therefore represent the net deferred tax position after relevant offsetting on a jurisdictional basis, with the total deferred tax asset of \u00a30.4m comprising those jurisdictions in a net deferred tax asset position and the total deferred tax liability of \u00a30.6m comprising those jurisdictions in a net deferred tax liability position. The deferred tax charge in the Income Statement comprises the following: Deferred tax has not been recognised in relation to certain losses carried forward at 31 December 2025, which comprise the following: \u2022 Trading losses of \u00a31.3m for the Group (2024: \u00a31.5m) and \u00a3nil for the Society (2024: \u00a3nil); \u2022 Capital losses of \u00a365.2m for the Group (2024: \u00a356.7m) and \u00a38.5m for the Society (2024: \u00a3nil); and \u2022 Other tax losses of \u00a30.2m for the Group (2024: \u00a30.2m) and \u00a3nil for the Society (2024: \u00a3nil). Trading losses relate to certain Jade entities and are based on the Group\u2019s five-year corporate plan as well as the recent trading history of those entities. Capital losses relate primarily to Countrywide entities; in determining the amounts to be unrecognised, management considered the likelihood of future capital gains materialising against which these losses could be offset and recognised. The majority of deferred tax assets are anticipated to be recoverable after one year. The Group\u2019s plans indicate that the Group and Society will generate sufficient taxable profits over its five-year planning period to absorb the corporation tax losses included within deferred tax at the reporting date, together with those other temporary differences that are expected to reverse during that period.
Group
Society
\u00a3m
2025
2024
2025
2024
Fixed asset temporary differences
0.1
3.0
(1.3)
1.2
Intangible asset temporary differences
4.2
(1.8)
-
-
Provisions
(0.3)
(0.4)
(0.2)
(0.7)
Derivatives and loans
(1.3)
1.6
1.5
1.5
Corporation tax losses
(0.2)
3.9
-
-
Tax losses on IFRS 16 transitional adjustments
-
1.7
-
-
Other
(0.7)
(0.1)
-
-
Total
1.8
7.9
-
2.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-458": { "value": "
On 31 January 2025, as part of a strategy to de-risk the Society\u2019s exposure to its defined benefit obligation, the
Skipton Building Society (2015) Group Pension Scheme was subject to an insurer buy-in (further detailed in
Note 36).
In connection with the buy-in, the Society made a loan to the Scheme \u2013 originally advanced in January 2025 in
Sterling but subsequently converted into a USD-denominated loan on 24 September 2025. In addition, the
maturity date of the loan was extended from 31 December 2027 to 30 November 2028.
The purchase of the insurance policy used the assets of the Scheme, except for \u00a314.6m of illiquid assets held
by the Scheme (as of 31 January 2025) which were not acquired by the insurer and thus remain in the Scheme.
A loan of \u00a314.6m was advanced by the Society to the Scheme in January 2025, to be repaid using the
proceeds from the illiquid assets as they mature.
Due however to the illiquid assets being entirely denominated in USD (through hedging arrangements within
the fund itself), the GBP loan was repaid and replaced with one denominated in USD on 24 September 2025, to
eliminate any foreign exchange risk arising from the USD-denominated proceeds from the fund. The Society
sourced the USD required to fund this lending through utilising the existing repo agreement with SIL.
At 31 December 2025 the fair value of the loan was \u00a310.9m, which includes a \u00a32.2m fair value loss recognised
within the Income Statement line \u2018Fair value (losses)/gains on financial instruments mandatorily held at
FVTPL\u2019. The valuation reflects management\u2019s estimate of the expected asset realisation profile, discounted
using a rate that reflects credit and liquidity risk. The loan is categorised as a Level 3 instrument within the
IFRS 13
fair value hierarchy, due to the use of unobservable inputs.
a) Defined contribution schemes
The amount charged to the Income Statement in respect to the Group\u2019s defined contribution arrangements is
the amount payable in the year. The total pension cost charged to the Income Statement amounted to \u00a332.8m
for the Group (2024: \u00a328.6m) and \u00a39.3m for the Society (2024: \u00a38.2m).
b) Defined benefit schemes
During 2025 the Group sponsored the schemes set out below:
\u2022 The Skipton Building Society (2015) Group Pension Scheme (the \u2018Skipton (2015) Scheme\u2019) \u2013 a funded
defined benefit arrangement;
\u2022 The Connells (2014) Group Pension Scheme (the \u2018Connells (2014) Scheme\u2019) \u2013 a funded defined benefit
arrangement; and
\u2022 The Countrywide plc Pension Scheme (the \u2018Countrywide Scheme\u2019) \u2013 a funded defined benefit arrangement.
The schemes are separate trustee administered funds holding the pension scheme assets to meet long-term
liabilities for current and past employees as follows:
\u2022 Skipton (2015) Scheme \u2013 719 members
\u2022 Connells (2014) Scheme \u2013 908 members
\u2022 Countrywide Scheme \u2013 176 members
Skipton Pension Trustees Limited, a company that acts as the sole Trustee, is appointed to manage the
Skipton (2015) Scheme and the Connells (2014) Scheme.
For all three schemes the level of retirement benefit is based on salary earned in each year of employment
prior to leaving active service as follows:
Skipton (2015) Scheme
There are two separate benefits sections within the scheme, as a result of the merger of two former pension
schemes into the Skipton (2015) Scheme, where members\u2019 benefits in the former pension schemes were
preserved. The benefits are based on the following:
\u2022 Old Skipton Scheme \u2013 the highest annual average salary earned over three consecutive years in the last 10
years of employment prior to leaving active service or, for members previously employed by Skipton
Financial Services, the annual average salary earned in the last five years of employment prior to leaving
active service; and
\u2022 Scarborough Scheme \u2013 the highest (prior to 2003) or the average (post 2003) annual salary earned in the
last three years of employment prior to leaving active service.
Connells (2014) Scheme
There are three separate benefit sections within the scheme, as the Connells (2014) Scheme is a result of three
previous schemes merged into one scheme in 2014. The benefits are based on the following:
\u2022 Scheme 1 \u2013 the highest annual average salary earned over three consecutive years in the last 10 years of
employment prior to leaving active service;
\u2022 Scheme 2 \u2013 the annual average salary earned in the last three years of employment prior to leaving active
service; and
\u2022 Scheme 3 \u2013 the greater of the annual average salary earned in the last three years and the highest annual
average salary earned over three consecutive years in the last 10 years of employment prior to leaving
active service.
Countrywide Scheme
The benefits are based on the following:
\u2022 the highest annual average salary earned over three consecutive years in the last 10 years of employment
prior to leaving active service or, if higher, the highest annual salary in the last five years of employment
prior to leaving active service.
The defined benefit schemes are all closed to new members and to the future accrual of benefits, with the
exception of the Scarborough section of the Skipton (2015) Scheme where active members retain a link to
salary (capped at 5% per annum). The Scarborough Scheme closed to the future accrual of benefits, subject to
the exception noted above, on 1 May 2007, the Connells (2014) Scheme on 1 January 2009, the Skipton (2015)
Scheme on 31 December 2009 and the Countrywide Scheme on 31 December 2003. Following the closure of
all the schemes, all active members left pensionable service and became entitled to deferred benefits.
The schemes are subject to the funding legislation outlined in the Pensions Act 2004 which came into force on
30 December 2005. This, together with documents issued by the Pensions Regulator and guidance notes
adopted by the Financial Reporting Council, sets out the framework for funding defined benefit occupational
pension schemes in the UK.
The Trustee of each scheme is required to act in the best interests of the scheme\u2019s beneficiaries. The
appointment of the Trustee is determined by the scheme\u2019s trust documentation.
BlackRock act as fiduciary manager to set and deliver the investment strategy on behalf of the Trustee of the
Skipton (2015) Scheme and the Connells (2014) Scheme.
Full actuarial valuations were carried out as at the dates set out below in accordance with the scheme funding
requirements of the Pensions Act 2004 and the funding of each scheme is agreed between the Group and the
Trustee in line with those requirements. This legislation requires the deficit to be calculated using prudent, as
opposed to best estimate, actuarial assumptions.
The most recent complete actuarial valuations for each of the schemes showed the following:
The actuarial valuations of the above schemes each showed a deficit. At the time, the Group agreed with the
Trustees of each scheme that it will aim to eliminate the deficit over a specified period by the payment of
annual contributions as agreed by the Group and the Trustees. As part of the 31 December 2022 Skipton
(2015) Scheme actuarial valuation, the Group agreed a one-off payment of \u00a322,999,000 to reduce the expected
ongoing contributions into this scheme to \u00a3nil; therefore, the current best estimate of contributions to be paid
by the Group to the schemes for the year commencing 1 January 2026 is \u00a33.0m (see page 227 for further
details).
On 31 January 2025, as part of a strategy to de-risk the Society\u2019s exposure to its defined benefit obligation, the
Skipton Building Society (2015) Group Pension Scheme was subject to an insurer buy-in. The majority of the
Scheme\u2019s defined benefit obligations to members are now insured under a policy held by the Scheme,
significantly reducing exposure to investment and longevity risk; certain obligations are not insured, for
example any future impact of the application of Guaranteed Minimum Pension (GMP) equalisation
requirements to historical transfers out of pension schemes. The insurance policy qualifies as a plan asset
under IAS 19 and is measured at fair value.
During the year, the Countrywide defined benefit pension scheme was subject to a full insurer buy-out. As a
result, all major obligations and associated assets were transferred to an insurance provider. There is only a
small portion of assets and liabilities remaining in the balance which is expected to be settled in 2026. No
settlement gain/loss has been recognised in the Income Statement following the buyout.
In light of the court appeal decision in July 2024, which upheld the High Court ruling in the Virgin Media v NTL
case, management acknowledges its obligations under Section 37 of the Pension Schemes Act 1993.
Management welcomes the decision of the Department for Work and Pensions (DWP) made in its recent draft
legislation which permits this issue to be resolved by the Actuary applying retrospective certification. This
legislation is set to become law in the middle of 2026.
Management has continued to liaise with the Scheme lawyers and Independent Trustee throughout the period
of uncertainty. Having reflected on the information received, management is awaiting the certainty of this
wording and will work with the Scheme Actuary to ensure that any retrospective assessments can be provided
to conclude this issue.
For the Countrywide scheme, documentation for the period 1997-2002 is unavailable. Management considers
the risk of non-compliance during the period to be low, based on reasonable assumptions about historical
benefit structures. For the Skipton Scheme, three Section 37 certificates have not been located. Legal advice
has been obtained, and management similarly considers the risk of material non-compliance to be low.
Based on initial assessments, management does not anticipate a material impact on the Group\u2019s financial
position, and therefore, no adjustments have been made to the schemes\u2019 valuations at this time. Management
is not aware of any immediate implications from this ruling that would affect the Group\u2019s schemes and has a
reasonable expectation that Section 37 requirements have been met accordingly. Due to the complexity of
implementing the relevant legislation, it is currently not possible to determine the exact impact on the financial
statements and pension obligations.
Valuation Deficit Recovery Annual
Scheme date \u00a3m period
contribution 2026
(estimate) \u00a3m
Skipton (2015)
31 December 2022
(24.5)
-
-
Connells (2014)
30 April 2023
(18.4)
6 years and 9 3.0
months
Countrywide
4 April 2021
(4.5)
-
-
The pension obligations are valued separately for accounting and funding purposes. For the purposes of IAS
19
Employee Benefits
, the actuarial valuations, which were carried out by a qualified independent actuary, have
been updated on an approximate basis to 31 December 2025. The actuarial valuation amounts shown in the
table above will always be different to the IAS 19 accounting amounts as, in addition to the different dates of
each valuation, accounting standards require best estimate assumptions to be used whereas the funding
valuation uses more prudent assumptions. There have been no material changes in the valuation methodology
adopted for this year's disclosures compared to the previous year's disclosures.
Scheme expenses and levies to the Pension Protection Fund are payable by the Group as and when they are
due and are accounted for within the Group\u2019s administrative expenses.
The aggregate costs of the three schemes are recognised in accordance with IAS 19.
The main financial assumptions used in the actuarial valuation are as follows:
Group & Society
2025
2024
Retail Price Inflation (RPI)
3.00
3.20
Consumer Price Inflation (CPI)
2.55
2.75
Discount rate
5.60
5.55
Increases to pension payment:
in line with RPI, subject to a max of 5% pa
2.85
3.03
in line with RPI, subject to a min of 3% and max of 5% pa
3.53
3.69
in line with RPI, subject to a max of 2.5% pa
2.02
2.00
in line with CPI, subject to a max of 5% pa
2.48
2.69
in line with CPI, subject to a min of 3% and max of 5% pa
3.38
3.52
in line with CPI, subject to a max of 3% pa
2.07
2.13
in line with CPI, subject to a max of 2.5% pa
1.85
1.87
Fixed 4.00% pa
4.00
4.00
Rate of increase for deferred pensions (in line with CPI, subject to a max of 5% pa)
2.55
2.75
Allowance for commutation of pension for cash at retirement
82% of post A
82% of post A
day maximum
day maximum
All the schemes\u2019 deferred pensions accrue inflationary increases based on CPI rather than RPI, unless the
scheme rules specifically refer to RPI.
The most significant non-financial assumption is the assumed rate of longevity. For the year ended 31
December 2025, these have been based on mortality rates that are 96% - 98% (male) and 96%-97% (female) of
the standard S3PMA and S3PFA_M tables respectively, with an allowance for projected improvements in
mortality in line with CMI_2023 improvements, with a 1.25% per annum long-term rate of convergence. The
tables adopted imply the following life expectancy:
Group & Society
2025
2024
Male retiring in the current year
21.5 \u2013 21.7
21.6 - 21.7
Female retiring in the current year
23.6 \u2013 23.7
23.6
Male retiring in 15 years' time
22.4 \u2013 22.5
22.4 - 22.6
Female retiring in 15 years' time
24.7 \u2013 24.8
24.6 - 24.7
When determining the financial and non-financial assumptions, consideration was given to the potential
impact of climate related risks. Based on the evidence available at this time, it was concluded that no explicit
allowances were required in this respect.
As at 31 December 2025 the Statement of Financial Position includes amounts relating to defined benefit
schemes as set out below:
Group
Society
\u00a3m
2025
2024
2025
2024
Within assets
Retirement benefit surplus
-
4.8
-
4.8
Within liabilities
Retirement benefit obligations
(7.4)
(8.6)
(1.2)
-
Retirement benefit surplus/obligations
For the Group and Society, amounts presented within \u2018Retirement benefit surplus\u2019 as at 31 December 2024
relate to the Skipton (2015) Scheme. For the Group, the amounts presented within \u2018Retirement benefit
obligations\u2019 as at 31 December 2024 include the Connells (2014) Scheme and the Countrywide scheme.
The table below shows the net pension (liability) / asset recognised within the Statement of Financial Position:
The present value of scheme liabilities is measured by discounting the best estimate of future cash flows to be
paid out by the schemes using the projected unit credit method. The value calculated in this way is reflected in
the net (liability) / asset within the Statement of Financial Position as shown above.
The projected unit credit method is a valuation method in which each potential cash flow from the schemes
(for example, annual pension payment or potential lump sum payment on death) is multiplied by an assumed
probability of payment and discounted between the valuation date and the time the payment is needed.
All remeasurements are recognised in the year in which they occur in the Statement of Comprehensive Income.
As all remeasurements and assets are recognised, the deficits shown above are those recognised within the
Statement of Financial Position.
2025
2024
Group
Retirement
Retirement
Retirement
\u00a3m
Benefit Total
Benefit
Benefit Total
Obligation
Surplus
Obligation
Fair value of plan assets
158.5
158.5
91.9
103.5
195.4
Fair value of defined benefit obligation
(165.9)
(165.9)
(87.1)
(112.1)
(199.2)
Net pensions (liability) / asset
(7.4)
(7.4)
4.8
(8.6)
(3.8)
2025
2024
Society
Retirement Retirement
\u00a3m
Benefit Total
Benefit Surplus
Total
Obligation
Fair value of plan assets
85.2
85.2
91.9
91.9
Fair value of defined benefit obligation
(86.4)
(86.4)
(87.1)
(87.1)
Net pensions (liability) / asset
(1.2)
(1.2)
4.8
4.8
The actual return on the scheme assets, including interest income on plan assets, over the year ended 31 December 2025 was as follows: \u2022 Group \u00a3(8.2)m (2024: \u00a3(11.5)m) \u2022 Society \u00a3(12.4)m (2024: \u00a3(6.2)m) The table below sets out the fair value of the scheme assets by each major category:
Group
Society
\u00a3m
2025
2024
2025
2024
At 1 January
195.4
191.1
91.9
79.2
Interest income
10.8
10.0
5.5
4.8
Return on plan assets (excluding amounts included
(19.0)
(21.5)
(17.9)
(11.0)
in interest income)
Contributions by employer
14.4
26.0
10.7
23.0
Benefits paid
(11.6)
(10.2)
(5.0)
(4.1)
Settlements paid
(31.5)
-
-
-
At 31 December
158.5
195.4
85.2
91.9
Group
Society
\u00a3m
2025
2024
2025
2024
Diversified growth fund (note A)
24.0
28.2
12.0
14.4
Insured pensioners (annuities) (note B)
85.6
31.3
85.6
-
Liability driven investments (note C)
52.1
125.0
-
76.2
Equities
5.5
5.4
-
-
Cash (note D)
(10.9)
2.9
(12.4)
1.3
Corporate bonds
1.9
1.3
-
-
Government bonds
0.3
1.3
-
-
Total
158.5
195.4
85.2
91.9
The table below sets out a reconciliation of the present value of the defined benefit obligation for the year:
Group
Society
\u00a3m
2025
2024
2025
2024
At 1 January
199.2
217.3
87.1
95.1
Interest expense
10.3
9.9
4.7
4.4
Remeasurement losses / (gains) arising from changes in:
Scheme experience
0.3
0.3
0.2
-
Demographic assumptions
1.7
(0.5)
0.8
(0.2)
Financial assumptions
(2.5)
(17.6)
(1.4)
(8.1)
Actual benefit payments
(11.6)
(10.2)
(5.0)
(4.1)
Settlement payments
(31.5)
-
-
-
At 31 December
165.9
199.2
86.4
87.1
The \u00a331.5m settlement payment relates to the Countrywide scheme buy-out (see page 229 for further details). The estimated average duration of the defined benefit obligation as at 31 December 2025 is 12 years (2024: 13 years). The table below sets out the reconciliation of the fair value of scheme assets for the year: It is the policy of the Trustee and the Group to review the investment strategy at the time of each funding valuation. The Trustee\u2019s investment objectives and the processes undertaken to measure and manage the risks inherent in the scheme investment strategy are documented in the scheme\u2019s Statement of Investment Principles. The schemes are exposed to the following investment risks: \u2022 Credit risk: this is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. \u2022 Market risk: this comprises currency risk, interest rate risk and other price risk. \u2022 Currency risk: this is the risk that the fair value or future cash flows of a financial asset will fluctuate because of changes in foreign exchange rates. \u2022 Interest rate risk: this is the risk that the fair value or future cash flows of a financial asset will fluctuate because of changes in market interest rates. \u2022 Longevity risk: The liabilities are very sensitive to unexpected changes in future mortality. If longevity increases by more than assumed, then the liabilities will increase at future calculations. \u2022 Inflation risk: Elements of the pensions in payment under the Scheme increase at an inflation-linked rate, albeit there are caps applying to the indexation. In addition, the rules of the Scheme require that some pensions are increased in the period up until payment commences in line with increases in inflation, again up to a certain cap. \u2022 Other price risk: this is the risk that the fair value or future cash flows of a financial asset will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The main investment objective for the Trustee of the schemes is to maintain a portfolio of suitable assets to meet, together with future contributions, the benefits payable under the Trust Deed and Rules as they fall due. Each scheme has exposure to investment risks because of the investments it makes to implement its investment strategy, as detailed in the Statement of Investment Principles. The Trustee manages investment risks, including credit risk and market risk, within agreed risk limits which are set taking into account the scheme\u2019s strategic investment objectives. These investment objectives and risk limits are implemented through the investment management agreements in place with the scheme\u2019s investment managers and are monitored by the Trustee by regular reviews of the investment portfolios. Notes A. Diversified growth funds (DGF) target equity-like returns with lower volatility which is achieved through dynamic diversification. Funds are invested in a diversified range of assets, including equities, bonds, property and cash and the allocation between these asset classes is actively managed by a fund manager reflecting the changing correlations and risk characteristics. B. An insured pensioner annuity is a type of annuity that is purchased by the scheme to provide a guaranteed income to its members. The insurer takes on the risk of paying the income, rather than the pension scheme. C. Liability driven investments (LDI) are investments in assets which are expected to behave in a similar manner to liabilities and therefore aim to provide a better match against liability movements than conventional bonds or gilts. D. The negative balance of cash is due to inclusion of the loan to defined benefit pension scheme held at FVTPL (see Note 35), in line with the provisions of IAS 19Employee Benefits. Each of the schemes invests in an LDI fund which aims to provide protection against interest rate and inflation movements. The Trustee has an approach to asset-liability matching where the level of coverage of interest rate sensitivity and inflation sensitivity are set based on a series of funding ratio triggers. This applies to both the Skipton (2015) Scheme and the Connells (2014) Scheme. None of the fair values of the assets shown above include any of the Group\u2019s own financial instruments or any property occupied by, or other assets used by, the Group. The schemes\u2019 assets that are invested in exchange traded funds have a quoted market price. The remainder use either the price of a recent transaction for an identical asset (where quoted prices for the asset are unavailable) or valuation techniques using non- observable data. Interest rate risk The schemes\u2019 assets are subject to indirect interest rate risk through their LDI pooled investment vehicles, as well as DGF pooled investment vehicles due to the bond holdings within these funds. The schemes\u2019 liabilities are exposed to a significant level of interest rate movement and for this reason it is desirable for the assets to also be exposed to interest rate risk. The schemes manage interest rate risk by considering the net risk when taking account of the liabilities valued. Other price risk Other price risk arises principally in relation to the schemes\u2019 return seeking portfolio which includes DGFs held in pooled investment vehicles, as well as the LDI pooled investment vehicles due to the inflation sensitive elements of the fund. The scheme manages this exposure to other price risk by constructing a diverse portfolio of investments across various markets. In addition to the above, the Countrywide scheme has mitigated risks associated with longevity risk, inflation risk and interest rate risk by securing a proportion of the Scheme\u2019s benefits for members with insurance companies. The table below sets out the amounts which have been recognised within the Income Statement. The service costs are recognised within \u2018Administrative expenses\u2019, whilst the net interest expense is recognised within \u2018Other operating income\u2019.
Group
Society
\u00a3m
2025
2024
2025
2024
Net interest expense
(0.5)
(0.1)
(0.8)
(0.4)
Total recognised in Income Statement
(0.5)
(0.1)
(0.8)
(0.4)
Credit risk The schemes invest in pooled investment vehicles and are therefore directly exposed to credit risk in relation to the pooled investment vehicles and are indirectly exposed to credit risks arising on the financial instruments held by the vehicles. The schemes\u2019 holdings in pooled investment vehicles are unrated. Direct credit risk arising from pooled investment vehicles is mitigated by the underlying assets of the pooled arrangements being ring-fenced from the pooled manager, the regulatory environments in which the pooled managers operate and diversification of investments amongst a number of pooled arrangements. The investment manager carries out its own due diligence checks before a new pooled fund is invested in, and on an ongoing basis monitors any changes to the regulatory and operating environment of the underlying pooled investment managers. Indirect credit risk arises in relation to underlying investments held in the LDI pooled investment vehicles, as well as DGF pooled investment vehicles due to the bond holdings within these funds. The LDI funds use robust collateralisation management procedures so as to mitigate the impact of credit risk. Market risk Currency risk The schemes do not take explicit unhedged positions in overseas investments through their investment strategy, either directly or indirectly via pooled investment vehicles. The DGF managers\u2019 default position is that any investment in overseas assets is hedged back to Sterling in order to reduce currency risk. The DGF managers may from time to time take unhedged overseas investment positions in pursuit of growth opportunities or to reduce overall fund risk. Overall, however, their neutral position is considered to be 100% Sterling. The table below sets out the Group\u2019s estimate of the aggregate contributions expected to be paid into the schemes during the year ending 31 December 2026, based on the most recent actuarial valuations: In line with UK pensions legislation, a formal actuarial valuation (\u2018triennial valuation\u2019) of the assets and liabilities of each scheme is carried out at least every three years by an independent actuary. The results of the most recent triennial valuations are set out on page 221. Following completion of the most recent actuarial valuations carried out, a new schedule of deficit contributions payable by the Group was agreed with the Trustees. The Group continues to make contributions in line with this schedule.
Group
Society
\u00a3m
2026
2026
Estimated employer contributions
Ongoing
3.0
-
Estimated total contributions
3.0 -
The table below sets out the remeasurements of retirement benefit obligations which have been recognised within the Statement of Comprehensive Income:
Group
Society
\u00a3m
2025
2024
2025
2024
Remeasurements of retirement benefit obligations:
Actuarial (losses) / gains arising from:
Experience adjustments
(0.3)
(0.3)
(0.2)
-
Demographic assumptions
(1.7)
0.5
(0.8)
0.2
Financial assumptions
2.6
17.6
1.4
8.1
Return on plan assets (excluding amounts included in net
(19.0)
(21.5)
(17.9)
(11.0)
interest expense)
Total amount recognised in Other Comprehensive Income
(18.4)
(3.7)
(17.5)
(2.7)
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-495": { "value": "On 31 January 2025, as part of a strategy to de-risk the Society\u2019s exposure to its defined benefit obligation, the Skipton Building Society (2015) Group Pension Scheme was subject to an insurer buy-in (further detailed in Note 36). In connection with the buy-in, the Society made a loan to the Scheme \u2013 originally advanced in January 2025 in Sterling but subsequently converted into a USD-denominated loan on 24 September 2025. In addition, the maturity date of the loan was extended from 31 December 2027 to 30 November 2028. The purchase of the insurance policy used the assets of the Scheme, except for \u00a314.6m of illiquid assets held by the Scheme (as of 31 January 2025) which were not acquired by the insurer and thus remain in the Scheme. A loan of \u00a314.6m was advanced by the Society to the Scheme in January 2025, to be repaid using the proceeds from the illiquid assets as they mature. Due however to the illiquid assets being entirely denominated in USD (through hedging arrangements within the fund itself), the GBP loan was repaid and replaced with one denominated in USD on 24 September 2025, to eliminate any foreign exchange risk arising from the USD-denominated proceeds from the fund. The Society sourced the USD required to fund this lending through utilising the existing repo agreement with SIL. At 31 December 2025 the fair value of the loan was \u00a310.9m, which includes a \u00a32.2m fair value loss recognised within the Income Statement line \u2018Fair value (losses)/gains on financial instruments mandatorily held at FVTPL\u2019. The valuation reflects management\u2019s estimate of the expected asset realisation profile, discounted using a rate that reflects credit and liquidity risk. The loan is categorised as a Level 3 instrument within the IFRS 13 fair value hierarchy, due to the use of unobservable inputs. ", "dimensions": { "concept": "skiptonbuilding:DisclosureOfLoanToDefinedBenefitPensionSchemeHeldAtFVTPL", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-496": { "value": "a) Defined contribution schemes The amount charged to the Income Statement in respect to the Group\u2019s defined contribution arrangements is the amount payable in the year. The total pension cost charged to the Income Statement amounted to \u00a332.8m for the Group (2024: \u00a328.6m) and \u00a39.3m for the Society (2024: \u00a38.2m). ", "dimensions": { "concept": "ifrs-full:DisclosureOfDefinedContributionPlansExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-497": { "value": "b) Defined benefit schemes During 2025 the Group sponsored the schemes set out below: \u2022 The Skipton Building Society (2015) Group Pension Scheme (the \u2018Skipton (2015) Scheme\u2019) \u2013 a funded defined benefit arrangement; \u2022 The Connells (2014) Group Pension Scheme (the \u2018Connells (2014) Scheme\u2019) \u2013 a funded defined benefit arrangement; and \u2022 The Countrywide plc Pension Scheme (the \u2018Countrywide Scheme\u2019) \u2013 a funded defined benefit arrangement. The schemes are separate trustee administered funds holding the pension scheme assets to meet long-term liabilities for current and past employees as follows: \u2022 Skipton (2015) Scheme \u2013 719 members \u2022 Connells (2014) Scheme \u2013 908 members \u2022 Countrywide Scheme \u2013 176 members Skipton Pension Trustees Limited, a company that acts as the sole Trustee, is appointed to manage the Skipton (2015) Scheme and the Connells (2014) Scheme. For all three schemes the level of retirement benefit is based on salary earned in each year of employment prior to leaving active service as follows: Skipton (2015) Scheme There are two separate benefits sections within the scheme, as a result of the merger of two former pension schemes into the Skipton (2015) Scheme, where members\u2019 benefits in the former pension schemes were preserved. The benefits are based on the following: \u2022 Old Skipton Scheme \u2013 the highest annual average salary earned over three consecutive years in the last 10 years of employment prior to leaving active service or, for members previously employed by Skipton Financial Services, the annual average salary earned in the last five years of employment prior to leaving active service; and \u2022 Scarborough Scheme \u2013 the highest (prior to 2003) or the average (post 2003) annual salary earned in the last three years of employment prior to leaving active service. Connells (2014) Scheme There are three separate benefit sections within the scheme, as the Connells (2014) Scheme is a result of three previous schemes merged into one scheme in 2014. The benefits are based on the following: \u2022 Scheme 1 \u2013 the highest annual average salary earned over three consecutive years in the last 10 years of employment prior to leaving active service; \u2022 Scheme 2 \u2013 the annual average salary earned in the last three years of employment prior to leaving active service; and \u2022 Scheme 3 \u2013 the greater of the annual average salary earned in the last three years and the highest annual average salary earned over three consecutive years in the last 10 years of employment prior to leaving active service. Countrywide Scheme The benefits are based on the following: \u2022 the highest annual average salary earned over three consecutive years in the last 10 years of employment prior to leaving active service or, if higher, the highest annual salary in the last five years of employment prior to leaving active service. The defined benefit schemes are all closed to new members and to the future accrual of benefits, with the exception of the Scarborough section of the Skipton (2015) Scheme where active members retain a link to salary (capped at 5% per annum). The Scarborough Scheme closed to the future accrual of benefits, subject to the exception noted above, on 1 May 2007, the Connells (2014) Scheme on 1 January 2009, the Skipton (2015) Scheme on 31 December 2009 and the Countrywide Scheme on 31 December 2003. Following the closure of all the schemes, all active members left pensionable service and became entitled to deferred benefits. The schemes are subject to the funding legislation outlined in the Pensions Act 2004 which came into force on 30 December 2005. This, together with documents issued by the Pensions Regulator and guidance notes adopted by the Financial Reporting Council, sets out the framework for funding defined benefit occupational pension schemes in the UK. The Trustee of each scheme is required to act in the best interests of the scheme\u2019s beneficiaries. The appointment of the Trustee is determined by the scheme\u2019s trust documentation. BlackRock act as fiduciary manager to set and deliver the investment strategy on behalf of the Trustee of the Skipton (2015) Scheme and the Connells (2014) Scheme. Full actuarial valuations were carried out as at the dates set out below in accordance with the scheme funding requirements of the Pensions Act 2004 and the funding of each scheme is agreed between the Group and the Trustee in line with those requirements. This legislation requires the deficit to be calculated using prudent, as opposed to best estimate, actuarial assumptions. The most recent complete actuarial valuations for each of the schemes showed the following: The actuarial valuations of the above schemes each showed a deficit. At the time, the Group agreed with the Trustees of each scheme that it will aim to eliminate the deficit over a specified period by the payment of annual contributions as agreed by the Group and the Trustees. As part of the 31 December 2022 Skipton (2015) Scheme actuarial valuation, the Group agreed a one-off payment of \u00a322,999,000 to reduce the expected ongoing contributions into this scheme to \u00a3nil; therefore, the current best estimate of contributions to be paid by the Group to the schemes for the year commencing 1 January 2026 is \u00a33.0m (see page 227 for further details). On 31 January 2025, as part of a strategy to de-risk the Society\u2019s exposure to its defined benefit obligation, the Skipton Building Society (2015) Group Pension Scheme was subject to an insurer buy-in. The majority of the Scheme\u2019s defined benefit obligations to members are now insured under a policy held by the Scheme, significantly reducing exposure to investment and longevity risk; certain obligations are not insured, for example any future impact of the application of Guaranteed Minimum Pension (GMP) equalisation requirements to historical transfers out of pension schemes. The insurance policy qualifies as a plan asset under IAS 19 and is measured at fair value. During the year, the Countrywide defined benefit pension scheme was subject to a full insurer buy-out. As a result, all major obligations and associated assets were transferred to an insurance provider. There is only a small portion of assets and liabilities remaining in the balance which is expected to be settled in 2026. No settlement gain/loss has been recognised in the Income Statement following the buyout. In light of the court appeal decision in July 2024, which upheld the High Court ruling in the Virgin Media v NTL case, management acknowledges its obligations under Section 37 of the Pension Schemes Act 1993. Management welcomes the decision of the Department for Work and Pensions (DWP) made in its recent draft legislation which permits this issue to be resolved by the Actuary applying retrospective certification. This legislation is set to become law in the middle of 2026. Management has continued to liaise with the Scheme lawyers and Independent Trustee throughout the period of uncertainty. Having reflected on the information received, management is awaiting the certainty of this wording and will work with the Scheme Actuary to ensure that any retrospective assessments can be provided to conclude this issue. For the Countrywide scheme, documentation for the period 1997-2002 is unavailable. Management considers the risk of non-compliance during the period to be low, based on reasonable assumptions about historical benefit structures. For the Skipton Scheme, three Section 37 certificates have not been located. Legal advice has been obtained, and management similarly considers the risk of material non-compliance to be low. Based on initial assessments, management does not anticipate a material impact on the Group\u2019s financial position, and therefore, no adjustments have been made to the schemes\u2019 valuations at this time. Management is not aware of any immediate implications from this ruling that would affect the Group\u2019s schemes and has a reasonable expectation that Section 37 requirements have been met accordingly. Due to the complexity of implementing the relevant legislation, it is currently not possible to determine the exact impact on the financial statements and pension obligations.
Valuation Deficit Recovery Annual
Scheme date \u00a3m period
contribution 2026
(estimate) \u00a3m
Skipton (2015)
31 December 2022
(24.5)
-
-
Connells (2014)
30 April 2023
(18.4)
6 years and 9 3.0
months
Countrywide
4 April 2021
(4.5)
-
-
The pension obligations are valued separately for accounting and funding purposes. For the purposes of IAS 19 Employee Benefits, the actuarial valuations, which were carried out by a qualified independent actuary, have been updated on an approximate basis to 31 December 2025. The actuarial valuation amounts shown in the table above will always be different to the IAS 19 accounting amounts as, in addition to the different dates of each valuation, accounting standards require best estimate assumptions to be used whereas the funding valuation uses more prudent assumptions. There have been no material changes in the valuation methodology adopted for this year's disclosures compared to the previous year's disclosures. Scheme expenses and levies to the Pension Protection Fund are payable by the Group as and when they are due and are accounted for within the Group\u2019s administrative expenses. The aggregate costs of the three schemes are recognised in accordance with IAS 19. The main financial assumptions used in the actuarial valuation are as follows:
Group & Society
2025
2024
Retail Price Inflation (RPI)
3.00
3.20
Consumer Price Inflation (CPI)
2.55
2.75
Discount rate
5.60
5.55
Increases to pension payment:
in line with RPI, subject to a max of 5% pa
2.85
3.03
in line with RPI, subject to a min of 3% and max of 5% pa
3.53
3.69
in line with RPI, subject to a max of 2.5% pa
2.02
2.00
in line with CPI, subject to a max of 5% pa
2.48
2.69
in line with CPI, subject to a min of 3% and max of 5% pa
3.38
3.52
in line with CPI, subject to a max of 3% pa
2.07
2.13
in line with CPI, subject to a max of 2.5% pa
1.85
1.87
Fixed 4.00% pa
4.00
4.00
Rate of increase for deferred pensions (in line with CPI, subject to a max of 5% pa)
2.55
2.75
Allowance for commutation of pension for cash at retirement
82% of post A
82% of post A
day maximum
day maximum
All the schemes\u2019 deferred pensions accrue inflationary increases based on CPI rather than RPI, unless the scheme rules specifically refer to RPI. The most significant non-financial assumption is the assumed rate of longevity. For the year ended 31 December 2025, these have been based on mortality rates that are 96% - 98% (male) and 96%-97% (female) of the standard S3PMA and S3PFA_M tables respectively, with an allowance for projected improvements in mortality in line with CMI_2023 improvements, with a 1.25% per annum long-term rate of convergence. The tables adopted imply the following life expectancy:
Group & Society
2025
2024
Male retiring in the current year
21.5 \u2013 21.7
21.6 - 21.7
Female retiring in the current year
23.6 \u2013 23.7
23.6
Male retiring in 15 years' time
22.4 \u2013 22.5
22.4 - 22.6
Female retiring in 15 years' time
24.7 \u2013 24.8
24.6 - 24.7
When determining the financial and non-financial assumptions, consideration was given to the potential impact of climate related risks. Based on the evidence available at this time, it was concluded that no explicit allowances were required in this respect. As at 31 December 2025 the Statement of Financial Position includes amounts relating to defined benefit schemes as set out below:
Group
Society
\u00a3m
2025
2024
2025
2024
Within assets
Retirement benefit surplus
-
4.8
-
4.8
Within liabilities
Retirement benefit obligations
(7.4)
(8.6)
(1.2)
-
Retirement benefit surplus/obligations For the Group and Society, amounts presented within \u2018Retirement benefit surplus\u2019 as at 31 December 2024 relate to the Skipton (2015) Scheme. For the Group, the amounts presented within \u2018Retirement benefit obligations\u2019 as at 31 December 2024 include the Connells (2014) Scheme and the Countrywide scheme. The table below shows the net pension (liability) / asset recognised within the Statement of Financial Position: The present value of scheme liabilities is measured by discounting the best estimate of future cash flows to be paid out by the schemes using the projected unit credit method. The value calculated in this way is reflected in the net (liability) / asset within the Statement of Financial Position as shown above. The projected unit credit method is a valuation method in which each potential cash flow from the schemes (for example, annual pension payment or potential lump sum payment on death) is multiplied by an assumed probability of payment and discounted between the valuation date and the time the payment is needed. All remeasurements are recognised in the year in which they occur in the Statement of Comprehensive Income. As all remeasurements and assets are recognised, the deficits shown above are those recognised within the Statement of Financial Position.
2025
2024
Group
Retirement
Retirement
Retirement
\u00a3m
Benefit Total
Benefit
Benefit Total
Obligation
Surplus
Obligation
Fair value of plan assets
158.5
158.5
91.9
103.5
195.4
Fair value of defined benefit obligation
(165.9)
(165.9)
(87.1)
(112.1)
(199.2)
Net pensions (liability) / asset
(7.4)
(7.4)
4.8
(8.6)
(3.8)
2025
2024
Society
Retirement Retirement
\u00a3m
Benefit Total
Benefit Surplus
Total
Obligation
Fair value of plan assets
85.2
85.2
91.9
91.9
Fair value of defined benefit obligation
(86.4)
(86.4)
(87.1)
(87.1)
Net pensions (liability) / asset
(1.2)
(1.2)
4.8
4.8
The actual return on the scheme assets, including interest income on plan assets, over the year ended 31
December 2025 was as follows:
\u2022 Group \u00a3(8.2)m (2024: \u00a3(11.5)m)
\u2022 Society \u00a3(12.4)m (2024: \u00a3(6.2)m)
The table below sets out the fair value of the scheme assets by each major category:
Group
Society
\u00a3m
2025
2024
2025
2024
At 1 January
195.4
191.1
91.9
79.2
Interest income
10.8
10.0
5.5
4.8
Return on plan assets (excluding amounts included
(19.0)
(21.5)
(17.9)
(11.0)
in interest income)
Contributions by employer
14.4
26.0
10.7
23.0
Benefits paid
(11.6)
(10.2)
(5.0)
(4.1)
Settlements paid
(31.5)
-
-
-
At 31 December
158.5
195.4
85.2
91.9
Group
Society
\u00a3m
2025
2024
2025
2024
Diversified growth fund (note A)
24.0
28.2
12.0
14.4
Insured pensioners (annuities) (note B)
85.6
31.3
85.6
-
Liability driven investments (note C)
52.1
125.0
-
76.2
Equities
5.5
5.4
-
-
Cash (note D)
(10.9)
2.9
(12.4)
1.3
Corporate bonds
1.9
1.3
-
-
Government bonds
0.3
1.3
-
-
Total
158.5
195.4
85.2
91.9
The table below sets out a reconciliation of the present value of the defined benefit obligation for the year:
Group
Society
\u00a3m
2025
2024
2025
2024
At 1 January
199.2
217.3
87.1
95.1
Interest expense
10.3
9.9
4.7
4.4
Remeasurement losses / (gains) arising from changes in:
Scheme experience
0.3
0.3
0.2
-
Demographic assumptions
1.7
(0.5)
0.8
(0.2)
Financial assumptions
(2.5)
(17.6)
(1.4)
(8.1)
Actual benefit payments
(11.6)
(10.2)
(5.0)
(4.1)
Settlement payments
(31.5)
-
-
-
At 31 December
165.9
199.2
86.4
87.1
The \u00a331.5m settlement payment relates to the Countrywide scheme buy-out (see page 229 for further
details).
The estimated average duration of the defined benefit obligation as at 31 December 2025 is 12 years (2024:
13 years).
The table below sets out the reconciliation of the fair value of scheme assets for the year:
It is the policy of the Trustee and the Group to review the investment strategy at the time of each funding
valuation. The Trustee\u2019s investment objectives and the processes undertaken to measure and manage the
risks inherent in the scheme investment strategy are documented in the scheme\u2019s Statement of Investment
Principles.
The schemes are exposed to the following investment risks:
\u2022 Credit risk: this is the risk that one party to a financial instrument will cause a financial loss for the other
party by failing to discharge an obligation.
\u2022 Market risk: this comprises currency risk, interest rate risk and other price risk.
\u2022 Currency risk: this is the risk that the fair value or future cash flows of a financial asset will fluctuate
because of changes in foreign exchange rates.
\u2022 Interest rate risk: this is the risk that the fair value or future cash flows of a financial asset will fluctuate
because of changes in market interest rates.
\u2022 Longevity risk: The liabilities are very sensitive to unexpected changes in future mortality. If longevity
increases by more than assumed, then the liabilities will increase at future calculations.
\u2022 Inflation risk: Elements of the pensions in payment under the Scheme increase at an inflation-linked rate,
albeit there are caps applying to the indexation. In addition, the rules of the Scheme require that some
pensions are increased in the period up until payment commences in line with increases in inflation, again
up to a certain cap.
