Annual Report
and Accounts
2024
Contents
Strategic Report 3
Chair’s Welcome 4
Chief Executive Officer’s Highlights 6
Business Model and Strategy 9
Financial Review 31
Risk Overview 41
Viability Statement 45
Climate-Related Financial Disclosures 47
Non-Financial and Sustainability Information Statement 61
Risk Management Report 62
Approach To Risk Management 63
Principal Risks 67
Governance 90
The Board of Directors 91
The Executive Committee 98
Corporate Governance Report 99
Nominations Committee Report 118
Audit Committee Report 124
Board Risk Committee Report 133
Directors’ Remuneration Report 136
Directors’ Report 152
Financial Statements 155
Independent Auditor’s Report 156
Income Statements 165
Statements of Comprehensive Income 166
Statements of Financial Position 167
Statements of Changes in Members’ Interest 168
Statements of Cash Flows 169
Notes to the Accounts 170
Other Information 221
Annual Business Statement 222
Country by Country Reporting 224
Glossary of Terms 225
2024: How we performed
Gross residential lending
£5.7bn
(2023: £4.4bn)
We helped 37,200 more people
have the home they want,
including 17,600 first time buyers
Total assets
£31.6bn
(2023: £28.1bn)
Savings balances
£24.5bn
(2023: £20.8bn)
We helped 119,100
more people save for
their future
Average savings rate
1
4.13%
Compared to the rest of the
market average of 3.34%
Generated the equivalent
of £175.0 million extra
interest for members
Underlying profit before tax
2
£187.5m
(2023: £181.5m)
Common Equity Tier 1 Capital
25.7%
(2023: 28.2%)
Reserves available
to protect us from
future problems
Member satisfaction
3
94%
(2023: 94%)
We have an ongoing
commitment to be customer
focused in everything we do
Colleague engagement
4
8.4 out of 10
(2023: 8.3)
We are committed
to being a great place to work
1 CACI January 2024 to December 2024 CSDB, Stock, latest data available. CACI is an independent company that provides financial benchmarking data of the retail cash
savings market.
2 Underlying profit before tax excludes one-off items.
3 Overall customer satisfaction in a survey of 3,463 members from January to December 2024.
4 Your Voice colleague survey, 1,644 respondents (92% response rate) in June 2024.
Strategic Report
Chair’s Welcome
2024 highlights
The purpose of Leeds Building Society is to put home
ownership within reach of more people – generation after
generation. Most people want to own their own home,
but getting a first foot on the housing ladder is as hard today
as it has been at any time in our 150-year history,
so although achieving our purpose remains completely
relevant, fulfilling it becomes ever more demanding.
Performance over 2024
The backdrop to our 2024 performance was one of a
modestly improving economy and housing market,
and although the inflation rate reduced and interest rates
began to fall, the pressure on household budgets remained
intense. I am therefore pleased to report that, despite these
conditions, the Society had another very strong, and in key
areas, record-breaking year.
The full details are set out in the chief executive officer's
(CEO) highlights and elsewhere in the annual report, but
the headlines include:
• We maintained the number of loans to first time buyers,
despite significantly increased competition, launching a
number of initiatives to further help borrowers overcome
the affordability barrier, and were named ‘Best Shared
Ownership Mortgage Lender’ in the 2024 What Mortgage
Awards for the ninth year running.
• With an average savings rate 0.79% higher than the market
average, we delivered record-breaking extra interest to our
savers equating to over £175.0 million.
1
• Our member satisfaction scores were maintained at 94%
in 2024.
• Total mortgage lending and total saving receipts were both
at record levels, and we now have just under one million
saving and borrowing members – an all-time high for the
Society.
• Colleague engagement scores improved to 8.4 (out of 10)
this year, versus 8.3 in 2023.
• We underpinned our financial strength with an underlying
profit of £187.5 million, modestly up year-on-year (2023:
£181.5 million).
1 Source: CACI’s CSDB, Stock, January 2024 to December 2024, latest data available. CACI is an independent company that provides financial benchmarking data of the retail
cash savings market.
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
4
• Through Society, member and colleague contributions
of over one million pounds, we supported numerous
purpose-linked community schemes and projects,
including our charity partner Barnardo’s.
• We continued to make good progress on our multi-year
programme to renew the Society’s technology, which will
further strengthen our competitive position and our ability
to meet our customers’ changing needs.
Board changes
This time last year I informed members that I intended to
step down from the board at the conclusion of my second
term of office. I am delighted to report that Brendan
McCafferty joined the board in September, and that he
will take over as board Chair and Chair of the Nominations
Committee (subject to regulatory approval) at the start of
March 2025. Brendan has wide experience in senior positions
in financial services, and I have no doubt that the Society will
benefit greatly from his leadership of the board in the years
to come.
Gareth Hoskin, who is both the senior independent director
and the Chair of the Audit Committee, will be standing down
from the board at the end of March, after just over nine years
of service. My colleagues and I are deeply grateful to him for
his exceptional contribution to the Society throughout that
time.
I am very pleased to report that Annette Barnes will take
over from Gareth as the senior independent director,
and that Farah Buckley will take over as Chair of the
Audit Committee. Annette will continue to chair the
Remuneration Committee and Pam Rowland will take
over from Annette as the board’s designated
non-executive director (NED) for matters relating
to colleague engagement.
Profiles of all the directors are to be found on pages 91 to 97
of this annual report.
Looking ahead
In 2025 we will celebrate the 150th anniversary of the
foundation of our Society. Throughout that time our mission
has remained essentially unchanged. We have brought
together savers and borrowers, across generations and
across communities, providing a safe and rewarding home
for members’ savings, and giving countless families the
opportunity to live in a home of their own. We have always
sought to do this in a responsible way, supporting our local
communities and providing a great place to work for our
people. As a mutual, run in the interests of our current and
future members, we have been able to take a long-term view,
which has seen us through the good times and the bad of the
last century and a half.
The immediate outlook for the economy remains uncertain,
but members of Leeds Building Society can be assured
that we remain extremely well-placed to go on delivering
on our purpose.
Finally, it has been a privilege to have been able to play a small
part in the Society’s recent history. I would like to express my
heartfelt gratitude to our members, and to my colleagues
on the board and throughout the Society for their support
throughout my time as Chair – it is ultimately our people,
under the guidance of an exceptional leadership team,
who make us successful, and I applaud them for all they
have achieved.
Iain Cornish
Chair
27 February 2025
A word from Brendan McCafferty
I am honoured to be appointed to the
role of Chair. Leeds Building Society
has a strong heritage, a clear purpose,
and is committed to putting members
first. I look forward to working with the
rest of the board, executive team, and
colleagues across the Society to build
on our success and ensure we remain
well-positioned to serve our members.
Leeds Building Society | Annual Report and Accounts 2024 5
Chief Executive
Officer’s
highlights
As a mutual organisation, Leeds Building Society is owned by,
and run for, the benefit of its members. The milestone of
our 150th anniversary offers the opportunity to reflect
on how far our Society has come and it’s a real privilege to
share that our performance in 2024 was record-breaking on
multiple fronts.
Our purpose of putting home ownership within reach of
more people – generation after generation, has remained
fundamentally unchanged since we were founded in 1875,
but our innovation and investment to support members
means we have otherwise grown beyond all recognition,
demonstrated through our performance.
Our total membership reached an all-time high at the end
of 2024 of just under a million. Mortgage completions have
also never been higher, ending the year at £5.7 billion. From
a savings perspective we’re continuing to demonstrate
value, generating the equivalent of £175.0 million in extra
interest for members as a result of paying 0.79% above the
market average on savings rates
1
which is an all-time high, up
from £110.0 million in 2023. It’s unsurprising, then, that our
savings balances have reached a record £24.5 billion, a year-
on-year growth of 18%.
Encouraging home ownership through
innovation
Our record-breaking performance was just one reason
why 2024 was a landmark year for our Society. It’s vital
that we deliver actions to advance our purpose alongside
this, particularly in an environment where home ownership
remains a challenge for many. We know that young
borrowers, first time buyers and those on a lower income
often face the toughest challenge to prove their ability to
repay a mortgage. I’m proud to say that we continued to
launch innovative propositions last year to help make the
dream of home ownership a reality for members who may
otherwise have been unable to purchase a property.
We supported over 17,600 first time buyers into home
ownership in 2024 through the launch of products such as
our Income Plus mortgage range, offering to lend them an
average of £66,000 more on 95% loan-to-value (LTV) lending
and enabling them to borrow up to 5.5 times their salary. By
combining a high LTV and loan-to-income (LTI) ratio with
generous affordability modelling, Income Plus enables first
time buyers to borrow more and buy the home they want
sooner than they may otherwise have been able to.
1 Source: CACI’s CSDB, Stock, January 2024 to December 2024, latest data available. CACI is an independent company that provides financial benchmarking data of the retail
cash savings market.
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
6
Our innovative partnership with Experian, allowing people to
potentially ‘boost’ their credit scores, continues to support
aspiring home owners. Experian Boost uses open banking
to assess the last 12 months of payments, such as council
tax and subscriptions to streaming services, incorporating
them into a free ‘boosted’ credit score. Over 4,100 mortgage
applications received a boosted Experian credit score in
2024, 64% of which were first time buyers.
We’ve also seen a 79% increase in those opening our Home
Deposit Saver account, which rewards savers with a £500
bonus after they receive a mortgage offer and continues to
be an important part of supporting members to purchase
their own home.
Our performance in the shared ownership sector continues
to be impressive, with our second-highest year ever of
shared ownership completions in 2024. We were pleased to
be named ‘Best Shared Ownership Mortgage Lender’ in the
2024 What Mortgage Awards, for the ninth consecutive year,
as well as in the 2024-2025 Your Mortgage Awards, for the
second year running.
We continue to push for real change in the housing market.
The cost of owning a home remains high and, as our ‘A Place
to Call Home’ report shows, hundreds of thousands of
people will be unable to get onto the housing ladder over the
coming years compared to the historic average.
2
Building houses remains an essential way to address that
challenge and pushing for wider community consultation on
planning developments should be central to delivering new
housing targets. We published a new report focused on this
issue in 2024, The Case for Inclusive Planning
3
, arguing for
a fairer system that reduces barriers to home ownership.
I was encouraged to see the government’s commitment to
overhauling the planning process published in the reformed
National Planning Policy Framework late last year.
Investing to support our members
We achieved an underlying profit of £187.5 million, modestly
up year on year (2023: £181.5 million) and our total assets
increased to £31.6 billion, which is an all-time high. Capital
and reserves exceed £2 billion, and liquidity levels are well
above regulatory requirements. Our performance reinforces
our ability to invest significantly in our branch network and
digital capabilities, demonstrating the value that a building
society can offer its members: fantastic rates, face-to-face
services and innovative products.
We recognise that the customer service provided in our
branches remains the lifeblood of our organisation and we
remain deeply committed to them. The exceptional levels
of service and support that our branch colleagues continue
to offer members is reflected in our overall customer
satisfaction scores, which reached 94% in 2024, and our
Trustpilot rating of 4.7. We are bucking the market trend by
investing in renovating and relocating branches across our
national network, including in Gloucester and Stevenage in
2024. We also opened a brand-new branch, our 51st,
in Solihull in the West Midlands.
As well as investing in our in-person services, we invested
heavily in our digital capability, modernising online journeys
to make life easier for brokers and members. Since we
launched our new online Individual Savings Account (ISA)
application journey last year, we’ve seen a 62% increase in
successful account openings. The modernisation of our core
IT platform will continue this year and will ultimately increase
functionality, security and resilience, making our systems
simpler and quicker to use for our members, colleagues and
intermediary partners.
In the first half of last year, we made a significant investment
to simplify our balance sheet by completing a successful
buy-back of Permanent Interest-Bearing Shares (PIBS).
The up-front cost in the buy-back of PIBS will be offset by
the year-on-year interest saving, which will set the Society
up for better long-term financial strength and security.
Our purpose of putting home ownership
within reach of more people – generation
after generation, has remained fundamentally
unchanged since we were founded in 1875.
2 A Place to Call Home: Barriers to entering the housing market then, now and in the future, a report by Leeds Building Society:
https://www.leedsbuildingsociety.co.uk/a-place-to-call-home
3 The Case for Inclusive Planning: How representative consultation can overcome barriers to housebuilding, a report by Leeds Building Society and Public First:
https://www.leedsbuildingsociety.co.uk/inclusive-planning
Leeds Building Society | Annual Report and Accounts 2024 7
Early last year, we were deeply saddened when we
understood the impact the collapse of Philips Trust
Corporation would have on some of our members. When it
was apparent that members’ investments associated with
their trusts were at risk, we made the decision to stand by
those members and offer a significant voluntary financial
support scheme. Throughout the year, the Society has
worked with the administrators to deliver that scheme and,
at the year end, had paid £6.2 million to those members who
would have lost their investment. We know directly from
some of those members that this action will make a real
difference to them and their families, and I am proud of how
we have responded.
Providing great products and services for our members
would not be possible without our dedicated colleagues,
and we remain committed to supporting their wellbeing and
development. We have over 1,700 colleagues in the Society,
and I was delighted that our engagement scores, measured
in the annual ’Your Voice‘ survey, improved to 8.4 (out of 10)
this year, versus 8.3 in 2023.
A sustainable and responsible business
Despite the challenging economic conditions, I’m pleased
to report that UK arrears figures have modestly declined
year-on-year, currently standing at 0.58% (2023: 0.61%) and
remaining stable. We have not charged arrears fees since
2020 and will continue to keep this policy in place in 2025
to support our members in financial difficulty. There are
many reasons customers may struggle to make mortgage
payments, and we continue to support our teams with
training to both identify and support members who may be
struggling.
Our performance is underpinned by good governance, and
I would like to take the opportunity to express my personal
thanks to Iain Cornish for his support during his time as
Chair, which is coming to an end. He has made an invaluable
contribution, including helping us navigate the Covid-19
pandemic and continuing to grow as a Society in a highly
competitive environment. The continued progress we
have made under his leadership of the board speaks to his
dedication and experience.
I would also like to welcome Brendan McCafferty as our
new Chair. Brendan brings a wealth of experience to the role
from a long and distinguished career in financial services,
and I am looking forward to working alongside him and the
rest of the board as we continue to provide a strong and
secure place for savers’ money and help more people onto
the housing ladder.
While our members receive great value and service, we also
work hard to meet their expectations to make a positive
contribution to the communities we serve. We awarded
over a million pounds to good causes in 2024 and supported
240 charities and community groups. In April we launched
a new three-year charity partnership with the UK’s largest
children’s charity, Barnardo’s, to build brighter futures for
care-experienced young people, and we’re committed to
raising at least £300,000 for them over the next three years.
In the first nine months of the partnership, our colleagues
and members have raised over £130,000 for the charity.
Climate change is one of the defining issues of our age
and we remain committed to the orderly transition to net
zero by 2050. We were one of the first lenders to use a
property’s Energy Performance Certificate (EPC) rating in its
affordability calculations, offering newbuild properties with
an A or B rating an increase in the maximum loan amount.
We have also started a multi-year programme to make our
branch estate more energy efficient.
This year we have published our inaugural climate transition
plan setting out our revised climate targets (2024-2034) and
the actions to achieve them. We continue to take steps to
reduce our emissions, but we are off track on three of our
existing (2021-2030) climate targets. We expect to bring
the emissions that are under our control back on track over
the longer term in line with our revised targets. We won’t
be able to achieve all of our ambitions alone and there are
several significant challenges to overcome. Based on the
current pace of collective change and external uncertainties,
it’s highly unlikely all our revised targets will be met without
further urgent action across government, society and
industry.
2025 outlook
Whilst we expect there will still be volatility ahead in 2025,
our strong financial performance means that we are well-
positioned to deal with challenges that lay ahead and the
housing market continues to remain stable, which offers
confidence for the long-term.
Our business model is robust, and our multi-year IT
transformation programme will provide a modern
technology platform which futureproofs our systems,
sets us up to deliver our purpose, and enables us to be here
for generations to come. The growth in our membership in
2024 demonstrates that our customers recognise this, and
we will continue to invest in supporting them.
It is a privilege to be leading Leeds Building Society into its
150th year and I look forward to continuing to work closely
with our talented colleagues, our valued members, and with
our experienced board to drive our purpose forward. Thank
you for your ongoing support and trust.
Richard Fearon
Chief Executive Officer
27 February 2025
Chief Executive Officer’s Highlights continued
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
8
Business Model and Strategy
Year ended 31 December 2024
Our strategy and business model
are owned by our members and we strive to act in their best interests as well as those of our wider stakeholders, both now and
over the long term.
Our purpose is ‘Putting home ownership within reach of more people – generation after generation’. Home ownership has
always been an important focus for our business since it was founded in 1875, and, like our founders, we believe more people
should have the security of owning their own home. We are committed to supporting our members onto and up the housing
ladder, as well as supporting them to remain in their home when faced with financial uncertainties. Our strategic drivers and
behaviours enable us to do so.
Strategic drivers: What we’ll deliver
More responsive model – it’s our responsibility to
serve members and society for generations. We will
build foundations that are strong and responsive to
the changing context we will face.
Close-the-gap innovation – there are too many
barriers to people getting the home they deserve.
We will be relentless in partnering and creating
solutions to help people onto and up the ladder of
home ownership.
Step-up savings – savers are the lifeblood of our
business. For them, we will create experiences
that are straightforward and human no matter the
channel, and ensure that when people save with us
they save with purpose.
Behaviours: How we’ll deliver it
I am curious – seeking out expertise from different
perspectives in the business, and looking outside
for insight and inspiration.
I focus on what matters – doing the things that will
make the biggest difference, and always doing the
right thing for our members and our Society.
I push forward – making decisions and creating
solutions to barriers.
I have the right conversation – facing into difficult
conversations, and celebrating great work.
Leeds Building Society | Annual Report and Accounts 2024 9
Our business model
We provide residential mortgages in the UK, through a
network of approved mortgage brokers and directly to
members through online and telephone channels, to help
members into homes of their own. We offer mortgage
products across mainstream residential, buy to let and
a range of other segments, such as shared ownership
and interest only. As a way of helping to put home
ownership within reach of more people, we no longer
offer new mortgages on second homes, because these
reduce the availability of homes for local residents. For
the same reason, we are also trialling restricted lending
on holiday lets in two popular UK tourist hotspots.
We fund the majority of mortgage lending with members’
savings, through a range of channels. We’ve continued
to support savers with our rates averaging 0.79%
1
above
the market average during the year. The remainder is
funded from wholesale money markets on competitive
terms, as well as reserves from previous years' profits,
and government-supported funding schemes aimed
at increasing the level of lending across the market.
Our strong liquidity position helps to make sure
that there are sufficient funds available to meet the
requirements of savers, investors and other creditors.
Assets are invested conservatively, in a range of high-
quality investment instruments and across a range of
counterparties. Environmental, Social and Governance
(ESG) factors are considered when assessing the
creditworthiness of our counterparties for liquidity
investments and, if a counterparty was to be judged not
to meet these criteria, then their limit may be withdrawn.
We aim to generate sufficient profit through cost
efficiency and management of the net interest margin,
in order to maintain a strong capital position, supporting
delivery of our purpose generation after generation.
As a result, we can continue to invest in the Society for
the benefit of our membership as a whole – for example
by improving customer experience, modernising
our technology platforms, maintaining branches and
enhancing the colleague working environment.
Longer term, while we believe that our core product
lines are sustainable into the future, we expect the
markets we operate in to remain fiercely competitive,
and we will need to adapt accordingly.
We continue to invest in our mortgage systems to improve
efficiency, speed up processing times and improve customer
experience. This will help us to serve the evolving needs
of more members, both through how they choose to
do business with us and by providing products relevant
to them. We continue to review opportunities to meet
existing and new members’ needs better, including the
development of our products and distribution channels.
Business Model and Strategy continued
1 Source: CACI’s CSDB, Stock, January 2024 to December 2024, latest data available. CACI is an independent company that provides financial benchmarking data of the retail
cash savings market.
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
10
Where our funding comes from
• Savers (via our branch network,
phone, online, post)
• Wholesale markets
• Reserves of previous profits
How we use our funding
The Society lends to help members have
the home they want, including:
• Mainstream residential
• First time buyers
• Shared ownership
• Buy to let
• Interest only
Why we need to make profit
We are member-owned and do
not pay any shareholder dividends,
however we need to make profit to:
• Maintain financial strength
• Invest in the Society for the
benefit of our membership as a
whole (for example, maintaining
our branch network, improving
digital capability and customer
experience, enhancing our
colleague working environment)
and to set up the business for
future success
• Provide benefits for the
communities in which we operate
How we remain financially stable
and operationally resilient
• By maintaining liquid investments
with strong credit rated
institutions and central banks
• By making sufficient profit to
maintain a strong capital base
• By having a prudent lending
approach
• By maintaining a long-term
strong credit rating
• By maintaining a multi-channel
business model
• Ongoing investment and focus
on operational risk reduction
including a robust cyber strategy
What we need to spend
• Costs of running the business
and investing to provide the right
level of service in an efficient way
• Paying our colleagues fairly to
attract and retain talent
• Paying our fair share of tax
• Putting money aside for bad
debts
Our business model is summarised below:
A key element of our mutual business model is also providing social value to our stakeholders, and there are some examples
of how we do this below.
Our Impact Report demonstrates the impact of our ESG activities and clearly outlines our aim to drive positive social
and environmental impact through what we do, now and into the future. The report is published on our website at
leedsbuildingsociety.co.uk/your-society/agm
Leeds Building Society | Annual Report and Accounts 2024 11
We deliver social value through the provision of
Members and brokers
A range of mortgages – to enable borrowers to achieve the basic societal need of having a home; supporting
first time buyers and home owners to move onto and up the property ladder and to remain in their home.
Competitive savings rates – on a range of simple products designed to meet the different savings needs of
our members and enable them to save for what’s important to them, including to buy a home.
A secure home for members’ savings – our financial strength means we are able to generate robust
profits that enable us to remain financially resilient and allow us to make longer term decisions in the best
interest of members.
Excellent customer service – our colleagues are focused on supporting the differing and evolving needs of
our members and brokers, generating consistently high levels of satisfaction.
Colleagues
Opportunities for professional growth – we offer a culture that is inclusive and supportive, with meaningful
roles that are fairly rewarded. We support colleagues to continually develop their skills, enabling them to
build a career that is right for them. Our engagement scores place us within the top 25% of the UK financial
services sector benchmark.
Communities
Support for the communities in which we operate – we contribute directly to society through the work of
the Leeds Building Society Foundation, our fundraising efforts, colleague volunteering scheme, and by paying
our fair share of tax to support essential services.
Environment
Propositions which support a reduction in climate risk and environmental impact – the increased focus
on climate issues presents further opportunities for the traditional mutual model to evolve and deliver
innovative solutions that contribute to a sustainable future. We continue to take actions to reduce our own
emissions footprint.
Third parties
Products and services developed and delivered through working with a number of trusted third parties –
who uphold our values and align their goals and objectives with our ESG aims.
Regulators
A strong focus on risk management and customer-centred decision-making – with our Mutuality
Statement
2
and ESG Policy
3
setting out how we continually strive to do the right thing for our members,
colleagues, communities and the environment in which we operate.
Investors
A safe and secure investment – we maintain our financial stability through strong income performance,
a continued focus on cost efficiency and by keeping a robust liquidity position, and always striving to act
responsibly as a business.
2 This can be found on our website at leedsbuildingsociety.co.uk/your-society/about-us/mutuality
3 This can be found on our website at leedsbuildingsociety.co.uk/your-society/financial-information
Business Model and Strategy continued
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
12
Progress on 2024 corporate priorities
During 2024 we have continued to take actions to support our purpose, and almost one in two of our new mortgages was
lent to first time buyers, supporting 17,600 into their own home. We also supported almost 3,000 customers who were
experiencing financial difficulty to stay in their homes, such as by working closely with them to agree an affordable and
sustainable forbearance solution. We continued to launch new products dedicated to supporting members into home
ownership, and restricted lending on holiday lets in two popular UK tourist hotspots as part of a 12-month trial, because of the
impact these have on availability of homes for local residents. We’ve also been advocating for a fairer planning system, through
commissioning research and publishing a new public policy proposal pushing for wider community input within the planning
process.
During the year, we’ve continued to deliver against our strategy by focusing on our corporate priorities. We’ve demonstrated
our responsiveness through a changing economic and market environment and have pushed forward on developing our
innovation capability for the future, whilst also improving customer experience, products, and propositions for our mortgage
and saving members. Our progress against our corporate priorities is detailed below.
Corporate priority Progress in 2024
More responsive model
Ensure we have highly
engaged and empowered
colleagues, a diverse
workforce and talent pipeline
to respond to our changing
context and needs
• In 2024 our engagement score in our annual survey was 8.4 (out of 10), a 0.1 increase
year-on-year, and sits above the UK financial services sector benchmark, and our score
was 8.7 (out of 10) when colleagues were asked how likely they would recommend
Leeds Building Society as a place to work. In March and October, we surveyed
colleagues with a reduced question set to enable us to more regularly monitor colleague
sentiment.
• We regularly review our talent strategy and activities to develop a more diverse pipeline.
• We delivered our Empowering Allyship programme to 86% of our colleague base,
focused on upskilling our colleagues on the role they play in our inclusion and diversity
(I&D) agenda.
Build a sustainable
technology platform and
rapid transformation
capability
• We’ve made significant progress in our core banking transformation programme, with
build activity well underway and key processes, technology environments and tooling
established that will enable us to continue to progress at pace.
• We’ve migrated to our strategic cloud-based identity and access management solution,
enhancing security for all online customers through providing authentication, and a new
assisted registration journey.
Maintain the capital strength
and cost efficiency to support
our differentiated product
mix and thrive though the
economic cycle
• We maintained our strong capital position throughout the year, with all capital ratios
significantly in excess of the regulatory minima.
• Our costs have increased in the year as we have invested in our multi-year technology
programme and long-term sustainability, but we maintain a strong focus on efficiency
with close control over our costs. Our cost ratios remain among the best in our sector.
Lead the business and
our members through the
transition to net zero
• We’ve continued to take action to reduce our greenhouse gas emissions. We’ve also
updated our climate targets to change from a 2021 to a 2024 base year, and revised the
required emissions reductions in line with the new requirements of the Science-Based
Targets initiative (SBTi). At the end of 2024, we were behind against three of our existing
climate targets (measured against a 2021 base year), due to external factors that are
largely outside of our direct control (such as the rate of decarbonisation of UK housing
stock). Refer to our climate-related financial disclosures on pages 47 to 60 for further
details.
• We’ve published our inaugural Climate-Related Financial Disclosures and Transition
Plan, based on the Transition Planning Taskforce’s guidance, which sets out our climate
ambitions and the actions and accountabilities that will underpin delivery. This can be
found on our website at leedsbuildingsociety.co.uk/press/financial-results.
Leeds Building Society | Annual Report and Accounts 2024 13
Corporate priority Progress in 2024
More responsive model (continued)
Lead the business and
our members through
the transition to net zero
(continued)
• We continue to reflect energy efficiency savings in the affordability assessment for new
build homes. We also continue to offer an energy efficiency assessment tool to members
in conjunction with the Energy Saving Trust.
• We continue to work in partnership with Keepmoat to support the first large-scale
development of low carbon affordable houses built to the Future Homes Standard.
Initial insights from research we have co-funded on the benefits of these homes have
been positive.
Corporate priority Progress in 2024
Close-the-gap innovation
Develop streamlined lending
journeys to make it easy for
members and brokers to do
business with us
• We’ve continued to invest in technology and have maintained our efficient average
times from mortgage application to offer at 13 days in 2024 and achieved an average
broker net promoter score (NPS) of +58.
• We launched our digital direct-to-customer mortgage journey for customers who want
to purchase a property without obtaining advice, providing them with the option to
apply via our website, making the process much easier and more efficient.
• We also implemented a new advised rate switch journey within Mortgage Hub,
delivering a smoother, faster rate switch journey for brokers and members.
Proactively spot
opportunities to meet the
needs of our members and
intermediaries through our
data and insights
• We continued to deliver purpose-led product innovation, informed by the needs of
our members and prospective first time buyers through bespoke and ongoing research.
• We’ve increased automation and dramatically reduced delivery time for new data
solutions, enabling us to respond to customer and broker needs quicker than ever.
We have positively impacted members by providing insight to improve key business
processes like reducing friction and wait times for registering power of attorneys and
deceased members.
Develop capabilities and an
innovation mindset focused
on helping more people onto
and up the property ladder
• During 2024 we launched our first range of products designed specifically for first time
buyers, including our new Income Plus mortgage, to support them in overcoming the
difficulties of raising a deposit and the high cost of housing.
• We’ve amended our lending criteria to increase the LTV on a number of residential
mortgages for new build and existing build properties, in order to support aspiring
home owners to purchase these types of properties with a smaller deposit. We’ve also
expanded our Reach Mortgages offering through our direct advised channel, a product
which allows brokers to give mortgage options to customers whose credit score means
they wouldn’t qualify for a standard product.
• We worked with the Department of Levelling Up, Housing and Communities, other
lenders and mortgage intermediaries to develop the Grenfell Assisted Home Ownership
Scheme, which launched in May, giving victims of the disaster the ability to purchase
their new homes in the way they would have been able to purchase their previous
property.
• During 2024 we won a number of awards demonstrating our commitment to first time
buyers and our shared ownership proposition, including What Mortgage’s ‘Best Shared
Ownership Mortgage Lender’ award for the ninth consecutive year.
Business Model and Strategy continued
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
14
Corporate priority Progress in 2024
Step-up savings
Cherish our branch network
and the service and loyalty it
delivers
• As part of our Property Strategy, during 2024 we continued to invest in our branch
network, including opening a new branch in Solihull and relocating our Gloucester and
Stevenage branches.
• We continue to have one of the most productive branch networks amongst our peer
group per the latest eBenchmarkers analysis
4
.
• Member satisfaction with our branch network remains extremely high, at an average of
94% during 2024.
Deliver a multi-channel
experience that meets
member needs and drives a
step-change in awareness,
accessibility, and service
• During 2024 we launched our new Digital ISA application, with one in five of our
members now using mobile to apply for an ISA with us. We’ve made it easier for
members to pay into their savings for example by using a debit card, and we’ve
completed the biggest update to our digital savings servicing experience, with both
online and mobile seeing an improved log in journey.
• All new services we’ve introduced via the digital channel have been developed in
accordance with the international World Wide Web Consortium’s Web Content
Accessibility Guidelines, improving the support for our vulnerable customers.
• As a result of actions taken to improve our digital proposition, our digital customer
experience measure improved in 2024.
• As noted above, we’ve improved the process for registering power of attorneys and
deceased members and have established a dedicated team to support members and
their loved ones through this difficult time.
• We’ve worked to improve consistency in service across our channels; for example,
average wait times to speak to a colleague in our contact centre have reduced from
77 seconds in 2023 to 44 seconds in 2024. In 2024 we won ‘Contact Centre of the Year
(under 250 seats)’ at the North East Contact Centre Awards.
Define and deliver a savings
member value proposition
that creates connection
beyond rate
• As noted above, we’ve continued to invest in our branch network, as well as our savers’
digital experience through improved application processes and ways of managing their
money online.
• During 2024 net retail savings have grown by £3.7 billion taking us to a record total
of £24.5 billion. We are committed to providing our members with an efficient online
channel for accessing their savings and we cherish our branch network to give members
the choice of how they save and interact with us.
• We have paid 0.79% above the average market savings rate during 2024, equating to
£175.0 million
5
in extra interest for our savers.
Across all strategic drivers
Delivery of our purpose
is underpinned by the
effective identification
and management of
the risks we face
• For information on our identification and management of risks faced by the Society,
please see the Risk Overview on pages 41 to 44, Climate-Related Financial Disclosures
on pages 47 to 60 and the Risk Management Report on pages 62 to 89. Also see our
inaugural Climate-Related Financial Disclosures and Transition Plan which has been
published on our website at leedsbuildingsociety.co.uk/press/financial-results.
4 eBenchmarkers Savings Report, Autumn 2024 – customer advisor productivity
5 Source: CACI’s CSDB, Stock, January 2024 to December 2024, latest data available. CACI is an independent company that provides financial benchmarking data of the
retail cash savings market.
Leeds Building Society | Annual Report and Accounts 2024 15
Our culture
We are committed to supporting colleagues to do their best
work every day. Our people leaders play an important role in
creating the conditions for individuals to thrive and feel proud
about their contributions to supercharging our purpose.
We know our colleagues make the difference
Creating opportunities for our colleagues to have a valued
voice is of paramount importance. We empower our
colleagues to champion changes that help us evolve and
be even better, delivering a lasting impact so that we can
continue to deliver our purpose. There are several ways that
we listen to our colleagues and create opportunities for two-
way dialogue across the Society.
Colleague surveys: in 2024 we ran three colleague surveys
to monitor colleague sentiment and provide an avenue for
feedback. 92% of our colleagues completed our annual
survey, with a minimum of 85% completion on our pulse
surveys. Our engagement score in our annual survey was 8.4
(out of 10), a 0.1 increase year-on-year, and sits above the UK
financial services sector benchmark.
Colleague Association: our CEO Richard Fearon, and NED
Annette Barnes, our Colleague Engagement Champion
who leads on elevating colleague voice on the board, met
regularly with members of our Colleague Association. With
1,300 members this feedback loop ensures senior leaders
are focusing on what matters most to our colleagues.
Great organisational size, genuine interest
in colleague voice which is reciprocated with
a positive approach to all colleagues and an
apparent eagerness to constantly improve
the life of colleagues beyond salary.
Colleague forums: across the Society we have several
colleague led groups:
• I&D forums: on DiverseAbility, Ethnicity and Cultural
Heritage, Gender Equality, LGBTQ+ and Wellbeing
with representatives from all business areas, meeting
monthly with our I&D team. The forums support our
I&D strategy, with sponsorship from a senior leader.
• Colleague Voice networks: within divisions focused on
providing consistent colleague experiences through
direct feedback locally to leadership teams.
• Green Champions: work to increase colleague
awareness around climate and environmental
impacts, providing opportunities for colleagues to
share suggestions and complete volunteering activity
which has a positive environmental impact.
Culture audit: in 2024 our Internal Audit function undertook
a culture audit to assess the Society’s culture and how well
our agreed behaviours are embedded. Over 100 colleagues
from across the Society were invited to take part in this audit,
through focus group discussion and individual interviews,
covering all divisions and grades. There was a high degree of
correlation between the outputs of the audit and results of
our colleague engagement survey. The outcome confirmed
that the Society culture is good and progress has been made
since our last audit, with three thematic areas to build upon
to elevate performance. For more detail on the culture audit,
see the Corporate Governance report on pages 99 to 117.
Across 2024 members of our executive team also led on
our colleague roadshow in February and thank you visits
at half year. These provide an all-colleague update on how
we are delivering on our purpose, with open Q&A available.
Our board also hosted several colleague focused sessions
including with members of our I&D forums, with our Chair of
the board, Iain Cornish, attending forum meetings across the
year. Representatives from our female NEDs also hosted two
female networking dinners. To read more about the board’s
engagement with colleagues, see pages 99, 106, 108-111.
A space to belong and feel valued
We’re building a Society where our colleagues feel they
belong. A truly collaborative environment where diverse
perspectives are sought to fuel innovation and help to
deliver our purpose. We do this by embedding inclusive
practices into everything we do, recognising our colleagues
for the value they bring and providing the right support and
guidance to support our teams.
Inclusion and diversity
Our I&D Strategy, Being You; Transforming Us, is focused
on ensuring our colleagues have a true sense of belonging.
We continue to make progress on this agenda, achieving a
score of 9.0 out of 10 in our annual colleague survey on I&D,
which places us in the top 10% of financial service sector
employers. The independent review, and endorsement, of
our plans through achieving Gold accreditation with Inclusive
Employers in 2023 provides confidence in our activity, and
we will continue to create awareness and develop skills to
further embed our inclusive practices.
Friendly, supportive and inclusive place to work
which also values work life balance.
Business Model and Strategy continued
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
16
Our greatest challenge remains in increasing the diversity
of workforce at senior leadership levels. We regularly
review our talent strategy and activities to develop a
more diverse pipeline, which is informing our internal and
external interventions. Updates on progress and suggested
actions have been discussed at Executive Committee
(ExCo) meetings, with an annual update to the board in
September. We continue to focus our efforts on divisions
with underrepresentation, for instance improving gender
diversity in technology which has seen our female hires
increase from 32% in 2023 to 48% in 2024. To further help
us understand the diversity of our workforce, we have
expanded our diversity data set to include a broader range
of characteristics beyond gender and ethnicity; we have
approximately 70% disclosure on these new questions.
More information on the diversity of our workforce can be
found on page 123.
Recognising our colleagues
We continue to review how we support our colleagues in
feeling valued for the contributions they make to the delivery
of our purpose. Our annual Excellence in Action awards
celebration recognises colleagues from across the Society
based on nominations received to specific award criteria
and in 2024 we received 181 nominations for this event.
To ensure continuous recognition, in July 2024 we launched
quarterly Excellence in Action awards, aligned to our four
behaviours. We have received 123 nominations to date and
winners of our quarterly recognition are invited to our annual
Excellence in Action celebration event.
Great to be part of a business taking on a role in
improving things for society through its role in
industry, pushing forward on purpose, green &
community initiatives.
Meaningful reward
It is important that our colleagues feel fairly rewarded for
their contributions and we are proud that our colleagues
scored us a 7.8 out of 10 on the colleague survey ‘I am fairly
rewarded (e.g. pay, promotion, training) for my contributions
to Leeds Building Society’ putting us in the top 25% for
financial sector employers.
Since 2019 we have been a Real Living Wage Employer,
paying colleagues at least the Real Living Wage. Our
minimum salary from April 2025 will be £13.18 per hour,
which is £0.58 above the Real Living Wage (outside of
London). As part of our pay practices, we review salary
benchmarks annually against job specifications, adjusting
where required. Our 2024 Gender Pay Gap report showed
25.7% and 27.0% for mean and median respectively. The
main driver for our pay gap continues to be the makeup of
our workforce as we have fewer women than men in more
senior, and therefore highly paid roles. As part of our reward
process, we regularly review our benefit provision and in
2024 launched an electric vehicle salary sacrifice scheme and
an improved colleague mortgage scheme.
A home for colleagues to thrive and grow
We encourage colleagues to continually develop their skills,
supporting them to thrive at work and build a career that
is right for them. We know that by creating the conditions
for our colleagues to thrive, they will do their best work,
generate new ideas and enable us to deliver our purpose.
Developing skills
All colleagues can develop their skills and are encouraged
to build their personal development plan with support from
their people leader. We offer a variety of options from self-
directed learning through to facilitator led training to support
our colleagues on their development journeys. In March 2024
we launched a new digital learning platform Thrive! providing
access to a range of resources tailored by the business to
support personal growth. This learning platform is intuitive,
with colleagues able to record their skills and learning needs
and be pointed to learning that helps them progress in the
areas they highlight. Internal subject matter experts can
also create learning content to further support cross-skilling
and knowledge sharing across the Society. Since launching,
learning content has been viewed 247,296 times, an average
of 134 times per colleague.
We are mindful that the skills we have now will not necessarily
be the skills we need for the future. To support the
ongoing success of the Society we work with our business
areas and use external insight through our partnerships
with organisations like the Financial Services and Skills
Commission to review any potential skill gaps in our future
needs. This insight helps to inform the development of our
future learning resources, be that developing our internal
offer, investing in apprenticeships or funding external
development programmes.
Leeds Building Society | Annual Report and Accounts 2024 17
Supporting our colleagues to thrive at work
Our colleague wellbeing is core to our success and colleague
sentiment on the Society’s wellbeing approach is positive,
+0.6 ahead of the UK financial services sector benchmark
and placing us in the top 25% for UK financial services sector
employers.
We provide tools and opportunities to enable colleagues
to be at their best. Our offer includes a variety of flexible
working arrangements, supported through our digital
channels with 30% of our colleagues adopting a flexible
working arrangement. This is alongside continuing to work
in a hybrid model for our office-based teams. We also offer
a variety of wellbeing benefits, including access to wellbeing
support through our free Colleague Assistance Programme,
external wellbeing app ‘Peppy’, access to a virtual GP service
and cash health plan.
Developing our leadership capability
We know our leaders have a significant impact on creating
the right environment for every colleague to thrive and feel
motivated to deliver meaningful work and develop their
skills. To ensure we have a high calibre of leadership and set
ourselves up well for the future, we:
• Have a dedicated ‘Leading with Purpose’ training provision
to support leaders in developing their leadership skills. This
can be personalised to their needs, helping them enhance
their skills now and for the future.
• Brought our leadership population together in November
for our ‘Supercharging Our Performance’ conference,
focused on aligning behind our strategic context, ambition
and progress, and enabling them to create the conditions
for high performance for themselves and with their teams.
The conference was the catalyst to building stronger
relationships across this leadership group, who will now
meet more regularly.
• Support the development of diverse talent into our
leadership positions as a key focus:
‒ In 2024 we launched two female development cohorts
who have networked with our female NEDs and then
undertaken 12 months of group mentoring with a
female director.
‒ Initiated several pilots to explore female-focused
external leadership development programmes.
To further support our people leaders, we have also reviewed
and made enhancements to our digital human resources (HR)
system including easy-to-use people leader guides, through
to simplification of core policy documents and our most used
HR processes. We know that through setting our leadership
teams up for success, we can create the right conditions to
drive high performance and deliver on our purpose.
Beyond our teams
We are passionate about promoting the financial services
sector as an industry where individuals can thrive and
build a career that is right for them. We know that this will
support the industry in attracting the best, diverse talent,
helping us meet the needs of our communities. That’s why
we’ve continued to invest in our digital work experience
programme – we are keen to engage with students from
diverse backgrounds and 338 enrolments have been made to
date, with 69% from ethnic minority backgrounds and 22%
eligible for free school meals. We are also members of the
Financial Services Skills Commission, with representation
on their board and across working groups to help inform and
tackle the challenges the industry is facing collectively.
More details relating to how we support our colleagues can
be found in the ‘Supporting our colleagues’ section of our
Impact Report.
Business Model and Strategy continued
The Impact Report can be found at
leedsbuildingsociety.co.uk/your-society/agm
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
18
Key performance indicators
The Society measures its performance against its strategic drivers using a number of key performance indicators (KPIs),
including both financial measures, as defined under International Financial Reporting Standards (IFRS), and non-financial
measures. Alternative performance measures (APMs) given below are in common use across the financial services industry
and are useful in explaining the performance of the business. The APMs are defined in the Glossary on pages 225 to 228.
KPIs
Home ownership
First time
buyers
The number of new
mortgage members in
the year who are first time
buyers, demonstrating our
purpose of putting home
ownership within reach of
more people.
2024
2023
2022
2021
2020
17,600
17,700
18,000
22,000
8,000
We remain committed to helping
first time buyers get on to the housing
ladder in line with our purpose.
Despite continuing challenging
market conditions and competition,
first time buyer members represented
almost half of our 2024 new mortgage
members.
More responsive model
Underlying
profit before
tax
Statutory profit before tax
after adjusting for one-off
items
£181.5m
Underlying profit £187.5m
£137.5m
£220.5m
£163.7m
£80.7m
2024
2023
2022
2021
2020
Statutory profit has decreased
compared to the previous period
predominantly due to the recognition
of three one-off items. Underlying
profit has increased modestly
compared to 2023 – balancing support
for members and ensuring financial
resilience generation after generation.
Underlying profit before tax has been
adjusted for one-off items being the
repurchase of PIBS, the revaluation
of our Head Office building and the
cost of the voluntary financial support
scheme for customers whose trusts
were impacted by the collapse of
Philips Trust Corporation (PTC). Further
detail can be found on pages 31 to 32.
Statutory
profit before
tax
Statutory profit before tax,
as reported in the income
statement, creating capital
to support future business
growth.
Net interest
margin
The difference between
interest received on
assets and interest paid on
liabilities, measured as a
percentage of mean assets.
This is the Society’s main
source of income.
1.21%
1.26%
1.50%
1.31%
0.99%
2024
2023
2022
2021
2020
Net interest margin has stabilised
despite the falling interest rate
environment and competitive
market for both mortgages and
savings. However, it has improved
when compared to the second half
of 2023 (1.18%) following a period of
competitive pressures last year, from
higher funding rates and a competitive
mortgage market.
Leeds Building Society | Annual Report and Accounts 2024 19
Business Model and Strategy continued
KPIs
More responsive model (continued)
Common
Equity Tier 1
(CET1) ratio
The highest quality form
of capital, which mainly
comprises retained
earnings and other
reserves, as a proportion
of risk weighted assets
(RWAs). This is measured
to help make sure that
the Society retains an
excess over the regulatory
minimum.
28.2%
25.7%
33.3%
38.0%
36.3%
2024
2023
2022
2021
2020
The reduction in our CET1 ratio
results from the recognition of three
one-off items through the Income
Statement in 2024, combined with an
increase in RWAs which was driven by
an increase in Internal Ratings Based
(IRB) risk weights and the growth
in the Society’s mortgage book.
Despite this reduction, we remain
in excess of all capital regulatory
requirements and well placed to
meet any future regulations.
UK leverage
ratio
Another measure of capital
strength. Measured as the
Society’s Tier 1 capital as a
proportion of relevant total
assets excluding central
bank reserves.
5.5%
6.0%
6.2%
6.1%
5.8%
2024
2023
2022
2021
2020
Our UK leverage ratio has remained
comfortably above internal limits,
through careful management of
our balance sheet and profitability
in a challenging environment.
We continue to invest surplus
capital to further our purpose.
Cost to income
ratio
6
A cost efficiency ratio
which measures costs in
relation to the Society’s
income. It is calculated
as the percentage of the
Society’s total income
spent on administrative
expenses and depreciation
and amortisation.
51.7%
47.3%
37.4%
43.9%
51.0%
2024
2023
2022
2021
2020
Increases in costs reflect the
investment made in our multi-year
technology programme and long-
term sustainability. We maintain close
control over our costs, balancing
cost efficiency with the desire to
increase member value through
more resilient systems and improved
service. Our cost ratios remain
among the best in our sector.
If transformational costs were
excluded, the cost to income
ratio was 46.6% and the cost to
mean asset ratio was 0.59%.
To calculate our cost to income ratio
we have removed the impact of the
PIBS buy-back as this is considered to
be a one-off item in 2024. More details
can be found on pages 31 to 39.
Note the PTC and Head Office
revaluation one-off items do
not impact the cost ratios.
Cost to mean
asset ratio
An additional cost
efficiency ratio which
measures costs in relation
to the Society’s total
assets. It is calculated as
administrative expenses
plus depreciation and
amortisation, divided by
average total assets.
0.66%
0.63%
0.59%
0.58%
0.48%
2024
2023
2022
2021
2020
Colleague
engagement
score
Colleague engagement
is measured through
our survey platform.
Across 2024 we ran two
pulse surveys (March and
October) and conducted
our full survey in July.
8.4
8.3
8.0
2024
2023
2022
2021
2020
Our 2024 engagement score from
our full survey was 8.4 out of 10,
which was a 0.1 increase from our
score in 2023. This score maintains
our placement in the top 25% for UK
financial services sector benchmark.
6 For the purpose of this ratio, the PIBS buy-back has been excluded.
Strategic Report
Risk Management
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Governance Financial Statements Other Information
20
KPIs
Close-the-gap innovation
New (gross)
residential
lending
The value of residential
lending advanced by the
Society during the year,
including loans for house
purchases, remortgages
and further advances.
£5.7bn
£4.4bn
£5.0bn
£4.4bn
£2.5bn
2024
2023
2022
2021
2020
Our purpose-focused product
proposition has allowed us to support
37,200 new members in their home
ownership aspirations and deliver
our strong levels of gross lending.
We had our highest ever day of
mortgage completions during 2024.
Net residential
lending
Gross residential lending,
less repayments of
principal and redemptions.
£2.6bn
£1.5bn
£2.0bn
£1.5bn
£0.0bn
2024
2023
2022
2021
2020
Our strong levels of new lending
and competitive product transfer
offering to existing customers
coming to the end of their initial
product term have driven a
significant increase in net lending.
Number of
days from
mortgage
application
to offer
The average number of
business days it takes to
issue a mortgage offer
from initial receipt of the
application.
11
13
15
18
24
2024
2023
2022
2021
2020
Continuous investment in technology
has enabled us to maintain efficient
average times from mortgage
application to offer and to best
serve our members. We continue
to turnaround applications quickly,
despite record lending volumes.
Broker Net
Promoter
Score (NPS)
Demonstrates how
likely brokers are to
recommend the Society
to their peers. Calculated
using the percentage of
people who are extremely
likely to recommend and
subtracting those who are
unlikely to recommend.
62
58
63
56
46
2024
2023
2022
2021
2020
Our broker NPS remains high as
we continue to focus on the broker
experience and a streamlined process
for issuing offers. This remains a
priority and is one of the key areas
we anticipate will improve as we
continue our technology investment.
Step-up savings
Savings
balances
The value of shares and
deposits held by the
Society’s members and
other customers, as
reported in the statement
of financial position.
£24.5bn
£17.5bn
£20.8bn
£15.3bn
£14.2bn
2024
2023
2022
2021
2020
Our attractive product range,
particularly our fixed rate ISAs and
competitive variable rate products,
has helped us deliver record
net savings growth in the
year of £3.7 billion.
Extra savings
interest
The extra interest for our
savers of paying above
market rates to savers,
based on the Society’s
weighted average savings
rate compared to the rest
of market rate.
7
£175.0m
£110.0m
£80.5m
£71.5m
£82.8m
2024
2023
2022
2021
2020
We consistently pay above average
market rates to our savers, paying an
average of 4.13% compared to the
rest of market average of 3.34%.
7
Member
satisfaction
The percentage of
customers surveyed who
described themselves as
quite, very or extremely
satisfied with the service
received from the Society.
94%
94%
93%
93%
93%
2024
2023
2022
2021
2020
During 2024 we have focused
on delivering consistently high
service levels to our members
and this is reflected in our
customer satisfaction score.
7 Source: CACI’s CSDB, Stock, January 2024 to December 2024, latest data available. CACI is an independent company that provides financial benchmarking data of the
retail cash savings market.
Leeds Building Society | Annual Report and Accounts 2024 21
ESG Strategy
At the end of the fourth year of our ESG Strategy (which runs
from 2021 to 2025) we are pleased to report good progress,
with all but five out of our 15 ESG KPIs on target at the end
of 2024, as illustrated on page 24. These targets will be kept
under review to ensure we continue to stretch our ambition.
The themes of our ESG Strategy were developed following
extensive consultation with over 3,800 stakeholders on what
issues were most important to them.
Our Impact Report outlines in more detail how we are
delivering our ESG Strategy, and is structured around
our key stakeholder groups: ‘Supporting our members’,
‘Supporting communities’, ‘Supporting our colleagues’ and
‘Supporting the climate and environment’. The report can
be found on our website at leedsbuildingsociety.co.uk/
your-society/agm.
Key achievements this year
Supporting our members
• We’re proud to say that our purpose-led strategy has
supported 17,600 first time buyers onto the housing
ladder in 2024, which was almost one in two of our new
mortgages.
• We’ve launched Income Plus, a new product which is
designed to overcome the difficulties of raising a deposit
and the high cost of housing. We also continue to offer
several products which support people to buy their own
home such as our Home Deposit Saver, Shared Ownership
Saver, and Reach mortgages. Our partnership with
Experian Boost may also improve affordability prospects
for some buyers.
• During 2024 we stopped holiday let lending in two popular
UK tourist spots as part of a 12-month trial with local
authorities, in places where housing pressures are more
acute.
• We’ve published a new public policy proposal pushing
for wider community input within the planning process.
This included research from our commissioned report
‘The Case for Inclusive Planning’
8
.
• We’ve supported almost 3,000 customers who were facing
financial difficulty to stay in their home. We continue to
offer tailored support to members who struggle with
their mortgage repayments, and have not charged arrears
fees
9
, such as failed direct debit fees, since the start of the
Covid-19 pandemic.
• As noted above, we’ve consistently paid above average
market rates to our savers during 2024.
• As part of our branch refresh programme across 2024
we updated our Gloucester and Stevenage branches
and opened our 51st branch in Solihull. For each branch,
we focused on creating welcoming and accessible spaces
for all needs.
• We've refreshed our accessibility and support page for
our members highlighting the range of tools and services
we offer, including our accessibility panel and the Sign
Solutions service.
Supporting communities
• We awarded over £1 million to communities during 2024,
supporting 240 charities and community groups.
• Since launching our new charity partnership with
Barnardo’s in April 2024, we have raised over £130,000 to
support care-experienced young people at high risk of
homelessness.
• We raised more than £1 million for our previous charity
partner Dementia UK since 2020, doubling our original
four-year target of £500,000, and our support has helped
to deliver over 4,000 dementia advice appointments both
in branches and online.
• We funded several community projects that support
diverse groups of people who typically experience barriers
to home ownership into safe and secure homes, such as
projects run by Leeds Action To Create Homes (LATCH)
and Pride of Place Living.
• We worked with Become, the national charity for care-
experienced children and young people, to create a training
programme to support young people into their first
tenancies.
• The Leeds Building Society Foundation awarded over
£340,000 in grants to 61 charities, which align with its
purpose of helping people in need of a safe and secure
home.
• Colleagues volunteered more than 6,400 hours to support
good causes. For example, they have continued to support
our environmental charity partners, spending over 1,100
volunteering hours supporting their projects, including
planting over 2,500 trees in partnership with Yorkshire
Dales Millennium Trust, and maintaining a mile of waterway
behind our Leeds Head Office with the Canal & River Trust.
8 This can be found on our website at leedsbuildingsociety.co.uk/inclusive-planning
9 Third party costs, such as solicitor costs, are passed onto the customer.
Business Model and Strategy continued
We’ve been awarded
What Mortgage’s ‘Best Shared
Ownership Lender’ for the
ninth year in a row.
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Supporting our colleagues
Our colleague engagement score of 8.4 out of 10 puts us in
the top quartile of financial sector employers, with 92% of
our colleagues completing our annual survey. For I&D, our
colleague score of 9.0 out of 10 places us in the top 10% of
UK financial services sector employers.
• 247,296 pieces of learning content have been viewed since
the launch of our new learning experience platform in
March 2024.
• Our Allyship training has been completed by 86% of
our colleagues, and we’ve achieved approximately 70%
disclosure rate on new equality data sets including areas
such as social mobility.
• We’ve continued sponsorship and attendance at both
Leeds Pride and Leeds West Indian Carnival.
• We’ve increased our Menopause Champions numbers and
provided further training, and we’ve been accredited as a
Bloody Good Employer by Bloody Good Period for work
undertaken to raise awareness around menstruation.
• We’ve revamped our recognition tools, launching Quarterly
Excellence in Action awards and had 5,177 recognitions
shared as part of our digital recognition tool.
• Our Green Champions colleague group produced
educational campaigns on COP 29 and Earth Week,
supporting local environmental charities, and monitoring
and sharing branch energy consumption data with
colleagues in branches to promote energy efficient
behaviour.
Supporting the climate and environment
• We’ve updated our climate targets to change from a 2021
to a 2024 base year, and revised the required emissions
reductions in line with the new requirements of the SBTi.
• We’ve published our inaugural Climate-Related Financial
Disclosures and Transition Plan, based on the Transition
Planning Taskforce’s guidance, which sets out our climate
ambitions and the actions and accountabilities that will
underpin delivery.
• We’re undertaking a refurbishment programme for our
network of branches, which includes removing gas from
all of our buildings to make them more energy efficient,
and we have installed 60 solar panels at our Leeds branch
as part of a trial. We’re also increasing engagement with
suppliers to influence reductions in emissions from the
goods and services we buy.
• We continue to reflect energy efficiency in the affordability
assessment for homes, and we’re continuing to work with
Keepmoat to support the first large scale development of
low carbon affordable homes built to the Future Homes
Standard.
• We’ve partnered with Wates and a select group of banks
and building societies to launch its latest Sustainable
Innovations Competition to support new green technology
solutions within the banking sector. This provides us
with a unique opportunity to explore cutting edge
decarbonisation pilot projects with some of the UK’s
most innovative businesses.
Governance
• During 2024 we received a strong Sustainalytics ESG
audit score, which has improved since our assessment in
2023. Our overall risk rating continues to be Low, placing
us within the top 15% of lending peers. We also gained an
Morgan Stanley Capital International (MSCI) ESG rating
of Average, (p)BBB, and we plan to build on this score
in future.
• We have produced our third standalone Impact Report to
clearly outline our ESG Strategy and progress against our
goals and have continued reporting with reference to the
Global Reporting Initiative standards.
• We have recently published our Financial Crime Policy on
our website, which together with our ESG Policy
10
, aims to
increase transparency of our ESG activities.
Our ESG goals
We made good progress against our ESG targets during
2024, meeting all except five of our KPIs relating to climate
and diversity. We are committed to achieving our 2030 I&D
targets for our leadership population and are confident that
the plans we have in place will enable us to make progress
towards these targets across 2025. Refer to pages 24 and
48 to 60 for details of our performance against our climate
targets. As part of our commitment to transparency we also
continue to publish an annual Impact Report, which outlines
progress in more detail.
10 This can be found on our website at leedsbuildingsociety.co.uk/your-society/financial-information
Leeds Building Society | Annual Report and Accounts 2024 23
Our ESG targets
Help 65,000 first time
buyers into a home of
their own by 2025.
Improve mortgage broker
satisfaction scores by
20% by 2025¹.
Maintain an average savings
rate premium of at least 0.25%
compared to market average.
3
Progress: Ahead
2024 target: 52,000 first time buyers
supported by the end of 2024
2024 actual: 73,300 first time buyers
supported by the end of 2024
Progress: Achieved
2024 target: >0.25%
2024 actual: 0.79%
Progress: On track
2024 target: +58 Broker NPS
2
2024 actual: +58 Broker NPS
2
Provide £3 million to charities and
communities through grants,
donations and sponsorship
by 2025.
Progress: Ahead
2024 target: £2.4 million by end
of 2024
2024 actual: £3.6 million by end
of 2024
Maintain our share of UK high street
branches at higher than 0.50%.
4
Progress: Achieved
2024 target: >0.50%
2024 actual: 0.73% (as at March 2024)
Achieve 45% female representation
in leadership roles by 2030.
5
Progress: Behind
2024 target: 38%
2024 actual: 33%
Achieve 10% ethnic minority
representation in leadership
roles by 2030.
5
Progress: Behind
2024 target: 7.5%
2024 actual: 6.0%
Our inclusion and diversity colleague
sentiment score is in top 25% of UK
financial services by 2030.
Progress: Ahead
2024 target: Top 25% by 2030
2024 actual: 9 (Top 10%)
Maintain strong colleague
engagement score which places us
in line with the UK financial services
sector benchmark.
11
Progress: Achieved
2024 target: Top 25%
2024 actual: 8.4
(placing us in the top 25%)
Maintain high member satisfaction
scores of over 90%.
1
Progress: Achieved
2024 target: >90%
2024 actual: 94%
Reduce absolute Scope 1 and 2
market-based emissions by 90%
by 2030.
7
Progress: Behind
2024 target: 30% reduction
2024 actual: 265% increase
Reduce absolute Scope 1 and 2
location-based emissions by 60%
by 2030.
Progress: Ahead
2024 target: 20% reduction
2024 actual: 24% reduction
Maintain carbon neutrality for Scope
1 and 2 market-based emissions and
selected Scope 3 emissions, on the
pathway towards net zero.
8
Progress: Achieved
9
2024 target: 0 tCO2e
2024 actual: 0 tCO2e
Reduce absolute Scope 3 emissions
(categories 1-14) by 25% by 2030.
10
Progress: Behind
2023 target: 5.6% reduction
(latest data available)
2023 actual: 17.0% increase
(latest data available)
Ambition to reduce the intensity
of our Scope 3 financed emissions
(category 15) from our residential
mortgage book by 45% by 2030.
10
Progress: Behind
2023 target: 10.0% reduction
(latest data available)
2023 actual: 4.4% reduction
(latest data available)
Sustainable
communities
Inclusion
and Diversity
Climate and
Environment
6
Trust and
Transparency
Key:
Ahead
Where the cumulative
performance to date is >5%
above the target on a pro-rata
basis (where appropriate).
On track
Where the cumulative
performance to date is
between 100%-105% versus
the pro-rata target.
Behind
Where the cumulative or
in-year performance is below
the associated target.
Achieved
Where the reported
performance for the year is in
line with or above the in-year
target.
1. Broker satisfaction is captured by independent research of 900 interviews
between January and December 2024. Overall customer satisfaction is captured
from a survey of 3,463 members from January 2024 to December 2024.
2. The Net Promoter Score® (NPS) is a measure of satisfaction and loyalty based on
survey responses. It measures the proportion of promoters less the proportion
of detractors. We use the NPS methodology to measure satisfaction among the
brokers we work with.
3. CACI’s CSDB, Stock, January 2024 to December 2024, latest data available. CACI
is an independent company that provides financial benchmarking data of the
retail cash savings market.
4. Based on bank and building society UK business count data, Office for National
Statistics, March 2024.
5. Excludes executive and non-executive directors. Whilst we are behind on our
progress, we continue to prioritise our inclusion and diversity efforts and are
working to deliver these by our target date of 2030.
6. Our carbon emission reduction measures were revised in 2024 and will be
applicable from 2025 (refer to our climate-related disclosures on pages 47 to 60
for further details). The targets shown in the table are our existing measures,
which began from a 2021 base year.
7. Our Scope 1 and 2 market-based emissions target was behind in 2024 due to
issues outside our direct control. We expect these emissions to reduce in future
in line with our revised (2024-2034) target set out on page 56.
8. Scope 3 emissions include business travel, fuel and energy related activities,
waste, and home working.
9. Subject to independent verification which will be completed during 2025.
10. Our Scope 3 targets were behind due to issues outside our direct control.
We expect they will continue to track above our revised (2024-2034) targets on
pages 58-59 due to the external challenges and uncertainties that we face.
