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Financial instruments - classification | 12 Months Ended
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Dec. 31, 2024
Financial instruments - classification |
Financial instruments - classification | 9 Financial instruments – classification
Financial instruments are contracts that give rise to a financial asset of one entity and a corresponding financial liability or equity instrument of a counterparty entity, such as cash, derivatives, loans, deposits and settlement balances. This note presents financial instruments classified in accordance with IFRS 9 – Financial Instruments.
​ Judgement: classification of financial assets Classification of financial assets between amortised cost and fair value through other comprehensive income requires a degree of judgement in respect of business models and contractual cashflows.
- | The business model criteria is assessed at a portfolio level to determine whether assets are classified as held to collect or held to collect and sell. Information that is considered in determining the applicable business model includes: the portfolio’s policies and objectives; how the performance and risks of the portfolio are managed, evaluated and reported to management; and the frequency, volume and timing of sales in prior periods, sales expectation for future periods, and the reasons for sales.
- | The contractual cash flow characteristics of financial assets are assessed with reference to whether the cash flows represent solely payments of principal and interest (SPPI). A level of judgement is made in assessing terms that could change the contractual cash flows so that it would not meet the condition for SPPI, including contingent and leverage features, non-recourse arrangements and features that could modify the time value of money.
For accounting policy information refer to Accounting policies 3.8, 3.9 and 3.11. ​ 9 Financial instruments – classification continued ​ The following tables analyse financial assets and liabilities in accordance with the categories of financial instruments in IFRS 9. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Amortised | ​ | Other |  | ​
​ | ​ | MFVTPL | ​ | DFV | ​ | FVOCI | ​ | cost | ​ | assets |  | Total
Assets |  | £m |  | £m |  | £m |  | £m |  | £m |  | £m
Cash and balances at central banks |  | ​ |  | ​ | ​ | ​ |  | 92,994 |  | ​ | ​ | 92,994
Trading assets | ​ | 48,917 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 48,917
Derivatives (1) | ​ | 78,406 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 78,406
Settlement balances |  | ​ | ​ | ​ | ​ | ​ | ​ | 2,085 | ​ | ​ | ​ | 2,085
Loans to bank - amortised cost (2) |  | ​ |  | ​ | ​ | ​ |  | 6,030 |  | ​ | ​ | 6,030
Loans to customers - amortised cost (3) |  | ​ |  | ​ | ​ | ​ |  | 400,326 |  | ​ | ​ | 400,326
Other financial assets |  | 798 | ​ | 5 | ​ | 37,843 |  | 24,597 |  | ​ | ​ | 63,243
Intangible assets | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 7,588 | ​ | 7,588
Other assets (4) |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  | 8,396 | ​ | 8,396
31 December 2024 |  | 128,121 |  | 5 | ​ | 37,843 |  | 526,032 |  | 15,984 |  | 707,985
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash and balances at central banks |  | ​ | ​ | ​ | ​ | ​ | ​ | 104,262 |  | ​ | ​ | 104,262
Trading assets | ​ | 45,551 |  | ​ | ​ | ​ | ​ | ​ |  | ​ | ​ | 45,551
Derivatives (1) | ​ | 78,904 |  | ​ | ​ | ​ | ​ | ​ |  | ​ | ​ | 78,904