\u2022 Other price risk: this is the risk that the fair value or future cash flows of a financial asset will fluctuate
because of changes in market prices (other than those arising from interest rate risk or currency risk),
whether those changes are caused by factors specific to the individual financial instrument or its issuer, or
factors affecting all similar financial instruments traded in the market.
The main investment objective for the Trustee of the schemes is to maintain a portfolio of suitable assets to
meet, together with future contributions, the benefits payable under the Trust Deed and Rules as they fall due.
Each scheme has exposure to investment risks because of the investments it makes to implement its
investment strategy, as detailed in the Statement of Investment Principles.
The Trustee manages investment risks, including credit risk and market risk, within agreed risk limits which are
set taking into account the scheme\u2019s strategic investment objectives. These investment objectives and risk
limits are implemented through the investment management agreements in place with the scheme\u2019s
investment managers and are monitored by the Trustee by regular reviews of the investment portfolios.
Notes
A. Diversified growth funds (DGF) target equity-like returns with lower volatility which is achieved through dynamic diversification.
Funds are invested in a diversified range of assets, including equities, bonds, property and cash and the allocation between these
asset classes is actively managed by a fund manager reflecting the changing correlations and risk characteristics.
B. An insured pensioner annuity is a type of annuity that is purchased by the scheme to provide a guaranteed income to its members.
The insurer takes on the risk of paying the income, rather than the pension scheme.
C. Liability driven investments (LDI) are investments in assets which are expected to behave in a similar manner to liabilities and
therefore aim to provide a better match against liability movements than conventional bonds or gilts.
D. The negative balance of cash is due to inclusion of the loan to defined benefit pension scheme held at FVTPL (see Note 35), in line
with the provisions of IAS 19
Employee Benefits
.
Each of the schemes invests in an LDI fund which aims to provide protection against interest rate and inflation
movements. The Trustee has an approach to asset-liability matching where the level of coverage of interest
rate sensitivity and inflation sensitivity are set based on a series of funding ratio triggers. This applies to both
the Skipton (2015) Scheme and the Connells (2014) Scheme.
None of the fair values of the assets shown above include any of the Group\u2019s own financial instruments or any
property occupied by, or other assets used by, the Group. The schemes\u2019 assets that are invested in exchange
traded funds have a quoted market price. The remainder use either the price of a recent transaction for an
identical asset (where quoted prices for the asset are unavailable) or valuation techniques using non-
observable data.
Interest rate risk
The schemes\u2019 assets are subject to indirect interest rate risk through their LDI pooled investment vehicles, as
well as DGF pooled investment vehicles due to the bond holdings within these funds.
The schemes\u2019 liabilities are exposed to a significant level of interest rate movement and for this reason it is
desirable for the assets to also be exposed to interest rate risk. The schemes manage interest rate risk by
considering the net risk when taking account of the liabilities valued.
Other price risk
Other price risk arises principally in relation to the schemes\u2019 return seeking portfolio which includes DGFs held
in pooled investment vehicles, as well as the LDI pooled investment vehicles due to the inflation sensitive
elements of the fund. The scheme manages this exposure to other price risk by constructing a diverse
portfolio of investments across various markets.
In addition to the above, the Countrywide scheme has mitigated risks associated with longevity risk, inflation
risk and interest rate risk by securing a proportion of the Scheme\u2019s benefits for members with insurance
companies.
The table below sets out the amounts which have been recognised within the Income Statement. The service
costs are recognised within \u2018Administrative expenses\u2019, whilst the net interest expense is recognised within
\u2018Other operating income\u2019.
Group
Society
\u00a3m
2025
2024
2025
2024
Net interest expense
(0.5)
(0.1)
(0.8)
(0.4)
Total recognised in Income Statement
(0.5)
(0.1)
(0.8)
(0.4)
Credit risk
The schemes invest in pooled investment vehicles and are therefore directly exposed to credit risk in relation
to the pooled investment vehicles and are indirectly exposed to credit risks arising on the financial instruments
held by the vehicles.
The schemes\u2019 holdings in pooled investment vehicles are unrated. Direct credit risk arising from pooled
investment vehicles is mitigated by the underlying assets of the pooled arrangements being ring-fenced from
the pooled manager, the regulatory environments in which the pooled managers operate and diversification of
investments amongst a number of pooled arrangements. The investment manager carries out its own due
diligence checks before a new pooled fund is invested in, and on an ongoing basis monitors any changes to
the regulatory and operating environment of the underlying pooled investment managers.
Indirect credit risk arises in relation to underlying investments held in the LDI pooled investment vehicles, as
well as DGF pooled investment vehicles due to the bond holdings within these funds.
The LDI funds use robust collateralisation management procedures so as to mitigate the impact of credit risk.
Market risk
Currency risk
The schemes do not take explicit unhedged positions in overseas investments through their investment
strategy, either directly or indirectly via pooled investment vehicles.
The DGF managers\u2019 default position is that any investment in overseas assets is hedged back to Sterling in
order to reduce currency risk. The DGF managers may from time to time take unhedged overseas investment
positions in pursuit of growth opportunities or to reduce overall fund risk. Overall, however, their neutral
position is considered to be 100% Sterling.
The table below sets out the Group\u2019s estimate of the aggregate contributions expected to be paid into the
schemes during the year ending 31 December 2026, based on the most recent actuarial valuations:
In line with UK pensions legislation, a formal actuarial valuation (\u2018triennial valuation\u2019) of the assets and
liabilities of each scheme is carried out at least every three years by an independent actuary. The results of the
most recent triennial valuations are set out on page 221. Following completion of the most recent actuarial
valuations carried out, a new schedule of deficit contributions payable by the Group was agreed with the
Trustees. The Group continues to make contributions in line with this schedule.
Group
Society
\u00a3m
2026
2026
Estimated employer contributions
Ongoing
3.0
-
Estimated total contributions
3.0 -
The table below sets out the remeasurements of retirement benefit obligations which have been recognised
within the Statement of Comprehensive Income:
Group
Society
\u00a3m
2025
2024
2025
2024
Remeasurements of retirement benefit obligations:
Actuarial (losses) / gains arising from:
Experience adjustments
(0.3)
(0.3)
(0.2)
-
Demographic assumptions
(1.7)
0.5
(0.8)
0.2
Financial assumptions
2.6
17.6
1.4
8.1
Return on plan assets (excluding amounts included in net
(19.0)
(21.5)
(17.9)
(11.0)
interest expense)
Total amount recognised in Other Comprehensive Income
(18.4)
(3.7)
(17.5)
(2.7)
", "dimensions": { "concept": "ifrs-full:DisclosureOfDefinedBenefitPlansExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-459": { "value": "The fixed rate reset notes are denominated in Sterling. Coupons are paid on a fixed basis semi-annually. The subordinated liabilities listed above were issued under the Society\u2019s \u00a32.0bn Euro Medium Term Note Programme. The \u00a3350m Senior non-preferred (SNP) notes due 2026 were called and redeemed at the optional redemption date of 2 October 2025. The \u00a3350m Senior non-preferred (SNP) notes due 2029 have a maturity date of 25 April 2029 and an optional redemption date of 25 April 2028. The optional redemptions, at 100% of the principal amount plus accrued and unpaid interest up to (but excluding) the date of redemption, are subject to certain conditions. The notes are junior in right of payment to all Senior Claims, pari passu with all other Senior Non-Preferred Claims, and in priority to all Subordinated Claims. Amounts shown in the above table represent the nominal value plus accrued interest, except for \u2018Unamortised discount on issue\u2019 which is the difference between face values and current book values. Senior non-preferred notes contribute to meeting the Society\u2019s MREL requirements.
Group & Society
\u00a3m
2025
2024
Fixed rate reset notes:
Senior non-preferred (SNP) notes due 2026
-
351.7
Senior non-preferred (SNP) notes due 2029
354.1
354.1
354.1
705.8
Unamortised discount on issue:
Senior non-preferred (SNP) notes due 2026
-
(0.2)
Senior non-preferred (SNP) notes due 2029
(1.2)
(1.4)
(1.2)
(1.6)
Fair value adjustment for hedged risk
3.1
(14.0)
356.0
690.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfSubordinatedLiabilitiesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-498": { "value": "
In December 2025, the Society undertook a liability management exercise to buy back the 12.875% legacy Tier
2 eligible Permanent Interest-Bearing Shares (PIBS). The decision to redeem the PIBS resulted in a one-off
charge of \u00a327.9m recognised in the Income Statement line \u2018Charge on buy-back of Permanent Interest-Bearing
Shares\u2019, but will save \u00a33.2m in interest payments per year into perpetuity.
All remaining PIBS are unsecured and rank pari passu with each other. They are deferred shares of the Society
and rank behind the claims against the Society of all subordinated note holders, depositors, payables and
investing members of the Society. These shares are measured at amortised cost.
Group & Society
\u00a3m
2025
2024
8.500% Sterling Permanent Interest
-Bearing Shares
15.2
15.2
12.875% Sterling Permanent Interest
-Bearing Shares
-
26.4
15.2
41.6
", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-460": { "value": "In December 2025, the Society undertook a liability management exercise to buy back the 12.875% legacy Tier 2 eligible Permanent Interest-Bearing Shares (PIBS). The decision to redeem the PIBS resulted in a one-off charge of \u00a327.9m recognised in the Income Statement line \u2018Charge on buy-back of Permanent Interest-Bearing Shares\u2019, but will save \u00a33.2m in interest payments per year into perpetuity. All remaining PIBS are unsecured and rank pari passu with each other. They are deferred shares of the Society and rank behind the claims against the Society of all subordinated note holders, depositors, payables and investing members of the Society. These shares are measured at amortised cost.
Group & Society
\u00a3m
2025
2024
8.500% Sterling Permanent Interest
-Bearing Shares
15.2
15.2
12.875% Sterling Permanent Interest
-Bearing Shares
-
26.4
15.2
41.6
", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-461": { "value": "
a) Cash flows from operating activities
i) Impairment charge / (credits) on financial instruments
For the purposes of the Statements of Cash Flows, amounts presented within the line \u2018Impairment charge /
(credits) on financial instruments\u2019 include the following:
ii) Fair value losses / (gains) on financial instruments held at FVTPL
For the purposes of the Statements of Cash Flows, amounts presented within the line \u2018Fair value losses /
(gains) on financial instruments held at FVTPL\u2019 include the following:
Group
Society
\u00a3m
2025
2024
2025
2024
Fair value gains on hedging instruments and hedged items
(0.9)
(2.0)
(7.0)
(6.9)
Fair value gains on derivatives associated with the equity release
(8.1)
(21.9)
(8.1)
(21.9)
portfolio
Fair value losses on equity release portfolio (Note 18)
14.5
12.6
14.5
12.6
Fair value gains on share warrants
(5.6)
(5.9)
-
-
Fair value losses on put options held by minority shareholders
0.2
0.3
-
-
Fair value gains on equity share investments at FVTPL (Note 20e))
(0.4)
(1.1)
-
-
Fair value (gains) / losses on debt securities at FVTPL
-
-
(3.3)
4.0
Fair value losses on loan to defined benefit pension scheme
2.2
-
2.2
-
1.9
(18.0)
(1.7)
(12.2)
Group
Society
\u00a3m
2025
2024
2025
2024
Impairment charge / (credit) on loans and advances to customers
10.1
(17.1)
6.0
(17.0)
(net of recoveries) (Note 17)
Loans and advances recovered
0.4
0.5
(3.8)
0.4
Impairment credit on liquid assets
(0.1)
(0.1)
(0.1)
(0.1)
Impairment charge on trade receivables (Note 45c))
1.3
0.8
-
-
11.7
(15.9)
2.1
(16.7)
iii) Other non-cash movements
For the purposes of the Statements of Cash Flows, amounts presented within the line \u2018Other non-cash
movements\u2019 include the following:
Group
Society
\u00a3m
2025
2024
2025
2024
(Profit) / loss on disposal of treasury assets
(0.3)
1.8
(0.3)
1.8
Realised losses on equity release portfolio (Note 18)
1.3
1.8
1.3
1.8
Income Statement credit for fair value of subsidiary management
-
(4.2)
-
--
incentive scheme liability (Note 7)
Share of profits from joint ventures
(2.0)
(1.4)
-
-
Profit on disposal of subsidiary undertakings
(10.8)
-
-
-
Other
3.9
(3.0)
(17.3)
(6.3)
(7.9)
(5.0)
(16.3)
(2.7)
b) Cash flows from investing activities
i) Other investing activities
For the purposes of the Statements of Cash Flows, amounts presented within the line \u2018Other investing
activities\u2019 include the following:
c) Cash flows from financing activities
For the purposes of the Statements of Cash Flows, put option obligations, the subsidiary management
incentive scheme, lease liabilities, subordinated liabilities and subscribed capital are classified as liabilities
arising from financing activities. The tables below provide a reconciliation of movements in liabilities arising
from financing activities:
Group
Society
\u00a3m
2025
2024
2025
2024
Purchase of property, plant and equipment and investment property
(14.0)
(22.0)
(6.3)
(10.5)
(Notes 22, 24)
Purchase of intangible assets
(33.8)
(14.9)
(4.1)
(4.1)
Proceeds from disposal of property, plant and equipment,
investment property and intangible assets
2.0
1.9
0.1
-
Dividends received from joint ventures
-
0.5
-
-
Investment in equity share investments (Note 20e))
(1.0)
(5.6)
-
-
Purchase of other business units
(1.7)
(1.2)
-
-
Proceeds on disposal of subsidiary undertakings in the year, net of
cash disposed
9.3
-
-
-
Proceeds from disposal of equity share investments
-
0.3
-
-
Loan advanced to defined benefit pension scheme
(14.6)
-
(14.6)
-
Repayment of loan to defined benefit pension scheme
1.7
-
1.7
-
(52.1)
(41.0)
(23.2)
(14.6)
2025
Group
Put option
Lease liabilities
Subordinated
Subscribed Total
\u00a3m
obligation liabilities capital
At 1 January 2025
4.1
92.1
690.2
41.6
828.0
Cash flow items:
Lease payments (excluding
-
(39.3)
-
-
(39.3)
interest)
Interest paid
-
(4.6)
(29.1)
(5.7)
(39.4)
Exercise of put options by non-
controlling shareholders
(4.2)
-
-
-
(4.2)
Redemption of subordinated
-
-
(350.0)
-
(350.0)
liabilities
Buy-back of Permanent Interest-
Bearing Shares (PIBS)
-
-
-
(52.9)
(52.9)
Non
-cash flow items:
Put option additions
0.1
-
-
-
0.1
Changes in fair values
1.0
-
17.1
-
18.1
Interest expense
-
4.6
27.8
4.3
36.7
Lease additions
-
44.7
-
-
44.7
Lease disposals
-
(1.9)
-
-
(1.9)
Lease modifications /
-
14.7
-
-
14.7
remeasurements
Charge on buy-back of PIBS
-
-
-
27.9
27.9
At 31 December 2025
1.0
110.3
356.0
15.2
482.5
2024
Liability of
Group
Put option subsidiary Lease
Subordinated
Subscribed
\u00a3m
obligation
management
liabilities liabilities capital Total
incentive
scheme
At 1 January 2024
3.5
4.2
103.0
685.3
41.6
837.6
Cash flow items:
Lease payments (excluding
-
-
(39.3)
-
-
(39.3)
interest)
Interest paid
-
-
(3.1)
(29.0)
(4.5)
(36.6)
Non
-cash flow items:
Changes in fair values
0.6
0.3
-
4.3
-
5.2
Interest expense
-
-
3.1
29.6
4.5
37.2
Lease additions
-
-
18.1
-
-
18.1
Lease disposals
-
-
(0.9)
-
-
(0.9)
Lease modifications /
-
-
11.2
-
-
11.2
remeasurements
Release of liability
-
(4.5)
-
-
-
(4.5)
At 31 December 2024
4.1
-
92.1
690.2
41.6
828.0
2025
Society
Lease
Subordinated
Subscribed
Total
\u00a3m
liabilities liabilities capital
At 1 January 2025
8.6
690.2
41.6
740.4
Cash flow items:
Lease payments (excluding interest)
(2.1)
-
-
(2.1)
Interest paid
(0.3)
(29.1)
(5.7)
(35.1)
Redemption of subordinated liabilities
-
(350.0)
-
(350.0)
Buy-back of Permanent Interest-Bearing Shares (PIBS)
-
-
(52.9)
(52.9)
Non
-cash flow items:
Changes in fair values
-
17.1
-
17.1
Interest expense
0.3
27.8
4.3
32.4
Lease additions
1.7
-
-
1.7
Charge on buy-back of PIBS
-
-
27.9
27.9
At 31 December 2025
8.2
356.0
15.2
379.4
2024
Society
Lease
Subordinated
Subscribed
Total
\u00a3m
liabilities liabilities capital
At
1 January 2024
10.3
685.3
41.6
737.2
Cash flow items:
Lease payments (excluding interest)
(2.4)
-
-
(2.4)
Interest paid
(0.3)
(29.0)
(4.5)
(33.8)
Non
-cash flow items:
Changes in fair values
-
4.3
-
4.3
Interest expense
0.3
29.6
4.5
34.4
Lease additions
0.7
-
-
0.7
Lease disposals
(0.1)
-
-
(0.1)
Other
0.1
-
-
0.1
At
31 December 2024
8.6
690.2
41.6
740.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-499": { "value": "a) Cash flows from operating activities i) Impairment charge / (credits) on financial instruments For the purposes of the Statements of Cash Flows, amounts presented within the line \u2018Impairment charge / (credits) on financial instruments\u2019 include the following: ii) Fair value losses / (gains) on financial instruments held at FVTPL For the purposes of the Statements of Cash Flows, amounts presented within the line \u2018Fair value losses / (gains) on financial instruments held at FVTPL\u2019 include the following:
Group
Society
\u00a3m
2025
2024
2025
2024
Fair value gains on hedging instruments and hedged items
(0.9)
(2.0)
(7.0)
(6.9)
Fair value gains on derivatives associated with the equity release
(8.1)
(21.9)
(8.1)
(21.9)
portfolio
Fair value losses on equity release portfolio (Note 18)
14.5
12.6
14.5
12.6
Fair value gains on share warrants
(5.6)
(5.9)
-
-
Fair value losses on put options held by minority shareholders
0.2
0.3
-
-
Fair value gains on equity share investments at FVTPL (Note 20e))
(0.4)
(1.1)
-
-
Fair value (gains) / losses on debt securities at FVTPL
-
-
(3.3)
4.0
Fair value losses on loan to defined benefit pension scheme
2.2
-
2.2
-
1.9
(18.0)
(1.7)
(12.2)
Group
Society
\u00a3m
2025
2024
2025
2024
Impairment charge / (credit) on loans and advances to customers
10.1
(17.1)
6.0
(17.0)
(net of recoveries) (Note 17)
Loans and advances recovered
0.4
0.5
(3.8)
0.4
Impairment credit on liquid assets
(0.1)
(0.1)
(0.1)
(0.1)
Impairment charge on trade receivables (Note 45c))
1.3
0.8
-
-
11.7
(15.9)
2.1
(16.7)
iii) Other non-cash movements For the purposes of the Statements of Cash Flows, amounts presented within the line \u2018Other non-cash movements\u2019 include the following:
Group
Society
\u00a3m
2025
2024
2025
2024
(Profit) / loss on disposal of treasury assets
(0.3)
1.8
(0.3)
1.8
Realised losses on equity release portfolio (Note 18)
1.3
1.8
1.3
1.8
Income Statement credit for fair value of subsidiary management
-
(4.2)
-
--
incentive scheme liability (Note 7)
Share of profits from joint ventures
(2.0)
(1.4)
-
-
Profit on disposal of subsidiary undertakings
(10.8)
-
-
-
Other
3.9
(3.0)
(17.3)
(6.3)
(7.9)
(5.0)
(16.3)
(2.7)
", "dimensions": { "concept": "skiptonbuilding:DisclosureOfCashFlowsFromOperatingActivities", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-500": { "value": "b) Cash flows from investing activities i) Other investing activities For the purposes of the Statements of Cash Flows, amounts presented within the line \u2018Other investing activities\u2019 include the following:
Group
Society
\u00a3m
2025
2024
2025
2024
Purchase of property, plant and equipment and investment property
(14.0)
(22.0)
(6.3)
(10.5)
(Notes 22, 24)
Purchase of intangible assets
(33.8)
(14.9)
(4.1)
(4.1)
Proceeds from disposal of property, plant and equipment,
investment property and intangible assets
2.0
1.9
0.1
-
Dividends received from joint ventures
-
0.5
-
-
Investment in equity share investments (Note 20e))
(1.0)
(5.6)
-
-
Purchase of other business units
(1.7)
(1.2)
-
-
Proceeds on disposal of subsidiary undertakings in the year, net of
cash disposed
9.3
-
-
-
Proceeds from disposal of equity share investments
-
0.3
-
-
Loan advanced to defined benefit pension scheme
(14.6)
-
(14.6)
-
Repayment of loan to defined benefit pension scheme
1.7
-
1.7
-
(52.1)
(41.0)
(23.2)
(14.6)
", "dimensions": { "concept": "skiptonbuilding:DisclosureOfCashFlowsFromInvestingActivities", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-501": { "value": "c) Cash flows from financing activities For the purposes of the Statements of Cash Flows, put option obligations, the subsidiary management incentive scheme, lease liabilities, subordinated liabilities and subscribed capital are classified as liabilities arising from financing activities. The tables below provide a reconciliation of movements in liabilities arising from financing activities:
2025
Group
Put option
Lease liabilities
Subordinated
Subscribed Total
\u00a3m
obligation liabilities capital
At 1 January 2025
4.1
92.1
690.2
41.6
828.0
Cash flow items:
Lease payments (excluding
-
(39.3)
-
-
(39.3)
interest)
Interest paid
-
(4.6)
(29.1)
(5.7)
(39.4)
Exercise of put options by non-
controlling shareholders
(4.2)
-
-
-
(4.2)
Redemption of subordinated
-
-
(350.0)
-
(350.0)
liabilities
Buy-back of Permanent Interest-
Bearing Shares (PIBS)
-
-
-
(52.9)
(52.9)
Non
-cash flow items:
Put option additions
0.1
-
-
-
0.1
Changes in fair values
1.0
-
17.1
-
18.1
Interest expense
-
4.6
27.8
4.3
36.7
Lease additions
-
44.7
-
-
44.7
Lease disposals
-
(1.9)
-
-
(1.9)
Lease modifications /
-
14.7
-
-
14.7
remeasurements
Charge on buy-back of PIBS
-
-
-
27.9
27.9
At 31 December 2025
1.0
110.3
356.0
15.2
482.5
2024
Liability of
Group
Put option subsidiary Lease
Subordinated
Subscribed
\u00a3m
obligation
management
liabilities liabilities capital Total
incentive
scheme
At 1 January 2024
3.5
4.2
103.0
685.3
41.6
837.6
Cash flow items:
Lease payments (excluding
-
-
(39.3)
-
-
(39.3)
interest)
Interest paid
-
-
(3.1)
(29.0)
(4.5)
(36.6)
Non
-cash flow items:
Changes in fair values
0.6
0.3
-
4.3
-
5.2
Interest expense
-
-
3.1
29.6
4.5
37.2
Lease additions
-
-
18.1
-
-
18.1
Lease disposals
-
-
(0.9)
-
-
(0.9)
Lease modifications /
-
-
11.2
-
-
11.2
remeasurements
Release of liability
-
(4.5)
-
-
-
(4.5)
At 31 December 2024
4.1
-
92.1
690.2
41.6
828.0
2025
Society
Lease
Subordinated
Subscribed
Total
\u00a3m
liabilities liabilities capital
At 1 January 2025
8.6
690.2
41.6
740.4
Cash flow items:
Lease payments (excluding interest)
(2.1)
-
-
(2.1)
Interest paid
(0.3)
(29.1)
(5.7)
(35.1)
Redemption of subordinated liabilities
-
(350.0)
-
(350.0)
Buy-back of Permanent Interest-Bearing Shares (PIBS)
-
-
(52.9)
(52.9)
Non
-cash flow items:
Changes in fair values
-
17.1
-
17.1
Interest expense
0.3
27.8
4.3
32.4
Lease additions
1.7
-
-
1.7
Charge on buy-back of PIBS
-
-
27.9
27.9
At 31 December 2025
8.2
356.0
15.2
379.4
2024
Society
Lease
Subordinated
Subscribed
Total
\u00a3m
liabilities liabilities capital
At
1 January 2024
10.3
685.3
41.6
737.2
Cash flow items:
Lease payments (excluding interest)
(2.4)
-
-
(2.4)
Interest paid
(0.3)
(29.0)
(4.5)
(33.8)
Non
-cash flow items:
Changes in fair values
-
4.3
-
4.3
Interest expense
0.3
29.6
4.5
34.4
Lease additions
0.7
-
-
0.7
Lease disposals
(0.1)
-
-
(0.1)
Other
0.1
-
-
0.1
At
31 December 2024
8.6
690.2
41.6
740.4
", "dimensions": { "concept": "skiptonbuilding:DisclosureOfCashFlowsFromFinancingActivities", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-524": { "value": "The Society has confirmed it will provide continuing support to its subsidiary undertakings that have net liabilities or which rely on it for ongoing funding. SIL continues to undertake a review exercise following feedback from the Guernsey Financial Services Commission (GFSC) in 2023 as part of the latter\u2019s PRISM (Probability Risk and Impact SysteM) approach to supervision. As at 31 December 2025, SIL has assessed that it is probable that further costs may be incurred in relation to this matter. However, at this stage, it is not possible to make a reliable estimate of the amount or timing of any cost. Accordingly, no provision has been recognised in the financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-515": { "value": "The Society has confirmed it will provide continuing support to its subsidiary undertakings that have net liabilities or which rely on it for ongoing funding. SIL continues to undertake a review exercise following feedback from the Guernsey Financial Services Commission (GFSC) in 2023 as part of the latter\u2019s PRISM (Probability Risk and Impact SysteM) approach to supervision. As at 31 December 2025, SIL has assessed that it is probable that further costs may be incurred in relation to this matter. However, at this stage, it is not possible to make a reliable estimate of the amount or timing of any cost. Accordingly, no provision has been recognised in the financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-502": { "value": "The Society has confirmed it will provide continuing support to its subsidiary undertakings that have net liabilities or which rely on it for ongoing funding. SIL continues to undertake a review exercise following feedback from the Guernsey Financial Services Commission (GFSC) in 2023 as part of the latter\u2019s PRISM (Probability Risk and Impact SysteM) approach to supervision. As at 31 December 2025, SIL has assessed that it is probable that further costs may be incurred in relation to this matter. However, at this stage, it is not possible to make a reliable estimate of the amount or timing of any cost. Accordingly, no provision has been recognised in the financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-462": { "value": "
2025
2024
Group
Before-tax
Tax (expense)
Net-of-tax Before-tax
Tax benefit /
Net-of-tax
\u00a3m
amount / benefit amount amount (expense) amount
Financial assets held at FVOCI
6.0
(1.7)
4.3
(1.7)
0.6
(1.1)
Cash flow hedges
(9.4)
2.6
(6.8)
16.3
(4.6)
11.7
Cost of hedging reserve
1.4
(0.4)
1.0
(1.2)
0.3
(0.9)
Remeasurements of defined
(18.4)
5.1
(13.3)
(3.7)
1.0
(2.7)
benefit obligations
Translation of foreign operations
(0.4)
-
(0.4)
(1.4)
-
(1.4)
Other comprehensive income
(20.8)
5.6
(15.2)
8.3
(2.7)
5.6
2025
2024
Society
Before-tax
Tax (expense)
Net-of-tax Before-tax
Tax benefit /
Net-of-tax
\u00a3m
amount / benefit amount amount (expense) amount
Financial assets held at FVOCI
6.0
(1.7)
4.3
(1.8)
0.5
(1.3)
Cash flow hedges
11.5
(3.2)
8.3
10.7
(3.0)
7.7
Cost of hedging reserve
0.1
-
0.1
-
-
-
Remeasurements of defined
(17.5)
4.9
(12.6)
(2.7)
0.8
(1.9)
benefit obligations
Other comprehensive income
0.1
-
0.1
6.2
(1.7)
4.5
", "dimensions": { "concept": "skiptonbuilding:DisclosureOfTaxEffectsRelatingToEachComponentOfOtherComprehensiveIncome", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-463": { "value": "
The Group uses derivative financial instruments (derivatives) to manage the risks arising from its operations.
The Board has authorised the use of derivatives by the Group to reduce the risk of loss arising from changes in
market risks in accordance with Section 9A(4) of the Building Societies Act 1986 and derivatives are used by
the Group for economic hedging purposes only. The Group does not run a trading book.
The principal derivatives used by the Group are interest rate swaps, index swaps and cross currency swaps
that are used to hedge Group exposures arising from fixed rate lending and savings products, funding and
investment activities. The accounting policies for derivatives are described in Note 1f) to the Accounts.
For the purpose of assessing hedge effectiveness, the Group determines the economic relationship between
the hedged item and the hedging instrument by comparing the terms of each item, including reference rate,
notional amount and maturity.
Risk management strategy
The Group has a formal structure for managing risk, including established risk limits, reporting requirements,
mandates and other control procedures. This structure is reviewed regularly by the Asset & Liability Committee
(ALCO).
Interest rate risk
The main market risk faced by the Group is interest rate risk. Interest rate risk is the risk that the fair values of
financial assets or financial liabilities, or future cash flows receivable or payable on financial assets or
financial liabilities, fluctuate as a result of changes in market interest rates.
Interest rate risk predominantly arises on the fixed rate mortgages and savings products offered by the Group.
Further detail on the Group\u2019s exposure to interest rate risk is found in Note 44.
The Group uses the following derivatives to hedge its exposure to interest rate risk:
Fair value hedges of interest rate risk
Portfolio hedging
The Group manages the interest rate risk arising from fixed rate mortgages and savings by entering into swaps
on a frequent basis. The level of exposure from the mortgage portfolio frequently changes due to new loans
being originated, contractual customer repayments and early customer repayments. As a result, the Group
adopts a dynamic hedging strategy to hedge the interest rate risk component within the exposure profile by
entering into new swap agreements each month. The Group uses a portfolio of fair value hedges of interest
rate risk to recognise fair value changes related to changes in interest rate risk on fixed rate mortgages and
savings products, to therefore reduce the profit or loss volatility that would otherwise occur from changes in
the fair value of the interest rate swaps alone.
The hedge relationship is reassessed prospectively each month in order that the hedging ratio is recalibrated
to be close to 100%, thereby reducing hedge ineffectiveness. The hedging ratio is the level of hedged items
designated in the portfolio against hedging instruments, taking into consideration the maturities of the hedge.
Occasionally hedge ineffectiveness can arise, i.e. the derivative fails to hedge the interest rate risk to the extent
that is expected. The Group assesses hedge ineffectiveness on an ongoing basis. Where the Group assesses
that the hedge relationship has changed to such an extent that the existing hedge ratio is no longer suitable,
the hedging relationship would be rebalanced to ensure hedge effectiveness.
The main sources of ineffectiveness in fair value hedges of interest rate risk are:
\u2022 Differences between the expected and actual volume of customer prepayments, as the Group hedges to the
expected repayment date taking into account expected prepayments based on past experience;
\u2022 Differences in the timing of cash flows from the mortgage loans and the interest rate swaps; and
\u2022 Differences in the maturities of the interest rate swap and the mortgage loans.
Micro hedging
Fair value hedge relationships are also designated for hedging the interest rate risk component arising from
the Group\u2019s liquidity portfolio, Medium Term Note (MTN) liabilities and wholesale deposits. For these items, a
hedge is taken out specifically for the individual asset or liability, and therefore critical terms of the hedged
item and hedging instrument match. Where critical terms match, the fair value adjustment on the hedged item
offsets exactly the change in fair value of the hedging instrument.
The Group assesses all of its micro fair value hedges of interest rate risk to have a hedge effectiveness ratio of
100%, as all derivatives hedge an amount of underlying instrument equal to the notional amount.
Hedge ineffectiveness could potentially arise if critical terms do not exactly match, amendments were made to
either the hedged item or the hedging instrument, or if there were significant changes in the credit rating of the
hedged item or hedging instrument\u2019s counterparties; the Group has assessed the likelihood of this to be low.
Cash flow hedges of interest rate risk
The Group also has exposure to interest rate risk arising from its free reserves portfolio, which is composed of
reserves held in excess of required reserves. The Group uses derivatives to hedge this risk component and
accounts for these derivatives as cash flow hedges against variable rate instruments. The aim of cash flow
hedging is to reduce the exposure to variability in cash flows arising from a financial asset or liability. The
variable rate on the hedging instrument, i.e. the swap, offsets the hedged items, which are SONIA-linked
financial assets or liabilities.
Hedge ineffectiveness for cash flow hedges is assessed using the \u2018hypothetical derivative\u2019 method and
ineffectiveness has been assessed as \u00a3nil (2024: \u00a3nil) for the Group\u2019s cash flow hedges.
Hedge ineffectiveness could potentially arise if amendments were made to either the hedged item or the
hedging instrument, or if there were significant changes in the credit rating of the hedged item or hedging
instrument\u2019s counterparties; the Group has assessed the likelihood of this to be low.
Currency risk
Fair value hedges of currency risk
The Group has entered into two (2024: one) cross-currency swap agreements to hedge the foreign currency
risk and interest rate risk components arising from: the Society\u2019s Euro covered bond issuances: and loans to
overseas subsidiaries.
Currency risk on covered bond issuances
Fixed rate Euro-denominated receipts are swapped to floating rate Sterling payments through these
derivatives. The derivative is entered into by the LLP, with the hedged item being the term advance from the
Society to the LLP, which mirrors the bond issued by the Society, effectively hedging the debt issued by the
Society. Foreign currency basis spread is priced into the derivative but is excluded from the hedging
relationship and any gain or loss arising from this is recognised directly in reserves in the cost of hedging
reserve, as permitted by IFRS 9.
Currency risk on loans to overseas subsidiaries
Fixed rate receipts from the subsidiary are denominated in New Zealand dollars, these are swapped to sterling
through this derivative. The derivative is entered into by the Society, with the hedged item being the intragroup
loan to the subsidiary. Foreign currency basis spread is priced into the derivative but is excluded from the
hedging relationship and any gain or loss arising from this is recognised directly in reserves in the cost of
hedging reserve, as permitted by IFRS 9. The society receives 90% of the interest cash flows from the
subsidiary with the remainder reclaimed from NZ Tax Authority due to double taxation treaties with New
Zealand. As a result, only 90% of the cash flows on the hedged item is included in the hedge accounting
relationship, resulting in some ineffectiveness in the income statement.
Equity release portfolio
In addition to the above, the Group holds derivative financial instruments to economically hedge the equity
release portfolio which do not qualify as being in a designated hedging relationship for accounting purposes.
As the derivatives held to hedge the equity release portfolio are not in a hedge accounting relationship, they are
not included in the tables on pages 235 to 239. Further information on the derivatives held to hedge this
portfolio can be found in Note 18.
2025
2024
Group
Up to 3 3 - 12 1 \u2013 5 Over Up to 3 3 - 12 1 \u2013 5 Over
months months years 5 years Months months years 5 years
Cash flow hedges
Interest rate swaps
Notional (\u00a3m)
-
-
2,152.0
760.0
-
-
2,291.5
571.5
Weighted average fixed
-
-
3.6%
3.7%
-
-
3.8%
3.8%
interest rate (%)
Fair value hedges
Interest rate swaps
Notional (\u00a3m)
3,376.3
11,414.5
20,293.2
1,087.3
3,988.3
13,699.0
16,872.2
1,538.5
Weighted average fixed
3.9%
3.3%
3.6%
3.1%
4.3%
3.7%
3.2%
3.2%
interest rate (%)
Cross currency swaps
Notional (\u00a3m)
-
-
431.9
-
-
-
421.3
-
Weighted average fixed
-
-
3.3%
-
-
-
3.3%
-
interest rate (%)
2025
2024
Society
Up to 3 3 - 12 1 \u2013 5 Over Up to 3 3 - 12 1 \u2013 5 Over
months months years 5 years months months years 5 years
Cash flow hedges
Interest rate swaps
Notional (\u00a3m)
40.2
325.0
2,936.3
776.7
23.0
145.0
3,214.3
571.5
Weighted average fixed
1.9%
2.6%
3.6%
3.7%
3.6%
2.6%
3.6%
3.8%
interest rate (%)
Fair value hedges
Interest rate swaps
Notional (\u00a3m)
3,416.8
11,530.8
20,695.2
1,087.3
4,110.7
13,813.2
17,205.5
1,538.5
Weighted average fixed
3.9%
3.3%
3.6%
3.1%
4.2%
3.6%
3.1%
3.2%
interest rate (%)
Cross currency swaps
Notional (\u00a3m)
-
-
10.7
-
-
-
-
-
Weighted average fixed
-
-
5.9%
-
-
-
-
-
interest rate (%)
Other derivatives not held in an accounting hedge Certain other derivatives cannot be accounted for in a fair value or cash flow hedge as the economic hedging relationship does not meet the criteria set out by IFRS 9. These derivatives are held at FVTPL and their change in fair value is included within the Income Statement line \u2018Fair value gains on financial instruments mandatorily held at FVTPL\u2019. Hedging instruments The following tables set out the maturity profile and average price and rate of the hedging instruments used in the Group\u2019s and Society\u2019s hedge accounting strategies. The tables below provide further detail on the Group\u2019s and Society\u2019s fair value hedges used in hedge accounting relationships: Notes A. The Statement of Financial Position lines that include these items are \u2018Derivative financial instruments\u2019. B. The change in fair value during the period that was used as the basis for calculating hedge ineffectiveness and which was recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. C. The amount of hedge ineffectiveness recognised in the Income Statement during the year. The Income Statement line that includes the hedge ineffectiveness recognised during the period is \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. D. In addition, \u00a31.4m of fair value gains (2024: \u00a31.2m losses) for the Group, and \u00a30.1m of fair value gains (2024: \u00a3nil) for the Society, were recognised directly in the cost of hedging reserve of the Group and Society respectively, due to ineffectiveness arising as a result of foreign currency basis spread as described in Note 1f). The tables below provide further detail on the Group\u2019s and Society\u2019s cash flow hedges used in hedge accounting relationships. Notes A. The Statement of Financial Position lines that include these items are \u2018Derivative financial instruments\u2019. B. The change in fair value during the period that was used as the basis for calculating hedge ineffectiveness and is recognised within the \u2018Cash flow hedging reserve: (Losses) / gains taken to equity\u2019 line of the Statement of Comprehensive Income. There was no hedge ineffectiveness recognised during either 2025 or 2024 in respect of the Group or Society\u2019s cashflow hedges.
