FINANCIAL RISK MANAGEMENT (Tables)

12 Months Ended

Dec. 31, 2017

FINANCIAL RISK MANAGEMENT (Tables) [Line Items]

Description of accounting policy for functional currency [text block]

	2017							2016
	Euro £m			US Dollar £m		Other non-sterling £m		Euro £m			US Dollar £m			Other non-sterling £m
Gross exposure		73			374		32		247			479			36
Net investment hedges		(41	)		–		–		(216	)		(479	)		–
Total structural foreign currency exposures, after net investment hedges		32			374		32		31			–			36

Disclosure of credit risk exposure [text block]

	At 31 December 2017							At 31 December 2016
	Maximum exposure £m		Offset2 £m			Net exposure £m		Maximum exposure £m		Offset2 £m			Net exposure £m
Loans and receivables:
Loans and advances to banks, net1		6,611		–			6,611		26,902		–			26,902
Loans and advances to customers, net1		472,498		(7,030	)		465,468		457,958		(6,331	)		451,627
Debt securities, net1		3,643		–			3,643		3,397		–			3,397
		482,752		(7,030	)		475,722		488,257		(6,331	)		481,926
Available-for-sale financial assets3		40,901		–			40,901		55,311		–			55,311
Trading and other financial assets at fair value through profit or loss:3,4
Loans and advances		31,590		–			31,590		33,079		–			33,079
Debt securities, treasury and other bills		45,198		–			45,198		50,398		–			50,398
		76,788		–			76,788		83,477		–			83,477
Derivative assets		25,834		(13,049	)		12,785		36,138		(18,539	)		17,599
Assets arising from reinsurance contracts held		602		–			602		714		–			714
Financial guarantees		5,820		–			5,820		6,883		–			6,883
Off-balance sheet items:
Acceptances and endorsements		71		–			71		21		–			21
Other items serving as direct credit substitutes		740		–			740		779		–			779
Performance bonds and other transaction-related contingencies		2,300		–			2,300		2,237		–			2,237
Irrevocable commitments		60,126		–			60,126		63,203		–			63,203
		63,237		–			63,237		66,240		–			66,240
		695,934		(20,079	)		675,855		737,020		(24,870	)		712,150

1	Amounts shown net of related impairment allowances.
2	Offset items comprise deposit amounts available for offset, and amounts available for offset under master netting arrangements, that do not meet the criteria under IAS 32 to enable loans and advances and derivative assets respectively to be presented net of these balances in the financial statements.
3	Excluding equity shares.
4	Includes assets within the Group’s unit-linked funds for which credit risk is borne by the policyholders and assets within the Group’s With-Profits funds for which credit risk is largely borne by the policyholders. Consequently, the Group has no significant exposure to credit risk for such assets which back related contract liabilities.

Disclosure of L&A to Customers and L&A held at FVTPL

			Loans and advances to customers													Loans and
	Loans and advances to banks £m			Retail – mortgages £m			Retail – other £m			Commercial £m			Total £m			advances designated at fair value through profit or loss £m
At 31 December 2017
Neither past due nor impaired		6,577			295,765			48,897			116,396			461,058			31,590
Past due but not impaired		6			5,934			585			336			6,855			–
Impaired – no provision required		28			640			306			700			1,646			–
– provision held		–			3,529			1,053			1,613			6,195			–
Gross		6,611			305,868			50,841			119,045			475,754			31,590
Allowance for impairment losses		–			(1,604	)		(655	)		(1,183	)		(3,442	)		–
Fair value adjustments		–												186			–
Net balance sheet carrying value		6,611												472,498			31,590
At 31 December 2016
Neither past due nor impaired		26,888			296,303			39,478			109,364			445,145			33,079
Past due but not impaired		14			7,340			386			305			8,031			–
Impaired – no provision required		–			784			392			689			1,865			–
– provision held		–			3,536			1,038			2,056			6,630			–
Gross		26,902			307,963			41,294			112,414			461,671			33,079
Allowance for impairment losses		–			(1,696	)		(458	)		(1,378	)		(3,532	)		–
Fair value adjustments		–												(181	)		–
Net balance sheet carrying value		26,902												457,958			33,079

