Annual Report
and Accounts 2025
Strategic report
An overview of how we have done
this year, our strategy and how we
measure our performance.
What Nationwide has achieved
this year 4
Our difference is our mutual
ownership model 5
Our acquisition of Virgin Money 7
Chairman's letter 8
Group Chief Executive Officer review 10
How we performed in 2024/25
against our key performance
indicators 16
Engaging with our stakeholders 19
Our Mutual Good Commitments 30
Nonfinancial and sustainability
information statement 35
Climaterelated financial disclosures 36
Risk overview 40
Viability statement 44
Financial review 46
Governance
How we are governed, what items
are discussed in our Board and
Committee meetings and how
we pay our directors.
Chairman’s introduction 57
Your Board 58
Governance at Nationwide 63
Statement of compliance with
the UK Corporate Governance
Code 2018 64
Nomination and Governance
Committee report 77
Audit Committee report 81
Board Risk Committee report 88
Report of the directors on
remuneration 92
Directors’ report 118
Risk report
Key risks that could affect our
business performance and what
we do to manage them.
Introduction 123
Managing risk 123
Principal risks and uncertainties 124
Credit risk 127
Liquidity and funding risk 171
Capital risk 184
Market risk 190
Pension risk 196
Business risk 199
Operational and conduct risk 200
Model risk 203
Financial statements
Our audited financial statements,
related notes and independent
auditor’s report.
Independent auditor’s report 205
Income statements 218
Statements of comprehensive
income 219
Balance sheets 220
Statements of movements in
members’ interests and equity 221
Cash flow statements 223
Notes to the financial statements 224
Other information
Including our annual business
statement.
Annual business statement 314
Countrybycountry report 317
Alternative performance measures 318
Forwardlooking statements 318
Glossary 318
Welcome to our Annual Report and Accounts 2025
Contents
Terms used in this report
Nationwide/the Group Nationwide Building Society and all consolidated
subsidiaries, including the Virgin Money subgroup
the Society/
Nationwide Building Society
Nationwide Building Society, parent entity of the Group
Nationwide subgroup
Nationwide Building Society and its consolidated
subsidiaries, excluding the Virgin Money subgroup
Virgin Money/
Virgin Money subgroup
Virgin Money UK PLC and its consolidated subsidiaries
Accounting reference date and basis of reporting
Following the acquisition of Virgin Money UK PLC, the Society changed
its accounting reference date to 31 March. Where reference is made
to the ‘year’ ended 31 March 2025, this represents the 361day period
from 5 April 2024 to 31 March 2025. The 2024 comparatives are
presented as at 4 April 2024 and have not been restated to include the
Virgin Money results prior to acquisition on 1 October 2024. See note 1
to the financial statements for further information.
2
Strategic report
The Strategic report has been approved by the Board of directors and signed on its behalf by:
Debbie Crosbie
28 May 2025
What Nationwide has achieved this year 4
Our difference is our mutual ownership model 5
Our acquisition of Virgin Money 7
Chairman's letter 8
Group Chief Executive Officer review
(includes delivery against our strategic drivers) 10
How we performed in 2024/25 against our key
performance indicators 16
Engaging with our stakeholders 19
Our Mutual Good Commitments 30
Non-financial and sustainability information
statement 35
Climate-related financial disclosures 36
Risk overview 40
Viability statement 44
Financial review 46
• Ownership model
Describes how we create value
over the longer term. Page 5
• Virgin Money
Our acquisition of Virgin
Money and the benefits it will
bring to the Society. Page 7
• Our strategy
Our delivery against our
strategic drivers is set out in
the Group Chief Executive
Officer review. Page 10
• Risk overview
Includes our approach to
managing risks and our
assessment of our top and
emerging risks. Page 40
• Financial review
Includes information on
financial performance and the
main trends and factors which
have impacted our financial
results. Page 46
• Key performance
indicators
Our performance in the year
is shown against our strategic
key performance indicators.
Page 16
• Our stakeholders
Listening and engaging
regularly with our
stakeholders is fundamental
to the way we do business.
Page 19
• Our Mutual Good
Commitments
We remain committed to
doing business in a way
that positively impacts our
customers, employees and
communities.
Page 30
Banking -
but fairer,
more
rewarding,
and for the
good of
society.
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
What Nationwide has achieved this year
1 Further information on our branch promise can be found on page 12.
2 Nationwide brand lead as at March 2025: 7.5%pts, March 2024: 5.5%pts. © Ipsos 2025, Financial Research Survey (FRS), for the 12 months ended 31 March 2013 to the 12 months ended 31 March 2025. For more information,
see footnote 11 on page 12.
3 Source based on the number of residential first time buyer mortgage completions in the UK by Banking Brand, between April 2024 to March 2025. Provided by CACI Mortgage Market database.
4 The majority of the difference between underlying and statutory profit before tax relates to the day one gain of £2.3 billion recognised on the acquisition of Virgin Money on 1 October 2024, the Nationwide Fairer Share Payment of
£385 million distributed in June 2024, and recognition of The Big Nationwide Thank You oneoff payment of £615 million. More information can be found on page 48.
We continued to prioritise
customer value and
service, including
through our Branch
Promise
1
and enhancing
our digital capability:
Record £2.8 billion in
member value, including
direct member rewards
of £1 billion through the
Nationwide Fairer Share
Payment and The Big
Nationwide Thank You, and
£1.8 billion through member
financial benefit
Nationwide remained first
for customer satisfaction
compared to our peer group,
for the 13
th
year running, with
a growing lead
2
This has contributed
towards record growth in
mortgages and deposits:
Record net lending of
£15.5 billion through our
Nationwide subgroup.
We helped more first time
buyers than any other bank
or building society in the UK
3
2024: £2.6 billion
Record deposit growth
of £14.0 billion through our
Nationwide subgroup
2024: £6.2 billion
Our acquisition of Virgin
Money on 1 October 2024
has further strengthened
our business:
Gain on acquisition of
£2.3 billion, as the fair value
of net assets acquired was
well in excess of the
£2.8 billion acquisition price
Our acquisition led to a
stepchange in scale in our
core markets of mortgages,
savings, current accounts
and credit cards. It also
broadened our product
range, through adding a
business banking capability
Our significant underlying
growth, together with
our acquisition of Virgin
Money, has led to a strong
financial performance:
£1,852 million underlying
profit before tax
2024: £2,003 million
£2,302 million statutory
profit before tax
2024: £1,776 million
5.2% leverage ratio
following our acquisition,
above regulatory and
internal targets
2024: 6.5%
What Nationwide has achieved this year
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Our difference is our mutual ownership model
Our purpose Our business model Our strategy
Banking –
but fairer,
more rewarding,
and for the
good of society.
As a modern mutual, we aim to improve
banking for all, making a positive
difference for our members and
customers, our communities and society
as a whole.
As a mutual, the value we create is used to benefit our members as owners – who
are customers with a Nationwidebranded current account, mortgage or savings.
We aim to deliver value for our members through our leading service, member
exclusive products and our Nationwide Fairer Share Payments.
We deliver our retail banking products and services to our customers by
helping them with:
• Managing everyday finances – more than one in nine
1
of the UK’s current
accounts are held with us.
• Owning a home – we are the UK’s second
2
largest mortgage provider.
• Saving for the future – we are the UK’s second
2
largest provider of
retail deposits.
We also offer other retail products, including credit cards, personal loans and
insurance. And we support landlords, through our buy to let business, The
Mortgage Works, and through Virgin Money.
Our acquisition of Virgin Money on 1 October 2024 has broadened our product
range to include Virgin Money’s business banking services, which we intend to offer
to more customers across the Group over time. Our business customer portfolio
primarily comprises small and mediumsized enterprises (SMEs).
In total, over 60% of our funding comes from our customers, and over 85%
of our lending is secured on residential property.
We have four strategic drivers that help
us to fulfil our purpose. They are:
• Simply brilliant experience
• More rewarding relationships
• Beacon for mutual good
• Simplify, integrate and grow
For more information on:
• Delivery against our strategic
drivers, see pages 12 to 15.
• Progress against our key
performance indicators for
2024/25, see pages 16 to 18.
• Our Mutual Good Commitments,
which measure the positive
impact we have on our customers,
communities and wider society,
see pages 30 to 34.
1 CAC’s Current Account and Savings Database, Stock (February 2025).
2 Based on internal analysis of company financial reports.
We are a modern mutual banking provider
The combination of our scale, mutual model and strong reputation puts us in a unique position in UK financial services. It
enables us to prioritise customer experience and value, whilst having a positive impact on wider society and growing our
business to bring the benefits of mutuality to more people.
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Our stakeholders
Members and customers Regulators and policymakers
Colleagues Investors and rating agencies
Communities Suppliers
As a mutual, we are here to support our customers. This includes our members as
owners, who are our primary stakeholders. It also includes a broader set of customers
who hold our retail banking products, as well as our buy to let customers and business
banking customers, including registered social landlords.
In addition, we have other important stakeholders as listed above, who we engage with
and consider in our decision making.
We are committed to maintaining effective communications and building positive
relationships with all our stakeholders. More information on our engagement with
stakeholders can be found on pages 19 to 29.
What makes us different –
our ownership model
As a mutual, our members do not just bank with Nationwide, they own us. Unlike
our banking peers, we do not have to pay shareholders dividends. We retain
sufficient profit to remain financially strong, while sharing our success with our
members through:
• Delivering value and rewarding loyalty.
• Product and service propositions that meet the needs and expectations of
existing and future customers.
• Providing brilliant and trusted service.
We also commit at least 1% of our pretax profits
3
each year to charitable activities,
supporting our broader communities.
3 The 1% is calculated based on average pretax profits over the previous three years. For 2024/25, this covered the three years ended 4 April 2024 and therefore predated our acquisition of Virgin Money, which completed on 1 October 2024.
Our difference is our mutual ownership model
(continued)
We are a modern mutual banking provider (continued)
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Our acquisition of Virgin Money
Our acquisition of Virgin Money, which completed on 1 October 2024, has grown and diversified our business, and will
enable us to deliver even greater value for our customers.
The acquisition brought a shareholderowned bank into our mutual group. Future
profits made by Virgin Money will now be retained for the benefit of members and
customers across the Group.
The acquisition has also enabled us to grow our business significantly. We are now the
UK’s second largest provider of mortgages and retail deposits, with total assets of
£368 billion. Combined, we hold approximately £1 in every £6 of mortgage balances
and £1 in every £8 of retail deposits in the UK. We are now connected to one in three
people in the UK.
Bringing the established business banking services of Virgin Money into the Group has
broadened our product range, and means we can start to support small and medium
sized businesses across the Group more quickly and efficiently than developing these
services ourselves. Diversifying our product range also helps us to manage risks even
better in the long term. It will make our income more resilient to interest rate volatility
in normal economic times, helping to protect the interest rates we offer our customers
on savings and mortgages.
We recorded a gain of £2.3 billion on completion of the acquisition, as the fair value of
net assets acquired was well in excess of the £2.8 billion acquisition price. The gain on
acquisition is expected to provide significant headroom to cover the costs associated
with integration, investment in customer service and delivery of value across
the Group.
The reduced funding costs and broader financial benefits that come from our
acquisition make us financially stronger, which means we can continue to invest in
service excellence across the Group, through our branch network, digital platforms
and contact centres, as well as in fraud prevention and our support for vulnerable
customers. We are also able to provide additional member value, including through
the continuation of our Nationwide Fairer Share Payment, which we will pay for a third
consecutive year, plus our oneoff distribution – The Big Nationwide Thank You – to
reward Nationwide members whose membership supported our financial strength and
enabled the acquisition of Virgin Money.
Since the acquisition, trading performance has been robust. Virgin Money’s lending
balances increased by over £400 million, including a 0.8% increase in mortgage
balances which had been in decline for a period prior to the acquisition, and a 1.8%
increase in business lending balances. In addition, Virgin Money’s customer deposits
increased by over £500 million, representing an increase of 0.8%.
We are making good progress with our integration plans and significant improvements
are being made to support our customers at Virgin Money. We are investing in
delivering the capabilities needed to improve customer experience (as described on
page 12), maintain business performance and growth, and build technology resilience,
all supporting our integration plans. This planned investment contributed to a short
term uplift in Virgin Money underlying costs
4
.
We will ensure a careful and considered approach to integrating Virgin Money into
the Group, that is aligned with the interests of all of our customers. We are preparing
to transfer the assets and liabilities of Virgin Money's main operating subsidiary,
Clydesdale Bank PLC, into Nationwide, which we expect to complete in 2026/27
5
.
This will be part of the wider integration programme that we expect to take several
years to complete.
4 Between the six months postacquisition and the six months preacquisition.
5 Through a proposed banking business transfer under Part V of the Financial Services and Markets Act 2000, subject to legal and regulatory approval and completion of internal governance processes.
Our acquisition of Virgin Money
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
A letter from
Kevin Parry
Chairman
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Chairman’s Letter
Dear fellow member
This has been Nationwide’s best ever year. We delivered
our highest ever member value of £2.8 billion and
acquired the Virgin Money business to become the
UK’s second largest lending and savings provider. This
enabled us to reward 12 million members through The
Big Nationwide Thank You, which was in addition to our
second Nationwide Fairer Share Payment of £100 to
3.85 million eligible members.
Our acquisition of Virgin Money will enable us to
bring the benefits of mutuality to more people in
the UK. This means we can provide further value to
customers and members, through a wider range of
products, propositions and services, including business
banking, which we intend to offer to more customers
across the Group over time. We have also gained a
more comprehensive credit card offering through the
acquisition.
Our Group financial position remains strong, reflecting
our underlying performance and the positive impact
of our acquisition of Virgin Money. Our pretax profit of
£2.3 billion enables us to continue to deliver meaningful
financial value to our members, including through
member financial benefit and our Nationwide Fairer
Share Payment. I am pleased that we will make our third
Nationwide Fairer Share Payment in June 2025 to eligible
members.
We recognise the value of enabling customers to
speak with our colleagues in branches, and so we
have extended our Branch Promise to include Virgin
Money branches. I am also particularly pleased with the
increased impact we now have in communities across the
country through our charitable giving programmes and
Fairer Futures strategy. More information on how we have
delivered for our customers and communities can be
found in the later sections of the Strategic report.
My fellow Board members and I valued hearing from,
and engaging with, our members at our online Annual
General Meeting (AGM) in July 2024. We also benefited
from meeting with members and discussing a range of
topics through our Closer to Customer focus groups
and branch visits. The Board benefits greatly from the
insight of our Member Voice panel, and we look forward
to having further conversations with our members during
the year ahead.
We are an inclusive organisation that values the diversity
of the communities we serve. I am pleased that our
diversity and inclusion activity was again recognised in
the Financial Times’ list of Europe’s Diversity Leaders
2025
6
, where Nationwide ranked fifth out of 850
organisations. Also, in the FTSE Women Leaders Report
7
,
we ranked joint fifth for female representation on our
Board of directors across 50 of the UK’s largest private
businesses.
The Governance report on page 57 sets out the key
changes to the Board during the year. In September
2024, Muir Mathieson was appointed as Group Chief
Financial Officer on Nationwide’s Board, following
Chris Rhodes’ appointment as Virgin Money’s Chief
Executive Officer and resignation from the Nationwide
Board. Anand Aithal and David Bennett were appointed
as nonexecutive directors in October and November
2024 respectively.
As we integrate the Virgin Money business carefully over
time, we will be able to increase further the impact we
have in communities across the UK and the benefits we
offer to members and customers. It means we can do
even more to make banking fairer, more rewarding, and
for the good of society.
I would like to thank my fellow directors and all our
colleagues for their continued hard work and dedication
to the Society. As a modern mutual, we are absolutely
committed to putting our customers and members at
the heart of everything we do. I look forward to making
further progress on our strategy in the year ahead.
Kevin Parry
Society Chairman
6 The FTStatista ranking of Europe’s Diversity Leaders is based on independent surveys of more than 100,000 employees across Europe, on their perceptions of their organisation’s diversity and inclusion practices. Employee surveys
accounted for 70% of the final score, and three indicators accounted for 30% of the score (the share of women in management positions, the communications made in favour of diversity, and a diversity score calculated by data provider
Denominator).
7 FTSE Women Leaders Review (February 2025).
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Reections on
2024/25 from
Debbie Crosbie
Group Chief Executive Officer
Group Chief Executive Officer review
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
My reections on 2024/25
We have had an outstanding year. We returned a record
£2.8 billion in value to our members, including £1 billion
through the Nationwide Fairer Share Payment and The
Big Nationwide Thank You. Our statutory profit before tax
increased to over £2.3 billion, and we increased our lead
over peers for customer satisfaction
8
.
We achieved our best ever organic growth in net mortgage
lending and retail deposit balances and we increased our
share of current accounts. More current account switches
were made to Nationwide than to any other brand, and we
are now connected to one in three people in the UK.
We chose to prioritise competitive rates for members
and invested in customer experience, remaining first
among our peer group for customer satisfaction for the
thirteenth year
8
.
I am especially pleased that we are now attracting more
younger customers, particularly to our mortgages and
current accounts. We became first choice for first time
buyers in the UK
9
, and we attracted a record number of
students, with over 1 in 4 new student account openings in
the market
10
.
The Virgin Money business is now part of Nationwide and
its performance was strong in the six months since our
acquisition. Customer service improved and mortgage
lending started to grow again.
We are investing to improve Virgin Money’s customer
service and systems so we can fully realise its potential
in the years ahead, particularly from its strong credit
card and business banking services. We are making
good progress on our plans to bring Virgin Money into
Nationwide and I am pleased to say that our expenditure
directly on integration has been lower than we expected.
Branches remain incredibly important to our customers,
and we extended our Branch Promise to include
Virgin Money branches. We are also investing in our
digital services and added over 30 new features and
improvements across the Nationwide and Virgin Money
personal banking apps.
We are improving customer experience by modernising
savings and payment systems and automating processes.
We are making good use of generative artificial
intelligence, particularly to help our colleagues to deliver
better experiences and outcomes for customers.
More people are aware of Nationwide thanks to the
success of our new branding and advertising campaigns.
We are promoting our mutual difference, and our brand
now ranks first among our peer group when consumers
rate those that they have ‘heard good things about’
11
. We
are in a really strong position to attract and retain more
customers in the future.
We are making a real difference in communities and
committed more than £20 million to charitable causes.
We launched Nationwide Fairer Futures, to help tackle
some of the biggest issues in society today – people
living with dementia, families living in poverty, and youth
homelessness. The dementia clinics that we introduced in
local branches last year have been incredibly well received.
Recently, we also committed to funding important cancer
research at The Royal Marsden.
We will continue to focus on our strengths and advantage
as a modern mutual, to build broader and deeper
relationships with our customers and invest to improve
customer experience.
I wish to thank our colleagues across the Group for their
outstanding contribution to a hugely successful year. I look
forward to another exciting year ahead as we build on our
strength as a larger and stronger Society and deliver our
purpose: Banking – but fairer, more rewarding, and for the
good of society.
Debbie Crosbie
Group Chief Executive Officer
Group Chief Executive Officer review
8 Nationwide brand lead at March 2025: 7.5%pts, March 2024: 5.5%pts. © Ipsos 2025, Financial Research Survey (FRS), for the 12 months ended 31 March 2013 to 12 months ended 31 March 2025. Results based on a sample of around 47,000 adults
(aged 16+). The survey contacts around 50,000 adults (aged 16+) a year in total across Great Britain. Interviews were face to face, over the phone and online, taking into account (and weighted to) the overall profile of the adult population. The
results reflect the percentage of extremely satisfied and very satisfied customers minus the percentage of customers who were extremely or very or fairly dissatisfied across those customers with a main current account, mortgage or savings.
Those in our peer group are Barclays, Halifax, HSBC, Lloyds Bank, NatWest, Santander and TSB. Prior to April 2017, those in our peer group were Barclays, Halifax, HSBC, Lloyds Bank (Lloyds TSB prior to April 2015), NatWest and Santander.
9 Based on the number of residential first time buyer mortgage completions in the UK by banking brand, between April 2024 and March 2025. Provided by CAC Ltd Mortgage Market database.
10 Based on Curinos eBenchmarkers comparison of financial services providers and Nationwide analysis, April 2024 to February 2025..
11 Based on a study conducted by an international market research company commissioned by Nationwide. Based on noncustomer responses for the 12 months ended March 2025. Financial brands included are Nationwide, Barclays, Chase, Co
operative Bank, First Direct, Halifax, HSBC, Lloyds, Monzo, NatWest, Santander, Starling Bank, TSB and Virgin Money.
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Simply brilliant experience
12 Nationwide brand lead as at March 2025: 7.5%pts, March 2024: 5.5%pts. © Ipsos 2025, Financial Research Survey (FRS), for the 12 months ended 31 March 2013 to the 12 months ended 31 March 2025. Results based on a sample of around 47,000
adults (aged 16+). The survey contacts around 50,000 adults (aged 16+) a year in total across Great Britain. Interviews were face to face, over the phone and online, taking into account (and weighted to) the overall profile of the adult population. The
results reflect the percentage of extremely satisfied and very satisfied customers minus the percentage of customers who were extremely or very or fairly dissatisfied across those customers with a main current account, mortgage or savings. Those
in our peer group are Barclays, Halifax, HSBC, Lloyds Bank, NatWest, Santander and TSB. Prior to April 2017, those in our peer group were Barclays, Halifax, HSBC, Lloyds Bank (Lloyds TSB prior to April 2015), NatWest and Santander.
13 According to an independent phone survey of 17,234 customers (aged 16+) of the 17 largest current account providers in Great Britain, and 5,612 customers (aged 16+) of the 11 largest current account providers in Northern Ireland, between
January 2024 and December 2024, run by Ipsos. Learn more at Ipsos.uk/personalbankingservicequality.
14 All our 605 Nationwide branches and 91 Virgin Money branches will remain open until at least 1 January 2028. Opening hours may vary. There may be exceptional circumstances outside of our control that mean we have to close a branch,
but we will only do this if we do not have another workable option.
Collaborating to deliver a personal, seamless, and easy experience, from start to finish.
We provide customers with great value products,
choice in the way they bank with us, and service
excellence. We aim to combine a seamless mobile
banking experience with modern branches, where our
colleagues provide personalised and trusted support.
We delivered leading levels of service through our
Nationwide brand and were ranked first for customer
satisfaction amongst our peer group, for the 13th year
running
12
.
Following our acquisition of Virgin Money, we increased
investment to improve customer experience. We created
370 new jobs dedicated to customer service in Virgin
Money contact centres and online chat channels. We also
created 15 new customer service jobs to support our
business banking customers. In addition, we extended
the opening hours of our business banking contact
centre and launched a new online chat platform.
In an independent survey conducted by Ipsos, on behalf
of the Competition and Markets Authority (CMA), which
asked personal current account customers how likely
they would be to recommend their provider’s branches,
our Nationwide brand came first in both Great Britain
and Northern Ireland, with Virgin Money ranking tenth in
Great Britain
13
. Virgin Money branches are now covered
by our Branch Promise, and we will invest to improve
customer service through them.
Making our mobile banking apps better
Our Nationwide and Virgin Money mobile banking apps
make it easy, quick and straight forward for customers to
manage their money.
We added over 30 new features and improvements
across our banking apps. We removed the need to use a
card reader (for customers of our Nationwide app), and
made our banking app interfaces and experiences more
user friendly. We improved fraud prevention features
and controls, modernised the way payments are made,
and extended support to vulnerable customers. We will
continue to innovate and deliver new functionality on our
apps that further improves our customers’ experience.
Our Branch Promise
We know that branches are important to customers,
some of whom rely on our branches or prefer faceto
face assistance. For example, more than 30% of new
Nationwidebranded current accounts and over 40% of
SAs were opened in our Nationwide branches.
This is why we are committed to our Branch Promise
– we promise to keep every one of our branches open
until at least the start of 2028
14
. Together with our Virgin
Money branches, we now have almost 700 branches
across the UK. Last year, we invested around £18 million
in upgrading more than 110 of our branches.
Nationwide has the UK’s largest singlebrand branch
network and, at the 2025 Moneyfactscompare.co.uk
Awards, won the Branch Network of the Year award, for
the third year running.
Providing customers with choice in how they
engage with us
As well as being able to interact with us through our
banking apps and branches, customers can reach us
through our telephone channels and 24/7 online chats.
Our creation of additional customer service roles at
Virgin Money has significantly improved answer rates
across both its call centre and online chat channels.
Our online Mortgage Manager service also made it easy
for customers to manage their Nationwidebranded
mortgages.
Protecting customers from fraud and scams
We introduced a dedicated fraud telephony team at
Nationwide, further improving our service for customers
impacted by fraud. We continued to offer our Scam
Checker Service (see page 31) and build awareness
around scams, via scam warnings in our apps, online
education and fraud awareness campaigns.
Group Chief Executive Officer review (continued)
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
More rewarding relationships
15 CAC’s Current Account and Savings Database, Stock (February 2025 and February 2024).
16 Our Nationwide current account switcher incentive enabled customers to earn cashback, providing they completed
a full switch to a Nationwidebranded current account, using the Current Account Switch Service.
17 Pay.UK quarterly Current Account Switch Service data, 9 months to December 2024, gross and net gains, based on
the latest available data.
18 Based on Curinos eBenchmarkers comparison of financial services providers and Nationwide analysis, April 2024
to February 2025.
19 Based on Curinos eBenchmarkers comparison of lenders and Nationwide analysis of maturing assets between
May 2024 and July 2024. Status 3 months postmaturity, percentage completing an internal transfer.
20 Our definition of a first time buyer is set out in the Glossary for the Annual Report and Accounts, available at
nationwide.co.uk
Building deeper, broader, more lifelong relationships that provide the best value in banking.
We aim to provide our customers with the best value in
UK banking, and increase the number of customers who
have deeper relationships with us.
We grew our business significantly, as a result of strong
underlying performance, combined with our acquisition of
Virgin Money. Our acquisition broadened our product range
to include Virgin Money’s business banking services, which
we intend to offer to more customers across the Group over
time. It will also enable us to provide a more comprehensive
credit card offering.
Creating value for our members
We delivered a record £2,795 million in value to our
members. This included member financial benefit of
£1,795 million (2024: £1,850 million) from better pricing
and incentives than the market average, primarily relating
to our member deposits. It also included £385 million
(2024: £344 million) in Nationwide Fairer Share Payments,
distributed in June 2024 to 3.85 million eligible members,
and £615 million for The Big Nationwide Thank You – a one
off £50 payment to over 12 million eligible members.
Supporting our customers’ banking needs
We now hold more than one in nine (2024: one in ten)
15
current accounts following our acquisition of Virgin Money.
We opened 881,000 (2024: 761,000) new current accounts,
supported by our successful member exclusive current
account switcher incentive
16
and our Virgin Money current
account and linked saver proposition. There were more
gains in current account switches to Nationwide than to any
other brand
17
.
We attracted a record 46,000 (2024: 17,900) students
with our competitive FlexStudent account, achieving a 27%
share of new student current accounts opened across the
market
18
.
Encouraging good savings habits
Our total market share of deposit balances increased to
12.2% (2024: 9.5%) following our acquisition of Virgin Money.
Over the period, retail customer deposits increased by
£67.3 billion, including £53.3 billion of Virgin Money
balances and record growth of £14.0 billion (2024:
£6.3 billion) through our Nationwide brand.
We offered attractive rates on our savings products,
including a Flex Regular Saver with an interest rate of 6.5%.
Customers registered with our SavingsWatch service were
informed of our latest, and best, savings rates and products.
Helping people into homes
Our share of total mortgage balances increased to 16.2%
(2024: 12.3%) following our acquisition of Virgin Money.
Net lending of £15.9 billion (2024: £2.6 billion) was led by
record net lending of £15.5 billion through our Nationwide
subgroup, as we kept rates competitive and focused on
retention. This included offering existing customers rates at
maturity that were the same or better than the equivalent
new customer remortgage rates. As a result, we saw the
highest rate of customers moving on to a new deal with us
at deal maturity, compared to our peer group
19
. At the 2025
Moneyfactscompare.co.uk Awards, our Nationwide brand
won High Street Mortgage Provider of the Year.
We helped 120,000 (2024: 64,000) first time buyers into
a home of their own
20
, including through our Helping Hand
mortgage, which we extended to enable first time buyers to
borrow up to six times (previously 5.5x times) their income.
We continued to offer £500 cashback with Nationwide
branded first time buyer mortgages.
We are the UK’s largest buy to let lender, with a 19.8%
(2024: 14.3%) share of total buy to let balances following our
acquisition of Virgin Money. The Mortgage Works won Best
BuytoLet Mortgage Lender in the Your Mortgage Awards
2024/25.
We also delivered £825 million (2024: £1,323 million) of
lending to social housing. This included new lending and the
refinancing of existing facilities.
Broadening our product range
Business deposit balances of £21.1 billion (2024: £4.2 billion)
and lending balances of £15.1 billion (2024: £5.5 billion)
reflected our acquisition of Virgin Money. Business lending
balances increased over the six months since acquisition,
including growth in the health and social care, hotels, asset
finance, and renewable energy sectors. Since the acquisition,
we opened around 25,000 business current accounts.
Consumer lending balances (personal loans, credit cards
and overdrawn current account balances) increased to £11.1
billion (2024: £4.3 billion) including £6.7 billion of Virgin
Money balances, predominantly in credit cards. We now
have a 10.7% share of the UK’s credit card market.
Virgin Money won Best Credit Card Provider at the
YourMoney.com Personal Finance Awards 2025.
Group Chief Executive Officer review (continued)
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Beacon for mutual good
21 Our charitable commitment of 1% of pretax profits is based on average profits over the previous three years. For 2024/25, this preceded the acquisition of Virgin Money on 1 October 2024. Our commitment of £18.7 million included
£17.0 million of charitable donations and £1.7 million relating to supporting activity and staff costs of the business.
22 Nationwide Foundation.
23 Virgin Money Foundation | Virgin Money UK.
Focusing our impact on the issues that matter most to customers, businesses and society, in a way that only we can.
We aim to have a positive and meaningful impact in
communities.
Over 2024/25, we committed more than £20 million to
charitable activities. This included £18.7 million (2024:
£15.5 million) as part of the 1% of pretax profits
21
that we
commit to good causes each year, as well as donations
awarded by Virgin Money.
Our £18.7 million commitment was primarily put
towards Nationwide Fairer Futures, our new social
impact strategy. It also included our commitment to
the Nationwide Foundation, and the internal costs of
managing our social impact activity.
Nationwide Fairer Futures  our new social
impact strategy
In June 2024, we launched Nationwide Fairer Futures,
to help tackle three of the biggest issues we see in
society today – youth homelessness, families living
in poverty and people living with dementia. We have
partnered with three charities: Centrepoint, Action for
Children, and Dementia UK, to help us make a meaningful
difference. In April 2025, we added a fourth partnership
with The Royal Marsden Cancer Charity, to additionally
focus on better outcomes and fairer futures for those
experiencing cancer.
Our funding for Centrepoint contributes towards their
independent living programme, creating and improving
homes for young people to live independently. It also
helps homeless young people with deposits so they
can leave supported accommodation and move into the
private rented sector.
Our funding for Action for Children has been used to
restart their Family Fund, which provides emergency
funds to families for food, utilities and other essentials
when they need it most. It is also funding the rollout
of Family Clubs at 30 locations across the UK, where
families can go for help and advice.
Through our partnership with Dementia UK, we are
funding 30 Admiral Nurse roles and have now hosted
1,400 dementia clinics in more than 120 of our branches,
offering free, specialist support and advice to those
impacted by dementia.
Our partnership with The Royal Marsden Cancer Charity
will fund specialist research staff who will deliver clinical
trials to enable breakthroughs in cancer care.
In addition to funding these programmes, we also
support each partners’ headline fundraising campaigns,
promoting opportunities for our colleagues and
customers to get involved.
Our funding for the Nationwide Foundation
We donated £4.7 million to the Nationwide Foundation,
an independent charity.
The Nationwide Foundation works to tackle the housing
shortage. It funds ontheground advocacy work,
groundbreaking research and innovation in housing,
and convenes coalitions to campaign for change. More
information can be found on their website
22
.
Enabling financial and digital inclusion
We aim to enable financial and digital inclusion, and remove
the barriers that exclude people from accessing financial
products and services. We partner with charities that align
with our ambitions, including Mind and SAMH (Scottish
Action for Mental Health), to help support people with
their money and mental health. We continued to roll out the
National Databank programme across our Virgin Money
branches, distributing free, dataloaded mobile SM cards
to enable internet access for those impacted by
data poverty.
In addition, the Virgin Money Foundation, an independent
charity, launched a new strategy dedicated to tackling
digital poverty and bridging the digital divide in society.
More information can be found on the Virgin Money
Foundation website
23
.
We are also assisting young people with financial knowledge
and skills, including through our Make my £5 Grow
programme at Virgin Money, and Nationwide’s Money
Lessons, which relaunched in January 2025.
Member voice
We regularly engage and seek feedback from customers
on the issues that are important to them (see page 19).
This helps us improve our services and propositions, and
feeds into our engagement programme with regulators
and policymakers, as described on page 21.
Our climaterelated ambitions
We are committed to a netzero future and supporting
the UK in achieving its ambition to be net zero by 2050.
More information can be found in our Climaterelated
Financial Disclosures 2025.
Group Chief Executive Officer review (continued)
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Simplify, integrate and grow
Unlocking our combined potential and delivering more for customers, together.
Our financial performance remained strong; we delivered
underlying profit before tax of £1,852 million
(2024: £2,003 million) and statutory profit before tax of
£2,302 million
24
(2024: £1,776 million). Our leverage ratio
and Common Equity Tier 1 (CET1) ratio reduced to 5.2%
(2024: 6.5%) and 19.1% (2024: 27.1%) respectively, primarily
as a result of our acquisition of Virgin Money. Our leverage
ratio, which is one of our key performance indicators,
remained comfortably above regulatory and internal
threshold requirements (see page 16).
Uniting our Nationwide and Virgin Money businesses
Our acquisition of Virgin Money has grown and diversified
our business, and means that future profits made by Virgin
Money will be retained for the benefit of members and
customers across the Group, rather than paying dividends
to external shareholders. This means we can continue to
invest in service excellence and provide additional member
value. Our diversified product range will make our income
more resilient to economic changes.
The gain on acquisition is expected to provide significant
headroom to cover costs associated with integration,
investment in customer service and delivery of value under
our mutual model.
As we carefully integrate Virgin Money within our Group,
our primary objective remains to ensure that Virgin Money
stays safe and secure. We have focused on three key
areas: investing in customer improvements, delivering
business performance and growth, and building technology
resilience and readiness for integration.
We are significantly improving our support for customers
at Virgin Money. This includes through our investment in
customer experience (see page 12). We are also making
pricing and product changes that help our customers,
including reducing the standard variable rate on Virgin
Money mortgages, and removing fees for late payments or
breaches of credit limits on Virgin Money credit cards.
In addition, we are further investing in the technology and
resilience needed to support our Virgin Money customers.
We will take a careful and considered approach to managing
and mitigating the risks around integration, ensuring we
prioritise good customer outcomes.
Modernising our systems and strengthening
operational resilience
Over the year, we invested in the technology foundations,
enhancements and innovations that will help us provide an
even better customer experience, and improve how we do
things, including the propositions we can offer.
We commenced the migration of Nationwidebranded
savings accounts onto a modern, core banking platform,
that further improves our customers’ experience when
opening and managing their savings accounts. We also
migrated inbound payments to our cloudbased payments
platform, improving resilience.
We are simplifying the homebuying experience and
enabling faster offers for customers of Nationwidebranded
mortgages, with our new automated income verification and
valuation tools, and a streamlined mortgage advice service
which reduces interview times for customers whilst still
ensuring appropriate products and good outcomes.
We are also enhancing our digital customer experience,
including automating key processes at Virgin Money, such
as for SA maturities.
We have continued to simplify our broader T application
estate, and further improved how we maintain and enhance
customer data, to enable us to deliver new and innovative
customer propositions.
At the Card and Payments Awards 2025, our Nationwide
brand won Best Technology Integration for our Payments
Modernisation programme, and Best Product Design for
our rebranded cards.
Leveraging new capabilities
Aligned to our ambition of being a modern mutual, we
are progressing generative artificial intelligence (GenA)
capabilities where it helps our colleagues to deliver better
experiences and outcomes for customers. We are carefully
exploring where it is appropriate to use the technology and
have adopted responsible artificial intelligence principles to
ensure any solution we adopt provides the right outcomes
for our customers and colleagues.
The use of more traditional artificial intelligence techniques
is mature across the Group, for example in aiding fraud
detection and Chatbot capability.
We are also exploring the use of GenA in software
development and the contact centre, where call
transcription analysis could provide better service for our
customers.
Group Chief Executive Officer review (continued)
24 The majority of the difference between underlying and statutory profit before tax relates to the day one gain of £2.3 billion recognised on the acquisition of Virgin Money on 1 October 2024, the Nationwide Fairer Share Payment of
£385 million distributed in June 2024, and recognition of The Big Nationwide Thank You oneoff payment of £615 million. More information can be found on page 48.
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Our 2024/25
key performance indicators
Our key performance indicators help us to track the effective delivery of our strategy. Our four measures
for 2024/25 are set out over the next two pages. Our measures were set at the start of the year, prior to the
acquisition of Virgin Money on 1 October 2024. Therefore, the leverage ratio is reported on a Group basis,
whilst all other measures are reported in relation to the Nationwide brand and products only.
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Our key performance indicator:
Customer experience score
What does it measure?
Our customer experience score is based on the feedback score customers of
Nationwidebranded products provide when they complete our survey after they
interact with us, in our branches, by telephone and through our digital channels
25
.
Customers are asked to rate their satisfaction with our service.
How did we perform against our target over 2024/25?
Our customer experience score of 83.8% was above our target of 83.6%. Customers
were satisfied with the service across our channels, particularly from colleagues
in branches. Our new banking app, and enhancements made through the year, also
contributed positively to our score.
Customer experience score
%
How we performed in 2024/25 against our
key performance indicators
25 Our customer experience score measure is based on the 12 months ended 31 March 2025, and is calculated by weighting the aggregated scores across Nationwide channels to reflect the way customers interact with us. Digital channels
include our Nationwide mobile banking app, internet bank and webchat.
26 The 2024 comparative has been restated to align with the 2025 methodology, in which website surveys have been removed to improve relevancy of feedback, and channel weighting has been rebalanced to reflect overall channel usage
by customers over a 12 month period.
27 Engaged customers have a Nationwidebranded main personal current account, plus either at least £100 in Nationwidebranded personal savings, or a Nationwidebranded residential mortgage of at least £100.
28 The 2024 comparative has been restated to align with the 2025 methodology, in which amendments were made to savings and current account eligibility criteria.
More rewarding relationships
Building deeper, broader, more lifelong relationships that
provide the best value in banking.
Simply brilliant experience
Collaborating to deliver a personal, seamless, and easy
experience, from start to finish.
Our key performance indicator:
Engaged customers
What does it measure?
Our engaged customers measure reflects the depth of active banking relationships
with us, by reference to the number of customers who have a Nationwidebranded
main current account, as well as a Nationwidebranded savings or mortgage account
27
.
How did we perform against our target over 2024/25?
We had 4.11 million engaged customers, which is above our 3.94 million target for
2024/25. This growth was supported by the strength of our competitive products and
propositions, including our current account switching incentive, Member Exclusive
Bond and Flex Regular Saver.
Engaged customers
Million
Target
Actuals
Actuals
4.11
3.85
28
20252024 2025
3.94
Target
Actuals
Actuals
83.8%
83.4%
26
20252024 2025
83.6%
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Our key performance indicator:
Leverage ratio
What does it measure?
Our Group leverage ratio demonstrates the financial strength of the Group, and our
ability to withstand economic shocks. Our financial strength helps us to progress
the delivery of our strategy. More information on the leverage ratio can be found
on page 55.
How did we perform against our target over 2024/25?
Our Group leverage ratio of 5.2% was lower than the previous year, primarily
as a result of our acquisition of Virgin Money. It continued to exceed regulatory
requirements and our own internal minimum target threshold of at least 4.5%, set at
the start of the year.
Leverage ratio
%
Our key performance indicator:
Heard good things about
What does it measure?
We measure the reputation of the Nationwide brand through an independent brand
study, which asks consumers: “Which of the brands have you heard good things
about?”. Respondents are asked to rate the Nationwide brand and peer brands from a
list
29
.
How did we perform against our target over 2024/25?
The Nationwide brand ranked first among its peer group when rated by non
customers as to which brands they had ‘heard good things about’. This was above our
target of at least third place.
The continued success of Nationwide’s new branding and advertising campaigns,
focused on the difference of our brand and the benefits of mutuality over our
competitors, has had a positive impact on improving awareness of, and engagement
with, our brand. Signature brand propositions, such as our Nationwide Fairer Share
Payment and our Branch Promise, have also had a positive influence.
Heard good things about
Ranking
29 Based on a study conducted by an international market research company commissioned by Nationwide. Based on noncustomer responses for the 12 months ended March 2025. Financial brands included are Nationwide, Barclays, Chase,
Cooperative Bank, First Direct, Halifax, HSBC, Lloyds, Monzo, NatWest, Santander, Starling Bank, TSB and Virgin Money.
Beacon for mutual good
Focusing our impact on the issues that matter most to customers,
businesses and society, in a way that only we can.
Simplify, integrate and grow
Unlocking our combined potential and delivering more for
customers, together.
How we performed in 2024/25 against our
key performance indicators (continued)
TargetActuals
5.4%
2022 2025
4.5%
Actuals
6.0%
2023
Actuals
6.5%
2024
Actuals
5.2%
2025
TargetActualsActuals
1st1st
20252024 2025
3rd
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Section 172(1) statement
This section describes how the directors considered
matters set out in section 172(1) of the Companies
Act 2006 (the ‘Act’). This also forms the directors’
statement required under section 414CZA of the Act.
Although, as a building society, we are not required to
follow the Act, we aim to apply its requirements
where appropriate.
Our stakeholders
Listening to and engaging regularly with our
stakeholders is fundamental to the way we do business,
and it ensures we operate in a balanced and responsible
way, both in the short and longer term. The views of our
stakeholders are important to us and help to guide our
decision making. Examples of how we have engaged with
our key stakeholder groups, including at Board level, are
provided on pages 19 to 22.
Members and customers
As a mutual, we are here for our customers. This includes
our members as owners (who have a Nationwidebranded
current account, mortgage or savings). It also includes
a broader set of customers who hold retail banking
products with us, as well as buy to let customers, and
business banking customers.
How we have engaged
We are keen to understand our customers’ views and
what is important to them.
Around 270 members attended our online Annual
General Meeting (AGM) in July 2024, where they could
have their say and vote on important issues. We also
engaged with our retail banking customers via our online
research communities and our customer experience
surveys.
We engaged with landlords and buy to let intermediaries
through our mortgage and intermediary relationship
teams respectively, as well as through our research
providers and our internal research team at The
Mortgage Works. We engaged with our business banking
customers through our business relationship managers
and customer experience surveys.
Examples of how we responded
• We explained the benefits of the Virgin Money
acquisition to customers, including through emails
and leaflets to our members and through regular
updates on our website.
• We delivered value through competitive products
and propositions, as well as through our Nationwide
Fairer Share Payment and The Big Nationwide Thank
You payment to eligible members (see page 13).
• We extended our Branch Promise to include Virgin
Money branches (see page 12).
• We further enhanced our mobile banking apps
(see page 12).
• We launched an online, selfserve mortgage home
hub
30
to support landlords, and a portfolio review
tool to assist intermediaries.
• We extended the opening hours of our business
banking contact centre.
• We provided our Sustainable Business Coach
tool and sustainabilitylinked loans to support
businesses.
Engaging with our stakeholders
30 Manage your mortgage | The Mortgage Works.
Engaging with our stakeholders
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Our Board engagement
Through the year, Board members visited branches to
strengthen their understanding of customer views and
needs. The Board held Closer to Customer focus groups,
to hear directly from customers on a range of topics, and
received updates from our online research community.
The Board received updates on the embedding of
the FCA’s Consumer Duty to ensure good customer
outcomes continued to be delivered, and endorsed the
extension of the Branch Promise to include Virgin Money
branches. The Board continued to review customer
service and satisfaction data, and received regular
updates on our engaged customer measure (see page
16) and on lending across our whole customer base. The
Board also received updates from the Virgin Money
Chief Executive Officer on performance against
strategic priorities.
Colleagues
Our colleagues are at the heart of serving our customers
and delivering our strategy. We are committed to
building a highperforming, customerfirst, inclusive
culture, where colleagues thrive and develop rewarding
careers. See page 23 for more information on our
support for colleagues, and pages 24 and 34 for our
progress against our diversity measures.
How we engaged
We have a strong commitment to listening to colleagues.
We invite all colleagues to share their views on working at
Nationwide, the challenges they face and what works well.
We engaged with colleagues through surveys, listening
events, including with the Group Chief Executive Officer
and executive management, and through engagement
with Employee Network Groups and staff unions.
Examples of how we responded
• We created action plans aligned to engagement
survey results. This included making improvements
to tools, processes and systems that support
colleagues.
• We regularly communicated on progress made
against our strategy, and on our acquisition and
integration of Virgin Money. This included engaging
colleagues on our updated Group Blueprint for a
modern mutual (see page 23).
• We continued to integrate inclusion into our people
processes and practices, and we launched a new
mental health and wellbeing online platform within
the Nationwide subgroup.
Our Board engagement
To ensure a strong understanding of culture, the Board
received regular updates on the topic. These included
colleague sentiment data and results of colleague
surveys. The Board also held townhall events and
visited colleagues in branches, to hear directly about
the issues that matter to them. The Board received
updates on culture, both pre and postacquisition, from
Tamara Rajah, the appointed nonexecutive director for
Employee Voice, and the Chief People Officer. The Group
Chief Executive Officer and Virgin Money Chief Executive
Officer have kept the Board updated on colleague
sentiment across the Group from colleague engagement
sessions held since the acquisition. The Board also met
with the General Secretary of the Nationwide Group
Staff Union. It will continue to sponsor and monitor
progress in all areas of our culture in the coming year.
Communities
As a modern mutual, we aim to make a positive
difference to communities and society as a whole. We
commit at least 1% of our pretax profits each year to
charitable activities. More information can be found on
page 33.
How we engaged
We engaged with communities through our charity
partnerships, including as part of our Nationwide Fairer
Futures social impact strategy and financial and digital
inclusion programmes (see page 14). Our colleague
grants programme gave colleagues the opportunity to
apply for a grant to benefit charity organisations they are
actively involved in. We also contributed to communities
through our employee volunteering programme.
Examples of how we responded
• More information on how we are supporting our
charity partners can be found on page 14.
Our Board engagement
The Board approved the Nationwide Fairer Futures
strategy and the appointment of our initial three charity
partnerships as part of this. The Board subsequently
approved our fourth charity partnership. The Board met
with chief executive officers and representatives from
our charity partners: Centrepoint, Action for Children
and Dementia UK, to build a deeper understanding of the
issues and challenges they face, and the people they are
supporting. Our Chairman and Group Chief Executive
Officer also visited The Royal Marsden Cancer Charity to
understand the impact of the oneoff donation we made
in 2023, and to discuss our new partnership. Through the
year, the Board received updates on progress against
our Nationwide Fairer Futures strategy.
Engaging with our stakeholders (continued)
20
Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Regulators and policy makers
Regulators and policymakers oversee our activities and
undertake consultations and policy reform. We aim for
the highest possible standards of regulatory compliance
to protect and enhance the integrity of the UK financial
system and ensure good outcomes for our customers.
How we engaged
We engaged effectively with regulators and policymakers
through the year to influence them on behalf of
Nationwide and its customers. Most notably, we worked
with others to deliver a Private Members Bill into law to
modernise the Building Societies Act, and supported
subsequent secondary legislation to provide a more
uptodate regulatory environment for Nationwide to
operate within. In addition, we continued to engage
with policymakers to encourage the development of
green policies and discuss the benefits of retrofitting
UK homes.
Since the general election, we have continued to engage
with political stakeholders, and have focused on building
links with the new Government and MPs. Our Group
Chief Executive Officer attended the Government’s
International Investment Summit. We also held local
MP visits at over 50 of our branches. Following our
acquisition of Virgin Money, which is headquartered in
Glasgow, we have sought to enhance our engagement
with the Scottish Government and MSPs.
Examples of how we responded
• We answered information requests and Select
Committee inquiries on key issues of interest. We
also input into government consultations.
• We engaged on themes such as:
• Our acquisition of Virgin Money and strategy for
integration
• Growing the mutual and cooperative sector
• Secondary legislation to modernise the Building
Societies Act
• Regulatory change to support first time buyers
• Government changes impacting the buy to let
sector, including the Renters’ Rights Bill and
Minimum Energy Efficiency Standards
• Tackling fraud, including proposals for a Fraud and
Scams Security Centre
• Our options for how customers access our
services, including in branches
• Financial and digital inclusion, and social mobility
• Green homes and climate change
Our Board engagement
The Board received regular updates on interactions
with regulators and taxation authorities, and how the
changing regulatory environment impacts the Group.
In the lead up to the acquisition of Virgin Money, Board
members met with regulators on multiple occasions
to provide insight and to discuss Board oversight
of the transaction, as well as keeping them updated
on progress. This engagement has continued post
acquisition, as we develop our plans for integrating
Virgin Money into the Group. More broadly, Board
members attended regular meetings with regulators,
and regulators attended Board meetings to present on
key topics.
Engaging with our stakeholders (continued)
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Investors and rating agencies
Our wholesale funding investors support us in meeting
our funding and capital requirements. Our investors are
interested in our financial performance and sustainability
practices and so, alongside our external disclosures, will
leverage our credit ratings and Environmental, Social and
Governance (ESG) ratings to aid their understanding.
How we engaged
We maintain an active dialogue through our investor
relations programme. This provides investors with
the opportunity to meet senior management and
executive directors of Nationwide, particularly following
financial results and other major announcements. Our
engagement extends to supporting the due diligence
process ahead of new funding issuances, and responding
to ad hoc queries.
Last year, we updated investors on our latest financial
performance, our acquisition of Virgin Money, our ESG
credentials, and other areas of interest.
We also continued to proactively engage with credit
and ESG rating agencies to ensure the Group is rated
appropriately.
Examples of how we responded
• We provided timely strategic and financial updates
to our investors, including additional disclosures
related to the acquisition of Virgin Money.
• We continued to produce high quality sustainability
related disclosures which report on our progress
and activity in relation to our intermediate (by 2030)
netzeroaligned sciencebased targets, and our
Mutual Good Commitment measures.
Our Board engagement
On behalf of the Board, the Group Chief Executive
Officer and Group Chief Financial Officer engaged
directly with investors following our external results
announcements.
Suppliers
Our suppliers help us run and improve our business and
deliver quality service for our customers.
How we engaged
We engage with our suppliers through direct
negotiations or within a tender, including our pre
onboarding due diligence. We also engage through our
ongoing management framework and due diligence
processes once a supplier is onboarded. To assist our
engagement and monitoring, we collect information
from suppliers, through external industry tools including
the Financial Services Qualification System (FSQS), and
EcoVadis.
Over the year, we updated suppliers on our Virgin
Money acquisition, held a Third Party Talk on Climate
Change where we shared decarbonisation knowledge,
requested a further set of suppliers to take the EcoVadis
sustainability assessment, and engaged with around 200
of our smaller suppliers to promote Cyber Essentials, a
governmentbacked certification scheme, as an effective
way to boost security and resilience.
Examples of how we responded
• Following our engagement with third parties, at
our Third Party Talk on Climate Change, and as a
result of our engagement for AntiSlavery Day, we
are developing toolkits to help our third parties to
address climate change and modern slavery risks.
• We held multiple learning events for our colleagues
with the support of our suppliers. This included
events to mark Learning at Work Week and a
‘Connect and Collaborate’ event.
Our Board engagement
The Board Risk Committee received updates on key
supplier relationships during the year and considered
the management of its key supply chains and the
steps being taken to avoid undue risk. Following the
unexpected insolvency of a key supplier during the
previous financial year, the Board Risk Committee
received an enhanced update on the business continuity
plans for material and higher risk suppliers of the
Nationwide subgroup. The Board Risk Committee, under
delegated authority from the Board, approved the Third
Party Risk Policy of the Nationwide subgroup.
Engaging with our stakeholders (continued)
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A focus on our colleagues
Engaging colleagues in our Group purpose, strategy
and behaviours
On 1 October 2024, we completed the acquisition of
Virgin Money. Throughout the acquisition process
and over the six months since, we have shared regular
communications to keep colleagues informed and
showcase the opportunity that our combined business
presents.
We also developed a Group purpose, strategy and set of
behaviours that Nationwide and Virgin Money can unite
behind, putting customers at the heart of everything
we do. We engaged our senior leaders and then all
colleagues through a series of immersive events, to
build clarity, connection and commitment to our future
direction and shared ambition as a combined group.
Building our inclusive culture
Inclusion is key to being a modern mutual. We want to
ensure that we have an inclusive culture where everyone
can thrive, and that we enhance our performance by
ensuring our workforce better reflects the diversity
of our society. Having a diverse range of perspectives,
skills and experiences will help us continue to benefit our
customers, through offering the products and leading
levels of service that matter most to them.
Our Board is committed to progressing our inclusion and
diversity approach, and receives regular updates on our
diversity measures (see page 34). Our senior leaders are
also accountable for driving our inclusive culture, and
inclusion and diversity data is made available to them to
enable betterinformed action.
We continue to embed inclusive practices and initiatives
into our Group strategy, including through our
policies, processes and propositions. Together with
our employee networks, we focus on initiatives that
support our ambition of being an inclusive employer. Our
employee networks cover: disability; faith and belief;
gender; LGBTQ+; race and ethnicity; social mobility;
sustainability; veterans and reservists; wellbeing;
working carers and working families.
In the 2025 Financial Times’ Diversity Leaders list, our
Nationwide brand was the highestranked UK high street
financial services provider for the fourth year running
31
.
Our latest gender and ethnicity pay gaps report can be
found on our website
32
.
Our diversity measures
On the next page, we have published our Group diversity
measures at both an allcolleague and senior leader level.
By combining data across the Group, we have seen an
overall reduction in the diversity of our allcolleague
population, but an increase in the diversity of our senior
leader population, when compared to 2024 data for the
Nationwide subgroup only.
We have made progress in the diverse representation of
colleagues at our Nationwide subgroup, achieving five
of our seven diversity measures (see page 34). We will
be reviewing our diversity measures to set appropriate
targets for the Group going forward.
Building skills for the future
We continued to roll out our leadership development
programme to senior leaders across our Nationwide sub
group, focused on developing commercial and business
leadership skills, and skills for building highperforming
teams. In addition, more than 2,000 people managers
across our Nationwide business have now completed
our People Manager Programme. Our People Manager
Programme achieved City & Guilds LM Assured status,
demonstrating its quality.
Engaging with our stakeholders (continued)
31 The FTStatista ranking of Europe’s Diversity Leaders is based on independent surveys of more than 100,000 employees across Europe, on their perceptions of their organisation’s diversity and inclusion practices. Surveys were
conducted in the period from April to July 2024. Employee surveys accounted for 70% of the final score, and three indicators accounted for 30% of the score (the share of women in management positions, the communications made in
favour of diversity, and a diversity score calculated by data provider Denominator).
32 Pay gaps at Nationwide: Genderpayreport2024.pdf. Pay gaps at Virgin Money: Genderpayreport2024.pdf.
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Engaging with our stakeholders (continued)
33 Gender – Figures reflect female representation. Gender is as recorded in our HR systems.
34 Ethnicity – Figures reflect Black, Asian, mixed and other. Excluded from the calculation are white majority and minority.
35 The percentage of colleagues meeting this diverse characteristic is based on their voluntary selfdeclaration recorded in our HR systems, which states that they consider themselves to belong to this characteristic.
36 Disability – Figures reflect those identifying as disabled or as having a longterm health condition.
37 Senior manager figures reflect the Companies Act definition of an employee who has responsibility for planning, directing or controlling the activities of an entity or a strategically important part of it, which includes our Executive
Committees and their executive direct reports.
Gender
33
Ethnicity
34,35
Disability
35,36
2025 2024 2025 2024 2025 2024
All employees 59.1% (15,460 females) 60.4% (10,825 females) 13.6% 15.0% 8.3% 8.3%
Senior managers
37
41.9% (75 females) 34.1% (31 females) 5.6% 4.4%
Our diversity measures
The 2025 measures presented below reflect the diversity of employees directly employed by the Group (including Virgin Money), based on headcount and not FTE (fulltime
equivalent value). The 2024 measures reflect the equivalent calculation, but for the Nationwide subgroup only.
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Board decisions
Section 172(1) of the Companies Act 2006 requires
directors to act in good faith, maintain a reputation
for high standards of business conduct, and consider
the longterm consequences of their decisions on the
Group’s key stakeholders, including our members and
customers, employees, wider communities and the
environment. Although Nationwide, as a building society,
is not required to follow the Companies Act, we seek to
apply its requirements where appropriate.
How are the impacts of key stakeholders considered?
In all its decision making, the Board considers the
consequences that each decision could have on our
stakeholders, as well as the need to maintain the highest
standards of business conduct. The terms of reference
of the Board and Board committees (available at
nationwide.co.uk) reflect the importance of considering
the requirements of the Group’s stakeholders.
Our experienced and diverse Board directors bring a
breadth of backgrounds and skills to the boardroom,
which ensures that a wide range of stakeholders and
perspectives are considered in the Board’s decision
making. Meeting agendas are planned carefully to
ensure that they cover a sufficiently broad range of
topics and stakeholder interests. Papers presented to
our Board and Board committees set out clearly how
the matter directly or indirectly impacts the Group’s key
stakeholders.
The process and approach taken by the Board in respect
of three principal decisions it took during the year is set
out against the backdrop of its overarching strategy on
the following pages.
Principal decisions of the Board are of strategic
importance, material to the operations of the business
and are significant to the Group’s key stakeholders.
Strong governance is at the heart of modern
mutuality. Nationwide’s experienced and diverse
Board ensures that decisions are made with key
stakeholders in mind. The Board remains committed
to engaging directly with key stakeholders, listening
to their views, and ensuring that decision making
takes wider impacts into consideration.
Kevin Parry
Chairman
Which stakeholders were considered?
Members and customers
Colleagues
Communities
Regulators and policymakers
Investors and rating agencies
Suppliers
Engaging with our stakeholders (continued)
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Completing the acquisition of Virgin Money
What was the decisionmaking process?
In March 2024, the Boards of Nationwide and Virgin
Money jointly announced that they had agreed the
terms of an offer for the share capital of Virgin Money by
Nationwide. The Board’s rationale in making the offer was
that acquiring Virgin Money would enable Nationwide
to grow its mortgages and savings business, as well as
diversify Nationwide’s income by widening its business
banking and credit card offerings. The acquisition would
be completed by Autumn 2024, subject to the Board’s,
Court and regulatory approval.
The final decision to approve the acquisition rested with
the Board, in accordance with its terms of reference.
Specialist financial and legal advisers were appointed to
advise the Board and management on the application of
laws, the deal structure and the City Code on Takeovers
and Mergers. A subcommittee of the Board was
established which could be convened at short notice to
facilitate agile decision making.
The Board received regular updates on the progress of
the acquisition, either from the Group Chief Executive
Officer’s Report or specific Board papers throughout
the period between the announcement and completion
of the acquisition. These focused on the anticipated
capital position at completion date, the proposed Group
governance arrangements and the required regulatory
approvals. These updates enabled the Board to challenge
and guide management on the progress and pace of the
acquisition.
At its June 2024 meeting, the Board considered the
Change in Control application to be sent to the PRA
and FCA. This included plans for the proposed Group
structure and integration of the two businesses which
would be implemented following completion. The Board
approved the combined Group Capital Assessment and
proposed approach for effective risk management. This
would ensure that there was clarity regarding both the
Group’s governance structure and regulatory capital
position upon completion.
In July 2024, the Board considered the combined Group
Pillar 2 liquidity assessment, the initial combined Group
capital position, and whether any capital actions would
need to be taken immediately following completion.
It also considered how the acquisition would impact
Nationwide’s exposure against the Building Societies Act
1986 funding limit. Additionally, the Board considered
and approved in principle the creation of the Group
Management and Group Risk Committees. More
information on this can be found on page 63.
The acquisition received formal approval from the FCA
and PRA in early September 2024, which set out both
regulators’ expectations of the Board that would apply
upon completion. At its September 2024 meeting, the
Board considered and approved management’s plans
for effective completion of the acquisition, including
the risk management framework. The Board approved
a new Group governance framework which would apply
from completion and approved the Change in Control of
Virgin Money to Nationwide which would take effect on 1
October 2024.
Following discussion and careful consideration of the
factors most likely to promote the success of the Society
for the benefit of members as a whole, the acquisition
of Virgin Money was approved by the Board on 26
September 2024.
How did the directors apply the principles of section
172 and how were stakeholders considered?
The benefits of the acquisition for members and future
members were considered by the Board at every stage.
This included: whether the purchase price represented
good value; how the acquisition would enhance the
financial strength of Nationwide; the wider range
of products and services that would be available to
members and customers; and the benefits of mutuality
that would be brought to more people in the UK
over time.
At its September 2024 meeting, the Audit Committee
considered a report from the Chief Risk Officer and
the Chief Internal Auditor on day 1 readiness risks and
controls and was satisfied that these were appropriate.
To ensure that the acquired assets and liabilities were
marked to their fair value as at the completion date
following completion, the Audit Committee undertook
an extensive review of approaches and assumptions
that would be used in the purchase price allocation. This
ensured that the purchase price was correctly accounted
for in accordance with FRS 3 and that regulators,
policymakers, investors and ratings agencies would have
confidence in the financial reporting.
Engaging with our stakeholders (continued)
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Completing the acquisition of Virgin Money (continued)
In readiness for completion and aligned to regulatory
requirements and expectations, the Board requested
that the Group Chief Executive Officer provide updates
on operational readiness for integration at every Board
meeting.
The PRA and FCA were briefed at regular intervals on the
progress of the acquisition and their feedback was taken
into account.
Board directors were guided by the City Code on
Takeovers and Mergers, which regulates public takeovers
in the UK. These rules cover directors’ responsibilities,
confidentiality, market announcements, shareholdings
and dealings, and processes leading up to, and following,
a public announcement.
The Group Chief Executive Officer held regular townhall
meetings to keep employees informed of the progress of
the acquisition.
What were the actions and outcomes?
The Chairman wrote to all Nationwide customers on
1 October 2024 informing them that Nationwide had
completed its acquisition of Virgin Money and that
Nationwide was now stronger and able to deliver even
greater value for members and customers. He further
informed that communities would continue to benefit
from the Branch Promise which was extended to Virgin
Money, meaning that everywhere there is a Nationwide
or Virgin Money branch, it will be there until at least the
start of 2028.
Nationwide and Virgin Money hosted colleague events on
1 October 2024 with the Chief Executive Officers of both
organisations sharing their thoughts on the acquisition
and answering colleague questions. Colleague townhall
events were also held one month after the acquisition for
Nationwide and Virgin Money colleagues, highlighting
the business opportunities that a combined group
provides. Colleague engagement was assessed by
culture surveys in both Nationwide and Virgin Money
during October 2024.
Which stakeholders were considered?
Members and customers
Colleagues
Regulators and government
Investors and rating agencies
Suppliers
Communities
Engaging with our stakeholders (continued)
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Engaging with our stakeholders (continued)
The Big Nationwide Thank You
What was the decisionmaking process?
In November 2024, the Group Chief Executive Officer
presented a proposal to the Board to make a oneoff
special distribution to members to thank them for making
the Virgin Money acquisition possible. The ambition
was to include the widest number of members in The
Big Nationwide Thank You, specifically those who were
members of the Society in the 12 months preceding
completion of the acquisition.
In the meeting, the Group Chief Financial Officer was
challenged on how the proposed distribution would affect
Nationwide’s financial position. He assured the Board that
Nationwide’s capital position would remain sustainable.
Detailed financial, accounting and tax information was
provided at the Board’s January 2025 meeting to further
support this.
At its January 2025 meeting, the Board considered the
proposal in greater detail. The proposed distribution had
been refined to a oneoff payment of £50 to each eligible
member holding a qualifying current account, savings
account or mortgage with the Society between 1 October
2023 and 30 September 2024. The qualifying criteria was
intended to be as inclusive as possible with the majority of
Nationwide’s members eligible.
The Board discussed in detail the eligibility criteria for the
payment at its February 2025 meeting. After challenging
management on how the proposed £50 was agreed, the
Board confirmed that it was satisfied that considerable
thought had been given to arrive at the appropriate level
of reward. The Board further recommended that the
communication strategy clarify that The Big Nationwide
Thank You would be distinct from the Nationwide Fairer
Share. The Board sought confirmation from management
that it was ready to meet the operational requirements
of the payment as well as dealing with additional queries
from members checking on their eligibility.
Following the above assurances from management, the
Board gave formal approval for the payment of The Big
Nationwide Thank You to eligible members, delegating
the final approval of the proposal and the announcement
to the Group Chief Executive Officer and Group Chief
Financial Officer.
How did the directors apply the principles of section
172 and how were stakeholders considered?
Nationwide’s strategic ambition to grow and deepen
relationships with its members, agreed by the Board, is
in the Group’s longterm interests. Rewarding members’
support during the acquisition of Virgin Money recognised
these relationships and demonstrated the benefits of
mutuality.
The Board considered that operational resilience and
maintaining service levels for customers was crucial to
the payment’s success. Execution risk was considered by
the Board, given the potential member and reputational
impact of operational issues arising. The risk was
mitigated via detailed governance and planning, and
lessons learned from previous largescale payments.
Internal controls were put in place and the risk continued
to be monitored closely.
The Board was assured that colleagues in branches and
contact centres would be trained to handle eligibility
enquiries and potential complaints. Colleagues who met
the member eligibility criteria would receive the payment.
The Board was updated on regulatory engagement on the
project plans. No material concerns were raised by the
regulators. The Board was also informed of engagement
with the Financial Ombudsman Service in preparation for
the payment.
The Board was made aware of communications with
investors and ratings agencies. This was to ensure the
rationale for the payment was understood by these
stakeholders and they understood that the payment was
possible due to Nationwide’s prevailing financial strength
and mutual purpose.
What were the actions and outcomes?
The Big Nationwide Thank You was announced on
11 March 2025 and 12 million members received
£50 during April and May 2025, with payments totalling
£615 million. On the date of the announcement our
website attracted one million visitors in a single day as
people sought additional information or checked their
eligibility.
Which stakeholders were considered?
Members and customers
Regulators and government
Colleagues
Investors and rating agencies
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Engaging with our stakeholders (continued)
Approval of our Social Impact Strategy
What was the decisionmaking process?
Nationwide, as a mutual and guided by its social purpose,
donates 1%
38
of its pretax profits each year to charitable
activities.
Following the successful launch of the Blueprint for a
modern mutual in 2023, the Board agreed this presented
an opportunity to refresh the social investment strategy,
which had been focussed on housing need. This would
underpin the Beacon for Mutual Good strategic driver and
align with the Society's new Blueprint.
In March 2024, the Board considered a proposal to
support a refreshed Social Impact Strategy – Nationwide
Fairer Futures – supporting those who have been dealt an
unfair hand. In reaching its decision, the Board considered
how the proposed new charity partners would help tackle
some of the biggest issues faced by society today: youth
homelessness, families living in poverty, and challenges
faced by people living with dementia.
The Board approved Nationwide Fairer Futures, which
was launched in June 2024. The Board also met
with representatives from the new charity partners
Centrepoint, Action for Children, and Dementia UK to hear
about the impact that Nationwide Fairer Futures funding
would have.
In April 2025 the Board endorsed an additional
partnership with The Royal Marsden Cancer Charity.
At its meeting in May 2025, the Board considered the first
Social Impact Annual Report.
How did the directors apply the principles of section
172 and how were stakeholders considered?
The Board considered whether the new Social Impact
Strategy would meet Nationwide's mutual good
commitment and how the chosen charity partners would
benefit the vulnerable sectors of society.
The Board considered colleague involvement, and
colleagues were encouraged to attend the Nationwide
Fairer Futures launch event and to find out more about the
new partner charities. The retention of colleague grants
was an important consideration, enabling staff members
to support local charities they are personally and actively
involved with.
The directors welcomed members’ support for Nationwide
Fairer Futures leading up to the 2024 AGM. In the AGM
voting form, members were invited to select one of the
three initial new charity partners to receive a voting
donation of £1 per vote up to £500,000.
Investors and Environmental, Social and Governance
(ESG) ratings agencies consider the delivery of social
impact actions as part of their overall ESG assessments.
The Board discussed how Nationwide Fairer Futures would
help Nationwide demonstrate its commitment to acting
responsibly and its social purpose.
What were the actions and outcomes?
Nationwide Fairer Futures was launched in June 2024 with
charity partnerships launched with Centrepoint, Action for
Children and Dementia UK. In April 2025 the additional
partnership with the Royal Marsden Cancer Charity was
confirmed.
Through our partnership with Dementia UK, Nationwide
has been able to offer specialised dementia clinics in
over 120 of its branches since September 2024. Anyone
affected by dementia, regardless of who they bank with,
can book a 45minute appointment with a dementia nurse
on specified dates in these designated branches.
Which stakeholders were considered?
Members and customers
Colleagues
Communities
Investors and rating agencies
38 The 1% is calculated based on average pretax profits over the previous three years. For 2024/25, this covered the three years ending 4 April 2024 and therefore predated our acquisition of Virgin Money, which completed
on 1 October 2024.
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Our Mutual Good Commitments
Our Mutual Good Commitments
Being a responsible business is part of our mutual heritage. We remain committed to doing business in a way that positively impacts our customers, colleagues, communities and
society as a whole.
Our environmental, social and governance (ESG) ambitions are embedded within our strategy, and are focused in areas where we believe we can make the most significant, positive
impacts across our stakeholder groups. Our ESG ambitions are articulated through a set of Mutual Good Commitments, which demonstrate how our business aligns to, and supports,
the UN Sustainable Development Goals (SDGs) and our netzero ambitions. Our Mutual Good Commitments are overseen by Nationwide’s Board and Executive Committee, and the
measures that support them are set out over the following pages.
Outside of our Annual Report and Accounts 2025, further information on how we are progressing against our ESG ambitions can be found in our sustainability reporting, as
described on page 35.
Our strategic drivers
Simply brilliant experience
Collaborating to deliver a
personal, seamless, and easy
experience, from start to finish.
More rewarding relationships
Building deeper, broader,
more lifelong relationships
that provide the best value in
banking.
Beacon for mutual good
Focusing our impact on the issues that matter most to customers, businesses and society, in a way that
only we can.
Our Mutual Good Commitments
We will offer customers a choice in
how they bank with us, and support
their financial resilience.
More on our measures can be found
on page 31.
We will help more people into
safe and secure homes, both our
customers who have relationships
with us and more broadly.
More on our measures can be found
on page 32.
We will make a positive difference
for our customers, communities and
society as a whole.
More on our measures can be found
on page 33.
We aim to build a more sustainable
world by supporting progress
towards a greener society.
More on our measures can be found
on page 33 and pages 36 to 39.
We will enhance our performance by
better reflecting the diversity of our
society.
More on our measures can be found
on page 34.
UN Sustainable Development Goals supported by our Mutual Good Commitments
SDG 1
No poverty
SDG 8
Decent work and economic growth
SDG 10
Reduced inequalities
SDG 1
No poverty
SDG 10
Reduced inequalities
SDG 11
Sustainable cities and communities
SDG 1
No poverty
SDG 11
Sustainable cities and communities
SDG 7
Affordable and clean energy
SDG 11
Sustainable cities and communities
SDG 12
Responsible consumption
and production
SDG 13
Climate action
SDG 5
Gender equality
SDG 8
Decent work and economic growth
SDG 10
Reduced inequalities
30
Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Our Mutual Good Commitments (continued)
Our Mutual Good Commitment measures were set prior to our acquisition of Virgin Money on 1 October 2024. Through this section, where we can
report on progress covering the Group, we show
Group
and where the measure relates to the Nationwide subgroup business excluding Virgin
Money, we show
N
. Where we have indicated that new measures will be in place for 2025/26, more detail will be included in our ESG Disclosures
2025, to be published later this year.
Simply brilliant experience
Collaborating to deliver a personal, seamless, and easy experience, from start to finish.
We will offer customers a choice in how they bank with us, and support their financial resilience.
Our measures for 2024/25 Our progress
Group
Our Branch Promise:
We promise to keep every one of our branches open until at
least the start of 2028
39
.
We have kept all our branches open. Following our acquisition of Virgin Money, we also extended our Branch Promise to cover Virgin
Money branches.
See also, page 12.
N
By 2025, we will protect 1.4 million customers with our
Scam Checker Service
40
.
We have exceeded our target, protecting almost 1.5 million customers with our Scam Checker Service. Usage was higher than
expected, supported by more people using our branches (which is the main channel for use of our Scam Checker Service), and by our
advertising approach and online prompts, which increased visibility and awareness of this service. This measure will be retired and
replaced with a new measure for 2025/26.
39 All our 605 Nationwide branches and 91 Virgin Money branches will remain open until at least 1 January 2028. Opening hours may vary. There may be exceptional circumstances outside of our control that mean we have to close a branch,
but we will only do this if we do not have another workable option.
40 Set against a baseline of 31 March 2022. Our Scam Checker Service enables customers to check their payments with us before they make them, if they have concerns it could be a scam, providing them with additional support and
reassurance.
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
More rewarding relationships
Building deeper, broader, more lifelong relationships that provide the best value in banking.
We will help more people into safe and secure homes, both our customers who have relationships with us and more broadly.
Our measures for 2024/25 Our progress
N
By 2025, we will help 300,000 people, through our
first time buyer proposition, to buy a home
41
.
We have exceeded our target, helping 373,000 people into a home, through our Nationwidebranded mortgages. This reflected a
stronger first time buyer market than expected over the period, and the ongoing success of our Helping Hand proposition (see page
13). We are introducing a new threeyear first time buyer target for 2025/26.
N
By 2025, we will have provided £2 billion of new
lending to support the social housing sector
42
.
We have exceeded our target, providing almost £2.5 billion of new lending to support the social housing sector. This reflected the
evolution of our lending criteria, which enabled us to become more competitive and support a broader range of customers with their
financing needs. We are introducing a new threeyear target for 2025/26.
N
We will ensure our new buy to let lending on rental
properties meets our minimum standards, which are informed
by and exceed the Decent Homes Standard
43
.
With many of our customers in rented accommodation, we seek to enable a private rented sector that works for the mutual good of
both landlords and tenants. We inspect the buy to let properties on which we originate new loans through The Mortgage Works, to
ensure they meet our minimum standards. Properties that do not meet these conditions must complete remedial work prior to us
lending on the property.
41 Set against a baseline of 30 November 2020. Our definition of a first time buyer is set out in the Glossary for the Annual Report and Accounts, available at nationwide.co.uk
42 Set against a baseline of 31 March 2022.
43 A Decent Homes Standard in the private rented sector: consultation  GOV.UK.
Our Mutual Good Commitments (continued)
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Beacon for mutual good
Focusing our impact on the issues that matter most to customers, businesses and society, in a way that only we can.
We will make a positive difference for our customers, communities and society as a whole.
Our measures for 2024/25 Our progress
Group
We will commit at least 1% of our pretax profits
44
to
charitable activities each year.
We met our target in 2024/25. Over 2024/25, we committed more than £20 million to charitable activities. This included
£18.7 million
44
(2023/24: £15.5 million) as part of the 1% of pretax profits, and also included donations awarded by Virgin Money.
More information can be found on page 14.
Group
New target: By 2027, we will have helped more than
200,000 people through our Nationwide Fairer Futures social
impact strategy
45
.
Following the launch of our Nationwide Fairer Futures social impact strategy in June 2024 (see page 14), we introduced a new target,
to demonstrate our reach and impact on the causes we set out to support. All programmes, for each partner, were launched in 2024
and initial results on the reach and impact we have had are now being received and analysed.
Due to the complex nature of measuring and reporting on individual beneficiary reach, we will start reporting on our progress
against our target in 2025/26.
We aim to build a more sustainable world by supporting progress towards a greener society.
Our measures for 2024/25 Our progress
Group
We aim to reduce our scope 1 emissions that we
control across our own business operations, in line with our
2030 scope 1 sciencebased target.
Our Mutual Good Commitment measures reflect our intermediate (by 2030) sciencebased targets, as described in the Metrics and
targets section of our Climaterelated Financial Disclosures 2025, from page 23.
Our scope 1 emissions have continued to reduce in comparison to previous years, and we are currently ahead of our intermediate
(by 2030) sciencebased target pathway. We have also continued to source 100% renewable electricity, and are on track to achieve
our scope 2 sciencebased target.
Our scope 3 emission reductions, particularly for mortgages, continue to be minimal given our limited control and influence in our
ability to progress towards our sciencebased targets. More information on the progress towards our scope 3 targets can be found
in our Climaterelated Financial Disclosures 2025, from page 29.
Scope 1 and 2 emissions form part of our directors’ LongTerm Performance Pay awards (see page 107).
Group
We aim to continue to source 100% renewable
electricity for our own operations, in line with our 2030 scope 2
science based target.
Group
We aim to reduce our scope 3 emissions for our
mortgages, business lending, other secured lending activity,
and our supply chain, by taking steps to reduce those emissions
within our control and encouraging our customers and
suppliers to do the same, in line with our 2030 scope 3 science
based targets.
44 Our charitable commitment of 1% of pretax profits is based on average profits over the previous three years. For 2024/25, this preceded the acquisition of Virgin Money on 1 October 2024. Our commitment of £18.7 million included
£17.0 million of charitable donations and £1.7 million relating to supporting activity and staff costs.
45 Set against a baseline of 1 April 2024.
Our Mutual Good Commitments (continued)
33
Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
46 Gender – Figures reflect female representation. Gender is as recorded in Nationwide’s HR system.
47 Leadership population – A targeted and broader leadership population comprising around 1,000 of our leaders.
48 Ethnicity – Figures reflect Black, Asian, mixed and other. Excluded from the calculation are white majority and
minority.
49 The percentage of colleagues meeting this characteristic is based on their voluntary selfdeclaration recorded in
Nationwide’s HR system, which states that they consider themselves to belong to this characteristic.
50 Disability – Figures reflect those identifying as disabled or as having a longterm health condition.
51 Sexual Orientation – Figures reflect those identifying as bisexual, gay man, gay woman, lesbian and other.
Excluded from the calculation are those identifying as heterosexual.
Gender
46
36.7%
39.2%
50.0%
Leadership population
47
Ethnicity
48,49
16.8%
14.9%
15.0%
All employees
9.5%
9.2%
12.0%
Leadership population
47
Disability
49,50
10.0%
9.2%
12.0%
Actuals Target TargetActuals Target Target
Actuals Target Target Actuals Target Target Actuals Target Target
Actuals Target Target Actuals Target Target
7.7%
7.7%
8.0%
All employees Leadership population
47
Sexual Orientation
49,51
4.6%
4.0%
All employees
3.0%
3.4%
4.0%
Leadership population
47
4.0%
Beacon for mutual good (continued)
We will enhance our performance by better reflecting the diversity of our society.
Our measures for 2024/25 Our progress
N
By 2028, our people will better reflect the wider
society that we represent.
We achieved five of our seven diversity measure targets for March 2025, with improvements seen across all measures in the year, except
for the LGBTQ+ leadership population. For the two measures where targets were not achieved, representation of women in our leadership
population improved to 36.7% (2024: 35.7%), whilst the proportion of LGBTQ+ colleagues in the leadership population decreased to 3.0%
(2024: 3.2%).
We will utilise our data and insights to identify where focus and action are needed to design inclusion into our processes, policies and
practices. We will also continue to enhance our evaluation of data to better understand the impacts of the targeted interventions we take.
We are reviewing our diversity measures to set appropriate targets for the combined Group, including Virgin Money.
Diversity measures are also included in our directors’ longterm variable pay targets. More information can be found on page 107.
All data is as at 31 March 2025, and is based upon headcount not FTE (fulltime equivalent value) of employees directly employed by Nationwide (excluding Virgin Money).
2025
2025
2025 2025
2025
2025
2025
2025
2025
2025 2025
2025
2025
2025
2028
2028
2028 2028
2028
2028
2028
Our Mutual Good Commitments (continued)
34
Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
This statement provides an overview of topics and related reporting references as required by Sections 414CA
and 414CB of the Companies Act 2006. Nonfinancial and sustainability (environmental, social and governance)
information is integrated across the Strategic report and other publications and we have used crossreferencing in
the table on the right to avoid duplication.
Non-nancial and sustainability
information statement
For further information on non-financial and
sustainability matters, please see our separate
reporting at nationwide.co.uk:
• ESG Disclosures
• Climaterelated Financial Disclosures
• Principles for Responsible Banking report
• Modern slavery statement
• Responsible business webpages (for information on our
ESG policies and statements)
Supporting our colleagues with disabilities
We are committed to fostering an inclusive culture,
ensuring everyone has access to opportunities. It is our
policy to afford access to training, career development,
and promotion opportunities fairly to all colleagues.
We actively support colleagues with disabilities or long
term health conditions, including through workplace
adjustments and supportive policies, to enable them
to be at their best. Should colleagues become disabled
while employed, we will, wherever possible, make
adjustments to support them in their existing role or
redeploy them to a more suitable alternative role. We
continue to improve our adjustments process to make
the experience as clear, quick and easy as possible.
Our collaboration with employee network groups helps
us learn from lived experiences, fostering a supportive
community and promoting belonging and inclusion. We
design spaces that work for colleagues and continue to
learn from feedback, to raise accessibility standards.
We partner with organisations such as the Business
Disability Forum and the Valuable500 to improve
outcomes for disabled colleagues and customers. We
are recognised as a Disability Confident Leader by the
Government’s Department for Work and Pensions, and
we continue to ensure that we continuously integrate
accessibility and inclusion into our policies and
processes.
Reporting
requirements
Section of Annual
Report and Accounts
Page
Business model We are a modern mutual
banking provider
5
Key performance
indicators
Our 2024/25 key
performance indicators
16
Governance Governance 56
Stakeholders Engaging with our
stakeholders
19
Social matters Our Mutual Good
Commitments
30
Key risks and their
management
Risk overview
40
Colleagues Our policies ensure consistent
governance in respect of our
colleagues, environmental matters,
human rights and economic crime
and anticorruption. Our key
policies and statements of intent
are set out on our webpages. For
our Nationwide subgroup, these
can be found on our Responsible
Business webpages at
nationwide.co.uk. For our Virgin
Money subgroup, these can
be found on our ESG hub at
virgninmoneyukplc.com.
Environmental
matters
Human rights
Economic crime
and anticorruption
For more information on how we support our
colleagues more generally, see page 23.
Non-financial and sustainability
information statement
35
Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Climate-related financial disclosures
Climate-related nancial disclosures
Environmental and climate consciousness are core to our strategy and align to our mutual purpose of Banking  but fairer, more rewarding and for the good of society. This compels us to take
meaningful action by limiting the environmental impact of our business operations, helping customers to green their homes and businesses, and managing better the impacts of a more unpredictable
climate. Climate change continues to present a risk to us and our customers, and so managing the risk from climate change, and aiming to build a more sustainable world by supporting progress towards
a greener society, is core to us being a responsible business.
The table below outlines how we have aligned to the four categories of the Task Force on Climaterelated Financial Disclosures (TCFD’s) recommendations
1
(Strategy, Governance, Risk management, and
Metrics and targets) and recommended disclosures. This is aligned with the Financial Conduct Authority’s Listing Rules 6.6.6R(8). Across these categories are 11 subcategory headings which we have
used to present our activities for this year, along with planned future activity.
Page number references have been provided to indicate where additional detail can be found in our full Climaterelated Financial Disclosures 2025.
The climaterelated risks and opportunities we have identified over the short, medium, and long term
The impact of climaterelated risks and opportunities on our businesses, strategy, and financial planning
The resilience of our strategy, taking into consideration different climaterelated scenarios, including a 2°C or lower scenario
Strategy – the actual and potential impacts of climaterelated risks and opportunities on us, our strategy, and financial planning
2024/25 activity Future activity Disclosure reference
• We continue to manage climaterelated risk across our separate but aligned Enterprise Risk
Management Frameworks (ERMFs).
• We consider physical, and transition, climaterelated risks and opportunities over short, medium, and
longterm horizons.
• Consider aligning our approach to climate change across
the Group, where appropriate.
• Assess climaterelated risks and opportunities across the
Group in accordance with future disclosure requirements.
Pages 3, 1012, 1822
2024/25 activity Future act
ivity Disclosure reference
• Our climaterelated impacts, risks, and opportunities were assessed through a double materiality
(financial and impact materiality) lens. We continue to embed climate change into our strategic planning
and financial planning processes.
• This year, we published our research paper
2
, which outlines the initial findings of our 0% interest
Green Additional Borrowing mortgage pilot. The paper includes six recommendations of actions that
policymakers, businesses, banks and building societies can take to help improve the decarbonisation of
UK homes.
• We also launched our Mobiliser Fund. Supported by two key initiatives, the fund aims to help
businesses in higher emitting sectors to start to make the important steps in the transition towards a
lowcarbon economy.
• Continue to engage with government and stakeholders
across the industry in the pursuit of decarbonising
homes in the UK.
• Continue to monitor the impact of our green finance
propositions, on our customers and business customers.
Pages 5, 79, 1112, 15
2024/25 activity Future act
ivity Disclosure reference
• Our scenario analysis activity continues to support our understanding of the impacts of climate change
on our residential mortgages, registered social landlords, and business lending portfolios.
• This year, we completed sensitivity analysis on the Nationwide subgroup’s residential mortgages
portfolio, across two climate pathways (including a wellbelow 2°C scenario). We also continue to
consider climate change in the Internal Capital Adequacy Assessment Process (CAAP).
• Further enhance our climate scenario analysis capability
and how we use it to manage climaterelated risks.
Page 14
1 Nationwide follows the TCFD’s Annex: Implementing the Recommendations of the Task Force on Climaterelated Financial Disclosures (October 2021).
2 How lowcost finance supports the greening of UK homes.
Our full Climaterelated Financial
Disclosures 2025 can be found at
nationwide.co.uk
36
Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Governance – the organisation’s governance around climaterelated risks and opportunities
The Board’s oversight of climaterelated risks and opportunities
2024/25 activity Future activity Disclosure reference
• Our climate change governance model provides clear oversight and management of climaterelated
issues. Our Board has ultimate accountability for all climaterelated matters and sets strategic
direction for our climate change ambitions. This year, our Board engaged regularly on climaterelated
matters, including receiving updates on progress towards our scope 1 intermediate (by 2030) science
based target, and updates on progress being made towards our Mutual Good Commitments.
• Continue to engage the Board on climaterelated issues,
including progress towards our intermediate (by 2030)
sciencebased targets, and Mutual Good Commitments.
Page 16
Describe management’s role in assessing and managing climaterelated risks and opportunities
2024/25 activity Future activity Disclosure reference
• Climaterelated Senior Managers Regime (SMR) accountabilities sit with our Group Chief Executive
Officer, supported by the Chief Executive Officer of Virgin Money. This year, our executive
managementlevel, and operationallevel, committees engaged regularly on climate change, including
discussing the outcomes of our 0% interest Green Additional Borrowing mortgage pilot research
paper and reviewing the appropriateness of our intermediate (by 2030) sciencebased target for
mortgages.
• Continue to engage management on climate change.
• Consider further alignment of our climaterelated
governance model across the Group.
Page 17
Risk management – our processes for identifying, assessing and managing climaterelated risks
Our processes for identifying and assessing climaterelated risks
2024/25 activity Future activity Disclosure reference
• This year, we assessed the potential inbound, and outbound, climaterelated impacts against our
principal risks, through a double materiality lens.
• Our risks were assessed across short, medium, and longterm time horizons.
• Continue to enhance our approach to help identify
and assess climate and naturerelated risks, where
appropriate.
Pages 1112, 1820
Our processes for managing climaterelated risks
2024/25 activity Future activity Disclosure reference
• This year, we updated the Nationwide subgroup’s Climate Change and Nature Risk Standard, to
incorporate naturerelated risk alongside climate change.
• The Group also engaged with the PRA on the outcome of the 2023 climate thematic review.
• Continue to consider the management of naturerelated
risk as part of our climate risk assessments.
Pages 10, 13, 1820
How our processes for identifying, assessing, and managing climaterelated risks are integrated into our overall risk management
2024/25 activity Future activity Disclosure reference
• We continue to identify, assess, and manage climaterelated risk across the Group.
• This year, we updated the Nationwide subgroup approach to consider naturerelated risk alongside
climate change as a cause to our principal risks.
• Consider aligning our approach to climate change, across
the Group, where appropriate.
Pages 1822
Climate-related financial disclosures (continued)
Our full Climaterelated Financial
Disclosures 2025 can be found at
nationwide.co.uk
37
Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
The metrics used by us to assess climaterelated risks and opportunities in line with our strategy and risk management process
Metrics and targets – disclose the metrics and targets used to assess and manage relevant climaterelated risks and opportunities where such information is material
2024/25 activity Future activity Disclosure reference
• Our climate change management information (M) continues to be discussed in our executive
managementlevel and operationallevel committees, to support better decision making by management.
This year, we incorporated naturerelated metrics into our M dashboard, including waste and water
usage data.
• We also continue to monitor climaterelated physical and transition risk metrics, including the flood risk
exposure, and the Energy Performance Certificate composition, of our residential mortgages portfolios.
• Continue to enhance our climate and naturerelated
metrics to support our climate change risk management.
Pages 17, 3739
Our scope 1, 2, and 3 greenhouse gas (GHG) emissions and targets, and the related risks
2024/25 activity Future activity Disclosure reference
• We continue to disclose our scope 1, 2, and 3 emissions, in line with the Government’s Streamlined
Energy and Carbon Reporting regulatory requirements.
• Our emissions data continues to help track progress towards our intermediate (by 2030) science
based targets and Transition Plan.
• Continue to review our approach to calculating
emissions, to support monitoring progress towards our
intermediate (by 2030) sciencebased targets.
Pages 2336
The targets used by us to manage climaterelated risks and opportunities, and performance against these targets
2024/25 activity Future activity Disclosure reference
• Our Mutual Good Commitments are supported by our scope 1, 2, and 3 emissions intermediate
(by 2030) sciencebased targets. Progress towards our scope 3 targets, particularly for residential
mortgages, will not be possible without substantial additional governmentled policy, and
consumer action.
• This year, we conducted internal modelling on the estimated impact of the Government’s green homes
policy and customer behaviour on emissions reductions, to understand the potential impact on our
intermediate (by 2030) sciencebased target for residential mortgages. Given the slow progress in UK
policy and consumer action to green UK homes to date, our internal modelling demonstrates that our
mortgages target is not achievable. For the time being, we have retained our target, and have aligned
our targets across the Group, where feasible. However, we will be keeping our targets under active
review as we continue to monitor the UK’s progress towards its netzero ambition.
• Continue to review progress towards our intermediate
(by 2030) sciencebased targets, and keep the targets
under active review.
• Consider our approach to future target setting across
the Group.
Pages 2336
Climate-related financial disclosures (continued)
Our full Climaterelated Financial
Disclosures 2025 can be found at
nationwide.co.uk
38
Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Our carbon emissions data
3
We report on our most material emissions categories, in line with the Streamlined Energy and Carbon Reporting requirements
4
. More information on our emissions, methodology used, energy efficiency action taken,
and progress towards our intermediate (by 2030) sciencebased emissions targets, can be found in our Climaterelated Financial Disclosures 2025, and Basis of Reporting
5
. Reporting period for comparative year
and baseline year have not been restated from Nationwide and Virgin Money historical reporting dates due to the early stages of integration in relation to the acquisition. The presented comparative and baseline
data at a Group level reflects an aggregate of this historical reporting. More information is in our Climaterelated Financial Disclosures: Basis of Reporting 2025. We will explore aligning better our emissions data
in the future, as appropriate. We appointed Ernst and Young LLP (EY) to provide limited independent assurance over selected KPs within our scope 1, 2, and 3 carbon emissions disclosures, as indicated by the EY
symbol in the table, below. The assurance engagement was planned and performed in accordance with the International Standard for Assurance Engagements (SAE) (UK) 3000 (July 2020), Assurance Engagements
Other than Audits or Reviews of Historical Financial Information.
Scope 1 and 2 emissions data 2024/25 2023/24 (Baseline) 2021/22
Scope 1 – Energy and travel (tCO
2
e/y)
EY
3,128 3,975
6
5,673
Scope 2 – Electricity (tCO
2
e/y)
EY
18,165 19,383
6
21,098
Total gross scope 1 and 2 emissions (tCO
2
e/y)
EY
21,293 23,358 26,771
Absolute carbon outturn – less PPA and green tariff electricity (tCO
2
e/y)
3,128 3,975 5,673
Total carbon dioxide in tonnes per full time employee (tCO
2
e/y/FTE)
0.15 0.19 0.28
Total energy usage – Electricity and gas (MWh)
103,839 115,214 131,159
Scope 3 upstream emissions data – purchased goods and services, capital goods, upstream transportation and distribution 2024/25 2023/24 (Baseline) 2021/22
Nationwide subgroup total upstream scope 3 carbon emissions (tCO₂e/y)
EY
177,000 169,500
6
230,000
Virgin Money subgroup total upstream scope 3 carbon emissions (tCO
2
e/y)
EY
54,500 53,000
6
Scope 3 downstream emissions data – residential mortgages 2024/25 2023/24 (Baseline) 2021/22
Nationwide subgroup LTV weighted carbon emissions using interpolated EPC data (tCO
2
e/y)
EY
2,611,000 2,807,000 2,795,000
Nationwide subgroup LTV weighted carbon intensity using interpolated EPC data (kgCO
2
e/m
2
/y)
17.98 18.27 19.03
Virgin Money subgroup LTV weighted carbon emissions using extrapolated EPC data (tCO
2
e/y)
EY
529,000 574,000 617,000
Virgin Money subgroup LTV weighted carbon intensity using extrapolated EPC data (kgCO
2
e/m
2
/y)
16.50 16.40 16.88
Scope 3 downstream emissions data – business lending (Virgin Money subgroup) 2024/25 2023/24 (Baseline) 2021/22
Agriculture LTV weighted carbon emissions (tCO
2
e/y)
EY
424,000 470,000 505,000
Agriculture physical LTV weighted carbon intensity (tCO
2
e/y/£m revenue)
1,369 1,535 1,431
Oil and gas LTV weighted carbon emissions (tCO
2
e/y)
84,000 140,000 87,000
Oil and gas economic LTV weighted carbon intensity (tCO
2
e/y/£m lent)
606 1,059 1,115
Shipping LTV weighted carbon emissions (tCO
2
e/y)
65,000 100,000 273,000
Shipping economic LTV weighted carbon intensity (tCO
2
e/y/£m lent)
478 738 1,934
Surface transport LTV weighted carbon emissions (tCO
2
e/y)
168,000 132,000
7
Surface transport physical LTV weighted carbon intensity (gCO
2
e/y/km travelled)
433 434
Scope 3 downstream emissions data – registered social landlords (Nationwide subgroup) 2024/25 2023/24 (Baseline) 2021/22
LTV weighted carbon emissions using interpolated EPC data (tCO
2
e/y)
EY
213,000 218,000 346,000
LTV weighted carbon intensity using interpolated EPC data (kgCO
2
e/m
2
/y)
21.51 20.61 22.36
Scope 3 downstream emissions data – commercial real estate (Nationwide subgroup) 2024/25 2023/24 (Baseline) 2021/22
LTV weighted carbon emissions using proxy EPC data (tCO
2
e/y)
EY
23,000 32,000 96,000
LTV weighted carbon intensity using proxy EPC data (kgCO
2
e/m
2
/y)
23.87 25.40 46.39
Climate-related financial disclosures (continued)
3 Notes for the carbon emissions data are detailed in our Climaterelated Financial Disclosures 2025, and our
Climaterelated Financial Disclosures: Basis of Reporting 2025. Data for scope 1 and 2 is presented for the 12month
period ended 31 December 2024 for the Nationwide subgroup, and for 12month period ended 30 June 2024 for the
Virgin Money subgroup. Data for scope 3 upstream is presented for the 12month period ended 31 December 2024
for the Nationwide subgroup, and the 12month period ended 30 September 2024 for the Virgin Money subgroup.
Data for scope 3 downstream (investments) is presented for the 12month period ended 31 December 2024 for the
Nationwide subgroup, and the 12month period ended 31 March 2024 for the Virgin Money subgroup (which includes
emissions from residential mortgages and our business lending sectors that we assess as most carbon intensive).
4 Streamlined Energy and Carbon Reporting requirementsGOV.UK(www.gov.uk).
5 Results and accounts | Nationwide.
6 Comparative amounts have been restated following ongoing review of our emissions calculation methodology. More
information is included in our Climaterelated Financial Disclosures: Basis of Reporting 2025.
7 Surface transport baseline set in 2023/24.
EY
Our emissions are subject to independent limited assurance by EY. Further information is in EY’s limited assurance
report 2025. Please refer to the report for full details of scope.
39
Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Annual Report and Accounts 2025
Strategic Report
(continued)
Risk overview
The Board recognises that effective risk management is essential to the Group’s ongoing strength and the delivery of our strategic objectives. We adopt a prudent approach to risk
management, keeping our customers’ money safe and secure by ensuring that the risks we take in support of our strategy are understood, and managed rigorously through a consistent
approach.
Significant analysis has taken place, both prior to and following the acquisition of Virgin Money, to understand the impact of the acquisition on the Group's risk profile. Prior to the acquisition, the
two separate businesses operated in broadly similar markets and were exposed to similar risks. Whilst the risks to which the new Group is exposed are fundamentally unchanged following the
acquisition, the absolute level of risk which the Group is exposed to has increased. This reflects the larger and more complex overall business and the risks associated with integration. In response,
we have ensured that appropriate risk mitigations and controls are in place. Given the Group’s increased market share, we also expect to be subject to increased regulatory scrutiny, particularly
throughout the integration period.
Risks are managed effectively across the Group with no material deficiencies, although some specific risk management practices differ across the Nationwide and Virgin Money sub-groups.
Against an evolving backdrop, with increased prevalence of financial, economic and cyber crime, the Group will continue to prioritise investment in its defences and drive towards best practice,
including investment to keep our systems up to date. The Group maintains a strong financial position and remains comfortably above regulatory and internal minima for all key measures of
capital and liquidity.
How risk is managed across the Group
Following the acquisition of Virgin Money on 1 October 2024, the Group operates separate but aligned Enterprise Risk Management Frameworks (ERMFs) for the Nationwide and Virgin Money
sub-groups, ensuring risks are managed in a consistent and rigorous way. These frameworks define how risks are managed within each business and set out the risk management
responsibilities of colleagues within an industry-standard three lines of defence model. They also ensure that all risks are appropriately and consistently identified, assessed, managed,
monitored, and reported. These frameworks are supplemented by Group level governance which supports the Board in ensuring risks are managed consistently and rigorously across the
Group, with appropriate escalation routes in place.
Independent oversight and challenge of risk management practices is provided by the respective independent risk functions within the two businesses, each led by a Chief Risk Officer (CRO).
The respective CROs have regular meetings to ensure risks are managed appropriately across the Group. The Internal Audit functions of the two businesses provide assurance of the
effectiveness of the control environments, to their respective boards.