Carrying amount (note A) Change in fair value
Losses reclassified from
\u00a3m
Notional
Assets
Liabilities
(charge) / credit
OCI to Income Statement
(note B)
2025
Group
Interest rate swaps
2,912.0
4.0
(22.1)
(13.5)
(6.0)
2025
Society
Interest rate swaps
4,078.2
10.6
(30.2)
15.7
(6.0)
2024
Group
Interest rate swaps
2,863.0
17.5
(22.1)
52.8
45.9
2024
Society
Interest rate swaps
3,953.8
20.1
(55.4)
47.0
45.9
Carrying amount (note A) Change in fair value Hedge ineffectiveness
(charge) / credit (credit) / charge
\u00a3m
Notional
Assets
Liabilities
(note B) (note C)
2025
Group
Interest rate swaps
36,171.3
296.4
(150.6)
(380.3)
(2.1)
Cross currency
D
431.9
29.0
-
19.3
0.1
swaps
2025
Society
Interest rate swaps
36,730.1
298.7
(161.4)
(366.2)
(2.1)
Cross currency
D
10.7
0.2
-
0.2
-
swaps
2024
Group
Interest rate swaps
36,068.0
697.4
(171.3)
(124.0)
5.7
Cross currency
D
421.3
8.3
-
33.1
(0.8)
swaps
2024
Society
Interest rate swaps
36,667.9
699.0
(195.5)
(105.1)
6.3
2024
Carrying amount Amount
Fair value
Change in fair
remaining on
adjustment on
value credit /
items de-
Group
Assets
Liabilities
hedged item
SoFP line (charge)
designated
\u00a3m
(note A) (note B)
from hedge
relationship
(note C)
Cash flow hedges
Floating rate assets
1,667.3
-
n/a
note D
n/a
37.6
Floating rate liabilities
-
1,195.7
n/a
note E
n/a
(10.0)
Fair value hedges
Fixed rate mortgages
21,210.0
-
(274.6)
note F
76.3
-
Debt securities
2,206.9
-
(79.2)
note D
(26.9)
-
Fixed rate savings
-
12,445.7
(1.8)
note G
1.5
-
Covered bonds
-
418.6
3.7
note E
26.5
-
Subordinated liabilities
-
705.8
(14.0)
note H
4.2
-
Hedged items The tables below provide further detail on the Group\u2019s and Society\u2019s hedged items: 2025
Carrying amount Amount
Fair value
remaining on
adjustment on
Change in fair
items de-
Group
Assets
Liabilities
hedged item
SoFP line value credit
designated
\u00a3m
(note A) (note B)
from hedge
relationship
(note C)
Cash flow hedges
Floating rate assets
670.5
-
n/a
note D
n/a
32.5
Floating rate liabilities
-
2,241.5
n/a
note E
n/a
(2.0)
Fair value hedges
Fixed rate mortgages
21,024.8
-
58.9
note F
333.5
-
Debt securities
2,049.9
-
(36.0)
note D
43.2
-
Fixed rate savings
-
11,617.6
56.5
note G
58.3
-
Covered bonds
-
442.7
22.3
note E
18.6
-
Due from Group companies
-
-
(0.1)
note I
(0.1)
-
Subordinated liabilities
-
354.1
3.1
note H
17.1
-
Notes A. Fair value adjustments on hedged items are included within the Statement of Financial Position (SoFP) as adjustments to the relevant SoFP line; see below notes for details. B. The change in fair value during the period that is used as the basis for calculating hedge ineffectiveness and is recognised within the Income Statement line \u2019Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Hedging instruments and hedged items\u2019. C. The accumulated amount of fair value hedge adjustments remaining (in the cash flow hedging reserve for cash flow hedges) for any hedged items that have ceased to be adjusted for hedging gains and losses. D. The SoFP lines that include these items are \u2018Debt securities\u2019 and \u2018Investments in subsidiary undertakings and joint ventures\u2019. E. The SoFP line that includes these items is \u2018Debt securities in issue\u2019. F. The SoFP line that includes these items is \u2018Loans and advances to customers held at amortised cost\u2019. G. The SoFP lines that include these items are \u2018Shares\u2019 (Group and Society) and \u2018Amounts owed to other customers\u2019 (Group only). H. The SoFP line that includes these items is \u2018Subordinated liabilities\u2019. I. The SoFP line that includes these items is \u2018Investments in subsidiary undertakings and joint ventures\u2019. 2024
Carrying amount Amount
Fair value
Change in fair
remaining on
adjustment on
value credit /
items de-
Society
Assets
Liabilities
hedged item
SoFP line (charge)
designated
\u00a3m
(note A) (note B)
from hedge
relationship
(note C)
Cash flow hedges
Floating rate assets
1,775.3
-
n/a
note D
n/a
37.6
Floating rate liabilities
-
2,178.5
n/a
note E
n/a
(10.1)
Fair value hedges
Fixed rate mortgages
21,325.2
-
(271.7)
note F
75.7
-
Debt securities
2,206.9
-
(79.3)
note D
(26.9)
-
Fixed rate savings
-
12,930.5
(16.2)
note G
14.6
-
Subordinated liabilities
-
705.8
(14.0)
note H
4.2
-
2025
Carrying amount Amount
Fair value
Change in fair
remaining on
adjustment on
value credit /
items de-
Society
Assets
Liabilities
hedged item
SoFP line (charge)
designated
\u00a3m
(note A) (note B)
from hedge
relationship
(note C)
Cash flow hedges
Floating rate assets
1,597.8
n/a
note D
n/a
32.5
Floating rate liabilities
2,480.4
n/a
note E
n/a
(4.2)
Fair value hedges
Fixed rate mortgages
21,024.8
-
60.9
note F
332.6
-
Debt securities
2,049.9
-
(36.1)
note D
43.2
-
Fixed rate savings
-
12,176.4
54.5
note G
70.7
-
Due from Group companies
10.7
-
(0.1)
note I
(0.1)
-
Subordinated liabilities
-
354.1
3.1
note H
17.1
-
2025
2024
Group
Cash flow Cost of Cash flow Cost of
\u00a3m
hedging hedging Total hedging hedging Total
reserve reserve reserve reserve
Balance at 1 January
16.6
(1.4)
15.2
4.9
(0.5)
4.4
Change in fair value of derivatives in effective hedging relationships:
Held to hedge interest rate
(6.3)
1.4
(4.9)
6.3
(1.2)
5.1
risk
Net amounts reclassified to profit or loss from derivatives:
Held to hedge interest rate
(3.1)
-
(3.1)
10.0
-
10.0
risk
Tax on movements in reserves
2.6
(0.4)
2.2
(4.6)
0.3
(4.3)
during the year
Balance at 31 December
9.8
(0.4)
9.4
16.6
(1.4)
15.2
2025
2024
Cash flow Cost of Cash flow Cost of
Society
hedging hedging Total hedging hedging Total
\u00a3m
reserve reserve reserve reserve
Balance at 1 January
1.3
-
1.3
(6.4)
-
(6.4)
Change in fair value of derivatives in effective hedging relationships:
Held to hedge interest rate
16.7
0.1
16.8
0.9
-
0.9
risk
Net amounts reclassified to profit or loss from derivatives:
Held to hedge interest rate
(5.2)
-
(5.2)
9.8
-
9.8
risk
Tax on movements in reserves
(3.2)
-
(3.2)
(3.0)
-
(3.0)
during the year
Balance at 31 December
9.6
0.1
9.7
1.3
-
1.3
Carrying amount Change in fair value
recognised in OCI:
Amount reclassified from
\u00a3m
Notional
Assets
Liabilities
credit / (charge)
OCI to Income Statement
(note A)
2025
Group
Cross currency
431.9
29.0
-
1.4
-
swaps
2025
Society
Cross currency
10.7
0.2
-
0.1
-
swaps
2024
Group
Cross currency
421.3
8.4
-
(1.2)
-
swaps
Note A. The change in fair value during the period is recognised within the \u2019Cash flow hedging reserve: (Losses) / gains taken to equity\u2019 line of the Statement of Comprehensive Income. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-503": { "value": "The Group uses derivative financial instruments (derivatives) to manage the risks arising from its operations. The Board has authorised the use of derivatives by the Group to reduce the risk of loss arising from changes in market risks in accordance with Section 9A(4) of the Building Societies Act 1986 and derivatives are used by the Group for economic hedging purposes only. The Group does not run a trading book. The principal derivatives used by the Group are interest rate swaps, index swaps and cross currency swaps that are used to hedge Group exposures arising from fixed rate lending and savings products, funding and investment activities. The accounting policies for derivatives are described in Note 1f) to the Accounts. For the purpose of assessing hedge effectiveness, the Group determines the economic relationship between the hedged item and the hedging instrument by comparing the terms of each item, including reference rate, notional amount and maturity. Risk management strategy The Group has a formal structure for managing risk, including established risk limits, reporting requirements, mandates and other control procedures. This structure is reviewed regularly by the Asset & Liability Committee (ALCO). Interest rate risk The main market risk faced by the Group is interest rate risk. Interest rate risk is the risk that the fair values of financial assets or financial liabilities, or future cash flows receivable or payable on financial assets or financial liabilities, fluctuate as a result of changes in market interest rates. Interest rate risk predominantly arises on the fixed rate mortgages and savings products offered by the Group. Further detail on the Group\u2019s exposure to interest rate risk is found in Note 44. The Group uses the following derivatives to hedge its exposure to interest rate risk: Fair value hedges of interest rate risk Portfolio hedging The Group manages the interest rate risk arising from fixed rate mortgages and savings by entering into swaps on a frequent basis. The level of exposure from the mortgage portfolio frequently changes due to new loans being originated, contractual customer repayments and early customer repayments. As a result, the Group adopts a dynamic hedging strategy to hedge the interest rate risk component within the exposure profile by entering into new swap agreements each month. The Group uses a portfolio of fair value hedges of interest rate risk to recognise fair value changes related to changes in interest rate risk on fixed rate mortgages and savings products, to therefore reduce the profit or loss volatility that would otherwise occur from changes in the fair value of the interest rate swaps alone. The hedge relationship is reassessed prospectively each month in order that the hedging ratio is recalibrated to be close to 100%, thereby reducing hedge ineffectiveness. The hedging ratio is the level of hedged items designated in the portfolio against hedging instruments, taking into consideration the maturities of the hedge. Occasionally hedge ineffectiveness can arise, i.e. the derivative fails to hedge the interest rate risk to the extent that is expected. The Group assesses hedge ineffectiveness on an ongoing basis. Where the Group assesses that the hedge relationship has changed to such an extent that the existing hedge ratio is no longer suitable, the hedging relationship would be rebalanced to ensure hedge effectiveness. The main sources of ineffectiveness in fair value hedges of interest rate risk are: \u2022 Differences between the expected and actual volume of customer prepayments, as the Group hedges to the expected repayment date taking into account expected prepayments based on past experience; \u2022 Differences in the timing of cash flows from the mortgage loans and the interest rate swaps; and \u2022 Differences in the maturities of the interest rate swap and the mortgage loans. Micro hedging Fair value hedge relationships are also designated for hedging the interest rate risk component arising from the Group\u2019s liquidity portfolio, Medium Term Note (MTN) liabilities and wholesale deposits. For these items, a hedge is taken out specifically for the individual asset or liability, and therefore critical terms of the hedged item and hedging instrument match. Where critical terms match, the fair value adjustment on the hedged item offsets exactly the change in fair value of the hedging instrument. The Group assesses all of its micro fair value hedges of interest rate risk to have a hedge effectiveness ratio of 100%, as all derivatives hedge an amount of underlying instrument equal to the notional amount. Hedge ineffectiveness could potentially arise if critical terms do not exactly match, amendments were made to either the hedged item or the hedging instrument, or if there were significant changes in the credit rating of the hedged item or hedging instrument\u2019s counterparties; the Group has assessed the likelihood of this to be low. Cash flow hedges of interest rate risk The Group also has exposure to interest rate risk arising from its free reserves portfolio, which is composed of reserves held in excess of required reserves. The Group uses derivatives to hedge this risk component and accounts for these derivatives as cash flow hedges against variable rate instruments. The aim of cash flow hedging is to reduce the exposure to variability in cash flows arising from a financial asset or liability. The variable rate on the hedging instrument, i.e. the swap, offsets the hedged items, which are SONIA-linked financial assets or liabilities. Hedge ineffectiveness for cash flow hedges is assessed using the \u2018hypothetical derivative\u2019 method and ineffectiveness has been assessed as \u00a3nil (2024: \u00a3nil) for the Group\u2019s cash flow hedges. Hedge ineffectiveness could potentially arise if amendments were made to either the hedged item or the hedging instrument, or if there were significant changes in the credit rating of the hedged item or hedging instrument\u2019s counterparties; the Group has assessed the likelihood of this to be low. Currency risk Fair value hedges of currency risk The Group has entered into two (2024: one) cross-currency swap agreements to hedge the foreign currency risk and interest rate risk components arising from: the Society\u2019s Euro covered bond issuances: and loans to overseas subsidiaries. Currency risk on covered bond issuances Fixed rate Euro-denominated receipts are swapped to floating rate Sterling payments through these derivatives. The derivative is entered into by the LLP, with the hedged item being the term advance from the Society to the LLP, which mirrors the bond issued by the Society, effectively hedging the debt issued by the Society. Foreign currency basis spread is priced into the derivative but is excluded from the hedging relationship and any gain or loss arising from this is recognised directly in reserves in the cost of hedging reserve, as permitted by IFRS 9. Currency risk on loans to overseas subsidiaries Fixed rate receipts from the subsidiary are denominated in New Zealand dollars, these are swapped to sterling through this derivative. The derivative is entered into by the Society, with the hedged item being the intragroup loan to the subsidiary. Foreign currency basis spread is priced into the derivative but is excluded from the hedging relationship and any gain or loss arising from this is recognised directly in reserves in the cost of hedging reserve, as permitted by IFRS 9. The society receives 90% of the interest cash flows from the subsidiary with the remainder reclaimed from NZ Tax Authority due to double taxation treaties with New Zealand. As a result, only 90% of the cash flows on the hedged item is included in the hedge accounting relationship, resulting in some ineffectiveness in the income statement. Equity release portfolio In addition to the above, the Group holds derivative financial instruments to economically hedge the equity release portfolio which do not qualify as being in a designated hedging relationship for accounting purposes. As the derivatives held to hedge the equity release portfolio are not in a hedge accounting relationship, they are not included in the tables on pages 235 to 239. Further information on the derivatives held to hedge this portfolio can be found in Note 18.
2025
2024
Group
Up to 3 3 - 12 1 \u2013 5 Over Up to 3 3 - 12 1 \u2013 5 Over
months months years 5 years Months months years 5 years
Cash flow hedges
Interest rate swaps
Notional (\u00a3m)
-
-
2,152.0
760.0
-
-
2,291.5
571.5
Weighted average fixed
-
-
3.6%
3.7%
-
-
3.8%
3.8%
interest rate (%)
Fair value hedges
Interest rate swaps
Notional (\u00a3m)
3,376.3
11,414.5
20,293.2
1,087.3
3,988.3
13,699.0
16,872.2
1,538.5
Weighted average fixed
3.9%
3.3%
3.6%
3.1%
4.3%
3.7%
3.2%
3.2%
interest rate (%)
Cross currency swaps
Notional (\u00a3m)
-
-
431.9
-
-
-
421.3
-
Weighted average fixed
-
-
3.3%
-
-
-
3.3%
-
interest rate (%)
2025
2024
Society
Up to 3 3 - 12 1 \u2013 5 Over Up to 3 3 - 12 1 \u2013 5 Over
months months years 5 years months months years 5 years
Cash flow hedges
Interest rate swaps
Notional (\u00a3m)
40.2
325.0
2,936.3
776.7
23.0
145.0
3,214.3
571.5
Weighted average fixed
1.9%
2.6%
3.6%
3.7%
3.6%
2.6%
3.6%
3.8%
interest rate (%)
Fair value hedges
Interest rate swaps
Notional (\u00a3m)
3,416.8
11,530.8
20,695.2
1,087.3
4,110.7
13,813.2
17,205.5
1,538.5
Weighted average fixed
3.9%
3.3%
3.6%
3.1%
4.2%
3.6%
3.1%
3.2%
interest rate (%)
Cross currency swaps
Notional (\u00a3m)
-
-
10.7
-
-
-
-
-
Weighted average fixed
-
-
5.9%
-
-
-
-
-
interest rate (%)
Other derivatives not held in an accounting hedge Certain other derivatives cannot be accounted for in a fair value or cash flow hedge as the economic hedging relationship does not meet the criteria set out by IFRS 9. These derivatives are held at FVTPL and their change in fair value is included within the Income Statement line \u2018Fair value gains on financial instruments mandatorily held at FVTPL\u2019. Hedging instruments The following tables set out the maturity profile and average price and rate of the hedging instruments used in the Group\u2019s and Society\u2019s hedge accounting strategies. The tables below provide further detail on the Group\u2019s and Society\u2019s fair value hedges used in hedge accounting relationships: Notes A. The Statement of Financial Position lines that include these items are \u2018Derivative financial instruments\u2019. B. The change in fair value during the period that was used as the basis for calculating hedge ineffectiveness and which was recognised in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. C. The amount of hedge ineffectiveness recognised in the Income Statement during the year. The Income Statement line that includes the hedge ineffectiveness recognised during the period is \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019. D. In addition, \u00a31.4m of fair value gains (2024: \u00a31.2m losses) for the Group, and \u00a30.1m of fair value gains (2024: \u00a3nil) for the Society, were recognised directly in the cost of hedging reserve of the Group and Society respectively, due to ineffectiveness arising as a result of foreign currency basis spread as described in Note 1f). The tables below provide further detail on the Group\u2019s and Society\u2019s cash flow hedges used in hedge accounting relationships. Notes A. The Statement of Financial Position lines that include these items are \u2018Derivative financial instruments\u2019. B. The change in fair value during the period that was used as the basis for calculating hedge ineffectiveness and is recognised within the \u2018Cash flow hedging reserve: (Losses) / gains taken to equity\u2019 line of the Statement of Comprehensive Income. There was no hedge ineffectiveness recognised during either 2025 or 2024 in respect of the Group or Society\u2019s cashflow hedges.
Carrying amount (note A) Change in fair value
Losses reclassified from
\u00a3m
Notional
Assets
Liabilities
(charge) / credit
OCI to Income Statement
(note B)
2025
Group
Interest rate swaps
2,912.0
4.0
(22.1)
(13.5)
(6.0)
2025
Society
Interest rate swaps
4,078.2
10.6
(30.2)
15.7
(6.0)
2024
Group
Interest rate swaps
2,863.0
17.5
(22.1)
52.8
45.9
2024
Society
Interest rate swaps
3,953.8
20.1
(55.4)
47.0
45.9
Carrying amount (note A) Change in fair value Hedge ineffectiveness
(charge) / credit (credit) / charge
\u00a3m
Notional
Assets
Liabilities
(note B) (note C)
2025
Group
Interest rate swaps
36,171.3
296.4
(150.6)
(380.3)
(2.1)
Cross currency
D
431.9
29.0
-
19.3
0.1
swaps
2025
Society
Interest rate swaps
36,730.1
298.7
(161.4)
(366.2)
(2.1)
Cross currency
D
10.7
0.2
-
0.2
-
swaps
2024
Group
Interest rate swaps
36,068.0
697.4
(171.3)
(124.0)
5.7
Cross currency
D
421.3
8.3
-
33.1
(0.8)
swaps
2024
Society
Interest rate swaps
36,667.9
699.0
(195.5)
(105.1)
6.3
2024
Carrying amount Amount
Fair value
Change in fair
remaining on
adjustment on
value credit /
items de-
Group
Assets
Liabilities
hedged item
SoFP line (charge)
designated
\u00a3m
(note A) (note B)
from hedge
relationship
(note C)
Cash flow hedges
Floating rate assets
1,667.3
-
n/a
note D
n/a
37.6
Floating rate liabilities
-
1,195.7
n/a
note E
n/a
(10.0)
Fair value hedges
Fixed rate mortgages
21,210.0
-
(274.6)
note F
76.3
-
Debt securities
2,206.9
-
(79.2)
note D
(26.9)
-
Fixed rate savings
-
12,445.7
(1.8)
note G
1.5
-
Covered bonds
-
418.6
3.7
note E
26.5
-
Subordinated liabilities
-
705.8
(14.0)
note H
4.2
-
Hedged items The tables below provide further detail on the Group\u2019s and Society\u2019s hedged items: 2025
Carrying amount Amount
Fair value
remaining on
adjustment on
Change in fair
items de-
Group
Assets
Liabilities
hedged item
SoFP line value credit
designated
\u00a3m
(note A) (note B)
from hedge
relationship
(note C)
Cash flow hedges
Floating rate assets
670.5
-
n/a
note D
n/a
32.5
Floating rate liabilities
-
2,241.5
n/a
note E
n/a
(2.0)
Fair value hedges
Fixed rate mortgages
21,024.8
-
58.9
note F
333.5
-
Debt securities
2,049.9
-
(36.0)
note D
43.2
-
Fixed rate savings
-
11,617.6
56.5
note G
58.3
-
Covered bonds
-
442.7
22.3
note E
18.6
-
Due from Group companies
-
-
(0.1)
note I
(0.1)
-
Subordinated liabilities
-
354.1
3.1
note H
17.1
-
Notes A. Fair value adjustments on hedged items are included within the Statement of Financial Position (SoFP) as adjustments to the relevant SoFP line; see below notes for details. B. The change in fair value during the period that is used as the basis for calculating hedge ineffectiveness and is recognised within the Income Statement line \u2019Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Hedging instruments and hedged items\u2019. C. The accumulated amount of fair value hedge adjustments remaining (in the cash flow hedging reserve for cash flow hedges) for any hedged items that have ceased to be adjusted for hedging gains and losses. D. The SoFP lines that include these items are \u2018Debt securities\u2019 and \u2018Investments in subsidiary undertakings and joint ventures\u2019. E. The SoFP line that includes these items is \u2018Debt securities in issue\u2019. F. The SoFP line that includes these items is \u2018Loans and advances to customers held at amortised cost\u2019. G. The SoFP lines that include these items are \u2018Shares\u2019 (Group and Society) and \u2018Amounts owed to other customers\u2019 (Group only). H. The SoFP line that includes these items is \u2018Subordinated liabilities\u2019. I. The SoFP line that includes these items is \u2018Investments in subsidiary undertakings and joint ventures\u2019. 2024
Carrying amount Amount
Fair value
Change in fair
remaining on
adjustment on
value credit /
items de-
Society
Assets
Liabilities
hedged item
SoFP line (charge)
designated
\u00a3m
(note A) (note B)
from hedge
relationship
(note C)
Cash flow hedges
Floating rate assets
1,775.3
-
n/a
note D
n/a
37.6
Floating rate liabilities
-
2,178.5
n/a
note E
n/a
(10.1)
Fair value hedges
Fixed rate mortgages
21,325.2
-
(271.7)
note F
75.7
-
Debt securities
2,206.9
-
(79.3)
note D
(26.9)
-
Fixed rate savings
-
12,930.5
(16.2)
note G
14.6
-
Subordinated liabilities
-
705.8
(14.0)
note H
4.2
-
2025
Carrying amount Amount
Fair value
Change in fair
remaining on
adjustment on
value credit /
items de-
Society
Assets
Liabilities
hedged item
SoFP line (charge)
designated
\u00a3m
(note A) (note B)
from hedge
relationship
(note C)
Cash flow hedges
Floating rate assets
1,597.8
n/a
note D
n/a
32.5
Floating rate liabilities
2,480.4
n/a
note E
n/a
(4.2)
Fair value hedges
Fixed rate mortgages
21,024.8
-
60.9
note F
332.6
-
Debt securities
2,049.9
-
(36.1)
note D
43.2
-
Fixed rate savings
-
12,176.4
54.5
note G
70.7
-
Due from Group companies
10.7
-
(0.1)
note I
(0.1)
-
Subordinated liabilities
-
354.1
3.1
note H
17.1
-
2025
2024
Group
Cash flow Cost of Cash flow Cost of
\u00a3m
hedging hedging Total hedging hedging Total
reserve reserve reserve reserve
Balance at 1 January
16.6
(1.4)
15.2
4.9
(0.5)
4.4
Change in fair value of derivatives in effective hedging relationships:
Held to hedge interest rate
(6.3)
1.4
(4.9)
6.3
(1.2)
5.1
risk
Net amounts reclassified to profit or loss from derivatives:
Held to hedge interest rate
(3.1)
-
(3.1)
10.0
-
10.0
risk
Tax on movements in reserves
2.6
(0.4)
2.2
(4.6)
0.3
(4.3)
during the year
Balance at 31 December
9.8
(0.4)
9.4
16.6
(1.4)
15.2
2025
2024
Cash flow Cost of Cash flow Cost of
Society
hedging hedging Total hedging hedging Total
\u00a3m
reserve reserve reserve reserve
Balance at 1 January
1.3
-
1.3
(6.4)
-
(6.4)
Change in fair value of derivatives in effective hedging relationships:
Held to hedge interest rate
16.7
0.1
16.8
0.9
-
0.9
risk
Net amounts reclassified to profit or loss from derivatives:
Held to hedge interest rate
(5.2)
-
(5.2)
9.8
-
9.8
risk
Tax on movements in reserves
(3.2)
-
(3.2)
(3.0)
-
(3.0)
during the year
Balance at 31 December
9.6
0.1
9.7
1.3
-
1.3
Carrying amount Change in fair value
recognised in OCI:
Amount reclassified from
\u00a3m
Notional
Assets
Liabilities
credit / (charge)
OCI to Income Statement
(note A)
2025
Group
Cross currency
431.9
29.0
-
1.4
-
swaps
2025
Society
Cross currency
10.7
0.2
-
0.1
-
swaps
2024
Group
Cross currency
421.3
8.4
-
(1.2)
-
swaps
Note A. The change in fair value during the period is recognised within the \u2019Cash flow hedging reserve: (Losses) / gains taken to equity\u2019 line of the Statement of Comprehensive Income. ", "dimensions": { "concept": "ifrs-full:DisclosureOfHedgeAccountingExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-464": { "value": "
Liquidity risk is the risk that the Group is unable to meet its current and future financial obligations as they fall
due, or is only able to do so at excessive cost. It is an inherent part of the Group\u2019s business as long-term
mortgages are funded mainly by shorter term retail customer balances. Mortgages can have a contractual
maturity date of, for example, 25 years but in practice are frequently repaid early; conversely retail deposits,
nominally repayable on demand or with short notice periods, frequently remain with the Group beyond their
contractual notice. It is this mismatch in the maturity profiles of retail assets and liabilities that creates liquidity
risk.
The Group\u2019s liquidity policy is designed to ensure the maintenance of sufficient liquid assets to cover statutory,
regulatory and operational requirements. This is achieved through maintaining a sufficient level of liquid
assets in realisable form to ensure the Group is able to meet its liabilities as they arise and to absorb potential
cash flow requirements created by the maturity mismatches referred to above or by a liquidity stress scenario.
ALCO manages liquidity under delegated authority, within risk appetite limits established by the Board, and
also monitors the composition of liquidity in line with risk management objectives.
The Group\u2019s liquidity is managed as follows:
\u2022 the Board establishes limits over the quantity and quality of the Group\u2019s portfolio of liquid assets. The
portfolio is monitored and managed by the Treasury function and overseen by ALCO under a series of
delegated authorities;
\u2022 the Treasury function conducts a series of weekly and monthly stress tests that are designed to ensure that
the Group\u2019s liquidity is sufficient to meet its cash flow needs under any one of a number of adverse
scenarios should they arise. The scenarios include both Group specific and general market events, and
incorporate both severe retail savings outflows and the unavailability of wholesale funding; and
\u2022 under the Regulatory liquidity regime, the Group is required to hold highly liquid assets (such as government
and supranational debt securities and cash) to satisfy the Liquidity Coverage Ratio (LCR).
There are two measures that the Group considers key to monitoring its liquidity position:
\u2022 LCR \u2013 which analyses the amount of high quality liquidity that it is necessary to hold to survive a 30 day
regulatory stress scenario; and
\u2022 liquidity stress tests \u2013 whereby, as noted above, the Group models how far its liquid asset holdings would
fall under a number of different stress scenarios.
The tables below analyse the carrying value of financial assets and financial liabilities into relevant maturity
groupings based on the remaining maturity period at the reporting date to the contractual maturity. In practice,
customer deposits, i.e. shares, amounts owed to credit institutions and amounts owed to other customers, are
likely to be repaid later than on the earliest date on which repayment can be required.
2025
Group
Repayable
Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m
on demand
months months years years
specified
Total
maturity
Assets
Cash in hand and balances with the
Bank of England
1,360.2
-
-
-
-
-
1,360.2
Loans and advances to credit
88.8
-
-
-
-
264.5
353.3
institutions
Debt securities
-
809.4
253.6
2,536.5
669.9
-
4,269.4
Derivative financial
-
17.3
75.6
179.9
78.0
-
350.8
instruments
Loans and advances to customers
196.6
27.1
77.4
994.5
32,083.3
-
33,378.9
held at amortised cost
Loans and advances to
customers held at FVTPL
0.8
-
-
-
-
-
0.8
Equity release portfolio at FVTPL
-
6.3
18.6
76.4
161.8
-
263.1
Equity share investments at FVTPL
-
-
-
-
-
18.3
18.3
Trade receivables
31.0
42.6
-
-
-
-
73.6
Total financial assets
1,677.4
902.7
425.2
3,787.3
32,993.0
282.8
40,068.4
Liabilities
Shares
13,614.8
2,843.4
8,787.9
5,193.4
86.8
-
30,526.3
Amounts owed to credit institutions
9.7
167.9
6.4
-
-
143.2
327.2
Amounts owed to other customers
820.3
559.9
1,229.5
109.9
-
-
2,719.6
Debt securities in issue
-
0.5
-
3,361.4
-
-
3,361.9
Derivative financial instruments
-
5.6
27.5
138.6
14.5
-
186.2
Lease liabilities
-
7.9
21.9
64.8
15.7
-
110.3
Trade payables
-
14.4
-
-
-
-
14.4
Fair value of put option obligation
-
-
0.7
0.3
-
-
1.0
Subordinated liabilities
-
-
-
356.0
-
-
356.0
Subscribed capital
-
-
-
-
-
15.2
15.2
Total financial liabilities
14,444.8
3,599.6
10,073.9
9,224.4
117.0
158.4
37,618.1
Net liquidity gap
(12,767.4)
(2,696.9)
(9,648.7)
(5,437.1)
32,876.0
124.4
2,450.3
2024 (restated*)
Group
Repayable
Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m
on demand
months months years years
specified
Total
maturity
Assets
Cash in hand and balances with the
Bank of England
1,930.6
-
-
-
-
-
1,930.6
Loans and advances to credit
121.5
1.6
1.0
-
-
290.5
414.6
institutions
Debt securities
-
492.9
826.3
2,222.1
808.3
-
4,349.6
Derivative financial
-
25.2
99.2
513.0
114.7
-
752.1
instruments
Loans and advances to customers
188.4
28.9
55.5
942.8
29,385.5
-
30,601.1
held at amortised cost
Loans and advances to
customers held at FVTPL
0.9
-
-
-
-
-
0.9
Equity release portfolio at FVTPL
-
6.6
19.2
70.1
181.3
-
277.2
Equity share investments at FVTPL
-
-
-
-
-
16.9
16.9
Trade receivables
30.5
38.3
-
-
-
-
68.9
Share warrants
21.9
-
-
-
-
-
21.9
Other assets
-
-
-
-
-
0.1
0.1
Total financial assets
2,293.8
593.5
1,001.2
3,748.0
30,489.8
307.5
38,433.8
Liabilities
Shares
11,415.2
3,715.1
9,162.4
3,889.0
86.8
-
28,268.5
Amounts owed to credit institutions
19.0
6.1
1,017.2
-
-
557.3
1,599.6
Amounts owed to other customers
895.9
715.4
1,018.2
121.6
-
-
2,751.1
Debt securities in issue
-
5.9
-
2,429.4
-
-
2,435.3
Derivative financial instruments
-
14.3
60.7
115.3
34.8
-
225.1
Lease liabilities
-
7.1
19.5
52.2
13.3
-
92.1
Trade payables
-
11.0
-
-
-
-
11.0
Fair value of put option obligation
-
-
3.8
0.3
-
-
4.1
Subordinated liabilities
-
-
-
340.0
350.2
-
690.2
Subscribed capital
-
-
-
-
-
41.6
41.6
Total financial liabilities
12,330.1
4,474.9
11,281.8
6,947.8
485.1
598.9
36,118.6
Net liquidity gap
(10,036.3)
(3,881.4)
(10,280.6)
(3,199.8)
30,004.7
(291.4)
2,315.2
* The information shown above for the year ended 31 December 2024 is restated to reflect the appropriate presentation of financial
liabilities, specifically in relation to Debt securities in issue (see Note 1c) for details).
2025
Society
Repayable
Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m
on demand
months months years years
specified
Total
maturity
Assets
Cash in hand and balances with the
Bank of England
1,360.2
-
-
-
-
-
1,360.2
Loans and advances to credit
31.2
-
-
-
-
273.5
304.7
Institutions
Debt securities
-
593.1
253.6
2,758.8
669.9
-
4,275.4
Derivative financial
-
17.4
75.9
159.3
80.5
-
333.1
Instruments
Loans and advances to customers
3.0
26.8
75.5
988.0
30,028.0
-
31,121.3
held at amortised cost
Loans and advances to
customers held at FVTPL
0.8
-
-
-
-
-
0.8
Equity release portfolio at FVTPL
-
6.3
18.6
76.4
161.8
-
263.1
Loans to subsidiary undertakings
454.7
-
-
-
-
-
454.7
Trade receivables
1.5
-
-
-
-
-
1.5
Total financial assets
1,851.4
643.6
423.6
3,982.5
30,940.2
273.5
38,114.8
Liabilities
Shares
13,614.8
2,843.4
8,787.9
5,193.4
84.8
-
30,524.3
Amounts owed to credit institutions
9.7
353.8
6.4
-
-
143.2
513.1
Amounts owed to other customers
508.3
32.4
14.3
616.9
-
-
1,171.9
Debt securities in issue
-
-
-
2,955.0
-
-
2,955.0
Derivative financial instruments
-
8.2
34.1
148.2
14.5
-
205.0
Lease liabilities
-
0.5
1.4
5.2
1.1
-
8.2
Trade payables
-
3.4
-
-
-
-
3.4
Subordinated liabilities
-
-
-
356.0
-
-
356.0
Subscribed capital
-
-
-
-
-
15.2
15.2
Total financial liabilities
14,132.8
3,241.7
8,844.1
9,274.7
100.4
158.4
35,752.1
Net liquidity gap
(12,281.4)
(2,598.1)
(8,420.5)
(5,292.2)
30,839.8
115.1
2,362.7
* The information shown above for the year ended 31 December 2024 is restated to reflect the appropriate presentation of financial liabilities, specifically in relation to Debt securities in issue (see Note 1c) for details). With respect to loans and advances to customers presented within the tables above, each outstanding loan balance is allocated in full to a single maturity grouping according to that loan\u2019s contractual maturity date (regardless of any scheduled repayments that may be receivable prior to the contractual maturity date). Loans and advances to customers presented as repayable on demand represent those loans and advances that are on call and at short notice. With respect to the equity release portfolio, contractual maturity arises in the event of the borrower\u2019s voluntary redemption, death or move to long-term care. For the purposes of the tables above, amounts have been allocated to maturity groupings based on the anticipated redemption profiles applied in the Group\u2019s equity release portfolio valuation model (see Note 1f) and Note 1v) for further details). Group debt securities in issue include \u00a3398.3m (2024: \u00a3491.6m) of funding obtained through the Group\u2019s securitisation issuances carried out through Darrowby No. 6 plc. The final maturity dates of the securitisation notes are significantly out into the future however the Group can exercise a call option to repurchase the outstanding Darrowby No. 6 notes at a date within the next five years. As a result, all such amounts have been shown within 1 to 5 years in the tables above.
2024 (restated*)
Society
Repayable
Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m
on demand
months months years years
specified
Total
maturity
Assets
Cash in hand and balances with the
Bank of England
1,930.6
-
-
-
-
-
1,930.6
Loans and advances to credit
54.0
-
1.0
-
-
342.8
397.8
Institutions
Debt securities
-
273.9
768.5
2,489.4
808.3
-
4,340.1
Derivative financial
-
25.5
99.5
507.7
110.3
-
743.0
Instruments
Loans and advances to customers
3.2
28.9
53.8
905.6
27,343.4
-
28,334.9
held at amortised cost
Loans and advances to
customers held at FVTPL
0.9
-
-
-
-
-
0.9
Equity release portfolio at FVTPL
-
6.6
19.2
70.1
181.3
-
277.2
Loans to subsidiary undertakings
403.9
-
-
-
-
-
403.9
Trade receivables
1.9
-
-
-
-
-
1.9
Total financial assets
2,394.5
334.9
942.0
3,972.8
28,443.3
342.8
36,430.3
Liabilities
Shares
11,415.2
3,715.1
9,162.4
3,889.0
72.4
-
28,254.1
Amounts owed to credit institutions
19.0
207.1
1,017.2
-
-
557.3
1,800.6
Amounts owed to other customers
470.4
49.9
-
748.6
-
-
1,268.9
Debt securities in issue
-
5.1
-
1,925.0
-
-
1,930.1
Derivative financial instruments
-
17.7
67.1
162.6
34.8
-
282.2
Lease liabilities
-
0.5
1.5
5.2
1.4
-
8.6
Trade payables
-
2.8
-
-
-
-
2.8
Subordinated liabilities
-
-
-
340.0
350.2
-
690.2
Subscribed capital
-
-
-
-
-
41.6
41.6
Total financial liabilities
11,904.6
3,998.2
10,248.2
7,070.4
458.8
598.9
34,279.1
Net liquidity gap
(9,510.1)
(3,663.3)
(9,306.2)
(3,097.6)
27,984.5
(256.1)
2,151.2
The following table is an analysis of undiscounted gross contractual cash flows payable on financial liabilities:
Note
A. With respect to subscribed capital, gross contractual cash flows represent interest payable on the Group\u2019s Permanent Interest-
Bearing Shares (PIBS) (see Note 38). Following buy-back of the 12.875% legacy Tier 2 eligible PIBS in the year, as described in Note
38, the undiscounted gross interest payable each year by the Group going forwards is \u00a31.3m per annum (2024: \u00a34.5m per annum).
As the PIBS have no specified contractual maturity (as shown on pages 241 and 242), it is not possible to calculate the total amount
of undiscounted gross interest that is payable beyond 5 years (i.e. into perpetuity). Also, as the PIBS have no specified contractual
maturity, the amounts shown in the tables above do not anticipate any future repurchase of the PIBS by the Group.
The undiscounted gross contractual cash flows of debt securities in issue that have been issued as
securitisation funding in the tables above have been calculated on the assumption that the call options
referred to on page 244 are exercised.
The Group has off-balance sheet exposure from commitments to lend where a mortgage has been offered but
not yet completed. The total amount of such loan commitments at 31 December 2025 is \u00a32,197.8m (2024:
\u00a31,885.1m) which are due within 3 months.
2025
Group
Up to 3 3 - 12 1 - 5 Over 5 Total
\u00a3m
months months years years
Shares
16,471.6
9,003.6
5,592.3
87.9
31,155.4
Amounts owed to credit institutions, other customers and
debt securities in issue
1,382.3
1,752.0
3,634.3
-
6,768.6
Derivative financial instruments
8.9
51.9
132.0
0.1
192.9
Lease liabilities
8.4
27.8
73.4
23.2
132.8
Trade payables
14.4
-
-
-
14.4
Fair value of put option obligation
-
0.7
0.4
-
1.1
Subordinated liabilities
-
21.9
393.8
-
415.7
Subscribed capital
-
1.3
5.1
note A
6.4
Total
17,885.6
10,859.2
9,831.3
111.2
38,687.3
2024
Group
Up to 3 3 - 12 1 - 5 Over 5 Total
\u00a3m
months months years years
Shares
15,148.0
9,408.1
4,148.1
86.8
28,791.0
Amounts owed to credit institutions, other customers and
debt securities in issue
1,552.1
3,057.5
2,569.6
-
7,179.2
Derivative financial instruments
20.9
98.8
104.1
11.9
235.7
Lease liabilities
7.5
25.2
58.7
20.8
112.2
Trade payables
11.0
-
-
-
11.0
Fair value of put option obligation
-
3.9
0.4
-
4.3
Subordinated liabilities
-
28.9
769.1
-
798.0
Subscribed capital
1.6
2.9
18.0
note A
22.5
Total
16,741.1
12,625.3
7,668.0
119.5
37,153.9
Note A. With respect to subscribed capital, gross contractual cash flows represent interest payable on the Society\u2019s Permanent Interest- Bearing Shares (PIBS) (see Note 38). Following buy-back of the 12.875% legacy Tier 2 PIBS in the year, as described in Note 38, the undiscounted gross interest payable each year by the Society going forwards is \u00a31.3m per annum (2024: \u00a34.5m per annum). As the PIBS have no specified contractual maturity (as shown on pages 243 and 244, it is not possible to calculate the total amount of undiscounted gross interest that is payable beyond 5 years (i.e. into perpetuity). Also, as the PIBS have no specified contractual maturity, the amounts shown in the tables above do not anticipate any future repurchase of the PIBS by the Society. Amounts owed to other customers in the Society tables above include a deemed loan from the Group\u2019s securitisation vehicle Darrowby No. 6 plc, which arise from the funding transactions carried out through that entity. The undiscounted gross contractual cash flows arising on this loan have been calculated on the assumption that the call options referred to on page 244 are exercised. The Society has off-balance sheet exposure from commitments to lend where a mortgage has been offered but not yet completed. The total amount of such loan commitments at 31 December 2025 is \u00a32,155.4m (2024: \u00a31,867.3m) which are due within 3 months. Society \u00a3m
2025
Up to 3 3 - 12 1 - 5 Over 5 Total
months months years years
Shares
16,471.6
9,003.6
5,592.3
85.9
31,153.4
Amounts owed to credit institutions, other customers and
debt securities in issue
758.9
566.7
3,796.7
-
5,122.3
Derivative financial instruments
8.9
60.5
134.7
0.1
204.2
Lease liabilities
0.6
1.5
5.8
1.2
9.1
Trade payables
3.4
-
-
-
3.4
Subordinated liabilities
-
21.9
393.8
-
415.7
Subscribed capital
-
1.3
5.1
note A
6.4
Total
17,243.4
9,655.5
9,928.4
87.2
36,914.5
Society \u00a3m
2024
Up to 3 3 - 12 1 - 5 Over 5 Total
months months years years
Shares
15,148.0
9,408.1
4,148.1
72.4
28,776.6
Amounts owed to credit institutions, other customers and
debt securities in issue
653.0
1,944.9
2,925.1
-
5,523.0
Derivative financial instruments
35.5
122.7
130.5
11.9
300.6
Lease liabilities
0.6
1.6
5.6
1.5
9.3
Trade payables
2.8
-
-
-
2.8
Subordinated liabilities
-
28.9
769.1
-
798.0
Subscribed capital
1.6
2.9
18.0
note A
22.5
Total
15,841.5
11,509.1
7,996.4
85.8
35,432.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-532": { "value": "Liquidity risk is the risk that the Group is unable to meet its current and future financial obligations as they fall due, or is only able to do so at excessive cost. It is an inherent part of the Group\u2019s business as long-term mortgages are funded mainly by shorter term retail customer balances. Mortgages can have a contractual maturity date of, for example, 25 years but in practice are frequently repaid early; conversely retail deposits, nominally repayable on demand or with short notice periods, frequently remain with the Group beyond their contractual notice. It is this mismatch in the maturity profiles of retail assets and liabilities that creates liquidity risk. The Group\u2019s liquidity policy is designed to ensure the maintenance of sufficient liquid assets to cover statutory, regulatory and operational requirements. This is achieved through maintaining a sufficient level of liquid assets in realisable form to ensure the Group is able to meet its liabilities as they arise and to absorb potential cash flow requirements created by the maturity mismatches referred to above or by a liquidity stress scenario. ALCO manages liquidity under delegated authority, within risk appetite limits established by the Board, and also monitors the composition of liquidity in line with risk management objectives. The Group\u2019s liquidity is managed as follows: \u2022 the Board establishes limits over the quantity and quality of the Group\u2019s portfolio of liquid assets. The portfolio is monitored and managed by the Treasury function and overseen by ALCO under a series of delegated authorities; \u2022 the Treasury function conducts a series of weekly and monthly stress tests that are designed to ensure that the Group\u2019s liquidity is sufficient to meet its cash flow needs under any one of a number of adverse scenarios should they arise. The scenarios include both Group specific and general market events, and incorporate both severe retail savings outflows and the unavailability of wholesale funding; and \u2022 under the Regulatory liquidity regime, the Group is required to hold highly liquid assets (such as government and supranational debt securities and cash) to satisfy the Liquidity Coverage Ratio (LCR). There are two measures that the Group considers key to monitoring its liquidity position: \u2022 LCR \u2013 which analyses the amount of high quality liquidity that it is necessary to hold to survive a 30 day regulatory stress scenario; and \u2022 liquidity stress tests \u2013 whereby, as noted above, the Group models how far its liquid asset holdings would fall under a number of different stress scenarios. The tables below analyse the carrying value of financial assets and financial liabilities into relevant maturity groupings based on the remaining maturity period at the reporting date to the contractual maturity. In practice, customer deposits, i.e. shares, amounts owed to credit institutions and amounts owed to other customers, are likely to be repaid later than on the earliest date on which repayment can be required.
