v3.25.4
Allowance for expected credit losses (Tables)
 12 Months Ended
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 boundary1 (%)
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 20241
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)
1For 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 20241
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
1For 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 quarter1
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
1Gross 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 – adjusted1
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 – adjusted1
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 – adjusted1
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 – adjusted1
2.6
2.9
2.4
2.3
2.0
2.4
3.5
1.9
1The 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 quarter1
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
1Gross 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