The Board sets the Group’s risk appetite, defining the acceptable levels of risk to take in pursuit of its objectives. To support this, the Nationwide and Virgin Money sub-groups also set
risk appetite for the specific risks arising from their operations. The Board and management receive regular risk profile reporting, including key risk metrics, to monitor our position
relative to risk appetite. We also continuously review risks to which the Group is exposed and strengthen both the framework and the controls we rely upon to mitigate these risks.
Further information on how risk is managed across the Group can be found in the Managing risk section of the Risk report on page 123.
Risk overview
40
Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Annual Report and Accounts 2025
Strategic Report
(continued)
Risk overview (continued
Principal risks and uncertainties
The Board is responsible for the principal risks to which the Group is exposed. These risks encompass all the different types of risk which are relevant to the Group’s business and the
achievement of its strategic objectives. This ensures we understand and manage all risks to which we are exposed in a comprehensive and consistent way. Further information on these
risks can be found in the Risk report as indicated below.
Principal risk Key developments Further detail
Credit risk – The risk of loss as a result of a customer or counterparty
failing to meet their financial obligations.
Despite the pressures on household finances, the Group’s credit performance remains within
expectations and appropriate provisions are in place. The acquisition of Virgin Money
introduced substantial business banking and credit card portfolios to the Group. Whilst this
has led to significant balance growth and change in the portfolios’ composition, it has not
resulted in a material change to the overall credit risk profile.
Page 127
Liquidity and funding risk – Liquidity risk is the risk that the Group is
unable to meet its liabilities as they fall due and maintain member and
other stakeholder confidence. Funding risk is the risk that the Group is
unable to maintain diverse funding sources in wholesale and retail
markets and manage retail funding risk that can arise from excessive
concentrations of higher risk deposits.
Following the acquisition of Virgin Money, the Group’s liquidity and funding position remains
strong, with a Liquidity Coverage Ratio of 174% (2024: 191%) and a Net Stable Funding Ratio of
147% (2024: 151%).
Page 171
Capital risk – The risk that the Group fails to maintain sufficient capital
to absorb losses throughout a full economic cycle and sufficient to
maintain the confidence of current and prospective investors,
members, the Board, and regulators.
Whilst the Group’s capital resources decreased following the acquisition of Virgin Money, they
remained comfortably above both regulatory and internal minima throughout the year. At
31 March 25 the Group’s Common Equity Tier 1 (CET1) ratio was 19.1% (2024: 27.1%) and the
Group’s leverage ratio was 5.2% (2024: 6.5%).
Page 184
Market risk – The risk that the net value of, or net income arising from,
the Group's assets and liabilities is impacted as a result of market price
or rate changes. The Group does not have a trading book; therefore,
market risk only arises in the banking book.
Whilst economic conditions impacted the Group, market risk continued to be managed
prudently, resulting in a low level of exposure to interest rate risk.
Page 190
Pension risk – The risk that the value of the pension scheme assets wil
be insufficient to meet the estimated liabilities, creating a pension
deficit.
l The Group’s pension schemes remain well funded, and no employer deficit contributions were
required or scheduled for the year.
Page 196
Business risk – The risk that volumes decline, margins shrink, or losses
increase relative to the cost or capital base, affecting the sustainability
of the business and the ability to deliver the strategy due to external
factors (macroeconomic, geopolitical, industry, regulatory,
technological, or other external events) or internal factors (including
the development and execution of the strategy).
The acquisition of Virgin Money has expanded and diversified the balance sheet, customer
base, and income streams, increasing resilience to potential shocks. However, this also
exposes the Group to new or increased risks, including those related to business banking and
credit cards. Whilst we remain within risk appetite, these risks will be assessed further in
upcoming stress testing activity.
Page 199
Risk overview (continued)
41
Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Annual Report and Accounts 2025
Strategic Report
(continued)
Risk overview (continued
Top and emerging risks
Top and emerging risks are specific risks which have the potential to materially impact the Group’s financial results and delivery of its strategic objectives and often impact across several
principal risks. The most significant of these are described below, together with a summary of actions we are taking to reduce the risk, and the principal risks which are most likely to be
impacted.
Risk How we mitigate this risk Related principal risks
Climate change
The Group is exposed to both physical risks arising from climate change
(such as damage to UK housing stock and property) and transitional risks
(such as lower economic growth and government policy impacts on
property values) as the country moves towards net-zero emissions. These
threats continue to evolve as government policy develops and green
technologies mature.
We invest in sustainable business practices and proactively review lending criteria to
limit the impact our activities have on climate change and to mitigate potential credit
risk.
We continue to develop our processes to reflect potential changes in macroeconomic
conditions and the housing market as we transition to a low-carbon economy, and we
have completed relevant stress testing for climate change.
Credit risk
Model risk
Operational and
conduct risk
Cyber
Given ongoing geopolitical tension, the threat of external parties
exploiting cyber-security vulnerabilities to gain access to data, system, or
assets; disrupt services; or otherwise affect the Group, our staff, and our
customers, remains. Cyber-attacks are constantly evolving and increasing
in terms of sophistication.
We continuously monitor the cyber threat level and continue to invest in our cyber
defences to ensure we are able to respond appropriately.
We have accelerated existing Virgin Money cyber defence enhancement programmes.
Operational and
conduct risk
Emergent technologies
The emergence of viable generative artificial intelligence, as well as the
continued development of quantum computing and crypto-currency
technologies, creates new risks and opportunities as they are adopted
internally, across the industry and potentially by malicious organisations
or individuals.
We only use generative artificial intelligence for specific activities which are subject to
robust control and oversight, including human intervention where required.
We continually develop and refine our control framework for advanced and emerging
technologies, and monitor the external environment for developments in industry best
practice.
Operational and
conduct risk
Model risk
Geopolitical environment
The geopolitical environment remains volatile, with ongoing global
conflicts and a range of global tensions. This uncertainty impacts the
macroeconomic environment. Conflicts and disputes also have the
potential to disrupt supply chains and increase cyber threats and
economic crime.
We prepare for a range of economic outcomes and continually assess the risks arising
from these.
Whilst our retail lending is restricted to the UK, we actively control our exposure to
mitigate the risks arising from geopolitical events.
We proactively engage suppliers to understand and manage exposures to geopolitical
events, whilst protecting services through enhanced due diligence and diversification.
Credit risk
Operational and
con
duct risk
Liquidity and
funding risk
Principal risk Key developments Further detail
Operational and conduct risk – The risk of impacts resulting from
inadequate or failed internal processes, conduct and compliance
management, people and systems, or from external events.
The Group has continued to mature its operational and conduct risk management processes
and capabilities throughout the year, most significantly in respect of change management,
economic crime and technology risk. Investment is being directed to enhance cyber defence,
economic crime and conduct and compliance capabilities across the Group.
Page 200
Model risk – The risk of adverse consequences from model errors or
the inappropriate use of modelled outputs. Model outputs may be
affected by the quality of data inputs, choice and suitability of
methodology and the integrity of implementation. The adverse
consequences include financial loss, poor business or strategic decision
making, or damage to the Group’s reputation.
Good progress has been made, improving model performance and compliance with Internal
Ratings Based (IRB) roadmap regulations. Model risk management and governance
capabilities continue to be enhanced in response to the implementation of the Prudential
Regulation Authority’s (PRA) supervisory statement 1/23 ‘model risk management principles
for banks’ and the Basel 3.1 standards.
Page 203
Risk overview (continued)
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Annual Report and Accounts 2025
Strategic Report
(continued)
Risk overview (continued
Key (change in underlying risk to the Group in the year)
Increased level of risk
Stable level of risk
Decreased level of risk
Risk
Integration risk (New)
How we mitigate this risk Related principal risks
The integration activity following the acquisition of Virgin Money increases
the Group’s exposure to a range of risks including reputational risks
arising from incidents, technology failure, people risks, ineffective group
governance and reporting, regulatory risks, and risk of unknowns.
We have established an Integration Management Office to oversee the planning and
delivery of a conservative integration strategy.
Risk assessments have yielded a number of actions which will mitigate identified risks.
The evolving integration landscape will be continually monitored and tracked with
support from the second line oversight function.
Operational and
conduct risk
Macroeconomic environment
The Group is inherently exposed to fluctuations in the UK's economic
conditions, which are impacted by the global geopolitical enviro
nment,
including ongoing trade disputes. The economic environment remains
uncertain, with slower growth and elevated interest rates impacting
customer finances, as well as other institutions and counterparties.
Government policy continues to evolve,
including in response to these
challenges, with consequential impacts for the UK economy.
We maintain strong capital and liquidity levels in excess of regulatory minima, and we
regularly undertake both internal and regulatory stress tests to ensure our financial
resources are sufficient under a range of severe but plausible scenarios.
We continuously review and adjust our credit policies so they remain appropriate for
the prevailing economic conditions and continue to support customers who may
experience financial difficulty.
We only have exposures to highly rated banking counterparties; these consist primarily
of fully collateralised derivatives and covered bonds for liquidity management.
Credit risk
Capital risk
Liquidity and
funding risk
Technology and resilience
The combination of a rapidly evolving and increasingly complex
technological environment, alongside the increasing importance of
services being available when customers need them, increases both the
potential for, and the impact of, outages and system failures.
We continue to prioritise strategic investment in our systems to simplify and
modernise the technology estate across the Group and reduce exposure to legacy
technology architecture. We have also accelerated existing activity at Virgin Money.
We continuously enhance our internal control environment, improving resilience whilst
proactively balancing ongoing service provision with the need to update and develop
our systems to meet the current and future needs of our customers.
Operational and
conduct risk
Risk overview (continued)
43
Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Annual Report and Accounts 2025
Viability statement
The directors have an obligation to confirm that they believe that the Group will be able to continue in operation, and to meet
its liabilities as they fall due. This viability statement considers the Group’s current financial and strategic position, along with
the potential impact of its principal risks, to explain the directors’ assessment of the Group’s prospects over an appropriate
period.
Assessment of viability
In addition to taking a 12�month view of whether the Group remains a going concern, the directors have considered the viability of the Group over a three�year period. The three�year period
is within the timeframe of the Group’s profitability projections and entity level stress tests, which are typically considered across a five�year horizon, providing a reasonable expectation of
continued operations and ability to meet liabilities as they fall due. Whilst it will always be difficult to predict the future path of the UK or the wider global economy with any degree of
precision, the three�year period strikes the right balance between assessing likely outcomes using the current information we have and acknowledging an increased degree of uncertainty
over a period longer than this.
In making their assessment, the directors have reviewed, alongside the strategic plan, the strength of the Group’s current financial position, with the impact of key risks also considered as
part of entity level stress testing activity for the Nationwide and Virgin Money sub�groups. This assessment includes consideration of the principal and top and emerging risks outlined in
the Risk overview on pages 40 to 43.
Consideration of key risks
The Board is responsible for identifying and assessing the risks to which the Group is exposed. The principal risks are explored fully within the annual financial planning and stress testing
framework to support the Board’s understanding of how our exposure to these risks evolves over time. This is further enhanced through the layering of emerging risks as appropriate to
deepen our understanding of how the top and emerging risks could interact with our principal risks. While some top and emerging risks related to operational and conduct risk were not
directly modelled, the assessment concluded that the severity and impact of these risks fall within the scenarios used for this analysis. Top and emerging risks which have the potential to
materially impact the Group’s financial results and considered more relevant to Nationwide’s strategy include:
•
Geopolitical and macroeconomic environments – The Group’s performance is exposed to fluctuations in economic conditions and the UK housing market. The global economic outlook
remains highly uncertain, due in part to geopolitical tensions and a worsening in global trading relations, but UK households and the UK�focused businesses we support appear relatively
well placed for any potential shocks. Despite this uncertainty, we maintain strong capital and liquidity levels in excess of regulatory minima, and we regularly undertake both internal
and regulatory stress tests to ensure our financial resources are sufficient under a range of severe but plausible scenarios.
•
Cyber security – We continuously monitor the external landscape to identify potential cyber and fraud threats, whilst operating and maturing our key financial crime and cyber controls
to protect our customers and services, and to meet our regulatory obligations. We have accelerated the existing Virgin Money cyber defence enhancements programmes across financial
crime prevention and cyber defence, further strengthening the Group position.
•
Technology and system resilience – We continue to prioritise strategic investment in our systems to simplify and modernise the technology estate across the Group, including the
acceleration of existing activity at Virgin Money. Maintaining resilient systems, infrastructure and processes remains critical as changing consumer behaviours influence customer needs
in accessing our products and services and how they interact with us. We continue to monitor and strengthen our control environment whilst proactively monitoring the resilience of our
services to reduce disruption to our customers.
•
Climate change – The Group is exposed to both physical risks arising from climate change and transitional risks as the country moves towards net�zero emissions, which continue to
evolve as government policy develops and ‘green’ technologies mature. We invest in sustainable business practices, proactively review lending criteria and continue to consider the
potential impact on the macroeconomic and trading environment as we transition to a low carbon economy.
•
Integration risk – The risk of adverse impacts arising directly from integration activity as a result of the Virgin Money acquisition is managed by the Integration Management Office,
which oversees the planning and delivery of a conservative integration strategy. The evolving integration landscape will be continuously monitored and tracked.
Viability statement
44
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Annual Report and Accounts 2025
Planning and stress testing activity during 2024/25
The directors’ assessment of viability over a three � year period is undertaken at a Group level. This has been performed using a Group base case macroeconomic scenario alongside a range of
plausible stressed macroeconomic scenarios undertaken by the Nationwide and Virgin Money sub�groups. The prioritisation of risks to explore within stress testing activities for 2024/25 utilised
the well�established processes within the two sub�groups, with governance responsibilities undertaken by the respective Stress Testing Committee and Boards.
The scenarios explored across the Group during 2024/25 include:
• A range of macroeconomic scenarios, inclusive of sensitivities to changes in Bank rate, alongside severe but plausible stress scenarios exploring the UK entering into a major recession and
house price activity falling to record lows. The output of these scenarios demonstrate that the Group remains resilient to a range of macroeconomic scenarios.
• Internally generated stress scenarios by the Nationwide and Virgin Money sub�groups, building on the macroeconomic stress scenarios in some instances to increase the severity to assess
capacity to withstand the liquidity and capital implications of significant operational incidents such as a ransomware attack which could drive significant and sudden retail deposit outflows.
The scenarios demonstrate the Group remains resilient to severe market�wide and idiosyncratic scenarios, supported by robust levels of management action capacity.
• Nationwide and Virgin Money sub�groups have each explored the point at which the current business model would become unviable as part of the reverse stress test. This represents one of
the most severe stress scenarios, examining how internal and external risk factors such as macroeconomic and strategic risks could, individually or in combination, result in the business model
failing without mitigating factors or actions being present today.
• Climate change stress testing and the continued development of capabilities remains a priority for the Group. During 2024/25, the Virgin Money sub�group executed bespoke climate scenarios,
assessing physical and transition risks across a 30�year horizon alongside accelerated short�term impacts. The Nationwide sub�group evaluated sensitivities to previously executed climate
change scenarios, including an extrapolation of synchronous physical and transition risk peaks. The combination supports the development of capabilities and further understanding of climate
change risk exposure.
A selection of the macroeconomic scenarios have been used for expected credit loss modelling during 2024/25, and further detail can be found in note 10 to the financial statements.
Conclusion on viability
The directors have assessed the Group’s current financial strength, demonstrated through strong capital ratios (CET1 ratio of 19.1% and leverage ratio of 5.2% at 31 March 2025), and liquidity
position (12�month average LCR for the period ended 31 March 2025 of 174%), and the impact of the scenarios described above on the Group’s key financial metrics over the three�year assessment
period.
In our base case macroeconomic scenario, key financial performance metrics are projected to remain comfortably above Board Risk Appetite and regulatory buffers. In addition, internal and
regulatory stress testing activity demonstrates how the Group can withstand severe macroeconomic stresses, including those linked to heightened inflation and changes to the expected path of
Bank rate.
The directors have a reasonable expectation that the Group will be able to continue its operations, and to meet its liabilities as they fall due, over the three�year assessment period.
Viability statement (continued)
45
Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Annual Report and Accounts 2025
Group financial highlights
Underlying profit before tax for the year reduced to £1,852 million (2024:
£2,003 million). Nationwide sub-group profit is £195 million lower,
partially offset by the inclusion of six months of Virgin Money sub-group
profits of £44 million.
Statutory profit before tax for the year increased to £2,302 million
(2024: £1,776 million). This is predominantly due to a net one-off benefit
in relation to the acquisition of Virgin Money, partially offset by an
additional £656 million for member reward payments. The net one-off
benefit includes a £2.3 billion gain on acquisition, partially offset by a
£456 million credit impairment charge and £367 million of
administrative expenses in relation to the acquisition.
Total underlying income increased to £5,211 million (2024:
£4,664 million) as a result of the acquisition of Virgin Money. Underlying
net interest margin was broadly stable at 1.55% (2024: 1.56%).
Total member value increased to a record £2,795 million (2024:
£2,194 million). This consists of £1,795 million (2024: £1,850 million) of
member financial benefit, the Nationwide Fairer Share Payment of
£385 million (2024: £344 million) and The Big Nationwide Thank You
one-off reward to members of £615 million.
Underlying administrative expenses increased by £634 million to
£3,183 million (2024: £2,549 million), including £698 million relating to
Virgin Money. Underlying administrative expenses exclude costs in
relation to the acquisition of Virgin Money.
Underlying credit impairment charges increased to £176 million
(2024: £112 million), of which £164 million relates to Virgin Money.
Arrears rates remain low and broadly stable. Underlying credit
impairment charges exclude £456 million of one-off charges arising on
the acquisition of Virgin Money.
CET1 and leverage ratios decreased to 19.1% and 5.2% (2024: 27.1% and
6.5%) respectively, due to the utilisation of capital to acquire Virgin
Money.
The average Liquidity Coverage Ratio over the 12 months ended 31 March
2025 remained strong at 174% (12 months ended 4 April 2024: 191%).
Drawings from the Bank of England’s Term Funding Scheme with
additional incentives for Small and Medium sized Enterprises (TFSME)
have been fully repaid by Nationwide sub-group. The Virgin Money sub-
group retains £900 million of TFSME drawings.
Underlying profit
before tax:
£1,852m
(2024: £2,003m)
Statutory profit before
tax:
£2,302m
(2024: £1,776m)
Member Value:
£2,795m
(2024: £2,194m)
Leverage ratio:
5.2%
(2024: 6.5%)
Financial review
Muir Mathieson, Group Chief Financial Officer, Nationwide Building Society, said:
“Our financial performance has been strong, with statutory profit before tax of £2.3 billion and record member value. Total underlying
income increased to £5.2 billion following the acquisition of Virgin Money, and our overall underlying net interest margin remained
broadly stable.
“
Cost discipline is strong, with underlying Nationwide cost growth significantly below the headline level of inflation. Group underlying
costs include six months of costs for Virgin Money.
“Our balance sheet remains robust and well capitalised. Arrears rates are low and stable, and we maintain a peer-leading Group CET1
ratio of 19.1% and leverage ratio of 5.2%.”
Financial review
Muir
Mathieson
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Annual Report and Accounts 2025
Financial review (continued)
Group financial highlights
(continued)
Strong organic growth in the Nationwide sub-group, together with the
acquisition of Virgin Money, has led to a significant increase in product
balances.
Retail deposit balances increased by £67.3 billion to £260.7 bill
ion (2024:
£193.4 billion). This comprises record organic balance growth for
Nationwide sub-group of £14.0 billion and £53.3 billion of Virgin Money
balances. The Group market share of deposit balances increased to 12.2%
(2024: 9.5%).
Mortgage balances increased to £275.9 billion (2024: £204.5 billion).
This includes
record net lending of £15.5 billion for Nationwide sub-group
and £55.6 billion of balances relating to Virgin Money. The Group market
share of mortgage balances increased to 16.2%. (2024: 12.3%).
Consumer lending balances grew to £11.1 billion (2024: £4.3 billion),
including £6.7 billion of Virgin Money balances. Total credit card balances
were £7.8 billion (2024: £1.6 billion), representing 10.7% share of the UK’s
consumer credit card balances.
The acquisition of Virgin Money included £17.1 billion of business deposit
balances and £9.5 billion of business lending balances. This brings
greater diversification of the Group’s products and services.
Nationwide sub-group underlying performance
highlights
Underlying profit before tax for the year reduced to £1,808 million
(2024: £2,003 million). This is due to a reduction in underlying
income, partially offset by lower underlying credit impairment
charges and lower underlying administrative expenses.
Total underlying income reduced to £4,305 million (2024:
£4,664 million). This is due to the timing of changes in Bank rate and
the continued reduction in overall mortgage margins. Underlying net
interest margin decreased to 1.49% (2024: 1.56%).
Record member value of £2,795 million (2024: £2,194 million) has
been delivered. This comprises member financial benefit of
£1,795 million (2024: £1,850 million), the Nationwide Fairer Share
Payment of £385 million, and The Big Nationwide Thank You of
£615 million to reward over 12 million eligible members.
Underlying administrative expenses have reduced by £64 million to
£2,485 million. A decrease in provisions for liabilities and charges of
£116 million is partially offset by £36 million of integration readiness
expenditure. Underlying administrative expenses have increased by
0.8% on a comparable basis
. This is materially below inflation,
despite record
balance sheet growth, and reflects efficiencies within
operating costs and strategic investment.
1
Underl
ying credit impairment charges reduced to £12 million (2024:
£112 million); this reflects the resilience of our lending, including the
impact of reductions to provisions where the previously anticipated
increase in arrears has not materialised.
Member retail deposit balances increased to £207.4 billion (2024:
£193.4 billion) with record organic growth of £14.0 billion. The market
share of retail deposit balances increased to 9.7% (2024: 9.5%).
Record mortgage net lending of £15.5 billion increased balances to
£220.3 billion (2024: £204.5 billion). The market share of mortgage
balances increased to 12.9% (2024: 12.3%).
Virgin Money sub-group underlying performance
highlights
Underlying profit before tax in the period since 1 October 2024 was
£44 million. This includes elevated underlying administrative
expenses to support integration readiness, in line with our
integration plans and ambitions.
Underlying income of £906 million includes £842 million of net
interest income, with resilient net interest margin and balance sheet
growth.
Underlying administrative expenses were £698 million, of which
£125 million relates to investment to support integration readiness.
This investment includes expenditure to improve customer
experience.
Underlying credit impairment charges were £164 million. The credit
quality of mortgage, consumer and business lending has remained
stable since 1 October 2024.
Group market share
of deposit balances:
12.2%
(2024: 9.5%)
Group market share of
mortgage balances:
16.2%
(2024: 12.3%)
Group market share of
credit card balances:
10.7%
(2024: 2.1%)
1
Excluding the £116 million decrease and £36 million increase noted above, together with other smaller one-off accounting items and the impact of the shorter accounting period.
Financial review (continued)
47
Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
The results are prepared in accordance with International Financial Reporting Standards (IFRSs) as set out in note 1 to the financial statements. Alternative performance measures are
used throughout the Financial review. Definitions of these measures can be found in our Glossary at nationwide.co.uk
Income statement
Underlying results are shown below, together with a reconciliation to the statutory results. Underlying results exclude certain items, detailed in the notes to the table below,
which management do not consider to be representative of underlying business performance.
Reconciliation of underlying to statutory results
2025 2024
Underlying basis
Total –
Underlying
basis
Acquisition
and other
adjustments
Total -
Statutory
basis
Total -
Underlying
basis
Other
adjustments
Total -
Statutory
basis
Nationwide
sub-group
Virgin Money
sub-group
(note i)
£m £m £m £m
£m
£m £m
£m
Net interest income (note ii)
4,189 842 5,031 (39) 4,992 4,450 - 4,450
Net other income (note iii)
116 64 180 12 192 214 117 331
Gain on the acquisition of Virgin Money (note iv)
- - - 2,300 2,300 - - -
Total income
4,305 906 5,211 2,273 7,484 4,664 117 4,781
Administrative expenses (note v and vi)
(2,485) (698) (3,183) (367) (3,550) (2,549) - (2,549)
Impairment charge on loans and advances to customers
(note vii)
(12) (164) (176) (456) (632) (112) - (112)
Profit before member reward payments and tax
1,808 44 1,852 1,450 3,302 2,003 117 2,120
Member reward payments (note viii)
- - - (1,000) (1,000) - (344) (344)
Profit before tax
1,808 44 1,852 450 2,302 2,003 (227) 1,776
Tax credit/(charge)
36 (476)
Profit after tax
2,338 1,300
Cost to income ratio (note ix)
57.7% 77.0% 61.1% 47.4% 54.7% 53.3%
Notes:
i. On 1 October 2024, the Group acquired Virgin Money, with the results of Virgin Money sub-group included from that date.
ii. Underlying net interest income excludes amortisation of fair value adjustments which were recognised on the acquisition of Virgin Money.
iii. Gains or losses from derivatives and hedge accounting are excluded from underlying net other income.
iv. The gain recognised on the acquisition of Virgin Money, as detailed in note 38 to the financial statements, has been excluded from underlying results.
v. Underlying administrative expenses exclude certain costs relating to the acquisition of Virgin Money. These comprise £36 million of transaction-related costs incurred by the Society, £56 million of
amortisation relating to acquired intangible assets, and £275 million of one-off costs (and related VAT) associated with the amended Trade Mark License Agreement between Virgin Money UK PLC and
Virgin Enterprises Limited.
vi. As detailed in note 1 to the financial statements, comparatives for the year ended 4 April 2024 have been restated to present provisions for liabilities and charges within administrative expenses. The cost
to income ratio for the year ended 4 April 2024 has also been restated accordingly.
vii. Excluded from the underlying impairment charge are the one-off impacts of recognising IFRS 9 provisions on acquisition of Virgin Money. This includes the initial recognition of the 12-month expected loss
for all acquired loans; the impact of the first application of staging criteria; and the alignment of key elements of the impairment provision methodology.
viii. Member reward payments represent discretionary payments to members of the Society which may be determined by the Board from time to time, depending on the financial strength of the Society. In
2025 this includes the Nationwide Fairer Share Payment of £385 million and a one-off amount of £615 million for The Big Nationwide Thank You.
ix. The cost to income ratio is calculated as administrative expenses divided by total income.
Financial review (continued)
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Annual Report and Accounts 2025
Financial review
(continued)
Total income and net interest margin
Net interest margin
2025 2024
Underlying
basis Total – underlying
basis
Acquisition and
other adjustments
Total – statutory
basis
Total – underlying
and statutory basis
Nationwide
sub-group
Virgin Money
sub-group
£m
%
£m % £m % £m % £m % £m %
Net interest income 4,189 842 5,031 (39) 4,992 4,450
Average total assets (note i) 283,730 88,679 327,130 327,130 285,128
Net interest margin (note ii
)
1.49 1.90 1.55 1.54 1.56
Notes:
i. Average total assets for Nationwide sub-group have been calculated on a full year basis and for Virgin Money sub-group on a six-month basis.
ii. Net interest margin for both Nationwide and Virgin Money sub-groups is calculated using annualised net interest income.
Underlying net interest income increased by £581 million to £5,031 million (2024: £4,450 million), of which £842 million relates to Virgin Money. This is partly offset by a decrease in
Nationwide sub-group net interest income primarily driven by the timing of changes in Bank rate and continued reduction in overall mortgage margins. Underlying net interest margin
decreased slightly to 1.55% (2024: 1.56%).
Underlying net other income reduced by £34 million to £180 million (2024: £214 million). Underlying net other income in Nationwide sub-group decreased by £98 million to £116 million
(2024: £214 million). This is predominantly due to lower gains from the disposal of treasury assets and lower investment income following the disposal of the Society’s investment advice
business in February 2024. This is offset by £64 million of underlying net other income relating to the Virgin Money sub-group.
Member financial benefit
As a mutual, we seek to maintain Nationwide’s financial strength whilst providing value to our members through pricing, products and service. Through member financial benefit, we
measure the additional financial value for members from the competitive mortgage, savings and banking products that we offer compared to the market average. Our members are those
customers with a Nationwide-branded current account, savings or mortgage, and do not include customers of Virgin Money or The Mortgage Works. Member financial benefit is
calculated by comparing, in aggregate, Nationwide’s average interest rates and incentives on member products to the market, predominantly using market data provided by the Bank of
England and CACI, alongside internal calculations. The value for individual members will depend on their circumstances and product choices. Further information on the components of
member financial benefit is set out below.
Interest rate differential
We measure how our average interest rates across our member balances in total compare against the market over the year.
For our two largest member segments, mortgages and retail deposits, we compare the average member interest rate for these portfolios against Bank of England and CACI industry data.
A market benchmark based upon the data from CACI and internal Nationwide calculations is used for mortgages and a Bank of England benchmark is used for retail deposits, both
adjusted to exclude Nationwide balances. The differentials derived in this way are then applied to member balances for mortgages and deposits.
For unsecured lending, a similar comparison is made. We calculate an interest rate differential based on available market data from the Bank of England and CACI and apply this to the
total interest-bearing balances of credit cards and personal loans.
Financial review (continued)
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Strategic report Risk reportGovernance Financial statements Other informationAnnual Report and Accounts 2025
Annual Report and Accounts 2025
Financial review
(continued)
Member incentives and fees
Our member financial benefit measure also includes amounts in relation to incentives and fees that Nationwide offers to members. The calculation includes annual amounts for the
following:
Mortgages: the differential on incentives for members
compared to the market.
FlexPlus current account: the difference between the FlexPlus monthly account fee and the market average monthly account fee.
For the year ended 31 March 2025 we delivered member financial benefit of £1,795 million (2024: £1,850 million). This reflects our strong savings and mortgage products which seek to
provide good value to members; however, the differential to market on deposits naturally narrows as Bank rate declines.
Member reward payments
As part of our ongoing commitment to reward
our members the Board announced the second Nationwide Fairer Share Payment of £385 million in May 2024, paid in June 2024 to eligible
members who had a qualifying current account plus either qualifying savings or a qualifying mortgage as at 31 March 2024. To thank our members who have contributed to building the
Society’s financial strength and enabling the successful acquisition of Virgin Money, in March 2025 the Board announced The Big Nationwide Thank You payment of £615 million in total,
to over 12 million eligible members. To qualify for The Big Nationwide Thank You payment, in the 12 months ending September 2024, members must have satisfied one of the following
eligibility criteria: had at least one qualifying transaction in a Nationwide current or savings account; or had at least £100 in total in one or more Nationwide current or savings accounts; or
owed at least £100 in total on one or more Nationwide residential mortgages. These payments are in addition to delivering the £1,795 million of member financial benefit.
Gain on the acquisition of Virgin Money
We recorded a gain of £2.3 billion on completion of the acquisition, as the fair value of the identifiable net assets acquired was gr
eater than the total consideration paid of £2.8 billion.
Further information is included in note 38 to the financial statements.
Administrative expenses
Underlying administrative expenses have increased by £634 million to £3,183 million (2024: £2,549 million), of which £698 million relate to the Virgin Money sub-group. Within the
Nationwide sub-group, underlying administrative expenses have decreased by £64 million due to lower provisions for liabilities and charges, with the impact of annual inflation largely
offset by efficiencies within operating costs and strategic investment. The costs for the Virgin Money sub-group include planned, short-term investment to improve customer experience.
Statutory administrative expenses include £36 million of acquisition-related costs incurred by the Society, £275 million of costs associated with the amended Trade Mark License
Agreement between Virgin Money UK PLC and Virgin Enterprises Limited, and £56 million of amortisation of acquired intangible assets recognised on the acquisition of Virgin Money.
Further information on administrative expenses is included in note 8 to the financial statements.
Underlying administrative expenses are expected to increase, as a result of spend relating to integration.
Impairment charge/(release) on loans and advances to customers
Impairment charge/(release) (note i)
2025 2024
Underlying basis Total – underlying
basis
Acquisition and
other adjustments
Total – statutory
basis
Total – underlying
and statutory basis
Nationwide
sub-group
Virgin Money
sub-group
£m £m £m £m £m £m
Residential lending (3) 15 12 21 33 44
Consumer lending 18 120 138 376 514 51
Retail lending 15 135 150 397 547 95
Business and commercial lending (3) 29 26 59 85 17
Impairment charge/(release) on loans and advances 12 164 176 456 632 112
Note:
i. Impairment charge/(release) represents the net amount recognised in the income statement, rather than amounts written off during the year.
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The net underlying impairment charge for the year of £176 million (2024: £112 million) comprises a £12 million charge for the Nationwide sub-group driven by reductions in adjustments
made to modelled provisions where the previously anticipated increase in arrears has not materialised, and a £164 million underlying charge for the Virgin Money sub-group. The
statutory net impairment charge of £632m includes an additional £456 million for one-off impacts relating to the acquisition of Virgin Money. This includes the initial recognition of the 12-
month expected loss; the impact of the first application of staging criteria; and the alignment of key elements of the Group’s impairment provision methodology. More information
regarding critical accounting judgements, and the forward-looking economic information used in impairment calculations, is included in note 10 to the financial statements.
Taxation
The main rate of UK corporation tax remained at 25%, the annual banking surcharge allowance remained at £100 million, and the banking surcharge rate remained at 3%. The Group tax
credit for the year of £36 million (2024 charge: £476 million) represents an effective tax rate of (1.6)% (2024: 26.8%) which is lower than the statutory UK corporation tax rate of 25%
(2024: 25%). The low Group effective tax rate is primarily due to the accounting gain which arose upon acquisition of Virgin Money on 1 October 2024, as detailed in note 38 to the financial
statements. As the gain was recognised only on consolidation, it is not a taxable item in any of the individual entities within the Group. The Society effective tax rate was 21.8% (2024:
27.3%). Further information is provided in note 11 to the financial statements.
Balance sheet
Total assets and total equity and liabilities have increased to £367.9 billion at 31 March 2025 (2024: £272.1 billion).
Residential mortgage balances increased to £275.9 billion (2024: £204.5 billion), driven by record net lending of £15.5 billion for Nationwide sub-group and £55.6 billion of balances
relating to Virgin Money. The Group market share of mortgage balances increased to 16.2%. (2024: 12.3%).
Retail deposit balances have increased by £67.3 billion to £260.7 billion (2024: £193.4 billion). Nationwide sub-group member savings balances increased by £10.6 billion, supported by
our fixed rate products and increased levels of capitalised interest due to higher average savings rates. The acquisition of Virgin Money contributed a further £53.3 billion of non-member
retail deposits.
Assets
12-month average
Liquidity Coverage Ratio
(note iv):
174%
(2024: 191%)
2025 2024 (note i)
£m
%
£m
%
Cash and balances at central banks 29,483 25,231
Residential mortgages (note ii) 275,926
91
204,467
95
Business and commercial lending 15,144
5
5,491
3
Consumer lending 11,107
4
4,263
2
302,177
100
214,221
100
Impairment provisions (1,288) (781)
Loans and advances to customers 300,889 213,440
Other financial assets 33,178 30,410
Other non-financial assets 4,327 3,006
Total assets 367,877 272,087
Asset quality
% %
Residential mortgages (note ii):
Proportion of residential mortgage accounts more than 3 months in arrears 0.43 0.41
Average indexed loan to value (by value) 56 55
Consumer lending:
Proportion of customer balances with amounts past due more than
3 months (excluding charged off balances)
1.11 1.36
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Assets
Return on assets
2025 2024
£m % £m
%
Statutory profit after tax 2,338 1,300
Mean total assets (note iii) 323,682 271,990
Return on assets
0.72 0.48
Notes:
i. Comparatives have been restated as detailed in note 1 to the financial statements.
ii. Residential mortgages include owner-occupied, buy to let and legacy lending.
iii. Mean total assets is calculated as a simple average of opening and closing assets for the period.
iv. This represents a simple average of the Liquidity Coverage Ratio (LCR) for the last 12 month ends. The LCR ensures that sufficient high-quality liquid assets are held to survive a short-term severe bu
plausible liquidity stress.
t
Cash and balances at central banks
Cash and balances held at central banks increased by £4.3 billion to £29.5 billion (2024: £25.2 billion), with a greater proportion of liquidity balances held in cash.
Residential mortgages
Total gross mortgage advances were £44.7 billion (2024: £26.3 billion) with market share of 16.3% (2024: 11.5%). Nationwide sub-group gross advances increased to £40.4 billion with the
market share increasing to 14.7%, supported by a continued focus on first time home buyers.
Total mortgage net lending increased to £15.9 billion (2024: £2.6 billion), of which Nationwide sub-group net lending was a record of £15.5 billion with strong retention of existing
customers through highly competitive products.
Our total market share of mortgage balances was 16.2% (2024: 12.3%) with owner-occupied balances and buy to let and legacy balances increasing to £215.5 billion (2024: £161.0 billion)
and £60.3 billion (2024: £43.5 billion) respectively. Growth in mortgage balances was driven by record performance in the Nationwide sub-group and the acquisition of Virgin Money
balances of £55.6 billion.
Total impairment provision balances have increased to £351 million (2024: £321 million) which include Virgin Money provisions of £37 million. The Group arrears rate is 0.43% (2024:
0.41%). Nationwide sub-group arrears remain low and stable, with cases more than three months in arrears representing 0.40% (2024: 0.41%) of the total portfolio. The Virgin Money sub-
group arrears rate is 0.58%.
Consumer lending
Total consumer lending balances have increased to £11.1 billion (2024: £4.3 billion), including £6.7 billion from the Virgin Money acquisition, predominantly relating to credit card balances.
Total consumer lending comprises personal loan balances of £3.0 billion (2024: £2.4 billion), credit card balances of £7.8 billion (2024: £1.6 billion) and overdrawn current account
balances of £0.3 billion (2024: £0.3 billion).
Total provision balances increased to £824 million (2024: £436 million), including £452 million for the Virgin Money sub-group. Excluding charged off accounts, balances more than three
months in arrears represent 1.11% (2024: 1.36%) of the total portfolio, with the decrease driven by the change in product mix resulting from the acquisition of Virgin Money. Nationwide
sub-group arrears levels have remained low during the period, with balances more than three months in arrears, excluding charged off accounts, representing 1.23% (2024: 1.36%) of the
portfolio. The Virgin Money sub-group credit card balance more than three months in arrears represents 1.06% of the Virgin Money credit card portfolio.
Business and commercial lending
During the year, total business and commercial lending balances increased to £15.1 billion (2024: £5.5 billion). Nationwide sub-group commercial lending is predominantly to registered
social landlords with balances of £4.7 billion (2024: £4.4 billion). Virgin Money sub-group’s business and commercial balances were £9.5 billion.
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Total impairment provision balances increased to £113 million (2024: £24 million), which include Virgin Money provisions of £91 million.
Other financial assets
Other financial assets increased to £33.2 billion (2024: £30.4 billion). These comprise investment assets held mainly for liquidity purposes of £28.7 billion (2024: £26.5 billion), loans and
advances to banks and similar institutions of £1.8 billion (2024: £0.9 billion), derivatives with positive fair values of £4.7 billion (2024: £6.3 billion) and fair value adjustments for portfolio
hedged risk of £(2.0) billion (2024: £(3.3) billion). Derivatives largely comprise interest rate and foreign exchange contracts which economically hedge financial risks inherent in our
lending and funding activities.
Liquidity Coverage Ratio
The average Liquidity Coverage Ratio over the 12 months ended 31 March 2025 reduced to 174% (12 months ended 4 April 2024: 191%), with lower average liquid asset balances due to the
repayment of drawings from the Bank of England’s TFSME. Our internal liquidity risk appetite is more prudent than regulatory requirements, with liquidity balances remaining higher than
the most severe internal 30 calendar day stress test. Further details are included in the Liquidity and funding risk section of the Risk report.
Members’ interests, equity and liabilities
Non-member funding ratio:
37.3%
(2024: 22.5%)
2025 2024
(note i)
£m £m
Member deposits 207,428 193,366
Non-member deposits 53,312 -
Business banking deposits 21,087 4,215
Debt securities in issue 51,109
34,749
Other financial liabilities 10,468 20,452
Other liabilities 3,991 1,619
Total liabilities 347,395 254,401
Members’ interests and equity 19,723 17,686
Non-controlling interest 759 -
Total equity and liabilities 367,877 272,087
Note:
i. Comparatives have been restated as detailed in note 1 to the financial statements.
Member, non-member and business banking deposits
Member retail deposit balances grew by £14.0 billion (2024: £6.3 billion) to £207.4 billion (2024: £193.4 billion) with the acquisition of Virgin Money contributing a further £53.3 billion of
non-member retail deposits. Total Group market share of retail deposit balances increased to 12.2% (2024: 9.5%).
Nationwide sub-group savings deposit balances increased by £10.6 billion (2024: £9.1 billion) supported by competitive fixed rate products, including the Member Exclusive Bond, and
increased levels of capitalised interest due to higher average savings rates. Nationwide sub-group current account credit balances increased by £3.5 billion (2024: £2.9 billion reduction),
predominantly due to strong underlying performance.
Total business savings and banking balances increased to £21.1 billion (2024: £4.2 billion), of which £17.1 billion relates to Virgin Money.
Debt securities in issue and other financial liabilities
Debt securities in issue relate to wholesale funding but exclude subordinated debt which is included within other financial liabilities. Balances increased to £51.1 billion (2024: £34.7 billion)
of which £9.9 billion relates to Virgin Money. Other financial liabilities increased to £84.9 billion (2024: £24.7 billion) primarily due to the acquisition of Virgin Money, offset by the
repayment of £11.3 billion of drawings from the Bank of England’s TFSME. Nationwide’s non-member funding ratio increased to 37.3% (2024: 22.5%) because of the acquisition.
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Members’ interests and equity
Members’ interests and equity have increased to £19.7 billion (2024: £17.7 billion), with growth largely driven by retained profits.
Statement of comprehensive income
Statement of comprehensive income (note i)
2025 2024
£m £m
Statutory profit after tax 2,338 1,300
Net remeasurement of pension obligations (144) (190)
Net movement in cash flow hedge reserve 5 (49)
Net movement in other hedging reserve (2) (4)
Net movement in fair value through other comprehensive income reserve (82) (24)
Net movement in revaluation reserve 1 (2)
Total comprehensive income 2,116 1,031
Note:
i. Movements are shown net of related taxation. Gross movements are set out in the financial statements on page 219.
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Capital structure
The Group’s capital position remains strong, with both the Common Equity Tier 1 (CET1) ratio and leverage ratio comfortably above regulatory capital requirements of 12.7% and 4.3%
respectively. The CET1 ratio decreased to 19.1% (2024: 27.1%) and the leverage ratio decreased to 5.2% (2024: 6.5%). The capital disclosures included in this report are in line with UK
Capital Requirements Directive V (UK CRD V).
Capital structure - Group
2025 2024
£m £m
Capital resources
CET1 capital 15,611 14,798
Tier 1 capital 17,732 16,134
Total regulatory capital 19,489 17,808
Capital requirements
Risk weighted assets (RWAs) 81,871 54,628
Leverage exposure 344,018 249,263
UK CRD V capital ratios % %
CET1 ratio 19.1 27.1
Leverage ratio 5.2 6.5
The CET1 ratio has decreased to 19.1% (2024: 27.1%) primarily due to the acquisition of Virgin Money. CET1 capital resources increased by £0.8 billion due to profit after tax of £2.3 billion,
partially offset by an increase in regulatory CET1 capital deductions of £1.4 billion following the Virgin Money acquisition; this increase in CET1 capital resources adds 1.5% to the CET1
ratio. RWAs increased by £27.2 billion, mainly driven by the inclusion of £27.7 billion of Virgin Money RWAs; the change in RWAs reduces the CET1 ratio by 9.5% in absolute terms.
The leverage ratio decreased to 5.2% (2024: 6.5%), primarily due to the Virgin Money acquisition as outlined above and increased Group residential mortgage balances. Leverage
requirements continue to be the Group’s binding Tier 1 capital constraint, as the combination of minimum and regulatory buffer requirements is in excess of the risk-based equivalent.
Further details of the capital position and future regulatory developments are described in the Capital risk section of the Risk report.
Financial review (continued)
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Governance
Chairman’s introduction 57
Your Board 58
Governance at Nationwide 63
UK Corporate Governance code 2018 -
statement of compliance 64
Nomination and Governance Committee report 77
Audit Committee report 81
Board Risk Committee report 88
Report of the directors on remuneration 92
Directors’ report 118
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Report of the directors on corporate governance
Chairman’s introduction
I am pleased to present the Report of the directors on corporate governance for the
financial year ended 31 March 2025.
The Board is responsible for promoting the highest standards of governance, setting a
clear strategy, and ensuring that, as well as fulfilling its statutory duties, Nationwide is
managed in line with its mutual values. Our banking peers are owned by shareholders
who expect a return on their investment by way of dividends and are not required to be
customers. In contrast, Nationwide is owned by its members. This enables the Board to
put the needs of our members and customers at the heart of its decision making and
ensures that decisions taken by both the Board and management deliver value for both
present and future members, thereby promoting the long-term success and
sustainability of the Group.
Nationwide reached an important milestone on 1 October 2024, when it acquired Virgin
Money. Nationwide is now larger, stronger and able to deliver even greater value for its
members and customers, including through our unique Branch Promise, focusing on
customer satisfaction, and competitive savings and lending rates. We aim to deliver
market-leading standards of customer service as the UK’s second largest provider of
mortgages and savings accounts, and Nationwide is the number one brand for first time
buyers.
Further information on the Group’s governance arrangements and how we have applied
the provisions of the UK Corporate Governance Code 2018 is set out in this report, together
with a description of some of the Board’s key activities during the year.
Member and customer engagement
The Board has continued to strengthen its understanding of our customers this year.
Members and customers are encouraged to share their views and contribute their
suggestions to support senior management and the Board in understanding their complex
and varied needs. Customers can engage with each other and with Nationwide through
multiple channels, including taking part in customer focus groups, surveys and telephone
interviews.
We have continued to successfully run our AGM as an online event. This enables all our
members, regardless of where they are in the UK, to join and participate. I look forward to
welcoming our members to this year’s AGM.
Inclusion, diversity and culture
To ensure we continue to serve our customers and their diverse needs effectively, we
remain committed to maintaining diversity of perspectives, experience and backgrounds
within Nationwide’s senior management and the Board. The composition of the Board
continues to exceed both the gender and ethnic diversity targets set out in the FCA’s Listing
Rules, further information on which can be found on page 72. We remain committed to creating
and promoting an inclusive culture which reflects the diversity of our members and
customers. Further information about the Board’s oversight of Nationwide’s culture can be
found on page 66.
Climate
Environmental and climate consciousness are aligned to our social purpose. The Board is
conscious of the impact of the Group’s operations on the environment and is committed to
ensuring that we scrutinise our carbon footprint and continue to reduce our energy
consumption wherever possible. We have six pillars to our climate change strategy, which
set out how we engage with our stakeholders on climate change. These can be found on
pages 36 to 39 and within our Climate-related Financial Disclosures on nationwide.co.uk.
Board changes
Full details of all changes to the composition of the Board are set out on page 65.
The year ahead
The Board is looking forward to another exciting year ahead, in which it will continue to
oversee the ongoing integration of Nationwide and Virgin Money. This will include
managing any risks associated with the integration, and ensuring that our updated
Blueprint for a modern mutual is implemented effectively across the Group.
I would like to thank all my fellow Board members and the executive management team for
their hard work, support, and dedication during the year.
Kevin Parry
Chairman
Report of the directors on corporate governance
Chairman’s introduction
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Report of the directors on corporate governance
(continued)
Your Board
Key: Audit Committee Nomination and Governance Committee Remuneration Committee Board Risk Committee
Indicates Chair of
Committee
Kevin Parry OBE
Tracey Graham
Debbie Crosbie
Chairman
Date of appointment
23 May 2016 (Board) and 1 February 2022 (Chairman)
Skills and experience
Kevin Parry is a chartered accountant and brings to the
Board expertise in audit, regulation, risk management, and
finance. He has used his deep knowledge of commercial
and mutual organisations to help shape and transform the
Society into a modern mutual. Additionally, as a former
Chairman of the Homes and Communities Agency, his
perspective on housing is an asset to the Group.
He has a wealth of experience across a broad range of
organisations. He has held the positions of Chairman of
Royal London Mutual Insurance Company Limited and
Intermediate Capital Group plc and Senior Independent
Director of Standard Life Aberdeen plc, as well as having
been the Chief Financial Officer of Schroders plc and the
Chief Executive Officer of Management Consulting Group
plc. Kevin is Chairman of the Board of Trustees for Marie
Curie, an organisation whose charitable purpose is aligned
with the Group’s Fairer Futures initiative.
Key current external appointments
Non-executive director of Daily Mail & General Trust plc
Chairman of the Board of Trustees for Marie Curie
Chairman of Mutuals and Cooperative Council
Senior Independent Director
Date of appointment
28 September 2022 (Board) and 20 July 2023 (Senior
Independent Director)
Skills and experience
Tracey Graham is an experienced non-executive director,
having served on several listed companies and mutual boards
across a range of sectors, including financial services. She has
considerable experience as a remuneration committee chair
and as a senior independent director at both Ibstock plc and
discoverIE plc. Tracey also has extensive consumer
experience, having been Chair of LINK Consumer Council for
nine years until December 2024.
She was Chief Executive of Talaris Limited, an international
cash management business. Before that she held a number of
senior roles in De La Rue plc, HSBC and AXA Insurance.
Key current external appointments
Non-executive director and Senior Independent Director
of Pension Insurance Corporation plc and Pension
Insurance Corporation Group Limited
Non-executive director of Close Brothers Group plc
Non-executive director of Close Brothers Limited
Group Chief Executive Officer
Date of appointment
2 June 2022
Skills and experience
Debbie Crosbie joined Nationwide as Chief Executive
Officer in June 2022. Since then, she has worked with
the Board to develop the Society’s new business
strategy, created a new purpose, and refreshed its
brand, marketing and member rewards. Debbie has over
25 years of experience in financial services and has led
many successful large-scale technology and customer
service transformations. She was previously CEO at TSB
bank where she created and delivered its three-year
growth strategy a year early and, while acting CEO of
Clydesdale Bank, Debbie led preparations for its
successful demerger and subsequent initial public
offering.
Debbie contributes to many industry bodies, including
the FCA Practitioner Panel, UK Finance, and the Banking
on Barnardo’s Charity.
Key current external appointments
Non-executive director of SSE plc
Member of the Financial Conduct Authority’s
Practitioner Panel
Director of UK Finance Limited (she stepped down from
this role on 1 May 2025)
Governa
Report of the directors on corporate governance
Your Board
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Report of the directors on corporate governance
(continued)
Key: Audit Committee Nomination and Governance Committee Remuneration Committee Board Risk Committee
Indicates Chair of
Committee
Anand Aithal David Bennett
Albert Hitchcock
Independent non-executive director
Date of appointment
1 October 2024
Skills and experience
Anand Aithal has over 30 years of international experience
across financial, business, government and professional
services. For five years he was Lead Non-Executive Board
Member of the Cabinet Office and he has also served on
not-for-profit boards in the education and international
development arenas.
Prior to his non-executive career, Anand was a Managing
Director at Goldman Sachs before starting his own firm,
which was a pioneering provider of data analytical services.
Independent non-executive director
Date of appointment
13 November 2024
Skills and experience
David Bennett is an experienced board chairman and non-
executive director and brings to the Board extensive
experience of retail banking, strategy, risk management,
corporate activity and organisation, operational and
structural change, gained from his long career in financial
services.
He has served as Chairman of Virgin Money UK PLC since
2020, and prior to that was Deputy Board Chair from 2015.
Independent non-executive director
Date of appointment
2 December 2018
Skills and experience
Albert Hitchcock is a leader in information technology with
over 30 years in the technology industry and consumer
sector. His experience is of huge value to Nationwide as we
continue our ambitious transformation programme to meet
the expectations of our members and customers today and in
the future.
He has held executive positions as Chief Technology and
Operations Officer of Pearson plc and Group Chief
Information Officer at Vodafone plc and Nortel Networks.
He was previously a technology adviser to the Board of
The Royal Bank of Scotland plc.
Key current external appointments
Non-executive director of Saga plc
Non-executive director of Polar Capital Holdings plc
Non-executive director of Persimmon plc
Trustee of the Institute for Government
Non-executive advisor to the Association of Chartered
Certified Accountants
Key current external appointments
Chairman of AllFunds Group plc
Chairman of PayPal UK LTD
Chairman of PayPal Digital Incorporation
Board Member of the Department of Work and Pensions
Key current external appointments
Digital Transformation Adviser at Hitachi
Adviser at Aldermore Bank
Report of the directors on corporate governance
Your Board (continued)
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Report of the directors on corporate governance
(continued)
Key: Audit Committee Nomination and Governance Committee Remuneration Committee Board Risk Committee
Indicates Chair of
Committee
Alan Keir Debbie Klein
Sally Orton
Independent non-executive director
Date of appointment
1 March 2022
Skills and experience
Alan Keir is an experienced banker who began his non-
executive career when he retired as a Group Managing
Director and CEO of EMEA at HSBC in 2016, where he had
been leading operations in 30 countries, including the UK
home market. He has extensive experience in a full range of
banking activity, including retail branches and investment
banking from his previous roles as Chair of Sumitomo
Mitsui Banking Corporation Bank International plc and non-
executive director of Majid Al Futtaim.
His expertise in the retail and commercial banking sector,
and his proven track record of delivering a successful
commercial banking strategy, whilst redefining the culture
and values of a large organisation, assists the Board in
setting and delivering strategic performance. He was
previously a non-executive director of HSBC Bank plc
between 2018 and 2021.
Independent non-executive director
Date of appointment
1 March 2021
Skills and experience
Debbie Klein has extensive experience in consumer,
commercial brand, marketing and people roles. Until 2023,
she was Group Chief Marketing, Corporate Affairs and
People Officer at Sky where her remit included
responsibility for overall brand and marketing
development, as well as leading corporate
communications, public affairs, internal communications
and human resources. She was responsible for Sky’s
corporate social responsibility (CSR) programme, leading
Sky’s challenge to meet its 2030 net-zero goals approved
by the Science Based Targets Initiative. Her expertise in
sustainability and CSR matters assists in building
Nationwide’s Environmental, Social and Corporate
Governance (ESG) agenda.
She was previously Chief Executive Europe and Asia Pacific
at The Engine Group, an integrated marketing services
business, and held various leadership roles in her 20 years
at the firm. Earlier in her career she worked in Strategy and
Insight at Saatchi & Saatchi and Nielsen.
Independent non-executive director
Date of appointment
1 June 2023
Skills and experience
Sally Orton is a dual-qualified chartered accountant in
Australia and the UK, with a career spanning 30 years in
financial services and professional services, bringing to the
Board expertise in audit, regulation and finance. She was
previously Group Chief Financial Officer at GAM Holdings
AG (listed on the SIX Swiss Exchange), where her remit
included responsibility for all financial matters in the
Group, including reporting, tax, treasury, capital
management and related regulatory matters.
Prior to joining GAM, she held CFO roles at LCH Ltd (part
of the London Stock Exchange Group) and Howden
Broking Group, and also held senior roles at Man Group
plc. Having started her career at KPMG in Australia, she
moved to London in 1997 to join the Banking and Capital
Markets industry groups of PwC and then EY.
Key current external appointments
None
Key current external appointments
Non-executive director of Guardian Media Group plc
Non-executive director of The Multichoice Group
Non-executive director of Showmax Africa Holdings
Limited
Non-executive director of Xyon Health Inc
Key current external appointments
Member of ICAEW Financial Services Faculty Board
Warden of Worshipful Company of Chartered
Accountants in England and Wales
Report of the directors on corporate governance
Your Board (continued)
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Report of the directors on corporate governance
(continued)
Muir Mathieson Tamara Rajah MBE
Gillian Riley
Group Chief Financial Officer
Date of appointment
6 September 2024
Skills and experience
Muir Mathieson was appointed Group Chief Financial
Officer in September 2024, having previously held
various senior leadership roles at Nationwide since
2010. He is a chartered accountant and his previous
positions within Nationwide include Deputy CFO,
Treasurer and Director of Financial Planning and Stress
Testing. Prior to this, he began his career at PwC, as well
as holding roles at Barclays Investment Bank and
Chelsea Building Society.
His significant financial services experiences across
finance and treasury disciplines mean that he has a deep
understanding of Nationwide, and the mutual business
model, and he is ideally placed to oversee the long-term
financial stability of the Group.
Independent non-executive director
Date of appointment
1 September 2020
Skills and experience
Tamara Rajah has extensive experience in entrepreneurial
ventures and technology and ran an award-winning, venture
capital backed global consumer healthcare platform. She
has published widely on high growth entrepreneurship and
was formerly a non-executive director of the ScaleUp
Institute Limited, London & Partners Limited and
Entrepreneur First Operations Limited. Tamara is currently
CEO of Wellness Solutions and Chief Transformation Officer
of Holland and Barrett, so brings a strong consumer focus
to the boardroom.
Prior to launching her own company, Tamara was one of the
youngest partners at strategy firm McKinsey where she
spent a decade in the healthcare practice and led
McKinsey’s knowledge and client work on entrepreneurship
and technology clusters in life sciences, digital and
technology. She brings to the Board vast experience of
digital transformation, entrepreneurship and innovation.
Independent non-executive director
Date of appointment
1 April 2022
Skills and experience
Gillian Riley is a senior banker with an accomplished track
record in consumer and commercial banking at Bank of
Nova Scotia, Canada’s third largest bank. Between 2018
and 2024, she was President and CEO of its subsidiary,
Tangerine Bank, which she evolved from being a digital
deposits bank to an everyday digital bank that is
profitable, has a full suite of banking solutions and which
consistently wins awards for its client satisfaction.
She founded The Scotiabank Women Initiative to
strengthen equality and support for women
entrepreneurs. She is a champion for diversity and
community values, contributing in areas such as health,
youth issues and gender equality.
Key current external appointments
Director of Silverstone Securitisation Holdings Limited
Member of the Prudential Regulation Authority’s Practitioner
Panel
Key current external appointments
CEO Wellness Solutions and Chief Transformation Officer of
Holland and Barrett
Trustee of parkrun Global Limited
Key current external appointments
Non-executive director and Chair of Roynat Capital
Incorporation
Non-executive director of St Michael’s Hospital
Foundation in Canada
Key: Audit Committee Nomination and Governance Committee Remuneration Committee Board Risk Committee
Indicates Chair of
Committee
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Phil Rivett
Jason Wright
Independent non-executive director
Date of appointment
1 September 2019
Skills and experience
Phil Rivett is a chartered accountant with over 40 years’
experience of professional accountancy and audit, with a
focus on banks and insurance companies. He has a wealth
of experience, advising major financial services providers
in the UK and on a global basis. He has held various senior
positions at PricewaterhouseCoopers LLP and was Chair
of its Global Financial Services Group prior to retiring from
the firm. He has an exceptional leadership track record,
advocating a collaborative and inclusive approach.
Group Society Secretary
Date of appointment
17 March 2021
Skills and experience
Jason Wright is responsible for delivering a
comprehensive governance and secretariat service to the
Board, Board committees and senior management. He
advises the Chairman and the Board on governance-
related matters and helps the Board function effectively
by ensuring it has the policies, processes, information,
time and resources it needs.
He joined Nationwide in December 2019 to lead the
Secretariat function and became Society Secretary in
March 2021. He is a qualified chartered company secretary
with over 25 years of experience working as a governance
professional within financial services. Prior to joining, he
was Company Secretary at Barclays Bank PLC and
previously held roles as the Head of Board Support at
Santander UK plc and Company Secretary of RBC Europe.
He is a Fellow of the Chartered Governance Institute.
Key current external appointments
Non-executive director of Standard Chartered PLC
Non-executive director of Standard Chartered Bank
Key: Audit Committee Nomination and Governance Committee Remuneration Committee Board Risk Committee
Indicates Chair of
Committee
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Governance at Nationwide
Our group structure
Nationwide Building Society is the Group’s parent undertaking and, as a building society, is a mutual organisation governed by the Building Societies Act 1986.
Nationwide acquired Virgin Money on 1 October 2024 and is its sole shareholder. The Virgin Money sub-group represents a significant element of the Group, and Virgin Money has its own
board of directors (comprising both executive and non-executive directors) and board committees. Further information on Virgin Money’s governance arrangements can be found in its Annual
Report and Accounts for the period ended 31 March 2025.
The Mortgage Works (UK) plc is a wholly owned operating entity of the Group and has its own board of directors, made up of members of the Group’s executive management team.
Our corporate governance framework
The Board approved a new Group Governance Framework, which came into effect upon completion of the Virgin Money acquisition, to ensure that our governance arrangements maintain the
highest standards of corporate governance and promote the success of the Group as a whole. This framework sets out how the Group’s principal operating entities (and their boards and board
committees) work together, how matters are reported, and how issues are escalated to the Board. To maintain the Board’s high standards, this document is reviewed annually and will continue
to evolve over time.
The Group Chief Executive Officer is accountable to the Board for the development and execution of the Group’s strategy and is responsible for its operation and management. The Group
Chief Executive Officer’s direct reports support her in implementing this strategy. To provide executive oversight of significant Group-wide matters, the Group Chief Executive Officer has
established the Group Management Committee. Group-wide matters are first considered by the Group Management Committee before they are recommended to the Board or one of its
committees.
The Board is the ultimate decision-making body for all significant Group-wide issues.
The role of the Board
The Board is responsible for ensuring that the Group’s long-term strategy is implemented within a robust governance framework and that the Group continues to be sustainable and deliver
long-term value for Nationwide’s members. To ensure that Board directors gain useful insight to support them in performing this role, all Board directors are required to be members of the
Society.
The powers of the Board are set out in the Memorandum and Rules, and it operates under formal terms of reference which include a schedule of matters reserved to the Board. The Board has
delegated the day-to-day management of the Group’s business to the Group Chief Executive Officer, who cascades the agreed standards to the business. The Memorandum and Rules, the
Board’s Terms of Reference and Matters Reserved for the Board are available at nationwide.co.uk.
The Board has standing committees in place, and each one considers matters that fall within its respective remit of responsibility. Further information on the work of the Board’s principal
committees can be found on pages 77 to 117 below.
To support the Board in exercising its oversight responsibilities in respect of the Virgin Money sub-group, the Virgin Money Board provides written reports to the Board after each of its
meetings. Each Virgin Money Board committee also provides written reports to its corresponding Nationwide Board committee, outlining the business undertaken at each meeting. In addition,
the respective committee chairs from Nationwide and Virgin Money meet at least once a quarter, or as required, to discuss and collaborate on matters of shared interest.
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Governance at Nationwide
(continued)
UK Corporate Governance Code 2018 – statement of compliance
Nationwide is committed to high standards of
corporate
governance and has continued to adopt the relevant parts of the UK Corporate Governance Code 2018 (the Code), which is
available at
www.frc.org.uk.
The UK Corporate Governance Code 2024 (the
2024 Code) applies from financial years beginning on or after 1 January 2025, so we will report against the 2024 Code in our Annual
Report and Accounts 2026.
The Board believes that throughout the year
Nationwide has complied with the principles of the Code, in line with the Building Societies Association guidance of July 2018. Details of the
principles, including where you can read more about ho
w Nationwide complied with them, are set out below.
1
The Code uses the terminologies of ‘company’ and ‘shareholder’ but for this Report of the directors on corporate governance, these terms should be read as ‘Group’ and ‘members’, respectively.
Section
Code Principles
1
Where to read about how Nationwide has complied
1. Board leadership and company purpose
A. An entrepreneurial board with the role to promote the long-term sustainable success
of the Group and generate value for members
Pages 3-55 and 65-66
B. Purpose, values and culture
Pages 3-55 and 65-66
C. Performance measures, risks and controls framework
Pages 16-18, 88-91 and 124
D. Stakeholder engagement
Pages 19-29
E. Workforce policies and practices
Pages 23-24 and 65-66
2. Division of responsibilities F. Leadership of Board and Board operations
Pages 9, 65-66, 69-71 and 77-80
G. Board composition, Board roles and independence
Pages 69-75
H. Directors’ responsibilities and time commitment
Pages 65 and 69-70
I. Board support, information and advice
Page 70
3. Composition, succession and evaluation J. Board appointments and succession plans for Board and senior management
Pages 77-80
K. Board skills, experience and knowledge
Pages 58-70 and 74
L. Annual Board evaluation
Pages 74-75
4. Audit, risk and internal control M. Effectiveness of external auditor and internal audit
Pages 81-87
N. Fair, balanced and understandable assessment of the company’s position and
prospects
Pages 82-85 and 120
O. Risk Management and Internal Control Framework
Pages 81-87 and 123-126
5. Remuneration P. Remuneration and Society purpose, strategy and values
Pages 92-117
Q. Executive and senior management remuneration
Pages 92-117
R. Authorisation of remuneration outcomes
Pages 92-177
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Governance at Nationwide
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Board meetings in 2024/25
The Board held 11 scheduled meetings in the 2024/25 financial year. Our Board directors’ attendance record for scheduled Board and committee meetings is set out below. The Board
and its committees have authority to meet on an ad hoc basis,
should a matter require consideration between scheduled meetings. During the year, ad hoc Board meetings were held to
consider and discuss the acquisition of Virgin Money.
Board meetings are structured to ensure that the Board considers and discusses a range of matters relating to the Group’s performance, operations and culture. The Chairman leads the
process of agenda setting, assisted by the Group Chief Executive Officer and the Group Society Secretary. At the end of each Board meeting, the Board reviews and provides feedback
on the cycle of meetings that has taken place. This feedback is used to support the continuous improvement in the quality of papers presented to the Board and its committees, and to
ensure that the content of future meeting agendas remains appropriate. In addition to the main items for consideration, the Board received reports from the Group Chief Executive
Officer and the Virgin Money Chief Executive Officer. The Board also received updates from each of its committees and the Virgin Money Board. During each Board cycle, the Chairman
meets with his fellow non-executive directors, without executive directors present. Directors who are unable to attend a meeting are provided with the supporting papers in advance and
can provide comments to the Chairman or to the relevant Committee Chair.
In addition to the scheduled meetings shown above, additional ad hoc meetings took place, as described in the relevant individual Committee reports.
Board and Committee composition and attendance at scheduled meetings in 2024/25
Board member Board Audit
Committee
Board Risk
Committee
Remuneration
Committee
Nomination
and Governance
Committee
Kevin Parry
11
/
11
- - -
6/6
Anand Aithal
1
6/6 3/4 4/4 - -
David Bennett
2
5/5 - - - -
Tracey Graham
11/11 - 6/6 6/6 6/6
Albert Hitchcock
10/11 - 6/6 6/6 -
Alan Keir
11/11 6/6 6/6 - 6/6
Debbie Klein
11/11 - - 6/6 -
Sally Orton
11/11 6/6 - - -
Tamara Rajah
10/11 - - - -
Gillian Riley
11/11 - 5/6 6/6 -
Phil Rivett
11/11 6/6 6/6 - 6/6
Debbie Crosbie
11/11 - - - -
Muir Mathieson
3
7/7 - - - -
Chris Rhodes
4
4/4 - - - -
1
Anand Aithal was appointed to the Board on 1 October 2024.
2
David Bennett was appointed to the Board on 13 November 2024.
3
Muir Mathieson was appointed to the Board on 6 September 2024.
4
Chris Rhodes resigned from the Board on 6 September 2024.
Report of the directors on corporate governance
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Governance at Nationwide
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Board leadership and organisational purpose
The Board is responsible for ensuring that the Group’s long-term strategy is implemented within a robust governance framework. More information on the Group’s purpose, its business
model and how it generates and preserves value over the long term can be found on pages 5 to 6. The Board is responsible for ensuring that the Group is sustainable and that Nationwide,
as a mutual, continues to deliver long-term value for its members. It determines the Group’s strategic objectives within a framework of risk appetite, internal controls and governance. The
Board monitors the Group’s overall financial performance and ensures effective governance, internal controls and risk management. The Board holds a Strategy Conference annually to
consider and develop the Group’s strategic direction. When setting the strategy, the Board considers the impact that its decisions might have on the Group’s stakeholders, including our
members, customers, colleagues, suppliers, debt investors and regulators, as well as wider communities.
The Board is accountable for ensuring that, as a collective body, it has the appropriate skills, knowledge and experience to perform its role effectively, and is also responsible for
providing leadership to the Group on culture, values and ethics. To support the ongoing development of our Board, formal training was delivered throughout the year to keep directors
abreast of technical, regulatory and statutory developments. The Closer to Customers programme enables our non-executive directors to build a deeper understanding of our customers
and provides them with insight into how our customers are using our products and the developments which they may wish to see in the future. As part of this year’s programme, the
Board held Closer to Customer focus groups, where directors asked a group of customers questions on a particular subject, visited branches and listened in to customer call recording
sessions.
Culture
Culture is an important focus of the Board to ensure it supports the Group’s purpose and delivery of its strategy: Blueprint for a modern mutual. The Board receives regular updates from
management to ensure it has a strong understanding of the current culture, as well as progress made towards achieving and embedding its cultural goals. Over the last 12 months, we
have identified three areas of focus in building the most capable workforce for the benefit of our members and customers. These are: clarifying and embedding high performance
expectations; putting our customers at the heart of everything we do; and building an inclusive culture in which everyone can thrive. Colleague engagement continues to outperform the
benchmark for the financial services industry and is in line with the ‘high performing’ benchmark. In addition, our colleagues’ connection to our purpose remains consistently strong.
During the year, executive directors and other senior managers held both in-person and online engagement events with colleagues, allowing them the opportunity to have their voice
heard. Additionally, the Chairman and non-executive directors held regular Townhall events, answering questions directly from colleagues. The Board has an appointed non-executive
director with specific responsibilities for the Employee Voice in the boardroom. This role is held by Tamara Rajah, who works with the People function and reports to the Board on an
annual basis. This year, this was supplemented by updates presented to the Board by both the Group Chief Executive Officer and Virgin Money Chief Executive Officer on employee
sentiment collated since the Virgin Money acquisition. In March 2025, Nationwide’s strategy, Blueprint for a modern mutual, was updated and relaunched across the Group. As a result,
the Nationwide and Virgin Money sub-groups now have a shared purpose, underpinned by a common set of strategic drivers and customer first behaviours. As the integration of
Nationwide and Virgin Money continues to develop in the coming year, the Board will continue to sponsor and monitor progress in all areas of the Group’s culture.
Whistleblowing
The Group has arrangements in place for employees, contractors and temporary workers to raise concerns about possible misconduct, wrongdoing and unacceptable behaviour towards
others by its employees and third parties, including those related to non-financial matters. The Board recognises that having effective and trusted confidential whistleblowing
arrangements is key in supporting an open and honest culture. All employees, contractors and temporary workers of the Group may raise concerns confidentially or anonymously (if
preferred) via various channels, which aim to make reporting concerns easier, and they also receive annual training on our whistleblowing policies and procedures. The Board has
appointed the Chair of its Audit Committee, Phil Rivett, and the Virgin Money Board has appointed the Chair of its Audit Committee, Tim Wade, as their respective Whistleblower
Champions. The Whistleblower Champions are responsible for ensuring and overseeing the integrity, independence and effectiveness of the respective policies and procedures relating
to whistleblowing, including measures to protect whistleblowers from being victimised as a result of their raising reportable concerns.
A recent survey showed that 87% of Nationwide sub-group colleagues would be happy to Speak Up if they witnessed or experienced any unacceptable behaviour. The Board receives an
Annual Whistleblowing Report and has reviewed the adequacy and effectiveness of the arrangements in place for the proportionate and independent investigation of concerns raised,
including any required follow-up action taken. Due to the developing nature of Nationwide’s and Virgin Money’s integration, this year’s report as at 31 December 2024 was presented to
the Board on a Nationwide sub-group basis only. During the 12 months to 31 December 2024, a total of 251 concerns were raised within the Nationwide sub-group, of which 96 were
formally investigated as whistleblowing (12 months to 31 December 2023: 232 concerns raised, of which 78 were investigated as whistleblowing). The remainder were managed utilising
other internal channels.
Report of the directors on corporate governance
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Governance at Nationwide
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Conflicts of interest
The Group Society Secretary maintains a Register of Directors’ Interests (the Register) which records actual or potential conflicts of directors’ interests. The Board approves the
Register annually, and directors are required to notify the Board of any changes to their interests throughout the year. During the year, the Board has considered the current external
appointments of all directors which may give rise to a conflict. In accordance with the Memorandum and Rules and the Building Societies Act 1986, a director shall not vote or be counted
in the quorum in any matter in which they hold a conflict of interest.
Board activity during the year
The following pages set out some of the key matters considered by the Board during the year, together with the stakeholder groups impacted, and principal risks presented, by each
matter. Further information on how the Board has engaged with its key stakeholder groups is outlined on pages 19 to 29.
Board Activity
Strategic Driver Stakeholder Principal risk
Strategic development and performance
Received business performance and strategic transformation updates, including operational
resilience.
Oversaw the completion of Nationwide’s acquisition of Virgin Money. This is discussed in more
detail in the Board Decisions section of the Strategic report on pages 26 to 28.
Approved Nationwide Fairer Futures, the revised Social Impact strategy, and key charitable
partnerships. This is discussed in more detail in the Board Decisions section of the Strategic report on
page 29.
Discussed and approved recommendations regarding the future strategic growth of the Group.
Received updates on, and oversaw progress of, the integration of Nationwide and Virgin Money.
Debated and considered the opportunities and challenges facing the Group due to the changing
macro environment and agreed the propositional, financial, strategic and risk response.
Approved a revised Group Performance Pack of key data and metrics to monitor performance.
Members and customers
Colleagues
Suppliers
Communities
Regulators and policy
makers
Investors and rating
agencies
Finance
Regularly assessed financial performance and the Group’s capital and liquidity position via
business performance reports from the Group Chief Financial Officer.
Reviewed and approved Nationwide’s full-year financial results and Annual Report and
Accounts 2024, and Group interim results prior to publication, with consideration given to
business viability and the preparation of the accounts on a going concern basis.
Reviewed Nationwide’s cost performance and outlook and discussed the opportunities to
reduce costs over the five-year Financial Plan.
Discussed and challenged the five-year forecast and economic and market assumptions ahead
of review of the five-year Group Financial Plan.
Approved the Group Internal Capital Framework.
Approved a capital injection from Nationwide Building Society to Virgin Money UK PLC.
Approved the Group Financial Plan 2025-30.
Assessed the economic and market conditions affecting the Group.
Members and customers
Colleagues
Suppliers
Regulators and policy
makers
Investors and rating
agencies
Key:
:
More rewarding relationships Simply brilliant experience Beacon for mutual good Simplify, integrate and grow
Prudential risks (including credit, model, liquidity and
funding, market, business, capital, and pension risk)
Operational risks Enterprise risk management
Report of the directors on corporate governance
Governance at Nationwide (continued)
E M S
R
EO
P
P O E
R E S
P O E
R E M S
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Governance at Nationwide
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Board activity
Strategic driver Stakeholder Principal risk
Risk and regulatory matters, including external outlook
Received regular reports from the Group Chief Risk Officer on the internal and external risk
outlook, and regulatory matters.
Approved the Group Risk Appetite and supporting metrics.
Assessed the Group’s overall risk profile and emerging risk themes.
Approved the withdrawal of the Board’s Consumer Duty Champion role. This is discussed in
further detail in the Board Risk Committee’s report on page 88.
Members and customers
Colleagues
Suppliers
Regulators and policy
makers
Investors and rating
agencies
Purpose, culture and values
Reviewed and discussed Nationwide’s new strategy for attracting and retaining talent, and the
tracking of inclusion and diversity metrics.
Reviewed Annual Reports from the Group Chief People Officer, General Secretary of the
Nationwide Group Staff Union, and the designated Employee Voice non-executive director.
Nationwide’s Gender and Ethnicity Pay Gap reporting for 2024 was approved by the
Remuneration Committee on behalf of the Board.
Reviewed the Annual Culture Report, which analysed the annual colleague pulse survey
results, and the progress made on the development and embedding of Nationwide’s culture
and behaviours.
Reviewed Nationwide’s Annual Whistleblowing Report 2024, sponsored by the Board’s
Whistleblower Champion, and whistleblowing arrangements.
Approved Nationwide’s Modern Slavery Statement for 2024.
Members and customers
Colleagues
Suppliers
Communities
Regulators and policy
makers
Investors and rating
agencies
Members and customers
Received regular updates on customer complaints, their themes and mitigation, and oversaw
the back book activity in advance of the Consumer Duty being applied to back books and
services from 31 July 2024.
Considered, and approved, the Fairer Share Payment, made to members in 2024 following the
approval of Nationwide’s 2023/24 financial results.
Approved the refreshed Member Voice programme of activity.
Considered, and approved, the payment of The Big Nationwide Thank You to members. This is
discussed in more detail in the Board Decisions section of the Strategic report on page 28.
Members and customers
Colleagues
Suppliers
Communities
Regulators and policy
makers
Investors and rating
agencies
Governance
Received regular reports from the Group General Counsel and Group Society Secretary.
Approved plans for the Nationwide AGM 2025, and the Notice of AGM 2024.
Received the 2024 Board performance review and discussed resulting actions.
Considered long-term succession planning for the Board and Executive Committee.
Received and reviewed updates on Environmental, Social and Governance matters.
Approved a new Group Governance Framework, and revised terms of reference for the Board
and its committees.
Members and customers
Colleagues
Suppliers
Communities
Regulators and policy
makers
Investors and rating
agencies
Key:
:
More rewarding relationships Simply brilliant experience Beacon for mutual good Simplify, integrate and grow
Prudential risks (including credit, model, liquidity and
funding, market, business, capital, and pension risk)
Operational risks Enterprise risk management
Report of the directors on corporate governance
Governance at Nationwide (continued)
P
P
P
O
O
O
O
E
E
E
E
R E M S
R
R
E M
M
S
S
R E S
E M S
R
EO
P
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Division of responsibilities
Leadership structure
An overview of the Board’s composition and its committee structure at 31 March 2025 is set out below:
Further information on how the Board has delegated the day-to-day management of the Group’s business to the Group Chief Executive Officer can be found on page 71.
Time commitment
Non-executive directors must commit sufficient time to their role, which varies according to their responsibilities. For example:
Non-executive directors: a minimum of 30 days per year;
Senior Independent Director and Committee Chairs: a minimum of 50-60 days per year; and
Chairman: a minimum of two days per week.
The Board
Roles and responsibilities within the Board
Non-executive directors Executive directors
Chairman
Leads the Board to ensure it
operates effectively in setting the
strategic direction of the Group,
promoting the highest standards of
corporate governance.
Shapes the culture in the
boardroom by fostering open and
honest debate and ensuring
valuable contribution from all non-
executive directors.
Senior Independent Director
Supports the Chairman in his role
and with the delivery of his
objectives and acts as his sounding
board.
Available to fellow directors as an
intermediary.
Non-executive directors
Use their skills, experience and
knowledge to hold management to
account by constructively providing
challenge to the Group’s
performance, culture and controls.
Group Chief Executive Officer
Runs the day-to-day management of
the Group under delegated
authority from the Board and is
accountable to the Board for the
Group’s performance and delivery
of the Group’s strategy.
Executive directors
Hold specific management
responsibilities in the day-to-day
running of the business, and
accountable to the Board for the
execution of the Group’s strategy
and the performance of the business.
Group Society Secretary
Advises the Board through the Chairman on all governance-related matters. Provides support to the Board in managing good information flows between the Board and the Group.
The Board delegates certain matters to its principal committees.
Each Board committee considers Nationwide business and Group matters that fall within its respective remit of responsibility.
Audit Committee
See the report on page 81.
Board Risk Committee
See the report on page 88.
Nomination and Governance Committee
See the report on page 77.
Remuneration Committee
See the report on page 92.
Report of the directors on corporate governance
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Division of responsibilities (continued)
In addition, the Chairman and non-executive directors are expected to allocate sufficient time to understand the business through meetings with management, and to attend meetings
with the Group’s regulators to foster an open and transparent working relationship.
Directors' time commitments are reviewed annually or more regularly where required. The Chairman has confirmed with each non-executive director that they have been able to allocate
sufficient time to fulfil their duties this year. There has been no net increase in the Chairman’s significant external commitments during the year which would impact his time commitment
to fulfil his duties.
On 13 November 2024, the Chairman of Virgin Money’s Board, David Bennett, was appointed as a non-executive director of Nationwide. On 23 January 2025, the Board’s Senior
Independent Director, Tracey Graham was appointed as a non-executive director of Virgin Money. These appointments were made to enable Mr Bennett and Ms Graham to share cross-
directorship insights with their fellow directors. Further information on Mr Bennett’s appointment can be found in the Nomination and Governance Committee report on page 79.
During the year, the Board approved additional external appointments for a number of non-executive directors on the basis that these appointments were not considered to impair their
ability to serve as a director of Nationwide:
Sally Orton as a member of the ICAEW Financial Services Faculty Board
Tracey Graham as a non-executive director of Pension Insurance Corporation plc and Pension Insurance Corporation Group Limited
Kevin Parry as non-executive chairman of Marie Curie and adviser to the board of Capital Com (UK) Limited
Tamara Rajah as trustee of parkrun Global Limited
Gillian Riley as a member of Huron University’s board of governors
Anand Aithal as non-executive director of Persimmon plc
Director independence
In reaching its annual determination of non-executive director independence, the Nomination and Governance Committee considers factors including length of tenure, relationships and
any circumstances which could influence or appear to influence a director’s judgement. On the recommendation of that Committee, the Board has determined that all non-executive
directors are independent and are free of relationships and other circumstances which could materially influence the exercise of their judgement. All eligible directors will be
recommended to members for re-election at the 2025 AGM.
Information and advice
To enable the Board to exercise its judgement and make fully informed decisions when discharging its duties, the Group Society Secretary ensures appropriate and timely information
flows between the Board, its committees and the rest of the Group. The Group Society Secretary supports the Chairman in setting the Board’s agenda, and board papers are distributed to
all directors in a timely manner, in advance of each meeting. Between formal Board meetings, regular management updates are provided to directors to keep them informed of the latest
issues affecting the Group. All directors have access to the advice and services of the Group Society Secretary, who is responsible for advising the Board on all governance matters, as
well as ensuring that Board procedures are followed and compliance with applicable rules and regulations is observed. Directors may also take independent professional advice at the
Group’s expense.
Induction, training, and development
Upon appointment, directors receive a formal induction programme to familiarise them with their duties, the Group’s business and its risk and governance arrangements. Induction
programmes are tailored to directors’ individual experience and expertise and are also aligned with their individual development plans.
The Cha
irman, supported by the Group Society Secretary, holds overall responsibility for ensuring that all directors receive suitable training to enable them to fulfil their duties
effectively. Training may be delivered through meetings, presentations, and briefings from internal subject matter experts and external advisers. The Chairman holds regular
conversations with each non-executive director throughout the year, as well as at the end of the year, to review their individual performance and development needs. The Senior
Independent Director is responsible for the evaluation of the Chairman’s performance and development needs. Executive directors undertake performance reviews as part of the annual
performance management cycle.
Report of the directors on corporate governance
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Division of responsibilities
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Senior management
There is a clear division of responsibilities between the Chairman and the Group Chief Executive Officer. To the extent that matters are not reserved to the Board for decision,
responsibility is delegated to the Group Chief Executive Officer, who is assisted by her team of direct reports, some of whom are members or attendees of the Executive Committee and,
in the case of Group-wide matters, of the Group Management Committee. Membership and attendance of these senior management committees comprises the Group Chief Executive
Officer, Group Chief Financial Officer and the leaders of relevant business areas, as set out below. Biographies for the executive directors and Group Society Secretary can be found on
pages 58 to 62 and, for the rest of the senior management team, at nationwide.co.uk.
Debbie Crosbie
Group Chief Executive Officer
Muir Mathieson
Group Chief Financial Officer
Chris Rhodes
V
irgin Money Chief Executive
Officer
Mandy Beech
Director of Retail Services
Steve Evenden
Chief Internal Auditor
Catherine Kehoe
Chief Customer Officer
Lynn McManus
Group Chief People Officer
Stephen Noakes
Director of Retail
J
ames Peirson
Group General Counsel
J
ason Wright
Group Society Secretary
T
om Rile
y
Director of Retail Products
Rachael Sinclair
Director of Mortgages and
Financial Wellbeing
Gavin Smyth
Group Chief Risk Officer
Suresh Viswanathan
Group Chief Operating Officer
Key::
Member of Group Management Committee Member of Executive Committee Attendee of Executive Committee
Governanc
Annual Report and Accounts 2025
Report of the directors on corporate governance
(continued)
Division of responsibilities
(continued)
Senior management
There is a clear division of responsibilities between the Chairman and the Group Chief Executive Officer. To the extent that matters are not reserved to the Board for decision,
responsibility is delegated to the Group Chief Executive Officer, who is assisted by her team of direct reports, some of whom are members or attendees of the Executive Committee and,
in the case of Group-wide matters, of the Group Management Committee. Membership and attendance of these senior management committees comprises the Group Chief Executive
Officer, Group Chief Financial Officer and the leaders of relevant business areas, as set out below. Biographies for the executive directors and Group Society Secretary can be found on
pages 58 to 62 and, for the rest of the senior management team, at nationwide.co.uk.
Debbie Crosbie
Group Chief Executive Officer
Muir Mathieson
Group Chief Financial Officer
Chris Rhodes
V
irgin Money Chief Executive
Officer
Mandy Beech
Director of Retail Services
Steve Evenden
Chief Internal Auditor
Catherine Kehoe
Chief Customer Officer
Lynn McManus
Group Chief People Officer
Stephen Noakes
Director of Retail
J
ames Peirson
Group General Counsel
J
ason Wright
Group Society Secretary
T
om Rile
y
Director of Retail Products
Rachael Sinclair
Director of Mortgages and
Financial Wellbeing
Gavin Smyth
Group Chief Risk Officer
Suresh Viswanathan
Group Chief Operating Officer
Key:
:
Member of Group Management Committee Member of Executive Committee Attendee of Executive Committee
Governanc
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Composition, succession, and evaluation
Board diversity
We are committed to having a diverse and inclusive Board to set the Group’s strategy, tone and culture. The Board aims to achieve this by ensuring there is diversity of ethnicity, age, gender,
disability and sexual orientation, as well as socio-economic, educational and professional backgrounds within its membership. This is a key determinant of any new Board appointment and is
also taken into consideration in the development of a diverse pipeline for succession. Selecting the best candidate is paramount and all appointments are based on merit and objective criteria
with due regard for the benefits of diversity, including diversity on the Board. This approach benefits the effectiveness of the Board by creating diversity of thought and breadth of perspective
among directors. The Board’s Diversity Statement is set out in the Board Composition and Succession Policy which can be found at nationwide.co.uk. The Nomination and Governance
Committee Report on pages 77 to 80 sets out the selection process for new directors appointed during the year. The gender and diversity data set out on this page is in the form prescribed by
the FCA’s UK Listing Rules. This data is collected from executive management and Board directors at the application and onboarding stages of their recruitment. They are requested to re-
attest this information by way of questionnaire annually.
Gender representation as at 31 March 2025
Board members
Number of
senior positions
(note i)
Executive management (note ii)
Number Percentage Number Percentage
Male 7 53.8% 2 7 58.3%
Female 6 46.2% 2 5 41.7%
Not specified/prefer not to say - - - - -
Ethnicity representation as at 31 March 2025
Board members
Number of
senior positions
(note i)
Executive management
(note ii)
Number Percentage Number Percentage
White British or other White (including
minority-white groups)
11 84.6% 4 11 91.7%
Mixed/Multiple Ethnic Groups - - - - -
Asian/British Asian 2 15.4% - 1 8.3%
Black/African/Caribbean/Black British - - - - -
Other ethnic group, including Arab - - - - -
Not specified/prefer not to say
- - - - -
Performance against FCA diversity targets as at 31 March 2025
Target Outcome
Position
At least 40% of Board directors are women Exceeded 46.2% of Board directors are women
At least one senior Board position is held by a woman Exceeded Two senior Board positions are held by women
At least one director from a minority ethnic background Exceeded Two directors are from a minority ethnic background
Notes:
i
. Senior Board positions are Chairman, Senior Independent Director, Group Chief Executive Officer and Group Chief Financial Officer.
i
i. Executive management is defined as the Executive Committee, including the Group Chief Executive Officer, Group Chief Financial
Officer and the Group Society Secretary.
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Composition, succession, and evaluation
(continued)
Board tenure
In compliance with the Code, the Memorandum and Rules require that Board directors are subject to election or re-election by
Nationwide’s members annually. Before re-election, a review of each non-executive director’s continued effectiveness and
independence is undertaken.
Board composition
The Nomination and Governance Committee is responsible for reviewing Board composition, considering succession plans for both
the Board and senior executives, selecting and appointing new directors and considering the results of the annual Board performance
review. More information on the work of this Committee can be found on pages 77 to 80.
To
ensure that an appropriate balance of skills, experience and knowledge on the Board is maintained, the competencies of individual
Board members are regularly reviewed. A balanced board is vital for constructive and open debate in the boardroom and, ultimately,
effective board decisions. Individual director biographies, including their relevant skills and experience, can be found on pages 58 to
62.
All directors are subject to conduct rules laid down by the Group’s regulators and must satisfy requirements relating to their fitness and
propriety. In addition, the Chairman, the Senior Independent Director and Committee Chairs are subject to all aspects of the Senior
Managers and Certification Regime.
Executive directors’ service contracts, as well as letters of appointment for the Chairman and non-executive directors, are available for
inspection at Nationwide’s principal office and will be available at the AGM.
Chairman performance and tenure
The Chairman’s performance review was led by the Senior Independent Director on behalf of the Board in May 2024. This review included peer feedback from the non-executive and executive
directors. The review concluded that Kevin Parry continued to perform effectively, remained fit and proper to perform the role, upheld his regulatory responsibilities, and demonstrated
commitment to his role. Considering this conclusion, the re-election of Kevin Parry was put to members at the 2024 AGM where he was re-elected as a director.
The Chairman will have served nine years on the Board in May 2025. To minimise disruption during this important time following the acquisition of Virgin Money, and to facilitate effective long-
term succession planning and development of a diverse board, the Senior Independent Director led a review process of the Chairman’s tenure. This review considered the Chairman's
preceding tenure as a non-executive director, his performance, his extensive experience in financial services and in the mutual sector, his continued independence and his significant ongoing
contribution to the Board's strategy. The Prudential Regulatory Authority and Financial Conduct Authority were consulted as part of the review and raised no objections. As a result, the Board,
in the absence of the Chairman, approved an extension to the Chairman's tenure of two years to July 2027. Kevin Parry will therefore serve a maximum of five years in the role of Chairman. The
Chairman has indicated that he will ask the Senior Independent Director to commence the process to find his successor after the 2025 AGM, to achieve a seamless appointment, to take effect
following next year’s AGM.
Individual director performance
A review of the performance and contribution of each director was conducted by the Chairman to ensure that all directors contributed effectively to the good governance of the Group. This is
one of the factors considered when deciding whether individual directors will offer themselves for election or re-election at the AGM. The reviews concluded that each director continued to
perform effectively and demonstrated commitment to the role. During the year, the Chairman met each director individually to discuss their personal performance and establish whether each
director continued to contribute effectively to the long-term success of the Group.
Governanc
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Composition, succession, and evaluation
(continued)
Board performance
The Board conducts an annual review of its performance. This is
a key mechanism for ensuring that the Board continues to operate effectively, and for setting the Board’s objectives and
development areas for the forthcoming year. This annual review is
conducted through a formal evaluation and considers both the work of individual directors and the collective work of the
Board and its committees. All reviews are cond
ucted in accordance with the Code and the Financial Reporting Council (FRC) Guidance on Board Effectiveness, which require boards to undergo
an externally facilitated review at least every three years.
2024 Board performance review
Better Boards was appointed to conduct an externally facilitated, independent Board performance review in 2024. Following a rev
iew of the 2023 performance review findings and the agreed
areas requiring particular focus that emerged from that review, th
e scope of the 2024 review was determined by the Nomination and Governance Committee in November 2023 and
subsequently approved by the Board. The 2024 review covered ge
neral areas of effectiveness including: the strengths and composition of the Board and its principal committees; clarity of the
Board’s roles and responsibilities; the Boar
d’s ability to resolve conflicts; the effectiveness of Board meetings, including the Board’s decision-making processes and identification of areas
needing more Board attention; eval
uation of individual Board members; and stakeholder engagement.
The performance review findings were
informed by responses provided by
all Board directors to a written quest
ionnaire, views shared in formal
interviews held with individual direct
ors, as well as observations made by
Better Boards during the March 2024
Board cycle. Individual committee
questionnaires were also
completed by members of the Board’s principal
committees and other key stakeholders where appropriate. The key findings
were captured in a review document that was submitted and presented to
the Board in May 2024.
Overall, the 2024 review concluded that the Board and its committees
continue to perform and operate effectively. The Board adopted the
recommendations from the review find
ings and has developed a plan to
implement the agreed actions. The Bo
ard will continue to make progress
against the key findings of the review, with monitoring of progress made
against these actions having been delegated to the Nomination and
Governance Committee; an update on th
e actions taken is provided on the
next page. Additionally, the Board will
ensure that these actions are also
considered in future reviews of Board
composition and succession planning.
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Composition, succession, and evaluation (continued)
2024 Board performance review area of focus and recommendation Action taken
Ensure that the size and composition of the Board is kept under
continuous review so that it remains appropriate following the acquisition
of Virgin Money.
Regular discussions in respect of the composition of the Board are held at meetings of both the Board and
Nomination and Governance Committee. The Chairman and Group Society Secretary met with Virgin Money’s
Chairman and Company Secretary in November 2024 to consider the Board’s succession plan. The Board’s
succession plan was reviewed and approved in January 2025.
Ensure time is allowed for unstructured, quality opportunities for Board
directors to: further deepen director relationships; and understand
better the distinctive strengths of individual directors and the Board
collectively, and how these strengths can be better leveraged.
Unstructured Board dinners are regularly held to facilitate deepening of relationships between our Board
directors; in addition, the Chairman monitors this in his one-to-one meetings with fellow non-executive directors.
Build reflection time into each Board cycle. A standing agenda item has been added to every Board meeting for directors to review and reflect upon the
Board cycle, in addition to private sessions held for non-executive directors at the end of each Board meeting.
Ensure that Board directors remain focused on providing constructive
challenge by encouraging them to build on their initial line of questioning in
Board discussions.
Regular discussions take place as part of the new standing Board agenda item for directors to review and reflect
upon the Board cycle. The Chairman also addresses this as part of his annual performance review of the
directors.
2025 Board performance review
In
accordance with the provisions of the Code, Nationwide is required to undertake an externally facilitated Board performance review every three years. Given the 2024 performance review
was undertaken externally, the 2025 performance review will be led by the Group Society Secretary. The 2025 review will utilise
Better Boards’ platform, methodology and independent opinion on
certain matters.
The results of the review will be presente
d to the Board for discussion and will form the basis of an action plan for completion during 2025. A similar process will be followed for Board
committees. Further information on the evalua
tion process, outcomes and actions identified will be presented in the 2025/26 Annual Report and Accounts.
Audit, risk and internal control
The Board is responsible for determining the nature and extent of the risks that the Group is willing to take to achieve its lo
ng-term strategic objectives. This is detailed in the Group’s Risk
Appetite Statement. The Board is responsible for ensuring that ma
nagement maintains an effective system of risk management and internal control across the Group, and for assessing its
ongoing effectiveness.
The Nationwide sub-group and the
Virgin Money sub-group have independent but aligned Enterprise Risk Management Frameworks (ERMFs)
to ensure risks are managed in a consistent and
rigorous way. These ERMFs define
how risks are managed within each business and set out the risk management responsibilities of colleagues within an industry-standard three lines of
defence model. They also ensure that all
risks are appropriately and consistently identified, assessed, managed, monitored, and reported, in accordance with the ‘Guidance on Risk
Management, Internal Control and Related Fi
nancial and Business Reporting’, published by the FRC. These frameworks are supplemented by Group-level governance which supports the
Board in ensuring risks are managed consiste
ntly and rigorously across the Group, with appropriate escalation routes in place for identifying, evaluating and managing principal and emerging
risks. Each ERMF is supported by a system
of internal controls and processes. These systems and processes are designed to manage, not eliminate, the risk of failure to achieve business
objectives, and can only provide reasonable and not abso
lute assurance against material misstatement or loss.
Nationwide’s and Virgin Money’s boards moni
tor their respective sub-group’s risk management and internal control systems and carry out an annual review of their effectiveness. On the basis
of this year’s review, each Board is satisfied
that each sub-group’s ERMF is appropriate.
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Audit, risk and internal control (continued)
Internal control over financial reporting
The Group’s financial reporting process has been designed to provide assurance regarding the reliability of financial reporting and preparation of financial statements, as well as consolidated
financial statements, in accordance with International Financial Reporting Standards (IFRS).
Internal controls and risk management systems are in place to provide assurance over the preparation of the Group’s annual financial statements. These include independent testing of the
critical financial reporting processes and controls, from data origination to reporting, to an agreed level aligned to the Group’s Board Risk Appetite. The result of this assurance work is
reported to control owners and the Group Chief Financial Officer, with a summary report presented to the Audit Committee. Financial information submitted for inclusion in the Group’s annual
financial statements is attested by individuals with appropriate knowledge and experience.
The Group’s Annual Report and Accounts are scrutinised throughout the financial reporting process by relevant senior stakeholders before being submitted to the Audit Committee, which
provides challenge, before recommending to the Board for approval. The Audit Committee also discusses control conclusions and recommendations arising from the statutory audit with the
external auditor. The external auditor’s year end report to the Audit Committee provided results and conclusions for the Group audit, including Virgin Money matters where relevant. In the
external auditor’s reporting to the Virgin Money Board Audit Committee, its component team provides more details on specific Virgin Money-related matters.
Aspects of internal control over the Group’s financial reporting have been reviewed by Nationwide’s Internal Audit function. Based on the various reviews and reports provided to the Audit
Committee, it was concluded that the controls over the Group’s financial reporting are effective.
More information on the Group’s risk management and internal control systems can be found on pages 81 to 91 of the Governance report and on pages 123 to 126 of the Risk report.
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Nomination and Governance Committee report
Nomination and Governance Committee report
I am pleased to report on the work of the Nomination and Governance Committee for the year ended 31 March 2025.
The Committee has played a critical role this year and continues to promote the long-term sustainable success of the
Group by ensuring that it is led by a Board and executive management possessing the appropriate combination of skills
and experience.
There have been several changes to the Board and executive management during the year, with the Committee focused on
ensuring that our leadership team has the skills and capabilities to meet the needs of a modern mutual both now and in the
future.
The changes included the appointment of Muir Mathieson as an executive director and Group Chief Financial Officer, and
the appointments of Anand Aithal and David Bennett as independent non-executive directors. The selection processes for
these Board changes are outlined on page 79 of this report.
The Committee ensures that the Group’s succession planning at a Board and an executive management level is sufficiently
robust and diverse to serve the best interests of our members, customers and key stakeholders.
Nationwide continues to disclose diversity data relating to both its Board and executive management. This information can
be found on page 72 and I am pleased to say that we continue to exceed all the set diversity targets.
As part of its remit, the Committee provides oversight of the Group’s Governance Framework on behalf of the Board, to
ensure that it remains effective and aligned with best practice. The Committee is satisfied that the current framework,
updated to incorporate Virgin Money, continues to operate effectively and efficiently.
Kevin Parry Chairman – Nomination and Governance Committee
Key activities of the Committee
Reviewed and challenged the Board and
Executive Committee succession plans to
be sufficiently robust and diverse to meet
the Group’s future needs.
Reviewed the independence, external
interests and time commitments of all
Board members.
Considered the governance arrangements
for the Group to ensure the long-term
success of the business.
Oversaw the selection and appointment of
executive and non-executive directors to
the Board.
