Coventry Building Society Annual Report and Accounts 2025
Coventry Building Society · published 2 March 2026 13:30 UTC · Coventry Building Society credit rating and record
Annual Report
& Accounts 2025
Coventry Building Society | Annual Report & Accounts 20252
Annual Report & Accounts
The acquisition of The Co-operative
Bank on 1 January 2025 has given the
Coventry Building Society the
platform to build a modern mutual
banking group with scale and a clear
sense of purpose.
A mutual owned by our members
with the ambition to offer something
meaningfully different to families,
businesses and individuals across the
country. Bringing together the best
of the Coventry Building Society and
The Co-operative Bank to better
meet peoples' needs.
Strategic Report
Group performance highlights
5
A statement from our Chair
7
Your Chief Executive's review of the year
9
Welcoming The Co-operative Bank
13
Our strategy
14
Our stakeholders
17
Building a sustainable Group
19
Our external environment and top and
emerging risks
23
Chief Financial Officer's review
26
Risk Management Report
33
Information about our capital, liquidity
and funding position and how we manage
key risks relating to our operations
Our approach to climate change
62
This section outlines how the Group is
responding to climate change including
its climate related financial disclosures
Governance
73
Our Board of directors and a review of
our governance, including the Directors'
Report and annual report on
remuneration
Financial Statements
121
Our audited financial statements and
related notes, including the Independent
Auditors' Report
Other information
Annual Business Statement
198
Glossary
201
Visit us here www.thecoventry.co.uk
The photography in this Annual Report & Accounts features some of our amazing colleagues, members and customers.
Coventry Building Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority (www.fca.org.uk) and
the Prudential Regulation Authority (firm reference number 150892). Coventry Building Society. Principal Office: Coventry House, Harry Weston Road,
Binley, Coventry, West Midlands CV3 2TQ.
Coventry Building Society | Annual Report & Accounts 20253
Annual Report & Accounts
This Annual Report and Accounts is the first financial year of combined reporting for the
enlarged Group following the acquisition of The Co-operative Bank Holdings p.l.c. by
Coventry Building Society on 1 January 2025.
The full year ended 31 December 2025 includes the financial impacts of this acquisition
along with resulting acquisition and integration-related costs.
Comparative period references in this Annual Report and Accounts do not include the Bank.
Underlying profit to statutory profit is reconciled on page 27.
The contents of pages 4 to 120 are unaudited, unless otherwise stated.
The following terms are used in this report:
The Group
Coventry Building Society and all of its subsidiaries, including the
Bank from 1 January 2025.
Coventry Building Society
the Society
Coventry Building Society, parent entity of the Group.
The Society sub-group
Coventry Building Society and its subsidiaries, excluding the Bank
sub-group.
The Co-operative Bank Holdings p.l.c.
the Bank
the Bank sub-group
The entity acquired on 1 January 2025 by Coventry Building Society,
including all of its subsidiaries.
The Co-operative Bank
The trading entity which conducts the banking operations within the
Bank sub-group.
Underlying profit
Underlying profit excludes all of the accounting impacts of acquiring
the Bank, including day one acquisition, accounting and related
unwinds, reset of accounting policies on the acquired assets and
liabilities and related acquisition and integration costs. Underlying
performance is considered to be a better measure of core business
performance.
Coventry Building Society | Annual Report & Accounts 20254
Strategic Report
Strategic Report
An overview of strategy
and our financial
and non-financial
performance in the year.
Group performance highlights
5
A statement from our Chair
7
Your Chief Executive's review of the year
9
Welcoming The Co-operative Bank
13
Our strategy
14
Our stakeholders
17
Building a sustainable Group
19
Our external environment and top and
emerging risks
23
Chief Financial Officer's review
26
Other information
32
Coventry Building Society | Annual Report & Accounts 20255
Strategic Report
Group performance highlights
A defining and transformational year for the Group having brought The Co-operative
Bank back into mutual ownership, delivered on our integration and financial
performance commitments and created our new ambitious organisational strategy.
The Co-operative Bank was acquired by the Group on 1 January 2025. As a result, comparative information for 2024
excludes the results of the Bank, unless specifically stated.
Delivering for our members and our personal and business customers
Mortgage
market
share1
4.2%
(2024: 3.1%)
• The acquisition of the Bank has increased our market share1 of mortgages
to 4.2% and savings to 3.5%, and creates an opportunity to build on the
1.6% market share acquired in the personal current accounts segment.
• Excluding the impact of the acquisition, Group lending balances remained
stable in the year as we focused on capital accretion, given our significant
inorganic growth in the period and the highly competitive market.
Savings
market
share1
3.5%
(2024: 2.7%)
• The Group launched a successful limited company buy to let proposition in
April, broadening our reach to the residential rental sector with over £1
billion of applications received in the year.
• Excluding the impact of the acquisition, Group deposit balances increased
by £2.4 billion to £71.7 billion, reflecting the strength of our propositions.
• Over 76,000 personal current accounts were opened in the year with
Current
account
market share1
1.6%
(2024: not
applicable)
positive net switching of almost 4,000. There were also 16,000 new
business current accounts opened with plans to expand relationship
management capability.
Our commitment to service and value
Society Net
Promoter
Score2
+75
(2024: +79)
• The Society continues its record of outstanding customer service with an
NPS score2 of +75 and an average call wait time3 of just 79 seconds. We
have started to measure NPS at the Bank and the results are already
tracking positively.
• The Bank has increased its focus on service and it is pleasing to see a
significant improvement across direct channels, including telephony. The
Value
returned to
members4
£398m
(2024: £401m)
average speed to answer calls is now three times faster than 2024 and at
the lowest level in the last six years.
• The Society has continued to offer member value with a £398 million
premium4 above the market average being paid to members, in line with
the prior year despite the lower bank rate environment.
Supporting our colleagues and the communities we serve
Great Place
to Work Trust
Index®
score5
76%
(2024: 83%)
• We are proud of our continued external recognition as a Great Place to
Work in the super large organisation category5. Whilst this is a decline in
the year to 76% this reflects the coming together of two organisations and
a period of significant change for colleagues.
• The Society has been named as one of the UK's Best WorkplacesTM for
Development6, recognising our commitment to making colleague
Total
community
investment7
£6m
(2024: £5m)
development a key part of our culture.
• We have invested £6 million over the year in supporting our communities7,
working alongside national and local charity partners, including
maintaining our funding to tackle youth homelessness at £2 million.
1. Source: Bank of England. Market data as at 31 December 2025 (31 December 2024).
2. A measure of customer advocacy that ranges between -100 and +100 which represents how likely a customer is to recommend our products and services. Bank data started to be
measured from 1 April 2025.
3. Based on Society average call waiting times between 1 January 2025 and 31 December 2025.
4. Based on the Society’s average month end savings rate compared to the CACI Ltd's Current Account and Savings Database rest of market average rate for savings accounts, excluding
current accounts and offset savings, for the 12 months of the year.
5. A measure indicating a trust-based people first workplace based on positive responses to the annual Great Place to Work survey.
6. By Great Place to Work.
7. Total community investment made by the Group has been determined in line with the Business for Societal Impact (B4SI) framework.
Coventry Building Society | Annual Report & Accounts 20256
Strategic Report
Group performance highlights
The Co-operative Bank was acquired by the Group on 1 January 2025. As a result, comparative information for 2024
excludes the results of the Bank, unless specifically stated.
Robust Group financial performance
• Underlying1 profit before tax increased to £374 million (2024: £349
Underlying1
profit
before tax
£374m
(2024: £349m)
million), with income, costs and impairment charges increasing as a result
of the acquisition of the Bank on 1 January 2025.
• Statutory profit before tax increased to £801 million (2024: £323 million),
including a gain of £584 million on the acquisition of the Bank. The day one
gain reflects the agreed purchase consideration being over 40% below the
fair value of the net assets acquired.
Statutory
profit
before tax
£801m
(2024: £323m)
• Total underlying income of £1,124 million (2024: £664 million) and
underlying net interest margin of 1.22% (2024: 1.07%).
• Underlying1 costs of £735 million (2024: £333 million), including £404
million of Bank costs. The cost to income ratio increase reflects the
inclusion of the Bank's financial results for the year. The Society sub group
costs remained broadly flat at £331 million (excluding £67 million
Underlying1
cost to income
ratio
65%
(2024: 50%)
acquisition and integration costs).
• The Bank's performance is in line with our expectations for the year,
providing confidence in the financial benefits of the acquisition. Bank
fraud losses have seen a significant reduction in the year with a nearly 40%
fall in losses incurred.
The newly formed group is well capitalised with low arrears
UK leverage
ratio
4.6%
(2024: 5.7%)
• Leverage ratio of 4.6% (2024: 5.7%) and CET 1 ratio of 19.7% (2024: 28.0%),
well above regulatory levels2. The reduction in the year reflects the
inclusion of the Bank.
• Arrears rates remain low for the Group at 0.38% (2024: 0.33%) with
Common
Equity Tier 1
19.7%
(2024: 28.0%)
mortgages more than three months in arrears remaining significantly below
the market average3. Credit impairment charges of £24 million on a
statutory basis (2024: £18 million release) reflect the inclusion of the Bank
and the accounting requirements to reset provision staging on acquisition.
Mortgages
more than
3 months in
arrears
0.38%
(2024: 0.33%)
• The average liquidity coverage ratio (LCR) over the 12 month period
remained strong at 230% (2024: 258%) with the Group successfully repaying
the majority of outstanding TFSME4 drawings in the year.
The Group continues to be recognised externally for doing the right thing
Coventry Building Society
Fairer Finance
Gold ribbon for customer
experience for our savings
Coventry Building Society
Fairer Finance Gold ribbon
for customer experience
for our mortgages
The Co-operative Bank
Recognised as a Which?
Eco Provider for Current
Accounts, for the third
year running
the Group
Great Place to Work Best
Workplaces in Financial
Services & Insurance
1. Excluding items that are one off in nature relating to the purchase and integration of the Bank. See page 27 for further details.
2. The UK leverage ratio framework is not yet binding for the Group and is expected to apply at the point retail deposits exceed £75 billion at the subsequent annual reporting date.
3. Source: UK Finance.
4. The Bank of England's Term Funding Scheme with additional incentives for SMEs (TFSME).
Coventry Building Society | Annual Report & Accounts 20257
Strategic Report
A statement from our Chair
2025 was a defining year for Coventry
Building Society as we completed the
acquisition of The Co-operative Bank, an
organisation that shares our mutual
heritage and values.
Prior to the acquisition, the Board came to
the view that maintaining the status quo
was not going to be optimal for the Society,
given the challenges of a fast-changing
competitive landscape, digital innovation
and an economic environment marked by
weak growth and uncertainty.
As 2025 unfolded, with industry
consolidation playing out, reductions in
interest rates and tighter margins across
the sector, it is clear that acquiring the
Bank was the right decision for the Society.
We now have the opportunity to create
something meaningfully different in our
industry, while protecting the long-term
interests of our members.
During the year, the leaders and teams
across the Group have focused on bringing
the Society and Bank together, while
continuing to deliver what matters most to
our members and customers - excellent
service, competitive rates and the security
of knowing their money is safe. Our
commitment to these priorities remains as
strong today as it has been throughout our
140 year history.
A challenging economic and geopolitical environment
2025 continued to be a challenging economic climate.
Economic growth was minimal throughout the year, and
business confidence remains low, with the impact of the
Government’s fiscal policy weighing heavily on investment
and hiring decisions.
Geopolitics has remained unstable in 2025, with the post
cold war consensus coming under increasing challenge and
threat. All of these elements have combined to create one
of the most challenging market environments we’ve faced
for some time.
The financial services industry has responded in two ways
- further consolidation in the retail banking space and
increased competition, both from large players and
specialist lenders. This has created difficult trading
conditions in both the mortgages and savings markets.
Had we not acquired the Bank and diversified our business
over the past 12 months, our ability to remain
competitive would have been challenged. However, the
enlarged Group’s broader product offering gives us an
enhanced ability to manage low‑margin mortgage lending
in competitive markets and offer the best possible rates
to savers.
Supporting our members through a challenging time
The cost of living crisis remains very real for many and
ongoing economic uncertainty continues to create
nervousness about job security. This all adds up to people
delaying major life decisions, such as moving home or
planning for the future.
This nervousness is reflected in the performance of the
housing market, where 2025 was marked by slow price
growth, fluctuating activity levels and continued buyer
caution, with annual house price increases remaining low
and transactions influenced by economic uncertainty.
This means, more now than ever, we need to be here for
our members and customers and continue to stand for
great rates, service and security.
A strong business to meet the needs of members
As we move forward with the integration of the Bank,
your Society will be better placed than ever to navigate
challenges ahead with confidence. Across the Group, we
can offer a broader range of products, such as personal
current accounts and business banking.
One of the priorities of the new Group is to show we can
be meaningfully different from both the high street banks
and the other building societies. Your Board is focused on
retaining what makes us special for our members, while
making sure we offer a modern, fresh alternative to the
other choices people have in the market.
You can expect to hear more on that in the year ahead.
Coventry Building Society | Annual Report & Accounts 20258
Strategic Report
A statement from our Chair continued
Delivering on our areas of focus
The Board's overarching priority is to protect the long-
term interests of its members. Under that umbrella, your
Board's priority areas during the last year included in
particular:
• Defining the strategy of our combined Group;
• Overseeing the organisational integration of
colleagues, culture and technology; and
• Delivering in year performance to the highest possible
standards.
The business has made good progress against those
priorities. I am particularly pleased that management has
been able to keep its focus firmly on achieving day-to-day
service and value for our members and customers, at the
same time as progressing the complex projects that are
required as part of the integration process.
Strengthening our Board
We have made a number of appointments in 2025 to
strengthen our Board. In January 2025, Caroline Marsh
became the Chair of the Remuneration Committee on
appointment and Mark Parker joined the Board from The
Co-operative Bank. Jane Leach also joined the Board in
October 2025 and as Chair of Board Audit Committee from
November 2025. All three have had extensive and
successful careers in the financial services industry and
bring valuable, fresh perspectives to the Board's
discussions.
Looking to the future
In the coming year, we anticipate further reductions to
interest rates, while the mortgage market looks set to
remain highly competitive. We will continue to work hard
to balance the needs of all of our members and customers
and ensure we meet their expectations in terms of service
and value.
In terms of the issues on the horizon, we keep a constant
eye on policy changes and will make our voice heard on
issues that we feel go against our members’ interests.
With that in mind, we were glad to see the Government
carve out the over 65s from the upcoming cuts to the cash
ISA allowances.
In terms of the broader external forces that require our
attention, two stand out: cyber security and Artificial
Intelligence ('AI'). The cyber threat continues to grow, and
we are investing significantly in our defences and in
protecting members and customers from fraud. AI also has
the potential to be genuinely transformational for our
industry. What form that transformation will take is still
emerging, but we remain alert to both the threats and
opportunities.
As we look to the future, the Group is strongly positioned
to navigate whatever the external environment may bring.
We are confident that the enlarged Group can build a
unique position in the market as a modern mutual
meeting the needs of its members and customers.
David Thorburn
Chair of the Board
26 February 2026
"The Group is focused on
delivering what matters most to
our members and customers -
excellent service, competitive
rates and the security of
knowing their money is safe.
Coventry Building Society | Annual Report & Accounts 20259
Strategic Report
Your Chief Executive's review of
the year
2025 was a pivotal year for Coventry
Building Society Group. 1 January marked
the legal completion of our acquisition of
The Co-operative Bank. A landmark
transaction designed to bring together two
organisations that share the same values,
the same commitment to doing the right
thing and the same ambition: to redefine
banking for our members and our
customers.
For the Group, this was the year that we
started laying the groundwork for our new
organisation – one which will offer
something meaningfully different to
families, businesses and individuals across
the country, and bring together the best of
Coventry Building Society and The Co-
operative Bank to better meet people’s
needs.
It has been a significant year. Integration milestones have
been met at a controlled pace but with real energy and
purpose. We are committed to delivering a successful
integration, which is why we’re taking the time to do
things properly and create strong foundations for our long-
term future. One of our key achievements this year was to
define a new shared purpose for the Group. This provides
a guide for how we will bring the two organisations
together and how we show up for our members, our
customers and communities in a way that delivers great
service, great value, security and makes a difference to
their world.
Our new purpose, ‘We power good with every pound’,
drives everything we do and every decision we make for
our colleagues, our members and our customers. At its
core is a fundamental belief that every pound holds the
power to create positive change. I’ve been extremely
proud to witness that purpose in action as our teams have
responded to the challenges we have set. We have made
huge progress with bringing together our colleagues,
integration of our systems and redefining our common
culture.
And we've achieved all this, while maintaining our focus
on delivering for members and customers. Our underlying1
Group profit before tax of £374 million (2024: £349
million) is ahead of our expectations. That performance
comes in spite of a challenging external environment in
which interest rates are falling, continued cost of living
challenges and intensified competition in mortgage and
savings markets.
Our statutory profit before tax of £801 million (2024: £323
million) includes a significant day one gain on the
acquisition of the Bank. The day one gain of £584 million
reflects the agreed purchase consideration being over 40%
below the fair value of the net assets acquired. As
importantly, our commitment and focus to members and
customers is unwavering.
When we envisaged the rationale for the acquisition, it
was to create national scale, access to a personal current
account offering, business banking and a scaled mortgage
and savings franchise. This rationale is more compelling
now than ever, in light of both the economic environment
and the competitive landscape. The acquisition of the
Bank has increased our market share2 of mortgages to
4.2% and savings to 3.5% (2024: 3.1% and 2.7%), and
creates an opportunity to build upon the 1.6% market
share acquired in the personal current account segment.
Knowing how to manage your money is increasingly
complex. The economy feels uncertain. Interest rates feel
unpredictable. For many people, it’s never felt harder to
manage their family’s finances, get on the property
ladder or start a business.
Now, more than ever, people want a banking partner they
can trust. One they know acts in their best interests –
both for today and tomorrow. One they know can help
their family, across the generations, through every
situation that they face. One that in an increasingly
digital world, is able to help them, when, where and how
they choose.
Before I go into the detail of our year, I wanted to reflect
on one of my personal highlights, introducing our new
purpose to our almost 6,000 colleagues. I came away from
that event energised by how enthused our colleagues
were by what we’re seeking to achieve. I’m proud of how
far we’ve already come on our journey and am excited for
the future.
Delivering for borrowers
Mortgage markets remained competitive, with thin
margins. We prioritised retention, achieving rates of 76%
in the Society and 65% in the Bank. We continued to
support first-time buyers, helping over 9,600 families and
1.Excluding items that are one off in nature relating to the purchase and integration of the Bank. See page 27 for further details.
2.Source: Bank of England. Market data as at 31 December 2025 (31 December 2024).
Coventry Building Society | Annual Report & Accounts 202510
Strategic Report
Chief Executive's review continued
individuals onto the property ladder. We launched new
propositions across the Group including limited company
buy-to-let, broadening our reach and meeting evolving
member and customer needs.
Despite a relatively flat housing market, the Group
delivered disciplined growth in mortgage balances,
supported by strong operational performance. Our new
mortgage origination platform at the Society has reduced
average time to offer to just eight days, improving
efficiency and customer experience. We are recognised by
brokers and consumers for our brilliant service.
Delivering value to savers
Despite falling rates, we sustained our commitment to
member value, paying a £398m premium above market
averages1.
Our savings strategy is built on trust and transparency. At
the Society, we aim to offer competitive rates
consistently, rather than chasing headlines. This approach
reflects our long-term perspective and our belief that
mutuality means doing the right thing for members, not
just today but for the future.
Everyday Banking for Individuals and Businesses
The acquisition enables the Group to offer a full-service
banking proposition. Over 76,000 new current accounts
were opened at the Bank this year, supported by popular
switch incentives. Business banking is a strategic priority,
with 16,000 new business current accounts opened and
plans to expand relationship management capability.
We see significant potential in everyday banking. Current
accounts are not just a product; they are a gateway to
deeper relationships with customers. They allow us to
serve more of their needs, provide greater convenience
and strengthen our funding base. Business banking offers
similar opportunities, enabling us to support purpose-
focused organisations from sole traders to credit unions to
housing associations – organisations that share our values
and contribute to local economies.
Powering our long-term future: bringing together
Coventry Building Society and The Co-operative Bank
Coventry Building Society and The Co-operative Bank
coming together isn’t just another merger in the banking
sector. We haven’t done this to make shareholders richer
or to be a bigger bank on the high street. It’s to give
members, customers and communities something
+75 Society
Net
Promoter
Score
Our measure of
excellent service 3
meaningfully different – a true alternative, acting in their
best interests.
In our first year of the integration, we’ve made significant
progress and hit the milestones we set ourselves earlier
this year. I’m incredibly proud of and grateful to everyone
that has helped make this happen.
The Group Executive Team has been established and
strengthened with new appointments during the year. As a
team, we have identified a number of long-term strategic
business priorities that will set us up for success now and
in the future, focused on bringing together the best of our
two organisations.
We’ve made good progress on the path to becoming a
simpler and more efficient business. We’ve created joint
centres of excellence across Group functions to provide
the best possible service to colleagues, members and
customers. In doing so, we have had to make some
difficult decisions and earlier this year announced changes
which resulted in a reduction of a number of roles across
the Group. We’ve worked closely with all affected
colleagues to make sure that they received the right
support.
Already delivering for members and customers
A key area of focus for our integration, was to ensure that
our members and customers saw an immediate benefit,
not only in terms of value but also service. Our philosophy
on customer service remains the same: digital first,
human-always. That means we need to support
individuals, when, where and how they choose to bank
with us.
That’s why we’ve invested over £6 million in all of our
customer service channels this year, ensuring a great
experience through whichever channels and brand people
interact with us.
We continue to offer excellent customer service with call
waiting times2 at the Society of 79 seconds and now at
under five minutes, the Bank service levels are the best in
six years. The Society Net Promoter Score3 (NPS) remains
at an exceptionally high level at +75 (2024: +79) and we
have started to measure NPS at the Bank to track service
and the results are already tracking positively.
We’ve maintained our commitment to our branch
network, committing to a multi-million pound investment
to refurbish the entire Bank network by 2027. I was
delighted that in November, we were able to refurbish
and re-launch Hanley, which also now serves as our first
ever dual-service branch, where both Society and Bank
members and customers can be served in one location. In
2026, we’re going to continue to trial this approach across
more of our network.
We've invested in a new service for members and
customers during the year, now starting to offer video
appointments through our branch network. During busy
times the branch network also supports the contact
centres and in the Society, 30% of all telephone calls are
taken in branch.
1. Based on the Society’s average month end savings rate compared to the CACI Ltd's Current Account and Savings Database rest of market average rate for savings accounts, excluding
current accounts and offset savings, for the 12 months of the year.
2. Based on average call waiting times between 1 January 2025 and 31 December 2025.
3. Net Promoter Score (NPS) is a measure of customer advocacy that ranges between -100 and +100, which represents how likely a customer is to recommend our products and services.
Coventry Building Society | Annual Report & Accounts 202511
Strategic Report
Chief Executive's review continued
Through our efforts in 2025, customers and members are
experiencing better service, wherever and whenever they
want to engage with us.
Investment in our technology and services
To consistently deliver for our customers we have
invested in cyber-security and operational resilience,
building on the strong safeguards already in place. At a
time when cyber risk is high on everyone’s agenda given
recent events impacting well known organisations, these
enhancements ensure we continue to protect our
members’ and customers’ data and maintain reliable,
resilient services, even in the face of disruption.
We continue to invest in our digital capability in the
Group and have started a major investment in the digital
capability for personal and business current account
customers.
Following the refreshing of our strategy in 2025, we've
begun the process of planning a multi year investment
programme across products and services. This will enable
the Group to remain agile and better react to future
customer needs and requirements.
Taking our people with us - creating a combined culture
Bringing together two organisations can be challenging,
especially two organisations that are steeped in such
history and legacy. At Coventry Building Society we’ve
always had strong colleague engagement, and I was
determined that this would continue during this new era.
I’m delighted that in our first year of integration we’ve
maintained this, especially during a period of significant
change for our people, while bringing our colleagues from
The Co-operative Bank on that journey as well.
We’ve worked with great dedication and focus to define
and embed a target culture that truly reflects who we are
and our ambitions for the future. We created this
together with our colleagues: more than 4,000 voices from
our colleague survey and 120 participants in in-person
sessions helped shape the outcome, ensuring it reflects
perspectives across the Group. We care, we are
ambitious, we take ownership: this epitomises the
organisation we will be.
We remain focused on strengthening diversity, inclusion
and colleague wellbeing across the Group. There is always
more we can do, but we've continued to make good
progress - from expanding our colleague networks to more
than 15 areas of focus and continuing to grow our
Ethnicity Career Development Programme, bringing
together the best of both organisations' cultures through
colleague voices. These steps reflect our commitment to
building an organisation where everyone feels supported,
represented and able to succeed.
Recognised as a Great Place to Work
I’m also delighted that we’ve once again been recognised
in the Great Place to Work Trust Index.
Since 2021, The Society has used Great Place to Work to
help us measure and improve our culture and colleague
engagement. In 2025, we were able to complete this on a
Group basis, ensuring the engagement of colleagues
across the full organisation can be understood. Over 80%
of our Group colleagues contributed to the survey and we
achieved a score of 76%. Areas of priority for our
colleagues remain around diversity & inclusion and further
progress on gender and ethnicity representation in senior
roles; all things we are working hard on.
I was particularly encouraged by several of the survey
results: 95% of colleagues believe good customer
outcomes are important to the organisation, 90% believe
their work contributes to our purpose and 89% feel
positive about how we contribute to our wider
communities.
All three of these things are crucial to what makes us
meaningfully different as an organisation to bank with and
work for - and I’m delighted our colleagues feel this so
strongly.
Community and responsible business
As a purpose-driven business, we’re committed to doing
the right thing for our customers, communities and the
environment. The power of our combined Group has
strengthened our ability to make a meaningful difference
in the communities we operate in, both at a national and
local level.
Community and powering change
In 2025, we have invested £6 million1 (2024: £5 million)
over the year in supporting our communities, including
working alongside national and local charity partners to
tackle youth homelessness. We’ve continued to deepen
our partnership with Centrepoint. Our funding towards
tackling youth homelessness has been maintained at £2
million, with a £1 million contribution in the year towards
affordable housing for young people in Coventry, building
on last year’s £1 million donation in Manchester.
Our support to Centrepoint has also included lending our
voice to the Make Work Pay campaign, which sought to
remove the benefits penalty for young working people
living in supported accommodation, we were delighted
that the Government addressed this in the last Budget.
Meanwhile, our colleagues contributed thousands of
volunteering hours, reinforcing our commitment to
local impact.
Through our partnership with Refuge, we have supported
the national helpline and also rolled out training to
colleagues on how to identify potential economic abuse
and best support victims.
Supporting those in our communities who are isolated and
vulnerable is something we take seriously – as well as
hosting our own befriending events in branches and at the
Coventry Building Society Arena, we also work with
partners to create spaces to bring people together.
£6m
Total community
investment1
(2024: £5m)
1. Total community investment made by the Group has been determined in line with the Business for Societal Impact (B4SI) framework.
Coventry Building Society | Annual Report & Accounts 202512
Strategic Report
Chief Executive's review continued
The Friends of the Earth Post Code Gardener project
supporting community-led gardening is a perfect example
of this, bringing people together whilst bringing nature
back to urban environments.
A responsible business
Our environmental ambitions continue to be important to
us. The Society remains proud to be a certified B Corp,
and we are making good progress towards our climate
targets.
Our Group remains carbon neutral for our operations, and
we are committed to reaching net zero for our Scope 1
and 2 emissions by 2030. To get there, we are reducing
our own operational carbon footprint every year by
improving our buildings, cutting energy use, purchasing
green energy for all our operations and travelling
more responsibly.
Looking ahead
2026 will be another pivotal year for the Group as we
work to finalise the integration. Bank customers will see
refreshed branches and enhanced digital journeys. Our
ambition is clear: to create a modern mutual banking
Group that combines scale with purpose.
We will continue to invest in technology, product
innovation, and deepen our social and environmental
impact. We will remain focused on what matters most:
delivering great value, outstanding service and security
for our members and customers.
With a refreshed strategy and a clear set of member and
customer missions, we are looking at how technology can
help enable the delivery of the strategy.
For over 140 years we’ve acted in the mutual interest of
our members and worked hard to do right by the people
who trust us with their money. As I look back on the year,
I am struck by the resilience, creativity and commitment
of our colleagues. I have seen hard work, dedication and
engagement across the organisation as we have navigated
change together. Our people have demonstrated what
makes this organisation special. And I am equally grateful
to our members and customers for their trust and loyalty.
Together, we are building something meaningfully
different – and it’s a powerful signal that values-led,
member-owned banking can thrive at scale. I could not be
more excited about the journey ahead.
Our new purpose, ‘We power
good with every pound’, drives
everything we do and every
decision we make for our
colleagues, our members and
our customers.
Thank you to all my colleagues for their hard work and
commitment as we continue on this journey, and of
course our members and customers for their continued
loyalty and trust.
Stephen Hughes
Chief Executive
26 February 2026
£801m
Reported profit before tax
(2024: £323m)
£374m on an underlying1 basis
1.Excluding items that are one off in nature relating to the purchase and integration of the Bank. See page 27 for further details.
Coventry Building Society | Annual Report & Accounts 202513
Strategic Report
Welcoming The Co-operative Bank to
Coventry Building Society
On 1 January 2025, the Society acquired the entire issued share capital of The Co-operative Bank Holdings p.l.c. (the
ultimate holding company of The Co-operative Bank p.l.c.).
Strategic rationale
The combination of the Society and the Bank brings together a purpose-led mutual and the original ethical bank. These
common values bring true challenge to the UK financial services sector. It enables the deepening of the enlarged Group's
existing presence in the mortgage and savings markets as well as extending the Group's proposition to the personal current
account and business banking markets. The acquisition enables the Society to leverage its financial scale and a diversified
funding base to continue to offer strong propositions and outstanding service to members and customers.
Financial considerations
As presented on page 133 and below, the combined organisation has a balance sheet size of approximately £90 billion
across a range of product offerings.
A gain on acquisition of £584 million arising from an acquired net asset value being well in excess of the consideration paid
was recognised on completion. Further information on the day one accounting impacts of bringing the two organisations
together are presented in note 38 to the accounts. The updated pro-forma combined Group CET1 ratio of 19.1% and
leverage ratio of 4.4% at acquisition were comfortably above applicable regulatory minimums.
Integration consideration
Bringing together the Society and Bank and creating a meaningfully different, true alternative Group in the banking sector
will power our long-term future. In our first year of the integration, we have made significant progress and delivered
against our commitments that we set ourselves at the beginning of 2025.
We established our group executive team, agreed our strategic business priorities, brought together the best of our two
organisations, created centres of excellence across group functions, implemented technology solutions to operate across
shared networks and agreed alignment of colleague terms and conditions. The shape of our integration plan for the next 12
months is clear and we expect to be materially complete by the end of 2026.
The Group
Funding 86% of the Group's overall funding comes from
retail, business and commercial customers as below. The
remainder comes from a range of wholesale funding.
Lending The combined Group's lending
portfolios remains focused on low risk residential
secured retail portfolios across the UK.
£63.2bn - Retail deposits
£2.6bn - Business current
accounts
£50.8bn - Retail owner occupier
£1.0bn - Business & commercial
£20.9bn - Retail BTL
£0.2bn - Retail unsecured
£5.0bn - Personal current accounts
£0.9bn - Business & corporate
deposits
over 4.5 million members
and customers
over 5,800
employees
and 114
branches
a combined
heritage
of almost
300 years
Coventry Building Society | Annual Report & Accounts 202514
Strategic Report
Our strategy
Free from shareholders, and guided by our ethics, we
are creating a meaningfully different organisation to
redefine banking.
We continue to operate as Coventry Building Society and The Co-operative Bank with separate
banking licences and FSCS protection for depositors.
Through 2025, we reviewed our strategy, reflecting the activities of the enlarged Group and building
on the heritage of both organisations. This refreshed group strategy has been developed to shape an
exciting future for the combined organisation with the ambition to offer something meaningfully
different to families, businesses and individuals across the country. We review our strategic plan
each year to ensure it continues to meet the evolving expectations of our members, customers and
other stakeholders and the changes to the markets in which we operate.
Our ownership model enables us to provide a mutual alternative to current and future members and
customers looking for their everyday banking, savings and lending needs.
During 2026, we expect to start the process to transfer the assets and liabilities1 of the Bank into
the Society. Completion is currently anticipated in 2027, but we will update on our progress when
we publish our Group interim results.
Our refreshed strategy is set out below.
1.Through a proposed Part VII business banking transfer under the Financial Services and Markets Act 2000, subject to internal governance steps and the necessary legal and regulatory
approvals.
Coventry Building Society | Annual Report & Accounts 202515
Strategic Report
Our strategy continued
Our Purpose
We power good with every pound
Every pound holds the power to create positive change. Free from shareholders, and guided by our ethics, we're creating a
meaningfully different organisation that redefines banking.
Our customer strategy and business model
As a customer owned mutual, the value we create is used for the benefit of both our current and future members who are
individuals with a Coventry branded savings or mortgage account.
We are guided by a core belief that every pound holds the power to create positive change - whether that’s the power to
live in a place you can call home, the power to manage your money in a way that’s right for you and your family, or the
power for purposeful businesses and partners to make a positive impact on the communities in which they operate.
We have aligned our businesses to focus on these three
customer missions:
The collective power of family finance – creating
solutions that allow people to manage your money in a way that is
right for them and their families and to save for their futures in a
safe and ethical way.
The power of a place to call home – building on our
position as the 7th largest provider of home loans to the UK market
to both owner occupied borrowers and lending to the private rental
sector.
The power of purposeful business – providing ethical
banking solutions for purposeful businesses, charities, other mutuals
and similar organisations whose values are aligned with own.
The acquisition of The Co-operative Bank on 1 January 2025 has broadened our product range to include current accounts,
credit cards and business banking services primarily to small and medium sized enterprises. These products will be
available and offered to more customers across the Group and membership of the Society will also be extended to
individual qualifying customers over time.
In total, over 86% of our funding comes from our members and customers and over 98% of our lending is secured on
residential property. The interest paid by our borrowers covers the cost of running the Society and provides the interest
we pay to our savers and investors, also covering any impairment of loans and generating the capital necessary to grow
and remain safe and secure through economic downturns.
Our culture and values
Defining a strong culture preserving the heritage of both organisations was a key part of the strategy work in 2025 and
involved colleagues from all areas and levels of seniority. This has led to three values that show how we expect colleagues
to behave and interact with members, customers, each other and with other stakeholders.
We Care. We are ethical, honest and brave, standing up for what’s right, and staying human.
We're ambitious. We are empowered and we move with pace, always with members and customers in mind.
We take ownership. We are accountable, we focus on what matters, and we don’t walk past problems.
Coventry Building Society | Annual Report & Accounts 202516
Strategic Report
Our strategy continued
Powering our future success
Our members don’t just use us to meet their mortgage and savings needs, they own us. Unlike a shareholder owned bank,
we don’t have to pay shareholder dividends or manage our share price expectations. We just retain sufficient profits to
remain financially safe and secure for both current and future generations of customers. Our business and operating model
will continue to evolve but we have identified the following attributes that will continue to power our future success:
Digital first, human always
Our "digital first, human always" approach is fundamental to our future
operating model and our commitment to UK based customer services
from our branches and contact centres. The Group continues to invest
significantly in its digital channels and making it simpler and easier for
customers who wish to give us their instructions to digitally do so.
Human service and support, particularly for those with complex
or additional needs, is just as important and we will continue to
offer that option via our UK branch network and contact centres.
We expect that future developments around Artificial Intelligence
can also improve our quality and speed of service, enabling
colleagues to focus on more complex customer needs.
We will also continue to invest in our customer ecosystem to better
meet the needs of the combined customers of the Group.
Standout member service and value
We will always prioritise the right outcome for our customers
and colleagues and continue to offer human service in our
branches and contact centres. We have already improved service for
The Co-operative Bank customers and started a long term investment
programme to improve capability across products and channels.
Demonstrated by our Bank branch upgrade plans.
We aim to deliver standout value through our propositions and better
pricing, long term value and fees compared to the UK average.
Champion for fairness and ethics
The Group is committed to driving the highest standards of fairness and ethics in the treatment of customers and other
stakeholders including its impact on the environment and wider society. We are committed to be net zero for our own
operations by 2030 and for our downstream lending activities and all our scope 3 indirect emissions by 2050. The Co-
operative Bank remains committed to its customer-led ethical policy and the values of the Co-operative movement.
Spending every pound wisely
The UK banking and financial services market is highly competitive and requires discipline over costs and investment. This
operating environment is even more challenging without the scale advantage that larger organisations benefit from. We
will operate efficiently, keeping our costs low and spending money wisely in line with our mutual ethos.
Simple, safe and secure
As we carefully integrate The Co-operative Bank within our Group, our primary objective remains to ensure that
customer’s money and the Group's operations stays safe and secure. We continue to invest heavily in fraud and cyber
protection and financial education for our customers, striving to keep our customer journeys and communications simple
and understandable as a key driver of good customer outcomes and model efficiency.
Coventry Building Society | Annual Report & Accounts 202517
Strategic Report
Our stakeholders
As directors, we work to promote the success of the Group for the benefit of all of its stakeholders. In doing so, we
voluntarily comply with Section 172 of the Companies Act 2006. More information on who our stakeholders are and how we,
as a Group, engage with them is set out below and in the Governance section.
Stakeholder
group
Customers
Colleagues
Suppliers
This group includes our
members, other customers, and
mortgage brokers.
This group includes all of the
Group’s employees.
This group includes third-party
organisations and contractors
who provide goods and services
to us.
Stakeholder
needs – what
do they
expect from
us?
• Great value products.
• Excellent human service
through whatever channel they
use to interact with us.
• A business model that is
resilient, so we are safe and
secure over the long term.
• High availability of IT systems
with data kept secure.
• Simple and clear
communications.
• An inclusive and inspiring
workplace for everyone.
• A great place to build and
develop their careers.
• An approach to reward that is
fair and consistent.
• Support for career
development and training.
• A culture that promotes
wellbeing, supported by
straightforward policies and
processes.
• To do business with us on
terms that are commercially
beneficial.
• To be paid promptly.
• To work with consistent and
understandable procurement
processes (and proportionate
for local SME suppliers).
• Decisions that are made in a
consistent, ethical and fair
way.
How do we
engage with
them?
• Our Member Panel, an online
forum of 13,000 members.
• Regular surveys and research
conducted with customers,
prospects and intermediaries.
• Online Member Talkback
sessions and research groups to
hear first-hand member and
customer thoughts on pre-
defined subjects.
• Complaints monitoring.
• Our AGM, where members vote
on key matters to the Society
and interact with the Board.
• Employee forums and an all-
colleague strategy unveiling
event.
• Annual Great Place to Work
survey and quarterly pulse
surveys.
• Structured meetings with the
Chief Executive and other
executives.
• Online internal
communications tools and
networks.
• Through our recognised union,
Unite.
• Regular governance meetings
with key suppliers. Suppliers
are provided with feedback on
sourcing activities they are
involved in, including
debriefing unsuccessful
suppliers.
• Supplier awards, where all
suppliers are invited to self-
nominate.
• Annual supplier surveys to gain
an understanding of the views
of our suppliers.
• Supplier strategy events.
What’s been
important
for them in
2025?
• Products that reward loyalty
and offer good long-term
value.
• The ability to access our online
services in an easier way whilst
maintaining security standards.
• Maintaining a consistent
presence in the mortgage
market.
• Less paper and a mobile
savings app.
• Our remuneration strategy and
focus on financial wellbeing.
• Creating an inclusive
workplace and progress against
published diversity and
inclusion ambitions.
• Maintaining positive wellbeing,
including mental health
support.
• Improving opportunities for
career development.
• Bringing together the Society
and Bank colleagues under one
Group structure.
• Understanding more about our
strategy.
• Prompt payment.
• Finding out about
opportunities that might be
available to local suppliers.
• Simplifying relationships across
the Group.
Our response
and key
decisions
taken by the
Board
• Oversaw the launch of buy to
let mortgages for limited
companies.
• Oversaw the introduction of
same day payments.
• Approved investment in
mortgage broker capabilities.
• Considered the Group's
performance against the four
Consumer Duty outcomes.
• The Board reviewed the results
of the Great Place to Work
survey and approved the
annual People Strategy,
including a review of diversity
and inclusion initiatives and
progress against key targets.
• The Board received updates on
the status of the integration
programme following the
acquisition of the Bank at the
start of the year.
• The Board received updates
throughout the year on how
suppliers were being reviewed
and managed as part of
integration and strategic
planning activity.
Coventry Building Society | Annual Report & Accounts 202518
Strategic Report
Our stakeholders continued
Stakeholder
group
Investors
Communities
Environment
This group includes wholesale
investors and ratings agencies.
This group includes those
supporting the communities we
serve.
The Group's direct and indirect
impact on the world around us.
What do they
expect from
us?
• A stable and sustainable
performance, with resilient
capital and liquidity levels.
• An organisation that is focused
on the mortgage, savings,
current account and business
banking markets, that is well
governed and manages risks
effectively.
• Clear disclosures to enable
informed investment decisions
to be made.
• Focus on environmental, social
and governance impacts.
• Support (financial and in kind)
and to benefit from our skills
and knowledge.
• Help to raise awareness of key
issues and signposting those in
need.
• A community strategy that
makes clear what we support
and how this can be accessed.
• Funding commitment across
the medium term.
• To contribute towards tackling
climate change.
• Measurement and reporting of
our emissions.
• The reduction of our own
emissions and broader
environmental impacts.
• Helping customers make the
transition to their homes being
more energy efficient.
How do we
engage with
them?
• A programme of investor and
analyst meetings.
• Public updates on our
performance or other material
matters for disclosure.
• Information about our funding
programmes and the Annual
Report & Accounts published
on our website.
• Engaging regularly with our
strategic partnerships,
charities, public sector and
schools.
• Key points of contact
established and maintained in
each of the organisations we
work with.
• Through a long-term
partnership with Centrepoint.
• Working with a range of
external bodies and suppliers
to monitor, manage and
reduce our environmental
impacts.
• Working with third parties for
assurance to conform with ISO
14064 and ISO 20400
standards.
• Engaging with customers to
help make energy-saving
improvements to their home.
• Working with suppliers to
understand actual emissions
produced when providing
goods or services to the Group.
What’s been
important for
them in
2025?
• Updates on integration
activity.
• The Group's roadmap to
achieving Net Zero ambitions.
• Product propositions aimed at
helping members improve the
energy efficiency of their
homes.
• Our plans for a green or social
bond.
• Building successful
partnerships which bring value
to community organisations.
• Certainty of funding as well as
responding to changing
external events, by providing
additional funding to support
services.
• Creating access to
opportunities and raising
aspirations.
• The Group's Net Zero Plan,
outlining our progress towards
improving our impact on the
environment.
• Aligning our environmental
and social initiatives to further
support our local communities.
Our response
and key
decisions
taken by the
Board
• Feedback used to develop the
Annual Report and
Sustainability Report to ensure
the emerging needs of
investors are met.
• The Board discussed the
feedback from rating agencies
and their assessment of our
performance.
• £6 million in community
investment across the Group.
• The Board considered our
ongoing investment in the
Group's community strategy.
• Received updates on a
campaign of activities to
support our corporate charity,
Centrepoint.
• The Board considered the
impact of climate change on
both the Group, its customers
and wider stakeholders in line
with the Net Zero Plan.
• The Board considered the
Group's ESG performance
against agreed ESG ambitions
and approved the content for
the annual Sustainability
Report.
Coventry Building Society | Annual Report & Accounts 202519
Strategic Report
Building a sustainable Group
Together, with over 300 years of combined experience, our two organisations are already on a
path to creating something truly distinctive in financial services. The blueprints are clear - with
the Society's B Corp status and the Bank's unique, customer-led Ethical Policy guiding the way -
the Group's sustainability agenda promises to go from strength to strength.
Whilst we have made good progress on integrating the Bank, our new long-term Group
sustainability ambitions and targets will be established in the first half of 2026.
Our achievements in 2025
76%
Over
19,000
B Corp
Employee engagement
across the Group
hours of colleague
volunteering across the
Group
Society retained
certified B Corp status
Thriving Group
charitable
partnership with
ISO
14064-1
Carbon
neutral
Society emission
certification retained
since 2021 for our
own operations across
the Group
Centrepoint
We are signatories of:
UN Global Compact, UN Sustainable Development Goals, UN Principles for Responsible Banking, Task Force for Climate-
related Financial Disclosures, Bankers for Net Zero, UK Sustainable Investment and Finance Association, Race at Work
Charter, Women in Finance Charter.
As a Society, we have been recognised:
Certified B Corp - A growing global community of businesses that demonstrate their commitment to people and the
planet, which spans 105 countries and over 160 industries. Becoming B Corp certified is the beginning of a journey of
continuous improvement and involves the organisation making a commitment to use their business as a force for good
and to be the change they want to see in the world.
Fair Tax Mark - Fair Tax is at the heart of a fair society, a strong economy and a functioning democracy. Its aim is to
help those people who believe in a fair society and playing by the rules to say so publicly.
ISO 14064-1 certification - An international standard that quantifies the reporting of greenhouse gas (GHG) emissions
and the verification.
External associations include:
Coventry Building Society | Annual Report & Accounts 202520
Strategic Report
Building a sustainable Group continued
Our sust ainability strategy
Our ambition is to offer something meaningfully different to families, businesses and individuals
in the UK. Bringing together the best of the Coventry Building Society and The Co-operative Bank
to better meet peoples' needs. Building a sustainable business is critical to this ambition and the
highlights of our progress in 2025 is explained on the following pages.
Sustainability is at the core of the Group's strategy, aligns
with our updated purpose and is embedded within the
Group's Strategic Plan. This is approved by our Board
annually and guides decision making over a five year
horizon. More detailed decision making on sustainability,
including identifying specific actions and accountabilities,
is considered by the Board twice a year.
The Plan's objective of the Group being a 'people and
purpose-led mutual' and this being made a reality, is
achieved by the strategic goals as outlined on page 16:
• Having a purpose-led approach that goes beyond
minimum regulatory requirements and champions fair
and ethical outcomes for customers, their
communities and for the environment.
• Creating an inclusive and inspiring workplace
for everyone.
The term sustainability covers all three areas of
Environmental, Social and Governance (ESG) and the
Group considers them as follows:
Environmental
We believe that climate change is a
critical issue for the UK and the wider
world. We are committed to making a
positive contribution to the challenge of
climate change by reducing the
environmental impact of our business
activities. At the heart of this is
progressing our decarbonisation strategy,
which aims to deliver on ambitious Net
Zero targets.
Social
As a people and purpose-led organisation,
we aim to meet the needs of multiple
stakeholders. For members and
customers, offering long-term value, good
customer outcomes and superior customer
service. For colleagues, providing work
that supports, engages and enables them
to unlock their full potential. And we
support local communities and national
causes, creating opportunities for the
most disadvantaged in society.
Governance
Maintaining the highest standards of
governance is integral to the successful
delivery of the Group's sustainability
strategy. Our governance framework
ensures that the Board is effective in
making decisions and maintaining
oversight, whilst keeping to our well-
established purpose and values.
The Group's commitment to sustainability
Since 2021, the Group has been committed to the UN
Global Compact corporate responsibility initiative and its
principles in the areas of human rights, labour, the
environment and anti-corruption.
Both the Society and the Bank are signatories of the UN
Principles for Responsible Banking and have identified the
following four of the 17 UN Sustainable Development
Goals (UN SDGs) to prioritise as the areas of focus.
• UN SDG 4: Quality education;
• UN SDG 8: Decent work and economic growth;
• UN SDG 11: Sustainable cities and communities;
and
• UN SDG 13: Climate Action
As the Group comes together from two standalone
organisations, 2025 has been a year of review in
preparation for re-establishing the Group ambitions and
targets ready for 2026. These measures will help to
define, measure and report on our broader sustainability
activities.
For each of these priority goals, our achievements in the
year are set out on the following page.
More information on the Group’s approach is provided on
our website at www.thecoventry.co.uk and in our annual
Sustainability Report.
Coventry Building Society | Annual Report & Accounts 202521
Strategic Report
Building a sustainable Group continued
Progress with our sustainability priority goal
Sustainable Development Goal - Quality education
Why we make a difference:
We are a leading local employer, wanting to provide employment opportunities for our local communities.
We are committed to enhancing the skills of our employees.
We have the resources to make a positive impact on education in Coventry and Manchester.
In 2025, we delivered:
376 apprentices since 2021.
39% of senior managers recruited internally.
Over 16,000 children and young people supported in 2025.
Sustainable Development Goal - Sustainable cities and communities
Why we make a difference:
We provide financing for housing and can help first time buyers onto the housing ladder.
We can help homeowners with the transition to Net Zero.
Our community programme focuses on access to housing.
In 2025, we delivered:
Over 5,000 people supported through Better Foundations.
We supported first time buyers to purchase over 9,600 homes.
Sustainable Development Goal - Climate action
Why we make a difference:
Our own operations emit GHG emissions.
Our borrowing members and customers will need help to deal with the transition to Net Zero.
In 2025, we delivered:
Reduced our Scope 1 and 2 emissions by 62% (compared to 2021).
6,000 trees planted within our local communities.
Zero waste to landfill.
Sustainable Development Goal - Decent work and economic growth
Why we make a difference:
We provide career opportunities at differing levels of seniority.
We spend around £471 million annually with our supply chain, enabling us to drive positive changes with our suppliers.
We can offer underrepresented groups career pathways.
In 2025, we delivered:
45% of roles were filled by internal candidates in the Society, and 35% within the Bank.
Sustainability features in supplier due diligence questionnaires and request for proposal documents.
35% of all senior manager and above roles held by women in the Society, and 43% within the Bank.
16% of manager and above roles held by colleagues from ethnic minority groups in the Society, and 7%
within the Bank.
Coventry Building Society | Annual Report & Accounts 202522
Strategic Report
Building a sustainable Group continued
Doing the right thing
Part of creating a more sustainable society is continuing to apply high standards of
corporate governance. Our key activities and policies in this area are set out below.
Information on how the Group performed across a range of Environmental, Social and Governance activities in 2025 is
included in our Sustainability Report, which will be available on our website at www.thecoventry.co.uk.
Climate
More information on our activity to meet our
environmental targets is included in the 'Our approach to
climate change' section of this report.
Diversity and inclusion
Our ambition is to be an inclusive, inspiring workplace
that is truly representative of our member and customer
base. This ambition guides our long‑term approach to
diversity and inclusion (D&I) and reflects our belief that
different perspectives and experiences help us make
better decisions and better serve our communities. D&I
continues to have strong senior‑level sponsorship, with
the Group’s General Counsel as executive sponsor. Our
colleague networks also play a vital role in shaping our
approach by raising awareness, providing insight and
offering a collective voice to senior leaders, the
Executive team and the Board. We will continue to build
momentum through our newly formed Group D&I
ambitions and supporting roadmap, which set out clear,
practical actions to strengthen representation, deepen
colleagues’ sense of inclusion and belonging, and
enhance transparency. This includes improving
embedding our colleague networks across the Group,
strengthening leadership capability, refining talent
processes and continuing targeted development
programmes to support underrepresented groups.
Ethical behaviour
Our belief in putting our members and customers first is
deeply embedded in the organisation and brings with it a
commitment to the highest possible standards of ethical
behaviour and conduct. To ensure we uphold these
standards, we use a number of resources, campaigns and
policies relating to topics such as: Code of Conduct,
Money Laundering, Bribery and Corruption, Personal
Responsibilities and Fraud Awareness. All our people
complete regular mandatory training and tests in each of
these areas. Our Whistleblowing Committee consists of
members of the senior leadership team who are
responsible for reviewing, investigating, monitoring and
reporting any incidences of whistleblowing. This
committee reports to our Whistleblowers’ Champion, Iraj
Amiri, one of our non-executive directors, who has
overall responsibility for overseeing the integrity,
independence and effectiveness of the Group’s
whistleblowing policies and procedures.
Tax strategy
We conduct all of our business activities in the UK and
are fully committed to meeting all of our UK tax
responsibilities. The Society has also been awarded the
Fair Tax Mark. More information is included in our tax
strategy which is published at www.thecoventry.co.uk.
Privacy and data security
Our operations are based in the UK, and we undertake
the requirements set out by our regulators, the Financial
Conduct Authority and Prudential Regulation Authority,
alongside relevant data security and privacy legislation.
We disclose information to HMRC and other government
bodies when we are required or permitted to do so. We
partner with experienced cyber security firms to help
manage our risks and strengthen our capability. All
employees undertake regular mandatory data protection
and information security training as a minimum, and
there is a wealth of experience in our data and security
teams that support the business. We undertake
compliance monitoring across functions on adherence to
data protection legislation, and work with business areas
to continually improve standards. Further information on
how we use and store data is in our Privacy Notice, which
can be found on our website at www.thecoventry.co.uk.
This all means we can provide an informative and safe
service to our members and customers.
Human trafficking and modern slavery
We have zero tolerance of slavery and human trafficking
in any of our own operations or in our supply chain. Due
to the nature of the Group’s business, the chance that
slavery or human trafficking will occur is low; however,
we are not complacent on these issues. More information
is in our Modern Slavery and Human Trafficking
statement at www.thecoventry.co.uk.
Anti-corruption and anti-bribery
Our values include being responsible and we expect all
colleagues and individuals acting on the Group’s behalf
to act with integrity in all dealings relating to our
business. As a result, we have no tolerance of bribery
and corruption. Our anti-bribery policy reflects our
internal zero tolerance approach and legal requirements.
All colleagues, contractors, directors and suppliers are
aware of their responsibilities in this area. Annual anti-
bribery training, together with monitoring and
enforcement tools, ensure compliance with our policy is
continuously assessed. The Board Audit Committee
receives an annual report on anti-bribery and
inducements.
Coventry Building Society | Annual Report & Accounts 202523
Strategic Report
Our external environment
In order to assess risks to the Group and our future performance, we consider the
following key external environmental factors:
Economic environment
UK economic growth remained subdued at 1.3% in 2025 as
elevated inflation and global political events continued to
weigh on consumer spending and investment confidence.
Inflation, including housing costs, remained broadly stable
at 3.6% at the end of 2025 (2024: 3.5%), remaining above
the Bank of England's 2% target for this measure.
Central banks continued to reduce interest rates to
protect employment and growth even with inflation
proving to be stubborn. The Bank of England reduced its
own rate four times in 2025 to 3.75% (2024: 4.75%).
Higher inflation and interest rates continued to suppress
economic activity, leading to higher unemployment,
although falling interest rates contributed to a more
active housing and mortgage market. Job vacancies fell
below pre-pandemic levels and the unemployment rate
increased to 5.2% 1 (2024: 4.4%). Average earnings
increased by 5.3% (2024: 4.9%) driven by public sector
wage settlements.
House prices increased more slowly than wages, and
general inflation, rising2 by 0.6% in 2025 (2024: rise of
4.7%). The number of housing market transactions rose to
1.2 million (2024: 1.1 million).
Market environment
Savings market
UK household deposits grew in 2025 as earnings outpaced
inflation and consumers remained cautious around
spending and taking on investment risk. Despite this,
savings rates remained attractive and fell more slowly
than bank rate, perhaps explained by volatility in
wholesale funding markets and the repayment of
extraordinary government support to firms following the
pandemic. The level of household deposits in savings and
current accounts increased by £80 billion to £1.94 trillion
( 2024: £1.86 trillion), over £0.5 trillion higher than pre-
pandemic levels. The weighted average market savings3
rate decreased from 3.3% to 3.0%, while household savings
balances in the UK grew by 4.3% (2024: 5.8%).
Mortgage market
Those remortgaging in 2025, particularly those on existing
five-year deals continued to experience higher interest
rates at maturity, although new business rates continued
to fall due to increased competition amongst firms. This
improved affordability for first time buyers and home
movers and contributed to both a rise in house prices and
higher level of gross mortgage lending and growth in
mortgages outstanding4 of 3.0% (2024: 1.6%).
Rental and buy to let market
The buy to let market remained subdued in 2025. New
lending demand was impacted by uncertain rental yields
and capital gains and the potential for increased costs
from the renters rights bill and and environmental
regulation. However, tenant demand and falling supply of
homes to rent led to above inflation rent growth. More
rental properties are now purchased through limited
companies to take advantage of preferential tax relief,
and the Society started to offer these propositions
in 2025.
Business deposits and lending market
The Group primarily offers deposit and lending to the
small and medium size enterprise (SME) segment. UK
Finance report that lending was 6% higher than a year ago
in Q3 2025 with deposits and overdraft usage broadly
stable. The net deposit buffer built up during the
pandemic continues to erode as firms pay back
government backed support.
Regulatory change
Key regulatory developments in 2025 included the
implementation of the Operational Resilience framework,
with firms required to demonstrate the ability to operate
within impact tolerances. The FCA continues to develop
Consumer Duty as a framework for conduct risk
supervision and promoting good customer outcomes. The
Bank of England continued to engage with firms through
its Resolvability Assessment Framework (RAF). The PRA
provided further clarity on financial resilience through the
finalisation of the Basel 3.1 standards, which are now
confirmed for 1 January 2027 implementation.
Technology
Technology continues to change the way that customers
access and interact with financial services providers and is
also exposing customers and the Group to new types of
fraud and cyber threats. Mobile apps are now the
preferred digital option for most consumers and the Group
offers services in its own mobile apps. The adoption of
mobile banking is expected to be permanent with a
continuing reduction in the use of branches and non-
digital channels. Artificial intelligence, open banking and
digital currencies are all developments we expect will
impact future consumer behaviour and competition.
Climate change
Climate change and the move to Net Zero will impact the
Group and its customers increasingly in the next decade,
and whilst overall adoption of green technologies is
growing, adoption of green finance products remains low
across the UK. Clarity around regulation and the
incentives available will enable firms to provide better
guidance and products to new and existing borrowers.
1. Source: UK Government National Statistics.
2. Source: Nationwide house price index.
3. Based on the CACI Ltd's Current Account and Savings Database rest of market average rate for savings accounts, excluding current accounts and offset savings, for the 12 months of the
year.
4. Source: Bank of England.
Coventry Building Society | Annual Report & Accounts 202524
Strategic Report
Top and emerging risks
The nature of the Group's business model results in a number of unavoidable or inherent risks, namely principal risks. These
risks are closely monitored by the Board through the Risk Management Framework and outlined on pages 34 and 35 of the
Risk Management Report. In light of the acquisition and significant integration-related activity, the principal risks have been
reviewed and amended to reflect the risk profile of the wider Group. Key changes include the elevation of strategic change
risk and financial crime risk to principal risks, whilst the technology and data risk categories were set as sub categories of
operational risk. In addition, the strategic risk category was removed.
The top and emerging risks outlined below provide information on the current risks, driven by the external environment,
which could impact the Group and how we mitigate them.
Risk
Mitigation
Economic and geopolitical environment
Global conflicts and trends towards protectionism and
deglobalisation impact the UK economy and the
sustainability of its national debt. This can inform UK
policy decisions which impact operations, customers and
suppliers and impact interest rates, housing prices and
the unemployment outlook, all key drivers of Group
performance. Particularly key are those policies that
impact the flow and cost of retail deposits or wholesale
funding or the size and performance of the UK financial
services markets, in particular mortgages and personal
current accounts.
Stress testing and sensitivity analysis of key assumptions in
response to changes in the macroeconomic environment is
regularly performed. The monthly Group Assets & Liabilities
Committee (ALCO) is responsible for monitoring interest rate
developments and managing the balance sheet accordingly.
Regulatory horizon scanning feeds into executive risk
committees and the quarterly forecasting and annual strategic
planning process. The Group maintains options to moderate
growth or deleverage in response to the economic outlook or
policy changes.
Customer expectations and market dynamics
Customers are increasingly seeking personalised and
digitally enhanced experience, are less loyal and may be
influenced by social media and/or Artificial Intelligence
to behave differently. Still, a large section of society is
less digitally literate and has more complex needs and
may wish to be served in a more traditional way. New
competitors are offering loss leading rates and switching
incentives to attract market share. Whilst increasing
choice, this may result in lower market stability and
poorer consumer outcomes in the long-term.
The Group continues to focus on developing products and
services that keep up with these expectations and we have
increased our investment in digital servicing and distribution.
Regular reviews of the evolving needs and expectations of
customers through research inform future plans around product
participation, customer proposition, servicing channels and the
impact of competitor behaviour on future strategy.
Technology and digital innovation
As new technology (including Artificial Intelligence)
develops and is adopted, there is a risk that our offering
does not keep pace with competitors, reducing the
Group's relative attractiveness to customers. There is
also a risk that technological change delivery itself
could impact service levels, growth or other
performance measures.
The Group continues to invest and focus on making sure the
capabilities and resilience of technology keeps pace to meet the
expectations of our regulators and other stakeholders, and to
ensure the resilience of our platforms and the security of
members' and customers' money and data. Over the plan horizon
we expect to make progress on modernising our technology and
include greater use of Artificial Intelligence, cloud and digital
identification to keep pace with technology change in the
market and help us reduce risk in some areas such as financial
crime.
Cyber
The cyber security threat landscape is continually
evolving, presenting a risk to both the Group and its
members and customers. As part of the integration, the
Group is merging the digital estates of the Society and
the Bank through an integration programme. Whilst this
brings additional risk, cyber security has been at the
forefront of integration activity and there is an
opportunity to further enhance cyber defence
capabilities.
The Group continues to develop its cyber defence posture,
which is aligned to the NIST Cybersecurity Framework (CSF) and
its six pillars, as well as the Bank of England's requirements. The
integration and harmonisation programme will mature an
existing intelligence led cyber capability, ensuring defence in
depth across all corporate and customer digital environments.
Coventry Building Society | Annual Report & Accounts 202525
Strategic Report
Top and emerging risks continued
Risk
Mitigation
Operational resilience
A severe disruptive event or crisis could impact the
ability of the Group to maintain the delivery of its
important business services and other support services.
Such events could lead to member and customer harm,
loss of funds, impact the safety and soundness of the
Group, reputational damage or regulatory penalties.
Severe disruptive events could include technology
failure impacting key IT services, widespread data loss
or corruption, a cyber security event, or the failure of a
critical third party.
To reduce the likelihood and impact of severe disruption, the
Group maintains operational resilience capabilities in place that
spans across three centres of excellence (Business Continuity &
Supplier Resilience, Incident Management & Change; and
Important Business Service Oversight.) Each centre focuses on
enhancing the Group's ability to prevent, adapt, respond,
recover and learn from disruptive events. This activity is
supported by multi layered approach to scenario stress testing
and a suite of management information that spans across six
resilience pillars (technology, data, cyber security, people,
premises and third parties).
Regulatory requirements
The Group is facing into a step up in regulatory
requirements as a function of its size and systemic
importance to the UK financial services sector. As a
result of growth and the acquisition of The Co-operative
Bank, the Group now undertakes a number of new
regulated activities, increasing compliance activity and
volume of regulatory change to implement. In addition,
whilst the pace and sequencing of reform remain
uncertain, the UK regulatory landscape is entering a
period of major transition as the FCA, PRA, Bank of
England and HM Treasury are all evolving towards a
more connected, data and technology driven approach.
The Group is alert to this risk and continues to manage it
appropriately, with a strong regulatory horizon scanning process,
clear owners for regulatory change and ongoing monitoring of
the Group's regulatory change implementations. The Group has
no appetite for any breach and will at all times seek to achieve
and maintain compliance with relevant regulatory requirements.
It is acknowledged that unintentional breaches may occur,
which will be remediated as and when they arise. The Group is
planning for flexibility and remains vigilant to shifts in
regulatory expectations.
Climate change
The risks of climate change could create disruption to
the Group's business as a result of transition risk as the
UK economy transitions to lower carbon activities. This
includes the potential impact of new regulations in our
core markets or policy changes intended to support the
transition to net zero.
The Group continues to focus on understanding and planning for
the impacts of climate risk as presented in the Group's
Sustainability Report and the Climate section of the Annual
Report & Accounts. Regular horizon scanning is performed with
periodic reporting to the Board Risk Committee, which includes
monitoring of emerging risks.
Strategic change
The risk that strategic outcomes are not successfully
delivered within agreed investment targets and/ or
strategic change deliverables adversely impact the
business operations across the Group. This could affect
the Group's growth and potentially cause reputational
damage with members and customers or regulators.
The Group has a robust governance framework, with a dedicated
change management office to ensure strategic change is
appropriately managed, and portfolio risks are monitored and
controlled. This includes deploying established programme risk
and governance tools, utilising third party subject matter
expertise as required. Strategic risk has been elevated to a
principal risk category to support enhanced monitoring by the
Board.
Fraud and financial crime
The Group has greater exposure to fraud and financial
crime as a result of the acquisition of The Co-operative
Bank. This is due to it offering current account services
to customers, which have a higher fraud and financial
crime risk profile across the financial services industry.
The Group remains close to industry developments and external
fraud threats, to manage fraud losses within defined internal
tolerances, balanced with customer outcomes. The Group has no
appetite for any breach in relevant regulatory requirements.
The Group's financial crime policies, standards and supporting
systems and controls help us to manage risks effectively and
identify, detect and prevent fraud. The financial crime road
map focuses on advancing our existing fraud prevention and
detection capability. Financial crime risk has been elevated to a
principal risk category to support enhanced monitoring by the
Board.
Coventry Building Society | Annual Report & Accounts 202526
Strategic Report
Chief Financial Officer's review
On 1 January 2025, the Society welcomed
The Co-operative Bank into the Group and
I'm delighted with the progress we have
made during the year. The power of the
acquisition has allowed the Group to
deliver a statutory profit before tax of
£801 million.
Despite modest UK economic growth and
continuing pressure on margins, we have
delivered another pleasing set of financial
results. Credit quality remains high, and
we are generating robust organic earnings
which are strengthening our capital
position following the acquisition of
the Bank.
Our results are underpinned by the Group's
belief in delivering long-term sustainable
value and outstanding levels of service,
whilst continuing to maintain a resilient
balance sheet.
The acquisition has diversified our balance
sheet funding further and brings the scale
benefits required to support the needs of
our members and customers today and into
the future.
1.Excluding items that are one off in nature relating to the purchase and integration of the Bank. See page 27 for further details.
Financial Highlights
• The underlying1 Group profit before tax increased to
£374 million (2024: £349 million), mainly due to the
inclusion of the Bank's profits in the year.
• Statutory profit before tax increased to £801 million
(2024: £323 million). The increase is due to the day
one gain of £584 million, which reflects the agreed
purchase consideration being over 40% below the fair
value of the net assets acquired. This is partially
offset by a £9 million credit impairment charge, £99
million hedge accounting charge and £67 million
integration costs directly related to the acquisition.
In addition, Bank profits are included for the
full year.
• The performance of the Bank is in line with the
Group's expectations during the first 12 months since
the acquisition. Over the course of 2026, we expect
the benefits of integration to be increasingly evident
in the overall performance of the Group.
• The underlying1 cost to income ratio increased to 65%
(2024: 50%), reflecting the impact of the Bank
acquisition and the cost of providing transactional
current accounts. Excluding the impact of the
acquisition, the Society sub-group's cost to income
ratio would be 56%.
• During 2025, we have seen very competitive trading
conditions, with the larger banks refocusing on the
residential mortgage and fixed rate savings market.
As a result of lower margins in these markets and
together with the acquisition, the Group has
continued to take a more measured approach to
managing organic growth.
• We successfully launched our new limited company
buy to let proposition in April, with over £1 billion in
applications in 2025. This broadens our buy to let
proposition and positions us well to build upon the
already strong position we hold in the buy to let
market.
• The asset quality of the Group continues to perform
very well, with stable arrears and losses remaining
very low and at the better end of industry
benchmarks.
• Following the acquisition of the Bank, our updated
pro-forma Group leverage and CET 1 ratios were 4.4%
and 19.1% respectively. As a result of increased
profits in the year, leverage and CET 1 respectively
increased to 4.6% and 19.7%.
Lee Raybould
Chief Financial Officer
26 February 2026
Coventry Building Society | Annual Report & Accounts 202527
Strategic Report
Chief Financial Officer's review continued
Income Statement
2025
2024
Group
underlying
performance1
Items related to
acquisition &
integration2
Group statutory
performance
Group underlying
performance1
Items related to
acquisition &
integration2
Group statutory
performance
£m
£m
£m
£m
£m
£m
Interest receivable3
3,952
41
3,993
3,294
—
3,294
Interest payable4
(2,868)
19
(2,849)
(2,615)
—
(2,615)
Net interest income
1,084
60
1,144
679
—
679
Other income and charges
43
—
43
(4)
—
(4)
Losses on derivative financial instruments5
(3)
(99)
(102)
(11)
—
(11)
Total income
1,124
(39)
1,085
664
—
664
Administrative expenses6
(673)
(67)
(740)
(307)
(26)
(333)
Amortisation and depreciation7
(62)
(42)
(104)
(26)
—
(26)
Impairment (charge)/ release8
(15)
(9)
(24)
18
—
18
Gain on acquisition of a subsidiary9
—
584
584
—
—
—
Profit before tax
374
427
801
349
(26)
323
Taxation
11
—
11
(76)
—
(76)
Profit for the financial year
385
427
812
273
(26)
247
1. Group underlying performance includes all underlying performance of The Co-operative Bank from 1 January 2025.
2. The following footnotes detail the acquisition & integration related items and their exclusion from underlying performance.
3. Relates to the unwind of the day one fair value adjustment recognised against the acquired loans & advances to customers and certain hedged liquidity instruments.
4. Relates to the unwind of the day one fair value adjustment recognised against certain external wholesale funding issuances acquired with the Bank.
5. Represents the impact of acquiring derivative instruments but not acquiring the linked hedge accounting relationships and therefore the resulting restart of hedge relationships on the
acquired derivatives.
6. Represents one off costs relating to the bringing together of people, systems and processes.
7. Represents the amortisation against the Core Deposit Intangible asset, which arose on acquisition and acceleration of amortisation and depreciation against assets impacted by
integration decisions.
8. Represents the recognition of the reset Expected Credit Loss allowance against Bank acquired loans & advances to customers.
9. Represents the resulting gain calculated as the fair value of the consideration paid less the net assets acquired.
Net interest income
Underlying (excluding the impact of acquisition related
items) Group net interest income increased to £1,084
million (2024: £679 million) in the year. The overall
increase is mainly due to the acquisition of the Bank, and
this is partially offset by a £67 million reduction to Society
sub-group net interest income. The reduction is due to
the impact of base rate reductions and lower mortgage
and savings margins as a result of more competitive
markets.
The underlying Group net interest margin of 1.22% (2024:
1.07%) has increased because of the acquisition of the
Bank. Society sub-group net interest margin reduced to
0.95% in line with expectations given the current trading
conditions.
Throughout the period, the Society continued to pay
above average savings rates, returning £398 million (2024:
£401 million) in member value compared to market
average rates1.
On a statutory basis, Group net interest income of £1,144
million (2024: £679 million) includes the unwinds of fair
value adjustments recognised on acquisition.
Other income and charges
Following the acquisition of the Bank, the Group has
diversified its balance sheet and now benefits from other
income streams, predominately related to fee income on
residential and business current accounts and credit
cards.
The £43 million of other income and charges relates
largely to the Bank current account transactional fee
income and related expenses and is a similar amount to
2024 when it was a standalone entity. The acquisition now
enables us to offer a full-service banking proposition with
over 90,000 new personal and business current accounts
opened this year.
Derivatives and hedge accounting
The Group uses derivative financial instruments to
manage interest rate and currency risk arising from its
fixed mortgage and savings activity and from non-sterling
and fixed rate wholesale issuances.
The Group applies hedge accounting where possible and
its approach continued to be effective throughout the
year. The underlying loss in the year of £3 million (2024:
£11 million loss) reflects the unwinding of previous gains,
as the hedges mature or move towards maturity.
On acquisition, the Bank's hedge accounting programme
ceases as the acquired balance sheet is measured at fair
value. This has resulted in an acquisition-related charge in
the year of £99 million. The Group has elected to
recommence a hedge accounting programme post
acquisition in order to manage the volatility of the
acquired portfolio of derivative assets, which allows for a
more controlled run-off.
1. Value given to members is based on the Society’s average month end savings rate compared to the CACI Ltd's Current Account and Savings Database rest of market average rate for savings
accounts, excluding current accounts and offset savings, for the 12 months of the year.
Coventry Building Society | Annual Report & Accounts 202528
Strategic Report
Chief Financial Officer's review continued
Management expenses
Underlying Group management expenses (excluding the
impact of acquisition related items), including
depreciation and amortisation, were £735 million (2024:
£333 million). This includes £404 million of costs relating
to the Bank. The Society sub-group's underlying costs were
flat at £331 million.
The Group statutory management expenses of £740
million (2024: £333 million) include £67 million (2024: £26
million) of acquisition and integration related expenses as
we continue our journey of integrating the businesses.
Our robust financial performance has underpinned our
continued investment in modernising the Group. The total
spend on investment, including capital expenditure, of
£132 million (2024: £91 million) has been focused on
activity to modernise our services, with good progress on
our digital roadmap, mortgage sales platform
enhancements (including limited company buy to let),
operational resilience and cyber security. This excludes
integration related costs.
The underlying Group cost to income ratio has increased
to 65% (2024: 50%), reflecting the inclusion of the Bank's
operating costs. Excluding this impact, the Society sub-
group cost to income ratio would be 56%, demonstrating
effective management of our operating cost base, whilst
continuing to invest for the future.
Further details regarding administrative expenses are
included in note 10 to the accounts.