2025
Group
Repayable
Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m
on demand
months months years years
specified
Total
maturity
Assets
Cash in hand and balances with the
Bank of England
1,360.2
-
-
-
-
-
1,360.2
Loans and advances to credit
88.8
-
-
-
-
264.5
353.3
institutions
Debt securities
-
809.4
253.6
2,536.5
669.9
-
4,269.4
Derivative financial
-
17.3
75.6
179.9
78.0
-
350.8
instruments
Loans and advances to customers
196.6
27.1
77.4
994.5
32,083.3
-
33,378.9
held at amortised cost
Loans and advances to
customers held at FVTPL
0.8
-
-
-
-
-
0.8
Equity release portfolio at FVTPL
-
6.3
18.6
76.4
161.8
-
263.1
Equity share investments at FVTPL
-
-
-
-
-
18.3
18.3
Trade receivables
31.0
42.6
-
-
-
-
73.6
Total financial assets
1,677.4
902.7
425.2
3,787.3
32,993.0
282.8
40,068.4
Liabilities
Shares
13,614.8
2,843.4
8,787.9
5,193.4
86.8
-
30,526.3
Amounts owed to credit institutions
9.7
167.9
6.4
-
-
143.2
327.2
Amounts owed to other customers
820.3
559.9
1,229.5
109.9
-
-
2,719.6
Debt securities in issue
-
0.5
-
3,361.4
-
-
3,361.9
Derivative financial instruments
-
5.6
27.5
138.6
14.5
-
186.2
Lease liabilities
-
7.9
21.9
64.8
15.7
-
110.3
Trade payables
-
14.4
-
-
-
-
14.4
Fair value of put option obligation
-
-
0.7
0.3
-
-
1.0
Subordinated liabilities
-
-
-
356.0
-
-
356.0
Subscribed capital
-
-
-
-
-
15.2
15.2
Total financial liabilities
14,444.8
3,599.6
10,073.9
9,224.4
117.0
158.4
37,618.1
Net liquidity gap
(12,767.4)
(2,696.9)
(9,648.7)
(5,437.1)
32,876.0
124.4
2,450.3
2024 (restated*)
Group
Repayable
Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m
on demand
months months years years
specified
Total
maturity
Assets
Cash in hand and balances with the
Bank of England
1,930.6
-
-
-
-
-
1,930.6
Loans and advances to credit
121.5
1.6
1.0
-
-
290.5
414.6
institutions
Debt securities
-
492.9
826.3
2,222.1
808.3
-
4,349.6
Derivative financial
-
25.2
99.2
513.0
114.7
-
752.1
instruments
Loans and advances to customers
188.4
28.9
55.5
942.8
29,385.5
-
30,601.1
held at amortised cost
Loans and advances to
customers held at FVTPL
0.9
-
-
-
-
-
0.9
Equity release portfolio at FVTPL
-
6.6
19.2
70.1
181.3
-
277.2
Equity share investments at FVTPL
-
-
-
-
-
16.9
16.9
Trade receivables
30.5
38.3
-
-
-
-
68.9
Share warrants
21.9
-
-
-
-
-
21.9
Other assets
-
-
-
-
-
0.1
0.1
Total financial assets
2,293.8
593.5
1,001.2
3,748.0
30,489.8
307.5
38,433.8
Liabilities
Shares
11,415.2
3,715.1
9,162.4
3,889.0
86.8
-
28,268.5
Amounts owed to credit institutions
19.0
6.1
1,017.2
-
-
557.3
1,599.6
Amounts owed to other customers
895.9
715.4
1,018.2
121.6
-
-
2,751.1
Debt securities in issue
-
5.9
-
2,429.4
-
-
2,435.3
Derivative financial instruments
-
14.3
60.7
115.3
34.8
-
225.1
Lease liabilities
-
7.1
19.5
52.2
13.3
-
92.1
Trade payables
-
11.0
-
-
-
-
11.0
Fair value of put option obligation
-
-
3.8
0.3
-
-
4.1
Subordinated liabilities
-
-
-
340.0
350.2
-
690.2
Subscribed capital
-
-
-
-
-
41.6
41.6
Total financial liabilities
12,330.1
4,474.9
11,281.8
6,947.8
485.1
598.9
36,118.6
Net liquidity gap
(10,036.3)
(3,881.4)
(10,280.6)
(3,199.8)
30,004.7
(291.4)
2,315.2
* The information shown above for the year ended 31 December 2024 is restated to reflect the appropriate presentation of financial liabilities, specifically in relation to Debt securities in issue (see Note 1c) for details).
2025
Society
Repayable
Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m
on demand
months months years years
specified
Total
maturity
Assets
Cash in hand and balances with the
Bank of England
1,360.2
-
-
-
-
-
1,360.2
Loans and advances to credit
31.2
-
-
-
-
273.5
304.7
Institutions
Debt securities
-
593.1
253.6
2,758.8
669.9
-
4,275.4
Derivative financial
-
17.4
75.9
159.3
80.5
-
333.1
Instruments
Loans and advances to customers
3.0
26.8
75.5
988.0
30,028.0
-
31,121.3
held at amortised cost
Loans and advances to
customers held at FVTPL
0.8
-
-
-
-
-
0.8
Equity release portfolio at FVTPL
-
6.3
18.6
76.4
161.8
-
263.1
Loans to subsidiary undertakings
454.7
-
-
-
-
-
454.7
Trade receivables
1.5
-
-
-
-
-
1.5
Total financial assets
1,851.4
643.6
423.6
3,982.5
30,940.2
273.5
38,114.8
Liabilities
Shares
13,614.8
2,843.4
8,787.9
5,193.4
84.8
-
30,524.3
Amounts owed to credit institutions
9.7
353.8
6.4
-
-
143.2
513.1
Amounts owed to other customers
508.3
32.4
14.3
616.9
-
-
1,171.9
Debt securities in issue
-
-
-
2,955.0
-
-
2,955.0
Derivative financial instruments
-
8.2
34.1
148.2
14.5
-
205.0
Lease liabilities
-
0.5
1.4
5.2
1.1
-
8.2
Trade payables
-
3.4
-
-
-
-
3.4
Subordinated liabilities
-
-
-
356.0
-
-
356.0
Subscribed capital
-
-
-
-
-
15.2
15.2
Total financial liabilities
14,132.8
3,241.7
8,844.1
9,274.7
100.4
158.4
35,752.1
Net liquidity gap
(12,281.4)
(2,598.1)
(8,420.5)
(5,292.2)
30,839.8
115.1
2,362.7
* The information shown above for the year ended 31 December 2024 is restated to reflect the appropriate presentation of financial liabilities, specifically in relation to Debt securities in issue (see Note 1c) for details). With respect to loans and advances to customers presented within the tables above, each outstanding loan balance is allocated in full to a single maturity grouping according to that loan\u2019s contractual maturity date (regardless of any scheduled repayments that may be receivable prior to the contractual maturity date). Loans and advances to customers presented as repayable on demand represent those loans and advances that are on call and at short notice. With respect to the equity release portfolio, contractual maturity arises in the event of the borrower\u2019s voluntary redemption, death or move to long-term care. For the purposes of the tables above, amounts have been allocated to maturity groupings based on the anticipated redemption profiles applied in the Group\u2019s equity release portfolio valuation model (see Note 1f) and Note 1v) for further details). Group debt securities in issue include \u00a3398.3m (2024: \u00a3491.6m) of funding obtained through the Group\u2019s securitisation issuances carried out through Darrowby No. 6 plc. The final maturity dates of the securitisation notes are significantly out into the future however the Group can exercise a call option to repurchase the outstanding Darrowby No. 6 notes at a date within the next five years. As a result, all such amounts have been shown within 1 to 5 years in the tables above.
2024 (restated*)
Society
Repayable
Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m
on demand
months months years years
specified
Total
maturity
Assets
Cash in hand and balances with the
Bank of England
1,930.6
-
-
-
-
-
1,930.6
Loans and advances to credit
54.0
-
1.0
-
-
342.8
397.8
Institutions
Debt securities
-
273.9
768.5
2,489.4
808.3
-
4,340.1
Derivative financial
-
25.5
99.5
507.7
110.3
-
743.0
Instruments
Loans and advances to customers
3.2
28.9
53.8
905.6
27,343.4
-
28,334.9
held at amortised cost
Loans and advances to
customers held at FVTPL
0.9
-
-
-
-
-
0.9
Equity release portfolio at FVTPL
-
6.6
19.2
70.1
181.3
-
277.2
Loans to subsidiary undertakings
403.9
-
-
-
-
-
403.9
Trade receivables
1.9
-
-
-
-
-
1.9
Total financial assets
2,394.5
334.9
942.0
3,972.8
28,443.3
342.8
36,430.3
Liabilities
Shares
11,415.2
3,715.1
9,162.4
3,889.0
72.4
-
28,254.1
Amounts owed to credit institutions
19.0
207.1
1,017.2
-
-
557.3
1,800.6
Amounts owed to other customers
470.4
49.9
-
748.6
-
-
1,268.9
Debt securities in issue
-
5.1
-
1,925.0
-
-
1,930.1
Derivative financial instruments
-
17.7
67.1
162.6
34.8
-
282.2
Lease liabilities
-
0.5
1.5
5.2
1.4
-
8.6
Trade payables
-
2.8
-
-
-
-
2.8
Subordinated liabilities
-
-
-
340.0
350.2
-
690.2
Subscribed capital
-
-
-
-
-
41.6
41.6
Total financial liabilities
11,904.6
3,998.2
10,248.2
7,070.4
458.8
598.9
34,279.1
Net liquidity gap
(9,510.1)
(3,663.3)
(9,306.2)
(3,097.6)
27,984.5
(256.1)
2,151.2
The following table is an analysis of undiscounted gross contractual cash flows payable on financial liabilities: Note A. With respect to subscribed capital, gross contractual cash flows represent interest payable on the Group\u2019s Permanent Interest- Bearing Shares (PIBS) (see Note 38). Following buy-back of the 12.875% legacy Tier 2 eligible PIBS in the year, as described in Note 38, the undiscounted gross interest payable each year by the Group going forwards is \u00a31.3m per annum (2024: \u00a34.5m per annum). As the PIBS have no specified contractual maturity (as shown on pages 241 and 242), it is not possible to calculate the total amount of undiscounted gross interest that is payable beyond 5 years (i.e. into perpetuity). Also, as the PIBS have no specified contractual maturity, the amounts shown in the tables above do not anticipate any future repurchase of the PIBS by the Group. The undiscounted gross contractual cash flows of debt securities in issue that have been issued as securitisation funding in the tables above have been calculated on the assumption that the call options referred to on page 244 are exercised. The Group has off-balance sheet exposure from commitments to lend where a mortgage has been offered but not yet completed. The total amount of such loan commitments at 31 December 2025 is \u00a32,197.8m (2024: \u00a31,885.1m) which are due within 3 months.
2025
Group
Up to 3 3 - 12 1 - 5 Over 5 Total
\u00a3m
months months years years
Shares
16,471.6
9,003.6
5,592.3
87.9
31,155.4
Amounts owed to credit institutions, other customers and
debt securities in issue
1,382.3
1,752.0
3,634.3
-
6,768.6
Derivative financial instruments
8.9
51.9
132.0
0.1
192.9
Lease liabilities
8.4
27.8
73.4
23.2
132.8
Trade payables
14.4
-
-
-
14.4
Fair value of put option obligation
-
0.7
0.4
-
1.1
Subordinated liabilities
-
21.9
393.8
-
415.7
Subscribed capital
-
1.3
5.1
note A
6.4
Total
17,885.6
10,859.2
9,831.3
111.2
38,687.3
2024
Group
Up to 3 3 - 12 1 - 5 Over 5 Total
\u00a3m
months months years years
Shares
15,148.0
9,408.1
4,148.1
86.8
28,791.0
Amounts owed to credit institutions, other customers and
debt securities in issue
1,552.1
3,057.5
2,569.6
-
7,179.2
Derivative financial instruments
20.9
98.8
104.1
11.9
235.7
Lease liabilities
7.5
25.2
58.7
20.8
112.2
Trade payables
11.0
-
-
-
11.0
Fair value of put option obligation
-
3.9
0.4
-
4.3
Subordinated liabilities
-
28.9
769.1
-
798.0
Subscribed capital
1.6
2.9
18.0
note A
22.5
Total
16,741.1
12,625.3
7,668.0
119.5
37,153.9
Note A. With respect to subscribed capital, gross contractual cash flows represent interest payable on the Society\u2019s Permanent Interest- Bearing Shares (PIBS) (see Note 38). Following buy-back of the 12.875% legacy Tier 2 PIBS in the year, as described in Note 38, the undiscounted gross interest payable each year by the Society going forwards is \u00a31.3m per annum (2024: \u00a34.5m per annum). As the PIBS have no specified contractual maturity (as shown on pages 243 and 244, it is not possible to calculate the total amount of undiscounted gross interest that is payable beyond 5 years (i.e. into perpetuity). Also, as the PIBS have no specified contractual maturity, the amounts shown in the tables above do not anticipate any future repurchase of the PIBS by the Society. Amounts owed to other customers in the Society tables above include a deemed loan from the Group\u2019s securitisation vehicle Darrowby No. 6 plc, which arise from the funding transactions carried out through that entity. The undiscounted gross contractual cash flows arising on this loan have been calculated on the assumption that the call options referred to on page 244 are exercised. The Society has off-balance sheet exposure from commitments to lend where a mortgage has been offered but not yet completed. The total amount of such loan commitments at 31 December 2025 is \u00a32,155.4m (2024: \u00a31,867.3m) which are due within 3 months. Society \u00a3m
2025
Up to 3 3 - 12 1 - 5 Over 5 Total
months months years years
Shares
16,471.6
9,003.6
5,592.3
85.9
31,153.4
Amounts owed to credit institutions, other customers and
debt securities in issue
758.9
566.7
3,796.7
-
5,122.3
Derivative financial instruments
8.9
60.5
134.7
0.1
204.2
Lease liabilities
0.6
1.5
5.8
1.2
9.1
Trade payables
3.4
-
-
-
3.4
Subordinated liabilities
-
21.9
393.8
-
415.7
Subscribed capital
-
1.3
5.1
note A
6.4
Total
17,243.4
9,655.5
9,928.4
87.2
36,914.5
Society \u00a3m
2024
Up to 3 3 - 12 1 - 5 Over 5 Total
months months years years
Shares
15,148.0
9,408.1
4,148.1
72.4
28,776.6
Amounts owed to credit institutions, other customers and
debt securities in issue
653.0
1,944.9
2,925.1
-
5,523.0
Derivative financial instruments
35.5
122.7
130.5
11.9
300.6
Lease liabilities
0.6
1.6
5.6
1.5
9.3
Trade payables
2.8
-
-
-
2.8
Subordinated liabilities
-
28.9
769.1
-
798.0
Subscribed capital
1.6
2.9
18.0
note A
22.5
Total
15,841.5
11,509.1
7,996.4
85.8
35,432.8
Market risk is the risk that the value of, or income arising from, the Group\u2019s assets and liabilities changes as a
result of changes in market prices; the principal elements being interest rate risk (including the use of
derivatives) and foreign currency risk.
The Group\u2019s Treasury function is responsible for managing the Group\u2019s exposure to all aspects of market risk
within the operational limits set out in the Group\u2019s Treasury policy, which is reviewed and recommended by
ALCO and approved by the Board. The Group\u2019s Treasury function measures and monitors adherence to the
Treasury policy and reports regularly on all aspects of market risk exposure, including interest rate risk and
foreign currency risk.
a) Interest rate risk
The main market risk faced by the Group is interest rate risk.
The Group uses a number of different metrics to monitor interest rate risk and details of these are set out
below.
The Group monitors interest rate risk exposure against limits by determining the effect on the Group\u2019s current
net notional value of assets and liabilities for a parallel shift in interest rates equivalent to 2% for all maturities,
in line with regulatory requirements. These results are compared to the Board limit and operational trigger at
least weekly, and are formally reported to ALCO and the Board monthly.
Other interest rate risk metrics employed by the Group incorporate earnings-at-risk and market value
methodologies. The market value exposure position is calculated using at least 250 monthly yield curve
movements from, approximately, the last seven years. The earnings-at-risk methodology is calculated using at
least 100 stochastically (randomly) generated rate paths. Both of these approaches employ 95% confidence
intervals. The outputs of these interest rate risk measurement methodologies are compared to their respective
Board limits and operational triggers at least weekly and are reported to ALCO and the Board monthly. All
these measures are used to guide interest rate risk management decisions.
The levels of Group interest rate risk exposures throughout the reporting period, based on measures taken at
each month end, were as follows:
Although these measures provide valuable insights into the market risk to which the Group is exposed, they
need to be viewed in the context of the following limitations:
\u2022 Historical data is not necessarily the best guide to future events, but is a reasonable proxy;
\u2022 The use of 95% confidence levels, by definition, does not take account of changes that may occur beyond
this level of confidence and therefore may not fully take into account the most extreme events; and
\u2022 Exposures are calculated on static Statement of Financial Position positions and therefore future changes
in the structure of the Statement of Financial Position are ignored.
Other interest rate risk exposures, such as basis risk (the risk of loss arising from changes in the relationship
between interest rates which have similar but not identical characteristics, for example SONIA and Bank of
England Base Rate), are also monitored closely and regularly reported to ALCO.
b) Currency risk
The currency risk appetite of the Group is low and any instruments denominated in foreign currency are
immediately swapped into Sterling.
The Group has one regulated covered bond in Euros totalling \u20ac500m (2024: one bond, \u20ac500m). The exposure
to foreign currency fluctuations on this bond is fully hedged as a derivative contract was taken out to swap the
Euros into Sterling on issuance of the bond.
\u00a3m
As at 31 December
Average High Low
As at 31 December
2025 2025 2025 2025 2024
Static earnings
-at-risk
25.3
22.1
25.5
16.8
27.9
Historical value
-at-risk
3.3
5.1
7.1
2.1
3.5
2% parallel interest rate shift
8.8
14.5
21.8
4.1
20.8
The Group has one intragroup loan denominated in New Zealand Dollars totalling $25m (2024: nil). The
exposure to foreign currency fluctuations on this bond is fully hedged as a derivative contract was taken out to
swap the Dollars into Sterling on the same date funds were lent.
The Group has investments in its subsidiary undertaking Jade, which are denominated in New Zealand dollars.
The foreign currency fluctuations in relation to these investments are not hedged and are recognised in the
Group\u2019s translation reserve.
SIL holds deposits from customers denominated in US dollars (USD). SIL manages its foreign currency risk by
holding cash and debt securities denominated in USD; the objective is to minimise mismatches between the
balance and maturity profile of USD assets and USD liabilities, and also mismatches between the related
interest income and interest expense on USD assets and liabilities.
In addition, a number of the Group\u2019s businesses undertake transactions denominated in foreign currency as
part of their normal business. Any amounts outstanding at 31 December 2025 are not material.
c) Other price risk
The Group also has exposure to market risk arising from the movement in the Retail Price Index and house
price indices. In particular, movements in these indices impact on the valuation of the equity release portfolio,
as outlined further in Note 1v).
Credit risk is the risk of suffering financial loss should borrowers or counterparties default on their contractual
obligations to the Group.
The Group faces this risk from its lending to:
\u2022 individual customers (retail mortgages);
\u2022 businesses (through legacy commercial lending no longer originated and current debt factoring / invoice
discounting);
\u2022 wholesale counterparties (including other financial institutions). Credit risk within our treasury portfolio
arises from the investments held by the Group in order to meet liquidity requirements and for general
business purposes; and
\u2022 other Group entities, for the Society only.
Changes in the credit quality and the recoverability of loans and amounts due from counterparties influence
the Group\u2019s exposure to the risk of credit losses. The Group\u2019s strategy is to maintain a cautious approach to
credit risk and new lending. Adverse changes in the credit quality of counterparties, collateral values or
deterioration in the wider economy, including rising unemployment, changes in interest rates, deterioration in
household finances and any contraction in the UK property market leading to falling property values, could
affect the recoverability and value of the Group\u2019s assets and influence its financial performance.
The Group has embedded a comprehensive credit risk management framework with clear lines of
accountability and oversight as part of its overall governance framework.
The Group has policies and procedures to monitor, control, mitigate and manage credit risk within the Group\u2019s
credit risk appetite. The Retail Credit Committee and the Group Wholesale Credit Committee provide oversight
to the effectiveness of all credit management across the Group and the controls in place ensure lending is
within the Board approved credit risk appetite. The reporting structure ensures timely and accurate reporting of
all substantive risk matters to the Board and the Board Risk Committee. The Board receives monthly updates
on the credit risk profile of the Group.
Scenario analysis has been undertaken to identify the impact of climate-related risks on the Group\u2019s credit risk
management. This includes assessing the residential lending portfolio at property level to determine the
potential impact of key climate-related physical and transitional risks. The scenario analysis indicates that the
most significant effects from climate change occur in the medium to long-term, with material financial impacts
from transition risks expected to transpire before physical risks. Based on current UK Government policies, a
delayed transition appears the most probable. Therefore, the most significant transition risks which may
impact the Group are not expected to occur before the 2030s. The results of this assessment did not lead to a
change in carrying amounts as at 31 December 2025 or 31 December 2024. The future impact of climate-
related risks on credit risk is uncertain, and the Group will continue to monitor developments in future periods.
Management makes use of the Group\u2019s IFRS 9 ECL information for purposes that include regulatory capital
management, certain product pricing models and credit risk forecasting.
The maximum exposure to credit risk for financial assets is represented by the carrying amount of each
financial asset, except for the following:
\u2022 A fair value adjustment debit for hedged risk of \u00a358.9m (2024: \u00a3274.6m credit) for the Group and \u00a360.9m
(2024: \u00a3271.7m credit) for the Society is included within loans and advances to customers. This is indirectly
exposed to credit risk through the relationship with the underlying loans covered by the Group\u2019s hedging
strategy.
\u2022 The Group has credit risk exposure from commitments to lend where a mortgage has been offered but not
yet completed, which leads to the recognition of a financial asset (within loans and advances to customers)
on completion of the mortgage. As outlined in Note 1h), an impairment loss allowance is held against these
commitments in accordance with IFRS 9. The total amount of such loan commitments at 31 December
2025 is \u00a32,197.8m (2024: \u00a31,885.1m) for the Group and \u00a32,155.4m (2024: \u00a31,867.3m) for the Society and
the impairment loss allowance held against these commitments is \u00a30.3m (2024: \u00a30.2m) for both the Group
and the Society.
Retail mortgage lending to customers
The Group currently lends in the prime residential UK mortgage market, including buy-to-let, through the
Society, whilst SIL lends in the Channel Islands and in the UK. The Board\u2019s credit risk appetite defines a number
of limits regarding customer and collateral credit quality to which all lending activity must adhere.
The credit decision process utilises automated credit scoring and policy rules with lending policy criteria
supporting manual underwriting. All aspects of the credit decision process are subject to regular independent
review and development ensuring they support decisions in line with the Board\u2019s credit risk appetite.
Commercial lending to customers and businesses
The Society\u2019s commercial mortgage portfolio was closed to new lending in November 2008.
Other loans and advances
These include advances made by our factored debt and invoice discounting business, SBF, which continue to
be managed by appropriately skilled teams. In addition, other loans and advances include advances made to
residential mortgage customers in Guernsey and Jersey by SIL; these are secured on shares in a property
management company which owns the building in which the properties are located. These loans are monitored
by appropriately skilled teams in SIL.
Wholesale lending to other financial institutions
Wholesale credit risk arises from the wholesale investments undertaken by the Group\u2019s Treasury function
which is responsible for managing this aspect of credit risk in line with the Board approved credit risk appetite
and wholesale credit policies. Wholesale counterparty limits are reviewed monthly by the Group Wholesale
Credit Committee based on analyses of counterparties\u2019 financial performance, ratings and other market
information to ensure that limits remain within our risk appetite. We regularly review and closely monitor the
number of counterparties to whom we will lend and, for those counterparties to whom we have lent, we review
both the amount and duration of any limits.
A deterioration in wholesale credit markets could lead to volatility in the value of the Group\u2019s portfolio of
treasury assets together with the risk of further impairment within our treasury investments portfolio.
ALCO provides oversight to the effectiveness of wholesale credit risk management.
Intra-Group lending
Credit risk also arises on loans made by the Society to other Group entities, including any committed to but
undrawn amounts. Intra-Group counterparty limits are reviewed monthly by, and any increases must be pre-
approved by, the Group Wholesale Credit Committee.
^ Also known as commercial mortgages. For details on how the Group assesses ECLs see Note 1h).
2025
Fair value
Group
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
33,007.5
(21.6)
58.9
33,044.8
99.0
Loans fully secured on land^
92.2
(2.6)
-
89.6
0.3
Other lending:
Debt factoring advances
200.6
(1.4)
-
199.2
0.6
Other loans
45.3
-
-
45.3
0.1
Total
33,345.6
(25.6)
58.9
33,378.9
100.0
2024
Fair value
Group
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
30,542.8
(13.5)
(274.6)
30,254.7
98.8
Loans fully secured on land^
114.3
(4.7)
-
109.6
0.4
Other lending:
Debt factoring advances
190.0
(1.4)
-
188.6
0.6
Other loans
48.2
-
-
48.2
0.2
Total
30,895.3
(19.6)
(274.6)
30,601.1
100.0
2025
Fair value
Society
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
30,991.2
(20.9)
60.9
31,031.2
99.7
Loans fully secured on land^
92.2
(2.6)
-
89.6
0.3
Other lending
0.5
-
-
0.5
-
Total
31,083.9
(23.5)
60.9
31,121.3
100.0
2024
Fair value
Society
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
28,509.8
(12.8)
(271.7)
28,225.3
99.6
Loans fully secured on land^
114.3
(4.7)
-
109.6
0.4
Total
28,624.1
(17.5)
(271.7)
28,334.9
100.0
a) Credit risk - loans and advances to customers held at amortised cost The tables below show the breakdown of the Group and Society\u2019s loans and advances to customers held at amortised cost at the reporting date: The tables below provide information on movements in the gross carrying amount of residential loans and advances to customers during the year:
2025
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
32,216.6
468.4
19.8
32,704.8
30,212.1
465.1
19.8
30,697.0
Up to 30 days past due
-
104.5
3.3
107.8
-
101.9
3.3
105.2
31 to 60 days past due
-
49.9
7.8
57.7
-
47.1
7.8
54.9
61 to 90 days past due
-
23.8
11.2
35.0
-
23.1
11.2
34.3
Over 90 days past due
-
-
102.2
102.2
-
-
99.8
99.8
Total
32,216.6
646.6
144.3
33,007.5
30,212.1
637.2
141.9
30,991.2
2024
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
30,067.3
224.2
13.8
30,305.3
28,046.0
220.4
13.8
28,280.2
Up to 30 days past due
-
72.5
3.6
76.1
-
70.6
3.6
74.2
31 to 60 days past due
-
46.4
4.6
51.0
-
43.6
4.6
48.2
61 to 90 days past due
-
15.7
9.8
25.5
-
15.7
9.8
25.5
Over 90 days past due
-
-
84.9
84.9
-
-
81.7
81.7
Total
30,067.3
358.8
116.7
30,542.8
28,046.0
350.3
113.5
28,509.8
2025
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
30,067.3
358.8
116.7
30,542.8
28,046.0
350.3
113.5
28,509.8
Transfers due to changes in credit
risk (note A):
From stage 1 to stage 2
(379.9)
379.9
-
-
(373.3)
373.3
-
-
From stage 1 to stage 3
(17.5)
-
17.5
-
(16.6)
-
16.6
-
From stage 2 to stage 1
102.5
(102.5)
-
-
99.1
(99.1)
-
-
From stage 2 to stage 3
-
(16.5)
16.5
-
-
(16.5)
16.5
-
From stage 3 to stage 2
-
10.2
(10.2)
-
-
10.2
(10.2)
-
From stage 3 to stage 1
0.6
-
(0.6)
-
0.6
-
(0.6)
-
Modification of contractual
(99.4)
67.9
26.3
(5.2)
(99.4)
67.9
26.3
(5.2)
cashflows
Increases due to origination
6,960.1
19.3
2.1
6,981.5
6,772.4
19.3
2.1
6,793.8
Decrease due to derecognition and
repayments
(4,427.6)
(71.1)
(20.7)
(4,519.4)
(4,227.2)
(68.8)
(19.0)
(4,315.0)
Written off
-
(0.1)
(4.1)
(4.2)
-
(0.1)
(4.1)
(4.2)
Other movements
10.5
0.7
0.8
12.0
10.5
0.7
0.8
12.0
Gross carrying amount at
31 December
32,216.6
646.6
144.3
33,007.5
30,212.1
637.2
141.9
30,991.2
i) Residential mortgages The majority of loans and advances to customers are secured on UK residential properties and are geographically diverse. The tables below provide information on residential loans and advances by payment due status: As shown in the tables above, during 2025 there was a net increase in stage 2 loans of \u00a3287.8m for the Group and of \u00a3286.9m for the Society. As outlined in Note 1v), during 2025 the Group has revised its view of forward- looking economic indicators and the associated scenario weightings; this caused PDs to increase and, as a result, more accounts have migrated to stage 2. Gains and losses arising during the year from loan modifications that did not result in derecognition were not material. Amounts written off are in accordance with the Group\u2019s accounting policy for write-offs (see Note 1h)). Amounts presented within \u2018other movements\u2019 in the tables above include movements in the Group\u2019s effective interest rate asset as described in Note 1f). For residential mortgages, stage 3 loans which no longer meet any of the default criteria are subject to a six month minimum probation period before they become eligible for transfer out of stage 3. At 31 December 2025, stage 3 loans include \u00a336.7m (2024: \u00a323.3m) for the Group and Society being held in stage 3 under this probation period.
2024
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
27,485.7
628.6
78.0
28,192.3
25,412.6
624.3
77.1
26,114.0
Transfers due to changes in credit
risk (note A):
From stage 1 to stage 2
(180.2)
180.2
-
-
(171.8)
171.8
-
-
From stage 1 to stage 3
(14.8)
-
14.8
-
(11.7)
-
11.7
-
From stage 2 to stage 1
352.8
(352.8)
-
-
350.3
(350.3)
-
-
From stage 2 to stage 3
-
(15.5)
15.5
-
-
(15.5)
15.5
-
From stage 3 to stage 2
-
6.0
(6.0)
-
-
6.0
(6.0)
-
From stage 3 to stage 1
1.0
-
(1.0)
-
1.0
-
(1.0)
-
Modification of contractual
(26.8)
(8.5)
30.6
(4.7)
(26.8)
(8.5)
30.6
(4.7)
cashflows
Increases due to origination
5,996.7
15.1
0.7
6,012.5
5,833.8
15.1
0.7
5,849.6
Decrease due to derecognition and
repayments
(3,555.8)
(93.9)
(12.7)
(3,662.4)
(3,350.1)
(92.2)
(11.9)
(3,454.2)
Written off
(0.1)
(0.4)
(3.9)
(4.4)
(0.1)
(0.4)
(3.9)
(4.4)
Other movements
8.8
-
0.7
9.5
8.8
-
0.7
9.5
Gross carrying amount at
31 December
30,067.3
358.8
116.7
30,542.8
28,046.0
350.3
113.5
28,509.8
Note A. For the purposes of the analysis presented above, the amounts shown for \u2018transfers due to changes in credit risk\u2019 are based on account balances at the start of the reporting period (not account balances at the date of transfer). The table below provides information on movements in the impairment loss allowance for residential loans and advances to customers during the year:
2025
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance at 1 January
4.5
2.5
6.5
13.5
4.4
2.4
6.0
12.8
Transfers due to changes in credit
risk:
From stage 1 to stage 2
(0.1)
2.3
-
2.2
(0.1)
2.3
-
2.2
From stage 1 to stage 3
-
-
1.0
1.0
-
-
1.0
1.0
From stage 2 to stage 1
-
(0.2)
-
(0.2)
-
(0.2)
-
(0.2)
From stage 2 to stage 3
-
(0.3)
0.7
0.4
-
(0.3)
0.7
0.4
From stage 3 to stage 2
-
0.1
(0.1)
-
-
0.1
(0.1)
-
Remeasurements within existing
2.3
0.3
-
2.6
2.2
0.1
0.2
2.5
stage
Increases due to origination
2.4
0.3
-
2.7
2.5
0.3
-
2.8
Decrease due to derecognition and
repayments
(0.5)
(0.3)
(1.4)
(2.2)
(0.5)
(0.3)
(1.4)
(2.2)
Changes due to modification
-
0.7
1.5
2.2
-
0.7
1.5
2.2
without derecognition
Written off
-
-
(0.6)
(0.6)
-
-
(0.6)
(0.6)
Loss allowance at 31 December
8.6
5.4
7.6
21.6
8.5
5.1
7.3
20.9
2024
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance at 1 January
16.2
6.0
6.8
29.0
15.4
5.9
6.6
27.9
Transfers due to changes in credit
risk:
From stage 1 to stage 2
(0.1)
0.8
-
0.7
(0.1)
0.8
-
0.7
From stage 1 to stage 3
-
-
0.5
0.5
-
-
0.5
0.5
From stage 2 to stage 1
0.1
(1.6)
-
(1.5)
0.1
(1.6)
-
(1.5)
From stage 2 to stage 3
-
(0.4)
0.4
-
-
(0.4)
0.4
-
From stage 3 to stage 2
-
0.1
(0.2)
(0.1)
-
0.1
(0.2)
(0.1)
Remeasurements within existing
(11.0)
(0.8)
(0.4)
(12.2)
(10.4)
(0.9)
(0.7)
(12.0)
stage
Increases due to origination
1.2
0.1
0.1
1.4
1.1
0.1
0.1
1.3
Decrease due to derecognition and
repayments
(1.9)
(0.6)
(0.9)
(3.4)
(1.7)
(0.5)
(0.9)
(3.1)
Changes due to modification
-
(1.1)
0.9
(0.2)
-
(1.1)
0.9
(0.2)
without derecognition
Written off
-
-
(0.7)
(0.7)
-
-
(0.7)
(0.7)
Loss allowance at 31 December
4.5
2.5
6.5
13.5
4.4
2.4
6.0
12.8
The loss allowance at 31 December 2025 includes judgmental adjustments totalling \u00a34.8m (2024: \u00a32.7m) for
the Group and \u00a34.8m (2024: \u00a32.7m) for the Society. Details of these judgmental adjustments are set out in
Note 1v).
The tables below provide information on residential loans and advances to customers grouped by credit risk
rating (probability of default). For further details on how the probability of default (PD) affects the Group\u2019s
assessment of ECLs, see Note 1h) and Note 1v). ECL coverage shows the level of loss allowance expressed as
a percentage of the gross carrying amount.
The PDs used by the Group for IFRS 9 accounting purposes are not directly comparable to the PDs used by the
Group for IRB regulatory purposes; this is due to significant differences in the requirements and methodologies
applied by the Group for IFRS 9 and for IRB respectively.
Group 2025 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
1,409.6
0.9
-
1,410.5
0.5
-
-
0.5
0.15%
- <0.25%
4,408.0
1.6
-
4,409.6
0.8
-
-
0.8
0.25%
- <0.5%
16,089.9
1.8
-
16,091.7
3.6
-
-
3.6
0.5%
- <0.75%
7,690.8
4.9
-
7,695.7
2.3
-
-
2.3
0.75%
- <2.5%
2,601.4
51.0
-
2,652.4
1.4
-
-
1.4
2.5%
- <10%
16.9
144.7
-
161.6
-
0.2
-
0.2
10%
- <100%
-
441.7
-
441.7
-
5.2
-
5.2
Default
-
-
144.3
144.3
-
-
7.6
7.6
Total
32,216.6
646.6
144.3
33,007.5
8.6
5.4
7.6
21.6
ECL coverage by stage (%)
0.03%
0.84%
5.27%
0.07%
Group 2024 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
4,841.6
0.4
-
4,842.0
0.6
-
-
0.6
0.15%
- <0.25%
11,387.8
0.4
-
11,388.2
1.5
-
-
1.5
0.25%
- <0.5%
10,752.9
5.7
-
10,758.6
1.8
-
-
1.8
0.5%
- <0.75%
2,647.4
13.0
-
2,660.4
0.4
-
-
0.4
0.75%
- <2.5%
430.9
65.3
-
496.2
0.2
-
-
0.2
2.5%
- <10%
6.7
59.4
-
66.1
-
0.1
-
0.1
10%
- <100%
-
214.6
-
214.6
-
2.4
-
2.4
Default
-
-
116.7
116.7
-
-
6.5
6.5
Total
30,067.3
358.8
116.7
30,542.8
4.5
2.5
6.5
13.5
ECL coverage by stage (%)
0.01%
0.70%
5.57%
0.04%
Society 2025 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
1,409.6
0.9
-
1,410.5
0.5
-
-
0.5
0.15%
- <0.25%
4,408.0
1.6
-
4,409.6
0.8
-
-
0.8
0.25%
- <0.5%
15,438.0
1.8
-
15,439.8
3.6
-
-
3.6
0.5%
- <0.75%
6,338.2
4.9
-
6,343.1
2.2
-
-
2.2
0.75%
- <2.5%
2,601.4
51.0
-
2,652.4
1.4
-
-
1.4
2.5%
- <10%
16.9
144.7
-
161.6
-
0.2
-
0.2
10%
- <100%
-
432.3
-
432.3
-
4.9
-
4.9
Default
-
-
141.9
141.9
-
-
7.3
7.3
Total
30,212.1
637.2
141.9
30,991.2
8.5
5.1
7.3
20.9
ECL coverage by stage (%)
0.03%
0.80%
5.14%
0.07%
Society 2024 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
4,841.6
0.4
-
4,842.0
0.6
-
-
0.6
0.15%
- <0.25%
11,387.7
0.4
-
11,388.1
1.5
-
-
1.5
0.25%
- <0.5%
10,063.3
5.7
-
10,069.0
1.8
-
-
1.8
0.5%
- <0.75%
1,315.8
13.0
-
1,328.8
0.3
-
-
0.3
0.75%
- <2.5%
430.9
65.3
-
496.2
0.2
-
-
0.2
2.5%
- <10%
6.7
59.4
-
66.1
-
0.1
-
0.1
10%
- <100%
-
206.1
-
206.1
-
2.3
-
2.3
Default
-
-
113.5
113.5
-
-
6.0
6.0
Total
28,046.0
350.3
113.5
28,509.8
4.4
2.4
6.0
12.8
ECL coverage by stage (%)
0.02%
0.69%
5.29%
0.04%
The tables below provide an analysis of residential loans held in stage 2 as at the balance sheet date,
reflecting the reasons for inclusion in stage 2. For the purposes of this analysis, where a loan satisfies at the
balance sheet date more than one of the stage 2 criteria, the loan is included below within one category only
and in order of the categories as presented. The amounts presented below as \u2018Over 30 days past due\u2019
therefore include all stage 2 loans which are over 30 days past due as at the balance sheet date, including
those where this was not the initial reason for being classified as stage 2.