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How the Committee works
Committee purpose and membership
The Committee provides oversight and advice to the Board on the succession planning for the Board and its committees and executive management level appointments for the Group. It
reviews the Board’s governance arrangements, ensuring they are consistent with best practice, and oversees the implementation of the inclusion and diversity (I&D) strategy and objectives
for the Nationwide sub-group. More details on the duties and responsibilities of the Committee can be found in its terms of reference at nationwide.co.uk.
The Committee comprises the Chairman (who chairs the Committee except when his own succession is being considered) and three independent non-executive directors, including the Senior
Independent Director. Details of the skills and experience of the Committee members can be found in their biographies on pages 58 to 62. In addition to the members, regular attendees of
the Committee include the Group Chief Executive Officer, Group Chief People Officer, and the Group Society Secretary.
Committee meetings
The Committee meets at least twice a year and otherwise as required. During the year, the Committee held six scheduled meetings. The attendance record of Committee members is set out
on page 65.
Virgin Money oversight
Since the acquisition of Virgin Money, the Committee has received and considered written reports provided by the Chair of Virgin Money’s Nomination and Governance Committee from
each of its meetings. When requested, the Virgin Money Nomination and Governance Committee Chair attends meetings of the Committee to provide a verbal update and answer questions
from the Committee members. All Virgin Money nomination and governance decisions taken and matters discussed by the Virgin Money Nomination and Governance Committee are
reported to the Committee so that it may discharge its oversight responsibilities.
Committee performance, skills and expertise
The performance of the Committee is reviewed annually, along with the Committee’s terms of reference and its activities over the previous year. The purpose of this review is to confirm that
the terms of reference align with the Committee’s remit and purpose, and continue to reflect all applicable governance codes, guidelines, legislation and best practice. The 2024 Board
performance review indicated that Committee members were satisfied with the performance and effectiveness of the Committee. The review is described in detail on pages 74 to 75.
What the Committee did in the year
Board succession
The Committee reviewed and challenged the Board succession plan, which included emergency succession arrangements for all senior non-executive director roles, such as chairs of Board
committees. This exercise considered a range of measures including strategic direction, culture, skills and experience, tenure and diversity. Board succession is reviewed annually to ensure the
Board has the appropriate succession plans in place to meet the needs of the Group.
Executive resourcing, leadership, talent, and succession
The Committee oversaw the selection process for a new Virgin Money Chief Executive Officer and the consequential process for the role of Group Chief Financial Officer and executive director
in anticipation of the planned acquisition of Virgin Money. This process was undertaken in line with existing talent management and succession planning activity. Further information on the
selection process for new directors is set out on the next page.
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What the Committee did in the year (continued)
The Committee received regular updates on the management of executive succession across the Group, including reviews of emergen
cy succession plans and talent management development
plans. This provided the Committee with a view of the talent pipeline of potential leaders as well as their key strengths and development areas. The Committee will continue to focus on the
long-term succession planning across the Group in alignment with the anticipated integration of the businesses. As part of any succession planning, the Committee considers its objective of
creating greater gender and ethnic diversity in senior roles.
Selection process for new directors
Three new directors were appointed to the Board during the year. Korn Ferry, an independent executive search firm, was used in two of the appointment processes. Korn Ferry has no
connection with Nationwide or any of the directors, other than to assist with searches for executive and non-executive talent.
Muir Mathieso
n – Group Chief Financial Officer
On 21 March 2024 it was announced that, subject to the successful completion of the Virgin Money acquisition,
Chris Rhodes, then Nationwide’s Chief Financial Officer, would be appointed as Virgin Money’s Chief Executive
Officer. Following an external benchmarking exercise undertaken by Korn Ferry, the Committee endorsed Muir
Mathieson’s appointment as Group Chief Financial Officer and executive director. Muir Mathieson had
previously held senior leadership roles at Nationwide, including Deputy Chief Financial Officer, Treasurer, and
Director of Financial Planning and Stress Testing. He was assessed as the most appropriate candidate for the
appointment given his significant relevant experience, combined with his unique knowledge and insight into
the mutual sector and Nationwide. Following due and careful consideration of the requirements of the Group,
the appointment was recommended by the Committee to the Board at its March 2024 meeting, ahead of the
announcement on 21 March 2024. Muir Mathieson assumed the role on 6 September 2024.
“Muir brings significant knowledge and experience to the
role of Group Chief Financial Officer. His previous role with
the Society as Deputy Chief Financial Officer and
Treasurer, together with the senior management positions
he has held, demonstrate his deep understanding of the
mutual sector. The Board was pleased to appoint him as
the Group Chief Financial Officer of the Society.”
Kevin Parry
Chairman
Anand Aithal – non-executive director
Following a review of the composition of the Board and its committees, and the planned acquisition of Virgin Money, the Committee identified the need for an independent non-
executive director with sufficient financial and risk experience to join both the Audit and Risk Committees. The Committee, supported by Korn Ferry, prepared a candidate specification
setting out the knowledge, skills, experience and attributes required. From this, a longlist of potential candidates was drawn up and considered by the Chairman, from which a shortlist
of three was compiled. Following interviews conducted by the Chairman, Group Society Secretary, Senior Independent Director and Audit Committee Chair, one preferred candidate
emerged for the role. Following due and careful consideration of the needs of the Board, Anand Aithal was selected, having demonstrated the financial acumen required for a proper
understanding of the Society’s activities and associated risks, and holding the relevant knowledge to become a member of the Audit and Risk Committees upon appointment. He was
appointed to the Board as an independent non-executive director with effect from 1 October 2024.
David Ben
nett – non-executive director
Leading up to Nationwide’s acquisition of Virgin Money, the Committee discussed the future governance requirements of the Group and proposed that David Bennett, Virgin Money’s
Chairman, be appointed to Nationwide’s Board in a cross-directorship arrangement. Such cross-directorships are common amongst UK banking peers with regulated subsidiaries and
provide a direct line of sight between the two boards, support effective governance between them and provide additional expertise on aspects of the Virgin Money sub-group. David
Bennett ’s time commitments were taken into consideration prior to his appointment. Following due and careful consideration and being satisfied that he had the right skills and
capability, David Bennett was appointed to the Board as an independent non-executive director with effect from 13 November 2024. His term of appointment is expected to align with
his tenure as Chairman of the Virgin Money Board.
Board composition and effectiveness
As part of its remit, the Committee assists the Chairman in the review of the composition of the Board and its committees. The purpose of this review is to identify the current and likely
future needs of the Board and to lead the appointment process for nominations to the Board. The Board should comprise the right mix of knowledge and skills for it to be effective in
delivering its responsibilities to provide oversight and governance, and to safeguard the interests of Nationwide’s members, customers and other stakeholders. In determining the
Board’s needs, the Committee considers a range of factors, including the diversity of the Board; strategic aims; current and future challenges and opportunities; and the need to
balance continuity and corporate knowledge with progressive changes to the Board and its committees. The recruitment process for directors is designed to meet these objectives. It
also involves detailed referencing and other checks to establish the candidate’s credentials, including suitability, fitness and propriety. Regulatory approval is required for certain
Board roles which are subject to the Senior Managers and Certification Regime (SM&CR).
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What the Committee did in the year (continued)
Board performance review
In accordance with the Code and the FRC Guidance on Board Effectiveness, the Chairman leads an annual Board performance review, with an externally facilitated review undertaken
every three years; the 2024 review was conducted externally by Better Boards. The Committee set the scope and brief for the review and worked with Secretariat to oversee the work
undertaken. The review looked at the overall performance of the Board and its committees and provided an objective assessment of the strengths, capabilities, effectiveness, and
dynamics of the Board to ensure it could meet the Group’s requirements going forward. More information on the performance review can be found on pages 74 to 75
.
Inclusion and diversity (I&D)
The Board is committed to reflecting the communities that the Group serves. It aims to achieve this by embracing inclusion and diverse characteristics, including socio-economic, educational
and professional backgrounds, within the Board’s membership. Additionally, the Committee oversees the development and implementation of the I&D strategy and objectives. Nationwide
launched its new I&D strategy in March 2025 which emphasises the importance of leaders modelling and advocating for true inclusion across the Group.
Selecting the best candidate for Board appointments is paramount. All appointments are based on merit and objective criteria, with due regard for the benefits of diversity on the Board. This
approach benefits the effectiveness of the Board by creating diversity of thought and breadth of perspective among our directors. The Board’s Diversity Statement is set out in the Board
Composition and Succession Policy, which can be found at nationwide.co.uk.
.
The Committee received updates on the pipeline of talent and progress made in achieving Nationwide’s I&D ambitions to ensure continued robust, enduring and diverse leadership. More
information on the I&D strategy, measures and progress made can be found on page 34 and in Nationwide’s Environmental, Social and Governance Disclosures 2024 document at
nationwide.co.uk. Diversity data relating to the Board and executive management can be found on page 72.
Corporate governance
As part of its remit, the Committee is responsible for the oversight of the Group’s governance arrangements on behalf of the Board. The Committee spent time during the year
ensuring that the governance arrangements of the Group were sufficiently robust, including the introduction and approval of a new Group Governance Framework. The Committee
reviewed the corporate governance disclosures in Nationwide’s Annual Report and Accounts for 2023/2024 and 2024/2025.
Individual accountability regimes
The Senior Managers and Certification Regime (SM&CR) was introduced by Nationwide’s regulators to encourage senior managers working within the financial services industry to
take greater accountability for their actions. In addition, it enables regulators to take action against individuals in cases where significant wrongdoing has been identified. The
Committee approves the appointment of senior management and ensures that SM&CR responsibilities are allocated appropriately through Nationwide’s well established mapping
process.
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Key activities of the Committee
Scrutinised and monitored the integrity of
the Group’s interim and full-year external
reporting.
Reviewed the going concern basis of
preparation of the financial statements and
the statement of business viability for
recommendation to the Board for approval.
Oversaw both the work of the Nationwide
sub-group’s Internal Audit function and the
relationship with the Group’s external
auditor, EY.
Monitored the overall effectiveness of
Nationwide’s internal control environment.
Audit Committee report
As Chair of the Audit Committee, I am pleased to report on the work of the Committee and its key areas of focus
during the financial year ended 31 March 2025.
The Committee has continued to play a key role in challenging and monitoring, on behalf of the Board, the integrity of
the Group’s external reporting and overseeing the supporting internal controls. The Committee scrutinised the
Group’s interim and full-year results, including a thorough review of the significant financial reporting judgements
and the accounting policies adopted. In addition, the Committee reviewed and provided challenge to Nationwide’s
climate-related disclosures and ensured that appropriate challenge was applied in respect of its science-based
emissions targets.
An important part of the Committee’s role is to oversee and review Nationwide’s internal financial controls and
internal control systems, ensuring that they operate effectively. Such controls are designed to mitigate risks and
keep our customers’ money safe. This includes overseeing steps being taken by management to ensure compliance
with new requirements relating to internal controls under the UK Corporate Governance Code 2024, with which the
Group will be expected to comply from the 2026/27 financial year.
The Committee has an oversight role in respect of the Nationwide sub-group’s Internal Audit function, including
monitoring and assessing its effectiveness, performance, resourcing and independence.
The Committee undertook additional work this year specific to the acquisition of Virgin Money to provide the Board
with assurance that the fair values attributed to the acquired assets and liabilities of Virgin Money, including
identifiable intangible assets, were appropriate, and that the gain on acquisition was appropriately reported.
During the year, the Committee has overseen the work undertaken by the Group’s external auditors, Ernst & Young
(EY). This included undertaking a review of EY’s effectiveness, independence and objectivity, which took into
consideration all applicable UK professional and regulatory requirements. In line with regulatory requirements to
preserve audit independence, Manprit Dosanjh assumed responsibility as senior statutory auditor for the Group for
the financial year ended 31 March 2025.
As Chair of the Audit Committee, I support the re-election of EY by members at our 2025 AGM and direct
members to further information on the work of EY that can be found on pages 205 to 217.
Phil Rivett
Chair – Audit Committee
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How the Committee works
Committee purpose and membership
The Committee provides oversight and advice to the Board on the matters listed in its terms of reference, available at nationwide.co.uk. Membership comprises at least three
independent non-executive directors who possess a diverse range of experience in business, finance, auditing, risk and controls and in the financial services sector. The attendance record
of Committee members is set out on page 65. Regular attendees at Committee meetings included the Chairman, Group Chief Executive Officer, Chief Internal Auditor, Group Chief
Financial Officer, Group Chief Risk Officer and representatives of EY. Subject matter experts were invited to meetings to present as required. The Chair of the Committee reported to the
Board on the matters considered at each meeting.
During the year, the Committee met privately with the Group Chief Financial Officer, Chief Internal Auditor, the Group Chief Risk Officer and the external auditor, EY, without
management present. The Chair of the Committee met regularly with the Group Chief Financial Officer, the Chief Internal Auditor, the Whistleblowing Officer and EY, and attended
meetings with the PRA.
Committee meetings
The Committee held six scheduled meetings during the year and two ad hoc meetings. Additionally, it held two joint meetings with the Board Risk Committee to consider matters of
common interest and to provide input to the Remuneration Committee to assist that committee in its assessment of possible risk impacts on variable remuneration. Updates on the steps
being taken to support a more coordinated approach to working between Nationwide’s second and third lines of defence were provided at these joint meetings.
Virgin Money oversight
Since the acquisition of Virgin Money, the Committee has received and considered written reports provided by the Chair of the Virgin Money Board Audit Committee from each of its
meetings. When requested, the Virgin Money Audit Committee Chair attends meetings of the Committee to provide a verbal update and answer questions from the Committee members.
All decisions taken and matters discussed by the Virgin Money Board Audit Committee are reported to the Committee so that it may discharge its oversight responsibilities. The Chair of
the Committee has met regularly with the Virgin Money Board Audit Committee Chair; discussions included accounting judgements relating to the purchase price allocation on
acquisition and credit impairment provisioning, as well as effective interest rate accounting and climate change reporting considerations.
Committee performance, skills and expertise
The performance of the Committee is reviewed annually, along with the Committee’s terms of reference and its activities over the previous year. The purpose is to confirm that the terms
of reference align with the Committee’s remit and activity, and continue to reflect all applicable governance codes, guidelines, legislation and best practice. The 2024 Board performance
review indicated that Committee members were satisfied with the performance and effectiveness of the Committee. The review is described further on pages 74 to 75. A review of the
qualifications and experience of each member of the Committee is also undertaken on a periodic basis as part of the Board and committee succession planning process, and the Board is
satisfied that the Committee possesses recent and relevant financial experience and accounting competence, and that it is competent in the sector in which the Group operates.
What the Committee did in the year
Financial reporting and non-financial reporting
A key role of the Committee is to monitor the integrity of the Group’s financial statements and to review the significant financial reporting judgements and any formal announcements
relating to its financial performance. The Committee was satisfied that the interim results, annual report and accounts and preliminary results announcements were fair, balanced and
understandable, reflected the Group’s position and performance, business model and strategy, and recommended their approval to the Board.
The Committee was satisfied that there were appropriate internal controls in place over the financial reporting systems to provide assurance over the preparation of these documents
and that financial information submitted for inclusion in the financial statements was attested by individuals with appropriate knowledge and experience. Key internal controls are tested
regularly, and the results reported to the Committee. The Committee noted that there were no new accounting standards, or amendments to standards, effective for the reporting period
which had a significant impact for the Group.
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The Comm
ittee reviewed the Report on Climate-related Financial Disclosures prior to its publication on nationwide.co.uk, as well as the summary of those disclosures presented in the
Annual Report and Accounts.
Significant financial reporting matters and accounting judgements considered by the Committee during the year
The preparation of financial statements necessitates estimates and judgements to be made in relation to outcomes that are typic
ally dependent on future events. Due to the inherently
uncertain nature of such estimates and judgements, actual result
s may differ from those assumed. The Committee engaged in active debate and challenged the significant financial
reporting matters and main areas
of judgement included in the interim and year end financial reports, as set out in the table below. Additionally, the Committee reviewed the Group’s
accounting policies and processes and
confirmed they were appropriate to be used in the financial statements.
The Virgin Money Board Audit Committee also reviewed key judgement areas for the Virgin
Money sub-group which were relevant to the Group’s financial statements, including the
alignment of accounting policies, impairment provisions for loan
portfolios and related disclosures, deferred tax asset recognition, provisions for liabilities and charges and pension
scheme accounting.
Area of focus Committee response
Purchase Price Allocation
process
Information is included in
note 38 to the financial
statements
Given the expected materiality of the Virgin Money acquisition during the year, and in consideration of the judgements required to conclude on the associated
acquisition accounting, the Committee received updates during the year on the Purchase Price Allocation (PPA) process, including the fair value assessment of the
Virgin Money acquired balances and associated gain on acquisition. Updates on the progress of the fair value modelling work and outputs from pre-completion dry-run
exercises were provided to the Committee for review, as well as details of key assumptions and their sensitivities across the suite of models used.
The Committee reviewed and discussed with management the valuation approach being applied in the fair value assessment, along with the key judgements and
estimates for the areas of subjectivity within each of the models. One area of particular focus for the Committee was the sensitivity of the PPA results to key
judgements, including the assumptions used to derive appropriate discount rates such as the cost of funding. Following review, the Committee was satisfied that
appropriate judgement was being applied, by reference to market data where available.
The Committee also challenged management on the adequacy of the credit loss assumptions within the fair value assessment across the various Virgin Money loan
portfolios, ensuring sufficient analysis on each portfolio. Following discussion and review, the Committee was satisfied that the credit risks were appropriately
reflected within the fair values.
Given the level of subjectivity involved, the Committee also focused on the valuation of the intangible assets arising as a result of the transaction, namely the core
deposit and purchased credit card relationship intangible assets. In particular, the Committee reviewed sensitivity analysis and challenged management on the key
valuation assumptions, including the behavioural life assumption used in calculating the value of the core deposit intangible.
The Committee concluded that the PPA process, including the fair value assessment of Virgin Money’s acquired assets and liabilities and the associated gain on
acquisition, was appropriately undertaken, with sufficient levels of review, oversight and challenge applied.
Virgin Money alignment of
accounting policies
During the year, the Committee received updates on various areas of accounting policy alignment to address differences in historical approaches between Virgin
Money and Nationwide, which required alignment for the purposes of consolidated reporting of the combined Group following the acquisition. These included material
areas of accounting policy difference relating to IFRS 9 expected credit losses, effective interest rate accounting and hedge accounting. The Committee was also
briefed on a number of presentational changes proposed to be reflected in the Group and Society’s financial statements to achieve alignment across the consolidated
Group, as detailed in note 1 to the financial statements. The Committee was satisfied with the changes made to align accounting policies for the combined Group.
Impairment provisions
for loan portfolios and
related disclosures
Information on credit risk
and assumptions relating
to expected credit losses
is included in note 10 to
the financial statements
Credit risk remained a priority for the Committee, given the significance of judgements made in calculating impairment provisions. Key judgements for the
Nationwide sub-group portfolios included the use of forward-looking economic information using multiple economic scenarios, and additional judgements made in
modelling expected credit losses (ECL). The Committee also reviewed the provisions and associated judgements relating to Virgin Money loan portfolios acquired
during the year, including the alignment with Nationwide sub-group assumptions and methodologies where relevant.
The Committee reviewed management’s selection of macroeconomic scenarios during the year to ensure that they appropriately reflected economic conditions.
Following discussion, the Committee concurred with management that the four scenarios reflected a suitably wide range of economic outcomes to capture the non-
linearity of expected losses in adverse economic conditions. The Committee also reviewed the probability weights applied to the scenarios. In particular, in response
to continuing geopolitical uncertainty and the risks associated with increasing tariffs on international trade, the probability weights allocated to the scenarios were
maintained at 10% for the upside scenario, 45% for the base case scenario, 30% for the downside scenario and 15% for the severe downside scenario.
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Area of focus Committee response
Impairment provisions
for loan portfolios and
related disclosures
(continued)
The Committee reviewed the level of provisions maintained based on expert judgement to ensure that they appropriately reflected management’s expectations of
credit losses. The most significant of these at the 2024/25 financial year end was the impact of ongoing affordability risks to borrowers as a result of economic
uncertainty, including the impact of higher mortgage interest rates. Specific areas of risk such as property valuation risk were also considered. The Committee was
satisfied that the evidence available supported the judgements made by management.
As noted above, the Committee reviewed the expectations for credit losses included in the fair value acquisition accounting for Virgin Money loan portfolios. The
Committee also asked management to explain the relationship between these expectations and the IFRS 9 impairment provisions that emerged in the period
between acquisition and the year end.
The Committee noted management’s continuing engagement with the PRA and peers to maintain high quality practices for the estimation of ECLs. This included the
implementation of SS1/23: Model risk management principles for banks and a review of management information to ensure that all models used in calculating
provisions were fit for purpose.
Deferred tax asset
recognition
Information is included in
note 11 to the financial
statements
As a result of the Virgin Money acquisition, the Group holds deferred tax assets relating to tax losses carried forward. The Committee received updates on the
judgements applied in determining an appropriate methodology to assess recoverability of such deferred tax assets, including the period over which forecast profits
would be considered.
Provisions for
liabilities and charges
Information is included in
notes 27 and 29 to the
financial statements
The Committee received updates on several matters during the year and considered whether the provisions established were appropriate. This included conduct
issues which may require customer redress, and legal and regulatory matters. To evaluate whether a provision or, alternatively, disclosure of a contingent liability is
required, judgements are needed to assess the likelihood that these matters will crystallise as a liability. Judgement may also be required to assess whether
contingent assets meet the criteria for recognition under accounting standards.
For legal and regulatory matters, consideration was given to the appropriate recognition of provisions and disclosure of related contingent liabilities, as well as the
disclosure of contingent assets relating to expected recoveries in litigation proceedings.
The Committee reviewed the associated judgements and estimates, discussing with management the criteria for recognition of any new or released provisions, as well
as the estimation of liabilities. The Committee concluded that the provisions held, and disclosures made in relation to contingent liabilities and contingent assets were
appropriate.
The Committee concurred with management’s updated presentation for the 2024/25 financial year, in which income statement amounts related to provisions for
customer redress, and legal and regulatory matters are no longer separately disclosed on the face of the income statement and are instead included within
administrative expenses.
Pension scheme accounting
Defined benefit pension scheme assets and liabilities are material to the financial statements, and a number of assumptions are made in determining the value of
pension scheme liabilities. During the year, the Committee assessed assumptions made by management in calculating the surplus relating to the Nationwide sub-
group pension scheme. In particular, the valuation of the scheme’s longevity swap was discussed, and pension asset valuations were considered in light of current
market conditions. The Committee was satisfied with the assumptions and judgements made.
Going concern and viability statement
The Committee considered whether the preparation of the financial statements on a going concern basis, and the Group’s viability statement, remained appropriate. The Committee,
together with the Board Risk Committee, undertook a forward-looking assessment of the Group’s capital position and the levels of funding and liquidity available, together with outputs of
stress testing and reverse stress testing exercises. The Committee considered risks arising from business activities, technological developments and evolving customer needs, alongside
ongoing macroeconomic factors, which may affect the Group’s future development, performance and financial position. Following due consideration, the Committee concluded that the
application of the going concern basis for the preparation of the financial statements remained appropriate and recommended the approval of the viability statement to the May 2025 Board.
The going concern statement is included in the Directors’ report on page 120 and the viability statement is included in the Strategic report on pages 44 to 45.
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What the Committee did in the year (continued)
Alternative performance measures
Whilst the financial statements have been prepared in accordance with Generally Accepted Accounting Principles (GAAP), the Committee continues to believe that certain alternative
performance measures (also known as non-GAAP measures), such as underlying profit before tax, aid a better understanding of the Group’s results. The Committee concluded that the
disclosure of, and the prominence provided to, underlying profit before tax within the Annual Report and Accounts is appropriate.
Another performance measure considered by the Committee was a metric which estimates the benefit provided to members in the form of differentiated pricing and incentives, referred
to as member financial benefit. This metric represents Nationwide’s aggregate interest rate differential, lower fees and higher member incentives compared with market averages. The
Committee was satisfied with the approach to the measurement of member financial benefit and the associated disclosure. Details of member financial benefit are shown on page 49.
Control environment
The Committee continued to monitor the overall effectiveness of the Nationwide sub-group’s internal control environment, including oversight of the continuing work undertaken by
management to strengthen and enhance its control framework. The Committee was updated regularly on the status of important work to streamline the approach to control ownership,
including biannual updates from the Chief Controls Officer. The Committee was previously responsible for oversight of IT controls, but this responsibility moved to the Board Risk
Committee in April 2024 and is now included in the Board Risk Committee Terms of Reference; the Audit Committee continued to receive reports from the Chief Controls Officer as part
of its overall responsibility to oversee the effectiveness of internal controls.
The Committee reviewed management reporting on the effectiveness of the Nationwide sub-group’s financial control framework, including the enhanced internal control requirements
under the revised 2024 UK Corporate Governance Code. The Group will be expected to comply with the enhanced requirements of the 2024 Corporate Governance Code from the 2026/27
financial year.
Prior to the completion of the Virgin Money acquisition the Committee received an opinion paper from Nationwide’s Risk and Internal Audit functions assessing management’s readiness
for the acquisition. Risk and Internal Audit conducted a real-time assessment and assurance review of the design and management of controls, leading the Committee to conclude that
risks to readiness for the acquisition were well understood and were being managed by an appropriate control framework.
Following the acquisition, the Committee received regular updates from the Virgin Money Board Audit Committee. This included updates on its financial reporting control framework, the
Control Environment Assessment from Virgin Money’s Internal Audit function and the planned audit and review activity of Virgin Money’s first, second and third lines of defence for the
forthcoming year.
Internal Audit
Internal Audit provides independent, objective assurance over the design and operating effectiveness of governance, risk management and internal controls of the Nationwide sub-group
via a risk-based audit plan approved by the Audit Committee. The Chief Internal Auditor, who reports to the Committee Chair, provides quarterly updates on the progress of the Internal
Audit function’s work, including any material concerns and themes identified. The Committee observed an overall marked improvement in management’s resolution of issues raised by
Internal Audit. The Committee reviewed the resourcing of the Internal Audit function and was satisfied that it remained appropriate.
The Committee has concluded that it is satisfied with the independence, impact, and effectiveness of Internal Audit, following regular reporting, update meetings with the Chief Internal
Auditor, senior stakeholder feedback and the outcome of an independent external quality review completed by PwC.
The written u
pdates to the Committee from the Virgin Money Board Audit Committee included progress on the delivery of the Virgin Money Internal Audit plan.
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What the Committee did in the year (continued)
External Audit (EY’s report can be found on pages 205 to 217)
A key responsibility of the Committee is to oversee the relationship with the external auditor, EY. Nationwide’s policy for auditor rotation and audit tender follows regulatory, statutory
and FRC requirements. Accordingly, the audit firm will be required to be rotated after no more than 20 years, with an audit tender to be held after no more than 10 years. EY were
appointed at the 2019 AGM. In line with senior statutory auditor rotation which EY operates, Manprit Dosanjh assumed responsibility as senior statutory auditor for the 2024/25 financial
year. EY has confirmed that it has complied with applicable regulatory and professional requirements, and its objectivity is not impaired. The Committee is satisfied that EY remained
independent throughout the year.
The Committee is responsible for reviewing the quality and effectiveness of the external audit. The Committee received a report on the effectiveness of EY’s audit of the 2023/24
financial statements, the findings of which were based on an assessment of EY’s compliance with the requirements of both the Code and the FRC Revised Ethical Standard for Audits,
and responses to a questionnaire sent to representatives of the Board and management. The findings of the review indicated that the external auditor was performing its duties in an
independent and effective manner. The Committee also evaluated the FRC’s annual report on EY, covering their overall performance as an audit firm. The report highlighted EY’s
commitment to maintaining high audit quality, while recommending certain improvements to EY’s processes. The Committee noted the measures undertaken by EY to implement these
suggestions in order to further enhance audit quality.
The Committee approved both the audit’s materiality level and the annual audit plan before the commencement of the annual audit process and as the audit progressed. Materiality
determines the threshold at which the auditor would consider a misstatement to compromise the truth or fairness of the financial statements. For 2024/25, overall Group and Society
materiality were set at £83 million and £61 million respectively (2023/24: £69 million for the Group and £55 million for the Society).
The Board has established policies for setting, reviewing and monitoring the non-audit services that can be provided by the external auditor. The purpose of the policies, which are
reviewed annually, are to safeguard the independence and objectivity of the external auditors and comply with the ethical standards of the FRC. Under the policies, all audit-related
services and permitted non-audit service engagements are approved by the Audit Committee following a detailed assessment of the nature of the work, availability of alternative
suppliers, and implications for auditor independence.
The Committee is responsible for approving EY’s terms of engagement for the statutory audit and the audit fee. The Committee also approved any fees for non-audit services in
accordance with the Group’s policies for non-audit fees. Where the fee for a permitted non-audit service is over £150,000, approval must be granted by the Audit Committee. Where the
fee is below £150,000, approval may be granted by the Committee Chair and the Group Chief Financial Officer with ratification at the next Committee meeting. Where aggregate non-
audit fees reach 50% of the statutory audit fee in any given year, all non-audit work must receive prior approval from the Committee.
During the year, the Committee considered a number of proposals from management to use the external auditors for non-audit services, ensuring that management had considered
alternative suppliers and scrutinised any potential threats to auditor independence. The annual value of the Group’s non-audit fees is subject to a regulatory cap which is the amount
equal to 70% of the average of the audit fees paid in the preceding three financial years. During the year, the Committee reviewed the cumulative value of non-audit work quarterly to
ensure that the Group was compliant with this regulatory requirement. The fees paid to EY in total for the year ended 31 March 2025 were £20.4 million (2024: £6.9 million), of which
£1.9 million (2024: £1.2 million) were for non-audit services. Non-audit services which fall within scope of the 70% regulatory cap represented 26% (2024: 17%) of the average statutory
audit fee for the previous three years. Audit fees in the current year include fees for the Virgin Money sub-group, as well as fees for additional audit work undertaken in relation to the
acquisition and consolidated accounting for the combined Group. The value of audit and non-audit fees in respect of the financial year are disclosed in note 8
to the financial statements.
During the year, approval was granted for the external auditors to undertake engagements which related to: the provision of limited assurance of Nationwide’s scope 1, 2 and 3 CO2
emissions; audit-related services required by law or regulations; and other assurance services for treasury funding activity. Having reviewed both the quantum of the non-audit fees and
the nature of the work undertaken by the external auditor, the Committee is satisfied that the non-audit work does not detract from EY’s audit independence.
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What the Committee did in the year (continued)
Other items considered by the Committee during the year included:
Model Risk Oversight: The Board Risk Committee retains responsibility for model risk oversight; however, at the request of that committee, the Audit Committee oversaw the
steps taken by management in readiness for the implementation of new regulatory requirements relating to model risk management under the PRA’s SS1/23: Model Risk
Management Principles for UK Banks. The Committee continues to receive regular updates on the progress made against compliance with these requirements, which came into
effect on 17 May 2024.
Capital and distributions: The Committee is responsible for advising the Board on the affordability of making payments of distributions and interest to holders of Nationwide’s
core capital deferred shares (CCDS) and AT1 securities, as well as Fairer Share payments to eligible members. The Committee recommended to the Board that the payments
proposed by management be approved.
Tax: The Committee receives an annual update on tax matters from the Director of Financial Reporting and Tax; this includes the management of Nationwide’s tax affairs, the
management of tax risk in business activities, and a review of tax-related judgements in the financial statements.
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Board Risk Committee report
I am pleased to present this report on the work of the Committee during the financial year ended 31 March 2025.
During the year, we have continued to monitor the current and emergent risks facing the Group. Risk principles for
the Nationwide and Virgin Money sub-groups are managed through their separate Enterprise Risk Management
Frameworks. We monitor proactively and manage and mitigate risk through the use of the Enterprise Risk
Management Framework, thereby ensuring that our customers continue to receive the level of service and financial
stability they expect from us.
The acquisition of Virgin Money has been an important event during Nationwide’s year, and the Committee has
welcomed reports from Virgin Money’s Board Risk Committee. We have established the Group Risk Committee to
provide executive oversight in relation to Group-related risk matters and its role is outlined on page 125.
The Committee continues to oversee the embedding of the FCA’s Consumer Duty, tracking and challenging
management activity against Consumer Duty requirements and customer outcomes. The Committee regularly
reviews the conduct dashboard providing data on customer outcomes, controls, and progress on key improvements.
In February 2025, the FCA removed its expectations for firms to have a Consumer Duty Champion, affording boards
greater flexibility on their ongoing governance arrangements. At its March 2025 meeting, the Board, assured by the
annual Consumer Duty report, agreed that retail customer outcomes were central to Nationwide’s risk control
arrangements and was content to withdraw the Consumer Duty Champion role with immediate effect. Despite
stepping down from the Consumer Duty Champion role in March 2025, I emphasise that this does not change the
level of importance that myself, the Board Risk Committee and the Board place on ensuring that Nationwide
discharges this duty to consumers.
The Committee ensured that sufficient meeting time was given to enable consistent review and monitoring of
material non-financial risks. The Committee is responsible for IT, operational resilience, and related technology risks,
including cyber and security, and it has dedicated time at each meeting to these critical areas.
The Committee continued its ongoing review of the Group’s financial stress testing, modelling and its recovery
and resolution frameworks. We continue to work closely with the Audit Committee on subjects of common
interest, including our joint oversight of the work undertaken by the Risk and Internal Audit functions and the
discussion of matters relating to remuneration.
The Committee receives regular reports on economic crime and fraud-related risks, which were previously
overseen by the Audit Committee, and the annual report from the Money Laundering Reporting Officer. The
Committee also took over responsibility for the oversight of IT controls from the Audit Committee and received
regular updates from the Group Chief Operating Officer on this topic.
The ever-changing macroeconomic environment and its impact on the Group will continue to determine the
Committee’s focus for the year ahead.
Alan Keir Chair – Board Risk Committee
Key activities of the Committee:
Challenged management to ensure that the
FCA’s Consumer Duty continues to embed
across the business.
Considered the current and emergent risks
facing the Group, including non-financial
risks.
Reviewed the Group’s financial stress
testing, modelling, and its recovery and
resolution frameworks.
Reviewed management’s plans for
operational resilience risk metrics to cover
all business service lines.
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How the Committee works
Committee purpose and membership
The Committee oversees and provides advice on risk-related matters, which includes the oversight and challenge of day-to-day IT and resilience risk, and the control and oversight
arrangements for the Nationwide sub-group. More details on the duties and responsibilities of the Committee can be found within its terms of reference, available at nationwide.co.uk.
Membership comprises at least three independent non-executive directors. The Committee oversees the Executive Risk Committee, which is the management committee responsible for
ensuring a coordinated risk management approach across the Nationwide sub-group. To provide executive oversight in relation to Group-related risk matters, the Group Chief Executive
Officer has established the Group Risk Committee. Where a Group-related risk matter is required to be presented to the Board Risk Committee, it will be first considered by the Group Risk
Committee.
Committee meetings
The Committee held six scheduled meetings during the year and one additional ad hoc meeting. The attendance record of Committee members is set out on page 65. In addition to Committee
members, regular attendees of Committee meetings included the Chairman, Group Chief Executive Officer, Group Chief Financial Officer, Group Chief Risk Officer,
Chief Internal Auditor, and a
representative of the external auditors, EY. Subject matter experts were invited to meetings to present as required. At each meeting, the Group Chief Risk Officer shares the current and
emerging risk profile for the Group and the Nationwide sub-group. Following each meeting, updates are provided to the Board by the Chair of the Committee, which are supplemented by
regular reports to the Board from the Group Chief Risk Officer.
The Committee held an ad hoc meeting in November 2024, at which management provided a detailed overview of the Group’s approach
to financial planning and stress testing and the Internal
Capital Adequacy Assessment Process (ICAAP). The Committee additionally held two joint meetings with the Audit Committee to consider matters of common interest, including providing
input to the Remuneration Committee to assist that committee in its consideration of any potential risk adjustments to senior executive variable remuneration. Updates on the steps being
taken to support a more coordinated approach to working between the second and third lines of defence were also provided at these joint meetings.
The Committee also met privately throughout the course of the year with the Group Chief Risk Officer, without management present.
Virgin Money oversight
Since the acquisition of Virgin Money, the Committee has received and considered written reports provided by the Chair of Virgin Money’s Risk Committee from each of its meetings. When
requested, the Virgin Money Risk Committee Chair attends meetings of the Committee to provide a verbal update and answer questions from the Committee members. All Virgin Money Risk
Committee decisions taken and matters discussed are reported to the Committee so that it may discharge its oversight responsibilities. A report from Virgin Money’s Chief Risk Officer was
submitted to the Committee’s March 2025 meeting, updating on risk appetite metrics and on key risk areas for the Virgin Money sub-group.
Committee performance, skills and expertise
The performance of the Committee is reviewed annually, along with the Committee’s terms of reference and its activities over the previous year. The purpose of this review is to confirm that
the terms of reference align with the Committee’s remit and purpose, and continue to reflect all applicable governance codes, guidelines, legislation and best practice. The 2024 Board
performance review indicated that Committee members were satisfied with the performance and effectiveness of the Committee. The review is described in detail on pages 74 to 75.
What the Committee did in the year
The principal purpose of the Committee is to provide oversight on behalf of, and advice to, the Board in relation to risk-related matters. This role is fulfilled through the provision of advice,
oversight and challenge to enable management to promote, embed and maintain a strong awareness of risk throughout the Group. More detail on the Group’s approach to the management
of risk can be found in the Risk Report on pages 123 to 126
.
A key responsibility of the Committee is monitoring the Group’s current and emerging risk exposures. In addition, the Committee considered issues which may present risks to the Group’s
strategy, as well as horizon scanning activity for any issues which may crystallise into future risk events.
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What the Committee did in the year (continued)
The Board considers the appropriateness of the Group’s strategic plan in the context of its risk appetite. At the beginning of the year, the Committee recommended the Board Risk
Appetite statements and supporting metrics to the Board and monitored performance against them, including undertaking appropriate reviews of material risks. At the start of the 2025/26
financial year, the Committee recommended the Group’s and the Nationwide sub-group’s risk appetite statements and supporting metrics to the Board.
An outline of the key topics considered by the Committee during the year is broken down by risk category and set out below. Across all principal risks, the Committee continued to oversee and
monitor the effectiveness of Nationwide’s internal controls designed to manage and mitigate risk and challenged management on its work to further enhance the control environment. The
Committee received regular updates from the Virgin Money Risk Committee, including on the risk profile and risk performance of the Virgin Money sub-group. The March 2025 Board Risk
Committee also received a report from Virgin Money’s Chief Risk Officer.
Non-financial risk
The Group seeks to minimise customer disruption, financial loss and reputational damage by providing sustainable services and r
esilient systems. During the year, the Committee reviewed and
challenged key areas of non-financial risk, as set out below.
Consumer Duty
The Committee received regular reports on the implementation of the FCA’s Consumer Duty and its ongoing embedding across the business. The Committee received and recommended to
the Board the first Annual Consumer Duty Board Report for the Nationwide sub-group. The Committee continued to champion Nationwide’s approach to customer service, ensuring that
customers are treated fairly throughout the lifecycle of our products, by offering products and services that meet their needs and expectations, perform as represented and provide value for
money. The Committee will continue to receive and monitor reports on customer outcomes.
Economic crime and fraud-related risks
Keeping our customers’ money safe is a priority and therefore the prevention of economic crime remains an area of focus. During the year, the Committee has continued to monitor economic
crime and fraud-related risks. Economic crime is a broad term that includes bribery and corruption, money laundering, fraud (including fraud scams), theft from customers’ accounts, card-
related thefts and Authorised Push Payment scams. The Committee considered cyber and fraud-related risks, both external and internal, and received fraud updates, as well as periodic
updates on work being undertaken by management to enhance the economic crime operations in the Nationwide sub-group. The Committee received and considered the annual report from
the Money Laundering Reporting Officer.
Third parties and outsourcing
The Committee has continued to monitor risk exposure arising from the third-party supply chain of the Nationwide sub- group and received updates on the management of this risk.
IT, cyber and security risk
The Committee received regular reports from the Group Chief Operating Officer and Chief Security and Resilience Officer in relation to progress made against the March 2025 regulatory
deadline to maintain Impact Tolerances for all Important Business Service Lines. The Committee received reports in relation to broader operational resilience matters and how the Group
would respond to a large-scale operational resilience incident to ensure continuity of service for our customers.
The Committee also oversaw management’s activities to maintain and develop the Group’s cyber-control capabilities and the assessments of maturity against industry standards such as the
NIST Cybersecurity Framework
1
.
The Committee received the annual Data Protection Officer’s report, detailing the adequacy of data protection policies, procedures and governance arrangements to mitigate data protection
risks and comply with data protection legislation, including the General Data Protection Regulation.
1
Cybersecurity Framework | NIST
Board Risk Committee report (continued)
1
Cybersecurity Framework | NST
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What the Committee did in the year (continued)
Prudential risk (includes credit, model, liquidity and funding, market, capital and pension risks)
We lend in a responsible, affordable and sustainable way to ensure we safeguard customers’ interests and maintain financial strength through the credit cycle. The Committee reviewed
and challenged the plans to ensure that the Group maintains sufficient capital and liquidity resources to support current business activity and to remain resilient to significant stress.
During the year, the Committee reviewed a number of
aspects of prudential risk as required by the Bank of England and the PRA. This included scrutiny of the Nationwide sub-group’s
Resolution Framework, the Group Resolution Framework, the Group and Nationwide sub-group’s capital and liquidity adequacy (as reported in the Internal Capital Adequacy Assessment
Process (ICAAP) and Internal Liquidity Adequacy Assessment Process (ILAAP), respectively), the Group and Nationwide sub-group Recovery Plans, the 2024 Climate Stress Test and the
2024 Reverse Stress Test results.
The Committee approved the Nationwide sub-group 2024 ICAAP assessment in January 2025 and the Virgin Money Board approved it’s 2024 ICAAP assessment in March 2025, both of
which were submitted separately to the PRA by March 2025, and the Group’s 2024 ICAAP assessment was approved by the Committee and submitted to the PRA in April 2025.
The Committee approved the Nationwide sub-group ILAAP in January 2025, with the Committee agreeing that the Nationwide sub-group continued to maintain sufficient liquidity.
Subsequently, the Group’s 2024 ILAAP assessment, including Virgin Money data reviewed by the Virgin Money Risk Committee, was approved by the Committee and submitted to the
PRA in March 2025.
The Committee monitored the impact of the current macroeconomic and political environment, including the impact on both owner-occupiers and renters of previous inflation rises, the
current geopolitical environment, house prices and higher interest rates. The Committee also considered the credit risk portfolio, which included a deep dive into high loan-to-income lending,
noting the strategic importance of supporting lending to first-time buyers and ensuring that a robust suite of credit controls was in place, as well as the strong loss cover provided by the
pricing of Nationwide’s Helping Hand proposition.
Whilst the Committee retains overall responsibility for model risk oversight, during the year the Audit Committee oversaw the steps taken by management in readiness for new regulatory
requirements relating to model risk management, which came into effect on 17 May 2024.
Enterprise risk management
The Committee has challenged Nationwide’s business model to ensure that it is sustainable and remains within the constraints of the Building Societies Act 1986. Below are examples of how
this was done:
The Committee considered and endorsed the Group’s and Nationwide sub-group’s Board Risk Appetite statements and supporting triggers and limits, which establish the amount and
type of risk that the Board is comfortable taking. This is to ensure that the Group remains sustainable in the long term for the benefit of its members, customers and other stakeholders.
The Committee regularly reviewed Nationwide’s risk performance against the applicable Board Risk Appetite to ensure that any appropriate action was being taken.
It received the annual review of the Nationwide sub-group’s Enterprise Risk Management Framework. This is the system of risk management and internal controls which the Nationwide
sub-group operates within. The review concluded that the system of risk management and internal controls were adequate when assessed against Board Risk Appetite.
The Committee encourages a culture that considers both risk and reward in decision-making. The Committee reviewed the culture of Nationwide through a risk lens in the context of
progress made against Nationwide’s strategy.
The Committee discussed the longer-term risks that could impact Nationwide’s strategy.
The Committee considered the potential propositional, operational and margin implications of interest rate and inflation rate changes on the Nationwide sub-group.
During the year, the Committee received regular updates from second line oversight functions. The Committee is confident that the division of duties between the first, second and third lines of
defence is sufficiently robust to ensure that operational decisions receive timely and appropriate challenge.
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Report of the directors on remuneration
Report of the directors on
remuneration
For the year ended 31 March 2025
I am pleased to share the Remuneration Committee’s report for the year ended 31 March 2025. This report includes details of directors’
pay for the year, together with our new directors’ remuneration policy and how the Group intends to implement the policy for 2025/26.
Our directors’ remuneration report for the year ended 4 April 2024, as well as our directors’ remuneration policy, received strong support
at the 2024 Annual General Meeting (AGM) (with both receiving 95% of votes ‘FOR’), and I would like to thank our members for their
ongoing support.
Remuneration arrangements across the Group
Following the acquisition of Virgin Money in October 2024, I would like to welcome our new colleagues into the Group. We now have over
25,000 colleagues driven by our shared purpose. We continue to build a supportive and inclusive environment for all colleagues and since
the acquisition I have been pleased to observe positive colleague engagement scores across the Group. We will remain focused on our
approach to talent identification and development, supporting all colleagues to reach their potential. This will continue to be supported
through our internship, scholarship and leadership development programmes.
In order to provide a level of consistency and stability for colleagues following the acquisition, there were no immediate changes to the
broad approach to remuneration for any employees within the Group. This applied equally to the executive directors, whose
remuneration arrangements remained as intended at the start of the year.
A pay package agreed with the Nationwide Group Staff Union (NGSU) for 2025/26 covers Nationwide sub-group employees, excluding
the most senior population. Eligible colleagues will receive a salary increase of the greater of 3.6% of current salary or £1,000 (pro-rated
for part time roles), effective from 1 July 2025, and the minimum salary will increase to £24,750. Separately, a pay package for Virgin
Money colleagues was agreed in November 2024, under which 98.8% of colleagues in the Virgin Money sub-group received an average
pay increase of 3.5% effective 1 January 2025.
Performance and pay outcomes for 2024/25
Annual P
erformance Pay (APP)
Nationwide sub-group employees continued to participate in the Annual Performance Pay (APP) plan during 2024/25. APP outcomes
for 2024/25 were determined by reference to consistent performance measures and two individual performance ratings, reflecting
both delivery and behaviours. Gateway measures of profit before tax, leverage ratio and conduct risk were passed in 2024/25 and, as a
result of strong performance in the year, the Committee approved an above target outcome against the APP scorecard.
The 2024/25 APP awards for the executive directors were also assessed against the Executive Scorecard, which captures a wide range of financial and non-financial key performance indicators
(KPIs). Taking this and their individual performance into account, the Committee agreed APP outcomes of 94.9% for the Group Chief Executive Officer and 86.9% for the Group Chief Financial
Officer. Details of the measures, individual performance assessments and the overall APP awards delivered to our executive directors are set out in this report.
Long-Term P
erformance Pay (LTPP)
The Committee approved the LTPP awards to be granted to the executive directors in 2025, based on a pre-grant assessment of performance delivered in 2024/25. Further details on the
LTPP awards are set out later in this report.
Key activities of the Committee:
Continued to oversee the remuneration and
performance framework for all colleagues within
the Group.
Reviewed the directors’ remuneration policy to
ensure it remains appropriate.
How the Committee spent its time in the year
21%
27%
24%
10%
16%
2%
Pay strategy and approach
Performance award outcomes
Oversight of remuneration
across the Group
Regulatory reporting
Procedural matters
Governance
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Director changes
As previously announced, Chris Rhodes stepped down from the Board and role of Chief Financial Officer on 6 September 2024 ahead of his appointment as Virgin Money Chief Executive
Officer. We are pleased to welcome Muir Mathieson as our new Group Chief Financial Officer,
appointed to the Board on 6 September 2024. In recognition of his significant financial
services experience across finance and treasury functions, his base salary was set at £675,000 on appointment. The Committee intends to keep Muir’s remuneration under review as he
gains experience in the role. Further details of their remuneration arrangements are set out in this report.
Our directors’ remuneration policy
During the year, the Committee reviewed the directors’ remuneration policy in the context of the significantly increased size and scope of the Group. The acquisition of Virgin Money has
grown and diversified our business, with established business banking services broadening the Group’s product range. We are now the UK’s second largest provider of mortgages and
retail deposits. Our increased scale brings additional operational complexity and demands of executive roles. We must continue to ensure that our remuneration arrangements are
appropriately positioned to recruit, motivate and retain executives of the calibre required to manage the enlarged Group, and to deliver an ambitious integration plan while maintaining
leading customer service.
The Committee observed the recent notable shift in market practice
around executive pay. A number of our UK banking peers have significantly increased variable pay opportunities
within their directors’ remuneration policies, and we expect this trend to continue. This has materially increased the gap between Nationwide and the firms with which we compete for
senior talent. Further details on our current market positioning are set out later in this report.
Therefore, the Committee carefully considered whether the current policy, as approved by members at the 2024 AGM, was sufficiently flexible to support our ambitions. Reflecting on the
above, the Committee has updated the policy to increase the maximum APP opportunity that may be awarded from 100% to 150% of salary. The Committee believes that an increase to
the performance-based pay opportunity is appropriate as it will enhance the alignment between reward and the successful delivery of the Group’s priorities. The Committee has decided
not to increase the maximum LTPP opportunity within the policy, which is currently set at 300% of salary. The Committee intends to keep LTPP grant levels under review over the course
of the three-year policy to ensure they remain appropriate.
Looking ahead to 2025/26
In the context of the base pay package agreed for the wider workforce, the
Committee approved a salary increase of 3% for the Group Chief Executive Officer, effective 1 April 2025. No
salary increase was applied for the Group Chief Financial Officer.
The Group Chief Executive Officer’s maximum APP opportunity for 2025/26 will be 150% of salary. The Group Chief Financial Officer’s maximum APP opportunity remains at 100% of
salary. Reflecting on performance during 2024/25, the Committee has determined to grant 2025 LTPP awards with a maximum opportunity of 300% of salary for the Group Chief
Executive Officer and 100% of salary for the Group Chief Financial Officer. LTPP awards are subject to performance conditions over a three-year forward-looking period.
The Committee considered
the proposals set out in the consultation paper jointly published by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) in
November 2024 on remuneration reforms. Nationwide responded to the consultation and we look forward to the final rules and updated guidance expected later this year. As ever, we
remain committed to ensuring our reward approach remains fit for purpose and aligned with both the evolving regulatory landscape and the Group’s pay philosophy. The Committee will
remain focused on overseeing the remuneration framework across the Group, ensuring it continues to align with our strategy and customers’ interests. The Group’s reward and benefits
proposition will be kept under review to ensure we can continue to attract and retain the talent needed for the future.
With a view to longer term Board succession planning, I will remain on the Board, but I have begun working with Debbie Klein, who has been a member of the Committee for over a year, to
support and develop her to succeed me as the Remuneration Committee Chair during 2025/26, subject to regulatory approval.
Member voting on remuneration
This year there will be advisory votes on both the directors’ remuneration report and the directors’ remuneration policy. Details are set out for your consideration on the following pages.
On behalf of the Remuneration Committee, I would like to thank members for their continued support and encourage you to vote in favour of both resolutions.
Tracey Graham Chair – Remuneration Committee
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How the Committee works
Committee purpose and membership
The Committee is responsible for determining, on behalf of the Board, the remuneration strategy, the broad policy for remuneration and the specific remuneration packages for the
Chairman, members of the Executive Committee, other employees who are deemed to fall within scope of the PRA / FCA Remuneration Codes, and any other Group employees specified
by the Committee from time to time. The Committee also provides oversight and advice to the Board on the appropriateness and relevance of the remuneration policy and pay practices
for the workforce across the Group. More details on the duties and responsibilities of the Committee can be found in its terms of reference at nationwide.co.uk.
All members of the Committee are non-executive directors of the Group. Regular attendees of the Committee include the Chairman, Group Chief Executive Officer, Chief People Officer,
the Director of Performance, Reward and Organisational Culture and a partner of Deloitte LLP (in their capacity as independent advisors to the Committee). In no case is any person
present when their own remuneration is discussed. The Chair of the Committee reports to the Board on the matters considered at each meeting and attends meetings with the PRA and
FCA.
Committee meetings
The Committee held six scheduled meetings during the year, and the attendance record of Committee members is set out on page 65 of the Governance report. The Committee is
supported by the Board Risk and Audit committees on risk-related matters.
Virgin Money oversight
Since the acquisition of Virgin Money, the Committee has received and considered written reports provided by the Chair of Virgin Money’s Remuneration Committee from each of its
meetings. When invited, the Virgin Money Remuneration Committee Chair attends meetings of the Committee to provide a verbal update and answer questions from the Committee
members. All decisions taken and matters discussed by the Virgin Money Remuneration Committee are reported to the Committee so that it may discharge its oversight responsibilities.
Committee performance, skills, and expertise
The performance of the Committee is reviewed annually, along with the Committee’s terms of reference and its activities over the previous year. The purpose of this review is to confirm
that the terms of reference align with the Committee’s remit and purpose, and continue to reflect all applicable governance codes, guidelines, legislation and best practice. The 2024
Board performance review indicated that Committee members are satisfied with the performance and effectiveness of the Committee and is described in detail on pages 74 to 75.
Committee advisor
The Committee agreed to retain Deloitte LLP as independent advisor to the Committee during 2024/25 after a review of its fees and quality of the service provided. The Committee
reviews annually all other services provided by Deloitte to ensure they continue to be independent and objective. Deloitte is a founding member of the Remuneration Consultants Group
and voluntarily operates under its code of conduct in relation to executive remuneration consulting in the UK. Deloitte’s advisory team has no connection with any individual director of
Nationwide. Their fees for advice provided to the Committee during 2024/25 were £138,050 (excluding VAT), typically charged on a time-and-materials basis. Deloitte also provided tax,
risk, internal audit and consulting services to the Group during 2024/25.
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What the Committee did in the year
Pay strategy and approach
In light of the acquisition of Virgin Money, the Committee has dedicated significant attention to reviewing reward arrangements across the Group.
For 2025/26, the Committee considered the APP awards across the Group and looked to align the performance measures on the APP awards where possible. For the executive directors,
the Committee determined that future APP awards will be based on the performance of the Group. The Committee also reviewed the LTPP metrics to ensure that they were aligned with
the strategy of the Group moving forwards.
The Committee approved the approach to variable pay across the Group for 2025/26, to ensure it continues to support the Group’s strategy and purpose, enabling recognition of
exceptional colleague performance and customer service.
The Committee carried out a full review of the directors’ remuneration policy and has proposed a new policy subject to an advisory vote at the 2025 AGM.
The Committee approved the pay arrangements for the appointment of M J Mathieson as Group Chief Financial Officer, and oversaw the transfer of C S Rhodes to Virgin Money. Further
details can be found on page 111.
The Committee reviewed and approved the Chairman’s fee. Further details can be found on page 117.
Performance award outcomes
The Committee approved both the outcome of the 2024/25 APP plan and the grant of 2024 LTPP awards. In April 2024 the Committee also made decisions on risk adjustment, including
for variable payments due in June 2024.
Oversight of remuneration across the Group
The Committee took account of remuneration practices across the Group in the context of making executive pay decisions. In addition to information received on Nationwide’s wider
workforce pay practices throughout the year, the Board received an annual update from the general secretary of the Nationwide Group Staff Union in November 2024 and regular
updates from the Employee Voice non-executive director, Tamara Rajah. More information on Board engagement with colleagues can be found on pages 20, 23 and 24.
Regulatory and reporting matters
The Committee reviewed and approved the report of the directors on remuneration for the year ended 4 April 2024. It also reviewed and approved all Nationwide sub-group
remuneration submissions made to the PRA and FCA over the course of the year.
Procedural matters
The Committee agreed the base pay and variable pay arrangements for all employees in scope of the PRA and FCA Remuneration Codes.
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Alignment between wider workforce and executive directors’ remuneration
Our reward framework is designed to attract, motivate and retain colleagues who are inspired to do their best for our customers every day, and to reward all colleagues fairly across the
Group. The framework for executive directors is generally aligned with the wider workforce, and where there are deviations, this is to ensure our executive directors have a significant
proportion of their remuneration linked to the Group’s longer-term priorities.
All colleagues Senior colleagues
Base salary and pension Benefits Annual Performance Pay plan Long-Term Performance Pay plan
Salaries are set to reflect the work colleagues
do and the contribution they make, informed
by external market benchmarking and the
salary of colleagues doing similar roles.
Nationwide Building Society is a principal
partner of the Living Wage Foundation.
Employees across the Group are entitled to
competitive pension arrangements. The
executive directors’ contributions are aligned
to Nationwide sub-group colleagues. Pension
arrangements across the Group will be
considered in light of the acquisition of Virgin
Money.
We are committed to providing a
comprehensive and competitive benefits
package that meets the needs of our
colleagues. While specific benefits may vary
across the Group, our philosophy is to offer a
range of core benefits, supplemented by
flexible options that can be tailored to
individual circumstances.
This approach ensures alignment between
the remuneration and benefits offered to our
executive directors and our wider workforce.
We aim to ensure our approach to variable
pay is competitive and enables us to attract
and retain high-calibre colleagues across all
areas of the Group.
While specific arrangements may vary,
reflecting the Group's structure and legacy
arrangements in place prior to the acquisition
of Virgin Money, our overarching philosophy
is to link a proportion of variable pay to
performance against both Group and
individual objectives. This fosters a culture of
shared success and rewards colleagues for
their contribution to the Group's overall
performance.
Our most senior colleagues are invited to
participate in the LTPP plan. This plan supports
the delivery of sustainable customer value, with
performance measures aligned to the
achievement of our long-term financial and
strategic priorities, including our sustainability
commitments.
LTPP awards are deferred over the long-term
and will only be paid subject to sustained
satisfactory Group and individual performance.
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Directors’ remuneration policy
This section sets out the new remuneration policy for our executive directors and non-executive directors. We will seek member approval for this policy by way of an advisory vote at the
2025 AGM. The policy is intended to apply for three years to the AGM in 2028 unless amendments to the policy are required, in which case a further advisory vote will be sought. It is
intended that no payments to directors will be made outside of this policy, unless required as a result of regulatory change.
2025 policy changes
During 2024/25 the Committee undertook a review of the directors’ remuneration policy. The Committee focused on whether the policy remains appropriate in light of the significantly
increased size, scope and complexity of the Group following the acquisition of Virgin Money and in the context of evolving market practice.
The Committee followed a robust decision-making process over a series of meetings, with input sought from the Chairman, the Committee’s independent external advisers and
management, while ensuring that conflicts of interests were appropriately mitigated. The Committee aimed to ensure strong alignment between reward and the interests of our
customers, while being appropriately positioned relative to the market. The Committee also assessed the policy against the principles of clarity, simplicity, risk management,
predictability, proportionality and alignment to culture.
As discussed in the Committee Chair’s letter, under the new policy we are proposing to increase the maximum APP opportunity for the executive directors from 100% to 150% of salary.
This will enhance the alignment of reward and the Group’s performance by increasing the proportion of variable pay, with awards only payable where strong performance for customers
has been delivered.
The policy has also been updated to align with the revised proposals set out in the consultation paper jointly published by the Prudential Regulation Authority (PRA) and the Financial
Conduct Authority (FCA) in November 2024 on remuneration reforms. Further details can be found in the policy table below.
Other than the above, and a few minor changes to simplify elements of wording or improve the operation and effectiveness of the policy over its term, it is proposed that the policy
remains as approved in 2024.
Market positioning
The chart opposite illustrates how the proposed changes to the remuneration package as
applicable to the Group Chief Executive Officer impact our relative positioning compared to UK
banking peers. Where relevant, this reflects the levels of opportunity available within firms’
directors’ remuneration policies subject to approval in 2025.
In determining the new policy, the Committee has not targeted the levels of opportunity in the
largest banks with the most complex business models. Rather, the changes aim to ensure we
remain appropriately positioned against the most relevant benchmarks for Nationwide, being
NatWest Group and Lloyds Banking Group.
While our proposed changes for 2025/26 will go some way to addressing the competitive gap, we
remain materially behind some of our UK banking peers, and the Committee recognises that
future policy changes among other firms may further increase the existing gap. The Committee
therefore intends to keep our positioning under review over the course of the three-year policy.
Data source: Deloitte LLP. The chart shows the total maximum remuneration opportunity for the
Group Chief Executive Officer role among UK banking peers, based on financial year 2024
disclosures. This comprises current base salary, fixed pay allowances, pension and maximum total
variable remuneration opportunity.
£0m
£2m
£4m
£6m
£8m
£10m
£12m
£14m
£16m
Yorkshire
Building
Society
Coventry
Building
Society
Nationwide
(current
policy
maximum)
Nationwide
(2025/26
proposed)
NatWest Lloyds Barclays HSBC
Group Chief Executive Officer - total maximum remuneration opportunity
compared to UK banking peers
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Remuneration policy for executive directors
Element Operation Opportunity Performance metrics
Fixed pay
Base salary
Supports the
recruitment and
retention of key talent.
Base salaries are market
competitive and reflect
the size and complexity
of the role
Base salaries are normally reviewed on an annual basis. Any
changes are normally effective from 1 April.
Base salaries are set taking into account market data for similar
roles in comparable organisations. Other factors considered
include the individual’s skills, experience and performance in the
role, additional responsibilities, and the approach being taken
on salaries in the wider organisation. There is no maximum base
salary.
Not applicable
Benefits
Provide a market
competitive and cost-
effective benefits
package as part of fixed
remuneration
Benefits may include a car allowance, access to drivers when
required, security when required, healthcare and insurance
benefits. Business-related expenses are also reimbursed,
including any associated tax.
The Committee retains the right to provide additional benefits
depending on individual circumstances, where considered
reasonable and appropriate, including but not limited to enable
recruitment, retention or relocation.
Benefits are reviewed regularly to ensure they remain
appropriate to role and location to assist individuals in carrying
out their duties effectively.
The value of benefits may vary depending on service providers,
cost and market conditions. There is no maximum value to the
benefits provided.
Not applicable
Pension
Provides post-retirement
benefits in a cost-
efficient manner
Executive directors may receive a cash allowance and/or
contribution to a defined contribution scheme.
Pension allowances are set as a percentage of base salary.
The maximum allowance payable is aligned with the maximum
pension benefit available to Nationwide sub-group colleagues,
which is currently 16% of base salary.
Not applicable
Variable pay
Annual Performance
Pay (APP) plan
Rewards the
achievement of
stretching Society, team
and individual targets for
a single financial year
APP awards are discretionary and determined by the Committee
following the end of the one-year performance period, reflecting
achievement against targets set.
To ensure alignment of goals, a portion of the awards for
executive directors is based on the same performance measures
as all eligible colleagues. The executive directors may also have a
portion of their awards based on the achievement of other
strategic and / or individual objectives.
Alongside awards under the Long-Term Performance Pay (LTPP)
plan, the payment and deferral of APP awards are determined at
the time of award and in compliance with regulatory
requirements. To the extent the minimum level of deferral
required is not met via the LTPP award, a proportion of the APP
award may be deferred in line with regulatory requirements. Any
non-deferred portion is normally paid upfront following the end
of the performance year.
Awards are normally paid in cash, with a portion delivered in, or
linked to the value of, the Group’s core capital deferred shares
(CCDS), or an alternative instrument that, subject to regulatory
requirements, is appropriate for use as variable remuneration.
Performance targets must be achieved to generate a ‘target’
award, and considerably exceeded to generate the maximum
award.
The normal maximum APP opportunity for the executive
directors is 150% of base salary. Maximum opportunities may
vary by role. Actual award levels will be determined by the
Committee.
Normally, 67% of the maximum opportunity is payable for target
performance and at the threshold level of performance, 33.5%
of the maximum opportunity will be paid. No portion of the
award will be paid where threshold performance is not achieved.
The award levels above may be varied in exceptional
circumstances, which may include where required for the Group
to remain competitively positioned against the market.
Performance measures and targets
are normally set on an annual basis by
the Committee.
These will normally reflect a mix of
financial and non-financial measures,
relating to strategic priorities as well
as regulatory obligations, risk
performance and individual
performance (including conduct and
behaviours).
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Element Operation Opportunity Performance metrics
CCDS-linked portions will be subject to a retention period, to the
extent required by regulations. For these purposes, the value of
CCDS may be adjusted to remove the impact of long-term
interest rates and any other items as agreed by the Committee
from time to time to ensure they remain an appropriate
instrument for the purposes of remuneration.
Participants will be entitled to the value of CCDS distributions
(or equivalent) to the extent permitted by regulations. Where
distributions (or equivalent) cannot be paid due to regulatory
requirements, the number of deferred instruments awarded may
be adjusted by reference to an expected yield over the relevant
period.
The Committee may reduce, freeze, suspend or cancel payments
under the APP plan if it believes that outcomes are not
representative of the overall performance of the Group (note i).
Long-Term Performance
Pay (LTPP) plan
Incentivises sustainable
long-term performance
and alignment with
members’ interests
Awards are made
annually and only pay out
where challenging
performance measures
are met, normally
measured over a three-
year period
LTPP awards are discretionary and normally granted subject to
the achievement of satisfactory performance over the year prior
to grant (the initial performance period).
Awards are then normally subject to a three-year forward-looking
performance period from the start of the financial year in which
the grant is made.
For each forward-looking performance measure, the Committee
will determine targets that need to be achieved to generate a
‘threshold’, ‘target’ and ‘maximum’ level of award. Performance
targets will normally be set annually for each award cycle.
The Committee will determine the extent of achievement based
on actual performance against the targets set and any other
relevant factors the Committee considers appropriate to take
account of.
Payment of the awards will not start until after the end of the
three-year performance period and is subject to the achievement
of the performance conditions. The payment of awards will be
deferred in compliance with regulatory requirements.
Awards are normally paid in cash, with a portion delivered in or
linked to the value of the Group’s CCDS, or an alternative
instrument that, subject to regulatory requirements, is
appropriate for use as variable remuneration. CCDS-linked
portions will be subject to a retention period to the extent
required by regulations. For these purposes, the value of CCDS
may be adjusted to remove the impact of long-term interest
rates and any other items as agreed by the Committee from time
to time to ensure they remain an appropriate instrument for the
purposes of remuneration.
LTPP awards may be granted up to a maximum value of 300% of
base salary. Maximum opportunities may vary by role. Actual
award levels will be determined by the Committee.
Normally, 67% of the maximum opportunity is payable for target
performance and at the threshold level of performance, 33.5%
of the maximum opportunity will be paid. No portion of the
award will be paid where threshold performance is not achieved.
Maximum awards will only be paid where there has been
outstanding performance.
The award levels above may be varied in exceptional
circumstances, which may include where required for the Group
to remain competitively positioned against the market.
The Committee takes into
consideration performance over the
initial performance period when
determining whether LTPP grants
will be made. The pre-grant
conditions will normally include an
assessment of both Nationwide and
individual performance to ensure
that the granting of awards is
sustainable according to the financial
position of Nationwide and justified
on the basis of individual
performance, conduct and
behaviours.
Forward-looking performance will be
measured against a long-term
scorecard, normally determined by
the Committee on an annual basis
and set to align with the long-term
objectives of the Group. The
measures will normally reflect a mix
of financial and non-financial
measures and be subject to the
satisfaction of risk performance and
regulatory obligations.
The specific performance measures
will be disclosed in the remuneration
report for the relevant year.
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Element Operation Opportunity Performance metrics
Participants will be entitled to the value of CCDS distributions
(or equivalent) to the extent permitted by regulations. Where
distributions (or equivalent) cannot be paid due to regulatory
requirements, the number of deferred instruments awarded may
be adjusted by reference to an expected yield over the relevant
period.
The Committee may reduce, freeze, suspend or cancel payments
under the LTPP plan if it believes that outcomes are not
representative of the overall performance of the Group (note i).
Notes:
i. Discretion, risk adjustment, malus and clawback: In determining variable pay awards, the Committee has the ability to apply independent judgement to ensure that the outcome is a fair reflection of the
performance of the Group and the individual over the relevant period. In applying this judgement, the Committee has scope to consider any such factors it deems relevant.
The Committee normally takes into account performance against a broad set of financial and non-financial performance measures and considers performance on a risk-adjusted basis, evaluating progress
against defined measures within the context of our risk appetite, including conduct risk. This is a formal process, which also includes input and feedback from the Audit and Board Risk Committees. In this
manner, the Committee has discretion to reduce an executive director’s variable pay in relation to risk-related matters.
The Committee also retains the discretion to adjust awards made under the APP and the LTPP in line with the discretions within the relevant plan rules, including but not limited to adjusting performance
conditions attached to awards for significant items, changes in working patterns, treatment on cessation of employment and treatment in the event of a change of control.
In certain circumstances, the Committee has the discretion to operate malus and clawback provisions under the APP and LTPP plans. Such circumstances may include, but are not limited to: participation in,
or responsibility for, conduct that results in significant losses; failure to meet appropriate standards of fitness and propriety; employee misbehaviour, fraud, material dishonesty or material error; a material
downturn in financial performance; a material failure of risk management; material corporate failure; as well as other circumstances required by regulatory obligations or deemed appropriate by the
Committee. Clawback can normally be applied for a period of seven years from the date of award. This may be extended to ten years in the event of ongoing internal or regulatory investigation at the end of
the seven-year period.
ii. Regulatory changes or resolution: In the event that regulatory standards change, the Committee has discretion to make such changes to our remuneration policy as to ensure regulatory compliance, even if
a revised policy has not been put to members for an advisory vote. Any such changes would normally be included in the policy report at the next AGM. This includes any changes as may be considered
appropriate in the event of resolution to reflect the nature of the roles and responsibilities in this context and to support the resolution process.
iii. Prior arrangements: The Committee reserves the right to honour remuneration payments, notwithstanding that they are not in line with the policy set out in this report, where the terms of the payment
were agreed in accordance with any previous member-approved policy, before the first member-approved policy came into effect, or at a time when the relevant individual was not a director of Nationwide
and, in the opinion of the Committee, the payment was not in consideration for the individual becoming a director of Nationwide.
Choice of performance measures and targets
The performance measures selected for APP and LTPP awards are reviewed and set on an annual basis by the Committee to reflect the priorities of the Group, providing a clear link with
customers’ interests and our short and long-term financial and strategic aims, as well as our regulatory obligations.
The Committee retains the discretion to amend the performance measures or weightings of performance measures for APP and LTPP awards to take account of the Group’s Plan,
emerging best practice and regulatory expectations. Normally, no less than 60% of executive directors’ APP awards will be based on Group performance measures.
The Committee sets performance targets at a level which it considers appropriately stretching in relation to the Group’s Plan and overall risk appetite, taking into account a number of
wider factors, including our strategic priorities, the economic environment, and market conditions and expectations. Maximum performance will only be achieved for exceptional
performance across all measures.
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What our executive directors could earn based on performance
The charts below illustrate the amounts that each of the executive directors could earn in different performance scenarios, including the percentage of the total comprised by each
element of remuneration, in the first year under the proposed remuneration policy. The charts reflect the increased 150% of salary maximum APP opportunity and a maximum LTPP
opportunity of 300% of salary for D A Crosbie. For M J Mathieson the charts reflect maximum APP and LTPP opportunities of 100% of salary. The Committee intends to keep award levels
under review over the course of the three-year policy to ensure they remain appropriate, and therefore the values illustrated below may be subject to change.
A significant proportion of the potential remuneration of the executive directors is payable based on the achievement of stretching performance conditions, and subject to deferral, malus
and clawback. No payments relating to LTPP awards will be made until the end of the three-year forward-looking performance period.
Notes:
i. The charts are based on the following scenarios:
Minimum opportunity: only fixed pay elements are payable (base salary, pension and benefits).
Target opportunity: fixed pay elements are payable and target APP and LTPP outcomes are achieved.
Maximum opportunity: fixed pay elements are payable and maximum APP and LTPP outcomes are achieved.
ii. The value of benefits for D A Crosbie and M J Mathieson is estimated based on the benefits paid to them in respect of 2024/25, as set out in the single total figure of remuneration table. Additional benefits may arise
but will always be provided in line with the approved policy.
iii. The charts have been prepared using the annual salaries that will apply during 2025/26 and, therefore, APP and LTPP opportunities have been calculated as percentages of these salaries.
30%
38%
76%
5%
6%
12%
5%
6%
12%
30%
25%
30%
25%
£2,241k
£1,796k
£891k
£0k £1,000k £2,000k £3,000k
M J Mathieson
Salary Benefits Pension APP LTPP
Minimum opportunity
Target opportunity
Maximum opportunity
17%
24%
84%
1%
1%
3%
3%
4%
13%
26%
24%
53%
47%
£6,864k
£5,057k
£1,442k
£0k £1,000k £2,000k £3,000k £4,000k £5,000k £6,000k £7,000k
D A Crosbie
Minimum opportunity
Target opportunity
Maximum o
pp
ortunit
y
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Remuneration arrangements throughout the Group
The remuneration policy for our executive directors is designed to align with the remuneration philosophy and principles that underpin remuneration for the wider Group. Within this
framework, whilst there are differences in reward opportunity under the APP plan depending on level of seniority, a proportion of the APP for all employees (including the executive
directors) is based on consistent performance measures. Having consistent goals for a proportion of the award helps make sure everyone works together to put our customers’ needs
first.
Certain employees, based on their role and seniority, are eligible to participate in the LTPP plan, which provides a clear link between remuneration outcomes and the long-term
performance of our most senior population in their stewardship of Nationwide and overseeing the delivery of the Group’s Plans.
Consideration of employment conditions elsewhere in the Group
The pay and conditions of all employees are taken into account when determining executive remuneration and the Committee appreciates the importance of this relationship. The
Committee reviews base salary levels, other elements of fixed remuneration and details of performance pay plans offered to all employees each year and is always mindful of ensuring
that the pay policy for senior roles is consistent with the culture and values of the Group as a whole. Our policy is to offer packages which are competitive within the financial services
market in which we operate and to reward individuals for delivering value to customers. The individual elements of remuneration offered, for example benefits provision, may vary
between the different roles, reflecting typical market practice. Employees who are members of Nationwide will be able to vote on the
directors’ remuneration policy and directors’
remuneration report.
Recruitment policy
On the appointment of a new executive director, the Committee will as far as possible determine the ongoing remuneration package in accordance with the remuneration policy. It would
aim not to pay more than necessary to secure the right candidate. New appointments will be eligible to be considered for variable pay consisting of an APP and LTPP award (or any other
element which the Committee considers appropriate), subject to the maximum opportunity being no more than the maximum ratio of fixed to variable pay in operation within Nationwide
as determined by the Committee from time to time.
The Committee may also consider whether it is necessary to offer any one-off arrangements on the recruitment of a new executive director to replace previously awarded variable
remuneration and any other remuneration arrangements forfeited upon leaving a previous employer. In making any such offer, the Committee will seek to ensure that the replacement
arrangements are on materially similar terms to the arrangements being forfeited in terms of value and vesting schedule and take into account the extent to which performance
conditions applied to the original awards, whilst taking into consideration all applicable regulatory requirements. Where possible, the replacement arrangements will be structured within
the parameters of Nationwide’s existing performance pay plans. If necessary, an individually tailored plan may be put in place. In line with regulatory requirements, the replacement
arrangements may continue to be subject to malus and clawback provisions, at the discretion of the individual’s previous employer. The Committee may award guaranteed variable
remuneration in exceptional circumstances for new hires. Such awards would be limited to the individual’s first year of employment only. The exceptional circumstances would typically
involve a critical new hire and would also depend on factors such as the seniority of the individual and the timing of the hire during the performance year.
Although our intention would be to offer any new director benefits in line with the policy set out in the policy table, if individual circumstances required this, the Committee may consider
offering a new recruit such additional benefits as might be required to secure their services. This may include, but is not limited to, travel allowances or relocation expenses for a limited
period following their appointment.
On the appointment of a new non-executive director, fees will be on similar terms to those of the existing non-executive directors and in accordance with the policy set out in this report.
Service contracts and policy on payments to departing directors
Executive director D A Crosbie M J Mathieson
Service contract effective from
2 June 2022 6 September 2024
Date first appointed to the Board
2 June 2022 6 September 2024
Executive directors’ terms and conditions of employment are detailed in their individual contracts or service agreements which include a notice period of 12 months from Nationwide to
the individual and a notice period of 12 months from the individual to Nationwide for any new executive directors.
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The terms set out in the service agreements for the current executive directors do not provide for any payments that are not in line with this policy. Service agreements include a
provision for a termination payment in lieu of notice, which will normally be subject to mitigation, up to a maximum of 12 months’ base salary and statutory redundancy in the event of
redundancy. Such a payment might also cover benefits and pension allowance.
The Chairman and non-executive directors are appointed for fixed terms not exceeding three years, which may be renewed subject to their re-election by members at AGMs. There are no
obligations in the non-executive directors’ letters of appointment that could give rise to remuneration payments or payments for loss of office. The dates of appointment to the Board for
the Chairman and non-executive directors are set out in the Governance report.
Leaver provisions for executive directors
If an executive director leaves in eligible leaver circumstances (including redundancy, retirement, ill health, death, by mutual consent or any other reason at the discretion of the
Committee), they may, subject to approval by the Committee on an individual basis, remain eligible for performance pay awards as described below.
For APP awards:
Where an executive director leaves during the performance year in eligible leaver circumstances they may, at the Committee’s discretion, receive a pro-rata performance award for
the period of time served during the current performance period in accordance with the plan rules. Such awards would be subject to deferral, retention, malus and clawback as normal.
Where an executive director leaves in certain defined eligible leaver circumstances, they will normally be eligible to continue to receive the deferred portion of any outstanding award
in full (subject to any risk or performance adjustment, including by way of malus and/or clawback).
In other eligible leaver circumstances, the treatment of outstanding deferred payments will normally be subject to time-prorating for months served in continued employment over
the first four years of the plan cycle, including the initial performance period.
The treatment for eligible leavers of APP awards in respect of performance years prior to 2022/23 will be in accordance with the relevant policy.
For LTPP awards:
Where an executive director leaves during the financial year prior to the year in which the grant is made, they would normally be ineligible to receive any LTPP award in respect of that
year.
Where an executive director leaves during the forward-looking LTPP performance period in eligible leaver circumstances, awards will normally be pro-rated for time served during the
relevant performance period. The extent to which an award will pay out will normally be subject to the achievement of the applicable performance conditions. Such awards would
normally remain subject to the deferral, retention, risk and performance adjustment provisions that would otherwise have applied, including malus and clawback.
Where an executive director leaves in eligible leaver circumstances following the end of the forward-looking LTPP performance period and during the additional deferral or retention
period, they will normally be eligible to continue to receive the deferred and retained portions of any outstanding awards in full (subject to any risk or performance adjustment,
including by way of malus and/or clawback).
Under both the APP and LTPP plans, the Committee retains the discretion to adjust the proportion of the outstanding or deferred payments that are retained by a leaver based on the
facts and circumstances of the departure. Furthermore, following departure, the Committee may still also reduce or cancel payme
nts if it believes that the var
iable pay plan outcomes are
not representative of the overall performance of Nationwide.
Any variable pay awards subject to deferral or retention periods, as well as any ‘in-flight’ LTPP awards, will continue to be paid at the usual payment date although the Committee will have
discretion to accelerate any payments to the leaving date in exceptional circumstances.
Individuals who leave in other circumstances (e.g. resignation) and are not determined to be ‘eligible leavers’ would receive only contractual payments to which they are entitled and would
not receive any payment in respect of performance pay plans, unless the Committee determines there is a robust case for discretion.
Depending on individual circumstances, the Committee may also make additional payments in connection with an executive director’s cessation of office or employment. For example, this
may include outplacement costs, legal fees and costs of settling any potential claim where appropriate.
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Mitigation
Mitigation means that after leaving Nationwide, should an executive director start employment elsewhere, any outstanding payments in lieu of notice due from Nationwide may be
reduced or lapse altogether. The Committee’s policy is that payments in lieu of notice should be made in monthly instalments and be subject to mitigation (where contractually
enforceable), although the Committee has discretion to waive mitigation if this is considered appropriate in individual circumstances. The current executive director contracts allow for
mitigation.
Consideration of member views
At recent AGMs we have received a significant majority vote in favour of our remuneration reports. We are also mindful of views expressed by individual members regarding specific
aspects of the policy. When taking decisions on remuneration policy, the Committee is also always conscious of the need to balance members’ views whilst ensuring executives are
motivated and rewarded to deliver value for our customers.
Remuneration policy for non-executive directors
The table below sets out the remuneration policy for our non-executive directors.
Element Operation Opportunity
Chairman and non-
executive director fees
Provide a market
competitive fee level for
the role at Nationwide
The Chairman’s fee is normally reviewed and approved by the Remuneration Committee on an annual basis.
Non-executive director fees are normally reviewed and approved by the executive directors and the Chairman on an annual basis.
Any changes are typically effective from 1 April.
Non-executive directors are paid a basic fee, with an additional supplement paid for additional roles or responsibilities, including
in respect of the Senior Independent Director or Employee Voice role, or for serving on or chairing a Board Committee or
committee of a subsidiary entity. Additional fees may be payable for additional time commitment or responsibilities.
The Chairman and non-executive directors do not take part in any performance pay plans or in any pension arrangements.
Benefits may be provided if considered appropriate including reimbursement of any reasonable expenses (together with any tax
thereon where these are deemed to be taxable benefits).
Fees are set taking into account
practice at other organisations
as well as the time commitment
for the role at Nationwide. There
is no maximum level.
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Annual report on remuneration for 2024/25
This sec
tion provides information on how the directors’ remuneration policy, as approved by members at the 2024 AGM, was implemented during 2024/25. A revised policy will be
subject to member approval by way of
an advisory vote at the 2025 AGM.
Base salary and pension
The effective base salary in the year for D A Crosbie was £1,170
,000. M J Mathieson was appointed to the Board on 6 September 2024 on a base salary of £675,000. C S Rhodes received
an annual salary of £750,000 pro-rated in respect of his role as Chie
f Financial Officer of Nationwide until 6 September 2024. The pension allowance for executive directors is 16% of
salary, which is the maximum benefit available to Nationwide sub-group colleagues.
Annual Performance Pay (APP) for 2024/25
APP awards were determined based on Nationwide sub-group perfor
mance measures set at the start of the year, as well as individual contribution. Consistent measures, aligned with the
attainment of challenging strategic and financial performance me
asures, applied for all Nationwide sub-group colleagues, including the executive directors, ensuring clear alignment and
focus in delivering for our customers. APP
awards were also assessed by reference to two separate individual performance ratings, reflecting both delivery and behaviours. A new
Executive Scorecard was also introduced fo
r executive directors for 2024/25, capturing a wide range of financial and non-financial KPIs.
Note:
i.
Based on a study conducted by an international market research company commissioned by Nationwide. Based on non-customer responses for the 12 months ended March 2025. Financial brands included are
Nationwide, Barclays, Co-operative Bank, First Direct, Halifax, HSBC, Lloyds, Monzo, NatWest, Santander, Starling Bank and TSB.
The maximum
potential APP award level for 2024/25 was 100% of base salary for all executive directors, with 50% of the overall award based on the Nationwide sub-group performance,
30% based on Executive Scorecard
performance and 20% based on individual performance. An illustration of the pay-out schedule of the executive directors' APP awards can be found on
page 110. The Group has the ability to clawback APP awards for up
to ten years after they were awarded in certain circumstances.
Informed by two separate performance
ratings, ensuring colleagues are rewarded
based on both delivery and behaviours.
Holistic assessment of financial and non-
financial KPIs.
Number of engaged customers
Customer experience score
Total costs
Heard good things about (note i)
Nationwide sub-group performance Individual performance Executive Scorecard
Nationwide sub-group colleagues
Executive Directors
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Outcomes for APP 2024/25
Three gateways must be passed before any payment is made under
the plan. The three gateways are based on measures of profit before tax, leverage ratio and conduct risk. These
gateways were passed in 2024/25. In determining executive direct
ors’ APP outcomes for 2024/25, the Committee assessed the performance against the four measures set out below, as
well as performance against the Executive Scor
ecard and individual performance. The Committee must also be satisfied that there is no significant conduct, risk, reputational, financial,
operational or other reasons why awards should not be made, taki
ng into account input from the Board Risk and Audit committees.
Notes:
i.
Our customer experience score measure is based on the 12 months ended 31 March 2025, and is calculated by weighting the aggregated scores across Nationwide channels to reflect the way customers interact
with us. Digital channels include our Nationwide mobile banking app, internet bank and webchat.
ii.
As per the design of the APP plan, the total costs outcome for 2024/25 of £2,449 million was adjusted to £2,418 million for the purposes of determining the APP outcome to exclude staff costs associated with the
overall APP outcome being above the target level.
iii.
Based on a study conducted by an international market research company commissioned by Nationwide. Based on non-customer responses for the 12 months ended March 2025. Financial brands included are
Nationwide, Barclays, Co-operative Bank, First Direct, Halifax, HSBC, Lloyds, Monzo, NatWest, Santander, Starling Bank and TSB.
iv.
M J Mathieson’s APP award reflects performance since his appointment as Group Chief Financial Officer on 6 September 2024. C S Rhodes APP award reflects performance until he stepped down from the Board
on 6 September 2024.
nd
rd
Measure Performance target range: threshold, target and maximum, and performance outcome achieved for 2024/25 Performance pay achieved / Maximum achievable (% of salary paid in 2024/25) D A Crosbie M J Mathieson C S Rhodes (Audited)(note iv) (note iv) Number of engaged Outcome: 4.11m – Maximum12.5% / 12.5% 12.5% / 12.5% 12.5% / 12.5% customers 3.85m 3.94m 4.05m Customer experience score Outcome: 83.8% – Above target 8.9% / 12.5% 8.9% / 12.5% 8.9% / 12.5% (note i) 82.1% 83.6% 85.1% Total costs Outcome: £2,418m – Maximum(note ii) 12.5% / 12.5% 12.5% / 12.5% 12.5% / 12.5% £2,569m £2,519m £2,469mHeard good things st Outcome: 1 within peer group – Maximumabout 12.5% / 12.5% 12.5% / 12.5% 12.5% / 12.5% th within peer group (note iii) 43 within peer group2 within peer groupExecutive Scorecard element (see further detail below) 28.5% / 30% 28.5% / 30% 28.5% / 30% Individual performance element (see further detail below) 20% / 20% 12% / 20% 20% / 20% Remuneration Committee discretionary performance and risk assessment The Committee carefully considered the outcomes for the executive directors to ensure they were a fair reflection of performance. This 0% 0% 0%took account of a broad range of factors including performance against wider key performance indicators and risk factors. Overall, the Committee was satisfied that the outcomes were a fair reflection of performance, and no discretionary adjustment was applied. Total performance pay achieved 94.9% / 100% 86.9% / 100% 94.9% / 100%
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Performance against the Executive Scorecard was based on an assessment of financial and non-financial KPIs. The table below provides an overview of the key achievements considered
in determining the outcome of the
Executive Scorecard for 2024/25.
Strategic driver Performance commentary th Delivered leading levels of service through our Nationwide brand and were ranked first for customer satisfaction for the 13 year running 2compared to our peer group. Increased investment in Virgin Money to improve customer experience. Created 370 new jobs dedicated to customer service in Virgin Money contact centres and online chat channels. Created 15 new customer Simply brilliant experience service jobs to support business banking customers. Invested around £18 million in upgrading more than 110 branches. Customer experience score of 83.8% was above our target of 83.6%. Customers of Nationwide-branded products were satisfied with our service across our channels, particularly from colleagues in our branches. The new banking app, and enhancements made through the year, also contributed positively to our score. Delivered a record £2,795 million in value to our members. This included member financial benefit of £1,795 million from better pricing and incentives than the market average, primarily relating to our member deposits. This also included £385 million in Nationwide Fairer Share Payments, distributed in June 2024 to 3.85 million eligible members, and £615 million via The Big Nationwide Thank You. More rewarding relationships Increased total market share of deposit balances to 12.2% (2024: 9.5%). Customer deposits increased by £67.3 billion, including £53.3 billion of Virgin Money balances and record growth of £14.0 billion (2024: £6.3 billion) through our Nationwide brand. Increased market share of Group mortgage balances to 16.2% (2024: 12.3%). Delivered £825 million (2024: £1,323 million) of lending to social housing. Committed more than £20 million to charitable activities. This included £18.7 million (2024: £15.5 million) as part of the 1% of pre-tax profits that we commit to good causes each year, as well as donations awarded by Virgin Money. Launched Nationwide Fairer Futures, our new social impact strategy. Scope 1 emissions have continued to reduce in comparison to previous years, and we are currently ahead of our intermediate (by 2030) Beacon for mutual good science-based target pathway. We have also continued to source 100% renewable electricity, and are on track to achieve our scope 2 science-based target. The continued success of our new brand and advertising campaigns, focused on expressing our mutual difference, has helped improveawareness of Nationwide across the UK.Achieved five out of seven of the 2025 diversity targets set out in our Mutual Good Commitments. Financial performance remained strong; we delivered underlying profit before tax of £1,852 million, and statutory profit before tax of£2,302 million. Leverage ratio remained comfortably above both regulatory and internal threshold requirements. Diversified our business through the acquisition of Virgin Money, making our income more resilient to economic changes. The gain on Simplify, integrate and grow acquisition is expected to provide significant headroom to cover the costs associated with integration, investment in customer service and delivery of value across the Group Invested in the technology foundations, enhancements and innovations that will help us provide an even better customer experience. Commenced the migration of Nationwide-branded savings accounts onto a modern, core banking platform, that further improvescustomers’ experience. Weighting 30% Outcome 28.5%
2
Lead at March 2025: 7.5%pts, March 2024: 5.5%pts. c Ipsos 2025, Financial Research Survey (FRS), for the 12 months ended 31 March 2013 to 12 months ended 31 March 2025. Results based on a sample of around 47,000 adults (aged
16+). The survey contacts
around 50,000 adults (aged 16+) a year in total across Great Britain. Interviews were face to face, over the phone and online, taking into account (and weighted to) the overall profile of the adult population. The
results reflect the percentage of extremely s
atisfied and very satisfied customers minus the percentage of customers who were extremely or very or fairly dissatisfied across those customers with a main current account, mortgage or
savings. Those in our peer group are Barclays
, Halifax, HSBC, Lloyds Bank, NatWest, Santander and TSB. Prior to April 2017, those in our peer group were Barclays, Halifax, HSBC, Lloyds Bank (Lloyds TSB prior to April 2015), NatWest and
Santander.
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For the element based on individual performance, performance was assessed by reference to two separate individual performance ratings, rewarding both delivery against goals set in
the context of our strategic drivers and the display of customer first behaviours. The
tables below provide an overview of the individual performance for 2024/25 achieved by the Group
Chief Executive Officer and the incoming and outgoing
Chief Financial Officers based on their objectives.
against balanced scorecard.
Executive Director 2024/25 achievement of individual objectives Objectives D A Crosbie M J Mathieson (note i) C S Rhodes (note ii) Financial and operational performance Delivered the 2024/25 financial plan, Robust financial management and Oversaw production of financial plan Strong and sustainable financial performance. including record member value, reporting throughout the year. for 2024/25 and performance mortgage lending and retail deposit Ensured successful delivery of Resilient business operations.growth. regulatory financial reporting, day 1 Prompt review of IT service accounting and appropriate availability incidents to ensure prudential risk management for the ongoing improvements in operational Virgin Money acquisition. resilience.Strategic development and delivery Record member value delivered in Financial plan developed to support Supported successful delivery of Ambitious and achievable strategy to grow and deliver value 2024/25 including direct member strategic growth and key decisions, value to members through the for members. reward payments of over £1 billion including the Nationwide Fairer Nationwide Fairer Share Payment, through the Nationwide Fairer Share Share Payment and The Big member exclusive savings bond and Purpose and Blueprint for a modern mutual embedded Payment and The Big Nationwide Nationwide Thank You. switching incentives. throughout and driving increased performance. Thank You. Contributed to refresh of strategic Oversaw business case for the Acquisition of Virgin Money to extenddrivers and customer first Virgin Money acquisition.products and services over time. behaviours. Refreshed purpose and implementation across the Group.Robust risk and control Regulatory approvals obtained for Ensured safe prudential Ensured safe prudential Effective risk and control framework embedded throughoutthe Virgin Money acquisition. management of Nationwide, management of Nationwide, the organisation. Operated within overall risk appetite. including effective wholesale including effective wholesale funding, hedging of the balance funding, hedging of the balance Timely resolution of actions and effective conclusion of any Asset quality remains robust with low sheet, and effective and efficient sheet, and effective and efficient regulator interventions.and stable arrears rates. management of liquidity. management of liquidity. Inspiring team and leadership performance Stable executive team and initial Transitioned into executive director Led finance, treasury and strategy High-performing and effective ExCo team that inspires leadership changes implementedrole while maintaining stability in teams through early acquisition strategic progress across the Group. Increased leadershipfollowing the acquisition of Virgin the finance function. related activity while also deliveringcapacity and capability at ExCo-1 level. Money.high quality day-to-day business responsibilities. Cultural transformation in line with business strategy and Colleague engagement performing Blueprint for a modern mutual.above industry benchmarks, including within Virgin Money following acquisition. Service excellence and member value Consumer Duty fully implemented Supported pricing decision making Supported pricing decision making Recognised for service excellence and member value. and maintained first place amongstto preserve member value and to preserve member value and Increasing value for members with leading personal financial peers for customer satisfaction. support strong customer retention.support strong customer retention. service products that meet member needs, and all Consumer Record level of member value.Duty requirements. Effective governance and contribution to the Board New governance arrangements for Contributed to Board and Executive Contributed to Board and Executive Good engagement between ExCo and Board with strong and Board designed and implemented Committee discussion beyond Committee discussion beyond effective overall governance. following Virgin Money acquisition. financial matters. financial matters.
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Notes:
i. M J Mathieson’s objectives reflect achievement against individual objectives since his appointment as Group Chief Financial Officer on 6 September 2024.
ii. C S Rhodes stepped down from the Board on 6 September 2024. His objectives have been assessed based on achievements until that date.
Long-Term Performance Pay (LTPP) awards in respect of 2024/25
LTPP awards in respect of 2024/25 will be granted in 2025. LTPP awards are discretionary and are granted subject to a pre-grant performance assessment over the year prior to grant
based on:
• Individual conduct and performance – must be satisfactory, including an assessment of individual delivery, behaviours and conduct during the year.
•
Leverage ratio and statutory profit before tax
– both gateways must be assessed and passed in respect of the period prior to grant.
After taking into account performance over 2024/25, the Committee agreed to grant D A Crosbie and M J Mathieson LTPP awards of 300% and 100% of base salary, respectively. The
Committee is satisfied that the granting of these awards is sustainable according to the financial position of the Group and justified on the basis of individual performance, conduct and
behaviours.
The 2024/25 LTPP awards will be subject to a three-year forward-looking performance period commencing 1 April 2025. During this period, performance will be assessed based on a
scorecard comprising the elements below. During 2024/25, the Committee reviewed the LTPP performance measures to ensure they remain appropriate in the context of the Group
following the acquisition of Virgin Money. The chosen performance measures are aligned to the Group’s longer-term priorities and provide a clear link with customers’ interests and the
achievement of our financial and strategic aims, including our sustainability commitments. At the end of the three-year performance period the Committee will also satisfy itself that there
is no significant conduct, risk, reputational, financial, operational or other reasons why the awards should not be released, taking into account input from the Board Risk and Audit
committees. Targets are deemed by the Committee to be commercially sensitive and will be disclosed, along with performance achieved, in the Annual Report and Accounts 2028.
2025/26 – 2027/28 LTPP scorecard Rationale for inclusion within the scorecard Weighting Group return on equity employed (note i) 20% Ensuring the Group’s continued financial security for the benefit of its customers via efficient profit generation and sustainable balance sheet management over the long term. Group underlying profit before tax 20% Financial Research Survey (FRS) satisfaction Rewarding ‘best-in-class’ customer service. 10% Risk and compliance Ensuring continued focus on the strength of the Group’s control environment. 20% Transformation Providing alignment with the Group’s long-term strategic priorities and Environmental, Social and Governance (ESG) objectives. 30%
Note:
i. Measured as return as a percentage of the minimum amount of capital required to stay above Board Risk Appetite and regulatory requirements throughout a plausible severe macroeconomic stress
scenario, while allowing for full distributions to be paid to CCDS and AT1 holders. Return is defined as a post-tax profit, calculated using underlying profit before tax amended to add back member reward
payments.
Executive Director 2024/25 achievement of individual objectives Objectives D A Crosbie M J Mathieson (note i) C S Rhodes (note ii) Impactful stakeholder engagement Engaged with political parties to Prioritised engagement with Led engagement with appropriate Strong and productive relationships with regulators, promote manifesto priorities in appropriate regulators through the regulators, rating agencies, governments, political, media and other key stakeholders thatadvance of the General Election.Virgin Money acquisition process investors, and other stakeholders. help secure policy objectives and raise the profile of the New Nationwide Fairer Futures social and in readiness for consolidated mutual model. impact activity launched. financial and regulatory reporting. Weighting 20% 20% 20%Outcome 20% 12% 20%
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How awards will be released to executive directors
The illustration below shows how APP and LTPP awards in respect of 2024/25 will be released to executive directors. Across both APP and LTPP elements, a minimum of 60% will be
deferred for between three and seven years. For awards in respect of 2024/25, the LTPP will be used to satisfy the minimum deferral requirements for both D A Crosbie and M J
Mathieson.
In line with the directors’ remuneration policy, 50% of APP and, subject to the achievement of the forward-looking performance measures, 60% of LTPP awards will be linked to the value
of the Group’s CCDS, with the balance paid in cash. The CCDS element will be subject to a 12-month retention period, which is reflected in the timing of payment illustrated below.
Note:
i. Payments are linked to the value of the Group’s CCDS.
Salary
Pension
Annual Performance
Pay plan
Long-Term
Performance Pay
plan
2024/25
June 2025
June 2026 June 2027
June 2028
June 2029 June 2030
June 2031
June 2032
Delivery method
Structure and timing of payment
100% Cash
100% Cash
Cash
Cash
50% Cash
50% CCDS (note i)
Cash
CCDS
40% Cash
60% CCDS (note i)
LTPP three-year forward-looking
performance period - 2025/26 to
Award to be granted June 2025
20%
Cash
20%
Cash
20%
CCDS
20%
CCDS
20%
CCDS
LTPP pre-
grant
performance
period
APP
performance
period
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Executive directors’ remuneration
Where indicated, the tables in the following sections have been
audited. These disclosures are included in compliance with the Building Societies Act 1986 and other mandatory reporting
regulations, as well as the Large and Medium
-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended), which Nationwide has voluntarily adopted to the
extent deemed appropriate. The table below shows the total remune
ration for each executive director who served during the period ended 31 March 2025.
Amounts of variable remuneration shown below consist of the aw
ards under the APP plan. LTPP awards are subject to the achievement of performance conditions over three years from
grant and, to the extent the performance measures are met, details will be included in the relevant directors’ remuneration rep
ort. Any amounts delivered to the executive directors
relating to the first LTPP awards granted in June 2023 will be disclosed within the Annual Report and Accounts 2026.
Single total figure of remuneration for each executive director (note i) D A Crosbie M J Mathieson (note iii) C S Rhodes (note iv) 2025 2024 2025 2024 2025 2024 (Audited) £’000 £’000 £’000 £’000 £’000 £’000 Salary 1,152 1,137 383 - 316 732 Pension allowance 184 182 61 - 51 117 Taxable benefits (note ii) 44 47 52 - 45 105 Total fixed remuneration 1,380 1,366 496 - 412 954 Annual performance pay 1,111 1,044 338 - 311 636 Total variable remuneration 1,111 1,044 338 - 311 636 Total pay package 2,491 2,410 834 - 723 1,590
Notes:
i.