Settlement balances | ​ | ​ |  | ​ | ​ | ​ | ​ | 7,231 |  | ​ | ​ | 7,231
Loans to bank - amortised cost (2) | ​ | ​ |  | ​ | ​ | ​ | ​ | 6,914 |  | ​ | ​ | 6,914
Loans to customers - amortised cost (3) |  | ​ |  | ​ | ​ | ​ | ​ | 381,433 |  | ​ | ​ | 381,433
Other financial assets |  | 703 |  | 5 | ​ | 28,699 | ​ | 21,695 |  | ​ | ​ | 51,102
Intangible assets | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 7,614 | ​ | 7,614
Other assets (4) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  | 9,662 | ​ | 9,662
31 December 2023 |  | 125,158 |  | 5 | ​ | 28,699 | ​ | 521,535 |  | 17,276 | ​ | 692,673
​ For the notes to this table refer to the following page. ​ 9 Financial instruments – classification continued ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Held-for- | ​ | ​ | ​ | Amortised | ​ | Other | ​ | ​
​ |  | trading |  | DFV |  | cost |  | liabilities |  | Total
Liabilities |  | £m | ​ | £m | ​ | £m | ​ | £m | ​ | £m
Bank deposits (5) |  | — |  | — | ​ | 31,452 |  | — |  | 31,452
Customer deposits |  | — |  | — | ​ | 433,490 |  | — |  | 433,490
Settlement balances |  | — |  | — | ​ | 1,729 |  | — |  | 1,729
Trading liabilities | ​ | 54,714 | ​ | — | ​ | — | ​ | — | ​ | 54,714
Derivatives (1) |  | 72,082 |  | — | ​ | — |  | — |  | 72,082
Other financial liabilities (6) |  | — |  | 3,548 | ​ | 57,539 |  | — |  | 61,087
Subordinated liabilities |  | — |  | 234 | ​ | 5,902 |  | — |  | 6,136
Notes in circulation | ​ | — | ​ | — | ​ | 3,316 | ​ | — | ​ | 3,316
Other liabilities (7) |  | — |  | — | ​ | 684 |  | 3,917 |  | 4,601
31 December 2024 |  | 126,796 |  | 3,782 | ​ | 534,112 |  | 3,917 |  | 668,607
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Bank deposits (5) |  | — |  | — | ​ | 22,190 |  | — |  | 22,190
Customer deposits |  | — |  | — | ​ | 431,377 |  | — |  | 431,377
Settlement balances |  | — |  | — | ​ | 6,645 |  | — |  | 6,645
Trading liabilities |  | 53,636 |  | — | ​ | — |  | — |  | 53,636
Derivatives (1) |  | 72,395 |  | — | ​ | — |  | — |  | 72,395
Other financial liabilities (6) |  | — |  | 2,888 | ​ | 52,201 |  | — |  | 55,089
Subordinated liabilities |  | — |  | 237 | ​ | 5,477 |  | — |  | 5,714
Notes in circulation | ​ | — | ​ | — | ​ | 3,237 | ​ | — | ​ | 3,237
Other liabilities (7) |  | — |  | — | ​ | 748 |  | 4,454 |  | 5,202
31 December 2023 |  | 126,031 |  | 3,125 | ​ | 521,875 |  | 4,454 |  | 655,485
​
(1) | Includes net hedging derivatives assets of £118 million (2023 - £114 million) and net hedging derivatives liabilities of £464 million (2023 - £270 million).
(2) | Includes items in the course of collection from other banks of £59 million (2023 - £255 million).
(3) | Includes finance lease receivables of £8,998 million (2023 - £8,731 million).
(4) | Includes assets of disposal groups held at FVTPL of nil (2023 - £841 million). The portfolio is classified as level 3 in the fair value hierarchy.
(5) | Includes items in the course of transmission to other banks of £136 million (2023 - £92 million).
(6) | The carrying amount of customer deposits designated at fair value through profit or loss is materially the same as the principal amount for both periods. No amounts have been recognised in the profit or loss for changes in credit risk associated with these liabilities as the changes are immaterial both during the period and cumulatively.
(7) | Includes lease liabilities of £630 million (2023 - £670 million), held at amortised cost.
