Liquidity risk

12 Months Ended

Dec. 31, 2024

Liquidity risk [Abstract]

Liquidity risk

Measurement

Liquidity risk is managed through a series of measures, tests and

reports that are primarily based on contractual maturities with

behavioural overlays as appropriate. The Group undertakes

quantitative and qualitative analysis of the behavioural aspects

of its assets and liabilities in order to reflect their expected

behaviour.

Mitigating actions

The Group manages and monitors liquidity risks and ensures that

liquidity risk management systems and arrangements are

adequate with regard to the internal risk appetite, Group

strategy and regulatory requirements. Liquidity policies and

procedures are subject to independent internal oversight by Risk.

Overseas branches and subsidiaries of the Group may also be

required to meet the liquidity requirements of the entity’s

domestic country. Management of liquidity requirements is

performed by the overseas branch or subsidiary in line with

Group policy. Liquidity risk of the Insurance business is actively

managed and monitored within the Insurance business. The

Group plans funding requirements over its planning period,

combining business as usual and stressed conditions. The Group

manages its liquidity position paying regard to its internal risk

appetite, Liquidity Coverage Ratio (LCR) and Net Stable Funding

Ratio (NSFR) as required by the PRA, the Capital Requirements

Directive (CRD V) and the Capital Requirements Regulation (UK

CRR) liquidity requirements.

Maturities of financial instrument liabilities (audited)

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 to 3 months £m	3 to 12 months £m	1 to 5 years £m	Over 5 years £m	Total £m
At 31 December 2024
Deposits from banks	1,809	673	904	2,775	105	6,266
Customer deposits	437,693	14,873	24,811	6,127	256	483,760
Repurchase agreements at amortised cost	8,974	5,169	15,300	9,416	–	38,859
Financial liabilities at fair value through profit or loss	15,208	3,965	1,803	2,102	7,078	30,156
Debt securities in issue at amortised cost	3,704	10,367	13,624	38,973	8,519	75,187
Liabilities arising from non-participating investment contracts	51,228	–	–	–	–	51,228
Lease liabilities	28	65	241	574	461	1,369
Subordinated liabilities	26	698	1,676	4,207	6,705	13,312
Total non-derivative financial liabilities	518,670	35,810	58,359	64,174	23,124	700,137
Derivative financial liabilities
Gross settled derivatives – outflows	100,432	61,356	43,231	34,795	22,505	262,319
Gross settled derivatives – inflows	(97,653)	(59,238)	(41,319)	(32,333)	(18,950)	(249,493)
Gross settled derivatives – net flows	2,779	2,118	1,912	2,462	3,555	12,826
Net settled derivative liabilities	10,432	92	109	404	1,557	12,594
Total derivative financial liabilities	13,211	2,210	2,021	2,866	5,112	25,420

	Up to 1 month £m	1 to 3 months £m	3 to 12 months £m	1 to 5 years £m	Over 5 years £m	Total £m
At 31 December 2023
Deposits from banks	2,093	1,073	623	2,394	–	6,183
Customer deposits	427,695	11,133	22,572	10,767	325	472,492
Repurchase agreements at amortised cost	3,627	4,092	1,085	31,399	–	40,203
Financial liabilities at fair value through profit or loss	8,801	4,157	5,694	1,808	5,845	26,305
Debt securities in issue at amortised cost	2,334	8,492	21,111	40,741	8,085	80,763
Liabilities arising from non-participating investment contracts	44,978	–	–	–	–	44,978
Lease liabilities	18	70	247	779	666	1,780
Subordinated liabilities	32	80	1,274	6,627	7,822	15,835
Total non-derivative financial liabilities	489,578	29,097	52,606	94,515	22,743	688,539
Derivative financial liabilities
Gross settled derivatives – outflows	80,148	46,874	47,777	35,807	20,302	230,908
Gross settled derivatives – inflows	(78,031)	(45,249)	(46,575)	(35,753)	(20,327)	(225,935)
Gross settled derivatives – net flows	2,117	1,625	1,202	54	(25)	4,973
Net settled derivative liabilities	12,095	138	161	402	1,501	14,297
Total derivative financial liabilities	14,212	1,763	1,363	456	1,476	19,270

The majority of the Group’s non-participating investment contract liabilities are unit-linked. These unit-linked products are invested in

accordance with unit fund mandates. Clauses are included in policyholder contracts to permit the deferral of sales, where necessary, so

that linked assets can be realised without being a forced seller.

