17. Credit quality of loans and advances to banks and customers

Gross drawn exposures


At 30 June 2020							Purchased
							or
							originated
							credit-
	PD			Stage 1	Stage 2	Stage 3	impaired	Total
	range			£m	£m	£m	£m	£m
Loans and advances to banks:
CMS 1-10	0.00	-	0.50%	6,094	—	—	—	6,094
CMS 11-14	0.51	-	3.00%	5,049	—	—	—	5,049
CMS 15-18	3.01	-	20.00%	37	44	—	—	81
CMS 19	20.01	-	99.99%	—	—	—	—	—
CMS 20-23			100%	—	—	—	—	—
				11,180	44	—	—	11,224
Loans and advances to customers:
Retail – mortgages
RMS 1-6	0.00	-	4.50%	236,569	27,321	—	—	263,890
RMS 7-9	4.51	-	14.00%	8	3,770	—	—	3,778
RMS 10	14.01	-	20.00%	—	862	—	—	862
RMS 11-13	20.01	-	99.99%	—	2,354	—	—	2,354
RMS 14			100.00%	—	—	1,800	13,043	14,843
				236,577	34,307	1,800	13,043	285,727
Retail – credit cards
RMS 1-6	0.00	-	4.50%	10,070	456	—	—	10,526
RMS 7-9	4.51	-	14.00%	2,882	641	—	—	3,523
RMS 10	14.01	-	20.00%	403	361	—	—	764
RMS 11-13	20.01	-	99.99%	84	630	—	—	714
RMS 14			100.00%	—	—	368	—	368
				13,439	2,088	368	—	15,895
Retail – UK Motor Finance
RMS 1-6	0.00	-	4.50%	11,615	1,762	—	—	13,377
RMS 7-9	4.51	-	14.00%	1,054	693	—	—	1,747
RMS 10	14.01	-	20.00%	—	155	—	—	155
RMS 11-13	20.01	-	99.99%	5	310	—	—	315
RMS 14			100.00%	—	—	236	—	236
				12,674	2,920	236	—	15,830
Retail – other
RMS 1-6	0.00	-	4.50%	19,242	693	—	—	19,935
RMS 7-9	4.51	-	14.00%	3,213	546	—	—	3,759
RMS 10	14.01	-	20.00%	787	191	—	—	978
RMS 11-13	20.01	-	99.99%	997	631	—	—	1,628
RMS 14			100.00%	—	—	480	—	480
				24,239	2,061	480	—	26,780
Total Retail				286,929	41,376	2,884	13,043	344,232


At 30 June 2020							Purchased
							or
							originated
							credit-
	PD			Stage 1	Stage 2	Stage 3	impaired	Total
	range			£m	£m	£m	£m	£m

Commercial
CMS 1-10	0.00	-	0.50%	29,923	353	–	–	30,276
CMS 11-14	0.51	-	3.00%	40,101	7,276	–	–	47,377
CMS 15-18	3.01	-	20.00%	8,038	7,543	–	–	15,581
CMS 19	20.01	-	99.99%	–	1,568	–	–	1,568
CMS 20-23			100%	–	–	3,808	–	3,808
				78,062	16,740	3,808	–	98,610
Other
RMS 1-6	0.00	-	4.50%	765	23	–	–	788
RMS 7-9	4.51	-	14.00%	–	–	–	–	–
RMS 10	14.01	-	20.00%	–	–	–	–	–
RMS 11-13	20.01	-	99.99%	–	–	–	–	–
RMS 14			100.00%	–	–	91	–	91
				765	23	91	–	879
CMS 1-10	0.00	-	0.50%	63,773	–	–	–	63,773
CMS 11-14	0.51	-	3.00%	–	–	–	–	–
CMS 15-18	3.01	-	20.00%	–	–	–	–	–
CMS 19	20.01	-	99.99%	–	–	–	–	–
CMS 20-23			100%	–	–	–	–	–
				63,773	–	–	–	63,773
Total loans and advances to customers				429,529	58,139	6,783	13,043	507,494

In respect of:
Retail				286,929	41,376	2,884	13,043	344,232
Commercial				78,062	16,740	3,808	–	98,610
Other				64,538	23	91	–	64,652
Total loans and advances to customers				429,529	58,139	6,783	13,043	507,494

The update to the Group's economic outlook has contributed to a deterioration of assigned credit quality and an increase in stage 2 balances due to the forward-looking probability of default (PD) used for rating segmentation.

