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Market risk
Risk definition (audited)
The risk of loss arising from movements in market prices. Market risk is the risk posed to earnings, economic
value or capital that arises from changes in interest rates, market prices or foreign exchange rates.
Risk appetite statement
Our market risk appetite is determined by reference to a number of sub-risk appetites:
Earning sensitivity \u2013 We have a low appetite for earnings risk, with the Board determining a limit
calibrated to ensure net interest income does not exceed an amount recommended and scrutinised by
the ALCO and approved by ROC. The limit is calibrated using a 2% instantaneous shock in both directions.
Economic value sensitivity \u2013 We have a low appetite for economic value risk, with the Board determining
a limit calibrated to ensure that a change to the present value of our balance sheet does not exceed an
amount as recommended and scrutinised by ALCO and approved by ROC. The limit is calibrated by
calculating the impact of a 2% instantaneous shock in both directions.
Revaluation risk \u2013 We have a low appetite for revaluation risk, with the Board prescribing that we should
avoid situations where the potential losses caused by changes in market prices shall not exceed capital
held under standard risk weights, taking account of any offsets, determined by our revaluation risk
stress scenario.
Foreign exchange risk \u2013 We have no appetite for foreign exchange risk, with the Board determining that
exposures in foreign currencies should not represent a material portion of our capital resources.
Exposure and assessment (audited)
We do not have a trading book and we do not actively seek to create value through taking interest rate
positions. Whilst we support our customers to make payments or hold accounts in foreign currency, we
actively avoid exposing our own balance sheet to foreign exchange risk.
The primary source of our market risk exposure arises from structural interest rate risk in the banking
book mismatch between the fixed rate assets and liabilities and any differences in bases. Interest rate risk
in the banking book crystallises in, and is measured through, the sensitivity of our current and future net
interest income and our economic value to movements in market interest rates. During 2024, we saw a
reduction in the interest rate environment and the Bank remained within approved limits throughout.
The Board is responsible for setting market risk appetite. Market risk is mitigated through a risk
management framework that allows it to be monitored and managed by first line management and
second line risk, with oversight from ALCO. Accordingly, ALCO ensures that steps taken to identify,
measure, monitor and control the interest rate risk in the banking book are consistent with the approved
strategies and policies.
Management limits are set at ALCO for economic value and net interest income sensitivity to ensure
prompt action and escalation. Limits and the relevant metrics are also reported to ROC and the Board.
The Treasury function has responsibility for managing within our market risk policy and strategy. We have
an independent second line Prudential Risk team who independently monitor our market risk daily
including ensuring compliance with the policies we have developed. The Prudential Risk team runs
additional interest rate risk simulations monthly to assess other threats that may not be evident in the
standard parallel shock metrics or supervisory outlier tests.
Response (audited)
We are not a trading bank and so have a low appetite for those market risks which we do take, with clear
limits set for net interest income and economic value sensitivity. These limits are sufficient to allow
efficient operational management of financial hedging.
Interest rate risk
We benefit from natural offsetting between certain assets and liabilities, which may be based on both the
contractual and behavioural characteristics of these positions. Where natural hedging is insufficient, we
hedge net interest rate risk exposures appropriately, including, where necessary, with the use of
derivatives. We enter into derivatives only for hedging purposes and not as part of customer transactions
or for speculative purposes.
Our Treasury and Prudential Risk teams work closely together to ensure that risks are identified and
managed appropriately and that we are well-positioned to avoid losses outside our appetite, in the event
of unexpected market moves.
Foreign exchange exposure
We have very limited exposure to foreign exchange risk. Foreign currency denominated assets and
liabilities are matched off closely in each of the currencies we operate, and we eliminate our foreign
exchange exposure as far as is practical on a daily basis. In any event the risk is strictly capped at 2% of our
capital base. We offer business current accounts in foreign currency and foreign exchange facilities to
facilitate customer requirements only.
Monitoring/reporting
We measure interest rate risk exposure using methods including the following:
\u2022 interest rate gaps: calculating the net difference between total assets and total liabilities across a range
of time buckets
\u2022 economic value sensitivity: calculating repricing mismatches across our assets and liabilities over the
horizon of our balance sheet and then evaluating the change in value arising from an instantaneous 2%
change in the yield curve in both directions, taking into consideration any embedded customer
optionality. Our economic value sensitivity risk appetite scenario is based on an instantaneous parallel
rate movement of 2% at all repricing maturities, which is widely considered severe but plausible.
Additionally, we evaluate the PRA\u2019s outlier test in line with regulatory requirements
\u2022 net interest income sensitivity: calculating repricing mismatches across our assets and liabilities over a
one-year horizon and then evaluating the change in net income arising from an instantaneous 2%
change in the yield curve in both directions. Our net interest income risk appetite scenario is based on
an instantaneous parallel rate movement of 2% at all repricing dates, which is widely considered severe
but plausible. We also assess basis risk by considering divergences between the Bank of England base
rate and the Sterling Overnight Index Average. (SONIA.).
Interest rate risk
Table 25 sets out the interest rate risk repricing gaps of our balance sheet in the specified time buckets, indicating how much of each type of asset and liability reprices in the indicated periods, after applying expected
pre-repayments in line with our policy.
A positive interest rate sensitivity gap exists when more assets than liabilities reprice during a given period. A positive gap tends to benefit net interest income in an environment where interest rates are rising;
however, the actual effect will depend on multiple factors, including actual repayment dates and interest rate sensitivities within the periods. The converse is true for a negative interest rate sensitivity gap.
Table 25: Behavioural repricing balance sheet
31 December 2024
Up to
3 months
\u00a3\u2019million
3 to 6 months
\u00a3\u2019million
6 to 12 months
\u00a3\u2019million
1 to 5 years
\u00a3\u2019million
Over 5 years
\u00a3\u2019million
Non-interest
bearing
\u00a3\u2019million
Total
\u00a3\u2019million
Cash and balances at central banks 2,750 \u2013 \u2013 \u2013 \u2013 61 2,811
Loans and advances to customers 3,407 502 1,053 4,006 44 1 9,013
Investment securities (AC & FVOCI) 1,861 320 130 2,070 109 \u2013 4,490
Other assets \u2013 \u2013 \u2013 \u2013 \u2013 1,268 1,268
Total assets 8,018 822 1,183 6,076 153 1,330 17,582
Deposits from customers (7,4 49) (1,017) (807) (5,185) \u2013 \u2013 (14,458)
Deposits from BoE and Repos (791) \u2013 \u2013 \u2013 \u2013 \u2013 (791)
Debt \u2013 \u2013 \u2013 (675) \u2013 \u2013 (675)
Other liabilities \u2013 \u2013 \u2013 \u2013 \u2013 (475) (475)
Shareholders\u2019 funds (13) (13) (27) (214) \u2013 (916) (1,183)
Total liabilities (8,253) (1,030) (834) (6,074) \u2013 (1,391) (17,582)
Interest rate derivatives (123) (150) (50) 373 (50) \u2013 \u2013
Interest rate sensitivity gap (358) (358) 299 375 103 (61) \u2013
Cumulative gap (358) (716) (417) (42) 61 \u2013 \u2013
Up to 3 months \u00a3\u2019million 3 to 6 months \u00a3\u2019million 6 to 12 months \u00a3\u2019million 1 to 5 years \u00a3\u2019million Over 5 years \u00a3\u2019million Non-interest bearing \u00a3\u2019million Total \u00a3\u2019million Cash and balances at central banks 3,817 \u2013 \u2013 \u2013 \u2013 74 3,891 Loans and advances to customers 3,803 860 1,499 6,063 71 1 12,297 Investment securities (AC & FVOCI) 2,029 3 154 2,642 51 \u2013 4,879 Other assets \u2013 \u2013 \u2013 \u2013 \u2013 1,178 1,178 Total assets 9,649 863 1,653 8,705 122 1,253 22,245 Deposits from customers (6,829) (734) (1,607) (5,897) (556) \u2013 (15,623) Deposits from BoE and Repos (4,241) \u2013 \u2013 \u2013 \u2013 \u2013 (4,241) Debt \u2013 \u2013 \u2013 (544) (150) \u2013 (694) Other liabilities \u2013 \u2013 \u2013 \u2013 \u2013 (553) (553) Shareholders\u2019 funds (24) (23) (47) (374) \u2013 (667) (1,134) Total liabilities (11,070) (757) (1,654) (6,815) (706) (1,220) (22,245) Interest rate derivatives (145) (2) \u2013 (3) 150 \u2013 \u2013 Interest rate sensitivity gap (1,589) 104 \u2013 1,887 (434) 33 \u2013 Cumulative gap (1,589) (1,485) (1,486) 401 (33) \u2013 (4,192) The below shows the sensitivity arising from the regulatory scenario of a +200bps and -200bps parallel interest rate shock for a one-year forecasting period upon projected net interest income. Table 26: NII sensitivity (audited) 200bps increase \u00a3\u2019million 200bps decrease \u00a3\u2019million At 31 December 2024 19.3 (19.9) At 31 December 2023 (13.8) 14.3 There is no material difference between the interest rate risk profile for the Group and that for the Company", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-8": { "value": "935400000.0", "decimals": -5, "dimensions": { "concept": "ifrs-full:RevenueFromInterest", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-9": { "value": "855700000.0", "decimals": -5, "dimensions": { "concept": "ifrs-full:RevenueFromInterest", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-10": { "value": "557500000.0", "decimals": -5, 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"ifrs-full:PaymentsOfLeaseLiabilitiesClassifiedAsFinancingActivities", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-264": { "value": "23000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:PaymentsOfLeaseLiabilitiesClassifiedAsFinancingActivities", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-265": { "value": "0.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:ProceedsFromIssuingShares", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-266": { "value": "150000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:ProceedsFromIssuingShares", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-267": { "value": "-0.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:PaymentsForShareIssueCosts", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-268": { "value": "6000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:PaymentsForShareIssueCosts", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-269": { "value": "0.0", "decimals": -6, "dimensions": { "concept": "metrobankholdingsplc:IssuanceOfDebtSecuritiesClassifiedAsFinancingActivities", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-270": { "value": "175000000.0", "decimals": -6, "dimensions": { "concept": "metrobankholdingsplc:IssuanceOfDebtSecuritiesClassifiedAsFinancingActivities", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-271": { "value": "-0.0", 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"ifrs-full:CashAndCashEquivalents", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-280": { "value": "3891000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-284": { "value": "
1. Basis of preparation and significant accounting policies
This section sets out the Group\u2019s (\u2018our\u2019 or \u2018we\u2019) accounting policies which relate to the financial statements
as a whole. Where an accounting policy relates specifically to a note then the related accounting policy is
set out within that note. All policies have been consistently applied to all the years presented unless stated
otherwise.
1.1 General information
Metro Bank Holdings PLC (the \u2018Company\u2019) is the holding company of Metro Bank PLC, which provides
retail and commercial banking services in the UK . Metro Bank Holdings PLC is a public limited liability
company incorporated and domiciled in England and Wales under the Companies Act 2006 (Company
number 14387040) and is listed on the London Stock Exchange (LON:MTRO). The address of its registered
office is One Southampton Row, London, WC1B 5HA.
1.2 Basis of preparation
The consolidated financial statements of the Company together with its subsidiaries (the \u2018Group\u2019) have
been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the
UK, interpretations issued by the IFRS Interpretations Committee and the Companies Act 2006 applicable
to companies reporting under IFRSs.
The consolidated financial statements of the Group and Company were authorised by the Board for issue
on 22 April 2025.
The financial information has been prepared under the historical cost convention, as modified by the
revaluation of certain financial assets and liabilities at fair value through profit or loss and other
comprehensive income. Fair value is defined as the price that would be received or paid in an orderly
transaction between market participants at the measurement date.
Certain disclosures required under IFRS 7 \u2018Financial instruments: disclosures\u2019 and IAS 1 \u2018Presentation of
financial statements\u2019 have been included within the Risk report on pages 121 to 150. Where information is
marked as audited, it is incorporated into these financial statements and it is covered by the Independent
auditor\u2019s report.
The Directors consider that it is appropriate to continue to adopt the going concern basis of accounting in
preparing the financial statements. In reaching this assessment, the Directors have considered projections
for the Group\u2019s capital and funding position as well as other principal risks. As part of this process the
Directors have considered and approved the Group\u2019s most recent Long-Term Plan including severe but
plausible downside scenarios. The Directors also considered the key assumptions and uncertainties that
feed into these plans alongside management actions and mitigants that would be available if required.
Under all scenarios considered, the Directors believe the Group to remain a going concern on the basis
that it maintains sufficient resources (including liquidity and capital) to be able to continue to operate for
the foreseeable future (considered to be at least 15 months from the date of these financial statements).
The Directors do not consider there to be any material uncertainties with regards to the assessment on
going concern. Further details on the assessment undertaken by the Directors is set out in the Viability
statement and going concern section on pages 46 and 47.
Basis of consolidation
Our consolidated financial statements include the results for all entities which we control (details of our
subsidiaries can be found in note 3 to the Company financial statements on page 217). Controlled entities
are all entities to which we are exposed, or have rights, to variable returns from our involvement with the
entity and have the ability to affect those returns through our power over it. An assessment of control is
performed on an ongoing basis.
Our controlled entities are consolidated from the date on which we establish control until the date that
control ceases. The acquisition method of accounting is used to account for business combinations other
than those under common control.
Post-acquisition, income and expenses are included in the consolidated income statement on a line-by-line
basis in accordance with the accounting policies set out herein, adjusting for any intra-group transactions
which are eliminated in full upon consolidation.
In publishing the Company financial statements here together with the Group financial statements, we
have adopted the exemption in section 408(3) of the Companies Act 2006. This means we have chosen
not to present a Company statement of comprehensive income and related notes as part of these
financial statements.
Insertion of Metro Bank Holdings PLC
To meet the Bank of England\u2019s resolution requirements, on 19 May 2023, Metro Bank Holdings PLC was
inserted as the new ultimate holding company and listed entity of the Group. Prior to this date Metro Bank
PLC was both a banking entity and the ultimate parent company of the Group, but has subsequently
become a 100% subsidiary of Metro Bank Holdings PLC.
The insertion of Metro Bank Holdings PLC was treated as a business combination under common control,
with the Group controlled by the same parties both before and after the insertion. Combinations under
common control are outside the scope of IFRS 3 \u2018Business Combinations\u2019 and accordingly, the insertion
was not recognised at fair value and no goodwill or fair value acquisition adjustments were recognised.
The Group had instead applied the predecessor accounting approach as this most faithfully represented
the substance of the facts and circumstances of the series of transactions that comprised the insertion of
Metro Bank Holdings PLC. In applying this approach, the Group had used the carrying amounts in Metro
Bank PLC\u2019s consolidated financial statements at the date of transfer to determine the value of the assets
and liabilities transferred.
1.3 Functional and presentation currency These financial statements are presented in pounds sterling (\u00a3), which is our functional currency. All amounts have been rounded to the nearest \u00a31 million and \u00a30.1 million for balance sheet and income statement line items respectively, except where otherwise indicated. 1.4 Cash flow statement The cash flow statement shows the changes in cash and cash equivalents arising during the year from operating activities, investing activities and financing activities. The cash flows from operating activities are determined by using the indirect method. Under that method, loss before tax is adjusted for non-cash items and changes in other assets and liabilities to determine net cash inflows or outflows from operating activities. Cash flows from investing and financing activities are determined using the direct method which directly reports the cash effects of the transactions. 1.5 Changes in accounting policies and presentational amendments During the year, there have not been any changes in any accounting policies or disclosures that have had a material impact on our financial statements. 1.6 Future accounting developments IFRS 18 will replace IAS 1 Presentation of Financial Statements and applies for annual reporting periods beginning on or after 1 January 2027. Whilst early application of the standard is permitted, the Group has not early adopted them in preparing these consolidated financial statements. The Group is still in the process of assessing the potential impact of this standard on presentation and disclosures. 1.7 Segmental reporting IFRS 8 \u2018Operating Segments\u2019 requires operating segments to be identified on the basis of internal reports and components of the Group which are regularly reviewed by the Chief Operating Decision Maker to allocate resources to segments and to assess their performance. For this purpose, the Chief Operating Decision Maker of the Group is our Board of Directors. The Board considers the results of the Group as a whole when assessing the performance of the Group and allocating resources, owing to our simple structure. Accordingly, the Group has a single operating segment. We operate solely within the UK and, as such, no geographical analysis is required. We are not reliant on any single customer. 1.8 Foreign currency translation Transactions in a foreign currency are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Monetary items denominated in a foreign currency are translated using the closing rate as at the reporting date. Non-monetary items measured at historical cost denominated in a foreign currency are translated with the exchange rate as at the date of initial recognition; non-monetary items in a foreign currency that are measured at fair value are translated using the exchange rates at the date when the fair value was determined. Foreign currency differences arising on translation are recognised in other income. Gains and losses arising from foreign currency transactions offered to customers are also recognised in other income. 1.9 Critical accounting judgements and estimates The preparation of financial statements in conformity with IFRS requires us to make material judgements as well as estimates which, although based on our best assessment, by definition will seldom equal the actual results. Management believes that the underlying assumptions applied at 31 December 2024 are appropriate and that these consolidated financial statements therefore present our financial position and results fairly. The areas involving a higher degree of complexity, judgement or where estimates have a significant risk of resulting in a material adjustment to the carrying amounts within the next financial year are: Area Estimates Judgements Further details Recognition of deferred Estimates are based on Availability of future taxable Note 9 tax assets the Long-Term Plan profit against which tax losses (which include inherent carried forward can be utilised uncertainties) Measurement of ECL Multiple forward- Significant increase Note 30 looking scenarios in credit risk Use of MOs and PMAs Impairment of non- n/a Key assumptions used for VIU financial assets calculations
Accounting policy
We recognise interest income and expense for all interest\u2013bearing financial instruments within
\u2018interest income\u2019 and \u2018interest expense\u2019 in the income statement using the effective interest rate
method. The effective interest rate method is a method of calculating the amortised cost of a
financial asset or a financial liability and of allocating the interest income or interest expense over
the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash payments or receipts through the expected life of the financial instrument to the net carrying
amount of the financial asset or financial liability. When calculating the effective interest rate we
estimate cash flows considering all contractual terms of the financial instrument (for example,
prepayment options) but do not consider future credit losses except for POCI assets.
The calculation includes all fees paid or received between parties to the contract that are an
integral part of the effective interest rate, transaction costs and all other premiums or discounts.
For loans that are credit impaired, interest income is calculated on the carrying amount of the loan
net of credit impairment.
Accounting policy
Fee and commission income is earned from a wide range of services we provide to our customers.
We account for fees and commissions as follows:
Product or service
Nature, timing and satisfaction of performance obligations and payment terms
Service charges and other We levy a range of standard charges and fees for account maintenance or
fee income specific account services. Where the fee is earned upon the execution of
a significant act at a point in time, for example CHAPS payment charges,
these are recognised as revenue when the act is completed for the
customer. Where the income is earned from the provision of services, for
example an account maintenance fee, this is recognised as revenue over
time when the service is delivered.
Safe deposit box Revenue is recognised over the period the customer has access to the
box from the date possession is taken. Safe deposit box fees are billed
on either a monthly or annual basis with a standard set price payable
dependent on the size of the box.
ATM and
interchange fees
Where we earn fees from our ATMs or from interchange this is
recognised at the point the service is delivered.
Expenses that are directly related and incremental to the generation of fee and commission income
are presented within fee and commission expense.
As disclosed in note 1, we provide services solely within the UK and therefore revenues are not
presented on a geographic basis. Revenue is grouped solely by contract-type as we believe this
best depicts how the nature, amount and timing of our revenue and cash flows are affected by
economic factors.
Accounting policy
Other income is accounted for as follows:
Product or service
Nature, timing and satisfaction of performance obligations and payment terms
Foreign currency transactions
Gains on foreign currency transactions is the spread earned on foreign
currency transactions performed for our customers along with any
associated fees. It is recognised at the point in time that the exchange is
executed.
Rental income Rental income is primarily earned from the letting out of surplus space in
some of our properties. The revenue is recognised on a straight-line basis
over the life of the lease.
Deferred grant income Deferred grant income relates to amounts recognised in relation to
the amounts drawn down against the Capability and Innovation Fund
(C&I) award (further details of which can be found in note 23). Income is
recognised in line with the delivery of the commitments we agreed to as
part of the bid.
Other income Other income primarily consists of hedge ineffectiveness, foreign
currency differences arising on translation and movements in financial
assets and liabilities held at fair value through profit and loss.
Accounting policy
Current tax
Our current tax comprises the expected tax payable or receivable on the taxable profit for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates
enacted or substantively enacted at the reporting date.
Where we have tax losses that can be relieved only by carry-forward against taxable profits of future periods, a deductible temporary difference arises. Those losses carried forward are set off against deferred
tax liabilities carried in the balance sheet.
Deferred tax
Deferred tax is recognised in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax
rates (and laws) that have been enacted or substantively enacted by the date of the balance sheet and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
The principal differences arise from trading losses, depreciation of property, plant and equipment and relief on research and development expenditure.
We recognise a deferred tax asset to the extent that it is probable that future taxable profits will be available against which they can be used and deferred tax liabilities are provided on taxable temporary
differences. Deferred tax assets and liabilities are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised or the deferred tax
liability settled.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets against current tax liabilities and where the deferred tax assets and liabilities relate to taxes
levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle on a net basis.
Accounting policy
Repurchase agreements
Where we sell financial assets subject to sale and repurchase agreements, the financial assets
are retained in their respective balance sheet categories, however they become encumbered
and are not available for transfer or sale. The associated liabilities are included in the repurchase
agreements line. The difference between the sale and repurchase price of repurchase agreements
is treated as interest and accrued over the life of the agreements using the effective interest
method as set out in note 2.
Other financial instruments
Our accounting policies in respect of our other financial instruments can be found in their
respective notes, where applicable.
Accounting policy
Cash and balances with other banks consists of both cash on hand and demand deposits, both at
other banks as well as the Bank of England. In addition, it includes highly liquid investments that are
readily convertible to known amounts of cash and which are subject to insignificant risk of changes
in value. Investment securities are only classified as cash equivalents if they have a short maturity
of three months or less from the date of acquisition and are in substance cash equivalents, e.g. debt
investments with fixed redemption dates that are acquired within a short period of their maturity.
Where cash is pledged as collateral and as such is not available on demand this is included within
other assets within note 17.
Accounting policy
Loans and advances to customers are classified as held at amortised cost. Our business model is
that customer lending is held to collect cash flows, with no sales expected in the normal course
of business. We aim to offer products with simple terms to customers, and as a result, all loans
comprise solely payments of principal and interest. Loans are initially recognised when cash is
advanced to the borrower at fair value \u2013 which is the cash consideration to originate the loan
including any transaction costs \u2013 and measured subsequently at amortised cost using the effective
interest rate method, which is detailed further in note 2. Interest on loans is included in the income
statement and is reported as \u2018Interest income\u2019. Expected credit losses (ECL) are reported as a
deduction from the carrying value of the loan. Changes to the ECL during the year are recognised
in the income statement as \u2018Expected credit loss expense\u2019.
Accounting policy
Our investment securities may be categorised as amortised cost, FVOCI or fair value through profit
and loss. Currently all investment securities are non-complex, with cash flows comprising solely
payments of principal and interest. We hold some securities to collect cash flows; other securities
are held to collect cash flows, and to sell if the need arises (e.g. to manage and meet day-to-day
liquidity needs). Therefore, we have a mixed business model and securities are classified as either
amortised cost or FVOCI as appropriate. We do not categorise any investment securities as fair
value through profit and loss.
Settlement date accounting is used when recording financial asset transactions where a trade is
settled through the regular settlement cycle for that particular investment.
Investment securities held at amortised cost
Investment securities held at amortised cost consist entirely of debt instruments. They are
accounted for using the effective interest method, less any impairment losses.
Investment securities held at FVOCI
Investment securities held at FVOCI consist entirely of debt instruments. Investment securities
held at FVOCI are initially recognised at fair value, which is the cash consideration including any
transaction costs, and measured subsequently at fair value with gains and losses being recognised
in other comprehensive income, except for impairment losses and foreign exchange gains and
losses, until the investment security is derecognised. Interest is calculated using the effective
interest method.
Accounting policy
Property, plant and equipment
Our property, plant and equipment primarily consists of investments and improvements in our store
network and is stated at cost less accumulated depreciation and any recognised impairment.
We depreciate property, plant and equipment on a straight-line basis to its residual value using the
following useful economic lives:
Leasehold improvements
Lower of the remaining life of the lease or the
useful life of the asset
Freehold land
Not depreciated
Buildings
Up to 50 years
Fixtures, fittings and equipment
5 years
IT hardware
3 to 5 years
We keep depreciation rates, methods and the residual values underlying the calculation of
depreciation of items of property, plant and equipment under review to take account of any change
in circumstances.
All items of property, plant and equipment are reviewed at the end of each reporting period for
indicators of impairment.
Right-of-use assets
All of our leases within the scope of IFRS 16 \u2018Leases\u2019 (other than those of low value) relate to our
stores and head office properties.
Upon the recognition of a lease liability (see note 22 for further details) a corresponding right-of-
use asset is recognised. This is adjusted for any initial direct costs incurred, lease incentives paid or
received and any restoration costs at the end of the lease (where applicable).
The right-of-use asset is depreciated on a straight-line basis over the life of the lease.
All right-of-use assets are reviewed at the end of each reporting period for indicators of
impairment.
Investment property
Investment property is also stated at cost less accumulated depreciation and any recognised
impairment. Depreciation is calculated on a consistent basis with that applied to land and buildings
as set out above.
Accounting policy
Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration
transferred over our interest in net fair value of the net identifiable assets, liabilities and contingent
liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree.
For the purpose of impairment assessment, goodwill acquired in a business combination is
allocated to each of our CGUs, or groups of CGUs, that is expected to benefit from the synergies of
the combination. Each unit or group of units to which the goodwill is allocated represents the lowest
level within the entity at which the goodwill is monitored for internal management purposes.
Goodwill is not amortised, however, it is tested for impairment at the end of each reporting period.
The recoverable amount of a CGU is the higher of its fair value less cost to sell, and the present
value of its expected future cash flows.
If the recoverable amount is less than the carrying value, an impairment loss is charged to the
income statement. Goodwill is stated at cost less accumulated impairment losses. Any impairment
is recognised immediately as an expense and is not subsequently reversed.
Other intangible assets
Software includes both purchased items and internally developed systems, which
consist principally of identifiable and directly associated internal colleague, contractor and other
costs.
Purchased intangible assets and costs directly associated with the development of systems are
capitalised as intangible assets where there is an identifiable asset which we control and which will
generate future economic benefits in accordance with IAS 38 \u2018Intangible Assets\u2019.
Costs to establish feasibility or to maintain existing performance are recognised as an expense.
Intangible assets are amortised on a straight-line basis within the income statement using the
following useful economic lives:
Core banking software
1
up to 20 years
Other banking software
3 to 10 years
Software licences
licence period
Brands
5 years
All intangible assets are reviewed at the end of each reporting period for indicators of impairment.
1. Core banking software consists of our central banking transaction platform. The original platform was assessed as
having a 20-year life due to it being the central component of our digital infrastructure. It was upgraded during 2019
with the upgrade assessed as having a 15-year life.
Accounting policy
Debt securities in issue are recognised initially at fair value, being proceeds less transaction costs.
Subsequently, debt securities are measured at amortised cost using the effective interest method.
Accounting policy
In accordance with our risk management strategy, to the extent not naturally hedged, we use
interest rate swaps to manage our exposure to interest rate risk. On adoption of IFRS 9 we chose to
continue applying the hedge accounting rules set out in IAS 39 \u2018Financial Instruments: Recognition
and Measurement\u2019 as we often chose to employ dynamic portfolio hedge accounting of interest
rate risk across fixed rate financial assets and fixed rate financial liabilities.
Where we are using interest rate swaps to hedge the changes in fair value attributable to the
interest rate risk of a recognised asset or liability that could affect profit or loss, we apply fair value
hedge accounting. If there is an effective hedge relationship, the hedged item is adjusted for fair
value changes in respect of the hedged risk. These fair value changes are recognised in the income
statement together with the fair value movements on the hedging instrument (the interest rate
swaps).
Hedge accounting is discontinued when a hedge ceases to be highly effective, a derivative expires
or is sold, the underlying hedged item matures or is repaid, or periodically if a new underlying
hedged item or hedging instrument is added to the hedge relationship. Where a fair value hedge
is de-designated (either due to becoming ineffective or as part of our dynamic approach to hedge
accounting) any hedge adjustments accrued to that point are amortised over the remaining life of
the hedged item.
At the inception of every hedge, we produce hedge documentation which identifies the hedged
risk, hedged item and hedging instrument. This documentation sets out the methodology used for
testing hedge effectiveness.
Accounting policy
At the inception of a contract we assess whether the contract contains a lease.
At the commencement of a lease we recognise a lease liability and right-of-use asset (see note 14
for further details). The lease liability is initially measured as the present value of the future lease
payments discounted at the rate implicit in the lease (where available) or our incremental cost of
borrowing. Generally we use our deemed incremental cost of borrowing as the discount rate.
Following initial recognition, the lease liability is measured using the effective interest method.
Where we are reasonably certain to exercise a break in the lease, only the lease payments up until
the date of the break are included.
We subsequently remeasure the lease liability when there is a change to an index or rate used or
when there is a change in expectation that we will exercise a purchase option or break clause or
if we extend the lease. When such an adjustment is made to the lease liability a corresponding
adjustment is made to the right-of-use asset.
Irrecoverable VAT on lease payments is excluded from the lease liability and is taken to the
income statement over the period which it is due. This is included within note 6, General operating
expenses, under \u2018occupancy expense\u2019.
We have elected not to recognise a lease liability and right-of-use assets for any leases that have a
term of less than 12 months, or are for an asset which is deemed to be of low value (item is worth
less than \u00a35,000). For these leases, the lease payments are recognised as an expense in the income
statement on a straight-line basis over the life of the lease.
All of our leases within the scope of IFRS 16 (other than those of low value) relate to our stores and
head office properties.
Accounting policy
Grants are recognised where there is reasonable assurance that we will both receive the grant and
will be able to comply with all the attached conditions. When the grant relates to an expense item,
it is recognised as income on a systematic basis over the periods that the related costs, for which it
is intended to compensate, are expensed. When the grant relates to the purchase of an asset, it is
recognised directly against the cost of the asset.
Accounting policy
We recognise provisions when it is probable that an outflow of economic benefits will be required
to settle a present legal or constructive obligation that has arisen as a result of past events and for
which a reliable estimate can be made. The provision is measured at its current present value.
Provision
Description
Customer We are committed to doing the right thing but occasionally we identify issues
remediation that have caused detriment as a result of our actions.
Where we have to refund costs to customers we provide for this at the point the
obligation arises. The amounts recognised include any associated interest due.
Dilapidations Dilapidations provisions are recognised in regard to certain properties we lease.
The majority of our stores and offices have an automatic right to renewal at
the end of the lease under the provisions of the Landlord and Tenant Act 1954.
Where this is the case we do not provide for restorations on these sites since
we have no intention of vacating at the end of the lease term. For sites that
are outside the Landlord and Tenant Act 1954, or sites within the Landlord and
Tenant Act 1954 where we think there is a chance we will vacate a site at the end
of its lease, a provision is made for dilapidations. The provision is made in line
with the underlying obligations contained within the lease.
Legal and Provisions are made relating to the outcome of legal cases and regulatory
regulatory investigations based on our best estimate of settlement following consultation
with our lawyers and advisors. The inclusion of a provision does not constitute
any admission of wrongdoing or legal liability. Details of individual cases are
provided where these are material to our financial statements and disclosure
would not be prejudicial to the outcome of the case.
Onerous Onerous contract provisions are recognised when the unavoidable costs of
contracts meeting the obligations under the contract exceed the economic benefits we
expect to be received under it. The provision is recognised as the net cost of
exiting from the contract, which is the lower of the cost of fulfilling it and any
compensation or penalties arising from failure to fulfil it.
Restructuring Restructuring provisions are recognised at the point we have developed
a detailed formal plan and we have raised a valid expectation that it will
be implemented. This is typically at the point the plan is announced to affected
colleagues.
Other
provisions
Other provisions consist of other sundry amounts that are provided for in the
ordinary course of our business.
Accounting policy
On issue of new shares, incremental directly attributable costs are shown in equity as a deduction
from the proceeds.
Accounting policy
The grant date fair value of options awarded to colleagues is recognised as an expense over
the period in which colleagues become unconditionally entitled to the options. The expense
(representing the value of the services received by us) is measured by reference to the fair value of
the awards granted on the date of the grant. The cost of the colleague services received in respect
of the awards granted is recognised in the consolidated income statement over the period that the
services are received, which is the vesting period. Graded vesting is applied where relevant.
Vesting conditions are limited to service and performance conditions. For performance-based
schemes, the relevant performance measures are projected to the end of the performance period
in order to determine the number of options expected to vest. This estimate of the performance
measures is used to determine the option fair value, discounted to present value. The Group revises
the number of options that are expected to vest, including an estimate of lapses at each reporting
date based on forecast performance measures. The impact of the revision to original estimates, if
any, is recognised in the income statement, with a corresponding adjustment to equity.
The fair value of colleague awards plans is calculated at the grant date using Black-Scholes and
Monte Carlo models. The resulting cost is charged to the income statement over the vesting period.
The value of the charge is adjusted to reflect expected and actual levels of vesting.
Accounting policy
We assess on a forward-looking basis the ECL associated with the assets carried at amortised cost and FVOCI and recognise a loss allowance for such losses at each reporting date.
Impairment provisions are driven by changes in the credit risk of loans and securities, with a provision for lifetime ECL recognised where the risk of default of an instrument has increased significantly. Risk of
default and ECL must incorporate forward-looking and macroeconomic information.
Loans and advances
Impairment models have been developed for our retail and commercial loan portfolios, with three core models: revolving products; fixed term loans; and mortgages. Expected credit losses are calculated for
drawn loans, and for committed lending.
The same broad calculation approach is applied for each core model. ECL are calculated by multiplying three main components, being the Probability of Default (PD), Loss Given Default (LGD) and the Exposure
at Default (EAD), discounted at the original effective interest rate.
Key model inputs, judgements and estimates include:
\u2022 consideration of when a SICR occurs
\u2022 PD, LGD and EAD as well as their modelled impact
\u2022 macroeconomic scenarios and weightings applied.
Significant increase in credit risk
IFRS 9 requires a higher level of ECL to be recognised for underperforming loans. This is considered based on a staging approach:
Stage
Description
ECL recognised
Stage 1 Financial assets that have had no significant increase in credit risk since initial recognition 12-month ECL
or that have low credit risk (high quality investment securities only) at the reporting date. Total losses expected on defaults which may occur within the next 12 months. Losses are
adjusted for probability-weighted macroeconomic scenarios.
Stage 2 Financial assets that have had a significant increase in credit risk since initial recognition Lifetime ECL
but that do not have objective evidence of impairment. Losses expected on defaults which may occur at any point in a loan\u2019s lifetime. Losses are
adjusted for probability-weighted macroeconomic scenarios.
Stage 3 Financial assets that are credit impaired at the reporting date. Lifetime ECL
A financial asset is credit impaired when it has met the definition of default. We define Losses expected on defaults which may occur at any point in a loan\u2019s lifetime. Losses are
default to have occurred when a loan is greater than 90 days past due or where the adjusted for probability-weighted macroeconomic scenarios.
borrower is considered unlikely to pay. Interest income is calculated on the carrying amount of the loan net of credit allowance.
POCI Financial assets that have been purchased and had objective evidence of being non- Lifetime ECL
performing or credit impaired at the point of purchase. At initial recognition, POCI assets do not carry an impairment allowance. Lifetime ECL
are incorporated into the calculation of the asset\u2019s effective interest rate. Subsequent
changes to the estimate of lifetime ECL are recognised as a loss allowance.
A SICR may be identified in a number of ways:
\u2022 Quantitative criteria \u2014 where the numerically calculated PD on a loan has increased significantly since initial recognition. This is assessed using detailed models which assess whether the lifetime PD at
observation is greater than the lifetime PD at origination by a portfolio specific threshold. Given the different nature of the products and the dissimilar level of lifetime PDs at origination, we implement
different thresholds by sub-products within each portfolio (term loans, revolving loan facilities and mortgages). The threshold is set at three times the median PD of the portfolio at origination.
\u2022 Qualitative criteria \u2014 instruments that are 30 days past due or more are allocated to Stage 2, regardless of the results of the quantitative analysis. In addition, instruments classified on the Early Warning List as
higher risk are allocated to Stage 2, regardless of the results of the quantitative analysis.
A loan will be considered to be \u2018non-performing\u2019 or \u2018credit impaired\u2019 when it meets our definition of default \u2014 that is to say, the loan is 90 days past due, or the borrower is considered unlikely to pay without
realisation of collateral. Unlikeliness to pay is assessed through the presence of triggers including the loan being in repossession, the customer having been declared bankrupt, or evidence of financial distress
leading to forbearance.
A loan may also be considered to be non-performing when it is subject to forbearance measures, consisting of concessions in relation to either:
\u2022 a modification of the previous terms and conditions of the loan which the borrower is not considered able to comply with
\u2022 a total or partial refinancing of a troubled debt contract that would not have been granted had the borrower not been in financial difficulties.
It may not be possible to identify a single discrete event which defines an asset as \u2018non-performing\u2019 or \u2018credit impaired\u2019. Instead, the combined effect of several events may cause financial assets to become
credit impaired.
Where an asset which has been classified as Stage 3 is showing improving trends and is no longer considered non-performing or credit impaired, a probation period of at least three consecutive months during
which the instrument should meet the criteria for exiting default must elapse before it is transferred to Stage 2.
Probability of default
PD represents the likelihood of a borrower defaulting on its financial obligation either over the next 12 months (for Stage 1 accounts), or over the remaining lifetime of the loan (for Stage 2 and 3 accounts).
A PD is calculated for all loans based on historical data and incorporates:
\u2022 credit quality scores
\u2022 life cycle trends depending on a loan\u2019s vintage
\u2022 factors indicating the quality of the vintage
\u2022 characteristics of the current and future economic environment.
Loss given default
LGD represents our expectation of the extent of a loss on a defaulted exposure and is expressed as a percentage considering expected recoveries on defaulted accounts. LGD rates have been modelled
considering a range of inputs, including:
\u2022 value of collateral on secured portfolios \u2014 a key driver of the expected recovery in the event of default
\u2022 expected haircut applied to the collateral value to reflect a forced sale discount
\u2022 price index forecasts applied to project collateral values into the future
\u2022 stress factors based on macroeconomic scenarios.
Exposure at default
This is the amount that we expect to be owed at the point of default. This is subject to judgement since a balance will not necessarily remain static between the balance sheet date and the point of expected
default. For example:
\u2022 interest should be accrued
\u2022 repayments may be received
\u2022 for a revolving product, further drawings may be taken between the current point in time and the point of default
\u2022 estimations of these factors will be incorporated into our estimate of EAD.
Retail PD, LGD and EAD are calculated and applied at an individual account level for secured lending. For unsecured lending, PD and EAD are calculated and applied at an individual account level, whilst LGD is
assessed at a portfolio level and applied to accounts on an individual basis.
Commercial PD and LGD for secured lending are calculated at a counterparty level, then applied at an account level. For commercial unsecured lending, LGD is assessed at a portfolio level and applied to
accounts on an individual basis. Commercial EAD is calculated and applied at account level.
Macroeconomic scenarios
The ECL recognised in the financial statements reflects the effect on ECL of a range of possible outcomes, calculated on a probability-weighted basis, based on a number of economic scenarios and
including management overlays where required. These scenarios are representative of our view of forecast economic conditions, sufficient to calculate unbiased ECL, and are designed to capture material
\u2018non-linearities\u2019 (i.e. where the increase in credit losses if conditions deteriorate exceeds the decrease in credit losses if conditions improve).
In the normal course of business, we use four scenarios. These represent a \u2018most likely outcome\u2019, the \u2018Baseline\u2019 scenario, and three, less likely, \u2018Outer\u2019 scenarios, referred to as an \u2018Upside\u2019, a \u2018Downside\u2019 and a
\u2018Severe Downside\u2019 scenario respectively. The Baseline scenario captures the most likely economic future; the Downside and Severe Downside scenarios reflect adverse economic conditions; and the Upside
scenario presents more favourable economic conditions.
Key scenario assumptions are set using data sourced from independent external economists. This helps ensure that the IFRS 9 scenarios are unbiased and maximise the use of independent information.
The following assumptions, considered to be the key drivers of ECL, have been used for the scenarios applied as at 31 December 2024 and 31 December 2023:
\u2022 UK interest rates (Bank of England base rate and five-year mortgage rate)
\u2022 UK unemployment rates
\u2022 UK HPI changes, year on year
\u2022 UK GDP changes, year on year
\u2022 UK commercial real estate index, year on year.
Macroeconomic scenarios impact the ECL calculation through varying PDs and LGDs. We use UK HPI to index mortgage collateral which has a direct impact on LGDs. Other metrics are considered to have a
direct impact on PDs and were selected following a search and data calibration exercise of possible drivers. A list of around fifteen potential drivers were initially considered, representing drivers which capture
trends in the economy at large, and may indicate economic trends which will impact UK borrowers. The list included variables which impact economic output, interest rates, inflation, share prices, borrower
income and the UK housing market. An algorithm was then used to choose the subset of drivers which had the greatest significance and predictive fit to our data.
Each scenario was determined by flexing the Baseline scenario, taking into account a number of factors in the global and UK economy such as commodity prices, global interest rates, UK investment spend and
exchange rates, as well as the possible impact of recessionary conditions or financial shocks. A simulation process was designed to determine the weighting to apply to each scenario based on its severity and
the range of possible scenarios for which that scenario was representative. A summary of each scenario and weighting used at 31 December 2024 is as follows:
\u2022 Baseline scenario: Reflects the projection of the median, or \u201850%\u2019 scenario, meaning that in the assessment there is an equal probability that the economy might perform better or worse than the baseline
forecast
\u2022 Upside scenario: This above-baseline scenario is designed so there is a 10% probability the economy will perform better than in this scenario, and a 90% probability it will perform worse
\u2022 Downside scenario: In this recession scenario, in which a deep downturn develops, there is a 90% probability the economy will perform better, and a 10% probability it will perform worse
\u2022 Severe Downside scenario: In this recession scenario, in which a deep downturn develops, there is a 96% probability the economy will perform better, and a 4% probability it will perform worse.
These assumptions are considered sufficient to capture any material non-linearities.
The weightings applied to each scenario at 31 December 2024 were Baseline \u2013 50%, Upside \u2013 20%, Downside \u2013 25% and Severe Downside scenario \u2013 5% (31 December 2023: Baseline \u2013 50%, Upside \u2013 20%,
Downside \u2013 25% and Severe Downside scenario \u2013 5%).
Economic variable assumptions
The year-end assumptions used for the ECL estimate as at 31 December 2024 and 31 December 2023 are as follows:
31 December 2024
31 December 2023
2025
2026
2027
2028
2024
2025
2026
2027
Interest rates (%) \u2013
Baseline
4.5%
4.2%
3.9%
4.0%
5.1%
4.7%
4.3%
4.2%
five-year mortgage rate
Upside
4.7%
4.3%
4.0%
4.0%
5.3%
4.7%
4.3%
4.2%
Downside
3.5%
2.4%
2.4%
3.1%
3.7%
2.7%
2.6%
2.6%
Severe downside
2.8%
2.1%
2.0%
2.4%
3.3%
2.2%
2.2%
2.2%
UK unemployment (%)
Baseline
4.4%
4.5%
4.6%
4.7%
4.6%
4.7%
4.7%
4.8%
Upside
3.8%
3.6%
3.8%
4.1%
4.1%
3.8%
3.9%
4.2%
Downside
6.3%
7. 2%
7. 3%
6.9%
6.5%
7.4%
7.4%
7.0%
Severe downside
7.5%
8.3%
8.2%
8.0%
7.7 %
8.5%
8.4%
8.1%
UK HPI \u2013
Baseline
2.2%
3.9%
2.6%
1.5%
(6.2%)
3.1%
4.7%
2.6%
% change year-on-year
Upside
16.6%
7.0%
0.1%
(2.6%)
7.0%
6.3%
2.1%
(1.5%)
Downside
(9.0%)
(5.6%)
1.9%
4.2%
(16.5%)
(6.3%)
4.0%
5.4%
Severe downside
(15.2%)
(9.6%)
2.3%
2.9%
(22.2%)
(10.3%)
4.4%
4.1%
UK GDP \u2013
Baseline
2.1%
1.2%
2.1%
1.4%
0.4%
1.0%
1.3%
1.4%
% change year-on-year
Upside
5.6%
1.4%
2.0%
1.5%
3.9%
1.2%
1.3%
1.4%
Downside
(3.5%)
1.5%
3.3%
1.4%
(5.6%)
1.3%
2.6%
1.4%
Severe downside
(4.6%)
0.1%
4.6%
2.3%
( 7.1%)
(0.2%)
4.2%
2.4%
UK commercial real estate index,
Baseline
(0.9%)
0.4%
(0.3%)
(1.3%)
(4.2%)
0.8%
1.7%
(0.4%)
year-on-year \u2013 % change
Upside
14.4%
2.3%
(3.3%)
(5.2%)
10.1%
3.3%
(1.3%)
(4.3%)
Downside
(16.0%)
(5.6%)
0.8%
2.0%
(18.7%)
(5.3%)
3.0%
3.4%
Severe downside
(25.1%)
(8.5%)
2.6%
1.2%
(26.9%)
( 7.4%)
4.9%
2.6%
BoE Interest Rate (%)
Baseline
4.1%
2.8%
2.5%
2.5%
4.6%
2.7%
2.3%
2.3%
Upside
4.3%
3.0%
2.6%
2.5%
4.8%
2.7%
2.3%
2.3%
Downside
2.7%
1.1%
1.4%
1.7%
3.2%
1.0%
1.2%
1.5%
Severe downside
2.1%
0.8%
0.8%
0.9%
2.6%
0.7%
0.5%
0.7%
Following the initial four-year projection period, the Upside, Downside and Severe Downside scenarios converge to the Baseline scenario. The rate of convergence varies based on the macroeconomic factor,
but at a minimum convergence takes place three years from the initial four-year projection period. We recognise that applying the above scenarios will not always be sufficient to determine an appropriate ECL
in all economic environments. The scenarios applied comprise our best estimate of economic impacts on the ECL, and the actual outcome may be significantly different.
Investment securities and other financial assets
Impairment provisions have been calculated based on our best estimate of ECL on other assets classified and measured at amortised cost and fair value through other comprehensive income. These include
investment securities, cash held at banks and other financial assets. These impairment provisions are not material.
Accounting policy
To meet the financial needs of our customers, we enter into various irrevocable commitments.
These generally consist of financial guarantees, letters of credit and other undrawn commitments
to lend.
Even though these obligations are not recognised on the balance sheet, they do contain credit risk
and an ECL is calculated and recognised for them (see note 30).
When these commitments are drawn down or called upon, and meet the recognition criteria as
detailed in note 12, these are recognised within our loans and advances to customers.
Accounting policy
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net
basis or realise the asset and settle the liability simultaneously.
Accounting policy
Determination of fair value
\u2018Fair value\u2019 is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the
most advantageous market to which we have access at that date. The fair value of a liability reflects its non-performance risk.
In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques, as summarised below:
\u2022 Level 1 financial instruments \u2013 Those where the inputs used in the valuation are unadjusted quoted prices from active markets for identical assets or liabilities that we have access to at the measurement
date. We consider markets as active only if there are sufficient trading activities with regards to the volume and liquidity of the identical assets or liabilities and when there are binding and exercisable price
quotes available on the balance sheet date.
\u2022 Level 2 financial instruments \u2013 Those where the inputs that are used for valuation are significant, and are derived from directly or indirectly observable market data available over the entire period of the
instrument\u2019s life. Such inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical instruments in inactive markets and observable inputs other than quoted prices,
such as interest rates and yield curves, implied volatilities, and credit spreads. In addition, adjustments may be required for the condition or location of the asset or the extent to which it relates to items that
are comparable to the valued instrument. However, if such adjustments are based on unobservable inputs which are significant to the entire measurement, we will classify the instruments as Level 3.
\u2022 Level 3 financial instruments \u2013 Those that include one or more unobservable inputs that are significant to the measurement as whole.
", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-286": { "value": "1.1 General information Metro Bank Holdings PLC (the \u2018Company\u2019) is the holding company of Metro Bank PLC, which provides retail and commercial banking services in the UK . Metro Bank Holdings PLC is a public limited liability company incorporated and domiciled in England and Wales under the Companies Act 2006 (Company number 14387040) and is listed on the London Stock Exchange (LON:MTRO). The address of its registered office is One Southampton Row, London, WC1B 5HA. ", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-2": { "value": "Metro Bank Holdings PLC", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-281": { "value": "Metro Bank Holdings PLC", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-3": { "value": "provides retail and commercial banking services in the UK ", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-282": { "value": "UK ", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-4": { "value": "public limited liability", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-5": { "value": "England and Wales", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-283": { "value": "England and Wales", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-6": { "value": "One Southampton Row, London, WC1B 5HA", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-287": { "value": "1.2 Basis of preparation The consolidated financial statements of the Company together with its subsidiaries (the \u2018Group\u2019) have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the UK, interpretations issued by the IFRS Interpretations Committee and the Companies Act 2006 applicable to companies reporting under IFRSs. The consolidated financial statements of the Group and Company were authorised by the Board for issue on 22 April 2025. The financial information has been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities at fair value through profit or loss and other comprehensive income. Fair value is defined as the price that would be received or paid in an orderly transaction between market participants at the measurement date. Certain disclosures required under IFRS 7 \u2018Financial instruments: disclosures\u2019 and IAS 1 \u2018Presentation of financial statements\u2019 have been included within the Risk report on pages 121 to 150. Where information is marked as audited, it is incorporated into these financial statements and it is covered by the Independent auditor\u2019s report. The Directors consider that it is appropriate to continue to adopt the going concern basis of accounting in preparing the financial statements. In reaching this assessment, the Directors have considered projections for the Group\u2019s capital and funding position as well as other principal risks. As part of this process the Directors have considered and approved the Group\u2019s most recent Long-Term Plan including severe but plausible downside scenarios. The Directors also considered the key assumptions and uncertainties that feed into these plans alongside management actions and mitigants that would be available if required. Under all scenarios considered, the Directors believe the Group to remain a going concern on the basis that it maintains sufficient resources (including liquidity and capital) to be able to continue to operate for the foreseeable future (considered to be at least 15 months from the date of these financial statements). The Directors do not consider there to be any material uncertainties with regards to the assessment on going concern. Further details on the assessment undertaken by the Directors is set out in the Viability statement and going concern section on pages 46 and 47. Basis of consolidation Our consolidated financial statements include the results for all entities which we control (details of our subsidiaries can be found in note 3 to the Company financial statements on page 217). Controlled entities are all entities to which we are exposed, or have rights, to variable returns from our involvement with the entity and have the ability to affect those returns through our power over it. An assessment of control is performed on an ongoing basis. Our controlled entities are consolidated from the date on which we establish control until the date that control ceases. The acquisition method of accounting is used to account for business combinations other than those under common control. Post-acquisition, income and expenses are included in the consolidated income statement on a line-by-line basis in accordance with the accounting policies set out herein, adjusting for any intra-group transactions which are eliminated in full upon consolidation. In publishing the Company financial statements here together with the Group financial statements, we have adopted the exemption in section 408(3) of the Companies Act 2006. This means we have chosen not to present a Company statement of comprehensive income and related notes as part of these financial statements. Insertion of Metro Bank Holdings PLC To meet the Bank of England\u2019s resolution requirements, on 19 May 2023, Metro Bank Holdings PLC was inserted as the new ultimate holding company and listed entity of the Group. Prior to this date Metro Bank PLC was both a banking entity and the ultimate parent company of the Group, but has subsequently become a 100% subsidiary of Metro Bank Holdings PLC. The insertion of Metro Bank Holdings PLC was treated as a business combination under common control, with the Group controlled by the same parties both before and after the insertion. Combinations under common control are outside the scope of IFRS 3 \u2018Business Combinations\u2019 and accordingly, the insertion was not recognised at fair value and no goodwill or fair value acquisition adjustments were recognised. The Group had instead applied the predecessor accounting approach as this most faithfully represented the substance of the facts and circumstances of the series of transactions that comprised the insertion of Metro Bank Holdings PLC. In applying this approach, the Group had used the carrying amounts in Metro Bank PLC\u2019s consolidated financial statements at the date of transfer to determine the value of the assets and liabilities transferred. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-323": { "value": "The consolidated financial statements of the Company together with its subsidiaries (the \u2018Group\u2019) have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the UK, interpretations issued by the IFRS Interpretations Committee and the Companies Act 2006 applicable to companies reporting under IFRSs. ", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-324": { "value": "The Directors consider that it is appropriate to continue to adopt the going concern basis of accounting in preparing the financial statements. In reaching this assessment, the Directors have considered projections for the Group\u2019s capital and funding position as well as other principal risks. As part of this process the Directors have considered and approved the Group\u2019s most recent Long-Term Plan including severe but plausible downside scenarios. The Directors also considered the key assumptions and uncertainties that feed into these plans alongside management actions and mitigants that would be available if required. Under all scenarios considered, the Directors believe the Group to remain a going concern on the basis that it maintains sufficient resources (including liquidity and capital) to be able to continue to operate for the foreseeable future (considered to be at least 15 months from the date of these financial statements). The Directors do not consider there to be any material uncertainties with regards to the assessment on going concern. Further details on the assessment undertaken by the Directors is set out in the Viability statement and going concern section on pages 46 and 47. ", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-325": { "value": "Basis of consolidation Our consolidated financial statements include the results for all entities which we control (details of our subsidiaries can be found in note 3 to the Company financial statements on page 217). Controlled entities are all entities to which we are exposed, or have rights, to variable returns from our involvement with the entity and have the ability to affect those returns through our power over it. An assessment of control is performed on an ongoing basis. Our controlled entities are consolidated from the date on which we establish control until the date that control ceases. The acquisition method of accounting is used to account for business combinations other than those under common control. Post-acquisition, income and expenses are included in the consolidated income statement on a line-by-line basis in accordance with the accounting policies set out herein, adjusting for any intra-group transactions which are eliminated in full upon consolidation. In publishing the Company financial statements here together with the Group financial statements, we have adopted the exemption in section 408(3) of the Companies Act 2006. This means we have chosen not to present a Company statement of comprehensive income and related notes as part of these financial statements. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-288": { "value": "
1.3 Functional and presentation currency
These financial statements are presented in pounds sterling (\u00a3), which is our functional currency. All
amounts have been rounded to the nearest \u00a31 million and \u00a30.1 million for balance sheet and income
statement line items respectively, except where otherwise indicated.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-289": { "value": "
1.4 Cash flow statement
The cash flow statement shows the changes in cash and cash equivalents arising during the year from
operating activities, investing activities and financing activities.
The cash flows from operating activities are determined by using the indirect method. Under that method,
loss before tax is adjusted for non-cash items and changes in other assets and liabilities to determine net
cash inflows or outflows from operating activities. Cash flows from investing and financing activities are
determined using the direct method which directly reports the cash effects of the transactions.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCashFlowsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-290": { "value": "
1.5 Changes in accounting policies and presentational amendments
During the year, there have not been any changes in any accounting policies or disclosures that have had
a material impact on our financial statements.
1.6 Future accounting developments
IFRS 18 will replace IAS 1 Presentation of Financial Statements and applies for annual reporting periods
beginning on or after 1 January 2027. Whilst early application of the standard is permitted, the Group has
not early adopted them in preparing these consolidated financial statements. The Group is still in the
process of assessing the potential impact of this standard on presentation and disclosures.
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-7": { "value": "1.6 Future accounting developments IFRS 18 will replace IAS 1 Presentation of Financial Statements and applies for annual reporting periods beginning on or after 1 January 2027. Whilst early application of the standard is permitted, the Group has not early adopted them in preparing these consolidated financial statements. The Group is still in the process of assessing the potential impact of this standard on presentation and disclosures. ", "dimensions": { "concept": "ifrs-full:DescriptionOfExpectedImpactOfInitialApplicationOfNewStandardsOrInterpretations", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-291": { "value": "
1.7 Segmental reporting
IFRS 8 \u2018Operating Segments\u2019 requires operating segments to be identified on the basis of internal reports
and components of the Group which are regularly reviewed by the Chief Operating Decision Maker to
allocate resources to segments and to assess their performance. For this purpose, the Chief Operating
Decision Maker of the Group is our Board of Directors.
The Board considers the results of the Group as a whole when assessing the performance of the Group
and allocating resources, owing to our simple structure. Accordingly, the Group has a single operating
segment. We operate solely within the UK and, as such, no geographical analysis is required. We are not
reliant on any single customer.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-292": { "value": "
1.8 Foreign currency translation
Transactions in a foreign currency are translated into the functional currency using the exchange rates
prevailing at the date of the transaction.
Monetary items denominated in a foreign currency are translated using the closing rate as at the reporting
date. Non-monetary items measured at historical cost denominated in a foreign currency are translated
with the exchange rate as at the date of initial recognition; non-monetary items in a foreign currency that
are measured at fair value are translated using the exchange rates at the date when the fair value was
determined.
Foreign currency differences arising on translation are recognised in other income. Gains and losses
arising from foreign currency transactions offered to customers are also recognised in other income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-382": { "value": "
1.9 Critical accounting judgements and estimates
The preparation of financial statements in conformity with IFRS requires us to make material judgements
as well as estimates which, although based on our best assessment, by definition will seldom equal the
actual results. Management believes that the underlying assumptions applied at 31 December 2024 are
appropriate and that these consolidated financial statements therefore present our financial position and
results fairly. The areas involving a higher degree of complexity, judgement or where estimates have a
significant risk of resulting in a material adjustment to the carrying amounts within the next financial year
are:
Area
Estimates
Judgements
Further details
Recognition of deferred Estimates are based on Availability of future taxable Note 9
tax assets the Long-Term Plan profit against which tax losses
(which include inherent carried forward can be utilised
uncertainties)
Measurement of ECL
Multiple forward-
Significant increase Note 30
looking scenarios in credit risk
Use of MOs and PMAs
Impairment of non-
n/a
Key assumptions used for VIU
Note 15
financial assets calculations
Critical accounting judgement
Measurement of the expected credit loss allowance
The measurement of ECL is complex and involves the use of significant judgements. We consider that the following represent key judgements in respect of the measurement of the ECL.
Significant increase in credit risk
IFRS 9 requires a higher level of ECL to be recognised for under-performing loans as a lifetime ECL is recognised compared to a 12-month ECL for performing loans. This is considered based on a staging
approach. Financial assets that have had no SICR since initial recognition, or that have low credit risk at the reporting date, are considered to be performing loans and are classified as \u2018Stage 1\u2019. Losses are
calculated based on our expectation of defaults which may occur within the next 12 months. Assets which are considered to have experienced a SICR since initial recognition, but that do not have objective
evidence of impairment, are classified as \u2018Stage 2\u2019. Losses are calculated based on defaults which may occur at any point in the asset\u2019s lifetime.
Judgement is required to determine when a SICR has occurred. An assessment of whether credit risk has increased significantly since initial recognition, resulting in transfer to Stage 2, is performed at each
reporting period by considering the change in the PD expected over the remaining life of the financial instrument. The assessment explicitly or implicitly compares the PD occurring at the reporting date
compared to that at initial recognition, taking into account reasonable and supportable information, including information about past events, current conditions and future economic conditions.
Use of Post Model Adjustments and Overlays
We have applied expert judgement to the measurement of the ECL in the form of Post Model Adjustments (PMAs) and Management Overlays (MOs).
Post Model Adjustments
PMAs refer to increases/decreases in ECL to address known model limitations, either in model methodology or model inputs. These rely on analysis of model inputs and parameters to determine the change
required to improve model accuracy. These may be applied at an aggregated level, however they will usually be applied at account level.
Model Overlays
MOs reflect management judgement. These rely more heavily on expert judgement and will usually be applied at an aggregated level. For example, where recent changes in market and economic conditions
have not yet been captured in the macroeconomic factor inputs to models (e.g., industry \u2013 specific stress event).
The appropriateness of PMAs and MOs is subject to rigorous review and challenge, including review by the Audit Committee (see page 66).
ECL assessment
We have applied PMAs in the assessment of ECL. PMAs supplement the models to account for where there are limitations in model methodology or data inputs and/or to mitigate downsides risks which are not
fully captured through the economic scenarios. The appropriateness of PMAs has been subject to rigorous review and challenge, including review by our Model Governance Committee, Impairment Committee
and Audit Committee.
The level of PMAs has reduced in 2024 with the total percentage of ECL stock standing at 10% as at 31 December 2024 (31 December 2023: 12%). There are no MOs being used as at 31 December 2024.
PMAs have been reassessed during the financial year to ensure an appropriate level of ECL to account for the high level of macroeconomic uncertainty, following the cost of living pressures, higher interest
rates, and potential property price falls.
PMAs make up \u00a318.7 million of the ECL stock as at 31 December 2024 (31 December 2023: \u00a323.4 million) and comprise:
\u2022 Macroeconomic correlation uncertainty \u2014 This PMA was raised in Q4 2024 to reflect the uncertainty risk and the potential adverse effects of significant government support that was in place during and
following the Covid period and the subsequent growth in SME debt which may not be fully reflected in model outputs (31 December 2024: \u00a311.5 million; 31 December 2023: nil).
\u2022 Significant increase in credit risk (SICR) adjustment overlay \u2014 The SICR model for the RateSetter portfolio is resulting in an overstatement of Stage 2 assets and a negative PMA is in place to account for this.
These overlays will be removed once the IFRS9 PD Annual Model Review is validated and implemented into production. The value of the PMA has reduced significantly during 2024 as a result of the rundown
of the portfolio (31 December 2024: \u00a32.2 million; 31 December 2023: \u00a37.4 million).
\u2022 CRE adjustment \u2014 Reflects potential downside risk in property price indices beyond the latest scenarios for the commercial property portfolios (31 December 2024: \u00a30.7 million; 31 December 2023:
\u00a33.4 million).
\u2022 Climate change impact \u2014 This adjustment was originally raised in 2021 has been revised for FY 2024 and reflects the impact of climate change on property values for the mortgage and commercial portfolios
(31 December 2024: \u00a32.8 million; 31 December 2023: \u00a33.2 million). The slight reduction in the overlay since December 2023 is due to the updated balance movements for all portfolios across the year.
\u2022 Mortgage model enhancements \u2014 A PMA reflects the new IFRS9 Mortgage PD and Staging models. This overlay will be removed once the IFRS9 PD Annual Model Reviews are validated and implemented into
production (31 December 2024: \u00a32.9 million; 31 December 2023: \u00a34.7 million).
\u2022 Commercial model enhancements \u2014 An overlay is held in anticipation of remaining model adjustments for the commercial portfolio (31 December 2024: \u00a34.6 million; 31 December 2023: \u00a33.5 million).
The increase in the overlay over the period is to reflect the impact from the Business Overdrafts portfolio growth which utilises the IFRS9 commercial models as a proxy for ECL assessment.
\u2022 Government guaranteed loans LGD adjustment \u2014 a \u00a31.6m negative PMA was raised for December 2024 month end (31 December 2023: Nil) in anticipation of changes to the LGD model.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-345": { "value": "2. Net interest income Accounting policy We recognise interest income and expense for all interest\u2013bearing financial instruments within \u2018interest income\u2019 and \u2018interest expense\u2019 in the income statement using the effective interest rate method. The effective interest rate method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate we estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but do not consider future credit losses except for POCI assets. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. For loans that are credit impaired, interest income is calculated on the carrying amount of the loan net of credit impairment. Interest income
2024 2023
\u00a3\u2019million \u00a3\u2019million
Cash and balances held with other banks
193.1
120.9
Loans and advances to customers
586.2
599.9
Investment securities held at amortised cost
126.1
118.6
Investment securities held at FVOCI
18.3
6.8
Interest income calculated using the effective interest rate method
923.7
846.2
Derivatives in hedge relationships
11.7
9.5
Total interest income
935.4
855.7
Interest expense
2024 2023
\u00a3\u2019million \u00a3\u2019million
Deposits from customers
303.6
147. 8
Deposits from central banks
124.2
161.3
Debt securities
84.8
55.7
Lease liabilities
12.4
13.1
Repurchase agreements
26.5
50.1
Interest expense calculated using the effective interest rate method
551.5
428.0
Derivatives in hedge relationships
6.0
15.8
Total interest expense
55 7.5
443.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-293": { "value": "2. Net interest income Accounting policy We recognise interest income and expense for all interest\u2013bearing financial instruments within \u2018interest income\u2019 and \u2018interest expense\u2019 in the income statement using the effective interest rate method. The effective interest rate method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate we estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but do not consider future credit losses except for POCI assets. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. For loans that are credit impaired, interest income is calculated on the carrying amount of the loan net of credit impairment. Interest income
2024 2023
\u00a3\u2019million \u00a3\u2019million
Cash and balances held with other banks
193.1
120.9
Loans and advances to customers
586.2
599.9
Investment securities held at amortised cost
126.1
118.6
Investment securities held at FVOCI
18.3
6.8
Interest income calculated using the effective interest rate method
923.7
846.2
Derivatives in hedge relationships
11.7
9.5
Total interest income
935.4
855.7
Interest expense
2024 2023
\u00a3\u2019million \u00a3\u2019million
Deposits from customers
303.6
147. 8
Deposits from central banks
124.2
161.3
Debt securities
84.8
55.7
Lease liabilities
12.4
13.1
Repurchase agreements
26.5
50.1
Interest expense calculated using the effective interest rate method
551.5
428.0
Derivatives in hedge relationships
6.0
15.8
Total interest expense
55 7.5
443.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-409": { "value": "Accounting policy We recognise interest income and expense for all interest\u2013bearing financial instruments within \u2018interest income\u2019 and \u2018interest expense\u2019 in the income statement using the effective interest rate method. The effective interest rate method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate we estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but do not consider future credit losses except for POCI assets. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. For loans that are credit impaired, interest income is calculated on the carrying amount of the loan net of credit impairment. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceCostsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-402": { "value": "Accounting policy We recognise interest income and expense for all interest\u2013bearing financial instruments within \u2018interest income\u2019 and \u2018interest expense\u2019 in the income statement using the effective interest rate method. The effective interest rate method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate we estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but do not consider future credit losses except for POCI assets. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. For loans that are credit impaired, interest income is calculated on the carrying amount of the loan net of credit impairment. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-384": { "value": "Accounting policy We recognise interest income and expense for all interest\u2013bearing financial instruments within \u2018interest income\u2019 and \u2018interest expense\u2019 in the income statement using the effective interest rate method. The effective interest rate method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate we estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but do not consider future credit losses except for POCI assets. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. For loans that are credit impaired, interest income is calculated on the carrying amount of the loan net of credit impairment. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-326": { "value": "
Interest income
2024 2023
\u00a3\u2019million \u00a3\u2019million
Cash and balances held with other banks
193.1
120.9
Loans and advances to customers
586.2
599.9
Investment securities held at amortised cost
126.1
118.6
Investment securities held at FVOCI
18.3
6.8
Interest income calculated using the effective interest rate method
923.7
846.2
Derivatives in hedge relationships
11.7
9.5
Total interest income
935.4
855.7
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-360": { "value": "Interest income
2024 2023
\u00a3\u2019million \u00a3\u2019million
Cash and balances held with other banks
193.1
120.9
Loans and advances to customers
586.2
599.9
Investment securities held at amortised cost
126.1
118.6
Investment securities held at FVOCI
18.3
6.8
Interest income calculated using the effective interest rate method
923.7
846.2
Derivatives in hedge relationships
11.7
9.5
Total interest income
935.4
855.7
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-327": { "value": "
Interest expense
2024 2023
\u00a3\u2019million \u00a3\u2019million
Deposits from customers
303.6
147. 8
Deposits from central banks
124.2
161.3
Debt securities
84.8
55.7
Lease liabilities
12.4
13.1
Repurchase agreements
26.5
50.1
Interest expense calculated using the effective interest rate method
551.5
428.0
Derivatives in hedge relationships
6.0
15.8
Total interest expense
55 7.5
443.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-361": { "value": "Interest expense
2024 2023
\u00a3\u2019million \u00a3\u2019million
Deposits from customers
303.6
147. 8
Deposits from central banks
124.2
161.3
Debt securities
84.8
55.7
Lease liabilities
12.4
13.1
Repurchase agreements
26.5
50.1
Interest expense calculated using the effective interest rate method
551.5
428.0
Derivatives in hedge relationships
6.0
15.8
Total interest expense
55 7.5
443.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-294": { "value": "3. Net fee and commission income Accounting policy Fee and commission income is earned from a wide range of services we provide to our customers. We account for fees and commissions as follows:
Product or service
Nature, timing and satisfaction of performance obligations and payment terms
Service charges and other We levy a range of standard charges and fees for account maintenance or
fee income specific account services. Where the fee is earned upon the execution of
a significant act at a point in time, for example CHAPS payment charges,
these are recognised as revenue when the act is completed for the
customer. Where the income is earned from the provision of services, for
example an account maintenance fee, this is recognised as revenue over
time when the service is delivered.
Safe deposit box Revenue is recognised over the period the customer has access to the
box from the date possession is taken. Safe deposit box fees are billed
on either a monthly or annual basis with a standard set price payable
dependent on the size of the box.
ATM and
interchange fees
Where we earn fees from our ATMs or from interchange this is
recognised at the point the service is delivered.
Expenses that are directly related and incremental to the generation of fee and commission income are presented within fee and commission expense. As disclosed in note 1, we provide services solely within the UK and therefore revenues are not presented on a geographic basis. Revenue is grouped solely by contract-type as we believe this best depicts how the nature, amount and timing of our revenue and cash flows are affected by economic factors.
2024 2023
\u00a3\u2019million \u00a3\u2019million
Service charges and other fee income
38.6
36.8
Safe deposit box income
19.0
18.2
ATM and interchange fees
40.4
40.0
Fee and commission income
98.0
95.0
Fee and commission expense
(4.8)
(4.6)
Total net fee and commission income
93.2
90.4
", "dimensions": { "concept": "ifrs-full:DisclosureOfFeeAndCommissionIncomeExpenseExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-385": { "value": "Accounting policy Fee and commission income is earned from a wide range of services we provide to our customers. We account for fees and commissions as follows:
Product or service
Nature, timing and satisfaction of performance obligations and payment terms
Service charges and other We levy a range of standard charges and fees for account maintenance or
fee income specific account services. Where the fee is earned upon the execution of
a significant act at a point in time, for example CHAPS payment charges,
these are recognised as revenue when the act is completed for the
customer. Where the income is earned from the provision of services, for
example an account maintenance fee, this is recognised as revenue over
time when the service is delivered.
Safe deposit box Revenue is recognised over the period the customer has access to the
box from the date possession is taken. Safe deposit box fees are billed
on either a monthly or annual basis with a standard set price payable
dependent on the size of the box.
ATM and
interchange fees
Where we earn fees from our ATMs or from interchange this is
recognised at the point the service is delivered.
Expenses that are directly related and incremental to the generation of fee and commission income are presented within fee and commission expense. As disclosed in note 1, we provide services solely within the UK and therefore revenues are not presented on a geographic basis. Revenue is grouped solely by contract-type as we believe this best depicts how the nature, amount and timing of our revenue and cash flows are affected by economic factors. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFeeAndCommissionIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-295": { "value": "
4. Loss/gain on sale of assets
2024 2023
\u00a3\u2019million \u00a3\u2019million
Investment securities held at amortised cost
\u2013
2.9
Loan portfolios
(101.4)
(0.2)
Total net (loss)/gain on sale of assets
(101.4)
2.7
Loan portfolio sales
The loss on sale relates to \u00a32.5 billion of prime residential mortgages sold to NatWest Group plc.
Metro Bank completed the sale on 30 September 2024. We will continue to service the loans until the
contractual migration date recognising an amount payable of \u00a347 million as at 31 December 2024 in other
liabilities (note 25).
", "dimensions": { "concept": "metrobankholdingsplc:DisclosureOfNetGainsOnSaleOfAssets", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-375": { "value": "5. Other income Accounting policy Other income is accounted for as follows:
Product or service
Nature, timing and satisfaction of performance obligations and payment terms
Foreign currency transactions
Gains on foreign currency transactions is the spread earned on foreign
currency transactions performed for our customers along with any
associated fees. It is recognised at the point in time that the exchange is
executed.
Rental income Rental income is primarily earned from the letting out of surplus space in
some of our properties. The revenue is recognised on a straight-line basis
over the life of the lease.
Deferred grant income Deferred grant income relates to amounts recognised in relation to
the amounts drawn down against the Capability and Innovation Fund
(C&I) award (further details of which can be found in note 23). Income is
recognised in line with the delivery of the commitments we agreed to as
part of the bid.
Other income Other income primarily consists of hedge ineffectiveness, foreign
currency differences arising on translation and movements in financial
assets and liabilities held at fair value through profit and loss.
2024 2023
\u00a3\u2019million \u00a3\u2019million
Foreign currency transactions
29.7
34.0
Rental income
1.3
1.1
Deferred grant income
3.4
2.4
Gain on debt extinguishment
\u2013
100.0
Other
1.2
6.4
Total other income
35.6
143.9
Gain on debt extinguishment As part of the capital package which completed in November 2023, a 40% haircut was agreed with bondholders on our Tier 2 debt securities, which saw their \u00a3250 million of existing notes replaced with \u00a3150 million of new notes. This resulted in a gain of \u00a3100 million. ", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-328": { "value": "5. Other income Accounting policy Other income is accounted for as follows:
Product or service
Nature, timing and satisfaction of performance obligations and payment terms
Foreign currency transactions
Gains on foreign currency transactions is the spread earned on foreign
currency transactions performed for our customers along with any
associated fees. It is recognised at the point in time that the exchange is
executed.
Rental income Rental income is primarily earned from the letting out of surplus space in
some of our properties. The revenue is recognised on a straight-line basis
over the life of the lease.
Deferred grant income Deferred grant income relates to amounts recognised in relation to
the amounts drawn down against the Capability and Innovation Fund
(C&I) award (further details of which can be found in note 23). Income is
recognised in line with the delivery of the commitments we agreed to as
part of the bid.
Other income Other income primarily consists of hedge ineffectiveness, foreign
currency differences arising on translation and movements in financial
assets and liabilities held at fair value through profit and loss.
2024 2023
\u00a3\u2019million \u00a3\u2019million
Foreign currency transactions
29.7
34.0
Rental income
1.3
1.1
Deferred grant income
3.4
2.4
Gain on debt extinguishment
\u2013
100.0
Other
1.2
6.4
Total other income
35.6
143.9
Gain on debt extinguishment As part of the capital package which completed in November 2023, a 40% haircut was agreed with bondholders on our Tier 2 debt securities, which saw their \u00a3250 million of existing notes replaced with \u00a3150 million of new notes. This resulted in a gain of \u00a3100 million. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-296": { "value": "5. Other income Accounting policy Other income is accounted for as follows:
Product or service
Nature, timing and satisfaction of performance obligations and payment terms
Foreign currency transactions
Gains on foreign currency transactions is the spread earned on foreign
currency transactions performed for our customers along with any
associated fees. It is recognised at the point in time that the exchange is
executed.
Rental income Rental income is primarily earned from the letting out of surplus space in
some of our properties. The revenue is recognised on a straight-line basis
over the life of the lease.
Deferred grant income Deferred grant income relates to amounts recognised in relation to
the amounts drawn down against the Capability and Innovation Fund
(C&I) award (further details of which can be found in note 23). Income is
recognised in line with the delivery of the commitments we agreed to as
part of the bid.
Other income Other income primarily consists of hedge ineffectiveness, foreign
currency differences arising on translation and movements in financial
assets and liabilities held at fair value through profit and loss.
2024 2023
\u00a3\u2019million \u00a3\u2019million
Foreign currency transactions
29.7
34.0
Rental income
1.3
1.1
Deferred grant income
3.4
2.4
Gain on debt extinguishment
\u2013
100.0
Other
1.2
6.4
Total other income
35.6
143.9
Gain on debt extinguishment As part of the capital package which completed in November 2023, a 40% haircut was agreed with bondholders on our Tier 2 debt securities, which saw their \u00a3250 million of existing notes replaced with \u00a3150 million of new notes. This resulted in a gain of \u00a3100 million. 6. General operating expenses
2024 2023
\u00a3\u2019million \u00a3\u2019million
People costs (note 7)
209.6
241.2
Information technology costs
60.1
59.7
Occupancy costs
30.9
31.7
Money transmission and other banking-related costs
49.3
49.2
Transformation costs
31.1
20.2
Remediation costs
21.3
\u2013
Capability and Innovation Fund costs
1
3.4
2.4
Legal and regulatory fees
9.0
7.0
Professional fees
2
27.7
23.2
Printing, postage and stationery costs
7.5
7.2
Travel costs
1.4
1.5
Marketing costs
9.4
7.7
Costs associated with capital raise
0.1
26.0
Holding company related costs
\u2013
1.8
Other
28.2
24.1
Total general operating expenses
489.0
502.9
1. C&I costs represent the non-capitalisable costs of delivering the C&I digital commitments. It includes \u00a32.4 million (2023: \u00a31.9 million) of people costs. These are included within C&I costs rather than people costs to better reflect their nature. In addition to these costs the grant income recognised in note 5 is also used to offset property costs relating to the store commitments delivered. 2. Professional fees are shown net of both amounts capitalised and amounts included within the transformation costs, remediation costs and C&I costs lines. Information technology costs Information technology costs include costs expensed in relation to software licences, support from third-party providers, back up costs and cloud computing costs. Occupancy costs Occupancy costs consist of the non-IFRS 16 property costs of occupying our stores and offices, including rates, utilities and property maintenance costs as well as irrecoverable VAT on lease payments. Money transmission and other banking-related costs Money transmission and other banking-related costs are made up of the overheads relating to servicing our deposits and lending that do not constitute either part of the effective interest rate, or fee and commission expense. Professional fees Professional costs includes \u00a312.3 million (2023: \u00a37.3 million) of R&D costs not capitalised. This does not include any costs of colleagues working on these projects that are include in the people costs line. Including these costs we spent \u00a325.1 million (2023: \u00a325.1 million) on R&D costs not capitalised. Included within legal and regulatory fees is \u00a30.13 million (2023: \u00a30.06m) in respect of the Financial Services Compensation Scheme (FSCS) levy. Transformation, remediation, Capability and Innovation Fund, costs associated with capital raise and holding company insertion costs Remediation costs include \u00a316.7 million in relation to the FCA fine following the resolution of enquiries into transaction monitoring systems and controls that began in 2016 and were remediated by 2020. Transformation costs include redundancy costs within the year and those related to the strategic collaboration with Infosys. Further details on other transformation, remediation, Capability and Innovation Fund and business acquisition and integration costs can be found on page 227 . ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-386": { "value": "Accounting policy Other income is accounted for as follows:
Product or service
Nature, timing and satisfaction of performance obligations and payment terms
Foreign currency transactions
Gains on foreign currency transactions is the spread earned on foreign
currency transactions performed for our customers along with any
associated fees. It is recognised at the point in time that the exchange is
executed.
Rental income Rental income is primarily earned from the letting out of surplus space in
some of our properties. The revenue is recognised on a straight-line basis
over the life of the lease.
Deferred grant income Deferred grant income relates to amounts recognised in relation to
the amounts drawn down against the Capability and Innovation Fund
(C&I) award (further details of which can be found in note 23). Income is
recognised in line with the delivery of the commitments we agreed to as
part of the bid.
Other income Other income primarily consists of hedge ineffectiveness, foreign
currency differences arising on translation and movements in financial
assets and liabilities held at fair value through profit and loss.
", "dimensions": { "concept": "metrobankholdingsplc:DescriptionOfAccountingPolicyForOtherIncome", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-346": { "value": "
6. General operating expenses
2024 2023
\u00a3\u2019million \u00a3\u2019million
People costs (note 7)
209.6
241.2
Information technology costs
60.1
59.7
Occupancy costs
30.9
31.7
Money transmission and other banking-related costs
49.3
49.2
Transformation costs
31.1
20.2
Remediation costs
21.3
\u2013
Capability and Innovation Fund costs
1
3.4
2.4
Legal and regulatory fees
9.0
7.0
Professional fees
2
27.7
23.2
Printing, postage and stationery costs
7.5
7.2
Travel costs
1.4
1.5
Marketing costs
9.4
7.7
Costs associated with capital raise
0.1
26.0
Holding company related costs
\u2013
1.8
Other
28.2
24.1
Total general operating expenses
489.0
502.9
1. C&I costs represent the non-capitalisable costs of delivering the C&I digital commitments. It includes \u00a32.4 million (2023:
\u00a31.9 million) of people costs. These are included within C&I costs rather than people costs to better reflect their nature. In
addition to these costs the grant income recognised in note 5 is also used to offset property costs relating to the store
commitments delivered.
2. Professional fees are shown net of both amounts capitalised and amounts included within the transformation costs,
remediation costs and C&I costs lines.
Information technology costs
Information technology costs include costs expensed in relation to software licences, support from
third-party providers, back up costs and cloud computing costs.
Occupancy costs
Occupancy costs consist of the non-IFRS 16 property costs of occupying our stores and offices, including
rates, utilities and property maintenance costs as well as irrecoverable VAT on lease payments.
Money transmission and other banking-related costs
Money transmission and other banking-related costs are made up of the overheads relating to servicing
our deposits and lending that do not constitute either part of the effective interest rate, or fee and
commission expense.
Professional fees
Professional costs includes \u00a312.3 million (2023: \u00a37.3 million) of R&D costs not capitalised. This does not
include any costs of colleagues working on these projects that are include in the people costs line.
Including these costs we spent \u00a325.1 million (2023: \u00a325.1 million) on R&D costs not capitalised.
Included within legal and regulatory fees is \u00a30.13 million (2023: \u00a30.06m) in respect of the Financial
Services Compensation Scheme (FSCS) levy.
Transformation, remediation, Capability and Innovation Fund, costs associated with capital
raise and holding company insertion costs
Remediation costs include \u00a316.7 million in relation to the FCA fine following the resolution of enquiries into
transaction monitoring systems and controls that began in 2016 and were remediated by 2020.
Transformation costs include redundancy costs within the year and those related to the strategic
collaboration with Infosys.
Further details on other transformation, remediation, Capability and Innovation Fund and business
acquisition and integration costs can be found on page 227 .
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-376": { "value": "6. General operating expenses
2024 2023
\u00a3\u2019million \u00a3\u2019million
People costs (note 7)
209.6
241.2
Information technology costs
60.1
59.7
Occupancy costs
30.9
31.7
Money transmission and other banking-related costs
49.3
49.2
Transformation costs
31.1
20.2
Remediation costs
21.3
\u2013
Capability and Innovation Fund costs
1
3.4
2.4
Legal and regulatory fees
9.0
7.0
Professional fees
2
27.7
23.2
Printing, postage and stationery costs
7.5
7.2
Travel costs
1.4
1.5
Marketing costs
9.4
7.7
Costs associated with capital raise
0.1
26.0
Holding company related costs
\u2013
1.8
Other
28.2
24.1
Total general operating expenses
489.0
502.9
1. C&I costs represent the non-capitalisable costs of delivering the C&I digital commitments. It includes \u00a32.4 million (2023: \u00a31.9 million) of people costs. These are included within C&I costs rather than people costs to better reflect their nature. In addition to these costs the grant income recognised in note 5 is also used to offset property costs relating to the store commitments delivered. 2. Professional fees are shown net of both amounts capitalised and amounts included within the transformation costs, remediation costs and C&I costs lines. Information technology costs Information technology costs include costs expensed in relation to software licences, support from third-party providers, back up costs and cloud computing costs. Occupancy costs Occupancy costs consist of the non-IFRS 16 property costs of occupying our stores and offices, including rates, utilities and property maintenance costs as well as irrecoverable VAT on lease payments. Money transmission and other banking-related costs Money transmission and other banking-related costs are made up of the overheads relating to servicing our deposits and lending that do not constitute either part of the effective interest rate, or fee and commission expense. Professional fees Professional costs includes \u00a312.3 million (2023: \u00a37.3 million) of R&D costs not capitalised. This does not include any costs of colleagues working on these projects that are include in the people costs line. Including these costs we spent \u00a325.1 million (2023: \u00a325.1 million) on R&D costs not capitalised. Included within legal and regulatory fees is \u00a30.13 million (2023: \u00a30.06m) in respect of the Financial Services Compensation Scheme (FSCS) levy. Transformation, remediation, Capability and Innovation Fund, costs associated with capital raise and holding company insertion costs Remediation costs include \u00a316.7 million in relation to the FCA fine following the resolution of enquiries into transaction monitoring systems and controls that began in 2016 and were remediated by 2020. Transformation costs include redundancy costs within the year and those related to the strategic collaboration with Infosys. Further details on other transformation, remediation, Capability and Innovation Fund and business acquisition and integration costs can be found on page 227 . 8. Fees payable to our auditors During the year, the Group (including its subsidiaries) obtained the following services from our auditors, PricewaterhouseCoopers LLP:
2024 2023
\u00a3\u2019000 \u00a3\u2019000
Audit of the Group and Company financial statements
105
54
Audit of the financial statements of the Company\u2019s subsidiaries
2,783
2,309
Audit-related assurance services
162
144
Other assurance services
\u2013
555
Total fees payable to our auditors
3,050
3,062
Of the audit fees above, \u00a3125 thousand relates to the prior financial year.", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-362": { "value": "6. General operating expenses
2024 2023
\u00a3\u2019million \u00a3\u2019million
People costs (note 7)
209.6
241.2
Information technology costs
60.1
59.7
Occupancy costs
30.9
31.7
Money transmission and other banking-related costs
49.3
49.2
Transformation costs
31.1
20.2
Remediation costs
21.3
\u2013
Capability and Innovation Fund costs
1
3.4
2.4
Legal and regulatory fees
9.0
7.0
Professional fees
2
27.7
23.2
Printing, postage and stationery costs
7.5
7.2
Travel costs
1.4
1.5
Marketing costs
9.4
7.7
Costs associated with capital raise
0.1
26.0
Holding company related costs
\u2013
1.8
Other
28.2
24.1
Total general operating expenses
489.0
502.9
1. C&I costs represent the non-capitalisable costs of delivering the C&I digital commitments. It includes \u00a32.4 million (2023: \u00a31.9 million) of people costs. These are included within C&I costs rather than people costs to better reflect their nature. In addition to these costs the grant income recognised in note 5 is also used to offset property costs relating to the store commitments delivered. 2. Professional fees are shown net of both amounts capitalised and amounts included within the transformation costs, remediation costs and C&I costs lines. Information technology costs Information technology costs include costs expensed in relation to software licences, support from third-party providers, back up costs and cloud computing costs. Occupancy costs Occupancy costs consist of the non-IFRS 16 property costs of occupying our stores and offices, including rates, utilities and property maintenance costs as well as irrecoverable VAT on lease payments. Money transmission and other banking-related costs Money transmission and other banking-related costs are made up of the overheads relating to servicing our deposits and lending that do not constitute either part of the effective interest rate, or fee and commission expense. Professional fees Professional costs includes \u00a312.3 million (2023: \u00a37.3 million) of R&D costs not capitalised. This does not include any costs of colleagues working on these projects that are include in the people costs line. Including these costs we spent \u00a325.1 million (2023: \u00a325.1 million) on R&D costs not capitalised. Included within legal and regulatory fees is \u00a30.13 million (2023: \u00a30.06m) in respect of the Financial Services Compensation Scheme (FSCS) levy. Transformation, remediation, Capability and Innovation Fund, costs associated with capital raise and holding company insertion costs Remediation costs include \u00a316.7 million in relation to the FCA fine following the resolution of enquiries into transaction monitoring systems and controls that began in 2016 and were remediated by 2020. Transformation costs include redundancy costs within the year and those related to the strategic collaboration with Infosys. Further details on other transformation, remediation, Capability and Innovation Fund and business acquisition and integration costs can be found on page 227 . ", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-329": { "value": "6. General operating expenses
2024 2023
\u00a3\u2019million \u00a3\u2019million
People costs (note 7)
209.6
241.2
Information technology costs
60.1
59.7
Occupancy costs
30.9
31.7
Money transmission and other banking-related costs
49.3
49.2
Transformation costs
31.1
20.2
Remediation costs
21.3
\u2013
Capability and Innovation Fund costs
1
3.4
2.4
Legal and regulatory fees
9.0
7.0
Professional fees
2
27.7
23.2
Printing, postage and stationery costs
7.5
7.2
Travel costs
1.4
1.5
Marketing costs
9.4
7.7
Costs associated with capital raise
0.1
26.0
Holding company related costs
\u2013
1.8
Other
28.2
24.1
Total general operating expenses
489.0
502.9
1. C&I costs represent the non-capitalisable costs of delivering the C&I digital commitments. It includes \u00a32.4 million (2023: \u00a31.9 million) of people costs. These are included within C&I costs rather than people costs to better reflect their nature. In addition to these costs the grant income recognised in note 5 is also used to offset property costs relating to the store commitments delivered. 2. Professional fees are shown net of both amounts capitalised and amounts included within the transformation costs, remediation costs and C&I costs lines. Information technology costs Information technology costs include costs expensed in relation to software licences, support from third-party providers, back up costs and cloud computing costs. Occupancy costs Occupancy costs consist of the non-IFRS 16 property costs of occupying our stores and offices, including rates, utilities and property maintenance costs as well as irrecoverable VAT on lease payments. Money transmission and other banking-related costs Money transmission and other banking-related costs are made up of the overheads relating to servicing our deposits and lending that do not constitute either part of the effective interest rate, or fee and commission expense. Professional fees Professional costs includes \u00a312.3 million (2023: \u00a37.3 million) of R&D costs not capitalised. This does not include any costs of colleagues working on these projects that are include in the people costs line. Including these costs we spent \u00a325.1 million (2023: \u00a325.1 million) on R&D costs not capitalised. Included within legal and regulatory fees is \u00a30.13 million (2023: \u00a30.06m) in respect of the Financial Services Compensation Scheme (FSCS) levy. Transformation, remediation, Capability and Innovation Fund, costs associated with capital raise and holding company insertion costs Remediation costs include \u00a316.7 million in relation to the FCA fine following the resolution of enquiries into transaction monitoring systems and controls that began in 2016 and were remediated by 2020. Transformation costs include redundancy costs within the year and those related to the strategic collaboration with Infosys. Further details on other transformation, remediation, Capability and Innovation Fund and business acquisition and integration costs can be found on page 227
8. Fees payable to our auditors
During the year, the Group (including its subsidiaries) obtained the following services from our auditors,
PricewaterhouseCoopers LLP:
2024 2023
\u00a3\u2019000 \u00a3\u2019000
Audit of the Group and Company financial statements
105
54
Audit of the financial statements of the Company\u2019s subsidiaries
2,783
2,309
Audit-related assurance services
162
144
Other assurance services
\u2013
555
Total fees payable to our auditors
3,050
3,062
Of the audit fees above, \u00a3125 thousand relates to the prior financial year.
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-298": { "value": "
7. People costs
2024 2023
\u00a3\u2019million \u00a3\u2019million
Wages and salaries
1
174.0
201.7
Social security costs
1
20.7
21.8
Pension costs
1
12.9
14.5
Equity-settled share-based payments
2.0
3.2
Total people costs
209.6
241.2
1. Amounts are net of people costs which are capitalised as well as those relating to C&I (see note 23) as these costs will be
offset against the C&I grant income (note 5). Amounts are also net of people costs relating to our restructuring. Most of the
cost was provided for in 2023, and details of provision and drawdown can be found in note 24.
The average monthly number of persons employed during the year was 3,455 (2023: 4,286).
2024
2023
Customer-facing
1,437
1,985
Non-customer-facing
2,018
2,301
Total number of persons employed
3,455
4,286
Pension costs
We operate a defined contribution pension scheme for our colleagues. Contributions to colleagues\u2019
individual personal pension plans are made on a contractual basis, with no further payment obligations
once the contributions have been paid. These contributions are recognised as an expense when they
fall due.
Payments were made amounting to \u00a313.7 million (2023: \u00a315.4 million) to colleagues\u2019 individual personal
pension plans during the year. This includes pension contributions that were capitalised as well as those
relating to colleagues working on C&I which are not included in the figures above.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-297": { "value": "8. Fees payable to our auditors During the year, the Group (including its subsidiaries) obtained the following services from our auditors, PricewaterhouseCoopers LLP:
2024 2023
\u00a3\u2019000 \u00a3\u2019000
Audit of the Group and Company financial statements
105
54
Audit of the financial statements of the Company\u2019s subsidiaries
2,783
2,309
Audit-related assurance services
162
144
Other assurance services
\u2013
555
Total fees payable to our auditors
3,050
3,062
Of the audit fees above, \u00a3125 thousand relates to the prior financial year.", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-299": { "value": "9. Taxation Accounting policy Current tax Our current tax comprises the expected tax payable or receivable on the taxable profit for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Where we have tax losses that can be relieved only by carry-forward against taxable profits of future periods, a deductible temporary difference arises. Those losses carried forward are set off against deferred tax liabilities carried in the balance sheet. Deferred tax Deferred tax is recognised in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the date of the balance sheet and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. The principal differences arise from trading losses, depreciation of property, plant and equipment and relief on research and development expenditure. We recognise a deferred tax asset to the extent that it is probable that future taxable profits will be available against which they can be used and deferred tax liabilities are provided on taxable temporary differences. Deferred tax assets and liabilities are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised or the deferred tax liability settled. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets against current tax liabilities and where the deferred tax assets and liabilities relate to taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle on a net basis. Tax expense The components of the tax expense for the year are:
2024 2023
\u00a3\u2019million \u00a3\u2019million
Current tax
Current tax
\u2013
(0.1)
Adjustment in respect of prior years
\u2013
\u2013
Total current tax credit/(expense)
\u2013
(0.1)
Deferred tax
Origination and reversal of temporary differences
254.1
(0.5)
Effect of changes in tax rates
\u2013
(0.4)
Adjustment in respect of prior years
0.5
\u2013
Total deferred tax credit/(expense)
254.6
(0.9)
Total tax credit/(expense)
254.6
(1.0)
Reconciliation of the total tax expense
The tax expense shown in the income statement differs from the tax expense that would apply if all accounting losses had been taxed at the UK corporation tax rate. A reconciliation between the expense and the
accounting profit/(loss) multiplied by the UK corporation tax rate is as follows:
Effective Effective
2024 tax rate 2023 tax rate
\u00a3\u2019million % \u00a3\u2019million %
Accounting (loss)/profit before tax
(212.1)
30.5
Tax credit/(expense) at statutory tax rate of 25% (2023: 23.5%)
53.0
25.0%
( 7. 2)
23.5%
Tax effects of:
Non-deductible expenses \u2013 depreciation on non-qualifying fixed assets
(3.0)
(1.4%)
(2.5)
8.3%
Non-deductible expenses \u2013 investment property impairment
\u2013
\u2013
\u2013
\u2013
Non-deductible expenses \u2013 remediation
\u2013
\u2013
\u2013
\u2013
Non-deductible expenses \u2013 other
( 7.7 )
(3.6%)
(0.8)
2.6%
Impact of intangible asset write-off on research and development deferred tax liability
\u2013
\u2013
0.1
(0.3%)
Share-based payments
(0.2)
(0.1%)
(1.2)
3.9%
Adjustment in respect of prior years
0.6
0.3%
\u2013
\u2013
Current year losses for which no deferred tax asset has been recognised
\u2013
\u2013
(15.4)
50.5%
Losses offset against current year profits
\u2013
\u2013
1.1
(3.6%)
Movement in recognised DTA for unused tax losses
211.9
99.9%
1.8
(5.9%)
Effect of changes in tax rates
\u2013
\u2013
(0.4)
1.3%
Income not taxable
\u2013
\u2013
23.5
( 7 7.0%)
Tax credit/(expense) reported in the consolidated income statement
254.6
120.0%
(1.0)
3.3%
The effective tax rate for the year is 120.0% (2023: 3.3%). The main reasons for this, in addition to the reported accounting loss before tax for the year, are set out below:
Non-deductible expenses \u2013 other
This mainly relates to the FCA fine and intangible asset amortisation and impairment upon which a tax deduction is not available.
Share-based payments
During the year, the Bank share price increased from \u00a30.37 to \u00a30.94. This had the impact of increasing the deferred tax asset, resulting in a deferred tax credit. The charge to the income statement (upon which a tax
deduction is not available) is higher than the deferred tax credit, resulting in a small increase in the total tax charge.
Adjustment in respect of prior years
Following the filing of our 2023 corporation tax return we reduced our R&D deferred tax liability following a decrease in qualifying capital R&D expenditure.
Deferred tax assets
A deferred tax asset must be regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not there will be suitable tax profits from which
the future of the underlying timing differences can be deducted.
