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real help
with
real life
Annual Report and
Accounts 2025
Members coming together to
make good homes possible
for more people
Introduction
2
Our Performance 2
Welcome from the Chair of the Board 4
Introduction from the Chief Executive 6
Strategic report
8
Our Purpose and Strategy 9
Purpose in action 10
Our Business Model 15
Our Strategy 16
Our Financial Review 18
Risk Overview 28
Our Social and Environmental Impact 31
Governance
54
Our Board and Executive Team 55
Corporate Governance Report 64
Board Governance and Nominations
Committee Report
82
Board Audit Committee Report 89
Risk Management Report 97
Board Environmental and Social Purpose
Committee Report
112
Directors’ Remuneration Report 114
Directors’ Report 126
Independent Auditors’ Report to the
Members of Yorkshire Building Society
131
Financial statements
139
Income Statements 140
Statements of Comprehensive Income 141
Balance Sheets 142
Statements of Changes in Members’
Interest and Equity
143
Statements of Cash Flows 145
Notes to the Financial Statements 146
Other information
227
Annual Business Statement 228
Country-by-Country Report 230
Glossary 234
Inside
this
report
real help
with real life
Members coming together to
make good homes possible
for more people.
Because we’re owned by our members, we do
things diff erently. As a building society, it’s our job
to help people save and take steps towards secure,
sustainable homes, whether owned or rented.
Because good homes aren’t just bricks and mortar –
they shape health, happiness, opportunity, and our
path to a greener future.
Welcome to
Yorkshire Building Society
Our purpose
Our Strategic Pillars
Our Behaviours
Double reach
and deepen
impact
Create
joyful
experiences
Cultivate
an ambitious
culture
Build a
future-ready
Society
We care
about people
We say it
straight
We reach
for better
We make it
happen
Growth
in savings
balances
Average
savings rate
paid
3
2.1
%
10.6% in 2024
3.66
%
over 2025
4.21% in 2024
Being the
number one
choice for
savers
How we’re delivering
long-term value
for our savers.
Our performance
How we're looking after our members' interests.
1
YBS Group average savings rate compared to Rest of Market average rates. Source: CACI’s Current Account and Savings Database (CSDB), Stock. Data period December
2024 – November 2025 (being latest available).
2
Source: YBS analysis of BSA Household savings. Data period January – December 2025.
3
Source: CACI’s Current Account and Savings Database (CSDB), Stock. Data period December 2024 – November 2025 (being latest available). The average Bank of England
base interest rate for 2025 was 4.25% (2024: 5.11%).
4
Based on Bank of England total industry gross lending. Data period January – December 2025.
5
Growth in mortgage balances excludes fair value adjustments for hedged risk on loans and advances to customers.
6
SeetheGlossarydefinitionsforalternativeperformancemeasures.
7
The LCR metric quoted represents the total for the Group as at 31 December 2025.
8
Net Promoter Score and trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc. Data period January – December 2025, based on
17,177 responses.
Statutory
profit before tax
£
377.9
m
£383.7m in 2024
Common equity
Tier 1 ratio
18.8
%
18.1% in 2024
Leverage
ratio
7.0
%
6.6% in 2024
Core
operating profit
6
£
426.7
m
£345.7m in 2024
Liquidity
coverage ratio
7
238.7
%
202.7% in 2024
Net Promoter
Score (NPS
®
)
8
+66
+64 in 2024
Cost to core
income ratio
6
48
%
51% in 2024
Growing
sustainably
How we’re staying
financiallystrong.
Gross
lending
£
9.9
bn
£9.7bn in 2024
Gross mortgage
lending
market share
4
3.3
%
3.8% in 2024
Growth in
mortgage
balances
5
4.4
%
6.2% in 2024
New residential
mortgages
provided
38,400
41,000 in 2024
First time
buyer mortgages
provided
11,000
9,700 in 2024
Real Help
with Real Life
How we’re delivering
on our Purpose to make
good homes possible
for more people.
Average
savings rate
differential
1
Savings
accounts
opened
0.62
PP
higher than the
market average
0.90PP in 2024
478,000
537,000 in 2024
Savings
balance
market share
2
2.4
%
2.5% in 2024
2 3
Introduction Strategic Report Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Welcome
from the
chair of
the board
Annemarie Durbin
2025 was a strong year for
the Society. We delivered
solid results and growth in our
core markets, despite tough
competition.
That says a lot about our strategy and the incredible
commitment of our colleagues.
However it was about more than just numbers. It was a reset
moment for the Society, where we sharpened our Purpose.
Defining our Purpose
For over 160 years, our Purpose has been clear: to deliver
Real Help with Real Life. It’s why we’re here and the role we
want to play for our members.
In 2025, we brought colleagues, members, customers and
partners together to sharpen that Purpose and set a clear
direction for the future:
At Yorkshire Building Society, Real Help with Real Life
means members coming together to make good homes
possible for more people.
That’s what being a building society is all about. Helping
people save and take steps towards secure, sustainable
homes - whether owned or rented.
Good homes are more than bricks and mortar. They shape
health, happiness and even a greener future. Owning a
homecanunlockfinancialconfidenceandsecuritytoo.
Ourresearchshowsrenterscouldbe£2.6mworseoffthan
homeowners over a lifetime.
Our mutual difference
As a mutual, we don’t have shareholders. Everything
we do is for our members – whether that’s through the
productsandservicesweofferortheinvestmentwemake
in the Society.
In 2025, we invested more than ever in our change
programme to make the Society stronger and improve
member experience. That meant boosting resilience,
tightening security controls and adding new features to our
app. We also introduced real time processing for inbound
faster payments. It’s a clear example of how we’re re-
investingprofittobetterservemembers.
Ultimately, we want our members to feel valued, supported,
heard and championed.
We appreciate their thoughts and always look forward to
speaking with them at our Annual General Meeting. Their
regular feedback through our member panel, My Voice,
shapes how we run the Society.
We provide excellent customer service, real support
fromrealpeopleandofferconsistentlygreatvalue,
year after year.
In 2025, despite reductions in the Bank of England Bank
Rate, we continued to reward our savers. Above market
average rates meant our savers gained an extra £313m.
Members also value how we stand up for their interests –
pushing for fairer housing and help with high living costs.
Ourzero-commissioninsuranceofferinghasalreadysaved
customers more than £2m
9
- a decision made purely to give
extra value to members.
As well as knowing their money is working hard for
them,memberswanttoknowit’smakingadifference
to others. This is the power of mutuality. The power of
coming together.
Weplayakeyroleinstrengtheningfinancialresiliencein
the wider community through programmes and partnerships
thathelppeoplefindworkandimprovefinancial
education and wellbeing.
Our partnership with FareShare has raised £884,000 so far
andhasequipped2,100peoplewithskillstofindwork,
with 153 going on to employment.
Citizens Advice advisers are in 44 of our branches and
helped 5,600 people in 2025. And four Bradford charities
that support skills and employment are sharing £1m from
the Yorkshire Building Society Charitable Foundation - made
possible thanks to investment from the Society.
We never take members’ trust for granted. It’s earned
through the hard work and dedication of our teams and is
reflectedinourNetPromoterScore(NPS)whichincreased
to +66 in 2025 (2024: +64).
Strengthening our
governance
We made important changes to build a modern Board for
a modern mutual – one with the skills, experience, talent
and diversity of perspectives that are needed to guide the
Society for our members, today and in the years ahead.
Sustainability matters to us. Decisions we make now shape
the homes, communities and environment of tomorrow.
That’s why we’ve set up a new Board Environmental and
Social Purpose Committee, chaired by Janet Pope. It gives
focused oversight and helps us respond to social, economic
and climate challenges.
We’ve strengthened the Board further with new
appointments. Elaine Bucknor joined as Non-Executive
Director, bringing three decades of experience in the
technology sector. And we welcomed Sahem Gulati as Board
Fellow through our work with Empowering People of Colour,
a network driving change in the makeup of UK boards.
Dina Matta and Guy Bainbridge stepped down from the
Board and we thank them for their valued contribution to
our Society. Angela Darlington succeeded Guy as Vice Chair.
We remain committed to the highest standards of corporate
governance. That means taking proactive steps to meet
regulatory obligations and strengthen the systems and
processes that protect our members, customers, colleagues
and the Society.
Ready for the future
The Board is here to make sure our culture thrives. We’ve
focusedonbuildinganagile,efficientwayofworking
– one that supports our Purpose, gives colleagues
the right skills for the future and keeps improving
experiences for everyone.
Our Board and governance keep evolving. Led by a clear
Purpose and plans for ambitious, sustainable growth, I’m
confidentYorkshireBuildingSocietywillkeepthrivingasa
mutual - serving members for generations to come.
Annemarie Durbin
Chair of the Board
9
Customers saved £1.65m through zero commission on home insurance
premiums, and £730,000 on life insurance, January – December 2025
4 5
Introduction Strategic Report Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Introduction
from
the Chief
Executive
Susan Allen, OBE
2025wasadefiningyearfor
us.WereaffirmedourPurpose.
We made progress on our plans
and we grew our mortgage and
savings balances – even with
increased competition and falling
interest rates.
Our members trust us to keep their money safe. Strong
capital and liquidity mean we can keep investing in better
products and services. That way, we meet members’ needs
todayandstayfitforthefuture.
Our Purpose in action
We’reheretomakearealdifference–forourmembersand
customers, their families and their communities. That’s why
our Purpose matters.
Real Help with Real Life means members coming together
to make good homes possible for more people.
It all starts with our savers. We want to be their number one
choice.So,werewardloyalty,offerratesabovethemarket
average and speak up for members when it counts. In 2025
we celebrated returning almost £1.5bn in extra interest to
saversinjustfiveyears
10
.
Research we supported
11
shows that saving even a little
canbringpeaceofmindandhelppeopleavoidfinancial
difficulty.That’swhy,forthesecondyearrunning,we
offeredour£50RegularSaver.In2025,ithelpednearly
11,000 customers start or keep saving.
Choice matters too. Many members want to save in a Cash
ISA. So, when speculation grew about changes to the ISA
allowance, we spoke out. Alongside other building societies,
we urged the government to think carefully about the
impact. While we’re disappointed to see the allowance
reduced, we welcome the fact the Chancellor listened to
us and the wider mutual sector and decided not to cut it
dramatically. And we’re pleased the £20,000 allowance
remainsforthoseover65,asflexibilityforretirement
planning is crucial.
10
Due to above market average rates, Yorkshire Building Society savers gained £313.0m in 2025 (Dec 2024 - Nov 2025), £430.2m in 2024, £441.1m in 2023, £198.6m in
2022, £107.1m in 2021.
11
https://www.bsa.org.uk/media-centre/press-releases/%C2%A32,000-in-savings-reduces-the-odds-of-falling-behind-on-bills-by-60-%E2%80%93-but-even-
small-amounts-can-ma
Making more good homes
possible
We’re going further to make good homes possible for
morepeople.Buildingonwhatwe’vestarted-andfinding
new ways to help:
•
We made home ownership more accessible. Products
like our £5k Deposit Mortgage and First Home Saver help
tackle barriers like raising a deposit. In 2025 almost 30%
ofourmortgageswenttofirst-timebuyers.
•
When stamp duty increased in April, we launched a
cashback mortgage – giving up to £6,250 to help cover
the extra costs.
•
We called for change in the housing system, taking
forward recommendations in our
Home Improvements
policypaperandurgingpolicymakerstofixchallenges,
likeaffordabilityandsupply.
•
We helped people make the most of their homes. Our
partnershipwithDoshi,anonlinefinancialeducation
tool, has helped 675 people better understand how
to buy a home. We also helped 2,400 customers
understand how to save on bills through our home
energyefficiencypartnershipwithSnugg.
•
We supported responsible landlords. Renting is the right
choice for some – and a stepping stone for others. As
one of the UK’s largest buy-to-let lenders, we work with
landlords and brokers to support good quality rental
homes. This helps more people to have a safe place to
call home.
Delivering our strategy
Our Purpose drives everything we do. We have four
strategic pillars to guide our activity and bring this to
life. They help us remain successful and make a lasting
differenceformembers.
•
Double reach and deepen impact - we’re investing
significantlytoprovidenewproductsandservicesto
meet customer needs - our £50 Regular Saver and First
Home Saver for example - and we’re keeping more
customers with us when their mortgage reaches maturity.
•
Create joyful experiences – however customers choose
to manage their money, we want it to feel easy. We have
one of the biggest building society branch and agency
networks in the country and we’re committed to keeping
a presence on the high street, because we know many
members value the personal touch found there when
they need it. In 2025, we introduced inbound faster
payments. We’re working on outbound faster payments
too - because we know it matters to members. We’re
also committed to making our app even better. Mortgage
balances are now in the app, and you can open most of
our savings accounts there too.
•
Cultivate an ambitious culture – we’re investing
in future skills so colleagues can keep delivering
the personal, friendly service our members and
customers value.
•
Build a future-ready Society – in 2025 we invested a
record amount in technology and capability to make sure
we’re set up for generations to come.
Looking ahead
I’m delighted to have strengthened my team in 2025, by
welcomingSimonWatsonasChiefCustomerOfficerand
Fiona Cannon OBE as Chief Strategy and Sustainability
Officer.Theirdecadesofrelevantexperiencewillmakea
differenceaswesetouttodeliverourambitiousplans.
2026 will bring challenges - for the economy and for our
customers. The cost of living is likely to stay high. That’s
why our renewed Purpose matters more than ever. I’m
committed to making sure it guides the decisions we make.
Withasolidfinancialposition,aclearstrategy,and
a committed team, the Society is equipped to keep
supporting our members and customers well for decades
tocome.We’reconfidentaboutourfuturesuccess,
energised for what’s ahead and united by putting our
Purpose into action.
Thank you for your continued support.
Susan Allen, OBE
Chief Executive Officer
6 7
Introduction Strategic Report Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Strategic Report
In this section
9 Our Purpose and Strategy
10 Purpose in action
15 Our Business Model
16 Our Strategy
18 Our Financial Review
28 Risk Overview
31 Our Social and Environmental Impact
OUR PURPOSE AND
STRATEGY
Sharpening our Purpose
For over 160 years, our Purpose
has been to provide Real Help
with Real Life.
It’s served us and our members well to date, but we knew
we could be clearer on what it meant in practice.
Ultimately, we knew we’d be able to drive more effective
business decisions to create better value for our members if
we sharpened it.
We engaged nearly 500 colleagues, members, partners and
leaders in workshops, interviews and surveys to understand
how we can truly bring our Purpose to life for today’s world.
The message was clear, we must do more to help people
into safe, secure homes. So, we sharpened our Purpose:
Real Help with Real Life means members coming together
to make good homes possible for more people.
We haven’t changed our Purpose. We’ve just made it clearer.
As a building society, we offer a safe and rewarding
place to save and then we lend responsibly to support
homeownership, whether that’s owned or rented.
Bringing our Purpose to life
TodeliveronourPurpose,we’recommittingtofivekey
areas, supported by our savers:
8 9Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Purpose in action
Number one choice for savers
DeliveringourPurposestartswithbeingthenumberonechoiceforsavers.That’swhyweoffer
award-winning service, great value, and products designed around our members’ needs.
Competitive savings rates
In 2025, our savings rates were on average 0.62 percentage
points higher than the market average, even as interest
rates fell following the Bank of England’s Bank Rate
reduction.Whilemanyproviderscutback,westoodfirmin
protecting our members’ returns and maintaining some of
the highest minimum interest rates in the industry.
Eveninthischallengingenvironment,wecontinuedtooffer
goodvalue,givingsaversconfidencethattheywouldbe
rewarded with competitive returns.
Meaningful value
We know rates are important, but there’s more to being
a member with us. From personal in-branch events and
services that help people when they need it most, or
the opportunity to shape our business decisions and the
productsandservicesweoffer-wemakebeingamember
rewarding. We also make it easy for members to give
back to their communities, for example through our Small
ChangeBigDifference
®
scheme.
So, whether it’s consistently good value, real support from
realpeopleorknowingtheirmoneyismakingadifference,
we want our members to feel part of something bigger.
Lobbying to retain
cash ISAs
We fought for our members’
interests on proposed ISA
reforms. Our message to
policymakers was clear: don’t
cut the £20,000 cash ISA limit.
We called for an ISA system
that remains simple, accessible,
andbackedbyeducation—so
people can invest their savings
withconfidence.Becausereal
help means standing up for what
matters most to savers.
While it’s disappointing that
the allowance will reduce from
£20,000 to £12,000 for under-
65s, at one stage there was
speculationaboutasignificantly
lower limit for all savers.
Advocacyfromtheindustry—
includingus—helpedsoften
this reduction, ensuring a better
outcome for our members.
Making home ownership more accessible
Wehelppeopleintohomes,whetherthey’rebuyingforthefirsttime,movingtotheirnexthome,
refinancingorinvestinginpropertytorentouttoothers.Ourtotalnewresidentialmortgagelending
in 2025 was £9.5bn (2024: £9.7bn), which included more than 38,400 new residential mortgages
(2024: 41,000). With options spanning residential, buy-to-let and commercial mortgages, we
supported 3.3% of the mortgage market in 2025 (2024: 3.8%), making it easier for people not only
to buy but also to provide quality homes for those who rent.
Supporting first-time
buyers
In 2025 we extended our innovative £5k
DepositMortgagetoincludeflats,helping
people buy with a smaller deposit than they
might once have thought possible.
We know not everyone has access to
financialsupportfromfamily,soontop
of deposit challenges, a lack of income
can also prove a barrier for some to meet
lending criteria.
We expanded our Boost loan-to-income
(LTI) range of mortgages to people buying
theirfirsthome.Thismeantinsteadof
lending someone four and half times their
income,we’dlendthemuptofiveanda
half times. This made our mortgages more
accessible to 994 people.
Helpful criteria changes
Aswellasimprovingwhatwedoforfirst-timebuyers,wemade
changes to our lending criteria in 2025 to help even more
people into homes.
For example, we now accept Universal Credit as income and
we reduced the minimum household income we require to
£50,000 from £75,000 for loans greater than four and a half
times earnings.
In total, we helped 26,300
people into their first home
(2024: 23,300).
A life-changing proposition
David and Natalie, from County Durham, aspired to own their own
home for years. But with two young children, every time they built
up a savings pot, it was eroded by the demands of family life.
David explained: “The income wasn’t a problem as we both work
full time, but before the £5k Deposit Mortgage came along we
just couldn’t save a big enough deposit to buy somewhere.”
They secured a four-bedroom detached house thanks to the £5k
DepositMortgage–makingaforeverhomefinallypossible.
Before the £5k Deposit
Mortgage came along we
just couldn’t save a big
enough deposit to buy
somewhere.
10 11Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Strategic Report > Purpose in action
Helping people make the most of their homes
We’recommittedtohelpingcustomerscreatehomesthatarewarm,energyefficientandmore
affordabletorun.ThisnotonlysupportsthejourneytoaNetZerofuture,butalsoimproves
everyday comfort and quality of life.
Sustainable homes
Our partnership with Snugg helps homeowners reduce how much energy they use and
their energy bills as a result. Heating homes accounts for around 20% of UK greenhouse
gas emissions
12
, so supporting our customers and members to reduce their carbon
footprint is another way we’re working together to build a sustainable future.
Snugg’s free online tool is available on our website
13
and includes personalised
suggestions for users to help improve the energy performance of their property, checks if
they’re eligible for grants and recommends trusted installers to make any changes.
Commission-free
protection
We’ve got two commission-free insurance
products, one for homes, and one for life,
thatareofferedpurelyforthebenefitofour
members to give them peace of mind.
Nearly a quarter of UK adults don’t have
buildings or contents insurance, with 31%
14
ofthosesayingtheycouldn’taffordit.Our
partnerships with Uinsure and LifeSearch
havenofinancialbenefittous,it’sjustthe
right thing to do.
In 2025 we had record uptake of the home
insurance product, and saved members
£1.65m on home insurance premiums.
We also saved them £730,000 on life
insurance premiums.
2,400 people
used the service
in 2025, showing
a clear interest
in learning about
potential retrofit
options.
Personalised home efficiency support
Emily, from Bristol, explains how our partnership with
Snugg helped her.
She said: “It was so easy to use Snugg - it’s really user friendly
and has a simple layout, making it easy to navigate and
understand. Me and my partner were interested to know the
EPCratingonourflat,andIlovetheplethoraoftipsonenergy
efficiencyandmoneysaving,someofwhichwe’vealready
incorporated. I also love the fact that, should you access any
grants through them, you know that the tradesperson is approved
by them - which adds peace of mind. I’m so grateful I heard about
this through Yorkshire Building Society.”
12
https://www.gov.uk/government/statistics/final-uk-greenhouse-gas-emissions-statistics-1990-to-2023
13
https://www.snugg.com/welcome/ybs
14
ResearchcompletedbyOpiniumresearchforYorkshireBuildingSocietywith2000NatRepsample–fieldworkcompletedbetweenNovember27thto
December 5th 2024
Supporting
responsible
landlords
Through our intermediary brands, we work with
brokers and landlords to improve how energy
efficientpropertiesare.
For example, for YBS Commercial Mortgages, we
make sure landlords provide good quality, energy
efficientrentalproperties.Beforeweagreeto
lend, we need the property to have an Energy
PerformanceCertificate(EPC)ofCoraboveor,a
valid exemption. For those with EPC below C and
no exemption, we must see a clear upgrade plan.
In 2025, 35.7% of our new lending met the
C rating. Of those that didn’t, and were rated
D or E, we worked with landlords to agree the
improvements needed. Typically, this was new
insulation, replacing a boiler or upgrading to
double or triple glazed windows. We make sure
the work is done within 12 months, requesting
documents and carrying out reviews to check
the work meets regulations and improves
homes for renters.
Investing in
creating more
good homes
We’re exploring ways to work with members and
partners to back projects that deliver good homes
for communities across the UK.
Whilst this is a relatively new focus area for us,
through our commercial lending activity, we’ve
already been supporting the creation of more
good homes, by helping landlords borrow against
existing assets to build or buy homes for rent.
Future proofed
developments
Through our YBS Commercial Mortgages brand,
we supported a borrower who converted part
ofalong-heldofficebuildingintosixquality
residentialflats.
With full planning permission, ensuring
compliance with standards for light,
soundproofing,andlayout,thedesigncreateda
safe and practical mixed-use space.
AllunitsachievedEPCGradeC,reflecting
significantupgradesforenergyefficiencyand
futureproofing,andkeepingtheremaining
commercial space meant local businesses
continued to be supported.
Quality regeneration
YBS Commercial Mortgages provided
development exit funding for a borrower who’d
created much-needed residential housing on a
former health care site in London.
Ninehighqualityflatswerebuiltinafour-storey
block, with each unit achieving EPC ratings of B
thankstoenergyefficientoptionsandtheuseof
modern building standard.
It’s an example of how we support borrowers
after completion to repurpose commercial sites
– helping to address housing demand while
promoting sustainable urban regeneration.
12 13Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Strategic Report > Purpose in action
Calling for
change in the
housing system
As one of the largest building societies in the UK,
we continue to use our voice to speak up on issues
that matter most to our members and customers by
engaging with policymakers to push for meaningful
change in the housing system.
Throughout 2025, we regularly submitted evidence,
joined roundtables, spoke to government and
pushed for housing reform.
WewelcomedtheFCA’sflexibilitytolowerthe
stress rates applied to mortgage applications,
which we predicted would mean we’d be able
to lend on average, up to 15% more to people
wanting to own their own home.
Andaspartofoureffortstoinfluenceachangein
loan-to-income limits, our Chief Executive joined
other building society leaders to give evidence
at the Treasury Select Committee. It was followed
up by a joint letter to the Committee Chair which
outlined how many more people would be
able to get on to the property ladder, if the cap
was increased.
We also joined an important roundtable at HM
Treasurytosharehowwe’resupportingfirst-time
buyers, and how more needs to be done to make
that support go further.
We recommended several things that needed
tochange,including:theurgentneedtofind
innovativesolutionsforfirst-timebuyers,ahousing
strategythatlookstorepurposebrownfieldsites,
betterunderstandingandaccesstoaffordable
sustainable home improvements, and more support
for the rental sector to provide quality homes.
Pivotal industry change
Tom Simpson leads our Homes business team
which led the charge for housing reform. He said:
“The regulatory change to loan-to-income limits
is a shining example of what happens when we
combine Purpose with pace, as is our removal
ofminimumincomerequirementsforfirst-time
buyers. Our teams didn’t just react - they led
and I’m so proud of how we put members and
customersfirsttoleadthemarketonsuchan
important and pivotal change for our industry.”
We’re engaging with
policymakers to push
for meaningful change
in the housing system.
Our business model
We’re owned by our members, not shareholders.
That means everything we do goes back into delivering long-term value for our savers and borrowers. It’s what we’ve done
for over 160 years - brought members’ savings together to help make good homes possible for more people.
How we’re funded
Saving deposits (81%)
Most of our funding comes from members
saving with us.
Wholesale funding (13%)
Weborrowmoneyfromfinancialmarkets.
Capital reserves (6%)
We’vebuiltafinancialsafetynetfrompastprofits.
How we earn income
Our main income comes from interest
paid by mortgage customers.
Net Interest Income
We then pay interest to our savings members
andthedifferencebetweentheinterestwepay
to our savers, and the interest we receive is net
interest income.
This is used to pay for our day-to-day operations.
What we use our funding for
Mortgage lending
Most of the money we raise goes towards helping
people buy homes – through our residential and
buy-to-let mortgages, with some also used to lend
on commercial properties.
Liquid assets
We hold some funds in easy-to-access places – like
government-backed investments, so we can respond
quickly to market changes.
What we use profits for
Financial strength
Weneedtomakeprofittomaintainourfinancial
strength and set us up for future success. It’s used
to help us grow and stay resilient if there was an
economic downturn.
Investing in what matters
Wealsouseprofitstoinvestinactivitiesand
initiatives that support our communities and the
world we live in, to make good homes possible
for more people.
Savers
Borrowers
I
n
t
e
r
e
s
t
L
e
n
d
i
n
g
D
e
p
o
s
i
t
s
I
n
t
e
r
e
s
t
members
coming
together
to make
good
homes
possible
for more
people
14 15Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Double reach and
deepen impact
Our focus is twofold - growing our reach through expanding
our customer base, whilst strengthening relationships
with existing customers, by delivering more value through
productsandbenefitsbuiltaroundmembers’needs.
In 2025 we introduced new savings and mortgage products,
supported by educational campaigns and community
programmes to extend our reach and deepen our impact.
For savers, we supported a broader range of needs, for
example providing propositions such as our £50 Regular
Saver with an enhanced interest rate, and our First Home
Saver, designed to help support those starting to save.
We also improved how many customers stayed with us
when their mortgage came to an end, with increased
engagement for those approaching maturity, and
the potential to lower monthly payments through
product transfers.
Theseeffortscontributedtoa£1.1bnyear-on-yearincrease
in savings balances and a year on year gross lending
increase of £0.1bn. Overall, we welcomed 76,000 new
members to save with us, and helped just under 53,800
people into homes
15
.
OUR
STRATEGY
To deliver our Purpose and make
adifferencetothelivesofour
members and customers, we’re
continuing to focus on the four
strategic pillars introduced in 2023.
They help us to concentrate on what we need to do to better
support our existing members, customers and colleagues, as
well as to reach and help more people.
Create joyful
experiences
We’re committed to making every interaction – whether
online, by phone or in person – easy, human and rewarding,
andtoshowingmembersthedifferencetheirmoneymakes.
It starts with making it simpler for customers to open
savings accounts with us and deposit their funds. The
number of our application forms was streamlined from 33
to three in 2025, making it much quicker for customers to
deposit their savings with us. We also introduced real time
processing of inbound faster payments, meaning 66% of all
faster payment transactions are now handled instantly.
We also improved our service during the busy ISA season
(March-April), increasing the availability of colleagues and
extending opening hours in branch and via telephony
channels, with an additional 942 extra appointments.
We’vemadesignificantimprovementstoourdigital
experience for both savers and borrowers, including
simplifying our app login process while still maintaining
security, adding mortgage balances and giving customers
the ability to open all online savings products directly in
the app. Almost 83,700 accounts were opened this way
in 2025. Our overall NPS score - which measures whether
customers would recommend our products and services to
friends and family – increased in 2025 to +66 (2024: +64) –
the highest we’ve ever recorded.
15
Figuresincludeallhousepurchases(first-timebuyers,homemovers,residentialandcommercialbuy-to-let)andexcluderemortgagesandinternalproducttransfers.
Calculated by multiplying new mortgages by the average occupancy rate (ONS: 2.4). Full basis of reporting is detailed in the Sustainability Reporting Framework
Index and Datasheet.
Cultivate an
ambitious culture
Our four behaviours – We Reach for Better, We Care about
People, We Say it Straight and We Make it Happen - remain
integral to how we work. They help us to foster an ambitious
culture to unlock pace and performance that helps us to
deliveronourPurposeforthebenefitofourmembers
and customers. We’ve continued to embed the behaviours
through guides and leadership cascade packs and
recognise outstanding role models through our CEO Awards
and Everyday Thanks scheme. In 2025 236 colleagues
were nominated.
Our apprenticeship programme has gone from strength-to-
strength. In 2025 we welcomed 36 new people from across
the business to build capabilities in digital, relationship
building, leadership, adaptability and data analytics. They’re
following in the footsteps of 39 people who completed
their apprenticeship in 2025.
We also continued to support the development of future
skills we believe are key to enabling the delivery of
our strategy. This included tailored Linkedin Learning
pathways as well as bespoke internal learning content.
We strengthened coaching capabilities and expanded our
adaptabilityoffering-keytofosteringresilience,agilityand
pace, qualities essential for navigating successful change.
Build a future ready
Society
Finally, we’re focusing on building an organisation that’s
ready for what’s to come and can deliver our Purpose
and ambition. This includes improving our ability to scale,
simplifying and optimising our processes and improving the
maturity of our governance, risk, and control procedures. We
continuetoinvestandenhanceourfinancialcrime,fraud
monitoring and management processes to ensure greater
protection for our customers.
In 2025 we reshaped our risk frameworks, launched a
new enterprise risk platform, and strengthened the risk
and control processes across our organisation. We also
increasedthepaceofourfinancetransformationwith
delivery of replacement secured funding and treasury
management systems.
We added mortgage
balances and gave
customers the
ability to open
all online savings
products directly
in our app.
16 17Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
In 2025, we delivered solid
financialperformanceaswe
continuedtofulfilourPurpose.
We further grew our balance sheet, with net lending of
£2.2bn (2024: £2.9bn) and an increase in savings balances
of£1.1bn(2024:£5.2bn).Profit,onastatutorybasis,
was broadly in line with last year and 23.4% higher on
anunderlyingcoreoperatingbasis.Themaindifference
betweenstatutoryprofitbeforetaxandcoreoperating
profitisa£50.3mlossonfairvalue(2024:£36.2m
gain), some of which relates to swaps not in a hedge
accounting relationship. Liquidity and capital levels remain
strongwithsignificantheadroomaboveregulatoryand
internal requirements.
The UK economy continued to demonstrate resilience
despite wider global economic uncertainty. Volatility in
interest rate expectations was a challenge throughout
theyear,andonlystabilisedinthefinalquarterasthe
Monetary Policy Committee continued to balance slow
growth and a more relaxed labour market against persistent
inflation.BankRatefellgraduallyduringtheyear,with
market sentiment suggesting we’re nearing the end of
the current downward rate cycle and only modest further
reductions expected.
Againstabackdropoffiscalpressuresandglobal
geopoliticalchallenges,inflationcreptupduringtheyear,
peaking at 3.8% in the autumn. While everyday costs
remained elevated, wage growth was modestly higher than
inflation,providingsomerelieftohouseholds.However,
this was tempered by a softening labour market, with rising
unemployment and fewer job vacancies limiting the extent
of that improvement.
Competition in our core markets of mortgages and savings
intensifiedovertheyear.Inmortgages,largerlenders
adopted more aggressive strategies, leading to front book
margin compression. The savings market was characterised
bycustomerpreferencesshiftingtowardsfixedrate
products, an active ISA season and heightened competition
– particularly across the larger banks; all of which resulted
in further margin compression.
Our deposits repriced faster than our mortgages due to
their shorter-term and underlying interest rate basis. In this
context, our structural hedge played a key role in supporting
income, cushioning the impact of margin pressure from
product repricing in a reducing rate environment.
We continued to grow both mortgage and savings balances
steadily and sustainably, underpinned by disciplined pricing
and risk management.
Our 2025 performance was achieved despite a number of
headwinds, including a declining interest rate environment,
thematurityofhigher-margin,fixedratemortgage
products originated during the pandemic, and intensifying
competition that has compressed both savings and
mortgage margins. In addition, operating costs increased
year-on-year,reflectingcontinuedstrategicinvestmentand
inflationarypressuresonourcostbase.
These headwinds are expected to persist over the near to
medium term, continuing to place pressure on margins.
Oursolidfinancialresultshavefurtherstrengthenedour
capital position, and our liquidity position remains strong
and well above regulatory requirements. Importantly, we
have delivered this performance while continuing to grow
mortgageandsavingsbalancessustainablyandoffering
competitive rates that reward our members.
Thefiguresbelowareconsolidatedamountsinrespect
of Yorkshire Building Society and its controlled
entities (‘the Group’).
OUR
FINANCIAL
REVIEW
Alternative performance measures are defined in the Glossary on page 238-240
Financial Highlights:
•
Profitbeforetaxwas£377.9m(2024:£383.7m),withcoreoperatingprofitrisingto£426.7m(2024:£345.7m).A
reconciliationbetweenprofitbeforetaxandcoreoperatingprofitisshownonpage22.
•
Net interest income increased by £133.3m to £869.8m (2024: £736.5m), representing an improved net interest
margin of 1.32% (2024: 1.16%), supported by balance sheet growth and strong structural hedge performance.
•
Thecost-to-core-incomeratioimprovedto48%(2024:51%),reflectingstrongincomegrowth,despiteinflationand
increased strategic investment. Costs in absolute terms increased in part due to increased investment of £18.9m, but
alsoduetothecontinuedgrowthofthebusiness,inflationandinvestmentintechnologytosupportfutureresilience
andefficiency.Theimpactisanincreaseinthemanagementexpensesratiofrom0.58%in2024to0.62%in2025.
•
Thequalityofourlendingisreflectedbythelevelofourcreditlossprovisioning.Expectedcreditloss(ECL)coverage
as a proportion of gross mortgage exposure remains at 0.1% (December 2024: 0.1%). The cost of risk, calculated as
theimpairmentchargeovertheaveragebalancefortheyear,was0.02%(2024:0.01%),reflectingahigheraverage
riskprofilewithintheStage2population,whichresultedinanincreasedECLdespiteareductioningrossexposure.
•
Our average savings rate exceeded the market by 0.62pp (2024: 0.90pp), generating £313.0m in member value
(2024: £430.2m). Member value typically widens when rates go up and contracts when rates go down, but our
consistent outperformance highlights the strength of our proposition. Savings balances grew by 2.1% (2024:10.6%),
reflectingthecompetitivenessofourratesandourcommitmenttorewardingloyalty.
•
Our capital and liquidity positions remain strong, well above regulatory requirements and aligned with our risk
appetite, supported by a stable Common Equity Tier 1 ratio of 18.8% (2024: 18.1%) and leverage ratio of 7.0%
(2024: 6.6%).
•
Our covered bond and residential mortgage-backed security (RMBS) issuances were both more than twice
oversubscribed,demonstratingstrongdemandandtheeffectivenessofourfundingstrategy.
Statutory profit
before tax (£m)
Management
expenses ratio (%)
Core operating
profit (£m)
Member value
(£m)
Net interest
margin (%)
Average savings
rate differential (%)
Liquidity coverage
ratio (%)
Common equity tier
1 capital ratio (%)
Cost to core
income ratio (%)
Leverage
ratio (%)
2021
2021
2021
2021
2021
2021
2021
2021
2021
2021
2022
2022
2022
2022
2022
2022
2022
2022
2022
2022
2023
2023
2023
2023
2023
2023
2023
2023
2023
2023
2024
2024
2024
2024
2024
2024
2024
2024
2024
2024
2025
2025
2025
2025
2025
2025
2025
2025
2025
2025
320
0.55
297
107
1.07
0.32
199
16.8
50
5.9
503
0.54
426
199
1.30
0.56
166
16.8
41
6.2
450
0.56
450
441
1.31
1.01
158
16.7
42
6.2
384
0.58
346
430
1.16
0.90
203
18.1
51
6.6
378
0.62
427
313
1.32
0.62
239
18.8
48
7.0
18 19Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
As we enter 2026, our focus remains on delivering our Purpose. We will do this by continuing to invest in our strategic
priorities,deliveringcompetitiveproductsandservicesforourmembers,andmaintainingthefinancialstrengththat
underpins sustainable growth.
Akeyprioritywillbemaintainingstrongcostdisciplineincludingtherealisationofbenefitsassociatedwithstrategic
investment. With a solid foundation and a clear Purpose, we’re well-positioned to adapt, evolve, and thrive, creating long-term
value to help our members come together to make good homes possible for more people in the years to come.
Weareconfidentthatourbusinessmodelwillallowustocontinuetonavigatetheincreasedcompetitioninourcoremarkets
and ongoing economic uncertainty.
Tom Ranger
ChiefFinancialOfficer
We’ll continue
to invest in our
strategic priorities,
deliver competitive
products and services
for our members,
and maintain the
financial strength
that underpins
sustainable growth.
Strategic Report > Our Financial Review
Savings performance
Delivering on our Purpose starts with our savers. We
achieved stable growth in savings balances during the year,
increasing them by £1.1bn (2024: £5.2bn), representing
a growth rate of 2.1% (2024: 10.6%). Following a period
ofsignificantsavingsgrowthcomparedtomortgages,
we actively chose to slow the rate of growth in 2025.
Additionally, speculation around potential changes to ISA
limits and Financial Services Compensation Scheme (FSCS)
protection thresholds further fuelled market activity. This
heightened competition occurred against a backdrop of
a slowing UK savings market, driven by a lower interest
rate environment.
While savings balances grew less quickly in 2025,
we continued to deliver strong value to our members
and customers through competitive savings rates. The
composition of our savings book leans more heavily
towards variable rate products than our peers, as a
consequence our book has repriced faster than many of our
peers. Our average savings rate premium over the market
remainedsignificantat0.62pp(2024:0.90pp),despite
the lower rate environment. This translated into £313.0m
in additional interest paid to our savers (2024: £430.2m),
reinforcing our ongoing commitment to delivering
meaningful value to members
Responding to change
The 2025 savings market was shaped by four Bank Rate
reductions, continuing the trend from the second half of
2024. Bank Rate gradually reduced from 4.75% to 3.75%,
after the peak of 5.25% in 2023 and 2024, causing variable
rate savings across the market to edge lower.
We responded to these changes with a balanced approach,
ensuring support for both new and existing members across
both sides of the balance sheet.
Market-wide, it proved to be the busiest ISA season on
record, with heightened competition and many of the
mostattractivefixedISAdealsofferedbylargerproviders.
Competition remained elevated following the ISA season
butdidnottranslateintohighermarketflows.
Atthesametime,concernsabouttheUK’sfiscalposition
and potential government measures to raise revenue
shaped savers’ behaviour. Many chose to put more into
ISAs,anticipatingpossibletaxchanges.Officialdata
also pointed to a weakening in the UK economy, and
households responded by saving a greater share of their
income, preparing for the possibility of further pressure
on real earnings.
Aspartofourcommitmenttofinancialwellbeing,wealso
relaunchedthe£50RegularSaver,offeringanattractiverate
to encourage healthy savings habits. We remain focused
on deepening our impact and supporting our members’
financialfutures.
More information on supporting savers can be
found in the Customers and members section of the
Sustainability Report.
Mortgage performance
Making good homes possible for more people remains
central to our Purpose. In 2025, we delivered gross
mortgage lending of £9.9bn , broadly consistent with
the prior year (2024: £9.7bn), in a market that saw only
modestgrowth.Thisperformancereflectedagradual
recoveryinbuyerconfidenceasinterestrateseased,
despite ongoing economic uncertainty, and included strong
supportforfirst-timebuyersastheycontinuedtoface
affordabilitychallenges.
Competitive pressures witnessed in H2 2024 continued
throughout 2025, resulting in lower mortgage margins
across the market. Lending momentum gathered
pace through the year, thanks to competitive pricing,
enhanced propositions and our decision to pass on
100% of the Bank of England Bank Rate reduction to our
variable rate mortgage customers. We were also among
thefirstlenderstoupdateourloan-to-incomelimits
following new regulatory guidance, helping to maintain
responsible lending while supporting customers’ home
ownership ambitions.
Changes to the Stamp Duty Land Tax in April meant more
buyers were liable for tax than under previous temporary
reliefs, which increased the volume of transactions ahead of
thechange,andsubsequentlydroppedoffafterwards.
Savings 2025 2024
Savings balance growth 2.1% 10.6%
Savings balance growth £1.1bn £5.2bn
Averagesavingsratedifferentialto
the market average
16
0.62pp 0.90pp
Market share of retail savings
balances
17
2.4% 2.5%
Mortgages 2025 2024
Gross lending £9.9bn £9.7bn
Net lending £2.2bn £2.9bn
Growth in mortgage balances 4.4% 6.2%
Market share of residential
gross lending
18
3.3% 3.8%
16
YBS Group average savings rate compared to Rest of Market average rates. Source: CACI’s Current Account and Savings Database (CSDB), Stock. Data period December
2024 – November 2025 (being latest available).
17
Source: YBS analysis of BSA Household savings. Data period January – December 2025.
18
Based on Bank of England total industry gross lending. Data period January – December 2025.
20 21Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Market share
2025 saw a highly competitive mortgage market, with the majority of the larger lenders choosing to reduce margins in an
attempt to increase market share. Lending criteria enhancements continued at pace, with the July 2025 regulatory relaxation
of loan-to-income limits being quickly adopted by some lenders, further increasing competition.
As a result, the residential mortgage market grew at a faster rate than in 2024 and average annual UK house prices increased
by around 2.5% overall.
19
Our market share of gross lending of 3.3% (2024: 3.8%) was underpinned by the strength of our mortgage propositions and a
disciplinedapproachtolendingandpricing.Netlendingtotalled£2.2bn(2024:£2.9bn),reflectingahigherlevelofmaturities.
Throughout, we remained focused on sustainable growth, carefully balancing volume and margin, while continuing to support
our members and customers in achieving home ownership.
More information about how we’re helping people into homes can be found in the Customers and members section of
the Sustainability Report.
19
https://www.gov.uk/government/statistics/uk-house-price-index-for-november-2025/uk-house-price-index-summary-november-2025
Strategic Report > Our Financial Review
2025 2024
£m Statutory
Remove non-
core items Core Statutory
Remove non-
core items Core
Net interest income i 869.8 (1.3) 868.5 736.5 (2.4) 734.1
Fair value gains and losses ii (50.3) 50.3 - 36.2 (36.2) -
Net realised gains 0.7 - 0.7 0.2 - 0.2
Other income and expenses iii (26.2) (0.3) (26.5) (21.1) (0.2) (21.3)
Total income/core income 794.0 48.7 842.7 751.8 (38.8) 713.0
Management expenses (407.6) - (407.6) (366.6) - (366.6)
Impairmentoffinancialassets (8.5) - (8.5) (0.2) - (0.2)
Movement in provisions iv - 0.1 0.1 (1.3) 0.8 (0.5)
Profit before tax/core operating profit 377.9 48.8 426.7 383.7 (38.0) 345.7
Summary Income Statement
Thenotesbelowexplaintheadjustmentsmadetostatutoryprofitbeforetaxtoarriveatcoreoperatingprofit:
i) Historical fair value credit adjustments on acquired loans.
ii) Removed fair value volatility i.e. gains and losses on derivatives, and on non-core equity investments.
iii) Profit/(loss)onthesaleoffixedassetsandonthedisposalofintangibleassets.
iv) Non-core elements of the restructuring provision.
Core operating profit
Coreoperatingprofitincreasedto£426.7min2025(2024:
£345.7m),reflectingthestrengthandresilienceofour
underlying business model. This measure, which excludes
fair value volatility and other non-core items, provides a
clearer view of our operational performance and is a key
indicator used by the Board to assess our organisation’s
financialhealth.
Theupliftincoreoperatingprofitwasprimarilydriven
by strong growth in net interest income, supported by
balance sheet expansion and the continuing contribution
of our structural hedge. At the same time, we maintained
a disciplined approach to cost management, even as we
increased investment in strategic initiatives to support long-
term growth and transformation.
Our cost-to-core income ratio improved to 48% (2024:
51%), demonstrating our ability to grow income while
managingourcostbaseeffectively.Thisperformance
reinforces our commitment to delivering long-term value
formemberswhilemaintainingfinancialstrengthand
operationalefficiency.
Net interest income
Net interest income rose to £869.8m in 2025 (2024:
£736.5m), representing a higher net interest margin of
1.32%(2024:1.16%).Thisimprovementreflectscontinued
balance sheet growth and strong performance from our
structural hedge, which contributed £437.0m in gross
interest income (2024: £376.7m).
The structural hedge is a key part of our balance sheet
management, helping to maintain stable income by utilising
thenaturaloffsetininterestratesbetweentheSociety’s
fixedratemortgagesandsavings.Thisapproachsupported
solid performance despite heightened competition across
both mortgages and savings markets.
In line with our mutual values, we adopted a balanced
pricingstrategythatcarefullyconsideredprofitability,
sustainable growth, and member value. During the year,
we reduced savings rates by less than the decrease in
Bank Rate on variable rate products, but fully on variable
rate mortgage products. This approach, in combination
with the impact of the structural hedge, supported income
stability while continuing to provide competitive value
for our members.
Fair value gains and losses
A fair value loss of £50.3m was recorded in 2025 (2024:
£36.2mgain).Theyear-on-yearmovementprimarilyreflects
volatility in swap rates, which declined over the period as
markets adjusted their expectations for future interest rate
levels, including the impact of four Bank Rate cuts totalling
1.00%, alongside broader changes in the UK and global
economicoutlook.Asignificantpartofourfairvaluelosses
relates to derivatives not included in hedge relationships,
wherethereisnooffsettingitemavailable.
This fair value volatility explains the divergence between
coreoperatingprofitandstatutoryprofitintheyear.Core
operatingprofitincreasedby£81.0m,demonstrating
strongunderlyingperformance,whereasprofitbefore
taxdecreasedby£5.8m.Thedifferenceisdrivenbyfair
value losses, which are excluded from core operating
profittoprovideaclearerviewoftheGroup’soperational
performanceandtoremoveshort-termmarketfluctuations.
In total, fair value movements resulted in a £50.3m loss
in 2025. The largest driver was the reversal of gains on
unmatchedpositionsrecordedin2024,whichsignificantly
amplifiedtheyear-on-yearswing.
We continue to monitor and reduce our exposure to
instruments not in hedge relationships. More detail on fair
value gains and losses in the period are available in Note 5.
Other income and expenses
Other income and expenses resulted in a net cost of
£26.2m in 2025 (2024: £21.1m cost), primarily driven
by commission payments of £21.5m (2024: £23.3m) to
our agency network, which continues to serve as a key
distribution channel. This line also includes income from
secondary business activities, such as insurance broking
commissions. However, insurance-related income declined
significantlyin2025followingourdecisiontostopearning
commission on new home and life insurance products. This
strategicshiftwasmadetorepositioninsuranceofferings
asamemberbenefit,aimedatdeepeningcustomer
relationships and delivering greater value to them.
22 23Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Strategic Report > Our Financial Review
Management expenses
Overall management expenses were £407.6m in 2025
(2024: £366.6m), an increase of £41.0m. The most
significantelementoftheincreaserelatedtoourcontinuing
strategic investment (the OnePlan Programme) which
totalled £88.6m in 2025, an increase of £18.9m from
£69.7m in 2024. This year-on-year increase includes
investment in a number of key strategic areas, most notably
intechnologysimplification,Data,Treasurymanagement
systems and an investment in reviewing the overall Society
cultureandorganisationaleffectiveness.Theseinvestments
are all anticipated to deliver material enduring savings for
the Society, starting in 2026.
Business as usual management expenses increased by 7%
compared to 11% in the prior year. Material increases in
people costs have arisen due to higher-than-typical pay
awards to colleagues aligned to increases in the wider
market,anincreaseinheadcountreflectingthegrowthin
operational scale of the business and an increase in the rate
of Employers National Insurance, incremental regulatory
fees and additional Bank Rate mailing costs with four rate
changes in 2025 vs. two in 2024.
Despite the increase in costs, we maintained disciplined
cost management, ensuing spending was directed towards
initiatives that deliver the greatest value for members
and customers while supporting our long-term strategy.
The cost-to-core income ratio reduced to 48% - a three-
percentage point improvement year-on-year, underpinned
by strong income growth and continued focus on managing
ourcostbaseeffectively.
Impairment of financial assets
A total net impairment charge of £8.5m (2024: £0.2m
charge) was recorded in the period, with the year-on-year
increasedrivenbyahigheraverageriskprofilewithinthe
Stage 2 ECL population.
More information on the impairment of financial
assets can be found in Notes 2 and 7 to the financial
statements.
Provisions
There were no movements in provisions in the year
(2024: £1.3m charge).
Summary Balance Sheet
£bn
2025
2024
Liquid assets 13.5 14.6
Loans and advances to customers 51.9 49.7
Fair value adjustment for hedged risk on loans and advances to customers 0.0 (0.5)
Other assets 0.9 1.7
Total assets 66.3 65.5
Shares
20
52.9 52.0
Wholesale funding and other deposits
21
7.3 7.3
Subordinated liabilities 1.5 1.5
Other liabilities 0.4 0.7
Total liabilities 62.1 61.5
Members’ interest and equity 4.2 4.0
Total members’ interest, equity, and liabilities 66.3 65.5
20
Shares in the summary balance sheet includes the fair value adjustment for hedged risk on shares of £27.3m (2024: £1.0m).
21
Within ‘wholesale funding and other deposits’ are £1.1bn of retail savings deposits not classed as shares (2024: £0.9bn).
We delivered steady and balanced growth across both our
mortgage and savings portfolios during the year. Mortgage
growth outpaced savings, helping to rebalance our funding
position after the imbalance observed between 2022 to
2024,whennetsavingsinflowssignificantlyexceedednet
mortgage lending.
As at 31 December 2025, the retail loan-to-deposit
ratiostoodat96.2%(2024:94.0%),reflectingamore
proportionate alignment between lending and funding
activities. This supports a resilient balance sheet structure
and ensures we remain well-positioned to meet member
needs while maintaining prudent liquidity and funding
risk management.
Liquidity
We conduct an internal liquidity adequacy assessment
process (ILAAP) at least annually to ensure that the Society
holdssufficientlevelsofliquidityunderbothbusiness-
as-usual and severe but plausible stress conditions. The
ILAAP also ensures that we have adequate governance and
controls to manage liquidity risks arising from the Society’s
business model.
Liquidity levels remained strong throughout 2025, with
significantheadroommaintainedabovebothregulatoryand
internal thresholds. As at 31 December 2025, the liquidity
balance sheet ratio stood at 22.5% (2024: 24.6%), while
the Liquidity Coverage Ratio (LCR) improved to 238.7%
(2024:202.7%),reflectingourcontinuedfocusonprudent
liquidity management.
The liquidity asset portfolio remains conservatively
positioned, comprising predominantly of exposures to the
Bank of England and UK Government securities, in line with
the Group’s balance sheet strategy and risk appetite.
High-quality liquid assets (HQLA) totalled £13.1bn at year-
end (2024: £13.7bn), including £6.0bn in cash reserves,
£6.8bn in AAA-rated assets, and £0.2bn in assets rated
between AA+ and A. This composition supports a robust
liquidityprofileandensuresweremainwell-placedtomeet
member needs under a range of stress scenarios.
Loans and advances to customers
The mortgage book grew by 4.4% in 2025 (2024: 6.2%).
The credit quality of the mortgage book continues to be
monitored monthly using a range of indicators. A key
measure is the proportion of outstanding retail mortgage
balances in arrears by three months or more (including
possessions). The quality of our book remains strong, with
0.46% of balances in arrears by value (2024: 0.43%).
The industry average for retail mortgage arrears is measured
by the number of accounts in arrears by three months or
more (including possessions). At 0.52% (2024: 0.50%),
our performance continues to be better than the industry
average of 0.88% (2024: 0.97%). Further details on arrears
are provided in the Directors’ Report and note 31 to the
financialstatements.
While no material deterioration in credit performance
has been observed, risks remain, and arrears levels will
continue to be closely monitored through our established
risk-managementprocesses.Affordabilityandcost-of-
livingpressuresmayalsoinfluencethemortgagebook,
particularly if future house price movements begin to
reflectthesechallenges.
In line with our lending strategy, we’ve seen an increase
in the proportion of our book with higher indexed loan-
to-value (LTV) ratios. As of December 2025, 9.7% of the
retail mortgage book had an indexed LTV greater than 85%
(2024: 9.4%). The average indexed LTV increased slightly to
51.7% (December 2024: 50.9%).
Wholesale funding
Wholesale funding markets remained relatively stable
throughout 2025, enabling the successful issuance of one
covered bond and one residential mortgage-backed security
(RMBS). The RMBS marked the second transaction through
the White Rose Master Issuer, a single special-purpose
vehicle designed to streamline and simplify the issuance
process. Each transaction was over two-times subscribed,
reflectingstronginvestordemandandtheeffectiveness
of our investor engagement strategy. These issuances are
aligned with our ongoing objective to maintain a presence
incorefundingmarketsandensureaccesstoadiversified
range of funding sources.
Capital
Introduction to capital
Weholdregulatorycapitaltoprovidefinancialsustainability
for our members and other creditors by protecting against
unexpected losses.
Regulatory capital resources encompass general reserves
and subordinated liabilities, both of which are subject to
regulatory adjustments.
The capital disclosures included in this report have been
prepared in accordance with the UK Capital Requirements
Directive V (UK CRD V), bound by regulatory requirements
from the UK Capital Requirements Regulation (CRR).
The disclosures have been prepared on a consolidated
Group basis, including all subsidiary entities, unless
otherwise stated.
We are subject to regulatory capital requirements
established by the Prudential Regulation Authority (PRA)
in the United Kingdom. We have complied with the
PRA’s regulatory capital requirements during the year.
Further details of our capital position can be found in
the 2025 Pillar 3 Disclosures. The ratios, deductions, and
definitionsbelowhavebeenprovidedinaccordancewith
CRD V regulations.
24 25Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Strategic Report > Our Financial Review
Management of capital (audited)
Capital risk is managed via a Board-approved Capital Policy
and risk appetite framework. We manage capital to comply
with regulatory requirements and risk appetite levels, to
support our strategic objectives for sustainable growth.
The Asset and Liability Committee (‘ALCO’) is the governance
committee with responsibility for capital management.
Under its delegated Board authority, it retains responsibility
for monitoring our capital adequacy and recommending/
approving actions as appropriate.
We perform an internal capital adequacy assessment
process (ICAAP) at least annually to ensure that we hold
sufficientcapitalandhaveadequategovernanceand
controls to manage the risks to capital arising from our
business model. The ICAAP considers severe but plausible
stress scenarios.
In addition, we identify our point of non-viability (PoNV)
to understand the possible scenarios and risk drivers that
could lead to the potential failure of our organisation, and
toassesswhethersufficientmitigationsareinplace.
Capital ratios
Our CET1 ratio at year-end 2025 stood at 18.8%, showing
an increase from the prior year (2024: 18.1%). Our UK
leverage ratio increased to 7.0% (2024: 6.6%). The CET1
ratio remains comfortably above regulatory requirements
and risk appetite.
Minimum requirement for own
funds and eligible liabilities
(MREL)
The minimum requirement for own funds and eligible
liabilities (MREL) is a regulatory requirement designed
tomakesureinstitutionshavesufficientlossabsorbing
and recapitalisation capacity in the event of a resolution
scenario. The MREL requirements can be met by regulatory
capital resources and MREL eligible resources, such as
Senior Non-Preferred (SNP) liabilities.
Our MREL Risk Weighted Asset (RWA) ratio at year-end
stood at 25.2%, compared to the prior year’s position of
24.6%. As the only applicable measure, this represents the
Society’s binding MREL ratio.
Capital outlook
We are committed to maintaining a robust capital position,
aligned with regulatory requirements and evolving market
conditions.TheimplementationofBasel3.1isasignificant
focus for us, with the leverage ratio framework (LREQ) not
expected to be binding until we average £75bn of retail
deposits over a three-year period.
The Basel 3.1 reforms, aimed at enhancing the risk
sensitivity and increasing the transparency of capital
requirements,willtakeeffectacrosstheUKin2027.These
updates will lead to adjustments in the calculation of RWAs,
particularly in areas such as credit risk, counterparty credit
risk, and operational risk.
We’re well-positioned to comply with these enhanced
requirements, having historically maintained a conservative
approach to capital management. We continue to hold
capital levels comfortably above regulatory minimums,
and the implementation of Basel 3.1 is not expected to
materiallyaffectourabilitytomeettheseobligations.
Based on current projections it is expected that our capital
ratios will improve under the Basel 3.1 regime, with capital
surplus broadly neutral.
In addition to risk-based capital requirements, the leverage
ratio framework, while not expected to become binding in
the near term, remains an important consideration in our
medium-term capital planning, particularly as we monitor
progress toward LREQ status.
When we reach LREQ status (£75bn in retail deposits) we
will become subject to a minimum regulatory requirement
of3.25%,plustheUK’scountercyclicalleveragebuffer.It
is not projected for us to reach this threshold within the
next 5 years, which to be binding would need us to average
£75bn of retail deposits over a three-year period.
Despitethis,ourstrongcapitalpositionreflectscompliance
with the minimum leverage ratio requirement. We continue
to monitor the impact of LREQ on our balance sheet and
capitalbufferstosupportourstrategicobjectiveswhile
remaining compliant with regulatory demands.
We anticipate our capital adequacy and leverage ratios to
remain strong, driven by prudent management, rigorous
stress testing, and our overall risk appetite. This will
support us in adapting to the evolving requirements of
Basel 3.1 and LREQ, once applicable, while maintaining
sustainable growth.
2025
£m
2024
£m
Common Equity Tier 1 (CET1)
General reserve* 4,253.2 3,981.5
Fair value through other comprehensive income reserve (14.5) (19.3)
Cash flow hedge reserve (3.0) 7.0
Common Equity Tier 1 prior to regulatory adjustments 4,235.7 3,969.2
Common Equity Tier 1 regulatory adjustments
IFRS 9 transitional arrangements - -
Pension fund adjustments (20.3) (23.8)
Intangible fixed assets (15.0) (16.1)
Prudent valuation adjustment (7.6) (9.3)
Cash flow hedge reserve 3.0 (7.0)
Total Common Equity Tier 1 capital 4,195.8 3,913.0
Tier 2
Subordinated liabilities 141.8 195.5
Collective provisions for impairment - -
Total Tier 2 Capital 141.8 195.5
Total capital (audited) 4,337.6 4,108.5
MREL Resources (unaudited)
Secondary Non-Preferential Liabilities 1,181.3 1,147.7
Tier 2 MREL Eligible 120.6 68.2
Total MREL Resources (unaudited) 5,639.5 5,324.4
Risk weighted assets (unaudited) 22,365.0 21,673.5
Common Equity Tier 1 capital ratio* 18.8% 18.1%
Tier 1ratio*22 18.8% 18.1%
Total capital ratio* 19.4% 19.0%
Total MREL Resources ratio* 25.2% 24.6%
CRR Leverage ratio* 6.3% 6.1%
UK Leverage ratio (excluding claims on central banks)* 7.0% 6.6%
*
IncludesallentitiesintheYBSGroup,asdisclosedinNote8tothesefinancialstatements,withtheexceptionofthesubsidiaryYorkshireKeyServicesLimited(YKS).
YKSisanon-tradingsubsidiaryand,asitsoperationswerenon-financialinnature,itisoutsidethescopeofCRDIVforcapitalpurposes.
22
Ratios are unaudited.
26 27Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
The environment in which
we operate and the nature
of the risks that we face are
continually evolving.
Effectiveriskmanagementisfundamentaltomaking
sure we achieve sustainable growth and keep the trust
of our members, customers, colleagues and regulators.
In 2025 we’ve invested in our risk capabilities to make it
easierforcolleaguestodelivereffectiveriskmanagement
by consolidating key enterprise-wide risk processes
and data onto a single industry standard platform that
gives them everything they need in one place. This has
been supported by risk operating model changes and
clearer accountabilities; the Enterprise Risk Management
Framework (ERMF) has been enhanced to ensure consistent
high-quality outputs and improved training & support.
How we manage risk
We categorise the emerging and evolving risks that we face
intheeightprincipalrisksdefinedinourEnterpriseRisk
Management Framework, which ensures we identify, assess,
and manage risks carefully and consistently.
Themostsignificantemergingandevolvingrisksare
reviewed regularly through our senior risk committees and
are considered during our business planning processes.
Wecontinuetomonitortheeffectivenessof,andinvestin,
our risk management capabilities, to make sure timely and
appropriate action is taken to protect the interests of our
organisation and our members and customers.
Our robust risk management framework, strong capital
position, diverse funding sources, and high liquidity
levelsmeanwecanbeconfidentinourfinancialand
operational resilience.
Risk
Overview
Top emerging and evolving risks
Emerging or
evolving risk
Principal risk(s) Commentary
Our strategy
and the external
environment
•
Strategic risk
•
Financial risk
Our core markets of savings and mortgages are highly competitive.
Macroeconomic forces are changing. The banking landscape is changing, so
it is important that we operate a responsible and sustainable business on
our members’ behalf. We continue to assess and monitor business model
risks and macro-economic trends and their potential impact, to ensure
long-term sustainability.
We regularly monitor, assess, report and manage the most material risks to
our strategy as part of our Enterprise Risk Management Framework (ERMF),
andthroughourstrategyandplanningprocesses.Thisincludes:effective
cost controls, ensuring investments are prioritised to the areas that will
deliver most for our members and customers, and stress-testing our capital
and liquidity positions and ratios regularly to remain within the Board-
approved risk appetite.
Cybersecurity
•
Operational risk
ThecybersecuritythreattotheUKfinancialservicesindustrycontinues
to grow, originating from both organised crime groups and nation state
operators. ‘Threat actors’ - individuals or groups that intentionally cause
harm digitally - are becoming ever more invasive and sophisticated
in their approaches, with ransomware and exploiting vulnerabilities
now key threats.
Resiliencetosuchthreats,andanabilitytorespondeffectivelyinthe
event of an attack, remain essential. We continue to invest in, enhance
and test our cyber threat monitoring and response capability to protect
our organisation and our members and customers, and maintain the
confidenceofourregulators.
More details of our approach are available in the Sustainability Report,
Responsible Business Foundations section.
Fraud
•
Operational risk
•
Conduct risk
Criminals are becoming increasingly sophisticated in targeting consumers.
Typicalfraudsinfinancialservicesincludephishing,identitytheft,account
takeovers and scams.
We continue to invest in and upgrade our fraud prevention and monitoring
controls to help protect our members and customers from becoming
victims of fraud.
More details of our approach are available in the Sustainability Report,
Responsible Business Foundations section.
Economic impact
on our customers
•
Credit risk
•
Conduct risk
•
Financial risk
We are alert to economic pressures on customers, as unemployment and
economic uncertainty persist. Despite lower mortgage costs year-on-year,
theyremainmuchhigherthantheywerefiveyearsago,potentiallyleaving
somehouseholdandbusinessfinancesstrained.
Fornewlending,weuseanaffordabilitymodelwhichappliesastressed
interest rate, reviewed at least every six months, to ensure that customers
couldaffordtheirmortgagepaymentsatahigherrate.Ourlending
criteria balances the level of risk with lending responsibly to deliver good
customer outcomes, minimise arrears and comply with Consumer Duty
regulations.Forexistingborrowersfacingfinancialdifficulty,weoffer
support options, including forbearance.
Technology
resilience
•
Operational risk
•
Change risk
Reliableandcost-effectiveITinfrastructureisvitaltodeliverthelevelof
service our members, customers, colleagues and regulators expect. As IT
components age, their health and value deteriorate and the risks they pose
to security and resilience increase.
We therefore continue to modernise and simplify our IT infrastructure to
ensure it remains resilient and secure. This includes ongoing evaluations
and trials of where further AI technologies could be implemented in a safe
and secure way.
More details of our approach are available in the Sustainability Report,
Responsible Business Foundations section.
28 29Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Top emerging and evolving risks (continued)
Strategic Report > Risk Overview
Emerging or
evolving risk
Principal risk(s) Commentary
Colleague Talent
and retention
•
People risk
Attracting and retaining talented colleagues to deliver our strategy is vital.
We continue to need to compete for certain skillsets, including credit risk,
internal audit and technology services/infrastructure.
Effectiveresourceplanning,forecastingandsuccessionplanning
remain priorities and are at the core of our People Plan which was
refreshed at mid-year.
More details of our approach are available in the Sustainability Report,
Colleagues section.
Delivering our
Strategy
•
Change risk
•
Strategic risk
We continue to deliver change to support the next phase of our growth
and realise our strategy. While our foundations continue to mature, the
pace of change across technology, customer expectations, and regulatory
requirements means we must evolve to stay competitive and sustainable.
We are investing in our change risk capability through regular training
and implementation of new change risk capabilities included in the
new Change Operating Model which will go live in Q1’26, with the build
progressing through the rest of the year.
We make essential changes when necessary to remain aligned with the
needs of our members and communities, guided by a regularly reviewed
and robust Risk and Control Framework. Recently, this saw us refresh our
Tier 1 Change Risk Policy to strengthen change risk management.
Consumer Duty
•
Conduct risk
•
Strategic risk
We operate in a dynamic regulatory landscape shaped by the FCA’s
Consumer Duty, ensuring good outcomes across vulnerable customers,
arrears management, and complaints handling. We’ve focused on ensuring
we operate within risk appetite across key areas, with an improved and
stable position now achieved.
Our focus has shifted from embedding compliance to actively embracing
the Duty as a driver of continuous improvement, responding quickly
to emerging risks and using data and insight to further strengthen
customer outcomes.
More details of our approach are available in the Sustainability Report,
Responsible Business Foundations section.
Climate change
•
Credit risk
•
Operational risk
The main risks for us from climate change are in the physical risks to our
membersandcustomers’properties-suchasfromflooding,subsidence,
and coastal erosion – and transitional risks, such as changes in energy
efficiencyregulation.
We continue to develop our environmental and climate change risk
management capabilities to ensure that we align with industry good
practice and meet reporting and disclosure requirements.
More details of our approach are available in the Climate risk and
opportunity management section.
Our Social and
Environmental
Impact
An evolving sustainability
strategy
In 2025 we continued to concentrate on four key focus
areas: Providing a Place to Call Home, Improving Financial
Wellbeing, Investing in our People and Building a Greener
Society,underpinnedbyafifth,OperatingResponsibly.
These priorities shaped our actions and reporting, enabling
us to deliver meaningful progress.
Asweevolveoursustainabilityreportingtoreflectour
redefinedPurpose,thesefourprioritieshavebeenreframed
to cover: Customers and Members, Communities, Climate
and Colleagues.
You can read more about each of these in the
Sustainability Report.
Through our social and environmental action, we make sure our business
is built to deliver our Purpose in a way that’s meaningful, credible and
creates long-term value for people and the world around us.
Fromtheproductsweofferandtheservicewegive,tothewaywe
operate and the decisions we make, sustainability is woven throughout
our business.
Defining our new approach
Our sharpened Purpose provided the foundations for
amoredefinedapproachtosocialandenvironmental
sustainability.
At the end of 2025, our Board reviewed and supported a
revisedsustainabilityapproach.Thisupdatereflectsour
prior materiality assessments, stakeholder research and
a comprehensive review of the external environment –
including the housing, climate and social cohesion crises
that continue to shape a challenging environment for our
members and customers.
In 2026 we’ll continue to shape our approach and as
part of this will update our materiality review and impact
assessment, in line with the requirements of the United
Nations Environment Programme Finance Initiative
(UNEP FI) Principles for Responsible Banking
23
. This will
ensure we identify and assess our most material risks and
opportunities, focusing our activity where we can deliver
the greatest impact.
23
https://www.unepfi.org/banking/bankingprinciples/
30 31Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Being the number one choice
for savers
Putting our Purpose into action starts with being the
number one choice for savers. By delivering great service,
fair rewards and products that work for our members, we
createacollectiveeffortthatisgoodformembersand
good for society.
Across all of our accounts, in 2025, we
supported over 76,000
24
new customers to
save to help boost their financial resilience.
For some people, saving can be hard. That’s why some of
ouraccountsaredesignedtohelppeopletakethefirststep,
and others encourage them to establish a savings habit.
In 2025, some of our accounts included:
•
Rainy Day Account – a limited access product that gives
savers the opportunity to earn a higher rate of interest
ontheirfirst£10,000.
•
Christmas Regular Saver – for the fourth year, we helped
people to plan ahead for an expensive season.
•
Regular Saver – we helped people to save little and
often to encourage healthy savings habits. We extended
our range of regular saver accounts with the launch of
the £50 Regular Saver in September, in addition to our
Loyalty Regular Saver which rewarded members with an
enhanced interest rate.
Building financial resilience
Research we commissioned with the University of Bristol’s
Personal Finance Research Centre and other providers
found people who save consistently feel more in control,
even when saving small amounts.
Customers and
members
As a building society, we don’t have
shareholders. We’re owned by our members, so we
reinvest in products and services that help people
to save and take steps towards a good home.
Whether it’s through our app, online or in-person
through our branch and agency network, we’re
there when people need us.
Households with a regular savings habit are 70% less
likely to fall behind on bills than non-savers and savers are
significantlymorelikelytoowntheirownhometoo.These
arejustafewofthemanyfindingsthatshowhowsaving
canhelp,butyoucanfindmoredetailsabouttheresearch
in our report,
The role of savings in building longer term
financialsecurity.
25
Peoplemanagetheirmoneyindifferentways,sowehave
a range of accounts to meet varying needs. Some support
peopletotakethefirststeptosaving,othersencourage
them to establish a savings habit with regular deposits,
andourISAsofferataxefficientwaytoprotecthard
earned savings.
Making good homes possible
for more people
When our members come together, we’re able to make good
homes possible for more people, whether owned or rented.