Information about credit quality of neither past due nor impaired financial assets [text block]

			Loans and advances to customers								Loans and
											advances
											designated
	Loans and										at fair value
	advances		Retail –		Retail –						through
	to banks		mortgages		other		Commercial		Total		profit or loss
	£m		£m		£m		£m		£m		£m
At 31 December 2017
Good quality		6,351		294,748		43,145		81,121				31,548
Satisfactory quality		198		790		4,770		30,154				42
Lower quality		28		32		286		4,807				–
Below standard, but not impaired		–		195		696		314				–
Total loans and advances which are neither past due nor impaired		6,577		295,765		48,897		116,396		461,058		31,590
At 31 December 2016
Good quality		26,745		295,286		34,195		72,083				33,049
Satisfactory quality		87		814		4,479		30,433				30
Lower quality		3		39		387		6,433				–
Below standard, but not impaired		53		164		417		415				–
Total loans and advances which are neither past due nor impaired		26,888		296,303		39,478		109,364		445,145		33,079

Analysis of age of financial assets that are past due but not impaired [text block]

			Loans and advances to customers								Loans and
											advances
											designated
	Loans and										at fair value
	advances		Retail –		Retail –						through
	to banks		mortgages		other		Commercial		Total		profit or loss
	£m		£m		£m		£m		£m		£m
At 31 December 2017
0-30 days		6		3,057		458		246		3,761		–
30-60 days		–		1,115		111		10		1,236		–
60-90 days		–		785		3		13		801		–
90-180 days		–		977		3		8		988		–
Over 180 days		–		–		10		59		69		–
Total loans and advances which are past due but not impaired		6		5,934		585		336		6,855		–
At 31 December 2016
0-30 days		14		3,547		285		157		3,989		–
30-60 days		–		1,573		75		37		1,685		–
60-90 days		–		985		2		74		1,061		–
90-180 days		–		1,235		6		14		1,255		–
Over 180 days		–		–		18		23		41		–
Total loans and advances which are past due but not impaired		14		7,340		386		305		8,031		–

Disclosure of fair value of financial instruments [text block]

An analysis of the Group’s trading and other financial assets at fair value through profit or loss is included in note 15. The credit quality of the Group’s debt securities, treasury and other bills held at fair value through profit or loss is set out below:

	2017						2016
	Investment						Investment
	grade1		Other2		Total		grade1		Other2		Total
	£m		£m		£m		£m		£m		£m
Debt securities, treasury and other bills held at fair value through profit or loss
Trading assets:
Government securities		9,833		–		9,833		11,828		–		11,828
Asset-backed securities:
Mortgage-backed securities		84		105		189		47		–		47
Other asset-backed securities		95		–		95		69		–		69
		179		105		284		116		–		116
Corporate and other debt securities		469		54		523		221		3		224
Total held as trading assets		10,481		159		10,640		12,165		3		12,168
Other assets held at fair value through profit or loss:
Government securities		12,180		7		12,187		14,904		–		14,904
Other public sector securities		1,519		8		1,527		1,318		7		1,325
Bank and building society certificates of deposit		222		–		222		244		–		244
Asset-backed securities:
Mortgage-backed securities		208		3		211		633		27		660
Other asset-backed securities		924		2		926		1,178		291		1,469
		1,132		5		1,137		1,811		318		2,129
Corporate and other debt securities		17,343		2,124		19,467		17,445		2,163		19,608
Total debt securities held at fair value through profit or loss		32,396		2,144		34,540		35,722		2,488		38,210
Treasury bills and other bills		18		–		18		20		–		20
Total other assets held at fair value through profit or loss		32,414		2,144		34,558		35,742		2,488		38,230
Total held at fair value through profit or loss		42,895		2,303		45,198		47,907		2,491		50,398

1	Credit ratings equal to or better than ‘BBB’.
2	Other comprises sub-investment grade (2017: £331 million; 2016: £485 million) and not rated (2017: £1,972 million; 2016: £2,006 million).