Lending originated under the UK Government's COVID-19 support schemes is rated according to the customer's probability of default; the Government guarantees impact the anticipated loss given default (LGD).

Expected credit losses


At 30 June 2020							Purchased
							or
							originated
							credit-
	PD			Stage 1	Stage 2	Stage 3	impaired	Total
	range			£m	£m	£m	£m	£m
Loans and advances to banks:
CMS 1-10	0.00	-	0.50%	1	—	—	—	1
CMS 11-14	0.51	-	3.00%	19	—	—	—	19
CMS 15-18	3.01	-	20.00%	1	1	—	—	2
CMS 19	20.01	-	99.99%	—	—	—	—	—
CMS 20-23			100%	—	—	—	—	—
				21	1	—	—	22
Loans and advances to customers:
Retail – mortgages
RMS 1-6	0.00	-	4.50%	106	250	—	—	356
RMS 7-9	4.51	-	14.00%	—	79	—	—	79
RMS 10	14.01	-	20.00%	—	28	—	—	28
RMS 11-13	20.01	-	99.99%	—	134	—	—	134
RMS 14			100.00%	—	—	187	325	512
				106	491	187	325	1,109
Retail – credit cards
RMS 1-6	0.00	-	4.50%	96	22	—	—	118
RMS 7-9	4.51	-	14.00%	134	61	—	—	195
RMS 10	14.01	-	20.00%	44	58	—	—	102
RMS 11-13	20.01	-	99.99%	13	208	—	—	221
RMS 14			100.00%	—	—	121	—	121
				287	349	121	—	757
Retail – UK Motor Finance
RMS 1-6	0.00	-	4.50%	184	50	—	—	234
RMS 7-9	4.51	-	14.00%	8	47	—	—	55
RMS 10	14.01	-	20.00%	—	21	—	—	21
RMS 11-13	20.01	-	99.99%	—	99	—	—	99
RMS 14			100.00%	—	—	152	—	152
				192	217	152	—	561
Retail - other
RMS 1-6	0.00	-	4.50%	116	28	—	—	144
RMS 7-9	4.51	-	14.00%	110	43	—	—	153
RMS 10	14.01	-	20.00%	22	35	—	—	57
RMS 11-13	20.01	-	99.99%	17	213	—	—	230
RMS 14			100.00%	—	—	173	—	173
				265	319	173	—	757
Total Retail				850	1,376	633	325	3,184


At 30 June 2020							Purchased
							or
							originated
							credit-
	PD			Stage 1	Stage 2	Stage 3	impaired	Total
	range			£m	£m	£m	£m	£m

Commercial
CMS 1-10	0.00	-	0.50%	21	2	—	—	23
CMS 11-14	0.51	-	3.00%	131	164	—	—	295
CMS 15-18	3.01	-	20.00%	118	390	—	—	508
CMS 19	20.01	-	99.99%	—	236	—	—	236
CMS 20-23			100%	—	—	1,509	—	1,509
				270	792	1,509	—	2,571
Other
RMS 1-6	0.00	-	4.50%	12	—	—	—	12
RMS 7-9	4.51	-	14.00%	—	—	—	—	—
RMS 10	14.01	-	20.00%	—	—	—	—	—
RMS 11-13	20.01	-	99.99%	—	—	—	—	—
RMS 14			100.00%	—	—	19	—	19
				12	—	19	—	31
CMS 1-10	0.00	-	0.50%	—	—	—	—	—
CMS 11-14	0.51	-	3.00%	—	—	—	—	—
CMS 15-18	3.01	-	20.00%	—	—	—	—	—
CMS 19	20.01	-	99.99%	—	—	—	—	—
CMS 20-23			100%	—	—	—	—	—
				—	—	—	—	—
Central adjustment to severe scenario				200	—	—	—	200
Total loans and advances to customers				1,332	2,168	2,161	325	5,986