Expected credit losses
The performance of the mortgage book remains resilient,
with just 0.38% (2024: 0.33%) of loans more than three
months in arrears.
Credit impairment charges increased in the year to £24
million (2024: £18 million release) of which £23 million
relates to the inclusion of the Bank. Post acquisition, the
credit quality of the Bank's lending propositions remains
similar to its 2024 performance and its standalone
expected credit loss provision remains stable.
The £24 million charge in the year reflects the inclusion of
the Bank into the Group. This has resulted in a £8 million
charge in relation to the Bank's mortgage lending, a £9
million charge for unsecured lending and a further £7
million charge for the business and commercial lending
portfolio. £5 million for a single case provision in
commercial lending is included following a detailed
review of the acquired assets. The charge in the year is
impacted by accounting requirements following the fair
value exercise of the acquired balance sheet. ECLs for
acquired assets are reset to zero, re-recognised at stage 1
and built back up as credit quality changes occur.
The Group has a deliberately cautious approach to
estimating ECLs and we continue to hold £7 million (2024:
£6 million) of post model adjustments (PMAs), where core
models do not fully reflect the risk of ECL given the
market environment.
Accounts which have experienced a significant increase in
credit risk and are classified as stage 2 decreased to 7%
(2024: 10%). 95% of these stage 2 accounts remain up to
date with their payments. 92% of the book remains in
stage 1 (2024: 89%).
The overall Group ECL provision equates to 0.06% of the
overall lending book (2024: 0.05%), which is reflective of
very strong credit quality with very low arrears and losses.
The marginal increase in this coverage ratio is due to the
inclusion of the Bank's unsecured, business and
commercial assets.
More information on ECLs is included in note 16 to
the accounts.
Taxation
In 2025, the Group tax credit was £11 million (2024: £76
million charge), reflecting an effective tax rate of minus
1.4% (2024: 23.6%). The effective tax rate is lower than
the UK statutory corporation tax rate of 25%, primarily
due to the accounting gain arising on acquisition of the
Bank, which is not taxable, and the recognition of
additional deferred tax assets in the year.
Total net deferred tax assets of £205 million (2024: £nil)
are recognised on the balance sheet which includes £243
million (2024: £nil) in relation to historical tax losses of
The Co-operative Bank. Deferred tax assets in respect of
historical losses have been recognised to the extent that
the latest approved financial plan supports the expected
future profitability and is subject to a significant degree
of estimation as outlined in note 23.
Further information on taxation is included in note 17 to
the accounts.
Items relating to acquisition and integration
As a post balance sheet event to the Society's 2024 Annual
Report and Accounts, we announced a £603 million gain
on acquisition of the Bank and proforma Group leverage
and CET 1 ratios of 4.5% and 19.7% respectively.
The accounting standard for acquisitions provides a 12
month measurement period post completion to conclude
the opening fair valued position as final, when more
granular information is available to the acquiree. This
measurement period closed on 31 December 2025. This
resulted in small adjustments to the previously disclosed
gain of £603 million on acquisition to an updated gain of
£584 million in these financial results. The change arose
as the more granular final review of the opening balance
sheet was concluded post acquisition.
The movement in the gain on acquisition together with
the £9 million charge for ECL reset against the Bank's non-
credit impaired assets and risk weighted asset
methodology alignment to the Society has resulted in an
updated opening Group leverage and CET 1 ratios of 4.4%
and 19.1% respectively.
Coventry Building Society | Annual Report & Accounts 202529
Strategic Report
Chief Financial Officer's review continued
Balance Sheet
Overview
Our core trading performance for mortgages, savings,
current accounts, business and commercial deposits has
been broadly stable. Excluding the acquisition impact,
retail savings have increased organically as interest
capitalises. This has been used to repay wholesale TFSME
funding in the year. A summarised Balance Sheet is set
out below:
2025
£m
2024
£m
Assets
Loans and advances to customers
72,936
51,801
Liquidity
13,896
10,724
Other
1,407
1,506
Total assets
88,239
64,031
Liabilities
Retail and other deposits
71,722
49,425
Wholesale funding
11,316
10,475
Subordinated liabilities and
subscribed capital
290
57
Other
622
446
Total liabilities
83,950
60,403
Equity
General reserve
3,506
2,754
Other equity instruments
665
665
Other
118
209
Total equity
4,289
3,628
Total liabilities and equity
88,239
64,031
Loans and advances to customers
The Group's lending remains focused on high quality, low
loan to value (LTV) owner-occupied and buy to let lending
within the prime residential market, distributed mainly
through mortgage intermediaries in a cost-effective way.
The addition of the Bank has increased both our scale and
the breadth of our already regionally diverse mortgage
portfolio.
The Group manages its growth according to the economic
conditions, market pricing and funding conditions. The
lending book has grown by £21.1 billion to £72.9 billion
(2024: £51.8 billion). The growth was primarily through
the acquisition of the Bank (£20.4 billion), with modest
organic growth over the period.
During the year, the group advanced £9.6 billion of
mortgages (2024: £6.7 billion), which was offset by
redemptions and other repayments. Growth in the sector
in 2025 has seen more lending in the higher LTV segments
and the Group has taken a measured approach to
participation given new business margins and the
acquisition.
New lending on owner-occupier homes accounted for 75%
of total new lending in 2025 (2024: 76%), with overall
average LTV on new lending of 67% (2024: 68%). The
Group continues to support first time buyers and
increased the number of loans advanced in 2025 to over
9,600 (2024: 7,100).
The balance weighted indexed LTV of the mortgage
portfolio has seen a small increase to 54.9%1 at 31
December 2025 (2024: 53.5%) and the Group continues to
have a robust and high quality asset book.
This is demonstrated by very low arrears with only 0.38%
of mortgages more than three months in arrears (31
December 2024: 0.33%). The arrears volume remains very
low both historically and when compared with the latest
available industry average of 0.78%2. Whilst this
represents an increase in the year, the low absolute
number of cases more than three months in arrears of
1,637 (31 December 2024: 1,045) demonstrates the
resilience of the portfolio. Most of these accounts have an
LTV below 75%. The buy to let book saw a small increase
in arrears but from a very low base.
Possessions and forbearance remained low, with 67
mortgages in possession at the year end (2024: 36) The
increase includes 21 cases in possession by the Bank.
The Group acquired £0.2 billion in unsecured credit card
assets, with flat growth during the year. Credit quality
remains stable with low arrears rates.
In addition, a further £1.0 billion of business and
commercial loans were acquired with flat growth over the
year. 56% of this portfolio represents PFI and housing
association loans. Despite a provision charge being booked
in the first half for a specific single customer exposure,
which is currently up to date, credit quality remains
strong with a low level of arrears.
Liquidity
Liquid assets have increased to £13.9 billion (2024: £10.7
billion), mainly due to the inclusion of the Bank from 1
January 2025. The Group liquidity position remains strong,
as demonstrated by our 12-month rolling average Liquidity
Coverage Ratio (LCR) of 230% at 31 December 2025 (2024:
258%), which is significantly above the minimum
regulatory requirement.
Liquid assets are principally held in deposits at the Bank
of England and in UK Government investment securities.
This means that asset quality remains very high, with 97%
of the portfolio rated Aaa–Aa3 (2024: 96%). 98% of liquid
assets are held in UK sovereign or UK financial institutions
(2024: 99%).
Retail and business funding
The Group continues to be predominately funded by retail
and business deposits, with balances of £71.7 billion at 31
December 2025 (2024: £49.4 billion), this includes £20.8
billion for the Bank.
The Group’s overall savings market share is 3.5%3 (2024:
2.7%), with the increase reflecting the acquisition of the
Bank.
1. LTV is calculated using the Nationwide Building Society quarterly regional house price index (HPI).
2. Source: UK Finance.
3. Source: Bank of England.
Coventry Building Society | Annual Report & Accounts 202530
Strategic Report
Chief Financial Officer's review continued
The Group acquired £4.9 billion of personal current
account balances as part of the acquisition of the Bank,
and we see a modest but positive trajectory on the
volume of customers switching to the Bank, with 4,000
net switches in 2025. The balances have remained stable
across 2025, in line with the market1.
The Group also acquired £3.4 billion of business and
commercial deposits, and we have seen a £0.1 billion
increase in the year.
Wholesale funding
The Group uses wholesale funding to provide
diversification of funding by source and term, supporting
growth and lowering risk by reducing the overall cost of
funding. This benefits retail deposit customers and
members through better savings rates and lending
customers and members by enabling us to offer more
competitive long-term rates.
Wholesale funding has remained broadly stable at £11.3
billion (2024: £10.5 billion) and includes £1.9 billion of
Bank wholesale funding. The Group successfully
completed three issuances during the year, comprising a
£600 million covered bond issued in January, a £500
million residential mortgage backed securities (RMBS)
issued in July and a £600 million covered bond in
September.
The Society and Bank have both previously accessed the
Bank of England's Term Funding Schemes and during 2025
the Group has successfully repaid the majority of the
outstanding drawings (£4.3 billion repaid during the year).
£260 million is expected to be repaid in 2026.
Equity
The Group’s equity is predominantly made up of over 140
years of retained profits in the general reserve and
Additional Tier 1 (AT 1) capital of £0.7 billion.
The Group made post-tax profits of £812 million in the
year and total equity increased by £661 million, inclusive
of a £58 million distribution to AT 1 capital holders and a
£92 million movement in the cash flow hedge reserve.
Pension Schemes
The assets and liabilities from the Group's pension
schemes are recorded in the Group’s financial statements
with an overall net surplus of £15 million at the end of
2025 (2024: £5 million deficit).
The Group has three legacy funded defined benefit
pension schemes, one for the Society and two Bank
schemes. They are all closed to new members and future
service accrual and employ low-risk investment strategies.
As a result, volatility in the net position of the schemes is
expected to be small relative to the overall balance
sheet.
Currently, the Society scheme remains in a deficit of £8
million, with its next triennial expected to conclude in
2026. The two Bank schemes are in full 'buy-in' positions
with specialist insurers, which substantially mitigates
volatility that the schemes are exposed to. They have a
combined surplus of £23 million.
The scheme assets and liabilities are impacted by market
movements and the change in the year for the Society has
been driven by fluctuations in the UK corporate bond
market. The Group continues to monitor the pension
scheme to ensure that there is no scheme deficit over the
medium-term.
Regulatory capital
We hold capital to protect members against unexpected
future losses. As we grow our lending balances, the
amount of capital we need to hold to meet the UK Capital
Requirements Directive (CRD) V increases.
The table below provides a summary of the Group's capital
resources and CRD V ratios on an end-point basis (i.e.
assuming all CRD V requirements were in force in full with
no transitional provisions permitted).
End-point
31 Dec
2025
£m
End-point
31 Dec
2024
£m
Capital resources:
Common Equity Tier 1 (CET 1)
2,907
2,616
Total Tier 1 capital
3,572
3,281
Total capital
3,847
3,321
Risk weighted assets
14,760
9,340
Capital and leverage ratios:
%
%
Common Equity Tier 1 (CET 1) ratio
19.7
28.0
Leverage ratio including central
bank reserves and full AT1 capital
4.0
5.2
UK leverage ratio1
4.6
5.7
1. The UK leverage ratio includes a restriction on the amount of Additional Tier 1
capital and excludes central bank reserves from the calculation of leverage
exposures.
Leverage
We are not currently bound by regulatory leverage ratios,
which measure Tier 1 capital against total exposures,
including off-balance sheet items. The UK leverage ratio
framework is expected to apply to the Group when its
average of retail deposits over the last three years
exceeds £75 billion (threshold subject to future review
and update) at its annual reporting date. The Group does
not anticipate leverage requirements to apply for the
foreseeable future.
The Group's UK leverage ratio reduced to 4.4% following
the acquisition of the Bank (2024: 5.7%) and has
subsequently improved to 4.6% during the year because of
the increase in retained profits. This remains above the
current regulatory expectation of 3.25% minima.
Capital
On acquisition of the Bank, the updated pro-forma Group
CET 1 ratio was 19.1%. As at 31 December 2025, the CET 1
ratio has increased to 19.7% as a result of retained profits
in the year offset by movements in RWAs. Our CET 1 ratio
remains significantly ahead of the Total Capital
Requirement for the Group, which was 11.5% of RWAs as
at 31 December 2025. The capital ratios include additional
RWAs held for regulatory changes that are currently not
reflected in the IRB models, as previously disclosed within
the 2024 Annual Report & Accounts.
1. Source: Bank of England.
Coventry Building Society | Annual Report & Accounts 202531
Strategic Report
Chief Financial Officer's review continued
The Society and Bank had both submitted updated models
to the PRA in 2023. Our strategy following the acquisition
is to move to a single Group IRB model. We have recently
received feedback from the PRA on the models which had
been submitted and we intend to incorporate this
feedback into the build of our new Group model. We
currently expect to submit our new Group IRB model at
the end of 2027. When approval is granted, the final
Group IRB model output RWAs may vary from those
calculated currently, thereby impacting capital ratios.
Basel 3.1 RWA floors are currently expected to be phased
in from the introduction of the new regulations in 2027,
and in time are expected to reduce the Group's reported
CET 1 ratio, through increasing RWAs. Applying the Basel
3.1 RWA floors to the 31 December 2025 figures on a full
transition pro-forma basis would result in a CET 1 ratio of
approximately 17.5%. However, on expected Basel 3.1
implementation in January 2027, the Group estimates a
20.1% pro-forma CET 1 ratio at 31 December 2025 due to
the removal of the IRB scalar of 1.06. The Group currently
expects Basel 3.1 capital requirements to bind from 2028.
All known future capital requirement changes (including
Basel 3.1 impacts) have been factored into the Group's
financial plans, ensuring we remain appropriately
capitalised.
The capital disclosures above are on a Group basis,
including all subsidiary entities.
Coventry Building Society | Annual Report & Accounts 202532
Strategic Report
Other information
Alternative performance measures
The Group reports its results using a number of financial measures which are not driven by accounting standards (non-IFRS
measures). These measures are used to understand our performance and are used internally when assessing the Group's
results. More information on each alternative performance measure and its calculation is set out within the Glossary on
page 202.
Non-financial information
The Society has voluntarily applied the requirements of Sections 414CA and 414CB of the Companies Act 2006 relating to
the disclosure of non-financial and sustainability (environmental, social and governance) information. The information is
integrated across the Annual Report & Accounts and therefore we have used cross-referencing to avoid duplication.
Reporting requirement
Page
Business model
15
Top & emerging risks
24
Key risk management
34
Key performance indicators
5, 107
Colleagues
17
Human rights
22
Anti-bribery and corruption
22
Communities
18
Environmental matters1
21
Climate-related financial disclosures
62
1. Our full Environmental Policy is published on our website at www.thecoventry.co.uk.
The Strategic Report has been approved by the Board of Directors and signed on its behalf.
Stephen Hughes
Chief Executive
26 February 2026
Coventry Building Society | Annual Report & Accounts 202533
Risk Management Report
Risk Management
Report
This section outlines
the risks that the Group
is exposed to and how they
are managed.
Introduction
34
Risk categories
Credit risk
38
Market risk
46
Liquidity and funding risk
47
Capital risk
53
Model risk
56
Operational risk
57
Strategic change risk
58
Financial crime risk
59
Conduct and compliance risk
59
Climate risk
60
Operational resilience
61
Coventry Building Society | Annual Report & Accounts 202534
Risk Management Report
Risk Management Report
Introduction
This Risk Management Report explains the principal risks that the Group is currently exposed to and provides information on
how these risks are managed.
The report also includes information on the Group’s capital position. Holding capital is key to ensuring the Group protects
members and customers from the impact of any related risk which may materialise.
Principal risks
The principal risks to which the Group's business model is inherently exposed are set out below. These risks are managed
through the Group’s Enterprise Risk Management Framework (ERMF).
Principal risks are those risks that the Group believes could materially compromise its ability to meet its strategic
objectives. The principal risks were reviewed during the year, as part of the alignment and integration of approaches post
acquisition of the Bank. Both financial crime and strategic change risks are included as principal risks, whilst technology &
cyber and data risks now form part of the broader operational risk principal risk category. Information on the Group’s top
and emerging risks is included in the Strategic Report on pages 24 and 25.
Principal risks
Mitigation
Credit risk
The risk of loss to the Group from members/customers
or wholesale counterparties failing to meet their
contractual payments in full and/or on time. This covers
retail and commercial credit risk.
We operate robust underwriting and affordability assessments
which, together with appropriate credit policies, results in the
Group lending responsibly and within its risk appetite. We also build
and operate statistical models to measure credit risk to ensure we
understand our exposure to ongoing risk of losses in stressed
scenarios.
Market risk
The risk of a reduction in Group earnings and/or value
resulting from adverse movements in market factors.
We operate within Board approved limits and use interest and
foreign exchange rate swap agreements to mitigate the impact of
changes in interest rates and foreign exchange rate.
Liquidity and funding risk
The risk that the Group has insufficient funds or
projected funds to meet obligations as they fall due or
could only do so at excessive cost or risk.
We hold sufficient liquidity to withstand a severe but plausible
stress, mitigate risks identified through the annual ILAAP process and
operate within limits set by the Board. We maintain a diversified
funding base to avoid any overreliance on any funding source, type
or term.
Capital risk
The risk that the Group has insufficient capital resources
to absorb losses in benign or stressed macro-economic
conditions, fails to meet prudential regulations and
expectations, or has insufficient financial resources to
recapitalise in the event of resolution.
We hold sufficient capital to withstand a severe but plausible stress,
and mitigate risks identified through the annual ICAAP process. Risk
appetite limits are set to ensure that the Group always maintains
compliance with regulatory minima, with early warning indicators in
place to identify periods of severe stress as part of the recovery
planning process.
Model risk
The potential for adverse consequences from errors or
the inappropriate use of modelled outputs to inform
business decisions.
We have implemented robust model risk management practices, set
out in the policy on Model Risk and Model Risk Framework. These
cover key governance requirements and processes applicable to
material models.
Operational risk
The risk of loss arising from inadequate or failed internal
processes, people, systems, or from external events that
disrupt business operations.
The operational risk principal risk category includes
technology & cyber; data; third party; legal; people;
statutory, regulatory and financial reporting; payments;
and premises risk.
We actively identify, assess and manage operational risks across a
number of categories to which the Group is exposed, consistent with
Basel risk classifications, industry best practice and the Group's
business model. We aim to continuously enhance our operational risk
management framework to enable the Group to effectively manage
its operational risk, thereby limiting incidents and associated losses
to within appetite.
Strategic change risk
The risk that strategic outcomes are not successfully
delivered and/or change deliverables adversely impact
business operations.
The Group has implemented a robust governance framework, with a
dedicated change management office to ensure strategic change is
appropriately managed, and portfolio risks are monitored and
controlled. This includes deploying established programme
management techniques and governance tools utilising third party
subject matter expertise as required. Strategic change risk has been
elevated to a principal risk category to support enhanced oversight
by the Board.
Coventry Building Society | Annual Report & Accounts 202535
Risk Management Report
Risk Management Report continued
Principal risks continued
Risk categories
Mitigation
Financial crime risk
The risk that Group products or services will be
exploited for criminal purposes, including:
a) fraud or dishonesty, including tax evasion and bribery
or corruption;
b) misconduct in, or misuse of information relating to a
financial market;
c) handling the proceeds of crime; or
d) the financing of terrorism or evading or circumventing
of sanctions.
The Group implements systems and controls in order to manage the
economic crime risks posed by our customers, products, geographies
and channels, in line with our legal and regulatory obligations. The
Group monitors the effectiveness of these controls through ongoing
oversight and assurance activity and through the Group's governance
committees.
Conduct & compliance risk
The risk that the Group's behaviour, decision making, or
products and services result in poor outcomes for
customers, undermine market integrity or breach
regulatory standards and cause harm to customers, the
Group or the financial system.
We place good customer outcomes, aligned to the FCA Consumer Duty,
at the heart of our decision making. In line with putting members and
customers first, this reduces conduct risk. This ethos is embedded in
product design, services, and people and communication strategies.
The Board plays an active role in oversight of these strategies and the
delivery by the Group of good customer outcomes.
Thematic risks
Thematic risks are a category of risks that span across two or more principal risks. They enable the risk exposure to be
connected such that it can be assessed, managed and reported.
Risk categories
Mitigation
Climate risk
The risk that climate-related events or the transition to
a low-carbon economy will lead to financial losses,
operational disruption, regulatory censure and/or
reputational damage for the Group.
The Group continues to focus on understanding and planning for the
impacts of risk associated with climate risk as presented in the
Sustainability Report and the Climate section of the Annual Report &
Accounts. Regular horizon scanning is performed with periodic
reporting to the Group Board Risk Committee, which includes
monitoring of emerging risks.
Operational resilience
The risk of the Group experiencing operational
disruptions due to shortcomings in preventing, adapting
to, responding to, recovering from, and learning from
disruptive events.
To reduce the likelihood and impact of severe disruption, the Group
maintains a comprehensive operational resilience capability that spans
across three centres of excellence: Business Continuity & Supplier
Resilience, Incident Management & Change, and Important Business
Service Oversight. Each centre focuses on enhancing the Group's ability
to prevent, adapt, respond, recover and learn from disruptive events.
This activity is supported by a multilayered approach to scenario stress
testing and a suite of management information that spans across six
resilience pillars: Technology, Data, Cyber Security, People, Premises
and Third Parties.
More detail on the principal and thematic risks is presented from page 38.
Controlling and managing risk
The Group manages risk through the ERMF, which sets out the Board’s approach to managing and overseeing risk by defining
risk appetite; governance and control; and risk management in light of the Group’s strategy. The ERMF is approved annually
by the Board to ensure it operates effectively. The Group will continue to enhance the ERMF as required to ensure it
identifies and manages risk within its risk appetite.
During 2025, enhancements have been incorporated to provide a consistent Group ERMF approach, replacing the legacy
Society and Bank ERMFs. This has resulted in the consistent application of risk committees, risk categorisation, risk
reporting, risk policies, risk appetite and the three lines of defence model throughout the Group. The 2026 financial year
will see a sustained focus on the full adoption and embedding of the Group’s ERMF.
Coventry Building Society | Annual Report & Accounts 202536
Risk Management Report
Risk Management Report continued
Controlling and managing risk continued
Three lines of defence
The Group operates a ‘three lines of defence’ model, recognised as an industry standard for risk management. The key
accountabilities of the three lines of defence within the Group are set out below:
Second line of defence
First line of defence
The risk team
Provides advice together with
oversight, challenge and
assurance of first line risk
management
• Responsible for setting,
maintaining and embedding
the ERMF.
• Oversees all aspects of risk
management.
• Oversees adherence to
regulation and legislation.
• Provides assurance of first
line compliance to the ERMF
and risk policies.
The business
Owns and manages the
Group's risks
• Responsible for compliance
with relevant regulations,
legislation, Group ERMF and
policies.
• Identifies, manages and
mitigates risks.
• Defines and
operates controls.
• Sets and manages risk
appetite.
• Produces management
information and reports.
Third line of defence
Internal audit
Provides independent
assurance on both the first
and second line risk
management effectiveness
• Provides assurance first line
is managing risk effectively
and that second line is
providing effective advice,
oversight and assurance.
• Completes independent
testing and assurance of the
adequacy and effectiveness
of governance, controls, risk
management, policies,
processes and compliance.
Risk committee structure
Group Board
Bank Board
Principal
Committees
Bank Board Risk Committee
Group Board Risk Committee
Chief Executive
Management
Committees
Group ALCo
Group Executive Risk
Committee
Bank Executive Risk
Oversight Committee
Group Executive
Change Committee
Bank Business &
Commercial Credit
Risk
Committee
Group Model
Risk Committee
Group Retail Credit
Committee
Group Non-Financial Risk
Committee
Coventry Building Society | Annual Report & Accounts 202537
Risk Management Report
Risk Management Report continued
Risk management
The Group’s risk management objectives are to:
• Identify risks to the strategic plan and to the Group’s
objectives.
• Assess risk exposures by impact and likelihood.
• Respond to risks by evaluating them against the
Group’s risk appetite, formulating associated
management responses and monitoring progress
against agreed management action plans.
Risks are identified, assessed, managed, monitored,
escalated and reported in accordance with the
requirements of the ERMF. Management information
captures risk metric performance against risk indicators,
triggers and limits as appropriate. Where a trigger or limit
is breached, a process exists to ensure it is escalated,
reported and managed effectively, through the
appropriate channels.
Risk strategy
The Board sets the Group’s risk strategy and risk
management approach. The strategy includes establishing
a robust risk culture, setting the Board’s risk appetite and
ensuring that the ‘three lines of defence’ model operates
effectively.
Risk culture
Risk culture is reflected in the behaviour and approach of
the Board and all employees to risk awareness, risk taking
and risk management. A strong risk culture helps the
Group to achieve its strategy within acceptable risk
levels.
The Group’s risk culture is built on the following five
elements:
• Tone from the top;
• Accountability;
• Conduct and member/customer outcomes;
• Risk actions and decisions are aligned with fair
treatment of members and customers, and
regulatory expectations.
• Governance; and
• Our governance processes encourage risk
transparency, open discussion and debate, and
robust execution of risk management mitigation.
• Incentives.
• In particular, the Society does not pay any sales
incentives to employees.
Board risk appetite
The Board articulates the risks it is willing to take in
delivering the Strategic Plan through its risk appetite
statements, which create a framework for decision
making. These appetite statements are reviewed on an
annual basis to ensure they remain appropriate.
The Board’s strategy towards risk and risk appetite is to
achieve operational, conduct and prudential resilience
that protects the long-term interests of our membership
and the Group, and also reflects our market role in
supporting economic growth and financial stability.
The Executive Risk Committee (ERC), the Board Risk
Committee (BRC) and the Board all review performance
and adherence to Board risk appetite limits.
Stress testing and planning
Stress testing, for both internal and external shocks, is
used to understand the potential impact of risks
crystallising and options to manage them. This includes
scenario and contingency planning.
Stress testing is a key part of the Group’s capital and
liquidity assessments, and allows the Board to be satisfied
that the Group has sufficient capital and liquidity
resources even under a range of severe forward-looking
scenarios.
More detail on the stress testing carried out by the Group,
including the Internal Capital Adequacy Assessment
Process (ICAAP), and Internal Liquidity Adequacy
Assessment Process (ILAAP) is set out in the sections that
follow covering capital risk and liquidity and funding risk.
Governance and control
The Group has a number of committees that oversee and
monitor risk as set out on page 36. The Board delegates to
BRC oversight of the Group's risk management
arrangements as a whole. The Chief Risk Officer (CRO)
has an independent reporting line directly to the Chair of
the BRC, in addition to reporting to the Chief Executive.
The Internal Audit function provides independent and
objective assurance and the Chief Internal Auditor has an
independent reporting line to the Chair of the Board Audit
Committee (BAC).
Further information on the BRC and BAC is included in the
Governance Report.
Coventry Building Society | Annual Report & Accounts 202538
Risk Management Report
Risk Categories
Credit risk
Credit risk is the risk of loss to the Group resulting from members, customers or wholesale counterparties failing to make
their contractual payments in full and/or on time. Credit risk arises primarily from the retail and commercial lending
activities and therefore is managed under the following sub-categories:
• Retail secured credit risk;
• Retail unsecured credit risk; and
• Business and commercial credit risk.
The retail secured portfolio represents 98% of the Group's lending.
Credit risk on treasury instruments is not considered a material driver of credit risk for the Group.
Maximum exposure to credit risk
The Group’s exposure to credit risk mostly relates to loans and advances to customers. The maximum exposure to credit
risk increased to £91.3 billion in 2025 (2024: £65.5 billion) primarily due to its acquisition of The Co-operative Bank.
The maximum exposure to credit risk for on-balance sheet and off-balance sheet financial exposures is set out below, with
on-balance sheet values of loans and advances presented net of expected credit losses (ECLs) of £44 million (2024: £24
million). The maximum exposure to credit risk for off-balance sheet financial exposures is considered to be the contractual
nominal amounts.
(Audited)
On-balance
sheet carrying
value
2025
£m
Off-balance
sheet
exposures¹
2025
£m
Maximum
credit risk
exposure
2025
£m
On-balance
sheet carrying
value
2024
£m
Off-balance
sheet
exposures¹
2024
£m
Maximum credit
risk exposure
2024
£m
Cash and balances with the Bank of England
11,948
—
11,948
9,893
—
9,893
Loans and advances to credit institutions
383
—
383
329
—
329
Debt securities
1,565
—
1,565
502
—
502
Loans and advances to customers
72,936
3,946
76,882
51,801
1,915
53,716
Derivative financial instruments
533
—
533
1,084
—
1,084
Total
87,365
3,946
91,311
63,609
1,915
65,524
1. Off-balance sheet exposures represents undrawn loan facilities, including mortgage pipeline, credit cards, personal loans and overdraft facilities.
Identifying impaired loans (Audited)
Under IFRS 9, the Group calculates impairment provisions on loans and advances to customers on an expected credit loss
(ECL) basis and not on an incurred loss basis. ECL provisions are based on an assessment of probability of default, loss given
default and exposure at default in a range of forward-looking scenarios.
IFRS 9 requires the Group to categorise customer loans into one of three stages at the Balance Sheet date. Assets that are
‘performing’ are shown in stage 1; assets where there has been a significant increase in credit risk (SICR) since initial
recognition or ‘deteriorating’ assets are in stage 2; and accounts which are credit impaired or in ‘default’ are in stage 3.
IFRS 9 requires a 12 month ECL provision on all stage 1 assets and a lifetime ECL provision on all stage 2 and 3 assets.
Further disclosures on the criteria applied to determine whether loans should be classed as stage 2 or stage 3 are included
in note 1 to the accounts.
Further disclosure on the ECL provisions and the accounting judgements which have been applied are included in note 16 to
the accounts.
Credit risk outlook
Looking beyond the accounting recognition of day one ECL for acquired loans and specific commercial cases, the resilience
of the lending portfolio has facilitated a largely stable impairment provision position in the year. Challenges do still persist
though, with costs continuing to be elevated and geopolitical developments that could lead to instability in the wider
economy that could feed into customer-level impacts. The Group therefore continues to remain alert to potential impacts
on its lending customers and will continue to manage policy and provisions in accordance with any emerging risks. The
Group has maintained its ongoing focus on low risk lending within a prudent risk appetite, which is geographically spread
across the UK.
Coventry Building Society | Annual Report & Accounts 202539
Risk Management Report
Risk Categories continued
Credit risk continued
Retail credit risk - secured
Credit risk in the Group’s mortgage book only crystallises
in the event that a borrower is unable to repay the
mortgage and, as a result, the property on which the
mortgage is secured has to be repossessed and sold at a
price which is insufficient to cover the outstanding loan
balance.
Portfolio analysis
The Group's secured portfolio has increased significantly
during the year as a consequence of the acquisition of
the Bank and accounts for 98% of the Group's overall
lending. The Group continues to focus on low risk, high
quality owner-occupier and buy to let mortgages. Non-
traditional mortgage lending outside these core segments
relates to residual legacy products and comprises a
negligible amount of total gross loans.
Buy to let lending continues to be provided mainly on an
interest only basis, reflecting the underlying investment
nature of buy to let properties, which can be sold to
repay the capital amount. Interest only lending was 5.2%
of the owner-occupier portfolio at 31 December 2025
(2024: 4.9%) with an average loan to value of 33.4%
(2024: 33.4%).
More information on the performance of the retail
secured portfolio is included in the following sections.
Geographical concentration
The mortgage portfolio continues to be well diversified
and reflects the national coverage of the Group’s
distribution channels.
The geographical split of mortgages by balance, gross of
impairment provisions, is shown below and has remained
broadly stable:
Region (Audited)
2025
%
2024
%
London
23.4
26.4
South East England
18.1
18.2
Central England
14.5
14.3
Northern England
16.5
14.1
East of England
11.9
12.0
South West England
8.4
8.6
Scotland
4.4
3.7
Wales and Northern Ireland
2.8
2.7
Total
100.0
100.0
Loan to value and income multiples
The low loan to value (LTV) profile of the mortgage book,
as shown in the following tables, is a reflection of the
Group’s low risk approach to lending. The Group updates
the estimated value of the properties securing the
mortgage portfolio on a quarterly basis using regional
house price indices and all tables within this report are
prepared using these valuations.
The Group operates a maximum income multiple for
owner-occupier mortgages that takes into account
factors such as LTV and income, ranging from 6 to 4.49.
Lending at or above 4.5 times income is closely
monitored, and we have seen an increase during 2025 as
a result of stress rate changes and income multiple policy
changes during the year. In 2025, lending at 4.5 income
multiple or above was 4.9% (2024: 1.7%).
The Group is a responsible lender and operates robust
affordability checks before advancing any loans. For
owner-occupier mortgages, ensuring a borrower has
sufficient net income, both at the time of application
and in a future higher interest rate environment, is a key
part of this. For buy to let loans, the Group sets
minimum interest coverage ratios that reflect, among
other things, the tax status of the borrower. The vast
majority of buy to let loans are assessed purely on the
income generated by the subject property.
The Group’s actual average interest coverage ratio at the
end of the year using a stressed 5% interest rate was
223.1% (2024: 225.2%), significantly above its minimum
lending criteria.
The Group also lends to portfolio landlords within the
buy to let segment and takes a prudent approach to
assessing portfolio LTV and income coverage ratios.
There are also limits on the number of properties in the
portfolio both in total and those which the Group will
lend on. Each loan in a portfolio is assessed on a
standalone basis and no allowance is made in the
affordability assessment for other income of the
borrower.
The Group launched a limited company buy to let
proposition during 2025, with lending criteria consistent
with personal name buy to let lending and the same
underwriting standards. During 2025, £271 million of
lending has been completed on the limited company BTL
proposition, with an income coverage ratio at a 5% stress
rate of 178%.
The LTV distribution of the mortgage book as at
31 December 2025 has slightly increased compared with
2024, as a result of increased lending in the 85% to 95%
including to first time buyers as well as the slightly
higher LTV portfolio following the acquisition. The
overall average LTV (balance weighted) increased during
the year. The following tables calculate LTV based on the
weighted average loan balances unless stated otherwise.
Total mortgage book profile by
number of accounts (Audited)
2025
%
2024
%
Indexed loan to value:
< 50%
52.7
53.2
50% to 65%
24.8
26.5
65% to 75%
12.3
11.8
75% to 85%
6.7
5.5
85% to 95%
3.4
2.9
>95%
0.1
0.1
Total
100.0
100.0
Average indexed loan to value of
stock (simple average)
46.3
46.0
Average indexed loan to value of
stock (balance weighted)
54.9
53.5
Coventry Building Society | Annual Report & Accounts 202540
Risk Management Report
Risk Categories continued
Credit risk continued
The average indexed LTV of the portfolio has increased
to 54.9% (2024: 53.5%). This is both the result of organic
change because of the increased higher LTV lending and
the acquisition of the Bank. The heritage Society
portfolio has a average LTV of 54.2% compared to 56.9%
for the heritage Bank portfolio.
The average LTV of gross new lending in 2025 is shown
below, which has increased during the year as a result of
an increased focus on higher LTV lending in line with
market changes.
Gross lending by balance - new
business profile
2025
%
2024
%
Owner-occupier purchase
42.8
43.2
Owner-occupier remortgages
30.4
30.9
Owner-occupier further advances
2.2
2.2
Buy to let purchase
5.1
5.7
Buy to let remortgages
18.5
17.2
Buy to let further advance
1.0
0.8
Total
100.0
100.0
Average loan to value (simple
average)
63.4
62.7
Average loan to value (balance
weighted)
67.0
66.7
Credit risk management
The Retail Credit Committee (RCC), and ultimately the
2025
2024
(Audited)
Gross
balance
£m
Arrears
balance
£m
Gross
balance
£m
Arrears
balance
£m
Greater than three months
269
15
174
9
Greater than six months
159
12
99
7
Greater than one year
61
7
40
4
In possession
15
1
8
—
Board, oversee the Group’s credit risk management
supported by a specialist retail credit risk department
reporting to the Chief Risk Officer.
The Board sets prudent credit risk limits within the
context of the Group’s overall risk appetite and these are
reflected in the Group’s lending criteria and credit
controls. The limits are also tested in a severe but
plausible stress scenario to ensure the Group is not
exposed to risk outside of its appetite if such a scenario
unfolds, and lending is tracked against these limits.
All mortgage applications are assessed against the
Group’s lending policy criteria to ensure consistent credit
decision making and lending within the Group’s credit
risk appetite. This assessment uses stressed interest rates
to ensure affordability even if interest rates increase.
The lending criteria has remained broadly unchanged
in 2025.
The Group also ensures that there is no overexposure to
any geographical region or counterparty and that its
mortgage portfolio as a whole can withstand a range of
macroeconomic and specific stress scenarios.
The Group's approach to payment difficulties
The Group continues to support customers having
difficulty making their mortgage payments; this includes
closely monitoring the impacts of the affordability
pressures that both the cost of living inflationary
challenges brings and a higher interest rate environment
have given rise to in recent years. The Group takes
action to proactively contact mortgage customers who
have or will be coming to the end of their initial fixed
rate mortgage product period, and who may experience
increases in their mortgage rates. In the event that
customers do experience financial difficulties, contact is
made on a missed direct debit (pre-arrears) as well as
following missed payments (arrears). The full range of
forbearance support, as detailed below, is available
related to the circumstances of the borrower. The Group
also continues to support the Mortgage Charter, an
initiative established in 2023 to provide short-term
assistance to borrowers experiencing cost of living
challenges.
Arrears performance
During 2025, whilst in absolute terms the Group's longer-
term arrears position has worsened, with £269 million
(2024: £174 million) of accounts being greater than three
months in arrears, proportional arrears levels remain low
at 0.38% (2024: 0.33%) of the total mortgage portfolio.
The absolute increase is both the result of an underlying
mild deterioration in arrears position of Society assets
(£52 million) and increase as a result of acquiring the
Bank (£43 million). The overall credit quality of the book
however does remain high and arrears levels compare
favourably to the UK Finance average. The vast majority
of these accounts have an LTV below 75%. The Group
continues to have a very low number of properties in
possession, which as at 31 December 2025 stood at 67
properties (2024: 36). This increase is the result of
increased levels of repossession on the Society mortgage
book (46) and as a result of acquiring the Bank (21).
The overall level of arrears remains significantly lower
than the UK Finance average, as shown below:
2025
2024
(Audited - Group only)
Group
%
UK
Finance1
%
Group
%
UK
Finance1
%
Greater than three months
0.38
0.78
0.33
0.91
Greater than six months
0.22
0.49
0.19
0.60
Greater than one year
0.08
0.29
0.08
0.31
In possession
0.02
0.06
0.01
0.02
1. UK Finance data as at 31 December 2025 (2024: 31 December 2024).
Coventry Building Society | Annual Report & Accounts 202541
Risk Management Report
Risk Categories continued
Credit risk continued
Extent and use of forbearance
The Group exercises forbearance if it is in the best
interests of the borrower. Forbearance measures that the
Group may offer are:
• Concessions, where the Group agrees to accept
either the normal monthly payment with no
contribution towards paying off the outstanding
arrears, reduced payments, or in exceptional
circumstances, no repayments for a short period.
• Mortgage term extensions to reduce the amount of
the monthly payment as part of a longer-term
solution.
• A change of product which results in more
sustainable monthly payments. On very rare
occasions, arrears may be capitalised or the Group
may agree to change repayment mortgages to
interest only terms for a temporary period as a
means of exercising forbearance.
Where a loan is up to date, the Group may agree a short-
term payment holiday as a way of allowing borrowers to
resolve financial difficulties, in which case this is treated
as a forbearance measure rather than as one where the
borrower is using a product feature. Forbearance
payment holidays are for a maximum of six months and
are only given where the borrower can afford the post-
holiday monthly repayments. The table below provides
details of loans which have had forbearance measures
granted.
The Group applies the Prudential Regulation Authority
(PRA) definition of forbearance (which aligns to the
European Banking Authority) for the purpose of this
disclosure, where forbearance measures have been
granted in the last 24 months, regardless of whether the
incident of forbearance has now been lifted and the
loans are back on their original terms.
As outlined in the table below, the overall number of
loans in forbearance has increased on account of the
acquisition of the Bank portfolio. The Bank has
historically applied a more prudent definition of
forbearance and the Group is working towards aligning
its definitions.
All accounts subject to active forbearance at the
reporting period are assessed as either stage 2 or 3 under
IFRS 9 and the Group recognises a lifetime ECL for these
as an impairment provision.
The table below details all cases which have had
forbearance measures granted during the last 24 months,
under the PRA definition of forbearance. This therefore
includes stage 1 accounts under IFRS 9, as the
forbearance measures have been lifted at 31 December
2025.
2025
2024
No. of
accounts
Carrying
value
£m
No. of
accounts
Carrying
value
£m
Forbearance: Accounts past due
Concessions
343
60
217
36
Payment holidays
72
9
43
5
Product transfers
3
—
2
—
Temporary transfer to interest only
20
3
7
1
Term extensions
6
—
1
—
Other
40
3
—
—
Forbearance Indicators: Accounts not past due
Concessions
281
42
150
23
Payment holidays
567
82
158
21
Product transfers
1
—
1
—
Temporary transfer to interest only
125
22
18
3
Term extensions
2
—
2
—
Other
65
9
—
—
Total Forbearance
1,525
230
599
89
Of which stage 2
348
37
177
22
Of which stage 3
712
108
311
53
ECL on forborne accounts
2
1
Coventry Building Society | Annual Report & Accounts 202542
Risk Management Report
Risk Categories continued
Credit risk continued
Retail credit risk - unsecured
The small retail unsecured portfolio comprises credit
cards and overdrafts and became part of the Group's
retail portfolio on acquisition of the Bank. As a result,
there is no comparative data presented. Credit risk in the
retail unsecured book crystallises in the event that a
borrower is unable to repay their credit card or overdraft
balance, which is then either sold at a loss to a specialist
distressed debt purchaser, or written off.
The unsecured retail portfolio represents 0.3% of the
Group's overall lending.
Portfolio analysis
The following table shows unsecured lending gross
customer balances and exposures (including undrawn
commitments) by product type and associated allowances
for losses. The gross customer exposure represents the
Group's maximum exposure to credit risk on these assets.
Total drawn balances have seen a minimal reduction over
the year alongside the undrawn exposure.
2025
(Audited)
Gross
customer
balances
£m
Undrawn
exposures
£m
Allowance
for
losses
£m
Coverage
%
Credit cards
211
766
3
1.42
Overdrafts
12
162
2
16.67
Total
223
928
5
2.24
Credit risk management
Customers' applications for credit are assessed using a
combination of credit scoring and policy rules. Credit
card and overdrafts are also subject to ongoing account
management to determine any increase or decrease in
credit limit that should apply as well as to manage over
limit authorisations.
The portfolio risk is reassessed monthly using behavioural
scorecards to determine the amount of capital required
to be held for individual exposures.
The Group's approach to payment difficulties
The Group provides support to those customers having
difficulty making their credit card payments or managing
their overdraft facility; this includes closely monitoring
the impacts of the affordability pressures that both the
cost of living inflationary challenges brings and a higher
interest rate environment have given rise to in recent
years. The Group takes action to proactively contact
credit card and overdraft customers who are identified as
at a greater risk of facing future financial difficulties.
Through delivery of our pre-arrears contact strategy, the
full range of forbearance support, as detailed below, is
available based on the circumstances of the borrower.
Forbearance
Forbearance occurs when, for reasons relating to actual
or apparent financial difficulty of the borrower, a
temporary or permanent concession is granted. A
concession may involve restructuring of the payment
terms of the facility. The primary aim of forbearance is
to help the borrower through a period of financial
difficulty and return the account into a sustainable
position, where the facility can be serviced through to
full repayment. When the primary aim cannot be
achieved, the secondary aim is to maximise recovery
of debt.
A number of forbearance options, including
concessionary arrangements, are available to borrowers
in financial difficulty. These are handled either with
customers directly or through a third party that they
have chosen to represent them. Accounts classified as
forborne remain so until the period of financial difficulty
has passed and the account has demonstrated it can
operate under sustainable terms or ownership is
transferred to a third party.
The table below analyses unsecured facility balances by
forbearance type and the associated gross allowance for
losses coverage.
2025
No. of
accounts
Carrying
value
£m
Forbearance: Accounts past due
Arrangements
203
—
Hardships
461
—
Temporary reducing overdraft
218
—
Forbearance: Accounts not past due
Arrangements
473
—
Hardships
430
—
Temporary reducing overdraft
2,797
1
Total Forbearance
4,582
1
Of which stage 2
89
—
Of which stage 3
3,200
1
ECL on forborne accounts
—
Coventry Building Society | Annual Report & Accounts 202543
Risk Management Report
Risk Categories continued
Credit risk continued
Business and commercial
The business and commercial portfolio comprises loans
made to business entities across a range of sectors and
became part of the Group's lending portfolio on
acquisition of the Bank. As a result, there is no
comparative data presented. New lending is primarily
focused on housing associations, commercial real estate
(CRE) and care and renewables sectors. The other main
lending sector is to Private Finance Initiative (PFI)
counterparties, however this is a closed portfolio, which
is expected to reduce over time.
The business and commercial portfolio represents 1.4% of
the Group's overall lending.
Portfolio analysis
The following table shows the Group's business and
commercial lending by industry sector.
2025
Balance
£m
Undrawn
exposures
£m
ECL
£m
Coverage
%
Split by industry
PFI
300
21
1
0.25
Housing association
271
163
—
0.03
Commercial real estate
253
2
1
0.35
Other
190
110
5
5.03
Total
1,014
296
7
0.72
Credit risk management
At origination, the sector-based key credit criteria
outline the requirements that must be met by the
majority of borrowers. Exceptions to that are monitored
via a key risk indicator. The Group operates a strict
policy with regards to reporting single name
concentrations.
There are a number of triggers which, when met, will
result in the customer being classed as watchlist, and
therefore classed as higher risk of default and will be
subject to closer monitoring. These triggers include, but
are not limited to: payments past due, cash flow
pressures, the need for temporary tailored support,
insolvency, covenant breaches, or other signs of
financial distress.
Collateral (Audited)
Various forms of collateral are used to mitigate the
Group's exposure to credit risk arising in business and
commercial lending. These can vary depending on the
lending type and include property collateral, debentures
(England and Wales), floating charges (Scotland), cash
cover, and personal guarantees. Government guarantees
apply to loans previously made under the Coronavirus
Business Interruption Loan Scheme (CBILS) and Bounce
Back Loan Scheme (BBLS) (80% and 100% respectively).
Property valuations are obtained when the facility is first
approved. Thereafter, the Group's lending procedures
require collateral values to be reviewed internally
annually to assess whether a material change has
occurred. A formal external revaluation of a property is
required, as a minimum, no less than every five years; or
more frequently where a customer's facilities exceed
£2.5 million (when a maximum 3 yearly revaluation is
required) and when lending exposures are considered to
be higher risk (when a material change has occurred that
is likely to affect the value and/or recoverability of the
debt).
The table below analyses the market value of the
property collateral and effective coverage provided by
government guarantees (capped at 100% of LTV) held
against assets across all sectors. As noted above, the
Group also has non-property collateral to utilise.
2025
Collateral type
Total
balances
£m
Property
collateral
Government
guarantee
Loss
allowance
£m
Stage 1
637
574
49
1
Stage 2
26
21
2
—
Stage 3 & POCI
20
11
4
4
Total secured
683
606
55
5
Unsecured
331
—
—
2
Total
1,014
606
55
7
Within the business and commercial portfolio, no loss
allowance will be recognised on certain loans where the
level of collateral available is sufficiently high, i.e. BBLs
or low LTV loans, such that the risk to the value of the
collateral in the downside scenarios still results in a loss
given default of nil.
The Group's approach to payment difficulties
The Group provides support to customers who are in
financial difficulty. The identification of financial
difficulty is seen through the use of early warning
indicators or through ongoing customer interactions. If
this is identified in the relationship, teams then seek to
consider if forbearance is appropriate.
Forbearance
Forbearance may be made to customers who are in
financial difficulty, which will be confirmed through
thorough financial assessment. As at 31 December 2025,
£29m of balances were subject to some degree of
forbearance.
Coventry Building Society | Annual Report & Accounts 202544
Risk Management Report
Risk Categories continued
Credit risk continued
Treasury credit risk
Treasury credit risk is the risk that the Group is unable to
recover the principal or interest due from a wholesale
debtor, or that the value of a wholesale asset or
instrument reduces materially due to changes in the
creditworthiness of the counterparty.
Management of treasury credit risk
The Group has a low appetite for treasury credit risk and
restricts exposures to good quality counterparties with a
low risk of failure.
Treasury investments in financial institutions are
predominantly with highly rated UK banks. The treasury
credit risk framework is reviewed annually by the BRC
and the Board, and reflects internal analysis, external
credit ratings and any other relevant factors. There is a
maximum permitted exposure set for each category of
investments in addition to country limits.
Within the risk framework, detailed limit setting is
delegated to the Asset and Liability Committee (ALCO)
with oversight from the Risk function.
Exposures are reviewed continuously to ensure that they
remain within the approved limits. Developments with
treasury counterparties are closely monitored, with
detailed internal credit assessments performed annually
on key counterparties, with limits reduced or suspended
where there are adverse changes, including changes in
the creditworthiness of counterparties or markets.
Treasury credit exposure profile (Audited)
Treasury assets comprise cash and balances with the
Bank of England, loans and advances to credit institutions
and debt securities. The majority of liquidity continues
to be held in UK central bank reserves.
All of the Group’s treasury exposures, outside of
balances held with the central clearing house, remain at
investment grade as set out below:
Exposure value by Moody's rating
2025 (Audited)
Aaa-Aa3
£m
A1-A3
£m
Baa1-Baa3
£m
Unrated
£m
Total
£m
Central banks and sovereigns1
12,757
—
—
—
12,757
Multilateral development banks (supranational bonds)
473
—
—
—
473
Financial institutions2
276
310
38
13
637
Mortgage backed securities
24
—
2
3
29
Total
13,530
310
40
16
13,896
1. Of the balance with central banks and sovereigns, £9,341 million was held by the Society.
2. Of the balance with financial institutions, £154 million at Aaa-Aa3 and £117 million A1-A3 was held by the Society.
Exposure value by Moody's rating
2024 (Audited)
Aaa-Aa3
£m
A1-A3
£m
Baa1-Baa3
£m
Unrated
£m
Total
£m
Central banks and sovereigns
10,270
—
—
—
10,270
Multilateral development banks (supranational bonds)
19
—
—
—
19
Financial institutions
9
123
—
303
435
Mortgage backed securities
—
—
—
—
—
Total
10,298
123
—
303
10,724
The majority of treasury assets continue to be held within the UK. The geographical domicile of the Group’s treasury assets
is shown below:
Treasury assets
Of which, debt securities
2025 (Audited)
Sovereign
£m
Supranationals
£m
Financial
institutions
£m
Mortgage
backed
securities
£m
Total liquid
assets
£m
Book value
£m
Market
value
movement
£m
Fair value
£m
United Kingdom
12,696
—
460
29
13,185
962
(72)
890
Supranationals1
—
473
—
—
473
454
19
473
Europe
61
—
5
—
66
60
1
61
Rest of the World
—
—
172
—
172
140
1
141
Total
12,757
473
637
29
13,896
1,616
(51)
1,565
1. Supranationals relate to amounts held with various Multilateral Development Banks.
Coventry Building Society | Annual Report & Accounts 202545
Risk Management Report
Risk Categories continued
Credit risk continued
Treasury assets
Of which, debt securities
2024 (Audited)
Sovereign
£m
Supranationals
£m
Financial
institutions
£m
Mortgage
backed
securities
£m
Total liquid
assets
£m
Book value
£m
Market
value
movement
£m
Fair value
£m
United Kingdom
10,270
—
290
—
10,560
530
(47)
483
Supranationals1
—
19
—
—
19
19
—
19
Europe
—
—
135
—
135
—
—
—
Rest of the World
—
—
10
—
10
—
—
—
Total
10,270
19
435
—
10,724
549
(47)
502
1. Supranationals relate to amounts held with the European Investment Bank (guaranteed by a number of European sovereigns).
Treasury credit risk mitigation
The Group enters into derivative transactions for risk
management purposes. It undertakes sale and repurchase
(repo) transactions to manage liquidity and raise longer-
term funding, where highly rated assets such as gilts are
sold with an agreement to repurchase at an agreed price
at a later date. Counterparty credit risk includes the risk
of default by the derivative counterparty and the risk
that cash received in a repo transaction is less than the
market value of the asset.
The Group manages this risk by undertaking credit
assessments of all counterparties and by exchanging
collateral to mitigate any exposure. Daily
collateralisation of repo transactions is carried out in
accordance with the Global Master Repurchase
Agreements to mitigate net exposure arising from
changes in market value. Similarly, all derivatives have
Credit Support Annexes (CSAs) in place to collateralise
the net mark-to-market credit exposures.
The Group has entered into International Swaps and
Derivatives Association (ISDA) master netting agreements
for all of its derivatives (other than swaps undertaken by
the Group's securitisation funding programmes). These
allow the Group to settle exposures ‘net’ in the event of
a default or other predetermined event.
The Group is subject to mandatory central clearing of
derivatives through a third-party regulated central
clearing counterparty to reduce systemic and operating
risk. Under this, collateral is exchanged on a daily basis.
The Group may still enter into swaps that are not
currently cleared by any of the central clearing houses,
e.g. cross currency swaps; these may be subject to daily
exchange of collateral to better manage counterparty
risk.
The Group’s covered bond programmes and Economic
Master Issuer plc enter into swaps under separate ISDA
agreements. Each agreement includes a CSA which
provides for collateralisation of the swap exposure.
The derivative exposures can only be settled net
following a default or other predetermined event, and
therefore exposures are presented gross on the Balance
Sheet.
As at 31 December 2025, the Society has £1 million
derivative net credit exposures (2024: nil).
More information is included in note 34 to the accounts.
Analysis of treasury assets by IFRS 9 stage
and impairment
No allowance for losses has been recognised for treasury
assets in either the current or prior year, and all are
classified as low-to-medium risk and within stage 1. The
Group has applied the low credit risk exemption available
within IFRS 9 to treasury assets with an external rating of
investment grade and to assets which the Group classifies
as investment grade.
Accordingly, at each balance sheet date, it is assumed
that credit risk on all such financial assets has not
increased significantly since initial recognition. The 'low
credit risk exemption' has not been applied to any other
type of financial asset.
Treasury credit risk outlook
The Group’s consistent low risk approach to treasury
credit risk is anticipated to provide continued protection
to the Group and its members and customers from credit
risk arising on its treasury portfolio.
Coventry Building Society | Annual Report & Accounts 202546
Risk Management Report
Risk Categories continued
Market risk
Market risk is the risk of a reduction in earnings and/or
value resulting from adverse movements in financial
markets. Market risk only arises in the banking book as
the Group does not hold a trading book.
Interest rate risk in the banking book includes re-price,
option and basis risk. The Group is also subject to credit
spread risk in the banking book and foreign currency risk.
The main source of market risk to which the Group is
exposed to is re-price risk.
Management of market risk
The Board has overall responsibility for determining the
appetite to market risks, including interest rate risk in
the banking book (IRRBB). The Chief Financial Officer and
Treasurer are responsible for managing and monitoring
current and emerging market risks. This is overseen by
the Market Risk Committee, ALCO, BRC and ultimately
the Board.
Market risk is managed by specifying risk tolerances and
operating within these limits, using derivatives, such as
interest rate swaps, or matching offsetting assets and
liabilities. The Group maintains adequate margin
capacity through administered rates, and invests its
reserves, non-interest bearing, and some of its interest
rate insensitive liabilities in fixed rate assets to reduce
income volatility.
Re-price risk
The Group is exposed to the risk that interest rates
change and its assets and liabilities re-price on different
dates, resulting in a negative impact to the future net
interest income or the value of the balance sheet. This
risk is managed by limiting the impacts of different
interest rate shocks.
The impact on the economic value of assets and
liabilities under parallel and non-parallel interest rate
shock scenarios is monitored across the Group.
The Group monitors its exposure against the prescribed
shocks of the Basel Committee on Banking Supervision
(BCBS) outlier tests monthly and the Board sets limits for
the maximum change in the economic value of equity
beneath the regulatory limit.
In addition to the economic value measures, the impact
of various interest rate scenarios on net interest income,
i.e. an earning measure is monitored.
The Group uses structural hedges to manage net interest
sensitivity arising from its reserves, non interest bearing,
and some of its interest rate insensitive balances. The
structural hedges have a number of Board approved
parameters that limit the size, duration and
concentration of maturities within each hedge.
Shock applied
2025
£m
2024
£m
Impact on present value of assets and liabilities at year end
from a parallel change in yield curve:
+100 basis points shift (EV 100)
2
3
-100 basis points shift (EV 100)
(2)
(3)
+200 basis points shift (EV 200)
35
28
-200 basis points shift (EV 200)
(39)
(31)
Impact on net interest income for the year from a parallel
change in yield curve:
+100 basis points shift
6
11
-100 basis points shift
(9)
(11)
The table above shows the exposure to re-price risk
against a range of value and earnings-based assessments
as at 31 December 2025. The relatively small change in
value and net interest income measures provides insight
into the modest amount of re-price risk the Group runs.
The balance sheet is positioned so that net interest
income increases should interest rates rise, i.e. net
interest income reduces from falling interest rates. The
sensitivity of the economic value to the different interest
rate shocks is driven by pre-hedged customer flow
positions and separate assumptions on how they will
complete under each shock.
Product option risk
The Group is exposed to the risk that arises when
interest rate changes result in a financial incentive for a
customer to exercise an option on a fixed rate product
and hedging has to be adjusted at adverse rates. The key
behavioural assumptions made are:
• Rate of prepayment of fixed rate mortgages.
• Rate of withdrawal of fixed rate savings.
• Rate of conversion of fixed rate mortgage pipeline.
Prepayment risk is quantified and assessed using a set of
bespoke models that, based on historical experience,
attempt to predict customer behaviour in response to
changes in interest rates, which are back tested. It is
mitigated by appropriate redemption or early withdrawal
charges.
Pipeline risk is managed through dynamic hedging of the
Group’s estimate of likely sales and timing using a
conversion model and applying stressed assumptions.
Final hedging adjustments are made once the completion
onto a product has ceased.
Coventry Building Society | Annual Report & Accounts 202547
Risk Management Report
Risk Categories continued
Market risk continued
Basis risk
The Group is exposed to the risk that interest rates
change and floating rate liabilities re-price by different
amounts than to its assets such that it is negatively
impacted. Basis risk is managed by offsetting assets and
liabilities by their reference rate and ensuring that
earnings sensitivity to market rates diverging from the
Bank of England Base Rate remain within limits. The
primary short-term interest rate benchmark that the
Group is exposed to is Sterling Overnight Index Average
(SONIA).
Credit spread risk
Credit spread risk in the banking book is the risk arising
from changes in the market value of financial assets due
to fluctuations in their credit spread. Beyond cash, the
Group holds securities for the high quality liquidity buffer
which are held at fair value through other comprehensive
income (FVOCI). This risk is managed through a limit
which caps the change in the market value of both fixed
and floating rate assets under a shock to credit spreads.
Foreign currency risk
The Group raises non-sterling funding to ensure
wholesale funds are obtained cost-effectively across a
wide pool of potential providers. However, this exposes
the Group to the risk of a change in the value of foreign
currency denominated liabilities. Cross currency swaps
are entered into in order to fully hedge the foreign
exchange risk. Both pre- and post-hedged exposures are
managed within limits.
Additionally, currency risk is incurred by facilitating
customer hedging and incidental customer transactions.
To manage this risk, an overall maximum notional net
sterling position limit is set of overnight exposures. This
is supported by applying sub-limits to currencies by tier
to reflect their liquidity. Further information is included
in note 26 to the accounts.
Market risk outlook
The Bank of England reduced Base Rate by a total of 100
basis points through 2025. This was a slightly faster pace
than anticipated by financial markets at the end of 2024
and was supported by the central bank's forecast that
inflation would continue to fall back towards the 2%
target over the medium-term. Following the 2025 UK
Budget, the outlook for base rate through 2026 is less
certain. Whilst growth has proved to be more resilient
than expected, with monthly GDP seeing a rebound
following the Budget, inflation remains sticky and ahead
of the Bank of England target. Wage growth also remains
elevated despite evidence of a rise in unemployment.
The Group is satisfied that the controls outlined above
will mean that market risk remains within appetite.
Liquidity and funding risk
Liquidity risk is the risk that the Group has insufficient
funds to meet its obligations as they fall due. Funding
risk reflects an inability to access funding markets or to
do so only at excessive cost.
Both risks are managed on a Group basis (including all
subsidiary entities) with day-to-day responsibility
delegated to the Chief Financial Officer and Treasurer,
with oversight provided by the Liquidity Management
Committee, ALCO, BRC and the Board.
Management of funding risk
The Group ensures that it is not reliant on any single
source or funding provider to manage funding risk. It
maintains a strong and diversified funding base with
access to a range of wholesale funding markets. This
reflects the Group's size and the building society business
model.
Following the acquisition of the Bank, retail funding
continues to form the bulk of the funding base and
consists of a mix of variable rate products, personal and
business current accounts, fixed rate bonds and ISAs. The
Group raises deposits from a broad customer base which
is spread throughout the UK and through both Society
and Bank brands.
Over 2020 and 2021, both the Society and Bank accessed
the Bank of England Term Funding Scheme with
additional incentives for SMEs (TFSME) to further reduce
funding costs and diversify exposures. A total of £10.5
billion was drawn. All of those funds have now been
repaid, excluding £0.26 billion linked to the Bank's
Bounce Bank Loan Scheme (BBLS) lending, which is due
for repayment in 2027.
A funding risk framework is in place, which includes a
series of Board Risk Appetite Metrics, Key Risk Indicators
and monitoring metrics that ensure a prudent funding
mix. This includes avoiding excessive exposure to
wholesale funding and maturity concentrations.
Management of liquidity risk (Audited)
The Group ensures it holds sufficient quality and quantity
of liquidity to remain a going concern after a severe but
plausible stress. In turn, this ensures that it meets
regulatory requirements set by the PRA. The level of
stress applied is dynamically assessed based on an
assessment of risks run by the Group and the prevailing
economic and market liquidity backdrop.
The business model inherently involves ‘maturity
transformation’ as it borrows, or takes deposits, for
shorter terms than its lending. This mismatch could, in
certain stress circumstances, give rise to liquidity risk if
the Group was unable to raise new funding or replace
existing funding at maturity because of either a liquidity
crisis in the capital markets and/or a loss of member
confidence that causes a severe outflow of retail funding
at that time.
Coventry Building Society | Annual Report & Accounts 202548
Risk Management Report
Risk Categories continued
Liquidity and funding risk
continued
The Internal Liquidity Adequacy Assessment Process
(ILAAP) is completed to ensure that the Group holds
sufficient liquidity to cover this risk. The ILAAP is
approved by the Board and confirms the quantum and
mix of liquidity that the Group must hold based on point
in time ('spot') and business forecasts. These spot and
forecast liquidity levels are monitored by the Liquidity
Management Committee, ALCO and BRC, and overseen by
the Board. Whilst the ILAAP process is usually completed
on an annual basis, due to the acquisition and as agreed
with the regulator, the first Group ILAAP will be
submitted in March 2026, based on a September 2025
position.
The Group Recovery Plan outlines a menu of actions that
can be executed to mitigate against the impact of both
capital and liquidity stresses.
The Group, Society and Bank all held a significant buffer
above regulatory liquidity requirements throughout 2025.
Liquidity resources
The Group’s liquidity resources includes funds held in the
Bank of England reserve account, other highly
marketable assets and contingent liquidity. They are
managed based on the prudent estimation of the
expected time taken to acquire cash funding in a stress
situation.
The Group monitors compliance against Liquidity
Coverage Ratio (LCR) requirements on a daily basis. The
12-month rolling average LCR for Group at 31 December
2025 is 230% (2024: 258%).
The Net Stable Funding Ratio (NSFR) is a measure that
compares the stability of the Group's asset and liability
base. The Group holds sufficient stable funding to meet
the regulatory requirement of 100% NSFR.
As at 31 December 2025, total cash and High Quality
Liquid Assets (HQLA) remains high, with the majority of
assets held as cash at the Bank of England.
Liquidity adequacy and stress testing
The ILAAP ensures that the Group holds sufficient
liquidity both to meet minimum regulatory requirements
such as the LCR and to comply with the Internal Liquidity
Adequacy Assessment (ILAA) Rules, including the Overall
Liquidity Adequacy Rule.
The ILAAP explains the assumptions used in liquidity
stress tests, including the rationale for their selection
and calibration. These assumptions are specific to the
Group, including depositor history and forecast behaviour
in stress. The funding model means that the main
liquidity risks would relate to significant unexpected
withdrawals of retail deposits, the impact of any credit
risk downgrade and a lack of access to wholesale funding
markets.
The ILAAP is reviewed by the PRA. Following this, the
PRA provides Individual Liquidity Guidance which sets out
the liquidity that the PRA requires the Group, Society
and Bank to hold, including any add-ons for liquidity risks
that are not adequately captured by the LCR.
The Group continued to meet all regulatory liquidity
requirements throughout the year.
Coventry Building Society | Annual Report & Accounts 202549
Risk Management Report
Risk Categories continued
Liquidity and funding risk continued
Wholesale funding
During 2025, the Group issued one Residential Mortgage Backed Security transaction (with total bonds issued of £500
million) and £1,200 million in covered bonds.
Overall, the wholesale funding at 31 December 2025 has increased by £841 million as a result of the acquisition of the Bank,
offset by the repayment of TFSME during the year.
2025
2024
(Audited)
Notes to the
accounts
£m
%
£m
%
Deposits from banks, including repo agreements
24
2,745
24.3
1,867
17.8
Amounts drawn under the Term Funding Scheme
24
264
2.3
2,065
19.7
Debt securities in issue
Medium term notes
25
2,412
21.3
2,067
19.7
Covered bonds
25
4,168
36.8
2,866
27.4
Residential Mortgage Backed Securities
25
1,727
15.3
1,610
15.4
Total
11,316
100.0
10,475
100.0
Wholesale funding outstanding at 31 December 2025 remained primarily denominated in sterling as shown below:
(Audited)
GBP
£m
EUR
£m
Total
£m
Deposits from banks, including repo agreements
2,745
—
2,745
Amounts drawn under the Term Funding Scheme
264
—
264
Debt securities in issue
Medium term notes
1,975
437
2,412
Covered bonds
2,203
1,965
4,168
Residential Mortgage Backed Securities
1,727
—
1,727
Total as at 31 December 2025
8,914
2,402
11,316
Total as at 31 December 2024
8,201
2,274
10,475
All of the euro denominated covered bonds have been swapped back into sterling.
The expected maturity analysis for wholesale funding is shown below, based on the earlier of first call date or contractual
maturity.
2025
2024
(Audited)
£m
%
£m
%
Less than one year
4,053
35.8
4,487
42.8
One to two years
2,172
19.2
1,559
14.9
Two to five years
4,947
43.7
3,550
33.9
More than five years
144
1.3
879
8.4
Total
11,316
100.0
10,475
100.0
Coventry Building Society | Annual Report & Accounts 202550
Risk Management Report
Risk Categories continued
Liquidity and funding risk continued
Contractual maturity profile of financial assets and liabilities
The table below analyses the carrying value of financial assets and financial liabilities based on the remaining contractual
life to the maturity date. In practice, the contractual maturity will differ to actual repayments; ‘on demand’ customer
deposits will be repaid later than the earliest date on which repayment can be requested and mortgages may be repaid
ahead of their contractual maturity. Overall, the net liquidity gap increased during the year.
Group
At 31 December 2025 (Audited)
Repayable
on demand
£m
Up to 3
months
£m
3-12
months
£m
1-5 years
£m
More than 5
years
£m
Total
£m
Assets
Cash and balances with the Bank of England
11,948
—
—
—
—
11,948
Loans and advances to credit institutions
358
—
—
—
25
383
Debt securities
—
118
335
811
301
1,565
Loans and advances to customers
84
1,474
3,235
16,017
52,126
72,936
Hedge accounting adjustment
1
4
51
121
(8)
169
Derivative financial instruments
10
8
115
329
71
533
Investment in equity shares
—
—
—
—
5
5
Total financial assets
12,401
1,604
3,736
17,278
52,520
87,539
Liabilities
Shares
30,674
1,207
13,384
5,104
461
50,830
Customer accounts
18,112
586
1,780
414
—
20,892
Sale and repurchase agreements1
61
993
964
500
—
2,518
Amounts drawn under TFSME1
3
—
—
261
—
264
Deposits from banks - other
225
2
—
—
—
227
Secured debt securities in issue - RMBS and covered bonds
—
8
1,147
4,737
—
5,892
Senior unsecured debt funding
5
14
665
1,589
142
2,415
Hedge accounting adjustment
—
—
16
13
—
29
Derivative financial instruments
2
4
50
244
20
320
Subordinated liabilities
—
2
10
220
16
248
Subscribed capital
—
2
—
—
40
42
Total financial liabilities
49,082
2,818
18,016
13,082
679
83,677
Net liquidity gap (contractual)
(36,681)
(1,214)
(14,280)
4,196
51,841
3,862
1. Included in Deposits from banks on the Balance Sheet.
Coventry Building Society | Annual Report & Accounts 202551
Risk Management Report
Risk Categories continued
Liquidity and funding risk continued
Contractual maturity profile of financial assets and liabilities continued
Group
At 31 December 2024 (Audited)
Repayable
on demand
£m
Up to 3
months
£m
3-12 months
£m
1-5 years
£m
More than 5
years
£m
Total
£m
Assets
Cash and balances with the Bank of England
9,893
—
—
—
—
9,893
Loans and advances to credit institutions
329
—
—
—
—
329
Debt securities
—
57
25
295
125
502
Loans and advances to customers
64
917
2,652
12,787
35,382
51,802
Hedge accounting adjustment
—
(2)
(51)
(370)
(25)
(448)
Derivative financial instruments
7
12
194
775
96
1,084
Investment in equity shares
—
—
—
—
9
9
Total financial assets
10,293
984
2,820
13,487
35,587
63,171
Liabilities
Shares
27,982
1,930
13,481
5,515
435
49,343
Customer accounts
—
76
6
—
—
82
Sale and repurchase agreements1
—
301
203
500
—
1,004
Amounts drawn under TFSME1
—
25
2,040
—
—
2,065
Deposits from banks - other
860
2
—
—
—
862
Secured debt securities in issue - RMBS and covered bonds
—
508
203
3,278
487
4,476
Senior unsecured debt funding
—
10
359
1,309
390
2,068
Hedge accounting adjustment
—
—
121
(149)
(40)
(68)
Derivative financial instruments
—
—
68
190
47
305
Subordinated liabilities
—
—
—
15
—
15
Subscribed capital
—
2
—
—
40
42
Total financial liabilities
28,842
2,854
16,481
10,658
1,359
60,194
Net liquidity gap (contractual)
(18,549)
(1,870)
(13,661)
2,829
34,228
2,977
1. Included in Deposits from banks on the Balance Sheet.
Gross contractual cash flows payable under financial liabilities are analysed further below. This analysis differs from the
analysis of contractual maturity as it includes interest accrued for the period to maturity on the balance outstanding at the
Balance Sheet date. Principal payments are included based on the earlier of first call date, accessible date or contractual
maturity. The undated Subscribed capital is included in the ‘More than 5 years’ column but with no accrued interest after
this date. In the prior year, only a Group table is presented as the Society owned the majority of the Group's liabilities.
Group
At 31 December 2025 (Audited)
Up to 3
months
£m
3-12
months
£m
1-5 years
£m
More than 5
years
£m
Total
£m
Liabilities
Shares
31,891
13,580
5,147
461
51,079
Customer accounts
18,724
1,824
422
—
20,970
Deposits
1,293
996
780
—
3,069
Debt securities in issue
144
2,441
8,071
181
10,837
Other liabilities and adjustments
105
541
912
14
1,572
Subordinated liabilities
1
24
263
—
288
Subscribed capital
2
2
19
41
64
Total liabilities
52,160
19,408
15,614
697
87,879
Society
At 31 December 2025 (Audited)
Up to 3
months
£m
3-12
months
£m
1-5 years
£m
More than 5
years
£m
Total
£m
Liabilities
Shares
31,891
13,580
5,147
461
51,079
Customer accounts
36
10
—
—
46
Deposits
1,055
524
516
—
2,095
Debt securities in issue
137
2,147
7,354
181
9,819
Other liabilities and adjustments
54
230
163
—
447
Subordinated liabilities
1
24
263
—
288
Subscribed capital
2
2
19
41
64
Total liabilities
33,176
16,517
13,462
683
63,838
Coventry Building Society | Annual Report & Accounts 202552
Risk Management Report
Risk Categories continued
Liquidity and funding risk continued
Contractual maturity profile of financial assets and liabilities continued
Group
At 31 December 2024 (Audited)
Up to 3
months
£m
3-12 months
£m
1-5 years
£m
More than 5
years
£m
Total
£m
Liabilities
Shares
29,908
13,687
5,582
435
49,612
Customer accounts
62
6
446
323
837
Deposits
1,238
1,392
535
—
3,165
Debt securities in issue
606
826
4,552
467
6,451
Other liabilities and adjustments
41
282
162
11
496
Subordinated liabilities
1
1
17
—
19
Subscribed capital
3
2
19
40
64
Total liabilities
31,859
16,196
11,313
1,276
60,644
Asset encumbrance
The Group’s mortgages and treasury assets can be used to support collateral requirements for secured funding, central
bank operations or third-party repo transactions. Mortgages or treasury assets used in this way are referred to as
encumbered. Encumbrance provides cheaper and more stable funding; however it creates the risk that savings members
and other senior unsecured creditors may be unable to benefit from the liquidation of encumbered assets in the event of
insolvency of the Group, and may risk bearing losses from a forced sale of the encumbered assets in the event of default.