The following table shows deferred tax recorded in the statement of financial position and changes recorded in the tax expense:
31 December 2024
31 December 2023
Investment Investment
securities Share- Property, securities Share- Property,
Unused and based plant and Intangible Unused and based plant and Intangible
tax losses impairments payments equipment assets Total tax losses impairments payments equipment assets Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Deferred tax assets
269
1
1
\u2013
\u2013
271
14
2
1
\u2013
\u2013
17
Deferred tax liabilities
\u2013
3
\u2013
(31)
(3)
(31)
\u2013
4
\u2013
(29)
(5)
(30)
Deferred tax assets (net)
269
4
1
(31)
(3)
240
14
6
1
(29)
(5)
(13)
1 January
14
6
1
(29)
(5)
(13)
12
7
1
(26)
(6)
(12)
Prior year movement
(1)
(1)
\u2013
\u2013
1
(1)
Income statement
256
\u2013
\u2013
(2)
1
255
2
(1)
\u2013
(3)
1
(1)
Other comprehensive expenses
\u2013
(1)
\u2013
\u2013
\u2013
(1)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
31 December
269
4
1
(31)
(3)
240
14
6
1
(29)
(5)
(13)
Offsetting of deferred tax assets and liabilities
We have presented all the deferred tax assets and liabilities above on a net basis within the balance sheet on page 162. This is on the basis that all our deferred tax assets and liabilities relate to taxes levied by HMRC
and we have a legally enforceable right to offset these. Further details on our offsetting of financial assets and liabilities can be found in note 33.
Deferred Tax on unused tax losses
Deferred tax assets are recognised only to the extent it is probable that future taxable profits will be available against which the assets can be utilised. Under current law there is no expiry date for UK trading losses not
yet utilised. An assessment has been undertaken, taking account of any deferred tax liabilities against which the reversal can be offset and using the Board\u2019s latest Long-Term Plan forecasts, to assess the level of
future taxable profits.
The forecasts are consistent with those used in the Value-in-Use (VIU) calculations. However, the Bank\u2019s Long-Term Plan contains inherent execution risks, including regulatory changes, market volatility, and
operational factors. These uncertainties require ongoing monitoring and regular stress testing to ensure the bank maintains sufficient resilience throughout the plan\u2019s implementation. Whilst loss making in the recent
past, the Bank returned to an underlying profit in H2 2024 and has made sufficient progress in the execution of its transformation plan that it is now projected to generate sufficient future taxable profits to fully utilise
its remaining tax losses. The plan assumes an improvement in net interest margin (driven by the strategic pivot to higher yielding lending, a lower cost of deposits and current market expectations of future interest
rates) and continued cost discipline and control. Further details of the progress the Group has made against its strategic objectives and the risks faced by the Bank are explained in the Strategic Report.
For the purposes of assessing the utilisation of the tax losses and estimating the period over which the losses will be utilised, the forecasts have been adjusted to reflect the inherent risks of the Bank and the
environment in which it operates. These include external macro-economic factors such as base rates, operating costs and the extent of credit losses. As a result, we have recognised a deferred tax asset of
\u00a3269 million (2023: deferred tax asset \u00a314 million) on unused tax losses totalling \u00a31,073 million leading to a credit to the income statement of \u00a3256 million. The value of the deferred tax asset in respect of tax losses is
expected to be fully recovered by 2035. A 10% annual reduction in forecast profits each year would increase the estimated recovery period by 1 year.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-387": { "value": "Accounting policy Current tax Our current tax comprises the expected tax payable or receivable on the taxable profit for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Where we have tax losses that can be relieved only by carry-forward against taxable profits of future periods, a deductible temporary difference arises. Those losses carried forward are set off against deferred tax liabilities carried in the balance sheet. Deferred tax Deferred tax is recognised in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the date of the balance sheet and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. The principal differences arise from trading losses, depreciation of property, plant and equipment and relief on research and development expenditure. We recognise a deferred tax asset to the extent that it is probable that future taxable profits will be available against which they can be used and deferred tax liabilities are provided on taxable temporary differences. Deferred tax assets and liabilities are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised or the deferred tax liability settled. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets against current tax liabilities and where the deferred tax assets and liabilities relate to taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle on a net basis. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-403": { "value": "Deferred tax Deferred tax is recognised in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the date of the balance sheet and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. The principal differences arise from trading losses, depreciation of property, plant and equipment and relief on research and development expenditure. We recognise a deferred tax asset to the extent that it is probable that future taxable profits will be available against which they can be used and deferred tax liabilities are provided on taxable temporary differences. Deferred tax assets and liabilities are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised or the deferred tax liability settled. Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets against current tax liabilities and where the deferred tax assets and liabilities relate to taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle on a net basis. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-377": { "value": "
Tax expense
The components of the tax expense for the year are:
2024 2023
\u00a3\u2019million \u00a3\u2019million
Current tax
Current tax
\u2013
(0.1)
Adjustment in respect of prior years
\u2013
\u2013
Total current tax credit/(expense)
\u2013
(0.1)
Deferred tax
Origination and reversal of temporary differences
254.1
(0.5)
Effect of changes in tax rates
\u2013
(0.4)
Adjustment in respect of prior years
0.5
\u2013
Total deferred tax credit/(expense)
254.6
(0.9)
Total tax credit/(expense)
254.6
(1.0)
Reconciliation of the total tax expense The tax expense shown in the income statement differs from the tax expense that would apply if all accounting losses had been taxed at the UK corporation tax rate. A reconciliation between the expense and the accounting profit/(loss) multiplied by the UK corporation tax rate is as follows:
Effective Effective
2024 tax rate 2023 tax rate
\u00a3\u2019million % \u00a3\u2019million %
Accounting (loss)/profit before tax
(212.1)
30.5
Tax credit/(expense) at statutory tax rate of 25% (2023: 23.5%)
53.0
25.0%
( 7. 2)
23.5%
Tax effects of:
Non-deductible expenses \u2013 depreciation on non-qualifying fixed assets
(3.0)
(1.4%)
(2.5)
8.3%
Non-deductible expenses \u2013 investment property impairment
\u2013
\u2013
\u2013
\u2013
Non-deductible expenses \u2013 remediation
\u2013
\u2013
\u2013
\u2013
Non-deductible expenses \u2013 other
( 7.7 )
(3.6%)
(0.8)
2.6%
Impact of intangible asset write-off on research and development deferred tax liability
\u2013
\u2013
0.1
(0.3%)
Share-based payments
(0.2)
(0.1%)
(1.2)
3.9%
Adjustment in respect of prior years
0.6
0.3%
\u2013
\u2013
Current year losses for which no deferred tax asset has been recognised
\u2013
\u2013
(15.4)
50.5%
Losses offset against current year profits
\u2013
\u2013
1.1
(3.6%)
Movement in recognised DTA for unused tax losses
211.9
99.9%
1.8
(5.9%)
Effect of changes in tax rates
\u2013
\u2013
(0.4)
1.3%
Income not taxable
\u2013
\u2013
23.5
( 7 7.0%)
Tax credit/(expense) reported in the consolidated income statement
254.6
120.0%
(1.0)
3.3%
The effective tax rate for the year is 120.0% (2023: 3.3%). The main reasons for this, in addition to the reported accounting loss before tax for the year, are set out below: Non-deductible expenses \u2013 other This mainly relates to the FCA fine and intangible asset amortisation and impairment upon which a tax deduction is not available. Share-based payments During the year, the Bank share price increased from \u00a30.37 to \u00a30.94. This had the impact of increasing the deferred tax asset, resulting in a deferred tax credit. The charge to the income statement (upon which a tax deduction is not available) is higher than the deferred tax credit, resulting in a small increase in the total tax charge. Adjustment in respect of prior years Following the filing of our 2023 corporation tax return we reduced our R&D deferred tax liability following a decrease in qualifying capital R&D expenditure. Deferred tax assets A deferred tax asset must be regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not there will be suitable tax profits from which the future of the underlying timing differences can be deducted. The following table shows deferred tax recorded in the statement of financial position and changes recorded in the tax expense:
31 December 2024
31 December 2023
Investment Investment
securities Share- Property, securities Share- Property,
Unused and based plant and Intangible Unused and based plant and Intangible
tax losses impairments payments equipment assets Total tax losses impairments payments equipment assets Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Deferred tax assets
269
1
1
\u2013
\u2013
271
14
2
1
\u2013
\u2013
17
Deferred tax liabilities
\u2013
3
\u2013
(31)
(3)
(31)
\u2013
4
\u2013
(29)
(5)
(30)
Deferred tax assets (net)
269
4
1
(31)
(3)
240
14
6
1
(29)
(5)
(13)
1 January
14
6
1
(29)
(5)
(13)
12
7
1
(26)
(6)
(12)
Prior year movement
(1)
(1)
\u2013
\u2013
1
(1)
Income statement
256
\u2013
\u2013
(2)
1
255
2
(1)
\u2013
(3)
1
(1)
Other comprehensive expenses
\u2013
(1)
\u2013
\u2013
\u2013
(1)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
31 December
269
4
1
(31)
(3)
240
14
6
1
(29)
(5)
(13)
Offsetting of deferred tax assets and liabilities We have presented all the deferred tax assets and liabilities above on a net basis within the balance sheet on page 162. This is on the basis that all our deferred tax assets and liabilities relate to taxes levied by HMRC and we have a legally enforceable right to offset these. Further details on our offsetting of financial assets and liabilities can be found in note 33. Deferred Tax on unused tax losses Deferred tax assets are recognised only to the extent it is probable that future taxable profits will be available against which the assets can be utilised. Under current law there is no expiry date for UK trading losses not yet utilised. An assessment has been undertaken, taking account of any deferred tax liabilities against which the reversal can be offset and using the Board\u2019s latest Long-Term Plan forecasts, to assess the level of future taxable profits. The forecasts are consistent with those used in the Value-in-Use (VIU) calculations. However, the Bank\u2019s Long-Term Plan contains inherent execution risks, including regulatory changes, market volatility, and operational factors. These uncertainties require ongoing monitoring and regular stress testing to ensure the bank maintains sufficient resilience throughout the plan\u2019s implementation. Whilst loss making in the recent past, the Bank returned to an underlying profit in H2 2024 and has made sufficient progress in the execution of its transformation plan that it is now projected to generate sufficient future taxable profits to fully utilise its remaining tax losses. The plan assumes an improvement in net interest margin (driven by the strategic pivot to higher yielding lending, a lower cost of deposits and current market expectations of future interest rates) and continued cost discipline and control. Further details of the progress the Group has made against its strategic objectives and the risks faced by the Bank are explained in the Strategic Report. For the purposes of assessing the utilisation of the tax losses and estimating the period over which the losses will be utilised, the forecasts have been adjusted to reflect the inherent risks of the Bank and the environment in which it operates. These include external macro-economic factors such as base rates, operating costs and the extent of credit losses. As a result, we have recognised a deferred tax asset of \u00a3269 million (2023: deferred tax asset \u00a314 million) on unused tax losses totalling \u00a31,073 million leading to a credit to the income statement of \u00a3256 million. The value of the deferred tax asset in respect of tax losses is expected to be fully recovered by 2035. A 10% annual reduction in forecast profits each year would increase the estimated recovery period by 1 year.", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-330": { "value": "Deferred tax assets A deferred tax asset must be regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not there will be suitable tax profits from which the future of the underlying timing differences can be deducted. The following table shows deferred tax recorded in the statement of financial position and changes recorded in the tax expense:
31 December 2024
31 December 2023
Investment Investment
securities Share- Property, securities Share- Property,
Unused and based plant and Intangible Unused and based plant and Intangible
tax losses impairments payments equipment assets Total tax losses impairments payments equipment assets Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Deferred tax assets
269
1
1
\u2013
\u2013
271
14
2
1
\u2013
\u2013
17
Deferred tax liabilities
\u2013
3
\u2013
(31)
(3)
(31)
\u2013
4
\u2013
(29)
(5)
(30)
Deferred tax assets (net)
269
4
1
(31)
(3)
240
14
6
1
(29)
(5)
(13)
1 January
14
6
1
(29)
(5)
(13)
12
7
1
(26)
(6)
(12)
Prior year movement
(1)
(1)
\u2013
\u2013
1
(1)
Income statement
256
\u2013
\u2013
(2)
1
255
2
(1)
\u2013
(3)
1
(1)
Other comprehensive expenses
\u2013
(1)
\u2013
\u2013
\u2013
(1)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
31 December
269
4
1
(31)
(3)
240
14
6
1
(29)
(5)
(13)
Offsetting of deferred tax assets and liabilities We have presented all the deferred tax assets and liabilities above on a net basis within the balance sheet on page 162. This is on the basis that all our deferred tax assets and liabilities relate to taxes levied by HMRC and we have a legally enforceable right to offset these. Further details on our offsetting of financial assets and liabilities can be found in note 33. Deferred Tax on unused tax losses Deferred tax assets are recognised only to the extent it is probable that future taxable profits will be available against which the assets can be utilised. Under current law there is no expiry date for UK trading losses not yet utilised. An assessment has been undertaken, taking account of any deferred tax liabilities against which the reversal can be offset and using the Board\u2019s latest Long-Term Plan forecasts, to assess the level of future taxable profits. The forecasts are consistent with those used in the Value-in-Use (VIU) calculations. However, the Bank\u2019s Long-Term Plan contains inherent execution risks, including regulatory changes, market volatility, and operational factors. These uncertainties require ongoing monitoring and regular stress testing to ensure the bank maintains sufficient resilience throughout the plan\u2019s implementation. Whilst loss making in the recent past, the Bank returned to an underlying profit in H2 2024 and has made sufficient progress in the execution of its transformation plan that it is now projected to generate sufficient future taxable profits to fully utilise its remaining tax losses. The plan assumes an improvement in net interest margin (driven by the strategic pivot to higher yielding lending, a lower cost of deposits and current market expectations of future interest rates) and continued cost discipline and control. Further details of the progress the Group has made against its strategic objectives and the risks faced by the Bank are explained in the Strategic Report. For the purposes of assessing the utilisation of the tax losses and estimating the period over which the losses will be utilised, the forecasts have been adjusted to reflect the inherent risks of the Bank and the environment in which it operates. These include external macro-economic factors such as base rates, operating costs and the extent of credit losses. As a result, we have recognised a deferred tax asset of \u00a3269 million (2023: deferred tax asset \u00a314 million) on unused tax losses totalling \u00a31,073 million leading to a credit to the income statement of \u00a3256 million. The value of the deferred tax asset in respect of tax losses is expected to be fully recovered by 2035. A 10% annual reduction in forecast profits each year would increase the estimated recovery period by 1 year.", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-363": { "value": "10. Financial instruments Accounting policy Repurchase agreements Where we sell financial assets subject to sale and repurchase agreements, the financial assets are retained in their respective balance sheet categories, however they become encumbered and are not available for transfer or sale. The associated liabilities are included in the repurchase agreements line. The difference between the sale and repurchase price of repurchase agreements is treated as interest and accrued over the life of the agreements using the effective interest method as set out in note 2. Other financial instruments Our accounting policies in respect of our other financial instruments can be found in their respective notes, where applicable. Our financial instruments primarily comprise customer deposits, loans and advances to customers and investment securities, all of which arise as a result of our normal operations. The main financial risks arising from our financial instruments are credit risk, liquidity risk and market risks (price and interest rate risk). Further details on these risks can be found within the Risk report on pages 121 to 150. The financial instruments we hold are simple in nature and we do not consider that we have made any significant or material judgements relating to the classification and measurement of financial instruments under IFRS 9. Cash and balances with other banks, trade and other receivables, trade and other payables and other assets and liabilities which meet the definition of financial instruments are not included in the following tables. Classification of financial instruments
31 December 2024
Fair value
through
profit and Amortised
loss FVOCI cost Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Assets
Loans and advances to customers
\u2013
\u2013
9,013
9,013
Investment securities
\u2013
377
4,113
4,490
Derivative financial assets
16
\u2013
\u2013
16
Liabilities
Deposits from customers
\u2013
\u2013
14,458
14,458
Deposits from central bank
\u2013
\u2013
400
400
Debt securities
\u2013
\u2013
675
675
Derivative financial liabilities
1
\u2013
\u2013
1
Repurchase agreements
\u2013
\u2013
391
391
31 December 2023
Fair value
through
profit Amortised
and loss FVOCI cost Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Assets
Loans and advances to customers
\u2013
\u2013
12,297
12,297
Investment securities
\u2013
476
4,403
4,879
Derivative financial assets
36
\u2013
\u2013
36
Liabilities
Deposits from customers
\u2013
\u2013
15,623
15,623
Deposits from central bank
\u2013
\u2013
3,050
3,050
Debt securities
\u2013
\u2013
694
694
Repurchase agreements
\u2013
\u2013
1,191
1,191
Financial assets pledged as collateral We have pledged \u00a31,034 million (2023: \u00a36,110 million) of the financial assets left as encumbered collateral which can be called upon in the event of default. Of this, \u00a3445 million (2023: \u00a31,311 million) is made up of high-quality securities and \u00a3589 million (2023: \u00a34,799 million) is from our own loan portfolio. This does not include cash balances pledged as collateral which are shown separately within note 17. LIBOR replacement On 1 January 2022 SONIA. (Sterling Overnight Index Average.) replaced LIBOR (London Inter-bank Offered Rate) as the industry standard sterling interest rate benchmark. As at 31 December 2024 all of our market-facing derivative flows are executed against SONIA, we hold \u00a30 million (31 December 2023: \u00a347 million) of mortgages that are either exposed, or revert to synthetic LIBOR. 34. Fair value of financial instruments Accounting policy Determination of fair value \u2018Fair value\u2019 is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which we have access at that date. The fair value of a liability reflects its non-performance risk. In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques, as summarised below: \u2022 Level 1 financial instruments \u2013 Those where the inputs used in the valuation are unadjusted quoted prices from active markets for identical assets or liabilities that we have access to at the measurement date. We consider markets as active only if there are sufficient trading activities with regards to the volume and liquidity of the identical assets or liabilities and when there are binding and exercisable price quotes available on the balance sheet date. \u2022 Level 2 financial instruments \u2013 Those where the inputs that are used for valuation are significant, and are derived from directly or indirectly observable market data available over the entire period of the instrument\u2019s life. Such inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical instruments in inactive markets and observable inputs other than quoted prices, such as interest rates and yield curves, implied volatilities, and credit spreads. In addition, adjustments may be required for the condition or location of the asset or the extent to which it relates to items that are comparable to the valued instrument. However, if such adjustments are based on unobservable inputs which are significant to the entire measurement, we will classify the instruments as Level 3. \u2022 Level 3 financial instruments \u2013 Those that include one or more unobservable inputs that are significant to the measurement as whole.
31 December 2024
31 December 2023
With With
Quoted Using significant Quoted Using significant
market observable unobservable market observable unobservable
Carrying price inputs inputs Total fair Carrying price inputs inputs Total fair
value Level 1 Level 2 Level 3 value value Level 1 Level 2 Level 3 value
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Assets
Loans and advances to customers
9,013
\u2013
\u2013
8,981
8,981
12,297
\u2013
\u2013
12,156
12,156
Investment securities held at fair value through other comprehensive income
377
377
\u2013
\u2013
377
476
476
\u2013
\u2013
476
Investment securities held at amortised cost
4,113
2,857
1,122
\u2013
3,979
4,403
3,143
1,072
\u2013
4,215
Derivative financial assets
16
\u2013
16
\u2013
16
36
\u2013
36
\u2013
36
Liabilities
Deposits from customers
14,458
\u2013
\u2013
14,458
14,458
15,623
\u2013
\u2013
15,622
15,622
Deposits from central bank
400
\u2013
\u2013
400
400
3,050
\u2013
\u2013
3,050
3,050
Debt securities
675
\u2013
711
\u2013
711
694
\u2013
585
\u2013
585
Derivative financial liabilities
1
\u2013
1
\u2013
1
\u2013
\u2013
\u2013
\u2013
\u2013
Repurchase agreements
391
\u2013
\u2013
391
391
1,191
\u2013
\u2013
1,191
1,191
Cash and balances with other banks, trade and other receivables, trade and other payables and other assets and liabilities which meet the definition of financial instruments are not included in the tables. Their carrying amount is a reasonable approximation of fair value. Information on how fair values are calculated are explained below: Loans and advances to customers Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the balance sheet date, adjusted for future credit losses and prepayments, if considered material. Investment securities The fair value of investment securities is based on either observed market prices for those securities that have an active trading market (fair value Level 1 assets), or using observable inputs (in the case of fair value Level 2 assets). Financial assets held at fair value through profit and loss The financial assets at fair value through profit and loss relate to the loans and advances previously assumed by the RateSetter provision fund. They are measured at the fair value of the amounts that we expect to recover on these loans. Deposits from customers Fair values are estimated using discounted cash flows, applying current rates offered for deposits of similar remaining maturities. The fair value of a deposit repayable on demand is approximated by its carrying value. Debt securities Fair values are determined using the quoted market price at the balance sheet date. Deposits from central banks/repurchase agreements Fair values are estimated using discounted cash flows, applying current rates. Fair values approximate carrying amounts as their balances are either short-dated or are on a variable rate which aligns to the current market rate. Derivative financial assets and liabilities The fair values of derivatives are obtained from discounted cash flow models as appropriate.", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-331": { "value": "10. Financial instruments Accounting policy Repurchase agreements Where we sell financial assets subject to sale and repurchase agreements, the financial assets are retained in their respective balance sheet categories, however they become encumbered and are not available for transfer or sale. The associated liabilities are included in the repurchase agreements line. The difference between the sale and repurchase price of repurchase agreements is treated as interest and accrued over the life of the agreements using the effective interest method as set out in note 2. Other financial instruments Our accounting policies in respect of our other financial instruments can be found in their respective notes, where applicable. Our financial instruments primarily comprise customer deposits, loans and advances to customers and investment securities, all of which arise as a result of our normal operations. The main financial risks arising from our financial instruments are credit risk, liquidity risk and market risks (price and interest rate risk). Further details on these risks can be found within the Risk report on pages 121 to 150. The financial instruments we hold are simple in nature and we do not consider that we have made any significant or material judgements relating to the classification and measurement of financial instruments under IFRS 9. Cash and balances with other banks, trade and other receivables, trade and other payables and other assets and liabilities which meet the definition of financial instruments are not included in the following tables. Classification of financial instruments
31 December 2024
Fair value
through
profit and Amortised
loss FVOCI cost Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Assets
Loans and advances to customers
\u2013
\u2013
9,013
9,013
Investment securities
\u2013
377
4,113
4,490
Derivative financial assets
16
\u2013
\u2013
16
Liabilities
Deposits from customers
\u2013
\u2013
14,458
14,458
Deposits from central bank
\u2013
\u2013
400
400
Debt securities
\u2013
\u2013
675
675
Derivative financial liabilities
1
\u2013
\u2013
1
Repurchase agreements
\u2013
\u2013
391
391
31 December 2023
Fair value
through
profit Amortised
and loss FVOCI cost Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Assets
Loans and advances to customers
\u2013
\u2013
12,297
12,297
Investment securities
\u2013
476
4,403
4,879
Derivative financial assets
36
\u2013
\u2013
36
Liabilities
Deposits from customers
\u2013
\u2013
15,623
15,623
Deposits from central bank
\u2013
\u2013
3,050
3,050
Debt securities
\u2013
\u2013
694
694
Repurchase agreements
\u2013
\u2013
1,191
1,191
Financial assets pledged as collateral We have pledged \u00a31,034 million (2023: \u00a36,110 million) of the financial assets left as encumbered collateral which can be called upon in the event of default. Of this, \u00a3445 million (2023: \u00a31,311 million) is made up of high-quality securities and \u00a3589 million (2023: \u00a34,799 million) is from our own loan portfolio. This does not include cash balances pledged as collateral which are shown separately within note 17. LIBOR replacement On 1 January 2022 SONIA. (Sterling Overnight Index Average.) replaced LIBOR (London Inter-bank Offered Rate) as the industry standard sterling interest rate benchmark. As at 31 December 2024 all of our market-facing derivative flows are executed against SONIA, we hold \u00a30 million (31 December 2023: \u00a347 million) of mortgages that are either exposed, or revert to synthetic LIBOR. 34. Fair value of financial instruments Accounting policy Determination of fair value \u2018Fair value\u2019 is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which we have access at that date. The fair value of a liability reflects its non-performance risk. In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques, as summarised below: \u2022 Level 1 financial instruments \u2013 Those where the inputs used in the valuation are unadjusted quoted prices from active markets for identical assets or liabilities that we have access to at the measurement date. We consider markets as active only if there are sufficient trading activities with regards to the volume and liquidity of the identical assets or liabilities and when there are binding and exercisable price quotes available on the balance sheet date. \u2022 Level 2 financial instruments \u2013 Those where the inputs that are used for valuation are significant, and are derived from directly or indirectly observable market data available over the entire period of the instrument\u2019s life. Such inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical instruments in inactive markets and observable inputs other than quoted prices, such as interest rates and yield curves, implied volatilities, and credit spreads. In addition, adjustments may be required for the condition or location of the asset or the extent to which it relates to items that are comparable to the valued instrument. However, if such adjustments are based on unobservable inputs which are significant to the entire measurement, we will classify the instruments as Level 3. \u2022 Level 3 financial instruments \u2013 Those that include one or more unobservable inputs that are significant to the measurement as whole.
31 December 2024
31 December 2023
With With
Quoted Using significant Quoted Using significant
market observable unobservable market observable unobservable
Carrying price inputs inputs Total fair Carrying price inputs inputs Total fair
value Level 1 Level 2 Level 3 value value Level 1 Level 2 Level 3 value
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Assets
Loans and advances to customers
9,013
\u2013
\u2013
8,981
8,981
12,297
\u2013
\u2013
12,156
12,156
Investment securities held at fair value through other comprehensive income
377
377
\u2013
\u2013
377
476
476
\u2013
\u2013
476
Investment securities held at amortised cost
4,113
2,857
1,122
\u2013
3,979
4,403
3,143
1,072
\u2013
4,215
Derivative financial assets
16
\u2013
16
\u2013
16
36
\u2013
36
\u2013
36
Liabilities
Deposits from customers
14,458
\u2013
\u2013
14,458
14,458
15,623
\u2013
\u2013
15,622
15,622
Deposits from central bank
400
\u2013
\u2013
400
400
3,050
\u2013
\u2013
3,050
3,050
Debt securities
675
\u2013
711
\u2013
711
694
\u2013
585
\u2013
585
Derivative financial liabilities
1
\u2013
1
\u2013
1
\u2013
\u2013
\u2013
\u2013
\u2013
Repurchase agreements
391
\u2013
\u2013
391
391
1,191
\u2013
\u2013
1,191
1,191
Cash and balances with other banks, trade and other receivables, trade and other payables and other assets and liabilities which meet the definition of financial instruments are not included in the tables. Their carrying amount is a reasonable approximation of fair value. Information on how fair values are calculated are explained below: Loans and advances to customers Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the balance sheet date, adjusted for future credit losses and prepayments, if considered material. Investment securities The fair value of investment securities is based on either observed market prices for those securities that have an active trading market (fair value Level 1 assets), or using observable inputs (in the case of fair value Level 2 assets). Financial assets held at fair value through profit and loss The financial assets at fair value through profit and loss relate to the loans and advances previously assumed by the RateSetter provision fund. They are measured at the fair value of the amounts that we expect to recover on these loans. Deposits from customers Fair values are estimated using discounted cash flows, applying current rates offered for deposits of similar remaining maturities. The fair value of a deposit repayable on demand is approximated by its carrying value. Debt securities Fair values are determined using the quoted market price at the balance sheet date. Deposits from central banks/repurchase agreements Fair values are estimated using discounted cash flows, applying current rates. Fair values approximate carrying amounts as their balances are either short-dated or are on a variable rate which aligns to the current market rate. Derivative financial assets and liabilities The fair values of derivatives are obtained from discounted cash flow models as appropriate.", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-300": { "value": "10. Financial instruments Accounting policy Repurchase agreements Where we sell financial assets subject to sale and repurchase agreements, the financial assets are retained in their respective balance sheet categories, however they become encumbered and are not available for transfer or sale. The associated liabilities are included in the repurchase agreements line. The difference between the sale and repurchase price of repurchase agreements is treated as interest and accrued over the life of the agreements using the effective interest method as set out in note 2. Other financial instruments Our accounting policies in respect of our other financial instruments can be found in their respective notes, where applicable. Our financial instruments primarily comprise customer deposits, loans and advances to customers and investment securities, all of which arise as a result of our normal operations. The main financial risks arising from our financial instruments are credit risk, liquidity risk and market risks (price and interest rate risk). Further details on these risks can be found within the Risk report on pages 121 to 150. The financial instruments we hold are simple in nature and we do not consider that we have made any significant or material judgements relating to the classification and measurement of financial instruments under IFRS 9. Cash and balances with other banks, trade and other receivables, trade and other payables and other assets and liabilities which meet the definition of financial instruments are not included in the following tables. Classification of financial instruments
31 December 2024
Fair value
through
profit and Amortised
loss FVOCI cost Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Assets
Loans and advances to customers
\u2013
\u2013
9,013
9,013
Investment securities
\u2013
377
4,113
4,490
Derivative financial assets
16
\u2013
\u2013
16
Liabilities
Deposits from customers
\u2013
\u2013
14,458
14,458
Deposits from central bank
\u2013
\u2013
400
400
Debt securities
\u2013
\u2013
675
675
Derivative financial liabilities
1
\u2013
\u2013
1
Repurchase agreements
\u2013
\u2013
391
391
31 December 2023
Fair value
through
profit Amortised
and loss FVOCI cost Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Assets
Loans and advances to customers
\u2013
\u2013
12,297
12,297
Investment securities
\u2013
476
4,403
4,879
Derivative financial assets
36
\u2013
\u2013
36
Liabilities
Deposits from customers
\u2013
\u2013
15,623
15,623
Deposits from central bank
\u2013
\u2013
3,050
3,050
Debt securities
\u2013
\u2013
694
694
Repurchase agreements
\u2013
\u2013
1,191
1,191
Financial assets pledged as collateral
We have pledged \u00a31,034 million (2023: \u00a36,110 million) of the financial assets left as encumbered collateral
which can be called upon in the event of default. Of this, \u00a3445 million (2023: \u00a31,311 million) is made up of
high-quality securities and \u00a3589 million (2023: \u00a34,799 million) is from our own loan portfolio.
This does not include cash balances pledged as collateral which are shown separately within note 17.
LIBOR replacement
On 1 January 2022 SONIA. (Sterling Overnight Index Average.) replaced LIBOR (London Inter-bank Offered
Rate) as the industry standard sterling interest rate benchmark.
As at 31 December 2024 all of our market-facing derivative flows are executed against SONIA, we hold
\u00a30 million (31 December 2023: \u00a347 million) of mortgages that are either exposed, or revert to synthetic
LIBOR.
20. Debt securities Accounting policy Debt securities in issue are recognised initially at fair value, being proceeds less transaction costs. Subsequently, debt securities are measured at amortised cost using the effective interest method. We assess the criteria for the modification and extinguishment of debt securities in accordance with IFRS 9. A substantial modification of the terms of an existing financial liability or a part of it is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. We determine a substantial modification by performing a quantitative and qualitative prospective assessment.
Amount
issued Coupon Maturity
Name
Issue date
Currency
\u00a3\u2019million
rate
Call date
date
Fixed rate reset callable
(MREL) notes
30/11/2023
GBP
525
12.00%
30/04/28
30/04/29
Fixed rate reset callable
subordinated (Tier 2) notes
30/11/2023
GBP
150
14.00%
30/04/29
30/04/34
2024 2023
\u00a3\u2019million \u00a3\u2019million
1 January
694
571
Issuances
\u2013
675
Redemption
\u2013
(500)
Haircut
\u2013
(100)
Costs associated with issuance
\u2013
(5)
Movements in micro hedging
(20)
50
Unwind of issuance costs
1
3
31 December
675
694
The fixed rate reset callable notes (MREL), which are listed on the London Stock Exchange, constitute subordinated and unsecured obligations. The notes have a call date of 30 April 2028, where they may be redeemed at par. If not called, the interest rate will be reset and fixed based on a benchmark gilt plus a credit spread of 7.814%. The notes are contractually obliged to mature on the maturity date of 30 April 2029. The fixed rate reset subordinated callable notes (Tier 2), which are listed on the London Stock Exchange, constitute subordinated and unsecured obligations. The notes have a call date of 30 April 2029, where they may be redeemed at par. If not called, the interest rate will be reset and fixed based on a benchmark gilt plus a credit spread of 9.822%. The notes are contractually obliged to mature on the maturity date of 30 April 2034. 21. Derivatives Accounting policy In accordance with our risk management strategy, to the extent not naturally hedged, we use interest rate swaps to manage our exposure to interest rate risk. On adoption of IFRS 9 we chose to continue applying the hedge accounting rules set out in IAS 39 \u2018Financial Instruments: Recognition and Measurement\u2019 as we often chose to employ dynamic portfolio hedge accounting of interest rate risk across fixed rate financial assets and fixed rate financial liabilities. Where we are using interest rate swaps to hedge the changes in fair value attributable to the interest rate risk of a recognised asset or liability that could affect profit or loss, we apply fair value hedge accounting. If there is an effective hedge relationship, the hedged item is adjusted for fair value changes in respect of the hedged risk. These fair value changes are recognised in the income statement together with the fair value movements on the hedging instrument (the interest rate swaps). Hedge accounting is discontinued when a hedge ceases to be highly effective, a derivative expires or is sold, the underlying hedged item matures or is repaid, or periodically if a new underlying hedged item or hedging instrument is added to the hedge relationship. Where a fair value hedge is de-designated (either due to becoming ineffective or as part of our dynamic approach to hedge accounting) any hedge adjustments accrued to that point are amortised over the remaining life of the hedged item. At the inception of every hedge, we produce hedge documentation which identifies the hedged risk, hedged item and hedging instrument. This documentation sets out the methodology used for testing hedge effectiveness.
We use derivatives as part of our approach to hedging interest rate and foreign exchange exposure. Our derivative financial instruments are analysed in the table below.
31 December 2024
31 December 2023
Notional
Carrying amount
Notional
Carrying amount
contract contract
amount Asset Liability amount Asset Liability
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Interest rate swaps \u2013 Designated as hedging instruments
1,253
16
\u2013
1,205
36
\u2013
Interest rate swaps \u2013 Designated as held at fair value through profit and loss
502
7
(7)
1,200
31
(31)
Foreign currency swaps \u2013 Designated as held at fair value through profit and loss
50
\u2013
(1)
63
\u2013
\u2013
Total
1,805
23
(8)
2,468
67
(31)
Derivative netting
(502)
(7)
7
(1,200)
(31)
31
Grand total
1,303
16
(1)
1,268
36
\u2013
Hedge accounting
Our hedging strategy is driven by micro hedges, where the hedged item is a identifiable asset or liability. The designated risk components of hedged items are benchmark interest rate risk. Other risks such as credit
risk and liquidity risk are managed separately and are not included in the hedge accounting relationship. The changes in the designated risk component usually account for the largest portion of the overall change in
fair value of the hedged item.
Micro fair value hedges
We use this hedging strategy on fixed rate assets and liabilities held at fair value through other comprehensive income and amortised cost as well as on our fixed rate debt issuance.
Hedge ineffectiveness
Hedge ineffectiveness within fair value hedges can occur due to a number of potential sources, such as non-zero derivative designated in a hedge relationship; mismatches between contractual terms such as basis,
timing, principal and notionals; or change in credit risk of interest rate swaps. The total ineffectiveness on our fair value hedges are recognised in note 5.
Offsetting derivatives
The Tier 2 and MREL debt held until renegotiation in late 2023 were designated as hedge items in fair value hedge relationships to manage our exposure to interest rate risk. Following the renegotiation of our debt in
November 2023, these hedge relationships were de-designated. We entered into equal and opposite interest rate swaps with a notional of \u00a3600 million to fully offset the interest rate swaps used to hedge the old MREL and
Tier 2 debt securities. Cash flows are offset at a central clearing party and both set of swaps will mature at the same time. Further details are included in note 33.
Master netting arrangement and collateral
We either receive or provide collateral related to our hedging arrangements. As at 31st December 2024, we provided collateral of \u00a31 million (2023: received \u00a311.4 million) which is reflected in note 17 .
Summary of hedging instruments in designated hedge relationships
The amounts relating to items designated as hedging instruments in fair value hedge relationships to manage our exposure to interest rates are:
31 December 2024
31 December 2023
Notional Carrying amount Notional Carrying amount
contract contract
amount Asset Liability amount Asset Liability
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Interest rate swaps
1,253
16
\u2013
1,205
36
\u2013
Total derivatives designated as fair value hedges
1,253
16
\u2013
1,205
36
\u2013
Summary of hedged items in designated hedge relationships
The items designated as hedged items in fair value hedge relationships to manage our exposure to interest rates are:
31 December 2024
31 December 2023
Accumulated Accumulated
amount of fair value amount of fair value
hedge adjustments hedge adjustments
included in the included in the
carrying amount of carrying amount of
Carrying amount
the hedged item
Carrying amount
the hedged item
Assets Liabilities Assets Liabilities
\u00a3\u2019million
\u00a3\u2019million
\u00a3\u2019million
\u00a3\u2019million
\u00a3\u2019million
\u00a3\u2019million
Fixed rate debt issuance
2
\u2013
(675)
(4)
\u2013
(694)
(24)
Fixed rate investment securities at FVOCI
3
293
\u2013
(8)
238
\u2013
(7)
Fixed rate investment securities at amortised cost
4
271
\u2013
\u2013
271
\u2013
1
Fixed rate loans
1
1
\u2013
\u2013
3
\u2013
\u2013
Total hedges designated as fair value hedges
565
(675)
(12)
512
(694)
(30)
1. Hedged item and the cumulative fair value changes are recorded in loans and advances to customers.
2. Hedged item and the cumulative fair value changes are recorded in debt securities in issue (see note 20).
3. Hedged item and the cumulative fair value changes are recorded in investment securities held at FVOCI.
4. Hedged item and the cumulative fair value changes are recorded in investment securities held at amortised cost.
Summary of ineffectiveness from designated hedge relationships
Total hedge ineffectiveness recognised in profit or loss for the designated fair value hedge relationships is a loss of \u00a32.0 million (2023: gain of \u00a35.6 million).
33. Offsetting of financial assets and liabilities Accounting policy Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
31 December 2024
31 December 2023
Effects of offsetting Effects of offsetting
on the balance sheet on the balance sheet
Net amounts Net amounts
Gross amounts presented Gross amounts presented
Gross offset in the in the balance Gross offset in the in the balance
amount balance sheet sheet amount balance sheet sheet
Assets \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Loans and advances to customers
9,013
\u2013
9,013
12,297
\u2013
12,297
Investment securities
1
4,490
\u2013
4,490
4,879
\u2013
4,879
Derivative financial assets
23
(7)
16
67
(31)
36
Deferred tax assets
271
(31)
240
17
(17)
\u2013
Other assets
2
82
\u2013
82
108
\u2013
108
Liabilities
Derivative financial liabilities
8
(7)
1
31
(31)
\u2013
Repurchase agreements
1
391
\u2013
391
1,191
\u2013
1,191
Deposits from central banks
1
400
\u2013
400
3,050
\u2013
3,050
Deferred tax liabilities
31
(31)
\u2013
30
(17)
13
1. We have pledged \u00a31,034 million (2023: \u00a36,110 million) against repos, deposits from central banks and other assets as encumbered collateral which can be called upon in the event of default. 2. Includes \u00a353 million (2023: \u00a350 million) pledged as cash collateral. None of the cash collateral has been offset in the balance sheet. 34. Fair value of financial instruments Accounting policy Determination of fair value \u2018Fair value\u2019 is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which we have access at that date. The fair value of a liability reflects its non-performance risk. In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques, as summarised below: \u2022 Level 1 financial instruments \u2013 Those where the inputs used in the valuation are unadjusted quoted prices from active markets for identical assets or liabilities that we have access to at the measurement date. We consider markets as active only if there are sufficient trading activities with regards to the volume and liquidity of the identical assets or liabilities and when there are binding and exercisable price quotes available on the balance sheet date. \u2022 Level 2 financial instruments \u2013 Those where the inputs that are used for valuation are significant, and are derived from directly or indirectly observable market data available over the entire period of the instrument\u2019s life. Such inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical instruments in inactive markets and observable inputs other than quoted prices, such as interest rates and yield curves, implied volatilities, and credit spreads. In addition, adjustments may be required for the condition or location of the asset or the extent to which it relates to items that are comparable to the valued instrument. However, if such adjustments are based on unobservable inputs which are significant to the entire measurement, we will classify the instruments as Level 3. \u2022 Level 3 financial instruments \u2013 Those that include one or more unobservable inputs that are significant to the measurement as whole.
31 December 2024
31 December 2023
With With
Quoted Using significant Quoted Using significant
market observable unobservable market observable unobservable
Carrying price inputs inputs Total fair Carrying price inputs inputs Total fair
value Level 1 Level 2 Level 3 value value Level 1 Level 2 Level 3 value
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Assets
Loans and advances to customers
9,013
\u2013
\u2013
8,981
8,981
12,297
\u2013
\u2013
12,156
12,156
Investment securities held at fair value through other comprehensive income
377
377
\u2013
\u2013
377
476
476
\u2013
\u2013
476
Investment securities held at amortised cost
4,113
2,857
1,122
\u2013
3,979
4,403
3,143
1,072
\u2013
4,215
Derivative financial assets
16
\u2013
16
\u2013
16
36
\u2013
36
\u2013
36
Liabilities
Deposits from customers
14,458
\u2013
\u2013
14,458
14,458
15,623
\u2013
\u2013
15,622
15,622
Deposits from central bank
400
\u2013
\u2013
400
400
3,050
\u2013
\u2013
3,050
3,050
Debt securities
675
\u2013
711
\u2013
711
694
\u2013
585
\u2013
585
Derivative financial liabilities
1
\u2013
1
\u2013
1
\u2013
\u2013
\u2013
\u2013
\u2013
Repurchase agreements
391
\u2013
\u2013
391
391
1,191
\u2013
\u2013
1,191
1,191
Cash and balances with other banks, trade and other receivables, trade and other payables and other
assets and liabilities which meet the definition of financial instruments are not included in the tables. Their
carrying amount is a reasonable approximation of fair value.
Information on how fair values are calculated are explained below:
Loans and advances to customers
Fair value is calculated based on the present value of future principal and interest cash flows, discounted
at the market rate of interest at the balance sheet date, adjusted for future credit losses and prepayments,
if considered material.
Investment securities
The fair value of investment securities is based on either observed market prices for those securities that
have an active trading market (fair value Level 1 assets), or using observable inputs (in the case of fair value
Level 2 assets).
Financial assets held at fair value through profit and loss
The financial assets at fair value through profit and loss relate to the loans and advances previously
assumed by the RateSetter provision fund. They are measured at the fair value of the amounts that we
expect to recover on these loans.
Deposits from customers
Fair values are estimated using discounted cash flows, applying current rates offered for deposits of
similar remaining maturities. The fair value of a deposit repayable on demand is approximated by its
carrying value.
Debt securities
Fair values are determined using the quoted market price at the balance sheet date.
Deposits from central banks/repurchase agreements
Fair values are estimated using discounted cash flows, applying current rates. Fair values approximate
carrying amounts as their balances are either short-dated or are on a variable rate which aligns to the
current market rate.
Derivative financial assets and liabilities
The fair values of derivatives are obtained from discounted cash flow models as appropriate.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-388": { "value": "Accounting policy Repurchase agreements Where we sell financial assets subject to sale and repurchase agreements, the financial assets are retained in their respective balance sheet categories, however they become encumbered and are not available for transfer or sale. The associated liabilities are included in the repurchase agreements line. The difference between the sale and repurchase price of repurchase agreements is treated as interest and accrued over the life of the agreements using the effective interest method as set out in note 2. Other financial instruments Our accounting policies in respect of our other financial instruments can be found in their respective notes, where applicable. Accounting policy Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Accounting policy Determination of fair value \u2018Fair value\u2019 is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which we have access at that date. The fair value of a liability reflects its non-performance risk. In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques, as summarised below: \u2022 Level 1 financial instruments \u2013 Those where the inputs used in the valuation are unadjusted quoted prices from active markets for identical assets or liabilities that we have access to at the measurement date. We consider markets as active only if there are sufficient trading activities with regards to the volume and liquidity of the identical assets or liabilities and when there are binding and exercisable price quotes available on the balance sheet date. \u2022 Level 2 financial instruments \u2013 Those where the inputs that are used for valuation are significant, and are derived from directly or indirectly observable market data available over the entire period of the instrument\u2019s life. Such inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical instruments in inactive markets and observable inputs other than quoted prices, such as interest rates and yield curves, implied volatilities, and credit spreads. In addition, adjustments may be required for the condition or location of the asset or the extent to which it relates to items that are comparable to the valued instrument. However, if such adjustments are based on unobservable inputs which are significant to the entire measurement, we will classify the instruments as Level 3. \u2022 Level 3 financial instruments \u2013 Those that include one or more unobservable inputs that are significant to the measurement as whole. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-347": { "value": "
Classification of financial instruments
31 December 2024
Fair value
through
profit and Amortised
loss FVOCI cost Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Assets
Loans and advances to customers
\u2013
\u2013
9,013
9,013
Investment securities
\u2013
377
4,113
4,490
Derivative financial assets
16
\u2013
\u2013
16
Liabilities
Deposits from customers
\u2013
\u2013
14,458
14,458
Deposits from central bank
\u2013
\u2013
400
400
Debt securities
\u2013
\u2013
675
675
Derivative financial liabilities
1
\u2013
\u2013
1
Repurchase agreements
\u2013
\u2013
391
391
31 December 2023
Fair value
through
profit Amortised
and loss FVOCI cost Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Assets
Loans and advances to customers
\u2013
\u2013
12,297
12,297
Investment securities
\u2013
476
4,403
4,879
Derivative financial assets
36
\u2013
\u2013
36
Liabilities
Deposits from customers
\u2013
\u2013
15,623
15,623
Deposits from central bank
\u2013
\u2013
3,050
3,050
Debt securities
\u2013
\u2013
694
694
Repurchase agreements
\u2013
\u2013
1,191
1,191
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-378": { "value": "Classification of financial instruments
31 December 2024
Fair value
through
profit and Amortised
loss FVOCI cost Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Assets
Loans and advances to customers
\u2013
\u2013
9,013
9,013
Investment securities
\u2013
377
4,113
4,490
Derivative financial assets
16
\u2013
\u2013
16
Liabilities
Deposits from customers
\u2013
\u2013
14,458
14,458
Deposits from central bank
\u2013
\u2013
400
400
Debt securities
\u2013
\u2013
675
675
Derivative financial liabilities
1
\u2013
\u2013
1
Repurchase agreements
\u2013
\u2013
391
391
31 December 2023
Fair value
through
profit Amortised
and loss FVOCI cost Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Assets
Loans and advances to customers
\u2013
\u2013
12,297
12,297
Investment securities
\u2013
476
4,403
4,879
Derivative financial assets
36
\u2013
\u2013
36
Liabilities
Deposits from customers
\u2013
\u2013
15,623
15,623
Deposits from central bank
\u2013
\u2013
3,050
3,050
Debt securities
\u2013
\u2013
694
694
Repurchase agreements
\u2013
\u2013
1,191
1,191
33. Offsetting of financial assets and liabilities Accounting policy Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
31 December 2024
31 December 2023
Effects of offsetting Effects of offsetting
on the balance sheet on the balance sheet
Net amounts Net amounts
Gross amounts presented Gross amounts presented
Gross offset in the in the balance Gross offset in the in the balance
amount balance sheet sheet amount balance sheet sheet
Assets \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Loans and advances to customers
9,013
\u2013
9,013
12,297
\u2013
12,297
Investment securities
1
4,490
\u2013
4,490
4,879
\u2013
4,879
Derivative financial assets
23
(7)
16
67
(31)
36
Deferred tax assets
271
(31)
240
17
(17)
\u2013
Other assets
2
82
\u2013
82
108
\u2013
108
Liabilities
Derivative financial liabilities
8
(7)
1
31
(31)
\u2013
Repurchase agreements
1
391
\u2013
391
1,191
\u2013
1,191
Deposits from central banks
1
400
\u2013
400
3,050
\u2013
3,050
Deferred tax liabilities
31
(31)
\u2013
30
(17)
13
1. We have pledged \u00a31,034 million (2023: \u00a36,110 million) against repos, deposits from central banks and other assets as encumbered collateral which can be called upon in the event of default. 2. Includes \u00a353 million (2023: \u00a350 million) pledged as cash collateral. None of the cash collateral has been offset in the balance sheet.