Across all our residential, buy-to-let,
including commercial buy-to-let, we helped
just under 53,800 people into homes
26
.
Supporting first-time buyers
Buying a home is one of life’s greatest expenses, so to help
people we have a range of support available, in addition to
competitive high LTV mortgages and products like our £5k
Deposit Mortgages.
OurpartnershipwithDoshi,adigitalfinancialeducation
tool,walksthroughthehomebuyingprocesstohelpfirst-
timebuyersbemoreconfident,andourFirstHomeeSaver
account aims to help people get to the end goal sooner.
Intotal,oursupportforfirst-timebuyersmeantatotalof
morethan26,300peopleboughttheirfirsthomein2025
(2024: 23,300).
Supporting renters
We know not everyone wants to, or can, buy a home, so we
lend to landlords through our Accord Mortgages and YBS
Commercial brands.
We make sure renters have access to houses in good
condition, and we take responsibility for making sure
they’re well maintained both inside and out. Our panel
ofvaluersonlyacceptbuy-to-lethousesthatarefitfora
mortgage, can get insurance and are sellable. That means all
our new lending is on rental homes that at least meet, but
ideally exceed, the government’s Decent Homes Standard
(DHS), giving renters some comfort that the place they call
home is of a good quality.
24
Thisexcludesfixedrateproductsandloyaltyproducts.
25
https://www.bristol.ac.uk/media-library/sites/geography/pfrc/documents/The_role_of_savings_in_building_longer_term_financial_security.pdf
26
Figuresincludeallhousepurchases(first-timebuyers,homemovers,residentialandcommercialbuy-to-let)andexcluderemortgagesandinternalproducttransfers.
Calculated by multiplying new mortgages by the average occupancy rate (ONS: 2.4). Full reporting basis is detailed in the 2025 Sustainability Reporting Framework
Index and Datasheet.
Strategic Report > Our Social and Environmental Impact
In total, our support
for first-time buyers
meant a total of more
than 26,300 people
bought their first
home in 2025.
32 33Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Responsible lending
We lend with common-sense, but we do it responsibly.
It’s an approach that’s well-known and respected by
borrowers, and brokers.
We go beyond traditional lending policies because our
Purpose is more than standard lending. To truly give real
help with real life, we support people who need access to
financebutdon’talwaysfitconventionalcriteria.
When reviewing credit appeals, we take a holistic
approach. For example, we look at the reasons behind
missed payments rather than treating all adverse credit
the same. A single late phone bill, alongside consistent
rentandutilitypayments,tellsaverydifferentstoryfrom
persistent non-payment.
We also consider variable income patterns. Many
professionals, such as nurses and doctors, regularly work
overtime,whicheffectivelyguaranteesadditionalearnings
even if their base salary appears modest. By recognising
this,wemakedecisionsthatreflectacustomer’strue
financialpositionandresilience.
We still review credit history and income, and stress-test
for future changes, but every application is assessed on its
own merits. Our underwriters are trained to use discretion
to help people where others might not. Common appeals
include credit blips with mitigating circumstances or
reliance on more than 60% variable income. We’re here
toconsiderthosesituationsfairly—notautomatically
declinethem.In2025,29.3%ofapplicationsbenefited
from this support.
Improving the housing market
Wesupportanyeffortbythegovernmenttocreateafairer,
more reliable housing market that contributes to making
good homes possible for more people – whether owned or
rented.
The government continued to push ahead with major
housing reforms, including plans to overhaul the leasehold
system through the proposed Leasehold and Commonhold
Reform Bill, which builds on the Leasehold and Freehold
Reform Act 2024. It aims to give homeowners more control
by promoting commonhold as a fairer alternative to
leasehold, reducing issues such as high service charges and
short leases.
We’re closely monitoring both proposals and reviewing
the draft reforms to understand how they might impact our
members and customers, and we contributed to the home
buying and selling consultation.
Providing personal support
Weofferanationalbranchandagencynetwork,aBradford-
based customer service centre, and we’ve invested in
our digital services to improve our web and mobile
experience. This gives the convenience of services on-the-
go, whilst also knowing we have real people available for
moments that matter.
To make sure we invest members’ money wisely, and in
locations where there’s a demand, at the end of 2025 we
had 220 physical locations across England, Scotland and
Wales (2024: 225).
We’ve always aimed to support people when they need us,
but important government and regulatory updates in 2025
madesurefinancialserviceprovidersgofurther.
The FCA and HM Treasury worked with the Financial
OmbudsmanServicetomodernisetheUK’sfinancialredress
system, to make sure it’s fairer, simpler and quicker when
things go wrong. We know things don’t always go to plan so
ifsomething’snotright,we’lldoourbesttofixit,andfast,
whether online, by phone, or in branch.
Citizens Advice
We fund Citizens Advice advisers in 44 of our branches
inEnglandandScotland,whocontinuedtoofferfree,
face-to-face impartial advice during 2025. It’s a service
that’s available to everyone in the community, not just our
members and customers.
Thanks to this 5,600 people were helped to
overcome a number of issues during the year
(2024: 5,600).
Extra care when it’s needed
In 2025 we introduced a new way to help people when they
need us most, with a real focus on making sure we provided
a more personal and compassionate service.
Our Vulnerable Customer Policy has an updated process
and standards for how we do things, and colleagues who
directly speak to or support customers received exclusive
trainingtogivethemtheskillsandconfidencetodeliverthe
best possible service when times are tough for members
and customers. This might be signposting to third party
organisations,providinginformationindifferentformats
or getting help with safeguarding when it was necessary to
protect people.
For more information about how we’re supporting
members and customers, see the 2025 Sustainability
Report.
Strategic Report > Our Social and Environmental Impact
Building an inclusive
workplace
Our Diversity, Equity and Inclusion (DEI) Strategy
sets out our vision to be a leading organisation that
embraces diversity, champions equity and creates an
inclusive environment where everyone, regardless of
their background or identity feels valued, empowered
and supported.
In 2025, we continued to take steps to improve gender
equity, including improving how many women were
represented in senior roles.
It increased to 48.1% (2024: 47.3%) thanks
in part to positive changes to our recruitment
process that saw us work with recruitment
partners to create balanced interview
shortlists.
Our Gender Pay Gap has steadily declined since 2020
and over the last 12 months we’ve reduced the mean pay
gap to 21.2% (-2.2%) and reduced our median pay gap
to 22.9% (-1.8%).
You can read more in our Gender Pay Gap report.
Our Board Diversity Statement can be found in the Board
Governance and Nominations Committee report.
DEI ambitions
We measure the impact of our DEI strategy by having
Ambitions.Thesearespecificallyfocusedonethnicity,
gender and social mobility.
Details of our progress against measures alongside our
programmes can be found in the Sustainability Report.
Inclusive Employers Silver
Accreditation
In recognition of our
commitment and
progress to DEI, we were
proud to be awarded
the globally recognised
Silver Accreditation from
Inclusive Employers
in July 2025. The accreditation not only recognises our
strengths but provides tailored recommendations to help
focuseffortsoncreatinganinclusiveculturefor
all colleagues.
Supporting colleague
wellbeing
Tosupportcolleaguewellbeing,weofferarangeof
benefits,whichincludediscountedaccesstocriticalillness
cover, private medical insurance, and health and dental
cash plans, which can be purchased via monthly salary
deductions over a 12-month period.
In 2025 we’ve improved the support we give colleagues
for a range of circumstances. For example, we refreshed
our Reasonable Adjustments Policy, which lets colleagues
outline the adjustments they need to perform at their best
and encourages regular conversations between a colleague
and their leader.
For parents going through IVF, our IVF leave policy covers
bothparentsforuptofivedays,wegivefullpayneo-natal
leave up to 12 weeks and should someone experience early
baby loss (before 24 weeks) they can take up to two weeks
bereavement leave.
Monitoring our sickness and absence levels helps us to
spot any trends that might indicate colleagues need more
support with their wellbeing.
In 2025, our colleague sickness rate was 4.54%
(2024: 4.26%).
Colleagues
We’re committed to building an
inclusive culture where colleagues
feel empowered to live our
Purpose, appreciated for their contributions, and
proud of the impact they make.
34 35Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Colleague engagement
We value the views of our colleagues and regularly seek
their input through a number of channels to help shape our
workplace,benefits,products,andservices.
In 2025, 89% of colleagues completed our annual
engagement survey (87% in 2024), with an average score
of8.5(2024:8.6).We’realsointhetop5%offinancial
organisations for colleague engagement (eNPS), but we
know we can always do more.
Feedback highlighted three areas we should focus on as
an organisation, which included using colleague voices
to enhance our culture, enhancing our communication
channels and evolving how we work. As a result, we’ve
improved how we help our colleagues to stay informed,
connected, and aligned to our strategy.
Details of how we responded to feedback and our
approach to colleague engagement can be found in the
Sustainability Report.
Supporting colleague learning
and development
To prepare for the future, we’re creating an ambitious,
forward-thinking culture that champions continuous
learning and growth.
We’re committed to investing in people. From mastering
new technologies to nurturing future leaders and
supporting personal development, learning empowers our
colleagues and helps our business to grow.
We aim for our colleagues to learn for 35
hours a year and in 2025, they averaged 48
hours (2024: 62 hours).
We’veidentifiedanumberofkeyskillsthatweneed
to enhance and develop to support delivery against
our strategy. LinkedIn Learning courses and internal
learning pathways are available to help colleagues
improve these skills.
Our apprenticeship programme went from
strength-to-strength in 2025, and we
welcomed 36 people from across the business
to reskill so we can increase the talent in the
places it’s needed.
Asabuildingsociety,wefocusoureffortswherethey
matter most. We partner with local organisations to support
peopleinfinancialhardshipandimproveaccesstofinancial
educationandemployabilityskillstrainingtobuildfinancial
resilience to help with access to secure, sustainable homes.
Through colleague volunteering, our FareShare charity
partnership, and donations from the Society and members,
we’re proud to make a meaningful impact.
We contributed £3.1m through our
community programmes in 2025 and reached
over 24,300 people with personal financial
wellbeing support (2024: 27,600). This is a
slight reduction against the goal of 27,000
people.
You can find a breakdown of our community
contributions in the 2025 Sustainability Reporting
Framework Index and Datasheet.
Building skills and
employability
Our commitment to Bradford
In 2025 we focused a lot of support on helping people into
work in our Bradford heartland. The city has above-average
unemployment rates
27
, and one in four people of working
age were not working or looking for work in 2024.
Strategic Report > Our Social and Environmental Impact
Communities
In 2025, many families continued
tofacefinancialhardship,drivenby
rising housing costs and stagnant
wages. Children, young adults, low-income
families, and older generations were among
themostaffected.
27
https://www.ons.gov.uk/visualisations/labourmarketlocal/E08000032/
We invested time, money and resources into some of
Bradford’s most deprived areas to give people the skills,
knowledge, training or experience to help them unlock
opportunities to work.
We welcomed 792 students into our Bradford
office to experience a working environment
and AQA-certified employment-related
workshops.
66% of students said they’d improved their employability
skills and 84% now know what skills employers are
looking for - preparing students for work and helping their
understandingofdifferentrolesandopportunities.
A further 360 students received insight into the world of
work through Work Immersion experiences held at their
school. A total of 1,200 Year-10 students were reached
through the Work Immersion programme in 2025.
In 2024, the Yorkshire Building Society Charitable
Foundation launched the Building Bradford Skills Fund.
Through this, four charities shared a £1m three-year
investmentfromtheSocietytoaddressspecificskillsand
employment challenges the city faced.
Bradford Central Foodbank, Lower Grange Community
Association, The Cellar Trust and Smart Works all launched
their projects during 2025, with each actively helping
people into work. 1,100 people were supported through the
projects overall in 2025.
Building Skills for the Future
programme
Our partnership with FareShare also contributed to
improving employability. In 2025, through colleague
fundraising, member and customer donations and a
contribution from the Society, we raised £336,000 to fund
the Building Skills for the Future programme, which helped
1,400 people to prepare for work.
Building financial resilience in
our communities
Helping people understand money, regardless of age, is key
toimprovingfinancialresilience.
According to our research
28
, more than nine in 10 (95%)
parents of school-aged children think it’s important their
childrenexperiencefinancialeducation,andalmost
the same amount (89%) say it should be taught in
schools. That’s why we submitted recommendations to
the government’s Curriculum and Assessment Review,
callingformandatoryfinancialeducationforallchildren
in England, including those in primary school. We were
delighted to see the government’s Financial Inclusion
Strategyconfirmthatfrom2028,thiswillbecomeareality.
In 2025, and in its absence, we continued to play our part
throughourMoneyMindsfinancialeducationprogramme.
In 2025 the programme reached 15,100,
children, young people and adults.
Our colleagues delivered face-to-face sessions in schools,
branches and community settings, covering a range of
topics, from budget management to fraud and scams for
adults, and understanding where money comes from to
planning the cost of a party for children.
Supporting our communities
The Yorkshire Building Society Charitable Foundation is a
registered charity with its own Board of Trustees,
27% of Yorkshire Building Society savings and mortgage
accountsareoptedintotheFoundation’sflagshipinitiative,
theSmallChangeBigDifference
®
scheme. By opting in, they
come together and turn pennies into meaningful donations
– up to £2,500 - to registered charities across the UK.
In 2025, 227 charities received a total of
£358,000 in donations (2024: £385,000, 388
charities), all nominated by our members and
colleagues.
Every colleague employed by us gets up to 31 hours a
year to volunteer and in 2025, 29% of colleagues – 1,100
people - gave their time to good causes (2024: 35%).
It might have been supporting our charity partner,
deliveringfinancialeducation,providingpro-bonosupport,
becoming a trustee, school governor or mentor, or giving
practical support to causes that help people out of
financialhardship.
More information about the impact of our community
impact can be found in the Sustainability Report.
28
A survey of 2,000 Parents of 5 to 17 year olds, undertaken by Opinium in March 2025
36 37Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Committed to reducing our
impact
We’re committed to understanding and reducing our
carbonfootprint,andthroughout2025,we’veredefinedour
climate strategy, considering the frameworks deemed best
practice and the current position of the emissions footprint.
Net Zero transition plan
In2025wedevelopedourNetZeroTransitionPlan,
focussing on the emissions arising from our own operations
and supply chain.
The Executive Team and subsequently Board, also
committed to bringing forward our Scope 1 and 2 Net
Zerotargetfrom2035to2030,toreflectourcommitment
to protecting the planet and making sure people have
sustainablehomesfitforthefuture:
•
Target:NetZeroinScope1by2030(location-basis)
•
Target:NetZeroinScope2by2030(market-basis)
•
Ambition:NetZeroinScope3Operational
emissions by 2050
•
Ambition:NetZeroinScope3Financed
emissions by 2050
The actions to support the delivery of the transition plan
replace the previous Climate Commitments we had.
Full details of the old Climate Commitments can be
found on page 22 of the Annual Report and Accounts
2024.
Outstanding actions will help inform our new plans.
Operational impact
Progress in reducing emissions across Scope 1 and Scope
2 categories has been made since 2023, due to a mix
ofenergyefficiencyinitiativesandchangestotheway
we work, including branch or agency closures, increased
remote working, and a return to normal ventilation after the
pandemic. But we’re committed to doing more.
Energy
The largest proportion of our energy use comes from the
operationofofficeandretaillocations(95.6%).In2025,we
increased the amount of electricity we generate ourselves.
New solar panel car ports at our Bradford
office generated 374,250 kWh, which
contributed 3.1% of our energy use across all
our sites.
We’re planning a second phase of solar panels to help
further reduce our electricity consumption from the
national grid, as we expect this to increase as we replace
our gas boilers with electric alternatives across our sites
starting in 2026.
WecontinuetomaintainourNetZeropositionforScope
2 emissions on a market-basis as we continue to procure
renewable energy.
Our full carbon footprint, and details of how we
calculated these emissions, can be found on page 48.
Business travel
Businesstravelalsoformsasignificantpartofourcarbon
footprint and is an emissions source we’re looking to
decarbonise as far as possible. Our business travel
emissions in 2025 were 258.3 tCO2e.
Over the course of 2026 we’ll be reviewing our business
travel policy, assessing various changes that could be made
to help limit and reduce our travel emissions.
Supply chain
In 2025 we updated our YBS Standards for Suppliers to be
clearer on how we expect those we work with to manage
their environmental impact.
We’re strengthening our engagement with existing
suppliers to better understand what they’ve done to date,
and how we can work with them to reduce their emissions.
More details, including our broader environmental
impact are available on pages 48 and in 60 in the
Sustainability Report.
Strategic Report > Our Social and Environmental Impact
Climate
We care for our collective home
by accelerating our transition to
NetZeroandhelpingmembers
make homes sustainable, resilient and part of a
healthy planet.
Helping members, customers
and colleagues reduce their
impact
Helping our members, customers and colleagues to make
greener choices, means together we can reduce our
environmental impact, which is good for the planet and
helps build a better future for all.
It starts with championing climate with colleagues. Our
network of 25 Climate Champions helped us to raise
awareness of Climate Change training and share their
knowledge with teams locally to encourage positive action.
Preparing members and customers
We’re helping homeowners navigate the physical and
transition risks associated with climate change and the
move to a low-carbon future.
Transition risks
As a lender supporting 3.3% of the mortgage
market, we provide education and guidance to help
customersunderstandtheiroptionsandoffersolutions
likeanadditionalloantosupportenergyefficient
home improvements.
WealsomonitortheEnergyPerformanceCertificate(EPC)
ratingsacrossourmortgageportfolioandofferproductsand
services that meet customer needs, like Snugg, which helps
homeowners improve their EPC rating (more on page 46).
Physical risks
We’ve worked with the wider industry to raise awareness
oftheissueoffloodingforhomeowners,andhowitcould
impact insurance prices in the future when Flood Re – a
government insurance scheme - ends.
We also took part in a project with the UK Centre
for Greening Finance and Investment (CGFI) to
improvehowfloodingandoverheatingrisksare
communicated to homeowners.
Full details of our climate risks, alongside opportunities
is available in the Task Force on Climate-related
Financial Disclosures (TCFD) report on page 42.
Working in partnership and calling
for change
We partner with organisations who are as committed as
us to doing the right thing and made sure we had our say
on several policy discussions during 2025. All had the
potential to help homeowners reduce their impact on
climate change, including the proposed EPC Reform and
changes to the Boiler Upgrade Scheme.
Together we
can reduce our
environmental
impact.
38 39Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Strategic Report > Our Social and Environmental Impact
TCFD
Recommendation
CFD
Requirement
Summary Disclosure Location
Governance
Describe the Board’s
oversight of climate-
related risks and
opportunities.
Companies Act
414CB (2A) (a)
OurBoardhasultimateaccountabilityoffinancial
risks for climate change and the associated
responsibilities.
Our climate governance structure was strengthened
in 2025 through the establishment of a new board-
level committee, the Environmental and Social
Purpose Committee.
Corporate Governance
Report, ARA page 64
Describe management’s
role in assessing and
managing climate-
related risks and
opportunities.
Companies Act
414CB (2A) (a)
The accountability for the senior management
function for climate remains shared between the
ChiefFinancialOfficerandChiefRiskOfficer.
Corporate Governance
Report, ARA page 64
Strategy
Describe the climate-
related risks and
opportunities the
organisation has
identified over the
short, medium and long
term.
Companies Act
414CB (2A) (d)
Climate-relatedfinancialrisksandopportunities
touch on many aspects of our risk categories. A full
breakdown is provided.
Climate Risk
and Opportunity
Management section,
ARA page 42 - 47
Describe the impact of
climate-related risks
and opportunities on the
organisation’s business,
strategy and financial
planning.
Companies Act
414CB (2A) (e)
Climate-relatedfinancialrisksandopportunities
impact our organisational strategy and Purpose. This
is discussed in the Climate report.
Climate Risk
and Opportunity
Management section,
ARA page 42 - 47
Describe the resilience
of the organisation’s
strategy, taking into
consideration different
climate-related
scenarios, including a
2°C or lower scenario.
Companies Act
414CB (2A) (f)
Scenario analysis is undertaken to assess our
resilience to climate change. Analysis shows that
in the short to medium term, our organisation is
resilient to climate change.
Climate Risk
and Opportunity
Management section,
ARA page 42 - 47
Task Force on Climate-related Financial Disclosures
Weknowthefinancialservicessectorplaysavitalroleinsupportingthetransitiontoalowcarboneconomy.
Thistablesummarisesourcommitmenttoeffectivelygovern,manage,andmonitortherisksandopportunitiesarisingfrom
climate change in line with our obligations under the Prudential Regulation Authority’s Supervisory Statement 5/25 (SS5/25).
The structure follows the requirements of the Taskforce for Climate-related Financial Disclosure (TCFD), referencing where,
throughout the ARA and Sustainability Report, the relevant information can be found.
Additionally, this report provides information in line with our obligations under:
•
The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022.
•
The Companies (Directors’ Report) (Energy and Carbon Report) Regulations 2018.
TCFD
Recommendation
CFD
Requirement
Summary Disclosure Location
Risk Management
Describe the
organisation’s processes
for identifying and
assessing climate-
related risks.
Companies Act
414CB (2A) (b)
Scenario analysis and our governance structure
underpins how climate-related risks and
opportunitiesareidentifiedandassessed.
Climate Risk
and Opportunity
Management section,
ARA page 42 - 47
Describe the
organisation’s processes
for managing climate
related risks.
Companies Act
414CB (2A) (b)
Our climate governance structure and the Enterprise
Risk Management Framework ensures climate risks
are managed appropriately.
Climate Risk
and Opportunity
Management section,
ARA page 42 - 47
Describe how processes
for identifying,
assessing, and managing
climate-related risks
are integrated into the
organisation’s overall
risk management.
Companies Act
414CB (2A) (c)
Climate risk is now a distinct risk category within
risk frameworks.
Climate Risk
and Opportunity
Management section,
ARA page 42 - 47
Metrics & Targets
Disclose the metrics
used by the organisation
to assess climate-
related risks and
opportunities in line
with its strategy and risk
management process.
Companies Act
414CB (2A) (h)
EnergyPerformanceCertificate(EPC)datais
presented to evidence our transition risk for the
mortgage portfolio.
Flood risk, subsidence risk and coastal erosion risk
are also presented, showing minimal impacts in the
short to medium term.
Opportunity metrics are also presented, including
the number of people utilising the Snugg
partnership.
Sustainability Report,
page 51 - 52
Metrics and Targets
section, ARA page
47-52
Disclose Scope 1, Scope
2, and, if appropriate,
Scope 3 greenhouse gas
(GHG) emissions, and
the related risks.
Companies Act
414CB (2A) (h)
Full carbon footprint is presented for all material
emissions categories.
Internal energy use and colleague intensity ratios
are also shown, in line with the Streamlined Energy
and Carbon Report requirements.
Supplychainandfinancedemissionsarereporteda
year in arrears due to the nature of the input data.
Metrics and Targets
section, ARA page
47-52
Describe the targets
used by the organisation
to manage climate-
related risks and
opportunities and
performance against
targets.
Companies Act
414CB (2A) (g)
OurNetZerotargetforScope1and2hasbeen
brought forward, aligning to renewed ambition to
reduce environmental impact.
Climate report, ARA
page 38
40 41Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Strategic Report > Our Social and Environmental Impact
Risk Nature Risk description Time horizon Strategy
Credit risk Physical Increased severity and frequency
of extreme weather events can
impact collateral value and
pressure households with higher
costs, increasing the probability of
default and the loss given default.
Long-term Physicalrisk(floodrisk,
subsidence & coastal erosion)
data and transition risk (EPC)
data is collected quarterly on
the back book. Physical risk
data is collected and projected
across future climate scenarios of
differinglevelsofgreenhousegas
concentrations.
Building insurance is required
under mortgage terms.
For buy-to-let lending, we require
properties to comply with legal
obligations and have a minimum
EPC of E or valid exemption in
place.
We have quantitative credit
risk appetites in place covering
transitionrisk(EPC)andfloodrisk.
Transition Government policy to facilitate a
transition to a low-carbon economy,
suchasminimumenergyefficiency
requirements, may impact collateral
value, impacting the loss given
default.
Macroeconomic downturn from
a disorderly transition will place
pressureonborroweraffordability,
increasing the probability of
default.
Short to
medium-term
Operational
risk
Physical Extreme weather may cause
damagetoouroffices,branches,or
supply chain, preventing us from
operating as usual. Employees’
homes may be impacted, reducing
productivity, and customers’ homes
may be impacted, driving call
volumes.
Long-term Weconsiderspecificclimate
related events during operational
resilience testing as appropriate.
Transition As the UK transitions to a low-
carbon economy, some of our
suppliers may cease trading or have
to materially change the service
they provide us, impacting our
ability to operate as usual.
Short to
medium-term
Capital risk Physical
and
Transition
Extreme weather events and
transitional policies may generate
credit defaults and operational
losses which we’d need to absorb.
Increased exposure to higher
climate related assets may require
additionalcapitalbuffers.
Medium to
long-term
Climate change risk forms part
of our annual Pillar 2a risk
assessment within the ICAAP.
Climate risk and opportunity management
Our climate-related financial risks
The table below discloses the climate-related risks expected to impact our organisation over the short, medium
and long-term
29
.
•
‘Physical’ risks arise from changes to the environment that may damage the integrity of a property, including
acuteweatherevents(e.g.flooding)andchronicchangestolocalenvironments(e.g.coastalerosion).
•
‘Transition’ risks arise from changes in the wider economy as it moves toward a low-carbon state, including
changes to climate policy and regulation, technology developments, and shifting consumer attitudes.
Further quantified information on how we monitor physical and transition risks can be found in Metrics and
targets, and in the Sustainability Report.
29
Short term: 0 – 5 years; Medium term: 5 – 15 years; Long term: 15+ years.
Risk Nature Risk description Time horizon Strategy
Regulatory
risk
Transition UK central and devolved
governments continue to alter
the course of the climate policy
landscape, impacting obligations
on lenders, landlords and
homeowners.
Short to long-
term
We undertake regular horizon
scanning activities to mitigate
against this risk.
Market risk Physical
and
Transition
Markets react to physical and
transition events, such as extreme
weather or government policy,
resulting in unexpected repricing
offinancialassetsandliabilities.
This repricing may also occur
due to macroeconomic reactions
from a transition to a low-carbon
economy.
Medium to
long-term
We have embedded qualitative
climate related risk consideration
into our Market Risk policy.
Funding and
Liquidity risk
Physical
and
Transition
Physical and transition risk factors
have the potential to reduce
savings balances held on our
balance sheet, the eligibility of
loans for securitisation and costs
of issuance of regulated mortgage-
backed securities.
Medium to
long-term
We completed a high-level
qualitative assessment of climate
related impacts within our ILAAP.
Climatechangemayalsobecomeevidentacrossabroadrangeofnon-financialrisksthatrequirecarefulconsideration.These
include conduct and reputational risks, as well as risks linked to our modelling, our strategy and through our people policies.
Change risk also plays a role, as organisations adapt to evolving expectations and regulatory requirements. We recognise
these additional considerations and will look to progress assessment and mitigation strategies as we continue to embed
climate change risk across our business.
42 43Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Strategic Report > Our Social and Environmental Impact
The climate change model operates by adjusting the
probability of default and the losses given default within
our existing stress testing model, in response to both
physical and transition risk.
Climate-related risks have the following
impact:
Physical risks impact:
•
The valuation of property, and therefore the loss given
default, based on assessment of indirect, long-term risk
of physical damage as the market price changes and
consumers face costs of additional insurance and to
resolve physical damage.
•
The valuation of the property due to direct physical
damageifthepropertygetsflooded,impacting:Theloss
given default; the loan-to-value, and therefore indirectly
the probability of default.
•
The probability of default directly due to additional
financialstrainontheborrowerfromthecostofrepairs.
Transition risks impact:
•
Theaffordabilityofthemortgageandbyextensionthe
probability of default.
•
The valuation of the property due to rising requirements
andconsumerexpectationsonenergyefficiency.
•
Through macroeconomic transition impacting the
probability of default on the portfolio.
The model shows that over the long-term, physical risks
have the largest potential for losses versus transition
impacts. Transition impacts are the more immediate risk
for us as physical risks do not manifest fully until close
to 2050. The nature of the transition impacts the volume
of losses with the model showing a disjointed or rushed
transition to be the most detrimental.
We’re cautious of the limitations within climate modelling
and are taking steps to improve it. In 2025, we enhanced
the capabilities of the climate model to incorporate
dynamic balance sheet assumptions, including new lending,
balance amortisation and redemption assumptions, to
align the model with more conventional stress testing and
forecasting. The dynamic balance sheet assumptions have
been segmented by high and low climate risk, this should
enable the model to be used for wider strategic decision-
making purposes, aligned to the PRA’s requirements in
SS5/25
31
. Modelling of climate change impacts continues
to be complex with a high degree of uncertainty. Despite
this, we’re well positioned to face the challenges posed by
climate change, due to our geographically diverse lending
portfolios,andprudentLTVprofile.Wewill,asappropriate,
continue to feed climate risk exposures into its strategic
decision making.
30
Representative Concentration Pathways (RCP) are a recognised series of greenhouse gas concentration trajectories. The higher the RCP, within a given scenario,
the greater the concentration of greenhouse gases in the atmosphere. RCP provide the bases for the extent of the severity of physical risks throughout the
scenario timelines.
31
https://www.bankofengland.co.uk/prudential-regulation/publication/2025/december/enhancing-banks-and-insurers-approaches-to-managing-climate-related-risks-ss
The resilience of our strategy – scenario analysis
To quantify the risks associated with climate change, we conduct climate scenario modelling to a 2050 time horizon on
our retail and commercial lending portfolios. The climate change model is built on our current credit stress testing models,
adding the impact of physical and transition risks associated with climate change while retaining the core methodology for
calculating losses.
Scenario Overview
Early Policy
Action
The transition to a carbon-neutral economy starts early and is gradual and moderate. Carbon prices and other
policies are introduced slowly and the increase in global warming stays below 2oC, in line with the Paris
Agreement. (RCP 2.6
30
).
Late Policy
Action
The global climate goal is met but the transition is delayed until 2031 and is more sudden and substantial.
This results in a material short-term macro disruption, with an economic recession, falls in property and equity
prices, and changes in interest rates. (RCP 6.0).
No Additional
Policy Action
Nopolicyactionbeyondthatwhichhasalreadybeenenactedisdelivered.Thetransitionisinsufficientforthe
world to meet its climate goal, leading to severe physical risks, materially lower trend growth rates, and impact
on asset prices. (RCP 8.5).
How we identify and assess climate-related risks
Climate scenario analyses are a foundational step in our process for identifying and assessing climate-related risks. The three
scenarios discussed previously are used to simulate potential future states dependent on the scale of action in tackling
climate change. The conclusions of the scenario analysis are used to facilitate discussions in selected meetings across our
organisation. While climate-related risks are incorporated into our ICAAP, further actions are required to embed the scenario
analysis within our strategy. In 2025 the following working groups and committees assessed the following:
How we manage climate-related risks
Climate Risk is a sub-category of Sustainability Risk, which is designated a Tier 2 risk category within the Society’s Enterprise
Risk Management Framework. Centralising climate risk as a distinct risk category, over designation as a cross-cutting risk,
enables a more focused approach in coordinating how we manage the risks arising from climate change.
Our Credit Risk team alongside Environmental Sustainability have reviewed climate-related key risk indicators to ensure
we continue to have appropriate limits to monitor the physical and transition risks relevant to our lending portfolios. These
measures are reviewed and updated as required on an annual basis.
During the year, our climate risk scenario analysis fed into our credit risk, risk appetite and key risk indicator review.
Group Discussion
Climate Risk
Working Group
•
Climate-relatedriskmanagementinformationincludingenergyperformancecertificates,floodrisk,
subsidence, and coastal erosion.
•
Progress and input for climate risk modelling and enhancement to a dynamic balance sheet basis.
•
Overview of the PRA CP10/25 updates to SS3/19 enhancing banks’ and insurers’ approaches to managing
thefinancialrisksfromclimatechange.
Asset and
Liability
Committee
•
Climate Change Risk Pillar 2A Risk Assessment outputs presented as part of our annual ICAAP governance
process.
•
Reviewed policy updates as appropriate, including Tier 1 Financial Risks inclusion of climate related policy
statement(s).
Environmental,
Social and
Governance
Committee
•
DiscussiononapprovingourNetZeroTransitionPlansandupdatestoNetZerotargets.
•
Sight of regular climate risk metrics and update received on climate risk action plan.
Retail and
Commercial
Credit Risk
Committee
•
Overview of climate change and associated risks, including updates to KRI in regards to climate-
related risks.
•
Presented with a Credit Risk Climate Action Plan, documenting progress to date and future actions to
improve climate-related risk management capabilities.
Executive Risk
Committee
•
Reviewed updated Credit Risk KRI’s including EPC and Flood Risk.
•
UpdatesareincludedintheChiefRiskOfficerreportandforwardedontoBoardRiskCommittee.
44 45Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Strategic Report > Our Social and Environmental Impact
Understanding the risks of our lending book
We gather several data sets relating to the physical and transition risks of our mortgage book, to understand any potential
future impact of climate change:
•
EnergyPerformanceCertificates(EPCs)recordtheenergyefficiencyofapropertyandactasaproxyforunderstanding
theemissionsthepropertygenerates.Theyalsoprovideinsightonhowaproperty’senergyefficiencycouldimprovevia
retrofitactivities,andthereforeareakeyinsightintothetransitionrisksofthemortgageportfolio.
• In 2025, 59.4% of our retail portfolio had a valid EPC, down from 2024 (60%). Of those with a valid EPC, 47.6% are EPC
C or above (2024: 45%), with 97.9% having the potential to be EPC C or above (2024: 98%).
• In 2025, 69.5% of our commercial portfolio had a valid EPC. Of those with a valid EPC, 61.8% are EPC C or above, with
95.1% having the potential to be EPC C or above.
• Our full EPC breakdown for both retail and commercial mortgage portfolios can be found on page 51 of the 2025
Sustainability Report.
•
FloodingisthemostsignificantriskarisingfromclimatechangetoUKhomeowners,andpresentsafinancialriskto
mortgagelenders.Wegatherfloodriskdataforourmortgagebook:whilstthedatashowsthereisminimalriskforusinthe
short to medium term, climate modelling indicates this risk may rise in the long term. This data can be found on page 52 of
the 2025 Sustainability Report.
•
SubsidenceisalsoaphysicalriskarisingfromclimatechangethatcouldimpactUKhomeowners.Itislikelytoaffecta
smallerproportionoftheUKthanflooding,butneverthelessimportanttomonitor.Wegatherdatatounderstandtherisk
posedtoourmortgagebookandhavepublishedthisforthefirsttimeonpage52ofthe2025SustainabilityReport.
Our climate-related financial opportunities
The table below discloses the climate-related opportunities that could impact our organisation over the short, medium,
and long-term. We recognise that progress is dependent on technological and public policy changes, without which the
effectivenessoftheseopportunitiesmaybelimited.
Opportunity Description Time horizon Impact to YBS
Supporting
our
customers,
members,
and
colleagues
Raising awareness of, and supporting
how, members and customers can reduce
their own carbon footprint. Educating
our customers, members, and colleagues
about climate change and how homes are
impacted can improve climate resilience
of our mortgage portfolio and our owned
property.
Short to
medium-
term
Reducedenergyusefromourofficesand
branches,helpingusreachNetZeroin
Scope 1 and 2. Improved climate resilience
in our mortgage book could mitigate
climate-relatedfinancialrisksand/orreduce
financedemissions.
New
products and
propositions
Developing products and propositions
thatarealignedtoaNetZeroeconomy,for
example, by providing solutions to support
energyefficienthomes.
Medium to
long-term
In the future, a suite of new products
and propositions could help us attract a
customer base in a lower carbon economy.
Products that encourage low-carbon homes
couldhelpreducefinancedemissions.Our
environment-related products are discussed
on page 49 of the 2025 Sustainability
Report.
Engaging our
supply chain
Improved relationships, data and resilience
of our supply chain in the face of climate
change.
Short to
medium-
term
Improved data from our supply chain will
improve reporting of Scope 3 emissions and
ensure readiness for any impacts to service
due to climate change.
Reputation
for social
purpose
Being prepared for climate change and
its impacts to customers, members and
colleagues has a strong connection to our
Purpose of providing Real Help with Real
Life.
Short to
medium-
term
Maintaining our reputation for having a
strong social purpose will continue to drive
consumer and colleague interest and trust
in the brand.
Opportunity Description Time horizon Impact to YBS
Collaboration Working with others provides greater insight
into the solutions required to adapt and
mitigate climate change.
Short to
medium-
term
Delivers insight and fruitful working
relationshipsthatcanbringbenefits
to members and customers. Working
with others can deliver insight into new
technological and public policy change. For
further information on our collaborative
work in 2025, see page 50 of the 2025
Sustainability Report.
Improvements
to data quality
Thorough climate reporting requires access
to good quality data, which can enable good
decision-makingforthebenefitofmembers
and customers.
Short to
medium-
term
Access to good quality data enables
assessment of our current position and
development of a clear transition plan to
meet climate aims.
In 2025, we established the Climate Opportunities Group,
gathering experts from all areas of the business to explore
opportunities arising from climate change. This has included
how to maximise our partnership with Snugg, propositional
discussions and wider integration of climate opportunities.
The Climate Champion Network has also played a key
role in identifying opportunities across our organisation,
including in the branch network.
Further details of Snugg and the Climate Champion
Network can be found on page 49 of the 2025
Sustainability Report.
Climate-related opportunities are managed through various
functions and governance structures across our organisation
according to need. The Executive Environmental and Social
Purpose Committee (formerly Environmental, Social and
Governance Committee) is central to managing those
opportunities and giving a directive steer on how to manage
opportunities according to our Purpose priorities and
climate strategy.
There are a number of climate-related opportunities
available for our members, customers, and colleagues.
For further information on these opportunities , please
see page 12 and 49 of the 2025 Sustainability Report.
Metrics and targets
Our targets
Our refreshed targets can be found on page 38
of the ARA.
Our carbon footprint
This section of the report constitutes our Streamlined
Energy and Carbon Report (SECR), in line with obligations
under The Companies (Directors’ Report) (Energy and
Carbon Report) Regulations 2018.
46 47Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Methodology
High-level methodology statements can be found in the table below, with further details of our methodology found in the
Basis of Reporting in the 2025 Sustainability Reporting Framework Index and Datasheet.
Emissions Methodology
Energy use The carbon footprint is calculated using an operational control approach, encompassing all YBS-owned
and operated sites, where YBS Group has full authority to introduce and implement operating policies.
Activity-based data is used in line with the Greenhouse Gas Protocol and UK Government conversion factors
to determine the energy usage in kilowatt hours (kWh). Activity-based data is sourced from various places,
including from third-party bill validators, fuel sheets and expense reports. Data is validated and where not
available,estimatedfiguresareusedbasedonhistoricdata.For2025,themonthofDecemberhasbeen
estimated based on historic usage for gas and electricity. The reporting period for energy use is January to
December 2025.
Own operations
(Scope 1, Scope
2, Scope 3
Categories 3, 5,
6, 7)
The carbon footprint is calculated using an operational control approach, encompassing all YBS-owned and
operated sites, where YBS Group has full authority to introduce and implement operating policies. Activity-
based data is used in line with the Greenhouse Gas Protocol and UK Government conversion factors to
determine the carbon emissions in tonnes of carbon dioxide equivalent. Activity-based data is sourced from
various places, including from third-party bill validators, fuel sheets and expense reports. Data is validated
andwherenotavailable,estimatedfiguresareusedbasedonhistoricdata.For2025,themonthofDecember
has been estimated based on historic usage for gas, electricity, and water. In 2025, the emissions from water
supplyandtreatmenthavebeenfurtherrefinedandseparated,meaningthe2025operationalfootprintonly
includes emissions from water treatment, with emissions from water supply being included within the supply
chain emissions (Scope 3 Category 1). The reporting period for these emissions is January to December 2025.
Supply Chain
(Scope 3
Categories 1
and 2)
We calculate Scope 3 Categories 1 and 2 in line with the Greenhouse Gas Protocol spend-based methodology.
We use actual supplier data sourced by YBS and sector averages sourced from Open CEDA by Watershed. For
supplierswhereemissionsdataisdisclosed,asupplierspecificemissionsfactorismultipliedbyourspend
with that supplier. Where we do not have supplier emissions data, an average emissions factor is used based
on the sector of the supplier. The reporting period for these emissions is January to December 2024.
Financed
Emissions
(Scope 3 Category
15)
WecalculateourfinancedemissionsinlinewiththePartnershipforCarbonAccountingFinancials(PCAF)
methodology for residential mortgages and commercial real estate. Our approach utilises the full loan
balance and property value at origination to determine our contribution towards the emissions generated
from mortgaged properties, where a property’s valuation at origination is not available, we utilise the latest
indexed valuation. For residential real estate, emissions data is taken from the property’s Energy Performance
Certificate(EPC)rating.ForpropertieswithoutavalidEPC,inlinewithPCAFmethodology,weassumean
emissions value for the property based on the data within the PCAF emissions factor database. For commercial
realestate,emissionsdataistakenfromtheproperty’sEnergyPerformanceCertificate(EPC)rating.For
properties without a valid EPC, then average values are used based on known values within the commercial
real estate portfolio. The reporting period for these emissions is December 2023 to November 2024. For a
breakdown of our EPC data please see page 51 in the 2025 Sustainability Report.
Strategic Report > Our Social and Environmental Impact
Assurance
Selected metrics have been subject to independent limited assurance by PricewaterhouseCoopers LLP (PwC), as indicated by
a star (
). Details of the assurance are set out in the 2025 Sustainability Report Framework Index and Datasheet.
Internal Energy Usage (kWh) 2025 2024 2025 change from
2023 base year
Heating 3,607,001 3,579,712
32
-11.5%
Emergency fuel usage 16,684 64,412 -47.4%
Company owned vehicle transport (Maintenance) 542 4,324 -93.0%
Scope 1 Total 3,624,227 3,648,448
33
-12.0%
Associated emissions (tCO2e) 661 656 -11.6%
National Grid Electricity Consumption 7,174,535 8,148,043 -12.3%
Onsite Solar Electricity Generation Consumption 650,717 137,233 333.4%
EV Owned and Leased Vehicle Usage 1,741 987 767.0%
Scope 2 Total 7,826,993 8,286,263 -6.1%
Associated emissions (tCO2e) 1,270 1,687 -25.1%
Business Transport - expensed mileage 524,203 553,151 1.4%
Hire Cars 1,504 2,618 -58.4%
Scope 3 Total 525,707 555,769 1%
Associated emissions (tCO2e) 127 134 1.6%
Total Energy Use
11,976,927
12,490,480 -7.7%
Associated emissions (tCO2e) 2,058 2,477 -19.9%
Energy use and emissions report
In line with the Streamlined Energy and Carbon Reporting (SECR) requirements and prepared using the Environmental
Reporting Guidelines (March 2019), below is presented our internal energy use and associated emissions from business
activities.Some2024figureshavebeenrestatedafterreceiptofactualdataforutilitiesforQ42024,whichhadpreviously
been estimated, these have been highlighted in the table.
32
2024 Heating kWh previously reported as 3,760,518. The change is due to receipt of actual consumption data replacing historically estimated data for Q4 2024.
33
2024 Scope 1 Total kWh previously reported as 3,829,254. The change is due to receipt of actual consumption data replacing historically estimated data for Q4 2024.
48 49Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Carbon footprint
Our carbon footprint calculated on a location-basis can be seen below. We continue to purchase renewable electricity backed
byRenewableEnergyGuaranteeofOrigin(REGO)certificatesforallofourownedandoperatedsites,andsoourScope2
emissions are zero on a market-basis. This has been subject to limited assurance by PwC.. For further information see the Basis
ofReportinginthe2025SustainabilityReportingFrameworkIndexandDatasheet.Some2024figureshavebeenrestated
followingreceiptofactualdataforQ42024,whichhadpreviouslybeenestimated.Somerestatedvaluesalsoreflectupdated
methodologies that have been introduced in 2025.
As at 31 December 2025 2025 Location-based
emissions
tCO
2
e
2024 Location-based
emissions
tCO
2
e
2025 change from
2023 base year
Scope 1 Generation of heat (gas consumption) 660 655
34
-11.5%
Vehicles used on Society business 1 1 -53.5%
Refrigerant gases 231 32 8,419.8%
Biodiesel (back-up generators) 0.06 0.23 -47.4%
Total Scope 1
892
688
35
18.8%
Scope 2 Electricity consumption 1,270 1,687 -25.1%
Electricity for owned vehicle 0.31 0.20 643.2%
Total Scope 2
1,270
1,687 -25.1%
Scope 3 Category 3: Well-to-tank – Electricity 329 374 -12.4%
Category 3: Well-to-tank – Fuels 110 117 -11.3%
Category 3: Transmission and distribution
losses - Electricity
133 149 -9.6%
Category 3: Well-to-tank Transmissions
& Distribution losses - Electricity
28 32 -11.0%
Total Category 3 Fuel-related emissions
600
672 -11.5
Category 5: Water treatment
3
36
5 -63.1%
Category 5: Waste disposal
2 5 -74.0%
Category 6: Business travel - Transport and WTT
37
241 288 -12.1%
Category 6: Business travel – Hotel
17 19 -29.7%
Total Category 6 Business travel
258
307 -26.1
Category 7: Employees Commuting 2,309 2,265 8.3%
Category 7:HomeOffice 1,397 1,205 28.3%
Total Scope 3 (Categories 3, 5, 6, 7) 4,569 4,459 7.1%
Total Carbon Footprint 6,731 6,834 -0.3%
34
2024 Emissions from gas consumption previously reported as 688 tCO2e. The change is due to receipt of actual consumption data replacing historically estimated
data for Q4 2024.
35
2024 Emissions from Scope 1 previously reported as 721 tCO2e. The change is due to receipt of actual consumption data replacing historically estimated
data for Q4 2024.
36
Thesignificantdecreaseinwateremissionsisduetousnolongercapturingemissionsfromwatersupplyinthiscategory.Emissionsfromwatersupplyarenowreported
in Scope 3 Category 1. Scope 3 Category 5 only reports emissions from water treatment.
37
A full breakdown of our travel emissions, including well-to-tank (WTT) is provided on page 47 of the 2025 Sustainability Report.
Strategic Report > Our Social and Environmental Impact
38
The PCAF data quality score is measured on a scale of 1 to 5, with 1 being of highest quality data.
Outside of scope biogenic emissions 2025 biogenic content (tCO
2
) 2024 biogenic content (tCO
2
)
Biodiesel (back-up generators) 4.08 15.76
In addition to the Scope 1 emissions from biodiesel, we’ve calculated the following out-of-scope biogenic emissions.
Additionally, the emissions arising from our supply chain as of 31 December 2024 are shown below. Due to the nature of
thedataset,theseemissionshavebeenpublishedayearinarrears.Thecolumnshowingpreviouslyreportedfiguresshows
the value as published last year as well as a restated value. This is due to a change in the methodology, where we now
use industry sector emissions factors from Open CEDA by Watershed, which is explained further on page 48 of the 2025
Sustainability Report.
The increase in our Capital Goods emissions in 2024 was in part due to the spend on developing our new solar panel car
ports at two of our sites.
Supply chain emissions
As of 31 December of reported year
2024
tCO
2
e
2023 (tCO2e) Restated
2023 As published
2024 change from 2023
base year
Scope 3 Category 1
Purchased goods and services
13,420
14,676
16,110
-8.6%
Scope 3 Category 2
Capital goods
4,748
2,974
4,725
59.7%
Total 18,168 17,650
20,835
2.9%
Financed emissions
As of 30 November of reported year
2024 2023 Restated
2023 As published
2024 change from
restated 2023 base
year
Scope 3
Category 15
Investments:
Retail portfolio
Absolute Financed Emissions (tCO
2
e)
796,355
790,479
662,265
0.7%
Total gross exposure accounted for in stated emissions £47,331m £44,678m
£41,702m
5.9%
Physical Intensity (kgCO
2
e / m
2
)
50.8
51.6
45.26
-1.5%
PCAF data quality score
38
3.82
3.83 -0.3%
Scope 3
Category 15
Investments:
Commercial
portfolio
Absolute Financed Emissions (tCO
2
e)
35,423
34,465
30,795
2.8%
Total gross exposure accounted for in stated emissions £2,169m £1,846m 17.5%
Physical Intensity (kgCO
2
e / m
2
)
76.6
81
71.99
-5.4%
PCAF data quality score
3.64
3.67
3.62
-0.8%
Ourfinancedemissionsareasfollowsasof30November2024.Itisnecessarytopublishtheseemissionsayearinarrearsto
ensureafulldatasetfortheyearisgathered.Thecolumnshowingpreviouslyreportedfiguresshowsthevalueaspublished
last year as well as a restated value. This is due to a change in the methodology, which is explained further in the 2025
Sustainability Report.
50 51Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Intensity ratio
In 2025, we changed the criteria for who’s captured in the greenhouse gas emissions colleague intensity ratio. The colleague
number, measured in full time equivalent (FTE), now only captures people directly employed by us, whereas previously it also
capturedagencystaffandcontractors.Thisisamoreaccuraterepresentationofthenumberofpeoplethatdirectlycontribute
to the carbon footprint, and also aligns to other sustainability reporting.
Thecolleagueintensityratiocanbefoundinthebelowtable.The2024figurehasbeenrecalculatedaccordingtothenew
method of identifying FTE value. The ratio has been calculated using location and market-based emissions for Scope 1, Scope
2, and Scope 3 Categories 3, 5, 6, and 7.
Explanation of carbon footprint
Scope 1 emissions include those from use of natural gas for heating, diesel for maintenance vehicle, biofuel for back-up
generator and refrigerant gas releases. Our scope 1 emissions have increased in 2025 compared to 2024 and to the base
year 2023, due to an increase in emissions from refrigerant gas releases (including leaks, maintenance-related releases, and
end-of-life disposal). Otherwise, emissions from other scope 1 emissions sources have marginally decreased.
Scope 2 emissions arise from purchased electricity use, for the running of YBS-owned and operated sites and the electric
vanusedformaintenancepurposes,whichischargedattheBradfordYorkshireDriveoffice.In2025,scope2emissionshave
decreasedsignificantlycomparedto2024andtothe2023baseyear.Thisispartlyduetosevensitesnolongerbeinginour
operational boundary, for example due to closure. However, a reduction is also seen due to the increased on-site generation
ofelectricitythroughnewlyinstalledsolarpanelsattheBradfordYorkshireDriveoffice.
Scope 3 emissions for our own operations relate to aspects of our supply chain and include fuel-related emissions, emissions
from waste and wastewater, business travel, and colleague home-working and commuting. These emissions rose very slightly
in 2025 due to an increase in the number of people working for YBS. We’re working to improve our understanding of Scope
3 emissions categories and continue to publish and seek improvements to all material emissions categories. The table below
shows the status for each category not currently reported.
2025 2024 Restated
(2024 As published)
Colleague intensity ratio Colleagues
(FTE)
GHG Emissions
tCO
2
e
Intensity ratio
tCO
2
e/FTE
Colleagues
(FTE)
GHG Emissions
tCO
2
e
Intensity ratio
tCO
2
e/FTE
Location 3,352 6,731 2 3,263
4,923
6,834
6,867
2.1
1.4
Strategic Report > Our Social and Environmental Impact
Scope 3 emissions category Detail
4. Upstream transportation &
distribution
Not yet calculated. Initial understanding of the available data. Currently
captured within our supply chain emissions.
8. Upstream leased assets Not yet calculated. Initial understanding of the available data. Currently
captured within our supply chain emissions.
9. Downstream transportation and
distribution
Not yet calculated. Initial understanding of the available data. Currently
captured within our supply chain emissions.
10: Processing of sold products Not applicable
11. Use of sold products Not applicable
12. End of life treatment of sold
products
Not applicable
13. Downstream leased assets Not yet calculated. Initial understanding of the available data. Currently
captured within our supply chain emissions.
2026:Tobepublishedforthefirsttime
14. Franchises Not applicable
Understanding our broader environmental
impact
We’re also taking steps to understand our broader
environmentalimpactandgatherdatasuchasthelandfill
diversion rate. In 2025, 98.2% of our waste was diverted
fromlandfill(2024:97.0%).
For a full breakdown of how our waste is treated
and our plans to reduce waste, see page 25 of the
2025 Sustainability Reporting Framework Index and
Datasheet.
Additionally, we’re starting to take steps to assess our
impact on nature by undertaking an assessment of the
biodiversity of woodland we own in Bradford. This initial
biodiversity survey is due to take place in Spring 2026 and
will determine the next steps for our nature journey.
Responsible Business
Foundations
As a purpose-driven business, we know how we do business
is as important as what we do, and why we do it.
We’re taking action to make sure we meet our regulatory
responsibilities and have the right systems, processes and
governance in place to protect our members, customers,
colleagues, and the organisation from potential risks.
A comprehensive overview of our responsible business
foundations is available in the 2025 Sustainability
Report.
Non-financial and
sustainability information
statement
We aim to voluntarily apply the requirements of s414CB
oftheCompaniesAct2006byincludingnon-financial
information intended to help stakeholders understand our
positiononkeynon-financialmatters.Informationregarding
these matters can be found in the following sections of
this document.
Area Strategic report reference
Environment
matters
See the Climate subsection of the
Strategic Report and the 2025
Sustainability Report
Employees See the Colleagues subsection of
the 2025 Sustainability Report
Social matters See the Purpose in action and
Communities subsections of the
2025 Sustainability Report
Respect for
human rights
See the Responsible business
foundations – Human rights and
modern slavery subsection of the
2025 Sustainability Report
Anti-corruption
and anti-bribery
See the Responsible business
foundations – Anti-bribery and
corruption subsection of the 2025
Sustainability Report
Our business
model
See Our business model
subsection of the Strategic Report
Principle risks See the Risk overview section of
the Strategic Report
Key performance
indicators
See Performance at a glance
section in the Introduction
52 53Introduction Strategic Report Governance Financial Statements Other Information
Yorkshire Building Society Annual Report and Accounts 2025
Governance
In this Section
55 Our Board and Executive Team
64 Corporate Governance Report
82 Board Governance and Nominations Committee Report
89 Board Audit Committee Report
97 Risk Management Report
112 Board Environmental and Social Purpose Committee Report
114 Directors’ Remuneration Report
126 Directors’ Report
131 Independent Auditors’ Report to the Members of
Yorkshire Building Society
Details of our Board and Executive Team
are set out in the following section.
For information regarding our Board and any changes during 2025 see
the Corporate Governance Report.
Our Board and
Executive Team
55Introduction Strategic Report
Governance Financial Statements Other Information
54
Yorkshire Building Society Annual Report and Accounts 2025
Annemarie Durbin BComm, LLB, MSc
Board Chair
Joined in 2023 as Board Chair Designate.
Became Board Chair in 2024.
Background and career
Annemarie has over 35 years of international business
and banking experience. She has worked across retail,
commercial, corporate and institutional banking. Most of
her executive career was at Standard Chartered, a FTSE
100 international bank, where she ultimately joined the
Group Executive Committee.
She held senior global roles at Standard Chartered,
including CEO and Executive Director of its listed
business in Thailand and CEO in the Philippines.
Annemarie’s Non-Executive Director positions have
included Petershill Partners PLC, WH Smith Plc,
Santander UK plc, Chair of Cater Allen Limited and Chair
of the FCA’s Listing Authority Advisory Panel. She is also
an executive coach and mentor.
Skills and experience
•
Extensive expertise in banking, leadership and talent,
transformation and corporate governance.
•
Significantexperienceinremuneration,includingas
a Remuneration Committee Chair and in audit, risk
and responsible banking from committee roles at
Santander UK plc.
Other roles
Senior Independent Director and Chair of Remuneration
Committee at Persimmon Plc.
Background and career
PeterwastheChiefFinancialOfficerforesureGroupplc
during a period of digital transformation for the business.
Beforethat,hewasChiefFinanceOfficeratTescoBank
and Virgin Money, later becoming Group Integration
Director at Virgin Money. He has also held senior roles at
RBS Insurance, Standard Life and Deloitte.
Skills and experience
•
Over25yearsinfinanceleadershiprolesacross
banking and insurance.
•
Expertise in managing growth and transformation in
consumer-focused businesses.
Other roles
None.
Peter Bole MA, CA
Independent Non-Executive Director
Joined the Board in 2024.
Key
Board Audit
Committee
Board Governance and
Nominations Committee
Board Risk
Committee
Board Remuneration
Committee
Board Environmental and
Social Purpose Committee
Committee
Chair
Board Consumer Duty /
Member Champion
Whistleblowing
Champion
Non-Executive Director for
Workforce Engagement
BAC BGNC BRC REM BESPC
Governance > Our Board and Executive Team
BGNC bAC
REM
BRC
Elaine Bucknor
Independent Non-Executive Director
from
1 January
2026
from
1 January
2026
Joined the Board in 2025.
Background and career
Elaine has held executive, operational and consultancy
roles with leading companies in Telecommunications,
Media, Technology, Travel and Utilities.
Her last executive role was at Sky as Group Director
of Technology Strategic Services and Group Chief
InformationSecurityOfficer.Sheledtechnology
strategy and strengthened cybersecurity across the
organisation. Elaine has previously held Non-Executive
Director roles at Darktrace plc, Notting Hill Genesis and
Smoove Limited.
Skills and experience
•
30 years in technology, delivering complex
multinational programmes.
•
Expertise in technology strategies to support
organisational transformation and growth.
Other roles
Non-ExecutiveDirectorforHoptroffLondonLimited,
Currys Plc and Reed Global Limited. Strategic advisor to
PwC and an advisor to RiverSafe Limited and ISTARI.
Background and career
Angela spent 20 years at Aviva PLC in senior roles,
includingChiefExecutiveOfficerofUKLife,whereshe
led the UK Insurance business and served on the Aviva
Leadership Team.
ShewaspreviouslyGroupChiefRiskOfficerforAviva
PLC, responsible for risk management at Group level.
Skills and experience
•
Deeptechnicalexpertiseinriskandfinancialservices.
•
Ability to contribute to strategic planning and
oversight.
Other roles
Independent Non-Executive Director of Rothesay
Life (including member of the Risk Committee, Audit
Committee, Governance & Nominations Committee
and Customer & Conduct Committee), Member
of Council for the London School of Hygiene and
Tropical Medicine (including Chair of the Finance &
Development Committee).
Angela Darlington BSc, FIA
Independent Non-Executive Director / Vice Chair
Joined the Board in 2022.
BRC
bACBRC
BGNC
56 57Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Debra Davies BA Hons, Business Studies
Independent Non-Executive Director
Joined the Board in 2023.
Background and career
Debrahasover30yearsofexperienceinfinancial
services, including senior roles at American Express
where she led the UK Business, global product marketing
and the partnerships business across 55 countries. She
alsorepresentedAmericanExpressinsignificantjoint
ventures in the Middle East, Belgium and Switzerland,
where she was the Chair of Swisscard.
Debra has held a range of non-executive roles with AXA
UK plc and Credit Suisse International.
Skills and experience
•
Expertiseinprofitandlossleadership,customer,
service, marketing, technology and digital innovation.
•
Experience in partnership development and managing
complex global businesses.
Other roles
Non-Executive Director and Senior Independent Director
at AXA UK plc, Chair of the Remuneration Committee
and member of the Audit and Risk Committees.
Non-Executive Director of Intrum AB, Chair of the
Transformation Committee. Non-Executive Director
and Chair of the Remuneration Committee of Nomura
International Plc.
Background and career
Mark was Chief Executive of Coventry Building Society
from 2014 until 2020. He has extensive experience in
retailfinancialservices,includingseniorrolesatBarclays
and Abbey National, and time at PwC. At Barclays, he was
ChiefFinanceOfficerforRetailandBusinessBankingand
Deputy CEO of Barclays UK Retail Bank.
Skills and experience
•
Over35yearsinfinancialservices.
•
Expertiseacrossfinance,HR,product,retail
management, risk and investor relations.
Other roles
Non-Executive Director of Fairstone
Capital Group Limited.
Mark Parsons BA, FCMA
Senior Independent Director
Joined the Board in 2020.
Governance > Our Board and Executive Team
REM
BRC bESPC
bAC BGNC
BRC bESPC
Janet Pope BSc Econ, MSc Economics, MBA
Independent Non-Executive Director
Joined the Board in 2024.
Background and career
Janet spent 16 years at Lloyds Banking Group, including
rolesrunningthesavingsbusinessandasChiefofStaff
andChiefSustainabilityOfficer,bothGroupExecutive
Committee roles. Janet was previously CEO at Alliance
Trust Savings and held senior roles at Visa and Standard
Chartered including Retail Banking MD for Africa.
Skills and experience
•
Extensive retail banking expertise and strong
corporate governance knowledge.
•
Proven track record in driving successful strategy and
improving diversity.
•
Significantnon-executiveexperienceingovernment
departments, charities and the private sector.
Other roles
Chair of Charities Aid Foundation (CAF) Bank and
Chair of Nominations and Remuneration Committee.
Non-Executive Director and Chair of Audit and Risk
Committee for the Department for Culture, Media and
Sport. Trustee of StepChange Debt Charity and The
Camden School for Girls.
Non-Executive
Director Changes
The following Non-Executive Directors stepped
down from the Board in 2025:
Dina Matta
Non-Executive Director, in October 2025.
Guy Bainbridge
Non-Executive Director, in December 2025.
REM
bESPC
Key
Board Audit
Committee
Board Governance and
Nominations Committee
Board Risk
Committee
Board Remuneration
Committee
Board Environmental and
Social Purpose Committee
Committee
Chair
Board Consumer Duty /
Member Champion
Whistleblowing
Champion
Non-Executive Director for
Workforce Engagement
BAC BGNC BRC REM BESPC
58 59Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Susan Allen BA Hons (Econ), ACIB, ACT, OBE
Chief Executive
Joined the Board in 2023.
Background and career
Susan has held senior executive roles at some of the UK’s
largest retail banks, including Barclays, Santander UK and
Royal Bank of Scotland. She has led major transformation
programmes and driven customer-focused change
throughout her career.
Before joining YBS, Susan was Head of Customer
Transformation at Barclays, leading and supporting
frontline teams to deliver outstanding service. At
SantanderUK,shewasChiefTransformationOfficer
beforebecomingChiefExecutiveOfficerforRetailand
Business Banking, supporting 15 million customers with
a nationwide network of branches and contact centres.
Susan is Deputy Chair of the Building
Societies Association.
Skills and experience
•
Over30years’experienceinfinancialservicesacross
diverse businesses.
•
Proven track record in transformation and customer
experience.
•
Champion of diversity and inclusion throughout
her career.
•
Responsible for leading the Society and delivering the
strategy approved by the Board, driving performance
andculture,andensuringtheSocietyfulfils
its Purpose.
Other roles
Director of TheCityUK and Trustee of the
Alzheimer’s Society.
Background and career
Tom joined YBS from Santander UK plc, where he spent
16 years. For the last seven years, he was UK Group
Treasurer. He was also a Non-Executive Board Director
ofSantanderFinancialServicesplcandSeniorOfficerof
Santander International’s Jersey Branch.
Tom began his career at Northern Rock in 1999. He
moved to Alliance & Leicester in 2007, just before its
acquisition by Banco Santander SA plc in 2008.
Skills and experience
•
Over25years’experienceinfinancialservices.
•
SignificantexpertiseinUKretailbankingfinanceand
treasury.
•
Specialist knowledge in markets, funding, capital
and liquidity management, balance sheet planning,
interest rate risk, pensions, stress testing and investor
relations.
•
ResponsibleforensuringtheSocietystaysfinancially
resilient–protectingthelong-termfinancialstability
of the Society and keeping members’ and customers’
money safe.
Other roles
Chair of Accord Mortgages Limited and Chair of Norwich
& Peterborough (LBS) Limited. Both are wholly owned
subsidiaries of the Society.
Tom Ranger BA Hons
Chief Financial Officer
Joined the Board in 2024.
Governance > Our Board and Executive Team
Richard Bowles MSc, BSc
Chief Risk Officer
Joined the Society in 2024.
Background and career
Richard has held senior risk leadership roles across major
UK banks and building societies. Before joining Yorkshire
BuildingSociety,hewasChiefRiskOfficeratCoventry
Building Society, following over a decade at Lloyds
Banking Group and roles at TSB, Barclays and HBOS.
Skills and experience
•
Over 15 years’ experience in retail banking.
•
Broad risk management expertise with a proven track
record in delivering major transformation.
•
Responsible for ensuring that there are appropriate
procedures and capability for the management of all
the Society’s risks, whether planned or unplanned.
Also, for the Compliance and Secretariat functions and
regulatory relationships.
Other roles
None.
Background and career
Fiona joined YBS from Lloyds Banking Group where
she was most recently the Group Sustainable Business
Director. She was responsible for social sustainability,
responsible business and inclusion and diversity
strategies, as well as broader ESG reporting.
Skills and experience
•
Over25years’experienceinfinancialservices.
•
Extensive knowledge of environmental and social
sustainability strategies.
•
Expertise in governance across public, private and
voluntary organisations.
•
Responsible for helping shape and deliver the
Society’s strategic priorities and sustainability goals.
Also has responsibility for the Society’s External
AffairsandInternalCommunicationfunctions.
Other roles
Chair of UK charity Surviving Economic Abuse.
Fiona Cannon BSc Hons (English Literature), OBE
Chief Strategy and Sustainability Officer
Joined the Society in 2025.
60 61Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
James Heslip BA Hons, MSc
Chief Internal Audit Officer
Joined the Society in 2016.
Background and career
Since joining YBS James has held senior roles including
Group Lead for Compliance Advisory, Senior Manager in
our Mortgage Advice Team and, most recently, Director
ofCompliance,MoneyLaunderingReportingOfficerand
DataProtectionOfficer.Inthatrole,hewasresponsible
for second line oversight of compliance and conduct risk,
as well as managing key regulatory relationships.
Earlier in his career, James worked across all three lines
ofdefenceatmultiplefinancialservicesinstitutions,
including Lloyds Banking Group and Aviva.
Skills and experience
•
Broadaudit,risk,andfinancialexperienceacrossall
three lines of defence.
•
Responsible for the Society’s third line of defence,
including evaluation of capital, liquidity, credit,
operational, and regulatory risk management.
Other roles
None.
Background and career
FraserwaspreviouslyChiefDigitalandInnovationOfficer
at Virgin Money. He has held senior roles including
GroupChiefOperatingOfficer,ChiefInformationOfficer
and Innovation and Change Director. Before Virgin
Money,FraserwasChiefOperatingOfficeratKleinwort
BensonandChiefInformationOfficerofCitizens
Bank in the USA.
Skills and experience
•
Over35years’experienceinfinancialservices.
•
Wide-ranging experience across businesses, functions,
and geographies.
•
Expertise in business transformation, IT, and change
management.
•
Responsible for the Society’s day-to-day operations,
including technology services, supply chain, data
and AI, risk and resilience, change delivery, and
customer support.
Other roles
Director of Norwich & Peterborough (LBS) Limited.
A wholly owned subsidiary of the Society.
Fraser Ingram MBA, FCB
Chief Operating Officer
Joined the Society in 2023.
Governance > Our Board and Executive Team
Holly Rankin FCIPD
Chief People Officer
Joined the Society in 2024.
Background and career
Holly has extensive experience in human resources,
including senior leadership roles in major UK banks.
Before joining YBS, she was Managing Director HR at
Barclays Bank.
She previously served as HR Director for Community
Banks and Wealth at Lloyds Banking Group and Head of
HR for the Retail Network at Santander UK.
Skills and experience
•
Over 28 years’ experience in human resources,
including16yearsinfinancialservices.
•
Expertise in shaping and leading strategic people
plans, culture change, talent and succession, reward,
and leadership capability.
•
Responsible for shaping the Society’s culture and
colleague experience, as well as overseeing reward
and performance.
Other roles
None.
Background and career
Simon brings 14 years of senior leadership experience
from NatWest Group. During his time there, he held key
roles across personal and private banking, customer
propositions,transformation,corporateaffairsandbrand.
He also led major business transformations and oversaw
the acquisition and scaling of the RoosterMoney youth
banking business.
Skills and experience
•
Extensive expertise in leading large-scale
transformationswithincomplexfinancialinstitutions.
•
Strong focus on customer and colleague engagement
to improve service delivery and performance.
•
Inclusive and results-driven leadership style, fostering
high-performing teams and sustainable growth.
•
Responsible for the Society’s customer strategy –
covering digital, branch and telephony channels,
savings and home ownership, digital channels, brand
and marketing, and intermediary relationships, guided
by customer preferences.
Other roles
None.
Simon Watson
Chief Customer Officer
Joined the Society in 2025.
62 63Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
A word from the Chair of the Board
As Board Chair, it is a pleasure to share this year’s Corporate
Governance Report with you.
Corporate
Governance
Report
Our Board is united by a shared commitment to the
Society’s success and at the heart of this is our mutuality.
It is what helps us to deliver our Purpose for our members
both now and in the future.
We work hard to ensure that the Society is well governed.
We are genuinely proud of the way we govern our Society.
Our governance framework is based on the best practice
set out in the UK Corporate Governance Code (the Code)
published by the Financial Reporting Council (FRC). In this
report we share how we have complied with the Code in
2025 (as it applies to a building society), highlighting the
Board’s role and key activities during the year.
Our Board composition and
other roles
In 2025 we said goodbye to two valued members of our
Board. Dina Matta stepped down in October 2025 after
more than four years of service, and Guy Bainbridge,
our Vice Chair, left the Board in December 2025 after
over six years. We would like to thank them both for
their considerable contributions to the Board over their
respective years of service.
We were delighted to welcome Elaine Bucknor to the Board
in September 2025. Elaine brings a wealth of experience
covering areas including technology transformation and
growth and spearheading cybersecurity. She brings a fresh
perspective that will be invaluable as we evolve and meet
our members’ changing needs.
Following the retirement of Guy Bainbridge, Angela
Darlington assumed the roles of Vice Chair and
Whistleblowing Champion and Elaine Bucknor became our
Non-Executive Director for Workforce Engagement with
effectfrom1January2026.
As we look ahead through 2026, Debra Davies will leave the
Board and step down as the Society’s Board Remuneration
Committee Chair following the Annual General Meeting
(AGM) after three years of service. On behalf of the Board,
I would like to extend our sincere gratitude to Debra for
hersignificantcontributionduringhertenureandforher
effectiveleadershipoftheBoardRemunerationCommittee.
