Financial assets at amortised cost (Tables)

6 Months Ended

Jun. 30, 2022

Financial Assets At Amortised Cost [Abstract]

Schedule of financial assets at amortised cost

Half-year to 30 June 2022

	Gross carrying amount								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
Loans and advances to banks
At 1 January 2022	7,002		—		—	—	7,002		1		—		—	—	1
Exchange and other adjustments	497		—		—	—	497		—		—		—	—	—
Other changes in credit quality									2		—		—	—	2
Additions and repayments	348		—		—	—	348		1		—		—	—	1
Charge to the income statement									3		—		—	—	3
At 30 June 2022	7,847		—		—	—	7,847		4		—		—	—	4
Allowance for impairment losses	(4)		—		—	—	(4)
Net carrying amount	7,843		—		—	—	7,843
Loans and advances to customers
At 1 January 2022	400,036		34,931		6,443	10,977	452,387		915		1,114		1,581	210	3,820
Exchange and other adjustments1	138		14		(21)	30	161		1		—		19	53	73
Transfers to Stage 1	8,517		(8,478)		(39)		—		173		(166)		(7)		—
Transfers to Stage 2	(21,796)		22,078		(282)		—		(46)		101		(55)		—
Transfers to Stage 3	(580)		(2,279)		2,859		—		(2)		(74)		76		—
Impact of transfers between stages	(13,859)		11,321		2,538		—		(129)		353		178		402
									(4)		214		192		402
Other changes in credit quality									(171)		(21)		206	(8)	6
Additions and repayments	11,162		(2,305)		(509)	(573)	7,775		36		(33)		(67)	(12)	(76)
Methodology and model changes									(2)		(18)		45	(22)	3
Charge (credit) to the income statement									(141)		142		376	(42)	335
Advances written off					(428)	(19)	(447)						(428)	(19)	(447)
Recoveries of advances written off in previous years					72	—	72						72	—	72
At 30 June 2022	397,477		43,961		8,095	10,415	459,948		775		1,256		1,620	202	3,853
Allowance for impairment losses	(775)		(1,256)		(1,620)	(202)	(3,853)
Net carrying amount	396,702		42,705		6,475	10,213	456,095

1Exchange and other adjustments includes the impact of movements in exchange rates, discount unwind, derecognising assets as a result of modifications and adjustments in respect of purchased or originated credit-impaired financial assets (POCI). Where a POCI asset’s expected credit loss is less than its expected credit loss on purchase or origination, the increase in its carrying value is recognised within gross loans, rather than as a negative impairment allowance.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (continued)

Note 12: Financial assets at amortised cost (continued)

	Gross carrying amount								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
Reverse repurchase agreements
At 30 June 2022	56,516		—		—	—	56,516
Allowance for impairment losses	—		—		—	—	—
Net carrying amount	56,516		—		—	—	56,516
Debt securities
At 1 January 2022	6,827		9		2	—	6,838		1		—		2	—	3
Exchange and other adjustments	359		—		—	—	359		(1)		—		—	—	(1)
Transfers to Stage 1	9		(9)		—		—		—		—		—		—
Impact of transfers between stages	9		(9)		—		—		—		—		—		—
									—		—		—		—
Other changes in credit quality									1		—		—	—	1
Additions and repayments	1,787		—		—	—	1,787		1		—		—	—	1
Charge to the income statement									2		—		—	—	2
At 30 June 2022	8,982		—		2	—	8,984		2		—		2	—	4
Allowance for impairment losses	(2)		—		(2)	—	(4)
Net carrying amount	8,980		—		—	—	8,980
Total financial assets at amortised cost	470,041		42,705		6,475	10,213	529,434

Year ended 31 December 2021

	Gross carrying amount					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
Loans and advances to banks
At 1 January 2021	8,066	—	—	—	8,066	6	—	—	—	6
Exchange and other adjustments	(11)	—	—	—	(11)	—	—	—	—	—
Other changes in credit quality						(5)	—	—	—	(5)
Additions and repayments	(1,053)	—	—	—	(1,053)	—	—	—	—	—
Credit to the income statement						(5)	—	—	—	(5)
At 31 December 2021	7,002	—	—	—	7,002	1	—	—	—	1
Allowance for impairment losses	(1)	—	—	—	(1)
Net carrying amount	7,001	—	—	—	7,001
Loans and advances to customers
At 1 January 2021	375,300	51,659	6,490	12,511	445,960	1,372	2,145	1,982	261	5,760
Exchange and other adjustments1	(2,686)	(39)	(81)	68	(2,738)	(3)	(6)	(1)	121	111
Transfers to Stage 1	18,705	(18,665)	(40)		—	564	(553)	(11)		—
Transfers to Stage 2	(12,009)	12,724	(715)		—	(48)	155	(107)		—
Transfers to Stage 3	(872)	(1,822)	2,694		—	(13)	(220)	233		—
Impact of transfers between stages	5,824	(7,763)	1,939		—	(428)	195	221		(12)
						75	(423)	336		(12)
Other changes in credit quality						(245)	(271)	255	(48)	(309)
Additions and repayments	21,598	(8,926)	(1,007)	(1,565)	10,100	(221)	(346)	(99)	(87)	(753)
Methodology and model changes						(63)	15	6	—	(42)
(Credit) charge to the income statement						(454)	(1,025)	498	(135)	(1,116)
Advances written off			(1,058)	(37)	(1,095)			(1,058)	(37)	(1,095)
Recoveries of advances written off in previous years			160	—	160			160	—	160
At 31 December 2021	400,036	34,931	6,443	10,977	452,387	915	1,114	1,581	210	3,820
Allowance for impairment losses	(915)	(1,114)	(1,581)	(210)	(3,820)
Net carrying amount	399,121	33,817	4,862	10,767	448,567