Analysis of Loan-to-value ratio of Residential Mortgage Lending

An analysis by loan-to-value ratio of the Group’s residential mortgage lending is provided below. The value of collateral used in determining the loan-to-value ratios has been estimated based upon the last actual valuation, adjusted to take into account subsequent movements in house prices, after making allowance for indexation error and dilapidations.

	2017								2016
	Neither								Neither
	past due		Past due but						past due		Past due but
	nor impaired		not impaired		Impaired		Gross		nor impaired		not impaired		Impaired		Gross
	£m		£m		£m		£m		£m		£m		£m		£m
Less than 70 per cent		217,070		4,309		2,443		223,822		220,497		5,288		2,334		228,119
70 per cent to 80 per cent		43,045		787		595		44,427		39,789		1,004		648		41,441
80 per cent to 90 per cent		25,497		500		436		26,433		23,589		621		495		24,705
90 per cent to 100 per cent		7,085		177		245		7,507		7,983		223		355		8,561
Greater than 100 per cent		3,068		161		450		3,679		4,445		204		488		5,137
Total		295,765		5,934		4,169		305,868		296,303		7,340		4,320		307,963

Participating investment contracts [Member]

FINANCIAL RISK MANAGEMENT (Tables) [Line Items]

Disclosure of Liabilities Arising from Insurance and Participating Investment Contracts [text block]

Liabilities arising from insurance and participating investment contracts are analysed on a behavioural basis, as permitted by IFRS 4, as follows:

	Up to 1 month £m	1-3  months £m	3-12 months £m	1-5 years £m	Over 5 years £m	Total  £m
At 31 December 2017	1,708	1,747	6,467	26,479	67,012	103,413
At 31 December 2016	1,283	1,836	6,266	23,425	61,580	94,390

Available-for-Sale Financial Assets (Excluding Equity Shares) [Member]

FINANCIAL RISK MANAGEMENT (Tables) [Line Items]

Disclosure of Available-for-Sale Financial Assets (Excluding Equity Shares) [text block]

An analysis of the Group’s available-for-sale financial assets is included in note 21. The credit quality of the Group’s available-for-sale financial assets (excluding equity shares) is set out below:

	2017						2016
	Investment						Investment
	grade1		Other2		Total		grade1		Other2		Total
	£m		£m		£m		£m		£m		£m
Debt securities:
Government securities		34,708		–		34,708		48,714		–		48,714
Bank and building society certificates of deposit		167		–		167		142		–		142
Asset-backed securities:
Mortgage-backed securities		1,156		–		1,156		108		–		108
Other asset-backed securities		235		20		255		312		5		317
		1,391		20		1,411		420		5		425
Corporate and other debt securities		4,250		365		4,615		6,030		–		6,030
Total held as available-for-sale financial assets		40,516		385		40,901		55,306		5		55,311

1	Credit ratings equal to or better than ‘BBB’.
2	Other comprises sub-investment grade (2017: £9 million; 2016: £5 million) and not rated (2017: £376 million; 2016: £nil).

Derivative assets [Member]

FINANCIAL RISK MANAGEMENT (Tables) [Line Items]

Disclosure of Derivative Assets [text block]

	2017						2016
	Investment						Investment
	grade1		Other2		Total		grade1		Other2		Total
	£m		£m		£m		£m		£m		£m
Trading and other		21,742		2,211		23,953		31,373		2,053		33,426
Hedging		1,874		7		1,881		2,664		48		2,712
Total derivative financial instruments		23,616		2,218		25,834		34,037		2,101		36,138

1	Credit ratings equal to or better than ‘BBB’.
2	Other comprises sub-investment grade (2017: £1,878 million; 2016: £1,830 million) and not rated (2017: £340 million; 2016: £271 million).

