Derivative financial instruments (Tables)

12 Months Ended

Dec. 31, 2025

Disclosure of derivative financial instruments [Abstract]

Schedule of Fair Values and Notional Amounts of Derivative Instruments

The fair values and notional amounts of derivative instruments are set out in the following table:

	2025			2024
	Contract/ notional amount £m	Fair value		Contract/ notional amount £m	Fair value
		Assets £m	Liabilities £m		Assets £m	Liabilities £m
Trading and other
Exchange rate contracts	689,215	7,594	6,454	707,329	10,247	9,172
Interest rate contracts	15,086,291	11,797	8,924	12,864,265	13,436	11,644
Credit derivatives	5,566	75	170	6,103	87	172
Equity, commodity and other contracts	8,914	236	294	8,678	247	333
Total derivative assets/liabilities – trading and other	15,789,986	19,702	15,842	13,586,375	24,017	21,321
Hedging
Interest rate
Currency swaps	35	4	–	43	2	–
Interest rate swaps	211,737	8	253	231,064	6	337
Designated as fair value hedges	211,772	12	253	231,107	8	337
Foreign exchange
Currency swaps	1,554	6	33	1,963	30	14
Interest rate
Interest rate swaps	571,126	7	4	484,996	10	4
Designated as cash flow hedges	572,680	13	37	486,959	40	18
Total derivative assets/liabilities – hedging	784,452	25	290	718,066	48	355
Total recognised derivative assets/liabilities	16,574,438	19,727	16,132	14,304,441	24,065	21,676

Schedule of Hedged Items and Gains and Losses Arising from Hedge Accounting

The Group’s hedged items and gains and losses arising from hedge accounting are summarised as follows:

	Carrying amount of the hedged item		Accumulated amount of fair value adjustment on the hedged item		Change in fair value of hedged item for ineffectiveness assessment £m	Hedge ineffectiveness recognised in the income statement4 £m
Fair value hedges	Assets £m	Liabilities £m	Assets £m	Liabilities £m
At 31 December 2025
Interest rate
Fixed rate mortgages1	121,732	–	(178)	–	725	(68)
Fixed rate issuance2	–	45,053	–	829	(530)	10
Fixed rate bonds3	35,058	–	(1,053)	–	(138)	4
Total	156,790	45,053	(1,231)	829	57	(54)
At 31 December 2024
Interest rate
Fixed rate mortgages1	124,013	–	(890)	–	(184)	(52)
Fixed rate issuance2	–	51,499	–	1,340	(75)	(11)
Fixed rate bonds3	29,264	–	(1,070)	–	(1,158)	(18)
Total	153,277	51,499	(1,960)	1,340	(1,417)	(81)

1Included within loans and advances to customers.

2Included within debt securities in issue at amortised cost and subordinated liabilities.

3Included within financial assets at amortised cost and financial assets at fair value through other comprehensive income.

4Hedge ineffectiveness is included in the income statement within net trading income.

Schedule of Movements in Cash Flow Hedges

	Gain (loss) recognised in other comprehensive income £m	Amounts reclassified from reserves to net interest income as:			Cash flow hedge reserve		Change in fair value of hedged item for ineffectiveness assessment £m	Hedge ineffectiveness recognised in the income statement1 £m
Cash flow hedges		Hedged cash flows that will no longer occur £m	Hedged item affected income statement £m		Continuing hedges £m	Discontinued hedges £m
At 31 December 2025
Foreign exchange
Foreign currency issuance2	(3)	–		(4)	(11)	138	7	–
Customer deposits3	–	–		4	–	9	–	–
Interest rate
Customer loans4	294	–		1,131	(2,159)	(1,475)	(802)	63
Central bank balances5	205	–		793	(100)	(831)	(487)	3
Customer deposits3	(14)	–		(55)	1,527	38	72	(12)
Total	482	–		1,869	(743)	(2,121)	(1,210)	54
At 31 December 2024
Foreign exchange
Foreign currency issuance2	61	–		(4)	75	59	(60)	–
Customer deposits3	–	–		–	–	5	–	–
Interest rate
Customer loans4	(2,700)	–		2,458	(3,470)	(1,590)	982	(61)
Central bank balances5	(780)	–		937	(1,012)	(917)	384	(7)
Customer deposits3	842	–		(794)	1,592	42	(51)	8
Total	(2,577)	–		2,597	(2,815)	(2,401)	1,255	(60)

1Hedge ineffectiveness is included in the income statement within net trading income. The reported hedge ineffectiveness includes an adjustment for off-market derivatives.

2Included within debt securities in issue at amortised cost and subordinated liabilities.

3Included within customer deposits.

4Included within loans and advances to customers.

5Included within cash and balances at central banks.

Schedule of Amount, Timing and Uncertainty of Future Cash Flows

Details of the Group’s hedging instruments are set out below:

	Maturity								Changes in fair value used for calculating hedge ineffectiveness £m
Fair value hedges	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 2025
Interest rate
Cross currency swap
Notional	–	–		–	35		–	35	2
Average fixed interest rate	–	–		–	1.28%		–
Average EUR/GBP exchange rate	–	–		–	1.38		–
Interest rate swap
Notional	395	5,503		31,294	132,417		42,128	211,737	(113)
Average fixed interest rate	3.00%	3.24%		3.70%	3.33%		1.96%
								211,772	(111)
Cash flow hedges
At 31 December 2025
Foreign exchange
Currency swap
Notional	152	162		157	884		199	1,554	(7)
Average EUR/GBP exchange rate	1.13	1.16		1.14	0.98		0.95
Average USD/GBP exchange rate	1.33	1.31		1.30	1.29		–
Interest rate
Interest rate swap
Notional	12,636	31,911		114,577	321,862		90,140	571,126	1,771
Average fixed interest rate	4.03%	3.43%		3.65%	3.59%		3.56%
								572,680	1,764
Total								784,452	1,653
Fair value hedges
At 31 December 2024
Interest rate
Cross currency swap
Notional	–	–		–	–		43	43	–
Average fixed interest rate	–	–		–	–		1.28%
Average EUR/GBP exchange rate	–	–		–	–		1.38
Interest rate swap
Notional	5,236	13,781		55,607	111,300		45,140	231,064	1,336
Average fixed interest rate	3.04%	3.68%		4.04%	3.36%		2.27%
								231,107	1,336
Cash flow hedges
At 31 December 2024
Foreign exchange
Currency swap
Notional	107	441		646	763		6	1,963	61
Average EUR/GBP exchange rate	1.17	1.16		1.15	1.10		1.06
Average USD/GBP exchange rate	1.30	1.27		1.27	1.27		1.30
Interest rate
Interest rate swap
Notional	9,195	21,010		129,436	262,387		62,968	484,996	(600)
Average fixed interest rate	4.32%	4.36%		3.84%	3.34%		3.01%
								486,959	(539)
Total								718,066	797