31 December 2024
31 December 2023
With With
Quoted Using significant Quoted Using significant
market observable unobservable market observable unobservable
Carrying price inputs inputs Total fair Carrying price inputs inputs Total fair
value Level 1 Level 2 Level 3 value value Level 1 Level 2 Level 3 value
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Assets
Loans and advances to customers
9,013
\u2013
\u2013
8,981
8,981
12,297
\u2013
\u2013
12,156
12,156
Investment securities held at fair value through other comprehensive income
377
377
\u2013
\u2013
377
476
476
\u2013
\u2013
476
Investment securities held at amortised cost
4,113
2,857
1,122
\u2013
3,979
4,403
3,143
1,072
\u2013
4,215
Derivative financial assets
16
\u2013
16
\u2013
16
36
\u2013
36
\u2013
36
Liabilities
Deposits from customers
14,458
\u2013
\u2013
14,458
14,458
15,623
\u2013
\u2013
15,622
15,622
Deposits from central bank
400
\u2013
\u2013
400
400
3,050
\u2013
\u2013
3,050
3,050
Debt securities
675
\u2013
711
\u2013
711
694
\u2013
585
\u2013
585
Derivative financial liabilities
1
\u2013
1
\u2013
1
\u2013
\u2013
\u2013
\u2013
\u2013
Repurchase agreements
391
\u2013
\u2013
391
391
1,191
\u2013
\u2013
1,191
1,191
", "dimensions": { "concept": "ifrs-full:DisclosureOfRepurchaseAndReverseRepurchaseAgreementsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-332": { "value": "11. Cash and balances with other banks Accounting policy Cash and balances with other banks consists of both cash on hand and demand deposits, both at other banks as well as the Bank of England. In addition, it includes highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. Investment securities are only classified as cash equivalents if they have a short maturity of three months or less from the date of acquisition and are in substance cash equivalents, e.g. debt investments with fixed redemption dates that are acquired within a short period of their maturity. Where cash is pledged as collateral and as such is not available on demand this is included within other assets within note 17.
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Unrestricted balances with the Bank of England
2,585
3,642
Cash and unrestricted balances with other banks
111
191
Money market placements
115
58
Total cash and balances with other banks
2,811
3,891
The expected credit loss held against cash and balances with the Bank of England is \u00a30.1 million (31 December 2023: \u00a30.1 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndBankBalancesAtCentralBanksExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-301": { "value": "11. Cash and balances with other banks Accounting policy Cash and balances with other banks consists of both cash on hand and demand deposits, both at other banks as well as the Bank of England. In addition, it includes highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. Investment securities are only classified as cash equivalents if they have a short maturity of three months or less from the date of acquisition and are in substance cash equivalents, e.g. debt investments with fixed redemption dates that are acquired within a short period of their maturity. Where cash is pledged as collateral and as such is not available on demand this is included within other assets within note 17.
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Unrestricted balances with the Bank of England
2,585
3,642
Cash and unrestricted balances with other banks
111
191
Money market placements
115
58
Total cash and balances with other banks
2,811
3,891
The expected credit loss held against cash and balances with the Bank of England is \u00a30.1 million (31 December 2023: \u00a30.1 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-389": { "value": "Accounting policy Cash and balances with other banks consists of both cash on hand and demand deposits, both at other banks as well as the Bank of England. In addition, it includes highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. Investment securities are only classified as cash equivalents if they have a short maturity of three months or less from the date of acquisition and are in substance cash equivalents, e.g. debt investments with fixed redemption dates that are acquired within a short period of their maturity. Where cash is pledged as collateral and as such is not available on demand this is included within other assets within note 17. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-302": { "value": "12. Loans and advances to customers Accounting policy Loans and advances to customers are classified as held at amortised cost. Our business model is that customer lending is held to collect cash flows, with no sales expected in the normal course of business. We aim to offer products with simple terms to customers, and as a result, all loans comprise solely payments of principal and interest. Loans are initially recognised when cash is advanced to the borrower at fair value \u2013 which is the cash consideration to originate the loan including any transaction costs \u2013 and measured subsequently at amortised cost using the effective interest rate method, which is detailed further in note 2. Interest on loans is included in the income statement and is reported as \u2018Interest income\u2019. Expected credit losses (ECL) are reported as a deduction from the carrying value of the loan. Changes to the ECL during the year are recognised in the income statement as \u2018Expected credit loss expense\u2019.
31 December 2024
31 December 2023
Gross Net Gross Net
carrying ECL carrying carrying ECL carrying
amount allowance amount amount allowance amount
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Consumer lending
745
(108)
637
1,297
(108)
1,189
Retail mortgages
5,145
(15)
5,130
7,817
(19)
7,798
Commercial lending
3,314
(68)
3,246
3,382
(72)
3,310
Total loans and advances to customers
9,204
(191)
9,013
12,496
(199)
12,297
Further information on the movements in gross carrying amounts and ECL can be found in note 30. An analysis of the gross loans and advances by product category is set out below:
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Overdrafts
39
40
Credit cards
20
28
Term loans
679
1,219
Consumer auto-finance
7
10
Total consumer lending
745
1,297
Residential owner occupied
3,692
5,851
Retail buy-to-let
1,453
1,966
Total retail mortgages
5,145
7,817
Total retail lending
5,890
9,114
Professional buy-to-let
283
465
Bounce back loans
346
524
Coronavirus business interruption loans
47
86
Recovery loan scheme
1
260
328
Core commercial lending
1,599
1,341
Commercial term loans
2,535
2,744
Overdrafts and revolving credit facilities
220
172
Credit cards
7
4
SME Asset Finance Limited and SME Invoice Finance Limited
552
462
Total commercial lending
3,314
3,382
Gross loans and advances to customers
9,204
12,496
1. Recovery loan scheme includes \u00a345 million acquired from third parties under forward flow arrangements (31 December 2023: \u00a370 million). The loans are held in a trust arrangement in which we hold 99% of the beneficial interest, with the issuer retaining the remaining 1% (the trust retains the legal title loans).", "dimensions": { "concept": "ifrs-full:DisclosureOfLoansAndAdvancesToCustomersExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-390": { "value": "Accounting policy Loans and advances to customers are classified as held at amortised cost. Our business model is that customer lending is held to collect cash flows, with no sales expected in the normal course of business. We aim to offer products with simple terms to customers, and as a result, all loans comprise solely payments of principal and interest. Loans are initially recognised when cash is advanced to the borrower at fair value \u2013 which is the cash consideration to originate the loan including any transaction costs \u2013 and measured subsequently at amortised cost using the effective interest rate method, which is detailed further in note 2. Interest on loans is included in the income statement and is reported as \u2018Interest income\u2019. Expected credit losses (ECL) are reported as a deduction from the carrying value of the loan. Changes to the ECL during the year are recognised in the income statement as \u2018Expected credit loss expense\u2019. ", "dimensions": { "concept": "metrobankholdingsplc:DescriptionOfAccountingPolicyForLoansAndAdvancesToCustomers", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-303": { "value": "13. Investment securities Accounting policy Our investment securities may be categorised as amortised cost, FVOCI or fair value through profit and loss. Currently all investment securities are non-complex, with cash flows comprising solely payments of principal and interest. We hold some securities to collect cash flows; other securities are held to collect cash flows, and to sell if the need arises (e.g. to manage and meet day-to-day liquidity needs). Therefore, we have a mixed business model and securities are classified as either amortised cost or FVOCI as appropriate. We do not categorise any investment securities as fair value through profit and loss. Settlement date accounting is used when recording financial asset transactions where a trade is settled through the regular settlement cycle for that particular investment. Investment securities held at amortised cost Investment securities held at amortised cost consist entirely of debt instruments. They are accounted for using the effective interest method, less any impairment losses. Investment securities held at FVOCI Investment securities held at FVOCI consist entirely of debt instruments. Investment securities held at FVOCI are initially recognised at fair value, which is the cash consideration including any transaction costs, and measured subsequently at fair value with gains and losses being recognised in other comprehensive income, except for impairment losses and foreign exchange gains and losses, until the investment security is derecognised. Interest is calculated using the effective interest method.
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Investment securities held at FVOCI
377
476
Investment securities held at amortised cost
4,113
4,403
Total investment securities
4,490
4,879
Investment securities held at FVOCI
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Sovereign bonds
149
220
Covered bonds
83
112
Multi-lateral development bank bonds
145
144
Total investment securities held at FVOCI
377
476
Investment securities held at amortised cost
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Sovereign bonds
875
938
Residential mortgage-backed securities
876
954
Covered bonds
478
594
Multi-lateral development bank bonds
1,576
1,729
Asset backed securities
308
188
Total investment securities held at amortised cost
4,113
4,403
Further information on the ECL recognised on investment securities can be found in note 30.", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-391": { "value": "Accounting policy Our investment securities may be categorised as amortised cost, FVOCI or fair value through profit and loss. Currently all investment securities are non-complex, with cash flows comprising solely payments of principal and interest. We hold some securities to collect cash flows; other securities are held to collect cash flows, and to sell if the need arises (e.g. to manage and meet day-to-day liquidity needs). Therefore, we have a mixed business model and securities are classified as either amortised cost or FVOCI as appropriate. We do not categorise any investment securities as fair value through profit and loss. Settlement date accounting is used when recording financial asset transactions where a trade is settled through the regular settlement cycle for that particular investment. Investment securities held at amortised cost Investment securities held at amortised cost consist entirely of debt instruments. They are accounted for using the effective interest method, less any impairment losses. Investment securities held at FVOCI Investment securities held at FVOCI consist entirely of debt instruments. Investment securities held at FVOCI are initially recognised at fair value, which is the cash consideration including any transaction costs, and measured subsequently at fair value with gains and losses being recognised in other comprehensive income, except for impairment losses and foreign exchange gains and losses, until the investment security is derecognised. Interest is calculated using the effective interest method. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-304": { "value": "14. Property, plant and equipment Accounting policy Property, plant and equipment Our property, plant and equipment primarily consists of investments and improvements in our store network and is stated at cost less accumulated depreciation and any recognised impairment. We depreciate property, plant and equipment on a straight-line basis to its residual value using the following useful economic lives:
Leasehold improvements
Lower of the remaining life of the lease or the
useful life of the asset
Freehold land
Not depreciated
Buildings
Up to 50 years
Fixtures, fittings and equipment
5 years
IT hardware
3 to 5 years
We keep depreciation rates, methods and the residual values underlying the calculation of depreciation of items of property, plant and equipment under review to take account of any change in circumstances. All items of property, plant and equipment are reviewed at the end of each reporting period for indicators of impairment. Right-of-use assets All of our leases within the scope of IFRS 16 \u2018Leases\u2019 (other than those of low value) relate to our stores and head office properties. Upon the recognition of a lease liability (see note 22 for further details) a corresponding right-of- use asset is recognised. This is adjusted for any initial direct costs incurred, lease incentives paid or received and any restoration costs at the end of the lease (where applicable). The right-of-use asset is depreciated on a straight-line basis over the life of the lease. All right-of-use assets are reviewed at the end of each reporting period for indicators of impairment. Investment property Investment property is also stated at cost less accumulated depreciation and any recognised impairment. Depreciation is calculated on a consistent basis with that applied to land and buildings as set out above.
2024
Freehold Fixtures,
Investment Leasehold land and fittings and IT Right-of-use
property improvements buildings equipment hardware assets Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Cost
1 January 2024
12
256
386
23
10
279
966
Additions
\u2013
1
37
\u2013
2
1
41
Disposals
\u2013
\u2013
\u2013
\u2013
\u2013
(25)
(25)
Transfers
\u2013
(13)
13
\u2013
\u2013
\u2013
\u2013
31 December 2024
12
244
436
23
12
255
982
Accumulated depreciation
1 January 2024
8
79
42
21
4
89
243
Depreciation charge
\u2013
5
12
1
4
12
34
Impairments
\u2013
\u2013
\u2013
\u2013
\u2013
1
1
Disposals
\u2013
\u2013
\u2013
\u2013
\u2013
(7)
(7)
Transfers
\u2013
(3)
3
\u2013
\u2013
\u2013
\u2013
31 December 2024
8
81
57
22
8
95
271
Net book value
4
163
379
1
4
160
711
2023
Freehold Fixtures,
Investment Leasehold land and fittings and IT Right-of-use
property improvements buildings equipment hardware assets Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Cost
1 January 2023
12
261
372
22
8
283
958
Additions
\u2013
\u2013
9
1
2
\u2013
12
Disposals
\u2013
\u2013
\u2013
\u2013
\u2013
(4)
(4)
Transfers
\u2013
(5)
5
\u2013
\u2013
\u2013
\u2013
31 December 2023
12
256
386
23
10
279
966
Accumulated depreciation
1 January 2023
8
69
34
20
2
77
210
Depreciation charge
\u2013
13
5
1
2
13
34
Disposals
\u2013
\u2013
\u2013
\u2013
\u2013
(1)
(1)
Transfers
\u2013
(3)
3
\u2013
\u2013
\u2013
\u2013
31 December 2023
8
79
42
21
4
89
243
Net book value
4
177
344
2
6
190
723
Fair value of investment property
Our investment property typically consists of shops and offices which are located within the same
buildings as some of our stores, where we have acquired the freehold interest. As at 31 December 2024
our investment property had a fair value of \u00a34 million (31 December 2023: \u00a34 million). The fair value has
been provided by a qualified independent valuer.
Impairments
During the year, impairment indicators were identified in respect of other items of our property, plant and
equipment. The assets, which included our stores, were tested for impairment. We do not consider
individual stores to be cash generating units (CGU), on the basis that they do not generate sufficiently
independent cash flows. Instead all of our stores and associated assets are deemed to belong to our retail
bank CGU. Further details on the impairment testing of our CGUs can be found in note 15.
The recoverable amount of the retail bank CGU was found to be in excess of its carrying amount and as
such no impairment was recognised.
Transfers
Transfers represent costs associated with the previous improvements made to the two (2023: one) leased
stores which have been purchased during the year.
Contractual commitment for the acquisition of property, plant and equipment
As at 31 December 2024, we had no contractual commitments relating to the acquisition of property,
plant and equipment that are not reflected in the tables (31 December 2023: \u00a3nil).
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-392": { "value": "Accounting policy Property, plant and equipment Our property, plant and equipment primarily consists of investments and improvements in our store network and is stated at cost less accumulated depreciation and any recognised impairment. We depreciate property, plant and equipment on a straight-line basis to its residual value using the following useful economic lives:
Leasehold improvements
Lower of the remaining life of the lease or the
useful life of the asset
Freehold land
Not depreciated
Buildings
Up to 50 years
Fixtures, fittings and equipment
5 years
IT hardware
3 to 5 years
We keep depreciation rates, methods and the residual values underlying the calculation of depreciation of items of property, plant and equipment under review to take account of any change in circumstances. All items of property, plant and equipment are reviewed at the end of each reporting period for indicators of impairment. Right-of-use assets All of our leases within the scope of IFRS 16 \u2018Leases\u2019 (other than those of low value) relate to our stores and head office properties. Upon the recognition of a lease liability (see note 22 for further details) a corresponding right-of- use asset is recognised. This is adjusted for any initial direct costs incurred, lease incentives paid or received and any restoration costs at the end of the lease (where applicable). The right-of-use asset is depreciated on a straight-line basis over the life of the lease. All right-of-use assets are reviewed at the end of each reporting period for indicators of impairment. Investment property Investment property is also stated at cost less accumulated depreciation and any recognised impairment. Depreciation is calculated on a consistent basis with that applied to land and buildings as set out above. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-404": { "value": "Property, plant and equipment Our property, plant and equipment primarily consists of investments and improvements in our store network and is stated at cost less accumulated depreciation and any recognised impairment. We depreciate property, plant and equipment on a straight-line basis to its residual value using the following useful economic lives:
Leasehold improvements
Lower of the remaining life of the lease or the
useful life of the asset
Freehold land
Not depreciated
Buildings
Up to 50 years
Fixtures, fittings and equipment
5 years
IT hardware
3 to 5 years
We keep depreciation rates, methods and the residual values underlying the calculation of depreciation of items of property, plant and equipment under review to take account of any change in circumstances. All items of property, plant and equipment are reviewed at the end of each reporting period for indicators of impairment. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-333": { "value": "
2024
Freehold Fixtures,
Investment Leasehold land and fittings and IT Right-of-use
property improvements buildings equipment hardware assets Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Cost
1 January 2024
12
256
386
23
10
279
966
Additions
\u2013
1
37
\u2013
2
1
41
Disposals
\u2013
\u2013
\u2013
\u2013
\u2013
(25)
(25)
Transfers
\u2013
(13)
13
\u2013
\u2013
\u2013
\u2013
31 December 2024
12
244
436
23
12
255
982
Accumulated depreciation
1 January 2024
8
79
42
21
4
89
243
Depreciation charge
\u2013
5
12
1
4
12
34
Impairments
\u2013
\u2013
\u2013
\u2013
\u2013
1
1
Disposals
\u2013
\u2013
\u2013
\u2013
\u2013
(7)
(7)
Transfers
\u2013
(3)
3
\u2013
\u2013
\u2013
\u2013
31 December 2024
8
81
57
22
8
95
271
Net book value
4
163
379
1
4
160
711
2023
Freehold Fixtures,
Investment Leasehold land and fittings and IT Right-of-use
property improvements buildings equipment hardware assets Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Cost
1 January 2023
12
261
372
22
8
283
958
Additions
\u2013
\u2013
9
1
2
\u2013
12
Disposals
\u2013
\u2013
\u2013
\u2013
\u2013
(4)
(4)
Transfers
\u2013
(5)
5
\u2013
\u2013
\u2013
\u2013
31 December 2023
12
256
386
23
10
279
966
Accumulated depreciation
1 January 2023
8
69
34
20
2
77
210
Depreciation charge
\u2013
13
5
1
2
13
34
Disposals
\u2013
\u2013
\u2013
\u2013
\u2013
(1)
(1)
Transfers
\u2013
(3)
3
\u2013
\u2013
\u2013
\u2013
31 December 2023
8
79
42
21
4
89
243
Net book value
4
177
344
2
6
190
723
Fair value of investment property Our investment property typically consists of shops and offices which are located within the same buildings as some of our stores, where we have acquired the freehold interest. As at 31 December 2024 our investment property had a fair value of \u00a34 million (31 December 2023: \u00a34 million). The fair value has been provided by a qualified independent valuer. Impairments During the year, impairment indicators were identified in respect of other items of our property, plant and equipment. The assets, which included our stores, were tested for impairment. We do not consider individual stores to be cash generating units (CGU), on the basis that they do not generate sufficiently independent cash flows. Instead all of our stores and associated assets are deemed to belong to our retail bank CGU. Further details on the impairment testing of our CGUs can be found in note 15. The recoverable amount of the retail bank CGU was found to be in excess of its carrying amount and as such no impairment was recognised. Transfers Transfers represent costs associated with the previous improvements made to the two (2023: one) leased stores which have been purchased during the year. Contractual commitment for the acquisition of property, plant and equipment As at 31 December 2024, we had no contractual commitments relating to the acquisition of property, plant and equipment that are not reflected in the tables (31 December 2023: \u00a3nil).
Right-of-use assets
All of our disclosures relating to right-of-use assets, including our accounting policy, can be found in
note 14.
", "dimensions": { "concept": "ifrs-full:DisclosureOfQuantitativeInformationAboutRightofuseAssetsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-348": { "value": "
2024
Freehold Fixtures,
Investment Leasehold land and fittings and IT Right-of-use
property improvements buildings equipment hardware assets Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Cost
1 January 2024
12
256
386
23
10
279
966
Additions
\u2013
1
37
\u2013
2
1
41
Disposals
\u2013
\u2013
\u2013
\u2013
\u2013
(25)
(25)
Transfers
\u2013
(13)
13
\u2013
\u2013
\u2013
\u2013
31 December 2024
12
244
436
23
12
255
982
Accumulated depreciation
1 January 2024
8
79
42
21
4
89
243
Depreciation charge
\u2013
5
12
1
4
12
34
Impairments
\u2013
\u2013
\u2013
\u2013
\u2013
1
1
Disposals
\u2013
\u2013
\u2013
\u2013
\u2013
(7)
(7)
Transfers
\u2013
(3)
3
\u2013
\u2013
\u2013
\u2013
31 December 2024
8
81
57
22
8
95
271
Net book value
4
163
379
1
4
160
711
2023
Freehold Fixtures,
Investment Leasehold land and fittings and IT Right-of-use
property improvements buildings equipment hardware assets Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Cost
1 January 2023
12
261
372
22
8
283
958
Additions
\u2013
\u2013
9
1
2
\u2013
12
Disposals
\u2013
\u2013
\u2013
\u2013
\u2013
(4)
(4)
Transfers
\u2013
(5)
5
\u2013
\u2013
\u2013
\u2013
31 December 2023
12
256
386
23
10
279
966
Accumulated depreciation
1 January 2023
8
69
34
20
2
77
210
Depreciation charge
\u2013
13
5
1
2
13
34
Disposals
\u2013
\u2013
\u2013
\u2013
\u2013
(1)
(1)
Transfers
\u2013
(3)
3
\u2013
\u2013
\u2013
\u2013
31 December 2023
8
79
42
21
4
89
243
Net book value
4
177
344
2
6
190
723
Fair value of investment property Our investment property typically consists of shops and offices which are located within the same buildings as some of our stores, where we have acquired the freehold interest. As at 31 December 2024 our investment property had a fair value of \u00a34 million (31 December 2023: \u00a34 million). The fair value has been provided by a qualified independent valuer. Impairments During the year, impairment indicators were identified in respect of other items of our property, plant and equipment. The assets, which included our stores, were tested for impairment. We do not consider individual stores to be cash generating units (CGU), on the basis that they do not generate sufficiently independent cash flows. Instead all of our stores and associated assets are deemed to belong to our retail bank CGU. Further details on the impairment testing of our CGUs can be found in note 15. The recoverable amount of the retail bank CGU was found to be in excess of its carrying amount and as such no impairment was recognised. Transfers Transfers represent costs associated with the previous improvements made to the two (2023: one) leased stores which have been purchased during the year. Contractual commitment for the acquisition of property, plant and equipment As at 31 December 2024, we had no contractual commitments relating to the acquisition of property, plant and equipment that are not reflected in the tables (31 December 2023: \u00a3nil). ", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentPropertyExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-364": { "value": "
2024
Freehold Fixtures,
Investment Leasehold land and fittings and IT Right-of-use
property improvements buildings equipment hardware assets Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Cost
1 January 2024
12
256
386
23
10
279
966
Additions
\u2013
1
37
\u2013
2
1
41
Disposals
\u2013
\u2013
\u2013
\u2013
\u2013
(25)
(25)
Transfers
\u2013
(13)
13
\u2013
\u2013
\u2013
\u2013
31 December 2024
12
244
436
23
12
255
982
Accumulated depreciation
1 January 2024
8
79
42
21
4
89
243
Depreciation charge
\u2013
5
12
1
4
12
34
Impairments
\u2013
\u2013
\u2013
\u2013
\u2013
1
1
Disposals
\u2013
\u2013
\u2013
\u2013
\u2013
(7)
(7)
Transfers
\u2013
(3)
3
\u2013
\u2013
\u2013
\u2013
31 December 2024
8
81
57
22
8
95
271
Net book value
4
163
379
1
4
160
711
2023
Freehold Fixtures,
Investment Leasehold land and fittings and IT Right-of-use
property improvements buildings equipment hardware assets Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Cost
1 January 2023
12
261
372
22
8
283
958
Additions
\u2013
\u2013
9
1
2
\u2013
12
Disposals
\u2013
\u2013
\u2013
\u2013
\u2013
(4)
(4)
Transfers
\u2013
(5)
5
\u2013
\u2013
\u2013
\u2013
31 December 2023
12
256
386
23
10
279
966
Accumulated depreciation
1 January 2023
8
69
34
20
2
77
210
Depreciation charge
\u2013
13
5
1
2
13
34
Disposals
\u2013
\u2013
\u2013
\u2013
\u2013
(1)
(1)
Transfers
\u2013
(3)
3
\u2013
\u2013
\u2013
\u2013
31 December 2023
8
79
42
21
4
89
243
Net book value
4
177
344
2
6
190
723
Fair value of investment property Our investment property typically consists of shops and offices which are located within the same buildings as some of our stores, where we have acquired the freehold interest. As at 31 December 2024 our investment property had a fair value of \u00a34 million (31 December 2023: \u00a34 million). The fair value has been provided by a qualified independent valuer. Impairments During the year, impairment indicators were identified in respect of other items of our property, plant and equipment. The assets, which included our stores, were tested for impairment. We do not consider individual stores to be cash generating units (CGU), on the basis that they do not generate sufficiently independent cash flows. Instead all of our stores and associated assets are deemed to belong to our retail bank CGU. Further details on the impairment testing of our CGUs can be found in note 15. The recoverable amount of the retail bank CGU was found to be in excess of its carrying amount and as such no impairment was recognised. Transfers Transfers represent costs associated with the previous improvements made to the two (2023: one) leased stores which have been purchased during the year. Contractual commitment for the acquisition of property, plant and equipment As at 31 December 2024, we had no contractual commitments relating to the acquisition of property, plant and equipment that are not reflected in the tables (31 December 2023: \u00a3nil). ", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-379": { "value": "Impairments During the year, impairment indicators were identified in respect of other items of our property, plant and equipment. The assets, which included our stores, were tested for impairment. We do not consider individual stores to be cash generating units (CGU), on the basis that they do not generate sufficiently independent cash flows. Instead all of our stores and associated assets are deemed to belong to our retail bank CGU. Further details on the impairment testing of our CGUs can be found in note 15. The recoverable amount of the retail bank CGU was found to be in excess of its carrying amount and as such no impairment was recognised. ", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-365": { "value": "15. Intangible assets Accounting policy Goodwill Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over our interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree. For the purpose of impairment assessment, goodwill acquired in a business combination is allocated to each of our CGUs, or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is not amortised, however, it is tested for impairment at the end of each reporting period. The recoverable amount of a CGU is the higher of its fair value less cost to sell, and the present value of its expected future cash flows. If the recoverable amount is less than the carrying value, an impairment loss is charged to the income statement. Goodwill is stated at cost less accumulated impairment losses. Any impairment is recognised immediately as an expense and is not subsequently reversed. Other intangible assets Software includes both purchased items and internally developed systems, which consist principally of identifiable and directly associated internal colleague, contractor and other costs. Purchased intangible assets and costs directly associated with the development of systems are capitalised as intangible assets where there is an identifiable asset which we control and which will generate future economic benefits in accordance with IAS 38 \u2018Intangible Assets\u2019. Costs to establish feasibility or to maintain existing performance are recognised as an expense. Intangible assets are amortised on a straight-line basis within the income statement using the following useful economic lives:
Core banking software
1
up to 20 years
Other banking software
3 to 10 years
Software licences
licence period
Brands
5 years
All intangible assets are reviewed at the end of each reporting period for indicators of impairment. 1. Core banking software consists of our central banking transaction platform. The original platform was assessed as having a 20-year life due to it being the central component of our digital infrastructure. It was upgraded during 2019 with the upgrade assessed as having a 15-year life.
2024
Goodwill Brands Software Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Cost
1 January 2024
10
2
355
367
Additions
\u2013
\u2013
19
19
Write-offs
\u2013
\u2013
(85)
(85)
31 December 2024
10
2
289
301
Accumulated amortisation
1 January 2024
\u2013
1
173
174
Amortisation charge
\u2013
\u2013
43
43
Write-offs
\u2013
\u2013
(42)
(42)
31 December 2024
\u2013
1
174
175
Net book value
10
1
115
126
2023
Goodwill Brands Software Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Cost
1 January 2023
10
2
338
350
Additions
\u2013
\u2013
26
26
Write-offs
\u2013
\u2013
(9)
(9)
31 December 2023
10
2
355
367
Accumulated amortisation
1 January 2023
\u2013
\u2013
134
134
Amortisation charge
\u2013
1
43
44
Write-offs
\u2013
\u2013
(4)
(4)
31 December 2023
\u2013
1
173
174
Net book value
10
1
182
193
Software Software consists of both internally generated and externally acquired assets. As at 31 December 2024, externally acquired licences had a net book value of \u00a35 million (31 December 2023: \u00a39 million). Out of our total intangible assets, \u00a320 million of software assets were under the course of construction at 31 December 2024 (31 December 2023: \u00a334 million). Write-offs The write-offs in the year consisted primarily of software and applications that are no longer being used and are no longer providing any further economic benefits. Goodwill and impairment testing of cash generating units An impairment test on the carrying value of the assets in our CGUs has been undertaken. As at 31 December 2024, we had two main CGUs being the retail bank and our SME Asset Finance Limited and SME Invoice Finance Limited businesses and no changes have been made to our CGUs during the year. Both of our CGUs contain goodwill and as such are tested annually for impairment. Additional impairment indicators were identified in relation to the retail bank CGU in relation to both its intangible assets as well as property, plant and equipment (see note 14).
31 December
2024
\u00a3\u2019million
SME Asset Finance Limited and SME Invoice Finance Limited
4
Retail bank
6
Total
10
The recoverable amount for both CGUs was determined by a Value-in-Use (VIU) calculation. The VIU was higher than their carrying value and therefore no impairment charge has been recognised for the current year (2023: no charge). The VIU calculation is based on our Board-approved Long-Term Plan which covers the five year period from 2025 to 2029 inclusive. Our Long-Term Plan is constructed using our best estimate of the future performance of the business. The plan incorporates market-based forecasts of interest rates and inflation, loan growth assumptions, costs, and our assessment of the impact of Basel 3.1 regulatory changes. The Long-Term Plan is built on the assumption that we remain appropriately capitalised to fund our anticipated growth. We have determined that we will be able to meet the appropriate regulatory requirements, which has been based on an analysis of both our existing and planned capital structure. This is consistent with the assessment undertaken by the Directors in respect of assessing viability, which can be found on pages 46 to 47. The profitability for each CGU per the Long-Term Plan is adjusted for non-cash items (including depreciation and amortisation), capital expenditure and long-term funding costs (which are reflected in the discount rate) and certain cash flows which are not permitted to be included under IAS 36, to establish the cash flows for the VIU. In the outer years beyond the Long-Term Plan period, we have assumed a terminal growth rate of 2% is reached by year six. The terminal growth rate of 2% represents the predicted long-term GDP growth rate of the UK economy (the only market both CGUs operate in). The VIU cash flows are compared to the carrying value of the CGUs, which exclude long term debt. A pre-tax discount rate of 13.82% (31 December 2023: 14.7%) has been used for the VIU calculation. The discount rate is based on our post-tax weighted average cost of capital of 11.36% (which is grossed up to a pre-tax rate), based on the cost of equity and long term debt, weighted by the market value of the equity and debt. The VIU is most sensitive to changes in the projected profitability per the Long-Term Plan and the discount rate applied (which are dependent on the assumptions regarding capital outlined above). If adjusted independently of all other variables, reasonable changes to the assumption in either of these factors over the next 12 months would not cause the recoverable of either CGU to fall below its carrying amount.", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-380": { "value": "15. Intangible assets Accounting policy Goodwill Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over our interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree. For the purpose of impairment assessment, goodwill acquired in a business combination is allocated to each of our CGUs, or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is not amortised, however, it is tested for impairment at the end of each reporting period. The recoverable amount of a CGU is the higher of its fair value less cost to sell, and the present value of its expected future cash flows. If the recoverable amount is less than the carrying value, an impairment loss is charged to the income statement. Goodwill is stated at cost less accumulated impairment losses. Any impairment is recognised immediately as an expense and is not subsequently reversed. Other intangible assets Software includes both purchased items and internally developed systems, which consist principally of identifiable and directly associated internal colleague, contractor and other costs. Purchased intangible assets and costs directly associated with the development of systems are capitalised as intangible assets where there is an identifiable asset which we control and which will generate future economic benefits in accordance with IAS 38 \u2018Intangible Assets\u2019. Costs to establish feasibility or to maintain existing performance are recognised as an expense. Intangible assets are amortised on a straight-line basis within the income statement using the following useful economic lives:
Core banking software
1
up to 20 years
Other banking software
3 to 10 years
Software licences
licence period
Brands
5 years
All intangible assets are reviewed at the end of each reporting period for indicators of impairment. 1. Core banking software consists of our central banking transaction platform. The original platform was assessed as having a 20-year life due to it being the central component of our digital infrastructure. It was upgraded during 2019 with the upgrade assessed as having a 15-year life.
2024
Goodwill Brands Software Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Cost
1 January 2024
10
2
355
367
Additions
\u2013
\u2013
19
19
Write-offs
\u2013
\u2013
(85)
(85)
31 December 2024
10
2
289
301
Accumulated amortisation
1 January 2024
\u2013
1
173
174
Amortisation charge
\u2013
\u2013
43
43
Write-offs
\u2013
\u2013
(42)
(42)
31 December 2024
\u2013
1
174
175
Net book value
10
1
115
126
2023
Goodwill Brands Software Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Cost
1 January 2023
10
2
338
350
Additions
\u2013
\u2013
26
26
Write-offs
\u2013
\u2013
(9)
(9)
31 December 2023
10
2
355
367
Accumulated amortisation
1 January 2023
\u2013
\u2013
134
134
Amortisation charge
\u2013
1
43
44
Write-offs
\u2013
\u2013
(4)
(4)
31 December 2023
\u2013
1
173
174
Net book value
10
1
182
193
Software Software consists of both internally generated and externally acquired assets. As at 31 December 2024, externally acquired licences had a net book value of \u00a35 million (31 December 2023: \u00a39 million). Out of our total intangible assets, \u00a320 million of software assets were under the course of construction at 31 December 2024 (31 December 2023: \u00a334 million). Write-offs The write-offs in the year consisted primarily of software and applications that are no longer being used and are no longer providing any further economic benefits. Goodwill and impairment testing of cash generating units An impairment test on the carrying value of the assets in our CGUs has been undertaken. As at 31 December 2024, we had two main CGUs being the retail bank and our SME Asset Finance Limited and SME Invoice Finance Limited businesses and no changes have been made to our CGUs during the year. Both of our CGUs contain goodwill and as such are tested annually for impairment. Additional impairment indicators were identified in relation to the retail bank CGU in relation to both its intangible assets as well as property, plant and equipment (see note 14).
31 December
2024
\u00a3\u2019million
SME Asset Finance Limited and SME Invoice Finance Limited
4
Retail bank
6
Total
10
The recoverable amount for both CGUs was determined by a Value-in-Use (VIU) calculation. The VIU was higher than their carrying value and therefore no impairment charge has been recognised for the current year (2023: no charge). The VIU calculation is based on our Board-approved Long-Term Plan which covers the five year period from 2025 to 2029 inclusive. Our Long-Term Plan is constructed using our best estimate of the future performance of the business. The plan incorporates market-based forecasts of interest rates and inflation, loan growth assumptions, costs, and our assessment of the impact of Basel 3.1 regulatory changes. The Long-Term Plan is built on the assumption that we remain appropriately capitalised to fund our anticipated growth. We have determined that we will be able to meet the appropriate regulatory requirements, which has been based on an analysis of both our existing and planned capital structure. This is consistent with the assessment undertaken by the Directors in respect of assessing viability, which can be found on pages 46 to 47. The profitability for each CGU per the Long-Term Plan is adjusted for non-cash items (including depreciation and amortisation), capital expenditure and long-term funding costs (which are reflected in the discount rate) and certain cash flows which are not permitted to be included under IAS 36, to establish the cash flows for the VIU. In the outer years beyond the Long-Term Plan period, we have assumed a terminal growth rate of 2% is reached by year six. The terminal growth rate of 2% represents the predicted long-term GDP growth rate of the UK economy (the only market both CGUs operate in). The VIU cash flows are compared to the carrying value of the CGUs, which exclude long term debt. A pre-tax discount rate of 13.82% (31 December 2023: 14.7%) has been used for the VIU calculation. The discount rate is based on our post-tax weighted average cost of capital of 11.36% (which is grossed up to a pre-tax rate), based on the cost of equity and long term debt, weighted by the market value of the equity and debt. The VIU is most sensitive to changes in the projected profitability per the Long-Term Plan and the discount rate applied (which are dependent on the assumptions regarding capital outlined above). If adjusted independently of all other variables, reasonable changes to the assumption in either of these factors over the next 12 months would not cause the recoverable of either CGU to fall below its carrying amount.", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-305": { "value": "15. Intangible assets Accounting policy Goodwill Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over our interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree. For the purpose of impairment assessment, goodwill acquired in a business combination is allocated to each of our CGUs, or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is not amortised, however, it is tested for impairment at the end of each reporting period. The recoverable amount of a CGU is the higher of its fair value less cost to sell, and the present value of its expected future cash flows. If the recoverable amount is less than the carrying value, an impairment loss is charged to the income statement. Goodwill is stated at cost less accumulated impairment losses. Any impairment is recognised immediately as an expense and is not subsequently reversed. Other intangible assets Software includes both purchased items and internally developed systems, which consist principally of identifiable and directly associated internal colleague, contractor and other costs. Purchased intangible assets and costs directly associated with the development of systems are capitalised as intangible assets where there is an identifiable asset which we control and which will generate future economic benefits in accordance with IAS 38 \u2018Intangible Assets\u2019. Costs to establish feasibility or to maintain existing performance are recognised as an expense. Intangible assets are amortised on a straight-line basis within the income statement using the following useful economic lives:
Core banking software
1
up to 20 years
Other banking software
3 to 10 years
Software licences
licence period
Brands
5 years
All intangible assets are reviewed at the end of each reporting period for indicators of impairment. 1. Core banking software consists of our central banking transaction platform. The original platform was assessed as having a 20-year life due to it being the central component of our digital infrastructure. It was upgraded during 2019 with the upgrade assessed as having a 15-year life.
2024
Goodwill Brands Software Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Cost
1 January 2024
10
2
355
367
Additions
\u2013
\u2013
19
19
Write-offs
\u2013
\u2013
(85)
(85)
31 December 2024
10
2
289
301
Accumulated amortisation
1 January 2024
\u2013
1
173
174
Amortisation charge
\u2013
\u2013
43
43
Write-offs
\u2013
\u2013
(42)
(42)
31 December 2024
\u2013
1
174
175
Net book value
10
1
115
126
2023
Goodwill Brands Software Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Cost
1 January 2023
10
2
338
350
Additions
\u2013
\u2013
26
26
Write-offs
\u2013
\u2013
(9)
(9)
31 December 2023
10
2
355
367
Accumulated amortisation
1 January 2023
\u2013
\u2013
134
134
Amortisation charge
\u2013
1
43
44
Write-offs
\u2013
\u2013
(4)
(4)
31 December 2023
\u2013
1
173
174
Net book value
10
1
182
193
Software Software consists of both internally generated and externally acquired assets. As at 31 December 2024, externally acquired licences had a net book value of \u00a35 million (31 December 2023: \u00a39 million). Out of our total intangible assets, \u00a320 million of software assets were under the course of construction at 31 December 2024 (31 December 2023: \u00a334 million).
Write-offs
The write-offs in the year consisted primarily of software and applications that are no longer being used
and are no longer providing any further economic benefits.
Goodwill and impairment testing of cash generating units
An impairment test on the carrying value of the assets in our CGUs has been undertaken. As at 31
December 2024, we had two main CGUs being the retail bank and our SME Asset Finance Limited and
SME Invoice Finance Limited businesses and no changes have been made to our CGUs during the year.
Both of our CGUs contain goodwill and as such are tested annually for impairment. Additional impairment
indicators were identified in relation to the retail bank CGU in relation to both its intangible assets as well
as property, plant and equipment (see note 14).
31 December
2024
\u00a3\u2019million
SME Asset Finance Limited and SME Invoice Finance Limited
4
Retail bank
6
Total
10
The recoverable amount for both CGUs was determined by a Value-in-Use (VIU) calculation. The VIU was
higher than their carrying value and therefore no impairment charge has been recognised for the current
year (2023: no charge). The VIU calculation is based on our Board-approved Long-Term Plan which covers
the five year period from 2025 to 2029 inclusive. Our Long-Term Plan is constructed using our best
estimate of the future performance of the business. The plan incorporates market-based forecasts of
interest rates and inflation, loan growth assumptions, costs, and our assessment of the impact of Basel 3.1
regulatory changes. The Long-Term Plan is built on the assumption that we remain appropriately
capitalised to fund our anticipated growth. We have determined that we will be able to meet the
appropriate regulatory requirements, which has been based on an analysis of both our existing and
planned capital structure. This is consistent with the assessment undertaken by the Directors in respect
of assessing viability, which can be found on pages 46 to 47.
The profitability for each CGU per the Long-Term Plan is adjusted for non-cash items (including
depreciation and amortisation), capital expenditure and long-term funding costs (which are reflected in
the discount rate) and certain cash flows which are not permitted to be included under IAS 36, to establish
the cash flows for the VIU. In the outer years beyond the Long-Term Plan period, we have assumed
a terminal growth rate of 2% is reached by year six. The terminal growth rate of 2% represents the
predicted long-term GDP growth rate of the UK economy (the only market both CGUs operate in).
The VIU cash flows are compared to the carrying value of the CGUs, which exclude long term debt.
A pre-tax discount rate of 13.82% (31 December 2023: 14.7%) has been used for the VIU calculation. The
discount rate is based on our post-tax weighted average cost of capital of 11.36% (which is grossed up to a
pre-tax rate), based on the cost of equity and long term debt, weighted by the market value of the equity
and debt.
The VIU is most sensitive to changes in the projected profitability per the Long-Term Plan and the discount
rate applied (which are dependent on the assumptions regarding capital outlined above). If adjusted
independently of all other variables, reasonable changes to the assumption in either of these factors over
the next 12 months would not cause the recoverable of either CGU to fall below its carrying amount.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-393": { "value": "Accounting policy Goodwill Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over our interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree. For the purpose of impairment assessment, goodwill acquired in a business combination is allocated to each of our CGUs, or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is not amortised, however, it is tested for impairment at the end of each reporting period. The recoverable amount of a CGU is the higher of its fair value less cost to sell, and the present value of its expected future cash flows. If the recoverable amount is less than the carrying value, an impairment loss is charged to the income statement. Goodwill is stated at cost less accumulated impairment losses. Any impairment is recognised immediately as an expense and is not subsequently reversed. Other intangible assets Software includes both purchased items and internally developed systems, which consist principally of identifiable and directly associated internal colleague, contractor and other costs. Purchased intangible assets and costs directly associated with the development of systems are capitalised as intangible assets where there is an identifiable asset which we control and which will generate future economic benefits in accordance with IAS 38 \u2018Intangible Assets\u2019. Costs to establish feasibility or to maintain existing performance are recognised as an expense. Intangible assets are amortised on a straight-line basis within the income statement using the following useful economic lives:
Core banking software
1
up to 20 years
Other banking software
3 to 10 years
Software licences
licence period
Brands
5 years
All intangible assets are reviewed at the end of each reporting period for indicators of impairment. 1. Core banking software consists of our central banking transaction platform. The original platform was assessed as having a 20-year life due to it being the central component of our digital infrastructure. It was upgraded during 2019 with the upgrade assessed as having a 15-year life. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-405": { "value": "Goodwill Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over our interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree. For the purpose of impairment assessment, goodwill acquired in a business combination is allocated to each of our CGUs, or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is not amortised, however, it is tested for impairment at the end of each reporting period. The recoverable amount of a CGU is the higher of its fair value less cost to sell, and the present value of its expected future cash flows. If the recoverable amount is less than the carrying value, an impairment loss is charged to the income statement. Goodwill is stated at cost less accumulated impairment losses. Any impairment is recognised immediately as an expense and is not subsequently reversed. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-406": { "value": "Other intangible assets Software includes both purchased items and internally developed systems, which consist principally of identifiable and directly associated internal colleague, contractor and other costs. Purchased intangible assets and costs directly associated with the development of systems are capitalised as intangible assets where there is an identifiable asset which we control and which will generate future economic benefits in accordance with IAS 38 \u2018Intangible Assets\u2019. Costs to establish feasibility or to maintain existing performance are recognised as an expense. Intangible assets are amortised on a straight-line basis within the income statement using the following useful economic lives:
Core banking software
1
up to 20 years
Other banking software
3 to 10 years
Software licences
licence period
Brands
5 years
All intangible assets are reviewed at the end of each reporting period for indicators of impairment. 1. Core banking software consists of our central banking transaction platform. The original platform was assessed as having a 20-year life due to it being the central component of our digital infrastructure. It was upgraded during 2019 with the upgrade assessed as having a 15-year life. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-306": { "value": "16. Prepayments and accrued income
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Prepayments
36
42
Accrued income
1
56
75
VAT receivable
1
1
Total prepayments and accrued income
93
118
Current portion
93
118
Non-current portion
\u2013
\u2013
1. Includes accrued interest receivable", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-307": { "value": "
17. Other assets
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Cash pledged as collateral
53
50
Amounts owed by group undertaking
1
\u2013
Other
1
28
58
Total other assets
82
108
Current portion
27
55
Non-current portion
55
53
1. Other balance primarily comprises customer transactions in process or items in the course of collection
over year end.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-349": { "value": "17. Other assets
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Cash pledged as collateral
53
50
Amounts owed by group undertaking
1
\u2013
Other
1
28
58
Total other assets
82
108
Current portion
27
55
Non-current portion
55
53
1. Other balance primarily comprises customer transactions in process or items in the course of collection over year end.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentAssetsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-334": { "value": "17. Other assets
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Cash pledged as collateral
53
50
Amounts owed by group undertaking
1
\u2013
Other
1
28
58
Total other assets
82
108
Current portion
27
55
Non-current portion
55
53
1. Other balance primarily comprises customer transactions in process or items in the course of collection over year end.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentAssetsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-308": { "value": "
18. Deposits from customers
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Deposits from retail customers
7,753
8,943
Deposits from commercial customers
6,705
6.680
Total deposits from customers
14,458
15,623
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Demand: current accounts
5,791
5,696
Demand: savings accounts
7,53
4
7,827
Fixed term: savings accounts
1,133
2,100
Total deposits from customers
14,458
15,623
As at 31 December 2024, 40% of deposits from customer consisted of instant access current accounts
(31 December 2023: 36%). Fixed term saving accounts made up 8% of balances (31 December 2023: 13%).
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepositsFromCustomersExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-309": { "value": "19. Deposits from central banks Deposits from central banks consist of amounts drawn down under the Bank of England\u2019s Term Funding Scheme with additional incentives for SMEs (TFSME).
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Amounts drawn down under TFSME
400
3,050
Deposits from central banks
400
3,050
The bank repaid \u00a32,650m of TFSME in 2024, with the remaining drawdowns of \u00a3400m to mature in 2027.", "dimensions": { "concept": "ifrs-full:DisclosureOfDepositsFromBanksExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-335": { "value": "20. Debt securities Accounting policy Debt securities in issue are recognised initially at fair value, being proceeds less transaction costs. Subsequently, debt securities are measured at amortised cost using the effective interest method. We assess the criteria for the modification and extinguishment of debt securities in accordance with IFRS 9. A substantial modification of the terms of an existing financial liability or a part of it is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. We determine a substantial modification by performing a quantitative and qualitative prospective assessment.
Amount
issued Coupon Maturity
Name
Issue date
Currency
\u00a3\u2019million
rate
Call date
date
Fixed rate reset callable
(MREL) notes
30/11/2023
GBP
525
12.00%
30/04/28
30/04/29
Fixed rate reset callable
subordinated (Tier 2) notes
30/11/2023
GBP
150
14.00%
30/04/29
30/04/34
2024 2023
\u00a3\u2019million \u00a3\u2019million
1 January
694
571
Issuances
\u2013
675
Redemption
\u2013
(500)
Haircut
\u2013
(100)
Costs associated with issuance
\u2013
(5)
Movements in micro hedging
(20)
50
Unwind of issuance costs
1
3
31 December
675
694
The fixed rate reset callable notes (MREL), which are listed on the London Stock Exchange, constitute subordinated and unsecured obligations. The notes have a call date of 30 April 2028, where they may be redeemed at par. If not called, the interest rate will be reset and fixed based on a benchmark gilt plus a credit spread of 7.814%. The notes are contractually obliged to mature on the maturity date of 30 April 2029. The fixed rate reset subordinated callable notes (Tier 2), which are listed on the London Stock Exchange, constitute subordinated and unsecured obligations. The notes have a call date of 30 April 2029, where they may be redeemed at par. If not called, the interest rate will be reset and fixed based on a benchmark gilt plus a credit spread of 9.822%. The notes are contractually obliged to mature on the maturity date of 30 April 2034. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-350": { "value": "21. Derivatives Accounting policy In accordance with our risk management strategy, to the extent not naturally hedged, we use interest rate swaps to manage our exposure to interest rate risk. On adoption of IFRS 9 we chose to continue applying the hedge accounting rules set out in IAS 39 \u2018Financial Instruments: Recognition and Measurement\u2019 as we often chose to employ dynamic portfolio hedge accounting of interest rate risk across fixed rate financial assets and fixed rate financial liabilities. Where we are using interest rate swaps to hedge the changes in fair value attributable to the interest rate risk of a recognised asset or liability that could affect profit or loss, we apply fair value hedge accounting. If there is an effective hedge relationship, the hedged item is adjusted for fair value changes in respect of the hedged risk. These fair value changes are recognised in the income statement together with the fair value movements on the hedging instrument (the interest rate swaps). Hedge accounting is discontinued when a hedge ceases to be highly effective, a derivative expires or is sold, the underlying hedged item matures or is repaid, or periodically if a new underlying hedged item or hedging instrument is added to the hedge relationship. Where a fair value hedge is de-designated (either due to becoming ineffective or as part of our dynamic approach to hedge accounting) any hedge adjustments accrued to that point are amortised over the remaining life of the hedged item. At the inception of every hedge, we produce hedge documentation which identifies the hedged risk, hedged item and hedging instrument. This documentation sets out the methodology used for testing hedge effectiveness. We use derivatives as part of our approach to hedging interest rate and foreign exchange exposure. Our derivative financial instruments are analysed in the table below.