In line with our commitment as a modern mutual, we
regularly review Board succession to ensure we maintain
the appropriate mix of skills and experience needed to
support the Society’s long-term strategic plans. Succession
plans for the Board Remuneration Committee Chair are in
place and, subject to regulatory approval, Janet Pope will
succeed Debra as Board Remuneration Committee Chair.
To broaden our reach and attract diverse talent, we are
partnering with the Nurole online Non-Executive Director
platform, reinforcing our ambition to remain a forward-
thinking mutual. We are well progressed in identifying
one or two Non-Executive Directors to join the Society in
2026. While the timing of these transitions may temporarily
reduce the Board size below our minimum of nine Directors
set out in our Society Rules, we are focused on ensuring we
appoint the best people to the Board.
TomRangerresignedasChiefFinancialOfficerin
February2026.Hewillcontinuetofulfilhisrolewhile
we conclude the search for his successor. We thank Tom
for his contribution to the Society and wish him well in
his future career.
In February 2025 we welcomed our new Board Fellow, a
role designed to help develop a broader, deeper and more
diverse pool of future leaders in the UK. While the position
doesn’tcarrythelegalresponsibilitiesofadirector,itoffers
individuals the experience of working with the Board and
has also brought a valuable perspective to our discussions.
Board activity in 2025
As a Board it is our responsibility to approve the Society’s
strategy and culture and to oversee execution of the
Society’s strategic plans. As a responsible Society, the
strategyisbuiltonmaintainingstrongfinancialfoundations,
enabling us to continue to serve member and customer
needs over the long term. Our strategic leadership is
supported by strong governance, genuine engagement with
ourstakeholdersandeffectivemanagementofrisk.
What truly unites us as a Society is our Purpose to provide
Real Help with Real Life. 2025 has been a reset moment
whenwehavereaffirmedandsharpenedwhatthatmeans
for YBS and its members, setting a clear direction for our
future. This journey has involved input from a wide range of
participants, including colleagues from across the business,
members, and prospective customers. This has been
invaluable in informing recommendations and supporting
Board discussions and decision making.
Members sit at the heart of our sharpened Purpose,
reflectingourlong-termcommitmenttodelivering
meaningful value for our members. In 2025 we took time
to explore what Member Value truly means in the context
of our Purpose, listening to colleagues, members, and
customers to shape a shared understanding.
This year we’ve placed real emphasis on embedding our
new Board and Committee Architecture, building on the
in-depth review we carried out in 2024. This has ensured
the Board can focus on key strategic topics, while the
Committees have been able to dive deeper into the
details within their areas of expertise. One important
change has been the introduction of our ‘Reconvened
Board Risk Committee’ which all Board members attend
(whether they are a member of the Board Risk Committee
or not) to discuss key topics such as capital, liquidity, and
stress testing. Our new Board Environmental and Social
Purpose Committee, established in January 2025, has been
developing its role during the year, supporting the Board’s
oversight of the sustainability agenda.
During2025,theBoardapprovedthefiveyearCorporate
Plan, and the ongoing investments needed to deliver on
that (the OnePlan). We also continued to oversee execution
of the Society’s strategic priorities and monitor key risk
areas, with the support of the Board Risk Committee, making
sureweremainfinanciallystrongandresilientinallareas,
including cybersecurity and business resilience.
Promoting an ambitious culture is one of our strategic
priorities and as a Board we are deeply committed to
ensuring that, together with our behaviours, it is embedded
throughout the Society.
Board effectiveness and
ongoing development
During 2025 we’ve continued to ensure our new Board and
CommitteeArchitecturestructureremainseffective,making
sure as a Board we are focused on what matters most for
the Society’s long-term success. We are also committed to
continue learning and growing together as a Board. Rather
than just relying on our existing skills and experience, we’re
committed to ongoing training and development.
This spirit of continuous learning will remain at the heart of
what we do in 2026, as we continue to adapt to changes in
the external environment and the needs of our members
now and in the future.
Stakeholder engagement
We are grateful for the ongoing engagement of our
members and colleagues, whose feedback helps shape a
stronger, more resilient Society for the future. The Board
is truly committed to listening and engaging with our
stakeholders, supported by dedicated Non-Executive
Director Champions for Members and Colleagues. In 2025,
colleague engagement sessions provided honest and
valuable insights into the highlights and challenges of their
workandshowedustherealimpactoureffortshaveon
members, customers and each other.
On a personal note, I was delighted to join a Colleague
Forum alongside our Non-Executive Director for Workforce
Engagement during 2025, Angela Darlington. We explored
theevolvingroleofartificialintelligence(AI)withinour
Society and the conversation was a wonderful chance to
hear directly from our colleagues.
Each year the AGM is a vital opportunity to connect with our
members. We were pleased to welcome everyone, whether
in person or online. It is important to us that members have
every opportunity to join in and share their thoughts and
valuable feedback.
Throughout the year, Board members have also taken the
opportunity to gain insights from our members, whether
through call listening or visiting branches in person.
Feedback from these visits supports decision making and
helps us continually improve member experience.
As Board Chair I also recognise the importance of engaging
with our external stakeholders as part of my role in
supportingtheSociety’slong-terminterestsforthebenefit
of our members. I’ve enjoyed sharing ideas at industry
roundtables and conferences and I’m proud to make
sure the Society’s voice is heard on important issues like
regulatory change.
I’m a passionate advocate for fostering diverse, inclusive,
and healthy workplaces alongside providing opportunities
for colleagues to learn and grow through being mentored.
2026 and beyond
Looking ahead, as a Society we have a clear Purpose and
strategy underpinned by investment in things that will
makearealdifference.Weareseeingencouragingchanges,
like real-time inbound faster payments and improvements
to our digital app and applications process, that make life
easier for our members. For 2026 the Board’s focus will be
overseeing the implementation of the strategy in a way that
delivers meaningful value for members as well as delivering
for our various other stakeholders.
Annemarie Durbin
Chair of the Board
25 February 2026
64 65Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Corporate Governance Statement
Forthe2025financialyearwehaveappliedtheprinciplesandcompliedwiththeprovisionsoftheCodepublishedin
2024 (available on the Financial Reporting Council’s website frc.org.uk) to the extent relevant to building societies (and in
accordance with guidance issued by the Building Societies Association (BSA) Guidance available at bsa.org.uk).
As a mutual organisation we do not have shares or shareholders therefore provisions relating to references to long-term
shareholdings in relation to remuneration (Provision 36) do not apply. We do, however, seek to apply the provisions of the
Code that reference shareholders as appropriate to our members and in accordance with the BSA’s guidance.
Board and Committee architecture
Board
Chair: Annemarie Durbin
Collectively responsible for the long-term success of the Society.
Board Committees
The Board delegates certain matters to Board Committees to provide focused oversight of those areas within their roles
and responsibilities.
Board
Remuneration
Committee
Board
Audit
Committee
Board
Risk
Committee
Board
Governance
and Nominations
Committee
Board
Environmental
and Social Purpose
Committee
Chair:
Debra Davies
Oversees the
development and
implementation of the
Remuneration Policy
for all colleagues.
Chair:
Peter Bole
Reports to the
Boardonfinancial
reporting, internal
controls and risk
management systems,
Internal Audit and
External Audit.
Chair:
Angela Darlington
Oversees Prudential
Risk, Operational Risk
and Conduct Risk, Risk
Strategy, Appetite and
Oversight.
Chair:
Annemarie Durbin
Oversees Board
governance, including
composition,
succession and
appointment
processes for
the Board.
Chair:
Janet Pope
Oversees
the Society’s
environmental
and social
purpose agenda.
The Board’s Schedule of Matters Reserved and Terms of Reference of its Committees are available on our website.
InadditiontoourfivecoreBoardCommittees,theBoardmayalsobesupportedbycommitteeswhichareestablishedas
neededtoallowdedicatedtimeandfocusforspecifictopics.
Board roles and responsibilities
Our Board is collectively responsible for the Society’s success and long-term sustainability. They are committed to acting in
the best interests of our existing and future members while listening to our other key stakeholders and the wider community,
as set out in Section 172 of the Companies Act 2006.
Further details of how we do this can found in the Section 172 Statement in the Directors’ Report.
The key decisions and matters reserved for the Board’s consideration are detailed in the Schedule of Matters Reserved to the
Board. These include, but are not limited to, approval of the Society’s strategy, Purpose, behaviours and desired culture.
For more insight into the work of our Board during 2025 see the Our Board’s activities in 2025 section in this report.
Governance > Corporate Governance Report
The Board is supported by a robust governance
framework, including:
Board and Committee
Architecture
The Board and Committee governance structure supports
effectivedecision-making,ensuringitalignswiththe
Society’s Purpose and strategy. In 2024, a review of the
Board and Committee Architecture was conducted to ensure
an appropriate structure was in place to provide oversight
of the Society’s strategy. The outcomes were implemented
and embedded during 2025.
Board composition
EnsuringtheBoardanditsCommitteesremainfitfor
purpose, with the right skills and experience, enables it
tocontinuetobeeffectiveandworkforthelong-term
success of the Society for our members and customers. This
is supported by strong succession planning and ongoing
reviews of Board composition by the Board Chair and Board
Governance and Nominations Committee.
Risk management
Ensuringcontinuousidentificationandreviewofprincipal
business risks and their potential impact on the Society’s
Purpose and long-term success, taking into consideration
the agreed risk appetite.
Further details can be found in the Strategic Report and
Risk Management Report.
Strategy and Purpose
Ensuring the Society has a clear direction which enables it
to address current and future opportunities and challenges.
Further details can be found in the Strategic Report.
Stakeholder Engagement
Engagement with and participation from key stakeholders,
such as our members and colleagues, supports decision
making and the long-term success of the Society for our
members.
Sustainability
Our sustainability commitments and goals support the
delivery of our Purpose with our oversight provided by the
Board Environmental and Social Purpose Committee.
People
Ensuring policies and procedures are consistent with the
Society’s strategy, Purpose, and behaviours.
Culture
An ambitious culture and strong behaviours which support
the delivery of our Purpose and strategy.
Compliance
Good corporate governance ensures that we meet legal
and regulatory requirements and avoid any consequences
of not doing so.
Brand and reputation
Aclearandeffectiveframeworkofcorporategovernance
providesconfidencetoourstakeholders,supportinga
positive brand reputation.
Fit for Growth
Ensuring that the Society is capability led.
Finance
Ensuring strong capital and liquidity management.
66 67Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Climate governance
Our climate governance structure was strengthened in 2025 through the establishment of a new Board Environmental and
Social Purpose Committee. This committee is chaired by Janet Pope, who was appointed to the Board as a Non-Executive
Director in October 2024.
For further information on Janet’s background, see the Our Board and Executive Team section of the Governance Report.
Additionally,FionaCannonjoinedusasLeadStrategyandSustainabilityOfficerandwassubsequentlyappointedChief
StrategyandSustainabilityOfficerinAugust2025,withfullexecutiveresponsibilities.FionaremainsExecutiveCommittee
sponsor for overarching sustainability reporting.
OurBoardhasultimateaccountabilityoffinancialrisksforclimatechangeandtheassociatedresponsibilities.Itdelegatesto
the following committees:
Board level Executive level
Board Environmental and Social Purpose Committee Executive Environmental and Social Purpose Committee
(Formerly Environment, Social and Governance Committee)
Role: Delegated authority
from the Board to support
the Board in overseeing the
environmental strategy.
Key 2025 activities:
Approved the acceleration
of our scope 1 and 2 Net
Zerotransitiontargetfrom
2035 to 2030, alongside
oversightoftheNetZero
Transition plan.
Role: Delegated authority
from Executive Committee
to support in overseeing the
environmental strategy.
Key 2025 activities:
ApprovedNetZero
transition plans.
Board Risk Committee Executive Risk Committee
Role: Provides oversight
of climate risk and sets the
Group’s risk appetite in
relation to climate-related
exposures.
Key 2025 activities:
Received six-monthly formal
updates on climate-related
work and progress.
Role: Responsible for
managing the governance
framework for climate risk,
ensuring it is embedded
within the Society’s overall
risk management approach.
Key 2025 activities:
Received key climate risk
maturity update. Climate
risk is now reported in the
ChiefRiskOfficerreport.
Board Audit Committee Asset and Liability Committee
Role: Oversees non-
financialclimatedisclosures,
ensuring transparency and
alignment with regulatory
expectations.
Key 2025 activities:
Oversaw the external
environmental disclosures
in the ARA and
Sustainability Report.
Role: Focuses on the
financialrisksassociated
with climate change,
including balance sheet
impacts and scenario
modelling.
Key 2025 activities:
Reviewed climate-related
content for the Society’s
ICAAP and ILAAP.
Retail and Commercial Credit Risk Committee
Role: Manages credit risks
linked to climate change
across the YBS Group.
Key 2025 activities:
Reviewed additional
climate-related credit
risk measures, discussed
essential climate risk data
and took an action plan to
BESPC and EESPC.
Governance > Corporate Governance Report
Senior management accountability
The accountability for the senior management function for
climateremainssharedbetweentheChiefFinancialOfficer
andChiefRiskOfficer:
Chief Financial Officer (CFO):
The CFO is responsible for managing the physical and
transitionalfinancialrisksstemmingfromclimatechange.
This includes accountability for leading the development
and implementation of:
•
Identification,measurement,monitoringandreporting
ofthefinancialrisksofclimatechange,inlinewithour
risk appetite including our risk exposure limits and
thresholds.
•
Scenario analysis (including a catastrophe modelling
approach)todeterminelong-termfinancialrisksand
assess the impacts on our balance sheet.
•
Disclosingthefinancialrisksofclimatechange
to the PRA.
•
The climate related inputs into the wider sustainability
reporting owned by the Chief Strategy and
SustainabilityOfficer.
Chief Risk Officer (CRO):
The CRO has accountability for ensuring the development
and implementation of:
•
A governance framework to ensure that the Board
understandandassessthefinancialrisksfromclimate
changewhichaffecttheSociety,andaddressand
oversee these risks within our overall business strategy
and risk appetite.
Working groups
Tosupporteffectiveclimate-relateddecision-making,we
have two dedicated working groups:
•
Climate Risk Working Group: Utilises subject matter
experts to deliver tactical and strategic change with
regardstounderstandingandreducingourfinanced
emissions and exposure to climate-related risks.
•
Climate Opportunities Working Group: Subject matter
experts from across the organisation discuss how to
maximise climate-related opportunities to support
emissionsreduction,particularlyforfinancedemissions.
68 69Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Alongside regular updates from our Chief Executive
andChiefFinancialOfficer,theBoard’sannualagenda
is anchored by a series of key strategic approvals. This
includes the review and approval of the following each year
to ensure the Society’s ongoing strength and resilience:
•
Five-year Corporate Plan and Annual Budget.
•
Financial Reports.
•
Internal Capital Adequacy Assessment Process (ICAAP).
•
Internal Liquidity Adequacy Assessment Process (ILAAP).
•
Operational Resilience Self-Assessment.
•
Recovery Plan and Resolution Assessment.
•
Consumer Duty Assessment.
In every decision, the Board considers the perspectives and
interests of all key stakeholders - including our colleagues,
members and customers, government bodies, regulators,
investors, and partners. For more details on how we engage
with our stakeholders, please see the Engagement with
stakeholders section.
Board decision making in
practice – Purpose articulation
For more than 160 years, we have been delivering our
Purpose of providing Real Help with Real Life. However,
last year, we asked the key question of what this really
means in practice. Working with our stakeholders, we
co-createdaclearerdefinitionofourPurposetoprovide
focusanddirection,driveeffectivedecisionsandcreate
value for our members. More detail on this can be found in
the section below.
Considering feedback from leaders, colleagues, members,
customers, lending partners and prospective members
andcustomers,theBoardapprovedasharpeneddefinition
of our Purpose, together with an accompanying strategic
framework that sets out our business ambitions and
priorities in its context. Our evolved Purpose will guide
decision making across the Society and shape the delivery
of our strategy.
More information can be found in the Strategic Report.
Setting our Purpose and generating long-term success
Weareproudtobeamutual–itiswhatmakesusdifferentandenablesustodeliverourPurposeandstrategyforour
members, but it’s also essential to the future of the Society as a modern mutual.
You can find out more on how we have brought our Purpose to life in the Board Activities and Engagement with
stakeholders sections of this report together with the Our Strategy and Purpose section.
Our Board’s activities in 2025
Examples of some of the key activities our Board has undertaken during 2025 include:
Member Value
Clarification and definition
of Member Value and
our proposition.
People Plan
Oversight of the development
of a revised plan to build a
colleague base united by our
Purpose and ambitious culture.
Board Strategy
Session
Support for the delivery of our
strategic ambitions.
Our Purpose
Articulation of an actionable
definition of Real Help
with Real Life.
Customer and
Members
Development of our Customer
and Member proposition.
Sustainability
Review of our revised approach
to sustainability.
Cyber Security
Oversight of cybersecurity risks and development.
Transformation
Oversight of our One Plan underpinning the Budget
and Corporate Plan.
Governance > Corporate Governance Report
Engagement with stakeholders
As a mutual, it’s important our members have a say on how the Society is run and
theproductsandservicesoffered.Wereallyvalueourmemberscontributions
and are committed to maintaining strong relationships with our stakeholders
by listening to what they want through the channels set out below. For our
colleagues, we have a structured colleague voice framework - including forums,
surveys, and listening sessions with the Board - which helps colleagues at all
levelstosharetheirviews.Togetherwithmembers,thefeedbackinfluencesthe
decisions we take as we support the Society to deliver its Purpose and strategy.
Our Board is committed to maintaining a strong relationship with its stakeholders
and recognises the important contribution that makes to achieving the Society’s
Purpose and delivering its strategy. This includes understanding the views, areas
of interest and / or any concerns they may have as part of Board decision-making.
The table below summarises our key stakeholders and how we engage with them:
Members and customers
As a mutual, we’re owned by, and exist for the benefit of, our members.
We’re also here for our wider set of customers – those with Accord Mortgages and YBS Commercial Mortgages.
How we engage:
•
Board Engagement: Our Board listen to customer calls in operational areas and visit branches to better understand what matters
to members and customers, through direct calls and from the perspective of our colleagues. Board and committee papers include
details of how member and customer views have been considered, together with any potential implications for them, to inform any
recommendations.
•
Board Champions: Our Non-Executive Director, Mark Parsons, is both our Member Champion and Customer Duty Champion. This dual
role ensures the perspective of our members remains central to Board discussions.
•
Events: In 2025 these included in-branch meetings with customers and members, Purpose workshops in London and Bradford to help
shapethedefinition,and‘YourTimetoTalk’events,whichareheldonline,andinperson.Acrossbothevents,membersattendedto
hear from our CEO Susan Allen and numerous other senior leaders. In June, we invited over 680,000 members to submit questions
onlineforourteamsofexpertstoanswer.Wereceivedover600questionswhichweregroupedintotopicstoformfiveonlinevideos
covering savings, mortgages, branches, wider society and the economy.
•
Feedback: Our Customer Insight function supports better decision making by turning data into actionable insight. The My Voice
community panel gathers member views through surveys, discussion rooms, and polls, with 2,400 participants and an average
engagement rate of 83%. Alongside this, our Customer Experience programme measures advocacy, loyalty, and satisfaction across our
brandsthroughrelationship,milestone,andinteractionspecificsurveys.
•
Direct engagement: Our specialist teams are ready to support people face-to-face, online through web chat and secure messaging, or
by phone, email and letters. They work proactively and reactively depending on members’ need handling more than 600,000
39
calls,
96,800securemessagesand16,300webchatqueriesin2025.Wealsoregularlyhostinbrancheventsfocusedonfinancialeducation
and raising awareness of frauds and scams.
•
Annual General Meeting (AGM): This meeting is a cornerstone of member engagement for our Board, providing the opportunity to
present performance highlights, future plans and invite questions and feedback. Our members can attend both online and in person
to ensure as many can be involved as possible. Members were also able to call, email or write with their questions and responses were
issued in a timely manner.
Voting at the AGM is one of the important ways in which our members can get involved and vote on important matters, including the
directors who represent them on the Board. The UK Corporate Governance Code expects that if there is a vote of 20 per cent or more
against any resolution put forward by our Board at the AGM, we should give details of how we will consult our members to understand
the reason why. The Society has a process in place if this happens. There were, however, no votes of 20 per cent or more against any of
the resolutions our Board put forward at the 2025 AGM.
•
Net Promoter Score (‘NPS’) tracking: Tracking NPS is one way we ensure that we’re striving to deliver the best possible customer
service. Our NPS targets are agreed by the Remuneration Committee and form part of our colleague recognition scheme.
•
Mortgage brokers: We engage with brokers on a proactive basis via face-to-face, telephony and virtual appointments, industry-wide
and localised events and a broad range of communication and marketing channels. With our Accord Mortgages brokers, we’re proud of
our popular “Growth Series” online content, which helps brokers to grow their business with free podcasts, webinars and guides. For
YBS Commercial Mortgages we work with the National Association of Commercial Finance Brokers (NACFB) and have a colleague on its
Board. We also host roundtables to gain feedback from brokers and others in the market.
39
Data covers reporting period January – October 2025, with November and December estimated
70 71Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Colleagues
Our colleagues all play a part in helping us do right by our members and customers.
We’re committed to a diverse, inclusive and engaged workforce to deliver our Purpose.
How we engage:
•
Live events: We host in-person and virtual events for colleagues to hear updates on our plans and strategy throughout the year,
including Leader Connect and Colleague Connect sessions and organised lunches with colleagues and senior leaders. Colleagues had
the opportunity to speak openly with executives about topics such as mentoring and colleague engagement. We also host Ask Exco
Anything meetings, which are open to everyone. In 2025, a number of sessions took place, providing colleagues across the business
with a chance to ask questions. These sessions are recorded and shared with colleagues who couldn’t join in person, so everyone
benefitsfromtheinsights.
•
Supporting our leaders to engage: We support leaders with bi-monthly information packs to cascade to teams and hold meaningful
conversations.
•
Colleague networks and groups: Our colleague networks and groups provide safe spaces for colleagues to connect, share experiences,
and engage on important topics. In 2025 they supported colleagues through awareness events, policy reviews, and initiatives e.g.
accessibility passports, with two members of senior leadership sponsoring and guiding each network.
•
Feedback: We carry out colleague engagement surveys twice a year and an annual Diversity, Equity and Inclusion survey. In 2025, 89%
of colleagues completed the colleague engagement survey, highlighting areas we should focus on as an organisation to improve the
workplace for colleagues.
•
Intranet: Internally, we have a place to share essential work updates as well as provide a space for colleagues to share the things that
matter to them, regular blogs from the Executive Team and important product and service updates.
•
Colleague forum: The Colleague Forum was established as a key mechanism for colleague engagement. Our Workforce Engagement
Non-Executive Director attends each session to ensure there’s a direct link between colleague feedback and Board-level discussions.
Its primary purpose is to inform and enrich senior conversations by ensuring colleagues’ views are heard and considered across a broad
rangeoftopics.In2025,thisincludedhealthandwellbeing,risk,artificialintelligenceandourPurpose.Theforumcontinuestoevolve
withamixofface-to-faceandonlinesessionssupportinghighlevelsofattendance.Wehaverepresentativesfromdifferentareasof
the business who are responsible for collating and sharing colleagues’ feedback, along with our Colleague Network Co-chairs who are
also invited to share feedback on the topics raised.
•
Board engagement: We have a Non-Executive Director for Workforce Engagement, who supports the Board in understanding the
views of our colleagues to enable them to be considered in discussions and decision making. Angela Darlington handed over these
responsibilities to Elaine Bucknor on 1 January 2026. The Board see annual assessments from our Colleague Voice Framework, get
health and safety and whistleblowing reports, and host face-to-face and online forums to make sure colleague views are heard and
considered. Their views are also an essential part of Board and committee paper submissions.
•
Colleague listening groups with Non-Executive Directors: Board colleague engagement events continue to be held to enable
colleagues to raise any questions they have directly with our Non-Executive Directors. In March 2025, this included meetings with
ourYBSCommercialMortgagescolleaguesatourPeterboroughOffice.AspartoftheOctoberBoardmeetingcycle,theBoardhosteda
ColleagueEngagementeventatourYorkshireDriveHeadOffice.TheeventwasfocusedonourOnePlan(Transformation)programmes.
Governance > Corporate Governance Report
Communities
We’re committed to making a positive contribution socially and to the planet in the local, regional, and national
communities in which we have a presence. We regularly engage with charities, community groups and partner
organisations based in the areas where our members and colleagues are based.
How we engage:
•
Community partners:We’reamemberorganisationthatcontributesto,andbenefitsfrom,theworkofBusinessintheCommunity,
with representation on the Leadership Council, Yorkshire & Humber Leadership Board, Yorkshire & Humber ED&I Network and Bradford
Place Board. We also work with Skills House, part of Bradford Council, to support students from educational institutions in lower
socio-economic areas or diverse communities and we met with a range of community stakeholders from Bradford to host a roundtable
discussion to understand, and suggest solutions to, barriers to employment in the city.
•
Charity partners: Since November 2023 we’ve partnered with FareShare as our charity partner, with the aim to support people into
employment. We also work closely with Citizens Advice and knowledge share to gain deeper insight into the support people need and
howourproductsandservicescouldbedesignedtofillanygaps.WesupporttrusteesoftheYorkshireBuildingSocietyCharitable
Foundation and worked together to strategically align funding criteria in 2025. Our colleagues also volunteer their time in their
communitiesandretailandofficesitesholdcausecollectionstosupportlocalcauseswithmuch-neededitemsfromfooditemstotoys
and clothing.
•
Environmental partners: We support and engage with the Yorkshire and the Humber Climate Commission, the Sustainable Business
Consortium, the Green Finance Institute, the Asset and Liability Management Association (ALMA) and the Green Finance Taskforce, part
of the Building Societies Association. In 2025 we worked with the Centre for Greening Financial Institutions to produce a campaign that
highlightstherisksoffloodingandoverheatingtoraiseawarenesswithcustomers,butalsotobeusedinternallytohelpwithmaking
decisions.
•
Sector engagement: Working with other building societies gives strength in numbers, and we often meet with our mutual peers
to discuss issues that matter to our members and customers, challenges the sector may be facing or action we can take together
for the greater good. UK Savings Week is a great example of how joint support can lead to increased awareness, and prompt more
people to act.
•
Board engagement: Our Chair, together with our wider Executive Team and colleagues supported students in Bradford at our Work
Immersion Days, helping to prepare them for the world of work. Our Chair also visited the city’s branch to see our partnership with
Citizens Advice in action.
Government and regulators
We work in close partnership with regulators to ensure our operations meet the highest standards of compliance,
helping to safeguard our business and protect our members. We also engage constructively with central and local
government to advocate for policies that support financial inclusion, sustainability, and stronger communities.
How we engage:
•
Government: We engage with political stakeholders to maintain and build relationships, while protecting and enhancing the reputation
of the Society. We also lobby for change in the interest of our members, customers, communities and the Society. In 2025, we lobbied
the Government on the impact of changes to the ISA limit, Loan-to-Income reform, a review of stress testing rules for mortgages and for
financialeducationtobepartofthenationalcurriculum.
•
Regulators: We have regular meetings with both the FCA and PRA. The PRA conduct an annual assessment and highlights what it
considers to be our key risks and vulnerabilities to be addressed the following year, helping us to improve. We participate in thematic
reviews conducted by the regulators, to help them assess and understand any emerging risks, and through industry bodies we engage
with relevant consultations.
•
Board engagement: Our Board also engages with other stakeholders such as regulators and industry bodies, considering updates and
inputting as appropriate to relevant consultations, conferences and forums.
72 73Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Wholesale funding investors and rating agencies
Wholesale funding investors play a vital role in helping us meet our funding and MREL needs. Both current and
prospective investors are interested in our Purpose and strategy, financial performance, and sustainability practices
in order to carry out their due diligence processes. To support these interests, our Investor Relations activities are
complemented by external disclosures, as well as Credit and ESG ratings and opinions from independent rating
agencies.
How we engage:
•
Annual reporting: Our year-end and mid-year reporting suite, includes the Annual Report and Accounts, Interim Results, Regulatory
News Service announcements, Investor Presentation and Sustainability Report; and are produced with investors in mind – to provide
clear disclosures and to enable informed decisions.
•
Direct engagement: Our investor relations activities provide investors the opportunity to directly engage with our management
through ways which include conferences, virtual calls, face-to-face meetings and presentations. We maintain an active relationship with
thecreditratingagencies,includingcommunicationofourfinancialresults,andannualreviewmeetings.
Partners
We work with multiple partners from suppliers to brokers and agency proprietors who hold the same values as we do.
We’re proud to be held to the highest standards by industry bodies and trade unions to act in the best interest of our
members, customers and colleagues.
How we engage:
•
Suppliers: We engage with suppliers through specialist relationship management teams via a combination of regular face-to-face
meetings and events, telephone calls, emails and online supplier portals to build trust and relationships.
•
Aegis the Union: Formutualbenefit,wemaintainanongoingandconstructivedialoguewithAegisthroughouttheyear.Thisincludes
collaboratingonstrategy,priorities,paynegotiations,andanysignificantorganisationalchangestoensuretransparencyandthe
alignment of shared goals.
•
Agency proprietors: We engage frequently with our agencies to make sure they feel supported to deliver the service our members
and customers expect. Each agency has a dedicated Retail Area Manager that meets with them face-to-face or remotely monthly where
possible, but quarterly as a minimum, to share updates and answer any queries they may have.
•
Yorkshire and the Humber Financial and Professional Services Skills Commission: After founding the Commission, we continued
to work with it in 2025 to identify the skills challenges facing our sector in Yorkshire. Our Director of People and Culture attended
roundtable discussions as a representative, bringing together employers, education providers, and policymakers, to continue
collaboration between stakeholders in the region.
Governance > Corporate Governance Report
Our culture
Our Board values the positive impact a strong and
supportive culture has on everyone connected with our
Society – it’s not just about what we do, but how we do
iteveryday.We’rebuildinganagile,efficientambitious
culture that supports our Purpose and constantly improves
experiences for our members, customers and colleagues.
Our approach to the development and embedding of our
ambitious culture strategic pillars was agreed in 2025,
which our colleagues had an important role in. In particular,
we sharpened our focus on two key aspects of our culture;
pace and accountability. The Board oversaw how our
sharpened Purpose and culture were being rolled out by
the Executive Team and this will continue to be a key area
of focus in 2026.
When it comes to culture, the Board and Executive
Committeeleadbyexampleandregularlyreflectonand
hold themselves to the high standards set out in their
shared Charter which is linked to the Society’s behaviours.
Whistleblowing
Our Board approves the Whistleblowing Policy on an
annual basis and oversees its implementation. We also
have a Whistleblowing Champion who is a key point of
contact for individuals who wish to report concerns. Our
Whistleblowing Champion to 31 December 2025 was one
of our Non-Executive Directors, Guy Bainbridge. From 1
January 2026 Non-Executive Director Angela Darlington
became our Whistleblowing Champion.
Directors’ duties
Section 172 of the Companies Act 2006 describes the
duties of company directors in respect of promoting the
business and considering other stakeholders. This does not
apply to our directors as we are a mutual building society,
not a company, but the UK Corporate Governance Code
(which we follow as a standard of good governance) expects
boards to report on how they have considered the matters
set out in Section 172 in decision making. Our Section 172
Statement is set out in the Directors’ Report.
Conflicts of interest
OurBoardhasaDirectorsandChiefOfficersConflictsof
Interest Policy which sets out how we will review and,
whereappropriate,approveanyconflictsorpotential
conflictsofinterest.ThePolicyisreviewedonanannual
basis by the Board Governance and Nominations Committee
and recommended to the Board for approval.
Anyinterestsandassociatedconflictsarerecordedina
Register of Interests, changes to which are monitored by our
Board Governance and Nominations Committee.
If any director wants to take on a new external position it
mustfirstbeapprovedbyourBoard,whichwillconsider
whethertherecouldbeanyconflictsofinterestand/oran
impact on the time they commit to their role with us.
74 75Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Division of responsibilities
Board roles and division of responsibilities
The roles and responsibilities of the Non-Executive and Executive Directors of our Board are set out below:
Non-Executive Directors
Board Chair
•
Leadership of the Board.
•
EnsurestheBoardactseffectively,promotinghighstandardsofcorporategovernance.
•
Leads the annual review of the performance of the Board, its Committees, and directors.
•
IdentifiesongoingdevelopmentneedsoftheBoard.
•
Leads the Board in the approval of the Society’s Strategy, Corporate Plan, One Plan, Budget, Risk Appetite,
Capital and Liquidity Plans and Culture.
Vice Chair
•
Deputises both internally and externally for, and provides support and guidance to, the Board Chair.
Senior Independent
Director
•
Acts as an intermediary for other directors.
•
Leads the performance evaluation of the Board Chair.
•
Acts as the main point of contact for the Society’s members should the normal channels of
communication fail.
All Non-Executive
Directors
•
Responsible for bringing independent judgement to Board decisions and debate.
•
Use their own experience and skills to constructively challenge the Executive Team.
•
Responsible for continuing their own learning growth and development to remain relevant.
Executive Directors (in addition to serving as a member of the Board)
Chief Executive Officer
•
Overall responsibility for leading the Society.
•
Leads the formulation of the Strategy, Corporate Plan, One Plan and Budget for the Board’s approval.
•
Implements the strategies and policies agreed by the Board, supported by the Executive Team, through a
number of management and risk committees.
Executive Director
•
Responsiblefortheday-to-daymanagementofspecificareasofthebusinessincludingmaintainingthe
Society’sfinancialstrengthandsustainability.
•
Brings associated skills and knowledge to the Board.
Group Secretary
AdvisestheBoardChairandtheBoardasawholeonallgovernancematters,supportingtheeffectiveoperationoftheBoard.
Governance > Corporate Governance Report
Independence
All the Non-Executive Directors continue to be considered independent based on the guidance in the Code and as set out in
the Our Board and Executive Team section. The Board Chair was considered to be independent on appointment.
Attendance at Board and Committee meetings
The table below shows our directors and the scheduled Board and Committee meetings they attended during 2025 (where
they were a member during the year) followed by the number of meetings the director was eligible to attend.
1. GuyBainbridgesteppeddownfromtheBoard,asViceChairandfromhisCommitteeroleswitheffectfrom31December2025.
2. PeterBolejoinedtheBoardRemunerationCommitteewitheffectfrom26September2025andtheBoardRiskCommitteewitheffectfrom22October2025.
3. ElaineBucknorjoinedtheBoardandtheBoardRiskCommitteewitheffectfrom26September2025.
4. Dina Matta stepped down from the Board and the Board Remuneration Committee on 22 October 2025.
Director Board
Board
Strategy/
Planning
Board Committees
Board
Audit
Board Governance
and Nominations
Board
Remuneration
Board
Risk
Board Environment and
Social Purpose
Board Chair
Annemarie Durbin 7/7 2/2 – 4/4 – – –
Non-Executive Directors
Guy Bainbridge
1
7/7 2/2 6/6 4/4 - 4/4 -
Peter Bole
2
7/7 2/2 5/6 - 1/1 - -
Elaine Bucknor
3
2/2 1/1 - - - 0/1
Angela Darlington 7/7 2/2 6/6 4/4 - 4/4 -
Debra Davies 7/7 2/2 - - 5/5 4/4 3/3
Dina Matta
4
5/6 2/2 - - 4/4 - -
Mark Parsons 7/7 2/2 6/6 4/4 - 4/4 3/3
Janet Pope 7/7 2/2 - - 5/5 - 3/3
Executive Directors
Susan Allen 7/7 2/2 - - - - -
Tom Ranger 7/7 2/2 - - - - -
In 2025 the following formal ad hoc meetings were also held:
•
Board in relation to key contract arrangements.
•
Board Risk Committee meeting in relation to LTI Risk Appetite.
•
Joint Board Audit Committee and Board Risk Committee meeting in relation to the requirements of
Provision 29 of the Code.
•
Board Governance and Nominations Committee meeting in relation to Non-Executive Director recruitment.
In addition, a number of Board and Committee workshops have been held on key topics that all directors were able to attend
(or otherwise view a recording) during the course of the year.
If a director cannot attend a meeting for unavoidable reasons, they will still receive the papers and are encouraged to share
their thoughts with the Chair ahead of time. When a new director joins the Board they may have some unavoidable pre-
existing commitments which can lead to less than full attendance. However, any director in this position provides comments
totheBoardorCommitteeChairinadvanceofthemeetingandhastheopportunitytoengageofflinewiththerelevant
members of the Executive Team.
TheBoardChairandChiefExecutiveareusuallyinvitedtoallCommitteemeetingsandtheChiefRiskOfficerisinvitedto
attend all Board meetings.
Should an urgent decision be needed between meetings, a written resolution can be used, provided all directors (or members
for a Committee) approve in accordance with our Rules.
76 77Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Directors’ time commitment
and other directorships
All Non-Executive Directors are expected to ensure that
they have enough time for the responsibilities of their role
and to support this:
•
Availability and other commitments are reviewed and
considered when recruiting and prior to appointing new
Non-Executive Directors.
•
Each Non-Executive Director has a letter of appointment
which sets out the expected time commitment
for the role.
•
If a director is intending to take on an additional external
appointment this is reviewed and, if appropriate,
approved before it is taken up. Our Board Governance
and Nominations Committee, and Board where
appropriate, will consider the impact any additional role
would have on the time they could commit to their role
with the Society.
•
A review of time commitment is also included as part of
the one-to-one sessions held each year with individual
directors.
Priortoappointmentthesignificantcommitments,including
the time involved, for Non-Executive Directors is disclosed
and reviewed. For 2025 this included Elaine Bucknor who
joined the Society in September 2025.
Additional external appointments for Directors require
priorapprovalinaccordancewiththeConflictsofInterest
Policy.Therewasonesignificantexternalappointment
during 2025, in relation to a Non-Executive Director role for
Debra Davies at Nomura International Plc. Prior to approval
the overall impact on time commitment was considered to
ensure it would not impact existing commitments to YBS.
None of the Executive Directors have held any non-
executive directorships in a FTSE100 company during 2025.
The Board Governance and Nominations Committee
continued to monitor all commitments throughout the year
through the Register of Interests.
During 2024, a review of the Board and Committee
Architecture was completed which was approved by
the Board in December 2024. In conjunction with this
an extensive review of Non-Executive Director time
commitment and fees was also undertaken, including an
external benchmarking exercise. As a result of the review,
and taking into account the increased requirements of
the Non-Executive Director role and the outcomes of the
timecommitmentandfeesreview,thenon-conflicted
members of the Board (i.e. the Executive Directors and
Board Chair) agreed a revised time commitment for all Non-
Executive Directors (excluding the Board Chair) together
withtheassociatedfeeseffectivefrom1January2025.
Revised letters of appointment were issued to all Non-
Executive Directors.
Composition, succession
and evaluation
Election and re-election of
directors
All of our directors are subject to election on appointment
and annual re-election by our members at the AGM based
on the best practice set out in the Code (our Rules require
the re-election of our directors to take place at least once
every three years).
Details of each individual director’s contribution are set
out in the booklet accompanying the Notice of AGM sent to
allqualifyingmembers.TheprofilesintheOurBoardand
Executive Team Section, and available on our website, also
set out the skills and experience of individual directors.
Governance > Corporate Governance Report
Board composition
Details of the composition of the Board are set out below for both the period end, 31 December 2025 and 25 February 2026
noting that Guy Bainbridge stepped down from the Board on 31 December 2025.
Further information in relation to Inclusion and Diversity can be found in the
Board Governance and Nominations Committee Report.
Board
ethnicity
White
background
Minority ethnic
background
As at 31
December
2025
As at 25
February
2026
1 1
9 8
Gender
balance
Female
Male
As at 31
December
2025
As at 25
February
2026
40% 33%
60% 67%
Board
tenure
As at 31
December
2025
As at 25
February
2026
0-2 Years
3-4 Years
5-7 Years
11%
20%
10%
11%
70%
78%
Tenure
A summary of the tenure of the current Board is set out in the Board Composition section. In accordance with the Code, the
Board Chair has not been in post for more than nine years having joined the Board in December 2023.
78 79Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Annual Board effectiveness
review 2024
After a thorough external review in 2023, our Board took
the opportunity in 2024 to complete an internal review
ofitseffectiveness.Thereviewfocusedontheactions
identifiedandprogressmadeagainsttherecommendations
from the external review.
The outcomes of the 2024 review were used to develop
theBoardEffectivenessActionPlanactionsfor2025.Key
themes for the 2025 Action Plan, along with the progress
we’ve made are set out below:
Annual Board effectiveness
review 2025
As an external review was completed in 2023, an internal
effectivenessreviewprocesswasonceagainundertaken
in 2025. The outcomes of the review were discussed at
the Board meeting in January 2026 and there were no
significantissuesarising.Furtherdetailswillbeprovidedin
the Annual Report and Accounts for 2026.
For further details on the process followed for the
Board and Committee evaluations please see the Board
Governance and Nominations Committee Report.
Board training and
development
A learning mindset is something we look for in all our
directors. As a modern Board it is essential that all directors
continue to learn, grow and develop to support our modern
Society. To support this, the Board has a formal Training
Plan to ensure that there is an overarching plan in place
for the Board as a whole which sets out the training and
development requirements for the year. The Training Plan
is agreed and overseen by the Board Governance and
Nominations Committee on behalf of the Board and takes
accountoffuturestrategy,keytopicswhichwouldbenefit
fromanexternalperspective,annualBoardEffectiveness
Review, Board Skills Matrix, succession plans and regulatory
and governance expectations as appropriate.
The Training Plan covers those development areas which are
required for the Board as a whole, with individual training
and development incorporated into personal development
plans. The Training Plan includes external speakers
/ facilitators where it is considered that an external
perspective would support strategy discussions and / or
Board decision making.
During 2025 Board and Board Committee workshops,
training and development topics included:
•
Structural Hedging and Hedge Accounting
•
ICAAP
•
ILAAP
•
Recovery Planning
•
EffectivenessandStrengths
•
Provision 29 Insights
•
Broker Market
•
Climate
•
Political Environment in the UK and its impact on retailers
•
Marketing and Competitor Updates
•
Insights on cybersecurity (presented bi-annually from our
independent Board Cyber Adviser)
Area for Focus Update
Embedding
the new
Board and
Committee
Architecture
ensuring
there are
no gaps and
overlaps.
The new Board and Committee
Architecture was implemented from 1
January 2025 and embedded during
2025 with the development of a
supporting Governance Map. Progress
was reviewed in July 2025 to ensure
that there were no overlaps or gaps
arising. This has been supported by an
external review in Quarter 4 2025, the
outcomes of which were considered
at the Board meeting in 2026 with no
significantissuesarising.
A key outcome has been to ensure that
the Board has the space to consider
the key strategy items for the Society
whilst the Committees undertake the
deep dives based on their areas of
responsibility.
There has also been a focus on
reviewingandrefiningtheapproach
to our practices underpinning Board
governance, including minutes,
agendas and papers.
Ensuring
effective
oversight of
Executive
Succession
and effective
interplay
between the
Board and
Executive
Committee.
Significantworkhasbeenundertaken
by the Board Governance and
Nominations Committee in relation
to Executive Succession on behalf of
the Board. Regular reports have been
received including in relation to the
development of a diverse pipeline.
The Board and Executive Committee
have agreed a Charter setting out the
high level principles of engagement.
Reviewing
and ensuring
the Society’s
Purpose
and related
priorities
are clearly
defined.
Significantworkhasbeenundertaken
in relation to reviewing and ensuring
the Society’s Purpose and related
prioritiesareclearlydefined.Further
detail is set out in this report together
with the Strategic Report.
Governance > Corporate Governance Report
During the course of the year the Board and Executive
Committee have engaged in a number of formal
sessions and informal engagements designed to foster
effectiverelationships.
Our Board is committed to being a modern, learning-
focused Board which means we encourage continuous
learning and development to support both individual
growthandforthebenefitofourSocietyasawhole.As
such, the formal Board Training Plan is also complemented
by self-directed and continual learning by directors
together with operational visits such as colleague listening
and branch visits.
Executive and Non-Executive
Director induction plans
Comprehensive, formal, and tailored induction plans are put
in place for all Executive and Non-Executive Directors on
joining the Board, based on their skills and experience. For
Non-ExecutiveDirectorsthisincludesaspecificinduction
programme for any Committees they will be joining. Role
specificinductionsarealsoarrangedwhereadirectortakes
on a new role or Committee membership as appropriate.
The Board Governance and Nominations Committee
monitors the completion of all Executive and Non-Executive
Director induction plans.
For 2025 that has included an induction plan for Elaine
Bucknor who was appointed as a Non-Executive Director in
September 2025.
More information on our Board is available in other sections
of this document:
Succession
planning for
the Board
See the Board Governance and
Nominations Committee Report.
Skills and
experience of
our Board and
Committees
See Our Board and Executive Team
profiles.
Recruitment and
appointment of
Directors
See our Board Governance and
Nominations Committee Report.
Board diversity
and inclusion
See our Board Governance and
Nominations Committee Report.
Audit, risk and internal control
Our Board has overall responsibility for audit, risk and
internal control, and delegates oversight to its committees:
The Board receives quarterly reports from the Chief Risk
Officertoenableittomonitortheeffectivenessoftherisk
management framework and internal controls systems.
TheBoardRiskCommitteereviewstheeffectivenessofthe
risk management framework. The Board Audit Committee
reviewstheeffectivenessofinternalcontrolsatleast
annually with the outcomes reported to the Board by the
Committee Chair.
Remuneration
Our Board Remuneration Committee has delegated
responsibility for setting the policy on the remuneration of
Executive Directors as well as setting the remuneration for
the Board Chair and other members of the Leadership Team.
For further details please see the Directors’
Remuneration Report.
The remuneration of Non-Executive Directors is a decision
reserved for the Board’s approval and is reviewed by the
Executive Directors and the Board Chair only.
Annemarie Durbin
Chair of the Board
25 February 2026
Ensuring that
both internal and
external audit are
effective
More information can be found in
the Board Audit Committee Report.
Setting our risk
appetite
More information can be found in
the Risk Management Report.
Our systems of
internal controls
More information on the internal
controls framework can be found in
the Board Audit Committee Report.
80 81Introduction Strategic Report
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As a Committee, we are focused on ensuring that the
Board’s composition and our governance structures
supportourPurposeandmakearealdifferenceforour
members and the wider community. Our work is guided by
our commitment to delivering value for our members and
ensuringtheirinterestsarereflectedinBoarddecisionsand
governance structures.
Succession planning remained a top priority for our
Committee in 2025. Two Non-Executive Directors stepped
down during the year and we welcomed Elaine Bucknor
to the Board following a thorough recruitment process
overseen by the Committee. Elaine brings a wealth
of experience covering areas including technology
transformation and growth and spearheading cybersecurity.
She also brings a fresh perspective that will be invaluable
as we evolve and meet our members’ changing needs.
Having served three years as our Board Remuneration
Committee Chair, Debra Davies will be stepping down from
the Board following the AGM. She will be succeeded by
Janet Pope who has been a member of the Committee for
more than 12 months.
We are well progressed towards appointing one or two
more Non-Executive Directors. We have embraced a new
approach by partnering with Nurole online Non-Executive
Director platform, reinforcing our ambition to remain a
forward-thinking mutual. This helps us to reach a broader
pooloftalentedindividualswhocanmakearealdifference
to our Board and Committees. Our aim is to ensure stability
and continuity, whilst also injecting fresh perspectives
into the Board to support the delivery of our Strategy.
It is possible that for a short period we may fall below
the minimum of nine Board directors as set out in the
Society’s Rules but we expect that to be normalised in the
next few months.
We understand the importance of our role in overseeing
executive succession planning to ensure the long-term
success of the Society.
We know that thoughtful succession planning is not
justaboutfillingroles,it’saboutensuringourSociety’s
continued strength and stability, now and for years to come
and ensuring we have the right people to support a modern
Society. Throughout 2025, we’ve focused on the work being
done to build a strong and diverse pipeline of talent for key
positions in our senior leadership team.
IampleasedtosayourfirstBoardFellowwillhave
completed a full year in the role in February 2026. This role
has not only provided valuable, hands-on experience for
the Fellow but it has also enriched our Board discussions
with fresh perspectives. It’s inspiring to see how this
opportunity is helping to shape a future leader.
Our new Board and Committee governance structure was
introduced at the beginning of 2025 following the work
we reported in the Annual Report and Accounts for 2024.
We have continued to monitor progress throughout 2025
to ensure that the improvements have taken root and are
making a positive impact, allowing our Board to focus on
key areas of strategic oversight whilst our Committees do
the deep dives in their areas of expertise. As part of this
journey, our Committee has embraced a broader role, now
overseeing the governance of our Society’s subsidiary
companies and executive governance. This expanded
responsibility is all about building strong and meaningful
connections between our Board, executive teams and the
wider Group, ensuring we work seamlessly together for the
benefitofourmembersandcustomers.Itwashearteningto
seefromour2025BoardEffectivenessReviewthatthenew
governance structure is working well and we will continue
to hone this in 2026.
As a Committee we understand the importance of
our role in overseeing the approach to Board and
Committee training and development. Our commitment
to being a modern, learning-focused Board means we
encourage continuous learning and development to
supportbothindividualgrowthandforthebenefitofour
Society as a whole.
A word from the Board Governance and Nominations Committee Chair
As Chair of the Committee, I am pleased to share this report on our
work throughout 2025.
Board Governance
and Nominations
Committee Report
As we look ahead to 2026, the Committee remains
committed to ensuring there continues to be a Board and
Committeestructurethattrulyreflectstheevolvingneeds
of our Society. Our focus will be on ensuring we have a
diverse and dynamic team that supports the delivery of our
Purpose and champions the interests of our members and
key stakeholders.
Annemarie Durbin
Board Governance and Nominations Committee Chair
25 February 2026
Board Governance
and Nominations
Committee members
and meetings
The members of the Board Governance and
Nominations Committee are:
Guy Bainbridge (former Vice Chair) was a member
of the Committee to 31 December 2025 when he
stepped down from the Board.
Annemarie Durbin
Board Chair
Angela Darlington
Board Risk Committee Chair
Vice Chair
from 1 January 2026
Mark Parsons
Senior Independent Director
You can find out more about the skills, qualifications and
experience of the Board Governance and Nominations
Committee members in the Our Board and Executive
Team section.
Only members of the Board Governance and Nominations
Committee are entitled to attend its meetings, although
others may be asked to attend all or part of a meeting. The
ChiefExecutive,ChiefPeopleOfficerandGroupSecretary
are usually invited to attend each meeting, although they
are recused for any matters which may relate to them.
In 2025 the Committee held four scheduled meetings
and one ad-hoc meeting to discuss Non-Executive
Director recruitment.
Details of the number of scheduled Committee meetings
attended by each member is available in the Corporate
Governance Report.
The written resolution process was not used during 2025.
Board Governance and
Nominations Committee
responsibilities
The key responsibilities of the Board Governance and
Nominations Committee include:
•
Reviewing the Board’s structure, size and composition,
considering succession plans, diversity, key skills and
experience.
•
Overseeing succession planning for the executive and
senior leadership teams, including the development of
diverse pipelines.
•
Agreeing the annual evaluation process for the Board and
its Committees.
•
Overseeing the appointment process for Non-Executive
Directors, Executive Directors and other key Board roles.
•
Agreeing the annual Board Training Plan for the Board.
•
Reviewing governance arrangements and monitoring
corporate governance developments.
•
Reviewing and recommending the Directors and Chief
OfficersConflictsofInterestPolicyforapprovaland
monitoringpotentialconflicts.
•
Reviewing and recommending the Board Diversity
Statement for approval.
•
Overseeing subsidiary and executive level governance.
Further detail on the role and responsibilities of the
Committee can be found in the Terms of Reference
which are available on our website.
Our Board appoints members to the Committee and all
members are independent Non-Executive Directors, with
the exception of the Board Chair who was considered
independent on appointment in accordance with the UK
Corporate Governance Code (the Code).
82 83Introduction Strategic Report
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Governance > Board Governance and Nominations Committee Report
The Terms of Reference of the Board Governance and Nominations Committee are reviewed annually to ensure it continues to
fulfilitsresponsibilitiesandmeetsregulatoryrequirementsandgoodpractice.Toallowforanychangesidentifiedinrelation
tothereviewofBoardandCommitteeTermsofReferenceaspartoftheBoardandCommitteeEffectivenessReviews,more
details of which are set out in this report, the approval of the latest annual Terms of Reference reviews will be completed in
Quarter 1 2026 (which aligns with the implementation of the current Terms of Reference in January 2025). Throughout 2025,
theCommitteefulfilledtherequirementsofitsTermsofReference,withparticularemphasisonthefollowingareas:
•
Board composition and succession, including the impact of changes on our Board.
•
ChiefOfficerandseniorleadersuccessionplanning.
•
EffectivenessofourBoardandCommitteearchitecture.
•
Diversity and inclusion of our Board and the development of a diverse talent pipeline.
•
BoardandCommitteeeffectivenessincludingoversightofourBoardEffectivenessActionPlan.
The Committee is committed to ongoing development and learning and receives regular updates in relation to Corporate
Governancedevelopments.Specifictrainingsessionsarearrangedifrequired,suchaswhentherearesignificantchangesin
Code requirements.
Board Governance and Nominations Committee
Effectiveness Review
In2024theCommitteecompletedaninternaleffectivenessreviewandidentifiedthefollowingactionswhichwere
incorporated in the Committee’s work in 2025:
For2025,theCommitteeundertookaninternaleffectivenessreviewbasedonaquestionnaireapproach.Theoutcomesofthe
reviewwereconsideredatitsmeetinginJanuary2026.Therewerenourgentorsignificantactions,however,theCommittee
hasidentifiedthefollowingareasforfocusduring2026:
•
Oversight of the next phase of work in relation to Executive Succession.
•
Continuing the close monitoring of Board Committee composition, taking into account Board changes in 2026, to ensure
thatcompositionremainseffective.
•
Next steps in relation to the development of Executive Governance oversight.
Area for Focus Update
Continued oversight of
Executive Succession
Executive Succession has been a key area of oversight during 2025 ensuring there are robust
plans in place. The Committee received regular updates to assist in its oversight of Executive
Director and Critical Director succession and the development of diverse talent pipelines
during 2025.
Oversight of the
effectiveness of
the new Board
and Committee
Architecture
Following the implementation of the Board and Committee Architecture changes in January
2025,theCommitteehasmonitoredtheeffectivenessthroughtheBoardEffectiveness
ActionPlantogetherwithaninternalreviewaftersixmonths.Thefinalstepsareanexternally
facilitatedreviewwhichwillsupportanyfurtheractionsfortheBoardEffectivenessActionPlan
in 2026.
Development of its
new role in respect of
Executive Governance
oversight
TheCommitteereceiveditsfirstreporttosupportitsoversightofexecutivegovernanceinJuly
2025 and will continue to develop this role into 2026 to ensure appropriate links between
Board and executive level governance.
Corporate governance
The Board Governance and Nominations Committee is
responsible for ensuring that the Society operates within a
robust corporate governance framework. Throughout 2025
the Committee undertook a range of activities to support
this, including:
•
Conducted an annual review of the Society’s compliance
with the Code (as it applies to a building society) to
support its approval of the Corporate Governance Report
for the Annual Report and Accounts.
•
Reviewed and recommended the Corporate Governance
Report for inclusion in the Annual Report and Accounts.
•
Reviewed and recommended the Board Governance and
Nominations Committee’s Report for inclusion in the
Annual Report and Accounts.
•
Monitored any corporate governance developments
during the year such as changes to the Building Societies
Act which came into force at the start of the year.
•
MonitoreddeliveryoftheBoardEffectiveness
Action Plan throughout 2025, ensuring it continued
strengthening the Board’s governance framework.
•
Reviewed the implementation of changes to the Board
and Committee Architecture introduced at the start of the
year,confirmingtheireffectivenessinenablingtheBoard
to focus on the key strategic issues, with the Committees
supporting in their areas of responsibility.
•
Following the Board and Committee Architecture review,
assumed responsibility for Board level oversight of
subsidiary and executive governance, ensuring strong
andeffectivelinksbetweentheBoard,executive
governance and the wider Group.
These activities demonstrate the Committee’s
commitment to maintaining high standards of corporate
governance, supporting the Board’s ability to deliver on
itsstrategicobjectivesandensuringeffectiveoversight
across the Society.
Succession planning
The Board is committed to maintaining the right
compositionnowandinthefuturetoprovideeffective
oversight and support the delivery of our strategy
and Purpose. The Board Governance and Nominations
Committee works to ensure the Board and its Committees
have the appropriate composition, diversity and skills mix.
TheCommitteeensuresthateffectivesuccessionplans
are in place to manage Board continuity during periods of
transition, especially for key roles. This includes planning
for future Non-Executive Director recruitment to meet the
Board’s ongoing and future skills needs.
The Committee uses a range of information sources to
support its succession planning work, including:
•
Directors complete a self-evaluation of their skills and
experience for the Board Skills Matrix. The Committee
uses this information to plan for succession and
recruitment, ensuring the Board and its Committees have
the necessary skills.
•
The Board and Committee Membership and Key Non-
Executive Director Roles document lists current Board
Committee membership, outlines composition, and
identifiesanyfutureneeds.
•
The Board Diversity Statement and Diversity Data
demonstrate the Board’s commitments to inclusion and
diversity.
•
The Non-Executive Director Succession Timeline details
appointmentdates,termsofofficeandexpected
retirement dates for Non-Executive Directors, including
succession plans for key roles.
•
The Contingency Planning Procedure ensures the
Committee has plans for unexpected circumstances
outside normal succession planning.
•
TheChiefOfficerandCriticalDirectorSuccessionPlans
give the Committee oversight of the senior talent
pipeline and helps identify opportunities or risks.
In 2025 the Committee continued to oversee succession
planning for Executive and Non-Executive Directors.
As two of our Non-Executive Directors, Dina Matta and
Guy Bainbridge, left the Board in 2025 there has been
a focus on ensuring appropriate succession for their
skills and experience. As a result, a recruitment process
was completed during 2025 for a new Non-Executive
Director and we are now well progressed on a new phase
of recruitment, further details of which are set out in
the next section.
There has been a particular focus on ensuring that robust
succession planning is in place for our Executive Directors,
boththeChiefExecutiveandtheChiefFinancialOfficer,
taking into account the skills required for our modern
Society now and in the future. This has included ensuring
we are building a strong and diverse internal talent pipeline
as well as maintaining visibility of external talent.
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Governance > Board Governance and Nominations Committee Report
Recruitment of Non-
Executive Directors,
Executive Directors and key
Board roles
The Committee leads the recruitment of new Executive
and Non-Executive Directors on behalf of the Board,
ensuring robust recruitment and appointment processes
are followed. All recruitment is undertaken following
consideration of succession plans and the current and
future composition requirements of the Board and its
Committees.
Non-Executive Directors
In 2025 a recruitment process was completed for a Non-
Executive Director, with a focus on key skills in relation to
technology, transformation, and cybersecurity. This was to
further strengthen the Board’s composition in those areas
following Dina Matta’s departure in October 2025.
Tosupporttheprocess,apersonspecificationwas
agreed outlining the key requirements for the role. A
comprehensive recruitment process was undertaken
which included:
•
Appointingarecruitmentfirmtoconductthesearch.
•
Identifying a long and short list of potential candidates.
•
Conducting extensive candidate interviews with the
Board Chair, members of the Board Governance and
Nominations Committee and other Non-Executive
Directors.
•
Holding meetings with key members of the Executive
Team, including the Chief Executive and Chief
OperatingOfficer.
As a result, the Committee recommended the appointment
of Elaine Bucknor to the Board as a Non-Executive Director.
Ms Bucknor is a highly accomplished senior leader and
technology executive who has brought an exceptional
blend of technological insight, strategic leadership, and
cybersecurity expertise to the Board.
Korn Ferry was appointed to lead the search process. They
previously assisted in the recruitment of the Chief Executive
in 2022 and provided pro bono support for the recruitment
of a Board Fellow in 2024.
In November 2025 the Committee started a new
recruitment process to identify one or two Non-Executive
Directors to join the Board in the coming months. In order
to attract the widest pool of talent, we appointed Nurole,
an online recruitment platform, to conduct the searches.
Nurole have not previously worked with the Society at an
executive level.
Board Fellow
A recruitment process for a Board Fellow was completed
in 2024 and our new Fellow joined us and attended their
firstBoardmeetinginFebruary2025.Therolehasbeen
very successful and not only provided the Fellow with
valuable practical experience of how the Board operates
but has also brought the contribution of fresh insights to
Board discussions.
Executive Directors
There were no recruitment exercises undertaken for
Executive Director appointments during 2025.
Details of the induction process for Non-Executive
and Executive Directors are set out in the Corporate
Governance Report.
We will continue to work to further increase Board
diversity in order to enhance our effectiveness.
We want to embrace the talents of people from
all backgrounds including those with differing
characteristics, for example those who identify as
LGBTQIA+ (Lesbian, Gay, Bisexual, Transgender, Queer
(or Questioning), Intersex and Asexual+), those with a
disability, be that physical or hidden, and those from
lower socio-economic backgrounds.
Our Board places great emphasis on ensuring its
membershipreflectsdiversityinitsbroadestsense.
We consider demographics, skills, experience, race,
age, gender, disability, educational and professional
background, and other relevant personal attributes.
An initial assessment of social mobility and our
Board’s composition aligned broadly with the broader
colleague base of our Society. It is also recognised that
there are various other aspects of non-visible diversity
on our Board.
By maintaining a balance of these factors, the Board
can provide the range of perspectives, insights and
challenge needed to support good decision making.
The Board Governance and Nominations Committee
regularly reviews the composition of the Board to
ensure that it has the balance of skills, experience,
independence and knowledge through its diverse
compositiontoremaineffective.
Board diversity
We place great importance on having an inclusive and diverse Board and workforce. Our Board has agreed a Diversity
Statement to support this ambition, which is reviewed by the Board Governance and Nominations Committee and approved
by the Board each year.
A summary of progress against the key aspects of the Diversity Statement is set out below:
Only candidate search and specialist recruitment
agencies that have signed up to the Standard
Voluntary Code of Conduct for Executive Search Firms
will be used for the appointment of Directors, and we
prefer to use those signed up to the Enhanced Code.
Korn Ferry was appointed to lead the search process
for a Non-Executive Director in 2025. Korn Ferry
has signed up to the Voluntary Code of Conduct for
Executive Search Firms.
Nurole was appointed to lead a new search process in
November 2025. Nurole has signed up to the Voluntary
Code of Conduct for Executive Search Firms.
At least 40% of the Board should be women.
The percentage of women on the Board as at 31
December 2025 was 60% and exceeded the target.
Following Guy Bainbridge’s departure from the Board
on 31 December 2025, the percentage of women on
the Board as at 25 February 2026 is 67%.
For prior years see the Board Composition section of
the Corporate Governance Report.
At least one of the senior Board positions (Chair, Chief
Executive Officer(CEO), Chief Financial Officer (CFO)
or Senior Independent Director (SID) should be a
woman.
As at 31 December 2025 (and as at 25 February 2026)
both the Board Chair and Chief Executive positions
were held by women and as such the target was met.
At least one member of the Board should be from an
ethnic minority background excluding white ethnic
groups (as set out in categories used by the Office for
National Statistics).
There was one member of the Board from an ethnic
minority background as at 31 December 2025 (and
as at 25 February 2026) and, as such, the target is
being met.
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Governance > Board Governance and Nominations Committee Report
For more details on our colleagues and inclusion and
diversity please see the Strategic Report.
Board and Committee
Effectiveness Reviews
The Board Governance and Nominations Committee agrees
theannualeffectivenessreviewprocessfortheBoardand
its Committees.
In line with the requirements of the Code, which requires an
external review every three years, the Board undertook an
externaleffectivenessreviewin2023.Thiswasfollowedby
an internal review process in 2024. Continuing this cycle, it
wasagreedthataninternaleffectivenessreviewwouldbe
completed in 2025. An internally facilitated questionnaire
has been used to focus on gaining granular feedback on
thecurrentstateandeffectivenessoftheBoardandits
Committees together with areas for improvement.
We have also undertaken an externally facilitated review
of Board and Committee Architecture following its
implementation during 2025 to ensure there are no further
areas of improvement or best practice to be considered.
The combination of both reviews will form the basis of our
BoardEffectivenessActionPlanfor2026.
Further details on the approach to the review can be
found in the Corporate Governance Report.
Board Chair
Our Senior Independent Director meets with our Board
Chair formally twice a year on behalf of our Board to review
the Chair’s performance. The review incorporates feedback
from key stakeholders including the Executive and Non-
Executive Directors.
The annual review for 2025 was completed by Mark
Parsons, the Senior Independent Director. The outcomes
were reported to the Board meeting in January 2026
without the Board Chair present.
Non-Executive Directors
The Board Chair has meetings with each Non-Executive
Director twice a year to review their performance,
discuss any areas for development and review ongoing
time commitment.
Executive Directors
Executive Director evaluations are carried out by our Chief
Executive (or the Board Chair in the case of the Chief
Executive) against agreed objectives.
The Board Chair meets with the Non-Executive Directors
at least once a year to discuss the performance of
management and the Executive Directors.
Annemarie Durbin
Board Governance and Nominations Committee Chair
25 February 2026
Diverse talent pipelines
As part of its role, the Committee oversees senior
leadership succession plans and the diversity of the talent
pool for future vacancies. Strong progress has been made in
relation to gender, however, more work is needed in relation
to ethnic diversity which will remain a focus going forward.
We have signed the HM Treasury’s Women in Finance
Charter and are committed to improving gender balance,
particularly at senior levels in our organisation. For
further information, we had the following percentages
of women colleagues at 31 December 2025 (and for
comparison 2024):
31 December
2025
%
31 December
2024
%
Executive Committee
The Leadership Team
immediately below
our Board (as set out
in the UK Corporate
Governance Code)
37.5% 28.6%
Senior Managers
Our colleagues in
roles Grade E and
above (excluding G)
(in accordance with
our commitments
under the Women in
Finance Charter)
48.1% 47.3%
All Colleagues 59.1% 59.7%
I joined our Board as a Non-Executive Director on 1
September 2024, when I also joined the Committee. I
undertook a tailored induction programme in preparation
for my appointment as Chair of the Committee, which
formally commenced on 1 September 2025. This followed
a structured and formal handover from Guy Bainbridge,
who retired from his position as Chair and later stepped
down from the Board on 31 December 2025. The handover
enabled me to prepare thoroughly for the responsibilities
of the role. I want to thank Guy for his valuable contribution
to the Committee’s work over the last six years, as both a
member and Chair.
I am also very grateful to my fellow Committee members for
the diligence with which they contribute to the Committee’s
work,andtomanagementforthetimeandefforttheyputin
toensuretheCommitteeremainseffective.
During the year we have spent considerable time
assessing progress in strengthening the Group’s control
environment to meet external threats and regulatory
requirements, and to protect our members’ interests.
This included strengthening the regulatory reporting
control environment through enhanced frameworks
and improved documentation of key judgments and
assumptions. We continued to oversee developments in
our internal audit function, including progress against its
strategic priorities and the results of its quality assurance
programme. We have remained focused on the impacts
of the economic environment, notably interest rates,
inflation,andunemployment,andregulatoryandlegislative
developments upon our current and future business. In
2026, the Committee will continue its work to protect the
interests of all of the Group’s stakeholders.
Peter Bole
Board Audit Committee Chair
25 February 2026
A word from the Chair of the Board Audit Committee
I am pleased to present our 2025 Board Audit Committee Report
which sets out the Committee’s role and its key activities during the
year,includingitsreviewoffinancialreportingmatters,oversightof
the Group’s internal controls, and its internal and external auditors.
Board Audit
Committee
Report
Board Audit Committee
members and meetings
The members of the Board Audit Committee are:
Guy Bainbridge (former Vice Chair and Committee
Chair) was a member of the Committee to
31 December 2025 when he stepped down
from the Board.
Peter Bole
Committee Chair
and Independent
Non-Executive Director
Angela Darlington
Independent Non-
Executive Director
Vice Chair
from 1 January 2026
Mark Parsons
Senior Independent Director
88 89Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Board Audit Committee
responsibilities
The responsibilities of the Committee include:
•
Overseeingtheintegrityoffinancialreporting.
•
Monitoringtheadequacyandeffectivenessofthe
Society’sinternalfinancialcontrols,systemsandrisk
management.
•
Monitoring and overseeing the internal audit function
and performance of the external auditor.
•
Monitoring the Society’s approach to the introduction
of Provision 29 of the Code and the implementation of
definedmaterialcontrols.
•
Reviewing and recommending to the Board for approval,
the Group’s annual Sustainability disclosures.
•
Reporting to the Board on matters within its remit and
making recommendations where required.
Further detail on the role and responsibilities of the
Committee can be found in the Terms of Reference
which can be found on our website
40
.
The Committee’s Terms of Reference are reviewed
annually to ensure they remain aligned with regulatory
requirements and good practice, alongside ensuring the
Committeeisfulfillingitsresponsibilities.Toincorporate
any changes arising from the Board and Committee
EffectivenessReviews,detailsofwhichareoutlinedinthe
Board Governance and Nominations Committee Report,
the approval of the latest Terms of Reference reviews will
take place in Quarter 1 of 2026. This timing aligns with
the implementation of the current Terms of Reference in
January2025.Throughout2025,theCommitteefulfilled
the requirements of its Terms of Reference, with particular
emphasis on the areas that are covered in more detail
in this report.
The Committee is committed to ongoing development and
learning and Committee members also take part in training
andreceivebriefingsonareasthatconcernnotonlytheir
roles on the Committee, but also their roles on the Board.
During 2025 the Committee were provided with additional
training on hedge accounting, along with other Board
members, and an insight session with the external auditor
on Provision 29 of the Code.
Our Chair of the Board oversees the training and
development of the full Board and you can find more
information on this in the Composition, Succession and
Evaluation section of the Corporate Governance Report.
Our Board appoints members to the Committee and
takes into account the requirements of the UK Corporate
Governance Code (‘the Code’), as far as they apply to
building societies, when considering who should be a
member. In line with the Code, all members have to be
independent Non-Executive Directors, at least one member
musthave‘recentandrelevantfinancialexperience’and
the Committee as a whole should have experience in the
financialservicessector.