The year end date of Nationwide Building Society has been changed to 31 March. The 2025 single total figure of remuneration for each executive director has been prepared for the period from 5 April
2024 to 31 March 2025.
ii.
Taxable benefits include travel, accommodation and other business-related costs for directors, incurred in connection with the performance of their duties, including any tax due under HMRC regulations,
as well as medical insurance, car allowance and security. These amounts are included as fixed remuneration for the calculation of the variable pay ratio in meeting our regulatory requirements.
iii.
M J Mathieson succeeded C S Rhodes as Group Chief Financial Officer and was appointed to the Board on 6 September 2024. The 2025 single total figure relates to the period from 6 September 2024 to
31 March 2025.
iv.
C S Rhodes stepped down as Chief Financial Officer and from the Board on 6 September 2024; details of his remuneration reflect the period of time he served on the Board. The 2025 single total figure
relates to the period from 5 April 2024 to 6 September 2024.
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Chairman and non-executive directors’ remuneration
The total fees paid to each non-executive director who served during the period ended 31 March 2025 are shown below.
Single total figure of remuneration for non-executive directors (note i) 2025 2024 Group Fees Taxable Total fees Group Fees Taxable Total fees benefits and taxable benefits and taxable (note ii) benefits (note ii) benefits (Audited) £’000 £’000 £’000 £’000 £’000 £’000 K A H Parry (Chairman) 581 16 597 557 18 575T Graham (Senior Independent Director) (note iii) 263 11 274 218 19 237A Aithal (note iv) 78 7 85 - - -D Bennett (note v) 200 7 207 - - -A Hitchcock 161 16 177 148 23 171A M Keir 200 15 215 192 20 212D Klein 121 2 123 119 2 121S Orton 121 8 129 99 3 102T Rajah 104 2 106 103 1 104G Riley 161 26 187 150 30 180P G Rivett 210 1 211 192 1 193Total 2,200 111 2,311 1,778 117 1,895Pension payments to past non-executive directors (note vi) 197 218
Notes:
i. The year end date of Nationwide Building Society has been changed to 31 March. The 2025 single total figure of remuneration for each non-executive director has been prepared for the period from 5 April
2024 to 31 March 2025.
ii. Taxable benefits for non-executive directors relate to travel, accommodation and other business-related costs in connection with their duties and attendance at Board and committee meetings. Where
these expenses are deemed taxable, the Group settles the tax on behalf of the non-executive directors and this is included in the amounts shown. Where a non-UK director is not UK domiciled their
reimbursed cost of travel into and out of the UK is not a taxable benefit.
iii. T Graham was appointed to the Virgin Money Board on 23 January 2025. Group fees for 2025 include £19,000 in connection with Virgin Money Board services in the period from 23 January 2025 to 31
March 2025.
iv. A Aithal joined the Board on 1 October 2024.
v. D Bennett joined the Board on 13 November 2024. Group fees for 2025 include £165,000 in connection with Virgin Money Board services in the period from 13 November 2024 to 31 March 2025.
vi. Nationwide stopped granting pension rights to non-executive directors who joined the Board after January 1990.
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Additional disclosures
CEO remuneration for the past ten years
The table below shows details of the remuneration of the Chief Executive Officer role for the previous ten years.
CEO remuneration for the past ten years Financial year Total Annual performance pay earned as % of Medium term performance pay earned Remuneration maximum available as % of maximum available (note i) (£’000) (%) (%) 2024/25 2,491 94.9 - 2023/24 2,410 91.9 - 2022/23 (note ii) 3,455 / 301 77.2 / 42.6 - 2021/22 2,114 67.2 -2020/21 (note iii) 1,236 72.3 - 2019/20 1,286 - - 2018/19 2,372 75.1 -2017/18 2,317 69.5 -2016/17 (note iv) 3,386 71.9 - 2015/16 (note v) 3,413 75.8 80.8
Notes:
i. Medium term performance pay ceased at the end of 2015/16.
ii. Figures shown for 2022/23 are those relating to D A Crosbie and J D Garner, respectively. D A Crosbie commenced her role as Group Chief Executive Officer on 2 June 2022. Her total remuneration for
2022/23 was £3,455,452 including the value of replacement awards on joining (£1,704,844). These awards did not form part of ongoing remuneration. The annual performance pay earned by D A Crosbie for
2022/23 was 77.2% of the maximum opportunity. J D Garner stepped down as Chief Executive Officer and from the Board on 1 June 2022. His total remuneration for 2022/23 shown above reflected the
period of time he served on the Board. The annual performance pay earned by J D Garner for 2022/23 was 42.6% of the maximum opportunity.
iii. The performance pay opportunity for 2020/21 was reduced by around two thirds.
iv. J D Garner commenced his role as Chief Executive Officer on 5 April 2016. His total remuneration for 2016/17 included the value of replacement awards on joining (£1,070,752). These awards did not form
part of ongoing remuneration.
v. The Chief Executive Officer in 2015/16 was G J Beale. His total remuneration includes annual performance pay awards as well as legacy payouts under the directors’ previous medium term pay plan as a
result of the transition period between plans.
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Relative importance of spend on pay
The chart below shows the cost of remuneration for all employees of the Group, compared with retained earnings.
Remuneration cost for all employees (note i) 2024/25 2023/24 £m £m All-employee remuneration 1,291 997 Retained earnings 2,117 1,125
Note:
i. On 1 October 2024, the Group acquired Virgin Money. The results of Virgin Money are included in the Group’s consolidated financial results for the period from 1 October 2024 to
31 March 2025 only.
All-employee remuneration represents 36.37% (2024: 39.11%) of total administrative expenses. All-employee remuneration costs include wages and salaries, bonuses, social security costs
and pension costs. Total administrative expenses for 2023/24 have been restated as described in note 1 to the financial statements.
The increase in year-on-year remuneration spend is primarily driven by the consolidation of Virgin Money for the period from 1 October 2024 to 31 March 2025.
Payments for loss of office and payments to past directors
C S Rhodes stepped down from the Board as Chief Financial Officer on 6 September 2024 and was appointed as Virgin Money Chief Executive Officer effective 1 October 2024. Details of
C S Rhodes’ remuneration for the period to 6 September 2024 are set out in the single total figure table on page 111.
C S Rhodes is eligible to receive a part-year APP award in respect of services as Chief Financial Officer during 2024/25. Details of his APP award are set out on pages 106 to 109 above.
C S Rhodes will retain his outstanding deferred annual bonus and LTPP awards which will continue to vest and be released at the normal times.
No other fees were payable to C S Rhodes in respect of his services as Chief Financial Officer.
Pay gap reporting
The Group is fully committed to promoting a diverse and inclusive workplace. Pay gaps are the difference in average hourly pay, when comparing different groups of people within an
organisation. Nationwide’s latest gender and ethnicity pay gaps report was published in March 2025 and can be found at nationwide.co.uk, together with an update of progress on our
inclusion and diversity ambition, and Women in Finance Charter commitments. Within the report we have again voluntarily published our ethnicity pay gap, comparing the pay of all
employees who have identified as black, asian and minority ethnic (ethnically diverse), with the pay for white (non-ethnically diverse) employees across Nationwide.
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CEO pay ratio reporting
The table below compares the total remuneration of the Group Chief Executive Officer against the total remuneration of the median employee and those who sit at the 25
th
and 75
th
percentiles (lower and upper quartiles). This reporting will build annually to cover a rolling ten-year period. Employee remuneration data for the purposes of the table below does not include
Virgin Money employees. We will consider the approach for this disclosure in future years to determine any changes that are appropriate.
The CEO pay ratios for 2024/25 are broadly consistent with previous years. Any amounts paid to the Group Chief Executive Officer relating to the first LTPP awards granted in June 2023
will be reflected in the pay ratios for 2025/26.
th percentile pay ratio Median pay ratio 75thYear Method 25 percentile pay ratio 2024/25 Option A 78:1 63:1 38:1 2023/24 Option A 78:1 64:1 38:12022/23 Option A 71:1 56:1 35:12021/22 Option A 80:1 54:1 35:12020/21 Option A 51:1 38:1 24:12019/20 Option A 53:1 41:1 26:12018/19 Option A 99:1 77:1 48:1
The total remuneration and salary values for the 25
th
, median and 75
th
percentile employees for 2024/25 are:
th percentile Median 75th25 percentile Total remuneration £31,978 £39,541 £66,078 Salary £24,568 £29,475 £51,067
Supplementary information on the tables above:
i. The calculation is based on Option A as set out in the regulations, which is considered to be the most statistically accurate methodology.
ii. Employee data includes full time equivalent total remuneration for all UK employees as at 1 March 2025. For each employee, remuneration was calculated based on all components of pay including base pay,
performance pay for 2024/25, core benefits including medical insurance and car allowance, and pension payments.
iii. The CEO pay ratio for 2022/23 above excludes the one-off replacement awards granted to D A Crosbie upon her appointment as Group Chief Executive Officer.
iv. For 2018/19, 2019/20 and 2020/21, whilst most employees participated in a defined contribution scheme with a fixed maximum employer contribution, there were other pension arrangements in place for
some employees, including a defined benefit pension scheme which has been closed to new participants since 2007. Although it would have been possible to recognise a higher value under the defined
benefit scheme, in order to ensure accurate year-on-year comparative data, a fixed value equal to the maximum employer contribution available to the defined contribution scheme members was included
for all defined benefit scheme members. From 2021/22 there is only one defined contribution scheme available; therefore, the actual employer contribution value has been used for all employees.
v. The Committee has considered the pay data for the three individuals identified for 2024/25 and confirms that the ratios reasonably represent the approach to pay and reward for employees taken as a
whole.
Voting at AGM
Resolutions to approve the 2023/24 Report of the directors on remuneration and the current directors' remuneration policy were passed at the 2024 AGM. In each case votes were cast
as follows:
Vote Report of the directors on remuneration (2024 AGM) Remuneration policy (2024 AGM) For 604,654 (95.05%) 601,014 (94.61%) Against 31,459 (4.95%) 34,260 (5.39%) Withheld 9,421 10,258
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Remuneration policy implementation for 2025/26
The directors’ remuneration policy is subject to member approval by way of an advisory vote at the 2025 AGM. It is intended for the policy to be implemented as follows in 2025/26:
Element Implementation in 2025/26 Base salary The Committee determined base salaries for 2025/26 with effect from 1 April 2025 as follows: Provides pay that is market competitive and reflects the D A Crosbie £1,205,000 (increase of 3%) size and complexity of the role M J Mathieson £675,000 (no change) Benefits No change for 2025/26. Provide a market competitive and cost-effective benefits package as part of fixed remuneration Pension No change for 2025/26. The executive directors’ contributions are aligned to the maximum rate available to Nationwide sub-group colleagues of 16% of salary. Provides post-retirement benefits for participants in a cost-efficient manner Annual Performance Pay (APP) plan For awards made in respect of 2025/26, the target opportunity for D A Crosbie will be 100% with a maximum opportunity of 150% of base salary. For M J Mathieson, target will be 67% of base salary, with a maximum opportunity of 100% of base salary. Rewards the achievement of stretching Nationwide, team and individual targets for a single financial year Performance measures: Awards made in respect of 2025/26 will continue to be subject to the following performance measures: More rewarding relationships: Number of Engaged Customers (12.5%); Simply brilliant experience: Customer Experience Score (12.5%); Simplify, integrate and grow: Total Costs (12.5%); Beacon for mutual good: Heard good things about (12.5%); Executive Scorecard: Performance against a comprehensive scorecard capturing a wide range of Nationwide’s financial and non-financialkey performance indicators (30%). The remaining 20% of the award based on individual contribution, behaviours and conduct. Gateway measures based on profit before tax, leverage ratio and conduct risk will also apply. Targets under the APP plan are commercially sensitive and so will be disclosed, along with performance achieved, in next year’s report. Long-Term Performance Pay (LTPP) plan LTPP awards in respect of 2025/26 will be made following the year subject to the achievement of satisfactory Group performance and individual delivery, behaviours and conduct. The Committee intends to keep LTPP grant levels under review to ensure they remain appropriate. Incentivises sustainable long-term performance and alignment with members’ interests Performance measures: Awards are made annually and only pay out where Forward-looking performance will be measured against a long-term scorecard determined by the Committee on an annual basis and set to challenging performance measures are met, normally align with the long-term strategic objectives of the Group. measured over a three-year period The measures for the 2024/25 LTPP awards (for the performance period 2025/26 to 2027/28) can be found on page 109. Targets for the 2024/25 LTPP awards are commercially sensitive and so will be disclosed, along with performance achieved, in the Annual Report and Accounts 2028. Details of the performance measures for the 2025/26 LTPP (for the performance period 2026/27 to 2028/29) will be included in next year’s remuneration report. Chairman and non-executive director fees The annual review of non-executive director fees for 2025/26 has been undertaken and details are set out below this policy summary table. Provide a market competitive fee level for the role at Nationwide
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Chairman and non-executive director fees
Following a review in the year, certain fees payable to the non-
executive directors were adjusted with effect from 1 October 2024 to take account of the increased responsibilities and workload
for the non-executive directors in light
of the acquisition of Virgin Money.
The annual review of non-executive director fees for 2025/26 has
been undertaken and fees adjusted with effect from 1 April 2025. Where appropriate, fees have been increased to ensure they
continue to be competitively positioned against the market.
Chairman and non-executive director fees for 2025/26 Fees effective Fees effective Fees effective 1 April 2025 1 October 2024 1 April 2024 £’000 £’000 £’000 Chairman 650.0 608.0 570.5Basic fee for non-executive directors 92.0 92.0 92.0Senior Independent Director 50.0 50.0 38.0Chair of the Audit, Board Risk or Remuneration Committee 75.0 70.0 62.0Member of the Audit, Board Risk or Remuneration Committee 34.0 32.0 29.5Member of the Nomination and Governance Committee 16.5 15.2 13.6Employee Voice 14.0 13.6 13.6Member of the Technology Advisory Forum 10.0 10.0 10.0
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Directors’ report
Directors’ report
for the year ended 31 March 2025
Information for the ‘C
ontent’ items listed in the table below can be found in the section of the Annual Report and Accounts as shown. These items are required to be included in the Directors’
report by the Building Societies Act 1986
and are incorporated into the Directors’ report by this cross referencing.
Content Section Pages
Business objectives and future plans Strategic report 5-7 and 10-15
Key performance indicators Strategic report 16-18
Chief Executive review including performance updates Strategic report 10-15
Employee involvement, engagement, development, inclusion and diversity Strategic report 20-34
Viability statement Strategic report 44-45
Environment, greenhouse gas emissions (GHG), energy consumption Strategic report 36-39
Directors’ remuneration Governance report– Report of the directors on remuneration 92-117
Mortgage arrears Risk report 146
Risk management Risk report 123 and 125-126
Principal risks Risk report 41-42 and 124
Emerging risks Strategic report – Risk overview 42-43
Directors’ share options Annual business statement 316
CRD IV country-by-country reporting Other information 317
Distributions on CCDS instruments Financial statements – note 31 296
Business relationships Strategic report – Engaging with our stakeholders 19-29
Financial instruments Financial statements – note 15 268-270
Corporate Governance statement Governance report – Statement of compliance with the UK Corporate Governance Code 2018 64
Board of direct
ors
The names of the Nationwide directors who we
re in office at the date of signing the financial statements, along with their biographies, are set out on pages 58 to 62.
The changes in the year and up to
the date of signing the financial statements are as follows:
Chris Rhodes (executive director and Chief Financial Officer) stepped down from the Board on 6 September 2024;
Muir Mathieson (executive director and Group Chief Financial Officer) was appointed to the Board on 6 September 2024;
Anand Aithal (non-executive director) was appointed to the Board on 1 October 2024; and
David Bennett (non-executive director) was appointed to the Board on 13 November 2024.
None of the directors have any beneficial interest in equity sh
ares in, or debentures of, any connected undertaking of the Group.
The Board has agreed that, in accordance wi
th the UK Corporate Governance Code, all the directors will stand for election or re-election on an annual basis.
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Political donations
Nationwide is politically neutral and does not support, or seek to influence public support for, any political party, nor make donations, contributions or pay subscriptions to any party. However,
it will from time to time make payments to third parties to
facilitate event space at party conferences and/or to participate in events organised by them at party conferences and which are
related to matters of interest to the Group and its members so as to communicate its position and understand that of others. These activities are not intended or considered to be in the nature
of party political campaigning, activity or support.
Charitable donations
The Group paid charitable donations of £18.7 million (2024: £13.6 million) in the financial year ended 31 March 2025.
Participation in the unclaimed assets scheme
The Group participates in the Government-backed unclaimed assets scheme, under which savings accounts that have been inactive for 15 years, and where the a
ccount holder cannot be traced,
are eligible to be transferred into a central reclaim fund. The central reclaim fund has the responsibility for retaining sufficient monies to meet the costs of future reclaims for any previously
transferred dormant account balances, and to transfer any surplus to the Big Lottery Fund for the benefit of good causes which have a social or environmental purpose. In December 2024,
Nationwide made a transfer of £9,217,759 to Reclaim Fund Ltd, the administrators of the unclaimed assets scheme, and a payment of £8,592,727 was made by the Virgin Money sub-group in
February 2025. The total contributions for the Group from inception to February 2025 are £120,387,819, including the February 2025 payment made by the Virgin Money sub-group since
acquisition.
Creditor payment policy
The Group’s aim is to agree terms of payment with suppliers at the start of trading, ensure that suppliers are aware of the terms of payment, and pay in accordance with contractual and other
legal obligations. The Group operates this through separate policies which aim to settle the supplier’s invoice for the complete provision of goods and services (unless there is an express
provision for stage payments), when in full conformity with the terms and conditions of the purchase, within the agreed payment terms.
The Group’s creditor days, calculated based on year end creditor balances and annualised total spend, were 6 days as at 31 March 2025 (2024: 5 days).
New activities
Virgin Money UK PLC, together with its subsidiaries, became part of the Group on 1 October 2024. While operating many of the same retail banking activities as the Nationwide sub-group,
Virgin Money broadens the Group’s product range with additional services.
Research and development
In the ordinary course of business, Nationwide regularly develops new products and services.
Directors’ responsibilities in respect of the preparation of the Annual Report and Accounts
The following statement, which should be read in conjunction with the independent auditor’s report on pages 205 to 217, is made by the directors to explain their responsibilities in relation to
the preparation of the Annual Report and Accounts, the directors’ emoluments disclosures within the Report of the directors on remuneration, the annual business statement and the
Directors’ report.
The Group financial statements included within the Annual Report and Accounts are prepared in accordance with international acc
ounting standards in conformity with the requirements of the
Building Societies Act 1986 and with those parts of the Building Societies (Accounts and Related Provisions) Regulations 1988 (as amended) that are applicable. International accounting
standards which have been adopted for use within the UK have also been applied in these financial statements.
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Directors’ responsibilities in respect of the preparation of the Annual Report and Accounts
(continued)
A copy of the Annual Report and Accounts
can be found on Nationwide’s website at nationwide.co.uk (Results and accounts section). The directors are responsible for the maintenance and
integrity of statutory and audited information on the website. Information published on the internet is accessible in many coun
tries with different legal requirements. Legislation in the UK
governing the preparation and dissemination of financial stat
ements may differ from legislation in other jurisdictions.
Building Societies Act 1986 (the Act)
As required by regulations made under the Ac
t, the directors have prepared an Annual Report and Accounts which gives a true and fair view of the income and expenditure of the Group for the
financial year and of the state of the affa
irs of the Group as at the end of the financial year, and which provides details of directors’ emoluments in accordance with Part VIII of the Act and
regulations made under it. The Act states
that the requirements under international accounting standards achieve a fair presentation.
In preparing the Annual Report
and Accounts, the directors have:
selected appropriate accounting policies and applied them consistently;
made judgements and estimates that are reasonable;
stated whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepared the financial statements on the going concern basis.
In addition, as required by the Act, the directors have prepared
an Annual Business Statement that can be found on pages 314 to 316 which, together with this Directors’ report, contains the
prescribed information relating to the busine
ss of the Group and its connected undertakings.
UK Finance Code for Financial Reporting Disclosure
The Group has continued to adopt the UK Finance Code for Financia
l Reporting Disclosure, and its Annual Report and Accounts 2025 has been prepared in compliance with its principles.
Going Concern
The Group’s
business activities and financial position, the factors likely to affect its future development and performance, it
s objectives and policies in managing the financial risks to which it is
exposed, and its capital, funding and li
quidity positions are set out in the Financial review and the Risk report.
The directors have assessed the Group with reference to current and anticipated market conditions, including the current geopol
itical environment. The Group’
s base case projections and
scenario analysis alongside stre
ss testing of the Nationwide and Virgin Money sub-groups, show that the Group will be able to o
perate at adequate levels of both liquidity and capital for at least
the next 12 months. Furthermore, the Group’s capital ratios and its total capital resources are comfortably in excess of Prudential Regulation Authority (PRA) requirements. This assessment has
been considered as part of the viability assessment, which is co
nsidered across a three-year horizon; further detail of the ass
essment is included within the viability statement on pages 44 to 45.
The directors confirm they are satisfied that
the Group has adequate resources to continue in business for a period of at least 12 months from the date of approval of the consolidated financial
statements and that it is therefore
appropriate to adopt the going concern basis in preparing these accounts.
Fair, balanced and understandable
The directors are satisfied that the Annual
Report and Accounts, taken as a whole, is fair, balanced and understandable, and provides the information necessary for members and other
stakeholders to assess the Group’s position
and performance, business model and strategy. Details of the governance procedures that have been embedded to support this can be found in the
Audit Committee report.
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Directors’ responsibilities in respect of the preparation of the Annual Report and Accounts
(continued)
Taskforce on Climate-related Financial Disclosures (TCFD)
The TCFD, established by the Financial Stability Board (FSB) in 2017, made recommendations designed to enable financial firms to produce clear, comprehensive, high-quality disclosures on
the impacts of climate change. Further enhancements were made in 2021, through the issuance of guidance on climate-related metrics, targets and transition plans. In 2023, the FSB asked the
International Financial Reporting Standards (IFRS) Foundation to take over monitoring the progress of firms’ climate-related disclosures. Nationwide publishes its TCFD-aligned Climate-
related Financial Disclosures annually, alongside its preliminary results. Nationwide also provides summary information consistent with the TCFD recommendations in the Strategic report
within its Annual Report and Accounts, aligned to the requirements of the Companies Act.
Enhanced Disclosure Task Force (EDTF)
The EDTF, established by the Financial Stability Board, published its report ‘Enhancing the Risk Disclosures of Banks’ in October 2012, with an update in November 2015 covering IFRS 9
expected credit losses. The Task Force on Disclosures about Expected Credit Losses (DECL), jointly established by the Financial Conduct Authority, Financial Reporting Council and the
Prudential Regulation Authority, published its third report in September 2022. The Group’s Annual Report and Accounts and Pillar 3 Disclosure have regard to EDTF and DECL Taskforce
recommendations.
Directors’ statement pursuant to the disclosure guidance and transparency rules
As required by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, the directors have included a fair review of the business and a description of the principal
risks and uncertainties facing the Group. The directors confirm that, to the best of each director’s knowledge and belief:
The Chief Executive review and the Financial review contained in the Strategic report include a fair review of the development and performance of the business and the position of the
Group. In addition, the Strategic report contains a description of the principal risks and uncertainties.
The financial statements, prepared in accordance with international accounting standards which have been adopted for use within the UK, give a true and fair view of the assets, liabilities,
financial position and profit the Group.
Directors’ responsibilities in respect of accounting records and internal control
The directors are responsible for ensuring that the Group and connected undertakings thereof:
Keep accounting records which disclose with reasonable accuracy the financial position of the Group and which enable them to ensure that the Annual Report and Accounts 2025 comply
with the Building Societies Act 1986.
Take reasonable care to establish, maintain, document and review such systems and controls as are appropriate to the Group.
The directors have general responsibility for safeguarding the assets of the Group and for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors who held office at the date of approval of this report confirm that, so far as they are each aware, there is no relevant audit information of which the Group’s auditors are unaware,
and each director has taken all the steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the Group’s auditors are
aware of that information.
The auditors
A resolution to re-appoint Ernst & Young LLP as external auditor will be proposed at the Annual General Meeting.
Kevin Parry
Chairman
28 May 2025
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Risk report
Introduction 123
Managing risk 123
Principal risks and uncertainties 124
Credit risk 127
• Overview 127
• Residential mortgages 133
• Consumer lending 149
• Business and commercial lending 158
• Treasury assets 167
Liquidity and funding risk 171
Capital risk 184
Market risk 190
Pension risk 196
Business risk 199
Operational and conduct risk 200
Model risk 203
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Risk report
Introduction
Effective risk management helps to ensure th
at we keep customers’ money safe and secure. This is critical to delivering our purpose:
Banking - but fairer, more rewarding, and for the
good of society
. The Group adopts a prudent approach to risk management, taking only those risks which support our strategy and managing them rigorously through a consistent
approach.
How risk is managed across the Group
Following the acquisition of Virgin Money on 1 October 2024, th
e Group continues to operate independent but aligned Enterprise Risk Management Frameworks (ERMFs) to manage risk
consistently within the two separate businesses and across the
Group. The Board retains overall responsibility for the management of these risks but delegates the day-to-day risk
management within each individual sub-grou
p where appropriate. The two separate risk frameworks follow similar principles based on the following core elements:
Identifying the principal risks to which the Group and its subsidiaries are exposed.
Establishing Group risk appetite, supported by more detailed risk appetite as appropriate for each business.
Implementing risk management, supported by appropriate risk and control monitoring, through an effective three lines of defence model.
Reporting risks through a robust governance structure to the appropriate level within the Group.
The frameworks are underpinned by processes,
policies and standards that are specific to individual risks faced by each sub-group, which focus on the responsibilities of key executives
and risk practitioners.
The design and operational effectiveness of
the Group’s approach to risk management and internal control is regularly reviewed and enhanced in response to changes in the internal and
external risk profile, allowing tailored responses to be develo
ped where improvements are considered appropriate. In 2025, this will include a review of the two ERMFs operated across
the Group to identify opportunities to strengthen the framewor
ks, enhance control, or better align practices and processes operated within the Group.
Introduction and Managing risk
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Principal risks and uncertainties
The principal risks set out in th
e table below are the key risks which are relevant to the Group and the achievement of its strategic objectives. These principal risks are derived from the
more detailed risk categories identified in the Nationwide and Virgin Money businesses. Each detailed risk category within the
two businesses is mapped to the corresponding principal
risk at a Group level.
Pages 41 to 43 clarify the link betw
een principal risks and emerging risks.
Risk appetite
Risk appetite sets the level of risk which is acceptable in th
e pursuit of the Group’s strategy. The Board approves the Group’s risk appetite, consisting of statements supported by metrics
with appropriate limits and triggers for all key risks to which
the Group is exposed. The Nationwide and Virgin Money sub-groups also approve risk appetite for the specific risks arising
from their operations through their
respective governance structures.
Principal Ris
k
Definition Further Detail
Credit risk The risk of loss as a result of a customer or counterparty failing to meet their financial obligations. Page 127
Liquidity and
funding risk
Liquidity risk is the risk that the Group is unable to meet its liabilities as they fall due and maintain member and other stakeholder confidence.
Funding risk is the risk that the Group is unable to maintain diverse funding sources in wholesale and retail markets and manage retail funding risk
that can arise from excessive concentrations of higher risk deposits.
Page 171
Capital risk
The risk that the Group fails to maintain sufficient capital to absorb losses throughout a full economic cycle and sufficient to maintain the
confidence of current and prospective investors, members, the Board, and regulators.
Page 184
Market risk
The risk that the net value of, or net income arising from, the Group's assets and liabilities is impacted as a result of market price or rate changes.
The Group does not have a trading book; therefore market risk only arises in the banking book.
Page 190
Pension risk The risk that the value of the pension schemes’ assets will be insufficient to meet the estimated liabilities, creating a pension deficit. Page 196
Business risk
The risk that volumes decline, margins shrink, or losses increase relative to the cost or capital base, affecting the sustainability of the business and
the ability to deliver the strategy due to external factors (macroeconomic, geopolitical, industry, regulatory, technological, or other external events)
or internal factors (including the development and execution of the strategy)
Page 199
Operational and
conduct risk
The risk of impacts resulting from inadequate or failed internal processes, conduct and compliance management, people and systems, or from
external events.
Page 200
Model risk
The risk of adverse consequences from model errors or the inappropriate use of modelled outputs. Model outputs may be affected by the quality of
data inputs, choice and suitability of methodology and the integrity of implementation. The adverse consequences include financial loss, poor
business or strategic decision making, or damage to the Group’s reputation.
Page 203
Principal risks and uncertainties
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Risk governance structure
The Board receives regular reports and assessments of the Group’s risk management and control environment and recommendations from Board Risk Committee (BRC) on matters
spanning all risk categories, including the appropriate level of risk appetite.
The BRC and Audit Committee provide oversight and advice to the Board. Matters such as risk appetite breaches and associated actions are reported to the relevant management
committee and, where appropriate, these are escalated through this governance structure as appropriate. The Group Risk Committee comprises members of both sub-groups to ensure a
coordinated management approach across all risks, and provides regular updates to the Board and Board Risk Committee on areas where it has challenged management and key
decisions.
Nationwide Board
Board Risk Committee (BRC)
Provides oversight and advice to the Board in relation to current
and potential future risk exposures and future risk strategy,
including determination of risk appetite.
Group Risk Committee (GRC)
Reviews, monitors and controls the combined Group’s risk
appetite, controls and exposures and considers group-wide risk
matters prior to consideration by the Board.
Nationwide sub-group Executive Risk Committee
Determines and amends Nationwide’s attitude to risk for endorsement by
the Board. Exercises responsibility for controlling risk across Nationwide,
ensuring controls are adequately designed and operating effectively.
Management Committees
Determines and amends Nationwide’s attitude to principal risks
identified by the Group
Audit Committee (AC)
Provides oversight and advice to the
Board in relation to financial and non-
financial reporting, internal and external
audit, and the adequacy and effectiveness
of internal controls and risk management
systems.
Virgin Money sub-group Executive Risk Committee
Determines and amends Virgin Money’s attitude to risk for endorsement by
the Board. Exercises responsibility for controlling risk across Virgin Money,
ensuring controls are adequately designed and operating effectively.
Management Committees
Determines and amends Virgin Money’s attitude to principal risks
identified by the Group
Principal risks and uncertainties (continued)
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Three lines of defence
Risk management activities are structured across three lines of defence, tailored to reflect the Group’s size, complexity and business model. Though everyone has a role to play in risk
management, the overall responsibilities and accountabilities are outlined through the model set out here.
A
ccountabilities
Providing expert risk advice on business initiatives
Providing advice on the setting of risk appetite
Reporting aggregate, enterprise-level risks
appropriately through the governance structure
Providing independent and risk-based assurance
A
ccountabilities
Performing independent audits of the effectiveness
of first line risk management and control, and
second line risk oversight, support and challenge
Taking a risk-based approach to the programme of
audit work
Preparing an annual opinion of the risk
management and controls framework to present
to the respective Audit Committees
Interpreting regulatory change
Setting the minimum standards for risk
management
Identifying future threats and risks
A
ccountabilities
Setting business objectives
Defining risk appetite for Board approval
Identifying, owning, and managing risks
Defining, operating, and testing controls
Identifying future threats and risks
Implementing and maintaining regulatory
compliance
Adhering to the minimum standards for risk
management and associated policies
Testing controls
Conducting outcomes testing
Operating and reporting on the control
framework
First line: Risk and control ownership
Second line: Oversight, support, and challenge
Third line: Assurance
Responsibilities
Designing and running business operations, owning and operating
most controls to manage risks and meet regulatory requirements.
Responsibilities
Overseeing, through support, challenge and the provision of advice,
the effectiveness of risk management by the first line.
Responsibilities
Providing assurance to the Board on the effectiveness of the control
environment.
Principal risks and uncertainties (continued)
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Credit risk – Overview
Credit risk is the risk of loss as a result
of a customer or counterparty failing to meet their financial obligations. Credit risk encompasses:
borrower/counterparty risk – the risk of loss arising from a borrower or counterparty failing to pay, or becoming increasingly likely not to pay the interest or principal on a loan, or on a
financial product, or for a service, on time;
security/collateral risk – the risk of loss arising from deteriorating security/collateral quality;
concentration risk – the risk of loss arising from insufficient diversification of region, sector, counterparties or other significant factor; and
refinance risk – the risk of loss arising when a repayment of a loan or other financial product occurs later than originally anticipated.
The Group man
ages credit risk for the following portfolios:
Portfolio Definition Residential mortgages Loans secured on residential property Consumer lending Unsecured lending comprising current account overdrafts, personal loans and credit cards Business and commercial lending Lending to non-retail customers, including registered social landlords Treasury Treasury liquidity, derivatives and investment portfolios
Management
of credit risk
The Group lends in a responsible, affordable and sustainable way
to ensure safeguarding of customers and the financial strength of the Group throughout the credit cycle.
To this end, the Board Risk Commi
ttee sets the level of risk appetite it is willing to take in pursuit of the Group’s strategy, which is articulated as Board risk appetite statements and
underlying principles:
Safeguarding our customers and counte
rparties by lending responsibly:
Only lending to customers or counterparties who demonstrate that they can afford to borrow.
Supporting customers buying mortgageable properties of wide-ranging types and qualities.
Working with customers and counterparties to recover their financial position should there be a delay, or risk of delay, in meeting their financial obligations.
Safeguarding the Group’s financial pe
rformance, strength and reputation:
Managing asset quality so that losses through an economic cycle will not undermine profitability, financial strength and our standing with external stakeholders.
Ensuring that no material segment of our lending exposes the Group to excessive loss.
Proactively managing credit risk and complying with regulations.
The Group operates with a commitment to resp
onsible lending and a focus on championing good conduct and fair outcomes. In this respect, the Group formulates appropriate credit criteria
and policies which are aimed at mitigating ri
sk from individual transactions and ensuring that credit risk exposure remains within risk appetite. Under a governed delegated mandate
structure from the Board Risk Committee, th
e respective Credit Committees, individual Material Risk Takers and relevant personnel holding lending mandates for the Nationwide and
Virgin Money sub-groups make credit decision
s, based on a thorough credit risk assessment, to ensure that customers and counterparties are able to meet their obligations.
Credit risk is managed within the risk appetite set by the Board. Performance against this appetite is measured across a range
of metrics and is reported to the respective sub-group Credit
Committees each month. Corrective action is taken when metrics mo
ve towards or beyond defined thresholds to ensure performance remains or returns to appetite within an appropriate
timescale.
Credit risk – Overview
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Credit risk – Overview (continued)
The Group is committed to helping customers who may anticipate, or find themselves experiencing a period of financial difficulty, offering a range of forbearance options tailored to their
individual circumstances. Accounts in arrears, or where the borrower is in financial difficulty, are managed by specialist teams within the Group or referred to debt charities to ensure an
optimal outcome for our customers and the Group.
Forbearance
Forbearance occurs when concessions are made to the contractual terms of a loan when the customer is facing or about to face difficulties in meeting their financial commitments. A
concession is where the customer receives assistance, which could be a modification to the previous terms and conditions of a facility or a total or partial refinancing of debt, either mid-
term or at maturity. Requests for concessions are principally attributable to:
temporary cash flow problems;
breaches of financial covenants; or
an inability to repay at contractual maturity.
Consistent with the European Banking Authority reporting definitions, loans are reported as forborne, until they meet the regulatory forbearance exit criteria.
Impairment provisions
Impairment provisions on financial assets are calculated on an expected credit loss (ECL) basis for assets held at amortised cost and at fair value through other comprehensive income
(FVOCI). ECL impairment provisions are based on an assessment of the probability of default (PD), exposure at default (EAD) and loss given default (LGD), discounted to give a net present
value. Provision calculations for retail portfolios are typically performed on a collective rather than individual loan basis. For collective assessments, whilst each loan has an associated ECL
calculation, the calculation is based on cohort level data for assets with shared credit risk characteristics (e.g. origination date, origination loan to value, term).
Impairment provisions are calculated using a three-stage approach depending on changes in credit risk since original recognition of the assets:
a loan which is not credit impaired on initial recognition and has not subsequently experienced a significant increase in credit risk is categorised as being within stage 1, with a
provision equal to a 12-month ECL (losses arising on default events expected to occur within 12 months);
where a loan’s credit risk increases significantly, it is moved to stage 2. The provision recognised is equal to the lifetime ECL (losses on default events expected to occur at any point
during the life of the asset);
if a loan meets the definition of credit impaired, it is moved to stage 3 with a provision equal to its lifetime ECL.
In addition to the stage allocation outlined above, loans which have been purchased or originated with a credit-impaired (POCI) status are reported separately. At initial recognition, POCI
assets do not carry an impairment provision; instead, gross balances are presented net of lifetime expected credit losses at acquisition. All changes in lifetime expected credit losses
subsequent to acquisition are recognised as an impairment charge or release.
For loans and advances held at amortised cost, the stage distribution and the provision coverage ratios are shown in this report for each portfolio. The provision coverage ratio is
calculated by dividing the provisions by the gross balances for each lending portfolio. Loans remain on the balance sheet, measured net of associated provisions, until they are repaid or
deemed no longer recoverable, when such loans are written off.
Governance and oversight of impairment provisions
The models used in the calculation of impairment provisions are governed in accordance with the model risk policies for the Nationwide and Virgin Money sub-groups as described in the
Model risk section of this report. PD, EAD and LGD models are subject to regular monitoring and annual validation in line with the relevant sub-group policy. Where necessary,
adjustments are approved for risks not captured in model outputs, for example where insufficient historic data exists.
Credit risk – Overview (continued)
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Credit risk – Overview (continued)
The Group’s economic scenarios used in the calculation of impairment provisions and associated probability weightings are proposed by our Chief Economist and are governed through a
quarterly meeting attended by the Group Chie
f Financial Officer. Details of these economic assumptions and material adjustments are included in note 10 to the financial statements.
All key judgements relating to impairment provisions are govern
ed through regular formal meetings for the Nationwide and Virgin Money sub-groups. Impairment provisions are
reported to the Audit Committee for each sub-group, where the ke
y judgements and estimates by management are reviewed and challenged.
Developments in the year
Whilst the UK economy has been broadly stable during the year, th
ere has been some uncertainty which was largely driven by geopolitical tensions and fiscal changes. The UK has seen
Bank rate reduce by 75 basis points but remain higher than the
pre-2021 rates at which many current fixed-rate mortgages were originated. The rate of inflation has reduced slightly but
remains above the Bank of Engl
and’s target of 2%. Annual house price growth was 3.9% in the year to March 2025.
The key development in the year is the acqui
sition of Virgin Money. The movements in each portfolio over the period are set out below.
Residential mortgages
Group residential mortgage balances have in
creased to £275.9 billion (2024: £204.5 billion) following the Virgin Money acquisition. Virgin Money mortgages are primarily owner-
occupied, with a similar credit risk profil
e to the Nationwide sub-group. Nationwide sub-group balances have increased due to continued support for first time buyers, together with the
continued focus on retention through highly compet
itive products provided to existing customers.
Residential mortgage arrears have
remained at low levels during the year and well below the industry average. The Group arrears rate has increased slightly to 0.43% (2024: 0.41%)
following the acquisition of Virgin Money,
which has an arrears rate of 0.58%, with the Nationwide sub-group arrears remaining broadly stable at 0.40% (2024: 0.41%).
Consumer lending
Group consumer lending balances have increa
sed to £11.1 billion (2024: £4.3 billion). The acquisition of Virgin Money and its significant credit card portfolio has been the main driver of this
increase, with credit card lending now representing 70% of tota
l consumer lending. The significant balance growth and change in the portfolio composition has not resulted in a material
change to the overall credit risk profile, reflected by a slight reduction to 1.11% (2024: 1.36%) in the Group arrears rate. Na
tionwide sub-group arrears have remained low during the year
representing 1.23% (2024: 1.36%) of the portfolio.
Business and commercial lending
Group business and commercial lending balances have increased to £15.1 billion (2024: £5.5 billion) following the Virgin Money
acquisition. Virgin Money business lending balances total
£9.5 billion and include term lending, asset and lease financin
g, specialist finance and other business lending, including business overdrafts and credit cards. The Virgin Money portfolio is
diversified across a range of sectors, with
the highest risk concentration being across the agriculture, business services, and government, health and education sectors. The Nationwide
sub-group lending is primarily to registered social landlords which have a low risk profile.
Provisions
Provisions have increased to £1,288 million (4 April 2024: £781 million) which includes Virgin Money sub-group provisions of £5
80 million. Group provisions include a modelled
adjustment for affordability risk
s totalling £83 million (4 April 2024: £145 million), which includes the impact of elevated mortgage interest rates. This adjustment has reduced during the
year due to the continued resilience of th
e portfolios, where the previously anticipated increase in arrears has not materialised.
Credit risk – Overview (continued)
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Credit risk – Overview (continued)
Outlook
In the base case scenario, the Group expects modest growth in the UK economy, with inflation expected to return to target in the years ahead. House prices are expected to continue to
grow steadily, whilst Bank rate is likely to be eased gradually. However, the outlook remains uncertain, given ongoing heightened geopolitical tensions, emerging policies of the UK
Government and uncertainty surrounding US trade policies.
The Group remains vigilant to the uncertainties within the geopolitical and economic landscape, assessing its impact on borrowers and the credit risks affecting our lending portfolios to
ensure appropriate actions are taken to support our customers. To date, borrowers have remained resilient to affordability pressures; arrears rates are expected to rise but remain below
the industry average.
Credit risk – Overview (continued)
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Credit risk – Overview (continued)
Maximum exposure to credit risk
The Group’s maximum exposure to credit risk at 31
March 2025 was £383 billion (2024: £282 billion).
Credit risk largely arises from loans and ad
vances to customers, which account for 84% (2024: 80%) of the Group’s credit risk exposure. Within this, the exposure relates primarily to
residential mortgages, which account for 90% (2024: 95%) of loans and advances to customers and
comprise high-quality assets with historically low occurrences of arrears and
repossessions.
In addition to loans and advances to cust
omers, the Group is exposed to credit risk on all other financial assets. For all financial assets recognised on the balance sheet, the maximum
exposure to credit risk represents the
balance sheet carrying value after allowance for impairment, plus off-balance sheet commitments. For off-balance sheet commitments, the
maximum exposure is the maximum amount that
the Group would have to pay if the commitments were to be called upon. For loan commitments and other credit-related commitments
that are irrevocable over the life of the
respective facilities, the maximum exposure is the full amount of the committed facilities.
Maximum exposure to credit risk - Group 2025 Gross Impairment Carrying Commitments Maximum % of total balancesprovisionsvalue(note i)credit risk credit risk exposureexposure £m £m £m £m £m % Amortised cost loans and advances to customers:Residential mortgages 275,890 (351) 275,539 13,765 289,304 76 Consumer lending 11,107 (824) 10,283 113 10,396 3 Business and commercial lending 14,818 (113) 14,705 5,580 20,285 5 Fair value adjustment for micro hedged risk (note ii) 277 - 277 - 277 - 302,092 (1,288) 300,804 19,458 320,262 84 FVTPL loans and advances to customers:Residential mortgages (note iii) 36 - 36 - 36 - Business and commercial lending (note iv) 49 - 49 - 49 - 85 - 85 - 85 - Other items:Cash and balances at central banks 29,483 - 29,483 - 29,483 8 Loans and advances to banks and similar institutions 1,810 - 1,810 - 1,810 1 Investment securities – FVOCI 28,658 - 28,658 - 28,658 7 Investment securities – Amortised cost - - - - - - Investment securities – FVTPL5 - 5 5 10 - Derivative financial instruments 4,742 - 4,742 - 4,742 1 Fair value adjustment for portfolio hedged risk (note ii) (2,037) - (2,037) - (2,037) (1) 62,661 - 62,661 5 62,666 16 Total364,838 (1,288) 363,550 19,463 383,013 100
The Society’s maximum exposure to credit ri
sk at 31 March 2025, which excludes Virgin Money and subsidiary lending, totals £285 billion (2024: £278 billion). This includes all financial
assets recognised on the Society’s balance sheet, the maximum expo
sure to credit risk represents the balance sheet carrying value after allowance for impairment, plus off-balance sheet
commitments. Further information is included in notes 12, 14 and 29 to the financial statements.
Credit risk – Overview (continued)
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Credit risk – Overview (continued)
Maximum exposure to credit risk (note v) – Group 2024 Gross Impairment Carrying Commitments Maximum % of total balancesprovisionsvalue(note i)credit risk credit risk exposureexposure £m £m £m £m £m % Amortised cost loans and advances to customers:Residential mortgages 204,427 (321) 204,106 11,526 215,632 76Consumer lending 4,263 (436) 3,827 18 3,845 2Business and commercial lending 5,139 (24) 5,115 1,795 6,910 2Fair value adjustment for micro hedged risk (note ii) 350 - 350 - 350 -214,179 (781) 213,398 13,339 226,737 80FVTPL loans and advances to customers:Residential mortgages (note iii) 40 - 40 - 40 -Business and commercial lending (note iv) 2 - 2 - 2 -42 - 42 - 42 -Other items:Cash and balances at central banks 25,231 - 25,231 - 25,231 9Loans and advances to banks and similar institutions 918 - 918 - 918 -Investment securities – FVOCI 26,522 - 26,522 - 26,522 10Investment securities – Amortised cost 4 - 4 - 4 -Investment securities – FVTPL 6 - 6 5 11 -Derivative financial instruments 6,290 - 6,290 - 6,290 2Fair value adjustment for portfolio hedged risk (note ii) (3,330) - (3,330) - (3,330) (1)55,641 - 55,641 5 55,646 20Total 269,862 (781) 269,081 13,344 282,425 100
Notes:
i.
In addition to the amounts shown above, the Group has revocable commitments of £23,352 million (2024: £10,394 million) primarily in respect of credit card and overdraft facilities. These commitments
represent agreements to lend in the future, subject to certain considerations. Such commitments are cancellable by the Group, subject to notice requirements, and given their nature are not expected to be
drawn down to the full level of exposure.
ii.
The fair value adjustment for portfolio hedged risk and the fair value adjustment for micro hedged risk (which relates to the business and commercial lending portfolio) represent hedge accounting
adjustments.
iii.
FVTPL residential mortgages include equity release and shared equity loans.
iv.
Business and commercial lending was previously reported as commercial lending. This has been updated as a result of the Virgin Money acquisition and its material business lending portfolio.
v.
Comparatives have been restated as detailed in note 1 to the financial statements.
C
ommitments
Irrevocable undrawn commitments to lend are within the scope of
provision requirements. The commitments in the table above consist of overpayment reserves and separately
identifiable irrevocable commitme
nts for the pipeline of residential mortgages, personal loans, business and commercial loans and investment securities. These commitments are not
recognised on the balance sheet; the associated provision of £4.6 million (2024: £0.3 million) is included within provisions fo
r liabilities and charges. The majority of the off-balance sheet
commitments are in stage 1, with a provision equal to a 12-month ECL.
Revocable commitments relating to overdrafts
and credit cards are included in the calculation of impairment provisions, with the allowance for future drawdowns included in the estimate
of the exposure at default.
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Credit risk – Residential mortgages
Summary
The Group’s residential mortgages comprise owner-occupied, buy to let and legacy loans. Owner-occupied residential mortgages are mainly advances made through the Nationwide,
Virgin Money, Clydesdale and Yorkshire Bank brands. Buy to let is lending originated through The Mortgage Works (UK) plc as well as Virgin Money, Clydesdale and Yorkshire Bank
brands. Legacy mortgages are smaller owner-occupied portfolios in run-off.
Gross balances have increased during the year to £275.9 billion (2024: £204.5 billion), with the acquisition of Virgin Money driving the majority of this increase. Virgin Money balances of
£55.6 billion include £41.1 billion of owner-occupied and £14.5 billion of buy to let mortgage balances. Nationwide sub-group balances have increased by £15.9 billion, with a focus on
supporting first time buyers. Net lending has also been supported by the continued focus on retention through highly competitive products provided to existing customers.
Residential mortgage arrears have remained at low levels during the year, with the Group arrears rate increasing slightly to 0.43% (2024: 0.41%) following the acquisition of Virgin Money,
which has a mortgage arrears rate of 0.58%. The proportion of cases more than 3 months in arrears for the Nationwide sub-group have remained broadly stable at 0.40% (2024: 0.41%).
Residential mortgage gross balances 2025 2024 (Audited) £m % £m % Owner-occupied 215,546 78 160,941 79 Buy to let and legacy:Buy to let 59,383 22 42,321 21 Legacy 961 - 1,165 - 60,344 22 43,486 21 Amortised cost loans and advances to customers 275,890 100 204,427 100 FVTPL loans and advances to customers 36 40Total residential mortgages 275,926 204,467
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Credit risk – Residential mortgages (continued)
Residential mortgages staging analysis
The following table shows the Group’s residential mortgage lending balances carried at amortised cost, the stage allocation of the loans, impairment provisions and the resulting
provision coverage ratios.
Residential mortgages staging analysis - Group 2025 Stage 1 Stage 2 Stage 2 Stage 2 Stage 2 Stage 3 POCI Total totalUp to date 1 – 30 DPD >30 DPD (note ii)(note i)(note i)(Audited) £m £m £m£m£m £m £m £m Gross balancesOwner-occupied 200,586 13,740 12,434 841 465 833 387 215,546 Buy to let and legacy 35,822 23,821 23,261 344 216 504 197 60,344 Total 236,408 37,561 35,695 1,185 681 1,337 584 275,890 ProvisionsOwner-occupied 14 58 41 7 10 41 2 115 Buy to let and legacy 31 150 131 10 9 54 1 236 Total 45 208 172 17 19 95 3 351 Provisions as a % of total balance % % % % % % % % Owner-occupied 0.01 0.42 0.33 0.82 2.05 4.99 --0.05 Buy to let and legacy 0.09 0.63 0.56 2.84 4.49 10.62 --0.39 Total 0.02 0.55 0.48 1.41 2.82 7.11 --0.13
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Credit risk – Residential mortgages (continued)
Residential mortgages staging analysis - Group 2024 Stage 1 Stage 2 Stage 2 Stage 2 Stage 2 Stage 3 POCI Total total Up to date 1 – 30 DPD >30 DPD (note ii) (note i) (note i) (Audited) £m £m £m £m £m £m £m £m Gross balances Owner-occupied 147,573 12,676 11,597 785 294 692 - 160,941 Buy to let and legacy 19,922 22,910 22,371 362 177 541 113 43,486 Total 167,495 35,586 33,968 1,147 471 1,233 113 204,427 Provisions Owner-occupied 7 46 31 7 8 37 - 90 Buy to let and legacy 15 151 126 15 10 65 - 231 Total 22 197 157 22 18 102 - 321 Provisions as a % of total balance % % % % % % % %Owner-occupied 0.00 0.36 0.27 0.89 2.72 5.37 - 0.06 Buy to let and legacy 0.07 0.66 0.56 4.28 5.55 12.03 - 0.53 Total 0.01 0.55 0.46 1.96 3.78 8.29 - 0.16
Notes:
i. Days past due (DPD) is a measure of arrears status.
ii. POCI loans are those which were credit impaired on purchase or acquisition. The POCI loans shown in the table above were recognised on the balance sheet when the Derbyshire Building Society was
acquired in December 2008 and Virgin Money was acquired in October 2024. The provision coverage for POCI loans has not been included due to the gross balance being reported net of the lifetime ECL.
On 1 October 2024, Virgin Money balances were recognised as either stage 1 or POCI. Since this date, the acquired balances have transferred from stage 1 to stages 2 or 3 if they have met
the stage allocation criteria relative to their credit risk at the acquisition date.
Stage 2 balances of £37.6 billion (2024: £35.6 billion) include £2.2 billion of Virgin Money balances where lending has transferred to stage 2 since acquisition. Nationwide sub-group stage
2 balances have remained broadly stable at £35.4 billion (2024: £35.6 billion). A reduction in the Nationwide sub-group staging impact of the modelled adjustment for affordability risks to
£9.2 billion (2024: £12.8 billion) has been offset by the impact of PD model recalibrations.
Stage 3 balances of £1,337 million (2024: £1,233 million) include £118 million of Virgin Money balances. The Nationwide sub-group stage 3 balance has remained broadly stable. Of the total
stage 3 balance, £910 million (2024: £800 million) is in respect of loans which are more than 90 days past due, with the remainder being impaired due to other indicators of unlikeliness to
pay such as forbearance.
The POCI balance of £584 million (2024: £113 million) includes £484 million of Virgin Money loans which were credit impaired at acquisition. The POCI gross balance is presented net of
lifetime ECL of £21 million (2024: £5 million).
Residential mortgage provisions have increased to £351 million (2024: £321 million), primarily due to the recognition of £37 million of provisions for the acquired Virgin Money loans.
Nationwide sub-group provisions have remained broadly stable at £314 million (2024: £321 million). Group provisions include a modelled adjustment of £70 million (2024: £72 million) to
reflect an increase to the PD to account for ongoing affordability risks, including those related to higher interest rates. Further information is included in note 10 to the financial
statements.
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Credit risk – Residential mortgages (continued)
The following table shows the Society’s residential mortgage lending balances carried at amortised cost, the stage allocation of the loans, impairment provisions and the resulting
provision coverage ratios. The Society’s balances exclude both Virgin Money and other subsidiaries, including TMW.
Residential mortgages staging analysis – Society 2025 Stage 1 Stage 2 Stage 2 Stage 2 Stage 2 Stage 3 POCI Total totalUp to date 1 – 30 DPD >30 DPD(Audited) £m £m £m£m£m £m £m £m Gross balancesOwner-occupied 161,412 12,150 11,064 759 327 736 - 174,298 Buy to let and legacy 129 71 65 3 3 11 - 211 Total 161,541 12,221 11,129 762 330 747 - 174,509 ProvisionsOwner-occupied 8 45 32 6 7 39 - 92 Buy to let and legacy - 1 1 - - 2 - 3 Total 8 46 33 6 7 41 - 95 Provisions as a % of total balance % % % % % % % % Owner-occupied 0.00 0.38 0.30 0.76 2.03 5.31 - 0.05 Buy to let and legacy 0.18 2.32 2.28 3.14 2.43 15.55 - 1.72 Total 0.00 0.39 0.31 0.77 2.03 5.46 - 0.05 Residential mortgages staging analysis – Society 2024 Stage 1 Stage 2 Stage 2 Stage 2 Stage 2 Stage 3 POCI Total total Up to date 1 – 30 DPD >30 DPD (Audited) £m £m £m £m £m £m £m £m Gross balances Owner-occupied 147,453 12,660 11,584 782 294 683 - 160,796 Buy to let and legacy 164 93 84 6 3 11 - 268 Total 147,617 12,753 11,668 788 297 694 - 161,064 Provisions Owner-occupied 7 45 30 7 8 36 - 88 Buy to let and legacy - 4 4 - - 1 - 5 Total 7 49 34 7 8 37 - 93 Provisions as a % of total balance % % % % % % % %Owner-occupied 0.00 0.36 0.27 0.89 2.72 5.23 - 0.05Buy to let and legacy 0.18 4.00 3.89 5.86 3.34 12.42 - 2.02Total 0.00 0.39 0.29 0.92 2.73 5.34 - 0.06
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Credit risk – Residential mortgages (continued)
Group impairment charge and write-offs for the year 2025 2024 (Audited)£m £m Owner-occupied 25 7 Buy to let and legacy 8 37 Total impairment charge 33 44 % % Impairment charge as a % of average gross balance 0.01 0.02 £m £m Gross write-offs 12 8
The Group impairment charge for the year includes a £36 million charge for the Virgin Money sub-group. This charge is primarily due to the initial recognition of provisions for the
acquired Virgin Money loans, including alignment to key elements of the Group’s impairment provision methodology. The total charge includes an impairment release of £3 million (2024:
£44 million charge) for the Nationwide sub-group, reflecting a modest reduction in balance sheet provisions to £314 million (2024: £321 million).
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Credit risk – Residential mortgages (continued)
The table below summarises the movements in, and stage allocations of, the Group’s residential mortgages held at amortised cost, including the impact of ECL impairment provisions.
The movements within the table compare the position at 31 March 2025 to that at the start of the reporting period.
Reconciliation of net movements in residential mortgage balances and impairment provisions – Group Non-credit impaired Credit impaired (note i)Subject to 12-month ECL Subject to lifetime ECL Subject to lifetime ECL Total Stage 1 Stage 2 Stage 3 and POCIGross Gross Gross Gross ProvisionsProvisionsProvisionsProvisionsbalancesbalancesbalancesbalances(Audited) £m £m £m £m £m £m £m £m At 5 April 2024 167,495 22 35,586 197 1,346 102 204,427 321Stage transfers:Transfers from stage 1 to stage 2 (12,649) (2) 12,649 2 - - - - Transfers to stage 3 (137) - (428) (12) 565 12 - - Transfers from stage 2 to stage 1 11,406 33 (11,406) (33) - - - - Transfers from stage 3 56 1 219 10 (275) (11) - - Net remeasurement of ECL arising from transfer of stage - (30) - 28 - 15 - 13 Net movement arising from transfer of stage (1,324) 2 1,034 (5) 290 16 - 13 New assets originated or purchased (notes ii and iii) 89,768 19 4,662 43 609 10 95,039 72 Net impact of further lending and repayments (6,494) (1) (471) (2) (10) (1) (6,975) (4) Changes in risk parameters in relation to credit quality - 5 - (4) - 9 - 10 Other items impacting income statement (including recoveries) - - - - - (9) - (9) Redemptions (13,037) (2) (3,250) (21) (280) (26) (16,567) (49) Income statement charge for the period 33 Decrease due to write-offs - - - - (34) (12) (34) (12) Other provision movements - - - - - 9 - 9 At 31 March 2025 236,408 45 37,561 208 1,921 98 275,890 351 Net carrying amount 236,363 37,353 1,823 275,539
Notes:
i. Gross balances of credit impaired loans include £584 million (2024: £113 million) of POCI loans, which are presented net of a lifetime ECL of £21 million (2024: £5 million).
ii. If a new asset is originated in the period, the values included are the closing gross balance and provision for the period. The stage in which the addition is shown reflects the stage allocation of the asset at
the end of the period.
iii. Virgin Money balances of £55.6 billion have been included within the new assets originated or purchased line item.
Further information on movements in gross loans and advances to customers and impairment provisions, including the methodology applied in preparing the table, is included in note 14
to the financial statements.
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Credit risk – Residential mortgages (continued)
Loans which are reported within stage 2 are those which have experienced a significant increase in credit risk since origination, determined through both quantitative and qualitative
indicators. The table below summarises the Group’s stage 2 balances and impairment provisions for these indicators.
Reason for residential mortgages being reported in stage 2 (note i) - Group 2025 Owner-occupied Buy to let and legacy Total Provisions Provisions Provisions Gross Gross Gross Provisions as a % of Provisions as a % of Provisions as a % of balances balances balances balance balance balance £m £m % £m £m % £m £m %Quantitative criteria:Payment status (greater than 30 DPD) 465 10 2.05 216 9 4.49 681 19 2.82 Increase in PD since origination (less than 30 DPD) 12,589 46 0.37 21,731 125 0.58 34,320 171 0.50 Qualitative criteria:Forbearance (less than 30 DPD) 206 1 0.34 24 - 1.63 230 1 0.47 Interest only – significant risk of inability to refinance at maturity (less than 30 DPD) - - - 1,709 15 0.85 1,709 15 0.85 Other qualitative criteria 480 1 0.29 141 1 0.46 621 2 0.33 Total stage 2 gross balances 13,740 58 0.42 23,821 150 0.63 37,561 208 0.55 Reason for residential mortgages being reported in stage 2 (note i) - Group 2024 Owner-occupied Buy to let and legacy Total Provisions Provisions Provisions Gross Gross Gross Provisions as a % of Provisions as a % of Provisions as a % of balances balances balances balance balance balance £m £m % £m £m % £m £m %Quantitative criteria: Payment status (greater than 30 DPD) 294 8 2.72 177 10 5.55 471 18 3.78 Increase in PD since origination (less than 30 DPD) 12,192 38 0.31 21,298 124 0.58 33,490 162 0.48 Qualitative criteria: Forbearance (less than 30 DPD) 148 - 0.01 2 - 0.45 150 - 0.02 Interest only – significant risk of inability to refinance at maturity (less than 30 DPD) - - - 1,430 17 1.22 1,430 17 1.22 Other qualitative criteria 42 - 0.02 3 - 0.23 45 - 0.04 Total stage 2 gross balances 12,676 46 0.36 22,910 151 0.66 35,586 197 0.55
Note:
i. Where loans satisfy more than one of the criteria for determining a significant increase in credit risk, the corresponding gross balance has been assigned in the order in which the categories are presented
above.
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Credit risk – Residential mortgages (continued)
The table below outlines the main criteria used to determine whether a significant increase in credit risk since origination has occurred.
Criteria Detail Quantitative The primary quantitative indicators are the outputs of internal credit risk assessments. For residential mortgage exposures, PDs are derived using models, which use external information such as that from credit reference agencies, as well as internal information such as known instances of arrears or other financial difficulty. Current and historical data relating to an exposure are combined with forward-looking macroeconomic information to determine the likelihood of default. The 12-month and lifetime PDs are calculated for each loan. Similar quantitative staging principles are applied across Nationwide and Virgin Money sub-groups. However, there are differences in the specific criteria, as outlined below. Nationwide sub-group: The 12-month and lifetime PDs are compared to pre-determined benchmarks at each reporting date to ascertain whether a relative or absolute increase in credit risk has occurred. The indicators for a significant increase in credit risk are: Absolute measures: - The 12-month PD exceeds the 12-month PD threshold that is indicative, at the assessment date, of an account being in arrears.- The residual lifetime PD exceeds the residual lifetime PD threshold, set at inception, which represents the maximum credit risk that would have been accepted at thatpoint. Relative measure: - The residual lifetime PD has increased by at least 75 basis points and has at least doubled. Virgin Money sub-group: The residual lifetime PD is compared to a threshold which varies by portfolio, and is based on the lifetime PD curves calculated at origination. The PD threshold curves were recalculated at acquisition, to reset the origination point to 1 October 2024, being the date when the Virgin Money business was acquired by the Group. Qualitative Qualitative indicators include the increased risk associated with interest only loans which may not be able to refinance at maturity, customer indebtedness markers and loans which have been in arrears during the past 12 months. Also included are forbearance events where full repayment of principal and interest is still anticipated, on a discounted basis. Backstop In addition to the primary criteria for stage allocation described above, accounts that are more than 30 days past due are also transferred to stage 2.
At 31 March 2025, stage 2 balances were £37.6 billion (2024: £35.6 billion). Of these, only 2% (2024: 1%) are in arrears by 30 days or more, with the majority of balances in stage 2 due to an
increase in PD since origination. This category includes £9.2 billion (2024: £12.8 billion) of loans where the PD has been uplifted to recognise the increased risk of default due to borrower
affordability pressures. The impact of this uplift in PD has resulted in these loans breaching existing quantitative PD thresholds.
Stage 2 loans include all loans greater than 30 days past due (DPD), including those where the original reason for being classified as stage 2 was other than arrears greater than 30 DPD.
The value of loans in stage 2 due solely to payment status is 0.1% (2024: <0.1%) of total stage 2 balances.
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Credit risk – Residential mortgages (continued)
Credit quality
The residential mortgage portfoli
o comprises many small loans which are broadly homogenous, have low volatility of credit risk outcomes and are geographically diversified. The table
below shows the Group’s loan balances and pr
ovisions for residential mortgages held at amortised cost, by PD range. The PD distributions shown are based on 12-month IFRS 9 PDs at
the reporting date.
Loan balance and provisions by PD - Group 2025 Gross balances (note i) Provisions Stage 3 Stage 3 Provision (Audited) Stage 1 Stage 2 Total Stage 1 Stage 2 Total and POCI and POCI coverage PD Range £m £m £m £m £m £m £m £m % 0.00 to < 0.15% 175,908 3,617 32 179,557 5 6 - 11 0.01 0.15 to < 0.25% 24,703 2,124 16 26,843 4 5 - 9 0.03 0.25 to < 0.50% 19,419 5,160 20 24,599 5 14 - 19 0.08 0.50 to < 0.75% 8,542 3,319 14 11,875 11 9 - 20 0.17 0.75 to < 2.50% 7,032 12,249 47 19,328 10 42 - 52 0.27 2.50 to < 10.00% 613 6,678 67 7,358 5 48 - 53 0.72 10.00 to < 100% 191 4,414 201 4,806 5 84 7 96 2.00 100% (default) - - 1,524 1,524 - - 91 91 5.96 Total 236,408 37,561 1,921 275,890 45 208 98 351 0.13 Loan balance and provisions by PD - Group 2024 Gross balances (note i) Provisions Stage 3 Stage 3 Provision (Audited) Stage 1 Stage 2 Total Stage 1 Stage 2 Total and POCI and POCI coverage PD Range £m £m £m £m £m £m £m £m % 0.00 to < 0.15% 128,032 3,099 32 131,163 4 3 - 7 0.01 0.15 to < 0.25% 14,654 1,888 7 16,549 2 4 - 6 0.040.25 to < 0.50% 13,712 5,865 10 19,587 6 11 - 17 0.08 0.50 to < 0.75% 5,148 3,779 8 8,935 2 9 - 11 0.12 0.75 to < 2.50% 5,525 10,733 41 16,299 4 38 - 42 0.26 2.50 to < 10.00% 389 6,491 53 6,933 3 49 - 52 0.75 10.00 to < 100% 35 3,731 191 3,957 1 83 10 94 2.37 100% (default) - - 1,004 1,004 - - 92 92 9.15 Total 167,495 35,586 1,346 204,427 22 197 102 321 0.16
Note:
i.
Includes POCI loans of £584 million (2024: £113 million).
At 31
March 2025, 95% (2024: 94%) of the portfolio had a 12-month IFRS 9 PD of less than 2.5%, reflecting the high quality of the residential mortgage portfolio.
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Credit risk – Residential mortgages (continued)
The table below shows the Society’s loan balances and provisions for residential mortgages held at amortised cost, by PD range. The Society’s balances exclude both Virgin Money and
other subsidiaries, including TMW. The PD distributions show
n are based on 12-month IFRS 9 PDs at the reporting date.
Loan balance and provisions by PD - Society 2025 Gross balances Provisions Provision coverage (Audited) Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total PD Range £m £m £m £m £m £m £m £m % 0.00 to < 0.15% 132,568 1,801 20 134,389 3 1 - 4 0.00 0.15 to < 0.25% 14,570 622 7 15,199 1 1 - 2 0.01 0.25 to < 0.50% 9,833 983 6 10,822 2 1 - 3 0.03 0.50 to < 0.75% 2,656 442 4 3,102 1 1 - 2 0.05 0.75 to < 2.50% 1,912 3,879 20 5,811 1 7 - 8 0.14 2.50 to < 10.00% 2 2,486 33 2,521 - 9 - 9 0.37 10.00 to < 100% - 2,008 80 2,088 - 26 4 30 1.45 100% (default) - - 577 577 - - 37 37 6.41 Total 161,541 12,221 747 174,509 8 46 41 95 0.05 Loan balance and provisions by PD - Society 2024 Gross balances ProvisionsProvision (Audited) Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total coverage PD Range £m £m £m £m £m £m £m £m % 0.00 to < 0.15% 124,249 2,182 31 126,462 3 1 - 4 0.00 0.15 to < 0.25% 11,073 663 7 11,743 1 1 - 2 0.02 0.25 to < 0.50% 7,779 1,161 8 8,948 1 1 - 2 0.03 0.50 to < 0.75% 2,738 560 6 3,304 1 1 - 2 0.05 0.75 to < 2.50% 1,738 3,671 22 5,431 1 6 - 7 0.14 2.50 to < 10.00% 40 2,515 26 2,581 - 10 - 10 0.40 10.00 to < 100% - 2,001 63 2,064 - 29 3 32 1.56 100% (default) - - 531 531 - - 34 34 6.28 Total 147,617 12,753 694 161,064 7 49 37 93 0.06
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Credit risk – Residential mortgages (continued)
LTV and credit risk concentration
Loan to value (LTV) is calculated by weighting the borrower level LTV by the individual loan balance to arrive at an average LTV. This approach is considered to reflect most appropriately
the exposure at risk.
Notes:
i. The average LTV of loan stock includes both amortised cost and FVTPL balances. There have been no new FVTPL advances during the year.
ii. The LTV of new business excludes further advances and product switches.
The Nationwide House Price Index has shown a 3.9% year on year increase in house prices, resulting in limited movements in the average LTV of loan stock.
The Group owner-occupied average LTV of new business has increased to 75% (2024: 71%). The strategy to support first time buyers has increased the proportion of lending at higher
LTVs, with the proportion of new business at an LTV greater than 80% within the Nationwide sub-group increasing to 42% (2024: 34%). This is a segment of the owner-occupied market
we have extensive experience in lending to, and we maintain robust credit criteria to support this strategy.
The Group buy to let average LTV of new business has increased to 65% (2024: 62%). This is largely due to the reduction in interest rates increasing the maximum loan sizes available to
landlords.
Group average LTV of loan stock (by value) (note i) 2025 2024 % % Owner-occupied 56 55 Buy to let and legacy 56 56 Group 56 55 Group average LTV of new business (by value) (note ii) 2025 2024 % % Owner-occupied 75 71 Buy to let 65 62 Group 73 70
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Residential mortgage balances by LTV
The following table shows the Group’s residential mortgages, excluding FVTPL balances, by LTV across stages 1 and 2 (non-credit impaired) and stage 3 (credit impaired). The LTV is
calculated using the latest indexed valuation.
Residential mortgage balances by LTV – Group 2025 Gross balances (note i) Provisions (note i)Provision Stage 3 and Stage 3 and (Audited)Stage 1 Stage 2Total Stage 1 Stage 2Totalcoverage POCI POCILTV ratio: £m £m £m £m £m £m £m £m % Up to 50% 86,725 11,980 843 99,548 4 31 23 58 0.06 50%-60% 41,051 9,588 399 51,038 5 37 15 57 0.11 60%-70% 42,127 9,489 305 51,921 11 51 18 80 0.15 70%-80% 33,735 4,886 193 38,814 15 49 13 77 0.20 80%-90% 27,721 1,327 92 29,140 7 25 11 43 0.15 90%-100% 5,023 242 48 5,313 2 8 8 18 0.33 Over 100% 26 49 41 116 1 7 10 18 15.36 Total 236,408 37,561 1,921 275,890 45 208 98 351 0.13 Residential mortgage balances by LTV – Group 2024 Gross balances (note i) Provisions (note i) Provision Stage 3 and Stage 3 and (Audited)Stage 1 Stage 2 Total Stage 1 Stage 2 Total coverage POCI POCI LTV ratio: £m £m £m £m £m £m £m £m % Up to 50% 63,657 11,809 602 76,068 4 36 22 62 0.08 50%-60% 28,834 9,126 293 38,253 3 36 17 56 0.14 60%-70% 31,859 8,852 224 40,935 5 43 19 67 0.16 70%-80% 23,948 4,579 135 28,662 6 38 15 59 0.21 80%-90% 14,311 939 49 15,299 3 19 13 35 0.23 90%-100% 4,839 228 19 5,086 1 10 4 15 0.30 Over 100% 47 53 24 124 - 15 12 27 21.87 Total 167,495 35,586 1,346 204,427 22 197 102 321 0.16
Note:
i. Includes POCI gross balances of £584 million (2024: £113 million) and provisions of £3 million (2024: £nil)
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Credit risk – Residential mortgages (continued)
The following table shows the Society’s residential mortgages, excluding FVTPL balances, by LTV across stages 1 and 2 (non credit impaired) and stage 3 (credit impaired). The Society’s
balances exclude both Virgin Money and other subsidiaries, includ
ing TMW. The LTV is calculated using the latest indexed valuation.
Residential mortgage balances by LTV – Society 2025 Gross balances Provisions Provision (Audited)Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total coverage LTV ratio: £m £m £m £m £m £m £m £m % Up to 50% 60,094 4,634 341 65,069 2 6 11 19 0.03 50%-60% 25,931 2,621 152 28,704 1 6 7 14 0.05 60%-70% 26,602 2,504 121 29,227 1 9 8 18 0.06 70%-80% 21,853 1,383 81 23,317 1 11 6 18 0.08 80%-90% 23,434 934 37 24,405 2 12 5 19 0.08 90%-100% 3,624 144 13 3,781 1 2 3 6 0.17 Over 100% 3 1 2 6 - - 1 1 14.93 Total 161,541 12,221 747 174,509 8 46 41 95 0.05 Residential mortgage balances by LTV – Society 2024 Gross balances Provisions Provision (Audited)Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total coverage LTV ratio: £m £m £m £m £m £m £m £m % Up to 50% 57,092 4,673 336 62,101 1 8 11 20 0.03 50%-60% 24,039 2,682 134 26,855 1 7 6 14 0.0560%-70% 26,707 2,854 116 29,677 1 10 8 19 0.0670%-80% 20,715 1,686 75 22,476 1 11 6 18 0.0880%-90% 14,186 678 21 14,885 2 9 4 15 0.1090%-100% 4,833 177 9 5,019 1 4 1 6 0.12Over 100% 45 3 3 51 - - 1 1 3.19Total 147,617 12,753 694 161,064 7 49 37 93 0.06
Geographical distribution
Dur
ing the year, the geographical distribution of the Group’s residential mortgages across the UK has remained broadly stable. The highest concentration of lending remains in Greater
London and the South East, with th
e proportion of lending in these regions totalling 46% (2024: 45%).
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Arrears
Residential mortgage lending continues to have a low risk profile as demonstrated by the low level of arrears compared to the industry average.
Number of cases more than 3 months in arrears as % of total book - Group 2025 2024 % % Owner-occupied 0.40 0.36 Buy to let and legacy 0.51 0.60 Total 0.43 0.41 UK Finance (UKF) industry average 0.89 0.94
Residential mortgage arrears have remained at low levels during the year, with the Group arrears rate increasing slightly to 0.43% (2024: 0.41%) following the acquisition of Virgin Money,
which has an arrears rate of 0.58%. The proportion of cases more than 3 months in arrears for the Nationwide sub-group have remained broadly stable at 0.40% (2024: 0.41%). The
performance of the open buy to let book originated under the TMW brand remains strong, with 0.21% (2024: 0.23%) of cases more than 3 months in arrears.
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Credit risk – Residential mortgages (continued)
Interest only mortgages
At 31 March 2025, interest only balances of £13,183 million (2024: £6,240 million) account for 6.1% (2024: 3.9%) of the owner-occupied residential mortgage portfolios. The increase during
the year includes Virgin Money balances of £7,420 million. Maturities of interest only mortgages are managed closely, with regular engagement with borrowers in advance of maturity, to
ensure the loan is redeemed or to agree a strategy for repayment.
Of the buy to let and legacy portfolio, £54,972 million (2024: £39,619 million) relates to interest only balances, representing 91% (2024: 91%) of balances. The increase during the year
includes Virgin Money balances of £13,154 million. Buy to let remains open to new interest only lending under standard terms.
There is a risk that a proportion of interest only mortgages will not be redeemed at their contractual maturity date, because a borrower does not have a means of capital repayment or has
been unable to refinance the loan. Interest only loans which are judged to have a significantly increased risk of inability to refinance at maturity are transferred to stage 2. The ability of a
borrower to refinance is calculated using current lending criteria which consider LTV and affordability assessments. The impact of recognising this risk is to increase provisions by
£28 million (2024: £35 million), of which £4 million is in relation to the Virgin Money sub-group.
Interest only mortgages (gross balance) – term to maturity (note i) - Group Due after one Due after two Term expired Due within one Due after more % of year and before years and before Total (still open)yearthan five yearsbook two years five years 2025 £m £m £m £m £m £m % Owner-occupied 126 282 445 1,860 10,470 13,183 6.1 Buy to let and legacy 172 308 536 2,169 51,787 54,972 91.1 Total 298 590 981 4,029 62,257 68,155 24.7 2024 £m £m £m £m £m £m % Owner-occupied 69 187 223 981 4,780 6,240 3.9 Buy to let and legacy 174 191 356 1,679 37,219 39,619 91.1 Total 243 378 579 2,660 41,999 45,859 22.4
Note:
i. Balances subject to forbearance with agreed term extensions are presented based on the latest agreed contractual term.
Past term interest only loans are not considered to be past due where contractual interest payments continue to be met, pending renegotiation of the facility. These loans are, however,
treated as credit impaired and categorised as stage 3 balances from three months after the maturity date.
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Forbearance
Nationwide is committed to supporting borrowers facing financial difficulty by working with them to find a solution through proactive arrears management and forbearance. The Group
applies the European Banking Authority (EBA) definition of forbearance. Types of forbearance include interest or payment arrangements, where the borrower is granted a concession
which varies from contractual terms and repayments during a time of financial difficulty.
The table below provides details of residential mortgages held at amortised cost subject to forbearance, including balances which are within stage 1 for provision purposes, but which
continue to meet the EBA definition of forbearance. Accounts that are currently subject to a concession are assessed as either stage 2, or stage 3 (credit impaired) where full repayment of
principal and interest is no longer anticipated.
Gross balances subject to forbearance - Group 2025 2024 Buy to let and Buy to let and Owner-occupiedTotal Owner-occupiedTotal legacylegacyGroup £m £m £m £m £m £m Total forbearance 1,048 377 1,425 661 339 1,000 Of which stage 2 363 108 471 206 66 272 Of which stage 3 or POCI 537 252 789 320 263 583 % % % % % % Total forbearance as a % of total gross balances 0.5 0.6 0.5 0.4 0.8 0.5 £m £m £m £m £m £m Impairment provisions on forborne loans 16 24 40 15 29 44
Gross balances subject to forbearance have increased to £1,425 million (2024: £1,000 million), including £517 million of Virgin Money balances. Nationwide sub-group forbearance
balances have reduced to £908 million (2024: £1,000 million) largely due to a reduction in interest only concessions.
In addition to the amortised cost balances above, £2 million (2024: £3 million) of FVTPL balances are also forborne.
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Credit risk – Consumer lending
Summary
The consumer lending portfolio comprises balances on unsecured retail banking products: overdrawn current accounts, personal loans and credit cards.
Gross balances have increased during the year to £11.1 billion (2024: £4.3 billion), with the acquisition of Virgin Money driving the majority of this increase. Virgin Money balances of
£6.7 billion include £6.2 billion of credit cards, £0.5 billion of personal loans and less than £0.1 billion of overdrawn current accounts. The composition of the consumer lending portfolio
has materially changed as a result of the acquisition, with credit card lending now making up 70% (2024: 37%) of the consumer lending portfolio.
The Group arrears rate is 1.11% (2024: 1.36%), with the lower rate being predominantly driven by the increased credit card book as a result of the Virgin Money acquisition. The Virgin
Money credit cards arrears rate is 1.06%, which has been broadly stable over the period since acquisition. Nationwide sub-group arrears levels have remained low during the year and,
excluding charged off accounts, balances more than 3 months in arrears represent 1.23% (2024: 1.36%) of the portfolio.
Consumer lending gross balances - Group 2025 2024 (Audited) £m % £m % Overdrawn current accounts 338 3 347 8 Personal loans 2,962 27 2,353 55 Credit cards 7,807 70 1,563 37 Total consumer lending 11,107 100 4,263 100
All consumer lending loans are classified and measured at amortised cost.
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Credit risk – Consumer lending (continued)
Consumer lending staging analysis
The following table shows Group consumer lend
ing balances by stage, with the corresponding impairment provisions and resulting provision coverage ratios.
Consumer lending staging analysis - Group 2025 2024 Stage 1 Stage 2 Stage 3 POCI (note i) Total Stage 1 Stage 2 Stage 3 Total (Audited) £m £m £m £m £m £m £m £m £mGross balances Overdrawn current accounts 179 115 44 - 338 187 120 40 347 Personal loans 2,131 488 342 1 2,962 1,274 950 129 2,353 Credit cards 6,311 1,304 165 27 7,807 1,099 380 84 1,563 Total 8,621 1,907 551 28 11,107 2,560 1,450 253 4,263 Provisions Overdrawn current accounts 5 22 40 - 67 5 23 36 64 Personal loans 16 41 158 - 215 10 54 113 177 Credit cards 104 323 119 (4) 542 16 105 74 195 Total 125 386 317 (4) 824 31 182 223 436 Provisions as a % of total balance % % % % % % % % %Overdrawn current accounts 2.77 19.39 90.17 - 19.74 2.81 18.89 90.00 18.39Personal loans 0.76 8.39 46.18 - 7.25 0.76 5.82 86.93 7.54Credit cards 1.65 24.78 71.64 - 6.94 1.43 27.52 88.26 12.46Total 1.46 20.26 57.32 - 7.42 1.20 12.58 87.86 10.23
Note:
i.
POCI loans are those which were credit impaired on acquisition. The POCI loans shown in the table above were recognised on the balance sheet when Virgin Money was acquired in October 2024. The
provision coverage for POCI loans has not been included due to the gross balance being reported net of the lifetime ECL.
On
1 October 2024, Virgin Money balances were recognised as either stage 1 or POCI. Since this date, the acquired balances have transferred from stage 1 to stages 2 or 3 if they have met
the stage allocation criteria relative to their credit risk at
the acquisition date. Stage 2 balances of £1,907 million (2024: £1,450 million) include £1,031 million of Virgin Money balances
where lending has transferred to stage 2 si
nce acquisition. Nationwide sub-group stage 2 balances of £876 million (2024: £1,450 million) include £66 million (2024: £473 million) of
balances where the PD has been uplifted by the model adjustment
for affordability risks. The reduction in balances impacted by this PD uplift, combined with an update to the personal
loans PD models, has driven the reduction in stage 2 balances.
Stage 3 balances of £551 million (2024: £2
53 million) include £299 million of Virgin Money balances. The Virgin Money stage 3 balances include £211 million of personal loans balances
which relate to a loan to the Salary Finance joint venture.
A combination of the joint venture’s historic trading losses and the decision to not extend any additional lending to the joint
venture beyond 2025
means that the loan meets the conditions to be transferred to Stage 3. The associated provision for this loan is £45 million, which has reduced the overall provision
coverage for the stage 3 loans category. The
Nationwide sub-group stage 3 balance has remained broadly stable at £252 million (2024: £253 million).
The POCI gross balance of £28 million repres
ents the Virgin Money loans which were credit impaired at acquisition; this balance is presented net of lifetime ECL of £29 million.
Consumer lending stage 3 gross ba
lances and provisions include charged off balances. These are accounts which are closed to future transactions and may be held on the balance sheet
for an extended period (up to 36 months) wh
ilst recovery activities take place. The charged off balances and provisions were £178 million (2024: £178 million) and £171 million (2024:
£170 million) respectively. Excluding these charged off balances an
d related provisions, provisions amount to 6.0% (2024: 6.5%) of gross balances.
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Credit risk – Consumer lending (continued)
Consumer lending provisions have increased to £824 million (2024: £436 million), primarily due to the recognition of £452 million of provisions for the acquired Virgin Money loans.
Nationwide sub-group balance sheet provisions of £372 million (2024: £436 million) include a modelled adjustment of £13 million (2024: £73 million) for affordability risks. This
adjustment has reduced during the year due to the continued resilience of the portfolios, where the previously anticipated increase in arrears has not materialised. Further information is
included in note 10 to the financial statements. The total provision coverage ratio has reduced primarily due to the reduction in the modelled adjustment for affordability risks and has
also been impacted by the inclusion of Virgin Money gross balances and provisions.
The following table shows Society consumer lending balances by stage, with the corresponding impairment provisions and resulting provision coverage ratios. The Society’s balances
exclude Virgin Money lending.
Consumer lending staging analysis - Society 2025 2024 Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 Total (Audited)£m £m £m £m £m £m £m £m £m Gross balances Overdrawn current accounts 154 115 43 - 312 187 120 40 347 Personal loans 1,882 479 127 - 2,488 1,274 950 129 2,353 Credit cards 1,277 282 82 - 1,641 1,099 380 84 1,563 Total 3,313 876 252 - 4,441 2,560 1,450 253 4,263 Provisions Overdrawn current accounts 4 22 39 - 65 5 23 36 64 Personal loans 14 39 112 - 165 10 54 113 177 Credit cards 13 57 72 - 142 16 105 74 195 Total 31 118 223 - 372 31 182 223 436 Provisions as a % of total balance % % % % % % % % %Overdrawn current accounts 2.47 19.28 90.20 - 20.72 2.81 18.89 90.00 18.39Personal loans 0.72 8.17 87.49 - 6.60 0.76 5.82 86.93 7.54Credit cards 1.06 20.18 88.06 - 8.69 1.43 27.52 88.26 12.46Total 0.93 13.49 88.14 - 8.37 1.20 12.58 87.86 10.23
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Credit risk – Consumer lending (continued)
The Group impairment charge for the year includes the recognition of £452 million of provisions for the acquired Virgin Money loans. This provision includes the impact of recognising
initial provisions for the acquired loans, including alignment to the key elements of the Group’s impairment provision methodology. The Nationwide sub-group impairment charge of £18
million (2024: £51 million) includes the impact of the reduction in balance sheet provisions to £372 million (2024: £436 million) where the previously anticipated increase in arrears has
not materialised, combined with broadly stable losses due to write-offs.
Gross write-offs have increased to £166 million (2024: £89 million), which include £79 million of Virgin Money balances which have been written off since the acquisition. Nationwide sub-
group write-offs have remained broadly stable at £87 million (2024: £89 million).
Group impairment charge/(release) and write-offs for the year (Audited)2025 2024 Impairment charge £m £m Overdrawn current accounts 21 15 Personal loans 75 37 Credit cards 418 (1) Total impairment charge 514 51 % % Impairment charge as a % of average gross balance 6.93 1.17 Gross write-offs £m £m Overdrawn current accounts 17 14 Personal loans 44 45 Credit cards 105 30 Total gross write-offs 166 89
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Credit risk – Consumer lending (continued)
The table below summarises the movements in, and stage allocation of, the Group’s consumer lending balances held at amortised cost, including the impact of ECL impairment provisions.
The movements within the table compare the position at 31 March 2025 to that at the start of the reporting period.
Reconciliation of net movements in consumer lending balances and impairment provisions - Group Non-credit impaired Credit impairedSubject to 12-month ECL Subject to lifetime ECL Subject to lifetime ECL Total Stage 1 Stage 2 Stage 3 and POCI (note i)Gross Gross Gross Gross ProvisionsProvisionsProvisionsProvisionsbalancesbalancesbalancesbalances(Audited)£m £m £m £m £m £m £m £m At 5 April 2024 2,560 31 1,450 182 253 223 4,263 436Stage transfers:Transfers from stage 1 to stage 2 (211) (4) 211 4 - - - - Transfers to stage 3 (21) (1) (64) (23) 85 24 - - Transfers from stage 2 to stage 1 702 71 (702) (71) - - - - Transfers from stage 3 2 1 3 2 (5) (3) - - Net remeasurement of ECL arising from transfer of stage - (57) - 36 - 46 - 25 Net movement arising from transfer of stage 472 10 (552) (52) 80 67 - 25 New assets originated or purchased (notes ii and iii) 6,578 107 1,279 291 413 174 8,270 572 Net impact of further lending and repayments (585) (13) (52) (15) (1) 3 (638) (25) Changes in risk parameters in relation to credit quality - (7) - (10) - 12 - (5) Other items impacting income statement (including recoveries) - - - - - (40) - (40) Redemptions (404) (3) (218) (10) - - (622) (13) Income statement charge for the period 514 Decrease due to write-offs - - - - (166) (166) (166) (166) Other provision movements - - - - - 40 - 40 At 31 March 2025 8,621 125 1,907 386 579 313 11,107 824 Net carrying amount 8,496 1,521 266 10,283
Notes:
i.
Gross balances of credit impaired loans include £28 million (2024: £nil million) of POCI loans, which are presented net of lifetime ECL of £29 million (2024: £nil million).
ii.
If a new asset is originated or purchased during the period, the values included are the closing gross balance and provision for the period. The stage in which the addition is shown reflects the stage of the
account at the end of the period.
iii.
Virgin Money balances of £6.7 billion have been included within the new assets originated or purchased line item.
Furt
her information on movements in gross loans and advances to customers and impairment provisions, including the methodology applied in preparing the table, is included in note 14
to the financial statements.
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Credit risk – Consumer lending (continued)
Loans which are reported within stage 2 are those which have experienced a significant increase in credit risk since origination, determined through both quantitative and qualitative
indicators. The table below summarises the Group’s stage 2 balances and impairment provisions for these indicators.
Reason for consumer lending balances being reported in stage 2 (note i) - Group 2025 Overdrawn current accounts Personal loans Credit cards Total Provisions Provisions Provisions Provisions Gross Gross Gross Gross Provisions as a % of Provisions as a % of Provisions as a % of Provisions as a % of balances balances balances balances balance balance balance balance £m £m % £m £m % £m £m % £m £m %Quantitative criteria:Payment status (greater than 30 DPD) (note ii) 5 3 56 12 6 51 35 22 63 52 31 59 Increase in PD since origination (less than 30 DPD) 96 18 19 470 35 7 924 230 25 1,490 283 19 Qualitative criteria:Forbearance (less than 30 DPD) (note iii) 1 - 10 - - 6 9 2 29 10 2 27 Other qualitative criteria (less than 30 DPD) 13 1 7 6 - 3 336 69 21 355 70 20 Total stage 2 gross balances 115 22 19 488 41 8 1,304 323 25 1,907 386 20 Reason for consumer lending balances being reported in stage 2 (note i) - Group 2024 Overdrawn current accounts Personal loans Credit cards Total Provisions Provisions Provisions Provisions Gross Gross Gross Gross Provisions as a % of Provisions as a % of Provisions as a % of Provisions as a % of balances balances balances balances balance balance balance balance £m £m % £m £m % £m £m % £m £m %Quantitative criteria: Payment status (greater than 30 DPD) (note ii) 4 3 68 12 7 63 5 4 86 21 14 69 Increase in PD since origination (less than 30 DPD) 108 19 18 935 47 5 347 95 27 1,390 161 12 Qualitative criteria: Forbearance (less than 30 DPD) (note iii) - - 14 - - 9 - - 14 - - 13 Other qualitative criteria (less than 30 DPD) 8 1 8 3 - 4 28 6 20 39 7 16 Total stage 2 gross balances 120 23 19 950 54 6 380 105 28 1,450 182 13
Notes:
i. Where loans satisfy more than one of the criteria for determining a significant increase in credit risk, the corresponding balance has been assigned in the order in which the categories are presented above.
ii. This category includes all loans greater than 30 DPD, including those whose original reason for being classified as stage 2 was not arrears greater than 30 DPD.
iii. Stage 2 forbearance relates to cases where full repayment of principal and interest is still anticipated.
Balances reported within stage 2 represent loans which have experienced a significant increase in credit risk since origination. The significant increase is determined through both
quantitative and qualitative indicators. Of the £1,907 million (2024: £1,450 million) stage 2 balances, 3% (2024: 1%) are in arrears by 30 days or more, with the majority of balances in stage
2 due to an increase in PD since origination. This category includes £66 million (2024: £473 million) of loans where the PD has been uplifted to recognise the increased risk of default due
to borrower affordability pressures. The impact of this uplift in PD has resulted in these loans breaching existing quantitative PD thresholds.
The other qualitative criteria category includes £225 million (2024: £28 million) of loans which have been moved to stage 2 in recognition of the risk related to borrowers in credit card
persistent debt, with £193 million of this relating to Virgin Money balances.
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Credit risk – Consumer lending (continued)
The
table below outlines the main criteria used to determine whether a significant increase in credit risk since origination has occurred.
Criteria Detail Quantitative The primary quantitative indicators are the outputs of internal credit risk assessments. For consumer lending exposures, PDs are derived using models, which use external information such as that from credit reference agencies, as well as internal information such as known instances of arrears or other financial difficulty. Current and historical data relating to the exposure are combined with forward-looking macroeconomic information to determine the likelihood of default. 12-month and lifetime PDs are calculated for each loan. Similar quantitative staging principles are applied across Nationwide and Virgin Money sub-groups. However, there are differences in the specific criteria, as outlined below. Nationwide sub-group: The 12-month and lifetime PDs are compared to pre-determined benchmarks at each reporting date to ascertain whether a relative or absolute increase in credit risk has occurred. The indicators for a significant increase in credit risk are: Absolute measures: - The 12-month PD exceeds the 12-month PD threshold that is indicative, at the assessment date, of an account being in arrears.- The residual lifetime PD exceeds the residual lifetime PD threshold, set at inception, which represents the maximum credit risk that would have been accepted at thatpoint. Relative measure: - The residual lifetime PD has increased by at least 75 basis points and has at least doubled. Virgin Money sub-group: The residual lifetime PD is compared to a threshold which varies by portfolio, and is based on the lifetime PD curves calculated at origination. The PD threshold curves were recalculated at acquisition, to reset the origination point to 1 October 2024, being the date when the Virgin Money business was acquired by the Group. Qualitative Qualitative criteria include forbearance events, customer indebtedness markers, and, within the credit card portfolio, recognition of the risk related to borrowers in persistent debt. Backstop In addition to the primary criteria for stage allocation described above, accounts that are more than 30 days past due are also transferred to stage 2.
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Credit risk – Consumer lending (continued)
Credit quality
The Group adopts robust credit management policies and processes designed to recognise and manage the risks arising from its lending portfolios.
The following tables show gross balances and provisions for consumer lending balances held at amortised cost by PD range for the Group and the Society. The Society table excludes
Virgin Money balances and provisions. The PD distributions shown are based on 12-month IFRS 9 PDs at the reporting date.
The credit quality of the consumer lending portfolio has remained strong; 88% (2024: 87%) of the portfolio has a 12-month IFRS 9 PD of less than 10%.
Consumer lending gross balances and provisions by PD - Group 2025 Gross balances ProvisionsProvision Stage 3 and Stage 3 and (Audited)Stage 1 Stage 2Total Stage 1 Stage 2Totalcoverage POCI (note i)POCI 12-month IFRS 9 PD range £m £m £m £m £m £m £m £m % 0.00 to <0.15% 1,101 33 - 1,134 2 2 - 4 0.37 0.15 to < 0.25% 529 21 - 550 2 1 - 3 0.58 0.25 to < 0.50% 1,267 70 - 1,337 7 3 - 10 0.72 0.50 to < 0.75% 1,030 80 - 1,110 8 3 - 11 0.98 0.75 to < 2.50% 3,125 319 - 3,444 43 24 - 67 1.94 2.50 to < 10.00% 1,502 740 1 2,243 52 125 - 177 7.90 10.00 to < 100% 67 644 3 714 11 228 1 240 33.74 100% (default) - - 575 575 - - 312 312 54.21 Total 8,621 1,907 579 11,107 125 386 313 824 7.42
Note:
i. Includes POCI loans of £28 million (2024: £nil million).
Consumer lending gross balances and provisions by PD - Society 2025 Gross balances ProvisionsProvision (Audited)Stage 1 Stage 2Stage 3 Total Stage 1 Stage 2 Stage 3 Totalcoverage 12-month IFRS 9 PD range £m £m £m £m £m £m £m £m % 0.00 to <0.15% 879 34 - 913 2 2 - 4 0.40 0.15 to < 0.25% 384 21 - 405 1 1 - 2 0.54 0.25 to < 0.50% 585 67 - 652 2 3 - 5 0.71 0.50 to < 0.75% 330 70 - 400 2 3 - 5 1.14 0.75 to < 2.50% 749 229 - 978 9 16 - 25 2.50 2.50 to < 10.00% 374 235 1 610 12 29 - 41 6.89 10.00 to < 100% 12 220 3 235 3 64 1 68 29.27 100% (default) - - 248 248 - - 222 222 89.31 Total 3,313 876 252 4,441 31 118 223 372 8.37
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Credit risk – Consumer lending (continued)
Consumer lending gross balances and provisions by PD – Group and Society 2024 Gross balances Provisions Provision (Audited)Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total coverage 12-month IFRS 9 PD range £m £m £m £m £m £m £m £m % 0.00 to <0.15% 684 24 - 708 2 2 - 4 0.52 0.15 to < 0.25% 307 24 - 331 1 1 - 2 0.70 0.25 to < 0.50% 408 121 - 529 2 3 - 5 0.96 0.50 to < 0.75% 227 126 - 353 2 3 - 5 1.31 0.75 to < 2.50% 555 444 - 999 7 20 - 27 2.73 2.50 to < 10.00% 354 427 1 782 14 53 - 67 8.61 10.00 to < 100% 25 284 3 312 3 100 1 104 33.42 100% (default) - - 249 249 - - 222 222 88.80 Total 2,560 1,450 253 4,263 31 182 223 436 10.23
Forbearance
The Group is committed to supporting customers facing financial difficulty by working with them to find a solution through proactive arrears management and forbearance. The Group
applies the European Banking Authority definition of forbearance. The main type of forbearance offered are interest payment concessions, which result in reduced monthly payments and
may be offered to customers with an overdraft, credit card or personal loan. Interest payments are suppressed during the period of the concession and arrears do not increase. Cases
subject to this concession are classified as impaired.
Gross balances subject to forbearance of £191 million (2024: £81 million) include £131 million of Virgin Money balances. The Nationwide sub-group forbearance balance has decreased to
£60 million (2024: £81 million). This reduction is largely the result of overdrawn current accounts, which were previously granted 0% interest rate concessions, reaching the end of the
forbearance probation period.
Gross balances subject to forbearance - Group 2025 2024 Overdrawn Personal Credit Total Overdrawn Personal Credit Total current loanscardscurrent loanscardsaccounts accounts £m £m £m £m £m £m £m £mTotal forbearance 15 27 149 191 30 30 21 81 Of which stage 2 5 2 46 53 16 2 12 30Of which stage 3 or POCI 10 24 94 128 9 27 9 45% % % % % % % %Total forbearance as a % of total gross balances 4.4 0.9 1.9 1.7 8.6 1.3 1.3 1.9£m £m £m £m £m £m £m £mImpairment provisions on forborne loans 10 21 47 78 12 24 10 46
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Credit risk – Business and commercial lending
Business and commercial lending comprise lending to non-retail customers, including loans to registered social landlords.
Gross balances have increased during the year to £15.1 billion (2024: £5.5 billion), of which £9.5 billion relates to Virgin Money lending. Virgin Money balances include term lending, asset
and lease financing, specialist finance and other business lending, including business overdrafts and credit cards. The Virgin Money business lending portfolio is diversified across a range
of sectors, with the highest risk concentration being across the agriculture, business services, and government, health and education sectors.
Nationwide sub-group lending balances total £5.6 billion (2024: £5.5 billion) and comprise loans which have been provided to meet the funding requirements of registered social
landlords, project finance initiatives (PFI) and commercial real estate investors. An increase in lending to registered social landlords, both through new lending and the refinancing of
existing facilities, demonstrates the continued support for this sector. The project finance and commercial real estate portfolios within the Nationwide sub-group remain closed to new
business.
Business and commercial lending gross balances 2025 2024 (Audited) £m £m Business and commercial lending (excl. registered social landlords) 9,817 753 Registered social landlords 5,001 4,386 Business and commercial lending balances at amortised cost 14,818 5,139 Fair value adjustment for micro hedged risk 277 350 Business and commercial lending balances – FVTPL 49 2 Total 15,144 5,491
Credit risk – Business and commercial lending
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Credit risk – Business and commercial lending (continued)
The following table shows the Group’s business and commercial lending balances carried at amortised cost on the balance sheet, with the stage allocation of the exposures, impairment
provisions and resulting provision coverage ratios.