31 December 2024
31 December 2023
Notional
Carrying amount
Notional
Carrying amount
contract contract
amount Asset Liability amount Asset Liability
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Interest rate swaps \u2013 Designated as hedging instruments
1,253
16
\u2013
1,205
36
\u2013
Interest rate swaps \u2013 Designated as held at fair value through profit and loss
502
7
(7)
1,200
31
(31)
Foreign currency swaps \u2013 Designated as held at fair value through profit and loss
50
\u2013
(1)
63
\u2013
\u2013
Total
1,805
23
(8)
2,468
67
(31)
Derivative netting
(502)
(7)
7
(1,200)
(31)
31
Grand total
1,303
16
(1)
1,268
36
\u2013
Hedge accounting Our hedging strategy is driven by micro hedges, where the hedged item is a identifiable asset or liability. The designated risk components of hedged items are benchmark interest rate risk. Other risks such as credit risk and liquidity risk are managed separately and are not included in the hedge accounting relationship. The changes in the designated risk component usually account for the largest portion of the overall change in fair value of the hedged item. Micro fair value hedges We use this hedging strategy on fixed rate assets and liabilities held at fair value through other comprehensive income and amortised cost as well as on our fixed rate debt issuance. Hedge ineffectiveness Hedge ineffectiveness within fair value hedges can occur due to a number of potential sources, such as non-zero derivative designated in a hedge relationship; mismatches between contractual terms such as basis, timing, principal and notionals; or change in credit risk of interest rate swaps. The total ineffectiveness on our fair value hedges are recognised in note 5. Offsetting derivatives The Tier 2 and MREL debt held until renegotiation in late 2023 were designated as hedge items in fair value hedge relationships to manage our exposure to interest rate risk. Following the renegotiation of our debt in November 2023, these hedge relationships were de-designated. We entered into equal and opposite interest rate swaps with a notional of \u00a3600 million to fully offset the interest rate swaps used to hedge the old MREL and Tier 2 debt securities. Cash flows are offset at a central clearing party and both set of swaps will mature at the same time. Further details are included in note 33. Master netting arrangement and collateral We either receive or provide collateral related to our hedging arrangements. As at 31st December 2024, we provided collateral of \u00a31 million (2023: received \u00a311.4 million) which is reflected in note 17 Summary of hedging instruments in designated hedge relationships The amounts relating to items designated as hedging instruments in fair value hedge relationships to manage our exposure to interest rates are:
31 December 2024
31 December 2023
Notional Carrying amount Notional Carrying amount
contract contract
amount Asset Liability amount Asset Liability
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Interest rate swaps
1,253
16
\u2013
1,205
36
\u2013
Total derivatives designated as fair value hedges
1,253
16
\u2013
1,205
36
\u2013
Summary of hedged items in designated hedge relationships The items designated as hedged items in fair value hedge relationships to manage our exposure to interest rates are:
31 December 2024
31 December 2023
Accumulated Accumulated
amount of fair value amount of fair value
hedge adjustments hedge adjustments
included in the included in the
carrying amount of carrying amount of
Carrying amount
the hedged item
Carrying amount
the hedged item
Assets Liabilities Assets Liabilities
\u00a3\u2019million
\u00a3\u2019million
\u00a3\u2019million
\u00a3\u2019million
\u00a3\u2019million
\u00a3\u2019million
Fixed rate debt issuance
2
\u2013
(675)
(4)
\u2013
(694)
(24)
Fixed rate investment securities at FVOCI
3
293
\u2013
(8)
238
\u2013
(7)
Fixed rate investment securities at amortised cost
4
271
\u2013
\u2013
271
\u2013
1
Fixed rate loans
1
1
\u2013
\u2013
3
\u2013
\u2013
Total hedges designated as fair value hedges
565
(675)
(12)
512
(694)
(30)
1. Hedged item and the cumulative fair value changes are recorded in loans and advances to customers. 2. Hedged item and the cumulative fair value changes are recorded in debt securities in issue (see note 20). 3. Hedged item and the cumulative fair value changes are recorded in investment securities held at FVOCI. 4. Hedged item and the cumulative fair value changes are recorded in investment securities held at amortised cost. Summary of ineffectiveness from designated hedge relationships Total hedge ineffectiveness recognised in profit or loss for the designated fair value hedge relationships is a loss of \u00a32.0 million (2023: gain of \u00a35.6 million). ", "dimensions": { "concept": "ifrs-full:DisclosureOfHedgeAccountingExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-336": { "value": "21. Derivatives Accounting policy In accordance with our risk management strategy, to the extent not naturally hedged, we use interest rate swaps to manage our exposure to interest rate risk. On adoption of IFRS 9 we chose to continue applying the hedge accounting rules set out in IAS 39 \u2018Financial Instruments: Recognition and Measurement\u2019 as we often chose to employ dynamic portfolio hedge accounting of interest rate risk across fixed rate financial assets and fixed rate financial liabilities. Where we are using interest rate swaps to hedge the changes in fair value attributable to the interest rate risk of a recognised asset or liability that could affect profit or loss, we apply fair value hedge accounting. If there is an effective hedge relationship, the hedged item is adjusted for fair value changes in respect of the hedged risk. These fair value changes are recognised in the income statement together with the fair value movements on the hedging instrument (the interest rate swaps). Hedge accounting is discontinued when a hedge ceases to be highly effective, a derivative expires or is sold, the underlying hedged item matures or is repaid, or periodically if a new underlying hedged item or hedging instrument is added to the hedge relationship. Where a fair value hedge is de-designated (either due to becoming ineffective or as part of our dynamic approach to hedge accounting) any hedge adjustments accrued to that point are amortised over the remaining life of the hedged item. At the inception of every hedge, we produce hedge documentation which identifies the hedged risk, hedged item and hedging instrument. This documentation sets out the methodology used for testing hedge effectiveness. We use derivatives as part of our approach to hedging interest rate and foreign exchange exposure. Our derivative financial instruments are analysed in the table below.
31 December 2024
31 December 2023
Notional
Carrying amount
Notional
Carrying amount
contract contract
amount Asset Liability amount Asset Liability
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Interest rate swaps \u2013 Designated as hedging instruments
1,253
16
\u2013
1,205
36
\u2013
Interest rate swaps \u2013 Designated as held at fair value through profit and loss
502
7
(7)
1,200
31
(31)
Foreign currency swaps \u2013 Designated as held at fair value through profit and loss
50
\u2013
(1)
63
\u2013
\u2013
Total
1,805
23
(8)
2,468
67
(31)
Derivative netting
(502)
(7)
7
(1,200)
(31)
31
Grand total
1,303
16
(1)
1,268
36
\u2013
Hedge accounting Our hedging strategy is driven by micro hedges, where the hedged item is a identifiable asset or liability. The designated risk components of hedged items are benchmark interest rate risk. Other risks such as credit risk and liquidity risk are managed separately and are not included in the hedge accounting relationship. The changes in the designated risk component usually account for the largest portion of the overall change in fair value of the hedged item. Micro fair value hedges We use this hedging strategy on fixed rate assets and liabilities held at fair value through other comprehensive income and amortised cost as well as on our fixed rate debt issuance. Hedge ineffectiveness Hedge ineffectiveness within fair value hedges can occur due to a number of potential sources, such as non-zero derivative designated in a hedge relationship; mismatches between contractual terms such as basis, timing, principal and notionals; or change in credit risk of interest rate swaps. The total ineffectiveness on our fair value hedges are recognised in note 5. Offsetting derivatives The Tier 2 and MREL debt held until renegotiation in late 2023 were designated as hedge items in fair value hedge relationships to manage our exposure to interest rate risk. Following the renegotiation of our debt in November 2023, these hedge relationships were de-designated. We entered into equal and opposite interest rate swaps with a notional of \u00a3600 million to fully offset the interest rate swaps used to hedge the old MREL and Tier 2 debt securities. Cash flows are offset at a central clearing party and both set of swaps will mature at the same time. Further details are included in note 33. Master netting arrangement and collateral We either receive or provide collateral related to our hedging arrangements. As at 31st December 2024, we provided collateral of \u00a31 million (2023: received \u00a311.4 million) which is reflected in note 17 . Summary of hedging instruments in designated hedge relationships The amounts relating to items designated as hedging instruments in fair value hedge relationships to manage our exposure to interest rates are:
31 December 2024
31 December 2023
Notional Carrying amount Notional Carrying amount
contract contract
amount Asset Liability amount Asset Liability
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Interest rate swaps
1,253
16
\u2013
1,205
36
\u2013
Total derivatives designated as fair value hedges
1,253
16
\u2013
1,205
36
\u2013
Summary of hedged items in designated hedge relationships The items designated as hedged items in fair value hedge relationships to manage our exposure to interest rates are:
31 December 2024
31 December 2023
Accumulated Accumulated
amount of fair value amount of fair value
hedge adjustments hedge adjustments
included in the included in the
carrying amount of carrying amount of
Carrying amount
the hedged item
Carrying amount
the hedged item
Assets Liabilities Assets Liabilities
\u00a3\u2019million
\u00a3\u2019million
\u00a3\u2019million
\u00a3\u2019million
\u00a3\u2019million
\u00a3\u2019million
Fixed rate debt issuance
2
\u2013
(675)
(4)
\u2013
(694)
(24)
Fixed rate investment securities at FVOCI
3
293
\u2013
(8)
238
\u2013
(7)
Fixed rate investment securities at amortised cost
4
271
\u2013
\u2013
271
\u2013
1
Fixed rate loans
1
1
\u2013
\u2013
3
\u2013
\u2013
Total hedges designated as fair value hedges
565
(675)
(12)
512
(694)
(30)
1. Hedged item and the cumulative fair value changes are recorded in loans and advances to customers. 2. Hedged item and the cumulative fair value changes are recorded in debt securities in issue (see note 20). 3. Hedged item and the cumulative fair value changes are recorded in investment securities held at FVOCI. 4. Hedged item and the cumulative fair value changes are recorded in investment securities held at amortised cost. Summary of ineffectiveness from designated hedge relationships Total hedge ineffectiveness recognised in profit or loss for the designated fair value hedge relationships is a loss of \u00a32.0 million (2023: gain of \u00a35.6 million). ", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-394": { "value": "Accounting policy In accordance with our risk management strategy, to the extent not naturally hedged, we use interest rate swaps to manage our exposure to interest rate risk. On adoption of IFRS 9 we chose to continue applying the hedge accounting rules set out in IAS 39 \u2018Financial Instruments: Recognition and Measurement\u2019 as we often chose to employ dynamic portfolio hedge accounting of interest rate risk across fixed rate financial assets and fixed rate financial liabilities. Where we are using interest rate swaps to hedge the changes in fair value attributable to the interest rate risk of a recognised asset or liability that could affect profit or loss, we apply fair value hedge accounting. If there is an effective hedge relationship, the hedged item is adjusted for fair value changes in respect of the hedged risk. These fair value changes are recognised in the income statement together with the fair value movements on the hedging instrument (the interest rate swaps). Hedge accounting is discontinued when a hedge ceases to be highly effective, a derivative expires or is sold, the underlying hedged item matures or is repaid, or periodically if a new underlying hedged item or hedging instrument is added to the hedge relationship. Where a fair value hedge is de-designated (either due to becoming ineffective or as part of our dynamic approach to hedge accounting) any hedge adjustments accrued to that point are amortised over the remaining life of the hedged item. At the inception of every hedge, we produce hedge documentation which identifies the hedged risk, hedged item and hedging instrument. This documentation sets out the methodology used for testing hedge effectiveness. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-407": { "value": "Accounting policy In accordance with our risk management strategy, to the extent not naturally hedged, we use interest rate swaps to manage our exposure to interest rate risk. On adoption of IFRS 9 we chose to continue applying the hedge accounting rules set out in IAS 39 \u2018Financial Instruments: Recognition and Measurement\u2019 as we often chose to employ dynamic portfolio hedge accounting of interest rate risk across fixed rate financial assets and fixed rate financial liabilities. Where we are using interest rate swaps to hedge the changes in fair value attributable to the interest rate risk of a recognised asset or liability that could affect profit or loss, we apply fair value hedge accounting. If there is an effective hedge relationship, the hedged item is adjusted for fair value changes in respect of the hedged risk. These fair value changes are recognised in the income statement together with the fair value movements on the hedging instrument (the interest rate swaps). Hedge accounting is discontinued when a hedge ceases to be highly effective, a derivative expires or is sold, the underlying hedged item matures or is repaid, or periodically if a new underlying hedged item or hedging instrument is added to the hedge relationship. Where a fair value hedge is de-designated (either due to becoming ineffective or as part of our dynamic approach to hedge accounting) any hedge adjustments accrued to that point are amortised over the remaining life of the hedged item. At the inception of every hedge, we produce hedge documentation which identifies the hedged risk, hedged item and hedging instrument. This documentation sets out the methodology used for testing hedge effectiveness. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-383": { "value": "Accounting policy In accordance with our risk management strategy, to the extent not naturally hedged, we use interest rate swaps to manage our exposure to interest rate risk. On adoption of IFRS 9 we chose to continue applying the hedge accounting rules set out in IAS 39 \u2018Financial Instruments: Recognition and Measurement\u2019 as we often chose to employ dynamic portfolio hedge accounting of interest rate risk across fixed rate financial assets and fixed rate financial liabilities. Where we are using interest rate swaps to hedge the changes in fair value attributable to the interest rate risk of a recognised asset or liability that could affect profit or loss, we apply fair value hedge accounting. If there is an effective hedge relationship, the hedged item is adjusted for fair value changes in respect of the hedged risk. These fair value changes are recognised in the income statement together with the fair value movements on the hedging instrument (the interest rate swaps). Hedge accounting is discontinued when a hedge ceases to be highly effective, a derivative expires or is sold, the underlying hedged item matures or is repaid, or periodically if a new underlying hedged item or hedging instrument is added to the hedge relationship. Where a fair value hedge is de-designated (either due to becoming ineffective or as part of our dynamic approach to hedge accounting) any hedge adjustments accrued to that point are amortised over the remaining life of the hedged item. At the inception of every hedge, we produce hedge documentation which identifies the hedged risk, hedged item and hedging instrument. This documentation sets out the methodology used for testing hedge effectiveness. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-310": { "value": "22. Leases Accounting policy At the inception of a contract we assess whether the contract contains a lease. At the commencement of a lease we recognise a lease liability and right-of-use asset (see note 14 for further details). The lease liability is initially measured as the present value of the future lease payments discounted at the rate implicit in the lease (where available) or our incremental cost of borrowing. Generally we use our deemed incremental cost of borrowing as the discount rate. Following initial recognition, the lease liability is measured using the effective interest method. Where we are reasonably certain to exercise a break in the lease, only the lease payments up until the date of the break are included. We subsequently remeasure the lease liability when there is a change to an index or rate used or when there is a change in expectation that we will exercise a purchase option or break clause or if we extend the lease. When such an adjustment is made to the lease liability a corresponding adjustment is made to the right-of-use asset. Irrecoverable VAT on lease payments is excluded from the lease liability and is taken to the income statement over the period which it is due. This is included within note 6, General operating expenses, under \u2018occupancy expense\u2019. We have elected not to recognise a lease liability and right-of-use assets for any leases that have a term of less than 12 months, or are for an asset which is deemed to be of low value (item is worth less than \u00a35,000). For these leases, the lease payments are recognised as an expense in the income statement on a straight-line basis over the life of the lease. All of our leases within the scope of IFRS 16 (other than those of low value) relate to our stores and head office properties. Lease liabilities
2024 2023
\u00a3\u2019million \u00a3\u2019million
1 January
234
248
Additions and modifications
1
\u2013
Disposals
(20)
(4)
Lease payments made
(22)
(23)
Interest on lease liabilities
12
13
31 December
205
234
Current
19
22
Non-current
186
212
Right-of-use assets All of our disclosures relating to right-of-use assets, including our accounting policy, can be found in note 14. Disposals The disposals during the year relate to two stores (2023: one store) where we purchased the freehold during the year. Following the purchase, both the lease liabilities and right-of-use assets relating to the stores were derecognised. Additionally, we derecognised one of the leases relating to three stores we closed during 2024 following the surrendering of this lease back to the landlord. Minimum lease payments Future undiscounted minimum payments under lease liabilities, exclusive of VAT, as at 31 December are as follows:
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Within one year
20
22
Due in one to five years
74
83
Due in more than five years
101
145
Total
195
250
Low value and short leases During the year ended 31 December 2024, \u00a30.04 million (2023: \u00a30.3 million) was recognised in the income statement with respect to assets of low value or a lease of less than 12 months.
Future income due under non-cancellable property leases
We lease out surplus space in some of our properties. The table below sets out the cash payments
expected over the remaining non-cancellable term of each lease, exclusive of VAT.
Receivable
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Within one year
1
1
Due in one to five years
2
3
Due in more than five years
3
3
Total
6
7
Finance lease receivables
Through our SME Asset Finance Limited and SME Invoice Finance Limited businesses we lease a variety of
assets to third parties, which typically consist of plant, machinery and vehicles. These rentals typically
cover the assets\u2019 useful economic life and as such any residual value is minimal. Amounts receivable are
classified as loans and advances to customers and are categorised within our SME Asset Finance Limited
and SME Invoice Finance Limited businesses lending per the breakdown provided in note 12.
31 December 2024
31 December 2023
Total future Unearned Total future Unearned
minimum finance Present minimum finance Present
payments income value payments income value
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Within one year
6
(1)
5
6
(1)
5
Due in one to five years
11
(1)
10
10
(1)
9
Due in more than five years
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total
17
(2)
15
16
(2)
14
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-395": { "value": "Accounting policy At the inception of a contract we assess whether the contract contains a lease. At the commencement of a lease we recognise a lease liability and right-of-use asset (see note 14 for further details). The lease liability is initially measured as the present value of the future lease payments discounted at the rate implicit in the lease (where available) or our incremental cost of borrowing. Generally we use our deemed incremental cost of borrowing as the discount rate. Following initial recognition, the lease liability is measured using the effective interest method. Where we are reasonably certain to exercise a break in the lease, only the lease payments up until the date of the break are included. We subsequently remeasure the lease liability when there is a change to an index or rate used or when there is a change in expectation that we will exercise a purchase option or break clause or if we extend the lease. When such an adjustment is made to the lease liability a corresponding adjustment is made to the right-of-use asset. Irrecoverable VAT on lease payments is excluded from the lease liability and is taken to the income statement over the period which it is due. This is included within note 6, General operating expenses, under \u2018occupancy expense\u2019. We have elected not to recognise a lease liability and right-of-use assets for any leases that have a term of less than 12 months, or are for an asset which is deemed to be of low value (item is worth less than \u00a35,000). For these leases, the lease payments are recognised as an expense in the income statement on a straight-line basis over the life of the lease. All of our leases within the scope of IFRS 16 (other than those of low value) relate to our stores and head office properties. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-351": { "value": "
Minimum lease payments
Future undiscounted minimum payments under lease liabilities, exclusive of VAT, as at 31 December are as
follows:
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Within one year
20
22
Due in one to five years
74
83
Due in more than five years
101
145
Total
195
250
Future income due under non-cancellable property leases We lease out surplus space in some of our properties. The table below sets out the cash payments expected over the remaining non-cancellable term of each lease, exclusive of VAT. Receivable
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Within one year
1
1
Due in one to five years
2
3
Due in more than five years
3
3
Total
6
7
", "dimensions": { "concept": "ifrs-full:DisclosureOfMaturityAnalysisOfOperatingLeasePaymentsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-337": { "value": "Finance lease receivables Through our SME Asset Finance Limited and SME Invoice Finance Limited businesses we lease a variety of assets to third parties, which typically consist of plant, machinery and vehicles. These rentals typically cover the assets\u2019 useful economic life and as such any residual value is minimal. Amounts receivable are classified as loans and advances to customers and are categorised within our SME Asset Finance Limited and SME Invoice Finance Limited businesses lending per the breakdown provided in note 12.
31 December 2024
31 December 2023
Total future Unearned Total future Unearned
minimum finance Present minimum finance Present
payments income value payments income value
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Within one year
6
(1)
5
6
(1)
5
Due in one to five years
11
(1)
10
10
(1)
9
Due in more than five years
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Total
17
(2)
15
16
(2)
14
", "dimensions": { "concept": "ifrs-full:DisclosureOfMaturityAnalysisOfFinanceLeasePaymentsReceivableExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-352": { "value": "23. Deferred grants Accounting policy Grants are recognised where there is reasonable assurance that we will both receive the grant and will be able to comply with all the attached conditions. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to the purchase of an asset, it is recognised directly against the cost of the asset.
2024 2023
\u00a3\u2019million \u00a3\u2019million
1 January
16
17
Released to the income statement
(3)
(1)
31 December
13
16
Our only deferred grant relates to amounts awarded in relation to the Capability and Innovation Fund which formed part of the RBS alternative remedies programme. The programme was aimed to increase competition in the UK business banking marketplace.", "dimensions": { "concept": "ifrs-full:DisclosureOfGovernmentGrantsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-311": { "value": "23. Deferred grants Accounting policy Grants are recognised where there is reasonable assurance that we will both receive the grant and will be able to comply with all the attached conditions. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to the purchase of an asset, it is recognised directly against the cost of the asset.
2024 2023
\u00a3\u2019million \u00a3\u2019million
1 January
16
17
Released to the income statement
(3)
(1)
31 December
13
16
Our only deferred grant relates to amounts awarded in relation to the Capability and Innovation Fund which formed part of the RBS alternative remedies programme. The programme was aimed to increase competition in the UK business banking marketplace.", "dimensions": { "concept": "metrobankholdingsplc:DisclosureOfDeferredGrants", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-396": { "value": "Accounting policy Grants are recognised where there is reasonable assurance that we will both receive the grant and will be able to comply with all the attached conditions. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to the purchase of an asset, it is recognised directly against the cost of the asset. ", "dimensions": { "concept": "metrobankholdingsplc:DescriptionOfAccountingPolicyForDeferredGrants", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-353": { "value": "24. Provisions Accounting policy We recognise provisions when it is probable that an outflow of economic benefits will be required to settle a present legal or constructive obligation that has arisen as a result of past events and for which a reliable estimate can be made. The provision is measured at its current present value.
Provision
Description
Customer We are committed to doing the right thing but occasionally we identify issues
remediation that have caused detriment as a result of our actions.
Where we have to refund costs to customers we provide for this at the point the
obligation arises. The amounts recognised include any associated interest due.
Dilapidations Dilapidations provisions are recognised in regard to certain properties we lease.
The majority of our stores and offices have an automatic right to renewal at
the end of the lease under the provisions of the Landlord and Tenant Act 1954.
Where this is the case we do not provide for restorations on these sites since
we have no intention of vacating at the end of the lease term. For sites that
are outside the Landlord and Tenant Act 1954, or sites within the Landlord and
Tenant Act 1954 where we think there is a chance we will vacate a site at the end
of its lease, a provision is made for dilapidations. The provision is made in line
with the underlying obligations contained within the lease.
Legal and Provisions are made relating to the outcome of legal cases and regulatory
regulatory investigations based on our best estimate of settlement following consultation
with our lawyers and advisors. The inclusion of a provision does not constitute
any admission of wrongdoing or legal liability. Details of individual cases are
provided where these are material to our financial statements and disclosure
would not be prejudicial to the outcome of the case.
Onerous Onerous contract provisions are recognised when the unavoidable costs of
contracts meeting the obligations under the contract exceed the economic benefits we
expect to be received under it. The provision is recognised as the net cost of
exiting from the contract, which is the lower of the cost of fulfilling it and any
compensation or penalties arising from failure to fulfil it.
Restructuring Restructuring provisions are recognised at the point we have developed
a detailed formal plan and we have raised a valid expectation that it will
be implemented. This is typically at the point the plan is announced to affected
colleagues.
Other
provisions
Other provisions consist of other sundry amounts that are provided for in the
ordinary course of our business.
2024
Customer Onerous Legal and Other
Restructuring remediation Dilapidations contracts regulatory provisions Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
1 January 2024
15
3
1
2
\u2013
2
23
Additions
8
\u2013
\u2013
3
\u2013
\u2013
11
Released
(1)
(2)
\u2013
\u2013
\u2013
\u2013
(3)
Utilised
(20)
\u2013
\u2013
\u2013
\u2013
\u2013
(20)
31 December 2024
2
1
1
5
\u2013
2
11
2023
Customer Legal and Onerous Other
remediation Dilapidations regulatory contracts Restructuring provisions Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
1 January 2023
1
1
\u2013
2
\u2013
3
7
Additions
2
\u2013
\u2013
\u2013
15
\u2013
17
Released
\u2013
\u2013
\u2013
\u2013
\u2013
(1)
(1)
Utilised
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
31 December 2023
3
1
\u2013
2
15
2
23
No provision has been recognised in relation to any of the contingent liabilities set out in note 32. All additions for both the current and prior year have been recognised in the income statement, with the exception of the \u00a32 million provision for dilapidations in 2021 and a further \u00a30.3 million provision for dilapidations in 2024. This was recognised as an addition to the right-of-use assets (see note 14). Dilapidations The amounts provided in respect of dilapidations are calculated based on assessments by an independent qualified valuer. They represent the best estimate of the present value to restore the site to the condition required under the lease. As the date restoration is required may be up to 25 years in the future, there is uncertainty in this estimation. Additionally, for sites that are outside the act, should we be successful in renewing the lease at the end of its term, it is possible that the provision recognised may not be utilised. Onerous contract Onerous contracts primarily relate to the non-rental costs of fulfilling property contracts from which we will no longer benefit, including closed stores and head office space. The provision is determined with reference to the occupancy costs from the date of closure through to the next lease break. Rental costs on these sites from which we will receive no future economic benefits are represented by an impairment to the right of use asset. The which have either been surrendered back to the landlord or fully sublet for the remainder of the lease term. 32. Contingent Liabilities As part of the normal course of business we are subject to legal, taxation and regulatory matters. The matters outlined below represent material contingent liabilities and as such at the reporting date no provision has been made for any of these cases within the financial statements. This is because, based on the facts currently known, it is not practicable to predict the outcome, if any, of these matters or reliably estimate any financial impact. Their inclusion does not constitute any admission of wrongdoing or legal liability. Magic Money Machine litigation In 2022 Arkeyo LLC, a software company based in the United States, filed a civil suit with a stated value of over \u00a324 million against us in the English High Court alleging, among other matters, that we infringed their copyright and misappropriated their trade secrets relating to money counting machines (i.e. our Magic Money Machines). We believe Arkeyo LLC\u2019s claims are without merit and are vigorously defending the claim.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-366": { "value": "24. Provisions Accounting policy We recognise provisions when it is probable that an outflow of economic benefits will be required to settle a present legal or constructive obligation that has arisen as a result of past events and for which a reliable estimate can be made. The provision is measured at its current present value.
Provision
Description
Customer We are committed to doing the right thing but occasionally we identify issues
remediation that have caused detriment as a result of our actions.
Where we have to refund costs to customers we provide for this at the point the
obligation arises. The amounts recognised include any associated interest due.
Dilapidations Dilapidations provisions are recognised in regard to certain properties we lease.
The majority of our stores and offices have an automatic right to renewal at
the end of the lease under the provisions of the Landlord and Tenant Act 1954.
Where this is the case we do not provide for restorations on these sites since
we have no intention of vacating at the end of the lease term. For sites that
are outside the Landlord and Tenant Act 1954, or sites within the Landlord and
Tenant Act 1954 where we think there is a chance we will vacate a site at the end
of its lease, a provision is made for dilapidations. The provision is made in line
with the underlying obligations contained within the lease.
Legal and Provisions are made relating to the outcome of legal cases and regulatory
regulatory investigations based on our best estimate of settlement following consultation
with our lawyers and advisors. The inclusion of a provision does not constitute
any admission of wrongdoing or legal liability. Details of individual cases are
provided where these are material to our financial statements and disclosure
would not be prejudicial to the outcome of the case.
Onerous Onerous contract provisions are recognised when the unavoidable costs of
contracts meeting the obligations under the contract exceed the economic benefits we
expect to be received under it. The provision is recognised as the net cost of
exiting from the contract, which is the lower of the cost of fulfilling it and any
compensation or penalties arising from failure to fulfil it.
Restructuring Restructuring provisions are recognised at the point we have developed
a detailed formal plan and we have raised a valid expectation that it will
be implemented. This is typically at the point the plan is announced to affected
colleagues.
Other
provisions
Other provisions consist of other sundry amounts that are provided for in the
ordinary course of our business.
2024
Customer Onerous Legal and Other
Restructuring remediation Dilapidations contracts regulatory provisions Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
1 January 2024
15
3
1
2
\u2013
2
23
Additions
8
\u2013
\u2013
3
\u2013
\u2013
11
Released
(1)
(2)
\u2013
\u2013
\u2013
\u2013
(3)
Utilised
(20)
\u2013
\u2013
\u2013
\u2013
\u2013
(20)
31 December 2024
2
1
1
5
\u2013
2
11
2023
Customer Legal and Onerous Other
remediation Dilapidations regulatory contracts Restructuring provisions Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
1 January 2023
1
1
\u2013
2
\u2013
3
7
Additions
2
\u2013
\u2013
\u2013
15
\u2013
17
Released
\u2013
\u2013
\u2013
\u2013
\u2013
(1)
(1)
Utilised
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
31 December 2023
3
1
\u2013
2
15
2
23
No provision has been recognised in relation to any of the contingent liabilities set out in note 32. All additions for both the current and prior year have been recognised in the income statement, with the exception of the \u00a32 million provision for dilapidations in 2021 and a further \u00a30.3 million provision for dilapidations in 2024. This was recognised as an addition to the right-of-use assets (see note 14). Dilapidations The amounts provided in respect of dilapidations are calculated based on assessments by an independent qualified valuer. They represent the best estimate of the present value to restore the site to the condition required under the lease. As the date restoration is required may be up to 25 years in the future, there is uncertainty in this estimation. Additionally, for sites that are outside the act, should we be successful in renewing the lease at the end of its term, it is possible that the provision recognised may not be utilised. Onerous contract Onerous contracts primarily relate to the non-rental costs of fulfilling property contracts from which we will no longer benefit, including closed stores and head office space. The provision is determined with reference to the occupancy costs from the date of closure through to the next lease break. Rental costs on these sites from which we will receive no future economic benefits are represented by an impairment to the right of use asset. The which have either been surrendered back to the landlord or fully sublet for the remainder of the lease term. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-312": { "value": "24. Provisions Accounting policy We recognise provisions when it is probable that an outflow of economic benefits will be required to settle a present legal or constructive obligation that has arisen as a result of past events and for which a reliable estimate can be made. The provision is measured at its current present value.
Provision
Description
Customer We are committed to doing the right thing but occasionally we identify issues
remediation that have caused detriment as a result of our actions.
Where we have to refund costs to customers we provide for this at the point the
obligation arises. The amounts recognised include any associated interest due.
Dilapidations Dilapidations provisions are recognised in regard to certain properties we lease.
The majority of our stores and offices have an automatic right to renewal at
the end of the lease under the provisions of the Landlord and Tenant Act 1954.
Where this is the case we do not provide for restorations on these sites since
we have no intention of vacating at the end of the lease term. For sites that
are outside the Landlord and Tenant Act 1954, or sites within the Landlord and
Tenant Act 1954 where we think there is a chance we will vacate a site at the end
of its lease, a provision is made for dilapidations. The provision is made in line
with the underlying obligations contained within the lease.
Legal and Provisions are made relating to the outcome of legal cases and regulatory
regulatory investigations based on our best estimate of settlement following consultation
with our lawyers and advisors. The inclusion of a provision does not constitute
any admission of wrongdoing or legal liability. Details of individual cases are
provided where these are material to our financial statements and disclosure
would not be prejudicial to the outcome of the case.
Onerous Onerous contract provisions are recognised when the unavoidable costs of
contracts meeting the obligations under the contract exceed the economic benefits we
expect to be received under it. The provision is recognised as the net cost of
exiting from the contract, which is the lower of the cost of fulfilling it and any
compensation or penalties arising from failure to fulfil it.
Restructuring Restructuring provisions are recognised at the point we have developed
a detailed formal plan and we have raised a valid expectation that it will
be implemented. This is typically at the point the plan is announced to affected
colleagues.
Other
provisions
Other provisions consist of other sundry amounts that are provided for in the
ordinary course of our business.
2024
Customer Onerous Legal and Other
Restructuring remediation Dilapidations contracts regulatory provisions Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
1 January 2024
15
3
1
2
\u2013
2
23
Additions
8
\u2013
\u2013
3
\u2013
\u2013
11
Released
(1)
(2)
\u2013
\u2013
\u2013
\u2013
(3)
Utilised
(20)
\u2013
\u2013
\u2013
\u2013
\u2013
(20)
31 December 2024
2
1
1
5
\u2013
2
11
2023
Customer Legal and Onerous Other
remediation Dilapidations regulatory contracts Restructuring provisions Total
\u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
1 January 2023
1
1
\u2013
2
\u2013
3
7
Additions
2
\u2013
\u2013
\u2013
15
\u2013
17
Released
\u2013
\u2013
\u2013
\u2013
\u2013
(1)
(1)
Utilised
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
31 December 2023
3
1
\u2013
2
15
2
23
No provision has been recognised in relation to any of the contingent liabilities set out in note 32. All additions for both the current and prior year have been recognised in the income statement, with the exception of the \u00a32 million provision for dilapidations in 2021 and a further \u00a30.3 million provision for dilapidations in 2024. This was recognised as an addition to the right-of-use assets (see note 14). Dilapidations The amounts provided in respect of dilapidations are calculated based on assessments by an independent qualified valuer. They represent the best estimate of the present value to restore the site to the condition required under the lease. As the date restoration is required may be up to 25 years in the future, there is uncertainty in this estimation. Additionally, for sites that are outside the act, should we be successful in renewing the lease at the end of its term, it is possible that the provision recognised may not be utilised. Onerous contract Onerous contracts primarily relate to the non-rental costs of fulfilling property contracts from which we will no longer benefit, including closed stores and head office space. The provision is determined with reference to the occupancy costs from the date of closure through to the next lease break. Rental costs on these sites from which we will receive no future economic benefits are represented by an impairment to the right of use asset. The which have either been surrendered back to the landlord or fully sublet for the remainder of the lease term. ", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-397": { "value": "Accounting policy We recognise provisions when it is probable that an outflow of economic benefits will be required to settle a present legal or constructive obligation that has arisen as a result of past events and for which a reliable estimate can be made. The provision is measured at its current present value.
Provision
Description
Customer We are committed to doing the right thing but occasionally we identify issues
remediation that have caused detriment as a result of our actions.
Where we have to refund costs to customers we provide for this at the point the
obligation arises. The amounts recognised include any associated interest due.
Dilapidations Dilapidations provisions are recognised in regard to certain properties we lease.
The majority of our stores and offices have an automatic right to renewal at
the end of the lease under the provisions of the Landlord and Tenant Act 1954.
Where this is the case we do not provide for restorations on these sites since
we have no intention of vacating at the end of the lease term. For sites that
are outside the Landlord and Tenant Act 1954, or sites within the Landlord and
Tenant Act 1954 where we think there is a chance we will vacate a site at the end
of its lease, a provision is made for dilapidations. The provision is made in line
with the underlying obligations contained within the lease.
Legal and Provisions are made relating to the outcome of legal cases and regulatory
regulatory investigations based on our best estimate of settlement following consultation
with our lawyers and advisors. The inclusion of a provision does not constitute
any admission of wrongdoing or legal liability. Details of individual cases are
provided where these are material to our financial statements and disclosure
would not be prejudicial to the outcome of the case.
Onerous Onerous contract provisions are recognised when the unavoidable costs of
contracts meeting the obligations under the contract exceed the economic benefits we
expect to be received under it. The provision is recognised as the net cost of
exiting from the contract, which is the lower of the cost of fulfilling it and any
compensation or penalties arising from failure to fulfil it.
Restructuring Restructuring provisions are recognised at the point we have developed
a detailed formal plan and we have raised a valid expectation that it will
be implemented. This is typically at the point the plan is announced to affected
colleagues.
Other
provisions
Other provisions consist of other sundry amounts that are provided for in the
ordinary course of our business.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-285": { "value": "
25. Other liabilities
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Trade creditors
1
1
Taxation and social security costs
8
8
Accruals
1
107
146
Deferred income
24
37
Other liabilities
105
75
Total other liabilities
245
267
Current portion
211
253
Non-current portion
34
14
1. Includes accrued interest payable.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-381": { "value": "25. Other liabilities
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Trade creditors
1
1
Taxation and social security costs
8
8
Accruals
1
107
146
Deferred income
24
37
Other liabilities
105
75
Total other liabilities
245
267
Current portion
211
253
Non-current portion
34
14
1. Includes accrued interest payable.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-367": { "value": "25. Other liabilities
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Trade creditors
1
1
Taxation and social security costs
8
8
Accruals
1
107
146
Deferred income
24
37
Other liabilities
105
75
Total other liabilities
245
267
Current portion
211
253
Non-current portion
34
14
1. Includes accrued interest payable.", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-354": { "value": "25. Other liabilities
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Trade creditors
1
1
Taxation and social security costs
8
8
Accruals
1
107
146
Deferred income
24
37
Other liabilities
105
75
Total other liabilities
245
267
Current portion
211
253
Non-current portion
34
14
1. Includes accrued interest payable.", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-338": { "value": "25. Other liabilities
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Trade creditors
1
1
Taxation and social security costs
8
8
Accruals
1
107
146
Deferred income
24
37
Other liabilities
105
75
Total other liabilities
245
267
Current portion
211
253
Non-current portion
34
14
1. Includes accrued interest payable.", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-313": { "value": "25. Other liabilities
31 December 31 December
2024 2023
\u00a3\u2019million \u00a3\u2019million
Trade creditors
1
1
Taxation and social security costs
8
8
Accruals
1
107
146
Deferred income
24
37
Other liabilities
105
75
Total other liabilities
245
267
Current portion
211
253
Non-current portion
34
14
1. Includes accrued interest payable.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-355": { "value": "26. Called-up share capital Accounting policy On issue of new shares, incremental directly attributable costs are shown in equity as a deduction from the proceeds. As at 31 December 2024, we had 673.0 million ordinary shares of 0.0001p (31 December 2023: 672.7 million) authorised and in issue. Called-up ordinary share capital, issued and fully paid The called-up share capital reserve is used to record our nominal share capital. At 31 December 2024, our called-up share capital was \u00a3672.98 (31 December 2023: \u00a3672.68).
2024 2023
\u00a3\u2019million \u00a3\u2019million
1 January
\u2013
\u2013
Bonus issuance
\u2013
965
Capital reduction
\u2013
(965)
31 December
\u2013
\u2013
Share premium The share premium reserve is used to record the excess consideration of any shares we have issued over the nominal share value.
2024 2023
\u00a3\u2019million \u00a3\u2019million
1 January
144
1,964
Cancellation of Metro Bank PLC share premium
\u2013
(1,964)
Share issuance
\u2013
150
Cost of share issuance
\u2013
(6)
31 December
144
144
Redeemable preference shares As at 31 December 2024, in addition to the share capital set out above, Metro Bank Holdings PLC has \u00a350,000 of redeemable preference shares which were issued to Robert Sharpe (Chair) and Daniel Frumkin (Chief Executive Officer) upon the initial incorporation of the legal entity on 29 September 2022. As at 31 December 2024, these shares have not yet been redeemed. 28. Other reserves Merger reserve
2024 2023
\u00a3\u2019million \u00a3\u2019million
1 January
\u2013
\u2013
Issuance of Metro Bank Holdings PLC share capital
\u2013
965
Bonus issuance
\u2013
(965)
31 December
\u2013
\u2013
Share option reserve The share option reserve is used to record movements in relation to share options awarded under our Deferred Variable Reward and LTIP.
2024 2023
\u00a3\u2019million \u00a3\u2019million
1 January
23
20
Equity-settled share-based payment charges (note 7)
2
3
Transfer of b/f share option reserve
(1)
\u2013
31 December
24
23
Fair value though other comprehensive income reserve The FVOCI reserve is used to record changes in the fair value of investment securities designated at FVOCI. When investment securities held at FVOCI are sold, any accumulated gains or losses are transferred to the income statement.
2024 2023
\u00a3\u2019million \u00a3\u2019million
1 January
(11)
(13)
Changes in fair value
5
3
Deferred tax movements
(1)
(1)
31 December
(7)
(11)
Treasury shares We have a small number of shares held in treasury relating to awards originally granted to key members of management in 2016 in recognition of their significant contribution to the successful listing on the London Stock Exchange. The final tranche of these awards vested in April 2021 and the remaining balance represents awards that did not vest owing to the original conditions of the grant not being fulfilled. These are held by an employee benefit trust, which is consolidated within the Bank\u2019s financial statements. The balance on the reserve is less than \u00a31 million (31 December 2023: less than \u00a31 million) and therefore has not been separately disclosed as a component of reserves due to its immaterial size. 26. Called-up share capital continued Insertion of Metro Bank Holdings Plc As set out in note 1, on 19th May 2023, Metro Bank Holdings PLC became the listed entity and new holding company of Metro Bank PLC. As part of the insertion of Metro Bank Holdings PLC, the existing listed share capital and share premium of Metro Bank PLC was cancelled and the share capital and share premium amounts transferred to retained earnings. Metro Bank PLC subsequently issued the same number of new unlisted 0.0001p ordinary shares from retained earnings to Metro Bank Holdings PLC. Each existing holder of Metro Bank PLC share was issued with an equivalent number of new shares in Metro Bank Holdings PLC, with the nominal value of 0.0001p, as part of a share for share exchange. The difference between the new nominal share capital in Metro Bank Holdings PLC and the net assets of Metro Bank PLC was recognised in a merger reserve. This merger reserve was capitalised through the allotment of 964,505,616 million special shares of 0.0001p each, which were then subsequently reduced to provide the Metro Bank Holdings PLC with distributable reserves. In November 2023, we issued 500.0 million of ordinary shares for consideration of \u00a3150 million. Associated costs of \u00a36 million have been offset against the amount raised. 27. Retained earnings Retained earnings records our cumulative earnings since our formation, including the accumulated earnings of our subsidiaries since they were acquired.
2024 2023
\u00a3\u2019million \u00a3\u2019million
1 January
978
(1,015)
Profit for the year
43
29
Cancellation of Metro Bank PLC share capital and share premium
\u2013
1,964
Issuance of Metro Bank Holdings PLC share capital
\u2013
965
Capital reduction of Metro Bank Holdings PLC share capital
\u2013
(965)
Transfer of b/f share option reserve
1
\u2013
31 December
1,022
978
No dividends were paid or declared during the year (2023: none).", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-314": { "value": "26. Called-up share capital Accounting policy On issue of new shares, incremental directly attributable costs are shown in equity as a deduction from the proceeds. As at 31 December 2024, we had 673.0 million ordinary shares of 0.0001p (31 December 2023: 672.7 million) authorised and in issue. Called-up ordinary share capital, issued and fully paid The called-up share capital reserve is used to record our nominal share capital. At 31 December 2024, our called-up share capital was \u00a3672.98 (31 December 2023: \u00a3672.68).
2024 2023
\u00a3\u2019million \u00a3\u2019million
1 January
\u2013
\u2013
Bonus issuance
\u2013
965
Capital reduction
\u2013
(965)
31 December
\u2013
\u2013
Share premium The share premium reserve is used to record the excess consideration of any shares we have issued over the nominal share value.
2024 2023
\u00a3\u2019million \u00a3\u2019million
1 January
144
1,964
Cancellation of Metro Bank PLC share premium
\u2013
(1,964)
Share issuance
\u2013
150
Cost of share issuance
\u2013
(6)
31 December
144
144
Redeemable preference shares As at 31 December 2024, in addition to the share capital set out above, Metro Bank Holdings PLC has \u00a350,000 of redeemable preference shares which were issued to Robert Sharpe (Chair) and Daniel Frumkin (Chief Executive Officer) upon the initial incorporation of the legal entity on 29 September 2022. As at 31 December 2024, these shares have not yet been redeemed.
26. Called-up share capital continued
Insertion of Metro Bank Holdings Plc
As set out in note 1, on 19th May 2023, Metro Bank Holdings PLC became the listed entity and new holding
company of Metro Bank PLC. As part of the insertion of Metro Bank Holdings PLC, the existing listed share
capital and share premium of Metro Bank PLC was cancelled and the share capital and share premium
amounts transferred to retained earnings. Metro Bank PLC subsequently issued the same number of new
unlisted 0.0001p ordinary shares from retained earnings to Metro Bank Holdings PLC. Each existing holder
of Metro Bank PLC share was issued with an equivalent number of new shares in Metro Bank Holdings
PLC, with the nominal value of 0.0001p, as part of a share for share exchange.
The difference between the new nominal share capital in Metro Bank Holdings PLC and the net assets of
Metro Bank PLC was recognised in a merger reserve. This merger reserve was capitalised through the
allotment of 964,505,616 million special shares of 0.0001p each, which were then subsequently reduced
to provide the Metro Bank Holdings PLC with distributable reserves.
In November 2023, we issued 500.0 million of ordinary shares for consideration of \u00a3150 million.
Associated costs of \u00a36 million have been offset against the amount raised.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-398": { "value": "Accounting policy On issue of new shares, incremental directly attributable costs are shown in equity as a deduction from the proceeds. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-315": { "value": "28. Other reserves Merger reserve
2024 2023
\u00a3\u2019million \u00a3\u2019million
1 January
\u2013
\u2013
Issuance of Metro Bank Holdings PLC share capital
\u2013
965
Bonus issuance
\u2013
(965)
31 December
\u2013
\u2013
Share option reserve The share option reserve is used to record movements in relation to share options awarded under our Deferred Variable Reward and LTIP.
2024 2023
\u00a3\u2019million \u00a3\u2019million
1 January
23
20
Equity-settled share-based payment charges (note 7)
2
3
Transfer of b/f share option reserve
(1)
\u2013
31 December
24
23
Fair value though other comprehensive income reserve The FVOCI reserve is used to record changes in the fair value of investment securities designated at FVOCI. When investment securities held at FVOCI are sold, any accumulated gains or losses are transferred to the income statement.