11. Our Employee Engagement Survey provider (Peakon) enables us to measure
colleague sentiment and benchmark this against other financial services
organisations in the UK.
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Stakeholder engagement
Our approach to corporate governance is based on the principles and provisions of the 2018 version of the UK Corporate
Governance Code (the Code) – available at frc.org.uk. In order to meet the requirement for a Section 172 Statement (insofar
as it is relevant to a building society), we include a summary of how the board has carried out its duties in promoting the
success of the organisation. This includes how the board engages with stakeholders and remains cognisant of their needs
when running the business. Further detail on the board’s activities and its engagement with stakeholders can be found in the
Corporate Governance Report on pages 99 to 117.
The board’s approach
The Society considers the needs of a diverse range of stakeholders, which have been identified as those who may be
affected by our activities and those groups whose actions can affect the operation of the business. These stakeholders are
also actively considered in the development of the Society’s strategy, specifically members’ product and servicing needs,
the expectations of regulators, the needs of mortgage brokers, views of investors and credit rating agencies, as well as any
potential impact on colleagues. The board recognises that agreeing a strategy, which is cognisant of key stakeholders, will
optimise long-term value creation and ensure relevance in a fast-changing environment.
Examples of two key decisions made by the board during the year and how stakeholder impact was considered, are shown
on pages 29 to 30: specifically the board’s decisions to appoint a new Chair and to begin the next phase of our core banking
transformation programme.
Our behaviours help to underpin a strong culture appropriate for a mutual organisation, encouraging actions that are in the
best interests of members and other stakeholders. Demonstration of the behaviours in the workplace forms a key part of
our performance management approach. For further information on culture and how this is monitored, see the Corporate
Governance Report on pages 99 to 117.
Stakeholder engagement
We have set out below our key stakeholder groups and how we engage with them. KPIs relevant to members, colleagues and
brokers can be seen in the KPIs section on pages 19 to 21.
Stakeholder
group
Why they are important to us How we engage with them Reporting to the board
Members
and brokers
Members own the Society,
and the Society acts to benefit
members’ interests over the
longer term.
Most of our lending is done via
brokers who are essential to us in
the process of helping people into
homes of their own.
• Independent external customer and
broker research.
• Gain feedback though our online panel
TalkingPoint.
• Trustpilot.
• Annual General Meeting (AGM).
• Social media.
• Brand perception tracking with our
members and brokers.
The board balances the interests
of borrowing and saving members,
as well as brokers, when making
decisions about the Society’s short-
and longer-term strategy. It does
so through consideration of the
following reporting:
• Annual analysis of five-year
forecast of member joiners and
leavers and monthly reporting.
• Regular reports on service
performance, customer
outcomes and complaints.
• Regular reporting of member
experience ensures service and
product meet our members’
needs.
• Consideration of mutual dividend.
• Reporting on savings rate benefit.
• Consideration of member
input on specific topics e.g.
development and shaping of
a new purpose-led product
(Income Plus mortgage).
Leeds Building Society | Annual Report and Accounts 2024 25
Stakeholder
group
Why they are important to us How we engage with them Reporting to the board
Colleagues
Colleagues are critical to the
success of the Society. Having a
culture where our colleagues can
contribute, feel valued and have a
sense of belonging will support us
in creating high performing teams
to better serve our members.
• Department, branch and contact
centre visits.
• Colleague surveys – at least one full
survey per year, with the option of
short pulse surveys.
• Colleague Association with board
appointed Colleague Engagement
Champion Annette Barnes (NED)
meeting with the Colleague
Association quarterly in 2024.
• Attendance by Iain Cornish (Chair) at
I&D forum meetings.
• Colleague development and wellbeing
sessions.
• Meaningful recognition tools, from
an ‘in the moment’ thank you in our
recognition reel to our Excellence in
Action awards initiative.
• Purposeful squad work with cross
divisional teams on colleague facing
activity.
• Communication on matters relevant to
colleagues and the Society.
Further information on engagement
with colleagues can be found in the
Our Culture section on pages 16 to 18,
within the Corporate Governance Report
on pages 110 to 111, and in our Impact
Report.
• Colleague survey engagement
results.
• Colleague update from colleague
representative and 'Voice of the
colleague' board sessions.
• Colleague Association topics.
• Pension scheme information.
• Update on diversity and progress
against our targets.
• Annual Speak Up policy review
and approval.
• Update on progress of our
Colleague Strategy.
• Review of approach and activities
for senior leadership team (SLT)
talent succession.
Third party
suppliers
Our supplier partners are key to
our ability to develop and deliver
services to members and are
an important aspect of how we
are represented with our other
stakeholders.
Our supply chain includes
suppliers of goods and services,
including professional services
(such as conveyancing services),
IT platform services (access and
administration) and IT software
licences.
We select suppliers based on their
ability to reliably deliver services
that enhance our members'
experience, their alignment to our
behavioural standards and the
measurable benefit we receive.
Our Third-Party Management
Policy includes a clear risk-
based classification of suppliers
which enables us to take a more
consistent and risk-appropriate
approach to our management of
each engagement.
• Governance meetings at appropriate
levels take place in accordance with the
materiality of the relationship.
• Our policies and standards drive a fair
and transparent supplier selection and
relationship management process
for new and renewed requirements,
proportionate to business risk.
• Appropriate governance
forums, including the board
where necessary, have received
regular updates on the progress
made against our Third-Party
Management Framework and are
involved in decisions on suppliers
for key strategic projects, for
example as part of our core
banking transformation project.
• Management information on
suppliers and our approach
to managing third-party
relationships.
• Annual approval of modern
slavery and transparency
statement.
Business Model and Strategy continued
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Stakeholder
group
Why they are important to us How we engage with them Reporting to the board
Communities
Leeds Building Society was set
up to help members save and buy
homes of their own. As a mutual,
we also aim to make a positive
difference in wider society and
the board understands that our
mortgage and savings business
needs to be underpinned by a
broader commitment to the
communities in which we operate.
Our communities are defined as
the places where our members
and colleagues live and work.
However we consider social
issues as well as geography in
defining where we focus our
efforts.
• Engagement via communication with
charity partners and their beneficiaries.
• Colleagues nominate, volunteer and
raise funds for charities and community
groups.
• Commitment to pay our fair share of
tax as evidenced by our Fair Tax Mark
accreditation.
More detail, as well as further information
on ESG at Leeds Building Society, can be
found within the ESG section on pages 22
to 24 and within our Impact Report.
• Approval of our updated ESG
Strategy targets and regular
updates of progress against
these.
• Ongoing progress reports on
the impact of our charity grant
making, fundraising and colleague
volunteering.
Environment
We are committed to minimising
our impact on the environment in
the places in which we operate, as
well as managing environment-
related risks. This is also an
increasing focus for our wider
stakeholders.
Our Climate Strategy has been
designed to support our key
stakeholders through an orderly
transition to a net zero economy by
2050 or sooner. This includes:
• Discussions held with a wide range of
stakeholders, including government
bodies, industry bodies and
stakeholders, building society peers
and third-party experts.
• Engaging and supporting our members
and colleagues to reduce their carbon
footprint.
• Working collaboratively with third
parties to understand and reduce the
emissions from our supply chain.
For further information on our carbon
emissions and engagement with
stakeholders on climate issues, please
see our climate disclosures on pages
47 to 60 and our inaugural Climate-
Related Financial Disclosures and
Transition Plan.
• Progress reports on our climate
data and insights.
• Approval of updated climate
targets and ambitions and our
new transition plan.
Leeds Building Society | Annual Report and Accounts 2024 27
Stakeholder
group
Why they are important to us How we engage with them Reporting to the board
Regulators
Our regulators, the Prudential
Regulation Authority (PRA) and
the Financial Conduct Authority
(FCA), are responsible for
maintaining a safe and sound
financial system, as well as
ensuring consumer protection.
Meeting regulatory requirements
engenders trust from our
stakeholders and demonstrates
that we are doing the right thing.
We have an open and transparent
relationship with our regulators, including:
• Regular dialogue and interactions
with our regulators both directly and
through our industry bodies.
• Regular meetings held with the PRA
which are attended by our CFO and
CRO along with members of the SLT.
• Regular meetings with the FCA,
which are attended by the director of
Legal, Compliance and Secretary and
appropriate members of the SLT.
• Monitoring regulatory publications
from the regulators and wider
stakeholder groups.
• Reviewing regulatory publications and
taking action as required.
We adopt a proactive approach with
the regulators and update them of any
material points as they arise.
• The board receives updates
on regulatory matters and a
summary of key regulatory
actions being undertaken by
the Society.
• Material dialogue and interactions
with our regulators are shared
with the board as appropriate.
• The board has sight of the
progress in delivery of regulatory
actions.
• The PRA engages directly with
directors, e.g. the Periodic
Summary Meeting.
Investors
Investors provide an important
part of our funding, which
supports our aim to help
members into homes of their
own.
We have a variety of different
types of investors who support
our Wholesale Funding Strategy
across secured and unsecured
types of debt. Our financing
strategy aims to have the
appropriate level of diversification
of funding, so we are not exposed
to only one type of funding.
We have an active investor relations
strategy, including:
• Individual meetings with key
institutional investors.
• Group presentations.
• Attendance at investment conferences.
• Investor events.
Regular and close dialogue is maintained
with credit rating agencies, including
formal annual review meetings.
• Investor relations approach
considered as part of the
Wholesale Funding Strategy,
contained within the overall
Treasury Strategy, as approved
by the Assets and Liabilities
Committee (ALCO).
Business Model and Strategy continued
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Key decisions made in the year
The key decisions taken this year by the board have been mindful of all stakeholders’ needs, while benefitting our members
over the long term. These decisions aim to improve member, broker and colleague experience, as well as increasing our
financial stability through improving income performance or reducing costs. This means that we can continue to operate
successfully in the future for the benefit of all our stakeholders.
Examples of two such key decisions made in 2024 are given below, and a summary of board activities during the year can be
found in the Corporate Governance Report on page 108.
Progress on core banking transformation project (June 2024)
Stakeholders
impacted
Members & brokers
Colleagues Regulators
Context
Our existing core banking system is at the centre of our business operations. It’s a mass of knowledge, holding customer
information, data and transactions on our savings and mortgage accounts, and a wealth of other information from across
the Society. Whilst changes have been made to it over the years, to ensure our long-term sustainability we need to
continue to invest in our core system capabilities that will provide more flexible and resilient applications to provide the
foundation for future strategic transformation. In 2023 it was agreed to invest in new core technology which will support
us in our ambition to put home ownership within reach of more people for generations to come. Delivery of the project
has been divided into individual phases; due to the complexity and size of the project, each phase requires board approval
before it commences. In June 2024 the board approved the decision to move from the initial design phase to the first
delivery phase.
Considerations and discussion
To support the board in its decision-making, detailed updates were provided throughout the year, including progress
updates, the requirements of the next stage and a detailed cost analysis. The ways in which the board has considered its
stakeholders as part of its decision-making process are shown below:
Board members: An independent technical advisor was appointed to provide technical advice to the board on the
requirements of the new core technology updates and to provide support to the board during the development and
delivery phase of the project. The project director also attended several board meetings for question and answer sessions
with the board.
Colleagues: Throughout the development phase the board has sought to ensure that colleagues are updated on its
transformation plans and a dedicated hub was established on the colleague intranet, which sets out what the objectives
are, a clear timeline for delivery, along with explanations as to progress and next steps during each phase. It also clearly
sets out how the implementation of new core technology will support both colleagues and members and what the future
benefits will be for all involved. Some of the key benefits are shown below:
• Implement a more intuitive document management system.
• Improve colleague experience through the provision of systems with better functionality.
• Provide greater insight on data from across the Society.
Members: The board is mindful that the purpose of implementing new core technology is to ensure the long-term
success and sustainability of the Society and to allow us to fulfil our purpose, through providing more opportunities
to develop purposeful and innovative products, which allow us to continue to support our members over the longer
term. Discussions to progress to the next stage also centred on the impact to the Society’s Customer Division and how
additional resource would be required to ensure service levels were maintained throughout the delivery phase.
Regulators: Regular updates have been provided to our regulators, which will continue until the project is completed.
Outcome: The board agreed that the first phase of the project had been successful and approved the decision to
transition to the first delivery phase.
Leeds Building Society | Annual Report and Accounts 2024 29
Appointment of new Chair (November 2024)
Stakeholders
impacted
Members & brokers
Colleagues Regulators
Context
In 2023 Iain Cornish announced his decision to step down as Chair of the Society in 2025, after six years on the board.
Following his decision, a number of succession planning meetings were held with members of the Nominations
Committee and led by Gareth Hoskin, as the senior independent director, without Iain Cornish being present. Following
an assessment of the skills matrix and detailed discussions over the requirements of the role, a recruitment plan was
developed along with a proposed timeline. Consideration was given to the external search firms which could be used to
support recruitment and it was agreed to appoint Warren Partners, an executive recruitment agency,
to provide a diverse short list of candidates.
Considerations and discussion
In May 2024, following a recommendation from the Nominations Committee, the board approved the appointment
of Brendan McCafferty, first as an independent NED (commencing September 2024) and subsequently as Chair
(commencing March 2025), subject to regulatory approval.
The impact on stakeholders was considered as outlined below:
Board members: Board members received regular updates on the recruitment process at each board meeting. Prior to
Brendan’s appointment, it was agreed that it was important for him to meet with the rest of the board. Consequently,
he was invited to attend the board strategy conference in May, where he also met with members of the Senior
Leadership Team.
Regulators: The appointment of a new board member and Chair was discussed with members of the Nominations
Committee and a timeline was agreed for the submission of the appropriate applications to be made to the FCA and
PRA. The PRA was also informed about the upcoming appointment and was provided with subsequent updates at the
regular meetings held with the Society’s PRA supervisor.
Members and colleagues: The Society recognises the importance of keeping colleagues and members informed
of changes to the board and this was taken into account during the succession planning meetings. Following Iain’s
announcement to step down, an update was provided on the colleague intranet, which confirmed that a recruitment
process was underway. Once Brendan’s appointment as Chair was formalised, a further update was provided to
colleagues in December which outlined the intended date on which he would become Chair, as well as details of his
skills and experience and other external appointments. Details of Iain’s departure was included in the Society’s
2023 Annual Report and Accounts and the 2024 AGM documentation issued to our members. Iain also provided an
update in his address to members who were in attendance at the AGM. A further public announcement was made in
December 2024, via the regulatory news service, confirming the details of Brendan’s appointment as Chair, subject to
regulatory approval.
Outcome: The board was satisfied with the recruitment and selection process undertaken and agreed that Brendan
had the experience and skills required for the role. Following the recommendation from the Nominations Committee,
it approved the appointment of Brendan McCafferty as Chair, subject to regulatory approval.
Business Model and Strategy continued
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30
Financial Review
Year ended 31 December 2024
Overview
Throughout 2024, the economic environment in the UK has
remained challenging and uncertain, both for members and
the Society. The rising cost of living continues to impact
households and, despite two reductions during the year, the
Bank of England (BoE) base rate remains high. Through these
challenges, we have been able to support our members more
than ever before and deliver robust financial results with
record breaking trading performance. Serving our members,
furthering our purpose of putting home ownership within
reach of more people and maintaining a sustainable and
secure Society have remained our priorities.
We continue to offer our members a wide range of products
at accessible rates. The strength of our product proposition
together with the quality of service we provide to our
members contributed to our record lending figures this year.
Despite competition in the market intensifying in the second
half of the year, with several of our peers following our focus
on the first time buyer market, our gross new lending and net
lending both reached record highs, of £5.7 billion (2023:
£4.4 billion) and £2.6 billion (2023: £1.5 billion) respectively.
Our market share of new mortgage lending was 2.3%
(2023: 1.9%).
During November 2024 we achieved our highest ever
monthly number of mortgage completions, which is a
testament to the evolving capabilities of our mortgage
application system which is providing a good experience
for members and brokers. This year also saw the release of
a new range of products designed specifically for first time
buyers, including our new innovative Income Plus mortgage
range, as well as expanding our Reach Mortgages offering.
It has been a record year for savings and more members are
benefitting from the quality of our offerings. Our savings
balances reached £24.5 billion at the end of 2024 and the
investment we made in our digital journey has contributed
to net retail growth of £3.7 billion, with many more members
remaining with the Society as they come to the end of fixed
term products. We have helped our savings members by
consistently paying above the average market rate, which
equates to an extra £175.0 million
1
in their pockets.
In 2024, we achieved an underlying profit of £187.5 million,
which represents a £6.0 million increase year-on-year (2023:
£181.5 million) and our total assets increased to £31.6 billion,
which is an all-time high. Statutory profit before tax for 2024
was £137.5 million and included the cost of three one-off
items. Capital and reserves exceed £2.0 billion and liquidity
levels are well above regulatory requirements. As a result
of our strong capital position, the opportunity was taken to
simplify our balance sheet and repurchase our PIBS at a fair
price in April 2024. This resulted in a one-off cost of £23.4
million but will save £3.3 million in interest payments per
year into perpetuity. These savings in interest payable will be
reinvested in delivering our purpose for the benefit of current
and future members.
During the year we also incurred one-off costs of £10.3
million in respect of the voluntary financial support we
offered to those members who were impacted by the
collapse of Philips Trust Corporation. When it became
apparent that members’ investments associated with
their trusts were at risk, we made the decision to stand by
those members and offer a significant voluntary financial
support scheme to support impacted members at this
challenging time. We worked hard during the financial year
to compensate impacted members, with £6.2 million of
voluntary financial support payments processed before
the year end. The cost of this voluntary support and the
associated legal costs have been recognised as a one-off
charge and the remaining provision of £3.6 million will be
utilised during the first quarter of 2025 as we process all
remaining payments.
This year, the directors felt it appropriate to obtain an
updated valuation for the Society’s Head Office building, the
previous valuation having been undertaken in December
2022, when market transaction activity was limited following
the Covid-19 pandemic. During the period since then there
has been a decline in the Leeds commercial property rental
market and the latest valuation, undertaken in December
2024 and based on an open market, vacant possession
scenario, resulted in a £16.3 million reduction in carrying
value. The full amount has been recognised as impairment
in the Income Statement and has been treated as one-off,
therefore added back in the calculation of underlying profit.
Our multi-year technology transformation programme
continues to progress at pace, and this will lead to increased
functionality, security and resilience of our systems, as well
as an improved experience for our members, colleagues
and intermediary partners. We remain focused on investing
wisely and driving cost efficiency, meaning our underlying
cost to income ratio continues to be one of the lowest in the
financial services sector, at 46.6% when adjusted for the PIBS
buy-back and transformation costs.
1 We paid an average rate of 4.13% against the rest of the market average of 3.34%. CACI’s CSDB, Stock, January 2024 to December 2024, latest data available.
Leeds Building Society | Annual Report and Accounts 2024 31
Financial Performance
The Group Income Statement for the year is summarised
below:
2024
£M
2023
£M
Net interest income 362.9 337.6
Fees, commissions and other income (17.6) 26.6
Fair value gains/(losses) 10.3 (6.7)
Total income 355.6 357.5
Management expenses (196.0) (169.0)
Impairment credit/(charge) on loans
and advances to customers
5.7 (6.1)
Impairments on property, plant and
equipment and intangible assets
(17.5) (0.2)
Provision for voluntary financial support (10.3) –
Other impairments and provisions – (0.7)
Profit before tax 137.5 181.5
Tax expense (37.6) (47.6)
Profit after tax 99.9 133.9
Underlying Profit before tax 187.5 181.5
The Group profit before tax in 2024 was £137.5 million
(2023: £181.5 million). This includes three one-off items
relating to the repurchase of the PIBS of £23.4 million to
optimise our capital position, the £16.3 million charge
recognised following a revaluation of our Head Office
building and the £10.3 million cost of the voluntary support
provided to members impacted by the actions of Philips
Trust Corporation.
Excluding one-off items, underlying profit before tax
remained strong at £187.5 million, which was a modest
increase of £6.0 million when compared to 2023 – a pleasing
achievement when considering the economic environment.
2024
£M
Profit before tax 137.5
Add back:
PIBS repurchase
2
23.4
Head Office revaluation loss
3
16.3
Philips Trust Corporation – voluntary financial support
4
10.3
Underlying profit before tax 187.5
Net interest income
2024
£M
2023
£M
Net interest income 362.9 337.6
Mean total assets 29,879.3 26,829.9
% %
Net interest margin 1.21 1.26
Net interest income has increased by £25.3 million (7.5%) in
the year and net interest margin has stabilised despite the
falling interest rate environment and competitive market
for both mortgages and savings. This is due to the proactive
choices we have made to manage our balance sheet,
protecting net interest margin over the medium term with a
positive trajectory as we moved through 2024 and into 2025.
1.24%
1.18%
1.18%
1.34%
H2 2024
H1 2024
H2 2023
H1 2023
We have remained agile whilst trading through a volatile
environment. Regular changes have been made to products
and rates to keep our growth aspirations within reach. Whilst
the BoE base rate reduced in the second half of the year, we
still paid an average interest rate of 4.13% (2023: 3.05%) to
our savers, compared to the average market rate of 3.34%
(2023: 2.46%)
5
.
The decision to repurchase our PIBS resulted in a one-off
charge to the Income Statement, but this will lead to a
£3.3 million interest saving per year, which will be reinvested
into the Society to deliver our purpose and create value for
our members.
2 Included in the Other operating (expense)/income line in the Income Statement.
3 Included in the Impairment of property, plant and equipment and intangible assets line in the Income Statement.
4 Included in the Provisions charge line in the Income Statement.
5 Source: CACI’s CSDB, Stock, January 2024 to December 2024, latest data available. CACI is an independent company that provides financial benchmarking data
of the retail cash savings market.
Financial Review continued
Strategic Report
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Governance Financial Statements Other Information
32
Fair value gains and losses
We hold certain financial assets and liabilities at their current
fair value, defined as the value a market participant would be
willing to pay or receive, and the movement in this fair value
is recognised in the Income Statement. Changes in fair value
are primarily due to timing differences, which will trend to
zero as the asset or liability reaches maturity.
For the financial year ended 31 December 2024, we have
recognised a net fair value gain of £10.3 million (2023: £6.7
million loss) from the movement in interest rates. These
gains have largely been recorded on swaps transacted to
manage interest rate risk associated with the fixed rate
mortgages and savings products.
The Group continues to manage volatility and mitigate some
of the impact of fair value movements using cash flow hedge
accounting.
Management expenses
Management expenses for the year are summarised below:
2024
£M
2023
£M
Colleague costs 106.1 102.9
Other administrative expenses 59.9 53.1
Depreciation and amortisation 10.6 9.1
Ongoing management expenses 176.6 165.1
IT transformation spend 19.4 3.9
Total management expenses 196.0 169.0
% %
Cost to income ratio
6
51.7 47.3
Cost to mean asset ratio 0.66 0.63
Total management expenses increased by 16.0% during
the year as we increased investment into our multi-year
technology transformation programme, which will support
operational efficiency, high customer service levels and
technology resilience for many years into the future. During
2024 we transitioned into the implementation stage of the
programme and this resulted in an increased level of spend
when compared to 2023.
Our ongoing management expenses have increased by 7.0%
when compared to 2023 and whilst our underlying cost ratios
have increased, they remain impressive for our sector. We
have maintained focus on cost management in 2024 and
have operated in a cost-conscious way. If transformational
costs are excluded, the cost to income ratio was 46.6% and
the cost to mean asset ratio was 0.59%.
Included in ongoing management expenses are other
administrative expenses, which have increased by £6.8
million in the year. This increase was predominately driven by
the introduction of the BoE levy, which resulted in a payment
of £3.7 million in the year. The BoE introduced a levy on banks
and building societies in 2024 to provide the budget required
by the BoE to advance its statutory objectives. This replaces
the cash ratio deposit scheme, which required banks and
building societies with eligible liabilities greater than £600
million to place a proportion of their deposit base with the
BoE on a non-interest bearing basis. Further increases in
other administrative expenses were related to an increase in
licence fees for existing IT systems used across the Society.
6 For the purpose of this ratio, the PIBS buy-back has been excluded.
Leeds Building Society | Annual Report and Accounts 2024 33
Impairments and provisions
The table below summarises the impact of impairments and
provision charges in the year:
2024
£M
2023
£M
Residential loans (4.8) 6.3
Commercial loans (0.9) (0.2)
Impairment (credit)/charge on loans
and advances to customers
(5.7) 6.1
Other impairments and provisions
7
27.8 0.9
Total impairments and provisions 22.1 7.0
Residential impairment
A provision is recognised for expected credit losses (ECL)
that may be incurred within the residential mortgage book.
This is based on the probability of default (PD) on each
mortgage, which results in an estimated loss. Provisions
are also estimated using assumptions related to future
economic scenarios and by assessing any increases in risk on
each mortgage since origination.
The quality of the Society’s mortgage book remains high,
with arrears percentages remaining stable over 2024, despite
ongoing cost pressures on households. At 31 December
2024, 0.61% of borrowers were greater than or equal to
3 months in arrears (2023: 0.64%). We have maintained
robust lending criteria and policies as we continue to increase
the overall proportion of purposeful lending whilst ensuring
the quality of the asset base is maintained.
The economic environment has improved during the
financial year, with falling inflation, a rise in house prices,
reductions in the base rate and stable unemployment rates.
These are all signs of a stronger economy, and the improved
outlook has been reflected in the modelled economic
scenarios and revised post model adjustments (PMAs).
The impact on profitability for the financial year is a £4.8
million release (2023: £6.3 million charge).
The key judgements and estimates involved in the
calculation of impairment loss provisions are set out
in note 2 of the accounts on pages 176 to 184.
Total impairment loss provisions against residential
mortgages at 31 December 2024 are £45.4 million (2023:
£53.5 million) and overall coverage remains at sufficient
levels to address the potential risk of future losses.
2024
£M
2023
£M
UK 37.1 44.5
Overseas 8.3 9.0
Total residential impairment
provisions
45.4 53.5
UK coverage 0.15% 0.21%
Taxation
The income tax expense of £37.6 million (2023: £47.6
million) represents 27.3% (2023: 27.2%) of profit before
tax. We pay UK corporation tax at the prevailing rate of
25.0% for 2024 (2023: 23.5%). We also pay a surcharge on
banking profits over the defined thresholds, at 3.0% for the
year (2023: 4.25%).
Financial Review continued
7 Includes the provision for voluntary financial support in relation to Philips Trust Corporation and the revaluation of our Head Office building.
Strategic Report
Risk Management
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Governance Financial Statements Other Information
34
Assets
Our strong lending and savings growth is reflected in overall
balance sheet growth of 12.5% from £28.1 billion to £31.6
billion.
2024
£M
2023
£M
Residential mortgages 24,448.1 21,836.4
Commercial mortgages 3.3 6.1
Other loans 145.0 153.6
Impairment provision (45.9) (54.9)
Loans and advances to customers 24,550.5 21,941.2
Liquid assets 6,545.5 5,559.3
Derivative financial instruments 371.1 443.6
Fair value adjustments (173.1) (132.3)
Fixed and other assets 318.6 334.1
Total assets 31,612.6 28,145.9
Loans and advances to customers
Our loans and advances to customers comprise mainly UK
residential mortgages. Our legacy overseas residential and
UK commercial loan portfolios continue to pay down, with no
new lending taking place. Other loans consist of a collateral
loan that represents a pool of equity release mortgages
purchased from a third party, where some of the risks
relating to those mortgages were retained by the third party.
Residential mortgage asset quality 2024
%
2023
%
Proportion of mortgages in arrears
8
0.61 0.64
Proportion of mortgages in arrears (UK)
8
0.58 0.61
Balance-weighted average indexed
LTV of mortgage book
54.2 51.2
Balance-weighted average LTV of
new lending
66.8 62.3
UK residential mortgage balances
The Society’s purpose is to enable home ownership, with a
particular emphasis on first time buyers and affordable home
ownership products such as shared ownership.
The composition of our mortgage book reflects our
segmental lending strategy of recent years, with buy to let
and shared ownership making up significant proportions of
the book alongside mainstream owner-occupied.
The chart below shows the mix of new lending by product
type in 2024.
76%
9%
1%
3%
11%
2024 new residential lending by type
Mainstream owner-occupied
Buy to let
Shared ownership
Other affordable home
ownership
Other
8 Greater than or equal to 3 months in arrears
Leeds Building Society | Annual Report and Accounts 2024 35
We remain committed to helping first time buyers get
on to the housing ladder and our lending policy reflects an
appropriate balance between supporting home ownership
and protecting both existing and future members.
Mainstream owner-occupied is the majority proportion of
our portfolio. Our performance in the shared ownership
sector continues to be positive, with our second-highest
year ever of shared ownership completions in 2024
(£0.6 billion).
We have increased the overall proportion of purposeful
lending, resulting in a modest uplift in average LTV. We have
approached this in a considered way to ensure maintenance
in the quality of the overall asset base. The average LTV of
new lending in 2024 was 66.8% (2023: 62.3%), reflecting
our balanced, risk-managed approach.
This approach, along with the effect of house price
inflation, is reflected in the distribution of the LTV profile of
the portfolio shown below. In 2024, we increased the overall
proportion of purposeful lending, resulting in a modest
uplift in average LTVs as we strove to drive our purpose
forward and break down barriers to home ownership in a
considered way.
2024 UK residential mortgage balances by indexed LTV
Less than 50%
50% to 60%
60% to 70%
70% to 80%
80% to 90%
More than 90%
44%
14%
15%
13%
10%
4%
Liquid assets
Liquidity ratios 2024
%
2023
%
Liquidity Coverage Ratio 183 227
Liquid assets as a percentage of
shares and borrowings
22.52 21.77
At 31 December 2024, liquid assets increased to £6.5 billion
(2023: £5.6 billion), of which £6.3 billion are High Quality
Liquid Assets (2023: £5.0 billion), which are either in cash or
are readily realisable as cash when required. Our Liquidity
Coverage Ratio (LCR) remained strong at 183% (2023: 227%)
and is significantly above the regulatory minimum of 100%.
Liquid assets are principally held in deposits at the BoE,
investments in UK government securities, and investments
in other securities rated highly by credit rating agencies. The
quality of liquid assets remains very high with 100% of our
portfolio rated A or above (2023: 100%).
The Society continues to attract members with its
competitive savings products, which in turn has helped
us maintain a robust level of liquidity to respond to future
changes whilst placing member demand at the forefront.
The Society has also utilised this liquidity to support our
purpose and increase lending to our members. This has all
been done whilst optimising net interest margin.
The mix of liquid assets at 31 December 2024 is shown
below.
2024 liquidity portfolio
Cash in hand and balances
with the Bank of England
Loans and advances to credit
institutions
UK Government securities
Government agency debt
Supranational bonds
Covered bonds
Residential mortgage backed
securities
37%
2%
3%
8%
10%
30%
10%
Financial Review continued
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Governance Financial Statements Other Information
36
Liabilities
A summary of our liabilities is shown below:
2024
£M
2023
£M
Shares 24,529.8 20,793.0
Wholesale funding 4,535.2 4,747.8
Derivative financial instruments 98.0 233.0
Other liabilities 387.0 371.8
Subordinated liabilities 334.2 323.9
Subscribed capital 8.0 33.0
Total liabilities 29,892.2 26,502.5
Equity attributable to members 1,720.4 1,643.4
Total liabilities and equity 31,612.6 28,145.9
Wholesale funding as proportion
of total borrowing
15.6% 18.6%
Shares (retail savings)
Our savings members play a vital role in allowing us to
achieve our purpose of putting home ownership within reach
of more people and we remain dedicated to providing them
with a secure place for their money, with compelling products
and competitive interest rates.
During 2024 our net retail savings grew by £3.7 billion (2023:
£3.3 billion), taking total retail savings up to a record £24.5
billion. We have maintained high quality products throughout
2024, featuring in the top 20 best buy tables consistently
throughout the year.
We offer our members a range of savings products, including
easy access and fixed rate bonds and ISAs. The chart below
shows the mix of savings balances by rate type.
2024 retail savings balances by type
Fixed rate bonds
Fixed rate ISAs
Variable rate
14%
37%
49%
This year our variable rate products have become more
popular with our members, and 37% of our retail savings
balances are now variable rate compared to 27% in 2023.
Leeds Building Society | Annual Report and Accounts 2024 37
Wholesale funding
Total wholesale funding at 31 December 2024 was £4.5
billion (December 2023: £4.7 billion). During the year we
raised £850 million of external wholesale funding through a
successful Covered Bond issuance and also our Albion No.6
residential mortgage backed securities (RMBS) issuance.
The deals were very well received by the market and were
competitively priced in comparison to similar deals.
A proportion of the funds raised through these wholesale
debt issuances has been used to repay £710 million of
TFSME
9
funding.
The mix of our wholesale funding portfolio at 31 December
2024 is shown below:
2024 wholesale funding portfolio
Covered bonds
Securitisation
Senior unsecured debt
Time deposits
TFSME
Certificates of deposit
47%
7%
14%
27%
1%
4%
We maintain secure credit ratings from two key agencies,
reflecting our strong capital base, sustainable profitability
and robust funding position.
Credit Rating Long-term Short term Outlook
Moody’s A3 P-2 Stable
Fitch A- F1 Stable
Derivative financial instruments
We transact derivative financial instruments to mitigate
risks within the balance sheet, primarily interest rate risk
associated with offering fixed rate mortgage and savings
products. In accordance with accounting standards,
derivatives are initially recognised at fair value on the date
that they are transacted and are subsequently re-measured
monthly at their fair value.
We make use of fair value hedge accounting to reduce
volatility in profits by hedging exposures to variability in the
fair value of financial assets and liabilities. Changes in the fair
value of derivatives that are designated in fair value hedges
are recorded in the Income Statement together with any
changes in the fair value of the hedged asset or liability that
are attributable to the hedged risk.
Financial Review continued
9 Bank of England’s Term Funding Scheme with additional incentives for SMEs
Strategic Report
Risk Management
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Governance Financial Statements Other Information
38
Regulatory capital
We hold capital to protect members against unexpected
future losses. As we grow our mortgage book, the amount of
capital we need to hold to meet the UK Capital Requirements
Directive V (UK CRD V) increases.
The Society maintained a strong capital position throughout
the year, with all capital ratios significantly in excess of the
regulatory minima. We have used the Internal Ratings Based
(IRB) approach to calculate our capital requirement for the
majority of our residential mortgage book since 2018.
Total regulatory capital has increased by £43.2 million
during 2024 to £1,595.0 million (2023: £1,551.8 million).
Our repurchase of PIBS resulted in a reduction in capital of
£48.4 million but will deliver £3.3 million per year in interest
savings as part of a more capital efficient structure.
The increase in RWAs to £6,171.0 million was predominately
driven by an increase in IRB risk weights and growth in the
Society’s mortgage book. Further refinement in relation to
the IRB regulations is ongoing across the industry and this
is expected to be finalised in the next 12 months. Until the
latest generation IRB models are approved by the PRA,
a PMA is used to calibrate the model output. These increased
capital requirements have been partly offset by strong
capital generation through retained profits during 2024.
As a result of these movements, the CET1 ratio, calculated
on a transitional basis, has reduced to 25.7% from 28.2%.
The following table shows the composition of our regulatory
capital. More detailed disclosures can be found in the Pillar 3
document available on our website at leedsbuildingsociety.
co.uk/press/financial-results.
2024
£M
2023
£M
Capital resources
Common Equity Tier 1 (CET1) capital 1,584.9 1,508.9
Tier 2 capital 10.1 42.9
Total regulatory capital 1,595.0 1,551.8
Senior non preferred notes 351.1 350.0
Total MREL Eligible Resources 1,946.1 1,901.8
RWAs 6,171.0 5,355.1
CRD V capital ratios (note 1) % %
CET1 ratio 25.7 28.2
Total capital ratio 25.9 29.0
Total MREL ratio 31.5 35.5
UK leverage ratio (note 2) 5.5 6.0
Note 1: The capital ratios are calculated as relevant capital
divided by risk weighted assets and the leverage ratio is
calculated as Tier 1 capital divided by total exposure (total
assets per the prudential group consolidated position
subject to some regulatory adjustments).
Note 2: The UK leverage ratio represents the UK regulatory
regime which excludes deposits with central banks from
the leverage exposure measure. The UK regime does not
apply to the Society as the applicable threshold set by the
regulator (>£50 billion of retail deposits) is considerably in
excess of the Society’s balance. Despite not being captured
by this regime, the Society continues to exceed the minimum
3.25% regulatory expectation.
New and emerging regulation
The Society is well-prepared to meet the requirements of
the Basel 3.1 regulations, which come into force in January
2027. As an IRB lender, the predominant impact will be the
new capital floor, to be phased in between January 2027 and
January 2030.
Leeds Building Society | Annual Report and Accounts 2024 39
Financial outlook
After reaching a peak in 2023, it appears we may have passed
the highs of interest rates and have commenced a downward
trajectory, as rates of inflation have reduced during 2024. We
expect further reductions to the BoE base rate across the
next three years, although this is expected to remain above
the historically low levels seen in recent years.
The combination of falling headline interest rates and lower
inflation should continue to support household income
growth. We therefore anticipate strengthening economic
growth, supported through higher levels of government
spending. However, as illustrated at the start of 2025,
vulnerabilities remain, especially with respect to levels of
government borrowing and associated borrowing costs, so
there continues to be a degree of uncertainty over both the
speed with which inflation and interest rates reduce, with a
high inflation and low growth environment considered a key
risk. We also remain cautious over the potential impacts for
the UK economy from global political instability.
Higher interest rates have been beneficial for savers so
many will be disappointed that these are now starting to
fall once again. However, for mortgage members, higher
interest rates have increased the cost of borrowing, and
there may still be members on fixed rate deals who will face
higher rates when they reach the end of their fixed term.
We remain committed to supporting members who may
be in financial difficulty.
The strength of our balance sheet, business model and our
high-quality assets, position us well to generate sustainable
levels of profitability across the economic cycle and as we
progress through the current challenges. We are resolute
in delivering on our purpose of balancing support for our
members with maintaining a resilient balance sheet and
sustainable profit.
Financial Review continued
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Risk Management
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Governance Financial Statements Other Information
40
Risk Overview
Year ended 31 December 2024
Our purpose of 'putting home ownership within reach of more people – generation after generation' can only be achieved
if risks are identified, understood and managed effectively. By understanding the nature of our risks, we can make informed
decisions to support delivery of our strategic objectives and protect our longer-term viability and members’ interests.
We deliver our purpose through a Corporate Strategy, which is built upon three strategic drivers (as described on pages
9 to 11). Inherent within this strategy are eight principal risk categories. These comprise credit; funding and liquidity; capital;
market; operational; conduct; model and strategic/business risks. We operate an Enterprise Risk Management Framework
(ERMF) covering all principal risk types and processes including risk governance, appetite setting, policies and key risk
indicator reporting. In aggregate, this sets the risk parameters within which our Corporate Plan needs to be delivered,
as well as providing appropriate triggers for management response under stressed conditions.
Enterprise Risk Management Framework (ERMF)
Principal risks
Credit Funding and liquidity Capital Market
Operational Model Conduct Strategic/business
Emerging risks
Risk governance
and culture
Risk appetite
and stress testing
Risk assessment
and management
Risk
reporting
Corporate Plan
Leeds Building Society | Annual Report and Accounts 2024 41
Enterprise Risk Management Framework
To ensure that risks are appropriately managed across the organisation, we operate a board approved ERMF, which sets
out a structured approach to identifying, assessing, controlling and monitoring risks.
Further information on the Society’s ERMF and its key components can be found on page 63 within the Risk
Management Report.
Risk profile
The risks that we are exposed to fall broadly into two categories:
1. Principal risks
We have identified eight principal risks, which are inherent within our strategy and have the potential to significantly impact
performance or viability. These principal risk categories remain consistent with those disclosed within the 2023 Annual Report
and Accounts. Further information can be found on pages 67 to 89 of the Risk Management Report .
We do not view climate change as a separate principal risk category, but as factors that have a bearing across our existing
principal risks. Refer to pages 49 to 54 for details of our assessment of the potential impacts of climate-related risks.
2. Emerging risks
Emerging risks are new or evolving risks where the impact is uncertain but they have the potential to materially impact our
performance or strategic objectives.
When assessing emerging risks, we consider the likelihood of the risk materialising and the potential impact on our business
strategy and stakeholders. These risks are considered by the board and Board Risk Committee (BRC), on an ongoing basis, as
part of our strategic and business planning processes.
The most significant emerging risks are described below, along with a summary of actions we are taking to manage the risks.
Macroeconomic risks
Overview Mitigating actions
• The UK macroeconomic environment remains finely
balanced. Whilst forecasters are expecting a pickup in
growth during 2025, driven by government and consumer
spending, several downside risks remain prevalent which
may impact the economy e.g. the UK’s fiscal position,
persistent inflation and the threat of trade tariffs.
• To date, the BoE has followed a cautious approach to
loosening monetary policy, due to concerns around
persistent domestic inflation. As a result, household
finances remain under pressure as members transition
onto higher mortgage rate products.
• Despite uncertainties, the UK housing market proved to
be resilient during 2024. Whilst market commentators
are expecting a further pickup in transactions in 2025,
concerns surrounding the UK economy/fiscal position
could result in higher mortgage pricing and suppressed
activity.
• Establishment of an appropriate corporate plan with performance
closely monitored against trading ranges, early warning indicators
and triggers by management and the board.
• Horizon scanning and close monitoring of key economic data and
forecasts to support timely management response.
• Regular assessment of macroeconomic risks under both central and
stressed conditions is performed to understand and manage the
impacts e.g. tightening of lending appetite (volume, risk premia and
mix).
• Robust levels of capital and liquidity are maintained to absorb periods
of economic volatility, supported by frequent stress testing and
sensitivity analysis to understand the impacts on our balance sheet.
• Close monitoring of our lending portfolios and regular review of
credit policies, criteria, and affordability assessments to ensure they
remain appropriate of prevailing economic conditions.
• Pre-delinquency strategies are deployed to proactively engage
members who may find themselves in financial difficulty.
Risk Overview continued
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Geopolitical risks
Overview Mitigating actions
• Geopolitical risks remain heightened with several key
threats emerging or increasing.
• Following several high-profile elections during 2024,
material changes to policies and regulations by newly
elected Governments are expected to be introduced,
which will significantly shape the global landscape.
In particular, changes to US economic policy and the
potential threat of trade tariffs could result in a trade
war. Other policies designed to promote growth could
also result in financial instability, as regulations are
relaxed.
• Geopolitical rivalries also persist which continue to
shape foreign policies and the economic landscape.
In recent years, these rivalries have led to wars and
conflicts, which are unlikely to end in the near term.
These ongoing rivalries/conflicts, have the potential
to impact the economy (higher inflation, interest rates
and cost of living) as well as our operational resilience
(disruptions to supply chains and an increased threat
of sophisticated/state-sponsored cyber attacks).
• Horizon scanning and scenario testing is used to understand potential
impacts from both a financial and operational perspective and develop
appropriate response plans.
• All new mortgage lending is restricted to the UK and exposures from our
Treasury investments are closely monitored for geopolitical risks in line
with our wholesale credit risk appetite.
• Due diligence is completed with our key suppliers to understand and
manage third-party exposures to geopolitical events.
• Investment in our IT security and operational controls to improve overall
resilience and ability to respond to evolving threats.
Competition risks
Overview Mitigating actions
• We operate in highly competitive markets, increasing
the risk of a loss of market share, reduced revenue, and
lower profitability.
• Competition risks also relate to changes in UK policies
and regulation as the government tries to encourage
home ownership, developments in digital technology,
new market entrants (predominantly Fintechs) and
changes in customer behaviour.
• The competitive landscape is regularly reviewed, and our product
proposition updated accordingly.
• Competition risks are considered as part of our strategic and business
planning activities, which set the future path for strategic investment and
development to ensure that we can adapt accordingly.
• Further investment is being made in our service and digital capabilities to
support our product offering, customer journeys and future scalability
and flexibility.
Operational resilience risks
Overview Mitigating actions
• A significant operational risk event could result in
disruption to important business services, leading to
customer harm, financial or regulatory impacts, or
reputational damage. Such events could include the
increasing threat of cyber attacks, third-party failure,
loss of data or service outages.
• Resilience to such threats and an ability to respond
effectively remain essential to maintain service
delivery and the trust of our members and the
confidence of regulators.
• Resilience risks are monitored and managed through our Operational
Resilience Framework, which includes regular scenario testing for
potential resilience events.
• Operational resilience processes are in place which aim to ensure that our
important business services can recover in a timely manner in the event
of disruption.
• We continue to invest in our IT security and operational controls to
improve overall resilience and ability to respond to these evolving threats.
• We frequently monitor both the effectiveness of the services we receive,
and the risks the third parties pose to us.
Leeds Building Society | Annual Report and Accounts 2024 43
Change risk
Overview Mitigating actions
• Our change portfolio includes the delivery of a multi-
year technology programme, other strategic initiatives
and new regulatory requirements.
• The volume of change activity could lead to increased
execution, operational and people risks.
• Failure to appropriately prioritise and deliver change
on time and within agreed budgets may also inhibit our
ability to achieve our purpose or strategic objectives.
• We continue to prioritise, manage and implement change in line with our
strategic plans while assessing execution risks and taking appropriate
mitigating action.
• In addition, we continue to invest in our change management processes,
capabilities, capacity, and governance to better control the execution
risks associated with large scale change.
• Use of independent external experts to provide assurance and board
advice.
Technology risk
Overview Mitigating actions
• Innovation in relation to artificial intelligence (AI)
and associated technologies are creating new risks
as usage becomes more prevalent within financial
services.
• Key risks include model risk (e.g. bias and
discrimination or models not operating as intended),
data privacy and security (improper handling of data
through AI processes), cyber security (exploitation
of AI systems by malicious parties) and accuracy/
transparency risk (AI systems trained on inaccurate
data sources).
• We continue to monitor the development of these new AI technologies,
and we are developing our internal risk and control frameworks to
incorporate the associated risks.
• We are also investing to ensure we have the appropriate internal skills and
capabilities to deploy required AI solutions.
Climate change risk
Overview Mitigating actions
• Climate risk continues to be classified as an emerging
risk due to uncertainty surrounding the exact
nature and timing of the impact on our strategy and
operations. Both transitional and physical risks could
materially affect the Society’s eight principal risks,
with impacts dependent on the future path of climate
change and timescales of government intervention
and actions.
• Stakeholder expectations continue to rise with regards
to our management and response to climate risk,
which could present heightened reputational risks.
• We have developed a Climate Strategy centred upon supporting the
orderly transition to a greener, net zero economy by 2050 or sooner.
• As part of this strategy, near-term science-based emission reduction
targets have been set for our full value chain.
• A Climate Risk Management Framework (CRMF) has been implemented
across the organisation, including use of climate risk factors and data in
our mortgage lending policy and credit decisioning processes.
• Refer to pages 49 to 54 for further information on how the Society
manages the risks from climate change.
Risk Overview continued
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Viability Statement
Year ended 31 December 2024
In accordance with provision 31 of the UK Corporate
Governance Code (the Code), the board is required to explain
how it has assessed the longer term prospects and viability
of the Society. This assessment considers our ability to
continue in operation and meet our liabilities as they fall due,
taking into account our current financial position and the
principal and emerging risks set out on pages 41 to 44.
Assessment of longer term prospects
Our business model, purpose statement and strategic
drivers are set out on page 9. The board receives strategic
updates throughout the year, which assess the business
model across multiple dimensions. These include
consideration of threats from principal and emerging risks,
additional scenarios that may occur and stress testing. The
directors have also reviewed our strategy in respect of the
environment, considering the opportunities and risks to
the Society’s business from climate change. This includes
physical risks to the Society’s mortgage stock and own
properties, and transitional risks as the UK migrates to a net
zero economy. Further details are provided on pages 41 to 44
and 47 to 54 of the Strategic Report.
The strengths of our business model and the Society’s
financial position, capital strength and levels of profitability
over the next five years and beyond are included in the
board’s consideration.
These reviews concluded that the Society remains in a
strong and resilient financial position, which will enable us
to support members, colleagues and communities through
the current period of economic uncertainty. Our purpose
statement and strategic drivers reflect the environment in
which we now operate and aim to maintain the relevance
of our business model, including managing and mitigating
potential threats.
Financial and operational stress testing
The Society utilises a stress testing programme which
includes regular operational planning exercises and more
formal risk assessments. The elements of this programme,
ranked in order of increasing severity, are summarised below.
The Society’s process for forecasting financial
performance takes into account our strategic objectives,
the risk involved in meeting those objectives and
our strategic risk appetite. The corporate planning
and alternative scenario modelling processes assess
these forecasts under a range of macroeconomic
scenarios which reflect the current uncertainty in the
macroeconomic environment and the behaviours and
needs of current and potential future members.
The board assesses the Society’s capital and liquidity
viability through the ICAAP and ILAAP. These consider
our ability to withstand severe capital and liquidity
stresses set out by regulators. The processes incorporate
new and emerging regulation, where sufficient
information is available. Mitigating management
actions and the ability of those actions to minimise the
impacts of the applied stresses are also evaluated.
The ICAAP concluded that the Society has significant
headroom over regulatory requirements and would
have sufficient capital resources to withstand
both the central and stressed scenarios under
current and confirmed future requirements.
The ILAAP also concluded that the Society is
able to meet both internal and external liquidity
risk capacity requirements and regulatory
requirements under modelled stress scenarios.
Further stress testing, including Recovery Plan testing,
is carried out on each of the principal risks outlined on
pages 67 to 89. This is performed to understand our
ability to withstand extreme stress scenarios, including
adverse economic scenarios that go above and beyond
those experienced at any point previously, major volatility
in financial markets, significant liquidity outflows and
operational risk events. This testing demonstrates that there
are appropriate resources, measures and controls in place to
withstand these extreme events.
Reverse stress testing considers a range of specific scenarios
which would cause the Society to fail and has concluded that,
since such scenarios are unlikely to occur, they do not pose a
risk to the viability of the business.
Operational
sensitivities
Corporate plan
and trading
sensitivities
Alternative
scenarios
ILAAP
ICAAP
Recovery plan
testing
Reverse stress
testing
Leeds Building Society | Annual Report and Accounts 2024 45
Stress testing of operational resilience is undertaken to
verify that the Society has appropriate measures in place
for the delivery of key customer-facing services during a
stress event. This is performed using a number of severe
but plausible scenarios, including third-party failure, cyber
attack, IT and system failures and loss of key premises.
The testing demonstrated that resilience is broadly in line
with expectations and supports the ongoing viability of the
business.
The Society assesses its resilience to people risks and
capabilities by regularly conducting talent and succession
planning reviews for key roles, up to and including the board.
We also identify and monitor key person risks for roles with
strategic importance and mitigate these where appropriate
to maintain operational resilience and to safeguard continuity
of service.
The risk management process, detailed on pages 62 to
89, includes ongoing monitoring and reporting of new
and emerging risks. This allows us to make additional
enhancements to the control environment, to adapt to and
respond quickly to these risks.
Assessment period used for reviewing viability
The board considers the viability of the Society over a three-
year period to 31 December 2027. A three-year period for
viability is determined to be appropriate for the following
reasons:
• Uncertainty is inherent in the predictions of economic,
competitive and regulatory environments, particularly in
the current climate. Going beyond the three-year period
increases this uncertainty and reduces the reliability of
the assessment of viability.
• It is within the period covered by our projections of cash
flows, capital and profitability. However, there is nothing
in our planning beyond the three years that would cause a
change in the board’s consideration of viability.
Assessment of viability
The board has assessed the financial impact of the modelled
stress scenarios and the outcomes from operational
resilience testing described previously. Based on these
assessments the board believes that:
• Our business model remains appropriate and will
continue to be relevant as the operating environment
evolves.
• We have and will continue to maintain an appropriate
level of liquidity, which meets the expected demands of
the business and the requirements that arise in modelled
stressed scenarios.
• We hold sufficient capital resources, including an excess
above the regulatory minimum and have plans in place
to ensure we meet future known requirements. We have
sufficient resources under both central and modelled
stressed scenarios.
• There are suitable operational capacities in place to
manage the impacts of risk events to a reasonable extent,
though it is impossible to eliminate all risk. This has been
evidenced as we operated effectively under the economic
uncertainty and disruption observed in recent years.
The board has a reasonable expectation that the
Society will be able to continue in operation and meet
our liabilities as they fall due, over the three-year period
to 31 December 2027.
Viability Statement continued
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46
Climate-Related Financial Disclosures
Year ended 31 December 2024
Andrew Greenwood
Deputy Chief Executive Officer
At Leeds Building Society,
supporting the orderly transition
to net zero is a core part of our
purpose. We are committed to
playing our part to turn ambitions
into action, so we avoid further
profound societal and economic
impacts from climate change.
Leeds Building Society | Annual Report and Accounts 2024 47
Section 1- Climate-related financial disclosures overview
We are entering the next crucial phase of the response to the climate crisis. The last two years have been the hottest on
record, with average temperatures exceeding the crucial threshold of 1.5°C above pre-industrial times for the first time in
2024, contributing to the many extreme and devastating weather events across the world.
At Leeds Building Society, supporting the orderly transition to net zero is a core part of our purpose. We are committed to
playing our part to turn ambitions into action, so we avoid further profound societal and economic impacts from climate
change.
Our climate disclosures are based on recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)
and requirements of the Companies Act 2006 414CA and 414CB, which are structured around four pillars to provide
consistent information on the Society’s exposure to, and management of, climate risks.
1. Strategy 2. Governance 3. Risk management 4. Metrics and targets
Actual and potential
impacts of climate
change on the Society’s
business, strategy and
financial planning.
The Society’s
governance
arrangements around
climate-related risks and
opportunities.
The processes used by
the Society to identify,
assess, and manage
climate-related risks.
The metrics and targets
used by the Society
to assess and manage
relevant climate-related
risks and opportunities.
In line with the UK government’s target to reduce greenhouse gas emissions
100% compared to 1990’s levels by 2050, we remain committed to supporting
the orderly transition to net zero.
During 2024, we have further developed our climate strategy in line with
emerging standards and good practice, including publication of our inaugural
climate transition plan, setting out in more detail our climate ambitions, actions
and accountabilities. Links to our additional climate-related disclosures have
been included on the following pages to signpost where further information can
be found.
Summary of our climate ambitions and targets
Overall strategic aim
Support the orderly transition to a greener, net zero economy by 2050 or sooner
90%
Targeted reduction in our absolute Scope 1 and 2 market-
based emissions of 90% by 2034, from a 2024 base year.
42%
Targeted reduction in our absolute Scope 1 and 2 location-
based emissions of 42% by 2034, from a 2024 base year.
35%
Targeted reduction in our absolute indirect operational
Scope 3 emissions (categories 1-14) of 35% by 2034,
from a 2024 base year.
70%
Ambition to reduce the physical intensity of the Scope 3
financed emissions (category 15) from our residential
mortgage book 70% by 2034, from a 2024 base year.
Note: During 2024 we rebaselined our targets from 2021 to 2024 and revised them in line with the new requirements of the
SBTi. Refer to section 3 for details.
Climate-Related Financial Disclosures continued
Our full climate-related
disclosures and transition plan
are available on our website:
leedsbuildingsociety.co.uk/press/
financial-results
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Section 2- Summary of TCFD and Companies Act requirements
The table below summarises our response to the 11 TCFD recommendations as well as areas of planned future
development to further enhance our approach. Page references indicate where further detail can be found in our
full climate-related disclosures and transition plan, available on our website:
Climate Strategy
1. Describe the climate-related risks and opportunities the organisation has identified over the short, medium,
and long-term.
Approach and
assessment
• We assess climate change impacts (physical and transition risk factors) across each of our eight
principal risk categories over the short-term (0-3 years), medium-term (3-5 years) and long-
term (5 years +) using a range of different future scenarios based on different climate pathways.
• Key risks that we have identified include:
− Strategic (physical and transition risk – short/medium-term): impacts to the delivery of
our strategic priorities, corporate plan and purpose (reputational damage from inappropriate
targets, disclosures and progress against our ambitions, and economic shocks from climate
change and the transition to net zero).
− Credit and capital (physical and transition risk – medium/long-term): losses from our
mortgage or treasury assets due to increases in PD and loss given default from the impacts of
climate on property valuations and obligor creditworthiness.
− Operational (physical risk – long-term): resilience impacts from climate factors which inhibit
delivery of important business services (Society and third-party services).
− Conduct (transition risk – short/medium-term): potential customer detriment due to the
design and sale of green finance products and services.
− Model (physical risk – short-term): incorrect decision-making due to gaps in climate data or
errors in climate models used to assess and manage the risks.
− Market and funding (transition risk – medium/long-term): impacts to profitability due to
increases in the price of carbon offset credits or funding costs (retail and wholesale).
• Key opportunities that we have identified include:
− Green finance: development of innovative new financial products to help members reduce
their carbon footprint.
− Communication: engagement with colleagues, members, suppliers and government to
increase understanding of climate change and lead the way towards an orderly and fair
transition to net zero.
− Partnerships: collaboration with key organisations to share knowledge, good practice and
collectively solve climate challenges.
− Resilience: increased operational and financial resilience through insulation from physical and
transitional risks and reduced cost of energy use.
− Strategy: supporting delivery of our purpose to help more people own their own home –
generation after generation.
Key mitigants • Regular identification, monitoring and management of climate risks and opportunities in
accordance with our CRMF.
• Automated flood and ground risk, and energy efficiency assessments as part of credit
decisioning processes.
• Credit policy controls and concentration limits.
• Regular stress testing of our strategy and balance sheet using multiple climate pathways.
• Alignment of our climate disclosures with good practice and regulatory requirements.
• Product Governance Framework and colleague training.
• Model Risk Management Framework and monitoring.
Leeds Building Society | Annual Report and Accounts 2024 49
Climate Strategy
Future priorities and
dependencies
• Refinement and delivery of our climate transition plan.
• Stakeholder engagement across our value chain (members, government and suppliers) to
influence actions in support of our ambitions.
• Development and roll-out of our green finance proposition.
• Assessment of the impacts of nature and biodiversity risk in conjunction with climate change.
Further details Climate-related Disclosures and Transition Plan - Sections 1.2 and 3.2
2. Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and
financial planning.
Approach and
assessment
• Impacts are regularly reviewed through risk assessments and scenario analysis as part of
our ICAAP.
• Based on our current business model and climate exposures, the overall immediate impact is
not considered material, but we will continue to monitor this as the risks evolve.
• The Society continues to have limited exposure to physical risk (flooding and ground risks), both
currently and under a range of future climate pathways modelled over the next 30 years, due
to the geographically diversified profile of our UK-focused mortgage portfolio and operational
resilience arrangements.
• While more material potential impacts are posed by transition risks under a late transition
scenario, where actions to achieve net zero are disorderly and concentrated in a short
period during the 2030s, transition pathways remain highly uncertain. Our strong capital
position means our business model remains resilient to the most extreme transitional stress
scenarios modelled.
Key mitigants • Regular stress testing of the mortgage portfolio is performed using multiple physical and
transition risk pathways.
• Climate risks are reflected in our approach for ECL modelling under IFRS 9 Financial Instruments
(refer to Notes to the Accounts, Note 2 page 177 for further details).
• Our climate transition plan ensures we have clear actions to minimise the future impacts of
climate risks and adapt our business model for any opportunities.
Future priorities and
dependencies
• Development of our climate scenario testing and IFRS 9 modelling capabilities, including
short-term and nature and biodiversity related scenarios.
• Further integration of climate risks and opportunities into our financial and strategic planning.
Further details Climate-related Disclosures and Transition Plan - Sections 3.2 and 3.3
Climate-Related Financial Disclosures continued
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Climate Strategy
3. Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios,
including a 2°C or lower scenario.
Approach and
assessment
• Aligned with the BoE’s 2021 Climate Biennial Exploratory Scenario (CBES), our ICAAP considers
the impacts of three different scenarios and pathways with different degrees of physical,
transitional and economic risk linked to climate change:
− Early policy action scenario (EPA): assumes there is an orderly transition to net zero by 2050,
keeping future temperature increases to 1.8°C above pre-industrial times (medium transition
risk and limited physical and economic risk).
− Late policy action scenario (LPA): assumes a disorderly transition to net zero by 2050,
resulting in high transition risk and limited physical risk, keeping temperature increases to
1.8°C (high transition risk, medium economic risk and limited physical risk).
− No policy action scenario (NPA): assumes there are no further policies to achieve net
zero resulting in high physical and economic risks and limited transition risks, leading to
temperatures rising 3.3°C.
• Results of our scenario testing indicate that ECL would increase versus the counterfactual
under all three of the scenarios. The biggest impact was observed under the NPA scenario
(ECLs increased by a factor of 10 versus the EPA scenario by 2050). This was largely due to the
economic impacts of the scenario and amplified physical risk losses. Despite this, the Society’s
capital position and strategy continued to be resilient to the risks modelled.
• Our climate emissions targets and ambitions are also aligned with minimum science-based
absolute and sectoral requirements for financial institutions, to ensure our strategy aligns with
the goal of limiting future temperature increases to well below 2°C.
Key mitigants • Regular stress testing of the mortgage portfolio is performed using multiple physical and
transition risk pathways.
• Our CRMF and transition plan ensure we are appropriately assessing and responding to
the risks.
Future priorities and
dependencies
• Refinement and delivery of our climate transition plan.
• Achieving our climate ambitions (in particular Scope 3 emissions) will only be possible with
further government, societal and corporate action to implement the necessary actions
required to collectively deliver net zero.
Further details Climate-related Disclosures and Transition Plan – Sections 1.2 and 3.2
Climate Governance
4. Describe the board’s oversight of climate-related risks and opportunities.
Approach and
assessment
• The board has ultimate accountability for the management of climate risk, including approval of
our climate strategy, risk appetite and ambitions, and overseeing delivery.
• The BRC oversees the identification and management of climate risks across all of our principal
risks, in line with the board’s stated appetite.
• The Audit Committee oversees internal systems of control and external disclosures for climate
risk, including approval of our transition plan on an annual basis on behalf of the board.