Stage 2 Analysis
2025
2024
Gross ECL ECL Gross ECL ECL
Group
carrying allowance coverage carrying allowance coverage
amount \u00a3m % amount \u00a3m %
\u00a3m \u00a3m
Over 30 days past due
73.7
2.1
2.8%
62.1
1.2
1.9%
In forbearance
130.2
1.1
0.8%
16.5
0.1
0.6%
In arrears
59.4
0.9
1.5%
66.8
0.6
0.9%
Term expired
15.7
-
-
18.6
-
-
Temporary transfer to interest only*
85.8
0.1
0.1%
103.5
0.1
0.1%
Increase in PD since origination
281.8
1.2
0.4%
91.3
0.5
0.5%
Total
646.6
5.4
0.8%
358.8
2.5
0.7%
*Temporary arrangement in place, via the Mortgage Charter Scheme, to repay interest only The tables below provide further information on the types of lending and geographical split: * Fast track relates to certain mortgages granted between 2007-2009 for which, subject to certain application criteria, the Society accepted reduced documentation from borrowers. ^ Sub-prime mortgages are defined as loans to borrowers that typically had weakened credit histories at the time the loan was advanced. Prior to 1 June 2021, these loans were held by the Group\u2019s specialist lending businesses Amber and NYM; these loans were hived-up into the Society with effect from 1 June 2021. Stage 2 Analysis
2025
2024
Gross ECL ECL Gross ECL ECL
Society
carrying allowance coverage carrying allowance coverage
amount \u00a3m % amount \u00a3m %
\u00a3m \u00a3m
Over 30 days past due
70.2
1.9
2.7%
59.3
1.1
1.9%
In forbearance
127.0
1.1
0.9%
12.6
0.1
0.8%
In arrears
56.7
0.8
1.4%
65.0
0.6
0.9%
Term expired
15.7
0.0
0.0%
18.6
-
-
Temporary transfer to interest only *
85.8
0.1
0.1%
103.5
0.1
0.1%
Increase in PD since origination
281.8
1.2
0.4%
91.3
0.5
0.5%
Total
637.2
5.1
0.8%
350.3
2.4
0.7%
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Prime:
Residential
26,835.0
513.2
109.0
27,457.2
24,273.8
288.6
80.1
24,642.5
Buy-to-let
5,239.7
91.4
19.4
5,350.5
5,608.3
42.1
18.3
5,668.7
Self build
7.5
0.9
0.7
9.1
8.6
0.8
1.0
10.4
Fast track*
7.8
0.4
0.2
8.4
9.2
0.6
0.1
9.9
Self certified
113.1
35.0
13.7
161.8
145.2
21.4
15.4
182.0
Sub
-prime^:
Residential
2.6
1.1
-
3.7
3.7
0.8
0.2
4.7
Buy-to-let
3.3
0.6
0.3
4.2
5.0
0.4
0.3
5.7
Self certified
7.6
4.0
1.0
12.6
13.5
4.1
1.3
18.9
Total
32,216.6
646.6
144.3
33,007.5
30,067.3
358.8
116.7
30,542.8
Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Prime:
Residential
26,183.1
511.2
109.0
26,803.3
23,584.1
285.0
79.8
23,948.9
Buy-to-let
3,887.1
84.0
17.0
3,988.1
4,276.7
37.2
15.4
4,329.3
Self build
7.5
0.9
0.7
9.1
8.6
0.8
1.0
10.4
Fast track*
7.8
0.4
0.2
8.4
9.2
0.6
0.1
9.9
Self certified
113.1
35.0
13.7
161.8
145.2
21.4
15.4
182.0
Sub
-prime^:
Residential
2.6
1.1
-
3.7
3.7
0.8
0.2
4.7
Buy-to-let
3.3
0.6
0.3
4.2
5.0
0.4
0.3
5.7
Self certified
7.6
4.0
1.0
12.6
13.5
4.1
1.3
18.9
Total
30,212.1
637.2
141.9
30,991.2
28,046.0
350.3
113.5
28,509.8
ndexed loan-to-value information on the Group\u2019s residential loan portfolio is set out below:
Group (\u00a3m)
2025
2024
Region
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
North
871.8
19.7
5.6
897.1
854.6
14.3
3.9
872.8
Yorkshire
2,445.7
50.8
9.8
2,506.3
2,332.1
30.2
9.8
2,372.1
East Midlands
2,199.7
52.1
8.2
2,260.0
2,035.7
26.7
7.2
2,069.6
East Anglia
3,186.6
69.6
16.2
3,272.4
2,836.3
43.8
11.3
2,891.4
London
6,211.9
110.9
29.4
6,352.2
5,732.7
54.4
22.6
5,809.7
South East
5,281.4
107.2
26.4
5,415.0
4,847.5
57.2
21.5
4,926.2
South West
2,804.1
51.9
9.5
2,865.5
2,695.6
29.2
6.9
2,731.7
West Midlands
2,625.2
55.8
10.0
2,691.0
2,381.5
31.1
7.4
2,420.0
North West
2,996.0
65.1
15.4
3,076.5
2,821.4
37.5
13.6
2,872.5
Wales
878.4
20.2
3.9
902.5
825.6
10.3
3.9
839.8
Scotland
2,012.4
39.7
8.6
2,060.7
1,959.1
19.8
6.7
1,985.6
Northern Ireland
8.7
1.4
1.3
11.4
11.2
0.8
1.3
13.3
Channel Islands
694.7
2.2
-
696.9
734.0
3.5
0.6
738.1
Total
32,216.6
646.6
144.3
33,007.5
30,067.3
358.8
116.7
30,542.8
Society (\u00a3m)
2025
2024
Region
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
North
867.8
19.7
5.6
893.1
850.3
14.3
3.9
868.5
Yorkshire
2,429.4
50.8
9.8
2,490.0
2,315.5
30.0
9.8
2,355.3
East Midlands
2,190.6
51.8
8.2
2,250.6
2,024.7
26.6
7.2
2,058.5
East Anglia
3,164.8
69.5
16.2
3,250.5
2,814.4
43.4
11.3
2,869.1
London
5,357.6
105.2
27.6
5,490.4
4,899.8
50.4
20.3
4,970.5
South East
5,145.1
107.2
26.0
5,278.3
4,705.0
57.0
21.5
4,783.5
South West
2,771.0
51.9
9.5
2,832.4
2,661.5
29.2
6.9
2,697.6
West Midlands
2,556.1
55.5
9.8
2,621.4
2,315.4
31.0
7.1
2,353.5
North West
2,863.3
64.6
15.4
2,943.3
2,698.9
37.5
13.6
2,750.0
Wales
873.0
19.9
3.9
896.8
819.6
10.3
3.9
833.8
Scotland
1,984.7
39.7
8.6
2,033.0
1,929.7
19.8
6.7
1,956.2
Northern Ireland
8.7
1.4
1.3
11.4
11.2
0.8
1.3
13.3
Total
30,212.1
637.2
141.9
30,991.2
28,046.0
350.3
113.5
28,509.8
Group (\u00a3m)
2025
2024
Loan
-to-value
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<40%
5,526.9
119.9
20.3
5,667.1
5,891.7
72.6
21.0
5,985.3
40%
- 50%
3,705.0
93.6
22.7
3,821.3
4,052.9
58.7
19.8
4,131.4
50%
- 60%
4,169.7
125.3
26.9
4,321.9
4,442.5
63.8
32.9
4,539.2
60%
- 70%
4,367.5
106.7
23.8
4,498.0
4,622.4
60.2
16.6
4,699.2
70%
- 80%
4,586.0
78.7
14.5
4,679.2
4,021.4
41.5
8.7
4,071.6
80%
- 90%
6,620.2
93.4
21.0
6,734.6
5,324.7
46.2
10.8
5,381.7
90%
- 100%
3,181.4
27.0
11.1
3,219.5
1,687.3
14.5
3.0
1,704.8
>100%
59.9
2.0
4.0
65.9
24.4
1.3
3.9
29.6
Total
32,216.6
646.6
144.3
33,007.5
30,067.3
358.8
116.7
30,542.8
The Group\u2019s policy for new mortgage lending is currently a maximum loan-to-value ratio of 100% for residential mortgages and 75% for buy-to-let lending. In addition, SIL lends up to 100% on its \u2018Next Generation\u2019 mortgages, for which a family member is required to provide a guarantee of up to 20% of the borrower\u2019s property value (to be supported by a bond over the guarantor\u2019s own suitable property in Guernsey or Jersey). There has been an increase in the volume of 80-100% LTV lending within the year as we continue to deliver on our purpose of helping more people have a home. This has resulted in an increase in the overall percentage of the book with an LTV greater than 80%; 31.8% at 31 December 2025 (2024: 24.5%) and an increase in the average indexed loan-to-value of the Society\u2019s new lending in 2025 to 68.4% (2024: 65.3%). The quality of the lending remains high, with a well-managed spread of risk, carried out in a controlled manner being cognisant of the economic challenges that lie ahead. This is represented by the proportion of Group residential mortgage accounts in arrears by three months or more which remained low at 0.30% (2024: 0.28%). At 31 December 2025, the average indexed loan-to-value of Group residential mortgages on a valuation weighted basis (calculated as the total outstanding balance divided by the total value of collateral held), was 48.8% (2024: 46.1%) and for Society residential mortgages was 48.7% (2024: 45.9%). Forbearance Where appropriate for customers, the Group applies a policy of forbearance. This may be applied where the actual or apparent financial stress of the customer is considered to be short-term with a potential to be recovered. Forbearance may involve arrears capitalisation, a reduction in the monthly payment (known as a concession), a conversion to interest only or a mortgage term extension. Forbearance is undertaken in order to achieve the best outcome for both the customer and the business through dealing with repayment difficulties at an early stage. Possession is generally considered only as a last resort, once all other options for the customer have been exhausted. Possession balances represent loans against which the Group has taken ownership of properties pending their sale. The Group does not occupy repossessed properties for business use or use assets acquired in its operations. All customer accounts are monitored to ensure that these strategies remain appropriate. Possessions For the Group, at 31 December 2025 the balance of residential loans where the property has been taken into possession was \u00a33.0m and represents less than 0.1% of total outstanding loans (2024: \u00a33.8m; less than 0.1%). For the Society, at 31 December 2025 the balance of residential loans where the property has been taken into possession was \u00a33.0m and represents less than 0.01% of total outstanding loans (2024: \u00a33.2m; less than 0.1%). All possessions balances are classified as stage 3. Forbearance activity The tables below provide further information on residential mortgages regarded as being in forbearance as at 31 December 2025, showing the type of account renegotiations applied. For the purposes of these forbearance tables, the Group applies the Bank of England Prudential Regulatory Authority (PRA) definition of forbearance (which is aligned to the European Banking Authority, EBA, definition).
Society (\u00a3m)
2025
2024
Loan
-to-value
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<40%
5,249.9
119.1
20.3
5,389.3
5,611.6
71.9
21.0
5,704.5
40%
- 50%
3,425.0
93.2
22.0
3,540.2
3,761.8
58.7
19.4
3,839.9
50%
- 60%
3,785.2
124.1
26.4
3,935.7
4,036.9
61.1
32.2
4,130.2
60%
- 70%
3,869.9
104.0
23.8
3,997.7
4,091.1
57.3
16.5
4,164.9
70%
- 80%
4,169.7
76.3
13.7
4,259.7
3,628.3
40.7
7.3
3,676.3
80%
- 90%
6,505.1
92.4
21.0
6,618.5
5,235.9
45.6
10.2
5,291.7
90%
- 100%
3,154.0
27.0
10.7
3,191.7
1,663.2
14.5
3.0
1,680.7
>100%
53.3
1.1
4.0
58.4
17.2
0.5
3.9
21.6
Total
30,212.1
637.2
141.9
30,991.2
28,046.0
350.3
113.5
28,509.8
Under the PRA definition, loans are required to meet certain payment and arrears criteria before they are
deemed to exit forbearance; this includes a minimum two-year probation period following the forbearance
event (extended to three years in certain situations).
For the purposes of the tables below, the following loans are regarded as forborne as at 31 December 2025*:
\u2022 any loan to which forbearance measures were applied within the two years prior to the reporting date
(regardless of whether the loan remains on renegotiated terms at 31 December 2025); and
\u2022 any loan to which forbearance measures were applied and which remains in the probation period following
the forbearance event.
For the purposes of the tables below, loans are presented according to the ECL stage they were held in as at
the reporting date.
* As noted in Note 1v), the SICR criteria applied by the Group was revised during the year, to align the probation period of forborne
accounts with that used in regulatory reporting standards. For the purposes of the 2024 comparative tables below, information is
therefore presented in accordance with the criteria that was applicable as at 31 December 2024 (as disclosed in Note 43a)(i) to the 2024
Annual Report and Accounts).
Reduced
Transfer to
Term Total renegotiations
Group
- 2025
Total
Capitalisation
Payment
interest only
Extension
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
32,216.6
-
-
-
-
-
-
32,216.6
-
-
-
-
-
-
Stage 2
Not past due
468.4
3.8
66.8
14.3
-
84.9
18.1
Past due up to 30 days
104.5
0.3
43.3
1.6
-
45.2
43.3
Over 30 days past due
73.7
-
24.4
2.2
-
26.6
36.1
646.6
4.1
134.5
18.1
-
156.7
24.2
Stage 3
Not past due
19.8
1.5
7.8
0.2
-
9.5
48.0
Past due up to 90 days
22.3
0.1
9.8
2.1
-
12.0
53.8
Over 90 days past due
102.2
0.7
53.9
7.5
-
62.1
60.8
144.3
2.3
71.5
9.8
-
83.6
57.9
Gross carrying amount
33,007.5
6.4
206.0
27.9
-
240.3
0.7
Loss allowance
(21.6)
(0.1)
(5.2)
(0.3)
-
(5.6)
25.9
32,985.9
6.3
200.8
27.6
-
234.7
0.7
Reduced
Transfer to
Term Total renegotiations
Group
\u2013 2024
Total
Capitalisation
Payment
interest only
Extension
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
30,067.3
0.3
27.8
6.0
-
34.1
0.1
30,067.3
0.3
27.8
6.0
-
34.1
0.1
Stage 2
Not past due
224.2
0.2
24.0
7.9
-
32.1
14.3
Past due up to 30 days
72.5
-
29.4
0.6
-
30.0
41.4
Over 30 days past due
62.1
0.3
24.4
1.4
-
26.1
42.0
358.8
0.5
77.8
9.9
-
88.2
24.6
Stage 3
Not past due
13.8
1.1
3.2
0.2
-
4.5
32.6
Past due up to 90 days
18.0
0.2
8.9
2.0
-
11.1
61.7
Over 90 days past due
84.9
0.2
46.8
5.9
-
52.9
62.3
116.7
1.5
58.9
8.1
-
68.5
58.7
Gross carrying amount
30,542.8
2.3
164.5
24.0
-
190.8
0.6
Loss allowance
(13.5)
(0.3)
(3.8)
(0.2)
-
(4.3)
31.9
30,529.3
2.0
160.7
23.8
-
186.5
0.6
Reduced
Transfer to
Term Total renegotiations
Society
- 2025
Total
Capitalisation
Payment
interest only
Extension
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
30,212.1
-
-
-
-
-
-
30,212.1
-
-
-
-
-
-
Stage 2
Not past due
465.1
3.2
64.3
14.2
-
81.7
17.6
Past due up to 30 days
101.9
0.3
43.3
1.6
-
45.2
44.4
Over 30 days past due
70.2
-
24.4
2.2
-
26.6
37.9
637.2
3.5
132.0
18.0
-
153.5
24.1
Stage 3
Not past due
19.8
1.5
7.8
0.2
-
9.5
48.0
Past due up to 90 days
22.3
0.1
9.8
2.1
-
12.0
53.8
Over 90 days past due
99.8
0.7
53.9
7.5
-
62.1
62.2
141.9
2.3
71.5
9.8
-
83.6
58.9
Gross carrying amount
30,991.2
5.8
203.5
27.8
-
237.1
0.8
Loss allowance
(20.9)
(0.1)
(5.2)
(0.3)
-
(5.6)
26.8
30,970.3
5.7
198.3
27.5
-
231.5
0.7
Collateral Collateral held consists of residential properties. The use of such collateral is in line with terms that are usual and customary to standard lending activities. Upon initial recognition of loans and advances, the fair value of collateral is based on valuation techniques commonly used for the corresponding assets. In subsequent periods, the fair value is updated by reference to market prices or indices of similar assets. Fair value of capped collateral held Some properties in the Group\u2019s mortgage book are in negative equity, which increases the possibility of the Group incurring a loss if the property is taken into possession. The fair value of residential property used to derive the figures in the table above is determined by reference to a recognised house price index. Movements in this index to the reporting date are applied to all properties in the portfolio on a regional basis. For the majority of the Group\u2019s loans, the Group holds excess collateral however this cannot be used to offset those instances where the loan amount exceeds the collateral held. The fair value of capped collateral in the table above therefore represents, on an individual loan basis, the lower of the value of the property and the outstanding loan amount. It does not reflect the overall value of properties against which the loans are secured. The total fair value of collateral held in respect of residential mortgages for the Group at 31 December 2025 is \u00a367,624.3m (2024: \u00a366,203.5m) and for the Society is \u00a363,600.6m (2024: \u00a362,133.0m).
Total
Capitalisation
Reduced
Transfer to
Term Total renegotiations
Society
- 2024
\u00a3m \u00a3m Payment
interest only
Extension
\u00a3m
%
\u00a3m \u00a3m \u00a3m
Stage 1
Not past due
28,046.0
0.3
27.8
6.0
-
34.1
0.1
28,046.0
0.3
27.8
6.0
-
34.1
0.1
Stage 2
Not past due
220.4
0.2
22.3
5.7
-
28.2
12.8
Past due up to 30 days
70.6
-
29.4
0.6
-
30.0
42.5
Over 30 days past due
59.3
0.3
24.4
1.4
-
26.1
44.0
350.3
0.5
76.1
7.7
-
84.3
24.1
Stage 3
Not past due
13.8
1.1
3.2
0.2
-
4.5
32.6
Past due up to 90 days
18.0
0.2
8.9
2.0
-
11.1
61.7
Over 90 days past due
81.7
0.2
46.8
5.9
-
52.9
64.7
113.5
1.5
58.9
8.1
-
68.5
60.4
Gross carrying amount
28,509.8
2.3
162.8
21.8
-
186.9
0.7
Loss allowance
(12.8)
(0.3)
(3.8)
(0.2)
-
(4.3)
33.6
28,497.0
2.0
159.0
21.6
-
182.6
0.6
\u00a3m
Group
Society
2025
2024
2025
2024
Stage 1
32,206.7
30,059.9
30,204.9
28,041.6
Stage 2
646.1
358.4
636.8
350.0
Stage 3
143.6
115.8
141.2
112.6
32,996.4
30,534.1
30,982.9
28,504.2
Gross loan balances
33,007.5
30,542.8
30,991.2
28,509.8
Negative equity
11.1
8.7
8.3
5.6
Capped collateral held in respect of
possessions (included in stage 3 above)
2.8
2.9
2.8
2.9
At 31 December 2025 the contractual amount outstanding on loans written off during the year due to there
being no reasonable expectation of recovery, but which remain subject to enforcement activity, is \u00a30.8m
(2024: \u00a30.7m) for the Group and for the Society.
ii) Commercial mortgages
The commercial mortgage portfolio (also known as loans fully secured on land) is currently closed to new
business.
The tables below provide information on commercial loans by payment due status.
Group & Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
74.6
2.6
2.7
79.9
93.9
0.4
11.3
105.6
Up to 30 days
-
2.8
-
2.8
-
2.3
-
2.3
31 to 60 days
-
2.7
-
2.7
-
2.1
-
2.1
61 to 90 days
-
1.0
-
1.0
-
1.1
0.7
1.8
Over 90 days
-
-
5.8
5.8
-
-
2.5
2.5
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
The table below provides information on movements in the gross carrying amount of commercial loans during
the year.
Group & Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
93.9
5.9
14.5
114.3
91.0
37.8
6.4
135.2
Transfers due to changes in credit
risk (note A):
From stage 1 to stage 2
(2.5)
2.5
-
-
(1.1)
1.1
-
-
From stage 1 to stage 3
(2.0)
-
2.0
-
(1.4)
-
1.4
-
From stage 2 to stage 1
0.1
(0.1)
-
-
19.2
(19.2)
-
-
From stage 2 to stage 3
-
(0.8)
0.8
-
-
(3.4)
3.4
-
From stage 3 to stage 1
0.8
-
(0.8)
-
-
-
-
-
Modification of contractual
(3.2)
2.3
0.5
(0.4)
0.8
(8.0)
6.8
(0.4)
cashflows
Decrease due to derecognition and
repayments
(12.5)
(0.7)
(7.2)
(20.4)
(14.6)
(2.4)
(3.1)
(20.1)
Written off
-
-
(1.3)
(1.3)
-
-
(0.4)
(0.4)
Gross carrying amount at
31 December
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Note
A. For the purposes of the analysis presented above, the amounts shown for \u2018transfers due to changes in credit risk\u2019 are based on
account balances at the start of the reporting period (not account balances at the date of transfer).
Gains and losses arising during the year from loan modifications that did not result in derecognition were not
significant. Amounts written off are in accordance with the Group\u2019s accounting policy for write-offs (see Note
1h)).
For commercial loans, stage 3 loans which no longer meet any of the default criteria are subject to a three
month minimum probation period before they become eligible for transfer out of stage 3. At 31 December
2025, stage 3 loans include \u00a30.1m being held in stage 3 under this probation period (2024: \u00a3nil).
The table below provides information on movements in the impairment loss allowance for commercial loans
during the year.
Group & Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss
allowance at 1 January
0.2
0.2
4.3
4.7
0.6
6.6
1.8
9.0
Transfers due to changes in credit
risk:
From stage 1 to stage 2
-
0.1
-
0.1
-
-
-
-
From stage 1 to stage 3
-
-
0.6
0.6
-
-
-
-
From stage 2 to stage 1
-
-
-
-
-
(1.9)
-
(1.9)
From stage 2 to stage 3
-
-
-
-
-
(0.4)
0.4
-
Remeasurements within existing
0.2
-
0.1
0.3
(0.3)
(0.1)
-
(0.4)
stage
Decrease due to derecognition and
repayments
-
-
(0.1)
(0.1)
(0.1)
(0.9)
(1.1)
(2.1)
Changes due to modification
-
-
(0.1)
(0.1)
-
(3.1)
3.3
0.2
without derecognition
Written off
-
-
(2.9)
(2.9)
-
-
(0.1)
(0.1)
Loss allowance at 31 December
0.4
0.3
1.9
2.6
0.2
0.2
4.3
4.7
ECL coverage (%)
0.54%
3.30%
22.35%
2.82%
0.21%
3.39%
29.66%
4.11%
Given the size and nature of the Group\u2019s commercial portfolio, it is not meaningful to manage credit risk by
reference to behavioural scores or PD percentages. Credit risk is predominantly managed by individual review
of loans in accordance with certain criteria. To aid an understanding of significant credit risk concentrations
for the Group\u2019s commercial portfolio, the tables below provide analyses of loans by industry type, by geography
and by loan-to-value percentage.
Group & Society (\u00a3m)
2025
2024
Industry analysis
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Leisure and hotels
5.7
0.5
-
6.2
6.4
0.6
5.1
12.1
Retail
1.9
0.3
0.2
2.4
2.1
0.3
0.2
2.6
Nursing/residential homes
1.6
-
-
1.6
1.7
-
2.2
3.9
Offices
1.1
-
-
1.1
1.2
-
-
1.2
Commercial and industrial units
63.8
8.3
8.3
80.4
81.9
5.0
7.0
93.9
Miscellaneous
0.5
-
-
0.5
0.6
-
-
0.6
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Group & Society (\u00a3m)
2025
2024
Geographical analysis (Region)
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
North
1.3
1.7
-
3.0
2.9
0.3
-
3.2
Yorkshire
3.7
0.5
1.1
5.3
6.2
0.3
5.7
12.2
East Midlands
2.1
-
2.2
4.3
3.2
-
2.3
5.5
East Anglia
8.4
0.1
0.1
8.6
9.6
0.1
-
9.7
London
19.0
2.9
1.2
23.1
22.8
2.1
0.7
25.6
South East
12.4
1.6
0.4
14.4
15.5
1.2
-
16.7
South West
11.2
-
0.4
11.6
12.0
0.4
0.4
12.8
West Midlands
5.3
1.1
0.3
6.7
7.0
0.6
2.3
9.9
North West
8.7
1.2
2.0
11.9
10.5
0.9
2.1
13.5
Wales
2.3
-
0.5
2.8
2.4
-
0.7
3.1
Scotland
0.2
-
0.3
0.5
1.8
-
0.3
2.1
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Group & Society (\u00a3m)
2025
2024
Loan
-to-value
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<40%
24.4
2.5
1.2
28.1
27.4
1.0
2.0
30.4
40%
- 50%
12.7
1.4
1.2
15.3
18.5
1.1
0.6
20.2
50%
- 60%
14.3
1.2
-
15.5
16.6
1.2
1.2
19.0
60%
- 70%
5.1
1.9
0.2
7.2
6.3
1.4
0.1
7.8
70%
- 80%
6.0
0.9
-
6.9
7.4
0.5
1.3
9.2
80%
- 90%
8.7
1.2
0.8
10.7
9.3
0.3
-
9.6
90%
- 100%
2.2
-
-
2.2
5.4
0.4
-
5.8
>100%
1.2
-
5.1
6.3
3.0
-
9.3
12.3
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Forbearance
The Group\u2019s policy on forbearance for commercial mortgages is the same as the policy for residential
mortgages, which is set out in Note 45a)(i).
At 31 December 2025 the balance of commercial mortgages where the property has been taken into
possession was \u00a30.1m for the Group and Society (2024: \u00a3nil). Possessions balances are classified as stage 3.
The tables below provide further information on commercial mortgages regarded as being in forbearance as at
31 December 2025, showing the type of account renegotiations applied. The tables below are presented on the
same basis as the corresponding tables for residential mortgages, the basis for which is described on pages
259 and 260.
Collateral The collateral held consists of properties held within the categories previously outlined. The use of such collateral is in line with terms that are usual and customary to standard lending activities. Fair value of capped collateral held An analysis of capped collateral, where the collateral is capped to the lower of the value of the property and the amount outstanding on an individual loan basis, is shown below.
2025
Group & Society
Reduced
Transfer to
Total renegotiations
Total
Capitalisation
Payment
interest only
\u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
74.6
-
-
-
-
-
74.6
-
-
-
-
-
Stage 2
Not past due
2.6
0.8
0.9
0.9
2.6
100.0
Past due up to 30 days
2.8
-
0.3
-
0.3
10.7
Over 30 days past due
3.7
0.8
-
-
0.8
21.6
9.1
1.6
1.2
0.9
3.7
40.7
Stage 3
Not past due
2.7
-
0.1
1.2
1.3
48.1
Past due up to 90 days
-
-
-
-
-
-
Over 90 days past due
5.8
-
1.0
2.8
3.8
65.5
8.5
-
1.1
4.0
5.1
60.0
Gross carrying amount
92.2
1.6
2.3
4.9
8.8
9.5
Loss allowance
(2.6)
(0.1)
(0.1)
(0.7)
(0.9)
34.6
89.6
1.5
2.2
4.2
7.9
8.8
2024
Group & Society
Reduced Transfer to Total renegotiations
Total
Capitalisation
Payment
interest only
\u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
93.9
0.9
0.4
0.5
1.8
1.9
93.9
0.9
0.4
0.5
1.8
1.9
Stage 2
Not past due
0.4
-
-
0.4
0.4
100.0
Past due up to 30 days
2.3
-
-
0.1
0.1
4.3
Over 30 days past due
3.2
0.9
0.5
-
1.4
43.8
5.9
0.9
0.5
0.5
1.9
32.2
Stage 3
Not past due
11.3
-
-
8.4
8.4
74.3
Past due up to 90 days
0.7
-
-
-
-
-
Over 90 days past due
2.5
-
0.6
0.7
1.3
52.0
14.5
-
0.6
9.1
9.7
66.9
Gross carrying amount
114.3
1.8
1.5
10.1
13.4
11.7
Loss allowance
(4.7)
-
-
(3.8)
(3.8)
80.9
109.6
1.8
1.5
6.3
9.6
8.8
The fair value of commercial property used to derive the figures in the table above is determined by reference to the latest external valuation of the properties in question. The total fair value of collateral held in respect of commercial loans for the Group and the Society at 31 December 2025 is \u00a3236.8m (2024: \u00a3270.5m). At 31 December 2025 the contractual amount outstanding on loans written off during the year due to there being no reasonable expectation of recovery, but which remain subject to enforcement activity, is \u00a30.2m (2024: \u00a30.2m) for the Group and the Society. iii) Other lending Other lending comprises the following: The table below provides information on movements in the gross carrying amount of other loans and advances during the year. Note: A. For the purposes of the analysis presented above, the amounts shown for \u2018transfers due to changes in credit risk\u2019 are based on account balances at the end of the reporting period (not account balances at the date of transfer).
Group & Society (\u00a3m)
2025
2024
Stage 1
74.4
93.2
Stage 2
9.1
5.9
Stage 3
7.0
12.3
Total
90.5
111.4
Gross loan balances
92.2
114.3
Negative equity
1.7
2.9
Capped collateral held in respect of possessions (included within stage 3 above)
0.1
-
2025
2024
Group
Gross ECL Net Gross ECL Net
\u00a3m
carrying Allowance carrying carrying allowance carrying
amount amount amount amount
Debt factoring advances
200.6
(1.4)
199.2
190.0
(1.4)
188.6
Other loans
45.3
-
45.3
48.2
-
48.2
Total
245.9
(1.4)
244.5
238.2
(1.4)
236.8
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
234.5
2.3
1.4
238.2
219.6
4.3
0.5
224.4
Transfers due to changes in
credit risk (note A):
From stage 1 to stage 2
(1.1)
1.1
-
-
(3.4)
3.4
-
-
From stage 1 to stage 3
-
-
-
-
(0.4)
-
0.4
-
From stage 2 to stage 1
1.0
(1.0)
-
-
2.3
(2.3)
-
-
From stage 2 to stage 3
-
(0.7)
0.7
-
-
(1.6)
1.6
-
From stage 3 to stage 2
-
1.0
(1.0)
-
-
0.3
(0.3)
-
From stage 3 to stage 1
0.4
-
(0.4)
-
0.3
-
(0.3)
-
Modification of contractual
-
-
-
-
-
-
-
-
cashflows
Increases due to origination
68.8
-
-
68.8
74.2
-
-
74.2
Decrease due to derecognition
(60.3)
(0.5)
-
(60.8)
(58.1)
(1.8)
-
(59.9)
and repayments
Write
-offs
-
-
(0.3)
(0.3)
-
-
(0.6)
(0.6)
Other movements
-
-
-
-
-
-
0.1
0.1
Gross carrying amount at 31
243.3
2.2
0.4
245.9
234.5
2.3
1.4
238.2
December
The table below provides information on movements in the impairment loss allowance for other loans and advances during the year. Debt factoring advances Debt factoring advances relate to amounts advanced to clients by SBF, the Group\u2019s debt factoring and invoice discounting business. Credit risk is predominantly managed by rigorous due diligence controls and regular monitoring of client accounts, and includes the use of concentration limits, credit reference checks and \u2018watchlists\u2019 on clients\u2019 debtors. Advances are typically made to clients only against notified invoices that are less than 90 days past due. Debt factoring and invoice discounting advances are typically secured via a legal charge against the relevant client\u2019s sales ledger. Additional security may also be taken in the form of an all assets debenture that may incorporate other unencumbered assets as well as personal guarantees. At 31 December 2025 and 31 December 2024, the fair value of the total collateral held by the Group against debt factoring and invoice discounting advances was in excess of the value of the total advances outstanding. Other loans The table below provides information on the gross carrying amount of other loans by payment due status. Other loans of \u00a344.8m (2024: \u00a348.2m), at a Group level, were advanced by SIL to customers in respect of residential properties owned by a property management holding company. The loans are secured on shares in that property management holding company and the fair value of the total collateral held is \u00a394.1m (2024: \u00a399.7m). b) Credit risk \u2013 balances with the Bank of England, debt securities and loans and advances to credit institutions The Group holds treasury investments in order to meet liquidity requirements and for general business purposes. The credit risk arising from these investments is closely monitored and managed by the Group. Collateral held for treasury assets is determined by the nature of the instrument. Loans and debt securities are generally unsecured with the exception of asset backed securities and covered bonds which are secured by pools of financial assets. For details of collateral held against debt securities see Note 14. For details of collateral held against loans and advances to credit institutions see Note 13. No collateral is held against balances with the Bank of England.
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance at 1 January
0.2
0.6
0.6
1.4
0.2
1.1
0.3
1.6
Transfers due to changes in
credit risk:
From stage 1 to stage 2
-
0.9
-
0.9
(0.1)
1.0
-
0.9
From stage 2 to stage 1
-
(0.2)
-
(0.2)
-
(0.3)
-
(0.3)
From stage 2 to stage 3
-
(0.7)
0.7
-
-
(1.0)
1.0
-
From stage 3 to stage 2
-
0.6
(0.6)
-
-
-
-
-
From stage 3 to stage 1
-
-
-
-
0.1
-
(0.1)
-
Remeasurements within existing
0.1
(0.5)
-
(0.4)
-
(0.2)
-
(0.2)
stage
Write
-offs
-
-
(0.3)
(0.3)
-
-
(0.6)
(0.6)
Loss allowance at 31 December
0.3
0.7
0.4
1.4
0.2
0.6
0.6
1.4
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Not past due
45.2
-
45.2
48.2
-
48.2
Up to 30 days
-
0.1
0.1
-
-
-
Total
45.2
0.1
45.3
48.2
-
48.2
At 31 December 2025 none of the Group or the Society\u2019s treasury assets were past due (2024: none past due).
At 31 December 2025 the ECLs on the Group and the Society\u2019s treasury assets were all held as stage 1 (2024:
all stage 1).
At 31 December 2025 and 31 December 2024, all the Group and the Society\u2019s treasury investments, except for
building society deposits (2025: \u00a3nil; 2024: \u00a30.1m) and certain collateral held (2025: \u00a3nil: 2024: \u00a30.1m), were
assessed to have a probability of default (PD) of less than 3.5% (2024: 0.11%).
The Group\u2019s accounting policies on impairment losses on treasury assets and how the Group assesses ECLs
and PDs on treasury assets are detailed in Note 1h).
At 31 December 2025 over 99.9% (2024: 99.9%) of the Group\u2019s treasury investment assets (including cash in
hand and with the Bank of England and excluding exposures to a central clearing house used to clear
derivatives to manage interest rate risk in line with regulation) were rated A3 or better, and for the Society over
99.9% (2024: 99.9%) were rated A3 or better. The table below provides further details of the credit ratings for
both the Group and the Society\u2019s treasury investment portfolios:
\u2018Unrated\u2019 in the above analysis includes an exposure to a central clearing house totalling \u00a3254.6m for the
Group and Society (2024: \u00a3273.3m) used to clear derivatives to manage interest rate risk, as required by
regulation, together with an exposure to subsidiary undertakings in the form of Credit Support Annex (CSA)
collateral for the Society only, totalling \u00a39.0m (2024: \u00a352.2m).
The Group also monitors exposure concentrations against a variety of criteria including industry sector / asset
class and country of risk.
Group
Society
Rating
2025 2025 2024 2024 2025 2025 2024 2024
\u00a3m % \u00a3m % \u00a3m % \u00a3m %
Aaa
2,818.1
47.1
2,429.6
36.3
3,040.5
51.2
2,666.1
40.0
Aa1
212.6
3.6
268.2
4.0
179.2
3.0
268.2
4.0
Aa2
0.1
-
0.1
-
-
-
-
-
Aa3
2,611.1
43.6
3,605.1
53.8
2,416.1
40.7
3,336.4
50.0
A1
85.3
1.4
117.3
1.8
40.9
0.7
72.1
1.1
A2
1.1
-
1.0
-
-
-
-
-
Unrated
254.6
4.3
273.5
4.1
263.6
4.4
325.7
4.9
Total
5,982.9
100.0
6,694.8
100.0
5,940.3
100.0
6,668.5
100.0
Group
Society
Industry sector / asset class
2025 2025 2024 2024 2025 2025 2024 2024
\u00a3m % \u00a3m % \u00a3m % \u00a3m %
Cash in hand and balances with the
Bank of England
1,360.2
22.7
1,930.6
28.9
1,360.2
22.9
1,930.6
29.0
Loans and advances to banks and
building societies
353.3
5.9
414.6
6.2
304.7
5.1
397.8
6.0
Gilts
500.5
8.4
1,086.5
16.2
500.5
8.4
1,086.5
16.3
Certificates of deposit
-
-
-
-
-
-
-
-
Fixed rate bonds
1,552.0
26.0
1,274.9
19.0
1,552.0
26.2
1,274.9
19.1
Floating rate notes
11.0
0.2
-
-
-
-
-
-
Treasury bills
733.4
12.9
598.2
8.9
557.0
9.4
321.2
4.8
Covered bonds
813.5
13.6
770.1
11.5
813.5
13.7
770.1
11.5
Residential mortgage backed
619.0
10.3
619.9
9.3
852.4
14.3
887.4
13.3
securities
Total
5,982.9
100.0
6,694.8
100.0
5,940.3
100.0
6,668.5
100.0
c) Credit risk \u2013 trade receivables The tables below provide information on movements in trade receivables during the year. As outlined in Note 1h), the Group\u2019s accounting policy for trade receivables is to always recognise lifetime ECLs in accordance with the simplified approach in IFRS 9. Trade receivables are therefore not allocated to ECL stages.
Group
Society
Geographical exposure (Region)
2025 2025 2024 2024 2025 2025 2024 2024
\u00a3m % \u00a3m % \u00a3m % \u00a3m %
UK
4,344.1
72.7
5,331.5
79.7
4,388.2
73.8
5,393.6
81.0
Rest of Europe
419.7
7.0
327.9
4.9
389.7
6.6
293.3
4.4
Supranationals:
Europe
226.7
3.8
122.4
1.8
215.6
3.6
122.4
1.8
Global
504.5
8.4
528.4
7.9
504.5
8.5
528.4
7.9
Africa
56.1
0.9
28.4
0.4
56.1
0.9
28.4
0.4
Asia
163.4
2.7
135.2
2.0
163.4
2.8
135.2
2.0
South America
145.8
2.4
117.7
1.8
145.8
2.5
117.7
1.8
North America
118.8
2.0
100.2
1.5
77.0
1.3
49.5
0.7
Rest of World
3.8
0.1
3.1
-
-
-
-
-
Total
5,982.9
100.0
6,694.8
100.0
5,940.3
100.0
6,668.5
100.0
\u00a3m
Group
Society
2025
2024
2025
2024
Gross carrying amount
76.3
71.0
1.5
1.9
Loss allowance
(2.7)
(2.2)
-
-
Net carrying amount
73.6
68.8
1.5
1.9
\u00a3m
Group
Society
2025
2024
2025
2024
Loss allowance at 1 January
2.2
2.4
-
-
Net allowances made during the
year
1.4
0.8
0.1
-
Write
-offs
(0.9)
(1.0)
(0.1)
-
Loss allowance at 31 December
2.7
2.2
-
-
The table below provides information on the gross carrying amount of trade receivables by payment due status.
\u00a3m
Group
Society
2025
2024
2025
2024
Not past due
42.6
38.3
-
-
Up to 30 days past due
18.1
19.5
0.6
0.5
31 to 120 days past due
10.1
9.5
0.5
1.0
Over 120 days past due
5.5
3.7
0.4
0.4
Total
76.3
71.0
1.5
1.9
No collateral is held against trade receivables. At 31 December 2025 the contractual amount outstanding on trade receivables written off during the year due to there being no reasonable expectation of recovery, but which remain subject to enforcement activity, is \u00a3nil (2024: \u00a3nil) for the Group and \u00a3nil (2024: \u00a3nil) for the Society. d) Credit risk \u2013 derivative financial instruments A credit exposure could arise in respect of derivative contracts entered into by the Group if the counterparty was unable to fulfil its contractual obligations. The Group addresses the risks associated with these activities by monitoring counterparty credit exposure and requiring additional collateral to be posted or returned as necessary. For all but one derivative, the only form of collateral accepted by the Group in respect of derivatives is cash. Derivatives are either transacted under International Swaps and Derivatives Association (ISDA) Master Agreements or Cleared Derivatives Execution Agreements. For swaps that are cash collateralised, no Credit (CVA) or Debit (DVA) Value Adjustments have been made in respect of credit risk in determining the fair value of these derivatives as the risk is significantly mitigated. Credit Support Annexes executed with certain counterparties in conjunction with the ISDA Master Agreement require collateral to be posted regularly, as required by specific terms and conditions of the arrangements. Due to the frequency of the posting of collateral, there is no material exposure from these minimal timing differences that would require CVA or DVA adjustments. At 31 December 2025 the Group held one derivative (2024: one) that is not fully collateralised for cash; CVA and DVA adjustments are made to the valuation of this derivative. Netting arrangements do not necessarily result in an offset of Statement of Financial Position (SoFP) assets and liabilities, as transactions are usually settled on a gross basis. The Group\u2019s legal documentation for derivative transactions does grant legal rights of set-off for those transactions with the same counterparty. Accordingly, the credit risk associated with such contracts is reduced to the extent that negative mark to market valuations on derivatives will offset positive mark to market values on derivatives. The following tables provide further detail on the net exposure to derivative transaction counterparties.
Group
2024
\u00a3m
As reported Netting Cash Net amounts
within SoFP agreements collateral after offsetting
Financial assets
Derivative financial instruments
752.1
(204.2)
(557.3)
-
Financial liabilities
Derivative financial instruments
225.1
(204.2)
(18.1)
2.8
Society
2025
\u00a3m
As reported Netting Cash Net amounts
within SoFP agreements collateral after offsetting
Financial assets
Derivative financial instruments
333.1
(189.4)
(141.3)
2.4
Financial liabilities
Derivative financial instruments
205.0
(189.4)
(14.6)
1.0
Group
2025
\u00a3m
As reported Netting Cash Net amounts
within SoFP agreements collateral after offsetting
Financial assets
Derivative financial instruments
350.8
(180.5)
(141.5)
28.8
Financial liabilities
Derivative financial instruments
186.2
(180.5)
(5.7)
-
In respect of derivative assets, there is \u00a328.8m (2024: \u00a3nil) for the Group, and \u00a32.4m (2024: \u00a3nil) for the Society, after offsetting between the value of the derivatives and the cash collateral held. At a Group level, this predominantly relates to the collateral arrangements for the one cross currency derivative held by the Group where collateral is not required to be posted up to a threshold. In 2024, the cross currency derivative was in a net liability position. In respect of derivative liabilities, there is a net amount after offsetting of \u00a3nil (2024: \u00a32.8m) for the Group, and \u00a31.0m (2024: \u00a33.5m) for the Society, between the value of the derivatives and the cash collateral pledged.
Society
2024
\u00a3m
As reported Netting Cash Net amounts
within SoFP agreements collateral after offsetting
Financial assets
Derivative financial instruments
743.0
(208.3)
(557.3)
-
Financial liabilities
Derivative financial instruments
282.2
(208.3)
(70.4)
3.5
The components of the Prudential Group\u2019s capital and the associated regulatory framework are set out in the Strategic Report, and this is followed by quantitative disclosure of the components of capital resources and capital requirements. The Group\u2019s capital management processes are also set out in the Strategic Report. Throughout both the current year and the prior year, the Group complied with and maintained surplus capital above all externally imposed capital requirements.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-516": { "value": "The tables below analyse the carrying value of financial assets and financial liabilities into relevant maturity groupings based on the remaining maturity period at the reporting date to the contractual maturity. In practice, customer deposits, i.e. shares, amounts owed to credit institutions and amounts owed to other customers, are likely to be repaid later than on the earliest date on which repayment can be required.
2025
Group
Repayable
Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m
on demand
months months years years
specified
Total
maturity
Assets
Cash in hand and balances with the
Bank of England
1,360.2
-
-
-
-
-
1,360.2
Loans and advances to credit
88.8
-
-
-
-
264.5
353.3
institutions
Debt securities
-
809.4
253.6
2,536.5
669.9
-
4,269.4
Derivative financial
-
17.3
75.6
179.9
78.0
-
350.8
instruments
Loans and advances to customers
196.6
27.1
77.4
994.5
32,083.3
-
33,378.9
held at amortised cost
Loans and advances to
customers held at FVTPL
0.8
-
-
-
-
-
0.8
Equity release portfolio at FVTPL
-
6.3
18.6
76.4
161.8
-
263.1
Equity share investments at FVTPL
-
-
-
-
-
18.3
18.3
Trade receivables
31.0
42.6
-
-
-
-
73.6
Total financial assets
1,677.4
902.7
425.2
3,787.3
32,993.0
282.8
40,068.4
Liabilities
Shares
13,614.8
2,843.4
8,787.9
5,193.4
86.8
-
30,526.3
Amounts owed to credit institutions
9.7
167.9
6.4
-
-
143.2
327.2
Amounts owed to other customers
820.3
559.9
1,229.5
109.9
-
-
2,719.6
Debt securities in issue
-
0.5
-
3,361.4
-
-
3,361.9
Derivative financial instruments
-
5.6
27.5
138.6
14.5
-
186.2
Lease liabilities
-
7.9
21.9
64.8
15.7
-
110.3
Trade payables
-
14.4
-
-
-
-
14.4
Fair value of put option obligation
-
-
0.7
0.3
-
-
1.0
Subordinated liabilities
-
-
-
356.0
-
-
356.0
Subscribed capital
-
-
-
-
-
15.2
15.2
Total financial liabilities
14,444.8
3,599.6
10,073.9
9,224.4
117.0
158.4
37,618.1
Net liquidity gap
(12,767.4)
(2,696.9)
(9,648.7)
(5,437.1)
32,876.0
124.4
2,450.3
2024 (restated*)
Group
Repayable
Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m
on demand
months months years years
specified
Total
maturity
Assets
Cash in hand and balances with the
Bank of England
1,930.6
-
-
-
-
-
1,930.6
Loans and advances to credit
121.5
1.6
1.0
-
-
290.5
414.6
institutions
Debt securities
-
492.9
826.3
2,222.1
808.3
-
4,349.6
Derivative financial
-
25.2
99.2
513.0
114.7
-
752.1
instruments
Loans and advances to customers
188.4
28.9
55.5
942.8
29,385.5
-
30,601.1
held at amortised cost
Loans and advances to
customers held at FVTPL
0.9
-
-
-
-
-
0.9
Equity release portfolio at FVTPL
-
6.6
19.2
70.1
181.3
-
277.2
Equity share investments at FVTPL
-
-
-
-
-
16.9
16.9
Trade receivables
30.5
38.3
-
-
-
-
68.9
Share warrants
21.9
-
-
-
-
-
21.9
Other assets
-
-
-
-
-
0.1
0.1
Total financial assets
2,293.8
593.5
1,001.2
3,748.0
30,489.8
307.5
38,433.8
Liabilities
Shares
11,415.2
3,715.1
9,162.4
3,889.0
86.8
-
28,268.5
Amounts owed to credit institutions
19.0
6.1
1,017.2
-
-
557.3
1,599.6
Amounts owed to other customers
895.9
715.4
1,018.2
121.6
-
-
2,751.1
Debt securities in issue
-
5.9
-
2,429.4
-
-
2,435.3
Derivative financial instruments
-
14.3
60.7
115.3
34.8
-
225.1
Lease liabilities
-
7.1
19.5
52.2
13.3
-
92.1
Trade payables
-
11.0
-
-
-
-
11.0
Fair value of put option obligation
-
-
3.8
0.3
-
-
4.1
Subordinated liabilities
-
-
-
340.0
350.2
-
690.2
Subscribed capital
-
-
-
-
-
41.6
41.6
Total financial liabilities
12,330.1
4,474.9
11,281.8
6,947.8
485.1
598.9
36,118.6
Net liquidity gap
(10,036.3)
(3,881.4)
(10,280.6)
(3,199.8)
30,004.7
(291.4)
2,315.2
* The information shown above for the year ended 31 December 2024 is restated to reflect the appropriate presentation of financial liabilities, specifically in relation to Debt securities in issue (see Note 1c) for details).