2024 2023
\u00a3\u2019million \u00a3\u2019million
1 January
(11)
(13)
Changes in fair value
5
3
Deferred tax movements
(1)
(1)
31 December
(7)
(11)
Treasury shares We have a small number of shares held in treasury relating to awards originally granted to key members of management in 2016 in recognition of their significant contribution to the successful listing on the London Stock Exchange. The final tranche of these awards vested in April 2021 and the remaining balance represents awards that did not vest owing to the original conditions of the grant not being fulfilled. These are held by an employee benefit trust, which is consolidated within the Bank\u2019s financial statements. The balance on the reserve is less than \u00a31 million (31 December 2023: less than \u00a31 million) and therefore has not been separately disclosed as a component of reserves due to its immaterial size. ", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-339": { "value": "Treasury shares We have a small number of shares held in treasury relating to awards originally granted to key members of management in 2016 in recognition of their significant contribution to the successful listing on the London Stock Exchange. The final tranche of these awards vested in April 2021 and the remaining balance represents awards that did not vest owing to the original conditions of the grant not being fulfilled. These are held by an employee benefit trust, which is consolidated within the Bank\u2019s financial statements. The balance on the reserve is less than \u00a31 million (31 December 2023: less than \u00a31 million) and therefore has not been separately disclosed as a component of reserves due to its immaterial size. ", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-316": { "value": "29. Share-based payments Accounting policy The grant date fair value of options awarded to colleagues is recognised as an expense over the period in which colleagues become unconditionally entitled to the options. The expense (representing the value of the services received by us) is measured by reference to the fair value of the awards granted on the date of the grant. The cost of the colleague services received in respect of the awards granted is recognised in the consolidated income statement over the period that the services are received, which is the vesting period. Graded vesting is applied where relevant. Vesting conditions are limited to service and performance conditions. For performance-based schemes, the relevant performance measures are projected to the end of the performance period in order to determine the number of options expected to vest. This estimate of the performance measures is used to determine the option fair value, discounted to present value. The Group revises the number of options that are expected to vest, including an estimate of lapses at each reporting date based on forecast performance measures. The impact of the revision to original estimates, if any, is recognised in the income statement, with a corresponding adjustment to equity. The fair value of colleague awards plans is calculated at the grant date using Black-Scholes and Monte Carlo models. The resulting cost is charged to the income statement over the vesting period. The value of the charge is adjusted to reflect expected and actual levels of vesting. We provide share award schemes to colleagues as part of their remuneration packages, and we operate a number of share-based compensation schemes, namely the DVRP and LTIP. The granting of awards is designed to provide incentives to colleagues to deliver long-term returns. No individual has a contractual right to participate in the plans or to receive any guaranteed benefits and the granting of awards remains at the discretion of the People and Remuneration Committee. Standard share options are granted for no consideration, are not pensionable and carry no voting rights. Long Term Incentive Plan The LTIP is the primary long-term incentive scheme for the members of our ExCo. It was approved by shareholders at the 2021 AGM. Under the plan, annual awards, based on a percentage of salary, may be offered. The extent to which an award vests is measured over a three-year period (four years for the initial awards granted in 2021) against financial targets, which consist of return on tangible equity and relative total shareholder return, as well as continued employment within the Group. Deferred Variable Reward Plan The DVRP was first introduced in 2010 and the latest plan was approved by shareholders at the 2021 AGM. Although originally designed for all colleagues, the plan is now operated for senior managers, primarily consisting of members of the our ExCo and other Material Risk Takers. Under the current rules participants are required to defer a proportion of any bonus paid into nominal price awards, a proportion of which vest immediately and the remainder of which vest over seven years. There are no further performance conditions on these shares, other than continued employment. All awards under the DVRP are subject to a one-year holding period; once exercised and all awards have a life of 10 years from the date of grant. More information in relation to both the DVRP and LTIP is available within the Remuneration Report. Awards outstanding The table below summarises the movements in the number of options outstanding and their weighted average exercise price:
2024
2023
Weighted Weighted
average average
Number exercise Number exercise
of options price of options price
\u2018000 \u00a3 \u2018000 \u00a3
Outstanding at 1 January
16,235
5.24
13,326
6.61
Granted
613
0.00
3,429
0.00
1
Exercised
(559)
0.00
(259)
0.03
Lapsed
(1,278)
7.54
(261)
10.46
Outstanding at 31 December
15,011
5.03
16,235
5.26
Exercisable at 31 December
7,608
9.92
7,931
10.54
1. Nominal price awards with exercise price of 0.0001p. The average share price during 2024 was 52p (2023: 94p). For share options exercised during the financial year, the weighted average share price at the date of exercise was 67p (2023: 118p). All our options are equity settled and we have no legal or constructive obligation to repurchase the shares or settle the options in cash. Exercises of awards granted are satisfied via the issuance of new shares. Total share-based compensation charges totalled \u00a32.0 million in the year ended 31 December 2024 (2023: \u00a33.2 million). Fair value of options granted The number of options outstanding at year end was as follows:
2024
2023
Weighted Weighted
average average
Number remaining Number remaining
of options contractual of options contractual
Exercise price \u2018000 life years \u2018000 life years
\u00a30.00
1
9,174
7.7
10,255
8.7
\u00a30.00
2
570
9.6
\u2013
\u2013
\u00a30.93
1,972
5.3
2,011
6.3
\u00a37.9 4
651
4.2
654
5.2
\u00a312.00
\u2013
0.0
\u2013
0.0
\u00a313.00
\u2013
0.0
60
0.2
\u00a313.50
\u2013
0.0
616
0.8
\u00a314.00
194
n/a
194
n/a
\u00a316.00
615
n/a
611
n/a
\u00a320.00
445
1.2
444
2.2
\u00a332.73
633
2.2
633
3.2
\u00a335.36
757
3.2
757
4.2
Total
15,011
6.2
16,235
7.3
1. Nominal price awards with exercise price of 0.0001p. 2. Nominal price awards with exercise price of 0.001p. The total fair value of options granted in 2024 was \u00a30.4 million (2023: \u00a33.4 million), based on the following assumptions:
2024
awards
Risk-free interest rate
4.19% to 4.77%
Expected life
1 to 7 years
Volatility
176%
Expected dividend yield
nil
Share price at grant date
\u00a30.31
Exercise price
\u00a30.00
Volatility has been estimated by taking our share price volatility since we listed in 2016. An assumption is also made in respect of how many shares will lapse due to the vesting criteria not being met. For the awards granted post 2023, as these were only made to members of the ExCo and other Material Risk Takers, the lapse assumption has been set at 0%. The fair value charges recognised in the income statement for these scheme are adjusted annually to reflect actual lapses. For all other schemes the lapse assumption is updated annually", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-399": { "value": "Accounting policy The grant date fair value of options awarded to colleagues is recognised as an expense over the period in which colleagues become unconditionally entitled to the options. The expense (representing the value of the services received by us) is measured by reference to the fair value of the awards granted on the date of the grant. The cost of the colleague services received in respect of the awards granted is recognised in the consolidated income statement over the period that the services are received, which is the vesting period. Graded vesting is applied where relevant. Vesting conditions are limited to service and performance conditions. For performance-based schemes, the relevant performance measures are projected to the end of the performance period in order to determine the number of options expected to vest. This estimate of the performance measures is used to determine the option fair value, discounted to present value. The Group revises the number of options that are expected to vest, including an estimate of lapses at each reporting date based on forecast performance measures. The impact of the revision to original estimates, if any, is recognised in the income statement, with a corresponding adjustment to equity. The fair value of colleague awards plans is calculated at the grant date using Black-Scholes and Monte Carlo models. The resulting cost is charged to the income statement over the vesting period. The value of the charge is adjusted to reflect expected and actual levels of vesting. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-356": { "value": "30. Expected credit losses Accounting policy We assess on a forward-looking basis the ECL associated with the assets carried at amortised cost and FVOCI and recognise a loss allowance for such losses at each reporting date. Impairment provisions are driven by changes in the credit risk of loans and securities, with a provision for lifetime ECL recognised where the risk of default of an instrument has increased significantly. Risk of default and ECL must incorporate forward-looking and macroeconomic information. Loans and advances Impairment models have been developed for our retail and commercial loan portfolios, with three core models: revolving products; fixed term loans; and mortgages. Expected credit losses are calculated for drawn loans, and for committed lending. The same broad calculation approach is applied for each core model. ECL are calculated by multiplying three main components, being the Probability of Default (PD), Loss Given Default (LGD) and the Exposure at Default (EAD), discounted at the original effective interest rate. Key model inputs, judgements and estimates include: \u2022 consideration of when a SICR occurs \u2022 PD, LGD and EAD as well as their modelled impact \u2022 macroeconomic scenarios and weightings applied. Significant increase in credit risk IFRS 9 requires a higher level of ECL to be recognised for underperforming loans. This is considered based on a staging approach:
Stage
Description
ECL recognised
Stage 1 Financial assets that have had no significant increase in credit risk since initial recognition 12-month ECL
or that have low credit risk (high quality investment securities only) at the reporting date. Total losses expected on defaults which may occur within the next 12 months. Losses are
adjusted for probability-weighted macroeconomic scenarios.
Stage 2 Financial assets that have had a significant increase in credit risk since initial recognition Lifetime ECL
but that do not have objective evidence of impairment. Losses expected on defaults which may occur at any point in a loan\u2019s lifetime. Losses are
adjusted for probability-weighted macroeconomic scenarios.
Stage 3 Financial assets that are credit impaired at the reporting date. Lifetime ECL
A financial asset is credit impaired when it has met the definition of default. We define Losses expected on defaults which may occur at any point in a loan\u2019s lifetime. Losses are
default to have occurred when a loan is greater than 90 days past due or where the adjusted for probability-weighted macroeconomic scenarios.
borrower is considered unlikely to pay. Interest income is calculated on the carrying amount of the loan net of credit allowance.
POCI Financial assets that have been purchased and had objective evidence of being non- Lifetime ECL
performing or credit impaired at the point of purchase. At initial recognition, POCI assets do not carry an impairment allowance. Lifetime ECL
are incorporated into the calculation of the asset\u2019s effective interest rate. Subsequent
changes to the estimate of lifetime ECL are recognised as a loss allowance.
A SICR may be identified in a number of ways: \u2022 Quantitative criteria \u2014 where the numerically calculated PD on a loan has increased significantly since initial recognition. This is assessed using detailed models which assess whether the lifetime PD at observation is greater than the lifetime PD at origination by a portfolio specific threshold. Given the different nature of the products and the dissimilar level of lifetime PDs at origination, we implement different thresholds by sub-products within each portfolio (term loans, revolving loan facilities and mortgages). The threshold is set at three times the median PD of the portfolio at origination. \u2022 Qualitative criteria \u2014 instruments that are 30 days past due or more are allocated to Stage 2, regardless of the results of the quantitative analysis. In addition, instruments classified on the Early Warning List as higher risk are allocated to Stage 2, regardless of the results of the quantitative analysis. A loan will be considered to be \u2018non-performing\u2019 or \u2018credit impaired\u2019 when it meets our definition of default \u2014 that is to say, the loan is 90 days past due, or the borrower is considered unlikely to pay without realisation of collateral. Unlikeliness to pay is assessed through the presence of triggers including the loan being in repossession, the customer having been declared bankrupt, or evidence of financial distress leading to forbearance. A loan may also be considered to be non-performing when it is subject to forbearance measures, consisting of concessions in relation to either: \u2022 a modification of the previous terms and conditions of the loan which the borrower is not considered able to comply with \u2022 a total or partial refinancing of a troubled debt contract that would not have been granted had the borrower not been in financial difficulties. It may not be possible to identify a single discrete event which defines an asset as \u2018non-performing\u2019 or \u2018credit impaired\u2019. Instead, the combined effect of several events may cause financial assets to become credit impaired. Where an asset which has been classified as Stage 3 is showing improving trends and is no longer considered non-performing or credit impaired, a probation period of at least three consecutive months during which the instrument should meet the criteria for exiting default must elapse before it is transferred to Stage 2. Probability of default PD represents the likelihood of a borrower defaulting on its financial obligation either over the next 12 months (for Stage 1 accounts), or over the remaining lifetime of the loan (for Stage 2 and 3 accounts). A PD is calculated for all loans based on historical data and incorporates: \u2022 credit quality scores \u2022 life cycle trends depending on a loan\u2019s vintage \u2022 factors indicating the quality of the vintage \u2022 characteristics of the current and future economic environment. Loss given default LGD represents our expectation of the extent of a loss on a defaulted exposure and is expressed as a percentage considering expected recoveries on defaulted accounts. LGD rates have been modelled considering a range of inputs, including: \u2022 value of collateral on secured portfolios \u2014 a key driver of the expected recovery in the event of default \u2022 expected haircut applied to the collateral value to reflect a forced sale discount \u2022 price index forecasts applied to project collateral values into the future \u2022 stress factors based on macroeconomic scenarios. Exposure at default This is the amount that we expect to be owed at the point of default. This is subject to judgement since a balance will not necessarily remain static between the balance sheet date and the point of expected default. For example: \u2022 interest should be accrued \u2022 repayments may be received \u2022 for a revolving product, further drawings may be taken between the current point in time and the point of default \u2022 estimations of these factors will be incorporated into our estimate of EAD. Retail PD, LGD and EAD are calculated and applied at an individual account level for secured lending. For unsecured lending, PD and EAD are calculated and applied at an individual account level, whilst LGD is assessed at a portfolio level and applied to accounts on an individual basis. Commercial PD and LGD for secured lending are calculated at a counterparty level, then applied at an account level. For commercial unsecured lending, LGD is assessed at a portfolio level and applied to accounts on an individual basis. Commercial EAD is calculated and applied at account level. Macroeconomic scenarios The ECL recognised in the financial statements reflects the effect on ECL of a range of possible outcomes, calculated on a probability-weighted basis, based on a number of economic scenarios and including management overlays where required. These scenarios are representative of our view of forecast economic conditions, sufficient to calculate unbiased ECL, and are designed to capture material \u2018non-linearities\u2019 (i.e. where the increase in credit losses if conditions deteriorate exceeds the decrease in credit losses if conditions improve). In the normal course of business, we use four scenarios. These represent a \u2018most likely outcome\u2019, the \u2018Baseline\u2019 scenario, and three, less likely, \u2018Outer\u2019 scenarios, referred to as an \u2018Upside\u2019, a \u2018Downside\u2019 and a \u2018Severe Downside\u2019 scenario respectively. The Baseline scenario captures the most likely economic future; the Downside and Severe Downside scenarios reflect adverse economic conditions; and the Upside scenario presents more favourable economic conditions. Key scenario assumptions are set using data sourced from independent external economists. This helps ensure that the IFRS 9 scenarios are unbiased and maximise the use of independent information. The following assumptions, considered to be the key drivers of ECL, have been used for the scenarios applied as at 31 December 2024 and 31 December 2023: \u2022 UK interest rates (Bank of England base rate and five-year mortgage rate) \u2022 UK unemployment rates \u2022 UK HPI changes, year on year \u2022 UK GDP changes, year on year \u2022 UK commercial real estate index, year on year. Macroeconomic scenarios impact the ECL calculation through varying PDs and LGDs. We use UK HPI to index mortgage collateral which has a direct impact on LGDs. Other metrics are considered to have a direct impact on PDs and were selected following a search and data calibration exercise of possible drivers. A list of around fifteen potential drivers were initially considered, representing drivers which capture trends in the economy at large, and may indicate economic trends which will impact UK borrowers. The list included variables which impact economic output, interest rates, inflation, share prices, borrower income and the UK housing market. An algorithm was then used to choose the subset of drivers which had the greatest significance and predictive fit to our data. Each scenario was determined by flexing the Baseline scenario, taking into account a number of factors in the global and UK economy such as commodity prices, global interest rates, UK investment spend and exchange rates, as well as the possible impact of recessionary conditions or financial shocks. A simulation process was designed to determine the weighting to apply to each scenario based on its severity and the range of possible scenarios for which that scenario was representative. A summary of each scenario and weighting used at 31 December 2024 is as follows: \u2022 Baseline scenario: Reflects the projection of the median, or \u201850%\u2019 scenario, meaning that in the assessment there is an equal probability that the economy might perform better or worse than the baseline forecast \u2022 Upside scenario: This above-baseline scenario is designed so there is a 10% probability the economy will perform better than in this scenario, and a 90% probability it will perform worse \u2022 Downside scenario: In this recession scenario, in which a deep downturn develops, there is a 90% probability the economy will perform better, and a 10% probability it will perform worse \u2022 Severe Downside scenario: In this recession scenario, in which a deep downturn develops, there is a 96% probability the economy will perform better, and a 4% probability it will perform worse. These assumptions are considered sufficient to capture any material non-linearities. The weightings applied to each scenario at 31 December 2024 were Baseline \u2013 50%, Upside \u2013 20%, Downside \u2013 25% and Severe Downside scenario \u2013 5% (31 December 2023: Baseline \u2013 50%, Upside \u2013 20%, Downside \u2013 25% and Severe Downside scenario \u2013 5%). Economic variable assumptions The year-end assumptions used for the ECL estimate as at 31 December 2024 and 31 December 2023 are as follows:
31 December 2024
31 December 2023
2025
2026
2027
2028
2024
2025
2026
2027
Interest rates (%) \u2013
Baseline
4.5%
4.2%
3.9%
4.0%
5.1%
4.7%
4.3%
4.2%
five-year mortgage rate
Upside
4.7%
4.3%
4.0%
4.0%
5.3%
4.7%
4.3%
4.2%
Downside
3.5%
2.4%
2.4%
3.1%
3.7%
2.7%
2.6%
2.6%
Severe downside
2.8%
2.1%
2.0%
2.4%
3.3%
2.2%
2.2%
2.2%
UK unemployment (%)
Baseline
4.4%
4.5%
4.6%
4.7%
4.6%
4.7%
4.7%
4.8%
Upside
3.8%
3.6%
3.8%
4.1%
4.1%
3.8%
3.9%
4.2%
Downside
6.3%
7. 2%
7. 3%
6.9%
6.5%
7.4%
7.4%
7.0%
Severe downside
7.5%
8.3%
8.2%
8.0%
7.7 %
8.5%
8.4%
8.1%
UK HPI \u2013
Baseline
2.2%
3.9%
2.6%
1.5%
(6.2%)
3.1%
4.7%
2.6%
% change year-on-year
Upside
16.6%
7.0%
0.1%
(2.6%)
7.0%
6.3%
2.1%
(1.5%)
Downside
(9.0%)
(5.6%)
1.9%
4.2%
(16.5%)
(6.3%)
4.0%
5.4%
Severe downside
(15.2%)
(9.6%)
2.3%
2.9%
(22.2%)
(10.3%)
4.4%
4.1%
UK GDP \u2013
Baseline
2.1%
1.2%
2.1%
1.4%
0.4%
1.0%
1.3%
1.4%
% change year-on-year
Upside
5.6%
1.4%
2.0%
1.5%
3.9%
1.2%
1.3%
1.4%
Downside
(3.5%)
1.5%
3.3%
1.4%
(5.6%)
1.3%
2.6%
1.4%
Severe downside
(4.6%)
0.1%
4.6%
2.3%
( 7.1%)
(0.2%)
4.2%
2.4%
UK commercial real estate index,
Baseline
(0.9%)
0.4%
(0.3%)
(1.3%)
(4.2%)
0.8%
1.7%
(0.4%)
year-on-year \u2013 % change
Upside
14.4%
2.3%
(3.3%)
(5.2%)
10.1%
3.3%
(1.3%)
(4.3%)
Downside
(16.0%)
(5.6%)
0.8%
2.0%
(18.7%)
(5.3%)
3.0%
3.4%
Severe downside
(25.1%)
(8.5%)
2.6%
1.2%
(26.9%)
( 7.4%)
4.9%
2.6%
BoE Interest Rate (%)
Baseline
4.1%
2.8%
2.5%
2.5%
4.6%
2.7%
2.3%
2.3%
Upside
4.3%
3.0%
2.6%
2.5%
4.8%
2.7%
2.3%
2.3%
Downside
2.7%
1.1%
1.4%
1.7%
3.2%
1.0%
1.2%
1.5%
Severe downside
2.1%
0.8%
0.8%
0.9%
2.6%
0.7%
0.5%
0.7%
Following the initial four-year projection period, the Upside, Downside and Severe Downside scenarios converge to the Baseline scenario. The rate of convergence varies based on the macroeconomic factor, but at a minimum convergence takes place three years from the initial four-year projection period. We recognise that applying the above scenarios will not always be sufficient to determine an appropriate ECL in all economic environments. The scenarios applied comprise our best estimate of economic impacts on the ECL, and the actual outcome may be significantly different. Investment securities and other financial assets Impairment provisions have been calculated based on our best estimate of ECL on other assets classified and measured at amortised cost and fair value through other comprehensive income. These include investment securities, cash held at banks and other financial assets. These impairment provisions are not material. Critical accounting judgement Measurement of the expected credit loss allowance The measurement of ECL is complex and involves the use of significant judgements. We consider that the following represent key judgements in respect of the measurement of the ECL. Significant increase in credit risk IFRS 9 requires a higher level of ECL to be recognised for under-performing loans as a lifetime ECL is recognised compared to a 12-month ECL for performing loans. This is considered based on a staging approach. Financial assets that have had no SICR since initial recognition, or that have low credit risk at the reporting date, are considered to be performing loans and are classified as \u2018Stage 1\u2019. Losses are calculated based on our expectation of defaults which may occur within the next 12 months. Assets which are considered to have experienced a SICR since initial recognition, but that do not have objective evidence of impairment, are classified as \u2018Stage 2\u2019. Losses are calculated based on defaults which may occur at any point in the asset\u2019s lifetime. Judgement is required to determine when a SICR has occurred. An assessment of whether credit risk has increased significantly since initial recognition, resulting in transfer to Stage 2, is performed at each reporting period by considering the change in the PD expected over the remaining life of the financial instrument. The assessment explicitly or implicitly compares the PD occurring at the reporting date compared to that at initial recognition, taking into account reasonable and supportable information, including information about past events, current conditions and future economic conditions. Use of Post Model Adjustments and Overlays We have applied expert judgement to the measurement of the ECL in the form of Post Model Adjustments (PMAs) and Management Overlays (MOs). Post Model Adjustments PMAs refer to increases/decreases in ECL to address known model limitations, either in model methodology or model inputs. These rely on analysis of model inputs and parameters to determine the change required to improve model accuracy. These may be applied at an aggregated level, however they will usually be applied at account level. Model Overlays MOs reflect management judgement. These rely more heavily on expert judgement and will usually be applied at an aggregated level. For example, where recent changes in market and economic conditions have not yet been captured in the macroeconomic factor inputs to models (e.g., industry \u2013 specific stress event). The appropriateness of PMAs and MOs is subject to rigorous review and challenge, including review by the Audit Committee (see page 66). ECL assessment We have applied PMAs in the assessment of ECL. PMAs supplement the models to account for where there are limitations in model methodology or data inputs and/or to mitigate downsides risks which are not fully captured through the economic scenarios. The appropriateness of PMAs has been subject to rigorous review and challenge, including review by our Model Governance Committee, Impairment Committee and Audit Committee. The level of PMAs has reduced in 2024 with the total percentage of ECL stock standing at 10% as at 31 December 2024 (31 December 2023: 12%). There are no MOs being used as at 31 December 2024. PMAs have been reassessed during the financial year to ensure an appropriate level of ECL to account for the high level of macroeconomic uncertainty, following the cost of living pressures, higher interest rates, and potential property price falls. PMAs make up \u00a318.7 million of the ECL stock as at 31 December 2024 (31 December 2023: \u00a323.4 million) and comprise: \u2022 Macroeconomic correlation uncertainty \u2014 This PMA was raised in Q4 2024 to reflect the uncertainty risk and the potential adverse effects of significant government support that was in place during and following the Covid period and the subsequent growth in SME debt which may not be fully reflected in model outputs (31 December 2024: \u00a311.5 million; 31 December 2023: nil). \u2022 Significant increase in credit risk (SICR) adjustment overlay \u2014 The SICR model for the RateSetter portfolio is resulting in an overstatement of Stage 2 assets and a negative PMA is in place to account for this. These overlays will be removed once the IFRS9 PD Annual Model Review is validated and implemented into production. The value of the PMA has reduced significantly during 2024 as a result of the rundown of the portfolio (31 December 2024: \u00a32.2 million; 31 December 2023: \u00a37.4 million). \u2022 CRE adjustment \u2014 Reflects potential downside risk in property price indices beyond the latest scenarios for the commercial property portfolios (31 December 2024: \u00a30.7 million; 31 December 2023: \u00a33.4 million). \u2022 Climate change impact \u2014 This adjustment was originally raised in 2021 has been revised for FY 2024 and reflects the impact of climate change on property values for the mortgage and commercial portfolios (31 December 2024: \u00a32.8 million; 31 December 2023: \u00a33.2 million). The slight reduction in the overlay since December 2023 is due to the updated balance movements for all portfolios across the year. \u2022 Mortgage model enhancements \u2014 A PMA reflects the new IFRS9 Mortgage PD and Staging models. This overlay will be removed once the IFRS9 PD Annual Model Reviews are validated and implemented into production (31 December 2024: \u00a32.9 million; 31 December 2023: \u00a34.7 million). \u2022 Commercial model enhancements \u2014 An overlay is held in anticipation of remaining model adjustments for the commercial portfolio (31 December 2024: \u00a34.6 million; 31 December 2023: \u00a33.5 million). The increase in the overlay over the period is to reflect the impact from the Business Overdrafts portfolio growth which utilises the IFRS9 commercial models as a proxy for ECL assessment. \u2022 Government guaranteed loans LGD adjustment \u2014 a \u00a31.6m negative PMA was raised for December 2024 month end (31 December 2023: Nil) in anticipation of changes to the LGD model. Expected credit loss expense
2024 2023
\u00a3\u2019million \u00a3\u2019million
Retail mortgages
1
(4)
(1)
Consumer lending
1
\u2013
33
Commercial lending
1
(4)
(20)
Investment securities
\u2013
1
Write-offs and other movements
15
20
Total expected credit loss expense
7
33
1. Represents the movement in ECL allowance during the year and therefore excludes write-offs which are shown separately. Investment securities All investment securities held at FVOCI are deemed to be in Stage 1. Any credit loss allowance is, however, included as part of the revaluation amount in the FVOCI reserve. At 31 December 2024, the loss allowance included within the FVOCI reserve is \u00a30.1 million (31 December 2023: \u00a30.1 million). All investment securities held at amortised cost are deemed to be in Stage 1. The total ECL expense recognised for these assets at 31 December 2024 is \u00a30.6 million (31 December 2023: \u00a30.9 million). Collateral Collateral is usually held in the form of real estate, guarantees, debentures and other loans that we can call upon in the event of the borrower defaulting. At 31 December 2024, 80% (31 December 2023: 80%) of our loans consisted of retail mortgages and commercial term loans secured on collateral, with average debt-to-value of 59% (31 December 2023: 58%) and 56% (31 December 2023: 55%) respectively. A further 4% (31 December 2023: 4%) of our lending portfolio consists of BBLS, which although they do not have any collateral are 100% guaranteed by the Government. Further details on the collateral of our loans can be found in the Risk report. Write-off policy We write off financial assets (either partially or fully) when there is no realistic expectation of receiving further payment from the customer. Indicators that there is no reasonable expectation of recovery include debt sale to a third party and ceasing enforcement activity. We may write off financial assets that are still subject to enforcement activity. Modification of financial assets We sometimes renegotiate the terms of loans provided to customers with a view to maximising recovery. The modifications have not led to any material modification gains or losses being recognised. The following tables explain the changes in both the gross carrying amount and loss allowances of our loans and advances during the year.
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2024
10,596
1,511
389
\u2013
12,496
(63)
(43)
(93)
\u2013
(199)
10,533
1,468
296
\u2013
12,297
Transfers to/(from) Stage 1
1
385
(368)
(17)
\u2013
\u2013
(11)
10
1
\u2013
\u2013
374
(358)
(16)
\u2013
\u2013
Transfers to/(from) Stage 2
(409)
416
(7)
\u2013
\u2013
2
(2)
\u2013
\u2013
\u2013
(407)
414
(7)
\u2013
\u2013
Transfers to/(from) Stage 3
(192)
(100)
292
\u2013
\u2013
4
7
(11)
\u2013
\u2013
(188)
(93)
281
\u2013
\u2013
Net remeasurement due to transfers
2
\u2013
\u2013
\u2013
\u2013
\u2013
9
(14)
(40)
\u2013
(45)
9
(14)
(40)
\u2013
(45)
New lending
3
1,716
147
1
\u2013
1,864
(11)
(3)
(1)
\u2013
(15)
1,705
144
\u2013
\u2013
1,849
Repayments, additional drawdowns and
interest accrued
(618)
(121)
(33)
(1)
(773)
\u2013
\u2013
\u2013
\u2013
\u2013
(618)
(121)
(33)
(1)
(773)
Derecognitions
4
(3,755)
(507)
(121)
\u2013
(4,383)
11
11
20
\u2013
42
(3,744)
(496)
(101)
\u2013
(4,341)
Changes to model assumptions
5
\u2013
\u2013
\u2013
\u2013
\u2013
20
5
\u2013
1
26
20
5
\u2013
1
26
31 December 2024
7,723
978
504
(1)
9,204
(39)
(29)
(124)
1
(191)
7,68
4
949
380
\u2013
9,013
Off-balance sheet items
Commitments and guarantees
6
718 \u2013 718
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2023
10,849
2,088
352
\u2013
13,289
(66)
(51)
(70)
\u2013
(187)
10,783
2,037
282
\u2013
13,102
Transfers to/(from) Stage 1
1
872
(857)
(15)
\u2013
\u2013
(15)
15
\u2013
\u2013
\u2013
857
(842)
(15)
\u2013
\u2013
Transfers to/(from) Stage 2
(581)
589
(8)
\u2013
\u2013
4
(6)
2
\u2013
\u2013
(577)
583
(6)
\u2013
\u2013
Transfers to/(from) Stage 3
(170)
(71)
241
\u2013
\u2013
3
4
(7)
\u2013
\u2013
(167)
(67)
234
\u2013
\u2013
Net remeasurement due to transfers
2
\u2013
\u2013
\u2013
\u2013
\u2013
12
(13)
(38)
\u2013
(39)
12
(13)
(38)
\u2013
(39)
New lending
3
2,060
239
16
\u2013
2,315
(18)
(6)
(6)
\u2013
(30)
2,042
233
10
\u2013
2,285
Repayments, additional drawdowns and
interest accrued
(685)
(172)
(40)
\u2013
(897)
\u2013
\u2013
\u2013
\u2013
\u2013
(685)
(172)
(40)
\u2013
(897)
Derecognitions
4
(1,749)
(305)
(157)
\u2013
(2,211)
13
10
26
\u2013
49
(1,736)
(295)
(131)
\u2013
(2,162)
Changes to model assumptions
5
\u2013
\u2013
\u2013
\u2013
\u2013
4
4
\u2013
\u2013
8
4
4
\u2013
\u2013
8
31 December 2023
10,596
1,511
389
\u2013
12,496
(63)
(43)
(93)
\u2013
(199)
10,533
1,468
296
\u2013
12,297
Off-balance sheet items
Commitments and guarantees
6
718
\u2013
718
1. Represents stage transfers prior to any ECL remeasurements. 2. Represents the remeasurement between the 12-month and lifetime ECL due to stage transfer. In addition it includes any ECL change resulting from model assumptions and forward-looking information on these loans. 3. Represents the increase in balances resulting from loans and advances that have been newly originated, purchased or renewed as well as any ECL that has been recognised in relation to these loans during the year. 4. Represents the decrease in balances resulting from loans and advances that have been fully repaid, sold or written off. 5. Represents the change in ECL to those loans that remain within the same stage through the year. 6. Represents undrawn lending facilities. Further details can be found in note 31. Retail mortgages
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2024
6,887
784
146
\u2013
7,817
(7)
(6)
(6)
\u2013
(19)
6,880
778
140
\u2013
7,798
Transfers to/(from) Stage 1
146
(138)
(8)
\u2013
\u2013
(1)
1
\u2013
\u2013
\u2013
145
(137)
(8)
\u2013
\u2013
Transfers to/(from) Stage 2
(171)
173
(2)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(171)
173
(2)
\u2013
\u2013
Transfers to/(from) Stage 3
(53)
(46)
99
\u2013
\u2013
\u2013
1
(1)
\u2013
\u2013
(53)
(45)
98
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
1
(1)
(2)
\u2013
(2)
1
(1)
(2)
\u2013
(2)
New lending
728
126
\u2013
\u2013
854
(1)
(2)
\u2013
\u2013
(3)
727
124
\u2013
\u2013
851
Repayments, additional drawdowns and
interest accrued
(113)
(12)
1
\u2013
(124)
\u2013
\u2013
\u2013
\u2013
\u2013
(113)
(12)
1
\u2013
(124)
Derecognitions
(3,066)
(303)
(33)
\u2013
(3,402)
3
2
2
\u2013
7
(3,063)
(301)
(31)
\u2013
(3,395)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
1
1
\u2013
\u2013
2
1
1
\u2013
\u2013
2
31 December 2024
4,358
584
203
\u2013
5,145
(4)
(4)
(7)
\u2013
(15)
4,354
580
196
\u2013
5,130
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2023
6,195
1,343
111
\u2013
7,649
(6)
(11)
(3)
\u2013
(20)
6,189
1,332
108
\u2013
7,629
Transfers to/(from) Stage 1
745
(737)
(8)
\u2013
\u2013
(6)
6
\u2013
\u2013
\u2013
739
(731)
(8)
\u2013
\u2013
Transfers to/(from) Stage 2
(193)
199
(6)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(193)
199
(6)
\u2013
\u2013
Transfers to/(from) Stage 3
(38)
(29)
67
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(38)
(29)
67
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
5
(2)
(2)
\u2013
1
5
(2)
(2)
\u2013
1
New lending
1,195
147
1
\u2013
1,343
(1)
(1)
\u2013
\u2013
(2)
1,194
146
1
\u2013
1,341
Repayments, additional drawdowns and
interest accrued
(177)
(18)
\u2013
\u2013
(195)
\u2013
\u2013
\u2013
\u2013
\u2013
(177)
(18)
\u2013
\u2013
(195)
Derecognitions
(840)
(121)
(19)
\u2013
(980)
1
1
\u2013
\u2013
2
(839)
(120)
(19)
\u2013
(978)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1
(1)
\u2013
\u2013
\u2013
1
(1)
\u2013
\u2013
31 December 2023
6,887
784
146
\u2013
7,817
(7)
(6)
(6)
\u2013
(19)
6,880
778
140
\u2013
7,798
Consumer lending
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2024
906
314
77
\u2013
1,297
(26)
(16)
(66)
\u2013
(108)
880
298
11
\u2013
1,189
Transfers to/(from) Stage 1
80
(79)
(1)
\u2013
\u2013
(3)
3
\u2013
\u2013
\u2013
77
(76)
(1)
\u2013
\u2013
Transfers to/(from) Stage 2
(74)
74
\u2013
\u2013
\u2013
1
(1)
\u2013
\u2013
\u2013
(73)
73
\u2013
\u2013
\u2013
Transfers to/(from) Stage 3
(27)
(14)
41
\u2013
\u2013
1
4
(5)
\u2013
\u2013
(26)
(10)
36
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
2
(4)
(25)
\u2013
(27)
2
(4)
(25)
\u2013
(27)
New lending
4
\u2013
\u2013
\u2013
4
\u2013
\u2013
\u2013
\u2013
\u2013
4
\u2013
\u2013
\u2013
4
Repayments, additional drawdowns and
interest accrued
(226)
(83)
(10)
(1)
(320)
\u2013
\u2013
\u2013
\u2013
\u2013
(226)
(83)
(10)
(1)
(320)
Derecognitions
(167)
(59)
(10)
\u2013
(236)
4
2
9
\u2013
15
(163)
(57)
(1)
\u2013
(221)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
9
3
(1)
1
12
9
3
(1)
1
12
31 December 2024
496
153
97
(1)
745
(12)
(9)
(88)
1
(108)
484
144
9
\u2013
637
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2023
1,180
250
50
\u2013
1,480
(21)
(12)
(42)
\u2013
(75)
1,159
238
8
\u2013
1,405
Transfers to/(from) Stage 1
34
(34)
\u2013
\u2013
\u2013
(2)
2
\u2013
\u2013
\u2013
32
(32)
\u2013
\u2013
\u2013
Transfers to/(from) Stage 2
(182)
182
\u2013
\u2013
\u2013
2
(2)
\u2013
\u2013
\u2013
(180)
180
\u2013
\u2013
\u2013
Transfers to/(from) Stage 3
(35)
(9)
44
\u2013
\u2013
1
2
(3)
\u2013
\u2013
(34)
(7)
41
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
2
(6)
(28)
\u2013
(32)
2
(6)
(28)
\u2013
(32)
New lending
311
78
7
\u2013
396
(9)
(4)
(6)
\u2013
(19)
302
74
1
\u2013
377
Repayments, additional drawdowns and
interest accrued
(217)
(111)
(10)
\u2013
(338)
\u2013
\u2013
\u2013
\u2013
\u2013
(217)
(111)
(10)
\u2013
(338)
Derecognitions
(185)
(42)
(14)
\u2013
(241)
3
2
12
\u2013
17
(182)
(40)
(2)
\u2013
(224)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
(2)
2
1
\u2013
1
(2)
2
1
\u2013
1
31 December 2023
906
314
77
\u2013
1,297
(26)
(16)
(66)
\u2013
(108)
880
298
11
\u2013
1,189
Commercial lending
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2024
2,803
413
166
\u2013
3,382
(30)
(21)
(21)
\u2013
(72)
2,773
392
145
\u2013
3,310
Transfers to/(from) Stage 1
159
(151)
(8)
\u2013
\u2013
(7)
6
1
\u2013
\u2013
152
(145)
(7)
\u2013
\u2013
Transfers to/(from) Stage 2
(164)
169
(5)
\u2013
\u2013
1
(1)
\u2013
\u2013
\u2013
(163)
168
(5)
\u2013
\u2013
Transfers to/(from) Stage 3
(112)
(40)
152
\u2013
\u2013
3
2
(5)
\u2013
\u2013
(109)
(38)
147
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
6
(9)
(13)
\u2013
(16)
6
(9)
(13)
\u2013
(16)
New lending
984
21
1
\u2013
1,006
(10)
(1)
(1)
\u2013
(12)
974
20
\u2013
\u2013
994
Repayments, additional drawdowns and
interest accrued
(279)
(26)
(24)
\u2013
(329)
\u2013
\u2013
\u2013
\u2013
\u2013
(279)
(26)
(24)
\u2013
(329)
Derecognitions
(522)
(145)
(78)
\u2013
(745)
4
7
9
\u2013
20
(518)
(138)
(69)
\u2013
(725)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
10
1
1
\u2013
12
10
1
1
\u2013
12
31 December 2024
2,869
241
204
\u2013
3,314
(23)
(16)
(29)
\u2013
(68)
2,846
225
175
\u2013
3,246
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2023
3,474
495
191
\u2013
4,160
(39)
(28)
(25)
\u2013
(92)
3,435
467
166
\u2013
4,068
Transfers to/(from) Stage 1
93
(86)
(7)
\u2013
\u2013
(7)
7
\u2013
\u2013
\u2013
86
(79)
(7)
\u2013
\u2013
Transfers to/(from) Stage 2
(206)
208
(2)
\u2013
\u2013
2
(4)
2
\u2013
\u2013
(204)
204
\u2013
\u2013
\u2013
Transfers to/(from) Stage 3
(97)
(33)
130
\u2013
\u2013
2
2
(4)
\u2013
\u2013
(95)
(31)
126
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
5
(5)
(8)
\u2013
(8)
5
(5)
(8)
\u2013
(8)
New lending
554
14
8
\u2013
576
(8)
(1)
\u2013
\u2013
(9)
546
13
8
\u2013
567
Repayments, additional drawdowns and
interest accrued
(291)
(43)
(30)
\u2013
(364)
\u2013
\u2013
\u2013
\u2013
\u2013
(291)
(43)
(30)
\u2013
(364)
Derecognitions
(724)
(142)
(124)
\u2013
(990)
9
7
14
\u2013
30
(715)
(135)
(110)
\u2013
(960)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
6
1
\u2013
\u2013
7
6
1
\u2013
\u2013
7
31 December 2023
2,803
413
166
\u2013
3,382
(30)
(21)
(21)
\u2013
(72)
2,773
392
145
\u2013
3,310
Credit risk exposures Total lending
31 December 2024
31 December 2023
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
Total
Up to date
7,694
849
145
(1)
8,687
10,553
1,342
123
12,018
1 to 29 days past due
29
39
14
\u2013
82
43
54
15
112
30 to 89 days past due
\u2013
90
86
\u2013
176
\u2013
115
43
158
90+ days past due
\u2013
\u2013
259
\u2013
259
\u2013
\u2013
208
208
Gross carrying amount
7,723
978
504
(1)
9,204
10,596
1,511
389
12,496
Retail mortgages
31 December 2024
31 December 2023
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
Total
Up to date
4,356
504
57
\u2013
4,917
6,885
695
37
7,617
1 to 29 days past due
2
21
11
\u2013
34
2
28
10
40
30 to 89 days past due
\u2013
59
21
\u2013
80
\u2013
61
16
77
90+ days past due
\u2013
\u2013
114
\u2013
114
\u2013
\u2013
83
83
Gross carrying amount
4,358
584
203
\u2013
5,145
6,887
784
146
7,817
Consumer lending
31 December 2024
31 December 2023
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
Total
Up to date
496
141
2
(1)
638
900
297
3
1,200
1 to 29 days past due
\u2013
2
1
\u2013
3
6
2
\u2013
8
30 to 89 days past due
\u2013
10
5
\u2013
15
\u2013
15
7
22
90+ days past due
\u2013
\u2013
89
\u2013
89
\u2013
\u2013
67
67
Gross carrying amount
496
153
97
(1)
745
906
314
77
1,297
Commercial lending
31 December 2024
31 December 2023
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
Total
Up to date
2,842
204
86
\u2013
3,132
2,768
350
83
3,201
1 to 29 days past due
27
16
2
\u2013
45
35
24
5
64
30 to 89 days past due
\u2013
21
60
\u2013
81
\u2013
39
20
59
90+ days past due
\u2013
\u2013
56
\u2013
56
\u2013
\u2013
58
58
Gross carrying amount
2,869
241
204
\u2013
3,314
2,803
413
166
3,382
", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-340": { "value": "30. Expected credit losses Accounting policy We assess on a forward-looking basis the ECL associated with the assets carried at amortised cost and FVOCI and recognise a loss allowance for such losses at each reporting date. Impairment provisions are driven by changes in the credit risk of loans and securities, with a provision for lifetime ECL recognised where the risk of default of an instrument has increased significantly. Risk of default and ECL must incorporate forward-looking and macroeconomic information. Loans and advances Impairment models have been developed for our retail and commercial loan portfolios, with three core models: revolving products; fixed term loans; and mortgages. Expected credit losses are calculated for drawn loans, and for committed lending. The same broad calculation approach is applied for each core model. ECL are calculated by multiplying three main components, being the Probability of Default (PD), Loss Given Default (LGD) and the Exposure at Default (EAD), discounted at the original effective interest rate. Key model inputs, judgements and estimates include: \u2022 consideration of when a SICR occurs \u2022 PD, LGD and EAD as well as their modelled impact \u2022 macroeconomic scenarios and weightings applied. Significant increase in credit risk IFRS 9 requires a higher level of ECL to be recognised for underperforming loans. This is considered based on a staging approach:
Stage
Description
ECL recognised
Stage 1 Financial assets that have had no significant increase in credit risk since initial recognition 12-month ECL
or that have low credit risk (high quality investment securities only) at the reporting date. Total losses expected on defaults which may occur within the next 12 months. Losses are
adjusted for probability-weighted macroeconomic scenarios.
Stage 2 Financial assets that have had a significant increase in credit risk since initial recognition Lifetime ECL
but that do not have objective evidence of impairment. Losses expected on defaults which may occur at any point in a loan\u2019s lifetime. Losses are
adjusted for probability-weighted macroeconomic scenarios.
Stage 3 Financial assets that are credit impaired at the reporting date. Lifetime ECL
A financial asset is credit impaired when it has met the definition of default. We define Losses expected on defaults which may occur at any point in a loan\u2019s lifetime. Losses are
default to have occurred when a loan is greater than 90 days past due or where the adjusted for probability-weighted macroeconomic scenarios.
borrower is considered unlikely to pay. Interest income is calculated on the carrying amount of the loan net of credit allowance.
POCI Financial assets that have been purchased and had objective evidence of being non- Lifetime ECL
performing or credit impaired at the point of purchase. At initial recognition, POCI assets do not carry an impairment allowance. Lifetime ECL
are incorporated into the calculation of the asset\u2019s effective interest rate. Subsequent
changes to the estimate of lifetime ECL are recognised as a loss allowance.