• The Remuneration Committee oversees the design and implementation of reward structures
to ensure they appropriately motivate colleagues to achieve our climate ambitions. Climate
actions are reflected in the Society’s remuneration scheme with relevant members of the SLT
required to have a personal objective linked to climate priorities.
• These committees receive periodic Management Information (MI) to track performance against
targets and key risk indicators (KRIs) and are provided with training on key strategic climate
related topics, including target setting.
Future priorities and
dependencies
• Track progress against our transition plan and the management of climate risks.
• Increase understanding of nature and biodiversity risks.
Further details Climate-related Disclosures and Transition Plan – Sections 1.2 and 3.2
Leeds Building Society | Annual Report and Accounts 2024 51
Climate-Related Financial Disclosures continued
Climate Governance
5. Describe management’s role in assessing and managing climate-related risks and opportunities.
Approach and
assessment
• The BRC is supported by five Executive Risk Committees, each of which focus on discipline(s) of
the risk universe influenced by climate change factors.
• The ESG and Climate forums support development of the Society’s climate strategy and
targets and monitor progress under the oversight of the ExCo.
• Responsibility for managing climate-related risk has been assigned to the deputy CEO, as the
appropriate Senior Management Function under the PRA’s Senior Managers Regime.
• Mandatory climate risk training has also been introduced for all colleagues, and colleague
engagement has been facilitated through a dedicated Green Champions network of colleagues.
Future priorities and
dependencies
• Further embed climate risk into Executive Risk Committee oversight.
• Implement required actions under our transition plan.
• Refine our climate strategy in response to changes in the external environment.
Further details Climate-related Disclosures and Transition Plan – Section 3.1
Climate Risk Management
6. Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the
organisation’s overall risk management.
Approach and
assessment
• Our CRMF is integrated into our ERMF to ensure that climate risks and opportunities are
appropriately identified, measured, managed, monitored, and reported. Refer to page 63 of the
Risk Management report for further details about our ERMF.
• We do not view climate risk as a separate principal risk category, but as a factor that has a
bearing on existing risks across our principal risk universe.
• Under our CRMF and ESG policy, our climate risk appetite has been defined in line with current
good practice guidance, combining a qualitative statement with measures the Society uses to
assess adherence to appetite over a time period reflective of the risks from climate change.
• Control of climate-related risks is codified through our ESG policy, which is approved by BRC.
Future priorities and
dependencies
• Incorporate nature and biodiversity risk into the CRMF and complete an initial assessment of
the associated impacts and risks.
• Develop our climate related disclosures in line with emerging regulations.
Further details Climate-related Disclosures and Transition Plan – Section 3.1
7. Describe the organisation’s processes for identifying and assessing climate related risks.
Approach and
assessment
• We use our CRMF and ERMF to assess how climate change risks could impact each of our eight
principal risks over the short, medium and long-term.
• Risks and mitigating controls are recorded in business unit risk registers to enable effective
monitoring and reporting on an enterprise-wide basis and are reassessed at least twice yearly
as part of our established Risk and Control Self-Assessment (RCSA) process.
• Risk assessments are based on several factors such as external horizon scanning (including
the impacts of changing regulation and government policy), scenario testing, insights from
property-level climate data, external benchmarking and supplier due diligence.
• The outputs from risk assessments are reported through our established governance
arrangements, including BRC and the Climate Forum.
Future priorities and
dependencies
• Further analysis of climate transition risks following changes in government net zero policies.
• Additional colleague training on emerging topics such as climate risk modelling, anti-
greenwashing and nature risk.
Further details Climate-related Disclosures and Transition Plan – Sections 3.1 and 3.2
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Climate Risk Management
8. Describe the organisation’s processes for managing climate-related risks.
Approach and
assessment
• The management of climate-related risks and opportunities has been incorporated into
existing governance and risk management processes, where appropriate, to ensure that they
are being monitored and managed in line with board approved appetite.
• We define roles and responsibilities in relation to climate risk under a three lines of defence
approach, reflective of our size and complexity. Business units (first line of defence) are
responsible for the identification, assessment, and management of climate change risks across
the Society. The risk function (second line of defence) maintains the CRMF, monitors and
reports on the management of climate risks and develops our climate scenario analysis, stress
testing and disclosures. Internal Audit (third line of defence) provides independent assurance to
the board on the adequacy and effectiveness of first and second line climate risk management.
• A climate change operating model has been established to assist the board and deputy
CEO in the effective identification and management of climate risks. A central strategy and
risk management hub ensures there is close alignment between our purpose and climate
risk appetite, and ESG policy and provides direction to relevant functional areas that have
responsibility for the management of each aspect of climate risk.
• Updates on the management of climate-related risks are regularly reported through our
established governance arrangements, including the current position against KRIs and other MI
e.g. results of scenario analysis and risk assessments.
Future priorities and
dependencies
• Review and refinement of our climate risk appetite in line with agreed targets and ambitions.
Further details Climate-related Disclosures and Transition Plan – Section 3.2
Climate metrics and targets
9. Describe the targets used by the organisation to manage climate-related risks and opportunities and performance
against targets.
Approach and
assessment
• We have set near-term science-based emissions targets and ambitions covering our full value
chain to support our transition to net zero:
− Reduce absolute Scope 1 and 2 market-based emissions 90% by 2034.
− Reduce absolute Scope 1 and 2 location-based emissions 42% by 2034.
− Reduce absolute Scope 3 (categories 1-14) emissions 35% by 2034.
− Reduce the physical intensity of Scope 3 (category 15) emissions from our residential
mortgage portfolio 70% by 2034.
• Our targets are set in line with the requirements of the SBTi.
• During 2024 we rebaselined and revised our targets following changes to the SBTi’s target
setting criteria and changes to our emissions calculation methodologies. Refer to section 3 for
further details.
Future priorities and
dependencies
• Development of our climate data architecture and reporting capabilities.
Further details Climate-related Disclosures and Transition Plan – Section 3.4
Leeds Building Society | Annual Report and Accounts 2024 53
Climate-Related Financial Disclosures continued
Climate metrics and targets
10. Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its
strategy and risk management process.
Approach and
assessment
• We also monitor several internal climate KRIs for climate-related risks.
• Physical risk KRIs:
− % of mortgage balances with high or very high physical risk (flooding and ground risk) under a
range of future climate scenarios.
− Stressed credit losses modelled under our ICAAP.
− Number of Society properties with high or very high physical risk.
− % of colleagues located in high physical risk areas.
• Transition risk KRIs:
− % of mortgage balances with current and potential EPC ratings of C or below.
− Stressed transitional credit losses under our ICAAP.
− External ESG ratings.
− Carbon prices.
− Supplier due diligence risk scores.
− Government policy implementation and progress towards UK targets.
− Liquidity investments with high climate risk.
− Complaints and adverse publicity related to climate change.
Future priorities and
dependencies
• Continue to refine our KRIs in line with emerging climate risks and regulations and embed them
into governance reporting.
Further details Climate-related Disclosures and Transition Plan - Section 3.4
11. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.
Approach and
assessment
• We measure our Scope 1, 2 and 3 emissions using the World Resources Institute and the World
Business Council for Sustainable Development GHG Protocol, which is the internationally
recognised standard for the measurement, management, and reporting of GHG emissions.
• We measure and disclose CO
2
equivalent emissions annually across our full value chain,
including all relevant Scope 3 categories.
• Data quality and availability are the key risks to the accuracy of our emissions reporting. We
use actual consumption data and emission factors where available. Where data is not available,
we use a range of proxies to estimate emissions. We report data quality scores for each of our
emissions categories to enhance the transparency of our disclosures and track progress. See
section 3 for further details.
• Where there are changes in our emissions calculation methodologies or data that result in a
material difference in emissions, we disclose the change and rebaseline our associated targets.
• Our disclosures are subject to internal and external verification prior to publication.
Future priorities and
dependencies
• Implement actions under our transition plan to influence reductions in our emissions.
Further details Section 3 of this report
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Section 3 – Our greenhouse gas (GHG) emissions
Our GHG Reporting has been completed in accordance with requirements of The Companies Act 2006 (Strategic Report and
Directors’ Report) Regulations 2013 and the UK’s Streamlined Energy and Carbon Reporting (SECR) regulations.
We have set our organisational GHG emissions boundary using the operational control approach, which captures GHG
emissions linked to entities under our control. Reported emissions encompass the seven GHGs defined under the Kyoto
Protocol and are broken down into three main categories:
Category Control Source Disclosure Description
Operational emissions
Scope 1 Direct Our buildings Mandatory
Direct GHG emissions that originate from assets that we own
or control e.g. emissions from the combustion of gas to heat
our buildings or fugitive emissions from ventilation systems.
Scope 2 Indirect
Purchased
electricity
Mandatory
Emissions from the generation of purchased electricity. Under
the GHG Protocol, we are required to report Scope 2 emissions
under both market and location-based approaches.
The market-based approach reflects emissions from
energy that we have purposefully chosen e.g. renewable
electricity.
The location-based approach reflects emissions from
purchased energy based on the average emissions intensity
on the grids upon which consumption occurs.
Value chain emissions
Scope 3
(Category
1 – 14)
Indirect
Upstream
and
downstream
activities
Voluntary
Indirect emissions that occur in our upstream and downstream
operational activities i.e. emissions from activities linked to the
provision of our products and services (predominantly from
the third-party goods and services that we purchase).
Scope 3
(Category
15)
Indirect
Downstream
activities
Voluntary
Indirect emissions that occur downstream in our value chain
i.e. emissions from our investments (predominantly from use
of the mortgaged properties that we finance).
Leeds Building Society | Annual Report and Accounts 2024 55
Climate-Related Financial Disclosures continued
2024 GHG emissions reporting
1
Our GHG emissions for 2024 (our revised baseline year) are summarised below, with comparison to the prior year.
Emissions Category 2024 (tCO
2
e) 2023 (tCO
2
e) Change
Scope 1
Diesel 2 1 63%
Gas 29 33 -13%
Fugitive 235 59 300%
Scope 2
Electricity – Market based 9 4 124%
Electricity - Location based 471 490 -4%
Total Scope 1 and 2 – Market Based 275 97 183%
Total Scope 1 and 2 – Location Based 737 583 26%
Scope 3
Purchased goods and services
2
22,802 21,083 8%
Capital goods
2
863 1,907 -55%
Fuel and Energy Related Activities (FERA) 160 166 -4%
Upstream transportation
2
470 662 -29%
Waste from operations
2
9 2 314%
Business travel 165 177 -7%
Employee commuting and homeworking 1,526 1,477 3%
Downstream leased assets
2
25 42 -40%
Total Scope 3 emissions (categories 1-14) 26,020 25,516 2%
Scope 3 Residential mortgages
2
212,835 312,569 -32%
Total Scope 3 emissions (categories 1-15) 238,855 338,085 -29%
Total emissions – Market based 239,130 338,182 -29%
Total emissions – Location based 239,592 338,668 -29%
Energy consumption (Mwh) 2,431 2,552 -5%
Scope 1 and 2 emissions intensity (per FTE) 0.2 0.1 175%
Scope 1 and 2 emissions intensity (per £ revenue) 12.4 19.4 -36%
Scope 1 and 2 emission targets and performance
We have rebaselined and revised our existing Scope 1 and 2 targets from 2021 to 2024 in line with SBTi requirements to
rebaseline at least every 5 years.
Our targets continue to be guided by the principles of an absolute contraction science-based net zero pathway and will align
our Scope 1 and 2 emissions with the Paris Agreement goal to limit future temperature increases to 1.5°C. That means we
plan to reach net zero for our Scope 1 and 2 emissions by 2034 on a market-based approach (a reduction of 90% from our
2024 base year) and reduce our Scope 1 and 2 emissions by 42% over the same period on a location-based approach.
1 t/CO
2
e stands for tonnes of carbon dioxide equivalent (the recognised measure for GHG emissions).
2 Categories which had a material change to their calculation methodology during 2024 and positions are therefore not directly comparable to the prior year.
3
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56
Scope 1 and 2 market-based 90% reduction target
0
50
100
150
200
250
300
350
400
20342033203220312030202920282027202620252024202320222021
2021
(previous base year)
75 tCO
2
e
2034
(revised target)
27 tCO
2
e
2034
(existing target)
8 tCO
2
e
2024
(revised base year)
275 tCO
2
e
Revised (2024-2034) 90% reduction target
Existing (2021-2030) 90% reduction target
Actual emissions
Absolute Emissions (tCO
2
e)
The chart above shows our Scope 1 and 2 market-based emissions between 2021 and 2024 together with our existing (2021-2030)
and revised (2024-2034) targets. Key actions to reduce these emissions will include removal of gas from our remaining buildings and
maintaining our use of renewable electricity.
Scope 1 and 2 location-based 42% reduction target
0
200
400
600
800
1000
1200
20342033203220312030202920282027202620252024202320222021
2021 (previous base year)
963 tCO
2
e
2034
(revised target)
501 tCO
2
e
2030
(previous target)
385 tCO
2
e
2024
(revised base year)
737 tCO
2
e
Absolute Emissions (tCO
2
e)
Revised (2024-2034) 42% reduction target
Existing (2021-2030) 60% reduction target
Actual emissions
The chart above shows our Scope 1 and 2 location-based emissions between 2021 and 2024, together with our existing (2021-2030)
and revised (2024-2034) targets. Key actions to reduce these emissions will include retrofitting our branch estate to improve energy
efficiency and the government's decarbonisation of the UK electricity grid.
Our Scope 1 and 2 location-based emissions increased 26% in 2024 versus 2023 due to several unexpected leakages of
fugitive gas emissions from the air conditioning system at one of our offices. Despite the increase, we remained below our
existing (2021-2030) target trajectory (an overall reduction of 24% since 2021 versus a targeted reduction of 20% by 2024).
Reductions between 2021-2022 were driven by the move to our new A rated Head Office in Leeds and the divestment of
another legacy contingency site during 2022.
As a result of the fugitive gas leaks and the relocation of three of our branches during 2024, our market-based emissions
also increased by 183% in 2024 versus 2023 meaning we exceeded our existing (2021 to 2030) target trajectory (an overall
increase of 265% since 2021 vs a targeted reduction of 30% by 2024).
In line with actions defined under our transition plan, we expect our future Scope 1 and 2 emissions to trend down in line with
our revised (2024-2034) targets.
We have calculated a data score of 2.06 for our Scope 1 and 2 market-based emissions and 2.02 for our Scope 1 and 2
location-based emissions using the Partnership for Carbon Accounting Financials (PCAF) methodology (with 1 being the
highest data quality and 5 the lowest quality).
The data scores reflect the high proportion of actual vs estimated consumption data and use of average emissions factors
provided by the Department for Energy Security and Net Zero (DESNEZ) in line with requirements of the UK’s SECR regulations.
Leeds Building Society | Annual Report and Accounts 2024 57
Climate-Related Financial Disclosures continued
Scope 3 operational emissions (categories 1-14)
Our Scope 3 operational targets are currently aligned with a well below 2°C future temperature pathway, in accordance with
the principles of the SBTi. During 2024, we updated our methodology for calculating supplier emissions (Scope 3 categories
1, 2 and 4) to improve data quality. We now utilise a combination of Eora multi-region input-output data and actual supplier
data (where available) to calculate the emission factors for our supplier emissions calculations. We have also updated our
methodology for calculating waste from operations to include water and waste from the refurbishment/conversion of several
of our branches.
As a result of the methodology changes, the PCAF data score for these emissions improved from 4.89 to 4.00. We expect the
score to improve further over time as the proportion of actual supplier data in our calculations increases. In accordance with
requirements of the SBTi, we have re-baselined our existing target from 2021 to 2024 to reflect the methodology changes,
and increased our targeted reduction from 25% to 35% by 2034.
Our 2024 emissions increased 20% from 21,723 t/CO
2
e in 2021 (based on our existing methodologies) to 26,021 t/CO
2
e in
2024. The main driver of this increase has been a significant increase in supplier spend as part of ongoing investment in our IT
infrastructure, people and processes.
We expect our expenditure (and emissions) to continue to increase in the near-term in line with future investment plans,
before reducing in line with our revised (2024-2034) target trajectory towards the end of the decade, subject to the actions
and dependencies set out in our transition plan.
Scope 3 categories 1-14 35% reduction target
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
20342033203220312030202920282027202620252024202320222021
2021
(previous base year)
21,723 tCO
2
e
2030
(previous target)
16,292 tCO
2
e
2034
(revised target)
21,594 tCO
2
e
2024
(revised base year)
26,021 tCO
2
e
Absolute Emissions (tCO
2
e)
Revised (2024-2034) 35% reduction target
Existing (2021-2030) 25% reduction target
Actual emissions
The chart above shows our Scope 3 operational emissions between 2021 and 2024, together with our existing (2021 - 2030) and revised
(2024-2034) targets. Key actions to reduce these emissions will include engagement with our supply chain to reduce emissions from our
purchased goods and services and encouraging our colleagues to make greener choices for business travel and commuting.
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Scope 3 residential mortgage emissions (category 15)
Our revised near-term Scope 3 category 15 ambition for UK residential mortgages is aligned with a 1.5°C Sectoral
Decarbonisation (SDA) pathway, as defined under the SBTi’s new buildings sector target setting guidance for in-use
emissions. That means we will aim to reduce the physical emissions intensity of the mortgage properties that we finance by
70% by 2034, from a 2024 base year, using a location-based approach.
Our emissions have been calculated using the PCAF methodology for mortgages, which is based on an attribution factor (loan
balance divided by indexed property value) which is multiplied by building emissions (energy consumption multiplied by an
emissions factor).
We include 100% of our UK mortgage balances but loans located in Gibraltar and Spain are excluded (£4.6 million and
£34.4 million at 31 December 2024) as these are closed books in run-off and are considered immaterial from an emissions
perspective.
During 2024, we updated our methodology to improve data quality and accuracy. We now utilise property-level metered
data to provide a view of actual energy consumption for our portfolio, rather than estimates under our existing EPC-based
methodology. Where we have been unable to match a property to an energy meter (3% of our portfolio), we have derived
consumption from the government's National Energy Efficiency Data (NEED) Framework.
As a result of this methodology change, the PCAF data score for our mortgage emissions has improved from 3.40 to 2.13
based on the location based approach.
Given the materiality of the change, we have also re-baselined our target from 2021 to 2024 in line with SBTi requirements.
Scope 3 category 15 70% reduction target
0
5
10
15
20
25
30
20342033203220312030202920282027202620252024202320222021
2021
(previous base year)
20.26 kgCO
2
e per m
2
2034 target
(revised target)
3.8 kgCO
2
e per m
2
2024
(revised base year)
12.4 kgCO
2
e per m
2
2030
(previous target)
11.24 kgCO
2
e per m
2
Emissions intensity (kgCO
2
e per m
2
)
Revised (2024-2034) 70% reduction target
Existing (2021-2030) 45% reduction target
Actual emissions
The chart above shows our Scope 3 financed emissions for residential mortgages between 2021 and 2024, together with our existing
(2021-2030) and revised (2024-2034) targets. Key actions to reduce these emissions will include decarbonisation of the UK housing
stock and electricity grid, development of our green finance proposition and engagement with our members, government and industry.
Leeds Building Society | Annual Report and Accounts 2024 59
Climate-Related Financial Disclosures continued
Scope 3 Category 15 Emissions
31-Dec-24 31-Dec-23
New methodology
Existing
Methodology
1
Location Based Market Based
Total mortgaged properties 201,368 201,368 189,794
Total mortgage lending £24.43 bn £24.43 bn £21.92 bn
PCAF data score 2.13 1.17 3.40
LTV attributed absolute financed emissions (tCO
2
e) 212,835 210,366 312,569
LTV attributed physical emissions intensity (kgCO
2
e/m
2
) 12.40 12.25 19.37
LTV attributed economic emissions intensity (tCO
2
e/£m lent) 8.71 8.61 14.26
Using our new methodology, our location-based absolute LTV attributed mortgage emissions were 212,835 tCO
2
e as at
31 December 2024 versus 312,569 tCO
2
e at the end of 2023 under our existing methodology. On a physical intensity basis
(emissions per square meter), our LTV attributed emissions were 12.4 kgCO
2
e/m
2
for 2024 versus 19.4 kgCO
2
e/m
2
in 2023.
In addition, we are also now reporting our financed emissions based on both the location-based approach (reflecting the grid
average emission factors for the UK provided by the government) and the market-based approach (reflecting energy supplier
specific emission factors reported to Ofgem). Using supplier specific emission factors reduces our absolute and physical
intensity emissions to 210,366 tCO
2
e and 12.3 kgCO
2
e/m
2
respectively and improves the data score to 1.2.
We expect our attributed mortgage emissions will trend above our required reduction pathway over the near-term due to the
dependencies and challenges set out in our transition plan and the lack of progress in decarbonising UK homes.
1 Using EPCs and the market-based approach
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We have complied with the requirements of s414CB of the Companies Act 2006 by including certain non-financial information
within the Strategic Report. The required information can be found as follows:
• Our business model is described on page 9 and KPIs are on pages 19 to 21.
• Our approach to managing our impact on the environment and to managing the risks arising from climate change
is explained on pages 47 to 60. Further details of some of the actions already undertaken as part of our responsible
business strategy are set out in our Impact Report.
• Our Colleague Policy is designed to ensure the fair, transparent and consistent treatment of colleagues in accordance
with legislative and regulatory requirements. Further information on our strategy in relation to colleagues is detailed on
pages 16 to 18.
• We have a zero tolerance approach to bribery and corruption, upholding ethical behaviours in our business activities at all
times. The Prevention of Financial Crime Policy sets out the requirements of colleagues in this respect and all colleagues
undertake regular mandatory training.
• Additionally, our Third-Party Management Policy ensures that we only enter into third-party arrangements with suppliers
that have the policies and procedures in place to comply with all applicable anti-bribery and corruption laws, including the
Bribery Act 2010 and the Modern Slavery Act.
Line managers throughout the business are responsible for ensuring colleagues in their teams comply with these policies.
Attestation of compliance is provided by first line management annually. Periodic independent reviews of compliance are
undertaken by the Risk function (second line) and Internal Audit (third line), using a risk-based approach.
Approval of the Strategic Report
This Strategic Report (on pages 3 to 61) has been approved by the board of directors and is signed on behalf of the board.
Andrew Conroy
Chief Financial Officer
27 February 2025
Non-Financial and Sustainability
Information Statement
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 61
Risk Management
Report
Approach to Risk Management
Year ended 31 December 2024
Approach to risk management
The ERMF integrates various risk management processes to consistently support the development and implementation
of our Strategy. The framework sets out a structured approach to identify, assess, control and monitor risks. The ERMF is
periodically reviewed by the BRC on behalf of the board. The CRO has responsibility for its implementation.
Governance and
culture
Supports risk-
based decision-
making and
oversight
Appetite and
stress testing
Sets the level
of risk that is
acceptable in
pursuit of our
strategy
Assessment and
management
Ensures
consistent risk
identification,
quantification
and response
Risk
reporting
Ensures the right
information is
provided to the
right people at
the right time
Enterprise Risk Management Framework (ERMF)
Corporate plan and business performance
Society purpose and strategy
The main components of the ERMF are outlined below:
Risk governance and culture
Risk governance encompasses the processes followed to support risk-based decision-making and oversight of risk across all
our operations, whereas risk culture relates to the behaviours and attitudes of colleagues in making these decisions.
Appropriate committee structures and our risk culture support the board in discharging its accountability for risk
oversight, with management responsible for day-to-day decision-making and management of risk.
Committee structure
The board is our governing body, responsible for overseeing the implementation of our strategy and holding management to
account. To support the board in the delivery of its responsibilities, we operate four board sub-committees, each with distinct
mandates in their Terms of Reference (ToR).
The BRC provides independent oversight of the effective management of risks, on behalf of the board, which is supported by
five Executive Risk Committees, each focusing on a particular risk discipline. These committees are decision-making in nature
and operate within delegated mandates and limits provided by the board/BRC. Our committee structure as at the year end is
set out overleaf:
Leeds Building Society | Annual Report and Accounts 2024 63
Board
Safeguards member interests.
Ensures robust risk management
systems and internal controls are in
place. Sets risk appetite and culture.
Remuneration
Committee
Ensures remuneration
policies and practices
support the long-term
interests of the Society.
Models and
Rating System
Committee
Oversees
management of
model risk and IRB
Rating System
Assets and
Liabilities
Committee
Oversees
management of
balance sheet and
financial risks
Credit
Committee
Oversees
management
of credit risks
from our lending
portfolio
Conduct and
Operational Risk
Committee
Oversees delivery
of good customer
outcomes and
management of
operation risks.
Operational
Resilience
Committee
Oversees
management
of operational
resilience matters.
Board Risk
Committee
Reviews the Society's
risk exposures and
oversees the ERMF.
Develops the strategic
risk appetite for board
approval.
Audit
Committee
Reviews effectiveness
of internal controls,
integrity of financial
reporting, and
performance of the
Internal Audit function.
Nominations
Committee
Reviews the structure
and composition of
the board and
oversees succession
planing for the board
and wider SLT.
Policies and delegated authorities
Mandates are provided by the board to management via the following routes to manage our day-to-day activities:
Delegation route Summary
1. Corporate plan The board approves a corporate plan annually, subsequent to the setting of risk appetite,
which provides the parameters within which management should operate.
2. Policy Framework We operate a tiered policy framework, through which mandates and limits are delegated to
management. Our policies are reviewed on an annual basis (or as appropriate), by relevant
committees.
3. Delegated Authorities Manual The Delegated Authorities Manual is designed to facilitate the effective discharge of
responsibilities and continuity of operations within a sound system of financial, operational
and budgetary control. It is reviewed by the board annually.
Approach To Risk Management continued
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64
Three lines of defence model and the Risk Division
Our approach to risk management aligns to a three lines of defence model, which is standard practice within the financial
services sector. This ensures a clear delineation of responsibilities between control over day-to-day operations, risk oversight
and independent assurance activities. The key accountabilities under the three lines of defence model are detailed below:
First line
(business lines)
Second line
(Risk Division)
Third line
(Internal Audit)
• Executing strategy.
• Identifying and managing risks,
including operating critical
controls.
• Defining appetite.
• Adhering to appetite, policies
and standards.
• Implementing and maintaining
regulatory compliance.
• Oversight of day-to-day activities of the first line.
• Maintenance of the ERMF.
• Coordination and oversight of the setting of risk appetite
and policy.
• Identifying emerging risks.
• Enterprise risk reporting.
• Independent risk-based assurance plans.
• Independent risk-based
assurance of the adequacy
and effectiveness of first and
second line risk management.
The Risk Division is independent from the operational business divisions and ensures we follow a consistent approach to risk
management. It is led by the CRO, who reports directly to the deputy CEO, with separate independent engagement with the
Chair of the BRC. The Risk Division comprises specialist teams, aligned to key risk disciplines, which provide oversight and
independent challenge of first line activities.
Risk culture
Risk culture is an essential element of effective risk management, underpinning how our ERMF is embedded across the
business and into decision-making. To maintain an appropriate risk culture, the ERMF includes a Risk Culture Framework,
designed around four components:
• Tone from the top and desired behaviours – the board and SLT are expected to demonstrate our behaviours to set the
tone for all colleagues.
• Accountability – to support the delivery of our strategy and business objectives, individuals at all levels are held
accountable for risk management.
• Effective communication – an environment of open and transparent communication is encouraged around all business
processes and decision-making. The Society’s open culture also allows both management and colleagues to report
concerns about potential inappropriate risk-taking or business conduct, which is facilitated through a ‘Speak Up’ policy.
• Incentives and performance management – an appropriate incentive scheme and other HR frameworks are operated to
promote and align with the desired risk culture.
Risk appetite and stress testing
Risk Appetite Framework
A key element of the ERMF is the Strategic Risk Appetite (SRA) Framework. This comprises qualitative statements and
quantitative metrics to set the parameters within which we should operate to deliver our strategy. Our SRA Framework is
reinforced through policies and standards, to ensure consistency and alignment to the board defined parameters.
The board defines SRA across our eight principal risks and it is reviewed on an annual basis. Performance against appetite is
monitored continually and we have developed appropriate early warning indicators and escalation procedures to anticipate
and respond to risk profile changes. SRA metrics are used in corporate planning and stress testing to measure and validate our
long-term viability, under both plausible and severe scenarios.
Leeds Building Society | Annual Report and Accounts 2024 65
Stress testing
Stress testing is a risk management tool that we use to support an understanding of the vulnerabilities within our business
model. Our approach to stress testing is defined within a stress testing framework and supports:
• a sound understanding of internal and external influences on our principal risks.
• the board in strategic business planning and the setting of SRA.
• management of capital and liquidity resources against SRA and regulatory expectations.
We have developed an annual programme of stress testing activity, which informs the planning process and the calibration of
SRA. The key components of the programme are as follows:
Increasing
severity
Activity Description
Corporate and operational
resilience planning
Sensitivity analysis and a suite of alternative scenarios are used to assess the corporate
plan under a range of plausible stresses. Operational resilience stressing is an embedded
part of corporate planning.
Prudential risk
assessments
ICAAP – an internal assessment of whether we have sufficient capital, given current risks,
as well as future risks from our strategy, under conditions as set out by the board/PRA.
ILAAP – an internal assessment of whether we have sufficient liquidity and stable funding
to withstand a range of severe liquidity stresses.
Climate change Scenario analysis is used to assess the potential financial and non financial impacts of
climate-related risks. Refer to pages 47 to 60 for further deails.
Recovery plan Scenario analysis is used to inform the development of a suite of recovery actions
(primarily capital and liquidity) to be used under extreme stress and to set and validate
operational protocols.
Reverse stress testing An assessment of the stress scenarios under which we would potentially become
unviable. This examines potential weaknesess in our business model under extreme
events so that mitigating actions can be identified (where possible).
Risk assessment and management
We operate defined risk assessment and management processes to facilitate the consistent identification, evaluation,
treatment and monitoring of risks across the organisation. The framework can be applied to both strategic and operational
risk assessments and is set within the context of our business environment, strategy and objectives. A summary of the four
stages of this process is set out below:
• Risk identification – we operate board level and operational level risk identification processes to capture new or
emerging risks, which could impact corporate objectives and the delivery of our strategy.
• Risk analysis and evaluation – a range of methodologies are used to identify risks, to understand their severity and
likelihood to impact on the delivery of our strategy and to inform risk evaluation and treatment. Management then
evaluates and prioritises risks to inform decision-making and to optimise the allocation of resources.
• Risk treatment – management selects and deploys appropriate risk responses, balancing the potential benefit
derived versus cost, effort and implications for key stakeholders. The principal mechanisms for risk treatment are
the deployment of suitable control actions, governance or assurance oversight, along with management information
monitoring to reduce the Society’s residual risk profile to acceptable levels.
• Risk monitoring – risk assessment and management processes are monitored to proactively identify and adjust to
changes in risk profile and to understand the effectiveness of implementing risk treatment strategies.
Risk reporting
We operate an appropriate risk reporting hierarchy to provide the right information, to the right people, at the right time, to
inform and support timely decision-making. We use a combination of strategic and business process reporting to understand
the current or potential risk profile of the business, which may impact the delivery of our strategy and corporate objectives.
These reporting processes are conducted at an appropriate frequency and are coordinated by the Risk Division.
Approach To Risk Management continued
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Governance Financial Statements Other Information
66
1. Credit risk
Definition
The risk that residential borrowers or wholesale counterparties fail to meet their financial obligations.
Sources of credit risk
Our sources of credit risk arise from loans and advances to customers (retail credit risk) and through treasury activities from
the investment of liquidity and use of derivatives to manage market risks (wholesale credit risk). The table below presents an
overview of our credit risk profile as at 31 December 2024:
Group 2024
£M
Group 2024
%
Group 2023
£M
Group 2023
%
Cash in hand and balances with the Bank of England 2,443.2 7.8 2,830.0 10.1
Loans and advances to credit institutions 152.3 0.5 213.7 0.8
Investment securities 3,950.0 12.6 2,515.6 9.0
Derivative financial instruments 371.1 1.2 443.6 1.6
Loans and advances to customers 24,550.5 77.9 21,941.2 78.5
Total 31,467.1 100.0 27,944.1 100.0
We retain non-material legacy commercial (2024: £3.3 million; 2023: £6.1 million) and Spanish residential mortgage
(2024: £34.4 million; 2023: £45.3 million) portfolios, which are closed portfolios in active run-off. On this basis, the following
sections focus primarily upon UK residential and wholesale credit exposures and risk management practices.
1.1 Retail credit risk
Managing retail credit risk
The key mitigants in relation to retail credit risk are as follows:
• A board defined appetite is approved at least annually, supported by the lending policy, limit frameworks and
management reporting.
• Performance is continually reviewed against appetite and adherence with policy limits.
• Our underwriting processes use a range of tools including credit scoring models, affordability stress testing, automated
decision-making and suitably qualified underwriters in assessing mortgage applications. Underwriting processes are
kept under close review to ensure they reflect risks in the prevailing environment.
• Independent appraisal of collateral is completed, such as property valuations.
• A dedicated Mortgage Support function engages with members at an early stage to discuss financial difficulties, with
oversight from the Risk Division.
• Stress testing is completed to assess vulnerabilities within credit portfolios and informs pre-emptive actions.
Monitoring retail credit risk
We operate various first line functions to monitor the retail credit profile on a continuous basis. This is overseen by both the
second and third lines of defence, through their monitoring and assurance activities. Our monitoring processes, including the
use of benchmarking, early warning indicators and governance protocols, ensure timely escalation to senior management if
there is a deterioration in credit quality.
The appropriateness of our lending policy and appetite are monitored on a frequent basis, with a formal review of the policy
by the board at least annually. The performance of our retail exposures versus appetite and policy is reviewed by the Credit
Committee at each meeting and is reported through to BRC.
2024 Retail credit risk developments
Retail credit risk focus during the year remained balanced across various dimensions including: suitability of lending policies/
criteria, deployment of risk appetite, arrears performance versus forecast and ECL provisions and modelling risk, given the
uncertain economic backdrop.
Principal Risks
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 67
Retail credit risk profile
The table below is a breakdown of our retail credit portfolio as at 31 December 2024. The retail credit risk portfolio remains
diversified across several mortgage lending segments with no significant change in the mix compared to the prior year.
Group and
Society 2024
£M
Group and
Society 2023
£M
Residential mortgages
Mainstream owner-occupied 13,586.5 10,960.7
Buy to let 5,176.2 5,454.6
Shared ownership 3,368.1 2,964.0
Other 2,317.3 2,457.1
Total gross exposure (contractual amounts) 24,448.1 21,836.4
Impairment loss provisions (45.4) (53.5)
Total net exposure 24,402.7 21,782.9
Geographic concentration
The table below provides a breakdown of the geographic concentration of our retail credit portfolio as at 31 December 2024.
The mortgage portfolio remains well diversified, reflecting the national coverage of our distribution channels.
Group and
Society 2024
%
Group and
Society 2023
%
South East 15.5 15.7
Midlands 15.7 15.0
Greater London 12.1 12.7
East of England 10.3 10.0
South West 9.9 9.9
North West 9.9 9.7
Yorkshire and Humberside 8.8 8.8
Scotland 7.5 7.8
North East 3.9 3.9
Wales 3.6 3.5
Northern Ireland 2.7 2.8
Spain 0.1 0.2
Total net exposure 100.0 100.0
Collateral
Retail mortgages are all fully secured on residential property. Collateral values are assessed at the point of origination and in
line with our lending policy. We require collateral to be valued by an appropriately qualified method, independent of both the
credit decisioning team and the customer, at the time of borrowing. This includes the selected use of automated valuation
models. These models are developed on market data and usage is subject to accuracy and criteria thresholds.
One of the key indicators of the credit risk associated with a mortgage book is the relationship between the amount of the
loan and the value of the underlying security, which is known as the LTV percentage. In general, the lower the LTV the greater
the equity within the property and the lower the losses expected to be realised in the event of default and subsequent
repossession.
Principal Risks continued
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68
Our lending policy permits owner occupier applications with a maximum LTV of 95%
1
and buy to let mortgages with a
maximum LTV of 80%. Higher LTV lending is subject to enhanced underwriting criteria.
The indexed LTV analysis of our retail mortgage portfolio as at 31st December 2024 is as follows:
Group and
Society 2024
£M
Group and
Society 2024
%
Group and
Society 2023
£M
Group and
Society 2023
%
Less than 10% 213.7 0.9 218.4 1.0
10% to 20% 996.6 4.1 1,016.6 4.7
20% to 30% 2,322.4 9.5 2,264.2 10.4
30% to 40% 3,327.6 13.6 3,379.9 15.5
40% to 50% 3,968.8 16.2 4,104.2 18.8
50% to 60% 3,683.2 15.1 3,460.4 15.8
60% to 70% 3,424.3 14.0 2,993.1 13.7
70% to 80% 3,174.2 13.0 2,138.8 9.8
80% to 90% 2,424.2 9.9 1,820.2 8.3
90% to 100% 907.7 3.7 437.7 2.0
More than 100% 5.4 – 2.9 –
Total 24,448.1 100.0 21,836.4 100.0
As at 31 December 2024, the overall weighted average LTV of the retail mortgage portfolio was 54.2% (2023: 51.2%).
The weighted average LTV of new lending in 2024 was 66.8% (2023: 62.3%).
Retail credit performance
Overview
As a responsible lender, the Society has continued to invest in its mortgage services capabilities to support members and
closely monitor affordability pressures from cost of living challenges and a higher interest rate environment.
As part of this investment, the Society has further developed its arrears management strategies to minimise credit risk
losses, whilst ensuring that customers are treated fairly. The Society proactively contacts mortgage customers who have
or will be coming to the end of their initial fixed rate mortgage product period, and who may experience increases in their
mortgage rates. If customers do experience financial difficulties, contact is made on a missed direct debit (pre-arrears)
as well as following missed payments (arrears). Where appropriate, customers are offered forbearance options, tailored
to their circumstances. Forbearance typically consists of modifications to previous conditions of a contract or a total or
partial refinancing of debt, either of which would not have been required had the customer not been experiencing financial
difficulties.
Arrears Performance
The following table sets out information about the credit quality of our retail mortgages as at 31 December 2024
2
.
Classification into low, medium or high-risk bandings is based on internal rating grades, which approximately translate
into the regulatory IRB PD shown in the table. An explanation of the classification is detailed below,
with further information provided in note 1(e) of the accounts.
• Stage 1 – assets are allocated to this stage on initial recognition and remain in this stage if there has not been a significant
increase in credit risk since initial recognition.
• Stage 2 – assets where it is determined that there has been a significant increase in credit risk since initial recognition,
but where there is no objective evidence of impairment.
• Stage 3 – assets where there is objective evidence of impairment, i.e. they are considered to be in default or in the cure
period following default.
Underlying retail credit performance has seen some deterioration with a small increase in Stage 2 balances reflecting IFRS 9
model enhancements, which also now include a provision for physical climate risks. The increase in Stage 3 balances was a
result of an increase in the balances for customers in arrears. A PMA has been applied to increase the level of provisions held
to reflect the increased risks associated with cost of living pressures and rate shocks, as well as addressing several model
limitations regarding new types of lending.
1 Excluding the Colleague Mortgage Scheme.
2 Loans measured at amortised cost and loan commitments represent amounts committed.
Leeds Building Society | Annual Report and Accounts 2024 69
Retail mortgages Stage 1
£M
Stage 2
£M
Stage 3
£M
Total
£M
Group and Society 2024
Low IRB PD <2.02% 19,080.2 3,323.7 26.7 22,430.6
Medium IRB PD ≥2.02% and <25.97% 578.3 999.6 36.3 1,614.2
High IRB PD ≥25.97% 15.5 158.0 229.8 403.3
Total gross exposure 19,674.0 4,481.3 292.8 24,448.1
Impairment loss provision (7.9) (23.3) (13.9) (45.1)
Net exposure 19,666.1 4,458.0 278.9 24,403.0
Loan commitments Stage 1
£M
Stage 2
£M
Stage 3
£M
Total
£M
Group and Society 2024
Low IRB PD <2.02% 1,610.5 – – 1,610.5
Medium IRB PD ≥2.02% and <25.97% 29.4 – – 29.4
High IRB PD ≥25.97% 0.7 – – 0.7
Total gross exposure 1,640.6 – – 1,640.6
Impairment loss provision (0.3) – – (0.3)
Net exposure 1,640.3 – – 1,640.3
Retail mortgages
Stage 1
£M
Stage 2
£M
Stage 3
£M
Total
£M
Group and Society 2023
Low IRB PD <2.02% 16,911.4 2,843.4 26.9 19,781.7
Medium IRB PD ≥2.02% and <25.97% 735.7 870.1 28.0 1,633.8
High IRB PD ≥25.97% 23.0 188.9 209.0 420.9
Total gross exposure 17,670.1 3,902.4 263.9 21,836.4
Impairment loss provision (4.8) (31.9) (16.5) (53.2)
Net exposure 17,665.3 3,870.5 247.4 21,783.2
Loan commitments
Stage 1
£M
Stage 2
£M
Stage 3
£M
Total
£M
Group and Society 2023
Low IRB PD <2.02% 1,244.1 – – 1,244.1
Medium IRB PD ≥2.02% and <25.97% 20.4 – – 20.4
High IRB PD ≥25.97% 4.4 – – 4.4
Total gross exposure 1,268.9 – – 1,268.9
Impairment loss provision (0.3) – – (0.3)
Net exposure 1,268.6 – – 1,268.6
The table below provides further information on our retail mortgages by payment status as at 31 December 2024
3
Overall,
past due balances as a percentage of the portfolio have remained broadly stable.
Group and
Society 2024
£M
Group and
Society 2024
%
Group and
Society 2023
£M
Group and
Society 2023
%
Not past due 24,145.3 98.7 21,530.9 98.7
Past due up to 3 months 160.4 0.7 172.5 0.8
Past due 3 to 6 months 58.6 0.2 50.4 0.2
Past due 6 to 12 months 45.9 0.2 47.8 0.2
Past due over 12 months 24.4 0.1 25.3 0.1
Possessions 13.5 0.1 9.5 –
Total gross exposure 24,448.1 100.0 21,836.4 100.0
Principal Risks continued
3 Excludes impairment loss provisions
Strategic Report
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Governance Financial Statements Other Information
70
Forbearance
The table below provides information on loans existing at 31 December 2024, which have had their terms renegotiated in the
last 24 months, regardless of whether the renegotiation is still in place or whether the loan has reverted to its original terms.
Group and Society 2024
Capitalisation
£M
Transfer to
interest only
£M
Term extension
£M
Hardship
products
£M
Other payment
arrangements
£M
Total
forbearance
£M
Not past due 6.0 7.5 34.3 9.0 13.1 69.9
Past due up to 3 months 2.4 3.7 4.6 6.8 2.5 20.0
Past due over 3 months 5.3 3.1 1.9 21.8 7.7 39.8
Total forbearance 13.7 14.3 40.8 37.6 23.3 129.7
Group and Society 2023
Capitalisation
£M
Transfer to
interest only
£M
Term extension
£M
Hardship
products
£M
Other payment
arrangements
£M
Total
forbearance
£M
Not past due 6.3 11.4 26.8 5.2 12.9 62.6
Past due up to 3 months 4.2 4.3 3.5 5.0 1.7 18.7
Past due over 3 months 6.3 3.5 3.6 15.8 6.9 36.1
Total forbearance 16.8 19.2 33.9 26.0 21.5 117.4
The level of loans reported as in forbearance has seen an overall increase reflecting an operational focus on implementing
appropriate forbearance measures during 2024. Increases in forbearance balances were largely due to term extensions and
the appropriate usage of rate reduction products.
Retail credit risk outlook
Whilst borrowers have so far been largely resilient to recent affordability pressures, several emerging macroeconomic and
geopolitical risks may result in increased numbers of members facing financial difficulty.
We will closely monitor external developments in 2025 to ensure our credit appetite and policies remain appropriate versus
prevailing conditions.
1.2 Wholesale credit risk
We have low appetite for wholesale credit risk, with exposures restricted to high quality counterparties with a low risk of
default.
Managing wholesale credit risk
The key mitigants in relation to wholesale credit risk are as follows:
• A board defined appetite is approved at least annually, supported by the Wholesale Credit Policy, limit frameworks and
management reporting.
• Performance versus appetite is reviewed at least monthly and more frequently during times of stress.
• All counterparty credit lines are reviewed at least annually, based on internal analysis, credit default swap spreads,
geographic location, ESG posture and other market intelligence.
• Daily exchange of collateral and other netting arrangements is in place for our derivative exposures
Monitoring wholesale credit risk
A dedicated first line function monitors our wholesale credit profile on a daily basis. This is overseen by both the second and
third lines of defence through their monitoring and assurance activities. Our monitoring processes and governance protocols
ensure timely escalation to senior management if there is a perceived deterioration in credit quality of a counterparty.
Each wholesale credit line is formally reviewed at least annually, with outputs overseen by ALCO. The performance of the
wholesale credit portfolio versus appetite and policy is reviewed by ALCO at each meeting and reported through to BRC.
Leeds Building Society | Annual Report and Accounts 2024 71
Wholesale credit risk profile
Credit ratings
Our liquidity portfolio is comprised of cash reserves at the Bank of England, loans and advances to credit institutions and
debt securities. An assessment of the wholesale credit profile of the liquidity portfolio, based upon external credit ratings
4
, is
outlined in the table below. As at 31 December 2024, 100% of the portfolio was rated as A- or above (2023: 100%).
Group 2024
Aaa
£M
Aa1–Aa3
£M
A1–A3
£M
Unrated
£M
Total
£M
Cash in hand and balances with the Bank of England – 2,443.2 – – 2,443.2
Loans and advances to credit institutions – 15.1 137.2 – 152.3
Investment securities
UK Government securities – 1,935.4 – – 1,935.4
Government agency debt 217.5 – – – 217.5
Supranational bonds 536.2 – – – 536.2
Covered bonds 612.9 – 10.5 – 623.4
Residential mortgage backed securities 637.5 – – – 637.5
Certificates of deposit – – – – –
Total liquid assets 2,004.1 4,393.7 147.7 – 6,545.5
30.6% 67.1% 2.3% – 100.0%
Group 2023
Aaa
£M
Aa1–Aa3
£M
A1–A3
£M
Unrated
£M
Total
£M
Cash in hand and balances with the Bank of England – 2,830.0 – – 2,830.0
Loans and advances to credit institutions – 77.8 135.9 – 213.7
Investment securities
UK Government securities – 965.3 – – 965.3
Government agency debt 82.0 – – – 82.0
Supranational bonds 180.6 – – – 180.6
Covered bonds 749.4 – – – 749.4
Residential mortgage backed securities 362.9 – – – 362.9
Certificates of deposit – 24.9 150.5 – 175.4
Total liquid assets 1,374.9 3,898.0 286.4 – 5,559.3
24.7% 70.1% 5.2% – 100.0%
Geographic concentration
Our liquidity portfolio continues to be invested predominantly within the UK. The geographical location of the portfolio as at
31 December 2024 is outlined below:
Group 2024
£M
Group 2024
%
Group 2023
£M
Group 2023
%
United Kingdom 5,514.0 84.2 5,020.9 90.4
Canada 206.6 3.2 161.7 2.9
Australia 94.7 1.4 99.3 1.9
Germany 194.0 3.0 47.1 0.8
Finland – – 24.9 0.4
Netherlands – – 24.8 0.4
United States – – 19.1 0.3
Global Supranational 355.3 5.4 131.8 2.4
European Supranational 116.1 1.8 – –
Asian Supranational 64.8 1.0 29.7 0.5
Total liquid assets 6,545.5 100.0 5,559.3 100.0
Principal Risks continued
4 The lower of either Fitch or Moody’s.
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Governance Financial Statements Other Information
72
Wholesale credit impairments
Our accounting policy for the calculation of impairment on wholesale assets is detailed in note 1e. All assets were
classified as at Stage 1 throughout the reporting period, and as such, no impairment loss provision is considered
necessary for these assets.
Collateral
The nature of a wholesale asset or liability determines the level of collateral required. Loans and debt securities are generally
unsecured except for asset backed securities, which are secured by a collection of financial assets.
The Society centrally clears all eligible derivatives classes through indirect membership with a central counterparty clearing
house (CCP). Cleared derivative instruments will only be transacted with counterparties with a Cleared Derivative Execution
Agreement (CDEA) or Accession Agreement (AA) in place. Derivatives that cannot be cleared via a CCP are managed
bilaterally under the terms of industry-standard International Swaps and Derivatives Association (ISDA) Master Agreements
and Credit Support Annexes (CSA).
Under these arrangements, collateral is exchanged between the counterparties of the transaction to mitigate some of the
counterparty credit risk inherent in outstanding derivative positions.
The table below shows the net exposure after reflecting the impact of netting arrangements and collateral:
Group 2024
Gross
amounts*
£M
Master netting
agreements
£M
Cash
collateral
£M
Net
amount
£M
Financial assets
Derivative financial instruments 371.1 (90.8) (310.7) (30.4)
Financial liabilities
Derivative financial instruments 98.0 (90.8) (5.7) 1.5
Society 2024
Gross
amounts*
£M
Master netting
agreements
£M
Cash
collateral
£M
Net
amount
£M
Financial assets
Derivative financial instruments 371.1 (90.8) (310.7) (30.4)
Financial liabilities
Derivative financial instruments 117.2 (90.8) (11.8) 14.6
Group 2023
Gross
amounts*
£M
Master netting
agreements
£M
Cash
collateral
£M
Net
amount
£M
Financial assets
Derivative financial instruments 443.6 (200.7) (267.7) (24.8)
Financial liabilities
Derivative financial instruments 233.0 (200.7) (32.7) (0.4)
Society 2023
Gross
amounts*
£M
Master netting
agreements
£M
Cash
collateral
£M
Net
amount
£M
Financial assets
Derivative financial instruments 443.6 (200.7) (267.7) (24.8)
Financial liabilities
Derivative financial instruments 232.8 (200.7) (15.9) 16.2
We also enter into repurchase agreements (repos) with counterparties with whom we have both a Global Master Repurchase
Agreement (GMRA) and an active credit line in place. The credit risk that arises from such transactions is managed under the
terms of the GMRA, through the monitoring and appropriate transfer of collateral.
*As reported in the Statement of Financial Position on page 167.
For derivative financial assets, collateral received is in the form of cash. Where cash is received it is included as a liability within Other Liabilities on the Statement of Financial
Position. For derivative financial liabilities, collateral paid is in the form of cash and is included as an asset in Other Assets.
Leeds Building Society | Annual Report and Accounts 2024 73
Wholesale credit risk outlook
Given the prevailing macroeconomic uncertainties and potential geopolitical risks outlined on page 43, we will continue to
closely monitor the performance of the wholesale portfolio and maintain an appropriate investment strategy and wholesale
credit risk profile.
2. Funding and liquidity risk
Definition
The risk of insufficient funds to meet obligations as they fall due or the inability to access funding at a reasonable cost.
Sources of funding and liquidity risk
The Society raises funding through two sources: retail savings deposits from our members and investments from wholesale
counterparties. Funding risk primarily arises from a failure to deliver an appropriately diversified funding strategy. This could
result in a loss of customer or investor confidence and inhibit our ability to refinance or raise new funding, or only at an
excessive cost.
Our main source of liquidity risk relates to the ability of members to withdraw retail deposits at little or no notice. All potential
sources of liquidity risk are assessed under severe but plausible stress scenarios as part of our annual ILAAP process, with
outputs used to inform our liquidity risk appetite and determine a minimum level of on balance sheet liquidity.
Managing funding and liquidity risk
The key mitigants in relation to funding and liquidity risk are as follows:
• A board defined appetite is approved at least annually, supported by the Funding and Liquidity Policy, limit frameworks
and management reporting.
• Our liquidity position is monitored daily by a dedicated first line team, with oversight provided by the Risk Division.
• An ILAAP assessment is conducted at least annually, to determine the level of liquidity resources required under stressed
conditions.
• A portfolio of high-quality liquid assets is maintained and regularly tested.
• Access to central bank funding is maintained and regularly tested, through prepositioned collateral.
• Stress testing and sensitivity analysis is conducted frequently to understand the impact of severe, but plausible
scenarios and to inform pre-emptive actions.
• A Recovery Plan, including a trigger and alert framework, is maintained to identify the emergence of a stress and actions
to respond accordingly.
Monitoring funding and liquidity risk
Our treasury function is responsible for monitoring potential liquidity and funding risks on a daily basis. Oversight and
assurance of liquidity and funding risks is achieved through the three lines of defence model.
ALCO is our primary committee for overseeing the management of potential liquidity or funding risks. Performance versus
appetite is also reported through to BRC.
2024 liquidity position
We maintained a strong liquidity position throughout 2024. As at 31 December 2024, our Liquidity Coverage Ratio (LCR) was
183% (2023: 227%), which was considerably above minimum regulatory requirements (100%).
Our Liquidity Strategy and limit structure ensures that the liquidity portfolio remains appropriately diversified across various
instruments and durations. As at 31st December 2024, our liquidity portfolio mainly consisted of cash held at the Bank
of England, UK government securities and other high quality assets. Levels of on balance sheet liquidity increased during
the year, providing protection and flexibility in light of the uncertain economic environment. We also continued to retain
significant levels of off-balance sheet liquidity capacity.
Principal Risks continued
Strategic Report
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Governance Financial Statements Other Information
74
Group and
Society 2024
£M
Group and
Society 2023
£M
Cash in hand and balances with the Bank of England 2,443.2 2,830.0
UK Government securities 1,861.2 965.3
Other qualifying securities 2,004.3 1,157.7
High quality liquid assets 6,308.7 4,953.0
Other on balance sheet securities 236.8 606.2
Total 6,545.5 5,559.2
Note: The Society balance for other on balance sheet securities includes amounts owed by subsidiary undertakings, including
collateral in relation to intragroup derivatives.
2024 funding risk position
As a mutual organisation, we are predominately funded through retail funding. As at 31 December 2024 84.4% of our shares,
deposits and liabilities (SDLs) were classified as retail funding, consisting of a mix of variable rate products, fixed rate bonds
and ISAs.
We also raise funding via capital markets, through a well-established wholesale franchise and through access to central bank
funding facilities. Our Funding Plan and limit structure ensures that the wholesale funding portfolio remains appropriately
diversified across various instruments, durations and investor types.
As at 31 December 2024, total wholesale funding stood at £4.5 billion (2023: £4.7 billion), representing 15.6% of total funding.
During the year, we raised £850 million of external wholesale funding through a successful Covered Bond issuance (£500
million) and the Albion No.6 residential mortgage-backed securities (RMBS) issuance (£350 million). We also made further
planned repayments of drawings from the BoE’s TFSME.
Group 2024
£M
Group 2024
%
Group 2023
£M
Group 2023
%
Deposits from banks 14.2 0.3 24.3 0.5
Amounts drawn under TFSME 1,230.0 27.1 1,845.0 38.9
Other deposits and amounts owed to other customers 159.3 3.5 169.9 3.6
Debt securities in issue:
Certificates of deposit 60.3 1.3 – –
Senior unsecured debts 319.3 7.0 315.9 6.7
Covered bonds 2,116.0 46.8 2,037.3 42.9
Residential mortgage backed securities 636.1 14.0 355.4 7.4
Total 4,535.2 100.0 4,747.8 100.0
As at 31 December 2024, 100% of our wholesale funding portfolio was denominated in sterling.
Group
Sterling
£M
Group
Euro
£M
Group
Total
£M
Deposits from banks 14.2 – 14.2
Amounts drawn under TFSME 1,230.0 – 1,230.0
Other deposits and amounts owed to other customers 159.3 – 159.3
Debt securities in issue:
Certificates of deposit 60.3 – 60.3
Senior unsecured debts 319.3 – 319.3
Covered bonds 2,116.0 – 2,116.0
Residential mortgage backed securities 636.1 – 636.1
Total as at 31 December 2024 4,535.2 – 4,535.2
Total as at 31 December 2023 4,321.1 426.7 4,747.8
Leeds Building Society | Annual Report and Accounts 2024 75
The expected maturity profile of our wholesale funding portfolio is outlined below, based on the earlier of the first call date
or the contractual maturity date. The concentration of maturities less than one year predominately relates to outstanding
TFSME drawings, which will be refinanced during 2025.
Group 2024
£M
Group 2024
%
Group 2023
£M
Group 2023
%
Less than one year 2,069.2 45.6 1,009.5 21.3
One to two years 502.1 11.1 2,062.1 43.4
Two to five years 1,963.9 43.3 1,676.2 35.3
More than five years – – – –
Total 4,535.2 100.0 4,747.8 100.0
The stability of our overall funding position is assessed through the Net Stable Funding Ratio (NSFR). As at 31 December
2024, our NSFR ratio stood at 147.8% (2023:143.1%), which is significantly above the regulatory minimum of 100%.
Maturity profile of financial assets and liabilities
The table below analyses our financial assets and liabilities based on the remaining period between 31 December 2024
and the contractual maturity date. In practice, the contractual maturity can differ to actual repayments, whereby customer
behaviour result in liabilities being held for longer than their contractual maturities and assets repaid earlier or vice versa.
During 2024, contractual liquidity gap mismatches changed in response to balance sheet growth and the structure of the
retail savings book.
Group 2024
Repayable
on demand
£M
Less than
3 months
£M
3 to 12
months
£M
1 to 5
years
£M
More than
5 years
£M
Total
£M
Financial assets
Cash in hand and balances with the Bank of England 2,443.2 – – – – 2,443.2
Loans and advances to credit institutions 152.3 – – – – 152.3
Investment securities – 612.9 1,076.1 1,363.9 897.1 3,950.0
Derivative financial instruments – 2.5 26.5 311.9 30.2 371.1
Loans and advances to customers
Loans fully secured on residential property 8.9 17.4 37.4 703.0 23,636.0 24,402.7
Other loans – – – – 147.8 147.8
Fair value adjustments for hedged risk on loans and
advances to customers
– 0.1 (4.9) (153.1) (15.2) (173.1)
Other assets, prepayments and accrued income – 209.7 – 6.0 5.7 221.4
Total financial assets 2,604.4 842.6 1,135.1 2,231.7 24,701.6 31,515.4
Financial liabilities
Shares 9,047.0 3,575.1 7,166.2 4,725.7 15.8 24,529.8
Fair value adjustment for hedged risk on shares – (1.1) 2.2 7.7 – 8.8
Derivative financial instruments – 2.4 10.9 75.0 9.7 98.0
Amounts owed to credit institutions – 14.2 1,230.0 – – 1,244.2
Amounts owed to other customers 8.7 82.7 66.5 1.4 – 159.3
Debt securities in issue – 657.0 10.1 2,464.6 – 3,131.7
Other liabilities and accruals – 1.0 23.7 268.3 23.7 316.7
Subordinated liabilities – – – 334.2 – 334.2
Subscribed capital – – – 8.0 – 8.0
Total financial liabilities 9,055.7 4,331.3 8,509.6 7,884.9 49.2 29,830.7
Net liquidity gap (6,451.3) (3,488.7) (7,374.5) (5,653.2) 24,652.4 1,684.7
Principal Risks continued
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Group 2023
Repayable
on demand
£M
Less than
3 months
£M
3 to 12
months
£M
1 to 5
years
£M
More than
5 years
£M
Total
£M
Financial assets
Cash in hand and balances with the Bank of England 2,830.0 – – – – 2,830.0
Loans and advances to credit institutions 213.7 – – – – 213.7
Investment securities – 403.8 709.5 947.1 455.2 2,515.6
Derivative financial instruments – 5.7 38.2 381.5 18.2 443.6
Loans and advances to customers
Loans fully secured on residential property 6.9 23.1 43.1 684.8 21,025.0 21,782.9
Other loans – 0.5 – – 157.8 158.3
Fair value adjustments for hedged risk on loans and
advances to customers
– (0.1) (0.3) (4.2) (127.7) (132.3)
Other assets, prepayments and accrued income – 192.3 – – 15.9 208.2
Total financial assets 3,050.6 625.3 790.5 2,009.2 21,544.4 28,020.0
Financial liabilities
Shares 5,390.8 1,785.2 6,694.2 6,913.9 8.9 20,793.0
Fair value adjustment for hedged risk on shares 8.3 2.7 10.3 10.6 – 31.9
Derivative financial instruments – 4.0 27.5 158.9 42.6 233.0
Amounts owed to credit institutions – 2.0 418.5 1,448.8 – 1,869.3
Amounts owed to other customers – 119.7 42.6 7.6 – 169.9
Debt securities in issue – – 426.7 2,281.9 – 2,708.6
Other liabilities and accruals – 9.5 18.6 194.6 45.0 267.7
Subordinated liabilities – – – 323.9 – 323.9
Subscribed capital – – – – 33.0 33.0
Total financial liabilities 5,399.1 1,923.1 7,638.4 11,340.2 129.5 26,430.3
Net liquidity gap (2,348.5) (1,297.8) (6,847.9) (9,331.0) 21,414.9 1,589.7
The following tables detail the remaining undiscounted contractual cash flows for our non-derivative financial liabilities
including interest, which will be accrued to those instruments, except where we are entitled and intend to repay the liabilities
before their maturity.