2025
Society
Repayable
Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m
on demand
months months years years
specified
Total
maturity
Assets
Cash in hand and balances with the
Bank of England
1,360.2
-
-
-
-
-
1,360.2
Loans and advances to credit
31.2
-
-
-
-
273.5
304.7
Institutions
Debt securities
-
593.1
253.6
2,758.8
669.9
-
4,275.4
Derivative financial
-
17.4
75.9
159.3
80.5
-
333.1
Instruments
Loans and advances to customers
3.0
26.8
75.5
988.0
30,028.0
-
31,121.3
held at amortised cost
Loans and advances to
customers held at FVTPL
0.8
-
-
-
-
-
0.8
Equity release portfolio at FVTPL
-
6.3
18.6
76.4
161.8
-
263.1
Loans to subsidiary undertakings
454.7
-
-
-
-
-
454.7
Trade receivables
1.5
-
-
-
-
-
1.5
Total financial assets
1,851.4
643.6
423.6
3,982.5
30,940.2
273.5
38,114.8
Liabilities
Shares
13,614.8
2,843.4
8,787.9
5,193.4
84.8
-
30,524.3
Amounts owed to credit institutions
9.7
353.8
6.4
-
-
143.2
513.1
Amounts owed to other customers
508.3
32.4
14.3
616.9
-
-
1,171.9
Debt securities in issue
-
-
-
2,955.0
-
-
2,955.0
Derivative financial instruments
-
8.2
34.1
148.2
14.5
-
205.0
Lease liabilities
-
0.5
1.4
5.2
1.1
-
8.2
Trade payables
-
3.4
-
-
-
-
3.4
Subordinated liabilities
-
-
-
356.0
-
-
356.0
Subscribed capital
-
-
-
-
-
15.2
15.2
Total financial liabilities
14,132.8
3,241.7
8,844.1
9,274.7
100.4
158.4
35,752.1
Net liquidity gap
(12,281.4)
(2,598.1)
(8,420.5)
(5,292.2)
30,839.8
115.1
2,362.7
* The information shown above for the year ended 31 December 2024 is restated to reflect the appropriate presentation of financial
liabilities, specifically in relation to Debt securities in issue (see Note 1c) for details).
With respect to loans and advances to customers presented within the tables above, each outstanding loan
balance is allocated in full to a single maturity grouping according to that loan\u2019s contractual maturity date
(regardless of any scheduled repayments that may be receivable prior to the contractual maturity date). Loans
and advances to customers presented as repayable on demand represent those loans and advances that are
on call and at short notice.
With respect to the equity release portfolio, contractual maturity arises in the event of the borrower\u2019s voluntary
redemption, death or move to long-term care. For the purposes of the tables above, amounts have been
allocated to maturity groupings based on the anticipated redemption profiles applied in the Group\u2019s equity
release portfolio valuation model (see Note 1f) and Note 1v) for further details).
Group debt securities in issue include \u00a3398.3m (2024: \u00a3491.6m) of funding obtained through the Group\u2019s
securitisation issuances carried out through Darrowby No. 6 plc. The final maturity dates of the securitisation
notes are significantly out into the future however the Group can exercise a call option to repurchase the
outstanding Darrowby No. 6 notes at a date within the next five years. As a result, all such amounts have been
shown within 1 to 5 years in the tables above.
2024 (restated*)
Society
Repayable
Up to 3 3 - 12 1 - 5 Over 5 No
\u00a3m
on demand
months months years years
specified
Total
maturity
Assets
Cash in hand and balances with the
Bank of England
1,930.6
-
-
-
-
-
1,930.6
Loans and advances to credit
54.0
-
1.0
-
-
342.8
397.8
Institutions
Debt securities
-
273.9
768.5
2,489.4
808.3
-
4,340.1
Derivative financial
-
25.5
99.5
507.7
110.3
-
743.0
Instruments
Loans and advances to customers
3.2
28.9
53.8
905.6
27,343.4
-
28,334.9
held at amortised cost
Loans and advances to
customers held at FVTPL
0.9
-
-
-
-
-
0.9
Equity release portfolio at FVTPL
-
6.6
19.2
70.1
181.3
-
277.2
Loans to subsidiary undertakings
403.9
-
-
-
-
-
403.9
Trade receivables
1.9
-
-
-
-
-
1.9
Total financial assets
2,394.5
334.9
942.0
3,972.8
28,443.3
342.8
36,430.3
Liabilities
Shares
11,415.2
3,715.1
9,162.4
3,889.0
72.4
-
28,254.1
Amounts owed to credit institutions
19.0
207.1
1,017.2
-
-
557.3
1,800.6
Amounts owed to other customers
470.4
49.9
-
748.6
-
-
1,268.9
Debt securities in issue
-
5.1
-
1,925.0
-
-
1,930.1
Derivative financial instruments
-
17.7
67.1
162.6
34.8
-
282.2
Lease liabilities
-
0.5
1.5
5.2
1.4
-
8.6
Trade payables
-
2.8
-
-
-
-
2.8
Subordinated liabilities
-
-
-
340.0
350.2
-
690.2
Subscribed capital
-
-
-
-
-
41.6
41.6
Total financial liabilities
11,904.6
3,998.2
10,248.2
7,070.4
458.8
598.9
34,279.1
Net liquidity gap
(9,510.1)
(3,663.3)
(9,306.2)
(3,097.6)
27,984.5
(256.1)
2,151.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfMaturityAnalysisForFinancialAssetsHeldForManagingLiquidityRiskExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-465": { "value": "Market risk is the risk that the value of, or income arising from, the Group\u2019s assets and liabilities changes as a result of changes in market prices; the principal elements being interest rate risk (including the use of derivatives) and foreign currency risk. The Group\u2019s Treasury function is responsible for managing the Group\u2019s exposure to all aspects of market risk within the operational limits set out in the Group\u2019s Treasury policy, which is reviewed and recommended by ALCO and approved by the Board. The Group\u2019s Treasury function measures and monitors adherence to the Treasury policy and reports regularly on all aspects of market risk exposure, including interest rate risk and foreign currency risk. a) Interest rate risk The main market risk faced by the Group is interest rate risk. The Group uses a number of different metrics to monitor interest rate risk and details of these are set out below. The Group monitors interest rate risk exposure against limits by determining the effect on the Group\u2019s current net notional value of assets and liabilities for a parallel shift in interest rates equivalent to 2% for all maturities, in line with regulatory requirements. These results are compared to the Board limit and operational trigger at least weekly, and are formally reported to ALCO and the Board monthly. Other interest rate risk metrics employed by the Group incorporate earnings-at-risk and market value methodologies. The market value exposure position is calculated using at least 250 monthly yield curve movements from, approximately, the last seven years. The earnings-at-risk methodology is calculated using at least 100 stochastically (randomly) generated rate paths. Both of these approaches employ 95% confidence intervals. The outputs of these interest rate risk measurement methodologies are compared to their respective Board limits and operational triggers at least weekly and are reported to ALCO and the Board monthly. All these measures are used to guide interest rate risk management decisions. The levels of Group interest rate risk exposures throughout the reporting period, based on measures taken at each month end, were as follows: Although these measures provide valuable insights into the market risk to which the Group is exposed, they need to be viewed in the context of the following limitations: \u2022 Historical data is not necessarily the best guide to future events, but is a reasonable proxy; \u2022 The use of 95% confidence levels, by definition, does not take account of changes that may occur beyond this level of confidence and therefore may not fully take into account the most extreme events; and \u2022 Exposures are calculated on static Statement of Financial Position positions and therefore future changes in the structure of the Statement of Financial Position are ignored. Other interest rate risk exposures, such as basis risk (the risk of loss arising from changes in the relationship between interest rates which have similar but not identical characteristics, for example SONIA and Bank of England Base Rate), are also monitored closely and regularly reported to ALCO. b) Currency risk The currency risk appetite of the Group is low and any instruments denominated in foreign currency are immediately swapped into Sterling. The Group has one regulated covered bond in Euros totalling \u20ac500m (2024: one bond, \u20ac500m). The exposure to foreign currency fluctuations on this bond is fully hedged as a derivative contract was taken out to swap the Euros into Sterling on issuance of the bond.
\u00a3m
As at 31 December
Average High Low
As at 31 December
2025 2025 2025 2025 2024
Static earnings
-at-risk
25.3
22.1
25.5
16.8
27.9
Historical value
-at-risk
3.3
5.1
7.1
2.1
3.5
2% parallel interest rate shift
8.8
14.5
21.8
4.1
20.8
The Group has one intragroup loan denominated in New Zealand Dollars totalling $25m (2024: nil). The exposure to foreign currency fluctuations on this bond is fully hedged as a derivative contract was taken out to swap the Dollars into Sterling on the same date funds were lent. The Group has investments in its subsidiary undertaking Jade, which are denominated in New Zealand dollars. The foreign currency fluctuations in relation to these investments are not hedged and are recognised in the Group\u2019s translation reserve. SIL holds deposits from customers denominated in US dollars (USD). SIL manages its foreign currency risk by holding cash and debt securities denominated in USD; the objective is to minimise mismatches between the balance and maturity profile of USD assets and USD liabilities, and also mismatches between the related interest income and interest expense on USD assets and liabilities. In addition, a number of the Group\u2019s businesses undertake transactions denominated in foreign currency as part of their normal business. Any amounts outstanding at 31 December 2025 are not material. c) Other price risk The Group also has exposure to market risk arising from the movement in the Retail Price Index and house price indices. In particular, movements in these indices impact on the valuation of the equity release portfolio, as outlined further in Note 1v). ", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-517": { "value": "Credit risk is the risk of suffering financial loss should borrowers or counterparties default on their contractual obligations to the Group. The Group faces this risk from its lending to: \u2022 individual customers (retail mortgages); \u2022 businesses (through legacy commercial lending no longer originated and current debt factoring / invoice discounting); \u2022 wholesale counterparties (including other financial institutions). Credit risk within our treasury portfolio arises from the investments held by the Group in order to meet liquidity requirements and for general business purposes; and \u2022 other Group entities, for the Society only. Changes in the credit quality and the recoverability of loans and amounts due from counterparties influence the Group\u2019s exposure to the risk of credit losses. The Group\u2019s strategy is to maintain a cautious approach to credit risk and new lending. Adverse changes in the credit quality of counterparties, collateral values or deterioration in the wider economy, including rising unemployment, changes in interest rates, deterioration in household finances and any contraction in the UK property market leading to falling property values, could affect the recoverability and value of the Group\u2019s assets and influence its financial performance. The Group has embedded a comprehensive credit risk management framework with clear lines of accountability and oversight as part of its overall governance framework. The Group has policies and procedures to monitor, control, mitigate and manage credit risk within the Group\u2019s credit risk appetite. The Retail Credit Committee and the Group Wholesale Credit Committee provide oversight to the effectiveness of all credit management across the Group and the controls in place ensure lending is within the Board approved credit risk appetite. The reporting structure ensures timely and accurate reporting of all substantive risk matters to the Board and the Board Risk Committee. The Board receives monthly updates on the credit risk profile of the Group. Scenario analysis has been undertaken to identify the impact of climate-related risks on the Group\u2019s credit risk management. This includes assessing the residential lending portfolio at property level to determine the potential impact of key climate-related physical and transitional risks. The scenario analysis indicates that the most significant effects from climate change occur in the medium to long-term, with material financial impacts from transition risks expected to transpire before physical risks. Based on current UK Government policies, a delayed transition appears the most probable. Therefore, the most significant transition risks which may impact the Group are not expected to occur before the 2030s. The results of this assessment did not lead to a change in carrying amounts as at 31 December 2025 or 31 December 2024. The future impact of climate- related risks on credit risk is uncertain, and the Group will continue to monitor developments in future periods. Management makes use of the Group\u2019s IFRS 9 ECL information for purposes that include regulatory capital management, certain product pricing models and credit risk forecasting. The maximum exposure to credit risk for financial assets is represented by the carrying amount of each financial asset, except for the following: \u2022 A fair value adjustment debit for hedged risk of \u00a358.9m (2024: \u00a3274.6m credit) for the Group and \u00a360.9m (2024: \u00a3271.7m credit) for the Society is included within loans and advances to customers. This is indirectly exposed to credit risk through the relationship with the underlying loans covered by the Group\u2019s hedging strategy. \u2022 The Group has credit risk exposure from commitments to lend where a mortgage has been offered but not yet completed, which leads to the recognition of a financial asset (within loans and advances to customers) on completion of the mortgage. As outlined in Note 1h), an impairment loss allowance is held against these commitments in accordance with IFRS 9. The total amount of such loan commitments at 31 December 2025 is \u00a32,197.8m (2024: \u00a31,885.1m) for the Group and \u00a32,155.4m (2024: \u00a31,867.3m) for the Society and the impairment loss allowance held against these commitments is \u00a30.3m (2024: \u00a30.2m) for both the Group and the Society. Retail mortgage lending to customers The Group currently lends in the prime residential UK mortgage market, including buy-to-let, through the Society, whilst SIL lends in the Channel Islands and in the UK. The Board\u2019s credit risk appetite defines a number of limits regarding customer and collateral credit quality to which all lending activity must adhere. The credit decision process utilises automated credit scoring and policy rules with lending policy criteria supporting manual underwriting. All aspects of the credit decision process are subject to regular independent review and development ensuring they support decisions in line with the Board\u2019s credit risk appetite. Commercial lending to customers and businesses The Society\u2019s commercial mortgage portfolio was closed to new lending in November 2008. Other loans and advances These include advances made by our factored debt and invoice discounting business, SBF, which continue to be managed by appropriately skilled teams. In addition, other loans and advances include advances made to residential mortgage customers in Guernsey and Jersey by SIL; these are secured on shares in a property management company which owns the building in which the properties are located. These loans are monitored by appropriately skilled teams in SIL. Wholesale lending to other financial institutions Wholesale credit risk arises from the wholesale investments undertaken by the Group\u2019s Treasury function which is responsible for managing this aspect of credit risk in line with the Board approved credit risk appetite and wholesale credit policies. Wholesale counterparty limits are reviewed monthly by the Group Wholesale Credit Committee based on analyses of counterparties\u2019 financial performance, ratings and other market information to ensure that limits remain within our risk appetite. We regularly review and closely monitor the number of counterparties to whom we will lend and, for those counterparties to whom we have lent, we review both the amount and duration of any limits. A deterioration in wholesale credit markets could lead to volatility in the value of the Group\u2019s portfolio of treasury assets together with the risk of further impairment within our treasury investments portfolio. ALCO provides oversight to the effectiveness of wholesale credit risk management. Intra-Group lending Credit risk also arises on loans made by the Society to other Group entities, including any committed to but undrawn amounts. Intra-Group counterparty limits are reviewed monthly by, and any increases must be pre- approved by, the Group Wholesale Credit Committee. ^ Also known as commercial mortgages. For details on how the Group assesses ECLs see Note 1h).
2025
Fair value
Group
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
33,007.5
(21.6)
58.9
33,044.8
99.0
Loans fully secured on land^
92.2
(2.6)
-
89.6
0.3
Other lending:
Debt factoring advances
200.6
(1.4)
-
199.2
0.6
Other loans
45.3
-
-
45.3
0.1
Total
33,345.6
(25.6)
58.9
33,378.9
100.0
2024
Fair value
Group
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
30,542.8
(13.5)
(274.6)
30,254.7
98.8
Loans fully secured on land^
114.3
(4.7)
-
109.6
0.4
Other lending:
Debt factoring advances
190.0
(1.4)
-
188.6
0.6
Other loans
48.2
-
-
48.2
0.2
Total
30,895.3
(19.6)
(274.6)
30,601.1
100.0
2025
Fair value
Society
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
30,991.2
(20.9)
60.9
31,031.2
99.7
Loans fully secured on land^
92.2
(2.6)
-
89.6
0.3
Other lending
0.5
-
-
0.5
-
Total
31,083.9
(23.5)
60.9
31,121.3
100.0
2024
Fair value
Society
Gross carrying
ECL allowance
adjustment for
Carrying amount
amount (Note 17) hedged risk
\u00a3m \u00a3m \u00a3m
\u00a3m
%
Residential mortgages
28,509.8
(12.8)
(271.7)
28,225.3
99.6
Loans fully secured on land^
114.3
(4.7)
-
109.6
0.4
Total
28,624.1
(17.5)
(271.7)
28,334.9
100.0
a) Credit risk - loans and advances to customers held at amortised cost The tables below show the breakdown of the Group and Society\u2019s loans and advances to customers held at amortised cost at the reporting date: The tables below provide information on movements in the gross carrying amount of residential loans and advances to customers during the year:
2025
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
32,216.6
468.4
19.8
32,704.8
30,212.1
465.1
19.8
30,697.0
Up to 30 days past due
-
104.5
3.3
107.8
-
101.9
3.3
105.2
31 to 60 days past due
-
49.9
7.8
57.7
-
47.1
7.8
54.9
61 to 90 days past due
-
23.8
11.2
35.0
-
23.1
11.2
34.3
Over 90 days past due
-
-
102.2
102.2
-
-
99.8
99.8
Total
32,216.6
646.6
144.3
33,007.5
30,212.1
637.2
141.9
30,991.2
2024
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
30,067.3
224.2
13.8
30,305.3
28,046.0
220.4
13.8
28,280.2
Up to 30 days past due
-
72.5
3.6
76.1
-
70.6
3.6
74.2
31 to 60 days past due
-
46.4
4.6
51.0
-
43.6
4.6
48.2
61 to 90 days past due
-
15.7
9.8
25.5
-
15.7
9.8
25.5
Over 90 days past due
-
-
84.9
84.9
-
-
81.7
81.7
Total
30,067.3
358.8
116.7
30,542.8
28,046.0
350.3
113.5
28,509.8
2025
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
30,067.3
358.8
116.7
30,542.8
28,046.0
350.3
113.5
28,509.8
Transfers due to changes in credit
risk (note A):
From stage 1 to stage 2
(379.9)
379.9
-
-
(373.3)
373.3
-
-
From stage 1 to stage 3
(17.5)
-
17.5
-
(16.6)
-
16.6
-
From stage 2 to stage 1
102.5
(102.5)
-
-
99.1
(99.1)
-
-
From stage 2 to stage 3
-
(16.5)
16.5
-
-
(16.5)
16.5
-
From stage 3 to stage 2
-
10.2
(10.2)
-
-
10.2
(10.2)
-
From stage 3 to stage 1
0.6
-
(0.6)
-
0.6
-
(0.6)
-
Modification of contractual
(99.4)
67.9
26.3
(5.2)
(99.4)
67.9
26.3
(5.2)
cashflows
Increases due to origination
6,960.1
19.3
2.1
6,981.5
6,772.4
19.3
2.1
6,793.8
Decrease due to derecognition and
repayments
(4,427.6)
(71.1)
(20.7)
(4,519.4)
(4,227.2)
(68.8)
(19.0)
(4,315.0)
Written off
-
(0.1)
(4.1)
(4.2)
-
(0.1)
(4.1)
(4.2)
Other movements
10.5
0.7
0.8
12.0
10.5
0.7
0.8
12.0
Gross carrying amount at
31 December
32,216.6
646.6
144.3
33,007.5
30,212.1
637.2
141.9
30,991.2
i) Residential mortgages The majority of loans and advances to customers are secured on UK residential properties and are geographically diverse. The tables below provide information on residential loans and advances by payment due status: As shown in the tables above, during 2025 there was a net increase in stage 2 loans of \u00a3287.8m for the Group and of \u00a3286.9m for the Society. As outlined in Note 1v), during 2025 the Group has revised its view of forward- looking economic indicators and the associated scenario weightings; this caused PDs to increase and, as a result, more accounts have migrated to stage 2. Gains and losses arising during the year from loan modifications that did not result in derecognition were not material. Amounts written off are in accordance with the Group\u2019s accounting policy for write-offs (see Note 1h)). Amounts presented within \u2018other movements\u2019 in the tables above include movements in the Group\u2019s effective interest rate asset as described in Note 1f). For residential mortgages, stage 3 loans which no longer meet any of the default criteria are subject to a six month minimum probation period before they become eligible for transfer out of stage 3. At 31 December 2025, stage 3 loans include \u00a336.7m (2024: \u00a323.3m) for the Group and Society being held in stage 3 under this probation period.
2024
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
27,485.7
628.6
78.0
28,192.3
25,412.6
624.3
77.1
26,114.0
Transfers due to changes in credit
risk (note A):
From stage 1 to stage 2
(180.2)
180.2
-
-
(171.8)
171.8
-
-
From stage 1 to stage 3
(14.8)
-
14.8
-
(11.7)
-
11.7
-
From stage 2 to stage 1
352.8
(352.8)
-
-
350.3
(350.3)
-
-
From stage 2 to stage 3
-
(15.5)
15.5
-
-
(15.5)
15.5
-
From stage 3 to stage 2
-
6.0
(6.0)
-
-
6.0
(6.0)
-
From stage 3 to stage 1
1.0
-
(1.0)
-
1.0
-
(1.0)
-
Modification of contractual
(26.8)
(8.5)
30.6
(4.7)
(26.8)
(8.5)
30.6
(4.7)
cashflows
Increases due to origination
5,996.7
15.1
0.7
6,012.5
5,833.8
15.1
0.7
5,849.6
Decrease due to derecognition and
repayments
(3,555.8)
(93.9)
(12.7)
(3,662.4)
(3,350.1)
(92.2)
(11.9)
(3,454.2)
Written off
(0.1)
(0.4)
(3.9)
(4.4)
(0.1)
(0.4)
(3.9)
(4.4)
Other movements
8.8
-
0.7
9.5
8.8
-
0.7
9.5
Gross carrying amount at
31 December
30,067.3
358.8
116.7
30,542.8
28,046.0
350.3
113.5
28,509.8
Note A. For the purposes of the analysis presented above, the amounts shown for \u2018transfers due to changes in credit risk\u2019 are based on account balances at the start of the reporting period (not account balances at the date of transfer). The table below provides information on movements in the impairment loss allowance for residential loans and advances to customers during the year:
2025
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance at 1 January
4.5
2.5
6.5
13.5
4.4
2.4
6.0
12.8
Transfers due to changes in credit
risk:
From stage 1 to stage 2
(0.1)
2.3
-
2.2
(0.1)
2.3
-
2.2
From stage 1 to stage 3
-
-
1.0
1.0
-
-
1.0
1.0
From stage 2 to stage 1
-
(0.2)
-
(0.2)
-
(0.2)
-
(0.2)
From stage 2 to stage 3
-
(0.3)
0.7
0.4
-
(0.3)
0.7
0.4
From stage 3 to stage 2
-
0.1
(0.1)
-
-
0.1
(0.1)
-
Remeasurements within existing
2.3
0.3
-
2.6
2.2
0.1
0.2
2.5
stage
Increases due to origination
2.4
0.3
-
2.7
2.5
0.3
-
2.8
Decrease due to derecognition and
repayments
(0.5)
(0.3)
(1.4)
(2.2)
(0.5)
(0.3)
(1.4)
(2.2)
Changes due to modification
-
0.7
1.5
2.2
-
0.7
1.5
2.2
without derecognition
Written off
-
-
(0.6)
(0.6)
-
-
(0.6)
(0.6)
Loss allowance at 31 December
8.6
5.4
7.6
21.6
8.5
5.1
7.3
20.9
2024
Group
Society
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance at 1 January
16.2
6.0
6.8
29.0
15.4
5.9
6.6
27.9
Transfers due to changes in credit
risk:
From stage 1 to stage 2
(0.1)
0.8
-
0.7
(0.1)
0.8
-
0.7
From stage 1 to stage 3
-
-
0.5
0.5
-
-
0.5
0.5
From stage 2 to stage 1
0.1
(1.6)
-
(1.5)
0.1
(1.6)
-
(1.5)
From stage 2 to stage 3
-
(0.4)
0.4
-
-
(0.4)
0.4
-
From stage 3 to stage 2
-
0.1
(0.2)
(0.1)
-
0.1
(0.2)
(0.1)
Remeasurements within existing
(11.0)
(0.8)
(0.4)
(12.2)
(10.4)
(0.9)
(0.7)
(12.0)
stage
Increases due to origination
1.2
0.1
0.1
1.4
1.1
0.1
0.1
1.3
Decrease due to derecognition and
repayments
(1.9)
(0.6)
(0.9)
(3.4)
(1.7)
(0.5)
(0.9)
(3.1)
Changes due to modification
-
(1.1)
0.9
(0.2)
-
(1.1)
0.9
(0.2)
without derecognition
Written off
-
-
(0.7)
(0.7)
-
-
(0.7)
(0.7)
Loss allowance at 31 December
4.5
2.5
6.5
13.5
4.4
2.4
6.0
12.8
The loss allowance at 31 December 2025 includes judgmental adjustments totalling \u00a34.8m (2024: \u00a32.7m) for the Group and \u00a34.8m (2024: \u00a32.7m) for the Society. Details of these judgmental adjustments are set out in Note 1v). The tables below provide information on residential loans and advances to customers grouped by credit risk rating (probability of default). For further details on how the probability of default (PD) affects the Group\u2019s assessment of ECLs, see Note 1h) and Note 1v). ECL coverage shows the level of loss allowance expressed as a percentage of the gross carrying amount. The PDs used by the Group for IFRS 9 accounting purposes are not directly comparable to the PDs used by the Group for IRB regulatory purposes; this is due to significant differences in the requirements and methodologies applied by the Group for IFRS 9 and for IRB respectively.
Group 2025 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
1,409.6
0.9
-
1,410.5
0.5
-
-
0.5
0.15%
- <0.25%
4,408.0
1.6
-
4,409.6
0.8
-
-
0.8
0.25%
- <0.5%
16,089.9
1.8
-
16,091.7
3.6
-
-
3.6
0.5%
- <0.75%
7,690.8
4.9
-
7,695.7
2.3
-
-
2.3
0.75%
- <2.5%
2,601.4
51.0
-
2,652.4
1.4
-
-
1.4
2.5%
- <10%
16.9
144.7
-
161.6
-
0.2
-
0.2
10%
- <100%
-
441.7
-
441.7
-
5.2
-
5.2
Default
-
-
144.3
144.3
-
-
7.6
7.6
Total
32,216.6
646.6
144.3
33,007.5
8.6
5.4
7.6
21.6
ECL coverage by stage (%)
0.03%
0.84%
5.27%
0.07%
Group 2024 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
4,841.6
0.4
-
4,842.0
0.6
-
-
0.6
0.15%
- <0.25%
11,387.8
0.4
-
11,388.2
1.5
-
-
1.5
0.25%
- <0.5%
10,752.9
5.7
-
10,758.6
1.8
-
-
1.8
0.5%
- <0.75%
2,647.4
13.0
-
2,660.4
0.4
-
-
0.4
0.75%
- <2.5%
430.9
65.3
-
496.2
0.2
-
-
0.2
2.5%
- <10%
6.7
59.4
-
66.1
-
0.1
-
0.1
10%
- <100%
-
214.6
-
214.6
-
2.4
-
2.4
Default
-
-
116.7
116.7
-
-
6.5
6.5
Total
30,067.3
358.8
116.7
30,542.8
4.5
2.5
6.5
13.5
ECL coverage by stage (%)
0.01%
0.70%
5.57%
0.04%
Society 2025 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
1,409.6
0.9
-
1,410.5
0.5
-
-
0.5
0.15%
- <0.25%
4,408.0
1.6
-
4,409.6
0.8
-
-
0.8
0.25%
- <0.5%
15,438.0
1.8
-
15,439.8
3.6
-
-
3.6
0.5%
- <0.75%
6,338.2
4.9
-
6,343.1
2.2
-
-
2.2
0.75%
- <2.5%
2,601.4
51.0
-
2,652.4
1.4
-
-
1.4
2.5%
- <10%
16.9
144.7
-
161.6
-
0.2
-
0.2
10%
- <100%
-
432.3
-
432.3
-
4.9
-
4.9
Default
-
-
141.9
141.9
-
-
7.3
7.3
Total
30,212.1
637.2
141.9
30,991.2
8.5
5.1
7.3
20.9
ECL coverage by stage (%)
0.03%
0.80%
5.14%
0.07%
Society 2024 (\u00a3m)
Gross Carrying Amount
Loss Allowance
Probability of default
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<0.15%
4,841.6
0.4
-
4,842.0
0.6
-
-
0.6
0.15%
- <0.25%
11,387.7
0.4
-
11,388.1
1.5
-
-
1.5
0.25%
- <0.5%
10,063.3
5.7
-
10,069.0
1.8
-
-
1.8
0.5%
- <0.75%
1,315.8
13.0
-
1,328.8
0.3
-
-
0.3
0.75%
- <2.5%
430.9
65.3
-
496.2
0.2
-
-
0.2
2.5%
- <10%
6.7
59.4
-
66.1
-
0.1
-
0.1
10%
- <100%
-
206.1
-
206.1
-
2.3
-
2.3
Default
-
-
113.5
113.5
-
-
6.0
6.0
Total
28,046.0
350.3
113.5
28,509.8
4.4
2.4
6.0
12.8
ECL coverage by stage (%)
0.02%
0.69%
5.29%
0.04%
The tables below provide an analysis of residential loans held in stage 2 as at the balance sheet date, reflecting the reasons for inclusion in stage 2. For the purposes of this analysis, where a loan satisfies at the balance sheet date more than one of the stage 2 criteria, the loan is included below within one category only and in order of the categories as presented. The amounts presented below as \u2018Over 30 days past due\u2019 therefore include all stage 2 loans which are over 30 days past due as at the balance sheet date, including those where this was not the initial reason for being classified as stage 2. Stage 2 Analysis
2025
2024
Gross ECL ECL Gross ECL ECL
Group
carrying allowance coverage carrying allowance coverage
amount \u00a3m % amount \u00a3m %
\u00a3m \u00a3m
Over 30 days past due
73.7
2.1
2.8%
62.1
1.2
1.9%
In forbearance
130.2
1.1
0.8%
16.5
0.1
0.6%
In arrears
59.4
0.9
1.5%
66.8
0.6
0.9%
Term expired
15.7
-
-
18.6
-
-
Temporary transfer to interest only*
85.8
0.1
0.1%
103.5
0.1
0.1%
Increase in PD since origination
281.8
1.2
0.4%
91.3
0.5
0.5%
Total
646.6
5.4
0.8%
358.8
2.5
0.7%
*Temporary arrangement in place, via the Mortgage Charter Scheme, to repay interest only The tables below provide further information on the types of lending and geographical split: * Fast track relates to certain mortgages granted between 2007-2009 for which, subject to certain application criteria, the Society accepted reduced documentation from borrowers. ^ Sub-prime mortgages are defined as loans to borrowers that typically had weakened credit histories at the time the loan was advanced. Prior to 1 June 2021, these loans were held by the Group\u2019s specialist lending businesses Amber and NYM; these loans were hived-up into the Society with effect from 1 June 2021. Stage 2 Analysis
2025
2024
Gross ECL ECL Gross ECL ECL
Society
carrying allowance coverage carrying allowance coverage
amount \u00a3m % amount \u00a3m %
\u00a3m \u00a3m
Over 30 days past due
70.2
1.9
2.7%
59.3
1.1
1.9%
In forbearance
127.0
1.1
0.9%
12.6
0.1
0.8%
In arrears
56.7
0.8
1.4%
65.0
0.6
0.9%
Term expired
15.7
0.0
0.0%
18.6
-
-
Temporary transfer to interest only *
85.8
0.1
0.1%
103.5
0.1
0.1%
Increase in PD since origination
281.8
1.2
0.4%
91.3
0.5
0.5%
Total
637.2
5.1
0.8%
350.3
2.4
0.7%
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Prime:
Residential
26,835.0
513.2
109.0
27,457.2
24,273.8
288.6
80.1
24,642.5
Buy-to-let
5,239.7
91.4
19.4
5,350.5
5,608.3
42.1
18.3
5,668.7
Self build
7.5
0.9
0.7
9.1
8.6
0.8
1.0
10.4
Fast track*
7.8
0.4
0.2
8.4
9.2
0.6
0.1
9.9
Self certified
113.1
35.0
13.7
161.8
145.2
21.4
15.4
182.0
Sub
-prime^:
Residential
2.6
1.1
-
3.7
3.7
0.8
0.2
4.7
Buy-to-let
3.3
0.6
0.3
4.2
5.0
0.4
0.3
5.7
Self certified
7.6
4.0
1.0
12.6
13.5
4.1
1.3
18.9
Total
32,216.6
646.6
144.3
33,007.5
30,067.3
358.8
116.7
30,542.8
Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Prime:
Residential
26,183.1
511.2
109.0
26,803.3
23,584.1
285.0
79.8
23,948.9
Buy-to-let
3,887.1
84.0
17.0
3,988.1
4,276.7
37.2
15.4
4,329.3
Self build
7.5
0.9
0.7
9.1
8.6
0.8
1.0
10.4
Fast track*
7.8
0.4
0.2
8.4
9.2
0.6
0.1
9.9
Self certified
113.1
35.0
13.7
161.8
145.2
21.4
15.4
182.0
Sub
-prime^:
Residential
2.6
1.1
-
3.7
3.7
0.8
0.2
4.7
Buy-to-let
3.3
0.6
0.3
4.2
5.0
0.4
0.3
5.7
Self certified
7.6
4.0
1.0
12.6
13.5
4.1
1.3
18.9
Total
30,212.1
637.2
141.9
30,991.2
28,046.0
350.3
113.5
28,509.8
ndexed loan-to-value information on the Group\u2019s residential loan portfolio is set out below:
Group (\u00a3m)
2025
2024
Region
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
North
871.8
19.7
5.6
897.1
854.6
14.3
3.9
872.8
Yorkshire
2,445.7
50.8
9.8
2,506.3
2,332.1
30.2
9.8
2,372.1
East Midlands
2,199.7
52.1
8.2
2,260.0
2,035.7
26.7
7.2
2,069.6
East Anglia
3,186.6
69.6
16.2
3,272.4
2,836.3
43.8
11.3
2,891.4
London
6,211.9
110.9
29.4
6,352.2
5,732.7
54.4
22.6
5,809.7
South East
5,281.4
107.2
26.4
5,415.0
4,847.5
57.2
21.5
4,926.2
South West
2,804.1
51.9
9.5
2,865.5
2,695.6
29.2
6.9
2,731.7
West Midlands
2,625.2
55.8
10.0
2,691.0
2,381.5
31.1
7.4
2,420.0
North West
2,996.0
65.1
15.4
3,076.5
2,821.4
37.5
13.6
2,872.5
Wales
878.4
20.2
3.9
902.5
825.6
10.3
3.9
839.8
Scotland
2,012.4
39.7
8.6
2,060.7
1,959.1
19.8
6.7
1,985.6
Northern Ireland
8.7
1.4
1.3
11.4
11.2
0.8
1.3
13.3
Channel Islands
694.7
2.2
-
696.9
734.0
3.5
0.6
738.1
Total
32,216.6
646.6
144.3
33,007.5
30,067.3
358.8
116.7
30,542.8
Society (\u00a3m)
2025
2024
Region
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
North
867.8
19.7
5.6
893.1
850.3
14.3
3.9
868.5
Yorkshire
2,429.4
50.8
9.8
2,490.0
2,315.5
30.0
9.8
2,355.3
East Midlands
2,190.6
51.8
8.2
2,250.6
2,024.7
26.6
7.2
2,058.5
East Anglia
3,164.8
69.5
16.2
3,250.5
2,814.4
43.4
11.3
2,869.1
London
5,357.6
105.2
27.6
5,490.4
4,899.8
50.4
20.3
4,970.5
South East
5,145.1
107.2
26.0
5,278.3
4,705.0
57.0
21.5
4,783.5
South West
2,771.0
51.9
9.5
2,832.4
2,661.5
29.2
6.9
2,697.6
West Midlands
2,556.1
55.5
9.8
2,621.4
2,315.4
31.0
7.1
2,353.5
North West
2,863.3
64.6
15.4
2,943.3
2,698.9
37.5
13.6
2,750.0
Wales
873.0
19.9
3.9
896.8
819.6
10.3
3.9
833.8
Scotland
1,984.7
39.7
8.6
2,033.0
1,929.7
19.8
6.7
1,956.2
Northern Ireland
8.7
1.4
1.3
11.4
11.2
0.8
1.3
13.3
Total
30,212.1
637.2
141.9
30,991.2
28,046.0
350.3
113.5
28,509.8
Group (\u00a3m)
2025
2024
Loan
-to-value
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<40%
5,526.9
119.9
20.3
5,667.1
5,891.7
72.6
21.0
5,985.3
40%
- 50%
3,705.0
93.6
22.7
3,821.3
4,052.9
58.7
19.8
4,131.4
50%
- 60%
4,169.7
125.3
26.9
4,321.9
4,442.5
63.8
32.9
4,539.2
60%
- 70%
4,367.5
106.7
23.8
4,498.0
4,622.4
60.2
16.6
4,699.2
70%
- 80%
4,586.0
78.7
14.5
4,679.2
4,021.4
41.5
8.7
4,071.6
80%
- 90%
6,620.2
93.4
21.0
6,734.6
5,324.7
46.2
10.8
5,381.7
90%
- 100%
3,181.4
27.0
11.1
3,219.5
1,687.3
14.5
3.0
1,704.8
>100%
59.9
2.0
4.0
65.9
24.4
1.3
3.9
29.6
Total
32,216.6
646.6
144.3
33,007.5
30,067.3
358.8
116.7
30,542.8
The Group\u2019s policy for new mortgage lending is currently a maximum loan-to-value ratio of 100% for residential mortgages and 75% for buy-to-let lending. In addition, SIL lends up to 100% on its \u2018Next Generation\u2019 mortgages, for which a family member is required to provide a guarantee of up to 20% of the borrower\u2019s property value (to be supported by a bond over the guarantor\u2019s own suitable property in Guernsey or Jersey). There has been an increase in the volume of 80-100% LTV lending within the year as we continue to deliver on our purpose of helping more people have a home. This has resulted in an increase in the overall percentage of the book with an LTV greater than 80%; 31.8% at 31 December 2025 (2024: 24.5%) and an increase in the average indexed loan-to-value of the Society\u2019s new lending in 2025 to 68.4% (2024: 65.3%). The quality of the lending remains high, with a well-managed spread of risk, carried out in a controlled manner being cognisant of the economic challenges that lie ahead. This is represented by the proportion of Group residential mortgage accounts in arrears by three months or more which remained low at 0.30% (2024: 0.28%). At 31 December 2025, the average indexed loan-to-value of Group residential mortgages on a valuation weighted basis (calculated as the total outstanding balance divided by the total value of collateral held), was 48.8% (2024: 46.1%) and for Society residential mortgages was 48.7% (2024: 45.9%). Forbearance Where appropriate for customers, the Group applies a policy of forbearance. This may be applied where the actual or apparent financial stress of the customer is considered to be short-term with a potential to be recovered. Forbearance may involve arrears capitalisation, a reduction in the monthly payment (known as a concession), a conversion to interest only or a mortgage term extension. Forbearance is undertaken in order to achieve the best outcome for both the customer and the business through dealing with repayment difficulties at an early stage. Possession is generally considered only as a last resort, once all other options for the customer have been exhausted. Possession balances represent loans against which the Group has taken ownership of properties pending their sale. The Group does not occupy repossessed properties for business use or use assets acquired in its operations. All customer accounts are monitored to ensure that these strategies remain appropriate. Possessions For the Group, at 31 December 2025 the balance of residential loans where the property has been taken into possession was \u00a33.0m and represents less than 0.1% of total outstanding loans (2024: \u00a33.8m; less than 0.1%). For the Society, at 31 December 2025 the balance of residential loans where the property has been taken into possession was \u00a33.0m and represents less than 0.01% of total outstanding loans (2024: \u00a33.2m; less than 0.1%). All possessions balances are classified as stage 3. Forbearance activity The tables below provide further information on residential mortgages regarded as being in forbearance as at 31 December 2025, showing the type of account renegotiations applied. For the purposes of these forbearance tables, the Group applies the Bank of England Prudential Regulatory Authority (PRA) definition of forbearance (which is aligned to the European Banking Authority, EBA, definition).
Society (\u00a3m)
2025
2024
Loan
-to-value
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<40%
5,249.9
119.1
20.3
5,389.3
5,611.6
71.9
21.0
5,704.5
40%
- 50%
3,425.0
93.2
22.0
3,540.2
3,761.8
58.7
19.4
3,839.9
50%
- 60%
3,785.2
124.1
26.4
3,935.7
4,036.9
61.1
32.2
4,130.2
60%
- 70%
3,869.9
104.0
23.8
3,997.7
4,091.1
57.3
16.5
4,164.9
70%
- 80%
4,169.7
76.3
13.7
4,259.7
3,628.3
40.7
7.3
3,676.3
80%
- 90%
6,505.1
92.4
21.0
6,618.5
5,235.9
45.6
10.2
5,291.7
90%
- 100%
3,154.0
27.0
10.7
3,191.7
1,663.2
14.5
3.0
1,680.7
>100%
53.3
1.1
4.0
58.4
17.2
0.5
3.9
21.6
Total
30,212.1
637.2
141.9
30,991.2
28,046.0
350.3
113.5
28,509.8
Under the PRA definition, loans are required to meet certain payment and arrears criteria before they are deemed to exit forbearance; this includes a minimum two-year probation period following the forbearance event (extended to three years in certain situations). For the purposes of the tables below, the following loans are regarded as forborne as at 31 December 2025*: \u2022 any loan to which forbearance measures were applied within the two years prior to the reporting date (regardless of whether the loan remains on renegotiated terms at 31 December 2025); and \u2022 any loan to which forbearance measures were applied and which remains in the probation period following the forbearance event. For the purposes of the tables below, loans are presented according to the ECL stage they were held in as at the reporting date. * As noted in Note 1v), the SICR criteria applied by the Group was revised during the year, to align the probation period of forborne accounts with that used in regulatory reporting standards. For the purposes of the 2024 comparative tables below, information is therefore presented in accordance with the criteria that was applicable as at 31 December 2024 (as disclosed in Note 43a)(i) to the 2024 Annual Report and Accounts).
