v3.25.4

Liquidity risk | 12 Months Ended
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Dec. 31, 2025
Liquidity risk [Abstract] |
Liquidity risk | Liquidity risk is managed through a series of measures, tests and reports that are primarily based on contractual maturities with behavioural overlays as appropriate. The Group undertakes quantitative and qualitative analysis of the behavioural aspects of its assets and liabilities in order to reflect their expected behaviour. The Group manages and monitors liquidity risks and ensures that liquidity risk management systems and arrangements are adequate with regard to the internal risk appetite, Group strategy and regulatory requirements. Liquidity policies and procedures are subject to independent internal oversight by the Risk function. Overseas branches and subsidiaries of the Group may also be required to meet the liquidity requirements of the entity’s domestic country. Management of liquidity requirements is performed by the overseas branch or subsidiary in line with Group policy. Liquidity risk of the Insurance business is actively managed and monitored within the Insurance legal entities. The Group plans funding requirements over its planning period, combining business-as-usual and stressed conditions. The Group manages its liquidity position paying regard to its internal risk appetite, Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) as required by the PRA, the Capital Requirements Directive (CRD V) and the Capital Requirements Regulation (UK CRR) liquidity requirements Reconciliation of Group funding to the balance sheet (audited)
| At 31 December 2025 |  | At 31 December 2024
| Included in funding analysis £bn |  | Cash collateral received 1 £bn |  | Fair value and other accounting methods £bn |  | Balance sheet £bn |  | Included in funding analysis £bn |  | Cash collateral received 1 £bn |  | Fair value and other accounting methods £bn |  | Balance sheet £bn
Deposits from banks | 3.8 |  | 2.0 |  | – |  | 5.8 |  | 3.1 |  | 3.2 |  | (0.1) |  | 6.2
Debt securities in issue | 83.9 |  | – |  | (5.6) |  | 78.3 |  | 77.2 |  | – |  | (6.4) |  | 70.8
Subordinated liabilities | 11.7 |  | – |  | (1.8) |  | 9.9 |  | 12.2 |  | – |  | (2.1) |  | 10.1
Total wholesale funding | 99.4 |  | 2.0 |  |  |  |  |  | 92.5 |  | 3.2 |  |  |  |
Customer deposits | 496.5 |  | – |  | – |  | 496.5 |  | 482.7 |  | – |  | – |  | 482.7
Repurchase agreements at amortised cost | 38.6 |  | – |  | – |  | 38.6 |  | 37.8 |  | – |  | – |  | 37.8
Total equity | 47.9 |  | – |  | – |  | 47.9 |  | 45.9 |  | – |  | – |  | 45.9
Funding Sources | 682.4 |  | 2.0 |  |  |  |  |  | 658.9 |  | 3.2 |  |  |  |
1 The Group enters into derivatives and repurchase and reverse repurchase agreements with various counterparties which are governed by industry standard master netting agreements. The Group holds cash collateral on its balance sheet in respect of these agreements. At 31 December 2025, £2.0 billion (31 December 2024: £3.2 billion) was with bank counterparties, of which £1.5 billion (31 December 2024: £2.8 billion) relates primarily to the Global Markets business of Lloyds Bank Corporate Markets plc, whilst £0.5 billion (31 December 2024: £0.4 billion) relates to the Insurance business. Maturities of financial instrument liabilities (audited) The table below analyses financial instrument liabilities of the Group, excluding those arising from insurance and participating investment contracts, on an undiscounted future cash flow basis according to contractual maturity, into relevant maturity groupings based on the remaining period at the balance sheet date; balances with no fixed maturity are included in the over 5 years category. In the case of dated subordinated liabilities, the maturity presented is based on call date where applicable. The Group’s preference shares have partially discretionary coupons and have been included in the below analysis.
| Up to 1 month £m |  | 1 to 3 months £m |  | 3 to 12 months £m |  | 1 to 5 years £m |  | Over 5 years £m |  | Total £m
At 31 December 2025 |  |  |  |  |  |  |  |  |  |  |
Deposits from banks | 1,872 |  | 421 |  | 1,930 |  | 1,579 |  | 10 |  | 5,812
Customer deposits | 428,915 |  | 23,351 |  | 35,640 |  | 9,722 |  | 503 |  | 498,131
Repurchase agreements at amortised cost | 11,966 |  | 9,750 |  | 7,866 |  | 6,773 |  | 3,147 |  | 39,502
Financial liabilities at fair value through profit or loss | 13,140 |  | 6,062 |  | 2,953 |  | 2,044 |  | 5,657 |  | 29,856
Notes in circulation | 2,118 |  | – |  | – |  | – |  | – |  | 2,118
Debt securities in issue at amortised cost | 408 |  | 9,959 |  | 22,797 |  | 40,064 |  | 13,427 |  | 86,655
Liabilities arising from non-participating investment contracts | 61,640 |  | – |  | – |  | – |  | – |  | 61,640
Lease liabilities | 35 |  | 59 |  | 200 |  | 446 |  | 392 |  | 1,132
Subordinated liabilities | 24 |  | 1,170 |  | 990 |  | 6,247 |  | 8,328 |  | 16,759
Total non-derivative financial liabilities | 520,118 |  | 50,772 |  | 72,376 |  | 66,875 |  | 31,464 |  | 741,605
Derivative financial liabilities |  |  |  |  |  |  |  |  |  |  |
Gross settled derivatives – outflows | 89,450 |  | 66,862 |  | 43,379 |  | 40,311 |  | 21,260 |  | 261,262
Gross settled derivatives – inflows | (88,088) |  | (65,410) |  | (42,508) |  | (38,949) |  | (18,853) |  | (253,808)
Gross settled derivatives – net flows | 1,362 |  | 1,452 |  | 871 |  | 1,362 |  | 2,407 |  | 7,454
Net settled derivative liabilities | 8,258 |  | 35 |  | 62 |  | 291 |  | 1,784 |  | 10,430
Total derivative financial liabilities | 9,620 |  | 1,487 |  | 933 |  | 1,653 |  | 4,191 |  | 17,884
| Up to 1 month £m |  | 1 to 3 months £m |  | 3 to 12 months £m |  | 1 to 5 years £m |  | Over 5 years £m |  | Total £m
At 31 December 2024 |  |  |  |  |  |  |  |  |  |  |
Deposits from banks | 1,809 |  | 673 |  | 904 |  | 2,775 |  | 105 |  | 6,266
Customer deposits | 437,693 |  | 14,873 |  | 24,811 |  | 6,127 |  | 256 |  | 483,760
Repurchase agreements at amortised cost | 8,974 |  | 5,169 |  | 15,300 |  | 9,416 |  | – |  | 38,859
Financial liabilities at fair value through profit or loss | 15,208 |  | 3,965 |  | 1,803 |  | 2,102 |  | 7,078 |  | 30,156
Notes in circulation | 2,121 |  | – |  | – |  | – |  | – |  | 2,121
Debt securities in issue at amortised cost | 3,704 |  | 10,367 |  | 13,624 |  | 38,973 |  | 8,519 |  | 75,187
Liabilities arising from non-participating investment contracts | 51,228 |  | – |  | – |  | – |  | – |  | 51,228
Lease liabilities | 28 |  | 65 |  | 241 |  | 574 |  | 461 |  | 1,369
Subordinated liabilities | 26 |  | 698 |  | 1,676 |  | 4,207 |  | 6,705 |  | 13,312
Total non-derivative financial liabilities | 520,791 |  | 35,810 |  | 58,359 |  | 64,174 |  | 23,124 |  | 702,258
Derivative financial liabilities |  |  |  |  |  |  |  |  |  |  |
Gross settled derivatives – outflows | 100,432 |  | 61,356 |  | 43,231 |  | 34,795 |  | 22,505 |  | 262,319
Gross settled derivatives – inflows | (97,653) |  | (59,238) |  | (41,319) |  | (32,333) |  | (18,950) |  | (249,493)
Gross settled derivatives – net flows | 2,779 |  | 2,118 |  | 1,912 |  | 2,462 |  | 3,555 |  | 12,826
Net settled derivative liabilities | 10,432 |  | 92 |  | 109 |  | 404 |  | 1,557 |  | 12,594
Total derivative financial liabilities | 13,211 |  | 2,210 |  | 2,021 |  | 2,866 |  | 5,112 |  | 25,420
The majority of the Group’s non-participating investment contract liabilities are unit-linked. These unit-linked products are invested in accordance with unit fund mandates. Clauses are included in policyholder contracts to permit the deferral of sales, where necessary, so that linked assets can be realised without being a forced seller. The principal amount for undated subordinated liabilities and preference shares with no redemption option is included within the over 5 years column; interest of £16 million (2024: £16 million) in respect of the undated subordinated liabilities and £28 million (2024: £28 million) in respect of the preference shares, per annum is not included beyond 5 years. An analysis of the Group’s total wholesale funding by residual maturity and by currency is set out on page 183. Cash flows arising from insurance liabilities (audited) The following table presents the estimated amount and timing of the remaining contractual discounted cash flows arising from insurance liabilities. The amounts presented do not include those relating to the liability for remaining coverage of contracts that are measured under the premium allocation approach.
| Less than 1 year £m | 1 to 2 years £m | 2 to 3 years £m | 3 to 4 years £m | 4 to 5 years £m | Over 5 years £m | Total £m
At 31 December 2025 |  |  |  |  |  |  |
Liabilities arising from insurance and participating investment contracts | (1,823) | (1,941) | (2,316) | (2,775) | (3,147) | (117,710) | (129,712)
Reinsurance contract liabilities | 3 | 3 | 3 | 2 | 2 | 12 | 25
Total | (1,820) | (1,938) | (2,313) | (2,773) | (3,145) | (117,698) | (129,687)
At 31 December 2024 |  |  |  |  |  |  |
Liabilities arising from insurance and participating investment contracts | (1,038) | (1,292) | (1,951) | (2,453) | (2,992) | (112,055) | (121,781)
Reinsurance contract liabilities | 3 | 3 | 3 | 3 | 2 | 13 | 27
Total | (1,035) | (1,289) | (1,948) | (2,450) | (2,990) | (112,042) | (121,754)
For insurance contracts which are neither unit-linked nor in the Group’s with-profit funds, in particular annuity liabilities, the aim is to invest in assets such that the cash flows on investments match those on the projected future liabilities. Insurance and participating investment contract liabilities payable on demand (audited) Some of the Group’s insurance and participating investment contract liabilities are payable on demand as shown in the table below:
| 2025 |  | 2024
| Amounts payable on demand £m | Carrying amount £m |  | Amounts payable on demand £m | Carrying amount £m
Life | 122,691 | 118,931 |  | 110,402 | 107,909
Non-life | – | – |  | – | –
Total | 122,691 | 118,931 |  | 110,402 | 107,909
The amounts payable on demand represent contract surrender values and incurred claims. Maturities of contingent liabilities, commitments and financial guarantees (audited) The table below shows the contractual maturity of the Group’s contingents, commitments and financial guarantees. Commitments are shown in the time band containing the earliest date the commitment can be drawn down. For financial guarantee contracts, the maximum amount of the guarantee is allocated to the earliest period in which the guarantee could be called.
| Up to 1 month £m | 1 to 3 months £m | 3 to 6 months £m | 6 to 9 months £m | 9 to 12 months £m | 1 to 3 years £m | 3 to 5 years £m | Over 5 years £m | Total £m
At 31 December 2025 |  |  |  |  |  |  |  |  |
Acceptances and endorsements | 97 | 6 | 2 | – | – | – | – | – | 105
Other contingent liabilities | 215 | 555 | 366 | 86 | 290 | 691 | 364 | 337 | 2,904
Total contingent liabilities | 312 | 561 | 368 | 86 | 290 | 691 | 364 | 337 | 3,009
Lending commitments and financial guarantees | 143,506 | 1,553 | 1,057 | 2,061 | 2,341 | 3,468 | 3,058 | 435 | 157,479
Other commitments | 95 | – | – | – | – | – | – | – | 95
Total commitments and financial guarantees | 143,601 | 1,553 | 1,057 | 2,061 | 2,341 | 3,468 | 3,058 | 435 | 157,574
Total contingents, commitments and financial guarantees | 143,913 | 2,114 | 1,425 | 2,147 | 2,631 | 4,159 | 3,422 | 772 | 160,583
At 31 December 2024 |  |  |  |  |  |  |  |  |
Acceptances and endorsements | 24 | 11 | 3 | 1 | – | – | – | – | 39
Other contingent liabilities | 208 | 357 | 225 | 115 | 370 | 547 | 211 | 533 | 2,566
Total contingent liabilities | 232 | 368 | 228 | 116 | 370 | 547 | 211 | 533 | 2,605
Lending commitments and financial guarantees | 134,283 | 1,416 | 1,729 | 1,562 | 3,367 | 2,755 | 3,140 | 256 | 148,508
Other commitments | 94 | 6 | 11 | – | – | – | – | – | 111
Total commitments and financial guarantees | 134,377 | 1,422 | 1,740 | 1,562 | 3,367 | 2,755 | 3,140 | 256 | 148,619
Total contingents, commitments and financial guarantees | 134,609 | 1,790 | 1,968 | 1,678 | 3,737 | 3,302 | 3,351 | 789 | 151,224

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- Definition The disclosure of liquidity risk. [Refer: Liquidity risk [member]] + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Note Expiry date 2027-01-01 -Name IAS -Number 1 -IssueDate 2025-01-01 -Paragraph 10 -Subparagraph e -URI https://taxonomy.ifrs.org/xifrs-link?type=IAS&num=1&code=ifrs-tx-2025-en-b&anchor=para_10_e&doctype=Standard -URIDate 2025-03-27 + Details
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