Group 2024
Repayable
on demand
£M
Less than
3 months
£M
3 to 12
months
£M
1 to 5
years
£M
More than
5 years
£M
Total
£M
Shares 9,047.0 3,592.5 7,367.0 5,034.1 18.8 25,059.4
Amounts owed to credit institutions – – 1,279.4 – – 1,279.4
Amounts owed to other customers 8.7 83.1 67.8 1.4 – 161.0
Debt securities in issue – 657.5 10.2 2,799.6 – 3,467.3
Subordinated liabilities – 2.6 2.6 342.2 347.4
Subscribed capital – – 0.3 9.1 – 9.4
Total financial liabilities 9,055.7 4,335.7 8,727.3 8,186.4 18.8 30,323.9
Group 2023
Repayable on
demand
£M
Less than
3 months
£M
3 to 12
months
£M
1 to 5
years
£M
More than
5 years
£M
Total
£M
Shares 5,390.8 1,788.1 6,779.0 7,300.5 9.0 21,267.4
Amounts owed to credit institutions – 2.1 436.9 1,562.0 – 2,001.0
Amounts owed to other customers – 120.5 43.9 7.9 – 172.3
Debt securities in issue – - 428.2 2,476.4 – 2,904.6
Subordinated liabilities – 2.6 2.6 337.1 342.3
Subscribed capital – 1.7 2.0 14.6 102.5 120.8
Total financial liabilities 5,390.8 1,915.0 7,692.6 11,698.5 111.5 26,808.4
Leeds Building Society | Annual Report and Accounts 2024 77
The following table details the contractual maturity for our derivative financial instruments. The table is based on the
undiscounted net cash inflows/(outflows) on the derivative instruments, which settle on a net basis, and the undiscounted
gross inflows/(outflows) on those derivatives that require gross settlement. When the amount payable or receivable is not
fixed, the amount disclosed has been determined by reference to the conditions existing at the reporting date.
Group 2024
Less than
3 months
£M
3 to 12
months
£M
1 to 5
years
£M
More than
5 years
£M
Total
£M
Swap contracts 47.8 151.0 213.4 4.7 416.9
Group 2023
Less than
3 months
£M
3 to 12
months
£M
1 to five
years
£M
More than
5 years
£M
Total
£M
Swap contracts 58.2 174.3 275.5 2.4 510.4
Encumbrance
Asset encumbrance occurs where some of our assets are used as collateral to support secured funding or central bank
operations. The main sources of our encumbered assets relate to mortgages used to collateralise our covered bond and
securitisation programmes and participation in the BoE’s central funding schemes. We have established an appropriate
limit to ensure that collateral is available to support current and future funding requirements under normal and stressed
conditions.
Asset encumbrance as at 31 December 2024 is set out in the table below:
Encumbered
£M
Unencumbered
£M
Total
£M
Cash and balances with the Bank of England – 2,443.2 2,443.2
Loans and advances to credit institutions – 152.3 152.3
Debt securities 72.6 3,877.4 3,950.0
Loans and advances to customers 6,776.9 17,773.6 24,550.5
Derivative financial instruments – 371.1 371.1
Other assets 404.2 (258.7) 145.5
Total as at 31 December 2024 7,253.7 24,358.9 31,612.6
Total as at 31 December 2023 7,342.0 20,803.9 28,145.9
External credit ratings
During 2024, both Fitch and Moody’s affirmed our long- and short-term credit ratings, as well as the outlook, as follows:
Long-term Short-term Outlook Date of last credit opinion
Moody’s A3 P-2 Stable July 2024
Fitch A- F1 Stable October 2024
Outlook
• Funding markets are likely to be impacted by heightened levels of uncertainty in 2025 due to potential geopolitical risks,
macroeconomic uncertainty and increased competition for retail savings as firms refinance TFSME drawings.
• Taking this into consideration, the Society carries strong levels of on balance sheet liquidity into 2025 and remains
well positioned to address any funding and liquidity uncertainty that may arise through a combination of its retail and
wholesale franchises.
Principal Risks continued
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3. Market risk
Definition
The risk that movements in interest rates or foreign currency adversely impact our capital and earnings.
Sources of market risk
The primary form of market risk that we face is interest rate risk, whereby our net interest income and value of assets and
liabilities are exposed to movements in interest rates. The main sources of our interest rate exposures relate to the duration
repricing mismatch between assets and liabilities, basis risk from linkage of assets and liabilities to different reference rates
and product optionality. Our interest rate exposures all arise from the banking book as we do not operate a trading book.
We also have foreign currency risk exposures from a legacy residential mortgage portfolio in Spain. Our market risk policy
does not permit any speculative foreign exchange positions.
Managing market risk
The key mitigants in relation to market risk are as follows:
• A board defined appetite is approved at least annually, supported by the Market Risk Policy, limit frameworks and
management reporting.
• Our market risk exposures are monitored frequently by a dedicated first line team, with oversight provided by the
Risk Division.
• Market risk positions are managed by the offsetting of assets and liabilities and use of derivatives. Derivatives are used to
hedge market risk exposures, where a natural hedge is not feasible.
• Stress testing and sensitivity analysis is conducted frequently to understand the impacts of movements in interest and
foreign exchange rates on value and income.
Monitoring market risk
Our treasury function is responsible for monitoring market risk and performance against appetite and limits on a frequent
basis. Oversight and assurance of market risk is achieved through the three lines of defence model.
ALCO is the Society’s primary committee for overseeing the management of market risks. Performance against risk appetite
is also reported through to BRC.
2024 market risk position
Key developments in relation to market risk during 2024 were as follows:
• Throughout the year, we continued to manage market risk in a structured and disciplined manner, to ensure exposures
were identified, measured and managed within the boundaries of risk appetite set by the board.
• The Monetary Policy Committee started to gradually reduce interest rates during 2024, from 5.25% to 4.75% by
November 2024. Whilst markets expect further rate reductions in 2025, the depth and speed of rate cuts remains highly
uncertain.
• In light of market conditions during 2024, we retained close oversight of our market risk exposures and product offerings,
making adjustments to our balance sheet structure in response to the evolving external environment. This was also
complemented by stress testing and sensitivity analysis to understand the impacts under various interest rate paths.
Leeds Building Society | Annual Report and Accounts 2024 79
Interest rate exposures
We assess potential interest rate impacts on our earnings and the value of our assets and liabilities through stress testing and
sensitivity analysis.
From an earnings perspective, we measure the potential impact on our net interest income under various interest rate paths.
The key assumptions used in this modelling are as follows:
• A constant balance sheet is assumed with all assets and liabilities maturing during the year being reinvested in like for like
products and a constant average spread.
• Managed rate products receive full pass through of changes in market interest rates.
• Scenarios are applied to the prevailing interest rates at the reporting date.
• The sensitivities do not take account of any management actions.
In addition, we monitor the impact of various parallel and non-parallel rate shocks to the value of our assets and liabilities. The key
assumptions used in this modelling are as follows:
• The balance sheet at the report date is run off over its remaining expected duration.
• Downward shocks allow the yield curve to go negative subject to a floor.
• The effect of external hedging is included.
• Our reserves and core stable savings balances are allocated in line with board approved limits.
The following table outlines the impacts against a range of value and earnings-based assessments. At 31 December 2024,
our balance sheet remained positioned so that net interest income would benefit from rising interest rates.
Group
+200bps
2024
£M
+200bps
2023
£M
-200bps
2024
£M
-200bps
2023
£M
Annual earnings impact 11.7 7.5 (8.3) (5.0)
Market value economic value (including capital) (50.1) 30.1 53.0 (33.3)
Foreign exchange exposures
The carrying amount of our foreign currency denominated monetary assets and monetary liabilities at the reporting date is
outlined in the table below:
Group
Assets
2024
£M
Assets
2023
£M
Liabilities
2024
£M
Liabilities
2023
£M
Euro 39.6 420.2 43.9 422.6
At 31 December 2024, we had hedges in place to match 100% of our foreign currency exposures, via the use of cross currency
swaps, which offset the impact of foreign exchange fluctuations. Therefore, any movement in foreign currency through profit
or loss and other equity are minimised. As at 31 December 2024, a 10% movement in the sterling/euro exchange rate would
result in a movement of £0.4 million (2023: £0.2 million) in profit or loss or other equity.
Outlook
• Financial markets remain susceptible to volatility during 2025 reflective of the Society’s emerging profile outlined on
pages 41 to 44.
• We will continue to monitor financial markets and changes in customer behaviour under the prevailing environment and
proactively manage our balance sheet to ensure that future earnings and value are protected.
Principal Risks continued
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4. Capital risk
Definition
The risk that the Society has insufficient quality or quantity of capital resources to meet current or future regulatory and
business requirements.
Sources of capital risk
Capital risk arises where we have insufficient capital resources to support strategic objectives and plans or regulatory
requirements. This could arise due to a depletion of our capital resources as a result of risk crystallisation, through a
significant increase in risk-weighted assets as a result of regulatory changes or economic deterioration, or increases in
minimum capital requirements, such as the countercyclical capital buffer.
Managing capital risk
The key mitigants in relation to capital risk are as follows:
• A board defined appetite is approved at least annually, supported by the Capital Policy and Capital Plan, limit frameworks
and management reporting.
• Discipline over lending volumes and returns to ensure adequate capital generation to support a sustainable capital
position.
• An ICAAP is conducted at least annually, to assess the level of capital required to support current and future business
activities.
• Stress testing and sensitivity analysis is conducted to understand the impact on the Society’s capital position, under a
range of severe scenarios.
• A Recovery Plan is maintained, including actions to generate/preserve capital in response to a severe stress.
Monitoring capital risk
We have a dedicated first line team responsible for managing and monitoring our capital position. Oversight and assurance
of capital risk is achieved through the three lines of defence model.
Capital planning is integrated into our wider strategic and financial planning processes to assess our capital position on
a forward-looking basis. Capital performance versus appetite is reviewed by ALCO at each meeting and is also reported
through to BRC.
2024 performance
Key developments in relation to capital risk during 2023 were as follows:
• We have continued to redevelop our mortgage IRB model suite to meet new requirements, which has been submitted
for regulatory approval. To account for the potential increase in RWAs from transitioning to a new model suite, we have
applied a PMA to our current IRB rating system. For further details, refer to our 2024 Pillar 3 disclosure, located on our
website. Notwithstanding this change, we maintained significant headroom above minimum regulatory requirements
throughout 2024.
• During 2024, we performed a liability management exercise to buy back our legacy Tier 2 eligible PIBS, which reduced
capital by £47.5 million but will deliver interest savings going forward as part of a more efficient capital model.
• The PRA published PS9/24 – Implementation of the Basel 3.1 standards near-final part 2 in September 2024,
setting out its near-final rules to implement Basel 3.1 in the UK. Based upon an initial assessment of the near-finalised
rules, we expect to retain significant headroom over minimum capital requirements. Following the year end date,
the PRA has announced an extension of the initial implementation date to 1 January 2027 to provide greater clarity
as to how the regulation is being implemented in other jurisdictions.
Leeds Building Society | Annual Report and Accounts 2024 81
Capital position
The following table provides a summary of our capital position as at 31 December 2024. More detailed disclosures can be
found in the Pillar 3 disclosures available on our website.
Unaudited
2024
£M
2023
£M
Capital resources
Common Equity Tier 1 (CET1) capital 1,584.9 1,508.9
Additional Tier 1 capital – –
Total Tier 1 capital 1,584.9 1,508.9
Tier 2 capital 10.1 42.9
Total regulatory capital resources 1,595.0 1,551.8
Senior non preferred notes 351.1 350.0
Total MREL eligible resources 1,946.1 1,901.8
Risk–weighted assets (RWAs) 6,171.0 5,355.1
CRD V capital ratios % %
CET1 ratio 25.7 28.2
Total capital ratio 25.9 29.0
Total MREL ratio 31.5 35.5
UK leverage ratio 5.5 6.0
Reductions in the Society’s key capital ratios are mainly reflective of the liability management exercise, one-off items and
balance sheet growth during the year. Notwithstanding these reductions the Society retained significant headroom above
minimum regulatory requirements under the various requirements of the UK’s capital regime.
Outlook
• We are awaiting final feedback from the PRA regarding our IRB model submission. Overall, we expect the capital impact
of the revised IRB model suite to be broadly in line with the temporary PMA applied to the current IRB Rating System.
• During 2025, we will closely monitor the finalisation and implementation of the Basel 3.1 standards, following the PRA’s
decision to delay implementation in the UK until January 2027.
• A deterioration in UK macroeconomic conditions and house prices could increase our capital requirements during 2025.
A sustained period of heightened competition within our key markets may also result in reduced levels of net interest
margin and capital generation. We will continue to monitor developments closely and adapt our plans, as appropriate.
5. Model risk
Definition
The risk of adverse consequences from model errors or the inappropriate use of modelled outputs.
Sources of model risk
Models are inherently uncertain as they are imperfect representations of the real world, based upon a set of assumptions and
theoretical methodologies, which may not translate into an accurate future outcome.
We use models across a broad range of business activities, including informing business decisions and strategies, determining
capital adequacy, provisioning, retail and wholesale credit decisioning, risk measurement and stress testing.
The level of risk relating to an individual model is assessed through a materiality rating. We have developed a quantitative
approach to determine the materiality rating of each model, reflective of the model’s complexity, use and potential impact
assessment. The outputs of the materiality assessment determine the approval path through governance and the degree,
frequency and depth of review and validation requirements. The materiality ratings for each model are reviewed on a regular
basis to ensure they remain representative of the risks associated with each model.
Principal Risks continued
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Managing model risk
The key mitigants in relation to model risk are as follows:
• A board defined appetite is approved at least annually, supported by a Model Risk Policy and Standards, which set our
minimum requirements in relation to model documentation, development, implementation, validation and change.
• A model inventory is maintained, acting as an enterprise-wide repository of key model artefacts.
• A materiality assessment is conducted on all models within the inventory.
• Model owner reviews are submitted through governance on a cyclical basis, in line with model materiality ratings.
• Models are validated independently prior to implementation and on a cyclical basis, in line with model validation
standards and materiality ratings.
• Controls around PMAs are in place to ensure they are appropriately governed and accurately applied.
• Annual attestations are completed by model owners to confirm that they have complied with the requirements of the
Model Risk Policy.
Monitoring model risk
Model owners represent the first line of defence for monitoring and managing model risk, with oversight provided through
independent model validation and second and third-line assurance activity.
The Models and Rating System Committee (MRSC) is our primary body for overseeing model risk. This forum assesses
whether models are fit for purpose through periodic model reviews and monitors model risk exposure on an enterprise-wide
basis. Material model issues are reported to through to BRC.
2024 performance
Key developments in relation to model risk during 2024 were as follows:
• During 2024, we enhanced our model risk management capabilities, as part of implementing PRA SS1/23 – Model risk
management principles for banks, which came into effect in May 2024. As part of this initiative, we have updated and
implemented new model risk policies and practices to align with the new requirements.
• We continued with the development and validation of our IRB rating systems during the year. As part of this process, we had
regular engagement with the PRA to ensure the revised model suite is aligned with evolving expectations.
• We closely monitored the performance of our models to ensure they remained appropriate for use under conditions
experienced during 2024. Where necessary, PMAs have been applied to capture the risks and uncertainties arising from the
current external environment.
Outlook
• We will continue to embed and refine our revised model risk practices during 2025, including consideration of emerging
modelling techniques and technologies such as generative AI and machine learning.
• We will continue to maintain close oversight of model inputs and outputs under the prevailing external environment to
ensure they remain appropriate or are adjusted based on quantitative and qualitative considerations.
Leeds Building Society | Annual Report and Accounts 2024 83
6. Operational risk
Definition
The risk of financial or reputational loss from inadequate or failed internal processes, people and systems or from external
events. This incorporates resilience risk which is the inability to maintain important business services in response to
unexpected or adverse events.
Sources of operational risk
The main drivers of operational risk are classified as follows:
• People risk
• Information security
(including cyber) risk
• IT risk
• Operational resilience risk
• Financial crime risk
• Data risk
• Change risk
• Third-party risk
• Legal and regulatory risk
• Financial reporting risk
Managing operational risk
A summary of the key mitigants for operational risk are as follows:
• A board defined appetite is approved at least annually, supported by an appropriate suite of operational risk related
policies.
• An Operational Risk Management Framework is maintained, outlining the process for identification, assessment,
mitigation and monitoring of operational risks, incident management protocols and reporting operational losses.
• The control environment is validated by the first line through Risk and Control Self Assessments (RCSA), control testing
and oversight procedures, with oversight from second and third lines of defence.
• An Operational Resilience Framework and testing programme is maintained, incorporating Business Continuity,
Information Technology Risk, Information Security and Third-Party Management, to ensure the provision of resilient
services to our members.
• A Payments Control Framework is maintained and supported by specific control assurance testing to ensure the effective
operation and resilience of Society payment services.
• A financial crime strategy and policy are maintained which are overseen by a dedicated Financial Crime Prevention Team.
The financial crime risk and control environment is formally assessed through the annual MLRO report to BRC.
• Stress testing is used as part of the ICAAP to ensure we retain sufficient capital for extreme, but plausible, operational
risk events.
Monitoring operational risk
Day-to-day operational risk is monitored by first line business functions, including regular critical control testing. Oversight of
first line activity is provided by both the second and third lines of defence through monitoring and assurance activity.
Conduct and Operational Risk Committee (CORC) and Operational Resilience Committee (ORC) provide oversight as to
how operational risks are being managed across the organisation. Performance against appetite is reviewed through these
committees and is also reported through to BRC.
Principal Risks continued
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2024 performance
Operational resilience risk
Throughout 2024 we continued to evolve the maturity of our controls for ensuring important business services are resilient
against disruption, including enhancing scenario testing to incorporate third parties, and completing a full test of the data-
centre disaster response controls for key services, proving our ability to maintain important technologies.
IT risk
We continued to invest in our multi-year technology programme to deliver better outcomes at a faster pace while being more
responsive to external events and ensuring the efficiency of IT operations. Technology improvements in 2024 have enhanced
our capabilities to develop and deliver safely and at scale through the cloud, improved digital experiences for our members,
improved efficiency of managing third-party relationships, and introduced new tools to enhance the management of IT
systems for the benefit of colleagues and members.
Information security risk
We reviewed the shifting threat landscape to ensure controls were appropriately targeted. Delivery of our multi-year security
strategy has continued to advance and strengthen defences around our online and cloud services, complemented by
control enhancements in response to the increasing threat from supply-chain attacks. Our security focus remains aligned to
protecting our information assets against key threats from data breaches through third parties and Ransomware.
Data risk
Throughout 2024, we continued to invest in capabilities to understand and manage our data. Building on the new
infrastructure delivered through 2023, development focused on providing customer teams with greater insight to enhance
the way they understand and respond to member needs.
People risk
We continued to focus on attracting and retaining people with the right skills and capabilities to deliver our purpose, whilst
continuing to support colleagues to develop and thrive in their careers through the launch of a new colleague learning
experience platform. As the cost of living crisis continues, we have remained committed to supporting colleagues through a
range of wellbeing resources and targeted benefits, including the launch of a new colleague mortgage scheme.
Change risk
We delivered significant volumes of change against an ambitious agenda to enhance support to members and drive our
purpose for the longer term, focused on the replacement of the core banking platform, legal and regulatory compliance, and
risk management. Strong portfolio oversight ensured that change capacity and resources were appropriately prioritised and
that we were well placed to flex the portfolio in response to external events.
Financial crime
The financial crime landscape remained challenging during 2024. Account takeovers and Authorised Push Payment (APP)
fraud remain a key threat to members, with increasingly complex and sophisticated social engineering techniques being
employed alongside changing regulations. We continued to evolve our controls in response, including the introduction of
Confirmation of Payee checking on outbound payments to help mitigate the risk of loss from fraud, and providing customers
and colleagues with training and educational information, helping them to better protect themselves against financial crime.
Third-party risk
We continue to increase the number of key third parties used to deliver elements of services to members, including the use
of cloud technologies. During 2024, we enhanced the maturity of controls around material suppliers in response to both
evolving risks and regulations. Appropriate due diligence was undertaken to gain assurance that third parties remain capable
of maintaining their services even in a stressed environment, that third parties and communications with them were secure,
and that we had appropriate strategies in place should unplanned events have occurred.
Leeds Building Society | Annual Report and Accounts 2024 85
Legal and regulatory risk
The volume, scale and complexity of regulatory change continued to shape our operating environment in 2024. We maintained
robust processes to ensure the changes in laws and regulations are identified and complied with during the year.
Outlook
In 2025, management will focus on maintaining an appropriate balance between progressing the delivery of our multi-year
technology programme and furthering our purposeful ambitions, while ensuring that we retain sufficient capacity and
flexibility to respond to external uncertainties. This will include ensuring we have the right skills and capabilities to support
our change programme.
We will also face into the significant challenges and opportunities from AI enabled technologies to build strong foundations
that allow us to benefit from efficiency and effectiveness, but ensure risks are understood and managed.
7. Conduct risk
Definition
The risk that actual or potential customer detriment arises, or may arise, from the way the Society conducts its business.
Sources of conduct risk
Conduct risk can arise from how we behave and how we carry out our business and will ultimately impact the outcomes
customers receive. This can manifest from several key areas, including:
• Product and services.
• Price and value.
• Customer communications
and understanding.
• Customer support.
Conduct risks can arise at any stage of the customer journey and risk assessments are carried out as part of our normal
business processes, so we can understand, mitigate and monitor them. Where we recognise something has gone wrong, we
carry out root cause analysis to reduce the chance of it happening again and ensure any customer detriment is appropriately
redressed in a fair and transparent way.
Monitoring conduct risk
First line colleagues are responsible for managing potential conduct risks through their day-to-day activities. Oversight of
first line activity is provided by all lines of defence through monitoring and assurance activities. CORC and BRC monitor the
delivery of good customer outcomes through management information, oversight updates and outputs from the product
governance work.
Managing conduct risk
The following controls and procedures help to mitigate conduct risk:
• A board defined appetite is approved on at least an annual basis, supported by the Conduct Risk Policy and Frameworks.
This is governed through CORC and BRC, including the monitoring of MI.
• A Product Governance Framework is in place, which outlines requirements for how products are developed to meet
customer needs, provide fair value and that their ongoing suitability for the target market is regularly assessed.
• A Customer Understanding Framework is in place to ensure our communications and product literature provide the right
information, at the right time and are also clear and transparent.
• A Customer Support Framework ensures support is provided to meet customers’ needs at the point of sale and
throughout the life of the product, so that customers can use their products as reasonably anticipated and without
unreasonable barriers to product changes, switching providers, or making a complaint. This is further supported by
Vulnerability Standards, which outline how we support customers with vulnerability characteristics.
• Customer-facing colleagues are suitably trained, with competency regularly assessed. Ongoing coaching and
development are in place for all customer-facing colleagues.
• Our Complaints Handling Policy and supporting processes ensure complaints are addressed with empathy and
sensitivity through a fair and transparent process.
Principal Risks continued
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2024 performance
In 2024, we continued to respond to changing market and customer dynamics, particularly in consideration of a challenging
mortgage market.
• We continued to evolve our approach under the Consumer Duty that came into force in July 2023, embedding
frameworks and finalising the Fair Value Assessments for all closed products.
• The annual Consumer Duty board report was completed July 2024, concluding that we continue to provide good
consumer outcomes that are consistent with regulatory requirements and that all products offer fair value to our
customers.
• To support borrowers in financial difficulty we implemented regulatory change in accordance with FCA policy statement
PS24/2, demonstrating increased transparency and wider ranging forbearance options, whilst continuing not to charge
arrears fees.
• Aligned to our purpose, we launched an Income Plus Product to support first time buyers with home ownership, offering
increased affordability, but still remaining in line with our responsible lending criteria.
• We moved some digital saving journeys onto a new platform to improve the overall member experience, including the
digital ISA journey.
• Complaints volumes have increased overall, in line with increased business volumes. Various management actions are
inflight to support the delivery of good customer outcomes during the complaint handling process. Analysis has been
routinely conducted to establish the root cause of complaints, supporting business improvement opportunities and
preventing recurrence.
• As volumes of Customers in Vulnerable Circumstances (CiVC) continued to rise, a maturity assessment was completed
to assess progress aligned to regulatory expectations. The maturity assessment concluded no material gaps but
highlighted further opportunities to evolve our approach to supporting these customers.
Outlook
• The Society will continue to develop and embed our Consumer Outcomes MI reported through governance, to provide
greater clarity and transparency of outcome monitoring across the customer base. Analysis of this data will continue to
be a focus, including consideration of customer groups (i.e CiVC versus non CiVC), to support decision-making.
• An assessment of conduct risk maturity will take place over the coming year, to determine progress since the launch of
Consumer Duty and any areas required for future focus.
Leeds Building Society | Annual Report and Accounts 2024 87
8. Strategic/business risk
Definition
The risk that the Society fails to formulate or execute an appropriate strategy and business model in response to the external
environment, threatening our longer-term viability.
Sources of strategic/business risk
The main sources of strategic/business risk arise from the following:
• Over or under diversification in our business model (geography, products, funding or exposures) inhibiting delivery of
strategic objectives.
• Failure to develop and execute an appropriate strategic plan and objectives.
• Failure to adapt to changes in the external environment e.g. macroeconomic, political, technological advances,
competition, and changes in consumer preferences.
Monitoring strategic/business risk
Strategic/business risks are monitored through our horizon scanning processes, with appropriate escalation channels in
place. These risks are also considered as part of the Society’s annual strategic and financial planning processes.
ExCo and BRC provide oversight of the management of strategic risks. Performance against appetite is reviewed through
these committees and at relevant board meetings.
Managing strategic/business risk
The following controls and procedures help to mitigate strategic/business risk:
• A board defined appetite is approved at least annually, supported by a suite of appropriate policies.
• The direction of business and investment activity are set by an annual strategic planning process in the context of the
changing regulatory, technological, and competitive landscape.
• Our corporate planning process includes an assessment of the business and macroeconomic environments, which are
regularly monitored throughout the year and plans adjusted accordingly.
• Competitor and market performance is assessed by regular thematic reviews.
• An ESG Strategy and targets are maintained, which ensures that our purpose and strategy remain aligned with our
stakeholder expectations.
• Stress testing is used to understand performance under a variety of severe, but plausible, scenarios.
• Independent risk reporting, including horizon scanning, assesses our operating environment and performance against
strategic plans and objectives.
Principal Risks continued
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2024 performance
During 2024, we continued to respond to evolving market conditions and customer dynamics:
• Conditions within our operating environment remained challenging, reflective of macroeconomic risks, a change in UK
government and wider geopolitical risks.
• Activity in the UK mortgage market continued to gain momentum during the year due to improved borrower affordability
as mortgage rates fell and household income increased. Changes to stamp duty thresholds in early 2025 also created
increase demand during the second half of 2024.
• From a savings perspective, price competition has further increased driven by savers looking to take advantage of the
higher interest rate environment, a new generation of digital challenger banks and lenders refinancing TFSME drawings.
• In the context of heightened competition within our core markets, we carefully monitored the market positioning of our
products and responded accordingly. Furthermore, we launched a range of new initiatives/products to deliver on our
purpose and continued to focus on operational and service performance.
• We continued to progress our multi-year IT project to increase functionality and strengthen our operational resilience
and make our systems simpler and quicker to use for our members, colleagues and intermediary partners.
• As a result of this investment, the Tier 2 capital liability management exercise and increased levels of competition,
the Society’s cost income ratio increased from 47.3% in 2023 to 51.7% at 31 December 2024. Notwithstanding this
increase, the Society continues to maintain an efficient business model relative to peers.
• We continued to deliver against our ESG strategy, and we were proud to be accredited with the Good Business Charter,
which recognises and champions responsible business behaviour.
Outlook
• Our strategic/business risks are closely linked to the emerging risks detailed within the Risk Overview on pages 41 to 44.
• Uncertainties from macroeconomic and geopolitical risks may create additional volatility and exacerbate strategic/
business risks. Competition within our core markets is also expected to increase through further competitor innovation
and exploitation of emerging technologies.
• We will continue to closely monitor external developments and assess potential impacts under both central and stressed
conditions.
• Progress with our strategic change portfolio will also be closely monitored, to ensure that key transformational projects
are appropriately prioritised and effectively delivered to support achievement of our strategic objectives.
Leeds Building Society | Annual Report and Accounts 2024 89
Governance
The Board of Directors
Year ended 31 December 2024
The biographies of each member of the board are shown here and serve to
demonstrate the reasons why the skills and experience of each director
contribute to our long-term and sustainable success.
Iain Cornish
Chair and Independent
Non-Executive Director
Appointed: Independent non-executive director in
January 2019 and Chair of the board in April 2020.
Board committees: Nominations (Chair) and
Remuneration committees.
Skills and experience: Iain has worked in financial
services for over 30 years. His previous roles include CEO
of Yorkshire Building Society and Chair of the Building
Societies Association. Iain has also held several non-
executive posts, such as: Treasury Select Committee
Special Advisor and independent director for the PRA
and chaired the Financial Services Authority Practitioner
Panel. In addition to significant experience within the
sector, Iain has relevant risk and audit committee
experience.
Other roles:
• Trustee and treasurer of Macmillan Cancer Support; and
• Chair of Governors at Leeds Beckett University
“As Chair, my role is to lead your board in overseeing the
performance of the Society and the development and
implementation of its strategy. As I approach the end of
my term with the Society, my priority over the next few
months will be to make sure that the Society continues
to offer sustainable good value to savers and enables as
many borrowers as possible to buy the homes they want.
At the same time, I will continue to ensure that the Society
remains financially secure for the future and provide a strong
handover to the new Chair in their new role.”
Richard Fearon
Chief Executive Officer
Appointed: Executive director in February 2016 and
chief executive officer in February 2019.
Skills and experience: Before joining Leeds Building
Society Richard spent 16 years in financial services
in roles spanning risk management, mortgages and
savings. Richard has an excellent understanding of
product development to meet customer needs, as well as
strong strategic and commercial skills. As CEO, Richard’s
responsibilities include promoting the long-term
success of the Society and leading the development and
implementation of the Society’s strategy and purpose in
the interest of its members and other stakeholders.
Other roles:
• Director of UK Finance Limited
• Chair of the UK Finance Audit & Oversight Committee
• Member of the UK Finance Mortgages Product and
Service Board
“My main responsibility is the day-to-day running of the
Society. This involves leading the management team so
that we can operate in the best interests of our members
and deliver our purpose, as a mutual building society. Our
members are at the heart of every decision we make and
my ambition is to continue putting home ownership within
reach of more people, generation after generation.”
Leeds Building Society | Annual Report and Accounts 2024 91
Annette Barnes
Independent Non-Executive Director
Appointed: February 2019.
Board committees: Remuneration (Chair), Board Risk and
Nominations committees.
Skills and experience: Before joining the Society,
Annette was CEO at Lloyds Bank Private Banking Ltd and
managing director of Wealth & Mass Affluent for Lloyds
Banking Group. Annette has over 35 years’ experience
in financial services and has a background in operations,
technology and customer engagement. Annette also has
recent board and regulatory experience.
Annette is Chair of the Remuneration Committee and as
such, part of Annette’s role is to make sure the Society
has the right reward structures in place to support our
mutual culture and to attract and retain the talent we
need to deliver our purpose.
Other roles:
• Non-executive director, Chair of Remuneration
Committee and senior independent director of
GlobalData plc
• Non-executive director, Chair of Remuneration and
Nominations committees of Stratos Markets Ltd
“As both the Consumer Duty and the Colleague
Engagement Champion, I work closely with the business
and the board to ensure our customer and colleague needs
are a key area of focus. I regularly meet with colleagues to
discuss their experiences and understand any changes
they’d like to see within the business to further support both
our members and colleagues.”
Farah Buckley
Independent Non-Executive Director
Appointed: April 2023.
Board committees: Audit and Board Risk committees.
Skills and experience: Farah has spent over 23 years
working within financial services. Having initially qualified
as a chartered accountant at Deloitte, Farah has had a
successful executive career, with a focus on private equity
and corporate finance, most recently with Hermes GPE
and Schroder Adveq. Farah has also held a variety of
board roles which includes a portfolio of non-executive
positions within financial services institutions. This has
given Farah extensive experience in audit, investment,
strategy, risk and ESG.
Other roles:
• Non-executive director Aurora UK Alpha plc
• Non-executive director Caledonia Investments plc
• Non-executive director Apollo Syndicate Management
Limited
• Non-executive director and Chair of Long Term Assets
Limited*
“As a chartered accountant, I bring relevant skills and insight
to the Society. Reflecting on my own experiences, I’m able
to help develop strategy, ensure positive outcomes and
promote fair treatment of all members. With my knowledge
and expertise, I bring independent judgement and
perspective to board meetings and decisions.”
* As at 31 December 2024, the number of non-executive
positions held were subject to a waiver issued by the
PRA and FCA. From 31 January 2025, Farah resigned
from this appointment and therefore a waiver is no
longer required.
The Board of Directors continued
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Andrew Conroy
Chief Financial Officer
Appointed: Chief financial officer in July 2019 and
executive director in January 2020.
Skills and experience: Andrew has over 20 years’
experience in financial services, including a number
of senior roles in both building societies and banking
institutions. Having worked within finance, treasury
and corporate strategy, Andrew has developed strong
technical skills in financial accounting and treasury risk
management.
Andrew is Chair of Assets and Liabilities Committee
and Balance Sheet Optimisation Group. He has
responsibility for our Finance, Treasury, Data and Third-
Party Management functions, along with oversight of its
recovery and resolution plan and associated activities.
Other roles:
• Trustee for Saltmine Trust
“As CFO I have a responsibility for managing the Society’s
finances and one focus is to make sure we support our
members and colleagues by safeguarding the Society’s
financial position. Our financial strength remains robust and
we’re in a great position to invest in the future of the Society.
As part of my role, I also regularly meet with the PRA to
discuss the ways in which we maintain a safe and sound
financial system.”
David Fisher
Non-Independent Non-Executive
Director
Appointed: March 2012.
Skills and experience: With more than 30 years’
experience in financial services, David’s career began at
Halifax Building Society. David later became the CEO of
Sainsbury’s Bank. David has a substantial track record
of board level leadership roles in retail financial services.
Throughout David’s career, he’s developed a great deal of
knowledge in retail financial services. He also has a strong
understanding of risk management, pensions and HR.
David has been a board member for nearly 12 years and
continues to provide challenge, scrutiny and thoughtful
discussion at both board and board committee meetings.
“My wide-ranging board level commercial experience
enables me to provide both a strategic and an operational
perspective on the challenges that the Society faces.
As a member of the board my role is to ensure we are
financially resilient and have systems in place to manage
risks appropriately. With my long-standing tenure, I’ve been
able to provide continuity and support to the board in its
succession planning, including that of the Chair.”
Leeds Building Society | Annual Report and Accounts 2024 93
The Board of Directors continued
Neil Fuller
Independent Non-Executive Director
Appointed: December 2020.
Board committees: Board Risk (Chair), Audit and
Remuneration committees.
Skills and experience: Neil has over 40 years’ experience
in retail banking and financial services. Before joining the
Society, Neil was the CRO and executive board director
at Bank of Ireland UK plc and CRO at GE Capital Bank Ltd.
Neil also previously held a variety of roles including risk
director and CRO in the UK retail division of Royal Bank of
Scotland and NatWest.
Other roles:
• Non-executive director and Chair of Board Risk
Committee of Cynergy Bank Limited
“Through my previous experience as CRO at different
organisations I have a strong understanding of risk
management and the principal risks facing the financial
services industry. This supports me in my role as Chair of
the BRC. My role requires me to oversee the delivery of the
ERMF which is designed to encourage a culture of sound
risk management and internal control. As part of this the
BRC monitors the Society’s risk exposures. The ethics of
a mutual resonate strongly with me and I very much enjoy
working with the Society.”
Andrew Greenwood
Deputy Chief Executive Officer
Appointed: Executive director in January 2015 and
deputy chief executive officer in May 2021.
Skills and experience: Andrew joined the Society as
a solicitor in 1998 and has worked in a variety of roles.
He was CRO from 2011 – 2022 and joined the board in
2015. Andrew has gained extensive experience in risk
management and strategy development. He also has
a strong knowledge of the organisation, its people and
culture.
Andrew is responsible for the Customer and Risk
Divisions, as well as the Property and Business Services
function. Andrew is also Chair of our Inclusion and
Diversity Steering Group, which supports the delivery
of our I&D strategy through the progression of our
objectives in this area.
Other roles:
• Member of the UK Finance Sustainability Committee
• Member of Shared Ownership Council Senior Advisory
Group
• Member of Clarion Housing Association Foresight Group
“As part of my role as deputy CEO, I am responsible for
managing climate-related risks. This includes developing
our climate transition plans as we move forward in our net
zero journey. A key aspect of this is reducing our carbon
footprint and working with key stakeholders to help them
to do the same. I’m a member of a number of risk-focused
committees and Chair of the Cost Optimisation Group.”
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Gareth Hoskin
Independent Non-Executive Director
Appointed: November 2015, vice chair and senior
independent director since January 2019.
Board committees: Audit (Chair), Board Risk,
Nominations and Remuneration committees.
Skills and experience: Gareth has a great deal of
experience in financial services having worked in the
industry for over 30 years. This included almost 20 years
at Legal & General plc, as a director and CEO of the
international division. Before this, Gareth was a chartered
accountant at PwC.
Gareth’s responsibilities as Chair of the Audit Committee
include safeguarding the independence of the Internal
Audit function and acting as our Whistleblowing
Champion.
Other roles:
• Non-executive director and Chair of Audit Committee of
Saga plc
• Non-executive director and Chair of Acromas Insurance
Company Ltd
“Over the last year I have worked closely with our new
external auditor, Ernst & Young LLP, to ensure a smooth
transition. As Chair of the Audit Committee, it’s my
responsibility to make sure our financial statements are
fair, balanced and include all the information you, as a
member or stakeholder, need to assess and understand
our performance. My other responsibilities include
safeguarding and assessing the effectiveness, performance
and independence of the Internal Audit function, as well
as monitoring the integrity of external financial reporting.
Additionally, I act as our Whistleblowing Champion and
ensure our culture welcomes open and transparent
discussions.”
Rob Howse
Chief Operating Officer
Appointed: Chief operating officer in September 2019
and executive director in May 2021.
Skills and experience: Before joining Leeds Building
Society, Rob spent over ten years working in senior
executive technology, operations and change roles. This
was mainly at RBS and Lloyds Banking Group, where he
was focused on retail banking. His earlier career included
time in telecoms and the Royal Navy. Rob also worked as
an associate partner at McKinsey and Company where he
specialised in advising multinational clients on the design
and execution of transformation programmes.
As COO, Rob is Chair of the Executive Transformation and
Operational Resilience committees.
Other roles:
• Member of the UK Finance Digital, Technology and Cyber
Product and Service Board
• Governor, trustee and director of The Grammar School
at Leeds
“My responsibilities include areas in technology,
transformation and operational resilience, where I have
extensive experience. One of my key priorities is the
successful delivery of the Society’s multi-year technology
transformation programme. This will create increased
technical resilience and functionality, enabling us to provide
our members with the best possible experience and
interaction with the Society.”
Leeds Building Society | Annual Report and Accounts 2024 95
Pam RowlandBrendan McCafferty
Independent Non-Executive Director
Appointed: May 2023.
Board committees: Board Risk, Nominations and
Remuneration committees.
Skills and experience: Pam is a chartered banker and has
over 30 years’ financial services experience. Her most
recent executive role was COO at Paragon Banking Group
Plc. Prior to working at Paragon, Pam was managing
director Change Delivery at Barclays UK Retail Bank
and COO at ING Direct. Pam has extensive experience
in operations, people leadership and customer led and
digital transformation programmes.
Other roles:
• Non-executive director of Saga Services Ltd
“My experience of financial services operations and
transformation programmes is relevant to the progressive
agenda at the Society. In my role as a board member,
I promote a strong customer-centric and people-focused
culture. I also make sure we work to a high level of conduct
delivering positive outcomes for our members. To help
achieve this I constructively challenge on the strategy and
execution plans.”
Independent Non-Executive Director
Appointed: September 2024.
Board committees: Board Risk, Nominations and
Remuneration* committees.
Skills and experience: Brendan is a chartered
management accountant with broad financial services
experience, including insurance and pensions. He
is currently Chair of the Board of Nest Corporation
(National Employment Savings Trust) and is Chair of a
specialist business in the insurance industry. Brendan
has successfully led major transformational strategic
change in regulated financial institutions as CEO. He has
also been at the forefront of public body collaborations
between industry and government.
Other roles:
• Chair of Nest Corporation
• Non-executive director of Academy Insurance Services
and its connected entities
• Trustee of Blueprint for Better Business Trust
• Trustee of Catholic Diocese of Salford and its connected
entities
“I believe passionately that business should be a force for
good, by pursuing a clear and compelling purpose. I bring a
spectrum of financial services experience and understand
how government and other complex stakeholders are best
engaged. I am pleased to have joined the Society as a non-
executive director and look forward to bringing my skills and
experiences to the board.”
* Due to start during 2025.
The Board of Directors continued
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Anita Tadayon
Independent Non-Executive Director
Appointed: October 2021.
Board committees: Board Risk Committee.
Skills and experience: Anita has held a number of
senior roles and has extensive expertise in combining
technology and change, along with the development and
design of customer journeys. Previously Anita worked in
transformation, digital and technology for Sky, British Gas
and BT Business. During Anita’s time at British Gas, she
was responsible for the conduct team within customer
operations which has enhanced her FCA regulatory
knowledge. Anita also has an MBA from London Business
School.
Other roles:
• Director of Planning, Transformation and Performance at
Virgin Media O2
• Director of Tadayon Consulting Limited
“With over 25 years’ knowledge and experience I add value
to the board discussions, particularly in transformation
and IT/digital areas. I also provide different insights which
help me to support the Society on its digital journey.
I’m passionate about the values associated with mutuality
and continue to bring further strength and diversity to
the board.”
Leeds Building Society | Annual Report and Accounts 2024 97
The Executive Committee (ExCo)
Year ended 31 December 2024
As executive directors of the board, Richard Fearon (CEO), Andrew Greenwood (Deputy CEO), Andrew Conroy (CFO) and Rob
Howse (COO), whose biographies can be found on pages 91 to 97, are members of the ExCo. Details of the other members of
the ExCo are set out below:
Bernadette Bruton
Chief People Officer
Bernadette joined the Society in October 2023 and is responsible for the
Society’s People Division. She started her career in business and customer
roles in retail banking, switching to HR after eight years. Bernadette has
spent most of her career in financial services (Barclays, Aviva, National
Australia Bank) and has executive experience in the technology and
telecoms sector. She has a breadth of generalist HR and specialist
knowledge and experience in organisation development, leadership and
culture. Bernadette’s recent focus has been on developing the Society’s
colleague strategy, which supports management in its focus on the purpose
of putting home ownership within reach of more people – generation after
generation.
Caroline Dale
Chief Internal Auditor
Caroline is a chartered accountant and trained at KPMG, where she spent
eight years delivering and managing external audits and other assurance
work in the financial services industry. She joined the Society in May 2015
and since then has held several Internal Audit and finance leadership roles.
She was appointed chief internal auditor and joined the ExCo in November
2023. Caroline is responsible for leading an independent and effective
Internal Audit function, which provides oversight and challenge of the risk
and control environment and gives assurance to the Society’s board and
management team, to support them in delivering its purpose.
Andy Mellor
Chief Risk Officer
Andy has worked in financial services for over 25 years, with experience
in a variety of senior roles in building societies, banking and consultancy.
Andy worked in specialised treasury roles prior to risk management,
Internal Audit and advisory roles. Andy’s recent focus has been on
developing the Risk function, as part of the risk strategy refresh and he
joined the ExCo in March 2021, following his appointment as risk director
and subsequently became CRO from October 2022. Andy is Chair of the
Models and Rating System Committee, and co-sponsor of the Gender
Equality Forum.
Andy Moody
Chief Commercial Officer
Andy joined the Society in 2012 and has held the roles of director of credit
risk, deputy CRO and more recently, chief commercial officer, in which
he has responsibility for our products and their distribution, our digital
channels, brand & marketing, strategy and corporate affairs. Andy’s prior
experience includes senior risk, commercial and consulting roles across
PwC, Skipton Building Society, Northern Rock, National Australia Bank and
Bradford & Bingley. Andy is Chair of the Credit Committee.
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Corporate Governance Report
Year ended 31 December 2024
Chair’s introduction
This report provides an overview of the way in which the board has operated over the last 12 months and outlines how we
incorporate good governance throughout the board’s operations and ensure that we make balanced decisions in the interests
of all our stakeholders.
This will be my last report as Chair of the Society, as I will be retiring from the board at the end of February. I’d like to take this
opportunity to welcome Brendan McCafferty, who will be your new chair from 1 March 2025 (subject to regulatory approval).
We are delighted that Brendan joined the board in September 2024 and believe his experience and skills will complement
those of the board and he’ll be able to take the Society forward as it enters a new phase of growth and digital transformation.
Gareth Hoskin will also step down in 2025 after just over nine years with the Society. I would like to thank Gareth for the
tremendous value and expertise he has brought to the board and the Society more widely.
Over the last 12 months the board continued to focus on serving our members through an environment of changing interest
rates and elevated costs of living. Key areas of focus have also included our IT transformation programme and several changes
to the composition of the board including: the appointment of a new Chair, senior independent director and Chair of Audit
Committee. More information on each of these matters is included in this report.
Some of our key priorities over the last 12 months are outlined below.
Enhancing the digital journey – our members
We recognise the need to have technology and systems that support our ambition to put home ownership within reach of
more people – generation after generation. With this in mind it was agreed in 2023 to invest in new core technology, which
will provide more flexible and resilient applications to futureproof our systems and provide a foundation for future strategic
transformation.
We’ve also focused on the transformation of our digital experience this year, for both savings and mortgages, bringing
improvements to the way new customers apply for our products or manage their accounts online. In addition, our simplified
and easy to use digital journeys are helping to make home ownership accessible to even more people.
The transformation programme is a key part of our technology roadmap and will be delivered over a multi-year period. It is
crucial to us delivering our purpose, making us more responsive, enabling us to deliver more innovative products to support
our members and to improve colleague experience.
The board is passionate about our delivery of this programme and has received regular updates throughout the year as well
as dedicated and focused training from our independent board technical advisor, to enable members of the board to develop
their technical understanding of the requirements.
People
Over the year, the board invested time in understanding our new multi-year colleague strategy and ambitions for a purposeful
colleague value proposition. This is focused on ensuring we have the leadership capability, workforce agility and skill capability
to support the Society in delivering its purpose.
Central to the colleague value proposition is how we create a space where colleagues feel they belong and are valued,
can make a difference, and thrive and grow. The board have continued to focus on our I&D strategy, and we continue to meet
the targets which were set in 2023 for both gender (minimum 30% female) and ethnicity (minimum one board member from
ethnic minority background) at board level. As of 31 December 2024, two board members were from an ethnic minority
background against a target of at least one.
Leeds Building Society | Annual Report and Accounts 2024 99
Governance and board effectiveness
To ensure we, as a board, continue to perform and operate effectively, we understand the requirement and importance of
assessing our own effectiveness and performance on an annual basis. This is particularly important as we move into 2025
with several planned changes to our board and committee composition. In 2024, and in line with the requirements of the
UK Corporate Governance Code (the Code), a review of our performance was arranged through an external assessor, Board
Alchemy. The previous external review was undertaken in 2021 by Russell Reynolds Associates. From the 2024 review, the
board was found to be operating effectively with a clear and effective governance framework underpinning how decisions are
made, and with clear lines of accountability and responsibility. A detailed report with recommendations was presented to the
board towards the end of 2024 with a workshop planned, to mobilise the agreed areas of focus, in early 2025. More detailed
information on the evaluation process is available to read on pages 115 to 116 of this report.
We firmly believe that upholding a high level of governance is essential for the long-term sustainable success of the Society
and is integral to the delivery of our purpose and strategic aims. Whilst it is not a mandatory requirement, we base our
approach to governance on the principles and provisions of the Code, in so far as they are relevant to a building society (as
set out in the Building Societies Association Guidance). I am pleased to confirm that our governance arrangements meet the
relevant requirements of the Code. A copy of the 2024 Code is available on the FRC’s website at frc.org.uk.
The FRC published updates to the Code in 2024, which came into force on 1 January 2025, with the exception of principle 29
which is effective from 1 January 2026. A detailed gap analysis of the changes has been undertaken, and we are confident the
Society continues to comply, in so far as it is relevant to a building society.
Iain Cornish
Chair of the board
27 February 2025
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The board’s role
The board’s role is to lead the Society and to secure its long-term success by developing and implementing a strategy which
delivers the Society’s purpose for the benefit of our current and future members, colleagues and the communities we serve.
Creating mutual value for our stakeholders is a priority, which the board ensures is integral when making decisions.
The board delegates certain duties to its dedicated board and management committees, each of which has a terms
of reference (ToR) which documents the level of delegated authority it has and its areas of focus. Copies of each board
committee’s ToR can be found on our website: leedsbuildingsociety.co.uk.your-society/about-us/board-committees.
Division of responsibilities
There are clear divisions between the roles of the executive and non-executive members of the board. The roles of the
Chair and CEO are held by separate individuals and each role has well-defined responsibilities. The division of principal
responsibilities of the Chair, CEO and senior independent director is reviewed periodically against their distinct job
descriptions and is documented for review and approval by the board. The table below demonstrates how responsibilities are
clearly defined for each of these roles, as well as those for the executive directors, NEDs and the Secretary.
All directors work closely with the Secretary, who provides advice on any Society or governance related matters, as well as
having access to independent professional advice, if required, at the Society’s expense.
Role Key accountabilities
Chair:
Iain Cornish
• The effective running of the board and guardian of the board’s decision-making
processes.
• To support the CEO in the development of strategy and more broadly to provide
oversight and advice.
• To ensure the board receives accurate, timely and clear information and considers
feedback and views from stakeholders, including members and colleagues.
• To lead the development and monitoring of the Society’s culture and behaviours in line
with the Society’s purpose blueprint by the governing body as a whole.
• To take the lead in providing a properly constructed induction programme for new
directors and in identifying and seeking to meet the development needs both of
individual directors and the board as a whole.
• To ensure the effectiveness of the board, its committees and individual directors is
formally and rigorously evaluated, at least once a year (including an external evaluation
at least every three years).
• To promote the highest standards of integrity, probity and corporate governance.
• To oversee the delivery of good customer outcomes, through a customer focused
strategy and culture.
Leeds Building Society | Annual Report and Accounts 2024 101
Role Key accountabilities
Chief Executive Officer:
Richard Fearon
• To propose, develop and implement the Society’s strategy, corporate priorities and
purpose blueprint, having regard to promoting our success in the interest of our
members and other stakeholders.
• To ensure we operate an adequate system of control through the application of a
three lines of defence model.
• To deliver a balanced business performance across a wide range of scorecard
measures, to ensure the achievement of short-term corporate plan objectives, while
building long-term sustainable performance.
• To set the tone in respect of our culture to ensure appropriate behaviours are
demonstrated in line with our purpose blueprint.
• To provide information and advice to the Chair, the Nominations Committee and other
members of the board, on succession planning, particularly in respect of executive
directors.
• Responsible for all executive management matters affecting the Society.
• To promote and conduct the affairs of the Society with the highest standards of
integrity, probity and corporate governance.
• To discharge the allocated PRA/FCA Prescribed Responsibilities and FCA Business
Activities via the Society’s management forums in line with the Society’s Risk
Management Framework.
• To promote and ensure the delivery of good customer outcomes through a customer
focused strategy and culture.
Senior Independent Director:
Gareth Hoskin
• To work closely with the Chair, acting as a sounding board and providing support.
• To act as an intermediary for other directors, as and when necessary.
• Be available to key stakeholders to address any concerns or issues they feel have not
been adequately dealt with through the usual channels of communication.
• To lead the performance evaluation of the Chair.
• To deputise for the Chair and chair meetings where the Chair is conflicted.
• To support the Chair in providing oversight of the delivery of good customer
outcomes, through a customer focused strategy and culture.
Non-executive Directors:
Annette Barnes
Farah Buckley
David Fisher
Neil Fuller
Brendan McCafferty
Pam Rowland
Anita Tadayon
• To help develop and constructively challenge proposals on strategy, ensuring a high
level of conduct and positive outcomes.
• To bring independent judgement and perspective to board debates and decisions and
to use their own experience to constructively challenge the proposals and updates
from the SLT.
• To set our risk appetite and to ensure that the integrity of financial information and
controls are robust and fit for purpose.
• To approve the corporate plan and monitor performance against agreed corporate
priorities.
• To have oversight of the culture, reward and talent management strategies whilst
ensuring management performance achieves the corporate goals.
• To ensure the Society operates with the highest level of governance as set out in the
Code and to assist in the discharge of PRA/FCA prescribed responsibilities and FCA
business activities via management forums, in line with the ERMF.
• To promote the fair treatment of all members/customers.
• To be sufficiently and appropriately informed of the matters under discussion and
to represent and have regard to the interests and views of the Society’s stakeholder
groups, including but not limited to members.
• Oversee and promote the delivery of good customer outcomes through
a customer-focused strategy and culture.
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Role Key accountabilities
Executive directors:
Andrew Greenwood
Andrew Conroy
Rob Howse
• To be responsible for and have oversight of the day-to-day management of the
Society.
• To escalate relevant issues to the rest of the board on a timely basis.
• To set the strategy of the Society alongside the rest of the board and ensure the
necessary business activities are undertaken to meet strategic objectives and
delivery of strategy overall.
• To ensure that prudential, conduct and operational risks are adequately controlled.
• To ensure the Society operates within the agreed risk appetite and Internal Risk
Framework.
• To oversee and promote the delivery of good customer outcomes through a customer
focused strategy and culture.
Secretary:
Katherine Tong
• To provide advice and updates to the board in respect of all governance related
matters and best practice guidance.
• To provide support to the board to ensure that complete and timely papers are
received in advance of all board and board Committee meetings.
• To act as a point of contact for all board members and provide advice as required.
• To provide all necessary support to ensure the board can function effectively with the
appropriate resources in place.
Board committee structure
Board
Nominations
Committee
Annette Barnes
Iain Cornish
Gareth Hoskin
Brendan
McCafferty
Pam Rowland
Audit
Committee
Farah Buckley
Neil Fuller
Gareth Hoskin
Board Risk
Committee
Annette Barnes
Farah Buckley
Neil Fuller
Gareth Hoskin
Brendan
McCafferty
Pam Rowland
Anita Tadayon
Remuneration
Committee
Annette Barnes
Iain Cornish
Neil Fuller
Gareth Hoskin
Brendan
McCafferty*
Pam Rowland
Our ExCo is chaired by the CEO and has the primary purpose of enabling the executive directors and chief officers to manage
the Society in a coordinated way, taking a broad view of key issues and priorities. It delegates some of its duties to, and is
supported by, a number of management committees.
Oversight of matters delegated to board committees, is maintained through regular updates from the Chair of each
committee at board meetings and through updates from the CEO and other executive directors. Members of the ExCo also
attend board meetings on a regular basis to provide updates from each business area and to discuss any pertinent matters.
* Due to start during 2025.
Leeds Building Society | Annual Report and Accounts 2024 103
Membership of each board committee is comprised of independent NEDs, most relevant to their skills and areas of expertise.
The Chair of each committee is responsible for ensuring receipt of accurate, timely and clear information to assist with their
deliberations and decision-making. Board committees have been established in line with the provisions of the Code and
membership is limited to NEDs only, with other board members and senior leaders in attendance, as and when required.
Details on each committee and their membership can be found in each committee’s individual report on page 98 and from
118 to 137.
The board maintains a schedule of matters reserved for its own decision, which sets out the material items for which approval
is required from the board. Examples of items which are within the board’s remit are displayed below.
Area of focus Board responsibilities
Financial reporting Review of the Society’s annual and interim financial statements.
Approval of the corporate plan and forecast updates.
Monitor the performance of the Society and its capital and liquidity requirements.
Strategy/purpose Approval and oversight of technological enhancements and transformation change to the
Society's operations.
Development and oversight of the Society's purpose and strategy.
Stakeholder engagement Stakeholder engagement including seeking the right outcomes for our members.
Approval of an NED to be appointed as (a) the Colleague Engagement Champion;
and (b) Consumer Duty Champion.
Review of the development and implementation of the Colleague Strategy.
Risk management Annual review of the effectiveness of our systems of internal control.
Annual approval of the Society’s risk appetite.
Governance Proposals for the appointment, re-appointment or removal of external auditors.
Annual approval of the Speak Up policy.
Set the tone and monitor culture.
Review and approve the framework of delegated authorities and mandates.
Authority for large initiatives including acquisitions or disposals and contract expenditure.
Appointment of any committees of the board and their ToR.
Approval of and changes to the Corporate Governance Framework.
Undertaking a rigorous and formal review annually of its own performance, committees and
individual directors.
Full details of the board’s role and the matters reserved for its decision can be found within the Matters Reserved for the
Board and the board’s ToR, which are available on our website: leedsbuildingsociety.co.uk.your-society/about-us/board-
committees.
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Board meetings
The board is led by the Chair and operates through a series of scheduled meetings which are held as often as is necessary to
discharge its obligations and to ensure the smooth running of the Society. There are usually at least eight board meetings per
year, with two additional meetings dedicated to planning and strategy in May and October. Ad-hoc meetings are convened
should any issues arise in the interim which require board discussion/approval.
In addition to the schedule of matters reserved for its decision, the board has formal ToR, which incorporate a clear set of roles
and responsibilities. The ToR are used to plan the agenda for each meeting. This allows the Secretary the flexibility to allocate
time to additional agenda items as matters arise that require discussion.
For each meeting, a comprehensive and timely set of papers is provided in advance. The board typically receives certain
regular items at every meeting, such as the minutes of the previous meeting, minutes of any board committee meetings
held since the previous meeting, an action schedule, schedule of key matters, a written update from the CEO, business
performance scorecard and updates on strategic matters, regulatory developments and business transformation.
Agendas also regularly include an item to reflect on the quality of the discussions held, the content of papers and behaviours
displayed. The purpose of this item is to gain constructive feedback on the content and format of papers, in real time and in an
open and transparent manner and ensure that the board reflect on whether together, they are creating the right environment
for effective decision-making.
Board decisions and stakeholder engagement
The board recognises the diverse range of our stakeholders and the importance of assessing and understanding their
needs. Established engagement channels are in place for each stakeholder group and the board receives insight from each
stakeholder group through a combination of direct and indirect engagement and through the reports it receives at board or
board committee level.
Who are our stakeholders?
Members and
brokers
Colleagues
Third-party
suppliers
Communities Environment Regulators Investors
Purpose, strategy, and stakeholder impact are central to the board’s decision-making process. All board papers which require
a decision from the board are required to include information on the key stakeholder groups which may be impacted by the
outcome of any decisions made, and to show how they have been considered.
Over recent years the board has sought to significantly increase its engagement with stakeholders to gain more insight
into their views and requirements, and overall, to enhance its decision-making. An action arising from the 2023 board
effectiveness review was to review how the voice of stakeholders can be amplified. In response, throughout 2024, the board
heard from stakeholders in a variety of different means, which are summarised below. In conclusion, it was discussed that the
variety in approach had created a positive impact and generated better debate in board meetings.
Leeds Building Society | Annual Report and Accounts 2024 105
Examples of how the board heard from stakeholders in 2024 are set out below:
• In March, a board meeting was held at the Society’s contact centre, during which colleagues from different teams met with
the board in person to speak about Customer in Vulnerable Circumstances (CiVC), I&D, innovation and cost consciousness
and customer experience. The board also heard from contact centre managers who outlined their challenges,
achievements, priorities and how they worked with colleagues to deliver excellent service and good customer outcomes.
Neurodiverse colleagues explained to the board how induction and training had been adjusted to meet their needs,
and they shared their experiences of working at the Society. Members of the board also sat with colleagues to listen to
customer calls.
• Members of the board were invited to view an exhibition of material about first time buyers and listen to views of first time
buyers on the challenges they face getting onto the housing ladder. An external speaker was also invited to present to the
board about the challenges associated with tackling the home ownership problem in the UK.
• Leads of the Society's I&D colleague forums were invited to meet with board members during an informal lunch meeting
and share first-hand feedback on the activities underway.
• There was a presentation from colleagues in the Digital and Brand Teams about enhancements made to the digital journey
for savings customers and their vision for the Society’s brand.
• The Chair of the Colleague Association attended a board meeting to provide an annual update on the association’s
activities.
• The board received a detailed presentation from an economics consultancy as to how Consumer Duty and banking
regulation was affecting market outcomes and competitive advantages between building societies and banks.
• There was an interactive session whereby board members were split into smaller groups and were joined by colleagues to
discuss the Society’s colleague strategy and colleague value proposition.
• Updates were received throughout the year from NEDs following meetings with colleagues/other stakeholders, examples
of which are included in the table below:
Non-executive director Stakeholder interaction
Neil Fuller and
Anita Tadayon
Neil and Anita met with colleagues from the Digital Team and provided an update on their
discussions around the progress on digital transformation, agile delivery and next steps to
progress the technology road map.
Iain Cornish Iain attended a meeting with each of the colleague-led I&D forums and reported it was useful
to see the areas in which colleagues were having an influence.
Annette Barnes Annette attended a joint session with the FCA and KPMG to discuss Consumer Duty and the
impact so far, following which she provided an update to the board.
Annette Barnes, Anita
Tadayon and Pam Rowland
Annette, Anita and Pam hosted two dinners for groups of female leaders from across the
business.
Neil Fuller Neil held regular meetings with colleagues from the Risk Division to discuss key matters.
Gareth Hoskin and
Farah Buckley
Gareth and Farah met with the external audit partner to discuss audit planning and to ensure a
smooth transition from Deloitte LLP to Ernst & Young LLP.
David Fisher David met with Board Alchemy to discuss and agree the approach for the 2024 board
effectiveness review.
Annette Barnes As Colleague Engagement Champion, Annette provided detailed updates regarding her
engagement with colleagues over the year, including an overview of colleague engagement
survey results, an update on career pathway development and discussions held at Colleague
Association meetings.
Iain Cornish Iain hosted the first Empowering People of Colour (EPoC) session with Andrew Conroy and
reported that it had been received positively by both internal and external attendees.
Anita Tadayon and
Brendan McCafferty
Anita and Brendan carried out a visit to the Society’s contact centre in the North East, where
they listened to calls and met with the Continuous Improvement (CI) Team.
'Stakeholder feedback and insight from engagement with colleagues and members' also featured as a regular board agenda
item in 2024. This generated more updates from board members regarding any stakeholder interactions they have had since
the previous meeting, whether with colleagues, members, industry bodies, the Society’s regulators or otherwise.