While these risks are very remote, limits on encumbrance are set by the Board and encumbrance levels are managed within
these limits. Asset encumbrance at 31 December 2025 is set out in the table below.
Encumbered
Unencumbered
Pledged as
collateral1
£m
Other2
£m
Available as
collateral 3
£m
Other4
£m
Total
£m
Cash and balances with the Bank of England
—
342
11,606
—
11,948
Loans and advances to credit institutions
327
—
—
56
383
Debt securities
609
—
926
30
1,565
Loans and advances to customers
14,153
—
11,598
47,185
72,936
Hedge accounting adjustments
—
—
—
169
169
Derivative financial instruments
—
—
—
533
533
Other assets
—
—
—
705
705
Total as at 31 December 2025
15,089
342
24,130
48,678
88,239
Total as at 31 December 2024
14,342
71
16,323
33,296
64,031
1. Assets that have been used to support interest rate swap collateralisation agreements, third-party secured funding operations, central bank operations or third-party repo
transactions, and cannot be used for any other purpose.
2. Other encumbered assets are assets that cannot be used for secured funding due to legal or other reasons. This includes cash and assets supporting secured funding vehicles.
3. These assets are readily available as collateral to secure funding. Loans and advances to customers in this category comprise Bank of England approved portfolios, and those that
although technically encumbered are held in respect of retained self-issued notes in the Society’s covered bond and securitisation programmes.
4. Unencumbered other assets are therefore conservatively defined as not readily available for use as collateral. The Loans and advances to customers in this category include £28.4
billion at 31 December 2025 (2024: £19.9 billion) which would be eligible for use to support future external or self-issuance under the Group’s covered bond and securitisation
programmes. A proportion of the remaining balance would also be suitable for such purpose subject to amending the programme structures.
External credit ratings
In December 2025, Moody's reaffirmed the Society's unsecured long- and short-term ratings at A3 and P-2, with the outlook
maintained as stable. Fitch upgraded the Society's outlook from negative to stable, with prevailing ratings reaffirmed. The
Society's unsecured short- and long-term credit ratings as at the date of approval of the Annual Report & Accounts are set
out below:
(Audited)
Long-term
Short-term
Outlook
Date of last credit opinion
Moody’s
A3
P–2
Stable
December 2025
Fitch
A–
F1
Stable
October 2025
Liquidity and funding risk outlook
The Group remains committed to prudent liquidity levels and funding levels, raising funds via retail savings and wholesale
markets. The Group has less than £0.3 billion of TFSME drawings remaining, acquired with the Bank relating to the Bounce
Back Loan Scheme to support small businesses affected by Covid-19. Funding continues to be targeted from both retail and
wholesale markets with specific products and instruments targeted for their relative benefit to the business strategy, such
as diversification and relative stability. The Group’s wholesale funding plan considers recent regulation updates (in
particular the threshold for the leverage ratio to bind), maintaining investor appetite across instruments and currencies as
well as the impact on the ratings of senior debt.
Coventry Building Society | Annual Report & Accounts 202553
Risk Management Report
Risk Categories continued
Capital risk
Introduction
Capital risk is the risk that the Group has insufficient
capital resources to absorb losses in benign or stressed
conditions, fails to meet prudential regulations and
expectations, or is unable to recapitalise in the event of
resolution. It is a principal risk within the Enterprise Risk
Management Framework (ERMF) and risk appetite limits
are approved by the Board.
Additional capital disclosures are available in the Group’s
2025 Pillar 3 Disclosures at www.thecoventry.co.uk.
Management of capital
The primary governance forum for the management of
capital is the Assets & Liabilities Committee (ALCO), with
delegated authority from the Board Risk Committee
(BRC) and supported by the Capital Management
Committee (CMC), a sub-committee of ALCO. The first
line risk owner is the Chief Financial Officer (CFO), with
second line oversight owned by the Chief Risk Officer
(CRO).
The Group regularly monitors its capital position against
Board approved risk appetite limits, recovery plan early
warning indicators (R-EWIs), and prescribed regulatory
minima. This monitoring is conducted against the current
position as well as forecast values, with escalation
procedures in place should any of these limits trigger.
The Group performs an Internal Capital Adequacy
Assessment Process (ICAAP), in which it considers the key
risks to which it is exposed and the capital required to
mitigate such risks. As part of the ICAAP, the Group
assesses its capital adequacy over the planning horizon
under base case strategic plan assumptions, as well as
severe but plausible stresses using scenarios provided
either by the regulator or developed internally. Whilst
the ICAAP process is usually completed on an annual
basis, due to the acquisition and as agreed with the
regulator, the first Group ICAAP will be submitted in
March 2026, based on a September 2025 position.
Stress testing is conducted to ensure the Group maintains
sufficient capital to withstand a severe but plausible
stress, and to identify mitigating management actions
that can be taken.
Reverse stress testing is also conducted to identify
extreme events that have the capacity to ‘break’ the
Group. This process helps identify risks and control
mechanisms which might otherwise be missed.
Capital adequacy
Risk weighted capital requirements
UK Capital Requirements Directive V (CRD V) requires the
Society to maintain a CET 1 ratio of at least 4.5%, a Tier
1 capital ratio of at least 6% and a total minimum capital
ratio of 8%. Taken together, these ratios are known as
the Pillar 1 requirement.
The Pillar 2 capital requirement reflects wider risks
within the Group's ICAAP assessment and any capital add-
ons arising from the supervisory review of those
assessments. The Group's combined Pillar 1 and Pillar 2
requirement is represented by its Total Capital
Requirement (TCR), which is set by the PRA. The TCR for
the Group, set following the acquisition of the Bank,
equates to 11.5% of risk weighted assets (RWAs), or £1.7
billion based on year end RWAs (2024: 10.6% of RWAs or
£1.0 billion). The Group comfortably meets this
requirement out of its CET 1 capital resources.
CRD V also requires lenders to hold supplementary
capital buffers, to be met from CET 1 capital. As at
31 December 2025, these were:
• A Capital Conservation Buffer (CCoB) of 2.5%.
• A macro-prudential Countercyclical Buffer (CCyB) at
2%.
In addition, a PRA buffer may be applied depending on
the outcome of the severe but plausible stress tests.
The Group uses the IRB basis for the majority of its retail
mortgage and commercial portfolios. IRB models are used
to calculate capital requirements for owner-occupier and
buy to let mortgage exposures, cards, overdrafts and the
majority of the commercial lending book, which includes
its housing association, PFI and commercial real estate
portfolios. These accounted for around 98% of lending
exposures throughout 2025 (2024: 100%).
The Group follows the standardised approach for all
other lending exposures and for operational risk. The
standardised approach uses capital risk weighting
percentages set by CRD V.
Leverage ratio
The leverage ratio measures Tier 1 capital against total
exposures, including off-balance sheet items. It is a non
risk-based measure designed to act as a backstop to the
risk-based capital ratios.
The PRA published Policy Statement 22/25 in the second
half of the year, which increased the threshold for the
application of the UK leverage ratio regulatory
requirement from £50 billion of retail deposits to £75
billion. The Group does not currently have retail deposits
in excess of £27 billion and dos not expect to exceed £75
billion in the foreseeable future.
Nonetheless, the PRA expects that a minimum ratio of
3.25% is maintained at all times by all firms. This
requirement is calculated on the basis that the exposure
measure excludes any central bank exposure with a
maturity less than three months and that no more than
25% of Tier 1 resources is met by AT 1 capital.
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Capital risk continued
Minimum Requirement for own funds and
Eligible Liabilities (MREL)
A Minimum Requirement for own funds and Eligible
Liabilities (MREL) has been introduced by regulators to
ensure that taxpayers no longer absorb losses when a
bank or building society fails. MREL requirements are set
to reflect how complex or important an institution is to
the wider economy.
The Group meets an MREL requirement of twice its
binding capital requirement (i.e. two times Pillar 1 plus
Pillar 2a), which currently equates to 23% of RWAs. The
Group is further required to meet capital buffers from
CET 1, generating a total loss-absorbing requirement of
27.5%.
Regulatory capital analysis
The Group calculates and maintains regulatory capital
ratios on both a consolidated (including all subsidiary
entities) and individual consolidated (or solo) basis for
the Society and Bank.
The individual consolidated basis includes only those
subsidiaries meeting particular criteria contained within
CRD V. For the Society, this is the same basis as the
Society's pre-acquisition Group position. The capital
disclosures in this report are provided on a Group
consolidated basis only.
Further information on capital management is included in
the 2025 Pillar 3 Disclosures at www.thecoventry.co.uk.
Risk weighted capital
The Group’s capital position is set out below based on all
CRD V requirements that were in force during 2025.
At 31 December 2025, and throughout the year, the
Group complied in full with the capital requirements that
were in force. On acquisition of the Bank, the updated
pro-forma Group CET 1 ratio was 19.1%. The increase in
capital as a result of retained profits in the period since
then has been offset by an increase in RWAs of 3.0%,
resulting in a small increase in the CET 1 ratio to 19.7%
at 31 December 2025. Our CET1 ratio remains
significantly ahead of the Total Capital Requirement for
the Group, which was 11.5% of RWAs as at 31 December
2025.
The capital requirements include additional RWAs in the
form of post model adjustments held for regulatory
changes that are currently not reflected in the IRB
models.
The Society and Bank had both submitted updated IRB
models to the PRA in 2023. Our strategy following the
acquisition is to move to a single Group IRB model. We
have recently received feedback from the PRA on the
models which had been submitted and we intend to
incorporate this feedback into the build of our new
Group model. We currently expect to submit our new
Group IRB model at the end of 2027.
In the absence of PRA approved hybrid IRB models, the
Group has concluded that its existing post model
adjustments remain appropriate for inclusion in the
Group’s calculation of RWAs until such time as a Group
IRB model can inform a revised estimate. The exact
timing and impact of any change remains uncertain.
When approval is granted, the final Group IRB model
output RWAs may vary from those calculated currently,
thereby impacting the capital ratios, and may effectively
bring forward some of the effect of increasing RWAs
envisaged by end-state Basel 3.1 impacts.
Basel 3.1 RWA floors are currently expected to be phased
in from the introduction of the new regulations in 2027
and in time are expected to reduce the Group’s reported
CET 1 ratio, through increasing RWAs. Applying the Basel
3.1 RWA floors to the 31 December 2025 figures on a full
transition, proforma basis would result in a CET 1 ratio of
approximately 17.5%. However, on expected Basel 3.1
implementation in January 2027, the Group estimates a
0.4% increase to its pro-forma 31 December 2025 CET 1
ratio due to the removal of the IRB scalar of 1.06. The
Group currently expects Basel 3.1 capital requirements
to bind from 2028.
All known future capital requirement changes (including
Basel 3.1 impacts) have been factored into the Group’s
Strategic Plan, ensuring we remain appropriately
capitalised.
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Risk Categories continued
Capital risk continued
Capital position
End-point
31 Dec 2025
£m
End-point
31 Dec 2024
£m
Common Equity Tier 1
General reserve
3,506
2,754
Fair value through other comprehensive income reserve
—
(1)
Cash flow hedge reserve
118
210
Common Equity Tier 1 prior to regulatory adjustments
3,624
2,963
Common Equity Tier 1 regulatory adjustments
Prudent additional valuation adjustment 1
(2)
(1)
Intangible assets2
(232)
(49)
Deferred tax assets
(243)
—
Cash flow hedge reserve2
(118)
(210)
Pension fund surplus adjustment2
(20)
—
Excess of expected loss over impairment 3
(100)
(66)
Foreseeable distributions4
(2)
(21)
Common Equity Tier 1 (CET 1)
2,907
2,616
Additional Tier 1 (AT 1) capital
Additional Tier 1 - Perpetual Capital Securities
665
665
Total Additional Tier 1 capital
665
665
Total Tier 1 capital
3,572
3,281
Tier 2
Subordinated debt
232
—
Permanent Interest Bearing Shares (PIBS)
42
40
Excess of provisions over expected loss
1
—
Total Tier 2 capital
275
40
Total Capital
3,847
3,321
Risk weighted assets
IRB approach
Credit risk – retail exposures
11,181
7,832
Credit risk - corporate exposures
823
—
Standardised Approach
Credit risk – retail exposures
356
82
Credit risk – liquidity book
203
245
Credit risk – other
305
80
Credit valuation adjustment risk
59
55
Operational risk
1,833
1,046
Total risk weighted assets
14,760
9,340
Common Equity Tier 1 ratio
19.7%
28.0%
1. A prudent valuation adjustment is applied in respect of assets and liabilities held at fair value.
2. Items do not form part of regulatory capital.
3. The expected loss over accounting provisions is deducted, gross of tax.
4. Foreseeable distributions in respect of AT 1 securities are deducted, net of tax.
Leverage ratio analysis
The Group’s UK leverage ratio position on an end-point
basis is set out below.
On acquisition of the Bank, the updated pro-forma Group
UK leverage ratio was 4.4%. The leverage ratio has
increased since then to 4.6%, as the increase in eligible
Tier 1 capital was relatively larger than the increase in
leverage ratio exposures.
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Capital risk continued
Leverage ratio analysis continued
Leverage ratio
End-point
31 Dec 2025
£m
End-point
31 Dec 2024
£m
Total Tier 1 capital - used in CRR calculation
3,572
3,281
Adjustment for AT 1 restriction
(44)
(229)
Total Tier 1 capital - used in UK calculation
3,528
3,052
Leverage ratio exposures
Total balance sheet assets
88,239
64,031
Retail: lending pipeline and other committed facilities1
637
383
Corporate: undrawn facilities1
228
—
Repurchase agreements2
109
80
Netted derivative adjustments3
(226)
(905)
Other adjustments4
(12)
(137)
Items included in the capital calculation
(590)
—
Total leverage ratio exposures
88,385
63,452
Adjustment to exclude central bank reserves
(11,978)
(9,787)
Total leverage ratio exposure - used in UK calculation
76,407
53,665
CRR leverage ratio
4.0%
5.2%
UK leverage ratio
4.6%
5.7%
1. Lending pipeline and undrawn or other committed facilities are calculated at the relevant credit conversion factor rate.
2. Repurchase agreements represent the extent to which collateral provided on repurchase agreements exceeds the amount borrowed.
3. The netted derivative adjustment figure converts the accounting value of derivatives to an exposure measure.
4. Other adjustments predominantly relate to asset balances that have already been included in the capital calculation and these are therefore removed from the total Balance Sheet
assets figure.
Capital outlook
The Basel 3.1 framework will be implemented and
impact the Group from 1 January 2027, with the majority
of rules confirmed in 2025.
Notwithstanding the increased uncertainty, the main
impact for the Group is expected to be the introduction
of an output floor which requires IRB firms to floor
aggregate IRB outputs to a minimum of 72.5% of the
corresponding RWA calculated under the revised
standardised approach. This will be punitive for the
Group as the equivalent risk weights under the
standardised approach for owner-occupied and buy to let
mortgages are much higher than under internal IRB
models. The delayed implementation has resulted in a
corresponding reduction in the transition period over
which the output floor will be phased in, from an initial
60% from 1 January 2027 to the final 72.5% from 1
January 2030.
As a result, the Group expects the full implementation of
the Basel 3.1 standard to see a significant reduction in
reported CET 1 measures.
The leverage ratio and applicable buffers will become a
regulatory capital requirement and MREL determinant
only when the Group exceeds the existing £75 billion of
retail deposits (last three years average) threshold.
Considerations and assumptions from Basel 3.1 have been
included within the Group’s Strategic Plan, which
indicates that it will continue to have a surplus over all
capital and MREL requirements, ensuring we remain
financially resilient.
Model risk
Model risk is defined as the potential for adverse
consequences from model errors or the inappropriate use
of modelled outputs to inform business decisions. These
adverse consequences could lead to a deterioration in
the prudential position, non-compliance with applicable
laws and/or regulations, or damage to a firm’s
reputation. Model risk can also lead to financial loss, as
well as qualitative limitations such as the imposition of
restrictions on business activities.
Model risk profile
The Group is exposed to model risk in relation to its
credit risk, financial, product, and economic crime
models. Models are utilised in a range of contexts,
including credit decisioning, calculation of regulatory
capital requirements for credit risk, and the application
of accounting standards such as IFRS 9. Whilst the
acquisition of the Bank has broadened the model risk
profile, the relative simplicity of the Group’s business
model reduces the extent of exposure to model risk.
However, the Group still considers it important that
robust model risk management practices are applied.
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Risk Categories continued
Model risk continued
Management of model risk
The Group has a Board approved policy on model risk,
which defines the standards to be applied to mitigate
model risk. This policy is supported by the Model Risk
Framework (MRF), approved by the Board Risk
Committee. The MRF defines key governance
requirements and processes for the material models used
throughout the Group. The Chief Risk Officer is
accountable for managing model risk within the Group.
The Model Risk Committee (MRC), chaired by the Head of
Financial & Model Risk, oversees the management of
model risk, and is responsible for ensuring the Group’s
exposure to model risk remains within the appetite
prescribed by the Board. MRC is supported by two
technical sub-fora, the Credit Models Risk Forum and the
Financial Model Risk Forum.
The MRF prescribes requirements that must be met in
order for the most critical models to be used within the
Group.
These requirements are tailored to the potential impact
of each model on the Group, with more extensive
requirements for the most critical models.
Model risk management controls include:
• The requirement for all critical models to be
approved for use by MRC.
• Independent model validation, with increased
validation activity carried out for higher criticality
models.
• Model risk standards in relation to model
development, testing, validation, monitoring,
documentation and use.
• Governance around model assumptions, overlays,
compliance and data.
• Model overview statements which identify conditions
when the models may fail.
For regulatory capital models, an annual self-assessment
against Capital Requirements Regulations and applicable
PRA Supervisory Statements is undertaken in order to
attest to the models' compliance with prevailing
regulations.
Model risk outlook
The PRA supervisory statement SS1/23 'Model risk
management principles for banks' came into effect in May
2024. It sets out the PRA’s expectations in relation to
banks' and building societies’ model risk management
practices. Whilst many of the expectations align to the
Group’s existing practices, we have undertaken a self-
assessment of our model risk management practices
against the supervisory statement, and are undertaking
work to enhance the Group’s model risk management
practices where relevant.
Activities are underway to consolidate the model estate
through development of Group-wide models. These are
part of a medium-long term plan and will ensure that risk
is managed in an integrated and consistent manner.
Operational risk
Operational risk is defined as the risk of loss arising from
inadequate or failed internal processes, people, systems,
or from external events that disrupt business operations.
The Group has a limited appetite for operational risk,
aiming to minimise financial, member and customer,
reputational and regulatory impact, but accepting
operational risk as a consequence of operating the
business. However, the Group does not accept
operational risks that are unmanaged or uncontrolled,
particularly those with the potential to cause material
harm to customers, adversely impact financial
performance, or undermine delivery of strategic
objectives.
The operational risk principal risk category includes:
technology & cyber; data; third party; legal; people;
statutory, regulatory and financial reporting; payments;
and premises risks. Operational risk categories are
consistent with the Basel risk classifications, industry
best practice and the Group's business model.
Management of operational risk
The Non-Financial Risk Committee provides primary
oversight of those risks included within the operational
risk principal risk category, financial crime, conduct and
compliance and operational resilience risks, with further
oversight provided by Executive and Board risk
committees and the Board.
Updates on the most significant operational risk
categories are included below.
Technology & cyber
The Group aims to maintain the stability, security and
resilience of its technology estate, and in doing so, avoid
member and customer disruption and reputational
impacts arising from cyber attacks and IT outages.
During 2025, the Group continued to invest significantly
in upgrading its IT estate and enhancing its digital
capabilities, IT operations and security defences and will
continue to do so in 2026.
Data
The data risk transformation programme completed
during 2024, having laid foundations for effective risk
management through enhanced risk appetite, board
reporting, risk policies and the definition and
implementation of key controls. During 2025, the Group
has been building on this through the creation of an
enhanced multi-year data strategy and investment to
increase internal capacity and capability in terms of
process, technology and people.
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Operational risk continued
Third party
The management of third party risk aims to ensure that
risks arising from the use of suppliers are managed
appropriately and meet regulatory requirements. This
risk has been elevated in 2025 due to reliance on supplier
led delivery increasing across the Group. This has been
appropriately managed to remain inside appetite
throughout 2025. Enhancements are underway to
implement revised Group supplier risk management in
2026.
Statutory, regulatory and internal financial
reporting
The Group continues to deliver enhancements under its
multi-year finance transformation programme to
modernise, optimise and transform the finance operating
model. In 2025 additional enhancements were made to
regulatory reporting. Work continues to further enhance
and integrate practices and systems across the Group
during 2026.
People
People risk has been an area of focus in 2025, as the
Group works to create optimal structures, policies and
practices for the future. In 2025, investment has been
made to enhance relevant technology, maintain
employee engagement and ensure continued compliance
during a period of change. Consequently, the level of risk
has been maintained within appetite throughout 2025.
Summary of risk incidents
Risk incidents are reported in the Group's risk
management systems.
In 2025, the total cost of risk incidents for the Group was
£17.1 million (2024: £0.4 million), as set out below.
% of total volume
% of total losses
Operational risk by Basel category1
2025
2024
2025
2024
Execution, delivery and process
management
21
33
16
16
Business disruption and system
failure
—
10
—
5
External fraud
79
57
84
79
Total
100
100
100
100
Value of losses (£m)
17.1
0.4
1. Losses less than £5,000 have been excluded.
Strategic change risk
Strategic change risk is defined as the risk that strategic
outcomes are not successfully delivered within agreed
investment targets and/or change deliverables adversely
impact the business operation across the Group.
The Group has elevated strategic change risk to a
principal risk following the acquisition of the Bank. This
is to reflect the volume and nature of change as a
significant impact to the Group's risk profile over the
coming years.
Strategic change risk profile
Prior to the acquisition of the Bank, the first significant
strategic change programme was initiated. The
integration programme was established to facilitate the
integration of the Bank into the Group in an organised
and efficient manner and to achieve the desired
integration outcomes and synergies.
At the time of the acquisition, the Bank was in progress
with its key strategic programme, which is migrating core
IT services into new, modern data centres while uplifting
internal technology capability. In addition, the Bank
change portfolio also had other significant change
initiatives in progress, e.g. digital service enhancements
and other technical remediation projects. The Society
also had a significant change portfolio, including plans to
re-platform the core IT services.
This combination of portfolios, plus future planned
change, has significantly increased the strategic change
risk profile for the Group.
Management of strategic change risk
The Chief Operating Officer is accountable for managing
strategic change risk across the Group, with independent
oversight provided by the risk team.
Governance of strategic change risk is through the Board
Change Committee, comprised of key Board members
and the Group Executive. This committee provides
delegated authority for the day-to-day management of
strategic change through the Group Executive Change
Committee (GECC), which is chaired by the Chief
Operating Officer.
The Group has a Board approved policy on strategic
change risk, which defines the standards to be applied to
mitigate this risk. The policy is supported by a control
standard that defines the minimum control requirements
for mitigating the risks, as defined in the policy.
Strategic change risk management controls include:
• Approval for the annual portfolio of change that
facilitates the delivery of the Group's strategy.
• Management of the portfolio costs to the approved
annual budged approved by the Board.
• Oversight of the schedule of change delivery with
reporting and escalation mechanisms.
• The use of appropriate methodologies dependent
upon the nature of the change.
• Minimum standards for the consistent and timely
assessment of risk.
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Risk Categories continued
Strategic change risk continued
Strategic change risk outlook
There is significant investment in change planned for the
next few years. This is a combination of integration as
well as remediation and uplift in technical infrastructure
to enable the Group strategy.
Notably, these are:
• Completion of the integration programme and
strategic project to transfer the Bank's data centres
to a cloud based solution;
• Build-up of the programme to deliver a new customer
ecosystem for the future of the Group;
• Regulatory and mandatory deliverables;
• Continued investment in the online and mobile digital
service offerings to members and customers; and
• Ongoing technical remediation for legacy IT services
and infrastructure.
As a result, strategic change risk management remains
core to the successful management of the portfolio. As a
principal risk in the Group's ERMF, there is significant
focus on, and management of, strategic change risk,
including the setting of an appropriate Board approved
appetite supplemented with monthly reporting against a
suite of risk metrics.
Financial crime risk
Financial crime risk is the risk that Group products or
services will be exploited for criminal conduct purposes,
including:
• fraud or dishonesty including tax evasion and bribery
or corruption; or
• misconduct in, or misuse of, information relating to a
financial market; or
• handling the proceeds of crime; or
• the financing of terrorism or evading or circumventing
of sanctions.
Financial crime risk profile
The Group is exposed to financial crime risk as a result of
our role in UK retail banking, resulting from our members
and customers, third parties and their activity. The
Group has implemented, embedded, and continues to
invest in a robust control framework to ensure that
financial crime risk, and any subsequent legal and
regulatory risk, are managed within appetite.
Management of financial crime risk
The Group's financial crime control framework is the
cornerstone of the Group's risk management approach.
This formalises the controls required to ensure that
financial crime risk is identified, managed and mitigated
in line with the Group's legal and regulatory obligations.
The control framework is founded on the Group's policies
and standards. In line with the policy requirements, the
Group deploy a suite of financial crime controls,
including due diligence, sanctions screening, fraud
screening, training and quality checking. The execution
and effectiveness of which are kept under review by first
line as well as through second line oversight.
Financial crime risks, key risk indicator reporting and any
key issues are identified and escalated through
governance monthly to the Board as applicable.
Financial crime risk outlook
The Group will continue to iterate and embed financial
crime systems and controls, to keep pace with the
evolving external environment and technology,
regulatory expectations, and organised crime typologies.
The Group continues to invest in people, technology and
other key capabilities to support effective risk
management.
Conduct and compliance risk
Conduct and compliance risk is the risk that the Group’s
behaviour, decision making, or products and services
result in poor outcomes for members and customers,
undermine market integrity or breach regulatory
standards and cause harm to members and customers,
the Group or the financial system.
Conduct and compliance risk profile
The Group’s purpose is to power good with every pound
and to be a champion for fairness and ethics. This,
together with our mutual ownership model and values,
drives decision making and activity supports delivery of
good customer outcomes.
The Group continues to meet its conduct risk
responsibilities and ensures the delivery of good
outcomes for members and customers, taking
responsibility to put things right where necessary. The
Group received less complaints per 1,000 members and
customers than the industry average. In 20251, the
combined Group received 2.02 complaints per 1,000
member or customer in the banking and credit sector,
compared to the industry average of 3.672.
Management of conduct risk
The Group manages conduct and compliance risk through
its Conduct and Compliance Risk Policy, which is
designed to protect our members and customers by
identifying, assessing and managing risks that could cause
them harm (financial or non-financial) during their
relationship with the Group.
The Product Governance Committee reviews all major
product developments prior to launch and oversees wider
product governance. This includes alignment with the
needs of the identified target market, clarity of terms
and conditions, consideration of the implications for
customers with characteristics of vulnerability and the
mitigation of any risks inherent in the products.
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Conduct and compliance risk
continued
Management of conduct risk continued
All colleagues are responsible for delivering good
outcomes to our members and customers and meeting
our responsibilities under The Consumer Duty.
Day-to-day management of conduct risk is the
responsibility of all of the Group’s senior and functional
management teams. Oversight is provided by the Non-
Financial Risk Committee (NFRC), membership of which
includes senior managers from across the Group.
Quality assurance activities across operational processes
are focused on customer outcomes, in addition to process
and policy adherence. These are specifically designed to
check that members and customers receive good
outcomes throughout their journey. Second line oversight
is undertaken by the Compliance function, reporting into
the Chief Risk Officer. The Board plays an active role in
oversight of these strategies and the delivery by the
Group of good customer outcomes.
Supporting vulnerable customers
The Group recognises that members in vulnerable
circumstances are at greater risk of poor outcomes when
dealing with their finances.
The Group has a strong track record in supporting
vulnerable customers with vulnerability experts in place
across our teams, supported by a Vulnerability Working
Group that regularly assesses the needs of vulnerable
customers. The Group is fully committed to applying a
‘human approach’ across all of its channels and this will
remain a key focus as digital services are developed.
Complaints and redress
The Group continues to keep positively encouraging
members and customers to identify poor outcomes or
service, that do not meet their expectations and seeks to
resolve complaints as soon as possible.
Key related improvements in 2025 include reducing the
time taken to resolve complaints, simplifying the
authentication process, streamlining the account opening
and maturing journeys, and improving internal payments.
Conduct and compliance risk outlook
Management of conduct and compliance risk at the Group
will continue to seek alignment with the regulatory
priorities, including continued embedding of the
Consumer Duty, demonstrating delivery of good customer
outcomes, tailored support for vulnerable customers,
including those in potential financial difficulty, access to
banking services, prevention, detection and
reimbursement of authorised push payment fraud, and
operational resilience.
Key internal activities will continue to focus on aligning
approaches across the Group, following the acquisition of
the Bank, and ensuring change is delivered safely.
1. Source: Financial Conduct Authority - contextualisation data for the combined Group for the six months to 30 June 2025. Banking and credit complaints.
2. Source: Financial Conduct Authority - contextualisation data for the banking and credit sector for the six months to 30 June 2025.
Climate risk
The risk that climate-related events or the transition to a
low-carbon economy will lead to financial losses,
operational disruption, regulatory censure and/or
reputational damage for the Group.
Climate risk profile
The physical and transitional risk impacts from climate
change have been considered against the Group's
principal risk categories including credit, capital,
conduct and compliance, liquidity and funding, model,
and operational. The key risks from climate change are
detailed in the Climate Risk Register, within the Our
approach to climate change section on page 67.
The Group employs scenario analysis as a core
component of its climate risk strategy, enabling us to
assess how varying levels of climate change could impact
our mortgage portfolio.
Our analysis has concluded that the Group does not have
a material exposure to the physical impacts of climate
change, even under severe and long-term modelling.
Whilst we continue to monitor and enhance our approach
to understanding the transitional risks, we believe that,
in the medium-term, this will have implications within
the markets where we operate as the UK progresses
towards a Net Zero 2050 target.
Management of climate risk
The Chief Risk Officer (CRO) holds SMF responsibility for
the identification and management of climate risk across
the Group.
The Climate Risk Forum brings together representatives
from across business functions to monitor climate risk
and reports directly into the Group Executive Risk
Committee.
In addition, each of the principal risk categories
impacted by climate risk have a defined executive owner
and risk committee responsible for the monitoring and
management of risk.
A Group risk policy and risk appetite statement have
been approved by the Board and the Board Risk
Committee, and support the effective coordination and
management of climate risk.
Climate risk outlook
During 2026, the Group will be focused on planning for
and delivering against the latest PRA guidance for the
management of climate related risks, outlined in
supervisory statement SS5/25, which is expected to
enhance the existing approaches employed. The Group
will continue to monitor physical and transition risk
exposures and horizon scan for impacts from policy and
market developments.
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Operational resilience risk
Operational resilience risk is the risk that the Group's
ability to prevent, adapt, respond, recover, and learn
from operational disruptions is insufficient, resulting in
harm to members and customers, the Group's reputation,
or confidence in the wider financial system.
Operational resilience risk profile
Operational resilience is a thematic risk and is therefore
exposed tol risks arising from five key areas: technology/
cyber security, data, third parties, people and property.
These are referred to as the 'Pillars of Resilience'.
Operational resilience risk is monitored through a suite of
resilience indicators set against each of the Group's
resilience pillars. These indicators are aligned to the
Group's risk appetite and tolerance for disruption.
Performance against these measures is overseen through
established governance forums, ensuring transparency of
the Group's resilience posture and its capability to
respond, recover, and maintain delivery of important
business services.
The Group has implemented, embedded, and continues
to invest in a robust resilience framework to ensure that
operational resilience risk, and any subsequent
regulatory or reputational risks, are managed within
appetite. This includes identifying important business
services, setting impact tolerances, and testing our
capabilities against severe but plausible scenarios.
In 2025, the Group continued to strengthen resilience
capabilities through scenario testing, third-party risk
assessments, and technology resilience programmes.
Management of operational resilience risk
The Group manages operational resilience risk through its
operational resilience policy, supported by a centre of
excellence (CoE) model that provides expertise,
governance, and oversight across all resilience pillars.
This model ensures consistency, scalability, and
alignment with regulatory expectations.
Key components of the operational resilience CoEs
include:
• Incident and crisis management: Coordinates rapid
response and strategic decision-making during
operational disruptions to minimise impact on critical
services.
• Change governance: Ensures that changes to
systems, processes, or services are assessed,
approved, and implemented without compromising
resilience.
• Business continuity planning: Establishes plans and
procedures to maintain or quickly restore critical
operations during disruptive events.
• Third party continuity: Manages resilience risks
associated with external suppliers and partners to
ensure continuity of outsourced services.
• Regulatory alignment: Maintains compliance with
operational resilience regulations and embeds
supervisory expectations into governance and
controls.
• Stress testing: Validates resilience capabilities
through severe but plausible disruption scenarios to
confirm ability to meet impact tolerances.
Following the acquisition of the Bank, resilience
governance arrangements, controls and working practices
have been aligned and integrated to ensure a consistent
approach across the enlarged Group.
Operational resilience risk outlook
The Group's operational resilience capability is well
established, mature, and benchmarked against industry
standards and peer practices.
It provides a strong foundation for managing disruptions
and maintaining critical services. In 2026, further
development is planned to strengthen resilience across
the Group, particularly in areas such as third party
continuity, enhanced monitoring of strategic
vulnerabilities, and scenario stress testing, including
scenarios emerging from the recent acquisition and
integration activity. These initiatives will also strengthen
alignment with regulatory expectations and support the
Group's broader strategic objectives.
Whilst operational resilience risk exposure can never be
fully eliminated, the Group's proactive approach -
including robust preparatory work, rigorous scenario
testing, and continuous improvement positions it strongly
to anticipate, withstand, and recover from severe but
plausible disruptions. This forward looking posture
ensures transparency of resilience performance and
reinforces confidence in the Group's ability to safeguard
members and customers, maintain critical services, and
protect financial stability.
Coventry Building Society | Annual Report & Accounts 202562
Our approach to climate change
Our approach to
climate change
including climate-related financial disclosures
This section outlines how the
Group is responding to
climate change and includes
its climate-related financial
disclosures.
Introduction
63
Climate Governance
65
Climate Strategy
66
Climate Risk Management
68
Metrics and Targets
70
Coventry Building Society | Annual Report & Accounts 202563
Our approach to climate change
Climate Related Financial Disclosures
Introduction
This section sets out our understanding of the impact of climate change on the Group and our members and customers. It
covers the activity we completed during 2025, and have planned for 2026 and beyond to achieve our climate targets. It also
captures how we are progressing our understanding of climate change and the impact it will have in the future, as well as
how we are bringing together the Society and Bank to have one overarching approach.
The Group supports the recommendations provided by the Financial Stability Board’s Task Force on Climate-Related
Financial Disclosures (TCFD). The information disclosed within this report is structured to demonstrate our understanding of
the risks and opportunities associated with climate change, in a way that is transparent and in accordance with the TCFD
guidance, where applicable.
The PRA's new Supervisory Statement SS5/25 - 'Enhancing banks' and insurers' approaches to manage climate related risks' is
effective from December 2025. The Group is assessing this new guidance and working to develop action plans to ensure it is
incorporated appropriately and proportionately.
The Group continues to mature its climate-related disclosures further to align with the ambition of our decarbonising
journey. We recognise that this is a complex, developing area of reporting, where our understanding continues to evolve
and develop in line with enhanced external guidance. Further information is detailed within the Group's Sustainability
Report, which is available at www.thecoventry.co.uk.
The Four Pillars of Climate-Related Financial Disclosures
Governance
This section describes how the
Group has embedded climate
change within its governance
structure, including the role of
the Board.
Strategy
This section outlines the
Group’s strategy and how we
are adapting to the risks and
opportunities of climate change.
Risk management
This section outlines how the
Group has incorporated climate
risk within its Enterprise Risk
Risk Management Framework
(ERMF) and the risks identified.
Metrics and targets
This section describes the Group’s
short-, medium- and long-term
climate targets and ambition, and
provides an update on its emissions
calculations.
Definitions
When writing this climate section of the Annual Report, we've tried to do so in a way that is transparent and accessible.
However, we recognise some of the language in this report requires further defining. The glossary to this Annual Report
includes definitions of key terminology used in this section. The Group's definitions for emissions and climate risks are
below and reflect industry standards.
Emissions
Scope 1
Direct greenhouse gas (GHG) emissions that occur from our own operations (e.g. our company vehicles, gas
usage and fugitive emissions).
Scope 2
Indirect GHG emissions associated with the purchase of our electricity.
Scope 3
The result of activities from assets not owned or controlled by the Group, but that the Group indirectly
impacts in its value chain. Include all sources not within an organisation's Scope 1 and 2 boundary and can be
separated into the following two categories:
- Scope 3 upstream
Business travel by means not owned or controlled by the Group, waste disposal, employee commuting, and
purchased goods and services.
- Scope 3 downstream
The emissions from our financed activities through the Group’s operations.
Risk Type
Physical
The physical risks arising from the direct impacts of climate change related to specific weather events (such
as heatwaves, floods and storms) and longer-term shifts in the climate (such as changes in precipitation,
extreme weather variability, sea level rise and rising mean temperatures). This may lead to damage to
assets, business disruption and changes in individuals' health and incomes, driving financial losses and
impaired asset/collateral values.
Transition
The risks arising from the process of adjustments as we transition to a Net Zero economy. Transition risk
could arise from technological innovations, policy decisions and/or market changes. These may drive changes
in the value of assets and liabilities, increase the cost of business for the Group and/or its customers, and
result in changes to consumer spending habits.
Coventry Building Society | Annual Report & Accounts 202564
Our approach to climate change
Climate Related Financial Disclosures
continued
The table below outlines the Group's progress on its climate journey with its achievements and future planned activity.
Achievements
Future activity
Governance
• The Society has maintained B Corp Status,
demonstrating continued high standards in our
ESG approach.
• Continued oversight of climate change through
the Board committee governance structures,
with periodic Board and Senior Management
updates on Climate Risk developments.
• Designated Senior Management Function (SMF)
with accountability for the financial risks arising
from climate change.
• A Non-Executive Director who is dedicated to
championing ESG at the Board.
• Continued oversight of external developments
and trends across ESG.
• Implemented Group governance structures, risk
frameworks and policies that support effective
oversight and monitoring of climate risk
management across the Group entities.
• Embedded consideration of climate risk within
the Group's product approval process.
• Ensure our Board and senior management
continue to receive at least annual climate risk
training and education.
• Continue to evolve climate governance in line
with updates to PRA guidance in SS5/25 and
drive positive outcomes.
Strategy
• Enhanced our assessment of the risks and
opportunities of climate change to our business
model.
• Identified strategic partners who can help us to
rise to the climate challenge.
• Continued to offer our green mortgage product
to eligible members and customers.
• Delivered Sustainability Reports in accordance
with GRI standards.
• Developed our Group environmental and Net
Zero approach.
• Continued supplier engagements, collecting
actual supplier-specific emissions data, to
support our move from spend-based emissions
estimation to a hybrid approach.
• Develop further our green product propositions.
• Engage with our members and customers to
support a green transition as understanding of
government support and regulations develop.
Risk
Management
• Maintained climate risk as a category within our
Enterprise Risk Management Framework, with an
elevated profile as a thematic risk.
• Continued to review our data with respect to
physical and transition risks to continue to grow
our understanding of our potential exposure to
climate risks across the Group.
• Incorporated climate risk modelling and analysis
within our ICAAP process.
• Incorporated group-wide climate risk measures
and KRIs within our risk appetite statement.
• Developed a group-wide Climate Risk Policy.
• Continue to review lending policy to ensure it
remains robust to potential climate risks.
• Develop our data capabilities to further embed
physical and transitional risk considerations in
our modelling and decision making.
• Enhance our data, risk management and
scenario analysis capability in line with the
updates to PRA guidance in SS5/25.
Metrics and
targets
• Remained carbon neutral for our own operations.
• Continued to publish calculations for all of the
Group's emissions (Scope 1, 2 and 3).
• Developed the Group's Net Zero approach of how
we intend to decarbonise.
• Continue to evolve our Net Zero Transition
Plan, to reflect the increased scale and scope
of the Group following acquisition of the Bank.
• Continuing to evolve and make progress against
our plan, monitoring internal and external
scenarios to drive the required action.
• Further define metrics and targets to capture
physical and transition risks.
Coventry Building Society | Annual Report & Accounts 202565
Our approach to climate change
Climate Governance
Board oversight of climate risks and opportunities
Board Audit
Committee
Committee
Board Risk
Committee
Responsibilities for
climate change
Reviews and oversees
the activities
undertaken by the
Group to respond to
the financial risks
arising from climate
change.
Receives annual
updates on the
management of
financial risks arising
from climate change.
Oversees external
disclosures relating to
the Group’s
management of the
financial risks arising
from climate change.
The Board has ultimate accountability for the
management of all risks and opportunities relating to
climate change as well as our broader approach to
sustainability. In fulfilling its role, the Board delegates
some of its responsibilities in this area to the committees
described above. Details of how the Group approaches risk
management more generally can be found on page 33.
The Board fulfils its responsibilities by receiving regular
updates and ESG information on climate-related issues. As
a part of the Board’s annual strategy process, material
matters arising from the assessment of climate risks and
opportunities are considered and any actions identified to
address such challenges are endorsed. Additionally, the
Board approved the annual budget, endorsing any
allocated amounts specifically designated for addressing
climate risks.
The Board received two detailed updates on sustainability
matters and approved the Group's vision for sustainability
and the material elements of the Sustainability Plan.
Performance against key ESG metrics were reported to
the Board on a quarterly basis and reviewed biannually as
part of the Board's sustainability updates.
The Board receives support from a nominated Non-
Executive Director, Shamira Mohammed, who serves as
the Board ESG champion. In addition to participating in
formal Board meetings addressing climate topics, her role
extends to regular engagement with the Group Executive
team and colleagues involved in this area, as well as the
review of climate-related management information.
Management oversight of climate-related issues
The Chief Executive holds the ultimate responsibility for
executive oversight of climate-related matters, with day-
to-day responsibilities delegated to the Chief Risk Officer
(CRO).
The responsibility for managing financial risks related to
climate change is designated to the Group's CRO, under
the Senior Management Function (SMF). This role includes
ensuring that climate-related financial risks are
appropriately integrated into the risk management
frameworks, allowing the Group to identify, measure,
monitor, and report its exposure to these risks.
Board
Nominations &
Governance
Committee
Board
Remuneration
Committee
Ensures that
arrangements are in
place to manage
climate risks and
opportunities at Board
level.
Oversees the
application of climate
and other ESG targets
to remuneration.
Executive Committee meetings address climate-related
matters, with material outputs reviewed by the Board. In
2025, the Group Executive team has over seen the Group's
engagement on a range of climate matters and broader
sustainability agenda. Climate topics are integral to
strategic discussions, analysing opportunities for green
lending and energy efficiency improvements. They have
extensively reviewed proposals on GHG emissions, climate
performance, decarbonisation plans, and the Net Zero
Transition Plan, submitting the latter to the Board for
approval.
The ESG Steering Group, chaired by the Chief People
Officer, reviews and endorses materials to be considered
by the Executive Committee. It develops and oversees the
delivery of the climate and sustainability strategy, playing
a key role in setting and overseeing environmental
targets. It also endorses and oversees the annual Group
ESG plan, guiding sustainability actions, including those
related to climate matters.
The Executive Risk Committee (ERC), chaired by the CRO,
oversees climate risk management, receiving regular
updates on risk appetite measures and relevant regulatory
developments. The Climate Risk Forum, reporting to ERC,
meets quarterly and reviews regulatory compliance, stress
testing, risk management, and data capabilities related to
climate risk. Other risk governance forums receive
updates on climate risk related matters as required.
How ESG-related performance goals are linked to
remuneration are outlined within the Directors'
Remuneration Report on page 107.
Training
We continue to engage with colleagues across the Group
on embedding awareness of the climate agenda. This
includes sharing our environmental ambitions in the
corporate induction programme, availability of personal
carbon calculators to educate on personal carbon
footprint and other e-learning tools.
Coventry Building Society | Annual Report & Accounts 202566
Our approach to climate change
Climate Strategy
We recognise that climate
change is a critical issue for our
stakeholders as well as for
wider society. The impact of
climate change also poses
potential risks to our business,
which need to be effectively
managed on behalf of our
members and customers.
The acquisition of the Bank has meant the bringing
together of two businesses and associated environmental
strategies, as well as the existing emissions, and targets,
of both. As a result of this, the Group has taken the
opportunity to refresh our Net Zero target to 2050, with
2021 as a baseline. We believe that given the scale of the
work to bring the Group’s activities together, this reflects
a credible target and is consistent with the UK
Government’s target and the Paris Agreement.
Our Group ambition remains unchanged: we are
committed to financing the transition to a low-carbon
economy. We recognise that our credibility in supporting
our customers and members on their Net Zero journey
depends on our ability to lead by example. That is why we
are committed to be operationally Net Zero across the
Group by 2030. Reducing our own emissions first
demonstrates accountability and provides a foundation for
influencing the wider transition through our financing
activities.
Our climate strategy is consistent with our purpose-led
approach to business, as a mutual committed to our
members . In 2025, the Group continued to take action to
positively contribute to addressing this generational
challenge as well as effectively managing the risks to our
business.
We continued to update our Net Zero Plan, setting and
agreeing our plans to achieving our climate-related
targets and ambition over the short-, medium- and long-
term. We are carbon neutral for our own operations as a
Group. Our Sustainability Report captures further
information and disclosures regarding our Net Zero Plan
and the actions to help deliver our ambition to be fully
Net Zero by 2050. Further information on the Group’s
emissions can be found in the metrics and targets section
on page 70.
Whilst we are focused on the positive actions we can take
to support a just transition, the climate challenge for the
UK’s housing stock cannot be solved by the Group on its
own. We recognise that broader policy changes,
significant cross-industry collaborative effort, and further
government support focused on UK housing are required
to meet our 2050 target. We are working with several
organisations such as the Green Finance Institute, E3G,
and UK Finance, supporting cross-industry green homes
action groups to drive sustainable and responsible
solutions. We also work and partner with several specialist
organisations to increase our expertise and member and
customer propositions around the areas where we can
make the greatest impact in reducing our carbon
footprint. This is a challenging objective, but one we
think is important to aim for, as supporting our members
and customers is our purpose. Therefore we will continue
to contribute to discussions during 2026 and beyond.
We also continued to enhance our understanding of
climate risk exposures, which included obtaining regular
updates on the physical and transition risks to our
mortgage book. The Climate Risk Management section of
this report includes further information on the Group's
approach to using scenario analysis to assess the physical
and transition risks and the outcome of these
assessments. This can be found on page 68.
Risks and opportunities from climate change
Climate change presents both risks and opportunities for
the Group's business model, impacting our balance sheet,
operations, and broader strategy. As a thematic risk
within the Group's ERMF, the impacts of climate change
are considered against the principal risk categories and
inform our strategic decision-making. The Group remains
committed to supporting a just and fair transition to a
low-carbon economy while safeguarding our lending
portfolio. This includes engaging with our members and
customers, developing innovative green financial
products, and leveraging our data insights to proactively
manage risks.
Below is a non-exhaustive summary of the opportunities
and risks identified.
TCFD areas of
opportunity
Climate
opportunities
Description
Products and
Services
Green finance
An opportunity for the Group to offer innovative financial products,
which help borrowers to reduce their carbon emissions and improve
energy efficiency.
Resilience
Educating and
communicating with our
members and customers
Supporting our members and customers with the transition to Net
Zero and leveraging partnerships and our B Corp network to attract
more ESG conscious customers and funding.
Markets
Access to green funding
By supporting a fair transition to Net Zero, the Group can utilise
opportunities to obtain green retail or wholesale funding.
Coventry Building Society | Annual Report & Accounts 202567
Our approach to climate change
Climate Strategy continued
Risk category
Risk description
Retail
Credit Risk
Transitional
• Impacts on valuations of properties due to potential future governmental requirements
for minimum efficiency standards (EPC). Metrics linked to this risk can be found under
the heading 'Transition Risk' of the risk management climate section.
• Borrower affordability declines leading to higher arrears and defaults, due to higher
energy costs, structural changes in the economy, tax changes or, for buy to let
specifically, other transitional impacts on borrowers' ability to repay.
• Deterioration in book quality and mix if we are not selected by more climate conscious
customers, or we do not compete with competitors pricing to attract or incentivise
higher rated EPC (or equivalent) properties.
Physical
• Houses are damaged or become uninhabitable due to physical impacts such as flooding.
• Properties become uninsurable or premiums increase dramatically, impacting
affordability and property valuations.
Operational
Risk
Transitional
• Reputational and financial impacts because of third-party providers not delivering
climate commitments.
• Potential for litigation from future impacts of climate change.
• New area for potential mortgage fraud through transitional climate processes e.g. energy
ratings for properties.
Physical
• Adverse impact on business continuity because of damages to the Group's premises and
infrastructure, or failure of suppliers to provide critical services as a result of physical
risks.
• Risk to employee health and safety in extreme weather events.
Conduct
and
Compliance
Risk
Transitional
• Borrowers in lower EPC rated properties are subject to increasing energy bills and unable
to afford retrofit costs, possibly resulting in 'mortgage prisoners' as lenders judge they do
not meet affordability requirements.
• Inadequate or misleading information about climate risks may lead to reputational
damage and erode customer trust.
• Increased regulatory compliance and costs associated with climate change, including
enhanced emissions or other climate-related reporting obligations.
Market &
Treasury
Credit Risk
Physical &
Transitional
• Impacts to markets arising from physical or transitional events. This could impact foreign
exchange markets or interest rate movements and in turn impact the Group's value, or
net income from its assets and liabilities.
• Investor sentiment and preferences, as they increasingly consider ESG factors when
making decisions.
• ESG rating downgrades, and credit ratings downgrades because of climate risk, could
impact the value of securities held and who we can operate with.
Liquidity &
Funding
Risk
Physical &
Transitional
• Inability to access wholesale markets due to lack of ability to operate in green markets.
• Retail funding is impacted as members and customers suffer economic challenges of
climate change.
Capital Risk
Physical &
Transitional
• Assets depreciate due to physical or transitional impacts of climate change, especially in
regions prone to extreme weather events.
• Imposed regulatory capital allocation could lead to opportunity cost, as the capital may
be utilised in other areas.
Technology
& Data Risk
Transitional
• Failure to adapt systems and technology to the requirements of the Group Net Zero Plan,
ingesting climate data into systems, emerging sustainability reporting and regulatory
changes.
Business &
commercial
Credit Risk
Physical &
Transitional
• Business and commercial borrowers may experience financial stress or asset devaluation
due to physical damage or transition pressures in carbon-intensive sectors, affecting their
ability to repay or refinance.
Model Risk
Transitional
• Data used for climate models is inaccurate and/or unreliable, increasing regulations and
external scrutiny of climate data mean that inaccurate or inconsistent data and
disclosures can lead to regulatory breaches, loss of investor confidence and reputational
harm.
Coventry Building Society | Annual Report & Accounts 202568
Our approach to climate change
Climate Risk Management
In line with the ERMF, the Group seeks to understand the
climate risks relevant to its operations, and to monitor
and mitigate these risks over time. Processes are in place
across the Group to support assessment of the physical
and transition risk exposures. Where appropriate, there
has been engagement with third parties to enhance data
capabilities. The outputs of these assessments have been
reviewed by the Climate Risk Forum, and reported to the
ERC and BRC.
Risk categorisation and risk appetite
Throughout 2025, a single group-wide ERMF was
developed to support effective risk management across
the combined Group. Climate risk is defined as a
"Thematic Risk" within the taxonomy. This is reflective of
climate risk being a cross-cutting risk, which can manifest
across multiple other risk types, including credit risk,
capital risk, conduct and compliance risk, liquidity and
funding risk, model risk and operational risk. The table of
risks on page 67 map the key identified potential impacts
to the Group's principal risk categories.
In accordance with the Group ERMF, a Group Climate Risk
Policy and Risk Appetite Statement were developed and
approved by the BRC and the Board respectively. These
foundational components will enable the embedding of a
consistent approach to governance, monitoring and
management of climate risks across the Group through
2026 and beyond.
During 2025, the Group continued to enhance its
understanding of the physical and transitional risks that it
is exposed to, over a range of time horizons reflecting the
complex and short-, medium- and long-term impacts that
climate risk poses to wider society and our business
model. The physical and transition risks of climate change
contribute to a structural change affecting the financial
sector at large, and we have sought to understand these
impacts by use of scenario analysis.
Approach to scenario analysis
The Group employs scenario analysis as a core component
of its climate risk management strategy, enabling us to
assess how varying levels of climate change could impact
our portfolio. Using comprehensive property climate-
related risk assessment data, we evaluate both physical
risks, such as flooding, subsidence, and coastal erosion,
and transition risks, including those related to Energy
Performance Certificate (EPC) ratings. Our methodology
aligns with internationally recognised frameworks, such as
the Intergovernmental Panel on Climate Change (IPCC)
Representative Concentration Pathways (RCPs), ensuring a
robust and consistent approach to climate modelling.
The three emissions pathways1,2 included in this scenario
are:
• Low Emissions Scenario: This scenario assumes
significant global action to curb greenhouse gas
emissions, consistent with limiting warming to 1.5°C
by 2100, mirroring the RCP 2.6 pathway. It reflects a
world committed to a rapid transition to a low-carbon
economy.
• Medium Emissions scenario: Representing moderate
climate action, this pathway is akin to RCP 4.5, with
global temperatures expected to increase by
approximately 2.5–3°C by 2100. This scenario assumes
balanced approaches in emission reductions.
• High Emissions Scenario: This pathway, comparable
to RCP 8.5, assumes limited emissions control, with
projected warming reaching or exceeding 4°C by the
end of the century. It highlights the highest physical
risks, especially in later years.
Overall, the results of the scenario analysis undertaken to
date have confirmed we have not identified significant
climate-related financial risk on our balance sheet.
Scenario analysis has been used to enhance understanding
of both the physical and transitional risks, with further
detail provided on page 69. However, we recognise that
climate risk and scenario analysis continues to evolve, and
we will monitor the need to enhance our analysis and
understanding of the risks in 2026 and beyond.
Physical and transitional risks
The Group modelled the impacts of a range of RCP levels
on its portfolio, over short-, medium- and long-term
horizons spanning from 2025 to 2080. RCPs provide a
recognised methodology for assessing a range of climate
impacts and temperature increases and have been used in
global climate science since 2013. The Group's analysis
included undertaking an assessment of the mortgage book
in line with the requirements of the Bank of England's
Climate Biennial Exploratory Scenario (CBES), published in
June 2021. The Group used RCP 8.5 for its physical risk
analysis, which is the highest baseline scenario, and it
should be noted that the CBES RCP range is less severe
than the scenarios modelled by the Group.
This analysis looked at the value at risk, loss given
default, probability of default and realised losses in the
event of a downturn. Our analysis has concluded that the
Group does not have a material exposure to the physical
impacts of climate change, even under severe and long-
term modelling. However, whilst we continue to monitor
and enhance our approach to understanding the
transitional risks, we believe that, in the medium-term
this will have implications within the markets where we
operate as the UK progresses towards a Net Zero 2050
target. The Group is therefore enhancing its
understanding of EPC ratings and the emissions of the
mortgages within our portfolio and plans to engage with
mortgage customers to help them understand what
actions they can take, educate them on what support is
available, as well as offering our Green Further Advance,
subject to eligibility, which may help enable customers to
improve their property’s energy-efficiency or
environmental impact. We will also inform customers,
where relevant, of any legislation that may affect them or
their property.
Climate risk in the business and commercial portfolio
Climate risk analysis is carried out on a case by case basis
at the point of acquisition and upon annual review,
considering both physical and transitional risk. The EPC
ratings form part of discussions with these customers, to
help them understand actions they can take to improve
property efficiency. In 2025, the Bank's relationship
managers and underwriters attended an ESG risk training
refresher, covering climate risks and opportunities to look
out for when carrying out due diligence on businesses.
These qualitative risk assessments form an essential part
of the credit cycle given low availability of climate data
among small to medium sized enterprises.
1. The Royal Society (2022): Climate change in the critical decade: A summary of the IPCC Sixth Assessment Report and its implications for the UK.
2. IPCC (2023) Sections. In: Climate Change 2023 Synthesis Report.
Coventry Building Society | Annual Report & Accounts 202569
Our approach to climate change
Climate Risk Management continued
Transition risk in the retail secured portfolio
Owner-occupier mortgages
As at 31 December 2025
As at 31 December 2024
Current EPC data
Number
Exposure
£m
% of book2
Number
Exposure
£m
% of book2
A
1,020
256
0.5
518
132
0.4
B
24,623
5,091
10.0
13,367
2,805
8.7
C
69,074
12,175
24.0
39,398
7,150
22.1
D
107,086
18,919
37.3
65,049
11,898
36.7
E
35,699
6,506
12.8
23,627
4,548
14.0
F
7,375
1,373
2.7
5,199
1,020
3.1
G
1,503
264
0.5
1,107
204
0.6
No EPC1
55,909
6,174
12.2
37,379
4,655
14.4
Buy to let mortgages
As at 31 December 2025
As at 31 December 2024
Current EPC data
Number
Exposure
£m
% of book2
Number
Exposure
£m
% of book2
A
89
18
0.1
79
16
0.1
B
6,348
1,078
5.1
6,062
1,028
5.3
C
49,843
7,310
34.9
43,438
6,386
33.0
D
57,771
8,681
41.5
53,946
8,106
41.8
E
14,180
2,041
9.8
14,518
2,094
10.8
F
643
86
0.4
709
101
0.5
G
170
21
0.1
198
25
0.1
No EPC1
10,922
1,698
8.1
10,437
1,619
8.4
1. No EPC means that at the time of searching the EPC register, the property in question did not have a record on the EPC database. An EPC carried out more than 10 years ago, whilst
invalid, would be included in relevant EPC band.
2. % of the book is based on the exposure value.
In 2025, our proxy for assessing transition risk was the
EPC register which records the EPC for 14 million
properties in England, Wales and Scotland, with a
separate calculation for Northern Ireland. The tables
above demonstrate that the EPC profile of the Group's
mortgage portfolio remains broadly consistent year on
year, with slight improvements to the exposures in both
mortgage types to higher-rated properties with
corresponding reduction in properties with no EPC data.
The heritage Bank and Society portfolios have broadly
similar EPC profiles, with the Bank having slightly higher
exposure in EPC bands A-C than the Society. Movements
over the past year are consistent across both portfolios.
The Group holds an EPC against 89% of portfolio stock by
value, with the remainder having a modelled EPC
recorded against it. On a portfolio level, the Group is
focused on improving the D-G range. If all properties
were retrofitted to their potential, this figure would
change materially. The Climate Risk Forum continues to
monitor regulatory and governmental policy with a view
to ensuring the Group is alert to any strategic
implications, risks or opportunities and the need to
respond accordingly.
Conclusions and future outlook
While the Group’s scenario analysis highlights no
significant exposure to physical risks, including coastal
erosion, flooding and subsidence, we remain committed
to proactive risk management. Our strategies focus on
monitoring evolving risks, supporting resilience measures,
and engaging with stakeholders to mitigate potential
impacts. These efforts underscore our dedication to
safeguarding the portfolio and ensuring long-term
sustainability.
The Group’s climate risks scenario analysis aligns with
the guidance set by the TCFD and the evolving
requirements outlined by the UK Government. By
adhering to these frameworks, we aim to address the
critical need for identifying, measuring, and mitigating
both physical and transition risks within our mortgage
portfolio.
Our findings, which indicate relatively low exposure to
significant financial risks even under severe climate
scenarios, reflect the resilience of our strategy. Looking
ahead, the Group will continue to enhance its climate
resilience by improving data quality, refining scenario
modelling techniques, and deepening engagement with
stakeholders.
Coventry Building Society | Annual Report & Accounts 202570
Our approach to climate change
Metrics and Targets
We recognise that the scale, composition and emissions
profile of the Group has changed significantly following
the acquisition of the Bank. As a result, the emissions
reported for the year show an overall increase. This
increase does not reflect a deterioration in underlying
performance, but rather the enlarged footprint of the
Group. We will provide further detail of these changes in
our Sustainability Report, where we will outline our
approach to harmonising methodologies, baselines and
classifications across the Group.
During 2026, we will develop a unified Group Net Zero
Transition Plan that underpins the Group target of 2050,
and aim to set a refreshed interim target, supporting
actions and a consolidated measurement framework. This
will ensure a consistent, credible and science-aligned
plan for the Group. Where relevant, we will explain
changes to metrics and targets by disclosing updates to
methodologies, definitions or scopes with rationale to
maintain transparency and comparability across reporting
periods.
We recognise that the path to Net Zero must be a just
transition. Our members expect us to act with integrity -
reducing emissions rapidly but also ensuring that the
pace of change is fair, affordable, and does not
disadvantage households or businesses. Aligning our
Group target to 2050 allows us to apply a consistent
approach across the business, while our 2030 interim
target commitment show that we intend to go further
and faster where possible.
The UK as a whole has made significant progress with
decarbonisation this century. However, the time and
investment to retrofit and upgrade housing stock, create
the necessary electricity generation and storage, and
change customer behaviour requires us to set a credible
and feasible plan.
During 2026, we will look to expand our work with
mortgage customers to improve home energy efficiency,
while ensuring that our corporate lending supports
clients' transition plans and remains underpinned by
strong ethical standards. By combining the Bank's
customer-led Ethical Policy and our sustainability
commitments, we are setting a higher benchmark for
responsible finance across the Group.
As a Group, we remain carbon neutral for our own
business operations. We continue to build on previous
disclosures, integrating forward looking targets and
focusing on ongoing improvements in our sustainability
practices. This commitment is central to our long-term
strategy as we work towards a resilient, net zero future.
In 2025, the Group achieved year on year reductions in
Scope 1 and Scope 2 emissions against the prior year, and
continue on a downward trend since 2021.
The Group remains committed to reducing its carbon
footprint by prioritising renewable energy and energy
efficiency across operations. Our approach includes
procuring 100% renewable electricity (through REGO-
backed certificates), focusing on electrifying our heating
systems by installing air source heat pumps to meet our
heating demands. We are on track to transition our
business fleet to electric vehicles by 2030.
We have been working towards meeting ISO 50001
(Energy Management System) standards, and ISO 14001
(Environmental Management System) certification, which
we will reinforce our environmental management
framework. We are working to achieve both in 2026
across the Group's operations.
While the Group does not currently have emissions
intensity targets, we are committed to reducing
emissions across our operations and financing activities.
By measuring both operational and total carbon emission
intensities, we can better understand emissions relative
to our financial performance, enabling more informed
decision making.
Scope 1 and 2 emissions data
The 2024 data below represents the Group position prior
to acquisition of the Bank. Overall, emissions data for
the Group has increased in the year as a result of coming
together as a larger business. Therefore, the data has
been split by sub-group to provide more detailed
comparisons.
Energy consumption
2025
Society sub-group
2025
Bank sub-group
2025
Total Group
2024
Scope 1: Combustion of
fuel and operation of
facilities
Natural gas (kWh)
1,462,320
1,406,124
2,868,444
1,223,360
Direct transport (kWh)
193,351
—
193,351
301,626
White diesel (kWh)
—
9,083
9,083
25,314
Refrigerants (kg)
1
—
—
21
Total Scope 1 energy (kWh)
excl refrigerants
1,655,671
1,415,207
3,070,878
1,550,300
Scope 2: Electricity
purchased
Total electricity (kWh)
4,462,293
4,013,251
8,475,544
4,067,441
Scope 3: Indirect
transport
Indirect transport (incl only
employee owned vehicles
(kWh)
316,135
305,530
621,665
371,227
Total Scope 1, 2 and 3 energy consumption (kWh)
excl refrigerants
6,434,099
5,733,988
12,168,087
5,988,968
Coventry Building Society | Annual Report & Accounts 202571
Our approach to climate change
Metrics and Targets continued
Scope 1 and 2 emissions data continued
Emissions assessment
2025
Society sub-group
2025
Bank sub-group
2025
Total Group
2024
Scope 1: Combustion of
fuel and operation of
facilities
Natural gas (tCO2e)
268
257
525
224
Direct transport (tCO2e)
48
—
48
73
White diesel (tCO2e)
—
3
3
7
Refrigerants (tCO2e)
3
—
3
34
Total Scope 1 energy
(tCO2e)
319
260
579
338
Scope 2: Electricity
purchased, heat and
steam generated
Location based (LB) (tCO2e)
790
710
1,500
842
Total Scope 1 and 2 energy
(tCO2e)
1,109
970
2,079
1,180
Scope 3: Indirect
emissions
Indirect emissions excluding
mortgage (tCO2e)
19,509
31,039
50,548
22,630
Mortgages (tCO2e)
663,542
305,060
968,602
677,302
Total Scope 1, 2 (LB) and 3 (indirect) emissions
(tCO2 e)
684,160
337,069
1,021,229
701,112
Intensity metric assessment
2025
Society sub-group
2025
Bank sub-group
2025
Total Group
2024
Intensity ratio (total
gross Scope 1 and 2)
tCO2e/ net interest income
£m
1.81
2.25
1.99
1.74
Intensity ratio (total
gross Scope 1, 2 and
partial 3)
tCO2e/ net interest income
£m
2.21
2.77
2.44
2.03
Notes on the above tables emissions data:
- No mandatory emissions have been excluded from this report.
- Emissions factors applied: Defra 2025.
- Methodology: the report is aligned with GHG Protocol and Environmental Reporting Guidelines including streamlined energy and carbon reporting guidance.
- Estimations for the last three months of 2025 have been used for the energy data (kWh) and associated emissions data (tCO2e).
- Scope 3 indirect emissions from mortgages is calculated based on 31 October position in 2025, 30 September in 2024.
- A full breakdown of all our Scope 1, 2 and 3 emissions and the Group's environmental data can be found in our Sustainability Report.
The above tables reflect estimates for the final three
months of 2025 and two months of 2024, including the
Bank's emissions for the first time in 2025, and calculated
in line with the SECR. We have also included estimates
for the emissions from our mortgage portfolio, based on
EPC data using PCAF guidance. A full breakdown of our
consumption and emissions data is available within our
Sustainability Report.
Scope 3 Financial Emissions Using the PCAF
Methodology
The majority of the Group's climate impact is associated
with financed emissions from residential secured lending.
The small portfolio of business and commercial lending
acquired with the Bank is a limited component of
financed emissions.
Given the importance of capturing these emissions
accurately, we have adopted the Partnership for Carbon
Accounting Financials (PCAF) methodology, a recognised
industry standard for calculating Scope 3 financed
emissions. In 2025, the Group joined this collective and
became signatories of PCAF. The PCAF methodology
provides a consistent framework for measuring and
disclosing emissions associated with financial assets,
ensuring that our metrics are comparable with those of
other financial institutions and are aligned with global
best practices.
In accordance with PCAF guidelines, the Group’s Scope 3
financed emissions have been weighted by the loan to
value (LTV) ratios of the mortgages in our portfolio. This
approach enables a precise calculation of the proportion
of emissions financed by the Group, reflecting our
financial exposure to carbon-intensive properties. The
calculations are informed by property data, including
EPCs sourced from publicly available government
databases. These EPC ratings form the basis for
modelling the GHG emissions associated with the
properties within the Group’s mortgage portfolio. Where
data is unavailable at property level, representative
archetypes or EPC distributions are used.
PCAF data scores are at a portfolio level and therefore
there is no total Group score available for 2025. The
Society sub-group's 2025 PCAF score has remained stable
at 3.12. By focusing on refining data collection methods
and incorporating higher-quality data inputs over time,
we are committed to improving our PCAF score and
achieving a more accurate emissions profile. As we move
forward, we will prioritise increased collaboration with
external data providers and explore potential
enhancements in data management to meet the evolving
standards of emissions accounting.
Calculation outputs
At Society sub-group level, there have been modest
improvements, due to a combination of factors.
Regulatory pressures, particularly for the buy to let
sector, may be driving gradual progress toward energy
efficiency. For owner-occupied properties, progress has
been slower, as limited incentives to update EPC ratings
continue to pose challenges. However, without active
monitoring of EPC data, capturing the full extent of
these efficiency gains remains a challenge. As the Group
works to address these gaps, we anticipate further
refinements in our emissions tracking and reporting.
Coventry Building Society | Annual Report & Accounts 202572
Our approach to climate change
Metrics and Targets continued
Calculation outputs continued
31 October 2025
30 September 2024
Society sub-group
Mortgage book
Bank sub-group
Mortgage book
Bank sub-group
Corporate loans
Total Group
Total Group
Total properties
312,309
130,431
N/A
442,740
310,121
Absolute finance emissions (FE) (MTCO2e) 1
0.66
0.27
0.04
0.97
0.68
Average FE per property (tCO2e)
2.12
2.05
N/A
2.10
2.18
FE intensity (KGCO2e/m2)2
42.6
42.8
N/A
42.6
43.5
% EPC match
85%
81%
N/A
83%
82%
PCAF data score
3.12
2.81
5.00
3.15
1. MTCO2e represents metric tonnes of carbon dioxide equivalent.
2. KGCO2e/m2 represents the carbon dioxide equivalent emitted per square metre.
We have achieved improvements across some key
metrics. Average financed emissions reduced to 2.1
tCO2e per property across our Group retail secured
mortgage portfolio. This metric allows us to assess the
carbon footprint on a per-asset basis, helping to pinpoint
where additional efficiency improvements are most
needed. Similarly, financed emissions intensity per
square metre (FE/m2), which normalises emissions data
for property size, reduced to 42.6 KGCO2e/m2, reflecting
improved energy efficiency within the portfolio. Our EPC
coverage has also improved slightly to 83%. Absolute
financed emissions, representing the total emissions
associated with all properties in our portfolio, offering a
snapshot of the Group's overall mortgage-related and
corporate lending emissions impact, increased to 0.97
MTCO2e as a result of the inclusion of the Bank.
Calculation approach for corporate lending
The Bank's small corporate lending portfolio is largely
made up of SMEs with limited or no published emissions
data. As a result, we have chosen to utilise sector-based
emissions intensities (using the PCAF database) with
economic activity metrics such as revenue and total
assets feeding into financed emissions estimates.
Emissions factors are sourced from DESNZ/DEFRA UK GHG
conversion factors (latest available), PCAF data, EPC-
derived energy intensity datasets and National Grid
Future Energy Scenarios (for scenario variants). All
conversion factors are reviewed annually for updates.
Data quality, limitations and planned improvements
The combined dataset currently has limitations. These
are due to data gaps that continue to limit the Group's
ability to calculate the financed emissions in absolute
and intensity terms for the whole lending portfolio as
well as reliance on estimated emissions with low PCAF
data quality scores for some financed emissions.
Data quality controls include annual internal assurance
procedures, external assurance against ISO 14064
(planned from 2026), and system integration that will
consolidate emissions datasets across the Group.
We are committed to improving the accuracy, coverage
and transparency of our climate metrics. As part of our
Group integration activities, we will harmonise
methodologies, boundaries and data governance,
undertake targeted data quality improvements,
particularly for financed emissions, enhance scenario
analysis and stress-testing capabilities.
Caution in interpreting Scope 3 emission data
This data can be key in driving change, and monitoring
our progress against our climate ambitions. However, we
would urge caution about its usefulness and reliability
given the infancy of uniform Scope 3 disclosures, the
data gaps that exist on energy efficiency data on UK
properties, the lack of information on utility usage and
the reliability of EPC bands. As outlined above, the
Group will continue to enhance its understanding and
maturity on this topic and will continue to report in line
with PCAF and industry best practice to promote
transparency. The Group will also look for opportunities
to engage industry on considering how to evolve and
improve EPC ratings and the PCAF methodology.
Looking ahead
Looking ahead to 2026, we will continue to develop our
capabilities to measure, report and mitigate the risks we
face arising from climate change. We will continue to
develop tools to assess the impacts of climate change on
our business activities and ensure that we embed this
within business management information.
We recognise that achieving Net Zero must be fair,
inclusive and realistic. While the UK has made significant
progress in decarbonisation, substantial investment and
time will be required to retrofit homes at scale, expand
clean energy generation and storage, support households
and businesses in changing behaviours, and provide
affordable pathways to transition.
Across the Group, we will continue to work to expand our
support for members and customers with improving home
energy efficiency, developing products that encourage
sustainable home improvements and ensuring that
corporate lending is underpinned by credible transition
plans.
The report aims to address the recommendations of TCFD
and we will continue to enhance our reporting on climate
and sustainability related issues as the area develops and
additional recommendations are released.
Coventry Building Society | Annual Report & Accounts 202573
Governance
Governance
This section outlines how the
Group is managed in the
interests of members and
highlights the role, constitution
and governance of the Board
and its Committees.
Board of Directors
74
Directors’ Report on Corporate Governance
79
Board Nominations & Governance Committee Report
92
Board Risk Committee Report
94
Board Audit Committee Report
96
Board Change Committee Report
101
Directors’ Remuneration Report
103
Directors’ Report
118
Coventry Building Society | Annual Report & Accounts 202574
Governance
Board of Directors
This section provides information about your Board of Directors as at 31 December 2025.
Changes to the Board
This section details the changes to the Board during 2025 and up to the date of signing the Annual Report & Accounts.
In January 2025, Caroline Marsh and Mark Parker were appointed to the Board, with Caroline taking on the role of Chair of
the Board Remuneration Committee and Mark joining from The Co-operative Bank. Jane Leach also joined the Board in
October 2025, taking on the role of Chair of Board Audit Committee.
