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Allowance for expected credit losses (Tables)
 6 Months Ended
Jun. 30, 2024
Disclosure of allowance for expected credit losses [Abstract]  
Disclosure of impairment allowances The table below analyses total ECL allowance 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.
Judgemental
adjustments due to:
At 30 June 2024
Modelled
ECL
£m
Individually
assessed
£m
Inflationary
and interest
rate risk
£m
Other
£m
Total
ECL
£m
UK mortgages
806
–
23
142
971
Credit cards
679
–
6
15
700
Other Retail
878
–
6
58
942
Commercial Banking
992
322
–
(315)
999
Other
18
–
–
–
18
Total
3,373
322
35
(100)
3,630
At 31 December 2023
UK mortgages
991
–
61
63
1,115
Credit cards
703
–
92
15
810
Other Retail
866
–
33
46
945
Commercial Banking
1,124
340
–
(282)
1,182
Other
32
–
–
–
32
Total
3,716
340
186
(158)
4,084
Disclosure of generation of multiple economic assumptions by quarter and by year
At 30 June 2024
2024
%
2025
%
2026
%
2027
%
2028
%
2024
to 2028
average
%
Upside
Gross domestic product growth
1.1
2.3
1.7
1.5
1.4
1.6
Unemployment rate
4.1
3.2
3.0
2.9
2.9
3.2
House price growth
2.2
5.0
7.3
6.0
5.2
5.1
Commercial real estate price growth
2.2
8.7
2.4
2.8
1.2
3.4
UK Bank Rate
5.17
5.30
5.17
5.33
5.55
5.31
CPI inflation
2.5
2.5
2.4
2.7
2.9
2.6
Base case
Gross domestic product growth
0.8
1.2
1.6
1.6
1.6
1.3
Unemployment rate
4.5
4.8
4.8
4.6
4.6
4.7
House price growth
1.2
1.4
1.0
1.4
2.4
1.5
Commercial real estate price growth
(1.6)
1.2
0.0
1.9
1.0
0.5
UK Bank Rate
5.06
4.19
3.63
3.50
3.50
3.98
CPI inflation
2.5
2.5
2.1
2.1
2.2
2.3
Downside
Gross domestic product growth
0.6
(0.5)
0.8
1.5
1.6
0.8
Unemployment rate
4.9
6.9
7.5
7.4
7.2
6.7
House price growth
0.6
(1.8)
(6.5)
(5.4)
(2.3)
(3.1)
Commercial real estate price growth
(4.7)
(6.7)
(4.1)
(0.8)
(1.3)
(3.5)
UK Bank Rate
4.97
2.77
1.38
0.89
0.63
2.13
CPI inflation
2.5
2.4
1.8
1.4
1.2
1.9
Severe downside
Gross domestic product growth
0.1
(2.2)
0.4
1.2
1.5
0.2
Unemployment rate
5.5
9.4
10.2
10.1
9.8
9.0
House price growth
(0.7)
(4.8)
(13.9)
(11.8)
(7.6)
(7.9)
Commercial real estate price growth
(9.1)
(15.1)
(8.6)
(5.3)
(4.7)
(8.6)
UK Bank Rate – modelled
4.81
1.12
0.16
0.05
0.02
1.23
UK Bank Rate – adjusted1
5.09
3.22
2.33
2.02
1.79
2.89
CPI inflation – modelled
2.6
2.4
1.3
0.5
0.1
1.4
CPI inflation – adjusted1
2.9
3.2
1.6
0.9
1.0
1.9
Probability-weighted
Gross domestic product growth
0.8
0.7
1.3
1.5
1.5
1.2
Unemployment rate
4.6
5.4
5.6
5.5
5.4
5.3
House price growth
1.1
0.9
(0.9)
(0.6)
0.8
0.3
Commercial real estate price growth
(2.1)
(0.5)
(1.3)
0.6
(0.2)
(0.7)
UK Bank Rate – modelled
5.04
3.79
3.07
2.92
2.90
3.55
UK Bank Rate – adjusted1
5.07
4.00
3.29
3.12
3.08
3.71
CPI inflation – modelled
2.5
2.5
2.1
1.9
1.9
2.2
CPI inflation – adjusted1
2.6
2.6
2.1
1.9
2.0
2.2
1The adjustment to UK Bank Rate and CPI inflation in the severe downside is considered to better reflect the risks to the Group’s base
case view in an economic environment where the risks of supply and demand shocks are seen as more balanced.