Further details on our stakeholders and their importance to us can be found on pages 25 to 28 of the Strategic Report.
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Board papers
High quality report writing, and board papers are also a key element to ensuring effective and informed decision-making.
The materials provided to the board are reviewed regularly to ensure the information provided is clear and concise, with
sufficient detail to enable a decision to be made. As part of the 2023 board effectiveness review, an action was taken to
further improve reports which are presented and to ensure reports are clear in the 'ask' of the board, the purpose is clearly
defined and to streamline the content where appropriate. Consequently, an external training provider was engaged to provide
training to report writers, with the focus being on creating more concise and purposeful reports.
Board and board committee meetings attendance in 2024
In 2024, there were 12 meetings of the board. The table below sets out the attendance records of each board member at
all board and board committee meetings of which they are members. In accordance with good practice, executive directors
do not have membership rights at board committee meetings and the Chair does not have membership rights at Audit
Committee or BRC.
Board Audit Board Risk Nominations Remuneration
Number of meetings held in 2024 12/12 6 7 4 4
Annette Barnes 12/12 – 7/7 4/4 4/4
Farah Buckley 12/12 6/6 7/7 – –
Andrew Conroy 12/12 – – – –
Iain Cornish 12/12 – – 4/4 4/4
Richard Fearon 12/12 – – – –
David Fisher 10/12 – – – –
Neil Fuller 12/12 6/6 7/7 – 4/4
Andrew Greenwood 12/12 – – – –
Gareth Hoskin 12/12 6/6 6/7 4/4 4/4
Rob Howse 12/12 – – – –
Brendan McCafferty* 3/4 – 2/2 1/1 –
Pam Rowland 12/12 – 7/7 4/4 4/4
Anita Tadayon 12/12 – 7/7 – –
*Brendan joined the board on 1 September 2024.
Leeds Building Society | Annual Report and Accounts 2024 107
Corporate Governance Report continued
2024 key board activities
Our purpose blueprint underpins our strategic plan and will continue to guide our thinking to future proof our Society for years
to come. Being purpose-led challenges us to be the best we can for our members, and to do that, we need to maintain the
upward trajectory we’ve seen in recent years by stretching ourselves and embracing opportunities to unlock our potential to
its fullest.
Examples of the core board activities undertaken over the year are outlined in the table below.
Theme Items Discussion points
Capital strategy Redemption of PIBS Following detailed analysis, it was agreed to redeem the
Society’s issuance of PIBS in April 2024.
Technology roadmap Digital to customer road map
review
IT transformation project
The board received an interactive update from members of
the Digital Team, setting out the Society’s plans to enhance its
digital capabilities and improve customer experience.
The board received regular updates on the IT transformation
programme and its governance framework. More detail can be
found in the strategic report on page 29.
Customer proposition and
brand strategy
First time buyer: customer
voice and proposition
roadmap
Brand re-launch
A discussion to strengthen understanding of first time buyers,
their behaviours and challenges, and how best to service
customers in this market.
Updates were received on the Society’s brand and how this
had created a tangible and emotional connection with the
Society’s members and purpose.
Financial planning 2025 corporate plan The board reviewed and approved the corporate plan for 2025.
People and culture Inclusion and diversity and
colleague strategy
Updates from the Colleague
Engagement Champion
The board received an update on the outcome and
conclusions of the culture audit, which had been conducted
by Internal Audit, along with a further update on the proposed
multi-year colleague strategy, which had also been discussed
at the board strategy conference earlier in the year and was
endorsed by the board.
As Colleague Engagement Champion, Annette Barnes also
provided updates to the board on her engagement with
colleagues and the Colleague Association. More details on this
are included on page 16 of this report.
Succession planning Appointment of a new Chair
and other changes to key
board roles
Following recommendations from the Nominations
Committee, the board approved a number of changes to board
roles, including the appointment of Brendan McCafferty as the
new Chair, subject to regulatory approval.
Members Updates from the Consumer
Duty Champion
Annette Barnes provided updates in her role as Consumer
Duty Champion, including insight from industry insight
sessions to discuss its impact and pace of embedding in the
industry, since its inception in July 2023.
Reflections of a new
director
Update from Farah Buckley
and Pam Rowland
Farah Buckley and Pam Rowland held a first impressions
session following their first six months on the board to capture
the perceptions of individuals new to the board.
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Strategic planning
From a strategic planning perspective, each year the board also holds two conferences, one for strategy in May and one
for planning in October. Each conference has a detailed agenda and supporting information to provide the basis for
discussions on the strategic plans and objectives for the forthcoming year. The items discussed at this year’s conferences
are summarised below:
Theme Purpose Outcome
Purpose To take stock of where we are on our
journey to becoming a truly purpose-
led, customer-focused, commercially
sustainable business and to validate
whether our key areas of focus
remain appropriate in light of external
environment dynamics.
A reinforced, shared understanding of the business we are
building and the key areas that require discipline and focus.
Sustainable
business model
To discuss key business model
dynamics and, in relation to growth,
how credit risk appetite could be
deployed safely to deliver against the
Society’s purpose.
To align board understanding of the dynamics at play, support
the current trade-off between balance sheet resilience,
customer focus and profitability and back the proposed
lending opportunities, to offset potential headwinds.
Colleague
strategy
To outline the context and priorities for
our multi-year colleague strategy, which
will provide the direction to supercharge
our purpose through people.
Endorsement of the ambitions of our multi-year colleague
strategy.
Driving value
through our
operating model
To take stock of the progress made
towards implementing the agreed
Society-wide operating model and to
share the proposed actions that will
help build our cost efficiency strategic
differentiator.
A shared understanding of our operating model dynamics and
any residual capability gaps that need to be addressed.
Our culture
We continue to review and evaluate our culture on a regular basis. Time was allocated during 2024 for discussions with the
board to gain their input into the development of our culture and how to enable high performing teams.
An effective listening approach was recognised as a critical step in elevating our culture to achieve higher performance,
support our innovation and enable us to respond quickly to both colleagues’ and members’ needs. Various listening channels
have been used to elevate the voice of our colleagues, including:
• Our colleague engagement surveys
• Established groups, such as our colleague I&D forums and Colleague Association
• Colleague Voice sessions
• Colleague events such as our annual results roadshow, thank you visits, organised listening groups and mentoring
In 2024, we continued to build an ‘inclusive by design’ culture, completing a significant investment in our Empowering Allyship
programme, which 86% of colleagues participated in. We have also continued to offer development to support people leaders
and colleagues build their capability around driving performance, including training on courageous conversations and giving
and receiving feedback.
As outlined above, we measure and monitor culture through activity such as understanding our colleague sentiment,
through colleague engagement surveys and focus groups. In 2024 we also used two shorter ‘pulse’ surveys, in March and
October, to conduct ‘temperature checks’ against progress.
Leeds Building Society | Annual Report and Accounts 2024 109
Corporate Governance Report continued
In addition, in the first half of 2024, our Internal Audit function performed a culture audit to assess the Society’s culture and
how well the agreed behaviours were embedded. The primary source of information was colleague opinion and experience,
and the review included a combination of focus group discussions and individual interviews, covering a set of structured
interview questions, with over 100 colleagues. Participants in these discussions were from all divisions, grades and a range
of locations. Additional data sources were also used, including the June 2024 colleague engagement survey, to gain further
insight on the themes emerging from the focus groups and interviews. There was a high degree of correlation between the
outputs of the audit and the results of the colleague engagement survey.
The outcome of the audit confirmed that the Society’s culture is good, and demonstrable progress has been made towards
the stated aim of going from ‘good to great’. Colleagues believe in the Society’s purpose and feel that the people around them
help to create a positive workplace environment. Colleagues also continue to feel encouraged to do the right thing for our
members. Many colleagues said the culture is something that has attracted them to or kept them at the Society.
When comparing to the themes from previous reviews, it was found that significant progress has been made on the ‘tone
from the top’ (which was defined as strong colleague understanding and belief in the purpose blueprint).
The review also highlighted that there’s more we can do to elevate performance, and some key themes were identified,
for example to provide colleagues with more constructive feedback to promote continued development, to empower
colleagues appropriately in decision-making and to embed more consistent demonstration of all of our expected behaviours.
Whistleblowing
Our whistleblowing policy - Speak Up - sets out the standards we expect of colleagues and those who work with us.
Our Speak Up arrangements can be used to raise concerns if colleagues have any suspicions or knowledge of wrongdoing
or misconduct. Colleagues are reminded that it is important to speak up to help prevent things going wrong and to protect
the Society, our members and colleagues. We continue to reinforce the internal arrangements for raising concerns, through
providing colleagues with ongoing communication, training and awareness by a variety of means including articles and
procedures and guidance published on the colleague intranet.
In our Speak Up Standard, colleagues can find the procedure, frequently asked questions and guidance on how to report a
concern. The Audit Committee annually reviews our Speak Up arrangements and any reports arising, with final approval from
the board. In 2024, the report to the Audit Committee and to the board confirmed details of a small number of Speak Up
notifications received through the Speak Up hotline during the period September 2023 - August 2024. The report provided
details of each matter and confirmed each one had been investigated, and appropriate action taken. In 2024, there were no
instances of which we are aware, where events have occurred where a Speak Up could have been raised and was missed.
We consider our Speak Up arrangements to be effective and will continue to keep this under review, especially to take account
of colleague feedback.
Gareth Hoskin continues to be the Society’s appointed Whistleblowing Champion and will be succeeded by Farah Buckley,
when he steps down in March 2025.
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Inclusion and Diversity – 2024 activities
The I&D strategy and our performance against the deliverables is important to the board and remains high on its agenda.
The board is pleased with overall progress made within this area and the momentum with which it has moved forward in
recent years. However, we know there is more to do, especially to increase diverse representation at a senior level. Included
below are examples of the ways in which we have progressed and enhanced our I&D activities over the last 12 months.
• A detailed discussion was had by the board in September on progress against our I&D strategy. Board members agreed the
diversity targets set for 2030 felt achievable with disciplined focus. It was also discussed that increasing diversity within the
senior leadership cohort was more difficult and that it was important to build a long-term strategy to achieve and maintain
success. More information is available in the Nominations Committee Report on pages 122 to 123.
• Our Inclusion Steering Committee (ISC), which is chaired by Andrew Greenwood (Deputy CEO) met three times in 2024
and was attended by each Colleague Forum lead and senior sponsor, the I&D team and overall sponsors of our I&D agenda.
The ISC reviews progress on our strategy and ensures we are taking an intersectional approach to our actions.
• The board met with members of each colleague forum as part of an informal networking session.
• The Chair attended meetings with each colleague forum, listened to feedback and shared the board’s own reflections.
• Our female NEDs hosted two dinners for females who are in mid-level/new to leadership positions to support the
development of our gender diverse talent pipelines. Attendees to these dinners have also taken part in group mentoring
sessions sponsored by female members of the SLT.
• Several NEDs have also supported various I&D events. For example, Anita Tadayon joined a panel discussion for
International Women’s Day and Annette Barnes has recently taken part in a wellbeing podcast that was shared internally.
To support the delivery of our I&D strategy, the Society has several well established colleague-led I&D forums.
Other activities to support us to meet our ambitions in this area include:
• We work with external bodies to review and validate our action plans such as Inclusive Employers, Business Disability Forum
and Business in the Community.
• We continue to be signatories to the Women in Finance Charter, as well as the Business in the Community Race at Work
Charter and the Open Doors Campaign (which promotes inclusive recruitment).
• We have achieved the Disability Confident Level 2 standard and in 2023, we received a gold accreditation in the Inclusive
Employers Standard which independently reviewed our progress against our I&D strategy since its launch.
Leeds Building Society | Annual Report and Accounts 2024 111
Executive and non-executive composition
(as at 31 December 2024)
31%
69%
Executive
Non-executive
The Code requires at least half of the board, excluding the Chair, to be made up of independent NEDs. As at 31 December
2024, the board comprised thirteen directors; four executive directors, eight independent NEDs and one non-independent
NED and therefore meets the requirement of the Code.
A number of changes to the board composition were discussed and agreed during 2024 which will come into effect in 2025.
33%
Board diversity
(as at 31 December 2024)
31%
69%
Female
Male
Tenure of non-executive directors
(as at 31 December 2024)
33%
45%
22%
0 to 3
4 to 6
7 to 9
9+
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During the year, Brendan McCafferty was appointed as an independent NED, with the intention he will become Chair from
1 March 2025 (subject to regulatory approval). In addition, having served on the board for over nine years, Gareth Hoskin will
step down as a NED, senior independent director and Chair of Audit Committee on 31st March 2025. Farah Buckley will be
appointed as Chair of Audit Committee and Annette Barnes will become the senior independent director.
The board considers and acts upon recommendations for all new appointments to the board and its committees, from the
Nominations Committee. At the first opportunity following their initial appointment by the board, directors must be elected
to the board by members at the annual general meeting. Brendan McCafferty will therefore be standing for election for the
first time in April 2025. Following their initial election, all directors stand for annual re-election at the AGM and their continued
appointment is dependent on their successful re-election each year.
The Society’s rules permit members to be nominated for election to the board, subject to compliance with PRA and FCA
requirements.
For more information on succession plans, recruitment and the selection process for the Chair, please refer to the
Nominations Committee Report on page 118 to 123.
Board conflicts of interest
All directors have a duty to disclose and notify the board of any potential, or actual conflicts of interest which should then be
considered and, if appropriate, approved by the board. The board has Conflicts of Interest Standards which set out the policy
and procedures for declaring and authorising any conflicts of interest, provides examples of what would constitute a conflict
of interest and refers board members to the Secretary for advice where required.
A detailed register of any potential or actual conflicts of interest is maintained by the Secretary and is submitted to the
Nominations Committee and to the board for review and consideration at least annually, to ensure that all declarations remain
acceptable. The Secretary also asks board members to confirm periodically if there have been changes or updates to the
register. The Chair will also discuss any potential or actual conflicts of interest with each NED in their annual appraisal and
will update the board thereafter should there be any changes.
Leeds Building Society | Annual Report and Accounts 2024 113
Additional roles and time commitment
The expected time commitment for NEDs is usually a minimum of 3 days per month.
All new board candidates are required to provide details of any other external appointments or positions they hold, to ensure
they have sufficient capacity to undertake the role and to assess if there are any potential, perceived or actual conflicts of
interest arising from their other appointments.
Before committing to any additional external appointments, directors are required to disclose details of the appointment,
the time commitment for the role and whether there is any potential, perceived or actual conflict of interest. Approval from
the board is required before any new additional roles can be accepted.
During the year, no additional statutory directorships were approved, however Andrew Greenwood was appointed as an
advisory member of the Clarion Foresight Group.
Each year, board members are requested to attest if the level of time commitment to their other roles has changed.
This is then assessed by the Nominations Committee and an update is provided to the board. In 2024, it was considered
that all members of the board had sufficient time to fulfil their role.
As disclosed in 2023, and as at 31 December 2024, Farah Buckley held more than the prescribed number of directorships
under Article 91 of the Capital Requirements Directive IV and SYSC 4.3A.6R/GOR 5.5, which stipulates a maximum of four
NED roles can be held by a member of the management body. Owing to the non-material nature of some of Farah’s additional
roles and low time commitment, the regulators agreed to a modification of the rules (under Section 138A of the FSMA) up
until 1 July 2025. From 31 January 2025, Farah resigned from her position with Long Term Assets Limited and therefore a
waiver is no longer required.
A list of all external directorships held by board members is shown in the Annual Business Statement on page 223.
Board independence
The independence of our NEDs is considered annually by the Nominations Committee and is assessed against the criteria set
out in the Code. In 2024, the Nominations Committee and the board agreed that all NEDs, with the exception of David Fisher,
were considered to remain independent in character and judgement and that there were no business or other circumstances
which were likely to impair their independence.
Whilst David Fisher continues to display independent character and judgement, as disclosed in 2023, he has been considered
as a non-independent NED since December 2023, owing to the time he has been on the board, over and above the nine-
year term. In accordance with the Code requirements, David remains as a member of the Society’s board only and, whilst he
attends certain board committees, he is not classed as a member. It was agreed in 2023 that David’s position would continue
for up to a further three years (to 2026) to support the changes on the board.
Gareth Hoskin reached his nine-year anniversary with the Society in November 2024 and the board agreed a short extension
of his term, to 31 March 2025, to provide continuity during Ernst & Young LLP’s first year as auditor and to support the financial
year end process, as Chair of Audit Committee.
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Board effectiveness 2024
Our annual board effectiveness review provides the board and its committees with an opportunity to consider and reflect
on the quality of its debate and decision-making and for individual and collective consideration of performance. In 2024, and
in line with the requirements of the Code to have an external review at least every three years, an external facilitator, Board
Alchemy, was appointed to conduct a review. The Society has no prior connection or conflict of interest with Board Alchemy.
As part of the review, the external reviewees were specifically asked to give focus to three matters. The first being how
cognitive diversity could be better harnessed, secondly, to consider how adept the board is at being future focused and lastly,
how can the board govern optimally, to focus on the things that matter most.
The table below sets out the agreed approach for the evaluation:
Approach Result
Questionnaires A questionnaire was issued and completed by all 12 directors (excluding the incoming Chair),
which provided their high-level views on the key drivers of board effectiveness. Feedback from
the questionnaires was used as the basis of the interviews and board members were also asked to
complete a questionnaire that assessed their skills and experience on a self-assessment basis. The
format of this was similar to previous years for internal assessments but was expanded to ask more
about soft skills and attributes.
Interviews All 12 directors on the board at the time were interviewed. The incoming Chair joined the board in
September 2024 and, being a new board member, was not interviewed. The reviewer also met with
eight senior colleagues, the board technology advisor and the external audit partner.
Other Additionally, the review work was supplemented by an analysis of Hogan Assessments for all board
members (including that of the incoming Chair), one to one feedback sessions and observation of a
board and board committee meeting.
On completion of their evaluation, Board Alchemy attended a meeting of the Nominations Committee in October and a board
meeting in November to present their initial findings. The review concluded that the board operates effectively in a context of
recent strong financial performance and a robust capital position. They also concluded there is a good understanding of the
role of the board and clear separation of the roles of executives and non-executives. Board meetings are efficiently chaired,
and all board members are encouraged to contribute. The board gives focus to appropriate areas, including stakeholders and
is well supported by the committees. It was also noted that there is an appropriate range of skills and experience on the board
and there has been thoughtful succession planning which has led to improved cognitive diversity.
A full and final report was provided to the board in December 2024, with a workshop scheduled in 2025, to mobilise the agreed
areas for focus.
In 2024, an update on the 2023 board effectiveness review and the progress made against each of the agreed actions was
provided to the board. The agreed actions have been completed and there have been improvements in the style of reporting
and presentations at board meetings, externally facilitated training on report writing has been provided to report writers and
improvements have been made to board agendas to ensure that the purpose and outcome of each item is clear.
Leeds Building Society | Annual Report and Accounts 2024 115
Committee effectiveness
All board committees also periodically evaluate their own performance and effectiveness, and that of the committee chairs,
through a series of questions, which are sent to all members and regular attendees of the committees. This process identifies
any areas where members may require further training or development to discharge their duties effectively, or where the
overall performance or approach of the committee or Chair could be improved. The evaluation process followed in 2024
concluded that committees were operating effectively.
Directors’ induction
On appointment, all directors, receive a comprehensive induction programme, which is tailored to their individual
requirements and based on their existing skills and expertise and the specific board and board committee roles they
will undertake.
The programme aims to support new directors to understand the Society’s activities and their roles within the committee
and governance structure.
As a newly appointed director in 2024, Brendan McCafferty regularly met with the Chair and the CEO to discuss a wide range
of topics, including strategic items, market trends, corporate objectives and performance against these. Linked to his board
committee membership responsibilities, he also attended introductory meetings with the chairs of the relevant board
committees and received detailed guidance on the board’s governance structure from the Society Secretary. He was also
provided with various documents to familiarise himself with, including the Society’s Rules and Memorandum, our director’s
information manual, our business model, our Responsible Business Model Framework, key board papers from the last
12 months and a summary of the outputs from the previous board effectiveness review.
As part of the detailed induction programme, he met with several senior colleagues to discuss key topics being discussed
at board, including, for example, the IT transformation project as well as leads from each of the colleague inclusion and
diversity forums.
Brendan’s induction plan also included a visit to a number of branches and the contact centre.
Farah Buckley and Pam Rowland provided an update to the January board meeting on their reflections following their first
six months with the Society. Farah noted she had attended several of the colleague I&D forums and had been particularly
struck by the passion of colleagues and how much they cared. Pam also said she had been impressed with the prevalence of
purpose in all discussions and there was evidently a great pride in the branch network, with a strong focus on members and
delivering the right outcomes. Both Pam and Farah also discussed ways to enhance efficiencies and streamline decision-
making processes.
Individual director evaluation and appraisal
Individual director performance is assessed through regular dialogue with the Chair and an annual appraisal is held at the end
of each calendar year. The appraisal process is led by the Chair and involves a discussion on each board member’s personal
development, any training requirements and their contribution to board discussions and any reflections they may have
on pertinent matters. In addition, confirmation is sought that the individual director has sufficient time to discharge their
fiduciary duties and that they are not conflicted in any way, which would mean they were unable to fully perform their role.
The Chair’s performance was evaluated by Gareth Hoskin as the senior independent director, and it incorporated feedback
provided from both the non-executive and the executive directors. The outcome of the appraisal was shared at the January
2024 board meeting, without the Chair being present. The Chair and all the NEDs are considered to be performing effectively
in their roles.
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Board training
The board and committees receive training throughout the year. Members of the board are invited to suggest topics and
themes where training and development is required. In addition, board members are encouraged to correspond with industry
peers and attend externally facilitated events and seminars to maintain and develop knowledge and gain insight into matters
which impact the Society.
In 2024, the board received training on several topics including:
February April
March
September
November
Training facilitated by
Experian on the UK
economy and credit risk
Internal training on
market risk delivered
by the CFO and CRO
Interactive session
with colleagues from
Contact Centre
Internal training
provided on AI
External training
on Consumer
Duty Outcomes
Internal training on competition risk
delivered by colleagues from the
Product and Pricing teams
2024
training
Training is also delivered to board members through the Remuneration, Audit and Board Risk Committees.
Audit, risk and internal control
Our internal governance arrangements continue to support the independence and effectiveness of the Audit function and
the integrity of our financial statements. The Audit Committee Report on page 124 to 132 provides further information in
this regard. We also have an ERMF in place, designed to manage risk, oversee internal control effectiveness and determine
the principal risks, so that we may achieve our long-term strategic objectives. The Risk Management Report on page 62 to
89 provides an overview of our approach to risk and internal control.
Remuneration
A summary of the work undertaken by the Remuneration Committee can be found within the Directors' Remuneration
Report at page 136 to 151.
Approved by the board of directors and signed on behalf on the board.
Iain Cornish
Chair
27 February 2025
Leeds Building Society | Annual Report and Accounts 2024 117
Nominations Committee Report
Year ended 31 December 2024
Nominations Committee highlights from 2024
• Appointment of Brendan McCafferty as new Chair of the board and Nominations Committee during 2025
• Appointment of a new Audit Committee Chair and senior independent director during 2025
• External board effectiveness review
List of committee members as of 31 December 2024
• Iain Cornish (Chair)
• Gareth Hoskin
• Pam Rowland
• Annette Barnes
• Brendan McCafferty
Number of meetings and attendance
• Four scheduled meetings
The attendance records from each meeting in 2024 are included in the Corporate Governance report on page 107.
Introduction from the Chair
I am pleased to present our 2024 report on the Nominations Committee, which summarises our activities over the past year
and the role and responsibilities of the committee.
Committee focus 2024
Key areas of focus for the committee in 2024 have included recruitment and onboarding for our new Chair, Brendan
McCafferty, led by the senior independent director, Gareth Hoskin. I am delighted that Brendan has joined the board as an
independent NED and will take over from me as Chair, subject to regulatory approval, when I leave at the end of February.
Brendan has extensive experience in financial services, including having worked as CEO for AXA Insurance. He is currently
Chair of Nest Corporation (also known as the National Employment Savings Trust) and a NED of Academy Insurance Services
and its connected companies.
With a number of planned changes to board composition on the horizon in 2025, the Committee spent considerable time
reviewing and agreeing changes to key roles and responsibilities to ensure orderly and timely succession arrangements were
in place. In addition to the new Chair, the Committee also agreed a succession plan for Gareth Hoskin once he steps down
from the board in March 2025, having spent over nine years with the Society.
The Committee also focused closely on the external board evaluation exercise which took place in September and was
facilitated by an external company, Board Alchemy. I am pleased to confirm that the evaluation concluded that the board
continues to operate effectively. More information on the outcome and the evaluation process is included below and in the
Corporate Governance Report on pages 115 to 116.
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Role and responsibilities
A summary of the Committee’s role and the activities undertaken in 2024 are detailed below.
Nominations Committee responsibilities:
• Oversight of succession planning and pipeline development for directors and the SLT, ensuring an appropriate focus
on I&D.
• Succession planning for all board and board committee roles.
• Oversight of the appointment and induction process for board candidates.
• Selecting the external firm, the approach and coordination of the annual board evaluation review.
• Review of the Board Conflicts of Interest Policy, including monitoring any potential, perceived or actual conflicts
of interest.
• Ongoing assessment of the independence, additional external appointments and time commitment of NEDs.
• Oversight of the Society’s governance structure and practices to ensure compliance with the UK Corporate
Governance Code (the Code) and best practice, in so far as it is relevant to a building society.
Board composition and succession planning
The Committee is accountable to the board for ensuring the board and its committees consist of directors with the
appropriate balance of skills, experience, background and opinions, to fully discharge their duties in a highly effective manner.
The Committee is also responsible for setting and agreeing the diversity targets at board level and approving the Board
Diversity Statement on an annual basis.
In order to discharge its role, the Committee is required to consider succession planning, for NEDs, executive directors and
the board committees with a forward-looking lens of up to 18 months ahead to ensure there are no gaps in expertise, skills
and experience.
The Committee makes recommendations to the board on all these matters, as well as providing oversight of succession plans
for the SLT. This aids forward planning, promotes the continual refresh of skills and experience on the board and, together
with the composition review, provides insight and direction into the search process for new NEDs. The Committee is required
to review the leadership needs of the organisation at regular intervals and ensure the development of a diverse pipeline for
succession. This enables the Society to continue to operate effectively and ensure its long-term success.
Board committee composition is a standing agenda item and is considered at every meeting. The Committee receives a
schedule of board members which highlights when each board member is within 18 months of their three, six or nine-year
anniversary. Appointments beyond each anniversary are considered closely by the Committee in terms of performance,
independence, time commitment to other roles and ongoing training, before being submitted to the board for approval.
The Committee also reviews composition to ensure they comprise a sufficient number of executive and NEDs, who
meet the requirements as set out by the Code and the Senior Managers Regime (which sets out the expectations of the
Society’s regulators on accountability and governance). As part of this review, the current mix of directors’ skills, experience,
backgrounds and qualifications is reviewed through the completion of a skills matrix. This is considered alongside the current
composition of the board and the board tenure plan, to aid a discussion about the board’s succession planning requirements.
Leeds Building Society | Annual Report and Accounts 2024 119
Appointment of a new Chair
As noted in the introduction, one of the Committee’s priorities in 2024 was the recruitment for the role of Chair following my
announcement to stand down in 2025. In the first half of 2024, the senior independent director led several planning meetings
without me present, to discuss succession planning.
Having considered several executive recruitment agencies, the sub-group agreed to engage the services of Warren Partners
to assist with the search for a suitable candidate and to provide a shortlist of diverse candidates. Following several interviews,
it was agreed that Brendan had been successful and was the best candidate for the role. In May 2024, the Committee
recommended his appointment to the board as a NED. Subsequently and following a successful induction period, the board
further confirmed its approval to appoint Brendan as Chair from 1 March 2025, subject to regulatory approval.
Following the appointment of Brendan, consideration was given as to which committees best suited his experience and
knowledge, alongside future succession plans for each committee and with a view to his appointment as Chair in 2025. After
consideration and approval from the board, it was agreed that Brendan would join the BRC, Remuneration Committee* and
Nominations Committee, the latter of which he will become Chair from March 2025. Brendan will step down as a member of
the BRC on or before his appointment as Chair, although he will continue to attend the Committee.
Succession planning for Gareth Hoskin
Succession planning for Gareth Hoskin was also considered in light of his planned departure from the board in March 2025.
It was agreed that Farah Buckley would replace Gareth as Chair of Audit Committee. Farah has extensive accountancy
experience within the financial services industry and has been a member of the Audit Committee since joining the Society
in 2023. Farah has worked closely with Gareth to ensure there is a detailed handover process and has also met regularly with
colleagues from Finance and Internal Audit, as well as with the external audit partner.
In addition, it was agreed that Annette Barnes would replace Gareth as the senior independent director. Annette has been
actively involved in recent board composition and board effectiveness activity alongside Gareth. She has also been the senior
independent director at GlobalData plc for three years and therefore has relevant experience of the role and responsibilities
involved.
It was also agreed that Pam Rowland would replace Annette as the Colleague Engagement Champion and would also become
a member of the Audit Committee following the departure of both Iain and Gareth.
Board re-appointments
The Committee is responsible for reviewing the re-appointment of all NEDs at the end of each three-year term. NEDs are
usually expected to serve a minimum of two terms. These terms are subject to ongoing performance evaluations and annual
re-election by members at the AGM. NEDs may also be proposed for a third term, up to a maximum of a further three years
(nine years in total but can be longer in very limited circumstances). On re-appointment, a refresher training programme,
informed by their performance evaluation and the future requirement of the role, is provided to each NED as appropriate.
During the year, the Committee proposed, and the board subsequently agreed, the following term extensions:
Name of non-executive Anniversary Agreed term extension
Gareth Hoskin 9 years Until the end of March 2025
Anita Tadayon 3 years 6 years
Annette Barnes 6 years 9 years
Iain Cornish 6 years Until the end of February 2025
The Committee reaffirmed its decision that Gareth Hoskin’s appointment should be extended into March 2025, in order to
provide oversight of the year-end process at Audit Committee and the external audit transition from Deloitte LLP to Ernst &
Young LLP. Gareth reached his nine-year tenure with the Society in November 2024.
Nominations Committee Report continued
* Due to start during 2025.
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Senior leadership team
In 2024, the approach and activities for talent succession for the SLT were reviewed to ensure they support developing a more
diverse pipeline and achieving the Society’s growth ambitions. This work continues in 2025.
Other key activities in 2024
Board effectiveness
In April and July, the Committee received detailed updates and approved the proposed approach to the board evaluation
process. A number of external facilitators had been shortlisted to support the process, and it was concluded to engage
Board Alchemy, a company with which the Society has no prior connection or conflict of interest. The Committee agreed
that the external facilitators would be invited to attend the September board meeting to conduct their review, as well as
attending a BRC meeting and interviews with board stakeholders, such as the external auditor, Secretary and chief officers.
The Committee agreed that the incoming Chair would be included within the review process as this would assist with their
transition to becoming Chair and could be aligned to the induction plan.
More information on the approach and outcome of the 2024 board evaluation is included in the Corporate Governance Report
on pages 115 to 116.
The Leeds NED network
The Leeds NED network was established in 2021 and is a network for potential NEDs with the objective of establishing
relationships with potential candidates for the future. The network aims to provide practical support to aid the attendees
in securing a non-executive role. The focus is on the transition from being an executive director to a non-executive and to
share the inner workings of a board. Three meetings were held in 2024 where a wide range of topics were discussed. The
Chair, CEO and several NEDs hosted and attended the meetings and provided attendees with examples of topics discussed
at the Society’s board meetings. They shared examples of how challenge was presented and explained interactions between
NEDs and management. The sessions sought to provide practical insight into what it means to be an NED and what the
expectations are of the role.
In July, the Committee discussed the future of the network and the pros and cons of face-to-face versus virtual meetings.
It was agreed that the scope of the network be widened to include internal colleagues and those from non-financial services
backgrounds. It was also noted that a combination of face-to-face and virtual meetings should continue to be used, with the
former being both in Leeds and London to ensure we engage with and attract diverse participants. The meetings held in 2024
covered the following themes:
• Exploring the transition from executive director to NED.
• Helping boards be more effective (whilst an executive).
• The ins and outs of the role of the senior independent director.
Board skills matrix review
The Committee has a detailed skills matrix for the board, which indicates the level of skills and experience required to deliver
our strategy and to effectively support the business over our strategy horizon. The range of skills within the matrix reflects
the complexity of executive and NED roles, as well as the responsibilities and governance requirements of the regulatory
regime. The Committee conducts a full review of the skills matrix each year, the outputs of which help to determine gaps and
priorities for succession planning.
In 2024, the skills matrix, with an added focus on soft skills, was used alongside the board effectiveness review outputs. It
continues to be a valuable document which generates and aids discussions regarding: (a) existing skills and experience; (b)
current and future gaps; (c) mitigants to those gaps; and (d) broader training requirements.
The 2024 review concluded there were no immediate skills gaps but in light of the composition changes explained earlier in
this report, the Committee will continue to review this in 2025.
Annual review of the NED Competency Framework and appraisal process
The Committee assessed the annual review process, noting it had been updated and streamlined to align with the NED
Competency Framework in 2023. It was agreed that the Chair would continue to conduct the annual appraisal meetings as
normal, and the incoming Chair would also arrange meetings with each board member to aid his induction and transition to
being Chair. The Committee concluded it was satisfied with the current approach and agreed it was proportionate.
Leeds Building Society | Annual Report and Accounts 2024 121
Review of independence and conflicts of interest
During the year, the independence of all NEDs was assessed against the criteria set out in the Code and their length of service.
The Committee simultaneously considered potential conflicts of interest by undertaking a review of the Board Conflicts of
Interest Register, alongside the external appointments and time commitments held by each director.
Gareth Hoskin’s independence was also considered in light of his term extension beyond his nine-year tenure. It was agreed
that he would continue to be considered as independent given the extension was only for a short period and that he continued
to demonstrate an appropriate level of challenge and scrutiny to all discussions. The Committee concluded that all other
directors, with the exception of David Fisher, remained independent and that all external appointments remained appropriate.
As reported last year, David Fisher’s appointment was extended in 2023 for up to three years as a non-independent NED.
David’s experience and knowledge of the business continues to be extremely valuable to the board and it was agreed that
his appointment would provide continuity and additional strength whilst succession plans for the board are underway and
being embedded.
Further details on the 2024 review process, conflicts of interest, external directorships and the associated time commitments
are contained within the Corporate Governance Report.
Governance
Whilst not mandatory, the Committee is responsible for ensuring the board meets the principles and provisions of the Code
and regulatory sourcebooks relevant to the remit of the Committee – specifically those regarding conduct, accountability and
management arrangements.
In 2024, following a review of compliance against the existing version of the Code, the Committee received an update to
confirm the Society complies with the Code, insofar as it is possible for a building society, with no further actions required.
A review of the 2024 Code was also received by the committee outlining updates and a small number of actions, in readiness
for when it becomes effective in 2025.
Throughout the year, the Committee also reviewed the responsibilities of the Chair, CEO and senior independent director
and agreed the division of responsibilities remained appropriate and aligned to the requirements of the Code.
Inclusion and diversity
The Committee is responsible for ensuring the composition of the board and the SLT is inclusive and diverse. Reflecting the
Society’s strategic ambition, which is to be an organisation where we harness inclusive practices, so that all colleagues are
valued and included for who they are and the unique perspectives they bring. We view diversity as something that is multi-
faceted and goes beyond what you can see. Within the boardroom the focus has been on optimising the cognitive diversity
that the lived experiences of individual members collectively bring to the board. We recognise that all differences bring
benefits – particularly in decision-making, where varying viewpoints can add real value.
In 2024, the Committee reviewed and approved the board Inclusion and Diversity Statement without any material changes.
It also reviewed the progress towards the I&D strategy. The Society’s statement on I&D is available on the Society’s website
at leedsbuildingsociety.co.uk/your-society/financial-information/diversity.
As part of the strategic review, it was agreed that the targets set for 2030 remain appropriate and positive progress is being
made. From a leadership perspective, we are currently tracking behind our 2030 target for both gender and ethnicity. The
numbers of colleagues within these populations are small (which means any shifts in this group can have a significant impact
on our target performance). We are committed to our 2030 targets and have discussed with our ExCo the actions we need
to take to ensure positive progress. This will include a deeper review into our internal development practices, with a view to
ensuring strong internal diverse pipelines, as we know relying on external recruitment alone will not enable the delivery of
our ambitions.
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The table below sets out the Society’s progress against the 2030 targets for gender and ethnicity representation on the board
and in the leadership team, as at 31 December 2024.
Element Actual position at
31 December 2024
Target for 2030
Board* gender diversity
31
%
30
%
minimum
Board* ethnic minority representation
2 members 1 or more members
Female representation at
leadership level**
33
%
45
%
Ethnic minority representation
at leadership level**
6
%
10
%
* Including non-executive and executive directors
** Excluding executive directors
Further information can be found on our website and more information on gender pay and the activities undertaken to
measure our inclusivity and promote wider diversity can be found in the Strategic Report on pages 16 to 17 and in our
Impact Report.
Looking forward to 2025
In 2025, the Committee will continue to focus on ensuring a smooth transition of the board role changes as outlined in this
report and the appointment of Brendan as the new Chair of the board and the Nominations Committee, when I step down
at the end of February.
The output from the board effectiveness review will also continue to be a regular area of discussion at board meetings
and will be used as a catalyst for further work on how the board optimises their cognitive diversity to raise its effectiveness
even further.
Iain Cornish
Chair of Nominations Committee
27 February 2025
Leeds Building Society | Annual Report and Accounts 2024 123
Year ended 31 December 2024
Audit Committee highlights from 2024
• Provided oversight of the Society’s relationship with the new external auditor.
• Annual Report and Accounts recommended to the board for approval.
• Integrated assurance continues to demonstrate our control environment is effective and proportionate.
• Internal Audit’s review of the Society’s culture was completed.
Committee membership during 2024
• Gareth Hoskin (Chair) – member since January 2016.
• Neil Fuller – member since January 2021.
• Farah Buckley – member since April 2023.
Number of meetings and attendance
• Six meetings during the year with 100% attendance from committee members.
• Meetings regularly attended by other board members including the Chair, CEO and CFO. The chief internal auditor,
representatives of the Finance and Risk Divisions and other relevant business areas, plus senior external audit
personnel also attend regularly.
• Two private meetings with the external auditor and two with the chief internal auditor, not attended by
management.
Introduction from the Chair
I am pleased to present my report on the work of the Society’s Audit Committee in relation to the financial year ended
31 December 2024.
The Committee comprises solely of NEDs so that it is independent of executive management. The Committee acts with
authority delegated to it by the board and reports directly to the board. All members of the Committee have recent and
relevant financial services experience and competence in accounting, finance or risk management.
Our core responsibilities relate to the following four areas:
1. Appropriateness
and integrity of our
external financial
reporting
2. Adequacy and
effectiveness of our
systems of internal
control and risk
management
3. Effectiveness,
performance and
independence of
the Internal Audit
function
4. Independence,
performance and
objectivity of the
external auditor
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In 2024, the economic environment in the UK has remained challenging and uncertain. Although the rate of inflation
reduced and interest rates began to fall, the pressure on household budgets remained intense. The knock-on impacts to
the mortgage and savings markets of this uncertainty have presented challenges to the Society which are reflected in the
work of the Committee.
In particular, the challenging economic conditions mean that greater reliance is placed on management judgement in
certain areas of financial reporting and committee members have spent considerable time reviewing and challenging these
judgements for both the Interim Financial Report and the Annual Report and Accounts.
It is vital that our internal control and risk management systems continue to operate effectively to protect the business
and our members in these uncertain times, and all three lines of defence have focused on maintaining a strong control
environment. I am pleased that the Committee has been able to conclude that the control environment remains effective and
proportionate to our operations.
The Internal Audit function continues to provide an effective and independent third line of defence. Internal Audit’s regular
updates to the Committee have generated significant discussion and challenge, so that Committee members could be
satisfied that their work was focused on the most appropriate areas of risk throughout the year.
Succession planning for the next Chair of the Audit Committee was considered following my planned departure from the
board in March 2025. It was agreed that Farah Buckley would be appointed as Chair of the Audit Committee. Farah has
extensive accountancy experience within the financial services industry and has been a member of the committee since
joining the Society in 2023. I have worked closely with Farah to ensure there has been a detailed handover process and Farah
has also met regularly with colleagues from Finance and Internal Audit, as well as with the external audit partner.
Gareth Hoskin
Chair of Audit Committee
27 February 2025
Leeds Building Society | Annual Report and Accounts 2024 125
What the Audit Committee did during 2024
External financial reporting
The Committee reviewed the Society’s Interim Financial Report, published in July, and its Annual Report and Accounts, on
behalf of the board. Following detailed discussions and challenge of management, we were able to recommend these to the
board for approval. All board members either attended the Committee meetings where the final financial statements were
reviewed or received an individual briefing from the Audit Committee Chair, so that all directors were aware of the matters
discussed and the challenges raised with management.
The Committee also provides oversight of the Society’s regulatory reporting and Pillar 3 disclosures. We considered
material overarching judgements applied by management in the preparation of these reports and approved the governance
arrangements around their production, noting the assurance provided by the second line Risk Division.
Preparation of the financial statements requires management to adopt certain accounting policies as appropriate for the
business and to make judgements, estimates and assumptions. Further details of the work undertaken to examine and
challenge the most significant areas are set out in the table overleaf, with additional information in note 2 of the accounts.
Having considered and challenged management and the external auditor’s reports on the approaches adopted, we were able
to conclude that they were appropriate.
The board has also asked the Committee to confirm that the Annual Report and Accounts, as a whole, presents a fair, balanced
and understandable view of the Society’s position and prospects. In assessing this, we considered the process for the
production, review and challenge of the report and whether this would result in a balanced and consistent report.
We read the narrative sections of the report, considering whether the content was consistent with our knowledge and
understanding of the business and the wider environment, as well as other information provided to the board throughout
the year.
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Area of focus How the committee responded
Residential impairment loss
provisions
Under IFRS 9, we are required to hold
impairment loss provisions against
our financial assets, calculated on an
ECL basis.
For residential mortgages, these
provisions are calculated using
complex statistical models which
incorporate historical default and loss
experience information.
Significant judgement and estimation
is required in determining whether
there has been a significant increase in
credit risk, in setting forward-looking
economic scenarios and the probability
weighting of those scenarios.
Management judgement is also
required on the nature and size of post
model adjustments (PMAs) where risks
are identified that are not sufficiently
covered by the modelled provisions
and scenarios.
Further details of the estimates and
judgements used are set out on pages
176 to 184.
We were supported in our assessment of residential impairment loss provisions
by the MRSC, which reviewed any model changes during the financial year, and
Credit Committee, which approved the approach to the non UK loan portfolio
and provided preliminary approval of the final provisions, including PMAs.
Despite evidence of a modest improvement in economic conditions during 2024,
the external environment remains uncertain, which has provided a challenge
when selecting appropriate economic scenarios for provisioning. Management’s
proposed scenarios and weightings were initially reviewed and refined by the
Balance Sheet Optimisation Group before being presented to the Committee for
feedback ahead of reporting dates.
To support the Committee’s review of the assumptions, management provided
benchmarking information and comparison to external third-party forecasts.
We also noted the challenge to specific assumptions provided by the external
auditor and management’s response to this.
As in the previous year, the potential impacts of inflationary pressures on
mortgage affordability have required additional consideration. In November,
management provided us with details of the multiple considerations, including
internal and external benchmarking, being used to assess the affordability
impacts on provision levels. We provided feedback on management’s approach
to be incorporated into the final calculations.
We discussed with management the extent to which the increase in purposeful
higher LTV and LTI lending, assessed using lower stress rates since regulatory
changes in October 2022, was reflected in the existing model outputs.
Management proposed an additional PMA, which addressed two different
elements of model risk that arise because the models were not developed using
data from mortgages underwritten under these conditions. We challenged
management's assumptions and concluded that the PMA appropriately captured
risk that wasn’t fully reflected in the existing models. The Audit Committee
noted that this additional PMA is temporary and the related risks will be captured
within the ECL models by 31 December 2025.
In January 2025, management reported to us their final proposed provisions,
including PMAs. These were supported by key metrics such as coverage rates
and proportions of loans in Stages 2 and 3, benchmarking data and sensitivity
analysis. The Committee assessed the work performed and asked questions on
the approach taken, with the main focus on the range and sensitivities of the
PMAs due to the level of inherent uncertainty.
Having considered management’s reports, the assurance from other
committees and feedback from the external auditor, we concluded that the
impairment models remain appropriate, the assumptions used are reasonable
and that the PMAs at the 2024 year end are appropriate in the circumstances.
Therefore, the Committee concluded that the level of impairment provisions at
31 December 2024 is reasonable.
Leeds Building Society | Annual Report and Accounts 2024 127
Area of focus How the committee responded
Fair value of the collateral loan which
represents a pool of equity release
mortgages
We hold a collateral loan to a third
party which represents a pool of equity
release mortgages acquired from that
third party, which is measured at fair
value through profit or loss.
Since open market prices are not
readily available, the fair value of this
loan is calculated using a model which
requires a combination of market data
and unobservable inputs.
The key estimates and sensitivities are
shown on page 183 to 184.
The model used by management to calculate the fair value of the collateral loan
was reviewed by our second line Risk Division during the year under our model
risk governance overseen by MRSC. The model was assessed as being fit for
purpose.
The assumptions used in the model are primarily evidence based, using historic
data on the performance of the underlying mortgages or external market data.
However, a significant level of judgement is required in selecting the discount
rate to be used and management refresh their calculation at the end of each
reporting period so that the rate applied is aligned to the current interest rate
and economic environment.
Management explained the assumptions used, the judgements applied in
deriving these for the interim and year end accounts and the sensitivity of the
model output to changes in these assumptions. We probed the approach taken
and questioned management on the magnitude of the changes in assumptions.
We also asked management to set out the rationale to justify the overall
movement in fair value for the year, noting the interaction with the fair values of
the associated derivatives. We received and discussed this information at the
January 2025 meeting.
Since there is no directly comparable market data available and a significant level
of judgement is required in the valuation, a wide range of valuations could be
considered reasonable.
Taking into consideration management’s explanations, the sensitivity analysis
provided and the views of the external auditor, the Committee concluded that
the fair value recorded in the financial statements for the collateral loan was
within a reasonable range.
Fair value of the RPI linked derivative
hedging the collateral loan (equity
release swap)
We hold derivative financial
instruments to mitigate risks from
movements in market rates.
The valuation of the RPI linked
derivative hedging the collateral loan
requires management judgement
in the modelling approach and
assumptions used.
The RPI linked derivative is valued using a discounted cash flow model which is
governed by the Society’s model risk policy.
The majority of the assumptions in the model are derived from market
observable data, with the only significant unobservable input being the profile
of the swap balance. Since this is a ‘balance guaranteed’ swap, this is assumed
to match the modelled profile of the underlying equity release mortgages.
Having considered management’s valuation, the rationale supporting this
and the results of the external auditor’s independent testing, the Committee
concluded that the valuation of the derivative in the accounts is appropriate.
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Area of focus How the committee responded
Hedge accounting
Changes in the fair value of derivatives
are recognised in the Income
Statement immediately. However,
if strict accounting criteria are met,
these instruments may be designated
in accounting hedge relationships.
Management continues to apply the hedge accounting rules of IAS 39 for
macro fair value hedges. From 1 January 2024, management chose to apply the
hedge accounting requirements of IFRS 9 for micro fair value hedges and the
macro cash flow hedge. The Committee was provided with the rationale for the
transition from IAS 39 and was satisfied that the change in accounting policy was
appropriate.
The Committee was provided with regular updates through the year on the
hedge relationships in place and the results of effectiveness testing which
showed all hedges remained effective throughout the year.
The nature of hedge accounting means that the external auditor performs
detailed substantive testing of management’s results, including reperformance
of hedge effectiveness testing and derivative valuation. We noted the results of
this testing which did not reveal any material errors.
The Committee therefore satisfied itself that hedge accounting has been
appropriately applied and that management’s hedge effectiveness testing
performed throughout the year was materially appropriate.
The Committee concluded that amounts recognised in the financial statements
are fairly stated and that appropriate disclosures have been made.
Going concern assessment and
Viability Statement
The directors are required to prepare
the financial statements on a going
concern basis, unless they consider
that it is inappropriate to presume that
the Society will continue in business
for the next 12 months.
The board is also required to provide a
statement on the longer term viability
of the Society.
These assessments have been
delegated to the Audit Committee.
Management provided the Committee with reports to support the going
concern assumption for the Interim Financial Report and Annual Report and
Accounts. Those reports drew on MI used by the business to forecast and
monitor key factors including profitability, liquidity, capital and operations. No
matters were identified that would indicate that the Society would not be able
to continue to operate over the period of assessment, even in the event of an
economic downturn or adverse stress.
In order to support the directors’ conclusions on viability, management provided
a report to the BRC reviewing principal and emerging risks. This report set out
details of the stress testing undertaken in respect of those risks, including the
ICAAP, ILAAP, recovery plan and reverse stress testing.
Having considered the outcome of this review and other evidence presented to
the Committee through the year in relation to our risk management processes,
including the annual reports produced by the second and third lines of defence,
the Committee was also satisfied that the Viability Statement is appropriate.
Systems of internal control
Maintaining effective systems of internal control is crucial for the Society to be able to deliver our purpose and to safeguard
our members’ money and our own assets. We operate an ERMF, which is designed to encourage a culture of sound risk
management and internal control. This is overseen by the BRC and delivered through established governance mechanisms
and a three lines of defence assurance model. Further details on the ERMF can be found on pages 41 to 44.
The Audit Committee is responsible for reviewing the adequacy and effectiveness of these controls and risk management
systems and we are supported by all three lines of defence, as part of an integrated assurance model, in order to carry out our
duties as set out overleaf.
Leeds Building Society | Annual Report and Accounts 2024 129
First line management
• Responsible for design,
documentation, operation and
monitoring of internal controls.
• Six monthly assessment of
design and effectiveness of
controls through RCSA.
• Regular scheduled testing of
critical controls.
• Report to the Committee on
request where specific matters
of concern raised by second or
third line.
Second line Risk Division
• Risk-based reviews of specific
processes and functions.
• Oversight and review of risk
registers and RCSA process;
report to Audit Committee on
outcome of RCSA.
• Review results of
management’s critical control
testing.
• Annual report to the
committee on enterprise wide
view of risks and controls.
Third line Internal Audit
• Independent, risk-based
assessments of effectiveness
and adequacy of controls in
specific areas of business.
• Cyclical independent testing
of critical controls, aiming to
cover each control at least
once every three years.
• Report to the Committee
summarising findings from
each review and tracking of
actions.
• Annual summary to the
Committee of observations
and themes in relation to
control environment.
The Committee reviewed and approved the 2024 work plan for the second line prudential risk and compliance monitoring
teams and the Internal Audit plan, which is refreshed on a quarterly basis to allow a focus on the most important areas at a
particular time and takes into account reviews undertaken by the second line as part of an integrated assurance model.
The annual report from the Risk Division showed that our control environment is effective and proportionate to our
operations. Identified control weaknesses are being adequately addressed by management, with ongoing remedial actions.
A particular focus from Risk during the year has been balancing business as usual risks with the risks that arise from a major
multi-year technology transformation programme whilst ensuring that the programme delivers appropriate compliance with
our internal policies.
Internal Audit concluded that the Society’s Risk And Control Framework is mostly adequately designed and operating
effectively, with some areas for improvement. Overall, it did not find any control weaknesses likely to be material to the
financial statements based on the assurance work delivered.
The external auditor also assesses the design and effectiveness of certain financial reporting, operational and IT controls as
part of its procedures to reach an audit opinion on the Annual Report and Accounts. The auditor reported its findings to the
Committee and no material issues were raised in this report.
Overall, based on this year’s review and the evidence provided by all three lines of defence, the Committee concluded that
the Society has adequate and effective systems of control and risk management in place, which has allowed risks to be
appropriately identified and managed.
Internal Audit
Internal Audit plays a vital role in the ERMF because it acts independently of the rest of the business to provide a reliable third
line of defence. The board has delegated the role of overseeing the effectiveness, performance and independence of the
Internal Audit function to the Audit Committee. The chief internal auditor reports directly to the Chair of the Audit Committee
to maintain their independence from executive management. We approved the Internal Audit Charter and ToR which detail
the scope, purpose, authority and responsibilities of the function, noting that these have been updated in January 2025 to
reflect the expectations of the new Global Internal Audit Standards. I also reviewed the chief internal auditor’s objectives for
the year. Internal Audit provides an annual declaration of independence, which confirmed that there was no impairment of its
independence.
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Internal Audit provides regular reports to the Committee setting out progress against the plan of work and the latest plan
for upcoming reviews, together with updates on resourcing and performance metrics. We assessed the coverage provided
by the audit plan and the effectiveness of delivery and debated any challenges arising with the chief internal auditor. We
probed on the use of external insight to inform the Internal Audit plan and discussed the approach to prioritising risk areas
in the quarterly refresh of the plan. We also challenged the approach to monitoring themes arising from Internal Audit’s
review of the Society’s culture in 2024. Updates on Internal Audit coverage of the Core Systems Replacement programme
were provided directly to the board during the year to avoid duplication of reporting, although we continued to receive and
review the outputs of Internal Audit’s work supporting integrated assurance on the programme, and regularly discussed
the appropriateness of Internal Audit resource allocated to oversight of the programme. We received the results of Internal
Audit’s cyclical testing of critical controls and noted improvements recommended by Internal Audit to the documentation and
evidence of first line control testing.
Following the introduction of Internal Audit’s 2024-26 Vision in February 2024, we have received half-yearly updates on
Internal Audit’s progress with implementing the Vision, and with delivery of improvements set out in the underpinning
‘roadmap’ for continuous improvement. We confirmed that, alongside implementation of the Vision, Internal Audit would
continue to be focused upon high quality assurance on key risks.
During the year, Internal Audit performed a self-assessment against new Global Internal Audit Standards which came into
effect on 9 January 2025, and the UK Institute of Internal Auditors’ new Code of Practice. We reviewed Internal Audit’s
assessment and discussed their proposed changes to address the new expectations. In January 2025 we also reviewed the
results of the Internal Audit Quality Assurance and Improvement programme for 2024, which summarised quality assurance
activities including confirming that actions had been completed to address the two observations in the External Quality
Assessment that we received in February 2024.
Based on work throughout the year, the Audit Committee is satisfied that Internal Audit had sufficient resources with the
appropriate skills, competencies and qualifications to deliver appropriate coverage of the Society’s risk areas. We are pleased
to note that the Internal Audit function is independent, effective and compliant with applicable standards.
External auditor
The Committee is responsible for overseeing the Society’s relationship with the external auditor so that the auditor remains
independent and effective.
Ernst & Young LLP were appointed as the Society’s external auditor in 2024 following a competitive audit tender process in
2022. The current audit engagement partner is Steven Robb. During 2024, the Audit Committee provided close oversight of
the transition of the external auditor from Deloitte LLP to Ernst & Young LLP.
During the 2024 financial year, the external auditor provided the Committee with an audit planning document for review and
challenge, setting out the scope, materiality, coverage and timing of the audit work and the qualification and expertise of the
audit engagement partner and key members of the audit team. We evaluated the significant risks identified by the auditor
against management’s assessment of the significant areas of judgement and risks. We also reviewed and approved the
auditor’s engagement letter and fees.
The external auditor provided us with regular reports on the progress of its work throughout the audit cycle and the areas in
which it has challenged management. We discussed these reports during committee meetings with management present
and in private sessions with the external auditor. We challenged them on the timing of certain aspects of their work so that
potential issues in complex areas of accounting could be identified early and resolved well ahead of the accounts signing.
The Committee is responsible for the annual review and approval of our policy on non-audit services, including the
employment of former partners or staff of the external auditor. The external auditor undertook a number of non-audit
assignments during the year, including review of the Interim Financial Report and verification of the Group’s interim net profit.
These assignments were conducted in compliance with the approved policy and occur typically where it is either mandatory
or more efficient for the external auditor to perform the work, in light of the information previously reviewed during the audit
engagement. Total non-audit fees for work undertaken in 2024, including one off items, represented 12% of the audit fees for
the year.
The Committee satisfied itself that the external auditor is effective and independent.
Leeds Building Society | Annual Report and Accounts 2024 131
Audit Committee Report continued
Other matters
Whistleblowing
The Society’s whistleblowing policy is known internally as the Speak Up Standard. Although whistleblowing is a matter
reserved for the board, the Chair of the Audit Committee is the Society’s Whistleblowers’ Champion and the Committee
reviews our policy on behalf of the board and recommends it for approval.
The Committee received an annual report from management on the number and nature of reports submitted and the
extent of training and communication to colleagues. The report noted that our approach is fully compliant with regulatory
requirements and that there is good awareness amongst colleagues, supported by positive responses to internal colleague
survey questions. We have a strong culture where the majority of colleagues feel comfortable to speak up and where survey
results identify this is not the case, action is taken to understand why.
Taxation
The Committee reviewed and approved our tax strategy and tax risk management policy. As part of the approval of the tax
policy, management confirmed to us that the policy had been complied with throughout the year.
Other accounting matters
The Committee reviewed the revised valuation of the Society’s Head Office building, ensuring the approach and data points
used in the valuation were appropriate. In addition, the Committee reviewed the accounting for the costs of the voluntary
support scheme for the members impacted by the collapse of Philip’s Trust Corporation and the relevant disclosure of the
scheme in the Annual Report and Accounts.
Audit Committee effectiveness
Each committee meeting concludes with a review of whether the meeting has been effective and conducted in line with the
Society’s behaviours. This review includes commentary from independent observers wherever possible.
The Committee also undertakes an annual self-assessment of its effectiveness, via anonymous questionnaires to all
members and regular attendees at meetings. The results of the review were very positive, with anonymised verbatims
commenting on the high quality of the reports and papers submitted to the Committee, and concluded that the Committee
had functioned well. The review also concluded that the Chair continues to be effective, actively encouraging debate and
seeking input from all committee members and attendees.
The ToR are reviewed annually and updated to align them to the latest governance requirements and best practice.
The revised ToR were approved at the meeting in November 2024 and are published on our website leedsbuildingsociety.
co.uk.your-society/about-us/board-committees.
All Committee members are required to keep their knowledge and awareness both recent and relevant. The Committee is
kept up to date with changes to accounting standards and regulatory focus areas for financial reporting through reports and
training from management and the external auditor. Separate training materials are also provided where particular topics of
relevance are identified by members or attendees. During 2024, additional training topics included: economic and accounting
updates together with credit and market risk insights to inform the annual and interim approvals of the Society’s financial
statements; fair value and effective interest rate (EIR) accounting; and regulatory reporting.
The year ahead
Farah Buckley will become the Chair of Audit Committee on 1 April 2025. As the Chair role is an accountable role in the
Senior Manager function regime a formally documented handover of duties, responsibilities and accountabilities will be
completed between the outgoing and incoming Chair to comply with regulatory requirements. This handover has been in
progress throughout 2024 and will be completed in advance of Farah’s formal appointment.
Another key focus for 2025 will be to ensure that control frameworks and relevant processes are aligned to the updated
requirements of the Code of Practice.
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Board Risk Committee Report
Year ended 31 December 2024
Board Risk Committee highlights from 2024
• Close monitoring of the Society’s emerging risk profile in the context of heightened external volatility to assess and
manage the impacts on the Society’s principal risks.
• Review of the inaugural Annual Consumer Duty Assessment.
• Monitoring of risks associated with the Society’s multi-year IT change programme, in conjunction with the board.
Committee membership during 2024
• Neil Fuller (Chair) – Chair since January 2022.
• Gareth Hoskin – member since November 2015.
• Annette Barnes – member since February 2019.
• Anita Tadayon – member since October 2021.
• Farah Buckley – member since April 2023.
• Pam Rowland – member since May 2023.
• Brendan McCafferty – member since September 2024.
Number of meetings and attendance
• Seven meetings held during the year; and
• 98% attendance from Committee members (the attendance record of Committee members is set out on page 107).
Introduction from the Chair
I am pleased to present the Board Risk Committee’s report for the year ended 31 December 2024.
This report outlines the operations of the Committee and how it has fulfilled its role overseeing and advising the board in
relation to current and potential future risk exposures and overseeing the effectiveness of risk management frameworks.
During the year, the Committee considered the current and emerging risk profile of the Society against a backdrop of ongoing
geopolitical, economic and financial market uncertainty. Particular focus has been given to monitoring the performance of the
Society’s credit portfolios in the context of prevailing operating conditions and to balance sheet structure in light of financial
market volatility.
From a non-financial risk perspective, the Committee has continued to challenge and closely monitor: embedding of new
frameworks across the organisation to support good customer outcomes; risks associated with the Society’s multi-year IT
change programme, model risk management, operational resilience and the Society’s financial crime control environment and
response to new APP rules.
I would like to thank fellow Committee members for their valued contributions throughout the year. I would also like to take
this opportunity to welcome Brendan McCafferty, who was appointed as a member of the Committee with effect from
1 September 2024. Brendan has extensive experience in financial services, including having worked as CEO for AXA Insurance.
Committee operations
The key purpose of the Committee is to assist the board in understanding and managing risk related matters.
The Committee is responsible for:
• Overseeing the development and effective implementation of the ERMF.
• Reviewing and recommending risk appetite to the board and monitoring the Society’s risk profile within these parameters.
Leeds Building Society | Annual Report and Accounts 2024 133
• Identifying and monitoring the profile of current and emerging risks, including those that may threaten the Society’s
business model, future performance, solvency or liquidity, or increase the potential for customer harm, and ensuring
that these are appropriately mitigated.
• Promoting a risk aware culture within the Society.
• Reviewing and recommending to the board the outputs of key prudential processes (ILAAP, ICAAP, Recovery Plan and
Resolvability Assessment), operational resilience assessments and annual assessment of good customer outcomes.