Board composition
Executive and Non-Executive Director split Gender split
Tenure of Board membersEthnic diversity
The Board’s calendar and commitments
The Board and its Committees have a regular cycle of meetings and will hold additional ad hoc meetings as required. The
table below outlines the schedule for 2025.
C
R
N&G
Re
A
C
Re
C
N&G
R
Re
N&G
R
N&G
A
R
C
Re
B
A
Re
B
A
R
B
A
R
A
B
A
B
B
A
B
B
NDR
B
B
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
AAuditB BoardN&GNominations & Governance
NDR Non-Executive Directors' RemunerationRRiskRe Remuneration
CChange
Coventry Building Society | Annual Report & Accounts 202575
Governance
Board of Directors continued
Committee membership
Chair of the Board and the Board Nominations & Governance Committee. Member
of the Board Remuneration Committee and Non-Executive Directors' Remuneration
Committee.
Experience
David has over 45 years’ experience in the banking industry, including four years as
Chief Executive of Clydesdale and Yorkshire Banks. Prior to joining the Society,
David held a number of board positions including Chair of the Board Risk
Committee at Barclays Bank UK plc. David's previous roles also include External
Member of the Bank of England’s Prudential Regulation Committee, Chair of the
Confederation of British Industry in Scotland, Independent Non-Executive for the
EY Global Network, member of its Global Governance Council and former Chair of
Ernst & Young LLP Audit Board.
External appointments
None.
David Thorburn
Chair of the Board
Appointed
April 2022
Committee membership
Chair of the Non-Executive Directors' Remuneration Committee.
Experience
Steve has broad transformation, financial and operational experience in senior
and board level roles within financial services and consumer goods sectors.
Before joining the Society, Steve had been Chief Executive of Principality
Building Society, and Finance Director of the Lloyds Banking Group General
Insurance businesses. Steve also held the role of Non-Executive Director on the
main Board of UK Finance and Chair of the Audit and Risk Committee of UK
Finance.
External appointments
Member and Chair of the Audit Committee at the BSA council. Advisory Board
Member of the Money and Pension Service. Member of the Payments Advisory
Board for the Pennies Foundation and Member of the FCA Practitioner Panel.
Stephen Hughes
Chief Executive
and Executive
Director
Appointed
April 2020
Committee membership
Member of the Board Audit Committee and Board Risk Committee.
Experience
Iraj was a senior partner with Deloitte for over 20 years, leading its national
internal audit group and serving clients in the financial, retail and public
sectors. He spent 10 years as Global Head of Internal Audit for Schroders plc.
Iraj was a Trustee, and Chair of the Audit and Risk Committee and a member
of the Investment Committee of NEST Pension, one of the largest pension
administrators in the UK. Iraj was also member of the Internal Audit Task
Force of the Institute of Chartered Accountants in England and Wales, and a
member of the Regulatory Decisions Committee at the Financial Conduct
Authority.
External appointments
Chair of the Audit Committee at Aon UK Limited. Chair of the Audit and Risk
Committee at Eurocell plc.
Iraj Amiri
Independent Non-Executive
Director
Whistleblowing champion
and DE&I champion
Appointed
June 2018
Coventry Building Society | Annual Report & Accounts 202576
Governance
Board of Directors continued
Committee membership
Member of the Board Remuneration Committee and the Board Nominations &
Governance Committee.
Experience
Jo is an experienced Non-Executive Director who has worked across multiple
sectors in her executive and non-executive careers. Her early career included
roles at Mars confectionery, Pepsi, and Asda, followed by executive roles at
Camelot Group plc, B&Q plc and Homebase Limited. She was also CEO of
Start, a Prince of Wales charitable initiative. Jo has held previous non-
executive roles at Principality Building Society and Safestore Self Storage Ltd
and was the former Chair of PayM and of the Current Account Switch Service
for Pay.UK.
External appointments
Senior Independent Director and Chair of the Remuneration Committee at
Dŵr Cymru Welsh Water. Chair of Remuneration Committee at Sirius Real
Estate. Non-Executive Director and Consumer Duty Champion at Vitality
Insurance.
Jo Kenrick
Deputy Chair of the Board
and Senior Independent
Director
Appointed
November 2017
Committee membership
Chair of the Board Audit Committee and member of the Board Risk
Committee.
Skills and experience
Jane is a chartered accountant and an experienced board, audit and risk
committee chair in the financial sector. She has deep control function and
governance expertise, combined with skills in strategic commercial
leadership. She began her career at KPMG where she went on to become a
Partner and then led KPMG’s Financial Services Risk Practice. Jane later
became Group Capital Controller at HSBC, before becoming a Senior Advisor
at The Bank of England.
External appointments
Chair of Jupiter Asset Management's UK Fund Manager. Chair of the Lucy
Faithfull Foundation. Chair of the Audit, Risk and Compliance Committee at
PayPal (UK). Chair of Audit at AIG (UK).
Jane Leach
Independent Non-
Executive Director
Appointed
October 2025
Committee membership
Chair of Board Remuneration Committee. Member of Board Nominations &
Governance Committee and Board Risk Committee.
Experience
Caroline has held many positions during her executive career in financial
services. She spent the first 13 years of her career in retail banking at Barclays
before joining Virgin as they moved into banking in the late 1990s. She was a
member of the Executive Committee of Virgin Money until 2018. As Virgin
Money's Culture Director, Caroline led the successful cultural integration of
Northern Rock and Virgin Money. She also led Virgin Money's social enterprise
strategy. Caroline has seven years of experience as a Non-Executive Director.
External appointments
None.
Caroline Marsh
Independent Non-
Executive Director
Employee engagement
champion
Appointed
January 2025
Coventry Building Society | Annual Report & Accounts 202577
Governance
Board of Directors continued
Committee membership
Member of the Board Audit Committee and Board Remuneration Committee.
Skills and experience
Shamira is a Chartered Accountant with over 20 years’ experience in the
financial services sector. Shamira held previous executive roles at Aviva plc
and Phoenix Group plc including Finance Director for the Phoenix Life Division
and Finance Acquisition Director.
External appointments
None.
Shamira
Mohammed
Independent Non-
Executive Director
Board Sustainability
champion
Appointed
May 2019
Committee membership
None.
Experience
Brendan has over 35 years’ experience at Allied Irish Bank, where his roles
included Head of Global Treasury Services, Head of Corporate Banking
International and Head of Business Banking. Brendan was most recently on the
AIB Group leadership team as Head of Financial Solutions Group before becoming
CEO of AIB UK plc in 2015.
External appointments
Non-Executive Director at Ford Credit Europe Bank plc and Chair of the Board
Risk Committee.
Brendan
O'Connor
Independent Non-
Executive Director
Board Consumer Duty
champion
Appointed
January 2021
Committee membership
Member of the Board Audit Committee and Board Change Committee.
Skills and experience
Mark has held several senior executive positions in the financial services
sector, most recently as Chief Operating Officer at Hastings Insurance
Services Limited. He was appointed as Chief Operating Officer at Virgin
Money, following the restructure and sale of Northern Rock plc to Virgin
Money. Prior to joining Northern Rock plc, Mark held senior executive
positions at HBOS plc leading Group Services, Group Technology and Chief
Executive Officer of Intelligent Finance Bank, part of the HBOS Group.
External appointments
None.
Mark Parker
Independent Non-
Executive Director
Appointed
January 2025
Coventry Building Society | Annual Report & Accounts 202578
Governance
Board of Directors continued
Committee membership
Chair of the Board Change Committee and Member of the Board Risk Committee
and Nominations & Governance Committee.
Experience
Iain began his career as a software engineer and architect and has since
undertaken several senior executive appointments. Iain's executive career began
at UBS Group where he was Group Chief Technology Officer, Chief Information
Officer ('CIO') of Europe and Global CIO of the investment bank. At Barclays
Group, he was the Global Chief Operating Officer of Group Shared Services. He
later joined Aberdeen Asset Management as Group Chief Operating Officer
before moving to TP ICAP as Group Chief Operating Officer. His most recent
executive role was with Santander UK as Chief Operating and Transformation
Officer.
External appointments
Independent Non-Executive Director at Citi Group Global Markets Limited.
Iain Plunkett
Independent Non-
Executive Director
Appointed
July 2024
Committee membership
Member of the Non-Executive Directors' Remuneration Committee.
Experience
Lee is a qualified accountant and has over 30 years’ experience in the building
society sector including 24 years at Nationwide Building Society. He has held
senior roles in finance, strategy, product and data and was a Member of the
Executive Committee during his time there.
External appointments
None.
Lee Raybould
Chief Financial Officer and
Executive Director
Appointed
April 2021
Committee membership
Chair of the Board Risk Committee. Member of the Board Audit Committee and
Board Change Committee.
Experience
Martin has wide-ranging experience within the financial services sector. He was
the Director of Banks, Building Societies and Credit Unions at the Bank of
England and Head of UK Banks and Mutuals at the Financial Services Authority
(now the Financial Conduct Authority). Martin also spent ten years in various
senior roles at Yorkshire Building Society.
External appointments
Non-Executive Director and Chair of Northern Bank Limited (Danske Bank UK).
Martin Stewart
Independent Non-
Executive Director
Appointed
September 2018
Coventry Building Society | Annual Report & Accounts 202579
Governance
Directors' Report on Corporate
Governance
Dear Fellow Member
I am pleased to present to you the Group’s Report on
Corporate Governance for the financial year 2025, which
sets out the role of the Board and its key activities during
the year.
Good governance underpins our accountability to
members of the Society and customers of the wider
Group. The Board is committed to maintaining high
standards in the way that the Group, including the
Society, is governed and managed and is guided by the
principles of the latest UK Corporate Governance Code
(the Code) in line with guidance from the Building
Societies Association to ensure alignment with good
practice and the Society's mutual status. The Board, with
support from the Board Audit Committee and Board
Nominations & Governance Committee oversaw the
implementation of the updated 2024 Code. This report,
together with the reports from the Board Committees,
highlights the work we have done to shape the Group's
governance in 2025.
Strategic priorities
The Board has remained focused on development of the
Group's strategic priorities during the year. We have
continued to invest in our technology capabilities and
service delivery across the Group. This has shown a
marked improvement in customer experience in the Bank
and maintained our high levels in the Society.
AGM
Good engagement with our members is vital to
understanding your needs and I was delighted to be able
to spend time with so many of our members at the 'meet
and greet' session ahead of the 2025 AGM. Board members
also joined member panel calls ahead of the AGM to gain
member insights. We remain committed to enhancing our
engagement with members and were pleased to see that
our hybrid facilities allowed so many of you to join our
AGM online again in 2025. The Board valued the chance to
have an open discussion with members, with Board
members joining members on their tables at the 2025 AGM
to encourage this.
The 2025 AGM provided an opportunity to understand
which other matters are most important for our members.
Notable in that context was discussion on the topic of the
acquisition of The Co-operative Bank. The Board remains
satisfied that the acquisition is in the best interests of the
Society's current and future members and for the long
term sustainability of the Society and continues to be
committed to openness and transparency on the benefits
the acquisition of the Bank will provide for members.
Sustainability
The Board is responsible for overseeing the delivery of the
Group’s sustainability strategy and it is a key theme of
Board and Committee discussions. A lot of work has taken
place during 2025 to align the separate targets of the
Society and the Bank into one Group approach to
sustainability from 2026 onwards, ensuring continued
alignment to a number of global standards. The Board
approves for publication each year, the Group's
Sustainability Report, which will be published shortly after
this report in 2026.
Consumer Duty
The Board places good customer outcomes, aligned to the
FCA consumer duty, at the heart of its decision making.
This ethos is also embedded in the Group's daily
operations, across its product design, services, people and
communication strategies and is an important
consideration of the ongoing integration work.
Board changes
In January 2025, Caroline Marsh joined our Board as a
Non-Executive Director, chairing the Board Remuneration
Committee during the year. Mark Parker also joined the
Board with effect from January 2025.
The Board was pleased to welcome Jane Leach as a Non-
Executive Director in October 2025. Jane took over the
Chair of the Board Audit Committee in November 2025
from Iraj Amiri who has chaired the committee with skill
and diligence for a number of years. Jane brings a wealth
of financial services experience, both in business and as a
Senior Advisor at the Bank of England.
The Board, with the support of the Board Nominations and
Governance Committee, continues to review the
composition of the Board ensuring that there is sufficient
succession planning in place and that the correct mix of
skills and expertise are around the table.
Looking forward
2025 saw good progress in the integration of the Bank with
the Society, but it is important to note this process will
continue into 2026. 2026 will therefore see the Board
continue to focus on oversight of integration activity while
progressing our modernisation agenda, including the
delivery of additional benefits for current and future
members and customers. Throughout all of this, we will
maintain high standards of governance and the strong
mutual values of the Group.
David Thorburn
Chair of the Board
26 February 2026
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Governance framework
Maintaining the highest standards of governance is integral to the successful delivery of the Group's strategy. Our
governance framework ensures that the Board is effective in both making decisions and maintaining oversight, whilst also
adhering to our well-established purpose and values.
Group Board
Bank Board
Group Board
Risk Committee
Group Board
Nominations
& Governance
Committee
Group Board
Remuneration
Committee
Bank Board Audit
Committee
Bank Board Risk
Committee
Bank
Remuneration
Committee
Bank Values Ethics
& Nominations
Committee
Group Board Change
Committee
Group Board
Audit Committee
A review of the Group's governance arrangements was carried out in 2025 to reflect the integration of the Bank into the
Group and to ensure that appropriate governance of the regulated entities within the Group is maintained. As a result, the
following governance structure has been established to lead the Group, effective from 1 January 2025 and in force
throughout the year.
Some Directors of the Group Board have roles on the Bank Board and its committees, for which they receive remuneration.
The roles held during the year and the remuneration received is detailed on page 116.
This Report on Corporate Governance focuses on the role and activities of the Group Board ('Board") and its Group
committees.
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Governance framework continued
The Board
Purpose: Setting the Group's strategic objectives, and monitoring its overall financial performance, ensuring effective
governance, controls and risk management.
Chair: David Thorburn
Members at 31 December 202 5: Jo Kenrick, Iraj Amiri, Jane Leach, Caroline Marsh, Shamira Mohammed, Brendan
O’Connor, Mark Parker, Iain Plunkett, Martin Stewart, Stephen Hughes, Lee Raybould
The Board delegates certain matters to its Committees. Matters discussed at Committee meetings are reported to
the Board at each meeting.
Board
Nominations &
Governance
Committee
Purpose: Assists the
Board in maintaining
high standards of
corporate
governance and
ensuring these are
consistent with best
practice. Oversees
the implementation
of the Group’s
diversity and
inclusion objectives.
Regularly reviews the
composition of the
Board and leads on
the appointments
process for
nominations to the
Board, and makes
recommendations to
the Board on
succession planning
of Board directors.
Board
Remuneration
Committee
Purpose: Determines
the Group’s
remuneration policy
and practices,
ensuring they are
effective, compliant,
and reflect the
Group’s purpose and
values. The
Committee is also
responsible for
determining the
remuneration
framework for the
remuneration of all
employees, with
particular scrutiny
given to the
remuneration of the
Chair of the Board,
executive directors
and executive
managers.
Board Risk
Committee
Purpose: Provides
oversight and advice
to the Board in
relation to current
and potential future
risk exposures of the
Group and future risk
strategy, including
determination of risk
appetite and
tolerance and the
effectiveness of the
Group’s framework
for managing risk.
The Committee
ensures the
Executive team is
held to account in
ensuring risks are
identified, assessed
and managed
effectively in
accordance with the
requirements of the
Enterprise Risk
Management
Framework.
Board Change
Committee
Purpose: Provides
oversight, strategic
direction and board
level governance for
the Group change
portfolio, assist the
Board in fulfilling its
responsibilities with
respect to oversight
of the integration of
the Bank within the
Group and to monitor
and evaluate existing
and future trends in
technology that may
affect the Group's
strategic plan
including overall
industry trends.
Board Audit
Committee
Purpose: Assists the
Board in discharging
its responsibilities
for the integrity of
the Group’s financial
statements, ensuring
they are fair,
balanced and
understandable. The
Committee is also
responsible for
reviewing significant
financial reporting
judgements, and
oversees the
effectiveness of the
system of internal
control and the
effectiveness of the
Internal Audit
function and external
auditors.
Information on the membership of each of the above committees can be found in the relevant committee report later in
the governance section.
In addition to the principal Board Committees outlined, the Board also has a Non-Executive Directors' Remuneration
Committee to assist it in fulfilling its oversight responsibilities for the remuneration, expenses, gifts and hospitality of the
Society's non-executive directors. This Committee typically meets once a year and its members comprise the Chair, Chief
Executive, Chief Financial Officer and Chief People Officer.
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Corporate Governance Statement
This Corporate Governance Statement has been prepared in accordance with the Principles of the UK Corporate Governance
Code dated January 2024 (the Code) that applied to the 2025 financial year. The Society met the requirements of the Code
throughout 2025 with the exception of the provisions relating to engagement with institutional shareholders, which is not
relevant to the Society given its mutual ownership model. Whilst not effective until 1 January 2026, throughout the year
the Board has considered the Group's approach to compliance with Provision 29 of the Code. The Board's oversight of this
activity will continue during 2026. The Governance Report explains how the Society has voluntarily applied the principles of
the Code throughout 2025.
Role of the Board
The Board has a collective responsibility to secure the long-term sustainable success of the Group for the benefit of its
members and wider stakeholders. It must ensure the delivery of the Group's strategy and that its strategic objectives
remain aligned to the Group's purpose and values. Having a robust governance framework is integral to achieving this
success. It enables the Board to reach decisions in a focused and balanced way, ensuring that full consideration is given to
the impact on each of the Group's key stakeholders.
The Board derives its powers from the Society's Rules and Memorandum (the Rules) which can be found in the corporate
governance section of the Society's website. The Rules are based on the provisions of the Building Societies Act 1986 and
other applicable law and regulation that the Society must comply with. The responsibilities of the Board are set out in a
formal schedule of matters reserved to the Board, which is located on the corporate governance section of the Society's
website. The Board reviews its schedule of matters reserved at least annually to ensure they reflect good governance
practice, any relevant regulatory changes and the requirements of the business. The Board last reviewed its schedule of
matters reserved in March 2025. The Board delegates certain matters to Board Committees so that they can be considered
in more detail by the directors who have the most relevant skills and experience to do so. A summary of the role of each of
the Board's Committees can be found on page 81 of this report and a more detailed account of activities undertaken by the
Board Committees can be found in their respective reports from page 92 onwards. Each of the Board Audit, Board Risk,
Board Change, Board Remuneration and Board Nominations & Governance Committees has terms of reference which set out
their respective roles and responsibilities. These can be found on the corporate governance section of the Society’s
website.
The day-to-day running of the business is delegated to the Chief Executive who is supported by an Executive team with the
remit of delivering the Group's strategic objectives.
Board responsibilities
The Board seeks to meet its legal and regulatory obligations as well as fulfilling its purpose to oversee the overall
management of the Group. The Board has a number of important responsibilities designed to achieve this objective
extending across a number of areas as summarised below.
Challenge and approve
the Group's long-term
strategy
Monitor the impact of the
Group's operations on
society and the
environment
Monitor and review the
Group's performance
Board
responsibilities
Set the right culture and
values for the Group
Determine and review the
Group's risk appetite and
the major risks faced by
the Group
Act in the best interest of
the Group's stakeholders
Assess the adequacy of
capital and liquidity
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Board activities in 2025
Board meetings are an important mechanism through
which the Board discharges its responsibilities, particularly
in relation to the requirements of the Code and Section
172 of the Companies Act 2006. Some of the Board’s
responsibilities are discharged directly, whereas others will
be delegated to the Committees of the Board.
The Board’s activities are planned on a 12 month rolling
basis to ensure the responsibilities detailed above are
discharged effectively, with additional items coming to the
Board as appropriate. Each Board meeting is structured
using a carefully tailored agenda that is agreed in advance
by the Chair, in conjunction with the Chief Executive and
Group Secretary. The contents of the agenda are made up
of a combination of standing items from the Board's 12
month rolling agenda and additional ad hoc items which
fall within the remit of the Board's responsibilities.
The Board's activities are structured in a way to ensure
that at each meeting the Board has an opportunity to
review trading and financial performance, track the
Group's progress against its strategic aims, assess the
Group's risk position, review governance matters and
oversee the work of its Committees. As relevant, the Board
will also carry out in-depth reviews on matters of strategic
importance, including material IT and change programmes,
the Group's sustainability performance and new product
proposals. Information on directors’ attendance at the
scheduled meetings that took place during the year can be
found on page 84.
During 2025, the Board necessarily spent a significant
amount of time discussing and considering options and
implications relating to the acquisition of the Bank. This
focused on the integration of colleagues and stakeholders
throughout the year and the timescales for integration of
the Bank's customers.
The key activities considered by the Board during the year
are summarised below.
Activities in 2025
At each meeting the following standing items are
considered by the Board:
Chief Executive’s assurance report: providing an
overview of the external competitive environment covering
key trends across the lending and savings sectors, in
addition to information on the status and progress of the
Group’s strategic change projects.
Management information: on the Group’s trading and
financial performance since the last meeting of the Board.
Reporting on the Group’s operations including people and
customer service metrics and key developments across
Group operations.
Chief Risk Officer’s report: on the Group’s risk position
and assessment of the Group’s key risks.
Board Committee updates: from the Chairs of the Board
Committees to the Board on the key issues and topics
raised at Committee meetings ensuring the Board is aware
of key discussions and decisions made by the Committees.
Reviewed the results of the Society’s annual employee
opinion survey.
Reviewed the results of the Board and Board Committee’s
annual performance review and non-executive directors
independence assessments.
January
Approved the Society's Annual Report & Accounts
Reviewed the Society's annual Sustainability Report and
approved its publication.
March
Received an update on customer experience. Received an
update on non-executive director recruitment and agreed
Board Champion roles.
Reported to the membership on the activity of the Society
at the Annual General Meeting.
April
Received updates on proposed strategy at a two day off
site event.
Reviewed progress on integration activity and considered the
approach to a full external Board and Board committee
performance review.
July
Considered and approved an updated governance
framework for the Group.
Received a further update on integration activity and
approved the Society's Modern Slavery Statement.
September
Reviewed a detailed update on the Group's transformation
programme.
October
Approved the 2026-2030 Group strategic plan.
Approved the Group enterprise risk management
framework and Group Board risk appetite framework.
November
Received update on/ approved the Group's net zero and
climate action plan.
December
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Operation of the Board
In 2025, there were nine formal meetings of the Board where the Board reviewed a range of matters (as outlined on page
83) relating to the Group’s business, strategy, culture and performance, and additionally one ad hoc meeting. The
integration of the Bank and setting the Group's strategy have been key themes of the discussions at Board meetings during
the year.
In addition to the business as usual board meetings, the Board also held strategy days in March, July and October where it
considered the Group's business model and made choices about the future direction of the business.
Members of the Group's Executive and senior leadership team are invited to attend meetings as required to present and
discuss matters relating to their business and subject matter areas. Where directors are unable to attend meetings, they
are encouraged to give the Chair their views in advance on the matters to be discussed.
Board and Board Committee attendance 2025
The attendance record for Board members is shown in the table below. The table shows the actual number of formal
meetings (excluding strategy days and ad hoc meetings) attended, together with the number of meetings which the
directors were eligible to attend.
Name
Board
Board Risk
Committee
Board Audit
Committee
Board
Nominations &
Governance
Committee
Board
Remuneration
Committee
Non-Executive
Directors’
Remuneration
Committee
Board Change
Committee
David Thorburn1
9/9
4/4
5/5
1/1
Jo Kenrick2
9/9
4/4
5/5
Iraj Amiri3
9/9
6/6
8/8
Martin Stewart4
9/9
6/6
8/8
4/4
Shamira Mohammed
9/9
8/8
5/5
Brendan O'Connor
9/9
Iain Plunkett5
9/9
5/6
4/4
4/4
Caroline Marsh 6
9/9
6/6
4/4
5/5
Mark Parker7
9/9
5/5
4/4
Jane Leach8
2/2
1/1
1/1
Stephen Hughes9
8/9
1/1
Lee Raybould
8/9
1/1
1. Chair of the Board and Chair of the Board Nominations & Governance Committee.
2. Chair of the Remuneration Committee.
3. Chair of the Board Audit Committee.
4. Chair of the Board Risk Committee.
5. Chair of the Board Change Committee.
6. Appointed to the Board on 3 January 2025 and Chair of Board Remuneration Committee from 3 January 2025
7. Appointed to the Board on 1 January 2025
8. Appointed to the Board on 3 October 2025 and Chair of the Board Audit Committee from 17 November 2025.
9. Group Chief Executive and Chair of the Non-Executive Directors' Remuneration Committee.
Division of responsibilities
The Board is comprised of the Chair, nine non-executive directors and two executive directors. To ensure an effective
working relationship, it is important that there is a clear division of roles and responsibilities, and that these are well
understood and agreed between the individuals holding them as well as by other members of the Board and executive
management.
The roles of Chair and Chief Executive are separately held and their responsibilities are well defined, set out in writing and
regularly reviewed by the Board.
Each of these roles has a detailed role profile which identifies the areas of responsibility and accountability to the Board
and/or Chief Executive, as appropriate, and a Statement of Responsibility, as required under the Senior Managers Regime.
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Division of responsibilities continued
The table below provides a summary of key responsibilities for each of these roles.
Role
Responsibilities
Chair
David Thorburn
• Provide leadership to the Board and to safeguard and promote the long-term success and
sustainability of the Group in the interests of past and future members and customers.
• Establish a programme of work for the Board, ensuring they are appropriately focused on
strategy, performance, culture and risk management matters.
• Empower Board members to challenge issues openly, and encourage and manage vigorous debate
in order to reach effective decisions.
• Demonstrate ethical leadership and uphold the highest standards of integrity and probity, setting
clear expectations concerning the Group’s culture, values and behaviour, including emphasising
putting members and customers first principles.
• Build an effective and diverse Board reflecting an appropriate balance of skills and experience
given the Group’s current and future activities, including leading on policies for Board member
training and development.
• Ensure effective communication with all stakeholder groups and that the Group’s obligations to
and interests of its stakeholders are known and understood by the Board.
• Facilitating the Group Chief Executive’s relationship with the Board and providing support to the
Group Chief Executive.
Deputy Chair and
Senior
Independent
Director
Jo Kenrick
• Deputise for the Chair where necessary.
• Work closely with the Chair, act as a sounding board and provide support in the delivery of the
directors' objectives.
• Serve as a trusted intermediary for the directors when necessary, including addressing any issues
they feel have not been dealt with adequately.
• Lead an annual process to review the Chair's performance and lead succession planning for the
Chair of the Board’s role, chairing the Board Nominations & Governance Committee when it
considers Chair succession.
Independent non–
executive
directors
Iraj Amiri
Jane Leach
Caroline Marsh
Shamira Mohammed
Brendan O’Connor
Mark Parker
Iain Plunkett
Martin Stewart
• Safeguard and promote the long-term success and sustainability of the Group in the interests of
past and future members and customers.
• Constructively challenge and help develop proposals on strategy and oversee the executive
directors’ implementation of the agreed strategy.
• Scrutinise the performance of management in meeting agreed goals and objectives, and monitor
ongoing performance against such goals.
• Satisfy themselves that the integrity of financial information, financial controls and systems of
risk management are robust and defensible.
• Complement the skills and experience of the executive directors, in particular by providing to the
Board a range of knowledge, experience and insight.
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Division of responsibilities continued
Role
Responsibilities
Chief Executive
(CEO)
Stephen Hughes
• Responsible for the day-to-day running of the Group and accountable to the Board for the
Group’s financial and operational performance.
• Responsible for providing leadership and direction to and developing the vision and strategy of
the Group, having regard to the duty to promote the success of the Group in the interests of
members, colleagues, customers and key stakeholders.
• Communicate the vision, strategy and performance of the Society to members, employees,
regulators and other stakeholders.
• Build and lead an effective Executive team to manage the Group in the longer-term interests of
its members and customers.
• Ensure that effective succession and development plans are in place and implemented for all key
executive roles.
• Lead the Executive team to successfully deliver agreed plans, objectives and targets.
• Monitor the effective implementation of policies and procedures for the induction, training and
professional development of all persons performing designated senior management functions on
behalf of the Society.
Chief Financial
Officer (CFO)
Lee Raybould
• With the Chief Executive and Executive team, ensure the development and implementation of
the Group’s corporate plans, strategies and policies.
• Ensure that the Group is appropriately resourced to meet its strategic aims and objectives, with
regular reviews of performance against objectives.
• Ensure the Group remains well funded and has sufficient liquidity to meet internal and regulatory
limits.
• Ensure that plans are in place to meet the financial performance targets agreed with the Chief
Executive and the Board.
• Ensure effective financial control, management and information are in place to support other
business areas.
• Manage the Group’s capital effectively, ensuring capital is managed within agreed risk appetites.
• Provide leadership of the Group, and the Finance function in particular, with a framework of
prudent and effective controls which enable risk to be assessed and managed.
Independence
In January each year, the Board reviews the independence of its non-executive directors. In line with the Code, it
considered whether there were any relationships or circumstances that were likely to affect, or could appear to affect, a
director’s independence.
In the opinion of the Board, all of the non-executive directors satisfy the requirements for independence and have
demonstrated this in their character and judgement. The Chair of the Board, David Thorburn, is a non-executive director
and, in accordance with the Code, was independent on appointment.
Letters of appointment for the directors are available from the Group Secretary or Chief People Officer on request. Details
of the directors’ external appointments are set out in the Annual Business Statement.
Time commitment
Non-executive directors are not required to devote the whole of their time to the Group’s affairs but must devote sufficient
time to properly discharge their duties and regulatory obligations. The time that non-executive directors are expected to
commit to their role at the Group is decided on an individual basis upon appointment and will depend on the director's role
and responsibilities. In addition to that spent preparing for and attending Board and Board Committee meetings, the non-
executive directors are also expected to dedicate sufficient time to understanding the business through meetings with
management, engagement with members, attending call listening, undertaking a programme of branch and department
visits, engaging with regulatory bodies and undertaking training. Each year, the Board Nominations & Governance
Committee assesses whether each of the directors is able to commit sufficient time to the Group to discharge their
responsibilities effectively, taking into account any external commitments they may also have. The assessment undertaken
in 2025 confirmed that all directors were considered to have sufficient time to properly discharge their duties as directors
of the Group.
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Time commitment continued
Set out below are details of the average time commitment expected of the non-executive directors.
Role
Expected time commitment
Chair
Approximately 120 days per year.
Deputy Chair & Senior
Independent Director
As is required to fulfil the role.
Non-Executive Director
Average time commitment of 35 days per year.
Committee Chair
Board Risk Committee Chair:
Approximately 12 days per year in addition to the time spent on normal non-executive director
responsibilities.
Board Audit Committee Chair:
Approximately 10–12 days per year in addition to the time spent on normal non-executive director
responsibilities.
Board Remuneration Committee Chair:
Approximately 10 days per year in addition to the time spent on normal non-executive director
responsibilities.
Board Nominations & Governance Committee Chair:
Approximately 6 days per year in addition to the overall time commitment required of the Chair.
Board Change Committee Chair:
Approximately 10 days per year in addition to the time spent on normal non-executive director
responsibilities.
Conflicts of interest
The Group's directors are subject to a Board Conflicts of Interest Policy which is reviewed regularly by the Board
Nominations & Governance Committee. The policy gives effect to various legal and regulatory requirements on the Group in
relation to conflicts of interest and in broad terms seeks to ensure the directors of the Group do not assume roles which
would conflict with their obligations as a director of the Group. Prior to appointment, all potential directors are required to
disclose any actual or potential conflicts of interest that may prevent them from taking on an appointment with the Group.
In addition, all directors must seek approval from the Board (via the Chair and Group Secretary) before committing to any
additional, external appointment. Where such approval is sought, the director must confirm the existence of any potential
or actual conflicts and that the role will not exceed the maximum number of directorships permitted (in accordance with
the Capital Requirements Directive V). The director must provide assurance that the appointment will not adversely impact
their ability to continue to fulfil their role as a director.
The Group's policy and processes for managing conflicts of interest seek to ensure that any actual or potential conflicts of
interest are prevented and any associated risks to the organisation of an actual or potential conflict situation materialising
are mitigated. In the event of an actual or potential conflict of interest arising, the matter would be dealt with in
accordance with the process under the policy and impacted parties would be notified where required.
In accordance with their duties as directors, each director is also obliged to notify the Board of any actual or potential
interest that they have in a matter to be transacted at a meeting. If any potential conflict does arise, the Board Conflicts of
Interest Policy permits the Board to authorise a conflict, subject to any conditions or limitations as it may deem
appropriate. The Board maintains a register of conflicts of interest which is reviewed at the start of every Board meeting
and actual or potential conflicts of interest are managed by the Chair or Deputy Chair, as required, with advice from the
Group Secretary.
Training and development
To enable the Board to be effective and discharge its duties, the Code specifies that each of the directors must be
equipped with the necessary resources to update their knowledge and capabilities. This should be in a manner that is
appropriate to the particular director, and which has the objective of enhancing that director’s effectiveness in the Board
or Committees. In addition to the requirements of the Code, the Group's approach to compliance with the Senior Managers
Regime requires directors to undergo a 'fit and proper' assessment. The Group’s Fit and Proper Policy sets out the various
criteria that the Group will consider to determine if an individual is 'fit and proper', one element of which includes an
assessment of competence. Accordingly, it is crucial that the right training topics are determined for members of the Board
and Committees to enable the Group to meet these requirements. New directors receive formal induction training on
joining the Board. This induction process is tailored to the needs of each director, given their existing knowledge and
experience, and any Committees on which they will serve. Induction includes extensive engagement with directors and
executives, updates on important commercial, regulatory and risk matters, and a particular focus on the culture of the
Group.
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Training and development continued
Following appointment, all directors continue their professional development and maintain their knowledge of the Group’s
operations through branch and department visits, and formal training overseen by the Board Nominations & Governance
Committee in line with the Board Training Policy. During 2025, Board members received training on Artificial Intelligence,
the relationship with Co-operatives UK and capital and liquidity.
Directors' skills and experience
An effective Board must comprise individuals with the right mix of knowledge, skills and experience. Ensuring this objective
is achieved is one of the responsibilities of the Chair, supported by the Board Nominations & Governance Committee.
Each year the Board Nominations & Governance Committee agree a set of key skills and capabilities that provide a
collective view of the Board’s knowledge, experience and composition. These attributes are compiled by reference to the
Group’s strategic plan and in particular its purpose, values and principles and seek to define what skills, attributes and
experience are needed to make the Group a success over the long term.
In 2025, there were three new members of the Board appointed. During the appointment process, the Board Nominations &
Governance Committee considers the skills required and the succession planning needs of the Board. This then informs the
potential candidates that are considered for any vacancies, to ensure the Board has the right composition of skills,
experience and capabilities to meet the needs of the Group and its members and customers.
The skills and capabilities of the Board are kept under review throughout the year, including during the annual appraisal of
each Board member, which is carried out by the Chair. During the appraisal, the training needs of individuals, and the
Board as a whole, are considered. This helps to shape the structured training provided to the Board throughout the year.
Composition, succession and evaluation
The Board delegates responsibility to the Board Nominations & Governance Committee to oversee:
• Matters relating to the composition of the Board.
• The development of a diverse pipeline for succession to the Board and executive positions.
• The results of the formal annual evaluation performance of the Board, its Committees, the Chair and individual
directors.
For more information on the work of the Board Nominations & Governance Committee in respect of these matters, please
see page 92 of this report.
In compliance with the Code, each director is required to submit themselves for election or re-election by members,
annually, at the Society's Annual General Meeting. Before doing so, each director is subject to a formal evaluation in which
the director must satisfy certain requirements regarding their fitness and propriety to undertake the role of a Board
director.
These requirements are determined by the rules of the Senior Managers Regime, the Financial Conduct Authority and the
Prudential Regulation Authority, and include amongst other things:
• Qualifications obtained.
• Training undertaken.
• Competence and capability.
• Honesty, integrity and reputation.
The competence of each non-executive director who served on the Board in 2025 was reviewed as part of the routine
appraisal process undertaken by the Chair in respect of the non-executive directors and Group Chief Executive, the Deputy
Chair in respect of the Chair of the Board and Chief Executive in respect of all executive directors. The assessment of
fitness and propriety also took into account directors' independence (as outlined above) and an independent, third-party
screening provider is used to carry out certain checks to confirm the honesty and integrity of each director.
Individual biographies of the directors are included in the Board of Directors section on page 74. These biographies detail
the backgrounds and relevant skills of the directors. Further details on the roles and responsibilities of each of the Board
directors can be found on pages 85 and 86. Details of those seeking election and re-election at the Society's 2026 Annual
General Meeting can also be found in the Notice of the 2026 Annual General Meeting.
Coventry Building Society | Annual Report & Accounts 202589
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Directors' Report on Corporate
Governance continued
Composition, succession and evaluation continued
The Society’s Rules require that the Board comprises between six and 12 directors. As at 31 December 2025, there are 12
directors: the Chair of the Board, nine independent non-executive directors (including the Senior Independent Director) and
two executive directors. The composition of our Board is consistent with the Code requirements, which specify that at least
half of the directors, excluding the Chair of the Board, should be non-executive.
Changes to the Board during 2025 were as follows:
Name
Role
Change
Caroline Marsh
Non-Executive Director
Appointed January 2025
Mark Parker
Non-Executive Director
Appointed January 2025
Jane Leach
Non-Executive Director
Appointed October 2025
Board evaluation
Each year, the Board and each of its Committees undergo a process to assess their performance during the year. This is a
key mechanism for ensuring that the Board and its Committees continue to operate effectively and for setting objectives
and development areas for the forthcoming year. The Code requires that the Board and each of its committees carry out an
annual review of their performance and undertake an externally facilitated review of performance every three years. The
Society had its last external review in 2021. It's next external review was due in 2024 but in light of the acquisition of the
Bank and the significant changes that were proposed to the governance and structure of the Society, Group and subsidiary
boards in 2025, it was recommended by the Board Nominations & Governance Committee, and agreed by the Board, that
the full externally facilitated review should be postponed to 2025. Ffion Hague of Independent Board Evaluation has been
appointed to carry out an independent external evaluation of the Board and its committees. The evaluation will be carried
out in two phases. Phase one commenced in the second half of 2025 and phase two will take place in summer 2026.
June and July 2025
The Board Nominations & Governance Committee reviewed the proposal and timeline for the external
review of the Board and Board committees' performance at its June 2025 meeting and the Board then
reviewed a longlist of potential providers at its July 2025 meeting.
September 2025
The Board Nominations & Governance Committee considered the proposals and fee quotes from a shortlist
of potential providers and noted that Ffion Hague of Independent Board Evaluation had been selected as
the preferred provider for the performance review.
November 2025 - January 2026
Phase one of the performance review process commenced.
A report of the findings and feedback from phase one of the effectiveness review was considered by the
Board.
2025 Board performance review
Independent Board Evaluation was commissioned to conduct a board performance review in two phases, adopting a flexible
approach to align with the new Group structure, allowing it to mature in a practical and effective way. The first phase was
to take feedback in order to streamline and hone the way in which the Boards of the Society and the Bank are working
together. The second phase will be a full externally facilitated review of the Board’s performance and is planned for
Summer 2026. The results of the first phase were presented and discussed at the Board meeting in January 2026.
The review concluded that the Board has operated effectively in discharging its responsibilities in 2025 with a positive
culture and good relations around the board table. The process to review and evolve the governance structure has been
thorough and well-received, with contiguous board meetings being held and joint board committee meetings. The review
found there had been comprehensive induction for Board members taking on new roles.
Coventry Building Society | Annual Report & Accounts 202590
Governance
Directors' Report on Corporate
Governance continued
Board evaluation continued
Directors' performance
The Chair of the Board appraised the performance of the non-executive directors and the Chief Executive. The Chair of the
Board’s performance review was led by the Deputy Chair and Senior Independent Director, and took into account the views
of the rest of the Board members and certain members of the Executive team. The executive directors' performance was
appraised by the Chief Executive. The conclusions of the appraisal process confirmed that all directors were fulfilling their
duties and responsibilities effectively.
The Board and its culture
The Board is also responsible for providing leadership to the Group on culture, values and ethics which are central to
supporting the organisation’s purpose, and the delivery of its strategic ambitions. The UK Corporate Governance Code
Principle B sets out the need for the Board to lead by example in promoting the desired culture of the Group. As such, the
Matters Reserved to the Board retains this responsibility to the Board of Directors as a key part of their responsibilities and
activities. The Financial Reporting Council has also published guidance emphasising the importance of culture and the role
of the Board in establishing and maintaining this, with particular prominence given to the need to recognise, continually
assess and embed cultural leadership across organisations. The Board demonstrates these key pillars via a variety of formal
Board discussion and decisions, but also through more informal activities such as department and branch visits. The Board
receives regular updates through its reviews of the Group’s people strategy, the results of Great Place to Work Survey and
other specific employee surveys, which take place each quarter, which help provide the Board with a good understanding of
the Group’s current culture and give them a basis on which to analyse trends and undertake deep dives into any areas
requiring further work to improve upon.
By reviewing qualitative and quantitative information from a range of sources, the Board is able to track progress and
ensure that the culture reflects the shared set of values, beliefs and behaviours which are central to the Group’s values.
The combined culture of the newly expanded Group, following the acquisition of the Bank, has been a key consideration for
the Board throughout 2025.The Board considered culture as part of their strategic discussions and planning in July, October
and November 2025, when determining the strategy for the forthcoming years, with the values of the Society and the
values and ethics of the Bank being a pivotal focus point for decision making. They also receive regular reporting on various
other aspects of culture, such as bi-annual customer and member experience updates, reports on whistleblowing, diversity,
equity and inclusion. Further detail on this can be found in the below sections on stakeholders and whistleblowing.
Iraj Amiri has supported the culture review activity completed during the year, which brought colleagues from across the
Group together to help shape the culture of the combined organisation. Executive Board members present and engage with
colleagues at 'Coventry Conversations', providing opportunity for open dialogue and issues that are important to colleagues
to be raised. Where relevant, this can then be discussed more broadly with the Board and help to inform their decision
making. The colleague Code of Conduct also clearly sets out the expectations of the Board in relation to their values and
behaviours that colleagues should seek to maintain in order that the Group can operate in a fair and honest way,
recognising that openness and trust are essential to creating and maintaining mutually rewarding relationships and
delivering high standards of customer service.
Throughout 2025, the Board and its committees considered and received updates on people policies for the Group which
would set the culture for the combined organisation moving forward. In particular, the Remuneration Committee received
updates on harmonising terms and conditions, including aspects such as the approach to variable pay, which helps guide the
culture of the Group. The Board also received regular updates on the integration of the Bank into the Group, including work
carried out to bring the cultures of the two organisations together into one, shared Group approach.
The Board and stakeholders
As a purpose-led building society, the Board understands the importance of engaging with the Group’s stakeholders to
understand how its decisions impact this wider group.
The Board takes into consideration the interests of these stakeholders as part of its discussion and decision making
processes, ensuring that they continue to act in the best interest of members, colleagues and the wider stakeholder group.
One of the key ways our Board members engage with members is through our Annual General Meeting. This year saw strong
engagement again from our members who attended both in person and virtually to hear from our Board about their work
and the achievements of the Society during the last 12 months. Members also had the opportunity to ask the Board
questions about the things that matter the most to them. These questions again covered a broad range of topics, including
whether the payment of a member dividend was being considered, the Society's commitment to its branch network, the
provision of debit cards for members, the Group's relationship with the co-operative movement following the acquisition of
the Bank and the use of AI. The number of attendees and the depth of questions demonstrated how engaged our
membership are and the importance the Board places on listening to them.
Coventry Building Society | Annual Report & Accounts 202591
Governance
Directors' Report on Corporate
Governance continued
The Board and stakeholders continued
Caroline Marsh attends 'My Society', the elected forum of employee representatives, and uses this as an opportunity to
understand the views of employees on key matters as well as updating forum members on issues that the Board is
considering. My Society members are also invited to attend and contribute directly in certain Board sessions. These
meetings, alongside insight shared from our wider listening approach, inform conversations and provide qualitative insights
to inform decisions made by the Board.
In addition, to the engagement through the My Society forum, there is a facilitated programme of branch and department
visits where non-executive directors meet colleagues across the organisation. This has included things such as call listening,
where Board members observe colleagues supporting members directly, branch visits and meeting with various teams within
our head office. This engagement has included visiting branches and meeting colleagues of the Bank. Board members also
participate in Member Talkback sessions, where members are invited to ask questions and engage on a variety of topics.
The latest of these sessions was held in November 2025. Members were also invited to various forums throughout the year
to discuss areas of interest and ask questions of Board members, such as Member Panels and Customer Research Groups.
Board members have also attended Better Connections and Tea and Tech events in branches, to meet members and support
local initiatives. The Board also receives detailed updates on the results of the Group's employee opinion survey which
provides granular insight into the views of the Group's employees.
The view of colleagues also helped to inform thinking on the Group’s net zero and climate action plan, which will be
considered by the Board in the first half of 2026. On pages 17 and 18 of the Strategic Report you will find more information
on the Group’s stakeholders and how they influence the decisions that the Board makes. This section also forms part of our
disclosure under Section 172(1) of the Companies Act 2006. Although, as a building society, we are not required to follow
the Companies Act 2006, we seek to voluntarily apply its requirements where appropriate.
Whistleblowing
The Group has in place arrangements to ensure that those who work for us speak up about concerns so that colleagues can
raise concerns in confidence and anonymously if they prefer, and that these can be investigated and properly dealt with.
The Group is committed to ensuring that no one will be at risk of detrimental treatment from the Group or its employees as
a result of raising a concern. Iraj Amiri, Non-Executive Director, has been appointed by the Board as the Whistleblowers
Champion, demonstrating the Group's commitment to upholding the Whistleblowing standards at the highest level. The
Whistleblowers Champion has overall responsibility for ensuring and overseeing the integrity, independence and
effectiveness of the Group’s whistleblowing policies and procedures, including arrangements for protecting whistleblowers
against detrimental treatment. The Whistleblowers Champion ensures that a report is presented to the Group’s Board
annually regarding the effectiveness of whistleblowing systems and controls. The Group provides training on whistleblowing
annually and has a specific reporting channel for its colleagues to report concerns via an independent third party.
The Group remains committed to continually evaluating its approach to whistleblowing and its effectiveness. The Board
plays an active role in overseeing the Group’s procedures and policies for whistleblowing and reviews a report on the
effectiveness of the Group’s whistleblowing procedures on an annual basis. The Group also has a designated Enterprise
Leader with responsibility for this area who meets regularly with the Whistleblowers Champion and the members of the
Board Audit Committee, without other management present, to discuss the Group’s whistleblowing arrangements.
Coventry Building Society | Annual Report & Accounts 202592
Governance
Board Nominations & Governance
Committee report
Dear Member
As Chair of the Board Nominations & Governance
Committee (the Committee), I am pleased to present a
report to you which outlines the matters that we, as a
Committee, have focused on in 2025.
Operation of the Committee
The Committee is chaired by the Chair of the Board and
the members are independent non-executive directors.
Details of the skills and experience of the Committee
members can be found in their biographies on pages 75 to
78. The Committee meets at least three times a year and
otherwise as required. The number of meetings held in
the year can be found in the table on page 84. In addition
to the members, regular attendees of the Committee
include: the Chief Executive, Chief People Officer,
General Counsel and the Group Secretary and Head of
Corporate Governance.
Following each meeting, the Chair of the Committee
provides an update to the Board, summarising the matters
reviewed by the Committee, and key decisions made.
Governance
The Committee advises the Board on matters set out in its
terms of reference, which are included on the Society's
website at www.thecoventry.co.uk. One of the principal
responsibilities of the Committee is to oversee the Group's
governance arrangements on behalf of the Board, ensuring
that these are consistent with relevant corporate
governance standards and consistent with best practice.
This is a key factor to the overall success of the Group and
ensures that the decisions made are in the best interests
of our members, customers and wider stakeholders as well
as being consistent with our values and culture. During
2025, the Committee has continued to monitor
compliance with the UK Corporate Governance Code 2024
(the 'Code') and considered in detail the Group's approach
to compliance with Provision 29.
Board composition and succession planning
As a part of its remit, the Committee is responsible for
reviewing and making recommendations on matters
relating to the structure, size, composition and ways of
working of the Board.
This includes succession planning for the Board and
overseeing the appointment of non-executive and
executive directors to the Board and Board Committees of
the Group. The Committee reviews the succession plans
for the Board and Executive team annually, focusing on
enhancing the composition of the Board, taking into
account the skills, knowledge, experience and diversity of
the existing members of the Board and the capabilities
needed for it to be effective in delivering its
responsibilities to provide oversight and governance of the
Group and to safeguard the interests of its members and
customers.
The Committee oversaw multiple appointments and
changes to the composition of the Board at the beginning
of 2025 with Caroline Marsh appointed to both the Group
and Bank Boards in January 2025, and the appointment of
existing Bank Board director, Mark Parker to the Board,
also in January 2025. The Committee asked Iraj Amiri to
retain the Chair of the Board Audit Committee while a
search for a successor was completed. Upon a
comprehensive and successful search by Odgers
Berndston, who are independent of the Group and any of
its directors, the Committee recommended to the Board
the appointment of Jane Leach as a non-executive
director and Chair of the Board Audit Committee.
Time commitment
For all Board vacancies, the Committee must assess
whether the proposed candidate has sufficient time to
discharge their duties as a director of the Group, having
regard to their other commitments. This assessment is
carried out at least annually for all existing Board
members and also upon any current Board member
seeking additional external appointments.
The Committee considers that the directors currently
comply with Article 91 of the Capital Requirements
Directive and the Code, since all directors are able to
commit sufficient time to perform their duties at the
Group and none of the directors has more than the
maximum number of directorships, when taking into
account the provisions relating to group directorships and
non-commercial organisations.
Committee membership
The Code requires the majority of members of the
Committee to be independent non-executive directors.
The Committee complies with this requirement and is
comprised solely of independent non-executive directors.
The members of the Committee in 2025 are:
Membership
Member since
David Thorburn1
2022
Jo Kenrick
2018
Caroline Marsh2
2025
Iain Plunkett 3
2025
1. Chair and member since 28 April 2022.
2. Member since 3 January 2025.
3. Member since 1 January 2025.
Coventry Building Society | Annual Report & Accounts 202593
Governance
Board Nominations & Governance
Committee report continued
Diversity
Diversity and inclusion are intrinsic to the Group’s values
and purpose. A key strategic priority for the Group is to
create an inspiring place to work which better reflects the
diversity of its city and communities. The Group’s
approach to gender and diversity will continue to be a key
factor in achieving this. As part of its remit, the
Committee oversees the implementation of the Group’s
diversity and inclusion commitments, and carried out a
detailed review of this area during the year.
One key area of focus for the Committee is the gender
balance of the Board and Executive team and their direct
reports. Clear succession planning is in place and takes
account of the current and future diversity of senior
leaders within the Group. This planning also looks closely
at the external market opportunities to support
achievement of our diversity and inclusion aspirations.
The Committee has engaged with the Executive team to
ensure accountability for progress on the Group’s diversity
and inclusion agenda.
The Society previously set a target to achieve 50% female
membership on its Board. Progress in this area remains a
priority for the Committee and following review in 2024,
it was agreed that the Society would retain this ambition
with a restated target date of 2028. The Committee has
continued to review during 2025 the Board and Board
committee composition as part of its succession planning
activity, ensuring that appointments and succession plans
are based on merit and objective criteria and, within this
context, promote diversity of gender, social and ethnic
background, cognitive and personal strengths, alongside
professional experience. Board appointments will continue
to ensure diverse shortlists as standard.
The Committee also considered gender balance across the
Group generally, particularly in respect of improving the
number of females in senior manager roles and above at
the Group, As at December 2025, the Group Executive was
gender balanced and the Board had 33% of roles filled by
women. 39% of roles regarding direct reports of the Group
Executive were held by women. The Committee endorsed
the Group’s diversity and inclusion ambitions during the
year, including the ambition for 45% of Senior Manager
and above roles to be held by women.
Effectiveness
The Committee is responsible for overseeing the
performance review of the Board. The Committee
considered multiple providers to complete a 2025 Chair
commissioned a Board performance review and a decision
was taken to invite Ffion Hague of Independent Board
Evaluation to conduct the review. The review will be
conducted in two phases with phase one having
commenced towards the end of 2025 and the findings
were reported to the Board in January 2026. Actions
arising from the review will be tracked by the Committee.
Other key activities in 2025
In addition to the points already covered, the Committee
also considered the following key matters during 2025:
• Ensured there was a comprehensive induction plan for
Jane Leach, a new non-executive director appointed
to the Board in October 2025.
• Reviewed and approved the Board succession plan with
particular reference to executive succession and
securing a pipeline of non-executive directors.
• Reviewed Board training throughout the year with a
particular focus on what training was required given
the changing trajectory of the Group within the
financial services sector.
• Received an update on progress against existing
diversity and inclusion commitments and approved
Group-wide ambitions to be launched from 2026.
• Reviewed directors’ proposed external appointments
to ensure they did not represent a conflict of interest
or exceed the number of permitted directorships or
prevent directors devoting sufficient time to the
Group.
• Received updates on corporate governance
developments, including the review and publication of
the new UK Corporate Governance Code 2024, and the
Identity Verification Process required for directors.
• Reviewed arrangements for the Society's Annual
General Meeting of members.
David Thorburn
Chair of the Nominations & Governance Committee
26 February 2026
Coventry Building Society | Annual Report & Accounts 202594
Governance
Board Risk Committee Report
Dear Member
I am pleased to present the Board Risk Committee (the
Committee) report for the year ended 31 December 2025.
During the year, the Committee was focused on the top
current and emerging risks as the activity to integrate the
Bank into the Group commenced. The Committee,
together with management, has continued to proactively
identify, manage, monitor and mitigate the key risks
facing the Group, ensuring it remains robust and resilient.
The Committee has continued to provide challenge and
influence regarding the Group's strategic goals and
initiatives, and to ensure good outcomes for our members.
Significant work has been undertaken in the year to
identify the most appropriate principal risks for the Group
and the development of a Group Enterprise Risk
Management Framework (ERMF). Committee members
were consulted on all the key designs and recommended
the final version to Board for approval.
To ensue sufficient oversight and governance of the
integration and future transformation activity, Strategic
Change risk was elevated to a principal risk category in
2025. We also elevated Financial Crime to a principal risk
category from previously being a constituent of
Operational Risk. Climate risk and Operational Resilience
have been designated as thematic risks as they span across
two or more principal risks.
During 2025, the Committee has performed oversight
across all of the Group's principal risk categories, with
performance against risk appetite reviewed on an ongoing
basis. Despite the challenging external environment, the
Group's risk profile has remained broadly stable versus the
prior year.
To ensure the Group risk profile remains appropriate, the
Committee reviewed the risk appetite statements and
policies for all principal risk categories.
The Committee reviewed the strength of the Group's
business plan and its projected liquidity and capital
position through the Strategic & Financial Plan. It was
determined that the Group continues to have sufficient
capital and liquidity resources.
The Committee were updated on climate risk
developments, including physical and transition risk
assessments and mitigations, developments in the
regulatory environment, and other key climate related
activity across the Group.
The Committee has continued to challenge management
on the planning and delivery of key transformational
change projects, and has been kept abreast of the Group's
engagement with regulators and ongoing future regulatory
change.
During the 2026 financial year, the Committee will oversee
further implementation of both Group risk appetite and
the Group ERMF. It will review the Group's risk appetite
statements, board limits and policies for principal risk
categories. In addition, the Committee will continue to
review the Group's future and forward-looking capital and
liquidity adequacy via the Group ICAAP and ILAAP, along
with focusing on overseeing current and new regulatory
expectations and monitoring the financial and operational
resilience of the Group.
Enhancements to risk capability and maturity will remain
an area of focus through 2026.
Martin Stewart
Chair of the Board Risk Committee
26 February 2026
Coventry Building Society | Annual Report & Accounts 202595
Governance
Board Risk Committee Report continued
Committee role and responsibility
The Committee is a sub-committee of the Board and the
most senior risk committee within the Group. It has
delegated authority from the Board and assists the Board
in fulfilling its oversight responsibilities for risk
management across the Group.
Its responsibilities include the following:
• Providing oversight and advice to the Board in relation
to current and potential future risk exposures of the
Group and risk strategy, including determination of risk
appetite and the effectiveness of the Group’s
framework for managing risk.
• Promoting a risk culture that puts the Group's members
and customers first and overseeing implementation and
maintenance of the Group’s Enterprise Risk
Management Framework (ERMF).
• Reviewing key risk policies and frameworks, including
key risk appetite statements.
• Ensuring the Executive team is held to account to
identify, assess and manage risks in accordance with
the requirements of the ERMF.
• Monitoring risks on behalf of the Board.
Committee meetings
During 2025, the Committee met on six separate
occasions. The Committee continues to operate in a
flexible manner with a mixture of meetings held remotely
and in person throughout the year to ensure that the
Committee could appropriately oversee the Group's risk
profile. Details on meeting attendance can be viewed in
the Directors’ Report on Corporate Governance.
Committee membership
The members of the Committee in 2025 are:
Membership
Member since
Martin Stewart
2018
Iraj Amiri
2018
Iain Plunkett
2024
Caroline Marsh1
2025
Jane Leach2
2025
1. Member from January 2025.
2. Member from November 2025.
Key matters considered by the Committee
At each meeting, the Committee considered a
consolidated risk report prepared by the Group's Risk
function. These reports highlighted key risks for
consideration by the Committee. In addition, during 2025,
among other things, the Committee:
• Reviewed and recommended to the Board, the new
Group ERMF.
• Reviewed the strategic and emerging risks relating to
the Group's 2026–2030 Strategic Plan.
• Reviewed the Group's risk appetite framework,
including risk limits and risk indicators for each of the
principal risk categories and considering the impact of
the acquisition of the Bank on risk appetites.
• Reviewed risk policies for principal risk categories,
including the creation of Group policies.
• Agreed a risk oversight plan and monitored second line
risk oversight and progress in delivering a programme
of thematic reviews.
• Reviewed the Group Recovery Plan and Resolvability
Assessment Framework.
• Reviewed stress test assumptions for the Group's and
Society's ICAAP and ILAAP.
• Reviewed the Model Risk Framework and model
development integration.
• Received updates relating to technology and data and
security risks.
• Reviewed the Operational Resilience Self-Assessment
and received updates on outsourcing and third-party
risk management.
• Reviewed an assessment of the independence and
performance of the Risk function.
• Received updates on regulatory change.
• Reviewed the Committee's terms of reference.
A private session was also held between Committee
members, the Chief Risk Officer (CRO) and the CRO’s
direct reports to provide an opportunity for discussion
about risk matters without management presence.
Please refer to the Risk Management Report for the
principal risks facing the Group, and the Strategic Report
for a summary of the inherent risks in the Group’s business
model. The Risk Management Report contains information
relating to how risk is managed across the Group.
Committee effectiveness
At the end of 2024, the Board and Board Committee
performance assessments were conducted by a desktop
survey issued by Halex Consulting, the results of which
were reviewed in January 2025. An external board
performance review was commissioned and commenced
towards the end of 2025 to be conducted in two phases.
The results of the first phase, an initial review of how the
new Group board structure is working, were presented to
the Board in January 2026 and the second phase in
Summer 2026 will include a review of committee
performance.
Looking forward
During 2026, the Committee will provide oversight of risk
management across the Group, including overseeing the
further implementation of both Group risk appetite and
the Group ERMF. Implementing the ERMF well is a core
plank of enhancing our risk management capability.
Oversight of the full risk profile of the Group will continue
to be a key priority given the potential risks emerging
from political uncertainty, a volatile macroeconomic
environment and noting the strategic change risk that the
Group is facing. Ensuring good outcomes for our members
and customers will always be at the heart of our Risk
Management.
Coventry Building Society | Annual Report & Accounts 202596
Governance
Board Audit Committee Report
Dear Member
As Chair of the Board Audit Committee (the Committee), I
am pleased to present our report for 2025, which sets out
the work carried out by the Committee throughout the
year. I joined the Committee as Chair in November 2025,
taking over from Iraj Amiri, who continues in his role as
Chair of the Bank Board Audit Committee. I would like to
take this opportunity to thank Iraj for chairing the
Committee for the past seven years.
We directed the Committee’s oversight responsibilities
relating to accounting, financial reporting and internal
control matters through what has been another busy year.
Key impacts on the Group’s accounting and financial
reporting matters continued to demand specific
consideration by the Committee.
Accounting for the acquisition of The Co-operative Bank,
including recognition of the gain on acquisition and
consideration of the impact of aligning accounting policies
for the combined group have been considered by the
Committee during the year. The Committee also focused
on the recognition and carrying value of the deferred tax
asset in relation to the Bank's historic losses and expected
credit losses recognised against the combined Group's
lending portfolio.
The Committee continued to monitor the integrity of the
Group’s external reporting and reviewed the significant
financial reporting judgements and estimates which
underpin the financial statements. More information on
these judgements is included in this report. The
Committee also presided over matters related to climate
change standards and disclosures aligned to the Task
Force on Climate-related Financial Disclosures (TCFD) and
the Global Reporting Initiative (GRI) standards, as
presented within the Group's Sustainability Report.
As a result of the work performed, the Committee has
been able to provide assurance to the Board that the
Annual Report & Accounts, taken as a whole, are fair,
balanced and understandable, and provide the
information necessary for members and other
stakeholders to assess the Group’s financial position and
performance, business model and strategy.
The effectiveness of the Group’s internal controls and risk
management systems also continued to be a core
consideration of the Committee during the year. The
Committee reviewed the activities, findings and
performance of the Internal Audit function during the
year, including the effectiveness of the function, the
adequacy of its departmental budget and the
remuneration of the Chief Internal Auditor.
The Committee also provided oversight of the Group’s
procedures and policies for maintaining probity during the
year, including whistleblowing, assessed their overall
efficacy and reviewed an annual report on the
effectiveness of whistleblowing procedures prior to
submission to the Board.
We monitored the external auditors' independence and
objectivity, and assessed the effectiveness of the external
audit process, in addition to recommending the
appointment and approving the remuneration and terms
of engagement of the external auditors.
More information on each of the above items is included
in the report.
Jane Leach
Chair of the Board Audit Committee
26 February 2026
Coventry Building Society | Annual Report & Accounts 202597
Governance
Board Audit Committee Report continued
Role and membership of the Committee
The role of the Committee is to review and assess the
integrity of the Group’s financial reporting and
statements, in addition to monitoring the effectiveness of
internal controls and risk management systems, and
overseeing the work of the Internal Audit function and
external auditors.
The Committee’s members are independent non-
executive directors who are able to draw on their
experience to review and challenge the work of
management in these areas.
The Committee advises the Board on matters which are
set out in its terms of reference, which are included on
our website at www.thecoventry.co.uk. The Committee
reviews its terms of reference and its roles and
responsibilities annually against the Financial Reporting
Council’s (FRC) Guidance on Audit Committees. This
review was completed during 2025 with changes made to
the Committee’s responsibilities to reflect the acquisition
of The Co-operative Bank.
The Board is satisfied that all Committee members have
recent and relevant financial services sector experience
and that Jane Leach, Iraj Amiri and Shamira Mohammed
are professionally qualified accountants.
The members of the Committee in 2025 are:
Membership
Member since
Jane Leach1
2025
Iraj Amiri2
2018
Shamira Mohammed
2019
Mark Parker3
2025
Martin Stewart
2018
1. Chair from 17 November 2025.
2. Chair until 16 November 2025.
3. Member from 1 January 2025.
More information on the Group’s committee structure is
included in the Corporate Governance Report.
Committee attendance
The Committee met eight times during 2025. All
Committee meetings are routinely attended by the Chief
Executive, Chief Financial Officer, Chief Risk Officer,
General Counsel, Chief Internal Auditor and the external
auditor. Other senior managers are invited to attend
meetings as required.
The Committee meets both the Chief Internal Auditor and
the external auditor without management present at least
once during the year to enable issues to be raised
privately if necessary. The Committee Chair also meets
privately with the Chief Internal Auditor and the external
auditor on a regular basis.
The effectiveness of the Committee
For 2024, the Board and Board committees effectiveness
assessments were conducted by a desktop survey issued
by Halex Consulting. This survey was issued to Committee
members and regular attendees. The results of the
assessment were reviewed by the Committee and the
Board in January 2025, which concluded that the
Committee had operated effectively in discharging its
responsibilities in 2024.
An external board performance review was commissioned
and commenced towards the end of 2025 to be conducted
in two phases. The results of the first phase, an initial
review of how the new board structure is working, were
presented to the Board in January 2026 and the second
phase in summer 2026 will include a review of the
Committee's performance.
Key areas of focus during 2025
Significant matters that were considered by the
Committee during the year, working closely with the
Board Risk Committee, the Group’s Risk function and
Internal Audit, are set out in the following sections.
Preparation of financial statements and key
areas of judgement
When assessing both the interim and full year 2025
financial statements, the Committee carefully considered
areas subject to management judgement, which included
the following:
Accounting for the acquisition of The Co-operative Bank
The Committee considered the impacts on financial
reporting and application of IFRS 3 'business combinations'
on the external reporting of the Society and the enlarged
Group. This included determination of the acquirer and
acquisition date (including change of control), as well as
assessment of the day one purchase price allocation,
resulting gain on acquisition recognised and the key
judgements which inform the calculation. The key
judgements considered are cost of debt on the fair value
of loans and advances to customers; determination of
intangible assets arising on acquisition; and the cost and
mix of funding used to value the identified Core Deposit
Intangible. The disclosure requirements for the business
combination were also considered.
The impacts of aligning accounting policies across the
Group post acquisition have also been considered by
management and the Committee. The key areas for
consideration were the reset of expected credit loss
provisions, the restart of hedge relationships on acquired
derivative financial instruments and carrying value of
assets in light of strategic integration decisioning.
Calculation of expected credit loss provisions under
IFRS 9
The Committee continued to review the Group’s IFRS 9
accounting policies during 2025 to ensure that they
remain appropriate. The Committee reviewed the basis of
calculating ECLs, including identifying any significant
changes in credit risk and the application of post model
adjustments to the overall ECL provision, and the
potential impact of climate change on the Group's
mortgage portfolio. This includes the reset of the ECLs on
the acquired Bank lending portfolios.
The calculation of ECLs for loans and advances to
customers has continued to require management
judgement as the economic environment stabilised after
the pressures on affordability which have been key
considerations in recent years. Consideration of
appropriate provisioning levels on specific cases within
the acquired small corporate lending portfolio is also
required. The Committee’s role is to make sure that
appropriate judgements are applied. The ECL provision
Coventry Building Society | Annual Report & Accounts 202598
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Board Audit Committee Report continued
has increased to £44 million (2024: £24 million) including
post model adjustments of £7 million (2024: £6 million).
The Committee challenged management on the
calculation methodology and is satisfied with the rationale
and method for determining the required post model
adjustments and for recognising or releasing post model
adjustments as required.
The Committee also reviewed the alternative economic
scenarios that have been used in the provision calculation
and the weightings that have been assigned to them along
with sensitivity of the provision to different weightings
and other key assumptions.
The financial statements disclosures were also reviewed
to ensure that sufficient information on the judgements
applied is included in the Group’s financial statements.
The Committee was satisfied with the adequacy of the
provisions and the appropriateness of the disclosures
made.
Recognition of deferred tax assets in relation to the
Bank's historic losses
On the acquisition of the Bank, the Group acquired
recognised and unrecognised deferred tax assets relating
to historic tax losses, which may be utilised against future
profits. Significant accounting judgment is required to
determine the validity of recognition and appropriate
value of such assets at a reporting period date. The
Committee considered a range of scenarios and possible
outcomes, aligned to the Group's latest approved strategic
plan, in their assessment of the Group's approach to
recognition of deferred tax assets at 31 December 2025.
Revenue recognition and EIR methodology
The Group recognises income on its mortgage loans using
the Effective Interest Rate (EIR) method. This applies a
rate of return that reflects a constant income yield over
the expected life of the lending assets based on
expectations of future loan redemption and interest rates.
The EIR calculation is most sensitive to assumptions on
loan redemption and the difference between fixed rates
and Standard Variable Rates in the future.
The Committee considered the key assumptions of EIR
methodology and expectations of future changes. The
Committee concluded that the accounting treatment was
appropriate.
Defined benefit pension schemes position
The Committee also considered the calculation of the
Group’s defined benefit pension obligation including the
valuation of the Schemes’ assets and the assumptions that
are used to calculate the Schemes’ liabilities. The
Committee is satisfied that the total Group reported
pension position is appropriately stated.
Going concern and long-term viability
The Committee evaluated whether adopting the going
concern basis of accounting was appropriate and
separately considered the Group’s long-term viability,
taking account of the principal risks facing the Group,
including those that could threaten the Group’s business
model, future performance, solvency and liquidity. The
range of macroeconomic scenarios on the Group’s
business continued to be reviewed, including revisions to
stress testing and forecasts as a result of updated
forward-looking assumptions.
In particular, the Committee considered the periods over
which the Group’s prospects and long-term viability
should be assessed, along with the basis of these
assessments.
It was concluded that a three year statement on long-
term viability remained appropriate taking into account
the planning and stress testing carried out by the Group,
combined with increased and inherent uncertainty in the
outer years of the Strategic Plan resulting from economic
and market conditions and predictions. The Committee
concluded that the going concern and long-term viability
assessments were appropriate and statements on these
matters are included in the Directors’ Report.
Fair, balanced and understandable
The Committee considered whether the Annual Report &
Accounts, taken as a whole, were fair, balanced and
understandable. The Committee satisfied itself that there
was a robust process of review and challenge at different
levels within the Group, to ensure balance and
consistency, and that this is reflected in the Annual
Report & Accounts. Its review included:
• Providing guidance on drafting.
• Making sure all messages are communicated as simply
as possible and that the Strategic Report is
comprehensive, including the approach to underlying
performance presentation.
• Ensuring factual content and statements have been
verified.
• Central coordination and thorough review including
review by a non-specialist.
• Comprehensive review by senior executives including
the Board committees’ Chairs prior to wider
Committee consideration.
The Committee also considered other information
regarding the Group’s performance presented to the
Board during the year. After consideration of all relevant
information, the Committee concluded that it could
report to the Board that the Annual Report & Accounts
were fair, balanced and understandable.
Disclosure preparation
The Committee was briefed on the Annual Report &
Accounts disclosure preparation process and control
environment supporting the activity, concluding that it
remained robust.
Updates on reporting developments and requirements
Regular updates and training on financial reporting
developments and disclosures were provided to the
Committee during the year. This included a briefing on
accounting for derivative financial instruments and hedge
accounting and reviewing the Group's approach to
reporting an underlying measure of performance.
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The Group's internal control and risk
management arrangements
The Committee reviewed the effectiveness of internal
control and risk management arrangements through
regular reporting from Internal Audit, the Risk function
and the external auditor. In addition, the Committee
reviewed the assurance statements received from the
Chief Internal Auditor on internal control and from the
Chief Risk Officer on risk management.
During 2025, Internal Audit continued to assess internal
control and risk management systems related to Group
functions and activities where external economic
conditions have the potential to impact member and
customer servicing. The Committee received the results of
formal assessments related to the key change initiatives,
including activities associated with the integration of the
Bank as well as functional control improvement plans
related to areas across the Group that included
information security management, technology risk
management and data governance and management.
The Committee received regular reports during the year
on whistleblowing and concluded that the arrangements
were operating effectively and there were no material
matters of concern.
Further information on the Group’s approach to internal
control and risk management is included in the Risk
Management Report.
The activities of Internal Audit
The role and responsibilities of Internal Audit are set out
in the Internal Audit Charter that was reviewed and
revalidated by the Committee during the year. A copy of
this Charter is available on the Society’s website
www.thecoventry.co.uk/InternalAudit.
In addition to approving the annual Internal Audit Plan
and budget, the Committee reviewed and approved
amendments to the Plan and resources throughout the
year.
The Committee received regular reports from the Chief
Internal Auditor setting out the results of assurance
activity related to Group operations and strategic change
initiatives, progress in delivery of the annual Internal
Audit Plan and the adequacy of resources.
Internal Audit’s assessments also considered the Group's
progress with bringing the Society and Bank's central
support functions together, with multiple engagements
completed that evidenced good progress with integration
and harmonisation activities right across the Group.
Assessments regarding the delivery of multiple, complex
change initiatives were also undertaken in relation of
programmes directed at replacing or updating critical
information technology infrastructure across the Group.
Change assurance work also included the continued
assessment of the finance transformation programme,
with 2025 assurance work focused on the adoption of a
new regulatory reporting system and the mobilisation of a
new Group treasury management system.
Significant findings and thematic issues identified were
considered by the Committee, together with
management’s response and completion of remedial
action commitments made in respect of previously issued
audit reports.
During the year, Internal Audit supported the Committee
by ensuring that there was appropriate consistency and
rigour in the process of preparing and reporting of climate
and other sustainability-related disclosures as well as
completing an independent review of the Annual Report &
Accounts disclosure preparation assessment.
The Committee oversaw a review of the effectiveness of
the Internal Audit function led by the Chief Internal
Auditor. The review considered the quality of work, the
appropriateness of skills and resources within the team
and compliance with the Standards set out by the
Chartered Institute of Internal Auditors’. The Committee
was satisfied that the Internal Audit function remained
effective.
The Chartered Institute of Internal Auditors' Standards
require the Committee to obtain an independent and
objective external assessment of the effectiveness of the
Internal Audit function at least every five years. The Chair
of the Committee is required to oversee the process and
approve the appointment of the independent assessor.