Consumer loans [member]

FINANCIAL RISK MANAGEMENT (Tables) [Line Items]

Explanation of impairment loss recognised or reversed [text block]

The table below sets out the reconciliation of the allowance for impairment losses of £2,201 million (2016: £2,412 million) shown in note 20 to the allowance for impairment losses on an underlying basis of £3,442 million (2016: £3,532 million) shown above:

	2017 £m		2016 £m
Allowance for impairment losses on loans and advances to customers	2,201		2,412
Impairment allowance of HBOS and MBNA at acquisition1	11,309		11,147
Impairment charge covered by fair value adjustments	12,321		12,236
Amounts subsequently written off, net of foreign exchange and other movements	(22,389	)	(22,263	)
Allowance for impairment losses on loans and advances to customers on an underlying basis	3,442		3,532

1 Comprises an allowance in respect of HBOS (£11,147 million) and, in 2017, MBNA (£162 million). These amounts impact the impairment allowance on an underlying basis but not on a statutory basis.

Corporate loans [member]

FINANCIAL RISK MANAGEMENT (Tables) [Line Items]

Disclosure of Debt Securities Classified as Loans and Receivables [text block]

An analysis by credit rating of the Group’s debt securities classified as loans and receivables is provided below:

	2017							2016
	Investment							Investment
	grade1		Other2		Total			grade1		Other2		Total
	£m		£m		£m			£m		£m		£m
Asset-backed securities:
Mortgage-backed securities		2,366		–		2,366			2,089		–		2,089
Other asset-backed securities		1,164		96		1,260			1,192		98		1,290
		3,530		96		3,626			3,281		98		3,379
Corporate and other debt securities		27		16		43			29		65		94
Gross exposure		3,557		112		3,669			3,310		163		3,473
Allowance for impairment losses						(26	)						(76	)
Total debt securities classified as loans and receivables						3,643							3,397

1	Credit ratings equal to or better than ‘BBB’.
2	Other comprises sub-investment grade (2017: £89 million; 2016: £91 million) and not rated (2017: £23 million; 2016: £72 million).

Assets and liabilities [member]

FINANCIAL RISK MANAGEMENT (Tables) [Line Items]

Disclosure of maturity analysis for derivative financial liabilities [text block]

The table below analyses assets and liabilities of the Group into relevant maturity groupings based on the remaining contractual period at the balance sheet date; balances with no fixed maturity are included in the over 5 years category. Certain balances, included in the table below on the basis of their residual maturity, are repayable on demand upon payment of a penalty.