You can find out more about the Code, and how it applies
to building societies, in the Corporate Governance
Report.
In 2025, all the members of the Committee were
independent Non-Executive Directors, and all have recent
andrelevantfinancialexperiencegainedthroughthe
qualificationstheyholdandtherolestheyhaveheldor
currently hold with other organisations.
TheCommitteebenefitsfromadiverserangeofexpertisein
theareasoffinance,riskandtransformationwithparticular
emphasisonthefinancialservicessector.Altogether,this
ensures that the Committee has the required competence in
thefinancialservicessector.
You can find out more about the skills, qualifications and
experience of the Committee members in the directors’
biographies in the Our Board and Executive Team section.
Only members of the Committee are entitled to attend its
meetings, although others may be asked to attend all or
part of a meeting. Our Chair of the Board, Chief Executive,
ChiefFinancialOfficer,ChiefInternalAuditOfficerand
the external auditor were invited to attend all meetings
in 2025, along with other members of our Leadership
Team and Senior Managers where the Committee felt it
wasbeneficial.
The Committee held six scheduled meetings in 2025
and one ad-hoc meeting, with the Board Risk Committee,
to consider the Society’s implementation plans for
Provision 29 of the Code. Three of those meetings began
with a private session between the invited members of
the Leadership Team and the Committee members and
finishedwithaprivatesessionbetweentheCommittee
membersandourChiefInternalAuditOfficerandexternal
auditor. These private sessions allow the Committee to
discussconfidentialmatters,whichmaynotbeappropriate
to discuss with all Committee attendees present. The
Committee also has private sessions each year with the
ChiefFinancialOfficer.Meetingsareregularlyscheduled
outside the Committee with the Chair and management and
the internal and external auditors to maintain a constructive
dialogue. We also used the Written Resolution process
twice where matters required review and approval outside
of the planned meeting schedule.
Details on the number of scheduled meetings attended
by each of the Committee members during 2025 are
shown in the Corporate Governance Report.
Governance > Board Audit Committee Report
Board Audit Committee
effectiveness review
TheeffectivenessoftheCommitteeisassessedannually.TheCommitteehas
throughout 2025 continued to progress the actions agreed as part of the 2024
process. For 2025 the Board Committee evaluations were incorporated into the
Board internal evaluation process. A self-assessment exercise was performed, co-
ordinated by Group Secretariat, and a summary of the results was reported to the
Committee and discussed in January 2026. The 2025 review concluded that the
Committeeoperatedeffectivelyduringtheyearandthattherewerenosignificant
areasforimprovementorsignificantactionsarisingfortheCommittee.
Further details on the evaluation process for 2025 can be found in both the
Board Governance and Nominations Committee Report and the Corporate
Governance Report.
Corporate Governance
The Committee considered in more detail the Financial Reporting Council’s (FRC)
‘Audit Committees and the External Audit: Minimum Standard’ (‘the Standard’),
published in 2023, which sets the minimum standards for audit committees in
relation to their oversight responsibilities for the external audit and includes
guidanceonassessingtheeffectivenessoftheauditprocessalongsidecovering
the audit committee’s responsibilities for the external audit, the external audit
tender,oversightoftheexternalauditorandauditandfinallythereportingof
activities undertaken to meet the Standard’s requirements. Whilst the Standard
applies to FTSE350 companies and is voluntary, the Standard is seen as good
governance. The Committee reviewed a comprehensive assessment of the
Society’s approach to the Standard and while the Society demonstrated strong
alignmentwithmanyaspectsoftheStandard,thereviewidentifiedsomeareas
wherecurrentpracticeswouldbenefitfromfurtherformalisationorenhancement.
Theareasidentifieddidnotindicatenon-compliancewiththeStandard,rather
areas where enhancements would support stronger alignment and demonstrate
best practice in audit oversight. The Committee will continue to focus on these
enhancements in 2026 developing further its External Audit Tender Policy.
The Committee has monitored the Society’s approach to the introduction of
Provision 29 of the Corporate Governance Code 2024 and the implementation
ofdefinedmaterialcontrols.TheCommitteewillcontinuetoworkwithkey
stakeholders to monitor the operation of material controls and ensure ongoing
compliance,followingprovision29becomingeffectiveon1January2026.
Key financial reporting matters
Providingourstakeholderswithcomplete,accurateandrelevantfinancial
information is critical to ensuring that the Society maintains their trust. The
Committee is responsible for ensuring that the key accounting policies,
estimatesandjudgementsusedinourfinancialstatementsareappropriate.To
help the Committee achieve this, it receives reports from management and our
external auditor, PwC.
40
https://www.ybs.co.uk/your-society/inside-your-society/corporate-governance/committees#audit
90 91Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Significant financial reporting matters considered by the Board
Audit Committee since the last Annual Report and Accounts
Matters
considered
Key activities 2025
Expected
credit losses
The Committee continued to provide robust oversight of the Group’s approach to credit risk
management and the calculation of Expected Credit Losses (ECL). The estimation of provisions
for mortgage loan portfolios remains inherently judgemental, requiring the use of historical data
alongside forward-looking assumptions about macroeconomic conditions and customer behaviour.
Throughout 2025, the Committee closely scrutinised management’s selection of economic
assumptions and the weighting of macroeconomic scenarios used in the ECL models. These
assumptions have a material impact on impairment outcomes, and the Committee sought assurance
thattheyappropriatelyreflecttheevolvingeconomiclandscape.
The UK macroeconomic environment showed signs of stabilisation during the year. The labour market
loosened modestly, with rising unemployment, slowing wage growth, and reduced vacancy levels
alongsideinflationpeakingat3.8%inthesecondhalfoftheyear.However,realearningsgrowth
helpedeaseaffordabilitypressuresforborrowers.
The Bank Rate was reduced gradually over the course of the year, with further cuts expected to
continue. Interest rate expectations remained volatile, as the Monetary Policy Committee (MPC)
continued to balance slow economic growth and a softening labour market against persistent
inflationarypressures.
The housing market demonstrated resilience, particularly in response to changes in stamp duty.
Mortgage approvals recovered well, with activity levels ahead of 2024. However, house price growth
moderated, and an emerging imbalance between supply and demand was evident, driven by an
increase in sellers of buy-to-let and second homes.
The Committee reviewed and agreed the assumptions applied across base case, upside, downside, and
severe stress scenarios. It concurred with management that the range and weighting of scenarios were
appropriate given the current macroeconomic outlook. Post Model Adjustments (PMAs) continue to
beappliedwhererisksareidentifiedthatarenotadequatelycapturedbythecoreECLmodels.These
adjustmentsarereviewedregularlytoensuretheyremainrelevantandreflectemergingrisks.
The Society previously applied a PMA to address under-prediction in the probability-of-default
element of the ECL calculation. Following a 2025 model review and update, this adjustment is no
longer required and has therefore been removed.
Given the ongoing uncertainty, PMAs remain a critical component of the Society’s approach to
ECL estimation. Their judgemental nature requires robust governance, clear documentation, and a
transparent process to ensure consistency and reliability.
Hedge
accounting
During 2025, the Committee continued to review the methodology and key assumptions applied
to the Group’s hedge accounting models. As part of its oversight responsibilities, the Committee
undertook targeted training on hedge accounting to deepen its understanding of the technical
requirements and evolving regulatory landscape. This training supported more informed discussions
and challenge of management’s approach.
The Committee considered the development of new hedge strategies introduced during the year
and assessed their alignment with the Group’s risk management objectives. While not all unmatched
interest rate swaps are currently designated within formal hedge relationships, the Committee noted
thatinvestigationsremainongoingintohowtheseinstrumentscanbemoreeffectivelyincorporated.
The aim is to further mitigate fair value volatility and enhance the alignment between accounting
outcomes and economic risk management.
Followingitsreview,theCommitteeissatisfiedthattheamountsrecognisedinthefinancial
statementsareappropriatelystatedandreflectaprudentandconsistentapplicationofhedge
accounting principles.
Governance > Board Audit Committee Report
Matters
considered
Key activities 2025
Retirement
benefit
obligations
TheGroupoperatesoneemployeebenefitscheme(theScheme)withbothdefinedbenefitand
definedcontributionsections.ThedefinedbenefitschemeisaccountedforbytheGroupunderIAS
19, with the key assumptions presented to, and approved by, the Committee. During the period the
Committee reviewed the assumptions proposed by management and the scheme administrators
(Willis Towers Watson), including how they benchmark against the rest of the industry.
Effective interest
rate (‘EIR’)
The Committee considered the results of management’s detailed reviews of the methods and
assumptionsusedinthecalculationofinterestincomeundertheEffectiveInterestRate(EIR)
methodology, as required under IFRS, and concluded that the amounts recognised were fairly stated.
Acquisition
fair value
adjustment
run-off
TheCommitteereviewedtherun-offprofileofthefairvalueadjustmentsmadeontheacquisitionof
the Chelsea, Norwich & Peterborough and Egg portfolios and approved changes where the actual run-
offexperienceiseitherquickerorslowerthanthatanticipatedoninitialrecognition.TheCommittee
iscomfortablethatthecarryingamountsreflecttheremainingexpectedlifeoftheacquiredloans
balances.
Tax Papers setting out the judgements applied in the recognition of deferred tax balances and the level of
transfer pricing adjustments applied between Group entities were presented to the Committee over
theperiod.TheCommitteeissatisfiedthattherecognisedamountsofdeferredtaxarereasonable
given the substantive enactment of scheduled changes in UK corporation tax rates and the transfer
pricing assumptions are reasonable.
Provisions
for liabilities
and charges
The Committee reviewed and considered the provisions and disclosures for liabilities and charges,
being those relating to restructuring, customer redress and property related costs, and agreed with the
overall amount held.
Viability and
going concern
The Committee reviewed papers prepared by management and recommended to the Board that the
financialstatementsshouldbepreparedonagoingconcernbasisi.e.12monthsfromthedateof
approvalofthisreport.TheCommitteeconfirmedthatthreeyearswasasuitableperiodofreview
for the viability statement, and that the viability statement could be provided. Whilst there is no
guarantee, there is a reasonable expectation that the Society will be able to continue to be viable, i.e.
operate and meet its liabilities as they become due, until 31 December 2028.
More information can be found in our Directors’ Report.
Disclosures The Committee reviewed papers prepared by management and agreed that the disclosures included
within this Annual Report and Accounts met all statutory requirements under the Building Societies
Act1986,thedisclosureandtransparencyrulesoftheFCAandapplicableinternationalfinancial
reporting standards.
TheCommitteeconfirmedthatdisclosuresintheHalf-YearlyFinancialReportmettherequirementsof
thedisclosureandtransparencyrulesoftheFCAandinternationalfinancialreportingstandards.
The Committee also reviewed the Group’s regulatory Pillar 3 quarterly disclosures included in full on
the Society’s website. The Committee approved the quarter one, two and three Pillar 3 disclosures for
publication and recommended the quarter four disclosures to the Board for its approval.
To enable the Board to approve the Letter of Representation to the external auditor at both year end and half year, the
BoardAuditCommitteereviewedthespecificrepresentationsandthebasisonwhichmembersoftheLeadershipteamhave
evidenced them.
92 93Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Other significant reporting
matters considered by the
Board Audit Committee since
the last Annual Report and
Accounts
In 2025, the Committee approved the 2024 Environmental,
Social and Governance Report (the ESG Report) following
a review that began in late 2024. The review considered
the report’s objectives, structure, key messages, and the
governance and publication timeline. The Committee
assessed the controls and processes in place to ensure the
accuracy and credibility of the data and narrative, alongside
key areas of focus including ESG governance, strategic
alignment, data validation, future assurance, and the clarity
ofdefinitionsandmeasurestosupporttransparencyand
regulatory compliance. To strengthen governance, the
Committee, and subsequently the Board Governance
and Nominations Committee (BGNC), considered the
governance process for future ESG Reports. From 2025, the
Board Environmental and Social Purpose Committee and
BGNC will review and recommend their respective sections
of the Sustainability Report (formerly ESG Report) to the
Committee, which in turn will recommend the Sustainability
Report to the Board for approval.
Oversight of the external
auditor and external audit
process
The Committee oversees the audit process and the
relationship with our external auditor. The Committee
begins each annual audit cycle by reviewing and approving
the proposed audit plan presented by our external auditor,
PwC. This process includes a discussion between the
Committee and our external auditor around key risk areas to
ensure that there is agreement on the focus of the external
auditor’s work and their assessment of materiality for the
financialstatements.TheCommittee’sdiscussionofthe
external auditor’s risk assessment was informed this year by
theeconomicfactorsaffectingECLs,hedgingstrategiesand
operational risks.
For further information about materiality and how it is
calculated, please refer to the Independent Auditors’
Report.
The Committee has considered PwC’s risk assessments,
planned work, resources and audit fees throughout the year
and monitored the progress of PwC’s audit work through
discussions with PwC and management. The external
auditor provides regular updates to the Committee on their
work on the Half-Yearly Financial Report and the Annual
Report and Accounts before the Committee approves them.
Throughout the year, the Committee assesses the
effectivenessoftheexternalauditprocess,anassessment
which is based on guidance from the Financial Reporting
Council (FRC). The assessment included a survey following
the completion of the 2024 audit to members of the
Committee, and Senior Managers in the Society’s Finance
division. Feedback from key internal stakeholders was
also gathered to assess the auditor’s performance, and
a meeting was held with senior audit team members to
discuss this feedback, share conclusions from reviews, and
gatherperspectivesontheeffectivenessoftheexternal
audit process and how the Society could further contribute
to this. These conclusions were then shared with the
Committee to support its assessment of the quality and
performance of the external audit team and process.
In line with the FRC’s ‘Audit Committees and the External
Audit: Minimum Standard’ (the Standard), the Committee
considered Audit Quality Indicators (AQIs) proposed by
the external auditor to support a structured and evidence-
basedassessmentofauditeffectiveness.TheseAQIswill
be adopted from the 2025 year-end audit. The Committee
also reviewed the external auditor’s internal quality
procedures, including their response to the FRC’s Audit
Quality Inspection and Supervision reports, and reviewed
the auditor’s system of quality management under ISQM
(UK) 1. The Committee concluded that the external auditor
wasperformingitsdutiesinaneffectivemannerin2024
and believe it remains so through the 2025 audit.
External auditor independence
The Board Audit Committee monitors and annually assesses
the external auditor’s independence and objectivity, taking
into account relevant laws, professional and regulatory
requirements and the relationship with the external auditor
asawhole.TofulfiltheresponsibilitiessetoutinitsTerms
of Reference, the Committee considers, as described
below, the external auditor’s non-audit work, the fees paid
in respect of such non-audit work, the employment of
former employees of the external auditor, and the external
auditor’s tenure.
The Group has a policy on the use of the external auditor
for non-audit work, and the application of this policy is
overseen by the Committee. The policy is designed to
ensure the external auditor’s continued independence
and objectivity.
Fees for individual assignments that exceed a set threshold
are reviewed by the Committee. Fees for those assignments
under the threshold are approved by the Chief Financial
Officerunderdelegatedauthority.Allnon-auditservices
are approved in advance of the work commencing. Our
external auditor’s fee is reviewed regularly. The Committee
issatisfiedthattheGrouphasoperatedinlinewiththe
policy during 2025.
Governance > Board Audit Committee Report
The total amount of fees paid to our external auditor for
both audit and non-audit work is disclosed in note 6 to the
financialstatements.
The Group also has a policy on the employment of
employees of the Group’s external auditor, and the
Committee monitors the implementation of this policy
annually.Insummary,thisrestrictstheSocietyfromoffering
employment to named individuals from the external audit
firmforkeymanagementpositionswithinatwo-year
period from working on the Group statutory audit and
ensuresanysuchoffersofemploymentarevettedbythe
Committee to ensure ongoing independence of the external
auditor. The Committee also reviewed the independence
position of relevant senior members of the Finance
Division,anditremainssatisfiedtherearenoconflictsor
independence issues.
In line with the Standard, the Committee continued to
strengthen its oversight of auditor independence by
reviewing the external auditor’s internal quality procedures,
including their response to the FRC’s Audit Quality
Inspection and Supervision reports, and by considering the
auditor’s system of quality management under ISQM (UK)
1. The Committee also receives regular updates from the
external auditor on their independence and objectivity, and
formally considers independence twice a year as part of its
auditplanningandeffectivenessreviewcycle.
The Committee takes into account the performance of the
external auditor when considering their reappointment
as well as their length of tenure and the date of rotation
of the audit partner. PwC were appointed as external
auditor following a competitive tender process in 2018
and their appointment was approved by members at the
2019 AGM. PwC were reappointed as the Society’s external
auditor at the 2025 AGM and the Committee remains
satisfiedwiththeperformanceofPwCduring2025andthe
Committee has therefore recommended to the Board that
they be approved for reappointment as external auditor
at the 2026 AGM.
Review of internal controls
OurBoardrecognisestheimportanceofeffectiverisk
management and strong internal controls. These help us
to achieve our Purpose of providing Real Help with Real
Life by protecting our customers’ and other stakeholders’
interests and looking after our Group’s assets. Well-
designedcontrolsalsoenableustobecomemoreefficient
andeffectiveatwhatwedo,producereliableinformation
and reports, and comply with laws and regulations.
The risks that the Society faces evolve over time, so the
Committee regularly considers the risks we face, how
our Group’s internal controls are working and whether
our Group needs to strengthen what it does to manage
the nature and extent of those risks. Our Board develops
our policies on risk and control, but all of our Society’s
colleagues have a responsibility to carry out those policies
as part of helping our organisation achieve its objectives.
So that they can do that, our Leadership Team provides
training and coaching, and then monitors how colleagues
are managing risks.
To support the Committee’s review of internal controls, our
Internal Audit function provides reports to every meeting
and our external auditor provide their own independent
opinions to us. The Committee also receives reports
onsignificantcontrolweaknessesfromtheLeadership
Team. The Committee works closely with the Board
Risk Committee to make sure that the risk management
frameworkisoperatingeffectivelyacrossourbusiness.
You can find further details of risk management
practices in the Risk Management Report.
The main types of information the Board Audit Committee
considered during 2025 were
•
Internal Audit reports: The Committee reviewed and
approved the Internal Audit assurance plan for the year,
the proposed revisions to the plan, and the resources
needed to support it. In doing this the Committee
considered the ongoing appropriateness of Internal
Audit’s coverage of the Group’s risks, processes, systems
and controls and the balance of assurance between the
Group’s transformation programme and business-as-
usual activities. The Committee also considered reports
ontheplan’sprogress,includingInternalAudit’sfindings,
their root causes and the Leadership Team’s responses.
Where Internal Audit reports are rated as ‘Unsatisfactory’,
the accountable members of the Leadership Team are
asked to attend the Committee and explain why the
identifiedcontrolweaknesseshavearisenandwhat
actions are being taken to address them. In 2025,
Internal Audit drew the Committee’s attention to a
rangeofareasthatrequiredsignificantimprovement,in
particular, the control framework and governance over
the group’s change programme.
•
Updates on risk management culture: During the year,
the Committee discussed the Society’s risk culture and
continued their ongoing monitoring of progress made
by management in improving end-to-end process and
controls documentation.
•
External auditor reports: The Committee reviewed reports
from our external auditors, PwC, about recommendations
inrelationtointernalcontrolsforkeyfinancialreporting
processes and systems.
•
Report on the adequacy of internal controls in 2025:
The Committee received a report from all three lines of
defencewithintheSociety,concerningtheeffectiveness
of internal controls, including focus on areas not yet
at target levels of maturity. The Committee’s attention
was drawn to the need to increase the maturity of the
control framework covering Change Risk, Information
Management, Compliance & Conduct Risk, Financial
Crime & Fraud and Model Risk, and the work being
done to embed a robust control environment for the
increasinguseofArtificialIntelligencetools.
94 95Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Findings that were raised were prioritised by management
according to impact and areas for improvement are being
addressed. The Committee considered regular updates on
thestatusofcontrolissuesidentifiedbybothInternalAudit
andPwC,andthevolumeandageprofileofthoseissues
remained within tolerable limits. Because our total assets
exceed £50bn, our external auditor provides the PRA with
a Written Auditor Report on selected aspects of their audit.
This was also considered by the Committee during the year.
The Committee considered whether any recommendation
should be made to the Board Remuneration Committee for
a possible adjustment to the variable remuneration of the
Leadership Team, in respect of internal control weaknesses.
Taken together, the information the Committee reviewed
provided assurance that, whilst control improvement work is
ongoing, the Group maintained an adequate internal control
frameworkin2025andtherewerenosignificantbreaches
of control or regulatory standards. This supports our aim of
complying with the principles and provisions of the Code
where they apply to building societies. The Leadership
Teamproactivelytookactiontotackleidentifiedcontrol
weaknesses, thereby improving the strength of the internal
controlenvironment,sothatourGroupremainsfinancially
and operationally resilient.
Oversight of the Internal Audit
function
The purpose of Internal Audit is to provide an independent
and objective opinion to the Board on the adequacy and
functioning of the Society’s system of internal control. This
is primarily achieved by performing risk-based reviews,
following an established audit methodology. Internal
Audit’s focus includes assessing risk management and
governance processes to ensure:
•
Significantriskexposuresareappropriatelyidentified,
reported to the Board and the Society’s Senior
LeadershipTeam,andeffectivelycontrolled.
•
Significantfinancial,management,andoperating
information is accurate, reliable and delivered in a
timely manner.
•
The Society’s actions comply with policies, standards,
procedures, and applicable laws and regulations.
Our Internal Audit function is governed by a charter, which
the Board Audit Committee reviews and approves annually.
The Committee reapproved the charter in November 2025
andyoucanfindacopyofitonourwebsite
ybs.co.uk/your-society/inside-your-society/corporate-
governance/committees.
TheChiefInternalAuditOfficerreportsdirectlytotheBoard
Audit Committee Chair and Internal Audit has full and
unrestricted access to all of our Group’s functions, systems,
records and colleagues. The Board Audit Committee Chair
meetsregularlywiththeChiefInternalAuditOfficerto
review the performance of the Internal Audit function
and discuss any matters emerging from Internal Audit
activities. During 2025, the Board Audit Committee Chair
alsoprovidedinputtotheChiefInternalAuditOfficer’s
performance objectives, annual performance appraisal
and remuneration.
In addition to receiving reports on the outcomes of Internal
Audit activities, as described above, the Committee receives
regular reports on the performance of Internal Audit against
an agreed set of performance measures. Internal Audit also
reports to the Committee annually on the strategy for the
function, the expertise, skills and resources it has, and what
itneedstoeffectivelydischargeitsrole.TheCommittee
reviews and approves any proposed changes to Internal
Audit’s strategy and resources. During 2025, this has
included consideration of the resources the Internal Audit
function may need over the year ahead, and the technology
and systems that Internal Audit uses.
Internal Audit continues to operate its own quality
assurance and improvement programme. In 2023, an
external quality assessment of the function was performed,
which benchmarked Internal Audit against relevant
professional standards and codes and industry best
practice. The assessment was performed by an independent
third-party. The recommendations put forward by the third-
partytoenhancethefunction’sapproach,effectiveness,
quality, skills and experience were implemented in 2024.
Overall,theCommitteeremainssatisfiedthattheInternal
Auditfunctioniseffectiveandhastheappropriate
resources, including use of external third-party support
wherenecessary,tofulfilitsresponsibilities.TheCommittee
will continue to oversee Internal Audit’s development,
including the monitoring of action plans resulting from
external and internal assessments, to make sure the
function remains equipped for the role it plays in helping
our Society achieve its Purpose.
Peter Bole
Board Audit Committee Chair
25 February 2026
Governance > Board Audit Committee Report
A word from the Chair of the Board
Risk Committee
I am pleased to present our
2025 Risk Management Report,
which sets out the role of the
Board Risk Committee (BRC) and
gives an overview of its activity
during the year.
Our attention during 2025 has focused on the principal
riskswhichaffecttheSocietyandensuringthatthere
is appropriate risk oversight on the strategic direction
of the Society.
A key development during the year has been that in addition
to the formal meetings of the Committee, each quarter
the BRC reconvenes during the wider Board meeting,
so oversight of key risk items can be considered by the
full Board. All Board members attend Reconvened BRC
meetings and availability and attendance at such meetings
is available in the Corporate Governance Report. Key Risk
items include assessing the Society’s Risk Appetite metrics,
ICAAP and ILAAP.
AsChairoftheBRC,IamsatisfiedtheSocietyhasaclear
risk appetite, aligned to its strategy, to ensure it contains the
impact of those risks it has chosen to take; has appropriate
controls in place to identify both the risk of material
deviation from the risk appetite and any unplanned risks the
Society encounters; and appropriately balances the risks it
takes between delivering against our Purpose for current
and future members and customers, and protecting the
resilience and sustainability of the Society.
As we look ahead to 2026, my BRC colleagues and I will
continue to expect a risk management approach that is
robust, prudent and member-focused so that I can continue
to report my satisfaction with the Society’s risk positions.
Angela Darlington
Board Risk Committee Chair
25 February 2026
Risk
Management
Report
Board Risk
Committee members
and meetings
The current membership of BRC comprises:
Angela Darlington
Board Risk
Committee Chair
Vice Chair
from 1 January 2026
Mark Parsons
Senior Independent
Non-Executive Director
Debra Davies
Independent
Non-Executive Director
Elaine Bucknor
Independent
Non-Executive Director
Peter Bole
Independent
Non-Executive Director
Guy Bainbridge (former Vice Chair and
Independent Non-Executive Director) was a
member of the Committee to 31 December
2025 when he stepped down from the Board.
96 97Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
•
Monitoring the progress of the Governance, Risk and
Control Programme.
•
Reviewing risks and issues related to the Society’s
One Plan.
•
Reviewing the second line of defence oversight plan.
•
Reviewing and recommending the approval of the
Society’s ILAAP and ICAAP, including appropriate stress
testing scenarios.*
•
Monitoring the Society’s Compliance with the
Resolvability Assessment Framework.
•
Reviewing and recommending the Board approve the
Society’s annual Operational Resilience Self-Assessment,
Important Business Services and Impact Tolerances.
•
Reviewing and monitoring the progress against the
prioritiesidentifiedbytheSociety’sMoneyLaundering
ReportingOfficer(MLRO).
*denotes items considered by the wider Board at the
Reconvened BRC.
Further detail on the role and responsibilities of the
Committee can be found in the Terms of Reference,
which are available on our website
41
.
The Committee’s Terms of Reference are reviewed annually
to ensure that they remain aligned with regulatory
requirements and good practice, alongside ensuring the
Committeeisfulfillingitsresponsibilities.Toincorporate
any changes arising from the Board and Committee
EffectivenessReviews,detailsofwhichareoutlinedinthe
Board Governance and Nominations Committee Report,
the approval of the latest Terms of Reference reviews will
take place in Quarter 1 of 2026. This timing aligns with
the implementation of the current Terms of Reference in
January2025.Throughout2025,theCommitteefulfilled
the requirements of its Terms of Reference, with particular
emphasis on the areas that are covered in more detail
in this report.
The Committee is committed to ongoing learning and
development and Committee members also take part in
trainingandreceivebriefingsonareasthatconcernnot
only their roles on the Committee, but also their roles
on the Board. During 2025, the Committee was provided
with additional training on Structural Hedging, as well
as multiple workshops on the Society’s ICAAP, ILAAP and
Recovery Plan.
Our Chair of the Board oversees the training and
development of the full Board and you can find more
information on this in the Composition, Succession and
Evaluation section of the Corporate Governance Report.
During the year, we have welcomed Elaine Bucknor and
Peter Bole as new Committee Members and are already
benefittingfromtheircontributionsandvastexperience.
Our Board appoints members to the Committee and all
members are independent Non-Executive Directors. You can
findoutmoreabouttheskills,qualificationsandexperience
of Board Risk Committee Members in the Our Board and
Executive Team section.
Only members of the Board Risk Committee are entitled to
attend its usual meetings, although others may be asked to
attend all or part of a meeting. The Committee meetings are
attended by the Board Chair and members of the Executive
teamincludingtheChiefExecutive,ChiefFinancialOfficer,
ChiefRiskOfficerandChiefInternalAuditOfficer.Our
External Audit Partner is invited to attend every meeting.
The Committee held four scheduled meetings during 2025
and held three ad-hoc meetings. The three ad-hoc meetings
were scheduled to consider:
•
Reviewing proposed Credit Risk Appetite metric changes
for High Loan-to-Income lending.
•
The Society’s Consumer Duty Annual Report.
•
Monitoring the Society’s approach (together with the
Board Audit Committee) to the introduction of Provision
29 of the Corporate Governance Code 2024, which
requiresfirmstoprovideamoredetaileddisclosure
oftheeffectivenessofriskmanagementandinternal
control frameworks in their Annual Reports.
Meetings are regularly scheduled outside of formal
Committee meetings with the Chair and the Chief Risk
Officerasnecessary.
The Written Resolution process was used twice where
matters required review and approval outside of the
planned meeting schedule and did not warrant an
ad-hoc meeting.
Details on the number of scheduled meetings attended
by each of the Committee members during 2025 are
shown in the Corporate Governance Report.
Board Risk Committee
responsibilities
The responsibilities of the Board Risk Committee include:
•
ReceivingtheChiefRiskOfficer’squarterlyreports,
encompassing performance against the risk appetite
exposure limits for 2025, his view of the Society’s
principle risks and other key areas.
•
Approval of the Society’s Enterprise Risk Management
Framework.
•
Reviewing and recommending Board approval for Risk
Appetite Exposure limits for 2026.*
Governance > Board Risk Management Report
Board and Committee
Effectiveness Review
TheeffectivenessoftheBRCisassessedannuallyin
accordance with its Terms of Reference. The Committee
progressedtheactionsidentifiedaspartofthe2024
process throughout the year. For 2025, the Board
Committee evaluations were incorporated into the Board
internal evaluation process. A self-assessment exercise
was performed, co-ordinated by Group Secretariat, and a
summary of the results were reported to the Committee
and discussed in January 2026. The 2025 review concluded
thattheCommitteeoperatedeffectivelyduringtheyear
andthattherewerenosignificantareasforimprovementor
significantactionsarisingfortheCommittee.
Further details on the evaluation process for 2025 can
be found in both the Board Governance and Nominations
Report and the Corporate Governance Report.
Corporate governance
The Committee continues to work closely with the Board
Audit Committee and other stakeholders to monitor
the Society’s approach to the introduction of additional
requirements of Provision 29 of the Corporate Governance
Code2024andtheimplementationofdefinedmaterial
controls,aheadoftheprovisionbecomingeffectiveon
1 January 2026.
The BRC will continue in 2026 to provide balanced
oversight of the Society’s risks and ensuring that the
Committee’s governance, risk and control capabilities can
support the Society’s strategy.
41
https://www.ybs.co.uk/your-society/inside-your-society/corporate-governance/committees#group-risk
98 99Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Our Enterprise Risk Management Framework (ERMF)
OurERMFenablesrobustyetefficientriskmanagement,whichhasanimportantandintegralroleinprotectingthe
Societyagainstunplannedfinancialoutcomes,providingmemberswithgoodoutcomesanddemonstratingcredibilityto
external stakeholders.
The ERMF supports a consistent approach to managing risk across the Society and helps ensure that everyone understands
their role. A robust and embedded framework enhances decision making and leads to improved business performance. It
providesanoverviewofhowriskistobemanagedandsignpostswheretofindmoredetailintheunderlyingsub-frameworks
and processes.
It comprises:
Our new risk platform was launched in 2025 and has been
used to progressively consolidate our core enterprise risk
processes and data onto a single industry standard platform.
Thisdrivesconsistentandeffectiveriskmanagementand
enhanced analysis and reporting capabilities.
Key Enterprise Risk Process Flow
YBS Strategy & Culture
Board sets vision, strategic objectives, and
desired culture.
Risk Strategy
Supports safe & sustainable delivery of
YBS strategy. Risk management integrated
within YBS Culture.
Key Enablers & Governance
Risk Categorisation Model
Acomprehensive,efficientandeffective
categorisation model, which clearly captures our
principal risks is a key foundation for how we organise
and embed many elements of risk activity.
Risk Governance
Anefficientriskcommitteestructurewithclear
accountabilities and alignment to our risk
categorisationmodeldriveseffectivedecision-making
and appropriate focus on our material risks.
Risk Policy Framework
Ensures we have appropriate policies for each
risk that set minimum standards and key controls,
for managing risks within both risk appetite and
regulatory requirements.
Compliance Framework
A robust compliance framework ensures colleagues
are clear who is accountable for identifying,
implementing, advising and providing oversight of
regulatory compliance.
Three Lines of Defence Framework and
Oversight Methodology
Clearly delineated accountabilities for day-to-day risk
management,oversightandassuranceenableefficient
organisationaldesignandeffectiveriskmanagement.
Risk Appetite
Sets types & levels of risk YBS is willing to
take to achieve its strategic objectives.
Risk Methodology (incl. RCSA)
Standardised processes to identify, assess,
manage & monitor risks, including Risk &
Control Self-Assessment (RCSA).
Risk Reporting
Drives timely action, allows Executive &
Board to focus on material risks, and enables
better decisions.
Risk Maturity Self-Assessment
Structured & proportionate approach
that drives continuous improvement in
risk capabilities.
Governance > Board Risk Management Report
Purpose & Principles of the Three Lines of Defence
Purpose
1LoD: Risk & Control
Management
Responsible for the
ongoing management of
risks and controls within
its respective business
areas. In managing these,
business areas will adopt a
wide variety of operational
level risk and control
monitoring mechanisms.
2LoD: Advisory,
oversight & challenge
Provide independent
advisory, oversight and
challenge of the day-to-day
management of risk by
1LoD, acting as a centre
of excellence and trusted
partner to the business.
3LoD: Independent
audit & assurance
Provide independent audit,
assurance and objective
opinion to The Board
on the adequacy and
functioning of the system
of internal control for the
Society.Specifically,this
should cover whether
the Society’s framework
for risk management,
control and governance
processes are adequate and
functioning as intended.
Three lines of defence
To support the operating model and facilitate the ERMF, the Society operates a three line of defence model. Each line is independent
from the others via reporting lines and activities that create clear separation. The role of each line is summarised below.
First Line (1LoD)
The First Line of Defence (1LoD) owns and
manages risks relevant to each business
area, designs and operates key controls,
andreportsontheeffectivenessofthese
controls to senior management and the
Executive Team. They ensure that the
business continues to operate on a day-to-
day basis and are the closest to our people,
processes, and systems and therefore, are
best placed to understand and manage the
Society’s risks.
Tosupporteffectiveriskmanagement,
the1LoDmayembedspecificriskexperts
or assurance teams within business
functions to support Risk Category Owners
in managing their risks in line with the
ERMF. These embedded teams assist with
activitiessuchasriskidentification,control
design and testing, root cause analysis,
and risk event logging. While these
colleagues may hold ‘risk’ or ‘control’ roles,
they remain an integral part of the 1LoD,
supporting the business with routine risk
management activities.
Second line (2LoD)
The Second Line of Defence (2LoD) consists of the Society’s Risk function,
reportingtotheChiefRiskOfficer(CRO).The2LoDsetstheSociety’s
ERMF, establishing the standards, tools, and processes for managing
riskeffectively.TheEnterpriseRiskteam,within2LoD,isresponsible
for developing, maintaining, and embedding the ERMF on behalf of the
CRO and the Board.
2LoD also provides, insight, challenge, oversight, and opinion on all aspects
of risk management and compliance, taking a risk-based approach. 2LoD
provides oversight on all aspects of risk management and compliance with
regulatory requirements and internal documents such as risk appetite,
policies, and the ERMF. Oversight and compliance activities are integrated
andappliedthrougharisk-basedapproachthatisefficient,proportionate
and value adding to the business. The 2LoD may also leverage their risk
expertise to provide insightful risk analytics to support the 1LoD.
The 2LoD operates with clear independence from 1LoD daily activities, with
its mandate supported by both the Board and CEO through:
•
The CRO has a direct reporting line to the CEO and an additional
independent reporting line to the Board Risk Committee (BRC) Chair.
•
The BRC ensures the Risk Function has adequate resources, unrestricted
access to necessary information, and the independence required for
effectiveperformance.
•
The Executive Risk Committee (ERC), chaired by the CRO, operates under
BRC-approved terms, and is authorised to seek information from any area
within the Society.
•
The BRC will also periodically receive Internal Audit reports, which will
includeassessmentsoftheeffectivenessofthe2LoD.
100 101Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Third line (3LoD)
The Third Line of Defence (3LoD) is the Society’s Internal Audit function. The purpose of Internal Audit is to provide an
independent and objective opinion to the Board, on the adequacy and functioning of the system of internal control for the
Society.InternalAudithasresponsibilityforbringingasystematicanddisciplinedapproachtoevaluatingtheeffectivenessof
the risk management, control, and governance processes. Through its activities, Internal Audit provides our Leadership Team
with information to help improve its risk management, control, and governance processes.
As the 3LoD does not direct or implement processes, it maintains a higher level of organisational independence
and objectivity.
Further details on the role of the 3LoD can be found in the Internal Audit Charter
42
.
Governance
The Society’s Board and senior management Committee structure is illustrated below.
Board and
Principal Board
Committees
ExCo,
Management
Committees and
Sub Committees
Escalation to
Board/Board
Committees
as required
* Supports the CEO in the day-to-day management of the Society.
Executive Risk
Committee
Executive
Committee*
Chief Executive Officer
Board Risk
Committee
Audit
Committee
Remuneration
Committee
Board
Governance &
Nominations
Committee
Environmental
& Social
Purpose
Committee
Commercial
Lending
Credit Risk
Committee
Model Risk
Committee
Executive
Environmental
& Social purpose
Committee
Conduct Risk
Committee
Operational
Risk
Committee
Secured
Funding
Management
Committee
Regulatory
Reporting
Oversight
Committee
Asset and
Liability
Committee
Wholesale
Funding
Committee
People Risk
Committee
Retail
Credit Risk
Committee
Commercial
Lending
Sanctioning
Committee
Product
Approval
Committee
Yorkshire Building
Society Board
Governance > Board Risk Management Report
TheBoardisultimatelyresponsiblefortheeffectivemanagementofrisk.Theapprovalofriskappetiteandcertainrisk
managementpoliciesareamongstseveralspecificareaswhicharemattersreservedfortheBoard.
The BRC is a Board Committee that oversees, on behalf of the Board, the key risks inherent in the Society and the system of
internal controls necessary to manage such risks.
The ERC is responsible for the monitoring of day-to-day risk management activity including, but not limited to, reviewing the
effectivenessoftheSociety’sriskmanagementframeworkandsystemofinternalcontrols.
Below the Board and senior management Committee structure is a set of category and business unit risk sub-committees.
These monitor risk management activity across the key risk categories, acting as a point of escalation for matters of Society
levelsignificance.
Principal risks and uncertainties and
how we mitigate them
Ourprincipalrisksanduncertaintiesandourriskprofileevolveaswemovethroughtheeconomiccycle.Wehaveanongoing
process for identifying, evaluating and managing the principal risks we face, and this process is regularly reviewed by the BRC.
Strategic risk
Risk YBS is unable to achieve its strategic objectives due to poor business decisions, improper execution of decisions,
or external events.
Sources
•
The business environment we operate in could change unexpectedly.
•
Thedecisionswemakeandactionswetakecouldproveineffective.
Approach Commentary
•
We perform regular horizon scanning, corporate
planning, scenario analysis, competitor analysis and
business performance monitoring to mitigate risks
arising from the economic environment and our
strategic choices.
•
Wehavedefinedriskattitudes,riskappetitesandrisk
metrics for all of our other principal risks.
•
Our business model is relatively simple, but we operate
in a highly competitive market. Our hedging strategy
therefore, mitigates the risks arising from our focused
range of products in this market.
•
We have continuously monitored the external
environment in which we operate.
•
The prevailing high-interest rate environment remained
a barrier for those seeking a mortgage. Homeowners
with an existing mortgage demonstrated a higher
propensity to remain with their existing lender likely due
toaffordabilityconstraints,resultinginareducedrange
ofoptionsforthosereachingtheendoftheirfixed-rate
term. The size of the remortgage market reduced as a
result of this dynamic.
•
A stable benchmark rate led to an observed easing in
competitive intensity in the savings market, with market-
leading rates gradually decreasing since their peak in
late 2023.
•
Whilst cost-of-living pressures do continue to weigh on
thepersonalfinancesofmany,thesavingsmarkethas
continuedtogrow,withinflationarypressureshaving
eased and real incomes having increased slightly.
42
https://www.ybs.co.uk/documents/pdf/financial/group-internal-audit-charter.pdf
102 103Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Financial risk
Risk of YBS having inadequate cash flow or capital to meet current or future requirements as they fall due.
Sources
•
Exposuretofinancialmarketparticipantswhomaydefaultonobligations,andvulnerabilitytosuddendeposit
withdrawalsorlossofinvestorconfidence.
•
Potential for principal Liquidity or Capital risks to materialise, leading to losses and capital depletion and regulatory
requirements for capital could increase.
•
Exposuretoforeignexchangeratefluctuationsandcreditspreadriskthataffectassetvaluationsandperceived
creditworthiness.
Approach Commentary
•
ThefinancialrisksareconstrainedbyBoard-approved
risk appetites and policies.
•
Ourfinancialriskpoliciesandpolicyguidesoutlinehow
the risks are managed and executed.
•
Treasury risk:Ourliquidassetbufferportfoliois
invested in the highest quality assets.
•
Most of our derivative contracts are subject to
centralised clearing to minimise risk exposures with
counterparties. Where this is not possible, derivative
exposures are restricted to high quality counterparties,
which are subjected to regular review by the Asset &
Liability Committee (ALCO).
•
Treasury risk: We review each wholesale counterparty
limit at least on an annual basis, or sooner if a risk event
occurs in the interim.
•
The size of the credit limit we allocate to each
counterparty is driven by the operational need and their
credit status, as determined by internal analysis, and is
calibrated to the size of our capital position to ensure
thatourfinancialviabilityisnotoverlyexposedtoany
single counterparty.
•
Exposure to AA- or above counterparties remains high,
maintainingthelowriskprofileinaccordancewithBoard
risk appetite.
•
The risk has not materially changed since last year;
market volatility is still at relatively elevated levels
generally, but the credit controls we have in place remain
appropriate.
•
Funding & liquidity risk: We are primarily funded
through retail savings balances, supported by a strong
franchise in key wholesale funding markets.
•
The Board annually approves the key assumptions and
controls for managing liquidity risk, including internal
liquidity stress testing, as part of the Internal Liquidity
Adequacy Assessment Process (ILAAP).
•
We conduct internal liquidity stress testing to ensure
sufficientliquidityisavailabletomeetbusiness-as-usual
and stressed requirements.
•
We also ensure compliance with regulatory
requirements, including the Liquidity Coverage Ratio
(LCR) and the Net Stable Funding Ratio (NSFR).
•
Reverse Stress Testing (RST) is performed to understand
the possible scenarios and risk drivers that could lead
to the potential failure of the Society through the
assessment of the Society’s Point of Non-Viability (PoNV),
andwhethersufficientmitigationsareinplace.
•
Funding & liquidity risk: Our liquidity levels remained
strong and materially above regulatory requirements
throughout 2025.
•
We report the LCR to the PRA monthly, evidencing
sufficientlevelsofhigh-qualityliquidassetsareheld
againsttheexpectednetliquidityoutflowsovera30-
day stress period. This is reported on both a Society
and a Group basis. At December 2025, the Group LCR
was 238.7%.
•
Liquidity levels are forecast to remain above regulatory
and internally derived minimum requirements across the
Society’s planning horizon.
•
Fixed income securities are hedged for interest rate
risk with c.95% held as Fair Value Through Other
Comprehensive Income (FVOCI).
Governance > Board Risk Management Report
Financial risk
Approach Commentary
•
Market risk: We have a dedicated system to model
market risk. This covers value, earnings and credit spread
measures, including market value change for a move in
interest rates and credit spreads and scenario analysis.
•
A range of assumptions are captured within the market
risk models, including customer behaviour. Assumptions
are subject to review at the Monthly Asset and Liability
Forum (ALM) by the senior leadership with delegated
authority.
•
Market risk metrics are monitored daily, with monthly
reporting of information to the Asset Liability Committee
(ALCO), ERC and Board, and quarterly reporting to BRC.
An internal capital assessment (ICAAP) of Pillar 2A
Risk Assessment for interest risk in the banking book,
including foreign exchange and credit spread risk, is
undertakenannuallywithfinalapprovalattheBoard.
•
Market risk: All market risk appetite metrics are reviewed
eachyeartoensuretheyremaineffectiveinthecurrent
rate environment and to keep pace with projected
balance sheet growth.
•
We proactively manage our interest rate risk exposure
within approved risk appetite limits.
•
Credit Spread Risk is monitored daily through Credit
Spread 01 (CS01).
•
PV100 (the market value impact arising from a parallel
100bps increase in interest rates) results in a loss, with
a year-end value of -£1.9m in 2025. This positions us
unfavourably for a rise in rates, but favourably should
rates fall.
•
The 12-month earnings sensitivity has decreased year-
on-year (impact on 1 year net interest income of a 1.0%
parallel increase/decrease in rates). As at December
2025 the sensitivity was an £18.3m cost against the
parallel down shock.
•
A structural hedge is in place to mitigate the interest
rate risk arising from reserves and the repricing of
administered rate savings balances.
•
Capital risk: We manage capital to comply with
regulatory requirements and risk appetite levels to
support our strategic objectives for sustainable growth.
•
We perform an Internal Capital Adequacy Assessment
Process (ICAAP) at least annually to ensure that we
holdsufficientcapitalandhaveadequategovernance
and controls to manage the risks to capital arising from
our business model. The ICAAP considers severe but
plausible stress scenarios.
•
Reverse Stress Testing (RST) is performed to understand
the possible scenarios and risk drivers that could lead
to the potential failure of the Society through the
assessment of the Society’s Point of Non-Viability (PoNV),
andwhethersufficientmitigationsareinplace.
•
Further details of our capital position can be found in the
2025 Pillar 3 Disclosures.
•
Capital Risk: We maintained strong capital levels
throughout 2025, well above regulatory requirements
and internal risk appetite, and forecast that this position
will be maintained across our planning horizon.
•
TheimplementationofBasel3.1,perthePRA’snear-final
policy statements (PS17/23 and PS9/24), on 1 January
2027 is a key focus for the Society.
•
We are well positioned to comply with these enhanced
requirements. Alongside this, we continue to work
towards Institutional Review Board (IRB) accreditation.
•
Wehaveinplaceamodificationbyconsenttodisapply
theLeverageRatio–CapitalRequirementsandBuffers
part of the rulebook until 30 June 2026.
•
The UK Leverage regime is now only applicable when
retail deposits surpass £75bn after change in regulation
in 2025. We continue to monitor the potential impact of
leverage ratio framework (LREQ) on our balance sheet
andcapitalbufferstosupportourstrategicobjectives
while remaining compliant with regulatory demands.
•
We are currently subject to end-state MREL (Minimum
Requirement for Own Funds and Eligible Liabilities)
requirements on a risk weighted basis, and expect
MREL to be based on leverage once LREQ status
applies. We comfortably met both these requirements
throughout 2025.
104 105Introduction Strategic Report
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Credit risk
The risk that retail and commercial borrowers fail to meet their financial obligations to YBS as they fall due, resulting in
higher-than-expected losses.
Sources
•
Loans to retail and commercial customers may not be fully repaid.
Approach Commentary
•
Retail and commercial credit risk is constrained by
a Board-approved risk appetite and the retail and
commercial lending policy.
•
Our robust credit risk framework ensures lending
remains within limits and appropriate remedial action is
taken if a breach occurs. Adherence is monitored through
governance committees.
•
We regularly use stress testing to assess the resilience of
our portfolio.
•
Our credit risk models are overseen by the model
governance framework (see Model risk).
•
We have continued to see stability in our arrears rates
and overall rates remain low. At 2025 year-end our >=3m
arrears rate (% by volume) for Retail mortgages was
0.52%, 2bps higher than where we were at the end of
2024.ThiscomparesfavourablytothelatestUKfinance
market average of 0.88%.
•
Our Commercial Lending >=3m arrears rate has seen
a small increase throughout 2025, increasing from
0.05% at the end of 2024, to 0.16% at the end of 2025,
however volumes in the arrears stock remain low at only
three accounts.
•
Our internal arrears forecast anticipates arrears will
remain stable throughout 2026. However, given our
continued purpose-aligned lending strategy to support
firsttimebuyers,includingthosewithhigherLTVs,we
may continue to see convergence between YBS Retail
arrearsandtheUKfinancemarketaverageduring2026.
We continue to proactively contact the most at-risk
customers via pre-arrears strategies and have a robust
set of forbearance solutions to support customers in
financialdifficulties.
•
Our residential possession rate was 0.03% at the year-
end,comparedtothelatestUKfinancemarketvalueof
0.04%. For Retail buy-to-let mortgages, the possession
rateis0.17%,comparedtotheUKfinancemarket
average of 0.12%, which is mainly driven by our legacy
retail buy-to-let portfolios.
•
Our Indexed LTV position of the book has remained
relatively stable over the year; 9.7% of our Retail
mortgage book has an indexed LTV >85%, compared to
9.5% in December 2024. Whilst we have seen positive
house price movements in 2025, these positive indexed
LTVmovementsonthebookhavebeenoffsetbythe
higher proportion of >85% LTV completions to support
our lending strategy (27% in 2024 compared to 33% in
2025). Overall the asset quality of our portfolios remains
strong. A large proportion of the expected credit losses
held against our mortgages relates to pre-2009 lending.
Governance > Board Risk Management Report
Model risk
Risk of adverse consequences arising from model errors and inappropriate use of model outputs to inform business
decisions, resulting in losses, non-compliance and/or reputational damage.
Sources
•
Models may be incorrectly designed or be implemented incorrectly.
•
Models may use logic and assumptions based on the past which are no longer relevant.
Approach Commentary
•
We maintain an inventory of models which are governed
by our model risk policy and model governance
framework.
•
We have a process to identify and monitor new models
to bring these into governance.
•
Compliance with the policy is monitored by the Model
Risk Committee (MRC), which is chaired by the Chief
RiskOfficer.
•
Work to assess our model risk management framework
againstthefinalregulatoryModelRiskManagement
Principles (SS1/23) has been carried out and a plan to
close gaps has been reported to the MRC.
•
Given the current political and economic climate and our
growth in size and complexity, there is an elevated level
of systemic model performance risk in models which are
calibrated based on historical events and/or customer
behaviours, which requires close monitoring.
•
Model risk appetite tracks key governance and
performance metrics. Measures for the performance
of critical models are presented to the MRC to ensure
mitigants and remedial plans are put in place to manage
andaddressanyidentifiedrisks.
Change risk
Risk YBS mismanages strategic and operational change due to ineffective prioritisation, scoping, definition,
implementation, or lack of business readiness. Resulting in failure to meet strategic objectives, regulatory requirements,
or customer and employee needs; business disruption; and inefficient use of resources.
Sources
•
We fail to deliver strategic outcomes.
•
The business is not equipped to manage changes to people, process and technology.
Approach Commentary
•
Change risk is constrained by Board-approved risk
appetite and a Change Risk policy.
•
Directorsmustregularlyattesttotheeffectivenessofthe
controls they are responsible for through the risk and
control self-assessment process.
•
Change Board is responsible for the prioritisation
of change initiatives and the successful delivery of
outcomes.
•
Following the elevation of Change Risk to Board level, a
Tier 1 Change Risk Policy has been created.
•
In addition to the suite of Executive Risk Metrics, a Board
Risk Appetite Metric has also been added and approved
by Board Risk Committee.
•
In January 2025, we introduced our Change Risk Forum
to monitor existing and emerging operational risks that
may impact the ability to deliver change safely.
•
In addition to this, thematic One Plan Risks and Issues
are presented at Board Risk Committee quarterly.
106 107Introduction Strategic Report
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Operational risk
Risk of loss, damage, or disruption due to inadequate or failed internal processes, systems or people and external events.
Sources
•
Our technology may fail.
•
Our suppliers may fail to meet their contractual obligations.
•
Criminals may use the Society for illegal activity.
•
Other external or internal events.
Approach Commentary
•
Operational risk is constrained by a Board-approved risk
appetiteandanumberofrisk-specificpolicies.
•
TheERMFdefineshowcolleaguesareexpectedto
identify, assess, monitor, manage and report their
operational risk exposures.
•
Directorsmustregularlyattesttotheeffectivenessofthe
controls they are responsible for through the risk and
control self-assessment process.
•
There has been an increase in the value of operational
losses in 2025 to £2.50m (2024: £1.69m)
•
We continue to invest in our cybersecurity posture
and focus on IT risk through a multi-year programme,
addressing legacy risks and enhancing resilience, and
enhanced colleague awareness, underpinned by external
benchmarking and robust risk management.
•
YBS has strengthened its risk management capability
by launching an enhanced RCSA process on a new risk
platform to drive engagement, granularity and action
focus, while upgrading the ERMF with clear standards,
integrated guidance and alignment to the platform
rollout to ensure consistent, high-quality risk practices.
•
Westrengthenedfinancialcrimecontrolswithenhanced
transaction monitoring and customer screening, while
improving payment resilience through introducing
inbound Faster Payments with better incident response
to reduce disruption risk.
•
We continue to enhance our Operational risk capabilities
with the strengthening of controls and oversight,
providing independent assurance that controls
are in place and supporting improvements in both
effectivenessandefficiency.
Governance > Board Risk Management Report
People risk
Risk YBS fails to attract, manage, retain and motivate a diverse, inclusive and appropriately skilled workforce. Resulting
in operational disruption, non-compliance with employment legislation, lack of engagement, undue focus on short-term
goals/excessive risk taking and reputational damage.
Sources
•
We may not be able to attract the right people due to skills shortages in the market.
•
We may not be able to retain the right people due to burnout, poor leadership behaviours or policy changes.
•
We may not be able to upskill our colleagues to be future ready if we don’t identify future needs in time.
•
We may not respond quickly enough to ensure we comply with employment legislation changes.
Approach Commentary
•
People risk is constrained by a Board-approved risk
appetiteandanumberofpeoplerisk-specificpolicies.
•
We apply preventative and detective controls across
key areas including capacity management, skills and
capability, health and wellbeing, diversity, equity and
inclusion and behaviours which are assessed through
our half-yearly Risk and Control Self-Assessment and
attested to by Directors across the business.
•
We perform regular horizon scanning and benchmarking
to mitigate risks arising from the legislative changes.
•
Following the elevation of People Risk to Board level, a
prioritised action plan saw many changes within 2025
including the introduction of a Tier 1 People Risk Policy
and associated Risk Appetite Metrics, the development
of Executive Tier People and Culture Risk Policies and
the establishment of a People Risk Committee to ensure
there is a dedicated forum for oversight, challenge and
decision-making.
•
In addition, several additional measures have been
introduced to enhance the control environment,
improving risk management and governance practice.
108 109Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Conduct risk
Risk YBS fails to deliver good customer outcomes and/or negatively impacts market integrity, resulting in customer harm,
non-compliance, reputational damage and financial loss.
Sources
•
Designing products and services.
•
Marketing and communications.
•
Customer servicing across channels.
•
Providing extra support where needed.
Approach Commentary
•
Compliance and conduct risk is constrained by a
Board-approved risk appetite and a number of risk-
specificpolicies.
•
Conduct risk is managed through a suite of frameworks
and processes embedded across the customer lifecycle,
including product governance, marketing approvals,
customer servicing protocols, and vulnerability support
mechanisms. These frameworks ensure that customer
outcomes are considered at every stage, with clear
escalation routes and decision-making forums to address
risks proactively.
•
We monitor conduct risk metrics for a number of areas
via the monthly conduct risk committee including
product design, fair value, sales, service, customer
vulnerability, complaints and collections.
•
The second line of defence provides compliance support
andoversightonallregulatorymatterstothefirstline,
for both day-to-day operations and change programmes.
•
We have continued to progress actions to evolve and
enhance how we meet the requirements of the FCA’s
Consumer Duty regulation for open and closed products
and services. The outcomes of this work were approved
by the Board following the annual Consumer Duty Board
Assessment.
•
In July 2025, YBS introduced a new Tier 2 conduct risk
category that focuses on Vulnerable Customer Risk.
There is an enterprise-wide action plan in place to
support the management of this risk category.
•
A compliance monitoring plan, approved by the Board
Risk Committee (BRC), has been completed during 2025
allowing robust oversight of the key areas of conduct,
financialcrime,anddataprotectionrisk.Alloversight
findingsarethesubjectofaformalactionplanoverseen
to closure by the BRC.
Climate risk
We recognise the physical and transition risks arising from climate change create risk exposures in several of the
principal risk categories above. We therefore manage these risks through the Enterprise Risk Management Framework to
ensure they are properly considered alongside the other risks we face.
Further detail on how we manage climate change risk can be found in the ‘How we manage climate-related risks’
section
Governance > Board Risk Management Report
Stress testing
Stress testing is a proactive risk management tool used
throughout the Society to better understand the potential
vulnerabilities in our business model and exposures to
capital, liquidity, market and credit risks. Stress testing
results are presented to several committees including Asset
& Liability Committee (ALCO), Executive Risk Committee
(ERC), and Board.
The key uses of stress testing are to:
•
Assess capital adequacy to determine the Society holds
sufficientcapitaltowithstandadverseeconomicand
market conditions and ensure compliance to regulatory
requirements.
•
Understandthecreditriskprofileofourmortgage
portfolios under a range of economic scenarios and
ensurewecansupportcustomersinfinancialdifficulties
in periods of stress.
•
Stress testing of the Corporate Plan to assess the
robustnessofourfinancialplanandexposuresto
adverse economic conditions.
•
Manage liquidity by identifying, measuring, and
managing material liquidity risk exposures under both
normal and stressed conditions.
•
Identify risk exposure to key risks in relation to capital,
liquidity, and market risk.
•
Enhance risk management to inform better risk control
management and strategies.
•
Support broader regulatory regimes including recovery
and resolution planning and reverse stress testing.
•
Identify the Society’s Point of Non-Viability (PoNV) for
capital and liquidity purposes and assess scenarios
which could cause the Society to reach this level,
ensuringtherearesufficientmitigantsinplace.
•
Support broader strategic decision-making in capital
planning, business continuity and risk appetite
assessment.
In 2025, the team used the Bank of England’s 2024 desk-
based stress test scenarios as part of the 2025 Internal
Capital Adequacy Assessment Process (ICAAP) submission.
This assesses capital requirements for the Society in both
a high and a low-interest rate stressed environment. The
stress tests have shown the Society is well positioned and
capitalised to withstand a stress environment.
110 111Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
A word from the Chair of the Board
Environmental and Social Purpose
Committee.
I am pleased to present the inaugural
Board Environmental and Social
Purpose Committee Report, which
sets out the role of the Committee
and gives an overview of its activity
during the year.
The Committee was established during the year to ensure appropriate
and robust Board oversight of the Society’s approach to Environmental
Sustainability and the delivery of our Purpose of helping our Members
with Real Help with Real Life.
During 2025, there has been a clear focus on establishing plans to
enabletheSocietytoreachNetZeroinitsownoperations(Scopes
1 & 2) and its Suppliers (Scope 3). The Committee was instrumental
insupportingmanagement’seffortsinbringingforwardtheinitial
dateforNetZeroforScopes1&2from2035toananticipated2030
and providing input into the Society’s Supplier Management Plan for
Scope 3 emissions.
The Society has worked to support its members during the year,
providing Real Help with Real Life. The Committee has worked closely
withtheChiefStrategyandSustainabilityOfficerandthewider
Executive team to oversee the establishment and utilisation of our
Purpose in every aspect of the Society’s decision making.
The Committee has worked closely with management and with the other
Committees of the Board to develop the Sustainability Report for the
Society (previously called the ESG Report in 2024). Looking ahead to
2026 and future years, the Society’s Sustainability Report will provide
members with greater insight into the extremely important initiatives
that are ongoing and planned in the Society to achieve its goals.
I am most grateful to my fellow Committee members for their
contributions to the discussions held during the Committee
meetings during the year and look forward to working closely with
them going forward.
Janet Pope
Board Environmental and Social Purpose Committee Chair
25 February 2026
Board Environmental
and Social Purpose
Committee Report
Board
Environmental
and Social Purpose
Committee
membership and
meetings
The members of the Board Environmental
and Social Purpose Committee are:
Janet Pope
Committee Chair
and Independent
Non-Executive
Director
Debra Davies
Independent
Non-Executive
Director
Mark Parsons
Senior
Independent
Director
In line with established practices for more traditional
Committees of the Board, all members of the Committee
are and will continue to be independent Non-Executive
Directors in line with the provisions of the UK Corporate
Governance Code 2024.
Only members of the Committee are entitled to attend its
meetings, although others may be asked to attend all or
part of a meeting. The Committee meetings are attended
by the Board Chair and members of the executive team
includingtheChiefExecutive,ChiefFinancialOfficerand
ChiefStrategyandSustainabilityOfficer.
The Committee held three scheduled meetings in 2025 and
expects to meet a minimum of three times during 2026, as
well as on an ad-hoc basis if required. Details of the number
of scheduled Committee meetings attended by each
member is available in the Corporate Governance Report.
Environmental and Social
Purpose Committee
responsibilities
The responsibilities of the Board Environmental and Social
Purpose Committee include:
•
Reviewing the outcomes of the Society’s environmental and
social purpose work across all activities against any targets
and measurable objectives set by the Board.
•
Oversight of the Society’s environmental
sustainability strategy.
•
Monitoring emerging environmental issues requiring Board-
level oversight.
•
Reviewing and oversight of the Society’s embedding of its
Purpose across its business activities.
•
Reviewing the Group’s ESG ratings and approach to
external reporting requirements, such as TCFD, International
Sustainability Standards Board (ISSB) disclosures, working
closely with the wider Board and its other Committees.
Further detail on the role and responsibilities of the
Committee can be found in the Terms of Reference
which are available on our website
43
.
The Committee’s Terms of Reference are reviewed annually
to ensure that they remain aligned with regulatory
requirements and good practice, alongside ensuring the
Committeeisfulfillingitsresponsibilities.Toincorporate
any changes arising from the Board and Committee
EffectivenessReviews,detailsofwhichareoutlinedinthe
Board Governance and Nominations Committee Report,
the approval of the latest Terms of Reference reviews will
take place in Quarter 1 of 2026. This timing aligns with
the implementation of the current Terms of Reference in
January2025.Throughout2025,theCommitteefulfilled
the requirements of its Terms of Reference, with particular
emphasis on the areas that are covered in more detail
in this report.
The Committee is committed to ongoing learning and
development and Committee members also take part in
trainingandreceivebriefingsonareasthatconcernnot
only their roles on the Committee, but also their roles on
the Board. At the inaugural meeting of the Committee, the
Cambridge Institute for Sustainable Leadership (CISL) were
invited to present on the current state of Environmental
Sustainability throughout the globe. The presentation
was attended by various members of the wider Board
and Executive team and provided a clear indication of
the challenges that climate change provides. Further
training on key topics under the Committee’s remit are
expected during 2026.
Our Chair of the Board oversees the training and
development of the full Board and you can find more
information on this in the Composition, Succession and
Evaluation section of the Corporate Governance Report.
Board Environmental and
Social Purpose Committee
effectiveness review
TheeffectivenessoftheBoardEnvironmentalandSocial
Purpose Committee is assessed annually in accordance with
its Terms of Reference and in line with the process adopted
by the other Committees of the Board. For 2025 the Board
Committee evaluations were incorporated into the Board
internal evaluation process. A self-assessment exercise
was performed, co-ordinated by Group Secretariat, and a
summary of the results were reported to the Committee
and discussed in January 2026. The 2025 review concluded
thattheCommitteeoperatedeffectivelyduringtheyear
andthattherewerenosignificantareasforimprovementor
significantactionsarisingfortheCommittee.
Further details on the evaluation process for 2025 can
be found in both the Board Governance and Nominations
Report and the Corporate Governance Report.
Board Environmental and
Social Purpose Committee
training
AtthefirstmeetingoftheCommittee,theCambridge
Institute for Sustainable Leadership (CISL) was invited to
provideabriefingonthecurrentglobalclimatechallenges
and the implications for the Society. The presentation
was attended by various members of the wider Board and
ExecutiveTeamandwasthefirstofaseriesofongoing
briefingsthatwillbeprovidedduring2026.
43
https://www.ybs.co.uk/your-society/inside-your-society/corporate-governance/committees#espc
112 113Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
A word from Debra Davies, Board Remuneration Committee Chair
I am pleased to set out how the Committee has overseen the
application of the Society’s Remuneration Policy during the
performance year ended 31 December 2025.
Throughout the year, our focus has remained on ensuring
that remuneration arrangements continue to support
the long-term interests of the Society and its members,
and that decisions are made in a fair, consistent and
transparent manner.
The bonus schemes (Our Bonus and Our Senior Leader
Bonus) continued to operate as intended during 2025.
These schemes were designed to strengthen alignment
between colleagues and the Society’s strategy by applying
financialandcustomerunderpinsacrosstheorganisation.
TheCommitteecontinuestomonitortheireffectiveness
closely, considering evolving remuneration regulatory
expectations and evolving market practices.
During the year, the Society operated against a challenging
externalbackdrop.Performanceoutcomesreflectfinancial
discipline and a continued focus on member service. Under
Our Bonus, eligible colleagues received an average award of
10% of salary. Senior leader outcomes were determined in
line with the Society-wide scorecard and the achievement
of agreed personal objectives. In reaching its decisions, the
Committee considered whether bonus scheme outcomes
appropriatelyreflectedoverallperformanceandthe
broader experience of members.
There were several changes to senior leadership and
Committee membership during the year. Simon Watson
joinedtheSocietyasChiefCustomerOfficer.Withinthe
Committee itself, Dina Matta left, and Peter Bole joined,
he is also Board Audit committee chair, strengthening the
alignment of committees and governance.
IalsoconfirmedmyintentiontostepdownfromtheBoard
and from my role as Chair of the Committee following the
2026 Annual General Meeting, having served as a Non-
Executive Director for three years. Janet Pope, an existing
member of the Board and Remuneration Committee will
take over as Chair of the Committee.
The external regulatory environment has continued to
evolve, particularly following the joint Prudential Regulation
Authority and Financial Conduct Authority policy statement
on Banking Remuneration Reform. During the year, the
Society reviewed its approach to deferral and long-term
performance alignment to comply with the revised
requirements. This included simplifying deferral structures,
adopting updated vesting arrangements and implementing
revised proportionality thresholds. The Committee will
continue to monitor future regulatory developments to
ensure the Society’s approach remains compliant and
supports long-term sustainability.
Throughouttheyear,theCommitteehasbeensatisfiedthat
remuneration decisions have been made in accordance with
the approved Remuneration Policy and remain aligned to
the long-term interests of the Society and its members. The
Directors’ Remuneration Report for 2025 will be subject
to an advisory vote at the 2026 Annual General Meeting,
and the Committee recommends that members vote in
favour of the report.
Debra Davies
Chair of the Board Remuneration Committee
25 February 2026
Directors’
Remuneration
Report
Our committees
Our committees help us make sure our reward policies
arefair,well-governedandfitforthefuture.TheBoard
Remuneration Committee and People Risk Committee play
a key role in keeping our approach to reward aligned with
our strategy and compliant with regulation.
Our Board appoints members to the Board Remuneration
Committee, and all members are independent Non-
Executive Directors in accordance the requirements of the
UKCorporateGovernanceCode(theCode).Youcanfindout
moreabouttheskills,qualificationsandexperienceofthe
Board Remuneration Committee members in the directors’
biographies in the Our Board and Executive Team section.
Only Board Remuneration Committee members are entitled
to attend its meetings, although others may be asked to
attend all or part of a meeting. The Chair of the Board, Chief
PeopleOfficerandDirectorofPerformanceandRewardare
usually invited to attend each meeting. The Chief Executive
also joins when needed to provide context and insight.
To help the Board Remuneration Committee make informed
decisions, we seek independent advice. In 2025, EY
provided guidance on reward and regulation. The Board
RemunerationCommitteeisconfidentthatalladvice
received was objective and independent.
In2025theBoardRemunerationCommitteeheldfive
scheduledmeetings.Fourofthosefinishedwithaprivate
session between the Board Remuneration Committee
members. These private sessions allow the Board
RemunerationCommitteememberstodiscussconfidential
matters, which may not be appropriate to discuss in the
main meeting itself. We also used the Written Resolution
process once where a matter required review and approval
outside of the planned meeting schedule.
Details of the number of scheduled meetings attended
by each member is available in the Corporate
Governance Report.
Board Remuneration
Committee responsibilities
The Board Remuneration Committee takes the lead on
making sure our reward policies are right for our Chief
Officers(includingExecutiveDirectors),ourMaterial
Risk Takers (MRTs), and all colleagues across the
Society. It oversees the Society’s Remuneration Policy,
making sure it supports our long-term goals and meets
regulatory expectations.
Here’s what the Board Remuneration Committee
gets involved in:
•
Setting the Remuneration Policy for all colleagues.
•
Reviewing and approving pay arrangements for Chief
OfficersandtheChairoftheBoard.
•
Ratifying annual objectives for Executive Directors.
•
Overseeing variable pay awards for other MRTs.
•
SigningoffbonusschemeoutcomesacrosstheSociety.
•
Applyingmalusorclawbackwhereneeded—ifbehaviour
doesn’t match our values.
•
Overseeing remuneration processes in relation to MRTs.
•
Making sure our Business Controls Overlay works
as intended.
•
Looking at how pay across the Society compares to
Executive pay.
Further detail on the role and responsibilities of the
Board Remuneration Committee can be found in the
Terms of Reference which are available on our website
44
.
Board Remuneration
Committee members
and meetings
The members of the Board
Remuneration Committee are:
Debra Davies
Committee Chair
and Independent
Non-Executive Director
Peter Bole
Independent
Non-Executive Director
(from 26 September 2025)
Janet Pope
Independent
Non-Executive Director
(from 1 January 2025).
Dina Matta (Former Independent Non-
Executive Director) was a member of the Board
Remuneration Committee until 22 October 2025
when she stepped down.