At 31 December 2023
2023
%
2024
%
2025
%
2026
%
2027
%
2023
to 2027
average
%
Upside
Gross domestic product growth
0.3
1.5
1.7
1.7
1.9
1.4
Unemployment rate
4.0
3.3
3.1
3.1
3.1
3.3
House price growth
1.9
0.8
6.9
7.2
6.8
4.7
Commercial real estate price growth
(3.9)
9.0
3.8
1.3
1.3
2.2
UK Bank Rate
4.94
5.72
5.61
5.38
5.18
5.37
CPI inflation
7.3
2.7
3.1
3.2
3.1
3.9
Base case
Gross domestic product growth
0.3
0.5
1.2
1.7
1.9
1.1
Unemployment rate
4.2
4.9
5.2
5.2
5.0
4.9
House price growth
1.4
(2.2)
0.5
1.6
3.5
1.0
Commercial real estate price growth
(5.1)
(0.2)
0.1
0.0
0.8
(0.9)
UK Bank Rate
4.94
4.88
4.00
3.50
3.06
4.08
CPI inflation
7.3
2.7
2.9
2.5
2.2
3.5
Downside
Gross domestic product growth
0.2
(1.0)
(0.1)
1.5
2.0
0.5
Unemployment rate
4.3
6.5
7.8
7.9
7.6
6.8
House price growth
1.3
(4.5)
(6.0)
(5.6)
(1.7)
(3.4)
Commercial real estate price growth
(6.0)
(8.7)
(4.0)
(2.1)
(1.2)
(4.4)
UK Bank Rate
4.94
3.95
1.96
1.13
0.55
2.51
CPI inflation
7.3
2.8
2.7
1.8
1.1
3.2
Severe downside
Gross domestic product growth
0.1
(2.3)
(0.5)
1.3
1.8
0.1
Unemployment rate
4.5
8.7
10.4
10.5
10.1
8.8
House price growth
0.6
(7.6)
(13.3)
(12.7)
(7.5)
(8.2)
Commercial real estate price growth
(7.7)
(19.5)
(10.6)
(7.7)
(5.2)
(10.3)
UK Bank Rate – modelled
4.94
2.75
0.49
0.13
0.03
1.67
UK Bank Rate – adjusted1
4.94
6.56
4.56
3.63
3.13
4.56
CPI inflation – modelled
7.3
2.7
2.2
0.9
(0.2)
2.6
CPI inflation – adjusted1
7.6
7.5
3.5
1.3
1.0
4.2
Probability-weighted
Gross domestic product growth
0.3
0.1
0.8
1.6
1.9
0.9
Unemployment rate
4.2
5.3
5.9
5.9
5.7
5.4
House price growth
1.4
(2.5)
(0.9)
(0.3)
1.8
(0.1)
Commercial real estate price growth
(5.3)
(1.9)
(1.1)
(1.0)
(0.2)
(1.9)
UK Bank Rate – modelled
4.94
4.64
3.52
3.02
2.64
3.75
UK Bank Rate – adjusted1
4.94
5.02
3.93
3.37
2.95
4.04
CPI inflation – modelled
7.3
2.7
2.8
2.3
1.9
3.4
CPI inflation – adjusted1
7.4
3.2
3.0
2.4
2.0
3.6
1The adjustment to UK Bank Rate and CPI inflation in the severe downside was considered to better reflect the risks to the Group’s
base case view in an economic environment where supply shocks were the principal concern.
At 30 June 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
0.6
0.4
0.3
0.2
0.3
0.3
0.4
0.4
Unemployment rate
4.3
4.5
4.6
4.7
4.8
4.9
4.9
4.8
House price growth
0.4
1.0
3.8
1.2
0.9
1.3
1.3
1.4
Commercial real estate price growth
(5.3)
(5.3)
(3.5)
(1.6)
(0.9)
0.2
(0.2)
1.2
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
2.2
2.7
2.6
2.4
At 31 December 2023
First
quarter
2023
%
Second
quarter
2023
%
Third
quarter
2023
%
Fourth
quarter
2023
%
First
quarter
2024
%
Second
quarter
2024
%
Third
quarter
2024
%
Fourth
quarter
2024
%
Gross domestic product growth
0.3
0.0
(0.1)
0.0
0.1
0.2
0.3
0.3
Unemployment rate
3.9
4.2
4.2
4.3
4.5
4.8
5.0
5.2
House price growth
1.6
(2.6)
(4.5)
1.4
(1.1)
(1.5)
0.5
(2.2)
Commercial real estate price growth
(18.8)
(21.2)
(18.2)
(5.1)
(4.1)
(3.8)
(2.2)
(0.2)
UK Bank Rate
4.25
5.00
5.25
5.25
5.25
5.00
4.75
4.50
CPI inflation
10.2
8.4
6.7
4.0
3.8
2.1
2.3
2.8
Disclosure of ECL sensitivity to economic assumptions The table below shows the Group’s ECL for the probability-weighted, upside, base case, downside and severe downside
scenarios, with the severe downside scenario incorporating adjustments made to CPI inflation and UK Bank Rate paths.
The stage allocation for an asset is based on the overall scenario probability-weighted PD 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 being £468 million compared to £678 million at 31 December 2023.
At 30 June 2024
Probability-
weighted
£m
Upside
£m
Base case
£m
Downside
£m
Severe
downside
£m
UK mortgages
971
387
658
1,190
3,004
Credit cards
700
583
676
772
903
Other Retail
942
855
915
990
1,139
Commercial Banking
999
746
895
1,143
1,641
Other
18
16
18
19
21
ECL allowance
3,630
2,587
3,162
4,114
6,708
At 31 December 2023
UK mortgages
1,115
395
670
1,155
4,485
Credit cards
810
600
771
918
1,235
Other Retail
945
850
920
981
1,200
Commercial Banking
1,182
793
1,013
1,383
2,250
Other
32
32
32
32
32
ECL allowance
4,084
2,670
3,406
4,469
9,202
The table below shows the impact on the Group’s ECL resulting from a 1 percentage point (pp) 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 the base case scenario. 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 30 June 2024
At 31 December 2023
1pp increase in
unemployment
£m
1pp decrease in
unemployment
£m
1pp increase in
unemployment
£m
1pp decrease in
unemployment
£m
UK mortgages
22
(17)
33
(32)
Credit cards
34
(34)
38
(38)
Other Retail
16
(16)
19
(19)
Commercial Banking
73
(67)
88
(83)
ECL impact
145
(134)
178
(172)
The table below shows the impact on the Group’s ECL in respect of UK mortgages resulting from an increase or
decrease in loss given default for a 10 percentage point (pp) increase or decrease in the UK HPI. The increase or
decrease is presented based on the adjustment phased evenly over the first 10 quarters of the base case scenario.
At 30 June 2024
At 31 December 2023
10pp
increase
in HPI
£m
10pp
decrease
in HPI
£m
10pp
increase
in HPI
£m
10pp
decrease
in HPI
£m
ECL impact
(164)
245
(201)
305