Loans and advances to customers

6 Months Ended

Jun. 30, 2024

Note 12: Loans and advances to customers

Half-year to 30 June 2024


	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

At 1 January 2024	385,294		53,167		7,147	7,854	453,462		900		1,467		1,137	213	3,717
Exchange and other adjustments1	(1,219)		(12)		(17)	7	(1,241)		(6)		(6)		10	23	21
Transfers to Stage 1	16,778		(16,708)		(70)		–		276		(271)		(5)		–
Transfers to Stage 2	(11,068)		11,546		(478)		–		(56)		116		(60)		–
Transfers to Stage 3	(508)		(1,728)		2,236		–		(8)		(157)		165		–
Net change in ECL due to transfers									(185)		257		169		241
									27		(55)		269		241
Impact of transfers between stages	5,202		(6,890)		1,688		–
Other changes in credit quality2									(139)		(50)		331	32	174
Additions and repayments	9,424		(3,150)		(828)	(418)	5,028		(9)		(101)		(115)	(29)	(254)
Charge (credit) to the income statement									(121)		(206)		485	3	161
Disposals and derecognition3	(449)		(206)		(88)	(219)	(962)		(1)		(4)		(7)	(8)	(20)
Advances written off					(618)	(6)	(624)						(618)	(6)	(624)
Recoveries of advances written off in previous years					69	–	69						69	–	69
At 30 June 2024	398,252		42,909		7,353	7,218	455,732		772		1,251		1,076	225	3,324
Allowance for expected credit losses	(772)		(1,251)		(1,076)	(225)	(3,324)
Net carrying amount	397,480		41,658		6,277	6,993	452,408
Drawn ECL coverage4	0.2%		2.9%		14.6%	3.1%	0.7%

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.

2Includes a credit for methodology and model changes of £65 million, split by Stage as £26 million credit for Stage 1, £31 million credit

for Stage 2, £4 million credit for Stage 3 and £4 million credit for POCI.

3Relates to the securitisation of legacy Retail mortgages.

4Allowance for expected credit losses on loans and advances to customers as a percentage of gross loans and advances to

customers.

The total allowance for expected credit losses includes £185 million (31 December 2023: £187 million) in respect of

residual value impairment and voluntary terminations within the Group’s UK Motor Finance business.

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

Note 12: Loans and advances to customers (continued)

Year ended 31 December 2023


	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

At 1 January 2023	380,991	61,164	7,640	9,622	459,417	700	1,808	1,757	253	4,518
Exchange and other adjustments1	1,830	(24)	(6)	18	1,818	(7)	(1)	105	67	164
Transfers to Stage 1	18,991	(18,953)	(38)		–	401	(393)	(8)		–
Transfers to Stage 2	(18,010)	18,592	(582)		–	(53)	121	(68)		–
Transfers to Stage 3	(1,216)	(2,507)	3,723		–	(13)	(223)	236		–
Net change in ECL due to transfers						(260)	402	312		454
						75	(93)	472		454
Impact of transfers between stages	(235)	(2,868)	3,103		–
Other changes in credit quality2						105	(103)	804	8	814
Additions and repayments	6,393	(4,213)	(2,353)	(1,043)	(1,216)	81	(85)	(862)	(81)	(947)
Charge (credit) to the income statement						261	(281)	414	(73)	321
Disposals and derecognition3	(3,685)	(892)	(122)	(743)	(5,442)	(54)	(59)	(24)	(34)	(171)
Advances written off			(1,231)	–	(1,231)			(1,231)	–	(1,231)
Recoveries of advances written off in previous years			116	–	116			116	–	116
At 31 December 2023	385,294	53,167	7,147	7,854	453,462	900	1,467	1,137	213	3,717
Allowance for expected credit losses	(900)	(1,467)	(1,137)	(213)	(3,717)
Net carrying amount	384,394	51,700	6,010	7,641	449,745
Drawn ECL coverage4	0.2%	2.8%	15.9%	2.7%	0.8%

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.

2Includes a charge for methodology and model changes of £60 million, split by Stage as £96 million charge for Stage 1, £33 million

credit for Stage 2, £1 million credit for Stage 3 and £2 million credit for POCI.

3Relates to the securitisations of legacy Retail mortgages and Retail unsecured loans.

4Allowance for expected credit losses on loans and advances to customers as a percentage of gross loans and advances to

customers.

The movement tables are compiled by comparing the position at the end of the period to that at the beginning of the year.

Transfers between stages are deemed to have taken place at the start of the reporting period, with all other movements

shown in the stage in which the asset is held at the end of the period. Purchased or originated credit-impaired are not

transferable.

Additions and repayments comprise new loans originated and repayments of outstanding balances throughout the

reporting period.

The Group’s impairment charge comprises impact of transfers between stages, other changes in credit quality and

additions and repayments.

Advances written off have first been transferred to Stage 3 and then acquired a full allowance through other changes in

credit quality. Recoveries of advances written off in previous years are shown at the full recovered value, with a

corresponding entry in repayments and release of allowance through other changes in credit quality.