44
https://www.ybs.co.uk/your-society/inside-your-society/corporate-governance/committees#remuneration
114 115Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Governance > Directors’ Remuneration Report
The Terms of Reference of the Board Remuneration
Committee are reviewed annually to ensure it continues to
fulfilitsresponsibilitiesandmeetsregulatoryrequirements
and good practice. The approval of the latest annual Terms
of Reference reviews will be completed in Quarter 1 2026
(which aligns with the implementation of the current Terms
of Reference in January 2025). Throughout 2025, the Board
RemunerationCommitteefulfilledtherequirementsof
its Terms of Reference, with particular emphasis on the
following areas:
•
Performance related pay schemes.
•
The Business Control Overlay process.
•
MaterialRiskTaker(MRT)Identification.
The Board Remuneration Committee is committed to
ongoing development and learning and regular updates
onsignificantregulatorychangesandmarketinsights
are provided by the independent adviser during
committee meetings.
Further information in relation to Board training can be
found in the Corporate Governance Report.
Board Remuneration
Committee effectiveness
review
In 2024 the Board Remuneration Committee completed
aninternaleffectivenessreview,therewerenourgentor
significantactionsarisingfromthisreview.For2025,the
Board Remuneration Committee undertook an internal
effectivenessreviewbasedonaquestionnaireapproach.
The Board Remuneration Committee considered the
outcomesofthe2025effectivenessreviewatitsmeeting
inJanuary2026.Therewerenourgentorsignificant
actionsidentified.
Further details on the evaluation process for 2025 can
be found in both the Board Governance and Nominations
Committee Report and the Corporate Governance
Report.
Corporate Governance
Provision 38 was introduced as part of the UK Corporate
Governance Code 2024. Aimed at strengthening
transparency and accountability in executive pay,
companies are required to include a clear statement in
their annual remuneration report on the operation of malus
and clawback arrangements (including the circumstances
in which malus and clawback would apply, the duration
of the malus and clawback period and whether this was
used within the reporting year). Provision 38 has been fully
considered, and its requirements have been incorporated
into the malus and clawback section of the Directors’
Remuneration Report.
People Risk Committee
As part of our evolving approach to risk management, we’ve
made a change during 2025. The responsibilities that used
to sit with the Performance & Reward Committee now fall
underthePeopleRiskCommittee—asub-committeeofour
Executive Risk Committee (ERC).
This Committee plays a vital role in making sure our
Remuneration Policy works well in practice. It keeps a close
eye on conduct, risk and how well our approach aligns
with our strategy. It also ensures that any variable pay we
offerencouragestherightbehavioursandsupportsgood
outcomes for our members and customers.
The Committee brings together senior leaders from across
the Society, with representation from Customer Services,
Commercial, People, Finance and Risk.
How we manage risk and
governance in reward
Our reward policies and practices meet all internal
governance standards and regulatory requirements. They’re
designedtomanagerisk—nowandinthefuture—forour
members, customers and colleagues.
Before any bonus is paid, we run a full risk check through
our Business Controls Overlay – so awards stay fair
and responsible.
We’re currently reviewing the latest Prudential Regulation
Authority (PRA) and Financial Conduct Authority (FCA)
Policy Statement on Banking Remuneration Reforms. These
changesaffecthowvariablepaymustbedeferred-whether
it’s already awarded or still to come. We’re committed to
implementing these changes in a way that supports our
values and long-term sustainability.
Our regulators
We’re regulated by the PRA and FCA. Our relationship
with them matters. It builds trust - inside and outside the
Society. That’s why our approach to base pay, bonuses
andbenefitsisdesignedtomeetregulatorystandardsand
fosterconfidence.
Executive Director remuneration for 2025
All remuneration in the 2025 performance year has been awarded in line with the Society’s Remuneration Policy.
Details of the full policy relevant for 2025 can be found at www.ybs.co.uk.
ThetablebelowshowsthesingletotalfiguretableofremunerationfortheExecutiveDirectorsoftheSocietyfortheyears
ended 31 December 2025 and 31 December 2024. This information has been audited by our independent auditors, PwC.
Past Executive Directors of the Society, Alasdair Lenman and David Morris, received no remuneration in 2025.
Their remuneration relating to 2024 was published in the 2024 Director’s Remuneration Report.
Only basic salary is pensionable and Executive Director pension contribution rates are aligned with the wider workforce.
Base salary
In 2025 Tom Ranger was awarded
apayincreaseof5.15%effective
1st September. This uplift was in
recognition of Tom’s expanded role to
includeStrategyandCorporateAffairs
and remains in line with our analysis
of the broader market. Susan Allen did
not receive a pay increase in 2025.
Variable pay
For the 2024 performance year, we introduced a new bonus system – one that’s
fairer,clearerandbuiltaroundwhatmattersmost:howweperformfinanciallyand
how we support our customers.
We’ve got two schemes in place:
•
‘Our Bonus’ – for all colleagues (excluding Senior Leaders)
•
‘Our Senior Leader Bonus’ – for Senior Leaders, including Executive Directors
Bothschemesareshapedbythesamethings:ourfinancialperformanceand
the experience we give our customers. For ‘Our Bonus’, these unlock and
guide the bonus pool. For ‘Our Senior Leader Bonus’, they help determine the
bonus opportunity.
In 2025, we focused on embedding these schemes – making sure they work well,
feelfairandreflecttheimpactweallmake.
Single total figure of remuneration for
each Executive Director (audited)
Fixed
Remuneration
Variable
Remuneration
Total
Remuneration
Excluding
Replacement
Awards
Total
Remuneration
Including
Replacement
Awards
2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024
Executive
Directors Role
Base
Salary
£'000
Taxable
Benefits
£'000
Pension
£'000
Total
Fixed
£'000
Bonus
£'000
Replacement
Awards
£'000
Total
Variable
£'000 £'000 £'000
Susan
Allen
Chief
Executive
Officer
805 798 32 32 88 88 925 918 686 777 N/A N/A 686 777 1,611 1.695 1,611 1,695
Tom Ranger
45
Chief Financial
Officer
493 259 37 19 54 29 584 307 327 426 N/A 869 327 1,295 911 733 911 1,602
45
TomRanger–joinedtheSocietyasChiefFinancialOfficeron18June2024andwasawardedanannualbasesalaryof£485,000.Replacementawardsincluded
£868,937 awarded to compensate for deferred awards forfeited on leaving his previous employer.
116 117Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Performance and Bonus
Outcomes in 2025
The Society’s bonus schemes are underpinned by two
keyperformancemeasures:CoreOperatingProfitand
customerNetPromoterScore(NPS).Thesemetricsreflect
theSociety’sfinancialstrengthandthequalityofservice
delivered to members.
Financial performance
TheSociety’sProfitBeforeTax(PBT)isadjustedforbonus
purposestoexcludeitemsthatdonotreflectunderlying
commercialperformance-suchastimingdifferencesor
accountingtreatments.Thisadjustedfigureisreferredtoas
CoreOperatingProfit.
In2025,theSociety’sCoreOperatingProfitexceeded
thetargetsetforbonuspurposes.Thissolidfinancial
performance contributed positively to the overall bonus
outcomes for the year. The Board Remuneration Committee
retainsdiscretiontomakefurtheradjustmentstotheprofit
calculationwhereappropriate,forexample,toreflect
significantinvestmentingrowthormaterialdeviationsfrom
cost management plans.
Customer experience
The second performance measure is the Society’s Net
Promoter Score (NPS), which assesses how likely members
are to recommend the Society. In 2025, the Society
achieved an NPS of 66 , which was above the target
threshold.Thisresultreflectscontinuedstrongmember
advocacy and contributed to the bonus opportunity.
Sustainability and governance
Before any bonus awards are granted, the Society
undertakes a comprehensive review to ensure that
capital levels remain sustainable and compliant with
regulatory requirements. This includes an assessment of
costmanagementpracticestoconfirmtheyarerobustand
alignedwiththeSociety’slong-termfinancialhealth.
Bonus Scheme Operation
The Society operates two bonus schemes: Our Bonus, which
applies to all colleagues excluding Senior Leaders, and
Our Senior Leader Bonus, which applies to Senior Leaders
including Executive Directors.
For both schemes, bonus awards are contingent on the
achievement of threshold performance levels against
twokeybusinessmetrics:CoreOperatingProfitand
customerNetPromoterScore(NPS).Thesemetricsreflect
theSociety’sfinancialhealthandthequalityofcustomer
experience delivered.
Under Our Bonus, once the Society-wide performance
thresholds are met, an individual’s bonus award may
include an additional percentage based on personal
performance. This is assessed against the achievement of
individualobjectives,whichmayincludebothfinancialand
non-financialmeasures.
Under Our Senior Leader Bonus, the Society’s performance
across all measures in the Remuneration scorecard
determines the core bonus award and aligns Executive
remuneration with Society strategy. An additional
percentage is also awarded based on individual
performance, assessed against objectives agreed at the
start of the year and subject to independent review at year
end.Theseobjectivesencompassbothfinancialandnon-
financialelements.
Our Business Controls Overlay ensures that all relevant risks
have been considered.
Governance > Directors’ Remuneration Report
Risk Underpin: the above scorecard is subject to the Society remaining within Risk Appetite (based on a qualitative
assessment of Tier 1 Risk Appetite metrics undertaken at year-end).
Executive Director personal objectives 2025
Alongside the shared Senior Leader scorecard for 2025, each Executive Director also worked towards a set of
personal objectives.
Following a thorough assessment, both the CEO and CFO were found to have met or exceeded their targets, with bonus
outcomes of 10% and 16% respectively, awarded from a maximum of 20%.
TheBoardRemunerationCommitteecarefullyreviewedtheseoutcomestoensuretheyfairlyreflectedindividual
performance. The Committee concluded that the results were a balanced and accurate representation of achievement.
How bonus is awarded for Executive Directors
In line with relevant remuneration regulations, bonus awards for Executive Directors are deferred over a number of years.
The table below shows when payments linked to 2025 performance will vest. Half will be paid in cash, and the other half
through Share Equivalent Instruments (SEIs), which are subject to a holding period, and malus and clawback provisions. You
canfindmoredetailinthe‘DeferralandShareEquivalentInstrument(SEI)’section.
There is an additional 20% associated with individual performance across colleague metrics.
How ‘Our Senior Leader Bonus’ value was calculated for
Executive Directors
Category Measure Weighting Achievement Outturn
Customer Balance Growth 5% 0%
NPS score 7.5% 6.9%
Retention (Mortgages) 5% 2%
Member value 5% 5%
Key One Plan priorities delivered 10% 2.5%
Sum of Customer 32.5% 16.4%
Financial CoreOperatingProfit 25% 23%
Run Costs 15% 8%
Sum of financial 40% 31%
Colleague Ambitious Culture 7.5% 2.8%
Sum of Society performance 80% 50.2%
118 119Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Regulatory review
Following the joint policy statement from the PRA and FCA on Banking Remuneration Reform, we’ve reviewed our approach
to bonus deferral and long-term alignment. While our structure has always balanced cash and Share Equivalent Instruments
(SEIs)withappropriateholdingperiods,we’venowsimplifiedthingsinlinewiththenewrules.
The changes mean our approach is clearer, fairer and easier to understand – while keeping risk management front and centre.
We’ve shortened deferral periods, introduced pro-rata vesting and removed unnecessary complexity, so colleagues know what
to expect and when.
The Board Remuneration Committee will keep a close eye on developments and make further adjustments if needed, ensuring
our practices stay aligned with regulation and support the long-term sustainability of the Society.
Remuneration scenarios in relation to the
Remuneration Policy in 2025
Thechartbelowshowshowremunerationcouldbesplitbetweenfixedpay(basesalary,benefitsandpension)andvariable
pay (bonus) for the Chief Executive and other Executive Directors.
Tobringthistolife,we’veuseddatafortheCEOandCFOunderthreedifferentscenarios:
•
Minimum – where performance conditions aren’t met, and no variable pay is awarded.
•
Target – where Society and personal performance measures are achieved. This would result in a variable pay award of 75%
of eligible pay for the CEO and 50% for other Executive Directors.
•
Maximum – where stretch objectives are fully met. This could result in a variable pay award of up to 125% of eligible pay
for the CEO and 100% for other Executive Directors.
Thesescenarioshelpshowhowperformanceshapesreward—andhowourapproachstaysalignedwithlong-term
sustainability and fairness.
Total Award Deferral schedule
Executive
Director Role
2026 2027 2028 2029 2030
Cash SEI SEI SEI SEI SEI SEI
£'000 £'000 £'000 £'000 £'000 £'000
Susan Allen
CEO 343 343 63 70 70 70 70
Tom Ranger
CFO 163 165 33 33 33 33 33
Governance > Directors’ Remuneration Report
Figures in this table are represented in £'000’s.
£2,500
£2,000
£1,500
£1,000
£500
£0
Minimum MinimumTarget TargetMaximum Maximum
Chief Executive Officer Chief Finance Officer
£930
£1,530
£1,930
£580
£830
£1,080
100% 61%
23%
28%
18%
27.5%
16%
24%
48%
100%
18.5%
12%
70% 54%
Payment for loss of office
No payments were made to Executive Directors for loss of
officein2025.
Payment to past Directors
No payments were made to past Directors in 2025 that
haven’t already been disclosed in previous reports.
Colleague consideration in
relation to remuneration
We’re building a workplace where colleagues feel part of
somethingbigger—engagedinourjourneyandproud
to play their part. Feeling valued and respected is key to
that, and our reward approach plays an important role. It’s
shaped by our mutuality and values, and designed to help
colleaguesworktogetherforthebenefitoftheSociety,our
members and our customers.
Colleague listening
Weactivelylistentocolleaguesinlotsofways—including
through our recognised trade union, Aegis, and our
Colleague Forum, which gives direct input into how our
reward framework is shaped and developed. Since January
2024, Angela Darlington has been our Non-Executive
Director for Workforce Engagement, helping ensure
colleague views are heard at Board level.
Supporting colleagues in 2025
We want every colleague to feel recognised, valued and
fairly rewarded for the role they play in delivering great
service and keeping the Society running smoothly.
In 2025, we made another meaningful investment in base
pay. Eligible colleagues received an average salary increase
of around 3.3% , made up of a core award of 3% and
adiscretionaryupliftforsome.Wealsomadeaone-off
payment of £200 to all eligible colleagues, to recognise
cost of living challenges.
CEO Pay ratio reporting
We continue to publish the ratio of the Chief Executive’s
pay compared to the wider colleague population. This looks
at total remuneration for the CEO against that of the median
colleague, as well as those at the 25th and 75th percentiles.
As in previous years, we’ve used reporting ‘Option B’.
This means we’ve drawn on our existing gender pay gap
data to identify colleagues at each quartile. The total
remuneration for these colleagues was calculated as at
31 December 2025.
ThisratioreflectsthenatureoftheSociety—whereawide
range of roles and skillsets come together to make things
work. From customer-facing colleagues in our branches
and call centres, to highly specialised roles in areas like
Treasury, it’s a diverse mix that’s essential to how we
serve our members.
The total remuneration values and base salary values for
the 25th, 50th and 75th percentile employees for 2025 are:
The following elements have been utilised to calculate the
total remuneration of each colleague; base salary, pension
(including pension cash allowance), car allowance, private
medical insurance and bonus.
Non-Executive Directors
Chair of the Board and Non-
Executive Directors
We review fees for the Chair of the Board and our Non-
Executive Directors (NEDs) from time to time.
Towards the end of last year, we completed a review of
our Board and Committee architecture. As part of that,
we also looked at the time commitment and fees for our
NEDs. With the role continuing to evolve and expectations
increasing,weagreedupdatedfeestoreflecttherevised
time commitment and responsibilities. These changes took
effectfrom1January2025.
Year
Defined
Method
25th
percentile
50th
percentile
75th
percentile
2025 Option B 50:1 38:1 26:1
2024 Option B 59:1 43:1 28:1
2023 Option B 60:1 44:1 28:1
2022 Option B 28:1 21:1 14:1
2021 Option B 29:1 21:1 14:1
25th
percentile
50th
percentile
75th
percentile
Total Remuneration £32,198 £42,374 £60,971
Salary £27,008 £35,180 £51,000
Key: Fixed Pay Undeferred Deferred
120 121Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
The Chair of the Board wasn’t included in this review. Their fee was considered separately as part of the usual cycle, with a
3% increase applied from 1 July 2025 - aligned with the award made to the wider colleague population.
*In 2024, the Senior Independent Director and Vice Chair was a combined role with a fee of £25,000.
**Fee does not apply to the Chair or Senior Independent Director
***NewCommitteeestablishedwitheffectfrom1January2025
Wedon’texpecttoreviewNEDfeesagain—orCommitteeChairandmembershipfees—untilthesecondhalfof2026.
Non-Executive Director fees (annual equivalents) Annual fees as at 1 July 2025 Annual fees as at 1 July 2024
£'000 £'000
Non-Executive Director basic fee 62.0 59.8
Additional fee for:
Vice Chair of the Board* 12.5 Not applicable
Senior Independent Director* 25.0 Not applicable
Board Audit Committee - Chair 27.0 24.3
Board Audit Committee - Member 13.5 10.1
Board Remuneration Committee – Chair 20.0 19.9
Board Remuneration Committee – Member 10.0 7.3
Board Risk Committee – Chair 27.0 24.3
Board Risk Committee – Member 13.5 10.1
Board Governance and Nominations Committee** 10.0 7.3
Board Environmental and Social Purpose Committee – Chair*** 20.0 Not applicable
Board Environmental and Social Purpose Committee - Member*** 10.0 Not applicable
Board Champion Roles (excluding where Champion Roles are held by the Vice
Chair or Senior Independent Director)
3.0 Not applicable
Chair of the Board fee (annual equivalents) Annual fees as at 1 July 2025 Annual fees as at 1 July 2024
£'000 £'000
Chair of the Board basic fee 232.0 225.0
Governance > Directors’ Remuneration Report
Single total figure of remuneration for each Non-
Executive Director
The basic and committee fees earned by our Non-Executive Directors in 2025 are outlined below. Non-Executive Directors
don’treceiveanybenefits,buttheyarereimbursedforexpensessuchastravelandsubsistence,inlinewiththeSociety’s
expenses policy. This information has been independently audited by PwC.
2025 2024
Non-Executive Director Basic Fees Committee
Fees
Total Basic Fees Committee
Fees
Total
£'000 £'000 £'000 £'000 £'000 £'000
Annemarie Durbin 228.5 - 228.5 220.6 - 220.6
Guy Bainbridge (stepped down from the
Board on 31 December 2025)
62 58.5 120.5 58.7 40.9 99.6
Peter Bole 62 23.3 85.3 19.9 3.4 23.3
Angela Darlington 62 53.5 115.5 58.7 33.7 92.4
Debra Davies 62 43.5 105.5 58.7 29.4 88.1
Elaine Bucknor (joined the Board on
26 September 2025)
16.2 3.5 19.7 - - -
Dina Matta (stepped down from the Board
on 22 October 2025)
51.7 8.3 60 58.7 7.1 65.8
Mark Parsons 62 62 124 58.7 19.8 78.5
Janet Pope 62 30 92 10.7 - 10.7
The following pages set out the approved Director
Remuneration Policy for our Executive Directors and Non-
Executive Directors. The revised policy was approved by
members at the Annual General Meeting (‘AGM’) on 23 April
2024 with 92.31% of the votes cast being in favour of
the resolution.
Remuneration Policy
Our policy is designed to apply for three years, through
to the AGM in 2027. We don’t expect to make payments
to Directors outside of this policy unless required by
regulatory change. No changes are planned for 2026.
Our Remuneration Policy can be found on our website
52
.
Deferral and Share
Equivalent Instruments
(SEI)
We’veupdatedhowwehandlebonusdeferraltoreflect
the latest regulatory changes from the PRA and FCA. These
changes make things simpler and easier to understand,
while keeping risk management front and centre.
What’s changing?
Shorter deferral period
From 2025 onwards, all bonus awards for Executive
Directors and Material Risk Takers (MRTs) will be deferred
over four years.Previously,deferralcouldstretchtofiveor
seven years depending on role and pay level. Regulators
haveconfirmedthatmostriskeventshappenwithinfour
years, so this new standard is both prudent and practical.
Pro-rata vesting
Deferred awards will now vest gradually from the grant
date,ratherthanwaitingthreeyearsforthefirstpayment
in the case of seven-year deferral. This means colleagues
see the value of their bonus sooner, while we still manage
risk responsibly.
Simpler structure
Half of every bonus will be paid in cash upfront, and the
other half will be deferred in Share Equivalent Instruments
(SEIs) over the four-year period. This keeps things
straightforward and gives colleagues more clarity on when
and how they’ll be paid.
122 123Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Governance > Directors’ Remuneration Report
No retention period on deferred instruments
There’s no longer a mandatory retention period after vesting for deferred SEIs. This change makes the process easier to
manage and simpler for colleagues to understand.
Deferral thresholds
We’ve also adopted new rules on how much of a bonus must be deferred:
Thefirst£660,000 of any bonus is subject to 40% deferral.
Anything above that is subject to 60% deferral. Previously, Executive Directors had to defer 60% of their entire award, so this
changeisawelcomesimplification.
Proportionality (de minimis) threshold
•
The previous proportionality threshold of variable pay above £44,000 no longer applies. Instead, the rule now focuses
on total remuneration and proportionality:
•
Colleagues with total remuneration above £660,000, or
•
Where variable pay makes up more than one-third of total remuneration, will still be subject to deferral.
This means fewer colleagues will need to defer bonuses, but some MRTs remain in scope because of the one-third rule. For
example, under the old rules, 20 out of 25 MRTs receiving a senior leader bonus in 2024 were subject to deferral. Under the
new rules, that number would have been just 11.
Length of time variable pay at risk
Malus and clawback: how we manage risk across the Society
All variable pay awards for Executive Directors and MRTs are subject to malus and clawback. This means awards can be
reducedorrecoveredinspecificcircumstances,suchasmisconductormaterialriskfailure,ensuringaccountabilityand
alignment with long-term member interests.
Our malus and clawback provisions apply across the whole Society and are set out in our bonus scheme rules. They can be
applied to individuals or groups where there’s shared responsibility.
Malus can be applied up until an award vests. Awards are subject to clawback for up to ten years, and 100% of deferred
bonus is open to future performance adjustments.
The Committee may consider applying malus or clawback in situations such as:
•
Amaterialfinancialmisstatement(notduetoachangeinaccountingpractice)
•
AsignificantdropinpersonalorSociety-wideperformance
•
A serious failure in risk management
•
Conduct that causes, or could cause, reputational damage
•
Negligence or misconduct
•
Fraud, or knowledge of fraud
No malus or clawback was applied in the last performance year.
TheseprovisionswerefirstapprovedbyTheCommitteein2014andhavebeeninplacesince.They’rereviewedalongsideour
widerRemunerationPolicytomakesuretheystayfitforpurpose.
2025 Bonus Delivery 2026 2027 2028 2029 2030
Up-front: April Cash
Deferred Year 1: April SEI
Deferred Year 2: April SEI
Deferred Year 3: April SEI
Deferred Year 4: April SEI
Remuneration scenarios in relation to the Remuneration Policy in 2025
Thechartbelowshowshowremunerationcouldbesplitbetweenfixedpay(basesalary,benefitsandpension)andvariable
pay (bonus) for the Chief Executive and other Executive Directors.
Tobringthistolife,we’veuseddatafortheCEOandCFOunderthreedifferentscenarios:
•
Minimum – where performance conditions aren’t met, and no variable pay is awarded.
•
Target – where Society and personal performance measures are achieved. This would result in a variable pay award of 75%
of eligible pay for the CEO and 50% for other Executive Directors.
•
Maximum – where stretch objectives are fully met. This could result in a variable pay award of up to 125% of eligible pay
for the CEO and 100% for other Executive Directors.
Thesescenarioshelpshowhowperformanceshapesreward—andhowourapproachstaysalignedwithlong-term
sustainability and fairness.
Appendix 1 – AGM: Statement of Member Voting
We’re committed to listening to our members. And we take voting outcomes seriously. Support for our policy has remained
strong over the years:
Appendix 2 - Aggregate remuneration data (Pillar 3)
For full details on the Society’s full Pillar 3 disclosure, please visit www.ybs.co.uk/your-society/financial-results.
This report contains the statutory disclosures required under the Building Societies Act 1986 (‘the Act’) and the Disclosure
Guidance and Transparency Rules of the Financial Conduct Authority (‘the DTR’). It also includes details of voluntarily applied
disclosure requirements, including those in respect of the UK Corporate Governance Code (‘the Code’), the Companies Act
2006 and the streamlined energy and carbon reporting (‘SECR’) rules.
Basis of Preparation
Forthe2025financialyearwehaveappliedtheprinciplesandcompliedwiththeprovisionsoftheUKCorporateGovernance
Code 2024 (available on the Financial Reporting Council’s website www.frc.org.uk) as far as they apply to Building Societies
(as set out in the Building Societies Association (BSA) Guidance available at www.bsa.org.uk) other than where stated in the
Corporate Governance Report.
Non-Executive Director 2019 2020 2021 2022 2023 2024 2025
To approve the Directors’ Remuneration report 91.86% 91.32% 92.45% 91.77% 93.15% 92.89% 93.4%
To approve the Directors’ Remuneration Policy 90.95% n/a 91.58% n/a n/a 92.31% n/a
124 125Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Our directors
The names of the directors of Yorkshire Building Society
(‘the Society’) who served during the year and up to the
date of this report, their roles, previous experience and
membership of board committees are described in the
Our Board and Executive Team area of the Governance
section. None of the directors had an interest in, or
share of, any associated body of the Society at any time
duringthefinancialyear.Atour2026AnnualGeneral
Meeting (‘AGM’) our directors will all retire and stand for
election/re-election.
Our strategy, future
developments and Key
Performance Indicators
(‘KPIs’)
Information on the strategy of Yorkshire Building Society
and its controlled entities (‘the Group’) can be found in the
Our Purpose and strategy section of the Strategic Report.
Details of future developments are included in the Looking
ahead section of the Introduction from the Chief Executive
and KPIs are set out in the Performance at a glance section.
Details of our corporate governance practices are
included in our Corporate Governance report.
How we manage risks
Our business activity exposes the Group to a variety of
risks, including retail and commercial credit, treasury,
funding and liquidity, market, operational, model, capital,
and compliance and conduct risk. We seek to manage all
the risks that arise from our business activities and we have
a number of committees and policies in place to do so.
Details of these risks are included in the Risk
overview section of the Strategic Report and the Risk
management report.
Our mortgage arrears
Details of the mortgage accounts that were 12 months or
more in arrears at 31 December are as follows:
Further details of the arrears position are set out in the
Our Financial Review section of the Strategic Report.
Note31tothefinancialstatementsalsodetailsthevarious
formsofsupportofferedtoborrowersexperiencing
difficultiesinmeetingtheirrepayments.
Our charitable and political
donations
Charitable donations made by the Group during the
year were £1.5m (2024: £1.3m), more details and
further information on fundraising by our colleagues,
members and customers can be found in the Our Social
and Environmental Impact: Communities section in the
Strategic Report. No political donations were made in the
year (2024: nil).
Directors’
Report
2025 2024 2025 2024
% of mortgage
account/balances
Number of
accounts
301 249 0.11% 0.09%
Balances
outstanding on
accounts
£51.7m £33.8m 0.10% 0.07%
Amount of arrears
included in balances
£6.7m £4.7m 0.01% 0.01%
Our colleagues
We continue to listen and respond to our colleagues’ needs.
It is important that all our colleagues feel connected to the
Society and can contribute to our success. To achieve this,
we communicate business information to our colleagues
across our organisation in an appropriate and timely
way.Werecognisethatemployingpeoplefromdifferent
backgrounds and with a range of experience enhances the
way in which we work. We are building a diverse workforce
and we make workplace adjustments wherever we possibly
can to provide an inclusive working environment for all
colleagues. See the Stakeholder engagement section of the
Corporate Governance Report for more details.
Our responsibilities in
respect of Accounting
Records and Internal
Control
We are responsible for ensuring that the Society:
•
keeps accounting records in accordance with the
Building Societies Act 1986 (‘the Act’); and
•
takes reasonable care to establish, maintain, document
and review such systems and control as are appropriate
to its business in accordance with the rules made by
the Prudential Regulation Authority under the Financial
Services Act 2012.
We have a general responsibility for the safeguarding of the
assets of the Society and for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Directors’ responsibilities
in respect of the
preparation of the Annual
Report and Accounts
The following statement, which should be read in
conjunction with the Auditors’ responsibilities for the audit
ofthefinancialstatementsintheIndependentauditors’
report to the members of Yorkshire Building Society, is
made by the directors to explain their responsibilities in
relationtothepreparationofthefinancialstatements.
WearerequiredbytheActtopreparefinancialstatements,
for both the Society and the Group, that give a true and fair
viewoftheincomeandexpenditureforthefinancialyear,
andthestateofaffairsattheendofeachfinancialyear
in accordance with UK-adopted International accounting
standards. We are also required to provide details of
directors’ remuneration in accordance with part VIII of the
Act and regulations made under it.
AspertheAct,directorsmustnotapprovethefinancial
statementsunlesstheyaresatisfiedthattheygivea
trueandfairviewofthestateofaffairsoftheGroupand
SocietyandoftheprofitorlossoftheGroupandSociety
in that period.
Inpreparingthefinancialstatements,thedirectors
are required to:
•
select suitable accounting policies and apply them
consistently;
•
make judgements and accounting estimates that are
reasonable;
•
statewhetherthefinancialstatementshavebeen
prepared in accordance with International Accounting
Standards; and
•
preparethefinancialstatementsonagoingconcern
basis, unless it is inappropriate to presume that the
Group will continue in business.
The directors are responsible for safeguarding the assets
of the Group and Society and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The directors are also responsible for keeping adequate
accountingrecordsthataresufficienttoshowandexplain
the Group’s and Society’s transactions and disclose with
reasonableaccuracyatanytimethefinancialposition
of the Group and Society and enable them to ensure
thatthefinancialstatementscomplywiththeBuilding
Societies Act 1986.
The disclosure and transparency rules of the Financial
ConductAuthority(‘theDTR’)requireanannualfinancial
report to include:
•
auditedfinancialstatementsforboththeSociety
and Group;
•
a management report that includes a fair review of the
business and a description of the principal risks and
uncertainties (see the Strategic Report and the Risk
Management Report); and
•
responsibility statements (see Responsibility Statements
on page 130).
We are responsible for the maintenance and integrity of
statutory and audited information on the Society’s website.
Information published on the internet is accessible in
manycountrieswithdifferentlegalrequirements.Laws
in the United Kingdom governing the preparation and
communicationoffinancialstatementsmaybedifferent
from laws in other jurisdictions.
Annual Business Statement
The Act also requires the directors to prepare, for each
financialyear,anannualbusinessstatementcontaining
prescribed information relating to the business of the
Group. See pages 228 to 229 for the 2025 Annual
Business Statement.
Governance > Directors’ Report
126 127Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Non-financial and sustainability information statement
PleaseseetheResponsibleBusinessFoundationssectionintheStrategicReportfordisclosureofournon-financial
sustainability statement.
Directors’ duties
Section 172 of the Companies Act 2006 (‘s172’) describes the duties of company directors in respect of promoting the
business and considering other stakeholders. This does not apply to the Society’s Directors as we are a building society not a
company, but the Code expects boards to report on how they have considered the matters set out in s172 in decision making.
The table below summarises the s172 requirements and cross references to where this consideration is covered in other
sections of this document.
Summary of s172
Requirements
Yorkshire Building Society Board Relevant Disclosure
A director must act in
a way they consider, in
good faith, would most
likely promote the success
of the business for the
benefit of its members as a
whole (i.e. the company’s
shareholders) and in doing
so have regard (amongst
other matters) to the:
As a mutual the Society does not have external
shareholders, we are owned by our members. The Board
is committed to promoting the long-term success of
theSocietyforthebenefitofourcurrentandfuture
members. Building on our Purpose to provide Real Help
with Real Life Our Strategy underpins our commitment
to the success of the business for our members both
now and in the future.
Strategic Report - Our
Business Model
Strategic Report
- Our Strategy
Strategic Report - Our
Purpose and Strategy
•
likely consequences
of any decision in
the long term
Our Board recognises the importance of ensuring the
likely consequences of decisions in the long term
areconsideredwhichisreflectedinOurStrategy,
built around our Purpose of providing Real Help
with Real Life.
Strategic Report -
Our Business Model
Strategic Report
- Our Strategy
Strategic Report - Our
Purpose and Strategy
•
interests of employees The Board understands that our people are the
foundation of our business and recognises the
importance of ensuring that their voice is heard in
the board room. Each paper considered by the Board
sets out the implications for our employees and,
where relevant, how they have been consulted on the
proposals. The Board also has a Non-Executive Director
for Workforce Engagement.
The Board has also put in place a framework to ensure
colleague views inform its decision.
Strategic Report - Our
Social and Environmental
Impact – Colleagues
Corporate
Governance Report –
Stakeholder engagement
•
need to foster business
relationships with
suppliers, customers
and others
The Society’s Board is committed to fostering and
monitoringtheeffectivenessofourwiderbusiness
relationships with all our key stakeholders. This
wasreflectedintheshapingofOurStrategy,which
was supported through detailed stakeholder
engagement exercises.
Corporate
Governance Report -
Stakeholder engagement
Summary of s172
Requirements
Yorkshire Building Society Board Relevant Disclosure
•
impact of the
business’s operations
on the community and
the environment
The environment, social and governance impact of
the Society underpins Our Strategy and each paper
considered by the Board sets out any social or
environmental implications of a decision ensuring
that the Board has regard to the impact of these as
part of its overall approach to promoting the success
of the Society.
Strategic Report - Our
Social and Environmental
Impact – Communities
Strategic Report - Our
Social and Environmental
Impact – Climate
•
desirability of
maintaining a
reputation for
high standards of
business conduct
The Board’s commitment to maintaining high
standards of business conduct helps to ensure the
long-term success of the Society for our current and
future members, customers, colleagues and all other
stakeholders. The Society’s behaviours help drive the
culture and supports the delivery of Our Strategy.
Strategic Report - Our
Business Model
Strategic Report
- Our Strategy
Strategic Report - Our
Purpose in Action
•
need to act fairly as
between members
(i.e. the company’s
shareholders)
The Society does not have external shareholders,
instead our members are our owners and at the heart
of what we do. The Board understands the importance
of engaging with our members and is committed
to ensuring their views inform future decision
making to ensure it is fair and in the interests of our
membership as a whole.
Strategic Report - Our
Purpose in Action
Strategic Report - Our Social
and Environmental Impact –
Customers & members
Corporate
Governance Report -
Stakeholder engagement
Streamlined Energy and
Carbon Reporting (‘SECR’)
In 2025, the Society has chosen to relocate the SECR
to join its Taskforce for Climate-related Financial
Disclosure (‘TCFD’) report, located in the Strategic
Report.
This allows the Society’s total climate-related reporting
tobefoundinonelocationandreflectsthestrategic
importance granted to climate reporting by the Society.
Going concern
ThedirectorsconfirmthattheyconsiderthattheGroupand
the Society has adequate resources to continue in existence
for at least 12 months from the date of approval of this
report.Thisconfirmationismadeafterhavingreviewed
assumptions about future trading performance, liquidity
requirements, capital requirements and organisational
sustainability. The directors also considered potential
risks and uncertainties in the business, credit, market and
liquidity risks, including the availability and repayment
profileoffundingfacilities.
Details of how the Board monitor longer term risks
are included in the Risk Management Report in the
Governance section.
Based on the above, together with available market
information and the directors’ knowledge and experience
of the business and our markets, the directors continue
to adopt the going concern basis in preparing the
Annual Report and Accounts for the year ended 31
December 2025.
Governance > Directors’ Report
128 129Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Viability
The UK Corporate Governance Code (‘the Code’), which the
Society adopts to the extent that it applies to a Building
Society, requires the directors to assess the prospects and
ongoing viability of the Group over a longer period than the
12 months required for the going concern assessment.
For the purposes of assessing longer term viability, the
directors have determined three years to be the most
appropriate period as this covers the typical term of most of
ourfixed-rateproductsandisthelongestperiodoverwhich
thedirectorsconsiderthattheycanformareasonablyfirm
view over the macroeconomic environment and associated
key drivers of business performance. The directors have
therefore assessed the viability of the Group and the
Society over the three years to December 2028, taking
account of the current position and the potential impact of
the risks documented in the Strategic Report and the Risk
Management Report.
Ourfinancialplanningprocessconsistsofabudgetforthe
nextfinancialyearandacorporateplanforthefollowing
additionalfourfinancialyears.Theone-yearbudgethas
a greater level of certainty and is used to set near-term
targets.Thefive-yearcorporateplanislesscertainthanthe
budget, but provides a longer term outlook against which
strategic decisions can be made.
ThefinancialplanningprocessforecaststheGroup’s
profitability,capitalposition,liquidityandotherkey
financialmetricsovertheperiod,includingregulatory
measures such as MREL (Minimum Requirement for Eligible
Liabilities). These metrics are subject to sensitivity analysis
through the annual Group ICAAP (Internal Capital Adequacy
Assessment Process) and ILAAP (Internal Liquidity Adequacy
Assessment) processes. The Group stresses its capital and
liquidity plans, under ‘severe but plausible’ stress test
scenarios, in line with PRA requirements.
The ICAAP stress test ensures that the plan projections for
capital requirements and capital generation are resilient to
stresses should the environment deteriorate beyond the
levels currently envisaged. The Group maintains capital
buffersthataresufficienttoabsorbthelevelofcapital
erosion in the stress scenario over and above its minimum
capital requirement, ensuring that the Group can continue
to meet its minimum capital requirements throughout a
‘severe but plausible’ stress. The ILAAP stress test ensures
that the Group holds adequate liquid assets in terms of both
qualityandquantitysufficienttomeetbothitsbusiness-
as-usual liquidity needs and increased requirements that
could occur as a result of the Group entering into a period
of stress. Planned liquidity levels meet the Group’s key risk
appetite measures over a period of three years.
The Board has undertaken a robust assessment of the
principal risks and uncertainties that could threaten the
business model, future performance, solvency or liquidity
of the Group and the Society. Based on this assessment,
the directors have a reasonable expectation that the Group
and the Society will be able to continue in operation
and meet its liabilities as they fall due over the period
to December 2028.
Responsibility statements
As required by the Disclosure Guidance and Transparency
Rules of the Financial Conduct Authority, the directors
confirmthat,tothebestoftheirknowledge:
•
Thefinancialstatementsgiveatrueandfairviewofthe
assets,liabilities,financialpositionandprofitorlossof
the Society and the Group; and
•
The Strategic Report includes a fair review of the
development and performance of the business and the
position of the Society and the Group, and the Strategic
Report and the Risk Management Report contain a
description of the principal risks and uncertainties.
Fair, balanced and
understandable
As required by the UK Corporate Governance Code, which
the Group adopts to the extent that it applies to a Building
Society,thedirectorsaresatisfiedthattheAnnualReport
and Accounts, taken as a whole, are fair, balanced and
understandable and provide the information necessary to
assess our performance, business model and strategy.
External auditor
The reappointment of PricewaterhouseCoopers LLP as the
Group’s external auditor is to be proposed at the 2026
AGM.Thedirectorsinofficeatthedateofthisreport
confirmthat,sofarastheyareaware,thereisnorelevant
audit information of which the external auditor is unaware.
Each director has taken all the steps necessary in order to
make themselves aware of any relevant audit information
and to establish that the external auditors are also aware of
that information.
Annemarie Durbin
Chair of the Board
25 February 2026
Independent auditors’
report to the
members of Yorkshire
Building Society
Report on the audit of the financial statements
Opinion
Inouropinion,YorkshireBuildingSociety’sgroupfinancialstatementsandSociety’sfinancialstatements(the
“financialstatements”):
•
giveatrueandfairviewofthestateoftheGroup’sandoftheSociety’saffairsasat31December2025andoftheGroup’s
andSociety’sincomeandexpenditureandtheGroup’sandtheSociety’scashflowsfortheyearthenended;
•
have been properly prepared in accordance with UK-adopted international accounting standards; and
•
have been prepared in accordance with the requirements of the Building Societies Act 1986.
Wehaveauditedthefinancialstatements,includedwithintheAnnualReportandAccounts(the“AnnualReport”),
which comprise:
•
the Group and Society Balance Sheets as at 31 December 2025;
•
the Group and Society Income Statements, the Group and Society Statements of Comprehensive Income, the Group and
Society Statements of Cash Flows and the Group and Society Statements of Changes in Members’ Interest and Equity for
the year then ended; and
•
thenotestothefinancialstatements,comprisingmaterialaccountingpolicyinformationandotherexplanatory
information.
CertainnotestothefinancialstatementshavebeenpresentedelsewhereintheAnnualReport,ratherthaninthenotestothe
financialstatements.Thesearecross-referencedfromthefinancialstatementsandareidentifiedas‘(Audited)’.Therelevant
disclosuresareincludedinthefinancialperformancesectionandtheDirectors’remunerationreportdisclosures.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilitiesunderISAs(UK)arefurtherdescribedintheAuditors’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 remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the
financialstatementsintheUK,whichincludestheFRC’sEthicalStandard,asapplicabletolistedpublicinterestentities,and
wehavefulfilledourotherethicalresponsibilitiesinaccordancewiththeserequirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard
were not provided.
Other than those disclosed in Note 6, we have provided no non-audit services to the society or its controlled undertakings in
the period under audit.
Governance > Directors’ Report
130 131Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Our audit approach
Overview
Audit scope
The scope of our audit and the nature, timing and extent of audit procedures performed were determined by our risk
assessment,thesignificanceofcomponentsandotherqualitativefactors.
WeperformedauditproceduresovercomponentsconsideredtobesignificantinthecontextoftheGrouporinthecontextof
individual primary statement account balance.
Key audit matters
•
Expected credit losses for loans and advances to customers (Group and Society)
•
Valuationofthefundeddefinedbenefitpensionobligation(GroupandSociety)
Materiality
•
OverallGroupmateriality:£21.4m(2024:£17.4m)basedon5%ofthecurrentyearprofitbeforetaxadjustedtoexclude
netgainsandlossesarisingfromfinancialinstrumentsheldatfairvalue.
•
OverallSocietymateriality:£20.0m(2024:£14.0m)basedon5%ofthecurrentyearprofitbeforetaxadjustedtoexclude
netgainsandlossesarisingfromfinancialinstrumentsheldatfairvalue.
•
Performance materiality: £16.0m (2024: £13.1m) (Group) and £15.0m (2024: £10.5m) (Society).
The scope of our audit
Aspartofdesigningouraudit,wedeterminedmaterialityandassessedtherisksofmaterialmisstatementinthefinancial
statements.Inparticular,welookedatwherethedirectorsmadesubjectivejudgements,forexampleinrespectofsignificant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain.
Key audit matters
Keyauditmattersarethosemattersthat,intheauditors’professionaljudgement,wereofmostsignificanceinthe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)identifiedbytheauditors,including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,andanycommentswe
makeontheresultsofourproceduresthereon,wereaddressedinthecontextofourauditofthefinancialstatementsasa
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Thisisnotacompletelistofallrisksidentifiedbyouraudit.
The key audit matters below are consistent with last year.
Governance > Independent auditors’ report to the members of Yorkshire Building Society
Key audit matter How our audit addressed the key audit matter
Expected credit losses for loans and advances to
customers (Group and Society)
Determining expected credit losses (“ECL”) is inherently
judgemental and involves making various assumptions. This
can give rise to increased estimation uncertainty.
ECL is calculated using historical default and loss experience
but requires judgement to be applied in predicting
future economic conditions, e.g. house prices, and
customer behaviour.
Modelling methodologies are used to estimate ECL..
Ourauditfocusedonthesignificantassumptionsforwhich
variations had the most material impact on ECL.
We consider forward looking economic assumptions,
specificallyHPIandunemploymentinbaseanddownside
scenarios, and the weighting assigned to these scenarios to be
significantindeterminationofECLforresidentialmortgages.
Refer to relevant disclosures in Note 31: Credit risk on loans
and advances to customers, Note 1: Material accounting
policies, and Note 2: Critical accounting judgements and key
sources of estimation uncertainty.
We engaged our credit risk modelling specialists
and economic experts to critically assess the
appropriateness of the ECL.
Forward looking economic scenarios and
assigned weightings.
We assessed the reasonableness of the forward looking
economic scenarios and weightings assigned to them, and
benchmarked them against market consensus data. The
severity of the scenarios was evaluated with reference
to external forecasts, including data from historical
economic downturns.
We evaluated the assigned weightings, using our economic
analysis tool, which assesses the reasonableness of the
scenariosandweights,givingspecificconsideration
to observed historical losses and the current
economic environment.
Model methodology and implementation.
We critically assessed the appropriateness of the methodology
used in the in-scope impairment models and evaluated
compliance with IFRS 9 requirements.
We evaluated the methodology, appropriateness and
implementation of model changes. We assessed and
tested the accuracy of the results of model monitoring
performed by management.
We validated that the in-scope models were implemented
in line with the methodology through a combination of
independent model replication and code reviews.
We tested the disclosures in respect of ECL that they were
compliant with accounting standards.
Valuation of the funded defined benefit pension
obligation (Group and Society)
TheGroupandSocietyoperateafundeddefinedbenefit
pensionscheme.Thevaluationofthefundeddefined
benefitobligationisdependentonanumberofactuarial
assumptions.Weconsiderthediscountrate,inflationrateand
mortalityratestobethemostsignificantassumptionsused
in the valuation.
Management uses an actuarial expert to determine the
valuationofthedefinedbenefitobligation.Thevaluation
methodology uses a number of market-based inputs and other
financialanddemographicassumptions.
Changes in these assumptions can have a material impact
on the valuation due to the long duration of the pension
liabilities and as such the valuation is considered to be
highly judgemental.
RefertorelevantdisclosuresinNote17:Retirementbenefit
obligations, Note 1: Material accounting policies, and
Note 2: Critical accounting judgements and key sources of
estimation uncertainty.
We evaluated the independence, objectivity and competence
of the third party actuary engaged by management. We
reviewed the actuary’s report and obtained an understanding
of the methodology used and assumptions set in calculating
thedefinedbenefitobligation.
We assessed the appropriateness of the methodology
used. We engaged our actuarial experts to understand the
judgements made by management and the third party actuary
indeterminingthesignificantassumptions.
We independently assessed, using our actuarial experts, the
reasonablenessofthesignificantassumptions,specificallythe
discountrate,inflationrateandmortalityrates,bycomparing
these assumptions to our independently compiled acceptable
ranges based on external market data.
We evaluated and tested the disclosures made in the Annual
Reportinrelationtothedefinedbenefitpensionobligation.
132 133Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
How we tailored the audit scope
Wetailoredthescopeofouraudittoensurethatweperformedenoughworktobeabletogiveanopiniononthefinancial
statements as a whole, taking into account the structure of the Group and the Society the accounting processes and controls,
and the industry in which they operate.
The Group comprises the Society, its wholly owned subsidiaries and special purpose vehicles over which, under accounting
standards,theSocietyhascontrol.EachentityislocatedintheUKandisconsideredtobeafinancialreportingcomponent.
Inestablishingtheoverallapproachtoourauditofthefinancialstatements,wedeterminedthetypeofworkthatwas
requiredtobeperformedovereachcomponent.TheSocietyandAccordMortgagesLimitedwereconsideredsignificantdue
toriskandsizeinthecontextoftheGroup’sconsolidatedfinancialstatementsandthereforeweperformedafullscope
auditofthecomponentfinancialinformation.YorkshireBuildingSocietyCoveredBondsLLP,BrassNo.10PLC,BrassNo.11
PLC,TombacNo.3PLCandWhiteRoseMasterIssuerPLCwereconsiderednon-significantcomponentsinthecontextofthe
Group’sconsolidatedfinancialstatementswithfurtherauditproceduresbeingperformedovercertainbalances.
Allremainingcomponentswereidentifiedasinconsequentialandnofurtherauditproceduresperformed.
All audit work was performed by the same engagement team.
The impact of climate risk on our audit
In considering the impact of climate risk on our audit, we:
•
MadeenquiriesofmanagementtounderstandtheextentofthepotentialimpactofclimateriskontheGroup’sfinancial
statements and we remained alert when performing our audit procedures for any indicators of the impact of climate risk;
•
Considered the exposure of the mortgage portfolio to physical and transition risks by examining the output of assessments
performed by management. Management does not consider the impact of climate risk to have a material impact on the
financialstatements;and
•
ConsideredtheconsistencyofthedisclosuresinrelationtoclimatechangewithintheAnnualReportwiththefinancial
statements and our knowledge obtained from our audit.
Our procedures did not identify any material impact as a result of climate risk on the Group’s and Society’s
financialstatements.
Materiality
Thescopeofourauditwasinfluencedbyourapplicationofmateriality.Wesetcertainquantitativethresholdsformateriality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extentofourauditproceduresontheindividualfinancialstatementlineitemsanddisclosuresandinevaluatingtheeffectof
misstatements,bothindividuallyandinaggregateonthefinancialstatementsasawhole.
Basedonourprofessionaljudgement,wedeterminedmaterialityforthefinancialstatementsasawholeasfollows:
Financial statements - Group Financial statements - Society
Overall
materiality
£21.4m (2024: £17.4m). £20.0m (2024: £15.0m).
How we
determined it
5%ofthecurrentyearprofitbefore
tax adjusted to exclude net gains and
lossesarisingfromfinancialinstruments
held at fair value.
5%ofthecurrentyearprofitbefore
tax adjusted to exclude net gains and
lossesarisingfromfinancialinstruments
held at fair value.
Rationale for
benchmark
applied
Profitbeforetax(GroupandSociety)isaprimarymeasureusedbystakeholdersinassessingthe
performance and is a generally accepted benchmark for determining audit materiality.
Managementassessestheperformanceofthebusinessusingthe“CoreOperatingProfit”measure,
whichitselfexcludesnetgainsandlossesonfinancialinstrumentsheldatfairvaluethrough
theincomestatement,asthesearenotconsideredtoreflecttheunderlyingperformanceofthe
business. The fair value movement relates predominantly to derivatives which are not yet in
accounting hedging relationships, rather than underlying business performance.
Governance > Independent auditors’ report to the members of Yorkshire Building Society
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality.
The range of materiality allocated across components was £10.3m to £20.0m. Certain components were audited to a local
statutory audit materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetectedmisstatementsexceedsoverallmateriality.Specifically,weuseperformancematerialityindeterminingthescope
of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example
in determining sample sizes. Our performance materiality was 75% (2024: 75%) of overall materiality, amounting to £16.0m
(2024:£13.1m)fortheGroupfinancialstatementsand£15.0m(2024:£10.5m)fortheSocietyfinancialstatements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment
andaggregationriskandtheeffectivenessofcontrols-andconcludedthatanamountattheupperendofournormalrange
was appropriate.
WeagreedwiththeAuditCommitteethatwewouldreporttothemmisstatementsidentifiedduringourauditabove£1.1m
(Group audit) (2024: £0.9m) and £1.0m (Society audit) (2024: £0.7m) as well as misstatements below those amounts that, in
our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
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:
•
performing a risk assessment to identify factors that could impact the going concern basis of accounting, including the
currentandforecastfinancialperformance;
•
understanding and evaluating management’s going concern assessment, including consideration of the impact of current
economic environment;
•
understanding and evaluating management’s forecasts and the stress testing of liquidity and regulatory capital performed
by management;
•
evaluatingmanagement’sabilitytoaccuratelyforecastfinancialperformancebycomparingbudgetedfinancialinformation
with historical actual results;
•
reviewing regulatory correspondence; and
•
readingandevaluatingtheappropriatenessofthedisclosuresmadeinthefinancialstatementsinrelationto
going concern.
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theSociety’sabilitytocontinueasagoingconcern
foraperiodofatleasttwelvemonthsfromwhenthefinancialstatementsareauthorisedforissue.
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.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s
and the Society’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material
toaddordrawattentiontoinrelationtothedirectors’statementinthefinancialstatementsaboutwhetherthedirectors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Reporting on other information
TheotherinformationcomprisesalloftheinformationintheAnnualReportotherthanthefinancialstatementsandour
auditors’reportthereon.Thedirectorsareresponsiblefortheotherinformation.Ouropiniononthefinancialstatements
does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise
explicitly stated in this report, any form of assurance thereon.
Inconnectionwithourauditofthefinancialstatements,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 audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement,wearerequiredtoperformprocedurestoconcludewhetherthereisamaterialmisstatementofthefinancial
statements or a material misstatement of the other information.
134 135Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Annual Business Statement and Directors’ Report, we also considered whether the disclosures required by
the Building Societies Act 1986 have been included.
Based on our work undertaken in the course of the audit, the Building Societies Act 1986 requires us also to report certain
opinions and matters as described below.
Annual Business Statement and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit:
•
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 year ended 31 December 2025 is consistent with the accounting
recordsand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.
In light of the knowledge and understanding of the Group and Society and their environment obtained in the course of the
audit, we did not identify any material misstatements in the Directors’ Report.
Corporate governance statement
ISAs (UK) require us to review the directors’ statements in relation to going concern, longer-term viability and that part
of the corporate governance statement relating to the Society’s compliance with the provisions of the UK Corporate
Governance Code, which the Listing Rules of the Financial Conduct Authority specify for review by the auditor. Our additional
responsibilities with respect to the corporate governance statement as other information are described in the Reporting on
other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governancestatementismateriallyconsistentwiththefinancialstatementsandourknowledgeobtainedduringtheaudit,
and we have nothing material to add or draw attention to in relation to:
•
Thedirectors’confirmationthattheyhavecarriedoutarobustassessmentoftheemergingandprincipalrisks;
•
The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging
risks and an explanation of how these are being managed or mitigated;
•
Thedirectors’statementinthefinancialstatementsaboutwhethertheyconsidereditappropriatetoadoptthegoing
concernbasisofaccountinginpreparingthem,andtheiridentificationofanymaterialuncertaintiestotheGroup’sand
Society’sabilitytocontinuetodosooveraperiodofatleasttwelvemonthsfromthedateofapprovalofthefinancial
statements;
•
The directors’ explanation as to their assessment of the Group’s and Society’s prospects, the period this assessment covers
and why the period is appropriate; and
•
The directors’ statement as to whether they have a reasonable expectation that the Society will be able to continue in
operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures
drawingattentiontoanynecessaryqualificationsorassumptions.
Our review of the directors’ statement regarding the longer-term viability of the Group and Society was substantially less in
scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement;
checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and
consideringwhetherthestatementisconsistentwiththefinancialstatementsandourknowledgeandunderstandingofthe
Group and Society and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of
thecorporategovernancestatementismateriallyconsistentwiththefinancialstatementsandourknowledgeobtained
during the audit:
•
The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess the Group’s and Society’s position, performance, business
model and strategy;
•
ThesectionoftheAnnualReportthatdescribesthereviewofeffectivenessofriskmanagementandinternalcontrol
systems; and
•
The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the Society’s
compliancewiththeCodedoesnotproperlydiscloseadeparturefromarelevantprovisionoftheCodespecifiedunderthe
Listing Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Directors’ responsibilities in respect of the preparation of the Annual Report, the directors
areresponsibleforthepreparationofthefinancialstatementsinaccordancewiththeapplicableframeworkandforbeing
satisfiedthattheygiveatrueandfairview.Thedirectorsarealsoresponsibleforsuchinternalcontrolasthey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 have no realistic
alternative but to do so.
Auditors’ 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 auditors’ 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 ISAs (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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
BasedonourunderstandingoftheGroupandindustry,weidentifiedthattheprincipalrisksofnon-compliancewithlaws
and regulations related to the Financial Conduct Authority’s (‘FCA’) regulations, the Prudential Regulation Authority’s (‘PRA’)
regulationsandUKtaxlegislation,andweconsideredtheextenttowhichnon-compliancemighthaveamaterialeffect
onthefinancialstatements.Wealsoconsideredthoselawsandregulationsthathaveadirectimpactonthefinancial
statements such as the Building Societies Act 1986. We evaluated management’s incentives and opportunities for fraudulent
manipulationofthefinancialstatements(includingtheriskofoverrideofcontrols)anddeterminedthattheprincipalrisks
wererelatedtothepostingofinappropriatejournalentriesthatcouldbeusedtomanipulatefinancialperformanceandthe
potential for management bias in accounting estimates.
Audit procedures performed by the engagement team included:
•
Enquiries of management and those charged with governance including consideration of known or suspected instances of
non-compliance with laws and regulations;
•
Reviewofinternalauditfindingsthroughouttheyear,insofarastheserelatedtothefinancialstatements;
•
Review of correspondence with the PRA, FCA and HMRC;
•
Incorporation of an element of unpredictability in our testing through altering the nature, timing and/or extent of work
performed;
Governance > Independent auditors’ report to the members of Yorkshire Building Society
136 137Introduction Strategic Report
Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Financial Statements
In this Section
140 Income Statements
141 Statements of Comprehensive Income
142 Balance Sheets
143 Statements of Changes in
Members’ Interest and Equity
145 Statements of Cash Flows
146 Notes to the Financial Statements
•
Challenging estimates and judgements made by management in forming signifi cant accounting estimates in particular
those relevant to the key audit matters below; and
•
Identifying and testing journals entries, in particular journal entries posted with unusual account combinations indicating a
higher level of risk.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely related to events and transactions refl ected in the fi nancial
statements. Also, 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.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing
complete populations. We will often seek to target particular items for testing based on their size or risk characteristics.
In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the
sample is selected.
A further description of our responsibilities for the audit of the fi nancial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Society’s members as a body in accordance with
Section 78 of the Building Societies Act 1986 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
Other required reporting
Building Societies Act 1986 exception reporting
Under the Building Societies Act 1986 we are required to report to you if, in our opinion:
•
adequate accounting records have not been kept by the Society; or
•
the Society fi nancial 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.
We have no exceptions to report arising from this responsibility.
Appointment
We were fi rst appointed by the Society for the fi nancial year ended 31 December 2019. Our uninterrupted engagement
covers seven fi nancial years.
Other matter
The Society is required by the Financial Conduct Authority Disclosure Guidance and Transparency Rules to include these
fi nancial statements in an annual fi nancial report prepared under the structured digital format required by DTR 4.1.15R
- 4.1.18R and fi led on the National Storage Mechanism of the Financial Conduct Authority. This auditors’ report provides
no assurance over whether the structured digital format annual fi nancial report has been prepared in accordance with
those requirements.
Michael Whyte (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Leeds
25 February 2026
Governance > Independent auditors’ report to the members of Yorkshire Building Society
138 Yorkshire Building Society Annual Report and Accounts 2025
139
Introduction Strategic Report Governance Financial Statements Other Information
128
Yorkshire Building Society Annual Report and Accounts 2025
Income Statements
For the year ended 31December 2025
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Interest revenue calculated using the effective interest rate method
3
2,672.8
2,496.5
3,205.8
3,400.9
Other interest revenue
3
505.3
879.9
505.3
879.8
Interest revenue
3
3,178.1
3,376.4
3,711.1
4,280.7
Interest expense
4
(2,308.3)
(2,639.9)
(3,083.5)
(3,798.1)
Net interest income
869.8
736.5
627.6
482.6
Fee and commission revenue
12.1
16.9
3.3
7.0
Fee and commission expense
(36.7)
(38.8)
(29.1)
(30.4)
Net fee and fee commission expense
(24.6)
(21.9)
(25.8)
(23.4)
Net (losses)/gains from financial instruments held at fair value
5
(50.3)
36.2
(54.2)
44.4
Income from investments
8
–
–
78.0
75.0
Net realised gains on disposal of financial instruments
0.7
0.2
0.7
0.2
Other operating (expense)/income
(1.6)
0.8
126.4
111.5
Total income
794.0
751.8
752.7
690.3
Administrative expenses
6
(387.8)
(343.1)
(387.5)
(343.0)
Depreciation and amortisation
13 14 15
(19.8)
(23.5)
(19.8)
(23.5)
Impairment (charge)/release of financial assets
7
(8.5)
(0.2)
2.3
2.0
Provisions for liabilities and charges
23
–
(1.3)
–
(1.3)
Profit before tax
377.9
383.7
347.7
324.5
Tax expense
9
(102.4)
(102.0)
(77.7)
(67.6)
Profit for the year
275.5
281.7
270.0
256.9
All profit for the year arises from continuing operations and is attributable to members.
The notes on pages 146 to 226 form part of these financial statements.
Statements of Comprehensive Income
For the year ended 31December 2025
Group
Society
2025
2024
2025
2024
Notes
£m
£m
£m
£m
Profit for the financial year
275.5
281.7
270.0
256.9
Items that may be subsequently reclassified through profit or loss
Cash flow hedges:
Fair value movements taken to equity
26
(16.7)
5.7
(16.7)
5.7
Amounts transferred to the income statement
26
2.8
3.5
2.8
3.5
Tax on amounts recognised in equity
9
3.9
(2.6)
3.9
(2.6)
Effect of change in corporation tax rate
9
–
–
–
–
Financial assets measured through other comprehensive income:
Fair value movements taken to equity
3.5
(13.8)
3.5
(13.8)
Amounts transferred to the income statement
3.2
1.2
3.2
1.2
Tax on amounts recognised in equity
9
(1.9)
3.5
(1.9)
3.5
Items that will not be reclassified through profit or loss
Remeasurement of retirement benefit obligations
17
(5.2)
(4.2)
(5.2)
(4.2)
Tax on remeasurement of retirement benefit obligations
9
1.5
1.2
1.5
1.2
Effect of change in corporation tax rate
9
–
–
–
–
Total other comprehensive expense
(8.9)
(5.5)
(8.9)
(5.5)
Total comprehensive income for the year
266.6
276.2
261.1
251.4
The notes on pages 146 to 226 form part of these financial statements.
140 141
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Balance Sheets
As at 31December 2025
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Assets
Cash and balances with the Bank of England
10
6,043.6
5,609.7
6,043.6
5,609.7
Loans and advances to credit institutions
363.7
590.0
366.5
433.9
Debt securities
11
7,136.9
8,421.3
15,639.7
18,989.0
Loans and advances to customers
12
51,893.8
49,705.5
10,303.7
10,571.6
Fair value adjustment for hedged risk on loans and advances to
customers
22.1
(454.7)
22.1
(454.7)
Derivative financial instruments
26
678.9
1,466.9
635.0
1,466.0
Investments
8
0.8
1.6
43,630.4
41,433.0
Intangible assets
13
15.0
16.1
15.0
16.1
Investment property
14
11.9
11.1
11.9
11.1
Property held for sale
1.4
0.8
1.4
0.8
Property, plant and equipment
15
89.7
101.4
89.7
101.4
Retirement benefit surplus
17
28.2
33.0
28.2
33.0
Current tax assets
5.7
5.3
5.7
5.3
Other assets
18
38.6
36.4
123.5
109.2
Total assets
66,330.3
65,544.4
76,916.4
78,325.4
Liabilities
Shares
19
52,913.7
52,044.4
52,913.7
52,044.4
Fair value adjustment for hedged risk on shares
27.3
1.0
27.3
1.0
Amounts owed to credit institutions
336.9
1,168.9
336.9
1,168.9
Other deposits
20
1,508.7
1,196.8
12,278.1
14,039.4
Debt securities in issue
21
5,425.2
5,019.3
5,689.6
5,454.0
Derivative financial instruments
26
286.0
555.8
222.9
429.6
Current tax liabilities
–
0.2
–
0.2
Deferred tax liabilities
16
22.7
43.2
21.8
42.1
Other liabilities
22
86.2
75.2
105.5
103.7
Retirement benefit obligations
17
7.5
7.4
7.5
7.4
Provisions for liabilities and charges
23
2.4
4.2
2.4
4.2
Subordinated liabilities
24
1,472.4
1,453.3
1,472.4
1,453.3
Total liabilities
62,089.0
61,569.7
73,078.1
74,748.2
Members’ interests and equity
4,241.3
3,974.7
3,838.3
3,577.2
Total members’ interest, equity and liabilities
66,330.3
65,544.4
76,916.4
78,325.4
The notes on pages 146 to 226 form part of these financial statements.
Approved by the Board of Directors on 25 February 2026 and signed on its behalf by:
Tom Ranger
Chief Financial Officer
Statements of Changes in Members’ Interest and Equity
For the year ended 31December 2025
Group
General
Cash flow Fair value Total
reservehedge through other
reservecomprehensive
income
£m
£m
£m
£m
At 1 January 2025
3,987.0
7.0
(19.3)
3,974.7
Profit for the year
275.5
–
–
275.5
Net remeasurement of retirement benefit obligations
(3.7)
–
–
(3.7)
Net movement in cash flow hedges
–
(10.0)
–
(10.0)
Net movement in fair value through other comprehensive income
–
–
4.8
4.8
Total comprehensive income
271.8
(10.0)
4.8
266.6
At 31 December 2025
4,258.8
(3.0)
(14.5)
4,241.3
Group
General
Cash flow Fair value Total
reservehedge through other
reservecomprehensive
income
£m
£m
£m
£m
At 1 January 2024
3,708.3
0.4
(10.2)
3,698.5
Profit for the year
281.7
–
–
281.7
Net remeasurement of retirement benefit obligations
(3.0)
–
–
(3.0)
Net movement in cash flow hedges
–
6.6
–
6.6
Net movement in fair value through other comprehensive income
–
–
(9.1)
(9.1)
Total comprehensive income
278.7
6.6
(9.1)
276.2
At 31 December 2024
3,987.0
7.0
(19.3)
3,974.7
The notes on pages 146 to 226 form part of these financial statements.
142 143
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Statements of Changes in Members’ Interest and Equity (continued)
For the year ended 31December 2025
Society General
reserve
Cash flow
hedge
reserve
Fair value
through other
comprehensive
income
Total
£m £m £m £m
At 1 January 2025 3,589.5 7.0 (19.3) 3,577.2
Profit for the year 270.0 – – 270.0
Net remeasurement of retirement benefit obligations (3.7) – – (3.7)
Net movement in cash flow hedges – (10.0) – (10.0)
Net movement in fair value through other comprehensive income – – 4.8 4.8
Total comprehensive income 266.3 (10.0) 4.8 261.1
At 31 December 2025 3,855.8 (3.0) (14.5) 3,838.3
Society General
reserve
Cash flow
hedge
reserve
Fair value
through other
comprehensive
income
Total
£m £m £m £m
At 1 January 2024 3,335.6 0.4 (10.2) 3,325.8
Profit for the year 256.9 – – 256.9
Net remeasurement of retirement benefit obligations (3.0) – – (3.0)
Net movement in cash flow hedges – 6.6 – 6.6
Net movement in fair value through other comprehensive income – – (9.1) (9.1)
Total comprehensive income 253.9 6.6 (9.1) 251.4
At 31 December 2024 3,589.5 7.0 (19.3) 3,577.2
The notes on pages 146 to 226 form part of these financial statements.
Statements of Cash Flows
For the year ended 31December 2025
Group
Society
2025
2024
2025
2024
Notes
£m
£m
£m
£m
Cash flows from operating activities
Profit before tax
377.9
383.7
347.7
324.5
Non-cash or non-operating items included in profit before tax
35
150.1
77.6
139.3
75.4
Net change in operating assets
35
(1,904.3)
(2,577.3)
(1,604.6)
(2,709.5)
Net change in operating liabilities
35
294.7
4,334.5
(1,742.1)
3,416.0
Tax paid
(120.0)
(80.6)
(95.1)
(45.9)
Net cash flow from operating activities
(1,201.6)
2,137.9
(2,954.8)
1,060.5
Cash flows from investing activities
Purchase of property, plant and equipment, and intangible assets
(10.5)
(18.3)
(10.5)
(18.3)
Proceeds from sale of property, plant and equipment
0.4
-
0.4
-
Purchase of debt securities
(3,345.9)
(3,769.4)
(4,376.7)
(4,734.3)
Redemption and other movements of debt securities
4,637.7
2,897.6
7,733.4
5,087.3
Net cash flow from investing activities
1,281.7
(890.1)
3,346.6
334.7
Cash flows from financing activities
Redemption of debt securities in issue
35
(666.7)
(1,429.4)
(469.5)
(1,194.1)
Issue of debt securities
35
892.7
1,543.6
542.7
1,193.6
Redemption of subordinated liabilities
35
(25.6)
(142.6)
(25.6)
(142.6)
Interest paid on subordinated liabilities
(70.6)
(76.7)
(70.6)
(76.7)
Interest paid on lease liabilities
(0.5)
(0.5)
(0.5)
(0.5)
Capital repayments on lease liabilities
(1.8)
(2.5)
(1.8)
(2.5)
Net cash flow from financing activities
127.5
(108.1)
(25.3)
(222.8)
Net change in cash and cash equivalents
207.6
1,139.7
366.5
1,172.4
Opening balance
6,199.7
5,060.0
6,043.6
4,871.2
Closing cash and cash equivalents
6,407.3
6,199.7
6,410.1
6,043.6
Cash and cash equivalents
Cash and cash equivalents
10
6,043.6
5,609.7
6,043.6
5,609.7
Loans and advances to credit institutions
363.7
590.0
366.5
433.9
Closing cash and cash equivalents
6,407.3
6,199.7
6,410.1
6,043.6
The notes on pages 146 to 226 form part of these financial statements.
Net cash flows from operating activities of the Group include interest received of £3,250.2 million (2024: £3,371.3 million)
and interest paid of £1,179.4 million (2024: £2,348.1 million). Net cash flows from operating activities of the Society include
interest received of £3,619.6 million (2024: £4,264.4 million) and interest paid of £1,123.3 million (2024: £3,506.3 million).
144 145
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Notes to the Financial Statements
1. Statement of accounting policies
Basis of preparation
These financial statements present the results of Yorkshire Building Society (‘YBS’ or ‘the Society’) and its controlled entities
(collectively ‘the Group’ or ‘the YBS Group’) for the year ended 31 December 2025.
The Group is required under the
Building Societies Act 1986
to apply ‘UK-adopted international accounting standards’ as
endorsed by the UK Endorsement Board (‘UKEB’). As a result, these financial statements have been prepared in accordance with
international accounting standards – being International Accounting Standards (IAS), International Financial Reporting Standards
(IFRS) and interpretations (IFRICs) issued by the International Accounting Standards Board (IASB) endorsed by the UKEB and
effective from 1 January 2021 – and with those parts of the
Building Societies Act 1986
and the
Building Societies (Accounts and
Related Provisions) Regulations 1998
applicable to societies reporting under international accounting standards.