Business and commercial lending portfolio and staging analysis – Group 2025 2024 Stage 1 Stage 2 Stage 3 POCI (note i) Total Stage 1 Stage 2 Stage 3 Total (Audited)£m £m £m £m £m £m £m £m £m Gross balances Business and commercial lending 7,991 1,354 137 335 9,817 623 63 67 753(excl. registered social landlords) Registered social landlords 4,731 270 - - 5,001 4,182 204 - 4,386Total 12,722 1,624 137 335 14,818 4,805 267 67 5,139ProvisionsBusiness and commercial lending 34 39 35 4 112 - 2 21 23(excl. registered social landlords) Registered social landlords 1 - - - 1 1 - - 1Total 35 39 35 4 113 1 2 21 24Provisions as a % of total balance % % % % % % % % % Business and commercial lending 0.42 2.87 25.42 - 1.14 0.11 2.93 31.58 3.15(excl. registered social landlords) Registered social landlords 0.02 0.13 - - 0.02 0.01 0.13 - 0.02Total 0.27 2.41 25.42 - 0.76 0.03 0.79 31.58 0.48
Note:
i. POCI loans are those which were credit impaired on acquisition. The POCI loans shown in the table above were recognised on the balance sheet when Virgin Money was acquired in October 2024. The
provision coverage for POCI loans has not been included due to the gross balance being reported net of the lifetime ECL.
On 1 October 2024, Virgin Money loans were recognised as either stage 1 or POCI. Since this date, the acquired balances have transferred from stage 1 to stages 2 or 3 if they have met the
stage allocation criteria relative to their credit risk at the acquisition date. Stage 2 balances of £1,624 million (2024: £267 million) include £1,272 million of Virgin Money balances where
lending has transferred to stage 2 since acquisition. The stage 2 Virgin Money balance includes £910 million of loans which have met qualitative staging criteria, including early warning
indicators and forbearance events.
Stage 3 balances of £137 million (2024: £67 million) include £71 million of Virgin Money balances. The Nationwide sub-group stage 3 balance has remained broadly stable at
£66 million (2024: £67 million). The POCI balance of £335 million represents the Virgin Money loans which were credit impaired at acquisition, with this balance presented net of lifetime
ECL of £50 million.
During the year, total provisions increased to £113 million (2024: £24 million), which is primarily due to the recognition of £91 million of provisions for the acquired Virgin Money loans.
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Credit risk – Business and commercial lending (continued)
The following table shows the Society’s business and commercial lending balances carried at amortised cost on the balance sheet, with the stage allocation of the exposures, impairment
provisions and resulting provision coverage ratios. The Society’s
balances exclude both Virgin Money and other subsidiary lending.
Business and commercial lending portfolio and staging analysis – Society 2025 2024 Stage 1 Stage 2 Stage 3 POCI Total Stage 1 Stage 2 Stage 3 Total (Audited)£m £m £m £m £m £m £m £m £m Gross balances Business and commercial lending 469 84 66 - 619 623 63 67 753 (excl. registered social landlords) Registered social landlords 4,216 232 - - 4,448 3,915 162 - 4,077 Total 4,685 316 66 - 5,067 4,538 225 67 4,830ProvisionsBusiness and commercial lending - 2 19 - 21 - 2 21 23 (excl. registered social landlords) Registered social landlords 1 - - - 1 1 - - 1 Total 1 2 19 - 22 1 2 21 24Provisions as a % of total balance % % % % % % % % %Business and commercial lending 0.13 1.92 28.09 - 3.38 0.11 2.93 31.58 3.15(excl. registered social landlords) Registered social landlords 0.01 0.14 - - 0.02 0.01 0.15 - 0.02Total 0.02 0.62 28.09 - 0.43 0.03 0.92 31.58 0.51
The G
roup impairment charge for the year includes a charge for the Virgin Money sub-group of £88 million. This charge is primarily due to the initial recognition of provisions for the
acquired Virgin Money loans, including alignment to key elements of the Group’s impairment provision methodology. The Nationwid
e sub-group impairment release for the year was £3
million (2024: £17 million impair
ment charge) reflecting updated case assessments for a small number of individually assessed exposures.
Group impairment charge and write-offs for the year 2025 2024 (Audited) £m £m Total impairment charge 85 17 % % Impairment charge as a % of average gross balance 0.88 0.34 £m £m Total gross write-offs 5 9
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Credit risk – Business and commercial lending (continued)
The table below summarises the movements in, and stage allocation of, the Group’s business and commercial lending balances held at amortised cost, including the impact of ECL
impairment provisions. The movements within the table compare the position at 31 March 2025 to that at the start of the reporti
ng period.
Reconciliation of net movements in business and commercial lending balances and impairment provisions - Group Non-credit impaired Credit impairedSubject to 12-month ECL Subject to lifetime ECL Subject to lifetime ECL Total Stage 1 Stage 2 Stage 3 and POCI (note i)Gross Gross Gross Gross ProvisionsProvisionsProvisionsProvisionsbalancesbalancesbalancesbalances(Audited)£m £m £m £m £m £m £m £m At 5 April 2024 4,805 1 267 2 67 21 5,139 24Stage transfers:Transfers from stage 1 to stage 2 (116) - 116 - - - - - Transfers to stage 3 - - (3) - 3 - - - Transfers from stage 2 to stage 1 4 - (4) - - - - - Transfers from stage 3 - - - - - - - - Net remeasurement of ECL arising from transfer of stage - - - - - - - - Net movement arising from transfer of stage (112) - 109 - 3 - - - New assets originated or purchased (notes ii and iii) 8,896 34 1,282 37 410 25 10,588 96 Net impact of further lending and repayments (189) - (23) - - - (212) - Changes in risk parameters in relation to credit quality - - - - - (1) - (1) Other items impacting income statement (including recoveries) - - - - - (9) - (9) Redemptions (678) - (11) - (3) (1) (692) (1) Income statement charge for the period 85 Decrease due to write-offs - - - - (5) (5) (5) (5) Other provision movements - - - - - 9 - 9 At 31 March 2025 12,722 35 1,624 39 472 39 14,818 113 Net carrying amount 12,687 1,585 433 14,705
Notes:
i.
Gross balances of credit impaired loans include £335 million (2024: £nil million) of POCI loans, which are presented net of lifetime ECL of £50 million (2024: £nil million).
ii.
If a new asset is originated or purchased in the period, the values included are the closing gross balance and provision for the period. The stage in which the addition is shown reflects the stage of the
account at the end of the period.
iii.
Virgin Money balances of £9.5 billion have been included within the new assets originated or purchased line item.
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Credit risk – Business and commercial lending (continued)
Loans which are reported within stage 2 are those which have experienced a significant increase in credit risk since origination, determined through both quantitative and qualitative
indicators. The table below summarises the Group’s stage 2 ba
lances and impairment provisions for these indicators.
Reason for business and commercial lending balances being reported in stage 2 (note i) - Group 2025 2024 Provisions as a % of Provisions as a % of Gross balances ProvisionsGross balances Provisions balance balance £m £m % £m £m %Quantitative criteria:Payment status (greater than 30 DPD) (note ii) 11 - 0.29 1 - 0.01Increase in PD since origination (less than 30 DPD) 703 15 2.22 146 2 1.30Qualitative criteria:Watchlist/approaching financial difficulty 833 23 2.72 120 - 0.21Forbearance (less than 30 DPD) (note iii) 77 1 1.08 - - -Other qualitative criteria (less than 30 DPD) - - 4.14 - _ -Total stage 2 gross balances 1,624 39 2.41 267 2 0.80
Notes:
i.
Where loans satisfy more than one of the criteria for determining a significant increase in credit risk, the corresponding balance has been assigned in the order in which the categories are presented above.
ii.
This category includes all loans greater than 30 DPD, including those whose original reason for being classified as stage 2 was not arrears greater than 30 DPD.
iii.
Stage 2 forbearance relates to cases where full repayment of principal and interest is still anticipated.
The
table below outlines the main criteria used to determine whether a significant increase in credit risk since origination has occurred.
Criteria Detail Quantitative The primary quantitative indicators are the outputs of internal credit risk assessments. For business and commercial lending exposures, internal risk grades are derived using models, which use both external and internal information, such as known instances of arrears or other financial difficulty. Current and historical data relating to an exposure are combined with forward-looking macroeconomic information to determine the likelihood of default. 12-month and lifetime PDs are calculated for each loan, based on internal risk grade and portfolio. The internal risk grades are compared to pre-determined benchmarks at each reporting date to ascertain whether an increase in credit risk has occurred. QualitativeQualitative indicators include early warning indicators such as loans being added to internal watchlists or loans judged to be approaching financial difficulty. Also included are forbearance events where full repayment of principal and interest is still anticipated, on a discounted basis. Backstop In addition to the primary criteria for stage allocation described above, accounts that are more than 30 days past due are also transferred to stage 2.
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Credit risk – Business and commercial lending (continued)
The following table shows the Group’s business and commercial lending balances held at amortised cost, impairment provisions and resulting provision coverage ratios by industry
sector.
Business and commercial lending portfolio by sector - Group 2025 2024 Provisions as Provisions as a Gross Gross Provision a % of total Provision% of total balancebalance balancebalance£m £m % £m £m %Agriculture 1,246 3 0.22 - - -Business services 1,286 18 1.42 - - -Commercial real estate 842 6 0.67 257 6 2.33Government, health & education 1,595 12 0.72 - - -Hospitality 1,020 2 0.23 - - -Manufacturing 659 17 2.52 - - -PFI 440 17 3.98 496 17 3.57Registered social landlords 5,001 1 0.02 4,386 1 0.02Resources 169 1 0.80 - - -Retail and wholesale trade 878 19 2.17 - - -Transport and storage 391 1 0.26 - - -Utilities, post and telecoms 578 7 1.13 - - -Other 713 9 1.26 - - -Total business and commercial lending 14,818 113 0.76 5,139 24 0.48
Registered social landlords is the largest sector exposure and aligns to the Group strategic purpose. The acquired Virgin Money business lending portfolio is diversified across a range of
sectors, with the highest risk concentration being across the agriculture, business services, and government, health and education sectors Nationwide sub-group exposures are limited to
registered social landlords, PFI and commercial real estate.
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Credit risk – Business and commercial lending (continued)
Credit quality
The following table shows the Group’s gross balances and provisions for business and commercial lending balances held at amortised cost by PD range. The PD distributions shown are
based on 12-month IFRS 9 PDs at the reporting date.
The registered social landlord portfolio exposure is low risk and weighted towards the lowest PD banding range. The additional business and commercial lending exposures are
predominantly within the 0.75%-10.00% range.
Business and commercial lending gross balances and provisions by PD – Group 2025 Gross balances ProvisionsProvision Stage 3 and Stage 3 and (Audited)Stage 1 Stage 2Total Stage 1 Stage 2Totalcoverage POCI (note i)POCI (note i)12-month IFRS 9 PD range £m £m £m £m £m £m £m £m % 0.00 to <0.15% 5,410 247 - 5,657 2 - - 2 0.03 0.15 to < 0.25% 617 39 - 656 - - - - 0.07 0.25 to < 0.50% 869 25 - 894 1 - - 1 0.09 0.50 to < 0.75% 552 53 - 605 1 1 - 2 0.28 0.75 to < 2.50% 3,317 434 - 3,751 10 4 - 14 0.37 2.50 to < 10.00% 1,946 679 2 2,627 21 21 - 42 1.59 10.00 to < 100% 11 147 1 159 - 13 - 13 8.28 100% (default) - - 469 469 - - 39 39 8.33 Total 12,722 1,624 472 14,818 35 39 39 113 0.76 Business and commercial lending gross balances and provisions by PD – Group 2024 Gross balances Provisions Provision (Audited)Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total coverage 12-month IFRS 9 PD range £m £m £m £m £m £m £m £m % 0.00 to <0.15% 4,564 217 - 4,781 1 - - 1 0.020.15 to < 0.25% 167 2 - 169 - - - - 0.020.25 to < 0.50% 7 - - 7 - - - - 0.150.50 to < 0.75% 5 22 - 27 - 1 - 1 3.230.75 to < 2.50% 61 4 - 65 - - - - 0.052.50 to < 10.00% 1 1 - 2 - - - - 0.2710.00 to < 100% - 21 - 21 - 1 - 1 5.93100% (default) - - 67 67 - - 21 21 31.58Total 4,805 267 67 5,139 1 2 21 24 0.48
Note:
i. Includes POCI loans of £335 million (2024: £nil million).
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Credit risk – Business and commercial lending (continued)
The following table shows the Society’s gross balances and provisions for business and commercial lending balances held at amortised cost by PD range. The Society balances exclude
Virgin Money and other subsidiary lending. The PD distributions shown are based on 12-month IFRS 9 PDs at the reporting date.
Business and commercial lending gross balances and provisions by PD – Society 2025 Gross balances ProvisionsProvision coverage (Audited)Stage 1 Stage 2Stage 3 Total Stage 1 Stage 2 Stage 3 Total12-month IFRS 9 PD range £m £m £m £m £m £m £m £m % 0.00 to <0.15% 4,648 210 - 4,858 1 - - 1 0.02 0.15 to < 0.25% 12 35 - 47 - - - - 0.33 0.25 to < 0.50% 10 - - 10 - - - - 0.17 0.50 to < 0.75% 15 28 - 43 - 1 - 1 2.19 0.75 to < 2.50% - 2 - 2 - - - - 0.40 2.50 to < 10.00% - 35 - 35 - - - - 0.56 10.00 to < 100% - 6 - 6 - 1 - 1 9.65 100% (default) - - 66 66 - - 19 19 28.09 Total 4,685 316 66 5,067 1 2 19 22 0.43 Business and commercial lending gross balances and provisions by PD - Society 2024 Gross balances Provisions Provision (Audited)Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total coverage 12-month IFRS 9 PD range£m £m £m £m £m £m £m £m % 0.00 to <0.15% 4,297 175 - 4,472 1 - - 1 0.020.15 to < 0.25% 167 2 - 169 - - - - 0.020.25 to < 0.50% 7 - - 7 - - - - 0.150.50 to < 0.75% 5 22 - 27 - 1 - 1 3.230.75 to < 2.50% 61 4 - 65 - - - - 0.052.50 to < 10.00% 1 1 - 2 - - - - 0.2710.00 to < 100% - 21 - 21 - 1 - 1 5.93100% (default) - - 67 67 - - 21 21 31.58Total 4,538 225 67 4,830 1 2 21 24 0.51
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Credit risk – Business and commercial lending (continued)
Forbearance
Nationwide is committed to supporting borrowers facing financial difficulty by working with them to find a solution through proactive arrears management and forbearance.
Forbearance is recorded and reported at borrower level and applies to all business and commercial lending, including impaired exposures and borrowers subject to enforcement and
recovery action. The Group applies the European Banking Authority definition of forbearance. Accounts that are currently subject to a concession are all assessed as either stage 2, or
stage 3 (credit impaired) where full repayment of principal and interest is no longer anticipated.
The table below provides details of business and commercial lending that is currently subject to forbearance. The main types of forbearance are associated with covenants and deferrals
of interest or capital repayments.
Gross balances subject to forbearance (note i) - Group 2025 2024 £m £m Total forbearance 659 184 Of which stage 2 382 102 Of which stage 3 or POCI 277 82 Total forbearance as a % of total gross balances 4.4 3.6 Total impairment provision on forborne loans 42 23
Note:
i. Balances include
the fair value adjustment for micro hedged risk.
Gross balances subject to forbearance (excluding FVTPL) have increased to £659 million (2024: £184 million), including £481 million of Virgin Money balances. Nationwide sub-group
forbearance balances remain broadly unchanged at £178 million (2024: £184 million).
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Credit risk – Treasury assets
Summary
The treasury portfolio is held primarily for operational purposes, liquidity management and, in the case of derivatives, for market risk management. As at 31 March 2025, treasury assets
represented 17.6% (2024: 21.7%) of total assets. Treasury asset balances are set out below.
Notes:
i. Comparatives have been restated as detailed in note 1 to the financial statements.
ii. The majority of this balance is collateral placed with the Bank of England to cover requirements for payments systems.
iii. Investment securities at FVOCI include £60 million (2024: £57 million) and investment securities at FVTPL include £5 million (2024: £6 million) which relate to investments not included within the Group’s
liquidity portfolio. These investments primarily relate to investments made in Fintech companies which are being held for strategic purposes.
iv. Derivatives are classified as assets where their fair value is positive and liabilities where their fair value is negative. As at 31 March 2025, derivative liabilities were £1,547 million (2024: £1,451 million).
Investment activity remains focused on high-quality liquid assets, which includes assets eligible for central bank operations. Derivatives are used to economically hedge financial risks
inherent in core lending and funding activities and are not used for trading or speculative purposes.
Managing treasury credit risks
Cr
edit risk within the treasury portfolio predominantly arises from the government and supranational bonds held to meet liquidity requirements. In addition, counterparty credit risk
arises from the use of derivatives to reduce exposure to market risks; these are only transacted with highly-rated institutions and are collateralised using standard documentation.
Standardised derivatives are cleared though a central clearing counterparty (CCP).
There were no impairment losses for the period ended 31 March 2025 (2024: £nil). All treasury assets within the Group’s liquidity portfolio are classified as stage 1, reflecting the strong
and stable credit quality of the Group’s treasury assets.
Treasury asset balances - Group 2025 2024 (Audited) Classification £m (note i) £m Cash and balances at central banks Amortised cost 29,48325,231 Loans and advances to banks and similar institutions (note ii)Amortised cost 1,810918 Investment securities (note iii) FVOCI 28,658 26,522 Investment securities (note iii)FVTPL 56 Investment securities Amortised cost -4 Liquidity and investment portfolio 59,956 52,681 Derivative instruments (note iv) FVTPL 4,7426,290 Treasury assets 64,698 58,971
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Credit risk – Treasury assets (continued)
Liquidity and investment portfolio
The tables below show the breakdown of the Group
and Society liquidity and investment portfolios.
Liquidity and investment portfolio - Group 2025 By credit rating (note i) By geographical region AAA AA A Below AUK US & Canada Europe Japan Other (Audited)£m % % % % % %% % %Liquid assets: Cash and balances at central banks 29,483 - 100 - - 100 - - - - Government bonds (note iii) 18,324 8 82 10 - 45 29 16 10 - Supranational bonds 4,653 64 36 - - - - - - 100 Covered bonds 4,343 100 - - - 50 32 12 - 6 Residential mortgage backed securities (RMBS) 721 100 - - - 54 - 46 - -Other asset backed securities 157 100 - - - 100 - - - -Liquid assets total 57,681 16 81 3 - 70 12 7 3 8 Other securities (note iv): RMBS FVOCI 400 100 - - - 100 - - - -RMBS amortised cost - - - - - - - - - -Other investments (note v) 65 - - - 100 99 - 1 - -Other securities total 465 86 - - 14 100 - - - -Loans and advances to banks and similar institutions 1,810 - 50 50 - 71 21 8 - -Total 59,956 16 79 5 - 70 12 7 3 8 Liquidity and investment portfolio - Society 2025 By credit rating (note i) By geographical region AAA AA A Below A UK US & Canada Europe Japan Other (Audited)£m % % % % % %% % %Liquid assets: Cash and balances at central banks 18,601 - 100 - - 100 - - - - Government bonds (note iii) 15,388 7 81 12 - 35 35 18 12 - Supranational bonds 2,929 46 54 - - - - - - 100Covered bonds 2,807 100 - - - 44 33 18 - 5 Residential mortgage backed securities (RMBS) 721 100 - - - 54 - 46 - -Other asset backed securities 156 100 - - - 100 - - - -Liquid assets total 40,602 15 80 5 - 63 16 9 4 8 Other securities (note iv): RMBS FVOCI 400 100 - - - 100 - - - -RMBS amortised cost - - - - - - - - - -Other investments (note v) 1 - - - 100 100 - - - -Other securities total 401 100 - - - 100 - - - -Loans and advances to banks and similar institutions 1,339 - 46 54 - 62 28 10 - -Total 42,342 16 78 6 - 64 16 9 4 7
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Credit risk – Treasury assets (continued)
Liquidity and investment portfolio - Group 2024 (note ii) By credit rating (note i) By geographical region AAA AA A Below AUK US & Canada Europe Japan Other (Audited) £m % % % % % %% % %Liquid assets:Cash and balances at central banks 25,231 - 100 - - 100 - - -- Government bonds (note iii) 19,080 5 81 14 - 39 35 14 12- Supranational bonds 3,093 44 56 - - - - - - 100Covered bonds 2,980 99 1 - - 4629 17 -8 Residential mortgage backed securities (RMBS) 631 100 - - - 63 - 37 - - Other asset backed securities 137 100 - - - 100 - - - - Liquid assets total 51,152 12 83 5 - 67 15 7 47 Other securities (note iv):RMBS FVOCI 544 100 - - - 100 - - - - RMBS amortised cost 4 100 - - - 100 - - - - Other investments (note v) 63 - - - 100 100 - - - - Other securities total 611 90 - - 10 100 - - - - Loans and advances to banks and similar institutions 918 - 34 66 - 47 42 11 - - Total 52,681 13 81 6 - 6815 7 46
Notes:
i.
Ratings used are obtained from S&P Global, Moody’s or Fitch.
ii.
Comparatives have been restated as detailed in note 1 to the financial statements.
iii.
Balances classified as government bonds include government guaranteed, agency and government sponsored bonds.
iv.
Includes RMBS (UK buy to let and UK non-conforming) not eligible for the Liquidity Coverage Ratio (LCR).
v.
Includes investment securities held at FVTPL of £5 million (2024: £6 million).
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Credit risk – Treasury assets (continued)
Derivative financial instruments
Derivatives are used for market risk management, and not for trading or speculative purposes, although the application of accounting rules can create volatility in the income statement
in an individual financial year. The fair value of derivative assets at 31 March 2025 was £4.7 billion (2024: £6.3 billion) and the fair value of derivative liabilities was £1.5 billion (2024: £1.5
billion).
Derivatives are transacted with counterparties under an International Swaps and Derivatives Association (ISDA) Master Agreement with a Credit Support Annex (CSA) always executed in
conjunction with the ISDA Master Agreement. The legal agreements grant the legal right of set-off and allow the netting of positions and exchange of collateral between counterparties,
which can reduce net derivative credit exposure.
This table shows the exposure to counterparty credit risk for derivative contracts after netting benefits and collateral. The £13 million of unrated derivative exposure relates to Virgin
Money’s business banking activities.
Derivative credit exposure by credit rating – Group 2025 2024 AA A Unrated Total AA A Unrated Total(Audited)£m £m £m £m £m £m £m £mDerivative assets as per balance sheet 1,209 3,520 13 4,742 584 5,706 - 6,290 Netting benefits (408) (828) - (1,236) (156) (1,109) - (1,265) Net current credit exposure 801 2,692 13 3,506 428 4,597- 5,025 Collateral (cash)(796) (2,671) - (3,467) (422) (4,587) - (5,009) Net derivative credit exposure 5 21 13 39 6 10- 16
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Liquidity and funding risk
Summary
L
iquidity risk is the risk that the Group is unable to meet its liabilities as they fall due and maintain member and other stakeholder confidence. Funding risk is the risk that the Group is
unable to maintain diverse funding sources in wholesale and retail markets and manage retail funding risk that can arise from e
xcessive concentrations of higher risk deposits.
The Group’s Liquidity Coverage Ratio (LCR),
which averaged 174% over the 12 months ended 31 March 2025 (2024: 191%), demonstrates that sufficient high-quality liquid assets are held
to survive a short-term severe but plausibl
e liquidity stress. The Group continues to manage liquidity against internal risk appetite which is more prudent than regulatory requirements.
The position against the longer-term funding metric, the Net Stab
le Funding Ratio (NSFR), is also monitored. The Group’s average NSFR for the four quarters ended 31 March 2025 was
147% (2024:
151%), well in excess of the 100% minimum regulatory requirement.
Following the acquisition of Virgin Money UK PLC, the Nationwide
sub-group and Virgin Money sub-group continue to manage liquidity risk on an independent basis, including meeting all
regulatory requirements. Each sub-group ho
lds sufficient liquid assets, both in terms of amount and quality, to meet their individual daily cash flow needs as well as simulated stressed
requirements driven by the Group’s risk
appetite and regulatory assessments.
Managing liquidity and funding risk
Liquidity and funding risks are managed with
in a comprehensive risk framework which includes policies, strategy, limit setting and monitoring, stress testing and robust governance
controls. This framework ensures that the
Group and its sub-groups maintain stable and diverse funding sources and a sufficient holding of high-quality liquid assets such that there is no
significant risk that liabilities cannot be met as they fall due.
The Group’s management of liquidity and fund
ing risks aims to ensure that there are sufficient liquid assets at all times, in both amount and quality, to:
cover cash flow mismatches and fluctuations in funding;
retain public confidence; and
meet financial obligations as they fall due, even during episodes of stress.
The liquidity and funding risk framework is
reviewed by the Board as part of the annual Internal Liquidity Adequacy Assessment Process (ILAAP). Each sub-group’s Assets and Liabilities
Committee (ALCO) is responsible for managing the balance sheet stru
cture and risk for the sub-group, within limits defined by Group risk appetite. Cash flow forecasts are maintained
and reviewed weekly to support the separate sub-groups in monito
ring key risk metrics. The framework also ensures the Group and its sub-groups maintain a prudent funding mix and
maturity profile, and appr
opriate encumbrance levels.
A Group Liquidity Contingency Plan (LCP), which is part of the wider recovery plan framework, is maintained which describes ear
ly warning triggers for indicating an emerging liquidity or
funding stress as well as escalation procedur
es and a range of actions that could be taken in response to ensure sufficient liquidity is maintained. The LCP is tested regularly to ensure it
remains robust. The Group Recovery Plan
describes potential actions that could be utilised in a more extreme stress.
Outlook
The Group continues to hold a diversified high-quality liquid a
sset buffer which will evolve in line with its liquidity requirements. The Group’s funding plans include a continued presence in
wholesale funding markets. The approach to
liquidity and funding risk management will continue to evolve as part of the integration of Virgin Money.
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Liquidity risk
Liquidity strategy
Following the acquisition of Virgin Money UK PLC, the Nationwide sub-group and Virgin Money sub-group continue to manage their day-to-day liquidity requirements as separate
businesses.
The Group’s risk appetite, as set by the Board, defines the minimum size and mix of the liquid asset buffer and is translated into a set of risk appetite metrics and liquidity risk limits for
each sub-group. Sufficient liquid assets, both in terms of amount and quality, are held to meet daily cash flow needs as well as simulated stressed requirements driven by the Group’s risk
appetite and regulatory assessments. This includes prudent management of the currency mix of liquid assets to ensure there is no undue reliance on currencies not consistent with the
profile of stressed outflows.
Liquid assets are held and managed centrally by each sub-group’s Treasury function. A high-quality liquidity portfolio is maintained, predominantly comprising reserves held at central
banks and highly-rated debt securities issued by a restricted range of governments, central banks and supranationals. The Group also holds high-quality, central bank-eligible covered
bonds, residential mortgage backed securities (RMBS) and asset-backed securities (ABS). Other securities are held that are not eligible for central bank operations but can be monetised
through sale and repurchase (repo) agreements with third parties or through sale.
The Group undertakes securities financing transactions in the form of repo agreements. This demonstrates the liquid nature of the assets held in its liquid asset buffers as well as
satisfying regulatory requirements.
For contingency purposes, each sub-group prepositions unencumbered mortgage assets at the Bank of England which can be used in the Bank of England’s liquidity operations if market
liquidity is severely disrupted.
The Nationwide sub-group has met its most recent Environmental, Social and Governance (ESG) asset investment target of £2 billion. Nationwide’s internal definition of ESG assets
remains restricted to bonds issued by multilateral development banks, and green, social or sustainable-labelled bonds issued by selected governments.
Liquidity stress testing
To mitigate liquidity and funding risks generated by its business activities, the Group aims to maintain a liquid asset buffer of at least 100% of the anticipated outflows seen under internal
stress test scenarios and the regulatory-prescribed LCR.
Potential contractual and behavioural stressed outflows are assessed across a range of liquidity risk drivers over 30 calendar days, with the key assumptions shown below. Internal stress
assumptions are reviewed regularly, with changes approved by ALCO, and approved annually by the Board Risk Committee as part of the ILAAP. Assessments over other stress horizons
are also performed and assessed against contingent liquidity resources.
Under the most severe internal 30 day stress test (a combined market-wide and firm-specific stress scenario), the average ratio of the liquid asset buffer to stressed net outflows over the
12 months ended 31 March 2025 remained within risk appetite.
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Liquidity risk driver Modelling assumptions used Deposit funding Significant unexpected outflows are experienced with no new deposits received. Wholesale funding Following a credit rating downgrade: zero rollover of maturing long-term wholesale funding; zero rollover of maturing short-term funding received from financial counterparties and partial roll-over from non-financialcounterparties; and no new wholesale funding received. Off-balance sheet Contractual outflows occur in relation to secured funding programmes and central derivatives clearing due to credit rating downgrades. Lending commitments continue to be met. Collateral outflows arise due to adverse movements in market rates. Expected inflows from mortgages, consumer, business and commercial loans are recognised. Intra-day Liquidity is needed to pre-fund outgoing payments. Liquid assets Asset values are reduced in recognition of the stressed conditions assumed.
Liquid assets
The ta
bles below set out the sterling equivalent carrying value of the Group’s liquid asset buffer, by asset class and by issuing currency. The liquid asset buffer includes off-balance sheet
liquidity, such as securities received through reverse repo agr
eements, and excludes securities encumbered through repo agreements and for other purposes.
LCR eligible assets (note i) – Group 2025 2024 Level 1 Level 2 Total Level 1 Level 2 Total £bn £bn£bn £bn £bn £bn Cash and balances at central banks 25.9 - 25.9 23.5 - 23.5 Government and supranational bonds (note ii) 17.0 2.0 19.0 16.2 2.8 19.0 Covered bonds 2.3 2.4 4.7 1.1 1.8 2.9RMBS and ABS - 0.9 0.9 - 0.8 0.8 Total LCR eligible assets 45.2 5.3 50.5 40.8 5.4 46.2 LCR eligible assets by currency (note i) – Group 2025 2024 Other Other GBP EUR USD Total GBP EUR USD Total (note iii) (note iii) £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn Total LCR eligible assets 36.9 7.2 4.3 2.1 50.5 31.8 6.1 5.5 2.8 46.2
Notes:
i.
Prior year comparatives have been restated to exclude holdings of non-LCR eligible assets.
ii.
Government bonds include regional governments, government guaranteed, agency and government sponsored bonds. Supranational bonds are multilateral development bank and international
organisations.
iii.
Other currencies primarily consist of Canadian dollars and Japanese yen.
The Group’s holdings of LCR
eligible high-quality liquid assets averaged £54.5 billion, post any liquidity haircuts, for the 12 months ended 31 March 2025 (2024: £56.1 billion). Further
details can be found in the Group’s
annual Pillar 3 Disclosure 2025 at nationwide.co.uk
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Funding risk
Funding strategy
Nationwide’s funding strategy is to be predominantly funded by deposits from individuals, as set out below.
Funding profile (note i) – Group Assets 2025 2024 Members' interests, equity and liabilities 2025 2024 (note ii)£bn £bn £bn £bn Residential mortgages 275.6204.1 Customer deposits – individuals 260.9193.4 Treasury assets (including liquidity portfolio) 60.052.7 Customer deposits – business 20.9 4.2 Business and commercial lending 15.05.5 Wholesale funding (note iii) 57.451.4 Consumer lending 10.33.8 Other liabilities 5.63.2 Other assets 7.06.0 Capital and reserves (note iv) 23.1 19.9 Total 367.9272.1 Total 367.9272.1
Notes:
i. Comparatives have been restated as detailed in note 1 to the financial statements.
ii. Figures are stated net of impairment provisions where applicable.
iii. Includes debt securities in issue, deposits from banks and other non-customer deposits. Comparatives have been restated to exclude deposits from business customers which are now presented
separately.
iv. Includes all subordinated liabilities and subscribed capital.
At 31 March 2025, the Group’s loan to deposit ratio, which represents loans and advances to customers divided by the total of shares and other deposits, was 106.7% (2024: 107.9%).
The non-member funding ratio (funding from sources other than Nationwide member deposits as a proportion of total funding liabilities) at 31 March 2025 was 37.3% (2024: 22.5%). The
main driver of the increase is the inclusion of Virgin Money balances within non-member funding.
1
Wholesale funding
The wholesale funding portfolio comprises a range of secured and unsecured instruments to ensure that a stable and diversified funding base is maintained across a range of
instruments, currencies, maturities, and investor types. Part of the Group’s wholesale funding strategy is to remain active in core markets and currencies. A funding risk limit framework
also ensures that a prudent funding mix and maturity concentration profile is maintained and limits the level of encumbrance to ensure enough contingent funding capacity is retained in
the event of a stress.
Wholesale funding has increased by £6.0 billion to £57.4 billion during the period, primarily due to the acquisition of Virgin Money UK PLC offset by repayment of drawings from the Bank
of England’s Term Funding Scheme with additional incentives for SMEs (TFSME). The Nationwide sub-group has fully repaid its TFSME drawings, while the Virgin Money sub-group has
£0.9 billion remaining.
1
Non-member funding comprises deposits from Virgin Money customers, business deposits and certain on-balance sheet wholesale funding items.
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The table below sets out the Group’s wholesale funding and subordinated liabilities by currency.
Currency composition of wholesale funding and subordinated liabilities - Group 2025 2024 GBP EUR USD Other Total GBP EUR USD Other Total £bn £bn £bn £bn £bn £bn £bn £bn £bn £bn Repos 1.2 0.2 0.1 - 1.5 0.1 1.7 0.1 - 1.9Deposits (note i) 3.8 - - - 3.8 5.5 - - - 5.5Certificates of deposit 1.8 - - - 1.8 1.5 - - - 1.5Commercial paper 0.1 - 0.6 - 0.7 - - - - -Covered bonds 9.1 9.6 1.2 1.3 21.2 5.7 7.4 1.2 1.2 15.5 Securitisations 5.0 - - - 5.0 1.9 - 0.1 - 2.0Senior preferred 3.1 7.0 3.6 1.2 14.9 1.5 5.9 2.9 1.3 11.6 Senior non-preferred (note ii) 1.8 2.7 3.2 0.5 8.2 0.8 0.9 3.2 0.5 5.4 TFSME 0.9 - - - 0.9 9.3 - - - 9.3Other (notes ii and iii) - (0.5) (0.1) - (0.6) - (0.9) (0.3) (0.1) (1.3) Total of wholesale funding 26.8 19.0 8.6 3.0 57.4 26.3 15.0 7.2 2.9 51.4 Subordinated liabilities (notes ii and iv) 0.8 0.4 1.2 - 2.4 - 0.9 1.2 - 2.1
Notes:
i. Comparatives for deposits have been restated to exclude business customer deposits which are now presented separately from wholesale funding in the funding profile table on page 174.
ii. Comparatives for senior non-preferred notes have been reclassified from subordinated liabilities and are now shown as a separate item within wholesale funding.
iii. The figure shown for Other consists of fair value adjustments to debt securities in issue for micro hedged risks.
iv. Subordinated liabilities include fair value hedge accounting adjustments.
The following table sets out the Group’s residual maturity of wholesale funding, on a contractual maturity basis.
At 31 March 2025, cash, government bonds and supranational bonds included in the liquid asset buffer represented 316% (2024: 278%
2
)
of wholesale funding maturing in less than one
year, assuming no rollovers.
2
Prior year comparative has been restated to exclude £4.2 billion of deposits from business customers which are no longer classified as wholesale funding.
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Wholesale funding – residual maturity - Group 2025 Not more than Over one Over three Over six Subtotal less Over one Over two years Total one month month but not months but months but than one year year but not more than not more than not more than more than three months six months one year two years £bn £bn £bn £bn £bn £bn £bn £bnRepos 1.5 - - - 1.5 - - 1.5 Deposits (note i) 3.7 0.1 - - 3.8 - - 3.8 Certificates of deposit 1.5 0.2 0.1 - 1.8 - - 1.8 Commercial paper - 0.7 - - 0.7 - - 0.7 Covered bonds - 0.1 0.2 2.1 2.4 5.2 13.6 21.2 Securitisations 0.1 0.1 0.1 0.2 0.5 0.9 3.6 5.0 Senior preferred 0.1 0.4 2.5 0.4 3.4 3.1 8.4 14.9 Senior non-preferred (note ii) 0.1 - - - 0.1 4.3 3.8 8.2 TFSME - - - - - 0.9 - 0.9 Other (notes ii and iii) - - - - - - (0.6) (0.6) Total of wholesale funding 7.0 1.6 2.9 2.7 14.2 14.4 28.8 57.4 Of which secured 1.6 0.2 0.3 2.3 4.4 7.0 16.8 28.2 Of which unsecured 5.4 1.4 2.6 0.4 9.8 7.4 12.0 29.2 % of total 12.2 2.8 5.1 4.6 24.7 25.1 50.2 100.0 Wholesale funding – residual maturity - Group 2024 Not more than Over one Over three Over six Subtotal less Over one Over two years Total one month month but not months but not months but not than one year year but not more than more than more than more than three months six months one year two years £bn £bn £bn £bn £bn £bn £bn £bnRepos 1.9 - - - 1.9 - - 1.9Deposits (note i) 5.3 0.1 - 0.1 5.5 - - 5.5Certificates of deposit 1.5 - - - 1.5 - - 1.5Commercial paper - - - - - - - - Covered bonds 0.1 0.5 - 0.6 1.2 1.5 12.8 15.5 Securitisations 0.1 - - 0.1 0.2 0.2 1.6 2.0Senior preferred - 0.1 0.1 0.8 1.0 3.2 7.4 11.6Senior non-preferred (note ii) - - - - - 4.5 0.9 5.4 TFSME - - - 4.0 4.0 5.3 - 9.3Other (notes ii and iii) - - - - - (0.2) (1.1) (1.3) Total of wholesale funding 8.9 0.7 0.1 5.6 15.3 14.5 21.6 51.4 Of which secured 2.1 0.5 - 4.7 7.3 7.0 13.8 28.1 Of which unsecured 6.8 0.2 0.1 0.9 8.0 7.5 7.8 23.3 % of total 17.3 1.4 0.2 10.9 29.8 28.2 42.0 100.0
Notes:
i.
Comparatives for deposits have been restated to exclude business customer deposits which are now presented separately from wholesale funding in the funding profile table on page 174.
ii.
Comparatives for senior non-preferred notes have been reclassified from subordinated liabilities and are now shown as a separate item within wholesale funding.
iii.
The figure shown for Other consists of fair value adjustments to debt securities in issue for micro hedged risks.
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Residual maturity of financial assets and liabilities
The table below segments the carrying value of financial assets
and financial liabilities into relevant maturity groupings based on the final contractual maturity date (residual maturity).
This gives rise to funding mismatches on
the balance sheet. In practice, customer behaviours mean that liabilities are often retained for longer than their contractual maturities and
assets are repaid earlier. The balance shee
t structure and risks are managed and monitored by each sub-group’s ALCO within Group risk appetite. Judgement and past behavioural
performance of each asset and liability class are us
ed to forecast likely cash flow requirements.
Residual maturity (note i) - Group 2025 Due less Due between Due between Due between Due between Due between Due between Due after Total than one and three and six and nine and one and two and more than one monththree six months nine months twelve months two years five years five years (note ii)months £m £m £m £m £m £m £m £m £mFinancial assets Cash and balances at central banks (note iii) 29,483 - - - - - - - 29,483 Loans and advances to banks and similar institutions 1,676 - - - - - - 134 1,810 (note iii) Investment securities 207 411 515 381 966 2,237 9,117 14,829 28,663 Derivative financial instruments 13 95 611 172 265 1,153 727 1,706 4,742 Fair value adjustment for portfolio hedged risk (19) (17) (90) (57) (108) (703) (819) (224) (2,037) Loans and advances to customers (note iv) 3,271 10,434 2,997 2,812 2,783 10,821 31,171 236,600 300,889 Total financial assets 34,631 10,923 4,033 3,308 3,906 13,508 40,196 253,045 363,550 Financial liabilities Shares 151,469 9,128 15,934 16,369 10,294 2,611 811 812 207,428 Deposits from banks and similar institutions 5,143 - 10 - - 900 - - 6,053 Of which repo 1,535 - 10 - - - - - 1,545 Of which TFSME 10 - - - - 900 - - 910Other deposits 52,358 3,858 8,952 4,131 3,985 1,252 131 - 74,667 Fair value adjustment for portfolio hedged risk - 4 8 7 7 1 - - 27Secured funding (note v) 111 175 353 403 1,932 6,057 11,180 5,632 25,843Unsecured funding (notes v and vii) 1,569 1,337 2,561 377 39 3,320 12,127 3,936 25,266Of which MREL resources45 1 41 23 19 1,079 5,910 3,632 10,750 Derivative financial instruments 13 16 98 24 29 296 545 526 1,547Subordinated liabilities (notes v and vii) 25 7 2 - - 843 - 1,567 2,444 Subscribed capital (notes vi and vii)- - 1 - - - - 128 129Total financial liabilities 210,688 14,525 27,919 21,311 16,286 15,280 24,794 12,601 343,404Off-balance sheet commitments (note viii) Financial guarantees 5 7 14 7 12 13 5 37 100 Other commitments 19,363 - - - - - - - 19,363 Net liquidity difference (195,425) (3,609) (23,900) (18,010) (12,392) (1,785) 15,397 240,407 683 Cumulative liquidity difference (195,425) (199,034) (222,934) (240,944) (253,336) (255,121) (239,724) 683 -
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Residual maturity (note i) - Group 2024 Due less than Due between Due between Due between Due between Due between Due between Due after Total one monthone and three and six and nine and one and two and more than (note ii)three months six months nine months twelve months two years five years five years £m £m £m £m £m £m £m £m £mFinancial assetsCash and balances at central banks (note iii) 25,231 - - - - - - - 25,231Loans and advances to banks and similar institutions 818 - - - - - - 100 918(note iii) Investment securities 58 212 272 239 325 2,016 10,639 12,771 26,532Derivative financial instruments 20 41 51 11 276 1,736 2,170 1,985 6,290Fair value adjustment for portfolio hedged risk (41) (18) (140) (185) (171) (814) (1,698) (263) (3,330)Loans and advances to customers (note iv) 1,249 2,878 1,953 1,925 1,927 7,664 22,460 173,384 213,440Total financial assets 27,335 3,113 2,136 1,990 2,357 10,602 33,571 187,977 269,081Financial liabilitiesShares 139,238 4,595 14,887 12,006 8,486 12,126 1,128 900 193,366Deposits from banks and similar institutions 7,129 7 1 1 3,980 5,270 - - 16,388Of which repo 1,943 - - - - - - - 1,943Of which TFSME - 4 - - 3,980 5,270 - - 9,254Other deposits 1,283 1,585 1,167 223 192 75 5 - 4,530Fair value adjustment for portfolio hedged risk 1 3 16 17 7 6 - - 50Secured funding (note v) 176 533 49 54 659 1,652 7,663 6,488 17,274Unsecured funding (notes v and vii) 1,557 75 92 35 748 3,928 9,622 1,418 17,475Of which MREL resources 30 2 16 15 - 828 3,433 826 5,150Derivative financial instruments 21 42 43 - 59 158 574 554 1,451Subordinated liabilities (notes v and vii)7 - 13 - - - 832 1,223 2,075Subscribed capital (notes vi and vii)1 - 1 - - - - 171 173Total financial liabilities 149,413 6,840 16,269 12,336 14,131 23,215 19,824 10,754 252,782Off-balance sheet commitments (note viii)Other commitments 13,344 - - - - - - - 13,344Net liquidity difference (135,422) (3,727) (14,133) (10,346) (11,774) (12,613) 13,747 177,223 2,955Cumulative liquidity difference (135,422) (139,149) (153,282) (163,628) (175,402) (188,015) (174,268) 2,955 -
Notes:
i. The analysis excludes certain financial assets and liabilities relating to accruals, trade receivables, trade payables and settlement balances which are generally short-term in nature, and lease liabilities.
Further information on lease liabilities is shown in note 28 to the financial statements.
ii. Due less than one month includes amounts repayable on demand.
iii. Comparatives have been restated to reflect presentational changes to the Group’s financial statements required to facilitate alignment of accounting policies across the Group. For further information see
note 1 to the financial statements.
iv. Credit card outstanding balances have been moved from due less than one month to due between one and three months; balances of £1,557 million have been restated for this change in the prior period.
v. The balance sheet amount for debt securities in issue is split into secured funding and unsecured funding in this table. Senior non-preferred notes were previously reported in subordinated liabilities. They
have been reclassified to debt securities in issue and are now presented in unsecured funding in this table.
vi. The principal amount for undated subscribed capital is included within the due after more than five years column.
vii. Unsecured funding, subordinated liabilities and subscribed capital may include early redemption features.
viii. Off-balance sheet commitments include amounts payable on demand for undrawn loan commitments, customer overpayments on residential mortgages where the borrower can draw down the amount
overpaid, and commitments to acquire financial assets. Further information on commitments is shown in note 29 to the financial statements.
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Financial liabilities – gross undiscounted contractual cash flows
The tables below provide an analysis of gross contractual cash fl
ows. In the prior year, as the majority of the Group’s liabilities were owed by the Society, only a Group table is presented.
The totals differ from the analysis of residual maturity as they
include estimated future interest payments, calculated using balances outstanding at the balance sheet date, contractual
maturities, and appropriate forward-looking interest rates.
Amounts are allocated to the relevant maturity band base
d on the timing of individual contractual cash flows.
Gross contractual cash flows (note i) – Group2025 Due less Due Due Due Due Due Due Due afterTotalthanbetweenbetweenbetweenbetweenbetweenbetween more than one monthone andthree and six andnine andone andtwo and five years(note ii) three six months nine months twelve two years five yearsmonthsmonths(Audited)£m £m £m £m £m £m £m £m £mShares151,470 9,684 16,354 16,616 10,397 2,738 958 812 209,029Deposits from banks and similar institutions 5,142 - 20 10 9 933 - - 6,114Other deposits52,406 3,917 9,189 4,200 4,052 1,289 133 - 75,186Secured funding (note iii)134 244 520 611 2,178 6,848 12,316 6,647 29,498Unsecured funding (notes iii and iv)1,579 1,352 2,745 497 307 4,115 13,535 4,644 28,774Subordinated liabilities (note iii and iv)26 12 21 20 21 974 312 1,813 3,199Subscribed capital (notes iv and v)- - 4 - 4 8 25 127 168Total non-derivative financial liabilities210,757 15,209 28,853 21,954 16,968 16,905 27,279 14,043 351,968Derivative financial liabilities:Gross settled derivative outflows296 635 1,508 826 755 6,351 12,454 8,433 31,258Gross settled derivative inflows(242) (572) (1,342) (708) (642) (5,836) (12,023) (8,735) (30,100)Gross settled derivatives – net flows54 63 166 118 113 515 431 (302) 1,158Net settled derivative liabilities (note vi) 20 3 28 31 (21) 17 176 246 500Total derivative financial liabilities74 66 194 149 92 532 607 (56) 1,658Total financial liabilities 210,831 15,275 29,047 22,103 17,060 17,437 27,886 13,987 353,626Off-balance sheet commitments (note vii)Financial guarantees5 7 14 7 12 13 5 37 100Other commitments 19,363 - - - - - - - 19,363Total financial liabilities including off-balance 230,199 15,282 29,061 22,110 17,072 17,450 27,891 14,024 373,089sheet commitments
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Gross contractual cash flows (note i) – Society2025 Due less Due Due Due Due Due Due Due afterTotalthanbetweenbetweenbetweenbetweenbetweenbetween more than one monthone andthree and six andnine andone andtwo and five years(note ii) three six months nine months twelve two years five yearsmonthsmonths(Audited)£m £m £m £m £m £m £m £m £mShares151,470 9,684 16,354 16,616 10,397 2,738 958 812 209,029Deposits from banks and similar institutions 5,096 - - - - - - - 5,096Other deposits1,562 1,376 1,394 76 128 17 6 - 4,559Secured funding (note iii)48 112 304 415 1,209 3,847 6,546 6,647 19,128Unsecured funding (notes iii and iv)1,567 1,352 2,716 478 245 3,136 11,661 4,644 25,799Subordinated liabilities (note iii and iv)26 - 17 8 17 915 117 963 2,063Subscribed capital (notes iv and v)- - 4 - 4 8 25 127 168Total non-derivative financial liabilities159,769 12,524 20,789 17,593 12,000 10,661 19,313 13,193 265,842Derivative financial liabilities:Gross settled derivative outflows233 583 1,421 738 682 5,020 11,017 7,943 27,637Gross settled derivative inflows(188) (519) (1,274) (648) (597) (4,609) (10,659) (8,232) (26,726)Gross settled derivatives – net flows45 64 147 90 85 411 358 (289) 911Net settled derivative liabilities (note vi) 19 4 20 23 (28) 2 140 226 406Total derivative financial liabilities64 68 167 113 57 413 498 (63) 1,317Total financial liabilities 159,833 12,592 20,956 17,706 12,057 11,074 19,811 13,130 267,159Off-balance sheet commitments (note vii)Financial guarantees- - - - - - - - -Other commitments 11,754 - - - - 900 - - 12,654Total financial liabilities including off-balance 171,587 12,592 20,956 17,706 12,057 11,974 19,811 13,130 279.813sheet commitments
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Gross contractual cash flows (note i) – Group2024 Due less Due Due Due Due betweenDue Due Due afterTotalthanbetweenbetweenbetweennine andbetweenbetween more than one monthone andthree and six and twelve one andtwo and five years(note ii) three six months nine months two years five yearsmonthsmonths(Audited) £m £m £m £m £m £m £m £m £mShares 139,238 5,206 15,376 12,327 8,679 12,442 1,284 900 195,452Deposits from banks and similar institutions 7,129 128 122 122 4,067 5,281 - - 16,849Other deposits 1,283 1,612 1,179 227 194 77 5 - 4,577Secured funding (note iii) 191 564 153 208 835 2,238 8,740 7,222 20,151Unsecured funding (notes iii and iv) 1,563 89 200 146 901 4,563 10,837 2,125 20,424Subordinated liabilities (note iii and iv) 8 - 35 8 18 69 998 1,342 2,478Subscribed capital (notes iv and v) 1 - 4 1 4 11 33 188 242Total non-derivative financial liabilities 149,413 7,599 17,069 13,039 14,698 24,681 21,897 11,777 260,173Derivative financial liabilities:Gross settled derivative outflows 366 841 1,328 268 1,216 3,085 11,863 7,758 26,725Gross settled derivative inflows (314) (787) (1,256) (219) (1,150) (2,906) (11,480) (7,670) (25,782)Gross settled derivatives – net flows 52 54 72 49 66 179 383 88 943Net settled derivative liabilities (note vi) 33 16 43 84 (40) 57 343 160 696Total derivative financial liabilities 85 70 115 133 26 236 726 248 1,639Total financial liabilities 149,498 7,669 17,184 13,172 14,724 24,917 22,623 12,025 261,812Off-balance sheet commitments (note vii)Financial guarantees - - - - - - - - -Other commitments 13,344 - - - - - - - 13,344Total financial liabilities including off-balance 162,842 7,669 17,184 13,172 14,724 24,917 22,623 12,025 275,156sheet commitments
Notes:
i.
The analysis excludes certain financial liabilities relating to trade payables and settlement balances which are generally short-term in nature, and lease liabilities. Further information on lease liabilities is
shown in note 28 to the financial statements.
ii.
Due less than one month includes amounts repayable on demand.
iii.
The balance sheet amount for debt securities in issue is split into secured funding and unsecured funding in this table. Senior non-preferred notes were previously reported in subordinated liabilities. They
have been reclassified to debt securities in issue and are now shown under unsecured funding in this table.
iv.
Unsecured funding, subordinated liabilities and subscribed capital may include early redemption features.
v.
The principal amount for undated subscribed capital is included within the due after more than five years column.
vi.
Cashflows from derivative assets and liabilities, and corresponding collateral balances which meet the criteria for offset in the balance sheet, are included on a net basis, with only the residual cash flows
payable reflected. Comparative information has been restated to reflect this approach. Also included in this line are the residual cash flows from net settled derivatives that do not have an unconditional
right of offset. Further information is detailed in note 24 to the financial statements.
vii.
Off-balance sheet commitments include amounts payable on demand for undrawn loan commitments, customer overpayments on residential mortgages where the borrower can draw down the amount
overpaid, and commitments to acquire financial assets.
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Liquidity and funding risk (continued)
Asset encumbrance
Encumbrance arises where assets are pledged as collateral against secured funding and other obligations and therefore cannot be used for other purposes. An analysis of the Group’s
encumbered and unencumbered on-balance sheet assets is set out below.
As a result of
covered bonds
As a result of
securitisations
Other
Total
Assets positioned at
the central bank
(i.e. prepositioned
plus encumbered)
Readily available
for encumbrance
Other assets that
are capable of
being encumbered
Cannot be
encumbered
Total
Asset encumbrance – Group 2025 Assets encumbered as a result of transactions with Other assets (comprising assets encumbered at the Totalcounterparties other than central banks central bank and unencumbered assets) Assets not positioned at the central bank £m £m £m £m £m £m £m £m £m £m Cash and balances at central banks 480 463 - 943 3,753 24,585 - 202 28,540 29,483 Loans and advances to banks and similar - 242 471 713 - 89 - 1,008 1,097 1,810 institutions Investment securities (note i) - - 4,463 4,463 - 24,136 - 64 24,200 28,663 Derivative financial instruments - - - - - - - 4,742 4,742 4,742 Loans and advances to customers (note ii) 32,739 19,353 - 52,092 96,928 62,369 89,106 394 248,797 300,889 Non-financial assets - - - - - - - 4,327 4,327 4,327 Fair value adjustment for portfolio hedged risk - - - - - - - (2,037) (2,037) (2,037) Total 33,219 20,058 4,934 58,211 100,681 111,179 89,106 8,700 309,666 367,877 2024 (note iii) £m £m £m £m £m £m £m £m £m £mCash 558 394 - 952 1,449 22,625 - 205 24,279 25,231Loans and advances to banks and similar - - 352 352 - 52 - 514 566 918institutions Investment securities (note i) - - 3,873 3,873 - 22,596 - 63 22,659 26,532 Derivative financial instruments - - - - - - - 6,290 6,290 6,290Loans and advances to customers (note ii) 23,581 7,321 - 30,902 67,206 51,983 62,999 350 182,538 213,440 Non-financial assets - - - - - - - 3,006 3,006 3,006Fair value adjustment for portfolio hedged risk - - - - - - - (3,330) (3,330) (3,330)Total 24,139 7,715 4,225 36,079 68,655 97,256 62,999 7,098 236,008 272,087
Notes:
i. Encumbered investment securities primarily relate to repo transactions and collateral pledged for derivatives.
ii. Loans and advances to customers ‘readily available for encumbrance’ are expected to be immediately eligible to use in existing secured funding programmes or at the central bank. Any fair value micro
hedge balance is reported as ‘cannot be encumbered’. Mortgages pledged include £15.2 billion (2024: £6.3 billion) in the covered bond and securitisation programmes that are in excess of the amount
contractually required to support notes in issue.
iii. Comparatives have been restated as detailed in note 1 to the financial statements.
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The majority of asset encumbrance arises from the use of residential mortgage pools to collateralise the covered bond and securitisation programmes. Further information is included in
note 14 to the financial statements.
Certain unencumbered assets are readily available to secure funding or meet collateral requirements. These include cash and securities held in the liquid asset buffer and residential
mortgages eligible for use in existing secured funding programmes or at the central bank. Other unencumbered assets, such as other residential mortgages, business and commercial loans
and consumer lending, are capable of being encumbered with a degree of further management action. Assets which do not fall into either of these categories are classified as not being
capable of being encumbered.
External credit ratings
The Group’s long-term and short-term credit ratings are shown in the table below.
Credit ratings Long-term Short-term Date of last rating Outlook action / confirmation Nationwide Building Society S&P Global A+ A-1 March 2024 Stable Moody’s A1 P-1 September 2024 Stable Fitch A F1 November 2024 Stable Virgin Money S&P Global BBB A-2 October 2024 Stable Moody’s A3 P-2 September 2024 Stable Fitch A- F1 October 2024 Stable Clydesdale Bank S&P Global A A-1 October 2024 Stable Moody’s A1 P-1 September 2024 Stable Fitch A- F1 October 2024 Stable
Collateral sensitivity
The amount of additional collateral the Group would need to provide in the event of a one notch and two notch downgrade by external credit rating agencies would be £0.6 billion (4 April
2024: £nil) and £1.0 billion (4 April 2024: £0.7 billion) respectively.
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Capital risk is the risk that the Group fails to maintain sufficient capital to absorb losses throughout a full economic cycle and sufficient to maintain the confidence of current and
prospective investors, members, the Board, and regulators. Capital is held to protect customers, cover inherent risks, provide a buffer for stress events and support the business
strategy. In assessing the adequacy of capital resources, risk appetite is considered in the context of the material risks to which the Group is exposed and the appropriate strategies
required to manage those risks.
Managing capital risk
The Board is responsible for setting the Group’s risk appetite with respect to capital risk, which is articulated through its risk appetite statements, and it defines minimum levels of capital
surplus above regulatory requirements that it is willing to operate with. These are translated into specific Group risk metrics, which are monitored by the Board Risk Committee (BRC)
and Group Risk Committee (GRC). Following the Virgin Money acquisition, capital is managed for the Nationwide and Virgin Money sub-groups through their respective Boards, BRCs,
Assets and Liabilities Committees (ALCOs) and other internal management reviews.
The capital structure is managed across the Group through the governance arrangements outlined above, to ensure that the minimum regulatory requirements and the expectations of
other key stakeholders continue to be met on a Group, sub-group and individual consolidation basis. As part of the risk appetite framework, strong capital ratios are targeted relative to
both regulatory requirements and major banking peers. Any planned changes to the balance sheet, potential regulatory developments and other factors (such as trading outlook,
movements in the fair value through other comprehensive income reserve and defined benefit pension deficit) are all considered.
The capital strategy is to manage capital ratios through retained earnings, supplemented by external capital where appropriate. Since general reserves form the majority of capital
resources, profitability is an important factor when considering the ability to meet capital requirements. Frameworks are in place to ensure that overall capital requirements are
appropriately allocated, as well as performance monitoring activity for individual product segments. Following the Virgin Money acquisition, an internal capital framework has been
established to enable capital to be transferred from the Nationwide sub-group to the Virgin Money sub-group. As at 31 March 2025, £0.8 billion of Common Equity Tier 1 (CET1) capital
resources had been transferred in response to the impact of harmonisation of accounting policies and acquisition-related costs recognised in the Virgin Money sub-group, ensuring that
the Virgin Money sub-group continues to maintain sufficient capital.
In line with the Group's capital management practices, opportunities are assessed and may be taken to reduce excess capital resources through liability management exercises, and the
use of open market repurchases of core capital deferred shares (CCDS).
Capital is held to meet Pillar 1 requirements for credit, counterparty credit and operational risks. In addition, the Prudential Regulation Authority (PRA) requires firms to hold capital to
meet Pillar 2A requirements which are firm-specific. This is a point-in-time estimate, set by the PRA on an annual basis, based on the submission of the results of the annual Internal
Capital Adequacy Assessment Process (ICAAP). This process confirms the amount of capital required to be held to meet risks partly covered by Pillar 1 such as operational risk, and risks
not covered by Pillar 1 such as pension and interest rate risks. The combination of Pillar 1 and Pillar 2A requirements form the Group’s Total Capital Requirement (TCR).
The Group’s latest Pillar 2A requirements were effective from October 2024 and were equivalent to 4.7% of risk weighted assets (RWAs) at 31 March 2025 (2024: 5.1% of RWA). This is
equal to a capital requirement of £3.9 billion, of which at least £2.2 billion must be met by CET1 capital. The Pillar 2A percentage is above the majority of banking peers due to the low
average RWA density of the Group’s balance sheet, given that 81% (2024: 82%) of total assets, excluding central bank reserves, are in the form of secured residential mortgages.
To protect against the risk of falling below Pillar 1 and Pillar 2A requirements (thereby breaching TCR), firms are subject to regulatory capital buffers which are set out in UK Capital
Requirements Directive V (UK CRD V). The PRA may set an additional firm-specific PRA buffer based upon supervisory judgement informed by the results of the Bank of England’s stress
testing scenarios. This Bank of England assessment considers the impacts of the stress scenarios on a firm’s capital requirements and resources, and other factors including leverage,
system
ic importance and any weaknesses in firms’ risk management and governance procedures. The ICAAP also considers appropriate internal capital buffers to ensure that the impact
of a severe but plausible stress can be absorbed.
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Capital risk (continued)
Stress testing
An assessment of potential vulnerabilities and available management actions is undertaken by considering a range of severe but plausible stressed scenarios by both Nationwide and
Virgin Money sub-groups. These stress tests project capital resources and requirements over a multi-year horizon and cover a range of macroeconomic and idiosyncratic scenarios that
test the most material risks to the individual sub-group business models. The combination of the sub-group stress testing scenarios supports the overall assessment of the Group’s
capital ratio resilience. The Group aims to maintain strong capital ratios in excess of regulatory minima under stressed conditions.
In 2023, the Bank of England confirmed it intended to run a desk-based stress test exercise in 2024, rather than an ACS (Annual Cyclical Scenario). The most recent Bank of England ACS
(2022/23) tested the resilience of the UK banking system to deep simultaneous recessions in the UK and global economies, large falls in asset prices and higher global interest rates, as
well as a separate stress of misconduct costs. The ACS was undertaken before Nationwide’s acquisition of Virgin Money. Both firms independently participated in the stress test. The
results were published by the Bank of England (www.bankofengland.co.uk) confirming that both Nationwide and Virgin Money remained above regulatory requirements and hurdle rates
at the low point with CET1 ratios of 20.3% and 9.9% respectively, before strategic management actions against starting CET1 ratios of 24.6% and 14.8% respectively. The leverage ratio low
point was 5.6% and 4.1% for Nationwide and Virgin Money respectively against starting leverage ratios of 5.6% and 4.0% respectively.
On 24 March 2025, the Bank of England released the 2025 Bank Capital Stress Test (BCST) which is the successor to the Bank of England’s Concurrent Stress Test (CST), which included
the Annual Cyclical Scenario. Nationwide is participating in BCST on a combined group basis, with results expected to be published by the Bank of England in Q4 2025.
Recovery planning and resolvability
The Group maintains a Group Recovery Plan under UK regulatory rules implementing the European Bank Recovery and Resolution Directive (BRRD). As a material subsidiary, Virgin
Money also maintains a Recovery Plan which would work alongside the Group Plan in the event of a stress. The plans contain a set of management actions that would be available to
support the Group's capital and liquidity position in the event of a breach of one or more of the Group’s internal risk appetite metrics.
The Group submitted its initial Group Recovery Plan to the PRA in March 2025, and will continue to do so typically on a two-year cycle or as requested by the PRA, with the next scheduled
submission due in June 2027. Prior to submission of the initial Group Recovery Plan, in October 2023, Nationwide and Virgin Money sub-groups independently submitted their individual
resolvability self-assessments to the Bank of England. These assessments document the capabilities that are designed to achieve the resolvability outcomes as prescribed within the
Bank of England Resolvability Assessment Framework, and included enhancements and developments since the previous self-assessment submissions in October 2021.
In March 2025, the Group submitted a Group interim resolvability self-assessment to the Bank of England summarising the capabilities across the Group and developments to
capabilities as a result of the Virgin Money acquisition. A summary of the Nationwide sub-group’s approach to resolvability is available within the Resolvability Assessment Framework
Disclosure at nationwide.co.uk and Virgin Money sub-group’s Resolution Disclosure at virginmoneyukplc.com. The next self-assessment submission is expected to be made in October
2026, with d
i
sclosures to follow in June 2027, and will describe how the resolvability outcomes are achieved for the Group.
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Capital position
The capital disclosures included in this report are in line with UK Capital Requirements Directive V (UK CRD V). The disclosures are on a consolidated Group basis, including all subsidiary
entities, unless otherwise stated.
Capital ratios and requirements - Group 2025 2024 Capital ratios % %CET1 ratio 19.1 27.1 Tier 1 ratio 21.7 29.5 Total regulatory capital ratio 23.8 32.6 Leverage ratio 5.2 6.5 Capital requirements £m £m Risk weighted assets (RWAs) 81,871 54,628 Leverage exposure 344,018 249,263
Risk-based capital ratios remain in excess of regulatory requirements with the CET1 ratio at 19.1% (2024: 27.1%), above the Group’s CET1 capital requirement of 12.7%. The CET1 capital
requirement includes a 7.2% minimum Pillar 1 and Pillar 2A requirement and the UK CRD V combined buffer requirements of 5.5% of RWAs.
The CET1 ratio has decreased to 19.1% (2024: 27.1%) primarily due to the acquisition of Virgin Money. CET1 capital resources increased by £0.8 billion due to profit after tax of £2.3 billion,
partially offset by an increase in regulatory CET1 capital deductions of £1.4 billion following the Virgin Money acquisition; this increase in CET1 capital resources adds 1.5% to the CET1 ratio.
RWAs increased by £27.2 billion, mainly driven by the inclusion of £27.7 billion of Virgin Money RWAs; the change in RWAs reduces the CET1 ratio by 9.5% in absolute terms.
UK CRD V requires firms to calculate a leverage ratio, which is non-risk-based, to supplement risk-based capital requirements. The Group’s leverage ratio decreased to 5.2% (2024: 6.5%),
primarily due to the Virgin Money acquisition as outlined above and increased Group residential mortgage balances.
The leverage ratio remains in excess of the Group’s leverage capital requirement of 4.3%, which comprises a minimum Tier 1 capital requirement of 3.25% and buffer requirements of
1.05%. The buffer requirements include a 0.7% UK countercyclical leverage ratio buffer and a 0.35% additional leverage ratio buffer.
Leverage requirements continue to be the Group’s binding Tier 1 capital measure, as the combination of minimum and regulatory buffer requirements is in excess of the risk-based
equivalent. The risk of excessive leverage is managed through regular monitoring and reporting of leverage, which forms part of risk appetite.
Further details of the leverage exposure can be found in the Nationwide Group and sub-group Pillar 3 Disclosures 2025 at nationwide.co.uk and Virgin Money Pillar 3 Disclosures 2025 at
virginmoneyukplc.com.
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Capital risk (continued)
The table below shows how components of members’ interests, equity and liabilities contribute to total regulatory capital and does not include non-qualifying instruments.
Total regulatory capital - Group 2025 2024 (Audited)£m £m General reserve 17,086 15,119 Proportional consolidated gains/losses arising from joint venture (note i) 9 - Core capital deferred shares (CCDS) (note ii) 1,334 1,334 Revaluation reserve 35 36 Fair value through other comprehensive income (FVOCI) reserve (119) (38) Cash flow hedge and other hedging reserves 79 76 Regulatory adjustments and deductions: Cash flow hedge and other hedging reserves (note iii) (79) (76) Direct holdings of CET1 instruments (note ii) (177) (177) Foreseeable distributions (note iv) (100) (63) Prudent valuation adjustment (note v) (82) (73) Own credit and debit valuation adjustments (note vi) (4) (11) Intangible assets (note vii) (1,226) (812) Goodwill (note vii) (12) (12) Defined-benefit pension fund asset (note vii) (669) (454) Excess of regulatory expected losses over impairment provisions (note viii) (247) (51) Deferred tax assets that rely on future profitability and do not arise from temporary differences (note ix) (217) - Total regulatory adjustments and deductions (2,813) (1,729) CET1 capital 15,611 14,798 Other equity instruments (Additional Tier 1 - note x) 2,121 1,336 Tier 1 capital 17,732 16,134 Subordinated debt (note xi) 1,757 1,650 Excess of impairment provisions over regulatory expected losses (note viii) - 24 Tier 2 capital 1,757 1,674 Total regulatory capital 19,489 17,808
Notes:
i. The Group applies a proportional consolidation approach to the Salary Finance Loans Limited joint venture, which is accounted for in the consolidated financial statements using the equity method.
ii. The CCDS amount does not include the deductions for the Group’s repurchase exercises completed in 2023. This is presented separately as a regulatory adjustment in line with UK Capital Requirements
Regulation (CRR) article 42.
iii. In accordance with CRR article 33, institutions do not include the fair value reserves related to gains or losses on cash flow hedges of financial instruments that are not valued at fair value.
iv. Foreseeable distributions in respect of CCDS and AT1 securities are deducted from CET1 capital under UK CRD V rules.
v. A prudent valuation adjustment (PVA) is applied in respect of fair valued instruments as required under UK CRD V rules.
vi. Own credit and debit valuation adjustments are applied to remove balance sheet gains or losses of fair valued liabilities and derivatives that result from changes in own credit standing and risk, as per UK
CRD V rules.
vii. Intangible, goodwill and defined benefit pension fund assets are deducted from capital resources after netting associated deferred tax liabilities.
viii. Where capital expected loss exceeds accounting provisions, the excess balance is removed from CET1 capital, gross of tax. In contrast, where provisions exceed capital expected loss, the excess amount is
added to Tier 2 capital, gross of tax. This calculation is not performed for equity exposures, in line with Article 159 of CRR. The expected loss amounts for equity exposures are deducted from CET1 capital,
gross of tax.
ix. Deferred tax assets that rely on future profitability excluding those arising from temporary differences as per CRR article 38, net of related tax liability where the conditions in CRR article 38 (3) are met
x. Minority interest haircuts are applied to Virgin Money’s externally issued Additional Tier 1 capital instruments in line with CRR article 85.
xi. Subordinated debt includes fair value adjustments relating to changes in market interest rates, adjustments for unamortised premiums and discounts that are included in the consolidated balance sheet,
and any amortisation of the capital value of Tier 2 instruments required by regulatory rules for instruments with fewer than five years to maturity. In addition, minority interest haircuts are applied to Virgin
Money’s externally issued subordinated debt in line with CRR article 87.
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Capital risk (continued)
As part of the Bank Recovery and Resolution Directive, the Bank of England, in its capacity as the UK resolution authority, has published its policy for setting the minimum requirement for
own funds and eligible liabilities (MREL). In line with the latest 2025 Bank of England MREL publication, the Group is required to hold twice the minimum capital requirements (equating
to 6.5% of leverage exposure), plus the applicable capital requirement buffers, which amount to 1.05% of leverage exposure. This equals a total loss-absorbing requirement of 7.55%.
At 31 March 2025, total MREL resources were 8.9% (2024: 9.4%) of leverage exposure, in excess of the loss-absorbing requirement of 7.55% (2024: 7.55%) described above.
Risk weighted assets
The table below shows the breakdown of risk weighted assets (RWAs) by risk type and business activity. Market risk has been set to zero as permitted by the UK CRR, as the exposure is
below the threshold of 2% of own funds at a Group level.
Risk weighted assets (note i) – Group 2025 2024 Risk weighted Minimum capital Risk weighted Minimum capital assets requirements assets requirements £m £m £m £mRetail mortgages 45,914 3,673 37,373 2,990Retail unsecured lending 9,481 758 4,750 380Business and commercial lending 11,274 902 1,818 145Treasury 1,903 152 1,736 139Other (note ii) 2,686 215 1,676 134Total credit risk (excluding counterparty credit risk) 71,258 5,700 47,353 3,788Counterparty credit risk (note iii) 463 38 415 33Credit valuation adjustment 338 27 362 29Operational risk 9,812 785 6,498 520Total 81,871 6,550 54,628 4,370
Notes:
i. Comparatives have been updated to align to the current year presentation; operational risk is no longer split by lending type and the credit valuation adjustment is shown separately to counterparty credit
risk.
ii. Other relates to equity, fixed, intangible, deferred tax and other assets.
iii. Counterparty credit risk relates to derivative financial instruments, securities financing transactions (repurchase agreements) and exposures to central counterparties.
RWAs increased by £27.2 billion, predominantly driven by the acquisition of Virgin Money, with Virgin Money sub-group RWAs equal to £27.7 billion. Nationwide sub-group RWAs reduced
by £0.5 billion, driven by a £3.0 billion reduction in RWAs following the approval of Hybrid Internal Ratings Based (IRB) mortgage models, which are used for exposures at the Nationwide
individual level of consolidation. This was partially offset by an increase in RWAs due to increased residential mortgage balances.
More detailed analysis of RWAs is included in the Nationwide Group and sub-group Pillar 3 Disclosures 2025 at nationwide.co.uk and Virgin Money Pillar 3 Disclosures 2025 at
virginmoneyukplc.com.
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Capital risk (continued)
IRB model risk
The performance and accuracy of IRB models is critical to the calculation of credit risk capital requirements. The effectiveness of the models is achieved through clear allocation and
segregation of roles and responsibilities covering model ownership, approval and governance, ongoing model monitoring, review and independent validation. Further information can be
found in the ‘Use of the IRB Approach to credit risk’ section of Nationwide sub-group and Virgin Money Pillar 3 Disclosures 2025 at
nationwide.co.uk and virginmoneyukplc.com.
Outlook
The Basel Committee published its final reforms to the Basel III framework in December 2017, now denoted by the PRA as Basel 3.1. The amendments include changes to the standardised
approaches for credit and operational risks, including the introduction of an RWA standardised output floor to restrict the use of internal models. On 12 September 2024, the Bank of
England published its last instalment of near-final rules for implementation of Basel 3.1 with a revised implementation date of 1 January 2026, following the consultation paper released on
30 November 2022. Although materially similar to the original Basel reforms, the near-final rules include interpretations and some divergences from Basel standards in relation to
market, counterparty credit, and operational risks as well as credit risk and the output floor. However, on 17 January 2025, the PRA announced the decision to delay the implementation of
Basel 3.1 in the UK by one year until 1 January 2027.
The near-final rules include a phased introduction of the RWA standardised output floor until fully implemented by 2030. The day-one impact of Basel 3.1 on the Group’s CET1 ratio is
expected to be positive with a small increase in the CET1 ratio anticipated, based on the Group’s initial interpretation of the near-final rules. This is primarily due to the impact of changes
to prescribed IRB model calculations. The Basel 3.1 RWA standardised output floor is expected to bind for the Group’s risk-based capital assessment towards the end of the
implementation period. The exact impact of Basel 3.1 on the Group position, and the point where the output floor becomes binding, will be influenced by the Group’s interpretation of the
final rules and the evolution of the balance sheet.
The Group will remain engaged in the development of the regulatory approach to ensure it is prepared for any resulting change.
The PRA has granted a renewed 12-month general prior permission to repurchase CCDS up to 2% of existing CET1 capital resources (£312 million at 31 March 2025), though this does not
mean further repurchase exercises will necessarily follow. The permission will expire in January 2026.
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Market risk
Summary
Market risk is the risk that the net value of, or net income arising from, the Group’s assets and liabilities is impacted by changes in market prices or rates, specifically interest or currency
rates. The Group has limited appetite for market risk and does not have a trading book. Market risk is closely monitored and managed to ensure the level of risk remains within appetite.
Market risks are not taken unless they are essential to core business activities and they provide stability of earnings, minimise costs or enable operational efficiency. Following the
acquisition of Virgin Money UK, the Nationwide sub-group and Virgin Money sub-group continue to manage their market risk exposure separately. Market risk management strategy,
governance and monitoring approach are similar across both entities.
The principal market risks that affect the Group are listed below, together with the types of risk reporting measures used in their assessment and management.
Market risk exposure Reporting measure Interest rate risk Value sensitivity / Value at risk / Net interest income sensitivity / Economic value of equity sensitivity Product option risk Value at risk / Economic value of equity sensitivity Foreign Exchange (FX) risk Value sensitivity / Value at risk Credit Spread risk Value at risk Inflation risk Value sensitivity
The Group has a capital requirement for its market risk exposure. In addition, stress analysis is used to evaluate the impact of more extreme, but plausible events.
Interest rate risk
Interest rate risk is the risk of an adverse impact to market values or income due to changes in market interest rates. It arises in relation to the Group’s non-traded assets and liabilities,
specifically loans, deposits and financial instruments. Basis risk (risk associated with assets and liabilities repricing with reference to differing interest rate benchmarks) and structural
risk (risk associated with the impact of interest rate movement on earnings and value due to the Group’s reserves) are included under this broad interest rate risk category. The Group’s
interest rate risk is measured and monitored using a combination of value-based and earnings sensitivity assessments. Balance sheet matching (the use of internal offsets) is the primary
strategy used to manage interest rate risk. Derivatives including interest rate swaps are used when matching is not appropriate or available.
The Group has structural hedging programmes in place to stabilise earnings as interest rates change. The most material hedging programmes are in place to manage liabilities, including
reserves and customer deposits. The Group also undertakes other balance sheet hedging to mitigate the asymmetric risk which arises in very low or negative interest rate scenarios,
mainly due to the different levels at which variable product rates can reach a minimum floor level.
Product option risk
Product option risk is the risk that changes to hedging may be required if customer behaviour deviates from expectations, which may result in a loss if derivatives need to be unwound.
The key product risks the Group is exposed to are repayment risk (early redemption or underpayment/overpayment of fixed rate mortgages), access risk (early withdrawal of fixed rate
savings), and take-up risk (higher or lower completions of fixed rate mortgage reservations than expected). These risk exposures are quantified under a range of stress scenarios using
models that predict customer behaviour in response to changes in interest rates.
Foreign exchange (FX) risk
FX risk is the risk to market values due to changes in exchange rates. The risk arises due to assets or liabilities being denominated in different currencies than the Group’s base currency
(sterling). Currency exposure is managed through natural offsetting on the balance sheet, with derivatives used to maintain the net exposures within approved limits.
Market risk
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Market risk (continued)
Credit spread risk
Credit spread risk is the risk to the market value of Treasury investments arising from changes in the spread between bond yields and swap rates. A liquidity portfolio is held to manage
the Group’s liquidity risk. The assets in this portfolio are predominantly fixed rate sovereign debt securities. Interest rate swaps are used to hedge the interest rate risk associated with
these assets. However, there remains a residual risk as sovereign debt yields and swap rates do not always move in the same way and to the same extent, meaning that the market value of
the liquidity portfolio assets can change due to movements in bond yields and swap rates.
Credit spread risk is monitored using a Value at Risk (VaR) metric and the risk is controlled via internal limits. Exposures are monitored daily and are reported monthly to the relevant sub-
group Asset and Liability Committee (ALCO).
Inflation risk
Inflation risk is the risk to market values and income arising from the impact of changes in inflation swap rates on inflation-linked assets in the Group’s liquidity portfolio. This risk is
managed through the use of inflation swaps. Residual exposures are monitored through sensitivity metrics (IE01), which measure the change in present value of future cashflows from a
one basis point parallel shift in inflation swap rates.
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Market risk (continued)
The principal market risks, linked to the Group’s balance sheet assets, liabilities, capital and reserves, are listed in the table below, irrespective of materiality.
Market risk linkage to the balance sheet 2025 Market risk Group Society Interest rate Product option Foreign Exchange Credit spread risk Inflation risk £m £m risk risk (FX) risk Assets Cash 29,483 18,601  Loans and advances to banks and similar institutions 1,810 1,339  Investment securities 28,663 22,402    Derivative financial instruments 4,742 5,373    Loans and advances to customers 300,889 183,843   Other assets (note i) 2,290 47,582  Total assets 367,877 279,140 Liabilities Shares 207,428 207,428  Deposits from banks and similar institutions 6,053 5,102  Other deposits 74,667 4,525   Debt securities in issue 51,109 39,429  Derivative financial instruments 1,547 1,637    Subordinated liabilities 2,444 1,674  4,147 4,746  Other liabilities Total liabilities 347,395 264,541 Total members’ interests and equity 20,482 14,599 
Note:
i. Other assets for the Group and Society include the fair value adjustment for portfolio hedged risk and the net defined benefit asset of the Pension Fund Investment. Other assets for the Society also
include investments in group undertakings. The Pension Fund is subject to pension risk, which includes exposure to market risk factors such as interest rate risk, inflation risk, and equity risk (from changes
to share prices). Pension risk is managed separately from the market risk arising from the Group’s core business. Further information is detailed in the Pension risk section on page 196.
Governance
The Group’s market risk exposure arises in the banking book; the Group does not have a trading book. Most of the exposure to market risk arises from fixed rate mortgages or savings
and changes in the market value of the liquidity portfolio. There is a low-level of foreign exchange risk on non-sterling financial assets and liabilities held.
The Board is responsible for setting market risk appetite. Nationwide and Virgin Money’s sub-group ALCOs are responsible for managing the market risk profile of each sub-group within
their defined risk appetites. Market risk is managed within a comprehensive risk framework which includes policies, limit setting and monitoring, stress testing, and robust governance
controls. This includes setting and monitoring more granular limits within Board limits, with relevant market risk metrics reported monthly to each sub-group’s ALCO and monitored daily
by the Treasury functions.
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Measurement
The Group’s objective is to measure, manage and control market risk exposures while maintaining a market profile consistent with the Group’s risk appetite. The analytical techniques
used to measure market risk are outlined below.
Value and earning sensitivities
Sensitivity analysis is used to assess the change in value of the net exposure to defined parallel and non-parallel shifts in interest rates. For example, a one basis point (0.01%) shift is
measured using PV01. This analysis is performed daily for each currency. Earning sensitivity metrics are used to measure and quantify exposure to interest rate risks, including basis risk,
and inflation risk. These techniques assess the impact on earnings when rate shocks are applied to the rates paid on liabilities and to the rates earned on assets.
The Group measures Interest Rate Risk in the Banking Book (IRRBB) through Net Interest Income (NII) and Economic Value of Equity (EVE) measures, under a range of shock scenarios
which factors in behavioural assumptions for retail products as interest rates change. These measures are assessed based on the standard shocks prescribed by the PRA, as well as
against internally generated shock scenarios.
NII sensitivities assess the impact to earnings under a range of interest rate shocks over a one-year period. Sensitivities are calculated based on a static balance sheet, where all assets
and liabilities maturing within the year are reinvested in like-for-like products. The sensitivity also includes the impact arising from off-balance sheet exposures.
EVE sensitivities measure the change in value of interest rate sensitive items, both on and off-balance sheet, under a range of interest rate shocks. Sensitivities are calculated on a run-
off balance sheet basis.
Both NII and EVE sensitivities are measured regularly, with risk limits set against the various shocks.
Value at Risk (VaR)
VaR is a technique that estimates the maximum potential losses that could occur from risk positions because of future movements in market rates and prices, over a specified time
horizon, to a given level of statistical confidence. VaR is based on historic market behaviour and uses a series of recorded market rates and prices to derive plausible future scenarios. This
considers inter-relationships between different markets and rates.
The VaR model incorporates risk factors based on historic interest rate and currency movements using a ten-year historical data series. A two-week horizon and a 99% confidence level is
used in day-to-day VaR monitoring. VaR is used to monitor interest rate, credit spread, currency and product option risks and is not used to model income. Exposures against limits are
reviewed daily by management. Actual outcomes are monitored on an ongoing basis by management to test the validity of the assumptions and factors used in the VaR calculation.
Although VaR is a valuable risk measure, it needs to be viewed in the context of the following limitations which may mean that exposures could be higher than modelled:
The use of a 99% confidence level, by definition, does not take account of changes in value that might occur beyond this level of confidence;
VaR models often under-predict the likelihood of extreme events and over-predict the benefits of offsetting positions in those extreme events;
The VaR model uses historical data to predict future events. Extreme market moves outside of those used to calibrate the model will deliver exceptions. In periods where volatility is
increasing, the model is likely to under-predict market risks and in periods where volatility is decreasing it is likely to over-predict market risks; and
Historical data may not adequately predict circumstances arising from government interventions and stimulus packages, which increase the difficulty of evaluating risks.
The Group validates the VaR model on a monthly basis by back testing the calculated VaR against a hypothetical profit and loss, which reflects the profit and loss that would have been
realised if positions were held constant over a two-week period. An exception is recognised where a loss over a two-week period exceeds the VaR calculated by the model. The number of
exceptions over a 12-month period is used to assess the performance of the VaR model, which in turn helps to decide whether it requires recalibration.
The model is subject to an annual review process to ensure it remains appropriate for risk reporting. In addition, stressed VaR is used to estimate the potential loss arising from
unfavourable market movements in a stressed environment. It is calculated in the same way as standard VaR, calibrated with a 99% confidence level and on a two-week basis, but uses
market data from a two-year period of significant financial stress.
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Market Risk Monitoring
Market risk is identified and assessed by monitoring and reporting market risk information at Society and Group levels. Industry expertise, effective treasury management systems,
processes and advanced evaluation techniques such as stress testing are used to enhance the effectiveness of the identification and assessment of all material market risks. Exposures
are monitored against limits on a daily basis, with relevant management information reports shared with key stakeholders, including the regulators, in line with the reporting frequency
established in the Market Risk Policy. A summary of the Group’s value and earnings-based assessment is presented below.
Value-Based Assessments - VaR
The table below highlights the Group’s limited exposure to market risk, shown against a range of value-based assessments. Interest Rate VaR represents the maximum potential loss,
with a 99% confidence, that could be incurred over a 2-week period, given an adverse movement in interest rates. Interest Rate VaR does not include the impact of future changes in
expected customer behaviour, but it does reflect changes in expectations of customer behaviour since the product was initially hedged. This is a refinement in methodology during the
year, and the 2024 values have been restated on this basis. Credit spread VaR represents the maximum potential loss, with a 99% confidence, over a 2-week period on the liquidity
portfolio due to an adverse movement in credit spreads, which are predominantly the spreads between fixed rate bond yields and swap rates.
The risk exposure is monitored each day and summarised over the financial year:
Value at Risk – Group 2025 2024 (note i) Close Average High Low Close Average High Low (Audited)£m £m £m £m £m £m £m £mInterest Rate VaR (99%/10-day) 7.7 5.7 7.7 4.3 4.5 4.6 5.6 3.9Credit Spread VaR (99%/10-day) 143.5 134.2 143.5 124.3 135.0 147.8 160.4 135.0Value at Risk – Society2025 2024 (note i) Close Average High Low Close Average High Low (Audited)£m £m £m £m £m £m £m £mInterest Rate VaR (99%/10-day) 4.9 4.7 4.9 4.3 4.5 4.6 5.6 3.9Credit Spread VaR (99%/10-day) 116.6 121.1 127.0 116.6 135.0 147.8 160.4 135.0
Note:
i. Comparatives have been restated to incorporate the impact of retail product behavioural changes as outlined above, which increased the reported VaR.
Net Interest Income (NII) sensitivity
The sensitivities presented below measure the extent to which the Group’s pre-tax earnings are exposed to changes in interest rates over a one-year period based on instantaneous
parallel rises and falls in interest rates, with the shifts applied to the prevailing interest rates at the reporting date.
The sensitivities are prepared based on a static balance sheet, with all assets and liabilities maturing within the year replaced with like-for-like products, and changes in interest rates
being passed through to variable rate retail products, unless a floor close to 0% is reached when rates fall. No management actions are included in the sensitivities.
The purpose of these sensitivities is to assess the Group’s exposure to interest rate risk and therefore the sensitivities should not be considered as a guide to future earnings
performance, with actual future earnings influenced by the extent to which changes in interest rates are passed through to product pricing, the timing of maturing assets and liabilities
and changes to the balance sheet mix. In practice, earnings changes from actual interest rate movements will differ from those shown below because interest rate changes may not be
passed through in full to those assets and liabilities that do not have a contractual link to Bank rate.
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Potential (adverse)/favourable impact on annual pre-tax future earnings Group Society 2025 2024 2025 2024 (Audited) £m £m £m £m +100 basis points shift71 (16) 24 (16) +25 basis points shift 22 (2) 10 (2) -25 basis points shift (49) (9) (33) (9) -100 basis points shift (204) (47) (135) (47)
Following the acquisition of Virgin Money UK PLC on 1 October 2024, the Group’s NII sensitivities have increased, reflecting a larger balance sheet. The sensitivities reflect that changes in
rates are fully passed through in these scenarios, and product margins are held static. The sensitivities also include the impact of balance sheet hedging and take-up risk in the mortgage
pipeline. Whilst the NII sensitivities have increased in the period, they remain low in absolute terms and reflect the Group’s prudent management of interest rate risk.
Economic Value of Equity (EVE)
The Group also measures interest rate risk through EVE sensitivity which identifies the change in value of interest rate sensitive items, both on and off-balance sheet, under a range of
interest rate shocks prescribed by the Prudential Regulation Authority (PRA). This measure includes behavioural assumptions using a run-off balance sheet basis. EVE is managed against
internal and regulatory risk limits and is monitored by each sub-group ALCO. Further details on EVE can be found in the Group’s annual Pillar 3 Disclosure for 2025 at nationwide.co.uk.
Global market conditions
Global GDP is estimated to have grown by 3.2% in 2024, with most countries experiencing a continued gradual easing of inflation rates and a shift to looser monetary policy. Trade policy
uncertainty has risen in the early part of 2025, as the new US administration announced new tariffs on some of its trading partners, posing downside risks to global activity. Having grown
solidly in the first half of 2024, UK GDP growth was flat in Q3 2024 and is estimated to have grown marginally by 0.1% in the final quarter of 2024.
UK consumer price inflation eased to 1.7% in September 2024, dipping below the Bank of England’s 2% target before steadily resuming an upward trajectory in Q4 2024 and Q1 2025,
with the March 2025 inflation rate at 2.6%. In response to inflation movements, the Monetary Policy Committee (MPC) has gradually reduced Bank rate to 4.5% at March 2025, from its
August 2023 peak of 5.25%. The 2-year and 5-year swap rates closed at 4.04% and 3.99% respectively as at 31 March 2025. An 18 basis points increase in 5-year swap rate between March
2024 and March 2025, reflects market expectations about the level of the UK base rate in the medium term, with expectations being slightly higher as at 31 March 2025 than a year ago.
While the Group has some inflation exposures to UK, EU and US inflation indices via inflation-linked bonds, this risk is managed within tight limits.
Sterling strengthened against both the dollar and euro by 2.15% and 2.22% respectively, over the 12-month period from March 2024 to March 2025. The movements had an immaterial
impact on earnings as foreign currency exposures are hedged. Whilst economic conditions within the UK have an impact on the Group, market risk is closely managed to ensure it remains
within risk appetite.
Outlook
The Group will continue to have a limited appetite for market risk, which will only be taken if it is essential to core business activities and provides stability of earnings, minimises costs or
enables operational efficiency.
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Pension risk
Summary
Pension risk is defined as the risk that the value of pension
schemes’ assets will be insufficient to meet the estimated liabilities, creating a pension deficit. Pension risk could negatively
impact the Group’s capital position and may result in in
creased cash funding obligations to the pension schemes.
The Group has funding obligations to a number
of defined benefit pension schemes, including the Nationwide Pension Fund (NPF) and, following the acquisition of Virgin Money UK PLC
on 1 October 2024, the Yorkshire
and Clydesdale Bank Pension Scheme (YCBPS). The NPF has approximately 29,000 participants, the majority of whom are deferred members (former
and current employee members, not yet retired). The NPF closed to new entrants in 2007 and closed to future accrual on 31 March
2021. The YCBPS has approximately 22,000
participants, with approximately half being deferred members. The YCBPS closed to new entrants in 2004 and to future accrual fo
r almost all current employees on 1 August 2017.
Further details are set out below and in
note 30 to the financial statements.
In accordance with UK legislation, the assets of the Group’s de
fined benefit pension schemes are held in distinct and legally separate trusts from the Group’s assets, and each are
administered by separate boards of trustees
(the Trustee boards) which have fiduciary responsibilities to pension scheme members.
The Group has specialist pension risk manage
ment teams responsible for regularly monitoring the financial risk to the Group from the defined benefit pension schemes. This includes
analysis, insight, risk appetite articulati
on and regular reporting to governance committees. The Group maintains effective engagement with the trustees in order to manage the long-
term impact on the capital and financial position. For the NPF and YCBPS, this is supported by the Group’s representation at th
e Trustee boards’ investment sub-committee meetings and
investment working groups, and th
e sharing of management information between the Group and the Trustee boards for the consideration of specific risk management initiatives.
Pension risk is embedded into the Group’s
individual Enterprise Risk Management Frameworks and stress testing processes. The Group monitors the potential capital deterioration from
the retirement benefit position that might occur in a 1-in-200 year stress test. The Group considers all pension regulation and
legislation change which may impact its obligations to
defined benefit schemes.
Risk factors
Volatility in investment returns from the assets and the value of the liabilities affect the pension schemes’ net deficit or su
rplus positions. The key risk factors which impact this position
are set out below. These factors can have a posi
tive or negative effect on the position.
Asset performance
The liabilities are calculated using a discou
nt rate set with reference to high-quality bond yields. This creates a risk that the assets underperform against those bond yields, resulting in
the net position worsening.
The Group’s pension schemes hold
a proportion of return-seeking assets, including private equity, infrastructure, property, credit investments and corporate bonds. Return-seeking
assets are expected to outperform liabilities in the long-term,
but they are riskier and potentially more volatile in the short to medium-term. Investments in return-seeking assets are
monitored by both the Trustee boards and the Group to ensure th
ey remain appropriate given the long-term objectives. Further details are set out in note 30 to the financial statements.
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Pension risk (continued)
Liabilities
There is a risk that the Group’s pension schemes’ liabilities increase to a level which is not supported by their respective asset performance, whether through discount rate changes,
increases in long-term inflation expectations, or increases in the life expectancy (longevity) of the participants. Approximately one third of all liabilities are hedged using longevity swaps,
which have been entered into within both the NPF and YCBPS schemes.
Actuarial assumptions
There is a risk that a change in the methodology used to derive key actuarial assumptions (for example, the discount rate or longevity assumptions) results in a step change in the
assessment of the liabilities and therefore in the net surplus or deficit, potentially impacting the Group's capital and/or deficit funding requirements. The ultimate cost of providing
pension benefits over the life of the obligation will depend on actual future events, rather than assumptions made.
Developments in the year
As the NPF is closed to future accrual, there were no employer contributions made in respect of future benefit accrual during the year. There were also no employer deficit contributions
into the NPF for the year ended 31 March 2025 and none are scheduled for the year ending 31 March 2026. As the 31 March 2022 Triennial Valuation indicated a funding surplus, a
recovery plan requiring employer deficit contributions was not required. The effective date of the NPF’s next Triennial Valuation is 31 March 2025. Employer deficit contributions of
£0.3 million were made in respect of the Nationwide sub-group’s defined benefit scheme in its Nationwide (Isle of Man) Limited subsidiary.
The YCBPS was closed to future accrual on 1 August 2017 for most members. A small number of active members remain on a defined benefit accruals basis subject to certain conditions.
Employer contributions for benefit accrual and expenses were £6 million for the year ended 31 March 2025. As the YCBPS’s 30 September 2022 Triennial Valuation indicated a funding
surplus, a recovery plan requiring employer deficit contributions was not required. The effective date of the next YCBPS Triennial Valuation is 30 September 2025.
As at 31
March 2025, the value of the Group’s pension schemes’ assets is £6,767 million (2024: £4,679 million) and the value of liabilities is £5,875 million (2024: £4,069 million).
Movements in the net defined benefit asset are set out below:
Changes in the present value of net defined benefit asset - Group
2025 2024
£m £m
At 5 April 610 950
Pension charge (7) (4)
Net interest credit
45
44
Actuarial remeasurement
(192)
(381)
Employer contributions (including deficit contributions)
7
1
Acquisition of Virgin Money UK PLC (note i)
429
-
At 31 March (2024: 4 April)
892
610
Note:
i. Acquisition of Virgin Money UK PLC refers to the surplus position of the YCBPS as at 1 October 2024. Movements in the YCBPS between 1 October 2024 and 31 March 2025 are included in the other
components of the table.
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Pension risk (continued)
The movement in the net defined benefit asset is largely driven by the acquisition of Virgin Money UK PLC on 1 October 2024. The acquisition increased the Group’s net defined benefit
asset by £429 million as at 1 October 2024, due to inheriting the surplus position of the YCBPS. The increase in surplus was partially offset by actuarial losses driven by decreases in asset
valuations in both schemes.
The actuarial remeasurement quantifies the impact on the net defined benefit asset from updating financial assumptions (such as discount rate and long-term inflation), demographic
assumptions (such as longevity), and the return on the pensions schemes’ assets being greater or less than the discount rate. Further details can be found in note 30 to the financial
statements.
In June 2023, His Majesty’s High Court of Justice issued a ruling in respect of Virgin Media Limited versus NTL Pension Trustees II Limited (and others) challenging the validity of rule
amendments made to pension schemes contracted out on a Reference Scheme Test basis between 6 April 1997 and 5 April 2016. On 25 July 2024, the Court of Appeal upheld the original
decision. The Group has assessed the possible impact on its two main pension schemes by reviewing a sample of amendments from the relevant period, judged as material. Uncertainties
remain over the Group’s position in respect of this, particularly with respect to the YCBPS, but the results of the review to date have not indicated any specific concerns and therefore no
adjustment has been made to the defined benefit obligation value.
Outlook
The Group will continue to engage with the Trustee boards to ensure broad alignment on investment objectives and implementation. Potential risk management initiatives include, but
are not limited to, adjusting the asset allocation (altering the allocation to return-seeking assets and to liability matching assets), longevity hedging and implementing derivative and other
hedging strategies.
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Business risk
Summary
Business risk is the risk that volumes decline, margins shrink, or losses increase relative to the cost or capital base, affecting long-term business sustainability and the ability to deliver the
strategy due to external (macroeconomic, geopolitical, industry, regulatory or other external events) or internal factors (including the development and execution of the strategy). This
risk is actively managed to ensure the Group generates sustainable returns by focusing on recurrent sources of income that provide value commensurate with risk appetite, and which
meet the needs of current and future customers.
Business risk is monitored and reported to the Board and senior management, with an emphasis on long-term sustainability over short-term gain. Ongoing monitoring ensures that the
strategy and associated execution plans adapt to address business model risks by considering changes in the external environment, including technology innovation, consumer
behaviour, regulation, and market conditions. The insights derived from this activity ensure actions are identified that can be implemented to minimise potential impacts on Group
performance.
The acquisition of Virgin Money has expanded the Group’s presence in existing core retail markets and provided further diversification of the Group’s income streams and customer base,
with increased exposure in credit card and business lending.
The Group’s business model is reliant on managing net interest margin – primarily the difference between the interest rates paid to savers and those received from mortgage holders. As
inflationary pressures eased last year, the Bank of England reduced the Bank rate by 0.75% to 4.50% and this decrease affected both mortgage and savings rates with an associated
slight reduction in margin as a result.
The Group operates in a highly competitive environment where incumbent banks and digital new entrants aim to attract and retain customers with a focus on service and product
offerings. To mitigate the impact of this competition, the Group's strategic initiatives focus on improving business efficiency and maintaining attractive customer propositions. This
supports a financially sustainable and competitive position in our core retail and business banking markets.
Managing business risk
Business risk is managed and mitigated through a range of measures which include:
Financial forecasting – As part of the financial planning process, income and costs are forecast over a five-year period with an updated forecast reviewed regularly by management,
taking into consideration the key internal and external risks and sensitivities.
Performance monitoring – Financial performance is monitored monthly against internal forecasts and key indicators across a variety of committees and forums, which consider
potential risks and possible mitigating actions. In addition, business areas monitor the demand for products and services to ensure we continue to deliver propositions that provide
value and meet customers’ needs.