	Up to 1 month £m	1-3 months £m	3-6 months £m	6-9 months £m	9-12 months £m	1-2 years £m	2-5 years £m	Over 5 years £m	Total £m
At 31 December 2017
Assets
Cash and balances at central banks	58,519	2	–	–	–	–	–	–	58,521
Trading and other financial assets at fair value through profit or loss	11,473	13,345	4,858	2,781	1,056	2,655	5,341	121,369	162,878
Derivative financial instruments	449	601	763	451	503	965	2,763	19,339	25,834
Loans and advances to banks	3,104	314	190	190	192	131	2,405	85	6,611
Loans and advances to customers	28,297	15,953	13,585	11,881	10,482	29,340	70,967	291,993	472,498
Debt securities held as loans and receivables	10	29	–	–	7	350	2,775	472	3,643
Available-for-sale financial assets	59	365	286	1,025	265	3,040	15,366	21,692	42,098
Other assets	3,807	897	414	1,170	854	725	5,618	26,541	40,026
Total assets	105,718	31,506	20,096	17,498	13,359	37,206	105,235	481,491	812,109
Liabilities
Deposits from banks	2,810	2,318	1,885	87	28	–	22,378	298	29,804
Customer deposits	366,778	18,821	10,615	5,524	5,074	7,823	2,986	503	418,124
Derivative financial instruments, trading and other financial liabilities at fair value through profit or loss	19,215	16,932	4,933	3,419	948	1,961	4,298	25,295	77,001
Debt securities in issue	3,248	6,014	4,431	3,506	2,902	6,333	25,669	20,347	72,450
Liabilities arising from insurance and investment contracts	1,898	2,003	2,484	2,466	2,425	8,532	21,842	77,210	118,860
Other liabilities	4,229	2,805	239	2,216	1,894	1,498	1,933	13,991	28,805
Subordinated liabilities	–	202	1,588	–	570	574	3,983	11,005	17,922
Total liabilities	398,178	49,095	26,175	17,218	13,841	26,721	83,089	148,649	762,966
At 31 December 2016
Assets
Cash and balances at central banks	47,446	2	4	–	–	–	–	–	47,452
Trading and other financial assets at fair value through profit or loss	20,168	14,903	7,387	2,914	817	1,680	6,011	97,294	151,174
Derivative financial instruments	956	1,700	1,393	786	651	2,230	4,165	24,257	36,138
Loans and advances to banks	9,801	6,049	3,894	1,201	867	1,281	3,692	117	26,902
Loans and advances to customers	20,179	10,651	14,235	12,400	10,773	26,007	69,300	294,413	457,958
Debt securities held as loans and receivables	8	–	–	242	–	–	34	3,113	3,397
Available-for-sale financial assets	127	259	73	637	222	1,887	16,080	37,239	56,524
Other assets	5,025	583	584	1,560	1,059	1,846	4,808	22,783	38,248
Total assets	103,710	34,147	27,570	19,740	14,389	34,931	104,090	479,216	817,793
Liabilities
Deposits from banks	3,772	2,779	1,062	503	13	43	7,859	353	16,384
Customer deposits	347,753	18,936	8,961	10,482	8,477	13,859	6,430	562	415,460
Derivative financial instruments, trading and other financial liabilities at fair value through profit or loss	18,381	19,640	8,779	1,696	1,179	3,843	5,575	30,335	89,428
Debt securities in issue	4,065	8,328	6,433	4,158	1,224	6,939	25,020	20,147	76,314
Liabilities arising from insurance and investment contracts	1,583	2,190	2,737	2,463	2,377	8,588	19,971	74,593	114,502
Other liabilities	3,282	2,266	1,213	2,164	1,440	413	3,087	23,544	37,409
Subordinated liabilities	–	390	161	393	–	1,750	4,527	12,610	19,831
Total liabilities	378,836	54,529	29,346	21,859	14,710	35,435	72,469	162,144	769,328

Financial liabilities, category [member]

FINANCIAL RISK MANAGEMENT (Tables) [Line Items]

Disclosure of maturity analysis for derivative financial liabilities [text block]

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.