The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain financial
instruments measured at fair value. Pounds sterling (£) is the presentational currency of the YBS Group and the functional and
presentational currency of Yorkshire Building Society. Except where otherwise stated, all figures in the financial statements are
rounded to the nearest hundreds of thousands of pounds sterling (£0.0 million).
Accounting policies have been consistently applied, except where a new accounting standard has been introduced.
The preparation of financial statements under international accounting standards requires the use of certain critical accounting
estimates and judgements. The areas involving a higher degree of judgements or complexity, or areas where assumptions and
estimates are significant to the financial statements are set out in Note 2.
Going concern
The YBS Board of Directors (the Board) undertake regular assessments of whether the Group is a going concern, taking into
account changing economic and market conditions, and using all available information about future risks and uncertainties.
Given its strong capital position and high liquidity levels, the Group is well placed to cope with economic volatility. As a
result, the directors confirm that, based on the latest formal review undertaken in February 2026, and stress tests performed
throughout the period, they consider the Group has adequate resources to continue in existence for at least 12 months from
the date the of approval of this report. Accordingly, they continue to adopt the going concern basis in preparing these financial
statements.
Basis of consolidation
The Group financial statements consolidate the financial statements of the Society and the entities it controls as listed in Note 8.
Control is deemed to exist when the Group has the power to govern the financial and operating policies of an entity so as to
obtain benefits from its activities. Upon consolidation, intra-group assets and liabilities, equity, income, expenses and cash
flows relating to transactions between members of the Group are eliminated. Investments in controlled entities are stated in the
Society accounts at cost less any provisions for impairment.
Securitisation transactions
The Group securitises mortgage loans by transferring them into special purpose vehicles (SPVs) and issuing debt securities
to investors, using the underlying loan assets as collateral. As the Society is deemed to control these SPVs, they are fully
consolidated into these financial statements.
Generally, the transfer of the mortgage loans to the structured entities does not meet the derecognition criteria under IFRS 9
Financial Instruments
as the Society/Accord Mortgages Limited (Accord) substantially retains all the risks and rewards of
ownership through the receipt of the residual profits or losses of the SPVs. In this instance, the Society/Accord continues to
recognise the mortgage loans on their own balance sheets after the transfer, with the proceeds received from the transfer
accounted for as a deemed loan from the SPVs. For covered bonds, the Society issues the covered bonds, not the structured
entity. The proceeds are then lent to the structured entity on the same terms as the covered bond issuance. These proceeds are
used as consideration for the loans transferred from the Society. Neither the loan to the structured entity nor the consideration
for the transfer of mortgage loans is recognised separately as an additional asset and liability in the accounts of the Society.
To manage interest rate risk, the Society enters into derivative transactions with its structured entities, receiving a rate of interest
based on the securitised mortgages and paying a rate inherent in the debt issuances. These internal derivatives are treated as
part of the deemed loan and not separately measured at fair value because the relevant mortgage loans are not derecognised.
Accounting developments
Changes to accounting standards effective in the period
There have been a number of amendments made to existing accounting standards that are effective for the reporting period
commencing 1 January 2025:
IAS 21 – The Effects of Changes in Foreign Exchange Rates
IAS 21 –
The Effects of Changes in Foreign Exchange Rates
received amendments to address circumstances in which a currency
lacks long-term exchangeability. The amendments provide explicit guidance on how to determine whether a currency
is exchangeable and, when it is not, how to estimate an appropriate spot exchange rate. The Group does not engage in
transactions involving currencies that lack exchangeability, and therefore these amendments have no impact on the Group’s
reporting.
Standards issued but not yet effective
The following standards or amendments were in issue but were either optional, or not yet effective, and have not been
adopted in these financial statements.
IFRS 9 and Hedge Accounting
IFRS 9
Financial Instruments
was issued in 2014 as a replacement of IAS 39
Financial Instruments: Recognition and
Measurement
and was mandatorily effective for periods beginning on or after 1 January 2018.
However, IFRS 9 did not replace the requirements for portfolio fair value hedge accounting for interest rate risk since this
phase of the project was separated out due to its longer-term nature.
As a result, IFRS 9 included a transitional relief allowing the continued use of the hedge accounting requirements of IAS 39,
and the Group continue to adopt this approach.
The development of requirements will be closely monitored and the Group will continue to assess the impacts of full
adoption of IFRS 9 for hedge accounting.
Amendments to IFRS 7 and IFRS 9 – Classification and Measurement of Financial Instruments
The Classification and Measurement of Financial Instruments amendments were made to IFRS 9
Financial Instruments
and
IFRS 7
Financial Instruments: Disclosures
in May 2024 and will become effective for annual reporting periods beginning on or
after 1 January 2026. These amendments:
•
clarify when some financial assets and liabilities can be recognised and derecognised, with a new exception for certain
financial liabilities that are settled through an electronic cash transfer system;
•
provide clarification and additional guidance on assessing whether a financial asset satisfies the sole payments of principal
and interest (SPPI) criterion;
•
introduce new disclosure requirements for instruments with contractual terms that can change cash flows; and
•
revise the disclosures for equity instruments designated at fair value through other comprehensive income (FVOCI).
The Group do not expect these amendments to have an impact on its operations or financial statements.
IFRS 19 Subsidiaries without Public Accountability: Disclosures
IFRS 19
Subsidiaries without Public Accountability: Disclosures
was issued in May 2024 and will become effective for annual
reporting periods beginning on or after 1 January 2027. The standard allows eligible subsidiaries to replace the disclosure
requirements of other IFRS Accounting standards with reduced disclosure requirements. The Group do not expect these
amendments to have an impact on its operations or financial statements given that the subsidiaries do not meet the
requirements set out in IFRS 19.
146 147
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Financial Statements > Notes to the Financial Statements
1. Statement of accounting policies (continued)
Accounting developments (continued)
Standards issued but not yet effective (continued)
IFRS 18 Presentation and Disclosure in Financial Statements
IFRS 18
Presentation and Disclosure in Financial Statements
was issued in April 2024 and will become effective for annual
reporting periods beginning on or after 1 January 2027, replacing IAS 1
Presentation of Financial Statements
. The Group is
assessing the impact of the new standard, with key areas of focus including:
•
Statement of profit or loss.
IFRS 18 introduces new categories and subtotals. IFRS 18 requires entities to assess whether their main business activities
include investing in assets and/or providing financing to customers. For entities such as banks and building societies for
which investing in assets and providing financing to customers are both main business activities, we expect that most of
the income and expenses of the business activities including providing financing and investing in assets (which includes
income and expenses from cash and cash equivalents for entities that invest in financial assets as a main business activity)
will fall into the operating income category. This allocation may impact on operating profit.
•
Management-defined performance measures.
Management might define its own measures of performance; the Group refer to these as ‘alternative performance measures’.
IFRS 18 defines a subset of these measures that relate to an entity’s financial performance as ‘management-defined
performance measures’ (‘MPMs’). Enhanced disclosures are required for these measures including a reconciliation between
the MPM and the most similar specified IFRS subtotal. The Group will therefore provide a reconciliation of Core Operating
Profit back to Profit Before Tax in the notes to the accounts.
•
Aggregation and disaggregation.
IFRS 18 strengthens guidance on the principles of aggregation and disaggregation of items based on their shared
characteristics. The Group does not present expenses by function therefore no significant impact is expected from this
requirement.
•
Foreign exchange differences, derivatives and designated hedging instruments.
Foreign exchange differences and gains and losses on derivatives must be classified consistently with the related
underlying items. This may change the category in which certain gains and losses appear and could affect operating profit
presentation.
As the Group will adopt IFRS 18 from the effective date of 1 January 2027, a comparative for the reporting period ending
31 December 2026 will need to be prepared as retrospective application is required.
Change in accounting policy
There were no changes to accounting policies during the year ended 31 December 2025.
Material accounting policies
Interest revenue and expense calculated using the effective interest rate method
The effective interest rate method is used to calculate the revenue and expense for financial instruments held at amortised
cost. The effective interest rate is the rate that exactly discounts estimated future cash flows (excluding credit losses) over the
expected life of the instrument back to the carrying value of the asset.
For mortgage loans and advances to customers this includes an estimate of any early repayment income. Directly attributable
acquisition costs, such as application and arrangement fees, are also incorporated in the calculation.
This has the effect of spreading these fees and costs over the expected life of the mortgage. Expected lives are estimated
using historical data and management judgement. The calculation is adjusted when actual experience differs from estimates,
with changes in deferred amounts being recognised immediately in the income statement.
Interest income and expense from clearing collateral agreements is presented within Interest revenue.
Fees and commissions
Fees and commissions on referral of customers to third party service providers of financial products is accounted for on an
effective interest rate basis, similar to interest revenue and expense calculated using the effective interest rate method.
Other fees and commissions are recognised on an accruals basis as the relevant service is provided or at a point in time if the
service or product provided relates to a one-off action.
Other operating income
Other operating income comprises profits and losses on disposal of fixed assets and rental income from investment property.
The Society also includes the recharge of administrative expenses to its subsidiaries.
Income from investments
This consists of dividend income and is recognised when the rights to receive the payment have been established.
Financial instruments
Classification and measurement of financial assets and financial liabilities
The Group initially recognises financial assets and liabilities at their fair value (adjusted for any directly attributable
transaction costs for those subsequently classified at amortised cost) on the date that the Group becomes a party to the
contractual provisions of the instrument. Subsequent measurement of financial assets and financial liabilities depends on the
contractual cash flow characteristics of the instrument.
Amortised cost: this measurement approach is applied to instruments that are held to collect interest and principal payments
over the life of the contract. Subsequent measurement is via the effective interest rate method (see
Interest revenue and
expense calculated using the effective interest rate method
), subject to impairment (see
Impairment
), plus any adjustment if
designated as part of an effective hedge accounting arrangement (see
Hedge accounting
).
Fair value through other comprehensive income: this measurement approach is applied to financial assets whose business
objective is the collection of interest and principal payments but that are also bought and sold. Subsequent measurement is
at fair value with changes in fair value recognised in other comprehensive income. When the instrument is derecognised, the
cumulative gain or loss previously recognised in reserves is reclassified to the income statement.
Fair value through profit and loss: this method is applied to those instruments that are not classed as amortised cost or fair
value through other comprehensive income. Subsequent measurement is at fair value with any movements recognised in the
income statement in the period in which they arise.
148 149
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Financial Statements > Notes to the Financial Statements
1. Statement of accounting policies (continued)
Material accounting policies (continued)
Financial instruments (continued)
The table below summarises the Group’s financial instruments and the treatment adopted in these financial statements:
Financial instrument Description Subsequent measurement
Cash and balances with the Bank of England
Cash balances and statutory deposits
Amortised cost
Loans and advances to credit institutions Fixed and variable interest rates Amortised cost
Debt securities Fixed, variable and indexed linked interest rates Fair value through other comprehensive
income, amortised cost and fair value
through profit and loss
Loans and advances to customers Primarily mortgage products offering a variety
of fixed and variable interest rates
Amortised cost
Derivative financial instruments* Swaps and options to manage interest rate and
foreign exchange risk exposures
Fair value through profit and loss (unless
designated as a cash flow hedge, see ‘Hedge
accounting’ section of Note 1, then fair value
through other comprehensive income)
Investments in controlled entities Equity investments in controlled entities Cost less accumulated impairment losses
Investment in equities Equity investments in non-controlled entities Fair value through profit and loss
Other deposits Deposits made by non-members Amortised cost
Shares Deposits made by members with a variety of
fixed and variable interest rates
Amortised cost
Amounts owed to credit institutions Time Deposits at fixed and variable interest
rates
Amortised cost
Debt securities in issue, subordinated liabilities
and other deposits
Fixed and variable interest rates Amortised cost
* The Society holds intra group derivatives to manage interest rate risk within the special purpose securitisation vehicles and these are measured at amortised cost.
These internal derivatives are treated as part of the deemed loan with the SPV.
Derecognition of financial instruments
Financial assets are only derecognised when the contractual rights to receive cash flows from the financial assets have
expired, or when the Group has transferred substantially all the risks and rewards of ownership. As described in
Securitisation
transactions
, the Group has not derecognised the loans transferred to the SPVs to secure the issue of covered bonds and
mortgage backed securities because substantially all the risks and rewards are retained.
Financial liabilities are only derecognised when the obligation is discharged, cancelled, or has expired.
Impairment of financial assets
At each reporting date the Group assesses financial assets held at amortised cost for impairment.
For
loans and advances to customers
the Group uses the expected credit loss (ECL) staging model to assess any impairment in
the carrying value of the mortgage assets. This model uses forward looking assessments of overall expected credit losses and
recognises impairment based on a three-staged approach as follows.
Stage 1: financial assets are categorised into ‘stage 1’ on initial recognition. Impairment is based on expected credit losses
resulting from default events projected within the next 12 months (12 month ECL).
Stage 2: financial assets move into ‘stage 2’ when they are deemed to have experienced a significant increase in credit risk
(SICR), based on quantitative and/or qualitative risk grade thresholds. Impairment is then based on expected losses over the
full lifetime of the contract (lifetime ECL).
The Group assesses a SICR to have occurred when the accounts are more than 30 days past due or there has been a significant
relative increase in the lifetime probability of default (PD) compared to that at initial recognition.
For retail accounts, PD is based on the customer’s credit quality, including analysis of their behaviour scores and other
account characteristics. For non-retail portfolios, the Group assess a significant increase in credit risk using a combination
of individual and collective information, including monitoring through the watch list process. For further information on the
watch list process see Note 31.
Stage 3: financial assets are moved into ‘stage 3’ when there is objective evidence that the loan is credit impaired, with
expected credit losses still calculated on a lifetime basis.
A loan is considered credit impaired when it is 90 days past due, has been renegotiated for credit risk reasons, or otherwise
considered to be in default (including possession, insolvency and assets beyond term expiry).
The Group’s use of forbearance tools, including arrears arrangements, payment deferrals, term extension, transfers to interest
only and interest capitalisation, are factored into the criteria for identifying stage 3 accounts. The impairment provision is
determined using the same calculation as stage 2 accounts, but with the PD set to 100%.
Loans that are either purchased or originated credit impaired (POCI) are classified as stage 3 at initial recognition and cannot
be transferred to stage 1 or 2 even if the credit quality of these assets improves. The Group has a portfolio of loans acquired
as part of the Chelsea Building Society and Norwich & Peterborough Building Society acquisitions that meet this definition.
ECL calculations: these are assessed at individual loan level using three main components.
•
PD, being the probability, at the point of assessment, that the customer will default in the future. The definition of default
includes accounts that are 90 days past due, interest only accounts past term end, those under certain forbearance
measures and others exhibiting other unlikeliness to pay indicators.
•
Exposure at default (EAD), being the outstanding value of the loan, taking into account the repayment of principal and
interest between the date of assessment and expected default date.
•
Loss given default (LGD), is the net impact of the EAD after taking into account the mitigating effect of collateral and the
time value of money.
PD is a calculation based on current conditions and adjusted to take into account estimates of future conditions that will
impact PD. EAD is modelled based on expected payments over the term and is not floored at the current balance.
LGD takes into account the expected impact of future economic conditions, such as changes in value of collateral, and
does not include any floors. Only costs directly associated with obtaining/selling collateral are included. Discounting of the
expected cash flows is performed using the effective interest rate of the loan.
The ECL is calculated using models that build up separate estimates for PD, EAD and LGD for every month that a loan is due to
be outstanding.
PD and LGD estimates are then flexed under different scenarios to capture the effects of changes to the forward looking
macroeconomic variables (including interest rates, unemployment, house prices and inflation). The final ECL figure takes a
probability weighted average of these different scenarios.
Loans are written off against this ECL balance when there is no realistic prospect of recovery. This is generally after receipt of
any proceeds from the realisation of the collateral backing the loan.
Other financial assets are considered low credit risk at the reporting date as they are investment grade instruments. As a
result, impairment is based on 12 month ECL as per stage 1 above. If changes in instruments’ rating breaches the risk appetite
then an ECL assessment will take place on the individual asset basis.
Financial instruments acquired in business combinations
Financial assets and liabilities acquired in a business combination are recognised at fair value upon acquisition. To the extent
that this differs from the underlying amortised cost carrying value assumed on the transaction date, a fair value adjustment is
recognised on the balance sheet.
This balance is then amortised through the income statement over the expected life of the acquired portfolio in a manner that
reflects the consumption of the economic benefits arising from the underlying assets and liabilities. To the extent that the
fair value adjustment relates to estimated credit losses on a portfolio of mortgage assets, the
fair value credit adjustment
is
included in the overall ECL balance.
The Group continues to run off balances in relation to the Chelsea Building Society and Norwich & Peterborough Building
Society acquisitions. In addition to the
fair value credit adjustments
, it also includes
interest rate fair value adjustments
in the
loans and advances to customers and shares
balances.
150 151
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Financial Statements > Notes to the Financial Statements
1. Statement of accounting policies (continued)
Material accounting policies (continued)
Financial instruments (continued)
Hedge accounting
As discussed, IFRS 9
Financial Instruments
included a transitional relief allowing the continued use of the hedge accounting
requirements of IAS 39
Financial Instruments: Recognition and Measurement
, and the Group continue to adopt this approach.
The Group applies hedge accounting when the specific rules and conditions in IAS 39 are fulfilled. The Group has designated
the majority of its derivatives as either fair value or cash flow hedges in order to reduce volatility in the income statement.
Fair value hedges
Where a derivative financial instrument meets the requirements of a fair value hedge, changes in the fair value of the hedged
item are taken to the income statement offsetting the effect of the related movements in the fair value of the derivative.
Where the hedge no longer meets the criteria, the adjustment to the hedged item is released to the income statement over
the remaining life of the original hedged relationship.
Cash flow hedges
Where a derivative financial instrument is designated as a cash flow hedge, the effective part of any gain or loss on the
derivative financial instrument is recognised directly in other comprehensive income and recycled to the income statement.
Any ineffective portion of the gain or loss on the hedging instrument is recognised in the income statement immediately. If a
cash flow hedge is terminated, the cumulative unrealised gain or loss recognised in equity is then amortised to profit and loss
over the remaining life of hedging instrument provided the cash flows on hedged items are still expected to occur.
Segmental reporting
The Executive Committee (EXCO) is responsible for allocating resources and assessing the performance of the Group and is
therefore identified as the chief operating decision maker.
The Group has one reportable segment that EXCO reviews performance and makes decisions on for the Group as a whole. As a
result, no segmental disclosure is provided.
Intangible assets
Intangible assets held by the Group consist primarily of externally acquired and internally developed computer software.
This is measured at cost less accumulated amortisation and impairment.
Costs incurred in the development of computer software for internal use are capitalised as intangible assets where
the expenditure leads to the creation of an identifiable non-monetary asset and it is probable that the expected future
economic benefits that are attributable to the asset will flow to the Group.
Purchased software is classified as an intangible asset where it is not an integral part of the related hardware. Computer
software costs are amortised using the straight line method over their estimated useful lives, which are generally three to
five years.
Intangible assets are reviewed for impairment at each reporting date or at any point in time where there is an indication of
impairment. Impairment is assessed by estimating the recoverable amount of the asset, being the higher of: fair value less
costs of disposal; and value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value. If the recoverable amount
of the asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable
amount. Any impairment in the value of these assets is recognised immediately in the income statement.
Investment property
Investment property comprise freehold properties, and parts of freehold properties, that are not used in the business and
held for rental income or capital appreciation. These properties are generally flats and offices ancillary to branch premises.
Investment properties are held at cost less accumulated depreciation and impairment.
Property, plant and equipment
Freehold properties used in the business, major alterations to office premises, fixtures and fittings, equipment and other tangible
fixed assets are stated at cost less accumulated depreciation and impairment. Costs incurred after the initial purchase of fixed
assets are expensed unless it directly results in increased future economic benefits that can be reliably measured. Repairs and
maintenance are treated as an expense.
Depreciation is a measure that recognises the cost, less estimated residual value, over the estimated useful economic lives as
follows:
•
Freehold/long leasehold buildings (including investment properties) – 50 years.
•
Short leasehold property and right-of-use property assets – Life of lease.
•
Equipment, fixtures, fittings and vehicles – 3 to 20 years.
•
Freehold land is stated at cost less accumulated impairment losses and is not depreciated.
Property, plant and equipment and investment properties are reviewed for impairment annually and where there is an indication
that events or circumstances may mean that the carrying amount is not recoverable. Where the recoverable amount of the asset
is estimated to be less than the carrying amount, the carrying amount is written down immediately to the recoverable amount.
Any impairment in the value of assets is recognised in the income statement as it arises.
Leases
Contracts are accounted for as leases when the terms of the contract transfer substantially all the risks and rewards of
ownership to the lessee. For such arrangements a ‘right-of-use’ asset, included in
property, plant and equipment
, and a
corresponding lease liability, included in other liabilities, are recorded on the balance sheet upon initial recognition.
The right-of-use asset is measured at the lower of its fair value and the present value of the minimum lease payments at
inception of the lease, less accumulated depreciation and impairment. The lease liability is measured at the present value of
the minimum lease payments.
Depreciation is recorded by the Group to write off the cost over the estimated useful economic life of the asset. Rent payable
on finance leases is apportioned between the finance element, charged to the income statement, and the reduction of the
lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability.
Leases with a short life, or relating to low value assets, are expensed to the income statement on a straight line basis over the
period of the lease agreement.
Retirement benefit obligations
The asset or liability is recognised in respect of the Group’s defined benefit pension scheme measured at the present value of the
defined benefit obligation at the reporting date, less the fair value of the plan assets, together with adjustments for unrecognised
past service costs.
An asset is only recognised to the extent that it is recoverable by the Group via available refunds and reductions in future
contributions to the scheme.
The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. Gains or
losses arising from changes in assumptions are recognised in other comprehensive income in the period in which they occur.
Defined benefit obligations are discounted to present value using the rate of return available on high quality corporate bonds of an
equivalent term to the obligations.
Past service costs are recognised immediately in the income statement to the extent that benefits are already vested and otherwise
are amortised on a straight line basis over the average period until the benefits become vested.
Controlled entities
An entity is controlled where the Group is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control
ceases.
Taxation including deferred tax
Tax comprises current tax and deferred tax. Tax is recognised in the income statement except to the extent that it relates to
items recognised directly in equity, in which case the tax is recognised in the statement of comprehensive income.
Current tax is the expected tax payable on the taxable profits for the year, using tax rates enacted or substantively enacted at
the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised for temporary differences arising between the carrying amount of certain assets and liabilities for
accounting purposes and for taxation purposes. Deferred tax is provided using tax rates enacted or substantively enacted at
the reporting date effective on the date at which they are expected to reverse.
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Financial Statements > Notes to the Financial Statements
2. Critical accounting judgements and key sources of estimation uncertainty
In applying its accounting policies, the Group makes judgements that have a significant impact on the amounts recognised in
the financial statements.
In addition, estimates and assumptions are used that could affect the reported amounts of assets and liabilities. The estimates
and underlying assumptions are reviewed on an ongoing basis. As explained in the
Board Audit Committee Report
in the
Governance
section, the Committee has considered the accounting judgements and estimates applied in the financial
statements. The Board Audit Committee have confirmed to the Board that they consider these to be appropriate.
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date that may
have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial
year, are discussed below.
Retirement benefit obligations
The Group’s accounting policy states that a net defined benefit pension scheme asset should only be recognised to the extent
that the Group has the ability to access the pension scheme surplus in the form of a refund or reduction in future contributions.
The scheme trustees could act unilaterally in order to restrict the ability of the Group to seek a refund or reduce future
contributions, hence a judgement on the likelihood of this event is required. The Group has received a legal opinion supporting
the judgement that any surplus of the scheme can be recovered in full and that pension scheme trustees are unable to act to
amend the scheme rules, and ultimately prevent the Society accessing the surplus, without the Society’s support.
In addition, significant estimation uncertainty in respect of areas such as future interest rates and mortality rates have to be
applied in estimating the value of the assets and liabilities of the defined benefit scheme. These are outlined in Note 17.
The impact of a 1.0% increase in the rate used to discount future liabilities from 5.50% to 6.50% would result in a decrease
of liabilities of 10.5% (a 1.0% decrease would increase liabilities by 12.8%). The impact of a 0.5% increase in inflation would
increase liabilities by 3.1% (a 0.5% decrease would decrease liabilities by 2.9%). The impact of a one-year increase in life
expectancy at age 60 would be to increase liabilities by around 3.6% (a one-year decrease would decrease liabilities by 3.7%).
Note that these sensitivities have been modelled independently as single variable adjustments and have not anticipated
any correlation between movements in the inputs. A summary of the impact of these sensitivities on the scheme liabilities is
included in Note 17.
Impairment of loans and advances to customers
The impairment calculation of expected credit losses (ECL) for a portfolio of mortgage loans is inherently uncertain. ECL are
calculated using historical default and loss experience but require judgement to be applied in predicting future economic
conditions (e.g. interest rates and house prices) and customer behaviour (e.g. default rates). The most critical judgements that
lead to estimation uncertainty are as follows:
Economic scenarios and weightings
A forum, supported by Finance, Credit Risk, Balance Sheet Management and economic experts considers the forward-looking
macroeconomic assumptions with the objective of developing internally coherent economic scenarios to propose to the
Group Asset and Liability Committee (ALCO) for challenge and approval. ALCO ensures that the ECL meets the requirement for
unbiased and weighted amounts derived by evaluating a range of possible outcomes and assumptions, or economic scenarios.
Judgements are made in arriving at the level of each economic variable, such as house price index (HPI) and unemployment,
applied in each economic scenario to support the estimate of ECL. ALCO applies judgements to arrive at these assumptions.
The UK economic environment during 2025 has been more stable than what we saw during the COVID-19 pandemic and the
years following it, with a more positive outlook emerging across key indicators. Inflation continues to ease and employment
conditions have remained broadly stable, with a modest rise in unemployment during the year. The HPI index returned to
positive annual growth and mortgage affordability pressures eased somewhat as interest rates stabilised.
The provision is calculated by applying a range of economic scenarios that are weighted.
The Group continue to apply four economic scenarios. The Group determined that the continued application of the combined
70% weighting to the Upside and Core scenarios still reflected a reasonable view of the more positive economic outlook. SME
judgement is applied in determining the relative weighting of each economic scenario in the ECL estimate, informed both by
an assessment of external data and statistical model results.
1. Statement of accounting policies (continued)
Material accounting policies (continued)
Taxation including deferred tax (continued)
The following temporary differences are not provided for:
•
The initial recognition of assets or liabilities that affect neither accounting nor taxable profit.
•
Differences relating to investments in subsidiaries, to the extent that the parent is able to control the reversal of temporary
differences, and it is probable they will not reverse in the foreseeable future.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available, against which
a temporary difference can be utilised. The carrying amount of the deferred tax asset is reviewed at the reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the
asset to be recovered.
Provisions
Provisions are recognised when: the Group has a present obligation (legal or constructive) as a result of a past event; it is
probable that the Group will be required to settle that obligation; and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of the net present value of the consideration required to settle the
obligation, taking into account the risks and uncertainties surrounding the obligation.
A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and raised
a valid expectation that it will carry out the restructuring through announcing the main features of the plan to those affected
by it.
Offsetting
Financial assets and liabilities are offset and the net amount reported in the balance sheets when there is a legally
enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or realise the asset and
settle the liability simultaneously. The Group’s loans and advances to customers include mortgage offset products that do not
qualify for netting under the requirements described above as transactions are settled on a gross basis.
The Group offers offset mortgage products which allows any money held in the offset savings account to be deducted from
the mortgage loan balance before calculating the interest on the loan. As there is a legally enforceable right to determine the
interest income on a net basis, the interest income is presented as single net amount in the income statement.
The Group enters into derivative contracts, which are governed by International Swaps and Derivatives Association (ISDA)
master agreements, an agreement is in place with each counterparty the Group transacts derivatives with. These agreements
define the terms of how the Group will enter derivative contracts with the counterparty, including any netting arrangements.
Also, the Group has various Credit Support Annexes (CSAs) with counterparties which define how collateral will be exchanged
with a counterparty to mitigate market risk.
Foreign currency
Assets and liabilities denominated in foreign currencies are translated into Sterling at the appropriate rates of exchange
prevailing at the reporting date and exchange differences are recognised in the income statement. All income and expense is
translated into Sterling at the rate of exchange on the day of receipt or payment.
Statements of cash flows
For the purposes of the cash flow statement, cash and cash equivalents comprise cash and non-restricted balances with less
than three months maturity from the date of acquisition, included within cash and loans and advances to banks and similar
institutions on the balance sheet. The statement of cash flows has been prepared using the indirect method.
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Financial Statements > Notes to the Financial Statements
3. Interest revenue
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Calculated using the effective interest rate method:
Loans secured on residential property
2,079.0
1,867.7
397.9
400.8
Loans secured on connected undertakings
–
–
1,787.8
1,749.3
Loans secured on commercial property
41.6
46.6
41.6
46.5
Other interest expense*
(15.9)
(41.7)
(15.9)
(41.7)
Liquid assets
284.5
304.5
282.1
295.0
Debt securities
283.6
319.4
712.3
951.0
Interest revenue calculated using the effective interest rate method
2,672.8
2,496.5
3,205.8
3,400.9
Other:
Derivatives in hedge relationships
462.2
808.1
462.2
808.1
Derivatives not included in hedge relationships
41.5
70.1
41.5
70.1
Investments held at fair value
1.6
1.7
1.6
1.6
Other interest revenue
505.3
879.9
505.3
879.8
Total interest revenue
3,178.1
3,376.4
3,711.1
4,280.7
* Includes net interest income on clearing collateral agreements.
4. Interest expense
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Shares held by individuals
1,834.1
2,022.3
1,834.1
2,022.3
Owed to credit institutions
21.6
48.5
21.8
48.5
Deposits from connected undertakings
–
–
818.8
1,195.9
Other deposits
19.3
22.5
19.3
22.5
Debt securities in issue
172.0
174.3
188.0
205.5
Subordinated liabilities
70.0
74.0
70.0
74.0
Other interest payable
0.1
0.1
0.1
0.1
Derivatives in hedge relationships
168.1
193.2
108.3
126.4
Derivatives not included in hedge relationships
22.6
104.5
22.6
102.4
Interest expense for leasing arrangements
0.5
0.5
0.5
0.5
Total interest expense
2,308.3
2,639.9
3,083.5
3,798.1
2. Critical accounting judgements and key sources of estimation uncertainty (continued)
Impairment of loans and advances to customers (continued)
Economic scenarios and weightings (continued)
In terms of sensitivity to changes in key economic variables within the model, the ECL model was run with a 100% weighting
applied to the Core scenario, in both Core and Non-Core models. When the HPI forecast was replaced with the respective
forecasts from the Downturn and Severe Downturn scenarios, ECL increased by £8.1 million and £27.7 million (2024:
£6.8 million and £23.1 million). Below is the percentage change in HPI forecast for both downturn scenarios for the next
5 years in relation to the Core scenario.
2025
Scenario (% change)
HPI
2026
2027
2028
2029
2030
Downturn
(8.2)
(4.4)
(2.0)
(1.8)
(1.8)
Severe Downturn
(16.9)
(11.0)
(3.5)
3.1
0.5
2024 Scenario (% change)
HPI 2025 2026 2027 2028 2029
Downturn (7.0) (2.0) (2.5) (1.8) (1.8)
Severe Downturn (17.3) (12.5) (4.6) 3.1 (2.5)
The key in-year impact of changes to economic variables came from applying quarterly Office of National Statistics (ONS) HPI
updates, which accounted for £2.8 million of impairment release over 2025 (2024: £0.3 million charge).
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Financial Statements > Notes to the Financial Statements
5. Net (losses)/gains from financial instruments held at fair value
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Equity investments held at fair value
(0.7)
(1.7)
(0.7)
(1.7)
Hedge accounting ineffectiveness
(30.0)
21.2
(33.9)
31.1
Derivatives and debt securities not included in hedge relationships
(19.6)
16.7
(19.6)
15.0
Net (losses)/gains from financial instruments held at fair value
(50.3)
36.2
(54.2)
44.4
Derivatives and hedge accounting
The Group enters into interest rate swaps to manage its exposure to interest rate risk. All swaps are transacted for economic
hedging purposes, although not all are designated in to a qualifying hedge relationship. Swaps not designated into a
qualifying hedge relationship are measured at fair value through profit and loss and presented within derivatives and debt
securities not included in hedge relationships. This portfolio includes both interest rate swaps that receive fixed cash flows
(receive fix) and that pay fixed cash flows (pay fix).
During 2025, interest rates used in fair value calculations, linked to the Bank of England base rate, declined following
cumulative cuts totalling 1%. For swaps designated in a fair value hedge relationship, these movements are offset by
the corresponding fair value hedge adjustment on hedged mortgage portfolio. The Group recognised losses from hedge
accounting ineffectiveness of £30.0m (2024: £21.2m gain), predominantly from its fair value mortgage hedge, the Group’s
largest hedge relationship. While interest rate risk is economically hedged, some hedge accounting ineffectiveness arises
because on balance sheet assets and liabilities do not naturally offset and derivative terms cannot always perfectly match the
underlying exposures. This hedge accounting ineffectiveness is amplified by the scale of the hedged portfolios, but all hedge
relationships meet the IAS 39 hedge accounting effectiveness requirements. The Group’s unmatched derivative portfolio is
also largely composed of pay-fix swaps, and in line with decreasing rates, this has contributed to further losses shown under
derivative and debt securities not included in hedge relationships.
Alongside this, the Group undertook a swap compression exercise during 2025, removing approximately £15.3 billion of
swap notional. While some new swaps were transacted to maintain effective hedging, most of the compressed notional was
eliminated entirely. This activity reduces operational complexity, counterparty exposure and ongoing costs. Although largely
neutral from a fair value perspective, the compression process temporarily increased hedge ineffectiveness and resulted in
higher amortisation adjustments where certain hedge relationships were rebalanced or discontinued as part of this exercise.
Hedge ineffectiveness also arises from the time-based amortisation of the fair value hedge adjustment on the mortgage
portfolio, which does not align with fair value movements of the pay-fixed interest rate swaps. Changes in prepayment
behaviour, updates to the hedged items and swaps, and revisions to expected cash flows alter the amortisation profile,
creating timing differences that result in hedge ineffectiveness recognised in profit or loss.
In a qualifying hedge relationship, hedge accounting ineffectiveness also includes the portion of the change in the fair value
of the hedging instrument that is not offset by changes in the fair values of the hedged item.
Investments held at fair value refer to the fair value gains and losses on equity shares investment.
6. Administrative expenses
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Staff costs
Salaries and wages
169.0
157.4
169.0
157.4
Social security costs
20.5
16.5
20.5
16.5
Pension costs – defined benefit plans
1.1
2.1
1.1
2.1
Pension costs – defined contribution plans
14.4
13.2
14.4
13.2
Contractor staff costs
35.1
31.0
35.1
31.0
Other staff costs
1.9
1.8
1.9
1.8
Professional consultancy costs
17.3
5.9
17.3
5.9
Regulatory fees
18.0
15.2
18.0
15.2
Premises costs
14.3
17.5
14.3
17.5
IT costs
57.7
47.1
57.7
47.2
Marketing
11.4
10.2
11.4
10.2
Other expenses
27.1
25.2
26.8
25.0
Total administrative expenses
387.8
343.1
387.5
343.0
The Society operates a salary sacrifice scheme whereby employees can opt to make pension contributions from their pre-tax
salaries. The amount shown in the table above under salaries and wages includes the headline salary (i.e. before the salary
sacrifice deduction) and pension costs exclude the additional contributions made by the Society on employees’ behalf as a
result of the salary sacrifice scheme.
Full details of directors’ remuneration, including the number of directors, the total remuneration of directors, including that of
the highest paid director, bonuses and pensions are given in the Directors’ Remuneration Report within the
Governance
section.
Staff numbers
The average number of persons employed by the Group and Society during the year (including executive directors) was as follows:
2025
2024
Full time
Part time
Full time
Part time
Central administration
2,461
476
2,390
429
Branches
372
333
380
340
Total staff numbers
2,833
809
2,770
769
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Financial Statements > Notes to the Financial Statements
6. Administrative expenses (continued)
Remuneration of the auditors
Group
Society
2025
2024
2025
2024
£000
£000
£000
£000
Audit fees for the Group and Society statutory audit*
1,226.0
1,420.0
1,226.0
1,420.0
Audit fee for the statutory audit of controlled entities
501.0
486.0
–
–
Audit related assurance services required by law or regulation
83.0
137.0
83.0
137.0
Total audit and audit related assurance services
1,810.0
2,043.0
1,309.0
1,557.0
Other permitted non-audit services
391.7
277.8
391.7
277.8
Total remuneration of the auditors
2,201.7
2,320.8
1,700.7
1,834.8
* Includes scope change of £34k related to the prior year (2024: £0.3m).
The above figures, relating to auditor’s remuneration, exclude value added tax. Details of the Society’s policy on non-audit
work is given in the Board Audit Committee Report.
The classifications of audit related assurance services required by law or regulation and other permitted non-audit services
reflect the terminology included in updated guidance issued by the UK Financial Reporting Council.
Other permitted non-audit services primarily consist of the half-year review and profit verification as well as assurance work
in respect of ESG disclosures and debt issuances.
7. Impairment charge/(release) of financial assets
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Impairment charge/(release) on loans and advances to customers
9.9
1.1
(1.4)
(1.4)
Recoveries relating to loans and advances previously written off
(0.8)
(0.6)
(0.3)
(0.3)
Impairment release of other financial assets
(0.6)
(0.3)
(0.6)
(0.3)
Impairment charge/(release) of financial assets
8.5
0.2
(2.3)
(2.0)
In year ended 2025, the impairment charge on loans and advances to customers has increased to £9.9m (2024: £1.1m),
reflecting a higher average risk profile within the Stage 2 ECL population, identified following the PD model recalibration.
8. Investments
During 2025, the Society received dividends from Accord of £78.0 million (2024: £75.0 million).
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Equities
0.8
1.6
0.8
1.6
Equity in controlled entities
–
–
104.0
104.0
Loans with controlled entities
–
–
43,525.6
41,327.4
Total investments
0.8
1.6
43,630.4
41,433.0
All loans with controlled entities are charged interest with amounts recognised in interest revenue.
Investment in equities
The Group holds equity investments in a banking and credit card service provider due to our historic participation in their
card servicing operations. The investments are held at fair value through profit or loss and the valuation technique is detailed
in Note 32.
Subsidiaries
The Society holds 100% of the ordinary equity share capital for each of the following subsidiary entities, all of which are
audited and consolidated. Norwich and Peterborough Insurance Brokers Limited Subsidiary was liquidated on 13 August
2025.
Subsidiary
Principal activity
Accord Mortgages Limited
Mortgage lending
Norwich and Peterborough (LBS) Limited
Mortgage finance
The Group has taken advantage of the audit exemptions available for small and dormant subsidiaries under sections 479 and
480 of the
Companies Act 2006
for the following subsidiary entities, all of which are consolidated:
BCS Loans & Mortgages Limited
Yorkshire Insurance Services Limited
Chelsea Mortgage Services Limited
Yorkshire Life Assurance Services Limited
YBS Limited
Yorkshire Mortgage Services Limited
Yorkshire Direct Limited
Yorkshire Personal Financial Services Limited
YBS Group Limited
Yorkshire Property Services Limited
YBS Pension Trustees Limited
Yorkshire Services Limited
Yorkshire Group Limited
Yorkshire Key Services Limited
All subsidiaries have a 31 December accounting period end, are registered in England and have their registered office as
Yorkshire Drive, Bradford, BD5 8LJ.
Other controlled entities
The following entities are deemed to be controlled as, whilst the Group does not have a controlling equity shareholding, it has
the right to variable returns from its involvement in the entity. The Society’s interests in these entities are, in substance, no
different than if they were wholly-owned subsidiary undertakings and, as a result, they are consolidated into the Group. The
carrying value of the equity holdings in these entities in the Society is £nil (2024: £nil).
Brass No.8 PLC (in liquidation)
Brass No.11 PLC
Brass No.8 Mortgage Holdings Limited* (in liquidation)
Brass No.11 Mortgage Holdings Limited*
Brass No.9 PLC
Tombac No.3 PLC
Brass No.9 Mortgage Holdings Limited*
Tombac No.3 Mortgage Holdings Limited*
Brass No.10 PLC
YBS Covered Bonds Finance Limited
Brass No.10 Mortgage Holdings Limited*
YBS Covered Bonds Finance (Holdings) Limited*
White Rose Master Issuer PLC
Yorkshire Building Society Covered Bonds LLP
White Rose Master Holdings Limited*
* All these entities, with the exceptions of the Holding Companies, are subject to audit and have a 31 December year end.
Their registered office is Third Floor, 1 King’s Arms Yard, London, EC2R 7AF, with the exceptions of Yorkshire Building Society
Covered Bonds LLP whose registered address is Yorkshire Drive, Bradford, BD5 8LJ.
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Financial Statements > Notes to the Financial Statements
9. Tax expense
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Corporation tax – current year charge
120.3
79.1
95.4
44.4
Corporation tax – adjustment in respect of prior periods
(0.9)
0.1
(0.9)
0.1
Total current tax
119.4
79.2
94.5
44.5
Deferred tax – current year
(18.7)
22.3
(18.5)
22.6
Deferred tax – adjustment in respect of prior periods
1.7
0.5
1.7
0.5
Total tax expense in the income statement
102.4
102.0
77.7
67.6
The Group has an effective tax rate for the year of 27.1% (2024: 26.6%), which is higher than the average UK statutory
corporation tax rate for the year of 25.0% (2024: 25.0%). This is mainly due to the effects of the banking surcharge on the
taxable profits of the Society. A full breakdown of the difference is provided below:
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Profit before tax
377.9
383.7
347.7
324.5
Tax calculated at a tax rate of 25.0% (2024: 25.0%)
94.5
95.9
86.9
81.1
Effects of:
Income not subject to tax
(0.5)
(0.8)
(20.0)
(19.1)
Expenses not deductible for tax purposes
2.0
1.8
3.4
3.0
Profit/(loss) of Yorkshire Building Society Covered Bonds LLP
–
–
1.0
(2.5)
Banking surcharge
5.6
4.5
5.6
4.5
Adjustment to tax charge in respect of prior periods
0.8
0.6
0.8
0.6
Total tax expense in income statement
102.4
102.0
77.7
67.6
Tax (credit)/expense recognised directly in equity:
Tax on financial instruments held at fair value through other comprehensive
income
1.9
(3.5)
1.9
(3.5)
Tax on remeasurement of net retirement benefit obligations
(1.5)
(1.2)
(1.5)
(1.2)
Deferred tax on cash flow hedges
(3.9)
2.6
(3.9)
2.6
Total tax recognised directly in equity
(3.5)
(2.1)
(3.5)
(2.1)
The Group is within the scope of the OECD Pillar Two model rules, which have been enacted into UK legislation. The intention
of the legislation is to ensure that UK-headquartered multinational enterprises pay a minimum tax rate of 15% on UK and
overseas profits. The Pillar Two rules include a Qualified Domestic Minimum Top-Up Tax, which aims to ensure that large UK
groups pay a minimum tax rate of 15% on their UK profits.
The Group’s operations are entirely based in the UK and are subject to UK corporation tax. The UK rate of corporation tax is
25% and based on a full assessment of the UK’s implementation of the rules and calculation of their application to the Group,
the impact of Pillar Two taxes on the Group is not expected to be material.
The tax expense arising from Pillar Two is £nil for the years ended 31 December 2025 and 31 December 2024.
The IAS 12 exceptions from recognising and disclosing information about deferred tax assets and liabilities related to Pillar
Two income taxes have been applied.
10. Cash and balances with the Bank of England
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Cash in hand
8.1
8.7
8.1
8.7
Unencumbered deposits with the Bank of England
6,035.5
5,601.0
6,035.5
5,601.0
Cash and balances with the Bank of England
6,043.6
5,609.7
6,043.6
5,609.7
11. Debt securities
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Debt securities issued by:
UK public bodies
2,433.8
2,414.8
2,433.8
2,414.8
Other public bodies
504.6
1,105.2
504.6
1,105.2
Other credit institutions
4,198.5
4,901.3
4,198.5
4,901.3
Group companies
–
–
8,502.8
10,567.7
Total debt securities
7,136.9
8,421.3
15,639.7
18,989.0
162 163
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Financial Statements > Notes to the Financial Statements
11. Debt securities (continued)
Debt securities issued by Group companies comprise retained investments in the Group’s securitisation vehicles.
Group
Fair value
Fair value Amortised Total
through profit through 0ther cost
and loss comprehensive
Income
£m
£m
£m
£m
Movements in debt securities during the year were:
At 1 January 2025
27.6
7,302.6
1,091.1
8,421.3
Additions
–
3,345.9
–
3,345.9
Disposals and repayments
–
(4,125.7)
(621.8)
(4,747.5)
Exchange translation
–
11.5
5.2
16.7
Other changes in value
1.1
99.2
0.2
100.5
At 31 December 2025
28.7
6,633.5
474.7
7,136.9
At 1 January 2024
27.3
5,195.7
2,338.9
7,561.9
Additions
–
3,141.2
628.2
3,769.4
Disposals and repayments
–
(988.8)
(1,866.4)
(2,855.2)
Exchange translation
–
(25.2)
(22.0)
(47.2)
Other changes in value
0.3
(20.3)
12.4
(7.6)
At 31 December 2024
27.6
7,302.6
1,091.1
8,421.3
Society
Fair value
Fair value Amortised Total
through profit through other cost
and loss comprehensive
Income
£m
£m
£m
£m
Movements in debt securities during the year were:
At 1 January 2025
27.6
7,302.6
11,658.8
18,989.0
Additions
–
3,345.9
1,030.8
4,376.7
Disposals and repayments
–
(4,125.7)
(3,702.4)
(7,828.1)
Exchange translation
–
11.5
5.2
16.7
Other changes in value
1.1
99.2
(14.9)
85.4
At 31 December 2025
28.7
6,633.5
8,977.5
15,639.7
At 1 January 2024
27.3
5,195.7
14,131.3
19,354.3
Additions
–
3,141.2
1,593.1
4,734.3
Disposals and repayments
–
(988.8)
(4,037.7)
(5,026.5)
Exchange translation
–
(25.2)
(22.0)
(47.2)
Other changes in value
0.3
(20.3)
(5.9)
(25.9)
At 31 December 2024
27.6
7,302.6
11,658.8
18,989.0
12. Loans and advances to customers
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Loans secured on residential property:
Loans fully secured on residential property
49,409.1
47,813.2
7,782.1
8,653.0
Other loans secured on residential property
4.7
5.1
–
–
Loans secured on commercial property
2,545.2
1,945.8
2,544.8
1,945.3
Gross loans and advances to customers
51,959.0
49,764.1
10,326.9
10,598.3
Impairment
(48.2)
(39.2)
(6.2)
(7.3)
Fair value credit adjustment
(17.0)
(19.4)
(17.0)
(19.4)
Expected credit losses (ECL)
(65.2)
(58.6)
(23.2)
(26.7)
Total loans and advances to customers
51,893.8
49,705.5
10,303.7
10,571.6
The following tables analyse the changes in ECL impairment and fair value credit adjustments.
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Opening impairment
39.2
37.7
7.3
8.4
Amounts written off in the year
(2.5)
(1.4)
(0.6)
(0.9)
Discounting recognised in net interest income
1.6
1.8
0.9
1.2
Charge/(release) for the year recognised in the income statement
9.9
1.1
(1.4)
(1.4)
Impairment
48.2
39.2
6.2
7.3
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Opening fair value credit adjustment
19.4
22.3
19.4
22.3
Release recognised in the income statement through net interest
(1.3)
(2.3)
(1.3)
(2.3)
Amounts written off in the year
(1.1)
(0.6)
(1.1)
(0.6)
Fair value credit adjustment
17.0
19.4
17.0
19.4
164 165
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Financial Statements > Notes to the Financial Statements
13. Intangible assets
Group and Society
Development
Software
Internally
Other
Total
costs generated
assets
£m
£m
£m
£m
£m
Cost:
At 1 January 2025
5.4
61.6
12.2
7.1
86.3
Additions
0.6
3.1
–
–
3.7
Other adjustments
(0.8)
–
–
–
(0.8)
Disposals
–
(4.1)
(10.8)
–
(14.9)
At 31 December 2025
5.2
60.6
1.4
7.1
74.3
Amortisation:
At 1 January 2025
–
50.9
12.2
7.1
70.2
Charged in year
–
3.5
–
–
3.5
Disposals
–
(3.6)
(10.8)
–
(14.4)
At 31 December 2025
–
50.8
1.4
7.1
59.3
Net book value at 31 December 2025
5.2
9.8
–
–
15.0
Cost:
At 1 January 2024
–
67.6
12.6
7.1
87.3
Additions
4.9
0.4
–
–
5.3
Disposals
–
(5.9)
(0.4)
–
(6.3)
Transfers
0.5
(0.5)
–
–
–
At 31 December 2024
5.4
61.6
12.2
7.1
86.3
Amortisation:
At 1 January 2024
–
49.4
12.5
7.1
69.0
Charged in year
–
7.4
0.1
–
7.5
Disposals
–
(5.9)
(0.4)
–
(6.3)
At 31 December 2024
–
50.9
12.2
7.1
70.2
Net book value at 31 December 2024
5.4
10.7
–
–
16.1
Other intangible assets primarily comprise the fair value of items acquired on mergers (retail savings and brands) and an
amount paid for the transfer of a number of employee sharesave schemes to the Society.
14. Investment property
Group and Society
2025
2024
£m
£m
Cost:
At 1 January 2025
22.0
21.7
Additions
1.7
0.4
Disposals
(0.3)
(0.1)
At 31 December 2025
23.4
22.0
Depreciation:
At 1 January 2025
10.9
6.0
Charged in year
0.7
0.4
Impairment
–
4.6
Disposals
(0.1)
(0.1)
At 31 December 2025
11.5
10.9
Net book value at 31 December 2025
11.9
11.1
Fair value
12.6
12.7
Investment properties are generally flats and offices ancillary to branch premises and not used by the Group. Rental income of
£1.1 million on investment properties has been included within other operating income (2024: £1.0 million).
The fair value of the Group’s investment properties at 31 December 2025 is based predominantly on external valuations.
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Financial Statements > Notes to the Financial Statements
15. Property, plant and equipment
Group and Society
Land and
Equipment, Right-of-use Right-of-use Total
buildings fixtures and property motor vehicles
fittings
£m
£m
£m
£m
£m
Cost:
At 1 January 2025
105.1
53.2
23.3
1.3
182.9
Additions
3.9
2.1
3.1
–
9.1
Disposals
(4.3)
(10.1)
(0.7)
(0.2)
(15.3)
Assets transferred to held for sale
(1.0)
–
–
–
(1.0)
At 31 December 2025
103.7
45.2
25.7
1.1
175.7
Depreciation:
At 1 January 2025
34.4
35.3
10.6
1.2
81.5
Charged in year
9.9
4.7
2.8
–
17.4
Disposals
(3.9)
(8.7)
–
(0.1)
(12.7)
Asset transferred to held for sale
(0.2)
–
–
–
(0.2)
At 31 December 2025
40.2
31.3
13.4
1.1
86.0
Net book value at 31 December 2025
63.5
13.9
12.3
–
89.7
Cost:
At 1 January 2024
101.9
59.2
22.6
1.3
185.0
Additions
6.6
6.0
0.6
–
13.2
Disposals
(3.4)
(11.3)
–
–
(14.7)
Lease modification
–
–
0.1
–
0.1
Assets transferred to held for sale
–
(0.7)
–
–
(0.7)
At 31 December 2024
105.1
53.2
23.3
1.3
182.9
Depreciation:
At 1 January 2024
34.2
42.2
8.0
1.1
85.5
Charged in year
3.6
4.9
2.6
0.1
11.2
Disposals
(3.4)
(11.3)
–
–
(14.7)
Asset transferred to held for sale
–
(0.5)
–
–
(0.5)
At 31 December 2024
34.4
35.3
10.6
1.2
81.5
Net book value at 31 December 2024
70.7
17.9
12.7
0.1
101.4
A £4.9m depreciation adjustment on freehold assets was recognised in the year to align all depreciation rates with the
Group’s accounting policy.
16. Deferred tax
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
At 1 January
43.2
22.5
42.1
21.1
Income statement (credit)/expense – Note 9
(17.0)
22.8
(16.8)
23.1
Tax (credit)/expense recognised directly in equity
(3.5)
(2.1)
(3.5)
(2.1)
At 31 December
22.7
43.2
21.8
42.1
Deferred tax assets and liabilities are attributable to the following items:
Deferred tax assets
Deferred remuneration
(4.0)
(4.0)
(4.0)
(4.0)
Pensions and other post-retirement benefits
(2.1)
(2.1)
(2.1)
(2.1)
Financial instruments held at fair value through other comprehensive
income
(5.7)
(7.5)
(5.7)
(7.5)
Cash flow hedge
(1.2)
–
(1.2)
–
Other temporary differences
(0.8)
(1.4)
(0.9)
(1.4)
Total deferred tax assets
(13.8)
(15.0)
(13.9)
(15.0)
Deferred tax liabilities
Pensions and other post-retirement benefits
7.9
9.2
7.9
9.2
Capital allowances in excess of depreciation
2.0
2.4
2.0
2.4
Fair value movements on external swap on intercompany loan
25.4
42.0
25.4
42.0
Cash flow hedge
–
2.7
–
2.7
Other temporary differences
1.2
1.9
0.4
0.8
Total deferred tax liabilities
36.5
58.2
35.7
57.1
Net deferred tax liabilities
22.7
43.2
21.8
42.1
The deferred tax (credit)/expense in the income statement comprise the following temporary differences:
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Pensions and other post-retirement benefits
0.1
(0.2)
0.1
(0.2)
Capital allowances in excess of depreciation
(0.4)
1.2
(0.4)
1.2
Fair value movements on external swap on intercompany loan
(16.7)
22.9
(16.7)
22.9
Other temporary differences
–
(1.1)
0.2
(0.8)
Total deferred tax (credit)/expense in the income statement
(17.0)
22.8
(16.8)
23.1
168 169
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Financial Statements > Notes to the Financial Statements
17. Retirement benefit obligations
The Group operates one main employee benefit scheme (the Scheme), the costs of which are borne by the Society, with both
defined benefit and defined contribution sections.
In addition, the Group operates unfunded defined benefit (DB) pension schemes for former members of staff. The present
value at 31 December 2025 of the defined benefit obligation (DBO) in relation to these schemes was £7.5 million (2024:
£7.4 million) and the relevant disclosures have been separated from those of the main employee benefits scheme where
appropriate.
Net defined benefit asset
As at 31 December 2025 the net defined benefit asset was £28.2 million (2024: £33.0 million), a decrease of £4.8 million from
31 December 2024.
Pensioner buy-in
In mid-November 2018 the Scheme entered into a pensioner buy-in with Pension Insurance Corporation (PIC). The premium
of £248 million was paid for out of the Scheme’s assets, with no additional funding required from the Society. The asset loss
from the buy-in was approximately £25 million on an accounting basis. The transaction covered around £250 million of the
Scheme’s pensioner liabilities, based on the Technical Provisions basis. As such, some pensioners remain uninsured and not
covered by the buy-in. At 31 December 2025, the Group valued the YBS Scheme insurance contract with PIC to be equal to
the corresponding IAS 19 defined benefit obligation in respect of the insured members. The assessed value of £134.9 million
(2024: £140.7 million) was calculated using a methodology consistent with the approach used to calculate the total pension
benefit. Benefits paid over 2025 in respect of the buy-in members totalled £9.8 million (2024: £9.5 million).
Defined contribution post-employment benefits
In addition to the defined benefit section (see below), the Group operates a defined contribution (DC) section of the main
scheme. This Scheme is used by the Society to fulfil its auto enrolment duties. In 2025, the total Society contribution into the
pension scheme in respect of DC benefits was £14.0 million (2024: £12.8 million). In addition to this the Society also paid
£1.0 million (2024: £1.0 million) into the pension scheme to cover the approximate cost of DC expenses, including the cost of
life assurance which is provided through the Scheme for all YBS colleagues.
Defined benefit post-employment benefits
The Group operates a funded defined benefit scheme for certain employees, providing benefits based on final salary. However,
benefits earned by members of the defined benefit section of the main scheme, with the exception of N&P Section members,
from 1 April 2010 are based on career average revalued earnings. N&P Section members’ benefits are based on their Final
Pensionable Salary (following the removal of the 31 March 2010 freeze). The defined benefit section was closed to new
employees in 2000 and to future accrual on 31 December 2015. The assets of the scheme are held in a separate trustee-
administered fund. Contributions are assessed in accordance with the advice of an independent qualified actuary using the
projected unit method.
The defined benefit section of the Scheme has a weighted average maturity of around 12 years (2024: 13 years). This weighted
average duration of a pension scheme is the average discounted term until benefit payments are due, weighted by the size of
the payment. A breakdown of the scheme liabilities by members is included below.
Funded DB scheme
Unfunded DB scheme
2025
2024
2025
2024
£m
£m
£m
£m
Deferred in service liability
32.3
31.0
–
–
Deferred liability
151.7
146.8
–
–
Pensioner liability
318.7
331.5
7.5
7.4
Total liabilities
502.7
509.3
7.5
7.4
GMP equalisation
On 26 October 2018, the High Court ruled that the Lloyds Bank schemes had to equalise pension scheme benefits between
males and females for the effects of Guaranteed Minimum Pension (GMP) and identified acceptable methods as to how this
can be achieved. The benefits provided under the Scheme are uncertain to the extent that the impact of GMP equalisation has
not yet been fully reflected in Scheme benefits. An allowance has been included in the liabilities to reflect the expected value
of these additional benefits in line with what was calculated at last year end, i.e. uplifting the DBO by 0.2%.
Scheme specific risks
The ultimate cost of the Scheme to the Society will depend upon actual future events rather than the assumptions made.
Many of the assumptions made are unlikely to be borne out in practice and, as such, the cost of the schemes may be higher or
lower than disclosed. In general, the risk to the Society is that the assumptions underlying the disclosures, or the calculation
of contribution requirements, are not borne out in practice and the cost to the Society is higher than expected. This could
result in higher contributions being required from the Society and a higher deficit being disclosed. This may also impact the
Society’s ability to grant discretionary benefits or other enhancements to members.
The assumptions not being borne out in practice could include:
•
The investment return on the Scheme’s assets being lower than assumed, resulting in an unaffordable increase in the
contributions required from the Society. The level of bond returns will be a key determinant of overall investment return;
the investment portfolio is also subject to a range of other risks typical of the asset classes held, in particular equity returns,
credit risk on bonds and exposure to the property market.
•
Falls in asset values (particularly equities) not being matched by similar falls in the value of liabilities. This risk has been
mitigated to some degree by the implementation of an asset liability matching investment strategy which is designed to
match a proportion of the Scheme’s interest rate exposure.
•
Future levels of inflation being higher than assumed, resulting in higher than anticipated annual increases to benefits in
payment, revaluations of benefits prior to retirement and salary increases. This risk has been mitigated to some degree
by the implementation of an asset liability matching investment strategy which is designed to match a proportion of the
Scheme’s inflation exposure.
•
Unanticipated improvements in the longevity of members leading to an increase in the Scheme’s liabilities.
Assets
The Scheme’s investment strategy, with a significant proportion of the assets invested in liability driven investments
(consisting of index-linked government bonds, corporate bonds and swaps), is expected to reduce the volatility of the
difference between the market value of the assets and the IAS 19 liabilities.
Funded DB scheme
2025
2024
%
%
Equities
–
1
Index-linked bonds
40
41
Corporate and other bonds
20
27
Cash and other
10
6
Swaps
–
(1)
Pensioner buy-in insurance contract
30
26
100
100
Approximately 68% (2024: 69%) of the Scheme’s investments are in quoted assets, with the exception of the liability
matching assets classified as ‘Swaps’ and reinsurance assets included in ‘Cash and other’, where a proportion of these will be
invested in unquoted assets and ‘Buy in’.
170 171
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Financial Statements > Notes to the Financial Statements
17. Retirement benefit obligations (continued)
Scheme investment strategy
The Trustees set the investment strategy for the Defined Benefit (“DB”) scheme taking into account considerations such as the
strength of the Society’s covenant, the long-term liabilities of the DB scheme and the funding agreed with the Society.
The Scheme’s investment strategy is set in conjunction with the Scheme’s investment adviser, recognising and managing a
number of risks involved in the investment of the Scheme’s assets in order to achieve the Scheme’s investment objective.
The Trustees agreed that the investment objectives for the DB scheme should be:
•
To achieve a return on the Scheme’s assets that is consistent with the long-term assumptions of the Scheme Actuary in
determining the funding of the Scheme, whilst at the same time balancing risk.
•
To aim for the assets to exceed the liabilities as determined in the event of the Scheme winding up on the basis of cash
equivalent transfer values.
•
To minimise the requirement for the Society to make further deficit recovery plan contributions.
The investment strategy is set out in its Statement of Investment Principles (SIP). The strategy is to hold:
•
A range of instruments that provide a better match both to changes in liability values and expected liability cash flows,
including (but not limited to) gilts, corporate bonds and derivatives.
•
A diversified range of return-seeking assets, including (but not limited to) equities (implemented physically and/or through
equity futures), corporate bonds and secure income assets.
•
Passive and actively managed portfolios as appropriate, following consideration of efficiency, liquidity and level of
transaction costs likely to prevail within each market as well as the impact of the investment managers’ fees on future
expected returns.
In 2025, the Trustees worked with its investment adviser to address outstanding decisions from the full strategy review
which took place in 2024. As part of these discussions, the Trustees assessed whether the current target return remained
appropriate and reviewed the level of collateral held by the DB Scheme. Following discussions, the Trustees introduced an
allocation to asset-backed securities to increase the expected return using excess collateral headroom.
With support from their investment adviser, the Trustees also conducted stress testing on the DB Scheme’s strategy and
balance sheet to identify key risks and consider potential mitigation actions. Based on this analysis, they decided to reduce
the allocation to synthetic equities.
The Trustees continue to actively monitor the Scheme’s investments as part of the Investment Sub Committee, which includes
analysis on future expected returns for the investments. Furthermore, the Trustees have an integrated risk management
framework in place to monitor and review the Covenant, Investment and Funding risks linked to the Scheme.
31 December 2022 Actuarial valuation
The value of the benefits promised to members are referred to as the Technical Provisions and are valued on a prudent basis
as determined by the Trustees, having received advice from the Scheme Actuary. The most recent actuarial valuation, effective
31 December 2022 and completed in November 2023, showed a funding level (the ratio of assets to Technical Provisions) of
102%. As the Scheme was in surplus, no recovery plan or deficit reduction contributions were required. The next valuation is
scheduled for 31 December 2025.
Virgin Media Ltd v NTL Pension Trustees II Ltd
On 5 June 2025, the Department for Work and Pensions confirmed its intention to introduce legislation permitting pension
schemes to obtain retrospective actuarial confirmation for historic amendments affected by the Virgin Media ruling. In 2024
the Trustee’s legal advisers reviewed a sample of deeds of amendment and concluded that the Scheme was likely to have
complied with Section 37 of the Pension Schemes Act 1993, noting the anticipated legislative remedy. As at the signing
date, and with reference to the Pension Schemes Bill 2025, the Trustees continue to monitor the position and expect that the
proposed legislative solution will be available to the Scheme, if required.
Summary of assumptions
2025
2024
% pa
% pa
Retail prices index (RPI) inflation
3.0
3.3
Consumer price index (CPI) inflation
2.4
2.7
Discount rate
5.5
5.5
Salary increases
3.7
3.9
Rate of increase of pensions in payment*
In line with RPI, subject to a min of 3% and a max of 5% pa
3.6
3.7
In line with RPI, subject to a min of 0% and a max of 5% pa
2.9
3.2
In line with RPI, subject to a min of 0% and a max of 2.5% pa
2.1
2.2
In line with CPI, subject to a min of 0% and a max of 3% pa
2.1
2.2
* Term dependent inflationary increases have been adopted to reflect expected inflation in each future year. Illustrative inflationary assumptions have been provided
which have been calculated to reflect the broad profile of the Society’s pension obligations.
The most significant non-financial assumption is the assumed rate of longevity. The assumptions made are equivalent to the
following life expectancies for scheme member at age 60.
2025
2024
Years
Years
For a current 60 year old male
28.1
27.7
For a current 60 year old female
29.9
29.7
For a current 45 year old male
29.3
28.9
For a current 45 year old female
31.0
30.8
Defined benefit actual contributions paid wholly relate to contributions made by the Society.
Changes in market conditions generate an actuarial gain (decrease in liabilities) and a return on plan less than discount rate
(decrease in assets).
Reconciliation of funded status
Group and Society
2025
2024
£m
£m
Present value of defined benefit obligation
(502.7)
(509.3)
Assets at fair value
530.9
542.3
Funded status/defined benefit asset
28.2
33.0
Reconciliation of unfunded status
Group and Society
2025
2024
£m
£m
Present value of unfunded defined benefit scheme
(7.5)
(7.4)
Present value of unfunded defined benefit scheme
(7.5)
(7.4)
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Financial Statements > Notes to the Financial Statements
17. Retirement benefit obligations (continued)
Statement of comprehensive income
Group and Society
Funded DB scheme
Unfunded DB scheme
2025
2024
2025
2024
£m
£m
£m
£m
Cumulative actuarial (loss)/gain recognised at 1 January
(46.1)
(41.2)
16.3
15.6
Gain due to financial assumptions
12.1
61.8
0.2
0.8
(Loss)/gain due to demographic assumptions
(3.6)
0.9
–
–
(Loss)/gain due to experience
(2.0)
0.8
(0.3)
(0.1)
Loss due to investment return different from return implied by the discount
(11.6)
(68.4)
–
–
rate
Total actuarial (loss)/gain recognised in SCI
(5.1)
(4.9)
(0.1)
0.7
Cumulative actuarial (loss)/gain recognised at 31 December
(51.2)
(46.1)
16.2
16.3
Components of pension expense as shown in the income statement
Group and Society
Funded DB scheme
Unfunded DB scheme
2025
2024
2025
2024
£m
£m
£m
£m
Administrative expenses
1.5
2.4
–
–
Interest (income)/cost on net defined benefit surplus
(1.8)
(1.7)
0.4
0.4
Total pension expense
(0.3)
0.7
0.4
0.4
Reconciliation of present value of defined benefit obligation
Group and Society
Funded DB scheme
Unfunded DB scheme
2025
2024
2025
2024
£m
£m
£m
£m
Present value of defined benefit obligation at 1 January
509.3
572.5
7.4
8.1
Administrative expenses
1.5
2.4
–
–
Interest cost
27.0
25.2
0.4
0.4
Actuarial (gain)/loss
(6.5)
(63.5)
0.1
(0.7)
Defined benefit actual benefits and costs paid
(28.6)
(27.3)
–
–
Disbursements directly paid by the employer
–
–
(0.4)
(0.4)
Present value of defined benefit obligation at 31 December
502.7
509.3
7.5
7.4
Movement in defined benefit fair value of assets
Group and Society
Funded DB scheme
2025
2024
£m
£m
Fair value of assets at 1 January
542.3
611.1
Interest income on scheme asset
28.8
26.9
Return on plan assets less than discount rates
(11.6)
(68.4)
Defined benefit actual benefits and costs paid
(28.6)
(27.3)
Fair value of plan assets at 31 December
530.9
542.3
The defined benefit obligation has reduced over the period, this is primarily driven by an increase in the discount rate
assumption to 5.50% (2024: 5.45%) and a decrease in the salary escalation and price inflation assumptions.
Sensitivities
The IAS 19 liability measurement and the service cost are sensitive to the assumptions made about future inflation and salary
growth levels, as well as the assumptions made about life expectation. They are also sensitive to the discount rate, which
depends on market yields on Sterling-denominated high quality corporate bonds. A decrease in corporate bond yields will
increase the liabilities although this will be partially offset by an increase in matching assets.
The table below shows the sensitivity of the defined benefit obligation combined and Scheme assets to changes in these
assumptions. The final assumptions are chosen by the Society.
Principal Sensitivity Illustrations
Defined benefit
Assets
Net effect
obligation
£m
£m
£m
Total as at 31 December 2025
510.2
530.9
20.7
Change in defined benefit obligation/assets given the following change in assumption:
Discount rate:* 1.00% pa increase
(53.5)
(60.2)
(6.7)
Discount rate:* 1.00% pa decrease
65.1
71.0
5.9
Salary Escalation: 0.75% increase
0.8
–
(0.8)
Salary Escalation: 0.75% decrease
(0.8)
–
0.8
Inflation:** 0.50% increase
15.7
17.0
1.3
Inflation:** 0.50% decrease
(14.7)
(14.4)
0.3
Life expectancy: 1 year average increase
18.3
5.7
(12.6)
Life expectancy: 1 year average decrease
(18.9)
(6.0)
12.9
* The change in the discount rate is assumed to be equivalent to a 1% decrease in gilt, swap and credit based interest rates.
** The sensitivity illustrations above are calculated changing each assumption in isolation, keeping all other assumptions constant. In practice this is unrealistic as it
ignores the impact from correlation between assumptions.
The asset liability matching strategy implemented for the Scheme means that a change in discount rate or inflation
assumption has a broadly similar impact on the liabilities and the assets, reducing the volatility of the net impact. It should be
noted that this strategy is based on liabilities on the self-sufficiency basis, i.e. higher liabilities than on an accounting basis.
As such, on an accounting basis, for the sensitivities above, the assets increase by more than the liabilities, resulting in an
improvement in the accounting balance sheet position.