​ 9 Financial instruments – classification continued We originate loans that include features that change the contractual cash flows based on the borrower meeting certain contractually specified environmental, social and governance (ESG) targets. These are known as ESG-linked, or sustainability-linked, loans. As part of the terms of these loans, the contractual interest rate is reduced or increased if the borrower meets, or fails to meet, specific targets linked to the activity of the borrower, for example reducing carbon emissions, increasing the level of diversity at Board level, or achieving a sustainable supply chain. ESG features are first assessed to ascertain whether the adjustment to the contractual cash flows results in a de minimis exposure to risks or volatility in those contractual cash flows. If this is the case the classification of the loan is not affected. If the effect of the ESG feature is assessed as being more than de minimis, we apply judgement to ensure that the ESG features do not generate compensation for risks that are not in line with a basic lending arrangement. This includes, amongst other aspects, a review of the consistency of the ESG targets with the asset or activity of the borrower, and consideration of the targets within our risk appetite. Some of these loans are an integral part of our climate and sustainable funding and financing target disclosed on page 15 of exhibit 15.2. ​ The table below analyses financial assets forming a component of ESG-linked loans and other products with contractual terms that could change the timing or amount of cash flows. This is based on balance sheet values as at 31 December and the maximum impact of the potential margin changes on these over a 12 month period. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023
​ | ​ | ​ |  | Positive impact on |  | Negative impact on | ​ | ​
​ | ​ | Carrying value | ​ | product margin | ​ | product margin | ​ | Carrying value
​ | ​ | £bn | ​ | bps | ​ | bps | ​ | £bn
Sustainability-linked loans |  | 6.9 |  | 3.1 |  | 4.0 |  | 6.5
Other products |  | 20.2 |  | — |  | — |  | 16.1
Lending subject to performance triggers |  | 27.1 |  | ​ | ​ | ​ |  | 22.6
​ Additional information on finance lease receivables The following table shows the reconciliation of undiscounted finance lease receivables to net investment in finance leases which are presented under Loans to customers-amortised cost on the balance sheet. ​
​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023
​ | ​ | £m | ​ | £m
Amount receivable under finance leases | ​ |  | ​ |
Within 1 year | ​ | 3,493 | ​ | 3,340
1 to 2 years | ​ | 2,499 | ​ | 2,358
2 to 3 years | ​ | 1,612 | ​ | 1,625
3 to 4 years | ​ | 842 | ​ | 900
4 to 5 years | ​ | 464 | ​ | 388
After 5 years | ​ | 1,043 | ​ | 1,079
Total lease payments | ​ | 9,953 | ​ | 9,690
Unguaranteed residual values | ​ | 150 | ​ | 169
Future drawdowns | ​ | (12) | ​ | (12)
Unearned income | ​ | (1,001) | ​ | (1,025)
Present value of lease payments | ​ | 9,090 | ​ | 8,822
Impairments | ​ | (92) | ​ | (91)
Net investment in finance leases | ​ | 8,998 | ​ | 8,731
​ ​ 9 Financial instruments – classification continued Financial instruments – financial assets and liabilities that can be offset The tables below present information on financial assets and financial liabilities that are offset on the balance sheet under IFRS or subject to enforceable master netting agreements together with financial collateral received or given. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Instruments which can be offset | ​ | Potential for offset not recognised by IFRS | ​ |  | ​ |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Effect of | ​ | ​ | ​ | ​ | ​ | Net amount | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | master | ​ | ​ | ​ | ​ | ​ | after netting | ​ | Instruments | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | netting | ​ | ​ | ​ | ​ | ​ | agreements and | ​ | outside | ​ | ​