In respect of:
Retail				850	1,376	633	325	3,184
Commercial				270	792	1,509	—	2,571
Other				212	—	19	—	231
Total loans and advances to customers				1,332	2,168	2,161	325	5,986

Gross drawn exposures


At 31 December 2019							Purchased
							or
							originated
							credit-
	PD			Stage 1	Stage 2	Stage 3	impaired	Total
	range			£m	£m	£m	£m	£m
Loans and advances to banks:
CMS 1-10	0.00	-	0.50%	9,777	—	—	—	9,777
CMS 11-14	0.51	-	3.00%	—	—	—	—	—
CMS 15-18	3.01	-	20.00%	—	—	—	—	—
CMS 19	20.01	-	99.99%	—	—	—	—	—
CMS 20-23			100%	—	—	—	—	—
				9,777	—	—	—	9,777
Loans and advances to customers:
Retail – mortgages
RMS 1-6	0.00	-	4.50%	257,028	13,494	—	—	270,522
RMS 7-9	4.51	-	14.00%	15	2,052	—	—	2,067
RMS 10	14.01	-	20.00%	—	414	—	—	414
RMS 11-13	20.01	-	99.99%	—	975	—	—	975
RMS 14			100.00%	—	—	1,506	13,714	15,220
				257,043	16,935	1,506	13,714	289,198
Retail – credit cards
RMS 1-6	0.00	-	4.50%	14,745	729	—	—	15,474
RMS 7-9	4.51	-	14.00%	1,355	556	—	—	1,911
RMS 10	14.01	-	20.00%	32	105	—	—	137
RMS 11-13	20.01	-	99.99%	1	291	—	—	292
RMS 14			100.00%	—	—	385	—	385
				16,133	1,681	385	—	18,199
Retail – UK Motor Finance
RMS 1-6	0.00	-	4.50%	13,568	1,297	—	—	14,865
RMS 7-9	4.51	-	14.00%	314	368	—	—	682
RMS 10	14.01	-	20.00%	—	99	—	—	99
RMS 11-13	20.01	-	99.99%	2	178	—	—	180
RMS 14			100.00%	—	—	150	—	150
				13,884	1,942	150	—	15,976
Retail - other
RMS 1-6	0.00	-	4.50%	17,166	763	—	—	17,929
RMS 7-9	4.51	-	14.00%	1,330	784	—	—	2,114
RMS 10	14.01	-	20.00%	44	91	—	—	135
RMS 11-13	20.01	-	99.99%	151	338	—	—	489
RMS 14			100.00%	—	—	443	—	443
				18,691	1,976	443	—	21,110
Total Retail				305,751	22,534	2,484	13,714	344,483


At 31 December 2019					Purchased
					or
					originated
					credit-
	PD			Stage 1	Stage 2	Stage 3	impaired	Total
	range			£m	£m	£m	£m	£m

Commercial
CMS 1-10	0.00	-	0.50%	59,708	379	—	—	60,087
CMS 11-14	0.51	-	3.00%	25,569	2,318	—	—	27,887
CMS 15-18	3.01	-	20.00%	1,797	3,111	—	—	4,908
CMS 19	20.01	-	99.99%	—	169	—	—	169
CMS 20-23			100%	—	—	3,447	—	3,447
				87,074	5,977	3,447	—	96,498
Other
RMS 1-6	0.00	-	4.50%	754	32	—	—	786
RMS 7-9	4.51	-	14.00%	40	—	—	—	40
RMS 10	14.01	-	20.00%	—	—	—	—	—
RMS 11-13	20.01	-	99.99%	—	—	—	—	—
RMS 14			100.00%	—	—	84	—	84
				794	32	84	—	910
CMS 1-10	0.00	-	0.50%	56,356	—	—	—	56,356
CMS 11-14	0.51	-	3.00%	—	—	—	—	—
CMS 15-18	3.01	-	20.00%	—	—	—	—	—
CMS 19	20.01	-	99.99%	—	—	—	—	—
CMS 20-23			100%	—	—	—	—	—
				56,356	—	—	—	56,356
Total loans and advances to customers				449,975	28,543	6,015	13,714	498,247