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Financial Statements > Notes to the Financial Statements
18. Other assets
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Prepayments and accrued interest
34.0
29.7
34.0
29.7
Due from controlled entities
–
–
86.9
74.7
Other assets
4.6
6.7
2.6
4.8
Total other assets
38.6
36.4
123.5
109.2
19. Shares
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Shares comprising balances held by individuals
52,913.7
52,044.4
52,913.7
52,044.4
Fair value adjustment for hedged risk on shares
27.3
1.0
27.3
1.0
Total shares
52,941.0
52,045.4
52,941.0
52,045.4
20. Other deposits
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Amounts owed to:
Subsidiary undertakings
–
–
10,769.4
12,842.6
Other customers
1,508.7
1,196.8
1,508.7
1,196.8
Total other deposits
1,508.7
1,196.8
12,278.1
14,039.4
21. Debt securities in issue
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Covered bonds
3,570.7
2,960.0
4,788.8
4,195.9
Medium-term notes
900.8
1,258.1
900.8
1,258.1
Residential mortgage backed securities
953.7
801.2
–
–
Total debt securities in issue
5,425.2
5,019.3
5,689.6
5,454.0
Debt securities in issue include amounts secured on certain loans and advances to customers in Group £4.5 billion (2024:
£3.8 billion) and Society £4.8 billion (2024: £4.2 billion).
22. Other liabilities
Group Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Accruals and deferred income
51.8
43.4
51.8
43.4
Finance lease liabilities
15.0
14.9
15.0
14.9
Other
19.4
16.9
38.7
45.4
Total other liabilities
86.2
75.2
105.5
103.7
The lease liabilities are secured by the related underlying assets. The underlying maturity analysis of lease liabilities at
31 December 2025 for the Group is as follows:
Buildings Finance NPV
lease charges
payments
£m
£m
£m
Within 1 year
3.6
(0.4)
3.2
1-2 years
3.1
(0.3)
2.8
2-3 years
2.7
(0.2)
2.5
3-4 years
2.4
(0.2)
2.2
4-5 years
2.0
(0.1)
1.9
5-10 years
1.6
(0.2)
1.4
10-15 years
0.5
(0.1)
0.4
Over 15 years
0.7
(0.1)
0.6
Total at 31 December 2025
16.6
(1.6)
15.0
176 177
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Financial Statements > Notes to the Financial Statements
23. Provisions for liabilities and charges
Group
Customer
Restructuring
Property
Other
Total
redress related
provision
£m
£m
£m
£m
£m
At 1 January 2025
0.7
0.9
1.7
0.9
4.2
Amounts utilised during the year
(0.6)
(1.0)
(0.1)
(0.1)
(1.8)
Provision (release)/charge
–
0.1
(0.1)
–
–
At 31 December 2025
0.1
–
1.5
0.8
2.4
At 1 January 2024
1.0
0.2
2.7
0.1
4.0
Amounts utilised during the year
(0.2)
(0.1)
(0.8)
–
(1.1)
Provision (release)/charge
(0.1)
0.8
(0.2)
0.8
1.3
At 31 December 2024
0.7
0.9
1.7
0.9
4.2
Society
Customer
Restructuring
Property
Other
Total
redress related
provision
£m
£m
£m
£m
£m
At 1 January 2025
0.7
0.9
1.7
0.9
4.2
Amounts utilised during the year
(0.6)
(1.0)
(0.1)
(0.1)
(1.8)
Provision (release)/charge
–
0.1
(0.1)
–
–
At 31 December 2025
0.1
–
1.5
0.8
2.4
At 1 January 2024
0.9
0.2
2.7
0.1
3.9
Amounts utilised during the year
(0.1)
(0.1)
(0.8)
0.0
(1.0)
Provision (release)/charge
(0.1)
0.8
(0.2)
0.8
1.3
At 31 December 2024
0.7
0.9
1.7
0.9
4.2
During the course of its business, the Society receives complaints in relation to past sales or ongoing administration, as well
as being subject to enquiries from and discussions with its regulators, governmental and other public bodies, on a range of
matters. No provision is made where it is concluded that it is not probable that a quantifiable payment will be made; this will
include circumstances where the facts are unclear or further time is required to reasonably quantify the expected payment.
At 31 December 2025, the Group holds customer redress provisions of £0.1 million (2024: £0.7 million) and the Society of
£0.1 million (2024: £0.7 million) in respect of various potential customer claims and represent management’s best estimate
of the likely costs.
Restructuring provisions of £nil (2024: £0.9 million) are held in relation to business and organisational changes announced
during 2025 and earlier periods.
Property related provisions of £1.5 million (2024: £1.7 million) are held in respect of lease costs for branch premises that are
no longer in use. This will be utilised over the remaining term of the unoccupied leasehold branches.
24. Subordinated liabilities
Group and Society
Maturity date
2025
2024
£m
£m
Senior non-preferred:
1½% Senior non-preferred bonds 2029
15 September 2029
250.0
249.6
3.511% Senior non-preferred bonds 2030
11 October 2030
301.7
301.6
63/8% Senior non-preferred bonds 2028
15 November 2028
351.9
352.0
73/8% Senior non-preferred bonds 2027
12 September 2027
305.9
305.5
Subordinated notes:
33/8% Subordinated Bonds 2028
13 September 2028
302.8
302.2
13½% Convertible Tier 2 Capital Notes 2025
01 April 2025
–
26.5
Fair value hedge accounting adjustments
(39.9)
(84.1)
Total subordinated liabilities
1,472.4
1,453.3
All senior non-preferred bonds and subordinated bonds are denominated in Sterling. The following notes are repayable at the
dates stated or earlier at the option of the Society and with the prior consent of the PRA under the following conditions.
Senior non-preferred:
•
Redemption of the 1½% Notes at par on the optional call date of 15 September 2028 after giving fifteen to thirty days’
notice to the holders. In the event the Society does not redeem the notes on 15 September 2028 the fixed rate of interest
will become the sum of the yield on the relevant 1-year UK gilt-edged reference bond plus 1.15%.
•
Redemption of the 3.511% Notes at par on the optional call date of 11 October 2029 after giving fifteen to thirty days’
notice to the holders. In the event the Society does not redeem the notes on 11 October 2029 the fixed rate of interest will
become the sum of the yield on the relevant 1-year UK gilt-edged reference bond plus 2.05%.
•
Redemption of the 63/8% Notes at par on the optional call date of 15 November 2027 after giving fifteen to thirty days’
notice to the holders. In the event the Society does not redeem the notes on 15 November 2027 the fixed rate of interest
will become the sum of the yield on the relevant 1-year UK gilt-edged reference bond plus 2.65%.
•
Redemption of the 73/8% Notes at par on the optional call date of 12 September 2026 after giving fifteen to thirty days’
notice to the holders. In the event the Society does not redeem the notes on 12 September 2026 the fixed rate of interest
will become the sum of the yield on the relevant 1-year UK gilt-edged reference bond plus 2.65%.
Subordinated notes:
•
Redemption of the 33/8% Notes at par on the optional call date of 13 September 2027 after giving thirty to sixty days’
notice to the holders. In the event the Society does not redeem the notes on this date, the fixed rate of interest will become
the sum of the yield on the relevant 1-year UK gilt-edged reference bond plus 3.65%.
The rights of repayment of the holders of Subordinated notes are subordinated to the claims of all depositors and members
holding shares in the Society, as regards the principal of their shares and interest due on them.
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Financial Statements > Notes to the Financial Statements
25. Financial commitments
At 31 December 2025, the Group and Society had committed undrawn standby facilities of £102.7m (2024: £105.8m). These
amounts represent undrawn elements on credit facilities with customers. The amount has reduced over the year due to
further drawdowns against these facilities and the maturity of a number of agreements.
26. Derivative financial instruments
Derivative financial instruments (derivatives) used for the management of market risk are contracts or agreements whose
value is derived from one or more underlying price, rate or index inherent in the contract or agreement, such as interest rates,
exchange rates or stock market indices.
Derivatives are used by the Group in accordance with the Building Societies Act 1986. This means that such instruments are
not used in trading activity or for speculative purposes and are only used to reduce the risk of loss on core assets or liabilities
arising from changes in interest rates, currency rates or other factors of a prescribed description.
The principal derivatives used in balance sheet risk management are interest rate swaps, interest rate options, cross currency
interest rate swaps and foreign exchange contracts. These are used to hedge Group exposures arising from fixed rate
mortgage lending and savings products, funding and investment activities.
The following table describes the significant activities undertaken by the Group, the related risks associated with such
activities and the type of derivatives which are typically used in managing such risks after considering any offsetting risk from
other activities.
Activity
Risk
Type of derivative
Management of the investment of reserves and
Sensitivity to changes in interest rates
Interest rate swaps
non-interest bearing liabilities
Fixed rate savings products and debt issuance
Sensitivity to changes in interest rates
Interest rate swaps
Fixed rate mortgage lending
Sensitivity to changes in interest rates
Interest rate swaps
Management of foreign currency risk arising
Sensitivity to changes in foreign exchange rates
Cross currency interest rate swaps and
from investment and funding foreign exchange contracts
Floating rate liabilities
Sensitivity to changes in interest rates
Interest rate swaps and capped interest
rate options
The Group’s objective is to manage risk within its risk tolerance, irrespective of the accounting treatment.
Whilst all derivatives have been entered into for hedging purposes, only certain arrangements meet the conditions necessary
to be designated as such for accounting purposes. In some cases, a natural offset can be achieved and hedge accounting is
not required. The Group only designates derivatives in qualifying hedge accounting relationships when the hedge is expected
to be highly effective.
Hedge accounting
The following table shows the balance sheet categories covered by hedge accounting relationships:
Hedge relationship
Balance sheet line item
Fair value hedge for interest rate risk
Fixed rate mortgages
Loans and advances to customers
Fixed rate debt securities held
Debt securities
Fixed rate savings
Shares
Fixed rate debt securities issued
Debt securities in issue
Fair value hedge for interest rate and FX risk
Fixed rate debt securities held
Debt securities
Fixed rate debt securities issued
Debt securities in issue
Cash flow hedge for interest rate risk
Floating rate deposits
Amounts owed to credit institutions
Floating rate debt securities issued
Debt securities in issue
Interest rate risk on fixed rate mortgages and purchased debt securities (fair value)
The Group holds portfolios of long-term fixed rate mortgages and debt securities. These instruments generate fixed rate
income whereas the Group liabilities are mostly floating rate. The Group manages this risk exposure by entering into pay
fixed/receive floating interest rate swaps. These swaps are then designated into a fair value hedge relationship along with the
issued mortgage or debt security.
Only the interest rate risk element is hedged and therefore other risks, such as credit risk, are managed but not hedged by
the Group. The interest rate risk component is determined as the change in fair value of the long-term fixed rate mortgages
arising solely from changes in SONIA (the benchmark rate of interest). Such changes are usually the largest component of the
overall change in fair value. This strategy is designated as a fair value hedge under IAS 39, and its effectiveness is assessed by
comparing changes in the fair value of the mortgage loan attributable to the benchmark interest rate with changes in the fair
value of the interest rate swap. Quantitative testing is performed using regression analysis, with the regression slope required
to fall within ranges consistent with the IAS 39 effectiveness criterion of 80-125%.
Possible sources of ineffectiveness are as follows:
•
differences between the expected and actual volume of prepayments for mortgage portfolios, as the Group hedges to the
expected repayment date taking into account expected prepayments based on past experience;
•
difference in timing of cash flows between the mortgage loans and the interest rate swaps;
•
difference in the designated coupon rate % of the hedged asset and the interest rate swaps; and
•
interest rate swaps with a non-zero fair value at the date of initial designation.
The exposure from the mortgage portfolio frequently changes due to new loans being originated, contractual repayments
and early prepayments made by customers in each period. To mitigate this risk, the Group enters into and tears up swap
agreements with external counterparties. These interest rate swaps and the mortgage portfolio are then designated in to a fair
value hedge to reduce the profit or loss volatility that would otherwise arise from changes in the fair value of the interest rate
swaps alone. This hedge relationship is updated on a monthly basis for changes in the portfolio.
180 181
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Financial Statements > Notes to the Financial Statements
26. Derivative financial instruments (continued)
Interest rate risk on fixed rate savings (fair value)
The Society holds a portfolio of fixed rate savings. The Group manages this risk exposure by entering into receive fixed/pay
floating interest rate swaps. Depending on availability of hedged items some of these swaps are then designated into a fair
value hedge relationship along with the issued savings balance.
Only the interest rate risk element is hedged and therefore other risks are managed but not hedged by the Group. The interest
rate risk component is determined as the change in fair value of the fixed rate savings arising solely from changes in SONIA
(the benchmark rate of interest). Such changes are usually the largest component of the overall change in fair value. This
strategy is designated as a fair value hedge and its effectiveness is assessed by comparing changes in the fair value of the
hedged item (the savings balance) attributable to changes in the benchmark rate of interest with changes in the fair value of
the hedging instrument (interest rate swap). Quantitative testing is performed using regression analysis, with the regression
slope required to fall within ranges consistent with the IAS 39 effectiveness criterion of 80-125%.
Possible sources of ineffectiveness are as follows:
•
difference in timing of cash flows between the savings balance and the interest rate swaps;
•
difference in the designated coupon rate % of the hedged liability and the interest rate swaps; and
•
interest rate swaps with a non-zero fair value at the date of initial designation.
Foreign Exchange and Interest rate risk on fixed rate debt issuance and purchased debt securities
(fair value)
The Group accesses international markets in order to obtain effective sources of liquidity and funding. As part of this process
the Group issues fixed rate debt in both GBP and EUR and also purchases debt securities in other foreign currencies, such as
JPY and USD. The foreign currency and interest rate risk associated with these instruments is mitigated by the use of cross
currency swaps, which exchange fixed interest payments in the foreign currency for floating interest payments in GBP. The
interest rate risk associated with the GBP debt is mitigated by the use of interest rate swaps which exchange fixed interest
payments with variable payments. These instruments are entered into to match the maturity profile of the Group’s debt
instruments.
The foreign currency risk component is determined as the change in fair value of the foreign currency debt arising solely
from changes in the relevant foreign currency exchange rate. The interest rate risk component is determined as the change
in fair value of the debt arising solely from changes in the benchmark rate of interest. Such changes are usually the largest
component of the overall change in fair value. This strategy is designated as a fair value hedge and its effectiveness is
assessed by comparing changes in the fair value of the debt attributable to changes in the hedged risk(s) with changes in the
fair value of the swaps. Quantitative testing is performed using regression analysis, with the regression slope required to fall
within ranges consistent with the IAS 39 effectiveness criterion of 80-125%.
Possible sources of ineffectiveness are as follows:
•
differences in discounting approach between the hedged item and hedging instrument, including the cross-currency basis
spread applied in the valuation of cross currency swaps;
•
swaps with a non-zero fair value at the date of initial designation;
•
difference in the designated coupon rate % of the hedged liability and the swap; and
•
counterparty credit risk which impacts the value of uncollateralised cross currency swaps but not the hedged items.
Interest rate risk on floating rate debt securities issued (cash flow hedge)
The Group has applied a macro cash flow hedge in relation to a portion of its floating rate issuances, this is to hedge part of
its fixed rate mortgages. These swaps are transacted prior to the mortgages completing and being recognised on the balance
sheet. Until the mortgage completes the swaps are entered into macro cash flow hedges against the Group’s floating rate debt
securities issued.
Any movements in fair value of the swaps arising due to movements in interest rates are recognised in other comprehensive
income to the extent that the hedge relationship is effective. Quantitative testing is performed using regression analysis, with
the regression slope required to fall within ranges consistent with the IAS 39 effectiveness criterion of 80-125%.
This hedge relationship is updated on a monthly basis for changes in the portfolio. This hedge is terminated and incepted
monthly to allow for new derivatives to enter the hedge and for derivatives to enter the macro fair value hedge once the
mortgages have completed and are recognised on the balance sheet.
Ineffectiveness
All ineffectiveness is recorded in the income statement in
Net (losses)/gains from financial instruments held at fair value
.
The following table shows the ineffectiveness in relation to the hedge relationships designated by the Group.
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Fair value hedges
Fixed rate mortgages
(23.5)
40.8
(23.5)
40.8
Fixed rate debt securities held
(5.5)
1.2
(5.5)
1.2
Fixed rate savings
7.7
(21.0)
7.7
(21.0)
Fixed rate debt securities issued
(0.1)
0.7
(4.0)
10.6
Cash flow hedges
Floating rate debt securities issued
(8.6)
(0.5)
(8.6)
(0.5)
Total
(30.0)
21.2
(33.9)
31.1
Interest rates used to determine fair values which are linked to BoE base rate have fallen throughout the year driven by a
1% reduction in BoE base rate. This large change in rates has had an adverse effect on the designated hedges, increasing
ineffectiveness. In addition, a large compression project has taken place across the year removing derivative balances of
c.£15.3bn. Swap compression is a mechanism that eliminates an existing cleared swap by executing an offsetting swap with
matching terms but the opposite pay/receive direction. This process terminates the original contract and reduces the number
of swaps recognised on the balance sheet. Overall, the impact of these compressions is minimal, though the removal of swaps
does impact ineffectiveness, amortisation adjustments and unmatched derivative movements.
182 183
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Financial Statements > Notes to the Financial Statements
26. Derivative financial instruments (continued)
Ineffectiveness (continued)
The following tables summarise the notional and fair value of all derivative financial instruments and the hedge relationships
in place at that date.
Contract/
Fair values
Change in fair
Notional
Assets
Liabilities
value used for
amount calculating
ineffectiveness
£m
£m
£m
£m
Group
At 31 December 2025
Interest rate risk
Interest rate swaps designated as fair value hedges
35,255.8
571.9
168.3
(491.2)
Interest rate swaps designated as cash flow hedges
1,922.2
0.1
3.2
(22.6)
Interest rate and FX risk
Cross currency interest rate swaps designated as fair value hedges
2,872.8
86.6
100.6
31.6
Derivatives not designated as hedges:
Interest rate swaps
9,524.1
19.8
13.9
n/a
Foreign exchange
49.1
0.5
–
n/a
Total derivative financial instruments
49,624.0
678.9
286.0
(482.2)
Society
At 31 December 2025
Interest rate risk
Interest rate swaps designated as fair value hedges
35,255.8
571.9
168.3
(491.2)
Interest rate swaps designated as cash flow hedges
1,922.2
0.1
3.2
(22.6)
Interest rate and FX risk
Cross currency interest rate swaps designated as fair value hedges
1,043.1
42.7
37.5
22.6
Derivatives not designated as hedges:
Interest rate swaps
15,300.1
19.8
13.9
n/a
Foreign exchange
49.1
0.5
–
n/a
Total derivative financial instruments
53,570.3
635.0
222.9
(491.2)
The expected future cash flows have been discounted using the Overnight Indexed Swap (OIS) curve (SONIA) for all
derivatives.
Credit risk on derivative exposures is significantly mitigated within the Group by the existence of a Credit Support Annex
(CSA) with the vast majority of the Group’s derivative counterparties. Under a CSA, cash is passed between parties to mitigate
the counterparty risk inherent in the outstanding positions. Where cash collateral is received, to mitigate the risk inherent
in amounts due to the Group, it is included as a liability within amounts owed to credit institutions. Where cash collateral is
given, it is included as an asset in loans and advances to credit institutions. Credit risk is also mitigated by the use of central
counterparties (CCPs) for eligible derivatives.
Contract/
Fair values
Change in fair
Notional
Assets
Liabilities
value used
amount for calculating
ineffectiveness
£m
£m
£m
£m
Group
At 31 December 2024
Interest rate risk
Interest rate swaps designated as fair value hedges
44,890.8
1,273.7
206.9
(103.7)
Interest rate swaps designated as cash flow hedges
1,530.0
18.3
–
8.8
Interest rate and FX risk
Cross currency interest rate swaps designated as fair value hedges
2,964.6
100.7
262.4
58.4
Derivatives not designated as hedges:
Interest rate swaps
14,341.0
66.5
86.5
n/a
Foreign exchange
92.9
7.7
–
n/a
Total derivative financial instruments
63,819.3
1,466.9
555.8
(36.5)
Society
At 31 December 2024
Interest rate risk
Interest rate swaps designated as fair value hedges
44,890.8
1,273.7
206.9
(103.7)
Interest rate swaps designated as cash flow hedges
1,530.0
18.3
–
8.8
Interest rate and FX risk
Cross currency interest rate swaps designated as fair value hedges
1,721.7
100.7
136.2
22.9
Derivatives not designated as hedges:
Interest rate swaps
22,593.0
66.5
86.5
n/a
Foreign exchange
83.0
6.8
–
n/a
Total derivative financial instruments
70,818.5
1,466.0
429.6
(72.0)
184 185
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Financial Statements > Notes to the Financial Statements
The following table shows the average price/rate of the hedging instruments by maturity used in the Group’s hedge
accounting strategies:
Group and Society
2025
2024
Repayable In more than Over Repayable In more than Over
up to three years five years up to three years five years
three but less than three but less than
years five years years five years
Average fixed interest rate – Fair value hedges
Interest rate swaps (pay fixed)
2.76
3.69
2.65
2.66
3.91
2.44
Interest rate swaps (receive fixed)
3.83
3.51
–
4.45
2.69
–
Cross currency interest rate swaps
0.76
3.72
3.85
0.66
0.63
2.66
Average fixed interest rate – Cash flow hedges
Interest rate swaps (pay fixed)
3.54
3.67
–
3.85
3.60
3.60
Average EUR:GBP FX rate – Fair value hedges
Cross currency interest rate swaps
1.15
1.18
1.16
1.11
1.17
1.16
Average JPY:GBP FX rate – Fair value hedges
Cross currency interest rate swaps
154.80
–
–
156.41
–
–
Average USD:GBP FX rate – Fair value hedges
Cross currency interest rate swaps
1.25
–
–
1.25
–
–
26. Derivative financial instruments (continued)
The following tables show the maturity profile, by notional amount, of the hedging instruments designated in hedge
relationships used in the Group’s hedge accounting strategies:
Group and Society
Repayable
In more than Over Total
up to three years five years
three years but less than
five years
£m
£m
£m
£m
At 31 December 2025
Interest rate swaps (pay fixed)
1,812.7
109.5
–
1,922.2
Total cash flow hedges
1,812.7
109.5
–
1,922.2
At 31 December 2024
Interest rate swaps (pay fixed)
1,095.0
150.0
285.0
1,530.0
Total cash flow hedges
1,095.0
150.0
285.0
1,530.0
Group
Repayable
In more than Over Total
up to three years five years
three years but less than
five years
£m
£m
£m
£m
At 31 December 2025
Interest rate swaps (pay fixed)
20,722.8
5,264.4
1,353.8
27,341.0
Interest rate swaps (receive fixed)
7,614.8
300.0
–
7,914.8
Cross currency interest rate swaps
1,770.0
588.4
514.4
2,872.8
Total fair value hedges
30,107.6
6,152.8
1,868.2
38,128.6
At 31 December 2024
Interest rate swaps (pay fixed)
24,778.6
6,395.1
1,246.5
32,420.2
Interest rate swaps (receive fixed)
11,880.6
590.0
–
12,470.6
Cross currency interest rate swaps
1,390.3
1,081.2
493.1
2,964.6
Total fair value hedges
38,049.5
8,066.3
1,739.6
47,855.4
Society
Repayable
In more than Over Total
up to three years five years
three years but less than
five years
£m
£m
£m
£m
At 31 December 2025
Interest rate swaps (pay fixed)
20,722.8
5,264.4
1,353.8
27,341.0
Interest rate swaps (receive fixed)
7,614.8
300.0
–
7,914.8
Cross currency interest rate swaps
898.7
65.6
78.8
1,043.1
Total fair value hedges
29,236.3
5,630.0
1,432.6
36,298.9
At 31 December 2024
Interest rate swaps (pay fixed)
24,778.6
6,395.1
1,246.5
32,420.2
Interest rate swaps (receive fixed)
11,880.6
590.0
–
12,470.6
Cross currency interest rate swaps
976.0
666.9
78.8
1,721.7
Total fair value hedges
37,635.2
7,652.0
1,325.3
46,612.5
186 187
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Financial Statements > Notes to the Financial Statements
The accumulated amount of fair value hedge adjustments remaining on the balance sheet for hedged items that have ceased
to be adjusted for hedge accounting gains and losses is a loss of £1.8 million (2024: £9.1 million loss).
The following tables show the cash flow hedge exposures (gross of tax) covered by the Group’s hedge accounting strategies:
Group and Society
Assets
Liabilities
Change in fair
Cash flow hedge reserve
value of hedged Continuing Discontinued
item used for hedges hedges
calculating
ineffectiveness
£m
£m
£m
£m
£m
At 31 December 2025
Floating rate debt securities issued
–
1,922.2
13.9
–
(1.9)
At 31 December 2024
Floating rate debt securities issued
–
1,530.0
(9.3)
–
26.4
For Society the exposure to floating rate debt includes those within White Rose Master Issuer PLC as this exposure is
transferred via an intercompany loan that mirrors the underlying debt security in this entity.
The following table shows the movements in the cash flow hedge reserve during the year:
Group and Society
2025
2024
£m
£m
At 1 January
7.0
0.4
Effective portion of changes in fair value of interest rate swaps:
Floating rate debt securities issued
(16.7)
5.7
Amounts reclassified from reserves to income statement:
Floating rate debt securities issued
2.8
3.5
Taxation
3.9
(2.6)
At 31 December
(3.0)
7.0
26. Derivative financial instruments (continued)
The following tables show the fair value hedge exposures covered by the Group’s hedge accounting strategies. The change in
fair value of the hedged item for calculating ineffectiveness is based on all hedge relationships designated during the year.
Carrying amount of Accumulated fair value Change in fair
hedged item adjustments on the value of the
hedged item hedged item
Assets
Liabilities
Assets
Liabilities
for calculating
ineffectiveness
£m
£m
£m
£m
£m
Group
At 31 December 2025
Fixed rate mortgages (interest rate risk)
24,174.3
–
22.1
–
476.8
Fixed rate debt securities held (interest rate and FX risk)
3,514.3
–
(213.5)
–
75.0
Fixed rate savings (interest rate risk)
–
6,014.5
–
(27.3)
(24.5)
Fixed rate debt securities issued (interest rate and FX risk)
–
4,302.1
–
109.0
(86.0)
Society*
At 31 December 2025
Fixed rate mortgages (interest rate risk)
24,174.3
–
22.1
–
476.8
Fixed rate debt securities held (interest rate and FX risk)
3,514.3
–
(213.5)
–
75.0
Fixed rate savings (interest rate risk)
–
6,014.5
–
(27.3)
(24.5)
Fixed rate debt securities issued (interest rate and FX risk)
–
2,449.8
–
72.0
(75.3)
Group
At 31 December 2024
Fixed rate mortgages (interest rate risk)
29,161.9
–
(454.7)
–
160.7
Fixed rate debt securities held (interest rate and FX risk)
3,706.7
–
(287.4)
–
(35.7)
Fixed rate savings (interest rate risk)
–
10,493.7
–
1.0
(1.0)
Fixed rate debt securities issued (interest rate and FX risk)
–
4,096.6
–
195.0
(60.0)
Society*
At 31 December 2024
Fixed rate mortgages (interest rate risk)
29,161.9
–
(454.7)
–
160.7
Fixed rate debt securities held (interest rate and FX risk)
3,706.7
–
(287.4)
–
(35.7)
Fixed rate savings (interest rate risk)
–
10,493.7
–
1.0
(1.0)
Fixed rate debt securities issued (interest rate and FX risk)
–
2,844.9
–
147.3
(14.6)
* For Society the exposure to mortgages includes those within Accord Mortgages Limited as this exposure is transferred via an intercompany loan that mirrors the
underlying loans in this entity.
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Financial Statements > Notes to the Financial Statements
Pledged assets
The Society’s asset backed funding programmes, reported within debt securities in issue (see Note 21) are secured against
certain loans and advances to customers.
In addition, as part of its liquidity management, the Society enters into sale and repurchase agreements whereby the Society
sells but agrees to repurchase assets at a future date. Typically this is for up to three months and for UK government securities
and listed transferable debt securities. Proceeds of these sale and repurchase agreements are included within amounts owed
to credit institutions.
Assets pledged are as follows:
Group
Carrying
Carrying Total
amount of amount of
encumbered unencumbered
assets assets
£m
£m
£m
2025
Liquid assets
1,370.3
12,173.8
13,544.1
Loans and advances to customers
6,329.6
45,564.2
51,893.8
Fair value adjustment for hedged risk on loans and advances to customers
–
22.1
22.1
Other assets
–
870.3
870.3
Total assets
7,699.9
58,630.4
66,330.3
2024
Liquid assets
1,514.2
13,106.8
14,621.0
Loans and advances to customers
5,714.8
43,990.7
49,705.5
Fair value adjustment for hedged risk on loans and advances to customers
–
(454.7)
(454.7)
Other assets
–
1,672.6
1,672.6
Total assets
7,229.0
58,315.4
65,544.4
All of the assets pledged as security are shown in the balance sheet, as the Society has retained substantially all the risk and
rewards of ownership.
The Society established Yorkshire Building Society Covered Bonds LLP in November 2006. The LLP provides security for
issues of covered bonds made by the Society to external counterparties. As at 31 December 2025, the Society had in issue
£2,950 million of Sterling denominated covered bonds, of which £1,200 million was retained, and €2,100 million of Euro
denominated covered bonds.
The Group established its first securitisation programme in 2011. In 2024, a new Master Issuer securitisation structure
was established, issuing £350 million A1 notes publicly with a further £350 million A1 note publicly issued in 2025. As at
31 December 2025, the Group had in issue £8,624 million of securitisation notes, of which £7,530 million were retained.
27. Liquidity risk
Liquidity risk is an intrinsic part of the Society’s business as long-term mortgages are funded by short-term retail customer
balances. Most mortgages have a contractual maturity date of around 25 years but in practice are frequently repaid early;
currently the estimated average life of a mortgage is approximately five years. Conversely, experience shows that retail
deposits, nominally repayable on demand or with short notice periods, actually remain with the Society for relatively long
periods. It is this inherent mismatch in the maturity profiles of retail assets and liabilities that creates liquidity risk.
The Society’s liquidity management policy is designed to ensure the maintenance of adequate investments in liquid assets
to cover statutory, regulatory and operational requirements. The primary function of liquidity is the provision of sufficient
assets in realisable form to ensure that the Society is able to meet its liabilities as they arise and to absorb potential cash flow
requirements created by the maturity mismatches referred to above or by a liquidity stress scenario.
The Society’s liquidity management comprises the following key areas:
•
At the highest level, the Society manages its liquidity levels to ensure compliance with the Overall Liquidity Adequacy Rule,
as set out by the PRA in Chapter 2 of the Internal Liquidity Adequacy Assessment part of the PRA Rulebook (ILAA rules).
•
Limits are established by the Board that govern the quantity, quality and marketability of and returns from the Society’s
portfolio of liquidity investments. The portfolio is managed by the Treasury function, monitored by the first and second line
risk functions and overseen by the Asset and Liability Committee (ALCO) under a series of delegated authorities.
•
The Society conducts a series of daily stress tests that are designed to ensure that its liquidity is sufficient to meet its cash
flow needs under any one of a number of adverse scenarios should they arise. The scenarios include ones caused by both
Society-specific and general market events, and incorporate both severe retail savings outflows and the unavailability of
wholesale funding. They are constructed on various timescales as far out as three months. These scenarios are updated and
approved by the Board annually through the Internal Liquidity Adequacy Assessment Process (ILAAP).
•
The Society also manages liquidity in line with prevailing regulatory requirements, namely the Liquidity Coverage Ratio
(LCR), as prescribed under the PRA Rulebook, Liquidity Coverage Ratio (CRR) part. The LCR measures the quantity of High
Quality Liquid Assets (HQLA) against net liquidity outflows over a 30 day period. YBS currently reports to the PRA on a
monthly basis with 238.7% reported for December 2025 month end. For comparison, as at 31 December 2024 this was
202.7%. These ratios are unaudited.
•
The Society monitors and reports its Net Stable Funding Ratio (NSFR), which is a longer term measure of the stability of the
Society’s funding sources relative to the assets being funded. The Society’s NSFR as at 31 December 2025 was 156.65%
(2024: 152.39%) and was therefore in excess of the regulatory minimum of 100%. These ratios are unaudited.
•
The Society has also implemented internal backstop limits for liquidity, to mitigate the potential risk of liquidity levels
under a risk-based approach being able to be reduced to below what is considered a minimum appropriate level for the
Society. These backstop limits are linked to balance sheet size.
•
The liquidity position of the Society is forecast across the next two years and measured against forecasts of the liquidity
requirements on both a regulatory and internal basis. This is to ensure that the short-term plans of the Society do not lead
to liquidity limits being breached and the financial sustainability of the organisation being threatened.
The above metrics are the key elements of the suite of measures by which the Society actively seeks to manage its liquidity
position, along with other complimentary metrics which are included within the Society’s risk appetite framework.
Liquidity risk in subsidiary companies, with the exception of other deposits, is mitigated by the use of appropriate
intercompany loans and deposits.
190 191
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Financial Statements > Notes to the Financial Statements
The table below analyses the Group’s financial assets and liabilities into relevant maturity groupings, based on the remaining
period between the balance sheet date and the contractual maturity date.
Group
Repayable
Less than In more than In more than Over five Total
on demand three three months one year but years
months but not more not more
than one than five
year years
£m
£m
£m
£m
£m
£m
As at 31 December 2025
Financial assets
Cash and balances with the Bank of England
6,043.5
–
–
–
–
6,043.5
Loans and advances to credit institutions
333.7
30.0
–
–
–
363.7
Debt securities
–
905.5
1,148.3
2,905.7
2,177.4
7,136.9
Loans and advances to customers
–
30.5
111.2
1,358.8
50,393.3
51,893.8
Fair value adjustment for hedged risk on loans and
advances to customers
–
(13.5)
(20.1)
55.7
–
22.1
Derivative financial instruments
–
23.2
137.2
288.2
230.3
678.9
Total financial assets
6,377.2
975.7
1,376.6
4,608.4
52,801.0
66,138.9
Financial liabilities
Shares
34,569.8
4,607.0
10,028.0
3,660.0
48.9
52,913.7
Fair value adjustment for hedged risk on shares
–
12.1
12.8
2.4
–
27.3
Amounts owed to credit institutions
166.5
170.4
–
–
–
336.9
Other deposits
1,093.0
415.7
–
–
–
1,508.7
Debt securities in issue
–
(5.3)
399.7
3,614.9
1,415.9
5,425.2
Derivative financial instruments
–
0.3
7.2
272.1
6.4
286.0
Subordinated liabilities
–
–
2.9
1,469.5
–
1,472.4
Total financial liabilities
35,829.3
5,200.2
10,450.6
9,018.9
1,471.2
61,970.2
As at 31 December 2024
Financial assets
Cash and balances with the Bank of England
5,609.7
–
–
–
–
5,609.7
Loans and advances to credit institutions
590.0
–
–
–
–
590.0
Debt securities
–
1,234.9
1,183.4
4,114.7
1,888.3
8,421.3
Loans and advances to customers
–
12.6
73.7
1,289.4
48,329.8
49,705.5
Fair value adjustment for hedged risk on loans and
advances to customers
–
574.9
640.1
(1,650.2)
(19.5)
(454.7)
Derivative financial instruments
–
54.6
161.7
994.9
255.7
1,466.9
Total financial assets
6,199.7
1,877.0
2,058.9
4,748.8
50,454.3
65,338.7
Financial liabilities
Shares
32,548.7
6,130.7
11,358.2
1,988.7
18.1
52,044.4
Fair value adjustment for hedged risk on shares
–
127.4
1,012.6
(1,139.0)
–
1.0
Amounts owed to credit institutions
708.9
450.0
10.0
–
–
1,168.9
Other deposits
842.6
348.7
5.5
–
–
1,196.8
Debt securities in issue
–
(6.1)
393.0
3,385.2
1,247.2
5,019.3
Derivative financial instruments
–
19.8
87.7
445.2
3.1
555.8
Subordinated liabilities
–
–
26.5
1,125.2
301.6
1,453.3
Total financial liabilities
34,100.2
7,070.5
12,893.5
5,805.3
1,570.0
61,439.5
27. Liquidity risk (continued)
The tables below provide an analysis of gross contractual cashflows. The sum of the balances depicted in the analysis do not
reconcile with the carrying value of the liabilities, as disclosed in the consolidated balance sheet. This is because they include
estimated future interest payments calculated using balances outstanding at the balance sheet date. Amounts are allocated to
the relevant maturity band based on the timing of individual contractual cashflows.
Group
Repayable on
In more than In more than Over five Total
demand and three months one year but years
up to three but not more not more than
months than one year five years
£m
£m
£m
£m
£m
As at 31 December 2025
Shares
39,176.8
10,028.0
3,660.0
48.9
52,913.7
Amounts owed to credit institutions
336.9
–
–
–
336.9
Other deposits
Society
1,508.7
–
–
–
1,508.7
Subsidiaries
–
–
–
–
–
Debt securities in issue
37.9
505.4
3,906.8
1,428.9
5,879.0
Subordinated liabilities
–
71.7
1,541.0
–
1,612.7
Derivative financial liabilities
19.2
95.9
245.2
2.1
362.4
Total
41,079.5
10,701.0
9,353.0
1,479.9
62,613.4
As at 31 December 2024
Shares
38,679.4
11,358.2
1,988.7
18.1
52,044.4
Amounts owed to credit institutions
1,158.9
10.1
–
–
1,169.0
Other deposits
Society
1,191.3
5.6
–
–
1,196.9
Subsidiaries
–
–
–
–
–
Debt securities in issue
23.7
424.8
3,556.9
1,543.8
5,549.2
Subordinated liabilities
–
97.1
1,323.9
312.1
1,733.1
Derivative financial liabilities
113.8
661.2
876.1
130.4
1,781.5
Total
41,167.1
12,557.0
7,745.6
2,004.4
63,474.1
192 193
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Financial Statements > Notes to the Financial Statements
29. Currency risk
Currency exchange risk is monitored daily and the Society seeks to minimise its net exposure to assets and liabilities
denominated in currencies other than sterling. The Society’s existing non-sterling liquidity portfolio and wholesale funding
exposures are swapped back into sterling. The maximum month end position in 2025 represented less than 0.02% of total
assets.
Actual exposures were:
Group and Society
2025
2024
£m
£m
Year end
1.0
7.2
Maximum
6.4
7.8
30. Wholesale credit risk
The Group’s wholesale credit risk arises principally from assets held for liquidity purposes. The risk is that counterparties with
whom the Group invests in liquid assets fail to repay those investments when they fall due. The Group, through the Treasury
function, undertakes its own internal rating of all its counterparties and sets individual limits accordingly. These limits are
regularly reviewed internally and against the external rating agencies, with revocation or suspension taking place where
considered appropriate.
Limits are in place governing the types of instrument in which the Group will invest, as well as geographic limits designed to
prevent over-exposure to a given country.
The Group uses an internal credit ratings process to identify potential risks and wholesale related credit risks are reported and
discussed monthly at the Asset and Liability Committee.
Whilst recognising that exposures will be maintained across a spectrum of counterparties the Board has maintained a low
risk appetite for wholesale credit risk. A diversified range of counterparties is in place to meet business and regulatory
requirements in order to meet the Board approved strategies with no credit risk exposures being undertaken by Treasury to
counterparties that have not been through an internal approvals process including a formal second LoD function.
The following tables break down Wholesale Group exposures by type using the composite external ratings*.
Aaa-Aa3
A1-A3
Baa1-Baa3
Ba1-B3
Caa1-C3
Unrated
Total
£m
£m
£m
£m
£m
£m
£m
2025
Central Bank and Sovereigns
8,696.0
133.0
–
–
–
–
8,829.0
Financial Institutions
4,447.9
272.3
59.4
–
–
–
4,779.6
Supranationals
614.4
–
–
–
–
–
614.4
Total
13,758.3
405.3
59.4
–
–
–
14,223.0
2024
Central Bank and Sovereigns*
8,370.4
219.9
–
–
–
–
8,590.3
Financial Institutions
5,708.5
868.6
229.3
–
–
–
6,806.4
Supranationals*
691.2
–
–
–
–
–
691.2
Total
14,770.1
1,088.5
229.3
–
–
–
16,087.9
* Prior year numbers reclassified (total exposure remains unchanged).
28. Market risk
Market risk is the potential change to earnings and/or the value of Society’s balance sheet arising from movements in interest
rates, foreign currency exchange rates, and the pricing of financial instruments.
Basis Point value (BP) sensitivity
These measures calculate the change in value of the assets and liabilities resulting from both a one basis point (PV01) and
100 basis points (PV100) parallel upward shift in interest rates. Within the Treasury portfolio, this is calculated separately for
each currency and reported on a daily basis and at the full Statement of Financial Position level on a monthly basis.
Repricing gap analysis
Repricing dates are analysed primarily to excessive volatility in the net interest margin that could arise if interest rates shifted
adversely within a given time period. Since the Society cannot dictate interest rate movements itself, the best approach is
to limit the amount of assets or liabilities that are exposed in this way. The analysis identifies the net asset/liability repricing
position across a series of time intervals. Positions are calculated using nominal amounts and exclude interest flows. General
reserves, fixed assets and other liabilities are classified as having ‘non-specific’ repricing characteristics with a zero rate of
interest. The measure is calculated as a reverse cumulative gap.
All market risk is managed in the Society on behalf of the Group. PV01 is presented for the Treasury book and PV100 with
respect to the full balance sheet.
Year end
Average
Maximum
Minimum
£m
£m
£m
£m
2025
PV01 sensitivity (Treasury)
–
–
–
–
PV100 sensitivity
(1.9)
9.4
29.9
(8.5)
2024
PV01 sensitivity (Treasury)
0.0
0.0
0.0
0.0
PV100 sensitivity
(14.9)
9.3
21.9
(14.9)
Greater than Greater than Greater than
one year five years ten years
£m
£m
£m
2025
Repricing gap (Treasury)
–
–
–
2024
Repricing gap (Treasury)
590
133
–
The reduction is driven by two key factors: tighter management of the Treasury gap throughout 2025, partly through the
execution of amortising swaps and evidenced by improvements in the repricing gap, together with offsetting Retail positions
that remained at year end due to limited hedging capacity.
Detail of how the Society manages its interest rate risk is included in the Strategic Report on pages 8 – 53.
194 195
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Financial Statements > Notes to the Financial Statements
30. Wholesale credit risk (continued)
The Group has a low risk appetite to exposures outside the UK. This is reflected in the country exposures by type shown in the
tables below.
Central Banks Financial
Supranationals
Total
and Sovereigns institutions
£m
£m
£m
£m
2025
United Kingdom
8,477.4
3,660.6
–
12,138.0
Australia
–
218.5
–
218.5
Canada
–
639.1
–
639.1
France
60.7
13.5
–
74.2
Germany
218.6
–
–
218.6
Japan
72.3
59.3
–
131.6
Netherlands
–
81.7
–
81.7
Norway
–
24.3
–
24.3
Spain
–
51.3
–
51.3
Sweden
–
31.1
–
31.1
Switzerland
–
–
–
–
United States
–
0.2
–
0.2
International
–
–
614.4
614.4
Total
8,829.0
4,779.6
614.4
14,223.0
2024
United Kingdom
8,024.5
4,370.3
–
12,394.8
Australia
–
609.5
–
609.5
Canada
–
1,111.2
–
1,111.2
France
57.8
49.0
–
106.8
Germany
288.1
–
–
288.1
Japan
219.9
196.6
–
416.5
Netherlands
–
164.4
–
164.4
Norway
–
71.2
–
71.2
Spain
–
71.2
–
71.2
Sweden
–
62.6
–
62.6
Switzerland
–
0.3
–
0.3
United States
–
100.1
–
100.1
International
–
–
691.2
691.2
Total
8,590.3
6,806.4
691.2
16,087.9
The Group’s main Sovereign exposure is to the UK which had an average external rating of ‘AA-’. At the year end, UK Sovereign
exposure was £6,043.6 million (2024: £5,609.7 million) to the Bank of England and £2,433.8 million (2024: £2,414.8 million)
in UK Government bonds.
None of the wholesale exposures are either past due or impaired and there are no assets that would otherwise be past due or
impaired whose terms have been renegotiated.
The key trigger events used to evaluate impairments are set out in Note 1 on page 146.
Wholesale credit risk is recorded in the following balance sheets as below:
2025
2024
£m
£m
Cash and balances with the Bank of England
6,043.6
5,609.7
Loans and advances to credit institutions
363.7
590.0
Debt securities
7,136.9
8,421.3
Derivative financial instruments
678.9
1,466.9
Total wholesale credit risk
14,223.1
16,087.9
31. Credit risk on loans and advances to customers
Gross contractual exposure
The table below splits the loans and advances to customers balance per the balance sheet into its constituent parts and
reconciles to the gross exposures used in the expected credit loss (ECL) model. Effective Interest Rate (EIR) and hedge
accounting adjustments have been excluded from the ECL model as these do not form part of the contractual cash flows from
the assets.
EIR is the measurement method used for financial assets held at amortised cost, including loans and advances to customers,
which spreads income and fees over the life of the asset. See Note 1 for more details. Hedge accounting is described in more
detail in Note 26. The fair value rate adjustment reflects the market value adjustment on acquired portfolios of mortgage
assets in respect of interest rates on the underlying products. This is amortised over the expected life of the acquired
portfolio. The fair value credit adjustment is the fair value discount applied on purchased or originated credit impaired (POCI)
mortgage assets acquired as part of the Norwich & Peterborough Building Society (N&P) and Chelsea Building Society (CBS)
acquisitions. Impairment represents the difference between the total ECL and the fair value credit adjustment.
ECL is calculated using models that take historical default and loss experience and apply predictions of future economic
conditions (e.g. unemployment and house prices) and customer behaviour (e.g. default rates). In certain circumstances, the
core models may not accurately reflect factors that have resulted in an increase in credit risk. When this happens, post model
adjustments (PMAs) are overlaid to reflect the impact on ECL. The economic scenarios and the PMAs applied at 31 December
2025 are described below.
Group Society
2025 2024 2025 2024
£m £m £m £m
Gross contractual exposures 51,950.7 49,758.5 10,373.2 10,645.7
EIR and other adjustments 28.3 29.7 (26.3) (23.8)
Fair value rate adjustment (20.0) (24.1) (20.0) (24.1)
Gross loans and advances to customers 51,959.0 49,764.1 10,326.9 10,597.8
Impairment (48.2) (39.2) (6.2) (7.3)
Fair value credit adjustment (17.0) (19.4) (17.0) (19.4)
ECL (65.2) (58.6) (23.2) (26.7)
Loans and advances to customers 51,893.8 49,705.5 10,303.7 10,571.1
196 197
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Financial Statements > Notes to the Financial Statements
31. Credit risk on loans and advances to customers (continued)
Expected Credit Losses (ECL)
Economic scenarios
Accounting standards require ECL to be calculated by applying multiple economic scenarios. Each economic scenario is
provided a weighting, and these are combined to arrive at the total ECL.
These scenarios are generated internally using external data, statistical methodologies, and senior management judgement, to
span a range of plausible economic conditions. The Group continues to apply four scenarios: an upside scenario that assumes
more benign economic conditions; our core or central best estimate scenario; a more negative downturn scenario; and a
severe downturn scenario.
Scenarios are projected over a 5-year window, reverting to long-term averages past that point. The Group allows all
macroeconomic scenarios to impact staging.
Current macroeconomic conditions
Despite the relative stability in the UK economic environment during 2025, global conflict continued throughout 2025,
generating heightened economic uncertainty and risks. After almost two years of conflict, Isreal and Hamas agreed a
ceasefire, reducing the probability of a wider escalation in the Middle East. The war in Ukraine continues, resulting in
heightened risk of energy and supply chain issues.
Global trade and protectionism have been another key theme. On 2nd April, President Trump announced wide scale tariff
policy, the announcement surprising markets both in terms of severity and scope, impacting most of the World. Since
the announcement, the US has made bilateral trade agreements with most countries, mitigating the impact for global
growth. The biggest risk for the global economy is the trade war between the US and China, which has escalated several
times throughout the year. A structural shift in global trade is likely, with China and the US reducing the reliance on one
another over the coming years. Supply and demand dynamics will evolve for goods globally, which brings both risks and
opportunities for the UK.
The UK economy has grown modestly in 2025, proving broadly resilient to the emergence of geopolitical uncertainty. After
a strong start to the year, with GDP growth driven by services and construction, momentum slowed through the summer.
Manufacturing and construction sectors were impacted by global trade uncertainty following the US tariff announcements
in April, while consumer confidence remained subdued despite real wage growth. Labour market conditions have softened
throughout 2025. Unemployment has risen from 4.4% at the beginning of the year to 5.1% by November. Redundancy
levels have increased but not rapidly, reiterating the sense of softening rather than a deterioration in the market. Inflation
has increased gradually throughout 2025. The resurgence was driven by persistent services inflation, contractual price resets
and regulated price increases in April, and the unwind of energy deflation (following energy price spikes in previous years).
Monetary policy has shifted from tightening to cautious easing since the first rate cut in August 2024. The easing has
been made possible by moderating inflation dynamics and increasing slack in the economy. MPC minutes throughout
the year have cited a “gradual and careful” approach to easing rates, with further cuts contingent on fiscal developments
and inflation trends. It has been made clear that the MPC are approaching the end of the cutting cycle, based on current
trends and forecasts. One more rate cut is expected by the Bank of England, with base rate expected to stabilise at 3.5% in
H1 2026.
The UK economy is expected to expand again modestly in 2026, stimulated by real earnings growth and a lower interest rate
environment. Housing market activity is expected to increase relative to 2025, and house prices are expected to increase
moderately.
The credit performance of our mortgage portfolio remains a core component of our established risk management framework
and will continue to be monitored closely. We remain committed to supporting customers experiencing financial difficulty
and will work with borrowers, where possible, to help them manage their individual circumstances.
Upside
Recovering business confidence and strong investment lead to productivity gains and strong growth. Domestic inflationary
pressures fall quickly, and consumer confidence rises. The Bank of England note the slowdown of inflation and cut rates to
stimulate growth. Strong consumer confidence and lower interest rates encourage strong housing market activity and house
price growth.
Core
The UK economy is expected to grow moderately throughout the planning horizon. The Bank of England cut base rate once
more, leaving base rate at 3.5%. Inflation remains above target for 2026 before trending back to target. The labour market
stabilises, with unemployment peaking at 5.2% in 2026. Stable house price growth over the planning horizon.
Downturn
Global uncertainty stifles investment, leading to recessions globally, including a recession in the UK. The Bank of England
accelerate the pace of rate cuts to stimulate the economy. Growing imbalance between supply and demand for housing leads
to house price reductions.
Severe Downturn
Geopolitical tensions escalate such that oil prices spike alongside material supply chain difficulties. This leads to another round
of inflation and rate hikes. A deep recession ensues, with unemployment rising and house prices falling significantly.
Macroeconomic assumptions
The following table shows the values of the key economic variables used by each economic scenario for the period until
December 2030. The table includes the three key parameters used to predict probability of default (PD) – unemployment, HPI
and UK Bank of England base rate. GDP is also presented as it is the key input for determining the economic parameters used
and provides context to the nature of the overall scenario.
2025
Scenario
2024
Scenario
2026
2027
2028
2029
2030
2025
2026
2027
2028
2029
HPI
Upside
5.5
4.0
4.0
4.0
4.0
6.0
5.5
4.0
4.0
4.0
Core
3.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0
3.0
Downturn
(5.2)
(1.4)
1.0
1.2
1.2
(4.0)
1.0
0.5
1.2
1.2
Severe Downturn
(13.9)
(8.0)
(0.5)
6.1
3.5
(14.3)
(9.5)
(1.6)
6.1
0.5
GDP
Upside
1.7
2.0
2.2
2.2
2.2
1.9
2.0
2.4
2.2
2.2
Core
1.0
1.3
1.4
1.5
1.5
1.3
1.5
1.6
1.6
1.7
Downturn
(2.0)
0.6
1.2
1.2
1.2
0.5
0.7
1.0
1.2
1.2
Severe Downturn
(3.5)
(1.0)
0.8
0.8
0.8
(4.5)
(1.5)
0.5
0.8
0.8
Unemployment
Upside
4.3
4.3
4.2
4.2
4.2
4.2
4.2
4.2
4.2
4.2
Core
5.2
5.0
4.7
4.5
4.5
4.6
4.7
4.6
4.5
4.5
Downturn
6.6
6.5
6.0
5.2
5.0
6.0
5.8
5.5
5.0
4.8
Severe Downturn
8.3
8.2
6.9
6.5
6.5
8.0
8.4
7.0
6.5
6.0
Bank base rate
Upside
3.0
3.0
3.0
3.0
3.0
3.5
3.5
3.5
3.3
3.3
Core
3.5
3.5
3.5
3.5
3.5
4.0
3.8
3.8
3.8
3.5
Downturn
2.5
2.5
2.8
3.0
3.0
4.8
4.3
4.3
4.3
4.3
Severe Downturn
6.3
5.0
5.0
4.5
4.5
6.5
5.5
5.0
5.0
4.5
198 199
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Financial Statements > Notes to the Financial Statements
31. Credit risk on loans and advances to customers (continued)
Expected Credit Losses (ECL) (continued)
Economic scenarios (continued)
Macroeconomic assumptions (continued)
The values in the table below are calculated as either a simple average of the rate across the 5 year forecasting period or as
peak to trough.
Upside
Core
Downturn
Severe Downturn
2025
2024
2025
2024
2025
2024
2025
2024
5 year average
GDP
2.1
2.1
1.3
1.5
0.4
0.9
(0.4)
(0.8)
HPI
4.3
4.7
3.0
3.0
(0.6)
–
(2.6)
(3.8)
Unemployment
4.2
4.2
4.8
4.6
5.9
5.4
7.3
7.2
Bank base rate
3.0
3.4
3.5
3.8
2.8
4.4
5.1
5.3
Peak to trough
GDP
–
–
–
–
(2.0)
–
(4.5)
(5.9)
HPI
–
–
–
–
(7.9)
(5.1)
(24.0)
(26.4)
Unemployment
4.3
4.2
5.2
4.7
6.6
6.0
8.3
9.0
Weightings
The following table shows the expected credit loss under each of the four economic scenarios along with the weightings that
have been applied to arrive at the weighted average ECL. PMAs are calculated based on the weighted average ECL across
the Group’s economic scenarios. Given the limited size of the PMA held at 31 December 2025, no further scenario specific
sensitivity has been presented.
Group
2025
2024
Weighting
ECL
Weighting
ECL
Scenario
%
£m
%
£m
Upside
10
30.5
10
39.1
Core
60
33.9
60
41.4
Downturn
20
109.9
20
83.7
Severe Downturn
10
197.5
10
130.2
Weighted scenario
100
65.2
100
58.6
SME judgment is applied in the final assessment of weights. The Group has internal governance frameworks and controls in
place to assess the appropriateness of all judgmental adjustments. The aim of the Group is to incorporate these adjustments
into the ECL models, where possible, as part of the periodic recalibration and model assessment procedures.
Post model adjustments
Post model adjustments (‘PMA’) are applied when an increase in credit risk is identified that is not effectively captured in the
core expected credit loss models. A rigorous review of the PMAs has been performed to determine whether the identified risks
are still applicable, and if any additional risks have been identified. Adjustments were made to which PMAs were required and
to the magnitude of those that were maintained.
The PMA working group includes colleagues from Finance, Balance Sheet Management and Credit Risk. This working group has
been used to review the on-going suitability of existing PMAs and discuss whether additional PMAs are required in relation to
emerging risks or issues.
The PMAs applied at 31 December 2025 are as follows:
2025
2024
£m
£m
Affordability
0.0
1.2
Model Performance
0.0
10.6
Climate Change Risk
0.8
0.9
Total PMA
0.8
12.7
During 2024, the Group applied a number of PMAs to reflect risks not fully captured in the IFRS 9 ECL model, including
affordability risks arising from high inflation and cost-of-living pressures, model performance limitations for the under-
prediction in the Society’s 4th generation (Gen 4) PD models which were implemented in 2023 for the first time, and other
limitation related to climate risk.
Following a reduction in affordability risk as cost-of-living pressures eased, together with the implementation of IFRS 9
PD model recalibration addressing model under-prediction and scenario sensitivity, these risks are reflected within the
modelled ECL in year end 31 December 2025. Accordingly, the related PMAs were released and no longer apply as at year
end 31 December 2025.
At 31 December 2025, the only remaining PMA held relates to a combination of physical and transition climate risks and is
not material.
200 201
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Financial Statements > Notes to the Financial Statements
31. Credit risk on loans and advances to customers (continued)
Expected Credit Losses (ECL) (continued)
Staging and POCI
The tables below show the staging of loans and advances plus those classed as purchased or originated credit impaired (POCI)
recognised as part of the acquisitions of Norwich & Peterborough Building Society (N&P) and Chelsea Building Society (CBS).
The fair value discount applied on acquisition is recognised as the fair value credit adjustment.
The Group has £247.1 million of POCI loans (2024: £290.4 million). Of these, 83% (2024: 84%) are now considered
performing loans but are not permitted to be reclassified to stage 1 or 2.
Details of the movements in staging are explained in the movement analysis section of this note.
Gross exposure
PMA
Total ECL
Coverage
Average LTV
£m
%
£m
£m
%
%
2025
Stage 1
48,066.3
92.5
0.4
12.0
–
52.5
Stage 2
3,058.5
5.9
0.2
24.9
0.8
44.3
Stage 3
578.8
1.1
0.2
20.2
3.5
44.7
POCI
247.1
0.5
–
8.1
3.3
36.5
Total
51,950.7
100.0
0.8
65.2
0.1
51.7
Stage 2 exposures have reduced year on year following the release of PMAs that had previously resulted in a portion of
accounts being classified in Stage 2. In addition, the IFRS 9 PD model recalibration and the associated Stage 2 review
have improved the identification of exposures with significant increase in credit risk. As a result, the remaining Stage 2
population has a higher average risk profile, leading to a higher ECL and coverage ratio despite the reduction in gross
exposure year on year.
Gross exposure
PMA
Total ECL
Coverage
Average LTV
£m
%
£m
£m
%
%
2024
Stage 1
44,489.2
89.4
2.8
7.8
–
52.1
Stage 2
4,458.8
9.0
9.6
23.5
0.5
39.3
Stage 3
520.1
1.0
0.3
16.7
3.2
44.5
POCI
290.4
0.6
–
10.6
3.7
38.6
Total
49,758.5
100.0
12.7
58.6
0.1
50.9
The cost of risk measure has been calculated using the impairment charge for the year divided by the average balance over
the period, which is 0.0% for 2025. Problem loans represent the total of the Group’s stage 3 balances and the non-performing
portion of our POCI loans.
2025
2024
£m
%
£m
%
Gross exposures
Stage 1
48,066.3
92.5
44,489.2
89.4
Stage 2
3,058.5
5.9
4,458.8
9.0
Stage 3
578.8
1.1
520.1
1.0
POCI
247.1
0.5
290.4
0.6
Total gross exposures
51,950.7
100.0
49,758.5
100.0
Problem loans
621.3
1.2
566.9
1.1
Cost of risk
–
–
–
–
ECL and Coverage ratios
Stage 1
12.0
–
7.8
–
Stage 2
24.9
0.8
23.5
0.5
Stage 3
20.2
3.5
16.7
3.2
POCI
8.1
3.3
10.6
3.7
Total ECL
65.2
0.1
58.6
0.1
Of which impairment
48.2
73.9
39.2
66.9
Of which fair value credit adjustment
17.0
26.1
19.4
33.1
202 203
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Financial Statements > Notes to the Financial Statements
31. Credit risk on loans and advances to customers (continued)
Expected Credit Losses (ECL) (continued)
Staging and POCI (continued)
The following table shows expected credit losses, split by impairment and fair value credit adjustments, and a best estimate
of the collateral against these mortgages. The collateral is calculated as the lower of the value of the property and the
outstanding loan amount so does not represent the overall value of properties backing the loans.
Group
Gross exposure
Collateral
Impairment
Fair value credit
adjustment
2025
2024
2025
2024
2025
2024
2025
2024
£m
£m
£m
£m
£m
£m
£m
£m
Stage 1
48,066.3
44,489.2
48,065.1
44,487.0
12.0
7.8
–
–
Stage 2
3,058.5
4,458.8
3,058.2
4,458.2
24.8
23.0
0.1
0.5
Less than 30 days past due
2,859.9
4,279.8
2,859.6
4,279.2
21.6
20.5
0.1
0.4
More than 30 days past due
198.6
179.0
198.6
179.0
3.2
2.5
–
0.1
Stage 3
578.8
520.1
578.7
519.0
16.0
12.8
4.2
3.9
Less than 30 days past due
250.6
234.7
250.6
234.7
2.8
2.6
0.3
0.5
30-90 days past due
115.1
96.4
115.1
96.4
1.8
1.1
0.2
0.2
More than 90 days past due
213.1
189.0
213.0
187.9
11.4
9.1
3.7
3.2
POCI
247.1
290.4
246.9
289.8
(4.6)
(4.4)
12.7
15.0
Less than 30 days past due
214.2
254.5
214.0
253.9
(4.8)
(4.9)
10.9
12.9
30-90 days past due
18.2
20.5
18.2
20.5
–
0.3
0.7
0.9
More than 90 days past due
14.7
15.4
14.7
15.4
0.2
0.2
1.1
1.2
Total
51,950.7
49,758.5
51,948.9
49,754.0
48.2
39.2
17.0
19.4
Society
Gross exposure
Collateral
Impairment
Fair value credit
adjustment
2025
2024
2025
2024
2025
2024
2025
2024
£m
£m
£m
£m
£m
£m
£m
£m
Stage 1
9,389.9
9,087.3
9,388.3
9,085.0
3.3
2.2
–
–
Stage 2
617.0
1,128.9
616.7
1,128.4
6.6
8.1
0.1
0.5
Less than 30 days past due
583.0
1,083.5
582.7
1,083.0
5.7
7.1
0.1
0.4
More than 30 days past due
34.0
45.4
34.0
45.4
0.9
1.0
–
0.1
Stage 3
119.2
139.1
119.2
138.3
0.9
1.5
4.2
3.9
Less than 30 days past due
56.0
62.9
56.0
62.9
0.3
0.3
0.3
0.6
30-90 days past due
18.9
25.6
18.9
25.6
0.1
0.1
0.2
0.2
More than 90 days past due
44.3
50.6
44.3
49.8
0.5
1.1
3.7
3.1
POCI
247.1
290.4
246.8
289.8
(4.6)
(4.5)
12.7
15.0
Less than 30 days past due
214.2
254.5
213.9
253.9
(4.8)
(4.9)
10.9
12.9
30-90 days past due
18.2
20.5
18.2
20.5
–
0.3
0.7
0.9
More than 90 days past due
14.7
15.4
14.7
15.4
0.2
0.1
1.1
1.2
Total
10,373.2
10,645.7
10,371.0
10,641.5
6.2
7.3
17.0
19.4
All accounts in stage 1 are less than 30 days past due.
Lending by type
Group
2025
2024
Percentage split of gross contractual exposure
%
%
Residential Prime
80.4
79.9
Residential Sub-Prime/Self-Cert
0.2
0.3
Retail Buy-To-Let
14.5
15.2
Social Housing
0.1
0.2
Commercial lending (exc. Social Housing)
4.8
4.4
100.0
100.0
Credit risk management
The
Retail and commercial credit risk
section of the
Risk management report
describes how the Group manages credit risk via a
robust risk appetite, credit risk framework, governance framework and through stress testing.
The Group’s exposure to mortgage related credit risk is monitored and reporting on risk exposures is provided regularly to the
Group’s risk committees, including analysis of mortgages in arrears and monitoring of the characteristics of the loan portfolios
(e.g. geographic location and loan-to-value).
Group
2025
2024
Retail
Commercial
Retail
Commercial
Arrears
%
%
%
%
No arrears
97.7
99.5
98.0
98.8
Less than three months
1.9
0.4
1.7
1.1
Equal to or more than three months, less than six months
0.2
–
0.2
–
Equal to or more than six months, less than twelve months
0.1
–
0.1
–
Twelve months or more
0.1
–
–
–
Property in possession
0.0
0.1
–
0.1
Total gross exposure (contractual amounts)
100.0
100.0
100.0
100.0
Number of properties in possession at the year end
141
–
111
–
The percentage of retail mortgages with arrears of three months or more (as a % of outstanding balances, including
possessions) has increased during 2025 from 0.43% to 0.46% %. The modest increase in retail mortgages arrears during
2025 reflects our continued purpose aligned lending strategy to support first time buyers, including those with higher LTVs.
We may continue to see convergence between YBS Retail arrears and the UK finance market average during 2026.
The UK Finance industry average ratio for mortgage arrears is measured using the number of accounts (including possessions).
On this basis, the Group’s retail mortgage arrears ratio of 0.52% (2024: 0.50%) is below the UK Finance ratio 0.88% (2024:
0.97%). Arrears on more recent lending are minimal, reflecting the Group’s credit risk appetite.
Arrears for the buy-to-let portfolio is also lower than average with an arrears ratio of 0.32% (2024: 0.27%) with an average
LTV of 54.9% (2024: 60%) for this cohort.
Society
2025
2024
Arrears
%
%
No arrears
97.4
97.5
Less than three months
1.8
1.8
Equal to or more than three months, less than six months
0.3
0.3
Equal to or more than six months, less than twelve months
0.2
0.2
Twelve months or more
0.1
0.1
Property in possession
0.2
0.1
Total
100.0
100.0
Number of properties in possession at the year end
86
67
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Financial Statements > Notes to the Financial Statements
31. Credit risk on loans and advances to customers (continued)
Retail mortgage lending
The Group’s retail mortgage exposure can be broken down by customer type and geographical region as follows:
Group
Book
New lending
2025
2024
2025
2024
Retail Mortgage Customer Type
%
%
%
%
First-time buyer
24.3
23.8
26.9
24.1
Other buyers e.g. movers
34.4
34.6
33.1
32.5
Re-mortgage
26.0
25.6
30.7
31.8
Buy-to-let
15.3
16.0
9.3
11.6
100.0
100.0
100.0
100.0
2025
2024
Retail Mortgage Geographical Distribution
%
%
Scotland
6.8
6.6
North East
3.2
3.2
Yorkshire & Humberside
7.9
8.0
North West
10.3
10.2
Midlands
13.3
13.1
East
11.1
11.0
South West
7.5
7.5
Greater London
17.6
18.2
South East
18.0
18.0
Wales & Northern Ireland
4.3
4.2
100.0
100.0
The Group’s retail mortgages are secured on property. The value of these properties is updated on a quarterly basis using the
Office for National Statistics (ONS) regional property price indices which comprise relative house price movements across the
UK. These indexed valuations provide senior management with a view of the value and risk of the properties on which retail
mortgages are secured.
Group
Book
New lending
2025
2024
2025
2024
Loan-to-value distribution of retail mortgages
%
%
%
%
100% or greater
–
–
–
–
95 to 100%
0.4
0.4
1.8
0.9
90 to 95%
2.4
2.8
9.3
6.8
85 to 90%
6.9
6.2
21.7
19.8
80 to 85%
9.6
7.9
19.7
19.1
75 to 80%
9.0
8.0
9.8
9.9
70 to 75%
9.9
9.7
11.4
12.1
60 to 70%
18.0
19.2
9.0
10.4
Less than 60%
43.8
45.8
17.3
21.0
100.0
100.0
100.0
100.0
Average LTV (all retail)
51.7
50.9
74.0
71.4
Average LTV (buy-to-let)
54.9
55.4
64.4
59.8
Group
2025
2024
Not impaired
Impaired
Not impaired
Impaired
Loan-to-value distribution of retail mortgages
%
%
%
%
100% or greater
–
–
–
–
95 to 100%
0.4
–
0.4
–
90 to 95%
2.4
–
2.8
–
85 to 90%
6.9
–
6.2
–
80 to 85%
9.5
0.1
7.9
0.1
75 to 80%
8.9
0.1
7.9
0.1
70 to 75%
9.8
0.1
9.6
0.1
60 to 70%
17.8
0.2
18.9
0.3
Less than 60%
42.7
1.1
44.6
1.1
98.4
1.6
98.3
1.7
The definition of default/impaired includes accounts that are 90 days past due, interest only accounts past term end,
those under certain forbearance measures and others exhibiting other unlikeliness to pay indicators. Accounting standards
require accounts considered to be credit impaired at the time of business combinations (POCI) to be classed as impaired
until de-recognition.
206 207
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Financial Statements > Notes to the Financial Statements
31. Credit risk on loans and advances to customers (continued)
Commercial lending
The Group offers commercial lending though the YBS brand, providing loans to commercial owner occupiers and corporate
entity landlords of commercial and residential property. The majority of loans are advanced against commercial properties
using a vacant possession valuation to mitigate against future losses. Loans against specialist properties are strictly limited
and no lending is given against land only.
The valuations of commercial properties are updated on a quarterly basis using MSCI’s commercial property price indices
based on region and property type. Residential valuations are indexed using the regional ONS house price indices. The
indexed valuations are used to assess the risk of loss on individual loans and to monitor whether loan-to-value covenants
are met. Where borrowers are more than two months in arrears, consideration is given to obtaining a professional valuation
of the property.
Group and Society
2025
2024
Average loan to value (%)
57.1
58.3
Average loan size (£m)
0.9
0.8
Value of security held (£m)
4,091.8
3,641.3
Balance of loans >100% LTV (£m)
10.6
28.2
Largest exposure to a single counterparty (£m)
20.0
20.0
At the year ended 2025 0.16% (2024: 0.54%) of commercial balances (including repossessions) were more than three
months in arrears.
‘Watch list’ loans include those where there are circumstances which could impact on the quality and recoverability of the
loan. Examples include borrowers requesting forbearance or reporting trading losses. Loans on the watch list total decreased
to £62.2 million in 2025 (2024: £69.3 million).
Corporate buy-to-let loans increased to £1926.9 million (2024: £1,632.8 million) and these loans are mainly interest only.
They are continuously monitored to ensure that full repayment is made on the expiry of the loan term.
Group and Society
2025
2024
Commercial mortgage balances by geographical region
%
%
North East
0.5
0.5
Yorkshire & Humberside
2.4
2.1
North West
4.6
4.6
Midlands
6.2
5.9
East
3.2
2.8
South West
6.1
6.5
Greater London
49.1
49.6
South East
26.7
26.9
Wales & Northern Ireland
1.2
1.1
100.0
100.0
Commercial mortgage balances by lending type
Commercial owner occupied
1.5
1.9
Commercial investment property
19.9
22.9
Corporate Buy-To-Let
75.8
70.9
Social Housing
2.8
4.3
100.0
100.0
The Group has an active business lending to housing associations in England and Wales, via the Yorkshire Building
Society brand. This sector has particularly robust credit characteristics and the lending is low risk albeit at low margins. At
31 December 2025 this loan book was £71.6 million (2024: £97.6 million). The Group has written further undrawn Term Loan/
Revolving Credit facilities in the region of £102.7 million (2024: £105.8 million) and these are expected to draw down over
the next 5 years.