The effectiveness of the Internal Audit function was last
subject to independent external assessment in 2024. The
Committee will select the most appropriate time to
complete the next external assessment, following
completion of Internal Audit’s integration and
harmonisation work.
External auditor
As well as discussing external audit findings, the
Committee is responsible for overseeing the relationship
with the external auditor and the quality of the audit
process. During the year this included the following:
Audit plan
Prior to the annual audit commencing, the Committee
considered PwC’s audit plan including materiality levels,
areas of audit focus, terms of engagement and fees
payable for the audit. As part of the review of the 2025
Interim Financial Report and audit of the annual financial
statements, the Committee received a report setting out:
the work performed in areas of significant risk and
management judgement and conclusions for each area; a
summary of adjustments and differences; and internal
control recommendations. In recommending approval of
the interim and annual financial statements, the
Committee considered the matters set out in these
reports.
Auditor consideration of acquisition
The external auditor has considered the impacts of the
acquisition of The Co-operative Bank within its audit plan
presented to the Committee during the year. Extensive
updates have also been provided with regards the
accounting for the acquisition, accounting policy
alignment and consideration of key judgments as the work
has progressed in parallel to the core annual reporting
cycle. This includes the use of valuation experts as part of
the acquisition accounting.
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Board Audit Committee Report continued
Audit quality
The Committee oversees external audit quality.
Committee meetings consider factors that impact external
audit quality, and conclusions on external audit
effectiveness are formalised and assessed by the
Committee each March, as part of the year end reporting
process. The factors considered included:
• The technical skills and industry experience of the
audit engagement partner and wider audit team.
• The appropriateness of the proposed Audit Plan, the
identification of significant risk areas and the effective
performance of the audit in line with the agreed plan.
• The quality of communication between the external
auditor and the Committee, and the effectiveness of
interaction between management and the external
auditor.
• The quality of reports to the Committee on accounting
matters, governance and internal control.
• The reputation and standing of the external auditor.
• The independence and objectivity of the external
auditor.
The Committee also considers any Financial Reporting
Council Audit Quality Inspection and Supervision Reports
on PwC.
In March 2025, the Committee concluded that the
external audit process was effective, and it was satisfied
that there were no matters of concern with respect to the
external auditor’s independence or objectivity.
The results of the next assessment will be considered by
the Committee in March 2026, at the conclusion of the
year end reporting process, with any areas for
improvement shared with the lead audit partner for
consideration.
The appointment of the external audit firm to
undertake non-audit services
The Committee regularly reviews and monitors the
Group’s relationship with the external auditor to ensure
that auditor independence and objectivity are maintained
at all times. The Committee has developed a policy and
framework which defines the approach to non-audit
engagements and reflects the guidance in the FRC’s
Revised Ethical Standard from 2024. At no time does the
external auditor audit its own work, make management
decisions for the Group, create a conflict of interest or
find itself in the role of advocate for the Group. The
Committee keeps non-audit engagements under review
and receives regular reports from the external audit
partner confirming that adequate safeguards for
independence remain in place.
During 2025, the Group engaged the external audit firm to
provide certain non-audit services, including assurance
engagements in relation to the Group’s debt issuances. All
engagements complied with the Group’s policy.
The Committee received regular updates on the nature
and cost of the engagements, seeking to ensure that they
were appropriate. Details of the fees paid to the external
auditor for audit and non-audit services are set out in
note 10 to the accounts.
Coventry Building Society | Annual Report & Accounts 2025101
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Board Change Committee Report
Dear Member
I am pleased to present to you the first report of the
Board Change Committee (the Committee) which provides
an update on the activity of the Committee throughout
the year.
2024 was the first full year in operation of the Board
Technology Oversight Committee, which had been
established following a previous independent review.
During 2025, the focus of the Board Technology Oversight
Committee evolved and in March 2025, it was agreed that
the Board Technology Oversight Committee should be
reconstituted as the Board Change Committee. The remit
of the Committee was expanded to include oversight of
key change activity that would drive the Group forward.
The focus of the Committee throughout 2025 included
oversight of integration activity, understanding the
change requirements of the wider Group following the
acquisition of the Bank and the technological
developments required to enhance the service and
benefits delivered to the Group’s members and
customers.
The Committee considered in detail the prioritisation of
change activity for 2026. The Group is at a pivotal
moment in its history and the Committee has played an
important role in ensuring the change activity needed to
grow the Group is appropriate and delivered in a safe and
timely manner.
Iain Plunkett
Chair of the Board Change Committee
26 February 2026
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Board Change Committee Report continued
Role of the Committee
The role of the Committee is to provide oversight to the
Board on matters relating to the Group's technology
strategy, technology investment, strategic architectural
direction and cyber security. This includes oversight of
both delivery and performance in each of these areas. The
Committee is also responsible for approving and
monitoring spend for transformational change projects, in
line with the Group's overall budget.
The Committee advises the Board on matters set out in its
terms of reference, which are included on the Society's
website at www.thecoventry.co.uk. The Committee
reviews its terms of reference and its roles and
responsibilities annually, with its terms of reference last
being approved by the Board in March 2025.
Committee membership and attendance
The Committee met four times during 2025, twice as the
Board Technology Oversight Committee and twice as the
Board Change Committee. The Committee consists
exclusively of independent non-executive directors.
The members of the Committee in 2025 are:
Membership
Member since
Mark Parker1
2025
Iain Plunkett2
2024
Martin Stewart
2023
1. Member of the Committee from 1 January 2025
2. Chair and member since 1 July 2024
Iraj Amiri and Brendan O'Connor were members until 31
December 2024.
The Committee is supported by several members of the
Executive Committee who regularly attend its meetings
including the Chief Operating Officer, Chief Information
and Digital Officer, the Chief Executive, Chief Financial
Officer, Chief Risk Officer and Chief Internal Auditor.
The effectiveness of the Committee
At the end of 2024, the Board and Board Committee
performance assessments were conducted by a desktop
survey issued by Halex Consulting, the results of which
were reviewed in January 2025. An external board
performance review was commissioned and commenced
towards the end of 2025 to be conducted in two phases.
The results of the first phase, an initial review of how the
new Group board structure is working, were presented to
the Board in January 2026 and the second phase in
Summer 2026 will include a review of committee
performance.
Key areas of focus during 2025
The Group remains focused on delivering the best service
across its product offerings for its members and
customers. Investing in improving technology capabilities
for our members and customers is one of the ways we
seek to achieve this. During 2025, the Committee oversaw
the start of a programme to replace the Group’s customer
ecosystem, which includes its mortgage and savings
platforms and the delivery of the Bank’s strategic project
to move data centres to a cloud based solution. Both
projects are longer terms programmes which will deliver
improved technological capabilities for the Group’s
members and customers.
Maintaining a stable, secure and resilient technology
estate is a key priority for the Group. During 2025, the
Committee has overseen work done to upgrade the
Society and Bank's IT estates and its operations.
Other key matters overseen by the Committee during 2025
include:
• Considering the remit and scope of the Committee's
activity, leading to the reconstitution of the
Committee as the Board Change Committee with
expanded responsibility for providing oversight of non-
technology, as well as technology-related change
activity.
• Receiving regular updates on the Group's change
portfolio of work, including delivery of key projects.
• Approving the plan for integration activity and
overseeing its delivery.
• Reviewing the roadmap for digital acceleration.
• Reviewing the re-planning activity for the Bank's
strategic project to move data centres to a cloud
based solution.
• Agreeing the 2026 change priorities for the Group.
Looking forward
2026 will be an important year for the Group with a large
volume of change activity planned, including progressing
with the strategic projects covering the move of the
Bank's data centres to cloud based solutions and plans for
a replacement customer ecosystem along with the
continued integration of the Bank.
Coventry Building Society | Annual Report & Accounts 2025103
Governance
Directors' Remuneration Report
Report of the Board Remuneration Committee
to members
Dear Member
On behalf of the Board Remuneration Committee (the
Committee) of the Board, I am pleased to present this
report to you, which outlines how our Remuneration
Policy has been applied during 2025 and how we intend to
apply it in 2026.
This is my first report since being appointed Chair of the
Committee on 3 January 2025. I would like to thank Jo
Kenrick, the outgoing Committee Chair, for her support
through 2025 and for continuing to serve as a member of
the Committee.
We will be seeking an advisory vote on this Remuneration
Report at the 2026 AGM.
Looking back at 2025
2025 has been a pivotal and successful year as we
completed the acquisition of The Co-operative Bank and
started to bring the two organisations together.
Despite a challenging economic and competitive
environment, we have delivered on all the commitments
we set out at the start of the year - delivering disciplined
profitable growth, a strong operational performance and
achieving our integration milestones. We sustained our
commitment to member value paying a saving premium of
£398 million and the Society's Net Promoter Score remains
excellent at +75. I am particularly pleased that we also
maintained high levels of colleague engagement during
this period of substantial change.
In last year’s Remuneration Report, we outlined how the
increase in scale and complexity arising from the
acquisition would place significant additional demands on
our colleagues and specifically on our executives. In
recognition of this, we introduced a number of changes to
our Remuneration Policy which came into effect in 2025.
These changes, which were approved by members at the
2025 AGM, were also designed to ensure that our
executive remuneration (both fixed and variable pay) was
aligned with the market so that we could continue to
recruit and retain the talented people we need to deliver
the performance our members expect.
These changes have meant that our executive directors
base salaries and variable pay opportunities were
increased in 2025. Their variable pay includes:
• An Annual Incentive Plan (AIP);
• a Long-Term Incentive Plan (LTIP); and
• for 2025 only, an Integration and Retention Award.
The maximum potential variable pay for executive
directors is normally 200% of base salary but the one-off
addition of the Integration and Retention Award means
that they have had the potential to earn up to 300% of
base salary for 2025 in recognition of the exceptional
demands placed on them in this critical year. This
additional award is the primary driver of the year-on-year
increase in our executive directors' total remuneration.
The Committee believes that the new Remuneration
Policy has achieved its objectives in 2025 and has
operated as intended, rewarding delivery of our strategic
objectives in a manner commensurate with the increased
scale and complexity of the business, and appropriately
positioned relative to our peer group.
Taking each element of our executives' 2025 variable pay
in turn:
Annual Incentive Plan
Business performance is measured through a balanced
scorecard which the Committee uses to determine annual
variable pay for all colleagues – both the AIP for our
executives and the all-colleague bonus schemes. The
scorecard comprises nine equally weighted and stretching
financial and non-financial measures which support our
strategic priorities. Each of these measures was achieved
or exceeded in 2025.
As a result of this robust performance, the Committee
approved an above target outcome for both the AIP and
Success Share bonus.
Full details are included on page 112.
Long Term Incentive Plan
During 2025, the first LTIP awards were granted to our
executives. The Committee approved the Plan’s design
and performance measures which span a three year period
from 1 January 2025 to 31 December 2027. The measures
are aligned to the Group's longer-term priorities and
provide a clear link to the interests of our members and
customers.
Subject to the performance conditions being met, LTIP
awards will start to vest after the three year performance
period has ended. Awards for executive directors will
normally be released no earlier than five years from the
date of grant, in compliance with the UK Corporate
Governance Code.
Further details on the LTIP are included on page 113.
Integration and Retention Award
The Committee recognised the importance of delivering
on our integration milestones in this pivotal year.
Therefore, for 2025 only, an Integration and Retention
Award was introduced to help us retain and reward
colleagues critical to integration delivery.
All the integration targets were met in 2025, so the
Committee approved payment of this award.
Full details of this award are included on page 114 of this
report.
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Directors' Remuneration Report continued
Report of the Board Remuneration Committee
to members continued
Looking ahead to 2026
Following the acquisition of the Bank, we now have almost
6,000 colleagues.
I have very much enjoyed and benefitted from attending
our colleague forums during 2025. I look forward to
continuing to meet regularly with colleagues across the
Group in 2026 so that I can represent their perspectives in
the boardroom and provide feedback to them on the
Board's discussions and decisions.
To align all colleagues behind our shared purpose and to
ensure that all colleagues are rewarded equitably, we will
be harmonising employment terms and conditions across
the Group with effect from 1 April 2026. Our proposals
have received very strong support from colleagues.
The Committee will continue to provide oversight and
advice to the Board in 2026 on remuneration practices for
the broader workforce to ensure that all colleagues are
remunerated and rewarded consistently and fairly.
As we highlighted in last year’s report, we operate in a
highly regulated industry. In October 2025, the Bank of
England confirmed changes to the Remuneration Code
rules which apply to us. The changes are designed to
strengthen the link between the actions of executives and
their financial rewards.
The Committee has carefully considered the rule changes
and has agreed to apply them from the 2025 performance
year. We have decided to go beyond the minimum
regulatory deferral requirements in two areas. The LTIP
awards for the Group’s executive directors will be subject
to a total vesting and holding period of five years in line
with the UK Corporate Governance Code rather than the
minimum four year period specified in the Remuneration
Code. The Integration and Retention Award will be paid to
executive directors in three equal instalments over the
period 2026 to 2028.
The Committee believes that our current Remuneration
Policy is sufficiently flexible to accommodate these latest
rule changes, however we will keep regulatory and market
developments under review in the year ahead to ensure
that our Policy remains fit for purpose.
Stakeholder engagement
As a mutual organisation, the Committee's remuneration
decisions will always have at their heart the Group's
purpose and values and the interests of our members and
customers.
Whilst voting arrangements for the Directors
Remuneration Report and any future changes to our
Remuneration Policy are advisory, meaning that the
directors' remuneration is not conditional upon them, the
Committee will continue to take into account your
feedback in its decision-making.
Thank you for your continued support.
Caroline Marsh
Chair of the Board Remuneration Committee
26 February 2026
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Directors' Remuneration Report continued
The Board Remuneration Committee
This section of the report provides more detail on the
Board Remuneration Committee, its membership, its
governance and the principal activities of the Committee
during 2025.
Committee membership and attendees
The Committee consists exclusively of independent non-
executive directors and the Chair of the Board.
The members of the Committee in 2025 are:
Membership
Member since
Caroline Marsh1
2025
Jo Kenrick2
2017
Shamira Mohammed
2023
David Thorburn
2022
1. Chair of the Committee from 3 January 2025.
2. Chair of the Committee until 31 December 2024.
The Committee seeks input from the Chief People Officer,
the Head of Reward and People Services and the Chief
Executive, who are invited to attend meetings. The Chief
Risk Officer and the Group Secretary are invitees where
appropriate. The Committee also benefits from specialist
advice from its independent remuneration advisor
(Deloitte LLP).
Governance and the role of the Board Remuneration
Committee
The Committee has overall responsibility for remuneration
matters delegated to it by the Board. The Committee’s
role is to consider the Group's Remuneration Policy and
the specific remuneration packages for the Group Chair,
executive directors and executive managers and any other
colleagues who are deemed to fall within the scope of the
PRA/FCA Remuneration Codes. The Committee also
provides oversight of the pay practices for the broader
Group workforce.
All decisions about remuneration have at their heart the
Group’s purpose and values and the interests of members
and customers.
The Group follows the PRA’s Code on Remuneration
Practices and Disclosure Requirements and, in addition,
aligns its Remuneration Policy with the PRA’s best
practice guidelines and the UK Corporate Governance
Code where applicable.
The Committee’s work is particularly focused on ensuring
that variable pay awards for colleagues and executive
directors reward good performance, are not excessive,
and drive sustainable growth and reasonable risk-taking.
The Committee considers that the Remuneration Policy
has operated as intended in 2025.
Activities during 2025
During 2025, the Committee undertook activity in these
areas:
Variable pay
• Considered the outturn of the 2024 balanced scorecard
to determine the 2024 Success Share scheme payment
and the 2024 Executive Variable Pay Plan (ExVPP)
payment.
• Approved the performance measures for the 2025
balanced scorecard for the Annual Incentive Plan and
the design and performance measures for the 2025
Long-Term Incentive Plan.
• Approved the one-off Integration and Retention
awards and monitored performance against the agreed
integration targets for each participant.
• Approved deferred and retained payments from in-
flight executive variable pay plans, ensuring these
were in line with the Group’s Remuneration Policy.
• Considered the Risk function's annual review of any
grounds to recover or withhold variable pay awards.
Fixed pay
• Approved the Group's salary review approach and
received analysis of its application.
Governance
• Approved updates to the Group’s Remuneration Policy.
• Received a report from the Risk function that gave
assurance that the Group's remuneration framework
had not encouraged excessive risk taking.
• Oversaw an assessment of colleagues whose
responsibilities could impact the Group’s risk profile.
• Approved the Group’s Prudential Regulation Authority
(PRA) Remuneration Policy Statement and Material
Risk Taker (MRT) disclosures.
• Approved the Directors’ Remuneration Report.
• Considered the Group’s gender and ethnicity pay ratios
and CEO pay ratio and noted future diversity and
inclusion actions.
• Received an update on the regulatory consultation on
remuneration reform and considered options for the
implementation of the final regulations.
• Received regular updates on proposals for the
harmonisation of employment terms and conditions for
all colleagues across the enlarged Group.
Other
• The Committee Chair also engaged with the broader
workforce through the Group's colleague forums, to
explain the work of the Committee and the Board and
to take feedback from representatives.
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Directors' Remuneration Report continued
Annual Remuneration Report
This section of the report details how the Remuneration Policy, approved by an advisory vote at the Annual General Meeting
in 2025, was applied during 2025. Remuneration awarded to executive and non-executive directors for 2025 is set out and is
in accordance with the Policy.
The total remuneration that was earned by each executive director for 2025 and 2024 is shown below:
Total remuneration earned by executive director
(Audited)
Fixed remuneration
Variable remuneration
Total
remuneration
£000
Base
salary
£000
Taxable
benefit
£000
Pension
allowance1
£000
Total
fixed
£000
Annual
Incentive
Plan
£000
Integration
& Retention
Award
£000
Total
variable
£000
2025
Stephen Hughes
800
10
80
890
592
700
1,292
2,182
Lee Raybould
575
13
58
646
425
475
900
1,546
Total
1,375
23
138
1,536
1,017
1,175
2,192
3,728
(Audited)
Fixed remuneration
Variable remuneration
Total
remuneration
£000
Base
salary
£000
Taxable
benefit
£000
Pension
allowance1
£000
Total
fixed
£000
Success
Share
£000
ExVPP
£000
Total
variable
£000
2024
Stephen Hughes
671
10
67
748
107
361
468
1,216
Lee Raybould
464
12
46
522
74
245
319
841
Total
1,135
22
113
1,270
181
606
787
2,057
1. Pension allowance includes both contributions to the Group’s defined contribution pension scheme and cash payments in lieu of contributions.
Further information on individual
remuneration elements: executive directors
Base salary 2025
As discussed in last year's report, the Committee
considered the base salary increases for the executive
directors in 2025 in the context of:
• the acquisition of The Co-operative Bank, and the
increased size and scope of executive roles; and
• ensuring base salaries and total remuneration are
appropriately positioned to recruit, motivate and
retain executives of the calibre required to manage
the enlarged and more complex Group.
Consequently, the Committee agreed the following base
salaries effective from 1 January 2025.
Executive director
Effective 1
January 2025
£
Effective 1
April 2024
£
%
increase
Stephen Hughes
800,000
700,000
14.3%
Lee Raybould
575,000
475,000
21.1%
The base salaries for 2026 will be reviewed with effect
from 1 April 2026 in a manner consistent with the
approach for all colleagues.
Benefits and pension 2025
Executive directors received benefits including a fully
expensed car or a cash alternative, personal membership
of a private medical insurance scheme, permanent health
insurance and life assurance.
Executive directors were eligible to participate in the
Group’s defined contribution pension scheme, which is
offered to all colleagues.
The Chief Executive and Chief Financial Officer received
cash alternatives in lieu of pension contributions
equivalent to 10% of base salary which is in line with the
approach for all employees who are eligible to join the
Group’s defined contribution pension scheme, receiving
contributions of up to 10%.
Variable pay 2025
Variable pay for executive directors in 2025 consisted of
an Annual Incentive Plan (AIP), a Long-Term Incentive
Plan (LTIP) and a one-off Integration and Retention
award.
Annual Incentive Plan for 2025
The maximum award for the executive directors is 100%
of base salary. The Group measures annual performance
against a number of stretching financial and non-financial
targets detailed in the balanced scorecard, aligned to its
strategic priorities.
Awards to executive directors are made in cash (as
opposed to shares). The plan is reviewed each year to
ensure continued alignment to strategic priorities and
changes in regulation.
If the Group performs in line with its plans, the AIP
provides for an award of up to 50% of salary for executive
directors. The maximum award is up to 100% of base
salary and can only be achieved by exceeding stretching
upper targets for all measures.
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Annual Remuneration Report continued
Variable pay 2025 continued
Annual Incentive Plan for 2025 continued
The balanced scorecard comprises the measures used by
the executive team and the Board to assess the Group’s
performance. This ensures alignment of remuneration
with the Group’s strategic objectives. The same balanced
scorecard is used to determine annual variable pay for all
colleagues. All measures are equally weighted. Further
information on the Group’s performance in 2025 can be
found in the Strategic Report. Performance against the
balanced scorecard measures is summarised in the table
below.
Despite the competitive market conditions in 2025, the
Group delivered a robust performance. The Group
exceeded four of the nine performance targets which
determine variable pay and met the other five measures.
It did not fall short of any measures.
A scoring matrix provides guidance to the Committee as
to the potential monetary outturn based on actual
performance against the balanced scorecard measures.
The number of measures above, on or below target
guides the range of awards considered.
70% of the executive directors' potential award is
determined by the balanced scorecard, with the
remaining 30% determined by individual performance
against up to three strategic individual goals. These
individual goals ensure personal accountability for the
delivery of key strategic objectives and are agreed with
the Committee. Performance against these goals,
together with conduct and behaviours are considered by
the Committee when assessing individual performance.
Balanced Scorecard - 2025 Plan
Performance target range
Performance result
Performance relative to
target range
People and societal impact
Employee Engagement1
67% - 73% Trust (Recognised)
76%
Exceed Target
Environmental, Social and Governance
measures
Qualitative and quantitative assessment 2
Assessment against these
outcome measures rated
overall as Achieved Target
Best at mortgages and savings
Mortgage balance growth3
-1% - +1%
1.0%
Achieved Target
Net Promoter Score4
+71 - +77
+75
Achieved Target
Savings Rate Premium
0.70% - 0.80%
0.86%
Exceeded Target
Key transformation and capability
Key capability delivery including:
digitisation, mortgages and integration5
Qualitative and quantitative assessment
Assessment against these
outcome measures rated
overall as Exceeded Target
Financial plan delivery
Group cost/ investment budget
£800m - £840m
£814m
Achieved Target
Group underlying profit before tax6
£248m - £304m
£374m
Exceeded Target
Group UK leverage ratio within appetite
4.25% - 4.75%
4.6%
Achieved Target
Individual objectives:
3 main individual objectives
Chair of Board/Chief Executive assessment
1. The 2025 engagement survey was provided by Great Place to Work (GPTW) and measures the Trust index. The GPTW employee engagement score reflects the assessment as a super
large organisation.
2. More detail can be found in the sustainability section within the Strategic Report.
3. For the Society.
4. The Society Net Promoter Score (NPS) is a measure of customer advocacy that ranges between -100 and +100, which represents how likely a customer is to recommend our products
and services.
5. Key transformation and key capability delivery are assessed against delivery and financial measures monitored by the Board Change Committee.
6. Group underlying profit excludes items that are one off in nature relating to the purchase and integration of The Co-operative Bank.
Stephen Hughes individual goals
Delivery of year one integration and detailed
planning of future transition states.
All 2025 key integration milestones delivered.
Integration costs for 2025 below budget and
synergies exceeded targets.
Strong colleague engagement sustained.
Exceeded
target
performance
Development of Group strategy including long-term
ambitions and performance measures for short-,
mid- and long-term time horizons.
Group strategy developed and approved by Board.
Plan signed off, setting out capability road map
over three time horizons: 2026-7 perform, 2028-30
transform and 2030+ scale. Purpose, customer
missions and values launched to all colleagues.
Development of approach to customer ecosystem
replacement.
Path in place to deliver requirements definition,
architecture review, capability assessment, vendor
selection and infrastructure.
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Annual Remuneration Report continued
Variable pay 2025 continued
Lee Raybould individual goals
Lead development of the Group financial strategy.
Deliver the 2025 financial plan, including capital
build.
Financial strategy shaped to support Group
strategy.
Strong financial plan delivery in 2025, exceeding
plan profit, controlling costs and delivering capital
plan.
Significant contribution to strategy development.
Exceeded
target
performance
Integrate the Finance functions safely, embedding
best practice, delivering efficiency and enhancing
diversity.
Teams brought together, processes working
effectively and policies harmonised. Strong
colleague engagement and diversity is building.
Sponsor the delivery of technology integration to
time, scope and cost including regulatory reporting
and Group general ledger alignment.
Five projects incepted, all running in line with
approved value cases.
Given the scorecard and individual performance outlined
above, the Committee determined an AIP award to
executive directors of 74% of base salary from a potential
maximum of 100%.
Long-term incentive plan (LTIP) granted in 2025
The 2025 LTIP awards were made based on a pre-grant
assessment of performance delivered in 2024. Taking into
account individual conduct and performance and Group
performance, awards of 100% of salary were made to the
executive directors.
The LTIP is subject to a three-year forward-looking
performance period that commenced on 1 January 2025.
The chosen performance measures are aligned to the
Group's longer-term priorities and provide a clear link to
member and customer interests and the achievement of
our financial and strategic aims. At the end of the
performance period, the Committee will assess whether
there has been any significant risk, conduct, reputational
or operational reasons why awards should not be
released, taking into account input from the Board Risk
Committee and Board Audit Committee.
Performance condition
Weighting
Franchise build based on the growth in active
account volumes.
30%
Integration and transformation measured
through delivery of financial and non-financial
milestones.
40%
Financial plan delivery measured through our
leverage ratio and our cost/income ratio.
30%
The specific targets are deemed to be commercially
sensitive and will be disclosed, along with the actual
performance achieved, in the 2027 Directors'
Remuneration Report.
Long-term incentive plan (LTIP) to be granted in 2026
Taking into account individual conduct and performance
and the Group's performance in 2025, awards of 100% of
salary will be granted under the LTIP for 2026 to the
executive directors. These awards will be made in April
2026 and will be subject to a three year performance
period commencing on 1 January 2026.
Performance will be assessed against a number of
financial and non-financial measures aligned to the
Group's long-term priorities.
Subject to the satisfaction of the performance
conditions, vesting of LTIP awards will start following the
end of the three year performance period. To comply
with the UK Corporate Governance Code, LTIP awards
will normally be released no earlier than five years from
the date of grant.
Integration and Retention Award (I&R)
As disclosed in last year's report, recognising the
importance of a stable leadership and strong delivery of
the integration of The Co-operative Bank into the Group,
the Committee made a one-off Integration and Retention
Award to retain and reward certain critical roles during
this period of substantial change. For the executive
directors, the awards were 100% of base salary.
One third of the Integration and Retention Award will be
paid upfront to executive directors following the end of
the performance year and two thirds will be deferred and
paid in equal instalments over the following two years in
share equivalent instruments (SEI). This goes beyond the
minimum level of deferral required under the
Remuneration Code.
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Annual Remuneration Report continued
Variable pay 2025 continued
How variable pay in respect of 2025 will be released to executive directors
The illustration below shows how the variable pay in respect of 2025 will be released to executive directors.
2025
2026
2027
2028
2029
2030
2031
Annual Incentive
Plan
100% cash
Performance
period
100% cash
Integration and
Retention Award
33.3% cash
Performance
period
33.3% cash
33.3% deferred
for one year
33.3% SEI
33.3% deferred
for two years
33.3% SEI
Long-term
Incentive Plan
100% Share
equivalent
instruments
Pre-grant
performance
period
Performance period
50% SEI
50% released
50% SEI
50%
released
All payments are subject to malus and clawback
provisions as detailed on page 114.
Payments to former Directors
The Committee may determine that retirees or
redundancies should be treated as good leavers and any
in-flight deferred variable pay will be released at the
normal time in line with the Remuneration Policy. The
following payments relating to deferred variable pay
were made to former directors in 2025: £74,000 to M
Parsons, former Chief Executive, £59,000 to M Faull,
former Chief Financial Officer, and £43,000 to P Frost,
former Chief Customer Officer. All these payments were
subject to performance and risk review by the
Committee in line with the Remuneration Policy.
Remuneration Policy implementation in 2025
Base salary 2026
Base salaries for executive directors will be reviewed in
April 2026, in line with the approach outlined in the
Remuneration Policy.
Benefits including pension 2026
There will be minor changes to benefits as a result of the
harmonisation of employment terms and conditions, in
line with the approach for all colleagues.
Variable pay 2026
Executive directors will participate in the following
variable pay plans for 2026:
• Annual Incentive Plan (AIP) – up to 100% of salary
• Long-Term Incentive Plan (LTIP) – up to 100% of salary
Details of the performance metrics will be provided in
the 2026 Directors’ Remuneration Report.
Relative importance of spend on pay
The following table sets out the % changes in profit after
tax in 2025 compared to 2024, and the % change in total
spend on remuneration. As a mutual, the Group only
seeks to retain sufficient profit to maintain its capital
ratios and allow for investment in the business, using any
surplus to deliver competitive value and outstanding
service to its members and customers. Another measure
of the Group’s performance is the level of growth in its
lending assets and retail deposits so the percentage
change in total assets has also been included in the
table.
2025
£m
2024
£m
Change
%
Total assets
88,239
64,031
37.8
Total employee
remuneration
344
169
103.6
Profit after tax
812
247
228.7
The higher employee remuneration costs primarily
reflect the increase in headcount following the
acquisition of The Co-operative Bank. In addition,
severance costs arising from integration activities and
any increase in salaries following annual reviews have
contributed to the higher overall costs.
The Chief Financial Officer's review on page 26 provides a
financial review of the year
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Annual Remuneration Report continued
Change in remuneration of Chief Executive
The historical levels of the Chief Executive’s variable pay awards as a percentage of the potential maximum payable are
shown below:
20251
2024
2023
2022
2021
2020
2019
2018
2017
2016
%
%
%
%
%
%
%
%
%
%
Annual Incentive Plan bonus as a
percentage of maximum
74
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
LTIP as a percentage of maximum
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
63
63
Annual Success Share as a percentage of
maximum
n/a
80
95
90
75
40
50
55
60
70
ExVPP as a percentage of maximum
n/a
96.5
96.5
85.5
75
40
45
50
60
65
1. In 2025, the one-off Integration and Retention Award also vested at 100% of potential maximum.
CEO pay ratio
The Companies (Miscellaneous Reporting) Regulations
2018 require UK quoted companies with more than 250
UK colleagues to publish their CEO pay ratio figures and
supporting information in their annual reports. The
regulations require that the pay ratio figures are
calculated using the total remuneration, which includes
total salary, variable pay, pension benefits and taxable
benefits.
The Group has elected to publish its CEO pay ratios using
the Government’s preferred methodology (Option A)
which is based on actual full time equivalent pay and
benefit values for all colleagues for the financial year. It
is calculated by identifying the median total
remuneration as well as the total remuneration at the
25th percentile and 75th percentile points. For 31
December 2025, these were as set out in the table
below. In calculating these figures, leavers were
excluded but all other colleagues who started partway
through the year or who were on extended leave for
some or all of the year have been included on the basis
of a full year’s salary.
Remuneration element
25th
percentile
£
Median
£
75th
percentile
£
Total pay and benefits
33,179
45,072
66,089
Salary
28,249
37,088
50,938
On the basis of these numbers the ratio of CEO pay to
employee pay at the median and 25th and 75th
percentiles is as follows:
Year
Method
25th
percentile
£
Median
£
75th
percentile
£
2025
Option A
66:1
48:1
33:1
2024
Option A
38:1
28:1
19:1
2023
Option A
35:1
26:1
17:1
2022
Option A
32:1
25:1
16:1
2021
Option A
32:1
24:1
16:1
The median pay ratio increased over the last year due to
the exceptional increase in the Chief Executive's fixed
and variable pay in 2025 following the acquisition of The
Co-operative Bank and the resulting increased size and
scope of his role as detailed earlier in the report. This
increase exceeded the year on year pay increases
awarded to the broader workforce.
The pay ratio for 2025 is also impacted by the Integration
and Retention Award which was granted to the Chief
Executive for 2025 only.
This concludes the Committee's annual Remuneration
Report, which members will be asked to approve through
an advisory vote at the 2026 AGM.
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Remuneration Policy for executive directors
This section of the report includes a summary of the main elements of the Remuneration Policy for executive directors who
sit on the Group Board, approved by members at the 2025 Annual General Meeting with a vote in favour of 92.4%. In the
introduction to the Remuneration Report, Caroline Marsh, as Chair of the Committee during 2025, indicated the Committee
would implement some changes to the Remuneration Policy with effect from the 2025 performance year in response to the
new Remuneration Code. These changes have been reflected in the summary tables below.
With effect from 2025, variable pay includes the Annual Incentive Plan and Long Term Incentive Plan. In addition, for 2025
only, an Integration & Retention Award was introduced to retain and reward critical roles during a period of substantial
change following the acquisition of The Co-operative Bank.
Base salary
Purpose and link to
strategy
Salaries are set with reference to market rates of pay to enable the Group to recruit, retain and
motivate high calibre leaders.
Operation
Executive director salaries are normally reviewed annually, with any increases usually taking
effect from 1 April, taking into account a number of factors, including but not limited to:
• The scope and size of role.
• The skills, experience and responsibility of the role holder.
• The position of the role holder’s salary against wider market rates of pay and their
individual performance.
• Equal pay principles, the Group’s financial performance and the economic environment.
• Increases awarded to the Group’s colleagues.
Where an executive director is to be promoted or where their role is to be expanded, the Group
will review the salary and decide whether an adjustment is appropriate.
Maximum potential
Any increases will generally be no higher than the average increases applied to the Group’s
colleagues (in percentage terms). Increases may be made either above or below that level in
exceptional circumstances, taking into account the factors outlined above.
Performance metrics
Individual performance is considered when setting salaries.
Consistency with
other colleagues
The Group uses the same approach when setting salaries for all its colleagues and executive
directors.
Benefits (excluding pension)
Purpose and link to
strategy
The Group provides a competitive benefits package to all its colleagues to support their physical,
mental and financial wellbeing.
Operation
Each executive director receives benefits that are in line with the external market. These may
include a company car or cash alternative, private medical insurance, health screening,
permanent health insurance and life insurance.
Consistency with
other colleagues
All colleagues receive permanent health insurance and life insurance, and many also receive
private medical insurance. Executive directors do not receive any benefits that are unavailable to
other colleagues within the Group.
Pension
Purpose and link to
strategy
The Group provides post-retirement financial security for all its colleagues at a cost that is
sustainable for the Group over the long term and in line with market practice.
Operation
Executive directors are eligible to participate in the defined contribution pension plan or they
may be permitted to take a cash alternative in place of contributions.
Maximum potential
Executive directors receive a pension contribution or cash alternative. This is 10% of base salary
in line with the maximum potential for all colleagues.
Consistency with
other colleagues
All colleagues are eligible to join the Group’s defined contribution pension schemes, receiving
contributions of up to 10%.
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Remuneration Policy for executive directors continued
Annual Incentive Plan (AIP)
Purpose and link to
strategy
The AIP is a discretionary variable pay scheme that enables executive directors to share in the
Group’s success in delivering against its strategy. It helps the Group to be competitive in
attracting and retaining high calibre executives and ensures alignment with strategic priorities.
Operation
Awards are determined by the Committee following the end of a one year performance period.
Awards to executive directors are made in cash (as opposed to shares) and are subject to deferral
and retention in line with regulatory requirements. Alongside awards made under the LTIP (and
for 2025 the Integration and Retention Award), the payment, deferral and retention of all
variable pay awards are determined at the time of award in compliance with regulatory
requirements. To the extent that the minimum level of deferral is not met via the LTIP award (or
for 2025 the Integration and Retention Award), a proportion of the AIP may be deferred in line
with regulatory requirements. Any non-deferred portion is normally paid upfront following the
end of the performance year. Where deferral applies, awards may be made in the form of a share
equivalent instrument where necessary to meet the requirements of the Remuneration Code. The
Group’s share equivalent instrument is currently based on leverage ratio and provides for both
uplift and reduction of awards. In line with the new Remuneration Code, the Committee retains
the discretion to pay interest on any deferred awards. The AIP is reviewed each year to ensure
alignment to the strategic priorities and changes in regulation. In line with the new Remuneration
Code, a 12 month retention period will no longer apply to deferred awards.
Maximum potential
If the Group performs in line with its plans, the AIP scheme provides for an award of up to 50% of
salary for executive directors. The maximum award of up to 100% of base salary at the date of
grant can only be achieved by exceeding stretching upper targets for all measures.
Performance metrics
The Group measures annual performance of the AIP against a mix of collective performance
targets in the balanced scorecard that normally account for 70% of the total award, and up to
three individual objectives that account for 30% of the total award. These goals are agreed with
the Committee at the outset of the scheme year.
Consistency with
other colleagues
The plan is only available to executive directors and executive managers. To ensure alignment
across the Group, the balanced scorecard which determines the all-colleague Success Share bonus
will continue to determine the outcome of the AIP.
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Remuneration Policy for executive directors continued
Long Term Incentive Plan (LTIP)
Purpose and link to
strategy
The LTIP helps to recruit and retain high calibre executives. Its design brings a long-term focus to
reward sustained performance in delivering the Group’s strategy. Awards are made annually and
only pay-out where appropriately stretching performance measures are met, normally measured
over a three year period.
Operation
LTIP awards are normally granted subject to the achievement of satisfactory performance over
the year prior to grant and are then normally subject to a forward-looking three year
performance period from the start of the financial year in which the grant is made. For each
forward-looking performance measure, the Committee determines targets by reference to the
Group’s long-term goals and sets a ‘threshold’, ‘target’ and ‘maximum’ level of award.
Subject to the satisfaction of the performance conditions, vesting of LTIP awards will start
following the end of the three year performance period. LTIP awards are made in cash (as
opposed to shares) and are subject to deferral and retention in line with regulatory
requirements. To comply with the UK Corporate Governance Code, LTIP awards made to
executive directors will normally be released no earlier than five years from the date of grant.
The Remuneration Code requires that 50% of variable pay is made in shares or, in the case of a
non-listed business like the Group, a share equivalent instrument. The Group's share equivalent
instrument is currently based on leverage ratio and provides for both uplift and reduction of
awards. The plan is reviewed each year to ensure alignment to the strategic priorities and
changes in regulation.
Maximum potential
The LTIP scheme provides for an award of up to 50% of salary for executive directors for on
target performance and 25% at the threshold level of performance. The maximum award (up to
100% of base salary at the date of grant for executive directors) can only be achieved by
exceeding stretching upper targets for all measures.
Performance metrics
The LTIP incentivises sustainable long-term performance and alignment with member interests.
The Committee will usually consider both Group and individual performance over the pre-grant
performance period when determining the level of LTIP awards that may be granted. This ensures
that the granting of awards is sustainable based on the Group’s performance and justified on the
basis of individual performance, conduct and behaviours.
Forward-looking performance will be measured normally over a three year period against a long-
term scorecard set to align with the long-term objectives of the Group. The performance metrics
will normally reflect a balance of financial and non-financial measures linked to the Group’s long-
term goals and be subject to the satisfaction of risk and individual performance and regulatory
obligations.
The measures are agreed with the Committee at the outset of the scheme year and will be
disclosed in the Remuneration Report for the relevant year.
Consistency with
other colleagues
The LTIP is only available to executive directors and executive managers.
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Remuneration Policy for executive directors continued
Integration and Retention Award - 2025 only
Purpose and link to
strategy
The Integration and Retention Award helps to retain high calibre executives during a period of
substantial change following the acquisition of The Co-operative Bank and in delivering the
Group’s strategy.
Operation
Awards are determined by the Committee based on performance to 31 December 2025. Awards
are made in cash (as opposed to shares) and are subject to deferral to satisfy regulatory
requirements. One third of the Integration and Retention Award will be paid upfront following
the end of the performance year and two thirds will be deferred and paid in equal instalments
over the following two years. This exceeds the minimum level of deferral required under the
Remuneration Code. The Remuneration Code requires that 50% of variable pay is made in shares
or, in the case of a non-listed business like the Group, a share equivalent instrument. In line with
the new Remuneration Code, we will primarily use the LTIP and deferred pay to meet this
instrument's requirement. The 12 month retention period will no longer apply to deferred pay.
The share equivalent instrument is currently based on leverage ratio and provides for both uplift
and reduction of awards. In line with the new Remuneration Code, the Committee may decide to
pay interest on deferred pay.
Maximum potential
If the Group performs in line with its integration plans, the Integration and Retention Award
provides for an award of up to 100% of salary for participants.
Performance metrics
The Group will measure the performance of the Integration and Retention Award against the
delivery of financial and non-financial integration targets for each participant during 2025. No
further grants of this award will be made.
Consistency with
other colleagues
The plan is only available to executives.
Risk mitigation
Executive director salaries are benchmarked against
comparable financial services organisations to ensure
they are not excessive. No executive director is involved
in setting their own remuneration or exercising discretion
over judgements that could influence their own
remuneration.
The Committee has absolute discretion to reduce any
variable pay award if it decides that acceptable
standards or performance levels have not been met. The
Committee can also adjust, withhold or recover any
vested awards using ‘malus’ and ‘clawback’
arrangements for executive directors. The variable pay
plans ensure that executive director remuneration
packages are strongly linked to the delivery of the
Group's strategy and members’ interests.
Malus
Clawback
What is it?
The Committee can decide to reduce or cancel
any variable pay award before the payment has
been made.
The Committee may decide that an individual must repay
part or all of a variable pay award after the payment has
been made.
Which
awards does
it apply to?
Malus applies to any payments under all our
variable pay plans.
Clawback applies to payments under all our variable pay
plans, for up to seven years even if an individual leaves the
Group’s employment.
When would
this be
used?
Can be applied in circumstances including, but
not limited to:
• Reasonable evidence of misbehaviour or
material error.
• The Group suffering a material downturn in
its financial performance.
• The Group suffering a material failure of risk
management.
Can be applied in circumstances including, but not limited
to:
• Reasonable evidence of misbehaviour or material error.
• The Group or function suffering a material failure of risk
management.
• A material misstatement of the Group’s financial results,
such that the payment made under the variable pay
arrangement was greater than it would have been.
Malus and clawback
Malus, clawback, deferral and retention arrangements
are in place. The Committee ensures that an objective
assessment of business risk, long-term sustainability and
individual performance, conduct and behaviours is
included with any assessment of variable pay awards and
it may decide to exercise its discretion and adjust
payments made under any of the variable pay plans.
Further details about malus and clawback arrangements
are set out as follows:
Coventry Building Society | Annual Report & Accounts 2025115
Governance
Directors' Remuneration Report continued
Non-executive directors
This section of the report provides more detail about the
Non-Executive Directors' Remuneration Committee
membership and governance alongside details of the non-
executive directors' fees.
Details of the Non-Executive Directors’ Remuneration
(NEDR) Committee
The members of the NEDR Committee are:
Current membership
Member since
Stephen Hughes1
2020
Lucy Becque2
2025
Lee Raybould
2021
David Thorburn
2022
1. Chair of the Committee.
2. Chief People Officer and member of the Committee from January 2025.
The NEDR Committee is responsible for reviewing and
recommending the remuneration of the non-executive
directors, other than for the Chair of the Board, for the
Board's approval. It met once during the year.
Non-executive directors' letters of appointment
Non-executive directors are appointed for an initial term
of three years, which can be terminated by the director,
or at the discretion of the Board with a notice period of
three months. Non-executive directors must voluntarily
stand for re-election each year.
Approach for non-executive directors’ fees
The approach for non-executive directors is in line with
the objectives of the Remuneration Policy for the whole
Group, which is to offer fees that are competitive when
compared with financial services firms of a similar size
and complexity. The time commitment for the role is
also taken into account.
The NEDR Committee recommends the remuneration of
the non-executive directors, other than the Chair of the
Board, to the Board for approval. Recommendations for
the remuneration of the Chair of the Board are made by
the Remuneration Committee and approved by the full
Board without the participation of the Chair. No director
takes part in the discussion of their own remuneration.
Non-executive directors matters are dealt with
separately from the wider employee base and further
details are shown in the table below.
Non-executive director fees are made up of a base fee,
plus fees for additional roles or responsibilities or time
commitments including chairing a Committee, Senior
Independent Director, and Deputy Chair. The Chair of the
Board does not receive additional fees for roles carried
out other than that of Chair.
Work was completed during 2024 to define the Board
governance structures which would come into effect for
the Group in 2025. These structures reflect the
requirement for there to be separate Group and Bank
Boards. The NEDR Committee mirrored the new
governance structures when designing NED fee
arrangements. The Committee’s decision making was
informed by extensive benchmarking with other
organisations in financial services. The Committee also
considered carefully the time requirements needed in
order for non-executive directors to provide effective
oversight of a larger, more complex Group as well as the
time requirement for individuals fulfilling roles on both
Group and Bank Boards.
Whilst maintaining strong oversight and governance of
two highly regulated legal entities, the combined cost of
governing both Boards has reduced significantly and
there is an ongoing focus on simplification.
Non-executive directors fees
Purpose and link to
strategy
Non-executive director fees are set at a level that reflects market conditions and is sufficient to
attract individuals with appropriate knowledge and experience.
Operation
Fees are usually reviewed annually and amended to reflect market positioning and any change in
responsibilities, with any increases usually taking effect from 1 April. Non-executive director fees
are made up of a base fee, plus an additional supplement paid for additional roles or
responsibilities or time commitments including chairing a Committee, Senior Independent Director
and Deputy Chair. The Chair of the Board does not receive additional fees for roles carried out
other than that of Chair. Non-executive directors may be eligible to receive reimbursement of
expenses for travel and accommodation costs and tax thereof.
Risk mitigation
Benchmarking non-executive director salaries against comparable financial services organisations
ensures they are not excessive. Fees paid to non-executive directors are recommended by the
NEDR Committee and approved by the Board as a whole. Non-executive directors do not
participate in any variable pay plans.
Maximum potential
Fees are based on the level of fees paid to non-executive directors serving on boards of similar-
sized UK companies and the time commitment and contribution expected for the role.
Non-executive directors receive a basic fee and an additional fee for further duties (for example,
Chair of a Committee or Senior Independent Director responsibilities).
Performance metrics
Not applicable.
Coventry Building Society | Annual Report & Accounts 2025116
Governance
Directors' Remuneration Report continued
Non-executive directors continued
The non-executive directors remuneration is detailed below.
Audited information
Group &
Society fees
Bank fees
Expense
payments
Total fees
and expense
payments
Group &
Society fees
Bank fees
Expense
payments
Total fees
and expense
payments
2025
2025
2025
2025
2024
2024
2024
2024
£000
£000
£000
£000
£000
£000
£000
£000
Non-executive directors:
David Thorburn 1
420
—
8
428
242
—
16
258
Iraj Amiri2
111
72
3
186
85
—
5
90
Jo Kenrick3
111
180
3
294
104
—
2
106
Ewa Kerin4
—
—
—
—
25
—
1
26
Jane Leach5
25
—
—
25
—
—
—
—
Caroline Marsh6
115
69
3
187
—
—
—
—
Shamira Mohammed7
90
—
1
91
66
—
1
67
Vanessa Murden8
—
—
—
—
11
—
—
11
Brendan O'Connor9
90
72
3
165
74
—
5
79
Mark Parker10
90
56
7
153
—
—
—
—
Iain Plunkett11
115
—
7
122
45
—
1
46
Martin Stewart 12
115
66
6
187
85
—
6
91
Total
1,282
515
41
1,838
737
—
37
774
1. Chair of the Board from 28.04.22.
2. Non-executive director from 28.06.18 and Chair of the Board Audit Committee until 17.11.25. Member of Bank Board and Chair of Bank Board Audit Committee from 01.01.25.
3. Deputy Chair of the Board from 22.04.21, Senior Independent Director from 24.04.19 and Chair of the Board Remuneration Committee from 26.04.18 to 31.12.24. Chair of Bank Board
from 01.01.25.
4. Non-executive director from 01.07.24 to 14.11.24.
5. Non-executive director from 03.10.25 and Chair of the Board Audit Committee from 17.11.25.
6. Non-executive director and Chair of the Board Remuneration Committee from 03.01.25. Member of Bank Board from 01.01.25 and Chair of Bank Board Remuneration Committee from
07.03.25.
7. Non-executive director from 01.05.19.
8. Non-executive director from 30.01.23 to 23.02.24. Chair of the Board Change Committee from 30.01.23 to 23.02.24.
9. Non-executive director from 18.01.21. Chair of the Board Change Committee from 24.02.24 to 30.06.24. Member of Bank Board from 01.01.25 and Chair of Bank Board Risk Committee
from 01.01.25.
10. Non-executive director from 01.01.25. Continuing member of Bank Board post acquisition from 01.01.25.
11. Non-executive director from 01.07.24. Chair of the Board Change Committee from 01.07.24.
12. Non-executive director from 01.09.18 and Chair of the Board Risk Committee from 25.09.18. Deputy Chair of the Bank Board from 01.01.25.
As discussed in the Remuneration Report last year, fee
levels were reviewed for 2025 in anticipation of the
acquisition of The Co-operative Bank and the increased
size, scope and time requirements of non-executive
roles. As a result, fees were increased with effect from 1
January 2025 to maintain the strength of the Board and
to ensure fees were appropriately positioned to reflect
the enlarged and more complex Group. For 2026, fees
will be reviewed in line with the wider workforce with
effect from 1 April.
Non-executive director fees
Group &
Society fees
2025
£000
Bank fees
2025
£000
Chair of the Board
420
180
Base fee
90
56
Deputy Chair of the Board1
21
10
Senior Independent Director1
21
10
Chair of Remuneration Committee
25
16
Chair of Board Audit Committee
25
16
Chair of Board Risk Committee
25
16
Chair of Board Change Committee
25
0
1. If both the Deputy Chair and Senior Independent Director roles are held by the
same person, the fees are combined.
Non-executive directors are reimbursed reasonable travel
and accommodation expenses in relation to attending
meetings but do not participate in any pension, benefits
or bonus arrangements.
Coventry Building Society | Annual Report & Accounts 2025117
Governance
Directors' Remuneration Report continued
Other matters
Remuneration committee advisor
The Committee agreed to retain Deloitte LLP (Deloitte)
to provide independent advice to the Committee as
required during 2025, after an annual review of its fees
and services. Deloitte voluntarily operates under the
code of conduct in relation to executive remuneration
consulting in the UK. The Committee is satisfied that the
advice received is objective and independent. The Group
also engages Deloitte to provide other assurance
services, consultancy and specialist advice to other
departments.
Consideration of members' views
The Group welcomes feedback on executive and non-
executive directors’ remuneration. Member approval of
the Directors’ Remuneration Report is voted on at each
Annual General Meeting and, every three years, the
Committee asks members for a non-binding vote on the
Remuneration Policy.
Statement of member vote at Annual
General Meeting
At the 2025 Annual General Meeting, an ordinary
resolution (advisory vote) was proposed to members to
approve the Annual Remuneration Report for the year
ended 31 December 2024 for which the following votes
were received:
Number of votes
% votes cast
Annual Remuneration Report
Votes cast for
64,369
92.4
Votes cast against
5,059
7.6
At the 2025 AGM, an ordinary resolution (advisory vote)
was proposed to members to approve the current
Remuneration Policy for which the following votes were
received:
Number of votes
% votes cast
Remuneration Policy
Votes cast for
64,100
92.7
Votes cast against
5,306
7.3
Coventry Building Society | Annual Report & Accounts 2025118
Governance
Directors' Report
The directors have pleasure in presenting their Annual
Report & Accounts for 2025 .
Business objectives, future developments and
key performance indicators
The Group’s objectives and future plans are set out in the
Strategic Report, together with the Group’s key
performance indicators. The Strategic Report is
incorporated by reference within this Directors’ Report.
Profit and capital
Profit before tax for the year ended 31 December 2025
was £801 million (2024: £323 million). The profit after tax
transferred to the general reserve was £812 million (2024 :
£247 million).
Total Group reserves and equity at 31 December 2025
were £4,289 million (2024: £3,628 million). Further details
on the movements on reserves and equity are given in the
Group Statement of Changes in Members’ Interests and
Equity.
Gross capital at 31 December 2025 was £4,579 million
(2024: £3,685 million), including £248 million (2024: £15
million) of subordinated debt, £42 million (2024: £42
million) of subscribed capital and £665 million (2024: £665
million) of Perpetual Capital Securities.
The ratio of gross capital as a percentage of savings and
borrowings at 31 December 2025 was 5.51% (2024: 6.16%)
and the free capital ratio was 5.07% (2024: 5.99%).
The Annual Business Statement gives an explanation of
these ratios.
Mortgage arrears
At 31 December 2025, there were 431 mortgage accounts
more than 12 months in arrears (including those in
possession) (2024 : 284). The balance on these accounts
totalled £76 million (2024: £48 million) and the value of
these arrears was £9 million (2024: £5 million) or 0.01%
(2024: 0.01%) of total mortgage balances.
Mortgage arrears disclosures are based on the UK Finance
definition, which calculates months in arrears by dividing
the arrears balance outstanding by the latest contractual
payment.
Charitable and political donations
The Group made donations of £5 million (2024: £4 million)
to charitable organisations during the year.
No contributions were made for political purposes.
However, employees are permitted time off to carry out
civic duties and political activity, which can amount to an
effective political donation. The Group supports a small
number of employees in this way.
Employees are also supported in volunteering and
fundraising in the local community. More information in
relation to this is included in the Strategic Report.
Creditor payment policy
The Group’s policy is to agree the terms of payment at
the start of trading with suppliers and to pay in
accordance with its contractual and other legal
obligations. The Group’s creditor days were 14 days as at
31 December 2025 (2024: 17 days).
Country-by-country reporting
The nature of the Group’s activities is set out in the
Strategic Report and for each of the Society’s subsidiaries
in note 18 to the accounts. All of the activities of the
Society and its subsidiaries are conducted in the United
Kingdom, and therefore 100% of the total income, profit
before tax and tax shown in the Income Statement, as
well as employee figures disclosed in note 11 to the
accounts, are related to the United Kingdom. The Society
and its subsidiaries have not received any public subsidies.
Risk management
As a result of its normal business activities, the Group is
exposed to a variety of risks, including credit, market,
liquidity and funding, capital, conduct, operational,
model and strategic risk. The Group seeks to manage all
the risks that arise from its activities and has established
a number of committees and policies to do so. Details of
these are set out in the Strategic Report, Risk
Management Report and the Directors’ Report on
Corporate Governance.
Colleagues
Information on colleague engagement, development,
equality, diversity and inclusion is included the Strategic
Report and is incorporated by reference into this
Directors’ Report.
The Group complies with the UK Equality Act 2010 and has
processes in place to help train, develop and promote
employees with disabilities. If someone has a disability,
the Group makes appropriate adjustments during the
recruitment process.
Similarly, if someone becomes disabled during their
employment, the Group provides support relevant to
individual's needs. This may include retraining and
redeployment within the workforce. Partnerships are also
in place with specialist organisations in order to make our
workplace more accessible to people with a disability.
Board of directors
The names of the directors of the Group who served
during the year and up to the date of signing the financial
statements, are set out on pages 75 to 78. No director has
any beneficial interest in equity shares, or debentures of,
any connected undertaking of the Group as at
31 December 2025.
The Board has agreed that in accordance with the UK
Corporate Governance Code, all the directors will stand
for election or re-election on an annual basis.
New activities in 2025
On 1 January 2025, the Society acquired The Co-operative
Bank Holdings p.l.c., which along with all of its
subsidiaries became part of the Group from this date. This
acquisition has broadened the products and services the
Group is able to offer.
Coventry Building Society | Annual Report & Accounts 2025119
Governance
Directors' Report continued
Directors' responsibilities in respect of the
preparation of the Annual Report & Accounts
The following statement, which should be read in
conjunction with the Statement of the auditors’
responsibilities on page 130, is made by the directors to
explain their responsibilities in relation to the preparation
of the Annual Accounts, the Directors’ Remuneration
Report, the Annual Business Statement and this Directors’
Report.
The Building Societies Act 1986 (the Act) requires the
directors to prepare Group and Society Annual Accounts
for each financial year. Under that law, they are required
to prepare the Group Annual Accounts in accordance with
UK adopted International Accounting Standards and
applicable law, and have elected to prepare the Society
Accounts on the same basis.
The Group and Society Annual Accounts are required by
law and by accounting standards to present fairly the
financial position and the performance of the Group and
the Society. The Act provides that references to Annual
Accounts giving a true and fair view are references to
their achieving a fair presentation. The Act also requires
the Annual Accounts to provide details of directors’
emoluments in accordance with Part VIII of the Act and
regulations made thereunder.
In preparing each of the Group and Society Annual
Accounts, the directors are required to:
• Select suitable accounting policies and apply them
consistently.
• Present information, including accounting policies, in a
manner that provides relevant, reliable, comparable
and understandable information.
• State whether applicable accounting standards have
been followed.
• Prepare the financial statements on a going concern
basis, unless it is inappropriate to presume that the
Group and Society will continue in business.
In addition to the Annual Accounts, the Act requires the
directors to prepare, for each financial year, an Annual
Business Statement and a Directors’ Report, each
containing prescribed information relating to the business
of the Group.
Directors' responsibilities in respect of
accounting records and internal control
The directors are responsible for ensuring that the Group:
• Keeps proper accounting records that disclose with
reasonable accuracy at any time the financial position
of the Group and Society.
• Establishes and maintains systems for control of its
business, records, inspection and reports.
The directors have 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 Directors’ Report confirm that, so far as each of them
is aware, there is no relevant audit information of which
the Group’s auditor is unaware, and each director has
taken all the steps that they ought to have taken as
directors to make themselves aware of any relevant
information and to establish that the Group’s auditor is
aware of that information.
Directors' statement pursuant to the
Disclosure and Transparency Rules
As required by the Disclosure and Transparency Rules of
the Financial Conduct Authority, the directors have
included a management report containing a fair review of
the business and a description of the principal risks and
uncertainties facing the Group. This information is
contained principally in the Strategic Report and the Risk
Management Report.
The directors confirm that to the best of each of their
knowledge and belief:
• The financial statements, prepared in accordance with
UK adopted International Accounting Standards,
present fairly the assets, liabilities, financial position
and profit of the Group and Society.
• The management report contained in the Strategic
Report includes a fair review of the development and
performance of the business and the position of the
Group and Society, and the Risk Management Report
includes a description of the principal risks and
uncertainties that they face.
Directors' statement of compliance with the
UK Corporate Governance Code
As required by the UK Corporate Governance Code, the
directors confirm their opinion that the 2025 Annual
Report & Accounts, taken as a whole, are fair, balanced
and understandable, and provide the information
necessary for members to assess the performance,
strategy and business model of the Society.
Directors' responsibilities in respect of going
concern and long-term viability
The UK Corporate Governance Code (the Code) requires
that the directors state whether they consider it
appropriate to adopt the going concern basis of
accounting and identify any material uncertainties to the
Group’s ability to continue as a going concern for a period
for at least 12 months from the date of approval of the
Annual Report & Accounts.
In addition, the Code requires that the directors explain
how the prospects of the Group have been assessed and
whether there is a reasonable expectation that the Group
will continue in operation and meet its liabilities as they
fall due over the period of assessment. Details of this
long-term viability assessment are set out below.
Coventry Building Society | Annual Report & Accounts 2025120
Governance
Directors' Report continued
Going concern
In preparing the financial statements, the directors are
required to satisfy themselves that it is appropriate to
adopt the going concern basis of accounting in accordance
with guidance from the Financial Reporting Council and
IAS 1 Presentation of Financial Statements.
The Group’s business activities, together with the factors
likely to affect its future development, performance,
position, liquidity and capital structure, are set out in the
Strategic Report. The Risk Management Report includes
further information on the Group’s objectives, policies
and processes for managing its exposure to credit,
market, liquidity and funding, conduct, operational,
model and strategic risks, along with details of its
financial instruments and hedging activities. In addition,
top and emerging risks are disclosed in the Strategic
Report.
The Group’s forecasts and projections include the
expected impact of these risks together with the enlarged
group view following the acquisition of The Co-operative
Bank on 1 January 2025. Together with stress testing and
scenario analysis, this shows that the Group will be able
to operate at adequate levels of both liquidity and capital
for at least the next 12 months while meeting all relevant
regulatory requirements.
After making enquiries, the directors are therefore
satisfied that the Group has adequate resources to
continue in business for the foreseeable future,
determined as at least the next 12 months, with no
material uncertainties and, therefore, it is appropriate to
adopt the going concern basis of accounting in preparing
these financial statements.
Long-term viability
In accordance with the UK Corporate Governance Code,
the directors are required to explain how, taking account
of the Group’s current position and principal risks, they
have assessed the prospects of the Group and to confirm
that they believe the Group will be able to continue in
operation and meet its liabilities as they fall due over a
specified period determined by the directors.
Assessment of long-term viability
The directors have assessed the viability of the Group over
the three year period to December 2028. The directors
consider a three year period appropriate as it is within the
period covered by the Strategic Plan and the stress testing
activities undertaken by the Group. In addition, using a
period of three years eliminates the inherent
uncertainties in the assumptions underpinning the outer
years of the Group’s Strategic Plan.
The directors considered the Group's strategy and the key
threats to its delivery. The directors also considered
broader risks to the prospects of the Group including the
adequacy of risk management arrangements, performance
of the Group against the Board's risk appetite and the risk
outlook for the Group.
In making the assessment, the directors considered the
financial projections of the Group, including profitability,
capital and funding positions, and the wide range of stress
testing of those projections to ensure the viability of the
Group even in times of severe stress. The directors
considered the impact of the macroeconomic
environment, including the impact of inflationary
pressures, the impact to the labour market, the credit
environment, the interest rate outlook and the potential
impact on wholesale funding markets.
The most significant stress scenario which was considered
included an increase in unemployment to 8.5% during the
first year of the stress and house price falls of 28%.
The review considered emerging regulation where there is
sufficient clarity over future standards to inform the
analysis. This review includes assessments of the Group’s
capital position and reflects current understanding of
capital buffer and leverage requirements likely to be
imposed on the Group. The review has also considered the
longer-term impacts of climate change and new
regulatory standards on climate risk, along with the
proposed Group response to the climate risks identified on
its loans and advances to customers and operations.
Conclusion on viability
Based upon the assessment set out above, the directors
have a reasonable expectation that the Group will
continue in operation and meet its liabilities as they fall
due over the period to December 2028.
Directors
The directors who served during the year are set out in
the Directors’ Report on Corporate Governance.
The auditor
A resolution to reappoint PricewaterhouseCoopers LLP
auditor of the Society will be proposed at the 2026 Annual
General Meeting.
Approved by the Board of directors and signed on its
behalf by
David Thorburn
Chair of the Board
26 February 2026
Coventry Building Society | Annual Report & Accounts 2025121
Financial Statements
Financial Statements
In this section, you will find
our primary statements and
related notes.
Independent Auditors’ Report
122
Accounts
131
Notes to the accounts
135
Coventry Building Society | Annual Report & Accounts 2025122
Financial Statements
Independent auditors' report to the members
of Coventry Building Society
Report on the audit of the financial statements
Opinion
In our opinion, Coventry Building Society's Group annual accounts and Society annual accounts (the "financial statements"):
• give a true and fair view of the state of the Group’s and of the Society’s affairs as at 31 December 2025 and of the
Group’s and the Society’s income and expenditure and the Group’s and the Society’s cash flows for the year then
ended;
• have been properly prepared in accordance with UK-adopted international accounting standards; and
• 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 (the “Annual Report”), which
comprise: the Group and Society Balance Sheets as at 31 December 2025; the Group and Society Income Statements and
Statements of Comprehensive Income, the Group and Society Statements of Cash Flows, and the Group and Society
Statements of Changes in Members’ Interest and Equity for the year then ended; and the notes to the financial statements,
comprising material accounting policy information and other explanatory information.
Certain notes to the financial statements have been presented elsewhere in the Annual Report, rather than in the notes to
the financial statements. These are cross-referenced from the financial statements and are identified as '(Audited)'. The
relevant disclosures are included in the Risk Management Report and Directors' remuneration report disclosures.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were
not provided to the Group.
Other than those disclosed in note 10, we have provided no non-audit services to the Society or its controlled undertakings
Group in the period under audit.
Our audit approach
Overview
Audit
scope
• On 1 January 2025, the Society acquired The Co-operative Bank Holdings p.l.c. ("the Bank"). Therefore,
this is the first year in which the results of The Co-operative Bank Holdings p.l.c. and its subsidiaries have
been incorporated into the Group. We performed audit procedures over all material account balances and
financial information of the Coventry Building Society, The Co-operative Bank Holdings p.l.c., The Co-
operative Bank p.l.c. ("The Co-operative Bank") and Godiva Mortgages Limited due to their size and
significance to the Group; and
• For four further reporting entities, namely ITL Mortgages Limited, Coventry Building Society Covered
Bonds LLP, Coventry Godiva Covered Bonds LLP and Economic Master Issuer plc we performed audit
procedures over one or more financial statement line items.
Key audit
matters
• The application of key judgements and assumptions in relation to applying expected credit loss
provisioning on loans and advances to customers (Group and Society);
• Completeness and accuracy of hedge accounting consolidation adjustments (Group);
• Recognition and measurement of the deferred tax asset relating to the Bank's brought forward trading
losses (Group); and
• Measurement of the gain on acquisition of The Co-operative Bank Holdings p.l.c. (Group).
Materiality
• Overall Group materiality: £18.0 million (2024: £16.2 million), based on 5% of underlying profit before tax
(2024: 5% of profit before tax).
• Overall Society materiality: £13.0 million (2024: £9.3 million), based on 0.5% of total equity (2024: 5% of
profit before tax).
• Group performance materiality: £13.5 million (2024: £12.1 million).
• Society performance materiality: £9.75 million (2024: £7.0 million).
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The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made subjective judgements, for example in respect of
significant accounting estimates that involved making assumptions and considering future events that are inherently
uncertain.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the 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) identified by the auditors, including those 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, and
any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. This is not a complete list of all risks identified by our audit.
Recognition and measurement of the deferred tax asset relating to the Bank's brought forward trading losses is a new key
audit matter this year. Otherwise, the key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
The application of key judgements and assumptions in relation to applying expected credit loss provisioning on loans
and advances to customers (Group and Society)
The Group holds £44 million (2024: £24 million) of
expected credit loss (‘ECL’) provisions against loans and
advances to customers in accordance with IFRS 9 against
total outstanding balances of £72,928 million (2024:
£51,825 million). Of this balance, the Group holds £7
million of ECL provisions for its commercial lending
portfolio, with £5 million of this in relation to its
individually assessed provisions.
The Society holds £13 million (2024: £11 million) of ECL
provisions against loans and advances to customers with
total outstanding balances of £33,921 million (2024:
£33,433 million).
The determination of ECL provisions is inherently
judgemental and involves setting assumptions using
forward looking information reflecting wider macro-
economic trends, individual customer behaviours as well
as individual recovery strategies for commercial loans,
which can give rise to increased estimation uncertainty.
For the audit of the Group, we focused our work on the
areas of the methodology that we identified as most
judgemental and where the risk to the financial
statements is greatest, which is the valuation of
collateral for stage 2 and stage 3 commercial customers
within the Group.
For the audit of the Group and the Society, we focused
our work on the appropriateness of provision models and
their ability to capture risk in the loan portfolio, due to
the low level of provision coverage recorded.
Detailed disclosures can be found in note 16. Associated
accounting policies are detailed in note 1 and significant
accounting judgements and estimates in note 2. The
Audit Committee’s consideration of the matter is set out
in the Board Audit Committee Report.
We have assessed the design and implementation of controls
over the estimation of ECL.
With the assistance of our credit risk modelling specialists,
we understood and critically assessed the ECL methodology
and assumptions applied by reference to the accounting
standards and industry practice. We understood and assessed
the methodology applied by management in calculating the
valuation of collateral for its commercial customers.
Our testing over the Group and Society's mortgage ECL
included a combination of controls and substantive testing,
including using our credit risk modelling specialists to
perform the following:
• Reviewed and challenged key model monitoring outputs
and independently replicated the ECL model logic.
• Assess the appropriateness of significant assumptions and
methodologies used for ECL models, in particular, those
underpinning probability of default and loss given default
for the mortgage book.
Our testing over the Group's commercial ECL included:
• With the assistance of our real estate valuations experts,
we tested a sample of higher risk customer collateral
valuations to assess they are valued appropriately and
reflect the current economic environment.
• We have reviewed the work performed by management's
experts and critically evaluated the assumptions they
have applied.
• We ran sensitivities on the commercial portfolio to
systematic declines in collateral values by modelling
wholesale valuation reductions across the book, to
identify any risk that could result in the ECL recorded by
the Group in the year to be materially misstated.
• We performed a full replication of the commercial
modelled ECL to confirm that it was mathematically
accurate.
We have reviewed the disclosures to ensure compliance with
accounting standards and agreed the disclosures to
supporting evidence.
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Key audit matter
How our audit addressed the key audit matter
Completeness and accuracy of hedge accounting consolidation adjustments (Group)
As part of the acquisition of The Co-operative Bank
Holdings p.l.c., the Group acquired a portfolio of
derivative assets and designated them in hedge
accounting relationships to minimise accounting
volatility. The acquisition value of these derivatives
requires adjustments to be made to reflect hedge
accounting principles under accounting standards.
These adjustments are designed to ensure appropriate
hedge accounting adjustments are recognised over time.
We focused on this matter because of the judgement and
complexity involved in the application of accounting
standards and in determining the impact of hedge
accounting on the income statement.
Detailed disclosures can be found in notes 9 and 26.
Associated accounting policies are detailed in note 1. The
Audit Committee's consideration of the matter is set out
in the Board Audit Committee Report.
We have assessed the design and implementation of controls
over the hedge accounting adjustments in respect of The
Co-operative Bank's acquired derivatives at Group level.
We assessed the reasonableness of the designation of a
hedge relationship under accounting standards at a Group
level.
We challenged management on the completeness and
appropriateness of adjustments made to calculate the
amounts recognised in the income statement.
We evaluated the reasonableness of the run-off profile of
the hedge by comparing it to the run-off profile of the
underlying hedged item.
We tested the accuracy of input data used to calculate the
adjustments and recalculated the amounts recognised in the
income statement.
We reconciled management's calculation to the accounting
books and records.
We have reviewed the disclosures to ensure compliance with
accounting standards and agreed the disclosures to
supporting evidence.
Recognition and measurement of the deferred tax asset relating to the The Co-operative Bank's brought forward
trading losses (Group)
As at 31 December 2025, the Group has recorded £243
million of deferred tax assets relating to brought forward
trading losses (2024: Nil).
Deferred tax assets are recognised on the The Co-
operative Bank's brought forward losses to the extent it is
probable that there will be future taxable profits
generated on the same trade which gave rise to the
losses. Management are required to make an estimate of
the amount and timing of future taxable profits, and
judgements relating to the continuity of The Co-operative
Bank's trade in light of the Group's future strategic plans.
Since this is inherently uncertain we focused on this as a
key audit matter. We focused on the reasonableness of
forecast future taxable profits in the strategic plan, as
well as the estimation of taxable profits beyond the
strategic planning period.
Detailed disclosures can be found in note 23. Associated
accounting policies are detailed in note 1 and significant
accounting judgements and estimates in note 2. The
Audit Committee's consideration of the matter is set out
in the Board Audit Committee Report.
With the help of tax specialists, we evaluated management's
methodology for assessing the recognition of and
recoverability of deferred tax assets, including the ability to
offset certain deferred tax liabilities and deferred tax
assets. Where deferred tax assets are recognised our
evaluation of these future profits considered both the
business model and the applicable UK tax legislation.
We critically assessed the future profit forecasts within the
board approved strategic plan for the Group, along with the
supporting assumptions, testing that the assumptions were
reasonable. We assessed the consistency of the forecasts
used to justify the recognition of deferred tax assets to
those used elsewhere in the business, including those used
in the going concern assessment. In doing this, we verified
that the forecasts did not include taxable profit growth that
could not be demonstrated as probable, including critically
evaluating risks and contrary evidence around the projected
future profits. We also performed sensitivity analysis to
understand whether reasonably possible changes to these
assumptions could lead to a material change in the
recognised asset.
We considered the length of the forecasts that it would be
appropriate to use in measuring the deferred tax asset, with
reference to The Co-operative Bank's historic performance
and levels of forecasting accuracy, as well as the haircuts
applied to the outer years of the forecast.
We tested the mathematical accuracy of the calculations
used in determination of deferred tax assets.
We have reviewed the disclosures to ensure compliance with
accounting standards and agreed the disclosures to
supporting evidence.
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Key audit matter
How our audit addressed the key audit matter
Measurement of the gain on acquisition of The Co-operative Bank Holdings p.l.c. (Group)
On 1 January 2025, the Group acquired the entire
share capital of The Co-operative Bank Holdings
p.l.c.. Consideration of £745 million was paid for
the acquisition in exchange for net assets with a
fair value of £1,329 million, resulting in a gain on
bargain purchase of £584 million being recognised
in the Group’s income statement.
The acquisition was accounted for as a business
combination using the acquisition method in
accordance with IFRS 3 ‘Business combinations’.
The identifiable assets acquired, and liabilities
assumed were recorded at their acquisition-date
fair values. IFRS 3 also allows a period of not more
than 12 months from the acquisition date in which
an acquirer may adjust the provisional amounts
recognised in a business combination.