Reduced
Transfer to
Term Total renegotiations
Group
- 2025
Total
Capitalisation
Payment
interest only
Extension
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
32,216.6
-
-
-
-
-
-
32,216.6
-
-
-
-
-
-
Stage 2
Not past due
468.4
3.8
66.8
14.3
-
84.9
18.1
Past due up to 30 days
104.5
0.3
43.3
1.6
-
45.2
43.3
Over 30 days past due
73.7
-
24.4
2.2
-
26.6
36.1
646.6
4.1
134.5
18.1
-
156.7
24.2
Stage 3
Not past due
19.8
1.5
7.8
0.2
-
9.5
48.0
Past due up to 90 days
22.3
0.1
9.8
2.1
-
12.0
53.8
Over 90 days past due
102.2
0.7
53.9
7.5
-
62.1
60.8
144.3
2.3
71.5
9.8
-
83.6
57.9
Gross carrying amount
33,007.5
6.4
206.0
27.9
-
240.3
0.7
Loss allowance
(21.6)
(0.1)
(5.2)
(0.3)
-
(5.6)
25.9
32,985.9
6.3
200.8
27.6
-
234.7
0.7
Reduced
Transfer to
Term Total renegotiations
Group
\u2013 2024
Total
Capitalisation
Payment
interest only
Extension
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
30,067.3
0.3
27.8
6.0
-
34.1
0.1
30,067.3
0.3
27.8
6.0
-
34.1
0.1
Stage 2
Not past due
224.2
0.2
24.0
7.9
-
32.1
14.3
Past due up to 30 days
72.5
-
29.4
0.6
-
30.0
41.4
Over 30 days past due
62.1
0.3
24.4
1.4
-
26.1
42.0
358.8
0.5
77.8
9.9
-
88.2
24.6
Stage 3
Not past due
13.8
1.1
3.2
0.2
-
4.5
32.6
Past due up to 90 days
18.0
0.2
8.9
2.0
-
11.1
61.7
Over 90 days past due
84.9
0.2
46.8
5.9
-
52.9
62.3
116.7
1.5
58.9
8.1
-
68.5
58.7
Gross carrying amount
30,542.8
2.3
164.5
24.0
-
190.8
0.6
Loss allowance
(13.5)
(0.3)
(3.8)
(0.2)
-
(4.3)
31.9
30,529.3
2.0
160.7
23.8
-
186.5
0.6
Reduced
Transfer to
Term Total renegotiations
Society
- 2025
Total
Capitalisation
Payment
interest only
Extension
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
30,212.1
-
-
-
-
-
-
30,212.1
-
-
-
-
-
-
Stage 2
Not past due
465.1
3.2
64.3
14.2
-
81.7
17.6
Past due up to 30 days
101.9
0.3
43.3
1.6
-
45.2
44.4
Over 30 days past due
70.2
-
24.4
2.2
-
26.6
37.9
637.2
3.5
132.0
18.0
-
153.5
24.1
Stage 3
Not past due
19.8
1.5
7.8
0.2
-
9.5
48.0
Past due up to 90 days
22.3
0.1
9.8
2.1
-
12.0
53.8
Over 90 days past due
99.8
0.7
53.9
7.5
-
62.1
62.2
141.9
2.3
71.5
9.8
-
83.6
58.9
Gross carrying amount
30,991.2
5.8
203.5
27.8
-
237.1
0.8
Loss allowance
(20.9)
(0.1)
(5.2)
(0.3)
-
(5.6)
26.8
30,970.3
5.7
198.3
27.5
-
231.5
0.7
Collateral Collateral held consists of residential properties. The use of such collateral is in line with terms that are usual and customary to standard lending activities. Upon initial recognition of loans and advances, the fair value of collateral is based on valuation techniques commonly used for the corresponding assets. In subsequent periods, the fair value is updated by reference to market prices or indices of similar assets. Fair value of capped collateral held Some properties in the Group\u2019s mortgage book are in negative equity, which increases the possibility of the Group incurring a loss if the property is taken into possession. The fair value of residential property used to derive the figures in the table above is determined by reference to a recognised house price index. Movements in this index to the reporting date are applied to all properties in the portfolio on a regional basis. For the majority of the Group\u2019s loans, the Group holds excess collateral however this cannot be used to offset those instances where the loan amount exceeds the collateral held. The fair value of capped collateral in the table above therefore represents, on an individual loan basis, the lower of the value of the property and the outstanding loan amount. It does not reflect the overall value of properties against which the loans are secured. The total fair value of collateral held in respect of residential mortgages for the Group at 31 December 2025 is \u00a367,624.3m (2024: \u00a366,203.5m) and for the Society is \u00a363,600.6m (2024: \u00a362,133.0m).
Total
Capitalisation
Reduced
Transfer to
Term Total renegotiations
Society
- 2024
\u00a3m \u00a3m Payment
interest only
Extension
\u00a3m
%
\u00a3m \u00a3m \u00a3m
Stage 1
Not past due
28,046.0
0.3
27.8
6.0
-
34.1
0.1
28,046.0
0.3
27.8
6.0
-
34.1
0.1
Stage 2
Not past due
220.4
0.2
22.3
5.7
-
28.2
12.8
Past due up to 30 days
70.6
-
29.4
0.6
-
30.0
42.5
Over 30 days past due
59.3
0.3
24.4
1.4
-
26.1
44.0
350.3
0.5
76.1
7.7
-
84.3
24.1
Stage 3
Not past due
13.8
1.1
3.2
0.2
-
4.5
32.6
Past due up to 90 days
18.0
0.2
8.9
2.0
-
11.1
61.7
Over 90 days past due
81.7
0.2
46.8
5.9
-
52.9
64.7
113.5
1.5
58.9
8.1
-
68.5
60.4
Gross carrying amount
28,509.8
2.3
162.8
21.8
-
186.9
0.7
Loss allowance
(12.8)
(0.3)
(3.8)
(0.2)
-
(4.3)
33.6
28,497.0
2.0
159.0
21.6
-
182.6
0.6
\u00a3m
Group
Society
2025
2024
2025
2024
Stage 1
32,206.7
30,059.9
30,204.9
28,041.6
Stage 2
646.1
358.4
636.8
350.0
Stage 3
143.6
115.8
141.2
112.6
32,996.4
30,534.1
30,982.9
28,504.2
Gross loan balances
33,007.5
30,542.8
30,991.2
28,509.8
Negative equity
11.1
8.7
8.3
5.6
Capped collateral held in respect of
possessions (included in stage 3 above)
2.8
2.9
2.8
2.9
At 31 December 2025 the contractual amount outstanding on loans written off during the year due to there being no reasonable expectation of recovery, but which remain subject to enforcement activity, is \u00a30.8m (2024: \u00a30.7m) for the Group and for the Society. ii) Commercial mortgages The commercial mortgage portfolio (also known as loans fully secured on land) is currently closed to new business. The tables below provide information on commercial loans by payment due status.
Group & Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
74.6
2.6
2.7
79.9
93.9
0.4
11.3
105.6
Up to 30 days
-
2.8
-
2.8
-
2.3
-
2.3
31 to 60 days
-
2.7
-
2.7
-
2.1
-
2.1
61 to 90 days
-
1.0
-
1.0
-
1.1
0.7
1.8
Over 90 days
-
-
5.8
5.8
-
-
2.5
2.5
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
The table below provides information on movements in the gross carrying amount of commercial loans during the year.
Group & Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
93.9
5.9
14.5
114.3
91.0
37.8
6.4
135.2
Transfers due to changes in credit
risk (note A):
From stage 1 to stage 2
(2.5)
2.5
-
-
(1.1)
1.1
-
-
From stage 1 to stage 3
(2.0)
-
2.0
-
(1.4)
-
1.4
-
From stage 2 to stage 1
0.1
(0.1)
-
-
19.2
(19.2)
-
-
From stage 2 to stage 3
-
(0.8)
0.8
-
-
(3.4)
3.4
-
From stage 3 to stage 1
0.8
-
(0.8)
-
-
-
-
-
Modification of contractual
(3.2)
2.3
0.5
(0.4)
0.8
(8.0)
6.8
(0.4)
cashflows
Decrease due to derecognition and
repayments
(12.5)
(0.7)
(7.2)
(20.4)
(14.6)
(2.4)
(3.1)
(20.1)
Written off
-
-
(1.3)
(1.3)
-
-
(0.4)
(0.4)
Gross carrying amount at
31 December
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Note A. For the purposes of the analysis presented above, the amounts shown for \u2018transfers due to changes in credit risk\u2019 are based on account balances at the start of the reporting period (not account balances at the date of transfer). Gains and losses arising during the year from loan modifications that did not result in derecognition were not significant. Amounts written off are in accordance with the Group\u2019s accounting policy for write-offs (see Note 1h)). For commercial loans, stage 3 loans which no longer meet any of the default criteria are subject to a three month minimum probation period before they become eligible for transfer out of stage 3. At 31 December 2025, stage 3 loans include \u00a30.1m being held in stage 3 under this probation period (2024: \u00a3nil). The table below provides information on movements in the impairment loss allowance for commercial loans during the year.
Group & Society
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss
allowance at 1 January
0.2
0.2
4.3
4.7
0.6
6.6
1.8
9.0
Transfers due to changes in credit
risk:
From stage 1 to stage 2
-
0.1
-
0.1
-
-
-
-
From stage 1 to stage 3
-
-
0.6
0.6
-
-
-
-
From stage 2 to stage 1
-
-
-
-
-
(1.9)
-
(1.9)
From stage 2 to stage 3
-
-
-
-
-
(0.4)
0.4
-
Remeasurements within existing
0.2
-
0.1
0.3
(0.3)
(0.1)
-
(0.4)
stage
Decrease due to derecognition and
repayments
-
-
(0.1)
(0.1)
(0.1)
(0.9)
(1.1)
(2.1)
Changes due to modification
-
-
(0.1)
(0.1)
-
(3.1)
3.3
0.2
without derecognition
Written off
-
-
(2.9)
(2.9)
-
-
(0.1)
(0.1)
Loss allowance at 31 December
0.4
0.3
1.9
2.6
0.2
0.2
4.3
4.7
ECL coverage (%)
0.54%
3.30%
22.35%
2.82%
0.21%
3.39%
29.66%
4.11%
Given the size and nature of the Group\u2019s commercial portfolio, it is not meaningful to manage credit risk by reference to behavioural scores or PD percentages. Credit risk is predominantly managed by individual review of loans in accordance with certain criteria. To aid an understanding of significant credit risk concentrations for the Group\u2019s commercial portfolio, the tables below provide analyses of loans by industry type, by geography and by loan-to-value percentage.
Group & Society (\u00a3m)
2025
2024
Industry analysis
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Leisure and hotels
5.7
0.5
-
6.2
6.4
0.6
5.1
12.1
Retail
1.9
0.3
0.2
2.4
2.1
0.3
0.2
2.6
Nursing/residential homes
1.6
-
-
1.6
1.7
-
2.2
3.9
Offices
1.1
-
-
1.1
1.2
-
-
1.2
Commercial and industrial units
63.8
8.3
8.3
80.4
81.9
5.0
7.0
93.9
Miscellaneous
0.5
-
-
0.5
0.6
-
-
0.6
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Group & Society (\u00a3m)
2025
2024
Geographical analysis (Region)
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
North
1.3
1.7
-
3.0
2.9
0.3
-
3.2
Yorkshire
3.7
0.5
1.1
5.3
6.2
0.3
5.7
12.2
East Midlands
2.1
-
2.2
4.3
3.2
-
2.3
5.5
East Anglia
8.4
0.1
0.1
8.6
9.6
0.1
-
9.7
London
19.0
2.9
1.2
23.1
22.8
2.1
0.7
25.6
South East
12.4
1.6
0.4
14.4
15.5
1.2
-
16.7
South West
11.2
-
0.4
11.6
12.0
0.4
0.4
12.8
West Midlands
5.3
1.1
0.3
6.7
7.0
0.6
2.3
9.9
North West
8.7
1.2
2.0
11.9
10.5
0.9
2.1
13.5
Wales
2.3
-
0.5
2.8
2.4
-
0.7
3.1
Scotland
0.2
-
0.3
0.5
1.8
-
0.3
2.1
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Group & Society (\u00a3m)
2025
2024
Loan
-to-value
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
<40%
24.4
2.5
1.2
28.1
27.4
1.0
2.0
30.4
40%
- 50%
12.7
1.4
1.2
15.3
18.5
1.1
0.6
20.2
50%
- 60%
14.3
1.2
-
15.5
16.6
1.2
1.2
19.0
60%
- 70%
5.1
1.9
0.2
7.2
6.3
1.4
0.1
7.8
70%
- 80%
6.0
0.9
-
6.9
7.4
0.5
1.3
9.2
80%
- 90%
8.7
1.2
0.8
10.7
9.3
0.3
-
9.6
90%
- 100%
2.2
-
-
2.2
5.4
0.4
-
5.8
>100%
1.2
-
5.1
6.3
3.0
-
9.3
12.3
Total
74.6
9.1
8.5
92.2
93.9
5.9
14.5
114.3
Forbearance The Group\u2019s policy on forbearance for commercial mortgages is the same as the policy for residential mortgages, which is set out in Note 45a)(i). At 31 December 2025 the balance of commercial mortgages where the property has been taken into possession was \u00a30.1m for the Group and Society (2024: \u00a3nil). Possessions balances are classified as stage 3. The tables below provide further information on commercial mortgages regarded as being in forbearance as at 31 December 2025, showing the type of account renegotiations applied. The tables below are presented on the same basis as the corresponding tables for residential mortgages, the basis for which is described on pages 259 and 260. Collateral The collateral held consists of properties held within the categories previously outlined. The use of such collateral is in line with terms that are usual and customary to standard lending activities. Fair value of capped collateral held An analysis of capped collateral, where the collateral is capped to the lower of the value of the property and the amount outstanding on an individual loan basis, is shown below.
2025
Group & Society
Reduced
Transfer to
Total renegotiations
Total
Capitalisation
Payment
interest only
\u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
74.6
-
-
-
-
-
74.6
-
-
-
-
-
Stage 2
Not past due
2.6
0.8
0.9
0.9
2.6
100.0
Past due up to 30 days
2.8
-
0.3
-
0.3
10.7
Over 30 days past due
3.7
0.8
-
-
0.8
21.6
9.1
1.6
1.2
0.9
3.7
40.7
Stage 3
Not past due
2.7
-
0.1
1.2
1.3
48.1
Past due up to 90 days
-
-
-
-
-
-
Over 90 days past due
5.8
-
1.0
2.8
3.8
65.5
8.5
-
1.1
4.0
5.1
60.0
Gross carrying amount
92.2
1.6
2.3
4.9
8.8
9.5
Loss allowance
(2.6)
(0.1)
(0.1)
(0.7)
(0.9)
34.6
89.6
1.5
2.2
4.2
7.9
8.8
2024
Group & Society
Reduced Transfer to Total renegotiations
Total
Capitalisation
Payment
interest only
\u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
%
Stage 1
Not past due
93.9
0.9
0.4
0.5
1.8
1.9
93.9
0.9
0.4
0.5
1.8
1.9
Stage 2
Not past due
0.4
-
-
0.4
0.4
100.0
Past due up to 30 days
2.3
-
-
0.1
0.1
4.3
Over 30 days past due
3.2
0.9
0.5
-
1.4
43.8
5.9
0.9
0.5
0.5
1.9
32.2
Stage 3
Not past due
11.3
-
-
8.4
8.4
74.3
Past due up to 90 days
0.7
-
-
-
-
-
Over 90 days past due
2.5
-
0.6
0.7
1.3
52.0
14.5
-
0.6
9.1
9.7
66.9
Gross carrying amount
114.3
1.8
1.5
10.1
13.4
11.7
Loss allowance
(4.7)
-
-
(3.8)
(3.8)
80.9
109.6
1.8
1.5
6.3
9.6
8.8
The fair value of commercial property used to derive the figures in the table above is determined by reference to the latest external valuation of the properties in question. The total fair value of collateral held in respect of commercial loans for the Group and the Society at 31 December 2025 is \u00a3236.8m (2024: \u00a3270.5m). At 31 December 2025 the contractual amount outstanding on loans written off during the year due to there being no reasonable expectation of recovery, but which remain subject to enforcement activity, is \u00a30.2m (2024: \u00a30.2m) for the Group and the Society. iii) Other lending Other lending comprises the following: The table below provides information on movements in the gross carrying amount of other loans and advances during the year. Note: A. For the purposes of the analysis presented above, the amounts shown for \u2018transfers due to changes in credit risk\u2019 are based on account balances at the end of the reporting period (not account balances at the date of transfer).
Group & Society (\u00a3m)
2025
2024
Stage 1
74.4
93.2
Stage 2
9.1
5.9
Stage 3
7.0
12.3
Total
90.5
111.4
Gross loan balances
92.2
114.3
Negative equity
1.7
2.9
Capped collateral held in respect of possessions (included within stage 3 above)
0.1
-
2025
2024
Group
Gross ECL Net Gross ECL Net
\u00a3m
carrying Allowance carrying carrying allowance carrying
amount amount amount amount
Debt factoring advances
200.6
(1.4)
199.2
190.0
(1.4)
188.6
Other loans
45.3
-
45.3
48.2
-
48.2
Total
245.9
(1.4)
244.5
238.2
(1.4)
236.8
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount at 1 January
234.5
2.3
1.4
238.2
219.6
4.3
0.5
224.4
Transfers due to changes in
credit risk (note A):
From stage 1 to stage 2
(1.1)
1.1
-
-
(3.4)
3.4
-
-
From stage 1 to stage 3
-
-
-
-
(0.4)
-
0.4
-
From stage 2 to stage 1
1.0
(1.0)
-
-
2.3
(2.3)
-
-
From stage 2 to stage 3
-
(0.7)
0.7
-
-
(1.6)
1.6
-
From stage 3 to stage 2
-
1.0
(1.0)
-
-
0.3
(0.3)
-
From stage 3 to stage 1
0.4
-
(0.4)
-
0.3
-
(0.3)
-
Modification of contractual
-
-
-
-
-
-
-
-
cashflows
Increases due to origination
68.8
-
-
68.8
74.2
-
-
74.2
Decrease due to derecognition
(60.3)
(0.5)
-
(60.8)
(58.1)
(1.8)
-
(59.9)
and repayments
Write
-offs
-
-
(0.3)
(0.3)
-
-
(0.6)
(0.6)
Other movements
-
-
-
-
-
-
0.1
0.1
Gross carrying amount at 31
243.3
2.2
0.4
245.9
234.5
2.3
1.4
238.2
December
The table below provides information on movements in the impairment loss allowance for other loans and advances during the year. Debt factoring advances Debt factoring advances relate to amounts advanced to clients by SBF, the Group\u2019s debt factoring and invoice discounting business. Credit risk is predominantly managed by rigorous due diligence controls and regular monitoring of client accounts, and includes the use of concentration limits, credit reference checks and \u2018watchlists\u2019 on clients\u2019 debtors. Advances are typically made to clients only against notified invoices that are less than 90 days past due. Debt factoring and invoice discounting advances are typically secured via a legal charge against the relevant client\u2019s sales ledger. Additional security may also be taken in the form of an all assets debenture that may incorporate other unencumbered assets as well as personal guarantees. At 31 December 2025 and 31 December 2024, the fair value of the total collateral held by the Group against debt factoring and invoice discounting advances was in excess of the value of the total advances outstanding. Other loans The table below provides information on the gross carrying amount of other loans by payment due status. Other loans of \u00a344.8m (2024: \u00a348.2m), at a Group level, were advanced by SIL to customers in respect of residential properties owned by a property management holding company. The loans are secured on shares in that property management holding company and the fair value of the total collateral held is \u00a394.1m (2024: \u00a399.7m). b) Credit risk \u2013 balances with the Bank of England, debt securities and loans and advances to credit institutions The Group holds treasury investments in order to meet liquidity requirements and for general business purposes. The credit risk arising from these investments is closely monitored and managed by the Group. Collateral held for treasury assets is determined by the nature of the instrument. Loans and debt securities are generally unsecured with the exception of asset backed securities and covered bonds which are secured by pools of financial assets. For details of collateral held against debt securities see Note 14. For details of collateral held against loans and advances to credit institutions see Note 13. No collateral is held against balances with the Bank of England.
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance at 1 January
0.2
0.6
0.6
1.4
0.2
1.1
0.3
1.6
Transfers due to changes in
credit risk:
From stage 1 to stage 2
-
0.9
-
0.9
(0.1)
1.0
-
0.9
From stage 2 to stage 1
-
(0.2)
-
(0.2)
-
(0.3)
-
(0.3)
From stage 2 to stage 3
-
(0.7)
0.7
-
-
(1.0)
1.0
-
From stage 3 to stage 2
-
0.6
(0.6)
-
-
-
-
-
From stage 3 to stage 1
-
-
-
-
0.1
-
(0.1)
-
Remeasurements within existing
0.1
(0.5)
-
(0.4)
-
(0.2)
-
(0.2)
stage
Write
-offs
-
-
(0.3)
(0.3)
-
-
(0.6)
(0.6)
Loss allowance at 31 December
0.3
0.7
0.4
1.4
0.2
0.6
0.6
1.4
Group
2025
2024
\u00a3m
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Not past due
45.2
-
45.2
48.2
-
48.2
Up to 30 days
-
0.1
0.1
-
-
-
Total
45.2
0.1
45.3
48.2
-
48.2
At 31 December 2025 none of the Group or the Society\u2019s treasury assets were past due (2024: none past due). At 31 December 2025 the ECLs on the Group and the Society\u2019s treasury assets were all held as stage 1 (2024: all stage 1). At 31 December 2025 and 31 December 2024, all the Group and the Society\u2019s treasury investments, except for building society deposits (2025: \u00a3nil; 2024: \u00a30.1m) and certain collateral held (2025: \u00a3nil: 2024: \u00a30.1m), were assessed to have a probability of default (PD) of less than 3.5% (2024: 0.11%). The Group\u2019s accounting policies on impairment losses on treasury assets and how the Group assesses ECLs and PDs on treasury assets are detailed in Note 1h). At 31 December 2025 over 99.9% (2024: 99.9%) of the Group\u2019s treasury investment assets (including cash in hand and with the Bank of England and excluding exposures to a central clearing house used to clear derivatives to manage interest rate risk in line with regulation) were rated A3 or better, and for the Society over 99.9% (2024: 99.9%) were rated A3 or better. The table below provides further details of the credit ratings for both the Group and the Society\u2019s treasury investment portfolios: \u2018Unrated\u2019 in the above analysis includes an exposure to a central clearing house totalling \u00a3254.6m for the Group and Society (2024: \u00a3273.3m) used to clear derivatives to manage interest rate risk, as required by regulation, together with an exposure to subsidiary undertakings in the form of Credit Support Annex (CSA) collateral for the Society only, totalling \u00a39.0m (2024: \u00a352.2m). The Group also monitors exposure concentrations against a variety of criteria including industry sector / asset class and country of risk.
Group
Society
Rating
2025 2025 2024 2024 2025 2025 2024 2024
\u00a3m % \u00a3m % \u00a3m % \u00a3m %
Aaa
2,818.1
47.1
2,429.6
36.3
3,040.5
51.2
2,666.1
40.0
Aa1
212.6
3.6
268.2
4.0
179.2
3.0
268.2
4.0
Aa2
0.1
-
0.1
-
-
-
-
-
Aa3
2,611.1
43.6
3,605.1
53.8
2,416.1
40.7
3,336.4
50.0
A1
85.3
1.4
117.3
1.8
40.9
0.7
72.1
1.1
A2
1.1
-
1.0
-
-
-
-
-
Unrated
254.6
4.3
273.5
4.1
263.6
4.4
325.7
4.9
Total
5,982.9
100.0
6,694.8
100.0
5,940.3
100.0
6,668.5
100.0
Group
Society
Industry sector / asset class
2025 2025 2024 2024 2025 2025 2024 2024
\u00a3m % \u00a3m % \u00a3m % \u00a3m %
Cash in hand and balances with the
Bank of England
1,360.2
22.7
1,930.6
28.9
1,360.2
22.9
1,930.6
29.0
Loans and advances to banks and
building societies
353.3
5.9
414.6
6.2
304.7
5.1
397.8
6.0
Gilts
500.5
8.4
1,086.5
16.2
500.5
8.4
1,086.5
16.3
Certificates of deposit
-
-
-
-
-
-
-
-
Fixed rate bonds
1,552.0
26.0
1,274.9
19.0
1,552.0
26.2
1,274.9
19.1
Floating rate notes
11.0
0.2
-
-
-
-
-
-
Treasury bills
733.4
12.9
598.2
8.9
557.0
9.4
321.2
4.8
Covered bonds
813.5
13.6
770.1
11.5
813.5
13.7
770.1
11.5
Residential mortgage backed
619.0
10.3
619.9
9.3
852.4
14.3
887.4
13.3
securities
Total
5,982.9
100.0
6,694.8
100.0
5,940.3
100.0
6,668.5
100.0
c) Credit risk \u2013 trade receivables The tables below provide information on movements in trade receivables during the year. As outlined in Note 1h), the Group\u2019s accounting policy for trade receivables is to always recognise lifetime ECLs in accordance with the simplified approach in IFRS 9. Trade receivables are therefore not allocated to ECL stages.
Group
Society
Geographical exposure (Region)
2025 2025 2024 2024 2025 2025 2024 2024
\u00a3m % \u00a3m % \u00a3m % \u00a3m %
UK
4,344.1
72.7
5,331.5
79.7
4,388.2
73.8
5,393.6
81.0
Rest of Europe
419.7
7.0
327.9
4.9
389.7
6.6
293.3
4.4
Supranationals:
Europe
226.7
3.8
122.4
1.8
215.6
3.6
122.4
1.8
Global
504.5
8.4
528.4
7.9
504.5
8.5
528.4
7.9
Africa
56.1
0.9
28.4
0.4
56.1
0.9
28.4
0.4
Asia
163.4
2.7
135.2
2.0
163.4
2.8
135.2
2.0
South America
145.8
2.4
117.7
1.8
145.8
2.5
117.7
1.8
North America
118.8
2.0
100.2
1.5
77.0
1.3
49.5
0.7
Rest of World
3.8
0.1
3.1
-
-
-
-
-
Total
5,982.9
100.0
6,694.8
100.0
5,940.3
100.0
6,668.5
100.0
\u00a3m
Group
Society
2025
2024
2025
2024
Gross carrying amount
76.3
71.0
1.5
1.9
Loss allowance
(2.7)
(2.2)
-
-
Net carrying amount
73.6
68.8
1.5
1.9
\u00a3m
Group
Society
2025
2024
2025
2024
Loss allowance at 1 January
2.2
2.4
-
-
Net allowances made during the
year
1.4
0.8
0.1
-
Write
-offs
(0.9)
(1.0)
(0.1)
-
Loss allowance at 31 December
2.7
2.2
-
-
The table below provides information on the gross carrying amount of trade receivables by payment due status.
\u00a3m
Group
Society
2025
2024
2025
2024
Not past due
42.6
38.3
-
-
Up to 30 days past due
18.1
19.5
0.6
0.5
31 to 120 days past due
10.1
9.5
0.5
1.0
Over 120 days past due
5.5
3.7
0.4
0.4
Total
76.3
71.0
1.5
1.9
No collateral is held against trade receivables. At 31 December 2025 the contractual amount outstanding on trade receivables written off during the year due to there being no reasonable expectation of recovery, but which remain subject to enforcement activity, is \u00a3nil (2024: \u00a3nil) for the Group and \u00a3nil (2024: \u00a3nil) for the Society.
d) Credit risk \u2013 derivative financial instruments
A credit exposure could arise in respect of derivative contracts entered into by the Group if the counterparty
was unable to fulfil its contractual obligations. The Group addresses the risks associated with these activities
by monitoring counterparty credit exposure and requiring additional collateral to be posted or returned as
necessary. For all but one derivative, the only form of collateral accepted by the Group in respect of derivatives
is cash. Derivatives are either transacted under International Swaps and Derivatives Association (ISDA) Master
Agreements or Cleared Derivatives Execution Agreements. For swaps that are cash collateralised, no Credit
(CVA) or Debit (DVA) Value Adjustments have been made in respect of credit risk in determining the fair value
of these derivatives as the risk is significantly mitigated. Credit Support Annexes executed with certain
counterparties in conjunction with the ISDA Master Agreement require collateral to be posted regularly, as
required by specific terms and conditions of the arrangements. Due to the frequency of the posting of
collateral, there is no material exposure from these minimal timing differences that would require CVA or DVA
adjustments. At 31 December 2025 the Group held one derivative (2024: one) that is not fully collateralised for
cash; CVA and DVA adjustments are made to the valuation of this derivative.
Netting arrangements do not necessarily result in an offset of Statement of Financial Position (SoFP) assets
and liabilities, as transactions are usually settled on a gross basis. The Group\u2019s legal documentation for
derivative transactions does grant legal rights of set-off for those transactions with the same counterparty.
Accordingly, the credit risk associated with such contracts is reduced to the extent that negative mark to
market valuations on derivatives will offset positive mark to market values on derivatives. The following tables
provide further detail on the net exposure to derivative transaction counterparties.
Group
2024
\u00a3m
As reported Netting Cash Net amounts
within SoFP agreements collateral after offsetting
Financial assets
Derivative financial instruments
752.1
(204.2)
(557.3)
-
Financial liabilities
Derivative financial instruments
225.1
(204.2)
(18.1)
2.8
Society
2025
\u00a3m
As reported Netting Cash Net amounts
within SoFP agreements collateral after offsetting
Financial assets
Derivative financial instruments
333.1
(189.4)
(141.3)
2.4
Financial liabilities
Derivative financial instruments
205.0
(189.4)
(14.6)
1.0
Group
2025
\u00a3m
As reported Netting Cash Net amounts
within SoFP agreements collateral after offsetting
Financial assets
Derivative financial instruments
350.8
(180.5)
(141.5)
28.8
Financial liabilities
Derivative financial instruments
186.2
(180.5)
(5.7)
-
In respect of derivative assets, there is \u00a328.8m (2024: \u00a3nil) for the Group, and \u00a32.4m (2024: \u00a3nil) for the Society, after offsetting between the value of the derivatives and the cash collateral held. At a Group level, this predominantly relates to the collateral arrangements for the one cross currency derivative held by the Group where collateral is not required to be posted up to a threshold. In 2024, the cross currency derivative was in a net liability position. In respect of derivative liabilities, there is a net amount after offsetting of \u00a3nil (2024: \u00a32.8m) for the Group, and \u00a31.0m (2024: \u00a33.5m) for the Society, between the value of the derivatives and the cash collateral pledged.
Society
2024
\u00a3m
As reported Netting Cash Net amounts
within SoFP agreements collateral after offsetting
Financial assets
Derivative financial instruments
743.0
(208.3)
(557.3)
-
Financial liabilities
Derivative financial instruments
282.2
(208.3)
(70.4)
3.5
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-466": { "value": "
a) Classification and measurement
The tables below summarise the classification of the carrying amounts of the Group\u2019s and Society\u2019s financial
assets and liabilities:
Group
Amortised
2025
Amortised
2024
\u00a3m
FVOCI
FVTPL
Total
FVOCI
FVTPL
Total
cost cost
Cash in hand and
balances with the
Bank of England
1,360.2
-
-
1,360.2
1,930.6
-
-
1,930.6
Loans and advances
353.3
-
-
353.3
414.6
-
-
414.6
to credit institutions
Debt securities
-
4,269.4
-
4,269.4
-
4,349.6
-
4,349.6
Derivative financial
-
-
350.8
350.8
-
-
752.1
752.1
Instruments
Loans and advances
33,378.9
-
0.8
33,379.7
30,601.1
-
0.9
30,602.0
to customers
Equity release
-
-
263.1
263.1
-
-
277.2
277.2
portfolio
Equity share
-
-
18.3
18.3
-
-
16.9
16.9
investments
Trade receivables
73.6
-
-
73.6
68.8
-
-
68.8
Share warrants
-
-
-
-
-
-
21.9
21.9
Loan to defined
benefit pension
-
-
10.9
10.9
-
-
-
-
scheme
Other assets
-
-
-
-
0.1
-
-
0.1
Total financial
35,166.0
4,269.4
643.9
40,079.3
33,015.2
4,349.6
1,069.0
38,433.8
assets
Other non
-financial
664.9
581.5
assets
Total assets
40,744.2
39,015.3
Shares
30,526.3
-
-
30,526.3
28,268.5
-
-
28,268.5
Amounts owed to
credit institutions
3,046.8
-
-
3,046.8
4,350.7
-
-
4,350.7
and other
customers
Debt securities in
issue
3,361.9
-
-
3,361.9
2,435.3
-
-
2,435.3
Derivative financial
-
-
186.2
186.2
-
-
225.1
225.1
Instruments
Lease liabilities
110.3
-
-
110.3
92.1
-
-
92.1
Trade payables
14.4
-
-
14.4
11.0
-
-
11.0
Fair value of put
-
-
1.0
1.0
-
-
4.1
4.1
option obligation
Subordinated
356.0
-
-
356.0
690.2
-
-
690.2
liabilities
Subscribed capital
15.2
-
-
15.2
41.6
-
-
41.6
Total financial
37,430.9
-
187.2
37,618.1
35,889.4
-
229.2
36,118.6
liabilities
Other non
-financial
261.5
229.3
liabilities
Total liabilities
37,879.6
36,347.9
All financial assets and liabilities in the tables above that are held as at FVTPL are mandatorily held as such. As outlined in Note 21, during the year, non-current assets with a total carrying value of \u00a33.7m (for the Group and Society) were reclassified as held for sale, and therefore presented separately within the Statement of Financial Position. In the above table, these amounts are included within \u2018Other non-financial assets\u2019.
Society
2025
2024
\u00a3m
Amortised
FVOCI
FVTPL
Total
Amortised
FVOCI
FVTPL
Total
cost cost
Cash in hand and
balances
1,360.2
-
-
1,360.2
1,930.6
-
-
1,930.6
with the Bank of
England
Loans and advances
304.7
-
-
304.7
397.8
-
-
397.8
to credit institutions
Debt securities
-
4,201.9
73.5
4,275.4
-
4,269.8
70.3
4,340.1
Derivative financial
-
-
333.1
333.1
-
-
743.0
743.0
instruments
Loans and advances
31,121.3
-
0.8
31,122.1
28,334.9
-
0.9
28,335.8
to customers
Equity release
-
-
263.1
263.1
-
-
277.2
277.2
portfolio
Loans to subsidiary
454.7
-
-
454.7
403.9
-
-
403.9
undertakings
Trade receivables
1.5
-
-
1.5
1.9
-
-
1.9
Loan to defined
benefit pension
-
-
10.9
10.9
-
-
-
-
scheme
Total financial
33,242.4
4,201.9
681.4
38,125.7
31,069.1
4,269.8
1,091.4
36,430.3
assets
Other non
-financial
201.2
198.0
assets
Total assets
38,326.9
36,628.3
Shares
30,524.3
-
-
30,524.3
28,254.1
-
-
28,254.1
Amounts owed to
credit institutions
1,685.0
-
-
1,685.0
3,069.5
-
-
3,069.5
and other
customers
Debt securities in
issue
2,955.0
-
-
2,955.0
1,930.1
-
-
1,930.1
Derivative financial
-
-
205.0
205.0
-
-
282.2
282.2
Instruments
Lease liabilities
8.2
-
-
8.2
8.6
-
-
8.6
Trade payables
3.4
-
-
3.4
2.8
-
-
2.8
Subordinated
356.0
-
-
356.0
690.2
-
-
690.2
liabilities
Subscribed capital
15.2
-
-
15.2
41.6
-
-
41.6
Total financial
35,547.1
-
205.0
35,752.1
33,996.9
-
282.2
34,279.1
liabilities
Other non
-financial
46.7
43.8
liabilities
Total liabilities
35,798.8
34,322.9
b) Valuation of financial instruments carried at fair value
The Group holds certain financial assets and liabilities at fair value, grouped into Levels 1 to 3 of the fair value
hierarchy as explained below.
Valuation techniques
Fair values are determined using the following fair value hierarchy that reflects the significance of the inputs
used in measuring fair value.
Level 1
The most reliable fair values of financial instruments are quoted market prices in an actively traded market.
The Group\u2019s Level 1 portfolio mainly comprises the Group\u2019s debt securities, with the exception of certificates of
deposits; for which traded prices are not readily available.
Level 2
These are valuation techniques for which all significant inputs are taken from observable market data. These
include valuation models used to calculate the present value of expected future cash flows and may be
employed when no active market exists and quoted prices are available for similar instruments in active
markets. Examples of Level 2 instruments are certificates of deposit and interest rate swaps.
Level 3
These are valuation techniques for which one or more significant inputs are not based on observable market
data.
Valuation techniques include net present value by way of discounted cash flow models. Assumptions and
market observable inputs used in valuation techniques include risk-free and benchmark interest rates, similar
market products, foreign currency exchange rates and equity index prices. Critical judgement is applied by
management in utilising unobservable inputs including expected price volatilities, expected mortality rates and
prepayment rates, based on industry practice or historical observation. The objective of valuation techniques is
to arrive at a fair value determination that reflects the price of the financial instrument at the reporting date
that would have been determined by market participants on an arm\u2019s-length basis.
Transfers between levels
The Group makes transfers between the different levels of the fair value hierarchy where the inputs used to
measure the fair value of the financial instruments in question no longer satisfy the conditions required to be
classified in a certain level within the hierarchy. Any such transfer between different levels of the fair value
hierarchy is made at the date the event in question that results in a change in circumstances occurs.
There were no transfers between different levels of the fair value hierarchy during the year ended 31 December
2025 or the year ended 31 December 2024.
The following tables provide an analysis of financial assets and liabilities held within the Statement of
Financial Position at fair value, grouped into Levels 1 to 3 of the fair value hierarchy.
Group
2025
2024
\u00a3m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets
Financial assets
held at FVOCI:
Debt securities
4,269.4
-
-
4,269.4
4,349.6
-
-
4,349.6
Financial assets at
FVTPL:
Equity share
-
-
18.3
18.3
-
-
16.9
16.9
investments
Derivative
financial
-
335.2
15.6
350.8
-
736.8
15.3
752.1
Instruments
Equity release
-
-
263.1
263.1
-
-
277.2
277.2
portfolio
Loans and
advances to
customers
-
-
0.8
0.8
-
-
0.9
0.9
Share warrants
-
-
-
-
-
-
21.9
21.9
Loan to defined
benefit pension
-
-
10.9
10.9
-
-
-
-
scheme
4,269.4
335.2
308.7
4,913.3
4,349.6
736.8
332.2
5,418.6
Financial liabilities
Financial liabilities
at FVTPL:
Derivative
financial
-
178.4
7.8
186.2
-
209.0
16.1
225.1
Instruments
Fair value of put
-
-
1.0
1.0
-
-
4.1
4.1
option Obligation
-
178.4
8.8
187.2
-
209.0
20.2
229.2
4,269.4
156.8
299.9
4,726.1
4,349.6
527.8
312.0
5,189.4
Society
2025
2024 (restated*)
\u00a3m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets
Financial assets
held at FVOCI:
Debt securities
4,201.9
-
-
4,201.9
4,269.8
-
-
4,269.8
Financial assets at
FVTPL:
Derivative
financial
-
315.1
18.0
333.1
-
727.7
15.3
743.0
Instruments
Debt securities*
-
-
73.5
73.5
-
-
70.3
70.3
Equity release
-
-
263.1
263.1
-
-
277.2
277.2
portfolio
Loans and
advances to
customers
-
-
0.8
0.8
-
-
0.9
0.9
Loan to defined
benefit pension
-
-
10.9
10.9
-
-
-
-
scheme
4,201.9
315.1
366.3
4,883.3
4,269.8
727.7
363.7
5,361.2
Financial liabilities
Financial liabilities
at FVTPL:
Derivative
financial
-
197.2
7.8
205.0
-
261.7
20.5
282.2
Instruments
-
197.2
7.8
205.0
-
261.7
20.5
282.2
4,201.9
117.9
358.5
4,678.3
4,269.8
466.0
343.2
5,079.0
* The information shown above for the year ended 31 December 2024, and the information for the year ended 31 December 2024 within the table on page 279, is restated to reflect the appropriate presentation of \u2018Financial assets at FVTPL: Debt securities\u2019. The valuation of these financial assets is determined using a discounted cashflow valuation model and is not based on observable market prices. Accordingly, all \u00a370.3m of Debt securities (at FVTPL) are now classified as Level 3 financial assets, rather than Level 1. There is no impact on the overall total amount reported for the year ended 31 December 2024.
The tables below analyse the movements in the Level 3 portfolio during the year:
Group 2024
Equity Equity Loans and Derivative Fair value of Share
\u00a3m
share release advances financial put option warrants Total
Investments portfolio
to customers
instruments obligation
At 1 January
10.5
293.3
0.9
(22.7)
(3.5)
15.1
293.6
Gain / (loss)
recognised in
Income Statement
1.1
A
(12.6)
B
-
21.9
C
(0.3)
D
5.9
E
16.0
Revaluations to
goodwill
-
-
-
-
(0.3)
-
(0.3)
Accrued interest
-
2.6
G
0.1
G
-
-
2.7
Repayments
-
(4.3)
(0.1)
-
-
-
(4.4)
Realised losses
-
(1.8)
H
-
-
-
-
(1.8)
Additions / Disposals /
5.3
-
-
-
-
0.9
6.2
Other
At 31 December
16.9
277.2
0.9
(0.8)
(4.1)
21.9
312.0
Notes
A. These are unrealised gains and are included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments
mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Equity share investments\u2019.
B. These are unrealised losses and are included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments
mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Equity release portfolio\u2019.
C. These are unrealised gains and are included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments
mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Derivatives associated with equity release portfolio\u2019.
D. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented
within Note 5 line \u2018Put options held by minority shareholders\u2019.
E. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented
within Note 5 line \u2018Share warrants\u2019.
F. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented
within Note 5 line \u2018Loan to defined benefit pension scheme\u2019.
G. Included in the Income Statement line \u2018Interest receivable and similar income\u2019.
H. Included in the Income Statement line \u2018Impairment and provisions\u2019; as presented within Note 8 line \u2018Realised losses on equity release
portfolio\u2019.