• Ensuring remuneration arrangements reflect appropriate and balanced risk management considerations; and
• Overseeing the activities of supporting Executive Risk Committees.
A full set of duties are outlined within the Committee’s ToR. A copy of this document can be found on our website:
leedsbuildingsociety.co.uk/your-society/about-us/board-committees.
During 2024, the Committee comprised of seven members, all of whom were independent NEDs. Full biographies and
experience of Committee members are set out on pages 91 to 97 within the Governance Report.
At the invitation of the Committee, meetings held in 2024 were also attended by the Chair of the board, a non-independent
NED and relevant members of the Executive and SLT, ensuring that the three lines of defence were represented.
During the year the Committee met seven times. At the beginning of each quarterly meeting the CRO provided an update
to the Committee regarding the Society’s current and emerging risk profile. A summary of the supporting Executive Risk
Committees was also provided by their respective Chairs through MI to ensure effective oversight of their activities.
To support the Committee’s oversight of key and emerging risks, the Committee receives training from internal and external
subject matter experts on a regular basis. During 2024, the Committee received training on the UK economic/credit
environment, interest rate risk and competition risk.
The Committee is required to conduct a self-assessment of its effectiveness on an annual basis. The 2024 review was
performed using anonymous questionnaires and was completed by Committee members and regular attendees.
The review concluded that the Committee was operating effectively, in accordance with its ToR, with a small number
of minor development areas identified, which will be addressed in 2025.
In addition, the Committee’s effectiveness was also considered as part of a wider board governance review by an external
party. This review also concluded that the Committee was operating effectively.
Matters considered by the Committee in 2024
The Committee had a balanced agenda in 2024, combining challenge and oversight of the Society’s current risk profile with
assessment of emerging risks. A summary of the key matters considered by the Committee during 2024 is set out below.
Enterprise risk (including strategic/business risk)
• Risk appetite – the Committee reviewed the Society’s risk appetite statements and metrics ahead of the 2025
Corporate Plan, to ensure they remained fit for purpose, reflective of prevailing operating conditions, and ensured that
the corporate plan was within risk appetite. Consideration has also been given by the Committee to greater use of the
Society’s risk appetite to support delivery of its purpose.
• ERMF – the Committee approved recommendations from an external review of the Society’s ERMF to ensure that our
risk management practices remain appropriate.
• Climate risk – the Committee received an updated assessment regarding the impacts of risks associated with climate change.
• Emerging external risks – the Committee received an update of the Society’s evolving operating environment at each
meeting and the associated management response.
• Remuneration – the Committee considered potential performance/risk adjustment to senior management variable
remuneration, with recommendations provided to the Remuneration Committee.
Prudential risk (credit, funding and liquidity, market, capital and model risks)
• Credit risk – during the year the Committee closely monitored the performance of the Society’s lending portfolio, in the
context of the cost of living challenges, house price expectations and a higher interest rate environment. Alongside this,
the Committee kept appetite and policies under continuous review to ensure that they remained appropriate for the
prevailing operating environment.
Board Risk Committee Report continued
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• Financial risk – the Committee oversaw the Society’s response to emerging financial risks (including interest rate risk, funding
and liquidity risk and wholesale credit risk), driven by volatility in financial markets and geopolitical risks. The Committee also
considered the potential capital impacts of the near-finalised Basel 3.1 regulatory reforms following their publication.
• Prudential assessments – the Committee conducted an annual review of the Society’s ICAAP, ILAAP, Resolvability
Assessment Framework and Recovery Plan prior to approval by the board.
• Financial risk policies – the Committee reviewed several key internal policies that govern management of financial risk,
including Lending, Funding and Liquidity, Market and Wholesale Credit risk.
• Model risk – the Committee reviewed the Society’s response to PRA SS1/23: Model Risk Management Principles for
Banks. This included review and approval of an enhanced Model Risk Management Framework, including Model Risk
Policy, Materiality Framework, model risk appetite and monitoring approach. The Committee has also received periodic
updates regarding the submission of the Society’s revised IRB models to the PRA.
Operational and conduct risk
• Operational resilience impact tolerances – the Committee reviewed and reaffirmed the Society’s operational resilience
impact tolerances for key business services.
• Cyber risk – the Committee reviewed periodic updates on material cyber risks and received a progress update on the
Society’s Cyber Strategy.
• Financial crime – the Committee received the annual MLRO report and other financial crime updates on a periodic basis.
• Data protection – the Committee received the annual Data Protection Officer’s Report.
• Outsourcing – the Committee received updates on emerging third-party outsourcing risks and reviewed risk
assessment outputs for several new material suppliers.
• Change risk – the Committee reviewed the risk profile associated with the Society’s IT change program.
• Consumer Duty – the Committee continued to oversee the Society’s embedding of the FCA’s Consumer Duty regulation
to support good customer outcomes.
• Philips Trust Corporation – the Committee oversaw risks to the implementation of the Voluntary Financial Support
Scheme.
• Members in financial difficulty – the Committee received regular updates on progress with the Society’s Mortgage
Support transformation programme.
Outlook
Over the next 12 months, key areas of focus for the committee in 2025 are expected to include:
• Ongoing assessment of the key emerging risks and uncertainties facing the Society, as outlined in the Risk Overview
Report on Pages 41 to 44, particularly geopolitical risks, and oversight of management response plans.
• Oversight of the ongoing embedding of Consumer Duty related frameworks across the Society and the evolution of
outcomes MI to further support trend analysis and decision-making.
• Close monitoring of customer outcomes for those customers in financial difficulties.
• Oversight of the risks and mitigants associated with the next phase of the Society’s multi-year IT change programme.
• Overseeing the delivery of the Society’s implementation plan in relation to model risk management.
I believe that the Committee remains well positioned to meet these challenges, as well as supporting the Society in the
delivery of our purpose and strategy.
Neil Fuller
Chair of Board Risk Committee
27 February 2025
Leeds Building Society | Annual Report and Accounts 2024 135
Directors’ Remuneration Report
Year ended 31 December 2024
Remuneration Committee highlights from 2024
• Agreed company and individual senior leadership
team objectives for 2024.
• Maintained vigilance on regulatory changes.
• Approved remuneration of material risk takers.
• Reviewed remuneration principles policy and
remuneration standard.
• Considered matters relating to colleague
remuneration and gender pay.
• Discussed and provided feedback on executive and
colleague reward strategies.
• Approved 2024 bonus outturns and reviewed salaries
of the executive directors.
• Approved bonus schemes for 2025 and agreed to
equalise the weighting on objectives and behaviours
for the senior leadership team .
Committee membership during 2024
In 2024 the committee comprised of five NEDs:
• Annette Barnes (Chair) – member since March 2021.
• Gareth Hoskin – member since January 2018.
• Iain Cornish – member since September 2023.
• Neil Fuller – member since November 2023.
• Pam Rowland – member since November 2023.
Number of meetings and attendance
• Four meetings were held during the year.
• 100% attendance from committee members.
• Other meeting attendees included David Fisher (non-independent NED), Brendan McCafferty (Chair of the board
elect) the CEO, chief people officer and reward lead.
Introduction from the Chair
I am pleased to present this year’s Remuneration Committee report. The report includes a summary of our Remuneration
Policy, together with key decisions made in the year.
The focus of the Committee is to set our Remuneration Policy, including base pay, variable remuneration and other benefits
for executive directors and Material Risk Takers. The Committee also has oversight of reward for the wider colleague
population, as it relates to the broader culture of the Society.
Our members will have the opportunity to vote, on an advisory basis, on the 2024 Directors’ Remuneration Report, at the
AGM. There have been no changes to the Policy since the last member vote at the AGM held in 2024.
The Remuneration Policy is consistent with and promotes sound and effective risk management and ensures processes and
practices do not introduce any risk of detriment to members.
The key features of the Remuneration Policy are set out in full on page 138.
As a mutual, purpose-led business, we reviewed and increased colleague salaries in April 2024, balancing the competing
considerations of cost, the external market, and the persistent cost of living challenge that our colleagues continue to
experience.
Whilst 2024 brought no significant changes in the regulatory landscape, we continue to monitor developments in this area,
particularly ahead of 2025, where the PRA is expected to provide further detail on proposed changes to Remuneration
Regulation first outlined in Q4 of 2024.
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Performance and awards 2024
Earlier sections of the Annual Report and Accounts have set out how we have made strong progress, across all of our key
metrics which determine our variable pay outturn.
After careful consideration, annual bonuses of between 16.31% and 17.35% (2023: 16.70% and 18.09%) have been awarded
for 2024 to the executive directors, which represents between 81.56% and 86.75% (2023: 83.50% and 90.45%) of the
maximum award available.
In arriving at the decision to award variable remuneration, a full risk assessment process was undertaken, during which
the Remuneration Committee considered a range of factors and received input from the BRC. Following full consideration,
no adjustment to variable remuneration was deemed necessary and no malus or clawback was applied.
The Remuneration Policy has operated as intended during the year.
2024 remuneration changes
In April 2024, all colleagues excluding the executive directors and SLT received a standard increase in base pay of 4.5%,
with other changes to colleague pay structures resulting in an overall colleague average increase of 4.64%. The base pay
increase for each executive director in 2024 was 3.5%. The Chair and NED basic fees also increased by 3.5% for 2024, in line
with the minimum increase received by the executive directors and following a review of peer group and wider market data.
Looking ahead
Looking ahead to 2025, the Committee will continue to ensure that we have the right reward structures in place, to foster our
mutual culture and to attract and retain the talent we will need to deliver on our purpose. Alongside this, the proposed PRA
changes to Remuneration Regulation will give the Committee a range of issues to consider during 2025, to ensure that our
remuneration practice remains appropriately structured and aligned with prevailing Remuneration Regulation.
In addition, we have also taken the decision to rebalance the bonus scheme constructs for executive directors and the wider
SLT with effect from January 2025. This rebalancing will see objectives and behaviours now given equal weighting within the
personal section of the bonus scheme, with further detail on this change provided on page 139 of the report. This change
recognises the continued importance of behaviours in driving both good member outcomes and superior commercial
performance at the Society, and the need for our remuneration practice to support this.
I trust this report is helpful and informative. The Remuneration Committee recommends that members vote in favour of the
2024 Directors’ Remuneration Report and Remuneration Policy.
Annette Barnes
Chair of the Remuneration Committee
27 February 2025
Directors’ Remuneration Report continued
Leeds Building Society | Annual Report and Accounts 2024 137
Our Remuneration Policy and principles
The Remuneration Policy is designed to serve the interests of members and stakeholders by:
• Being clearly linked to business objectives.
• Driving behaviours consistent with our purpose, culture, values and strategy.
• Being structured to attract and retain appropriately skilled colleagues to support the Society’s long-term interests and to
promote a healthy culture.
All our remuneration decisions are based on:
• Objectives which ensure the security of the Society and our members through our purpose, business strategy, values
and long-term interests.
• Procedures and practices that are consistent with, and promote, sound and effective risk management. They balance
fixed and variable remuneration to create an acceptable relationship between risk and reward.
• Basic salary and total remuneration which are set at a competitive level to attract, retain and motivate colleagues of the
required calibre.
Components of remuneration structure
Executive directors
The following table summarises the principal components of the executive directors’ total remuneration and the way they
operate. Details which are commercially sensitive have not been provided.
Remuneration element Summary
Fixed
remuneration
Basic salary Provides ability to attract and retain executives through market competitive
rates of pay.
The basic salaries of executive directors are reviewed each year, as for any
other colleague, based on the economic environment, the overall financial
position of the Society and in accordance with benchmarking.
The only exception is if there is a material increase in scope or responsibility
to the executive director’s role.
Pension Based on membership of the Society’s defined contribution section of
the pension scheme. In appropriate circumstances, for example, where
contributions exceed the annual or lifetime allowance, there is an option to
receive a monthly cash allowance in lieu of pension contributions.
Executive directors appointed before 1 April 2019 receive a range of relevant
employer contributions, fully aligned with the colleague population who
joined before 1 April 2019, with a maximum contribution of 20% of basic
salary, based on age and pensionable service.
Executive directors appointed on or after 1 April 2019 receive a maximum
contribution, fully aligned with the colleague population who joined after
1 April 2019, of 10% of basic salary.
Benefits The principal benefits executive directors receive are:
• Life assurance (up to 4x basic salary).
• Private medical insurance.
• Group income protection.
• Health screening.
• Cash health plan.
Other benefits may be provided based on individual circumstances,
for example, relocation.
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Remuneration element Summary
Variable
remuneration
Annual bonus scheme The 20% maximum is split between:
Society performance – 10%.
Personal performance – 10%.
Society performance objectives are agreed by the Remuneration Committee
at the start of each year and reflect business priorities.
Personal performance objectives, appropriate to the responsibilities of the
director, are set at the start of each year and agreed by the Remuneration
Committee. From 2025, 50% of the personal performance award is allocated
to the demonstration of set behaviours (30% previously) which drive true
differentiation, setting out the culture we wish to foster.
The 20% maximum for the executive director in a control function is based
on a range of personal objectives only, with 50% of the award (30% prior to
2025) allocated to the demonstration of behaviours.
Robust risk evaluation measures are independently assessed by the BRC,
with measures for the Deputy CEO assessed by the CEO.
For executive directors designated as ‘Senior Managers’ under the Senior
Manager Regime and over the de-minimis (1), 60% of the bonus will be
deferred, over a period of seven years with no vesting until three years after
the award is made. 50% of variable remuneration will be delivered in a share-
like instrument (2).
Retention awards Such awards will only be made in exceptional circumstances. The monetary
value of the award will be defined at grant, and vesting of awards will be
tied to the completion of a defined period of service and the satisfactory
completion of a specific project or other multi-task deliverable.
Retention awards can be made in conjunction with the annual bonus, up to a
maximum of 100% of fixed pay. All retention bonuses for Material Risk Takers
are subject to the approval of the Remuneration Committee.
Retention awards are part of variable pay and may be subject to malus
and clawback, deferral and delivery in instruments, as determined by the
Remuneration Committee.
Notes
1. The de-minimis limit level is set by regulation, in relation to the level of bonus deferral applied, and impacts colleagues
whose variable remuneration is greater than £44,000 per annum or where variable remuneration is more than 33% of
their total remuneration.
2. Where remuneration exceeds the de-minimis, 50% of the variable remuneration award will be paid in an instrument and
50% will be paid in cash. As a mutual organisation, this means that 50% of the award payable in each year will be held and
retained for a further 12 months and which can be written down in value if agreed capital levels are not maintained.
The instrument cannot increase in value or attract interest payments during the deferral and retention periods.
The Remuneration Committee may apply discretion at any point to reduce bonus awards in whole or part using either malus
or clawback. Malus is a reduction factor which is applied to bonus payments which have not yet vested, and clawback is applied
to seek recovery of bonus payments already paid.
Leeds Building Society | Annual Report and Accounts 2024 139
Bonus deferral and share-like instrument
Variable remuneration is subject to regulatory deferral arrangements. For executive directors designated as ‘Senior Managers’
their total variable pay is deferred over a period of seven years with 50% delivered in a share-like instrument.
The table below illustrates how the 2024 bonus for the CEO, deputy CEO, CFO and COO will be delivered:
Performance
year
April following
the bonus
scheme year
Paid one
year later
Paid two
years later
Paid three
years later
Paid four
years later
Paid five
years later
Paid six
years later
Paid seven
years later
Paid eight
years later
20% cash
20% share-like
instrument
6% share-like
instrument
6% share-like
instrument
6% share-like
instrument
6% share-like
instrument
6% share-like
instrument
6% cash 6% cash 6% cash 6% cash 6% cash
Annual
bonus
scheme
40% of the bonus is awarded
in the April following the
scheme year. 50% of any
award will be delivered in a
share-like instrument.
60% of the bonus will be deferred, over a period of seven years with no vesting until three
years after the award is made. 50% of any award will be delivered in a share-like instrument.
Non-executive directors
NED fees are set at a level that aligns with market conditions and is sufficient to attract individuals with appropriate
knowledge and experience whilst reflecting the level of responsibilities and time commitment required for board and board
committee meetings.
NEDs receive a basic fee and an additional fee for further duties (for example, Chair of a committee or senior independent
director responsibilities).
Fees are reviewed annually with recommendations made to the board by the ExCo. The Chair’s fee is reviewed by the
Remuneration Committee and is in line with the Remuneration Policy, which is to offer fees that are competitive when
compared with similar financial services organisations.
Non-executive directors are reimbursed for travel expenses for attending meetings and, where tax liability arises for these
travel expenses, this will be covered by the Society.
Work of the Committee
The Remuneration Committee divides its time appropriately and proportionately across the three key workstreams of:
1. Pay policy, strategy and variable pay design – ensuring that our remuneration programmes are designed in a way that
links outcomes to Society performance and operates in a way that promotes sound and effective risk management.
2. Base and variable pay outcomes and oversight of Society remuneration – base and variable pay awards are considered
against a full risk assessment, Society performance and external market practice and trends. Alongside this,
appropriate scrutiny and oversight of broader society remuneration takes place, to ensure compliance with prevailing
legislation, broader Society culture and alignment with Executive Compensation outcomes.
3. Governance and regulatory reporting – ensuring that the Committee is properly structured and effectively run, and
that the Committee is properly informed and aware of the regulatory and reporting context that reward management
sits within.
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Report on remuneration 2024
Executive director remuneration summary for 2024
The total remuneration received by executive directors for 2024 is detailed below, compared with 2023. The total
remuneration for executive directors equates to 1.95% of profit before tax (2023:1.41%). This information has been
audited and shows remuneration for the years ending 31 December 2023 and 31 December 2024, as required to be
reported under the Building Societies (Accounts and Related Provisions) Regulations 1998. The awards made in respect
of performance in 2024 are in line with the 2024 Remuneration Policy, with a maximum annual bonus of 20% for executive
directors.
The CEO is the Society’s highest paid colleague. As we are a mutual organisation, we have no share capital and, therefore,
do not offer share-based remuneration to executive directors or colleagues.
Executive director remuneration 2024 and 2023 (audited)
Executive
directors
Salary
£’000
Annual bonus
£’000
Retention
award (1)
£’000
Pension (2)
£’000
Loss of office
£’000
Total fixed
remuneration
£’000
Total variable
remuneration
£’000
Total
remuneration
£’000
Year 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023
R G Fearon 696 665 122 123 – – 77 74 – – 773 739 122 123 895 862
A P Conroy 431 404 71 71 – – 44 40 – – 475 444 71 71 546 515
A J Greenwood 436 415 74 71 – – 74 71 – – 510 486 74 71 584 557
R J Howse 402 392 69 68 142 118 40 39 – – 442 431 211 186 653 617
Total
remuneration
(3)
1,965 1,876 336 333 142 118 235 224 – – 2,200 2,100 478 451 2,678 2,551
Notes
(1) The Remuneration Committee approved a retention award, specifically in relation to the successful delivery of the
critical, multi-year core system migration programme for R J Howse.
(2) These directors elected to receive part or all of the Society’s pension contribution as a cash allowance.
(3) No director received other taxable benefits of £1,000 or above.
Leeds Building Society | Annual Report and Accounts 2024 141
Annual incentive
For 2024, corporate performance incentive opportunities were based on the performance measures in the following table.
The table also illustrates performance against each of the measure.
Blueprint performance measure Weightings for maximum (as % of salary) Pay out %
Sustainable purpose delivery 3.34% 3.23%
Being responsive to member needs 3.33% 2.99%
Purpose-led colleagues and culture 3.33% 2.78%
Notes:
The corporate measures only apply to the CEO, CFO and COO. The deputy CEO is responsible for a control function and,
therefore, is remunerated on personal objectives only based on a maximum of 20%.
Personal performance achievement for executive directors was in the range of 7.31% to 8.35% (16.88% in respect of the
deputy CEO). Personal performance for executive directors in a non-control function is based on a maximum of 10% and is
assessed on personal objectives relating to each executive director specific role and behaviours. Following a thorough risk
assessment as detailed below, no malus or clawback was applied.
Retention award
As reported in 2022, the Remuneration Committee approved a retention award, specifically in relation to the successful
delivery of the critical, multi-year core system migration programme for the COO, Rob Howse.
The second instalment of the retention award of £142,076 was made in 2024, based on the successful delivery of specific
project milestones and objectives.
The retention award is part of variable pay and is subject to malus and clawback, deferral and delivery in instruments, as
determined by the Remuneration Committee.
Risk assessment
The risk assessment process is independently managed by the Risk function. Following completion of the risk assessment
process, the CRO provides an annual report on areas the Remuneration Committee should consider, in respect of whether
performance or risk adjustment is necessary to remuneration outcomes. The report is initially reviewed by the BRC, which
then highlights any specific areas for further consideration to the Remuneration Committee. In addition, the Risk function
considers the corporate priorities and personal objectives for executive directors’ future year remuneration, to ensure they
are aligned with our risk appetite.
The report from the CRO includes an assessment of the current year’s performance in the context of objectives for each prior
year for which variable remuneration has been deferred.
The individual performance of Material Risk Takers and their teams is risk assessed by reference to a range of dimensions
including audit findings, compliance with regulatory policies, compliance with our risk appetite, and general control and
governance matters.
The Remuneration Committee, after consultation with the BRC and consideration of performance against risk appetites, did
not make any risk adjustment for 2024.
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Unpaid deferred elements of the annual bonus scheme
Executive
directors
Performance
year
Due 2025
£’000
Due 2026
£’000
Due 2027
£’000
Due 2028
£’000
Due 2029
£’000
Due 2030
£’000
Due 2031
£’000
Due 2032
£’000
Due 2033
£’000
Total
£’000
R G Fearon 2019 20 20 20 11 – – – – – 71
2020 14 23 23 23 20 8 – – – 111
2021 6 12 12 12 12 7 – – – 61
2022 – 7 13 13 13 13 7 – – 66
2023 24 – 7 15 15 15 15 8 – 99
2024 24 24 – 7 15 15 15 15 7 122
Total 88 86 75 81 75 58 37 23 7 530
A P Conroy 2020 12 – – – – – – – – 12
2021 4 7 7 7 7 4 – – – 36
2022 – 3 8 8 8 8 3 – – 38
2023 14 – 5 8 8 8 8 5 – 56
2024 14 14 – 4 9 9 9 9 4 72
Total 44 24 20 27 32 29 20 14 4 214
A J
Greenwood
2020 13 – – – – – – – – 13
2021 4 7 7 7 7 4 – – – 36
2022 – 4 8 8 8 8 4 – – 40
2023 14 – 4 8 8 8 8 4 – 54
2024 15 15 – 4 9 9 9 9 4 74
Total 46 26 19 27 32 29 21 13 4 217
R J Howse 2021 4 7 7 7 7 5 – – – 37
2022 – 4 8 8 8 8 4 – – 40
2023 14 – 4 8 8 8 8 4 – 54
2024 14 14 – 4 8 8 8 8 4 68
Total 32 25 19 27 31 29 20 12 4 199
P A Hill 2018 25 25 14 – – – – – – 64
Total 25 25 14 – – – – – – 64
R S P Litten 2018 17 17 9 – – – – – – 43
2019 3 4 4 2 – – – – – 13
Total 20 21 13 2 – – – – – 56
Total 255 207 160 164 170 145 98 62 19 1,280
The payment of deferred elements is subject to future performance, for example, the application of malus. Clawback will be
applied as required by regulation.
Leeds Building Society | Annual Report and Accounts 2024 143
Pensions and other benefits
A J Greenwood is a deferred member of the defined contribution section of the pension scheme and has opted for a cash
allowance in lieu of the Society’s pension contribution. R G Fearon and A P Conroy opted to receive pension benefits as part
contributions to the defined contribution section of the pension scheme and part cash allowance, in lieu of the Society’s
pension contribution. R J Howse has opted for a cash allowance in lieu of the Society’s pension contribution.
No executive director has the right or opportunity to receive enhanced benefits beyond those already disclosed, and the
Committee has not exercised its discretion during the year to enhance benefits.
Long-term incentive awards made in the financial year
No long-term incentive awards were made in the financial year to executive directors.
Payments for loss of office
Executive directors may be entitled to receive compensation for loss of office. Such payments will be based on the monthly
salary and pension contributions that the executive would have received if still in our employment.
There were no payments for loss of office made in the financial year to executive directors.
Remuneration for Material Risk Takers in 2024
Material Risk Takers are senior managers who include executive and non-executive directors, chief officers and directors
whose actions have a material impact on the risk profile of the Society.
The basic salary or fees of Material Risk Takers is determined to reflect the responsibilities of the role. Salaries are reviewed
annually, as for all colleagues. Material Risk Takers, other than NEDs, are eligible for an annual bonus scheme. The bonus
scheme for Material Risk Takers in control functions is based on the achievement of non-financial objectives. In 2024, there
were 34 Material Risk Takers during the year.
Aggregate remuneration for Material Risk Takers is reported in the table below.
Number of
beneficiaries (1)
Fixed pay (2) Current year
variable pay
Total
2024 2023 2024
£’000
2023
£’000
2024
£’000
2023
£’000
2024
£’000
2023
£’000
Senior management 13 13 2,860 2,693 520 492 3,380 3,185
Other Material Risk Takers (3) 21 26 5,104 4,787 712 645 5,816 5,432
Total 34 39 7,964 7,480 1,232 1,137 9,196 8,617
Notes
(1) Material Risk Takers who left the Society during the calendar year are included in the table above.
(2) Fixed pay includes basic salary, benefits, pension, loss of office payments and fees for NEDs.
(3) The presentation of the 2023 comparatives has been restated to present the accurate split between senior
management and other material risk takers.
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Remuneration for non-executive directors
NEDs receive a basic fee and an additional fee for further duties (for example, Chair of a committee or senior independent
director responsibilities).
Non-executive directors Basic fees
(£’000)
Benefits (1)
(£’000)
Committee chair/
other fees (£’000)
Total
(£’000)
2024 2023 2024 2023 2024 2023 2024 2023
I C A Cornish (Chair) 174 169 5 6 – – 179 175
G J Hoskin
(current senior
independent director)
58 56 3 5 25 24 86 85
A M Barnes 58 56 8 8 18 18 84 82
D Fisher 58 56 – – – – 58 56
N A Fuller 58 56 3 5 18 18 79 79
A Tadayon 58 56 8 10 – – 66 66
F Buckley 58 42 3 3 – – 61 45
P Rowland 58 37 6 3 – – 64 40
B McCafferty (2) 19 – 5 – – – 24 –
L R McManus (3) – 2 – 2 – – – 4
Total 599 530 41 42 61 60 701 632
Notes
(1) In addition to the payment of fees, NEDs are reimbursed for travel expenses for attending meetings and, where tax
liability arises, this will be covered by the Society.
(2) This colleague joined on 1 September 2024.
(3) This colleague left on 13 January 2023.
NEDs (including the Chair) received an annual basic fee increase of 3.5% in April 2024, in line with the senior leadership
colleague population.
From 1 April 2025, NED fees will be as follows:
Role 2025 Fee
Chair of the board £180,538
Senior independent director £7,128
NED base fee £59,812
Committee Chair (Audit, Risk, Remuneration) £18,849
Payments to former directors
A payment of £25,307 has been made in 2024 to P A Hill, the former CEO, who retired on 30 June 2019. A payment of £20,662
has been made in 2024 to R S P Litten, the former CFO, who left the Society on 18 April 2019. The bonus payments consisted
of deferred incentive awards, which are assessed in full when they are awarded. All these payments were subject to risk
assessment and the Committee determined no risk adjustment was required.
Policy review
The Remuneration Policy is subject to an annual review of both its content and implementation and is approved by the
Remuneration Committee. The BRC also contributes to the policy review, to ensure it takes sufficient account of risk
considerations.
Remuneration arrangements meet regulatory requirements, including the FCA Dual–Regulated Firms Remuneration Code,
PRA Rulebook and good corporate governance practice.
Leeds Building Society | Annual Report and Accounts 2024 145
Vote
Members are asked to vote on the Remuneration Policy at least every three years, or earlier if the policy changes. The current
Remuneration Policy took effect from the date of the 2024 AGM.
Annual General Meeting 2024 results – Directors Remuneration Report
Resolution 3 % votes for % votes against
Directors’ remuneration report 93.01% 6.99%
Resolution 4 % votes for % votes against
Directors’ remuneration policy 92.48% 7.52%
Awards under different scenarios for 2025
The charts below show the awards split between fixed pay and variable pay, under the variable pay arrangements, for each
current executive director under different scenarios:
Chief Executive Officer (£)
Chief Financial Officer (£)
Deputy Chief Executive Officer (£)
Chief Operating Officer (£)
100%
803
Fixed Target Maximum
88% 85%
12% 15%
911
948
100%
493
Fixed Target Maximum
88% 85%
12% 15%
560
582
100%
530
Fixed Target Maximum
88% 85%
12% 15%
598
621
100%
460
Fixed Target Maximum
88% 85%
12% 15%
523
544
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Type Summary
Fixed Consists of basic salary and pension.
Basic salary at 1 April 2025:
Executive director Basic salary Pension Total fixed
Chief Executive Officer £723,318 £79,565 £802,883
Deputy Chief Executive Officer £453,076 £77,023 £530,099
Chief Financial Officer £447,741 £44,774 £492,515
Chief Operating Officer £418,108 £41,811 £459,919
Target Based on what an executive director would receive if the target level of performance was achieved, based on
a 20% variable remuneration scheme: annual variable element pays out at 75% of the maximum available.
Maximum Based on what an executive director would receive if the maximum level of performance was achieved:
annual variable element pays out at 100% of maximum available.
Approach to recruitment remuneration for executive directors
Type Remuneration element Summary
Fixed
remuneration
Basic salary and benefits The salary level will be set taking into account the responsibilities of the
individual and by comparison with roles carrying similar responsibilities,
in organisations of a comparable size, complexity and diversity to the
Society. The executive director will be eligible to receive benefits as set
§out in the Remuneration Policy table.
Pension The executive director will be able to participate in the defined contribution
section of the pension scheme or to receive a cash allowance of up to a
maximum of 10% of basic salary, in line with the colleague population.
Variable
remuneration
Annual bonus The executive director will be eligible to participate in the annual bonus
scheme as set out in the Remuneration Policy table. The bonus award will be
pro-rated to the number of complete months worked during that year.
Replacement award When replacement awards cannot be avoided, the Committee will
structure any such awards so that, overall, they are no more generous in
terms of quantum or vesting period than the awards due to be forfeited.
In determining the quantum and structure of these commitments,
the Committee will seek to replicate the fair value and, as far as practicable,
the timing and performance requirements of remuneration foregone.
Recruitment
remuneration
Any payments made to executive directors on joining the Society to
compensate them for forfeited remuneration from their previous employer
will be compliant with the provisions of the PRA Rulebook and the FCA Dual-
Regulated Firms Remuneration Code.
Retention awards Such awards will only be made in exceptional circumstances. The monetary
value of the award will be defined at grant and vesting of awards will be
tied to the completion of a defined period of service and the satisfactory
completion of a specific project or other multi-task deliverable.
Retention awards can be made in conjunction with the annual bonus, up to
a maximum of 100% of fixed pay. All retention bonuses, for Material Risk
Takers, are subject to the approval of the Remuneration Committee.
Retention awards are part of variable pay and may be subject to malus
and clawback, deferral and delivery in instruments, as determined by the
Remuneration Committee.
Leeds Building Society | Annual Report and Accounts 2024 147
Service contracts
Executive directors’ terms and conditions of employment, including details of remuneration, are detailed in their individual
service agreements, which include a notice period of 12 months. The standard contract is available to view at the Society’s
Head Office.
The NEDs do not have service contracts with the Society.
Other paid directorships
Andrew Greenwood holds a member role at the Clarion Foresight Group which has been approved by the board and does not
give rise to any conflict.
Policy on payment for loss of office
When determining any loss of office payment for a departing individual, the Committee will seek to minimise costs to the
Society, whilst seeking to reflect the circumstances in place at the time. Accordingly, the Committee retains overriding
judgement to make loss of office payments appropriate to the circumstances and applying the overriding principle that there
should be no element of reward for failure.
Remuneration element Summary
Fixed
remuneration
Basic salary and benefits In the event of termination by the Society, there will be no compensation
for loss of office due to misconduct or poor performance. In other
circumstances, executive directors may be entitled to receive
compensation for loss of office. Such payments will be based on the
monthly salary and pension contributions that the executive would have
received if still in employment with the Society. Executive directors are
expected to mitigate compensation for loss of office, in appropriate
circumstances.
Variable
remuneration
Annual bonus Where an executive director’s employment is terminated during or after the
end of a performance year, but before the payment is made, the executive
may be eligible for a pro-rated annual bonus for that performance year,
subject to an assessment based on performance achieved over the period
and subject to risk adjustment. No award will be made in the event of
misconduct.
Where an executive director leaves the Society after an award is made,
deferred payments will remain payable, subject to the normal rules of the
scheme, including risk adjustment.
The Remuneration Committee, in determining the final awards, may
apply judgement to assess performance in the round. When assessing
performance in the round, the Remuneration Committee may take into
account (inter alia) wider market, regulatory and stakeholder considerations.
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Statement of consideration of conditions elsewhere in the Society
The Committee considers the increase in general basic salary for the wider colleague population when determining the annual
salary increases for the executive directors.
The chart below illustrates the comparison of average basic salary increase made in April 2025 to the CEO, executive directors
and all other colleagues.
CEO Executive directors All other colleagues
3.00% 3.00% 3.37%
Statement of implementation of the Remuneration Policy in the following year
The Remuneration Policy is implemented by management. A formal review of the implementation of the policy is conducted
by the Remuneration Committee on an annual basis.
The executive directors’ salaries from 1 April 2025 are as follows, compared with 1 April 2024:
1 April 2024 1 April 2025 % Increase
R G Fearon £702,250 £723,318 3%
A J Greenwood £439,880 £453,076 3%
A P Conroy £434,700 £447,741 3%
R J Howse £405,930 £418,108 3%
The annual pay review takes place in April, for all colleagues in the Society, including executive directors.
As noted in the Chair’s introduction, the bonus scheme constructs for executive directors and the wider SLT will be
rebalanced with effect from January 2025. This rebalancing will see objectives and behaviours given equal weighting within
the personal section of the bonus scheme. This change does not impact the overall scheme maximum, which remains at 20%,
or the 50:50 split between Society and personal performance elements. The change recognises the value of behaviours in
driving superior commercial performance at the Society.
Due to their commercial sensitivity, targets and individual objective weightings are not disclosed prospectively.
Leeds Building Society | Annual Report and Accounts 2024 149
CEO pay ratio
The Companies (Miscellaneous Reporting) Regulations 2018 came into force for accounting periods starting from
1 January 2019 and requires the publication of the ratio of the CEO’s single figure total remuneration. We have chosen to
use the government’s preferred methodology (option A), which determines the total full time equivalent remuneration for all
colleagues for the relevant financial year, and compares the median, 25th and 75th percentiles against the CEO single figure.
Year Method 25th percentile Median 75th percentile
2024 Option A 31:1 20:1 14:1
2023 Option A 31:1 21:1 14:1
2022 Option A 30:1 20:1 13:1
2021 Option A 30:1 20:1 13:1
2020 Option A 32:1 21:1 14:1
2019 Option A 32:1 22:1 15:1
The remuneration below is calculated in respect of the year ended 31 December 2024:
Remuneration element 25th percentile (£) Median (£) 75th percentile (£)
Total pay and benefits £29,073 £43,905 £65,369
Salary £23,776 £39,082 £53,774
Directors’ loans, transactions and related business activity
The aggregate amount outstanding at 31 December 2024 in respect of loans from the Society or a subsidiary undertaking to
directors of the Society or persons associated with directors was nil (2023: nil), being nil mortgages (2023: nil) to directors and
persons connected to directors. A register of loans and transactions with directors and their connected persons is maintained
at the Head Office of the Society and may be inspected by members. There were no significant contracts between the Society
or our subsidiaries and any director of the Society during the year.
History of remuneration of CEO
The table below shows the total remuneration of the CEO over the last five years, together with the performance pay awarded
as a percentage of the maximum possible.
Year Total remuneration
£’000
Performance pay as %
of maximum
2024 895 86.8
2023 862 90.4
2022 752 93.4
2021 695 94.0
2020 684 82.9
Directors’ Remuneration Report continued
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Percentage change in salary for CEO
The basic salary of the CEO increased by 3.5% during 2024. An average annual increase of 4.64% in basic pay was awarded
to all colleagues. The annual change of each individual executive director’s pay, compared to the annual change in average
colleague pay is detailed below.
Annual increase
Chief executive officer 3.50%
Deputy chief executive officer 3.50%
Chief financial officer 3.50%
Chief operating officer 3.50%
Minimum salary 4.55%
Colleague average 4.64%
Relative importance of spend on pay
The following table sets out the percentage change in profit and overall spend on remuneration in the year ending
31 December 2024, compared to the previous year.
2024 2023 Percentage change
Group profit after tax £99.9 million £133.9 million (25.4)%
Colleague remuneration costs £85.2 million £79.1 million 7.7%
Headcount 1,846 1,788 3.2%
External advisers to the Remuneration Committee
The Committee seeks input from the Chief People Officer, the Reward Lead, and the CEO, who are invited to attend meetings.
The Committee also benefits from specialist advice when required from an appropriate independent remuneration advisor
(PwC LLP). PwC LLP advised management, in support of committee activity, in 2024 and has confirmed it does not have any
conflict of interest in advising the Remuneration Committee.
Leeds Building Society | Annual Report and Accounts 2024 151
Directors’ Report
Year ended 31 December 2024
The directors are pleased to present their Annual Report
and Accounts and Annual Business Statement, for the year
ended 31 December 2024.
Our business model and purpose-led strategy are described
in the business model and strategy section on pages 9 to 30
of the Strategic Report, where KPIs are also presented.
Profits and capital
Profit before tax for the year was £137.5 million (2023:
£181.5 million). The profit after tax transferred to the general
reserve was £99.9 million (2023: £133.9 million). Total equity
attributable to members at 31 December 2024 was £1,720.4
million (2023: £1,643.4 million).
Gross capital at 31 December 2024 was £2,062.6 million
(2023: £2,000.3 million) including £334.2 million (2023:
£323.9 million) of subordinated liabilities and £8.0 million
(2023: £33.0 million) of subscribed capital. The ratio of gross
capital as a percentage of shares and borrowings was 7.10%
at 31 December 2024 (2023: 7.83%) and the free capital ratio
was 6.82% (2023: 7.46%). Further explanation of these ratios
is provided on page 222 of the Annual Business Statement.
Mortgage arrears
At 31 December 2024, there were 361 (2023: 343) mortgage
accounts 12 months or more in arrears. The total mortgage
arrears, for these accounts, was £5.0 million (2023: £4.4
million) and the total principal balance outstanding was
£38.2 million (2023: £34.9 million).
Charitable and political donations
In 2024, the Society made donations of £305,434 (2023:
£301,670) to the Leeds Building Society Charitable
Foundation. Our other donations to charities and good
causes (including colleague match funding) during the year
amounted to £391,251 (2023: £582,077).
The Caring Saver and Your Interest in Theirs scheme
provided further donations of £20,316 (2023: £13,170)
and £92,601 (2023: £84,874) respectively to specified
charities. Additionally, the Society has savings products
which supported Dementia UK and Barnardo’s during 2024,
resulting in a donation of £98,066 (2023: £82,082).
Other charitable donations from colleagues and members
totalled £115,518 (2023: £112,256) taking total donations to
charities and good causes to £1,023,186 (2023: £1,176,129).
No political donations were made during the year
(2023: none).
Principal risks and uncertainties
Our approach to managing risks and the principal risks and
uncertainties we face are set out in the Risk Management
Report on pages 62 to 89, which also contains information
on, and our approach to managing, our financial risks.
Colleagues
Information on key colleague policies and associated KPIs,
including our processes for communication and consultation
with colleagues, are included in the Strategic Report on
pages 9 to 30 and the Corporate Governance Report on
pages 99 to 117 .
We are committed to ensuring every colleague feels valued
and included for who they are and the unique perspectives
they bring. We are a Disability Confident accredited employer
and give full and fair consideration to applications for
employment from disabled persons, having regard to their
particular aptitudes and abilities. Where a colleague becomes
disabled during the course of their employment, every effort
is made to continue their employment, making reasonable
and proportionate adjustments as necessary.
Business relationships
We are committed to developing strong business
relationships with our partners, notably our mortgage
brokers, suppliers and investors. Further details of how
the board has regard to the interests of these and other
stakeholders can be found on pages 25 to 28 and 105 to 106.
Creditor payment policy
We aim to agree terms and conditions with suppliers that
outline the way in which business is to be transacted,
including the terms of payment, and to pay in accordance
with contractual and other legal obligations.
Creditor days stood at 15 days at 31 December 2024
(2023: 15 days).
Environmental policy
The directors recognise that climate change is a significant
global issue which impacts on and requires action from
multiple bodies, including governments, businesses and
individuals. We are committed to playing our part as a
responsible business.
During the year, we have continued to enhance our
understanding of the risks and opportunities for the
business from climate change and monitor targets to
reduce our environmental impact. Our climate-related
financial disclosures are included on pages 47 to 60 of the
Strategic Report.
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Pillar 3 disclosures
The disclosures required under Pillar 3 of CRD V are
published on our website at leedsbuildingsociety.co.uk/
press/financial-results.
Corporate governance
We have provided statements on corporate governance
and directors’ roles and responsibilities in the Corporate
Governance Report on pages 99 to 117.
Directors’ responsibilities in respect of the
preparation of the Annual Accounts
This statement is made by the directors to explain their
responsibilities in relation to the preparation of the Annual
Accounts, Annual Business Statement and Directors’ Report.
It should be read in conjunction with the statements on the
respective responsibilities of directors and the auditor on
pages 162 and 163.
For each financial year, the directors are required by the
Building Societies Act 1986 (the Act) to prepare annual
accounts which give a true and fair view of the income and
expenditure of the Society and the Group, and of the state of
affairs of both, as at the end of the financial year. Additionally,
they must provide details of directors’ emoluments in
accordance with Part VIII of the Act and regulations made
under it. The Act states that references to IFRS accounts
giving a true and fair view are references to their achieving a
fair presentation.
In preparing the Annual Accounts, directors are required to:
• Select appropriate accounting policies and apply them
consistently.
• Make judgements and estimates that are reasonable and
prudent.
• State whether the Annual Accounts have been prepared
in accordance with IFRS.
• Prepare the Annual Accounts on the going concern basis,
unless it is inappropriate to presume that the Group will
continue in business.
The directors consider that the Annual Report and Accounts
are fair, balanced and understandable, when taken as a
whole, and that they provide the information necessary for
members to assess the Society’s and Group’s performance,
business model and strategy.
In addition to the Annual Accounts, the Act requires the
directors to prepare an Annual Business Statement and
a Directors’ Report for each financial year. Each contains
prescribed information relating to our business and
subsidiary undertakings.
Directors’ responsibilities for accounting
records and internal control
The directors are responsible for ensuring that the Society
and our subsidiary undertakings:
• Keep accounting records in accordance with the Building
Societies Act 1986.
• Take reasonable care to establish, maintain, document
and review such systems and controls as are appropriate
to our business.
The directors have general responsibility for safeguarding
the Society’s assets and for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance of the
corporate and financial information included on the Society’s
website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
The directors who held office at the date of approval of this
report confirm that, as far as they are aware, there is no
relevant information of which our auditor is unaware and
that each director has taken all steps necessary to make
themselves aware of any relevant audit information and
establish that the auditor is aware of that information.
Going concern
The directors are required to prepare financial statements on
a going concern basis, unless it is inappropriate to presume
that the Society and the Group will continue in business for
the next 12 months.
The directors review the results of regular forecasts and
stress tests to understand the potential financial and
operational performance of the business under a range
of economic and market conditions. This informs their
assessment of whether the Society and the Group are going
concerns. These assessments reflect the potential impacts
of the principal and emerging risks set out on pages 41 to 44.
The directors have also reviewed the Society’s and Group’s
position over a longer period than the 12 months required
by the going concern assessment. This is explained in the
Viability Statement on pages 45 to 46 of the Strategic
Report.
Based on the assessments performed, the directors have
concluded that:
• The Group has proven access to liquidity resources,
including access to central bank funding facilities if
required, sufficient to meet both the normal demands
of the business and the requirements which might arise
in modelled stressed circumstances. The availability and
quality of liquid assets are structured so that funds are
available to repay any maturing wholesale funds and cover
exceptional demand from retail investors.
Leeds Building Society | Annual Report and Accounts 2024 153
• The Group’s other assets consist primarily of mortgages
secured on residential property. The recoverability of all
mortgage assets is regularly reviewed and provisions are
made, incorporating a forward-looking view of expected
losses under a range of macroeconomic scenarios, so
that the Group is not exposed to losses on these assets
which would impact its decision to adopt the going
concern basis.
• The Group’s current capital resources are sufficient to
meet regulatory requirements. Having reviewed plans
and forecasts, the directors consider plans for future
capital generation are sufficient to maintain capital in
excess of regulatory requirements, under both central
and modelled stressed scenario.
The directors have therefore concluded that the Society
and Group have adequate resources to continue in
operation to 27 February 2026, representing a period
of at least 12 months from the date of approval of the
financial statements. Therefore, it is appropriate to
continue to adopt the going concern basis in preparing
the financial statements.
Directors
The names of the directors of the Society at 31 December
2024, their roles and membership of board committees are
detailed on pages 91 to 97.
In line with best practice, all executive and non executive
directors offer themselves for election or re-election by the
members at the AGM.
None of the directors hold any beneficial interest in shares in,
or debentures of, any subsidiary undertaking of the Society.
Auditor
In accordance with Section 77 of the Building Societies Act
1986, a resolution for Ernst & Young LLP’s re-appointment as
auditor will be proposed at the AGM.
Post balance sheet events
The directors consider that no events have occurred since
the year end to the date of this Annual Report that are likely
to have a material effect on the financial position of the
Group, as disclosed in the Annual Accounts.
Director of Legal, Compliance
and Secretary
Directors’ Report continued
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Financial
Statements
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Independent Auditor’s Report to the
Members of Leeds Building Society
Year ended 31 December 2024
Opinion
In our opinion:
• The financial statements of Leeds Building Society (the Society) and its subsidiaries (together the Group) give a true
and fair view of the state of the Group’s and the Society’s affairs as at 31 December 2024 and of the Group’s and the
Society’s income and expenditure for the year then ended;
• The financial statements have been properly prepared in accordance with UK adopted international accounting
standards; and
• The financial statements have been prepared in accordance with the requirements of the Building Societies Act 1986.
We have audited the financial statements (as defined in the table below) of the Group and Society for the year ended
31 December 2024, which comprise:
Group Society
Income statement for the year ended 31 December 2024 Income statement for the year ended 31 December 2024
Statement of comprehensive income for the year ended
31 December 2024
Statement of comprehensive income for the year ended
31 December 2024
Statement of financial position for the year ended
31 December 2024
Statement of financial position for the year ended
31 December 2024
Statement of changes in members’ interests for the year
ended 31 December 2024
Statement of changes in members’ interests for the year
ended 31 December 2024
Statement of cash flows for the year ended
31 December 2024
Statement of cash flows for the year ended
31 December 2024
Related notes 1 to 33 to the financial statements, including material accounting policy information
Country by Country Reporting for the year ended 31 December 2024
Tables within the Directors’ remuneration report identified as 'audited' on pages 136 to 151.
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international
accounting standards.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group and the Society in accordance with the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the FRC’s Ethical Standard as applied to public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Society and we
remain independent of the Group and the Society in conducting the audit.
Leeds Building Society | Annual Report and Accounts 2024 157
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group’s and
the Society’s ability to continue to adopt the going concern basis of accounting included the following procedures:
• We confirmed our understanding of the directors’ going concern assessment process, including the Financial Statement
Close Process, and the process by which the Corporate Plan is created and approved.
• We obtained the directors’ going concern assessment, which covers a period until 27 February 2026, being 12 months
from the date of approval of the Annual Report and Accounts.
• We compared the historical budgeted financial information with actual results, in order to form a view on the reliability of
the forecasting process.
• We assessed the reasonableness of the Group and Society’s funding plans, including capital and liquidity requirements.
We considered the Group and Society’s current funding position and availability of additional capital and liquidity should
it be required. We also evaluated the Group and Society’s ability to replace maturing debt instruments over the going
concern period to manage regulatory capital requirements.
• We assessed the results of the Group's stress and reverse stress testing, including considering the impact of ongoing
macroeconomic uncertainty. We evaluated the feasibility of management’s planned future actions should stress
scenarios materialise.
• We considered whether there were other events subsequent to the balance sheet date which could have a bearing on the
going concern conclusion.
• We reviewed regulatory correspondence, committee and board meeting minutes in order to identify events or conditions
that may impact the Group and Society’s ability to continue as a going concern.
• We reviewed the going concern disclosures included in the annual report in order to assess whether the disclosures were
appropriate and in conformity with the reporting standards.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group’s and Society’s ability to continue as a going
concern until 27 February 2026, being a period of 12 months from the date of approval of the Annual Report and Accounts.
In relation to the Group’s and the Society’s reporting on how they have applied the UK Corporate Governance Code
(the Code), we have nothing material to add or draw attention to in relation to the directors’ statement in the financial
statements about whether the directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report. However, because not all future events or conditions can be predicted, this statement is not a
guarantee as to the Group’s and the Society’s ability to continue as a going concern.
Overview of our audit approach
Audit scope • We performed an audit of the complete financial information of the Group and the Society.
Key audit matters • Fair value of the collateral loan and RPI-linked swap.
• UK residential ECL provisions.
Materiality • Overall Group and Society materiality of £9.4 million which represents 5% of adjusted profit
before tax. In 2023 the predecessor auditor adopted a materiality of £8.2 million for the Group
and £8.1 million for the Society based on 0.5% of net assets.
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Independent Auditor’s Report continued
Year ended 31 December 2024
An overview of the scope of the Society and the Group audits
Tailoring the scope
The Society is managed from one location in Leeds. All audit work performed for the purposes of the audit was undertaken
by a single audit team based in the UK.
We have followed a risk-based approach when developing our audit approach to obtain sufficient appropriate audit
evidence on which to base our audit opinion. We performed risk assessment procedures to identify and assess risks of
material misstatement of the Group and Society financial statements and identified significant accounts and disclosures.
When identifying the extent to which audit work needed to be performed to respond to the identified risks of material
misstatement of the Group and Society financial statements, we considered our understanding of the Group and its
business environment, the potential impact of climate change, the applicable financial framework, the Group’s system of
internal control at the entity level, applications and relevant internal audit results.
Our scoping to address the risk of material misstatement for each key audit matter is set out in the key audit matters
section of our report.
Climate change
Stakeholders are increasingly interested in how climate change will impact the Group and the Society. The Group and
Society has determined that the most significant future impacts from climate change on their operations will be from
physical and transition risks. These are explained on pages 47 to 60 in Climate-Related Financial Disclosures section of the
Annual Report and Accounts, including the Society’s commitments to support transition to a greener, net zero economy
by 2050. All of these disclosures form part of the 'Other Information' rather than the audited financial statements.
Our procedures on these unaudited disclosures therefore consisted solely of considering whether they are materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appear to be
materially misstated, in line with our responsibilities on 'Other Information'.
In planning and performing our audit we assessed the potential impacts of climate change on the Group and Society’s
business and any consequential material impact on its financial statements.
The Group and Society has explained in Note 2 how they have reflected the impact of climate change in their financial
statements. These disclosures explain the approach to quantify the impact of climate risk on ECL. These disclosures
also explain that future government policies and economic and regulatory responses to climate change risks are still
developing, and future impacts remain uncertainty and cannot be reliability incorporated into assessments when
determining asset and liability valuations under the requirements of UK adopted international accounting standards.
Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating
management’s assessment of the impact of climate risk, physical and transition, their climate commitments, the effects
of material climate risks disclosed in Note 2 and whether these have been appropriately reflected in asset and liability
values, where these are impacted by future cash flows, following the requirements of UK adopted international accounting
standards. As part of this evaluation, we performed our own risk assessment, supported by our climate change specialists,
to determine the risks of material misstatement in the financial statements from climate change which needed to be
considered in our audit.
We also challenged the directors’ considerations of climate change risks in their assessment of going concern and
associated disclosures. Where considerations of climate change were relevant to our assessment of going concern,
these are described above.
Based on our work, whilst we have not identified the impact of climate change on the financial statements to be a
standalone key audit matter, we have considered the impact of climate change to principally impact the 'UK residential
ECL provisions' key audit matter. Details of the impact, our procedures and findings are included in our explanation of the
'UK residential expected credit loss provisions' key audit matter overleaf.
Leeds Building Society | Annual Report and Accounts 2024 159
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall
audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not
provide a separate opinion on these matters.
Risk Our response to the risk
Fair value of the collateral loan and RPI-linked swap
Refer to the Audit Committee Report (page 128); Accounting policies (page
171); and Note 2 (b) of the Consolidated Financial Statements (pages 183
and 184).
As at 31 December 2024, the Group and Society reported a £145.0 million
collateral loan (2023: £153.6 million) and fair value of the associated RPI-
linked swap of £5.9 million (2023: £14.9 million).
The Society owns three equity release mortgage portfolios that each
contain a 'no negative equity guarantee' that any shortfall arising on the
sale of the property securing the mortgage will not be pursued. The Society
is therefore exposed to potential losses on the portfolio, albeit any loss
is limited in part by a further guarantee provided to the Society by a third
party. As a result of these elements, the portfolio is measured at fair value.
The fair value of the equity release portfolio is determined using a model
involving several judgmental assumptions. As the portfolio ages, a greater
portion of the book does not have observable market data, increasing its
inherent risk.
The Society uses swaps to manage the interest rate risk and reduce
income statement volatility that would otherwise result from changes
in the fair value of the equity release portfolio. The RPI-linked swap is a
Level 3 financial instrument as it is valued using a model with judgemental
assumptions and the unobservable inputs of mortality rate and voluntary
redemption rates as future notional amounts are not specified in the
contract.
The key assumptions used in the models include:
• Discount rates, including spread.
• Property price volatility.
• Property price sale discounts.
• Mortality rates.
• RPI inflation rates.
• Voluntary mortgage redemption rates.
• Estimations for long-term care.
Due to the degree of judgement that needs to be exercised by the
directors in determining the key assumptions used in the valuation model,
we considered this to be a key audit matter. The heightened levels of
estimation uncertainty also gave rise to an increased risk of management
override of controls.
We understood and evaluated the design effectiveness
of key controls over the fair value of the equity release
portfolio and RPI-linked swap, and adopted a substantive
audit approach.
With support from EY valuation specialists, we assessed
the appropriateness of the Society’s valuation techniques
and independently calculated a range of fair values for
the collateral loan and RPI-linked swap. We compared the
reported fair values against this range.
Alongside EY valuation specialists and life actuaries,
we challenged the key assumptions used in the fair value
models. We compared assumptions applied in the fair
value models to the Society’s historical experience and
benchmarked assumptions to observable market data
where applicable.
Key observations communicated to the Audit Committee
We reported the outcome of our independently determined ranges, and concluded that the fair value of the collateral loan and
RPI-linked swap was within our reasonable range. We concluded that the assumptions deployed in the fair value of the collateral loan
and RPI-linked swap were reasonable in the context of the equity release mortgage portfolio and current market conditions.
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Risk Our response to the risk
UK residential ECL provisions
Refer to the Audit Committee Report (page 127);
Accounting policies (pages 172 and 173); and Note 2
of the Consolidated Financial Statements (pages 177
to 183).
As at 31 December 2024, the Group and Society
reported gross UK residential loans and advances
to customers of £24,355.0 million (2023: £21,741.1
million) and related ECL provisions of £36.9 million
(2023: £44.3 million).
The ECL provision is a significant balance that carries
a high degree of estimation uncertainty due to the
assumptions used in its calculation. The calculation
of such provisions under IFRS 9 requires a forward-
looking assessment of expected losses, increasing
the complexity and number of judgements used.
The level of judgement and estimation remains
heightened as a result of the current economic
environment which leads to greater uncertainty
in forecasting future economic scenarios, the
weightings to be applied to these scenarios, the
determination of significant increase in credit risk
(SICR), and the use of judgemental overlays.
Key judgements and estimates in the timing and
measurement of ECL include:
• Probability of default (PD).
• Loss given default (LGD).
• Exposure at default (EAD).
• Assessment of staging criteria and identification of
loans that exhibit a SICR.
• Incorporation of forward-looking information,
including multiple economic assumptions.
• Completeness and valuation of post model
adjustments (PMAs).
We also considered potential consequences of climate
change and the impact of this on the ECL provision.
Due to the degree of judgement that needs to be
exercised by the directors in determining the key
assumptions used in calculating the ECL provision for
the UK residential mortgage portfolio, we considered
this to be a key audit matter. The heightened levels of
estimation uncertainty also gave rise to an increased
risk of management override of controls.
We understood and evaluated the design effectiveness of controls over the UK
residential impairment processes, and adopted a substantive audit approach.
With the support of EY credit risk modelling specialists, we performed a model
inherent risk assessment of models used to generate the UK residential ECL
provision. Based on this risk assessment we tailored our procedures, which
included:
• Testing the appropriateness of the Society’s model methodology through
inspection of model design documentation.
• Independently implementing the Society’s modelled ECL calculation,
including recalculation of PDs, LGDs, EADs and overall ECL.
• Performing sensitivity analysis to determine the impact of changes in key
assumptions to the ECL provision.
• Benchmarking assumptions to observable market data where applicable.
With the support of EY credit risk modelling specialists, we assessed whether
the SICR criteria used by the Society provided appropriate leading indicators
of increased credit risk in the UK residential mortgage portfolio. We also
independently tested whether the UK residential mortgage portfolio had been
appropriately staged in line with the Society’s stated criteria.
With the support of EY economists, we assessed the base case and alternative
macroeconomic scenarios through comparison to other scenarios from
external sources and EY internally developed forecasts. This testing also
included benchmarking of the probability weightings used by the Society.
Having determined the appropriateness of the unemployment, GDP and
property price forecasts and associated probability weightings, we assessed
the reasonableness of the extent of non-linearity arising from the Society’s
model outputs.
We assessed the completeness and appropriateness of PMAs using our
knowledge and experience across the UK lending sector, and challenging
the Society’s rationale for new PMAs recorded in the year and the continued
justifications for existing PMAs where relevant.
With the involvement of our credit risk modelling specialists we tested material
PMAs for reasonableness of estimation with reference to observable market
data. We also tested the Society’s incorporation of climate risk into the
modelled ECL provision, and utilised external data to determine whether the
impact of this had been reasonably estimated at 31 December 2024.
We performed stand-back analysis to assess the overall adequacy of the
UK residential ECL provisions. This included utilising our understanding of
the Society and the UK residential mortgage market to perform analytical
procedures, assessing whether any contradictory evidence had been obtained
from other parts of the audit, and considering the Group and Society’s
provision coverage ratios in comparison to other lenders using available
benchmarking data.
Key observations communicated to the Audit Committee
We communicated that we were satisfied that the Society’s UK residential ECL provisions were reasonably estimated and materially in
compliance with IFRS 9.
We highlighted to the Committee that there remains increased uncertainty in determining forecast losses due to the prevailing uncertain
economic environment.
We highlighted to the Audit Committee that although we observed certain limitations in the Society’s ECL models, the reported ECL was
reasonable after incorporating appropriate PMAs, which in aggregate we considered to be reasonably estimated.
We considered the multiple economic scenarios, and associated weightings, incorporated in the IFRS 9 models to be materially appropriate.
Independent Auditor’s Report continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 161
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified
misstatements on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence
the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and
extent of our audit procedures.
We determined materiality for the Group and Society to be £9.4 million, which is 5% of profit before tax, adjusted for
the non-recurring expense associated to the Philips Trust Corporation voluntary financial support initiative, the cost of
the Society’s buy-back of Permanent Interest-Bearing Shares (PIBS) and an impairment loss related to the Head Office
revaluation. We believe that adjusted profit before tax provides us with an appropriate basis for materiality given the users
of the financial statements (including the Society’s members and regulators) principally focus on pre-tax profit in assessing
the Group and Society’s performance. In 2023 the predecessor auditor adopted a materiality of £8.2 million for the Group
and £8.1 million for the Society based on 0.5% of net assets.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low
level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our
judgement was that performance materiality was 50% of our planning materiality, namely £4.7 million. We set performance
materiality at this percentage since this was a first year audit. In 2023 the predecessor auditor set performance materiality
at £5.7 million, being 70% of planning materiality.
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £0.5
million which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted
reporting on qualitative grounds. In 2023 the predecessor auditor adopted a reporting threshold of £0.4 million.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in
light of other relevant qualitative considerations in forming our opinion.
Other Information
The Other Information comprises the information included in the annual report, other than the financial statements and
our auditor's report thereon. The directors are responsible for the Other Information contained within the annual report.
Our opinion on the financial statements does not cover the Other Information and, except to the extent otherwise
explicitly stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the Other Information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work
we have performed, we conclude that there is a material misstatement of the other information, we are required to report
that fact.
We have nothing to report in this regard.
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Opinion on other matters prescribed by the Building Societies Act 1986
In our opinion:
• The Annual Business Statement and the Directors’ Report have been prepared in accordance with the requirements of
the Building Societies Act 1986;
• The information given in the Directors’ Report for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
• The information given in the Annual Business Statement (other than the information upon which we are not required to
report) gives a true representation of the matters in respect of which it is given.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Building Societies Act 1986 requires us to report
to you if, in our opinion:
• Proper accounting records have not been kept by the Society; or
• The Group or Society financial statements are not in agreement with the accounting records; or
• We have not received all the information and explanations and access to documents we require for our audit.