Purchase price allocation (‘PPA’) adjustments were
recognised on a range of assets and liabilities
including loans and advances to customers and the
Bank’s deposit book in the form of a core deposit
intangible (the intangible benefit arising in respect
of the Bank having a stable source of funding from
depositors). Management engaged an external
expert to determine the fair value of certain
assets, including intangible assets and liabilities on
the acquisition date balance sheet.
Deriving the Group’s fair value estimates involves
significant judgement and there is a high degree of
estimation uncertainty in the fair value adjustment
of the acquired Loans and advances to customers
and the valuation of the core deposit intangible.
We focused on these as a Key Audit Matter.
The transaction also gave rise to a gain on bargain
purchase and, as such, we focused on the
completeness of the purchase price allocation
accounting based on the activities of the Bank.
Detailed disclosures can be found in note 38.
Associated accounting policies are detailed in note
1 and significant accounting judgements and
estimates in note 2. The Audit Committee’s
consideration of the matter is set out in the Board
Audit Committee Report.
We reviewed the Sale Purchase Agreement, regulatory approvals
and related documentation to understand the structure and terms
of the acquisition.
We obtained an understanding of management’acquisition
accounting process and assessed whether the accounting
treatment associated with the assets and liabilities acquired was in
accordance with IFRS 3 'Business Combinations'.
We assessed the competence and objectivity of managements
expert, and we engaged our own valuations expert to challenge
management's assumptions.
We challenged the completeness of management’s identification
of intangible assets by reviewing the Sale and Purchase Agreement
and related documentation for indicators of separately identifiable
intangibles. With the support of our valuation experts, we assessed
the appropriateness of the valuation methodologies, the
reasonableness of significant assumptions applied and re-
performed the valuation of the core deposit intangible.
Our procedures focused on the alternative cost of funds
assumption and the internal consistency of assumptions applied
between the valuation of loans and advances to customers and the
core deposit intangible.
We assessed the appropriateness of management's amortisation
approach for the core deposit intangible by comparing the
amortisation profile to the expected period of benefit of the
acquired deposits.
For loans and advances to customers, we focused on the
assumptions with the most material impact on fair value, namely
the cost of debt component of the discount rate and the assumed
run-off of the acquired mortgage portfolio following the end of the
fixed term. We assessed the reasonableness of these assumptions
by corroborating recent retail and wholesale funding costs and
benchmarking them against market rates and comparable
institutions, and we re-performed fair value calculations for a
sample of loans.
We tested the completeness and accuracy of data used in the
valuation models to underlying records.
We challenged management on the overall recognition of a gain on
bargain purchase by considering the commercial rationale for the
transaction, market precedent for banks to trade below their book
value, the specific factors that led to this transaction and
evaluating the completeness of the identified acquisition
accounting adjustments.
We validated the consideration paid to bank statements and legal
documents. We evaluated the fair value of purchase consideration
at the acquisition date and considered subsequent evidence arising
during 2025.
We instructed the Bank component team to audit the acquisition
date balance sheet. We inspected their working papers and
summary conclusions reported to the Audit Committee of the
Bank.
We performed stand-back procedures during the measurement
period to assess whether post-acquisition information indicated the
provisional fair values required adjustment.
We have reviewed the disclosures to ensure compliance with
accounting standards and agreed the disclosures to supporting
evidence.
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How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Group and the Society, the accounting processes and
controls, and the industry in which they operate.
All of the Group’s activities are administered in the United Kingdom. The principal activity of the Group is the provision of
savings products and mortgage finance to members and other customers. The Group’s mortgage book is predominantly
secured on UK residential owner-occupied and buy to let lending. On 1 January 2025, the Society acquired the entire share
capital of The Co-operative Bank Holdings p.l.c., the ultimate parent of The Co-operative Bank. As a result, the financial
statements consolidate the results and the financial position of The Co-operative Bank Holdings p.l.c. and its subsidiaries
for the entire year. The Group also includes several structured entities which administer the Group’s funding programmes
by virtue of the Group’s control over them. A component is each controlled subsidiary that is a separate legal entity within
the Group.
Throughout our risk assessment, we tailored our determination as to which entities and balances we needed to perform
testing over to support our Group and Society opinions, taking into account the new Group structure, accounting processes
and controls.
The risk of material misstatement can be reduced to an acceptable level by testing the most financially significant entities
within the Group and those that drive particular significant risks identified as part of our risk assessment, providing us with
sufficient coverage for each financial statement line item ('FSLI'). Coventry Building Society, The Co-operative Bank
Holdings p.l.c., The Co-operative Bank and Godiva Mortgages Limited were considered significant due to their size and risk
in the context of Group's consolidated financial statements and hence were full scope audit components. ITL Mortgages
Limited, Coventry Building Society Covered Bonds LLP, Coventry Godiva Covered Bonds LLP and Economic Master Issuer plc
are identified as being individually financially significant in respect of only one or more account balances. We classified
these as non-significant components and performed specific audit procedures over those account balances. All remaining
components were identified as inconsequential and no further audit procedures were performed to support the Group audit
opinion. We perform all of the work to support the Group and Society audit opinions.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the process management adopted to assess the
extent of the potential impact of climate risk on the Group's and Society’s financial statements and support the disclosures
made in relation to climate change in the Annual Report. In addition to enquiries with management, we also:
• Read the materials considered by the Group’s Climate Risk Forum during the year to consider the impact on our audit
risk assessment;
• Considered the exposure of the Group and Society’s mortgage portfolio to physical and transition risks by examining the
output of assessments performed by management during the year; and
• Considered the consistency of the disclosures in relation to climate change within the Annual Report with the financial
statements and our knowledge obtained from our audit.
Our procedures did not identify any material impact in the context of our audit of the financial statements as a whole, or
our key audit matters for the year ended 31 December 2025.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the annual accounts as a whole as follows:
Group financial statements
Society financial statements
Overall materiality
£18.0 million (2024: £16.2 million).
£13.0 million (2024: £9.3 million).
How we determined it
5% of underlying profit before tax.
0.5% of total equity.
Rationale for
benchmark applied
We determined that underlying profit before tax,
excluding accounting impacts of the Bank
acquisition, is the appropriate benchmark. This
focuses on recurring earnings and removes
accounting balances arising as part of the
acquisition, including the gain on a bargain
purchase recognised, and deal and integration
costs. Management monitors the business on
underlying profit before tax. In 2024 we adopted a
materiality based on statutory profit before tax.
We determined that total equity is the
appropriate benchmark for the Society in 2025.
This reflects that the users' focus is on capital
strength and balance sheet resilience rather than
Society standalone profitability, particularly
given the Society holds the majority of the
capital in the Group and capital adequacy
remains a key consideration post-acquisition of
the Bank. In 2024 we adopted a materiality
based on statutory profit before tax.
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For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group
materiality. The range of materiality allocated across components was £8.4 million to £16.4 million. Certain components
were audited to a local statutory audit materiality that was also less than our overall Group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the
scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for
example in determining sample sizes. Our performance materiality was 75% (2024: 75%) of overall materiality, amounting to
£13.5 million (2024: £12.1 million) for the Group financial statements and £9.75 million (2024: £7.0 million) for the Society
financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our
normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £1.8
million (Group audit) (2024: £0.8 million) and £1.3 million (Society audit) (2024: £0.4 million) as well as misstatements
below those amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group’s and the Society’s ability to continue to adopt the going concern
basis of accounting included:
• A risk assessment to identify critical factors that could impact the going concern basis of preparation, including the
current and forecast financial performance, regulatory metrics and the sector in which the Group operates. As part of
our risk assessment, we reviewed and considered the Group’s strategic plan, regulatory correspondence and
management reports provided to key governance forums;
• Evaluation of the reasonableness of the strategic and capital plan of the Group and Society, including testing key
assumptions and performance of sensitivity analysis using our understanding of the Group and its financial and operating
performance obtained during the course of our audit under stress scenarios. We also considered management’s ability to
accurately forecast financial performance by comparing past business plans to actual results; and
• Testing the appropriateness of the disclosures made in the Annual Report.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group’s and the Society’s ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
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.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s
and Society’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing
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 concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent
otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the
financial statements or a material misstatement of the other information. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report based on these responsibilities.
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With respect to the Annual Business Statement and Directors’ Report we also considered whether the disclosures required
by the Building Societies Act 1986 have been included.
Based on our work undertaken in the course of the audit, the Building Societies Act 1986 requires us also to report certain
opinions and matters as described below.
Annual Business Statement and Directors’ Report
In our opinion, based on our work undertaken in the course of the audit:
• 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 year ended 31 December 2025 is consistent with the accounting
records and 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.
In light of the knowledge and understanding of the Group and Society and their environment obtained in the course of the
audit, we did not identify any material misstatements in the Annual Business Statement and the Directors’ Report.
Corporate governance statement
ISAs (UK) require us to review the directors’ statements in relation to going concern, longer-term viability and that part of
the corporate governance statement relating to the Society’s compliance with the provisions of the UK Corporate
Governance Code, which the Listing Rules of the Financial Conduct Authority specify for review by auditor. Our additional
responsibilities with respect to the corporate governance statement as other information are described in the Reporting on
other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit,
and we have nothing material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their identification of any material uncertainties to the Group’s and
Society’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial
statements;
• The directors’ explanation as to their assessment of the Group’s and Society’s prospects, the period this assessment
covers and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the Society will be able to continue in
operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures
drawing attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the Group and Society was substantially less in
scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their
statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code;
and considering whether the statement is consistent with the financial statements and our knowledge and understanding of
the Group and Society and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of
the corporate governance statement is materially consistent with the financial statements and our knowledge obtained
during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable,
and provides the information necessary for the members to assess the Group’s and Society’s position, performance,
business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control
systems; and
• The section of the Annual Report describing the work of the Audit Committee.
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We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the Society’s
compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the
Listing Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Directors’ responsibilities in respect of the preparation of the Annual Report & Accounts, the
directors are responsible for the preparation of the financial statements in accordance with the applicable framework and
for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they
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
continue 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 the Society or to cease operations, or have no
realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ 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 from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The
extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and Society/industry, we identified that the principal risks of non-compliance with
laws and regulations related to Financial Conduct Authority’s ('FCA') regulations and the Prudential Regulation Authority’s
('PRA') regulations related to the financial statements, and we considered the extent to which non-compliance might have a
material effect on the financial statements. We also consider those laws and regulations that have a direct impact on the
financial statements such as the UK tax legislation and Building Societies Act 1986. We evaluated management’s incentives
and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and
determined that the principal risks were related to posting of inappropriate journal entries that could be used to
manipulate financial performance and potential for management bias in accounting estimates. Audit procedures performed
by the engagement team included:
• Discussions with management and those charged with governance including consideration of known or suspected
instances of non-compliance with laws and regulations and fraud;
• Review of internal audit and compliance monitoring findings throughout the year;
• Reading key correspondence with the Financial Conduct Authority and Prudential Regulation Authority;
• Incorporation of an element of unpredictability in our testing through altering the nature, timing and/or extent of work
performed;
• Challenging assumptions and judgements made by management in their significant accounting estimates; and
• Identifying and testing journal entries, in particular any journal entries posted to unusual account combinations based
on our understanding of usual business operations, and late adjustments.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial
statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing
complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In
other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is
selected.
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A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Society’s members as a body in accordance with
Section 78 of the Building Societies Act 1986 and for no other purpose. We do not, in giving these opinions, accept or
assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
Other required reporting
Building Societies Act 1986 exception reporting
Under the Building Societies Act 1986 we are required to report to you if, in our opinion:
• adequate accounting records have not been kept by the Society; or
• the Society 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.
We have no exceptions to report arising from this responsibility.
Appointment
We were first appointed by the Society for the financial year ended 2019. Our uninterrupted engagement covers seven
financial years.
Other matter
The Society is required by the Financial Conduct Authority Disclosure Guidance and Transparency Rules to include these
financial statements in an annual financial report prepared under the structured digital format required by DTR 4.1.15R -
4.1.18R and filed on the National Storage Mechanism of the Financial Conduct Authority. This auditors’ report provides no
assurance over whether the structured digital format annual financial report has been prepared in accordance with those
requirements.
Other voluntary reporting
Directors' remuneration
The Society voluntarily prepares a Directors’ Remuneration Report in accordance with the provisions of the Companies Act
2006. The directors requested that we audit the part of the Directors’ Remuneration Report specified by the Companies Act
2006 to be audited as if the Society were a quoted company.
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with
the Companies Act 2006.
Chris Shepherd (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Birmingham
26 February 2026
Coventry Building Society | Annual Report & Accounts 2025131
Financial Statements
Income Statements
For the year ended 31 December 2025
Notes
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Interest receivable and similar income
4
3,993
3,294
2,683
3,138
Interest payable and similar charges
5
(2,849)
(2,615)
(2,317)
(2,642)
Net interest income
1,144
679
366
496
Fees and commissions receivable
6
75
4
2
3
Fees and commissions payable
7
(47)
(10)
(9)
(9)
Other operating income
8
15
2
4
2
Losses from derivative financial instruments
9
(102)
(11)
(18)
(11)
Total income
1,085
664
345
481
Administrative expenses
10
(673)
(307)
(246)
(254)
Acquisition & integration related costs
10
(67)
(26)
(58)
(26)
Amortisation of intangible assets
19
(79)
(14)
(18)
(14)
Depreciation of property, plant and equipment
20
(25)
(12)
(12)
(12)
Impairment (charge)/ release on loans and advances to customers
16
(24)
18
(2)
11
Gain on acquisition of a subsidiary
584
—
—
—
Profit before tax
801
323
9
186
Taxation
17
11
(76)
26
(43)
Profit for the financial year
812
247
35
143
Profit for the financial year arises from continuing operations and is attributable to the members of the Society.
Statements of Comprehensive Income
For the year ended 31 December 2025
Notes
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Profit for the financial year
812
247
35
143
Other comprehensive (expense)/ income
Items that will not be transferred to the income statement:
Remeasurement of defined benefit pension plan
(3)
(9)
(3)
(9)
Taxation
17
1
2
1
2
Items that may be transferred to the income statement
Fair value through other comprehensive income investments:
Fair value movements taken to reserves
32
(6)
17
(6)
Amount transferred to the income statement
(31)
3
(17)
3
Taxation
17
—
1
—
1
Cash flow hedges:
Fair value movements taken to reserves
107
(11)
39
27
Amount transferred to the income statement
(235)
(45)
(129)
(122)
Taxation
17
36
16
24
27
Other comprehensive expense for the year, net of tax
(93)
(49)
(68)
(77)
Total comprehensive income/(expense) for the year, net of tax
719
198
(33)
66
The notes on pages 135 to 196 form part of these accounts.
Coventry Building Society | Annual Report & Accounts 2025132
Financial Statements
Balance Sheets
As at 31 December 2025
Notes
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Assets
Cash in hand and balances with the Bank of England
13
11,948
9,893
8,912
9,818
Loans and advances to credit institutions
13
383
329
261
329
Debt securities
14
1,565
502
440
442
Loans and advances to customers
15
72,936
51,801
33,941
33,458
Hedge accounting adjustment
169
(448)
118
(448)
Derivative financial instruments
26
533
1,084
424
1,082
Investment in equity shares
5
9
—
9
Current tax assets
12
—
8
—
Deferred tax assets
23
205
—
—
—
Investments in Group undertakings
18
—
—
19,462
17,591
Intangible assets
19
269
55
48
55
Property, plant and equipment
20
101
47
50
47
Other assets
21
—
725
—
725
Prepayments and accrued income
85
34
45
34
Pension benefit surplus
22
28
—
—
—
Total assets
88,239
64,031
63,709
63,142
Liabilities
Shares
50,830
49,343
50,830
49,343
Customer accounts
20,892
82
187
234
Deposits from banks
24
3,009
3,932
2,055
3,932
Debt securities in issue
25
8,307
6,543
5,615
4,930
Hedge accounting adjustment
29
(68)
7
(68)
Derivative financial instruments
26
320
305
252
254
Current tax liabilities
—
29
—
28
Deferred tax liabilities
23
—
86
44
74
Accruals and deferred income
152
61
81
57
Other liabilities
32
108
28
1,703
1,574
Pension benefit obligation
22
13
5
8
5
Subordinated liabilities
28
248
15
254
15
Subscribed capital
29
42
42
42
42
Total liabilities
83,950
60,403
61,078
60,420
Equity
General reserve
3,506
2,754
1,854
1,879
Other equity instruments
30
665
665
665
665
Fair value through other comprehensive income reserve
—
(1)
(1)
(1)
Cash flow hedge reserve
118
210
113
179
Total equity
4,289
3,628
2,631
2,722
Total liabilities and equity
88,239
64,031
63,709
63,142
The notes on pages 135 to 196 fo rm part of these accounts.
Approved by the Board of directors on 26 February 2026 and signed on its behalf by
David Thorburn
Chair of the Board
Stephen Hughes
Chief Executive
Lee Raybould
Chief Financial Officer
Coventry Building Society | Annual Report & Accounts 2025133
Financial Statements
Statements of Changes in Members'
Interest and Equity
For the year ended 31 December 2025
Group
General reserve
£m
Other equity
instruments
£m
Fair value through
other
comprehensive
income reserve
£m
Cash flow hedge
reserve
£m
Total
£m
As at 1 January 2025
2,754
665
(1)
210
3,628
Profit for the financial year
812
—
—
—
812
Net remeasurement of defined benefit plan
(2)
—
—
—
(2)
Net movement in fair value through other
comprehensive income reserve
—
—
1
—
1
Net movement in cash flow hedge reserve
—
—
—
(92)
(92)
Total comprehensive income/(expense)
810
—
1
(92)
719
Distribution to Additional Tier 1 capital holders
(58)
—
—
—
(58)
As at 31 December 2025
3,506
665
—
118
4,289
As at 1 January 2024
2,573
415
1
250
3,239
Profit for the financial year
247
—
—
—
247
Additional Tier 1 Capital repurchased
(2)
(415)
—
—
(417)
Additional Tier 1 Capital issued
(7)
665
658
Net remeasurement of defined benefit plan
(7)
—
—
—
(7)
Net movement in fair value through other
comprehensive income reserve
—
—
(2)
—
(2)
Net movement in cash flow hedge reserve
—
—
—
(40)
(40)
Total comprehensive income/(expense)
231
250
(2)
(40)
439
Distribution to Additional Tier 1 capital holders
(50)
—
—
—
(50)
As at 31 December 2024
2,754
665
(1)
210
3,628
Society
General reserve
£m
Other equity
instruments
£m
Fair value through
other
comprehensive
income reserve
£m
Cash flow hedge
reserve
£m
Total
£m
As at 1 January 2025
1,879
665
(1)
179
2,722
Profit for the financial year
35
—
—
—
35
Net remeasurement of defined benefit plan
(2)
—
—
—
(2)
Net movement in fair value through other
comprehensive income reserve
—
—
—
—
—
Net movement in cash flow hedge reserve
—
—
—
(66)
(66)
Total comprehensive income/(expense)
33
—
—
(66)
(33)
Distribution to Additional Tier 1 capital holders
(58)
—
—
—
(58)
As at 31 December 2025
1,854
665
(1)
113
2,631
As at 1 January 2024
1,802
415
1
247
2,465
Profit for the financial year
143
—
—
—
143
Additional Tier 1 Capital repurchased
(2)
(415)
—
—
(417)
Additional Tier 1 Capital issued
(7)
665
658
Net remeasurement of defined benefit plan
(7)
—
—
—
(7)
Net movement in fair value through other
comprehensive income reserve
—
—
(2)
—
(2)
Net movement in cash flow hedge reserve
—
—
—
(68)
(68)
Total comprehensive income/(expense)
127
250
(2)
(68)
307
Distribution to Additional Tier 1 capital holders
(50)
—
—
—
(50)
As at 31 December 2024
1,879
665
(1)
179
2,722
The notes on pages 135 to 196 form part of these accounts.
Coventry Building Society | Annual Report & Accounts 2025134
Financial Statements
Statements of Cash Flows
For the year ended 31 December 2025
Notes
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Cash flows from operating activities:
Profit before tax
801
323
9
186
Adjustments for:
Expected credit loss provisions
16
24
(18)
2
(11)
Depreciation and amortisation
104
26
30
26
Interest on subordinated liabilities and subscribed capital
21
6
14
6
Changes to fair value adjustment of hedged risk
56
102
59
28
Gain on acquisition
38
(584)
—
—
—
Other non-cash movements
18
(28)
207
(28)
Non-cash items included in profit before tax
(361)
88
312
21
Loans and advances to credit institutions
175
642
50
642
Loans and advances to customers
(750)
(1,507)
(485)
(1,444)
Prepayments, accrued income and other assets
715
(729)
710
(729)
Changes in operating assets
140
(1,594)
275
(1,531)
Shares
1,524
1,703
1,524
1,703
Customer accounts, deposits and other borrowings
(2,780)
(1,434)
(1,907)
(1,396)
Accruals and deferred income and other liabilities
85
14
30
14
Changes in operating liabilities
(1,171)
283
(353)
321
Interest paid on subordinated liabilities and subscribed capital
(29)
(6)
(18)
(6)
Interest paid on lease liabilities
(1)
—
—
—
Taxation
(60)
(35)
(15)
—
Net cash flows from operating activities
(681)
(941)
210
(1,009)
Cash flows from investing activities
Net cash on acquisition of subsidiary
38
1,841
—
—
—
Purchase of investment securities
(182)
(844)
(16)
(717)
Sale and maturity of investment securities and equities
799
1,902
47
1,785
Purchase of property, plant and equipment and intangible assets
(68)
(26)
(26)
(26)
Net cash flows from investing activities
2,390
1,032
5
1,042
Cash flows from financing activities
Distributions paid to Additional Tier 1 capital holders
(58)
(50)
(58)
(50)
Loans with connected undertakings
—
—
(1,428)
400
Issuance of AT 1 Capital1
—
658
—
658
Repurchase of AT 1 Capital1
—
(417)
—
(417)
Repurchase and repayment of debt securities
(1,232)
(598)
(850)
(430)
Principal elements of lease payments
(9)
(5)
(4)
(5)
Issue of debt securities
1,701
1,824
1,201
1,324
Net cash flows from financing activities
402
1,412
(1,139)
1,480
Net increase in cash
2,111
1,503
(924)
1,513
Cash and cash equivalents at start of year
9,893
8,390
9,818
8,305
Cash and cash equivalents at end of year
13
12,004
9,893
8,894
9,818
1. Net of transaction fees.
Included within cash flows from operating activities, is total interest received of £3,969 million (2024: £3,293 million) and
total interest paid of £2,941 million (2024: £2,555 million) for the Group. For the Society, total interest received of £2,696
million (2024: £3,146 million) and total interest paid of £2,376 million (2024: £2,593 million) is included.
The notes on pages 135 to 196 form part of these accounts.
Coventry Building Society | Annual Report & Accounts 2025135
Financial Statements
Notes to the accounts
1. Accounting policies
Basis of preparation
These accounts have been prepared in accordance with UK adopted International Accounting Standards in accordance with
the requirements of the Building Societies Act 1986, the Disclosure and Transparency Rules of the Financial Conduct
Authority (FCA) and with those parts of the Building Societies (Accounts and Related Provisions) Regulations 1998 that are
applicable to the Group.
The accounts comprise the standalone financial statements of the Society and the consolidated financial statements of the
Group. They have been prepared on a historical cost basis, as modified by the revaluation of financial instruments which
are measured at fair value. As stated in the Directors’ Report, the directors consider that it is appropriate to continue to
adopt the going concern basis in preparing the accounts.
A summary of the Group's accounting policies is set out within this note. These accounting policies have been applied
consistently throughout the current and prior year (where applicable). Further information on judgements in the
application of accounting policies and significant accounting estimates is set out within note 2.
These accounts are presented in pounds sterling and, except where otherwise stated, all figures in the financial statements
have been rounded to the nearest million pounds (£1 million).
Basis of consolidation
The assets, liabilities and results of the Society and its consolidated subsidiaries and structured entities are included in the
financial statements of the Group.
The Group consolidates an entity from the date on which it: (a) has power over the entity; (b) is exposed to, or has the
right to, variable returns from its involvement with the entity; and (c) has the ability to affect those returns through the
exercise of its powers. Upon consolidation, intra-group transactions, balances and unrealised gains and losses are
eliminated.
The Group reassesses whether it controls an entity if facts and circumstances indicate that there are changes in one or
more of these three elements. The Group deconsolidates entities from the date that control ceases.
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. In making this judgement,
the Group considers factors such as the purpose and design of the entity, size and exposure to variability of returns and the
nature of the relationship, including power over the structured entity.
The Society's investment in shares in its subsidiaries is recognised on the Balance Sheet at cost less any provision for
impairment.
Unconsolidated structured entities
Within the Group, the Bank is the sponsor of one unconsolidated structured entity, Warwick Finance Residential Mortgages
Number Three plc. This structured entity is therefore not included within the consolidated results of the Group as its
ongoing interest represents a less than de minimis variability of return. The Group will reassess its requirement to
consolidate this entity on an annual basis.
Changes in accounting standards
Adoption of new and revised standards
There are no amendments to standards effective from 1 January 2025 that apply to and have a material impact on the
Group.
Future accounting developments
Amendments to the Classification and Measurement of Financial Instruments - Amendments to IFRS 9 and IFRS 7 is
effective for accounting periods beginning on or after 1 January 2026. The amendments provide clarification to the
derecognition criteria for financial liabilities when using an electronic payment system and 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 but is not expected to have a material impact to the Group.
IFRS 18 Presentation and Disclosure in Financial Statements is effective for accounting periods beginning on or after 1
January 2027 and was endorsed for use in the UK in December 2025. This standard replaces IAS 1 Presentation of Financial
Statements. Whilst much of IAS 1 is retained in IFRS 18, the standard sets out updated principles for the presentation and
disclosures of information in the financial statements, in particular the income statement. The requirements and impacts
are currently being assessed and whilst it is expected that the presentation of information will be potentially amended, it is
not expected to affect underlying recognition or measurement criteria.
Coventry Building Society | Annual Report & Accounts 2025136
Financial Statements
Notes to the accounts continued
1. Accounting policies continued
Derecognition of financial assets and liabilities
The Group derecognises financial assets where the right to receive cash flows has expired, or where the assets are
transferred with substantially all the risks and rewards of ownership. Where the transfer does not result in the transfer of
cash flows, but the Group assumes an obligation to pay the cash flows to the transferee, the financial assets are also
derecognised.
The Group derecognises financial liabilities when the obligation is discharged, cancelled or has expired.
Financial assets and liabilities are derecognised and a new instrument recognised where a renegotiated or new agreement is
established on substantially different terms; an example of this would be a product port to a new property on a mortgage
loan.
Securitisation and covered bond transactions
The Group has securitised certain mortgage loans by transferring the loans to structured entities controlled by the Group.
These securitisations enable the issuance of debt to investors, who take security in the underlying assets as collateral.
Where it is determined that the Group has control over the entity, the structured entities are fully consolidated into the
Group accounts.
Transfers of mortgage loans to the structured entities are not treated as sales and the loans are not derecognised but
remain on the transferor's own Balance Sheet as it retains substantially all the risks and rewards of the mortgage loans. In
the accounts of the transferor, the proceeds received from the transfer of mortgage loans to structured entities are
accounted for as a deemed loan from the structured entity and are disclosed within Other liabilities on the Balance Sheet.
For covered bonds, the transferring entity, 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 Society or the Bank. In the accounts of the Society, 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 issued debt to be used as collateral for central government schemes or for use in sale and repurchase
agreements (repos) and similar transactions. Some or all of the debt issuances may be retained by the Group.
Investments in such self-issued debt and the associated deemed loan, together with the related income, expenditure and
cash flows, are not recognised in the Society's financial statements.
To manage interest rate risk, the Group enters into derivative transactions with its structured entities, receiving a rate of
interest based on the securitised mortgages and paying a rate inherent in the debt issuances. In accordance with IFRS 9,
these internal derivatives are treated as part of the deemed loan and not separately measured at fair value because the
relevant mortgage loans are not derecognised. All other derivatives relating to securitisations and covered bonds are
explained in the derivatives and hedge accounting policy below.
Sale and repurchase agreements (repos)
Securities sold subject to a commitment to repurchase them are retained on the Balance Sheet when substantially all the
risks and rewards of ownership remain within the Group. The counterparty liability is included separately on the Balance
Sheet, as appropriate. The difference between the sale and repurchase price is accrued over the life of the agreements
using the Effective Interest Rate (EIR) method.
Interest receivable and interest payable
For instruments measured at amortised cost, the EIR method is used to measure the carrying value of a financial asset or a
liability and to allocate associated interest income or expense and transaction costs over the relevant period. The EIR is the
rate that discounts the estimated future cash payments or receipts over the expected life of the financial instrument or,
when appropriate, a shorter period, to the net carrying amount of the financial asset. Interest income on fair value through
other comprehensive income (FVOCI) debt is also included on an EIR basis.
In calculating the EIR, the Group estimates cash flows considering all contractual terms of the financial instrument. For
assets that are in default and assessed as stage 3 under IFRS 9, interest is calculated by applying the EIR to the expected
recoverable amount. The EIR calculation includes all directly attributable fees received and paid and costs borne and all
other premiums above or below market rates.
Fees and commissions
Fees and commissions receivable and payable that are not spread across expected asset lives under the EIR method are
taken to income on an accruals basis as the related obligations are satisfied.
Coventry Building Society | Annual Report & Accounts 2025137
Financial Statements
Notes to the accounts continued
1. Accounting policies continued
Leases
The majority of the Group’s leases relate to property including branches, head office buildings and data centres. The Group
also has other leases that relate to cars and office equipment.
Where the Group enters into a lease or contract that meets the criteria for lease classification under IFRS 16, the Group
recognises an asset representing its right to use the leased item and a corresponding liability on the Balance Sheet.
The lease liability is measured at the present value of the lease payments including any incentives, additional lease
components and lease extension or termination options where they are reasonably certain to be exercised.
These payments are discounted using the Group's incremental borrowing rate since no interest rates are specified in the
Group's leases.
The right-of-use asset is measured at cost including the lease liability and any initial direct costs.
The right-of-use asset is depreciated over the shorter of its useful life or the lease term on a straight line basis through the
Income Statement, and the interest charge on the lease liability is recognised within Interest payable. In the Cash Flow
Statement, the interest paid on lease liabilities is included in Interest paid on lease liabilities, and the principal element of
the lease payments is included in Principal elements of lease payments.
Expenses relating to leases that are for less than 12 months, of low value or relate to intangibles such as software are
recognised in the Income Statement as charged.
On an ongoing basis the Group reviews the right-of-use asset and lease liability for any modifications that would require
remeasurement and makes an assessment for impairment as required.
Taxation including deferred tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities, based on tax rates and laws that are enacted or substantively enacted by the Balance Sheet date.
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. Deferred tax assets are recognised only to the extent that it is probable that
future taxable profits will be available against which they can be utilised and is supported by a Board approved financial
plan.
Deferred tax assets and liabilities are measured on a non-discounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, and based on tax rates and laws that have been enacted or substantively
enacted at the reporting date. Deferred tax assets and liabilities are offset when there is both a legally enforceable right
and an intention to settle on a net basis.
Current and deferred tax is charged or credited directly to the Statement of Comprehensive Income if it relates to items
that are credited or charged to the Statement of Comprehensive Income. Otherwise corporation tax is recognised in the
Income Statement.
Business combinations
The acquisition of the Bank represents a business combination under IFRS 3 and is accounted for using the acquisition
method. Identifiable assets and liabilities as well as consideration are measured at their fair value at the date of
acquisition. Goodwill is measured as the difference between the fair value determined for the acquired assets and
liabilities and the fair value of consideration paid. Where the goodwill arising is negative, it is recognised in the income
statement as a gain on date of acquisition. Other intangible assets arising as a result of the business combination and day
one fair value adjustments arising are amortised over the estimated useful life.
Segmental reporting
The Board is responsible for allocating resources and assessing the performance of the business and is therefore identified
as the chief operating decision maker.
With effect from 1 January 2025, subsequent to the acquisition of the Bank, the Group has determined that it has two
reportable segments as the Board reviews performance and makes decisions based on this information. The Group operates
solely within the United Kingdom and therefore there is no segmental analysis on a geographical basis.
Financial assets
Financial assets comprise cash and balances with the Bank of England, loans and advances to credit institutions, debt
securities, loans and advances to customers, derivative financial instruments and investment in equity shares.
Coventry Building Society | Annual Report & Accounts 2025138
Financial Statements
Notes to the accounts continued
1. Accounting policies continued
Financial assets continued
At initial recognition, the Group measures financial assets at their fair value. Subsequently, financial assets are classified in
one of the following measurement categories:
• Amortised cost.
• Fair value through other comprehensive income (FVOCI).
• Fair value through profit and loss (FVTPL).
Financial assets are classified based on an assessment of the Group’s business model for managing the assets and their
contractual cash flow characteristics.
Amortised cost
Financial assets held to collect contractual cash flows and where contractual terms comprise solely payment of principal
and interest are classified as amortised cost. This category of financial asset includes cash and balances with the Bank of
England, loans and advances to credit institutions, loans and advances to customers, and a small portfolio of debt
securities.
Financial assets within this category are recognised on either the receipt of cash or deposit of funds into one of the Group’s
bank accounts or when the funds are advanced to borrowers. After initial recognition, the assets are measured at amortised
cost using the EIR method, less provision for expected credit losses.
Assets acquired through a business combination or portfolio acquisition are recognised at fair value at the acquisition date.
The fair value at acquisition becomes the opening amortised cost for acquired assets. Fair value adjustments are made to
reflect both credit risk and interest yield associated with the acquired loan assets. Any discount between the amount due
and the fair value is subsequently recognised in interest receivable and similar income using the EIR method.
Fair value through other comprehensive income (FVOCI)
Financial assets held with the intent of collecting contractual cash flows or selling, where contractual terms comprise solely
payment of principal and interest, are classified and measured at FVOCI. This category of financial asset includes most of
the Group’s debt securities which are held to manage liquidity.
Assets are measured at fair value based on quoted market prices or prices obtained from market intermediaries where
available. In cases where quoted market prices are not available, discounted cash flow valuations are used.
Interest on FVOCI assets is recognised in Interest receivable and similar income in the Income Statement, using the EIR
method.
Unrealised gains and losses arising from changes in fair value are recognised directly in Other comprehensive income,
except for impairment losses and foreign exchange gains and losses, which are recognised in the Income Statement. Gains
and losses arising on the sale of FVOCI assets, including any cumulative gains or losses previously recognised in Other
comprehensive income, are recognised in the Income Statement.
Fair value through profit and loss (FVTPL)
FVTPL is the default category for financial assets which do not meet the criteria for amortised cost or FVOCI assets. Assets
that are classified as FVTPL include derivative financial instruments, investments in equity shares and for the Society,
investments in group undertakings that are debt instruments with write-down features.
These assets are carried at fair value and are initially recognised at the trade date.
Interest income and changes in the fair value of derivatives other than the effective portion of those in cash flow hedge
accounting relationships are recognised in the Income Statement. The impact of hedging on the measurement of financial
assets and liabilities is detailed in the derivatives and hedge accounting policy.
Dividends and changes in the fair value of equity instruments are recognised in the Income Statement.
Impairment of financial assets
The Group assesses, on a forward-looking basis, the expected credit loss (ECL) associated with its financial assets carried at
amortised cost and FVOCI and its mortgage pipeline commitments. Financial assets held at FVTPL are not subject to
impairment under IFRS 9.
IFRS 9 requires the Group to categorise its financial assets into one of four stages at the reporting date.
Assets that are performing are shown in stage 1; assets where there has been a significant increase in credit risk since
initial recognition are in stage 2; assets that were not credit impaired or in default at origination but have since become so
are in stage 3; and assets that were Purchased or Originated Credit Impaired are classed as POCI. The Group is required to
recognise a 12 month ECL allowance on all stage 1 assets and a lifetime ECL allowance on all stage 2, 3 and POCI assets.
Whilst stage 2 or 3 assets may cure and revert to stage 1, POCI assets always attract a lifetime ECL until derecognition.
Purchased assets that are not POCI are initially allocated to stage 1 on recognition by the Group.
Coventry Building Society | Annual Report & Accounts 2025139
Financial Statements
Notes to the accounts continued
1. Accounting policies continued
Impairment of financial assets continued
The Group’s treasury assets are investment grade and therefore assumed to be in stage 1, as permitted by IFRS 9.
Accordingly, due to the extremely low probability of default (PD) of these instruments, the resulting ECL is immaterial to
the financial statements.
Loans and advances to customers
Significant accounting judgements – identifying significant increase in credit risk
The Group considers a loan to have experienced a significant increase in credit risk when one or more of the following
qualitative, quantitative or backstop criteria have been met.
Qualitative criteria
The qualitative measures used to allocate a loan to stage 2 are aligned to the Group’s underwriting and forbearance
practices. In some cases, the qualitative measures will be evident before the borrower’s credit score is impacted and they
are therefore lead indicators of a deteriorating credit risk. These qualitative measures can be assessed as part the Group's
underlying ECL model methodology, or applied as judgemental adjustments. Further information on the application of these
judgemental adjustments is disclosed in Note 16.
Other criteria include county court judgements, bankruptcy (with no arrears), temporary transfer to interest only or poor
external credit bureau data that exceeds the Group’s underwriting policy at the reporting date, even if the loan is currently
performing. For business and commercial exposures, the main trigger would be moving to a ‘watchlist’ status. Qualitative
criteria are monitored and reviewed periodically for appropriateness.
Quantitative criteria
The Group uses internal credit risk gradings that reflect its assessment of the PD of individual borrowers and
counterparties. Given the Group’s very low risk loan book, a deterioration in internal risk grade rating may still result in a
very low PD. Therefore in order for the loan to be assessed as stage 2, the portfolio-specific relative PD deterioration is
typically subject to a minimum PD floor.
Backstop criteria
In addition, a loan is considered to have experienced a significant increase in credit risk if it is more than one month past
due. Loans subject to this backstop measure will typically continue to be classified as stage 2 for a period of 12 months
from the date that the arrears fall below one current monthly repayment.
Default
The Group considers a loan to be in default when the loan is three months or more in arrears i.e. current arrears balances
are equal to three or more current monthly repayments. Alternatively, a loan is considered to be in default if certain
qualitative criteria are met, which can include the following unlikeliness to pay indicators:
• The customer is bankrupt and the account is in arrears, or the customer has had an individual voluntary arrangement in
the last three years at the bureau or with internal bankruptcy.
• Litigation proceedings against the borrower have begun and the account is in arrears.
• The loan is interest only and has gone three months past the scheduled term date, or 12 months past the contractual
trigger event for equity release loans.
• The loan is interest only and has delayed the repayment of capital or extended the term of their interest only mortgage
for forbearance reasons or under the new temporary FCA guidance.
These definitions where relevant align to the Group's internal definition of arrears for risk management and collection
purposes.
Inputs, assumptions and estimation techniques
A loan is considered to no longer be in default (i.e. to have been cured) when a consecutive period of 12 months has passed
since it met any of the above qualitative and quantitative criteria (cure period).
The measurement of expected credit loss reflects:
• An unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes.
• The time value of money.
• Reasonable and supportable information that is available without undue cost or effort at the reporting date about past
events, current conditions and forecasts of future economic conditions.
Coventry Building Society | Annual Report & Accounts 2025140
Financial Statements
Notes to the accounts continued
1. Accounting policies continued
Loans and advances to customers continued
Inputs, assumptions and estimation techniques (continued)
Expected credit losses (ECLs), being forward-looking, are discounted back to the reporting date and are calculated by
multiplying the probability of default (PD), exposure at default (EAD) and loss given default (LGD) where:
• The PD represents the likelihood of a borrower defaulting over either the next 12 months or over the remaining lifetime
of the mortgage (being the contractual lifetime).
• EAD is the amount the Group expects to be owed at the time of default.
• LGD represents the Group’s expectation of the extent of loss on a default and takes account of available collateral,
likely sales cost and potential discount needed to secure a sale.
More information on the forward-looking information incorporated in the ECL calculations is included in note 16.
Post model adjustments
The Group applies post model adjustments (PMAs) to reflect ECLs relating to items that cannot be adequately captured by
existing models and as a result, management judgement and estimation are required in order to reflect the underlying risk.
The assumptions used in calculating ECLs are regularly reviewed and model outputs and components of ECL estimates are
assessed by management in line with internal policy. This is used across all aspects of the model including the assessment
of the predicted PD or LGD of an account against the actual outturn.
ECL allowance on acquired portfolios
Following an acquisition, the acquiree, i.e. the Group, is required under IFRS 9 to recognise a new ECL allowance against
the acquired non-credit impaired financial assets. Therefore all of the Bank's non-credit impaired assets were initially
recognised by the Group in stage 1. Loans that are credit impaired on acquisition are classed as purchased or originated
credit-impaired ('POCI'), with any credit risk against these assets covered by the fair value adjustment recognised against
the assets. Such credit impaired loans remain categorised as POCI throughout their life, irrelevant of any significant
improvement in credit quality.
Governance of Expected Credit Losses
Governance over ECLs is carried out by the Group's ECL Working Group (ECLG), which meets on a regular basis, at least
quarterly. ECLG is made up of members from the Finance and Credit Risk functions in addition to members from the second
and third lines of defence. They are responsible for the review of key assumptions and judgements within the ECL
calculations such as the staging criteria or need for post model adjustments and does this by review of key management
information and assessing existing and future risks to the portfolio. Assumptions and judgements are approved by the ECLG
with oversight performed by the Board Audit Committee.
Governance over the IFRS 9 ECL models is carried out by the Model Risk Committee and includes assessments of model
performance, model monitoring and model validation at regular intervals and on an ad hoc basis where significant model
enhancements are carried out. See the Risk Management Report for more information on model risk.
ECLs for loans and advances to customers reduce the carrying amount of these assets in the Balance Sheet and the
movement in ECLs is included in Impairment charge in the Income Statement. For mortgage pipeline exposures and
undrawn facilities, the provision is included in the ECL provision in the Balance Sheet.
Further information on PMA in place at the year end can be found in note 16.
Calculation of expected credit loss under IFRS 9 – loans with group undertakings
Loans with group undertakings are valued at cost less any provision for impairment. These balances are reviewed annually
for evidence of potential impairment or significant increase in credit risk with any impairment recognised in the Income
Statement. No impairment has been identified.
Write-off policy
The Group writes off financial assets when it has exhausted all practical recovery efforts and has concluded that there is no
reasonable expectation of recovery.
Coventry Building Society | Annual Report & Accounts 2025141
Financial Statements
Notes to the accounts continued
1. Accounting policies continued
Derivative financial instruments
The Group holds derivative financial instruments only to manage the risks associated with its non-variable rate assets and
liabilities and its foreign currency transactions, and not for speculative or trading purposes.
All external derivative financial instruments are carried at fair value. Derivatives are principally valued by discounting cash
flows using yield curves that are based on observable market data. In measuring fair value, separate adjustments are made
for credit risk to the extent not already included in the valuation.
Hedge accounting
The Group applies the requirements of IAS 39 for hedge accounting. Where the documentation, eligibility and testing
criteria for hedge accounting set out in IAS 39 are met, the Group applies hedge accounting and designates the hedging
derivative as either hedging fair value or cash flow risks. The Group undertakes this on both an individual and a portfolio
hedge accounting basis.
The acquisition of the Bank included a portfolio of non-interest bearing balances (NIBBs), which are financial instruments
that have not been previously held within the Group. The Group has relied on the provisions of UK-adopted IAS 39 that
allows an effective hedge accounting relationship to be designated for the interest rate exposure arising from stable, non-
interest bearing current accounts based on behavioural modelling of their expected duration.
Fair value hedges
Changes in the fair value of derivatives that are designated in fair value hedge relationships are recorded in the Income
Statement under Net gains/losses from derivative financial instruments in the period in which the movement occurs,
together with the change in fair value of the hedged asset or liability that is attributable to the hedged risk (interest rate
risk). This also applies if the hedged item is classified as an FVOCI financial asset.
Cash flow hedges
Gains and losses on derivative financial instruments hedging the variability in cash flows of a designated asset or liability
are recognised directly through the Statement of Comprehensive Income in the cash flow hedge reserve. The relevant
portion of the gain or loss on the hedging instrument is recognised in the Income Statement immediately to the extent that
the hedge is deemed ineffective under IAS 39. Any amounts deferred to the cash flow hedge reserve are subsequently
recycled to the Income Statement when the underlying asset or liability being hedged impacts the Income Statement, for
example, when foreign exchange movements occur.
Intangible assets
Intangible assets are stated at cost less accumulated amortisation and any accumulated impairment. Maintenance costs
associated with the operation of these intangibles are charged to the Income Statement as incurred. Amortisation is
charged to the Income Statement on a straight line basis over the useful life of the asset commencing from the date the
asset is ready for use.
The useful life of computer software is reviewed by management at each financial year end and is currently between three
and eight years for assets which are currently in use.
Software development costs, both internal and external, and purchased software that is not an integral part of a related
hardware purchase are recognised as an intangible asset if it is probable that: (a) the asset is controlled by the Group; (b) it
is separately identifiable; and (c) it will generate future economic benefits. For each significant project undertaken by the
Group, an assessment of capitalisation criteria including future economic benefit is performed by the relevant business area
and reviewed in accordance with agreed governance processes.
Intangible assets held by the Group also includes a core deposit relationship asset recognised as part of business
combinations and is held at cost (equivalent to fair value at acquisition) less accumulated amortisation and impairment.
This is amortised over an estimated useful life of five years on a straight line basis.
Intangible assets, including assets in the course of construction, are reviewed for impairment at each reporting date or
whenever events or changes in circumstances indicate that the carrying amount may exceed the recoverable amount.
Where impairment is identified, the asset is written down immediately to the estimated recoverable amount and the
impairment amount is charged to the Income Statement.
Coventry Building Society | Annual Report & Accounts 2025142
Financial Statements
Notes to the accounts continued
1. Accounting policies continued
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment.
The carrying values of property, plant and equipment are reviewed at each reporting date for impairment or whenever
events or changes in circumstances indicate that the carrying value may not be recoverable. Where this is the case, the
asset is written down immediately to the estimated recoverable amount.
Gains and losses on disposals are determined by comparing the net disposal proceeds with the carrying value of the asset
and are included within the Income Statement.
Depreciation commences when the asset is ready for use and is provided on a straight line basis over the anticipated useful
life of the asset, which is typically as follows:
Freehold and long leasehold buildings
Over a period of 50 years
Leasehold adaptations
Shorter of remaining term of the lease and useful life
Equipment, fixtures and fittings
Three to eight years
Employee benefits
Pensions
The Group operates both defined benefit and defined contribution pension schemes for employees.
Contributions to the defined contribution pension schemes are recognised as an expense in the Income Statement as
incurred, on an accruals basis.
The Group's net obligations under each defined benefit pension scheme are assessed annually by independent qualified
actuaries. The net obligations are calculated as the difference between the fair value of the schemes' assets and the
amount of future entitlements earned by the schemes' members from service in prior periods, discounted back to present
values using a rate based on an index of long-dated AA rated corporate bonds for each separate scheme. This calculation
allows the net obligation of each scheme to be expressed as either a surplus or a deficit, which is recognised as either an
asset or a liability respectively in the Group's accounts at the Balance Sheet date.
Gains or losses arising from the remeasurement of the defined benefit pension schemes are recognised in full, in the year
they occur, in the Statement of Comprehensive Income.
Other long-term employee benefits
The cost of bonuses payable 12 months or more after the end of the financial years in which they are earned is recognised
in the year in which the employees render the related service.
Short-term employee benefits
The cost of short-term employee benefits, including wages and salaries, social security costs, bonuses payable within 12
months and healthcare, is recognised in the year of service.
Financial liabilities
Financial liabilities include shares, customer accounts, bank and other deposits, debt securities in issue, derivative financial
instruments, subordinated liabilities and subscribed capital. The Group classifies its financial liabilities into the following
categories:
Amortised cost
Financial liabilities, other than those classified as fair value through profit and loss, are measured on an amortised cost
basis reflecting their face value adjusted for any unamortised premiums, discounts and transaction costs directly
attributable to the acquisition or issue.
Amortisation is recognised in Interest payable and similar charges at the Effective Interest Rate of the liability.
Fair value through profit and loss
All derivatives are carried at fair value. Changes in the fair value of derivatives other than those in cash flow hedge
accounting relationships are recognised in the Income Statement. The impact of hedging on the measurement of financial
assets and liabilities is detailed in the derivatives and hedge accounting policy above. For changes in the fair value of
derivatives in cash flow hedge accounting relationships, see the accounting policy for cash flow hedges.
In the Society only, specific debt securities in issue and subordinated liabilities have been designated at fair value in order
to avoid an accounting mismatch where the financial instruments have been downstreamed to the Bank on a like-for-like
basis and the corresponding internal assets have been mandatorily classified at fair value. As this mismatch does not persist
at the Group level, these instruments are classified at amortised cost on the Group balance sheet.
Coventry Building Society | Annual Report & Accounts 2025143
Financial Statements
Notes to the accounts continued
1. Accounting policies continued
Provisions and contingent liabilities
A provision is recognised when there is a present obligation as a result of a past event, it is probable that the obligation will
be settled and the amount can be estimated reliably.
Contingent liabilities are potential obligations from past events which will only be confirmed by future events. Contingent
liabilities are not recognised within the Balance Sheet.
Equity instruments
Financial instruments are classified as equity instruments where the contractual arrangements with the holder do 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.
The proceeds of the issuance of equity instruments are included in equity net of the costs directly attributable to the
issuance.
Distributions to holders of equity instruments are recognised when they become irrevocable and are deducted from the
general reserve.
Foreign currency translation
The consolidated financial statements are presented in pounds sterling, which is the functional currency of the Group.
Foreign currency transactions are translated into sterling using the exchange rates prevailing at the dates of the
transactions. Monetary items denominated in foreign currencies are re-translated at the rate prevailing at the Balance
Sheet date. Foreign exchange gains and losses resulting from re-translation and settlement are recognised on a net basis in
the Income Statement within Interest payable and similar charges.
Cash and cash equivalents
Cash and cash equivalents in the Statement of Cash Flows comprise balances with less than three months’ maturity from
the date of acquisition, including cash and non-restricted balances with central banks, and loans and advances to credit
institutions. Restricted balances such as cash collateral are excluded from cash and cash equivalents.
IFRS disclosure
For ease of reference, certain audited IFRS disclosures related to credit, market and liquidity and funding risks are included
within the Risk Management Report.
A maturity analysis for all assets and liabilities is presented in the Liquidity and Funding section of the Risk Management
Report.
Audited information is also included within the Directors’ Remuneration Report. These disclosures, where marked as
'audited', are covered by the Independent Auditors' Report.
Coventry Building Society | Annual Report & Accounts 2025144
Financial Statements
Notes to the accounts continued
2. Judgement in applying accounting policies and significant
accounting estimates
In the process of applying accounting policies, the Group makes various judgements, estimates and assumptions that have
had a significant effect on the amounts recognised in the financial statements. The Group has also made assumptions and
estimates that could affect the reported amount of assets and liabilities both in the accounts and in the following financial
years.
In relation to the acquisition of the Bank on 1 January 2025, the Group made significant judgements and estimates 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. This resulted in the recognition of a gain on acquisition of £584 million.
Further information is included in note 38.
Other significant judgements, assumptions and estimates are disclosed in the following notes:
Significant accounting policy judgements
Notes
Determining a significant increase in credit risk (SICR) under IFRS 9
1
Significant accounting assumptions and estimates
Measurement of deferred tax assets in respect of future taxable profits
23
The significant accounting policy judgements included the classification and measurement of equity release loans in the
prior year. As a result of this being a small residual and closed portfolio in run off, this is no longer classed as a significant
accounting policy judgment.
In the prior year, the significant accounting assumptions and estimates included, in relation to expected credit loss
provision on loans and advances to customers, the application of post model adjustments and forward-looking information
incorporated in the ECL models. As a result of the nature of risk in the lending portfolio in the context of the Group
financial statements, these are no longer classed as a significant accounting assumption and estimate.
3. Segmental reporting
Coventry Building Society and its subsidiaries all operate in the United Kingdom and therefore no further geographical
analysis has been presented.
The chief operating decision maker has been identified as the Group Board. The Board reviews the Group's internal
reporting in order to assess performance and allocate resources. Operating segments are reported in a manner consistent
with the internal reporting provided to the Board.
The Group operates with the following two segments:
Society sub-group: Provides retail financial services across mortgages and savings products to individual members and
customers. Includes all income and costs associated with Coventry Building Society, Godiva Mortgages Ltd, ITL Mortgages
Ltd and the consolidated Special Purpose Vehicles (SPV), (namely Coventry Building Society Covered Bonds LLP, Coventry
Godiva Covered Bonds LLP and Economic Master Issuer plc).
Bank sub-group: Provides retail and business banking services across mortgages, savings, current accounts and unsecured
lending products to individual, business and commercial customers. Includes all income and costs associated with The Co-
operative Bank Holdings p.l.c., The Co-operative Bank p.l.c. and their subsidiaries and the consolidated SPV Moorland
Covered Bonds LLP.
In addition to the two segments identified above, certain other financial adjustments arise at a consolidated level as a
result of combining the two organisation segments together. These have been classified separately as a consolidation
category.
Coventry Building Society | Annual Report & Accounts 2025145
Financial Statements
Notes to the accounts continued
3. Segmental reporting continued
There is no comparative segmental reporting disclosed for the prior period. Prior to the acquisition of the Bank, the Group
had no separately identified segments, being a wholly UK operating retail financial services organisation under one banking
licence.
Society sub-group
2025
£m
Bank sub-group
2025
£m
Consolidation
2025
£m
Group
2025
£m
Net interest income1
611
431
102
1,144
Other non-interest (expense)/ income
(21)
52
(90)
(59)
Total income
590
483
12
1,085
Administrative expenses
(301)
(372)
—
(673)
Acquisition & integration related costs
(58)
(9)
—
(67)
Amortisation and depreciation
(29)
(45)
(30)
(104)
Impairment charge
(2)
(4)
(18)
(24)
Gain on acquisition of a subsidiary
—
—
584
584
Profit before tax
200
53
548
801
Total assets
64,618
24,981
(1,360)
88,239
Total liabilities
60,962
23,629
(641)
83,950
1. Net interest income of Society sub-group and Bank sub-group includes intercompany interest of £17m paid by the Bank to the Society, which is eliminated in the Group.
4. Interest receivable and similar income
[]
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
On financial assets measured at amortised cost:
Loans and advances to customers
2,795
1,846
1,262
1,145
Connected undertakings
—
—
546
555
Interest on other liquid assets1
562
496
420
490
Interest and other income on debt securities measured at FVOCI
96
60
7
56
Net income on financial instruments in a qualifying hedge relationship
539
892
448
892
Total interest receivable and similar income calculated using the EIR
method
3,992
3,294
2,683
3,138
Interest income on derivatives not in a designated hedging relationship
1
—
—
—
Total interest receivable and similar income
3,993
3,294
2,683
3,138
1. Interest on other liquid assets includes £526 million for the Group and £407 million for the Society (2024: £470 million, Group and Society) in respect of interest on reserve balances
with the Bank of England.
5. Interest payable and similar charges
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
On shares held by individuals
1,844
1,935
1,844
1,935
On customer accounts
400
—
—
—
On subscribed capital
5
5
5
5
On other deposits and borrowings
Subordinated liabilities
16
1
9
1
Debt securities in issue
317
229
182
150
Loans from connected undertakings
—
—
119
128
Other1
192
241
114
241
Net expense from hedging instruments
74
204
42
182
Foreign currency losses
1
—
2
—
Total interest payable and similar charges
2,849
2,615
2,317
2,642
1. Other interest payable includes £104 million for the Group and £43 million for the Society (2024: £154 million, Group and Society) relating to interest on balances drawn under the
Term Funding Scheme and £23 million for the Group and £20 million for the Society (2024: £51 million,Group and Society) of interest on collateral in respect of swap agreements.
Coventry Building Society | Annual Report & Accounts 2025146
Financial Statements
Notes to the accounts continued
6. Fees and commissions receivable
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Mortgage related administration fees
8
3
2
2
Current accounts
58
—
—
—
Credit cards
7
—
—
—
Other fees and commissions
2
1
—
1
Total
75
4
2
3
Group fees and commissions receivable for current accounts represents income for merchant interchange and added value
accounts.
7. Fees and commissions payable
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Mortgage related administration fees
6
4
3
3
Current accounts
31
—
—
—
Credit cards
4
—
—
—
Other fees and commissions
6
6
6
6
Total
47
10
9
9
Group fees and commissions payable for current accounts represents costs for provided added value accounts as well as
access to payment networks.
8. Ot her operating income
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Investment in equity shares
5
2
3
2
Foreign exchange gains
8
—
—
—
Other
2
—
1
—
Total
15
2
4
2
9. Net losses from derivative financial instruments
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Derivatives designated as fair value hedges
Losses on derivatives designated as fair value hedges
(753)
(119)
(625)
(119)
Movement in fair value of hedged items attributable to hedged risk
549
(16)
508
(16)
Derivatives designated as fair value hedges
(204)
(135)
(117)
(135)
Derivatives designated as cash flow hedges
Interest rate
108
126
108
126
Derivatives designated as cash flow hedges
108
126
108
126
Losses on other derivatives
(6)
(2)
(9)
(2)
Total
(102)
(11)
(18)
(11)
Further information on the Group’s risk management strategy and how it hedges interest rate and foreign exchange risk is
included in note 26.
Losses on other derivatives where hedge accounting relief has not been obtained are £6 million over the year for the Group
and £9 million for the Society (2024: £2 million loss Group and Society).
The gains and losses recognised represent both the impact of early termination of derivative instruments and timing
differences, which are expected to reverse over the remaining life of the derivatives, although further volatility may also
be experienced. Within losses on derivatives designated as fair value hedges reported in the year, £99 million is included
which arose from the restart of the hedging programme against the acquired Bank's mortgage portfolio and non-interest
bearing liabilities as well as liquidity instruments.
Coventry Building Society | Annual Report & Accounts 2025147
Financial Statements
Notes to the accounts continued
9. Net losses from derivative financial instruments continued
Foreign exchange losses of £128 million (2024: £78 million gains) have been recognised in the Income Statement relating to
the principal amount of financial instruments held at amortised cost. This is offset by foreign exchange gains of £127 million
(2024: £81 million loss) on derivative financial instruments held at fair value.
10. Administrative expenses
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Employee costs
Wages and salaries
252
137
119
137
Social security costs
33
15
18
15
Pension costs
17
9
9
9
302
161
146
161
Other expenses
Information systems
162
52
35
52
Training, recruitment and other employee costs
12
13
8
13
Premises and facilities
21
9
10
9
Legal, professional and consultancy
67
36
26
36
Marketing and communications
16
9
12
9
Other operating expenses (include project costs)
93
27
62
26
Intercompany management charge
—
—
(53)
(52)
Total
673
307
246
254
Acquisition and integration related costs
67
26
58
26
Total administrative expenses
740
333
304
280
Acquisition and integration related costs includes the residual legal, professional and consultancy fees in relation to the
purchase of the Bank as well as the one off costs relating to the bringing together of people, systems and processes.
The intercompany management charge reflects a contribution to operational costs by Godiva Mortgages Limited and ITL
Mortgages Limited to the Society in respect of management and servicing of their mortgage portfolios. There is no
management recharge for services between the Society and Bank in the year.
The remuneration of the external auditors, PricewaterhouseCoopers LLP, (excluding VAT) is set out below:
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Audit of the Group and Society annual accounts
1.3
1.4
1.3
1.4
Audit of Group subsidiaries
2.6
0.2
—
—
Audit related assurance services
0.3
0.1
0.3
0.1
Other non-audit services
0.3
0.3
0.2
0.3
Total
4.5
2.0
1.8
1.8
11. Employee numbers
The average number of persons employed during the year (including executive directors) was:
Group
2025
Group
2024
Society
2025
Society
2024
Full time
4,598
2,358
2,957
2,358
Part time
1,354
722
781
722
Total
5,952
3,080
3,738
3,080
Head office and administrative centres
5,052
2,516
3,190
2,516
Branches
900
564
548
564
Total
5,952
3,080
3,738
3,080
The average number of employees of the Group on a full time equivalent basis was 5,520 (2024: 2,821) and all of these are
employed within the United Kingdom.
During the year, a number of Bank head office employees were legally transferred to the Society. These individuals have
continued to deliver activities to the Bank during 2025 and therefore their costs are recognised in the Bank and not the
Society.
Coventry Building Society | Annual Report & Accounts 2025148
Financial Statements
Notes to the accounts continued
12. Classification and measurement of financial instruments
The following tables summarise the classification of carrying amounts of the Group and Society’s financial assets and
liabilities at the reporting date.
2025
2024
Group
Amortised
cost
£m
Fair value
through other
comprehensive
income
£m
Fair value
through
profit and
loss
£m
Total
£m
Amortised
cost
£m
Fair value
through other
comprehensive
income
£m
Fair value
through profit
and loss
£m
Total
£m
Financial assets
Cash and balances with
the Bank of England
11,948
—
—
11,948
9,893
—
—
9,893
Loans and advances to
credit institutions
383
—
—
383
329
—
—
329
Debt securities
26
1,536
3
1,565
—
502
—
502
Loans and advances to
customers
72,936
—
—
72,936
51,801
—
—
51,801
Hedge accounting
adjustment
169
—
—
169
(448)
—
—
(448)
Derivative financial
instruments
—
—
533
533
—
—
1,084
1,084
Investment in equity
shares
—
—
5
5
—
—
9
9
Total financial assets
85,462
1,536
541
87,539
61,575
502
1,093
63,170
Other non-financial assets
700
—
—
700
861
—
—
861
Total assets
86,162
1,536
541
88,239
62,436
502
1,093
64,031
Financial liabilities
Shares
50,830
—
—
50,830
49,343
—
—
49,343
Customer accounts
20,892
—
—
20,892
82
—
—
82
Deposits from banks
3,009
—
—
3,009
3,932
—
—
3,932
Debt securities in issue
8,307
—
—
8,307
6,543
—
—
6,543
Hedge accounting
adjustment
29
—
—
29
(68)
—
—
(68)
Derivative financial
instruments
—
—
320
320
—
—
305
305
Subordinated liabilities
248
—
—
248
15
—
—
15
Subscribed capital
42
—
—
42
42
—
—
42
Total financial liabilities
83,357
—
320
83,677
59,889
—
305
60,194
Other non-financial
liabilities
273
—
—
273
209
—
—
209
Total liabilities
83,630
—
320
83,950
60,098
—
305
60,403
Coventry Building Society | Annual Report & Accounts 2025149
Financial Statements
Notes to the accounts continued
12. Classification and measurement of financial instruments continued
2025
2024
Society
Amortised
cost
£m
Fair value
through other
comprehensive
income
£m
Fair value
through
profit and
loss
£m
Total
£m
Amortised
cost
£m
Fair value
through other
comprehensive
income
£m
Fair value
through profit
and loss
£m
Total
£m
Financial assets
Cash and balances with
the Bank of England
8,912
—
—
8,912
9,818
—
—
9,818
Loans and advances to
credit institutions
261
—
—
261
329
—
—
329
Debt securities
—
440
—
440
—
442
—
442
Loans and advances to
customers
33,941
—
—
33,941
33,458
—
—
33,458
Hedge accounting
adjustment
118
—
—
118
(448)
—
—
(448)
Derivative financial
instruments
—
—
424
424
—
—
1,082
1,082
Loans with Group
undertakings
18,263
—
446
18,709
17,583
—
—
17,583
Investment in equity
shares
—
—
—
—
—
—
9
9
Total financial assets
61,495
440
870
62,805
60,740
442
1,091
62,273
Other non-financial assets
904
—
—
904
869
—
—
869
Total assets
62,399
440
870
63,709
61,609
442
1,091
63,142
Financial liabilities
Shares
50,830
—
—
50,830
49,343
—
—
49,343
Customer accounts
187
—
—
187
234
—
—
234
Deposits from banks
2,055
—
—
2,055
3,932
—
—
3,932
Debt securities in issue
5,408
—
207
5,615
4,930
—
—
4,930
Hedge accounting
adjustment
7
—
—
7
(68)
—
—
(68)
Derivative financial
instruments
—
—
252
252
—
—
254
254
Subordinated liabilities
15
—
239
254
15
—
—
15
Subscribed capital
42
—
—
42
42
—
—
42
Total financial liabilities
58,544
—
698
59,242
58,428
—
254
58,682
Other non-financial
liabilities
1,836
—
—
1,836
1,738
—
—
1,738
Total liabilities
60,380
—
698
61,078
60,166
—
254
60,420
13. Cash and cash equivalents
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Cash and balances at central banks
11,948
9,893
8,912
9,818
Loans and advances to credit institutions repayable in 3 months or less
56
—
(18)
—
Total cash and cash equivalents
12,004
9,893
8,894
9,818
Included within loans and advances to credit institutions at 31 December 2025 is £327 million for the Group and £279 million
for the Society (2024: £329 million, Group and Society) which relates to collateral pledged as part of the Group's
involvement in transactional payment schemes, pension scheme arrangements and derivative clearing that is not classified
as cash and cash equivalents due to restrictions to its access.
At 31 December 2025, £26 million (2024: £nil) of cash in transit is included within loans and advances to credit institutions
for the Society.
Coventry Building Society | Annual Report & Accounts 2025150
Financial Statements
Notes to the accounts continued
14. Debt securities
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Amortised cost:
Mortgage backed securities
26
—
—
—
Total amortised cost
26
—
—
—
Fair value through other comprehensive income:
UK Government investment securities
789
483
440
423
Other listed transferable debt securities
747
19
—
19
Total fair value through other comprehensive income
1,536
502
440
442
Fair value through profit and loss:
Mortgage backed securities
3
—
—
—
Total fair value through profit and loss
3
—
—
—
Total debt securities
1,565
502
440
442
2025
2024
Group
Amortised
cost
£m
FVOCI
£m
FVTPL
£m
Total
£m
Amortised
cost
£m
FVOCI
£m
FVTPL
£m
Total
£m
As at 1 January 2025
—
502
—
502
—
1,564
—
1,564
Recognised on acquisition
47
1,587
3
1,637
—
—
—
—
Additions
—
182
—
182
—
844
—
844
Maturities and disposals
(21)
(765)
—
(786)
—
(1,902)
—
(1,902)
Change in fair value
—
30
—
30
—
(4)
—
(4)
As at 31 December 2025
26
1,536
3
1,565
—
502
—
502
2025
2024
Society
Amortised
cost
£m
FVOCI
£m
FVTPL
£m
Total
£m
Amortised
cost
£m
FVOCI
£m
FVTPL
£m
Total
£m
As at 1 January 2025
—
442
—
442
—
1,515
—
1,515
Additions
—
16
—
16
—
718
—
718
Maturities and disposals
—
(35)
—
(35)
—
(1,787)
—
(1,787)
Change in fair value
—
17
—
17
—
(4)
—
(4)
As at 31 December 2025
—
440
—
440
—
442
—
442
A maturity analysis of the Group debt securities is included in the Liquidity and Funding section of the Risk Management
Report. Of the £440 million relating to the Society at 31 December 2025, £127 million are due in less than one year, £313
million in more than one year.
At the 31 December 2025, debt securities totalling £10 million for the Group and £nil for the Society had been sold under
sale and repurchase agreements (2024: £112 million Group, £112 million Society).
Coventry Building Society | Annual Report & Accounts 2025151
Financial Statements
Notes to the accounts continued
15. Loans and advances to customers
Notes
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Retail
Secured: owner-occupier
50,758
32,422
32,663
32,114
Secured: buy to let
20,933
19,374
1,258
1,319
Unsecured1
223
—
—
—
Business and commercial
1,014
—
—
—
Total Gross loans and advances to customers (contractual amounts)
72,928
51,796
33,921
33,433
Impairment
16
(44)
(24)
(13)
(11)
Total Net loans and advances to customers (contractual amounts)
72,884
51,772
33,908
33,422
EIR, fair value and other adjustments
52
29
33
36
Total
72,936
51,801
33,941
33,458
1. Unsecured represents credit cards, personal loans and overdraft facilities provided.
Off balance sheet exposures
Following the acquisition of the Bank, the Group now has customers across new lending areas, namely retail unsecured
(comprising primarily credit cards and overdraft facilities) as well as business and commercial lending. As a result, the
Group now has off balance sheet exposures to undrawn credit facilities of £3,946 million at 31 December 2025, including
the mortgage pipeline. This is in addition to the on balance sheet lending exposures presented above. All expected credit
loss provisions are based on the gross exposure rather than the balance drawn, which is recognised on balance sheet.
Maturity analysis
The remaining contractual maturity of loans and advances to customers at the Balance Sheet date is as follows:
Notes
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Repayable in less than one year
4,796
3,636
2,109
2,071
Repayable in more than one year
68,184
48,189
31,845
31,398
72,980
51,825
33,954
33,469
Impairment provision
16
(44)
(24)
(13)
(11)
Total
72,936
51,801
33,941
33,458
Actual redemption levels experienced by the Group or Society may differ from the contractual analysis.
Pledged assets – loans and advances to customers
Certain loans and advances to customers have been pledged to the Group's asset backed funding programmes or utilised as
whole mortgage loan pools with the Bank of England to enable the Group to obtain secured funding. Loans and advances to
customers pledged to support secured funding and the notes in issue are as follows:
Notes in issue 1
2025
Group
Mortgages
pledged
£m
Held by third
parties
£m
Held by the
Group
pledged
£m
Held by the
Group
unpledged
£m
Total
£m
Loans and advances to customers
Covered bond programme – Coventry Building Society Covered
Bonds LLP
7,703
3,674
1,132
218
5,024
Covered bond programme – Coventry Godiva Covered Bonds LLP
4,294
—
—
3,000
3,000
Covered bond programme – Moorland Covered Bonds LLP
2,519
500
455
545
1,500
Securitisation programme – Economic Master Issuer plc
2,332
1,730
—
—
1,730
Whole mortgage loan pools2
3,857
—
1,776
2,081
3,857
Total
20,705
5,904
3,363
5,844
15,111
Coventry Building Society | Annual Report & Accounts 2025152
Financial Statements
Notes to the accounts continued
15. Loans and advances to customers continued
Pledged assets – loans and advances to customers continued
Notes in issue 1
2024
Group
Mortgages
pledged
£m
Held by third
parties
£m
Held by the
Group
pledged
£m
Held by the
Group
unpledged
£m
Total
£m
Loans and advances to customers
Covered bond programme – Coventry Building Society Covered
Bonds LLP
6,912
2,873
1,346
4
4,223
Covered bond programme – Coventry Godiva Covered Bonds LLP
5,393
—
1,000
3,000
4,000
Securitisation programme – Economic Master Issuer plc
2,496
1,611
232
—
1,843
Whole mortgage loan pools2
4,495
—
2,075
2,420
4,495
Total
19,296
4,484
4,653
5,424
14,561
1. Notes in issue exclude Class Z securitisation notes (2025: £286 million, 2024: £314 million), which represent either the first loss tranche in the structure or a required liquidity reserve,
and the Economic Master Issuer plc Sellers Notes (2025: £369 million, 2024: £405 million). All of these notes are held by the Group unpledged.
2. The whole mortgage loan pools are pre-positioned at the Bank of England. Pools are pledged to the Bank of England when drawings are made directly against the eligible collateral, for
example, under TFSME, subject to a ‘haircut’ as defined by the Bank of England. The amounts under notes in issue are the outstanding balances of mortgages.
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. No gain or loss has been recognised on pledging the mortgages to the programmes.
Notes in issue and held by third parties are included within debt securities in issue (note 25).
Notes in issue, held by the Group and pledged, include debt securities issued under the covered bond programmes and
retained by the Group and whole mortgage loan pools, all pledged as collateral.
Notes in issue, held by the Group and unpledged, are other debt securities issued by the programmes to the Group, and
mortgage loan pools that have been pre-positioned at the Bank of England but not utilised. These are held to provide
collateral for potential future use in sale and repurchase agreements or central bank operations.
Notes in issue, and held by the Group, are not recognised on the Group or Society Balance Sheets, thus preventing
inappropriate ‘grossing up’ of the Group and Society Balance Sheets.
Covered bond programmes
The Group operates three covered bond programmes which it uses to provide security for issues of retained and externally
issued covered bonds. Securities issued under the programmes are secured through certain mortgage loans of Coventry
Building Society, Godiva Mortgages Limited or of The Co-operative Bank p.l.c., the Originators. The loans are retained on
the Originators' Balance Sheets as they retain substantially all the risks and rewards relating to the loans.
At the reporting date, the Group has overcollateralised these programmes as set out in the table above to secure the
ratings of the covered bonds and to provide operational flexibility. The Group maintains the overcollaterisation by adding
loans to the loan portfolios throughout the period. From time to time, the obligation of the Group to provide collateral may
increase due to the formal requirements of the covered bond programmes and the value of the collateral would depend
upon conditions at that time. The Group may also voluntarily contribute collateral to support the covered bond ratings; no
such contributions were made during 2025 or 2024. The Group undertakes various roles in these programmes, including
acting as cash manager and servicer as well as acting as the bank account provider for Coventry Godiva Covered Bonds LLP
(Godiva LLP) and Moorland Covered Bond LLP (MCB LLP).
Coventry Building Society Covered Bonds LLP
Coventry Building Society Covered Bonds LLP (CBS LLP) was established in 2008 and provides security for issued notes
secured against certain loans of Coventry Building Society. As at 31 December 2025, the Society had £3,050 million (2024:
£2,350 million) and €2,250 million (2024: €2,250 million) of covered bonds in issue, of which £1,350 million (2024: £1,350
million) were retained by the Group.