Stress testing and sensitivity analysis – Business risk is regularly stress tested via upside and downside scenarios to the Financial Plan, the Internal Capital Adequacy Assessment
Process, and internal recovery and reverse stress tests. In addition, the Prudential Regulation Authority’s Bank Capital Stress Test provides an industry comparable test of the Group
business model through a stressed economic scenario.
A range of indicators are monitored to ensure the early identification of an extreme stress to business conditions. Should one arise. a Group Recovery Plan is maintained and includes a list
of strateg
ic actions that could be taken, if necessary, to protect the Group.
Outlook
Business risks are linked to the top and emerging risks outlined in the Risk overview section of the Strategic report. The outlook for the UK economy is impacted by factors which have the
potential to create volatility and uncertainty such as elevated geopolitical tensions and macro-economic policy interventions. The Group expects further gradual reduction in the Bank
rate over the medium term. Delivery of the Group strategic priorities continues to be an important mitigant to the business risk arising from uncertain conditions.
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Operational and conduct risk
Summary
Operational and conduct risk is the risk of impacts resulting from inadequate or failed internal processes, conduct and compliance management, people and systems, or from external
events. These risks are managed through proportionate controls designed to identify and prevent failures that could affect customers, colleagues or the Group. The Board recognises the
importance of, and has prioritised, continuous improvement in the understanding of the operational and conduct risks the Group is exposed to and enhancement of the associated control
environment it relies on to mitigate these risks. Additional investment has been allocated to enhance cyber defences, economic crime and conduct and compliance capabilities across the
Group.
Following the acquisition of Virgin Money, the operational and conduct risks to which the Group is exposed remain largely unchanged. Whilst the Group’s aggregate exposure has
increased when compared to last year, reflecting a larger and more complex business, this is commensurate with the increased resources available to the Group. Governance structures
for the management and oversight of operational and conduct risk, operational performance and transformation matters have been enhanced to ensure they remain appropriate for the
larger Group. More detail is provided in the Managing risk section of the Risk report on pages 123 to 126.
The primary areas of operational and conduct risk to which the Group is exposed are detailed below.
Operational resilience and technology
Customers understandably expect services to be available when they want to use them, with a demand for an ‘always on’ capability. To support customers, operational resilience is a
fundamental part of the Group’s strategy and continues to be an area of regulatory focus. Significant work has been undertaken to define the Group’s most critical business services,
identify the resources required to prevent unacceptable levels of customer disruption to these services, and ensure there are sufficient resources in place. The Group was materially
compliant with operational resilience expectations set by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) by the prescribed deadline of March 2025.
Following the delivery of these regulatory activities, plans are in place to further mature and invest in operational resilience capabilities, addressing any residual issues or opportunities.
This will include harmonisation and alignment of a Group approach.
Cyber security
A successful cyber-attack on the Group could potentially cause significant disruption to business operations and prevent our customers accessing key services. The Group maintains and
develops its cyber-control capabilities to ensure a robust suite of preventative, detective and recovery measures is in place to effectively manage cyber security risk. In addition, as new
technologies are implemented and external attack techniques strengthen, the Group constantly assesses how to protect against attacks. This includes threat monitoring, ensuring a
robust security culture is maintained, risk assessing third parties and allocating investment appropriately.
Following acquisition by the Group, Virgin Money’s existing cyber security programme has been accelerated, with support provided by Nationwide subject matter experts.
Artificial Intelligence (AI)
The continued, rapid growth of digitisation and demand for enhanced customer experience has led to ever greater volumes of data being used in increasingly complex ways. As a result,
the challenges of ensuring that data is used ethically and appropriately, particularly in relation to emerging AI developments, are becoming ever more complex. Responding to these
challenges relies upon a rapidly evolving set of skills required to operate and maintain systems and data whilst ensuring a rigorous focus on customer outcomes.
Whilst these new artificial technologies unquestionably offer significant benefits, they also carry potentially significant risks. The Group has a number of safeguards in place to ensure
these risks are appropriately identified and managed, including defined principles for Generative AI experimentation, development and control, and only using Generative AI in a limited
group of sanctioned applications. The development and implementation of Generative AI technologies follows an enhanced governance process with specialist review, challenge and
oversight provided.
The Group continues to review and further strengthen its AI governance as this emerging field matures, and new risk management approaches are identified.
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Operational and conduct risk (continued)
Data
The Group collects, stores and uses data, including personal information, to deliver services that meet the needs of our customers, to engage with our employees and to meet regulatory
requirements. We are committed to protecting the data under our control and achieving compliance with all legal and regulatory obligations such as the UK General Data Protection
Regulation, the Basel Committee on Banking Supervision (BCBS 239) requirements and being transparent about how we use data. Policies and controls are in place to protect data and
manage data risk end-to-end. If data issues are identified, timely and proactive remediation activities are prioritised. Nationwide has achieved material compliance with BCBS 239
requirements, and Virgin Money has assessed the work required to move towards compliance.
Following its acquisition by the Group, Virgin Money is investing further to mature data governance and align data risk capabilities with those of the Nationwide sub-group.
Supply chain
The Group uses a network of third parties to provide services to customers and internal functions, supporting areas such as IT infrastructure and back-office processing. When
outsourcing activities to third parties, the Group retains responsibility for all services and the associated risks. Third party risk is managed in proportion to the criticality of the service
provided. When outsourcing activities to third parties, we ensure that appropriate risk assessments, due diligence, screening, controls, and contract clauses are in place.
Supply chain risk is an area of increased regulatory focus as there are third parties that provide similar services to many banks and building societies, and their failure could potentially
impact on the UK’s financial stability, market integrity and consumer protection. The Group will continue to maintain and enhance internal continuity strategies and seek to leverage
benefits from FCA and PRA policy statements aimed at managing the systemic risks posed by critical third parties and national infrastructure.
The acquisition of Virgin Money has increased the number of third parties upon which the Group is now reliant. All required risk management activities, including concentration risk
assessments, are performed across the Group. Opportunities to consolidate the Group’s supplier base are likely to be identified as operations are reviewed, aligned and integrated. The
integration will progress on a conservative basis, and opportunities to enhance third party risk management and controls will continue to be explored.
Regulatory compliance risk
There continues to be a high volume of complex regulatory change impacting the financial services industry. The Group will respond to these changes, while actively engaging with its
regulators. Key developments include:
The Group has implemented the higher operational resilience standards set by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) by the prescribed
deadline of March 2025. This is discussed in more detail in the Operational resilience and technology section above.
The Group has implemented the PRA’s supervisory statement ‘Model risk management principles for banks’ which applied from May 2024. This is discussed in more detail in the
Model risk section of the Risk report.
The PRA has postponed implementation of the remaining elements of the Basel 3.1 framework. Further detail of the impact for the Group is provided in the Capital risk and Model risk
sections of the Risk report.
Conduct risk
The FCA's Consumer Duty has been in force since July 2023 for new and existing products, and since July 2024 for products and services no longer on sale. These requirements, which
mandate
a higher standard of consumer care and require firms to be more proactive in the delivery, monitoring and evidencing of good outcomes have been implemented across the
Group and a range of activity has been undertaken to ensure that the Group continues to deliver good outcomes for all customers, including those with characteristics of vulnerability.
Following the acquisition, Virgin Money has taken a number of actions to increase alignment of conduct risk management practices across the Group in line with the spirit of the Duty.
These include investment in customer service, repricing certain products, and enhancements to how change is delivered. As integration activities progress, further opportunities to align
or enhance approaches are expected to be identified.
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Operational and conduct risk (continued)
Economic Crime risk
The Group is exposed to economic crime risks across all its business lines. Criminal activity to which each business is exposed includes physical theft, money laundering, terrorist
financing, bribery and corruption, tax evasion, and fraud, both external and internal. The Group may be adversely affected if its customers, employees or third-party suppliers engage in
criminal activity, or if the business’s products or services are used to facilitate economic crime. Furthermore, the Group may incur significant costs to rectify issues, reimburse customer
losses, address regulatory concerns, or for potential penalties. Management’s consideration of such matters, and any associated contingent liabilities or provisions, are discussed further
in notes 27 and 29 to the financial statements.
The Group has obligations and responsibilities to reduce the risk of being used to further economic crime. To meet these, economic crime risk is managed through detailed controls
policies, standards and procedures. There remains significant focus on this area, as legal and regulatory requirements and criminal methods evolve, shaping the nature of the threats
faced across the Group.
Operational and conduct risk events
Operational and conduct risk events which have occurred are monitored and reported on to understand those exposures better and to drive sustainable mitigation to prevent recurrence.
For the purposes of this report, events shown include only those where a financial loss arises from an incident. Events are recorded against internally defined risk categories, in addition to
reporting them against the categories defined by the Basel Committee on Banking Supervision in Basel II, which allows comparison of risk experience with our main banking peers.
Notes:
i. Risk events with aggregated gross losses of £5,000 and over (before monies recovered); multiple losses related to the same event are counted once.
ii. 2025 figures provide a consolidated view of Nationwide sub-group operational losses for the whole year, plus Virgin Money sub-group operational losses from 1 October 2024 to 31 March 2025.
iii. Comparatives have been restated to include additional historic data where more information has been received.
The most material categories remain ‘Execution, delivery and process management’ and ‘External fraud’. The value of losses against the ‘Execution, delivery and process management’
category is largely attributable to a payment relating to a legal and regulatory provision that was settled in the period.
Losses relating to key customer remediation projects have
decreased this year due to several remediation projects winding down.
Operational losses arising from external fraud risk events, as a percentage of events by number, have remained stable. However, there has been a reduction in the percentage of events
by value due to a reduction in redress related to historic Authorised Push Payment scams recognised in 2025, compared to 2024.
Outlook
The Group’s operational and conduct risk outlook is impacted by the environment it operates in and its strategy. The sources of operational and conduct risk are expected to remain
broadly consistent. The Group continues to invest to maintain and develop appropriate controls in all areas to ensure residual risk exposures are managed within appetite. As the
Group strategy is implemented, operational and conduct exposures and risk management practices will be continuously assessed to enable appropriate mitigating actions to be taken.
Operational risk events by Basel risk category, % of total events by value (note i)
2025 (note ii) 2024 (note iii)
% %
Clients, products and business practices
1.1
2.3
External fraud
18.8
33.3
Execution, delivery and process management
79.9
63.1
Internal fraud
-
0.1
Business disruption and system failure
-
-
Damage to physical assets
0.1
0.5
Employment practices and workplace safety
0.1
0.7
Total 100.0 100.0
Operational risk events by Basel risk category, % of total events by number (note i)
2025 (note ii) 2024 (note iii)
% %
Clients, products and business practices 0.7 0.7
External fraud 92.4 94.2
Execution, delivery and process management 6.2 4.3
Internal fraud 0.2 0.2
Business disruption and system failure 0.1 -
Damage to physical assets 0.1 0.1
Employment practices and workplace safety 0.3 0.5
Total 100.0 100.0
Operational and conduct risk (continued)
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Risk report
(continued)
Model risk
Summary
Models are widely used across the Group to support a broad rang
e of business and risk management activities. Examples include credit approval, estimating capital requirements,
stress testing, loss provisioning, financial planning, and product pricing. A model is a quantitative method, system, or approa
ch that applies statistical, economic, financial, or mathematical
theories, techniques, and assumptions to proce
ss input data into output for business use.
Whilst models are essential tools, they are inherently imperfect
as they are simplified representations of the real world. This introduces model risk, which is the risk of adverse
consequences from model errors or the inap
propriate use of modelled outputs. Model risk can arise from a number of factors, including the quality of data inputs, choice and suitability of
methodology and the integrity of implementation. Model risk is mana
ged in line with other principal risks such as credit risk and operational risk.
Model risk management
Model risk is governed through risk policy
and appetite is set at Board level. Across the Nationwide and Virgin Money sub-groups, management responsibility for model risk is assigned to
the respective Chief Risk Officer. Policy re
quirements and supplementary standards prescribe how model risk is to be managed, including roles and responsibilities, model development,
independent validation, monitori
ng, adjustments and governance. There are dedicated resources that support overarching Model Risk Management, separate to the development and
validation teams. Model risk commi
ttees are responsible for overseeing the management of model risk.
Developments
in the year
With
the acquisition of Virgin Money, the size of the model estate for the Group has materially increased in the year. There is broad alignment in model risk management practices across
the Nationwide and Virgin Money sub-groups, with opportunities to adopt best practices in the future.
The PRA’s ‘Model Risk Management Principles
for Banks’ (SS1/23) was implemented on 17 May 2024. In line with regulatory expectations, compliance with the principles has been
assessed, with remediation plans agreed an
d being executed to achieve compliance.
The safe adoption of artificial intelligenc
e solutions for business problems is a continuing focus, including enabling effective management of the associated risks, which are more cross-
cutting in nature than traditional models.
Good progress has been made towards complian
ce with IRB Roadmap regulations, with Retail mortgage hybrid IRB rating systems for the Nationwide sub-group receiving regulatory
approval and being implemented within the
year. Appropriate adjustments are in place to ensure minimum capital requirements continue to align to regulatory expectations.
Outlook
Nationwid
e will continue to make progress towards compliance with SS1/23 while further aligning model risk management practices across the Nationwide and Virgin Money sub-groups
in line with broader integration plans. Th
e adoption of artificial intelligence will continue to advance and model risk management will evolve in line with developments in this area.
Achieving compliance across the IRB model la
ndscape continues to be a priority, with Basel 3.1 implementation being considered within development plans.
Model risk
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Financial statements
Independent auditor’s report 205
Income statements 218
Statements of comprehensive income 219
Balance sheets 220
Statements of movements in members’
interests and equity 221
Cash flow statements 223
Notes to the financial statements 224
• Note 1 – Statement of accounting policies
• Note 2 – Judgements in applying accounting
policies and critical accounting estimates
Performance
• Note 3 – Interest receivable and similar income
• Note 4 – Interest expense and similar charges
• Note 5 – Fee and commission income and expense
• Note 6 – Other operating income
• Note 7 – Gains/losses from derivatives and hedge
accounting
• Note 8 – Administrative expenses
• Note 9 – Employees
• Note 10 – Impairment charge and provisions on
loans and advances to customers
• Note 11 – Taxation
Financial assets and liabilities
• Note 12 – Classification and measurement
• Note 13 – Investment securities
• Note 14 – Loans and advances to customers
• Note 15 – Derivative financial instruments
• Note 16 – Deposits from banks and similar
institutions
• Note 17 – Other deposits
• Note 18 – Debt securities in issue
• Note 19 – Subordinated liabilities
• Note 20 – Subscribed capital
• Note 21 – Fair value hierarchy of financial
assets and liabilities held at fair value
• Note 22 – Fair value of financial assets and
liabilities held at fair value – Level 3
portfolio
• Note 23 – Fair value of financial assets and
liabilities measured at amortised
cost
• Note 24 – Offsetting financial assets and
financial liabilities
Other assets and investments
• Note 25 – Intangible assets
• Note 26 – Property, plant and equipment
Provisions, contingent and other liabilities
• Note 27 – Provisions for liabilities and charges
• Note 28 – Leasing
• Note 29 – Contingent liabilities and
commitments
• Note 30 – Retirement benefit obligations
Capital and equity instruments
• Note 31 – Core capital deferred shares
• Note 32 – Other equity instruments
Scope of consolidation
• Note 33 – Investments in Group undertakings
• Note 34 – Structured entities
Other disclosure matters
• Note 35 – Related party transactions
• Note 36 – Notes to the cash flow statements
• Note 37 – Segmental reporting
• Note 38 – Acquisition of Virgin Money UK PLC
• Note 39 – Capital management
• Note 40 – Registered office
• Note 41 – Events after the balance sheet date
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Independent auditor’s report
to the members of Nationwide Building Society
Opinion
In our opinion:
The financial statements of Nationwide Building Society (the “Society”) and its subsidiaries (together, the “Group”) give a true and fair view of the state of the Group’s and the
Society’s affairs as at 31 March 2025 and of the Group’s and the Society’s income and expenditure for the period then ended;
The financial statements have been properly prepared in accordance with UK adopted International Accounting Standards; and
The financial statements have been prepared in accordance with the requirements of the Building Societies Act 1986.
We have audited the financial statements included within the Annual Report and Accounts 2025 (the “Annual Report”) of the Group
and the Society for the period ended 31 March 2025,
which comprise:
Group Society
Consolidated balance sheet as at 31 March 2025;
Consolidated income statement for the period then ended;
Consolidated statement of comprehensive income for the period then ended;
Consolidated statement of movements in members’ interests and equity for the
period then ended;
Consolidated cash flow statement for the period then ended;
Related notes 1 to 41 to the financial statements, including information on
material accounting policies;
Information identified as ‘audited’ in the Report of the directors on remuneration;
Information identified as ‘audited’ in the Risk report; and
Information in the Capital requirements (Country-by-country reporting)
regulations report.
Balance sheet as at 31 March 2025;
Income statement for the period then ended;
Statement of comprehensive income for the period then ended;
Statement of movements in members’ interests and equity for the period then ended;
Cash flow statement for the period then ended;
Related notes 1 to 41 to the financial statements, including information on material
accounting policies; and
Information identified as ‘audited’ in the Risk report.
Th
e financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards.
Following the acquisition of Virgin Money UK PLC (‘Virgin Money’), the Society changed its accounting reference date to 31 Marc
h. Where reference is made to the ‘period’ ended 31 March
2025, this represents the 361-day period from 5 April to 31 March 2025.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our respon
sibilities under those standards are further described in
the ‘Auditor’s responsibilities for the audit of the financial statements’ section of our report. We believe that the audit evi
dence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Independence
We are independent of the Group and the Society in accordance with the ethical requirements that are relevant to our audit of t
he financial statements in the UK, including the Financial
Reporting Council’s (“FRC’s”) Ethical Standard as applied to public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
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Independent auditor’s report to the members of Nationwide Building Society (continued)
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Society and we remain independent of the Group and the Society in conducting the
audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors’ assessment of the Group’s and the Society’s ability to continue to adopt the going concern basis o
f accounting included the following:
We obtained management’s going concern assessment for the Group, including consolidated forecasts for the going concern period covering 12 months from the date of approval of
the financial statements by the Board, and compared historical budgeted financial information with actual results to form a view of the reliability of the forecasting process;
We understood and evaluated the reasonableness of these forecasts, which included using EY modelling specialists to help assess the assumptions used to develop forecasted
results using relevant peer and sector comparatives. We used this to challenge the reasonableness of the Bank of England base rate assumptions and resultant impact on net
interest margin, operating costs, and customer deposit growth;
We used EY financial modelling specialists to assess the refinancing risk of wholesale funding maturing in the 12 months from the date of approval of the financial statements by the
Board. We evaluated the reasonableness of the Group’s liquidity position in light of the increased outflow of funds required to acquire Virgin Money and to support the enlarged
Group;
We used EY economic specialists to assess the macroeconomic assumptions in the forecast, through benchmarking to institutional and HM Treasury consensus forecasts and Bank of
England inflation projections;
We reviewed the results of adverse scenarios modelled by management to incorporate unexpected changes to forecasted liquidity and capital positions, as well as reverse stress
testing exercises, to identify whether they indicated significant issues that might impact the Group’s ability to continue as a going concern;
We assessed the Group’s regulatory capital computation and reviewed capital risk disclosures, with the involvement of EY Regulatory specialists;
We understood the directors’ considerations of the current uncertain geopolitical and economic outlook and climate change, including both financial risks and impacts on operational
resilience; and
We read and evaluated the adequacy of the disclosures included in the Annual Report in relation to going concern and considered whether there were other events subsequent to
the balance sheet date which could have a bearing on the going concern conclusion.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, i
ndividually or collectively, may cast significant doubt on the
Group’s and Society’s ability to continue as a going concern for a period of 12 months from the date the financial statements a
re approved for issue.
In relation to the Group’s and the Society’s reporting on how they have applied the UK Corporate Governance Code, we have nothi
ng material to add or draw attention to in relation to the
directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going conce
rn basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sect
ions of this report. However, because not all future events or
conditions can be predicted, this statement is not a guarantee as to the Group’s and the Society’s ability to continue as a goi
ng concern.
Overview of our audit approach
Audit scope
We performed an audit of the complete financial information of both components of the Group as detailed in the ‘An overview of the scope of
our audit’ section of this report.
These components accounted for 100% of the Group’s profit before tax measure used to calculate materiality, 100% of revenue, and 100% of
total assets.
Key audit matters
Valuation of the gain on acquisition of Virgin Money, including the subsequent unwind of fair value adjustments;
Measurement of IFRS 9 expected credit losses;
Risk of fraud in revenue recognition relating to effective interest rate accounting;
Valuation of the net defined benefit pension asset; and
IT access management.
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Independent auditor’s report to the members of Nationwide Building Society (continued)
Materiality
• Overall Group materiality was set at £83.5 million, which represents 5 .0% of Group profit before tax adjusted for member reward payments
and individual items related to the Virgin Money acquisition.
• Overall Society materiality was set at £61 .1 million, which represents 3.8% of profit before member reward payments and tax.
An overview of the scope of our audit
Tailoring the scope
In the current period our audit scoping has been updated to reflect the new requirements of ISA (UK) 600 (Revised). We have followed a risk�based approach when developing our audit
approach to obtain sufficient appropriate audit evidence on which to base our audit opinion.
The Group comprises two components: Virgin Money and its consolidated subsidiaries (“the Virgin Money component”), and the Society and its consolidated subsidiaries, excluding the
Virgin Money component (“the Nationwide component”). We identified both components as individually relevant to the Group due to their materiality and the financial size of the
component relative to the Group, as well as the related risks of material misstatement of the Group financial statements. We designed and performed audit procedures on the entire
financial information of both components, which are therefore considered full scope components.
The audit team is structured as a Group audit team (covering the Group and the Nationwide component), and a component audit team (covering the Virgin Money component).
As a Group audit team we performed risk assessment procedures, with input from the component auditors, to identify and assess risks of material misstatement of the Group financial
statements and identified significant accounts and disclosures.
For both components, we identified the significant accounts where audit work needed to be performed by applying professional judgement, having considered the reasons for identifying
the financial reporting component as individually relevant and the size of the component’s account balance relative to the Group significant financial statement account balance.
We then considered whether the remaining Group significant account balances not yet subject to audit procedures, in aggregate, could give rise to a risk of material misstatement of the
Group financial statements. We did not identify additional components, as we assessed the residual risk not to be material.
Our scoping to address the risk of material misstatement for each key audit matter is set out below.
Key Audit Matter How we scoped our audit to respond to the risk Involvement with the component team
Valuation of the gain on acquisition of Virgin Money, including the
subsequent unwind of fair value adjustments
All audit work performed to address this risk was
undertaken by the Group audit team, aside from the
audit of the acquisition balance sheet which was
performed by the component team.
The Group audit team’s involvement with the component team and
procedures performed included:
• Risk assessment procedures and determining the type and extent
of work to be undertaken by the component team;
• Regular interactions throughout the course of the audit, including
planning meetings, maintaining regular communications on the
status of audit work, and meetings on results and conclusions; and
• Reviewing key working papers and taking responsibility for the
scope and direction of the audit process.
Measurement of IFRS 9 expected credit losses We performed full scope audit procedures at both
components over this risk, which covered 100% of the
risk amount.
Risk of fraud in revenue recognition relating to effective interest
rate (“EIR”) accounting
Valuation of the defined benefit pension asset
IT access management The audit work performed to address this risk was
undertaken by both the Group audit team and
component team.
The audit work performed by both the Group audit team and
component team was overseen by the same executives across the
Group audit.
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Independent auditor’s report to the members of Nationwide Building Society (continued)
Involvement with component team
In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of the components by us, as the Group audit team, or by
component auditors operating under our instruction.
The Group audit team interacted regularly with the component team throughout the course of the audit, which included holding pl
anning meetings, maintaining regular communications
on the status of the audits, reviewing key working papers and taking responsibility for the scope and direction of the audit process. The Group audit team followed a programme of
oversight that has been designed to ensure that the Senior Stat
utory Auditor has ongoing interactions with the other in-scope component. The Group audit team interacted regularly with
the component team and maintained a continuous and open dialogue
to ensure that the Group audit team were fully aware of their progress and results of their procedures. The Group
audit team also reviewed key working papers and were responsible for the scope and direction of the audit process. Where releva
nt, the ‘Key audit matters’ section of our report details
the level of involvement we had with component auditors to enable us to determine that sufficient audit evidence had been obtai
ned as a basis for our opinion on the Group as a whole.
This, together with the additional procedures performed at Group level, gave us appropriate evidence for our opinion on the Gro
up financial statements.
Climate change
Stakeholders are increasingly interested in how climate change will impact the Group and Society. Management has determined tha
t the most significant future impacts from climate
change on their operations will be from physical and transition
risks, which are explained on pages 36 to 39 in the Climate-related financial disclosures section of the Strategic report and
on page 42 in the Top and emerging risks section. They have also explained the Group’s climate commitments on pages 36 to 39. T
hese disclosures form part of the “Other information,”
rather than the audited financial statements. Our procedures on
these unaudited disclosures therefore consisted solely of considering whether they are materially inconsistent with the
financial statements or our knowledge obtained in the course of
the audit or otherwise appear to be materially misstated, in line with our responsibilities on “Other information”.
The Group has explained how climate risks have been considered in the preparation of the financial statements
in Note 2 ‘Judgements in applying accounting policies and critical
accounting estimates’ on page 236; and also explained their approach to quantifying the impact of climate risks on expected cre
dit losses in Note 10 ‘Impairment charge and provisions on
loans and advances to customers’.
We performed our own risk assessment, supported by EY climate ch
ange specialists, to determine the risks of material misstatement in the financial statements from climate change
which needed to be considered in our audit and to assess whether the effects of potential climate risks have been appropriately
reflected by management in reaching their judgements in
relation to the measurement of financial assets and liabilities. We also challenged the directors’ considerations of climate ch
ange risks in their assessment of going concern and viability
and associated disclosures.
Based on our work, whilst we have not identified the impact of climate change on the financial statements to be a standalone ke
y audit matter, we have considered the impact on the
following key audit matter: IFRS 9 expected credit losses. Details of the impact, our procedures and findings are included in o
ur explanation of key audit matters below.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most
significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included th
ose which had the greatest effect on the overall audit
strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addres
sed in the context of our audit of the financial statements as
a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
Valuation of the gain on acquisition of Virgin Money, including the subsequent unwind of fair value adjustments
Group and Society: Refer to the Audit Committee report (page 81); Accounting policies (page 224); and note 38 of the consolidated financial statements (page 309)
Key audit matter Our response to the key audit matter
The Society acquired 100% of the ordinary share
capital of Virgin Money on 1 October 2024. As the
fair value of the identifiable net assets acquired was
greater than the total consideration paid, negative
We obtained an understanding of management’s process related to the acquisition accounting and assessed whether the treatment applied
was in accordance with IFRS 3 Business Combinations. We evaluated the design of key controls related to the acquisition accounting and
purchase price allocation. We assessed the competence, objectivity and independence of management’s specialists and we engaged our own
EY valuations specialists to assist in our challenge of management’s process and key assumptions. We also instructed our component team to
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Independent auditor’s report to the members of Nationwide Building Society (continued)
Valuation of the gain on acquisition of Virgin Money, including the subsequent unwind of fair value adjustments
Group and Society: Refer to the Audit Committee report (page 81); Accounting policies (page 224); and note 38 of the consolidated financial statements (page 309)
goodwill arose as a result of the acquisition. This
represented a gain on acquisition of £2.3 billion.
The acquisition was accounted for as a business
combination. In line with IFRS 3 Business
Combinations, management allocated the purchase
price to the identifiable assets acquired, liabilities
assumed and non-controlling interests.
Purchase Price Allocation (“PPA”) adjustments were
recognised on assets and liabilities, including loans
and advances to customers, a core deposit
intangible asset and a purchased credit card
relationship intangible asset. Management engaged
their own specialists to assist in determining the
fair value of certain assets and liabilities on the
acquisition date balance sheet.
The degree of subjectivity in estimating the
resulting gain on acquisition is high due to
significant judgment and complexity in valuing the
identified net assets of the acquired business’s
opening balance sheet and the intangible assets
arising on acquisition, which were reliant on
valuation models, assumptions, and data.
Certain fair value adjustments recorded on the
acquired portfolios are amortised over the
projected behavioural lives of the financial
instruments and as a result are subject to
assumptions on customer behaviour.
audit the acquisition date opening balance sheet, and this work was directed by us and done under our supervision. In addition, we performed
the following procedures:
Models:
We engaged EY model risk specialists to assess the appropriateness of the models used against industry standards. In addition, the
specialists performed a combination of model code reviews and independent implementation of these model codes to assess the
appropriateness of the modelled valuation calculations. EY model risk specialists used independent EY developed models to inform our
testing in response to model risk, after considering the size of relevant portfolios, modelling approach used and the related judgments
applied. We used independent challenger models for the mortgages and term deposits portfolios.
Assumptions:
We engaged EY valuation specialists to assist in evaluating and challenging the reasonableness of key assumptions including the weighted
average cost of capital and attrition rates underpinning the intangible assets, with consideration of their expectations and industry
benchmarking. In addition, EY model risk specialists performed an independent assessment of credit risk assumptions, including challenging
the appropriateness of the probability of default (“PD”) and loss given default (“LGD”) curves used and assessing the need for any overlay
adjustment as a result of model or data limitations.
Data:
We identified the critical data fields and performed data lineage testing to confirm accurate inputs were used within the valuation models. We
verified the completeness and accuracy of data used by reconciling balances to the Virgin Money general ledger, and tracing critical data
fields for a sample of assets and liabilities to underlying source documentation.
With the involvement of EY valuation specialists, we challenged the key assumptions and the appropriateness of the amortisation approach
applied by management in the unwind of the fair value adjustments. This included reviewing actual attrition profiles observed since the
acquisition.
Key observations communicated to the Audit Committee
Based on the procedures we performed we concluded that the models used in the fair value calculation were appropriate, the key assumptions used in the valuation were reasonable and the data
used in the valuation models was complete and accurate.
We concluded that management’s purchase price allocation was performed in compliance with IFRS 3 Business Combinations, and based on the procedures performed and the evidence obtained,
the gain on acquisition and the unwind of the fair value adjustments was reasonable.
Measurement of IFRS 9 expected credit losses
Group and Society: Refer to the Audit Committee report (page 81); Accounting policies (page 224); and note 10 of the consolidated financial statements (page 247)
Key audit matter Our response to the key audit matter
IFRS 9 expected credit losses (“ECL”):
£1,288 million (2024: £781 million)
The degree of subjectivity in the assumptions
and estimates used by management to measure
IFRS 9 ECL is high due to significant
Risk assessment:
We performed a detailed risk assessment over the loans and advances to customers within the Group’s financial statements. We assessed the
accounting considerations related to the loans and advances to customers acquired as part of the Virgin Money acquisition, and the impact of
acquired portfolios with differing characteristics, including credit cards and commercial and business lending. Portfolios associated with a risk of
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Independent auditor’s report to the members of Nationwide Building Society (continued)
Measurement of IFRS 9 expected credit losses
Group and Society: Refer to the Audit Committee report (page 81); Accounting policies (page 224); and note 10 of the consolidated financial statements (page 247)
uncertainty associated with the assumptions
used. These include the impacts of the
continued uncertain geopolitical and economic
outlook, continued impact of higher interest
rates and inflation on borrower affordability,
and the potential impact of climate change,
which were all considered in our risk
assessment.
The risk of material misstatement within the
measurement and timing of IFRS 9 ECL
manifests itself across the following five areas:
Staging:
The qualitative and quantitative criteria applied
by management may not completely and
accurately identify a significant increase in
credit risk or credit impairment on a timely
basis.
Modelling:
Models that calculate the ECLs, including PD,
LGD and exposure at default (“EAD”) models,
may not appropriately apply accounting
interpretations, modelling assumptions, or data,
or may not be appropriately implemented.
Multiple Economic Scenarios (“MES”):
ECLs may be inaccurate because the range of
scenarios considered and the probability
weightings applied to them are not sufficient or
appropriate to capture all relevant factors
required, including the continued uncertain
geopolitical and economic outlook, and
continued impact of higher interest rates and
inflation, or because the MES may not be
incorporated appropriately into the estimation
of PD, LGD, and EAD.
In-Model and Post Model Adjustments (“PMAs”):
In-model and post-model adjustments could be
inappropriate, incomplete, or in the case of in-
material misstatement were identified, taking into account the following where appropriate: staging, modelling, multiple economic scenarios
(“MES”), in-model and post-model adjustments (“PMAs”), and individually impaired assets.
Control testing:
We evaluated the Group’s design of controls across the processes relevant to ECL, including the controls relating to the approval of key
judgements and development of the estimate. These controls included:
Review of staging effectiveness;
Model governance controls, including model validation and monitoring;
Controls over the completeness and accuracy of data feeding into ECL provision calculations;
Governance of statistical models used to develop the MES and their associated probability weights; and
The governance and review of MES, post-model adjustments, and individual provisions.
As a result of our evaluation, we elected to take a combination of controls reliance and substantive-only approaches across the Group.
Staging:
We reviewed the Group’s accounting policies and tested how they were applied in allocating a financial asset to stage 1, 2 or 3, to assess whether
they remained compliant with the requirements of IFRS 9. This included peer benchmarking to consider staging triggers and staging levels. We
assessed the appropriateness of staging criteria and their accurate application through the modelled environment, and then independently
recalculated staging results for all portfolios we determined to be of higher risk by replicating the staging model code and recreating the results
in our own environment. We also performed sensitivity analysis to consider the significance of potential impacts on staging as a result of (i)
cohorts of borrowers coming to the end of their fixed term contracts, thereby moving to higher interest rates; and (ii) collectively downgrading
exposures to industries and geographic regions at greater risk of climate change impacts. We tested the staging of the commercial and business
lending portfolio on a sample basis to verify the completeness and accuracy of loans classified in respective stages. We also assessed the staging
criteria applied to the Virgin Money acquired portfolio, which was reset to stage 1 on acquisition to comply with initial recognition and
measurement requirements of IFRS 9, and concluded on the reasonableness of the staging criteria.
Modelling:
We involved EY modelling specialists to assist in the qualitative and quantitative risk assessment of the models, and to perform a combination of
model methodology reviews, model implementation testing, model reperformance testing, model assumptions testing and model sensitivity
analysis, based on the risk designated to each model. We tested the completeness and accuracy of data fields that drive ECL provisions through a
combination of controls and substantive testing. We substantively tested the accuracy of data underpinning the ECL provisions by testing lineage
from the ECL models back to source systems for each critical data item, and a sample of non-critical data items, and tested the completeness and
accuracy of loan data lineage from source systems into the ECL models.
MES:
With the support of our EY economic specialists, we considered both the appropriateness of the scenario weightings and the underlying
macroeconomic variables, with specific focus on the continued uncertain geopolitical and economic outlook, continued impact of higher interest
rates and inflation on borrower affordability, as well as the impacts of climate change on the economic variables. In addition, we evaluated
management’s approach in using statistical models to inform their judgement in determining the scenarios and their probability weightings. We
carried out comparisons to consensus forecasts and other independently derived assumptions. We engaged EY economic and modelling
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Measurement of IFRS 9 expected credit losses
Group and Society: Refer to the Audit Committee report (page 81); Accounting policies (page 224); and note 10 of the consolidated financial statements (page 247)
model adjustments, incorrectly incorporated
into the PD, LGD, and EAD models, with
consideration to the risk of management
override. These adjustments are inherently
uncertain and subjective. Significant
management judgement is often involved in
identifying and estimating certain adjustments,
including the appropriate criteria for release.
Individually impaired assets:
Individual impairment within the commercial
and business lending portfolios may not be
identified on a timely basis or the provisions
recognised may be incorrectly measured
considering the impact of geopolitical tensions
on exit strategies, collateral valuation and time
to collect.
specialists to assess the reasonableness of the non-linearity in the scenarios and perform sensitivities on the weightings and macroeconomic
variables to confirm they are reasonable. We also independently tested the appropriate application of the MES data within the models.
In-Model and PMAs:
We involved EY modelling specialists to assess whether the inventory of adjustments was complete considering the evolution of external factors
and whether all material adjustments were appropriate. In performing the model methodology reviews for a sample of models, we considered
whether there were shortcomings that could require further adjustment. We reviewed risk registers and governance meeting materials and
performed independent cohort analysis to assess the completeness of management adjustments. Additionally, we performed a benchmarking
exercise by comparing the suite of model adjustments recognised by management to those seen in the industry.
We also evaluated the application of, and independently recalculated, all material adjustments, the outputs of which we reconciled to the reported
balances. We assessed reasonable alignment across the components in the significant judgements and adjustments applied in responding to risk
factors to verify consistency and validated the implementation of additional adjustments arising.
Individually impaired assets:
We assessed the completeness and reasonableness of impairment provisions recorded for individually assessed loans by selecting a sample for
which we recalculated the ECL. As part of this recalculation, we independently estimated the impact on ECLs of applying multiple scenarios that
impact collateral values estimated by management, involving EY valuation specialists where appropriate. We considered the impact that the
current geopolitical and economic outlook and climate change had on collateral valuations and time to collect as well as whether planned exit
strategies remained viable.
Overall stand-back assessment:
We performed a stand-back assessment of the ECL provisions and coverage at an overall level and by stage to determine if changes were
reasonable and internally consistent by considering the overall credit quality of the Group’s portfolios, their risk profile, and the impacts of the
current uncertain geopolitical and economic outlook and climate change. We performed peer benchmarking where available to assess overall
staging and provision coverage levels.
Key observations communicated to the Audit Committee
Based on the work we performed, we were satisfied that IFRS 9 ECL provisions were reasonably stated. In particular:
The Group accounting policy for ECL provisions on loans and advances to customers is sufficiently aligned across both components and appropriately applied.
Independent model testing showed that IFRS 9 ECL models performed as expected, with some immaterial differences; were aligned to the requirements of the standard; and the external
data, internal data and assumption data feeding the IFRS 9 ECL models was complete and accurate.
Economic assumptions and probability weightings assigned to the multiple economic scenarios used within the models were concluded to be reasonable.
Staging criteria were appropriate and the results of staging reperformance indicated their application was complete and accurate.
Independent replication of material PMA and in-model adjustment calculations confirmed they had been accurately recorded, and we were satisfied that they were complete and
appropriate.
Individual provisions recorded for the stage 3 commercial and business lending portfolio were in line with the industry-specific risks highlighted by EY valuation specialists.
Our stand-back assessment of the overall provision balance, in light of the current economic environment, through peer benchmarking and analysis of key indicators such as coverage ratios,
did not indicate the provision recorded as at period end was unreasonable.
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Risk of fraud in revenue recognition relating to effective interest rate (“EIR”) accounting
Group and Society: Refer to Accounting policies (page 224); and note 3 of the consolidated financial statements (page 237)
Key audit matter Our response to the key audit matter
EIR adjustment to mortgage loans and advances:
£60 million (2024: £33 million)
The Group records income on financial instruments
under the EIR method. The most material
adjustments to interest income under EIR
accounting are made in respect of the Group’s
mortgage portfolios.
Significant management judgement is required to
forecast cashflows; which in turn are derived from
expected customer behaviour over the life of the
financial instrument.
Mortgage EIR adjustments are sensitive to the
following assumptions:
The period over which to defer eligible
fees and costs, which is determined by
reference to analysis of historical
customer behaviours; and
The extent to which early redemption
charges (“ERCs”) and variable interest
expected to be collected in the future
should be recognised as revenue/assets
upfront.
The complexity of calculations, the degree of
management judgement in respect of forecast
future cashflows, and the sensitivity of the amounts
recognised in the financial statements to the
assumptions increases the risk of material
misstatement.
We assessed the Group’s policies in relation to the application of EIR adjustments for compliance with the requirements of IFRS 9. We
understood the design and operating effectiveness of the Group’s controls over system-driven revenue recognition. We took a substantive
approach to testing the EIR models which are applied to that revenue, and the related balances.
We tested the data used within the EIR models, including historical data used to analyse customer behaviours. We involved EY model risk
specialists in reviewing the code used to extract historical data from the mortgage systems as part of our work to verify that the data used in
the EIR models was complete and accurate. We involved EY model risk specialists in reviewing the functionality of the models, ensuring
consistency of the calculations with the accounting policy.
We benchmarked the inclusion of lending fees and costs in the EIR calculations, as well as the upfront recognition of early redemption
charges (“ERCs”) and expected future variable interest income, to equivalent assumptions made by peers. We also performed sensitivity
analysis over key assumptions and judgements. We extended our analysis to reflect increased uncertainty and potential fluctuations in
borrowing and switching activity attributable to changes in the Bank of England’s base rate. Further, we have assessed the reasonableness of
the assumption for the future propensity to redeem mortgages early through the performance of EY independent stress testing.
Key observations communicated to the Audit Committee
The Group accounting policy for recognising interest income using the EIR method on loans and advances to customers is sufficiently aligned across both components, and appropriately applied.
We concluded that the fees and costs being deferred are reasonable and complete; the average lives used in the EIR models are reasonable; the extent to which ERC fees are recognised upfront is
reasonable; and the data populating the EIR models is complete and accurate. We concluded that the resulting EIR adjustments are appropriate and comply with the requirements of IFRS 9.
Independent auditor’s report (continued)
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Valuation of the defined benefit pension asset
Group and Society: Refer to the Audit Committee report (page 81); Accounting policies (page 224); and note 30 of the consolidated financial statements (page 291)
Key audit matter Our response to the key audit matter
Net retirement benefit asset: £892 million
(2024: £610 million)
The Group operates a number of defined benefit
schemes with a combined defined benefit pension
asset of £892 million, which represents the fair
value of pension plan assets less the present value
of defined benefit obligations after applying the
asset ceiling test as required by IFRIC 14.
The net defined benefit pension asset is sensitive to
changes in key judgements and estimates.
Management uses specialists to inform the
valuation of the net defined benefit pension asset.
We identified the key audit matter as the
judgements and estimates used in valuing the
defined benefit obligation and the assets which are
considered to be illiquid. Below are the key
judgements and estimates used in deriving the
valuation of the net defined benefit pension asset:
Assumptions: actuarial assumptions and inputs,
including discount rate, inflation and longevity
which are used to determine the valuation of the
defined benefit pension obligation; and
Valuations: pricing inputs and calibrations for
illiquid valuations of certain investments held by
the pension scheme.
We assessed the design of controls in place over the valuation of the plan assets, and the process of setting significant assumptions which are
used in the calculation of the defined benefit obligation. We elected to take a combination of controls reliance and substantive-only
approaches across the Group.
We considered the appropriateness of the Group’s recognition of the pension asset in accordance with IFRIC 14. Specifically, we assessed
whether the Group was entitled to an unconditional right of refund by reference to the terms of the pension agreements.
Valuations:
We tested the reasonableness of the fair value of plan assets by independently repricing 100% of the quoted bonds and equities, a sample of
the derivative financial instruments and a sample of the properties held by the pension fund. For illiquid investments held, for example
unquoted property, infrastructure, private equity and private debt instruments, we involved our valuation specialists to assess the
appropriateness of management's valuation methodology, including the judgements made in determining significant assumptions used in the
valuation of these investments. We independently valued a sample of illiquid investments that had been valued using unobservable market
inputs, using alternative pricing sources where available, to evaluate management’s valuations.
Assumptions:
We evaluated the objectivity and competence of management’s specialists involved in the valuation of the defined benefit obligation and we
involved EY actuarial specialists to evaluate the actuarial assumptions used to calculate the defined benefit pension obligation by comparing
the assumptions to ranges we independently developed based on market observable indices and the knowledge of the EY actuarial
specialists.
We assessed the impact on the defined benefit pension obligation of changes in financial, demographic and longevity assumptions over the
period, and the continued effects of the economic outlook, including market volatility. We then assessed whether these assumptions were
supported by objective external evidence and rationales.
We assessed the adequacy of the disclosures made in the financial statements, including the appropriateness of the assumptions and
sensitivities disclosed.
Key observations communicated to the Audit Committee
The Group accounting policy for the net defined benefit asset is sufficiently aligned across both components and appropriately applied. Based on the procedures performed and the evidence
obtained, we found the key actuarial assumptions used in the valuation of the defined benefit pension obligation to be within a reasonable range and no material differences were identified during
our independent valuation of the pension assets. We were also satisfied that the net defined benefit pension asset was recognisable in accordance with the terms of IFRIC 14.
Independent auditor’s report (continued)
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Independent auditor’s report to the members of Nationwide Building Society (continued)
IT access management
Key audit matter Our response to the key audit matter
The Group is highly dependent on technology due
to the significant number of transactions that are
processed daily.
IT access management controls ensure that only
authorised users have access to data. Such controls
contribute to mitigating the risk of potential fraud
or errors as a result of unauthorised access to
applications and data.
The Group has implemented user access
management controls across IT applications,
databases and operating systems. The Group also
has some third party hosted systems with related
business teams managing associated IT access
management controls.
The nature of the access management processes
across the Group, and the associated audit
procedures, results in a significant part of our IT
audit work relating to access management.
We evaluated the design and operating effectiveness of IT access management controls over the applications, operating systems and
databases that are relevant to financial reporting.
We tested user access by assessing the controls in place for in-scope applications, in particular testing the user access provisioning, de-
provisioning, privileged access and periodic recertification of users’ access.
Where control deficiencies were identified, we performed substantive procedures or alternative audit procedures to mitigate any residual
risk over financial statement reporting.
Where systems are managed by third-party service providers, we tested IT access management controls through evaluating service
organisation control (“SOC”) reports and testing management's complementary end user controls, where applicable. If no SOC report was
available, we performed additional procedures, for example direct testing, to address the related risk.
Key observations communicated to the Audit Committee
Based on our testing procedures, we are satisfied that reliance can be placed on IT access management controls impacting financial reporting systems identified as relevant to our audit.
Improvements were made around user entitlement review controls as a result of automation and enhanced evidence retention. Where control exceptions were noted, we have either relied on
mitigating controls or performed IT substantive procedures to confirm that the control exceptions identified did not impact our approach to the financial statement audit.
In the prior period, our auditor’s report included a key audit matter in relation to the recoverability of capitalised software costs. During the current period, we no longer consider this to
be a key audit matter due to reduced levels of capital expenditure in recent periods, and an improvement in control activities in this area.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or
in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial
statements. Materiality provides a basis for determin
ing the nature and extent of our audit procedures.
We determined materiality for the Group to be £83 .5 million, which is 5 .0% of Group profit before tax adjusted for member reward payments and individual items related to the Virgin
Money acquisition, such as the gain recognised on the acquisition, adjustments arising from accounting policy alignment, and costs associated with the amended Trade Mark Licensing
Arrangement between Virgin Money and Virgin Enterprises Limited (2024: £69 .1 million, which is 3.3% of Group profit before member reward payments and tax).
We determined materiality for the Society to be £61 .1 million, which is 3.8% of Society profit before member reward payments and tax (2024: £55 .1 million, which is 3.1% of Society profit
before member reward payments and tax).
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Independent auditor’s report to the members of Nationwide Building Society (continued)
We believe that adjusting profit in this way is an appropriate basis for materiality as it provides a more useful measure for the users of the financial statements, including the Group’s and
the Society’s members and regulators, to assess the Group’s and the Society’s performance. The 5% basis used for Group material
ity is consistent with the wider industry and is the
standard for regulated entities.
Performance materiality
The application of materiality at the individual account or balance
level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements
exceeds materiality.
On the basis of our risk assessments, together with our assessm
ent of the Group’s overall control environment, our judgement was that performance materiality was 75% (2024: 75%) of
our planning materiality, namely £62.6 million and £45.8 million for the Group and the Society respectively (2024: £51.8 millio
n and £41 .3 million). We have set performance materiality at
this percentage based on our experience of misstatements and consistent effectiveness of the control environment.
Audit work was undertaken for component entities for the purpose of responding to the assessed risks of material misstatement o
f the Group financial statements. The performance
materiality set for each component is based on the relative scal
e and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that component. In
the current period, the range of performance materiality allocate
d to components was £28.2 million to £56.4 million (2024: £51.8 million, one component).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them
all uncorrected audit differences in excess of £4.2 million (2024: £3.5 million) and £3 .1 million (2024: £2.8 million) for
the Group and the Society respectively, which is set at 5% of planning materiality, as well as differences below that threshold
that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quanti
tative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our
opinion.
Other information
The other information comprises the information included in the An
nual Report other than the financial statements and our auditor’s report thereon. The directors are responsible for the
other information contained within the Annual Report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inco
nsistent with the financial statements or our knowledge
obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistenci
es or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we h
ave performed, we conclude that there is a material
misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the Building Societies Act 1986
In our opinion:
The Annual business statement and the Directors’ report have been prepared in accordance with the requirements of the Building Societies Act 1986;
The information given in the Directors’ report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
The information given in the Annual business statement (other than the information upon which we are not required to report) gives a true representation of the matters in respect of
which it is given.
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Independent auditor’s report to the members of Nationwide Building Society (continued)
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Building Societies Act 1986 requires us to report to yo
u if, in our opinion:
Proper accounting records have not been kept by the Society; or
The Group’s or Society’s financial statements are not in agreement with the accounting records; or
We have not received all the information and explanations and access to documents we require for our audit.
Corporate governance statement
We have reviewed the directors’ statements in relation to going concern, longer-term viability and that part of the Corporate G
overnance Statement relating to the Group’s and the
Society’s voluntary compliance with the provisions of the UK Corp
orate Governance Code specified for our review by the UK Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Gover
nance Statement are materially consistent with the
financial statements or our knowledge obtained during the audit:
The directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified, set out on page 120;
The directors’ explanation as to their assessment of the Group’s prospects, the period this assessment covers and why the period is appropriate, set out on page 44;
The directors’ statement on fair, balanced and understandable, set out on page 120;
The Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks, set out on page 124;
The section of the annual report that describes the review of effectiveness of risk management and internal control systems, set out on page 75; and
The section describing the work of the Audit Committee, set out on page 81.
Report of the directors on remuneration
The Society voluntarily prepares a Report of the directors on remuneration in accordance with the provisions of the Companies A
ct 2006. The directors have requested that we audit the
part of the Report of the directors on remuneration specified by
the Companies Act 2006 to be audited as if the Society were a quoted company.
In our opinion, the part of the Report of the directors on remuneration to be audited has been properly prepared in accordance
with the Companies Act 2006.
Responsibilities of directors
As explained more fully in the directors’ responsibilities stat
ement set out on page 119, the directors are responsible for the preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal cont
rol as the directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and Society’s ability to continu
e as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or t
he Society or to cease operations, or has no realistic
alternative but to do so.
Auditor’s responsibilities for the au
dit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material miss
tatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise fr
om fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users take
n on the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance wi
th laws and regulations. We design procedures in line with our responsibilities, outlined below, to detect irregularities,
including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one re
sulting from error, as fraud may involve deliberate
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Independent auditor’s report to the members of Nationwide Building Society (continued)
concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is
detailed below. However, the primary responsibility for the prev
ention and detection of fraud rests with both those charged with governance of the Society and management.
Our approach was as follows:
We obtained an understanding of the legal and regulatory frameworks that are applicable to Group and determined that the most significant are the regulations, licence conditions
and supervisory requirements of the Prudential Regulation Authority (“PRA”) and the Financial Conduct Authority (“FCA”). We also considered those laws and regulations that have a
direct impact on the preparation of the financial statements, such as UK adopted International Accounting Standards and the Building Societies Act 1986.
We understood how the Group is complying with those legal and regulatory frameworks by making enquiries of management, Internal Audit, and those responsible for legal and
compliance matters. We also reviewed correspondence between the Group and UK regulatory bodies; reviewed minutes of the Board and Board Risk Committee; and gained an
understanding of the Group's approach to governance, demonstrated by the Board's approval of the Group's governance framework.
We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by considering the controls that the Group has
established to address risks identified, or that otherwise seek to prevent, deter or detect fraud. We made enquiries of management and Internal Audit to supplement our assessment
of how fraud might occur. Our procedures to address the risks identified also included incorporation of unpredictability into the nature, timing and/or extent of our testing, challenging
assumptions and judgements made by management in their significant accounting estimates, and testing period-end adjustments and other targeted journal entries posted with
certain descriptions or unusual characteristics.
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved inquiries of internal and external
legal counsel, executive management and Internal Audit, and reviewing the key policies, reports on the legal and regulatory frameworks and internal whistleblowing logs. With
involvement of the relevant specialists, we also conducted a review of correspondence with regulators, including the FCA, and gained an understanding of any regulatory investigations
being undertaken. We also evaluated the appropriateness of the recognition and disclosure of provisions and the contingent liability disclosures made in note 27 and note 29 to the
financial statements.
The Group operates in the banking industry which is a highly regulated environment. As such the Senior Statutory Auditor considered the experience and expertise of the engagement
team to ensure that the team had the appropriate competence and capabilities, which included the use of specialists where appropriate.
A furt
her description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at
https://www.frc.org.uk/audito
rsresponsibilities. This description forms part of our auditor’s report.
Other matters we are required to address:
We were appointed as auditors by the Society on 2 August 2019 to audit the financial statements for the year ended 4 April 2020 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is six years, covering the years ending 2020 to 2025.
The audit opinion is consistent with the additional report to the Audit Committee.
Use of our report
This report is made solely to the Society’s members, as a body,
in accordance with Section 78 of the Building Societies Act 1986. Our audit work has been undertaken so that we might
state to the Society’s members those matters we are required to st
ate to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than
the Society and the Society’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Manprit Dosanjh (Senior statu
tory auditor)
for and on behalf of Ernst
& Young LLP, Statutory Auditor
London, United Kingdom
28 May 2025
Independent auditor’s report (continued)
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Income statements
For the period ended 31 March 2025
Group Society
2025 2024
(note i)
2025 2024
(note i)
Notes £m £m £m £m
Interest receivable and similar income:
Calculated using the effective interest rate method 3 16,010
13,962
13,482
13,571
Other 3 72
63
56
62
Total interest receivable and similar income 3 16,082 14,025 13,538 13,633
Interest expense and similar charges 4 (11,090)
(9,575)
(9,676)
(9,575)
Net interest income 4,992 4,450 3,862 4,058
Fee and commission income 5 515
426
415
423
Fee and commission expense 5 (356)
(292)
(308)
(288)
Other operating income 6 21
80
97
159
Gains from derivatives and hedge accounting 7 12
117
46
133
Gain on acquisition 38 2,300
-
-
-
Total income 7,484
4,781
4,112
4,485
Administrative expenses 8 (3,550)
(2,549)
(2,474)
(2,543)
Impairment charge on loans and advances to customers 10 (632)
(112)
(18)
(77)
Profit before member reward payments and ta
x
3,302
2,120
1,620
1,865
Member reward payments
(1,000)
(344)
(1,000)
(344)
Profit before tax 2,302
1,776
620
1,521
Taxation 11 36
(476)
(135)
(415)
Profit after tax 2,338
1,300
485
1,106
Profit attributable to non-controlling interests 34
-
-
-
Profit attributable to members 2,304
1,300
485
1,106
Note:
i. Comparatives have been restated as detailed in note 1.
The notes on pages 224 to 312 form part of these financial statements.
Income statements
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Annual Report and Accounts 2025
Statements of comprehensive income
For the period ended 31 March 2025
Group Societ
y
2025 2024 2025 2024
Notes £m £m £m £m
Profit after ta
x
2,338 1,300 485 1,106
Other comprehensive expense:
Items that will not be reclassified to the income statement
Retirement benefit obligations:
Remeasurement of net retirement benefit asset 30 (192) (380) (101
)
(380)
Taxation 11 48 190 27 190
(144) (190) (74) (190)
Revaluation reserve:
Revaluation of property 1 - - -
Taxation 11 - (2) - (2)
1 (2) - (2)
Fair value through other comprehensive income reserve:
Revaluation (losses)/gains on equity instruments at fair value through
other comprehensive income
(1) 5 (4) 2
Taxation 11 (1) (1) - -
(2) 4 (4) 2
(145) (188) (78) (190)
Items that may subsequently be reclassified to the income statement
Cash flow hedge reserve:
Hedging net gains/(losses) arising during the period 30 (21) (8) (21)
A
mount transferred to income statement (24
)
(48) 1 (16)
Taxation 11 (1) 20 3 10
5 (49) (4) (27)
Other hedging reserve:
Hedging net (losses)/gains arising during the period (8) 5 22 12
A
mount transferred to income statement 5 (10) 4 (10)
Taxation 11 1 1 - 1
(2) (4) 26 3
Fair value through other comprehensive income reserve:
Revaluation (losses)/gains on debt instruments at fair value through
other comprehensive income
(103) 8 (97) 8
Amount transferred to income statement (8) (47) (8) (47)
Taxation 11 31 11 29 11
(80) (28) (76) (28)
(77
)
(81) (54) (52)
Other comprehensive expense (222
)
(269) (132
)
(242)
Total comprehensive income 2,116 1,031 353 864
Attributable to:
Non-controlling interests 34 - - -
Members’ interests 2,082 1,031 353 864
T
otal comprehensive income 2,116 1,031 353 864
The notes on pages 224 to 312 form part of these financial statements.
Statements of comprehensive income
219
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Annual Report and Accounts 2025
Balance sheets
At 31 March 2025
Group Society
2025 2024
(note i)
2025 2024
(note i)
Notes £m £m £m £m
Assets
Cash and balances with central banks
29,483 25,231 18,601 25,231
Approved by the Board of directors on 28 May 2025.
K A H Parry Chairman
D Crosbie Group Chief Executive Officer
M Mathieson Group Chief Financial Officer
Loans and advances to banks and similar institutions
1,810 918 1,339 908
Investment securities 13
28,663 26,532 22,402 26,476
Derivative financial instruments 15
4,742 6,290 5,373 6,905
Fair value adjustment for portfolio hedged risk
(2,037) (3,330) (1,985) (3,330)
Loans and advances to customers 14
300,889 213,440 183,843 169,996
Investments in Group undertakings 33
- - 46,889 40,223
Intangible assets 25
1,481 848 782 836
Property, plant and equipment 26
796 656 615 656
A
ccrued income and prepaid expenses
394 294 290 293
Deferred tax assets 11
278 109 105 106
Current tax assets
262 54 226 46
Other assets
224 435 126 501
Retirement benefit asset 30
892 610 534 610
T
otal assets
367,877 272,087 279,140 269,457
Liabilities
Shares
207,428 193,366 207,428 193,366
Deposits from banks and similar institutions 16
6,053 16,388 5,102 16,388
Other deposits 17
74,667 4,530 4,525 4,752
Fair value adjustment for portfolio hedged risk
27 50 27 50
Debt securities in issue 18
51,109 34,749 39,429 33,405
Derivative financial instruments 15
1,547 1,451 1,637 1,640
Other liabilities
2,432 859 3,433 2,621
Provisions for liabilities and charges 27
70 149 26 145
A
ccruals and deferred income
1,223 405 909 398
Subordinated liabilities 19
2,444 2,075 1,674 2,075
Subscribed capital 20
129 173 129 173
Deferred tax liabilities 11
266 206 134 153
Current tax liabilities
- - 88 -
T
otal liabilities
347,395 254,401 264,541 255,166
Members’ interests and equit
y
Core capital deferred shares 31
1,157 1,157 1,157 1,157
Other equity instruments 32
1,485 1,336 1,485 1,336
General reserve
17,086 15,119 12,011 11,792
Revaluation reserve
35 36 34 36
Cash flow hedge reserve
132 127 2 6
Other hedging reserve
(53
)
(51) 43 17
Fair value through other comprehensive income reserve
(119
)
(38
)
(133)
(53
)
Note:
T
otal members’ interests and equity
19,723 17,686 14,599 14,291
i. Comparatives have been restated as detailed in note 1.
Non-controlling interests
759 - - -
T
otal equity and liabilities
367,877 272,087 279,140 269,457
The notes on pages 224 to 312 form part of these financial statements.
Balance sheets
220
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Annual Report and Accounts 2025
Group statement of movements in members’ interests and equity
For the period ended 31 March 2025
Core capital
deferred
shares
Other
equity
instruments
General
reserve
Revaluation
reserve
Cash flow
hedge
reserve
Other
hedging
reserve
FVOCI
reserve
Total
members’
interests
Non-
controlling
interest
Total
£m £m £m £m £m £m £m £m
£m
£m
At 5 April 2024
1,157 1,336 15,119 36 127 (51) (38) 17,686 - 17,686
Profit for the period
- - 2,304 - - - - 2,304 34 2,338
Net remeasurements of retirement benefit obligations
- - (144) - - - - (144) - (144)
Net revaluation of property
- - - 1 - - - 1 - 1
Net movement in cash flow hedge reserve
- - - - 5 - - 5 - 5
Net movement in other hedging reserve
- - - - - (2) - (2) - (2)
Net movement in FVOCI reserve
- - - - - - (82) (82) - (82)
Total comprehensive income
- - 2,160 1 5 (2) (82) 2,082 34 2,116
Reserve transfer
- - 1 (2) - - 1 - - -
Issuance of Additional Tier 1 capital
- 742 - - - - - 742 - 742
Redemption of Additional Tier 1 capital
- (593) (7) - - - - (600) - (600)
Distribution to the holders of core capital deferred shares
- - (94) - - - - (94) - (94)
Distribution to the holders of Additional Tier 1 capital
- - (93) - - - - (93) - (93)
Non-controlling interests on acquisition of a subsidiary
- - - - - - - - 759 759
Distributions to non-controlling interests
- - - - - - - - (34) (34)
At 31 March 2025
1,157 1,485 17,086 35 132 (53) (119) 19,723 759 20,482
For the year ended 4 April 2024
Core capital
deferred
shares
Other
equity
instruments
General
reserve
Revaluation
reserve
Cash flow
hedge
reserve
Other
hedging
reserve
FVOCI
reserve
Total
members’
interests
Non-
controlling
interests
Total
£m £m £m £m £m £m £m £m
£m
£m
A
t 5 April 2023 1,233 1,336 14,184 38 176 (47) (14) 16,906 - 16,906
Profit for the year
- - 1,300 - - - - 1,300 - 1,300
Net remeasurements of retirement benefit obligations
- - (190) - - - - (190) - (190)
Net revaluation of property
- - - (2) - - - (2) - (2)
Net movement in cash flow hedge reserve
- - - - (49) - - (49) - (49)
Net movement in other hedging reserve
- - - - - (4) - (4) - (4)
Net movement in FVOCI reserve
- - - - - - (24) (24) - (24)
Total comprehensive income
- - 1,110 (2) (49) (4) (24) 1,031 - 1,031
Repurchase of core capital deferred shares
(76) - - - - - - (76) - (76)
Distribution to the holders of core capital deferred shares
- - (97) - - - - (97) - (97)
Distribution to the holders of Additional Tier 1 capital
- - (78) - - - - (78) - (78)
At 4 April 2024
1,157 1,336 15,119 36 127 (51) (38) 17,686 - 17,686
The notes on pages 224 to 312 form part of these financial statements.
Group statement of movements in
members’ interests and equity
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Annual Report and Accounts 2025
Society statement of movement in members’ interests and equity
For the period ended 31 March 2025
Core capital
deferred
shares
Other equity
instruments
General
reserve
Revaluation
reserve
Cash flow
hedge
reserve
Other
hedging
reserve
FVOCI
reserve
Total
£m £m £m £m £m £m £m £m
At 5 April 2024
1,157 1,336 11,792 36 6 17 (53) 14,291
Profit for the period
- - 485 - - - - 485
Net remeasurements of retirement benefit obligations
- - (74) - - - - (74)
Net movement in cash flow hedge reserve
- - - - (4) - - (4)
Net movement in other hedging reserve
- - - - - 26 - 26
Net movement in FVOCI reserve
- - - - - - (80) (80)
Total comprehensive income
- - 411 - (4) 26 (80) 353
Reserve transfer
- - 2 (2) - - - -
Issuance of Additional Tier 1 capital
- 742 - - - - - 742
Redemption of Additional Tier 1 capital
- (593) (7) - - - - (600)
Distribution to the holders of core capital deferred shares
- - (94) - - - - (94)
Distribution to the holders of Additional Tier 1 capital
- - (93) - - - - (93)
At 31 March 2025
1,157 1,485 12,011 34 2 43 (133) 14,599
For the year ended 4 April 2024
Core capital
deferred
shares
Other equity
instruments
General
reserve
Revaluation
reserve
Cash flow
hedge
reserve
Other
hedging
reserve
FVOCI
reserve
Total
£m £m £m £m £m £m £m £m
At 5 April 2023 1,233 1,336 11,051 38 33 14 (27) 13,678
Profit for the year - - 1,106 - - - - 1,106
Net remeasurements of retirement benefit obligations - - (190) - - - - (190)
Net revaluation of property - - - (2) - - - (2)
Net movement in cash flow hedge reserve - - - - (27) - - (27)
Net movement in other hedging reserve - - - - - 3 - 3
Net movement in FVOCI reserve - - - - - - (26) (26)
Total comprehensive income - - 916 (2) (27) 3 (26) 864
Repurchase of core capital deferred shares (76) - - - - - - (76)
Distribution to the holders of core capital deferred shares - - (97) - - - - (97)
Distribution to the holders of Additional Tier 1 capital - - (78) - - - - (78)
At 4 April 2024
1,157 1,336 11,792 36 6 17 (53) 14,291
The notes on pages 224 to 312 form part of these financial statements.
Society statement of movement
in members’ interests and equity
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Annual Report and Accounts 2025
Cash flow statements
For the period ended 31 March 2025
Group Society
2025 2024
(note i)
2025 2024
(note i)
Notes £m £m £m £m
Cash flows used in operating activities
Profit before tax 2,302 1,776
620 1,521
Adjustments for:
Non-cash items included in profit before tax 36 (126) 965
1,322 907
Changes in operating assets and liabilities 36
(9,865)
(4,543)
(8,671) (4,298)
Taxation
(225)
(479)
(181) (407)
Net cash flows used in in operating activities (7,914) (2,281) (6,910) (2,277)
Cash flows generated from/(used in) investing activities
Purchase of investment securities
(8,830)
(8,598)
(8,029) (8,591)
Investment in subsidiary share capital and senior non-preferred notes
-
-
(1,548) (15)
Sale and maturity of investment securities
12,566
9,736
12,009 9,736
Proceeds on sale of investment advice business
-
33
- 33
Purchase of property, plant and equipment
(98)
(85)
(90) (85)
Sale of property, plant and equipment
8
4
7 4
Purchase of intangible assets
(303)
(298)
(303) (298)
Net cash flow from acquisition of Virgin Money UK PLC
7,430
-
(2,866) -
Net cash flows generated from/(used in) investing activities
10,773
792
(820) 784
Cash flows generated from/ (used in) financing activities
Distributions paid to the holders of core capital deferred shares (94) (97) (94) (97)
Repurchase of core capital deferred shares
-
(76)
- (76)
Issuance of Additional Tier 1 capital
742
-
742 -
Redemption of Additional Tier 1 capital
(600)
-
(600) -
Distributions paid to the holders of Additional Tier 1 capital
(93)
(78)
(93) (78)
Distributions paid to the holders of Additional Tier 1 capital –
non-controlling interest
(34) - - -
Issuance of financing liabilities
4,160
1,385
4,160 1,385
Redemption of financing liabilities
(1,822)
(771)
(1,822) (771)
Interest paid on financing liabilities
(776)
(481)
(623) (481)
Repayment of lease liabilities
(41)
(34)
(32) (34)
Net cash flows generated from/ (used in) financing activities
1,442
(152)
1,638 (152)
Effect of exchange rate changes on cash and cash equivalents
(121)
(110)
(122) (110)
Net increase/(decrease) in cash and cash equivalents
4,180
(1,751)
(6,214) (1,755)
Cash and cash equivalents at start of period 24,345 26,096
24,335 26,090
Cash and cash equivalents at end of period 36 28,525 24,345
18,121 24,335
Note:
i. Comparatives have been restated as detailed in note 1.
Total interest received was £16,263 million (2024: £12,963 million) and total interest paid was £10,978 million (2024: £7,828 million).
The notes on pages 224 to 312 form part of these financial statements.
Cash flow statements
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Annual Report and Accounts 2025
Notes to the financial statements
1. Statement of accounting policies
Basis of preparation
The Group and Society financial statements are prepared in accordance with
international accounting standards in conformity with the requirements of the Building
Societies Act 1986 and with those parts of the Building Societies (Accounts and Related
Provisions) Regulations 1998 (as amended) that are applicable. International accounting
standards which have been adopted for use within the UK have also been applied in
these financial statements.
The audited sections in the Risk report form an integral part of these financial
statements. These disclosures (where marked as ‘audited’) are covered by the
Independent auditor’s report for this Annual Report and Accounts.
The financial statements have been prepared under the historical cost convention as
modified by the revaluation of investment properties, branches and non-specialised
buildings, financial assets measured at fair value through other comprehensive income
(FVOCI), and derivatives and certain other financial assets and liabilities measured at fair
value through profit and loss (FVTPL).
The consolidated financial statements are presented in sterling, which is the functional
currency of the Group and Society.
Acquisition of Virgin Money UK PLC
On 1 October 2024, the Group acquired Virgin Money UK PLC (hereafter referred to as
Virgin Money). The results of Virgin Money are included in the Group’s consolidated
financial results for the period from 1 October 2024 to 31 March 2025 only. Further
information is included in note 38.
Reporting date
The year end date of the Society has been changed to 31 March, which aligns with that of
its subsidiary undertakings including Virgin Money. The consolidated financial
statements have been prepared for the period from 5 April 2024 to 31 March 2025.
Basis of consolidation
The assets, liabilities and results of the Society and its undertakings, which include
subsidiaries and structured entities, are included in the financial statements on the
basis of accounts made up to the reporting date.
Going concern
The Group’s business activities and financial position, the factors likely to affect its
future development and performance, its objectives and policies in managing the
financial risks to which it is exposed, and its capital, funding and liquidity positions are
set out in the Strategic report and the Risk report.
The directors have assessed the Group’s ability to continue as a going concern, with
reference to current and anticipated market conditions as well as the impact of climate-
related matters and the acquisition of Virgin Money. The directors confirm they are
satisfied that the Group has adequate resources to continue in business for a period of
not less than 12 months from the date of approval of these consolidated financial
statements and that it is therefore appropriate to adopt the going concern basis.
Adoption of new and revised IFRSs
A number of amendments and improvements to accounting standards have been issued
by the International Accounting Standards Board (IASB) with an effective date for
annual reporting periods beginning on or after 1 January 2024. The adoption of these
amendments had no significant impact on the Group.
Restatement of prior year comparatives
Comparatives for the year ended 4 April 2024 have been restated for the two items
noted below. As set out on the table on the next page, these changes had no impact on
the Group’s or Society’s net assets or members’ interests and equity at 4 April 2024, or
on profits for the year ended 4 April 2024.
Virgin Money acquisition
Following the acquisition of Virgin Money, the Group has assessed the alignment of
accounting policies across the consolidated group. As a result of some differences
identified, a number of presentational changes to the Group’s and Society’s financial
statements have been made to better reflect the nature of the underlying assets,
liabilities and income statement line items, and to align to market practice where
appropriate.
Adjustments relating to the covered bond programme
In accordance with its accounting policy, the Society does not recognise on its balance
sheet the deemed loan repayable, or the proceeds receivable, in connection with its
covered bond structure. The interest on these instruments is similarly not recognised in
the Society’s income statement.
Corrections to presentation have been made in the current period in relation to the
elimination of these amounts within the Society’s balance sheet and income statement.
Notes to the financial statements
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Annual Report and Accounts 2025
Notes to the financial statements
(continued)
1. Statement of accounting policies (continued)
The restatements to comparatives for the items noted above are set out below.
Notes:
i. Balance sheet line item has been renamed to cash and balances at central banks (previously
referred to as ‘cash’). Adjustments totalling £1,397 million have been made, primarily reflecting
reclassification of collateral balances held with the Bank of England in support of participation
in payment schemes, which were previously included within loans and advances to banks and
similar institutions.
ii. Certain balances relating to settlement accounts held with payment schemes have been
reclassified, resulting in increases to cash and balances at central banks of £17 million, other
assets of £313 million and other liabilities of £167 million, and a decrease to loans and advances
to banks and similar institutions of £163 million.
iii. Unfunded retirement benefit obligations of £3 million have been reclassified to other liabilities.
This balance was previously included within the retirement benefits asset line item.
iv. Senior non-preferred notes have been reclassified from subordinated liabilities to debt
securities in issue.
v. Certain accrued interest and intercompany balances within the Society relating to the covered
bond programme have been reclassified, resulting in a decrease to accrued income and
expenses prepaid of £171 million, a decrease to other liabilities of £76 million, and an increase
to other assets of £95 million.
Notes:
i. Provisions for liabilities and charges are now included within administrative expenses in the
income statement. Such amounts continue to be disclosed separately in note 8.
ii. An element of interest expense within the Society relating to issuances under its covered bond
programme was incorrectly classified within interest income for the year ended 4 April 2024.
Note:
i. Certain balances relating to settlement accounts held with payment schemes have been
reclassified to other assets and other liabilities.
Balance sheet extract at 4 April 2024 Previously Adjustments Restated published £m £m £m Group Total assets 271,917 170 272,087 Impacted line items: Cash and balances at central banks (notes i, ii) 23,817 1,414 25,231 Loans and advances to banks and similar 2,478 (1,560) 918 institutions (notes i, ii) Other assets (note ii) 122 313 435 Retirement benefit asset (note iii) 607 3 610 Total liabilities 254,231 170 254,401 Impacted line items: Debt securities in issue (note iv) 29,599 5,150 34,749 Subordinated liabilities (note iv) 7,225 (5,150) 2,075 Other liabilities (notes ii, iii) 689 170 859 Society Total assets 269,363 94 269,457 Impacted line items: Cash and balances at central banks (note i) 23,817 1,414 25,231 Loans and advances to banks and similar 2,468 (1,560) 908 institutions (notes i, ii) Accrued income and expenses prepaid (note v) 464 (171) 293 Other assets (notes ii, v) 93 408 501 Retirement benefit asset (note iii) 607 3 610 Total liabilities 255,072 94 255,166 Impacted line items: Debt securities in issue (note iv) 28,255 5,150 33,405 Subordinated liabilities (note iv) 7,225 (5,150) 2,075 Other liabilities (notes ii, iii, v) 2,527 94 2,621
Income statement extract for the year ended 4 April 2024 Previously Adjustments Restated published £m £m £m Group Administrative expenses (note i) (2,422) (127) (2,549) Provisions for liabilities and charges (note i) (127) 127 - SocietyInterest receivable and similar income (note ii) 13,317 316 13,633 Interest expense and similar charges (note ii) (9,259) (316) (9,575) Administrative expenses (note i) (2,419) (124) (2,543) Provisions for liabilities and charges (note i) (124) 124 -
Cash flow statement extract for the year ended 4 April 2024 Previously Adjustments Restated published £m £m £m Group Cash flows generated from/(used in) operating activities Changes in operating assets and liabilities (note i) (4,256) (287) (4,543)Cash and cash equivalents Cash and cash equivalents at start of period (note i) 25,955 141 26,096 Cash and cash equivalents at end of period (note i) 24,491 (146) 24,345 SocietyCash flows generated from/(used in) operating activities Changes in operating assets and liabilities (note i) (4,011) (287) (4,298) Cash and cash equivalents Cash and cash equivalents at start of period (note i) 25,949 141 26,090 Cash and cash equivalents at end of period (note i) 24,481 (146) 24,335
Notes to the financial statements (continued)
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Annual Report and Accounts 2025
Notes to the financial statements
(continued)
1. Statement of accounting policies
(continued)
F
uture accounting developments
‘Amendments to the Classification and
Measurement of Financial Instruments -
Amendments to IFRS 9 and IFRS 7’ was i
ssued in May 2024 and is effective for
accounting periods beginning on or after 1 January 2026. The amendments provide
clarification as to the derecognition criteria for financial liabilities when using an
electronic payment system. The
amendments also provide guidance on the classification
of financial assets that contain contractual
terms that change the timing or amount of
contractual cash flows. The impact of these amendments is currently being assessed.
IFRS 18 ‘Presentation and Disc
losure in Financial Statements’ was issued in April 2024
and is effective for accounting
periods beginning on or after 1 January 2027, but is not
yet endorsed for use in the UK. IFRS 18 replac
es IAS 1, and while much of IAS 1 has been
retained in IFRS 18, the new standard establishes updated principles for the
presentation and disclosure of information in
the financial statements, in particular the
income statement. The requirements of IFRS
18 are currently being assessed, and while
the new standard will potentially alter the presentation of information, it is not
anticipated to affect underlying re
cognition or measurement criteria.
The IASB has also issued a number of othe
r minor amendments to IFRSs that become
effective for annual reporting periods beginni
ng on or after 1 January 2025, some of
which have not yet been endorsed for us
e in the UK. These amendments are not
expected to have a significant impact for the Group.
Accounting policies
A summary of the Group’s material accounting
policies is set out below. The accounting
policies are consistent with those applied by
the Group in its financial statements for the
year ended 4 April 2024, except for certai
n voluntary changes to accounting policy,
impacting the presentation of cert
ain items as described above.
Further information about judgements in ap
plying accounting policies and critical
accounting estimates is provided in note 2.
Investments in subsidiary undertakings
Investments in subsidiary undertakings are stated in the Society accounts at cost less
provisions for any impairment in value.
Securitisation and covered bond transactions
The Group has securitised certain mortgage
loans by the transfer of the loans to
structured entities controlled by the Grou
p. The securitisation enables a subsequent
issuance of debt, either by the entity which originated the mortgages (the ‘originator’) or
the structured entities, to investors who gain the security of the underlying assets as
collateral. Those structured entities are fu
lly consolidated into the Group accounts.
The transfers of the mortgage loans to the structured entities are not treated as sales
by the originator. The originator continues to recognise the mortgage loans on its own
balance sheet after the transfer because it retains their risks and rewards through the
receipt of substantially all of the profits or losses of the structured entities. In the
accounts of the originator, the proceeds received from the transfer are accounted for as
a deemed loan repayable to the structured entities.
For covered bonds, the originator itself and not the structured entity issues the covered
bonds and then lends the proceeds to the structured entity on back-to-back terms. The
structured entity then uses these proceeds as consideration for the loans transferred
from the originator. In the accounts of the originator, neither the loan to the structured
entity nor the consideration for the transfer of mortgage loans is recognised separately
as an additional asset and liability.
The Group has also entered into self-issuances of debt to be used as collateral for
repurchase (‘repo’) and similar transactions. Investments in self-issued debt and the
related obligation, together with the related income, expenditure and cash flows, are not
recognised in the Society’s or Group’s financial statements. This avoids the ‘grossing-up’
of the financial statements that would otherwise arise.
To manage interest rate risk, the Society enters into derivative transactions with the
structured entities, receiving a rate of interest based on the securitised mortgages and
paying a rate inherent in the debt issuances. These internal derivatives are treated as
part of the deemed loan and not separately fair valued because the relevant mortgage
loans are not derecognised. All other derivatives relating to securitisations are treated
as explained in the derivatives and hedge accounting policy below.
Notes to the financial statements (continued)
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Annual Report and Accounts 2025
Notes to the financial statements
(continued)
1. Statement of accounting policies (continued)
Interest receivable and interest expense
For instruments measured at amortised cost the effective interest rate (EIR) method is
used to measure the carrying value of a fina
ncial asset or liability and to allocate
associated interest income or expense over the relevant period.
In calculating the effective interest rate, th
e Group estimates cash flows considering all
contractual terms of the financial instrument
(for example, early redemption penalty
charges) and anticipated custom
er behaviour but does not consider future credit losses.
The calculation includes all fees received
and paid and costs incurred that are an
integral part of the effective interest rate, transaction costs, and all other premiums or
discounts above or below market rates.
Interest income is calculated by applying the EIR to the gross carrying amount of non-
credit impaired financial assets. For credit impaired financial assets the interest income
is calculated by applying the EIR to the amor
tised cost of the credit impaired financial
assets (i.e. net of the allowance for expected credit losses (ECLs)). Where loans are credit
impaired on origination, or when purchased from third parties, the carrying amount at
initial recognition is net of the lifetime ECL at that date. For these assets, the EIR
reflects the ECLs in determining the future ca
sh flows expected to be received from the
financial asset.
Interest receivable and similar income calculated using the effective interest rate
method also includes interest on financial assets classified as fair value through other
comprehensive income, and on
derivatives in qualifying hedge relationships.
Interest income not calculated using the effective interest rate method, including
interest on financial assets classified as fa
ir value through profit or loss and derivatives
not in qualifying hedge relationships, is presented as other interest receivable and
similar income.
Member reward payments
Member reward payments represent discretionary payments to members of the Society
which may be determined by the Board from time to time, depending on the financial
strength of the Society. The Group recognises the expected cost of member reward
payments within accruals and deferred income on the date at which they are announced.
Fees and commissions
Fee and commission income and expense comprises fees that are not an integral part of
the EIR. Fees and commissions relating to current accounts, savings accounts,
mortgages and credit cards are either:
transaction-based and therefore recognised when the performance obligation
related to the transaction is fulfilled, or
related to the provision of services over a period of time and therefore recognised
on a systematic basis over the life of the agreement as services are provided.
Trail commission relating to investments under administration, general insurance and
protection products sold on behalf of third parties may include variable consideration.
Where this is the case the trail commission is recognised either on the accruals basis
over the period to which the commission relates or, if the uncertainties are more
significant, once the uncertainties are resolved.
Segmental reporting
The Group Management Committee (GMC) is responsible for allocating resources and
assessing the performance of the business and is therefore identified as the chief
operating decision maker.
Operating segments are reported in a manner consistent with internal reporting
provided to the GMC and include the Nationwide sub-group and the Virgin Money sub-
group.
No segmental analysis is required on geographical lines as substantially all of the
Group’s activities are in the United Kingdom.
Prior to the acquisition of Virgin Money, the Nationwide Executive Committee (ExCo)
was considered to be the chief operating decision maker and there was only one
reportable segment.
Notes to the financial statements (continued)
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Leases
At inception, the Group assesses whether a contract is, or contains, a lease. This
assessment involves exercising judgement as to whether the contract conveys the right
to control the use of an identified asset, and the right to obtain substantially all of the
economic benefits from this asset, for a period of time.
Leases held by the Group as a lessee consist primarily of property contracts for
branches and office buildings. The Group recognises a right-of-use (RoU) asset and a
lease liability at the commencement of the lease, except for short-term leases (defined
as leases with a lease term of less than 12 months) and leases of low value assets.
Payments for short-term leases and leases of low value assets are generally recognised
in the income statement on a straight-line basis.
Intangible assets
Intangible assets held by the Group consist of core deposit and purchased credit card
relationship intangible assets acquired in business combinations, as well as externally
acquired and internally developed computer software. These assets are held at cost
(equivalent to fair value at acquisition for core deposit and purchased credit card
relationship intangible assets) less accumulated amortisation and impairment.
Intangible assets are amortised using the straight-line method over the following
estimated useful lives:
Core deposit intangible 6.5 years
Purchased credit card relationships 5 years
Computer software 3 to 10 years
Intangible assets are reviewed for indicators of impairment at each reporting date and
whenever events or changes in circumstances indicate that the carrying amount may not
be recoverable. Where the carrying amount is not recoverable, the asset is written down
immediately to the estimated recoverable amount.
Property, plant and equipment
Freehold and long leasehold properties comprise mainly branches and office buildings.
Branches and non-specialised buildings are stated at revalued amounts representing
fair value, determined by market-based evidence at the date of the valuation, less any
subsequent accumulated depreciation and subsequent impairment. Valuations are
completed annually as at 31 March, or more frequently if required, by external,
independent and qualified surveyors who have recent experience in the location and
type of properties. Valuations are performed in accordance with the Royal Institution of
Chartered Surveyors Appraisal and Valuation Standards and are generally performed on
a vacant possession basis, using a comparative method of valuation with reference to
sales prices and observable market rents for similar properties in similar locations.
The Group holds a small number of investment properties comprising properties held
for rental which are held at fair value, with changes in fair value recognised in the income
statement.
Other property, plant and equipment, including specialised administration buildings, are
included at historical cost less accumulated depreciation and impairment. Land is not
depreciated. Other assets are depreciated over the following estimated useful lives:
Branches and non-specialised buildings 60 years
Specialised administration buildings up to 60 years
Plant and machinery 5 to 15 years
Equipment, fixtures, fittings and vehicles 3 to 10 years
Assets are reviewed for indicators of impairment at each reporting date and whenever
events or changes in circumstances indicate that the carrying amount may not be
recoverable. Where the carrying amount is not recoverable the asset is written down
immediately to the estimated recoverable amount.
Inventories
Inventories relating to property development activities are held at the lower of cost and
net realisable value and are included within other assets on the balance sheet.
Employee benefits
The Group operates a number of defined benefit and defined contribution pension
arrangements.
The net defined benefit asset or liability represents the difference between the present
value of defined benefit obligations and the fair value of plan assets, after applying the
asset ceiling test, where a net defined benefit surplus is limited to the present value of
available refunds and reductions in future contributions to the plan.
The defined benefit obligation is calculated by independent actuaries using the
projected unit credit method. The present value of the defined benefit obligation is
determined by discounting the estimated future cash flows, using a discount rate
derived from yields of high-quality corporate bonds that have terms to maturity
approximating to the terms of the related pension liability.
Actuarial remeasurements arise from experience adjustments (the effects of differences
between previous actuarial assumptions and what has actually occurred) and changes in
forward-looking actuarial assumptions. Actuarial remeasurements are recognised in full,
in the year they occur, in other comprehensive income.
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A defined contribution arrangement is one into which the Group and the employee pay
fixed contributions, without any further obligation to pay additional contributions.
Payments to defined contribution schemes are charged to the income statement as they
fall due.
The Group also offers variable compensation to employees, including bonus schemes.
For performance-based awards, no amounts are recognised in the income statement
until it is considered probable that payments will be made. Where a performance-based
bonus payment is considered probable, the amount recognised in the income statement
will reflect the portion of the vesting period that has passed. The vesting period for
performance-based awards runs from the start of the performance period associated
with the plan to the settlement date.
Provisions
A provision is recognised where there is a present obligation as a result of a past event,
it is probable that the obligation will be settled, and it can be reliably estimated.
Contingent liabilities
Contingent liabilities are possible obligations whose existence will be confirmed only by
the outcome of uncertain future events, and present obligations where the outflow of
resources is uncertain or cannot be measured reliably. Contingent liabilities are not
recognised on the balance sheet but are disclosed, unless the likelihood of an outflow of
economic resources is remote.
Taxation
Current tax payable on profits is recognised as an expense in the period in which profits
arise. Current tax assets and liabilities are measured at the amount expected to be
recovered from, or paid to, taxation authorities. Management evaluates where uncertain
taxation positions exist and recognises provisions, where appropriate, to reflect the best
estimate of the probable outcome.
Deferred tax is provided in full on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the financial statements, using tax
rates and laws that have been enacted or substantively enacted by the balance sheet
date and which are expected to apply when the related deferred tax asset is realised, or
the deferred tax liability is settled.
The amounts recognised for deferred tax assets are reviewed at each reporting date. In
the case of deferred tax assets relating to tax losses carried forward, the Group
assesses the likelihood of recovery and considers whether it is probable that sufficient
future taxable profits will be available over a suitable planning horizon against which the
tax losses can be utilised.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to
offset current tax assets against current tax liabilities, and where the deferred tax
assets and liabilities relate to income taxes levied by the same taxation authority on
either the same taxable entity, or different taxable entities where there is an intention to
settle on a net basis.
Current and deferred tax are charged or credited in the income statement except to the
extent that the tax arises from a transaction or event which is recognised outside the
income statement. In this case, the tax appears in the same statement as the transaction
that gave rise to it. An exception to this principle relates to the tax consequences of the
Group's distributions on other equity instruments. Although such distributions are
recognised directly in equity, the tax consequences are credited to the income
statement, where the profit being distributed originally arose.
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise cash
and non-restricted balances with less than three months maturity from the date of
acquisition, included within cash and balances at central banks and loans and advances
to banks and similar institutions on the balance sheet.
Financial assets
Financial assets primarily consist of cash and balances at central banks, loans and
advances to banks and similar institutions, investment securities, derivative financial
instruments and loans and advances to customers.
Recognition and derecognition
All financial assets are recognised initially at fair value. Purchases and sales of
investment securities and derivative financial instruments are accounted for at trade
date. All other financial assets are accounted for at settlement date. Financial assets are
derecognised when the rights to receive cash flows have expired or where the assets
have been transferred and substantially all the risks and rewards of ownership have
been transferred.
Modification of contractual terms
An instrument that is renegotiated is derecognised if the existing agreement is
cancelled and a new agreement is made on substantially different terms (such as
renegotiations of commercial loans). Residential mortgages reaching the end of a fixed
interest deal period are deemed repricing events, rather than a modification of
contractual terms, as the change in interest rate at the end of the fixed rate period was
envisaged in the original mortgage contract.
Where an instrument is renegotiated and not derecognised, the change is considered a
modification of contractual terms. Where this arises, the gross carrying amount of the
loan is recalculated as the present value of the renegotiated or modified contractual
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cash flows, discounted at the loan’s original effective interest rate. Any gain or loss on
recalculation is recognised immediately in the income statement.
Classification and measurement
The classification and subsequent measurement of financial assets is based on an
assessment of the Group’s business models for managing the assets and their
contractual cash flow characteristics. Financial assets are classified into the following
three categories:
(a)
Amortised cost
Financial assets held to collect contractual cash flows and where contractual terms
comprise solely payments of principal and interest (SPPI) are classified as amortised
cost. This category of financial assets includes cash and balances at central banks, loans
and advances to banks and similar institutions, the majority of the Group’s residential
mortgage and business and commercial loans, all unsecured lending, and certain
investment securities within a ‘hold to collect’ business model.
Financial assets within this category are recognised on settlement date (for cash and
balances with central banks, loans and advances to banks and similar institutions, and
loans and advances to customers), or on the trade date for purchases of investment
securities. After initial recognition, the assets are measured at amortised cost using the
effective interest rate method, less provisions for expected credit losses.
Leases entered into by the Group as lessor, where the Group transfers substantially all
the risks and rewards of ownership to the lessee, are classified as finance leases. The
leased asset is not held on the Group balance sheet; instead, a finance lease is
recognised representing the minimum lease payments receivable under the terms of
the lease, discounted at the rate implicit in the lease. Interest income is recognised in
interest receivable, allocated to accounting years to reflect a constant periodic rate of
return.
(b)
Fair value through other comprehensive income (FVOCI)
Debt instruments held in a business model whose objective is achieved by both
collecting contractual cash flows and selling financial assets, and where contractual
terms comprise solely payments of principal and interest (SPPI), are classified as, and
measured at, FVOCI. This category of financial assets includes most of the Group’s
investment securities which are held to manage liquidity requirements.
Financial assets within this category are recognised on trade date. The assets are
measured at fair value using, in the majority of cases, market prices or, where there is no
active market, prices obtained from market participants. In sourcing valuations, the
Group makes use of a consensus pricing service, in line with standard industry practice.
In cases where market prices or prices from market participants are not available,
discounted cash flow models are used.
Interest on FVOCI debt instruments is recognised in interest receivable and similar
income in the income statement, using the effective interest rate method. Unrealised
gains and losses arising from changes in value are recognised in other comprehensive
income. Provisions for expected credit losses and foreign exchange gains or losses are
recognised in the income statement. Cumulative gains or losses arising on sale of FVOCI
debt instruments are recognised in the income statement within other operating
income/(expense), net of any credit or foreign exchange gains or losses already
recognised.
Upon initial recognition, the Group may elect to classify irrevocably some of its equity
investments as FVOCI when they meet the definition of equity under IAS 32 ‘Financial
Instruments: Presentation’ and are not held for trading. Such classification is
determined on an instrument-by instrument basis. Gains and losses on these equity
instruments are never recycled to the income statement. Dividends are recognised in
the income statement as other operating income unless deemed to represent a recovery
of part of the cost of the investment. Equity instruments at FVOCI are not subject to an
impairment assessment.
(c) Fair value through profit or loss (FVTPL)
All other financial assets are measured at FVTPL. Financial assets within this category
primarily include derivative instruments and a small number of residential and
commercial loans and investment securities with contractual cash flow characteristics
which do not meet the SPPI criteria. The contractual terms for these cash flows include
contingent or leverage features, or returns based on movements in underlying collateral
values such as house prices.
Fair values are based on observable market data, valuations obtained from third parties
or, where these are not available, internal models. Gains or losses arising from changes
in the fair value of these instruments and on disposal are recognised in the income
statement within other operating income.
Hedge accounting is not applied to assets classified as FVTPL; however, hedging may be
applied for economic purposes. Gains or losses arising from changes in the fair value of
derivatives economically hedging FVTPL financial assets are also included within other
operating income.
Notes to the financial statements (continued)
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Impairment of financial assets
Financial assets within the scope of IFRS 9 expected credit loss (ECL) requirements
comprise all financial debt instruments measured at either amortised cost or FVOCI.
These include cash and balances at central banks, loans and advances to banks and
similar institutions, and the majority of investment securities and loans and advances to
customers. Also within scope are irrevocable undrawn commitments to lend and intra-
group lending (the latter being eliminated on consolidation in the Group financial
statements).
The ECL represents the present value of expected cash shortfalls following the default
of a financial instrument, including any undrawn commitment. A cash shortfall is the
difference between the cash flows that are due in accordance with the contractual terms
of the instrument and the cash flows that the Group expects to receive.
The allowance for ECLs is based on an assessment of the probability of default,
exposure at default and loss given default, discounted at the effective interest rate to
give a net present value of cash flows. The estimation of ECLs is unbiased and
probability weighted, taking into account all reasonable and supportable information,
including forward-looking economic assumptions and a range of possible outcomes.
ECLs are typically calculated from initial recognition of the financial asset for the
maximum contractual period that the Group is exposed to the credit risk. However, for
revolving credit loans such as credit cards and overdrafts, the Group’s credit risk is not
limited to their contractual period and therefore the expected life of the loan and
associated undrawn commitment is calculated based on the behavioural life of the loan.
For financial assets recognised in the balance sheet at amortised cost, the allowance for
ECLs is offset against the gross carrying value so that the amount presented in the
balance sheet is net of impairment provisions. For financial assets classified as FVOCI,
any credit losses recognised are offset against cumulative fair value movements within
the other comprehensive income reserve. For separately identifiable irrevocable loan
commitments, where the related financial asset has not yet been advanced, the
provision is presented in provisions for liabilities and charges in the balance sheet.
Forward-looking economic inputs
ECLs are calculated by reference to information on past events, current conditions and
forecasts of future economic conditions. Multiple economic scenarios are incorporated
into ECL calculation models. These scenarios are based on external sources where
available and appropriate, and internally generated assumptions in all other cases. An
appropriate number of scenarios are considered to capture any non-linear relationship
between economic assumptions and credit losses. These scenarios are weighted based
on management’s view of their probability
.
Further information is provided in note 10.
Credit risk categorisation
For the purpose of calculating ECLs, assets are categorised into three stages as follows:
Stage 1: no significant increase in credit risk since initial recognition
On initial recognition, and for financial assets where there has not been a significant
increase in credit risk since initial recognition, provision is made for losses from credit
default events expected to occur within the next 12 months. Expected credit losses for
these stage 1 assets continue to be recognised on this basis unless there is a significant
increase in the credit risk of the asset.
Stage 2: significant increase in credit risk
Financial assets are categorised as being within stage 2 where an instrument has
experienced a significant increase in credit risk since initial recognition. For these assets,
provision is made for losses from credit default events expected to occur over the
lifetime of the instrument.
Whether a significant increase in credit risk has occurred is ascertained by considering
both quantitative and qualitative factors. Quantitative considerations take into account
changes in the residual lifetime probability of default (PD) of the asset. As a backstop, all
assets with an arrears status of more than 30 days past due on contractual payments
are considered to be in stage 2.
Qualitative factors that may indicate a significant change in credit risk include
concession events that are deemed to be forbearance.
Further information about the identification of significant increases in credit risk is
provided in note 10.
Notes to the financial statements (continued)
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Stage 3: credit impaired (or defaulted) loans
Financial assets are transferred into stage 3 when there is objective evidence that an
instrument is credit impaired. Provisions for stage 3 assets are made on the basis of
credit default events expected to occur over the lifetime of the instrument. Assets are
considered credit impaired when:
Contractual payments of either principal or interest are past due by more than 90
days;
There are other indications that the borrower is unlikely to pay, such as signs of
financial difficulty, probable bankruptcy, breaches of contract and concession events
which have a detrimental impact on the present value of future cash flows; or
The loan is otherwise considered to be in default.
Interest income on stage 3 credit impaired loans is recognised in the income statement
on the loan balance net of the ECL provision. The gross balance sheet value of stage 3
loans reflects the contractual terms of the assets and continues to increase over time
with the contractually accrued interest.
Purchased or originated credit impaired (POCI) loans
Where loans are credit impaired on origination, or when purchased from third parties,
lifetime ECLs are incorporated into the calculation of the effective interest rate on initial
recognition. POCI assets do not carry an impairment allowance on initial recognition, and
the amount recognised as a loss allowance subsequently is equal to the changes in
lifetime ECLs since initial recognition of the asset discounted at the credit
impaired EIR. POCI loans are separately disclosed as credit impaired loans and cannot
be transferred out of the POCI designation, even if there is a significant improvement in
credit quality.
Transfers between stages
Transfers from stage 1 to 2 occur when there has been a significant increase in credit
risk and from stage 2 to 3 when credit impairment is indicated as described above.
Loans in stage 2 or 3 can transfer back to stage 1 or 2 once the criteria for a significant
increase in credit risk or impairment are no longer met. For loans subject to concession
events deemed to be forbearance, accounts are transferred back to stage 1 or 2 only
after being up to date for a period of up to 36 months, depending on the concession.
Write-off
Loans remain on the balance sheet, net of associated provisions, until they are deemed
to have no reasonable expectation of recovery. Loans are generally written off after
realisation of any proceeds from collateral and upon conclusion of the collections
process, including consideration of whether an account has reached a point where
continuing attempts to recover are no longer likely to be successful. Where a loan is not
recoverable, it is written off against the related provision for loan impairment once all
the necessary procedures have been completed and the amount of the loss has been
determined. Subsequent recoveries of amounts previously written off decrease the
value of impairment charges recorded in the income statement.
Financial liabilities
Borrowings, including shares, deposits, debt securities in issue, subordinated liabilities
and permanent interest-bearing shares (subscribed capital) are recognised initially at
fair value, being the issue proceeds net of premiums, discounts and transaction costs
incurred.
All borrowings are subsequently measured at amortised cost using the effective interest
rate method. Amortised cost is adjusted for the amortisation of any premiums,
discounts and transaction costs. The amortisation is recognised in interest expense and
similar charges using the effective interest rate method.
Derivative financial liabilities are measured at FVTPL. Borrowings that are designated as
hedged items are subject to measurement under the hedge accounting requirements
described in the derivatives and hedge accounting policy below.
Financial liabilities are derecognised when the obligation is discharged, cancelled or has
expired. The financial liabilities of dormant shares and deposit accounts are
extinguished when balances have been transferred to the Government-backed
unclaimed asset scheme under the terms of the Dormant Accounts and Building Society
Accounts Act 2008, with no impact on the income statement.
Fair value of assets and liabilities
IFRS 13 ‘Fair Value Measurement’ requires an entity to classify assets and liabilities held
at fair value, and those not measured at fair value but for which the fair value is
disclosed, according to a hierarchy that reflects the significance of observable market
inputs in calculating those fair values. The three levels of the fair value hierarchy are
defined below.