1Exchange and other adjustments includes the impact of movements in exchange rates, discount unwind, derecognising assets as a result of modifications and adjustments in respect of purchased or originated credit-impaired financial assets (POCI). Where a POCI asset’s expected credit loss is less than its expected credit loss on purchase or origination, the increase in its carrying value is recognised within gross loans, rather than as a negative impairment allowance.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (continued)

Note 12: Financial assets at amortised cost (continued)

	Gross carrying amount					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
Reverse repurchase agreements
At 31 December 2021	54,753	—	—	—	54,753
Allowance for impairment losses	—	—	—	—	—
Net carrying amount	54,753	—	—	—	54,753
Debt securities
At 1 January 2021	5,406	—	2	—	5,408	1	—	2	—	3
Exchange and other adjustments	(20)	—	—	—	(20)	—	—	—	—	—
Transfers to Stage 2	(6)	6	—		—	—	—	—		—
Impact of transfers between stages	(6)	6	—		—	—	—	—		—
						—	—	—		—
Additions and repayments	1,447	3	—	—	1,450	—	—	—	—	—
Charge to the income statement						—	—	—	—	—
At 31 December 2021	6,827	9	2	—	6,838	1	—	2	—	3
Allowance for impairment losses	(1)	—	(2)	—	(3)
Net carrying amount	6,826	9	—	—	6,835
Total financial assets at amortised cost	467,701	33,826	4,862	10,767	517,156

Schedule of undrawn balances

Movements in allowance for expected credit losses in respect of undrawn balances were as follows:

		Allowance for expected credit losses
	Stage 1 £m		Stage 2 £m		Stage 3 £m		POCI £m	Total £m
Undrawn balances
At 1 January 2022		109		86		5	—	200
Exchange and other adjustments		2		—		(1)	—	1
Transfers to Stage 1		23		(23)		—		—
Transfers to Stage 2		(6)		6		—		—
Transfers to Stage 3		—		(2)		2		—
Impact of transfers between stages		(18)		38		(1)		19
		(1)		19		1		19
Other items taken to the income statement		13		4		(1)	—	16
Charge (credit) to the income statement		12		23		—	—	35
At 30 June 2022		123		109		4	—	236

Movements in allowance for expected credit losses in respect of undrawn balances were as follows:

	Allowance for expected credit losses
	Stage 1 £m	Stage 2 £m	Stage 3 £m	POCI £m	Total £m
Undrawn balances
At 1 January 2021	212	234	13	—	459
Exchange and other adjustments	(1)	(2)	1	—	(2)
Transfers to Stage 1	78	(78)	—		—
Transfers to Stage 2	(8)	8	—		—
Transfers to Stage 3	(1)	(6)	7		—
Impact of transfers between stages	(69)	18	(4)		(55)
	—	(58)	3		(55)
Other items taken to the income statement	(102)	(88)	(12)	—	(202)
Credit to the income statement	(102)	(146)	(9)	—	(257)
At 31 December 2021	109	86	5	—	200

Disclosure of impairment allowances

		Allowance for expected credit losses
	Stage 1 £m		Stage 2 £m		Stage 3 £m		POCI £m	Total £m
In respect of:
Loans and advances to banks		4		—		—	—	4
Loans and advances to customers		775		1,256		1,620	202	3,853
Debt securities		2		—		2	—	4
Financial assets at amortised cost		781		1,256		1,622	202	3,861
Other assets		—		—		23	—	23
Provisions in relation to loan commitments and financial guarantees		123		109		4	—	236
Total		904		1,365		1,649	202	4,120
Expected credit loss in respect of financial assets at fair value through other comprehensive income (memorandum item)		3		—		—	—	3

The Group's total impairment allowances at 31 December 2021 were as follows:

	Allowance for expected credit losses
	Stage 1 £m	Stage 2 £m	Stage 3 £m	POCI £m	Total £m
In respect of:
Loans and advances to banks	1	—	—	—	1
Loans and advances to customers	915	1,114	1,581	210	3,820
Debt securities	1	—	2	—	3
Financial assets at amortised cost	917	1,114	1,583	210	3,824
Other assets	—	—	18	—	18
Provisions in relation to loan commitments and financial guarantees	109	86	5	—	200
Total	1,026	1,200	1,606	210	4,042
Expected credit loss in respect of financial assets at fair value through other comprehensive income (memorandum item)	3	—	—	—	3