​ | ​ | ​ | ​ | IFRS | ​ | Balance | ​ | and similar | ​ | Cash | ​ | Securities | ​ | effect of | ​ | netting | ​ | Balance
​ | ​ | Gross | ​ | offset | ​ | sheet | ​ | agreements | ​ | collateral | ​ | collateral | ​ | related collateral | ​ | agreements | ​ | sheet total
2024 |  | £m |  | £m |  | £m |  | £m |  | £m |  | £m |  | £m |  | £m |  | £m
Derivative assets |  | 96,624 | ​ | (18,746) | ​ | 77,878 | ​ | (61,883) | ​ | (10,005) | ​ | (4,072) | ​ | 1,918 | ​ | 528 | ​ | 78,406
Derivative liabilities |  | 92,620 | ​ | (21,027) | ​ | 71,593 | ​ | (61,883) | ​ | (5,801) | ​ | (896) | ​ | 3,013 | ​ | 489 | ​ | 72,082
Net position (1) |  | 4,004 | ​ | 2,281 | ​ | 6,285 | ​ | — | ​ | (4,204) | ​ | (3,176) | ​ | (1,095) | ​ | 39 | ​ | 6,324
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Trading reverse repos |  | 42,261 | ​ | (15,174) | ​ | 27,087 | ​ | (1,469) | ​ | — | ​ | (25,406) | ​ | 212 | ​ | 40 | ​ | 27,127
Trading repos |  | 45,033 | ​ | (15,174) | ​ | 29,859 | ​ | (1,469) | ​ | — | ​ | (28,390) | ​ | — | ​ | 703 | ​ | 30,562
Net position |  | (2,772) | ​ | — | ​ | (2,772) | ​ | — | ​ | — | ​ | 2,984 | ​ | 212 | ​ | (663) | ​ | (3,435)
​ |  | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Non trading reverse repos |  | 45,600 | ​ | (8,709) | ​ | 36,891 | ​ | (80) | ​ | — | ​ | (36,811) | ​ | — | ​ | — | ​ | 36,891
Non trading repos |  | 22,288 | ​ | (8,709) | ​ | 13,579 | ​ | (80) | ​ | — | ​ | (13,499) | ​ | — | ​ | — | ​ | 13,579
Net position |  | 23,312 | ​ | — | ​ | 23,312 | ​ | — | ​ | — | ​ | (23,312) | ​ | — | ​ | — | ​ | 23,312
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2023 |  | ​ |  | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  | ​ |  | ​ |  | ​
Derivative assets |  | 99,023 | ​ | (20,597) | ​ | 78,426 | ​ | (60,355) | ​ | (12,284) | ​ | (3,408) | ​ | 2,379 | ​ | 478 | ​ | 78,904
Derivative liabilities |  | 95,734 | ​ | (23,869) | ​ | 71,865 | ​ | (60,355) | ​ | (6,788) | ​ | (1,663) | ​ | 3,059 | ​ | 530 | ​ | 72,395
Net position (1) |  | 3,289 | ​ | 3,272 | ​ | 6,561 | ​ | — | ​ | (5,496) | ​ | (1,745) | ​ | (680) | ​ | (52) | ​ | 6,509
​ |  | ​ |  | ​ |  | ​ |  | ​ |  | ​ |  | ​ |  | ​ |  | ​ |  | ​
Trading reverse repos |  | 39,573 | ​ | (16,257) | ​ | 23,316 | ​ | (664) | ​ | — | ​ | (22,461) | ​ | 191 | ​ | 378 | ​ | 23,694
Trading repos |  | 42,442 | ​ | (16,257) | ​ | 26,185 | ​ | (664) | ​ | — | ​ | (25,520) | ​ | 1 | ​ | 717 | ​ | 26,902
Net position |  | (2,869) | ​ | — | ​ | (2,869) | ​ | — | ​ | — | ​ | 3,059 | ​ | 190 | ​ | (339) | ​ | (3,208)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Non trading reverse repos |  | 37,477 | ​ | (9,646) | ​ | 27,831 | ​ | (5) | ​ | — | ​ | (27,826) | ​ | — | ​ | 80 | ​ | 27,911
Non trading repos |  | 23,605 | ​ | (9,646) | ​ | 13,959 | ​ | (5) | ​ | — | ​ | (13,954) | ​ | — | ​ | 3 | ​ | 13,962
Net position |  | 13,872 | ​ | — | ​ | 13,872 | ​ | — | ​ | — | ​ | (13,872) | ​ | — | ​ | 77 | ​ | 13,949
​
(1) | Net IFRS offset balance of £2,281 million (2023 - £3,272 million)relates to variation margin netting reflected on other balance sheet lines.

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