During the period, the Society voluntarily repurchased £105 million (2024: £129 million) of mortgages from CBS LLP to
maintain the quality of the pool and minimise the overcollateralisation requirement.
Coventry Godiva Covered Bonds LLP
Coventry Godiva Covered Bonds LLP was established in 2020 and provides security for issued notes secured against certain
mortgage loans of Godiva Mortgages Limited. As at 31 December 2025, the Society had £3,000 million (2024: £4,000 million)
of covered bonds in issue of which all were retained by the Group.
During the period, the Society voluntarily repurchased £1,166 million (2024: £59 million) of mortgages from Godiva LLP to
maintain the quality of the pool and minimise the overcollateralisation requirement.
Coventry Building Society | Annual Report & Accounts 2025153
Financial Statements
Notes to the accounts continued
15. Loans and advances to customers continued
Pledged assets – loans and advances to customers continued
Moorland Covered Bonds LLP
Moorland Covered Bonds LLP was established in 2009 and provides security for issued notes secured against certain
mortgage loans of the Bank. As at 31 December 2025, the Bank had £ 1,500 million of covered bonds in issue, of which
£1,000 million were retained by the Group.
Securitisation
During the period, the Group operated one securitisation vehicle which it uses to obtain collateral and source funding
through the internal and external issuances of listed debt securities secured through certain mortgage loans of Coventry
Building Society, the Originator. The loans are retained on the Originator’s Balance Sheet as it retains substantially all the
risks and rewards relating to the loans. The Society undertakes various roles in these transactions, including acting as cash
manager and servicer as well as acting as the bank account provider for Economic Master Issuer plc.
Economic Master Issuer PLC
Economic Master Issuer plc (EMI) was established in 2019 and has subsequently issued £2,950 million of listed debt securities
secured against certain mortgage loans of Coventry Building Society. At 31 December 2025, there are no (2024: £232
million) notes retained by the Group and £1,730 million (2024: £1,611 million) are held by parties external to the Group.
The Society retains a beneficial interest in the pool through its holding of the Sellers Note in the structure and its
obligations in respect of this securitisation vehicle are limited to transferring cash flows from the underlying assets and
maintaining its required minimum sellers share in accordance with the rules of programme.
The fair values of assets that have been pledged and their associated liabilities where recourse is limited to the underlying
asset are presented in the table below:
Fair value assets
pledged
2025
£m
Fair value
liabilities
2025
£m
Fair value net
position
2025
£m
Fair value assets
pledged
2024
£m
Fair value
liabilities
2024
£m
Fair value net
position
2024
£m
Securitisation programme – Economic
Master Issuer plc
2,336
1,730
606
2,474
1,610
864
16. Impairment on loans and advances to customers
Under IFRS 9, impairment provisions or expected credit losses (ECLs) are required to be calculated on assets held at
amortised cost and fair value through other comprehensive income. For the Group, this includes loans and advances to
customers and undrawn commitments to lend (such as mortgage pipeline and undrawn credit cards balances). Expected
credit loss provisions have been deducted from the associated asset values on the balance sheet. Further information on
the credit quality of these loans is included in the Risk Management Report.
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Income statement
(Charge) / release for the year1
(20)
18
(2)
11
Net (write offs)/recoveries of amounts previously written off
(4)
—
—
—
Total (charge)/ release to the Income Statement
(24)
18
(2)
11
1. Included in the Group charge for the year in 2025 is £9 million reset Expected Credit Loss allowance for Bank acquired loans & advances to customers
The tables below shows gross loans and advances to customers, ECL provision and resulting coverage ratio split by IFRS 9
stage at 31 December 2025 and at 31 December 2024 for both the Group and Society. For loans in stages 2 and 3, or those
classed as ‘Purchased or Originated Credit Impaired’ (‘POCI’), further analysis of accounts which are past due and not past
due is also presented.
Coventry Building Society | Annual Report & Accounts 2025154
Financial Statements
Notes to the accounts continued
16. Impairment on loans and advances to customers continued
Group
Stage 1
'Performing'
Stage 2 'Deteriorating'
Stage 3 'Default' and POCI
'Acquired defaulted'
As at 31 December 2025
£m
Not past due
£m
Past due
£m
Not past due
£m
Past due
£m
Total
£m
Gross balances
Retail secured
65,908
4,991
269
155
368
71,691
Retail unsecured
212
5
2
1
3
223
Business and commercial
959
33
—
22
—
1,014
Total
67,079
5,029
271
178
371
72,928
ECL
Retail secured
6
10
2
4
10
32
Retail unsecured
2
1
—
—
2
5
Business and commercial
2
—
—
5
—
7
Total
10
11
2
9
12
44
ECL coverage as a % of total balance
Retail secured
0.01
0.20
0.74
2.58
2.72
0.04
Retail unsecured
0.94
20.00
—
—
66.67
2.24
Business and commercial
0.21
—
—
22.73
—
0.69
Total coverage
0.01
0.22
0.74
5.06
3.23
0.06
Society
Stage 1
‘Performing’
Stage 2 ‘Deteriorating’
Stage 3 'Default' and POCI
'Acquired defaulted'
As at 31 December 2025
£m
Not past due
£m
Past due
£m
Not past due
£m
Past due
£m
Total
£m
Gross balances
Retail secured
30,911
2,609
144
64
193
33,921
Retail unsecured
—
—
—
—
—
—
Business and commercial
—
—
—
—
—
—
Total
30,911
2,609
144
64
193
33,921
ECL
Retail secured
1
3
1
3
5
13
Retail unsecured
—
—
—
—
—
—
Business and commercial
—
—
—
—
—
—
Total
1
3
1
3
5
13
ECL coverage as a % of total balance
Retail secured
0.01
0.11
0.69
4.69
2.59
0.04
Retail unsecured
—
—
—
—
—
—
Business and commercial
—
—
—
—
—
—
Total coverage
—
0.11
0.69
4.69
2.59
0.04
Coventry Building Society | Annual Report & Accounts 2025155
Financial Statements
Notes to the accounts continued
16. Impairment on loans and advances to customers continued
Group
Stage 1
'Performing'
Stage 2 'Deteriorating'
Stage 3 'Default' and POCI
'Acquired defaulted'
As at 31 December 2024
£m
Not past due
£m
Past due
£m
Not past due
£m
Past due
£m
Total
£m
Gross balances
Retail secured
46,203
5,038
205
91
259
51,796
Retail unsecured
—
—
—
—
—
—
Business and commercial
—
—
—
—
—
—
Total
46,203
5,038
205
91
259
51,796
ECL
Retail secured
2
10
1
5
6
24
Retail unsecured
—
—
—
—
—
—
Business and commercial
—
—
—
—
—
—
Total
2
10
1
5
6
24
ECL coverage as a % of total balance
Retail secured
—
0.20
0.49
5.49
2.32
0.05
Retail unsecured
—
—
—
—
—
—
Business and commercial
—
—
—
—
—
—
Total coverage
—
0.20
0.49
5.49
2.32
0.05
Society
Stage 1
‘Performing’
Stage 2 ‘Deteriorating’
Stage 3 'Default' and POCI
'Acquired defaulted'
As at 31 December 2024
£m
Not past due
£m
Past due
£m
Not past due
£m
Past due
£m
Total
£m
Gross balances
Retail secured
30,236
2,861
121
52
163
33,433
Retail unsecured
—
—
—
—
—
—
Business and commercial
—
—
—
—
—
—
Total
30,236
2,861
121
52
163
33,433
ECL
Retail secured
2
3
—
3
3
11
Retail unsecured
—
—
—
—
—
—
Business and commercial
—
—
—
—
—
—
Total
2
3
—
3
3
11
ECL coverage as a % of total balance
Retail secured
0.01
0.10
—
5.77
1.84
0.03
Retail unsecured
—
—
—
—
—
—
Business and commercial
—
—
—
—
—
—
Total coverage
0.01
0.10
—
5.77
1.84
0.03
Included within the Group ECL is £1 million (2024: £nil) associated with undrawn balances, primarily being mortgage
pipeline and undrawn credit card balances.
The Group’s lending strategy is predominately focused on high quality low-risk residential mortgages, reflected in the low
loan to value of the mortgage book and low levels of arrears and possessions. As a result of the acquisition of the Bank, the
Group now has two smaller portfolios of business & commercial and retail unsecured lending, which contribute less than 2%
to the overall lending balances. At the reporting date 92% of loans are in stage 1 with 7% in stage 2 and 1% in stage 3 or
POCI (31 December 2024: 89%, 10% and 1%). The proportion in stage 1 increased, and correspondingly the proportion in
stage 2 decreased, during the year as a result of recognising the acquired Bank non-credit impaired loans in stage 1 at the
date of acquistion.
Unless specified otherwise, further disclosure on the Group's impairment on loans and advances to customers is presented
on a portfolio rather than entity basis as this best reflects the underlying risk.
Coventry Building Society | Annual Report & Accounts 2025156
Financial Statements
Notes to the accounts continued
16. Impairment on loans and advances to customers continued
The table below provides more analysis on the reason for presence within stage 2 under the Group's SICR criteria. Where a
loan meets more than one of these criteria at the Balance Sheet date, it has been included in only one category, being the
first which applied and led to its movement into stage 2:
Group
2025
2024
Basis of stage 2 classification
Retail
secured
£m
Retail
unsecured
£m
Business
and
commercial
£m
Total
£m
Retail
secured
£m
Retail
unsecured
£m
Business and
commercial
£m
Total
£m
Gross balances
Quantitative criteria
1,346
3
18
1,367
1,182
—
—
1,182
Qualitative criteria
3,646
2
15
3,663
3,829
—
—
3,829
30 days past due backstop
268
2
—
270
232
—
—
232
Total
5,260
7
33
5,300
5,243
—
—
5,243
ECL
Quantitative criteria
3
1
—
4
2
—
—
2
Qualitative criteria
9
—
—
9
9
—
—
9
30 days past due backstop
—
—
—
—
—
—
—
—
Total
12
1
—
13
11
—
—
11
Cure periods are applied to accounts in stages 2 and 3 which have hit certain quantitative triggers such as arrears. These
cure periods delay transition of loans to a lower credit risk classification (i.e. from stage 3 to stage 2 or from stage 2 to
stage 1) by requiring 12 months of sustained performance before a loan is reassessed. As a result, loans can be recorded in
stage 2 or stage 3 despite otherwise performing at the reporting date.
See note 1 to the accounts for more information on the quantitative and qualitative SICR criteria applied for stage 2
allocation.
The table below provides more analysis on the reason for presence within stage 3 under the Group's definition of default
criteria. Where a loan meets more than one of these criteria at the Balance Sheet date, it has been included in only one
category, being the first which applied and led to its movement into stage 3 unless the exposure is no longer in default and
is in a cure period:
Group
2025
2024
Basis of stage 3 and POCI classification
Retail
secured
£m
Retail
unsecured
£m
Business
and
commercial
£m
Total
£m
Retail
secured
£m
Retail
unsecured
£m
Business and
commercial
£m
Total
£m
Acquired impaired (POCI)
74
2
5
81
—
—
—
—
Qualitative criteria
117
—
—
117
93
—
—
93
90 days past due backstop
90
—
17
107
69
—
—
69
In cure period
242
2
—
244
188
—
—
188
Total
523
4
22
549
350
—
—
350
ECL
Acquired impaired (POCI)
—
—
—
—
—
—
—
—
Qualitative criteria
2
—
—
2
1
—
—
1
90 days past due backstop
7
1
5
13
7
—
—
7
In cure period
5
1
—
6
3
—
—
3
Total
14
2
5
21
11
—
—
11
As at 31 December 2025, the number of properties in possession remained low. A total of £15 million of stage 3 and POCI
loans are in possession (31 December 2024: £8 million), representing 67 individual properties (31 December 2024: 36
properties). In 2025, this includes possession cases in the acquired Bank portfolios.
Coventry Building Society | Annual Report & Accounts 2025157
Financial Statements
Notes to the accounts continued
16. Impairment on loans and advances to customers continued
A
pplication of judgemental adjustments
The table below presents the judgemental adjustments that have been recognised within the ECL provision outside of core
modelled ECLs where the Group’s models do not fully capture the associated risks of future credit loss.
2025
2024
Retail
secured
£m
Retail
unsecured
£m
Business
and
commercial
£m
Total
£m
Retail
secured
£m
Retail
unsecured
£m
Business
and
commercial
£m
Total
£m
Core modelled ECL
26
5
6
37
18
—
—
18
Judgemental adjustments
6
—
1
7
6
—
—
6
Total reported ECL
32
5
7
44
24
—
—
24
At 31 December 2025, the Group held total judgemental adjustments of £7 million (2024: £6 million).
This includes a residual cost of living affordability PMA of £2 million (2024: £2 million), additional adjustments for negative
equity accounts, which are identified through using automated valuation models (AVM), stale collateral valuations on
corporate real estate exposures and fraud.
Movements in gross exposure and ECL provision
A reconciliation of movements in gross exposures and ECL provision split by IFRS 9 stage from 1 January 2025 to 31
December 2025 is set out below for the Group and Society.
Stage 1
Stage 2
Stage 3
Total
Group
Gross
balance
£m
Provision
12 month
ECL
£m
Gross
balance
£m
Provision
lifetime
ECL
£m
Gross
balance
£m
Provision
lifetime
ECL
£m
Gross
balance
£m
Provision
£m
At 1 January 2025
46,203
2
5,243
11
350
11
51,796
24
Loans recognised on acquisition
20,347
9
—
—
120
—
20,467
9
Movements with Income
Statement impact
Transfers from Stage 1 to Stage 2
(2,438)
(1)
2,438
4
—
—
—
3
Transfers from Stage 1 to Stage 3
(133)
—
—
—
133
11
—
11
Transfers from Stage 2 to Stage 3
—
—
(134)
—
134
—
—
—
Transfers from Stage 3 to Stage 2
—
—
46
1
(46)
(1)
—
—
Transfers from Stage 3 to Stage 1
12
—
—
—
(12)
—
—
—
Transfers from Stage 2 to Stage 1
1,753
—
(1,753)
(1)
—
—
—
(1)
Net movement arising from
transfer of stages
(806)
(1)
597
4
209
10
—
13
New loans originated
10,529
5
24
—
—
—
10,553
5
Remeasurement of ECL due to
changes in risk parameters
—
1
—
(1)
—
5
—
5
Increase/(decrease) in post model
adjustments
—
—
—
—
—
—
—
—
Loans derecognised in the period
(6,823)
(3)
(463)
(1)
(118)
(2)
(7,404)
(6)
Net write offs
(2)
(3)
—
—
(3)
(3)
(5)
(6)
Income Statement charge for the
period
8
2
10
20
Repayment and charges
(2,369)
—
(101)
—
(9)
—
(2,479)
—
At 31 December 2025
67,079
10
5,300
13
549
21
72,928
44
Coventry Building Society | Annual Report & Accounts 2025158
Financial Statements
Notes to the accounts continued
16. Impairment on loans and advances to customers continued
Movements in gross exposure and ECL provision continued
Stage 1
Stage 2
Stage 3 & POCI
Total
Society
Gross
balance
£m
Provision
12 month
ECL
£m
Gross
balance
£m
Provision
lifetime
ECL
£m
Gross
balance
£m
Provision
lifetime
ECL
£m
Gross
balance
£m
Provision
£m
At 1 January 2025
30,236
2
2,982
3
215
6
33,433
11
Movements with Income
Statement impact
Transfers from Stage 1 to Stage 2
(1,210)
—
1,210
1
—
—
—
1
Transfers from Stage 1 to Stage 3
(47)
—
—
—
47
1
—
1
Transfers from Stage 2 to Stage 3
—
—
(81)
—
81
—
—
—
Transfers from Stage 3 to Stage 2
—
—
27
—
(27)
—
—
—
Transfers from Stage 3 to Stage 1
8
—
—
—
(8)
—
—
—
Transfers from Stage 2 to Stage 1
1,025
—
(1,025)
—
—
—
—
—
Net movement arising from
transfer of stages
(224)
—
131
1
93
1
—
2
New loans originated
5,103
1
16
—
—
—
5,119
1
Remeasurement of ECL due to
changes in risk parameters
—
(1)
—
—
—
2
—
1
Increase/(decrease) in post model
adjustments
—
—
—
—
—
—
—
—
Loans derecognised in the period
(2,649)
(1)
(286)
—
(45)
(1)
(2,980)
(2)
Net write offs
—
—
—
—
—
—
—
—
Income Statement charge for the
period
(1)
1
2
—
2
Repayment and charges
(1,555)
—
(90)
—
(6)
—
(1,651)
—
At 31 December 2025
30,911
1
2,753
4
257
8
33,921
13
Coventry Building Society | Annual Report & Accounts 2025159
Financial Statements
Notes to the accounts continued
16. Impairment on loans and advances to customers continued
Movements in gross exposure and ECL provision continued
A reconciliation of movements in gross exposures and impairment provision split by IFRS 9 stage from 1 January 2024 to 31
December 2024 is set out in the following table for the Group and Society.
Stage 1
Stage 2
Stage 3 & POCI
Total
Group
Gross
balance
£m
Provision
12 month
ECL
£m
Gross
balance
£m
Provision
lifetime
ECL
£m
Gross
balance
£m
Provision
lifetime
ECL
£m
Gross
balance
£m
Provision
£m
At 1 January 2024
42,720
2
7,319
29
268
11
50,307
42
Movements with Income
Statement impact
—
—
—
—
—
—
—
—
Transfers from Stage 1 to Stage 2
(2,193)
—
2,193
2
—
—
—
2
Transfers from Stage 1 to Stage 3
(71)
—
—
—
71
1
—
1
Transfers from Stage 2 to Stage 3
—
—
(134)
(1)
134
1
—
—
Transfers from Stage 3 to Stage 2
—
—
29
—
(29)
—
—
—
Transfers from Stage 3 to Stage 1
9
—
—
—
(9)
—
—
—
Transfers from Stage 2 to Stage 1
3,592
—
(3,592)
(1)
—
—
—
(1)
Net movement arising from
transfer of stages
1,337
—
(1,504)
—
167
2
—
2
New loans originated
7,057
2
17
—
—
—
7,074
2
Remeasurement of ECL due to
changes in risk parameters
—
(1)
—
(1)
—
2
—
—
Increase/(decrease) in post model
adjustments
—
—
—
(16)
—
(2)
—
(18)
Loans derecognised in the period
(3,084)
(1)
(481)
(1)
(77)
(1)
(3,642)
(3)
Net write offs
—
—
—
—
(1)
(1)
(1)
(1)
Income Statement charge for the
period
—
(18)
—
(18)
Repayment and charges
(1,827)
—
(108)
—
(7)
—
(1,942)
—
At 31 December 2024
46,203
2
5,243
11
350
11
51,796
24
Coventry Building Society | Annual Report & Accounts 2025160
Financial Statements
Notes to the accounts continued
16. Impairment on loans and advances to customers continued
Movements in gross exposure and ECL provision continued
Stage 1
Stage 2
Stage 3
Total
Society
Gross
balance
£m
Provision 12
month ECL
£m
Gross
balance
£m
Provision
lifetime ECL
£m
Gross
balance
£m
Provision
lifetime ECL
£m
Gross
balance
£m
Provision
£m
At 1 January 2024
27,383
1
4,456
15
161
6
32,000
22
Movements with Income
Statement impact
Transfers from Stage 1 to Stage 2
(1,297)
—
1,297
1
—
—
—
1
Transfers from Stage 1 to Stage 3
(41)
—
—
—
41
1
—
1
Transfers from Stage 2 to Stage 3
—
—
(82)
—
82
—
—
—
Transfers from Stage 3 to Stage 2
—
—
19
—
(19)
—
—
—
Transfers from Stage 3 to Stage 1
6
—
—
—
(6)
—
—
—
Transfers from Stage 2 to Stage 1
2,288
—
(2,288)
(1)
—
—
—
(1)
Net movement arising from
transfer of stages
956
—
(1,054)
—
98
1
—
1
New loans originated
5,510
2
12
—
—
—
5,522
2
Remeasurement of ECL due to
changes in risk parameters
—
—
—
—
—
1
—
—
Increase/(decrease) in post model
adjustments
—
—
—
(11)
—
(1)
—
(12)
Loans derecognised in the period
(2,045)
(1)
(336)
—
(39)
—
(2,420)
(1)
Net write offs
—
—
—
—
(1)
(1)
(1)
(1)
Income Statement charge for the
period
1
(12)
—
(11)
Repayment and charges
(1,568)
—
(96)
—
(4)
—
(1,668)
—
At 31 December 2024
30,236
2
2,982
3
215
6
33,433
11
Forward-looking information incorporated in the ECL models
Formulation of economic scenarios and governance
The economic scenarios used by the Group reflect management’s best estimate of the future economic conditions under a
range of scenarios, including a weighting reflecting the loss distribution on the occurrence of each scenario.
The assumptions in each of the four (2024: four) scenarios evolve, reflecting latest expectations with the base scenario
representing the most likely outcome, complemented by one upside and two downside scenarios based on potential
economic developments. These alternative scenarios are built using management judgement and are calibrated to
statistical views of economic cycles ranging from periods of five to ten years from the beginning of an overall expansion
phase to the end of the contraction phase and the beginning of the next initial recovery phase. Available data from the last
50 years has been analysed to draw out the normal range through to extreme outcomes that could be expected to be
observed. Outside of these extreme outcomes, the severe downside scenario is based on a deliberately extreme case used
for stress testing, the severity of which has not been experienced in the last 50 years.
Beyond the five year forecast horizon which aligns to the Strategic Plan period, long-term averages for each economic
assumption variable are used. The severe downside scenario transitions to the long-term average level over a period of ten
years, reflecting the negativity of the scenario. The other three scenarios transition over a five year period. These long-
term averages hold true throughout various financial and economic crises, and are therefore used until the end of the 35
year forecast.
Scenarios and accompanying weightings are determined following analysis of economic news, forecasts, peer benchmarking,
scientific developments and results. By their nature, a significant degree of estimation is involved in determining the
scenario weightings.
Coventry Building Society | Annual Report & Accounts 2025161
Financial Statements
Notes to the accounts continued
16. Impairment on loans and advances to customers continued
Forward-looking information incorporated in the ECL models continued
Formulation of economic scenarios and governance continued
These scenarios and weightings are developed within the Group's Treasury function and are reviewed and approved
quarterly by the Asset and Liability Committee with further approval at reporting periods by the Board Audit Committee.
Current year scenarios and weightings
During the year, the weightings for each scenario were reviewed, resulting in a small rebalancing between the base and
upside scenarios. The weightings used at the year end reflect the Group’s view of the range of potential future economic
conditions at the Balance Sheet date. An explanation of each scenario and its relative weighting in calculating ECL is set out
below:
Scenario
Weighting
2025
2024
Base
The central scenario used to support the business planning of the Group. Unemployment remains
elevated for a while following restrictive monetary policy, with GDP growth remaining steady.
Whilst domestic inflationary pressures take longer to unwind than they did to emerge, CPI is
expected to return close to the 2% target in the near term, allowing bank rate to decrease. This
easing of conditions supports house prices which return to modest growth.
50%
55%
Downside
Inflation rebounds following renewed geopolitical tensions, and the Bank of England increases
interest rates again to contain it. There is an economic contraction resulting from further cost of
living deterioration which drives up unemployment, and house prices weaken considerably. Inflation
returns to target within the first 5 years and monetary policy begins to ease.
25%
25%
Severe downside
Following the Bank of England’s Bank Capital Stress Test, in which deep simultaneous recessions in
the UK and global economies sees large falls in asset prices and higher global interest rates. GDP
contracts 5% as unemployment reaches 8.5%. Bank rate rises to 8% to tackle inflation of 10% and
house prices consequently fall 28%.
10%
10%
Upside
Inflation dissipates and unemployment reduces, underpinning robust economic growth and rising
house prices. The Bank of England lowers bank rate further in response to the easing inflation
environment.
15%
10%
Macroeconomic assumptions
The Group's ECL calculation incorporates four key economic assumptions: unemployment rate, house price index (HPI), GDP
and the Bank of England Base Rate. While all feed into the economic forecasts and impact the final ECL provision, the
models are particularly sensitive to changes in the following assumptions in each scenario:
• Unemployment rate, given its impact on borrowers’ ability to meet their loan repayments.
• HPI, given the significant impact it has on mortgage collateral valuations.
Inflation impacts are also reflected within all four scenarios as the effect has become embedded within economic forecasts.
The following graphs show these two key economic assumptions used in the scenarios over a five year forecast period:
Coventry Building Society | Annual Report & Accounts 2025162
Financial Statements
Notes to the accounts continued
16. Impairment on loans and advances to customers continued
Forward-looking information incorporated in the ECL models continued
Key economic assumptions as at 31 December 2025
While the Group's ECL calculation is particularly sensitive to unemployment and HPI movements, GDP and the Bank of
England Base Rate remain key drivers of the provision calculation and the forward economic outlook. The rates applied to
all key measures are shown below for the five year forecast period:
Scenario/
weighting
2026
%
2027
%
2028
%
2029
%
2030
%
Peak to
trough
%
Range
%
Average to
31 Dec 2030
%
Unemployment
5.2
5.3
5.1
4.9
4.9
0.6
4.7 - 5.3
4.9
Base
HPI
2.5
3.0
3.0
3.0
3.0
15.2
0.2 - 15.4
2.9
50%
GDP
1.4
1.5
1.5
1.5
1.5
7.5
0.1 - 7.6
1.5
Base Rate
3.25
3.25
3.25
3.25
3.25
0.50
3.25 - 3.75
3.3
Unemployment
5.5
6.0
5.7
5.5
5.5
1.0
5.0 - 6.0
5.5
Downside
HPI
(1.1)
(8.0)
(5.0)
4.0
4.5
13.5
(13.6) - (0.1)
(1.2)
25%
GDP
0.0
(0.9)
1.4
1.4
1.5
4.3
(0.9) - 3.4
0.7
Base Rate
5.00
5.25
4.50
4.00
4.00
1.50
3.75 - 5.25
4.5
Severe
downside
10%
Unemployment
6.3
8.2
8.1
7.3
6.5
3.6
4.9 - 8.5
7.1
HPI
(9.4)
(12.1)
(9.5)
7.4
6.9
27.9
(28.0) - (0.1)
(3.8)
GDP
(4.3)
0.0
1.4
1.4
1.4
4.9
(5.0) - (0.1)
(0.1)
Base Rate
8.00
6.75
5.25
4.00
3.00
5.00
3.00 - 8.00
5.6
Unemployment
4.4
4.0
4.0
4.0
4.0
1.0
4.0 - 5.0
4.2
Upside
HPI
3.8
5.0
5.0
5.0
5.0
25.9
0.3 - 26.2
4.8
15%
GDP
2.0
2.5
2.5
2.5
2.5
12.4
0.2 - 12.6
2.4
Base Rate
3.25
2.75
2.75
2.75
2.75
1.00
2.75 - 3.75
2.9
1. HPI change and GDP change average to 31 December 2030 are shown as the annual compound growth rates.
A significant degree of estimation relates to the relative weightings of the scenarios, incorporating different views of the
house price index and the unemployment rate as indicated above. In order to demonstrate this sensitivity, the impact of
applying 100% of a particular scenario on the reported IFRS 9 ECL provision is shown below. For example, if the provision
was wholly calculated on the base scenario, it would decrease by £11 million, or 25% (2024: £6 million, 25%) compared with
the reported provision. If a 100% weighting was attributed to the severe downside scenario, ECLs would increase by £51
million or 116% (2024: £22 million, 92%).
Group
31 December 2025
31 December 2024
Scenario
IFRS 9
provision
£m
(Decrease)/
increase
%
IFRS 9
provision
£m
(Decrease)/
increase
%
IFRS 9 weighted average
44
—
24
—
Base scenario
33
(25)
18
(25)
Downside scenario
53
21
32
33
Severe downside scenario
95
116
46
92
Upside scenario
30
(32)
16
(33)
The above sensitivities are presented on a Group basis, as the retail secured portfolio, which is the majority of the balance,
is the driver of the sensitivity impact.
The ECL calculated above for 100% of each scenario multiplied by the scenario probability will not reconcile to the overall
provision. This is due to the staging of loans within each scenario varying, but being allocated to a single stage in the
overall provision calculation and having a weighted average 12 month or lifetime PD applied taking into account the
economic scenarios. The probability weighted ECL is then calculated based on this staging allocation. The estimated ECL
provision is determined using an uplift to account for non-linearity in modelling of unemployment rates beyond 8.5%.
Coventry Building Society | Annual Report & Accounts 2025163
Financial Statements
Notes to the accounts continued
16. Impairment on loans and advances to customers continued
Forward-looking information incorporated in the ECL models continued
Sensitivity assessment
As at 31 December 2025, a decrease to the annual HPI assumption by 10% combined with an increase in the unemployment
rate assumption of 10% throughout the forecast period would have the impact of increasing the core modelled ECL provision
by £15 million from £44 million to £59 million. This is driven by the retail secured portfolio, representing the majority of
the overall lending assets.
Group
2025
2024
Sensitivity impacts on ECL
Retail
secured
£m
Retail
unsecured
£m
Business and
commercial
£m
Total
£m
Retail
secured
£m
Retail
unsecured
£m
Business and
commercial
£m
Total
£m
Underlying ECL
32
5
7
44
24
—
—
24
Sensitised ECL
47
5
7
59
43
—
—
43
Difference
15
—
—
15
19
—
—
19
In practise, multi-factor sensitivities such as the above have limitations; the impacts of the above might be reasonably
modified by the application (or removal) of judgemental adjustments by management.
Other credit risk information
This section provides further information of the Group's lending assets at a portfolio level, which best reflects the
underlying risk of the portfolio. Additional information relating to the credit risk profile of the Group’s lending portfolios, is
also included in the credit risk section of the Risk Management Report.
Retail secured
A reconciliation of movements in gross balances and ECL provision for the Group retail secured portfolio split by IFRS 9
stage from 1 January 2025 to 31 December 2025 is set out below. For the 2024 Group movement, please refer to the total
Group table on page 160 as in 2024 the Group only had retail secured exposures. For the equivalent Society disclosure,
please refer to the Society tables included in the wider loans and advances to customers reconciliation tables disclosed
earlier in this note, as the Society only has retail secured exposures.
Stage 1
Stage 2
Stage 3 & POCI
Total
Group
Gross
balance
£m
Provision
12 month
ECL
£m
Gross
balance
£m
Provision
lifetime
ECL
£m
Gross
balance
£m
Provision
lifetime
ECL
£m
Gross
balance
£m
Provision
£m
At 1 January 2025
46,203
2
5,243
11
350
11
51,796
24
Loans recognised on acquisition
19,135
5
—
—
101
—
19,236
5
Movements with Income
Statement impact
—
—
—
—
—
—
—
—
Transfers from Stage 1 to Stage 2
(2,398)
(1)
2,398
3
—
—
—
2
Transfers from Stage 1 to Stage 3
(114)
—
—
—
114
3
—
3
Transfers from Stage 2 to Stage 3
—
—
(134)
—
134
—
—
—
Transfers from Stage 3 to Stage 2
—
—
46
1
(46)
(1)
—
—
Transfers from Stage 3 to Stage 1
12
—
—
—
(12)
—
—
—
Transfers from Stage 2 to Stage 1
1,753
—
(1,753)
(1)
—
—
—
(1)
Net movement arising from
transfer of stages
(747)
(1)
557
3
190
2
—
4
New loans originated
10,315
3
24
—
—
—
10,339
3
Remeasurement of ECL due to
changes in risk parameters
—
—
—
(1)
—
3
—
2
Loans derecognised in the period
(6,715)
(2)
(463)
(1)
(110)
(2)
(7,288)
(5)
Net write offs
—
(1)
—
—
—
—
—
(1)
Income Statement charge for the
period
4
1
3
8
Repayment and charges
(2,283)
—
(101)
—
(8)
—
(2,392)
—
At 31 December 2025
65,908
6
5,260
12
523
14
71,691
32
Coventry Building Society | Annual Report & Accounts 2025164
Financial Statements
Notes to the accounts continued
16. Impairment on loans and advances to customers continued
Other credit risk information continued
Retail secured continued
The Group updates its security values using the Nationwide Building Society quarterly regional HPI. Part of the risk
assessment of the portfolio also includes an initial individual revaluation of security using automated valuation model (AVM)
values.
The LTV distribution of the Group retail secured book by IFRS 9 stage widened slightly during 2025, with 85% of the
mortgage book having an LTV of 75% or lower (2024: 88%). The slight increase in the higher LTV bandings was driven
primarily by the acquisition of the Bank. However, the overall average LTV (balance weighted) of the book remained stable
at 55% (2024: 54%) during the year. This is shown by IFRS 9 stage below:
As at 31 December 2025
Indexed loan to value
Stage 1
£m
Stage 2
£m
Stage 3 & POCI
£m
Total
£m
ECL
£m
<50%
26,208
836
211
27,255
5
50% to 65%
19,734
1,882
158
21,774
6
65% to 75%
10,099
1,734
84
11,917
6
75% to 85%
6,478
614
42
7,134
6
85% to 95%
3,313
189
21
3,523
6
95% to 100%
61
1
—
62
—
> 100%
15
4
7
26
3
Total
65,908
5,260
523
71,691
32
As at 31 December 2024
Indexed loan to value
Stage 1
£m
Stage 2
£m
Stage 3 & POCI
£m
Total
£m
ECL
£m
<50%
20,028
723
140
20,891
2
50% to 65%
14,474
1,930
115
16,519
8
65% to 75%
6,175
1,761
57
7,993
5
75% to 85%
3,614
665
24
4,303
4
85% to 95%
1,887
161
9
2,057
3
95% to 100%
25
2
1
28
—
> 100%
—
1
4
5
2
Total
46,203
5,243
350
51,796
24
2025
2024
Society
Indexed loan to value
Stage 1
£m
Stage 2
£m
Stage 3
£m
Total
£m
ECL
£m
Stage 1
£m
Stage 2
£m
Stage 3
£m
Total
£m
ECL
£m
<50%
13,422
495
102
14,019
1
13,618
471
87
14,176
1
50% to 65%
8,108
810
71
8,989
2
7,623
877
64
8,564
2
65% to 75%
4,065
836
35
4,936
2
3,876
887
33
4,796
2
75% to 85%
3,283
477
27
3,787
4
3,208
585
21
3,814
4
85% to 95%
2,006
134
19
2,159
2
1,886
160
8
2,054
2
95% to 100%
27
1
—
28
—
25
2
1
28
—
> 100%
—
—
3
3
2
—
—
1
1
—
Total
30,911
2,753
257
33,921
13
30,236
2,982
215
33,433
11
The credit quality of the Group retail secured book remains high, and performance continues to be strong.
Coventry Building Society | Annual Report & Accounts 2025165
Financial Statements
Notes to the accounts continued
16. Impairment on loans and advances to customers continued
Other credit risk information continued
Retail secured continued
The table below analyses the credit risk exposure by probability of default (PD) of retail secured mortgages. All PDs are
calculated using the Internal Ratings Based (IRB) approach under CRD IV (12-month PDs). Further information on SICR
criteria and the differences between the IFRS 9 ECL calculation and regulatory expected losses can be found in note 1 to
the accounts.
Group
As at 31 December 2025
Risk grades
Gross balance
Stage 1
£m
Gross balance
Stage 2
£m
Gross balance
Stage 3 & POCI 2
£m
Total
£m
ECL
£m
0.0 to <0.25%
34,282
621
4
34,907
1
0.25 to <0.75%
27,096
2,106
7
29,209
4
0.75 to <2.50%
3,483
969
6
4,458
4
2.50 to <10.00%
830
887
3
1,720
1
10.00 to <100%
88
646
22
756
3
100% (default)
—
—
477
477
14
Other1
129
31
4
164
5
Total
65,908
5,260
523
71,691
32
Society
As at 31 December 2025
Risk grades
Gross balance
Stage 1
£m
Gross balance
Stage 2
£m
Gross balance
Stage 3 & POCI 2
£m
Total
£m
ECL
£m
0.0 to <0.25%
17,944
379
—
18,323
—
0.25 to <0.75%
11,564
1,163
—
12,727
2
0.75 to <2.50%
1,062
475
—
1,537
1
2.50 to <10.00%
311
436
—
747
1
10.00 to <100%
11
298
—
309
1
100% (default)
—
—
257
257
7
Other1
19
2
—
21
1
Total
30,911
2,753
257
33,921
13
Group
As at 31 December 2024
Risk grades
Gross balance
Stage 1
£m
Gross balance
Stage 2
£m
Gross balance
Stage 3 & POCI2
£m
Total
£m
ECL
£m
0.0 to <0.25%
26,378
745
—
27,123
1
0.25 to <0.75%
17,196
2,278
—
19,474
3
0.75 to <2.50%
1,846
843
—
2,689
1
2.50 to <10.00%
617
842
—
1,459
1
10.00 to <100%
22
503
—
525
1
100% (default)
—
—
345
345
10
Other1
144
32
5
181
7
Total
46,203
5,243
350
51,796
24
Society
As at 31 December 2024
Risk grades
Gross balance
Stage 1
£m
Gross balance
Stage 2
£m
Gross balance
Stage 3 & POCI2
£m
Total
£m
ECL
£m
0.0 to <0.25%
18,122
476
—
18,598
—
0.25 to <0.75%
10,874
1,349
—
12,223
2
0.75 to <2.50%
943
479
—
1,422
1
2.50 to <10.00%
271
430
—
701
1
10.00 to <100%
5
245
—
250
1
100% (default)
—
—
215
215
5
Other1
21
3
—
24
1
Total
30,236
2,982
215
33,433
11
1. Other includes equity release mortgages and other loans where credit risk is assessed using alternative calculation methods and their respective ECLs or where ECLs are not directly
attributable to underlying accounts and therefore are not allocated across risk grades or to default.
2. Stage 3 and POCI balances with PDs <100% relate to POCI accounts that have cured, but remain classed as POCI.
Coventry Building Society | Annual Report & Accounts 2025166
Financial Statements
Notes to the accounts continued
16. Impairment on loans and advances to customers continued
Other credit risk information continued
In the following retail unsecured portfolio disclosures, no comparative information has been disclosed as this portfolio was
acquired on 1 January 2025. No Society-specific disclosures have been provided as the portfolio sits solely within The Co-
operative Bank p.l.c.
Retail unsecured
A reconciliation of movements in gross balances and ECL provision for the retail unsecured portfolio split by IFRS 9 stage
from 1 January 2025 to 31 December 2025 is set out below for the Group:
Stage 1
Stage 2
Stage 3 & POCI
Total
Group
Gross
balance
£m
Provision
12 month
ECL
£m
Gross
balance
£m
Provision
lifetime
ECL
£m
Gross
balance
£m
Provision
lifetime
ECL
£m
Gross
balance
£m
Provision
£m
At 1 January 2025
—
—
—
—
—
—
—
—
Loans recognised on acquisition
226
2
—
—
4
—
230
2
Movements with Income
Statement impact
Transfers from Stage 1 to Stage 2
(7)
—
7
1
—
—
—
1
Transfers from Stage 1 to Stage 3
(3)
—
—
—
3
2
—
2
Net movement arising from
transfer of stages
(10)
—
7
1
3
2
—
3
New loans originated
9
1
—
—
—
—
9
1
Remeasurement of ECL due to
changes in risk parameters
—
1
—
—
—
2
—
3
Loans derecognised in the period
(8)
—
—
—
—
—
(8)
—
Net write offs
(2)
(2)
—
—
(2)
(2)
(4)
(4)
Income Statement charge for the
period
2
1
2
5
Repayment and charges
(3)
—
—
—
(1)
—
(4)
—
At 31 December 2025
212
2
7
1
4
2
223
5
The table below analyses the credit risk exposure by PD of retail unsecured products. All PDs are calculated using the
Internal Ratings Based (IRB) approach under CRD IV (12-month PDs). The majority of the book has a PD of less than 0.75%.
Group
As at 31 December 2025
Risk grades
Gross balance
Stage 1
£m
Gross balance
Stage 2
£m
Gross balance
Stage 3 & POCI
£m
Total
£m
ECL
£m
0.0 to <0.15%
25
—
—
25
—
0.15 to <0.25%
44
—
—
44
—
0.25 to <0.50%
38
—
—
38
—
0.50 to <0.75%
1
—
—
1
—
0.75 to <2.50%
26
—
—
26
—
2.50 to <10.00%
38
1
—
39
1
10.00 to <100%
40
6
—
46
2
100% (default)
—
—
4
4
2
Total
212
7
4
223
5
Coventry Building Society | Annual Report & Accounts 2025167
Financial Statements
Notes to the accounts continued
16. Impairment on loans and advances to customers continued
Other credit risk information continued
Business and commercial lending
A reconciliation of movements in gross balances and ECL provision for the business and commercial portfolio split by IFRS 9
stage from 1 January 2025 to 31 December 2025 is set out below for the Group. No comparative information has been
presented as this portfolio was acquired by the Group on 1 January 2025.
Stage 1
Stage 2
Stage 3 & POCI
Total
Group
Gross
balance
£m
Provision
12 month
ECL
£m
Gross
balance
£m
Provision
lifetime
ECL
£m
Gross
balance
£m
Provision
lifetime
ECL
£m
Gross
balance
£m
Provision
£m
At 1 January 2025
—
—
—
—
—
—
—
—
Loans recognised on acquisition
986
2
—
—
15
—
1,001
2
Movements with Income
Statement impact
Transfers from Stage 1 to Stage 2
(33)
—
33
—
—
—
—
—
Transfers from Stage 1 to Stage 3
(16)
—
—
—
16
6
—
6
Net movement arising from
transfer of stages
(49)
—
33
—
16
6
—
6
New loans originated
205
1
—
—
—
—
205
1
Remeasurement of ECL due to
changes in risk parameters
—
—
—
—
—
—
—
—
Loans derecognised in the period
(100)
(1)
—
—
(8)
—
(108)
(1)
Net write offs
—
—
—
—
(1)
(1)
(1)
(1)
Income Statement charge for the
period
2
—
5
7
Repayment and charges
(83)
—
—
—
—
—
(83)
—
At 31 December 2025
959
2
33
—
22
5
1,014
7
The table below analyses the credit risk exposure by regulatory slotting credit grade of loans to business and commercial
customers.
Group
As at 31 December 2025
Risk grades
Gross balance
Stage 1
£m
Gross balance
Stage 2
£m
Gross balance
Stage 3 & POCI
£m
Total
£m
ECL
£m
Strong
275
—
—
275
—
Good
231
3
—
234
1
Satisfactory
13
15
—
28
—
Weak
2
1
1
4
—
Default
2
—
19
21
5
Other
436
14
2
452
1
Total
959
33
22
1,014
7
Coventry Building Society | Annual Report & Accounts 2025168
Financial Statements
Notes to the accounts continued
17. Taxation
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Current tax
UK corporation tax
26
72
(21)
37
UK corporation tax – adjustment in respect of prior years
(1)
32
(1)
32
Total current tax charge / (credit)
25
104
(22)
69
Deferred tax
Current year
(34)
4
(2)
4
Adjustment in respect of prior years
(2)
(32)
(2)
(30)
Total deferred tax credit
(36)
(28)
(4)
(26)
Total (credit) / charge
(11)
76
(26)
43
A reconciliation between the actual tax credit (2024: charge) and tax that would be due if the UK standard corporation tax
rate of 25% (2024 : 25%) was applied to the profit before tax without adjustment is as follows:
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Profit before tax (PBT)
801
323
9
186
Tax at UK standard rate of corporation tax on PBT of 25%
200
81
2
46
Surcharge on banking profits1
—
1
—
1
Tax credit on Additional Tier 1 capital distribution 2
(15)
(12)
(15)
(12)
Expenses/income not deductible for tax purposes 3
4
6
(10)
6
Gain on acquisition
(146)
—
—
—
Recognition of deferred tax asset in relation to tax losses
(46)
—
—
—
Utilisation of unrecognised deferred tax assets
(2)
—
—
—
Deferred tax arising from surcharge rate
(3)
—
—
—
Adjustments in respect of prior years
(3)
—
(3)
2
Total (credit)/ charge
(11)
76
(26)
43
1. Banking companies and building societies are required to pay a surcharge of 3% on their taxable profits in addition to the main rate of corporation tax, subject to an annual allowance
of £100 million. The Society and its subsidiary The Co-operative Bank p.l.c. are subject to the surcharge.
2. The Society's AT 1 capital instrument is categorised as a Hybrid Capital Instrument (HCI) and is taxable under the HCI regime. Under the HCI regime, the distributions made to holders
of the Society’s AT 1 instruments are deductible for tax purposes.
3. Some business expenses, or income, although entirely appropriate for inclusion the Group’s accounts, are not allowed as a deduction against taxable income when calculating the tax
liability. Examples of these expenses include include transaction costs and depreciation on assets not qualifying for capital allowances.
The Group has an effective tax rate for the year of minus 1.4% (2024: 23.6%). The effective tax rates are below the UK
standard corporation tax rate largely due to the accounting gain on acquisition recognised in the year, which is not subject
to taxation in individual entities within the Group as it arose only on consolidation. The tax credit in relation to
distributions to holders of the Society’s AT 1 instrument of £15 million (2024: £12 million) and deferred tax asset
recognition in relation to tax losses of £46 million (2024: £nil) also contribute to a lower effective tax rate than the UK
standard rate.
The Society has an effective tax rate for the year of minus 288.9% (2024: 23.1%). This rate is below (2024: below) the UK
standard corporation tax rate primarily due to the tax credit in relation to distributions to holders of the Society's AT 1
instrument of £15 million (2024: £12 million), and a further tax credit of £10 million (2024: £6 million charge) for expenses/
income not deductible for tax purposes.
With a UK corporation tax rate of 25% alongside the Bank Corporation Tax Surcharge of 3% (chargeable on banking profits in
excess of £100 million), the combined rate of tax on banking profits in excess of £100 million is 28%. Deferred tax assets
and liabilities at 31 December 2025 have been calculated on these rates, reflecting the expected timing of reversal of the
related timing differences.
The Group is liable to pay a domestic top-up tax for the difference between its global anti-base erosion effective tax rate in
the UK and the 15% minimum rate as a result of the UK Government enacting Pillar 2 legislation. There is also a temporary
exception in place regarding the accounting for forward-looking deferred taxes on application of the Pillar 2 rules. The
Group has assessed the impact of the legislation with support from its tax advisers and it is not subject to a top-up tax and
does not expect an impact on current or deferred taxes.
The Group publishes its tax strategy on the website at www.thecoventry.co.uk.
Further information on the Group's deferred tax position is disclosed in note 23.
Coventry Building Society | Annual Report & Accounts 2025169
Financial Statements
Notes to the accounts continued
17. Taxation continued
Tax on items reported through the Statements of Comprehensive Income is as follows:
Statements of Comprehensive Income
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Tax credit on remeasurement of defined benefit pension plan
(1)
(2)
(1)
(2)
Tax credit on fair value through other comprehensive income
—
(1)
—
(1)
Tax credit on cash flow hedges
(36)
(16)
(24)
(27)
Total
(37)
(19)
(25)
(30)
18. Investment in Group undertakings
Society
Shares
£m
Loans
£m
Total
£m
At 1 January 2025
8
17,583
17,591
Movements
745
1,126
1,871
At 31 December 2025
753
18,709
19,462
The Society has the following consolidated subsidiary undertakings, all of which operate in the United Kingdom.
Active subsidiary undertakings
Address
reference
Principal activity
Group
shareholding
Godiva Mortgages Limited
1
Mortgage lending
100%
ITL Mortgages Limited
1
Mortgage lending
100%
The Co-operative Bank Holdings p.l.c.
2
Intermediary holding company
100%
The Co-operative Bank Finance p.l.c.
2
Intermediary holding company
100%
The Co-operative Bank p.l.c.
2
Provider of banking operations
100%
Mortgage Agency Services Number One Ltd
2
Former mortgage and syndicated lending
100%
Mortgage Agency Services Number Two Ltd
2
Former mortgage lending
100%
Mortgage Agency Services Number Four Ltd
2
Former mortgage lending
100%
Mortgage Agency Services Number Five Ltd
2
Former mortgage lending
100%
Mortgage Agency Services Number Six Ltd
2
Former mortgage lending
100%
Platform Funding Ltd
2
Former mortgage lending
100%
Second Roodhill Leasing Ltd
2
Inactive
100%
Third Roodhill Leasing Ltd
2
Inactive
100%
Fourth Roodhill Leasing Ltd
2
Inactive
100%
Co-operative Bank Financial Advisers Ltd
2
Inactive
100%
Britannia Pension Trustees Ltd
2
Dormant
100%
BPS Principal Employer Ltd
2
Dormant
100%
The Co-operative Bank Pension Trust Ltd
2
Dormant
100%
Britannia New Homes (Scotland) Ltd
5
Dormant
50%
Consolidated 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 in accordance with the accounting policy
set out in note 1.
The following structured entities are consolidated into the Group financial statements:
Consolidated structured entities
Address
reference
Principal activity
Coventry Building Society Covered Bonds LLP
3
Mortgage acquisition and guarantor of covered bonds
Coventry Godiva Covered Bonds LLP
3
Mortgage acquisition and guarantor of covered bonds
Economic Master Issuer plc
4
Funding vehicle
Moorland Covered Bonds LLP
2
Mortgage acquisition and guarantor of covered bonds
The nature and risks associated with the Society's investments in these entities (including obligations of financial support)
are disclosed in note 15.
Coventry Building Society | Annual Report & Accounts 2025170
Financial Statements
Notes to the accounts continued
18. Investments in Group undertakings continued
The below table shows the addresses of all subsidiaries in the tables above.
Address
reference
Address
1
Coventry House, Harry Weston Road, Binley, Coventry CV3 2TQ
2
1 Balloon Street, Manchester, M4 4BE
3
Oakfield House, Harry Weston Road, Coventry CV3 2TQ
4
10th Floor, 5 Churchill Place, London E14 5HU
5
Blairton House, Old Aberdeen Road, Balmedie, Aberdeenshire, AB23 8SH
Unconsolidated structured entities
The Group is the sponsor for Warwick Finance Residential Mortgages Number Three plc, an unconsolidated structured entity
established for the purposes of selling Bank Group legacy retail secured mortgages in a capital efficient manner in 2017.
The Group does not consolidate this entity as it has no substantive power over the entity and is unable to meaningfully
influence its exposure to variable returns from its continuing involvement with the entity.
As sponsor, the Group holds amortised cost rated notes of £26 million and FVTPL residual certificates of £3 million, both
classed as debt securities. The maximum exposure to loss associated with the Group's continuing involvement with this
entity is the carrying value of the securities.
During the year, income of £4 million was recognised in association with the Group's ongoing involvement with the entity,
made up of a combination of interest income on the rated notes, fair value movements on the residual certificates and a
fee income for legal title holder services provided. The Group no longer holds legal title to the securitised mortgages as at
31 December 2025.
19. Intangible assets
Group
Externally
acquired
2025
£m
Internally
developed
2025
£m
Core deposit
intangible
2025
£m
Total
2025
£m
Externally
acquired
2024
£m
Internally
developed
2024
£m
Core deposit
intangible
2025
£m
Total
2024
£m
Cost
At 1 January
5
99
—
104
5
87
—
92
Recognised on acquisition
17
93
143
253
—
—
—
—
Additions
13
27
—
40
—
20
—
20
Disposals
(4)
(14)
—
(18)
—
(8)
—
(8)
At 31 December
31
205
143
379
5
99
—
104
Amortisation
At 1 January
4
45
—
49
4
39
—
43
Charge for the year
4
46
29
79
—
14
—
14
Disposals
(4)
(14)
—
(18)
—
(8)
—
(8)
At 31 December
4
77
29
110
4
45
—
49
Net book value at 31 December
27
128
114
269
1
54
—
55
Included within the Group charge for the year is £8 million (2024: £nil) of additional amortisation charges recognised as a
result of integration decisions made during the year.
Further information relating to the recognition of the core deposit intangible asset is included in note 38.
Externally acquired and internally developed assets at 31 December 2025 include £23 million and £16 million respectively
(2024: externally acquired £nil, internally developed £7 million) of assets in the course of construction. These assets relate
mainly to the Group’s investment in new systems and platforms to meet the future needs of the business. To the extent
that these new systems and platforms are not yet ready for use by the business, no amortisation has been charged against
these assets.
Coventry Building Society | Annual Report & Accounts 2025171
Financial Statements
Notes to the accounts continued
19. Intangible assets continued
Society
Externally
acquired
2025
£m
Internally
developed
2025
£m
Total
2025
£m
Externally
acquired
2024
£m
Internally
developed
2024
£m
Total
2024
£m
Cost
At 1 January
5
99
104
5
87
92
Additions
—
11
11
—
20
20
Disposals
—
(5)
(5)
—
(8)
(8)
At 31 December
5
105
110
5
99
104
Amortisation
At 1 January
4
45
49
4
39
43
Charge for the year
—
18
18
—
14
14
Disposals
—
(5)
(5)
—
(8)
(8)
At 31 December
4
58
62
4
45
49
Net book value at 31 December
1
47
48
1
54
55
Intangible assets primarily consist of externally acquired and internally developed software that is not an integral part of a
related hardware purchase.
Internally developed assets at 31 December 2025 include £3 million (2024: £7 million) of assets in the course of
construction. These assets relate mainly to investment in new systems and platforms to meet the future needs of the
business. To the extent that these new systems and platforms are not yet ready for use by the business, no amortisation has
been charged against these assets.
20. Property, plant and equipment
Group
Land and
buildings
2025
£m
Equipment,
fixtures and
fittings
2025
£m
Right-of-
use
assets
2025
£m
Total
2025
£m
Land and
buildings
2024
£m
Equipment,
fixtures
and fittings
2024
£m
Right-of-
use
assets
2024
£m
Total
2024
£m
Cost
At 1 January
15
69
23
107
15
63
27
105
Recognised on acquisition
10
15
31
56
—
—
—
—
Additions1
—
10
23
33
—
7
1
8
Disposals1
(15)
(8)
(5)
(28)
—
(1)
(5)
(6)
At 31 December
10
86
72
168
15
69
23
107
Depreciation
At 1 January
4
42
14
60
4
34
15
53
Charge for the year
4
13
8
25
—
9
3
12
Depreciation on disposals
(8)
(8)
(2)
(18)
—
(1)
(4)
(5)
At 31 December
—
47
20
67
4
42
14
60
Net book value at 31 December
10
39
52
101
11
27
9
47
1. During the year, certain long leasehold assets totalling £7m were reclassified as right of use assets.
Included within the Group charge for the year is £4 million (2024: £nil) of additional depreciation recognised against
property as a result of integration decisions made during the year.
Coventry Building Society | Annual Report & Accounts 2025172
Financial Statements
Notes to the accounts continued
20. Property, plant and equipment continued
Society
Land and
buildings
2025
£m
Equipment,
fixtures and
fittings
2025
£m
Right-of-
use
assets
2025
£m
Total
2025
£m
Land and
buildings
2024
£m
Equipment,
fixtures
and fittings
2024
£m
Right-of-
use
assets
2024
£m
Total
2024
£m
Cost
At 1 January
15
69
23
107
15
63
27
105
Additions1
—
6
16
22
—
7
1
8
Disposals1
(8)
(3)
(2)
(13)
—
(1)
(5)
(6)
At 31 December
7
72
37
116
15
69
23
107
Depreciation
At 1 January
4
42
14
60
4
34
15
53
Charge for the year
—
9
3
12
—
9
3
12
Depreciation on disposals
(1)
(3)
(2)
(6)
—
(1)
(4)
(5)
At 31 December
3
48
15
66
4
42
14
60
Net book value at 31 December
4
24
22
50
11
27
9
47
1. During the year, certain long leasehold assets totalling £7m were reclassified as right of use assets.
The net book value of land and buildings owned by and occupied by the Group for its own activities is shown below. This
therefore excludes any right-of-use assets.
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Net book value
8
11
4
11
Right-of-use assets additions includes new leases entered into during the year and additions related to lease modifications
following changes in lease agreements during the period. These changes do not constitute a new agreement but adaptations
or amendments to an existing contract.
Disposals relate to assets that were retired during the year.
The net book value of right-of-use assets above relates to the following types of assets:
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Property
50
7
20
7
Enhanced data infrastructure
2
2
2
2
Total
52
9
22
9
21. Other assets
At 31 December 2024, the Group and Society held a balance of £725 million in other assets, which related to inaccessible
funds held with independent paying agents in readiness for the purchase completion of The Co-operative Bank Holdings
p.l.c. on 1 January 2025. At 31 December 2025, the balance is £nil following completion of the acquisition.
22. Pension scheme
The Group operates both funded and unfunded defined benefit and defined contribution pension schemes.
Defined benefit schemes
The Society sponsors one defined benefit pension scheme; Coventry Building Society Superannuation Scheme (CBS Scheme).
Following the acquisition of the Bank, the Group now sponsors a further two defined benefit pension schemes; The Bank
Section of The Co-operative Pension Scheme (Pace DB) and the Britannia Pension Scheme (BPS). The Group also has a
further £5 million unfunded liabilities from legacy Bank arrangements.
Coventry Building Society | Annual Report & Accounts 2025173
Financial Statements
Notes to the accounts continued
22. Pension scheme continued
Defined benefit schemes continued
All of the schemes are overseen by separate trustee companies that are legally separate from the Group. The trustees of
the schemes are required to act in the best interests of the scheme members. The appointment of the trustees is
determined by each scheme’s trust documentation. All schemes are closed to new members and future service accrual.
Annual increases on pensions in payment for all defined benefit schemes are applied in line with their respective scheme
rules. Further detail on the individual schemes are provided below.
The schemes typically expose the Group to actuarial risks such as investment risk, interest rate risk, inflation risk and
longevity risk. These could impact the Balance Sheet and may give rise to increased charges in future periods. In Pace DB
and BPS, this effect is substantially mitigated by the specialist insurance contracts the schemes hold, which are designed to
fully offset changes in liabilities arising from principal investment and longevity risks. In the CBS Scheme, the effect would
be partially mitigated by an increase in the value of the bonds and liability matched investments.
CBS Scheme
The CBS Scheme has been closed to new members since December 2001. It provides benefits based on final pensionable
salary and was closed to future service accrual from 31 December 2012. The latest full actuarial valuation of the CBS
Scheme was carried out as at 30 September 2022. This showed a deficit and, since it is closed to future service accrual, no
contributions were made in respect of members’ pensionable salaries. There have been no further deficit contributions and
none are planned ahead of the next actuarial valuation. The Society continues to meet the Scheme's expenses through
contributions, including levies to the Pension Protection Fund. The deficit is expected to be recovered in future periods
through investment performance.
Overall, the balance has remained in a liability position in the year, standing at £8 million at 31 December 2025 (2024: £5
million deficit). Market movements, or the resulting increase in corporate bond yields compared to the prior year, has
resulted in a slightly higher discount rate applied. Whilst this has reduced the value of the CBS Scheme liabilities, there has
been a greater offsetting impact on the yields and overall asset values, resulting in an increased net obligation balance.
The Society will be able to reduce this obligation in the future either through future changes to the CBS Scheme valuation
or through increased contributions.
The CBS Scheme employs a Liability Driven Investment (LDI) investment strategy. Each fund holds a portfolio of assets that
are sensitive to changes in interest rates and/or inflation expectations. The particular funds chosen are selected so that,
when combined, the value of the CBS Scheme's assets are expected to move proportionately to that of the liabilities for a
given change in interest rates and/or inflation expectations. The funds will principally hold a combination of gilt repos,
interest rate swaps, inflation swaps, gilt total return swaps and physical gilts. The leverage of each fund will vary with
changes in interest rates and inflation and the fund manager will follow a recapitalisation process, if the leverage in any
individual fund reaches a heightened level and follow a re-leveraging process if the leverage in any individual fund
decreases to a depressed level.
The average duration of the defined benefit obligation at the period ended 31 December 2025 is 13 years (2024: 13 years).
Pace DB
Pace DB has been closed to new members and future accrual since October 2015, with benefits provided on career average
revalued earnings basis. This means that benefits earned by a member were dependent on length of service and average
earnings over the length of service. The latest full actuarial valuation of Pace DB was carried out as at April 2022. In 2022,
the Pace Trustee completed a full “buy-in” transaction to insure scheme benefits through purchase of a bulk annuity
insurance policy from scheme assets, having previously completed a partial “buy-in” transaction in April 2020. Through
these “buy-in” transactions materially all liabilities in respect of pension benefits are matched by insurance assets of
equivalent value. As above, this means the principal risks associated with the scheme are substantially mitigated, and there
is the potential to complete a full “buy-out” in the future, through issuance of individual annuity policies to members, and
subsequent wind-up of the schemes.
Coventry Building Society | Annual Report & Accounts 2025174
Financial Statements
Notes to the accounts continued
22. Pension scheme continued
Defined benefit schemes continued
Pace DB continued
As at 5 April 2022, the date of the most recent completed triennial funding valuation, the surplus for Pace DB was £232
million and subsequently the full “buy-in” was completed, which insured scheme benefits through a bulk annuity insurance
policy with residual risk cover. The annual funding update as at 5 April 2024 indicated a £27 million surplus, with the
reduction relative to the 5 April 2022 valuation including the premium paid by the Pace Trustee in the “buy-in” transaction.
No deficit recovery contributions are in place, but the Pace Trustee retains a security interest in £25 million of cash in an
escrow arrangement under the terms of a Payment Agreement in the event of Bank insolvency and in limited other
circumstances.
The Group has recognised a net pension asset of £13 million in respect of Pace DB. The average duration of the defined
benefit obligation at the period ended 31 December 2025 is 13 years.
BPS
BPS has been closed to new members since 2001, and to future accrual since October 2012. The latest full actuarial
valuation of BPS was carried out as at April 2023. The BPS Trustee completed a full “buy-in” transaction in December 2024,
also with the potential to complete a full “buy-out” of the scheme in the future, through issuance of individual annuity
policies to members, and subsequent wind-up of the scheme.
The actuarial valuation of BPS as at 5 April 2023, showed BPS had a surplus of £66 million and no deficit recovery or other
contributions are required.
The Group has recognised a net pension asset of £15 million in respect of BPS for the year ended 31 December 2025. The
average duration of the defined benefit obligation at the period ended 31 December 2025 is 11 years.
Pension benefit/(obligation)
The assumptions used are across the schemes are shown below. There have been no changes in the valuation methodology
adopted for this period's disclosures compared with the prior period's disclosures. Group comparative positions will include
the CBS Scheme only, due to the acquisition of the Bank on 1 January 2025.
The costs of the schemes were assessed in accordance with the advice of a qualified actuary on the basis of valuations using
the projected unit credit method.
The present value of the schemes' liabilities is measured by discounting the best estimate of future cash flows to be paid
out by the schemes using the projected unit credit method. The value calculated in this way is deducted from the fair value
of scheme assets and the net (surplus/(obligation) is presented on the Balance Sheet as shown below:
2025
2024
Asset
Obligation
Net
Asset
Obligation
Net
Scheme
£m
£m
£m
£m
£m
£m
CBS Scheme
127
(135)
(8)
132
(137)
(5)
Society total
127
(135)
(8)
132
(137)
(5)
Pace DB
794
(781)
13
—
—
—
BPS
403
(388)
15
—
—
—
Total funded surplus/(obligation)
1,324
(1,304)
20
132
(137)
(5)
Unfunded Obligation
—
(5)
(5)
—
—
—
Net surplus/(obligation)
1,324
(1,309)
15
132
(137)
(5)
Shown as
Pension benefit surplus
28
—
Pension benefit obligation
(13)
(5)
Coventry Building Society | Annual Report & Accounts 2025175
Financial Statements
Notes to the accounts continued
22. Pension scheme continued
Movement in funded pension benefit/(obligation)
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Present value of obligation
As at 1 January
(137)
(149)
(137)
(149)
Recognised on acquisition
(1,209)
—
—
—
Interest expense
(73)
(7)
(8)
(7)
Benefit payments from plan assets
81
7
8
7
Remeasurements:
—
—
—
—
Effects of changes in demographic assumptions
6
—
(1)
—
Effects of changes in financial assumptions
34
12
3
12
Effects of experience adjustments
(6)
—
—
—
As at 31 December
(1,304)
(137)
(135)
(137)
Fair value of plan assets
As at 1 January
132
153
132
153
Recognised on acquisition
1,241
—
—
—
Interest income
75
7
8
7
Benefit payments from plan assets
(81)
(7)
(8)
(7)
Return on assets
(37)
(21)
(5)
(21)
Administrative Expenses
(6)
—
0
—
As at 31 December
1,324
132
127
132
Funded pension benefit (obligation)/surplus
20
(5)
(8)
(5)
The movement is analysed below:
Pension benefit (obligation)/surplus as at 1 January
(5)
4
(5)
4
Recognised on acquisition
32
—
—
—
Amount recognised in the income statement
(4)
—
—
—
Remeasurement losses
(3)
(9)
(3)
(9)
Funded pension benefit (obligation)/surplus as at 31 December
20
(5)
(8)
(5)
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Amount recognised in Other Comprehensive Income:
Return on plan assets
(37)
(21)
(5)
(21)
Effect of changes in demographic assumptions
6
—
(1)
—
Effect of changes in financial assumptions
34
12
3
12
Effect of experience adjustments
(6)
—
—
—
Remeasurement loss of pension benefit surplus
(3)
(9)
(3)
(9)
Amount recognised in the income statement:
Administrative Expenses
(6)
—
—
—
Net Interest expense on defined benefit obligation
2
—
—
—
Net expense
(4)
—
—
—
Coventry Building Society | Annual Report & Accounts 2025176
Financial Statements
Notes to the accounts continued
22. Pension scheme continued
The major categories of plan assets are:
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Quoted
Corporate bonds and liability matching
43
14
43
14
Equities
—
1
—
1
Unit trusts
5
—
5
—
Unquoted
Annuities
1,162
—
—
—
Cash
19
3
—
3
Corporate bonds and liability matching
6
36
6
36
Direct lending
19
4
3
4
Diversified growth funds
8
11
8
11
Property
—
9
—
9
Unit trusts
62
55
62
55
Total
1,324
133
127
133
The principal weighted average actuarial assumptions used are as follows:
Financial assumptions
2025
%
2024
%
Discount rate
5.60
5.55
Rate of pensionable salary increase
—
—
Rates of inflation (Retail Prices Index)
2.80 - 2.90
3.10
Rates of inflation (Consumer Prices Index)
2.30 - 2.45
2.55
2025
2024
Life expectancy for mortality tables used to determine benefit obligation
Male
Female
Male
Female
Member age 60 (current life expectancy)
24.7 - 26.2
27.6 - 28.8
25.9
28.7
Member age 40 (life expectancy at age 60)
25.9 - 27.7
28.8 - 30.3
27.4
30.2
The assumptions on mortality are based on the actuarial table known as the S3PxA table. For the CBS Scheme, the
assumptions are 101% of the S3PxA table with CMI 2024 projections with a 1.25% p.a. long-term improvement rate (2024:
101% S3PxA with CMI 2023 projections with a 1.25% p.a. long-term improvement rate). For Pace DB and BPS, the
assumptions are 117% of the S3PxA table with CMI 2023 projections with a 1.00% p.a. long-term improvement rate.
The Group has to make assumptions on the discount rate, inflation and life expectancy when valuing the schemes' balances
and changes in these assumptions could affect the reported balance. The sensitivity of the defined benefit obligation of the
Society to changes in the weighted principal assumptions is indicated below for isolated changes in assumptions; in reality,
it is likely that assumptions will be related to each other and impact simultaneously.
Sensitivity analysis has been presented separately for the CBS Scheme. This is due to the buy-in arrangements in place for
the Pace DB and BPS schemes resulting in them being subject to less variability.
CBS Scheme
Impact on present value of obligation:
Change in
assumption
Increase in
assumption
%
Increase in
assumption
£m
Decrease in
assumption
%
Decrease in
assumption
£m
Discount rate
0.50%
(0.06)
(7.5)
0.06
8.4
Rates of inflation (Retail Prices Index and Consumer
Prices Index)
0.25%
0.02
2.8
(0.02)
(2.7)
Life expectancy
1 year
0.03
3.5
(0.03)
(3.4)
Pace DB and BPS
Impact on present value of obligation:
Change in
assumption
Increase in
assumption
%
Increase in
assumption
£m
Decrease in
assumption
%
Decrease in
assumption
£m
Discount rate
0.50%
(0.06)
(68.4)
0.06
75.4
Rates of inflation (Retail Prices Index and Consumer
Prices Index)
0.50%
0.05
54.3
(0.04)
(51.4)
Life expectancy
1 year
0.03
33.9
(0.03)
(34.4)
Coventry Building Society | Annual Report & Accounts 2025177
Financial Statements
Notes to the accounts continued
22. Pension scheme continued
Consideration of recent UK High Court case appeal (Virgin Media Ltd v NTL Pension Trustees II Ltd)
In July 2024, the UK High Court upheld on appeal a case decision which concerned the validity of amendments made to
pension schemes that were contracted-out of the state pension system between the period of April 1997 to April 2016. In
2025, the Government committed to introduce legislation to allow pension schemes to retrospectively obtain written
actuarial confirmation that historic benefit changes met the necessary standards. Therefore, whilst a review is ongoing at
the date of approval of these financial statements as to whether the Group schemes are affected, there is not expected to
be any material impact.
23. Deferred tax
Deferred tax assets and liabilities are attributable to the following items:
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Deferred tax assets
Other derivatives
—
(1)
(1)
(1)
Defined benefit pension plan obligation
—
(1)
(2)
(1)
Excess of capital allowances over depreciation
(46)
(2)
(2)
(2)
Provisions and other temporary differences
—
(1)
(1)
(1)
Tax losses
(243)
—
—
—
Total deferred tax assets
(289)
(5)
(6)
(5)
Deferred tax liabilities
Cash flow hedges
45
81
44
69
Defined benefit pension plan surplus
6
—
—
—
Investment in equity shares
1
4
—
4
Research and development intangible assets
6
6
6
6
Transfer of engagements – fair value adjustments
26
—
—
—
Total deferred tax liabilities
84
91
50
79
Net deferred tax (asset)/liability
(205)
86
44
74
Deferred tax liabilities have been offset against deferred tax assets in the Balance Sheet where there is a legal right of
offset. The deferred tax balances at 31 December 2025 reflect tax rates enacted at the Balance Sheet date, being
corporation tax of 25% and banking surcharge of 3% where it applies.
Deferred tax assets are recognised where they have arisen on the basis that sufficient future taxable trading profits will be
available to utilise the deferred tax assets and are recognised only to the extent that the Group expects to utilise them
against future profits based on current UK tax laws.
The Group has recognised deferred tax assets of £243 million (2024: £nil) in respect of historical trading losses of £2,353
million (2024: £nil), which relate wholly to the Bank. Whilst there is no expiry date for the utilisation of tax losses, it is
restricted to 50% or 25% of taxable profits depending on when those tax losses were incurred.
Deferred tax assets are recognised only to the extent that the Group expects to utilise them against future profits based on
current UK tax laws. The deferred tax asset recognised is based on the Board-approved strategic plan which incorporates
assumptions about the Bank’s trade and profitability over the five year plan period.
Measurement of deferred tax assets in respect of future taxable profits is a significant accounting estimate for the Group.
The five year planning period and five year period beyond the financial plan, where haircuts are applied for future
uncertainty, all inform the asset recognised. A range of plausible scenarios are considered to determine the deferred tax
asset recognised and the time period over which it will be recovered. This approach is considered appropriate given the
sensitivity of forecast profitability to macroeconomic conditions and the Group’s ability to achieve its financial and
strategic targets.
A movement of 10% in the haircut applied to the outer years beyond the approved financial plan results in a £21 million
movement in the deferred tax asset balance.
A 5% reduction (or increase) in the profitability forecast for the financial plan period and outer years results in a £12m
decrease (or increase) in the deferred tax asset balance.
A further £364 million (2024: £nil) of deferred tax assets in relation to the Bank's historic trading losses have not been
recognised at 31 December 2025, as they have not yet met the assessment level for expected future utilisation. The Group
also has an unrecognised deferred tax asset of £14 million (2024: £nil) relating to other temporary differences.
Coventry Building Society | Annual Report & Accounts 2025178
Financial Statements
Notes to the accounts continued
24. Deposits from banks
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Bank of England - TFSME
264
2,065
—
2,065
Sale and repurchase agreements (repos) in relation to:
Covered bond programme
1,358
504
1,358
504
Debt securities
1,160
500
503
500
Other1
227
863
194
863
Total deposits from banks
3,009
3,932
2,055
3,932
1. Other deposits from banks includes the collateral received held against derivative financial assets.
25. Debt securities in issue
The changes in debt securities issued by the Group are as follows :
2025
2024
Group
Medium
term notes
£m
Covered
bonds
£m
Residential
Mortgage
Backed
Securities
£m
Total
£m
Medium
term notes
£m
Covered
bonds
£m
Residential
Mortgage
Backed
Securities
£m
Total
£m
As at 1 January
2,067
2,866
1,610
6,543
1,145
2,955
1,278
5,378
Recognised on acquisition
678
499
—
1,177
—
—
—
—
Cash flows
(345)
697
117
469
910
(15)
331
1,226
Non-cash flows
Foreign exchange movements
24
104
—
128
(2)
(76)
—
(78)
Change in accrued interest
(6)
(1)
(1)
(8)
12
—
—
12
Amortisation
4
3
1
8
2
2
1
5
Unwind of fair value on acquisition
(10)
—
—
(10)
—
—
—
—
As at 31 December
2,412
4,168
1,727
8,307
2,067
2,866
1,610
6,543
The changes in debt securities issued by the Society are as follows:
2025
2024
Society
Medium
term notes
£m
Covered
bonds
£m
Residential
Mortgage
Backed
Securities
£m
Total
£m
Medium
term notes
£m
Covered
bonds
£m
Residential
Mortgage
Backed
Securities
£m
Total
£m
As at 1 January
2,067
2,866
(3)
4,930
1,145
2,955
(3)
4,097
Cash flows
(145)
697
—
552
910
(15)
—
895
Non-cash flows
Foreign exchange movements
24
104
—
128
(2)
(76)
—
(78)
Change in accrued interest
(3)
(1)
—
(4)
12
—
—
12
Amortisation
2
3
—
5
2
2
—
4
Change in fair value through profit
and loss
4
—
—
4
—
—
—
—
As at 31 December
1,949
3,669
(3)
5,615
2,067
2,866
(3)
4,930
Debt securities in issue are repayable in the ordinary course of business as follows:
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Accrued interest
39
31
32
30
Other debt securities
In not more than one year
1,795
1,052
1,272
849
In more than one year
6,473
5,460
4,311
4,051
Total
8,307
6,543
5,615
4,930
Coventry Building Society | Annual Report & Accounts 2025179
Financial Statements
Notes to the accounts continued
26. Derivative financial instruments
The Group elected to continue to apply the hedge accounting requirements of IAS 39 as permitted under IFRS 9.