	Up to 1 month £m			1-3 months £m			3-12 months £m			1-5 years £m			Over 5 years  £m			Total £m
At 31 December 2017
Deposits from banks		2,516			3,545			2,096			21,498			660			30,315
Customer deposits		367,103			18,854			21,308			11,198			2,375			420,838
Trading and other financial liabilities at fair value through profit or loss		21,286			14,424			6,499			4,251			13,044			59,504
Debt securities in issue		3,444			6,331			12,562			36,999			23,923			83,259
Liabilities arising from non-participating investment contracts		15,447			–			–			–			–			15,447
Subordinated liabilities		231			454			2,907			7,170			19,164			29,926
Total non-derivative financial liabilities		410,027			43,608			45,372			81,116			59,166			639,289
Derivative financial liabilities:
Gross settled derivatives – outflows		23,850			31,974			24,923			43,444			30,605			154,796
Gross settled derivatives – inflows		(23,028	)		(30,972	)		(23,886	)		(43,523	)		(32,065	)		(153,474	)
Gross settled derivatives – net flows		822			1,002			1,037			(79	)		(1,460	)		1,322
Net settled derivatives liabilities		17,425			128			776			974			2,795			22,098
Total derivative financial liabilities		18,247			1,130			1,813			895			1,335			23,420
At 31 December 2016
Deposits from banks		3,686			4,154			1,541			5,883			1,203			16,467
Customer deposits		347,573			19,151			28,248			20,789			1,294			417,055
Trading and other financial liabilities at fair value through profit or loss		14,390			19,718			11,845			1,938			13,513			61,404
Debt securities in issue		7,590			8,721			12,533			36,386			17,635			82,865
Liabilities arising from non-participating investment contracts		20,112			–			–			–			–			20,112
Subordinated liabilities		41			674			1,289			9,279			18,542			29,825
Total non-derivative financial liabilities		393,392			52,418			55,456			74,275			52,187			627,728
Derivative financial liabilities:
Gross settled derivatives – outflows		33,128			24,088			25,366			52,925			36,462			171,969
Gross settled derivatives – inflows		(31,359	)		(22,401	)		(23,510	)		(49,239	)		(32,382	)		(158,891	)
Gross settled derivatives – net flows		1,769			1,687			1,856			3,686			4,080			13,078
Net settled derivatives liabilities		21,669			117			620			1,167			3,020			26,593
Total derivative financial liabilities		23,438			1,804			2,476			4,853			7,100			39,671

Off balance sheet [Member]

FINANCIAL RISK MANAGEMENT (Tables) [Line Items]

Maturity Analysis For Commitments And Contingent Liabilities

The following tables set out the amounts and residual maturities of the Group’s off balance sheet contingent liabilities and commitments.

	Up to 1 month £m	1-3 months £m	3-6 months £m	6-9 months £m	9-12 months £m	1-3 years £m	3-5 years £m	Over 5 years £m	Total £m
At 31 December 2017
Acceptances and endorsements	12	51	4	–	–	4	–	–	71
Other contingent liabilities	392	669	210	131	205	506	271	656	3,040
Total contingent liabilities	404	720	214	131	205	510	271	656	3,111
Lending commitments	66,964	3,137	5,966	5,525	11,440	17,374	15,106	3,913	129,425
Other commitments	19	–	–	38	–	46	71	210	384
Total commitments	66,983	3,137	5,966	5,563	11,440	17,420	15,177	4,123	129,809
Total contingents and commitments	67,387	3,857	6,180	5,694	11,645	17,930	15,448	4,779	132,920

	Up to 1 month £m	1-3 months £m	3-6 months £m	6-9 months £m	9-12 months £m	1-3 years £m	3-5 years £m	Over 5 years £m	Total £m
At 31 December 2016
Acceptances and endorsements	13	6	–	–	1	1	–	–	21
Other contingent liabilities	427	782	163	153	122	466	280	623	3,016
Total contingent liabilities	440	788	163	153	123	467	280	623	3,037
Lending commitments	48,210	3,546	5,276	4,783	11,628	17,212	18,775	4,090	113,520
Other commitments	–	3	–	41	1	79	122	402	648
Total commitments	48,210	3,549	5,276	4,824	11,629	17,291	18,897	4,492	114,168
Total contingents and commitments	48,650	4,337	5,439	4,977	11,752	17,758	19,177	5,115	117,205

Securities lending [member]

FINANCIAL RISK MANAGEMENT (Tables) [Line Items]

Disclosure of transfers of financial assets [text block]

The following on balance sheet financial assets have been lent to counterparties under securities lending transactions:

	2017		2016
	£m		£m
Trading and other financial assets at fair value through profit or loss		6,622		6,991
Loans and advances to customers		197		583
Available-for-sale financial assets		2,608		3,206
		9,427		10,780