The principal amount for undated subordinated liabilities with no redemption option is included within the over 5 years column; interest of

£16 million (2023: £16 million) per annum which is payable in respect of those instruments for as long as they remain in issue is not included

beyond 5 years.

An analysis of the Group’s total wholesale funding by residual maturity and by currency is set out on page 183.

Cash flows arising from insurance liabilities (audited)

The following table presents the estimated amount and timing of the remaining contractual discounted cash flows arising from insurance

liabilities. The amounts presented do not include those relating to the liability for remaining coverage of contracts that are measured under

the premium allocation approach.

	Less than 1 year £m	1 to 2 years £m	2 to 3 years £m	3 to 4 years £m	4 to 5 years £m	Over 5 years £m	Total £m
At 31 December 2024
Liabilities arising from insurance and participating investment contracts	(1,038)	(1,292)	(1,951)	(2,453)	(2,992)	(112,055)	(121,781)
Reinsurance contract liabilities	3	3	3	3	2	13	27
Total	(1,035)	(1,289)	(1,948)	(2,450)	(2,990)	(112,042)	(121,754)
At 31 December 2023
Liabilities arising from insurance and participating investment contracts	(843)	(2,112)	(3,035)	(3,537)	(3,667)	(101,354)	(114,548)
Reinsurance contract liabilities	–	–	–	–	–	(13)	(13)
Total	(843)	(2,112)	(3,035)	(3,537)	(3,667)	(101,367)	(114,561)

For insurance contracts which are neither unit-linked nor in the Group’s with-profit funds, in particular annuity liabilities, the aim is to invest

in assets such that the cash flows on investments match those on the projected future liabilities.

Insurance and participating investment contract liabilities payable on demand (audited)

Some of the Group’s insurance and participating investment contract liabilities are payable on demand as shown in the table below:

	2024		2023
	Amounts payable on demand £m	Carrying amount £m	Amounts payable on demand £m	Carrying amount £m
Life	110,402	107,909	102,396	99,799
Non-life	–	–	–	–
Total	110,402	107,909	102,396	99,799

The amounts payable on demand represent contract surrender values and incurred claims.

Maturities of contingent liabilities, commitments and guarantees (audited)

The table below shows the contractual maturity of the Group’s contingents, commitments and guarantees. Commitments are shown in the

time band containing the earliest date the commitment can be drawn down. For financial guarantee contracts, the maximum amount of

the guarantee is allocated to the earliest period in which the guarantee could be called.

	Up to 1 month £m	1 to 3 months £m	3 to 6 months £m	6 to 9 months £m	9 to 12 months £m	1 to 3 years £m	3 to 5 years £m	Over 5 years £m	Total £m
At 31 December 2024
Acceptances and endorsements	24	11	3	1	–	–	–	–	39
Other contingent liabilities	208	357	225	115	370	547	211	533	2,566
Total contingent liabilities	232	368	228	116	370	547	211	533	2,605
Lending commitments and guarantees	134,283	1,416	1,729	1,562	3,367	2,755	3,140	256	148,508
Other commitments	94	6	11	–	–	–	–	–	111
Total commitments and guarantees	134,377	1,422	1,740	1,562	3,367	2,755	3,140	256	148,619
Total contingents, commitments and guarantees	134,609	1,790	1,968	1,678	3,737	3,302	3,351	789	151,224
At 31 December 2023
Acceptances and endorsements	7	10	166	–	8	–	–	–	191
Other contingent liabilities	214	558	157	148	200	598	190	593	2,658
Total contingent liabilities	221	568	323	148	208	598	190	593	2,849
Lending commitments and guarantees	69,932	4,767	17,384	4,212	6,528	23,269	14,142	2,983	143,217
Other commitments	–	–	–	–	–	38	41	23	102
Total commitments and guarantees	69,932	4,767	17,384	4,212	6,528	23,307	14,183	3,006	143,319
Total contingents, commitments and guarantees	70,153	5,335	17,707	4,360	6,736	23,905	14,373	3,599	146,168