In respect of:
Retail				305,751	22,534	2,484	13,714	344,483
Commercial				87,074	5,977	3,447	—	96,498
Other				57,150	32	84	—	57,266
Total loans and advances to customers				449,975	28,543	6,015	13,714	498,247

Expected credit losses


At 31 December 2019							Purchased
							or
							originated
							credit-
	PD			Stage 1	Stage 2	Stage 3	impaired	Total
	range			£m	£m	£m	£m	£m
Loans and advances to banks:
CMS 1-10	0.00	-	0.50%	2	—	—	—	2
CMS 11-14	0.51	-	3.00%	—	—	—	—	—
CMS 15-18	3.01	-	20.00%	—	—	—	—	—
CMS 19	20.01	-	99.99%	—	—	—	—	—
CMS 20-23			100%	—	—	—	—	—
				2	—	—	—	2
Loans and advances to customers:
Retail – mortgages
RMS 1-6	0.00	-	4.50%	23	183	—	—	206
RMS 7-9	4.51	-	14.00%	—	39	—	—	39
RMS 10	14.01	-	20.00%	—	13	—	—	13
RMS 11-13	20.01	-	99.99%	—	46	—	—	46
RMS 14			100.00%	—	—	122	142	264
				23	281	122	142	568
Retail – credit cards
RMS 1-6	0.00	-	4.50%	103	25	—	—	128
RMS 7-9	4.51	-	14.00%	49	54	—	—	103
RMS 10	14.01	-	20.00%	3	19	—	—	22
RMS 11-13	20.01	-	99.99%	—	91	—	—	91
RMS 14			100.00%	—	—	126	—	126
				155	189	126	—	470
Retail – UK Motor Finance
RMS 1-6	0.00	-	4.50%	203	30	—	—	233
RMS 7-9	4.51	-	14.00%	10	15	—	—	25
RMS 10	14.01	-	20.00%	—	10	—	—	10
RMS 11-13	20.01	-	99.99%	1	32	—	—	33
RMS 14			100.00%	—	—	84	—	84
				214	87	84	—	385
Retail - other
RMS 1-6	0.00	-	4.50%	109	26	—	—	135
RMS 7-9	4.51	-	14.00%	55	64	—	—	119
RMS 10	14.01	-	20.00%	4	16	—	—	20
RMS 11-13	20.01	-	99.99%	3	103	—	—	106
RMS 14			100.00%	—	—	158	—	158
				171	209	158	—	538
Total Retail				563	766	490	142	1,961


At 31 December 2019					Purchased
					or
					originated
					credit-
	PD			Stage 1	Stage 2	Stage 3	impaired	Total
	range			£m	£m	£m	£m	£m

Commercial
CMS 1-10	0.00	-	0.50%	33	1	—	—	34
CMS 11-14	0.51	-	3.00%	50	37	—	—	87
CMS 15-18	3.01	-	20.00%	13	174	—	—	187
CMS 19	20.01	-	99.99%	—	16	—	—	16
CMS 20-23			100%	—	—	941	—	941
				96	228	941	—	1,265
Other
RMS 1-6	0.00	-	4.50%	6	1	—	—	7
RMS 7-9	4.51	-	14.00%	—	—	—	—	—
RMS 10	14.01	-	20.00%	—	—	—	—	—
RMS 11-13	20.01	-	99.99%	—	—	—	—	—
RMS 14			100.00%		—	16	—	16
				6	1	16	—	23
CMS 1-10	0.00	-	0.50%	10	—	—	—	10
CMS 11-14	0.51	-	3.00%	—	—	—	—	—
CMS 15-18	3.01	-	20.00%	—	—	—	—	—
CMS 19	20.01	-	99.99%	—	—	—	—	—
CMS 20-23			100%	—	—	—	—	—
				10	—	—	—	10
Total loans and advances to customers				675	995	1,447	142	3,259

In respect of:
Retail				563	766	490	142	1,961
Commercial				96	228	941	—	1,265
Other				16	1	16	—	33
Total loans and advances to customers				675	995	1,447	142	3,259