Corporate Governance Statement
We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Group and the Society’s voluntary compliance with the provisions of the
Code specified for our review by the UK Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement are materially consistent with the financial statements or our knowledge obtained
during the audit:
• Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on pages 153 and 154 of the Directors' Report;
• Directors’ explanation as to its assessment of the Society’s prospects, the period this assessment covers and why the
period is appropriate set out on pages 153 and 154 of the Directors' Report;
• Directors’ statement on fair, balanced and understandable set out on page 153 of the Directors' Report;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages
41 to 44;
• The section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out in the Board Risk Committee (BRC) Report on pages 133 to 135; and;
• The section describing the work of the Audit Committee set out on page 126.
Directors’ Remuneration Report
The Society voluntarily prepares a Report of the Directors on remuneration in accordance with the provisions of the
Companies Act 2006. The directors have requested that we audit the part of the Report of the Directors on remuneration
specified by the Companies Act 2006 to be audited as if the Society were a quoted company.
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with
the Companies Act 2006.
Responsibilities of directors
As explained more fully in the Directors’ responsibilities statement set out on page 153 of the Directors' Report, the
directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Society’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or the Society or to cease operations, or has no
realistic alternative but to do so.
Independent Auditor’s Report continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 163
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International
Standards on Auditing (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined below, to detect irregularities, including fraud. The risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with
governance of the Group and management.
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined
that the most significant are the regulations, licence conditions and supervisory requirements of the Prudential
Regulation Authority (PRA), the Financial Conduct Authority (FCA) and the Building Societies Act 1986.
• We understood how the Group and Society are complying with those frameworks by attending the Society’s Audit
Committee, making enquiries of management, internal audit, and those responsible for legal and compliance matters.
We inquired as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
We also reviewed correspondence between the Group and UK regulatory bodies and reviewed minutes of the board
and BRC. We also reviewed the Society’s Whistleblowing Policy and reports.
• We assessed the susceptibility of the Group and the Society’s financial statements to material misstatement, including
how fraud might occur by holding discussions with senior management, those charged with governance, Internal Audit
and the Audit Committee.
• Based on this understanding we designed our audit procedures to identify non-compliance with such laws and
regulations. Our procedures involved enquiries of legal counsel, executive management, Internal Audit, and focused
testing on areas of key judgement and estimation, as referred to in the Key Audit Matters section above.
• The Group and Society operate in the financial services sector which is a highly regulated environment. As such the
Senior Statutory Auditor considered the experience and expertise of the engagement team to ensure that the team
had the appropriate competence and capabilities, which included the use of specialists where appropriate.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
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Independent Auditor’s Report continued
Other matters we are required to address
• Following the recommendation from the Audit Committee, we were appointed by the Society on 18 April 2024 to audit
the financial statements for the year ending 31 December 2024 and subsequent financial periods.
• The period of total uninterrupted engagement including previous renewals and reappointments is one year, covering the
year ending 31 December 2024.
• The audit opinion is consistent with the additional report to the Audit Committee.
Use of our report
This report is made solely to the Society’s members, as a body, in accordance with Section 78 of the Building Societies Act
1986. Our audit work has been undertaken so that we might state to the Society’s members those matters we are required
to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Society and the Society’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
for and on behalf of Ernst & Young LLP , Statutory Auditor
Leeds
27 February 2025
Leeds Building Society | Annual Report and Accounts 2024 165
Income Statements
For the year ended 31 December 2024
| Group | Group | Society | Society | ||
| 2024 | 2023 | 2024 | 2023 | ||
| Notes | £M | £M | £M | £M | |
| Interest receivable and similar income | |||||
Accounted for using effective interest rate method* | 3 | 1,279.9 | 946.7 | ||
Other | 3 | 304.1 | 313.8 | ||
Total interest receivable and similar income | 1,584.0 | 1,260.5 | |||
Interest payable and similar charges | 4 | ( | ( | (1,221.4) | (923.1) |
Net interest receivable | 362.6 | 337.4 | |||
Fees and commissions receivable | 5.1 | 5.2 | |||
Fees and commissions payable | ( | ( | (0.3) | (0.6) | |
Fair value gains/(losses) from financial instruments | 5 | ( | 6.0 | (16.0) | |
Other operating (expense)/income | 24 | ( | (21.4) | 22.5 | |
Total income | 352.0 | 348.5 | |||
Administrative expenses | 6 | ( | ( | (185.4) | (159.9) |
Depreciation and amortisation | 16,17 | ( | ( | (10.6) | (9.1) |
Impairment release/(charge) on loans and advances to customers | 8 | ( | 5.7 | (6.1) | |
Impairment of property, plant and equipment and intangible assets | 16,17 | ( | ( | (17.5) | (0.2) |
Provisions charge | 22 | ( | ( | (10.3) | (0.7) |
Operating profit and profit before tax | 133.9 | 172.5 | |||
Tax expense | 9 | ( | ( | (36.2) | (45.3) |
Profit for the financial year | 127.2 |
All amounts relate to continuing operations.
The notes on pages 170 to 220 form part of these accounts.
* IAS 1 requires separate presentation in the Income Statement of interest receivable that is calculated using the effective interest method.
The comparatives for 31 December 2023 have been taken from the notes to the accounts.
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Statements of Comprehensive Income
For the year ended 31 December 2024
| Group | Group | Society | Society | ||
| 2024 | 2023 | 2024 | 2023 | ||
| Notes | £M | £M | £M | £M | |
Profit for the financial year | 127.2 | ||||
| Items that may subsequently be reclassified to profit and loss: | |||||
Fair value gains recorded in cash flow hedge reserve | 19.1 | 15.0 | |||
Gains previously recorded in cash flow hedge reserve amortised through profit or loss | ( | ( | (27.9) | (26.7) | |
Fair value (losses)/gains on investment securities measured at fair value through other comprehensive income | ( | (18.1) | 13.4 | ||
(Gains)/losses on investment securities measured through other comprehensive income reclassified to profit or loss on disposal | ( | (1.3) | 1.4 | ||
Tax relating to items that may subsequently be reclassified | 7.0 | 0.5 | |||
Effect of change in corporation tax rate | 0.8 | 0.1 | |||
| Items that may not subsequently be reclassified to profit and loss: | |||||
Actuarial gain/(loss) on retirement benefit surplus | 25 | ( | 0.7 | (0.9) | |
Change in asset ceiling on retirement benefits | 25 | ( | (4.2) | – | |
Tax relating to items that may not be reclassified | 0.9 | – | |||
Effect of change in corporation tax rate | ( | 0.1 | (0.1) | ||
Total comprehensive income for the year | 74.8 | 129.9 |
Leeds Building Society | Annual Report and Accounts 2024 167
Statements of Financial Position
For the year ended 31 December 2024
| Group | Group | Society | Society | ||
| 2024 | 2023 | 2024 | 2023 | ||
| Notes | £M | £M | £M | £M | |
| Assets | |||||
| Liquid assets | |||||
Cash in hand and balances with the Bank of England | 11 | 2,443.2 | 2,830.0 | ||
Loans and advances to credit institutions | 11 | 15.2 | 109.2 | ||
Investment securities | 12 | 3,950.0 | 2,515.6 | ||
Derivative financial instruments | 31 | 371.1 | 443.6 | ||
Loans and advances to customers | 13 | ||||
Loans fully secured on residential property | 24,402.7 | 21,782.9 | |||
Other loans | 147.8 | 158.3 | |||
Fair value adjustment for hedged risk on loans and advances to customers | ( | ( | (173.1) | (132.3) | |
Other assets, prepayments and accrued income | 14 | 444.5 | 431.8 | ||
Current tax assets | – | 9.8 | |||
Deferred tax assets | 26 | – | 3.0 | ||
Intangible assets | 16 | 35.1 | 29.8 | ||
Property, plant and equipment | 17 | 45.4 | 64.5 | ||
Retirement benefit surplus | 25 | – | 2.9 | ||
Total assets | 31,681.9 | 28,249.1 | |||
| Liabilities | |||||
Shares | 18 | 24,529.8 | 20,793.0 | ||
Fair value adjustment for hedged risk on shares | 8.8 | 31.9 | |||
Derivative financial instruments | 31 | 117.2 | 232.8 | ||
Amounts owed to credit institutions | 1,244.2 | 1,869.3 | |||
Amounts owed to other customers | 19 | 791.1 | 521.6 | ||
Debt securities in issue | 20 | 2,495.6 | 2,361.0 | ||
Other liabilities and accruals | 21 | 416.0 | 410.2 | ||
Current tax liabilities | 0.6 | – | |||
Deferred tax liabilities | 26 | 21.1 | 35.3 | ||
Provisions for liabilities and charges | 22 | 4.2 | 1.3 | ||
Retirement benefit obligation | 25 | 0.5 | – | ||
Subordinated liabilities | 23 | 334.2 | 323.9 | ||
Subscribed capital | 24 | 8.0 | 33.0 | ||
Total liabilities | 29,971.3 | 26,613.3 | |||
General reserve | 1,637.4 | 1,540.9 | |||
Cash flow hedge reserve | 66.6 | 74.3 | |||
Fair value reserve | ( | (9.3) | 4.7 | ||
Revaluation reserve | 1.6 | 1.6 | |||
Other reserve | 14.3 | 14.3 | |||
Total liabilities and equity | 31,681.9 | 28,249.1 |
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Statements of Changes in
Members’ Interest
For the year ended 31 December 2024
| Cash flow | Total equity | |||||
| General | hedge | Fair value | Revaluation | Other | attributable | |
| reserve | reserve | reserve | reserve | reserve* | to members | |
| Group 2024 | £M | £M | £M | £M | £M | £M |
At | ||||||
Comprehensive income/(expense) for the year | ( | ( | ||||
At | ( | |||||
| Cash flow | Total equity | |||||
| General | hedge | Fair value | Revaluation | Other | attributable | |
| reserve | reserve | reserve | reserve | reserve* | to members | |
| Group 2023 | £M | £M | £M | £M | £M | £M |
At 1 January 2023 | ( | |||||
Comprehensive income/(expense) for the year | ( | ( | ||||
At 31 December 2023 |
Society 2024
General
reserve
£M
Cash flow
hedge
reserve
£M
Fair value
reserve
£M
Revaluation
reserve
£M
Other
reserve*
£M
Total equity
attributable
to members
£M
At 1 January 2024 1,540.9 74.3 4.7 1.6 14.3 1,635.8
Comprehensive income/(expense) for the year 96.5 (7.7) (14.0) – – 74.8
At 31 December 2024 1,637.4 66.6 (9.3) 1.6 14.3 1,710.6
Society 2023
General
reserve
£M
Cash flow
hedge
reserve
£M
Fair value
reserve
£M
Revaluation
reserve
£M
Other
reserve*
£M
Total equity
attributable
to members
£M
At 1 January 2023 1,414.4 81.3 (5.9) 1.8 14.3 1,505.9
Comprehensive income/(expense) for the year 126.5 (7.0) 10.6 (0.2) – 129.9
At 31 December 2023 1,540.9 74.3 4.7 1.6 14.3 1,635.8
*Other reserve relates to the 2006 merger with Mercantile Building Society.
Leeds Building Society | Annual Report and Accounts 2024 169
Statements of Cash Flows
For the year ended 31 December 2024
| Group | Group | Society | Society | |
| 2024 | 2023 | 2024 | 2023 | |
| £M | £M | £M | £M | |
Profit before tax | 133.9 | 172.5 | ||
| Adjusted for: | ||||
| Impairment (release)/charge | ( | (5.7) | 6.1 | |
| Provisions charge | 10.3 | 0.7 | ||
| Depreciation and amortisation | 10.6 | 9.1 | ||
| Impairment of property, plant and equipment and intangible assets | 17.5 | 0.2 | ||
| Fair value of collateral loan which represents a pool of equity release mortgages | 7.6 | 6.9 | ||
Non-cash and other items | ( | 9.8 | (30.6) | |
Cash generated from operations | 184.0 | 164.9 | ||
| Changes in operating assets and liabilities: | ||||
Derivative financial instruments | ( | ( | (21.4) | (44.4) |
Loans and advances to customers | ( | ( | (2,611.2) | (1,461.0) |
Loans and advances to credit institutions | ( | 77.8 | (7.1) | |
Other operating assets | ( | (11.7) | 16.1 | |
Shares | 3,736.8 | 3,272.6 | ||
Amounts owed to credit institutions and other customers | ( | ( | (355.6) | (282.2) |
Other operating liabilities | ( | (0.1) | (219.4) | |
Taxation paid | ( | ( | (28.2) | (49.6) |
Net cash flows from operating activities | 970.4 | 1,389.9 | ||
| Cash flows from investing activities | ||||
Purchase of investment securities | ( | ( | (5,124.3) | (2,882.9) |
Proceeds from sale and redemption of investment securities | 3,689.3 | 1,840.2 | ||
Purchase of intangible assets | ( | ( | (12.4) | (12.5) |
Purchase of property, plant and equipment | ( | ( | (3.0) | (1.9) |
Net cash flows from investing activities | ( | ( | (1,450.4) | (1,057.1) |
| Cash flows from financing activities | ||||
Net proceeds from issue of debt securities | 560.2 | 0.4 | ||
Repayments of debt securities in issue | ( | ( | (433.4) | (269.9) |
Repayments of subscribed capital | ( | ( | (48.4) | (171.2) |
Principal lease payments | ( | ( | (1.4) | (1.4) |
Net cash flows from financing activities | ( | 77.0 | (442.1) | |
Net decrease in cash and cash equivalents | ( | ( | (403.0) | (109.3) |
Cash and cash equivalents at the beginning of the year | 2,861.4 | 2,970.7 | ||
Cash and cash equivalents at the end of the year | 2,458.4 | 2,861.4 | ||
| Additional information on operational cash flows from interest | ||||
Interest paid | 1,137.1 | 780.0 | ||
Interest received | 1,279.9 | 946.7 |
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Notes to the Accounts
Year ended 31 December 2024
1. Accounting policies
Leeds Building Society | Annual Report and Accounts 2024 171
1. Accounting policies (continued)
(d) Financial instruments (continued)
(i) Classification and measurement (continued)
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1. Accounting policies (continued)
(d) Financial instruments (continued)
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 173
1. Accounting policies (continued)
(e) Impairment of financial assets (continued)
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1. Accounting policies (continued)
(e) Impairment of financial assets (continued)
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 175
1. Accounting policies (continued)
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1. Accounting policies (continued)
(k) Retirement benefits (continued)
(ii) Defined benefit pension scheme (continued)
2. Critical accounting estimates and judgements
The preparation of these financial statements involves making judgements in the application of accounting policies which affect the
amounts recognised in the financial statements. In addition, the Group makes estimates and assumptions which could affect the
reported amounts of assets and liabilities in the next financial year and beyond.
The Group reviews all critical judgements and estimates on a regular basis, including approval by the Audit Committee as explained on
pages 125 to 128, to ensure that these remain appropriate. The critical judgements and estimates which have a significant impact on the
financial statements of the Group are described below.
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 177
2. Critical accounting estimates and judgements (continued)
(a) Critical judgements (continued)
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2. Critical accounting estimates and judgements (continued)
(a) Critical judgements (continued)
| 31 Dec | 31 Dec | |
| 2024 | 2023 | |
| Central scenario | ||
| Central scenario reflecting stronger growth in the economy in later years as inflation drops back to target | ||
and households enjoy real wage growth. Economic growth in this scenario is further supported through gradual reductions in the BoE base rate (BBR) and increasing levels of government spending and investment. | 50% | 50% |
| The scenario assumes that, as additional people return to the labour market, levels of unemployment increase | ||
| slightly from current levels and then subsequently reduce as growth generates more employment opportunities | ||
| in the later years. | ||
| Downside scenario | ||
Downside scenario as modelled in the Group’s risk management process reflecting a ‘1 in 20’ stress scenario, with weak consumer spending resulting in a reduction in gross domestic product (GDP), a rise in unemployment | 25% | 25% |
| and reductions in house prices as demand falls due to weaker affordability. The scenario assumes that base rate | ||
initially rises to help reduce entrenched level of higher inflation, before being cut in order to tackle the effects of the would-be recession on the UK economy. | ||
| Alternative downside scenario | ||
Alternative scenario representing a more severe downturn than in the downside scenario. This initially has very high levels of persistent inflation resulting in a period of higher BBR to reduce demand, with the economy then subject to a further external shock resulting in sharp falls to consumer confidence, steep falls in demand, and falling growth. These conditions drive peak unemployment to 8.4%, with a fall in demand across the housing | 10% | 20% |
market, causing greater reductions in house prices in the earlier years of the forecast. As demand collapses, BBR is then reduced quickly to try and stimulate the economy. | ||
| Growth scenario | ||
Growth scenario representing a more optimistic view of the current economic outlook than assumed in the central scenario, including higher GDP as investment in AI drives an increase in productivity and has a positive | 15% | 5% |
| impact on the unemployment rate. The scenario assumes that as inflation returns to target, further support | ||
| comes from base rate being reduced to a long run rate of 3.0%. |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 179
2. Critical accounting estimates and judgements (continued)
(b) Significant accounting estimates and assumptions (continued)
(i) Impairment losses on loans and advances to customers (continued)
Downside Alternative downside Growth WeightedKey:
Downside Alternative downside Growth WeightedKey:
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2. Critical accounting estimates and judgements (continued)
(b) Significant accounting estimates and assumptions (continued)
(i) Impairment losses on loans and advances to customers (continued)
| 2025 | 2026 | 2027 | 2028 | 2029 | ||
Scenario/weighting | Assumption | % | % | % | % | % |
| Central | House price inflation | 2.80 | 3.00 | 3.00 | 2.50 | 2.50 |
Unemployment rate (31 December) | 4.40 | 4.30 | 4.20 | 4.20 | 4.20 | |
| 50% | Gross domestic product growth | 1.50 | 1.60 | 1.60 | 1.60 | 1.50 |
Base rate (31 December) | 4.00 | 3.50 | 3.25 | 3.25 | 3.25 | |
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
| Downside | House price inflation | (13.70) | (2.00) | 0.00 | 0.00 | 1.00 |
Unemployment rate (31 December) | 6.50 | 7.30 | 6.20 | 5.80 | 5.80 | |
| 25% | Gross domestic product growth | (0.75) | (1.25) | 1.00 | 1.00 | 1.00 |
Base rate (31 December) | 6.00 | 3.00 | 0.75 | 0.25 | 0.25 | |
| Alternative | House price inflation | (20.00) | (5.00) | (4.00) | 0.00 | 1.00 |
| downside | Unemployment rate (31 December) | 7.80 | 8.40 | 7.90 | 7.80 | 7.80 |
Gross domestic product growth | (0.20) | (4.20) | 2.10 | 1.50 | 1.50 | |
| 10% | Base rate (31 December) | 6.50 | 4.50 | 1.00 | 0.10 | 0.10 |
| Growth | House price inflation | 4.20 | 3.00 | 3.00 | 3.00 | 2.75 |
Unemployment rate (31 December) | 4.20 | 4.00 | 3.80 | 3.80 | 3.70 | |
| 15% | Gross domestic product growth | 1.90 | 2.20 | 2.20 | 2.20 | 2.10 |
Base rate (31 December) | 4.00 | 3.50 | 3.25 | 3.00 | 3.00 | |
| Weighted* | House price inflation | (3.40) | 0.95 | 1.55 | 1.70 | 2.00 |
Unemployment rate (31 December) | 5.20 | 5.40 | 5.00 | 4.90 | 4.90 | |
Gross domestic product growth | 0.80 | 0.40 | 1.60 | 1.50 | 1.50 | |
Base rate (31 December) | 4.75 | 3.50 | 2.40 | 2.15 | 2.15 |
| 2024 | 2025 | 2026 | 2027 | 2028 | ||
Scenario/weighting | Assumption | % | % | % | % | % |
| Central | House price inflation | (6.50) | 1.50 | 2.50 | 2.50 | 2.50 |
Unemployment rate (31 December) | 5.00 | 4.75 | 4.50 | 4.20 | 4.00 | |
| 50% | Gross domestic product growth | (0.25) | 0.75 | 1.00 | 1.50 | 1.50 |
Base rate (31 December) | 4.75 | 4.25 | 4.25 | 4.00 | 4.00 | |
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
| Downside | House price inflation | (13.70) | (2.00) | 0.00 | 0.00 | 1.00 |
Unemployment rate (31 December) | 6.50 | 7.30 | 6.20 | 5.80 | 5.80 | |
| 25% | Gross domestic product growth | (0.70) | (1.30) | 1.00 | 1.00 | 1.00 |
Base rate (31 December) | 6.00 | 3.00 | 0.75 | 0.25 | 0.25 | |
| Alternative | House price inflation | (20.00) | (5.00) | (4.00) | 0.00 | 1.00 |
| downside | Unemployment rate (31 December) | 7.80 | 8.40 | 7.90 | 7.80 | 7.80 |
Gross domestic product growth | (0.20) | (4.20) | 2.10 | 1.50 | 1.50 | |
| 20% | Base rate (31 December) | 6.50 | 4.50 | 1.00 | 0.10 | 0.10 |
| Growth | House price inflation | 1.00 | 2.00 | 2.70 | 2.70 | 2.70 |
Unemployment rate (31 December) | 4.80 | 4.50 | 4.30 | 4.00 | 4.00 | |
| 5% | Gross domestic product growth | 0.50 | 1.10 | 1.60 | 2.10 | 2.10 |
Base rate (31 December) | 5.00 | 4.50 | 4.00 | 3.25 | 3.25 | |
| Weighted* | House price inflation | (10.60) | (0.70) | 0.60 | 1.40 | 1.80 |
Unemployment rate (31 December) | 5.90 | 6.10 | 5.60 | 5.30 | 5.20 | |
Gross domestic product growth | (0.30) | (0.70) | 1.30 | 1.40 | 1.40 | |
Base rate (31 December) | 5.40 | 4.00 | 2.70 | 2.20 | 2.20 |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 181
2. Critical accounting estimates and judgements (continued)
(b) Significant accounting estimates and assumptions (continued)
(i) Impairment losses on loans and advances to customers (continued)
| + 10.0 | + 5.0 | - 5.0 | - 10.0 | |
| percentage | percentage | percentage | percentage | |
| points | points | points | points | |
(Decrease)/increase in impairment loss provisions (£M) | (1.2) | (0.6) | 1.0 | 2.3 |
| + 2.0 | + 1.0 | - 1.0 | - 2.0 | |
| percentage | percentage | percentage | percentage | |
| points | point | point | points | |
Increase/(decrease) in impairment loss provisions (£M) | 2.5 | 1.1 | (0.2) | (0.3) |
| 2024 | 2023 | |
| £M | £M | |
| (Decrease)/increase in impairment loss provisions if scenarios are weighted 100%: | ||
Central | (12.3) | (12.9) |
Downside | 12.8 | 1.9 |
Alternative downside | 91.9 | 58.5 |
Growth | (12.8) | (14.8) |
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2. Critical accounting estimates and judgements (continued)
(b) Significant accounting estimates and assumptions (continued)
(i) Impairment losses on loans and advances to customers (continued)
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 183
2. Critical accounting estimates and judgements (continued)
(b) Significant accounting estimates and assumptions (continued)
(i) Impairment losses on loans and advances to customers (continued)
Assumption | Sensitivity modelled for current assumption | (Decrease)/increase in PMA (£M) |
| Number of borrowers that will migrate to Stage 3 due to risk | (Decrease)/increase by 5 percentage points | (1.8)/1.9 |
| of shortfall | ||
| £100 threshold above which shortfall against mortgage | (Increase threshold to £200)/reduce threshold to 1p | (0.9)/1.1 |
| payment is ‘unaffordable’ and PMA is applied | ||
Product interest rates available for switching product on maturity or for standard variable rate | (Reduce)/increase rates by 1 percentage point | (1.1)/1.0 |
Assumption | Basis of estimation |
Discount rate | Derived from current market rates for new equity release mortgages adjusted for the specific profile of the Group's portfolio, |
| also reflects liquidity term premium in current market funding costs | |
Property price volatility | Analysis of historic property price volatility and external research |
Sales price haircut | Average actual discounts observed on the portfolio during the 2023 financial year |
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2. Critical accounting estimates and judgements (continued)
(b) Significant accounting estimates and assumptions (continued)
(ii) Fair value of the collateral loan (continued)
Assumption | Sensitivity modelled for current assumption | (Decrease)/increase in fair value of collateral loan (£M) |
Discount rate | +/- 1 percentage point | (10.1)/11.4 |
Property price volatility | +/- 3 percentage points | (3.9)/3.5 |
Sales price haircut | +/- 5 percentage points | (3.1)/2.7 |
| Group | Group | Society | Society | |
| 2024 | 2023 | 2024 | 2023 | |
| £M | £M | £M | £M | |
| Interest receivable calculated using the effective interest rate method: | ||||
| On instruments held at amortised cost: | ||||
On loans fully secured on residential property | 972.7 | 693.3 | 972.7 | 693.3 |
On other loans and advances to customers | 0.4 | 0.5 | 0.4 | 0.5 |
On liquid assets | 160.4 | 159.7 | 154.0 | 154.1 |
Total interest receivable on instruments held at amortised cost | 1,133.5 | 853.5 | 1,127.1 | 847.9 |
| On instruments held at fair value through other comprehensive income: | ||||
On investment securities | 150.1 | 93.8 | 152.8 | 98.8 |
Total interest receivable calculated using the effective interest rate method | 1,283.6 | 947.3 | 1,279.9 | 946.7 |
| Similar income on instruments held at fair value through profit or loss: | ||||
| On other loans and advances to customers | 13.9 | 12.0 | 13.9 | 12.0 |
| Net income on derivatives that hedge financial assets and are designated in accounting | 287.0 | 298.6 | 287.0 | 298.6 |
| hedge relationships | ||||
Net income on derivatives that hedge financial assets and are not designated in accounting hedge relationships | 7.6 | 5.7 | 3.2 | 3.2 |
Total similar income on instruments held at fair value through profit or loss | 308.5 | 316.3 | 304.1 | 313.8 |
Total interest receivable and similar income | 1,592.1 | 1,263.6 | 1,584.0 | 1,260.5 |
| Included in the above is: | ||||
Interest receivable on impaired financial assets | 16.7 | 13.3 | 16.7 | 13.3 |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 185
| Group | Group | Society | Society | |
| 2024 | 2023 | 2024 | 2023 | |
| £M | £M | £M | £M | |
| Interest payable on instruments held at amortised cost: | ||||
On shares held by individuals | 904.7 | 551.7 | 904.7 | 551.7 |
| On deposits and other borrowings: | ||||
Wholesale and other funding | 246.9 | 233.7 | 217.8 | 223.8 |
Lease liabilities | 0.2 | 0.2 | 0.2 | 0.2 |
On subordinated liabilities | 6.2 | 6.3 | 6.2 | 6.3 |
On subscribed capital | 1.2 | 9.2 | 1.2 | 9.2 |
Total interest payable on instruments held at amortised cost | 1,159.2 | 801.1 | 1,130.1 | 791.2 |
| Similar charges on instruments held at fair value through profit or loss: | ||||
Net charges on derivatives which hedge financial liabilities and are designated in accounting hedge relationships | 48.3 | 101.9 | 58.4 | 104.1 |
Net charges on derivatives which hedge financial liabilities and are not designated in accounting hedge relationships | 21.7 | 23.0 | 32.9 | 27.8 |
Total similar charges on instruments held at fair value through profit or loss | 70.0 | 124.9 | 91.3 | 131.9 |
Total interest payable and similar charges | 1,229.2 | 926.0 | 1,221.4 | 923.1 |
| Group | Group | Society | Society | |
| 2024 | 2023 | 2024 | 2023 | |
| £M | £M | £M | £M | |
| Fair value hedge relationships | ||||
Derivatives designated in fair value hedge relationships | (3.3) | (281.5) | (3.3) | (293.3) |
Fair value adjustment for hedged risk of hedged items | (20.7) | 252.5 | (20.7) | 264.3 |
| Cash flow hedge relationships | ||||
Derivatives designated in cash flow hedge relationships | 29.9 | 26.9 | 29.9 | 26.9 |
| Derivatives not designated in accounting hedge relationships | ||||
Equity release swaps | 11.1 | 0.7 | 11.1 | 0.7 |
Cross currency swaps net of retranslation on matched Euro liabilities | 0.9 | 1.6 | – | 0.2 |
Other derivatives | – | – | (3.4) | (7.9) |
| Other financial instruments measured at fair value through profit or loss | ||||
Collateral loan which represents a pool of equity release mortgages | (7.6) | (6.9) | (7.6) | (6.9) |
Total fair value gains/(losses) from financial instruments | 10.3 | (6.7) | 6.0 | (16.0) |
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Notes to the Accounts continued
Year ended 31 December 2024
| Group & | Group & | |
| Society | Society | |
| 2024 | 2023 | |
| £M | £M | |
| Staff costs | ||
Wages and salaries* | 80.3 | 73.3 |
Social security costs | 8.9 | 8.2 |
Pension costs | 12.1 | 10.8 |
Temporary staff | 3.1 | 9.0 |
Other staff costs | 1.7 | 1.6 |
Remuneration of auditor (see below) | 1.2 | 1.1 |
| Other administrative expenses | ||
Technology | 19.8 | 17.6 |
Development activity | 23.8 | 8.9 |
Property | 7.6 | 7.3 |
Legal and professional fees | 3.8 | 3.5 |
Marketing | 6.1 | 5.3 |
Regulatory fees | 7.1 | 2.8 |
Postage and stationery | 2.5 | 2.1 |
Recruitment and training | 1.6 | 2.1 |
Other | 5.8 | 6.3 |
Total administrative expenses | 185.4 | 159.9 |
| Group & | Group & | |
| Society | Society | |
| 2024 | 2023 | |
| £‘000 | £‘000 | |
Fee payable to the Society’s auditor for the audit of the Society’s annual accounts | 1,029.0 | 916.2 |
Fees payable to the Society’s auditor for the audit of the Society’s subsidiaries | 84.0 | 28.2 |
Total audit fees | 1,113.0 | 944.4 |
Assurance services | 130.0 | 170.8 |
Total non-audit fees | 130.0 | 170.8 |
Total auditor’s remuneration | 1,243.0 | 1,115.2 |
Leeds Building Society | Annual Report and Accounts 2024 187
7. Staff numbers
The average number of colleagues employed during the year was as follows:
| Group & | Group & | |
| Society | Society | |
| 2024 | 2023 | |
| Number | Number | |
Central administration | 1,551 | 1,493 |
Branches | 295 | 295 |
Total monthly average number of people employed | 1,846 | 1,788 |
Total monthly average number of full time equivalent employees | 1,662 |
At 31 December 2024 the total number of colleagues employed by the Group and the Society was 1,863 (2023: 1,813).
8. Impairment on loans and advances to customers
| Loans fully | ||||
| secured on | Loans fully | |||
| residential | secured on | Other | ||
| property | land | loans | Total | |
| Group & Society 2024 | £M | £M | £M | £M |
| Impairment loss provision: | ||||
At 1 January 2024 | 53.5 | 1.4 | – | 54.9 |
Charge/(credit) for the year | (4.6) | (0.9) | – | (5.5) |
Amounts written off during the year | (3.1) | – | – | (3.1) |
Movement in foreign exchange rate | (0.4) | – | – | (0.4) |
At 31 December 2024 | 45.4 | 0.5 | – | 45.9 |
| Income Statement | ||||
Charge/(credit) for the year | (4.6) | (0.9) | – | (5.5) |
Recoveries of amounts previously written off | (0.2) | – | – | (0.2) |
Total income statement charge/(credit) | (4.8) | (0.9) | – | (5.7) |
| Loans fully | ||||
| secured on | Loans fully | |||
| residential | secured on | Other | ||
| property | land | loans | Total | |
| Group & Society 2023 | £M | £M | £M | £M |
| Impairment loss provision: | ||||
At 1 January 2023 | 48.0 | 1.6 | 2.5 | 52.1 |
Charge/(credit) for the year | 6.4 | (0.2) | – | 6.2 |
Amounts written off during the year | (0.7) | – | (2.5) | (3.2) |
Movement in foreign exchange rate | (0.2) | – | – | (0.2) |
At 31 December 2023 | 53.5 | 1.4 | – | 54.9 |
| Income Statement | ||||
Charge/(credit) for the year | 6.4 | (0.2) | – | 6.2 |
Recoveries of amounts previously written off | (0.1) | – | – | (0.1) |
Total income statement charge/(credit) | 6.3 | (0.2) | – | 6.1 |
The Group’s policy for calculating impairment of loans and advances to customers (including retail mortgages and loan commitments)
is detailed in note 1(e). Details of the significant accounting estimates and judgements required in the calculation of impairment loss
provisions, including the incorporation of forward-looking information, are provided in note 2.
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8. Impairment on loans and advances to customers (continued)
The table below summarises the Group’s retail mortgage balances, loan commitments and associated impairment loss provisions.
The classification of loans into stages for impairment purposes is explained in note 1(e).
Group & Society 2024 | Group & Society 2023 | |||||
| Impairment | Impairment | |||||
| Gross | loss | Provision | Gross | loss | Provision | |
| exposure | provision | coverage | exposure | provision | coverage | |
| £M | £M | % | £M | £M | % | |
| Retail mortgages | ||||||
Stage 1 | 19,674.0 | 7.9 | 0.04 | 17,670.1 | 4.8 | 0.03 |
Stage 2 and <30 days past due | 4,385.8 | 21.5 | 0.49 | 3,791.4 | 29.0 | 0.76 |
Stage 2 and 30+ days past due | 95.5 | 1.8 | 1.88 | 111.0 | 2.9 | 2.61 |
Stage 3 and <90 days past due | 145.4 | 2.0 | 1.38 | 125.0 | 2.1 | 1.68 |
Stage 3 and 90+ days past due | 147.4 | 11.9 | 8.07 | 138.9 | 14.4 | 10.37 |
Total retail mortgages | 24,448.1 | 45.1 | 0.18 | 21,836.4 | 53.2 | 0.24 |
| Loan commitments | ||||||
Stage 1 | 1,640.6 | 0.3 | 0.02 | 1,268.9 | 0.3 | 0.02 |
Total impairment loss provision | 26,088.7 | 45.4 | 0.17 | 23,105.3 | 53.5 | 0.23 |
The tables below provide information on movements in the gross retail mortgage exposures and associated impairment loss provisions
during the year:
Stage 1 | Stage 2 | Stage 3 | Total | |||||
| Provision | Provision | |||||||
| Gross | Provision | Gross | Lifetime | Gross | Lifetime | Gross | ||
| exposure | 12m ECL | exposure | ECL | exposure | ECL | exposure | Provision | |
| Group & Society 2024 | £M | £M | £M | £M | £M | £M | £M | £M |
At 1 January 2024 | 17,670.1 | 4.8 | 3,902.4 | 31.9 | 263.9 | 16.5 | 21,836.4 | 53.2 |
| Transfers resulting in increased | ||||||||
| impairment loss provision: | ||||||||
From Stage 1 to Stage 2 | (2,290.0) | (0.6) | 2,290.0 | 4.4 | – | – | – | 3.8 |
From Stage 1 to Stage 3 | (42.4) | (0.1) | – | – | 42.4 | 0.9 | – | 0.8 |
From Stage 2 to Stage 3 | – | – | (76.8) | (0.9) | 76.8 | 2.1 | – | 1.2 |
| Transfers resulting in reduced | ||||||||
| impairment loss provision: | ||||||||
From Stage 2 to Stage 1 | 1,319.2 | 0.3 | (1,319.2) | (3.1) | – | – | – | (2.8) |
From Stage 3 to Stage 1 | 7.5 | – | – | – | (7.5) | – | – | – |
From Stage 3 to Stage 2 | – | – | 32.3 | 0.1 | (32.3) | (0.5) | – | (0.4) |
| Change in impairment loss | – | – | – | – | – | 0.5 | – | 0.5 |
| provision resulting from loan | ||||||||
| modifications | ||||||||
Other remeasurement of impairment loss provision | – | 2.1 | – | (8.8) | – | (0.9) | – | (7.6) |
| (no movement in stage) | ||||||||
New advances | 6,674.3 | 2.1 | 120.5 | 0.6 | 1.2 | – | 6,796.0 | 2.7 |
Redemptions and repayments | (3,664.7) | (0.7) | (467.9) | (0.9) | (51.7) | (1.6) | (4,184.3) | (3.2) |
Write offs | – | – | – | – | – | (3.1) | – | (3.1) |
At 31 December 2024 | 19,674.0 | 7.9 | 4,481.3 | 23.3 | 292.8 | 13.9 | 24,448.1 | 45.1 |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 189
8. Impairment on loans and advances to customers (continued)
Stage 1 | Stage 2 | Stage 3 | Total | |||||
| Provision | Provision | |||||||
| Gross | Provision | Gross | Lifetime | Gross | Lifetime | Gross | ||
| exposure | 12m ECL | exposure | ECL | exposure | ECL | exposure | Provision | |
| Group & Society 2023 | £M | £M | £M | £M | £M | £M | £M | £M |
At 1 January 2023 | 16,965.3 | 5.1 | 3,185.5 | 31.6 | 221.5 | 11.1 | 20,372.3 | 47.8 |
| Transfers resulting in increased | ||||||||
| impairment loss provision: | ||||||||
From Stage 1 to Stage 2 | (1,837.6) | (0.4) | 1,837.6 | 4.2 | – | – | – | 3.8 |
From Stage 1 to Stage 3 | (45.3) | – | – | – | 45.3 | 0.9 | – | 0.9 |
From Stage 2 to Stage 3 | – | – | (68.1) | (0.7) | 68.1 | 5.1 | – | 4.4 |
| Transfers resulting in reduced | ||||||||
| impairment loss provision: | ||||||||
From Stage 2 to Stage 1 | 926.2 | 0.3 | (926.2) | (1.4) | – | – | – | (1.1) |
From Stage 3 to Stage 1 | 6.3 | – | – | – | (6.3) | – | – | – |
From Stage 3 to Stage 2 | – | – | 30.6 | 0.2 | (30.6) | (0.3) | – | (0.1) |
| Change in impairment loss | – | – | – | – | – | 0.3 | – | 0.3 |
| provision resulting from loan | ||||||||
| modifications | ||||||||
Other remeasurement of impairment loss provision | – | (2.3) | – | (1.1) | – | 2.4 | – | (1.0) |
| (no movement in stage) | ||||||||
New advances | 5,311.8 | 2.9 | – | – | – | – | 5,311.8 | 2.9 |
Redemptions and repayments | (3,656.6) | (0.8) | (157.0) | (0.9) | (34.1) | (2.3) | (3,847.7) | (4.0) |
Write offs | – | – | – | – | – | (0.7) | – | (0.7) |
At 31 December 2023 | 17,670.1 | 4.8 | 3,902.4 | 31.9 | 263.9 | 16.5 | 21,836.4 | 53.2 |
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| Group | Group | Society | Society | |
| 2024 | 2023 | 2024 | 2023 | |
| £M | £M | £M | £M | |
| Analysis of charge in the year | ||||
| Current tax | ||||
UK corporation tax on profits for the year | 38.5 | 45.1 | 38.5 | 45.1 |
Adjustments in respect of prior year | 0.1 | (0.2) | 0.1 | (0.2) |
Total current tax | 38.6 | 44.9 | 38.6 | 44.9 |
| Deferred tax | ||||
Current year | (0.8) | 2.6 | (2.2) | 0.3 |
Adjustments for changes in tax rates | (0.2) | 0.1 | (0.2) | 0.1 |
Total deferred tax | (1.0) | 2.7 | (2.4) | 0.4 |
Total tax charge | 37.6 | 47.6 | 36.2 | 45.3 |
| Tax charged/(credited) to other comprehensive income | ||||
Deferred tax current year credit | (8.8) | – | (8.8) | – |
Total tax credit to other comprehensive income | (8.8) | – | (8.8) | – |
| Factors affecting total tax charge for the year: | ||||
Profit on ordinary activities before tax | 137.5 | 181.5 | 133.9 | 172.5 |
| Profit on ordinary activities multiplied by standard rate of corporation tax | ||||
in the UK of 25.0% (2023: 23.5%) | 34.4 | 42.7 | 33.5 | 40.6 |
| Effects of: | ||||
Banking surcharge | 1.5 | 4.4 | 1.5 | 4.4 |
Adjustments in respect of prior year (current tax) | – | (0.2) | – | (0.2) |
Expenses not deductible for tax purposes | 1.3 | 0.3 | 1.3 | 0.3 |
Other differences | 0.4 | 0.4 | (0.1) | 0.2 |
Total current tax | 37.6 | 47.6 | 36.2 | 45.3 |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 191
| Amortised | ||||
| cost | FVOCI | FVTPL | Total | |
| Group 2024 | £M | £M | £M | £M |
| Financial assets: | ||||
Cash in hand and balances with the Bank of England | 2,443.2 | – | – | 2,443.2 |
Loans and advances to credit institutions | 152.3 | – | – | 152.3 |
Investment securities | 10.5 | 3,939.5 | – | 3,950.0 |
Derivative financial instruments | – | 8.1 | 363.0 | 371.1 |
| Loans and advances to customers: | ||||
Loans fully secured on residential property | 24,402.7 | – | – | 24,402.7 |
Other loans | 2.8 | – | 145.0 | 147.8 |
Fair value adjustment for hedged risk on loans and advances to customers | – | – | (173.1) | (173.1) |
Other assets, prepayments and accrued income* | 221.4 | – | – | 221.4 |
Total financial assets | 27,232.9 | 3,947.6 | 334.9 | 31,515.4 |
| Financial liabilities: | ||||
Shares | 24,529.8 | – | – | 24,529.8 |
Fair value adjustment for hedged risk on shares | – | – | 8.8 | 8.8 |
Derivative financial instruments | – | – | 98.0 | 98.0 |
Amounts owed to credit institutions | 1,244.2 | – | – | 1,244.2 |
Amounts owed to other customers | 159.3 | – | – | 159.3 |
Debt securities in issue | 3,162.5 | – | (30.8) | 3,131.7 |
Other liabilities and accruals* | 316.7 | – | – | 316.7 |
Subordinated liabilities | 350.4 | – | (16.2) | 334.2 |
Subscribed capital | 8.0 | – | – | 8.0 |
Total financial liabilities | 29,770.9 | – | 59.8 | 29,830.7 |
| Amortised | ||||
| cost | FVOCI | FVTPL | Total | |
| Group 2023 | £M | £M | £M | £M |
| Financial assets: | ||||
Cash in hand and balances with the Bank of England | 2,830.0 | – | – | 2,830.0 |
Loans and advances to credit institutions | 213.7 | – | – | 213.7 |
Investment securities | – | 2,515.6 | – | 2,515.6 |
Derivative financial instruments | – | – | 443.6 | 443.6 |
| Loans and advances to customers: | ||||
Loans fully secured on residential property | 21,782.9 | – | – | 21,782.9 |
Other loans | 4.7 | – | 153.6 | 158.3 |
Fair value adjustment for hedged risk on loans and advances to customers | – | – | (132.3) | (132.3) |
Other assets, prepayments and accrued income* | 208.2 | – | – | 208.2 |
Total financial assets | 25,039.5 | 2,515.6 | 464.9 | 28,020.0 |
| Financial liabilities: | ||||
Shares | 20,793.0 | – | – | 20,793.0 |
Fair value adjustment for hedged risk on shares | – | – | 31.9 | 31.9 |
Derivative financial instruments | – | – | 233.0 | 233.0 |
Amounts owed to credit institutions | 1,869.3 | – | – | 1,869.3 |
Amounts owed to other customers | 169.9 | – | – | 169.9 |
Debt securities in issue | 2,750.1 | – | (41.5) | 2,708.6 |
Other liabilities and accruals* | 267.7 | – | – | 267.7 |
Subordinated liabilities | 349.9 | – | (26.0) | 323.9 |
Subscribed capital | 33.0 | – | – | 33.0 |
Total financial liabilities | 26,232.9 | – | 197.4 | 26,430.3 |
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10. Classification of financial assets and liabilities (continued)
| Amortised | ||||
| cost | FVOCI | FVTPL | Total | |
| Society 2024 | £M | £M | £M | £M |
| Financial assets: | ||||
Cash in hand and balances with the Bank of England | 2,443.2 | – | – | 2,443.2 |
Loans and advances to credit institutions | 15.2 | – | – | 15.2 |
Investment securities | 10.5 | 3,939.5 | – | 3,950.0 |
Derivative financial instruments | – | 8.1 | 363.0 | 371.1 |
| Loans and advances to customers: | ||||
Loans fully secured on residential property | 24,402.7 | – | – | 24,402.7 |
Other loans | 2.8 | – | 145.0 | 147.8 |
Fair value adjustment for hedged risk on loans and advances to customers | – | – | (173.1) | (173.1) |
Other assets, prepayments and accrued income* | 298.0 | – | – | 298.0 |
Total financial assets | 27,172.4 | 3,947.6 | 334.9 | 31,454.9 |
| Financial liabilities: | ||||
Shares | 24,529.8 | – | – | 24,529.8 |
Fair value adjustment for hedged risk on shares | – | – | 8.8 | 8.8 |
Derivative financial instruments | – | – | 117.2 | 117.2 |
Amounts owed to credit institutions | 1,244.2 | – | – | 1,244.2 |
Amounts owed to other customers | 791.1 | – | – | 791.1 |
Debt securities in issue | 2,526.4 | – | (30.8) | 2,495.6 |
Other liabilities and accruals* | 310.7 | – | – | 310.7 |
Subordinated liabilities | 350.4 | – | (16.2) | 334.2 |
Subscribed capital | 8.0 | – | – | 8.0 |
Total financial liabilities | 29,760.6 | – | 79.0 | 29,839.6 |
| Amortised | ||||
| cost | FVOCI | FVTPL | Total | |
| Society 2023 | £M | £M | £M | £M |
| Financial assets: | ||||
Cash in hand and balances with the Bank of England | 2,830.0 | – | – | 2,830.0 |
Loans and advances to credit institutions | 109.2 | – | – | 109.2 |
Investment securities | – | 2,515.6 | – | 2,515.6 |
Derivative financial instruments | – | – | 443.6 | 443.6 |
| Loans and advances to customers: | ||||
Loans fully secured on residential property | 21,782.9 | – | – | 21,782.9 |
Other loans | 4.7 | – | 153.6 | 158.3 |
Fair value adjustment for hedged risk on loans and advances to customers | – | – | (132.3) | (132.3) |
Other assets, prepayments and accrued income* | 246.5 | – | – | 246.5 |
Total financial assets | 24,973.3 | 2,515.6 | 464.9 | 27,953.8 |
| Financial liabilities: | ||||
Shares | 20,793.0 | – | – | 20,793.0 |
Fair value adjustment for hedged risk on shares | – | – | 31.9 | 31.9 |
Derivative financial instruments | – | – | 232.8 | 232.8 |
Amounts owed to credit institutions | 1,869.3 | – | – | 1,869.3 |
Amounts owed to other customers | 521.6 | – | – | 521.6 |
Debt securities in issue | 2,394.8 | – | (33.8) | 2,361.0 |
Other liabilities and accruals* | 267.7 | – | – | 267.7 |
Subordinated liabilities | 349.9 | – | (26.0) | 323.9 |
Subscribed capital | 33.0 | – | – | 33.0 |
Total financial liabilities | 26,229.3 | – | 204.9 | 26,434.2 |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 193
11. Cash and cash equivalents
For the purposes of the Statements of Cash Flows, cash and cash equivalents comprise the following balances with a maturity of less
than three months.
| Group | Group | Society | Society | |
| 2024 | 2023 | 2024 | 2023 | |
| £M | £M | £M | £M | |
Cash in hand | 2.0 | 2.0 | 2.0 | 2.0 |
Balances with the Bank of England | 2,441.2 | 2,828.0 | 2,441.2 | 2,828.0 |
Cash in hand and Balances with the Bank of England | 2,443.2 | 2,830.0 | 2,443.2 | 2,830.0 |
Loans and advances to credit institutions (excluding mandatory reserve deposits) | 152.3 | 135.9 | 15.2 | 31.4 |
Total cash and cash equivalents | 2,595.5 | 2,965.9 | 2,458.4 | 2,861.4 |
The Group’s loans and advances to credit institutions on the Statements of Financial Position includes £137.1 million (2023: £104.5
million) of balances belonging to the Society’s securitisation programmes.
The amount reported for loans and advances to credit institutions in the 2023 Statements of Financial Position includes mandatory
reserve deposits of £77.8 million which were not available for use in the Group’s day to day operations. The mandatory reserve deposits
balance at 31 December 2024 was nil due to the cash ratio deposit scheme being replaced by the Bank of England levy in 2024.
| Group | Group | Society | Society | |
| 2024 | 2023 | 2024 | 2023 | |
| £M | £M | £M | £M | |
At 1 January | 2,515.6 | 1,386.7 | 2,515.6 | 1,452.8 |
Additions | 5,124.3 | 2,882.9 | 5,124.3 | 2,882.9 |
Disposals (sale and redemption) | (3,689.3) | (1,774.0) | (3,689.3) | (1,840.2) |
Movement in fair value | (0.6) | 20.0 | (0.6) | 20.1 |
At 31 December | 3,950.0 | 2,515.6 | 3,950.0 | 2,515.6 |
13. Loans and advances to customers
| Impairment | |||
| Gross | loss | ||
| exposure | provision | Total | |
| Group & Society 2024 | £M | £M | £M |
Loans fully secured on residential property | 24,448.1 | (45.4) | 24,402.7 |
Loans fully secured on land | 3.3 | (0.5) | 2.8 |
Other loans | 145.0 | – | 145.0 |
Total loans and advances to customers | 24,596.4 | (45.9) | 24,550.5 |
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13. Loans and advances to customers (continued)
| Impairment | |||
| Gross | loss | ||
| exposure | provision | Total | |
| Group & Society 2023 | £M | £M | £M |
Loans fully secured on residential property | 21,836.4 | (53.5) | 21,782.9 |
Loans fully secured on land | 6.1 | (1.4) | 4.7 |
Other loans | 153.6 | – | 153.6 |
Total loans and advances to customers | 21,996.1 | (54.9) | 21,941.2 |
The Group has previously acquired a pool of equity release mortgages from a third party. The Group assumed a number of, but not all,
risks arising from these loans. The remaining risks were retained by the third party, which also retained a proportion of the income from
the underlying equity release mortgages. As a consequence, these mortgages have been recognised as a collateral loan to the third party
within other loans in the table above. This loan is measured at fair value through profit or loss.
The net fair value movement on loans and advances to customers at fair value through profit or loss was a loss of £7.6 million (2023: £0.4
million loss) for both the Group and Society. The equity release mortgages are economically hedged using interest rate swaps and as a
result the loss was offset by a net fair value gain on the swaps of £11.1 million (2023: £0.7 million gain).
Loans and advances to customers, for both the Group and Society, include £3,900.9 million (2023: £3,342.0 million) of loans which have
been ringfenced from the Society for its associated secured funding vehicles.
The Groups asset encumbrance as at 31 December 2024 relating to mortgages used to collateralise the covered bond and securitisation
programmes is detailed on page 78.
| LBS | ||||
| Covered | ||||
| Bonds | Albion | Albion | ||
| LLP | No. 5 plc | No. 6 plc | Total | |
| 2024 | £M | £M | £M | £M |
Loans and advances transferred from the Society to secured funding vehicles | 3,241.6 | 307.3 | 352.0 | 3,900.9 |
Loan notes issued by the Society | 2,100.0 | 291.4 | 337.7 | 2,729.1 |
| LBS | ||||
| Covered | ||||
| Bonds | Albion | Albion | ||
| LLP | No. 5 plc | No. 6 plc | Total | |
| 2023 | £M | £M | £M | £M |
Loans and advances transferred from the Society to secured funding vehicles | 2,974.1 | 367.9 | – | 3,342.0 |
Loan notes issued by the Society | 2,033.5 | 349.8 | – | 2,383.3 |
The covered bonds and residential mortgage backed securities issued have been used to secure long-term funding from other financial
institutions. The loans are retained in the Society’s Statement of Financial Position, with judgement required in assessing whether risks
or rewards of ownership of the mortgage portfolio have been transferred by the Society to another Group entity. It was determined to be
inappropriate for the mortgage portfolio to be derecognised by the Society as it has retained significant risks and rewards of ownership
of these financial assets.
| Group | Group | Society | Society | |
| 2024 | 2023 | 2024 | 2023 | |
| £M | £M | £M | £M | |
Collateral | 221.4 | 208.2 | 221.4 | 208.2 |
Prepayments | 10.5 | 9.8 | 10.5 | 9.8 |
Other assets | 6.2 | 6.1 | 212.6 | 213.8 |
Total other assets, prepayments and accrued income | 238.1 | 224.1 | 444.5 | 431.8 |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 195
Name | Major Activities | Class of Shares | Interest of | Address |
| held | Society | |||
| Leeds Mortgage Funding | Non-trading | Ordinary £1 shares | 100% | 26 Sovereign Street, Leeds, |
| Limited | LS1 | 4BJ | ||
| Leeds Building Society Covered | Provision of mortgage assets | * * 26 Sovereign Street, Leeds, | ||
| Bonds LLP | and guarantor of covered bonds | LS1 | 4BJ | |
| Leeds Covered Bonds | First designated member of | * * 1 Bartholomew Lane, London, | ||
| Designated Member (No. 1) | Leeds Building Society Covered | EC2N 2AX | ||
| Limited | Bonds LLP | |||
| Leeds Covered Bonds | Second designated member of | * * 1 Bartholomew Lane, London, | ||
| Designated Member (No. 2) | Leeds Building Society Covered | EC2N 2AX | ||
| Limited | Bonds LLP | |||
| Leeds Covered Bonds Holdings | Holding company to both Leeds | * * 1 Bartholomew Lane, London, | ||
| Limited | Covered Bonds Designated | EC2N 2AX | ||
| Member (No. 1) and (No. 2) | ||||
| Limited | ||||
Albion No.5 plc | Provision of residential | * * Level 6 Duo, 280 Bishopsgate, | ||
| mortgage backed securities | London, EC2M 4RB | |||
Albion No.5 Holdings Limited | Holding company to | * * Level 6 Duo, 280 Bishopsgate, | ||
| Albion No. 5 plc | London, EC2M 4RB | |||
Albion No.6 plc | Provision of residential | * * Level 6 Duo, 280 Bishopsgate, | ||
| mortgage backed securities | London, EC2M 4RB | |||
Albion No.6 Holdings Limited | Holding company to | * * Level 6 Duo, 280 Bishopsgate, | ||
| Albion No. 6 plc | London, EC2M 4RB |
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| New core | System | ||
| systems | enhancements | Total | |
| Group & Society 2024 | £M | £M | £M |
| Cost | |||
At 1 January | 16.1 | 30.7 | 46.8 |
Additions | – | 12.4 | 12.4 |
Disposals | – | (0.2) | (0.2) |
At 31 December | 16.1 | 42.9 | 59.0 |
| Amortisation and impairment | |||
At 1 January | 5.3 | 11.7 | 17.0 |
Amortisation charged in the year | 1.6 | 4.6 | 6.2 |
Disposals | – | (0.1) | (0.1) |
Impairment charged in the year | – | 0.8 | 0.8 |
At 31 December | 6.9 | 17.0 | 23.9 |
| Net book value | |||
At 31 December | 9.2 | 25.9 | 35.1 |
| New core | System | ||
| systems | enhancements | Total | |
| Group & Society 2023 | £M | £M | £M |
| Cost | |||
At 1 January | 16.1 | 18.2 | 34.3 |
Additions | – | 12.5 | 12.5 |
Disposals | – | – | – |
At 31 December | 16.1 | 30.7 | 46.8 |
| Amortisation and impairment | |||
At 1 January | 3.7 | 8.1 | 11.8 |
Amortisation charged in the year | 1.6 | 3.4 | 5.0 |
Impairment charged in the year | – | 0.2 | 0.2 |
At 31 December | 5.3 | 11.7 | 17.0 |
| Net book value | |||
At 31 December | 10.8 | 19.0 | 29.8 |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 197
| Long | Short | Office and | ||||
| Freehold | leasehold | leasehold | computer | Right-of- | ||
| premises | premises | premises | equipment | use assets | Total | |
| Group & Society 2024 | £M | £M | £M | £M | £M | £M |
| Cost or valuation | ||||||
At 1 January | 51.8 | 0.2 | 0.9 | 46.7 | 12.6 | 112.2 |
Additions | 0.3 | – | – | 2.7 | 0.6 | 3.6 |
Disposals | – | – | – | (4.9) | (1.9) | (6.8) |
At 31 December | 52.1 | 0.2 | 0.9 | 44.5 | 11.3 | 109.0 |
| Depreciation and impairment | ||||||
At 1 January | 4.8 | – | 0.9 | 36.5 | 5.5 | 47.7 |
Disposals | – | – | – | (4.9) | (0.3) | (5.2) |
Depreciation charged in the year | – | – | – | 3.2 | 1.2 | 4.4 |
Impairment charged in the year | 16.3 | – | – | 0.4 | – | 16.7 |
At 31 December | 21.1 | – | 0.9 | 35.2 | 6.4 | 63.6 |
| Net book value | ||||||
At 31 December | 31.0 | 0.2 | – | 9.3 | 4.9 | 45.4 |
| Long | Short | Office and | ||||
| Freehold | leasehold | leasehold | computer | Right-of- | ||
| premises | premises | premises | equipment | use assets | Total | |
| Group & Society 2023 | £M | £M | £M | £M | £M | £M |
| Cost or valuation | ||||||
At 1 January | 51.8 | 0.2 | 0.9 | 45.0 | 12.4 | 110.3 |
| Additions | – | – | – | 1.7 | 0.2 | 1.9 |
At 31 December | 51.8 | 0.2 | 0.9 | 46.7 | 12.6 | 112.2 |
| Depreciation and impairment | ||||||
At 1 January | 4.8 | – | 0.9 | 33.6 | 4.3 | 43.6 |
Depreciation charged in the year | – | – | – | 2.9 | 1.2 | 4.1 |
At 31 December | 4.8 | – | 0.9 | 36.5 | 5.5 | 47.7 |
| Net book value | ||||||
At 31 December | 47.0 | 0.2 | – | 10.2 | 7.1 | 64.5 |
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17. Property, plant and equipment (continued)
| Group & | Group & | |
| Society | Society | |
| 2024 | 2023 | |
| £M | £M | |
Freehold premises | 32.9 | 44.6 |
Long leasehold premises | 0.2 | 0.2 |
At 31 December | 33.1 | 44.8 |
18. Shares
| Group & | Group & | |
| Society | Society | |
| 2024 | 2023 | |
| £M | £M | |
Held by individuals | 24,526.2 | 20,789.2 |
Other shares | 3.6 | 3.8 |
Total shares | 24,529.8 | 20,793.0 |
19. Amounts owed to other customers
| Group | Group | Society | Society | |
| 2024 | 2023 | 2024 | 2023 | |
| £M | £M | £M | £M | |
Amounts owed to subsidiary undertakings | – | – | 631.8 | 351.7 |
Other deposits | 159.3 | 169.9 | 159.3 | 169.9 |
Total amounts owed to other customers | 159.3 | 169.9 | 791.1 | 521.6 |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 199
20. Debt securities in issue
| Group | Group | Society | Society | |
| 2024 | 2023 | 2024 | 2023 | |
| £M | £M | £M | £M | |
Certificates of deposit | 60.3 | – | 60.3 | – |
Senior unsecured debt | 319.3 | 315.9 | 319.3 | 315.9 |
Covered bonds | 2,116.0 | 2,037.3 | 2,116.0 | 2,045.1 |
Residential mortgage backed securities | 636.1 | 355.4 | – | – |
Total debt securities in issue | 3,131.7 | 2,708.6 | 2,495.6 | 2,361.0 |
The underlying security for the covered bonds and residential mortgage backed securities (RMBS) is certain loans and advances to
customers (see note 13 for further detail).
In May 2024, the Group issued £350 million of RMBS Class A from Albion No 6 plc, which are denominated in sterling and have a floating
interest rate quarterly to January 2067, with an optional call date in July 2029.
| Group | Group | Society | Society | |
| 2024 | 2023 | 2024 | 2023 | |
| £M | £M | £M | £M | |
Accruals | 18.4 | 18.6 | 18.4 | 18.6 |
| Lease liabilities | ||||
Current | 1.2 | 1.2 | 1.2 | 1.2 |
Non-current | 4.3 | 6.5 | 4.3 | 6.5 |
Other payables | 323.4 | 273.9 | 392.1 | 383.9 |
Total other liabilities and accruals | 347.3 | 300.2 | 416.0 | 410.2 |
| Group & | Group & | |
| Society | Society | |
| 2024 | 2023 | |
| Maturity analysis – contractual undiscounted cash flows | £M | £M |
Less than one year | 1.3 | 1.3 |
One to five years | 3.1 | 4.5 |
More than five years | 0.9 | 2.0 |
Total undiscounted cash flows at 31 December | 5.3 | 7.8 |
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21. Other liabilities and accruals (continued)
| Group & | Group & | |
| Society | Society | |
| 2024 | 2023 | |
| £M | £M | |
Interest payable on lease liabilities | 0.2 | 0.2 |
Depreciation of right-of-use assets | 1.2 | 1.2 |
Expenses relating to short term leases | 0.1 | 0.1 |
Expenses relating to leases of low value assets, excluding short term leases of low value assets | 0.1 | 0.1 |
Total recognised in Income Statement in the year | 1.6 | 1.6 |
| Group & | Group & | |
| Society | Society | |
| 2024 | 2023 | |
| £M | £M | |
Total cash outflow for leases | 2.1 | 2.1 |
| Voluntary | |||
| financial | Other | ||
| support | provisions | Total | |
| Group & Society 2024 | £M | £M | £M |
At 1 January 2024 | – | 1.3 | 1.3 |
Provision charge in the year | 10.3 | 0.3 | 10.6 |
Amounts released during the year | – | (0.3) | (0.3) |
Amounts paid during the year | (6.7) | (0.7) | (7.4) |
At 31 December 2024 | 3.6 | 0.6 | 4.2 |
| Voluntary | |||
| financial | Other | ||
| support | provisions | Total | |
| Group & Society 2023 | £M | £M | £M |
At 1 January 2023 | – | 0.6 | 0.6 |
Provision charge in the year | – | 0.7 | 0.7 |
Amounts released during the year | – | – | – |
Amounts paid during the year | – | – | – |
At 31 December 2024 | – | 1.3 | 1.3 |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 201
23. Subordinated liabilities
Subordinated liabilities comprise £334.2 million (2023: £323.9 million) of senior non-preferred fixed rate reset notes which were issued
during 2021 under the Group’s £2 billion Euro Medium Term Note Programme. The notes are denominated in sterling and have a fixed
interest rate of 1.5% payable semi-annually to 16 March 2026, followed by a further year at the benchmark gilt rate plus 1.3% until maturity
on 16 March 2027.