208 209
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Financial Statements > Notes to the Financial Statements
31. Credit risk on loans and advances to customers (continued)
Risk assessment
The following tables are included to give an overview of the Group’s credit risk. This includes analysis of exposures by
12 month probability of default (PD) bands and origination year.
The risk models cover the majority of loans underwritten by the Group, with exceptions for portfolios subject to bespoke
modelling requirements including Accord buy-to-let, commercial lending and POCI accounts. The Accord BTL population
currently has very strict underwriting criteria and limited behavioural history, with only a single possession to date.
Commercial lending has significantly different behavioural characteristics to the retail mortgages.
In year ended 2025, exposures are allocated to PD bands using a recalibrated IFRS 9 PD model. The prior year numbers did
not reflect the impact of PD related PMA applied in 2024. As a result, a smaller proportion of exposures falls within the lowest
PD band in 2025.
Lending by risk grade
Group
2025
2024
Stage 1
Stage 2
Stage 3
POCI
Total
ECL
Total
ECL
exposure exposure
PD Band
£m
£m
£m
£m
£m
£m
£m
£m
0.00%–<0.15%
6,869.7
43.8
0.1
–
6,913.6
0.3
29,258.4
0.8
0.15%–<0.25%
9,497.6
29.2
–
–
9,526.8
0.5
4,703.9
0.5
0.25%–<0.50%
12,416.2
126.8
–
–
12,543.0
1.5
1,531.7
0.3
0.50%–<0.75%
4,811.4
106.3
–
–
4,917.7
1.3
1,021.6
0.3
0.75%–<1.00%
1,708.5
82.0
–
–
1,790.5
0.8
1,042.5
0.5
1.00%–<2.50%
2,699.1
757.7
–
–
3,456.8
3.6
1,396.2
2.7
2.50%–<10.0%
609.8
1,171.7
–
–
1,781.5
9.7
364.3
2.4
10.0%–<100%
70.7
423.7
–
–
494.4
7.8
173.2
2.5
Default
–
–
563.0
36.9
599.9
21.1
541.1
17.2
Accord buy-to-let
6,971.8
177.2
14.5
–
7,163.5
4.9
7,159.6
4.8
Commercial
2,339.7
126.2
1.2
5.5
2,472.6
6.8
2,205.8
7.4
Other
71.8
13.9
–
204.7
290.4
6.2
360.2
7.9
PMAs
–
–
–
–
–
0.7
–
11.3
Total
48,066.3
3,058.5
578.8
247.1
51,950.7
65.2
49,758.5
58.6
Society
2025
2024
Stage 1
Stage 2
Stage 3
POCI
Total
ECL
Total
ECL
exposure exposure
PD Band
£m
£m
£m
£m
£m
£m
£m
£m
0.00%–<0.15%
1,736.9
28.6
–
–
1,765.5
–
6,029.0
0.2
0.15%–<0.25%
2,295.9
18.0
–
–
2,313.9
0.1
801.0
0.2
0.25%–<0.50%
1,868.5
57.7
–
–
1,926.2
0.2
253.3
0.1
0.50%–<0.75%
409.1
31.6
–
–
440.7
0.1
193.3
0.1
0.75%–<1.00%
129.7
18.4
–
–
148.1
0.1
195.2
0.2
1.00%–<2.50%
308.8
137.9
–
–
446.7
0.4
297.0
0.7
2.50%–<10.0%
186.5
125.7
–
–
312.2
1.1
85.5
0.7
10.0%–<100%
42.8
59.0
–
–
101.8
1.3
57.5
0.9
Default
–
–
118.0
36.9
154.9
6.7
169.5
6.4
Commercial
2,339.3
126.1
1.2
5.5
2,472.1
6.8
2,205.3
7.4
Other
72.4
14.0
–
204.7
291.1
6.2
359.1
8.2
PMAs
–
–
–
–
–
0.2
–
1.6
Total
9,389.9
617.0
119.2
247.1
10,373.2
23.2
10,645.7
26.7
Lending by origination year
The table below shows exposures and expected credit losses by origination year for retail loans. The table shows that the
credit quality of newly written business is of significantly higher quality than that written before 2009 or acquired as part of
business combinations.
Group
2025
2024
Stage 1
Stage 2
Stage 3
POCI
Total
ECL
Total
ECL
exposure exposure
Origination Year
£m
£m
£m
£m
£m
£m
£m
£m
2025
9,342.0
274.0
31.7
-
9,647.7
5.8
-
-
2024
8,327.0
448.3
43.6
-
8,818.9
9.8
9,501.2
4.6
2023
6,425.9
457.9
62.8
-
6,946.6
11.0
8,542.4
7.3
2022
7,047.5
390.3
66.2
-
7,504.0
8.1
8,191.6
7.3
2013 – 2021
15,174.5
1,062.5
211.3
-
16,448.3
12.7
20,404.7
17.8
2009 – 2012
566.4
34.2
8.1
-
608.7
0.1
735.8
0.3
Pre-2009
585.7
248.3
92.9
-
926.9
3.2
1,115.6
3.8
Acquired loans
597.3
143.0
62.2
247.1
1,049.6
14.5
1,267.2
17.5
Total
48,066.3
3,058.5
578.8
247.1
51,950.7
65.2
49,758.5
58.6
For 2009 and post lending, the average indexed LTV is 54.9% and the 90 days plus arrears rate is 0.3%. For Lending prior to
2009 the average indexed LTV is 24.0% and the 90 days arrears rate is 3.9%.
210 211
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Financial Statements > Notes to the Financial Statements
31. Credit risk on loans and advances to customers (continued)
Movement analysis
The tables on pages 212 to 215 detail the movement in the gross exposures and ECL from the beginning to the end of the
reporting period split by stage.
During 2024, a level of PD underprediction was identified in the Gen4 models and a PMA had been applied to uplift PD
estimates and was used in the calculation of staging and ECL.
Following recalibration of the model during 2025, the updated Gen4 models appropriately capture the underlying credit risk
without the need for a PMA. Accordingly, this PMA was released and does not apply at year end 31 December 2025.
The following tables detail the movement in the gross exposures and ECL from the beginning to the end of the reporting
period split by class of financial instrument.
Group
Stage 1
Stage 2
Stage 3
POCI
Total
£m
£m
£m
£m
£m
Gross exposure at 31 December 2024
44,489.2
4,458.8
520.1
290.4
49,758.5
Transfers from stage 1 to 2
(1,489.4)
1,489.4
–
–
–
Transfers from stage 1 to 3
(123.3)
–
123.3
–
–
Transfers from stage 2 to 1
949.9
(949.9)
–
–
–
Transfers from stage 2 to 3
–
(133.1)
133.1
–
–
Transfers from stage 3 to 1
44.8
–
(44.8)
–
–
Transfers from stage 3 to 2
–
75.5
(75.5)
–
–
Changes to carrying value
268.3
(1,629.7)
21.3
(10.0)
(1,350.1)
New financial assets originated or purchased
9,574.8
–
–
–
9,574.8
Financial assets derecognised during the year
(5,648.0)
(252.5)
(86.7)
(31.6)
(6,018.8)
Write-offs
–
–
(12.0)
(1.7)
(13.7)
Gross exposure at 31 December 2025
48,066.3
3,058.5
578.8
247.1
51,950.7
ECL at 31 December 2024
7.8
23.5
16.7
10.6
58.6
Transfers from stage 1 to 2
(0.2)
13.3
–
–
13.1
Transfers from stage 1 to 3
–
–
4.0
–
4.0
Transfers from stage 2 to 1
0.6
(4.6)
–
–
(4.0)
Transfers from stage 2 to 3
–
(1.4)
4.1
–
2.7
Transfers from stage 3 to 1
0.1
–
(0.7)
–
(0.6)
Transfers from stage 3 to 2
–
0.5
(0.9)
–
(0.4)
Changes in PDs/LGDs/EADs
(2.7)
(5.3)
1.6
(1.1)
(7.5)
New financial assets originated or purchased
6.6
–
–
–
6.6
Changes to model assumptions and methodologies
0.2
0.4
0.3
0.2
1.1
Unwind of discount
–
–
0.6
0.2
0.8
Financial assets derecognised during the year
(0.3)
(1.5)
(2.8)
(1.4)
(6.0)
Write-offs
–
–
(2.6)
(0.5)
(3.1)
PMA
(0.1)
–
(0.1)
0.1
(0.1)
ECL at 31 December 2025
12.0
24.9
20.2
8.1
65.2
Group
Stage 1
Stage 2
Stage 3
POCI
Total
£m
£m
£m
£m
£m
Gross exposure at 31 December 2023
41,597.7
4,521.8
409.4
339.7
46,868.6
Transfers from stage 1 to 2
(2,828.0)
2,828.0
–
–
–
Transfers from stage 1 to 3
(118.7)
–
118.7
–
–
Transfers from stage 2 to 1
605.9
(605.9)
–
–
–
Transfers from stage 2 to 3
–
(128.8)
128.8
–
–
Transfers from stage 3 to 1
30.9
–
(30.9)
–
–
Transfers from stage 3 to 2
–
57.0
(57.0)
–
–
Changes to carrying value
561.9
(1,977.9)
20.4
(10.8)
(1,406.4)
New financial assets originated or purchased
9,401.9
–
–
–
9,401.9
Financial assets derecognised during the year
(4,762.4)
(235.4)
(62.0)
(36.8)
(5,096.6)
Write-offs
–
–
(7.3)
(1.7)
(9.0)
Gross exposure at 31 December 2024
44,489.2
4,458.8
520.1
290.4
49,758.5
ECL at 31 December 2023
8.5
26.5
13.8
11.2
60.0
Transfers from stage 1 to 2
(0.2)
7.1
–
–
6.9
Transfers from stage 1 to 3
–
–
3.4
–
3.4
Transfers from stage 2 to 1
0.5
(3.8)
–
–
(3.3)
Transfers from stage 2 to 3
–
(1.7)
4.5
–
2.8
Transfers from stage 3 to 1
–
–
(0.5)
–
(0.5)
Transfers from stage 3 to 2
–
0.3
(0.9)
–
(0.6)
Changes in PDs/LGDs/EADs
(1.8)
3.6
2.1
1.1
5.0
New financial assets originated or purchased
2.9
–
–
–
2.9
Changes to model assumptions and methodologies
(1.6)
(3.6)
(3.2)
(0.7)
(9.1)
Unwind of discount
–
–
0.5
0.3
0.8
Financial assets derecognised during the year
(0.3)
(1.4)
(2.4)
(1.2)
(5.3)
Write-offs
–
–
(1.3)
(0.1)
(1.4)
PMA
(0.2)
(3.5)
0.7
–
(3.0)
ECL at 31 December 2024
7.8
23.5
16.7
10.6
58.6
212 213
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Financial Statements > Notes to the Financial Statements
31. Credit risk on loans and advances to customers (continued)
Movement analysis (continued)
Society
Stage 1
Stage 2
Stage 3
POCI
Total
£m
£m
£m
£m
£m
Gross exposure at 31 December 2024
9,087.3
1,128.9
139.1
290.4
10,645.7
Transfers from stage 1 to 2
(298.8)
298.8
–
–
–
Transfers from stage 1 to 3
(19.0)
–
19.0
–
–
Transfers from stage 2 to 1
272.6
(272.6)
–
–
–
Transfers from stage 2 to 3
–
(26.3)
26.3
–
–
Transfers from stage 3 to 1
16.7
–
(16.7)
–
–
Transfers from stage 3 to 2
–
16.2
(16.2)
–
–
Changes to carrying value
307.3
(439.9)
(2.4)
(10.0)
(145.0)
New financial assets originated or purchased
1,252.8
–
–
–
1,252.8
Financial assets derecognised during the year
(1,229.0)
(88.1)
(24.9)
(31.6)
(1,373.6)
Write-offs
–
–
(5.0)
(1.7)
(6.7)
Gross exposure at 31 December 2025
9,389.9
617.0
119.2
247.1
10,373.2
ECL at 31 December 2024
2.2
8.6
5.4
10.5
26.7
Transfers from stage 1 to 2
(0.2)
13.4
–
–
13.2
Transfers from stage 1 to 3
–
–
4.0
–
4.0
Transfers from stage 2 to 1
0.6
(4.6)
–
–
(4.0)
Transfers from stage 2 to 3
–
(1.4)
4.1
–
2.7
Transfers from stage 3 to 1
0.1
–
(0.7)
–
(0.6)
Transfers from stage 3 to 2
–
0.5
(0.9)
–
(0.4)
Changes in PDs/LGDs/EADs
(5.8)
(8.4)
(1.7)
(1.3)
(17.2)
New financial assets originated or purchased
6.6
–
–
–
6.6
Changes to model assumptions and methodologies
0.1
0.1
0.1
0.2
0.5
Unwind of discount
–
–
0.2
0.6
0.8
Financial assets derecognised during the year
(0.3)
(1.5)
(2.8)
(1.4)
(6.0)
Write-offs
–
–
(2.6)
(0.5)
(3.1)
PMA
–
–
–
–
–
ECL at 31 December 2025
3.3
6.7
5.1
8.1
23.2
Society
Stage 1
Stage 2
Stage 3
POCI
Total
£m
£m
£m
£m
£m
Gross exposure at 31 December 2023
9,233.4
1,294.3
133.8
339.6
11,001.1
Transfers from stage 1 to 2
(654.3)
654.3
–
–
–
Transfers from stage 1 to 3
(23.9)
–
23.9
–
–
Transfers from stage 2 to 1
148.3
(148.3)
–
–
–
Transfers from stage 2 to 3
–
(35.2)
35.2
–
–
Transfers from stage 3 to 1
10.2
–
(10.2)
–
–
Transfers from stage 3 to 2
–
15.0
(15.0)
–
–
Changes to carrying value
(8.6)
(566.5)
(1.4)
(10.7)
(587.2)
New financial assets originated or purchased
1,306.2
–
–
–
1,306.2
Financial assets derecognised during the year
(924.0)
(84.7)
(22.5)
(36.8)
(1,068.0)
Write-offs
–
–
(4.7)
(1.7)
(6.4)
Gross exposure at 31 December 2024
9,087.3
1,128.9
139.1
290.4
10,645.7
ECL at 31 December 2023
2.8
11.4
5.4
11.2
30.8
Transfers from stage 1 to 2
(0.2)
7.6
–
–
7.4
Transfers from stage 1 to 3
–
–
3.4
–
3.4
Transfers from stage 2 to 1
0.2
(3.8)
–
–
(3.6)
Transfers from stage 2 to 3
–
(1.8)
4.5
–
2.7
Transfers from stage 3 to 1
–
–
(0.5)
–
(0.5)
Transfers from stage 3 to 2
–
0.3
(0.9)
–
(0.6)
Changes in PDs/LGDs/EADs
(2.8)
1.2
(2.4)
0.7
(3.3)
New financial assets originated or purchased
2.9
–
–
–
2.9
Changes to model assumptions and methodologies
(0.4)
(1.3)
(1.0)
(0.8)
(3.5)
Unwind of discount
–
–
0.4
0.7
1.1
Financial assets derecognised during the year
(0.3)
(1.4)
(2.4)
(1.2)
(5.3)
Write-offs
–
–
(1.3)
(0.1)
(1.4)
PMA
–
(3.6)
0.2
–
(3.4)
ECL at 31 December 2024
2.2
8.6
5.4
10.5
26.7
214 215
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Financial Statements > Notes to the Financial Statements
31. Credit risk on loans and advances to customers (continued)
Forbearance
Forbearance tools are used, in line with industry guidance, where they are deemed appropriate for an individual customer’s
circumstances. These include capitalisation, interest only concessions, arrears arrangements and term extensions. Forbearance
measures are incorporated into the calculation of ECLs.
The table below shows the retail accounts that are forborne. These accounts have been further classified as follows:
•
non-performing – where an account meets the definition of default at the point it is granted a forbearance measure; and
•
probationary – for accounts that have exited forbearance measures and been re-classed from non-performing in the last
2 years.
The definition of non-performing and stage 3 are aligned such that no accounts in stage 2 are classed as non-performing.
Any accounts that were previously in default have a cure period of 12 months, after which they are able to move back into
stage 2 or 1.
Group
Arrangements
Other concessions
Term extension
Interest only
Exposure
ECL
Exposure
ECL
Exposure
ECL
Exposure
ECL
£m
£m
£m
£m
£m
£m
£m
£m
2025
Probation
52.1
0.3
6.7
–
53.1
0.1
10.4
–
Stage 1
14.8
–
4.2
–
35.1
–
7.4
–
Stage 2
37.3
0.3
2.5
–
18.0
0.1
3.0
–
Non-performing
286.8
10.0
18.4
1.1
40.7
0.3
14.8
0.2
Stage 3
266.5
9.3
16.6
0.9
33.3
0.3
14.1
0.2
POCI
20.3
0.7
1.8
0.2
7.4
–
0.7
–
Total
338.9
10.3
25.1
1.1
93.8
0.4
25.2
0.2
2024
Probation
43.8
0.1
3.7
–
48.6
–
6.8
–
Stage 1
8.8
–
1.5
–
29.6
–
2.7
–
Stage 2
35.0
0.1
2.2
–
19.0
–
4.1
–
Non-performing
236.1
7.7
17.7
0.8
54.4
0.5
15.3
0.6
Stage 3
212.6
6.2
15.8
0.7
46.1
0.5
13.4
0.2
POCI
23.5
1.5
1.9
0.1
8.3
–
1.9
0.4
Total
279.9
7.8
21.4
0.8
103.0
0.5
22.1
0.6
All requests for forbearance on commercial loans are subject to full credit risk appraisal and are predominantly for a period of
interest only, which allows the borrower to improve income from trading or rent receipts, pending the sale of the property. The
appraisal process considers the likelihood of a loss being substantiated from any borrower granted a concession and ensures
that the concession is in the interests of both the borrower and the Group. In 2025 there were 3 accounts (2024: 4) in the
commercial loans portfolio subject to forbearance with a total balance of £0.5 million (2024: £2.3 million). There has been no
underlying increase in the risk of the portfolio.
Loans Purchased or Originated Credit Impaired (POCI)
The table below shows the status of the Group’s POCI loans and how they are distributed across loan-to-value (LTV) bands.
A substantial proportion of POCI balances, were they not required to be classified as stage 3 by accounting standards, would
transfer to other stages. The table below shows that 67.0% (2024: 67.5%) of balances have been fully up to date for the last
24 months and only 17.2% (2024: 16.1%) of balances would be classified as in default.
Group and Society
Up to date
Some arrears Meets Total
for the last in the last definition of
24 months 24 months default
£m
£m
£m
£m
2025
Gross exposure
165.5
39.1
42.5
247.1
ECL
4.2
2.1
1.8
8.1
2024
Gross exposure
195.9
47.7
46.8
290.4
ECL
5.6
2.7
2.3
10.6
2025
LTV Split
Less than 60%
154.5
33.7
35.2
223.4
From 60 to 70%
7.1
4.3
4.3
15.7
From 70 to 80%
2.0
1.0
1.7
4.7
From 80 to 90%
0.5
0.1
0.8
1.4
90% or greater
1.4
–
0.5
1.9
Total
165.5
39.1
42.5
247.1
2024
LTV Split
Less than 60%
177.6
40.2
36.6
254.4
From 60 to 70%
11.6
4.7
6.6
22.9
From 70 to 80%
3.5
1.8
2.3
7.6
From 80 to 90%
1.0
0.4
0.6
2.0
90% or greater
2.2
0.6
0.7
3.5
Total
195.9
47.7
46.8
290.4
216 217
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Financial Statements > Notes to the Financial Statements
32. Fair values
Fair value is the price that would be paid upon the purchase of an asset or received upon the sale of a liability in an arm’s
length transaction between two entities at a specific measurement date.
Where external market prices are available these are used to determine the fair value. When these are not available internal
pricing models using external market data are used. The following hierarchy is used when measuring fair value:
Level 1: Quoted prices are available for identical assets or liabilities in active markets, these are unadjusted.
Level 2: Significant inputs to the calculated fair values are taken from observable market data, other than those in Level 1.
This may include direct inputs (i.e., prices) or indirect inputs (i.e., derived from prices).
Level 3: Fair value is derived from non-observable inputs and not solely based on external market data.
The table below summarises the carrying value and fair value of financial assets and liabilities measured at amortised cost as
at the Balance Sheet date.
2025
Notes
Carrying
Fair values
Total fair
value
Level 1
Level 2
Level 3
value
£m
£m
£m
£m
£m
Group
Assets
Cash and balances with the Bank of England
(i)
6,043.6
6,043.6
–
–
6,043.6
Loans and advances to credit institutions
(i)
363.7
–
363.7
–
363.7
Loans and advances to customers
(ii)
51,893.8
–
–
52,182.2
52,182.2
Debt securities – amortised cost
474.7
474.1
–
–
474.1
Liabilities
Shares
(iii)
52,913.7
–
52,880.4
–
52,880.4
Amounts due to credit institutions
336.9
–
336.9
–
336.9
Other deposits
1,508.7
–
1,508.7
–
1,508.7
Debt securities in issue
5,425.2
4,468.8
972.7
–
5,441.5
Subordinated liabilities
(iv)
1,472.4
1,496.2
–
–
1,496.2
Society
Assets
Cash and balances with the Bank of England
(i)
6,043.6
6,043.6
–
–
6,043.6
Loans and advances to credit institutions
(i)
366.5
–
366.5
–
366.5
Loans and advances to customers
(ii)
10,303.7
–
–
10,347.6
10,347.6
Debt securities – amortised cost
8,977.5
8,985.4
–
–
8,985.4
Liabilities
Shares
(iii)
52,913.7
–
52,880.4
–
52,880.4
Amounts due to credit institutions
336.9
–
336.9
–
336.9
Other deposits
12,278.1
–
12,278.1
–
12,278.1
Debt securities in issue
5,689.6
5,670.5
–
–
5,670.5
Subordinated liabilities
(iv)
1,472.4
1,496.2
–
–
1,496.2
i. The fair values of all cash in hand, balances with the Bank of England and loans and advances to credit institutions have been
measured at par as they are all due in under one year.
ii. The fair value of loans and advances to customers is assessed as the value of the expected future cash flows. Future cash flows
are projected using contractual interest payments, contractual repayments and the expected prepayment behaviour of borrowers.
The resulting expected future cash flows are discounted at current market rates to determine fair value.
For standard variable rate mortgage products, the interest rate on such products is equivalent to a current market product rate
and as such the Group considers the fair value of these mortgages to be equal to their carrying value. Fixed rate mortgages
have been discounted using current market product rates. The difference between book carrying value and fair value results
from market rate volatility relative to the fixed rate at inception of the loan; in addition to assumptions applied in relation to
redemption profiles, which are regularly reviewed and updated where necessary.
2024
Notes
Carrying
Fair values
Total fair
value
Level 1
Level 2
Level 3
value
£m
£m
£m
£m
£m
Group
Assets
Cash and balances with the Bank of England
(i)
5,609.7
5,609.7
–
–
5,609.7
Loans and advances to credit institutions
(i)
590.0
–
590.0
–
590.0
Loans and advances to customers
(ii)
49,705.5
–
–
49,119.8
49,119.8
Debt securities – amortised cost
1,091.1
1,094.2
–
–
1,094.2
Liabilities
Shares
(iii)
52,044.4
–
51,938.3
–
51,938.3
Amounts due to credit institutions
1,168.9
–
1,168.9
–
1,168.9
Other deposits
1,196.8
–
1,196.8
–
1,196.8
Debt securities in issue
5,019.3
4,218.8
806.8
–
5,025.6
Subordinated liabilities
(iv)
1,453.3
1,464.6
26.8
–
1,491.4
Society
Assets
Cash and balances with the Bank of England
(i)
5,609.7
5,609.7
–
–
5,609.7
Loans and advances to credit institutions
(i)
433.9
–
433.9
–
433.9
Loans and advances to customers
(ii)
10,571.6
–
–
10,516.3
10,516.3
Debt securities – amortised cost
11,658.8
11,622.3
–
–
11,622.3
Liabilities
Shares
(iii)
52,044.4
–
51,938.3
–
51,938.3
Amounts due to credit institutions
1,168.9
–
1,168.9
–
1,168.9
Other deposits
14,039.4
–
14,039.4
–
14,039.4
Debt securities in issue
5,454.0
5,422.8
–
–
5,422.8
Subordinated liabilities
(iv)
1,453.3
1,464.6
26.8
–
1,491.4
ii. (continued) As these redemption profiles are not considered to be observable by the market, then the fair value of loans and
advances to customers continues to be a Level 3 valuation technique. Overall, the fair value is greater than the carrying value by
£288.4 million (2024: £585.7 million lower), which arises primarily due to the fair value gains being calculated on a lifetime basis
for all mortgage accounts.
iii. All the Group’s non-derivative financial liabilities are initially recorded at fair value less directly attributable costs and are
subsequently measured at amortised cost. The only exception is where an adjustment is made to certain fixed rate shares
balances that are in hedge relationships. The fair value of shares and deposits that are available on demand approximates to the
carrying value. The fair value of fixed term shares and deposits is determined from the projected future cash flows from those
deposits, discounted at the current market rates. In 2025, the estimated fair value of share balances, using a Level 2 method, is
lower than the carrying value by £33.3 million (2024: £106.1 million lower).
iv. The Group’s accounts include some subordinated liabilities classified as level 2 as fair values are calculated using a method
based on observable market prices. The fair value of subordinated liabilities, which is a fixed rate product, is greater than the
carrying value due to the volatility in market rates over the course of the year.
v. The Group’s accounts include investments in controlled entities and amounts owed to subsidiary undertakings, for which the
carrying value is deemed a reasonable approximation of fair value.
218 219
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Financial Statements > Notes to the Financial Statements
32. Fair values (continued)
The table below classifies all financial instruments held at fair value on the face of the Group’s Balance Sheet according to the
method used to establish the fair value.
Group
Fair values
Total fair
Level 1
Level 2
Level 3
value
£m
£m
£m
£m
2025
Assets
Debt securities
28.7
–
–
28.7
Debt securities – fair value through OCI
6,633.5
–
–
6,633.5
Derivative financial instruments
–
678.9
–
678.9
Investments
–
–
0.8
0.8
Liabilities
Derivative financial instruments
–
286.0
–
286.0
2024
Assets
Debt securities
27.6
–
–
27.6
Debt securities – fair value through OCI
7,302.6
–
–
7,302.6
Derivative financial instruments
–
1,466.0
0.9
1,466.9
Investments
–
–
1.6
1.6
Liabilities
Derivative financial instruments
–
555.8
–
555.8
The Group’s Level 1 portfolio of available for sale debt securities comprises liquid securities for which traded prices are
readily available.
Some derivative financial instruments are also included within Level 2 as fair values are derived from discounted cash flow
models using yield curves based on observable market data.
Level 3 instruments
Investments classified in Level 3 relate to the Group’s holding in equity preference shares. These shares are convertible into
common equity shares at various intervals during the life of the instrument. This is based on a conversion factor set by the
issuer. The valuation method therefore uses the quoted share price of the unrestricted stock as a base, applies the current
estimated conversion factor as advised by the issuer and applies a discount.
This discount reflects the current illiquidity of the instrument and the risks to changes in the conversion factor between the
balance sheet date and the next conversion date. Whilst the valuation is primarily based on an observable market price, the
level and significance of the unobservable input relating to the calculation of the discount moves this asset into Level 3.
Changes in the carrying value of Level 3 financial instruments in the period relate to the redemption of a derivative financial
instrument and changes in fair value. There have been no changes in methodology, additions or transfers in or out of Level 3
in the year.
Fair value through other comprehensive income and hedge accounting reserve
Amounts within the fair value through comprehensive income reserve are transferred to the income statement upon the disposal
of debt securities. During the year, a gain of £3.2 million (2024: £1.1 million gain) was recognised in net realised gains and
losses.
33. Offsetting
In accordance with IAS 32 ‘Financial Instruments: Presentation’ the Society must offset in the financial statements, financial
assets and liabilities where there is a legally enforceable right to offset the recognised amounts and there is the intention to
settle these amounts on a net basis.
The Group enters into derivative contracts to mitigate various risks, see Note 26 for further details. These derivatives are
governed by International Swaps and Derivatives Association (ISDA) master agreements, an agreement is in place with each
counterparty the Group transacts derivatives with. These agreements define the terms of how the Group will enter derivative
contracts with the counterparty, including any netting arrangements.
In addition to these ISDA agreements the Group has various Credit Support Annexes (CSAs) with counterparties which defines
how collateral will be exchanged with a counterparty to mitigate market risk.
The following table shows the impact on the financial statements of these arrangements:
2025
2024
Gross Master netting Financial Net Gross Master netting Financial Net
amounts* arrangements collateral** amount amounts* arrangements collateral** amount
£m
£m
£m
£m
£m
£m
£m
£m
Group
Financial assets
Derivative financial
678.9
(192.8)
(439.3)
46.8
1,466.9
(321.6)
(1,160.0)
(14.7)
instruments
Total financial assets
678.9
(192.8)
(439.3)
46.8
1,466.9
(321.6)
(1,160.0)
(14.7)
Financial liabilities
Derivative financial
286.0
(192.8)
(30.0)
63.2
555.8
(321.6)
(107.1)
127.1
instruments
Total financial liabilities
286.0
(192.8)
(30.0)
63.2
555.8
(321.6)
(107.1)
127.1
Society
Financial assets
Derivative financial
635.0
(192.8)
(439.3)
2.9
1,466.0
(321.6)
(1,160.0)
(15.6)
instruments
Total financial assets
635.0
(192.8)
(439.3)
2.9
1,466.0
(321.6)
(1,160.0)
(15.6)
Financial liabilities
Derivative financial
222.9
(192.8)
(30.0)
0.1
429.6
(321.6)
(107.1)
0.9
instruments
Total financial liabilities
222.9
(192.8)
(30.0)
0.1
429.6
(321.6)
(107.1)
0.9
* As recognised in the balance sheet.
** Collateral is restricted by the value of the related financial asset or liability.
Collateral is received and paid in the form of cash. Where cash is received from counterparties it is included as a liability
in amounts owed to credit institutions. Where cash is paid to a counterparty it is recorded as loans and advances to credit
institutions. Cash collateral paid and received is not restricted and is returned at the end of the contract.
220 221
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Financial Statements > Notes to the Financial Statements
34. Related parties
Identity of related parties
The Society has related party relationships with its controlled entities, a joint venture, the pension schemes and key
management personnel. The Society considers its key management personnel to be its directors.
Contributions to the pension schemes
The Society paid contributions of £25.5 million to the pension schemes (2024: £23.5 million).
Remuneration of and transactions with directors
Full details of directors’ remuneration, including the highest paid director, bonuses and pensions are given in the
Directors’
Remuneration Report
. In addition, past directors’ pensions in respect of services as directors from the closed scheme
amounted to £26,320 (2024: £25,313).
None of the directors of the Society had any equity interest in, or loans to or from, any subsidiary of the Society at any time
during the financial year.
A register containing details of loans, transactions and arrangements between the Society and its directors and connected
persons is maintained at the head office of the Society. A statement containing the details of this register for 2025 will be
available for inspection at the head office by members for a period of 15 days up to and including the date of the Annual
General Meeting.
Key management personnel compensation
The directors of the Society are considered to be the key management personnel as defined by IAS 24
Related party
Disclosures
. Total key management personnel compensations was as follows:
2025
2024
£000
£000
Short-term employee benefits*
3,331.0
4,788.5
Post-employment benefits
143.0
173.0
Total key management personnel compensation
3,474.0
4,961.5
* Includes bonus of £1.0 million for the year.
Key management compensation in 2025 includes amounts paid to key management personnel who both retired and joined the
Society during 2025. The number of key management personnel at 31 December 2025 totalled 9 (31 December 2024: 12).
Transactions with key management personnel
Key management personnel and their close family members have undertaken the following transactions with the Society
under normal business terms.
2025
2024
No. of key Amounts in No. of key Amounts in
management respect of key management respect of key
personnel management personnel management
personnel and personnel and
their close family their close family
£000
£000
Mortgage loans
At 1 January
–
–
–
–
Net movements in the year
1
500.0
–
–
At 31 December
1
500.0
–
–
Deposit accounts and investments
At 1 January
12
1,347.8
12
1,136.6
Net movements in the year
(3)
284.3
–
211.2
At 31 December
9
1,632.1
12
1,347.8
There were £0.5 million mortgage loan transactions or balances key management personnel and their close family members
in 2025 (2024: £nil).
Amounts relating to directors who joined or left during the year are included in net movement in the year.
Mortgage loans made to key management personnel and their close family members were granted in the ordinary course of
business and are subject to repayment under normal lending terms. The maximum outstanding balances during the year 2025
were £500,000 (2024: £nil).
Amounts deposited by key management personnel and their close family members earn interest at the same rates offered to
the public.
Key management personnel and their close family members paid interest totalling £195.23 (2024: £nil), received interest
totalling £42,728.66 (2024: £40,846.87), and paid no fees and commissions during the year 2025. Interest paid includes
amounts relating to ‘offset’ mortgages where savings balances are used to reduce the interest-bearing balance of mortgage
loans.
222 223
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Financial Statements > Notes to the Financial Statements
34. Related parties (continued)
Transactions with controlled entities
The Society transacts with its controlled entities in the form of intra-group loans and equity shareholdings in the normal
course of business. The value of related party transactions and outstanding balances at the year end for the financial year are
as follows:
Shares in Loans to Deposits from
subsidiaries controlled controlled
entities entities
£m
£m
£m
At 1 January 2025
104.0
41,327.4
(12,800.7)
Net movements
–
2,198.2
2,486.6
At 31 December 2025
104.0
43,525.6
(10,314.1)
At 1 January 2024 (as restated)
104.9
37,936.8
(13,672.3)
Net movements
(0.9)
3,390.6
871.6
At 31 December 2024
104.0
41,327.4
(12,800.7)
The value of related party transactions income and expense for the financial year is as follows:
2025
2024
£m
£m
Interest revenue on loans
1,787.8
1,749.3
Interest expense on deposits
(818.8)
(1,195.9)
Fees and expenses revenue
119.3
101.1
Fees and expenses expense
–
–
Dividends received
78.0
75.0
35. Notes to the cash flow statements
Group
Society
2025
2024
2025
2024
£m
£m
£m
£m
Non-cash or non-operating items included in profit before tax:
Depreciation and amortisation
21.8
23.7
21.8
23.7
Loss on sale of assets
2.1
–
2.1
–
Interest on subordinated liabilities
70.6
76.7
70.6
76.7
Impairment charge/(release) for the year
10.8
0.2
–
(2.0)
Provision charge for the year
–
1.3
–
1.3
Non-cash movements on subordinated liabilities
44.7
(25.8)
44.7
(25.8)
Loss on realisation of debt securities
0.1
1.5
0.1
1.5
Non-cash or non-operating items included in profit before tax
150.1
77.6
139.3
75.4
(Increase)/decrease in operating assets:
Change in loans and advances to customers and related fair value
(2,675.9)
(3,050.6)
(208.9)
190.2
adjustments for hedged risk, excluding impairment
Investments
–
–
(2,198.2)
(3,389.7)
Derivative financial assets
774.1
297.3
817.1
295.1
(Increase)/decrease in other assets and non-OCI element of retirement
(2.5)
176.0
(14.6)
194.9
benefit surplus
Net increase in operating assets
(1,904.3)
(2,577.3)
(1,604.6)
(2,709.5)
Increase/(decrease) in operating liabilities:
Shares and related fair value adjustments for hedged risk
895.6
4,988.7
895.6
4,988.7
Amounts owed to credit institutions
(832.0)
(717.4)
(832.0)
(717.4)
Non cash movements on debt securities
179.9
(14.3)
162.4
(63.1)
Other deposits
311.9
213.2
(1,761.3)
(623.2)
Derivative financial liabilities
(269.8)
(141.6)
(206.7)
(154.7)
Cash movements in other liabilities and provisions
9.1
5.9
(0.1)
(14.3)
Net increase/(decrease) in operating liabilities
294.7
4,334.5
(1,742.1)
3,416.0
224 225
Yorkshire Building Society Annual Report and Accounts 2025 Introduction Strategic Report Governance Financial Statements Other Information
Financial Statements > Notes to the Financial Statements
35. Notes to the cash flow statements (continued)
The following table reconciles liabilities arising from financing activities.
Liabilities from Brought
Cash flows
Non-cash changes caused by:
Carried
financing activities forward
Redemption
Issue
Foreign
Accrued Fair value forward
exchange interest and other
movements
£m
£m
£m
£m
£m
£m
£m
2025 – Group
Debt securities in issue
5,019.3
(666.7)
892.7
125.1
10.4
44.4
5,425.2
Subordinated liabilities
1,453.3
(25.6)
–
–
(0.8)
45.5
1,472.4
Total
6,472.6
(692.3)
892.7
125.1
9.6
89.9
6,897.6
2024 – Group
Debt securities in issue
4,919.4
(1,429.4)
1,543.6
(104.7)
5.9
84.5
5,019.3
Subordinated liabilities
1,621.7
(142.6)
–
–
(3.0)
(22.8)
1,453.3
Total
6,541.1
(1,572.0)
1,543.6
(104.7)
2.9
61.7
6,472.6
2025 – Society
Debt securities in issue
5,454.0
(469.5)
542.7
124.9
11.1
26.4
5,689.6
Subordinated liabilities
1,453.3
(25.6)
–
–
(0.8)
45.5
1,472.4
Total
6,907.3
(495.1)
542.7
124.9
10.3
71.9
7,162.0
2024 – Society
Debt securities in issue
5,517.6
(1,194.1)
1,193.6
(104.6)
6.5
35.0
5,454.0
Subordinated liabilities
1,621.7
(142.6)
–
–
(3.0)
(22.8)
1,453.3
Total
7,139.3
(1,336.7)
1,193.6
(104.6)
3.5
12.2
6,907.3
In this Section
228 Annual Business Statement
230 Country-by-Country Report
234 Glossary
227
Introduction Strategic Report Governance Financial Statements Other Information
226
Yorkshire Building Society Annual Report and Accounts 2025
Other Information
1. Statutory percentages
2025 2024 Statutory
limit
% % %
Lending limit 5.8 6.2 25.0
Funding limit 12.1 12.4 50.0
The above percentages have been calculated in accordance with the provisions of the
Building Societies Act 1986
.
The Lending limit measures the proportion of business assets not in the form of loans fully secured on residential property.
The Funding limit measures the proportion of shares and borrowings not in the form of shares.
The statutory limits are as laid down under the
Building Societies Act 1986
and ensure that the principal purpose of a building
society is that of making loans which are secured on residential property and are funded substantially by its members.
2. Other percentages
2025 2024
% %
As a percentage of shares and borrowings
Gross capital 9.49 9.13
Free capital 9.29 8.92
Liquid assets 22.49 24.60
Profit after taxation for the financial year as a percentage of mean total assets 0.41 0.45
Management expenses as a percentage of mean total assets 0.62 0.58
The above percentages have been prepared from the Group financial statements and further details on the above percentages
can be found in the
Glossary
.
Annual Business Statement
3. Information relating to the directors at 31December 2025
Director name and
date of birth
Business
occupation
Date of appointment Other
Directorships
A V F Durbin, BComm LLB MSc
9 October 1963
Chair of the Board 18 December 2023 Persimmon PLC
S M Allen, OBE, BA Hons (Econ)
ACIB ACT
1 September 1966
Chief Executive 2 March 2023 Alzheimer’s Society
TheCityUK
G L T Bainbridge, MA (Cantab),
ACA*
13 September 1960
Non-Executive Director 1 January 2019 ICE Clear Europe Limited
Manulife Financial Corporation
The Manufacturers Life Insurance Company
71-72 Oakley Street Limited
P D Bole, MA Chartered
Accountant
16 October 1969
Non-Executive Director 1 September 2024 None
E S Bucknor
6 July 1966
Non-Executive Director 26 September 2025 Hoptroff London Limited
Currys Plc
Reed Global Limited
A J Darlington, BSc FIA
7 May 1968
Non-Executive Director 26 April 2022 Rothesay Life Plc
Rothesay Limited
D J Davies, BA Hons
8 February 1963
Non-Executive Director 26 July 2023 AXA UK Plc
AXA PPP Healthcare Limited
AXA Insurance UK Plc
Intrum AB (Sweden)
Nomura International Plc
Nomura Europe Holdings
Nomura Bank International
M A Parsons, BA, FCMA
24 October 1961
Non-Executive Director 20 October 2020 Fairstone Capital Group Limited
Fairstone Private Wealth Limited
J E Pope BSc Econ, MSc
Economics, MBA
2 September 1960
Non-Executive Director 29 October 2024 CAF Bank Limited
Foundation for Credit Counselling
Department for Culture Media and Sport (DCMS)
T A Ranger BA Hons
20 November 1977
Chief Financial Officer and
Executive Director
18 June 2024 Accord Mortgages Limited
Norwich and Peterborough (LBS) Limited
* Stepped down from the Board on 31 December 2025.
Mr T A Ranger entered into a contract on 15 February 2024 and was appointed to the Board on 18 June 2024 and his mutual
contractual notice period is 12 months.
Ms Allen entered into a contract on 5 August 2022 and was appointed to the Board on 2 March 2023 and her mutual
contractual notice period is 12 months.
Documents may be served on the above named directors: Yorkshire Building Society, c/o Addleshaw Goddard LLP, One St
Peter’s Square, Manchester, M2 3DE, United Kingdom.
4. Registered office
Yorkshire Building Society is a building society incorporated and domiciled in the United Kingdom. The address of the
principal office is Yorkshire House, Yorkshire Drive, Bradford, BD5 8LJ.
228 229
Introduction Strategic Report Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Disclosure requirements under CRD IV country-by-country reporting
We are required to disclose the following information in our Annual Report and Accounts to comply with the Regulations of
Article 89 of the Capital Requirements Directive IV (CRD IV) country-by-country reporting (CBCR).
This regulation requires us to disclose financial information by country. Yorkshire Building Society has a number of
subsidiaries; these can be found in Note 8 to these financial statements.
All the activities of Yorkshire Building Society and its subsidiaries (together, ‘the Group’) are conducted in the United Kingdom.
Country Nature of activities Number of
employees
Turnover (Note i) Profit before tax Corporation tax
paid
(average
full time
equivalent)
£m £m £m
United Kingdom Provision of financial services 3,642 794.0 377.9 120.0
i) Turnover represents ‘total income’ on the Group’s income statement as disclosed in the Group’s Annual Report and Accounts.
No public subsidies were received by the Group in 2025.
Basis of preparation
The Group’s CBCR disclosure has been prepared to comply with the regulations. The requirements place certain reporting
obligations on financial institutions that are within the scope of CRD IV. CBCR requires annual publication of certain statutory
information on a consolidated basis, by country, where an institution has a subsidiary or branch.
The CBCR disclosure has been prepared solely to comply with the requirements of the regulations and may not be relied on
for any other purpose.
Full-time equivalent employees
The figures disclosed above represent the average number of FTE’s all of which were employed in the UK.
Turnover and Profit before tax
Turnover and profit before tax are compiled from the Yorkshire Building Society Group consolidated financial statements for
the year ended 31 December 2025, which are prepared in accordance with IFRS.
Corporation tax paid
Corporation tax paid represents the net cash taxes paid during 2025. Corporation tax paid is reported on a cash basis and will
normally differ from the tax expenses recorded for accounting purposes due to:
•
Timing differences in the accrual of the tax charge;
•
Brought forward losses from previous years;
•
Other differences between when income and expenses are accounted for under IFRS and when they become taxable.
Country-by-Country Report
Report on the audit of the country-by-country information
Opinion
In our opinion, Yorkshire Building Society’s country-by-country information for the year ended 31December 2025 has been
properly prepared, in all material respects, in accordance with the requirements of the Capital Requirements (Country-by-
Country Reporting) Regulations 2013.
We have audited the country-by-country information for the year ended 31 December 2025 in the Country-
by-Country Report.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”), including ISA (UK) 800 and
ISA (UK) 805, and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for
the audit of the country-by-country information 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 remained independent of the Society in accordance with the ethical requirements that are relevant to our audit of the
country-by-country information in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Emphasis of matter – Basis of preparation
In forming our opinion on the country-by-country information, which is not modified, we draw attention to the country-
by-country report of the country-by-country information which describes the basis of preparation. The country-by-country
information is prepared for the directors for the purpose of complying with the requirements of the Capital Requirements
(Country-by-Country Reporting) Regulations 2013. The country-by-country information has therefore been prepared in
accordance with a special purpose framework and, as a result, the country-by-country information may not be suitable for
another purpose.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Society’s ability to continue to adopt the going concern basis of accounting
included:
•
performing a risk assessment to identify factors that could impact the going concern basis of accounting, including the
current and forecast financial performance;
•
understanding and evaluating management’s going concern assessment, including consideration of the impact of current
economic environment;
•
understanding and evaluating management’s forecasts and the stress testing of liquidity and regulatory capital performed
by management;
•
evaluating management’s ability to accurately forecast financial performance by comparing budgeted financial information
with historical actual results; and
•
reviewing regulatory correspondence, and relevant reports provided to governance forums.
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 Society’s ability to continue as a going concern for a period of at
least twelve months from the date on which the country-by-country information is authorised for issue.
In auditing the country-by-country information, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the country-by-country information is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Society’s
ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Independent auditors’ report
to the directors of Yorkshire
Building Society
230 231
Introduction Strategic Report Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Responsibilities for the country-by-country information and the audit
Responsibilities of the directors for the country-by-country information
The directors are responsible for the preparation of the country-by-country information in accordance with the requirements
of the Capital Requirements (Country-by-Country Reporting) Regulations 2013 as explained in the basis of preparation in the
country-by-country information, and for determining that the basis of preparation and accounting policies are acceptable in
the circumstances. The directors are also responsible for such internal control as they determine is necessary to enable the
preparation of country-by-country information that is free from material misstatement, whether due to fraud or error.
In preparing the country-by-country information, the directors are responsible for assessing 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 Society or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the country-by-country information
It is our responsibility to report on whether the country-by-country information has been properly prepared in accordance
with the relevant requirements of the Capital Requirements (Country-by-Country Reporting) Regulations 2013.
Our objectives are to obtain reasonable assurance about whether the country-by-country information as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditors’ 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 ISAs (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 this country-by-country information.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Society and the industry, we identified that the principal risks of non-compliance with laws
and regulations related to the Financial Conduct Authority’s (‘FCA’) regulations, the Prudential Regulation Authority’s (‘PRA’)
regulations and UK tax legislation, and we considered the extent to which non-compliance might have a material effect on
the country-by-country information. We also considered those laws and regulations that have a direct impact on the country-
by-country information such as applicable tax legislation and the Capital Requirements (Country-by-Country Reporting)
Regulations 2013. We evaluated management’s incentives and opportunities for fraudulent manipulation of the country-
by-country information (including the risk of override of controls), and determined that the principal risks were related to
the posting of inappropriate journal entries that could be used to manipulate financial performance and the potential for
management bias in accounting estimates.
Audit procedures performed included:
•
Review of correspondence with the PRA, FCA and HMRC;
•
Challenging estimates and judgements made by management in forming significant accounting estimates;
•
Identifying and testing journals that meet the higher risk criteria;
•
Incorporation of an element of unpredictability in our testing through altering the nature, timing and/or extent of work
performed;
•
Discussions with management and those charged with governance in relation to known or suspected instances of non-
compliance with laws and regulation; and
•
Review of internal audit reports in so far as they related to the country-by-country information.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely related to events and transactions reflected in the country-
by-country information. Also, 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.
A further description of our responsibilities for the audit of the country-by-country information is located on the
FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Other Information > Independent auditors’ report to the directors of Yorkshire Building Society
Use of this report
This report, including the opinion, has been prepared for and only for the Society’s directors in accordance with the Capital
Requirements (Country-by-Country Reporting) Regulations 2013 and for no other purpose. We do not, in giving this opinion,
accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands
it may come, save where expressly agreed by our prior consent in writing.
The engagement partner responsible for this audit is Michael Whyte.
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Leeds
25 February 2026
232 233
Introduction Strategic Report Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Exposure The maximum loss that a financial institution might suffer if a borrower or counterparty fails to
meet its obligations to the Group.
Exposure at default (EAD) An estimation of the amount of exposure that will be outstanding at the time of default.
Fair value The price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date in the principal or, in its
absence, the most advantageous market to which the Group has access at that date.
Financed Emissions Emissions arising from YBS financed activities, including residential mortgages (both owner-
occupied and buy-to-let) and commercial mortgages (both buy-to-let and investment).
Financial Conduct Authority (FCA) The UK conduct regulator which is responsible for regulation of conduct in retail, as well as
wholesale, financial markets and the infrastructure that supports those markets. The FCA’s
objective is to protect consumers, promote competition and enhance market integrity.
Forbearance The Group grants concessions to assist borrowers who experience difficulties in meeting their
obligations to pay their mortgage. Examples of forbearance tools are described in Note 31.
Free capital The aggregate of gross capital and collective impairment provision less property, plant and
equipment, intangible assets and investment properties.
Gross capital The aggregate of general reserve, hedge accounting reserve, available for sale reserve,
subordinated liabilities and subscribed capital.
Impaired loans Loans which have been assessed and there is evidence to suggest a measurable decrease in the
present value of cash flows expected from the loans that have occurred after initial recognition
of the asset, but before the balance sheet date.
Internal Liquidity Adequacy Assessment
Process (ILAAP)
The Group's internal assessment of the levels of liquidity that need to be held by the Society to
meet its regulatory liquidity requirements.
Interest rate swap An arrangement under which two counterparties agree to exchange periodic interest payments
based on a predetermined notional principal amount.
Internal Capital Adequacy Assessment
Process (ICAAP)
The Group's internal assessment of the levels of capital that need to be held by the Society to
meet its regulatory capital requirements.
International Financial Reporting Standards
(IFRS)
International Financial Reporting Standards issued by the International Accounting Standards
Board (IASB).
High Quality Liquid Assets (HQLA) Assets which can be easily and immediately converted into cash at little or no loss of value.
Liquidity Coverage Ratio (LCR) A liquidity metric which aims to ensure that a firm maintains an adequate level of liquidity to
meet its needs for a 30 calendar day time horizon under a severe stress scenario.
Liquid assets The total of cash in hand and balances with the Bank of England, loans and advances to credit
institutions, debt securities and other liquid assets.
Liquidity risk The risk that the Group does not hold sufficient liquidity, in terms of quantity and quality, to
meet its liabilities as they fall due.
Loan-to-value (LTV) A ratio showing outstanding loan balance as a percentage of the value of the security.
Loss given default (LGD) An estimate of the difference between exposure at default (EAD) and the net amount of the
expected recovery expressed as a percentage of EAD.
Management expenses The aggregate of administrative expenses, depreciation and amortisation.
Market Risk The risk that the value of, or income derived from, the Group’s assets and liabilities changes
unfavourably due to movements in interest rates or foreign currency rates.
Mean total assets The amount produced by halving the aggregate of total assets at the beginning and end of the
financial year.
The following glossary defines terminology
used within the Annual Report and Accounts:
Additional Tier 1 (AT1) capital Capital that meets certain criteria set out in CRD IV. In particular, the criteria require that upon
the occurrence of a trigger event, the AT1 capital instrument converts to a form of Common
Equity Tier 1 capital or the principal is written down on a permanent basis.
Arrears Amounts unpaid at their contractual date. A customer is in arrears when they fall behind in
meeting their obligations to pay their mortgage.
Buy-to-let (BTL) mortgages Lending on property that is rented out to individuals.
Capital Requirements Directive (CRD) &
Capital Requirements Regulation
European legislation that defines the regulatory capital framework in the UK. The latest
legislation – the Capital Requirements Regulation (CRR) and the Capital Requirements Directive
(CRD) (together commonly referred to as CRD IV) came into effect from 1 January 2014.
Collateral (for loans and advances to
customers)
Security (property) pledged for the repayment of a loan. Collateral is valued as the lower of the
value of the property or the outstanding loan amount.
Commercial lending Secured loans to a commercial borrower.
Common Equity Tier 1 (CET1) capital The highest quality regulatory capital resources, comprising retained earnings less regulatory
adjustments, as defined under CRD IV. Equivalent to Core Tier 1 defined under previous CRD
legislation.
Contractual maturity The final payment date of a loan or financial instrument, at which all the outstanding loan and
interest is repayable.
Council of Mortgage Lenders (CML) A not-for-profit organisation and trade association for the mortgage lending industry.
Covered bonds A type of wholesale funding backed by cash flows from mortgages that are segregated from the
issuer’s other assets to be solely for the benefit of the holders of the covered bonds.
Credit Valuation Adjustment (CVA) The risk of financial loss arising from a failure of a customer or counterparty to settle their
financial and contractual obligations as they fall due.
These are adjustments applied to the fair values of derivatives to reflect the creditworthiness of
the counterparty.
Cross currency interest rate swap An arrangement in which two parties exchange equivalent principal amounts of different
currencies at inception and subsequently exchange interest payments on the principal amounts.
At the maturity of the swap, the principal amounts are re-exchanged at the original rates.
Currency risk The exposure to risk from assets and liabilities denominated in currencies other than Sterling.
Debt securities in issue Transferable certificates of indebtedness including certificates of deposits and fixed and floating
rate notes.
Debit Valuation Adjustment (DVA) These are adjustments applied to the fair values of derivatives to reflect the entity’s own credit
risk.
Defined Benefit Obligation The present value of expected future benefit payments resulting from past service of employees
in the defined benefit pension plan.
Derivative financial instruments Contracts or agreements whose value is derived from one or more underlying prices, rates or
indices inherent in the contract or agreement, such as interest rates, exchange rates or stock
market indices. Examples of derivatives include interest rate swaps, forward rate agreements and
futures.
Effective interest rate The method used to calculate the amortised cost of financial instruments and to recognise
interest receivable or payable over the relevant period. The effective interest rate is the rate that
exactly discounts estimated cash flows (excluding credit losses) to zero, through the expected
life of the instrument.
Encumbered assets Assets on the balance sheet which are pledged in order to secure, collateralise or credit-enhance
a financial transaction from which they cannot be freely withdrawn.
Expected credit losses An estimate of the potential losses on current exposures due to potential defaults.
Glossary
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Introduction Strategic Report Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
Shares Money deposited by members in a retail savings account with the Society and held as a liability
in the balance sheet.
Shares and borrowings The total of shares, amounts owed to credit institutions, amounts owed to other customers and
debt securities in issue.
SONIA (Sterling Overnight Index Average) An index that tracks actual market overnight funding rates calculated as a weighted average
overnight deposit rate for each business day.
Subordinated liabilities Liabilities which are subordinated to preferred creditors’ claims, including claims by depositors
and members holding shares in the Society.
Term Funding Scheme with additional
incentives for small and medium sized
entities (TFSME)
A scheme launched by the Bank of England designed to boost lending to households and
businesses by providing term funding to banks and building societies participating in the
scheme at rates close to Bank Rate.
Tier 1 (T1) capital The sum total of Common Equity Tier 1 and Additional Tier 1 capital.
Tier 1 capital ratio The ratio of Tier 1 capital to risk weighted assets.
Tier 2 capital A measure of regulatory capital that includes subordinated liabilities and provisions for
collective impairment, less regulatory adjustments.
Total capital The total capital resources, including retained earnings, PIBS and subordinated liabilities, less
regulatory adjustments.
Total capital ratio The ratio of total capital to risk weighted assets.
UK Corporate Governance Code The UK Corporate Governance Code (the Code), first published by the Financial Reporting Council
in October 2012 which sets out standards of good practice in relation to Board leadership
and effectiveness, accountability and remuneration. Reporting in relation to these accounts is
based on the version of the Code published in published in January 2024 which applies from
accounting years after 1 January 2025, with the exception of Provision 29 which will apply from
January 2026).
Value at Risk (VaR) A risk management tool which evaluates the potential losses that may be incurred as a result
of movements in market conditions over a specified holding period and to a given level of
confidence.
Watch list The watch list is used by the commercial lending team to flag those loans where there are
circumstances which could impact on the quality and safety of the loan.
Wholesale funding The funding that is available between banks and other financial or commercial institutions.
Examples of wholesale funding include covered bonds, deposits and government guarantees.
Other Information > Glossary
Medium-term notes Corporate notes continuously offered by a company to investors through a dealer. Investors can
choose from differing maturities.
Member A person who has a share account or a mortgage loan with the Society.
Minimum Requirement for Eligible Liabilities
(MREL)
The minimum requirements a financial institution must hold to meet the loss absorption and
recapitalisation components if an institution were to fail.
Net interest income The difference between the interest received on assets and the interest paid on liabilities.
Net interest margin The ratio of net interest income as a percentage of mean total assets.
Net Zero The aim of balancing greenhouse gases with the amount produced and removed from the
atmosphere, to limit the global temperature rise to 1.5°C. For YBS, this means gradually reducing
greenhouse gas emissions to 10% of the base year position by the target date stated.
Operational Emissions Emissions arising from YBS activities, including Scope 1 and 2 emissions, and select Scope 3
emissions (Waste, Water, Business Travel, Colleague Commuting and Homeworking).
Operational risk The risk of direct and indirect loss resulting from inadequate or failed internal processes, people
and systems or from external events.
Other income The income received from selling non-mortgage and savings products (e.g. home and contents
insurance, investment products and other insurances).
PRA Remuneration Code Guidance provided by the PRA on directors’ remuneration.
Probability of default (PD) An estimate of the probability that a borrower will default on their credit obligations.
Prudential Regulation Authority (PRA) The UK prudential regulator, which is a part of the Bank of England and alongside the FCA has
responsibility for the oversight of building societies, banks and insurers. The PRA’s objective is to
promote the safety and soundness of regulated firms.
Repossessions Property taken into ownership by the Society as a result of the borrower’s failure to make
contractual loan repayments.
Residential Mortgage Backed Securities
(RMBS)
An asset backed security that represents a claim on the cash flows from residential mortgage
loans through a process known as securitisation.
Risk appetite The level of risk that the Group is willing to take (or not take) in order to safeguard the interests
of members whilst achieving business objectives.
Risk weighted assets A regulatory measure that adjusts the value of assets to reflect their level of risk when
calculating capital requirements.
Scope 1 Emissions Emissions from sources YBS directly owns and controls, including burning natural gas in boilers
for heating.
Scope 2 Emissions Emissions YBS indirectly causes due to purchasing electricity.
Scope 3 Emissions All other indirect emissions resulting from activities in YBS’ upstream and downstream value
chain.
Securitisation A process by which a group of assets, usually loans, are aggregated into a pool which is used
to back the issuance of debt securities in issue. A firm transfers these assets to a special
purpose vehicle which then issues securities backed by the assets. The Group has established
securitisation structures as part of its funding activities and uses residential mortgages as the
asset pool.
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Introduction Strategic Report Governance Financial Statements Other InformationYorkshire Building Society Annual Report and Accounts 2025
APM Calculation of Measure Reconciling items to statutory measure Definition and purpose
Liquidity ratio Cash in hand and balances
with the Bank of England,
loans and advances to
credit institutions and
debt securities as a
percentage of shares and
borrowings.
Cash in hand, balances with the Bank of
England, loans and advances to credit
institutions, debt securities, and shares
are as shown in the balance sheets.
Borrowings comprise amounts owed to
credit institutions, other deposits and
debt securities in issue, also as shown
in the balance sheets.
The liquidity ratio measures those assets available
to meet requests by savers to withdraw their money,
to fund mortgage advances and to fund general
business activities. It expresses cash and assets easily
converted into cash as a percentage of the Group’s
liabilities to investors.
Loan to deposit ratio Loans and advances to
customers as a percentage
of shares and other retail
customer deposits.
Not applicable This is an industry-standard measure of the
relationship between Loans and advances to
customers and retail customer deposits.
Mortgages funded
by retail savings and
retained profits
Shares and total reserves
as a percentage of
loans and advances to
customers.
Shares, total reserves and loans and
advances to customers are as shown in
the balance sheets.
The retail savings and reserves to mortgages ratio
shows the extent to which the Group is dependent on
financing from the wholesale markets.
Mortgage balance
growth
Loans and advances to
customers at the end of
the year less loans and
advances to customers at
the start of the year.
Loans and advances to customers are as
shown in the balance sheets.
Movement in mortgage balances including
impairment provisions and fair value accounting
adjustments over the period.
Net lending Loans and advances to
customers at the end of
the year less loans and
advances to customers
at the start of the year,
excluding movements in
provisions and accounting
adjustments detailed in
Note 12.
Mortgage growth less movements in
provisions and accounting adjustments
detailed in Note 12.
Net lending represents gross lending less repayment
of principal and redemptions and is a key measure to
monitor the Group’s overall lending performance. This
measures our effectiveness in both new mortgage
lending and in retaining borrowers.
Number of accounts
more than three
months in arrears
None Not applicable The number of mortgage accounts where the amount
of arrears is greater than three monthly payments, or
the account is in possession, as a proportion of the
total number of mortgage accounts.
The industry average for mortgage arrears is
measured as the number of accounts more than
three months in arrears (including possessions). We
produce this KPI to assess how our level of mortgage
arrears compares to the market.
Percentage of
outstanding retail
mortgage balances
in arrears by three
months or more
None Not applicable The percentage of mortgage account balances where
the amount of arrears is equal to or greater than three
monthly payments, or the account is in possession, as
a proportion of the entire mortgage book.
This measures the overall quality of our mortgage
book.
Retail Savings
balance growth
Shares at the end of the
year less shares at the
start of the year.
Shares are as shown in the balance
sheets.
Movement in overall savings balances over the
period, including capitalised interest and accounting
adjustments.
Savings inflow/
outflow
None Not applicable Displays the cash in/out of savings accounts held,
excluding capitalised interest. The Group uses this to
monitor its main funding source throughout the year.
The following glossary defines Alternative
Performance Measures (APM) used within
the Annual Report and Accounts:
APM Calculation of Measure Reconciling items to statutory measure Definition and purpose
Income Statement measures
Core operating profit Profit before tax adjusted
for one-off items.
A full reconciliation between profit
before tax as shown in the income
statement and core operating profit is
shown in the
Strategic Report
.
Core operating profit excludes items such as fair
value volatility and material one-time charges that
do not reflect the Group’s day-to-day activities. Our
Board considers core operating profit to be a more
appropriate measure of the underlying performance
of the business and this is how financial performance
is reported to and assessed by the Board.
Cost to core income
ratio
Management expenses
as a percentage of core
income.
Management expenses = administrative
expenses plus depreciation and
amortisation per the income statement.
Core income = total income less gains/
(losses) from financial instruments held
at fair value per the income statement.
This is a measure of the Group’s costs in relation to
its income excluding fair value volatility. This is used
by the Group to monitor and manage its overall cost
position and understand how efficient the Group is at
generating income on an underlying basis.
Cost to income ratio Management expenses
as a percentage of total
income.
Management expenses = administrative
expenses plus depreciation and
amortisation per the income statement.
Total income as per the income
statement.
This is an industry-standard measure of the Group’s
costs in relation to its income. This is used by
the Group to monitor and manage its overall cost
position and understand how efficient the Group is at
generating income.
Management
expense ratio
Management expenses
(the aggregate of
administrative expenses,
depreciation and
amortisation) as a
percentage of mean total
assets.
Administrative expenses and
depreciation and amortisation
(management expenses) are as shown
in the income statements. Mean total
assets are calculated by taking the
average of the value of the opening
balance for the year and the value of
the closing balance, as shown in the
balance sheets.
This is an industry-standard ratio of the Group’s costs
as a proportion of its mean assets during the year,
and is used to measure how efficient the Group is at
maintaining its asset base.
Net interest margin Net interest income as a
percentage of mean total
assets.
Net interest income is as shown in the
income statements. Mean total assets
are calculated by taking the average of
the value of the opening balance for
the year and the value of the closing
balance, as shown in the balance sheets.
This is an industry-standard measure of the
relationship between net interest income (the
difference between the interest received on assets
and the interest paid on liabilities) and assets. This is
a key measure used by the Board to monitor how the
Group manages income from its assets and interest
paid on funding.
Balance Sheet items
Asset growth Total assets at the end of
the year less total assets
at the start of the year.
Total assets are as shown in the balance
sheets.
Movement in total asset over the period.
Average savings rate
differential
None Not applicable Calculates the average savings rate applied to the
Group’s savings accounts during the period versus
the average UK savings interest rates for the rest
of the market, based on savings stock from CACI’s
Current Account and Savings Database (CSDB), based
on stock value. This is used to assess how much the
Group is paying out in interest in comparison to
peers.
Gross lending None Not applicable The total value of mortgage loans advanced by
the Group in the period, including loans for house
purchase, further advances, re-mortgages etc.
Lending to first time
buyers
None Not applicable The total value of mortgage loans advanced by the
Group in the period to first time home buyers. This
measure displays how the Group is helping people
overcome the challenge of buying their first property.
Other Information > Glossary
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Forward-looking
statements
This document contains certain forward-looking statements, which are made in good faith based on the information
available up to the time of the approval of this report. Such statements should be treated with caution due to the inherent
uncertainties, including both economic and business risk factors, underlying any such forward-looking information.
APM Calculation of Measure Reconciling items to statutory measure Definition and purpose
Share of the gross
mortgage market
None Not applicable Displays the Group’s total gross lending as a
percentage of the gross lending in the UK housing
market by banks, building societies and other lenders
as measured by the Council of Mortgage Lenders
(CML), which represents 97% of the UK mortgage
market. From 1 July 2017 the Council of Mortgage
Lenders integrated into a new trade association, UK
Finance.
Regulatory Measures
Common Equity Tier
1 (CET1) capital ratio
None Common equity tier 1 capital ratio
is defined as a percentage of risk
weighted assets.
This ratio represents the relationship between the
strongest form of capital (primarily accumulated
profits that have built up over time) and assets,
weighted by the level of risk they carry. It is a
regulatory-defined ratio whose purpose is to ensure
that institutions are able to absorb unexpected
losses. It is a key measure of financial sustainability.
Leverage ratio Reserves as a percentage
of total assets.
Leverage ratio measures the Society’s
Tier 1 capital as a percentage of total
assets adjusted for certain off-balance
sheet exposures. 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 leverage ratio is also a regulatory-defined ratio
used to assess capital adequacy, but removes the
risk-weighting element of assets. It is therefore a
more simplified measure of financial sustainability.
Total capital ratio None Total capital ratio is defined as a
percentage of risk weighted assets.
This measure is used to assess the total amount
of capital the Group retains compared to its risk
weighted assets, hence it includes externally issued
capital. It is also defined by the regulatory authorities.
Non-financial measures
Absenteeism None Not applicable This indicator is for measuring the average
absenteeism rate, as a % of the total working days.
This KPI can be an indicator of colleague motivation
as a high absence rate may indicate poor motivation
and engagement.
Colleague
engagement score
None Not applicable Our annual colleague engagement survey is used
to calculate an engagement score which helps to
understand our people’s needs and what will lead to
their enjoyment and commitment in work.
Net Promoter Score
(NPS)
None Not applicable NPS is a measure of how willing customers are to
recommend the Group to others. It measures the
difference between the percentage of ‘promoters’
(those willing to recommend the Group to others)
and ‘detractors’ (those unwilling to recommend
the Group). The score can range from -100 if all
customers are ‘detractors’ to +100 if all customers are
‘promoters’. The Group uses this as a key measure of
customer satisfaction with our products and service.
Peakon survey result None Not applicable This is an external benchmarking exercise conducted
by Peakon, involving an employee survey and
a culture audit. The Group uses this measure to
understand how successful we are at delivering our
vision as a workplace where our people can give
their best and thrive. This is monitored annually and
reported to the Board as a colleague engagement
measure.
Other Information > Glossary
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YBM 0019 25 02 26
References to ‘YBS Group’ or ‘Yorkshire Group’ refer to Yorkshire Building Society, the trading names under
which it operates (Chelsea Building Society, the Chelsea, Norwich & Peterborough Building Society, Norwich &
Peterborough and N&P) and its subsidiary companies.
Accord Mortgages Limited is authorised and regulated by the Financial Conduct Authority. Accord Mortgages
Limited is entered in the Financial Services Register under registration number 305936. Buy to Let mortgages
for business purposes are not regulated by the Financial Conduct Authority. Accord Mortgages Limited is
registered in England No: 02139881. Registered Office: Yorkshire Drive, Bradford BD5 8LJ. Accord Mortgages is
a registered Trade Mark of Accord Mortgages Limited.
Yorkshire Building Society Charitable Foundation is a Registered Charity (No: 1069082) and a Registered
Company (No: 03545437). It is an independent registered charity governed by a board of trustees and its
results are not included in the annual report and accounts of Yorkshire Building Society. Registered Office:
Yorkshire House, Yorkshire Drive, Bradford, BD5 8LJ.
Small Change Big Difference
®
is a registered trademark of Yorkshire Building Society.
FareShare is a registered charity in England & Wales (1100051) and Scotland (SC052672).
Citizens Advice is an operating name of The National Association of Citizens Advice Bureaux. Registered charity
number 279057.
Arniston Ltd (t/a) Snugg is authorised and regulated by the Financial Conduct Authority. FRN: 999500.
Registered in Scotland. Company Number: SC707743.
Yorkshire Building Society are an introducer to Uinsure Limited, and will not provide advice on Uinsure
products. Uinsure is registered in England and Wales with company number 06046870 with a registered office
at XYZ Building, Hardman Boulevard, Manchester M3 3AQ. Uinsure Limited is authorised and regulated by the
Financial Conduct Authority and is registered on the Financial Services Register under number 463689.
Yorkshire Building Society chooses to introduce its customers to LifeSearch Limited for life and protection
insurance. LifeSearch Limited is an Appointed Representative of LifeSearch Partners Limited, who are
authorised and regulated by the Financial Conduct Authority. Registration Number: 656479.
Yorkshire Building Society is a member of the Building Societies Association and is authorised by the Prudential
Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Yorkshire Building Society is entered in the Financial Services Register and its registration number is 106085.
Head Office: Yorkshire House, Yorkshire Drive BD5 8LJ. ybs.co.uk