Risk management strategy
Derivative financial instruments, predominantly interest rate and cross currency swaps, are held solely for the purposes of
mitigating interest rate risk, foreign exchange risk or interest rate and foreign exchange risk together, as explained in the
Risk Management Report. Where appropriate, they are designated as hedging instruments within either fair value or cash
flow hedge relationships under the terms of UK-adopted IAS 39. Derivatives can hedge specific assets or liabilities such as
liquidity or wholesale instruments (sometimes referred to as ‘micro’ hedges) or portions of a portfolio of fixed rate
products (sometimes referred to as ‘macro’ hedges).
For micro hedges, the Group establishes the hedging ratio by comparing the notional amount of the derivatives with the
principal of the instruments being hedged. For macro hedges, the Group establishes the hedging ratio by matching the
notional amount of the derivatives with the principal of that portion of the portfolio being hedged and manages this on a
monthly basis by entering into interest rate swaps.
Where interest rate risk is hedged, only the interest rate risk element of the underlying position is designated as the hedged
item and therefore other risks, such as credit risk, which are managed but not hedged by the Group, are excluded.
The interest rate risk element is determined with regard to the fixed rate that represents the benchmark rate of interest
being hedged. Where foreign exchange risk is hedged, the foreign currency risk component is determined as the change in
cash flows of the foreign currency debt arising solely from changes in the relevant forward exchange rates.
For fair value hedges, the effectiveness of the hedge relationship is assessed by comparing changes in the fair value of the
hedged item attributable to changes in the benchmark rate of interest with changes in the fair value of the derivative.
For cash flow hedges, effectiveness is assessed by comparing the changes in the fair value of the derivative with changes in
the fair value of the hedged item attributable to the hedged risk, using the hypothetical derivative method.
Possible sources of ineffectiveness are as follows:
• Differences in the benchmark rates of interest used to value the hedged item and the hedging instrument, such as when
cash collateralised interest rate swaps are discounted using SONIA but this is not the benchmark rate of interest for the
hedged item.
• Differences in timing of cash flows between the derivative and the hedged item.
• Differences in weighted average rate between the derivatives and the hedged item per monthly time buckets in a
portfolio hedge.
• Differences between the expected and actual volume of prepayments where a portfolio is being hedged, as the hedging
ratio is calculated with regard to expected repayment dates, taking account of expected prepayments based on past
experience.
• Hedging derivatives with a non-zero fair value at the date of initial designation as a hedging instrument.
• Counterparty credit risk which impacts the fair value of uncollateralised swaps but not the hedged item.
Hedging instruments
The following tables contain details of the hedging instruments used in the Group’s hedging strategies. The notional amount
indicates the amount on which payment flows are derived at the Balance Sheet date and do not represent risk. Derivative
assets and liabilities are included in the Balance Sheet at fair value.
2025
2024
Group
Notional
amount
£m
Fair value
assets
£m
Fair value
liabilities
£m
Notional
amount
£m
Fair value
assets
£m
Fair value
liabilities
£m
Derivatives designated as fair value hedges:
Interest rate risk
69,401
457
291
55,893
1,057
201
Derivatives designated as cash flow hedges:
Interest rate risk
9,238
18
12
9,916
23
43
Foreign exchange risk1
1,940
30
11
1,941
2
51
Foreign exchange and interest rate risk 1
417
16
—
417
—
8
Other derivatives
Interest rate risk
1,257
12
6
972
2
2
Foreign exchange risk
14
—
—
—
—
—
Total derivatives
82,267
533
320
69,139
1,084
305
1. Cash flows are expected to occur over a four year period (2024: five).
Coventry Building Society | Annual Report & Accounts 2025180
Financial Statements
Notes to the accounts continued
26. Derivative financial instruments continued
Hedging instruments continued
2025
2024
Society
Notional
amount
£m
Fair value
assets
£m
Fair value
liabilities
£m
Notional
amount
£m
Fair value
assets
£m
Fair value
liabilities
£m
Derivatives designated as fair value hedges:
Interest rate risk
56,784
389
240
55,893
1,057
201
Derivatives designated as cash flow hedges:
Interest rate risk
9,238
18
12
9,916
23
43
Foreign exchange and interest rate risk
417
16
—
417
—
8
Other derivatives
Interest rate risk
482
1
—
972
2
2
Total derivatives
66,921
424
252
67,198
1,082
254
The following tables set out the maturity profile and average interest and foreign exchange rates of the hedging
instruments used in the Group’s hedging strategy at 31 December 2025. Derivative contractual maturities are included in
the Risk Management Report.
The following table contains details of fair value hedged exposures at 31 December 2025:
Maturity
2025
Group
Up to one
month
£m
One to three
months
£m
Three months
to one year
£m
One to five
years
£m
More than five
years
£m
Interest rate risk:
Contract/ notional amount
1,278
1,795
25,710
47,266
3,847
Average fixed interest rate
1.9%
3.4%
3.7%
3.4%
3.6%
Foreign exchange risk:
Contract/ notional amount
2
—
891
1,061
—
Average fixed interest rate
—%
—%
2.9%
2.3%
—%
Average £/€ exchange rate
1.2
—
0.9
0.9
—
Foreign exchange and interest rate risk:
Contract/ notional amount
—
—
—
417
—
Average fixed interest rate
—%
—%
—%
3.1%
—%
Average £/€ exchange rate
—
—
—
0.8
—
Maturity
2025
Society
Up to one
month
£m
One to three
months
£m
Three months
to one year
£m
One to five
years
£m
More than five
years
£m
Interest rate risk:
Contract/ notional amount
232
961
22,822
39,697
2,792
Average fixed interest rate
1.3%
3.4%
3.7%
3.4%
3.6%
Foreign exchange and interest rate risk:
Contract/ notional amount
—
—
—
417
—
Average fixed interest rate
—%
—%
—%
3.1%
—%
Average £/€ exchange rate
—
—
—
0.8
—
Coventry Building Society | Annual Report & Accounts 2025181
Financial Statements
Notes to the accounts continued
26. Derivative financial instruments continued
Hedging instruments continued
Maturity
2024
Group
Up to one
month
£m
One to three
months
£m
Three months
to one year
£m
One to five
years
£m
More than five
years
£m
Interest rate risk:
Contract/ notional amount
184
792
23,453
38,961
3,392
Average fixed interest rate
0.4%
2.3%
4.0%
3.4%
3.4%
Foreign exchange risk:
Contract/ notional amount
—
—
—
1,940
—
Average fixed interest rate
—
—
—
2.6%
—
Average £/€ exchange rate
—
—
—
1.0
—
Foreign exchange and interest rate risk:
Contract/ notional amount
—
—
—
417
—
Average fixed interest rate
—
—
—
3.1%
—
Average £/€ exchange rate
—
—
—
0.8
—
Maturity
2024
Society
Up to one
month
£m
One to three
months
£m
Three months
to one year
£m
One to five
years
£m
More than five
years
£m
Interest rate risk:
Contract/ notional amount
184
792
23,453
38,961
3,392
Average fixed interest rate
0.4%
2.3%
4.0%
3.4%
3.4%
Foreign exchange and interest rate risk:
Contract/ notional amount
—
—
—
417
—
Average fixed interest rate
—
—
—
3.1%
—
Average £/€ exchange rate
—
—
—
0.8
—
Hedged items
The following table contains details of fair value hedged exposures at 31 December:
2025
2024
Carrying amount of hedged
item
Accumulated amount of fair
value adjustments on the
hedged item
Carrying amount of hedged
item
Accumulated amount of fair
value adjustments on the
hedged item
Group
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
Fair value hedges:
Interest rate 1,2
67,047
(22,739)
107
(29)
46,473
(23,042)
(494)
68
2025
2024
Carrying amount of hedged
item
Accumulated amount of fair
value adjustments on the
hedged item
Carrying amount of hedged
item
Accumulated amount of fair
value adjustments on the
hedged item
Society
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
Fair value hedges:
Interest rate 1,2
48,489
(19,394)
88
(7)
46,473
(23,042)
(494)
68
1. Assets presented in Loans and advances to customers and Debt securities in the Balance Sheet.
2. Liabilities presented in Shares, Customer accounts and Debt securities in issue in the Balance Sheet.
Of the £107 million increase (2024: £494 million decrease) total accumulated fair value adjustments on the hedged asset,
£169 million increase (2024: £448 million decrease) relates to hedging instruments for loans and advances to customers.
The remainder relates to hedges in place against treasury instruments.
Coventry Building Society | Annual Report & Accounts 2025182
Financial Statements
Notes to the accounts continued
26. Derivative financial instruments continued
Hedged items continued
The following tables provide additional information on cash flow hedges:
Changes in Fair Value
Amounts reclassified from
reserves to Income Statement
2025
Group
Hedging
derivative
£m
Hedged item
for
ineffectiveness
assessment
£m
Gains/(losses)
recognised in
OCI
£m
Hedged cash
flows will no
longer occur
£m
Hedged item
for affected
Income
Statement
£m
Recognised in
Income
Statement1
£m
Derivatives designated as cash flow hedges:
Foreign exchange
68
68
68
—
106
—
Foreign exchange and interest rate
22
23
22
—
22
—
Interest rate
17
17
17
107
—
108
1. Ineffectiveness is shown in note 9 Net (losses)/gains from derivatives and hedge accounting.
Changes in Fair Value
Amounts reclassified from
reserves to Income Statement
2025
Society
Hedging
derivative
£m
Hedged item
for
ineffectiveness
assessment
£m
Gains/(losses)
recognised in
OCI
£m
Hedged cash
flows will no
longer occur
£m
Hedged item
for affected
Income
Statement
£m
Recognised in
Income
Statement1
£m
Derivatives designated as cash flow hedges:
Foreign exchange
—
—
—
—
—
—
Foreign exchange and interest rate
22
23
22
—
22
—
Interest rate
17
17
17
107
—
108
1. Ineffectiveness is shown in note 9 Net losses from derivative financial instruments.
As at 31 December 2025, balances remaining in the cash flow hedge reserve, gross of tax, are a £15 million gain for
continuing hedges and £149 million gain for discontinued hedges (2024: £30 million gain, £261 million gain respectively).
Changes in Fair Value
Amounts reclassified from
reserves to Income Statement
2024
Group
Hedging
derivative
£m
Hedged item
for
ineffectiveness
assessment
£m
Gains/(losses)
recognised in
OCI
£m
Hedged cash
flows will no
longer occur
£m
Hedged item
for affected
Income
Statement
£m
Recognised in
Income
Statement1
£m
Derivatives designated as cash flow hedges:
Foreign exchange
(38)
(38)
(38)
—
(77)
—
Foreign exchange and interest rate
(4)
(4)
(4)
—
(4)
—
Interest rate
31
31
31
126
—
126
1. Ineffectiveness is shown in note 9 Net losses from derivative financial instruments.
Changes in Fair Value
Amounts reclassified from
reserves to Income Statement
2024
Society
Hedging
derivative
£m
Hedged item
for
ineffectiveness
assessment
£m
Gains/(losses)
recognised in
OCI
£m
Hedged cash
flows will no
longer occur
£m
Hedged item
for affected
Income
Statement
£m
Recognised in
Income
Statement1
£m
Derivatives designated as cash flow hedges:
Foreign exchange
—
—
—
—
—
—
Foreign exchange and interest rate
(4)
(4)
(4)
—
(4)
—
Interest rate
31
31
31
126
—
126
1. Ineffectiveness is shown in note 9 Net (losses)/gains from derivatives and hedge accounting.
Coventry Building Society | Annual Report & Accounts 2025183
Financial Statements
Notes to the accounts continued
27. Provisions for liabilities and charges
During the normal course of business, the Group receives complaints from customers in relation to past sales and ongoing
administration. The Group is also subject to enquiries from and discussions with its regulators, including the Financial
Ombudsman Service (FOS), on a range of matters.
The Group continues to monitor ongoing legal cases and makes assessment on potential exposure based on available
information and expected outcomes. The Group does not expect the ultimate resolution of any current complaints,
threatened or actual legal proceedings, regulatory or other matters to have a material adverse impact on its financial
position.
Therefore there are no matters which require disclosure as a contingent liability or provisions recognised at the balance
sheet date.
28. Subordinated liabilities
Issue date
Call date
Maturity
date
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Subordinated liabilities owed to note holders are as follows:
Fixed rate subordinated notes 2032 - 7.54%
Aug 2009
Aug 2027
Aug 2032
15
15
15
15
Fixed rate subordinated notes 2034 - 11.75%
Nov 2023
May 2029
May 2034
233
—
239
—
Total
248
15
254
15
The 2023 issued subordinated notes were transferred to the Society from The Co-operative Bank Holdings p.l.c., the original
issuer, during the year as part of simplifying the Group funding structure.
All the subordinated liabilities are denominated in sterling and are repayable in the years stated, or earlier in accordance
with their terms at the option of the issuer, subject to prior consent of the Prudential Regulation Authority (PRA).
The subordinated notes rank equally with each other and behind all other creditors of the Society and the claims of
Shareholding Members, other than holders of Permanent Interest Bearing Shares (PIBS) and Perpetual Capital Securities
(PCS), for both principal and interest.
The fixed rate subordinated notes 2032 – 7.54% can be called at the option of the Society in August 2027 in accordance with
their terms, subject to prior consent of the PRA.
The fixed rate subordinated notes 2034 – 11.75% can be called at the option of the Society in May 2029 in accordance with
their terms, subject to prior consent of the PRA.
29. Subscribed capital
Group and Society
2025
£m
2024
£m
Subscribed capital owed to permanent interest holding members is as follows:
Permanent Interest Bearing Shares - 1992 - 12 1/8%
42
42
Total
42
42
Subscribed capital comprises the Society's Permanent Interest Bearing Shares (PIBS) issued in 1992 which are only repayable
in the event of the winding up of the Society. Interest is paid in arrears in half yearly instalments at 12 1/8% per annum.
PIBS rank equally with each other. They rank behind all other creditors of the Society including subordinated liabilities and
the claims of Shareholding Members (other than holders of PCS, which rank behind PIBS) for both principal and interest. The
holders of PIBS are not entitled to any share in any final surplus upon a winding up or final dissolution of the Society.
30. Other equity instruments
In June 2024, the Society issued £665 million Perpetual Capital Securities (PCS). This is also known as Additional Tier 1
Capital. This PCS issuance pays a fully discretionary, non-cumulative fixed coupon at an initial rate of 8.750% per annum.
The rate will reset on 11 December 2029 and every five years thereafter to the prevailing rate on a benchmark gilt plus
4.727%. Coupons are paid semi-annually in June and December. The cost of issuance of £7 million (net of tax) has been
recognised within the Society’s general reserve.
The returns paid to holders of PCS are treated as an appropriation of profit after tax, reflecting their categorisation as
equity instruments, distributed directly from the general reserve. During 2025, coupon payments of £58 million (2024: £50
million) have been recognised in the Consolidated Statement of Change in Members’ Interests and Equity. The 2024
payments include the interest relating to the 2019 issuance which was settled as part of the tender process.
Coventry Building Society | Annual Report & Accounts 2025184
Financial Statements
Notes to the accounts continued
30. Other equity instruments continued
The 2024 instruments have no maturity date. They are repayable at the option of the Society in 2029 and on every fifth
anniversary thereafter, but only with the prior consent of the PRA. If the end-point Common Equity Tier 1 ratio for the
Group, on either an individual consolidated or a consolidated basis, falls below 7% they convert to Core Capital Deferred
Shares (CCDS) at the rate of one CCDS for every £67 PCS held.
The PCS rank behind all other creditors of the Society including Subordinated liabilities and the claims of Shareholding
Members (other than PIBS), for both principal and interest. The holders of PCS are not entitled to any share in any final
surplus upon a winding up or final dissolution of the Society.
In the prior year, a tender offer for previously issued PCS instruments was completed, with £388 million of the £415 million
PCS repurchased for £390 million (net of tax). A residual £27 million was redeemed by the Society in September 2024 on the
optional redemption date of the bonds.
31. Financial commitments
The table below shows commitments arising from customer transactions.
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Advances in respect of loans and advances to customers for mortgages
approved but not yet completed
2,722
1,915
1,196
1,429
Loan facilities for business and commercial customers
296
—
—
—
Unused credit card and overdraft limits
928
—
—
—
Total commitments arising from customer transactions
3,946
1,915
1,196
1,429
32. Other liabilities
Items presented on the Balance Sheet within other liabilities as shown below:
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Other taxation and social security
13
7
4
7
Amounts due to beneficiary banks
23
—
—
Lease liabilities
44
12
13
12
Amounts due to connected undertakings
—
—
1,671
1,546
Other
28
9
15
9
Total
108
28
1,703
1,574
Amounts due to connected undertakings reflects the deemed loan to Economic Master Issuer plc.
Lease liabilities
The table below shows the maturity profile of the gross contractual cash flows, including interest charge, of the lease
liabilities held. This analysis differs from the lease liabilities balance, above which represents the discounted future cash
flows of the operations.
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
Amounts falling due:
Less than three months
2
1
1
1
Greater than three months and less than one year
7
3
3
3
Between one and five years
24
7
9
7
After five years
15
1
1
1
Total
48
12
14
12
The Group has elected to adopt the exemption for short-term leases or leases of low value, and these leases are recognised
in the Income Statement as an expense. There were no items expensed in 2025 (2024: £nil). Variable lease payments are
not included as lease liabilities and are expensed as incurred, and they amount to £nil for the year (2024: £1 million). The
Group sublets 12 (2024: three) of its leased properties. The income received from this is negligible and is recognised as
rental income.
Coventry Building Society | Annual Report & Accounts 2025185
Financial Statements
Notes to the accounts continued
33. Financial instruments – fair value of financial assets and liabilities
For the purpose of calculating fair values, fair value is assessed as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants in the principal or, in its absence, the most
advantageous market to which the Group has access at that date. The Group measures fair value using the following fair
value hierarchy that reflects the significance of the inputs used in making the measurements:
• Level 1: unadjusted quoted prices in active markets for identical instruments.
• Level 2: valuation techniques for which all significant inputs are based on observable market data.
• Level 3: valuation techniques for which significant inputs are not based on observable market data.
Where applicable, the Group measures fair value using the quoted price in an active market for that instrument. A market
is regarded as active if transactions take place with sufficient frequency and volume to provide pricing information on an
ongoing basis. Where this is not applicable, the Group determines fair values using other valuation techniques.
Fair value of assets and liabilities held at amortised cost
The following table summarises the fair value of the Group's and Society's financial assets and liabilities measured at
amortised cost in the Group's and Society's Balance Sheet.
2025
Group
Carrying
amount
£m
Fair value
Level 1
£m
Fair value
Level 2
£m
Fair value
Level 3
£m
Fair value
Total
£m
Financial assets
Loans and advances to credit institutions
383
—
383
—
383
Loans and advances to customers
72,936
—
—
73,266
73,266
Debt securities
26
—
—
27
27
Financial liabilities
Shares
50,830
—
—
50,480
50,480
Customer accounts
20,892
—
42
20,841
20,883
Deposits from banks
3,009
—
2,993
16
3,009
Debt securities in issue
8,307
—
8,301
—
8,301
Subordinated liabilities
248
—
258
—
258
Subscribed capital
42
79
—
—
79
2025
Society
Carrying
amount
£m
Fair value
Level 1
£m
Fair value
Level 2
£m
Fair value
Level 3
£m
Fair value
Total
£m
Financial assets
Loans and advances to credit institutions
261
—
261
—
261
Loans and advances to customers
33,941
—
—
34,167
34,167
Debt securities
—
—
—
—
—
Loans with Group undertakings
18,263
—
3,873
14,298
18,171
Financial liabilities
Shares
50,830
—
—
50,480
50,480
Customer accounts
187
—
187
—
187
Deposits from banks
2,055
—
2,055
—
2,055
Debt securities in issue
5,408
—
5,393
—
5,393
Subordinated liabilities
15
—
19
—
19
Subscribed capital
42
79
—
—
79
Coventry Building Society | Annual Report & Accounts 2025186
Financial Statements
Notes to the accounts continued
33. Financial instruments – fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at amortised cost continued
2024
Group
Carrying
amount
£m
Fair value
Level 1
£m
Fair value
Level 2
£m
Fair value
Level 3
£m
Fair value
Total
£m
Financial assets
Loans and advances to credit institutions
329
—
329
—
329
Loans and advances to customers
51,801
—
—
51,593
51,593
Debt securities
—
—
—
—
—
Financial liabilities
Shares
49,343
—
—
49,268
49,268
Customer accounts
82
—
82
—
82
Deposits from banks
3,932
—
3,932
—
3,932
Debt securities in issue
6,543
—
6,441
—
6,441
Subordinated liabilities
15
—
19
—
19
Subscribed capital
42
67
—
—
67
2024
Society
Carrying
amount
£m
Fair value
Level 1
£m
Fair value
Level 2
£m
Fair value
Level 3
£m
Fair value
Total
£m
Financial assets
Loans and advances to credit institutions
329
—
329
—
329
Loans and advances to customers
33,458
—
—
33,416
33,416
Debt securities
—
—
—
—
—
Loans with Group undertakings
17,583
—
4,634
12,810
17,444
Financial liabilities
Shares
49,343
—
—
49,268
49,268
Customer accounts
234
—
234
—
234
Deposits from banks
3,932
—
3,932
—
3,932
Debt securities in issue
4,930
—
4,831
—
4,831
Subordinated liabilities
15
—
19
—
19
Subscribed capital
42
67
—
—
67
Loans and advances to credit institutions
The fair value of loans and advances to credit institutions over the longer term is estimated by discounting expected cash
flows at a market discount rate. Amounts maturing in the short term are valued at carrying amount.
Loans and advances to customers
The fair value of loans and advances to customers is assessed as the value of the expected future cash flows, projected
using contractual interest payments and repayments and the expected prepayment behaviour of borrowers. Assumptions
are applied regarding expected levels of customer prepayments and the risk of defaults. The estimated future cash flows
are discounted at current market rates for the loan types and adjusted where necessary to reflect any observable market
conditions. The majority of the loans and advances to customers are on a fixed rate product, and therefore interest rate
swap derivative instruments are in place against these assets. Hedge accounting related fair value adjustments of £169
million increase at Group and £118 million increase at Society (31 December 2024: £448 million decrease, Group and
Society) are excluded from the carrying value and fair value.
Debt securities
Debt securities for which no market price or executable bid is available at the year end date are valued by one of two
methods. Where there are recent market prices or executable bids for the security, these are used as the basis for
establishing a valuation. Otherwise, a security is valued based on its relative value to comparable bonds.
Coventry Building Society | Annual Report & Accounts 2025187
Financial Statements
Notes to the accounts continued
33. Financial instruments – fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at amortised cost continued
Loans with Group undertakings
Loans with Group undertakings are made up of intercompany loan balances. Intercompany loan balances repayable on
demand are classed as level 3. Intercompany loans due in relation to the covered bond programmes are valued by reference
to the to the fair value of the underlying covered bond and are classed as level 2.
Shares and customer accounts
The fair value of shares and customer accounts available on demand approximates to the carrying value. The fair value of
fixed term or restricted access deposits is determined from the estimated projected cash flows discounted at the current
market rates for those types of deposit. The estimated fair value of deposits with no stated maturity, which includes non-
interest bearing deposits, is the amount repayable on demand. Hedge accounting fair value adjustments to the share
balance of £25 million increase (31 December 2024: £18 million) are excluded from the carrying value and fair value. Hedge
accounting fair value adjustments to customer accounts of £22 million increase (31 December 2024: £nil) are excluded from
the carrying value and fair value.
Deposits from banks
The fair value of deposits taken from wholesale counterparties over the longer term is estimated by discounting expected
cash flows at a market discount rate. Amounts maturing in the short term are valued at carrying amount.
Debt securities in issue, subordinated liabilities and subscribed capital
The estimated fair value of longer-dated liabilities is calculated based on quoted market prices where available or using
similar issues as a proxy for those liabilities that are not of sufficient size or liquidity to have an active market quote. For
those liabilities where quoted market prices are not available, a discounted cash flow model is used based on a current
yield curve appropriate to the remaining term to maturity.
Fair value of assets and liabilities held at fair value
The following table summarises the fair value of the Group's financial assets and liabilities measured at fair value on the
face of the Group and Society's Balance Sheet by fair value hierarchy and product type.
2025
Group
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
—
488
—
488
Cross currency swaps
—
45
—
45
Total
—
533
—
533
Debt securities:
UK Government investment securities
789
—
—
789
Other listed transferable debt securities
747
—
3
750
Total
1,536
—
3
1,539
Investment in equity shares:
Investment in equity shares
—
—
5
5
Total
—
—
5
5
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
—
308
1
309
Cross currency swaps
—
11
—
11
Total
—
319
1
320
Coventry Building Society | Annual Report & Accounts 2025188
Financial Statements
Notes to the accounts continued
33. Financial instruments – fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at fair value continued
2025
Society
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
—
409
—
409
Cross currency swaps
—
15
—
15
Total
—
424
—
424
Debt securities:
UK Government investment securities
440
—
—
440
Other listed transferable debt securities
—
—
—
—
Total
440
—
—
440
Loans with Group undertakings:
Loans with Group undertakings
—
446
—
446
Total
—
446
—
446
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
—
251
1
252
Cross currency swaps
—
—
—
—
Total
—
251
1
252
Debt securities in issue:
Medium term notes
—
207
—
207
Total
—
207
—
207
Subordinated liabilities:
Subordinated liabilities
—
239
—
239
Total
—
239
—
239
2024
Group
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
—
1,082
—
1,082
Cross currency swaps
—
2
—
2
Total
—
1,084
—
1,084
Debt securities:
UK Government investment securities
483
—
—
483
Other listed transferable debt securities
19
—
—
19
Total
502
—
—
502
Investment in equity shares:
Investment in equity shares
1
—
8
9
Total
1
—
8
9
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
—
245
1
246
Cross currency swaps
—
59
—
59
Total
—
304
1
305
Coventry Building Society | Annual Report & Accounts 2025189
Financial Statements
Notes to the accounts continued
33. Financial instruments – fair value of financial assets and liabilities
continued
Fair value of assets and liabilities held at fair value continued
2024
Society
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
Financial assets
Derivative financial instruments - assets:
Interest rate swaps
—
1,082
—
1,082
Cross currency swaps
—
—
—
—
Total
—
1,082
—
1,082
Debt securities:
UK Government investment securities
423
—
—
423
Other listed transferable debt securities
19
—
—
19
Total
442
—
—
442
Investment in equity shares:
Investment in equity shares
1
—
8
9
Total
1
—
8
9
Financial liabilities
Derivative financial instruments - liabilities:
Interest rate swaps
—
245
1
246
Cross currency swaps
—
8
—
8
Total
—
253
1
254
Financial instruments recorded at fair value
The determination of fair value for financial instruments that are recorded at fair value using valuation techniques is
described below, including the assumptions that a market participant would be expected to make when valuing the
instruments:
Level 1: Debt securities – fair value through other comprehensive income – Listed
Market prices have been used to determine the fair value of listed debt securities.
Level 1: Investment in equity shares – fair value through profit and loss – Listed
Market prices have been used to determine the fair value of listed equity shares.
Level 2: Derivatives
Derivative products utilise observable market inputs for interest rate swaps and cross currency swaps. Valuations are
generated by swap models which use present value calculations and incorporate assumptions for interest rate curves and
foreign exchange spot and forward rates.
Level 2: Loans with Group undertakings - Unlisted
This reflects a back-to-back arrangement between the Society and the Bank in respect of listed debt securities in issue and
subordinated liabilities, market prices of the these instruments have been used to to determine the fair value.
Level 2 - Debt securities - fair value through other comprehensive income - Unlisted
Where quoted market prices are not available at the valuation date, valuations of securities are based on their relative
value to comparable securities.
Level 2 - Debt securities in issue - fair value through profit and loss - Listed
Market prices have been used to determine the fair value of listed debt securities in issue.
Level 2 - Subordinated liabilities - Listed
Market prices have been used to determine the fair value of listed subordinated liabilities.
Level 3 - Debt securities - Unlisted
Represents a 5% risk retention holding of residual certificates issued by Warwick Finance Residential Mortgages Number
Three plc. The remaining 95% is privately held, therefore there is no available market prices. An in-house model is used
that sources independent market data for disclosure purposes only.
Level 3: Investment in equity shares – fair value through profit and loss – Unlisted
The Group has a small balance of investments in equity shares, including a residual holding in Visa Inc. shares. These shares
are valued based on future cash consideration which the Group expects to receive on sale of these instruments, or the
underlying market value.
Coventry Building Society | Annual Report & Accounts 2025190
Financial Statements
Notes to the accounts continued
33. Financial instruments – fair value of financial assets and liabilities
continued
Financial instruments recorded at fair value continued
Level 3: Derivatives
The item included within Level 3 is a balance tracking swap, which remained in place during the year. It is valued using
present value calculations based on market interest rate curves. The unobservable inputs relate to the projection of the
swap notional amount, which changes over time to match the balance of the underlying mortgage portfolio. Projected
mortgage prepayment amounts are used in the modelling of the mortgage portfolio profile. The changes in the projection of
interest and prepayment rates of the underlying mortgage portfolio affect both the unbounded swap and hedged item so
that the net Income Statement and Balance Sheet impact would be minimal.
The following table analyses fair value movements in the Level 3 portfolio for both the Group and the Society:
2025
2024
Group
Investment in
equity shares
£m
Derivative
financial
instruments
£m
Debt securities
£m
Investment in
equity shares
£m
Derivative
financial
instruments
£m
Debt securities
£m
As at 1 January
8
(1)
—
6
(2)
—
Recognised on acquisition
6
—
14
Gains/(losses) recognised in the
Income Statement
Net unrealised gains/ (losses)
(1)
—
—
2
1
—
Settlements
(8)
—
(11)
—
—
—
As at 31 December
5
(1)
3
8
(1)
—
2025
2024
Society
Investment in
equity shares
£m
Derivative
financial
instruments
£m
Debt securities
£m
Investment in
equity shares
£m
Derivative
financial
instruments
£m
Debt securities
£m
As at 1 January
8
(1)
—
6
(2)
—
Gains/(losses) recognised in the
Income Statement
Net unrealised gains/ (losses)
3
—
—
2
1
—
Settlements
(11)
—
—
—
—
—
As at 31 December
—
(1)
—
8
(1)
—
No sensitivities have been performed with regards the level 3 instruments as the balances are immaterial to the financial
statements.
Transfers between fair value levels
Transfers between fair value levels only occur when either it becomes possible to value a financial instrument using a
method that is higher up the valuation hierarchy or it is no longer possible to value it using the current method and it must
instead be valued using a method lower down the hierarchy. Transfers are considered to have occurred at the end of the
reporting period for the purposes of this disclosure.
Coventry Building Society | Annual Report & Accounts 2025191
Financial Statements
Notes to the accounts continued
34. Offsetting financial assets and liabilities
The Group and Society do not have any financial assets or financial liabilities that are offset with the net amount presented
in the Balance Sheets. IAS 32 Financial Instruments: Presentation states that there should be both an enforceable right to
set-off and the intention either to settle on a net basis or to realise the asset and settle the liability simultaneously to
apply this treatment, and neither of these conditions is met.
The Group has entered into master netting arrangements such as International Swaps and Derivatives Association (ISDA)
master agreements for its derivatives, other than derivatives held by Coventry Building Society Covered Bonds LLP.
Credit Support Annexes (CSAs) are executed in conjunction with these ISDA master agreements, which typically provide for
the exchange of collateral to mitigate net mark-to-market credit exposure.
The Group has also entered into Global Master Repurchase Agreements, including margin collateralisation arrangements,
whereby outstanding transactions with the same counterparty can be settled net following a default or other
predetermined event.
Coventry Building Society Covered Bonds LLP does not enter into a master netting agreement due to the structure of the
covered bond programme. However, it has entered into a separate ISDA agreement in respect of each of the derivatives it
has transacted with external counterparties. Each agreement includes a CSA which provides for full collateralisation of the
swap exposure, with exposure thresholds in place for a single agreement before collateral is exchanged. The £35 million net
derivative credit exposure in the table below is in respect of an arrangement that will only be fully collateralised if the
counterparty is downgraded to below its specified credit rating (2024: £2 million).
The table below shows the net exposure for sale and repurchase agreements or derivative contracts after any netting
benefits and collateral. At the end of the year the Group did not hold any reverse sale and repurchase agreements with
respect to Gilts (2024: £nil), with £2,015 million of sale and repurchase agreements being held on the balance sheet as at
31 December 2025 (2024: £602 million). The Group did not enter into securities lending (2024: £nil) during the year.
2025
Group
Gross amounts
£m
Master netting
arrangements
£m
Financial
collateral1
£m
Net amount
£m
Financial assets
Derivative financial instruments
533
(309)
(189)
35
Reverse Repurchase Agreements
—
—
—
—
Total financial assets
533
(309)
(189)
35
Financial liabilities
Derivative financial instruments
320
(309)
(1)
10
Repurchase agreements
2,015
—
(2,015)
—
Total financial liabilities
2,335
(309)
(2,016)
10
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
2025
Society
Gross amounts
£m
Master netting
arrangements
£m
Financial
collateral1
£m
Net amount
£m
Financial assets
Derivative financial instruments
424
(251)
(172)
1
Reverse Repurchase Agreements
250
—
(250)
—
Total financial assets
674
(251)
(422)
1
Financial liabilities
Derivative financial instruments
252
(251)
(1)
—
Repurchase agreements
1,358
—
(1,358)
—
Total financial liabilities
1,610
(251)
(1,359)
—
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
Coventry Building Society | Annual Report & Accounts 2025192
Financial Statements
Notes to the accounts continued
34. Offsetting financial assets and liabilities continued
2024
Group
Gross amounts
£m
Master netting
arrangements
£m
Financial
collateral1
£m
Net amount
£m
Financial assets
Derivative financial instruments
1,084
(245)
(837)
2
Reverse Repurchase Agreements
—
—
—
—
Total financial assets
1,084
(245)
(837)
2
Financial liabilities
Derivative financial instruments
305
(245)
(7)
53
Repurchase agreements
602
—
(602)
—
Total financial liabilities
907
(245)
(609)
53
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
2024
Society
Gross amounts
£m
Master netting
arrangements
£m
Financial
collateral1
£m
Net
amount
£m
Financial assets
Derivative financial instruments
1,083
(246)
(837)
—
Reverse Repurchase Agreements
—
—
—
—
Total financial assets
1,083
(246)
(837)
—
Financial liabilities
Derivative financial instruments
254
(246)
(7)
1
Repurchase agreements
602
—
(602)
—
Total financial liabilities
856
(246)
(609)
1
1. The financial collateral disclosed is limited to the amount of the related financial asset or related financial liability.
For derivative financial assets, collateral received can be in the form of cash and UK Government investment securities.
Where cash is received, it is included as a liability within Deposits from banks (note 24). Where UK Government investment
securities are received, these are not recognised on the Balance Sheet, as the Group does not obtain the risks and rewards
of ownership.
For derivative financial liabilities, collateral paid is in the form of cash and is included as an asset in Loans and advances to
credit institutions.
For sale and repurchase agreements (repos), collateral provided is predominantly in UK Government investment securities
with the remainder in cash. Again, cash paid is included as an asset in Loans and advances to credit institutions.
UK Government investment securities are not derecognised as the Group retains substantially all the risks and rewards of
ownership.
Cash collateral held and cash collateral pledged are not restricted and are returned at the end of the contract.
35. Capital management
As at 31 December 2025, and throughout the year, the Group complied in full with the capital requirements that were in
force. Further information on the Group's capital resources and capital management can be found in the Capital risk section
of the Risk Management Report.
Coventry Building Society | Annual Report & Accounts 2025193
Financial Statements
Notes to the accounts continued
36. Related party transactions
The Group is controlled by Coventry Building Society registered in England and Wales, which is also considered to be the
ultimate parent.
Transactions with related undertakings
Transactions are entered into with related parties in the normal course of business. These include loans, deposits, and the
payment and recharge of interest and administrative expenses. Where these charges are associated to Group subsidiaries,
they are settled through the intercompany accounts.
Interest on outstanding loans and deposits accrues at a rate agreed between the Society and its subsidiaries in the normal
course of business.
Loans and deposits payable by the Society to Group undertakings relate to amounts owing to the Society's structured
entities, in accordance with the accounting policy set out in note 1. These intercompany balances have been presented
within Other liabilities on the Society Balance Sheet.
2025
£m
2024
£m
Loans payable to the Society
Loans outstanding as at 1 January
17,583
17,668
Movement during the year
1,879
(85)
Loans outstanding as at 31 December
19,462
17,583
Loans and deposits payable by the Society
Deposits outstanding at 1 January
1,546
1,231
Movement during the year1
125
315
Deposits outstanding at 31 December
1,671
1,546
Net interest income
Interest receivable
546
555
Interest payable
(119)
(128)
Total
427
427
Other income and expenses
Fees and expenses paid to the Society
53
52
1. Includes loans and deposits received from connected undertakings in respect of securitisation transactions during the year
Transactions with key management
Transactions with key management are on the same terms and conditions applicable to members and other employees
within the Group. The Board of directors is considered to be the only 'key management' for the purposes of the related
party transactions disclosures under IAS 24 Related Party Disclosures. No director has any interest in the shares or
debentures of any connected undertaking of the Society. See the Directors’ Remuneration Report in the Governance section
for information on directors’ remuneration for 2025.
In accordance with Section 68 of the Building Societies Act 1986, the Society maintains a register of loans falling within
Section 65 made to directors and connected persons. A statement containing requisite particulars of such transactions may
be inspected by members at the Society's Annual General Meeting (AGM) or at the Principal Office of the Society during the
period 15 days prior to the AGM.
No. of directors
and persons
connected to them
Amount in relation
to directors and
persons connected
to them
No. of directors
and persons
connected to them
Amount in relation
to directors and
persons connected
to them
2025
Number
2025
£m
2024
Number
2024
£m
Loans and advances
Net movement
—
—
—
(0.1)
Balance outstanding
2
0.3
2
0.3
Share and deposit accounts
Net movement
3
0.1
1
—
Balance outstanding
16
0.5
13
0.4
Coventry Building Society | Annual Report & Accounts 2025194
Financial Statements
Notes to the accounts continued
37. Cash flows from financing activities
For the purposes of the Statements of Cash Flows, debt securities in issue, subordinated liabilities and subscribed capital
are classified as liabilities arising from financing activities. The table below provides a reconciliation of movements in
liabilities arising from financing activities.
Group
2025
£m
Group
2024
£m
Society
2025
£m
Society
2024
£m
At 1 January
6,600
5,435
4,986
4,153
Recognised on acquisition
1,404
—
—
—
Cash flows:
Net proceeds form issue of debt securities
1,701
1,824
1,201
1,324
Repayment of debt securities in issue
(1,232)
(598)
(850)
(430)
Interest paid on subordinated liabilities
(24)
—
(13)
—
Non-cash flows:
Amortisation of premium/ discount on issue
6
5
6
5
Intercompany transfer
—
—
443
—
Accrued interest movements
12
12
5
12
Change in FVTPL
4
—
4
—
Foreign exchange movements
126
(78)
129
(78)
At 31 December
8,597
6,600
5,911
4,986
Coventry Building Society | Annual Report & Accounts 2025195
Financial Statements
Notes to the accounts continued
38. The acquisition of The Co-operative Bank Holdings p.l.c.
On 1 January 2025, the Society acquired the entire issued share capital of The Co-operative Bank Holdings p.l.c. (the
ultimate holding company of The Co-operative Bank p.l.c.) for a total cash consideration of £745 million following receipt
of regulatory approvals.
The Bank provides a range of banking products and services to both retail, business and commercial customers. As outlined
further on page 13, the acquisition deepens the enlarged group’s existing presence in mortgages and savings and extends
the Society’s propositions. The Society's Board believes that the acquisition of the Bank was in the best interests of the
Society and its current and future members.
In accordance with IFRS 3, an assessment of the fair value of the net assets acquired and the cash consideration paid has
been completed at the date of acquisition and is detailed below. The 12 month measurement period closed on 31 December
2025 and the fair values on acquisition are concluded.
Book value as at 1
January 2025
£m
Fair value adjustments
£m
Fair value as at 1
January 2025
£m
Assets
Cash in hand and balances with the Bank of England
2,586
—
2,586
Loans and advances to credit institutions
173
—
173
Debt securities
1,637
—
1,637
Loans and advances to customers
20,373
31
20,404
Derivative financial instruments
216
—
216
Investments in equity shares
6
—
6
Current tax assets
7
—
7
Deferred tax assets
243
(26)
217
Intangible assets
110
143
253
Property, plant & equipment
52
4
56
Other assets
9
—
9
Prepayments and accrued income
36
—
36
Pension benefit asset
32
—
32
Total assets
25,480
152
25,632
Liabilities
Deposits from banks
2,717
—
2,717
Customer accounts
19,971
5
19,976
Debt securities in issue
1,156
21
1,177
Hedge accounting adjustment
(21)
21
—
Derivative financial instruments
48
—
48
Accruals and deferred income
47
—
47
Other liabilities
82
—
82
Provisions for liabilities and charges
10
—
10
Pension benefit obligation
5
—
5
Subordinated liabilities
200
41
241
Total liabilities
24,215
88
24,303
Net assets acquired
1,265
64
1,329
Cash consideration paid
745
Gain on acquisition
584
The consideration was fully settled in cash on completion, subject to a small residual holdback which is payable subject to
satisfactory conclusion of the closing accounts process which is due for conclusion later in 2026. £125 million of the total
£745 million cash consideration is deferred and held in escrow for a period of 3 years from completion in line with the
terms of the share purchase agreement.
The fair value of loans and advances to customers of £20,404 million was calculated using a discounted cash flow method,
at an individual account or suitable segmented level taking into account interest, market and credit risk for the acquired
loans. The gross contractual amount of the loans and advances receivable from the customers was £20,476 million. The best
estimate of the amounts not expected to be collected was £29 million.
For other assets and liabilities held at amortised cost, suitable valuation techniques were used to assess fair value.
Coventry Building Society | Annual Report & Accounts 2025196
Financial Statements
Notes to the accounts continued
38. The acquisition of The Co-operative Bank Holdings p.l.c. continued
The main fair value adjustments determined and recognised by the Group on acquisition related to loans and advances to
customers and treasury funding liability instruments. These adjustments are being written down over approximately 2.5
years for loans and advances to customers, representing the weighted average life of the acquired portfolio and over 1 - 4.5
years for the treasury funding liabilities, determined by the relevant maturity date.
Intangible assets recognised on acquisition relate to a core deposit intangible of £143 million. This relates to the value
derived from access to a stable source of low cost, on-demand deposit balance funding when compared to the cost of
alternative funding available to a typical market participant. The intangible asset represents the present value of the cost
savings expected to be realised over the expected remaining useful life of the deposits and is being amortised over a life of
five years.
Deferred tax at the rate of 28% has been recognised on all fair value adjustments arising.
Since 1 January 2025 (the date representing both the acquisition date and the start of the financial year), total income of
£496 million and profit after tax of £49 million (excluding the gain on acquisition) has been included in the consolidated
Income Statement for the year.
Gain on acquisition
As the fair value of the identifiable net assets acquired were greater than the fair value of consideration paid, negative
goodwill arises. For accounting purposes, this is considered a bargain purchase. The acquisition has resulted in a gain on
acquisition of £584 million which is recognised and presented separately in the consolidated Income Statement as at the
acquisition date. The purchase of the Bank resulted in a gain due to the macroeconomic conditions in the post financial
crisis period and the surplus liquidity positions held by market participants, like the Society. Therefore the Society is in a
better position to realise the fair value of the net assets acquired compared with the Seller.
Acquisition costs
Acquisition costs of £28 million have been incurred by the Society in relation to the acquisition. Of this, £22 million was
recognised within acquisition and integration-related costs in the financial year ended 31 December 2024. A further £6
million of costs arose on completion in the 2025 reporting period.
Net cash on acquisition
On acquisition of the Bank, the Group acquired £2,586 million of cash balances. This was offset by the consideration paid of
£745 million, resulting in a net cash inflow of £1,841 million.
Coventry Building Society | Annual Report & Accounts 2025197
Other Information
Other Information
In this section, you will find
our Annual Business Statement
and glossary of terms
Annual Business Statement
198
Glossary
201
Coventry Building Society | Annual Report & Accounts 2025198
Other Information
Annual Business Statement
For the year ended 31 December 2025
1. Statutory percentages
2025
2024
Statutory
limits
%
%
%
Lending limit
3.1
2.7
25.0
Funding limit
38.8
16.7
50.0
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.
The lending limit measures the proportion of the 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 loan impairment less liquid assets, intangible assets and
property, plant and equipment. The value of X used is the value at 31 December 2025.
Y = the principal value of, and interest accrued on, loans owed to the Group which are fully secured on residential
property. The value of Y used is the value at 31 December 2025.
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, the amounts deposited with the Society or any subsidiary undertaking,
by banks, credit institutions and other customers.
III. The principal value of, and interest accrued on, the amounts of debt securities of the Society or any subsidiary
undertaking.
Y = the principal value of, and interest accrued on, shares in the Society held by individuals other than bare trustees (or, in
Scotland, simple trustees) for bodies corporate or for persons that include bodies corporate.
2. Other percentages
2025
%
2024
%
As a percentage of shares and borrowings:
Gross capital
5.51
6.16
Free capital
5.07
5.99
Liquid assets
16.7
17.9
As a percentage of mean total assets:
Profit for the financial year
0.91
0.39
Management expenses
0.95
0.57
Net profit as a percentage of total Balance Sheet
0.92
0.39
Shares and borrowings represents the total of shares, customer accounts deposits from banks, other deposits and debt
securities in issue.
Gross capital represents the aggregate of reserves, other equity instruments, subordinated liabilities and subscribed
capital.
Free capital represents the aggregate of gross capital and collective impairment less intangible assets and property, plant
and equipment.
Coventry Building Society | Annual Report & Accounts 2025199
Other Information
Annual Business Statement continued
3. Principal Office
Coventry Building Society is a building society, incorporated and domiciled in the United Kingdom. The address of the
Principal Office is: Coventry House, Harry Weston Road, Binley, Coventry CV3 2TQ.
4. Information relating to directors at 31 December 2025
Name
(Date of birth)
Occupation
Date of appointment
as a director of the
Society
Other directorships and appointments
Iraj Amiri
Non-Executive
Director
28.06.2018
AON UK Limited
(February 1954)
Eurocell plc
The Co-operative Bank p.l.c.
The Co-operative Bank Finance p.l.c
The Co-operative Bank Holdings p.l.c.
Stephen Hughes
Chief Executive
20.04.2020
Godiva Mortgages Limited
(May 1972)
ITL Mortgages Limited
BSA Council
The Money and Pension Service (Member)
The Pennies Foundation (Member)
Financial Conduct Authority Practitioner Panel
(Member)
The Co-operative Bank p.l.c.
The Co-operative Bank Finance p.l.c
The Co-operative Bank Holdings p.l.c.
Joanne Kenrick
Non-Executive
Director
06.11.2017
Dwr Cymru Cyfyngedig
(September 1966)
Glas Cymru Holdings Cyfyngedig
Rhapsody Court Freehold Limited
Sirius Real Estate Ltd
Vitality Health Limited
Vitality Life Limited
Vitality Corporate Services Limited
Discovery Holdings Europe Limited
The Co-operative Bank p.l.c.
The Co-operative Bank Finance p.l.c
The Co-operative Bank Holdings p.l.c.
Jane Leach
Non-Executive
Director
03.10.2025
PayPal UK Limited
(May 1966)
Jupiter Unit Trust Managers Limited
American International Group UK Limited
Lucy Faithfull Foundation
Caroline Marsh
Non-Executive
Director
03.01.2025
Another Lens LLP
(December 1963)
The Co-operative Bank p.l.c.
The Co-operative Bank Finance p.l.c
The Co-operative Bank Holdings p.l.c.
Shamira Mohammed
Non-Executive
Director
01.05.2019
Pezula Limited
(November 1968)
Brendan O’Connor
Non-Executive
Director
18.01.2021
Ford Credit Europe Bank plc
(June 1965)
The Co-operative Bank p.l.c.
The Co-operative Bank Finance p.l.c
The Co-operative Bank Holdings p.l.c.
Coventry Building Society | Annual Report & Accounts 2025200
Other Information
Annual Business Statement continued
4. Information relating to directors at 31 December 2025 continued
Name
(Date of birth)
Occupation
Date of appointment
as a director of the
Society
Other directorships and appointments
Mark Parker
Non-Executive
Director
01.01.2025
Parkers Consulting Group Limited
(March 1965)
Talkbiznow Limited
Elixirr Consulting Limited (advisory role)
The Co-operative Bank p.l.c.
The Co-operative Bank Finance p.l.c
The Co-operative Bank Holdings p.l.c.
Iain Plunkett
Non-Executive
Director
01.07.2024
Citi Group Global Markets Limited
(May 1971)
Two Viewbank Limited
Lee Raybould
Chief Financial Officer
06.04.2021
Godiva Mortgages Limited
(March 1973)
ITL Mortgages Limited
Mortgage Agency Services Number One Limited
Mortgage Agency Services Number Two Limited
Mortgage Agency Services Number Four Limited
Mortgage Agency Services Number Five Limited
Mortgage Agency Services Number Six Limited
Platform Funding Limited
Martin Stewart
Non-Executive
Director
01.09.2018
Clayton Stewart Properties Limited
(September 1966)
Clayton Stewart Limited
Northern Bank Limited
Independent Football Regulator Expert Panel
(Member)
The Co-operative Bank p.l.c.
The Co-operative Bank Finance p.l.c
The Co-operative Bank Holdings p.l.c.
David Thorburn
Non-Executive
Director
28.04.2022
None
(January 1958)
Documents may be served on the above named directors at: Coventry Building Society, Harry Weston Road, Binley,
Coventry, CV3 2TQ.
The Society has entered into service contracts with the following directors: Stephen Hughes (Chief Executive); and Lee
Raybould (Chief Financial Officer). These are terminable by the individual on six months’ notice and by the Society on one
year’s notice.
Coventry Building Society | Annual Report & Accounts 2025201
Other Information
Glossary
Alternative Performance Measures
The Society reports its results using a number of financial measures which are not driven by accounting standards (non-IFRS
measures). These measures are used to understand our performance and are used internally when assessing the Group's
results.
Measure
Definition
Calculation
Underlying profit
Underlying profit excludes all of the accounting
impacts of acquiring the Bank, including day one
acquisition, accounting and related unwinds, reset
of accounting policies on the acquired assets and
liabilities and related acquisition and integration
costs. Underlying performance is considered to be a
better measure of core business performance.
n/a
Cost to income ratio
A measure of costs relative to income more
generally used by banks. This ratio will be
impacted by significant changes in interest rates or
widening margins.
Administrative expenses, depreciation and
amortisation as a percentage of total income.
Member value
This measure is widely used across the building
society sector.
The Society’s average month end savings rate
compared to the CACI savings database for
market average rate for savings accounts,
excluding current accounts and offset savings.
Net interest margin
A measure of profitability which is used throughout
the building society sector.
Net interest income as a percentage of average
total assets. Net interest income is the
difference between interest receivable on
assets and interest payable on liabilities.
Glossary
The following glossary defines terminology within the Annual Report & Accounts to assist the reader and to facilitate
comparison with publications by other institutions:
Additional Tier 1 (AT 1) capital
Capital that meets certain criteria set out in CRD V. In particular, the criteria
require that upon the occurrence of a trigger event, the AT 1 capital instrument
converts to a form of Common Equity Tier 1 capital or the principal is written
down on a permanent basis; or grandfathered instruments such as Permanent
Interest Bearing Shares (PIBS).
Arrears
The financial value of unpaid obligations, which arise when contractual payments
are not paid as they fall due.
Bank
The group of companies of which the ultimate parent company is The Co-
operative Bank Holdings p.l.c. and the main trading entity is The Co-operative
Bank p.l.c..
Basel 3.1
The Basel Committee's final implementation of its Basel III Banking Supervision
reforms, published in December 2017, addressing credit risk and operational risk.
The proposal will update the risk weighted asset calculation and improve
comparability across firms and is now effective from January 2027.
Basis point
One hundredth of a percent (0.01 percent). Used when quoting movements in
interest rates and yields on securities.
Board
Represents the Group and Society Board.
Bounce Bank Loan Scheme (BBLS)
Scheme brought in during the pandemic to help small and medium size entities
borrow between £2,000 and £50,000 at low interest rates, guaranteed by the
Government.
Buy to let mortgage
A mortgage secured on a residential property that is rented out to tenants.
Capital Conservation Buffer (CCoB)
A CRD V risk adjusted capital requirement for all banks that can be used to
absorb losses whilst avoiding breaching minimum capital requirements.
Capital requirements
Amount of capital required to be held by the Group to cover the risk of losses
and to protect against excessive leverage. The level is set by regulators and the
firm’s own assessment of its risk profile.
Capital Requirements Regulation and
Capital Requirements Directive V
(CRD V)
CRD V is the European Union legislation (part regulation and part directive),
which came into force to implement Basel III, revising the capital requirements
framework and introducing liquidity requirements, which regulators use when
supervising firms.
Coventry Building Society | Annual Report & Accounts 2025202
Other Information
Glossary continued
Capital resources
Capital comprising the general reserve, fair value through other comprehensive
income reserve, eligible Additional Tier 1 capital less all required regulatory
adjustments.
Collateral
Security pledged by the borrower to the lender in case of default.
Common Equity Tier 1 (CET 1)
Common Equity Tier 1 capital comprises general reserve and the fair value
through other comprehensive income reserve, less regulatory deductions.
Common Equity Tier 1 must absorb losses on a going concern basis. The CET 1
ratio is calculated as CET 1 capital as a percentage of risk weighted assets.
Conduct risk
The risk that the Group’s behaviour and decision making fails to deliver good
customer outcomes.
Consumer Price Index (CPI)
An index that measures the average change in price over time of a UK-based
market basket of consumer goods and services.
Contractual maturity
The date in the terms of a financial instrument on which the last payment or
receipt under the contract is due for settlement.
Core Capital Deferred Shares (CCDS)
A form of Common Equity Tier 1 (CET 1) capital. The Society’s Perpetual Capital
Securities (PCS) convert into CCDS.
Coronavirus Business Interruption
Loan Scheme (CBILS)
Scheme brought in to help small and medium size entities access loans and other
finance up to £5 million, 80% guaranteed by the Government.
Countercyclical Buffer (CCyB)
A CRD V risk adjusted capital requirement for all banks that is varied over the
financial cycle to match the resilience of the banking system to the scale of risks
faced.
Countercyclical Leverage Buffer
(CCLB)
A leverage capital requirement under the UK leverage regime that is set at 35%
of the corresponding risk adjusted Countercyclical Buffer (CCyB).
Covered bonds
Debt securities that are backed by both the resources of the issuer and a
portfolio of mortgages that are segregated from the issuer’s other assets solely
for the benefit of the holders of the covered bonds. The Group issues covered
bonds as part of its funding activities.
Credit risk
The risk of loss to the Group from members and customers or wholesale
counterparties failing to meet their contractual payments in full and/or on time.
This covers retail, commercial and treasury credit risk and is a principal risk of
the Group.
Credit valuation adjustment
An adjustment to the valuation of financial instruments held at fair value to
reflect the creditworthiness of the counterparty.
Debt securities
Transferable instruments creating or acknowledging indebtedness of credit
institutions, public bodies or other undertakings.
Debt securities in issue
Liabilities of the Group that are transferable by external investors that operate
within the global financial markets.
Defined benefit obligation/surplus
The present value of expected future payments required to settle the obligations
of a defined benefit pension scheme resulting from past employee service.
Derivative financial instrument
(swap)
A contract or agreement that derives its value or cash flows from changes in an
underlying index such as an interest rate, foreign exchange rate or market index.
The most common type of derivative instruments are interest rate swaps.
Effective Interest Rate (EIR)
The rate of interest earned over the life of an instrument that is equivalent to
the discounted rate of projected cash flows of the instrument, adjusted for
compounding.
Encumbered assets
Assets used to secure liabilities or otherwise pledged. This excludes loans and
advances to customers that, although technically encumbered, are held in
respect of undrawn self-issued notes under the Group’s covered bond and
securitisation programmes.
Enterprise Risk Management
Framework (ERMF)
A Board approved framework that provides the context, guidance and principles
needed for cohesive risk management activity across the Society and its
subsidiaries.
Economic Value
Measure of the change in the net present value of interest rate sensitive
instruments over their remaining life resulting from a 100 basis points (1%)
(EV100), or 200 basis points (2%) (EV200) parallel shock to the yield curve.
Coventry Building Society | Annual Report & Accounts 2025203
Other Information
Glossary continued
Expected credit loss (ECL)
The present value of all cash shortfalls over the expected life of a financial
instrument. The term is used for the accounting for impairment provisions under
the IFRS 9 standard. ECLs may arise over a 12 month or lifetime basis.
Expected loss
A calculation under the IRB approach to estimate the potential losses on current
exposures due to expected defaults over a 12 month time period.
Exposure
The quantified potential for loss that might occur as a result of a risk occurring.
Exposure at default (EAD)
A calculation of the amount expected to be outstanding at the time of default.
Fair value
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 in
the principal or, in its absence, the most advantageous market to which the
Group has access at that date.
Fair value through other
comprehensive income (FVOCI)
Financial assets held at fair value on the Balance Sheet with changes in fair value
recognised through other comprehensive income.
Fair value through profit and loss
(FVTPL)
Financial assets held at fair value on the Balance Sheet with changes in fair value
recognised through the Income Statement.
Financial Conduct Authority (FCA)
A statutory body responsible for the conduct of business regulation and
supervision of UK financial institutions in the UK.
Financial Ombudsman Service
The Financial Ombudsman Service provides an independent and impartial service
to resolve individual complaints that consumers and financial institutions have
been unable to settle themselves.
Forbearance
Forbearance takes place when a concession, which can be temporary or
permanent, is made on the contractual terms of a loan in response to the
borrower’s financial difficulties.
Free capital
The aggregate of gross capital and collective impairment less intangible assets
and property, plant and equipment.
General reserve
The general reserve is the accumulation of historical and current year profits and
includes remeasurements of the defined benefit pension scheme and
distributions to holders of Perpetual Capital Securities (net of tax).
Gross capital
The aggregate of reserves, other equity instruments, subscribed capital and
subordinated liabilities.
Gross Domestic Product (GDP)
A measure that includes the value created through the production of goods and
service in a national economy.
House Price Index (HPI)
An index that captures changes in house prices monthly or annually, using data
from UK-based residential housing transactions.
Impaired loans
Impaired loans are defined as those which are defaulted loans in IFRS 9 stage 3.
Interest rate risk
Interest rate risk arises from the different interest rate characteristics of the
Group’s lending and deposit products and from other financial instruments. The
Group is subject to the risk that changes in interest rates will cause material
variations in earnings because of differences between interest rates received and
paid on mortgages, deposits and financial instruments.
Internal Capital Adequacy
Assessment Process (ICAAP)
The Group’s own assessment of the amount of capital that it needs to hold to
support all relevant current and future risks. This assessment includes
determination of a number of capital buffers to be held in case of potential
future economic stress, and provides confirmation that the Group has
appropriate processes in place to ensure compliance with regulatory
requirements.
Internal Liquidity Adequacy
Assessment Process (ILAAP)
The Group’s own assessment of the liquidity resources that are required to
remain within the risk tolerances it has set. This will include an evaluation of
potential stresses based on regulatory benchmarks and on Group-specific tests.
Internal Ratings Based (IRB) approach
An advanced approach to measuring capital requirements in respect of credit risk
under Pillar 1. The IRB approach may only be used with permission from the PRA.
ISDA
International Swaps and Derivatives Association is the global trade association for
over-the-counter derivatives and providers of the industry-standard
documentation for derivative transactions.
Leverage ratio
A calculation as part of CRD V, which measures the relationship between eligible
Tier 1 capital and exposures to on and off-balance sheet items. UK institutions
are subject to the PRA's interpretation of the leverage ratio - see UK leverage
ratio.
Coventry Building Society | Annual Report & Accounts 2025204
Other Information
Glossary continued
Liquid assets
This comprises cash in hand, balances with the Bank of England, debt securities
(including Government investment securities (gilts)), loans to credit institutions
and other liquid assets.
Liquidity and funding risk
Liquidity risk is the risk that the Group has insufficient funds to meet its
obligations as and when they fall due. Funding risk is the inability to access
funding markets or to only do so at excessive cost and/or liquidity risk. Liquidity
and funding risk is a principal risk of the Group.
Loan to value (LTV)
The amount of mortgage loan as a percentage of the value of the property.
Average loan to value is either a simple average, or balance weighted. Indexed
loan to value is calculated on the basis of the latest property valuation being
adjusted by the relevant house price index movement since that date.
Loss given default (LGD)
A parameter used to estimate the difference between exposure at default (EAD)
and the net amount of the expected recovery expressed as a percentage of EAD.
Management expenses
The aggregate of administrative expenses, depreciation and amortisation.
Market risk
Market risk is defined as the risk of a reduction in Group earnings and/or value
resulting from adverse movements in financial markets.
Medium term notes
Securities offered by a company to investors, through a dealer, across a range of
maturity periods.
Member
A person or individual who holds a share in the Society or has a mortgage loan
with the Society. Deposit or lending customers of subsidiary entities are not
members.
Minimum Requirement for own funds
and Eligible Liabilities (MREL)
A requirement under the Bank Recovery and Resolution Directive which requires
deposit takers to hold minimum levels of capital plus debt eligible for bail-in.
Model risk
The risk that an ineffective model or incorrectly interpreted model output leads
to a loss, reputational damage or regulatory censure.
Mortgage backed securities (RMBS)
Asset backed securities that represent interests in a group of mortgages which
give the investor the right to cash received from future mortgage payments of
both principal and interest. These can also be known as Residential mortgage
backed securities (RMBS) where the underlying security is a residential mortgage.
Net interest income
The difference between interest receivable on assets and similar income and
interest paid on liabilities and similar charges.
Net interest margin
Net interest income as a percentage of average total assets.
Net Stable Funding Ratio (NSFR)
A ratio which assesses the amount of stable funding in place as a proportion of
the on and off-balance sheet funding requirements of an institution.
Operational risk
The risk of loss arising from inadequate internal processes, systems or people, or
from external events.
Other Systemically Important
Institutions (O-SII) Buffer
Buffer set for ring-fenced banks and large building societies to reduce their
probability of failure or distress, reducing the risk of disruption to the supply of
credit in the UK economy.
Owner-occupier mortgage
A mortgage on residential property that is to be occupied by the borrower.
Past due
A financial asset such as a loan is past due when the counterparty has failed to
make a payment when contractually due.
Permanent Interest Bearing Shares
(PIBS)
Unsecured, perpetual deferred shares of the Society offering a fixed coupon. Also
defined as subscribed capital.
Perpetual Capital Securities (PCS)
Securities that pay a non-cumulative coupon at the discretion of the Society and
qualify as Additional Tier 1 capital.
Pillar 1/2/2A/3
Components of the Basel capital framework. Pillar 1 covers the minimum
requirement, Pillar 2/2A covers capital requirement of risks not covered in Pillar
1 and Pillar 3 covers disclosures.
PRA buffer
A buffer to ensure that financial institutions that are more at risk of loss than the
system in aggregate have additional capital buffers to reflect that risk.
Post Model Adjustment (PMA)
A PMA is applied when the Group considers that a modelled output is not
sufficiently accurate or complete due to there being potential for additional risks
that have not been identified or that cannot be adequately modelled.
Probability of default (PD)
An estimate of the probability that a borrower will default on their credit
obligations over a fixed time period. With respect to impairment provisions under
IFRS 9, 12 month ECLs use 12 month PDs, whilst a lifetime ECL uses the
estimated PD over the remaining contractual life of the loan.
Coventry Building Society | Annual Report & Accounts 2025205
Other Information
Glossary continued
Principal risk
Principal risks are those risks to which the Group's business model is inherently
exposed and those that the Group believes could materially compromise its
ability to meet its strategic objectives.
Prudential Regulation Authority
(PRA)
The statutory body responsible for the prudential regulation and supervision of
banks, building societies, credit unions, insurers and major investment firms. The
PRA is a subsidiary of the Bank of England.
Purchased or originated credit
impaired (POCI)
Purchased or originated financial assets that are credit-impaired on initial
recognition.
Retail deposits
Includes Shares and other customer deposits made by individuals.
Reverse stress test
A regulatory stress test that requires a firm to assess scenarios and circumstances
that would render its business model unviable, thereby identifying potential
business vulnerabilities.
Risk appetite
An articulation of the level of risk that the Group is willing to accept in order to
safeguard the interests of the Group’s members and customers, whilst also
achieving its business objectives.
Risk weighted assets (RWAs)
The value of assets, after adjustment to reflect the degree of risk they represent
in accordance with the relevant capital rules.
Sale and repurchase agreement
(repo)
An agreement to sell a financial security together with a commitment by the
seller to repurchase the asset at a specified price on a given date. In substance,
this forms a secured loan, with the difference between the purchase price and
repurchase price being the interest rate.
Securitisation
A pool of loans used to back the issuance of new securities. The loans are
transferred to a structured entity which then issues securities (RMBS) backed by
the assets. The Group has used residential mortgages as the loan pool for
securitisation purposes.
Shares
Funds deposited by a person in a retail savings account with the Society. Such
funds are recorded as liabilities of the Society. These are also referred to as
retail deposits.
Shares and borrowings
The total of shares, customer accounts, deposits from banks and debt securities
in issue.
Significant increase in credit risk
(SICR)
A significant increase in credit risk on a financial asset is judged to have occurred
when an assessment, using quantitative and qualitative factors, identifies at a
reporting date that the credit risk has increased significantly since the asset was
originally recognised.
SONIA (Sterling Overnight Interbank
Average)
A rate reflecting actual overnight funding rates, at a weighted average overnight
deposit rate for each day.
Stage 1
Assets that under IFRS 9 have not experienced a significant increase in credit risk
since the asset was originally recognised on the Balance Sheet are classed as
stage 1.
Stage 2
Assets that have experienced a significant increase in credit risk since initial
recognition under IFRS 9 are classed as stage 2.
Stage 3
Assets identified as in default and considered credit impaired under IFRS 9 are
classed as stage 3.
Standardised approach
The basic method used to calculate capital requirements for credit and
operational risk.
In this approach, the risk weighting used in the capital calculation is determined
by specified percentages.
Strategic risk
Strategic risk is the risk that changes to business model or macroeconomic,
geopolitical, regulatory or other factors may lead to the business model, strategy
or Strategic Plan becoming inappropriate. This includes the risk of an overly
ambitious Strategic Plan as well as unforeseen market, consumer, competitor or
regulatory changes.
Stress testing
Testing undertaken to provide an understanding of the Group’s resilience to
internal and external shocks.
Structured entity
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.
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Other Information
Glossary continued
Subordinated liabilities
A form of Tier 2 capital that is unsecured. Subordinated notes rank equally with
each other and behind all other creditors of the Society and the claims of
Shareholding Members (other than holders of Permanent Interest Bearing Shares
and Perpetual Capital Securities) as to principal and interest.
Subscribed capital
See Permanent Interest Bearing Shares.
Term Funding Scheme with
additional incentives for SMEs
(TFSME)
A scheme (now closed to new drawings) launched by the Bank of England
designed to boost lending to households and businesses by providing term funding
to banks and building societies participating in the scheme at rates close to Bank
Rate.
Tier 1 capital
A component of regulatory capital comprising Common Equity Tier 1 and
Additional Tier 1 capital.
Tier 2 capital
A component of regulatory capital comprising qualifying subordinated debt and
eligible collective impairment allowances.
Total Capital Requirement (TCR)
The minimum amount of capital the Group should hold as set by the PRA under
Pillar 1 and Pillar 2A and informed by the Internal Capital Adequacy Assessment
Process (ICAAP).
UK leverage ratio
A ratio prescribed by the PRA based on the CRR leverage ratio but modified to
restrict the amount of AT 1 capital that can be included in Tier 1 capital and to
exclude eligible central bank holdings from leverage ratio exposures.
Unencumbered assets
Assets readily available as collateral to secure funding. This includes loans and
advances to customers that, although technically encumbered, are held in
respect of undrawn self-issued notes under the Group’s covered bond and
securitisation programmes and are therefore readily available as collateral to
secure funding or to pledge as collateral against margin calls.
Watchlist
A list of counterparties drawn up by the Group once it has elected to closely
monitor the performance of loans subject to significant credit risk.
Wholesale funding
Funding received from external counterparties that operate within the global
financial markets (for example, insurance companies, pension funds, large
businesses, financial institutions and sovereign entities).
Write off
To write off a financial asset when it has exhausted all practical recovery efforts
and it is concluded that there is no reasonable expectation of recovery.
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Glossary continued
Glossary of terms used in reference to climate risk
Climate Biennial Exploratory Scenario
exercise (CBES)
Bank of England initiative to explore the financial risks posed by climate
change. The exercise will test the resilience of the current business models of
the largest banks, insurers and the financial system to climate-related risks and
therefore the scale of adjustment that will need to be undertaken in coming
decades for the system to remain resilient.
Climate-related risks - physical
The physical risks arising from the direct physical impacts of climate change.
Physical risks from climate change arise from a number of factors, and relate to
specific weather events (such as heatwaves, floods and storms) and longer-term
shifts in the climate (such as changes in precipitation, extreme weather
variability, sea level rise and rising mean temperatures).
Climate-related risks - transition
The transition risks arising from the transition to a low-carbon economy.
Transition risks arise from the process of adjustment towards a Net-Zero Carbon
economy. The UK Government has set a target of achieving Net Zero
greenhouse gas emissions by 2050 to respond to the challenge climate change
poses. A range of factors influence this risk, including: climate-related
developments in policy and regulation, the emergence of disruptive technology
or business models, shifting sentiment and societal preferences and the
potential for 'stranded assets' to be created.
Climate-related opportunities
Refers to the potential positive impacts that climate change may have on the
Group’s business model and the opportunities this may present, for example, by
growing our lending by supporting borrowers who make energy efficiency
improvements on their homes.
Energy Performance Certificate (EPC)
A report that assesses the energy efficiency of a property and recommends
specific ways in which the efficiency of a property could be improved.
Certification is graded from A (most efficient) to G (least efficient).
Greenhouse gas (GHG) emissions
GHGs are atmospheric gases that absorb and emit radiation within the thermal
infrared range and that contribute to the greenhouse effect and global climate
change. Many different GHGs are produced as a result of human activities. The
seven gases mandated under the Kyoto Protocol and to be included in national
inventories under the United Nations Framework Convention on Climate Change
(UNFCCC) - carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O),
hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF)
and nitrogen trifluoride (NF3).
ISO 14064-1 certification
An international standard that quantifies the reporting of greenhouse gas (GHG)
emissions and the verification.
Partnership for Carbon Accounting
Financial (PCAF)
Global partnership of financial institutions that work together to develop and
implement a harmonised approach to assess and disclose the greenhouse gas
emissions associated with their loans and investments.
Representative Concentration Pathway
(RCP)
A method for capturing assumptions about climate change and global mean
temperature increases over the 21st century. Each pathway results in a
different range of global mean temperature, which helps the Group to
understand how its assets will perform under a range of scenarios.
Scope 1 emissions
Scope 1 emissions are direct greenhouse gas (GHG) emissions that occur from
our own operations (e.g. our company vehicles, gas usage & fugitive emissions).
Scope 2 emissions
Scope 2 emissions are indirect GHG emissions associated with the purchase of
our electricity.
Scope 3 emissions
Scope 3 emissions are the result of activities from assets not owned or
controlled by the Society, but that the Society indirectly impacts in its value
chain. Scope 3 emissions include all sources not within an organisation's Scope 1
and 2 boundary and can be separated into the following two categories:
• Upstream Scope 3 emissions: business travel by means not owned or
controlled by the Society, waste disposal and purchased goods & services;
• Downstream Scope 3 emissions: the emissions from the properties financed
through the Society’s operations – i.e. our mortgage customers.
Streamlined Energy and Carbon
Reporting (SECR)
SECR regulation is a crucial element of the UK's climate strategy. It aims to
improve energy efficiency and reduce carbon emissions across large businesses.
Task Force for Climate Related
Financial Disclosures (TCFD)
The Financial Stability Board created the TCFD to improve the quality and
quantity of reporting of climate related financial information, including the
concentration of carbon related assets within the financial sector and the
financial system's exposure to climate related risks.
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