The total amount reported in the Statements of Financial Position represents the nominal value of £350.0 million (2023: £350.0 million)
plus accrued interest and a fair value adjustment for hedged risk.
The notes rank behind the claims of all other creditors and members of the Society, other than holders of tier 2 capital.
24. Subscribed capital
| Group & | Group & | |
| Society | Society | |
| 2024 | 2023 | |
| £M | £M | |
13 ⅜% permanent interest bearing shares | – | 25.0 |
3 ¾% tier 2 capital | 8.0 | 8.0 |
Total | 8.0 | 33.0 |
In April 2024, the Society repurchased £25.0 million of PIBS. The repurchase resulted in an upfront cost for the Society of £23.4 million,
which was recognised in the Other operating income/(expense) line in the Income Statement, but it also released the Society from the
permanent obligation of paying a 13.375% interest rate to investors. The Society continues to meet its current and forecasted Minimum
Requirement for Own Funds and Eligible Liabilities (MREL). This requirement ensures that institutions have a minimum amount of
liabilities that can bear losses before and in resolution, allowing the resolution authority to use these financial resources to absorb losses
and recapitalise the continuing business.
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25. Retirement benefit obligation (continued)
Risk | Impact |
Interest rate risk | A decrease in corporate bond yields results in an increase in the present value of the scheme liabilities because the |
| discount rate is linked to corporate bond yields | |
Inflation risk | An increase in inflation results in higher benefit increases for scheme members, increasing the scheme liabilities |
Longevity risk | An increase in life expectancies results in a longer benefit payment period which in turn increases the scheme liabilities |
Investment market risk | The value of the scheme’s assets is impacted by the market prices of those assets |
2024 | 2023 | |
Discount rate | 5.40% | 4.60% |
| Price inflation | ||
RPI | 3.15% | 3.05% |
CPI | 2.65% | 2.45% |
| Future pension increases | ||
RPI max 5% | 2.95% | 2.85% |
RPI min 3% max 5% | 3.70% | 3.70% |
Cash commutation | 100% of members assumed to take | 100% of members assumed to take |
| 80% of maximum tax free cash | 80% of maximum tax free cash | |
| Mortality | ||
Actuarial base table | S3PMA/S3PFA tables | S2PMA/S2PFA tables |
Future improvements | CMI_2023 with 1% p.a. long-term | CMI_2022 with 1% p.a. long-term trend, |
| trend, smoothing factor of 7, initial | smoothing factor of 7, initial addition of | |
| addition of 0, w2020 and w2021 | 0, w2020 and w2021 parameters of 10% | |
| parameters of 0% and w2022 and | and w2022 parameter of 35% | |
| w2023 parameters of 100% | ||
| Life expectancy | ||
Male at age 63 | 22.8 years | 22.4 years |
Female at age 63 | 25.4 years | 24.6 years |
Male at age 63 (currently aged 43) | 23.8 years | 23.4 years |
Female at age 63 (current age 43) | 26.6 years | 25.8 years |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 203
25. Retirement benefit obligation (continued)
| Group & | Group & | |
| Society | Society | |
| 2024 | 2023 | |
| £M | £M | |
Present value of funded obligations | (61.0) | (70.2) |
Present value of unfunded obligations | (0.5) | (0.6) |
Funded scheme assets at fair value | 65.2 | 73.7 |
Effect of asset ceiling | (4.2) | – |
Retirement benefit (obligation)/surplus | (0.5) | 2.9 |
| Group & | Group & | |
| Society | Society | |
| 2024 | 2023 | |
| £M | £M | |
At 1 January | 70.8 | 70.2 |
Interest cost | 3.1 | 3.3 |
Actuarial gains arising from changes in demographic assumptions | (0.7) | (1.4) |
Actuarial (gains)/losses arising from changes in financial assumptions | (6.0) | 0.7 |
Actuarial (gains)/losses on experience adjustment | (1.5) | 1.8 |
Benefits paid | (4.2) | (3.8) |
At 31 December | 61.5 | 70.8 |
| Group & | Group & | |
| Society | Society | |
| 2024 | 2023 | |
| £M | £M | |
At 1 January | 73.7 | 73.8 |
Interest income | 3.3 | 3.5 |
Return on scheme assets excluding interest income | (7.5) | 0.2 |
Contribution by employer | 0.4 | 0.4 |
Administrative expenses | (0.5) | (0.4) |
Benefits paid | (4.2) | (3.8) |
At 31 December | 65.2 | 73.7 |
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25. Retirement benefit obligation (continued)
| Group & | Group & | |
| Society | Society | |
| 2024 | 2023 | |
| £M | £M | |
Corporate bonds | 29.9 | 40.0 |
Asset backed securities | 18.3 | 12.3 |
Index-linked Government bonds | 12.8 | 13.5 |
Cash and cash equivalents | 2.8 | 2.7 |
Fixed-interest Government bonds | 1.4 | 0.4 |
Absolute return bonds | – | 4.8 |
Total assets | 65.2 | 73.7 |
| Group & | Group & | |
| Society | Society | |
| 2024 | 2023 | |
| £M | £M | |
Administration expenses | 0.5 | 0.4 |
Net interest on the defined benefit asset | (0.2) | (0.2) |
Total cost – defined benefit scheme | 0.3 | 0.2 |
| Group & | Group & | |
| Society | Society | |
| 2024 | 2023 | |
| £M | £M | |
Actuarial gains/(losses) on experience adjustment | 1.5 | (1.8) |
Actuarial gains arising from changes in demographic assumptions | 0.7 | 1.4 |
Actuarial gains/(losses) arising from changes in financial assumptions | 6.0 | (0.7) |
Effect of asset ceiling | (4.2) | – |
Percentage of scheme liabilities (%) | 6.5% | (1.6)% |
Return on scheme assets excluding interest income | (7.5) | 0.2 |
Percentage of scheme assets (%) | 28.5% | 40.3% |
Total loss recognised in SOCI during the year | (3.5) | (0.9) |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 205
25. Retirement benefit obligation (continued)
| Group & Society 2024 | |
| Approximate impact on defined benefit obligation | £M |
Increase discount rate by 1.0% | 6.9 |
Increase inflation assumption by 0.5% | (2.8) |
Change long-term trend of increases in mortality improvement to 1.25% | (0.3) |
| Group & Society 2024 | |
| £M | |
Estimated employer normal contributions in financial year 2025 | 0.4 |
| Group | Group | Society | Society | |
| 2024 | 2023 | 2024 | 2023 | |
| £M | £M | £M | £M | |
| Deferred tax | ||||
At 1 January | (35.4) | (32.7) | (32.3) | (31.8) |
Credit/(charge) in other comprehensive income for the period | 8.8 | (0.1) | 8.8 | (0.1) |
Credit/(charge) to income statement for the period | 1.0 | (2.6) | 2.4 | (0.4) |
At 31 December | (25.6) | (35.4) | (21.1) | (32.3) |
| Group | Group | Society | Society | |
| 2024 | 2023 | 2024 | 2023 | |
| £M | £M | £M | £M | |
| Deferred tax liabilities | ||||
IFRS 9 transitional adjustment | 2.2 | 3.0 | 2.2 | 3.0 |
Cash flow hedge reserve | (25.9) | (28.3) | (25.9) | (28.3) |
Revaluation reserve | (0.7) | (0.7) | (0.7) | (0.7) |
Pensions | 0.1 | (0.8) | 0.1 | (0.8) |
Fair value reserve | (0.9) | (4.9) | 3.6 | (1.8) |
Fixed assets | (0.9) | (4.0) | (0.9) | (4.0) |
Trading items | 0.5 | 0.3 | 0.5 | 0.3 |
Total deferred tax | (25.6) | (35.4) | (21.1) | (32.3) |
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27. Tax effects relating to each component of other comprehensive income
| Group and | Group and | |
| Society | Society | |
| 2024 | 2023 | |
| £M | £M | |
Tax benefit on cash flow hedge reserve | 2.4 | 4.7 |
Tax benefit/(expense) on investment securities | 5.4 | (4.2) |
Tax expense on revaluation loss on properties | – | (0.2) |
Tax benefit on actuarial gains/losses on retirement benefit obligations | 1.0 | 0.3 |
Tax expense on IFRS 9 transitional adjustment | – | (0.1) |
Other comprehensive income | 8.8 | 0.5 |
| Group | Group | Society | Society | |
| 2024 | 2023 | 2024 | 2023 | |
| £M | £M | £M | £M | |
At 1 January | 3,064.1 | 3,217.7 | 2,716.5 | 3,126.9 |
| Cash flows: | ||||
Net proceeds from issue of debt securities | 910.1 | 350.2 | 560.2 | 0.4 |
Repayments of debt securities in issue | (503.8) | (379.9) | (433.4) | (269.9) |
Repayments of subscribed capital | (48.4) | (171.2) | (48.4) | (171.2) |
Principal lease payments | (1.4) | (1.4) | (1.4) | (1.4) |
| Non-cash flows: | ||||
Amortisation of discount on issue | – | (19.6) | – | (19.6) |
Accrued interest movements | 6.6 | 8.7 | 5.2 | 3.5 |
Foreign exchange movements | – | (9.1) | – | (9.1) |
Movement in fair value | 20.6 | 68.7 | 12.8 | 56.9 |
Loss on repurchase of subscribed capital | 23.4 | – | 23.4 | – |
At 31 December | 3,471.2 | 3,064.1 | 2,834.9 | 2,716.5 |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 207
| Society | Directors and connected | |||
| subsidiaries | persons | |||
| 2024 | 2023 | 2024 | 2023 | |
| £M | £M | £M | £M | |
| Deposits payable by the Society | ||||
Deposits outstanding at 1 January | 351.7 | 175.1 | 0.5 | 0.2 |
Net movement during the year | 280.1 | 176.6 | 0.4 | 0.3 |
Deposits outstanding at 31 December | 631.8 | 351.7 | 0.9 | 0.5 |
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Activity | Risk | Type of derivative | Hedge accounting |
Fixed rate mortgage lending | Sensitivity to changes in interest rates | Pay fixed interest rate swaps | Fair value hedge |
| Cash flow hedge | |||
Fixed rate asset investments | Sensitivity to changes in interest rates | Pay fixed interest rate swaps | Fair value hedge |
Fixed rate savings products | Sensitivity to changes in interest rates | Receive fixed interest rate swaps | Fair value hedge |
Fixed rate wholesale funding | Sensitivity to changes in interest rates | Receive fixed interest rate swaps | Fair value hedge |
Equity release mortgages | Sensitivity to changes in interest rates | Pay fixed interest rate swaps | – |
Investment and funding in foreign currency | Sensitivity to changes in foreign | Cross currency interest rate swaps | – |
| exchange rates | and foreign exchange contracts |
Group 2024 | Group 2023 | |||||
| Contract or | Contract or | |||||
| underlying | underlying | |||||
| principal | Positive | Negative | principal | Positive | Negative | |
| amount | fair value | fair value | amount | fair value | fair value | |
| £M | £M | £M | £M | £M | £M | |
Interest rate swaps available to designate in accounting hedges | 28,753.6 | 369.4 | (90.3) | 24,335.1 | 442.8 | (208.7) |
| Derivatives not designated in accounting hedges: | ||||||
Equity release swaps | 57.2 | – | (7.7) | 61.5 | – | (18.9) |
Interest rate swaps | – | – | – | – | – | – |
Cross currency swaps | 43.8 | 1.7 | – | 494.3 | 0.8 | (5.4) |
Total derivatives held for hedging purposes | 28,854.6 | 371.1 | (98.0) | 24,890.9 | 443.6 | (233.0) |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 209
31. Derivative financial instruments and hedge accounting (continued)
(a) Derivative financial instruments (continued)
Society 2024 | Society 2023 | |||||
| Contract or | Contract or | |||||
| underlying | underlying | |||||
| principal | Positive | Negative | principal | Positive | Negative | |
| amount | fair value | fair value | amount | fair value | fair value | |
| £M | £M | £M | £M | £M | £M | |
Interest rate swaps available to designate in accounting hedges | 28,753.6 | 369.4 | (90.3) | 23,901.5 | 442.8 | (197.6) |
| Derivatives not designated in accounting hedges: | ||||||
Equity release swaps | 57.2 | – | (7.7) | 61.5 | – | (18.9) |
Interest rate swaps | 658.1 | – | (19.2) | 371.9 | – | (16.3) |
Cross currency swaps | 43.8 | 1.7 | – | 53.8 | 0.8 | – |
Total derivatives held for hedging purposes | 29,512.7 | 371.1 | (117.2) | 24,388.7 | 443.6 | (232.8) |
Group 2024 | Group 2023 | |||
| Notional | Notional | |||
| principal | Replacement | principal | Replacement | |
| amount | cost | amount | cost | |
| £M | £M | £M | £M | |
Less than 1 year | 10,961.7 | 29.0 | 8,428.9 | 43.9 |
Between 1 and 5 years inclusive | 16,877.9 | 311.9 | 15,711.5 | 381.5 |
More than 5 years | 1,015.0 | 30.2 | 750.5 | 18.2 |
Total derivatives | 28,854.6 | 371.1 | 24,890.9 | 443.6 |
Society 2024 | Society 2023 | |||
| Notional | Notional | |||
| principal | Replacement | principal | Replacement | |
| amount | cost | amount | cost | |
| £M | £M | £M | £M | |
Less than 1 year | 10,961.7 | 29.0 | 7,554.8 | 43.9 |
Between 1 and 5 years inclusive | 17,536.0 | 311.9 | 16,083.4 | 381.5 |
More than 5 years | 1,015.0 | 30.2 | 750.5 | 18.2 |
Total derivatives | 29,512.7 | 371.1 | 24,388.7 | 443.6 |
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31. Derivative financial instruments and hedge accounting (continued)
(b) Hedge accounting (continued)
| Less than | 3 to 12 | 1 to 5 | More than | |
| 3 months | months | years | 5 years | |
| Group 2024 | £M | £M | £M | £M |
| Macro fair value hedges of loans and advances to customers | ||||
Swap notional | 13.1 | 2,714.8 | 12,910.3 | 428.8 |
Average fixed rate | 1.1% | 3.9% | 3.1% | 3.1% |
| Macro fair value hedges of shares | ||||
Swap notional | 1,024.0 | 6,141.0 | 1,837.5 | – |
Average fixed rate | 4.8% | 4.7% | 4.4% | – |
| Micro fair value hedges of wholesale funding denominated in Sterling | ||||
Swap notional | – | – | 700.0 | – |
Average fixed rate | – | – | 1.4% | – |
| Micro fair value hedges of wholesale funding denominated in Euros | ||||
Swap notional | – | – | – | – |
Average fixed rate | – | – | – | – |
| Macro cash flow hedges | ||||
Swap notional | – | – | – | 525.0 |
Average fixed rate | – | – | – | 3.6% |
| Less than | 3 to 12 | 1 to 5 | More than | |
| 3 months | months | years | 5 years | |
| Group 2023 | £M | £M | £M | £M |
| Macro fair value hedges of loans and advances to customers | ||||
Swap notional | 10.0 | 1,030.2 | 9,979.2 | 669.8 |
Average fixed rate | 1.1% | 1.7% | 2.6% | 3.9% |
| Macro fair value hedges of shares | ||||
Swap notional | – | 3,825.0 | 4,590.5 | – |
Average fixed rate | – | 4.7% | 4.7% | – |
| Micro fair value hedges of wholesale funding denominated in Sterling | ||||
Swap notional | – | – | 700.0 | – |
Average fixed rate | – | – | 1.4% | – |
| Micro fair value hedges of wholesale funding denominated in Euros | ||||
Swap notional | – | 433.5 | – | – |
Average fixed rate | – | 0.5% | – | – |
| Macro cash flow hedges | ||||
Swap notional | – | – | – | 450.0 |
Average fixed rate | – | – | – | 4.3% |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 211
31. Derivative financial instruments and hedge accounting (continued)
(b) Hedge accounting (continued)
Interest rate swaps | Hedged items | |||||||
| Accumulated fair | ||||||||
Carrying amount (Note 1) | Carrying amount | value adjustments | ||||||
| Notional | ||||||||
| amount | Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | SOFP line | |
| Group 2024 | £M | £M | £M | £M | £M | £M | £M | item |
Hedge of loans and advances to customers | 16,067.0 | 319.6 | (29.2) | 16,751.3 | – | 28.9 | (324.8) | Note 2 |
Hedge of shares | 9,002.5 | 14.2 | (6.5) | – | 8,876.1 | 6.4 | (12.9) | Note 3 |
| Hedge of wholesale funding | ||||||||
denominated in Sterling | 700.0 | – | (46.9) | – | 700.0 | 47.0 | – | Note 4 |
| Hedge of wholesale funding | ||||||||
denominated in Euros | – | – | – | – | – | – | – | Note 4 |
Interest rate swaps | Hedged items | |||||||
| Accumulated fair | ||||||||
Carrying amount (Note 1) | Carrying amount | value adjustments | ||||||
| Notional | ||||||||
| amount | Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | SOFP line | |
| Group 2023 | £M | £M | £M | £M | £M | £M | £M | item |
Hedge of loans and advances to customers | 11,689.2 | 362.5 | (77.0) | 12,085.1 | – | 78.4 | (359.0) | Note 2 |
Hedge of shares | 8,415.5 | 49.4 | (16.6) | – | 8,385.1 | 15.5 | (57.6) | Note 3 |
| Hedge of wholesale funding | ||||||||
denominated in Sterling | 700.0 | – | (59.8) | – | 700.0 | 59.8 | – | Note 4 |
| Hedge of wholesale funding | ||||||||
denominated in Euros | 433.5 | – | (7.7) | – | 433.5 | 7.7 | – | Note 4 |
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31. Derivative financial instruments and hedge accounting (continued)
(b) Hedge accounting (continued)
(i) Fair value hedge accounting (continued)
| Accumulated | ||||
| amount of | ||||
| Change in fair | fair value | |||
| value of hedging | Change in fair | Total hedge | adjustments | |
| instrument | value of hedged | ineffectiveness | remaining in the | |
| (Note 1) | item (Note 1) | (Note 2) | SOFP | |
| Group 2024 | £M | £M | £M | £M |
Loans and advances to customers | 4.9 | (15.3) | (10.4) | 122.9 |
Shares | (25.0) | 35.7 | 10.6 | (2.4) |
Wholesale funding denominated in Sterling | 12.8 | (12.8) | – | – |
Wholesale funding denominated in Euros | – | – | – | – |
| Accumulated | ||||
| amount of | ||||
| Change in fair | fair value | |||
| value of hedging | Change in fair | Total hedge | adjustments | |
| instrument | value of hedged | ineffectiveness | remaining in the | |
| (Note 1) | item (Note 1) | (Note 2) | SOFP | |
| Group 2023 | £M | £M | £M | £M |
Loans and advances to customers | (366.9) | 386.5 | 19.6 | 148.4 |
Shares | 97.1 | (101.1) | (4.0) | 11.2 |
Wholesale funding denominated in Sterling | 28.3 | (29.8) | (1.5) | (0.6) |
Wholesale funding denominated in Euros | 11.5 | (11.5) | – | (0.4) |
Interest rate swaps | Hedged items | ||||||
Carrying amount (Note 1) | Carrying amount | ||||||
| Notional | |||||||
| amount | Assets | Liabilities | Assets | Liabilities | SOFP line | ||
| Group 2024 | £M | £M | £M | £M | £M | item | |
Floating rate liabilities | 525.0 | 8.1 | – | – | (525.0) | Note 2 | |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 213
31. Derivative financial instruments and hedge accounting (continued)
(b) Hedge accounting (continued)
(ii) Cash flow hedge accounting (continued)
Interest rate swaps | Hedged items | |||||
Carrying amount (Note 1) | Carrying amount | |||||
| Notional | ||||||
| amount | Assets | Liabilities | Assets | Liabilities | SOFP line | |
| Group 2023 | £M | £M | £M | £M | £M | item |
Floating rate liabilities | 450.0 | – | (18.0) | – | (450.0) | Note 2 |
| Accumulated | |||||
| amount of | Gains reclassified | ||||
| Change in fair | fair value | from OCI | |||
| value of hedging | Change in fair | Total hedge | adjustments | to Income | |
| instrument | value of hedge | ineffectiveness | remaining in OCI | Statement | |
| (Note 1) | item | (Note 2) | (Note 3) | (Note 4) | |
| Group 2024 | £M | £M | £M | £M | £M |
Floating rate liabilities | 28.8 | (29.3) | 0.5 | 92.5 | 29.4 |
| Accumulated | Gains reclassified | ||||
| Change in fair | amount of fair | from OCI | |||
| value of hedging | Change in fair | Total hedge | value adjustments | to Income | |
| instrument | value of hedge | ineffectiveness | remaining in OCI | Statement | |
| (Note 1) | item | (Note 2) | (Note 3) | (Note 4) | |
| Group 2023 | £M | £M | £M | £M | £M |
Floating rate liabilities | 128.1 | (128.3) | 0.2 | 101.2 | 26.7 |
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Group 2024 | Society 2024 | |||||
| Fair value | Carrying | Fair | Carrying | Fair | ||
| hierarchy | value | value | value | value | ||
| level | £M | £M | £M | £M | ||
| Financial assets: | ||||||
Cash in hand and balances with the Bank of England | Level 1 | 2,443.2 | 2,443.2 | 2,443.2 | 2,443.2 | |
Loans and advances to credit institutions | i) | Level 2 | 152.3 | 152.3 | 15.2 | 15.2 |
Investment securities | v) | Level 1 | 10.5 | 10.5 | 10.5 | 10.5 |
| Loans and advances to customers | ||||||
Loans fully secured on residential property | ii) | Level 3 | 24,402.7 | 24,353.9 | 24,402.7 | 24,353.9 |
Other loans | ii) | Level 2 | 2.8 | 2.8 | 2.8 | 2.8 |
Other assets, prepayments and accrued income* | vi) | Level 1 | 221.4 | 221.4 | 221.4 | 221.4 |
Other assets, prepayments and accrued income* | vi) | Level 2 | – | – | 76.6 | 76.6 |
| Financial liabilities: | ||||||
Shares | ii) | Level 2 | 24,529.8 | 24,501.0 | 24,529.8 | 24,501.0 |
Amounts owed to credit institutions | iii) | Level 2 | 1,244.2 | 1,244.2 | 1,244.2 | 1,244.2 |
Amounts owed to other customers | ii) | Level 2 | 159.3 | 159.3 | 791.1 | 791.1 |
Debt securities in issue | iv) | Level 1 | 2,526.4 | 2,506.1 | 2,526.4 | 2,506.1 |
Debt securities in issue | iv) | Level 2 | 636.1 | 628.7 | – | – |
Other liabilities and accruals* | vi) | Level 2 | 316.7 | 316.7 | 310.7 | 310.7 |
Subordinated liabilities | v) | Level 1 | 350.4 | 337.3 | 350.4 | 337.3 |
Subscribed capital | v) | Level 1 | 8.0 | 8.0 | 8.0 | 8.0 |
Group 2023 | Society 2023 | |||||
| Fair value | Carrying | Fair | Carrying | Fair | ||
| hierarchy | value | value | value | value | ||
| level | £M | £M | £M | £M | ||
| Financial assets: | ||||||
Cash in hand and balances with the Bank of England | Level 1 | 2,830.0 | 2,830.0 | 2,830.0 | 2,830.0 | |
Loans and advances to credit institutions | i) | Level 2 | 213.7 | 213.7 | 109.2 | 109.2 |
Investment securities | v) | Level 1 | – | – | – | – |
| Loans and advances to customers | ||||||
Loans fully secured on residential property | ii) | Level 3 | 21,782.9 | 21,375.6 | 21,782.9 | 21,375.6 |
Other loans | ii) | Level 2 | 4.7 | 4.7 | 4.7 | 4.7 |
Other assets, prepayments and accrued income* | vi) | Level 1 | 208.2 | 208.2 | 246.5 | 246.5 |
Other assets, prepayments and accrued income* | vi) | Level 2 | – | – | 38.3 | 38.3 |
| Financial liabilities: | ||||||
Shares | ii) | Level 2 | 20,793.0 | 20,747.2 | 20,793.0 | 20,747.2 |
Amounts owed to credit institutions | iii) | Level 2 | 1,869.3 | 1,869.3 | 1,869.3 | 1,869.3 |
Amounts owed to other customers | ii) | Level 2 | 169.9 | 169.9 | 521.6 | 521.6 |
Debt securities in issue | iv) | Level 1 | 2,400.3 | 2,365.3 | 2,394.8 | 2,357.6 |
Debt securities in issue | iv) | Level 2 | 349.8 | 349.9 | – | – |
Other liabilities and accruals* | vi) | Level 2 | 267.7 | 267.7 | 267.7 | 267.7 |
Subordinated liabilities | v) | Level 1 | 349.9 | 322.1 | 349.9 | 322.1 |
Subscribed capital | v) | Level 1 | 33.0 | 51.3 | 33.0 | 51.3 |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 215
32. Fair values (continued)
(a) Carrying value and fair value of financial instruments not carried at fair value (continued)
| Level 1 | Level 2 | Level 3 | Total | |
| Group 2024 | £M | £M | £M | £M |
| Assets: | ||||
Investment securities | 3,939.5 | – | – | 3,939.5 |
Derivative financial instruments | – | 371.1 | – | 371.1 |
Loans and advances to customers | – | – | 145.0 | 145.0 |
Fair value adjustment for hedged risk on loans and advances to customers | – | – | (173.1) | (173.1) |
Total assets | 3,939.5 | 371.1 | (28.1) | 4,282.5 |
| Liabilities: | ||||
Fair value adjustment for hedged risk on shares | – | 8.8 | – | 8.8 |
Derivative financial instruments | – | 92.1 | 5.9 | 98.0 |
Debt securities in issue | – | (30.8) | – | (30.8) |
Subordinated liabilities | – | (16.2) | – | (16.2) |
Total liabilities | – | 53.9 | 5.9 | 59.8 |
| Level 1 | Level 2 | Level 3 | Total | |
| Group 2023 | £M | £M | £M | £M |
| Assets: | ||||
Investment securities | 965.3 | 1,550.3 | – | 2,515.6 |
Derivative financial instruments | – | 443.6 | – | 443.6 |
Loans and advances to customers | – | – | 153.6 | 153.6 |
Fair value adjustment for hedged risk on loans and advances to customers | – | – | (132.3) | (132.3) |
Total assets | 965.3 | 1,993.9 | 21.3 | 2,980.5 |
| Liabilities: | ||||
Fair value adjustment for hedged risk on shares | – | 31.9 | – | 31.9 |
Derivative financial instruments | – | 218.1 | 14.9 | 233.0 |
Debt securities in issue | – | (41.5) | – | (41.5) |
Subordinated liabilities | – | (26.0) | – | (26.0) |
Total liabilities | – | 182.5 | 14.9 | 197.4 |
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32. Fair values (continued)
(b) Fair value measurement basis for financial instruments carried at fair value (continued)
| Level 1 | Level 2 | Level 3 | Total | |
| Society 2024 | £M | £M | £M | £M |
| Assets: | ||||
Investment securities | 3,939.5 | – | – | 3,939.5 |
Derivative financial instruments | – | 371.1 | – | 371.1 |
Loans and advances to customers | – | – | 145.0 | 145.0 |
Fair value adjustment for hedged risk on loans and advances to customers | – | – | (173.1) | (173.1) |
Total assets | 3,939.5 | 371.1 | (28.1) | 4,282.5 |
| Liabilities: | ||||
Fair value adjustment for hedged risk on shares | – | 8.8 | – | 8.8 |
Derivative financial instruments | – | 92.1 | 25.1 | 117.2 |
Debt securities in issue | – | (30.8) | – | (30.8) |
Subordinated liabilities | – | (16.2) | – | (16.2) |
Total liabilities | – | 53.9 | 25.1 | 79.0 |
| Level 1 | Level 2 | Level 3 | Total | |
| Society 2023 | £M | £M | £M | £M |
| Assets: | ||||
Investment securities | 965.3 | 1,550.3 | – | 2,515.6 |
Derivative financial instruments | – | 443.6 | – | 443.6 |
Loans and advances to customers | – | – | 153.6 | 153.6 |
Fair value adjustment for hedged risk on loans and advances to customers | – | – | (132.3) | (132.3) |
Total assets | 965.3 | 1,993.9 | 21.3 | 2,980.5 |
| Liabilities: | ||||
Fair value adjustment for hedged risk on shares | – | 31.9 | – | 31.9 |
Derivative financial instruments | – | 201.6 | 31.2 | 232.8 |
Debt securities in issue | – | (33.8) | – | (33.8) |
Subordinated liabilities | – | (26.0) | – | (26.0) |
Total liabilities | – | 173.7 | 31.2 | 204.9 |
Notes to the Accounts continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 217
32. Fair values (continued)
| Fair value | ||||
| Derivative | Loans and | adjustment | ||
| financial | advances to | for hedged | ||
| instruments | customers | risk | Total | |
| Group 2024 | £M | £M | £M | £M |
At 1 January 2024 | (14.9) | 153.6 | (132.3) | 6.4 |
Total gains/(losses) in the Income Statement | 9.0 | (7.6) | – | 1.4 |
Movement in fair value adjustment for hedged risk on loans and advances to customers | – | – | (40.8) | (40.8) |
Net repayment in the year | – | (1.0) | – | (1.0) |
At 31 December 2024 | (5.9) | 145.0 | (173.1) | (34.0) |
| Fair value | ||||
| Derivative | Loans and | adjustment | ||
| financial | advances to | for hedged | ||
| instruments | customers | risk | Total | |
| Group 2023 | £M | £M | £M | £M |
At 1 January 2023 | (26.9) | 161.9 | (585.9) | (450.9) |
Total gains/(losses) in the Income Statement | 1.4 | (6.9) | – | (5.5) |
Movement in fair value adjustment for hedged risk on loans and advances to customers | – | – | 453.6 | 453.6 |
Net repayment in the year | 10.6 | (1.4) | – | 9.2 |
At 31 December 2023 | (14.9) | 153.6 | (132.3) | 6.4 |
| Fair value | ||||
| Derivative | Loans and | adjustment | ||
| financial | advances to | for hedged | ||
| instruments | customers | risk | Total | |
| Society 2024 | £M | £M | £M | £M |
At 1 January 2024 | (31.2) | 153.6 | (132.3) | (9.9) |
Total losses in the Income Statement | 6.1 | (7.6) | – | (1.5) |
Movement in fair value adjustment for hedged risk on loans and advances to customers | – | – | (40.8) | (40.8) |
Net repayment in the year | – | (1.0) | – | (1.0) |
At 31 December 2024 | (25.1) | 145.0 | (173.1) | (53.2) |
| Fair value | ||||
| Derivative | Loans and | adjustment | ||
| financial | advances to | for hedged | ||
| instruments | customers | risk | Total | |
| Society 2023 | £M | £M | £M | £M |
At 1 January 2023 | (32.2) | 161.9 | (585.9) | (456.2) |
Total gains in the Income Statement | (6.5) | (6.9) | – | (13.4) |
Movement in fair value adjustment for hedged risk on loans and advances to customers | – | – | 453.6 | 453.6 |
Net repayment in the year | 7.5 | (1.4) | – | 6.1 |
At 31 December 2023 | (31.2) | 153.6 | (132.3) | (9.9) |
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32. Fair values (continued)
| Relationship of | ||||||
| Fair value at | Fair value at | Significant | unobservable | |||
| Financial assets/ | 31 December | 31 December | Fair value | Valuation technique(s) and | unobservable | inputs to |
| financial liabilities | 2024 | 2023 | hierarchy | key input(s) | input(s) | fair value |
| Investment | Group | Group | Level 1 | Quoted bid prices in an active | N/A | N/A |
| securities | Assets - | Assets - £965.3 | market sourced from third-party | |||
| £3,939.5 | million | data providers. | ||||
| million | Society | |||||
| Society | Assets - £965.3 | |||||
| Assets - | million | |||||
| £3,939.5 | ||||||
| million | ||||||
| Derivative financial | Group | Group | Level 2 | Discounted cash flow. Future | N/A | N/A |
| instruments | Assets - | Assets - | cash flows are estimated based | |||
| (interest rate | £369.4 million | £442.8 million | on forward interest rates (from | |||
| swaps) | and Liabilities - | and Liabilities - | observable yield curves at the | |||
| £90.3 million | £208.7 million | end of the reporting period) and | ||||
| Society | Society | contract interest rates, discounted | ||||
| Assets - | Assets - | at a rate that reflects the credit | ||||
| £369.4 million | £442.8 million | risk exposure to the various | ||||
| and Liabilities - | and Liabilities - | counterparties. | ||||
| £90.3 million | £197.6 million | |||||
| Derivative financial | Group | Group | Level 2 | Discounted cash flow. Future | N/A | N/A |
| instruments (cross | Assets - | Assets - | cash flows are estimated based | |||
| currency swaps) | £1.7 million | £0.8 million | on forward interest rates (from | |||
| Society | and Liabilities - | observable yield curves at the | ||||
| Assets - | £5.4 million | end of the reporting period) and | ||||
| £1.7 million | Society | contract interest rates discounted | ||||
| Assets - £0.8 | at a rate that reflects the credit | |||||
| million | risk exposure to the various | |||||
| counterparties. Any foreign | ||||||
| currency amounts are translated | ||||||
| into sterling at the contract | ||||||
| exchange rate. | ||||||
| Derivative financial | Group | Group | Level 2 | Discounted cash flow. Future | N/A | N/A |
| instruments (equity | Liabilities - | Liabilities - | cash flows are estimated based | |||
| release swaps) | £1.8 million | £4.0 million | on forward interest rates (from | |||
| (Level 2) | Society | Society | observable yield curves at the | |||
| Liabilities - | Liabilities - | end of the reporting period) and | ||||
| £1.8 million | £4.0 million | contract interest rates discounted | ||||
| at a rate that reflects the credit | ||||||
| risk exposure to the counterparty. | ||||||
| The profile of future notional | ||||||
| amounts is specified in the | ||||||
| contract. | ||||||
| Fair value | Group | Group | Level 2 | Discounted cash flow. Future | N/A | N/A |
| adjustment for | Liabilities - | Liabilities - | cash flows are estimated based | |||
| hedged risk on | £8.8 million | £31.9 million | on contractual interest rates and | |||
| shares | Society | Society | balances of fixed rate shares, | |||
| Liabilities - | Liabilities - | discounted at the risk free rate. | ||||
| £8.8 million | £31.9 million |
Year ended 31 December 2024
Notes to the Accounts continued
Leeds Building Society | Annual Report and Accounts 2024 219
32. Fair values (continued)
(d) Recurring fair value measurement (continued)
| Relationship of | ||||||
| Fair value at | Fair value at | Significant | unobservable | |||
| Financial assets/ | 31 December | 31 December | Fair value | Valuation technique(s) and | unobservable | inputs to |
| financial liabilities | 2024 | 2023 | hierarchy | key input(s) | input(s) | fair value |
| Debt securities in | Group | Group | Level 2 | Discounted cash flow. Future | N/A | N/A |
| issue | Liabilities - | Liabilities - | cash flows are estimated based | |||
| £30.8 million | £41.5 million | contractual interest rates and | ||||
| Society | Society | balances of fixed rate shares, | ||||
| Liabilities - | Liabilities - | discounted at the risk free rate. | ||||
| £30.8 million | £33.8 million | |||||
| Subordinated | Group | Group | Level 2 | Discounted cash flow. Future | N/A | N/A |
| liabilties | Liabilities - | Liabilities - | cash flows are estimated based | |||
| £16.2 million | £26.0 million | contractual interest rates and | ||||
| Society | Society | balances of wholesale debt. | ||||
| Liabilities - | Liabilities - | |||||
| £16.2 million | £26.0 million | |||||
| Derivative financial | Group | Group | Level 3 | Discounted cash flow. Future cash | Assumptions | An increase in |
| instruments (equity | Liabilities - | Liabilities - | flows are based on a projection of | on future life | life expectancy | |
| release swaps) | £5.9 million | £14.9 million | interest rates and RPI, a discount | expectancy of | or reduction in | |
| (Level 3) | Society | Society | rate to reflect the counterparty | customers based | prepayments will | |
| Liabilities - | Liabilities - | risk and assumptions for future | on best estimate | increase the value | ||
| £5.9 million | £14.9 million | mortality and prepayment which | mortality data. | of the liability. | ||
| determine the profile of future | Assumptions | |||||
| notional amounts. | on the level of | |||||
| prepayment. | ||||||
| Derivative financial | Society | Society | Level 3 | Discounted cash flow. The | Assumptions on | An increase in |
| instruments | Liabilities - | Liabilities - | valuations are based on a | future notional | prepayment rates | |
| (securitisation | £19.2 million | £16.3 million | discounted cash flow model | balances related | will increase the | |
| swaps) | which uses a projection of | to mortgage | fair value of the | |||
| interest rates, a discount rate | prepayment | swaps. | ||||
| to reflect the counterparty risk | rates. | |||||
| and assumptions for future | ||||||
| prepayment. The notional profile | ||||||
| of the swaps tracks the balance | ||||||
| of a loan portfolio which is subject | ||||||
| to assumptions about the rate of | ||||||
| prepayment. | ||||||
| Loans and advances | Group | Group | Level 3 | Discounted cash flow. The | Assumptions | An increase in |
| to customers | Assets - | Assets - £153.6 | valuations are based on a | on future life | life expectancy | |
| (collateral loan) | £145.0 million | million | discounted cash flow model | expectancy of | or reduction in | |
| Society | Society | which uses projections of | customers based | prepayment will | ||
| Assets - | Assets - £153.6 | interest rates, a discount rate and | on best estimate | increase the value | ||
| £145.0 million | million | assumptions for future mortality | mortality data. | of the asset. An | ||
| and prepayment. The no negative | Assumptions | increase in house | ||||
| equity component of the loan | on the level of | price volatility or | ||||
| is valued using a stochastic | repayment, house | the discount rate | ||||
| modelling technique. | price volatility and | will reduce the | ||||
| the discount rate. | value of the asset. | |||||
| Fair value | Group | Group | Level 3 | Discounted cash flow. Future | Assumptions on | An increase in |
| adjustment for | Assets - | Assets - | cash flows are estimated based | future mortgage | prepayment rates | |
| hedged risk on | £(173.1 million) | £(132.3 million) | on contractual interest rates and | balances related | will reduce the | |
| loans and advances | Society | Society | projected fixed rate mortgage | to mortgage | value of the fair | |
| to customers | Assets - | Assets - | balances, discounted at the risk | prepayment | value adjustment. | |
| £(173.1 million) | £(132.3 million) | free rate. | rates. |
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32. Fair values (continued)
Assumption | Sensitivity modelled for current assumption | (Decrease)/increase in fair value of collateral loan (£M) |
Discount rate | +/- 1 percentage point | (10.1)/11.4 |
Property price volatility | +/- 3 percentage points | (3.9)/3.5 |
Sales price haircut | +/- 5 percentage points | (3.1)/2.7 |
Notes to the Accounts continued
Leeds Building Society | Annual Report and Accounts 2024 221
Other
Information
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222
Annual Business Statement
Year ended 31 December 2024
1. Statutory percentages
31 December
2024
Statutory
Limit
Lending limit 2.3% 25%
Funding limit 15.6% 50%
The above percentages have been calculated in accordance with the provisions of the Building Societies Act 1986 (as amended by the
Building Societies Act 1997).
The lending limit measures the proportion of business assets not in the form of loans fully secured on residential property. Business
assets are the total assets of the Group as shown in the Statement of Financial Position, plus impairment provisions for loans and
advances to customers, less liquid assets, intangible assets and property, plant and equipment.
The funding limit measures the proportion of shares and borrowings (excluding fair value adjustment for hedged risk) not in the form of
shares held by individuals.
2. Other percentages
31 December
2024
31 December
2023
As a percentage of shares and borrowings:
Gross capital 7.10% 7.83%
Free capital 6.82% 7.46%
Liquid assets 22.52% 21.77%
Profit for the financial year as a percentage of mean total assets 0.33% 0.50%
Management expenses as a percentage of mean total assets 0.66% 0.63%
The above percentages have been prepared from the Group’s consolidated accounts and in particular:
• ‘Shares and borrowings’ represent the total of shares, amounts owed to credit institutions, amounts owed to other customers
and debt securities in issue.
• ‘Gross capital’ represents the aggregate of general reserve, other reserve, revaluation reserve, fair value reserve, cash flow
hedge reserve, subordinated liabilities and subscribed capital.
• ‘Free capital’ represents the aggregate of gross capital less intangible assets and property, plant and equipment.
• ‘Liquid assets’ represent the total of cash in hand and balances with the Bank of England, loans and advances to credit institutions
and investment securities.
• ‘Mean total assets’ represent the amount produced by halving the aggregate of total assets at the beginning and end of the
financial year.
• ‘Management expenses’ represent the aggregate of administrative expenses, depreciation and amortisation.
3. Principal Office
Leeds Building Society is a building society, incorporated and domiciled in the United Kingdom. The address of the Principal Office is: 26
Sovereign Street, Leeds, West Yorkshire, LS1 4BJ
Leeds Building Society | Annual Report and Accounts 2024 223
4. Information relating to the directors at 31 December 2024
Name Occupation Date of
Birth
Date first
appointed
Other directorships/appointments
Chair
I C A Cornish
Chair from 3 April 2020
Chair 11.11.60 01.01.19
Macmillan Cancer Support
Leeds Beckett University
Vice Chair
G J Hoskin
Vice Chair and Senior Independent Director
from 1 January 2019
Non-Executive Director 18.09.60 16.11.15
Saga plc
Acromas Insurance Company Ltd
Chief Executive Officer
*R G Fearon
Chief Executive Officer from
27 February 2019
Chief Executive Officer 16.07.78 19.02.16 UK Finance Ltd
Deputy Chief Executive Officer
*A J Greenwood Deputy Chief Executive
Officer
11.12.69 08.01.15
None
Directors
A M Barnes Non-Executive Director 10.11.68 01.02.19
Globaldata plc
Stratos Markets Ltd (trading as FXCM UK)
** F A Buckley Non-Executive Director 12.05.80 01.04.23 Aurora UK Alpha plc
Caledonia Investments plc
Apollo Syndicate Management Ltd
Long Term Assets Ltd
*A P Conroy Chief Financial Officer 11.12.75 06.01.20 Saltmine Trust
Arkose Funding Ltd
****Leeds Mortgage Funding Ltd
***D Fisher Non-Executive Director 02.08.58 27.03.12 None
N A Fuller
Non-Executive Director 17.12.66 01.12.20 Cynergy Bank Ltd
*R J Howse Chief Operating Officer 03.12.70 01.05.21 The Grammar School at Leeds
B McCafferty Non-Executive Director 06.06.67 01.09.24 Academy Insurance Services Ltd
Salinas Midco Limited
Vmans Limited
The Unbeatable Group Limited
Beyond Doubt Holdings Limited
Salinas Topco Limited
Caritas Diocese of Salford
Catholic Truth Society (Diocese of Salford)
Blueprint Trust
The Salford Diocesan Trust
National Employment Savings Trust (NEST)
P E Rowland Non-Executive Director 22.12.61 01.05.23 Saga Services Ltd
A Tadayon Non-Executive Director 10.06.66 22.10.21 Tadayon Consulting Ltd
*Executive directors
**Under SYSC 4.3A.6R/GOR 5.5, there is a maximum of four non-
executive directorship roles, which can be held by a member of the
management body. Owing to the non-material nature of some of
Farah’s additional roles and low time commitment, the regulators
agreed to a modification of the rules (under Section 138A of the
FSMA) up until 1 July 2025. From 31 January 2025, Farah resigned
from her position with Long Term Assets Limited and therefore a
waiver is no longer required.
***David Fisher is a non-independent Non-Executive Director
****Society Subsidiary
The Society’s executive director service contracts can be
terminated on twelve months’ notice by either the Society or the
director. Documents may be served on the above-named directors
at: Addleshaw Goddard LLP, One St Peter’s Square, Manchester
M2 3DE.
More information on director appointments can be found within the
2024 Pillar 3 document which is available on the Society’s website
at leedsbuildingsociety.co.uk
Year ended 31 December 2024
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Country by Country Reporting
Year ended 31 December 2024
Leeds Building Society provides disclosures below in accordance with the Capital Requirements (Country by Country Reporting)
Regulations 2013. The information below has been audited in accordance with the standards required by Directive 2006/43/EC.
Nature and location of the Group’s activities
The Society is the UK’s fifth largest building society with 51 branches (2023: 50), total assets of £31.6 billion (2023: £28.1 billion) and
991,000 members (2023: 919,000). The Society’s mortgage book primarily relates to properties in the UK, with a small proportion of
historic balances, but no new lending, in Spain and Gibraltar.
The Society’s subsidiary undertakings, their country of incorporation and their principal activities are detailed in note 15 on page 195.
The Society and its subsidiaries are all tax resident in the UK.
The Society has no physical presence or regulatory branch in Spain, with all mortgages administered from the UK. The results of the
Society’s activity in Spain are included in the results of the Society and subject to taxation in the UK.
The Society has no permanent establishment in Gibraltar, with all mortgages administered from the UK. The results of the Society’s
activity in Gibraltar are included in the results of the Society and subject to taxation in the UK.
Results by country
The information for the year ended 31 December 2024 presented below is at a full Group level of consolidation, which has been prepared
under IFRS.
Total income is defined as net interest income plus fees and commissions receivable (net of fees and commissions payable), fair value
gains less losses from financial instruments, together with all other components of operating income. Total income, profit before tax
and corporation tax charge are as disclosed in the Group’s Income Statement on page 165.
Average monthly number of employees is shown on a full-time equivalent (FTE) basis. Colleague costs comprise wages and salaries,
social security costs and pension costs as disclosed in note 6 on page 186.
Corporation tax paid represents the total payments as reported in the Statement of Cash Flows on page 169.
2024 UK* Spain Total
*UK
includes
Gibraltar
Total income (£M) 353.9 1.7 355.6 0.4
Profit before tax (£M) 136.6 0.9 137.5 0.4
Total assets (£M) 31,586.6 26.0 31,612.6 4.6
Total assets less liabilities (£M) 1,694.4 26.0 1,720.4 4.6
Average number of FTEs 1,712 – 1,712 –
Staff costs (£M) 106.1 – 106.1 –
Corporation tax charge (£M) 37.6 – 37.6 –
Current tax charge 38.6 – 38.6 –
Deferred tax credit (1.0) – (1.0) –
Corporation tax paid (£M) 28.2 – 28.2 –
2023 UK* Spain Total
*UK
includes
Gibraltar
Total income (£M) 357.5 2.3 359.8 0.8
Profit before tax (£M) 181.5 (1.0) 180.5 0.1
Total assets (£M) 28,109.4 36.5 28,145.9 5.8
Total assets less liabilities (£M) 1,608.7 36.5 1,645.2 5.8
Average number of FTEs 1,662 – 1,662 –
Staff costs (£M) 108.7 – 108.7 –
Corporation tax charge (£M) 47.6 – 47.6 –
Current tax charge
44.9 – 44.9 –
Deferred tax charge
2.7 – 2.7 –
Corporation tax paid (£M) 49.6 – 49.6 –
Return on assets
The return on assets, calculated as profit before tax divided by mean total assets, was 0.50% (2023: 0.70%) for the year ended
31 December 2024.
Public subsidies received
The Group received no public subsidies in the year ended 31 December 2024.
Leeds Building Society | Annual Report and Accounts 2024 225
Glossary of Terms
Alternative Performance Measures
The table below sets out the Alternative Performance Measures (APM) used within the Annual Report and Accounts. These are financial
measures of the Group’s performance or position which are not defined or specified under IFRS but which are useful in understanding
how the Group has performed. The measures used are common practice across the financial services industry and facilitate
comparisons with other institutions.
The table explains how the APM is calculated and provides a reconciliation to the closest equivalent statutory measure, as defined or
specified under IFRS.
Measure Definition and purpose How the measure is calculated
Reconciliation to statutory
measure under IFRS
Cost to income ratio A measure of the efficiency of the
Group in generating its income by
showing the level of costs incurred
relative to the level of income
generated. This measure is used by
the Group to monitor and manage
its cost base.
Management expenses
(administrative expenses plus
depreciation and amortisation)
divided by total income, as recorded
in the Income Statement.
No equivalent statutory measure
but all elements of the calculation
are separately disclosed in the
Income Statement.
Cost to mean asset ratio A measure of the efficiency of the
Group in maintaining its asset base,
showing the level of costs incurred
relative to the size of the Group’s
balance sheet. This measure is
used by the Group to monitor and
manage its cost base.
Management expenses
(administrative expenses plus
depreciation and amortisation) for
the period divided by the mean of
the opening and closing total assets
for the period, as recorded in the
Statement of Financial Position.
No equivalent statutory measure,
but all elements of the calculation
are separately disclosed in the
Income Statement or Statement of
Financial Position.
Net interest margin Net interest income (the difference
between interest receivable and
interest payable) is the primary
source of income for the Group.
This is a key measure for monitoring
and managing the level of income
generated by the Group’s balance
sheet.
Net interest receivable, as recorded
in the Income Statement, divided
by the mean of the opening and
closing total assets for the period,
as recorded in the Statement of
Financial Position.
No equivalent statutory measure,
but all elements of the calculation
are separately disclosed in the
Income Statement or Statement
of Financial Position.
Net residential lending The increase in the size of the
Group’s residential mortgage book
during the year. Used by the Group
to monitor and manage the growth
of the business.
Gross residential lending less
redemptions, contractual
repayments and other capital
repayments.
This is approximately equal to the
difference between the opening
and closing balance of loans and
advances fully secured on residential
property in the Statement of
Financial Position, adjusted for
movements in impairment loss
provisions and other accounting
adjustments.
New (gross) residential lending The total amount of new loans and
advances to customers secured on
residential property advanced by the
Group during the year.
No calculation required. No equivalent statutory measure.
Underlying profit before tax Add back one-off items to profit
before tax to allow comparison to
prior periods.
Profit before tax add back one-off
items.
Profit before tax add back one-off
items.
Year ended 31 December 2024
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Glossary
Set out below are the definitions of terms used within the Annual Report and Accounts to assist the reader and to facilitate comparison
with other financial institutions.
Arrears
A mortgage member is in arrears when they are behind in fulfilling
their payment obligations with the result that an outstanding loan
commitment is overdue. Such a member can also be said to be in a
state of delinquency
Basel 3
Basel 3 is the third Capital Adequacy Framework issued by the
Basel Committee on Banking Supervision, which defines the capital
and liquidity rules for banks and building societies. The framework
has been embedded into UK law through the European Capital
Requirements Directive V (CRD V).
Basis point
One hundredth of one per cent (0.01%), so 100 basis points is
1%. Used in quoting movements in interest rates or yields on
securities.
Commercial loans
Loans secured on commercial property.
Common Equity Tier 1 (CET1) ratio
This is a regulatory ratio, calculated as the total of CET1 capital
divided by Risk Weighted Assets (RWAs). CET1 capital is the
highest quality form of capital and comprises general reserves
from retained profits, less the book values of any pension surplus,
goodwill and intangible assets and other regulatory adjustments as
defined under CRD V.
Contractual maturity
The final payment date of a loan or other financial instrument, at
which point all the remaining outstanding principal and interest is
due to be repaid.
Covered bonds
Debt securities backed by a portfolio of mortgages that is
segregated from the issuer’s other assets solely for the benefit of
the holders of the covered bonds. The Group issues covered bonds
as part of its funding activities.
Credit risk
This is the risk that a member or counterparty is unable to pay the
interest or to repay the capital on a loan when required.
Debt securities in issue
Transferable certificates of indebtedness of the Group to the
bearer of the certificates. These are liabilities of the Group and
include certificates of deposit.
Default
An account is classified as in default for impairment provisioning
Default occurs when a borrower is deemed unlikely to repay their
loan or other amount due to the Group.
Derivative financial instruments
A derivative financial instrument is a type of financial instrument
(or an agreement between two parties) whose value is based
on the underlying asset, index or reference rate to which it is
linked. The Group uses derivative financial instruments to hedge
its exposures to market risks, such as interest rate and foreign
currency risk.
Effective interest rate method (EIR)
The method used to measure the carrying value of a financial asset
or a liability and to allocate associated interest income or expense
to produce a level yield over the relevant period.
Expected credit loss (ECL)
A calculation to estimate potential losses on current exposures
due to potential defaults; the term is used in relation to
impairment loss provisioning under IFRS 9 and is derived from the
multiplication of the PD, LGD and EAD.
Exposure at default (EAD)
An estimate of the maximum loss that an entity might suffer if a
borrower or other counterparty fails to meet their obligations at
default.
Fair value
Fair value is the amount for which an asset could be exchanged,
or a liability settled, between willing parties in an arm’s length
transaction.
Financial Services Compensation Scheme (FSCS)
The UK’s compensation fund of last resort for members
of authorised financial services firms. The FSCS may pay
compensation to members if a firm is unable, or likely to be unable,
to pay claims against it, usually because it has stopped trading or
has been declared in default. The FSCS is funded by the financial
services industry. Every firm authorised by the FCA and PRA is
obliged to pay an annual levy, which goes towards its running costs
and compensation payments.
Forbearance strategies
Strategies to assist borrowers in financial difficulty, such as
agreeing a temporary reduction in payments, extending loan
terms and temporarily converting loans to an interest only basis.
Forbearance strategies aim to avoid repossession where it is in the
interest of the borrower.
Free capital
The aggregate of gross capital less intangible assets and property,
plant and equipment.
Funding limit
Measures the proportion of shares and borrowings (excluding the
fair value adjustment for hedged risk) not in the form of shares held
by individuals.
Glossary of Terms continued
Year ended 31 December 2024
Leeds Building Society | Annual Report and Accounts 2024 227
General reserves
The accumulation of the Group’s profit after tax since inception. It
is the Group’s main component of Common Equity Tier 1 capital
which is a measure of strength and stability.
Gross capital
The aggregate of the general reserve, cash flow hedge reserve,
fair value reserve, other reserve, revaluation reserve, subordinated
liabilities and subscribed capital.
Impaired loans
Loans where there is objective evidence that an impairment event
has occurred, meaning that the Group does not expect to collect
all the contractual cash flows or expect to collect them when they
are contractually due.
Internal Capital Adequacy Assessment Process (ICAAP)
The Group’s own assessment, as part of CRD V requirements, of
the levels of capital that it needs to hold in respect of regulatory
capital requirements for risks it faces under a business as usual
scenario and a number of stressed scenarios.
Internal Liquidity Adequacy Assessment Process (ILAAP)
The Group’s own internal assessment of the level of liquidity that
it needs to hold in respect of regulatory liquidity requirements in
relation to a number of stressed scenarios.
Internal Ratings Based (IRB) Approach
An approach for measuring exposure to credit risk which is
more sophisticated than the Standardised Approach, where an
entity can calculate its own risk weights for certain assets. IRB
approaches can only be used with the permission of the Prudential
Regulation Authority.
International Swaps and Derivatives Association (ISDA)
master agreement
A standardised contract developed by ISDA and used to enter into
bilateral derivative transactions granting legal rights of offsetting
for derivative transactions with the same counterparty.
Investment securities/debt securities
Assets held by the Group representing certificates of indebtedness
of credit institutions, public bodies or other undertakings excluding
those issued by central banks.
Lending limit
Measures the proportion of business assets not in the form of
loans fully secured on residential property.
Leverage ratio
A regulatory ratio which measures the value of the Society’s Tier 1
capital as a proportion of total relevant non-risk weighted assets.
The CRR leverage ratio is defined by the EU’s Capital Requirements
Regulation, while the UK leverage ratio modifies this ratio to
exclude central bank reserves. The UK regime does not apply to
the Society due to its size (less than £50 billion of retail deposits).
Liquid assets
Assets which are either in the form of cash or are readily
convertible into cash. Total of cash in hand and balances with the
Bank of England, loans and advances to credit institutions, and
investment securities.
Liquidity Coverage Ratio (LCR)
A regulatory standard ratio implemented by the Basel 3 Reforms.
It is calculated as the stock of high quality liquid assets divided by
the total net stressed cash outflows over the next 30 calendar days
expressed as a percentage.
Liquidity risk
The risk that the Group is not able to meet its financial obligations
as they fall due, or will only be able to do so at an excessive cost.
This risk arises from timing mismatches of cash inflows and
outflows.
Loan to income ratio (LTI)
A ratio which expresses the amount of a mortgage as a percentage
of the borrower’s income, used to assess affordability and
determine borrowing limits.
Loan to value ratio (LTV)
A ratio which expresses the amount of a mortgage as a percentage
of the value of the property. The Group calculates residential
mortgage LTV on an indexed basis (the value of the property is
updated on a quarterly basis to reflect changes in the house price
index).
Loans past due/past due loans
Loans are past due when a counterparty has failed to make a
payment when contractually due.
Loss given default (LGD)
A parameter used in relation to credit risk exposures modelled
under IFRS 9; an estimate of the difference between the EAD and
the net amount recovered, expressed as a percentage of the EAD.
Management expenses
Management expenses represent the aggregate of administrative
expenses, depreciation and amortisation as recorded in the
Income Statement.
Market risk
The risk that movements in market risk factors, including foreign
exchange rates, interest rates and member driven factors will
create losses or decrease portfolio values.
Mean total assets
Represents the amount produced by halving the aggregate of total
assets at the beginning and end of the financial year.
Member
A person who has a share investment or a mortgage loan with the
Society which satisfies the Society’s rules for membership.
Minimum Requirements for Own Funds
and Eligible Liabilities (MREL)
The total loss absorbing capital a financial institution must hold to
facilitate the recapitalisation of the institution in resolution.
Net interest income
The difference between interest receivable and similar income
and interest payable and similar charges. This is the same as net
interest receivable in the Income Statement.
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Net Promoter Score®
The Net Promoter Score® (NPS) is a measure of satisfaction and
loyalty to the Group based on survey responses. It measures the
proportion of promoters (positive responses) less the proportion
of detractors (negative responses). We use the NPS methodology
to measure satisfaction among our broker partners.
Net Stable Funding Ratio (NSFR)
A regulatory standard ratio implemented by the Basel 3 reforms
which is the total amount of stable funding divided by the total
amount of required stable funding, expressed as a percentage.
The NSFR is currently an observable measure which became a
minimum standard in 2022 with the implementation of CRR2.
Notional principal amount
The notional principal amount indicates the amount on which cash
flows on derivative financial instruments are calculated and does
not represent amounts at risk.
Operational risk
The risk of loss arising from inadequate or failed internal processes,
people and systems or from external events.
Probability of default (PD)
An estimate of the likelihood a borrower will not be able to meet
their debt obligations as they fall due.
Permanent interest bearing shares (PIBS)
Unsecured deferred shares that are a form of capital. PIBS rank
behind the claims of all subordinated debt holders, depositors,
payables and investing members of the Group.
Replacement cost
The amount the Group would need to pay to replace derivative
contracts that are favourable to the Group if the counterparty
with whom the contract was held were unable to honour their
obligation.
Repurchase agreements (Repo)
A repurchase agreement allows a borrower to use a financial
security as collateral for a cash loan at a fixed rate of interest. In
a repo, the borrower agrees to sell a commitment to repurchase
the asset at a specified price on a given future date. For the party
selling the security and agreeing to repurchase the asset in the
future, it is a repo, for the party purchasing the security and
agreeing to resell, it is a reverse repo.
Residential loans
Loans which are secured against residential property.
Residential mortgage backed securities (RMBS)
A category of asset backed security that represents interests in
a group of residential mortgages. Investors in these securities
have the right to cash received from future mortgage payments
(interest/principal).
Risk appetite
The articulation of the level of risk that the Group is willing to take
(or not take) in order to safeguard the interests of the Society’s
members while achieving business objectives.
Risk-weighted assets (RWAs)
A regulatory measure which adjusts the value of assets as recorded
in the Statement of Financial Position to reflect the relative level
of risk. This measure is used in calculating regulatory capital
requirements.
Securitisation
The process by which a group of assets (usually loans) is
aggregated into a pool which is used to back the issuance of new
securities. A company transfers assets to a special purpose entity
which issues securities backed by those assets. The Society has
established securitisation structures (using residential mortgages)
as part of its funding activities.
Shares
Money deposited by a person in a retail savings account with the
Group. Such funds are recorded as liabilities for the Group.
Shares and borrowings
The total of shares, amounts owed to credit institutions, amounts
owed to other customers and debt securities in issue.
SONIA
The Sterling Over Night Index Average rate. The risk free rate
calculated as the weighted average overnight sterling deposit rate
for each business day.
Subordinated liabilities
Debt securities issued by the Group which have certain terms
and conditions attached relating to the payment of interest and
principal such that they are ranked behind the claims of all other
creditors and members of the Society, other than subscribed
capital.
Subscribed capital
Debt securities issued by the Group which have certain terms
and conditions attached relating to the payment of interest and
principal such that they are treated as capital.
Tier 1 capital
A measure of financial strength as defined by the PRA. Tier 1
capital is divided into Common Equity Tier 1 and other Tier 1
capital. Common Equity Tier 1 capital is defined above, while other
Tier 1 capital includes qualifying capital instruments such as PIBS.
Tier 2 capital
A further component of regulatory and financial capital as defined
by CRD V.
Wholesale funding
The total of amounts owed to credit institutions, amounts owed to
other customers and debt securities in issue
Glossary of Terms continued
Year ended 31 December 2024