A SICR may be identified in a number of ways: \u2022 Quantitative criteria \u2014 where the numerically calculated PD on a loan has increased significantly since initial recognition. This is assessed using detailed models which assess whether the lifetime PD at observation is greater than the lifetime PD at origination by a portfolio specific threshold. Given the different nature of the products and the dissimilar level of lifetime PDs at origination, we implement different thresholds by sub-products within each portfolio (term loans, revolving loan facilities and mortgages). The threshold is set at three times the median PD of the portfolio at origination. \u2022 Qualitative criteria \u2014 instruments that are 30 days past due or more are allocated to Stage 2, regardless of the results of the quantitative analysis. In addition, instruments classified on the Early Warning List as higher risk are allocated to Stage 2, regardless of the results of the quantitative analysis. A loan will be considered to be \u2018non-performing\u2019 or \u2018credit impaired\u2019 when it meets our definition of default \u2014 that is to say, the loan is 90 days past due, or the borrower is considered unlikely to pay without realisation of collateral. Unlikeliness to pay is assessed through the presence of triggers including the loan being in repossession, the customer having been declared bankrupt, or evidence of financial distress leading to forbearance. A loan may also be considered to be non-performing when it is subject to forbearance measures, consisting of concessions in relation to either: \u2022 a modification of the previous terms and conditions of the loan which the borrower is not considered able to comply with \u2022 a total or partial refinancing of a troubled debt contract that would not have been granted had the borrower not been in financial difficulties. It may not be possible to identify a single discrete event which defines an asset as \u2018non-performing\u2019 or \u2018credit impaired\u2019. Instead, the combined effect of several events may cause financial assets to become credit impaired. Where an asset which has been classified as Stage 3 is showing improving trends and is no longer considered non-performing or credit impaired, a probation period of at least three consecutive months during which the instrument should meet the criteria for exiting default must elapse before it is transferred to Stage 2. Probability of default PD represents the likelihood of a borrower defaulting on its financial obligation either over the next 12 months (for Stage 1 accounts), or over the remaining lifetime of the loan (for Stage 2 and 3 accounts). A PD is calculated for all loans based on historical data and incorporates: \u2022 credit quality scores \u2022 life cycle trends depending on a loan\u2019s vintage \u2022 factors indicating the quality of the vintage \u2022 characteristics of the current and future economic environment. Loss given default LGD represents our expectation of the extent of a loss on a defaulted exposure and is expressed as a percentage considering expected recoveries on defaulted accounts. LGD rates have been modelled considering a range of inputs, including: \u2022 value of collateral on secured portfolios \u2014 a key driver of the expected recovery in the event of default \u2022 expected haircut applied to the collateral value to reflect a forced sale discount \u2022 price index forecasts applied to project collateral values into the future \u2022 stress factors based on macroeconomic scenarios. Exposure at default This is the amount that we expect to be owed at the point of default. This is subject to judgement since a balance will not necessarily remain static between the balance sheet date and the point of expected default. For example: \u2022 interest should be accrued \u2022 repayments may be received \u2022 for a revolving product, further drawings may be taken between the current point in time and the point of default \u2022 estimations of these factors will be incorporated into our estimate of EAD. Retail PD, LGD and EAD are calculated and applied at an individual account level for secured lending. For unsecured lending, PD and EAD are calculated and applied at an individual account level, whilst LGD is assessed at a portfolio level and applied to accounts on an individual basis. Commercial PD and LGD for secured lending are calculated at a counterparty level, then applied at an account level. For commercial unsecured lending, LGD is assessed at a portfolio level and applied to accounts on an individual basis. Commercial EAD is calculated and applied at account level. Macroeconomic scenarios The ECL recognised in the financial statements reflects the effect on ECL of a range of possible outcomes, calculated on a probability-weighted basis, based on a number of economic scenarios and including management overlays where required. These scenarios are representative of our view of forecast economic conditions, sufficient to calculate unbiased ECL, and are designed to capture material \u2018non-linearities\u2019 (i.e. where the increase in credit losses if conditions deteriorate exceeds the decrease in credit losses if conditions improve). In the normal course of business, we use four scenarios. These represent a \u2018most likely outcome\u2019, the \u2018Baseline\u2019 scenario, and three, less likely, \u2018Outer\u2019 scenarios, referred to as an \u2018Upside\u2019, a \u2018Downside\u2019 and a \u2018Severe Downside\u2019 scenario respectively. The Baseline scenario captures the most likely economic future; the Downside and Severe Downside scenarios reflect adverse economic conditions; and the Upside scenario presents more favourable economic conditions. Key scenario assumptions are set using data sourced from independent external economists. This helps ensure that the IFRS 9 scenarios are unbiased and maximise the use of independent information. The following assumptions, considered to be the key drivers of ECL, have been used for the scenarios applied as at 31 December 2024 and 31 December 2023: \u2022 UK interest rates (Bank of England base rate and five-year mortgage rate) \u2022 UK unemployment rates \u2022 UK HPI changes, year on year \u2022 UK GDP changes, year on year \u2022 UK commercial real estate index, year on year. Macroeconomic scenarios impact the ECL calculation through varying PDs and LGDs. We use UK HPI to index mortgage collateral which has a direct impact on LGDs. Other metrics are considered to have a direct impact on PDs and were selected following a search and data calibration exercise of possible drivers. A list of around fifteen potential drivers were initially considered, representing drivers which capture trends in the economy at large, and may indicate economic trends which will impact UK borrowers. The list included variables which impact economic output, interest rates, inflation, share prices, borrower income and the UK housing market. An algorithm was then used to choose the subset of drivers which had the greatest significance and predictive fit to our data. Each scenario was determined by flexing the Baseline scenario, taking into account a number of factors in the global and UK economy such as commodity prices, global interest rates, UK investment spend and exchange rates, as well as the possible impact of recessionary conditions or financial shocks. A simulation process was designed to determine the weighting to apply to each scenario based on its severity and the range of possible scenarios for which that scenario was representative. A summary of each scenario and weighting used at 31 December 2024 is as follows: \u2022 Baseline scenario: Reflects the projection of the median, or \u201850%\u2019 scenario, meaning that in the assessment there is an equal probability that the economy might perform better or worse than the baseline forecast \u2022 Upside scenario: This above-baseline scenario is designed so there is a 10% probability the economy will perform better than in this scenario, and a 90% probability it will perform worse \u2022 Downside scenario: In this recession scenario, in which a deep downturn develops, there is a 90% probability the economy will perform better, and a 10% probability it will perform worse \u2022 Severe Downside scenario: In this recession scenario, in which a deep downturn develops, there is a 96% probability the economy will perform better, and a 4% probability it will perform worse. These assumptions are considered sufficient to capture any material non-linearities. The weightings applied to each scenario at 31 December 2024 were Baseline \u2013 50%, Upside \u2013 20%, Downside \u2013 25% and Severe Downside scenario \u2013 5% (31 December 2023: Baseline \u2013 50%, Upside \u2013 20%, Downside \u2013 25% and Severe Downside scenario \u2013 5%). Economic variable assumptions The year-end assumptions used for the ECL estimate as at 31 December 2024 and 31 December 2023 are as follows:
31 December 2024
31 December 2023
2025
2026
2027
2028
2024
2025
2026
2027
Interest rates (%) \u2013
Baseline
4.5%
4.2%
3.9%
4.0%
5.1%
4.7%
4.3%
4.2%
five-year mortgage rate
Upside
4.7%
4.3%
4.0%
4.0%
5.3%
4.7%
4.3%
4.2%
Downside
3.5%
2.4%
2.4%
3.1%
3.7%
2.7%
2.6%
2.6%
Severe downside
2.8%
2.1%
2.0%
2.4%
3.3%
2.2%
2.2%
2.2%
UK unemployment (%)
Baseline
4.4%
4.5%
4.6%
4.7%
4.6%
4.7%
4.7%
4.8%
Upside
3.8%
3.6%
3.8%
4.1%
4.1%
3.8%
3.9%
4.2%
Downside
6.3%
7. 2%
7. 3%
6.9%
6.5%
7.4%
7.4%
7.0%
Severe downside
7.5%
8.3%
8.2%
8.0%
7.7 %
8.5%
8.4%
8.1%
UK HPI \u2013
Baseline
2.2%
3.9%
2.6%
1.5%
(6.2%)
3.1%
4.7%
2.6%
% change year-on-year
Upside
16.6%
7.0%
0.1%
(2.6%)
7.0%
6.3%
2.1%
(1.5%)
Downside
(9.0%)
(5.6%)
1.9%
4.2%
(16.5%)
(6.3%)
4.0%
5.4%
Severe downside
(15.2%)
(9.6%)
2.3%
2.9%
(22.2%)
(10.3%)
4.4%
4.1%
UK GDP \u2013
Baseline
2.1%
1.2%
2.1%
1.4%
0.4%
1.0%
1.3%
1.4%
% change year-on-year
Upside
5.6%
1.4%
2.0%
1.5%
3.9%
1.2%
1.3%
1.4%
Downside
(3.5%)
1.5%
3.3%
1.4%
(5.6%)
1.3%
2.6%
1.4%
Severe downside
(4.6%)
0.1%
4.6%
2.3%
( 7.1%)
(0.2%)
4.2%
2.4%
UK commercial real estate index,
Baseline
(0.9%)
0.4%
(0.3%)
(1.3%)
(4.2%)
0.8%
1.7%
(0.4%)
year-on-year \u2013 % change
Upside
14.4%
2.3%
(3.3%)
(5.2%)
10.1%
3.3%
(1.3%)
(4.3%)
Downside
(16.0%)
(5.6%)
0.8%
2.0%
(18.7%)
(5.3%)
3.0%
3.4%
Severe downside
(25.1%)
(8.5%)
2.6%
1.2%
(26.9%)
( 7.4%)
4.9%
2.6%
BoE Interest Rate (%)
Baseline
4.1%
2.8%
2.5%
2.5%
4.6%
2.7%
2.3%
2.3%
Upside
4.3%
3.0%
2.6%
2.5%
4.8%
2.7%
2.3%
2.3%
Downside
2.7%
1.1%
1.4%
1.7%
3.2%
1.0%
1.2%
1.5%
Severe downside
2.1%
0.8%
0.8%
0.9%
2.6%
0.7%
0.5%
0.7%
Following the initial four-year projection period, the Upside, Downside and Severe Downside scenarios converge to the Baseline scenario. The rate of convergence varies based on the macroeconomic factor, but at a minimum convergence takes place three years from the initial four-year projection period. We recognise that applying the above scenarios will not always be sufficient to determine an appropriate ECL in all economic environments. The scenarios applied comprise our best estimate of economic impacts on the ECL, and the actual outcome may be significantly different. Investment securities and other financial assets Impairment provisions have been calculated based on our best estimate of ECL on other assets classified and measured at amortised cost and fair value through other comprehensive income. These include investment securities, cash held at banks and other financial assets. These impairment provisions are not material. Critical accounting judgement Measurement of the expected credit loss allowance The measurement of ECL is complex and involves the use of significant judgements. We consider that the following represent key judgements in respect of the measurement of the ECL. Significant increase in credit risk IFRS 9 requires a higher level of ECL to be recognised for under-performing loans as a lifetime ECL is recognised compared to a 12-month ECL for performing loans. This is considered based on a staging approach. Financial assets that have had no SICR since initial recognition, or that have low credit risk at the reporting date, are considered to be performing loans and are classified as \u2018Stage 1\u2019. Losses are calculated based on our expectation of defaults which may occur within the next 12 months. Assets which are considered to have experienced a SICR since initial recognition, but that do not have objective evidence of impairment, are classified as \u2018Stage 2\u2019. Losses are calculated based on defaults which may occur at any point in the asset\u2019s lifetime. Judgement is required to determine when a SICR has occurred. An assessment of whether credit risk has increased significantly since initial recognition, resulting in transfer to Stage 2, is performed at each reporting period by considering the change in the PD expected over the remaining life of the financial instrument. The assessment explicitly or implicitly compares the PD occurring at the reporting date compared to that at initial recognition, taking into account reasonable and supportable information, including information about past events, current conditions and future economic conditions. Use of Post Model Adjustments and Overlays We have applied expert judgement to the measurement of the ECL in the form of Post Model Adjustments (PMAs) and Management Overlays (MOs). Post Model Adjustments PMAs refer to increases/decreases in ECL to address known model limitations, either in model methodology or model inputs. These rely on analysis of model inputs and parameters to determine the change required to improve model accuracy. These may be applied at an aggregated level, however they will usually be applied at account level. Model Overlays MOs reflect management judgement. These rely more heavily on expert judgement and will usually be applied at an aggregated level. For example, where recent changes in market and economic conditions have not yet been captured in the macroeconomic factor inputs to models (e.g., industry \u2013 specific stress event). The appropriateness of PMAs and MOs is subject to rigorous review and challenge, including review by the Audit Committee (see page 66). ECL assessment We have applied PMAs in the assessment of ECL. PMAs supplement the models to account for where there are limitations in model methodology or data inputs and/or to mitigate downsides risks which are not fully captured through the economic scenarios. The appropriateness of PMAs has been subject to rigorous review and challenge, including review by our Model Governance Committee, Impairment Committee and Audit Committee. The level of PMAs has reduced in 2024 with the total percentage of ECL stock standing at 10% as at 31 December 2024 (31 December 2023: 12%). There are no MOs being used as at 31 December 2024. PMAs have been reassessed during the financial year to ensure an appropriate level of ECL to account for the high level of macroeconomic uncertainty, following the cost of living pressures, higher interest rates, and potential property price falls. PMAs make up \u00a318.7 million of the ECL stock as at 31 December 2024 (31 December 2023: \u00a323.4 million) and comprise: \u2022 Macroeconomic correlation uncertainty \u2014 This PMA was raised in Q4 2024 to reflect the uncertainty risk and the potential adverse effects of significant government support that was in place during and following the Covid period and the subsequent growth in SME debt which may not be fully reflected in model outputs (31 December 2024: \u00a311.5 million; 31 December 2023: nil). \u2022 Significant increase in credit risk (SICR) adjustment overlay \u2014 The SICR model for the RateSetter portfolio is resulting in an overstatement of Stage 2 assets and a negative PMA is in place to account for this. These overlays will be removed once the IFRS9 PD Annual Model Review is validated and implemented into production. The value of the PMA has reduced significantly during 2024 as a result of the rundown of the portfolio (31 December 2024: \u00a32.2 million; 31 December 2023: \u00a37.4 million). \u2022 CRE adjustment \u2014 Reflects potential downside risk in property price indices beyond the latest scenarios for the commercial property portfolios (31 December 2024: \u00a30.7 million; 31 December 2023: \u00a33.4 million). \u2022 Climate change impact \u2014 This adjustment was originally raised in 2021 has been revised for FY 2024 and reflects the impact of climate change on property values for the mortgage and commercial portfolios (31 December 2024: \u00a32.8 million; 31 December 2023: \u00a33.2 million). The slight reduction in the overlay since December 2023 is due to the updated balance movements for all portfolios across the year. \u2022 Mortgage model enhancements \u2014 A PMA reflects the new IFRS9 Mortgage PD and Staging models. This overlay will be removed once the IFRS9 PD Annual Model Reviews are validated and implemented into production (31 December 2024: \u00a32.9 million; 31 December 2023: \u00a34.7 million). \u2022 Commercial model enhancements \u2014 An overlay is held in anticipation of remaining model adjustments for the commercial portfolio (31 December 2024: \u00a34.6 million; 31 December 2023: \u00a33.5 million). The increase in the overlay over the period is to reflect the impact from the Business Overdrafts portfolio growth which utilises the IFRS9 commercial models as a proxy for ECL assessment. \u2022 Government guaranteed loans LGD adjustment \u2014 a \u00a31.6m negative PMA was raised for December 2024 month end (31 December 2023: Nil) in anticipation of changes to the LGD model.
Expected credit loss expense
2024 2023
\u00a3\u2019million \u00a3\u2019million
Retail mortgages
1
(4)
(1)
Consumer lending
1
\u2013
33
Commercial lending
1
(4)
(20)
Investment securities
\u2013
1
Write-offs and other movements
15
20
Total expected credit loss expense
7
33
1. Represents the movement in ECL allowance during the year and therefore excludes write-offs which are shown separately.
Investment securities
All investment securities held at FVOCI are deemed to be in Stage 1. Any credit loss allowance is, however, included as part of the revaluation amount in the FVOCI reserve. At 31 December 2024, the loss allowance
included within the FVOCI reserve is \u00a30.1 million (31 December 2023: \u00a30.1 million).
All investment securities held at amortised cost are deemed to be in Stage 1. The total ECL expense recognised for these assets at 31 December 2024 is \u00a30.6 million (31 December 2023: \u00a30.9 million).
Collateral
Collateral is usually held in the form of real estate, guarantees, debentures and other loans that we can call upon in the event of the borrower defaulting. At 31 December 2024, 80% (31 December 2023: 80%) of our
loans consisted of retail mortgages and commercial term loans secured on collateral, with average debt-to-value of 59% (31 December 2023: 58%) and 56% (31 December 2023: 55%) respectively. A further 4% (31
December 2023: 4%) of our lending portfolio consists of BBLS, which although they do not have any collateral are 100% guaranteed by the Government. Further details on the collateral of our loans can be found in the
Risk report.
Write-off policy
We write off financial assets (either partially or fully) when there is no realistic expectation of receiving further payment from the customer. Indicators that there is no reasonable expectation of recovery include debt
sale to a third party and ceasing enforcement activity. We may write off financial assets that are still subject to enforcement activity.
Modification of financial assets
We sometimes renegotiate the terms of loans provided to customers with a view to maximising recovery. The modifications have not led to any material modification gains or losses being recognised.
The following tables explain the changes in both the gross carrying amount and loss allowances of our loans and advances during the year.
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2024
10,596
1,511
389
\u2013
12,496
(63)
(43)
(93)
\u2013
(199)
10,533
1,468
296
\u2013
12,297
Transfers to/(from) Stage 1
1
385
(368)
(17)
\u2013
\u2013
(11)
10
1
\u2013
\u2013
374
(358)
(16)
\u2013
\u2013
Transfers to/(from) Stage 2
(409)
416
(7)
\u2013
\u2013
2
(2)
\u2013
\u2013
\u2013
(407)
414
(7)
\u2013
\u2013
Transfers to/(from) Stage 3
(192)
(100)
292
\u2013
\u2013
4
7
(11)
\u2013
\u2013
(188)
(93)
281
\u2013
\u2013
Net remeasurement due to transfers
2
\u2013
\u2013
\u2013
\u2013
\u2013
9
(14)
(40)
\u2013
(45)
9
(14)
(40)
\u2013
(45)
New lending
3
1,716
147
1
\u2013
1,864
(11)
(3)
(1)
\u2013
(15)
1,705
144
\u2013
\u2013
1,849
Repayments, additional drawdowns and
interest accrued
(618)
(121)
(33)
(1)
(773)
\u2013
\u2013
\u2013
\u2013
\u2013
(618)
(121)
(33)
(1)
(773)
Derecognitions
4
(3,755)
(507)
(121)
\u2013
(4,383)
11
11
20
\u2013
42
(3,744)
(496)
(101)
\u2013
(4,341)
Changes to model assumptions
5
\u2013
\u2013
\u2013
\u2013
\u2013
20
5
\u2013
1
26
20
5
\u2013
1
26
31 December 2024
7,723
978
504
(1)
9,204
(39)
(29)
(124)
1
(191)
7,68
4
949
380
\u2013
9,013
Off-balance sheet items
Commitments and guarantees
6
718 \u2013 718
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2023
10,849
2,088
352
\u2013
13,289
(66)
(51)
(70)
\u2013
(187)
10,783
2,037
282
\u2013
13,102
Transfers to/(from) Stage 1
1
872
(857)
(15)
\u2013
\u2013
(15)
15
\u2013
\u2013
\u2013
857
(842)
(15)
\u2013
\u2013
Transfers to/(from) Stage 2
(581)
589
(8)
\u2013
\u2013
4
(6)
2
\u2013
\u2013
(577)
583
(6)
\u2013
\u2013
Transfers to/(from) Stage 3
(170)
(71)
241
\u2013
\u2013
3
4
(7)
\u2013
\u2013
(167)
(67)
234
\u2013
\u2013
Net remeasurement due to transfers
2
\u2013
\u2013
\u2013
\u2013
\u2013
12
(13)
(38)
\u2013
(39)
12
(13)
(38)
\u2013
(39)
New lending
3
2,060
239
16
\u2013
2,315
(18)
(6)
(6)
\u2013
(30)
2,042
233
10
\u2013
2,285
Repayments, additional drawdowns and
interest accrued
(685)
(172)
(40)
\u2013
(897)
\u2013
\u2013
\u2013
\u2013
\u2013
(685)
(172)
(40)
\u2013
(897)
Derecognitions
4
(1,749)
(305)
(157)
\u2013
(2,211)
13
10
26
\u2013
49
(1,736)
(295)
(131)
\u2013
(2,162)
Changes to model assumptions
5
\u2013
\u2013
\u2013
\u2013
\u2013
4
4
\u2013
\u2013
8
4
4
\u2013
\u2013
8
31 December 2023
10,596
1,511
389
\u2013
12,496
(63)
(43)
(93)
\u2013
(199)
10,533
1,468
296
\u2013
12,297
Off-balance sheet items
Commitments and guarantees
6
718
\u2013
718
1. Represents stage transfers prior to any ECL remeasurements. 2. Represents the remeasurement between the 12-month and lifetime ECL due to stage transfer. In addition it includes any ECL change resulting from model assumptions and forward-looking information on these loans. 3. Represents the increase in balances resulting from loans and advances that have been newly originated, purchased or renewed as well as any ECL that has been recognised in relation to these loans during the year. 4. Represents the decrease in balances resulting from loans and advances that have been fully repaid, sold or written off. 5. Represents the change in ECL to those loans that remain within the same stage through the year. 6. Represents undrawn lending facilities. Further details can be found in note 31. Retail mortgages
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2024
6,887
784
146
\u2013
7,817
(7)
(6)
(6)
\u2013
(19)
6,880
778
140
\u2013
7,798
Transfers to/(from) Stage 1
146
(138)
(8)
\u2013
\u2013
(1)
1
\u2013
\u2013
\u2013
145
(137)
(8)
\u2013
\u2013
Transfers to/(from) Stage 2
(171)
173
(2)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(171)
173
(2)
\u2013
\u2013
Transfers to/(from) Stage 3
(53)
(46)
99
\u2013
\u2013
\u2013
1
(1)
\u2013
\u2013
(53)
(45)
98
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
1
(1)
(2)
\u2013
(2)
1
(1)
(2)
\u2013
(2)
New lending
728
126
\u2013
\u2013
854
(1)
(2)
\u2013
\u2013
(3)
727
124
\u2013
\u2013
851
Repayments, additional drawdowns and
interest accrued
(113)
(12)
1
\u2013
(124)
\u2013
\u2013
\u2013
\u2013
\u2013
(113)
(12)
1
\u2013
(124)
Derecognitions
(3,066)
(303)
(33)
\u2013
(3,402)
3
2
2
\u2013
7
(3,063)
(301)
(31)
\u2013
(3,395)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
1
1
\u2013
\u2013
2
1
1
\u2013
\u2013
2
31 December 2024
4,358
584
203
\u2013
5,145
(4)
(4)
(7)
\u2013
(15)
4,354
580
196
\u2013
5,130
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2023
6,195
1,343
111
\u2013
7,649
(6)
(11)
(3)
\u2013
(20)
6,189
1,332
108
\u2013
7,629
Transfers to/(from) Stage 1
745
(737)
(8)
\u2013
\u2013
(6)
6
\u2013
\u2013
\u2013
739
(731)
(8)
\u2013
\u2013
Transfers to/(from) Stage 2
(193)
199
(6)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(193)
199
(6)
\u2013
\u2013
Transfers to/(from) Stage 3
(38)
(29)
67
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(38)
(29)
67
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
5
(2)
(2)
\u2013
1
5
(2)
(2)
\u2013
1
New lending
1,195
147
1
\u2013
1,343
(1)
(1)
\u2013
\u2013
(2)
1,194
146
1
\u2013
1,341
Repayments, additional drawdowns and
interest accrued
(177)
(18)
\u2013
\u2013
(195)
\u2013
\u2013
\u2013
\u2013
\u2013
(177)
(18)
\u2013
\u2013
(195)
Derecognitions
(840)
(121)
(19)
\u2013
(980)
1
1
\u2013
\u2013
2
(839)
(120)
(19)
\u2013
(978)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1
(1)
\u2013
\u2013
\u2013
1
(1)
\u2013
\u2013
31 December 2023
6,887
784
146
\u2013
7,817
(7)
(6)
(6)
\u2013
(19)
6,880
778
140
\u2013
7,798
Consumer lending
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2024
906
314
77
\u2013
1,297
(26)
(16)
(66)
\u2013
(108)
880
298
11
\u2013
1,189
Transfers to/(from) Stage 1
80
(79)
(1)
\u2013
\u2013
(3)
3
\u2013
\u2013
\u2013
77
(76)
(1)
\u2013
\u2013
Transfers to/(from) Stage 2
(74)
74
\u2013
\u2013
\u2013
1
(1)
\u2013
\u2013
\u2013
(73)
73
\u2013
\u2013
\u2013
Transfers to/(from) Stage 3
(27)
(14)
41
\u2013
\u2013
1
4
(5)
\u2013
\u2013
(26)
(10)
36
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
2
(4)
(25)
\u2013
(27)
2
(4)
(25)
\u2013
(27)
New lending
4
\u2013
\u2013
\u2013
4
\u2013
\u2013
\u2013
\u2013
\u2013
4
\u2013
\u2013
\u2013
4
Repayments, additional drawdowns and
interest accrued
(226)
(83)
(10)
(1)
(320)
\u2013
\u2013
\u2013
\u2013
\u2013
(226)
(83)
(10)
(1)
(320)
Derecognitions
(167)
(59)
(10)
\u2013
(236)
4
2
9
\u2013
15
(163)
(57)
(1)
\u2013
(221)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
9
3
(1)
1
12
9
3
(1)
1
12
31 December 2024
496
153
97
(1)
745
(12)
(9)
(88)
1
(108)
484
144
9
\u2013
637
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2023
1,180
250
50
\u2013
1,480
(21)
(12)
(42)
\u2013
(75)
1,159
238
8
\u2013
1,405
Transfers to/(from) Stage 1
34
(34)
\u2013
\u2013
\u2013
(2)
2
\u2013
\u2013
\u2013
32
(32)
\u2013
\u2013
\u2013
Transfers to/(from) Stage 2
(182)
182
\u2013
\u2013
\u2013
2
(2)
\u2013
\u2013
\u2013
(180)
180
\u2013
\u2013
\u2013
Transfers to/(from) Stage 3
(35)
(9)
44
\u2013
\u2013
1
2
(3)
\u2013
\u2013
(34)
(7)
41
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
2
(6)
(28)
\u2013
(32)
2
(6)
(28)
\u2013
(32)
New lending
311
78
7
\u2013
396
(9)
(4)
(6)
\u2013
(19)
302
74
1
\u2013
377
Repayments, additional drawdowns and
interest accrued
(217)
(111)
(10)
\u2013
(338)
\u2013
\u2013
\u2013
\u2013
\u2013
(217)
(111)
(10)
\u2013
(338)
Derecognitions
(185)
(42)
(14)
\u2013
(241)
3
2
12
\u2013
17
(182)
(40)
(2)
\u2013
(224)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
(2)
2
1
\u2013
1
(2)
2
1
\u2013
1
31 December 2023
906
314
77
\u2013
1,297
(26)
(16)
(66)
\u2013
(108)
880
298
11
\u2013
1,189
Commercial lending
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2024
2,803
413
166
\u2013
3,382
(30)
(21)
(21)
\u2013
(72)
2,773
392
145
\u2013
3,310
Transfers to/(from) Stage 1
159
(151)
(8)
\u2013
\u2013
(7)
6
1
\u2013
\u2013
152
(145)
(7)
\u2013
\u2013
Transfers to/(from) Stage 2
(164)
169
(5)
\u2013
\u2013
1
(1)
\u2013
\u2013
\u2013
(163)
168
(5)
\u2013
\u2013
Transfers to/(from) Stage 3
(112)
(40)
152
\u2013
\u2013
3
2
(5)
\u2013
\u2013
(109)
(38)
147
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
6
(9)
(13)
\u2013
(16)
6
(9)
(13)
\u2013
(16)
New lending
984
21
1
\u2013
1,006
(10)
(1)
(1)
\u2013
(12)
974
20
\u2013
\u2013
994
Repayments, additional drawdowns and
interest accrued
(279)
(26)
(24)
\u2013
(329)
\u2013
\u2013
\u2013
\u2013
\u2013
(279)
(26)
(24)
\u2013
(329)
Derecognitions
(522)
(145)
(78)
\u2013
(745)
4
7
9
\u2013
20
(518)
(138)
(69)
\u2013
(725)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
10
1
1
\u2013
12
10
1
1
\u2013
12
31 December 2024
2,869
241
204
\u2013
3,314
(23)
(16)
(29)
\u2013
(68)
2,846
225
175
\u2013
3,246
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2023
3,474
495
191
\u2013
4,160
(39)
(28)
(25)
\u2013
(92)
3,435
467
166
\u2013
4,068
Transfers to/(from) Stage 1
93
(86)
(7)
\u2013
\u2013
(7)
7
\u2013
\u2013
\u2013
86
(79)
(7)
\u2013
\u2013
Transfers to/(from) Stage 2
(206)
208
(2)
\u2013
\u2013
2
(4)
2
\u2013
\u2013
(204)
204
\u2013
\u2013
\u2013
Transfers to/(from) Stage 3
(97)
(33)
130
\u2013
\u2013
2
2
(4)
\u2013
\u2013
(95)
(31)
126
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
5
(5)
(8)
\u2013
(8)
5
(5)
(8)
\u2013
(8)
New lending
554
14
8
\u2013
576
(8)
(1)
\u2013
\u2013
(9)
546
13
8
\u2013
567
Repayments, additional drawdowns and
interest accrued
(291)
(43)
(30)
\u2013
(364)
\u2013
\u2013
\u2013
\u2013
\u2013
(291)
(43)
(30)
\u2013
(364)
Derecognitions
(724)
(142)
(124)
\u2013
(990)
9
7
14
\u2013
30
(715)
(135)
(110)
\u2013
(960)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
6
1
\u2013
\u2013
7
6
1
\u2013
\u2013
7
31 December 2023
2,803
413
166
\u2013
3,382
(30)
(21)
(21)
\u2013
(72)
2,773
392
145
\u2013
3,310
Credit risk exposures Total lending
31 December 2024
31 December 2023
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
Total
Up to date
7,694
849
145
(1)
8,687
10,553
1,342
123
12,018
1 to 29 days past due
29
39
14
\u2013
82
43
54
15
112
30 to 89 days past due
\u2013
90
86
\u2013
176
\u2013
115
43
158
90+ days past due
\u2013
\u2013
259
\u2013
259
\u2013
\u2013
208
208
Gross carrying amount
7,723
978
504
(1)
9,204
10,596
1,511
389
12,496
Retail mortgages
31 December 2024
31 December 2023
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
Total
Up to date
4,356
504
57
\u2013
4,917
6,885
695
37
7,617
1 to 29 days past due
2
21
11
\u2013
34
2
28
10
40
30 to 89 days past due
\u2013
59
21
\u2013
80
\u2013
61
16
77
90+ days past due
\u2013
\u2013
114
\u2013
114
\u2013
\u2013
83
83
Gross carrying amount
4,358
584
203
\u2013
5,145
6,887
784
146
7,817
Consumer lending
31 December 2024
31 December 2023
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
Total
Up to date
496
141
2
(1)
638
900
297
3
1,200
1 to 29 days past due
\u2013
2
1
\u2013
3
6
2
\u2013
8
30 to 89 days past due
\u2013
10
5
\u2013
15
\u2013
15
7
22
90+ days past due
\u2013
\u2013
89
\u2013
89
\u2013
\u2013
67
67
Gross carrying amount
496
153
97
(1)
745
906
314
77
1,297
Commercial lending
31 December 2024
31 December 2023
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
Total
Up to date
2,842
204
86
\u2013
3,132
2,768
350
83
3,201
1 to 29 days past due
27
16
2
\u2013
45
35
24
5
64
30 to 89 days past due
\u2013
21
60
\u2013
81
\u2013
39
20
59
90+ days past due
\u2013
\u2013
56
\u2013
56
\u2013
\u2013
58
58
Gross carrying amount
2,869
241
204
\u2013
3,314
2,803
413
166
3,382
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-317": { "value": "30. Expected credit losses Accounting policy We assess on a forward-looking basis the ECL associated with the assets carried at amortised cost and FVOCI and recognise a loss allowance for such losses at each reporting date. Impairment provisions are driven by changes in the credit risk of loans and securities, with a provision for lifetime ECL recognised where the risk of default of an instrument has increased significantly. Risk of default and ECL must incorporate forward-looking and macroeconomic information. Loans and advances Impairment models have been developed for our retail and commercial loan portfolios, with three core models: revolving products; fixed term loans; and mortgages. Expected credit losses are calculated for drawn loans, and for committed lending. The same broad calculation approach is applied for each core model. ECL are calculated by multiplying three main components, being the Probability of Default (PD), Loss Given Default (LGD) and the Exposure at Default (EAD), discounted at the original effective interest rate. Key model inputs, judgements and estimates include: \u2022 consideration of when a SICR occurs \u2022 PD, LGD and EAD as well as their modelled impact \u2022 macroeconomic scenarios and weightings applied. Significant increase in credit risk IFRS 9 requires a higher level of ECL to be recognised for underperforming loans. This is considered based on a staging approach:
Stage
Description
ECL recognised
Stage 1 Financial assets that have had no significant increase in credit risk since initial recognition 12-month ECL
or that have low credit risk (high quality investment securities only) at the reporting date. Total losses expected on defaults which may occur within the next 12 months. Losses are
adjusted for probability-weighted macroeconomic scenarios.
Stage 2 Financial assets that have had a significant increase in credit risk since initial recognition Lifetime ECL
but that do not have objective evidence of impairment. Losses expected on defaults which may occur at any point in a loan\u2019s lifetime. Losses are
adjusted for probability-weighted macroeconomic scenarios.
Stage 3 Financial assets that are credit impaired at the reporting date. Lifetime ECL
A financial asset is credit impaired when it has met the definition of default. We define Losses expected on defaults which may occur at any point in a loan\u2019s lifetime. Losses are
default to have occurred when a loan is greater than 90 days past due or where the adjusted for probability-weighted macroeconomic scenarios.
borrower is considered unlikely to pay. Interest income is calculated on the carrying amount of the loan net of credit allowance.
POCI Financial assets that have been purchased and had objective evidence of being non- Lifetime ECL
performing or credit impaired at the point of purchase. At initial recognition, POCI assets do not carry an impairment allowance. Lifetime ECL
are incorporated into the calculation of the asset\u2019s effective interest rate. Subsequent
changes to the estimate of lifetime ECL are recognised as a loss allowance.
A SICR may be identified in a number of ways: \u2022 Quantitative criteria \u2014 where the numerically calculated PD on a loan has increased significantly since initial recognition. This is assessed using detailed models which assess whether the lifetime PD at observation is greater than the lifetime PD at origination by a portfolio specific threshold. Given the different nature of the products and the dissimilar level of lifetime PDs at origination, we implement different thresholds by sub-products within each portfolio (term loans, revolving loan facilities and mortgages). The threshold is set at three times the median PD of the portfolio at origination. \u2022 Qualitative criteria \u2014 instruments that are 30 days past due or more are allocated to Stage 2, regardless of the results of the quantitative analysis. In addition, instruments classified on the Early Warning List as higher risk are allocated to Stage 2, regardless of the results of the quantitative analysis. A loan will be considered to be \u2018non-performing\u2019 or \u2018credit impaired\u2019 when it meets our definition of default \u2014 that is to say, the loan is 90 days past due, or the borrower is considered unlikely to pay without realisation of collateral. Unlikeliness to pay is assessed through the presence of triggers including the loan being in repossession, the customer having been declared bankrupt, or evidence of financial distress leading to forbearance. A loan may also be considered to be non-performing when it is subject to forbearance measures, consisting of concessions in relation to either: \u2022 a modification of the previous terms and conditions of the loan which the borrower is not considered able to comply with \u2022 a total or partial refinancing of a troubled debt contract that would not have been granted had the borrower not been in financial difficulties. It may not be possible to identify a single discrete event which defines an asset as \u2018non-performing\u2019 or \u2018credit impaired\u2019. Instead, the combined effect of several events may cause financial assets to become credit impaired. Where an asset which has been classified as Stage 3 is showing improving trends and is no longer considered non-performing or credit impaired, a probation period of at least three consecutive months during which the instrument should meet the criteria for exiting default must elapse before it is transferred to Stage 2. Probability of default PD represents the likelihood of a borrower defaulting on its financial obligation either over the next 12 months (for Stage 1 accounts), or over the remaining lifetime of the loan (for Stage 2 and 3 accounts). A PD is calculated for all loans based on historical data and incorporates: \u2022 credit quality scores \u2022 life cycle trends depending on a loan\u2019s vintage \u2022 factors indicating the quality of the vintage \u2022 characteristics of the current and future economic environment. Loss given default LGD represents our expectation of the extent of a loss on a defaulted exposure and is expressed as a percentage considering expected recoveries on defaulted accounts. LGD rates have been modelled considering a range of inputs, including: \u2022 value of collateral on secured portfolios \u2014 a key driver of the expected recovery in the event of default \u2022 expected haircut applied to the collateral value to reflect a forced sale discount \u2022 price index forecasts applied to project collateral values into the future \u2022 stress factors based on macroeconomic scenarios. Exposure at default This is the amount that we expect to be owed at the point of default. This is subject to judgement since a balance will not necessarily remain static between the balance sheet date and the point of expected default. For example: \u2022 interest should be accrued \u2022 repayments may be received \u2022 for a revolving product, further drawings may be taken between the current point in time and the point of default \u2022 estimations of these factors will be incorporated into our estimate of EAD. Retail PD, LGD and EAD are calculated and applied at an individual account level for secured lending. For unsecured lending, PD and EAD are calculated and applied at an individual account level, whilst LGD is assessed at a portfolio level and applied to accounts on an individual basis. Commercial PD and LGD for secured lending are calculated at a counterparty level, then applied at an account level. For commercial unsecured lending, LGD is assessed at a portfolio level and applied to accounts on an individual basis. Commercial EAD is calculated and applied at account level. Macroeconomic scenarios The ECL recognised in the financial statements reflects the effect on ECL of a range of possible outcomes, calculated on a probability-weighted basis, based on a number of economic scenarios and including management overlays where required. These scenarios are representative of our view of forecast economic conditions, sufficient to calculate unbiased ECL, and are designed to capture material \u2018non-linearities\u2019 (i.e. where the increase in credit losses if conditions deteriorate exceeds the decrease in credit losses if conditions improve). In the normal course of business, we use four scenarios. These represent a \u2018most likely outcome\u2019, the \u2018Baseline\u2019 scenario, and three, less likely, \u2018Outer\u2019 scenarios, referred to as an \u2018Upside\u2019, a \u2018Downside\u2019 and a \u2018Severe Downside\u2019 scenario respectively. The Baseline scenario captures the most likely economic future; the Downside and Severe Downside scenarios reflect adverse economic conditions; and the Upside scenario presents more favourable economic conditions. Key scenario assumptions are set using data sourced from independent external economists. This helps ensure that the IFRS 9 scenarios are unbiased and maximise the use of independent information. The following assumptions, considered to be the key drivers of ECL, have been used for the scenarios applied as at 31 December 2024 and 31 December 2023: \u2022 UK interest rates (Bank of England base rate and five-year mortgage rate) \u2022 UK unemployment rates \u2022 UK HPI changes, year on year \u2022 UK GDP changes, year on year \u2022 UK commercial real estate index, year on year. Macroeconomic scenarios impact the ECL calculation through varying PDs and LGDs. We use UK HPI to index mortgage collateral which has a direct impact on LGDs. Other metrics are considered to have a direct impact on PDs and were selected following a search and data calibration exercise of possible drivers. A list of around fifteen potential drivers were initially considered, representing drivers which capture trends in the economy at large, and may indicate economic trends which will impact UK borrowers. The list included variables which impact economic output, interest rates, inflation, share prices, borrower income and the UK housing market. An algorithm was then used to choose the subset of drivers which had the greatest significance and predictive fit to our data. Each scenario was determined by flexing the Baseline scenario, taking into account a number of factors in the global and UK economy such as commodity prices, global interest rates, UK investment spend and exchange rates, as well as the possible impact of recessionary conditions or financial shocks. A simulation process was designed to determine the weighting to apply to each scenario based on its severity and the range of possible scenarios for which that scenario was representative. A summary of each scenario and weighting used at 31 December 2024 is as follows: \u2022 Baseline scenario: Reflects the projection of the median, or \u201850%\u2019 scenario, meaning that in the assessment there is an equal probability that the economy might perform better or worse than the baseline forecast \u2022 Upside scenario: This above-baseline scenario is designed so there is a 10% probability the economy will perform better than in this scenario, and a 90% probability it will perform worse \u2022 Downside scenario: In this recession scenario, in which a deep downturn develops, there is a 90% probability the economy will perform better, and a 10% probability it will perform worse \u2022 Severe Downside scenario: In this recession scenario, in which a deep downturn develops, there is a 96% probability the economy will perform better, and a 4% probability it will perform worse. These assumptions are considered sufficient to capture any material non-linearities. The weightings applied to each scenario at 31 December 2024 were Baseline \u2013 50%, Upside \u2013 20%, Downside \u2013 25% and Severe Downside scenario \u2013 5% (31 December 2023: Baseline \u2013 50%, Upside \u2013 20%, Downside \u2013 25% and Severe Downside scenario \u2013 5%). Economic variable assumptions The year-end assumptions used for the ECL estimate as at 31 December 2024 and 31 December 2023 are as follows:
31 December 2024
31 December 2023
2025
2026
2027
2028
2024
2025
2026
2027
Interest rates (%) \u2013
Baseline
4.5%
4.2%
3.9%
4.0%
5.1%
4.7%
4.3%
4.2%
five-year mortgage rate
Upside
4.7%
4.3%
4.0%
4.0%
5.3%
4.7%
4.3%
4.2%
Downside
3.5%
2.4%
2.4%
3.1%
3.7%
2.7%
2.6%
2.6%
Severe downside
2.8%
2.1%
2.0%
2.4%
3.3%
2.2%
2.2%
2.2%
UK unemployment (%)
Baseline
4.4%
4.5%
4.6%
4.7%
4.6%
4.7%
4.7%
4.8%
Upside
3.8%
3.6%
3.8%
4.1%
4.1%
3.8%
3.9%
4.2%
Downside
6.3%
7. 2%
7. 3%
6.9%
6.5%
7.4%
7.4%
7.0%
Severe downside
7.5%
8.3%
8.2%
8.0%
7.7 %
8.5%
8.4%
8.1%
UK HPI \u2013
Baseline
2.2%
3.9%
2.6%
1.5%
(6.2%)
3.1%
4.7%
2.6%
% change year-on-year
Upside
16.6%
7.0%
0.1%
(2.6%)
7.0%
6.3%
2.1%
(1.5%)
Downside
(9.0%)
(5.6%)
1.9%
4.2%
(16.5%)
(6.3%)
4.0%
5.4%
Severe downside
(15.2%)
(9.6%)
2.3%
2.9%
(22.2%)
(10.3%)
4.4%
4.1%
UK GDP \u2013
Baseline
2.1%
1.2%
2.1%
1.4%
0.4%
1.0%
1.3%
1.4%
% change year-on-year
Upside
5.6%
1.4%
2.0%
1.5%
3.9%
1.2%
1.3%
1.4%
Downside
(3.5%)
1.5%
3.3%
1.4%
(5.6%)
1.3%
2.6%
1.4%
Severe downside
(4.6%)
0.1%
4.6%
2.3%
( 7.1%)
(0.2%)
4.2%
2.4%
UK commercial real estate index,
Baseline
(0.9%)
0.4%
(0.3%)
(1.3%)
(4.2%)
0.8%
1.7%
(0.4%)
year-on-year \u2013 % change
Upside
14.4%
2.3%
(3.3%)
(5.2%)
10.1%
3.3%
(1.3%)
(4.3%)
Downside
(16.0%)
(5.6%)
0.8%
2.0%
(18.7%)
(5.3%)
3.0%
3.4%
Severe downside
(25.1%)
(8.5%)
2.6%
1.2%
(26.9%)
( 7.4%)
4.9%
2.6%
BoE Interest Rate (%)
Baseline
4.1%
2.8%
2.5%
2.5%
4.6%
2.7%
2.3%
2.3%
Upside
4.3%
3.0%
2.6%
2.5%
4.8%
2.7%
2.3%
2.3%
Downside
2.7%
1.1%
1.4%
1.7%
3.2%
1.0%
1.2%
1.5%
Severe downside
2.1%
0.8%
0.8%
0.9%
2.6%
0.7%
0.5%
0.7%
Following the initial four-year projection period, the Upside, Downside and Severe Downside scenarios converge to the Baseline scenario. The rate of convergence varies based on the macroeconomic factor, but at a minimum convergence takes place three years from the initial four-year projection period. We recognise that applying the above scenarios will not always be sufficient to determine an appropriate ECL in all economic environments. The scenarios applied comprise our best estimate of economic impacts on the ECL, and the actual outcome may be significantly different. Investment securities and other financial assets Impairment provisions have been calculated based on our best estimate of ECL on other assets classified and measured at amortised cost and fair value through other comprehensive income. These include investment securities, cash held at banks and other financial assets. These impairment provisions are not material. Critical accounting judgement Measurement of the expected credit loss allowance The measurement of ECL is complex and involves the use of significant judgements. We consider that the following represent key judgements in respect of the measurement of the ECL. Significant increase in credit risk IFRS 9 requires a higher level of ECL to be recognised for under-performing loans as a lifetime ECL is recognised compared to a 12-month ECL for performing loans. This is considered based on a staging approach. Financial assets that have had no SICR since initial recognition, or that have low credit risk at the reporting date, are considered to be performing loans and are classified as \u2018Stage 1\u2019. Losses are calculated based on our expectation of defaults which may occur within the next 12 months. Assets which are considered to have experienced a SICR since initial recognition, but that do not have objective evidence of impairment, are classified as \u2018Stage 2\u2019. Losses are calculated based on defaults which may occur at any point in the asset\u2019s lifetime. Judgement is required to determine when a SICR has occurred. An assessment of whether credit risk has increased significantly since initial recognition, resulting in transfer to Stage 2, is performed at each reporting period by considering the change in the PD expected over the remaining life of the financial instrument. The assessment explicitly or implicitly compares the PD occurring at the reporting date compared to that at initial recognition, taking into account reasonable and supportable information, including information about past events, current conditions and future economic conditions. Use of Post Model Adjustments and Overlays We have applied expert judgement to the measurement of the ECL in the form of Post Model Adjustments (PMAs) and Management Overlays (MOs). Post Model Adjustments PMAs refer to increases/decreases in ECL to address known model limitations, either in model methodology or model inputs. These rely on analysis of model inputs and parameters to determine the change required to improve model accuracy. These may be applied at an aggregated level, however they will usually be applied at account level. Model Overlays MOs reflect management judgement. These rely more heavily on expert judgement and will usually be applied at an aggregated level. For example, where recent changes in market and economic conditions have not yet been captured in the macroeconomic factor inputs to models (e.g., industry \u2013 specific stress event). The appropriateness of PMAs and MOs is subject to rigorous review and challenge, including review by the Audit Committee (see page 66). ECL assessment We have applied PMAs in the assessment of ECL. PMAs supplement the models to account for where there are limitations in model methodology or data inputs and/or to mitigate downsides risks which are not fully captured through the economic scenarios. The appropriateness of PMAs has been subject to rigorous review and challenge, including review by our Model Governance Committee, Impairment Committee and Audit Committee. The level of PMAs has reduced in 2024 with the total percentage of ECL stock standing at 10% as at 31 December 2024 (31 December 2023: 12%). There are no MOs being used as at 31 December 2024. PMAs have been reassessed during the financial year to ensure an appropriate level of ECL to account for the high level of macroeconomic uncertainty, following the cost of living pressures, higher interest rates, and potential property price falls. PMAs make up \u00a318.7 million of the ECL stock as at 31 December 2024 (31 December 2023: \u00a323.4 million) and comprise: \u2022 Macroeconomic correlation uncertainty \u2014 This PMA was raised in Q4 2024 to reflect the uncertainty risk and the potential adverse effects of significant government support that was in place during and following the Covid period and the subsequent growth in SME debt which may not be fully reflected in model outputs (31 December 2024: \u00a311.5 million; 31 December 2023: nil). \u2022 Significant increase in credit risk (SICR) adjustment overlay \u2014 The SICR model for the RateSetter portfolio is resulting in an overstatement of Stage 2 assets and a negative PMA is in place to account for this. These overlays will be removed once the IFRS9 PD Annual Model Review is validated and implemented into production. The value of the PMA has reduced significantly during 2024 as a result of the rundown of the portfolio (31 December 2024: \u00a32.2 million; 31 December 2023: \u00a37.4 million). \u2022 CRE adjustment \u2014 Reflects potential downside risk in property price indices beyond the latest scenarios for the commercial property portfolios (31 December 2024: \u00a30.7 million; 31 December 2023: \u00a33.4 million). \u2022 Climate change impact \u2014 This adjustment was originally raised in 2021 has been revised for FY 2024 and reflects the impact of climate change on property values for the mortgage and commercial portfolios (31 December 2024: \u00a32.8 million; 31 December 2023: \u00a33.2 million). The slight reduction in the overlay since December 2023 is due to the updated balance movements for all portfolios across the year. \u2022 Mortgage model enhancements \u2014 A PMA reflects the new IFRS9 Mortgage PD and Staging models. This overlay will be removed once the IFRS9 PD Annual Model Reviews are validated and implemented into production (31 December 2024: \u00a32.9 million; 31 December 2023: \u00a34.7 million). \u2022 Commercial model enhancements \u2014 An overlay is held in anticipation of remaining model adjustments for the commercial portfolio (31 December 2024: \u00a34.6 million; 31 December 2023: \u00a33.5 million). The increase in the overlay over the period is to reflect the impact from the Business Overdrafts portfolio growth which utilises the IFRS9 commercial models as a proxy for ECL assessment. \u2022 Government guaranteed loans LGD adjustment \u2014 a \u00a31.6m negative PMA was raised for December 2024 month end (31 December 2023: Nil) in anticipation of changes to the LGD model. Expected credit loss expense
2024 2023
\u00a3\u2019million \u00a3\u2019million
Retail mortgages
1
(4)
(1)
Consumer lending
1
\u2013
33
Commercial lending
1
(4)
(20)
Investment securities
\u2013
1
Write-offs and other movements
15
20
Total expected credit loss expense
7
33
1. Represents the movement in ECL allowance during the year and therefore excludes write-offs which are shown separately. Investment securities All investment securities held at FVOCI are deemed to be in Stage 1. Any credit loss allowance is, however, included as part of the revaluation amount in the FVOCI reserve. At 31 December 2024, the loss allowance included within the FVOCI reserve is \u00a30.1 million (31 December 2023: \u00a30.1 million). All investment securities held at amortised cost are deemed to be in Stage 1. The total ECL expense recognised for these assets at 31 December 2024 is \u00a30.6 million (31 December 2023: \u00a30.9 million). Collateral Collateral is usually held in the form of real estate, guarantees, debentures and other loans that we can call upon in the event of the borrower defaulting. At 31 December 2024, 80% (31 December 2023: 80%) of our loans consisted of retail mortgages and commercial term loans secured on collateral, with average debt-to-value of 59% (31 December 2023: 58%) and 56% (31 December 2023: 55%) respectively. A further 4% (31 December 2023: 4%) of our lending portfolio consists of BBLS, which although they do not have any collateral are 100% guaranteed by the Government. Further details on the collateral of our loans can be found in the Risk report. Write-off policy We write off financial assets (either partially or fully) when there is no realistic expectation of receiving further payment from the customer. Indicators that there is no reasonable expectation of recovery include debt sale to a third party and ceasing enforcement activity. We may write off financial assets that are still subject to enforcement activity. Modification of financial assets We sometimes renegotiate the terms of loans provided to customers with a view to maximising recovery. The modifications have not led to any material modification gains or losses being recognised.
The following tables explain the changes in both the gross carrying amount and loss allowances of our loans and advances during the year.
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2024
10,596
1,511
389
\u2013
12,496
(63)
(43)
(93)
\u2013
(199)
10,533
1,468
296
\u2013
12,297
Transfers to/(from) Stage 1
1
385
(368)
(17)
\u2013
\u2013
(11)
10
1
\u2013
\u2013
374
(358)
(16)
\u2013
\u2013
Transfers to/(from) Stage 2
(409)
416
(7)
\u2013
\u2013
2
(2)
\u2013
\u2013
\u2013
(407)
414
(7)
\u2013
\u2013
Transfers to/(from) Stage 3
(192)
(100)
292
\u2013
\u2013
4
7
(11)
\u2013
\u2013
(188)
(93)
281
\u2013
\u2013
Net remeasurement due to transfers
2
\u2013
\u2013
\u2013
\u2013
\u2013
9
(14)
(40)
\u2013
(45)
9
(14)
(40)
\u2013
(45)
New lending
3
1,716
147
1
\u2013
1,864
(11)
(3)
(1)
\u2013
(15)
1,705
144
\u2013
\u2013
1,849
Repayments, additional drawdowns and
interest accrued
(618)
(121)
(33)
(1)
(773)
\u2013
\u2013
\u2013
\u2013
\u2013
(618)
(121)
(33)
(1)
(773)
Derecognitions
4
(3,755)
(507)
(121)
\u2013
(4,383)
11
11
20
\u2013
42
(3,744)
(496)
(101)
\u2013
(4,341)
Changes to model assumptions
5
\u2013
\u2013
\u2013
\u2013
\u2013
20
5
\u2013
1
26
20
5
\u2013
1
26
31 December 2024
7,723
978
504
(1)
9,204
(39)
(29)
(124)
1
(191)
7,68
4
949
380
\u2013
9,013
Off-balance sheet items
Commitments and guarantees
6
718 \u2013 718
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2023
10,849
2,088
352
\u2013
13,289
(66)
(51)
(70)
\u2013
(187)
10,783
2,037
282
\u2013
13,102
Transfers to/(from) Stage 1
1
872
(857)
(15)
\u2013
\u2013
(15)
15
\u2013
\u2013
\u2013
857
(842)
(15)
\u2013
\u2013
Transfers to/(from) Stage 2
(581)
589
(8)
\u2013
\u2013
4
(6)
2
\u2013
\u2013
(577)
583
(6)
\u2013
\u2013
Transfers to/(from) Stage 3
(170)
(71)
241
\u2013
\u2013
3
4
(7)
\u2013
\u2013
(167)
(67)
234
\u2013
\u2013
Net remeasurement due to transfers
2
\u2013
\u2013
\u2013
\u2013
\u2013
12
(13)
(38)
\u2013
(39)
12
(13)
(38)
\u2013
(39)
New lending
3
2,060
239
16
\u2013
2,315
(18)
(6)
(6)
\u2013
(30)
2,042
233
10
\u2013
2,285
Repayments, additional drawdowns and
interest accrued
(685)
(172)
(40)
\u2013
(897)
\u2013
\u2013
\u2013
\u2013
\u2013
(685)
(172)
(40)
\u2013
(897)
Derecognitions
4
(1,749)
(305)
(157)
\u2013
(2,211)
13
10
26
\u2013
49
(1,736)
(295)
(131)
\u2013
(2,162)
Changes to model assumptions
5
\u2013
\u2013
\u2013
\u2013
\u2013
4
4
\u2013
\u2013
8
4
4
\u2013
\u2013
8
31 December 2023
10,596
1,511
389
\u2013
12,496
(63)
(43)
(93)
\u2013
(199)
10,533
1,468
296
\u2013
12,297
Off-balance sheet items
Commitments and guarantees
6
718
\u2013
718
1. Represents stage transfers prior to any ECL remeasurements.
2. Represents the remeasurement between the 12-month and lifetime ECL due to stage transfer. In addition it includes any ECL change resulting from model assumptions and forward-looking information on these loans.