Group 2025
Equity
Equity
Loans and Derivative
Fair value of
Share
Loan to defined
\u00a3m
share
release
advances financial put option
warrants
benefit pension
Total
investments
portfolio
to customers
instruments
obligation scheme
At 1 January
16.9
277.2
0.9
(0.8)
(4.1)
21.9
-
312.0
Gain / (loss)
recognised in Income
0.4
A
(14.5)
B
-
8.1
C
(0.2)
D
5.6
E
(2.2)
F
(2.8)
Statement
Revaluations to
goodwill
-
-
-
-
(0.8)
-
-
(0.8)
Accrued interest
-
5.7
G
0.1
G
0.5
G
-
-
0.8
G
7.1
Repayments
-
(4.0)
(0.2)
-
-
-
(2.3)
(6.5)
Realised losses
-
(1.3)
H
-
-
-
-
-
(1.3)
Exercise of put
options by non
-
controlling
-
-
-
-
4.2
-
-
4.2
shareholders
Additions / Disposals
1.0
-
-
-
(0.1)
(27.5)
14.6
(12.0)
/ Other
At 31 December
18.3
263.1
0.8
7.8
(1.0)
-
10.9
299.9
Loans and
Loan to
Society 2025
Equity
advances
Derivative Debt defined
\u00a3m
release
to financial
securities
benefit Total
portfolio
customers
instruments
pension
scheme
At 1 January
277.2
0.9
(5.2)
70.3
-
343.2
(Loss) / gain recognised in Income Statement
(14.5)
A
-
14.9
B
3.2
C
(2.2)
D
1.4
Accrued interest
5.7
E
0.1
E
0.5
E
-
0.8
E
7.1
Repayments
(4.0)
(0.2)
-
-
(2.3)
(6.5)
Realised losses
(1.3)
F
-
-
-
-
(1.3)
Additions
-
-
-
-
14.6
14.6
At 31 December
263.1
0.8
10.2
73.5
10.9
358.5
Society 2024 (restated*)
Equity Loans and
Derivative
Debt
\u00a3m
release advances
financial
securities*
Total
portfolio
to customers
instruments
At 1 January
293.3
0.9
(34.2)
-
260.0
(Loss) / gain recognised in Income Statement
(12.6)
A
-
29.0
B
(4.0)
C
12.4
Accrued interest
2.6
E
0.1
E
-
-
2.7
Repayments
(4.3)
(0.1)
-
-
(4.4)
Realised losses
(1.8)
F
-
-
-
(1.8)
Additions
-
-
-
74.3
74.3
At 31 December
277.2
0.9
(5.2)
70.3
343.2
* The information shown above for the year ended 31 December 2024 is restated to reflect the appropriate presentation of \u2018Debt
securities\u2019 \u2013 see page 277 for details.
Notes
A. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented
within Note 5 line \u2018Equity release portfolio\u2019.
B. \u00a38.1m (2024: \u00a321.9m) is included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held
at FVTPL\u2019; as presented within Note 5 line \u2018Derivatives associated with equity release portfolio\u2019. The remaining \u00a36.8m (2024: \u00a37.1m)
is included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as
presented within Note 5 line \u2018Hedging instruments and hedged items\u2019.
C. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented
within Note 5 line \u2018Other financial instruments\u2019.
D. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented
within Note 5 line \u2018Loan to defined benefit pension scheme\u2019.
E. Included in the Income Statement line \u2018Interest receivable and similar income\u2019.
F. Included in the Income Statement line \u2018Impairment and provisions\u2019; as presented within Note 8 line \u2018Realised losses on equity release
portfolio\u2019.
Equity share investments
The valuation of the Group\u2019s unlisted investments is typically regarded as a Level 3 valuation technique as
certain inputs are not market observable. Further details of the Group\u2019s equity share investments are found in
Note 20e).
Equity release portfolio
The valuation of the equity release portfolio is regarded as a Level 3 valuation technique as certain inputs into
the valuation are not market observable. Further details on the valuation techniques used are found in Note 1f).
Further details on the inputs into the valuation and the impact of reasonably possible alternative assumptions
of certain inputs into the valuation of the portfolio are found in Note 1v).
Loans and advances to customers
The valuation of these loans and advances to customers is regarded as a Level 3 valuation technique as
certain inputs are not market observable. Further details are found in Note 1f).
Derivative financial instruments
The Level 3 derivative financial instruments included in the tables on pages 276 to 279 mostly comprise
derivatives which are used to hedge the Group\u2019s interest rate risk and inflation risk arising from the equity
release portfolio. The valuation of these derivatives is regarded as a Level 3 valuation technique as certain
inputs into the valuation are not market observable. Further details on the inputs into the valuation and the
impact of reasonably possible alternative assumptions of certain inputs into the valuation of these derivatives
are found in Note 1v).
Any change in fair value of the derivative liabilities is offset to some extent by a corresponding but opposite
change in the value of the equity release portfolio. The characteristics and the valuation requirements differ
slightly between the derivatives and the equity release portfolio resulting in the changes in fair value not
offsetting completely. During the year the net impact to the Income Statement (Group and Society) was a debit
of \u00a36.4m (2024: \u00a39.3m credit).
Debt securities
The valuation of the retained Darrowby 6 B Notes is regarded as a Level 3 valuation technique as the
credit risk premium is a key input into the calculation and is not market observable. This input is based on
the judgement of senior management and observed similar transactions within the market.
Fair value of put option obligation
A key input into the calculation of the fair value of the put option obligation is the estimate of the market value
of the noncontrolling shareholding. As this input is based on the judgement of senior management, the
valuation of the put option obligation is considered to be a Level 3 valuation technique.
Share warrants and other assets
These assets relate to share warrants held in unlisted entities and amounts recognised, where appropriate, for
additional share warrants yet to be received. The valuation of these assets is regarded as a Level 3 valuation
technique as certain inputs into the valuation are not market observable. Further details are found in Note 1f).
Loan to defined benefit pension scheme
The valuation of the loan to the defined benefit pension scheme is regarded as a Level 3 valuation technique
as certain inputs into the valuation are not market observable. Further details on the inputs into the valuation
of this loan, and the impact of reasonably possible alternative assumptions of certain inputs, are found in Note
1v). For the year ended 31 December 2025 the net impact to the Income Statement (Group and Society) was a
debit of \u00a32.2m (2024: \u00a3nil).
c) Fair values of financial instruments not carried at fair value
The tables below summarise the carrying values and fair values of those financial assets and liabilities not
presented within the Statement of Financial Position at fair value.
\u00a3m
Group 2025
Society 2025
Carrying Value
Fair Value
Carrying Value
Fair Value
Financial assets
Cash in hand and balances with the Bank of England
1,360.2
1,360.2
1,360.2
1,360.2
Loans and advances to credit institutions
353.3
353.3
304.7
304.7
Loans and advances to customers
33,378.9
33,609.2
31,121.3
31,324.5
Trade receivables
73.6
73.6
1.5
1.5
Loans to subsidiary undertakings
-
-
454.7
454.7
35,166.0
35,396.3
33,242.4
33,445.6
Financial liabilities
Shares
30,526.3
30,535.0
30,524.3
30,531.0
Amounts owed to credit institutions
327.2
327.2
513.1
513.1
Amounts owed to other customers
2,719.6
2,723.5
1,171.9
1,171.9
Debt securities in issue
3,361.9
3,349.8
2,955.0
2,950.6
Lease liabilities
110.3
110.3
8.2
8.2
Trade payables
14.4
14.4
3.4
3.4
Subordinated liabilities
356.0
364.1
356.0
364.1
Subscribed capital
15.2
21.1
15.2
21.1
37,430.9
37,445.4
35,547.1
35,563.4
\u00a3m
Group 2024
Society 2024
Carrying Value
Fair Value
Carrying Value
Fair Value
Financial assets
Cash in hand and balances with the Bank of England
1,930.6
1,930.6
1,930.6
1,930.6
Loans and advances to credit institutions
414.6
414.6
397.8
397.8
Loans and advances to customers
30,601.1
30,804.7
28,334.9
28,531.4
Trade receivables
68.8
68.8
1.9
1.9
Loans to subsidiary undertakings
-
-
403.9
403.9
Other assets
0.1
0.1
-
-
33,015.2
33,218.8
31,069.1
31,265.6
Financial liabilities
Shares
28,268.5
28,239.2
28,254.1
28,239.2
Amounts owed to credit institutions
1,599.6
1,599.6
1,800.6
1,800.6
Amounts owed to other customers
2,751.1
2,753.8
1,268.9
1,268.7
Debt securities in issue
2,435.3
2,423.1
1,930.1
1,930.9
Lease liabilities
92.1
92.1
8.6
8.6
Trade payables
11.0
11.0
2.8
2.8
Subordinated liabilities
690.2
700.4
690.2
700.4
Subscribed capital
41.6
61.8
41.6
61.8
35,889.4
35,881.0
33,996.9
34,013.0
Key considerations in the calculation of fair values of those financial assets and liabilities not presented within
the Statement of Financial Position at fair value are set out below unless there is no significant difference
between carrying value and fair value.
Loans and advances to customers
For fixed rate and tracker mortgage products, the Group has estimated the fair value of these products using
discounted cash flows and has applied relevant current market product rates as discount rates in order to also
incorporate an element of future expected credit losses. Fixed rate and tracker mortgages have been
discounted using current market product rates that are specific to the particular market to which they relate.
Market prices will generally have moved since the fixed or tracker rate was taken out, therefore the valuation of
these products will change reflecting upwards or downwards movements in market rates. The valuation
includes information and expectations regarding estimated redemption profiles which are regularly reviewed
and updated in light of experience.
As these redemption profiles are not considered to be observable by the market, the fair value of loans and
advances to customers is considered to be derived by using Level 3 valuation techniques.
For standard variable rate mortgage products, the interest rate on such products is equivalent to a current
market product rate and as such the Group considers the fair value of these mortgages to be equal to their
carrying value.
Shares
Savings products at variable rates are at current market rates and therefore the Group regards the fair value to
be equal to the carrying value.
The fair value of fixed rate savings products has been determined using discounted cash flows, discounted
using a combined yield curve of cash and swap term rates.
Changes in market prices since the product was taken out will result in increases or decreases in the fair value
of the fixed rate savings products. The valuation includes information and expectations regarding estimated
withdrawal profiles which are regularly reviewed and updated in light of experience. As these profiles are not
considered to be observable by the market, the fair value of shares is considered to be derived by using Level 3
valuation techniques.
Amounts owed to credit institutions and other customers
Balances in these categories are valued using discounted cash flows which use only observable market inputs
consisting of the combined yield curve of cash and swap term rates. All inputs to this valuation technique are
market observable and as such they are categorised within Level 2 of the fair value hierarchy, with the
exception of amounts owed to other customers in relation to retail deposits with SIL which uses information
and expectations regarding estimated withdrawal profiles which are regularly reviewed and updated in light of
experience. As these profiles are not considered to be observable by the market, this fair value is considered to
be derived by using Level 3 valuation techniques.
Debt securities in issue
Where securities are actively traded in a recognised market, with readily available and quoted prices, these
have been used to value the securities. These securities are therefore regarded as having Level 1 fair values.
Where such prices are not available, discounted cash flows are used. Where only market observable inputs are
used within these discounted cash flows, such as a combined yield curve of cash and swap term rates, theses
securities are categorised as having Level 2 fair values. Securities valued using unobservable inputs are
regarded as having Level 3 fair values.
Subordinated liabilities and subscribed capital
Prices are quoted for these instruments in actively traded markets and, as a result, these instruments are
categorised as having Level 1 fair values.
d) Fair values of non-financial assets and liabilities not carried at fair value
The fair value of investment property, which is a non-financial asset, is disclosed in these financial statements.
Note 24 provides details of the valuation techniques used in estimating this fair value, together with the
resulting categorisation of these valuation techniques within the fair value hierarchy.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-504": { "value": "a) Classification and measurement The tables below summarise the classification of the carrying amounts of the Group\u2019s and Society\u2019s financial assets and liabilities:
Group
Amortised
2025
Amortised
2024
\u00a3m
FVOCI
FVTPL
Total
FVOCI
FVTPL
Total
cost cost
Cash in hand and
balances with the
Bank of England
1,360.2
-
-
1,360.2
1,930.6
-
-
1,930.6
Loans and advances
353.3
-
-
353.3
414.6
-
-
414.6
to credit institutions
Debt securities
-
4,269.4
-
4,269.4
-
4,349.6
-
4,349.6
Derivative financial
-
-
350.8
350.8
-
-
752.1
752.1
Instruments
Loans and advances
33,378.9
-
0.8
33,379.7
30,601.1
-
0.9
30,602.0
to customers
Equity release
-
-
263.1
263.1
-
-
277.2
277.2
portfolio
Equity share
-
-
18.3
18.3
-
-
16.9
16.9
investments
Trade receivables
73.6
-
-
73.6
68.8
-
-
68.8
Share warrants
-
-
-
-
-
-
21.9
21.9
Loan to defined
benefit pension
-
-
10.9
10.9
-
-
-
-
scheme
Other assets
-
-
-
-
0.1
-
-
0.1
Total financial
35,166.0
4,269.4
643.9
40,079.3
33,015.2
4,349.6
1,069.0
38,433.8
assets
Other non
-financial
664.9
581.5
assets
Total assets
40,744.2
39,015.3
Shares
30,526.3
-
-
30,526.3
28,268.5
-
-
28,268.5
Amounts owed to
credit institutions
3,046.8
-
-
3,046.8
4,350.7
-
-
4,350.7
and other
customers
Debt securities in
issue
3,361.9
-
-
3,361.9
2,435.3
-
-
2,435.3
Derivative financial
-
-
186.2
186.2
-
-
225.1
225.1
Instruments
Lease liabilities
110.3
-
-
110.3
92.1
-
-
92.1
Trade payables
14.4
-
-
14.4
11.0
-
-
11.0
Fair value of put
-
-
1.0
1.0
-
-
4.1
4.1
option obligation
Subordinated
356.0
-
-
356.0
690.2
-
-
690.2
liabilities
Subscribed capital
15.2
-
-
15.2
41.6
-
-
41.6
Total financial
37,430.9
-
187.2
37,618.1
35,889.4
-
229.2
36,118.6
liabilities
Other non
-financial
261.5
229.3
liabilities
Total liabilities
37,879.6
36,347.9
All financial assets and liabilities in the tables above that are held as at FVTPL are mandatorily held as such.
As outlined in Note 21, during the year, non-current assets with a total carrying value of \u00a33.7m (for the Group
and Society) were reclassified as held for sale, and therefore presented separately within the Statement of
Financial Position. In the above table, these amounts are included within \u2018Other non-financial assets\u2019.
Society
2025
2024
\u00a3m
Amortised
FVOCI
FVTPL
Total
Amortised
FVOCI
FVTPL
Total
cost cost
Cash in hand and
balances
1,360.2
-
-
1,360.2
1,930.6
-
-
1,930.6
with the Bank of
England
Loans and advances
304.7
-
-
304.7
397.8
-
-
397.8
to credit institutions
Debt securities
-
4,201.9
73.5
4,275.4
-
4,269.8
70.3
4,340.1
Derivative financial
-
-
333.1
333.1
-
-
743.0
743.0
instruments
Loans and advances
31,121.3
-
0.8
31,122.1
28,334.9
-
0.9
28,335.8
to customers
Equity release
-
-
263.1
263.1
-
-
277.2
277.2
portfolio
Loans to subsidiary
454.7
-
-
454.7
403.9
-
-
403.9
undertakings
Trade receivables
1.5
-
-
1.5
1.9
-
-
1.9
Loan to defined
benefit pension
-
-
10.9
10.9
-
-
-
-
scheme
Total financial
33,242.4
4,201.9
681.4
38,125.7
31,069.1
4,269.8
1,091.4
36,430.3
assets
Other non
-financial
201.2
198.0
assets
Total assets
38,326.9
36,628.3
Shares
30,524.3
-
-
30,524.3
28,254.1
-
-
28,254.1
Amounts owed to
credit institutions
1,685.0
-
-
1,685.0
3,069.5
-
-
3,069.5
and other
customers
Debt securities in
issue
2,955.0
-
-
2,955.0
1,930.1
-
-
1,930.1
Derivative financial
-
-
205.0
205.0
-
-
282.2
282.2
Instruments
Lease liabilities
8.2
-
-
8.2
8.6
-
-
8.6
Trade payables
3.4
-
-
3.4
2.8
-
-
2.8
Subordinated
356.0
-
-
356.0
690.2
-
-
690.2
liabilities
Subscribed capital
15.2
-
-
15.2
41.6
-
-
41.6
Total financial
35,547.1
-
205.0
35,752.1
33,996.9
-
282.2
34,279.1
liabilities
Other non
-financial
46.7
43.8
liabilities
Total liabilities
35,798.8
34,322.9
b) Valuation of financial instruments carried at fair value The Group holds certain financial assets and liabilities at fair value, grouped into Levels 1 to 3 of the fair value hierarchy as explained below. Valuation techniques Fair values are determined using the following fair value hierarchy that reflects the significance of the inputs used in measuring fair value. Level 1 The most reliable fair values of financial instruments are quoted market prices in an actively traded market. The Group\u2019s Level 1 portfolio mainly comprises the Group\u2019s debt securities, with the exception of certificates of deposits; for which traded prices are not readily available. Level 2 These are valuation techniques for which all significant inputs are taken from observable market data. These include valuation models used to calculate the present value of expected future cash flows and may be employed when no active market exists and quoted prices are available for similar instruments in active markets. Examples of Level 2 instruments are certificates of deposit and interest rate swaps. Level 3 These are valuation techniques for which one or more significant inputs are not based on observable market data. Valuation techniques include net present value by way of discounted cash flow models. Assumptions and market observable inputs used in valuation techniques include risk-free and benchmark interest rates, similar market products, foreign currency exchange rates and equity index prices. Critical judgement is applied by management in utilising unobservable inputs including expected price volatilities, expected mortality rates and prepayment rates, based on industry practice or historical observation. The objective of valuation techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the reporting date that would have been determined by market participants on an arm\u2019s-length basis. Transfers between levels The Group makes transfers between the different levels of the fair value hierarchy where the inputs used to measure the fair value of the financial instruments in question no longer satisfy the conditions required to be classified in a certain level within the hierarchy. Any such transfer between different levels of the fair value hierarchy is made at the date the event in question that results in a change in circumstances occurs. There were no transfers between different levels of the fair value hierarchy during the year ended 31 December 2025 or the year ended 31 December 2024. The following tables provide an analysis of financial assets and liabilities held within the Statement of Financial Position at fair value, grouped into Levels 1 to 3 of the fair value hierarchy.
Group
2025
2024
\u00a3m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets
Financial assets
held at FVOCI:
Debt securities
4,269.4
-
-
4,269.4
4,349.6
-
-
4,349.6
Financial assets at
FVTPL:
Equity share
-
-
18.3
18.3
-
-
16.9
16.9
investments
Derivative
financial
-
335.2
15.6
350.8
-
736.8
15.3
752.1
Instruments
Equity release
-
-
263.1
263.1
-
-
277.2
277.2
portfolio
Loans and
advances to
customers
-
-
0.8
0.8
-
-
0.9
0.9
Share warrants
-
-
-
-
-
-
21.9
21.9
Loan to defined
benefit pension
-
-
10.9
10.9
-
-
-
-
scheme
4,269.4
335.2
308.7
4,913.3
4,349.6
736.8
332.2
5,418.6
Financial liabilities
Financial liabilities
at FVTPL:
Derivative
financial
-
178.4
7.8
186.2
-
209.0
16.1
225.1
Instruments
Fair value of put
-
-
1.0
1.0
-
-
4.1
4.1
option Obligation
-
178.4
8.8
187.2
-
209.0
20.2
229.2
4,269.4
156.8
299.9
4,726.1
4,349.6
527.8
312.0
5,189.4
Society
2025
2024 (restated*)
\u00a3m
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets
Financial assets
held at FVOCI:
Debt securities
4,201.9
-
-
4,201.9
4,269.8
-
-
4,269.8
Financial assets at
FVTPL:
Derivative
financial
-
315.1
18.0
333.1
-
727.7
15.3
743.0
Instruments
Debt securities*
-
-
73.5
73.5
-
-
70.3
70.3
Equity release
-
-
263.1
263.1
-
-
277.2
277.2
portfolio
Loans and
advances to
customers
-
-
0.8
0.8
-
-
0.9
0.9
Loan to defined
benefit pension
-
-
10.9
10.9
-
-
-
-
scheme
4,201.9
315.1
366.3
4,883.3
4,269.8
727.7
363.7
5,361.2
Financial liabilities
Financial liabilities
at FVTPL:
Derivative
financial
-
197.2
7.8
205.0
-
261.7
20.5
282.2
Instruments
-
197.2
7.8
205.0
-
261.7
20.5
282.2
4,201.9
117.9
358.5
4,678.3
4,269.8
466.0
343.2
5,079.0
* The information shown above for the year ended 31 December 2024, and the information for the year ended 31 December 2024 within the table on page 279, is restated to reflect the appropriate presentation of \u2018Financial assets at FVTPL: Debt securities\u2019. The valuation of these financial assets is determined using a discounted cashflow valuation model and is not based on observable market prices. Accordingly, all \u00a370.3m of Debt securities (at FVTPL) are now classified as Level 3 financial assets, rather than Level 1. There is no impact on the overall total amount reported for the year ended 31 December 2024. The tables below analyse the movements in the Level 3 portfolio during the year:
Group 2024
Equity Equity Loans and Derivative Fair value of Share
\u00a3m
share release advances financial put option warrants Total
Investments portfolio
to customers
instruments obligation
At 1 January
10.5
293.3
0.9
(22.7)
(3.5)
15.1
293.6
Gain / (loss)
recognised in
Income Statement
1.1
A
(12.6)
B
-
21.9
C
(0.3)
D
5.9
E
16.0
Revaluations to
goodwill
-
-
-
-
(0.3)
-
(0.3)
Accrued interest
-
2.6
G
0.1
G
-
-
2.7
Repayments
-
(4.3)
(0.1)
-
-
-
(4.4)
Realised losses
-
(1.8)
H
-
-
-
-
(1.8)
Additions / Disposals /
5.3
-
-
-
-
0.9
6.2
Other
At 31 December
16.9
277.2
0.9
(0.8)
(4.1)
21.9
312.0
Notes A. These are unrealised gains and are included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Equity share investments\u2019. B. These are unrealised losses and are included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Equity release portfolio\u2019. C. These are unrealised gains and are included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Derivatives associated with equity release portfolio\u2019. D. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Put options held by minority shareholders\u2019. E. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Share warrants\u2019. F. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Loan to defined benefit pension scheme\u2019. G. Included in the Income Statement line \u2018Interest receivable and similar income\u2019. H. Included in the Income Statement line \u2018Impairment and provisions\u2019; as presented within Note 8 line \u2018Realised losses on equity release portfolio\u2019.
Group 2025
Equity
Equity
Loans and Derivative
Fair value of
Share
Loan to defined
\u00a3m
share
release
advances financial put option
warrants
benefit pension
Total
investments
portfolio
to customers
instruments
obligation scheme
At 1 January
16.9
277.2
0.9
(0.8)
(4.1)
21.9
-
312.0
Gain / (loss)
recognised in Income
0.4
A
(14.5)
B
-
8.1
C
(0.2)
D
5.6
E
(2.2)
F
(2.8)
Statement
Revaluations to
goodwill
-
-
-
-
(0.8)
-
-
(0.8)
Accrued interest
-
5.7
G
0.1
G
0.5
G
-
-
0.8
G
7.1
Repayments
-
(4.0)
(0.2)
-
-
-
(2.3)
(6.5)
Realised losses
-
(1.3)
H
-
-
-
-
-
(1.3)
Exercise of put
options by non
-
controlling
-
-
-
-
4.2
-
-
4.2
shareholders
Additions / Disposals
1.0
-
-
-
(0.1)
(27.5)
14.6
(12.0)
/ Other
At 31 December
18.3
263.1
0.8
7.8
(1.0)
-
10.9
299.9
Loans and
Loan to
Society 2025
Equity
advances
Derivative Debt defined
\u00a3m
release
to financial
securities
benefit Total
portfolio
customers
instruments
pension
scheme
At 1 January
277.2
0.9
(5.2)
70.3
-
343.2
(Loss) / gain recognised in Income Statement
(14.5)
A
-
14.9
B
3.2
C
(2.2)
D
1.4
Accrued interest
5.7
E
0.1
E
0.5
E
-
0.8
E
7.1
Repayments
(4.0)
(0.2)
-
-
(2.3)
(6.5)
Realised losses
(1.3)
F
-
-
-
-
(1.3)
Additions
-
-
-
-
14.6
14.6
At 31 December
263.1
0.8
10.2
73.5
10.9
358.5
Society 2024 (restated*)
Equity Loans and
Derivative
Debt
\u00a3m
release advances
financial
securities*
Total
portfolio
to customers
instruments
At 1 January
293.3
0.9
(34.2)
-
260.0
(Loss) / gain recognised in Income Statement
(12.6)
A
-
29.0
B
(4.0)
C
12.4
Accrued interest
2.6
E
0.1
E
-
-
2.7
Repayments
(4.3)
(0.1)
-
-
(4.4)
Realised losses
(1.8)
F
-
-
-
(1.8)
Additions
-
-
-
74.3
74.3
At 31 December
277.2
0.9
(5.2)
70.3
343.2
* The information shown above for the year ended 31 December 2024 is restated to reflect the appropriate presentation of \u2018Debt securities\u2019 \u2013 see page 277 for details. Notes A. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Equity release portfolio\u2019. B. \u00a38.1m (2024: \u00a321.9m) is included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Derivatives associated with equity release portfolio\u2019. The remaining \u00a36.8m (2024: \u00a37.1m) is included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Hedging instruments and hedged items\u2019. C. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Other financial instruments\u2019. D. Included in the Income Statement line \u2018Fair value (losses) / gains on financial instruments mandatorily held at FVTPL\u2019; as presented within Note 5 line \u2018Loan to defined benefit pension scheme\u2019. E. Included in the Income Statement line \u2018Interest receivable and similar income\u2019. F. Included in the Income Statement line \u2018Impairment and provisions\u2019; as presented within Note 8 line \u2018Realised losses on equity release portfolio\u2019. Equity share investments The valuation of the Group\u2019s unlisted investments is typically regarded as a Level 3 valuation technique as certain inputs are not market observable. Further details of the Group\u2019s equity share investments are found in Note 20e). Equity release portfolio The valuation of the equity release portfolio is regarded as a Level 3 valuation technique as certain inputs into the valuation are not market observable. Further details on the valuation techniques used are found in Note 1f). Further details on the inputs into the valuation and the impact of reasonably possible alternative assumptions of certain inputs into the valuation of the portfolio are found in Note 1v). Loans and advances to customers The valuation of these loans and advances to customers is regarded as a Level 3 valuation technique as certain inputs are not market observable. Further details are found in Note 1f). Derivative financial instruments The Level 3 derivative financial instruments included in the tables on pages 276 to 279 mostly comprise derivatives which are used to hedge the Group\u2019s interest rate risk and inflation risk arising from the equity release portfolio. The valuation of these derivatives is regarded as a Level 3 valuation technique as certain inputs into the valuation are not market observable. Further details on the inputs into the valuation and the impact of reasonably possible alternative assumptions of certain inputs into the valuation of these derivatives are found in Note 1v). Any change in fair value of the derivative liabilities is offset to some extent by a corresponding but opposite change in the value of the equity release portfolio. The characteristics and the valuation requirements differ slightly between the derivatives and the equity release portfolio resulting in the changes in fair value not offsetting completely. During the year the net impact to the Income Statement (Group and Society) was a debit of \u00a36.4m (2024: \u00a39.3m credit). Debt securities The valuation of the retained Darrowby 6 B Notes is regarded as a Level 3 valuation technique as the credit risk premium is a key input into the calculation and is not market observable. This input is based on the judgement of senior management and observed similar transactions within the market. Fair value of put option obligation A key input into the calculation of the fair value of the put option obligation is the estimate of the market value of the noncontrolling shareholding. As this input is based on the judgement of senior management, the valuation of the put option obligation is considered to be a Level 3 valuation technique. Share warrants and other assets These assets relate to share warrants held in unlisted entities and amounts recognised, where appropriate, for additional share warrants yet to be received. The valuation of these assets is regarded as a Level 3 valuation technique as certain inputs into the valuation are not market observable. Further details are found in Note 1f). Loan to defined benefit pension scheme The valuation of the loan to the defined benefit pension scheme is regarded as a Level 3 valuation technique as certain inputs into the valuation are not market observable. Further details on the inputs into the valuation of this loan, and the impact of reasonably possible alternative assumptions of certain inputs, are found in Note 1v). For the year ended 31 December 2025 the net impact to the Income Statement (Group and Society) was a debit of \u00a32.2m (2024: \u00a3nil). c) Fair values of financial instruments not carried at fair value The tables below summarise the carrying values and fair values of those financial assets and liabilities not presented within the Statement of Financial Position at fair value.
\u00a3m
Group 2025
Society 2025
Carrying Value
Fair Value
Carrying Value
Fair Value
Financial assets
Cash in hand and balances with the Bank of England
1,360.2
1,360.2
1,360.2
1,360.2
Loans and advances to credit institutions
353.3
353.3
304.7
304.7
Loans and advances to customers
33,378.9
33,609.2
31,121.3
31,324.5
Trade receivables
73.6
73.6
1.5
1.5
Loans to subsidiary undertakings
-
-
454.7
454.7
35,166.0
35,396.3
33,242.4
33,445.6
Financial liabilities
Shares
30,526.3
30,535.0
30,524.3
30,531.0
Amounts owed to credit institutions
327.2
327.2
513.1
513.1
Amounts owed to other customers
2,719.6
2,723.5
1,171.9
1,171.9
Debt securities in issue
3,361.9
3,349.8
2,955.0
2,950.6
Lease liabilities
110.3
110.3
8.2
8.2
Trade payables
14.4
14.4
3.4
3.4
Subordinated liabilities
356.0
364.1
356.0
364.1
Subscribed capital
15.2
21.1
15.2
21.1
37,430.9
37,445.4
35,547.1
35,563.4
\u00a3m
Group 2024
Society 2024
Carrying Value
Fair Value
Carrying Value
Fair Value
Financial assets
Cash in hand and balances with the Bank of England
1,930.6
1,930.6
1,930.6
1,930.6
Loans and advances to credit institutions
414.6
414.6
397.8
397.8
Loans and advances to customers
30,601.1
30,804.7
28,334.9
28,531.4
Trade receivables
68.8
68.8
1.9
1.9
Loans to subsidiary undertakings
-
-
403.9
403.9
Other assets
0.1
0.1
-
-
33,015.2
33,218.8
31,069.1
31,265.6
Financial liabilities
Shares
28,268.5
28,239.2
28,254.1
28,239.2
Amounts owed to credit institutions
1,599.6
1,599.6
1,800.6
1,800.6
Amounts owed to other customers
2,751.1
2,753.8
1,268.9
1,268.7
Debt securities in issue
2,435.3
2,423.1
1,930.1
1,930.9
Lease liabilities
92.1
92.1
8.6
8.6
Trade payables
11.0
11.0
2.8
2.8
Subordinated liabilities
690.2
700.4
690.2
700.4
Subscribed capital
41.6
61.8
41.6
61.8
35,889.4
35,881.0
33,996.9
34,013.0
Key considerations in the calculation of fair values of those financial assets and liabilities not presented within the Statement of Financial Position at fair value are set out below unless there is no significant difference between carrying value and fair value. Loans and advances to customers For fixed rate and tracker mortgage products, the Group has estimated the fair value of these products using discounted cash flows and has applied relevant current market product rates as discount rates in order to also incorporate an element of future expected credit losses. Fixed rate and tracker mortgages have been discounted using current market product rates that are specific to the particular market to which they relate. Market prices will generally have moved since the fixed or tracker rate was taken out, therefore the valuation of these products will change reflecting upwards or downwards movements in market rates. The valuation includes information and expectations regarding estimated redemption profiles which are regularly reviewed and updated in light of experience. As these redemption profiles are not considered to be observable by the market, the fair value of loans and advances to customers is considered to be derived by using Level 3 valuation techniques. For standard variable rate mortgage products, the interest rate on such products is equivalent to a current market product rate and as such the Group considers the fair value of these mortgages to be equal to their carrying value. Shares Savings products at variable rates are at current market rates and therefore the Group regards the fair value to be equal to the carrying value. The fair value of fixed rate savings products has been determined using discounted cash flows, discounted using a combined yield curve of cash and swap term rates. Changes in market prices since the product was taken out will result in increases or decreases in the fair value of the fixed rate savings products. The valuation includes information and expectations regarding estimated withdrawal profiles which are regularly reviewed and updated in light of experience. As these profiles are not considered to be observable by the market, the fair value of shares is considered to be derived by using Level 3 valuation techniques. Amounts owed to credit institutions and other customers Balances in these categories are valued using discounted cash flows which use only observable market inputs consisting of the combined yield curve of cash and swap term rates. All inputs to this valuation technique are market observable and as such they are categorised within Level 2 of the fair value hierarchy, with the exception of amounts owed to other customers in relation to retail deposits with SIL which uses information and expectations regarding estimated withdrawal profiles which are regularly reviewed and updated in light of experience. As these profiles are not considered to be observable by the market, this fair value is considered to be derived by using Level 3 valuation techniques. Debt securities in issue Where securities are actively traded in a recognised market, with readily available and quoted prices, these have been used to value the securities. These securities are therefore regarded as having Level 1 fair values. Where such prices are not available, discounted cash flows are used. Where only market observable inputs are used within these discounted cash flows, such as a combined yield curve of cash and swap term rates, theses securities are categorised as having Level 2 fair values. Securities valued using unobservable inputs are regarded as having Level 3 fair values. Subordinated liabilities and subscribed capital Prices are quoted for these instruments in actively traded markets and, as a result, these instruments are categorised as having Level 1 fair values. d) Fair values of non-financial assets and liabilities not carried at fair value The fair value of investment property, which is a non-financial asset, is disclosed in these financial statements. Note 24 provides details of the valuation techniques used in estimating this fair value, together with the resulting categorisation of these valuation techniques within the fair value hierarchy.", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-467": { "value": "
The Group\u2019s structure and reportable segments are outlined in the Strategic Report.
Transactions between the segments are on normal commercial terms and conditions. The accounting policies
of the reportable segments are consistent with the Group\u2019s accounting policies. The Group has not aggregated
any of its operating segments for the purposes of financial reporting. Intra-group dividends are excluded from
the segmental analysis presented as these are not included in the measure of segment profit or loss that is
used by the Group\u2019s Board.
No geographical analysis is presented because substantially all of the Group\u2019s activities are conducted within
the UK. Of the total external income, \u00a381.5m (2024: \u00a363.1m) was generated outside the UK.
A breakdown of the allocation of goodwill by segment is included within Note 25.
Group
2025
\u00a3m
Society
SIL
Connells
Other^
Total
Interest receivable and similar income
1,956.8
141.7
16.0
(157.6)
1,956.9
Interest payable and similar charges
(1,514.6)
(99.9)
(13.0)
185.5
(1,442.0)
Net interest income
442.2
41.8
3.0
27.9
514.9
Net non
-interest income
46.2
0.3
1,155.1
11.0
1,212.6
Fair value gains / (losses) on hedged
15.1
(0.2)
-
(5.9)
9.0
items and derivatives
Fair value losses on equity release
(14.5)
-
-
-
(14.5)
portfolio
Fair value gains on share warrants
-
-
5.6
-
5.6
Fair value losses on put options held by
minority shareholders
-
-
(0.2)
-
(0.2)
Fair value gains on equity share
-
-
0.4
-
0.4
investments mandatorily held at FVTPL
Fair value gains / (losses) on other
instruments mandatorily held at FVTPL
1.1
-
-
(3.3)
(2.2)
Realised profits on treasury assets held
0.3
-
-
-
0.3
at FVOCI
Profit on disposal of Group
-
-
10.8
-
10.8
undertakings
Share of profits from joint ventures
-
-
2.0
-
2.0
Charge on buy
-back of Permanent
(27.9)
-
-
-
(27.9)
Interest
-Bearing Shares
Total income
462.5
41.9
1,176.7
29.7
1,710.8
Administrative expenses
(262.4)
(29.7)
(1,102.5)
(28.8)
(1,423.4)
Realised losses on equity release
(1.3)
-
-
-
(1.3)
portfolio
Impairment and provisions for liabilities
(9.5)
(0.1)
(1.1)
(0.2)
(10.9)
Profit before tax
189.3
12.1
73.1
0.7
275.2
Taxation
(49.5)
(1.6)
(15.2)
0.1
(66.2)
Profit after tax
139.8
10.5
57.9
0.8
209.0
Total assets
38,326.9
2,540.4
698.2
(821.3)
40,744.2
Total liabilities
35,798.8
2,388.7
440.3
(748.2)
37,879.6
Total income can be analysed as follows:
Group
2025
\u00a3m
Society
SIL
Connells
Other^
Total
External Income
517.9
13.8
1,157.7
21.4
1,710.8
Income from other segments
(55.4)
28.1
19.0
8.3
-
Total Income
462.5
41.9
1,176.7
29.7
1,710.8
Total income can be analysed as follows: * In accordance with IFRS 8Operating Segments , the Group has expanded the above segmental analysis to show the breakdown of \u2018Net interest income\u2019 between \u2018Interest receivable and similar income\u2019 and \u2018Interest payable and similar charges\u2019. The information shown for the year ended 31 December 2024 is therefore restated to present on this updated basis. The impacts of this change are presentational only and there is no impact on the amounts reported for the year ended 31 December 2024. ^ The \u2018Other\u2019 category comprises segments that are not separately reportable, together with the impact of Group consolidation adjustments. The Other category therefore includes amounts relating to all Group entities except for the Society, SIL and Connells. Amounts relating to Group consolidation adjustments include the elimination of intra-group transactions such as intercompany fees.
Group (restated*)
2024
\u00a3m
Society
SIL
Connells
Other^
Total
Interest receivable and similar income
2,083.5
166.4
17.8
(165.4)
2,102.3
Interest payable and similar charges
(1,676.3)
(114.6)
(12.3)
189.3
(1,613.9)
Net interest income
407.2
51.8
5.5
23.9
488.4
Net non
-interest income
43.9
0.3
1,055.4
13.6
1,113.2
Fair value gains / (losses) on hedged
28.8
(0.1)
-
(4.8)
23.9
items and derivatives
Fair value losses on equity release
(12.6)
-
-
-
(12.6)
portfolio
Fair value gains on share warrants
-
-
5.9
-
5.9
Fair value losses on put options held by
minority shareholders
-
-
(0.3)
-
(0.3)
Fair value gains on equity share
-
-
1.1
-
1.1
investments mandatorily held at FVTPL
Fair value (losses) / gains on other
instruments mandatorily held at FVTPL
(4.0)
-
-
4.0
-
Realised losses on treasury assets held
(1.8)
-
-
-
(1.8)
at FVOCI
Share of profits from joint ventures
-
-
1.4
-
1.4
Total income
461.5
52.0
1,069.0
36.7
1,619.2
Administrative expenses
(262.0)
(21.4)
(1,008.9)
(20.0)
(1,312.3)
Realised losses on equity release
(1.8)
-
-
-
(1.8)
portfolio
Impairment and provisions for liabilities
12.2
0.4
1.2
(0.3)
13.5
Profit before tax
209.9
31.0
61.3
16.4
318.6
Taxation
(56.7)
(3.1)
(15.8)
(2.5)
(78.1)
Profit after tax
153.2
27.9
45.5
13.9
240.5
Total assets
36,628.3
2,618.6
649.1
(880.7)
39,015.3
Total liabilities
34,322.9
2,466.6
396.8
(838.4)
36,347.9
Group
2024
\u00a3m
Society
SIL
Connells
Other^
Total
External Income
550.2
1.4
1,051.4
16.2
1,619.2
Income from other segments
(88.7)
50.6
17.6
20.5
-
Total Income
461.5
52.0
1,069.0
36.7
1,619.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-468": { "value": "
The components of the Prudential Group\u2019s capital and the associated regulatory framework are set out in the
Strategic Report, and this is followed by quantitative disclosure of the components of capital resources and
capital requirements. The Group\u2019s capital management processes are also set out in the Strategic Report.
Throughout both the current year and the prior year, the Group complied with and maintained surplus capital
above all externally imposed capital requirements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-505": { "value": "The Group adopted during the year the following new accounting standards and amendments to existing accounting standards, none of which had a material impact on these consolidated financial statements: \u2022 Lack of exchangeability (Amendments to IAS 21). ", "dimensions": { "concept": "ifrs-full:DescriptionOfInitialApplicationOfStandardsOrInterpretations", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-506": { "value": "Standards issued but not yet effective The new and amended accounting standards and interpretations set out below will be effective for future reporting periods (subject to UK endorsement for some) and have not been early adopted by the Group in preparing these consolidated financial statements: i. Amendments to Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7) The Amendments, which are effective for accounting periods commencing on or after 1 January 2026, include: \u2022 Clarifications of the requirements for recognition and derecognition of financial assets and liabilities \u2022 A clarification that a financial liability is derecognised on the \u2018settlement date\u2019 and introduce an accounting policy choice (if specific conditions are met) to derecognise financial liabilities settled using an electronic payment system before the settlement date \u2022 Additional guidance on how the contractual cash flows for financial assets with environmental, social and corporate governance (ESG) and similar features should be assessed \u2022 Clarifications on what constitute \u2018non-recourse features\u2019 and what are the characteristics of contractually- linked instruments \u2022 The introduction of disclosures for financial instruments with contingent features and additional disclosure requirements for equity instruments classified at FVOCI With respect to the amendments on the derecognition of financial liabilities that are settled through an electronic payment system, the Group has performed an initial impact assessment. There is a limited number of electronic payment systems used by the Group that do not result in real-time settlement. In response to the Amendments, the Group is establishing any revisions required to existing accounting practices; the impact on the Group\u2019s annual consolidated financial statements is not currently expected to be material. ii. IFRS 18 Presentation and Disclosure in Financial Statements IFRS 18 replaces IAS 1 Presentation of Financial Statements and becomes effective for accounting periods commencing on or after 1 January 2027. IFRS 18 introduces new requirements for presentation within the statement of profit or loss, including specified totals and subtotals. Furthermore, entities are required to classify all income and expenses within the statement of profit or loss into one of five categories; operating, investing, financing, income taxes and discontinued operations, whereof the first three are new. There are also other changes, including specific presentation requirements and options for entities, such as the Society, that provide finance to customers. The Group is currently assessing the impacts for the Group\u2019s primary financial statements and notes to the financial statements. iii. Other, none of which are currently expected to have a material impact on the Group\u2019s consolidated financial statements: \u2022 IFRS 19 Subsidiaries without Public Accountability: Disclosures; \u2022 Annual Improvements to IFRS Accounting Standards \u2013 Volume 11; and \u2022 Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 and IFRS 7).", "dimensions": { "concept": "ifrs-full:DescriptionOfExpectedImpactOfInitialApplicationOfNewStandardsOrInterpretations", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-469": { "value": "
There have been no material subsequent events between 31 December 2025 and the date of approval of this
Annual Report and Accounts by the Board.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-4": { "value": "building society", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-5": { "value": "United Kingdom", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-413": { "value": "United Kingdom", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-6": { "value": "The Bailey, Skipton, North Yorkshire, BD23 1DN", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-414": { "value": "The Bailey, Skipton, North Yorkshire, BD23 1DN", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:66AGRETLUXS4YO5MUH35", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } } } }