v3.25.4

Allowance for expected credit losses (Tables) | 12 Months Ended
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Dec. 31, 2025
Disclosure of allowance for expected credit losses [Abstract] |
Disclosure of impairment allowances | The Group’s total expected credit loss allowances were as follows:
|  | At 31 December 2025 |  | At 31 December 2024
Allowance for expected credit losses |  | Stage 1 £m |  | Stage 2 £m |  | Stage 3 £m |  | POCI £m |  | Total £m |  | Stage 1 £m |  | Stage 2 £m |  | Stage 3 £m |  | POCI £m |  | Total £m
In respect of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans and advances to banks |  | 1 |  | – |  | – |  | – |  | 1 |  | 1 |  | – |  | – |  | – |  | 1
UK mortgages |  | 51 |  | 207 |  | 309 |  | 159 |  | 726 |  | 53 |  | 273 |  | 335 |  | 187 |  | 848
Credit cards |  | 145 |  | 248 |  | 121 |  | – |  | 514 |  | 149 |  | 297 |  | 133 |  | – |  | 579
Other |  | 368 |  | 343 |  | 226 |  | – |  | 937 |  | 329 |  | 326 |  | 227 |  | – |  | 882
Retail |  | 564 |  | 798 |  | 656 |  | 159 |  | 2,177 |  | 531 |  | 896 |  | 695 |  | 187 |  | 2,309
Commercial Banking |  | 173 |  | 279 |  | 382 |  | – |  | 834 |  | 205 |  | 264 |  | 413 |  | – |  | 882
Other |  | – |  | – |  | – |  | – |  | – |  | – |  | – |  | – |  | – |  | –
Loans and advances to customers |  | 737 |  | 1,077 |  | 1,038 |  | 159 |  | 3,011 |  | 736 |  | 1,160 |  | 1,108 |  | 187 |  | 3,191
Debt securities |  | 4 |  | – |  | 1 |  | – |  | 5 |  | 3 |  | – |  | 1 |  | – |  | 4
Financial assets at amortised cost |  | 742 |  | 1,077 |  | 1,039 |  | 159 |  | 3,017 |  | 740 |  | 1,160 |  | 1,109 |  | 187 |  | 3,196
Other assets |  | 6 |  | – |  | 8 |  | – |  | 14 |  | 7 |  | – |  | 8 |  | – |  | 15
Provisions in relation to loan commitments and financial guarantees | 113 |  | 83 |  | 1 |  | – |  | 197 |  | 142 |  | 126 |  | 2 |  | – |  | 270
Total |  | 861 |  | 1,160 |  | 1,048 |  | 159 |  | 3,228 |  | 889 |  | 1,286 |  | 1,119 |  | 187 |  | 3,481
Expected credit loss in respect of financial assets at fair value through other comprehensive income (memorandum item) |  | 3 |  | – |  | – |  | – |  | 3 |  | 4 |  | – |  | – |  | – |  | 4
Disclosure of Detailed Information about Allowance for Expected Credit Losses |
Critical judgements: | Determining an appropriate definition of default against which a probability of default, exposure at default and loss given default parameter can be evaluated
| Establishing the criteria for a significant increase in credit risk (SICR)
| The individual assessment of material cases and the use of judgemental adjustments made to impairment modelling processes that adjust inputs, parameters and outputs to reflect risks not captured by models
Key source of estimation uncertainty: | Base case and multiple economic scenarios (MES) assumptions, including the rate of unemployment and the rate of change of house prices, required for creation of MES scenarios and forward-looking credit parameters
Disclosure of Detailed Information about Significant Increase in Credit Risk |
RMS grade | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14
PD boundary 1 (%) | 0.10 | 0.40 | 0.80 | 1.20 | 2.50 | 4.50 | 7.50 | 10.00 | 14.00 | 20.00 | 30.00 | 45.00 | 99.99 | 100.00
Disclosure of Detailed Information about ECL Sensitivity to Economic Assumptions | The table below analyses total ECL allowances by portfolio, separately identifying the amounts that have been modelled, those that have been individually assessed and those arising through the application of judgemental adjustments.
| At 31 December 2025 |  | At 31 December 2024
| Modelled ECL £m | Individually assessed £m |  | Judgemental adjustments £m |  | Total £m |  | Modelled ECL £m |  | Individually assessed £m |  | Judgemental adjustments £m |  | Total £m
UK mortgages | 623 |  | – |  | 108 |  | 731 |  | 720 |  | – |  | 132 |  | 852
Credit cards | 540 |  | – |  | 63 |  | 603 |  | 681 |  | – |  | (7) |  | 674
Other Retail | 916 |  | – |  | 75 |  | 991 |  | 860 |  | – |  | 90 |  | 950
Commercial Banking | 555 |  | 355 |  | (22) |  | 888 |  | 894 |  | 354 |  | (259) |  | 989
Other | 15 |  | – |  | – |  | 15 |  | 16 |  | – |  | – |  | 16
Total | 2,649 |  | 355 |  | 224 |  | 3,228 |  | 3,171 |  | 354 |  | (44) |  | 3,481
The following table shows the Group’s ECL for the probability-weighted, upside, base case, downside and severe downside scenarios. The stage allocation for an asset is based on the overall probability-weighted probability of default and hence the staging of assets is constant across all the scenarios. In each economic scenario the ECL for individual assessments is held constant reflecting the basis on which they are evaluated. Judgemental adjustments applied through changes to model inputs or parameters, or more qualitative post model adjustments, are apportioned across the scenarios in proportion to modelled ECL where this better reflects the sensitivity of these adjustments to each scenario. The probability-weighted view shows the extent to which a higher ECL allowance has been recognised to take account of multiple economic scenarios relative to the base case; the uplift on a statutory basis being £366 million compared to £445 million at 31 December 2024.
| At 31 December 2025 |  | At 31 December 2024
| Probability- weighted £m | Upside £m | Base case £m | Downside £m | Severe downside £m |  | Probability- weighted £m | Upside £m | Base case £m | Downside £m | Severe downside £m
UK mortgages | 731 | 341 | 510 | 937 | 1,943 |  | 852 | 345 | 567 | 1,064 | 2,596
Credit cards | 603 | 498 | 579 | 674 | 777 |  | 674 | 518 | 641 | 773 | 945
Other Retail | 991 | 922 | 969 | 1,036 | 1,126 |  | 950 | 843 | 923 | 1,010 | 1,172
Commercial Banking | 888 | 690 | 789 | 1,010 | 1,414 |  | 989 | 745 | 889 | 1,125 | 1,608
Other | 15 | 15 | 15 | 15 | 15 |  | 16 | 16 | 16 | 16 | 17
ECL allowance | 3,228 | 2,466 | 2,862 | 3,672 | 5,275 |  | 3,481 | 2,467 | 3,036 | 3,988 | 6,338
The table below shows the impact on the Group’s ECL resulting from a 1 percentage point increase or decrease in the UK unemployment rate. The increase or decrease is presented based on the adjustment phased evenly over the first 10 quarters of all four scenarios. A more immediate increase or decrease would drive a more material ECL impact as it would be fully reflected in both 12-month and lifetime probability of defaults.
| At 31 December 2025 |  | At 31 December 2024 1
| 1pp increase in unemployment £m | 1pp decrease in unemployment £m |  | 1pp increase in unemployment £m | 1pp decrease in unemployment £m
UK mortgages | 11 | (11) |  | 13 | (12)
Credit cards | 54 | (53) |  | 54 | (53)
Other Retail | 25 | (25) |  | 23 | (24)
Commercial Banking | 58 | (48) |  | 113 | (82)
ECL impact | 148 | (137) |  | 203 | (171)
1 For 2025, impacts are assessed as changes to probability-weighted modelled ECL inclusive of the impacts upon staging of assets, excluding post model adjustments. The comparative period has been represented on a consistent basis. The table below shows the impact on the Group’s ECL in respect of UK mortgages of an increase or decrease in loss given default for a 10 percentage point increase or decrease in HPI. The increase or decrease is presented based on the adjustment phased evenly over the first 10 quarters of all four scenarios.
| At 31 December 2025 |  | At 31 December 2024 1
| 10pp increase in HPI £m | 10pp decrease in HPI £m |  | 10pp increase in HPI £m | 10pp decrease in HPI £m
ECL impact | (172) | 261 |  | (207) | 312
1 For 2025, impacts are assessed as changes to probability-weighted modelled ECL inclusive of the impacts upon staging of assets, excluding post model adjustments. The comparative period has been represented on a consistent basis.
Disclosure of Detailed Information about Total Impact on ECL per Scenario |
At 31 December 2025 | 2025 % | 2026 % | 2027 % | 2028 % | 2029 % | 2025 to 2029 average % | Start to peak % | Start to trough %
Upside |  |  |  |  |  |  |  |
Gross domestic product growth | 1.4 | 2.0 | 2.3 | 1.6 | 1.6 | 1.8 | 9.4 | 0.7
Unemployment rate | 4.8 | 4.2 | 3.2 | 3.1 | 3.2 | 3.7 | 5.1 | 3.0
House price growth | 0.8 | 3.5 | 7.1 | 6.9 | 6.0 | 4.8 | 26.4 | (0.1)
Commercial real estate price growth | 1.2 | 7.9 | 4.9 | 1.7 | 0.8 | 3.2 | 17.3 | 0.6
UK Bank Rate | 4.13 | 3.94 | 4.59 | 5.07 | 5.33 | 4.61 | 5.39 | 3.75
CPI inflation | 3.4 | 2.6 | 2.4 | 2.8 | 3.1 | 2.9 | 3.8 | 2.1
Base case |  |  |  |  |  |  |  |
Gross domestic product growth | 1.4 | 1.2 | 1.4 | 1.5 | 1.6 | 1.4 | 7.6 | 0.7
Unemployment rate | 4.8 | 5.2 | 4.8 | 4.6 | 4.5 | 4.8 | 5.3 | 4.5
House price growth | 0.8 | 1.6 | 1.9 | 2.2 | 3.1 | 1.9 | 9.8 | (0.1)
Commercial real estate price growth | 1.2 | 0.6 | 1.7 | 0.5 | 0.2 | 0.9 | 4.4 | 0.6
UK Bank Rate | 4.13 | 3.44 | 3.25 | 3.44 | 3.50 | 3.55 | 4.50 | 3.25
CPI inflation | 3.4 | 2.6 | 2.2 | 2.2 | 2.3 | 2.6 | 3.8 | 2.1
Downside |  |  |  |  |  |  |  |
Gross domestic product growth | 1.4 | (0.3) | (0.5) | 1.1 | 1.6 | 0.7 | 3.6 | 0.1
Unemployment rate | 4.8 | 6.6 | 7.5 | 7.4 | 7.0 | 6.7 | 7.6 | 4.5
House price growth | 0.8 | (0.2) | (4.7) | (5.7) | (2.8) | (2.6) | 0.9 | (12.2)
Commercial real estate price growth | 1.2 | (7.1) | (4.2) | (2.7) | (2.3) | (3.1) | 1.3 | (14.4)
UK Bank Rate | 4.13 | 2.74 | 1.09 | 0.75 | 0.52 | 1.85 | 4.50 | 0.45
CPI inflation | 3.4 | 2.6 | 2.0 | 1.4 | 1.0 | 2.1 | 3.8 | 0.8
Severe downside |  |  |  |  |  |  |  |
Gross domestic product growth | 1.4 | (1.9) | (1.8) | 0.7 | 1.4 | 0.0 | 1.3 | (2.8)
Unemployment rate | 4.8 | 8.3 | 10.2 | 9.9 | 9.4 | 8.5 | 10.3 | 4.5
House price growth | 0.8 | (1.2) | (11.1) | (12.2) | (7.8) | (6.5) | 0.8 | (28.4)
Commercial real estate price growth | 1.2 | (17.4) | (9.8) | (7.4) | (5.4) | (8.0) | 1.3 | (34.0)
UK Bank Rate | 4.13 | 1.91 | 0.10 | 0.03 | 0.01 | 1.24 | 4.50 | 0.01
CPI inflation | 3.4 | 2.6 | 1.7 | 0.5 | (0.4) | 1.6 | 3.8 | (0.7)
Probability-weighted |  |  |  |  |  |  |  |
Gross domestic product growth | 1.4 | 0.7 | 0.8 | 1.3 | 1.6 | 1.2 | 6.1 | 0.7
Unemployment rate | 4.8 | 5.6 | 5.7 | 5.5 | 5.4 | 5.4 | 5.8 | 4.5
House price growth | 0.8 | 1.3 | 0.2 | (0.2) | 1.1 | 0.6 | 2.8 | (0.1)
Commercial real estate price growth | 1.2 | (1.3) | (0.3) | (0.9) | (0.9) | (0.4) | 1.3 | (2.6)
UK Bank Rate | 4.13 | 3.23 | 2.69 | 2.78 | 2.81 | 3.13 | 4.50 | 2.64
CPI inflation | 3.4 | 2.6 | 2.2 | 2.0 | 1.9 | 2.4 | 3.8 | 1.8
Base case scenario by quarter 1 At 31 December 2025 | First quarter 2025 % | Second quarter 2025 % | Third quarter 2025 % | Fourth quarter 2025 % | First quarter 2026 % | Second quarter 2026 % | Third quarter 2026 % | Fourth quarter 2026 %
Gross domestic product growth | 0.7 | 0.3 | 0.1 | 0.3 | 0.3 | 0.3 | 0.4 | 0.4
Unemployment rate | 4.5 | 4.7 | 5.0 | 5.1 | 5.3 | 5.3 | 5.2 | 5.1
House price growth | 2.9 | 2.7 | 1.3 | 0.8 | 1.3 | 1.6 | 1.6 | 1.6
Commercial real estate price growth | 2.5 | 2.6 | 2.6 | 1.2 | 0.5 | 0.2 | 0.1 | 0.6
UK Bank Rate | 4.50 | 4.25 | 4.00 | 3.75 | 3.75 | 3.50 | 3.25 | 3.25
CPI inflation | 2.8 | 3.5 | 3.8 | 3.7 | 3.3 | 2.6 | 2.2 | 2.2
1 Gross domestic product growth is presented quarter-on-quarter. House price growth, commercial real estate growth and CPI inflation are presented year-on-year, i.e. from the equivalent quarter in the previous year. Unemployment rate and UK Bank Rate are presented as at the end of each quarter. Note 21: Allowance for expected credit losses continued
At 31 December 2024 | 2024 % | 2025 % | 2026 % | 2027 % | 2028 % | 2024 to 2028 average % | Start to peak % | Start to trough %
Upside |  |  |  |  |  |  |  |
Gross domestic product growth | 0.8 | 1.9 | 2.2 | 1.5 | 1.4 | 1.6 | 8.9 | 0.7
Unemployment rate | 4.3 | 3.5 | 2.8 | 2.7 | 2.8 | 3.2 | 4.4 | 2.7
House price growth | 3.4 | 3.7 | 6.5 | 6.6 | 5.4 | 5.1 | 28.2 | 0.4
Commercial real estate price growth | 0.7 | 7.8 | 6.7 | 3.2 | 0.5 | 3.7 | 20.0 | (0.8)
UK Bank Rate | 5.06 | 4.71 | 5.02 | 5.19 | 5.42 | 5.08 | 5.50 | 4.50
CPI inflation | 2.6 | 2.8 | 2.6 | 2.9 | 3.0 | 2.8 | 3.5 | 2.0
Base case |  |  |  |  |  |  |  |
Gross domestic product growth | 0.8 | 1.0 | 1.4 | 1.5 | 1.5 | 1.2 | 7.0 | 0.7
Unemployment rate | 4.3 | 4.7 | 4.7 | 4.5 | 4.5 | 4.5 | 4.8 | 4.2
House price growth | 3.4 | 2.1 | 1.0 | 1.4 | 2.4 | 2.0 | 10.5 | 0.4
Commercial real estate price growth | 0.7 | 0.3 | 2.5 | 1.9 | 0.0 | 1.1 | 5.4 | (0.8)
UK Bank Rate | 5.06 | 4.19 | 3.63 | 3.50 | 3.50 | 3.98 | 5.25 | 3.50
CPI inflation | 2.6 | 2.8 | 2.4 | 2.4 | 2.2 | 2.5 | 3.5 | 2.0
Downside |  |  |  |  |  |  |  |
Gross domestic product growth | 0.8 | (0.5) | (0.4) | 1.0 | 1.5 | 0.5 | 3.2 | 0.0
Unemployment rate | 4.3 | 6.0 | 7.4 | 7.4 | 7.1 | 6.4 | 7.5 | 4.2
House price growth | 3.4 | 0.6 | (5.5) | (6.6) | (3.4) | (2.4) | 4.0 | (11.4)
Commercial real estate price growth | 0.7 | (7.8) | (3.1) | (0.9) | (2.3) | (2.7) | 0.7 | (12.9)
UK Bank Rate | 5.06 | 3.53 | 1.56 | 0.96 | 0.68 | 2.36 | 5.25 | 0.59
CPI inflation | 2.6 | 2.8 | 2.3 | 1.8 | 1.2 | 2.1 | 3.5 | 0.9
Severe downside |  |  |  |  |  |  |  |
Gross domestic product growth | 0.8 | (1.9) | (1.5) | 0.7 | 1.3 | (0.1) | 1.2 | (2.4)
Unemployment rate | 4.3 | 7.7 | 10.0 | 10.0 | 9.7 | 8.4 | 10.2 | 4.2
House price growth | 3.4 | (0.8) | (12.4) | (13.6) | (8.8) | (6.7) | 3.4 | (29.2)
Commercial real estate price growth | 0.7 | (17.4) | (8.5) | (5.5) | (5.7) | (7.5) | 0.7 | (32.3)
UK Bank Rate – modelled | 5.06 | 2.68 | 0.28 | 0.08 | 0.02 | 1.62 | 5.25 | 0.02
UK Bank Rate – adjusted 1 | 5.06 | 4.03 | 2.70 | 2.23 | 1.95 | 3.19 | 5.25 | 1.88
CPI inflation – modelled | 2.6 | 2.8 | 1.9 | 1.0 | 0.1 | 1.7 | 3.5 | (0.2)
CPI inflation – adjusted 1 | 2.6 | 3.6 | 2.1 | 1.4 | 0.8 | 2.1 | 3.9 | 0.7
Probability-weighted |  |  |  |  |  |  |  |
Gross domestic product growth | 0.8 | 0.5 | 0.8 | 1.2 | 1.4 | 1.0 | 5.7 | 0.7
Unemployment rate | 4.3 | 5.0 | 5.5 | 5.4 | 5.3 | 5.1 | 5.5 | 4.2
House price growth | 3.4 | 1.8 | (0.7) | (1.0) | 0.4 | 0.8 | 5.3 | 0.4
Commercial real estate price growth | 0.7 | (1.7) | 1.0 | 0.7 | (1.1) | (0.1) | 0.7 | (1.3)
UK Bank Rate – modelled | 5.06 | 4.00 | 3.09 | 2.90 | 2.88 | 3.59 | 5.25 | 2.88
UK Bank Rate – adjusted 1 | 5.06 | 4.13 | 3.33 | 3.12 | 3.08 | 3.74 | 5.25 | 3.06
CPI inflation – modelled | 2.6 | 2.8 | 2.4 | 2.2 | 1.9 | 2.4 | 3.5 | 1.8
CPI inflation – adjusted 1 | 2.6 | 2.9 | 2.4 | 2.3 | 2.0 | 2.4 | 3.5 | 1.9
1 The adjustment to UK Bank Rate and CPI inflation in the severe downside was considered to better reflect the risks around the Group’s base case view in an economic environment where the risks of supply and demand shocks are more balanced.
Base case scenario by quarter 1 At 31 December 2024 | First quarter 2024 % | Second quarter 2024 % | Third quarter 2024 % | Fourth quarter 2024 % | First quarter 2025 % | Second quarter 2025 % | Third quarter 2025 % | Fourth quarter 2025 %
Gross domestic product growth | 0.7 | 0.4 | 0.0 | 0.1 | 0.2 | 0.3 | 0.3 | 0.3
Unemployment rate | 4.3 | 4.2 | 4.3 | 4.4 | 4.5 | 4.6 | 4.7 | 4.8
House price growth | 0.4 | 1.8 | 4.6 | 3.4 | 3.6 | 4.0 | 3.0 | 2.1
Commercial real estate price growth | (5.3) | (4.7) | (2.8) | 0.7 | 1.8 | 1.4 | 0.9 | 0.3
UK Bank Rate | 5.25 | 5.25 | 5.00 | 4.75 | 4.50 | 4.25 | 4.00 | 4.00
CPI inflation | 3.5 | 2.1 | 2.0 | 2.5 | 2.4 | 3.0 | 2.9 | 2.7
1 Gross domestic product growth is presented quarter-on-quarter. House price growth, commercial real estate growth and CPI inflation are presented year-on-year, i.e. from the equivalent quarter in the previous year. Unemployment rate and UK Bank Rate are presented as at the end of each quarter.
Disclosure Of Climate High Risk Areas |
Assessment | Nature of risk assessed | Portfolios assessed | ECL impact At 31 December 2025 | ECL impact At 31 December 2024
Macroeconomic impact from climate scenario | Scenario risk – macro level | Retail | < £10 million | < £5 million
Sector level impacts from climate scenario | Scenario risk – sector level | Commercial Banking (excluding Business Banking) | < £15 million | < £15 million
Retrofitting cost to meet EPC regulation | Transition risk | UK mortgages | < £10 million | < £10 million
Flood risk | Physical risk | UK mortgages | < £5 million | < £5 million

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