Level 1 – Valuation using quoted market prices
Assets and liabilities are classified as Level 1 if their value is observable in an active
market. Such instruments are valued by reference to unadjusted quoted prices for
identical assets or liabilities in active markets where the quoted price is readily available,
and the price reflects actual and regularly occurring market transactions on an arm’s
length basis. An active market is one in which transactions occur with sufficient volume
and frequency to provide pricing information on an ongoing basis.
Notes to the financial statements (continued)
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Level 2 – Valuat
ion technique using observable inputs
Assets and liabilities classified as Level 2 have been valued using models whose inputs
are observable in an active market. Valuations based on observable inputs include
derivative financial instruments such as swaps and forward rate agreements which are
valued using market standard pricing techniques, and options that are commonly traded
in markets where all the inputs to the market standard pricing models are observable.
They also include investment securities valued using consensus pricing or other
observable market prices.
Level 3 – Valuation technique using
significant unobservable inputs
Assets and liabilities are classified as Level 3 if their valuation incorporates significant
inputs that are not based on observable market data. A valuation input is considered
observable if it can be directly observed from transactions in an active market, or if
there is compelling external evidence demonstrating an executable exit price. An input
is deemed significant if it is shown to contribute more than 10% to the valuation of a
financial instrument.
Derivatives and hedge accounting
Derivatives are entered into to reduce exposures to fluctuations in interest rates,
exchange rates, market indices and credit risk, and are not used for speculative
purposes.
(a) Derivative financial instruments
Derivatives are carried at fair value with movements in fair values recognised in the
income statement. Derivative financial instruments are principally valued by discounted
cash flow models using yield curves that are based on observable market data or on
valuations obtained from third parties. Discounting uses the appropriate risk-free rate
for the currency of the cash flow; for example, GBP cash flows are discounted using a
Sonia yield curve.
In the first instance, fair values are calculated using mid prices. An adjustment is then
made to derivative assets and liabilities to value them on a bid and offer basis
respectively. The bid-offer adjustment is calculated on a portfolio basis and reflects the
costs that would be incurred if substantially all residual net portfolio market risks were
closed out using available hedging instruments or by disposing of or unwinding actual
positions. The methodology for determining the bid-offer adjustments involves netting
between long and short positions and the grouping of risk by type, in accordance with
the hedging strategy. Bid-offer spreads are derived from market sources such as broker
data and are reviewed periodically.
In measuring fair value, separate credit valuation and debit valuation adjustments are
made for counterparty or own credit risk to the extent not already included in the
valuation. Funding valuation adjustments are also made to reflect an estimate of the
adjustment a market participant would make to incorporate funding costs and benefits
that arise in relation to derivative exposures.
All derivatives are classified as assets where their fair value is positive and liabilities
where their fair value is negative. Where there is the legal right and intention to settle
net, then the derivative is classified as a net asset or liability, as appropriate.
Where cash collateral is received, to mitigate the risk inherent in amounts due to the
Group, a liability is recognised within deposits from banks and similar institutions.
Similarly, where cash collateral is given, to mitigate the risk inherent in amounts due
from the Group, an asset is recognised within loans and advances to banks and similar
institutions. Where securities collateral is received the securities are not recognised in
the accounts as the Group does not obtain the risks and rewards of the securities.
Where securities collateral is given, the securities are not derecognised as the Group
retains substantially all the risks and rewards of ownership.
(b) Hedge accounting
The Group has adopted the general hedge accounting requirements of IFRS 9 but
continues to apply the scope exception which allows ongoing application of IAS 39 for
fair value hedge accounting for a portfolio (macro) hedge of interest rate risk. When
transactions meet the criteria specified in IFRS 9, the Group can apply two types of
hedge accounting: either hedges of the changes in fair value of the financial asset or
liability (fair value hedge accounting) or hedges of the variability in cash flows of the
financial asset or liability (cash flow hedge accounting). The Group does not have hedges
of net investments.
At inception each hedge relationship is formally documented, including a description of
the hedged item (a financial asset or liability which is being economically hedged) and
the hedging instrument (a derivative), as well as the methods which will be used to
assess the effectiveness of the hedge. Hedges accounted for under IFRS 9 are required
to be effective on a prospective basis, in line with risk management strategy. Macro
hedges which continue to be accounted for under IAS 39 are required to be highly
effective on both a retrospective and a prospective basis.
Notes to the financial statements (continued)
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Fair value and cash flow hedges may have residual hedge ineffectiveness. This is the
degree to which the change in fair value of the hedging instrument does not offset the
change in fair value of the hedged item. This ineffectiveness is recognised in the income
statement and typically arises from:
Differences in the magnitude or timing of future expected cash flows in the hedged
item and hedging instrument;
Differences in the market curves used to value the hedged item and hedging
instrument;
Unexpected adjustments to either the hedged item or hedging instrument, due to
early repayments or disposals; or
The ongoing amortisation of any existing balance sheet mismatch between the fair
value of the hedged item and hedging instrument.
The Group discontinues hedge accounting when:
It is evident from testing that a hedging instrument ceases to meet the hedge
effectiveness requirements;
The hedging instrument expires, or is sold, terminated or exercised; or
The hedged item matures, is sold or repaid or, in the case of a forecasted item, is no
longer deemed to be highly probable to occur.
For macro hedges which continue to be accounted for under IAS 39, the Group may also
decide to prospectively cease hedge accounting even though the hedge relationship
continues to be highly effective, by ceasing to designate the financial instrument as a
hedge. For hedges accounted for under IFRS 9, the Group is unable to voluntarily de-
designate hedging relationships, unless there has been a change to risk management
objectives.
Fair value hedge accounting
Fair value hedge accounting results in the carrying value of the hedged item being
adjusted to reflect changes in fair value attributable to the risk being hedged. This
creates an offset to the fair value movements of the hedging instrument. Changes in the
fair value of the hedged items and hedging instruments are recorded in the income
statement, except for changes in the fair value of hedging instruments accounted for
under IFRS 9 which are attributable to foreign currency basis spreads. Where foreign
currency basis spreads are excluded from hedge designation, this element of fair
valuation of the hedging instrument is instead recognised directly within equity within
the ‘other hedging reserve’.
For larger and distinctively identifiable assets and liabilities, such as investment
securities and debt securities in issue, a single or small number of hedging instruments
may be used. This is referred to as a micro fair value hedge. If the hedge is effective, the
Group adjusts the carrying value of that specific asset or liability to reflect changes in its
fair value due to movements in the designated benchmark rate, such as Sonia. This
creates an offset to the fair value movement of the hedging instruments.
For hedged items which are classified as FVOCI, such as investment securities, there is
no further need to adjust their carrying value as they are already held at fair value.
Instead, hedge accounting results in an amount being removed from the FVOCI reserve
and instead reported in the income statement, to create an offset to the change in fair
value of the hedging instrument.
For balances within portfolios of homogeneous instruments, such as mortgages, savings,
and business and commercial loans, derivatives may be used to hedge risks on a
portfolio basis. The Group creates separate macro hedges for assets and liabilities. The
Group determines the hedged item by identifying portfolios of similar assets or
liabilities and scheduling the expected future cash flows from these items into repricing
time buckets, based on expected rather than actual repricing dates. A portion of the
total cash flow from each time bucket is then included in the hedged item. The size of
this portion is set so that it is expected to create a highly effective fair value offset to the
equivalent future cash flows from the hedging instruments. If the hedge is highly
effective the Group records an adjustment in the fair value adjustment for portfolio
hedged risk category on the balance sheet. Macro hedges are frequently rebalanced to
include new business.
In fair value hedge accounting relationships, if the hedging instrument no longer meets
the criteria for hedge accounting, the cumulative fair value hedge adjustment is
amortised over the period to maturity of the previously designated hedge relationship.
If the hedged item is sold or repaid, the unamortised fair value adjustment is
immediately recognised in the income statement.
Cash flow hedge accounting
In a cash flow hedge accounting relationship, the portion of the hedging instrument’s
fair value movement that is deemed to be an effective hedge is deferred to the cash flow
hedge reserve, instead of being immediately recognised in the income statement. The
ineffective portion of the derivative fair value movement is recognised immediately in
the income statement.
Amounts deferred to the cash flow hedge reserve are subsequently recycled to the
income statement. This recycling occurs when the underlying asset or liability being
hedged impacts the income statement, for example when interest payments are
recognised. In cash flow hedge accounting relationships, if the derivative no longer
meets the criteria for hedge accounting, the cumulative gain or loss from the effective
portion of the movement in the fair value of the derivative remains in other
comprehensive income until the cash flows from the underlying hedged item are
recognised in the income statement or are no longer expected to occur. If the hedged
item is sold or repaid, the cumulative gain or loss in other comprehensive income is
immediately recognised in the income statement.
Notes to the financial statements (continued)
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Sale and repurchase agreements
Investment and other securities may be lent or sold subject to a commitment to
repurchase them at a pre-determined price (a repo). Such securities are retained on the
balance sheet when substantially all the risks and rewards of ownership (typically, the
interest rate risk and credit risk on the asset) remain within the Group, and the
counterparty liability is included separately on the balance sheet within deposits from
banks and similar institutions as appropriate.
Similarly, where the Group borrows or purchases securities subject to a commitment to
resell them (a reverse repo) but does not acquire the risks and rewards of ownership, the
transactions are treated as collateralised loans within loans and advances to banks and
similar institutions, and the securities are not included on the balance sheet.
The difference between sale and repurchase price is accrued over the life of the
agreements using the effective interest rate method.
Equity instruments
Issued financial instruments are classified as equity instruments where the contractual
arrangement with the holder does not result in the Group having a present obligation to
deliver cash, another financial asset or a variable number of equity instruments. Where
the Group does have a present obligation, the instrument is classified as a financial
liability.
Own equity instruments that are reacquired, referred to as treasury shares, are
recognised at cost and deducted from equity. No gain or loss is recognised in profit or
loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.
Any difference between the carrying amount and the consideration, if reissued, is
recognised in the share premium.
Business combinations
Business combinations are accounted for using the acquisition method, as prescribed by
IFRS 3 ‘Business Combinations’. Under this method, any excess of the fair value of the
consideration transferred over the fair value of the identifiable net assets acquired is
recognised as goodwill. If the fair value of the identifiable net assets acquired exceeds
the aggregate fair value of the consideration transferred, this results in a gain on
acquisition, recognised in the income statement on the date of the acquisition.
The fair value measurement of identifiable assets acquired and liabilities assumed may
be adjusted following management’s finalisation of its acquisition date fair value
estimates if new information about facts and circumstances existing on the date of the
acquisition is obtained, as allowed by IFRS 3 for a maximum of one year from the
acquisition date.
The amount of non-controlling interests is measured at fair value as at the date of
acquisition. Acquisition-related costs are expensed as incurred and included in
administrative expenses.
Further information on the acquisition of Virgin Money UK PLC during the current
period is included in note 38.
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2. Judgements in applying accounting policies and critical accounting estimates
The preparation of the Group’s financial statements in accordance with IFRS involves management making judgements and estimates when applying those accounting policies that affect
the reported amounts of assets, liabilities, income and expense. Actual results may differ from those on which management’s estimates are based. Estimates and assumptions are
continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable. For the period ended 31 March
2025, this evaluation has considered the impact of climate-related risks on the Group’s financial position and performance. While the effects of climate change represent a source of
uncertainty, the Group does not consider there to be a material impact on its judgements and estimates from physical and transition risks of climate change in the short to medium term.
In relation to the acquisition of Virgin Money on 1 October 2024, the Group made significant judgements in respect of valuation techniques, modelling assumptions and estimates of
market inputs used to determine the fair value of identifiable assets acquired and liabilities assumed. The fair values calculated resulted in the recognition of a £2.3 billion gain on the
acquisition. Further information on the valuation approaches applied is included in note 38.
The key areas involving significant sources of estimation uncertainty or a higher degree of judgement by management in applying the Group’s accounting policies, where actual results
may differ from those on which management’s estimates are based, are disclosed in the following notes.
Estimates Judgements Impairment charge and provisions on loans and advances to customers Note 10 Note 10 Retirement benefit obligations Note 30 Deferred taxation Note 11 Note 11
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3. Interest receivable and similar income
Group Society2025 2024 2025 2024 £m £m £m £m On financial assets measured at amortised cost: Residential mortgages 8,904 6,424 5,955 4,733 Connected undertakings (note i) - - 1,623 1,316 Other loans (note ii) 1,399 718 749 702 Other liquid assets, including reserves at central banks 1,647 1,962 1,414 1,962 Investment securities - 1 - 1 On investment securities measured at FVOCI 644 522 540 522 Net income on financial instruments hedging assets in a 3,416 4,335 3,201 4,335 qualifying hedge accounting relationship Total interest receivable and similar income calculated using 16,010 13,962 13,482 13,571 the effective interest rate method Interest on net defined benefit pension surplus (note 30) 45 44 30 44 Other interest and similar income (note iii) 27 19 26 18 Total 16,082 14,025 13,538 13,633
Notes:
i. Society comparatives have been restated to reclassify an element of interest expense relating to issuances under the Society’s covered bond programme, which was previously included within interest
income. Further information is included in note 1.
ii. Includes interest on financial lease receivables of £31 million (2024: £nil). More information on leasing arrangements can be found in note 28.
iii. Includes interest on financial instruments hedging assets that are not in a qualifying hedge accounting relationship.
4. Interest expense and similar charges
Group Society2025 2024 2025 2024 £m £m £m £m On shares held by individuals 6,001 5,217 6,001 5,217 On non-member retail deposits 834 - - - On subscribed capital 10 11 10 11 On other deposits and other borrowings: Subordinated liabilities (note i) 96 72 75 72 Connected undertakings (note ii) - - 137 91 Deposits from banks and similar institutions and other 1,246 1,723 965 1,723 deposits Debt securities in issue (note i) 1,837 1,449 1,509 1,353 Net expense on financial instruments hedging liabilities (note ii) 1,066 1,103 979 1,108 Total 11,090 9,575 9,676 9,575
Notes:
i. Group and Society comparatives have been restated to align with the reclassification of senior non-preferred notes from subordinated liabilities to debt securities in issue, as detailed in note 1.
ii. Society comparatives have been restated to reclassify an element of interest expense relating to issuances under the Society’s covered bond programme, which was previously included within interest
income. Further information is included in note 1.
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5. Fee and commission income and expense
2025 2024 Income Expense Net Income Expense Net Group £m £m £m £m £m £mCurrent account and savings 352 (265) 87 300 (234) 66 Insurance, protection and investments 55 - 55 67 - 67Mortgage 13 (31) (18) 12 (20) (8)Credit card 69 (43) 26 41 (33) 8Other fees and commissions 26 (17) 9 6 (5) 1Total 515 (356) 159 426 (292) 134 2025 2024 Income Expense Net Income Expense Net Society £m £m £m £m £m £mCurrent account and savings 317 (245) 72 300 (234) 66 Insurance, protection and investments 41 - 41 67 - 67Mortgage 7 (25) (18) 9 (16) (7)Credit card 41 (26) 15 41 (33) 8Other fees and commissions 9 (12) (3) 6 (5) 1Total 415 (308) 107 423 (288) 135
6. Other operating income
Group Society2025 2024 2025 2024 £m £m £m £m Gains on disposal of FVOCI investment securities 8 47 8 47 Losses on financial assets measured at FVTPL (2) (6) (2) (6) Recharges for services to connected undertakings - - 83 75 Other income 15 39 8 43 Total 21 80 97 159
Other income for the year ended 4 April 2024 includes a £42 milli
on net gain relating to the disposal of the Society’s investment advice business.
There were no gains or lo
sses on disposal of financial assets measured at amortised cost in the period ended 31 March 2025 (2024: £nil).
The Group’s unrecognised share of
profits of joint ventures was £1 million for the period (2024: £nil). For loss-making entities, subsequent profits earned are not recognised until
previously unrecognised losses are extinguished. On a cumulative
basis, the Group’s unrecognised share of joint venture losses, net of unrecognised profits, is £14 million (2024: £nil); the
Group has no obligation to fund these losses.
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7. Gains/losses from derivatives and hedge accounting
As a part of its risk management strategy, the Group uses derivatives to economically hedge financial assets and liabilities. More information on how the Group manages market risk can
be found in the Risk report. Hedge accounting is employed by the Group to minimise the accounting volatility associated with the change in fair value of derivative financial instruments.
The Group only uses derivatives for the hedging of risks; however, income statement volatility can still arise due to hedge accounting ineffectiveness or because hedge accounting is
either not applied or is not currently achievable. The overall impact of derivatives will remain volatile from period to period as new derivative transactions replace those which mature to
ensure that interest rate and other market risks are continually managed.
Note 1 describes how fair value and cash flow hedge accounting affect the financial statements and the main sources of the residual hedge ineffectiveness remaining in the income
statement. Further information on the current derivative portfolio and the allocation to hedge accounting types is included in note 15.
Gains/(losses) from derivatives and hedge accounting Group Society2025 2024 2025 2024 £m £m £m £m Gains from fair value hedge accounting (note i) 73 111 88 103 (Losses) from cash flow hedge accounting (32) - (1) - Fair value (losses)/gains from other derivatives (note ii) (29) 10 (42) 34 Foreign exchange retranslation (note iii) - (4) 1 (4) Total 12 117 46 133
Notes:
i. Includes gains or losses from portfolio hedges of interest rate risk arising from amortisation of existing balance sheet amounts and hedge ineffectiveness.
ii. Gains or losses arise from derivatives used for economic hedging purposes which are not currently in a hedge accounting relationship, including derivatives economically hedging fixed rate mortgages not
yet on the balance sheet, and valuation adjustments applied at a portfolio level which are not allocated to individual hedge accounting relationships.
iii. Gains or losses arise from the retranslation of foreign currency monetary items not subject to effective hedge accounting.
Gains from fair value hedge accounting include the impact of updating the hedge accounting amortisation methodology used for macro hedges. This updated methodology applies a
more refined EIR approach, to reduce volatility in a high-interest rate environment by improving the phasing of amortisation. The impact of this has been to reduce gains by £52 million
compared to the previous approach.
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7. Gains/losses from derivatives and hedge accounting (continued)
Fair value hedge accounting
Interest rate and currency derivatives are used to economically hedge the fair value of fixed rate assets and liabilities. The market risk from fixed rate assets and liabilities may be netted
down before deciding to use derivatives. The derivatives used are predominantly interest rate swaps, which convert fixed rate cash flows to a benchmark floating rate such as Sonia, and
cross currency swaps which convert foreign currency cash flows to GBP cash flows. In addition, bond forwards are used to reduce swap spread risk within the investment securities
portfolio and inflation swaps are used to economically hedge contractual inflation risk within investment securities. The table below provides further information on the Group’s fair value
hedges:
Fair value hedge accounting 2025 Change in fair value used Hedge Carrying Of which: for determining hedge ineffectiveness amount accumulated ineffectiveness recognised in of the fair value the income hedged item adjustment Group statement (note i) Hedged item balance sheet Hedging instrument Risk category Hedged Instrument classification item (note i) (note i, ii)£m £m £m £m £mAssets: Loans and advances to customers (note iii) Interest rate swaps Interest rate 1,220 (1,186) 34 148,076 (1,760) Investment securities Interest rate swaps, bond forwards Interest rate (106) 106 - 7,491 (315) Interest rate swaps, cross currency Interest rate and foreign Investment securities 428 (419) 9 12,513 (235) interest rate swaps exchange Interest rate swaps, inflation Interest rate, inflation and Investment securities swaps, cross currency interest rate foreign exchange 163 (164) (1) 1,917 (153) swaps Investment securities Inflation swaps Interest rate and inflation 23 (27) (4) 3,282 (138) Total assets 1,728 (1,690) 38 173,279 (2,601) Liabilities: Shares (note iv) Interest rate swaps Interest rate 23 (27) (4) 36,514 27 Debt securities in issue Interest rate swaps Interest rate (1) 24 23 4,129 (5)Interest rate swaps, cross currency Interest rate and foreign Debt securities in issue (574) 579 5 21,869 (653) interest rate swaps exchange Interest rate swaps, cross currency Interest rate and foreign Subordinated liabilities (55) 67 12 2,444 (25) interest rate swaps exchange Subscribed capital Interest rate swaps Interest rate (2) 1 (1) 124 2 Total liabilities (609) 644 35 65,080 (654)Total fair value hedges 1,119 (1,046) 73
Notes to the financial statements (continued)
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7. Gains/losses from derivatives and hedge accounting (continued)
Fair value hedge accounting 2024 Change in fair value Hedge Carrying Of which: used for determining ineffectiveness amount accumulated hedge ineffectiveness recognised in of the fair value the income hedged adjustment Group statement item (note i) Hedged item balance sheet Hedging instrument Risk category Hedged Instrument classification item (note (note i, ii) i) £m £m £m £m £mAssets: Loans and advances to customers (note iii) Interest rate swaps Interest rate 1,601 (1,492) 109 109,318 (2,980) Investment securities Interest rate swaps, bond forwards Interest rate 254 (254) - 3,176 (220)Interest rate swaps, cross currency Interest rate and foreign Investment securities 354 (350) 4 13,088 (663)interest rate swaps exchange Interest rate swaps, inflation Interest rate, inflation and Investment securities swaps, cross currency interest rate foreign exchange (75) 77 2 2,631 (316)swaps Investment securities Inflation swaps Interest rate and inflation (64) 65 1 4,864 (149)Total assets 2,070 (1,954) 116 133,077 (4,328) Liabilities: Interest rate Shares (note iv) Interest rate swaps (48) 47 (1) 32,458 50Debt securities in issue (note v, vi) Interest rate swaps Interest rate 11 (9) 2 2,243 (6) Interest rate swaps, cross currency Interest rate and foreign Debt securities in issue (note v, vi) (404) 397 (7) 23,758 (1,226) interest rate swaps exchange Interest rate swaps, cross currency Interest rate and foreign Subordinated liabilities (note v) (8) 11 3 2,075 (80) interest rate swaps exchange Subscribed capital Interest rate swaps Interest rate 1 (3) (2) 168 -Total liabilities (448) 443 (5) 60,702 (1,262)Total fair value hedges 1,622 (1,511) 111
Notes:
i. Under IAS 21 both the hedged item and instrument are revalued on the balance sheet for changes in foreign currency valuation; these offsetting amounts are therefore excluded from the change in fair
value of both hedged item and instrument presented above. The accumulated change from foreign exchange revaluation for assets is a reduction of £838 million (2024: £627 million), and for liabilities is a
reduction of £530 million (2024: £27 million).
ii. The Group does not include cross currency basis spreads within its hedge accounting relationships. The change in fair value is instead deferred to an ‘other hedging reserve’ and so is not included in the
change in value of the hedging instrument.
iii. Some of the Group’s loans and advances to customers have been included as hedged items in macro fair value hedges of interest rate risk. The accumulated fair value hedge adjustment includes
£(2,037) million (2024: £(3,330) million) which is recognised in the separate balance sheet asset ‘fair value adjustment for portfolio hedged risk’. The remaining amount relates to the fair value adjustment to
commercial loans in a micro fair value hedge accounting relationship and is included in the carrying value of these loans as shown in note 14.
iv. A portion of the Group's shares were included as hedged items in macro fair value hedges of interest rate risk, with the accumulated fair value hedge adjustments recognised in the separate balance sheet
liability 'fair value adjustment for portfolio hedged risk' of £27 million (2024: £50 million).
v. Comparatives been restated as detailed in note 1, with senior non-preferred note fair value hedge adjustments reclassified from subordinated liabilities to debt securities in issue.
vi. Comparative balances for the carrying amount of the hedged item have been corrected to reflect the impact of previous repurchases of debt securities.
Notes to the financial statements (continued)
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7. Gains/losses from derivatives and hedge accounting (continued)
Cash flow hedge accounting
The Group’s risk management approach may involve creating future cash flow certainty. The Group uses interest rate swaps to hedge sterling floating rate assets and floating rate
liabilities. The Group uses cross currency interest rate swaps to hedge non-sterling investment securities, debt securities in issue and subordinated liabilities. A portion of the interest
rate flows within these derivatives has been included as a hedging instrument in cash flow hedges. In addition, inflation swaps are used to hedge RPI-linked debt securities in issue. The
table below provides further information on the Group’s cash flow hedges:
Cash flow hedge accounting 2025 Change in fair value used for Changes in instrument fair value Amounts accumulated Amounts determining hedge reported as in the cash flow hedge reserve reclassified ineffectiveness Hedge Net amounts (excluding deferred taxation) from reserves ineffectiveness deferred to to income Group recognised in other statement Hedged item balance Hedging instrument Risk category Hedged item Hedging the income comprehensive Continuing Discontinued (note ii) sheet classification instrument statement income hedges hedges (note i) £m £m £m £m £m £m £mCross currency interest Interest rate and Investment securities - (2) (1) (1) (1) - 2 rate swaps foreign exchange Floating rate assets and Interest rate swaps Interest rate (49) 18 (31) 49 26 21 (1) floating rate liabilities Cross currency interest Interest rate and Debt securities in issue 5 (3) - (3) (5) 128 14 rate swaps foreign exchange Cross currency interest Interest rate and Subordinated liabilities 3 (4) - (4) 3 7 (4) rate swaps foreign exchange Total cash flow hedges (41) 9 (32) 41 23 156 11
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7. Gains/losses from derivatives and hedge accounting (continued)
Cash flow hedge accounting 2024 Change in fair value used for Changes in instrument fair value Amounts accumulated Amounts determining hedge reported as in the cash flow hedge reserve reclassified ineffectiveness Hedge Net amounts (excluding deferred taxation) from reserves ineffectiveness deferred to to income Group recognised in other statement Hedged item balance sheet Hedging instrument Risk category Hedged item Hedging the income comprehensive Continuing Discontinued (note ii) classification instrument statement income hedges hedges (note i) £m £m £m £m £m £m £mCross currency interest Interest rate and Investment securities 2 (1) - (1) (1) - (1)rate swaps foreign exchange Interest rate and Debt securities in issue Inflation swaps 10 (10) - (10)- - (10) inflation Debt securities in issue Cross currency interest Interest rate and 16 (16) - (16) - 178 - (note iii) rate swaps foreign exchange Subordinated liabilities Cross currency interest Interest rate and 4 (5) - (5) 5 (8) - (note iii) rate swaps foreign exchange Total cash flow hedges 32 (32) - (32) 4 170(11)
Notes:
i. Net amounts deferred to other comprehensive income, being gains before tax of £41 million (2024: losses of £32 million), are shown within the cash flow hedge reserve section of the statements of
comprehensive income. The cash flow hedge reserve also includes amounts previously deferred on instruments which have since been migrated to fair value hedges. Amortisation of these amounts of £35
million (2024: £37 million) is presented within the fair value hedge accounting table within the change in fair value of the hedging instrument.
ii. The amounts reclassified from reserves to income statement of £11 million (£2024: £(11) million) exclude amortisation of migrated hedges of £35 million (2024: £37 million) which are shown within the cash
flow hedge reserve section of the statements of comprehensive income. Of these amounts reclassified, £11 million (2024: £(10) million) and £nil (2024: £(1) million) were reclassified from the cash flow hedge
reserve to net interest income and other operating income, respectively, in the income statement.
iii. Comparatives been restated as detailed in note 1, with balances relating to senior non-preferred note cash flow hedge relationships reclassified from subordinated liabilities to debt securities in issue.
Notes to the financial statements (continued)
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8. Administrative expenses
Notes:
i. Other staff costs have been recategorised from other administrative expenses to staff costs. Other staff costs include credits of £99 million for Group and Society (2024: £96 million for Group and Society)
for capitalised permanent, contract and temporary staff costs which were previously included within technology costs. Technology costs include credits of £93 million for Group and Society (2024: £196
million for Group and Society) for capitalised statement of work contractors. All prior period comparatives have been restated on a consistent basis.
ii. Other administrative expenses for the Group include certain costs relating to the acquisition of Virgin Money. These comprise:
£36 million of transaction-related costs and £275 million of one-off costs (and related VAT) associated with the amended Trade Mark License Agreement between Virgin Money UK PLC and Virgin
Enterprises Limited, which are included in other operating costs; and
£56 million of amortisation relating to acquired intangible assets, which is included within depreciation, amortisation and impairment.
iii. Other administrative expenses have been updated to include costs relating to provisions for customer redress, and legal and regulatory matters, which were previously shown separately on the income
statement. Prior period comparatives have been restated on a consistent basis.
iv. Other administrative expense categories have been updated to better align with how the Group manages and monitors expenses. The previously disclosed categories of printing, postage and stationery,
marketing and advertising, product operating costs, legal, professional and consultancy, and Bank of England levy have all been combined into other operating costs.
Group Society2025 2024 2025 2024 Notes £m £m £m £m Staff costs: Wages and salaries 839 660 669 660 Bonuses 132 83 97 83 Social security costs 116 86 90 86 Pension costs 30 204 168 169 168 Other staff costs (note i) 12 (6) (22) (6) 1,303 991 1,003 991 Other administrative expenses (notes i, ii): Property costs 133 105 110 105 Technology costs (note i) 598 479 452 479 Other operating costs (note iv) 877 373 368 370 Depreciation, amortisation and impairment 592 461 499 461 Bank levy 34 13 34 13 Customer redress, legal and regulatory provisions (note iii) 13 127 8 124 2,247 1,558 1,471 1,552 Total 3,550 2,549 2,474 2,543
Notes to the financial statements (continued)
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8. Administrative expenses (continued)
Executive directors and certain senior executives are entitled to long-term bonus payments under the Annual Performance Pay (APP) and the Long-Term Performance Pay (LTPP) plans.
Long-term bonus awards made under the APP plan are based on current period results but are generally paid over a period of up to two years for executive directors, and up to seven
years for certain senior executives, with part of the awards linked to the value of Nationwide’s core capital deferred shares (CCDS). Awards made under LTPP plans are based on longer
term performance over a two or three-year period but are paid up to five years after the end of the performance period, with part of the awards linked to the value of Nationwide’s CCDS.
Long-term bonus awards made to Virgin Money employees with a performance period of 1 October 2024 to 31 March 2025 are reported within Annual Performance Pay 2025 in the table
below. Long-term awards made to Virgin Money employees with a performance period commencing after the acquisition, and exceeding 12 months, are reported within the Long-Term
Performance Pay section of the table. Legacy awards of Virgin Money, shown in the table, reflect new awards issued to replace those which lapsed as a result of the acquisition.
No bonus is recognised in the income statement for the APP, LTPP or legacy Virgin Money plans until it is considered probable that payments will be made. Where a bonus payment is
considered probable, the amount recognised in the income statement will reflect the portion of the vesting period that has passed. The vesting period for each plan runs from the start of
the performance period or service period associated with the plan to the end of the service period. The payment of deferred elements remains subject to further discretion by the
Remuneration Committee. The table below shows actual and expected charges to the income statement in respect of all APP, LTPP and legacy Virgin Money long-term bonuses for each
relevant scheme year:
Income statement charge for long-term bonuses Group Society Actual Actual Expected Expected Actual Actual Expected Expected 2024 2025 2026 2027 and 2024 2025 2026 2027 and (notes i, ii) (note iii) beyond (notes i, ii) (note iii) beyond (note iii) (note iii) £m £m £m £m £m £m £m £m Annual Performance Pay: 2023 and previous years 6.5 5.3 0.9 0.9 6.5 5.3 0.9 0.92024 7.7 7.3 1.3 1.2 7.7 7.3 1.3 1.22025 - 10.2 6.6 3.2 - 9.6 5.4 2.8Long-Term Performance Pay (note iv): 2024-2026 and 2025-2027 - - - - - - - -Virgin Money legacy awards - 3.6 1.5 2.0 - - - -Income statement charge for long-term bonuses 14.2 26.4 10.3 7.3 14.2 22.2 7.6 4.9
Notes:
i. The bonus expense within employee costs includes £10 million and £8 million (2024: £7 million and £7 million), for Group and Society respectively, of deferred bonuses which will be paid more than one year
from the balance sheet date.
ii. In the period ended 31 March 2025, £15 million and £11 million (2024: £7 million and £7 million), in respect of Group and Society respectively, were recognised in the income statement in relation to awards
linked to share based payments, being amounts dependent on the performance of the Group’s CCDS. These payments are deferred and are therefore included in accruals and deferred income on the
balance sheet.
iii. The amounts expected are based on past performance and are subject to change as a result of future leavers and CCDS performance.
iv. Amounts are only recognised, or reported as expected in future periods, once payments are deemed probable. Further details on the long-term performance pay plan are included in the Report of the
directors on remuneration.
Notes to the financial statements (continued)
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8. Administrative expenses
(continued)
The remuneration of the external auditors, Ernst & Young LLP (EY), is set out below:
External auditor’s remuneration Group Society2025 2024 2025 2024 £m £m £m £m Statutory audit fees (note i) 18.5 5.7 9.4 5.4Fees for audit-related assurances services 1.0 0.4 0.5 0.4 Total audit and audit-related assurance services 19.5 6.1 9.9 5.8 Other non-audit services 0.9 0.8 0.8 0.8 Total 20.4 6.9 10.7 6.6
Note:
i. The Group statutory audit fees for 2025 include fees for audit services rendered to Virgin Money UK PLC for the period ended 30 September 2024. These services were completed in the period following
the acquisition.
9. Employees
Average number of persons employed during the period Group Society2025 2024 2025 2024 Nationwide sub-group (note i) 17,906 18,310 17,901 18,305 Virgin Money sub-group (note ii) 4,136 - - - Total 22,042 18,310 17,901 18,305
Notes:
i. The difference between Group and Society relates to employees located in the Isle of Man.
ii. The average number of persons employed is calculated over a 12-month period and includes employees of the Virgin Money group from the date of acquisition. The average number of Virgin Money
employees over the 6-month post-acquisition period was 8,273, which equates to an average over 12 months of 4,136.
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10. Impairment charge and provisions on loans and advances to customers
The following tables set out the impairment charges during the period and the closing provision balances which are deducted from the relevant asset values in the balance sheet:
Impairment charge Group Society2025 2024 2025 2024 £m £m £m £m Owner-occupied mortgages 25 7 5 6 Buy to let and legacy residential mortgages 8 37 (2) 3 Consumer lending 514 51 18 51 Business and commercial lending 85 17 (3) 17 Total 632 112 18 77 Impairment provisions Group Society2025 2024 2025 2024 £m £m £m £m Owner-occupied mortgages 115 90 92 88 Buy to let and legacy residential mortgages 236 231 3 5 Consumer lending 824 436 372 436 Business and commercial lending 113 24 22 24 Total 1,288 781 489 553
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10. Impairment charge and provisions on loans and advances to customers (continued)
Critical accounting estimates and judgements
Impairment is measured as the impact of credit risk on the present value of management’s estimate of future cash flows. In determining the required level of impairment provisions,
outputs from statistical models are used, and judgements incorporated to determine the probability of default (PD), the exposure at default (EAD), and the loss given default (LGD) for
each loan. Provisions represent a probability-weighted average of these calculations under multiple economic scenarios. Adjustments are made in modelling provisions, applying further
judgements to take into account model limitations, or to deal with instances where insufficient data exists to fully reflect credit risks in the models.
The most significant areas of judgement are:
The approach to identifying significant increases in credit risk; and
The approach to identifying credit-impaired loans.
The most significant areas of estimation uncertainty are:
The use of forward-looking economic information using multiple economic scenarios; and
The additional judgements made in modelling expected credit losses (ECL) – these currently include PD uplifts relating to both affordability risks and risks associated with credit
card persistent debt, and LGD uplifts for property valuation risk.
Sensitivity analysis has been completed, based on the results from previous climate change stress tests, that supports the Group’s view that the impact of climate change on impairment
provisions remains immaterial. The potential economic impact of climate change is captured by our existing range of economic scenarios. Supported by our controls operated at lending
origination, the expected credit losses associated with physical risks are low and arise over the long term, and therefore currently have an immaterial impact on the Group’s retail lending
due to the effect of loan amortisation and redemptions over time. There are no current transition policies that require additional provisions against current retail lending, while potential
future Government transition policies and the Group’s response to these remain highly uncertain. The Group’s exposure to increased losses from business sectors most affected by
climate change, whether via physical or transition risks, are also judged to be immaterial.
Identifying significant increases in credit risk (stage 2)
Loans are allocated to stage 1 or stage 2 according to whether there has been a significant increase in credit risk. Judgement has been used to select both quantitative and qualitative
criteria which are used to determine whether a significant increase in credit risk has taken place. These criteria are detailed within the Credit risk section of the Risk report. The primary
quantitative indicators are the outputs of internal credit risk assessments. While different approaches are used within each portfolio, the intention is to combine current and historical
data relating to the exposure with forward-looking economic information to determine the probability of default (PD) at each reporting date. For residential mortgages and consumer
lending, the main indicators of a significant increase in credit risk are either of the following:
Nationwide sub-group portfolios:
The residual lifetime PD exceeds a benchmark determined by reference to the maximum credit risk that would have been accepted at origination; or
The residual lifetime PD is at least 75 basis points more than, and at least double, the residual lifetime PD calculated at origination.
Virgin Money sub-group portfolios:
The residual lifetime PD exceeds a threshold which varies by portfolio, and is based on the lifetime PD curves calculated at origination. The PD threshold curves were recalculated at
acquisition, to reset the origination point to 1 October 2024, being the date when the Virgin Money business was acquired by the Group.
These complementary criteria have been reviewed through regular model monitoring, using management performance indicators and actual default experience, and found to be effective
in capturing events which would constitute a significant increase in credit risk.
Identifying credit impaired loans (stage 3)
The identification of credit-impaired loans is an important judgement within the staging approach. A loan is credit-impaired if it has an arrears status of more than 90 days past due,
is considered to be in default, or it is considered unlikely that the borrower will repay the outstanding balance in full, without recourse to actions such as realising security.
Notes to the financial statements (continued)
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Notes to the financial statements
(continued)
10. Impairment charge and provisions on loans and advances to customers (continued)
Critical accounting estimates and judgements (continued)
Use of forward-looking economic information
Management exercises judgement in estimating future economic conditions which are incorporated into provisions through modelling of multiple scenarios. The economic scenarios are
reviewed and updated on a quarterly basis. The provision recognised is the probability-weighted sum of the provisions calculated under a range of economic scenarios. The scenarios and
associated probability weights are derived using external data and statistical methodologies, together with management judgement. The Group continues to model four economic
scenarios, which together encompass an appropriate range of potential economic outcomes. The base case scenario is aligned to the Group’s financial planning process. The upside and
downside scenarios are reasonably likely favourable and adverse alternatives to the base case, and the severe downside scenario is aligned with the Group’s internal stress testing.
Probability weightings for each scenario are reviewed quarterly to reflect economic conditions as they evolve. The probability weightings applied to the scenarios were unchanged over
the year and are shown in the table below. As a result of geopolitical tensions, the potential impact of UK Government tax changes, and US trade policies, the probability weighting for the
severe downside scenario has been maintained at 15%.
Scenario probability weighting (%) Severe Upside Base case Downside downside scenario scenario scenario scenario 31 March 2025 10 45 30 15 4 April 2024 10 45 30 15
Notes to the financial statements (continued)
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Notes to the financial statements
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10. Impairment charge and provisions on loans and advances to customers
(continued)
Critical accounting estimates and judgements (continued)
In the base case scenario, modest growth in GDP of 1.4% is expected during 2025, following a period of stagnation. In this scen
ario, unemployment is forecast to increase to 4.7% by the end
of 2025. By contrast, in the do
wnside scenario, GDP reflects a significant UK recession, and the peak unemployment increases to 6.2%, whilst the severe downside scenario unemployment
peak of 9.3% corresponds with a severe
and longer-lasting economic downturn.
As a result of continued economic uncertainty, the house price forecasts used within the provision calculations cover a wide ra
nge of outcomes. House prices are now expected to increase
in the base case scenario by 1.9% during
2025 and a further 2.3% during 2026. The downside scenario continues to assume a significant fall in both 2025 and 2026, driven by a deterioration
in economic conditions, including an increase in unemployment, whilst the severe downside scenario includes a fall in house prices of 30.1% from the end of 2024 to the low point in early
2027.
Bank rate in the base case scenario is expected to continue to reduce to 3.75% during 2025 and 3.25% by the end of 2028. Inflat
ion in this scenario is expected to reduce to the Bank of
England target rate of 2.0% by the end of 2026. In the downside
scenario, the recession results in Bank rate remaining at low levels from 2025 onwards, in order to stimulate economic
demand. By contrast the severe downside sc
enario includes a sustained high level of inflation, which requires an increase in Bank rate to 8.5%.
The graphs below show the historical and fo
recasted GDP level, unemployment rate and average house price for the Group’s current economic scenarios, as well as the previous base
case economic scenario.
Notes to the financial statements (continued)
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Notes to the financial statements
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10. Impairment charge and provisions on loans and advances to customers (continued)
Critical accounting estimates and judgements (continued)
The tables below provide a summary of the values of the key UK economic variables used within the economic scenarios over the first five years of the scenario:
Economic variables Rate/annual growth rate at December 2024-2029 5-year Dec-24 to Dec-24 to Actual Forecastaverage peak trough 2024 2025 2026 2027 2028 2029 (note i) (note ii) (note ii) 31 March 2025 %% % %% % % % %GDP growth Upside scenario 1.4 1.7 2.0 2.0 2.0 2.0 2.0 10.2 0.3 Base case scenario 1.4 1.4 1.7 1.6 1.6 1.4 1.5 8.0 0.2 Downside scenario 1.4 (0.9) (1.2) 3.3 2.4 1.9 1.1 5.6 (2.1) Severe downside scenario 1.4 (1.8) (3.7) 2.8 2.8 2.2 0.4 2.2 (5.5) Probability weighted 1.4 0.3 0.1 2.4 2.1 1.8 HPI growth Upside scenario 3.6 5.4 4.5 3.8 3.8 3.8 4.2 23.1 1.3 Base case scenario 3.6 1.9 2.3 2.7 3.3 3.2 2.7 14.3 0.1 Downside scenario 3.6 (4.9) (9.4) (3.7) 8.7 9.3 (0.3) (0.6) (17.1) Severe downside scenario 3.6 (12.4) (18.1) (1.8) 9.3 9.7 (3.3) (1.4) (30.1) Probability weighted 3.6 (1.9) (4.1) 0.2 5.9 6.1 Unemployment Upside scenario 4.4 4.1 4.0 4.0 4.0 4.0 4.0 4.3 4.0 Base case scenario 4.4 4.7 4.6 4.4 4.3 4.3 4.5 4.7 4.3 Downside scenario 4.4 5.4 6.2 5.6 5.2 5.0 5.4 6.2 4.7 Severe downside scenario 4.4 5.9 8.4 8.5 7.0 6.0 7.1 9.3 4.8 Probability weighted 4.4 5.0 5.6 5.3 4.9 4.7 Bank rate Upside scenario 4.8 4.3 4.3 4.3 4.3 4.3 4.3 4.5 4.3 Base case scenario 4.8 3.8 3.5 3.5 3.3 3.3 3.6 4.5 3.3 Downside scenario 4.8 2.5 0.5 0.5 0.5 0.5 1.3 4.5 0.5 Severe downside scenario 4.8 6.5 8.0 5.0 4.3 3.5 5.4 8.5 3.5 Probability weighted 4.8 3.8 3.4 2.9 2.7 2.6 Consumer price inflation Upside scenario 2.6 2.5 2.0 2.0 2.0 2.0 2.1 2.7 2.0 Base case scenario 2.6 3.4 2.0 2.0 2.0 2.0 2.3 3.5 1.8 Downside scenario 2.6 1.5 0.3 1.2 1.8 2.0 1.5 2.8 0.3 Severe downside scenario 2.6 6.5 7.0 2.2 2.0 2.0 4.1 8.0 2.0 Probability weighted 2.6 3.2 2.2 1.8 1.9 2.0
Notes to the financial statements (continued)
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Notes to the financial statements
(continued)
10. Impairment charge and provisions on loans and advances to customers (continued)
Critical accounting estimates and judgements (continued)
Notes:
i. The average rate for GDP and HPI is based on the cumulative annual growth rate over the forecast period. Average unemployment and CPI is calculated using a simple average using quarterly points.
ii. GDP growth and HPI are shown as the largest cumulative growth/fall over the forecast period. The unemployment rate and CPI is shown as the highest/lowest rate over the forecast period.
Economic variables Rate/annual growth rate at December 2023-2028 5-year Dec-23 to Dec-23 to Actual Forecast average peak trough (note i) (note ii) (note ii) 2023 2024 2025 2026 2027 2028 4 April 2024 %%% %% %%%% GDP growth Upside scenario (0.2) 1.6 1.6 1.6 1.6 1.7 1.6 8.4 0.4Base case scenario (0.2) 0.7 1.0 1.2 1.6 1.8 1.3 6.4 0.1Downside scenario (0.2) (0.6) (1.9) 1.8 3.3 2.1 0.9 4.8 (2.6)Severe downside scenario (0.2) (1.8) (3.5) 3.1 3.0 2.3 0.6 3.1 (5.2)Probability weighted (0.2) 0.0 (0.5) 1.7 2.3 1.9HPI growth Upside scenario (2.3) 5.5 3.8 3.8 3.8 3.8 4.1 22.6 0.7Base case scenario (2.3) (0.5) 0.6 2.2 2.7 3.3 1.7 9.0 (1.1)Downside scenario (2.3) (6.1) (9.2) (1.8) 5.1 7.5 (1.1) (1.3) (16.3)Severe downside scenario (2.3) (13.3) (16.0) 0.2 8.2 8.0 (3.1) (2.6) (28.3)Probability weighted (2.3) (3.5) (4.5) 0.9 4.3 5.3Unemployment Upside scenario 3.8 4.1 4.0 4.0 4.0 4.0 4.0 4.1 4.0Base case scenario 3.8 4.6 5.0 4.7 4.6 4.3 4.6 5.0 4.2 Downside scenario 3.8 5.3 6.7 6.2 5.6 5.3 5.7 6.7 4.3Severe downside scenario 3.8 5.9 8.6 8.4 6.6 5.8 7.0 9.5 4.6 Probability weighted 3.8 4.9 5.9 5.6 5.1 4.8Bank rate Upside scenario 5.3 4.8 4.0 4.0 4.0 4.0 4.2 5.3 4.0 Base case scenario 5.3 4.3 3.5 3.0 3.0 3.0 3.5 5.3 3.0 Downside scenario 5.3 5.8 3.0 1.0 1.0 1.0 2.7 6.0 1.0 Severe downside scenario 5.3 7.5 6.0 4.5 4.0 3.5 5.3 7.5 3.5 Probability weighted 5.3 5.2 3.8 2.7 2.7 2.6Consumer price inflation Upside scenario 3.9 1.7 2.0 2.0 2.0 2.0 1.9 2.3 1.4 Base case scenario 3.9 2.6 1.7 1.9 2.0 2.0 2.1 3.7 1.6 Downside scenario 3.9 2.0 0.3 1.2 1.7 2.0 1.5 4.0 0.3Severe downside scenario 3.9 8.0 3.0 2.0 2.0 2.0 3.8 8.0 2.0 Probability weighted 3.9 3.1 1.5 1.7 1.9 2.0
Notes to the financial statements (continued)
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Notes to the financial statements
(continued)
10. Impairment charge and provisions on loans and advances to customers (continued)
Critical accounting estimates and judgements (continued)
To give an indication of the sensitivity of ECLs to different economic scenarios, the table below shows the ECL if 100% weighting is applied to each scenario:
Expected credit losses Proportion of balances in stage 2 under 100% weighted scenarios under 100% weighted scenarios Reported Severe Severe Upside Base case Downside Reported Upside Base case Downside Reported stage 3 downside downside scenario scenario scenario provision scenario scenario scenario stage 2 and POCI scenario scenario (note i) 31 March 2025 £m £m £m £m £m %%%% %% Residential mortgages 224 229 271 1,089 351 12.6 11.6 9.9 37.7 13.6 0.7 Consumer lending – credit cards 475 480 479 1,120 542 13.6 13.7 13.4 41.2 16.7 2.5 Consumer lending – personal loans 270 272 279 331 282 17.6 17.5 17.0 25.2 18.3 11.7 and overdrafts Business and commercial lending 102 106 118 288 113 9.2 9.3 11.7 39.2 11.0 3.2 Total 1,071 1,087 1,147 2,828 1,288 4 April 2024 £m £m £m £m £m % % % % % % Residential mortgages 210 216 275 814 321 15.0 13.7 13.0 27.7 17.4 0.6Consumer lending – credit cards 186 183 187 247 195 23.8 23.0 22.4 24.6 24.3 5.4Consumer lending – personal loans 229 232 245 269 241 35.3 37.1 41.1 45.6 39.6 6.3and overdrafts Business and commercial lending 24 24 24 24 24 5.2 5.2 5.2 5.2 5.2 1.3Total 649 655 731 1,354 781
Note:
i. The staging of stage 3 assets is not sensitive to economic scenarios. The reported stage 3 proportion is the same as it would be in any of the 100% weighted scenarios.
Reported ECL represents 118% (2024: 119%) of the base case scenario ECL, primarily due to the impact of increased losses in the severe downside scenario. The increased ECLs in both
the downside and severe downside scenarios are the result of increased unemployment rates combined with material house price falls. The low Bank rate forecast in the downside
scenario is the main driver of residential mortgage and consumer lending stage 2 proportions being lower in the downside scenario than in the base case scenario.
The ECL for each scenario multiplied by the scenario probability will not reconcile to the reported provision. Whilst the stage allocation of loans varies in each individual scenario, each
loan is allocated to a single stage in the reported provision calculation; this is based on a weighted average PD which takes into account the economic scenarios. A probability-weighted 12-
month or lifetime ECL (which takes into account the economic scenarios) is then calculated based on the stage allocation.
The table below shows the sensitivity at 31 March 2025 to some of the key assumptions used within the ECL calculation:
Sensitivity to key forward-looking information assumptions Increase in provision 2025 £m Single-factor sensitivity to key economic variables (note i) 10% decrease in house prices (HPI) at 31 March 2025 and throughout the forecast period 16 1% increase in unemployment rate at 31 March 2025 and throughout the forecast period 32 Sensitivity to changes in scenario probability weightings 10% increase in the probability of the downside scenario (reducing the upside by a corresponding 10%) 8 5% increase in the probability of the severe downside scenario (reducing the downside by a corresponding 5%) 84
Note:
i. These are single-factor sensitivities; therefore, they should not be extrapolated due to the likely non-linear effects. The provision impacts are calculated using the base case scenario. The house price
sensitivity is the impact of a 10% decrease in house prices on LGD for the residential mortgage portfolio.
Notes to the financial statements (continued)
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Annual Report and Accounts 2025
Notes to the financial statements
(continued)
10. Impairment charge and provisions on loans and advances to customers (continued)
Critical accounting estimates and judgements (continued)
The table below shows key adjustments made in modelling provisions in relation to the significant areas of estimation uncertainty for the retail portfolios (residential mortgages and
consumer lending), with further details on each provided below. There are no significant adjustments for the business and commercial lending portfolio.
Note:
i. This adjustment was previously called ‘PD uplift for economic uncertainty’ but has been updated during the year to reflect the nature of the remaining provision adjustment at 31 March 2025.
PD uplift for affordability risks
At 31 March 2025, the PD uplift adjustment for affordability risks increased provisions by £83 million (2024: £145 million). This adjustment reflects the ongoing affordability pressures
faced by borrowers, primarily within the residential mortgage portfolio. This adjustment includes the risks associated with borrowers who have switched or are expected to switch to
higher mortgage interest rates in the next two years. The uplift in PD has resulted in loans breaching existing quantitative criteria for transfer to stage 2. This has resulted in
approximately £9.2 billion (2024: £12.8 billion) of residential mortgages and £66 million (2024: £473 million) of consumer lending balances moving from stage 1 to stage 2.
The prior year provision adjustment also assumed that model inputs relating to borrower credit quality were still benefitting from temporary improvements to credit indicators which
were expected to reverse, such as reduced levels of arrears. It is now judged that this adjustment is no longer required, due to observed credit quality returning to longer-term levels for
most portfolios, and continued resilient arrears performance for all portfolios. The removal of this element of the PD adjustment has primarily impacted provisions for the consumer
lending portfolios.
PD uplift for credit card persistent debt
A borrower is defined as being in persistent debt if they have been paying more in interest, fees and charges than they are paying to reduce their outstanding balance for at least three
years. Nationwide provides support to these borrowers, including the offer of forbearance, to help reduce the level of their credit card debt. To reflect an increase in risk since origination,
accounts are moved to stage 2 and therefore receive a lifetime ECL This adjustment to modelled stage increases provisions by £23 million (2024: £5 million) and results in £225 million
(2024: £28 million) of credit card balances being reported in stage 2. The increase during the period relates to the Virgin Money credit card portfolio.
LGD uplift for property valuation risks
An adjustment is made to reflect the property valuation risk associated with flats, originally driven by risks for properties subject to fire safety issues such as unsuitable cladding. We
continue to hold an adjustment to provisions for this segment of the market whilst there is insufficient evidence of a recovery in the value of affected properties. This adjustment
increased provisions by £21 million (2024: £19 million).
Annual Report and Accounts 2025
Notes to the financial statements
(continued)
10. Impairment charge and provisions on loans and advances to customers (continued)
Critical accounting estimates and judgements (continued)
The table below shows key adjustments made in modelling provisions in relation to the significant areas of estimation uncertainty for the retail portfolios (residential mortgages and
consumer lending), with further details on each provided below. There are no significant adjustments for the business and commercial lending portfolio.
£m
1
i. This adjustment was previously called ‘PD uplift for economic uncertainty’ but has been updated during the year to reflect the nature of the remaining provision adjustment at 31 March 2025.
PD uplift for affordability risks
At 31 March 2025, the PD uplift adjustment for affordability risks increased provisions by £83 million (2024: £145 million). This adjustment reflects the ongoing affordability pressures
faced by borrowers, primarily within the residential mortgage portfolio. This adjustment includes the risks associated with borrowers who have switched or are expected to switch to
higher mortgage interest rates in the next two years. The uplift in PD has resulted in loans breaching existing quantitative criteria for transfer to stage 2. This has resulted in
approximately £9.2 billion (2024: £12.8 billion) of residential mortgages and £66 million (2024: £473 million) of consumer lending balances moving from stage 1 to stage 2.
The prior year provision adjustment also assumed that model inputs relating to borrower credit quality were still benefitting from temporary improvements to credit indicators which
were expected to reverse, such as reduced levels of arrears. It is now judged that this adjustment is no longer required, due to observed credit quality returning to longer-term levels for
most portfolios, and continued resilient arrears performance for all portfolios. The removal of this element of the PD adjustment has primarily impacted provisions for the consumer
lending portfolios.
PD uplift for credit card persistent debt
A borrower is defined as being in persistent debt if they have been paying more in interest, fees and charges than they are paying to reduce their outstanding balance for at least three
years. Nationwide provides support to these borrowers, including the offer of forbearance, to help reduce the level of their credit card debt. To reflect an increase in risk since origination,
accounts are moved to stage 2 and therefore receive a lifetime ECL This adjustment to modelled stage increases provisions by £23 million (2024: £5 million) and results in £225 million
(2024: £28 million) of credit card balances being reported in stage 2. The increase during the period relates to the Virgin Money credit card portfolio.
LGD uplift for property valuation risks
An adjustment is made to reflect the property valuation risk associated with flats, originally driven by risks for properties subject to fire safety issues such as unsuitable cladding. We
continue to hold an adjustment to provisions for this segment of the market whilst there is insufficient evidence of a recovery in the value of affected properties. This adjustment
increased provisions by £21 million (2024: £19 million).
Annual Report and Accounts 2025
Notes to the financial statements
(continued)
10. Impairment charge and provisions on loans and advances to customers (continued)
Critical accounting estimates and judgements (continued)
The table below shows key adjustments made in modelling provisions in relation to the significant areas of estimation uncertainty for the retail portfolios (residential mortgages and
consumer lending), with further details on each provided below. There are no significant adjustments for the business and commercial lending portfolio.
Significant adjustments made in modelling provisions
s
s and
£m
145
1
2
is adjustment was previously called ‘PD uplift for economic uncertainty’ but has been updated during the year to reflect the nature of the remaining provision adjustment at 31 March 2025.
PD uplift for affordability risks
At 31 March 2025, the PD uplift adjustment for affordability risks increased provisions by £83 million (2024: £145 million). This adjustment reflects the ongoing affordability pressures
faced by borrowers, primarily within the residential mortgage portfolio. This adjustment includes the risks associated with borrowers who have switched or are expected to switch to
higher mortgage interest rates in the next two years. The uplift in PD has resulted in loans breaching existing quantitative criteria for transfer to stage 2. This has resulted in
approximately £9.2 billion (2024: £12.8 billion) of residential mortgages and £66 million (2024: £473 million) of consumer lending balances moving from stage 1 to stage 2.
The prior year provision adjustment also assumed that model inputs relating to borrower credit quality were still benefitting from temporary improvements to credit indicators which
were expected to reverse, such as reduced levels of arrears. It is now judged that this adjustment is no longer required, due to observed credit quality returning to longer-term levels for
most portfolios, and continued resilient arrears performance for all portfolios. The removal of this element of the PD adjustment has primarily impacted provisions for the consumer
lending portfolios.
PD uplift for credit card persistent debt
A borrower is defined as being in persistent debt if they have been paying more in interest, fees and charges than they are paying to reduce their outstanding balance for at least three
years. Nationwide provides support to these borrowers, including the offer of forbearance, to help reduce the level of their credit card debt. To reflect an increase in risk since origination,
accounts are moved to stage 2 and therefore receive a lifetime ECL This adjustment to modelled stage increases provisions by £23 million (2024: £5 million) and results in £225 million
(2024: £28 million) of credit card balances being reported in stage 2. The increase during the period relates to the Virgin Money credit card portfolio.
LGD uplift for property valuation risks
An adjustment is made to reflect the property valuation risk associated with flats, originally driven by risks for properties subject to fire safety issues such as unsuitable cladding. We
continue to hold an adjustment to provisions for this segment of the market whilst there is insufficient evidence of a recovery in the value of affected properties. This adjustment
increased provisions by £21 million (2024: £19 million).
Significant adjustments made in modelling provisions Significant adjustments made in modelling provisions 2025 2024 Significant adjustments made in modelling provisions 2025 2024 2025 2024 umer lending Consumer leConsnding Consumer lending 2025 2024 Consumer lending Consumer lending Consumer lending Personal Residential PerResidential onal Residential Consumer lending Personal Total Residential Residential Mortgages Credit cards loans and Personal Residential Mortgages Total Total Consumer lendingPerdit cards loanPeronal onal ssCreTotal Total Total Mortgages ResidentialMortgages Credit cards loans and Personal Credit cards overdrafts loans and Residential Mortgages Mortgages Credit cards loans and Personal Credit cards overdrafts loans and Total Total Mortgages Credit cards overdrafts loans and Mortgages Credit cards overdrafts loans and overdrafts overdrafts £m £m £m £m £m £m £m £m £m £m £m £m £m £m overdrafts overdrafts £m £m £m £m £m £m £m 70 6 7 83 72 44 29 PD uplift for affordability risks (note i) £m £m £m £m £m £m £m £m 70 6 7 83 72 44 29 145 70 6 7 83 72 44 29 145 - 23 - 23 - 5 - 5 PD uplift for affordability risks (note i) PD uplift for affordability risks (note i) PD uplift for credit card persistent debt PD uplift for affordability risks (note i) 70 6 7 83 72 44 29 145 PD uplift for credit card persistent debt - 23 - 23 - 5 - 5 PD uplift for credit card persistent debt - 23 - 23 - 5 - 5 LGD uplift for property valuation risks 21 - - 21 19 - - 19 PD uplift for credit card persistent debt - 23 - 23 - 5 - 5 LGD uplift for property valuation risks 21 - - 21 19 - - 19 LGD uplift for property valuation risks 21 - - 21 19 - - 19 Total 91 29 7 127 91 49 29 169 LGD uplift for property valuation risks 21 - - 21 19 - - 19 Total 91 29 7 127 91 49 29 169 Total 91 29 7 127 91 49 29 169 Total 91 29 7 127 91 49 29 169 Of which: Of which: Of which: Stage 14 1 1 16 7 6 3 16 Of which: Stage Stage Stage 14 1 1 16 7 6 3 16 14 1 1 16 7 6 3 16 70 28 6 104 76 43 26 145 Stage 1 14 1 1 16 7 6 3 16 Stage 2 70 28 6 104 76 43 26 145 Stage 2 70 28 6 104 76 43 26 145 Stage 3 7 - - 7 8 - - 8 Stage 2 70 28 6 104 76 43 26 145 Stage 3 7 - - 7 8 - - 8 Stage 3 7 - - 7 8 - - 8 e: NotNote:Si. ThNote:tage 3 7 - - 7 8 - - 8
Annual Report and Accounts 2025
Notes to the financial statements
(continued)
10. Impairment charge and provisions on loans and advances to customers (continued)
Critical accounting estimates and judgements (continued)
The table below shows key adjustments made in modelling provisions in relation to the significant areas of estimation uncertainty for the retail portfolios (residential mortgages and
consumer lending), with further details on each provided below. There are no significant adjustments for the business and commercial lending portfolio.
£m
1
i. This adjustment was previously called ‘PD uplift for economic uncertainty’ but has been updated during the year to reflect the nature of the remaining provision adjustment at 31 March 2025.
PD uplift for affordability risks
At 31 March 2025, the PD uplift adjustment for affordability risks increased provisions by £83 million (2024: £145 million). This adjustment reflects the ongoing affordability pressures
faced by borrowers, primarily within the residential mortgage portfolio. This adjustment includes the risks associated with borrowers who have switched or are expected to switch to
higher mortgage interest rates in the next two years. The uplift in PD has resulted in loans breaching existing quantitative criteria for transfer to stage 2. This has resulted in
approximately £9.2 billion (2024: £12.8 billion) of residential mortgages and £66 million (2024: £473 million) of consumer lending balances moving from stage 1 to stage 2.
The prior year provision adjustment also assumed that model inputs relating to borrower credit quality were still benefitting from temporary improvements to credit indicators which
were expected to reverse, such as reduced levels of arrears. It is now judged that this adjustment is no longer required, due to observed credit quality returning to longer-term levels for
most portfolios, and continued resilient arrears performance for all portfolios. The removal of this element of the PD adjustment has primarily impacted provisions for the consumer
lending portfolios.
PD uplift for credit card persistent debt
A borrower is defined as being in persistent debt if they have been paying more in interest, fees and charges than they are paying to reduce their outstanding balance for at least three
years. Nationwide provides support to these borrowers, including the offer of forbearance, to help reduce the level of their credit card debt. To reflect an increase in risk since origination,
accounts are moved to stage 2 and therefore receive a lifetime ECL This adjustment to modelled stage increases provisions by £23 million (2024: £5 million) and results in £225 million
(2024: £28 million) of credit card balances being reported in stage 2. The increase during the period relates to the Virgin Money credit card portfolio.
LGD uplift for property valuation risks
An adjustment is made to reflect the property valuation risk associated with flats, originally driven by risks for properties subject to fire safety issues such as unsuitable cladding. We
continue to hold an adjustment to provisions for this segment of the market whilst there is insufficient evidence of a recovery in the value of affected properties. This adjustment
increased provisions by £21 million (2024: £19 million).
Notes to the financial statements (continued)
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Annual Report and Accounts 2025
Notes to the financial statements
(continued)
11. Taxation
Tax charge in the income statement Group Society2025 2024 2025 2024 £m £m £m £m Current tax: UK corporation tax charge (note i) 96 483 173 409 Adjustments in respect of prior years (77) (28) (77) (29) Total current tax charge 19 455 96 380Deferred tax: Current year (credit)/charge (114) (3) (20) 11 Adjustments in respect of prior years 59 24 59 24 Total deferred taxation (credit)/charge (55) 21 39 35 Tax (credit)/charge (36) 476 135 415
Note:
i. The current tax charge for the Society includes £88 million (2024: £nil) due to subsidiary companies in respect of group relief claimed.
The actual tax charge differs from the theoretical amount that would arise using the standard rate of corporation tax in the UK as follows:
Reconciliation of tax charge Group Society 2025 2024 2025 2024 £m £m £m £m Profit before tax: 2,302 1,776 620 1,521 Tax calculated at a tax rate of 25% (2024: 25%) 576 444 155 380 Adjustments in respect of prior years (18) (4) (18) (5) Tax credit on Additional Tier 1 capital (34) (20) (25) (20)Banking surcharge 6 41 16 41 Bank levy 8 3 8 3 Deferred tax assets derecognised 3 - - - Gain on acquisition (575) - - - Expenses not deductible for tax purposes/ (income not taxable) (note i) 15 12 2 16 Effect of deferred tax provided at different tax rates (17) - (3) - Tax (credit)/charge (36) 476 135 415
Note:
i. Expenses not deductible for tax purposes/ (income not taxable) primarily include depreciation on non-qualifying assets, non-deductible acquisition expenses, the credit recognised for research and
development expenditure and non-deductible customer redress provisions. In addition, the Society is liable for tax on the results of Nationwide Covered Bonds LLP, the profit or loss of which is reported
within that entity.
In the period ended 31 March 2025, the main rate of UK corporation tax remained at 25%, the annual banking surcharge allowance remained at £100 million, and the banking surcharge
rate remained at 3%. These rates have been reflected in the current tax and deferred tax balances recognised in these financial statements.
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11. Taxation
(continued)
The Group tax credit for the period of £36 million (2024 charge: £476 million) represents an effective tax rate of (1.6)% (2024: 26.8%) which is lower than the statutory UK corporation tax
rate of 25%. The low Group effective tax rate is primarily due to the accounting gain which arose upon acquisition of Virgin Money on 1 October 2024, as detailed in note 38. As the gain
was recognised only on consolidation, it is not a taxable item in any of the individual entities within the Group. The Society effective tax rate was 21.8% (2024: 27.3%).
On 17 November 2022 the UK Government confirmed its intention to implement the G20-OECD Inclusive Framework Pillar 2 rules in the UK, including a Qualified Domestic Minimum
Top-Up Tax rule. This legislation, enacted on 11 July 2023, seeks to ensure that UK-headquartered multinational enterprises pay a minimum tax rate of 15% on UK and overseas profits
arising after 31 December 2023. The Group is within the scope of the legislation; however, as the UK rate of corporation tax is 25%, and the Group’s business is UK-based, there is no
impact of these rules on the financial statements. The IAS 12 exemption to recognise and disclose information about deferred tax assets and liabilities related to Pillar 2 income
taxes has been applied.
In November 2024, HMRC updated its published guidance on the treatment of beneficiary accounts for the purposes of the exclusion of protected deposits from the UK bank levy charge.
The Society has applied the updated guidance in it’s UK bank levy calculation.
Deferred tax
Deferred tax movements Deferred tax assets Deferred tax liabilities Fixed Cash flow & FVOCI Accounting Acquisition Tax losses Other Total Retirement Cash flow & Other Total assets other investment policy accounting carried items benefit other items hedging securities transition forward obligations hedging adjustment (note i) Group £m £m £m £m £m £m £m £m £m £m £m £m At 5 April 2023 67 4 8 28 - - 12 119 (333) (49) (24) (406)Income statement (charge)/credit (24) 1 (4) (6) - - 2 (31) (10) 812 10 Other comprehensive income credit - 11 9 - - - 1 21 190 - - 190At 5 April 2024 43 16 13 22 - - 15 109 (153) (41) (12) (206)Acquisition of Virgin Money 94 (66) 7 7 (165) 213 4 94 (107) - - (107) Income statement (charge)/credit (40) 14 1 95 (25) 7 2 54 (10) 7 4 1 Other comprehensive income - (9) 30 - - - - 21 46 - - 46 (charge)/credit At 31 March 2025 97 (45) 51 124 (190) 220 21 278 (224) (34) (8) (266)
Note:
i. Deferred tax on the Group’s retirement benefit asset is provided at 25% (2024: 25%).
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11. Taxation (continued)
Deferred tax movements Deferred tax assets Deferred tax liabilities Fixed assets Cash flow & FVOCI Accounting Other items Total Retirement Total other hedginginvestment policy benefit securities transition obligations adjustment (note i)Society £m £m £m £m £m £m £m £m At 5 April 2023 67 4 8 17 12 108 (333) (333) Income statement (charge)/credit (24) 1 1 (3) - (25) (10) (10) Other comprehensive income credit - 11 10 - 2 23 95 95 Effect of deferred tax provided at different tax rates - - - - - - 95 95 At 5 April 2024 43 16 19 14 14 106 (153) (153) Income statement (charge)/credit (30) - - (4) 1 (33) (6) (6) Other comprehensive income credit - 3 29 - - 32 25 25 At 31 March 2025 13 19 48 10 15 105 (134) (134)
Note:
i. Deferred tax on the Society’s retirement benefit asset is provided at 25% (2024: 25%).
As set out in note 38, the £94 million of Group deferred tax assets recognised as part of the acquisition of Virgin Money include £(125) million of adjustments arising as a result of
acquisition accounting. These include £(161) million of temporary differences which arose from fair value adjustments recognised and £36 million relating to additional tax losses
recognised. These adjustments have been included in the acquisition accounting and tax losses carried forward categories respectively, within the Group table above.
Subsequent to the acquisition, accounting policy changes were implemented by Virgin Money to align with Group policies which resulted in the recognition of losses at an entity level. The
losses recognised are deductible for corporation tax, but the tax deduction is spread equally over ten years. This temporary timing difference resulted in the creation of a deferred tax
asset which has been included within the accounting policy transition adjustment category within the Group table above.
The majority of deferred tax assets are anticipated to be recoverable after more than one year. As a result of exemptions on dividends from subsidiaries and on capital gains on disposal
there are no significant taxable temporary differences associated with investments in subsidiaries.
Deferred tax assets have not been recognised in respect of temporary differences and carried forward tax losses on capital assets for the Group and Society of £28 million (2024:
£18 million), representing gross temporary differences and losses totalling £100 million (2024: £63 million). These differences relate primarily to revalued properties, for which capital
losses realised on disposal can be carried forward indefinitely. Deferred tax assets have not been recognised in respect of these items because it is not considered probable that future
taxable gains will be available against which they can be utilised.
Critical accounting estimates and judgements
The Group has recognised deferred tax assets in respect of trading tax losses of £220 million (2024: £nil), based on future taxable profits. Deferred tax assets have not been recognised
in respect of trading tax losses of £58 million (2024: £nil) (£232 million of gross losses valued at the mainstream rate of 25%) representing trading tax losses whose use is not forecast
within the foreseeable future.
The Group has assessed the likelihood of recovery of the recognised deferred tax assets at 31 March 2025, and considers it probable that sufficient future taxable profits will be available
over its planning horizon against which the underlying deductible temporary differences can be utilised. Deferred tax assets in respect of these tax losses are recognised to the extent
that they are expected to be utilised within six years of the balance sheet date. An increase or decrease of one year to the forecast period would increase or decrease the recognised
deferred tax asset in respect of losses by £44 million. An increase or decrease of 10% to forecast Group taxable profits would increase or decrease the deferred tax asset recognised in
respect of tax losses by £19 million. All tax assets arising will be used within the UK.
For other deferred tax assets recognised on the balance sheet, the Group considers that there will be sufficient future trading profits, in excess of profits arising from the reversal of
existing taxable temporary differences, to utilise the deferred tax assets.
Notes to the financial statements (continued)
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12. Classification and measurement
The following tables summarise the classification of carrying amounts of the Group’s and Society’s financial assets and liabilities:
Classification of financial assets and liabilities 2025 2024 Amortised Fair value Fair value Total Amortised Fair value Fair value Total cost through other through profit cost through other through profit comprehensive or loss comprehensive or loss income (note i) income (note i) Group £m £m £m £m £m £m £m £mFinancial assets Cash and balances at central banks (note ii) 29,483 - - 29,483 25,231 - - 25,231Loans and advances to banks and similar institutions 1,810 - - 1,810 918 - - 918(note ii) Investment securities - 28,658 5 28,663 4 26,522 6 26,532Derivative financial instruments - - 4,742 4,742 - - 6,290 6,290Fair value adjustment for portfolio hedged risk (2,037) - - (2,037) (3,330) - - (3,330)Loans and advances to customers 300,804 - 85 300,889 213,398 - 42 213,440Total financial assets (note iii) 330,060 28,658 4,832 363,550 236,221 26,522 6,338 269,081Other (notes ii & iii) 4,327 3,006 Total assets (note ii) 367,877 272,087 Financial liabilities Shares 207,428 - - 207,428 193,366 - - 193,366Deposits from banks and similar institutions 6,053 - - 6,053 16,388 - - 16,388Other deposits 74,667 - - 74,667 4,530 - - 4,530Fair value adjustment for portfolio hedged risk 27 - - 27 50 - - 50Debt securities in issue (note ii) 51,109 - - 51,109 34,749 - - 34,749Derivative financial instruments - - 1,547 1,547 - - 1,451 1,451Subordinated liabilities (note ii) 2,444 - - 2,444 2,075 - - 2,075Subscribed capital 129 - - 129 173 - - 173Lease liabilities 315 - - 315 172 - - 172Total financial liabilities (note iii) 342,172 - 1,547 343,719 251,503 - 1,451 252,954Other (notes ii, iii and iv) 3,676 1,447 Total liabilities (note ii) 347,395 254,401
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12. Classification and measurement (continued)
Classification of financial assets and liabilities 2025 2024 Amortised Fair value Fair value Total Amortised Fair value Fair value Total cost through other through profit cost through other through profit comprehensive or loss comprehensive or loss income (note i) income (note i) Society £m £m £m £m £m £m £m £mFinancial assets Cash and balances at central banks (note ii) 18,601 - - 18,601 25,231 - - 25,231Loans and advances to banks and similar institutions 1,339 - - 1,339 908 - - 908(note ii) Investment securities - 22,401 1 22,402 4 26,469 3 26,476Derivative financial instruments - - 5,373 5,373 - - 6,905 6,905Fair value adjustment for portfolio hedged risk (1,985) - - (1,985) (3,330) - - (3,330)Loans and advances to customers 183,805 - 38 183,843 169,954 - 42 169,996Investments in Group undertakings (note v) 42,833 - - 42,833 39,847 - - 39,847Total financial assets (note iii) 244,593 22,401 5,412 272,406 232,614 26,469 6,950 266,033Other (notes ii, iii and v) 6,734 3,424 Total assets (note ii) 279,140 269,457 Financial liabilities Shares 207,428 - - 207,428 193,366 - - 193,366Deposits from banks and similar institutions 5,102 - - 5,102 16,388 - - 16,388Other deposits 4,525 - - 4,525 4,752 - - 4,752Fair value adjustment for portfolio hedged risk 27 - - 27 50 - - 50Debt securities in issue (note ii) 39,429 - - 39,429 33,405 - - 33,405Derivative financial instruments - - 1,637 1,637 - - 1,640 1,640Subordinated liabilities (note ii) 1,674 - - 1,674 2,075 - - 2,075Subscribed capital 129 - - 129 173 - - 173Lease liabilities 156 - - 156 172 - - 172Total financial liabilities (note iii) 258,470 - 1,637 260,107 250,381 - 1,640 252,021Other (note ii & iii) 4,434 3,145 Total liabilities (note ii) 264,541 255,166
Notes:
i. The Group has £47 million (2024: £nil) of assets for which it had taken the option to designate at FVTPL. The Group has no liabilities (2024: £nil) for which it had taken the option to designate at FVTPL. As
at 31 March 2025 and 4 April 2024 the Society had no assets or liabilities for which it had taken the option to designate at FVTPL.
ii. Comparatives have been restated as detailed in note 1.
iii. Total financial assets and financial liabilities exclude certain financial instruments presented within 'other' relating to accruals, trade receivables, trade payables and settlement balances which are classified
at amortised cost.
iv. Other liabilities for the Group include £1,429 million (2024: £nil) of notes in circulation.
v. The Society’s investments in group undertakings relating to loans and other debt instruments are included within financial assets, with investments in shares presented within ‘other’ assets.
Further information on the fair value of financial assets and liabilities is included in notes 21 to 23.
Notes to the financial statements (continued)
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13. Investment securities
Group Society2025 2024 2025 2024 £m £m £m £m Government, government guaranteed and 22,977 22,173 18,316 22,173 supranational investment securities Other debt investment securities 5,624 4,299 4,085 4,296 Investments in equity shares 62 60 1 7 Total 28,663 26,532 22,402 26,476
The Group may use its investment securities
as collateral to secure deposits received under sale and repurchase agreements or to support derivative financial instruments. The Group
retains substantially all of the risks and rewards associated with
those investment securities and as a result they are retained on the balance sheet. The counterparty receiving that
collateral normally has the contractua
l right to sell or repledge it.
Investment securities with a fair value of
£2,163 million (2024: £2,569 million) have been used for sale and repurchase agreements and £2,353 million (2024: £1,304 million) for derivative
financial instruments. The Group also holds
£624 million (2024: £631 million) of investment securities as collateral under reverse repurchase agreements which are not recognised in the
table above.
Further information on investment securities is included in th
e Credit risk - Treasury assets section of the Risk report.
14. Loans and advances to customers
2025 2024 Loans held at amortised cost Loans held Total Loans held at amortised cost Loans held Total Gross Provisions Other Total Gross Provisions Other at FVTPL Total at FVTPL (note i) (note i) Group £m £m £m £m £m £m £m £m £m £m £m £mOwner-occupied mortgages 215,546 (115) - 215,431 36 215,467 160,941 (90) - 160,851 40 160,891Buy to let and legacy residential 60,344 (236) - 60,108 - 60,108 43,486 (231) - 43,255 - 43,255mortgages Consumer lending 11,107 (824) - 10,283 - 10,283 4,263 (436) - 3,827 - 3,827Business and commercial lending 14,818 (113) 277 14,982 49 15,031 5,139 (24) 350 5,465 2 5,467Total 301,815 (1,288) 277 300,804 85 300,889 213,829 (781) 350 213,398 42 213,4402025 2024 Loans held at amortised cost Loans held Total Loans held at amortised cost Loans held Total Gross Provisions Other Total Gross Provisions Other at FVTPL Total at FVTPL (note i) (note i) Society £m £m £m £m £m £m £m £m £m £m £m £mOwner-occupied mortgages 174,298 (92) - 174,206 36 174,242 160,796 (88) - 160,708 40 160,748Buy to let and legacy residential 211 (3) - 208 - 208 268 (5) - 263 - 263mortgages Consumer lending 4,441 (372) - 4,069 - 4,069 4,263 (436) - 3,827 - 3,827Business and commercial lending 5,067 (22) 277 5,322 2 5,324 4,830 (24) 350 5,156 2 5,158Total 184,017 (489) 277 183,805 38 183,843 170,157 (553) 350 169,954 42 169,996
Note:
i.
‘Other’ represents a fair value adjustment for micro hedged risk for commercial loans that were previously hedged on an individual basis. The hedge relationships have been discontinued and the balances
are being amortised over the remaining life of the loans.
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14. Loans and advances to customers (continued)
The tables below summarise the movements in, and stage allocation of, gross loans and advances to customers held at amortised cost, including the impact of impairment provisions and
excluding the fair value adjustment for micro hedged risk. Residential mortgages represent the majority of the Group’s loans and advances to customers. Additional tables summarising
the movements for the Group’s residential mortgages and consumer lending are presented in the Credit risk section of the Risk report.
The tables are prepared on a net basis. The movements within the tables compare the position at 31 March 2025 to that at 4 April 2024. Further detail on the methodology is included
within the footnotes to the tables.
The reasons for key movements for the period ended 31 March 2025 were as follows:
Gross balances increased by £88 billion, of which £72 billion relates to the Virgin Money sub-group, with this amount included in the table below within new assets originated or
purchased. In addition, Nationwide sub-group residential mortgage balances have increased by £15.9 billion during the period.
Write-offs increased to £183 million, comprising £166 million relating to consumer lending, £12 million to residential mortgages and £5 million to business and commercial lending.
Impairment provisions increased by £507 million in the period to £1,288 million, of which £580 million represents provisions relating to the Virgin Money sub-group. Further detail on
impairment provisions by portfolio is shown in note 10.
Reconciliation of net movements in balances and impairment provisions Non-credit impaired Credit impaired (note i) Subject to 12-month ECL Subject to lifetime ECL Subject to lifetime ECL Total Stage 1 Stage 2 Stage 3 and POCI Gross Gross Gross Gross Provisions Provisions Provisions Provisions balances balances balances balances Group £m £m £m £m £m £m £m £mAt 5 April 2024 174,860 54 37,303 381 1,666 346 213,829 781Stage transfers: Transfers from stage 1 to stage 2 (12,976) (6) 12,976 6 - - - - Transfers to stage 3 (158) (1) (495) (35) 653 36 - - Transfers from stage 2 to stage 1 12,112 104 (12,112) (104) - - - - Transfers from stage 3 58 2 222 12 (280) (14) - - Net remeasurement of ECL arising from transfer of stage (note ii) (87) 64 61 38 Net movement arising from transfer of stage (964) 12 591 (57) 373 83 - 38 New assets originated or purchased (notes iii and iv) 105,242 160 7,223 371 1,432 209 113,897 740 Net impact of further lending and repayments (note v) (7,268) (14) (546) (17) (11) 2 (7,825) (29) Changes in risk parameters in relation to credit quality (note vi) - (2) - (14) - 20 - 4 Other items impacting income statement (including recoveries) - - - - - (58) - (58) Redemptions (note vii) (14,119) (5) (3,479) (31) (283) (27) (17,881) (63) Income statement charge for the period 632 Decrease due to write-offs - - - - (205) (183) (205) (183) Other provision movements - - - - - 58 - 58 At 31 March 2025 257,751 205 41,092 633 2,972 450 301,815 1,288 Net carrying amount 257,546 40,459 2,522 300,527
Notes to the financial statements (continued)
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Reconciliation of net movements in balances and impairment provisions Non-credit impaired Credit impaired (note i) Subject to 12-month ECL Subject to lifetime ECL Subject to lifetime ECL Total Stage 1 Stage 2 Stage 3 and POCI Gross Gross Gross Gross Provisions Provisions Provisions Provisions balances balances balances balances Group £m £m £m £m £m £m £m £mAt 5 April 2023 172,058 50 37,457 410 1,502 305 211,017 765Stage transfers:Transfers from stage 1 to stage 2 (16,072) (3) 16,072 3 - - - - Transfers to stage 3 (162) (1) (612) (40) 774 41 - - Transfers from stage 2 to stage 1 13,432 100 (13,432) (100) - - - - Transfers from stage 3 76 1 176 10 (252) (11) - - Net remeasurement of ECL arising from transfer of stage (note ii) (82) 102 82 102 Net movement arising from transfer of stage (2,726) 15 2,204 (25) 522 112 - 102New assets originated or purchased (note iii) 25,526 12 1,681 39 12 7 27,219 58Net impact of further lending and repayments (note v) (7,785) (15) (769) (26) (5) 2 (8,559) (39) Changes in risk parameters in relation to credit quality (note vi) - (3) - 3 - 37 - 37Other items impacting income statement (including recoveries) - - - - - (10) - (10)Redemptions (note vii) (12,213) (5) (3,270) (20) (238) (11) (15,721) (36)Income statement charge for the year 112Decrease due to write-offs - - - - (127) (106) (127) (106)Other provision movements - - - - - 10 - 10At 4 April 2024 174,860 54 37,303 381 1,666 346 213,829 781Net carrying amount 174,806 36,922 1,320 213,048
Notes:
i.
Gross balances of credit impaired loans include £947 million (2024: £113 million) of purchased or originated credit impaired (POCI) loans which are presented net of lifetime ECL of £100 million
(2024: £5 million). These loans were recognised on the balance sheet when Derbyshire Building Society was acquired in December 2008 and Virgin Money was acquired in October 2024.
ii.
The remeasurement of provisions arising from a change in stage is reported within the stage to which the assets are transferred.
iii.
If a new asset is originated in the period, the values included are the closing gross balance and provision for the period. The stage in which the addition is shown reflects the stage of the account at the end
of the period.
iv.
Virgin Money balances of £71,768 million are included within the new assets originated or purchased line item.
v.
This comprises further lending and capital repayments where the asset is not derecognised. The gross balances value is calculated as the closing gross balance for the period less the opening gross balance
for the period. The provisions value is calculated as the change in exposure at default (EAD) multiplied by opening provision coverage for the period.
vi.
This comprises changes in risk parameters, and changes to modelling inputs and methodology. The provision movement for the change in risk parameters is calculated for assets that do not move stage in
the period.
vii.
For any asset that is derecognised in the period, the value disclosed is the provision at the start of the period.
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14. Loans and advances to customers (continued)
Reconciliation of net movements in balances and impairment provisions Non-credit impaired Credit impaired Subject to 12-month ECL Subject to lifetime ECL Subject to lifetime ECL Total Stage 1 Stage 2 Stage 3 Gross Gross Gross Gross Provisions Provisions Provisions Provisions balances balances balances balances Society £m £m £m £m £m £m £m £mAt 5 April 2024 154,715 38 14,428 234 1,014 281 170,157 553Stage transfers: Transfers from stage 1 to stage 2 (7,247) (5) 7,247 5 - - - - Transfers to stage 3 (138) (1) (329) (27) 467 28 - - Transfers from stage 2 to stage 1 6,907 85 (6,907) (85) - - - - Transfers from stage 3 43 1 151 7 (194) (8) - - Net remeasurement of ECL arising from transfer of stage (note i) (70) 49 56 35 Net movement arising from transfer of stage (435) 10 162 (51) 273 76 - 35 New assets originated or purchased (note ii) 35,181 15 815 30 12 7 36,008 52 Net impact of further lending and repayments (note iii) (6,963) (14) (412) (15) (7) 2 (7,382) (27) Changes in risk parameters related to credit quality (note iv) - (5) - (17) - 17 - (5) Other items impacting income statement (including recoveries) - - - - - (8) - (8) Redemptions (note v) (12,959) (4) (1,580) (15) (128) (10) (14,667) (29) Income statement charge for the period 18 Decrease due to write-offs - - - - (99) (90) (99) (90) Other provision movements - - - - - 8 - 8 At 31 March 2025 169,539 40 13,413 166 1,065 283 184,017 489 Net carrying amount 169,499 13,247 782 183,528
Notes to the financial statements (continued)
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14. Loans and advances to customers (continued)
Reconciliation of net movements in balances and impairment provisions Non-credit impaired Credit impaired Subject to 12-month ECL Subject to lifetime ECL Subject to lifetime ECL Total Stage 1 Stage 2 Stage 3 Gross Gross Gross Gross Provisions Provisions Provisions Provisions balances balances balances balances Society £m £m £m £m £m £m £m £mAt 5 April 2023 145,642 37 20,156 269 954 265 166,752 571Stage transfers:Transfers from stage 1 to stage 2 (6,549) (5) 6,549 5- - - -Transfers to stage 3 (105) (1) (390) (33) 495 34 - - Transfers from stage 2 to stage 1 10,454 84 (10,454) (84) - - - - Transfers from stage 3 69 2 139 7 (208) (9) - - Net remeasurement of ECL arising from transfer of stage (note i) (67) 62 63 58 Net movement arising from transfer of stage 3,869 13 (4,156) (43) 287 88 - 58New assets originated or purchased (note ii) 23,389 10 787 33 11 7 24,187 50 Net impact of further lending and repayments (note iii) (7,489) (14) (545) (24) (6) 1 (8,040) (37)Changes in risk parameters related to credit quality (note iv) - (4) - 9 - 25 - 30Other items impacting income statement (including recoveries) - - - - - (5) - (5)Redemptions (note v) (10,696) (4) (1,814) (10) (120) (5) (12,630) (19)Income statement charge for the year 77Decrease due to write-offs - - - - (112) (100) (112) (100)Other provision movements - - - - - 5 - 5At 4 April 2024 154,715 38 14,428 234 1,014 281 170,157 553Net carrying amount 154,677 14,194 733 169,604
Notes:
i.
The remeasurement of provisions arising from a change in stage is reported within the stage to which the assets are transferred.
ii.
If a new asset is originated in the period, the values included are the closing gross balance and provision for the period. The stage in which the addition is shown reflects the stage of the account at the end
of the period.
iii.
This comprises further lending and capital repayments where the asset is not derecognised. The gross balances value is calculated as the closing gross balance for the year less the opening gross balance
for the period. The provisions value is calculated as the change in exposure at default (EAD) multiplied by opening provision coverage for the period.
iv.
This comprises changes in risk parameters, and changes to modelling inputs and methodology. The provision movement for the change in risk parameters is calculated for assets that do not move stage in
the period.
v.
For any asset that is derecognised in the period, the value disclosed is the provision at the start of that period.
Notes to the financial statements (continued)
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14. Loans and advances to customers (continued)
Maturity analysis
The following table shows the residual maturity of loans and advances to customers, based on their contractual maturity:
Residual maturity of loans and advances to customers Group Society2025 2024 2025 2024 £m £m £m £m Repayable: On demand (note i) 1,020 348 313 348 In not more than three months (note i) 13.159 3,795 3,641 3,583 In more than three months but not more than one year 8,625 5,826 5,727 5,663 In more than one year but not more than five years 42,096 30,175 28,568 27,986 In more than five years 237,000 173,727 145,806 132,619 301,900 213,871 184,055 170,199 Impairment provision on loans and advances (1,288) (781) (489) (553) Fair value adjustment for micro hedged risk 277 350 277 350 Total 300,889 213,440 183,843 169,996
Note:
i. Comparatives have been restated to better reflect the contractual terms of credit card advances. £1,563 million previously disclosed as “On demand” has been moved to “In not more than three months”.
The maturity analysis is produced on the basis that where a loan is repayable by instalments, each such instalment is treated as a separate repayment. The analysis is based on contractual
maturity rather than actual redemption levels experienced, which are likely to be materially different.
Notes to the financial statements (continued)
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14. Loans and advances to customers
(continued)
Asset backed funding
Certain mortgages have been pledged to the Group’s asset backed funding programmes or utilised as whole mortgage loan pools for TFSME and other short-term liquidity facilities. The
programmes have enabled the Group to obtain secured funding. Mortgages pledged and the carrying values of the notes in issue are as follows:
Mortgages pledged to asset backed funding programmes 2025 2024 Notes in issue Notes in issue Held by Held by the Group Held by Held by the Group Mortgages third Mortgages third pledgedpartiesDrawn Undrawn Total notes pledgedpartiesDrawn Undrawn Total notes (note i) (note ii) (note iii) (note iv) in issue (note i) (note ii) (note iii) (note iv)in issue Group £m £m £m £m £m £m £m £m £m £m Covered bond programmes 32,739 20,829 - - 20,829 23,581 14,955 - - 14,955 Securitisation programmes 19,353 5,015 - 6,128 11,143 7,321 1,984 - 3,651 5,635 Whole mortgage loan pools 1,219 - 910 - 910 12,000 - 9,254 - 9,254 Total 53,311 25,844 910 6,128 32,882 42,902 16,939 9,254 3,651 29,844
Notes:
i. Mortgages pledged include £15.2 billion (2024: £6.3 billion) in the covered bond and securitisation programmes that are in excess of the amount contractually required to support notes in issue.
ii. Notes in issue which are held by third parties are included within debt securities in issue. Further information on debt securities is included in note 18.
iii. Notes in issue, held by the Group and drawn are whole mortgage loan pools securing amounts drawn with the BoE under the TFSME.
iv. Notes in issue, held by the Group and undrawn, are debt securities issued by the programmes to the Society or other Group entities.
Mortgages pledged under the covered bond programmes provide security for covered bonds issued by the Society or Virgin Money.
The securitisation notes are issued by the programmes and the issuing entities are fully consolidated into the accounts of the Group. The issuance proceeds are used to purchase, for the
benefit of note holders, a share of the beneficial interest in the pledged mortgages. The remaining beneficial interest in the pledged mortgages stays with the originator of the mortgages
and includes its required minimum seller share in accordance with the rules of the programme. The entitlement of note holders is restricted to payment of principal and interest to the
extent that the resources of the programme are sufficient to support such payment and the holders of the notes have agreed not to seek recourse in any other form. The Group is under
no obligation to support losses incurred by the programmes or holders of the notes and does not intend to provide such further support.
The whole mortgage loan pools are pledged at the BoE Single Collateral Pool. Notes are not issued when pledging the mortgage loan pools at the BoE. Instead, the whole loan pool is
pledged to the BoE and drawings are made directly against the eligible collateral, subject to a haircut. At 31 March 2025 £1.2 billion (2024: £12.0 billion) of pledged collateral supported
£0.9 billion (2024: £9.3 billion) of TFSME drawdowns.
In accordance with accounting standards, notes in issue and held by the Group are not recognised in the Group’s or Society’s balance sheets. Mortgages pledged are not derecognised
from the Group or Society balance sheets as the Group has retained substantially all the risks and rewards of ownership. The Group and Society continue to be exposed to the liquidity
risk, interest rate risk and credit risk of the mortgages. No gain or loss has been recognised on pledging the mortgages to the programmes.
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14. Loans and advances to customers (continued)
The following table sets out the carrying value and fair value of the transferred assets and liabilities for the securitisation programmes:
Carrying value Fair value Transferred Associated Total Transferred Associated Total assetsliabilitiesassetsliabilities£m £m £m £m £m £m At 31 March 2025 19,353 (11,143) 8,210 19,221 (11,154) 8,067 At 4 April 2024 7,321 (5,635) 1,686 7,110 (5,634) 1,476
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15. Derivative financial instruments
All of the Group’s derivative financial instruments are used to manage economic risk, although not all of the derivatives are subject to hedge accounting. Note 7 sets out the link between
economic risk management and the hedge accounting applied by the Group. The table below provides an analysis of the notional amount and fair value of derivatives by both hedge
accounting type and instrument type. The amount of ineffectiveness recognised for each hedge type is shown in note 7. Contract/notional amount is the amount on which payment flows
are derived and does not represent amounts at risk.
20
Derivatives by instrument and hedge type Group Society2025 2024 2025 2024 Contract/ Fair value Contract/ Fair value Contract/ Fair value Contract/ Fair value notional notional notional notional amount Assets Liabilities Assets Liabilities Assets Liabilities amount amount amount Assets Liabilities (note i) (note i) (note i) (note i) £m £m £m £m £m £m £m £m £m £m £m £m Micro fair value hedges: Interest rate swaps 54,003 38 214 48,764 22 364 55,228 444 321 55,876 527 361 Cross currency interest rate swaps 47,064 1,562 1,063 43,111 1,722 771 52,999 1,832 1,115 50,144 1,849 1,007 Bond forwards 42 - - 143 - - 42 - - 143 - - Inflation swaps 5,663 43 32 7,687 205 46 4,183 43 32 7,687 204 46 106,772 1,643 1,309 99,705 1,949 1,181 112,452 2,319 1,468 113,850 2,580 1,414 Macro fair value hedges: Interest rate swaps 292,950 1,195 31 233,132 1,985 60 272,687 1,195 31 233,132 1,985 60 292,950 1,195 31 233,132 1,985 60 272,687 1,195 31 233,132 1,985 60 Cash flow hedges: Cross currency interest rate swaps 32,623 13 17 32,443 20 26 31,744 13 16 31,087 20 26 Interest rate swaps 28,014 5 3 - - -- - - - - - 60,637 18 20 32,443 20 26 31,744 13 16 31,087 20 26 Not subject to hedge accounting: (note ii) Interest rate swaps 107,246 1,646 119 111,771 2,096 119 106,592 1,629 85 112,52,079 111 Cross currency interest rate swaps 1,546 33 38 2,010 19 42 2,201 27 19 2,163 20 6 Foreign exchange swaps 1,668 13 4 2,469 31 2 1,157 10 - 2,469 31 2 Inflation swaps 10,325 180 16 7,425 190 19 10,325 180 16 7,425 190 19 Other derivatives 1,359 14 10 111 - 2 109 - 2 111 - 2 122,144 1,886 187 123,786 2,336 184 120,384 1,846 122 124,688 2,320 140 Total 582,503 4,742 1,547 489,066 6,290 1,451 537,267 5,373 1,637 502,7576,905 1,640
Notes:
i. Where the same derivative contract has been used in more than one hedge type, for example where one risk component has been included in a fair value hedge and another risk component has been
included in a cash flow hedge, the full notional amount has been included in both categories.
ii. Valuation adjustments are applied at a portfolio level and not allocated to individual hedge accounting relationships and have therefore been included in the ‘Not subject to hedge accounting section’, which
can result in negative amounts presented.
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15. Derivative financial instruments (continued)
The contractual maturity of derivatives used as hedging instruments in micro fair value and cash flow hedges is provided in the table below. Macro fair value hedges are frequently
rebalanced to include new business. As a result, these hedges have not been included in the analysis below.
Contractual maturity of hedging instruments (contract/notional amount) 2025 2024 Less than Between More than Total Less than Between one More than Total one year one and five five years one year and five five years years years Group £m £m £m £m £m £m £m £mMicro fair value hedges Interest rate swaps 6,135 30,133 17,735 54,003 3,405 29,092 16,267 48,764 Cross currency interest rate swaps 5,182 28,645 13,237 47,064 3,688 25,494 13,929 43,111Bond forwards 42 - - 42 143 - - 143Inflation swaps - 1,911 3,752 5,663 - 4,498 3,189 7,68711,359 60,689 34,724 106,772 7,236 59,084 33,385 99,705Cash flow hedges Cross currency interest rate swaps 3,529 20,433 8,661 32,623 3,359 20,389 8,695 32,443Interest rate swaps 14,766 10,462 2,786 28,014 - - - - 18,295 30,895 11,447 60,637 3,359 20,389 8,695 32,443Contractual maturity of hedging instruments (contract/notional amount) 2025 2024 Less than Between More than Total Less than Between one More than Total one year one and five five years one year and five five years years years Society£m £m £m £m £m £m £m £mMicro fair value hedges Interest rate swaps 5,302 31,642 18,284 55,228 2,942 33,209 19,725 55,876Cross currency interest rate swaps 5,938 31,033 16,028 52,999 3,319 29,601 17,224 50,144Bond forwards 42 - - 42 143 - - 143Inflation swaps - 1,381 2,802 4,183 - 4,498 3,189 7,68711,282 64,056 37,114 112,452 6,404 67,308 40,138 113,850Cash flow hedges Cross currency interest rate swaps 3,529 19,994 8,221 31,744 2,883 19,950 8,254 31,0873,529 19,994 8,221 31,744 2,883 19,950 8,254 31,087
Notes to the financial statements (continued)
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15. Derivative financial instruments
(continued)
The weighted average rates of hedging instruments which achieve fixed rates are summarised in the table below. Fair value and cash flow hedging instruments which do not achieve a
fixed rate have not been included in this analysis.
1
Average rates achieved 2025 2024 Less than Between one More than Total Less than Between one More than Total one year and five five years one year and five five years Group years years Cross currency interest rate swaps Average EUR/GBP rate 1.13 1.17 1.19 1.17 1.18 1.16 1.19 1.17 Average USD/GBP rate 1.39 1.29 1.30 1.30 1.36 1.30 1.27 1.29 Average JPY/GBP rate 143.40 157.83 - 149.98 145.59 148.25 132.22 147.68 Average NOK/GBP rate - 11.28 13.06 11.72 10.06 11.21 12.66 11.53 Average HKD/GBP rate 12.14 11.52 9.13 11.56 - 11.85 9.13 11.56 Average CHF/GBP rate 1.16 1.14 1.24 1.16 - 1.15 1.18 1.16 Average CAD/GBP rate 1.78 1.75 1.70 1.72 - 1.74 1.67 1.69 Average AUD/GBP rate - 1.80 1.70 1.78 - - - - Average rates achieved 2025 2024 Less than Between one More than Total Less than Between one More than Total one year and five five years one year and five five years Societyyears years Cross currency interest rate swaps Average EUR/GBP rate 1.13 1.18 1.19 1.18 1.19 1.16 1.20 1.18Average USD/GBP rate 1.39 1.28 1.30 1.29 1.36 1.30 1.27 1.29Average JPY/GBP rate 143.40 157.83 - 149.98 145.59 148.25 132.22 147.68Average NOK/GBP rate - 11.28 13.18 11.99 10.06 1.21 12.90 11.81Average HKD/GBP rate 12.14 11.52 9.13 11.56 - 11.85 9.13 11.56 Average CHF/GBP rate 1.16 1.14 1.24 1.16 - 1.16 1.19 1.17 Average CAD/GBP rate 1.78 1.75 1.70 1.72 - 1.74 1.67 1.69 Average AUD/GBP rate - 1.80 1.70 1.78 - - - -
16. Deposits from banks and similar institutions
A maturity analysis for the Group’s deposits from banks and similar institutions can be found in the Liquidity and funding risk section of the Risk report.
Deposits from banks and similar institutions include £0.9 billion (2024: £9.3 billion) and £nil (2024: £9.3 billion) of TFSME for the Group and Society, respectively.
Notes to the financial statements (continued)
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17. Other deposits
Group Society2025 2024 2025 2024 £m £m £m £m Non-member retail deposits 53,312 - - - Business deposits 21,087 4,215 4,015 4,215 Other 268 315 268 315 Amounts owed to subsidiaries - - 242 222 Total 74,667 4,530 4,525 4,752
Non-member retail deposits represent Virgin Money customer deposits.
18. Debt securities in issue
Group Society2024 2024 2025 2025 (note i) (note i) £m £m £m £m Certificates of deposit and commercial paper 2,516 1,506 2,516 1,506 Covered bonds 21,251 15,577 16,810 15,577 Securitisations 5,015 1,984 - - Senior preferred (note ii) 14,792 11,557 12,131 11,557 Senior non-preferred 8,193 5,357 8,193 5,357 51,767 35,981 39,650 33,997 Fair value adjustment for micro hedged risk (658) (1,232) (221) (592) Total 51,109 34,749 39,429 33,405
Notes:
i. Comparatives have been restated as detailed in note 1, with senior non-preferred notes totaling £5,357 million at 4 April 2024 reclassified from subordinated liabilities to debt securities in issue. Fair value
hedge accounting adjustments of £(207) million at 4 April 2024 relating to these instruments are also now presented within debt securities in issue, rather than subordinated liabilities.
ii. Senior preferred debt securities in issue for the Group at 31 March 2025 include £2,661 million of MREL-eligible liabilities issued by Virgin Money UK PLC.
The total for debt securities in issue in the Group includes £25,844 million (2024: £16,939 million), and in the Society includes £16,810 million (2024: £15,577 million), secured on certain
loans and advances to customers. Further information is given in note 14.
Senior non-preferred notes are a class of liability which rank equally with each other and behind the claims against the Society of all depositors, creditors and investing
members other than holders of Tier 2 eligible subordinated notes, permanent interest-bearing shares (PIBS), Additional Tier 1 (AT1) instruments and core capital deferred shares (CCDS)
issued by the Society. Senior non-preferred notes contribute to meeting the Society’s minimum requirement for own funds and eligible liabilities (MREL) and loss absorbing requirements.
Notes to the financial statements (continued)
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19. Subordinated liabilities
Group Society2024 2024 2025 2025 (note i) (note i) Issuance date Next call date Maturity date £m £m £m £m Tier 2 eligible notes Nationwide Building Society issued notes: 4% subordinated notes (USD 1.25 billion) (note ii) 14 September 2016 14 September 2026 864 879 864 879 2% subordinated notes (EUR 1 billion) (note iii) 25 July 2017 25 July 2029 - 869 - 869 4.125% subordinated notes (USD 1.25 billion) (note iv) 18 October 2017 18 October 2027 18 October 2032 400 407 400 407 4.375% subordinated notes (EUR 0.5 billion) 16 April 2024 16 April 2029 16 April 2034 434 - 434 - Virgin Money UK PLC issued notes: 5.13% subordinated notes (GBP 0.475 billion) 11 September 2020 11 September 2025 11 December 2030 481 - - - 2.63% subordinated notes (GBP 0.3 billion) 19 May 2021 19 May 2026 19 August 2031 290 - - - 2,469 2,155 1,698 2,155 Fair value hedge accounting adjustments (25) (80) (24) (80) Total 2,444 2,075 1,674 2,075
Notes:
i. Comparatives have been restated as detailed in note 1, with senior non-preferred notes totalling £5,357 million at 4 April 2024 reclassified from subordinated liabilities to debt securities in issue. Fair value
hedge accounting adjustments of £(207) million at 4 April 2024 relating to these instruments are also now presented within debt securities in issue, rather than subordinated liabilities.
ii. The Society repurchased USD 136 million of the outstanding principal on 10 June 2022.
iii. The Society exercised its option to call these notes during the period ended 31 March 2025.
iv. The Society repurchased USD 742 million of the outstanding principal on 10 June 2022.
The Tier 2 eligible subordinated notes rank at least pari passu with other such notes of the relevant issuer, behind claims of all senior creditors and ahead of claims against the Group of
holders of PIBS, AT1 instruments and CCDS. These notes are dated subordinated securities on which there is an obligation to pay coupons and are included within the Group's regulatory
capital base as Tier 2 capital.
The interest rate and foreign exchange risks arising from the issuance of fixed rate and foreign currency subordinated liabilities have been mitigated through the use of derivatives.
Notes to the financial statements (continued)
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20. Subscribed capital
Group and Society 2025 2024 Next call date £m £m 6.25% permanent interest-bearing shares (note i) - 45 5.769% permanent interest-bearing shares (note ii) 6 February 2026 84 84 7.859% permanent interest-bearing shares (note ii) 13 March 2030 38 39 Floating rate (Sonia + 4.2%) permanent interest-bearing shares 30 September 2030 5 5 127 173 Fair value hedge accounting adjustments 2 - Total 129 173
Notes:
i. The Society exercised its option to call these notes during the period ended 31 March 2025.
ii. Repayable, at the option of the Society, in full on the initial call date or every fifth anniversary thereafter. If not repaid on a call date, then the interest rate is reset at a rate linked to the prevailing five-year
benchmark gilt rate.
All PIBS are denominated in sterling and only repayable with the prior consent of the PRA. PIBS do not form part of capital resources.
PIBS rank equally with each other. They are deferred shares of the Society and rank behind the claims against the Society of all noteholders, depositors, creditors and investing members
of the Society, other than the holders of AT1 and CCDS instruments.
The interest rate risk arising from the issuance of fixed rate PIBS has been mitigated through the use of interest rate swaps.
Notes to the financial statements (continued)
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21. Fair value hierarchy of financial assets and liabilities held at fair value
The following tables show the Group’s and Society’s financial assets and liabilities that are held at fair value by fair value hierarchy, balance sheet classification and product type:
6
2025 2024 Fair values based on Fair values based on Group Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total £m £m £m £m £m £m £m £m Financial assets Government, government guaranteed and supranational investment securities 22,977 - - 22,977 22,173 - - 22,173Other debt investment securities 4,344 1,277 3 5,624 2,980 1,312 3 4,295 Investments in equity shares - - 62 62 - - 60 60Total investment securities (note i) 27,321 1,277 65 28,663 25,153 1,312 63 26,528 Interest rate swaps - 2,884 - 2,884 - 4,103 - 4,103 Cross currency interest rate swaps - 1,608 - 1,608 - 1,761 - 1,761 Foreign exchange swaps - 13 - 13 - 31 - 31Inflation swaps - 182 41 223 - 200 195 395 Other derivatives - 8 6 14 - - - - Total derivative financial instruments - 4,695 47 4,742 - 6,095 195 6,290 Loans and advances to customers - 47 38 85 - - 42 42Total financial assets 27,321 6,019 150 33,490 25,153 7,407 300 32,860 Financial liabilities Interest rate swaps - 367 - 367 - 543 - 543 Cross currency interest rate swaps - 1,118 - 1,118 - 839 - 839Foreign exchange swaps - 4 - 4 -2 -2Inflation swaps - 23 25 48 - 2 3 65Other derivatives - 8 2 10 - - 2 2Total derivative financial instruments - 1,520 27 1,547 - 1,446 5 1,451 Total financial liabilities - 1,520 27 1,547 - 1,446 5 1,451
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21. Fair value hierarchy of financial assets and liabilities held at fair value
(continued)
2025 2024 Fair values based on Fair values based on Society Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total £m £m £m £m £m £m £m £m Financial assets Government, government guaranteed and supranational investment securities 18,316 - - 18,316 22,173 - - 22,173Other debt investment securities 2,808 1,277 - 4,085 2,980 1,312 - 4,292 Investments in equity shares - - 1 1 - - 7 7Total investment securities (note i) 21,124 1,277 1 22,402 25,153 1,312 7 26,472 Interest rate swaps - 3,268 - 3,268 - 4,591 - 4,591 Cross currency interest rate swaps - 1,872 - 1,872 - 1,889 - 1,889 Foreign exchange swaps - 10 - 10 - 31 - 31 Inflation swaps - 182 41 223 - 199 195 394 Total derivative financial instruments - 5,332 41 5,373 - 6,710 195 6,905 Loans and advances to customers - - 38 38 - - 42 42Total financial assets 21,124 6,609 80 27,813 25,153 8,022 244 33,419 Financial liabilities Interest rate swaps - 437 - 437 - 532 - 532 Cross currency interest rate swaps - 1,150 - 1,150 - 1,039 - 1,039 Foreign exchange swaps - - - - - 2 - 2 Inflation swaps - 23 25 48 - 62 3 65 Other derivatives - - 2 2 - - 2 2 Total derivative financial instruments - 1,610 27 1,637 - 1,635 5 1,640 Total financial liabilities - 1,610 27 1,637 - 1,635 5 1,640
Note:
i.
Investment securities exclude £nil (2024: £4 million) of investment securities held at amortised cost.
The Level 1 portfolio comprises government an
d other highly rated securities for which traded prices are readily available. Asset valuations for Level 2 investment securities are sourced
from consensus pricing or other observable
market prices. None of the Level 2 investment securities are valued using models. Level 2 derivative assets and liabilities are valued using
observable market data for all significant valuation inputs. More detail on the Level 3 portfolio is provided in note 22.
Transfers between fair value hierarchies
Instruments m
ove between fair value hierarchies primarily due to increases or decreases in market activity or changes to the significance of unobservable inputs to valuation. Transfers
are recognised at the date of the event or
change in circumstances which caused the transfer. There were no transfers between the Level 1 and Level 2 portfolios during the current
period or prior year.
Notes to the financial statements (continued)
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22. Fair value of financial assets and liabilities held at fair value – Level 3 portfolio
The main constituents of the Level 3 portfolio are as follows:
Loans and advances to customers
Certain loans and advances to customers are classified as FVTPL. Level 3 assets in this category include a closed portfolio of residential mortgages.
Investment securities
The Level 3 items in this category primarily include investments made in Fintech companies, of which £60 million (2024: £57 million) are equity investments which have been designated
at FVOCI as the investments are being held for long-term strategic purposes.
Derivative financial instruments (inflation swaps and swaptions)
Inflation swaps are used to hedge the Group’s investments in index-linked government debt. Adjustments to the inflation curve to reflect seasonality in inflation index publications are
required to determine a valuation; however, unlike most derivative valuation inputs, this market data is not available and therefore the input is internally derived rather than observable.
Where the impact of seasonality is significant to the valuation of the swaps, these are classified as Level 3 in the hierarchy.
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22. Fair value of financial assets and liabilities held at fair value – Level 3 portfolio (continued)
The tables below set out movements in the Level 3 portfolio, including transfers in and out of Level 3. The majority of the Group’s Level 3 assets and liabilities are held within the Society,
with the exception of its Level 3 investment securities which are predominantly held in a subsidiary of the Society.
Notes:
i. Includes foreign exchange revaluation gains/(losses).
ii. The proportional impact of seasonality on the value of EUR-denominated inflation swaps reduced during the period ended 31 March 2025, resulting in these instruments no longer being categorised within
Level 3 of the fair value hierarchy.
Movements in Level 3 portfolio 2025 2024 Investment Derivative Derivative Loans and Investment Derivative Derivative Loans and securities financial financial advances to securities financial financial advances to assets liabilities customers assets liabilities customers £m £m £m £m £m £m £m £m At 5 April 63 195 (5) 42 54 157 (11) 100Gains/(losses) recognised in the income statement, within: Net interest income - 95 5 1 - 97 2 4(Losses)/gains from derivatives and hedge accounting (note i) - (163) 16 - - 58 7 -Other operating income (3) 99 1 - (4) 24 - (2)(Losses)/gains recognised in other comprehensive income, within: Fair value through other comprehensive income reserve (2) - - - 5 - - -Additions 6 - - - 8 - - -Acquisition of Virgin Money 2 - - - - - - -Disposals (1) (97) (1) - - (24) - - Settlements/repayments - (82) (47) (5) - (117) (3) (60)Transfers out of Level 3 portfolio (note ii) - - 4 - - - - -At 31 March (2024: 4 April) 65 47 (27) 38 63 195 (5) 42Unrealised gains/ (losses) recognised in the income statement 3 (58) 17 - (4) 81 7 (2)attributable to assets and liabilities held at the end of the period
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22. Fair value of financial assets and liabilities held at fair value – Level 3 portfolio (continued)
Level 3 portfolio sensitivity analysis of valuations using unobservable inputs
The fair value of financial instruments is, in certain circumstances, measured using valuation techniques based on market prices that are not observable in an active market or significant
unobservable market inputs. Reasonable alternative assumptions can be applied for sensitivity analysis, taking account of the nature of valuation techniques used, as well as the
availability and reliability of observable proxy and historical data. The following table shows the sensitivity of the Level 3 fair values to reasonable alternative assumptions (as set out in the
table of significant unobservable inputs below) and the resultant impact of such changes in fair value on the income statement or members’ interests and equity.
Sensitivity of Level 3 fair values 2025 2024 Income statement Other comprehensive income Income statement Other comprehensive income Favourable Unfavourable Favourable Unfavourable Favourable Unfavourable Favourable Unfavourable Fair value changes changes changes changes Fair value changes changes changes changes £m £m £m £m £m £m £m £m £m £m Investment securities 65 1 (1) 15 (15) 63 2 (2) 14 (14)Net derivative financial instruments 20 5 (5) - - 190 29 (29) - - Loans and advances to customers 38 2 (1) - - 42 2 (2) - - Total 123 8 (7) 15 (15) 295 33 (33) 14 (14)
Alternative assumptions are considered for each product and varied according to the quality of the data and variability of the underlying market. The following table discloses the
significant unobservable inputs underlying the above alternative assumptions for assets and liabilities recognised at fair value and classified as Level 3, along with the range of values for
those significant unobservable inputs. Where sensitivities are described, the inverse relationship will also generally apply.
Significant unobservable inputs 2025 2024 Total Total Valuation Significant Range Units Total Total Valuation Significant Range Units assets liabilities technique unobservable (note i) assets liabilities technique unobservable (note i) inputs inputs £m £m £m £mInternal Various Internal Various Investment securities 65 - - - £ 63 - - - £assessment (note ii) assessment (note ii) Derivative financial Discounted Discounted 47 (27) Seasonality 0.02 0.54 % 195 (5) Seasonality 0.02 0.99 % instruments cash flows cash flows Loans and advances to Discounted Discounted 38 - Discount rate 5.11 7.11 % 42 - Discount rate 5.23 7.23 % customers cash flows cash flows
Notes:
i. The range represents the values of the highest and lowest levels used in the calculation of favourable and unfavourable changes as presented in the table of sensitivities above.
ii. Given the wide range of investments and variety of inputs to modelled values, which may include inputs such as observed market prices, discount rates or probability weightings of expected outcomes, the
Group does not disclose ranges as they are not meaningful without reference to individual underlying investments, which would be impracticable. Some of the significant unobservable inputs used in the
fair value measurement of investment securities may be interdependent.
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22. Fair value of financial assets and liabilities held at fair value – Level 3 portfolio
(continued)
Discount rate
The discount rate is used to determine the present value of future cash flows. The level of the discount rate takes into account the time value of money, but also the risk associated with
the investment at the time the investment was made. Typically, the greater the risk, the higher the discount rate. A higher discount rate leads to a lower valuation and vice versa.
Seasonality
An inflation swap curve is built using inflation swap quotes to project future levels of the inflation indices in each of the markets in which the Group is active. These curves are used to
calculate future cash flows. While inflation swap instruments give a good indication of annual growth in inflation, monthly index fixings throughout the year tend to behave differently and
so the inflation swap curve is adjusted for this seasonality accordingly. The higher the seasonality, the greater the adjustment to the inflation swap curve.
23. Fair value of financial assets and liabilities measured at amortised cost
The following tables summarise the Group’s and Society’s carrying value and fair value of financial assets and liabilities measured at amortised cost on the balance sheet:
Fair value of financial assets and liabilities (note i) 2025 2024 Carrying Fair values based on Total fair Carrying Fair values based on Total fair value Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 value value value Group £m £m £m £m £m £m £m £m £m £mFinancial assets Loans and advances to banks and similar 1,810 - 1,810 - 1,810 918 - 918 - 918institutions (note ii) Investment securities - - - - - 4-4-4Loans and advances to customers: Residential mortgages 275,539 - - 272,365 272,365 204,106 - - 198,123 198,123Consumer lending 10,283 - - 10,596 10,596 3,827 - - 3,737 3,737Business and commercial lending 14,982 - 995 13,632 14,627 5,465 - - 4,981 4,981Total 302,614 - 2,805 296,593 299,398 214,320 - 922 206,841 207,763Financial liabilities Shares 207,428 - 207,459 - 207,459 193,366 - 193,333 - 193,333Deposits from banks and similar institutions 6,053 - 6,053 - 6,053 16,388 - 16,388 - 16,388Other deposits 74,667 - 74,568 13 74,581 4,530 - 4,516 15 4,531Debt securities in issue (note ii) 51,109 18,719 32,722 - 51,441 34,749 12,889 22,322 - 35,211 Subordinated liabilities (note ii) 2,444 - 2,464 - 2,464 2,075 - 2,091 - 2,091Subscribed capital 129 - 129 - 129 173 - 173 - 173Total 341,830 18,719 323,395 13 342,127 251,281 12,889 238,823 15 251,727
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23. Fair value of financial assets and liabilities measured at amortised cost
(continued)
Fair value of financial assets and liabilities (note i) 2025 2024 Carrying Fair values based on Total fair Carrying Fair values based on Total fair value Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 value value value Society £m £m £m £m £m £m £m £m £m £mFinancial assets Loans and advances to banks and similar 1,339 - 1,339 - 1,339 908 - 908 - 908institutions (note ii) Investment securities - - - - - 4-4-4Loans and advances to customers: Residential mortgages 174,414 - - 171,410 171,410 160,971 - - 155,993 155,993Consumer lending 4,069 - - 4,003 4,003 3,827 - - 3,737 3,737Business and commercial lending 5,322 - - 4,890 4,890 5,156 - - 4,702 4,702Investments in Group undertakings 42,833 - 752 42,079 42,831 39,847 - - 39,847 39,847Total 227,977 - 2,091 222,382 224,473 210,713 - 912 204,279 205,191Financial liabilities Shares 207,428 - 207,459 - 207,459 193,366 - 193,333 - 193,333Deposits from banks and similar institutions 5,102 - 5,102 - 5,102 16,388 - 16,388 - 16,388Other deposits 4,525 - 4,512 13 4,525 4,752 - 4,738 15 4,753Debt securities in issue (note ii) 39,429 14,274 25,039 - 39,313 33,405 12,889 20,328 - 33,217 Subordinated liabilities (note ii) 1,674 - 1,692 - 1,692 2,075 - 2,091 - 2.091Subscribed capital 129 - 129 - 129 173 - 173 - 173Total 258,287 14,274 243,933 13 258,220 250,159 12,889 237,051 15 249,955
Notes:
i. The tables above exclude certain cash and other financial assets and liabilities such as accruals, trade receivables, trade payables and settlement balances which are short-term in nature and for which fair
value approximates carrying value.
ii. Comparatives have been restated as detailed in note 1.
Fair value is an estimate of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It
does not reflect the economic benefits and costs that the group expects to flow from an instrument’s cash flow over its expected future life. The assumptions and methodologies
underlying the calculation of fair values of financial instruments at the balance sheet date are set out below.
Loans and advances to banks and similar institutions
The fair value of loans and advances to banks and similar institutions is estimated by discounting expected cash flows at a market discount rate.
Loans and advances to customers
The fair value of loans and advances to customers is estimated by discounting expected cash flows at rates that reflect current pricing for similar lending. Loans are segregated into
portfolios with similar characteristics, with fair values estimated using valuation models incorporating a range of input assumptions considered consistent with those that would be used
by market participants in valuing such loans, including expected credit losses and customer prepayment rates. Cash flows are discounted at rates which are appropriate based on the
underlying portfolios, including separate consideration of the loans originated by the Nationwide sub-group and the Virgin Money sub-group. Further information about the Group’s two
reportable segments is included in note 37.
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23. Fair value of financial assets and liabilities measured at amortised cost (continued)
Investments in Group undertakings
Level 2 investments in Group undertakings represent senior non-preferred debt issued by Virgin Money UK PLC to Nationwide Building Society. The fair value of these instruments is
estimated using a discounted cash flow model applying yields on similar externally issued instruments. Level 3 investments in Group undertakings represent other loans to subsidiaries
where carrying value approximates fair value as the rate payable resets biannually based on current market conditions.
Shares and deposits
Fair values of shares and deposits are estimated using discounted cash flow valuation techniques. In many cases, the fair value disclosed approximates carrying value because the
instruments are short-term in nature or have interest rates that reprice frequently. The fair value for deposits with longer-term maturities, such as time deposits, are estimated using
discounted cash flows applying either market rates or current rates for deposits of similar remaining maturities.
Debt securities in issue, subordinated liabilities and subscribed capital
The estimated fair values of longer dated liabilities are calculated based on quoted market prices where available or using similar instruments as a proxy for those liabilities that are not of
sufficient size or liquidity to have an active market quote. For those notes for which quoted market prices are not available, a discounted cash flow model is used based on a current yield
curve appropriate for the remaining term to maturity.
24. Offsetting financial assets and financial liabilities
The Group has financial assets and liabilities for which there is a legally enforceable right to set off the recognised amounts, and there is an intention to settle on a net basis or realise the
asset and liability simultaneously. In accordance with IAS 32 ‘Financial Instruments: Presentation,’ where the right to set off is not unconditional in all circumstances this does not result in
an offset of balance sheet assets and liabilities.
The following table shows:
Amounts which have been offset, where there is an enforceable master netting arrangement or similar agreement in place, an unconditional right to offset exists and there is an
intention to settle net (‘amounts offset’); and
Amounts which have not been offset, where there is an enforceable master netting arrangement or similar agreement in place, but the offset criteria are otherwise not satisfied
(‘master netting arrangements’) and/or where financial collateral has been paid or received (‘financial collateral’).
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24. Offsetting financial assets and financial liabilities (continued)
Offsetting financial assets and financial liabilities 2025 2024 Gross Amounts Net amounts Master Financial Net Gross Amounts Net amounts Master Financial Net amounts offset reported on netting collateral amounts amounts offset reported on netting collateral amounts recognised (note i) the balance arrangements (note ii) recognised (note i) the balance arrangements (note ii) sheet sheet £m £m £m £m £m £m £m £m £m £m £m £m Financial assets Derivative financial assets 13,986 (9,244) 4,742 (1,236) (3,467) 39 17,580 (11,290) 6,290 (1,265) (5,009) 16 Reverse repurchase 624 (624) - - - - 628 (617) 11 - (11) -agreements Total financial assets 14,610 (9,868) 4,742 (1,236) (3,467) 39 18,208 (11,907) 6,301 (1,265) (5,020) 16Financial liabilities Derivative financial liabilities 10,491 (8,944) 1,547 (1,236) (100) 211 12,326 (10,875) 1,451 (1,265) (38) 148Repurchase agreements 2,169 (624) 1,545 (10) (1,535) - 2,560 (617) 1,943 - (1,942) 1Total financial liabilities 12,660 (9,568) 3,092 (1,246) (1,635) 211 14,886 (11,492) 3,394 (1,265) (1,980) 149
Notes:
i. Amounts offset for derivative financial assets of £9,244 million (2024: £11,290 million) include cash collateral netted of £720 million (2024: £1,055 million). Amounts offset for derivative financial liabilities of
£8,944 million (2024: £10,875 million) include cash collateral netted of £420 million (2024: £640 million).
ii. The balances presented for financial collateral on repurchase agreements and reverse repurchase agreements are less than the financial collateral balances reported in note 13, as the amounts disclosed
above are limited to the net amounts reported on the balance sheet after amounts offset as shown in the table.
Master netting arrangements consist of agreements such as an International Swaps and Derivatives Association (ISDA) Master Agreement, global master repurchase agreements and
global master securities lending agreements, whereby outstanding transactions with the same counterparty can be offset and settled net, either unconditionally or following a default or
other predetermined event.
Financial collateral on derivative financial instruments consists of cash paid or received, typically daily or weekly, to mitigate the credit risk on the fair value of derivative contracts.
Financial collateral on repurchase agreements typically comprises highly liquid securities which are legally transferred and can be liquidated in the event of counterparty default.
The net amounts after offsetting presented above show the exposure to counterparty credit risk for derivative contracts after netting benefits and collateral, and are not intended to
represent the Group’s actual exposure to credit risk. This is due to a variety of credit mitigation strategies which are employed in addition to netting and collateral arrangements.
Notes to the financial statements (continued)
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25. Intangible assets
Group 2025 Computer software Total computer Core deposit Purchased Goodwill Totalsoftware intangible credit card and Externally Internally other acquired developed relationships £m £m £m £m £m £m £m Cost At 5 April 2024 342 2,592 2,934 - - 12 2,946 Additions 33 275 308 - - 308 Acquisition of Virgin Money - 116 116 360 292 - 768 Disposals (16) (80) (96) - - - (96) At 31 March 2025 359 2,903 3,262 360 292 12 3,926 Accumulated amortisation and impairment At 5 April 2024 290 1,808 2,098 - - - 2,098 Amortisation charge 26 347 373 28 29 - 430 Impairment in the period - 13 13 - - - 13 Disposals (16) (80) (96) - - - (96)At 31 March 2025 300 2,088 2,388 28 29 - 2,445 Net book value At 31 March 2025 59 815 874 332 263 12 1,481 Group 2024 Computer software Total computer Core deposit Purchased credit Goodwill TotalExternally Internally software intangible card and other acquired developed relationships £m £m £m £m £m £m £mCostAt 5 April 2023 356 2,426 2,782 - - 12 2,794 Additions 15 281 296 - - - 296Disposals (29) (115) (144) - - - (144)At 4 April 2024 342 2,592 2,934 - - 12 2,946Accumulated amortisation and impairment At 5 April 2023 278 1,654 1,932 - - - 1,932 Amortisation charge 38 263 301 - - - 301Impairment in the year 3 6 9 - - - 9 Disposals (29) (115) (144) - - - (144)At 4 April 2024 290 1,808 2,098 - - - 2,098 Net book valueAt 4 April 2024 52 784 836 - - 12 848
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25. Intangible assets (continued)
The Group’s core deposit intangible and purchased credit card relationships have arisen from the acquisition of Virgin Money. Further information is included in note 38.
The Group’s goodwill relates to the Society’s acquisition of The Mortgage Works (UK) PLC.
Computer software capitalised during the period primarily relates to the Group’s investment in digital services, data capabilities and modernisation of the Group’s technology estate. The
total cost at 31 March 2025 includes £119 million for the Group and Society (2024: £80 million for the Group and Society) of assets in the course of construction which, to the extent that
they are not yet ready for use by the business, have no amortisation charged against them. For all other computer software capitalised the estimated useful life of individual assets is
predominantly four years.
An impairment loss of £13 million (2024: £9 million) was recognised in the period, primarily as a result of software becoming obsolete earlier than envisaged due to ongoing investment to
ensure the Group's technology estate is fit for the future.
Capital expenditure contracted for, but not accrued, at 31 March 2025 was £17 million for the Group and Society (2024: £17 million for the Group and Society).
Society 2025 2024Computer software Total Computer software Total Externally acquired Internally developed Externally acquired Internally developed £m £m £m £m £m £m Cost At 5 April 342 2,592 2,934 356 2,426 2,782 Additions 33 275 308 15 281 296 Disposals (16) (80) (96) (29) (115) (144) At 31 March 2025 (2024: 4 April) 359 2,787 3,146 342 2,592 2,934 Accumulated amortisation and impairment At 5 April 290 1,808 2,098 278 1,654 1,932 Amortisation charge 26 323 349 38 263 301 Impairment in the period - 13 13 3 6 9 Disposals (16) (80) (96) (29) (115) (144) At 31 March 2025 (2024: 4 April) 300 2,064 2,364 290 1,808 2,098 Net book value At 31 March 2025 (2024: 4 April) 59 723 782 52 784 836
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26. Property, plant and equipment
Property, plant and equipment Group Society 2025 2024 2025 2024 £m £m £m £m Branches and non-specialised buildings 141 137 133 137 Specialised administration buildings 71 74 71 74 Investment properties (note i) 35 2 2 2 Plant and machinery 49 50 45 50 Equipment, fixtures, fittings and vehicles 292 277 258 277 Right-of-use branches and non-specialised buildings 208 116 106 116 Total 796 656 615 656
Note:
i.
Included within investment properties for the Group is £30 million (2024: £nil) of right-of-use investment properties.
Proper
ty, plant and equipment includes £6 million and £5 million for Group and Society respectively (2024: £8 million for the Group and Society) of assets in the course of construction.
Capital expenditure contracted for but not accrued at 31 March 20
25 was £6 million for the Group and Society (2024: £10 million for the Group and Society). As at 31 March 2025,
branches and non-specialised buildings includes £6 million for
the Group and Society (2024: £3 million for the Group and Society) of properties which are classified as held for sale.
Branches and non-specialised buil
dings are valued annually at the balance sheet date by independent surveyors. The current use of all branches and non-specialised buildings represents
the highest and best use, and there have been no ch
anges to the valuation technique during the period.
IFRS 13 requires that all assets held at fair value are classifi
ed according to a hierarchy that reflects the significance of observable market inputs in calculating those fair values. Branches
and non-specialised buildings valuations are classifi
ed within Level 2 of the fair value hierarchy.
Branches and non-specialised buildings revalued annually would have a carrying value under the historic cost model of £65 milli
on and £53 million for the Group and Society respectively
(2024: £55 million for the Group and Society)
. Investment properties revalued annually would have a carrying value under the historic cost model of £35 million and £2 million for the
Group and Society respectively (2024:
£2 million for the Group and Society).
Notes to the financial statements (continued)
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27. Provisions for liabilities and charges
Group SocietyCustomer Legal and Other Total Customer Legal and Other Total redress regulatory provisions redress regulatory provisions £m £m £m £m £m £m £m £m At 5 April 2024 24 97 28 149 20 97 28 145Acquisition of Virgin Money 6 - 32 38 - - - - Charge for the period 8 8 38 54 3 8 30 41 Release for the period (3) - (13) (16) (3) - (12) (15) Net income statement charge (note i) 5 8 25 38 - 8 18 26 Provisions utilised (14) (105) (36) (155) (12) (105) (28) (145) At 31 March 2025 21 - 49 70 8 - 18 26
Note:
i.
The net income statement charge is included within administrative expenses.
Customer redress
During the course of its business, the Group receives complaints
from customers in relation to past sales or ongoing administration and is subject to enquiries from regulators or other
public bodies, including the Financial Ombudsman Service, on a ra
nge of customer-related matters. In addition, the Group may identify through its own investigations matters which
require customer redress.
Consideration of these matters may result in a provision, a contingent liability or both, depending upon relevant facts and cir
cumstances. No provision is made where it is concluded that it
is not probable that a quantifiable payment will be made; this
will include circumstances where the facts are unclear or further time is required to reasonably quantify the expected
payment.
At 31 March 2025, the Group and Society held
provisions of £21 million and £8 million, respectively, (2024: £24 million and £20 million, respectively) in respect of the potential costs of
remediation and redress in relation to issu
es with historical quality control procedures, past sales and administration of customer accounts, and other matters requiring customer
redress. Whilst there is uncertainty as to
the timing of the utilisation of customer redress provisions, the Group expects the majority to have been utilised within the next year.
Legal and regulatory provisions
The Group
is also subject to enquiries from, and discussions with, its regulators and other government bodies, including tax authorities, on a range of matters, and may be engaged in
legal proceedings in the course of its business.
The prior year provision of £97 million has been utilised in the period. This provision related to a matter which remains the s
ubject of ongoing litigation commenced by the Group against
Allen & Overy and Bank of New York Mellon, and the Group expect
s to recover significant amounts through the litigation. No such amounts have been recognised as at the balance sheet
date on the basis that these are not yet considered to be virtually certain of receipt.
The Group does not disclose furt
her information in the case of matters subject to active legal proceedings where such disclosure could be seriously prejudicial to the conduct of the
claims.
Other provisions
Other provisions include amounts for property-related provisions,
severance costs and expected credit losses on irrevocable lending commitments. Whilst there is uncertainty as to the
timing of the utilisation of provisions, the Group expects the majority to have been utilised within the next two years.
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28. Leasing
The Group and Society lease various offices, branches and other premises under leasing arrangements. The following tables show the amounts recognised in the income statement and on
the balance sheet arising from these leases:
Leasing amounts recognised in the income statement Group Society2025 2024 2025 2024 Income statement classification £m £m £m £m Finance lease interest income Interest receivable and similar income 31 - - - Interest expense Interest expense and similar charges (6) (3) (4) (3) Depreciation and impairment of right-of-use assets Administrative expenses (26) (20) (20) (20) Lease expense in respect of short-term and low value leases Administrative expenses (10) (9) (9) (9) Amounts receivable under leases where the Group is a lessor Other operating income 3 2 3 2 Leasing amounts recognised at the balance sheet date Group Society2025 2024 2025 2024 Balance sheet classification £m £m £m £m Right-of-use assets Property, plant and equipment 238 116 106 116 Lease liabilities Other liabilities (315) (172) (156) (172) Finance lease receivables Loans and advances to customers 1,066 - - -
Total leasing cash outflows in the period for the Group were £49 million (2024: £42 million) and £40 million (2024: £42 million) for the Society. No lease commitments (2024: £nil) were
entered into that had not yet commenced at the balance sheet date for the Group or the Society.
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28. Leasing (continued)
Future undiscounted minimum payments under lease liabilities were as follows:
Leasing commitments Group Society 2025 2024 2025 2024 £m £m £m £m Amounts falling due: Within one year 44 33 29 33 Between one and two years 40 31 26 31 Between two and three years 37 28 23 28 Between three and four years 34 26 21 26 Between four and five years 33 23 18 23 After five years 193 99 64 99 Total 381 240 181 240
Right-of-use assets recognised on the balance sheet and the movements during the period were as follows:
Right-of-use assets Group Society 2025 2024 2025 2024 £m £m £m £m At 5 April 116 153 116 153 Additions 11 10 11 10 Acquisition of Virgin Money 137 - - - Revaluation 1 - - - Disposals (1) (27) (1) (27) Depreciation and impairment (26) (20) (20) (20) At 31 March (2024: 4 April) 238 116 106 116 Of which: Branches and non-specialised buildings 208 116 106 116 Investment property 30 - - -
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28. Leasing (continued)
The Group leases a variety of assets to third parties under finance lease and hire purchase arrangements, including vehicles and general plant and machinery.
Future undiscounted minimum lease payments receivable in respect of leased assets were as follows:
Finance lease receivable Group 2025 2024 £m £m Amounts falling due: Within one year 461 - Between one and two years 282 - Between two and three years 206 - Between three and four years 117 - Between four and five years 77 - After five years 26 - Total 1,169 - Unearned finance income (103) - Net investment in finance lease and hire purchase receivables 1,066 -
The Society had no finance lease receivables falling due at the current period end or prior year end.
At the balance sheet date, the Group had £12 million (2024: £13 million) of future minimum lease payments receivable under operating leases where the Group was the lessor, of which £4
million (2024: £3 million) were receivable under non-cancellable subleases. The Society had £12 million (2024: £13 million) of future minimum lease payments receivables under operating
leases, of which £2 million (2024: £3 million) was receivable under non-cancellable subleases.
29. Contingent liabilities and commitments
Contingent liabilities
During the ordinary course of business, the Group may be subject to complaints, disputes and threatened or actual legal proceedings brought by or on behalf of current or former
employees, customers, investors or other third parties. The Group may also be subject to legal and regulatory reviews, challenges, investigations and enforcement actions which may
result in, among other things, actions being taken by governmental, tax and regulatory authorities, increased costs being incurred in relation to remediation of systems and controls, or
fines. Any such material cases are periodically reassessed, with the assistance of external professional advisers where appropriate, to determine the likelihood of incurring a liability and
any ability to recover any losses in future periods.
The FCA is undertaking an investigation of the Society’s compliance with UK money laundering regulations and the FCA’s rules and Principles for Businesses in an enquiry focused on
aspects of the Society’s anti-money laundering control framework. The Society is co-operating with the investigation, which remains ongoing. The Group has not disclosed an estimate of
any potential financial impact arising from this matter as it is not currently practicable to do so.
There are no other current complaints, disputes, threatened or actual legal proceedings, regulatory or other matters, the resolution of which are expected to have a material adverse
impact on its financial position. However, in light of the uncertainties involved in such matters there can be no assurance that the outcome of a particular matter or matters may not
ultimately be material to the Group’s results.
Notes to the financial statements (continued)
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29. Contingent liabilities and commitments (continued)
Commitments
The following table summarises the nominal pr
incipal amount for commitments which are not recorded on balance sheet. Since a significant portion of guarantees and commitments are
expected to expire without being drawn upon, the total of the contract amounts is not representative of future liquidity requir
ements.
Commitments Group Society 2025 2024 2025 2024 £m £m £m £m Financial guarantees 100 - - - Other loan commitments 19,358 13,339 11,734 12,142 Other financial commitments 5 5 920 -
The Group provides guarante
es in the normal course of business on behalf of its customers. Guarantees written are conditional commitments issued by the Group to guarantee the
performance of a customer to a third party
and are primarily issued to support direct financial obligations such as commercial bills or other debt instruments issued by a counterparty.
The maximum amount that the Group could be
required to pay under a guarantee is its principal amount as disclosed in the table above.
The other financial commitments balance in the Society includes
amounts drawn by the Virgin Money sub-group under the Sterling Monetary Framework, which have been guaranteed by
the Society.
In addition to the amounts shown above, th
e Group has revocable commitments of £23,352 million (2024: £10,394 million) in respect of credit card, overdraft, and asset finance facilities.
These commitments represent agreements to lend in the future, subject to certain considerations. Such commitments are cancellab
le by the Group, subject to notice requirements, and
given their nature are not expected to be
drawn down to the full level of exposure.
Detail of commitments in respect of capital expenditure contracted
for, but not provided for, can be found in notes 25 and 26. Future undiscounted minimum payments due in respect of
lease liabilities are di
sclosed in note 28.
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30. Retirement benefit obligations
The Group operates three defined contribution pension schemes in the UK – the Nationwide Group Personal Pension Plan (GPP), Virgin Money’s ‘My Retirement’ scheme and the
Nationwide Temporary Workers Pension Scheme. New employees are automatically enrolled into one of these schemes. Outside of the UK, there is a defined contribution pension scheme
for a small number of employees in the Isle of Man.
The Group also has funding obligations to several defined benefit pension schemes, which are administered by boards of trustees. Pension trustees are required by law to act in the
interests of all relevant beneficiaries and are responsible for the investment policy of fund assets, as well as the day-to-day administration.
The Society’s pension scheme is the Nationwide Pension Fund (NPF). This is a defined benefit pension scheme, with both final salary and career average revalued earnings (CARE) sections.
The NPF was closed to new entrants in 2007 and since that date employees have been able to join the GPP. The NPF was closed to future accrual on 31 March 2021. Following the
acquisition of Virgin Money on 1 October 2024, the Group has funding obligations to the Yorkshire and Clydesdale Bank Pension Scheme (YCBPS). This scheme, with both final salary and
CARE sections, was closed to new entrants in 2004 and to future accrual for almost all current employees on 1 August 2017.
In line with UK pensions legislation, a formal actuarial valuation (‘Triennial Valuation’) of the assets and liabilities of each of the defined benefit pension schemes is carried out at least
every three years by independent actuaries. The main differences between the assumptions used for assessing defined benefit liabilities for purposes of the actuarial funding valuation
and those used for accounting under IAS 19 ‘Employee Benefits’ are that the financial and demographic assumptions used for the funding valuation are generally more prudent than those
used for the IAS 19 valuation. As the 31 March 2022 Triennial Valuation indicated a funding surplus for the NPF, a recovery plan requiring employer deficit contributions was not needed.
The 30 September 2022 Triennial Valuation of the YCBPS also indicated a funding surplus, and therefore a recovery plan requiring employer deficit contributions was not needed.
In November 2020, the Society and the Trustee of the NPF entered into an arrangement whereby the Society agreed to provide a contingent asset in the form of self-issued residential
mortgage-backed securities to provide additional security to the NPF. The NPF would have access to these securities in the case of certain events such as insolvency of the Society.
Further information on the Group’s obligations to defined benefit pension schemes is set out below.
Defined benefit pension schemes
Retirement benefit obligations on the balance sheet Group Society2025 2024 2025 2024 £m £m £m £m Fair value of fund assets 6,767 4,679 4,165 4,670 Present value of funded obligations (5,875) (4,069) (3,631) (4,060) Surplus at 31 March (2024: 4 April) 892 610 534 610 Other liabilities (note i)(4) (3) (3) (3)
Note:
i. As detailed in note 1, unfunded retirement benefit obligations have been reclassified to other liabilities. In previous years, this balance was included within the retirement benefits asset line item. Tables for
the remainder of this note have been updated accordingly.
Retirement benefit obligations for the Society relate to the NPF. Approximately 55% (2024: 56%) of the NPF’s pension obligations relate to deferred members (current and former
employees not yet drawing their pension) and 45% (2024: 44%) to current pensioners and dependants. The weighted average duration of the NPF’s pension obligation is approximately
14 years (2024: 16 years), reflecting an average duration of 17 years for deferred members and 11 years for current pensioners.
The YCBPS has a surplus of £357 million as at 31 March 2025, which is recognised in Clydesdale Bank PLC, a subsidiary of Virgin Money UK PLC. Less than 1% of the YCBPS obligations are
attributable to current employees still accruing benefits, 45% relate to deferred members and 55% to current pensioners and dependants.
Notes to the financial statements (continued)
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30. Retirement benefit obligations (continued)
The Group’s retirement benefit obligations also include a surplus of £1 million (2024: deficit £1 million) relating to Nationwide (Isle of Man) Limited, which has a defined benefit scheme
providing benefits based on both final salary and CARE, which was closed to new entrants in 2009.
The Group’s retirement benefit obligations also include £4 million (2024: £3 million) in respect of unfunded legacy defined benefit arrangements. This obligation is included within other
liabilities.
The results of the YCBPS have been included in the Group disclosures below from the date of acquisition.
The amounts recognised in the income statement are as follows:
Retirement benefit obligations recognised in the income statement Group Society2025 2024 2025 2024 £m £m £m £m Defined contribution cost (197) (164) (164) (164) Defined benefit schemes - administrative expenses (7) (4) (5) (4) Included in employee costs (note 8) (204) (168) (169) (168) Interest on net defined benefit asset (note 3) 45 44 30 44 Total (159) (124) (139) (124)
Changes in the present value of the net defined benefit asset are as follows:
Movements in net defined benefit asset Group Society2025 2024 2025 2024 £m £m £m £m At 5 April 610 950 610 950 Interest on net defined benefit asset 45 44 30 44 Return on assets less than discount rate (note i) (800) (684) (551) (682) Contributions by employer 7 1 - - Acquisition of Virgin Money 429 - - - Administrative expenses (7) (4) (5) (4) Actuarial gains on defined benefit obligations (note i) 608 303 450 302 At 31 March (2024: 4 April) 892 610 534 610
Note:
i. The net impact before tax on the surplus of return on assets and actuarial gains is a decrease of £192 million (2024: £381 million) for Group and a decrease of £101 million (2024: £380 million) for Society in
other comprehensive income.
The loss relating to the return on assets being less than the discount rate of £800 million (2024: £684 million) for the Group and £551 million (2024: £682 million) for Society is driven by
decreases in value of the liability matching assets due to increases in long-term government bond yields in the period.
As the NPF is closed to future accrual, there have been no current service costs, past service costs or employer contributions made in respect of future benefit accrual during the current
or prior year. The YCBPS has a very small number of active members in the scheme which gives rise to employer contributions and service costs made in respect of future benefit accrual.
There have been no employer deficit contributions required into the NPF or the YCBPS and there are no such contributions scheduled in the period ending 31 March 2026 or future years
under the current Schedules of Contributions, other than the ongoing funding of the YCBPS administrative expenses. Employer deficit contributions of less than £1 million (2024: £1
million) were made in respect of the Group’s defined benefit scheme in its Nationwide (Isle of Man) Limited subsidiary.
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30. Retirement benefit obligations (continued)
The actuarial gain on defined benefit obligations for the Group of £608 million (2024: £303 million) and the Society of £450 million (2024: £302 million) is due to:
A gain of £639 million (2024: £214 million) in the Group and £473 million (2024: £213 million) in the Society from changes in financial assumptions, driven by a 0.80% increase in the
discount rate (which decreases the value of liabilities) and a 0.10% decrease in assumed Retail Price Index (RPI) inflation (which also decreases the value of the liabilities).
A gain of £1 million (2024: £75 million) in the Group and £nil (2024: £75 million) in the Society arising from the impacts of updates to demographic assumptions and applying the
latest industry views for future longevity improvements.
An experience loss of £32 million (2024: £14 million gain) in the Group and £23 million (2024: £14 million gain) in the Society primarily reflecting the difference between estimates of
long-term inflation compared to actual inflation.
Changes in the present value of defined benefit obligations are as follows:
Movements in defined benefit obligations Group Society2025 2024 2025 2024 £m £m £m £m At 5 April (4,069) (4,331) (4,060) (4,322) Interest expense on retirement obligation (257) (198) (194) (197) Experience (loss)/gain on plan assumptions (32) 14 (23) 14 Changes in demographic assumptions 1 75 - 75 Changes in financial assumptions 639 214 473 213 Acquisition of Virgin Money (2,394) - - - Benefits paid 237 157 173 157 At 31 March (2024: 4 April) (5,875) (4,069) (3,631) (4,060)
Changes in the fair value of plan assets for the pension schemes are as follows:
Movements in plan assets Group Society2025 2024 2025 2024 £m £m £m £m At 5 April 4,679 5,281 4,670 5,272 Interest income on assets 302 242 224 241 Return on assets less than discount rate (800) (684) (551) (682) Administrative expenses (7) (4) (5) (4) Contributions by employer 7 1 - - Acquisition of Virgin Money 2,823 - - - Benefits paid (237) (157) (173) (157) At 31 March (2024: 4 April) 6,767 4,679 4,165 4,670
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30. Retirement benefit obligations (continued)
The major categories of assets held for the pension schemes, stated at fair value, are as follows:
Categories of plan assets 2025 2024 Quoted Unquoted Total Quoted Unquoted Total Group £m £m £m £m £m £m Listed equities 9 - 9 12 - 12Government bonds 4,694 - 4,694 3,298 - 3,298Corporate bonds and other credit investments 1,141 - 1,141 7 - 7Infrastructure - 437 437 - 258 258Property - 540 540 - 573 573Private equity investments - 1,059 1,059 - 818 818Private debt investments - 629 629 - 637 637Cash and derivatives - 281 281 - 84 84Liability relating to repurchase agreement - (2,100) (2,100) - (1,150) (1,150)Insurance policies - 97 97 - 107 107Longevity swaps - (42) (42) - - - Other assets and liabilities - 22 22 - 35 35Total 5,844 923 6,767 3,317 1,362 4,679Categories of plan assets 2025 2024 Quoted Unquoted Total Quoted Unquoted Total Society £m £m £m £m £m £m Listed equities 8 - 8 10 - 10 Government bonds 3,325 - 3,325 3,295 - 3,295 Corporate bonds and other credit investments 74 - 74 5 - 5 Infrastructure - 217 217 - 258 258 Property - 511 511 - 573 573 Private equity investments - 751 751 - 818 818 Private debt investments - 629 629 - 637 637 Cash and derivatives - 139 139 - 84 84 Liability relating to repurchase agreement - (1,589) (1,589) - (1,150) (1,150) Insurance policies - 97 97 - 107 107 Longevity swaps - (18) (18) - - - Other assets and liabilities - 21 21 - 33 33 Total 3,407 758 4,165 3,310 1,360 4,670
The Society’s defined benefit pension schemes do not invest in the Group’s own financial instruments or property. At 31 March 2025, the YCBPS held investments of £2 million in the
Group’s own financial instruments or property. Certain investments in private equity, private debt, infrastructure and property are not quoted in active markets or valued based on
observable inputs. Valuations for these assets are based on the most recent valuation provided by the asset manager and adjusted for any cash movements to the balance sheet date.
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30. Retirement benefit obligations (continued)
The NPF’s liabilities are well hedged by matching assets, primarily government bonds and corporate bonds. In addition, the NPF invests in alternative matching assets such as property
ground rents and property leases (included in property above) that are expected to generate inflation-linked income over the long term. The NPF also holds return-seeking assets which
are expected to generate a return over and above its liabilities in the long term but may create risk and volatility in the short to medium term.
The YCBPS liabilities are also well hedged with matching assets and a portfolio of corporate bonds which are expected to deliver a long-term rate of return in excess of the YCBPS's
liabilities. The value of these assets is sensitive to changes in interest rates. Additionally, the YCBPS holds return-seeking assets, including alternative matching assets such as property
ground rents and property leases and in renewable energy funds, which are expected to generate a return over and above the YCBPS’s liabilities in the long term but may create risk and
volatility in the short to medium term.
In May 2023, the NPF entered into a longevity swap transaction to manage the scheme’s longevity risk in relation to £1.7 billion of pension liabilities, covering approximately 7,000
pensioners. This transaction provides income to the NPF in the event that pensions are paid out for longer than expected, mitigating the financial impact and reducing the scheme’s
longevity risk exposure by approximately one third. The swap is included in the NPF’s assets at a fair value of £(18) million at 31 March 2025 (2024: £nil). In April 2023, the YCBPS Trustee
also entered into a longevity swap transaction to cover approximately 9,000 pensioners, covering around 40% of the scheme’s longevity risk. The swap is included in the YCBPS’s assets
at a fair value of £(24) million at 31 March 2025. Future changes to the fair value of these longevity swaps are expected to broadly offset changes in the schemes’ liabilities relating to
updates to life expectancy for those pensioners covered.
In January 2022 the NPF Trustee completed a pensioner buy-in for the smaller Cheshire & Derbyshire section of the NPF, removing the investment and longevity risk to the NPF in
relation to members in this section. At 31 March 2025, the value of the insurance asset for the Cheshire & Derbyshire section buy-in was £97 million (2024: £107 million).
The Group’s pension scheme investments are monitored by both the Group and the trustees to ensure they remain appropriate given the long-term objectives of the schemes.
The principal actuarial assumptions used are as follows:
Financial assumptions 2025 2024 % % Discount rate 5.75 4.95 Future pension increases (maximum 5%) 2.90 3.00 Retail Price Index (RPI) inflation 3.00 3.10 Consumer price index (CPI) inflation 2.40 2.50 Life expectancy assumptions 2025 2024 years years Age 60 at 31 March 2025 (4 April 2024): Males 27.0 27.0 Females 28.9 28.5 Age 60 at 31 March 2045 (4 April 2044): Males 28.3 28.0 Females 30.3 29.8
The assumptions for mortality rates are based on standard mortality tables which allow for future improvements in life expectancy and are adjusted to represent the membership profiles
of the Group’s pension schemes. The assumptions made are illustrated in the table above, showing how long the Group would expect the average member to live for after the age of 60,
based on reaching that age at 31 March 2025 or in 20 years’ time at 31 March 2045.
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30. Retirement benefit obligations (continued)
Critical accounting estimates and judgements
The key assumptions used to calculate the defined benefit obligation which represent significant sources of estimation uncertainty are the discount rate, inflation assumptions and
mortality assumptions. If different assumptions were used, this could have a material effect on the reported surplus. The sensitivity of the Group results to these assumptions is shown
below:
Change in key assumptions at 31 March 2025 Increase in defined benefit obligation £m 1.0% decrease in discount rate 836 0.1% increase in inflation assumption 61 1 year increase in life expectancy at age 60 in respect of all members 124
The above sensitivities apply to individual assumptions in isolation. In practice, changes to individual assumptions in isolation are unlikely to occur, and changes in some of the
assumptions may be correlated. The inflation assumption sensitivity includes the impact on the rate of increases to pensions, both before and after retirement.
31. Core capital deferred shares
Group and Society Number of CCDS Share Treasury Total shares premium share reserve £m £m £m £m At 31 March 2025 (note i) 9,122,345 11 1,323 (177) 1,157 At 4 April 2024 (note i) 9,122,345 11 1,323 (177) 1,157
Note:
i. The total number of shares outstanding at 31 March 2025 and 4 April 2024 is 10,555,500, which includes 1,433,155 shares repurchased and retained by the Society.
Core capital deferred shares (CCDS) are a form of Common Equity Tier 1 (CET1) capital which has been developed to enable the Group to raise capital from the capital markets. CCDS are
perpetual instruments. They rank equally to each other and are junior to claims against the Society of all depositors, creditors and investing members. Each holder of CCDS has one vote,
regardless of the number of CCDS held.
In the event of a winding up or dissolution of the Society, if a surplus was available, the amount that the investor would receive for each CCDS held is limited to the average principal
amount in issue, which is currently £126.39 per share.
There is a cap on the distributions that can be paid to holders of CCDS in any financial year. The cap is currently set at £20.87 per share and is adjusted annually in line with CPI. A final
distribution of £47 million (£5.125 per share) for the financial year ended 4 April 2024 was paid on 20 June 2024 and an interim distribution of £47 million (£5.125 per share) in respect of
the period to 30 September 2024 was paid on 20 December 2024. These distributions have been recognised in the statement of movements in members’ interests and equity.
Since the balance sheet date, the directors have declared a distribution of £5.125 per share in respect of the period to 31 March 2025, amounting in aggregate to £47 million. This has not
been reflected in these financial statements as it will be recognised in the year ending 31 March 2026, by reference to the date at which it was declared.
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32. Other equity instruments
Group and Society 2025 2024 Call period Issuance date Next reset date Reset rate £m £m commencement date Nationwide 7.5% Additional Tier 1 16 September 2024 20 December 2030 20 June 2031 Benchmark gilts + 7.5% 750 - Nationwide 5.75% Additional Tier 1 10 June 2020 20 June 2027 20 December 2027 Benchmark gilts + 5.625% 750 750 Nationwide 5.875% Additional Tier 1 (note i) 17 September 2019 20 December 2024 20 June 2025 Benchmark gilts + 5.39% - 600 1,500 1,350 Issuance costs (15) (14) Total 1,485 1,336
Note:
i. The Society exercised its option to call these notes during the period ended 31 March 2025.
Other equity instruments are Nationwide’s Additional Tier 1 (AT1) capital instruments. The AT1 instruments rank equally to each other and are junior to claims against the Society of all
depositors, creditors and investing members, other than the holders of CCDS.
The AT1 instruments pay a fully discretionary, non-cumulative fixed rate of interest. Coupons are paid semi-annually in June and December. AT1 instruments have no maturity date but are
repayable at the option of the Society from the first day of the call period to the first reset date, and on every reset date thereafter. If they are not repaid the interest rate resets at the
rates shown in the table above.
If the CET1 ratio for the Society, on either a consolidated or unconsolidated basis, falls below 7% the AT1 instruments convert to CCDS instruments at the rate of one CCDS share for every
£100 of AT1 holding.
Interest payments totalling £93 million were made in the period ended 31 March 2025 (2024: £78 million), representing the maximum non-cumulative fixed coupon amounts. These
payments have been recognised in the statement of movements in member’s interest and equity. A coupon payment of £50 million is expected to be paid on 20 June 2025 and will be
recognised in the statement of movements in members’ interests and equity in the year ending 31 March 2026.
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33. Investments in Group undertakings
Society investments in Group undertakings 2025 2024 Other Equity Equity Loans instruments Total Loans Total shares shares (note i) £m £m £m £m £m £m £m At 5 April 376 39,847 - 40,223 366 40,690 41,056 Additions 3,679 2,470 754 6,903 15 1 16Impairment release/(charge) 1 - - 1 (5) 3 (2)Disposals, redemptions and repayments - (238) - (238) - (847) (847)At 31 March (2024: 4 April) 4,056 42,079 754 46,889 376 39,847 40,223
Note:
i. Other instruments consist of senior non-preferred debt issued from Virgin Money UK PLC to Nationwide Building Society.
Additions to equity shares in the period ended 31 March 2025 include the acquisition of Virgin Money UK PLC as detailed in note 38, in addition to further capital issuances by Virgin
Money UK PLC to the Society in the period totalling £800 million.
The Society received dividends from Group undertakings during the period ended 31 March 2025 totalling £2 million (2024: £nil).
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33. Investments in Group undertakings (continued)
Subsidiary undertakings
The interests of the Society in its subsidiary undertakings as at 31 March 2025 are set out below:
Active subsidiaries Name of undertaking Country of Registered office Notes incorporation CGF No. 9 Limited Scotland 177 Bothwell Street, Glasgow, G2 7ER Clydesdale Bank Asset Finance Limited Scotland 177 Bothwell Street, Glasgow, G2 7ER Clydesdale Bank PLC Scotland 177 Bothwell Street, Glasgow, G2 7ER i CYB Intermediaries Limited England Jubilee House, Gosforth, Newcastle upon Tyne, NE3 4PL i CYB Investments Limited England Jubilee House, Gosforth, Newcastle upon Tyne, NE3 4PL Derbyshire Home Loans Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW i Dunfermline BS Nominees Limited Scotland 1 Masterton Park, Carnegie Campus, Dunfermline, Fife, KY11 8NX ii E-Mex Home Funding Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW i Home Propositions Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW ii Nationwide (Isle of Man) Limited Isle of Man Atlantic House, Circular Road, Douglas, Isle of Man, IM1 1AG Nationwide Housing Trust Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW ii Nationwide Syndications Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW ii NBS Ventures Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW ii NBS Ventures Management Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW ii Piper Javelin Holding Company Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW ii Piper Javelin No 1 Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW ii St Vincent (Equities) Limited Scotland 177 Bothwell Street, Glasgow, G2 7ER The Mortgage Works (UK) PLC England Nationwide House, Pipers Way, Swindon, SN38 1NW i UCB Home Loans Corporation Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW i Virgin Money Unit Trust Managers Limited England Jubilee House, Gosforth, Newcastle Upon Tyne, NE3 4PL i Virgin Money Holdings (UK) Limited England Jubilee House, Gosforth, Newcastle upon Tyne, NE3 4PL Virgin Money Limited England Jubilee House, Gosforth, Newcastle upon Tyne, NE3 4PL Virgin Money Personal Financial Service Limited England Jubilee House, Gosforth, Newcastle upon Tyne, NE3 4PL Virgin Money UK PLC England Jubilee House, Gosforth, Newcastle upon Tyne, NE3 4PL Yorkshire Bank Home Loans Limited England Jubilee House, Gosforth, Newcastle upon Tyne, NE3 4PL i
Notes:
i. Audited accounts are prepared for regulated entities.
ii. For these companies, the Group has adopted the audit exemption for the year ended 31 March 2025 under Section 479A of the Companies Act 2006. The Society guarantees all outstanding liabilities of the
exempted subsidiary undertakings.
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33. Investments in Group undertakings (continued)
Dormant subsidiaries Name of undertaking Country of Registered office incorporation C.B. Nominees Limited Scotland 177 Bothwell Street, Glasgow, G2 7ER Confederation Mortgage Services Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW CYB SSP Trustee Limited England Jubilee House, Gosforth, Newcastle upon Tyne, NE3 4PL Exeter Trust Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW FN1 England Nationwide House, Pipers Way, Swindon, SN38 1NW Nationwide Home Loans Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW Nationwide Trust Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW NBS CoSec Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW NI1 Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW NLF1 Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW NOK1 Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW The Derbyshire (Premises) Limited England Nationwide House, Pipers Way, Swindon, SN38 1NW Virgin Money Giving Limited England Jubilee House, Gosforth, Newcastle upon Tyne, NE3 4PL Virgin Money Nominees Limited England Jubilee House, Gosforth, Newcastle upon Tyne, NE3 4PL Virgin Money Retirement Savings Plan Trustee Limited Scotland 177 Bothwell Street, Glasgow, G2 7ER Virgin Money Trustee Limited England Jubilee House, Gosforth, Newcastle upon Tyne, NE3 4PL YCBPS Property Nominee Company Limited England Jubilee House, Gosforth, Newcastle upon Tyne, NE3 4PL Yorkshire and Clydesdale Bank Pension Trustee Limited Scotland 177 Bothwell Street, Glasgow, G2 7ER Yorkshire Bank Limited England Jubilee House, Gosforth, Newcastle upon Tyne, NE3 4PL
The Society directly or indirectly holds 100% of the issued share capital of each subsidiary undertaking. All of the subsidiary undertakings are limited liability companies, with the
exception of FN1 which is an unlimited company and C.B. Nominees Limited which is limited by guarantee.
There are no significant restrictions on any of the Society’s subsidiaries in paying dividends or repaying loans, subject to their financial and operating performance and availability of
distributable reserves.
Investments in associates and joint ventures are recognised in the financial statements using the equity method and are included within other assets. The interests of the Group in
associates and joint ventures as at 31 March 2025 are set out below:
Associates and joint ventures Name of undertaking Status % of share class held by Registered office Financial year end immediate parent company and Group Argot Properties Limited Joint venture 50% Ground Floor T3 Trinity Park, Bickenhill Lane, 31 December Birmingham, United Kingdom, B37 7ES Eagle Place Covered Bonds Finance Limited Associate 20% 1 Bartholomew Lane, London, EC2N 2AX 31 March Longwide Limited Joint venture 50% Nationwide House, Pipers Way, Swindon, SN38 1NW 31 March Salary Finance Loans Limited (note i) Joint venture 50% Scale Space, 58 Wood Lane, London, W12 7RZ 31 December
Note:
i. Salary Finance Loans Limited is a regulated entity.
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33. Investments in Group undertakings (continued)
The Group’s interests in equity shares of unconsolidated entities are included in investment securities as set out in note 13.
Interest in charitable foundations
The Group has an interest in The Virgin Money Foundation, a charitable foundation registered in England as a company limited by guarantee. Clydesdale Bank PLC acts as a guarantor for
£1 and is also a donor.
Non-controlling interests
The Group has a non-controlling interest, represented by Virgin Money UK PLC’s AT1 equity instruments, with a carrying value of £759 million (2024: £nil). Distributions of £34 million
(2024: £nil) were paid in the period to non-controlling interests.
Subsidiaries by virtue of control
Details of consolidated and unconsolidated structured entities are set out in note 34.
34. Structured entities
A structured entity is an entity in which voting or similar rights are not the dominant factor in deciding control. Structured entities are consolidated when the substance of the
relationship indicates control. The Group considers factors such as the purpose and design of the entity, the nature of its relationship with the entity, the size of its holding and its
exposure to variability of returns.
Consolidated structured entities
The following structured entities are consol
idated in the Group’s results:
Structured entity name Nature of business Country of Registered office incorporation Nationwide Covered Bonds LLP Mortgage acquisition and guarantor of covered bonds England Nationwide House, Pipers Way, Swindon, SN38 1NW Silverstone Master Issuer PLC Funding vehicle England Wilmington Trust SP Services (London) Limited, Third Floor, 1 King’s Arms Yard, London, EC2R 7AF Silverstone Funding (No.1) Limited Funding vehicle England Wilmington Trust SP Services (London) Limited, Third Floor, 1 King’s Arms Yard, London, EC2R 7AF Eagle Place Covered Bonds LLP Acquisition of mortgage loans England Jubilee House, Gosforth, Newcastle upon Tyne, NE3 4PL Gosforth Funding 2017-1 PLC (in Issuer of securitised notes England 10 Fleet Place, London, EC4M 7RB liquidation) Gosforth Holdings 2017-1 Limited (in Holding company England 10 Fleet Place, London, EC4M 7RB liquidation) Lanark Funding Limited Funding company England Suite 2, Seventh Floor, 50 Broadway, London, SW1H 0DB Lanark Holdings Limited Holding company England Suite 2, Seventh Floor, 50 Broadway, London, SW1H 0DB Lanark Master Issuer PLC Issuer of securitised notes England Suite 2, Seventh Floor, 50 Broadway, London, SW1H 0DB Lanark Trustees Limited Mortgages trustee England Suite 2, Seventh Floor, 50 Broadway, London, SW1H 0DB Lannraig Funding Limited Funding company England 1 Bartholomew Lane, London, EC2N 2AX Lannraig Holdings Limited Holding company England 1 Bartholomew Lane, London, EC2N 2AX Lannraig Master Issuer PLC Issuer of securitised notes England 1 Bartholomew Lane, London, EC2N 2AX Lannraig Trustees Limited Mortgages trustee Jersey 44 Esplanade, St Helier, Jersey, JE4 9WG, Channel Islands
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34. Structured entities (continued)
Further details on the activities of the above structured entities are included in note 14.
Unconsolidated structured entities
The Group has interests in structured entities which it does not sponsor or control. These largely consist of holdings of mortgage-backed securities and covered bonds issued by entities
that are sponsored by other unrelated financial institutions. The entities are financed primarily by investments from investors, such as the purchase of issued notes.
The Group’s direct interests in unconsolidated structured entities comprise primarily investments in asset backed securities which are reported within investment securities on the
balance sheet. The total carrying value of these interests at 31 March 2025 is £5,620 million (2024: £4,296 million). Further details on the credit risk that the Group is exposed to in
respect of these assets can be found in the Credit risk - Treasury assets section of the Risk report.
Management has concluded that the Group has no control or significant influence over these entities and that the carrying value of the interests held in these entities represents the
maximum exposure to loss. During the period the Group has not provided any non-contractual financial or other support to these entities and has no current intention of providing any
such support.
35. Related party transactions
Key management personnel compensation
As defined by IAS 24 ‘Related Party Disclosures’, members of the Group Management Committee and the non-executive directors of Nationwide Building Society are considered to be the
Group’s key management personnel. Members of the Executive Committee and the non-executive directors of Nationwide Building Society are considered to be the Society’s key
management personnel. Total compensation for key management personnel for the period was as follows:
Key management personnel compensation Group Society 2025 2024 2025 2024 £’000 £’000 £’000 £’000 Short-term employee benefits 9,871 10,158 10,406 10,158 Other long-term benefits 2,468 2,079 2,565 2,079 Share based payments 3,031 1,872 2,990 1,872 Total 15,370 14,109 15,961 14,109
Other long-term benefits include amounts relating to long-term bonus schemes, some of which will be paid in future periods. Further information on these can be found in note 8. Share-
based payments include amounts that are dependent on the performance of CCDS.
Further information on the remuneration of executive and non-executive directors is included in the Report of the directors on remuneration.
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35. Related party transactions (continued)
Transactions with key management personnel
Balances with key management personnel Group Society2025 2024 2025 2024 £m £m £m £m Loans receivable 1.6 1.7 0.8 1.7 Deposits payable 5.0 3.6 3.4 3.6
All loans and deposits with key management personnel were made in the ordinary course of business at substantially the same terms, including interest rates and security, as generally
available to other members and customers for comparable transactions. These transactions did not involve more than normal risk of repayment or present other unfavourable features.
A register is maintained by the Society containing details of loans and arrangements made between the Society or its subsidiary undertakings and directors of the Society or persons
connected with directors of the Society. The register will be available for inspection by members at the Annual General Meeting on 25 July 2025 and during normal office hours at the
Society’s principal office (Nationwide House, Pipers Way, Swindon, SN38 1NW) during the period of 15 days prior to the meeting.
Subsidiary, parent and ultimate controlling party
The Group is controlled by Nationwide Building Society, the ultimate parent, which is registered in England and Wales. Details of subsidiary undertakings are shown in note 33.
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35. Related party transactions (continued)
Transactions with related parties
A number of transactions are entered into with related parties in the normal course of business. These include loans, deposits and the payment and recharge of administrative expenses.
The outstanding balances for these related party transactions at the period end, and the associated income and expenses for the period, are as follows:
Note:
i. As detailed in note 1, comparatives have been restated to reclassify certain amounts relating to the Society's covered bond programme, including an element of interest expense relating to issuances which
was previously included within interest income, and certain accrued interest and intercompany balances.
In addition, the Society enters into derivative financial instruments with the consolidated structured entities used in its asset backed funding programmes, which are described in note 14.
As at 31 March 2025, the Society held intercompany derivative assets of £679 million and intercompany derivative liabilities of £331 million (2024: £615 million and £313 million,
respectively) in respect of these instruments.
Transactions with Group companies
Transactions with Group companies arise in the normal course of business. Interest on outstanding loans and deposits accrues at a transfer pricing rate agreed between the Society and
its subsidiary undertakings. The Society does not charge the net defined benefit cost to the subsidiary undertakings that participate in the Nationwide Pension Fund.
Transactions with related parties SocietyGroupSociety subsidiaries Joint ventures 2025 2024 2025 2024 £m £m £m £m Intra-group balances Loans receivable 42,079 39,847 211 - Deposits payable 242 222 12 - Net interest income (note i) Interest receivable 1,623 1,316 7 - Interest expense 137 91 - - Other income and expenses Dividends received 2 - - - Fees and expenses received 83 75 - - Other balance sheet items (note i) Other assets - 95 - - Other liabilities 2,706 1,762 - -
Notes to the financial statements (continued)
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36. Notes to the cash flow statements
Non-cash items included in profit before tax Group Society2025 2024 2025 2024 £m £m £m £m Net increase/(decrease) in impairment provisions 507 16 (64) (18) Net (decrease)/increase in provisions for liabilities and charges (117) 67 (119) 63 Amortisation and (gains)/losses on investment securities 432 110 436 110 Amortisation of acquisition fair value adjustments 39 - - - Depreciation, amortisation and impairment 592 461 499 461 Impairment (release)/charge on investment in Group undertakings - - (1) 2 Loss/(profit) on property, plant and equipment and write downs of inventory - 4 (1) (2) Gain on disposal of investment advice business - (42) - (42) Net credit in respect of retirement benefit obligations (38) (40) (25) (40) Interest on financing liabilities 771 506 643 506 Gains from derivatives and hedge accounting (12) (117) (46) (133) Gain on acquisition of Virgin Money (2,300) - - - Total (126) 965 1,322 907 Changes in operating assets and liabilities Group Society2025 2024 2025 2024 £m £m £m £m Loans and advances to banks and similar institutions and payment scheme (8) 732 (24) 732 collateral Net derivative financial instruments 251 (1,510) (285) (1,757) Loans and advances to customers (16,719) (2,754) (13,856) (3,362) Other operating assets (note i) 278 (301) (1,656) 965 Shares 14,062 6,223 14,062 6,223 Deposits from banks and similar institutions and other deposits (12,981) (9,160) (11,445) (9,531) Debt securities in issue 4,808 2,136 3,209 2,685 Contributions to defined benefit pension schemes (7) (1) - - Other operating liabilities (note i) 451 92 1,324 (253) Total (9,865) (4,543) (8,671) (4,298) Cash and cash equivalents Cash and balances at central banks (note i) 27,187 23,782 17,153 23,782 Loans and advances to banks and similar institutions repayable in 3 months or 1,338 563 968 553 less (note i) Total 28,525 24,345 18,121 24,335
Note:
i.
Comparatives have been restated as detailed in note 1.
Balances required to be maintained with the Bank of England we
re £2,296 million and £1,448 million for the Group and Society, respectively (2024: £1,449 million for the Group and
Society). These balances are included within
cash and balances at central banks on the balance sheet and are not included in cash and cash equivalents in the cash flow statement as they
are not liquid in nature. Cash collateral and other deposit balanc
es relating to derivative activities, totalling £472 million and £371 million for the Group and Society respectively (2024:
£355 million for the Group and Society), are also
excluded from cash and cash equivalents.
Notes to the financial statements (continued)
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36. Notes to the cash flow statements (continued)
Movements in liabilities arising from financing activities are set out below:
Note:
i. Comparatives have been restated to reflect the reclassification of senior non-preferred notes as detailed in note 1. These notes have been reclassified from subordinated liabilities to debt securities in issue
but have continued to be classified within cash flows from financing activities.
Derivative financial instruments used to hedge financing liabilities include interest rate and cross-currency swaps. For the Group, interest paid and payment/(proceeds) on redemption of
these hedging instruments are included within financing cash flows and for the period ended 31 March 2025 amounted to £376 million and £97 million respectively (2024: £228 million
and £(18) million). For the Society, interest paid and payment/(proceeds) on redemption of these hedging instruments are included within financing cash flows and for the period ended 31
March 2025 amounted to £315 million and £97 million respectively (2024: £228 million and £(18) million.
Other changes in the value of these derivatives in the period ended 31 March 2025 included decreases of £275 million (2024: £256 million) for the Group and decreases of £251 million
(2024: £256 million) for the Society due to foreign exchange, fair value and other movements.
Movements in liabilities arising from financing activities 2025 2024 (note i) Subordinated Senior non-Subscribed Lease Total Subordinated Senior non-Subscribed Lease Total liabilities preferred capital liabilities liabilities preferred capital liabilities notes notes Group £m £m £m £m £m £m £m £m At 5 April 2,075 5,150 173 172 7,5702,101 4,654 173 225 7,153Acquisition of Virgin Money 766 2,672 - 165 3,603 - - - - -Issuances/additions 426 3,734 - 10 4,170 - 1,385 - 11 1,396Redemptions/repayments (842) (839) (44) (40) (1,765) - (789) - (68) (857)Foreign exchange (50) (140) - - (190) (35) (122) - - (157)Fair value and other movements 69 185 - 8 262 9 22 - 4 35At 31 March (2024: 4 April) 2,444 10,762 129 315 13,650 2,075 5,150 173 172 7,570Movements in liabilities arising from financing activities 2025 2024 (note i) Subordinated Senior non-Subscribed Lease Total Subordinated Senior non-Subscribed Lease Total liabilities preferred capital liabilities liabilities preferred capital liabilities notes notes Society £m £m £m £m £m £m £m £m At 5 April 2,075 5,150 173 172 7,5702,101 4,654 173 225 7,153Issuances/additions 426 3,734 - 10 4,170 - 1,385 - 11 1,396Redemptions/repayments (842) (839) (44) (32) (1,757) - (789) - (68) (857)Foreign exchange (50) (104) - - (154) (35) (122) - - (157)Fair value and other movements 65 151 - 6 222 9 22 - 4 35At 31 March (2024: 4 April) 1,674 8,092 129 156 10,051 2,075 5,150 173 172 7,570
Notes to the financial statements (continued)
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37. Segmental reporting
As detailed in note 38, the Group acquired Virgin Money on 1
October 2024. Following the acquisition, the business is being operated as two separate segments which reflect the Group’s
current regulatory structure. These segments are:
Nationwide sub-group: This represents the Society and its subsidiaries, excluding Virgin Money UK PLC and its subsidiaries.
Virgin Money sub-group: This represents Virgin Money UK PLC and its subsidiaries, including adjustments arising on consolidation within the Group financial statements.
Both sub-groups are UK regulated financial services business, an
d have a UK customer base. All transactions between segments are conducted at arm’s length.
The sub-group results reflect underlying perf
ormance. Underlying results exclude certain items, detailed in the notes to the table below, which management do not consider to be
representative of underlying busi
ness performance. Further information on underlying profit before tax is provided on page 318 within Other information.
Prior to the acquisition of Virgin Money on 1 October 2024, the
Group had one reportable segment. Comparative segmental disclosure for the year ended 4 April 2024 represents
underlying performance for the Group as a wh
ole, which is presented on page 48 of the Financial review within the Strategic report.
The Group's reportable segments will be kept under
review as integration of the businesses progresses.
Segmental results for the period ended 31 March 2025 Underlying basis Total -Acquisition & Total – Nationwide Virgin Money underlying other statutory sub-group sub-group basis adjustments basis £m £m £m £m £mNet interest income: External net interest income (note i) 4,183 848 5,031 (39) 4,992 Internal interest income/(expense) 6 (6) - - - Total net interest income 4,189 842 5,031 (39) 4,992 Net other income (note ii) 116 64 180 12 192 Gain on the acquisition of Virgin Money (note iii) - - - 2,300 2,300 Total income 4,305 906 5,211 2,273 7,484 Administrative expenses (note iv) (2,485) (698) (3,183) (367) (3,550) Impairment charge on loans and advances to customers (note v) (12) (164) (176) (456) (632) Profit before member reward payments and tax1,808 44 1,852 1,450 3,302 Member reward payments (note vi) - - - (1,000) (1,000) Profit before tax 1,808 44 1,852 450 2,302 Tax credit 36 Profit after tax 2,338 Other items reflected in the income statement above: Depreciation and amortisation (482) (37) (519) (56) (575)
Notes:
i.
Underlying net interest income excludes amortisation of fair value adjustments which were recognised on the acquisition of Virgin Money.
ii.
Gains or losses from derivatives and hedge accounting are excluded from underlying net other income.
iii.
The gain recognised on acquisition of Virgin Money, as detailed in note 38, has been excluded from underlying results.
iv.
Underlying administrative expenses exclude certain costs relating to the acquisition of Virgin Money. These comprise £36 million of transaction-related costs incurred by the Society, £56 million of
amortisation relating to acquired intangible assets, and £275 million of one-off costs (and related VAT) associated with the amended Trade Mark License Agreement between Virgin Money UK PLC and
Virgin Enterprises Limited.
v.
Excluded from the underlying impairment charge are the one-off impacts of recognising IFRS 9 provisions on acquisition of Virgin Money. This includes the initial recognition of the 12-month expected loss
for all acquired loans; the impact of the first application of staging criteria; and the alignment of key elements of impairment provisions methodology.
vi.
Member reward payments represent discretionary payments to members of the Society which may be determined by the Board from time to time, depending on the financial strength of the Society.
Notes to the financial statements (continued)
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37. Segmental reporting (continued)
Segmental analysis for additions to intangible assets, total assets and total liabilities is provided below.
Segmental analysis of non-income statement items Nationwide Virgin Money Total sub-group sub-group £m £m £m Additions to intangible assets in the period ended 31 March 2025 308 768 1,076 Total assets at 31 March 2025 (note i) 277,485 90,392 367,877 Total liabilities at 31 March 2025 (note i) 263,913 83,482 347,395
Note:
i. Total assets and liabilities exclude the Society's investment in Virgin Money UK PLC and intercompany balances.
Notes to the financial statements (continued)
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38. Acquisition of Virgin Money UK PLC
On 1 October 2024 the Society acquired 100 per cent of the ordinary share capital of Virgin Money UK PLC by means of a court-sanctioned scheme of arrangement under Part 26 of the UK
Companies Act 2006. Together with its subsidiaries, Virgin Money UK PLC undertakes banking and other financial services related activities in the UK. The combination of the two
complementary businesses has created the second largest provider of mortgages and retail deposits in the UK. The table below sets out the fair values of the identifiable net assets and
liabilities acquired.
Book value as at
1 October 2024
Fair value
adjustments
Fair value as at 1
October 2024
£m £m
£m
Assets
Cash and balances at central banks
10,695
-
10,695
Loans and advances to banks and similar institutions
519
-
519
Investment securities
6,089
-
6,089
Derivative financial instruments
44
-
44
Loans and advances to customers
71,278 59 71,337
Intangible assets
151 617 768
Property, plant and equipment
192 (8) 184
Accrued income and prepaid expenses
94
-
94
Deferred tax
219
(125)
94
Other assets
73 - 73
Retirement benefit asset
429 - 429
Total assets
89,783 543 90,326
Liabilities
Deposits from banks and similar institutions
3,035 - 3,035
Other deposits
69,816 (5) 69,811
Debt securities in issue
8,414 113 8,527
Derivative financial instruments
191 - 191
Other liabilities
1,822 - 1,822
Provisions for liabilities and charges
38 - 38
Accruals and deferred income
133 - 133
Subordinated liabilities
741 25 766
Deferred tax
107 - 107
Current tax liabilities
5 - 5
Total liabilities
84,302 133 84,435
Net assets 5,481
410 5,891
Fair value of net assets before non-controlling interests
5,891
Fair value of non-controlling interests (note i)
(759)
Fair value of net assets acquired
5,132
Cash paid for ordinary shares (note ii)
2,819
Deferred consideration for employee share plans (note iii)
13
Total consideration
2,832
Gain on acquisition
2,300
Notes to the financial statements (continued)
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38. Acquisition of Virgin Money UK PLC
(continued)
Notes:
i. At the acquisition date, Virgin Money Group PLC had in issue Fixed Rate resettable AT1 securities issued on the London Stock Exchange (‘LSE’). In accordance with IAS 32, these were classified as equity
instruments. The Society did not acquire the AT1 securities which remained in issue to third parties, and as such these represent non-controlling interests which have been recognised at fair value by
reference to the traded market prices on the LSE.
ii. 1,296,472,686 ordinary shares in Virgin Money UK PLC were acquired on 1 October 2024 at a price of 218 pence per share, resulting in £2,826 million of consideration settled in cash. This included £7 million
for shares held by an Employee Benefit Trust (‘EBT’) consolidated into the Virgin Money UK PLC group, and which were held within the Nationwide group on acquisition. This amount is deducted from the
total, to show the consideration paid external to the Group of £2,819 million.
iii. Included within total consideration are shares to be issued in the future relating to the settlement of outstanding Virgin Money UK PLC employee share awards which became fully vested upon the court
sanction date of the scheme of arrangement. The Society will be required to redeem the shares from the employees in cash at a fixed price of 218 pence per share at the end of the award deferral periods
(subject to customary malus and clawback provisions).
Intangibles recognised on acquisition included a core deposit intangible of £360 million which relates to the value derived from access to a stable source of low cost on-demand deposit
funding when compared to the marginal cost of alternative funding. This asset has been valued using the income approach, specifically the ‘cost of savings method’ which compares the cost of
the existing on-demand deposits (including the cost of servicing them) to the marginal cost of alternative funds from a mix of diversified funding sources available to market participants. The
intangible asset represents the present value of the cost savings expected to be realised over the remaining useful life of the deposits.
An intangible asset of £288 million has been recognised relating to purchased credit card relationships, reflecting the value that is expected to be generated from existing credit card
customers who will continue to borrow using their credit cards into the future. This has been valued using a discounted cash flow approach to determine the present value of cash flows
attributable to future spending.
The fair value adjustment for intangible assets also includes a reduction of £31 million relating to the elimination of legacy goodwill recognised by Virgin Money UK PLC.
For assets and liabilities held at amortised cost, suitable valuation techniques were used to assess fair value.
The fair value of loans and advances to customers of £71,337 million was calculated using a discounted cash flow methodology, at an individual loan level or segmented according to vintage
and product groupings where appropriate. The gross contractual amount of the loans and advances receivable from customers was £71,630 million. The best estimate of the amounts not
expected to be collected was £437 million.
On demand customer deposits were valued based on book value, with a core deposit intangible separately recognised as detailed above. Interest-bearing term deposits were valued using a
discounted cash flow approach. For debt instruments in issue, the fair value was taken directly from quoted market prices.
The fair value measurement of identifiable assets acquired and liabilities assumed may be adjusted following management’s finalisation of its acquisition date fair value estimates if new
information about facts and circumstances existing on the date of the acquisition is obtained. In accordance with IFRS 3 ‘Business combinations’, any such adjustment can be made for up to a
maximum of one year from the acquisition date. No such adjustments have been made in the period to 31 March 2025. Fair value adjustments will be amortised or depreciated over the
remaining life of the underlying items, where appropriate. The adjustment on the deferred tax asset will reduce as it is utilised.
Since the acquisition date, total income of £842 million and loss after tax of £579 million from Virgin Money have been included in the consolidated income statement for the period ended 31
March 2025. This includes the one-off costs associated with the amended Trade Mark License Agreement and the one-off impacts of recognising IFRS 9 provisions on acquisition of Virgin
Money, as detailed in note 37. Had Virgin Money been acquired on 5 April 2024, management has estimated that consolidated income for the Group would have been £8,355 million and profit
after tax £2,331 million for the period ended 31 March 2025. In determining these amounts, management has assumed that the fair value adjustments that arose on acquisition as part of the
purchase price allocation would have been the same if the acquisition had occurred on 5 April 2024. The pro forma income and profit after tax figures do not purport to represent what the
Group’s actual results would have been had the acquisition occurred on 5 April 2024, nor are they indicative of future results.
Gain on acquisition
As the fair value of the identifiable net assets acquired was greater than the total consideration paid, negative goodwill arises as a result of the acquisition. This represents a gain on acquisition
of £2.3 billion, which has been presented separately in the consolidated income statement for the period ended 31 March 2025.
Notes to the financial statements (continued)
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38. Acquisition of Virgin Money UK PLC (continued)
The price paid by the Society to acquire the outstanding shares of Virgin Money UK PLC of 218 pence per share, plus the 2 pence per share dividend paid to shareholders as part of Virgin
Money UK PLC’s ordinary dividend calendar, represented a 38 per cent premium to the closing share price on 6 March 2024, the day immediately prior to the offer period. Although
representing a premium on the traded share price, the total consideration of £2.8 billion was significantly lower than the fair value of net assets acquired of £5.1 billion. The fair value of net
assets acquired was determined in accordance with the principles of IFRS 13 ‘Fair value measurement’, based on a market-participant view of the fair value of assets acquired and liabilities
assumed.
Acquisition costs
Acquisition costs of £39 million have been incurred by the Society in relation to the acquisition. Of this, £36 million was recognised within administrative expenses in the consolidated income
statement in the period ended 31 March 2025, with £3 million having previously been recognised in the year ended 4 April 2024.
Transactions recognised separately from the business combination
On 1 October 2024, Virgin Money UK PLC and Virgin Enterprises Limited (‘VEL’) executed a Deed of Amendment and Restatement to the Trade Mark License Deed of Agreement originally
dated 1 October 2014, as amended, restated and novated on 25 July 2016 and 18 June 2018. Pursuant to this Deed of Amendment and Restatement, the agreement will terminate after a four-
year period, followed by a two-year cessation period, and Virgin Money UK PLC has agreed to make payments to VEL totalling £250 million in addition to annual royalties during the remaining
four-year term. These costs will be recognised within administrative expenses in the consolidated income statement, with the £250 million payment recognised in the period ended 31 March
2025 and the annual royalties recognised over the periods to which they relate.
Net cash flow from acquisition
As outlined in note 36, certain balances included within cash and balances at central banks and loans and advances to banks and similar institutions are excluded from the Group’s definition of
cash and cash equivalents in the cash flow statement. This is either where the balances are not liquid in nature, or where they relate to cash collateral and other deposit balances held in respect
of derivative activities. A reconciliation between the balance sheet values acquired and the net cash flow from acquisition of Virgin Money presented in the Group’s cash flow statement is
provided below.
As at
1 October 2024
£m
Cash and balances at central banks 10,695
Loans and advances to banks and similar institutions 519
Balances acquired on acquisition 11,214
Adjustments for items not classified as cash and cash equivalents (965)
Cash and cash equivalents acquired 10,249
Cash paid for ordinary shares (2,819)
Net cash flow from acquisition of Virgin Money 7,430
Notes to the financial statements (continued)
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39. Capital management
The Group is subject to the regulatory capital requirements applied by its regulator, the Prudential Regulation Authority (PRA). Regulatory capital comprises the Group’s general reserve,
fair value through other comprehensive income reserve, revaluation reserve, core capital deferred shares, other equity instruments and subordinated debt, subject to various
adjustments and transitional arrangements required by the capital rules.
During the period the Group complied with the capital requirements applied by the PRA. Further unaudited details about the Group’s capital position can be found in the Capital risk
section of the Risk report.
40. Registered office
Nationwide is a building society, incorporated and domiciled in the United Kingdom. The address of its registered office is:
Nationwide Building Society
Nationwide House
Pipers Way
Swindon
United Kingdom
SN38 1NW
41. Events after the balance sheet date
On 28 May 2025, the Board approved a Nationwide Fairer Share Payment to be made to certain eligible members in June 2025, amounting to approximately £410 million in total. This has
not been reflected in these financial statements as it will be recognised in the year ending 31 March 2026, by reference to the date at which it was announced.
Notes to the financial statements (continued)
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Other information
Annual business statement 314
1. Statutory percentages
2. Other percentages
3. Information relating to directors at 31 March 2025
Country-by-country report 317
Alternative performance measures 318
Forward-looking statements 318
Glossary .....................................................................................................................................318
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Other information
Annual business statement
for the period ended 31 March 2025
1. Statutory percentages
Statutory percentages
2025 Statutory limit
% %
Lending limit 12.74 25.00
Funding limit 37.23 50.00
The above percentages have been calculated in accordance with the provisions of the
Building Societies Act 1986 as amended by the Building Societies Act 1997 and the
Modification of the Lending Limit and Funding Limit Calculations Order 2004.
The lending limit measures the proportion of business assets not in the form of loans
fully secured on residential property and is calculated as (X-Y)/X where:
X = business assets, being the total assets of the Group plus impairment provisions on
loans and advances to customers, less liquid assets, property, plant and equipment,
intangible fixed assets and investment properties included in the Group balance
sheet.
Y = the principal of, and interest accrued on, loans owed to the Group which are fully
secured on residential property.
The funding limit measures the proportion of shares and borrowings not in the form of
shares held by individuals and is calculated as (X-Y)/X where:
X = shares and borrowings, being the aggregate of:
i) the principal value of, and interest accrued on, shares in the Society,
ii) the principal value of, and interest accrued on, sums deposited with the Society or
any subsidiary undertaking of the Society, and
iii) the principal value of, and interest accrued under, bills of exchange, instruments or
agreements creating or acknowledging indebtedness and accepted, made, issued
or entered into by the Society or any such undertaking, less any amounts qualifying
as own funds.
Y = the principal value of, and interest accrued on, shares in the Society held by
individuals otherwise than as bare trustees (or, in Scotland, simple trustees) for
bodies corporate or for persons who include bodies corporate.
The statutory limits are as laid down under Buildings Society Act 1986 as amended by
the Building Societies Act 1997 and ensure that the principal purpose of a building
society is that of making loans which are secured on residential property and are funded
substantially by its members.
2. Other percentages
Other percentages
2025
2024 (note i)
Restated Previously
published
% %
%
As a percentage of shares and borrowings:
Gross capital 6.8 8.0 10.3
Free capital 6.3 7.7 10.0
Liquid assets 17.6 21.1 21.6
Profit for the financial year as a percentage
of mean total assets
0.72 0.48 0.48
Management expenses as a percentage of
mean total assets
1.10 0.94 0.89
Note:
i. Comparative percentages have been restated to reflect the reclassifications detailed in
note 1.
The above percentages have been prepared from the Society’s consolidated financial
statements and in particular:
‘Shares and borrowings’ represent the total of shares, deposits from banks and
similar institutions, other deposits and debt securities in issue.
‘Gross capital’ represents the aggregate of general reserve, revaluation reserve, fair
value through other comprehensive income reserve, cash flow hedge reserve, other
hedging reserve, non-controlling interests, CCDS, Additional Tier 1 capital,
subscribed capital and subordinated liabilities.
‘Free capital’ represents the aggregate of gross capital and provisions for collective
impairment losses on loans and advances to customers less property, plant and
equipment and intangible assets.
‘Liquid assets’ represent the total of cash in hand and balances with the Bank of
England, loans and advances to credit institutions and investments in debt securities.
‘Mean total assets’ represent the amount produced by halving the aggregate of total
assets at the beginning and end of the financial year.
‘Management expenses’ represent administrative expenses including depreciation,
amortisation and impairment of property, plant and equipment and intangible assets.
Annual business statement
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3. Information relating to directors at 31 March 2025
Name and date of birth Occupation Date of appointment Other directorships
K A H Parry OBE
29 January 1962
Chairman 23 May 2016
Daily Mail and General Trust plc
K A H Parry Limited
Marie Curie
T Graham
20 July 1965
Senior Independent Director
28 September 2022 Close Brothers Group plc
Close Brothers Limited
Clydesdale Bank PLC
Pension Insurance Corporation plc
Pension Insurance Corporation Group Limited
Virgin Money UK PLC
D A Crosbie
30 March 1970
Group Chief Executive Officer 2 June 2022 SSE plc
UK Finance Limited
A Aithal
14 February 1968
Non-executive director 1 October 2024 Institute for Government
Persimmon Plc
Polar Capital Holdings plc
Saga PLC
D J Bennett
26 March 1962
Non-executive director 13 November 2024 Allfunds Group PLC
Allfunds Bank S.A.
Clydesdale Bank PLC
Department of Work and Pensions
PayPal UK Limited
PayPal Digital Incorporation
V
irgin Money UK PLC
A Hitchcock
16 January 1965
Non-executive director 2 December 2018
A M Keir
16 October 1958
Non-executive director 1 March 2022
D Klein
10 August 1968
Non-executive director 1 March 2021
Guardian Media Group plc
Gwanda Global Limited
Gwanda Properties Limited
The Multichoice Group
Showmax Africa Holdings Limited
X
yon Health Inc
M J Mathieson
15 August 1974
Group Chief Financial Officer 6 September 2024
Derbyshire Home Loans Limited
E-Mex Home Funding Limited
FN1
Nationwide Housing Trust Limited
Nationwide Syndications Limited
NBS Ventures Management Limited
Silverstone Securitisation Holdings Limited
The Mortgage Works (UK) plc
UCB Home Loans Corporation Limited
Annual business statement (continued)
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3. Information relating to directors at 31 March 2025 (continued)
Name and date of birth Occupation Date of appointment Other directorships
S Orton
5 March 1970
Non-executive director 1 June 2023
T Rajah MBE
24 August 1982
Non-executive director 1 September 2020
Live Better With LTD
parkrun Global Limited
G Riley
6 December 1967
Non-executive director 1 April 2022
Roynat Capital Incorporation
St Michael’s Hospital Foundation
P G Rivett
27 June 1955
Non-executive director 1 September 2019
Standard Chartered PLC
Standard Chartered Bank
Directors’ service address
Documents may be served on any of the directors c/o Addleshaw Goddard LLP, One St Peter’s Square, Manchester M2 3DE, United Kingdom, REF: NBSAG.
Directors’ service contracts
Executive directors’ terms and conditions of employment are detailed in their individual contracts or service agreements which include a notice period of 12 months from Nationwide to
the individual and a notice period of 12 months from the individual to Nationwide. The notice period offered to any new executive director would be in line with this approach.
Directors’ share options
A proportion of executive directors’ variable pay is linked to the value of Nationwide’s core capital deferred shares (CCDS), details of which have been provided in the Report of the
directors on remuneration. For 2024/25, the executive directors participated in the Annual Performance Pay (APP) plan and the Long-Term Performance Pay (LTPP) plan. A maximum of
20% of the combined value of the APP and LTPP awards is payable in June 2025, with an equivalent proportion retained until June 2026. A minimum of 60% of the combined value is
deferred, payable between 3 and 7 years following the date of the award. A minimum of 50% of both the upfront portion and deferred portion is linked to the value of Nationwide’s
CCDS. These CCDS-linked elements are payable in cash subject to a 12-month retention period. No directors held securities in Nationwide Building Society during the year.
Annual business statement (continued)
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Other information
Country-by-country report (audited)
The Group is required to comply with the Capital Requirements (country-by-country reporting) Regulations 2013 which implement article 89 of the Capital Requirements Directive IV.
These regulations require disclosure of certain statutory information on a consolidated basis, by country, where an institution has a subsidiary or branch.
The country-by-country reporting disclosures for the period ended 31 March 2025 are shown below.
All activities of the Group are conducted in the United Kingdom. Details of the Society’s subsidiaries and consolidated structured entities can be found in notes 33 and 34 to the financial
statements.
Country Nature of activities Number of
employees
(average full
time equivalent)
Turnover
(note i)
£m
Profit before
tax
£m
Corporation
tax paid
£m
United Kingdom (notes ii, iii, iv) Provision of financial services 20,328 7,484 2,302 225
Notes:
i. Turnover represents ‘total income’ on the Group’s income statement.
ii. The Group acquired Virgin Money UK PLC on 1 October 2024; accordingly the information for this entity and its subsidiaries is included from this date.
iii.
The Group has a subsidiary incorporated in the Isle of Man which had an average of five full time equivalent employees during the year and which provides IT services to the Group. The entity is reported under
the United Kingdom where it is managed, controlled and subject to corporation tax.
iv.
The Group includes a consolidated structured entity incorporated in Jersey. This entity has no turnover or profit, pays no corporation tax and has no employees.
No public subsidies were received during the year.
Country-by-country report
317
Strategic report Risk report Other informationGovernance Financial statementsAnnual Report and Accounts 2025
Alternative performance measures
Nationwide uses a number of alternative performance measures in presenting business and financial performance. In addition to statutory results, underlying measures such as
underlying profit before tax are used to assist with like-for-like comparisons of performance across periods. Underlying profit before tax is not designed to measure sustainable levels of
profitability as that potentially requires exclusion of non-recurring items even though they are closely related to (or even a direct consequence of) the Group’s core business activities.
Alternative performance measures are presented within the Financial review on pages 46 to 55, with definitions presented in the Glossary.
Forward-looking statements
Certain statements in this document are forward-looking with respect to plans, goals and expectations relating to the future financial position, business performance and results of the
Group. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, the Group can give no assurance that these expectations will
prove to be an accurate reflection of actual results. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances
that are beyond the control of the Group including, amongst other things, UK domestic and global economic and business conditions, market-related risks such as fluctuation in interest
rates and exchange rates, inflation/deflation, the impact of competition, changes in customer preferences, risks concerning borrower credit quality, delays in implementing proposals,
the timing, impact and other uncertainties of future acquisitions or other combinations involving the Society and/or within relevant industries, risks relating to sustainability and climate
change, the policies and actions of regulatory authorities and the impact of tax or other legislation and other regulations in the jurisdictions in which the Group operates. The economic
outlook remains uncertain and, as a result, the Group’s actual future financial condition, business performance and results may differ materially from the plans, goals and expectations
expressed or implied in these forward-looking statements. Due to such risks and uncertainties, the Group cautions readers not to place undue reliance on such forward-looking
statements.
The Group undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
This document does not constitute, or form part of, any offer, invitation or solicitation of any offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities
or the solicitation of any vote or approval in any jurisdiction. No securities are being offered to the public by means of this document. Securities may not be offered or sold in the United
States absent registration or an exemption from registration. Any public offering to be made in the United States will be made by means of a prospectus that may be obtained from the
Group and will contain detailed information about the Group and its management, as well as its financial statements.
Glossary
The glossary for the Annual Report and Accounts 2025 is available at:
https://www.nationwide.co.uk/about-us/governance-reports-and-results/results-and-accounts/
Alternative performance measures,
Forward-looking statements and Glossary
318
Strategic report Risk report Other informationGovernance Financial statementsAnnual Report and Accounts 2025
Nationwide Building Society
Head Office: Nationwide House, Pipers Way, Swindon, Wiltshire SN38 1NW.
nationwide.co.uk
AGMAR&A2025 (June 2025)
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