3. Represents the increase in balances resulting from loans and advances that have been newly originated, purchased or renewed as well as any ECL that has been recognised in relation to these loans during the year.
4. Represents the decrease in balances resulting from loans and advances that have been fully repaid, sold or written off.
5. Represents the change in ECL to those loans that remain within the same stage through the year.
6. Represents undrawn lending facilities. Further details can be found in note 31.
Retail mortgages
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2024
6,887
784
146
\u2013
7,817
(7)
(6)
(6)
\u2013
(19)
6,880
778
140
\u2013
7,798
Transfers to/(from) Stage 1
146
(138)
(8)
\u2013
\u2013
(1)
1
\u2013
\u2013
\u2013
145
(137)
(8)
\u2013
\u2013
Transfers to/(from) Stage 2
(171)
173
(2)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(171)
173
(2)
\u2013
\u2013
Transfers to/(from) Stage 3
(53)
(46)
99
\u2013
\u2013
\u2013
1
(1)
\u2013
\u2013
(53)
(45)
98
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
1
(1)
(2)
\u2013
(2)
1
(1)
(2)
\u2013
(2)
New lending
728
126
\u2013
\u2013
854
(1)
(2)
\u2013
\u2013
(3)
727
124
\u2013
\u2013
851
Repayments, additional drawdowns and
interest accrued
(113)
(12)
1
\u2013
(124)
\u2013
\u2013
\u2013
\u2013
\u2013
(113)
(12)
1
\u2013
(124)
Derecognitions
(3,066)
(303)
(33)
\u2013
(3,402)
3
2
2
\u2013
7
(3,063)
(301)
(31)
\u2013
(3,395)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
1
1
\u2013
\u2013
2
1
1
\u2013
\u2013
2
31 December 2024
4,358
584
203
\u2013
5,145
(4)
(4)
(7)
\u2013
(15)
4,354
580
196
\u2013
5,130
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2023
6,195
1,343
111
\u2013
7,649
(6)
(11)
(3)
\u2013
(20)
6,189
1,332
108
\u2013
7,629
Transfers to/(from) Stage 1
745
(737)
(8)
\u2013
\u2013
(6)
6
\u2013
\u2013
\u2013
739
(731)
(8)
\u2013
\u2013
Transfers to/(from) Stage 2
(193)
199
(6)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(193)
199
(6)
\u2013
\u2013
Transfers to/(from) Stage 3
(38)
(29)
67
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(38)
(29)
67
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
5
(2)
(2)
\u2013
1
5
(2)
(2)
\u2013
1
New lending
1,195
147
1
\u2013
1,343
(1)
(1)
\u2013
\u2013
(2)
1,194
146
1
\u2013
1,341
Repayments, additional drawdowns and
interest accrued
(177)
(18)
\u2013
\u2013
(195)
\u2013
\u2013
\u2013
\u2013
\u2013
(177)
(18)
\u2013
\u2013
(195)
Derecognitions
(840)
(121)
(19)
\u2013
(980)
1
1
\u2013
\u2013
2
(839)
(120)
(19)
\u2013
(978)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1
(1)
\u2013
\u2013
\u2013
1
(1)
\u2013
\u2013
31 December 2023
6,887
784
146
\u2013
7,817
(7)
(6)
(6)
\u2013
(19)
6,880
778
140
\u2013
7,798
Consumer lending
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2024
906
314
77
\u2013
1,297
(26)
(16)
(66)
\u2013
(108)
880
298
11
\u2013
1,189
Transfers to/(from) Stage 1
80
(79)
(1)
\u2013
\u2013
(3)
3
\u2013
\u2013
\u2013
77
(76)
(1)
\u2013
\u2013
Transfers to/(from) Stage 2
(74)
74
\u2013
\u2013
\u2013
1
(1)
\u2013
\u2013
\u2013
(73)
73
\u2013
\u2013
\u2013
Transfers to/(from) Stage 3
(27)
(14)
41
\u2013
\u2013
1
4
(5)
\u2013
\u2013
(26)
(10)
36
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
2
(4)
(25)
\u2013
(27)
2
(4)
(25)
\u2013
(27)
New lending
4
\u2013
\u2013
\u2013
4
\u2013
\u2013
\u2013
\u2013
\u2013
4
\u2013
\u2013
\u2013
4
Repayments, additional drawdowns and
interest accrued
(226)
(83)
(10)
(1)
(320)
\u2013
\u2013
\u2013
\u2013
\u2013
(226)
(83)
(10)
(1)
(320)
Derecognitions
(167)
(59)
(10)
\u2013
(236)
4
2
9
\u2013
15
(163)
(57)
(1)
\u2013
(221)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
9
3
(1)
1
12
9
3
(1)
1
12
31 December 2024
496
153
97
(1)
745
(12)
(9)
(88)
1
(108)
484
144
9
\u2013
637
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2023
1,180
250
50
\u2013
1,480
(21)
(12)
(42)
\u2013
(75)
1,159
238
8
\u2013
1,405
Transfers to/(from) Stage 1
34
(34)
\u2013
\u2013
\u2013
(2)
2
\u2013
\u2013
\u2013
32
(32)
\u2013
\u2013
\u2013
Transfers to/(from) Stage 2
(182)
182
\u2013
\u2013
\u2013
2
(2)
\u2013
\u2013
\u2013
(180)
180
\u2013
\u2013
\u2013
Transfers to/(from) Stage 3
(35)
(9)
44
\u2013
\u2013
1
2
(3)
\u2013
\u2013
(34)
(7)
41
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
2
(6)
(28)
\u2013
(32)
2
(6)
(28)
\u2013
(32)
New lending
311
78
7
\u2013
396
(9)
(4)
(6)
\u2013
(19)
302
74
1
\u2013
377
Repayments, additional drawdowns and
interest accrued
(217)
(111)
(10)
\u2013
(338)
\u2013
\u2013
\u2013
\u2013
\u2013
(217)
(111)
(10)
\u2013
(338)
Derecognitions
(185)
(42)
(14)
\u2013
(241)
3
2
12
\u2013
17
(182)
(40)
(2)
\u2013
(224)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
(2)
2
1
\u2013
1
(2)
2
1
\u2013
1
31 December 2023
906
314
77
\u2013
1,297
(26)
(16)
(66)
\u2013
(108)
880
298
11
\u2013
1,189
Commercial lending
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2024
2,803
413
166
\u2013
3,382
(30)
(21)
(21)
\u2013
(72)
2,773
392
145
\u2013
3,310
Transfers to/(from) Stage 1
159
(151)
(8)
\u2013
\u2013
(7)
6
1
\u2013
\u2013
152
(145)
(7)
\u2013
\u2013
Transfers to/(from) Stage 2
(164)
169
(5)
\u2013
\u2013
1
(1)
\u2013
\u2013
\u2013
(163)
168
(5)
\u2013
\u2013
Transfers to/(from) Stage 3
(112)
(40)
152
\u2013
\u2013
3
2
(5)
\u2013
\u2013
(109)
(38)
147
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
6
(9)
(13)
\u2013
(16)
6
(9)
(13)
\u2013
(16)
New lending
984
21
1
\u2013
1,006
(10)
(1)
(1)
\u2013
(12)
974
20
\u2013
\u2013
994
Repayments, additional drawdowns and
interest accrued
(279)
(26)
(24)
\u2013
(329)
\u2013
\u2013
\u2013
\u2013
\u2013
(279)
(26)
(24)
\u2013
(329)
Derecognitions
(522)
(145)
(78)
\u2013
(745)
4
7
9
\u2013
20
(518)
(138)
(69)
\u2013
(725)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
10
1
1
\u2013
12
10
1
1
\u2013
12
31 December 2024
2,869
241
204
\u2013
3,314
(23)
(16)
(29)
\u2013
(68)
2,846
225
175
\u2013
3,246
Gross carrying amount
Loss allowance
Net carrying amount
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
POCI
Total
1 January 2023
3,474
495
191
\u2013
4,160
(39)
(28)
(25)
\u2013
(92)
3,435
467
166
\u2013
4,068
Transfers to/(from) Stage 1
93
(86)
(7)
\u2013
\u2013
(7)
7
\u2013
\u2013
\u2013
86
(79)
(7)
\u2013
\u2013
Transfers to/(from) Stage 2
(206)
208
(2)
\u2013
\u2013
2
(4)
2
\u2013
\u2013
(204)
204
\u2013
\u2013
\u2013
Transfers to/(from) Stage 3
(97)
(33)
130
\u2013
\u2013
2
2
(4)
\u2013
\u2013
(95)
(31)
126
\u2013
\u2013
Net remeasurement due to transfers
\u2013
\u2013
\u2013
\u2013
\u2013
5
(5)
(8)
\u2013
(8)
5
(5)
(8)
\u2013
(8)
New lending
554
14
8
\u2013
576
(8)
(1)
\u2013
\u2013
(9)
546
13
8
\u2013
567
Repayments, additional drawdowns and
interest accrued
(291)
(43)
(30)
\u2013
(364)
\u2013
\u2013
\u2013
\u2013
\u2013
(291)
(43)
(30)
\u2013
(364)
Derecognitions
(724)
(142)
(124)
\u2013
(990)
9
7
14
\u2013
30
(715)
(135)
(110)
\u2013
(960)
Changes to model assumptions
\u2013
\u2013
\u2013
\u2013
\u2013
6
1
\u2013
\u2013
7
6
1
\u2013
\u2013
7
31 December 2023
2,803
413
166
\u2013
3,382
(30)
(21)
(21)
\u2013
(72)
2,773
392
145
\u2013
3,310
Credit risk exposures
Total lending
31 December 2024
31 December 2023
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
Total
Up to date
7,694
849
145
(1)
8,687
10,553
1,342
123
12,018
1 to 29 days past due
29
39
14
\u2013
82
43
54
15
112
30 to 89 days past due
\u2013
90
86
\u2013
176
\u2013
115
43
158
90+ days past due
\u2013
\u2013
259
\u2013
259
\u2013
\u2013
208
208
Gross carrying amount
7,723
978
504
(1)
9,204
10,596
1,511
389
12,496
Retail mortgages
31 December 2024
31 December 2023
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
Total
Up to date
4,356
504
57
\u2013
4,917
6,885
695
37
7,617
1 to 29 days past due
2
21
11
\u2013
34
2
28
10
40
30 to 89 days past due
\u2013
59
21
\u2013
80
\u2013
61
16
77
90+ days past due
\u2013
\u2013
114
\u2013
114
\u2013
\u2013
83
83
Gross carrying amount
4,358
584
203
\u2013
5,145
6,887
784
146
7,817
Consumer lending
31 December 2024
31 December 2023
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
Total
Up to date
496
141
2
(1)
638
900
297
3
1,200
1 to 29 days past due
\u2013
2
1
\u2013
3
6
2
\u2013
8
30 to 89 days past due
\u2013
10
5
\u2013
15
\u2013
15
7
22
90+ days past due
\u2013
\u2013
89
\u2013
89
\u2013
\u2013
67
67
Gross carrying amount
496
153
97
(1)
745
906
314
77
1,297
Commercial lending
31 December 2024
31 December 2023
\u00a3\u2019million
Stage 1
Stage 2
Stage 3
POCI
Total
Stage 1
Stage 2
Stage 3
Total
Up to date
2,842
204
86
\u2013
3,132
2,768
350
83
3,201
1 to 29 days past due
27
16
2
\u2013
45
35
24
5
64
30 to 89 days past due
\u2013
21
60
\u2013
81
\u2013
39
20
59
90+ days past due
\u2013
\u2013
56
\u2013
56
\u2013
\u2013
58
58
Gross carrying amount
2,869
241
204
\u2013
3,314
2,803
413
166
3,382
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-400": { "value": "Accounting policy We assess on a forward-looking basis the ECL associated with the assets carried at amortised cost and FVOCI and recognise a loss allowance for such losses at each reporting date. Impairment provisions are driven by changes in the credit risk of loans and securities, with a provision for lifetime ECL recognised where the risk of default of an instrument has increased significantly. Risk of default and ECL must incorporate forward-looking and macroeconomic information. Loans and advances Impairment models have been developed for our retail and commercial loan portfolios, with three core models: revolving products; fixed term loans; and mortgages. Expected credit losses are calculated for drawn loans, and for committed lending. The same broad calculation approach is applied for each core model. ECL are calculated by multiplying three main components, being the Probability of Default (PD), Loss Given Default (LGD) and the Exposure at Default (EAD), discounted at the original effective interest rate. Key model inputs, judgements and estimates include: \u2022 consideration of when a SICR occurs \u2022 PD, LGD and EAD as well as their modelled impact \u2022 macroeconomic scenarios and weightings applied. Significant increase in credit risk IFRS 9 requires a higher level of ECL to be recognised for underperforming loans. This is considered based on a staging approach:
Stage
Description
ECL recognised
Stage 1 Financial assets that have had no significant increase in credit risk since initial recognition 12-month ECL
or that have low credit risk (high quality investment securities only) at the reporting date. Total losses expected on defaults which may occur within the next 12 months. Losses are
adjusted for probability-weighted macroeconomic scenarios.
Stage 2 Financial assets that have had a significant increase in credit risk since initial recognition Lifetime ECL
but that do not have objective evidence of impairment. Losses expected on defaults which may occur at any point in a loan\u2019s lifetime. Losses are
adjusted for probability-weighted macroeconomic scenarios.
Stage 3 Financial assets that are credit impaired at the reporting date. Lifetime ECL
A financial asset is credit impaired when it has met the definition of default. We define Losses expected on defaults which may occur at any point in a loan\u2019s lifetime. Losses are
default to have occurred when a loan is greater than 90 days past due or where the adjusted for probability-weighted macroeconomic scenarios.
borrower is considered unlikely to pay. Interest income is calculated on the carrying amount of the loan net of credit allowance.
POCI Financial assets that have been purchased and had objective evidence of being non- Lifetime ECL
performing or credit impaired at the point of purchase. At initial recognition, POCI assets do not carry an impairment allowance. Lifetime ECL
are incorporated into the calculation of the asset\u2019s effective interest rate. Subsequent
changes to the estimate of lifetime ECL are recognised as a loss allowance.
A SICR may be identified in a number of ways: \u2022 Quantitative criteria \u2014 where the numerically calculated PD on a loan has increased significantly since initial recognition. This is assessed using detailed models which assess whether the lifetime PD at observation is greater than the lifetime PD at origination by a portfolio specific threshold. Given the different nature of the products and the dissimilar level of lifetime PDs at origination, we implement different thresholds by sub-products within each portfolio (term loans, revolving loan facilities and mortgages). The threshold is set at three times the median PD of the portfolio at origination. \u2022 Qualitative criteria \u2014 instruments that are 30 days past due or more are allocated to Stage 2, regardless of the results of the quantitative analysis. In addition, instruments classified on the Early Warning List as higher risk are allocated to Stage 2, regardless of the results of the quantitative analysis. A loan will be considered to be \u2018non-performing\u2019 or \u2018credit impaired\u2019 when it meets our definition of default \u2014 that is to say, the loan is 90 days past due, or the borrower is considered unlikely to pay without realisation of collateral. Unlikeliness to pay is assessed through the presence of triggers including the loan being in repossession, the customer having been declared bankrupt, or evidence of financial distress leading to forbearance. A loan may also be considered to be non-performing when it is subject to forbearance measures, consisting of concessions in relation to either: \u2022 a modification of the previous terms and conditions of the loan which the borrower is not considered able to comply with \u2022 a total or partial refinancing of a troubled debt contract that would not have been granted had the borrower not been in financial difficulties. It may not be possible to identify a single discrete event which defines an asset as \u2018non-performing\u2019 or \u2018credit impaired\u2019. Instead, the combined effect of several events may cause financial assets to become credit impaired. Where an asset which has been classified as Stage 3 is showing improving trends and is no longer considered non-performing or credit impaired, a probation period of at least three consecutive months during which the instrument should meet the criteria for exiting default must elapse before it is transferred to Stage 2. Probability of default PD represents the likelihood of a borrower defaulting on its financial obligation either over the next 12 months (for Stage 1 accounts), or over the remaining lifetime of the loan (for Stage 2 and 3 accounts). A PD is calculated for all loans based on historical data and incorporates: \u2022 credit quality scores \u2022 life cycle trends depending on a loan\u2019s vintage \u2022 factors indicating the quality of the vintage \u2022 characteristics of the current and future economic environment. Loss given default LGD represents our expectation of the extent of a loss on a defaulted exposure and is expressed as a percentage considering expected recoveries on defaulted accounts. LGD rates have been modelled considering a range of inputs, including: \u2022 value of collateral on secured portfolios \u2014 a key driver of the expected recovery in the event of default \u2022 expected haircut applied to the collateral value to reflect a forced sale discount \u2022 price index forecasts applied to project collateral values into the future \u2022 stress factors based on macroeconomic scenarios. Exposure at default This is the amount that we expect to be owed at the point of default. This is subject to judgement since a balance will not necessarily remain static between the balance sheet date and the point of expected default. For example: \u2022 interest should be accrued \u2022 repayments may be received \u2022 for a revolving product, further drawings may be taken between the current point in time and the point of default \u2022 estimations of these factors will be incorporated into our estimate of EAD. Retail PD, LGD and EAD are calculated and applied at an individual account level for secured lending. For unsecured lending, PD and EAD are calculated and applied at an individual account level, whilst LGD is assessed at a portfolio level and applied to accounts on an individual basis. Commercial PD and LGD for secured lending are calculated at a counterparty level, then applied at an account level. For commercial unsecured lending, LGD is assessed at a portfolio level and applied to accounts on an individual basis. Commercial EAD is calculated and applied at account level. Macroeconomic scenarios The ECL recognised in the financial statements reflects the effect on ECL of a range of possible outcomes, calculated on a probability-weighted basis, based on a number of economic scenarios and including management overlays where required. These scenarios are representative of our view of forecast economic conditions, sufficient to calculate unbiased ECL, and are designed to capture material \u2018non-linearities\u2019 (i.e. where the increase in credit losses if conditions deteriorate exceeds the decrease in credit losses if conditions improve). In the normal course of business, we use four scenarios. These represent a \u2018most likely outcome\u2019, the \u2018Baseline\u2019 scenario, and three, less likely, \u2018Outer\u2019 scenarios, referred to as an \u2018Upside\u2019, a \u2018Downside\u2019 and a \u2018Severe Downside\u2019 scenario respectively. The Baseline scenario captures the most likely economic future; the Downside and Severe Downside scenarios reflect adverse economic conditions; and the Upside scenario presents more favourable economic conditions. Key scenario assumptions are set using data sourced from independent external economists. This helps ensure that the IFRS 9 scenarios are unbiased and maximise the use of independent information. The following assumptions, considered to be the key drivers of ECL, have been used for the scenarios applied as at 31 December 2024 and 31 December 2023: \u2022 UK interest rates (Bank of England base rate and five-year mortgage rate) \u2022 UK unemployment rates \u2022 UK HPI changes, year on year \u2022 UK GDP changes, year on year \u2022 UK commercial real estate index, year on year. Macroeconomic scenarios impact the ECL calculation through varying PDs and LGDs. We use UK HPI to index mortgage collateral which has a direct impact on LGDs. Other metrics are considered to have a direct impact on PDs and were selected following a search and data calibration exercise of possible drivers. A list of around fifteen potential drivers were initially considered, representing drivers which capture trends in the economy at large, and may indicate economic trends which will impact UK borrowers. The list included variables which impact economic output, interest rates, inflation, share prices, borrower income and the UK housing market. An algorithm was then used to choose the subset of drivers which had the greatest significance and predictive fit to our data. Each scenario was determined by flexing the Baseline scenario, taking into account a number of factors in the global and UK economy such as commodity prices, global interest rates, UK investment spend and exchange rates, as well as the possible impact of recessionary conditions or financial shocks. A simulation process was designed to determine the weighting to apply to each scenario based on its severity and the range of possible scenarios for which that scenario was representative. A summary of each scenario and weighting used at 31 December 2024 is as follows: \u2022 Baseline scenario: Reflects the projection of the median, or \u201850%\u2019 scenario, meaning that in the assessment there is an equal probability that the economy might perform better or worse than the baseline forecast \u2022 Upside scenario: This above-baseline scenario is designed so there is a 10% probability the economy will perform better than in this scenario, and a 90% probability it will perform worse \u2022 Downside scenario: In this recession scenario, in which a deep downturn develops, there is a 90% probability the economy will perform better, and a 10% probability it will perform worse \u2022 Severe Downside scenario: In this recession scenario, in which a deep downturn develops, there is a 96% probability the economy will perform better, and a 4% probability it will perform worse. These assumptions are considered sufficient to capture any material non-linearities. The weightings applied to each scenario at 31 December 2024 were Baseline \u2013 50%, Upside \u2013 20%, Downside \u2013 25% and Severe Downside scenario \u2013 5% (31 December 2023: Baseline \u2013 50%, Upside \u2013 20%, Downside \u2013 25% and Severe Downside scenario \u2013 5%). Economic variable assumptions The year-end assumptions used for the ECL estimate as at 31 December 2024 and 31 December 2023 are as follows:
31 December 2024
31 December 2023
2025
2026
2027
2028
2024
2025
2026
2027
Interest rates (%) \u2013
Baseline
4.5%
4.2%
3.9%
4.0%
5.1%
4.7%
4.3%
4.2%
five-year mortgage rate
Upside
4.7%
4.3%
4.0%
4.0%
5.3%
4.7%
4.3%
4.2%
Downside
3.5%
2.4%
2.4%
3.1%
3.7%
2.7%
2.6%
2.6%
Severe downside
2.8%
2.1%
2.0%
2.4%
3.3%
2.2%
2.2%
2.2%
UK unemployment (%)
Baseline
4.4%
4.5%
4.6%
4.7%
4.6%
4.7%
4.7%
4.8%
Upside
3.8%
3.6%
3.8%
4.1%
4.1%
3.8%
3.9%
4.2%
Downside
6.3%
7. 2%
7. 3%
6.9%
6.5%
7.4%
7.4%
7.0%
Severe downside
7.5%
8.3%
8.2%
8.0%
7.7 %
8.5%
8.4%
8.1%
UK HPI \u2013
Baseline
2.2%
3.9%
2.6%
1.5%
(6.2%)
3.1%
4.7%
2.6%
% change year-on-year
Upside
16.6%
7.0%
0.1%
(2.6%)
7.0%
6.3%
2.1%
(1.5%)
Downside
(9.0%)
(5.6%)
1.9%
4.2%
(16.5%)
(6.3%)
4.0%
5.4%
Severe downside
(15.2%)
(9.6%)
2.3%
2.9%
(22.2%)
(10.3%)
4.4%
4.1%
UK GDP \u2013
Baseline
2.1%
1.2%
2.1%
1.4%
0.4%
1.0%
1.3%
1.4%
% change year-on-year
Upside
5.6%
1.4%
2.0%
1.5%
3.9%
1.2%
1.3%
1.4%
Downside
(3.5%)
1.5%
3.3%
1.4%
(5.6%)
1.3%
2.6%
1.4%
Severe downside
(4.6%)
0.1%
4.6%
2.3%
( 7.1%)
(0.2%)
4.2%
2.4%
UK commercial real estate index,
Baseline
(0.9%)
0.4%
(0.3%)
(1.3%)
(4.2%)
0.8%
1.7%
(0.4%)
year-on-year \u2013 % change
Upside
14.4%
2.3%
(3.3%)
(5.2%)
10.1%
3.3%
(1.3%)
(4.3%)
Downside
(16.0%)
(5.6%)
0.8%
2.0%
(18.7%)
(5.3%)
3.0%
3.4%
Severe downside
(25.1%)
(8.5%)
2.6%
1.2%
(26.9%)
( 7.4%)
4.9%
2.6%
BoE Interest Rate (%)
Baseline
4.1%
2.8%
2.5%
2.5%
4.6%
2.7%
2.3%
2.3%
Upside
4.3%
3.0%
2.6%
2.5%
4.8%
2.7%
2.3%
2.3%
Downside
2.7%
1.1%
1.4%
1.7%
3.2%
1.0%
1.2%
1.5%
Severe downside
2.1%
0.8%
0.8%
0.9%
2.6%
0.7%
0.5%
0.7%
Following the initial four-year projection period, the Upside, Downside and Severe Downside scenarios converge to the Baseline scenario. The rate of convergence varies based on the macroeconomic factor, but at a minimum convergence takes place three years from the initial four-year projection period. We recognise that applying the above scenarios will not always be sufficient to determine an appropriate ECL in all economic environments. The scenarios applied comprise our best estimate of economic impacts on the ECL, and the actual outcome may be significantly different. Investment securities and other financial assets Impairment provisions have been calculated based on our best estimate of ECL on other assets classified and measured at amortised cost and fair value through other comprehensive income. These include investment securities, cash held at banks and other financial assets. These impairment provisions are not material. ", "dimensions": { "concept": "metrobankholdingsplc:DescriptionOfAccountingPolicyForExpectedCreditLosses", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-318": { "value": "31. Financial commitments Accounting policy To meet the financial needs of our customers, we enter into various irrevocable commitments. These generally consist of financial guarantees, letters of credit and other undrawn commitments to lend. Even though these obligations are not recognised on the balance sheet, they do contain credit risk and an ECL is calculated and recognised for them (see note 30). When these commitments are drawn down or called upon, and meet the recognition criteria as detailed in note 12, these are recognised within our loans and advances to customers. At 31 December 2024, we had undrawn facilities granted to retail and commercial customers of \u00a3881 million (31 December 2023: \u00a3718 million). As part of our retail and commercial operations, this includes commitments of \u00a3241 million (31 December 2023: \u00a3327 million) for credit card and overdraft facilities. These commitments represent agreements to lend in the future, subject to certain conditions. Such commitments are cancellable, subject to notice requirements, and given their nature are not expected to be drawn down to the full level of exposure. 32. Contingent Liabilities As part of the normal course of business we are subject to legal, taxation and regulatory matters. The matters outlined below represent material contingent liabilities and as such at the reporting date no provision has been made for any of these cases within the financial statements. This is because, based on the facts currently known, it is not practicable to predict the outcome, if any, of these matters or reliably estimate any financial impact. Their inclusion does not constitute any admission of wrongdoing or legal liability. Magic Money Machine litigation In 2022 Arkeyo LLC, a software company based in the United States, filed a civil suit with a stated value of over \u00a324 million against us in the English High Court alleging, among other matters, that we infringed their copyright and misappropriated their trade secrets relating to money counting machines (i.e. our Magic Money Machines). We believe Arkeyo LLC\u2019s claims are without merit and are vigorously defending the claim.", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-341": { "value": "31. Financial commitments Accounting policy To meet the financial needs of our customers, we enter into various irrevocable commitments. These generally consist of financial guarantees, letters of credit and other undrawn commitments to lend. Even though these obligations are not recognised on the balance sheet, they do contain credit risk and an ECL is calculated and recognised for them (see note 30). When these commitments are drawn down or called upon, and meet the recognition criteria as detailed in note 12, these are recognised within our loans and advances to customers. At 31 December 2024, we had undrawn facilities granted to retail and commercial customers of \u00a3881 million (31 December 2023: \u00a3718 million). As part of our retail and commercial operations, this includes commitments of \u00a3241 million (31 December 2023: \u00a3327 million) for credit card and overdraft facilities. These commitments represent agreements to lend in the future, subject to certain conditions. Such commitments are cancellable, subject to notice requirements, and given their nature are not expected to be drawn down to the full level of exposure. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-401": { "value": "Accounting policy To meet the financial needs of our customers, we enter into various irrevocable commitments. These generally consist of financial guarantees, letters of credit and other undrawn commitments to lend. Even though these obligations are not recognised on the balance sheet, they do contain credit risk and an ECL is calculated and recognised for them (see note 30). When these commitments are drawn down or called upon, and meet the recognition criteria as detailed in note 12, these are recognised within our loans and advances to customers. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialGuaranteesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-342": { "value": "
32. Contingent Liabilities
As part of the normal course of business we are subject to legal, taxation and regulatory matters.
The matters outlined below represent material contingent liabilities and as such at the reporting date no
provision has been made for any of these cases within the financial statements. This is because, based on
the facts currently known, it is not practicable to predict the outcome, if any, of these matters or reliably
estimate any financial impact. Their inclusion does not constitute any admission of wrongdoing or legal
liability.
Magic Money Machine litigation
In 2022 Arkeyo LLC, a software company based in the United States, filed a civil suit with a stated value of
over \u00a324 million against us in the English High Court alleging, among other matters, that we infringed their
copyright and misappropriated their trade secrets relating to money counting machines (i.e. our Magic
Money Machines).
We believe Arkeyo LLC\u2019s claims are without merit and are vigorously defending the claim.
", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-368": { "value": "33. Offsetting of financial assets and liabilities Accounting policy Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
31 December 2024
31 December 2023
Effects of offsetting Effects of offsetting
on the balance sheet on the balance sheet
Net amounts Net amounts
Gross amounts presented Gross amounts presented
Gross offset in the in the balance Gross offset in the in the balance
amount balance sheet sheet amount balance sheet sheet
Assets \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Loans and advances to customers
9,013
\u2013
9,013
12,297
\u2013
12,297
Investment securities
1
4,490
\u2013
4,490
4,879
\u2013
4,879
Derivative financial assets
23
(7)
16
67
(31)
36
Deferred tax assets
271
(31)
240
17
(17)
\u2013
Other assets
2
82
\u2013
82
108
\u2013
108
Liabilities
Derivative financial liabilities
8
(7)
1
31
(31)
\u2013
Repurchase agreements
1
391
\u2013
391
1,191
\u2013
1,191
Deposits from central banks
1
400
\u2013
400
3,050
\u2013
3,050
Deferred tax liabilities
31
(31)
\u2013
30
(17)
13
1. We have pledged \u00a31,034 million (2023: \u00a36,110 million) against repos, deposits from central banks and other assets as encumbered collateral which can be called upon in the event of default. 2. Includes \u00a353 million (2023: \u00a350 million) pledged as cash collateral. None of the cash collateral has been offset in the balance sheet. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialAssetsAndFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-357": { "value": "33. Offsetting of financial assets and liabilities Accounting policy Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
31 December 2024
31 December 2023
Effects of offsetting Effects of offsetting
on the balance sheet on the balance sheet
Net amounts Net amounts
Gross amounts presented Gross amounts presented
Gross offset in the in the balance Gross offset in the in the balance
amount balance sheet sheet amount balance sheet sheet
Assets \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Loans and advances to customers
9,013
\u2013
9,013
12,297
\u2013
12,297
Investment securities
1
4,490
\u2013
4,490
4,879
\u2013
4,879
Derivative financial assets
23
(7)
16
67
(31)
36
Deferred tax assets
271
(31)
240
17
(17)
\u2013
Other assets
2
82
\u2013
82
108
\u2013
108
Liabilities
Derivative financial liabilities
8
(7)
1
31
(31)
\u2013
Repurchase agreements
1
391
\u2013
391
1,191
\u2013
1,191
Deposits from central banks
1
400
\u2013
400
3,050
\u2013
3,050
Deferred tax liabilities
31
(31)
\u2013
30
(17)
13
1. We have pledged \u00a31,034 million (2023: \u00a36,110 million) against repos, deposits from central banks and other assets as encumbered collateral which can be called upon in the event of default. 2. Includes \u00a353 million (2023: \u00a350 million) pledged as cash collateral. None of the cash collateral has been offset in the balance sheet. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-343": { "value": "33. Offsetting of financial assets and liabilities Accounting policy Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
31 December 2024
31 December 2023
Effects of offsetting Effects of offsetting
on the balance sheet on the balance sheet
Net amounts Net amounts
Gross amounts presented Gross amounts presented
Gross offset in the in the balance Gross offset in the in the balance
amount balance sheet sheet amount balance sheet sheet
Assets \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million \u00a3\u2019million
Loans and advances to customers
9,013
\u2013
9,013
12,297
\u2013
12,297
Investment securities
1
4,490
\u2013
4,490
4,879
\u2013
4,879
Derivative financial assets
23
(7)
16
67
(31)
36
Deferred tax assets
271
(31)
240
17
(17)
\u2013
Other assets
2
82
\u2013
82
108
\u2013
108
Liabilities
Derivative financial liabilities
8
(7)
1
31
(31)
\u2013
Repurchase agreements
1
391
\u2013
391
1,191
\u2013
1,191
Deposits from central banks
1
400
\u2013
400
3,050
\u2013
3,050
Deferred tax liabilities
31
(31)
\u2013
30
(17)
13
1. We have pledged \u00a31,034 million (2023: \u00a36,110 million) against repos, deposits from central banks and other assets as encumbered collateral which can be called upon in the event of default. 2. Includes \u00a353 million (2023: \u00a350 million) pledged as cash collateral. None of the cash collateral has been offset in the balance sheet. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-408": { "value": "Accounting policy Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForOffsettingOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-358": { "value": "Accounting policy Determination of fair value \u2018Fair value\u2019 is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which we have access at that date. The fair value of a liability reflects its non-performance risk. In order to show how fair values have been derived, financial instruments are classified based on a hierarchy of valuation techniques, as summarised below: \u2022 Level 1 financial instruments \u2013 Those where the inputs used in the valuation are unadjusted quoted prices from active markets for identical assets or liabilities that we have access to at the measurement date. We consider markets as active only if there are sufficient trading activities with regards to the volume and liquidity of the identical assets or liabilities and when there are binding and exercisable price quotes available on the balance sheet date. \u2022 Level 2 financial instruments \u2013 Those where the inputs that are used for valuation are significant, and are derived from directly or indirectly observable market data available over the entire period of the instrument\u2019s life. Such inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical instruments in inactive markets and observable inputs other than quoted prices, such as interest rates and yield curves, implied volatilities, and credit spreads. In addition, adjustments may be required for the condition or location of the asset or the extent to which it relates to items that are comparable to the valued instrument. However, if such adjustments are based on unobservable inputs which are significant to the entire measurement, we will classify the instruments as Level 3. \u2022 Level 3 financial instruments \u2013 Those that include one or more unobservable inputs that are significant to the measurement as whole. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-319": { "value": "
35. Related parties
Related persons
Key management personnel
Our key management personnel, and persons connected with them, are considered to be related parties.
Key management personnel are defined as those persons having authority and responsibility for planning,
directing and controlling the activities of the Group. The Directors and members of the ExCo are
considered to be the key management personnel for disclosure purposes.
Controlling shareholder
Following the completion of our capital raise in November 2023, Jaime Gilinski Bacal, via Spaldy
Investments Limited, a company of which he is the sole director and shareholder, became the controlling
shareholder of Metro Bank Holdings PLC (see note 7 to the Company financial statements for further
details). Given his control over the Group, Jaime Gilinski Bacal, Spaldy Investments Limited and persons
connected to them are also considered to be related parties as at 31 December 2024. We have a
relationship agreement with our controlling shareholder which may be viewed on our website
(www.metrobankonline.co.uk/globalassets/documents/customer_documents/personal/relationship-
agreement-metro-bank-holdings-plc-spaldy-investments-ltd-jaime-gilinski-bacal.pdf). More information
on the independence of our controlling shareholder can be found on page 119.
Key management compensation
Total compensation cost for key management personnel for the year by category of benefit was as
follows:
2024 2023
\u00a3\u2019million \u00a3\u2019million
Short-term benefits
5.5
5.4
Post-employment benefits
0.1
0.1
Share-based payment costs
1.1
0.9
Termination benefits
0.4
0.9
Total compensation for key management personnel
7.1
7.3
Short-term employee benefits include salary, medical insurance, bonuses and cash allowances paid to key
management personnel. The share-based payment cost represents the IFRS 2 charge for the year which
includes awards granted in prior years that have not yet vested.
During the year as part of the organisational restructure announced, exit agreements were agreed with
certain key management personnel who subsequently left the business in January 2024.
Banking transactions with key management personnel
We provide banking services to Directors and other key management personnel and persons connected
to them.
Deposit transactions during the year and the balances outstanding as at 31 December 2024 and
31 December 2023 were as follows:
2024 2023
\u00a3\u2019million \u00a3\u2019million
Deposits held at 1 January
1.0
1.5
Deposits relating to persons and companies newly considered
related parties
0.1
\u2013
Deposits relating to persons and companies no longer considered related parties
(0.3)
(0.5)
Net amounts deposited/(withdrawn)
\u2013
\u2013
Deposits held as at 31 December
0.8
1.0
Loan transactions during the year and the balances outstanding as at 31 December 2024 and
31 December 2023 were as follows:
2024 2023
\u00a3\u2019million \u00a3\u2019million
Loans outstanding at 1 January
2.0
2.1
Loans relating to persons and companies newly considered related parties
0.4
\u2013
Loans issued during the year
0.2
\u2013
Net repayments during the year
\u2013
\u2013
Loans outstanding as at 31 December
2.6
2.1
Interest received on loans (\u00a3\u2019000)
62
35
There were two (31 December 2023: two) loans outstanding at 31 December 2024 totalling \u00a32.6 million
(31 December 2023: \u00a32.1 million). Both are residential mortgages secured on property; all loans were
provided on our standard commercial terms.
In addition to the loans detailed above, we have issued credit cards and granted overdraft facilities on
current accounts to Directors and key management personnel.
Credit card balances outstanding as at 31 December 2024 and 31 December 2023 were as follows:
2024 2023
\u00a3\u2019000 \u00a3\u2019000
Credit cards outstanding as at 31 December
\u2013
3
As with all of our lending we recognise an ECL on loans and credit card balances outstanding with key
management personnel. As at 31 December 2024, the only ECL recognised on the balances above was
our standard modelled ECL with no individual impairments recognised (31 December 2023: \u00a3nil). We have
not written off any balances to key management personnel in either 2023 or 2024.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-344": { "value": "Related persons Key management personnel Our key management personnel, and persons connected with them, are considered to be related parties. Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group. The Directors and members of the ExCo are considered to be the key management personnel for disclosure purposes. Controlling shareholder Following the completion of our capital raise in November 2023, Jaime Gilinski Bacal, via Spaldy Investments Limited, a company of which he is the sole director and shareholder, became the controlling shareholder of Metro Bank Holdings PLC (see note 7 to the Company financial statements for further details). Given his control over the Group, Jaime Gilinski Bacal, Spaldy Investments Limited and persons connected to them are also considered to be related parties as at 31 December 2024. We have a relationship agreement with our controlling shareholder which may be viewed on our website (www.metrobankonline.co.uk/globalassets/documents/customer_documents/personal/relationship- agreement-metro-bank-holdings-plc-spaldy-investments-ltd-jaime-gilinski-bacal.pdf). More information on the independence of our controlling shareholder can be found on page 119. Key management compensation Total compensation cost for key management personnel for the year by category of benefit was as follows:
2024 2023
\u00a3\u2019million \u00a3\u2019million
Short-term benefits
5.5
5.4
Post-employment benefits
0.1
0.1
Share-based payment costs
1.1
0.9
Termination benefits
0.4
0.9
Total compensation for key management personnel
7.1
7.3
Short-term employee benefits include salary, medical insurance, bonuses and cash allowances paid to key management personnel. The share-based payment cost represents the IFRS 2 charge for the year which includes awards granted in prior years that have not yet vested. During the year as part of the organisational restructure announced, exit agreements were agreed with certain key management personnel who subsequently left the business in January 2024. Banking transactions with key management personnel We provide banking services to Directors and other key management personnel and persons connected to them. Deposit transactions during the year and the balances outstanding as at 31 December 2024 and 31 December 2023 were as follows:
2024 2023
\u00a3\u2019million \u00a3\u2019million
Deposits held at 1 January
1.0
1.5
Deposits relating to persons and companies newly considered
related parties
0.1
\u2013
Deposits relating to persons and companies no longer considered related parties
(0.3)
(0.5)
Net amounts deposited/(withdrawn)
\u2013
\u2013
Deposits held as at 31 December
0.8
1.0
Loan transactions during the year and the balances outstanding as at 31 December 2024 and 31 December 2023 were as follows:
2024 2023
\u00a3\u2019million \u00a3\u2019million
Loans outstanding at 1 January
2.0
2.1
Loans relating to persons and companies newly considered related parties
0.4
\u2013
Loans issued during the year
0.2
\u2013
Net repayments during the year
\u2013
\u2013
Loans outstanding as at 31 December
2.6
2.1
Interest received on loans (\u00a3\u2019000)
62
35
There were two (31 December 2023: two) loans outstanding at 31 December 2024 totalling \u00a32.6 million (31 December 2023: \u00a32.1 million). Both are residential mortgages secured on property; all loans were provided on our standard commercial terms. In addition to the loans detailed above, we have issued credit cards and granted overdraft facilities on current accounts to Directors and key management personnel. Credit card balances outstanding as at 31 December 2024 and 31 December 2023 were as follows:
2024 2023
\u00a3\u2019000 \u00a3\u2019000
Credit cards outstanding as at 31 December
\u2013
3
As with all of our lending we recognise an ECL on loans and credit card balances outstanding with key management personnel. As at 31 December 2024, the only ECL recognised on the balances above was our standard modelled ECL with no individual impairments recognised (31 December 2023: \u00a3nil). We have not written off any balances to key management personnel in either 2023 or 2024.", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-359": { "value": "Related persons Key management personnel Our key management personnel, and persons connected with them, are considered to be related parties. Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group. The Directors and members of the ExCo are considered to be the key management personnel for disclosure purposes. Controlling shareholder Following the completion of our capital raise in November 2023, Jaime Gilinski Bacal, via Spaldy Investments Limited, a company of which he is the sole director and shareholder, became the controlling shareholder of Metro Bank Holdings PLC (see note 7 to the Company financial statements for further details). Given his control over the Group, Jaime Gilinski Bacal, Spaldy Investments Limited and persons connected to them are also considered to be related parties as at 31 December 2024. We have a relationship agreement with our controlling shareholder which may be viewed on our website (www.metrobankonline.co.uk/globalassets/documents/customer_documents/personal/relationship- agreement-metro-bank-holdings-plc-spaldy-investments-ltd-jaime-gilinski-bacal.pdf). More information on the independence of our controlling shareholder can be found on page 119. Key management compensation Total compensation cost for key management personnel for the year by category of benefit was as follows:
2024 2023
\u00a3\u2019million \u00a3\u2019million
Short-term benefits
5.5
5.4
Post-employment benefits
0.1
0.1
Share-based payment costs
1.1
0.9
Termination benefits
0.4
0.9
Total compensation for key management personnel
7.1
7.3
Short-term employee benefits include salary, medical insurance, bonuses and cash allowances paid to key management personnel. The share-based payment cost represents the IFRS 2 charge for the year which includes awards granted in prior years that have not yet vested. During the year as part of the organisational restructure announced, exit agreements were agreed with certain key management personnel who subsequently left the business in January 2024. Banking transactions with key management personnel We provide banking services to Directors and other key management personnel and persons connected to them. Deposit transactions during the year and the balances outstanding as at 31 December 2024 and 31 December 2023 were as follows:
2024 2023
\u00a3\u2019million \u00a3\u2019million
Deposits held at 1 January
1.0
1.5
Deposits relating to persons and companies newly considered
related parties
0.1
\u2013
Deposits relating to persons and companies no longer considered related parties
(0.3)
(0.5)
Net amounts deposited/(withdrawn)
\u2013
\u2013
Deposits held as at 31 December
0.8
1.0
Loan transactions during the year and the balances outstanding as at 31 December 2024 and 31 December 2023 were as follows:
2024 2023
\u00a3\u2019million \u00a3\u2019million
Loans outstanding at 1 January
2.0
2.1
Loans relating to persons and companies newly considered related parties
0.4
\u2013
Loans issued during the year
0.2
\u2013
Net repayments during the year
\u2013
\u2013
Loans outstanding as at 31 December
2.6
2.1
Interest received on loans (\u00a3\u2019000)
62
35
There were two (31 December 2023: two) loans outstanding at 31 December 2024 totalling \u00a32.6 million (31 December 2023: \u00a32.1 million). Both are residential mortgages secured on property; all loans were provided on our standard commercial terms. In addition to the loans detailed above, we have issued credit cards and granted overdraft facilities on current accounts to Directors and key management personnel. Credit card balances outstanding as at 31 December 2024 and 31 December 2023 were as follows:
2024 2023
\u00a3\u2019000 \u00a3\u2019000
Credit cards outstanding as at 31 December
\u2013
3
As with all of our lending we recognise an ECL on loans and credit card balances outstanding with key management personnel. As at 31 December 2024, the only ECL recognised on the balances above was our standard modelled ECL with no individual impairments recognised (31 December 2023: \u00a3nil). We have not written off any balances to key management personnel in either 2023 or 2024.", "dimensions": { "concept": "ifrs-full:DisclosureOfTransactionsBetweenRelatedPartiesExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-320": { "value": "
36. Earnings per share
Basic earnings per share is calculated by dividing the profit/(loss) attributable to our ordinary equity
holders by the weighted average number of ordinary shares in issue during the year.
Diluted earnings per share has been calculated by dividing the profit/(loss) attributable to our ordinary
equity holders by the weighted average number of ordinary shares in issue during the year plus the
weighted average number of ordinary shares that would be issued on the conversion to shares of options
granted to colleagues.
In the year ended 31 December 2024, 2.5 million share options were excluded from the weighted average
number of shares due to these being antidilutative.
2024
2023
Profit attributable to ordinary equity holders (\u00a3\u2019million)
42.5
29.5
Weighted average number of ordinary shares in issue (thousands)
\u2013
Basic
672,784
214,297
Adjustment for share awards
2,466
6,459
Diluted
675.250
220,756
Earnings per share (pence)
Basic
6.3
13.8
Diluted
6.3
13.4
There have been no transactions involving ordinary shares or potential ordinary shares between the
reporting date and the date of the completion of these financial statements which would require the
restatement of loss per share.
In Q4 2023, shareholders approved a \u00a3925 million capital package that included \u00a3150 million of new
equity made up of 500,000 shares. The new shares increased the weighted average number of ordinary
shares in issue from 214,297 thousand in 2023 to 672,784 thousand in 2024.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-322": { "value": "
37. Non-cash items
The table below sets out the non-cash items included in profit/(loss) before tax. These have been adjusted
for in the cash flow statements on page 164.
2024 2023
\u00a3\u2019million \u00a3\u2019million
Interest receivable
(935)
(856)
Interest paid
558
444
Depreciation and amortisation
77
78
Impairment and write-offs of property, plant, equipment
and intangible assets
44
5
Expected credit loss expense
7
33
Share option charge
2
3
Grant income recognised in the income statement
(3)
(2)
Amounts provided for (net of amounts released)
(8)
16
Haircut on Tier 2 debt
\u2013
(100)
(Loss)/gain on sale of assets
(101)
3
Total adjustments for non-cash items
(359)
(376)
", "dimensions": { "concept": "metrobankholdingsplc:DisclosureOfNonCashItems", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-321": { "value": "38. Post balance sheet events On 26th February 2025, the Bank confirmed entering into an agreement to sell a portfolio of approximately \u00a3584 million of unsecured personal loans. The sale of the portfolio is in line with the Bank\u2019s strategy to reposition its balance sheet and enhance risk-adjusted returns on capital. The transaction is capital accretive and creates additional lending capacity to enable the Bank to continue its asset rotation towards higher yielding corporate, commercial and SME lending and specialist mortgages. The sale was completed on 31st March 2025. On 26th March 2025, the Bank issued \u00a3250 million 13.875 per cent fixed rate reset perpetual subordinated contingent convertible capital securities (Additional Tier 1 securities). These securities constitute direct, unsecured, unguaranteed and subordinated obligations of the Bank and rank pari passu without preference among themselves. The issuance is in line with Metro Bank\u2019s capital management framework and strategy and is aimed at optimising the capital structure and providing further flexibility for growth. On 31st March 2025, \u00a350,000 of redeemable preference shares associated with the original incorporation of MB Group PLC, subsequently Metro Bank Holdings PLC, were redeemed. This transaction occurred between the period end and publication date of the Annual Report and Accounts and is therefore an immaterial yet noteworthy event", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:984500CDDEAD6C2EDQ64", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } } } }