Annual Financial Report
Leeds Building Society · published 4 March 2026 09:25 UTC · Leeds Building Society credit rating and record
Annual
Report and
Accounts
2025
Annual Report and Accounts
2025
It’s bett
er
Contents
Strategic Report 3
Chair’s Welcome 4
Chief Executive Officer’s Highlights 6
Business Model and Strategy 9
Financial Review 30
Risk Overview 37
Viability Statement 41
Climate-Related Financial Disclosures 43
Non-Financial and Sustainability Information Statement 57
Risk Management Report 58
Approach to Risk Management 59
Principal Risks 63
Governance 86
Corporate Governance Report 87
The Board of Directors 89
The Executive Committee 94
Nominations Committee Report 112
Audit Committee Report 118
Board Risk Committee Report 125
Directors’ Remuneration Report 130
Directors’ Report 147
Financial Statements 150
Independent Auditor’s Report 151
Income Statements 160
Statements of Comprehensive Income 161
Statements of Financial Position 162
Statements of Changes in Members’ Interest 163
Statements of Cash Flows 164
Notes to the Accounts 165
Other Information 217
Annual Business Statement 218
Country by Country Reporting 220
Glossary of Terms 221
2025: How we performed
Gross residential lending
£5.0bn
(2024: £5.7bn)
We helped 34,600 more people
have the home they want,
including 17,100 first time buyers
Total assets
£32.0bn
(2024: £31.6bn)
Strong asset growth in a
competitive market
Savings balances
£26.1bn
(2024: £24.5bn)
We helped 85,600
more people save for
their future
Average savings rate
1
3.92%
Compared to the rest of the
market average of 3.02%
Generated the equivalent
of £225.6 million extra
interest for members
Profit before tax
2
£198.6m
(2024: £137.5m; underlying profit
before tax £187.5m)
Increase in profitability,
underpinned by growth in
net interest income
Common Equity Tier 1 Capital
25.5%
(2024: 25.7%)
Reserves available
to protect us from
future problems
Member satisfaction
3
94%
(2024: 94%)
We have an ongoing
commitment to be customer
focused in everything we do
Colleague engagement
4
8.4 out of 10
(2024: 8.4)
We are committed
to being a great place to work
1 CACI January 2025 to December 2025 CSDB, Stock, latest data available. CACI is an independent company that provides financial benchmarking data of the retail cash
savings market.
2 2024 underlying profit before tax excludes one-off items. There were no one-off items during 2025.
3 Overall customer satisfaction in a survey of 3,409 members from January to December 2025.
4 Your Voice colleague survey, 1,653 respondents (89% response rate) in June 2025.
Strategic Report
2025 marked the 150th
anniversary of the establishment
of Leeds Building Society and it
was also my first year as Chair.
I joined the Society because of our clear and compelling
purpose, proud heritage, and commitment to putting
members first. Our purpose of ‘putting home ownership
within reach of more people – generation after generation’
remains as relevant today as it was 150 years ago.
Our purpose is our ‘north star’ helping us to make good
decisions on behalf of members. We know that people
want to own their own home, but getting a first foot on the
housing ladder is as hard today as it has ever been.
Performance over 2025
We measure the Society’s performance in terms of how well
it is delivering on that purpose across a number of areas. We
develop mortgage products and lend responsibly to ensure
that we’re helping people to achieve their home ownership
aspirations, giving them a place to call home. We also provide
competitive and sustainable savings products for members,
which funds our lending. We make sufficient profit to ensure
we’re able to invest back into our business to improve service
for our members and to protect the Society’s financial
strength.
2025 saw modest improvements to the UK economy and a
stable housing market, with the Bank of England cutting the
base rate to 3.75% by the end of the year – the lowest it has
been since 2023. However, households across the country
continued to have their budgets squeezed and inflation
remained a key issue for all of us. Against this economic
background, mortgage and savings market competition
intensified considerably. I am proud of our performance as
a Society in such circumstances, both in terms of helping
people get onto and progress up the housing ladder, and
in terms of providing good returns and a safe place for our
members’ savings to grow.
Chair’s
Welcome
Chair Brendan
McCafferty looks
back on 2025
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
4
The full details of our 2025 performance are set out in the
Interim Chief Executive Officer’s highlights and elsewhere in
the annual report, but the headlines include:
• Mortgage lending totalled £5.0 billion and almost half of
new mortgage members in 2025 were first time buyers.
• With an average savings rate 0.90% higher than the market
average, we delivered extra interest to our savers equating
to over £225.6 million annually.
1
• Our member satisfaction score was maintained at 94%
in 2025.
• Total savings balances reached £26.1 billion.
• We achieved a profit before tax of £198.6 million,
supported by a strong net interest margin and efficient
cost management.
• We made great progress in the modernisation of our core
banking platform in 2025. In December, we completed the
first mortgage journey on the new platform, introducing
automated processes that will improve resilience and
efficiency for colleagues.
• Colleagues and members helped us achieve our
fundraising target of £300,000 for our charity partner
Barnardo’s ahead of schedule, and we have now increased
the target to £500,000 by the end of 2027.
Leadership and Board changes
Richard Fearon, who had been Chief Executive Officer (CEO)
of the Society since 2019, stood down from the Board in
November after we agreed it was the right moment that he
seek a new challenge and for a new chief executive to lead
the Society’s development.
I would like to thank Richard for the progress made under his
leadership of the Society. He can rightly be proud of steering
the business through the Covid-19 pandemic, implementing
our refreshed purpose, and overseeing years of successive
and impressive growth. Our investment in our core banking
upgrade will usher in a new phase of the Society’s history, and
in 2026 we will be appointing a new CEO who will continue to
lead that transformation, continue to guide our people, and
drive our strategy forwards.
I am pleased to confirm that Annette Barnes will continue as
Interim CEO until we appoint a permanent successor, and
they are in place. Before stepping into the role of Interim
CEO, Annette served as an independent non-executive
board director from 2019 onwards. She has provided strong
leadership and stability since taking on the interim position
over the summer, and I am grateful for her dedication and
commitment.
1 Source: CACI’s CSDB, Stock, January 2025 to December 2025, latest data available. CACI is an independent company that provides financial benchmarking data of the
retail cash savings market.
In addition, Andrew Conroy, Chief Financial Officer (CFO), left
the Society earlier this year after almost seven years' service
and I would like to thank him for his significant contribution.
His replacement, Arlene Cairns, joins us in May. Changes
were made to the Board following Annette’s appointment
as Interim CEO last year, with Pamela Rowland appointed as
Interim Chair of the Remuneration Committee and Neil Fuller
appointed as Interim Senior Independent Director.
Looking ahead
Whilst the macroeconomic environment for 2026 remains
uncertain, and direct competition has increased significantly,
the decisions made before and during 2025 have set our
Society up well for the future and will protect the long-term
interests of our members. We will continue to support
savers with competitive rates and support people’s home
ownership aspirations with responsible lending, while also
helping charities and community groups that assist those
who may otherwise struggle to access safe and secure
housing.
Colleagues at the Society feel a sense of pride in our
business and show their commitment to our purpose
through the work they do every day. Our strong performance
in 2025 is down to them, and to the Society’s excellent
leadership team, and I am extremely grateful to them all.
I would also like to thank our members for their loyalty
and support.
Brendan McCafferty
Chair
26 February 2026
Leeds Building Society | Annual Report and Accounts 2025 5
Leeds Building Society celebrated a milestone year in 2025;
our 150th anniversary. This occasion has allowed us the
opportunity to reflect on how far we have come, as well as
consider the direction we must take to continue to support
our members for the next 150 years.
I was honoured to be asked to take on the chief executive
role on an interim basis in June 2025, and I am pleased to
report a strong performance for the year. Progress against
our long-term goals continued, underpinned by ongoing
investment in our core capabilities and our commitment to
supporting our savings and mortgage members and broker
partners; powered, as always, by our purpose.
Our purpose of supporting home ownership has remained
unchanged since our founding in 1875. As the Society
has grown and adapted to its changing environment, our
direction remains clear and our foundations strong. With
membership now exceeding one million, every decision we
make is guided by what is right for our members and the
long-term protection of the Society.
1 Calculation based on assessment of Leeds Building Society applications between March 2024 and August 2024 which meet Income Plus credit criteria. The £66,000 figure
is the average increase in maximum loan size when comparing Income Plus with standard residential products.
Helping more people achieve their
housing aspirations
Mortgage lending totalled £5.0 billion, with almost half of
all new mortgages going to first time buyers. March was a
standout month, with 2,700 first time buyer completions
taking place that month, ahead of changes to Stamp Duty
Land Tax introduced in April.
Our innovative Income Plus range has now supported over
900 first time buyers into home ownership. With a loan to
income ratio of 5.5 times, Income Plus mortgages offer first
time buyers (with a minimum household income of £30,000)
an average of up to £66,000 more on 95% loan to value (LTV)
lending.
1
We also continued to improve the lending journey for brokers
and members. In 2025, the average time between mortgage
application and offer reduced by 15.4% compared with 2024,
with offers now issued in under eleven days on average. As
a result, our broker net promoter score reached 63 in 2025,
reflecting the strong service levels we provide.
As affordability pressures have persisted, we have continued
to support schemes that lower barriers to home ownership,
including shared ownership. Our approach was recognised
externally when we were named the ‘Best Shared Ownership
Mortgage Lender’ in the 2025 What Mortgage Awards for the
tenth consecutive year.
Interim
Chief Executive
Officer’s
Highlights
Interim Chief Executive
Annette Barnes reflects
on 2025
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
6
Continuing to deliver for our savers
We continued to deliver value to members through
competitive and above average interest rates on savings and
further improving the service we provide. We were delighted
to be recognised as a recommended provider for savings by
Which? Magazine and ranked amongst the top four Best Buys
by Ethical Consumer.
Savings balances reached £26.1 billion (2024: £24.5 billion),
with interest generated for savers equating to an extra
£225.6 million annually in members’ pockets (2024: £175.0
million annual equivalent).
2
As savings habits continue to evolve and other organisations
said goodbye to passbooks last year, we renewed our
commitment to keeping them
3
. We know how important
passbooks are to our members and that having one is an
important part of belonging to a building society
4
, so last
year we revamped them, allowing members to vote for a new
design. Whilst the appearance of our passbooks has changed
over the years, our commitment to them and what they
mean to members remains the same.
Similarly, our branch network remained a key priority for us in
2025. We continued to modernise our high street network,
completing refurbishments in Harrogate, Halifax, North
Shields, and relocating our South Shields branch. Members
appreciate the personal service they receive when they visit
us in person and the support that our branch colleagues
continue to offer is an important reason why our member
satisfaction score was maintained at a strong 94% in 2025
(2024: 94%), and why our Trustpilot rating remained so high
at the end of last year at 4.8 out of 5.
Branches don’t just offer members the opportunity to carry
out transactions in person, but also present an opportunity
to educate and support the communities they are based
in. Last year we launched one to one fraud clinics across all
branches; appointments at which people can discuss any
concerns they have and learn how to protect themselves.
Branch colleagues delivered over 700 of these clinics in 2025,
giving people the confidence and knowledge to spot scams.
2 Source: CACI’s CSDB, Stock, January 2025 to December 2025, latest data available. CACI is an independent company that provides financial benchmarking data of the
retail cash savings market.
3 Your Money: Leeds Building Society commits to keeping savings passbooks: yourmoney.com/saving-banking/leeds-building-society-commits-to-keeping-savings-
passbooks
4 Research of 461 Leeds Building Society members, carried out between 4-8 October 2024
Speaking up in the interest of our members
We remained vocal on the issues that matter to members
including the importance of Cash ISAs, which provide
certainty for people in retirement, those buying their first
home, and those saving for major life events. We welcomed
the government’s decision to protect a £20,000 annual cash
ISA allowance for savers older than 65; however, reducing the
cash ISA allowance for under 65s to £12,000 from April 2027
limits options. We support calls for an industry-led campaign
to promote the value of investing: people should have the
knowledge and confidence to make the right decisions for
their circumstances.
We also ensured our voice was heard regarding regulatory
changes to loan to income flow limits for mortgages, which
are designed to unlock more lending across the industry. We
have made use of this greater flexibility to extend our Income
Plus and other lending, whilst ensuring borrowers can afford
repayments.
Investment for the future underpinned
by a sustainable business model
We made further progress in modernising our IT platform
in 2025, completing the first mortgage journey on our
new platform in December. This milestone means we have
proven the technology and achieved everything we set
out to achieve by the end of 2025. We will continue the
development of the new platform this year, introducing more
functionality and capabilities, which will make a significant
difference to our colleague and member experience for the
future, whilst also leveraging our existing systems to support
real member value.
We achieved a profit before tax of £198.6 million in 2025
(2024: £137.5 million, underlying profit before tax £187.5m),
reinforcing our ability to invest in the long-term replacement
of our core banking platform and future-proof the business.
Total assets increased to £32.0 billion (2024: £31.6 billion)
and we maintained a strong capital and liquidity position
throughout the year, with all capital ratios materially higher
than the regulatory minima, in line with our prudent approach
to protecting our long-term sustainability. Our Common
Equity Tier 1 (CET 1) capital ratio was 25.5% at 31 December
2025 (2024: 25.7%). Our cost to income ratio, after adjusting
for transformation costs, remains excellent and is one of the
lowest in the sector at 46.1% (2024: 46.6%).
Leeds Building Society | Annual Report and Accounts 2025 7
Despite challenging economic conditions, I’m pleased to
report that arrears figures modestly improved to 0.57%
at the end of 2025 (2024: 0.61%). There are many reasons
customers may find it difficult to make their mortgage
payments and our specialist teams continue to support
members who may be struggling.
Our performance is underpinned by good governance,
strong risk management, and an excellent leadership team,
and I would like to take this opportunity to express my
personal thanks to Richard Fearon for his time as CEO and
to wish him all the best for the future. I worked closely with
Richard for several years whilst serving on the Society’s
Board and will continue to build on his progress in my role as
Interim CEO until a permanent replacement joins us.
Making a difference to our society
In our anniversary year, I’m proud to say that we continued to
support the communities around us, donating an additional
£100,000 to the Leeds Building Society Foundation. In total,
the Foundation awarded over £450,000 in grant funding in
2025, enabling 50 charities across the UK to support those in
need of safe and secure housing. In 2024, we launched a new
three year partnership with the UK’s largest children’s charity,
Barnardo’s, to build brighter futures for care-experienced
young people. We committed to raising at least £300,000 for
them over three years but have impressively achieved that
ahead of schedule, increasing our target to £500,000 by the
end of 2027.
Last year we also launched a partnership with Become,
the national charity for care leavers, to trial a six week
programme called KEYS: Knowledge and Essentials for
Your Space. The programme consists of courses designed
to help care experienced young people gain the skills and
knowledge needed to move into independent living. We are
already seeing positive effects from this partnership, with
young people involved in the scheme going on to secure
employment and housing of their own.
Colleagues, who were awarded an extra day for skills
based volunteering last year, donated over 8,000 hours
to charities. Colleagues regularly go above and beyond to
support members and communities, and the Society is
fortunate in having employees with such a strong sense of
identity and purpose. We are an inclusive organisation and
remain committed to supporting both the wellbeing and
development of our diverse workforce. This commitment
was recognised in 2025 when we became the first
organisation to be accredited with a Gold Inclusive Employers
Standard twice.
Throughout 2025, the effects of climate change have
continued to develop. At the same time, the pace of change
to address the causes remains too slow and views on net
zero have become more divided, driven by global geopolitical
events and uncertainties. We remain dedicated to achieving
an orderly transition to net zero by 2050 and took further
steps towards our net zero ambitions in 2025. We continued
to deliver our multi-year investment to make our branch
network more energy efficient and launched a new green
additional borrowing product, supporting members to
purchase a range of energy efficient home improvements.
These actions allowed us to meet all four of our 2025 climate
targets; however, the longer term remains less certain.
Reaching all our near-terms targets remains unlikely without
urgent action from government, society, and industry.
Looking to the future
As custodians of Leeds Building Society, we have a
responsibility to make decisions that protect the long-term
interests of our members and ensure we remain a resilient
organisation that can navigate any uncertainty that lies
ahead. This will be key as we look ahead to 2026.
The level of competition within the market has increased
considerably over the course of the year and the immediate
economic outlook remains uncertain. Our business
model is robust, and the multi-year modernisation of our
core banking platform will set us up to respond to these
competitive conditions, enabling us to continue delivering
our purpose. Our financial performance in 2025, the broader
strength of our balance sheet, our talented and responsive
colleagues, our skilled leadership team, and strong leadership
appointments, all give me confidence that the Society is in a
great place as we embark on our next 150 years.
I look forward to continuing to work closely with our
members, our colleagues, and with the Board to drive our
purpose forward.
Annette Barnes
Interim Chief Executive Officer
26 February 2026
Chief Executive Officer’s Highlights continued
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
8
Business Model and Strategy
Year ended 31 December 2025
Our strategy and business model
Leeds Building Society is the fifth largest building society in the UK, with assets of £32.0 billion. As a mutual organisation we
are owned by our members and we strive to act in their best interests as well as those of our wider stakeholders, both now and
over the long term.
Our purpose is ‘Putting home ownership within reach of more people – generation after generation’. Home ownership has
always been an important focus for our business since it was founded in 1875, and, like our founders, we believe more people
should have the security of owning their own home. We are committed to supporting our members onto and up the housing
ladder, as well as supporting them to remain in their home when faced with financial uncertainties. Our strategic drivers and
behaviours enable us to do so.
Over 2025, the senior leadership team has been refining our strategy, ensuring it balances the appropriate ambition and
focus to support the ongoing success of the Society both over the near-term and long term, particularly in the context of the
dynamic and competitive nature of the markets in which we operate. To support our success, we have evolved our strategic
focus including introducing a new set of strategic drivers that will guide our future collective efforts to deliver on our purpose.
They define what we must prioritise to create the greatest impact for our members, colleagues, and society.
Putting home ownership within reach
of more people generation after generation
PURPOSE
I am curious I push forwardI focus on what matters
I have the right conversation
BEHAVIOURS
PRODUCTIVITY
Optimising productivity –
harnessing the power of our
colleagues and technology.
CUSTOMER EXPERIENCE
Crafting tailored, intuitive experiences
where technology harmonises with
genuine human understanding.
MARKET PARTICIPATION
Propositions designed to meet
evolving customer needs and
thrive in dynamic markets.
STRATEGIC
DRIVERS
Delivering formidable colleague, data and technology foundations to power the Society’s future whilst continuing to deliver for our members
NEAR TERM
STRATEGY
(0-3 Years)
A dynamic, customer focused mutual that harnesses our expertise and technological strengths to eliminate barriers to home ownership
LONG TERM
STRATEGY
(<10 Years)
In terms of our overall strategy, in the near-term we are well progressed with our core banking transformation programme
and development of colleague skills for the future, whilst continuing to deliver for our members. These will help to enable
the realisation of our long term strategy to be a dynamic, customer focused mutual that harnesses our expertise and
technological strengths to eliminate barriers to home ownership.
Our Customer Experience driver is focused on crafting tailored, intuitive experiences where technology harmonises with
genuine human understanding. Market Participation focuses on designing propositions to meet evolving customer needs in
order to thrive within our dynamic markets. Productivity is about harnessing the power of our colleagues and technology for
efficiency and empowerment.
Each strategic driver is designed to deliver on our purpose by addressing the most important challenges and opportunities
facing our members and society. They connect, feed into, and support each other, creating a responsive, innovative, and
purpose-led strategy.
Leeds Building Society | Annual Report and Accounts 2025 9
Our business model
Our simple business model supports delivery of our
purpose, through providing a safe and rewarding
place to save, and supporting home ownership by
providing a range of mortgages to our members.
We provide residential mortgages in the UK, through
a network of approved mortgage brokers and directly
to members through online and telephone channels,
to help members into homes of their own. We offer
mortgage products across mainstream residential, buy
to let and a range of other segments, such as shared
ownership and interest only. As a way of helping to put
home ownership within reach of more people, we don't
offer new mortgages on second homes, because these
reduce the availability of homes for local residents. For
the same reason, we have also continued to restrict
lending on holiday lets in two popular UK tourist
hotspots, following the end of pilots in those areas.
We fund the majority of mortgage lending with members’
savings, through a range of channels. We’ve continued to
support savers with our rates averaging 0.90%
1
above the
market average during the year. The remainder is funded
from wholesale money markets on competitive terms
and government-supported funding schemes aimed
at increasing the level of lending across the market.
Our strong liquidity position helps to make sure that there
are sufficient funds available to meet the requirements of
savers, investors and other creditors. Liquidity is invested
in a range of high quality investment instruments and
across a range of counterparties. Environmental, Social and
Governance (ESG) factors are considered when assessing
the creditworthiness of our counterparties for liquidity
investments and, if a counterparty was judged not to
meet these criteria, then their limit could be withdrawn.
We aim to generate sufficient profit through cost
efficiency and management of the net interest margin in
order to maintain a strong capital position, supporting
delivery of our purpose generation after generation.
As a result, we can continue to invest in the Society
for the benefit of our membership as a whole – e.g.
by improving customer experience, modernising our
technology platforms, maintaining branches and
enhancing the colleague working environment.
Longer term, while we believe that our core product
lines are sustainable into the future, we expect the
markets we operate in to remain fiercely competitive,
and we will need to adapt accordingly.
We continue to invest in our mortgage and savings systems
to improve efficiency, speed up processing times and
improve customer experience. This will help us to serve the
evolving needs of more members, both through how they
choose to do business with us and by providing products
relevant to them. We continue to review opportunities to
meet existing and new members’ needs better, including the
development of our products and distribution channels.
Business Model and Strategy continued
1 Source: CACI’s CSDB, Stock, January 2025 to December 2025, latest data available. CACI is an independent company that provides financial benchmarking data of the retail
cash savings market.
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
10
Our business model is summarised below:
Where our funding comes from
• Savers (via our branch network,
phone, online, post)
• Wholesale markets
• Reserves of previous profits
How we use our funding
The Society lends to help members have
the home they want, including:
• Mainstream residential
• Shared ownership
• Buy to let
• Interest only
Why we need to make profit
We are member-owned and do
not pay any shareholder dividends,
however we need to make profit to:
• Maintain financial strength
• Invest in the Society for the
benefit of our membership as
a whole (e.g. maintaining our
branch network, improving
digital capability and customer
experience, enhancing our
colleague working environment)
and to set up the business for
future success
• Provide benefits for the
communities in which we operate
How we remain financially stable
and operationally resilient
• By maintaining liquid investments
with strong credit rated
institutions and central banks
• By making sufficient profit to
maintain a strong capital base
• By having a prudent lending
approach
• By maintaining a long term,
strong credit rating
• By maintaining a multi-channel
business model
• Ongoing investment and focus
on operational risk reduction
including a robust cyber strategy
What we need to spend
• Costs of running the business
and investing to provide the right
level of service in an efficient way
• Paying our colleagues fairly to
attract and retain talent
• Paying our fair share of tax
• Putting money aside for bad
debts
A key element of our mutual business model is also providing social value to our stakeholders, and there are some examples
of how we do this in the next page.
Our Impact Report demonstrates the impact of our ESG activities and clearly outlines our aim to drive positive social
and environmental impact through what we do, now and into the future. The report is published on our website at
leedsbuildingsociety.co.uk/your-society/agm
Leeds Building Society | Annual Report and Accounts 2025 11
We deliver social value through the provision of:
Members and brokers
A range of mortgages – to enable borrowers to achieve the basic societal need of having a home; supporting
first time buyers and home owners to move onto and up the property ladder and to remain in their home.
Competitive savings rates – on a range of simple products designed to meet the different savings needs of
our members and enable them to save for what’s important to them, including to buy a home.
A secure home for members’ savings – our financial strength means we are able to generate robust
profits that enable us to remain financially resilient and allow us to make longer term decisions in the best
interest of members.
Excellent customer service – our colleagues are focused on supporting the differing and evolving needs of
our members and brokers, generating consistently high levels of satisfaction.
Colleagues
Opportunities for professional growth – we offer a culture that is inclusive and supportive, with meaningful
roles that are fairly rewarded. We support colleagues to continually develop their skills, enabling them to build
a career that is right for them. Our annual engagement scores place us within the top 25% of the UK financial
services sector benchmark.
Communities
Support for the communities in which we operate – we contribute directly to society through the work of
the Leeds Building Society Foundation, our fundraising efforts, colleague volunteering scheme, and by paying
our fair share of tax to support essential services.
Environment
Propositions which support a reduction in climate risk and environmental impact – the increased focus
on climate issues presents further opportunities for the traditional mutual model to evolve and deliver
innovative solutions that contribute to a sustainable future. We continue to take actions to reduce our own
emissions footprint.
Third parties
Products and services developed and delivered through working with a number of trusted third parties
– setting out clear expectations on how we expect them to behave and align with our values and ESG aims
within our Supplier Code of Conduct
2
.
Regulators
A strong focus on risk management and customer-centred decision-making – with our Mutuality
Statement
3
and ESG Policy
4
setting out how we continually strive to do the right thing for our members,
colleagues, communities and the environment in which we operate.
Investors
A safe and secure investment – we maintain our financial stability through strong income performance,
a continued focus on cost efficiency and by keeping a robust liquidity position, and always striving to act
responsibly as a business.
2 This can be found on our website at leedsbuildingsociety.co.uk/_resources/pdfs/supplier-code-of-conduct.pdf
3 This can be found on our website at leedsbuildingsociety.co.uk/your-society/about-us/mutuality
4 This can be found on our website at leedsbuildingsociety.co.uk/your-society/financial-information
Business Model and Strategy continued
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
12
Progress on 2025 corporate priorities
During the year, we’ve continued to deliver against our strategy by focusing on our corporate priorities. We’ve demonstrated
our responsiveness through a changing economic and market environment and have pushed forward on developing our
technological and people capability for the future, whilst also offering excellent customer service and improving products and
propositions for our mortgage and saving members. Our progress against our corporate priorities is detailed below.
Corporate priority and progress in 2025
Deliver our core banking transformation programme
• We continue to deliver at pace on our core banking transformation, and we are on track to achieve our objectives. We
successfully built and validated an early build of our savings and mortgages journeys in the new core ecosystem, reducing
risk through an incremental delivery approach.
• A small number of colleague savings and mortgages accounts are now live in the new system and are serviceable.
This milestone proved the technology worked as intended and marked a significant step forward.
• The programme has strengthened colleague engagement, supported by strong leadership advocacy and contribution
to the programme. Through our incremental delivery approach, colleagues are starting to see the benefits the new core
platform will bring to our customers and colleagues, witnessing the build of colleague-facing screens.
• We’ve ensured we have effective resourcing and development plans, supporting over 150 colleagues to enable and
deliver the core programme.
Evolve our strategic focus and organisation to accelerate delivery of our purpose in a
post-core banking transformation world
• Our modernised core banking platform is set to simplify processes, empower colleagues, and boost productivity by
being more intuitive, enabling more efficient and flexible processes, and therefore delivering considerable time savings.
This will create more opportunity for more nimble future innovation as we harness the power of this technology.
• Our programme team has grown to over 300 colleagues and partner employees in conjunction with our third party
delivery partnerships. We continue to evolve and add relevant expertise to accelerate delivery and shape our future
operating model. Working at this scale enables us to refine best practices and modernise engineering tools to support
our ambitious plans. We remain fully focused on achieving our transformation goals.
• In 2025, we also expanded the talent readiness data we collect to all leadership levels. This enables us to understand the
diversity of our pipeline, as well as readiness to respond to business change, and tailor interventions where required.
• During the year, we have also taken steps to evolve our strategy, introducing a new set of strategic drivers that are
designed to be dynamic, integrated, and future-focused, as explained on page 9. The senior leadership team have
been creating transformation plans aligned to our future strategy to enable focused decision-making on future
initiatives in the Society’s next strategic phase.
Leeds Building Society | Annual Report and Accounts 2025 13
Corporate priority and progress in 2025
Embed behaviours and raise the bar on performance and our leadership capability to lead the
transformation and realise our future ambition
• Our engagement score in our annual survey was 8.4 (out of 10), flat year-on-year. In March and October, we surveyed
colleagues with a reduced question set to enable us to more regularly monitor colleague sentiment on key topics.
• We launched our People Leader Fundamentals programme in November, focused on upskilling all our people leaders on
the role they play to empower their colleagues as we continue to evolve the Society to respond to our members' and
market needs.
• To further build leadership capability we have evolved our focus to further ensure strategy alignment and peer
collaboration.
• We have continued to focus on board and management effectiveness, more information on this can be found in the
Corporate Governance report on pages 87 to 111.
Advance our purpose by delivering our ambitious corporate plan goals
• We continued to advance our purpose during 2025 in a number of ways, including improving our proposition to support
more first time buyers and home movers, and ensuring financial stability to support innovation. Our membership grew to
one million members, meaning we are helping to support more members to save and to have a home of their own.
• Despite competition in the mortgage market intensifying during 2025, net lending was £1.5 billion (2024: £2.6 billion)
which has resulted in 5.8% growth in our residential mortgage portfolio.
• The Society continues to be predominantly funded by savers and during 2025 our net retail savings grew by £0.6 billion
(2024: £2.8 billion), taking total retail savings up to £26.1 billion. We consistently pay above average market rates to our
savers, paying an average of 3.92% compared to the rest of market average of 3.02%
4
.
• We continued to deliver purpose-led product innovation, informed by the needs of our members and prospective first
time buyers. We reduced the minimum income requirement on our Income Plus mortgage product to enable us to
support more first time buyers, as well as widening access to mortgage products that support those with complex or
non-standard income. We have also launched our first green mortgage product, to support home owners make energy
efficient improvements to their homes.
• We have made changes to our credit decisioning process to improve member experience e.g. enabling members to share
their bank statements with us more easily through the use of open banking, as well as enabling fully automated mortgage
offers within seconds, helping around 5% of our applicants gain mortgage certainty quickly.
• During 2025 we won a number of awards demonstrating our commitment to first time buyers and our shared ownership
proposition, including the What Mortgage Best Shared Ownership Mortgage Lender award, which we won for the tenth
year in a row.
• Our broker net promoter score remains high at 63 (2024: 58) as we continue to focus on the broker experience and a
streamlined process for issuing offers. We are also issuing mortgage offers faster, as shown by a two-day reduction in
time between receiving an application and making an offer (2025: 11 days; 2024: 13 days).
• In 2025 we rolled out Microsoft Copilot, an Artificial Intelligence (AI) tool that can support our colleagues to work more
efficiently, to all colleagues, underpinned by training and guidance. The adoption of AI in an ethical and risk managed way
supports us in streamlining our processes, increasing productivity and developing the skills we need for the future.
• Delivery of our purpose is underpinned by the effective identification and management of the risks we face. For
information on risks faced by the Society, please see the Risk Overview on pages 37 to 40, Climate-Related Financial
Disclosures on pages 43 to 56 and the Risk Management report on pages 59 to 85. Also see our Climate-Related
Financial Disclosures and Transition Plan which has been published on our website at leedsbuildingsociety.co.uk/
your-society/financial-results.
4 Source: CACI’s CSDB, Stock, January 2025 to December 2025, latest data available. CACI is an independent company that provides financial benchmarking data of the
retail cash savings market.
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14
Our culture
By harnessing technology and empowering our
colleagues, we can work smarter and create a space for
everyone to thrive, feel valued, and make a difference.
We’re shaping tomorrow, where curiosity drives us and
the right conversations spark progress. By focusing on
what truly matters we can push forward and deliver the
best outcomes for our members and colleagues.
We know our colleagues make the difference
We empower our colleagues to champion changes that help
us evolve and be even better, delivering a lasting impact so
that we can continue to deliver our purpose. We create
two-way dialogue through several channels including:
Colleague surveys: in 2025 we ran three colleague surveys
to monitor colleague sentiment and provide an avenue for
feedback. 89% of our colleagues completed our annual
survey, with an engagement score of 8.4 (out of 10),
maintaining our position within the top 25% of the UK
financial services sector benchmark.
Colleague Association: our non-executive director
colleague engagement champion leads on elevating
colleague voice on the Board, and met regularly with
members of our Colleague Association. Annette Barnes held
this role as a non-executive director until she was appointed
as Interim CEO, and subsequently our non-executive
director Pam Rowland took on this responsibility. With 1,373
members this feedback loop ensures senior leaders are
focusing on what matters most to our colleagues.
Colleague groups: across the Society we have several
colleague led groups:
• Colleague Voice networks: launched in 2025, colleagues
from each division come together to enhance the colleague
experience with support from their leadership team.
• Inclusion and Diversity (I&D) forums: on DiverseAbility,
Ethnicity and Cultural Heritage, Gender Equality, LGBTQ+
and Wellbeing with representatives from all business areas,
meeting monthly with our I&D team. The forums support
our I&D strategy, with sponsorship from a senior leader.
• Green Champions: work to increase colleague
awareness around climate and other environmental
impacts, providing opportunities for colleagues to
share suggestions and complete volunteering activity
which has a positive environmental impact.
Branch Buddy: in 2025 we launched our branch
buddy programme, where members of the leadership
team buddy with one of the branches in our
network. Our leaders visit their branch across the
year to support cascading of key messages, hear
colleague views and connect with our members.
Our colleague groups help shape and inform Society
activity where appropriate, from reviewing relevant policies,
to informing training and providing feedback on current
Society culture. Our Board continues to be engaged with
our colleague led groups. Pam Rowland, our non-executive
director colleague engagement champion, hosted two
focused listening sessions with colleagues across the Society
in 2025, including forum and network representatives, as well
as colleagues and people leaders. To read more about the
Board’s engagement with colleagues, see pages 100 to 102.
A space to belong and feel valued
We’re shaping a future where everyone feels valued for
what they bring, a collaborative environment where diverse
perspectives are sought to fuel innovation and help to deliver
our purpose. We do this by embedding inclusive practices
and recognising the efforts of our colleagues to adapt and
evolve the Society to deliver for our members today and in
the future.
Inclusion and diversity:
Our I&D strategy, Being You; Transforming Us, is focused
on ensuring our colleagues have a true sense of belonging.
Within our annual colleague survey, we placed within the top
10% in financial services on inclusion and diversity. Progress
to the strategy and our ongoing work was independently
assessed by Inclusive Employers and we were delighted to
retain our Gold accreditation this year.
We remain focused on improving diverse representation
at senior leadership levels as we acknowledge we have
more progress to make. We know that relying on external
hires alone will not create the shifts we need to see and
are therefore committed to growing our internal talent
pipeline. In 2025 we have seen the benefit of this focus
across changes in our executive committee with a blend of
internal progression and external hires, this has seen our
representation shift to 50% female, up from 25% at the end
of 2024.
In 2025, we expanded the talent data we collected to include
all leadership roles and, in some divisions, going further into
management positions. This will enable us to review the
true diversity of our internal talent pipelines and bespoke
interventions to relevant need. More information on the
diversity of our workforce can be found on page 106.
Recognising our colleagues:
We value the contribution of our colleagues every day, from
an in the-moment thank you to more formal recognition;
we know that our colleagues shape the Society’s future.
Our digital recognition tool continues to be well utilised
with 6,362 pieces of recognition shared across 2025. Our
Excellence in Action awards provide an opportunity to
celebrate real change makers and our colleagues who role
model our behaviours every day. Across both our annual and
quarterly recognition we received 289 nominations.
Leeds Building Society | Annual Report and Accounts 2025 15
Meaningful reward:
It is important that our colleagues feel fairly rewarded for
their contributions. Our colleagues scored us a 7.8 out of
10 on the colleague survey question ‘I am fairly rewarded
(e.g. pay, promotion, training) for my contributions to Leeds
Building Society’ maintaining our position in the top 25% for
UK financial services sector employers.
Since 2019 we have been a Real Living Wage Employer,
paying colleagues at least the Real Living Wage. Minimum
salary levels from April 2026 will be £13.73 per hour, which
is £0.28 above the Real Living Wage (outside of London).
As part of our pay practices, we review salary benchmarks
annually against job specifications, adjusting where required.
Our 2025 Gender Pay Gap report showed 26.7% and
29.2% for mean and median respectively. We also made
the decision to publish our Ethnicity Pay Gap report for the
first time as part of our journey to greater transparency,
which showed a 16.1% and 7.5% mean and median gap
respectively. The main driver for our pay gaps continues to
be the makeup of our workforce as we have fewer women
and ethnically diverse colleagues in more senior roles.
A home for colleagues to thrive and grow
Together, we’re shaping a place where everyone can thrive
and grow, where learning new skills is part of our every day,
helping generate new ideas and enabling us to deliver our
purpose.
Developing skills:
We offer a variety of options for our colleagues from self-
directed learning through to facilitator-led training. Thrive!
(our digital learning pathway) makes it easy for colleagues
to take ownership of their own skills journey, tailoring
recommended courses and learning based on individual
need. Across this year learning content on Thrive! has been
viewed 416,170 times, an average of 226 per colleague.
Our relationships with external partners such as the Financial
Services Skills Commission (FSSC) enable us to ensure
we are investing in the skills that matter most, not just for
today but also for the future. This insight helps inform our
focus areas, including where we invest in apprenticeships or
funding of external development programmes. We continue
to embrace a holistic approach to skills development,
assessing external trends and internal capability to build the
skills we need now and for the future.
In 2025, 114 colleagues undertook apprenticeships or
external learning opportunities. These focused on areas such
as our coaching capability, a key skill identified for the future,
and initiatives to support the development of our diverse
pipelines.
Enabling wellbeing:
Supporting our colleagues to thrive at work is a key focus;
we know that for our colleagues to do their best work for
our members, they need to feel at their best. As part of our
annual survey, we ask colleagues questions relating to health
and wellbeing and the support that is available to them. We
retained our position in the top 25% for UK financial services
sector employees in our health and wellbeing score in 2025.
Our wellbeing provision includes access to a variety of
benefits, from our Colleague Assistance Programme to
focused wellbeing app ‘Peppy’, access to a virtual GP service
and cash health plan. We have a hybrid working model for our
office-based team and a variety of flexible working options
available.
Developing our leadership capability:
Delivering high performance across our teams is a top
priority and we know that this can only be achieved through
having effective leadership capability. Our leaders play a
significant role in aligning colleague work to our purpose,
providing the right stretch and feedback for our colleagues
to grow, and recognising the work our colleagues do in the
moment. We continue to invest in our leadership capability
through:
• People Leadership Fundamentals: a programme for all
people leaders focused on setting the bar and providing
the right skills and learning to get the foundations right.
This programme launched in November 2025 and will
continue to evolve across 2026.
• Learning pathways: focused support to further develop
key skills which can be personalised to individual needs.
Content for this audience is focused on building the skills
we need based on external insight such as the FSSC skills
framework.
• Leadership alignment: our business leaders are brought
together regularly to ensure alignment on key strategic
priorities. This includes a monthly call on member,
colleague and trading updates. Our annual leadership
conference focused on the value to our members of
aligning around our strategic priorities in 2026. We
heard from a number of members in the room, who
provided their views of our current service provision and
recommendations for the future.
• Launch of digital people data: as we continue our digital
journey, we are leveraging tools such as PowerBI to provide
business leaders with relevant data insights to help inform
decision-making in the moment. In 2025, we rolled out
people dashboards across divisions with support and
training to further enhance our data literacy.
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Simplification of process:
We want our colleagues to be focused on the things that
make the biggest difference for our members and are
therefore committed to continuous improvement and
simplification. In 2025, we rolled out access to Copilot,
an AI tool that can support our colleagues to work more
efficiently. We will continue to review AI usability, ensuring
an ethical and risk-measured approach.
As part of our long term strategy we continue to review
and make enhancements to our human resource system,
including simplification of polices and smoother system
journeys. As part of People Leader Fundamentals we also
created a people leader hub on our internal intranet, creating
a central place for key information to be sourced. We will be
reviewing a similar hub for our colleagues in 2026.
Beyond our teams
We are passionate about promoting the financial services
sector as an industry where individuals can thrive and
build a career that is right for them. We know that this will
support the industry in attracting the best, diverse talent,
helping us meet the needs of our communities. That’s why
we’ve continued to invest in our digital work experience
programme with over 1,000 colleagues taking part in the
last 12 months. The programme is free to access, enabling
us to reach a broader range of young talent and to date 56%
of those enrolled in the programme were ethnically diverse,
31% have free school meals, 14% are care-experienced and
12% are living with a disability. We are also members of the
Financial Services Skills Commission, with representation
on their Board and across working groups to help inform and
tackle the challenges the industry is facing collectively.
More details relating to how we support our colleagues can
be found in the ‘Empowering our colleagues’ section of our
Impact Report.
The Impact Report can be found at Report and
Documents section of the AGM hub at:
leedsbuildingsociety.co.uk/your-society/agm
Leeds Building Society | Annual Report and Accounts 2025 17
Key performance indicators
The Society measures its performance against its strategic drivers using a number of key performance indicators (KPIs),
including both financial measures, as defined under International Financial Reporting Standards (IFRS), and non-financial
measures. Alternative performance measures (APMs) given below are in common use across the financial services industry
and are useful in explaining the performance of the business. The APMs are defined in the Glossary on page 221.
KPIs
First time
buyers
The number of new
mortgage members in
the year who are first time
buyers, demonstrating our
purpose of putting home
ownership within reach of
more people.
2025
2024
2023
2022
2021
17,600
17,100
17,700
18,000
22,000
Our mortgage membership continues
to grow, and we have maintained our
high level of support for first time
buyers across the UK.
Despite challenging market conditions,
first time buyer members represented
almost half of our 2025 new mortgage
members.
Profit before
tax
Profit before tax, as
reported in the income
statement, creating capital
to support future business
growth.
£198.6m
£137.5m
£181.5m
£220.5m
£163.7m
2025
2024
2023
2022
2021
Profit before tax has increased when
compared to the previous period.
This increase was predominantly
driven by a rise in net interest income
which is related to the growth in our
residential mortgage book. The prior
period included three significant items
which together suppressed results by
£50.0m
5
.
Net interest
margin
The difference between
interest received on
assets and interest paid on
liabilities, measured as a
percentage of mean assets.
This is the Society’s main
source of income.
1.27%
1.21%
1.26%
1.50%
1.31%
2025
2024
2023
2022
2021
Net interest margin has increased
modestly in 2025 and has remained
broadly stable when compared to the
second half of 2024 (1.24%).
Cost to income
ratio
A cost efficiency ratio
which measures costs in
relation to the Society’s
income. It is calculated
as the percentage of the
Society’s total income
spent on administrative
expenses and depreciation
and amortisation.
52.2%
51.7%
47.3%
37.4%
43.9%
2025
2024
2023
2022
2021
We maintained a robust cost to
income ratio during the financial year
with a strong focus on balancing cost
efficiency with the desire to increase
member value through more resilient
systems and improved service.
We have increased the level of
investment into our IT transformation
programme, which will support
operational efficiency, high customer
service levels and technology resilience
for many years into the future.
Our cost ratios remain among the
best in our sector and if we exclude
transformation costs, the cost to
income ratio becomes 46.1% and
the cost to mean asset ratio 0.60%.
Cost to mean
asset ratio
An additional cost
efficiency ratio which
measures costs in relation
to the Society’s total
assets. It is calculated as
administrative expenses
plus depreciation and
amortisation, divided by
average total assets.
0.68%
0.66%
0.63%
0.59%
0.58%
2025
2024
2023
2022
2021
5 2024 underlying profit before tax was £187.5 million and excluded three one-off items: 1) repurchase of the Society’s Permanent Interest-Bearing Shares (PIBS), 2) the
revaluation of our Head Office building and 3) the cost of the voluntary financial support we offered to those members who were impacted by the collapse of Philips Trust
Corporation (PTC).
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KPIs
Common
Equity Tier 1
(CET1) ratio
The highest quality form
of capital that mainly
comprises retained
earnings and other
reserves, as a proportion
of risk weighted assets
(RWAs). This is measured
to help make sure that
the Society retains an
excess over the regulatory
minimum.
25.7%
25.5%
28.2%
33.3%
38.0%
2025
2024
2023
2022
2021
Our CET1 ratio is in line with the
prior period with profit generated
offsetting increases in risk-weighted
assets (RWAs). The Society remains
in excess of all capital regulatory
requirements and well placed to
meet any future regulations.
Colleague
engagement
score
Colleague engagement
is measured through our
survey platform. Across
2025 we ran two pulse
check-ins on critical
surveys (March/October)
and conducted our full
survey in July.
8.4
8.4
8.3
8.0
2025
2024
2023
2022
2021
We are proud that we continue to have
a highly engaged colleague workforce,
as this remains integral to ensuring
we deliver our purpose. This score
places us in the top 25% for the UK
financial services sector benchmark.
New (gross)
residential
lending
The value of residential
lending advanced by the
Society during the year,
including loans for house
purchases, remortgages
and further advances.
£5.0bn
£5.7bn
£4.4bn
£5.0bn
£4.4bn
2025
2024
2023
2022
2021
Our purpose-focused product
proposition has allowed us to support
34,600 new members in their home
ownership aspirations and deliver our
third highest ever level of gross lending.
Net residential
lending
Gross residential lending,
less repayments of
principal and redemptions.
£1.5bn
£2.6bn
£1.5bn
£1.5bn
£2.0bn
2025
2024
2023
2022
2021
Our robust volumes of new lending
and competitive product transfer
offering to existing customers
coming to the end of their initial
product term has enabled us to
deliver positive levels of net lending.
Number of
days from
mortgage
application
to offer
The average number of
business days it takes to
issue a mortgage offer
from initial receipt of the
application.
13
11
11
15
18
2025
2024
2023
2022
2021
We are issuing mortgage offers
faster, as shown by the reduced
time between receiving an
application and making an offer.
Leeds Building Society | Annual Report and Accounts 2025 19
KPIs
Broker Net
Promoter
Score (NPS)
Demonstrates how
likely brokers are to
recommend the Society
to their peers. Calculated
using the percentage of
people who are extremely
likely to recommend and
subtracting those who are
unlikely to recommend.
58
63
62
63
56
2025
2024
2023
2022
2021
Our broker NPS remains high as
we continue to focus on the broker
experience and a streamlined
process for issuing offers.
Savings
balances
The value of deposits held
by the Society’s members
and other customers, as
reported in the statement
of financial position.
£26.1bn
£20.8bn
£24.5bn
£17.5bn
£15.3bn
2025
2024
2023
2022
2021
We continue to attract more new
savings members period on period
with our competitive fixed and variable
rate products. We have gained 85,600
new savings members this year.
Extra savings
interest
The extra interest for our
savers of paying above
market rates to savers,
based on the Society’s
weighted average savings
rate compared to the rest
of market rate
6
.
£225.6m
£175.0m
£110.0m
£80.5m
£71.5m
2025
2024
2023
2022
2021
We consistently pay above average
market rates to our savers, paying an
average of 3.92% compared to the
rest of market average of 3.02%.
Member
satisfaction
The percentage of
customers surveyed who
described themselves as
quite, very or extremely
satisfied with the service
received from the Society.
94%
94%
94%
93%
93%
2025
2024
2023
2022
2021
During 2025 we have consistently
delivered high service levels to our
members, and this is reflected in
our member satisfaction score.
6 Source: CACI’s CSDB, Stock, January 2025 to December 2025, latest data available. CACI is an independent company that provides financial benchmarking data of the
retail cash savings market.
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ESG strategy
The themes of our ESG strategy were developed following
extensive consultation with over 3,800 stakeholders on
what issues were most important to them. At the end of
the fifth and final year of our ESG strategy, we are pleased
to report that we have met all but three out of our 15 ESG
KPIs, as illustrated on page 23.
During 2025 we have been developing a refreshed ESG
strategy for the next five years, consulting with a range of
stakeholders to ensure our new strategy is focused on the
areas important to them, to be rolled out during 2026.
Our Impact Report outlines in more detail how we are
delivering our ESG strategy, and is structured around
our key stakeholder groups: ‘Supporting our members’,
‘Supporting communities’, ‘Empowering our colleagues’
and ‘Our path to net zero’. The report can be found on our
website at leedsbuildingsociety.co.uk/your-society/agm.
Key achievements this year
Supporting our members
• Savers are the lifeblood of our business. That’s why, as
previously noted, we’ve consistently paid above average
market rates to our savers during 2025, as well as renewing
our commitment to passbooks and investing in our
branches.
• We’ve relocated our South Shields branch and refurbished
our branches in Halifax, Harrogate and North Shields.
These locations are now sporting our new-look branch
design, offering members a bright, welcoming and
accessible environment, with more space and privacy.
• We’re proud to say that our purpose-led strategy has
supported 17,100 first time buyers onto the housing ladder
during 2025, which was almost half of our new mortgages.
• We’ve put home ownership within reach of more people
by making changes to our mortgage products, such as
by lowering the minimum household income needed to
borrow more than 4.5 times annual income. We’ve also
continued to offer products and services which support
home ownership, including our Home Deposit Saver,
Experian Boost, Reach mortgages and Shared Ownership
products.
We’ve been awarded
What Mortgage’s ‘Best
Shared Ownership Lender’
for the tenth year in a row.
• We’ve lobbied against cash ISA tax changes, along with
the Building Societies Association and UK Finance, which
has meant that the changes announced in the Budget
impacted our members to a lesser extent than originally
expected. We’ve also ensured our voice was heard
regarding regulatory changes to loan to income flow limits
for mortgages, designed to unlock more lending across
financial services.
• In 2025 we played an active role in supporting the Shared
Ownership Council, a cross-sector body established to
raise standards and improve outcomes for shared owners,
which led to the development of the industry-wide Shared
Ownership Code.
• During 2025, we went the extra mile for our members,
e.g. we offered 720 free Fraud Clinics across our branch
network (also available to non-members) to help people
improve their scam-spotting skills.
• We provide in depth training for colleagues to enable
them to support members in financial difficulty, as well as
directing members towards free independent help. We’ve
also suspended arrears fees
7
, such as for failed direct
debits, since 2020.
Supporting communities
• During 2025, we awarded £1,013,064 to communities,
supporting 272 charities and non profit groups, taking
the total to £4.61 million since 2021.
• We’ve donated over £188,000 to our charity partner,
Barnardo’s, including for their Gap Homes programme,
to support care-experienced young people at high risk
of homelessness. We’ve also continued to support the
charity Become, to roll out a financial and life skills training
programme, tailored to the specific needs of young people
leaving care.
• As part of Leeds Building Society’s 150th anniversary,
we launched Fund 150 – a pot of £150,000 to be awarded
by colleagues to charitable organisations nationally,
with the aim of ‘supporting vulnerable people to belong
through housing and their community’. A colleague panel,
with colleagues ranging from apprentice to director level,
were recruited and trained to undertake the grant selection
process, with five organisations being awarded £30,000
including Rowan Alba in Edinburgh and Handcrafted
Projects in Sunderland.
• The Leeds Building Society Foundation awarded over
£450,000 in grants to 50 charities which align with its
purpose of helping people in need of a safe and secure
home, including Hull Lighthouse, and Street Paws which
operates across Yorkshire and the North East.
7 Third party costs, such as solicitor costs, are passed onto the customer
Leeds Building Society | Annual Report and Accounts 2025 21
• In 2025 we have been focusing on volunteering with
purpose, for organisations that truly align to supporting
people into a safe and secure home. To celebrate the
Society’s 150th anniversary we gave our colleagues an
additional seven hours of volunteering time for skills-based
volunteering, meaning all colleagues had a total of 21 hours
to support our community in 2025. Colleagues donated
8,089 volunteering hours to support 207 organisations,
over 500 of which were to support the development of
skills.
Supporting our colleagues
• Our colleague engagement score of 8.4 out of 10 puts us
in the top 25% of UK financial services sector employers,
with 89% of our colleagues completing our annual survey.
For I&D, our colleague score of 8.9 out of 10 places us in the
top 10% of UK financial services sector employers.
• Our colleagues have continued to invest in their learning
with 416,170 views on our Thrive! learning solution.
• 13.2 % of colleagues have been promoted or taken on new
opportunities internally across the past 12 months.
• We have been shortlisted for, or have won, a variety of
HR focused awards across 2025, including the bronze
innovation award for our ‘hear to help’ simulation training
and silver award for Learning Designer of the Year. We also
retained Gold accreditation with Inclusive Employers.
• Colleagues were recognised 6,651 times through our
recognition reel or Excellence in Action, our formal
recognition channels.
• We’ve continued sponsorship and attendance at both
Leeds Pride and Leeds West Indian Carnival.
Supporting the climate and environment
• We’ve set ambitious targets and plans to be net zero in our
own operations (Scope 1 and 2 market-based emissions)
and to significantly reduce our energy consumption
(location-based emissions) by 2034. We were on track
against both our targets during 2025.
• We’ve published our latest Climate-Related Financial
Disclosures and Transition Plan, based on the Transition
Planning Taskforce’s guidance, which sets out our climate
ambitions and the actions and accountabilities that will
underpin delivery.
• During 2025, we completed refurbishments or relocations
at four branches, including removal of gas from three sites
and installation of solar power at our North Shields branch.
• During 2025, we participated in the annual Financial
Services Sustainable Technology Competition in
collaboration with five other UK banks and building
societies, Wates and the Sustainable Business
Consortium, to help scale innovative solutions to
decarbonise buildings in the UK. We have selected two
technologies to pilot in our property estate during 2026 to
help optimise and reduce the electricity consumption from
our heating and cooling systems.
• We continue to reflect energy efficiency in the affordability
assessment for homes, and we have launched our first
ever green additional borrowing product, aligned with
the principles of the Green Finance Institute, to support
existing residential or buy to let mortgage holders to
decarbonise their property.
• We participated in the Finance Initiative for Sustainable
Procurement (FISP) Peer Group, coordinated by Accenture,
collaborating with industry colleagues to enhance
sustainable procurement practices within the financial
sector.
• We’re partnered with three non profit organisations with
a focus on environmental stewardship – Yorkshire Dales
Millennium Trust, Canal and River Trust and Aire Resilience
Company – supporting their operations through funding
and creating volunteer opportunities for colleagues to
contribute directly to local conservation efforts.
Governance
• We have produced our fourth standalone Impact Report to
clearly outline our ESG strategy and progress against our
goals, which includes our latest ESG risk score. We have
continued reporting with reference to the Global Reporting
Initiative standards.
• We’re proud to have been re-accredited with the Good
Business Charter, which recognises and champions
responsible business behaviour.
Our ESG goals
At the end of our five-year ESG strategy we have met 12 out
of our 15 KPIs, with those off target relating to communities
and diversity. For 2025 we set a new stretching target for
charitable funding, as we had met our original target of £3
million by 2025. We are committed to achieving our 2030 I&D
targets for our leadership population and are confident that
the plans we have in place will enable us to make progress
towards these targets across 2026. Refer to pages 23 and
43 to 56 for details of our performance against our climate
targets. As part of our commitment to transparency we have
published an annual Impact Report, which outlines progress
in more detail.
Business Model and Strategy continued
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
22
Our ESG targets
We set ourselves targets to assess the impact we make in relation to our environmental, social and
governance responsibilities.
These are regularly reviewed to help guide delivery of our ESG strategy, with dates for completion
varying by target. This also includes creating new, stretching goals when existing targets have been
achieved, such as our charitable funding goal. We are in the process of updating our strategy and will
determine the long-term priorities and measures later this year.
Supporting home
ownership
Help 65,000 first time buyers into a
home of their own by 2025.
Progress: Achieved
2025 target: 65,000 first time buyers
supported by the end of 2025
2025 actual: 90,400 first time buyers
supported by the end of 2025
Improve mortgage broker satisfaction
scores by 20% by 2025¹.
Progress: Achieved
2025 target: +60 Broker NPS
2
2025 actual: +63 Broker NPS
2
Maintain an average savings rate
premium of at least 0.25% compared
to market average.
3
Progress: Achieved
2025 target: >0.25%
2025 actual: 0.90%
Provide £5m to charities and
communities through grants,
donations and sponsorship by 2025.
Progress: Not met
4
2025 target: £5m by end of 2025
2025 actual: £4.6m by end of 2025
Maintain our share of UK high street
branches at higher than 0.50%.
5
Progress: Achieved
2025 target: >0.50%
2025 actual: 0.83%
Sustainable
communities
Inclusion
and Diversity
Achieve 45% female representation
in leadership roles by 2030.
6
Progress: Behind
2025 target: 39.2%
2025 actual: 34.5%
Achieve 10% ethnic minority
representation in leadership
roles by 2030.
6
Progress: Behind
2025 target: 7.9%
2025 actual: 5.5%
Our inclusion and diversity colleague
sentiment score is in top 25% of UK
financial services by 2030.
9
Progress: Ahead
2025 target: Top 25% by 2030
2025 actual: Top 10%
Trust and
Transparency
Maintain strong colleague
engagement score which places us
in line with the UK financial services
sector benchmark.
9
Progress: Achieved
2025 target: Top 25%
2025 actual: 8.4
(placing us in the top 25%)
Maintain high member satisfaction
scores of over 90%.
1
Progress: Achieved
2025 target: >90%
2025 actual: 94%
Climate and
Environment
Reduce absolute Scope 1 and 2
market-based emissions by 90%
by 2034.
Progress: Ahead
2025 target: 9% reduction
2025 actual: 71% reduction
Reduce absolute Scope 1 and 2
location-based emissions by 60%
by 2034.
Progress: Ahead
2025 target: 6% reduction
2025 actual: 35% reduction
Maintain carbon neutrality (tCO
2
e )
for Scope 1 and 2 market-based
emissions and selected Scope 3
emissions, on the pathway towards
net zero.
7
Progress: Achieved
8
2025 target: 0 tCO
2
e
2025 actual: 0 tCO
2
e
Reduce absolute Scope 3 emissions
(categories 1-14) by 35% by 2034.
Progress: Ahead
2025 target: 4% reduction
2025 actual: 18% reduction
Ambition to reduce the intensity
of our Scope 3 financed emissions
(category 15) from our residential
mortgage book by 70% by 2034.
Progress: Ahead
2025 target: 7% reduction
2025 actual: 8% reduction
Key:
Achieved
Where performance is above
target at completion of a
reporting period.
Ahead
Where the cumulative
performance to date is above
the target on a pro-rata basis
(where appropriate).
Behind/Not Met
Where the cumulative or
in-year performance is below
the associated target or
has not been achieved at
completion of a reporting
period.
1. Broker satisfaction is captured by independent research of 900 interviews
between January and December 2025. Overall customer satisfaction is captured
from a survey of 3,409 members from January 2025 to December 2025.
2. The Net Promoter Score® (NPS) is a measure of satisfaction and loyalty based on
survey responses. It measures the proportion of promoters less the proportion
of detractors. We use the NPS methodology to measure satisfaction among the
brokers we work with.
3. Source: CACI’s CSDB, Stock, January 2025 to December 2025, latest data
available. CACI is an independent company that provides financial benchmarking
data of the retail cash savings market.
4. For 2025 we set a new stretching target for charitable funding, as we had met our
original target of £3m by 2025.
5. Based on bank and building society UK business count data, Office for National
Statistics, March 2025.
6. Excludes executive and non-executive directors. Whilst we are behind on our
progress, we continue to prioritise our inclusion and diversity efforts and are
working to deliver these by our target date of 2030.
7. Scope 3 emissions include business travel, fuel and energy related activities,
waste, and home working.
8. Subject to independent verification which will be completed during 2026.
9. Our Employee Engagement Survey provider (Peakon) enables us to measure
colleague sentiment and benchmark this against other financial services
organisations in the UK.
Leeds Building Society | Annual Report and Accounts 2025 23
Stakeholder engagement
Our approach to corporate governance is based on the principles and provisions of the 2024 version of the UK Corporate
Governance Code (the Code) – available at frc.org.uk. In order to meet the requirement for a Section 172 Statement (insofar
as it is relevant to a building society), we include a summary of how the Board has carried out its duties in promoting the
success of the organisation. This includes how the Board engages with stakeholders and remains cognisant of their needs
when running the business. Further detail on the Board’s activities and its engagement with stakeholders can be found in the
Corporate Governance Report on pages 87 to 111.
The Board’s approach
The Society considers the needs of a diverse range of stakeholders, which have been identified as those who may be
affected by our activities and those groups whose actions can affect the operation of the business. These stakeholders are
also actively considered in the development of the Society’s strategy, specifically members’ product and servicing needs,
the expectations of regulators, the needs of mortgage brokers, views of investors and credit rating agencies, as well as any
potential impact on colleagues. The Board recognises that agreeing a strategy, which is cognisant of key stakeholders, will
optimise long term value creation and ensure relevance in a fast-changing environment.
Examples of decisions made by the Board during the year and how stakeholder impact was considered, are shown on pages
28 and 29: specifically the Board’s decisions on Board composition and changes, and the evolution of our strategy and
strategic drivers.
Our behaviours help to underpin a strong culture appropriate for a mutual organisation, encouraging actions that are in the
best interests of members and other stakeholders. Demonstration of the behaviours in the workplace forms a key part of
our performance management approach. For further information on culture and how this is monitored, see the Corporate
Governance Report on pages 87 to 111.
Stakeholder engagement
We have set out below our key stakeholder groups and how we engage with them. KPIs relevant to members, colleagues and
brokers can be seen in the KPIs section on pages 18 to 20.
Stakeholder
group
Why they are important to us How we engage with them Reporting to the Board
Members
and brokers
Members own the Society,
and the Society acts to benefit
members’ interests over the
longer term.
Most of our lending is done via
brokers who are essential to us in
the process of helping people into
homes of their own.
• Independent external customer and
broker research.
• Gain feedback though our online panel
TalkingPoint.
• Communication testing with our
members.
• Trustpilot.
• Annual General Meeting (AGM).
• Social media.
• Brand perception tracking with our
members and brokers.
The Board balances the interests
of borrowing and saving members,
as well as brokers, when making
decisions about the Society’s short
and longer-term strategy. It does
so through consideration of the
following reporting:
• Annual analysis of five-year
forecast of member joiners and
leavers and monthly reporting.
• Regular reports on service
performance, customer
outcomes and complaints.
• Regular reporting of member
experience ensures services and
products meet our members’
needs.
• Consideration of mutual dividend.
• Reporting on savings rate benefit.
• Consideration of member input
on specific topics e.g. impacts of
ISA changes from the Budget.
Business Model and Strategy continued
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
24
Stakeholder
group
Why they are important to us How we engage with them Reporting to the Board
Colleagues
Colleagues are critical to the
success of the Society. Having a
culture where our colleagues can
contribute, feel valued and have
a sense of belonging will support
us in creating high performance
teams to better serve our
members.
• Department, branch and contact centre
visits.
• Launch of Branch Buddy initiative in 2025
with the leadership team.
• Colleague surveys – at least one full
survey per year, with the option of short
pulse surveys.
• Colleague Association with Board
appointed colleague engagement
champion meeting with the Colleague
Association quarterly in 2025. This role
was held by Annette Barnes (as non-
executive director) until her appointment
as Interim CEO, with Pam Rowland (non-
executive director) subsequently taking
on this responsibility.
• Launch of Colleague Voice networks
within each division to enable local action.
• Colleague development and wellbeing
sessions.
• Meaningful recognition tools, from
an ‘in the moment’ thank you in our
recognition reel to our Excellence in
Action awards initiative.
• Purposeful squad work with cross
divisional teams on colleague-facing
activity.
• Communication on matters relevant to
colleagues and the Society.
Further information on engagement with
colleagues can be found in the Our Culture
section on page 105, within the Corporate
Governance Report on pages 100 to 102,
and in our Impact Report.
• Colleague survey engagement
results.
• Colleague update from colleague
representative and non-executive
director colleague engagement
champion Board sessions.
• Colleague Association and
Colleague Voice topics.
• Pension scheme information.
• Update on diversity and progress
against our targets.
• Annual Speak Up policy review and
approval.
• Update on progress of our
Colleague Strategy.
• Review of approach and activities
for senior leadership team talent
succession.
Third party
suppliers
Our supplier partners are key to
our ability to develop and deliver
services to members and are
an important aspect of how we
are represented with our other
stakeholders.
Our supply chain includes
suppliers of goods and services,
including professional services
(such as conveyancing services),
IT platform services (access and
administration) and IT software
licences.
We select suppliers based on their
ability to reliably deliver services
that enhance our members'
experience, their aligned values and
the measurable benefit we receive.
Our Third Party Management
Policy includes a clear risk-
based classification of suppliers
which enables us to take a more
consistent and risk-appropriate
approach to our management of
each engagement.
• Governance meetings at appropriate
levels take place in accordance with the
materiality of the relationship.
• Our policies and standards drive a fair
and transparent supplier selection and
relationship management process
for new and renewed requirements,
proportionate to business risk.
• Appropriate governance
forums, including the Board
where necessary, have received
regular updates on the progress
made against our Third Party
Management Framework and are
involved in decisions on suppliers
for key strategic projects, for
example as part of our core banking
transformation programme.
• Management information on
suppliers and our approach to
managing third party relationships.
• Annual approval of modern slavery
and transparency statement.
Leeds Building Society | Annual Report and Accounts 2025 25
Stakeholder
group
Why they are important to us How we engage with them Reporting to the Board
Communities
Leeds Building Society was set
up to help members save and buy
homes of their own. As a mutual,
we also aim to make a positive
difference in wider society and
the Board understands that our
mortgage and savings business
needs to be underpinned by a
broader commitment to the
communities in which we operate.
Our communities are defined as
the places where our members
and colleagues live and work.
However, we consider social
issues as well as geography in
defining where we focus our
efforts.
• Engagement via communication with
charity partners and their beneficiaries.
• Colleagues nominate, volunteer and
raise funds for charities and community
groups.
• Commitment to pay our fair share of
tax as evidenced by our Fair Tax Mark
accreditation.
More detail, as well as further information
on ESG at Leeds Building Society, can be
found within the ESG section on pages 21
to 22 and within our Impact Report.
• Regular updates of progress
against our ESG strategy targets.
• Ongoing progress reports on
the impact of our charity grant
making, fundraising and colleague
volunteering.
Environment
We are committed to minimising
our impact on the environment in
the places in which we operate, as
well as managing environment-
related risks. This is also an
increasing focus for our wider
stakeholders.
Our Climate strategy has been designed
to support our key stakeholders
through an orderly transition to a net
zero economy by 2050 or sooner. This
includes:
• Discussions held with a wide range of
stakeholders, including government
bodies, industry bodies and
stakeholders, building society peers
and third party experts.
• Engaging and supporting our members
and colleagues to reduce their carbon
footprint.
• Working collaboratively with third
parties to understand and reduce the
emissions from our supply chain.
For further information on our carbon
emissions and engagement with
stakeholders on climate issues, please
see our climate disclosures on pages 43
to 56 and our Climate-Related Financial
Disclosures and Transition Plan.
• Progress reports on our climate
data and insights.
• Approval of an updated climate
target and our transition plan.
Business Model and Strategy continued
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
26
Stakeholder
group
Why they are important to us How we engage with them Reporting to the Board
Regulators
Our regulators, the Prudential
Regulation Authority (PRA) and
the Financial Conduct Authority
(FCA), are responsible for
maintaining a safe and sound
financial system, as well as
ensuring consumer protection.
Meeting regulatory requirements
engenders trust from our
stakeholders and demonstrates
that we are doing the right thing.
We have an open and transparent
relationship with our regulators, including:
• Regular dialogue and interactions
with our regulators both directly and
through our industry bodies.
• Regular meetings held with the PRA
which are attended by our CFO and
CRO along with members of the senior
leadership team.
• Regular meetings with the FCA,
which are attended by the CRO and
appropriate members of the senior
leadership team.
• Monitoring regulatory publications
from the regulators and wider
stakeholder groups.
• Reviewing regulatory publications and
taking action as required.
We adopt a proactive approach with
the regulators and update them of any
material points as they arise.
• The Board receives updates on
regulatory matters and a summary
of key regulatory actions being
undertaken by the Society.
• Material dialogue and interactions
with our regulators are shared
with the Board as appropriate.
• The Board has sight of the
progress in delivery of regulatory
actions.
• The PRA engages directly with
directors, e.g. the Periodic
Summary Meeting.
Investors
Investors provide an important
part of our funding, which
supports our aim to help members
into homes of their own.
We have a variety of different
types of investors who support
our wholesale funding strategy
across secured and unsecured
types of debt. Our strategy aims
to have the appropriate level of
diversification of funding, so we
are not exposed to only one type
of funding.
We have an active investor relations
strategy, including:
• Individual meetings with key
institutional investors.
• Group presentations.
• Attendance at investment conferences.
• Investor events.
Regular and close dialogue is maintained
with credit rating agencies, including
formal annual review meetings.
• Investor relations approach
considered as part of the Funding
Plan, contained within the overall
Corporate Plan, as approved by
the Board.
Key decisions made in the year
The key decisions taken this year by the Board have been mindful of all stakeholders’ needs, while benefitting our members
over the long term. These decisions aim to improve member, broker and colleague experience, as well as increasing our
financial stability through improving income performance or reducing costs. This means that we can continue to operate
successfully in the future for the benefit of all our stakeholders.
Examples from 2025 are given below, and a summary of Board activities during the year can be found in the Corporate
Governance Report on page 103 to 104.
Leeds Building Society | Annual Report and Accounts 2025 27
Board composition and changes (November 2025)
Stakeholders
impacted
Members
Colleagues Regulators
Context
In April 2025, Andrew Conroy announced his decision to step down as CFO of the Society. Andrew joined the Society in
2018 and committed to spending three to five years in the role. After almost seven years, he decided to leave the Society
and seek his next career challenge.
Following the announcement in April, a number of succession planning meetings were held with members of the people
team, our Chief People Officer and the Nominations Committee. An assessment of the skills matrix was undertaken along
with detailed discussions over the requirements of the role, and a recruitment plan was developed along with a proposed
timeline. Consideration was given to the external search firms which could be used to support recruitment, and it was
agreed to appoint Warren Partners, an executive recruitment agency with whom there is no connection or conflict of
interest, to provide a diverse shortlist of candidates.
Considerations and discussion
In October 2025, following discussions with the Nominations Committee, the Board approved the appointment of Arlene
Cairns as the incoming CFO, subject to regulatory approval, and subsequently agreed a leaving date of 31 December
2025 for Andrew. The Board has expressed its appreciation to Andrew, acknowledging his exceptional contribution during
his time with the Society. Arlene joins us from Phoenix Life, where she currently holds the positions of CFO and group
performance director and brings a wealth of experience, both within and beyond the financial services sector.
Discussions were held over the appointment of an Interim CFO to lead the Finance division during the period January to May
2026, when Arlene is due to take up the role. A key area of consideration for the Board was to ensure resilience and stability
within its existing leadership and ensure changes to the leadership team were managed appropriately and colleagues were
kept informed. To provide continuity, it was agreed to appoint Jon Bailey, Director of Finance, as Interim CFO, and an interim
member of the Executive Committee. Jon is an experienced leader with substantial financial services experience. This also
evidences the focus that has been applied in recent years in developing a strong internal pipeline for succession planning,
which supports internal development and resilience in the leadership team. To support his continued development and
transition into the role, Jon worked closely alongside Andrew in the months prior to his departure, attended several Board
and Executive Committee meetings and met with the PRA during their annual supervisory visit. In addition, the Board
agreed to appoint an external advisor to provide support in an advisory capacity to the Executive Committee as it transitions
through a period of compositional change at both Board and Executive Committee level, in 2026.
The impact on stakeholders was considered as outlined below:
Board members: Members of the Nominations Committee discussed and monitored progress of the recruitment
process and provided regular updates to the Board. Prior to Arlene’s appointment, it was agreed that Arlene would meet
with a number of Board members including the CEO, Chair and Chair of Audit Committee, and members of the executive
committee.
Regulators: The recruitment of the incoming CFO and appointment of an Interim CFO was discussed with members of
the Nominations Committee, and a timeline was agreed for submission of the relevant applications to be made to the FCA
and PRA. The PRA was also informed about the CFO and Interim CFO’s appointment in advance and was provided with
subsequent updates at the regular meetings held with the Society’s PRA supervisor.
Members & Colleagues: The Society recognises the importance of keeping colleagues and members informed of
changes to the Board and this was considered carefully following Andrew’s decision to step down and during the
succession planning meetings. Updates to colleagues were shared through divisional reporting lines and a detailed
announcement was posted on the colleague intranet, which confirmed that a recruitment process was underway and a
public announcement then followed. Once Arlene’s appointment as CFO was formalised, a further update was provided to
colleagues in November which outlined the intended date on which she would join the Board, as well as details of her skills
and experience and other external appointments. Colleagues were also informed about the appointment of Jon Bailey as
Interim CFO. The Chair also provided an update on Andrew’s resignation to members at the 2025 AGM. A further public
announcement was made in December 2025, confirming the details of Arlene’s appointment.
Outcome: The Board was satisfied with the recruitment and selection process undertaken and subsequently approved
Arlene’s appointment and supported the appointment of an Interim CFO.
Business Model and Strategy continued
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
28
Evolution of our strategy and strategic drivers (January to November 2025)
Stakeholders
impacted
Members
Colleagues
Context
In January 2025, the Board agreed with management that as part of the management and Board strategy conferences
held in April and May respectively, there would be a session looking at how we could evolve our strategic focus to support
our ongoing success – particularly in the context of our growth trajectory and the investment we are making in our core
technology platform. Understanding the potential of what our new technology platform could do, as well as how it could
support and further our strategic aspirations, was also identified as an important aspect.
Considerations and discussion
Following the strategy conferences, the senior leadership team, the Executive Committee and the Board continued
to discuss and refine the long term strategy for the Society, ensuring our evolved strategy balances appropriate
ambition and focus to support the Society’s ongoing success. This was developed against the background of increased
competition within the mortgage and savings markets in which we operate, increasing automation and adoption of AI,
evolving customer preferences and margin pressures.
In September, management presented a draft of our evolved strategy to the Board and asked for its feedback on this.
The proposed evolution of our strategic drivers was based on the areas of our strategy where we would need to focus in
order to succeed over the medium and long term. Consideration was given as to whether the strategy was appropriate to
provide sufficient clarity and alignment over time, and whether it was directionally right given how our competition and
markets are evolving.
In November, the final iteration of our evolved strategy was presented to the Board for approval, including a view on
proposed activities for 2026 which will help to drive us toward our strategic ambitions. Our updated strategic drivers
are: customer experience, market participation and productivity. In earlier discussions the Board had highlighted the
importance of communication, execution and measurement of the evolved strategy – and therefore, the November
update also included a view of how it would be communicated to colleagues (see below), how the strategy would be
executed in terms of governance, and what reporting would need to be in place to measure its success. Key enablers of
the strategy which were identified include the opportunities arising from the new core technology platform, as well as the
deployment of AI.
The impact on stakeholders was considered as outlined below:
Members: Members’ needs have been a key consideration throughout the work undertaken on the evolution of our
strategy during 2025, with the new customer experience strategic driver focusing on delivering tailored, intuitive
experiences enhanced by the use of technology. The new market participation strategic driver is also focused on
meeting evolving member needs around products and services over the medium and long term.
Colleagues: The Society recognises the importance of colleagues to the success of its strategy, and it was
acknowledged at the Board strategy conference that colleague buy-in to the evolution was crucial. Our evolved
strategy and how this will feed into colleague objectives was presented to, and discussed with, the extended leadership
team in December 2025. It was then announced to all colleagues in January 2026, with the opportunity for questions
from colleagues to be answered by members of the Executive Committee. This ensured that all colleagues clearly
understood the evolved strategy and how they will continue to support its execution. Thoughtful consideration has
also been given throughout the development of the strategy to colleague capabilities and how our organisation is set
up, to ensure these support us in the delivery of our strategy.
Outcome: The Board reviewed and approved the evolved strategy, including our new strategic drivers, and the planned
activity in relation to these drivers for 2026.
Leeds Building Society | Annual Report and Accounts 2025 29
Financial Review
Year ended 31 December 2025
Overview
The Society has continued to deliver a strong financial
performance in 2025 against what remains a challenging
external backdrop. This is reflected in an increase in our
statutory profit, the second highest in our history.
We continue to offer our members a strong range of
products at rewarding rates and strive to provide an excellent
service to all our members. In spite of increasing levels of
competition in both the mortgage and savings markets
we have been able to achieve strong growth in both areas
whilst delivering additional value to our savings members
compared to the market.
Income Statement
In 2025 we have achieved a statutory profit before tax of
£198.6 million, which represents a £11.1 million (5.9%)
increase on 2024 (2024: £187.5 million underlying profit
before tax
1
). This increase is primarily due to a growth in net
interest income which is partly offset by fair value losses and
an increase in management expenses.
The Group Income Statement for the year is summarised
below:
2025
£M
2024
£M
Net interest income 402.5 362.9
Fees, commissions and other income/
(expense)
2
14.9 (17.6)
Fair value (losses)/gains (4.9) 10.3
Total income 412.5 355.6
Management expenses (215.3) (196.0)
Impairment (charge)/credit on loans
and advances to customers
(0.1) 5.7
Impairments on property, plant and
equipment and intangible assets
– (17.5)
Other provisions release/(charge) 1.5 (10.3)
Profit before tax 198.6 137.5
Tax expense (53.1) (37.6)
Profit after tax 145.5 99.9
Underlying Profit before tax
1
198.6 187.5
Net interest income
2025
£M
2024
£M
Net interest income 402.5 362.9
Mean total assets 31,787.5 29,879.3
% %
Net interest margin 1.27 1.21
Net interest income increased by £39.6 million (10.9%)
during the year, with net interest margin rising modestly to
1.27%. Our residential mortgage book has increased by £1.4
billion (5.8%) over the past 12 months, which contributed
positively to net interest income.
The Society remains successful in attracting members
through its competitive savings offerings, which have
contributed to the maintenance of a strong liquidity
position that exceeds regulatory requirements. We have
further optimised the income from our liquidity portfolio
(i.e. investments in UK government securities and other
securities rated highly by credit rating agencies) to boost our
net interest income and support delivery of our purpose.
In the previous financial year, we made a proactive choice to
simplify our balance sheet, buying back Permanent Interest-
Bearing Shares (PIBS) and during the current financial year
we repurchased Senior Non-Preferred notes after reviewing
our funding requirements. These decisions have reduced our
interest payment obligations, and, during the financial year,
we have seen the benefit that these decisions have had on
net interest income.
Our net interest margin has remained robust in 2025 despite
a challenging environment characterised by declining
mortgage rates and strong competition for retail savings
balances. We use structural hedging to stabilise net interest
margin over an average period of two years. When market
interest rates are falling, as we have experienced during
this financial year, the Society benefits from the income
generated from the fixed interest rate instruments that are
designated in the hedge. The structural hedge has therefore
contributed to the stability in net interest margin when
compared to previous periods.
1 2024 underlying profit before tax excludes one-off items. There have been no one-off items during 2025.
2 2024 includes a one-off item. Further information can be found on page 32 of the Society’s 2024 Annual Report and Accounts. There have been no one-off items during 2025.
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Our efforts to support members with competitive mortgage
rates, along with growing competition as peers also help first
time buyers enter the housing market, are leading to reduced
lending margins. Additionally, the Bank of England cut its
base rate three times in 2025, and we expect to see the
impact of those cuts on our net interest margin in the near
future. We remain committed to balancing member support
with long term sustainability, staying true to our purpose
of putting home ownership within reach of more people,
generation after generation.
Fees, commissions and other income
In January, we successfully repurchased Senior Non-
Preferred notes at a discounted rate which produced a £6.8m
other income gain in the period. Following the repurchase,
we were able to issue replacement notes at a more
competitive price, which results in lower interest payments.
The amount reported in 2024 includes the upfront cost
(£23.4 million) of our decision to simplify the balance sheet
and repurchase our PIBS.
Fair value gains and losses
We hold certain financial assets and liabilities at their current
fair value, defined as the value a market participant would be
willing to pay or receive, and the movement in this fair value
is recognised in the Income Statement. Changes in fair value
are primarily due to timing differences, which will trend to
zero as the asset or liability reaches maturity.
For the financial year ended 31 December 2025, we have
recognised a net fair value loss of £4.9 million (2024: £10.3
million gain) from the movement in interest rates. These
losses have largely been recorded on swaps transacted
to manage interest rate risk associated with the fixed rate
mortgages and savings products.
We continue to manage volatility and mitigate some of
the impact of fair value movements using cash flow hedge
accounting.
Management expenses
Management expenses for the year are summarised below:
2025
£M
2024
£M
Colleague costs 114.2 106.1
Other administrative expenses 64.1 59.9
Depreciation and amortisation 11.7 10.6
Ongoing management expenses 190.0 176.6
IT transformation spend 25.3 19.4
Total management expenses 215.3 196.0
% %
Cost to income ratio
3
52.2 51.7
Cost to income ratio excluding IT
transformation spend 46.1 46.6
Cost to mean asset ratio 0.68 0.66
Cost to mean asset ratio excluding IT
transformation spend
0.60 0.59
Total management expenses increased by £19.3 million
(9.8%) during the year, but despite this increase our cost
ratios remain among the best in our sector. When excluding
transformational costs, our cost to income ratio was 46.1%
(2024: 46.6%) and our cost to mean asset ratio was 0.60%
(2024: 0.59%). Both ratios have remained broadly stable year
on year.
We have maintained focus on cost management in 2025
and have carefully shaped the way our teams work, our
relationships with third parties and assessed spend to
operate in a cost-conscious way. We are continuously looking
to identify appropriate efficiencies whilst at the same time
investing thoughtfully for the long term future of the Society.
3 2024 excludes a one-off item, being the cost of repurchasing the Society’s PIBS.
Financial Review continued
Leeds Building Society | Annual Report and Accounts 2025 31
Our ongoing management expenses have increased by
£13.4 million (7.6%) when compared to 2024. The primary
driver of this is colleague costs which have grown due
to annual salary increases and the impact of a rise in the
national insurance contributions rate from 13.8% to 15.0%
in April 2025.
Other administrative expenses have increased by £4.2
million (7.0%) in the year. This increase was predominantly
driven by higher technology and regulatory costs. We see a
modest rise in depreciation and related technology costs as
we continue to invest in improving our digital capability and
our technology infrastructure.
We have also continued to invest into our multi-year
technology transformation programme, which will support
operational efficiency, high customer service levels and
technology resilience for many years into the future. We are
in the build phase of our new core banking platform as we
strive to modernise and improve the experience for both our
members and colleagues.
Impairments and provisions
The table below summarises the impact of impairments and
provision releases/(charges) in the year:
2025
£M
2024
£M
Residential loans – 4.8
Commercial loans (0.1) 0.9
Impairment (charge)/release on loans
and advances to customers
(0.1) 5.7
Other provisions release/(charge) 1.5 (27.8)
Total impairments and provisions 1.4 (22.1)
Residential impairment
We make provisions for expected credit losses (ECL) across
all loans, based on the probability of each loan defaulting and
resulting in a loss, while considering a range of assumptions
about future economic scenarios and an assessment of
whether the credit risk of the loan has increased.
The quality of the Society’s mortgage book remains high,
with arrears percentages improving during 2025, despite
ongoing cost pressures on households. At 31 December
2025, 0.57% of borrowers were greater than or equal to
three months in arrears (31 December 2024: 0.61%).
The UK economy exceeded growth expectations in early
2025, but has since slowed, resulting in a more cautious
outlook. Housing activity followed suit, rising at first then
falling after stamp duty changes. Annual house price growth
was 0.6%. Our macroeconomic updates for ECL provisioning
anticipate the Bank of England cutting rates in 2026 and
GDP improving slowly as inflation drops. Unemployment is
expected to rise briefly before easing as growth recovers.
Persistent geopolitical uncertainty has led us to lower the
central scenario weighting to 40% (from 50%) and raise the
downside scenario weighting.
Total impairment provisions against residential mortgages at
31 December 2025 were £43.7 million (2024: £45.4 million),
which represents mortgage book coverage of 0.17% (2024:
0.18%). The key judgements and estimates involved in the
calculation of impairment loss provisions are set out in Note
2 of the accounts on pages 171 to 179.
2025
£M
2024
£M
UK 36.6 37.1
Spain 7.1 8.3
Total residential impairment
provisions
43.7 45.4
UK coverage 0.14% 0.15%
Total coverage 0.17% 0.18%
Financial Review continued
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Assets
Our strong lending growth has continued into 2025 with
a 5.8% increase in residential mortgages in an extremely
competitive market.
2025
£M
2024
£M
Residential mortgages 25,864.3 24,448.1
Commercial mortgages 3.1 3.3
Other loans 138.9 145.0
Impairment provision (43.8) (45.9)
Loans and advances to customers 25,962.5 24,550.5
Liquid assets 5,450.5 6,545.5
Derivative financial instruments 129.5 371.1
Fair value adjustments 75.5 (173.1)
Intangible assets 43.9 35.1
Fixed and other assets 300.5 318.6
Total assets 31,962.4 31,612.6
Loans and advances to customers
Our loans and advances to customers comprise mainly UK
residential mortgages. Our legacy Spanish residential and
UK commercial loan portfolios continue to pay down, with no
new lending taking place. Other loans consist of a collateral
loan that represents a pool of equity release mortgages
purchased from a third party, where some of the risks
relating to those mortgages were retained by the third party.
Residential mortgage asset quality 2025
%
2024
%
Proportion of mortgages in arrears
4
0.57 0.61
Proportion of mortgages in arrears (UK) 0.56 0.58
Balance-weighted average indexed
LTV of mortgage book
54.9 54.2
Balance-weighted average LTV of
new lending
66.8 66.8
58%
20%
3%
5%
14%
2025 UK residential mortgage balances by type
Mainstream owner occupied
Buy to let
Shared ownership
Other affordable
home ownership
Other
4 Greater than or equal to 3 months in arrears.
Leeds Building Society | Annual Report and Accounts 2025 33
UK residential mortgage balances
The composition of our mortgage book reflects our
segmental lending strategy of recent years, with mainstream
owner occupied making up the significant proportion of
the book (58%) alongside a strong weighting of shared
ownership (14%). Buy to let (20%) remains important to us
and supports our purposeful lending strategy.
The chart below shows the mix of new lending by product
type in 2025.
72%
12%
2%
3%
11%
2025 new residential lending by type
Mainstream owner occupied
Buy to let
Shared ownership
Other affordable
home ownership
Other
Despite competition in the mortgage market intensifying
during 2025, our gross new lending during the financial year
was £5.0 billion (2024: £5.7 billion) and net lending was £1.5
billion (December 2024: £2.6 billion). The Society manages
its growth according to macroeconomic conditions, market
pricing and funding conditions. We continue to launch
new innovative mortgage products, such as Income Plus
mortgages, which further support our ability to help more
people get on the housing ladder in a competitive market.
We achieved our strongest month ever with 2,700 first time
buyer completions in one month in March, as house buyers
expedited house purchases before a revision to the stamp
duty threshold took effect in early April.
The average LTV of new lending in 2025 remains consistent
with 2024 at 66.8% (2024: 66.8%) and reflects our balanced,
risk-managed approach.
Liquid assets
Liquidity ratios 2025
%
2024
%
Liquidity Coverage Ratio 196.7 183.0
Liquid assets as a percentage of
shares and borrowings
18.5 22.5
Liquid assets are principally held in deposits at the Bank
of England, investments in UK government securities
and investments in other securities. The level of liquidity
required is closely monitored and considers forecasted and
stressed outflows on a dynamic basis; this provides us with
protection and flexibility considering the uncertain economic
environment.
2025 vs 2024 liquidity portfolio
37%
2%
3%
8%
10%
30%
10%
26%
2%
6%
29%
16%
13%
8%
20242025
Cash in hand and balances
with the Bank of England
Loans and advances to
credit institutions
UK government securities
Government agency debt
Supranational bonds
Covered bonds
Residential mortgage backed
securities
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At 31 December 2025, liquid assets decreased to £5.5 billion
(2024: £6.5 billion) following our repayment of drawings
from the BoE’s TFSME
5
and sustained mortgage growth.
However, we continue to report a strong liquidity position
and as at 31 December 2025, our Liquidity Coverage Ratio
(LCR) was 196.7% (31 December 2024: 183.0%), which
was significantly above minimum regulatory requirements
(100%). The quality of liquid assets remains very high with
100% of our portfolio rated A or above (2024: 100%).
Derivative financial instruments and fair value
adjustments
We transact derivative financial instruments to mitigate
risks within the balance sheet, primarily interest rate risk
associated with offering fixed rate mortgage and savings
products. In accordance with accounting standards,
derivatives are initially recognised at fair value on the date
that they are transacted and are subsequently remeasured
monthly at their fair value.
We make use of fair value hedge accounting to reduce
volatility in profits by hedging exposures to variability in the
fair value of financial assets and liabilities. Changes in the fair
value of derivatives that are designated in fair value hedges
are recorded in the Income Statement together with any
changes in the fair value of the hedged asset or liability that
are attributable to the hedged risk.
Intangible assets
Intangible assets have increased by £8.8 million (25.1%)
during 2025 reflecting the costs we have capitalised as part
of our technology transformation programme. The new
core banking platform will lead to increased functionality,
security and resilience of our systems, as well as improved
experiences for our members, colleagues and intermediary
partners.
Liabilities
Our total liabilities have increased by £226.2 million in the
year with a 6.3% increase in retail savings balances as we
continue to offer members competitive savings products.
A summary of our liabilities is shown below:
2025
£M
2024
£M
Shares 26,069.9 24,529.8
Wholesale funding 3,376.9 4,535.2
Derivative financial instruments 119.9 98.0
Other liabilities 105.6 387.0
Subordinated liabilities 438.1 334.2
Subscribed capital 8.0 8.0
Total liabilities 30,118.4 29,892.2
Equity attributable to members 1,844.0 1,720.4
Total liabilities and equity 31,962.4 31,612.6
Wholesale funding as proportion
of total borrowing
11.5% 15.6%
Shares (retail savings)
Our savings members play a vital role in allowing us to
achieve our purpose and we remain dedicated to providing
them with a secure place for their money, with compelling
products and competitive interest rates.
The Society continues to be predominantly funded by retail
savings at 86.6% (2024: 82.1%) and during 2025 our net
retail savings inflows were £0.6 billion (2024: £2.8 billion),
taking total retail savings up to £26.1 billion. Throughout
2025, we have consistently maintained high quality savings
products and achieved prominent rankings on best buy and
savings comparison websites.
We consistently pay above average market rates to our
savers, paying an average of 3.92% compared to the rest
of market average of 3.02%
6
. Our competitive savings
propositions are seeing increasing numbers of members
utilise our online channel and our branches remain extremely
popular with savers as demonstrated in our members
satisfaction score remaining consistently high at 94%
7
.
We offer our members a range of savings products, including
easy access and fixed rate bonds and ISAs. The next chart
below shows the mix of savings balances by rate type.
5 Bank of England’s Term Funding Scheme with additional incentives for SMEs
6 CACI’s CSDB, Stock, January 2025 to December 2025, latest data available. CACI is an independent company that provides financial benchmarking data of the retail cash
savings market.
7 Overall customer satisfaction in a survey of 3,409 members from January to December 2025.
Leeds Building Society | Annual Report and Accounts 2025 35
2025 retail savings balances by type
Fixed rate bonds
12%
43%
45%
Variable rate
Fixed rate ISAs
This year our variable rate products have become more
popular with our members, and 42.9% of our retail savings
balances are now variable compared to 37.0% as at 31
December 2024.
Wholesale funding
Total wholesale funding at 31 December 2025 was £3.4 billion
(December 2024: £4.5 billion). The Society successfully
completed three wholesale debt issuances during the
financial year, comprising £300 million of Senior Non-
Preferred (SNP) notes
8
, £350 million of residential mortgage
backed securities (RMBS)
9
and a £500 million covered bond.
The deals were positively received by the market and were
priced competitively relative to comparable offerings.
The net reduction in wholesale funding is related to our full
repayment of TFSME which had an outstanding balance of
£1.1 billion at 31 December 2024.
Our long and short term credit ratings have been stable
over the year, reflecting our strong capital base, sustainable
profitability and robust funding position.
Credit Rating Long term Short term Outlook
Moody’s A3 P-2 Stable
Fitch A- F1 Stable
Regulatory capital
31
December
2025
£M
31
December
2024
£M
Capital resources
Common Equity Tier 1 (CET1) capital 1,720.5 1,584.9
Tier 2 capital 10.5 10.1
Total regulatory capital 1,731.0 1,595.0
Senior non preferred notes 429.0 351.1
Total MREL Eligible Resources 2,160.0 1,946.1
Risk-weighted assets (RWAs) 6,735.3 6,171.0
CRD V capital ratios % %
CET1 ratio 25.5 25.7
Total capital ratio 25.7 25.9
Total MREL ratio 32.1 31.5
UK leverage ratio
10
5.7 5.5
We hold capital to protect members against unexpected
future losses. As we grow our mortgage book, the amount of
capital we need to hold to meet the UK Capital Requirements
Directive V (UK CRD V) increases.
We maintained a strong capital position throughout the
period, with all capital ratios materially more than the
regulatory minima. Our total capital ratio was 25.7% at
31 December 2025 (31 December 2024: 25.9%). We are
supporting homeowners with higher loan to value
mortgages, in adherence with our lending policy, and this has
resulted in a small reduction to our capital ratios due to the
associated uplift in risk. We have used the Internal Ratings
Based (IRB) approach to calculate our capital requirement for
most of our residential mortgage book since 2018.
New and emerging regulation
The Society is well-prepared to meet the requirements of
the Basel 3.1 regulations, which will come into force in
January 2027. As an IRB lender, the predominant impact will
be the new output floor, to be phased in between January
2027 and January 2030.
8 The SNP issuance was recognised in the ‘Subordinated liabilities' line in the Statement of Financial position.
9 Issued via Albion No.7 PLC.
10 The UK leverage ratio is specific to the UK regulatory regime, which excludes deposits with central banks from the leverage exposure measure. The UK regime does not
apply to the Society as the applicable threshold set by the regulator (greater than £50 billion of retail deposits increasing to greater than £75bn from 1 January 2026) is
considerably in excess of the Society’s balance.
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36
Risk Overview
Year ended 31 December 2025
Our purpose of 'putting home ownership within reach of more people – generation after generation' can only be achieved
if risks are identified, understood and managed effectively. By understanding the nature of our risks, we can make informed
decisions to support delivery of our strategic objectives and protect our longer-term viability and members’ interests.
Enterprise Risk Management Framework
To ensure that risks are appropriately managed across the organisation, we operate a Board approved Enterprise
Risk Management Framework (ERMF), which sets out a structured approach to identifying, assessing, controlling and
monitoring risks.
Further information on our ERMF and its key components can be found on page 59 within the Risk Management Report.
Risk profile
The risks that we are exposed to fall into two separate categories:
1. Principal risks
We have identified eight principal risks, which are inherent within our strategy and have the potential to significantly impact
performance or viability. These principal risk categories are outlined below and remain consistent with those disclosed within
the 2024 Annual Report and Accounts.
Principal Risk Risk Description
Credit risk The risk that residential borrowers or wholesale counterparties fail to meet their financial obligations.
Funding and
liquidity risk
The risk of insufficient funds to meet obligations as they fall due or the inability to access funding at a
reasonable cost.
Market risk The risk that movements in interest rates or foreign currency adversely impact our capital and earnings.
Capital risk The risk that the Society has insufficient quality or quantity of capital resources to meet current or future
regulatory and business requirements.
Model risk The risk of adverse consequences from model errors or the inappropriate use of modelled outputs.
Operational risk The risk of financial or reputational loss from inadequate or failed internal processes, people and systems or from
external events. This incorporates resilience risk, which is the inability to maintain important business services in
response to unexpected or adverse events.
Conduct risk The risk that actual or potential customer detriment arises, or may arise, from the way the Society conducts its
business.
Strategic/
business risk
The risk that the Society fails to formulate or execute an appropriate strategy and business model in response to
the external environment, threatening our longer-term viability.
Further information can be found on pages 63-85 of the Risk Management Report.
We do not view climate change as a separate principal risk category, but as a factor that has a bearing across our existing
principal risks. Refer to pages 45 to 50 of the Strategic Report for further information on our assessment of the potential
impacts of climate-related risks.
Leeds Building Society | Annual Report and Accounts 2025 37
2. Emerging risks
Emerging risks are new or evolving risks where the impact is uncertain, but have the potential to materially impact our
performance or strategic objectives.
When assessing emerging risks, we consider the likelihood of the risk materialising and the potential impact on our business
strategy and stakeholders. These risks are considered by the Board and Board Risk Committee (BRC), on an ongoing basis,
as part of our strategic and business planning processes.
The most significant emerging risks are described below, along with a summary of actions we are taking to manage these risks.
Macroeconomic risks:
Overview Mitigating actions
• The UK macroeconomic environment continues to
present a finely balanced picture. Whilst economic
growth picked up in 2025, momentum in the UK
economy is expected to slow in 2026, with a weakening
labour market and ongoing geopolitical tensions set to
constrain consumer spending and growth.
• The Bank of England (BoE) continued to loosen
monetary policy during 2025, with four interest rate
cuts to 3.75%. With inflation easing, unemployment
increasing and weaker growth, further modest interest
rate cuts are likely in 2026.
• Activity within the UK housing market has remained
resilient during 2025, with house prices evolving in
line with expectations. Whilst the central view is for
housing market activity to strengthen in 2026, several
headwinds persist, which may constrain demand.
• Establishment of an appropriate corporate plan with performance closely
monitored by management and the Board against trading ranges, early
warning indicators and triggers.
• Horizon scanning and close monitoring of key economic data and
forecasts to support timely management response.
• Regular assessment of macroeconomic risks, under both central and
stressed conditions, is performed to understand and manage the
impacts e.g. tightening of lending appetite (volume, risk premia and
mix).
• Robust levels of capital and liquidity are maintained to absorb periods of
economic volatility, supported by frequent stress testing and sensitivity
analysis to understand the impacts on our balance sheet.
• Close monitoring of our lending portfolios and regular review of credit
policies, criteria, and affordability assessments to ensure they remain
appropriate for prevailing economic conditions.
• Pre-delinquency strategies are deployed to proactively engage members
who may find themselves in financial difficulty.
Geopolitical risks:
Overview Mitigating actions
• Geopolitical tensions have become a more prominent
and persistent source of uncertainty for UK financial
institutions. Geopolitical fragmentation has
intensified, resulting in the introduction of global
trade tariffs, escalation in wars and conflicts, political
instability, and an increased threat of cyber attacks.
• Geopolitical risks have the potential to impact the
global economic outlook and financial stability,
influencing growth, inflation, financial markets, and
supply chains.
• Horizon scanning and scenario testing is used to understand potential
impacts from both a financial and operational perspective and develop
appropriate response plans.
• All new mortgage lending is restricted to the UK and exposures from our
liquid asset investments are closely monitored for geopolitical risks in line
with our wholesale credit risk policy.
• Due diligence is completed with our key suppliers to understand and
manage third party exposures to geopolitical events.
• Investment in our IT security and operational controls to improve overall
resilience and ability to respond to evolving threats.
Risk Overview continued
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Strategic risks:
Overview Mitigating actions
• In 2025, competition among UK mortgage lenders
increased, led by major high street banks, which
resulted in lower margins for new mortgage lending.
This trend is likely to continue into 2026.
• Increased competition was also experienced within
the UK savings market, resulting in an increased cost
of funds. This trend is expected to continue into
2026, driven by changes in interest rates, repayment
of BoE TFSME funding, ISA reforms and increased
participation of digital banks.
• The combined impact of these competition risks is
expected to place further downward pressure on net
interest margin in 2026.
• As part of supporting the UK’s growth agenda, there
are several recommendations under consideration
by UK regulatory authorities to support growth and
house purchases. Mortgage market reform, such as
proposals under the FCA’s Mortgage Rule Review, could
exacerbate competitive pressures and lead to higher
risk lending practices, potentially impacting credit
quality and financial stability.
• Consolidation within the UK financial services
continued during 2025, which may further increase the
risk of future competitive pressures.
• Customer expectations and increased use of digital
channels are changing the way the Society’s products
and services are designed and distributed. There is a
risk that our propositions do not adapt with the pace of
change or attract new members.
• During 2025, the Society experienced significant
change across its Board and executive team. Whilst
the transition of the leadership team has been given
careful consideration by the Board, reflective of our
strategic priorities, this will take time to embed.
• Competition/market risks are considered as part of our strategic/
business planning activities, which set the future path for strategic
investment and development to ensure that we can adapt accordingly.
• Changes to lending policy and criteria are carefully considered by the
Credit Committee/BRC in the context of our Board approved risk
appetite.
• The competitive/market landscape is regularly reviewed to understand
emerging trends, to ensure we can continue to meet customer needs.
• Further investment is being made in our core banking systems, services
and digital capabilities to support our product offerings, customer
journeys and future scalability and flexibility.
• Regular horizon scanning and assessment of regulatory change are
performed to ensure updates and new requirements are factored into our
future plans and change portfolio.
• Succession planning assessments for all Senior Leadership roles are
conducted quarterly, with regular updates to Nominations Committee/
Board to ensure there is a strong pipeline to provide leadership continuity,
maintaining stability for the long term success of the Society.
Operational resilience risks:
Overview Mitigating actions
• Operational resilience remains a key emerging risk for
the Society, reflecting the increasing complexity and
interdependence of modern business environments.
• A significant operational risk event could result in
disruption to important business services, leading to
customer harm, financial or regulatory impacts, or
reputational damage. Such events could include the
threat of cyber attacks, third party failure, loss of data
or service outages.
• Recent external high profile incidents have highlighted
the disruptive potential of cyber attacks and third
party failures.
• Resilience to such threats and an ability to respond
effectively remain essential to maintain service
delivery and the trust of our members and the
confidence of regulators.
• Resilience risks are monitored and managed through our Operational
Resilience Framework, which includes regular scenario testing for
potential resilience events.
• Operational resilience and crisis management processes are in place
to ensure that our important business services can recover in a timely
manner in the event of disruption.
• We continue to invest in our IT security and operational controls to
improve overall resilience and our ability to respond to these evolving
threats. The controls already in place to mitigate against cyber attacks
are regularly validated through testing by external security specialists to
ensure that they remain appropriate.
• We frequently assess the risks posed by third parties, as well as the
effectiveness of the services provided, to mitigate the potential for
operational disruption.
Leeds Building Society | Annual Report and Accounts 2025 39
Change risk:
Overview Mitigating actions
• Our change portfolio includes the delivery of a multi-
year technology programme, other strategic initiatives
and new regulatory requirements.
• The volume of change activity could lead to increased
execution, operational and people risks.
• Failure to appropriately prioritise and deliver change
on time and within agreed budgets may also inhibit our
ability to achieve our purpose or strategic objectives.
• We continue to prioritise, manage and implement change in line with our
strategic plans while assessing execution risks and taking appropriate
mitigating action.
• In addition, we continue to invest in our change management processes,
leadership and colleague capabilities, change capacity, and governance to
better control the execution risks associated with large scale change.
• Major change projects are subject to close monitoring and governance
through our Executive Transformation Committee, with regular assurance
provided to the Board. The Board has an independent adviser, supporting
oversight of the core transformation project.
Technology risk:
Overview Mitigating actions
• Innovation in relation to artificial intelligence (AI)
and associated technologies are creating new risks,
as usage becomes more prevalent within financial
services.
• Key risks include model risk (e.g. bias and
discrimination or models not operating as intended),
data privacy and security (improper handling of data
through AI processes), cyber security (exploitation
of AI systems by malicious parties) and accuracy/
transparency risk (AI systems trained on inaccurate
data sources).
• Given the pace of AI development externally, there is a
risk that the Society may fall behind others/not benefit
from efficiencies that AI can deliver.
• The Society has developed a new overarching AI policy, which establishes
minimum standards for the safe adoption of AI tools across the business.
• We have continued to invest to ensure we have the appropriate internal
skills and capabilities to deploy required AI solutions.
• We will continue to monitor the development of these new AI
technologies, including the speed of competitor uptake, and assess how
they could be incorporated into our operations on a test and learn basis.
Alongside this we will look to further develop internal risk and control
frameworks to manage the associated risks as adoption of AI solutions
evolves.
Climate change risk:
Overview Mitigating actions
• Climate risk continues to be classified as an emerging
risk due to uncertainty surrounding the exact
nature and timing of the impact on our strategy and
operations. Both transitional and physical risks could
materially affect the Society’s eight principal risks,
with impacts dependent on the future path of climate
change and timescales of government intervention
and actions.
• Stakeholder expectations continue to rise with regards
to our management and response to climate risk,
which could present heightened reputational risks.
• During 2025, the PRA published SS5/25, setting out
revised regulatory expectations in relation to the
identification and management of climate related risks
for financial institutions.
• We have developed a Climate Strategy centered upon supporting the
orderly transition to a greener, net zero economy by 2050 or sooner.
• As part of this strategy, near-term science-based emission reduction
targets have been set for our full value chain.
• A Climate Risk Management Framework (CRMF) has been implemented
across the organisation, including use of climate risk factors and data in
our mortgage lending policy and credit decisioning processes.
• We have reviewed our CRMF against revised regulatory expectations and
have developed an implementation plan for 2026.
• Refer to pages 45 to 50 of the Strategic Report for further information on
how the Society manages the risks from climate change.
Risk Overview continued
Strategic Report
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40
Viability Statement
Year ended 31 December 2025
In accordance with provision 31 of the UK Corporate
Governance Code, the Board is required to explain how it
has assessed the longer-term prospects and viability of the
Society. This assessment considers our ability to continue in
operation and meet our liabilities as they fall due, taking into
account our current financial position and the principal and
emerging risks set out on pages 37 to 40.
Assessment of longer-term prospects
Our business model, purpose statement and strategic
drivers are set out on page 9. The Board receives strategic
updates throughout the year, which assess the business
model across multiple dimensions. These include
consideration of threats from principal and emerging risks,
additional scenarios that may occur and stress testing. The
directors have also reviewed our strategy in respect of the
environment, considering the opportunities and risks to
the Society’s business from climate change. This includes
physical risks to the Society’s mortgage stock and own
properties, and transitional risks as the UK migrates to a net
zero economy. Further details are provided on pages 37 to 40
of the Strategic Report.
The strengths of our business model and the Society’s
financial position, capital strength and levels of profitability
over the next five years and beyond are included in the
Board’s consideration.
These reviews concluded that the Society remains in a
strong and resilient financial position, which will enable us
to support members, colleagues and communities through
the current period of economic uncertainty. Our purpose
statement and strategic drivers reflect the environment in
which we now operate and aim to maintain the relevance
of our business model, including managing and mitigating
potential threats.
Financial and operational stress testing
The Society utilises a stress testing programme which
includes regular operational planning exercises and
more formal risk assessments. The elements of this
programme are discussed in detail on pages 61 and 62 of
the Risk Management Report.
The Society’s process for forecasting financial performance
takes into account our strategic objectives, the risk
involved in meeting those objectives and our strategic risk
appetite. The corporate planning and alternative scenario
modelling processes assess these forecasts under a range
of macroeconomic scenarios which reflect the current
uncertainty in the macroeconomic environment, as well as
the behaviours and needs of current and potential future
members.
The Board assesses the Society’s capital and liquidity viability
through the ICAAP and ILAAP. These consider our ability
to withstand severe capital and liquidity stresses set out by
regulators. The processes incorporate new and emerging
regulation, where sufficient information is available.
Mitigating management actions and the ability of those
actions to minimise the impacts of the applied stresses are
also evaluated.
The ICAAP concluded that the Society has headroom over
regulatory requirements and would have sufficient capital
resources to withstand both the central and stressed
scenarios under current and confirmed future requirements.
The ILAAP also concluded that the Society is able to meet
both internal and external liquidity risk capacity requirements
and regulatory requirements under modelled stress
scenarios.
Further stress testing, including recovery plan testing,
is carried out on each of the principal risks outlined on
pages 63 to 85. This is performed to understand our
ability to withstand extreme stress scenarios, including
adverse economic scenarios that go above and beyond
those experienced at any point previously, major volatility
in financial markets, significant liquidity outflows and
operational risk events. This testing demonstrates that there
are appropriate resources, measures and controls in place to
withstand these extreme events.
Reverse stress testing considers a range of specific scenarios
which would cause the Society to fail and has concluded that,
since such scenarios are unlikely to occur, they do not pose a
risk to the viability of the business.
Leeds Building Society | Annual Report and Accounts 2025 41
Stress testing of operational resilience is undertaken to
verify that the Society has appropriate measures in place
for the delivery of key customer-facing services during a
stress event. This is performed using a number of severe
but plausible scenarios, including third party failure, cyber
attack, IT and system failures and loss of key premises.
The testing demonstrated that resilience is broadly in line
with expectations and supports the ongoing viability of the
business.
The Society assesses its resilience to people risks and
capabilities by regularly conducting talent and succession
planning reviews for key roles, up to and including the Board.
We also identify and monitor key person risks for roles with
strategic importance and mitigate these where appropriate
to maintain operational resilience and to safeguard continuity
of service.
The risk management process, detailed on pages 58 to
85, includes ongoing monitoring and reporting of new
and emerging risks. This allows us to make additional
enhancements to the control environment, to adapt to and
respond quickly to these risks.
Assessment period used for reviewing viability
The Board considers the viability of the Society over a three
year period to 31 December 2028. A three year period for
viability is determined to be appropriate for the following
reasons:
• Uncertainty is inherent in the predictions of economic,
competitive and regulatory environments, particularly in
the current climate. Going beyond the three year period
increases this uncertainty and reduces the reliability of
the assessment of viability.
• It is within the period covered by our projections of cash
flows, capital and profitability. However, there is nothing
in our planning beyond the three years that would cause a
change in the Board’s consideration of viability.
Assessment of viability
The Board has assessed the financial impact of the modelled
stress scenarios and the outcomes from operational
resilience testing described previously. Based on these
assessments the Board believes that:
• Our business model remains appropriate and will continue
to be relevant as the operating environment evolves.
• We have and will continue to maintain an appropriate
level of liquidity, which meets the expected demands of
the business and the requirements that arise in modelled
stressed scenarios.
• We hold sufficient capital resources, including an excess
above the regulatory minimum and have plans in place
to ensure we meet future known requirements. We have
sufficient resources under both central and modelled
stressed scenarios.
• There are suitable operational capacities in place to
manage the impacts of risk events to a reasonable extent,
though it is impossible to eliminate all risk. This has been
evidenced as we operated effectively under the economic
uncertainty and disruption observed in recent years.
The Board has a reasonable expectation that the Society
will be able to continue in operation and meet our liabilities
as they fall due, over the three year period to 31 December
2028.
Viability Statement continued
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42
Climate-Related Financial Disclosures
Year ended 31 December 2025
Section 1- Climate-related financial disclosures overview
Climate risks, both physical and transitional, have continued to intensify during 2025. The trajectory remains uncertain
amid geopolitical tensions and growing polarisation around net zero. Global temperature increases reached 1.5°C for the
first time in 2024, with long-run averages expected to reach this level by 2028-30, escalating the risk of increased and
irreversible impacts.
At Leeds Building Society, supporting the orderly transition to net zero is an important part of our purpose. We take a careful,
long term approach that balances environmental responsibility with affordability, financial resilience, and the best interests of
both current and future members and the wider communities we serve.
Our climate disclosures are based on recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)
and requirements of the Companies Act 2006 414CA and 414CB, which are structured around four pillars to provide
consistent information on the Society’s exposure to, and management of, climate risks.
1. Strategy 2. Governance 3. Risk management 4. Metrics and targets
Actual and potential
impacts of climate
change on the
Society’s business,
strategy and financial
planning.
The Society’s
governance
arrangements around
climate-related risks
and opportunities.
The processes used by
the Society to identify,
assess, and manage
climate-related risks.
The metrics and
targets used by the
Society to assess
and manage relevant
climate-related risks
and opportunities.
In line with the UK government’s target to reduce greenhouse gas emissions
100% compared to 1990’s levels by 2050, we remain committed to
supporting the orderly transition to net zero.
During 2025, we have further developed our climate strategy and approach
to risk management in line with emerging standards and good practice. The
Society’s separate climate-related disclosures and transition plan sets out
our climate ambitions, actions and accountabilities in more detail. References
to these disclosures have been included on the following pages to signpost
where further information can be found.
Our full climate-related
disclosures and transition plan
are available on our website:
leedsbuildingsociety.co.uk/press/
financial-results
Leeds Building Society | Annual Report and Accounts 2025 43
Summary of our climate ambitions and targets
Overall strategic aim
Support the orderly transition to a greener, net zero economy by 2050 or sooner
90%
Targeted reduction in our absolute Scope 1 and 2
market-based emissions of 90% by 2034, from a
2024 base year.
2025 status: Ahead
Long term outlook: On track
60%
(1)
Targeted reduction in our absolute Scope 1 and 2
location-based emissions of 60% by 2034, from a
2024 base year.
2025 status: Ahead
Long term outlook: Uncertain (2)
35%
Targeted reduction in our absolute indirect
operational Scope 3 emissions (categories 1-14)
of 35% by 2034, from a 2024 base year.
2025 status: Ahead
Long term outlook: Uncertain (2)
70%
Ambition to reduce the intensity of our Scope 3
financed emissions (category 15) from our
residential mortgage book 70% by 2034, from a
2024 base year.
2025 status: Ahead
Long term outlook: Uncertain (2)
Notes
(1) During 2025 we increased our Scope 1 and 2 location-based target from 42% to 60% to align with minimum
requirements of the Science-Based Targets initiative (SBTi).
(2) Long term outlook reflects our view of the likelihood of achieving net zero based on current external dependencies/
challenges and progress.
Climate-Related Financial Disclosures continued
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Section 2- Summary of TCFD and Companies Act requirements
The table below summarises our response to the 11 TCFD recommendations, as well as areas of planned future
development to further enhance our approach. Page references indicate where further detail can be found in our
full climate-related disclosures and transition plan, available on our website:
Climate Strategy
1. Describe the climate-related risks and opportunities the organisation has identified over the short, medium,
and long term.
Approach and
assessment
• We assess climate change impacts (physical and transition risk factors) across each of our eight
principal risk categories over the short term (zero to three years), medium-term (three to five
years) and long term (five years+) using a range of different future scenarios based on different
climate pathways.
• Key risks that we have identified include:
− Strategic (physical and transition risk – short/medium-term): impacts to the delivery of
our strategic priorities, corporate plan and purpose (reputational damage from inappropriate
targets, disclosures and progress against our ambitions, and economic shocks from climate
change and the transition to net zero).
− Credit and capital (physical and transition risk – medium/long term): losses from our
mortgage or treasury assets due to increases in Probability of Default (PD) and Loss Given
Default (LGD) from the impacts of climate change on property valuations and obligor
creditworthiness.
− Operational (physical risk – long term): climate factors, such as flooding, inhibit delivery of
our important business services (Society and third party services).
− Conduct (transition risk – short/medium-term): potential customer detriment due to the
design and sale of green finance products and services.
− Model (physical risk – short term): incorrect decision-making due to gaps in climate data or
errors in climate models used to assess and manage the risks.
− Market (transition risk – medium/long term): impacts to profitability due to increases in
carbon prices or the repricing of asset values to reflect climate risks.
− Funding and Liquidity (transition risk – medium/long term): impacts to profitability due to
increases in retail/wholesale funding prices or reductions in available collateral to support
central bank or wholesale funding programmes.
• Key opportunities that we have identified include:
− Transition finance: development of innovative financial products to help members reduce
their carbon footprint or adapt to climate changes.
− Communication: engagement with colleagues, members, suppliers and government to
increase understanding of climate change and lead the way towards an orderly and fair
transition to net zero.
− Partnerships: collaboration with key organisations to innovate, share knowledge, good
practice and collectively solve climate challenges.
− Resilience: increased operational and financial resilience through mitigation of physical and
transitional risks and reduced cost of energy use.
− Strategy: supporting delivery of our purpose to help more people own their own home –
generation after generation.
Key mitigants • Integration of climate change into our strategy and corporate planning process.
• Regular identification, monitoring and management of climate risks and opportunities in
accordance with our Climate Risk Management Framework (CRMF).
• Automated flood and ground risk, and energy efficiency assessments as part of our credit
origination processes.
• Credit and treasury policy controls and concentration limits.
• Regular stress testing of our strategy and balance sheet using multiple climate pathways.
• Alignment of our climate disclosures with good practice and regulatory requirements.
• Product Governance Framework and colleague training.
• Model Risk Management Framework and monitoring.
Leeds Building Society | Annual Report and Accounts 2025 45
Climate Strategy
Future priorities and
dependencies
• Refinement and delivery of our climate transition plan.
• Stakeholder engagement across our value chain (members, government and suppliers)
to influence actions in support of our ambitions.
• Development and roll out of our green finance proposition.
• Refinement and development of our climate scenario analysis and closure of data gaps.
• Consideration of the impacts of nature and biodiversity risk in conjunction with climate change.
Further details Climate-related Disclosures and Transition plan – Sections 1.2 and 3.2
2. Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy,
and financial planning.
Approach and
assessment
• Strategic and financial impacts from climate change are regularly reviewed and monitored
through risk assessments and key risk indicators (KRI) reported to our Board Risk Committee
(BRC) and scenario analysis as part of our ICAAP.
• The Society operates a relatively simple business model, providing residential mortgages in the
UK, funded through members’ savings and wholesale markets. We do not directly finance any
fossil fuel activity or carbon-intensive industries, and our liquidity portfolio is primarily invested
in high quality UK government assets for regulatory purposes.
• Based on our current business model and climate exposures, the overall immediate impact
to our strategy and financial performance is not considered material, but we will continue to
monitor this as the risks evolve.
• The Society continues to have limited exposure to physical risk (flooding and ground risks),
both currently and under a range of future climate pathways modelled over the next 30 years,
due to the geographically diversified profile of our UK-focused mortgage portfolio and
operational resilience arrangements.
• While more material medium to longer-term impacts are posed by transition risks under a late
transition scenario, where actions to achieve net zero are disorderly and concentrated in a
short period during the 2030s, transition pathways remain highly uncertain. Our strong capital
position and lending controls means our business model remains resilient to the most extreme
transitional stress scenarios modelled.
Key mitigants • Regular stress testing of the mortgage portfolio is performed using multiple physical and
transition risk pathways over the next 30 years.
• Climate risks are reflected in our approach for expected credit loss (ECL) modelling under IFRS 9
Financial Instruments (refer to page 172 for further details) to ensure potential future losses from
climate change are appropriately reflected in our financial results.
• Our climate transition plan ensures we have clear actions to minimise the future impacts of
climate risks and adapt our business model for any opportunities over the medium to longer term.
Future priorities and
dependencies
• Consideration of new regulatory requirements for the management of climate risk
(PRA SS5/25).
• Development of our climate scenario testing and IFRS 9 modelling capabilities.
• Consideration of emerging climate risks for the UK, including heat stress and storm damage.
• Further integration of climate risks and opportunities into our financial and strategic planning
and risk management processes.
Further details Climate-related Disclosures and Transition plan – Sections 3.2 and 3.3
Climate-Related Financial Disclosures continued
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Climate Strategy
3. Describe the resilience of the organisation’s strategy, taking into consideration different climate-related
scenarios, including a 2°C or lower scenario.
Approach and
assessment
• Our ICAAP considers the impacts of three different scenarios and pathways over the next 30
years with different degrees of physical, transitional and economic risks linked to climate change:
− Early policy action scenario (EPA): assumes there is an orderly transition to net zero by 2050,
keeping future temperature increases to 1.8°C above pre-industrial times (medium transition
risk and limited physical and economic risk).
− Late policy action scenario (LPA): assumes a disorderly transition to net zero by 2050,
resulting in high transition risk and limited physical risk, keeping temperature increases to
1.8°C (high transition risk, medium economic risk and limited physical risk).
− No policy action scenario (NPA): assumes there are no further policies to limit global
warming resulting in high physical and economic risks and limited transition risks, leading
to temperatures rising 3.3°C.
• Results of our scenario testing indicate that ECL would increase versus the counterfactual
under all three of the scenarios. The biggest impact was observed under the NPA scenario,
largely due to the economic impacts of the scenario and amplified physical risk losses. Despite
this, the Society’s capital position and strategy continued to be resilient to the risks modelled.
• Our climate emissions targets and ambitions are also aligned with minimum science-based
absolute and sectoral requirements for financial institutions, to ensure our strategy aligns with
the goal of limiting future temperature increases to well below 2°C.
Key mitigants • Regular stress testing of the mortgage portfolio is performed using multiple physical and
transition risk pathways.
• Our CRMF and transition plan ensure we are appropriately assessing and responding to the risks.
Future priorities and
dependencies
• Refinement and delivery of our climate transition plan and scenario analysis, including
consideration of shorter-term scenarios, reverse stress tests/sensitivities and dynamic balance
sheet assumptions.
• Progressing actions to deliver against our climate emissions reduction targets. Achieving
our ambitions (in particular Scope 3 emissions) continues to be heavily reliant on further
government, societal and corporate change to implement the necessary actions required to
collectively deliver net zero.
Further details Climate-related Disclosures and Transition plan – Sections 1.2 and 3.2
Climate Governance
4. Describe the Board’s oversight of climate-related risks and opportunities.
Approach and
assessment
• The Board has ultimate accountability for the management of climate risk, including approval of
our climate strategy, risk appetite and targets, and overseeing delivery of our transition plan.
• Senior management accountability for the management of climate risk is assigned to the
Deputy Chief Executive Officer.
• BRC oversees the identification and management of climate risks across all of our principal
risks, in line with the Board’s stated appetite.
• The Audit Committee oversees internal systems of control and external disclosures for climate
risk, including approval of our transition plan on an annual basis on behalf of the Board.
• The Remuneration Committee oversees the design and implementation of reward structures
to ensure they appropriately motivate colleagues to achieve our climate ambitions. Climate
actions are reflected in the Society’s remuneration scheme with relevant members of the
senior leadership team required to have a personal objective linked to climate priorities.
• These committees receive periodic management information (MI) to track performance against
targets and key risk indicators (KRIs) and are provided with training on key strategic climate
related topics periodically.
Future priorities and
dependencies
• Track progress against our transition plan and the management of climate risks.
• Oversee agreement and implementation of plans to address any gaps against PRA SS5/25.
• Continue to develop Board understanding of climate related risks and mitigants, including
regulatory and external changes and emerging risks such as nature and biodiversity.
Further details Climate-related Disclosures and Transition plan – Sections 1.2 and 3.2
Leeds Building Society | Annual Report and Accounts 2025 47
Climate-Related Financial Disclosures continued
Climate Governance
5. Describe management’s role in assessing and managing climate-related risks and opportunities.
Approach and
assessment
• The BRC is supported by five Executive Risk committees, each of which focus on discipline(s) of
the risk universe influenced by climate change factors.
• The ESG and Climate forums support development of the Society’s Climate strategy and
targets and monitor progress under the oversight of the Executive Committee.
• Responsibility for managing climate-related risk has been assigned to the Deputy CEO, as the
appropriate Senior Management Function under the PRA’s Senior Managers Regime.
• Mandatory climate risk training has also been introduced for all colleagues, and colleague
engagement has been facilitated through a dedicated Green Champions network of colleagues.
Future priorities and
dependencies
• Further embed climate risk into management risk committee oversight and accountabilities.
• Review our climate governance arrangements in line with SS5/25.
• Implement required actions under our transition plan.
• Refine our climate strategy in response to changes in the external environment, as part of our
wider ESG strategy.
Further details Climate-related Disclosures and Transition plan – Section 3.1
Climate Risk Management
6. Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the
organisation’s overall risk management.
Approach and
assessment
• The CRMF is integrated into our ERMF to ensure that climate risks and opportunities are
appropriately identified, measured, managed, monitored, and reported. Refer to the Risk
Management Report for further details about our ERMF.
• We do not view climate risk as a separate principal risk category, but as a factor that has a
bearing across our other principal risks.
• Under our CRMF and ESG policy, our climate risk appetite has been defined in line with current
good practice guidance, combining a qualitative statement with measures, which the Society
uses to assess adherence to appetite over the short, medium and long term.
• Control of climate-related risks is codified through our ESG policy, which is approved by BRC.
Future priorities and
dependencies
• Enhance approach for the identification and quantification of climate risks, in line with new
regulatory expectations under PRA SS5/25.
• Refinement of our climate risk appetite in line with SS5/25.
• Development of our climate related disclosures in line with emerging regulations.
Further details Climate-related Disclosures and Transition plan – Section 3.1
7. Describe the organisation’s processes for identifying and assessing climate related risks.
Approach and
assessment
• We use our CRMF and ERMF to assess how climate change risks could impact each of our eight
principal risks over the short, medium and long term.
• Risks and mitigating controls are recorded in business unit risk registers to enable effective
monitoring and reporting on an enterprise-wide basis and are reassessed at least twice yearly
as part of our established Risk and Control Self Assessment (RCSA) process.
• Risk assessments are based on several factors such as external horizon scanning (including
the impacts of changing regulation and government policy), scenario testing, insights from
property-level climate data, external benchmarking and supplier due diligence.
• The outputs from risk assessments are reported through our established governance
arrangements, including BRC and the Climate Forum.
Future priorities and
dependencies
• Enhance the approach for the identification and quantification of climate risks, in line with new
regulatory expectations under PS25/25.
• Further analysis of climate transition risks, following changes in government net zero policies.
• Enhance scenario analysis processes to support climate risk identification.
Further details Climate-related Disclosures and Transition plan – Sections 3.1 and 3.2
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Climate Risk Management
8. Describe the organisation’s processes for managing climate-related risks.
Approach and
assessment
• Where appropriate, the management of climate-related risks and opportunities have been
incorporated into existing governance and risk management processes, to ensure that they are
being monitored and managed in line with Board approved appetite.
• We define roles and responsibilities in relation to climate risk under a three lines of defence
approach, reflective of our size and complexity. Business units (first line of defence) are
responsible for the identification, assessment, and management of climate change risks
across the Society. The Risk Division (second line of defence) maintains the CRMF, monitors
and reports on the management of climate risks and develops our climate scenario analysis,
stress testing and disclosures. Internal Audit (third line of defence) provides independent
assurance to the Board on the adequacy and effectiveness of first- and second-line climate risk
management.
• A climate change operating model has been established to assist the Board and Deputy CEO
in the effective identification and management of climate risks. A central strategy and risk
management hub ensures there is close alignment between our purpose and climate risk
appetite.
• Updates on the management of climate-related risks are regularly reported through our
established governance arrangements, including the current position against KRIs and other MI
e.g. results of scenario analysis and risk assessments.
Future priorities and
dependencies
• Review and refinement of our strategic posture, climate risk appetite and KRIs.
• Review our operating model, roles and responsibilities, and capabilities.
Further details Climate-related Disclosures and Transition plan – Section 3.2
Climate metrics and targets
9. Describe the targets used by the organisation to manage climate-related risks and opportunities and performance
against targets.
Approach and
assessment
• The Society has set near-term science-based emissions targets and ambitions covering our full
value chain to support our transition to net zero:
− Reduce absolute Scope 1 and 2 market-based emissions 90% by 2034.
− Reduce absolute Scope 1 and 2 location-based emissions 60% by 2034.
− Reduce absolute Scope 3 (categories 1-14) emissions 35% by 2034.
− Reduce the intensity of Scope 3 (category 15) emissions from our residential mortgage
portfolio 70% by 2034.
• Our targets are set in line with the requirements of the Science-based Targets institute (SBTi)
and are aligned with a well below 2°C emissions pathway.
• During 2025, we obtained external assurance from a third party specialist regarding our climate
targets and emissions reporting. Ahead of this process we revised our Scope 1 and 2 location-
based emission target to a 60% reduction by 2034, from a 2024 base year (previously 42%).
Refer to section 3 for further details.
Future priorities and
dependencies
• Development of our climate data architecture and reporting capabilities.
• Consideration of additional targets to support the net zero transition.
Further details Climate-related Disclosures and Transition plan – Section 3.4
Leeds Building Society | Annual Report and Accounts 2025 49
Climate-Related Financial Disclosures continued
Climate metrics and targets
10. Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its
strategy and risk management process.
Approach and
assessment
• We also monitor several internal climate KRIs for climate-related risks.
• Physical risk KRIs:
− Percentage of mortgage balances with high or very high physical risk (flooding and ground
risk) under a range of future climate scenarios.
− Stressed credit losses from physical and transition risks modelled under our ICAAP.
− Number of Society properties with high or very high physical risk.
− Percentage of colleagues located in high physical risk areas.
• Transition risk KRIs:
− Percentage of mortgage balances with current and potential EPC ratings of C or below.
− Stressed transitional credit losses under our ICAAP.
− External ESG ratings.
− Carbon prices.
− Supplier due diligence risk scores.
− Government policy implementation and progress towards UK targets.
− Liquidity investments with high climate risk.
− Complaints and adverse publicity related to climate change.
Future priorities and
dependencies
• Refine our KRIs in line with emerging climate risks and regulations and embed them into
governance reporting.
Further details Climate-related Disclosures and Transition plan - Section 3.4
11. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.
Approach and
assessment
• We measure our Scope 1, 2 and 3 emissions using the World Resources Institute and the World
Business Council for Sustainable Development GHG Protocol, which is the internationally
recognised standard for the measurement, management, and reporting of GHG emissions.
• We measure and disclose CO2 equivalent emissions annually across our full value chain,
including all relevant Scope 3 categories, in line with agreed methodologies published by the
Partnership for Carbon Accounting Financials (PCAF).
• During 2025, we have expanded our reporting to include financed emissions associated with
our investments in sovereign debt as part of our liquidity portfolio.
• Data quality and availability are the key risks to the accuracy of our emissions reporting. We
use actual consumption data and emission factors where available. Where data is not available,
we use a range of proxies to estimate emissions. We report data quality scores for each of our
emissions categories to enhance the transparency of our disclosures and track progress. See
section 3 for further details.
• Where there are material changes in our emissions calculation methodologies or data that
result in a >5% difference in emissions, we disclose the change and re-baseline our associated
targets in line with SBTi requirements.
• Our emissions disclosures are subject to external verification by an independent third party.
Future priorities and
dependencies
• Implement actions under our transition plan to influence reductions in our emissions.
• Consideration of new regulatory requirements and standards for emission reporting, including
the UK’s adoption of International Sustainability Standards Board (ISSB) reporting, revised
PCAF methodologies for financed emissions and proposed amendments to the GHG Protocol.
Further details Section 3 of this report
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Section 3 – Our greenhouse gas (GHG) emissions
Our GHG reporting has been completed in accordance with requirements of The Companies Act 2006 (Strategic Report and
Directors’ Report) Regulations 2013 and the UK’s Streamlined Energy and Carbon Reporting (SECR) regulations. We have set
our organisational GHG emissions boundary using the operational control approach, which captures GHG emissions linked to
entities under our control. Reported emissions encompass the seven GHGs defined under the Kyoto Protocol and are broken
down into three main categories:
Category Control Source Disclosure Description
Operational emissions
Scope 1 Direct Our buildings Mandatory
Direct GHG emissions that originate from assets that we
own or control e.g. emissions from the combustion of gas
to heat our buildings or fugitive emissions from ventilation
systems.
Scope 2 Indirect
Purchased
electricity
Mandatory
Emissions from the generation of purchased electricity.
Under the GHG Protocol, we are required to report Scope
2 emissions under both market and location-based
approaches.
The market-based approach reflects emissions from
energy that we have purposefully chosen e.g. renewable
electricity.
The location-based approach reflects emissions from
purchased energy based on the average emissions intensity
on the grids upon which consumption occurs.
Value chain emissions
Scope 3
(Category 1
– 14)
Indirect
Upstream
and
downstream
activities
Voluntary
Indirect emissions that occur in our upstream and
downstream operational activities i.e. emissions from
activities linked to the provision of our products and services
(predominantly from the third party goods and services that
we purchase).
Scope 3
(Category 15)
Indirect
Downstream
activities
Voluntary
Indirect emissions that occur downstream in our value chain
i.e. emissions from our investments (predominantly from use
of the mortgaged properties that we finance).
Leeds Building Society | Annual Report and Accounts 2025 51
Climate-Related Financial Disclosures continued
2025 GHG emissions reporting
The Society’s GHG emissions for 2025 are summarised below, with comparison to the prior year. During 2025, we have made
several changes to our emissions calculation methodologies in line with evolving industry standards and good practice.
Restatements are highlighted in the footnotes to the table below with further explanation provided in the subsequent
sections.
Emissions Category (1) 2025 (tCO
2
e) 2024 (tCO
2
e) Change Data score
Scope 1
Diesel 0 2 -85% 3.0
Gas 16 29 -43% 2.0
Fugitive 58 235 -75% 2.0
Scope 2
Electricity – market based 4 9 -57% 3.0
Electricity - location based 407 471 -14% 2.0
Total Scope 1 and 2 – Market Based 79 275
†
-71% 2.1
Total Scope 1 and 2 – Location Based 481 737
†
-35% 2.0
Scope 3
Purchased goods and services (2) 5,862 8,018 (3) -27% 3.6
Capital goods 673 731 (3) -8% 4.1
Fuel and Energy Related Activities (FERA) 160 160 0% 2.0
Upstream transportation 802 459 (3) 75% 2.1
Waste from operations 4 9 -55% 3.6
Business travel 175 176 -1% 2.0
Employee commuting and home working 1,457 1,552 (3) -6% 5.0
Downstream leased assets 18 25 -29% 4.0
Total Scope 3 emissions (categories 1-14) 9,151 11,131 -18% 3.7
Scope 3 Residential mortgages 203,602 212,835 -4% 2.6
Total Scope 3 emissions (categories 1-15) 212,753 223,966
†
-5% –
Total emissions – market based 212,831 224,241
†
-5% –
Total emissions – location based 213,234 224,703
†
-5% –
Energy consumption (Mwh) 2,386 2,431 -2% –
Scope 1 and 2 emissions intensity (per FTE) 0.1 0.2 -72% –
Scope 1 and 2 emissions intensity (per £ revenue) 11.4 12.4 -8% –
Notes
† = Calculations that have been validated by an independent third party. Equivalents for 2025 will be subject to validation
during 2026.
(1) tCO
2
e stands for tonnes of carbon dioxide equivalent (the recognised measure for GHG emissions).
(2) Excludes emissions associated withmortgage brokersthat introduce customers on our behalf, on the basis thatthis
activityrepresentsindependent intermediated financial activities rather than purchased goods and services.We
estimate thattheseemissionsequated toan additional5,511and6,033tCO
2
e in 2025 and 2024 respectively, based ona
spend-basedmethodologyand CEDA emission factors.
(3) 2024emissionshave been restatedforpurchased goods and services(22,802tCO
2
e), capital goods
(863tCO
2
e),upstreamtransportation (470tCO
2
e), business travel (165tCO
2
e) and employee commutingand home
working (1,526tCO
2
e)following changesinthe calculationmethodology.
Scope 1 and 2 emission targets and performance
Our Scope 1 and 2 targets continue to be guided by the principles of an absolute contraction science-based net zero pathway
and will align our Scope 1 and 2 emissions with the Paris Agreement goal to limit future temperature increases to 1.5°C.
That means we plan to reach net zero for our Scope 1 and 2 emissions by 2034 on a market-based approach (a reduction of
90% from our 2024 base year) and reduce our Scope 1 and 2 emissions by 60%
6
over the same period on a location-based
approach.
6 Our Scope 2 location-based target was revised to 60% in 2025 (previously 42%) to align with SBTi requirements.
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Scope 1 and 2 market-based 90% reduction target
0
50
100
150
200
250
300
350
400
20342033203220312030202920282027202620252024
2025
79 tCO
2
e
2034
(target year)
28 tCO
2
e
2024
(base year)
275 tCO
2
e
90% reduction target
Actual emissions
Absolute Emissions (tCO
2
e)
The chart above shows our Scope 1 and 2 market-based emissions between 2024 and 2025 together with our 2034 target. Key actions
to reduce these emissions will include removal of gas from our remaining buildings, managing fugitive emissions, and maintaining our use
of renewable electricity.
Scope 1 and 2 location-based 60% reduction target
0
200
400
600
800
1000
1200
20342033203220312030202920282027202620252024
2034
(revised target)
295 tCO
2
e
2024
(base year)
737 tCO
2
e
2025
481 tCO
2
e
Absolute Emissions (tCO
2
e)
60% reduction target
Actual emissions
The chart above shows our Scope 1 and 2 location-based emissions between 2024 and 2025, together with our 2034 target. Key actions
to reduce these emissions will include retrofitting our branch estate to improve energy efficiency and the government's decarbonisation
of the UK electricity grid.
Our Scope 1 and 2 market-based emissions reduced 71% in 2025 vs. 2024. This reduction was driven by a lower level of
fugitive emission leaks at one of our sites and lower gas consumption, following removal of gas at several branches during
the year.
A similar trend was also observed for our Scope 1 and 2 location-based emissions, which reduced by 35% year on year.
In addition to the benefits gained under a market-based approach, location-based emissions have benefitted from
decarbonisation of the UK electricity grid and installation of solar power at one of our branches.
In line with actions defined under our transition plan, we expect our future Scope 1 and 2 emissions to trend down in line with
our targets towards 2034. Key risks to meeting our targets remain the reliance on decarbonisation of the UK electricity grid,
availability of renewable energy sources, and decarbonisation of the heating and cooling systems used in our buildings.
We have calculated a data score of 2.1 for our Scope 1 and 2 market-based emissions and 2.0 for our Scope 1 and 2 location-
based emissions using the PCAF methodology (with 1 being the highest data quality and 5 the lowest quality).
The data scores reflect the high proportion of actual versus estimated consumption data and the use of average emissions
factors provided by the Department for Energy Security and Net Zero (DESNEZ) in line with requirements of the UK’s SECR
regulations.
Leeds Building Society | Annual Report and Accounts 2025 53
Climate-Related Financial Disclosures continued
Scope 3 operational emissions (categories 1-14)
Our Scope 3 operational targets are currently aligned with a well below 2°C future temperature pathway, in accordance
with requirements of the SBTi. During 2025, we updated our methodology for calculating supply chain emissions (Scope 3
categories 1, 2 and 4) to align with emerging practice. We now use a combination of CEDA data and actual supplier data (where
available) to determine emission factors and calculate our supplier emissions. In addition, we have removed Value Added Tax
(VAT)
7
and expenditure with mortgage brokers
8
from our supply chain emission calculations for both 2025 and 2024, which is
consistent with good practice and principles of the GHG protocol.
We have also restated our emissions for business travel and colleague commuting and home working following refinements to
spend data and emission factors.
As a result of these methodology changes, the PCAF data score for our Scope 3 operational emissions has improved from 4.0
to 3.7. We expect the score to increase over time as the proportion of actual supplier data in our calculations increases.
Overall, our Scope 3 operational emissions decreased 18% from 11,131 tCO
2
e in 2024 to 9,151 tCO
2
e in 2025. We expect
our emissions to remain broadly stable over the near-term, as further improvements in supplier performance are offset by
increased expenditure in line with our investment plans. Towards the end of decade we expect emissions to reduce in line with
our target trajectory, subject to the actions and dependencies set out in our transition plan.
Scope 3 categories 1-14 35% reduction target
0
2000
4000
6000
8000
10000
12000
14000
16000
20342033203220312030202920282027202620252024
2034
(target year)
7,235 tCO
2
e
2024
(base year)
11,131 tCO
2
e
2025
9,151 tCO
2
e
Absolute Emissions (tCO
2
e)
35% reduction target
Actual emissions
The chart above shows our Scope 3 operational emissions between 2024 and 2025, together with our 2034 target. Key actions to
reduce these emissions will include engagement with our supply chain to reduce emissions from our purchased goods and services and
encouraging our colleagues to make greener choices for business travel and commuting.
7 VAT is a consumption tax rather than a purchased good or service, therefore it has been excluded from our supplier chain calculations.
8 The Society utilises mortgage brokers to introduce customers in exchange for fee-based commission. These payments have been excluded from our supply chain
emissions because they represent independent intermediated financial activities rather than contracted services and purchased goods.
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54
Scope 3 residential mortgage emissions (category 15)
Our near-term Scope 3 category 15 ambition for UK residential mortgages is aligned with a 1.5°C Sectoral Decarbonisation
(SDA) pathway, as defined under the SBTi’s new buildings sector target setting guidance for in-use emissions. That means we
will aim to reduce the physical emissions intensity of the mortgage properties that we finance by 70% by 2034, from a 2024
base year, using a location-based approach.
Our emissions have been calculated using the PCAF methodology for residential mortgages, which is based on an attribution
factor (loan balance divided by indexed property value), multiplied by building emissions (energy consumption multiplied
by an emissions factor). We include 100% of our UK residential mortgage balances but loans located in Gibraltar and Spain
are excluded (£3.2 million and £29.2 million at 31 December 2025) as these are closed books in run-off and are considered
immaterial from an emissions perspective.
We derive building emissions from property-level metered data to provide a more accurate representation of actual energy
consumption for our portfolio. Where we are unable to match a property to an energy meter (22% of our portfolio), we have
derived consumption from the government's National Energy Efficiency Data (NEED) Framework. Emission factors are
derived from the DEFRA dataset.
Scope 3 category 15 70% reduction target
0
5
10
15
20
20342033203220312030202920282027202620252024
2034
(target year)
3.7 kgCO
2
e per m
2
2024
(base year)
12.4 kgCO
2
e per m
2
2025
11.4 kgCO
2
e per m
2
Emissions intensity (kgCO
2
e per m
2
)
70% reduction target
Actual emissions
The chart above shows our Scope 3 financed emissions for residential mortgages between 2024 and 2025, together with our 2034
target. Key actions to reduce these emissions will include decarbonisation of the UK housing stock and electricity grid, development of
our green finance proposition and engagement with our members, government and industry.
Leeds Building Society | Annual Report and Accounts 2025 55
Climate-Related Financial Disclosures continued
Scope 3 Category 15 Emissions 31-Dec-25 31-Dec-24
Total mortgaged properties 209,177 201,368
Total mortgage lending £26.0 billion £24.4 billion
PCAF data score 2.6 2.1
LTV attributed absolute financed emissions (tCO
2
e) 203,602 212,835
LTV attributed physical emissions intensity (kgCO
2
e/m
2
) 11.4 12.4
LTV attributed economic emissions intensity (tCO
2
e/£m lent) 7.8 8.7
As at 31 December 2025, our location-based absolute LTV attributed mortgage emissions were 203,602 tCO
2
e versus
212,835 tCO
2
e at the end of 2024. On a physical intensity basis (emissions per square metre), our LTV attributed emissions
were 11.4 kgCO
2
e/m2 for 2025 versus 12.4 kgCO
2
e/m2 in 2024. The PCAF data score for our mortgage emissions declined
from 2.1 to 2.6 based on a location-based approach.
The deterioration in our data score was as a result of an issue with obtaining meter data for all of our mortgaged properties,
increasing our usage of NEEDs data as an alternative. We do not believe that this materially impacted our reported emissions
(NEEDs data is broadly comparable with our portfolio) and expect the issue to be resolved for 2026 reporting.
We expect future emission reductions in line with our targeted ambition to be challenging due to the dependencies and
challenges set out in our transition plan and the lack of progress in decarbonising UK homes.
Scope 3 sovereign debt emissions (category 15)
Following the issuance of a new sovereign debt methodology by PCAF, we have calculated and reported financed emissions
on our sovereign bond portfolio for the first time this year. These bonds are held as part of the Society’s liquidity portfolio for
regulatory purposes.
Given the considerable fluctuations in these balances over time and the limited ability to affect the emissions of issuing
nations, these emissions are currently excluded from the Society’s financed emissions targets. Estimated emissions for the
period ending 31 December 2025 were 453,290 tCO
2
e.
We are currently evaluating equivalent new PCAF methodologies for financed emissions from investments in securitisation,
structured finance products, and sub sovereign debt and will provide updates in our future disclosures.
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56
Non-Financial and Sustainability
Information Statement
Year ended 31 December 2025
We have complied with the requirements of s414CB of the Companies Act 2006 by including certain non-financial information
within the Strategic Report. The required information can be found as follows:
• Our business model is described on page 9 and KPIs are on pages 18 to 20.
• Our approach to managing our impact on the environment and to managing the risks arising from climate change
is explained on pages 43 to 57. Further details of some of the actions already undertaken as part of our responsible
business strategy are set out in our Impact Report.
• Our colleague policy is designed to ensure the fair, transparent and consistent treatment of colleagues in accordance
with legislative and regulatory requirements. Further information on our strategy in relation to colleagues is detailed on
pages 15 to 17.
• We have a zero tolerance approach to bribery and corruption at the Society and we uphold ethical behaviours in our
business activities at all times. The prevention of financial crime policy sets out the requirements of colleagues in this
respect and all colleagues undertake regular mandatory training.
• Additionally, our Third Party Management Policy ensures that we only enter into third party arrangements with suppliers
that have the policies and procedures in place to comply with all applicable anti-bribery and corruption laws, including the
Bribery Act 2010 and the Modern Slavery Act.
Line managers throughout the business are responsible for ensuring colleagues in their teams comply with these policies.
Attestation of compliance is provided by first line management annually. Periodic independent reviews of compliance are
undertaken by the Risk function (second line) and Internal Audit (third line), using a risk-based approach.
Approval of the Strategic Report
This Strategic Report (on pages 4 to 57) has been approved by the Board of directors and is signed on behalf of the Board.
Jon Bailey
Interim Chief Financial Officer
26 February 2026
Leeds Building Society | Annual Report and Accounts 2025 57
Risk Management
Report
Approach to Risk Management
Year ended 31 December 2025
Approach to risk management
The Enterprise Risk Management Framework (ERMF) integrates various risk management processes to consistently support
the development and implementation of our Strategy. The framework sets out a structured approach to identify, assess,
control and monitor risks. The ERMF is periodically reviewed by the Board Risk Committee (BRC), on behalf of the Board.
The Chief Risk Officer (CRO) has responsibility for its implementation.
Governance
and culture
Supports risk-
based decision-
making and
oversight
Appetite and
stress testing
Sets the level
of risk that is
acceptable in
pursuit of our
strategy
Assessment and
management
Ensures
consistent risk
identification,
quantification
and response
Risk
reporting
Ensures the right
information is
provided to the
right people at
the right time
Enterprise Risk Management Framework (ERMF)
Corporate plan and business performance
Society purpose and strategy
The main components of the ERMF are outlined below:
Risk governance and culture
Risk governance encompasses the processes followed to support risk-based decision-making and oversight of risk across
all our operations, whereas risk culture relates to the behaviours and attitudes of colleagues in making these decisions.
Well established committee structures and our risk culture support the Board in discharging its accountability for risk
oversight, with Management responsible for day to day decision-making and management of risk.
Committee structure
The Board is our governing body, responsible for overseeing the implementation of our strategy and holding management
to account. To support the Board in the delivery of its responsibilities, we operate four Board Sub-Committees, each with
distinct mandates in their Terms of Reference (ToR).
The BRC provides independent oversight of the effective management of risks, on behalf of the Board, which is supported by
five Executive Risk Committees, each focusing on a particular risk discipline. These committees are decision-making in nature
and operate within delegated mandates and limits provided by the Board/BRC. Our committee structure as at the year end is
set out overleaf:
Leeds Building Society | Annual Report and Accounts 2025 59
Board
Safeguards member interests.
Ensures robust risk management
systems and internal controls are in
place. Sets risk appetite and culture.
Remuneration
Committee
Ensures remuneration
policies and practices
support the long-term
interests of the Society.
Models and
Rating System
Committee
Oversees
management of
model risks and
IRB Rating System.
Assets and
Liabilities
Committee
Oversees
management of
balance sheet and
financial risks.
Credit
Committee
Oversees
management
of credit risks
from our lending
portfolio.
Conduct and
Operational Risk
Committee
Oversees delivery
of good customer
outcomes and
management of
operational risks.
Operational
Resilience
Committee
Oversees
management
of operational
resilience matters.
Board Risk
Committee
Reviews the Society's
risk exposures and
oversees the ERMF.
Develops strategic
risk appetite for
Board approval.
Audit
Committee
Nominations
Committee
Reviews the structure
and composition of
the Board and
oversees succession
planning for the Board
and wider SLT.
Reviews effectiveness of
internal controls, integrity
of financial reporting,
and performance of the
Internal Audit function.
Policies and delegated authorities
Mandates are provided by the Board to Management via the following routes to manage our day to day activities:
Delegation route Summary
1. Corporate plan The Board approves a corporate plan annually, subsequent to the setting of risk appetite,
which provides the parameters within which management should operate.
2. Policy framework We operate a tiered policy framework, through which mandates and limits are delegated to
Management. Our policies are reviewed on an annual basis (or as appropriate), by relevant
committees.
3. Delegated Authorities Manual The Delegated Authorities Manual is designed to facilitate the effective discharge of
responsibilities and continuity of operations within a sound system of financial, operational
and budgetary control. It is reviewed by the Board annually.
Approach to Risk Management continued
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60
Three lines of defence model and the Risk Division
Our approach to risk management aligns to a three lines of defence model, which is standard practice within financial services.
This ensures a clear delineation of responsibilities between control over day to day operations, risk oversight and independent
assurance activities. The key accountabilities under the three lines of defence model are detailed below:
First line
(business lines)
Second line
(Risk Division)
Third line
(Internal Audit)
• Executing strategy
• Identifying and managing risks, including
operating critical controls
• Defining appetite
• Adhering to appetite, policies and
standards
• First line risk reporting
• Implementing and maintaining
regulatory compliance
• Oversight of day to day activities of the
first line
• Maintenance of the ERMF
• Coordination and oversight of the
setting of risk appetite and policy
• Identifying emerging risks
• Enterprise risk reporting
• Independent risk-based assurance plans
• Independent risk-based assurance of
the adequacy and effectiveness of first
and second line risk management
The Risk Division is independent from operational business divisions and ensures we follow a consistent approach to risk
management. It is led by the CRO, who reports directly to the CEO, with separate independent engagement with the
Chair of the BRC. The Risk Division comprises specialist teams, aligned to key risk disciplines, which provide oversight and
independent challenge of first line activities.
Risk culture
Risk culture is an essential element of effective risk management, underpinning how our ERMF is embedded across the
business and into decision-making. To maintain an appropriate risk culture, the ERMF includes a risk culture framework,
designed around four components:
• Tone from the top and desired behaviours – the Board and senior leadership team are expected to role model our
behaviours to set the tone for all colleagues.
• Accountability – to support the delivery of our strategy and business objectives, individuals at all levels are held
accountable for risk management.
• Effective communication – an environment of open and transparent communication is encouraged around all business
processes and decision-making. The Society’s open culture also allows both Management and colleagues to report
concerns about potential inappropriate risk taking or business conduct, which is facilitated through a ‘Speak Up’ policy.
• Incentives and performance management – an appropriate incentive scheme and other HR frameworks are operated to
promote and align with the desired risk culture.
Risk appetite and stress testing
Risk Appetite framework
A key element of the ERMF is the Strategic Risk Appetite (SRA) framework. This comprises qualitative statements and
quantitative metrics to set the parameters within which we should operate to deliver our strategy. Our SRA framework is
reinforced through policies and standards, to ensure consistency and alignment to the Board defined parameters.
The Board defines SRA across our eight principal risks and it is reviewed on an annual basis. Performance against appetite is
monitored continually and we have developed appropriate early warning indicators and escalation procedures to anticipate
and respond to changes in risk profile. SRA metrics are used in corporate planning and stress testing to measure and validate
our long term viability, under both plausible and severe scenarios.
Leeds Building Society | Annual Report and Accounts 2025 61
Stress testing
Stress testing is a risk management tool that we use to support an understanding of the vulnerabilities within our business
model. Our approach to stress testing is defined within a stress testing framework and supports:
• A sound understanding of internal and external influences on our principal risks.
• The Board in strategic business planning and the setting of SRA.
• Management of capital and liquidity resources against SRA and regulatory expectations.
We have developed an annual programme of stress testing activity, which informs the planning process and the calibration of
SRA. The key components of the programme are as follows:
Increasing
severity
Activity Description
Corporate and operational
resilience planning
Sensitivity analysis and a suite of alternative scenarios are used to assess the corporate
plan under a range of plausible stresses. Operational resilience stress testing is an
embedded part of corporate planning.
Prudential risk
assessments
ICAAP – an internal assessment of whether we have sufficient capital, given current risks,
as well as future risks from our strategy, under conditions as set out by the Board/PRA.
ILAAP – an internal assessment of whether we have sufficient liquidity and stable
funding to withstand a range of severe liquidity stresses.
Climate change Scenario analysis is used to assess the potential financial and non financial impacts of
climate-related risks. Refer to pages 43-56 for further details.
Recovery plan Scenario analysis is used to inform the development of a suite of recovery actions
(primarily capital and liquidity) to be used under extreme stress and to set and validate
operational protocols.
Reverse stress testing An assessment of the stress scenarios under which we would potentially become
unviable. This examines potential weaknesses in our business model under extreme
events so that mitigating actions can be identified (where possible).
Risk assessment and management
We operate defined risk assessment and management processes to facilitate the consistent identification, evaluation,
treatment and monitoring of risks across the organisation. The framework can be applied to both strategic and operational
risk assessments and is set within the context of our business environment, strategy and objectives. A summary of the four
stages of this process is set out below:
• Risk identification – we operate Board and operational level risk identification processes to capture new or emerging
risks, which could impact corporate objectives and the delivery of our strategy.
• Risk analysis and evaluation – a range of methodologies are used to identify risks, to understand their potential severity
and likelihood on the delivery of our strategy and to inform risk evaluation and treatment. Management then evaluates
and prioritises risks to inform decision-making and to optimise the allocation of resources.
• Risk treatment – management selects and deploys appropriate risk responses, balancing the potential benefit
derived versus cost, effort and implications for key stakeholders. The principal mechanisms for risk treatment are
the deployment of suitable control actions, governance or assurance oversight, along with management information
monitoring to reduce the Society’s residual risk profile to acceptable levels.
• Risk monitoring – risk assessment and management processes are monitored to proactively identify and adjust to
changes in risk profile and to understand the effectiveness of implementing risk treatment strategies.
Risk reporting
We operate an appropriate risk reporting hierarchy to provide the right information, to the right people, at the right time, to
inform and support timely decision-making. Using a combination of strategic and business process reporting to understand
the current or potential risk profile of the business, which may impact the delivery of our strategy and corporate objectives.
These reporting processes are conducted at an appropriate frequency and are co-ordinated by the Risk Division.
Approach to Risk Management continued
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Governance Financial Statements Other Information
62
1. Credit risk
Definition
The risk that residential borrowers or wholesale counterparties fail to meet their financial obligations.
Sources of credit risk
Our sources of credit risk arise from loans and advances to customers (retail credit risk) and through treasury activities from
the investment of liquidity and use of derivatives to manage market risks (wholesale credit risk). The table below presents an
overview of our credit risk profile as at 31 December 2025:
Audited
Group 2025
£M
Group 2025
%
Group 2024
£M
Group 2024
%
Cash in hand and balances with the Bank of England 1,413.4 4.5 2,443.2 7.8
Loans and advances to credit institutions 115.2 0.4 152.3 0.5
Investment securities 3,921.9 12.4 3,950.0 12.6
Derivative financial instruments 129.5 0.4 371.1 1.2
Loans and advances to customers 25,962.5 82.3 24,550.5 77.9
Total 31,542.5 100.0 31,467.1 100.0
Retail credit risk primarily arises from the Society’s residential mortgage lending activities. The Society has legacy commercial
(2025: £3.1 million; 2024: £3.3 million) and Spanish residential mortgage (2025: £29.2 million; 2024: £34.4 million) portfolios,
which are closed portfolios in active run-off. On this basis the following sections focus upon residential lending exposures and
practices.
1.1 Retail credit risk
Managing and monitoring retail credit risk
We apply a range of controls and procedures to identify, mitigate and monitor retail credit risk:
• A Board defined appetite is approved at least annually, supported by the lending policy, limit frameworks and
management reporting.
• Performance is continually reviewed against appetite and adherence with policy limits, with upward reporting through to
Credit Committee and BRC.
• Our underwriting processes use a range of tools including credit scoring models, affordability stress testing, automated
decision-making and suitably qualified underwriters in assessing mortgage applications. Underwriting processes are
kept under close review to ensure they reflect risks in the prevailing environment.
• Independent appraisal of collateral is completed, such as property valuations.
• We operate various first line functions to monitor the retail credit profile on a continuous basis. This is overseen by
various teams across the three lines of defence, through their assurance activities.
• Our monitoring processes, including the use of benchmarking, early warning indicators and governance protocols,
ensure timely escalation to senior management if there are signs of a deterioration in credit quality.
• A dedicated Mortgage Support function engages with members at an early stage to discuss financial difficulties.
• Stress testing is completed to assess vulnerabilities within credit portfolios and inform pre-emptive actions.
2025 Retail credit risk developments
The credit risk quality of the book has proven to be resilient in 2025 as immediate affordability risks have not crystallised. This
is reflected in positive movements in underlying arrears rates and modest reductions in ECL provision coverage. There have
also been material reductions in post model adjustments associated with ECL provisions following enhancements to credit
risk models. The positive performance of the book has supported appropriate use of lending policies/limits and deployment
of credit risk appetite.
Principal Risks
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 63
Retail credit risk profile
The table below is a breakdown of our retail credit portfolio as at 31 December 2025. The retail credit risk portfolio remains
diversified across several segments. Whilst the volume of buy to let balances reduced during the year, an increasing
proportion of this portfolio is made up of limited company buy to let loans (5.5% in 2025 versus 2.1% in 2024).
Audited
Group and
Society 2025
£M
Group and
Society 2024
£M
UK Residential mortgages
Owner-occupied 16,630.4 15,408.8
Buy to let 5,162.2 5,223.1
Shared ownership 3,611.0 3,363.7
Other 460.7 452.5
Total gross exposure (contractual amounts) 25,864.3 24,448.1
Impairment loss provisions (43.7) (45.4)
Total net exposure 25,820.6 24,402.7
The 2024 prior year comparatives have been represented to reflect a more accurate breakdown of residential lending
segments.
Geographic concentration
The table below provides a breakdown of the geographic concentration of our retail credit portfolio as at 31 December 2025.
Overall, the mortgage portfolio remains well diversified, reflecting the national coverage of our distribution channels.
Audited
Group and
Society 2025
%
Group and
Society 2024
%
Midlands 15.8 15.7
South East 15.5 15.5
Greater London 11.7 12.1
East Anglia 10.4 10.3
South West 10.0 9.9
North West 10.0 9.9
Yorkshire and Humberside 8.9 8.8
Scotland 7.3 7.5
North East 3.9 3.9
Wales 3.7 3.6
Northern Ireland 2.7 2.7
Spain 0.1 0.1
Total net exposure 100.0 100.0
Collateral
Retail mortgages are all fully secured on residential property. Collateral values are assessed at the point of origination and in
line with our lending policy. We require collateral to be valued by an appropriately qualified method, independent of both the
credit decisioning team and the customer, at the time of borrowing. This includes the selected use of automated valuation
models. These models are developed on market data and usage is subject to accuracy and criteria thresholds.
One of the key indicators of the credit risk associated with a mortgage book is the relationship between the amount of the
loan and the value of the underlying security, which is known as the loan to value (LTV) percentage. In general, the lower the
LTV, the greater the equity within the property and therefore lower losses are expected to be realised in the event of default
and subsequent repossession.
Principal Risks continued
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
64
Our lending policy limits owner occupier applications to a maximum LTV of 95%
1
and buy to let mortgages to a maximum LTV
of 80%. Higher LTV lending is subject to enhanced underwriting criteria.
The indexed LTV analysis of our retail mortgage portfolio as at 31 December 2025 is as follows:
Audited
Group and
Society 2025
£M
Group and
Society 2025
%
Group and
Society 2024
£M
Group and
Society 2024
%
Less than 10% 218.8 0.8 213.7 0.9
10% to 20% 1,023.7 4.0 996.6 4.1
20% to 30% 2,438.7 9.4 2,322.4 9.5
30% to 40% 3,324.4 12.9 3,327.6 13.6
40% to 50% 3,874.3 15.0 3,968.8 16.2
50% to 60% 3,948.8 15.3 3,683.2 15.1
60% to 70% 3,888.5 15.0 3,424.3 14.0
70% to 80% 3,431.1 13.3 3,174.2 13.0
80% to 90% 2,648.0 10.2 2,424.2 9.9
90% to 100% 1,065.3 4.1 907.7 3.7
More than 100% 2.7 – 5.4 –
Total 25,864.3 100.0 24,448.1 100.0
As at 31 December 2025, the overall weighted average loan to value of the retail mortgage portfolio was 54.9% (2024: 54.2%).
The weighted average loan to value of new lending in 2025 was 66.8% (2024: 66.8%).
Retail credit performance
Overview
As a responsible lender, the Society has continued to invest in our capabilities and capacity to support members in financial
difficulties. We closely monitor affordability pressures arising from cost of living challenges and higher interest rates,
to ensure customers are treated fairly and receive good outcomes.
The Society proactively contacts 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. If customers do experience financial
difficulties, contact is made upon a missed direct debit (pre-arrears) as well as following missed payments (arrears). Where
appropriate, customers are offered forbearance options, tailored to their circumstances. Forbearance typically consists of
modifications to previous conditions of a contract or a total or partial refinancing of debt, either of which would not have been
required had the customer not been experiencing financial difficulties.
Arrears performance
The following table sets out information about the credit quality of our retail mortgages as at 31 December 2025.
Classification into low, medium or high-risk bandings is based on internal rating grades, which approximately translate
into the regulatory Internal Ratings-Based (IRB) approach Probability of Default shown in the table. An explanation of the
classification is detailed below, with further information provided in note 1(e) of the accounts.
• Stage 1 – assets are allocated to this stage on initial recognition and remain in this stage if there has not been a significant
increase in credit risk since initial recognition.
• Stage 2 – assets where it is determined that there has been a significant increase in credit risk since initial recognition, but
where there is no objective evidence of impairment.
• Stage 3 – assets where there is objective evidence of impairment, i.e. they are considered to be in default or in the cure
period following default.
1 Excluding the Colleague Mortgage Scheme.
Leeds Building Society | Annual Report and Accounts 2025 65
Retail mortgages - Unaudited Stage 1
£M
Stage 2
£M
Stage 3
£M
Total
£M
Group and Society 2025
Low IRB PD <2.02% 20,648.0 3,078.7 22.2 23,748.9
Medium IRB PD ≥2.02% and <25.97% 861.4 816.8 27.1 1,705.3
High IRB PD ≥25.97% 9.2 167.0 233.9 410.1
Total gross exposure 21,518.6 4,062.5 283.2 25,864.3
Impairment loss provision (5.3) (23.4) (14.7) (43.4)
Net exposure 21,513.3 4,039.1 268.5 25,820.9
Loan commitments Stage 1
£M
Stage 2
£M
Stage 3
£M
Total
£M
Group and Society 2025
Low IRB PD <2.02% 1,218.4 – – 1,218.4
Medium IRB PD ≥2.02% and <25.97% 23.0 – – 23.0
High IRB PD ≥25.97% 0.9 – – 0.9
Total gross exposure 1,242.3 – – 1,242.3
Impairment loss provision (0.3) – – (0.3)
Net exposure 1,242.0 – – 1,242.0
Retail mortgages - Unaudited
Stage 1
£M
Stage 2
£M
Stage 3
£M
Total
£M
Group and Society 2024
Low IRB PD <2.02% 19,080.2 3,323.7 26.7 22,430.6
Medium IRB PD ≥2.02% and <25.97% 578.3 999.6 36.3 1,614.2
High IRB PD ≥25.97% 15.5 158.0 229.8 403.3
Total gross exposure 19,674.0 4,481.3 292.8 24,448.1
Impairment loss provision (7.9) (23.3) (13.9) (45.1)
Net exposure 19,666.1 4,458.0 278.9 24,403.0
Loan commitments
Stage 1
£M
Stage 2
£M
Stage 3
£M
Total
£M
Group and Society 2024
Low IRB PD <2.02% 1,610.5 – – 1,610.5
Medium IRB PD ≥2.02% and <25.97% 29.4 – – 29.4
High IRB PD ≥25.97% 0.7 – – 0.7
Total gross exposure 1,640.6 – – 1,640.6
Impairment loss provision (0.3) – – (0.3)
Net exposure 1,640.3 – – 1,640.3
The table below provides further information on our retail mortgages by payment status as at 31 December 2025
2
. Overall,
past due balances as a percentage of the portfolio have remained broadly stable. The table includes £7.1 million (2024: £8.6
million) of loans and advances secured on residential property in Spain that are past due. At 31 December 2025 £0.2 million of
Spanish properties were in possession (2024: £0.5 million).
Audited
Group and
Society 2025
£M
Group and
Society 2025
%
Group and
Society 2024
£M
Group and
Society 2024
%
Not past due 25,551.8 98.8 24,145.3 98.7
Past due up to 3 months 170.0 0.7 160.4 0.7
Past due 3 to 6 months 60.4 0.2 58.6 0.2
Past due 6 to 12 months 42.3 0.2 45.9 0.2
Past due over 12 months 27.9 0.1 24.4 0.1
Possessions 11.9 – 13.5 0.1
Total gross exposure 25,864.3 100.0 24,448.1 100.0
2 Excludes impairment loss provisions
Principal Risks continued
Strategic Report
Risk Management
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Governance Financial Statements Other Information
66
Forbearance
The table below provides information on loans existing at 31 December 2025, which have had their terms renegotiated in the
last 24 months, regardless of whether the renegotiation is still in place or whether the loan has reverted to its original terms.
Audited
Group and Society 2025
Capitalisation
£M
Transfer to
interest only
£M
Term extension
£M
Hardship
products
£M
Other payment
arrangements
£M
Total
forbearance
£M
Not past due 3.2 1.1 5.1 3.0 0.8 13.2
Past due up to 3 months 13.5 5.4 14.8 16.2 2.5 52.4
Past due over 3 months 3.7 2.4 2.5 23.5 5.1 37.2
Total forbearance 20.4 8.9 22.4 42.7 8.4 102.8
Audited
Group and Society 2024
Capitalisation
£M
Transfer to
interest only
£M
Term extension
£M
Hardship
products
£M
Other payment
arrangements
£M
Total
forbearance
£M
Not past due 6.0 7.5 34.3 9.0 13.1 69.9
Past due up to 3 months 2.4 3.7 4.6 6.8 2.5 20.0
Past due over 3 months 5.3 3.1 1.9 21.8 7.7 39.8
Total forbearance
13.7 14.3 40.8 37.6 23.3 129.7
The level of loans reported as in forbearance has seen an overall decrease during 2025, reflecting broadly stable arrears and
despite an increase in the appropriate use of capitalisations following regulatory changes in late 2024.
Retail credit risk outlook
While borrowers have so far remained resilient to affordability pressures, emerging macroeconomic and geopolitical risks
may result in more members facing financial difficulty in future. Our central forecast is for rising unemployment and modest
house price growth; both of which are fundamental to the emergence of credit risks and asset quality. We will closely monitor
external conditions and early warning indicators to ensure that our limits, policies and deployment of appetite remain
appropriate to support our purpose.
As part of supporting the UK government’s growth agenda, the PRA relaxed macroprudential regulation and the FCA
published a discussion paper on the future of the UK mortgage market during the second half of 2025. The Society will
continue to closely monitor developments in this area and carefully consider how this will be reflected in our lending policy/
criteria on an ongoing basis.
1.2 Wholesale credit risk
We have low appetite for wholesale credit risk, with exposures restricted to high quality counterparties with a low risk of default.
Managing and monitoring wholesale credit risk
We apply a range of controls and procedures to identify, mitigate and monitor wholesale credit risk:
• A Board defined appetite is approved at least annually, supported by the Wholesale Credit policy, limit frameworks and
management reporting.
• The performance of the wholesale credit portfolio versus appetite and policy is monitored daily, by a dedicated first line
team. This is overseen by both the second and third lines of defence through their monitoring and assurance activities.
• ALCO is the Society’s primary committee for overseeing the management of wholesale credit risk. Performance against
risk appetite is also reported through to BRC.
• Our monitoring processes and governance protocols ensure timely escalation to senior management if there is a
perceived deterioration in credit quality of a counterparty.
• All counterparty credit lines are formally reviewed at least annually, based on internal analysis, credit default swap
spreads, geographic location, ESG posture and other market intelligence.
• Daily exchange of collateral and other netting arrangements is in place for our derivative exposures.
Leeds Building Society | Annual Report and Accounts 2025 67
Wholesale credit risk profile
Credit ratings
Our liquidity portfolio is comprised of cash reserves at the Bank of England, loans and advances to credit institutions and
investment securities. An assessment of the wholesale credit profile of the liquidity portfolio, based upon external credit
ratings
3
, is outlined in the table below. As at 31 December 2025, 100% of the portfolio was rated as A- or above (2024: 100%).
Audited
Group 2025
Aaa
£M
Aa1–Aa3
£M
A1–A3
£M
Unrated
£M
Total
£M
Cash in hand and balances with the Bank of England – 1,413.4 – – 1,413.4
Loans and advances to credit institutions – 6.1 109.1 – 115.2
Investment securities
UK government securities – 1,586.2 – – 1,586.2
Government agency debt 309.7 – – – 309.7
Supranational bonds 871.9 – – – 871.9
Covered bonds 696.7 – – – 696.7
Residential mortgage backed securities 457.4 – – – 457.4
Certificates of deposit – – – – –
Total liquid assets 2,335.7 3,005.7 109.1 – 5,450.5
42.9% 55.1% 2.0% – 100.0%
Audited
Group 2024
Aaa
£M
Aa1–Aa3
£M
A1–A3
£M
Unrated
£M
Total
£M
Cash in hand and balances with the Bank of England – 2,443.2 – – 2,443.2
Loans and advances to credit institutions – 15.1 137.2 – 152.3
Investment securities
UK government securities – 1,935.4 – – 1,935.4
Government agency debt 217.5 – – – 217.5
Supranational bonds 536.2 – – – 536.2
Covered bonds 612.9 – 10.5 – 623.4
Residential mortgage backed securities 637.5 – – – 637.5
Certificates of deposit – – – – –
Total liquid assets 2,004.1 4,393.7 147.7 – 6,545.5
30.6% 67.1% 2.3% – 100.0%
Geographic concentration
Our liquidity portfolio continues to be invested predominantly within the UK. The geographical location of the portfolio as at
31 December 2025 is outlined below:
Audited
Group 2025
£M
Group 2025
%
Group 2024
£M
Group 2024
%
United Kingdom 3,968.8 72.8 5,514.0 84.2
Germany 309.7 5.7 194.0 3.0
Canada 130.0 2.4 206.6 3.2
Australia 170.0 3.1 94.7 1.4
Global Supranational 609.0 11.2 355.3 5.4
European Supranational 159.3 2.9 116.1 1.8
Asian Supranational 103.7 1.9 64.8 1.0
Total liquid assets 5,450.5 100.0 6,545.5 100.0
3 The lower of either Fitch or Moody’s.
Principal Risks continued
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
68
Wholesale credit impairments
Our accounting policy for the calculation of impairment on wholesale assets is detailed in Note 1(e) of the financial
statements. All assets were classified as at Stage 1 throughout the reporting period, and as such, no impairment loss
provision is considered necessary for these assets.
Collateral
The nature of a wholesale asset or liability determines the level of collateral required. Loans and debt securities are generally
unsecured except for asset backed securities, which are secured by a collection of financial assets.
The Society centrally clears all eligible derivatives classes through indirect membership with a central counterparty clearing
house (CCP). Cleared derivative instruments will only be transacted with counterparties with a Cleared Derivative Execution
Agreement (CDEA) or Accession Agreement (AA) in place. Derivatives that cannot be cleared via a CCP are managed
bilaterally under the terms of industry standard International Swaps and Derivatives Association (ISDA) Master Agreements
and Credit Support Annexes (CSA).
Under these arrangements, collateral is exchanged between the counterparties of the transaction to mitigate some of the
counterparty credit risk inherent in outstanding derivative positions.
The table below shows the net exposure after reflecting the impact of netting arrangements and collateral:
Audited
Group 2025
Gross
amounts
4
£M
Master netting
agreements
£M
Cash
collateral
£M
Net
amount
£M
Financial assets
Derivative financial instruments 129.5 (111.3) (39.7) (21.5)
Financial liabilities
Derivative financial instruments 119.9 (111.3) (13.2) (4.6)
Society 2025
Gross
amounts
4
£M
Master netting
agreements
£M
Cash
collateral
£M
Net
amount
£M
Financial assets
Derivative financial instruments 129.5 (111.3) (39.7) (21.5)
Financial liabilities
Derivative financial instruments 130.7 (111.3) (17.0) 2.4
Audited
Group 2024
Gross
amounts
4
£M
Master netting
agreements
£M
Cash
collateral
£M
Net
amount
£M
Financial assets
Derivative financial instruments 371.1 (90.8) (310.7) (30.4)
Financial liabilities
Derivative financial instruments 98.0 (90.8) (5.7) 1.5
Society 2024
Gross
amounts
4
£M
Master netting
agreements
£M
Cash
collateral
£M
Net
amount
£M
Financial assets
Derivative financial instruments 371.1 (90.8) (310.7) (30.4)
Financial liabilities
Derivative financial instruments 117.2 (90.8) (11.8) 14.6
For derivative financial assets, collateral received is in the form of cash. Where cash is received it is included as a liability within
Other Liabilities on the Statement of Financial Position.
For derivative financial liabilities, collateral paid is in the form of cash and is included as an asset in Other Assets.
We also enter into repurchase agreements (repos) with counterparties with whom we have both a Global Master Repurchase
Agreement (GMRA) and an active credit line in place. The credit risk that arises from such transactions is managed under the
terms of the GMRA, through the monitoring and appropriate transfer of collateral.
4 As reported on the Statement of Financial Position.
Leeds Building Society | Annual Report and Accounts 2025 69
Wholesale credit risk outlook
Due to ongoing macroeconomic uncertainties and geopolitical risks discussed on page 38, we will continue to closely monitor
the performance of the wholesale portfolio and ensure that our investment strategy and credit risk profile remain suitable.
2. Funding and liquidity risk
Definition
The risk of insufficient funds to meet obligations as they fall due or the inability to access funding at a reasonable cost.
Sources of funding and liquidity risk
The Society raises funding through two sources: retail savings deposits from our members and investments from wholesale
counterparties. Funding risk predominately arises from an inadequately diversified funding strategy. This could result in a loss
of customer or investor confidence and inhibit our ability to refinance or raise new funding, or only at an excessive cost.
Our main source of liquidity risk relates to the ability of members to withdraw retail deposits at little or no notice. All potential
sources of liquidity risk are assessed under severe but plausible stress scenarios as part of our annual ILAAP process, with
outputs used to inform our liquidity risk appetite and determine a minimum level of on and off balance sheet liquidity.
Managing and monitoring funding and liquidity risk
We apply a range of controls and procedures to identify, mitigate and monitor funding and liquidity risk:
• A Board defined appetite is approved at least annually, supported by the Funding and Liquidity policy, limit frameworks
and management reporting.
• Our liquidity position is monitored daily by a dedicated first line team. This is overseen by both the second and third lines
of defence through their monitoring and assurance activities.
• ALCO is the Society’s primary committee for overseeing the management of funding and liquidity risks. Performance
against risk appetite is also reported through to BRC.
• An ILAAP assessment is conducted at least annually, to determine the level of liquidity resources required under stressed
conditions.
• A portfolio of high quality liquid assets is maintained and regularly tested.
• Access to central bank funding is maintained and regularly tested, through prepositioned collateral.
• Stress testing and sensitivity analysis is conducted frequently to understand the impact of severe, but plausible
scenarios and to inform pre-emptive actions.
• A Recovery Plan, including a trigger and alert framework, is maintained to identify the emergence of a stress and actions
to respond accordingly.
2025 liquidity position
Our Liquidity Strategy and limit structure ensures that the liquidity portfolio remains appropriately diversified across various
instruments and durations. As at 31 December 2025, our liquidity portfolio mainly consisted of cash held at the Bank of
England, UK government securities and other high quality assets.
Levels of on balance sheet liquidity decreased during the year, following our repayment of drawings from the BoE’s TFSME.
Notwithstanding this, we continue to report a strong liquidity position and as at 31 December 2025, our LCR was 196.7%
(31 December 2024: 183.0%), which was significantly above minimum regulatory requirements (100%). In addition, we also
continued to retain significant levels of off balance sheet liquidity capacity.
Principal Risks continued
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
70
Audited
Group and
Society 2025
£M
Group and
Society 2024
£M
Cash in hand and balances with the Bank of England 1,413.4 2,443.2
UK government securities 1,561.2 1,861.2
Other qualifying securities 2,335.8 2,004.3
High quality liquid assets 5,310.4 6,308.7
Other on balance sheet securities 140.1 236.8
Total 5,450.5 6,545.5
2025 funding risk position
As a mutual organisation, we are predominantly funded through retail funding. As at 31 December 2025, 88.5% (2024: 84.4%)
of our shares, deposits and liabilities (SDLs) were categorised as retail funding, consisting of a mix of variable rate products,
fixed rate bonds and ISAs.
We also raise funding via capital markets, through a well-established wholesale franchise and access to central bank funding
facilities. Our Funding Plan and limit structure ensures that the wholesale funding portfolio remains appropriately diversified
across various instruments, durations and investor types.
As at 31 December 2025, total wholesale funding stood at £3.4 billion (2024: £4.5 billion), representing 11.5% of total funding.
We raised £1.2 billion in wholesale funding during 2025, through senior non-preferred (£0.3 billion), covered bond (£0.5 billion),
and Albion No.7 RMBS (£0.4 billion) issuances. We also repaid all our outstanding drawings from the BoE’s TFSME scheme.
As at 31 December 2025 100% of our wholesale funding portfolio was denominated in sterling.
Audited
Group 2025
£M
Group 2025
%
Group 2024
£M
Group 20243
%
Deposits from banks 0.5 – 14.2 0.3
Amounts drawn under Bank of England ILTR facility – – 1,230.0 27.1
Other deposits and amounts owed to other customers 138.8 4.1 159.3 3.5
Debt securities in issue:
Certificates of deposit 85.0 2.5 60.3 1.3
Senior unsecured debts 334.4 9.9 319.3 7.0
Covered bonds 2,009.8 59.6 2,116.0 46.8
Residential mortgage backed securities 808.4 23.9 636.1 14.0
Total 3,376.9 100.0 4,535.2 100.0
The expected maturity profile of our wholesale funding portfolio is outlined below, based on the earlier of the first call date
or the contractual maturity date. The concentration of maturities less than one year has reduced materially following the
refinancing of TFSME drawings during 2025.
Audited
Group 2025
£M
Group 2025
%
Group 2024
£M
Group 2024
%
Less than one year 725.2 21.5 2,069.2 45.6
One to two years 837.1 24.8 502.1 11.1
Two to five years 1,814.6 53.7 1,963.9 43.3
Total 3,376.9 100.0 4,535.2 100.0
The stability of our overall funding position is assessed through the Net Stable Funding Ratio (NSFR). As at 31 December
2025, our NSFR ratio stood at 150.8% (2024: 147.8%), which is significantly above the regulatory minimum of 100%.
Leeds Building Society | Annual Report and Accounts 2025 71
Maturity profile of financial assets and liabilities
The table below analyses our financial assets and liabilities based on the remaining period between 31 December 2025 and
the contractual maturity date. In practice, the contractual maturity can differ to actual repayments, whereby customers'
behaviours result in liabilities being held for longer than their contractual maturities and assets repaid earlier or vice versa.
During 2025, contractual liquidity gap mismatches changed in response to balance sheet growth and the structure of the
retail savings book.
Audited
Group 2025
Repayable
on demand
£M
Less than
3 months
£M
3 to 12
months
£M
1 to 5
years
£M
More than
5 years
£M
Total
£M
Financial assets
Cash in hand and balances with the Bank of England 1,413.4 – – – – 1,413.4
Loans and advances to credit institutions 115.2 – – – – 115.2
Investment securities – 743.1 232.2 2,026.2 920.4 3,921.9
Derivative financial instruments – 4.9 26.0 87.7 10.9 129.5
Loans and advances to customers
Loans fully secured on residential property 5.1 17.7 42.4 785.6 25,045.3 25,896.1
Other loans – – – – 141.9 141.9
Other assets, prepayments and accrued income – 215.1 (0.9) 4.2 13.4 231.8
Total financial assets 1,533.7 980.8 299.7 2,903.7 26,131.9 31,849.8
Financial liabilities
Shares 11,144.5 3,817.8 6,795.0 4,288.2 36.1 26,081.6
Derivative financial instruments - 1.0 8.8 101.7 8.4 119.9
Amounts owed to credit institutions - - 0.5 - - 0.5
Amounts owed to other customers 6.8 71.6 60.4 - - 138.8
Debt securities in issue - 85.0 500.9 2,651.7 - 3,237.6
Other liabilities and accruals - 2.5 21.5 12.9 6.5 43.4
Subordinated liabilities - 126.8 - 311.3 - 438.1
Subscribed capital - - - 8.0 - 8.0
Total financial liabilities 11,151.3 4,104.7 7,387.1 7,373.8 51.0 30,067.9
Net liquidity gap (9,617.6) (3,123.9) (7,087.4) (4,470.1) 26,080.9 1,781.9
Principal Risks continued
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
72
Audited
Group 2024
Repayable
on demand
£M
Less than
3 months
£M
3 to 12
months
£M
1 to 5
years
£M
More than
5 years
£M
Total
£M
Financial assets
Cash in hand and balances with the Bank of England 2,443.2 – – – – 2,443.2
Loans and advances to credit institutions 152.3 – – – – 152.3
Investment securities – 612.9 1,076.1 1,363.9 897.1 3,950.0
Derivative financial instruments – 2.5 26.5 311.9 30.2 371.1
Loans and advances to customers
Loans fully secured on residential property 8.9 17.5 32.5 549.9 23,620.8 24,229.6
Other loans – – – – 147.8 147.8
Other assets, prepayments and accrued income – 209.7 – 6.0 5.7 221.4
Total financial assets 2,604.4 842.6 1,135.1 2,231.7 24,701.6 31,515.4
Financial liabilities
Shares 9,047.0 3,574.0 7,168.4 4,733.4 15.8 24,538.6
Derivative financial instruments – 2.4 10.9 75.0 9.7 98.0
Amounts owed to credit institutions – 14.2 1,230.0 – – 1,244.2
Amounts owed to other customers 8.7 82.7 66.5 1.4 – 159.3
Debt securities in issue – 657.0 10.1 2,464.6 – 3,131.7
Other liabilities and accruals – 1.0 23.7 268.3 23.7 316.7
Subordinated liabilities – – – 334.2 – 334.2
Subscribed capital – – – 8.0 – 8.0
Total financial liabilities 9,055.7 4,331.3 8,509.6 7,884.9 49.2 29,830.7
Net liquidity gap (6,451.3) (3,488.7) (7,374.5) (5,653.2) 24,652.4 1,684.7
The following tables detail the remaining undiscounted contractual cash flows for our non-derivative financial liabilities
including interest, which will be accrued to those instruments, except where we are entitled and intend to repay the liabilities
before their maturity.
Audited
Group 2025
Repayable
on demand
£M
Less than
3 months
£M
3 to 12
months
£M
1 to 5
years
£M
More than
5 years
£M
Total
£M
Shares 11,144.5 3,835.7 6,974.8 4,596.1 42.9 26,594.0
Amounts owed to credit institutions – – 0.5 – – 0.5
Amounts owed to other customers 6.8 71.8 61.4 – – 140.0
Debt securities in issue – 85.1 517.2 3,006.6 – 3,608.9
Subordinated liabilities – 136.0 8.3 369.0 – 513.3
Subscribed capital – – 0.3 8.8 – 9.1
Total financial liabilities 11,151.3 4,128.6 7,562.5 7,980.5 42.9 30,865.8
Group 2024
Repayable on
demand
£M
Less than
3 months
£M
3 to 12
months
£M
1 to 5
years
£M
More than
5 years
£M
Total
£M
Shares 9,047.0 3,591.4 7,369.2 5,041.8 18.8 25,068.2
Amounts owed to credit institutions – – 1,279.4 – – 1,279.4
Amounts owed to other customers 8.7 83.1 67.8 1.4 – 161.0
Debt securities in issue – 657.5 10.2 2,799.6 – 3,467.3
Subordinated liabilities – 2.6 2.6 342.2 347.4
Subscribed capital – – 0.3 9.1 – 9.4
Total financial liabilities 9,055.7 4,334.6 8,729.5 8,194.1 18.8 30,332.7
Leeds Building Society | Annual Report and Accounts 2025 73
The following table details the contractual maturity for our derivative financial instruments. The table is based on the
undiscounted net cash inflows/(outflows) on the derivative instruments, which settle on a net basis, and the undiscounted
gross inflows/(outflows) on those derivatives that require gross settlement. When the amount payable or receivable is not
fixed, the amount disclosed has been determined by reference to the conditions existing at the reporting date.
Audited
Group 2025
Less than
3 months
£M
3 to 12
months
£M
1 to 5
years
£M
More than
5 years
£M
Total
£M
Swap contracts 52.9 148.4 (179.7) (23.9) (2.3)
Group 2024
Less than
3 months
£M
3 to 12
months
£M
1 to 5
years
£M
More than
5 years
£M
Total
£M
Swap contracts 47.8 151.0 213.4 4.7 416.9
Encumbrance
Asset encumbrance arises where certain assets are pledged as collateral to secure funding or facilitate central bank
operations. The main sources of our encumbered assets are mortgages, used to collateralise our covered bond and
securitisation programmes and participation in the BoE’s central bank funding schemes. We have established an appropriate
limit to ensure that sufficient collateral is maintained to support current and future funding requirements under normal and
stressed market conditions.
Asset encumbrance as at 31 December 2025 is set out in the table below. Encumbered assets fell during the year, as the
Society repaid its outstanding TFSME drawings.
Audited
Encumbered
£M
Unencumbered
£M
Total
£M
Cash and balances with the Bank of England – 1,413.4 1,413.4
Loans and advances to credit institutions – 115.2 115.2
Investment securities 24.7 3,897.2 3,921.9
Loans and advances to customers 3,702.2 22,260.3 25,962.5
Derivative financial instruments – 129.5 129.5
Other assets 407.2 12.7 419.9
Total as at 31 December 2025 4,134.1 27,828.3 31,962.4
Total as at 31 December 2024 7,253.7 24,358.9 31,612.6
External credit ratings
We maintain secure credit ratings from two key rating agencies, reflecting our strong capital base, sustainable profitability and
robust funding positions.
Long term Short term Outlook
Moody’s A3 P-2 Stable
Fitch A- F1 Stable
Funding and liquidity risk outlook
The Society’s central view is that funding markets will remain supportive during 2026, but several uncertainties persist,
which could influence the delivery of our funding plan. This includes geopolitical and macroeconomic risks, contagion
within financial markets and increased competition for retail savings balances.
The Society carries strong levels of liquidity into 2026 and will continue to monitor developments closely.
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3. Market risk
Definition
The risk that movements in interest rates or foreign currency adversely impact our capital and earnings.
Sources of market risk
The primary form of market risk that we face is interest rate risk, whereby our net interest income and value of assets and
liabilities are exposed to movements in interest rates. The main sources of our interest rate exposures relate to the duration
repricing mismatch between assets and liabilities, basis risk from linkage of assets and liabilities to different reference rates
and product optionality. Our interest rate exposures all arise from the banking book as we do not operate a trading book.
We also have foreign currency risk exposures from a legacy residential mortgage portfolio in Spain. Our market risk policy
does not permit any speculative foreign exchange positions.
Managing and monitoring market risk
We apply a range of controls and procedures to identify, mitigate and monitor market risk:
• A Board defined appetite is approved at least annually, supported by the market risk policy, limit frameworks and
management reporting.
• Our market risk exposures are monitored daily by a dedicated first line team. This is overseen by both the second and
third lines of defence through their monitoring and assurance activities.
• ALCO is the Society’s primary committee for overseeing the management of market risks. Performance against risk
appetite is also reported through to BRC.
• Market risk positions are managed by the offsetting of assets and liabilities and use of derivatives. Derivatives are used to
hedge market risk exposures, where a natural hedge is not feasible.
• Structural hedging is also used to stabilise earnings arising from our reserves and some of our other interest rate
insensitive liabilities, with limits in place to determine the size, duration and construct of the hedges in line with the
Board’s appetite to deliver a stable earnings profile.
• Stress testing and sensitivity analysis is conducted frequently to understand the impacts of movements in interest and
foreign exchange rates on value and income.
2025 market risk position
Key developments in relation to market risk during 2025 were as follows:
• As inflationary pressures continued to ease, the BoE made further reductions in interest rates, from 4.75% to 3.75%,
during 2025.
• Throughout the year, we maintained a structured and disciplined approach to market risk management, ensuring that
exposures were identified, measured, and managed in line with the risk appetite established by the Board. We provided
close oversight of our market risk exposures and product offerings, making strategic adjustments to our balance sheet
structure in response to changing external conditions.
• Additionally, we conducted regular stress testing and sensitivity analysis to assess potential impacts under various
interest rate scenarios.
Leeds Building Society | Annual Report and Accounts 2025 75
Interest rate exposures
We assess potential interest rate impacts on our earnings and the value of our assets and liabilities through stress testing and
sensitivity analysis.
From an earnings perspective, we measure the potential impact on our net interest income under various interest rate paths.
The key assumptions used in this modelling are as follows:
• A constant balance sheet is assumed with all assets and liabilities maturing during the year being reinvested in like for like
products and a constant average spread.
• Scenarios are applied to the prevailing interest rates at the reporting date.
• The sensitivities do not take account of any management actions.
In addition, we monitor the impact of various parallel and non-parallel rate shocks to the value of our assets and liabilities. The key
assumptions used in this modelling are as follows:
• The balance sheet at the report date is run off over its remaining expected duration.
• Downward shocks allow the yield curve to go negative subject to a floor.
• The effect of external hedging is included.
• The non-interest rate sensitive impacts from commercial margins are excluded.
• Behavioural modelling is used to estimate the extent to which customers use options contained in retail products, specifically
part or full prepayment of fixed rate mortgages.
• Our reserves and core stable savings balances are allocated in line with Board approved limits.
The following table outlines the impacts against a range of value and earnings-based assessments. At 31 December 2025, our
balance sheet remained positioned so that net interest income would benefit from rising interest rates.
Audited
Group
+200bps
2025
£M
+200bps
2024
£M
-200bps
2025
£M
-200bps
2024
£M
Annual earnings impact 11.5 11.7 (10.8) (8.3)
Market value economic value (including capital) (5.0) (50.1) 4.6 53.0
Foreign exchange exposures
The carrying amount of our foreign currency denominated monetary assets and monetary liabilities at the reporting date is
outlined in the table below:
Audited
Group
Assets
2025
£M
Assets
2024
£M
Liabilities
2025
£M
Liabilities
2024
£M
Euro 31.4 39.6 35.8 43.9
At 31 December 2025, we had hedges in place to match 100% of our foreign currency exposures, via the use of cross currency
swaps, which offset the impact of foreign exchange fluctuations. Therefore, any movements in foreign currency through
profit or loss and other equity are minimised. As at 31 December 2025, a 10% movement in the sterling/euro exchange rate
would result in a movement of £0.4 million (2024: £0.4 million) in profit or loss or other equity.
Market risk outlook
Financial markets remain susceptible to volatility during 2026, reflective of the Society’s emerging profile outlined on pages
37 to 40.
We will continue to monitor developments in the macroeconomy and financial markets, the competitive landscape and
changes in customer behaviour and proactively manage our balance sheet to ensure that future earnings and value are
protected.
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4. Capital risk
Definition
The risk that the Society has insufficient quality or quantity of capital resources to meet current or future regulatory and
business requirements.
Sources of capital risk
Capital risk is where we have insufficient capital resources to support strategic objectives and plans or regulatory
requirements. This could arise due to a depletion of our capital resources as a result of risk crystallisation, through a
significant increase in risk weighted assets because of regulatory changes or economic deterioration, or increases in
minimum regulatory requirements, such as the countercyclical capital buffer.
Managing and monitoring capital risk
We apply a range of controls and procedures to identify, mitigate and monitor capital risk:
• A Board defined appetite is approved at least annually, supported by the Capital policy and Capital Plan, limit frameworks
and management reporting.
• We have a dedicated first line team responsible for managing and monitoring our capital position. This is overseen by
both the second and third lines of defence through their monitoring and assurance activities.
• ALCO is the Society’s primary committee for overseeing the management of capital risk. Performance against risk
appetite is also reported through to BRC.
• Capital planning is integrated into our wider strategic and financial planning processes to assess our capital position on a
forward looking basis. This provides discipline over lending volumes and returns to ensure adequate capital generation to
support a sustainable capital position.
• An ICAAP is conducted at least annually, to assess the level of capital required to support current and future business
activities.
• Stress testing and sensitivity analysis is conducted to understand the impact on the Society’s capital position, under a
range of severe scenarios.
• A Recovery Plan is maintained, including actions to generate/preserve capital in response to a severe stress.
2025 performance
Key developments in relation to capital risk during 2025 were as follows:
• We maintained significant headroom above minimum regulatory capital requirements throughout 2025.
• During 2025, the PRA published several proposed changes to the UK capital regime. The Society has reviewed these
policy statements and has considered impacts as part of capital planning, alongside the impact of forthcoming changes
to capital rules as part of the UK’s implementation of final Basel 3.1 standards, applicable from January 2027.
• In late December, the BoE revised the Society’s preferred resolution strategy from bail-in to transfer.
The Society is currently reviewing the implications of this change on the Society’s capital strategy.
• Alongside these publications, the PRA published DP1/25, setting out a range of possible policy changes to the treatment
of residential mortgage exposure under IRB, and the FPC has undertaken a review of the level of capitalisation within
the UK banking system. Both publications are designed to optimise capital and increase competition amongst market
participants. The Society is monitoring developments closely.
Leeds Building Society | Annual Report and Accounts 2025 77
Capital position
The following table provides a summary of our capital position as at 31 December 2025. More detailed disclosures can be
found in the Pillar 3 disclosures available on our website.
Unaudited
2025
£M
2024
£M
Capital resources
Common Equity Tier 1 (CET1) capital 1,720.5 1,584.9
Total Tier 1 capital 1,720.5 1,584.9
Tier 2 capital 10.5 10.1
Total regulatory capital resources 1,731.0 1,595.0
Senior non preferred notes 429.0 351.1
Total MREL eligible resources 2,160.0 1,946.1
Risk weighted assets (RWAs) 6,735.3 6,171.0
CRD V capital ratios % %
CET1 ratio 25.5 25.7
Total capital ratio 25.7 25.9
Total MREL ratio 32.1 31.5
UK leverage ratio 5.7 5.5
Both CET1 and Total Capital ratios have reduced in the 12 months to 31 December 2025 primarily reflecting an increase in
risk weighted assets driven by the changing maturity profile of the mortgage portfolio and marginally higher loan to value
lending against modest house price growth. This was partly offset by higher capital resources following the recognition of
full year profits.
Capital risk outlook
The BoE confirmed in late 2025 from 1 January 2026 the preferred resolution strategy for the Society has changed from
bail-in to transfer. This change reduces MREL requirements for the Society from 2x Total Capital Requirement (TCR)
to 1x TCR. Further details are included within our 2025 Pillar 3 disclosure.
During 2026, the Society will continue to progress activity to implement revised Basel 3.1 rules ahead of the 1 January
2027 implementation date.
The Society will closely consider the implications on our longer-term strategy of the changes to the MREL regime,
implementation of Basel 3.1, revisions to our IRB models and the FPC recommendations on the capitalisation of the UK
banking system.
We will continue to closely monitor the key emerging risks discussed on pages 37 to 40, and any capital implications,
to ensure that our Capital Strategy adapts appropriately.
5. Model risk
Definition
The risk of adverse consequences from model errors or the inappropriate use of modelled outputs.
Sources of model risk
Models are inherently uncertain as they are imperfect representations of the real world, based upon a set of assumptions and
theoretical methodologies, which may not translate into an accurate future outcome.
We use models across a broad range of business activities, including informing business decisions and strategies, determining
capital and liquidity adequacy, provisioning, retail credit decisioning, risk measurement and stress testing.
We assess individual model risk using a materiality rating based on a quantitative approach that considers complexity, use,
and impact. The materiality assessment determines the appropriate governance requirements for each model, including
the model review frequency and validation requirements. Materiality ratings for each model are reviewed at least annually to
ensure they remain representative of the risks associated with the model.
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Managing and monitoring model risk
We apply a range of controls and procedures to identify, mitigate and monitor model risk:
• A Board defined appetite is approved at least annually, supported by a Model Risk policy and standards, which set our
minimum requirements in relation to model documentation, development, implementation, validation and change.
• A model inventory serves as a central repository for essential model artefacts.
• A materiality assessment is conducted on all models within the model inventory.
• Model owners represent the first line of defence for monitoring and managing model risk, with oversight provided
through second line independent model validation and third line assurance activity.
• The Models and Rating System Committee (MRSC) is our primary body for overseeing model risk. Material model risk
issues and performance versus appetite are reported to through to BRC.
• Model owner reviews are submitted through governance on a cyclical basis, in line with model materiality ratings.
• Models are validated independently prior to implementation and on a cyclical basis, in line with model validation
standards and materiality ratings.
• Regular model performance monitoring is conducted against defined tolerances, to identify where model redevelopment
or calibration may be required.
• Controls around post model adjustments (PMAs) are in place to ensure they are appropriately governed and accurately
applied.
• Annual attestations are completed by model owners to confirm that they have complied with the requirements of the
Model Risk policy.
2025 performance
Key developments in relation to model risk during 2025 were as follows:
• During the year, the Society completed its inaugural self assessment against the requirements of PRA SS1/23: Model risk
management principles for banks. Overall, the review concluded that our model risk policies and practices were aligned to
regulation and highlighted planned areas of activity to further embed requirements across the business.
• The responsible adoption of artificial intelligence solutions across the organisation is an increasing area of focus. To support
this process, the Society has developed a new AI policy to manage associated risks, which tend to be broader than those
presented by more traditional models.
• Throughout 2025, the Society has continued to engage with the PRA regarding its submission of a revised suite of IRB
models to address revised regulatory requirements.
• We continued to closely monitor the performance of our models to ensure they remained fit for purpose. Where
appropriate, PMAs have been applied to capture risks and uncertainties in the prevailing environment.
Model risk outlook
We will continue to embed and refine our revised model risk management practices during 2026, in accordance with industry
good practice, and the interlinkage with AI, as these tools are more widely adopted across the business.
As at year end the Society was awaiting feedback from the regulator regarding its revised IRB model suite. Upon receipt of
this feedback the Society will determine appropriate next steps. During the interim period, PMAs will be maintained to ensure
the existing model suite remain reflective of updated regulatory expectations. For further details, refer to our 2025 Pillar 3
disclosure, located on our website.
Leeds Building Society | Annual Report and Accounts 2025 79
6. Operational risk
Definition
The risk of financial or reputational loss from inadequate or failed internal processes, people and systems or from external
events. This incorporates resilience risk which is the inability to maintain important business services in response to
unexpected or adverse events.
Sources of operational risk
The main drivers of operational risk are classified as follows:
• Operational resilience risk
• IT risk
• Information security
(including cyber risk)
• Data risk
• People risk
• Change risk
• Financial crime risk
• Third party risk
• Legal and regulatory risk
• Financial reporting risk
Managing and monitoring operational risk
We apply a range of controls and procedures to identify, mitigate and monitor operational risk:
• A Board defined appetite is approved at least annually, supported by an appropriate suite of operational risk related policies.
• An Operational Risk Management Framework is maintained, outlining the process for identification, assessment,
mitigation and monitoring of operational risks, incident management protocols and reporting operational losses.
• Day to day operational risk is managed by first line business functions. Oversight of first line activity is provided by both
the second and third lines of defence through monitoring and assurance activity.
• Conduct and Operational Risk Committee (CORC) and Operational Resilience Committees (ORC) provide oversight of
how operational risks are being managed across the organisation. Performance against appetite is reviewed through
these committees and is also reported through to BRC.
• The control environment is validated by the first line through Risk and Control Self Assessments (RCSA), control testing
and oversight procedures, including a dedicated Customer Risk & Assurance team, with oversight from the second and
third lines of defence.
• An Operational Resilience Framework and testing programme is maintained, incorporating business continuity,
Information Technology Risk, Information Security and Third Party Management, to ensure the provision of resilient
services to our members.
• A financial crime strategy and policy are maintained, which are overseen by a dedicated Financial Crime Prevention team.
The financial crime risk and control environment is formally assessed through the annual MLRO report to BRC.
• Stress testing is used as part of the ICAAP to ensure we retain sufficient capital for extreme, but plausible, operational
risk events.
• The Society has developed a multi-year cyber strategy to further strengthen defences around our online and cloud
services through consideration of zero-trust principles.
• We operate various people related frameworks to attract and retain people with the right skills and capabilities to deliver
our purpose and to provide operational resilience.
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2025 performance
Operational resilience risk
Our controls, to ensure that Important Business Services (IBS) can be maintained in the event of an incident, continue to
operate effectively and have been enhanced through live testing. We have also enhanced the mapping of our IBS to better
focus on the underlying infrastructure supporting the services and ensure these have appropriate resilience arrangements
in place.
IT risk
Controls over the Society’s technology estate continue to operate effectively. Focus on efficiency and effectiveness within IT
teams has continued, delivering enhanced management of third party IT services and introducing new tools to support the
management of IT systems for the benefit of colleagues and members. Delivery of our multi-year core systems programme,
designed to enhance our capabilities to change at pace to deliver better outcomes sooner while being more responsive to
external events, continued in 2025 with the launch of the pilot digital savings platform.
Information security risk
We continue to monitor the evolving threat landscape to ensure controls remain appropriately targeted. Our multi-year cyber
strategy has advanced, further strengthening defences around our online and cloud services through consideration of zero-
trust principles. In response to the persistent risk of supply chain attacks and ransomware, we have continued our focused
assurance on third party integrations and foundational security controls.
Data risk
Throughout 2025, we continued to invest in capabilities to understand and manage our data. Building on the new
infrastructure delivered previously, development has focused on supporting our multi-year core systems programme through
migration of data flows onto the modern data platform, enhancing quality management and traceability.
People risk
We have developed our purposeful Colleague Value Proposition (CVP), 'It’s better to belong', which clearly articulates the
benefits of working at the Society. This underpins our activity to attract and retain people with the right skills and capabilities
to deliver our purpose. We have continued to support colleagues to develop and thrive in their careers through a blend of
learning resources accessible to all via our digital learning platform.
Following recent changes in the senior leadership team, there has been increased focus on succession planning. Succession
planning assessments for all senior leadership roles are conducted quarterly, with regular updates to the Nominations
Committee/Board to ensure there is a strong pipeline to provide leadership continuity, maintaining stability for the long term
success of the Society.
Change risk
During 2025, the key focus of our change activities was on progression of the multi-year programme to replace our core
banking platform. Regular reviews over the governance approach, to ensure it remains strong and appropriate, supported
by oversight across all lines of defence, strengthened with external expertise, have been used to ensure the right change
is delivered without disruption to Society services. Development to date has been successfully tested for a small number
of colleague savings and mortgages accounts as part of the incremental, risk conscious, proving approach adopted by
the Society.
Financial crime risk
The financial crime landscape remained heightened throughout 2025. In the industry account takeovers and Authorised
Push Payment (APP) fraud continue to pose significant threats to members. In response, we continued to advance our
control measures, including enhancing checks on outbound payments to further mitigate the risk of fraud-related losses.
Additionally, we offered customers opportunities to attend fraud clinics to provide advice on how to be vigilant and recognise
scams. We also provided colleagues with comprehensive training and educational resources to enhance their ability to protect
themselves, the Society and our members against financial crime.
Leeds Building Society | Annual Report and Accounts 2025 81
Third party risk
Third parties continue to be key in the delivery of services to members, especially our increasing use of cloud technologies as
we move towards migration of our core systems. Throughout the year we have continued to gain assurance that third parties
remain capable of maintaining their services even in a stressed environment and that data shared with them is secure through
regular due diligence activities.
Legal and regulatory risk
The volume, scale and complexity of regulatory change continued to shape our operating environment in 2025. We maintained
robust processes to ensure relevant changes are identified and complied with during the year.
Operational risk outlook
In 2026, management will focus on maintaining an appropriate balance between progressing the delivery of our multi-year
core systems programme, furthering our purposeful ambitions and change to ensure legal and regulatory compliance and
ensuring that risks associated with these activities are mitigated appropriately. This will include ensuring we have the right
skills and capabilities to support our change programme, including responding to uncertainties. Discretionary change will be
carefully prioritised to maximise the benefits achieved and ensure focus can be maintained on the core migration programme.
Challenges and opportunities will continue to arise from AI enabled technologies. We will continue to take appropriate steps
to safely benefit from efficiency and effectiveness gains from AI while ensuring that risks are understood and managed.
In line with changes to the Corporate Governance Code, we will introduce revised monitoring and testing of our 'material
controls' as an extension to the current control environment processes, in preparation for the new reporting requirements
in 2027.
7. Conduct risk
Definition
The risk that actual or potential customer detriment arises, or may arise, from the way the Society conducts its business.
Sources of conduct risk
Conduct risk can arise from how we carry out our business and will ultimately impact the outcomes customers receive.
This can manifest from several key areas, including:
• Product and services
• Price and value
• Customer communications
and understanding
• Customer support
Conduct risks can occur at any stage of the customer journey and risk assessments are carried out as part of our normal
business processes, so we can understand, mitigate and monitor them. Where we recognise something has gone wrong, we
carry out root cause analysis to reduce the chance of it happening again and ensure any customer detriment is appropriately
redressed in a fair and transparent way.
Managing and monitoring conduct risk
We apply a range of controls and procedures to identify, mitigate and monitor conduct risk:
• A Board defined appetite is approved on at least an annual basis, supported by the Conduct Risk policy and frameworks.
• First line colleagues are responsible for managing potential conduct risks through their day to day activities. This is
overseen by various teams across the three lines of defence, through their assurance activities.
• CORC is the Society’s primary committee for overseeing the management of conduct risk. Performance against risk
appetite is also reported through to BRC.
• A Product Governance framework is in place, which outlines how products are designed to meet customer needs, deliver
fair value, and remain suitable for their target market through ongoing assessments.
• A Customer Understanding Framework is in place to ensure our communications and product literature provide the right
information at the right time and are also clear and transparent.
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• A Customer Support Framework ensures support is provided to meet customers’ needs at the point of sale and
throughout the product lifecycle, so that customers can use their products as reasonably anticipated and without
unreasonable barriers to product changes, switching providers, or making a complaint. This is further supported by our
vulnerability standards, which outline how we support customers with vulnerability characteristics.
• Customer-facing colleagues receive comprehensive training, with regular competency assessments, coaching, and
ongoing development.
• Our Complaints Handling policy and supporting processes ensure complaints are addressed with empathy and
sensitivity through a fair and transparent process.
• Ongoing monitoring is embedded within business processes, supported by MI reporting and trend analysis. Independent
assurance reviews are conducted by the customer assurance team, Compliance and Internal Audit to assess the
effectiveness of controls and frameworks. Findings are reported through governance committees, with actions tracked
to completion.
2025 performance
• The Consumer Duty Annual Assessment, completed in July, confirmed that the Society continues to deliver good
outcomes for the majority of customers.
• Product and services and price and value outcomes remain strong, supported by robust product level MI, fair value
reviews, and governance committee oversight. Independent external reviews confirm strong alignment with regulatory
expectations and industry peers.
• Customer support outcomes showed improvement during the year but still revealed pockets of inconsistency, especially
in areas reliant on manual processes and colleague judgement. Management is actively addressing this with targeted
plans, including embedding customer outcomes testing, optimising customer outcomes MI, focussing on customer
support across operational areas and digital channels, and investment in our systems and processes through our multi-
year core banking systems project.
• During the year, further enhancements have been made to controls to improve the customer journey for those reaching
end of term on an interest only product, without a repayment strategy. Additionally, the launch of an online referral tool
to Legal & General has provided customers with easier access to specialist advice where they require it.
• Elevated complaint volumes in the first half of the year were attributable to increased business activity and operational
incidents. Complaint volumes reduced through the remainder of the year and complaint handling measures showed
strong performance at year end. The current emphasis is on tackling root causes so that we can continue to improve our
processes and provide excellent service and outcomes for our members.
• Several improvements have been implemented during the year to strengthen the identification and support for
customers in vulnerable circumstances (CiVC), including colleague training and coaching, inclusion of CiVC data in
product fair value assessments and embedding of dedicated CiVC support teams within customer service teams.
Conduct risk outlook
We remain committed to delivering fair outcomes for all customers, with a particular focus on those in vulnerable
circumstances. Actions are in train to further enhance our CiVC processes, including improvements to the identification
and logging of CiVC in intermediary and online savings journeys.
A new Outcomes MI framework has been endorsed and is now progressing towards implementation. This enhanced
approach will deliver a more holistic and integrated view of outcome performance, further strengthening our ability to
monitor and respond to customer outcomes indicators.
Our multi-year programme to replace our core banking platform is focused on safeguarding the delivery of good customer
outcomes and implementing targeted product simplification. Maintaining a strong customer focus throughout the
remaining build and migration phases will ensure consistently positive outcomes for customers.
Leeds Building Society | Annual Report and Accounts 2025 83
8. Strategic/business risk
Definition
The risk that the Society fails to formulate or execute an appropriate strategy and business model in response to the external
environment, threatening our longer-term viability.
Sources of strategic/business risk
The main sources of strategic/business risk arise from the following:
• Over or under diversification in our business model (geography, products, funding or exposures) inhibiting delivery of
strategic objectives.
• Failure to develop and execute an appropriate strategic plan and objectives.
• Failure to adapt to changes in the external environment e.g. macroeconomic, political, technological advances,
competition, and changes in consumer preferences.
Managing and monitoring strategic/business risk
We apply a range of controls and procedures to identify, monitor and mitigate strategic/business risk:
• A Board defined appetite is approved at least annually, supported by a suite of appropriate policies.
• Strategic/business risks are monitored through our horizon scanning processes, with appropriate escalation channels in
place.
• Executive Committee and BRC provide oversight of the management of strategic risks. Performance against appetite is
reviewed through these committees and at relevant Board meetings.
• The direction of business and investment activity are set by an annual strategic planning process in the context of the
changing regulatory, technological, and competitive landscape.
• Our corporate planning process includes an assessment of the business and macroeconomic environments, which are
regularly monitored throughout the year and plans adjusted accordingly.
• Competitor and market performance is assessed by regular thematic reviews.
• An ESG strategy and targets are maintained, which ensure that our purpose and strategy remain aligned with our
stakeholder expectations.
• Stress testing is used to understand performance under a variety of severe, but plausible, scenarios.
• Independent risk reporting, including horizon scanning, assesses our operating environment and performance against
strategic plans and objectives.
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2025 performance
During 2025, we continued to respond to evolving market conditions and customer dynamics:
• Conditions within our operating environment remained uncertain, reflective of macroeconomic and geopolitical risks.
• Activity within the UK housing market remained resilient during the year, underpinned by improved borrower affordability
through above-inflation wage growth and lower interest rates. Competition amongst mortgage lenders continued to
strengthen with margins further tightening and changes to criteria following a relaxation of lending rules by the PRA.
• A similar trend was mirrored within the savings market whereby retail savings reverted to being a 'true cost' of funds.
The increase in the relative cost was driven by larger market participants and lenders refinancing TFSME drawings.
• In the context of heightened competition within our core markets, we carefully monitored the market positioning of our
products and responded accordingly. Furthermore, we launched a range of new initiatives/products to deliver on our
purpose and continued to focus on operational and service performance.
• We continued to progress our multi-year core transformation programme to increase functionality, strengthen our
operational resilience and make our systems simpler and quicker to use for our members, colleagues and intermediary
partners.
• In light of progress with transformational activity, changes in market dynamics and emerging customer/technological
trends the Society undertook a review of its strategic drivers, which underpin our purpose, to ensure they remain
appropriate for the next phase of the Society’s strategy.
• The Society’s cost base continued to increase during the year, driven by investment in transformational projects.
Notwithstanding this investment, the Society continues to operate an efficient underlying business model, with a cost
income ratio of 52.2%.
Outlook
• Our strategic/business risks are closely linked to the emerging risks detailed within the Risk Overview on pages 37 to 40.
• In particular, prevailing macroeconomic and geopolitical risks may have the potential to create volatility and uncertainty
in the Society’s outlook. Competition within our core markets is also expected to remain heightened, driven by relaxation
of macroprudential regulation, ISA reforms and increasing demand for digital channels.
• We will continue to closely monitor external developments and assess potential impacts under both central and stressed
conditions.
• Progress with our strategic change portfolio will also be closely monitored, to ensure that key transformational projects
are appropriately prioritised and effectively delivered to support achievement of our strategic objectives.
Leeds Building Society | Annual Report and Accounts 2025 85
Governance
Corporate Governance Report
Year ended 31 December 2025
Introduction
Following my appointment to the role in March 2025, this is my first Corporate Governance report as Chair of the Board. I am
delighted to have taken on the role of Chair and feel privileged to lead the Society. In February 2025, we said farewell to Iain
Cornish, former Chair, and I would like to express our sincere gratitude for his strong leadership during his tenure.
Our Board
2025 saw a number of changes for our Board, with my appointment as the Chair and the departures of Richard Fearon as Chief
Executive Officer (CEO) and Andrew Conroy as Chief Financial Officer (CFO). As reported last year, Gareth Hoskin, Senior
Independent Director and Chair of Audit Committee also retired at the end of March, following nine years with the Society.
Following Richard taking some extended leave in June, Annette Barnes, our former non-executive director, was appointed as
the Interim Chief Executive Officer (Interim CEO).
Following the announcement of Andrew Conroy’s departure, the Board was pleased to announce the appointment of Arlene
Cairns as the new CFO (subject to regulatory approval). In 2025, we have been particularly focused on succession planning
for both the Board and Executive Committee, to ensure we have a strong and diverse composition to lead the Society and to
deliver the strategy. I am pleased to report that the Board and the Executive Committee have demonstrated their strength
and resilience during this transitional period. We have also continued to display our resilience, adapting to changes in the
economic environment and remaining financially and operationally stable, please see pages 4 to 57 of the Strategic Report for
further information. The recent changes have enabled a number of internal appointments, demonstrating the level of internal
talent and strength of our succession plans.
Transformation and innovation
As reported in 2025, we are investing significantly in the development of new core banking technologies which will provide
more flexible and resilient systems to futureproof our systems and provide a foundation for strategic transformation. This is
a multi-year programme and a long term investment in our future, ensuring we are set up for a world of constant change.
It will also lay the groundwork for ongoing improvements, helping us unlock the full potential of our people and our business
and enhance our digital experience for our members and colleagues.
This transformation is a vital part of our broader strategy – all aimed at delivering on our purpose, to put home ownership
within reach of more people – generation after generation.
In terms of oversight, the Board continues to be focused on this area of transformation and has received regular updates on
progress of the programme.
People and culture
In 2025, we continued to strengthen the culture that underpins our purpose and performance. Our ambition is clear: to build a
workplace where colleagues feel heard, valued and empowered, and where high-performing teams can thrive through change.
We remain committed to fostering a workplace where every colleague feels they belong, can grow and can contribute to
delivering on our purpose for members and communities.
We are committed to having a diverse and inclusive Board to help set the Society’s strategy, tone and culture and in 2025 have
moved further towards greater gender diversity in the Boardroom with a 60/40 gender split (male/female), supported by
female Chairs for both the Audit and Remuneration Board Committees, a female Interim CEO
1
and a newly appointed female
CFO (joining in 2026).
1 Annette Barnes was appointed as Interim CEO in June 2025
Leeds Building Society | Annual Report and Accounts 2025 87
Corporate governance
For the 2025 financial year we have applied the principles and complied with the provisions of the Financial Reporting Council’s
Corporate Governance Code (the 'Code') published in 2024, save for provision 11, which relates to Board composition, where
at least half of the Board, excluding the chair, should be independent non-executive directors. A copy of the Code which is
available on the Financial Reporting Council’s website (frc.org.uk), and as a building society, we voluntarily apply the Code
as set out in the Building Societies Association (BSA) Guidance, available at bsa.org.uk. During 2025, the Board opted to
prioritise specialist knowledge and succession planning at Board level over its composition. Therefore, as at 31 December,
the Board comprised ten directors: four executive directors, the Chair, four independent non-executive directors and one
non-independent non-executive director. Whilst the Board composition was made up of 40% independent non-executive
directors (excluding the Chair) for the purposes of provision 11 of the Code, the Board continued to have a majority of
non-executive directors (60%) versus executive directors (40%) as at 31 December 2025. This was also a consequence of
Annette’s appointment as an executive director which left one fewer independent non-executive director, and as reported
previously, David Fisher’s tenure as a non-independent non-executive director had been extended into 2026, to provide
continuity and support to the Board following changes in Board composition made earlier in the year. Succession plans will be
an area of key focus in 2026, and recruitment plans are in place to ensure the composition of the Board remains appropriate in
all material respects.
This report sets out how the Board has operated over the past twelve months and explains how we embed good governance
throughout our activities, ensuring that our decisions remain balanced, transparent and aligned to the interests of all
stakeholders.
Brendan McCafferty
Chair of the Board
26 February 2026
Corporate Governance Report continued
The following non-executive directors stepped down
from the Board in 2025:
• Iain Cornish, former Board Chair, in February 2025.
• Gareth Hoskin, former Senior Independent Director,
Chair of Audit Committee, in April 2025.
• Annette Barnes, former Senior Independent Director
(from 1 April 2025) and Chair of Remuneration
Committee was appointed as Interim Chief Executive
Officer in June 2025.
The following executive directors stepped down from the
Board in 2025:
• Richard Fearon, former Chief Executive Officer,
in November 2025.
• Andrew Conroy, former Chief Financial Officer,
in December 2025.
For further details of Board changes and new
appointments, please see page 108 of this report.
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The Board of Directors
Year ended 31 December 2025
The biographies of each member of the Board as at 31 December 2025, are shown here and serve to demonstrate the
reasons why the skills and experience of each director contribute to our long term and sustainable success.
Brendan McCafferty
Chair and Independent
Non-Executive Director
Appointed: Independent non-executive director in
September 2024 and Chair of the Board in March 2025.
Board committees: Nominations (Chair) and
Remuneration committees.
Skills and experience: Brendan is a chartered
management accountant with over 30 years’ senior
leadership experience in regulated financial services
businesses. Brendan is also Chair of Nest Corporation
(National Employment Savings Trust) and a specialist
insurance business.
From Brendan’s previous roles as CEO, he has experience
leading major transformational change in financial
services organisations, and Brendan understands how to
best engage government and the other stakeholders we
work with. Brendan believes his experience and strategic
leadership will help us achieve our purpose.
Roles and responsibilities: As Chair, Brendan leads
the Board and oversees our performance as a business
to make sure our strategy is on track to deliver for our
members. As Chair of the Nominations Committee,
Brendan makes sure the Board and senior leadership team
have the right mix of skills and experience now and in the
future.
Other roles:
• Chair of Nest Corporation
• Chair of Academy Insurance Services and its connected
entities
• Trustee of Blueprint for Better Business Trust
• Trustee of Catholic Diocese of Salford and its connected
entities
Annette Barnes
Interim Chief Executive Officer
Appointed: Independent non-executive director in
February 2019. Interim CEO in June 2025.
Skills and experience: Annette has over 35 years’
experience in financial services, including senior
leadership experience – as a CEO, managing director and
Board member. She is also a non-executive director for
Globaldata plc and Stratos Markets Limited.
Annette's experience in financial services, aligned
with her background in customer engagement,
people leadership and technology, has given her
strong commercial and strategic skills, especially in
transformation and change, which will be an important
factor in the Society's forthcoming core transformation
journey. Annette has been a director at the Society since
2019, and is passionate about our purpose - putting
home ownership within reach of more people, generation
after generation.
Roles and responsibilities: Annette oversees the day to
day running of the Society, leads the management team
and delivers our purpose to make sure we’re operating in
the best interests of our members and key stakeholders.
She also works closely with the Chair and the Board to
agree and deliver against our long term strategy.
Other roles:
• Non-Executive Director, Chair of Remuneration
Committee and Senior Independent Director of
GlobalData plc (due to step down in February 2026)
• Non-Executive Director, Chair of Remuneration and
Nominations committees of Stratos Markets Ltd
Leeds Building Society | Annual Report and Accounts 2025 89
Farah Buckley
Independent Non-Executive Director
Appointed: April 2023.
Board committees: Audit (Chair) and Board Risk
committees.
Skills and experience: Farah has had a successful
executive career, with a focus on private equity and
corporate finance, most recently with Hermes GPE
and Schroder Adveq. This has given her extensive
experience in audit, investment, strategy, risk and ESG
(Environmental, Social and Governance).
Farah has spent more than 23 years working in financial
services and has held a variety of Board roles including
several non-executive positions. Her experience, skills
and insight as a chartered accountant mean she can
effectively monitor the integrity of our external financial
reporting.
Roles and responsibilities: As Chair of the Audit
Committee, Farah makes sure our financial statements
are fair, balanced and include all the information needed to
assess our performance. She is also our ‘whistleblowing’
champion and ensures our culture welcomes open and
transparent discussions.
Other roles:
• Non-Executive Director Aurora UK Alpha plc
• Non-Executive Director Caledonia Investments plc
• Non-Executive Director Apollo Syndicate Management
Limited
Andrew Conroy
Chief Financial Officer
Appointed: Chief Financial Officer in July 2019 and
Executive Director in January 2020.
Skills and experience: Andrew has over 20 years’
experience in financial services, including a number
of senior roles in both building societies and banking
institutions. Having worked within finance, treasury
and corporate strategy, Andrew developed strong
technical skills in financial accounting and treasury risk
management.
Roles and responsibilities: As CFO Andrew was
responsible for managing the Society’s finances and
one focus was to make sure we support our members
and colleagues by safeguarding the Society’s financial
position. As part of Andrew’s role, he regularly met with
the PRA to discuss the ways in which we maintain a safe
and sound financial system.
Andrew was Chair of Assets and Liabilities Committee
and Balance Sheet Optimisation Group. He was
responsible for our Finance, Treasury, Data and Third
Party Management functions, along with oversight of the
Society's recovery and resolution plan and associated
activities.
Andrew stood down from the Board on 31 December 2025.
The Board of Directors continued
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David Fisher
Non-Independent Non-Executive
Director
Appointed: March 2012.
Skills and experience: David has had a career in financial
services for more than 30 years in a variety of senior roles
including CEO of Sainsbury’s Bank. In this time, David has
developed a great deal of knowledge in retail financial
services. He also has a strong understanding of risk
management, pensions and human resources.
David’s wide ranging Board level commercial experience
enables him to provide both a strategic and an
operational perspective on the challenges that the
Society faces. He also has a great deal of knowledge in
retail financial services which is useful as we continue to
expand our branch network.
Roles and responsibilities: David’s role is to provide
challenge and scrutiny to make sure we are financially
resilient and have systems in place to manage risks
appropriately. David’s been a long-standing member of
the Board, and he continues to provide insight at both
Board and Board committee meetings.
Neil Fuller
Independent Non-Executive Director
Appointed: Independent non-executive director in
December 2020 and Interim Senior Independent Director
in June 2025.
Board committees: Board Risk (Chair), Audit,
Nominations and Remuneration committees
Skills and experience: Neil has over 40 years’ experience
of retail banking and financial services, most recently
as Executive Director and Chief Risk Officer at Bank of
Ireland UK plc and GE Capital Bank. Prior to this he has
held a variety of roles including Risk Director and Chief
Risk Officer in the UK Retail Division of NatWest/RBS.
Neil’s previous experience as CRO at different
organisations gives him a strong understanding of risk
management and risks that have the potential to impact
the Society’s operations.
Roles and responsibilities: As Interim Senior
Independent Director he provides support and guidance
to the Chair. As Chair of the Board Risk Committee, Neil
helps monitor the Society’s exposure to potential risk.
Neil works with the committee to oversee the delivery
and effectiveness of our risk management frameworks
and promote a risk aware culture within the Society. The
ethics of a mutual are important to Neil and he very much
enjoys working with the Society.
Other roles:
• Non-Executive Director and Chair of Board Risk
Committee of Cynergy Bank plc
Leeds Building Society | Annual Report and Accounts 2025 91
The Board of Directors continued
Deputy Chief Executive Officer
Appointed: Executive Director in January 2015 and
Deputy Chief Executive Officer in May 2021.
Skills and experience: Andrew has worked at the
Society since 1998, joining as a solicitor but progressing
into a variety of senior roles since then including Chief
Risk Officer. He’s also Chair of our Inclusion Steering
Committee, which supports the delivery of our inclusion
and diversity strategy.
After 27 years’ working at the Society, Andrew has
developed strong knowledge of the organisation, its
people and culture. He also has extensive experience
in risk management and strategy which supports our
growth ambitions.
Roles and responsibilities: Andrew is responsible for the
Customer division, and Property and Business Services
function. He also leads on managing our climate-related
risks and our climate transition plans, as we move forward
in our net zero journey. Andrew is a member of several risk
focused committees and Chair of the Cost Optimisation
Group, which aims to deliver our annual cost plan, making
sure the Society manages costs effectively.
Other roles:
• Non-Executive Director of Leeds Teaching Hospitals
NHS Trust
• Non-Executive Director of Shared Ownership Code
Limited
Andrew Greenwood
Chief Operating Officer
Appointed: Chief Operating Officer in September 2019
and Executive Director in May 2021.
Skills and experience: Rob has spent much of his
career working in senior executive roles in technology,
operations and transformation at Lloyds Banking Group,
Royal Bank of Scotland and McKinsey and Company. His
earlier career included time serving as an officer in the
Royal Navy.
Rob brings a wealth of experience in retail banking,
technology and strategy as well as specialist knowledge
in the design and execution of transformation and
technology programmes. Over the last six years in the
Society, Rob has used this expertise to strengthen our
resilience, improve our mortgage systems and lay the
technology foundations for our future success.
Roles and responsibilities: As Chief Operating Officer
Rob is responsible for the Society’s technology,
transformation and operational resilience. A key priority
is the successful delivery of our multi-year technology
transformation programme, which includes building a
replacement core banking system that will ensure we
have capable and robust systems to keep us ahead of
future customer and market expectations.
Other roles:
• Member of the UK Finance Digital, Technology and Cyber
Product and Service Board
• Vice Chair of Governors, Trustee and Director of
The Grammar School at Leeds
Rob Howse
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Pam Rowland
Independent Non-Executive Director
Appointed: May 2023.
Board committees: Remuneration (Chair), Audit, Board
Risk and Nomination committees.
Skills and experience: Pam is a chartered banker with
over 30 years’ financial services experience in operations
and transformation roles, most recently as Chief
Operating Officer at Paragon Banking Group plc.
Pam has experience promoting a strong customer-
centric and people focused culture within organisations.
Pam’s knowledge and experience of financial services
operations and transformation programmes help her
support the Board and the Society, particularly as we
move to a new core banking system over the next few
years.
Roles and responsibilities: As Interim Chair of
Remuneration Committee, Pam makes sure the Society
has the right reward structures in place to support
our culture as a mutual and to attract and retain the
talent we need to deliver our purpose. As our colleague
engagement champion she regularly meets with
colleagues to discuss their experiences and raise their
views to the Board to drive change and positive action.
Other roles:
• Non-Executive Director and Chair of Remuneration
Committee of Saga Services Ltd
Anita Tadayon
Independent Non-Executive Director
Appointed: October 2021.
Board committees: Board Risk committee.
Skills and experience: In her career Anita has held a
number of senior roles and has a wide range of expertise
combining technology, strategy and change. She has
worked in senior roles in transformation, digital and
technology for Sky, British Gas and BT Business.
Anita is passionate about the values associated with
mutuality and she continues to bring further strength and
diversity to the Board. Anita has a wide knowledge of the
development and design of customer journeys, and she is
dedicated to ensuring our members’ needs are a key area
of focus.
Roles and responsibilities: As consumer duty champion,
Anita provides oversight of conduct and ensures we
deliver positive member outcomes. With over 25 years’
knowledge and experience she adds value to Board
discussions, particularly in transformation, strategy and
IT/digital areas to help support the Society on our digital
journey.
Other roles:
• Director of Planning, Transformation and Performance at
Virgin Media O2
• Director of Tadayon Consulting Limited
Leeds Building Society | Annual Report and Accounts 2025 93
The Executive Committee
Year ended 31 December 2025
All executive directors of the Society serve as members of the Executive Committee, alongside the Chief Officers (listed
below). Biographical profiles for the executive directors are provided on the previous pages.
Jon Bailey
Interim Chief Financial Officer (from 1 January 2026)
Jon joined the Society in 2022 and has over 15 years' experience in financial
services across all areas of Finance in both building society and banking
institutions. Since joining the Society, he has had responsibility for financial
planning, financial reporting and third party management. Since stepping
into the Chief Financial Officer role on an interim basis his remit expanded
to include Credit Risk and Treasury. Jon is also Chair of the Balance Sheet
Optimisation Group.
Caroline Dale
Chief Internal Auditor
Caroline is a chartered accountant and trained at KPMG, where she spent
eight years delivering and managing external audits and other assurance
work in the financial services industry. She joined the Society in May 2015
and since then has held several Internal Audit and Finance leadership
roles. She was appointed Chief Internal Auditor and joined the Executive
Committee on 1 November 2023. Caroline is responsible for leading an
independent and effective Internal Audit function, which provides oversight
and challenge of the risk and control environment and gives assurance to the
Society’s Board and management team, to support them in delivering
its purpose.
Geraldine Kemp-Klotz
Chief People Officer
Geraldine joined the Society in September 2024 and was appointed
permanently to the role of Chief People Officer in July 2025. She has over
20 years’ global experience across universal banking. She has diversified
strategic capabilities, combining deep industry knowledge with expertise in
people and culture. Prior to joining the society, Geraldine spent eleven years
at Barclays Bank plc in London and New York. Geraldine also spent over ten
years with Citigroup and Visa Inc. in EMEA (Europe, Middle East
and Africa), and Asia Pacific. Geraldine is a strong advocate of healthy
inclusive workplaces and empowering colleagues, which she champions
across financial services as a member of the UK Financial Services Skills
Commission Board.
Andy Mellor
Chief Risk Officer
Andy has worked in financial services for over 25 years, with experience
in a variety of senior roles in building societies, banking and consultancy.
Andy worked in specialised treasury roles prior to risk management, Internal
Audit and advisory roles. Andy developed the Risk function, as part of the
risk strategy refresh and he joined the Executive Committee in March 2021,
following his appointment as Risk Director, then Chief Risk Officer on
1 October 2022. Andy was Chair of the Models and Ratings Committee,
and co-sponsor of the Gender Equality Forum. Andy left after 12 years with
the Society and Katherine Tong, Director of Compliance, Legal, Risk and
Secretary, was appointed as his successor.
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Andy Moody
Chief Commercial Officer
Andy joined the Society in 2012 and has held the roles of Director of Credit
Risk, Deputy Chief Risk Officer and more recently Chief Commercial Officer,
in which he has responsibility for our products and their distribution, our
digital channels, brand and marketing, strategy and corporate affairs. Andy’s
prior experience includes senior risk, commercial and consulting roles across
PwC, Skipton Building Society, Northern Rock, National Australia Bank and
Bradford & Bingley. Andy is Chair of the Credit Committee.
Victoria Reid
Chief of Staff
Victoria has worked in financial services for over 23 years, with experience in
a variety of leadership roles across Customer, Commercial and Operational
divisions. Victoria leads the Executive Office and in doing so acts as the
strategic partner and right-hand person to the Chief Executive Officer, and
Executive Committee more broadly, driving alignment across executive
priorities, accelerating decision-making, and ensuring operational excellence
throughout the Society.
Katherine Tong
Chief Risk Officer (from 1 January 2026) and Secretary
Katherine joined the Society in 2001 and initially carried out some operational
roles before moving to the Risk Division. As a head of department in Risk,
she has had responsibility for several different teams, before, more recently,
operating as the Director of Compliance, Legal, Risk and Secretary. In Q4,
2025, Katherine was appointed as Chief Risk Officer and from 1 January 2026
formally replaced Andy Mellor. Katherine joined the Executive Committee
in Q4 as part of the transition to her new role. Her wealth of experience will
greatly strengthen the Executive Committee, having worked across a number
of areas including legal and regulatory compliance, risk management, and
Board and corporate governance.
Leeds Building Society | Annual Report and Accounts 2025 95
The Board’s role
The Board leads the Society and is responsible for securing its long term success by developing and implementing a strategy
that delivers our purpose for the benefit of our current and future members, colleagues, and the communities we serve.
Creating mutual value for our stakeholders is a core priority and is integral to the Board’s decision-making processes.
To support effective governance, the Board delegates certain duties to its dedicated Board committees. Each committee
operates under detailed Terms of Reference (ToR), which set out its delegated authority and areas of focus. Copies of each
committee’s ToR are available on our website at leedsbuildingsociety.co.uk/your-society/about-us/board-committees.
The Board is governed by the Society's Memorandum and Rules and operates under a formal ToR, which set out a clear set of
roles and responsibilities. The Board also maintains a formal schedule of matters reserved for its own decision. Examples of
these responsibilities are set out below. Comprehensive details of the Board’s role, together with the full schedule of matters
reserved to it, are available within the Matters Reserved for the Board and the Board’s Terms of Reference, accessible on our
website at leedsbuildingsociety.co.uk/your-society/about-us/board-committees.
Area of focus Board responsibilities
Finance Review of the Society’s annual and interim financial statements.
Approval of the corporate plan and forecast updates.
Monitor the performance of the Society and its capital and liquidity requirements.
Strategy/purpose Approval and oversight of technological enhancements and transformation change to the
Society's operations.
Development and oversight of the Society's purpose and strategy.
Stakeholder engagement Stakeholder engagement including seeking the right outcomes for our members.
Approval of a non-executive director to be appointed as (a) the colleague engagement
champion; and (b) consumer duty champion.
Review of the development and implementation of the Colleague Strategy.
Risk management Annual review of the effectiveness of our systems of internal control.
Annual approval of the Society’s risk appetite.
Governance Proposals for the appointment, re-appointment or removal of external auditors.
Annual approval of the Speak Up Policy.
Set the tone and monitor culture.
Review and approve the framework of delegated authorities and mandates.
Authority for large initiatives including acquisitions or disposals and contract expenditure.
Appointment of any committees of the Board and their terms of reference.
Approval of and changes to the Corporate Governance Framework.
Undertaking a rigorous and formal review annually of its own performance, committees and
individual directors.
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Division of responsibilities
There is a clear division between the roles of the executive and non-executive members of the Board. The positions of Chair
and CEO are held by different individuals, each with well-defined responsibilities. The principal responsibilities of the Chair,
CEO, and Senior Independent Director are reviewed periodically against their respective job descriptions and are documented
for Board review and approval.
The table below outlines how responsibilities are clearly delineated for each of these roles, as well as for executive directors,
non-executive directors, and the Secretary. All directors work closely with the Secretary, who provides guidance on Society
and governance matters and have access to independent professional advice, where required, at the Society’s expense.
The Board
Roles and responsibilities within the Board
Chair
Leads the Board to ensure it
operates effectively in setting the
strategic direction of the Society,
promoting the highest standards
of corporate governance. Shapes
the culture in the boardroom by
fostering open and honest debate
and ensuring valuable contribution
from all directors.
Senior Independent Director
Supports the Chair in their role
and with the delivery of objectives
and acts as a sounding board.
Available to fellow directors as an
intermediary.
Non-executive Directors
Use their skills, experience and
knowledge to hold management
to account by constructively
providing challenge to the Society’s
performance, culture and controls.
Chief Executive Officer
Runs the day to day management of the Society under
delegated authority from the Board and is accountable
to the Board for the Society’s performance and delivery
of the Society’s strategy.
Executive Directors
Hold specific management responsibilities in the day
to day running of the business, and accountable to the
Board for the execution of the Society’s strategy and
the performance of the business.
Secretary
Advises the Board on all Society and governance related matters. Provides support to the Board in managing good
information flows.
The Board delegates certain matters to its principal committees
Each Board committee considers the Society’s business and matters that fall within its respective remit of responsibility.
Audit Committee
Key areas: Financial reporting, Internal Audit and
relationship with External Auditors.
Members: Farah Buckley (Chair), Neil Fuller, Pam Rowland
See the Audit Committee Report on page 118
Board Risk Committee
Key areas: Risk (management, frameworks, appetite, and
monitoring).
Members: Neil Fuller (Chair), Anita Tadayon, Farah Buckley,
Pam Rowland
See Board Risk Committee Report on page 125
Nominations Committee
Key areas: Succession planning, Board leadership and
composition.
Members: Brendan McCafferty (Chair), Pam Rowland,
Neil Fuller
See Nominations Committee Report on page 112
Remuneration Committee
Key areas: Board and material risk takers pay and benefits,
Society reward oversight.
Members: Pam Rowland (Chair), Neil Fuller,
Brendan McCafferty
See Remuneration Committee Report on page 130
Leeds Building Society | Annual Report and Accounts 2025 97
Board committees
Board committee members are all independent non-
executive directors, selected for their skills and experience
relevant to each committee’s remit. Membership is restricted
to non-executive directors to maintain independence and
ensure compliance with the Code. Other Board members
and senior leaders may attend committee meetings by
invitation, when their input is required.
Each committee chair is responsible for ensuring that
accurate, timely and clear information is provided to
support effective deliberation and decision-making. The
Board maintains oversight of all matters delegated to its
committees through regular reports from committee Chairs
at Board meetings, supplemented by updates from members
of the Executive Committee.
Executive Committee
The Executive Committee is chaired by our CEO and its
primary purpose is to support the executive directors
and chief officers in managing the Society in a unified
and strategically focused way. The committee takes
an enterprise wide view of key issues and priorities
and delegates specific responsibilities to a number of
management committees. Members of the Executive
Committee also regularly attend Board meetings to provide
updates on their areas of responsibility and to address
relevant matters.
Board meetings
The Board, led by the Chair, holds scheduled meetings as
often as necessary to fulfil its responsibilities and to ensure
the effective operation of the Society. Each year, the Board
typically meets at least eight times and holds both a planning
and strategy conference. Extra meetings are convened
by the Secretary when matters arise that require Board
attention in the interim.
Board meeting agendas are planned in accordance with the
ToR, while allowing flexibility to allocate time for additional
items that may require discussion.
Comprehensive and timely papers are provided in advance of
each meeting. Several standing items appear at every Board
meeting, including:
• Minutes of the previous meeting
• Minutes of any Board Committee meetings held since the
last Board meeting
• The action schedule
• The schedule of key matters
• A written update from the CEO
• The business performance scorecard
• Updates on strategic matters, regulatory developments,
and business transformation
Each agenda also includes an item inviting reflection on the
quality of the discussions held, the content of the papers
presented, and the behaviours demonstrated during
the meeting. This aims to gather constructive, real time
feedback on the format and quality of Board materials in
an open and transparent manner, and to ensure the Board
continues to cultivate an environment that supports
effective decision-making.
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Board and Board committee meetings attendance in 2025
In 2025, there were 11 meetings of the Board. The table below sets out the attendance records of all Board and Board
committee meetings. In accordance with good governance practices, executive directors do not have membership rights at
Board committee meetings, and the Chair does not have membership rights at the Audit or Board Risk Committees.
Board Audit Board Risk Nominations (1) Remuneration
Number of meetings held in 2025 11 6 7 4 (1) 7
Annette Barnes (2) 11/11 – 3/3 2/2 2/2
Farah Buckley 10/11 6/6 6/7 – –
Andrew Conroy (3) 9/11 – – – –
Iain Cornish (4) 2/2 – – 1/1 1/1
Richard Fearon (5) 5/5 – – – –
David Fisher 11/11 – – – –
Neil Fuller (6) 11/11 6/6 7/7 2/2 7/7
Gareth Hoskin (4) 2/2 2/2 2/2 1/1 1/1
Andrew Greenwood 11/11 – – – –
Rob Howse 11/11 – – – –
Brendan McCafferty (7) 11/11 – 2/2 4/4 4/6
Pam Rowland 11/11 6/6 7/7 4/4 7/7
Anita Tadayon 11/11 – 7/7 – –
Notes
(1) Three additional Nominations Committee meetings were held in 2025 to deal with single issue emerging items.
(2) Annette Barnes was appointed as Interim CEO from 23 June 2025 and her membership of any Board committees
automatically ceased.
(3) Andrew Conroy attended the morning session only of the November Board meeting.
(4) Iain Cornish and Gareth Hoskin stepped down on 28 February and 31 March 2025 respectively.
(5) Richard Fearon took a leave of absence from 23 June 2025 and stood down from the Board on 27 November 2025.
(6) Neil Fuller joined the Nominations Committee in July 2025 following his appointment as Interim Senior Independent
Director.
(7) Brendan McCafferty was appointed as Chair from 1 March 2025. His membership of Board Risk Committee automatically
ceased, and he joined the Remuneration Committee.
Leeds Building Society | Annual Report and Accounts 2025 99
Director – Annette Barnes
Stakeholder: Government
Annette attended a Labour Party fringe event and a
Yorkshire Businesses event at Number 11 Downing Street,
hosted by the Chancellor of the Exchequer, Rachel Reeves.
During these engagements, Annette raised key topics for
discussion, including cash ISA limits and shared ownership
schemes.
Stakeholder: Colleagues
Annette participated in a 2025 graduation celebration,
honouring 35 colleagues for completing external
qualifications alongside their professional roles.
Stakeholder: Regulators
Annette engaged with the Bank of England Financial
Policy Committee, to discuss several sector-wide issues,
including the impact of recent Loan to Income (LTI)
changes on mortgage accessibility, potential government
measures to further support the housing market, the
influence of parental financial assistance on borrowing
trends, and the use of rental payment data to strengthen
credit scoring practices.
Board decisions and stakeholder engagement
High quality reporting remains fundamental in supporting the Board’s ability to make well informed and timely decisions.
The Board continues to place strong emphasis on the clarity, accuracy, and relevance of the materials presented to it. Regular
reviews of reporting practices ensure that information is concise yet sufficiently detailed to enable effective scrutiny and
robust decision-making. In recent years, enhancements have been implemented to strengthen the readability and focus of
Board papers, including clearer articulation of the specific actions or decisions being sought.
As part of the Board’s ongoing commitment to continuous improvement, all standard reporting templates were
comprehensively reviewed and updated in 2025. The revised templates are designed to promote consistency, reinforce a
clear statement of purpose and intended outcomes, and streamline content where appropriate to support efficient Board
deliberation.
The Board recognises the importance of engaging with a diverse range of stakeholders and considers their views when
making decisions which shape the organisation’s strategic direction. Established engagement channels are in place for each
stakeholder group, and the Board receives insight through a combination of direct interactions, structured engagement
programmes, and formal reports presented either at Board level or through its committees.
Consideration of purpose, strategy, and stakeholder impact remains central to the Board’s decision-making framework.
All reports requiring a decision from the Board must set out the stakeholder groups likely to be affected and describe how
their interests have been considered. In recent years, the Board has introduced changes to increase its engagement activity
and to deepen its understanding of stakeholder perspectives, enabling more informed judgements and supporting balanced,
sustainable decision-making.
Stakeholder interactions are a standing agenda item on all Board agendas. The Chair invites Board members to provide
updates on any engagement undertaken since the previous meeting, bringing insight to the Board and promoting discussion
and thought, in a more direct and meaningful manner. Some examples of engagement with stakeholders are presented
below. Further information on how the Board has engaged with its key stakeholder groups is outlined on pages 24 to 27 in the
Strategic Report.
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Who are our stakeholders?
Members and
brokers
Colleagues
Third-party
suppliers
Communities Environment Regulators Investors
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Director – Brendan McCafferty
Stakeholder: Colleagues
Brendan visited our contact centre, to engage directly
with frontline colleagues. During the visit, Brendan
listened to colleagues’ experiences, and shared
reflections on the organisation’s future direction and
purpose. This engagement reinforced the importance
of strong connections between leadership and
frontline teams, helping to build trust, boost morale,
and highlight the critical role every colleague plays in
delivering exceptional customer outcomes.
Stakeholder: Regulators
Brendan and Katherine Tong, Society Secretary,
engaged with both the FCA and PRA, regarding the
Society’s governance framework and succession plans
in place for the Board and leadership team.
Stakeholder: Colleagues
Brendan attended a LGBTQ+ Colleague Forum meeting
to gain strategic insight into emerging priorities and
explore opportunities to support its long term impact.
Director – Neil Fuller
Stakeholder: Colleagues
Neil delivered a presentation at the annual colleague
Risk Division Conference and engaged with colleagues
throughout the event to discuss key priorities and share
insights from his role as Chair of Board Risk Committee.
Director – Farah Buckley
Stakeholder: External auditor
Farah maintained regular engagement with Ernst &
Young LLP, the Society’s external auditor, to challenge
planned approach and discuss results of audit work
performed.
AAA
Who are our stakeholders?
Members and
brokers
Colleagues
Third-party
suppliers
Communities Environment Regulators Investors
Director – Andrew Greenwood
Stakeholder: Colleagues
As Chair of the Society’s Inclusion Steering Committee,
Andrew continued to advance the Society’s inclusion
and diversity strategy. Under his leadership, the Society
achieved a significant milestone by becoming the first
organisation to receive gold accreditation for the second
time, under the Inclusive Employers Standard.
Stakeholder: Members, Colleagues
Andrew visited a number of branches this year including
York, Wetherby, Harrogate and Garforth, and attended
the re-opening of the Harrogate branch following its
refurbishment in July.
Who are our stakeholders?
Members and
brokers
Colleagues
Third-party
suppliers
Communities Environment Regulators Investors
Leeds Building Society | Annual Report and Accounts 2025 101
Director – Anita Tadayon
Stakeholder: Colleagues
Anita spent a day with the core team to observe how
the core transformation project had developed since its
inception.
Stakeholder: Members, Colleagues
As consumer duty champion, Anita visited our
Cheltenham branch to meet with colleagues, observe
the branch’s daily operations and interactions with
members.
Who are our stakeholders?
Members and
brokers
Colleagues
Third-party
suppliers
Communities Environment Regulators Investors
Director – Andrew Conroy
Stakeholder: Colleagues
Andrew sponsored the Ethnicity and Cultural Heritage
Forum throughout 2025, supporting key initiatives such
as the Zero Tolerance project, which reinforced the
Society’s commitment to a harassment free workplace.
Stakeholder: Rating agencies
Andrew attended meetings with rating agencies, Moody
and Fitch, to provide a comprehensive update on our
financial performance, strategy, and risk management
to ensure transparency and maintain our credit rating.
AAA
Director – Pam Rowland
Stakeholder: Colleagues
As colleague engagement champion, Pam attended
a number of meetings with colleagues including the
Colleague Voice Network, Chair of the Colleague
Association and meetings with colleagues across
various departments, representing a range of levels and
roles. Pam also visited our contact centre in Cobalt, and
visited a number of our branches. More information on
Pam’s role as colleague engagement champion is on
page 105.
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Director – Rob Howse
Stakeholder: Colleagues
Rob collaborated closely with the Colleague Association
(CA) to discuss the core transformation project and
how it will impact colleagues. As part of this, Rob worked
closely with the CA to support the implementation
of changes to our Target Operating Model, ensuring
that colleague feedback informed decision-making
processes, outcomes and colleague communication.
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2025 Board activity
This page sets out an example of the key matters considered by the Board during the year.
Theme Discussion points Stakeholder
Board effectiveness Board effectiveness review sessions were held with Board
members in both January and May in which the actions from the
external effectiveness review in 2024 were discussed. In July, the
Board received an update on those agreed actions and confirmed
the proposed plans for an internal review in the second half of 2025.
The output from the 2025 review was discussed with the Board
in November 2025 and it was agreed to allocate time to a further
discussion in 2026. More information on board effectiveness and
outputs is on page 110 of this report.
Board
Technology and
innovation
In January, the Board provided approval for management to
progress to the second phase of the core transformation
project. Regular updates on core transformation and migration
programme were provided thought the year, including updates
on progress against key delivery milestones, budgetary controls,
the partnerships in place with Accenture and Mambu and project
governance. Discussions also focused on optimisation, business
readiness, co-existence plans and service design processes. More
detail can be found in the strategic report on page 13.
In addition to the core transformation programme, the Board
received updates on management’s decision to progress with
development of a mobile app and the importance and growing
use of AI.
Colleagues
Members
Brokers
The full Board met with the CEO of Mambu, to discuss their joint
partnership with the Society in delivering the core transformation
programme and progress made so far.
Suppliers
Colleagues
Consumer duty The Board received the Annual Consumer Duty Assessment
and noted the good progress that had been made to embed the
consumer duty. Over the last twelve months, the Society has
continued to enhance its focus on consumer outcomes within
operational areas and decision-making processes.
Members
Annual General
Meeting (AGM)
The Board received an update in June on the 2025 AGM and results
of a member survey, including questions on the format and design
of our AGM documentation and meeting. Insight was used to
formulate plans for future meetings.
Members
Colleagues
Financial planning In January, the Board received proposals for a revised format and
proposed agenda for the May Strategy Conference.
The Board reviewed the proposed Corporate Plan for 2026 – 2030
in October. Further discussions took place in November, and the
Corporate Plan was approved at the November meeting.
Colleagues
Members
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Theme Discussion points Stakeholder
People and culture The Board received two updates, in July and November, on the
multi-year colleague strategy, which also included an update on the
culture audit performed in 2024. More information on the culture
section of this report on page 105.
As colleague engagement champion, Pam Rowland provided an
update from her first few months in the role and referenced the key
themes which had been identified through her interactions with
colleagues. The Board also received an update from the Chair of the
Colleague Association who explained that during the period, the
association had worked closely with the People team to enhance
the colleague experience, including: the introduction of Leadership
Fundamentals training courses; launch of a Colleague Assistance
Program, and delivery of training for supporting customers in
vulnerable circumstances. Collaboration with the People Team also
focused on preparing for changes to employment legislation.
Colleagues
Board
Members
Strategy update The proposed strategy and evolution of our strategic drivers
was discussed in depth at the Strategy Conference in May, and
subsequent Board meetings. Consideration was given to whether
the strategy was appropriate to provide sufficient clarity and
alignment over time, and whether it was directionally right given
how competition and markets are evolving.
In November, the final iteration of the evolved strategy and new
strategic drivers was presented to the Board for approval, including
a view on proposed activities for 2026, which will help to drive us
towards achieving our strategic ambitions. More information on
strategic drivers can be found in the Strategic Report on page 9.
Members
Colleague
Board
Governance As disclosed earlier in this report, the Board approved a number
of changes to Board roles, including the appointment of Annette
Barnes as the Interim Chief Executive Officer, the appointments
of Neil Fuller as the Senior Independent Director, Pam Rowland as
Chair of Remuneration Committee, member of Audit Committee
and colleague engagement champion, and Anita Tadayon as
consumer duty champion.
The Board was also engaged in and provided input to the changes
to the Executive Committee, including the appointment of
Katherine Tong as Chief Risk Officer and Jon Bailey as Interim Chief
Financial Officer.
The appointment of Arlene Cairns as the incoming CFO was also
approved in November.
Board
Colleagues
Regulators
Members
Risk Following a recommendation from the Board Risk Committee,
the Board approved the outputs of key prudential processes
(ILAAP, ICAAP, Recovery Plan and Resolvability Assessment),
operational resilience assessments and the annual assessment of
good customer outcomes.
Board
Colleagues
Regulators
Members
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Our culture: building a high-performing, purpose-led organisation
In 2025, we continued to strengthen the culture which supports the delivery of our purpose and performance. Our ambition is
clear: to build a workplace where colleagues feel heard, valued and empowered, and where high-performing teams can thrive
through change.
This year, the Board and our Executive Committee dedicated significant time to shaping the next phase of our culture. They
received updates on our colleague strategy and reviewed findings from our ongoing culture audit. The audit confirmed that
our culture remains strong and stable, colleagues believe in the Society’s purpose and feel supported by the people around
them. They continue to be motivated to do the right thing for our members and for one another.
At the same time, Board discussions reinforced a shared understanding that cultural stability – while positive – can make
meaningful shifts hard to achieve. To ensure we continue evolving, we prioritised four areas:
1. Supporting leaders to lead through change well, with more purposeful engagement and transparency;
2. Reimagining performance management to unlock potential and drive clarity;
3. Setting consistent standards for people leadership to ensure colleagues have high quality consistent experiences; and
4. Strengthening communication, helping colleagues understand the ‘why’ behind decisions.
These priorities are helping us move from a strong culture to one that is future-ready, more agile and equipped for
transformation.
With transformation accelerating, equipping our leaders became a central focus in 2025. All people leaders were invited to
our new People Leadership Fundamentals programme. An inaugural workshop focused on: understanding current colleague
experience, the role people leaders play in shaping culture, upcoming employment law changes, and guidance and resources
available to support people management. Alongside this, we launched a new People Leader resource on our intranet,
providing easy access to essential information throughout the colleague lifecycle. New quarterly bitesize digital learning
modules will support continuous capability building.
This programme is designed not just for compliance, but to create space for people leaders to learn from each other, build
confidence and connect across the organisation, ensuring a true sense of belonging. It strengthens our ability to foster
innovation, build resilience and deliver through change. We will continue investing in this programme throughout 2026.
Listening to our colleagues remains one of the most important ways we understand culture, improve performance, and
respond quickly to colleagues’ and members’ needs. In 2025, we expanded and deepened our listening approach. We
introduced Colleague Voice, a new network of representatives from across the Society. Representatives meet monthly
to surface what matters most to colleagues. Every quarter, representatives from all divisions also meet with members of
the Executive Committee and Board to share insights and agree actions. This network ensures leaders hear directly from
colleagues and supports colleagues in growing wider organisational awareness, influencing decisions and shaping plans
before broader rollout.
Our engagement approach, Your Voice, includes a full annual survey and two pulse surveys. Our annual survey confirmed
engagement remained strong at 8.4, keeping the Society in the top 25% of Financial Services organisations. Colleagues
highlighted our friendly, supportive, and inclusive culture, strong sense of purpose and belonging and valued development
opportunities. Where colleagues identified opportunities - including more open conversations about transformation, clearer
personal development discussions and more competitive pay structures – we used AI-enabled analysis (via Peakon, our
Employee Engagement Survey provider) to quickly identify themes and accelerate action planning.
In June, Pam Rowland, non-executive director, assumed the role of colleague engagement champion, succeeding Annette
Barnes. In this capacity, Pam met with a wide range of colleague groups and attended the Society wide Colleague Voice
forum. The insights she gathered were presented to the Board and provided real time visibility of colleague sentiment and
reinforced the Society’s continued commitment to active listening and open dialogue.
Leeds Building Society | Annual Report and Accounts 2025 105
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Whistleblowing
Our whistleblowing policy, ‘Speak Up’ outlines the standards expected of all colleagues and those who work with us. We
refreshed the policy in 2025, appointing a new whistleblowing champion, Farah Buckley, and added the Chief People Officer
as a nominated manager to reflect regulatory requirements. We continue to promote awareness of Speak Up through
communications, training and intranet resources. Our Speak Up arrangements can be used to raise concerns if colleagues
have any suspicions or knowledge of wrongdoing or misconduct. The nominated managers (Chief People Officer, Chief
Internal Auditor and Chief Risk Officer) meet monthly to discuss themes and any matters that might warrant escalation.
The Audit Committee reviews our Speak Up arrangements annually. During the reporting period, a small number of Speak Up
notifications were received (September 2024 - August 2025). All were fully investigated with appropriate action taken.
No incidents were identified where a Speak Up should have been raised but was missed.
Training on Speak Up was refreshed in this year’s essential learning programme, ensuring colleagues feel confident in raising
concerns and understanding how reports are handled. We consider our Speak Up arrangements to be effective and will
continue to keep this under review.
Inclusion and diversity: creating a culture where everyone thrives
Inclusion and diversity remain central to our long term success and to the Board’s agenda. We made meaningful progress this
year, while recognising we have further to go, especially to increase diverse representation at a senior leadership level, which
has been a key area of focus in recent months for the Executive Committee.
Through focused development and robust talent sourcing, female representation at Executive Committee increased from
25% (2024), to 50% (2025). Our focus remains on ensuring we have robust diverse pipelines, that go beyond gender, as
we continue to push forward on our inclusion and diversity strategy. This includes us exploring other avenues of diversity
characteristics, such as social mobility as part of our diversity assessments. In 2025, we expanded our talent data to all
leadership levels to understand future pipeline strength and concentrate targeted interventions to either support internal
development or external attraction where it matters most.
Having diversity in the pipeline is something the Executive Committee is focused on driving forwards, with each member of
the committee being accountable for their own area in this regard.
Included below are four examples of our inclusion and diversity activities over the last twelve months.
1. Governance
To support the delivery of our inclusion and diversity strategy, the Society has several well-established colleague-led inclusion
and diversity forums. More information can be found in the Strategic Report on page 15.
Our Inclusion Steering Committee (ISC), which is chaired by Andrew Greenwood (Deputy CEO) met twice in 2025 and was
attended by each colleague forum lead and senior sponsor, the Inclusion and Diversity team and overall sponsors of our
inclusion and diversity agenda. The ISC reviews progress on our strategy and ensures we are taking an intersectional approach
to our actions. As overall inclusion and diversity strategy sponsor, Andrew has also hosted quarterly recognition breakfasts
and monthly touchpoint meetings with the Inclusion and Diversity team to discuss key areas of focus, and to help the team to
drive forward on the agreed strategy.
2. Accreditations
In October we celebrated becoming the first organisation to have been accredited Gold in the Inclusive Employers Standard
for a second time, an achievement we are incredibly proud of, whilst also recognising there is still further progress we need to
make. We originally achieved Gold in 2023 and have gone on to make progress across all pillars of the assessment, including
launching other inclusive initiatives such as expanding diversity data collection, introducing our Empowering Allyship learning
programme, and providing resources for inclusive leadership, demonstrating the sustained impact of our inclusion work and
our commitment to fostering a truly inclusive culture.
In March we became the first building society to be officially certified as a Bloody Good Employer, an accreditation, which helps
businesses create a more inclusive workplace for colleagues who menstruate.
In 2025, our Contact Centre team was presented with a bronze award for Diversity, Equity, Inclusion and Belonging (DEIB)
at the European Contact Centre and Customer Service Awards. This recognition highlights all of the amazing work our
colleagues have been doing to improve ways of working in our Contact Centre, working alongside our inclusion and diversity
forums and included the training we provide to our leaders, as well as the support and adaptations we offer to colleagues who
might need a more personalised development plan to help them thrive.
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3. Working with external partners and committed signatories
We continue to be signatories to the Women in Finance Charter, as well as the Business in the Community Race at Work
Charter and the Open Doors Campaign (which promotes inclusive recruitment). We also continue to work with Inclusive
Employers, Business Disability Forum and Business in the Community to review and validate our action plans.
4. Colleague Forums and other key initiatives in 2025
• Members of the senior leadership team got involved in the LGBTQ+ History Month, aided by members of the LGBTQ+ Forum
to help spread knowledge, support and awareness across the Society as part of that event. We created an informative and
entertaining video for colleagues covering themes related to the LGBTQ+ History Month topic of activism covering subjects
such as LGBTQ+ champions, Pride events, LGBTQ+ sports stars and LGBTQ+ safe spaces.
• We also launched a neurodiversity toolkit for people leaders and colleagues. It aims to build understanding of neurodiversity
and demonstrate how, with a little bit of support, all colleagues can understand more about neurodivergence and the
adjustments that can easily be made to help everyone reach their full potential.
• To ensure an inclusive recruitment process, we have launched the sharing of interview questions in advance to candidates.
We believe this supports candidates to show up as their best selves at interview.
As we move into 2026, we will continue to strengthen:
• Leadership capability across the organisation
• Our listening culture
• Inclusion and diversity, with a focus on sustainable pipelines
• Transparency and engagement during transformation
Board composition, succession and evaluation
On 31 December 2025, the Board comprised ten directors: four executive directors, the Chair, four independent
non-executive directors (40%) and one non-independent non-executive director.
Board gender diversity
(as at 31 December 2025)
Female
Male
4
6
Tenure of non-executive directors
(as at 31 December 2025)
0 to 3 years
4 to 6 years
7 to 9 years
9+ years
3
2
1
Board ethnicity
(as at 31 December 2025)
Ethnically Diverse
White
2
8
Executive and non-executive composition
(as at 31 December 2025)
Executive
Non-executive
4
6
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As outlined in the introduction to this report, a number of changes to Board composition arose in 2025, full details of which
are shown in the table on this page. The process for succession planning and recruitment to support changes in Board
composition is discussed in more detail in the Nominations Committee report on page 114.
Date Board Member Leavers
28 February 2025 Iain Cornish Stepped down as Chair and non-executive director
31 March 2025 Gareth Hoskin Stepped down as a non-executive director, Senior Independent Director
and Chair of Audit Committee
23 June 2025 Richard Fearon Stepped down temporarily as Chief Executive Officer to take a leave of
absence
27 November 2025 Richard Fearon Stood down from the Board
31 December 2025 Andrew Conroy Stood down from the Board
Date Board Member Role Changes
29 January 2025 Pam Rowland Pam Rowland was appointed a member of the Audit Committee
1 March 2025 Brendan McCafferty Appointed as Chair of the Board
1 April 2025 Farah Buckley Appointed as Chair of Audit Committee
1 April 2025 Annette Barnes Appointed as Senior Independent Director
23 June 2025 Annette Barnes Appointed as Interim Chief Executive Officer, and stepped down as
non-executive director, Senior Independent Director and Chair of
Remuneration Committee
23 June 2025 Pam Rowland Appointed as Interim Chair of Remuneration Committee and colleague
engagement champion
23 June 2025 Neil Fuller Appointed as Interim Senior Independent Director and member of
Nominations Committee
November 2025 Arlene Cairns The Board approved the appointment of Arlene as the incoming Chief
Financial Officer. Arlene will join the Board in May, 2026 as the incoming
Chief Financial Officer – subject to regulatory approval.
Election and re-election of directors
Following their initial appointment by the Board, all directors must be elected to the Board by members at the annual general
meeting (AGM). Following their initial election, all directors stand for annual re-election at the AGM, and their continued
appointment is dependent on their successful re-election each year. The Society’s rules permit members to be nominated for
election to the Board, subject to compliance with PRA and FCA requirements.
Board conflicts of interest
All directors have a duty to disclose and notify the Board of any potential, or actual conflicts of interest which should then be
considered and, if appropriate, approved by the Board. The Board has Conflicts of Interest Standards which set out the policy
and procedures for declaring and authorising any conflicts of interest, provides examples of what would constitute a conflict
of interest and refers Board members to the Secretary for advice where required.
A detailed register of any potential or actual conflicts of interest is maintained by the Secretary and is submitted to the
Nominations Committee and to the Board for review and consideration at least annually, to ensure that all declarations remain
acceptable. The Secretary also asks Board members to confirm periodically if there have been changes or updates to the
register. The Chair will also discuss any potential or actual conflicts of interest with each non-executive director in their annual
appraisal and will update the Board thereafter should there be any changes.
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Additional roles and time commitment
The expected time commitment for non-executive directors is usually a minimum of three days per month and six days per
month for the Chair.
All new Board candidates are required to provide details of any other external appointments or positions they hold, to ensure
they have sufficient capacity to undertake the role and to assess if there are any potential, perceived or actual conflicts of
interest arising from their other appointments.
Before committing to any additional external appointments, directors are required to disclose details of the appointment, the
time commitment for the role and whether there is any potential, perceived or actual conflict of interest. Approval from the
Board is required before any new additional roles can be accepted.
The table below outlines changes to additional appointments which occurred during the year.
Director Entity Role Month
New appointments
Andrew Greenwood Leeds Teaching Hospitals NHS Trust Non-Executive Director October 2025
Shared Ownership Code Limited Non-Executive Director November 2025
Cessations
Farah Buckley Long Term Assets Limited Chair/Non-Executive
Director
January 2025
Andrew Conroy Leeds Mortgage Funding Limited Executive Director December 2025
Each year, Board members are also requested to attest if the level of time commitment to their other roles has changed.
This is then assessed by the Nominations Committee, and an update is provided to the Board. In 2025, it was considered
that all members of the Board had sufficient time to fulfil their role.
As disclosed in 2024, Farah Buckley previously held more than the prescribed number of directorships under Article 91
of the Capital Requirements Directive IV and SYSC 4.3A.6R/GOR 5.5, which stipulates a maximum of four non-executive
directorship roles can be held by a member of the management body. Owing to the non-material nature of some of Farah’s
additional roles and low time commitment, the regulators agreed to a modification of the rules (under Section 138A of the
FSMA) up until 1 June 2025. Farah stepped down from her position with Long Term Assets Limited in January 2025 and a
waiver is therefore no longer required.
A list of all external directorships held by Board members is shown in the Annual Business Statement on page 219.
Board independence
The independence of our non-executive directors is considered annually by the Nominations Committee and is assessed
against the criteria set out in the Code. In 2025, the Nominations Committee and the Board agreed that all non-executive
directors, with the exception of David Fisher, were considered to remain independent in character and judgement and that
there were no business or other circumstances which were likely to impair their independence.
David Fisher continues to display independent character and judgement, however, and as disclosed in previous years, he has
been considered as a non-independent director since December 2023, owing to his tenure on the Board beyond the nine
year term. In accordance with the Code requirements, David remains as a member of the Society’s Board only and, whilst he
attends certain Board committees, he is not classed as a member. It was agreed in 2023 that David’s position would continue
for up to a further three years (to November 2026) to provide continuity and to support the changes on the Board.
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Board and committee effectiveness
The 2024 external evaluation of Board effectiveness concluded in January 2025 with the Board attending a workshop to
discuss the output from the previous year’s review. A follow up meeting was held in May, where commitment to three rituals
to support enabling the desired shifts were agreed: (a) Building relationships, (b) Embracing challenging conversations, and (c)
Productive meetings. A pragmatic discussion on the prerequisites for a ‘good Board meeting’ also generated tangible actions
relating to the agenda design.
The 2025 Board Effectiveness Review was an internal process and comprised of a questionnaire for members of the Executive
Committee and Board, representatives from Ernst & Young LLP, as the external auditor and Katherine Tong as Secretary. The
final part of the proposed questionnaire explicitly revisited the areas of focus agreed following the 2024 review and invited
feedback on progress and tangible next steps.
In addition, one Audit Committee and one Board Risk Committee meeting were assessed. The questionnaire results were
considered alongside the skills matrix and results from other Board Committee effectiveness reviews. The results were
presented to the Board in November, and it was concluded that the Board continued to operate effectively, recognising the
significance of sustaining this effectiveness during ongoing organisational change and recent leadership transitions.
Every year members and regular attendees of each Board committee also complete a series of questions regarding the Chair
and committee’s effectiveness and performance. The results of these questions help identify areas of improvement as well as
training and development opportunities. In 2025 the evaluation process concluded that all Board committees were operating
effectively. More information about the effectiveness results for individual Board committees is contained in each individual
committee’s report: Nominations page 117, Remuneration page 146, Board Risk page 126 and Audit page 124.
Directors’ induction
New directors receive a tailored induction programme aligned to their experience and responsibilities. The programme
provides a clear understanding of the Society’s operations and governance framework, with a strong focus on Board and
committee roles, decision-making processes, and accountability within the governance structure. An example of a typical
induction programme is set out below.
Pre-appointment Initial integration
Months 0-1
Observation & learning
Months 2-4
Stakeholder engagement
Months 3-5
Performance review
End of Month 6
Induction timeline
• Share formal
appointment letter, roles
& responsibilities, and
governance policies.
• Provide access to key
documents: Society’s
Rules, Memorandum, our
directors’ information
manual, business model,
responsible business
framework, Board papers
(last 12 months), and
previous Board
effectiveness review
summary.
• Meet with Chair and CEO
to discuss strategic
priorities, market trends,
and objectives.
• Meet with Society
Secretary to review
Board duties, regulatory
obligations, and our
governance structure.
• Attend introductory
meetings with chairs of
relevant Board
committees.
• Attend Board and
committee meetings as
an observer to
understand discussion
flow and agenda
structures.
• Debrief with committee
Chairs and relevant
committee members
directors after initial
attendance.
• Visit operational areas
(branches, teams, key
departments) to gain
insight into operations
and culture.
• Conduct one on one
sessions with senior
executives (for example
CFO, CRO, COO) to
deepen governance
understanding.
• Feedback session with
Chair to evaluate
integration and
contribution.
• Complete self
assessment and
induction checklist to
identify strengths and
development areas.
Individual director evaluation and appraisal
Director performance is assessed through ongoing dialogue, supplemented by a formal annual appraisal conducted at the
end of each calendar year. The appraisal process includes a discussion on each Board member’s personal development, any
training needs, their contribution to Board and committee discussions, and any reflections they may have on key matters.
As part of the process, the Chair also seeks confirmation that each non-executive director continues to have sufficient time
to discharge their fiduciary responsibilities and that no actual or potential conflicts of interest exist that could impair their
ability to perform their role effectively. The outcome of non-executive director appraisals is discussed by the Nominations
Committee.
Strategic Report
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The former Chair’s performance was evaluated by Gareth Hoskin as the Senior Independent Director at the time, and it
incorporated feedback provided from both the non-executive and the executive directors. The outcome of the appraisal was
shared at the January 2025 Board meeting, and it was agreed that the Chair was considered to be performing effectively in
his role. It was also noted that due to the Chair leaving in February, the discussion had very much centred on the handover
process and there were no material points to raise with the Board. Brendan McCafferty’s performance, as the incoming Chair,
was assessed by Neil Fuller, the current Senior Independent Director, and will be reported to the Board in January 2026.
Board training
The Board and committees receive training throughout the year. Members of the Board are invited to suggest topics and
themes where training and development is required. Training is also provided through the Board committees, details of which
can be found within each individual committee report.
In 2025, the Board received training on several topics including:
May
June
July October
November
An externally facilitated and interactive session provided
by Accenture on the mortgages and savings sector and
potential changes in customer expectations.
Presentation from Whitecap Consulting Ltd on AI and key
themes from ‘The Building Societies Report 2025’ including
market participation, regulation and digital capabilities.
Internal training on liquidity
risk delivered by the
Director of Treasury.
Training facilitated by Nomura on
Tier 2 buy-back strategies which
Nomura was engaged to advise on.
Training facilitated by
Experian on the UK Economy
and Credit Risk outlook.
2025
training
Audit, risk and internal control
Our internal governance arrangements continue to underpin the independence and effectiveness of the Internal Audit
function and safeguard the integrity of our financial statements. Further detail on the work of the Audit Committee can be
found in the Audit Committee Report on pages 118 to 124.
We also operate an Enterprise Risk Management Framework designed to identify, assess and manage risk, monitor the
effectiveness of internal controls, and determine the principal risks facing the Society. This supports the delivery of our long
term strategic objectives by ensuring robust oversight of our risk environment. An overview of this framework is provided in
the Risk Management Report on pages 59 to 85.
Remuneration
A summary of the work undertaken by the Remuneration Committee can be found within the Remuneration Report at pages
130 to 146.
Approved by the Board of directors and signed on behalf on the Board.
Brendan McCafferty
Chair
26 February 2026
Leeds Building Society | Annual Report and Accounts 2025 111
Nominations Committee Report
Year ended 31 December 2025
Nominations Committee highlights from 2025
• Brendan McCafferty commenced his role as Chair following his appointment to the Board in 2024
• Appointment of Annette Barnes as Interim Chief Executive Officer (Interim CEO)
• Appointment of a new Chief Financial Officer (CFO)
• Talent/Succession Plan development
List of committee members as of 31 December 2025
• Brendan McCafferty (Chair)
• Neil Fuller*
• Pam Rowland
* Neil Fuller became a member in July 2025 following
his appointment as Senior Independent Director and
Annette Barnes stepped down as a member following
her appointment as Interim CEO, in June 2025.
Number of meetings and attendance
• Four scheduled meetings
The attendance records from each meeting in 2025 are included within the Corporate Governance report. A number
of additional ad hoc meetings were held to discuss changes to the Executive Committee and recruitment.
Introduction from the Chair
I am pleased to present my first report as Chair of the Nominations Committee, which summarises our activities over the past
year and the role and responsibilities of the committee.
Committee focus 2025
Key areas of focus for the committee in 2025 have included recruitment for the new CFO and considering and agreeing interim
plans in response to Richard Fearon, CEO, going on a leave of absence in June. In addition, the committee has commenced
steps to find Richard's replacement, following him stepping down in November, as well as giving consideration to other non-
executive director roles.
Following Richard commencing extended leave in June, the committee gave careful consideration to the appointment of an
interim successor. It was agreed that Annette Barnes would assume the role of Interim CEO, reflecting her six years of service
as a non-executive director, her extensive executive leadership experience – including prior CEO responsibilities – and her
deep commitment to the Society, its members and its colleagues. The Board was confident that Annette’s appointment
represented the most appropriate short to medium-term solution, enabling the executive directors to maintain focus on their
existing responsibilities as the Society navigates this period of digital transformation.
With the change in CEO and a number of additional changes to Board and senior leadership composition during the year,
and on the horizon in 2026, the committee spent considerable time reviewing and agreeing changes to key roles and
responsibilities to ensure orderly and timely succession arrangements were in place. Following the announcement in April
that Andrew Conroy, CFO, would step down, the committee also agreed a succession and recruitment plan for his successor.
The committee was also focused closely on the outputs of the external Board evaluation exercise which took place in
September 2024, and facilitated an internal review based on the agreed actions from the previous year. I am pleased to
confirm that the evaluation concluded that the Board continues to operate effectively, particularly through a period of
significant change and with focus centered on the delivery of our digital transformation programme. More information
on the outcome and the evaluation process is included below and in the Corporate Governance report.
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Role and responsibilities
A summary of the committee’s role and responsibilities is detailed below.
Nominations Committee responsibilities:
• Oversight of succession planning and pipeline development for directors and the senior leadership team, ensuring
an appropriate focus on inclusion and diversity.
• Succession planning for all Board and Board committee roles.
• Oversight of the appointment and induction process for Board candidates.
• The approach to coordination of the internally facilitated annual Board evaluation review.
• Review of the Board Conflicts of Interest Policy, including monitoring any potential, perceived or actual conflicts
of interest.
• Ongoing assessment of the independence, additional external appointments and time commitment of
non-executive directors.
• Oversight of the Society’s governance structure and practices to ensure compliance with the Code and best
practice, insofar as it is relevant to a building society.
• Reviewing and recommending the Board Diversity Statement to the Board for approval.
• Oversight of subsidiary governance arrangements.
More information on the committee’s roles and responsibilities can be found in the terms of reference (ToR) which are available
on our website at leedsbuildingsociety.co.uk/your-society/about-us/board-committees.
Governance
The committee is responsible for ensuring the Board operates within a strong and effective corporate governance framework.
During 2025 this has included the activities highlighted below.
• Review of Board committee composition – several changes to committee composition were recommended to the Board
following Annette Barnes’ transition from a non-executive to executive Board member. This also included changes to
the appointments of consumer duty champion and colleague engagement champion. More details are included in the
Corporate Governance Report on pages 96 to 111.
• Annual review of the Society’s compliance with the Code (as it applies to a building society). Our statement of compliance
is found within the Corporate Governance Report on page 88. The FRC expect institutions to ‘comply’ or ‘explain’ against
provisions within the Code, and in that regard, the Society can confirm a deviation from provision 11 which requires at least
half the Board to be non-independent directors, excluding the Chair. As of 31 December, four out of ten directors were
independent non-executive directors. The Board continued to have a majority of non-executive directors (60%) versus
executive directors (40%) as at 31 December 2025.
• Review of the requirement to appoint a consumer duty champion. Following the FCA’s advice that Boards were no longer
required to retain this role, the committee reviewed its position and agreed to retain the role for at least 12 months.
Anita Tadayon is currently the Society’s consumer duty champion.
• Review of both the Corporate Governance and Nominations Committee’s reports for inclusion in the Annual Report
and Accounts.
• Oversight of the plan for the Board Effectiveness Review for 2025 and reviewing output and action plans from the externally
facilitated review in 2024.
Leeds Building Society | Annual Report and Accounts 2025 113
Board composition and succession planning
The committee ensures the Board and its sub committees maintain an appropriate balance of skills, experience and diverse
perspectives to operate effectively. To support this, it uses a range of information to support its deliberations and planning
discussions, including a Board committee composition schedule, Board tenure plan, skills matrix and Board level diversity
targets.
Succession planning for non-executive directors, executive directors and Board committees is carried out with an 18-month
forward view to prevent gaps in expertise and capability. This supports effective long term planning, promotes the ongoing
refresh of skills and experience, and informs search activity for future non-executive directors. The committee also reviews
the organisation’s leadership needs regularly and ensures a strong, diverse pipeline is in place.
Board committee composition is reviewed at every meeting. The committee receives a schedule highlighting non-executive
directors approaching their three, six or nine year anniversaries, and considers re-appointments based on performance,
independence, external commitments and development needs, before recommending them to the Board. Composition is
assessed to ensure compliance with the Code and the Senior Managers Regime. A skills matrix is used to review the mix of
skills, experience and qualifications across the Board, and is considered alongside the Board tenure plan to identify succession
priorities.
The committee also provides recommendations to the Board and oversees succession plans for the senior leadership team.
To drive progress and ensure diverse talent pipelines are in place for both the senior management and senior leadership
teams, it was agreed in 2025 to schedule updates to be provided at each committee meeting, following discussions with the
Executive Committee. In 2025, members of the Executive Committee completed psychometric assessments to support their
ongoing development.
The strength of our succession plans and internal pipelines were evidenced this year with several internal appointments to the
Executive Committee. Including the appointment of Katherine Tong, Society Secretary as Chief Risk Officer. Katherine has
been with the Society for over 20 years and, having joined in an operational role, she has held a number of roles within the Risk
Division and has been Secretary since 2015. Recruitment of a new secretary is currently underway, and Katherine will continue
to act as Chief Risk Officer and Secretary in the interim. Katherine’s profile, including details of her previous appointments,
skills and experience, is on page 95. In addition, Jon Bailey, previously Director of Finance, was appointed as the Interim CFO
from January 2026, until Arlene Cairns takes up her role later this year. Jon has been with the Society since 2022 and has
worked closely with Andrew Conroy to transform the Finance division. More information on this appointment is included in
the Strategic Report on page 28.
Board recruitment
The recruitment process is managed by our Chief People Officer with oversight and direction from the Nominations
committee. A typical process is set out below.
1. Succession planning 2. Role requirements 3. Agency search 4. Interview process 5. Recommendation
Board recruitment
The committee proactively
manages Board succession
by planning recruitment in
line with anticipated term
expirations and any
upcoming changes to
the Board.
Role descriptions,
including essential skills
and experience, are
developed in accordance
with succession plans and
the Board Skills Matrix.
Alongside our People
team, an external search
agency is engaged to
ensure access to a broad
and diverse candidate pool.
Potential candidates are
shortlisted and
interviewed using
objective criteria, with
particular emphasis on
promoting inclusion and
diversity within the Board.
The Nominations
committee will make a
recommendation for
appointment to the Board,
once a suitable candidate
has been identified.
Nominations Committee Report continued
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Appointment of a new Chief Financial Officer – Arlene Cairns
As noted in the introduction, one of the committee’s priorities in 2025 was the recruitment for the role of CFO, following
Andrew Conroy’s announcement to stand down. The committee held several planning meetings to review the skills matrix
and assess the desired skills and experience for the role. In addition, a timeline and interview schedule were also developed.
The interview schedule included meetings with both the Chair and Chief Executive Officer and a series of 'fire side' chats with
the Chair of Audit Committee and members of the executive team. The next stage included two formal panel interviews with
members of the executive team and Society Secretary.
Having considered several executive recruitment agencies, it was agreed to engage the services of Warren Partners to assist
with the search for a suitable candidate and to provide a shortlist of diverse candidates.
Having followed the interview process outlined above, it was agreed that Arlene Cairns had been successful and was the best
candidate for the role and the Nominations Committee recommended her appointment to the Board for approval, which was
duly approved. Arlene is due to join the Society as CFO (subject to regulatory approval) in May 2026.
Update to committee compositions
Following Annette’s appointment as Interim CEO, she stepped down as a non-executive director and from a number of Board
and Board committee roles, including Chair of Remuneration Committee, Senior Independent Director, consumer duty
champion, colleague engagement champion, member of Nominations Committee and member of Board Risk Committee.
The committee reviewed the skills and experience of the remaining non-executive directors alongside their existing roles
and time commitments and recommended the following appointments to the Board, for approval, in the interim. These
arrangements will remain in place into 2026 whilst Annette continues to act as Interim CEO and will be reviewed once an
appointment for the CEO is made.
• Pam Rowland – Interim Chair of Remuneration Committee and colleague engagement champion
• Neil Fuller – Interim Senior Independent Director and a member of Nominations Committee
• Anita Tadayon – consumer duty champion
Recruitment planning for Chief Executive Officer
Following the announcement in November that Richard Fearon would not be returning to the Board, meetings were held to
agree the role description, develop a detailed review of the skills and experience required for the vacancy alongside a timeline
for recruitment. The committee will be prioritising the recruitment for this role into 2026, and a further announcement will be
made once an appointment has been made. Annette Barnes has reiterated her commitment to acting as Interim CEO until the
successor can commence in role.
Board re-appointments
The committee is responsible for reviewing the re-appointment of all non-executive directors at the end of each three-year
term. Non-executive directors are usually expected to serve a minimum of two terms. These terms are subject to ongoing
performance evaluations and annual re-election by members at the AGM. Non-executive directors may also be proposed for
a third term, up to a maximum of a further three years (nine years in total but can be longer in very limited circumstances). On
re-appointment, a refresher training programme, informed by their performance evaluation and the future requirement of the
role, is provided to each non-executive director as appropriate.
During the year, the committee proposed, and the Board subsequently agreed, the following term extensions:
Name of non-executive Anniversary Agreed term extension
Farah Buckley 3 years 6 years – until 01.04.2029
Pam Rowland 3 years 6 years – until 01.05.2029
Leeds Building Society | Annual Report and Accounts 2025 115
Board skills matrix review
The committee maintains a comprehensive Board skills matrix, which requires directors to undertake an annual self
assessment of their skills and experience. The scope and depth of the matrix reflect the complexity of both executive and
non-executive director roles, as well as the regulatory responsibilities and governance standards expected of the Board.
Each year, the committee conducts a full review of the matrix. The outcomes of this exercise inform succession planning
and recruitment priorities, ensuring the Board and its committees retain the appropriate balance of skills and expertise,
and support the identification of any development or training needs.
In 2025, the skills matrix was considered alongside the outputs of the Board Effectiveness Review and the Board tenure plan.
This integrated analysis enabled the committee to identify future recruitment priorities and resulted in a recommendation to
appoint at least one additional non-executive director.
Other key activities in 2025
Annual review of the non-executive director competency framework and appraisal process
The committee assessed the competency framework and annual appraisal process in July, noting it was compliant with best
practice. No additional changes were proposed to the framework itself; however, it was agreed to reflect the output of the
Board effectiveness review into the appraisal process and include prompts to promote more developmental and constructive
feedback. Non-executive director appraisals, including that of the Chair, take place in November each year with a discussion at
the following committee to allow any matters to be raised.
Review of independence and conflicts of interest
During the year, the independence of all non-executive directors was assessed against the criteria set out in the Code and
their length of service. With the exception of David Fisher, all non-executive directors were assessed as continuing to be
independent. As reported in previous years, David Fisher’s appointment was extended into 2026 as a non-independent
non-executive director, due to the length of his tenure with the Society.
The committee simultaneously considered potential conflicts of interest by undertaking a review of the Board Conflicts of
Interest Register, alongside the external appointments and time commitments held by each director. Further details on the
2025 review process, conflicts of interest, external directorships and the associated time commitments are contained within
the Corporate Governance Report.
Board diversity
The committee is responsible for ensuring the composition of the Board and the senior leadership team is inclusive and
diverse and we place great importance on developing and meeting our targets in this area. We view diversity as something
that is multifaceted and goes beyond what you can see, which is why inclusive practices and supporting all our colleagues to
be at their best, is at the heart of our business.
In 2025, the committee reviewed and approved the Board inclusion and diversity statement with a small number of changes
to reflect the Society’s brand messaging: ‘it’s better to belong’ and to highlight focus on broader people culture activity.
The Society’s statement on inclusion and diversity is available on the Society’s website at leedsbuildingsociety.co.uk.
Our diversity targets set for 2030 remain appropriate and we are proud of the progress we have made at Board level. We
do however recognise that we are currently tracking behind our 2030 target for both gender and ethnicity at a leadership
level. We are committed to our 2030 targets and have discussed and agreed the actions we need to take with our Executive
Committee. As discussed earlier in this report, the committee will receive updates at each scheduled meeting on succession
planning and talent development which will ensure focus and positive progress.
Nominations Committee Report continued
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Board and Committee effectiveness
An external review was completed in 2024, in accordance with the recommendations in the Code, to hold an external review
every three years. The committee agreed the annual effectiveness review approach for 2025 in July and the review was
undertaken in September. More information on the outcome and process followed is included in the Corporate Governance
Report on page 110.
The committee undertook an annual internal effectiveness review whereby all members and regular attendees were invited to
complete an anonymous questionnaire. The results were considered at its meeting in October 2025, and it was discussed that
the committee was operating effectively and there were no significant actions requiring immediate attention. A small number
of focus areas were identified:
• Review of opportunities to use externally facilitated training sessions
• Continuous review of talent development and succession planning process – which will be satisfied through planned
updates to the committee at each meeting
Looking forward to 2026
In 2026, the committee will continue to focus on ensuring a smooth transition of the Board role changes explained in this
report, with focus on the recruitment and appointment of a new CEO, welcoming our new CFO and progressing plans for the
recruitment of at least one additional non-executive director.
Brendan McCafferty
Chair of Nominations Committee
26 February 2026
The table below sets out the Society’s progress against the 2030 targets for gender and ethnicity representation on the
Board and in the leadership team, as at 31 December 2025.
* Including non-executive and executive directors
** Excluding executive directors
Element Actual position at 31
December 2025
Target for 2030
Board* gender diversity
40
%
30
%
minimum
Board* ethnic minority representation
2 members 1 or more members
Female representation at
leadership level**
34.5
%
45
%
Ethnic minority representation at
leadership level**
5.5
%
10
%
Leeds Building Society | Annual Report and Accounts 2025 117
Audit Committee Report
Year ended 31 December 2025
Audit Committee highlights from 2025
• Provided oversight of the Society’s relationship with the external auditor.
• Annual Report and Accounts recommended to the Board for approval.
• Integrated assurance continues to demonstrate our control environment is effective and proportionate.
Committee membership during 2025
• Farah Buckley (Chair) – member since April 2023.
• Neil Fuller – member since January 2021.
• Pam Rowland – member since January 2025.
Number of meetings and attendance
• Six meetings during the year with 100% attendance from committee members.
• Meetings regularly attended by other Board members including the Chair, CEO and CFO. The Chief Internal Auditor,
representatives of the Finance and Risk Divisions and other relevant business areas, plus senior external audit
personnel also attend regularly.
• Two private meetings with the external auditor and two with the Chief Internal Auditor, not attended by
management.
Introduction from the Chair
I am pleased to present my report on the work of the Society’s Audit Committee in relation to the financial year ended
31 December 2025.
The committee comprises solely of non-executive directors so that it is independent of executive management. The
committee acts with authority delegated to it by the Board and reports directly to the Board. All members of the committee
have recent and relevant financial services experience and competence in accounting, finance or risk management.
Our core responsibilities relate to the following four areas:
1. Appropriateness
and integrity of our
external financial
reporting
2. Adequacy and
effectiveness of our
systems of internal
control and risk
management
3. Effectiveness,
performance and
independence of
the Internal Audit
function
4. Independence,
performance and
objectivity of the
external auditor
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In 2025, the economic environment in the UK has remained challenging and uncertain and although interest rates began
to fall, the pressure on household budgets remained intense. Against this economic background, mortgage and savings
market competition intensified considerably and presented challenges to the Society which are reflected in the work of the
committee.
In particular, the challenging economic conditions mean that greater reliance is placed on management judgement in
certain areas of financial reporting and committee members have spent considerable time reviewing and challenging these
judgements for both the Interim Financial Report and the Annual Report and Accounts.
It is vital that our internal control and risk management systems continue to operate effectively to protect the business
and our members in these uncertain times, and all three lines of defence have focused on maintaining a strong control
environment. I am pleased that the committee has been able to conclude that the control environment remains effective and
proportionate to our operations.
The Internal Audit function continues to provide an effective and independent third line of defence. Internal Audit’s regular
updates to the committee have generated significant discussion and challenge, so that committee members could be
satisfied that their work was focused on the most appropriate areas of risk throughout the year.
What the Audit Committee did during 2025
External financial reporting
The committee reviewed the Society’s Interim Financial Report, published in July, and its Annual Report and Accounts, on
behalf of the Board. Following detailed discussions and challenge of management, we were able to recommend these to the
Board for approval. All Board members either attended the committee meetings where the final financial statements were
reviewed or received an individual briefing from the Audit Committee Chair, so that all directors were aware of the matters
discussed and the challenges raised with management.
The committee also provides oversight of the Society’s regulatory reporting and Pillar 3 disclosures. We considered
material overarching judgements applied by management in the preparation of these reports and approved the governance
arrangements around their production, noting the assurance provided by the second line Risk Division.
Preparation of the financial statements requires management to adopt certain accounting policies as appropriate for the
business and to make judgements, estimates and assumptions. Further details of the work undertaken to examine and
challenge the most significant areas are set out in the table overleaf, with additional information in note 2 of the accounts.
Having considered and challenged management and the external auditor’s reports on the approaches adopted, we were able
to conclude that they were appropriate.
The Board has also asked the committee to confirm that the Annual Report and Accounts, as a whole, presents a fair, balanced
and understandable view of the Society’s position and prospects. In assessing this, we considered the process for the
production, review and challenge of the report and whether this would result in a balanced and consistent report.
We read the narrative sections of the report, considering whether the content was consistent with our knowledge and
understanding of the business and the wider environment, as well as other information provided to the Board throughout
the year.
Leeds Building Society | Annual Report and Accounts 2025 119
Area of focus How the Audit Committee responded
Residential expected credit loss
provisions
Under IFRS 9 – Financial Instruments,
we are required to hold impairment
loss provisions against our financial
assets, calculated on an expected
credit loss basis.
For residential mortgages, these
provisions are calculated using
complex statistical models which
incorporate historical default and loss
experience information.
Significant judgement and estimation
is required in determining whether
there has been a significant increase in
credit risk, in setting forward looking
economic scenarios and the probability
weighting of those scenarios.
Management judgement is also
required on the nature and size of
post model adjustments where risks
are identified that are not sufficiently
covered by the modelled provisions
and scenarios.
Further details of the estimates and
judgements used are set out on pages
171 to 179.
We were supported in our assessment of residential expected credit loss
provisions by the MRSC, which reviewed any model changes during the financial
year, and Credit Committee, which approved the approach to the non UK loan
portfolio and provided preliminary approval of the final provisions, including PMAs.
Despite evidence of a modest improvement in economic conditions during 2025,
the external environment remains uncertain, which has provided a challenge
when selecting appropriate economic scenarios for provisioning. Management’s
proposed scenarios and weightings were initially reviewed and refined by the
Balance Sheet Optimisation Group before being presented to the committee for
feedback ahead of reporting dates.
To support the committee’s review of the assumptions, management provided
benchmarking information and comparison to external third party forecasts.
We also noted the challenge to specific assumptions provided by the external
auditor and management’s response to this.
Management proposed that one additional PMA, which addressed the residual
risk in a limited subset of legacy shared ownership cases, where historical
documentation retention may restrict recoveries under the Mortgagee
Protection Clause resulting in losses. We challenged management's
assumptions and concluded that the post model adjustment appropriately
captured a risk that wasn’t reflected in the existing models.
In January 2026, management reported to us their final proposed provisions,
including PMAs. These were supported by key metrics such as coverage rates
and proportions of loans in Stages 2 and 3, benchmarking data and sensitivity
analysis. The committee assessed the work performed and asked questions on
the approach taken.
Having considered management’s reports, the assurance from other
committees and feedback from the external auditor, we concluded that the ECL
models remain appropriate, the assumptions used are reasonable and that the
PMAs at the 2025 year end are appropriate in the circumstances.
Therefore, the committee concluded that the level of impairment provisions at
31 December 2025 is reasonable.
Audit Committee Report continued
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Area of focus How the Audit Committee responded
Fair value of the collateral loan which
represents a pool of equity release
mortgages
We hold a collateral loan to a third
party which represents a pool of equity
release mortgages acquired from that
third party, which is measured at fair
value through profit or loss.
Since open market prices are not
readily available, the fair value of this
loan is calculated using a model which
requires a combination of market data
and unobservable inputs.
The key estimates and sensitivities are
shown on page 178 to 179.
The model used by management to calculate the fair value of the collateral loan
underwent an in depth review in 2024 and remains appropriate. The assumptions
used in the model are primarily evidence based, using historic data on the
performance of the underlying mortgages or external market data. However,
a significant level of judgement is required in selecting the discount rate to be
used and management refresh their calculation at the end of each reporting
period so that the rate applied is aligned to the current interest rate and
economic environment.
Management explained the assumptions used, the judgements applied in
deriving these for the interim and year end accounts and the sensitivity of the
model output to changes in these assumptions. We probed the approach taken
and questioned management on the magnitude of the changes in assumptions.
We also asked management to set out the rationale to justify the overall
movement in fair value for the year, noting the interaction with the fair values of
the associated derivatives. We received and discussed this information at the
January 2026 meeting.
Since there is no directly comparable market data available and a significant level
of judgement is required in the valuation, a wide range of valuations could be
considered reasonable.
Taking into consideration management’s explanations, the sensitivity analysis
provided and the views of the external auditor, the committee concluded that
the fair value recorded in the financial statements for the collateral loan was
within a reasonable range.
Fair value of the RPI linked derivative
hedging the collateral loan (equity
release swap)
We hold derivative financial
instruments to mitigate risks from
movements in market rates.
The valuation of the RPI linked
derivative hedging the collateral loan
requires management judgement
in the modelling approach and
assumptions used.
The RPI linked derivative is valued using a discounted cash flow model which is
governed by the Society’s model risk policy.
The majority of the assumptions in the model are derived from market
observable data, with the only significant unobservable input being the profile of
the swap balance. Since this is a ‘balance guaranteed’ swap, this is assumed to
match the modelled profile of the underlying equity release mortgages.
Having considered management’s valuation, the rationale supporting this and
the results of the external auditor’s independent valuation, the committee
concluded that the valuation of the derivative in the accounts is appropriate.
Going concern assessment and
Viability Statement
The directors are required to prepare
the financial statements on a going
concern basis, unless they consider
that it is inappropriate to presume that
the Society will continue in business
for the next 12 months.
The Board is also required to provide a
statement on the longer term viability
of the Society.
These assessments have been
delegated to the Audit Committee.
Management provided the committee with reports to support the going concern
assumption for the Interim Financial Report and Annual Report and Accounts.
Those reports drew on data used by the Society to forecast and monitor key
factors including profitability, liquidity, capital and operations. No matters were
identified that would indicate that the Society would not be able to continue
to operate over the period of assessment, even in the event of an economic
downturn or adverse stress.
In order to support the directors’ conclusions on viability, management provided
a report to the BRC reviewing principal and emerging risks. This report set out
details of the stress testing undertaken in respect of those risks, including the
ICAAP, ILAAP, recovery plan and reverse stress testing.
Having considered the outcome of this review and other evidence presented to
the committee through the year in relation to our risk management processes,
including the annual reports produced by the second and third lines of defence,
the committee was also satisfied that the Viability Statement is appropriate.
Leeds Building Society | Annual Report and Accounts 2025 121
Systems of internal control
Maintaining effective systems of internal control is crucial for the Society to be able to deliver our purpose and to safeguard
our members’ money and our own assets. We operate an ERMF, which is designed to encourage a culture of sound risk
management and internal control. This is overseen by the BRC and delivered through established governance mechanisms
and a three lines of defence assurance model. Further details on the ERMF can be found on pages 37 to 40.
The Audit Committee is responsible for reviewing the adequacy and effectiveness of these controls and risk management
systems and we are supported by all three lines of defence, as part of an integrated assurance model, to carry out our duties
as set out below.
First line management
• Responsible for design,
documentation, operation and
monitoring of internal controls.
• Six monthly assessment of
design and effectiveness of
controls through RCSA.
• Regular scheduled testing of
critical controls.
• Report to the committee on
request where specific matters
of concern raised by second or
third line.
Second line Risk Division
• Risk-based reviews of specific
processes and functions.
• Oversight and review of risk
registers and RCSA process;
report to Audit Committee on
outcome of RCSA.
• Review results of
management’s critical control
testing.
• Annual report to the
committee on enterprise wide
view of risks and controls.
Third line Internal Audit
• Independent, risk-based
assessments of effectiveness
and adequacy of controls in
specific areas of business.
• Cyclical independent testing
of critical controls, aiming to
cover each control at least
once every three years.
• Report to the committee
summarising findings from
each review and tracking of
actions.
• Annual summary to the
committee of observations
and themes in relation to
control environment.
The committee reviewed and approved the 2025 work plan for the second line prudential risk and compliance monitoring
teams and the Internal Audit plan, which is refreshed on a quarterly basis to allow a focus on the most important areas at a
particular time and takes into account reviews undertaken by the second line as part of an integrated assurance model.
The annual report from the Risk Division showed that our control environment is effective and proportionate to our
operations. Identified control weaknesses are being adequately addressed by management, with ongoing remedial actions.
The focus from Risk during the year has been balancing business as usual risks with the risks that arise from a major multi-
year technology transformation programme whilst ensuring that the programme delivers appropriate compliance with our
internal policies.
Internal Audit concluded that the Society’s risk and control framework is mostly adequately designed and operating
effectively, with some areas for improvement. Overall, it did not find any control weaknesses likely to be material to the
financial statements based on the assurance work delivered.
The external auditor also assesses the design and effectiveness of certain financial reporting, operational and IT controls as
part of its procedures to reach an audit opinion on the Annual Report and Accounts. The auditor reported its findings to the
committee and no material issues were raised in this report.
Overall, based on this year’s review and the evidence provided by all three lines of defence, the committee concluded that
the Society has adequate and effective systems of control and risk management in place, which has allowed risks to be
appropriately identified and managed.
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Internal Audit
Internal Audit plays a vital role in the ERMF because it acts independently of the rest of the business to provide a reliable
third line of defence. The Board has delegated the role of overseeing the effectiveness, performance and independence
of the Internal Audit function to the Audit Committee. The Chief Internal Auditor reports directly to the Chair of the Audit
Committee to maintain their independence from executive management. In January 2025, we approved the Internal Audit
Charter and ToR which detail the scope, purpose, authority and responsibilities of the function and reflect the expectations of
the new Global Internal Audit Standards and the UK Institute of Internal Auditors’ new Code of Practice. The previous Chair of
the Audit Committee and I also reviewed the Chief Internal Auditor’s objectives for the year. Internal Audit provides an annual
declaration of independence, which confirmed that there was no impairment of its independence.
Internal Audit provides regular reports to the committee setting out progress against the plan of work and the latest plan for
upcoming reviews, together with updates on resourcing and performance metrics. We assessed the coverage provided by
the audit plan and the effectiveness of delivery and debated any challenges arising with the Chief Internal Auditor. We probed
on the approach to auditing systems that are expected to be decommissioned as part of the core systems replacement
programme and Internal Audit presented further information to clarify the risk coverage.
We received the results of all audits conducted by Internal Audit and enquired about how the risks identified may evolve
during the business changes underway. In 2025 Internal Audit pivoted to providing additional thematic commentary, which
drove wider conversation at the committee, including around siloed working and third party management. Updates on
Internal Audit coverage of the core systems replacement programme were provided directly to the Board during the year to
avoid duplication of reporting, although we continued to receive and review the outputs of Internal Audit’s work supporting
integrated assurance on the programme and considered the resource available to provide coverage of the programme.
Following the introduction of Internal Audit’s 2024-26 Vision in February 2024, we received half-yearly updates on Internal
Audit’s progress in implementing the Vision. We engaged with industry thought leaders during a session run by an external
partner on the future of internal audit as a profession and assessed the function’s response to this through the continuous
improvement roadmap. We welcomed the continued focus on developing technical and human skills concurrently, which
aligns to the Internal Audit Vision. We confirmed that, alongside implementation of the Vision, Internal Audit would continue
to be focused upon high quality assurance on key risks. We evaluated the function’s proposed quality metrics in February,
noting both the internal peer and periodic external file review. We agreed that the Chief Internal Auditor would commission an
external file review, which was completed in December for results to be presented to the January 2026 Audit Committee.
Based on work throughout the year, the Audit Committee is satisfied that Internal Audit had sufficient resources with the
appropriate skills, competencies and qualifications to deliver appropriate coverage of the Society’s risk areas. We are pleased
to note that the Internal Audit function is independent, effective and compliant with applicable standards.
External auditor
The committee is responsible for overseeing the Society’s relationship with the external auditor so that the auditor
remains independent and effective. Ernst & Young LLP were appointed as the Society’s external auditor in 2024 following a
competitive audit tender process in 2022. The current audit engagement partner is Steven Robb.
During the 2025 financial year, the external auditor provided the committee with an audit planning document for review and
challenge, setting out the scope, materiality, coverage and timing of the audit work and the qualification and expertise of the
audit engagement partner and key members of the audit team. We evaluated the significant risks identified by the auditor
against management’s assessment of the significant areas of judgement and risks. We also reviewed and approved the
auditor’s fees.
The external auditor provided us with regular reports on the progress of its work throughout the audit cycle and the areas in
which it has challenged management. We discussed these reports during committee meetings with management present
and in private sessions with the external auditor. We challenged them on the timing of certain aspects of their work so that
potential issues in complex areas of accounting could be identified early and resolved well ahead of the accounts signing.
The committee is responsible for the annual review and approval of our policy on non audit services, including the
employment of former partners or staff of the external auditor. The external auditor undertook a number of non audit
assignments during the year, including review of the Interim Financial Report and verification of the Group’s interim net profit.
These assignments were conducted in compliance with the approved policy and occur typically where it is either mandatory
or more efficient for the external auditor to perform the work, in light of the information previously reviewed during the audit
engagement. Total non audit fees for work undertaken in 2025, including one off items, represented 48% of the audit fees for
the year.
The committee satisfied itself that the external auditor is effective and independent.
Leeds Building Society | Annual Report and Accounts 2025 123
Other matters
Whistleblowing
The Society’s whistleblowing policy is known internally as the Speak Up Standard. Although whistleblowing is a matter
reserved for the Board, the Chair of the Audit Committee is the Society’s whistleblowers’ champion and the committee
reviews our policy on behalf of the Board and recommends it for approval.
The committee received an annual report from management on the number and nature of reports submitted and the
extent of training and communication to colleagues. The report noted that our approach is fully compliant with regulatory
requirements and that there is good awareness amongst colleagues, supported by positive responses to internal colleague
survey questions. We have a strong culture where the majority of colleagues feel comfortable to speak up and where survey
results identify this is not the case, action is taken to understand why.
Taxation
The committee reviewed and approved our Tax Strategy and Tax Risk Management Policy. As part of the approval of the tax
policy, management confirmed to us that the policy had been complied with throughout the year.
Audit Committee effectiveness
Each committee meeting concludes with a review of whether the meeting has been effective and conducted in line with the
Society’s behaviours. This review includes commentary from independent observers wherever possible.
The committee also undertakes an annual self assessment of its effectiveness, via anonymous questionnaires to all members
and regular attendees at meetings. The results of the review were very positive, with anonymised verbatims commenting on
the high quality of the reports and papers submitted to the committee, and concluded that the committee had functioned
well. The review also concluded that the Chair continues to be effective, actively encouraging debate and seeking input from
all committee members and attendees.
The ToR are reviewed annually and updated to align them to the latest governance requirements and best practice. The
revised ToR were approved at the meeting in November 2025 and are published on our website at leedsbuildingsociety.co.uk/
your-society/about-us/board-committees.
All committee members are required to keep their knowledge and awareness both recent and relevant. The committee is
kept up to date with changes to accounting standards and regulatory focus areas for financial reporting through reports and
training from management and the external auditor. Separate training materials are also provided where particular topics of
relevance are identified by members or attendees. During 2025, additional training topics included: economic and accounting
updates together with credit and market risk insights to inform the annual and interim approvals of the Society’s financial
statements, hedge accounting, future of internal audit and regulatory reporting.
Farah Buckley
Chair of Audit Committee
26 February 2026
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Board Risk Committee Report
Year ended 31 December 2025
Board Risk Committee highlights from 2025
• Oversight of the management of emerging risks in the external environment and their potential impact on the
Society’s risk profile.
• Oversight of the management of risks associated with the Society’s multi-year IT change programme,
in conjunction with the Board.
• Continue to oversee the embedding of Consumer Duty across the organisation.
• In the context of operational resilience, an annual review of the Society’s Important Business Services, Impact
Tolerances and scenario testing.
• Review of the Society’s inaugural model risk management self assessment and approval of a new AI policy.
• Received assurance over people risks and succession planning, following several changes to the executive team.
Committee membership during 2025
• Neil Fuller (Chair) – member since January 2022.
• Gareth Hoskin
1
– member from November 2015 to February 2025.
• Annette Barnes
2
– member from February 2019 to June 2025.
• Anita Tadayon – member since October 2021.
• Farah Buckley – member since April 2023.
• Pam Rowland – member since May 2023.
• Brendan McCafferty
3
– member from September 2024 to March 2025.
Number of meetings and attendance
• Seven meetings held during the year; and
• 97% attendance from committee members (the attendance record of committee members is set out on page 99).
Introduction from the Chair
I am pleased to present the Board Risk Committee’s report for the year ended 31 December 2025.
This report outlines the operations of the committee and summarises its role in overseeing and advising the Board in relation
to the Society’s current and future risk exposures and effectiveness of risk management frameworks.
During the year, the committee considered the current and emerging risk profile of the Society against a backdrop of ongoing
geopolitical/economic uncertainty and increasing competition within core markets. As part of the annual Enterprise Risk
Management Framework review, the committee reviewed the suitability of the Framework against prevailing operating
conditions, to ensure it remained fit for purpose.
From a financial risk perspective, the committee has closely monitored performance of the credit portfolio under an uncertain
economic and competitive outlook and has carefully considered the implementation of revised macroprudential regulation in
relation to affordability stress testing for mortgage borrowers.
1 Stepped down from the Board.
2 Stepped down following their appointment as Interim CEO.
3 Stepped down following their appointment as Society Chair.
Leeds Building Society | Annual Report and Accounts 2025 125
Other financial risks under consideration during the year have related to funding, liquidity and market risks, with close
monitoring of the impacts from changes to BoE monetary policy and increased competition within savings markets,
uncertainty surrounding changes to government policy ahead of the Autumn budget; proposed changes to UK capital
frameworks, and the implementation of revised regulatory expectations for the management of model risk.
From a non-financial risk perspective, the committee has focused its efforts on overseeing the embedding of Consumer Duty
frameworks across the business and closely monitoring the performance of customer outcomes, against the backdrop of
reforms to regulatory rules designed to promote growth and competition.
The committee reviewed an operational resilience self assessment, ahead of the March 2025 regulatory deadline and received
a progress update regarding the Society’s Cyber Strategy, to ensure that it remained appropriate in the context of an evolving
threat landscape.
During the year, there were several changes to the committee’s membership. In February 2025, Gareth Hoskin stood down
from the committee. I would like to convey the committee’s thanks to Gareth for his contribution over the last nine years.
In addition, Annette Barnes and Brendan McCafferty were also reclassified as attendees of the committee, following their
appointments as Interim Chief Executive and Society Chair, respectively.
Committee operations
The committee consists of four members, all of whom are independent non-executive directors. Full biographies and
experience of committee members are set out on pages 89 to 93 within the Governance Report.
At the invitation of the committee, meetings held in 2025 were also attended by the Chair of the Board, a non-independent
non-executive director and relevant members of the Executive and Senior Leadership Team, ensuring that the three lines
of defence were represented.
The key purpose of the committee is to assist the Board in understanding and managing risk related matters.
The committee is responsible for:
• Overseeing the development and effective implementation of the ERMF.
• Reviewing and recommending risk appetite to the Board and monitoring the Society’s risk profile within these
parameters.
• Identifying and monitoring the profile of current and emerging risks, including those that may threaten the Society’s
business model, future performance, solvency or liquidity, or increase the potential for customer harm, and ensuring that
these are appropriately mitigated.
• Promoting a risk aware culture within the Society.
• Reviewing and recommending to the Board the outputs of key prudential processes (ILAAP, ICAAP, Recovery Plan and
Resolvability Assessment), operational resilience assessments and annual assessment of good customer outcomes.
• Ensuring remuneration arrangements reflect appropriate and balanced risk management considerations; and
• Overseeing the activities of the supporting Executive Risk Committees.
A full set of duties is outlined within the committee’s terms of reference (ToR). A copy of this document can be found on our
website: leedsbuildingsociety.co.uk/your-society/about-us/board-committees.
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During the year the committee met seven times. At the beginning of each meeting the Chief Risk Officer provided an update
to the committee regarding the Society’s current and emerging risk profile. A summary of the activities of each supporting
Executive Risk Committee was also provided by their respective Chairs via management information to ensure effective
oversight of their operations.
The committee also met privately on two occasions during the year with the Chief Risk Officer to discuss risk matters, without
management present.
To support the committee’s oversight of key and emerging risks, the committee receives training from internal and external
subject matter experts on a periodic basis. During 2025, the committee received training on funding and liquidity risk and the
outlook for the UK economic/credit environment.
The committee is required to conduct a self assessment of its effectiveness on an annual basis. The 2025 review was
performed using anonymous questionnaires and was completed by committee members and regular attendees. The
review concluded that the committee was operating effectively, in accordance with its ToR, with a small number of minor
development areas identified, which will be addressed in 2026.
Matters considered by the committee in 2025
The committee had a balanced agenda in 2025, combining challenge and oversight of the Society’s current risk profile with
assessment of emerging risks. A summary of the key matters considered by the committee during 2025 is set out below.
Enterprise risk (including strategic/business risk)
• Risk appetite – the committee conducted a review of the Society’s risk appetite statements and metrics in preparation
for the 2026 Corporate Plan, ensuring they remained suitable under current operating conditions, whilst continuing
to support the longer-term delivery of our Purpose. The committee regularly reviewed the Society’s risk performance
against risk appetite metrics to ensure that any appropriate action was being taken.
• ERMF – the committee reviewed proposals surrounding the maturity of the ERMF, to ensure that our risk management
practices remain appropriate, as the Society’s strategy and business model continue to evolve.
• Climate risk – the committee received an impact assessment of forthcoming enhancements to regulatory requirements
for the identification and management of climate-related risks. In addition, the committee also reviewed periodic
updates regarding the Society’s climate risk exposures and mitigation plans.
• Emerging external risks – the committee received regular updates regarding uncertainties in the Society’s external
operating environment and discussed whether the management response was suitable, including the potential impacts
from ongoing geopolitical events and economic uncertainty.
• Remuneration – the committee considered a potential performance/risk adjustment to senior management variable
remuneration, with recommendations provided to the Remuneration Committee.
Leeds Building Society | Annual Report and Accounts 2025 127
Prudential risk (including credit, funding and liquidity, market, capital and model risks)
• Credit risk – during the year the committee closely monitored the performance of the Society’s lending portfolio, in
the context of emerging risks in the macroeconomy. Alongside this, the committee also considered changes to lending
policy following a relaxation of macroprudential regulation and heightened competition within core markets, ensuring
that potential risks were appropriately managed.
• Financial risk – the committee oversaw the Society’s response to emerging financial risks (including market risk, funding
and liquidity risk and wholesale credit risk), driven by volatility in financial markets, repayment of BoE TFSME funding and
geopolitical risks. The committee also considered the potential capital impacts of proposed changes to the UK capital
framework, including MREL, Basel 3.1 and the Leverage ratio.
• Prudential assessments – the committee conducted an annual review of the Society’s ICAAP, ILAAP, Recovery Plan and
Resolvability Assessment Framework prior to approval by the Board.
• Financial risk policies – several key internal policies that govern management of financial risk, including lending, funding
and liquidity, market and wholesale credit risk were considered by the committee, ahead of Board approval.
• Model risk – the committee received the conclusions of the Society’s inaugural self assessment against PRA SS1/23:
Model Risk Principles for Banks and the actions to further embed these requirements across the Society. Alongside this,
the committee also approved a new overarching AI policy, which will be used to guide the wider adoption of AI tools over
the medium term, and monitored progress with the Society’s IRB model remediation plans.
Operational and conduct risk
• Operational resilience – the committee reviewed an operational resilience self assessment, which reaffirmed the
Society’s important business services and associated impact tolerances, as well as evidencing the Society’s ability to
operate within these tolerances under agreed scenarios, ahead of the March 2025 regulatory deadline.
• Cyber risk – periodic updates were received by the committee regarding the external cyber threat landscape, following
several external high profile incidents during the year. The suitability of the Society’s Cyber Strategy was also reviewed in
the context of the evolving threat environment.
• Outsourcing – throughout the year, the committee received periodic updates on emerging third party outsourcing and
resilience risks.
• Financial crime – the committee reviewed the annual MLRO Report and other periodic updates regarding the Society’s
financial crime control environment.
• Change risk – the committee received periodic updates regarding the risk profile associated with the Society’s multi-
year IT change programme.
• Consumer Duty – the committee reviewed and endorsed the Consumer Duty Annual Assessment, ahead of Board
approval. On a periodic basis, the committee also received monitoring reports on customer outcomes, and progress
updates where further work is underway to better support good customer outcomes.
• People risk– the committee closely monitored the evolution of people risks associated with the Society’s People
Strategy, following a number of changes to the executive team.
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Outlook
Over the next twelve months, key areas of focus for the committee in 2026 are expected to include:
• Continued oversight of the key and emerging risks/uncertainties facing the Society, as outlined in the Risk Overview
Report on pages 37 to 40.
• Maintaining focus on the risks and mitigants associated with the Society’s ongoing multi-year IT change programme.
• The Society’s response to proposed changes to regulation and policy, including the UK’s capital framework and changes
linked to the government’s Leeds Reforms package such as ISA reforms and the FCA’s discussion paper on the future of
the UK mortgage market.
• Oversight of risks associated with competitive pressures in the UK retail financial services market, including pricing
dynamics, digital innovation along with AI and member expectations.
• Continue to oversee the potential risks associated with people change in key roles.
I believe that the committee remains well positioned to meet these challenges, as well as supporting the Society in the
delivery of our purpose and strategy.
Neil Fuller
Chair of Board Risk Committee
26 February 2026
Leeds Building Society | Annual Report and Accounts 2025 129
Directors’ Remuneration Report
Year ended 31 December 2025
Remuneration Committee highlights from 2025
• Agreed Society and individual senior leadership team
objectives.
• Maintained vigilance on regulatory changes.
• Approved remuneration of material risk takers.
• Reviewed Remuneration Principles Policy and
Remuneration Standard.
• Approved the introduction of a new Variable
Performance Award for 2026 and revision to the
Remuneration Policy.
• Considered matters relating to colleague
remuneration and gender and ethnicity pay.
• Discussed and provided feedback on executive and
colleague reward strategies.
• Approved bonus outturns and reviewed salaries of the
executive directors.
• Approved bonus schemes for 2025 and agreed to
equalise the weighting on objectives and behaviours
for the senior leadership team.
Committee membership during 2025
• Annette Barnes (Chair) from 1 January 2025 to
22 June 2025 – member since March 2021.
• Gareth Hoskin from 1 January 2025 to 31 March 2025
– member since January 2018.
• Iain Cornish from 1 January 2025 to 28 February 2025
– member since September 2023.
• Neil Fuller – member since November 2023.
• Pam Rowland (Chair) from 23 June 2025 to
31 December 2025 – member since May 2023.
• Brendan McCafferty (Chair of the Board) – member
since March 2025.
Number of meetings and attendance
• Seven meetings were held during the year.
• 95% attendance from all committee members.
• Other meeting attendees included David Fisher
(non-independent non-executive director), the Chief
Executive Officer, Chief People Officer, Reward Lead
and Reward Manager.
Introduction from the Chair
I am pleased to present this year’s Remuneration Committee
report. The report includes a summary of our Remuneration
Policy, together with key decisions made in the year.
The focus of the committee is to set our Remuneration
Policy, including base pay, variable remuneration and other
benefits for executive directors and material risk takers.
The committee also has oversight of reward for the wider
colleague population, as it relates to the broader culture of
the Society.
As a purpose-driven mutual business, we remain committed
to ensuring our colleagues are paid fairly and appropriately
rewarded for their work. In 2025, our colleague annual pay
review award exceeded the pay increase percentage for
Executive Directors. We continue to be accredited as a real
living wage employer and raised our minimum full time
salary to £24,000 last year. Every colleague in the Society is
eligible for an annual bonus, allowing colleagues to share in
our success and be acknowledged for their contributions.
Additionally, we offer a variety of benefits designed to
support our colleagues and their families, spanning financial,
physical, social, and emotional wellbeing.
In order to maintain this fair and competitive approach to
remuneration, the committee has, over the past 12 months,
carefully considered the significant changes in the regulatory
landscape as well as broader shifts in remuneration practices
within the financial services sector. Against this backdrop,
the committee believes that now is an appropriate time to
review our Directors' Remuneration Policy for the coming
years. We are confident that this review will ensure our
remuneration practices remain aligned with our purpose,
competitive within the market, and underpinned by robust
risk management, while safeguarding against any risks that
could adversely affect members.
Our members will have the opportunity to vote, on an
advisory basis, on both the 2025 Directors’ Remuneration
Report and our 2026 Directors’ Remuneration Policy, at the
2026 AGM. The key features of the new Remuneration Policy
are set out in full on page 140 to 142.
Performance and awards 2025
Earlier sections of the Annual Report and Accounts outline
the strong progress we have made across our key metrics
and against our purpose blueprint, which determines the
bonus outturn for 2025.
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After careful consideration, annual bonuses of between
15.60% and 17.58% (2024: 16.31% and 17.35%) have
been awarded for 2025 to the executive directors, which
represents between 78.00% and 87.92% (2024: 81.56%
and 86.75%) of the maximum award available.
In arriving at the decision to award variable remuneration, a
full risk assessment process was undertaken, during which
the Remuneration Committee considered a range of factors
and received input from the Board Risk Committee. Following
full consideration, no adjustment to variable remuneration
was deemed necessary and no malus or clawback applied.
2025 remuneration and leadership changes
We review each colleague and executive’s salary on an annual
basis, to ensure our pay levels remain competitive. The base
pay increase for each executive director in 2025 was 3%,
which was less than the average increase received by our
wider workforce. The Chair and non-executive director basic
fees also increased by 3% for 2025, in line with the increase
received by the executive directors and following a review of
peer and wider market data.
In June 2025, the incumbent CEO, Richard Fearon, began an
extended leave of absence and was replaced on an interim
basis by Annette Barnes. The Remuneration Committee
carefully reviewed the appropriate remuneration for
Annette during her tenure as Interim CEO and determined
it appropriate to align her remuneration with that of the
incumbent CEO.
The Remuneration Committee has also considered a
number of other appointments during the year at Executive
Committee and director level.
Looking ahead – 2026 remuneration changes
The committee has carefully considered the significant
changes in the regulatory landscape, as well as broader shifts
in remuneration practices within the financial services sector
in recent years. Following a comprehensive market review,
supported by independent external remuneration advisors,
the committee has determined now is the right time to
review our Directors’ Remuneration Policy.
To remain competitive and ensure the Society can both
attract and retain the senior talent required to deliver value
for our members, the current executive bonus scheme will
be replaced with a new Variable Performance Award for our
senior leaders from 1 January 2026.
The Variable Performance Award will be based on a series
of metrics linked directly to member value, the Society’s
operational excellence and an executive’s individual
objectives and behaviours. These metrics will help ensure
that payments are only made from the plan if the Society
functions efficiently, upholds the highest standards, and
delivers considerable value to members.
Under the new arrangements, executive directors can
earn up to 50% of their salary on target and up to 100% at
maximum, with a significant portion deferred for payment in
future years.
The Remuneration Committee recognises that this
represents a notable increase in the variable pay opportunity
for the executive team. However, it considers this necessary
to reflect the substantial rises in variable pay introduced by
peers in recent years, which have created a widening gap
between executive pay levels at the Society and the wider
market.
The committee has chosen to increase the variable pay
opportunity rather than rely on increases to base salaries. In
contrast to base salaries, variable pay is contingent on clearly
defined metrics. It is not guaranteed and may be reduced
to zero or recouped if performance falls short, or if risk or
conduct issues arise. Furthermore, whilst the variable pay
opportunity has been increased, the on target award under
the new Variable Performance Award has been reduced
from 75% of the maximum award available to 50% of the
maximum award. Payments at maximum will only be made
should a stretching range of metrics be achieved, together
with exceptional personal performance and behaviours
of the executive. To reflect the increases in variable pay
opportunity, executive directors’ base salaries will not be
increased for 2026.
The Society will also adopt the new requirements of the
PRA’s Remuneration Code, which include changes to
the vesting of deferred awards and the reduction of the
deferral period from seven years to four years. In addition,
the committee has chosen to introduce a voluntary
deferral scheme which will require an executive’s Variable
Performance Award to be deferred should they exceed
a de minimis threshold set by the Society which will be
significantly lower than the regulatory requirement. The
committee has chosen to adopt this approach to ensure that
long term behaviours are incentivised, risk adjustments in
later years can be applied on awards if required, and to ensure
the new Variable Performance Award helps retain executives.
I trust this report is helpful and informative. The
Remuneration Committee recommends that members
vote in favour of the 2025 Directors' Remuneration Report
and Remuneration Policy.
Pam Rowland
Chair of the Remuneration Committee
26 February 2026
Directors’ Remuneration Report continued
Leeds Building Society | Annual Report and Accounts 2025 131
Our Remuneration Policy and principles
The Remuneration Policy is designed to serve the interests of members and stakeholders by:
• Being clearly linked to business objectives.
• Driving behaviours consistent with our purpose, culture, values, and strategy.
• Being structured to attract and retain appropriately skilled colleagues to support the Society’s long term interests and to
promote a healthy culture.
All our remuneration decisions are based on:
• Objectives which ensure the security of the Society and our members through our purpose, business strategy, values,
and long term interests.
• Procedures and practices that are consistent with, and promote, sound and effective risk management. They balance
fixed and variable remuneration to create an acceptable relationship between risk and reward.
• Basic salary and total remuneration which are set at a competitive level to attract, retain and motivate colleagues of the
required calibre.
Work of the committee
The Remuneration Committee divides its time appropriately and proportionately across the three key workstreams of:
1. Pay policy, strategy, and variable pay design - ensuring that our remuneration programmes are designed in a way that
links outcomes to Society performance and operates in a way that promotes sound and effective risk management.
2. Base and variable pay outcomes and oversight of Society remuneration – base and variable pay awards are considered
against a full risk assessment, Society performance, and external market practice and trends. Alongside this,
appropriate scrutiny and oversight of broader society remuneration takes place to ensure compliance with prevailing
legislation, broader Society culture, and alignment with executive compensation outcomes.
3. Governance and regulatory reporting – ensuring that the committee is properly structured and effectively run, and
that the committee is properly informed and aware of the regulatory and reporting context that reward management
sits within.
Report on Remuneration 2025
Executive director remuneration summary for 2025
The total remuneration received by executive directors for 2025 is detailed below, compared with 2024. The total
remuneration for executive directors equates to 1.59% of profit before tax (2024: 1.95%). This information has been
audited and shows remuneration for the years ending 31 December 2024 and 31 December 2025, as required to be
reported under the Building Societies (Accounts and Related Provisions) Regulations 1998. The awards made in respect
of performance in 2025 are in line with the 2025 Remuneration Policy, with a maximum annual bonus of 20% for executive
directors.
The Chief Executive Officer is the Society’s highest paid colleague. As we are a mutual organisation, we have no share
capital and, therefore, do not offer share-based remuneration to executive directors or colleagues.
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Executive director remuneration 2025 and 2024 (audited)
Executive
directors
Salary
£’000
Annual bonus
£’000
Retention
award (1)
£’000
Pension (2)
£’000
Total fixed
remuneration
£’000
Total variable
remuneration
£’000
Total
remuneration
£’000
Year 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024
R G Fearon (3) 651 696 104 122 – – 73 77 724 773 104 122 828 895
A P Conroy 444 431 71 71 – – 47 44 491 475 71 71 562 546
A J Greenwood 450 436 70 74 – – 77 74 527 510 70 74 597 584
R J Howse 415 402 66 69 167 142 43 40 458 442 233 211 691 653
A M Barnes (4) 363 N/A 64 N/A – N/A 50 N/A 413 N/A 64 N/A 477 N/A
Total
remuneration
£'000
2,323 1,965 375 336 167 142 290 235 2,613 2,200 542 478 3,155 2,678
Notes
(1) The Remuneration Committee approved a retention award, specifically in relation to the successful delivery of the
critical, multi-year core system migration programme, for R J Howse.
(2) All directors elected to receive part or all of the Society’s pension contribution as a cash allowance.
(3) R G Fearon stood down from the board on 27 November. His salary, benefits, and annual bonus are prorated.
(4) A M Barnes assumed the role of Chief Executive Officer on 23 June 2025; both her salary, benefits, and annual bonus
are prorated. Her remuneration in relation to her prior role as a non-executive director is included in the later table of
this report.
Leaving Arrangements for Departing Executive Directors
The remuneration arrangements for R G Fearon and A P Conroy, who have stepped down from the Board, have been
carefully considered. The leaving terms are in line with our Policy upon Directors exiting the business and were approved by
the Remuneration Committee.
R G Fearon stepped down from the Board on 27 November 2025. His salary, pension and benefits in the table above are
pro-rated to reflect the period until 27 November 2025. After careful consideration of the achievement against objectives
and measures, the Remuneration Committee has chosen to award R G Fearon a bonus for the full year of 2025. The value
for the period until the 27 November is stated in the table above, the value of the bonus for the period from 28 November
to 31 December is £10,668.
Under the terms of his contract and leaving arrangements R G Fearon will continue to receive his salary of £549,099,
plus pension and contractual benefits of £113,950 for the period from 28 November 2025 until 31 August 2026. Upon
formally leaving the Society he will receive his remaining Pay in Lieu of Notice of £361,659, compensation for loss of
office of £125,000 and legal expenses up to the value of £11,000. R G Fearon has been awarded good leaver status and
therefore retains his eligibility for bonus deferrals from prior years. The deferrals will be paid no earlier than they would have
otherwise been paid and remain subject to our plan rules, including malus and clawback. R G Fearon will not be eligible for
any bonus in 2026.
A P Conroy stepped down from the Board on 31 December 2025 and remained employed by the Society until 31 January
2026. His remuneration for the period to 31 December 2025 is detailed in the table above. Under the terms of his contract
and leaving arrangements he continued to receive his salary of £37,312, plus pension and contractual benefits of £17,054
until 31 January 2026. Upon leaving the Society he received his remaining Pay in Lieu of Notice of £74,624, compensation
for loss of office of £184,159 and legal expenses up to the value of £3,000. A P Conroy has also been awarded good leaver
status and therefore retains his eligibility for bonus in 2025 and his bonus deferrals from prior years. The deferrals will
be paid no earlier than they would have otherwise been paid and remain subject to our plan rules, including malus and
clawback. A P Conroy will not be eligible for any bonus in 2026.
Leeds Building Society | Annual Report and Accounts 2025 133
Annual incentive
For 2025, corporate performance incentive opportunities were based on the performance measures in the following table.
The table also illustrates performance against each of the measures.
Blueprint performance measure Weightings for maximum (as % of salary) Pay out %
Deliver the transformative core technology programme 3.34% 2.50%
Embed behaviours and raise the bar on performance 3.33% 2.50%
Advancing our purpose by delivering our ambitious corporate plan
& stretch goals
3.33% 3.33%
Notes:
The corporate measures only apply to the Chief Executive Officer, Interim Chief Executive Officer, Chief Financial Officer
and Chief Operating Officer. In 2025, the Deputy Chief Executive Officer was responsible for a control function and,
therefore, is remunerated on personal objectives only based on a maximum of 20%.
Personal performance for executive directors is out of maximum of 10% (20% for the Deputy CEO, as a control function) and
is assessed on personal objectives relating to each executive director’s specific role and behaviours. Personal performance
achievement for executive directors was in the range of 7.50% to 9.25% (15.60% in respect of the Deputy CEO). Following a
thorough risk assessment, as detailed below, no malus or clawback was applied.
Retention award
As reported in 2022, the Remuneration Committee approved a retention award, specifically in relation to the successful
delivery of the critical, multi-year core system migration programme, for the Chief Operating Officer, R J Howse.
The third instalment of the retention award of £167,243 was made in 2025, based on the successful delivery of specific
project milestones and objectives.
The retention award is part of variable pay and is subject to malus and clawback, deferral and delivery in instruments, as
determined by the Remuneration Committee.
Risk assessment
The risk assessment process is independently managed by the Risk function. Following completion of the risk assessment
process, the Chief Risk Officer provides an annual report on areas the Remuneration Committee should consider, in respect
of whether performance or risk adjustment is necessary to remuneration outcomes. The report is initially reviewed by the
Board Risk Committee, which then highlights any specific areas for further consideration to the Remuneration Committee.
In addition, the Risk function considers the corporate priorities and personal objectives for executive directors’ future year
remuneration, to ensure they are aligned with our risk appetite.
The report from the Chief Risk Officer includes an assessment of the current year’s performance in the context of objectives
for each prior year for which variable remuneration has been deferred.
The individual performance of material risk takers and their teams is risk assessed by reference to a range of dimensions
including audit findings, compliance with regulatory policies, compliance with our risk appetite, and general control and
governance matters.
The Remuneration Committee, after consultation with the Board Risk Committee and consideration of performance against
risk appetites, did not make any risk adjustment for 2025.
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Variable pay deferral and share-like instrument
Variable remuneration is subject to regulatory deferral arrangements. For 2025 variable pay, executive directors designated
as ‘senior managers’ have their total variable pay deferred over a period of seven years with 50% delivered in a share-like
instrument.
The table below illustrates how the 2025 variable pay for the Chief Executive Officer, Interim Chief Executive Officer,
Deputy Chief Executive Officer, Chief Financial Officer and Chief Operating Officer will be delivered:
Variable pay delivery
Performance
year
April
following
the bonus
scheme year
Paid one
year later
Paid two
years later
Paid three
years later
Paid four
years later
Paid five
years later
Paid six
years later
Paid seven
years later
Paid eight
years later
Annual
bonus
scheme
40% of the bonus is
awarded in the following
scheme year.
50% of any award will be
delivered in a share-like
instrument.
60% of the bonus will be deferred, over a period of seven years with no
vesting until three years after the award is made.
50% of any award will be delivered in a share-like instrument.
20% cash 6% cash 6% cash 6% cash 6% cash 6% cash
20%
share-like
instrument
6%
share-like
instrument
6%
share-like
instrument
6%
share-like
instrument
6%
share-like
instrument
6%
share-like
instrument
Leeds Building Society | Annual Report and Accounts 2025 135
Pensions and other benefits
A J Greenwood, R J Howse and A M Barnes have opted for a cash allowance in lieu of the Society’s pension contribution.
R G Fearon and A P Conroy opted to receive pension benefits as part contributions to the defined contribution section of the
pension scheme and part cash allowance, in lieu of the Society’s pension contribution.
A M Barnes is reimbursed for travel and accommodation in relation to her role as Interim CEO, and any tax liability arising from
these expenses.
No executive director has the right or opportunity to receive enhanced benefits beyond those already disclosed, and the
committee has not exercised its discretion during the year to enhance benefits.
Long term incentive awards made in the financial year
No long term incentive awards were made in the financial year to executive directors.
Payments for loss of office
Executive directors may be entitled to receive compensation for loss of office. Such payments will be based on the monthly
salary and pension contributions that the executive would have received if still in our employment.
There were no payments for loss of office made in the financial year to executive directors.
Remuneration for material risk takers in 2025
Material risk takers are senior managers who include executive and non-executive directors, chief officers and directors whose
actions have a material impact on the risk profile of the Society.
The basic salary or fees of material risk takers is determined to reflect the responsibilities of the role. Salaries are reviewed
annually, as for all colleagues. Material risk takers, other than non-executive directors, are eligible for an annual bonus
scheme. The bonus scheme for material risk takers in control functions is based on the achievement of non-financial
objectives. In 2025, there were 32 material risk takers during the year.
Remuneration for non-executive directors (audited)
Non-executive director fees are set at a level that aligns with market conditions and is sufficient to attract and retain
individuals with appropriate knowledge and experience whilst reflecting the level of responsibilities and time commitment
required for Board and Board committee meetings.
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).
To ensure compliance with the Remuneration Policy and to ensure that individuals are not participating in discussions relating
to their own remuneration, non-executive director fees are reviewed annually by the Executive Committee, in line with the
framework for setting and approving fees agreed by the Board. The Chair’s fee is reviewed by the Remuneration Committee
(with the Society Chair recused) and is in line with the Remuneration Policy, which is to offer fees that are competitive when
compared with similar financial services organisations.
Non-executive directors are reimbursed for travel expenses for attending meetings and, where tax liability arises for these
travel expenses, this will be covered by the Society.
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).
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Non-executive directors Basic fees
(£’000)
Benefits and
expenses (1) (£’000)
Committee chair/
other fees (£’000)
Total
(£’000)
2025 2024 2025 2024 2025 2024 2025 2024
B McCafferty (Chair) (2) 161 19 11 5 – – 172 24
I C A Cornish (Chair) (3) 29 174 1 5 – – 30 179
G J Hoskin (Vice Chair) (4) 14 58 – 3 7 25 21 86
A M Barnes (5) 28 58 4 8 10 18 42 84
D Fisher 59 58 1 – – – 60 58
N A Fuller (6) 59 58 5 3 22 18 86 79
A Tadayon 59 58 6 8 – – 65 66
F Buckley (7) 59 58 5 3 14 – 78 61
P Rowland (8) 59 58 6 6 10 – 75 64
Total 527 599 39 41 63 61 629 701
Notes
(1) In addition to the payment of fees, non-executive directors are reimbursed for travel expenses for attending meetings
and, where tax liability arises, this will be covered by the Society.
(2) This individual assumed responsibility for Chair of the Board in March 2025.
(3) This individual left the Society in February 2025.
(4) This individual left the Society in March 2025.
(5) This individual assumed the role of Interim CEO in June 2025 and rescinded her position as a non-executive director.
The remuneration stated relates to her time as a non-executive director only.
(6) This individual became a interim Senior Independent Director in June 2025.
(7) This individual assumed the role of Audit committee Chair in April 2025.
(8) This individual assumed the role of Remuneration Committee Chair in June 2025.
Non-executive directors (including the Chair) received an annual basic fee increase of 3% in April 2025, in line with the senior
leadership colleague population.
From 1 April 2026, non-executive director fees will increase by 3% in line with colleague pay. The only exception is the Senior
Independent Director fee, which will increase from £7,128 to £10,000, following an extensive market benchmarking exercise.
The following fees will apply from this date:
Role 2026 Fee
Chair of the Board £185,954
Senior Independent Director £10,000
Non-executive director base fee £61,606
Committee Chair (Audit, Risk, Remuneration) £19,414
Payments to former directors
A payment of £25,307 has been made in 2025 to P A Hill, the former Chief Executive Officer, who retired on 30 June 2019.
A payment of £20,662 has been made in 2025 to R S P Litten, the former Chief Financial Officer, who left the Society on
18 April 2019. The bonus payments consisted of deferred incentive awards, which are assessed in full when they are awarded.
All these payments were subject to risk assessment and the committee determined no risk adjustment was required.
Leeds Building Society | Annual Report and Accounts 2025 137
Chief Executive Officer (CEO) pay ratio
The Companies (Miscellaneous Reporting) Regulations 2018, came into force for accounting periods starting from 1 January
2019 and requires the publication of the ratio of the CEO’s single figure total remuneration. We have chosen to use the
government’s preferred methodology (option A), which determines the total full time equivalent total remuneration for all
colleagues for the relevant financial year, and compares the median, 25th and 75th percentiles against the CEO single figure.
The CEO single figure reflects the prorated total remuneration attributable to R G Fearon and A M Barnes for the periods
during which each held the role of CEO in 2025.
Year Method 25th percentile Median 75th percentile
2025 Option A 30:1 21:1 13:1
2024 Option A 31:1 20:1 14:1
2023 Option A 31:1 21:1 14:1
2022 Option A 30:1 20:1 13:1
2021 Option A 30:1 20:1 13:1
2020 Option A 32:1 21:1 14:1
2019 Option A 32:1 22:1 15:1
The remuneration below is calculated in respect of the year ended 31 December 2025:
Remuneration element 25th percentile (£) Median (£) 75th percentile (£)
Total pay and benefits £30,917 £45,785 £69,365
Salary £26,016 £38,934 £58,215
Directors’ loans, transactions and related business activity
The aggregate amount outstanding at 31 December 2025 in respect of loans from the Society or a subsidiary undertaking to
directors of the Society or persons associated with directors was nil (2024: nil), being nil mortgages (2024: nil) to directors and
persons connected to directors. A register of loans and transactions with directors and their connected persons is maintained
at the Head Office of the Society and may be inspected by members. There were no significant contracts between the Society
or our subsidiaries and any director of the Society during the year.
History of remuneration of Chief Executive Officer
The table below shows the total remuneration of the Chief Executive Officer, Richard Fearon, over the last six years, together
with the performance pay awarded as a percentage of the maximum possible.
Year Total remuneration
£’000
Performance pay as %
of maximum
2025 828 (1) 79.17
2024 895 86.75
2023 862 90.44
2022 752 93.42
2021 695 94.02
2020 684 82.85
Notes
(1) R G Fearon stood down from the board on 27 November. His salary, benefits, and annual bonus are prorated.
Directors’ Remuneration Report continued
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Percentage change in salary for Chief Executive Officer
The basic salary of the Chief Executive Officer increased by 3% during 2025. An average annual increase of 3.48% in basic pay
was awarded to all colleagues. The annual change of each individual executive director’s pay, compared to the annual change in
average colleague pay is detailed below.
Annual increase
Chief Executive Officer 3%
Deputy Chief Executive Officer 3%
Chief Financial Officer 3%
Chief Operating Officer 3%
Minimum salary 4.35%
Colleague average 3.48%
Relative importance of spend on pay
The following table sets out the percentage change in profit and overall spend on remuneration in the year ending
31 December 2025, compared to the previous year.
2025 2024 Percentage change
Profit after tax £145.5 million £99.9 million 45.6%
Colleague remuneration costs £93.8 million £85.2 million 10.1%
Headcount 1,874 1,846 1.5%
External advisers to the Remuneration Committee
The committee seeks input from the Chief People Officer, the Reward Lead, and the Chief Executive Officer, who are invited
to attend meetings. The committee also benefits from specialist advice when required from appropriate independent
remuneration advisors (PwC LLP and KPMG LLP). PwC LLP and KPMG LLP advised management, in support of committee
activity, in 2025 and have each separately confirmed they do not have any conflicts of interest in advising the Remuneration
Committee.
Policy review
The Remuneration Policy is subject to an annual review of both its content and implementation and is approved by the
Remuneration Committee. The Board Risk Committee also contributes to the policy review, to ensure it takes sufficient
account of risk considerations.
The Remuneration Policy and arrangements meet regulatory requirements, including the FCA Dual–Regulated Firms
Remuneration Code, PRA Rulebook, and good corporate governance practice.
Vote
Members are asked to vote on the Remuneration Policy at least every three years, or earlier if the policy changes. The current
Remuneration Policy took effect from the date of the 2024 AGM and will be brought forward to members to vote upon at the
AGM, as detailed in the next section.
Annual General Meeting 2025 results – Directors' Remuneration Report
Resolution 3 % votes for % votes against
Directors' Remuneration Report 93.31% 6.69%
Leeds Building Society | Annual Report and Accounts 2025 139
Executive directors' remuneration changes for 2026 Financial Year
The following table summarises the principal components of the Directors’ Remuneration Policy for 2025 and the proposed
changes. These changes will be brought forward for members to vote upon, on an advisory basis, at the 2026 AGM.
Type Remuneration
Element
Current policy Proposed policy
Fixed
remuneration
Basic salary Provides ability to attract and retain executives through
market competitive rates of pay.
The basic salaries of executive directors are reviewed each
year, as for any other colleague, based on the economic
environment, the overall financial position of the Society
and in accordance with benchmarking.
The only exception is if there is a material increase in
scope or responsibility to the executive director’s role.
No change
Pension Based on membership of the Society’s defined
contribution section of the pension scheme. In
appropriate circumstances, for example, where
contributions exceed the annual or lifetime allowance,
there is an option to receive a monthly cash allowance in
lieu of pension contributions.
Executive directors appointed before 1 April 2019 receive
a range of relevant employer contributions, fully aligned
with the colleague population who joined before 1 April
2019, with a maximum contribution of 20% of basic salary,
based on age and pensionable service.
Executive directors appointed on or after 1 April 2019
receive a maximum contribution, fully aligned with the
colleague population who joined after 1 April 2019, of 10%
of basic salary.
No change
Benefits The principal benefits executive directors receive are:
• Life assurance (up to 4 x basic salary)
• Private medical insurance
• Group income protection
• Health screening
• Cash health plan.
Other benefits may be provided based on individual
circumstances, for example, relocation.
No change
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Type Remuneration
element
Current policy Proposed policy
Variable
remuneration
Variable
Performance
Award (VPA)
The 20% maximum is split between:
Society performance – 10%
Personal performance – 10%.
Society performance objectives are
agreed by the Remuneration Committee
at the start of each year and reflect
business priorities.
Personal performance objectives,
appropriate to the responsibilities of
the director, are set at the start of each
year and agreed by the Remuneration
Committee. From 2025, 50% of the
personal performance award is allocated
to the demonstration of set behaviours
(30% previously) which drive true
differentiation, setting out the culture
we wish to foster.
The 20% maximum for the executive
director in a control function is based
on a range of personal objectives only,
with 50% of the award (30% previously)
allocated to the demonstration of
behaviours.
Robust risk evaluation measures are
independently assessed by the Board
Risk Committee, with measures for
the Deputy Chief Executive Officer
assessed by the Chief Executive Officer.
For executive directors designated as
‘senior managers’ under the Senior
Manager Regime and over the
de minimis, 60% of the bonus will be
deferred, over a period of seven years
with no vesting until three years after
the award is made. 50% of variable
remuneration will be delivered in a
share-like instrument.
The Variable Performance Award will be
based on metrics linked to member value,
operational excellence, and an executive’s
personal objectives and behaviours.
The metrics, executive objectives, and
their relative weighting are agreed by the
Remuneration Committee at the start of
each year and reflect business priorities.
Additionally, any payment under the
VPA is subject to the maintenance of a
minimum level of personal performance
and behaviours, as well as agreed capital
and sustainability levels.
The plan provides the opportunity for
executive directors to earn up to 50% of
annual basic salary when target is achieved
across metrics, and up to 100% of salary
only when significant stretching targets
are achieved across all metrics.
The VPA for an executive director in
a control function is not based upon
the Society’s performance, to ensure
independence of this role and prevent
any conflict of interest. It is therefore
based on a range of personal or functional
objectives, and an assessment of
behaviours.
Executive directors whose remuneration
exceeds the Regulators’ de minimis
threshold, will be subject to the
Regulators’ deferral, retention, payment
in instruments, plus malus and clawback
requirements.
In cases where an executive director’s
remuneration does not exceed the de
minimis threshold, the Society’s voluntary
deferral scheme applies. Under this
scheme, 50% of variable remuneration
is deferred for two years with prorated
vesting. The voluntary deferral scheme
applies to VPA awards that exceed
£10,000.
The committee may choose to apply
a suitable level of interest rate to the
deferred element of the VPA, where it is
deemed appropriate.
The Remuneration Committee retains full
discretion and VPA payments to executive
directors are not guaranteed.
Leeds Building Society | Annual Report and Accounts 2025 141
Type Remuneration
element
Current policy Proposed policy
Variable
remuneration
Retention
awards
Such awards will only be made in
exceptional circumstances. The
monetary value of the award will
be defined at grant, and vesting of
awards will be tied to the completion
of a defined period of service and the
satisfactory completion of a specific
project or other multi-task deliverable.
Retention awards can be made in
conjunction with the annual bonus, up
to a maximum of 100% of fixed pay.
All retention awards for material risk
takers are subject to the approval of the
Remuneration Committee.
Retention awards are part of variable
pay and may be subject to malus and
clawback, deferral and delivery in
instruments, as determined by the
Remuneration Committee.
Such awards will only be made in
exceptional circumstances. The monetary
value of the award will be defined at grant,
and vesting of awards will be tied to the
completion of a defined period of service
or the satisfactory completion of a specific
project or other multi-task deliverable.
Retention awards are made in addition to
the annual VPA and are excluded from the
100% of fixed pay maximum. All retention
awards for executive directors are subject
to the approval of the Remuneration
Committee.
Retention awards are part of variable pay
and, where remuneration exceeds the
Regulators’ de minimis threshold, they will
be subject to the Regulators’ requirements
on malus and clawback, deferral, and
delivery in instruments.
In cases where an executive director’s
remuneration does not exceed the de
minimis threshold, the Society’s voluntary
deferral scheme applies. Under this
scheme, 50% of variable remuneration
is deferred for two years with prorated
vesting. The voluntary deferral scheme
applies to retention awards that exceed
£10,000.
The committee may choose to apply
a suitable level of interest rate to the
deferred element of the retention award,
where it is deemed appropriate.
The Remuneration Committee retains full
discretion, and retention award payments
to executive directors are not guaranteed.
The Remuneration Committee may apply discretion at any point to reduce variable pay awards in whole or part using malus
or clawback. Malus is a reduction factor which is applied to variable pay payments which have not yet vested, and clawback is
applied to seek recovery of variable pay payments already paid.
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Awards under different scenarios for 2025
The charts below show the awards split between fixed pay and variable pay, under the variable pay arrangements, excluding
the Chief Operating Officer’s retention award, for each current executive director under different scenarios. At 1 April 2026,
the Chief Financial Officer role will continue to be covered by an internal interim appointment who is not a member of the
Board. A permanent external CFO is expected to join in May 2026. Accordingly, the CFO position has been removed from the
forward looking remuneration charts and tables.
100%
796
Fixed Target Maximum
69% 52%
31%
48%
1,157
1,519
Fixed
Variable
Interim Chief Executive Officer (£’000)
100%
530
Fixed Target Maximum
70% 54%
30%
46%
757
Fixed
Variable
983
Deputy Chief Executive Officer (£’000)
100%
460
Fixed Target Maximum
69% 52%
31%
48%
669
878
Chief Operating Officer (£’000)
Fixed Variable
Type Summary
Fixed Consists of basic salary and pension
Basic salary at 1 April 2026
Executive director Basic salary Pension Total fixed
Interim Chief Executive Officer £723,318 £72,332 £795,650
Deputy Chief Executive Officer £453,076 £77,023 £530,099
Chief Operating Officer £418,108 £41,811 £459,919
Target Based on what an executive director would receive if the target level of performance was achieved, based on
a 100% variable remuneration scheme: annual variable element pays out at 50% of the maximum available.
Maximum Based on what an executive director would receive if the maximum level of performance was achieved:
annual variable element pays out at 100% of maximum available.
Leeds Building Society | Annual Report and Accounts 2025 143
Statement of implementation of Remuneration Policy in the following year
The Remuneration Policy is implemented by management. A formal review of the implementation of the policy is conducted
by the Remuneration Committee on an annual basis.
Following a market review and assessment by the committee and taking into account the wider changes in Remuneration
Policy, the executive directors’ salaries from 1 April 2026 will not be increased. Details of the salaries compared to April 2025
are as follows:
1 April 2025 1 April 2026 % Increase
A M Barnes (1) £723,318 £723,318 0%
A J Greenwood £453,076 £453,076 0%
R J Howse £418,108 £418,108 0%
Notes
(1) Salary for A M Barnes is the salary upon appointment to Interim CEO on 23 June 2025.
R G Fearon has not been included in the table above as he will be leaving the Society and is no longer a Board member.
The annual pay review takes place in April, for all colleagues in the Society, including executive directors.
Due to their commercial sensitivity, targets and individual objective weightings are not disclosed prospectively.
Statement of consideration of conditions elsewhere in the Society
The Remuneration Committee considers the increase in general basic salary for the wider colleague population when
determining the annual salary increases for the executive directors.
The graph below illustrates the comparison of average basic salary increase made in April 2026 to the Chief Executive Officer,
Executive Directors and all other colleagues.
Chief Executive Officer Executive Directors All other colleagues
0.00% 0.00% 3.50%
Directors’ Remuneration Report continued
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Approach to recruitment remuneration for executive directors
Type Remuneration element Summary
Fixed
remuneration
Basic salary and benefits The salary level will be set taking into account the responsibilities of the
individual and by comparison with roles carrying similar responsibilities, in
organisations of a comparable size, complexity and diversity to the Society.
The executive director will be eligible to receive benefits as set out in the
Remuneration Policy table.
Pension The executive director will be able to participate in the defined contribution
section of the pension scheme or to receive a cash allowance of up to a
maximum of 10% of basic salary, in line with the colleague population.
Variable
remuneration
Annual VPA The executive director will be eligible to participate in the annual VPA as set
out in the Remuneration Policy table. The VPA award will be prorated to the
number of days worked during that year.
Replacement award When replacement awards cannot be avoided, the committee will
structure any such awards so that, overall, they are no more generous in
terms of quantum or vesting period than the awards due to be forfeited.
In determining the quantum and structure of these commitments, the
committee will seek to replicate the fair value and, as far as practicable,
the timing and performance requirements of remuneration foregone.
Recruitment
remuneration
Any payments made to executive directors on joining the Society to
compensate them for forfeited remuneration from their previous employer
will be compliant with the provisions of the PRA Rulebook and the FCA
Dual-Regulated Firms Remuneration Code.
Retention awards Such awards will only be made in exceptional circumstances. The monetary
value of the award will be defined at grant and vesting of awards will be
tied to the completion of a defined period of service or the satisfactory
completion of a specific project or other multi-task deliverable.
Retention awards can be made in conjunction with the annual VPA.
All retention awards, for executive directors, are subject to the approval
of the Remuneration Committee.
Retention awards are part of variable pay and may be subject to malus
and clawback, deferral and delivery in instruments, as determined by the
Remuneration Committee.
Service contracts
Executive directors’ terms and conditions of employment, including details of remuneration, are detailed in their individual
service agreements. The standard contract is available to view at the Society’s Head Office.
The non-executive directors do not have service contracts with the Society.
Other paid directorships
Andrew Greenwood held a member role (non director) at the Clarion Foresight Group and non-executive director roles
at Leeds Teaching Hospitals NHS Trust and Shared Ownership Code Limited during 2025. The appointments have been
approved by the Board and do not give rise to any conflict.
Annette Barnes holds non-executive director roles at Globaldata plc and Stratos Markets Limited (trading as FXCM UK and
Tradu). These appointments have been approved by the Board and do not give rise to any conflict.
Leeds Building Society | Annual Report and Accounts 2025 145
Directors’ Remuneration Report continued
Policy on payment for loss of office
When determining any loss of office payment for a departing individual, the committee will seek to minimise costs to the
Society, whilst seeking to reflect the circumstances in place at the time. Accordingly, the committee retains overriding
judgement to make loss of office payments appropriate to the circumstances and applying the overriding principle that there
should be no element of reward for failure.
Type Remuneration element Summary
Fixed
remuneration
Basic salary and benefits In the event of termination by the Society, there will be no compensation
for loss of office due to misconduct or poor performance. In other
circumstances, executive directors may be entitled to receive
compensation for loss of office. Such payments will be based on the
monthly salary and pension contributions that the executive director would
have received if still in employment with the Society. Executive directors
are expected to mitigate compensation for loss of office, in appropriate
circumstances.
Variable
remuneration
Annual VPA Where an executive director’s employment is terminated during or after
the end of a performance year, but before the payment is made, the
executive may be eligible for a prorated annual VPA for that performance
year, subject to an assessment based on performance achieved over the
period and subject to risk adjustment. No award will be made in the event of
misconduct.
Where an executive director leaves the Society after an award is made,
deferred payments may still be payable, subject to the rules of the scheme
and good leaver status, including risk adjustment.
The Remuneration Committee, in determining the final awards, may
apply judgement to assess performance in the round. When assessing
performance in the round, the Remuneration Committee may take into
account wider market, regulatory and stakeholder considerations.
Reward risk management and governance in 2026
In 2026, the Society will continue to operate its reward framework within robust governance and risk management
arrangements designed to promote sound and effective risk management in a way which is proportionate to the Society’s
size, complexity and risk profile. The Society will continue to monitor regulatory and governance developments and, where
required, will seek advice and guidance from external remuneration consultants to ensure its reward arrangements remain
compliant, competitive and aligned with the long term interests of members.
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Directors’ Report
Year ended 31 December 2025
The directors are pleased to present their Annual Report
and Accounts and Annual Business Statement, for the year
ended 31 December 2025.
Our business model and purpose-led strategy are described
in the business model and strategy section on pages 9 to 29
of the Strategic Report, where KPIs are also presented.
Profits and capital
Profit before tax for the year was £198.6 million (2024:
£137.5 million). The profit after tax transferred to the general
reserve was £145.5 million (2024: £99.9 million). Total equity
attributable to members at 31 December 2025 was £1,844.0
million (2024: £1,720.4 million).
Gross capital at 31 December 2025 was £2,290.1 million
(2024: £2,062.6 million) including £438.1 million (2024:
£334.2 million) of subordinated liabilities and £8.0 million
(2024: £8.0 million) of subscribed capital. The ratio of gross
capital as a percentage of shares and borrowings was 7.78%
at 31 December 2025 (2024: 7.10%) and the free capital ratio
was 7.47% (2024: 6.82%). Further explanation of these ratios
is provided on page 218 of the Annual Business Statement.
Mortgage arrears
At 31 December 2025, there were 383 (2024: 361)
mortgage accounts 12 months or more in arrears. The
total mortgage arrears, for these accounts, was £5.4
million (2024: £5.0 million) and the total principal balance
outstanding was £39.9 million (2024: £38.2 million).
Charitable and political donations
In 2025, the Society made donations of £409,444
(2024: £305,434) to the Leeds Building Society Charitable
Foundation. Our other donations to charities and good
causes (including colleague match funding) during the year
amounted to £390,259 (2024: £391,251).
The Your Interest in Theirs schemes provided further
donations of £52,075 (2024: £20,316) and £39,981
(2024: £92,601) respectively to the Foundation and our
main charity partner, Barnardo’s.
Other charitable donations from colleagues and members
totalled £121,305 (2024: £115,518) taking total donations to
charities and good causes to £1,013,064 (2024: £1,023,186).
No political donations were made during the year
(2024: none).
Principal risks and uncertainties
Our approach to managing risks and the principal risks and
uncertainties we face are set out in the Risk Management
Report on pages 59 to 85, which also contains information
on, and our approach to managing, our financial risks.
Colleagues
Information on key colleague policies and associated KPIs,
including our processes for communication and consultation
with colleagues, are included in the Strategic Report on
pages 9 to 29 and the Corporate Governance Report on
pages 96 to 111.
We are committed to ensuring every colleague feels valued
and included for who they are and the unique perspectives
they bring. We are a Disability Confident accredited employer
and give full and fair consideration to applications for
employment from disabled persons, having regard to their
particular aptitudes and abilities. Where a colleague becomes
disabled during the course of their employment, every effort
is made to continue their employment, making reasonable
and proportionate adjustments as necessary.
Business relationships
We are committed to developing strong business
relationships with our partners, notably our mortgage
brokers, suppliers and investors. Further details of how
the Board has regard to the interests of these and other
stakeholders can be found on pages 24 to 27 and 100 to 102.
Creditor payment policy
We aim to agree terms and conditions with suppliers that
outline the way in which business is to be transacted,
including the terms of payment, and to pay in accordance
with contractual and other legal obligations.
Creditor days stood at 9 days at 31 December 2025
(2024: 15 days).
Environmental policy
The directors recognise that climate change is a significant
global issue which impacts on and requires action from
multiple bodies, including governments, businesses and
individuals. We are committed to playing our part as a
responsible business.
During the year, we have continued to enhance our
understanding of the risks and opportunities for the business
from climate change and have monitored performance
against targets in order to reduce our environmental impact.
Our climate-related financial disclosures are included on
pages 43 to 56 of the Strategic Report.
Leeds Building Society | Annual Report and Accounts 2025 147
Pillar 3 disclosures
The disclosures required under Pillar 3 of CRD V are
published on our website at leedsbuildingsociety.co.uk/
press/financial-results.
Corporate governance
We have provided statements on corporate governance
and directors’ roles and responsibilities in the Corporate
Governance Report on pages 96 to 111.
Directors’ responsibilities in respect of the
preparation of the Annual Report and Accounts
This statement is made by the directors to explain their
responsibilities in relation to the preparation of the Annual
Accounts, Annual Business Statement and Directors’ Report.
It should be read in conjunction with the statements on the
respective responsibilities of directors and the auditor on
page 158.
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 Annual Accounts in accordance with UK adopted
International Accounting Standards and applicable law.
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 the Annual Accounts, the directors have:
• Selected appropriate accounting policies and applied
them consistently.
• Made judgements and estimates that are reasonable.
• Stated whether the Annual Accounts are prepared in
accordance with UK-adopted International Accounting
Standards.
• Prepared the financial statements on a going concern
basis.
The directors consider that the Annual Report and Accounts
are fair, balanced and understandable, when taken as a
whole, and that they provide the information necessary for
members to assess the Society’s and Group’s performance,
business model and strategy.
In addition to the Annual Accounts, the Act requires the
directors to prepare an Annual Business Statement and
a Directors’ Report for each financial year. Each contains
prescribed information relating to our business and
subsidiary undertakings.
Directors’ responsibilities for 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.
• Takes reasonable care to establish, maintain, document
and review such systems and controls as are appropriate
to the Group.
The directors have responsibility for safeguarding the
Group’s assets and for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance of the
corporate and financial information included on the Society’s
website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
The directors who held office at the date of approval of this
report confirm that, as far as they are aware, there is no
relevant information of which our auditor is unaware and
that each director has taken all steps necessary to make
themselves aware of any relevant audit information and
establish that the auditor is aware of that information.
Going concern
The directors are required to prepare financial statements on
a going concern basis, unless it is inappropriate to presume
that the Society and the Group will continue in business for
the next 12 months.
The directors review the results of regular forecasts and
stress tests to understand the potential financial and
operational performance of the business under a range
of economic and market conditions. This informs their
assessment of whether the Society and the Group are going
concerns. These assessments reflect the potential impacts
of the principal and emerging risks set out on pages 37 to 40.
The directors have also reviewed the Society’s and Group’s
position over a longer period than the 12 months required
by the going concern assessment. This is explained in the
Viability Statement on pages 41 to 42 of the Strategic
Report.
Based on the assessments performed, the directors have
concluded that:
• The Group has proven access to liquidity resources,
including access to central bank funding facilities if
required, sufficient to meet both the normal demands
of the business and the requirements which might arise
in modelled stressed circumstances. The availability and
quality of liquid assets are structured so that funds are
available to repay any maturing wholesale funds and cover
exceptional demand from retail investors.
Directors’ Report continued
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• The Group’s other assets consist primarily of mortgages
secured on residential property. The recoverability of all
mortgage assets is regularly reviewed and provisions are
made, incorporating a forward looking view of expected
losses under a range of macroeconomic scenarios, so
that the Group is not exposed to losses on these assets
which would impact its decision to adopt the going
concern basis.
• The Group’s current capital resources are sufficient to
meet regulatory requirements. Having reviewed plans
and forecasts, the directors consider plans for future
capital generation to be sufficient to maintain capital in
excess of regulatory requirements, under both central
and modelled stressed scenarios.
The directors have therefore concluded that the Society
and Group have adequate resources to continue in
operation for a period of at least 12 months from the date
of approval of the financial statements. Therefore, it is
appropriate to continue to adopt the going concern basis in
preparing the financial statements.
Directors
The names of the directors of the Society at 31 December
2025, their roles and membership of Board committees are
detailed on pages 89 to 93.
In line with best practice, all executive and non-executive
directors offer themselves for election or re-election by the
members at the AGM.
None of the directors hold any beneficial interest in shares in,
or debentures of, any subsidiary undertaking of the Society.
Auditor
In accordance with Section 77 of the Building Societies Act
1986, a resolution for Ernst & Young LLP’s re-appointment as
auditor will be proposed at the AGM.
Katherine Tong
Chief Risk Officer/Secretary
26 February 2026
Leeds Building Society | Annual Report and Accounts 2025 149
Financial
Statements
Leeds Building Society | Annual Report and Accounts 2025 151
Independent Auditor’s Report to the
Members of Leeds Building Society
Year ended 31 December 2025
Opinion
In our opinion:
• The financial statements of Leeds Building Society (the “Society”) and its subsidiaries (together, the “Group”) give a
true and fair view of the state of the Group’s and the Society’s affairs as at 31 December 2025 and of the Group’s and
the Society’s income and expenditure for the year then ended;
• The financial statements have been properly prepared in accordance with UK adopted international accounting
standards; and
• The financial statements have been prepared in accordance with the requirements of the Building Societies Act 1986
We have audited the financial statements (as defined in the table below) of the Group and the Society for the year ended 31
December 2025, which comprise:
Group Society
Income statement for the year ended 31 December 2025 Income statement for the year ended 31 December 2025
Statement of comprehensive income for the year ended
31 December 2025
Statement of comprehensive income for the year ended
31 December 2025
Statement of financial position for the year ended
31 December 2025
Statement of financial position for the year ended
31 December 2025
Statement of changes in members’ interest for the year
ended 31 December 2025
Statement of changes in members’ interest for the year
ended 31 December 2025
Statement of cash flows for the year ended
31 December 2025
Statement of cash flows for the year ended
31 December 2025
Related notes 1 to 33 to the financial statements, including material accounting policy information
Country by Country Reporting for the year ended 31 December 2025
Information identified as "audited" within the Risk Management Report (pages 58 to 85) and Director's Remuneration
Report (pages 130 to 146)
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international
accounting standards.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK)(“ISAs (UK)”) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We are independent of the Group and the Society in accordance with the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the FRC’s Ethical Standard as applied to public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Society and we
remain independent of the Group and the Society in conducting the audit.
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Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group’s and
the Society’s ability to continue to adopt the going concern basis of accounting included the following procedures:
• We confirmed our understanding of the Directors’ going concern assessment process, including the Financial Statement
Close Process, and the process by which the Corporate Plan is created and approved.
• We obtained the Directors’ going concern assessment, which covers a period until 26 February 2027, being 12 months
from the date of approval of the Annual Report and Accounts.
• We compared the historical budgeted financial information with actual results, in order to form a view on the reliability of
the forecasting process.
• We assessed the reasonableness of the Group and the Society’s funding plans, including capital and liquidity
requirements. We considered the Group and Society’s current funding position and availability of additional capital and
liquidity should it be required. We also evaluated the Group and Society’s ability to replace maturing debt instruments
over the going concern period to manage regulatory capital requirements.
• We assessed the results of the Group’s stress and reverse stress testing, including considering the impact of ongoing
macroeconomic uncertainty. We evaluated the feasibility of Management’s planned future actions should stress
scenarios materialise.
• We considered whether there were other events subsequent to the balance sheet date which could have a bearing on the
going concern conclusion.
• We reviewed regulatory correspondence, committee and board meeting minutes in order to identify events or conditions
that may impact the Group and the Society’s ability to continue as a going concern.
• We reviewed the going concern disclosures included in the annual report in order to assess whether the disclosures were
appropriate and in conformity with applicable reporting standards.
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 until 26 February 2027, being a period of 12 months from the data of approval of the Annual Report and Accounts.
In relation to the Group’s and the Society’s 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. However, because not all future events or conditions can be predicted, this statement is not a
guarantee as to the Group’s and the Society’s ability to continue as a going concern.
Overview of our audit approach
Audit scope • We performed an audit of the complete financial information of the Group and the Society.
Key audit matters • Fair value of the collateral loan and RPI-linked swap.
• UK residential expected credit loss provisions.
Materiality • Overall Group and Society materiality of £10.0m (2024: £9.4m) which represents 5% of profit
before tax (2024: 5% of adjusted profit before tax).
Independent Auditor’s Report continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 153
An overview of the scope of the Society and the Group audits
Tailoring the scope
The Group and the Society is managed from one location in Leeds. All audit work performed for the purposes of the audit
was undertaken by a single audit team based in the UK.
We have followed a risk-based approach when developing our audit approach to obtain sufficient appropriate audit
evidence on which to base our audit opinion. We performed risk assessment procedures to identify and assess risks
of material misstatement of the Group and the Society financial statements and identified significant accounts and
disclosures. When identifying the extent to which audit work needed to be performed to respond to the identified risks of
material misstatement of the Group and the Society financial statements, we considered our understanding of the Group
and its business environment, the potential impact of climate change, the applicable financial framework, the Group’s
system of internal control at the entity level, applications and relevant internal audit results.
Our scoping to address the risk of material misstatement for each key audit matter is set out in the key audit matters
section of our report.
Climate change
Stakeholders are increasingly interested in how climate change will impact the Group and the Society. The Group and
the Society has determined that the most significant future impacts from climate change on their operations will be
from physical and transition risks. These are explained on pages 45 to 50 in the Climate-Related Financial Disclosures
section of the Annual Report and Accounts, including the Society’s commitments to support transition to a greener, net
zero economy by 2050. All of these disclosures form part of the “other information” rather than the audited financial
statements. Our procedures on these unaudited disclosures therefore consisted solely of considering whether they are
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise
appear to be materially misstated, in line with our responsibilities on “other information”.
In planning and performing our audit we assessed the potential impacts of climate change on the Group and the Society’s
business and any consequential material impact on its financial statements.
The Group and the Society have explained in Note 2 how they have reflected the impact of climate change in their financial
statements. These disclosures explain the approach taken to quantify the effect of climate-related risks on expected
credit losses, and note that, as governmental policies and economic and regulatory responses continue to evolve, future
impacts remain uncertain and cannot yet be reliably incorporated into asset and liability valuations under UK adopted
international accounting standards.
Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating
management’s assessment of the impact of physical and transition climate risk, the Group and the Society’s climate
commitments, the effects of material climate risks disclosed in Note 2 and whether these have been appropriately
reflected in asset and liability values, where these are impacted by future cash flows following the requirements of UK
adopted international accounting standards. As part of this evaluation, we performed our own risk assessment, supported
by our climate change specialists, to determine whether there were any risks of material misstatement in the financial
statements relating to climate change that needed to be considered in the audit.
We also challenged the Directors’ considerations of climate change risks in their assessment of going concern and
associated disclosures. Where considerations of climate change were relevant to our assessment of going concern, these
are described above.
Based on our work, whilst we have not identified the impact of climate change on the financial statements to be a
standalone key audit matter, we have considered the impact of climate change to principally impact the ‘UK residential
expected credit loss (‘ECL’) provisions’ key audit matter. Details of the impact, our procedures and findings are included in
our explanation of the UK residential expected credit loss provisions key audit matter overleaf.
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Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included 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
were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not
provide a separate opinion on these matters.
Risk Our response to the risk
Fair value of the collateral loan and RPI-linked swap
Refer to the Audit Committee Report (page 121); Accounting policies (page
166); and Note 2 (b) of the Consolidated Financial Statements (pages 178
and 179).
As at 31 December 2025, the Group and Society reported a £138.9 million
collateral loan (2024: £145.0 million) and fair value of the associated RPI-
linked swap of £1.6 million (2024: £5.9 million).
The Society owns three equity release mortgage portfolios that each
contain a ‘no negative equity guarantee’ that any shortfall arising on the
sale of the property securing the mortgage will not be pursued. The Society
is therefore exposed to potential losses on the portfolio, albeit any loss
is limited in part by a further guarantee provided to the Society by a third
party. As a result of these elements, the portfolio is measured at fair value.
The fair value of the equity release portfolio is determined using a model
involving several judgmental assumptions.
The Society uses swaps to manage the interest rate risk and reduce
income statement volatility that would otherwise result from changes in
the fair value of the equity release portfolio. One of these instruments, an
RPI-linked swap, is used to hedge the interest rate risk associated with one
of the three portfolios. The RPI-linked swap is a Level 3 financial instrument
as it is valued using a model with judgemental assumptions and the
unobservable inputs of mortality rate and voluntary redemption rates as
future notional amounts are not specified in the contract.
The key assumptions used in the models include:
• Discount rates, including spread
• Property price volatility
• Property price sale discounts
• Mortality rates
• RPI inflation rates
• Voluntary mortgage redemption rates
• Estimations for long term care
As the portfolio ages, a greater portion of the book does not have
observable market data, increasing its inherent risk.
Due to the degree of judgement exercised by the Directors in determining
the key assumptions used in the valuation model, we considered this to be
a key audit matter. The heightened levels of estimation uncertainty also
gave rise to an increased risk of management override of controls.
We understood and evaluated the design
effectiveness of key controls over the fair value of
the equity release portfolio and RPI-linked swap,
and adopted a substantive audit approach.
With support from EY valuation specialists, we
assessed the appropriateness of the Society’s
valuation techniques and independently calculated
a range of fair values for the collateral loan and RPI-
linked swap. We compared the reported fair values
against this range.
Alongside EY valuation specialists and life actuaries,
we challenged the key assumptions used in the fair
value models. We compared assumptions applied
in the fair value models to the Society’s historical
experience and benchmarked assumptions to
observable market data where applicable.
Key observations communicated to the Audit Committee
We reported the outcome of our independently determined ranges, and concluded that the fair value of the collateral loan and RPI-
linked swap was within our reasonable range. We concluded that the assumptions deployed in the fair value of the collateral loan and
RPI-linked swap were reasonable in the context of the equity release mortgage portfolio and current market conditions.
Independent Auditor’s Report continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 155
Risk Our response to the risk
UK residential expected credit loss (“ECL”) provisions
Refer to the Audit Committee Report (page 120);
Accounting policies (pages 168 and 169); and Note 2 of the
Consolidated Financial Statements (pages 172 to 178).
As at 31 December 2025, the Group and Society reported
gross loans fully secured on residential property of
£25,820.6m (2024: £24,402.7). Of these amounts,
£25,772.3 million (2024: £24,355.0 million) related to
UK residential loans and advances to customers, with
associated ECL provisions of £35.9 million (2024: £36.9
million).
The ECL provision is a significant balance that carries a high
degree of estimation uncertainty due to the assumptions
used in its calculation. The calculation of such provisions
under IFRS 9 requires a forward looking assessment of
expected losses, increasing the complexity and number of
judgements used.
The level of judgement and estimation remains heightened
as a result of the current economic environment which
leads to greater uncertainty in forecasting future economic
scenarios, the weightings to be applied to these scenarios,
the determination of significant increase in credit risk
(‘SICR’), and the use of judgemental overlays.
Key judgements and estimates in the timing and
measurement of ECL include:
• Probability of default (‘PD’)
• Loss given default (‘LGD’)
• Exposure at default (‘EAD’)
• Assessment of staging criteria and identification of loans
that exhibit a SICR
• Incorporation of forward looking information, including
multiple economic assumptions
• Completeness and valuation of post model adjustments
(‘PMAs’)
We evaluated model changes deployed by Management
during the year, and the related effect on certain post model
adjustments.
We also considered potential consequences of climate
change and the impact of this on the ECL provision.
Due to the degree of judgement that needs to be exercised
by the Directors in determining the key assumptions used
in calculating the ECL provision for the UK residential
mortgage portfolio, we considered this to be a key audit
matter. The heightened levels of estimation uncertainty also
gave rise to an increased risk of management override of
controls.
We understood and evaluated the design effectiveness of controls over
the UK residential impairment processes, and adopted a substantive audit
approach.
With the support of EY credit risk modelling specialists, we risk assessed
the models used to generate the UK residential ECL provision. Based on this
risk assessment we tailored our procedures, which included:
• Testing the appropriateness of the Society’s updated model
methodology through inspection of model design documentation.
• Independently replicating the Society’s modelled ECL as at 31 December
2025 which incorporated the model changes made in the year. This
included recalculation of PDs, LGDs, EADs and overall ECL.
• Performing sensitivity analysis to determine the impact of changes in key
assumptions to the ECL provision.
• Benchmarking assumptions to observable market data where applicable.
With the support of EY credit risk modelling specialists, we assessed
whether the SICR criteria used by the Society provided appropriate leading
indicators of increased credit risk in the UK residential mortgage portfolio.
We also independently tested whether the UK residential mortgage
portfolio had been appropriately staged in line with the Society’s stated
criteria.
With the support of EY economists, we assessed the base case and
alternative macroeconomic scenarios through comparison to other
scenarios from external sources. This testing also included benchmarking of
the probability weightings used by the Society.
Having determined the appropriateness of the unemployment, GDP,
inflation, interest rate and property price forecasts and associated
probability weightings, we assessed the reasonableness of the extent of
non-linearity arising from the Society’s model outputs.
We assessed the completeness and appropriateness of PMAs using our
knowledge and experience across the UK lending sector, and challenging
the Society’s rationale for new PMAs recorded in the year and the continued
justifications for existing PMAs where relevant.
With the involvement of our credit risk modelling specialists we tested in
scope PMAs for reasonableness of estimation with reference to observable
market data. We also tested the Society’s incorporation of climate risk
into the modelled ECL provision, and utilised external data to determine
whether the impact of this had been reasonably estimated at 31 December
2025.
We performed a stand back analysis to assess the overall adequacy of the
UK residential ECL provisions. This included utilising our understanding of
the Society and the UK residential mortgage market to perform analytical
procedures, assessing whether any contradictory evidence had been
obtained from other parts of the audit, and considering the Group and
Society’s provision coverage ratios in comparison to other lenders using
available benchmarking data.
Key observations communicated to the Audit Committee
We communicated that we were satisfied that the Society’s UK residential ECL provisions were reasonably estimated and materially in
compliance with IFRS 9.
We highlighted to the committee that there remains increased uncertainty in determining forecast losses due to the prevailing uncertain
economic environment.
We highlighted to the Audit Committee that the updated model methodology, including the incorporation of the prior period PMA relating
to affordability, was appropriate and that the models operated as designed. On this basis, we consider the reported ECL to be reasonably
estimated.
We considered the multiple economic scenarios, and associated weightings, incorporated in the IFRS 9 models to be materially appropriate.
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Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified
misstatements on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence
the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and
extent of our audit procedures.
We determined materiality for the Group and the Society to be £10.0 million (2024: £9.4 million), which is 5% of profit
before tax (2024: 5% of profit before tax, adjusted for certain non-recurring items). We believe that profit before tax
provides us with an appropriate basis for materiality given the users of the financial statements (including the Society’s
members and regulators) principally focus on pre-tax profit in assessing the Group and the Society’s performance.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low
level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our
judgement was that performance materiality was 75% (2024: 50%) of our planning materiality, namely £7.5 million (2024:
£4.7 million). We increased performance materiality to 75% in the current year as this was our second year as auditor, and
having considered the results of our assessment of the effectiveness of the Group’s control environment.
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £0.5
million (2024: £0.5 million), which is set at 5% of planning materiality, as well as differences below that threshold that, in our
view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in
light of other relevant qualitative considerations in forming our opinion.
Other Information
The “other information” comprises the information included in the Annual Report and Accounts, other than the financial
statements and our auditor’s report thereon. The Directors are responsible for the “other information” contained within
the Annual Report and Accounts.
Our opinion on the financial statements does not cover the “other information” and, except to the extent otherwise
explicitly stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the “other information” and, in doing so, consider whether the “other information” is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work
we have performed, we conclude that there is a material misstatement of the “other information”, we are required to report
that fact.
We have nothing to report in this regard.
Independent Auditor’s Report continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 157
Opinion on other matters prescribed by the Building Societies Act 1986
In our opinion:
• The Annual Business Statement and the Directors’ Report have been prepared in accordance with the requirements of
the Building Societies Act 1986;
• The information given in the Directors’ Report for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
• The information given in the Annual Business Statement (other than the information upon which we are not required to
report) gives a true representation of the matters in respect of which it is given.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Building Societies Act 1986 requires us to report
to you if, in our opinion:
• Proper accounting records have not been kept by the Society; or
• The Group or 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.
Corporate Governance Statement
We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Group and the Society’s voluntary compliance with the provisions of the
UK Corporate Governance Code specified for our review by the UK Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement are materially consistent with the financial statements or our knowledge obtained
during the audit:
• Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on pages 148 and 149;
• Directors’ explanation as to its assessment of the Society’s prospects, the period this assessment covers and why the
period is appropriate set out on pages 148 and 149;
• Directors’ statement on fair, balanced and understandable set out on page 148;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 37
to 40;
• The section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out in the Board Risk Committee (BRC) Report on pages 125 to 129; and;
• The section describing the work of the Audit Committee set out on page 119.
Directors’ Remuneration Report
The Society voluntarily prepares a Report of the directors on remuneration in accordance with the provisions of the
Companies Act 2006. The Directors have requested that we audit the part of the Report of the Directors on remuneration
specified by the Companies Act 2006 to be audited as if the Society were a quoted company.
In our opinion, the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with
the Companies Act 2006.
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Responsibilities of directors
As explained more fully in the Directors’ responsibilities statement set out on page 148, the Directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the 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 has no
realistic alternative but to do so.
Auditor’s 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 auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International
Standards on Auditing (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.
Explanation as to what extent the audit was considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined below, to detect irregularities, including fraud. The risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with
governance of the Group and Management.
• We obtained an understanding of the legal and regulatory frameworks that are applicable to Group and determined that
the most significant are the regulations, licence conditions and supervisory requirements of the Prudential Regulation
Authority (“PRA”), the Financial Conduct Authority (“FCA”) and the Building Societies Act 1986.
• We understood how the Group and the Society are complying with those frameworks by attending the Society’s Audit
Committee, making enquiries of Management, internal audit, and those responsible for legal and compliance matters. We
inquired as to any known instances of non-compliance or suspected non-compliance with laws and regulations. We also
reviewed correspondence between the Group and UK regulatory bodies and reviewed minutes of the Board and Board
Risk Committee. We also reviewed the Society’s Whistleblowing Policy and reports.
• We assessed the susceptibility of the Group and the Society’s financial statements to material misstatement, including
how fraud might occur by holding discussions with senior Management, those charged with governance, internal audit
and the Audit Committee.
• Based on this understanding we designed our audit procedures to identify non-compliance with such laws and
regulations. Our procedures involved enquiries of legal counsel, executive Management, internal audit, and focused
testing on areas of key judgement and estimation, as referred to in the Key Audit Matters section above.
• The Group and Society operate in the financial services sector which is a highly regulated environment. As such the
Senior Statutory Auditor considered the experience and expertise of the engagement team to ensure that the team had
the appropriate competence and capabilities, which included the use of specialists where appropriate.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Independent Auditor’s Report continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 159
Other matters we are required to address
• Following the recommendation from the Audit Committee, we were appointed by the Society on 18 April 2024 to audit
the financial statements for the year ending 31 December 2024 and subsequent financial periods.
• The period of total uninterrupted engagement including previous renewals and reappointments is two years, covering
the years ending 31 December 2024 to 31 December 2025.
• The audit opinion is consistent with the additional report to the Audit Committee.
Use of our report
This report is made solely to the Society’s members, as a body, in accordance with Section 78 of the Building Societies Act
1986. Our audit work has been undertaken so that we might state to the Society’s members those matters we are required
to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Society and the Society’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Steven Robb (Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Leeds
26 February 2026
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Income Statements
For the Year ended 31 December 2025
Notes
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
Interest receivable and similar income
Accounted for using effective interest rate method
3
1,395.0
1,283.6
1,366.8
1,279.9
Other
3
177.1
308.5
200.7
304.1
Total interest receivable and similar income
1,572.1
1,592.1
1,567.5
1,584.0
Interest payable and similar charges
4
(1,169.6)
(1,229.2)
(1,165.5)
(1,221.4)
Net interest receivable
402.5
362.9
402.0
362.6
Fees and commissions receivable
5.5
5.1
5.5
5.1
Fees and commissions payable
(1.1)
(0.6)
(0.7)
(0.3)
Fair value (losses)/gains from financial instruments
6
(4.9)
10.3
2.9
6.0
Other operating income/(expense)
5
10.5
(22.1)
10.5
(21.4)
Total income
412.5
355.6
420.2
352.0
Administrative expenses
7
(203.6)
(185.4)
(203.6)
(185.4)
Depreciation and amortisation
17,18
(11.7)
(10.6)
(11.7)
(10.6)
Impairment (charge)/release on loans and advances to customers
9
(0.1)
5.7
(0.1)
5.7
Impairment of property, plant and equipment and intangible assets
17,18
–
(17.5)
–
(17.5)
Provisions release/(charge)
23
1.5
(10.3)
1.5
(10.3)
Operating profit and profit before tax
198.6
137.5
206.3
133.9
Tax expense
10
(53.1)
(37.6)
(55.3)
(36.2)
Profit after tax for the financial year
145.5
99.9
151.0
97.7
All amounts relate to continuing operations.
The notes on pages 165 to 216 form part of these accounts.
Leeds Building Society | Annual Report and Accounts 2025 161
Statements of Comprehensive Income
For the Year ended 31 December 2025
Notes
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
Profit for the financial year
145.5
99.9
151.0
97.7
Items that may subsequently be reclassified to profit and loss:
Cash flow hedge reserve:
Fair value (losses)/gains recorded in cash flow hedge reserve
(9.1)
19.1
(9.1)
19.1
Amount transferred to income statement (Note 1)
(29.6)
(27.9)
(29.6)
(27.9)
Fair value reserve:
Fair value gains/(losses) on investment securities at fair value through
other comprehensive income
9.0
(18.1)
9.0
(18.1)
Amount transferred to income statement (Note 2)
1.5
(1.3)
1.5
(1.3)
Taxation (Note 3)
7.9
7.8
7.9
7.8
Items that may not subsequently be reclassified to profit and loss:
Retirement benefit obligations:
Actuarial (loss)/gain on retirement benefit surplus
26
(0.3)
0.7
(0.3)
0.7
Change in asset ceiling on retirement benefits
26
(3.1)
(4.2)
(3.1)
(4.2)
Revaluation reserve:
Revaluation gain on properties
18
0.3
–
0.3
–
Taxation (Note 4)
0.8
1.0
0.8
1.0
Total comprehensive income for the year
122.9
77.0
128.4
74.8
Notes:
(1) Reported in the 2024 Annual Report and Accounts as 'Gains previously recorded in cash flow hedge reserve amortised through
profit or loss'.
(2) Reported in the 2024 Annual Report and Accounts as '(Gains)/losses on investment securities measured through other
comprehensive income reclassified to profit or loss on disposal'.
(3) Reported in the 2024 Annual Report and Accounts as 'Tax relating to items that may subsequently be reclassified' & 'Effect of
change in corporation tax rate'.
(4) Reported in the 2024 Annual Report and Accounts as 'Tax relating to items that may not be reclassified' & 'Effect of change in
corporation tax rate'.
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Notes
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
Assets
Liquid assets
Cash in hand and balances with the Bank of England
12
1,413.4
2,443.2
1,413.4
2,443.2
Loans and advances to credit institutions
12
115.2
152.3
6.1
15.2
Investment securities
13
3,921.9
3,950.0
3,921.9
3,950.0
Derivative financial instruments
32
129.5
371.1
129.5
371.1
Loans and advances to customers
14
Loans fully secured on residential property
25,820.6
24,402.7
25,820.6
24,402.7
Other loans
141.9
147.8
141.9
147.8
Fair value adjustment for hedged risk on loans and advances to customers
75.5
(173.1)
75.5
(173.1)
Other assets, prepayments and accrued income
15
253.3
238.1
385.1
444.5
Current tax assets
0.1
–
0.1
–
Intangible assets
17
43.9
35.1
43.9
35.1
Property, plant and equipment
18
47.1
45.4
47.1
45.4
Total assets
31,962.4
31,612.6
31,985.1
31,681.9
Liabilities
Shares
19
26,069.9
24,529.8
26,069.9
24,529.8
Fair value adjustment for hedged risk on shares
11.7
8.8
11.7
8.8
Derivative financial instruments
32
119.9
98.0
130.7
117.2
Amounts owed to credit institutions
0.5
1,244.2
0.5
1,244.2
Amounts owed to other customers
20
138.8
159.3
944.9
791.1
Debt securities in issue
21
3,237.6
3,131.7
2,429.2
2,495.6
Other liabilities and accruals
22
77.9
347.3
98.8
416.0
Current tax liabilities
–
0.6
–
0.6
Deferred tax liabilities
27
14.9
25.6
12.5
21.1
Provisions for liabilities and charges
23
0.6
4.2
0.6
4.2
Retirement benefit obligation
26
0.5
0.5
0.5
0.5
Subordinated liabilities
24
438.1
334.2
438.1
334.2
Subscribed capital
25
8.0
8.0
8.0
8.0
Total liabilities
30,118.4
29,892.2
30,145.4
29,971.3
General reserve
1,790.8
1,647.2
1,786.5
1,637.4
Cash flow hedge reserve
38.7
66.6
38.7
66.6
Fair value reserve
(1.7)
(9.3)
(1.7)
(9.3)
Revaluation reserve
1.9
1.6
1.9
1.6
Other reserve
14.3
14.3
14.3
14.3
Total liabilities and equity
31,962.4
31,612.6
31,985.1
31,681.9
The accounts on pages 160 to 216 were approved by the Board of directors on 26 February 2026.
Signed on behalf of the Board of directors by:
Brendan McCafferty
Chair
Annette Barnes
Interim Chief Executive Officer
Jon Bailey
Interim Chief Financial Officer
Statements of Financial Position
For the Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 163
Statements of Changes in
Members’ Interest
For the Year ended 31 December 2025
Cash flow
Total equity
General
hedge
Fair value
Revaluation
Other
attributable
reserve
reserve
reserve
reserve
reserve*
to members
Group 2025
£M
£M
£M
£M
£M
£M
At 1 January 2025
1,647.2
66.6
(9.3)
1.6
14.3
1,720.4
Income recognised in respect of prior periods
0.7
–
–
–
–
0.7
At 1 January 2025 adjusted
1,647.9
66.6
(9.3)
1.6
14.3
1,721.1
Comprehensive income/(expense) for the year
142.9
(27.9)
7.6
0.3
–
122.9
At 31 December 2025
1,790.8
38.7
(1.7)
1.9
14.3
1,844.0
Cash flow
Total equity
General
hedge
Fair value
Revaluation
Other
attributable
reserve
reserve
reserve
reserve
reserve*
to members
Group 2024
£M
£M
£M
£M
£M
£M
At 1 January 2024
1,548.5
74.3
4.7
1.6
14.3
1,643.4
Comprehensive income/(expense) for the year
98.7
(7.7)
(14.0)
–
–
77.0
At 31 December 2024
1,647.2
66.6
(9.3)
1.6
14.3
1,720.4
Society 2025
General
reserve
£M
Cash flow
hedge
reserve
£M
Fair value
reserve
£M
Revaluation
reserve
£M
Other
reserve*
£M
Total equity
attributable
to members
£M
At 1 January 2025 1,637.4 66.6 (9.3) 1.6 14.3 1,710.6
Income recognised in respect of prior periods 0.7 – – – – 0.7
At 1 January 2025 adjusted 1,638.1 66.6 (9.3) 1.6 14.3 1,711.3
Comprehensive income/(expense) for the year 148.4 (27.9) 7.6 0.3 – 128.4
At 31 December 2025 1,786.5 38.7 (1.7) 1.9 14.3 1,839.7
Society 2024
General
reserve
£M
Cash flow
hedge
reserve
£M
Fair value
reserve
£M
Revaluation
reserve
£M
Other
reserve*
£M
Total equity
attributable
to members
£M
At 1 January 2024 1,540.9 74.3 4.7 1.6 14.3 1,635.8
Comprehensive income/(expense) for the year 96.5 (7.7) (14.0) – – 74.8
At 31 December 2024 1,637.4 66.6 (9.3) 1.6 14.3 1,710.6
*Other reserve relates to the 2006 merger with Mercantile Building Society.
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164
Statements of Cash Flows
For the Year ended 31 December 2025
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
Profit before tax
198.6
137.5
206.3
133.9
Adjusted for:
Impairment charge/(release)
0.1
(5.7)
0.1
(5.7)
Provisions (release)/charge
(1.5)
10.3
(1.5)
10.3
Depreciation and amortisation
11.7
10.6
11.7
10.6
Impairment of property, plant and equipment and intangible assets
–
17.5
–
17.5
Fair value of collateral loan which represents a pool of equity release mortgages
3.9
7.6
3.9
7.6
Net loss / (gain) from financing activities*
0.1
(3.8)
0.1
(11.6)
Non cash and other items
(35.4)
11.2
(35.9)
9.8
Cash generated from operations
177.5
185.2
184.7
172.4
Changes in operating assets and liabilities:
Derivative financial instruments*
43.3
14.2
34.9
22.3
Loans and advances to customers
(1,416.0)
(2,611.2)
(1,416.0)
(2,611.2)
Loans and advances to credit institutions
–
77.8
–
77.8
Other operating assets
(16.7)
(12.9)
57.9
(11.7)
Shares
1,540.1
3,736.8
1,540.1
3,736.8
Amounts owed to credit institutions and other customers
(1,264.2)
(635.7)
(1,089.9)
(355.6)
Other operating liabilities
(273.5)
41.0
(321.3)
(0.1)
Taxation paid
(53.6)
(28.2)
(53.6)
(28.2)
Net cash flows from operating activities
(1,263.1)
767.0
(1,063.2)
1,002.5
Cash flows from investing activities
Purchase of investment securities
(3,917.4)
(5,124.3)
(3,917.4)
(5,124.3)
Proceeds from sale and redemption of investment securities
3,984.9
3,689.3
3,984.9
3,689.3
Purchase of intangible assets
(16.9)
(12.4)
(16.9)
(12.4)
Purchase of property, plant and equipment
(3.6)
(3.0)
(3.6)
(3.0)
Net cash flows from investing activities
47.0
(1,450.4)
47.0
(1,450.4)
Cash flows from financing activities
Net proceeds from issue of debt securities
874.3
910.1
524.4
560.2
Net proceeds from issue of subordinated liabilities
299.2
–
299.2
–
Repayments of debt securities in issue
(777.3)
(503.8)
(599.3)
(433.4)
Repayments of subordinated liabilities
(217.0)
–
(217.0)
–
Repayments of subscribed capital
–
(48.4)
–
(48.4)
Principal lease payments
(1.4)
(1.4)
(1.4)
(1.4)
Derivative financial instruments*
(28.6)
(43.5)
(28.6)
(32.1)
Net cash flows from financing activities
149.2
313.0
(22.7)
44.9
Net decrease in cash and cash equivalents
(1,066.9)
(370.4)
(1,038.9)
(403.0)
Cash and cash equivalents at the beginning of the year
2,595.5
2,965.9
2,458.4
2,861.4
Cash and cash equivalents at the end of the year
1,528.6
2,595.5
1,419.5
2,458.4
Additional information on operational cash flows from interest
Interest paid
1,179.5
1,164.7
1,145.0
1,137.1
Interest received
1,395.0
1,283.6
1,366.8
1,279.9
* Derivative financial instrument cash flows were previously presented under net cash flows from operating activities, but have now been
split across net cash flows from operating activities and net cash flows from financing activities to align classification with items being
hedged. The 2024 Group and Society comparatives has been represented, resulting in an increase in net cash flows from operating
activities of £43.5m and £32.1m respectively, and a reduction in net cash flows from financing activities of £43.5m and £32.1m
respectively. There is no net impact on cash and cash equivalents at the end of the year.
Leeds Building Society | Annual Report and Accounts 2025 165
Notes to the Accounts
Year ended 31 December 2025
1. Accounting policies
(a) Basis of preparation
The Group and Society financial statements are prepared in accordance with international accounting standards (IAS) in conformity with
the requirements of the Building Societies Act 1986 and with those parts of the Building Societies (Accounts and Related Provisions)
Regulations 1998 (as amended) that are applicable. The Group and Society financial statements are also prepared in accordance with
UK-adopted IAS.
The Group prepares its accounts under the historical cost convention except for the valuation of financial assets and liabilities held at fair
value through other comprehensive income or fair value through profit or loss including all derivative financial instruments, and certain
freehold and long leasehold properties.
As stated in the Directors’ Report, the directors have not identified any material uncertainties that may cast significant doubt on the
Group’s ability to continue as a going concern. As such, the Group has prepared its consolidated financial statements on the basis that it will
continue to operate as a going concern. Please refer to page 148 to 149 for further details of the directors’ assessment.
The particular accounting policies adopted are described below and the policies, presentation and methods of computation are consistent
with those applied by the Group in the prior year, except where otherwise indicated.
These financial statements are presented in sterling and, except where otherwise indicated, have been rounded to the nearest one hundred
thousand pounds.
(b) Accounting developments
In April 2024, the International Accounting Standard Board (IASB) issued IFRS 18 Presentation and Disclosure in Financial Statements
which replaces IAS 1 Presentation of Financial Statements. IFRS 18 introduces new requirements for presentation within the statement
of profit or loss, including specified totals and subtotals. It also requires disclosure of newly defined management-defined performance
measures, which are subtotals of income and expenses, and includes new requirements for aggregation and disaggregation of financial
information based on the identified ‘roles’ of the primary financial statements and the notes.
IFRS 18 is effective for reporting periods beginning on or after 1 January 2027. The Society is continuing to assess the impacts of the
amendments and is actively preparing for implementation, including updates to the primary financial statements and related disclosures.
In May 2024, the IASB issued Amendments to the Classification and Measurement of Financial Instruments which amended IFRS 9
Financial Instruments and IFRS 7 Financial Instruments: Disclosures. These amendments clarify when specific financial assets and liabilities
can be recognised or derecognised, introducing an accounting policy choice when derecognising financial liabilities settled using an
electronic payment system, classification of financial assets with ESG linked features and introduce additional disclosures for financial
instruments with contingent features and equity instruments classified at fair value through other comprehensive income (FVOCI).
The amendments are effective for reporting periods beginning on or after 1 January 2026. The Society does not expect the
amendments to have an impact on the primary financial statements and notes to the financial statements.
Taxation
The Group is within the scope of the Organisation for Economic Co-operation and Development (OECD) Pillar 2 Model Rules. In July
2023, the Pillar 2 legislation was enacted in the United Kingdom, the jurisdiction in which the Group operates. The Pillar 2 legislation
came into effect for accounting periods beginning on or after 31 December 2023. The Group applies the exception to recognising and
disclosing information about deferred tax assets and liabilities related to Pillar 2 income taxes, as provided in the amendments to IAS 12
Income Taxes issued in May 2023.
Within Pillar 2, the Global Anti-Base Erosion (GloBE) rules are designed to ensure large multinational enterprises pay a minimum level of
tax on the income arising in each jurisdiction where they operate. Where the legislation applies, a group is liable to pay a top-up tax for
the difference between its GloBE effective tax rate (ETR) and the 15% minimum rate on a jurisdictional basis. Based on an assessment of
the current period, all entities within the group are expected to have an ETR that exceeds 15% and therefore there is not expected to be
a top-up tax charge on the Group. The Group will continue to review this position at each reporting date.
(c) Basis of consolidation
The Society does not have a parent or controlling entity. The Group accounts consolidate the accounts of the Society, its subsidiaries
and those entities over which it is deemed to have control, as listed in Note 16. Uniform accounting policies are applied throughout the
Group. Intragroup transactions are eliminated upon consolidation.
Special Purpose Funding Vehicles
The Society has transferred the beneficial interest in various mortgage portfolios to special purpose funding vehicles (SPVs), enabling
the subsequent raising of debt to investors with the underlying assets as collateral.
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1. Accounting policies (continued)
(c) Basis of consolidation (continued)
Special Purpose Funding Vehicles (continued)
It is considered inappropriate for these mortgage assets to be derecognised by the Society in accordance with IFRS 9. This is due to the
Society retaining significant risks, being exposure to credit risk and prepayment risk, and rewards of ownership of these financial assets.
As such, the Society has not truly transferred ownership, so has continued to recognise the mortgage assets on its balance sheet. The
beneficial interest transferred in the mortgage assets is recognised as a deemed loan to the SPV, included in 'Other assets, prepayments
and accrued income' within the Society's Statement of Financial Position, and is fully eliminated at the Group level on consolidation in
accordance with IFRS 10.
(d) Financial instruments
(i) Classification and measurement
Financial assets
In accordance with IFRS 9, the Group has classified its financial assets with reference to both the Group’s business model for managing
the assets and the contractual cash flow characteristics of the assets. The Group’s financial assets have been classified into the following
categories:
• At amortised cost
These are assets for which the business model is to hold the asset and collect the contractual cash flows, and those cash flows are
solely payments of principal and interest. This means that cash flows typically occur on pre-determined dates and that interest
primarily reflects the time value of money, compensation for credit risk and a profit margin.
The Group has classified the following assets as ‘at amortised cost’: cash in hand and balances with the Bank of England, loans and
advances to credit institutions and loans and advances to customers, with the exception of a collateral loan which represents a pool of
equity release mortgages purchased from a third party for which some but not all risks were transferred to the Group.
Assets held at amortised cost are initially recorded at fair value (usually transaction price) plus any directly attributable costs. They are
subsequently measured using the effective interest rate (EIR) method less provisions for impairment.
• At fair value through other comprehensive income (FVOCI)
These are categories of assets for which the business model is to hold the asset and collect the contractual cash flows or to sell the
assets. The contractual cash flows must be solely payments of principal and interest. The Group holds investment securities in order
to meet current and future liquidity requirements, and these are considered to meet the definition of the hold or sell business model.
They are therefore classified as ‘at FVOCI’, apart from those assets for which the cash flows are not solely payments of principal and
interest, as noted below.
These assets are initially recognised at fair value adjusted for any attributable costs. Subsequent changes in fair value are recognised
in other comprehensive income, except for impairment losses which are recognised in profit or loss. Upon derecognition, any
accumulated movements in fair value previously recognised in equity are reclassified to profit or loss in the Income Statement.
Premia and discounts arising on the purchase of assets held at FVOCI are spread over the life of the asset using the EIR method.
• At fair value through profit or loss (FVTPL)
Assets for which the business model is not 'to hold’ or ‘to hold or sell’, or those for which contractual cash flows are not solely
payments of principal and interest, are classified as ‘at FVTPL’. The Group has classified the collateral loan which represents a pool of
equity release mortgages as ‘at FVTPL’ since the underlying contract with the member contains a ‘no negative equity guarantee’ that
any shortfall arising on the sale of the property securing the mortgage will not be pursued.
IFRS 9 mandates that derivative financial instruments are classified as ‘at FVTPL’.
Instruments classified as ‘at FVTPL’ are initially recognised at fair value and any subsequent changes in fair value are recognised
immediately in the Income Statement. The exception to this is for those derivative financial instruments designated in cash flow hedge
accounting relationships, where the effective portion of any changes in fair value is recognised in other comprehensive income (see
Note 1(d)(iv)).
Financial liabilities
All financial liabilities are classified as ‘at amortised cost’, with the exception of derivative financial instruments which under IFRS 9 are
mandatorily classified as ‘at FVTPL’.
Financial liabilities are initially recorded at their fair value, and those to be measured at amortised cost are subsequently measured using
the EIR method. The premia and discounts, together with commissions and other costs incurred in the raising of wholesale funds and
subordinated liabilities, are amortised over the period to maturity using the EIR method. Those liabilities measured ‘at FVTPL’ are initially
recognised at fair value and any subsequent changes in fair value are recognised immediately in the Income Statement apart from for
those instruments designated in cash flow hedge accounting relationships, as above.
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 167
1. Accounting policies (continued)
(d) Financial instruments (continued)
(ii) Sale and repurchase agreements
Investments and other securities may be lent or sold subject to a commitment to repurchase them (a ‘repo’). Such securities are
retained on the Statement of Financial Position when substantially all of the risks and rewards of ownership remain within the Group, and
the counterparty liability is included separately on the Statement of Financial Position as appropriate. Where applicable, the difference
between sale and repurchase price is accrued over the life of the agreement using the EIR method.
(iii) Recognition and derecognition of financial assets and liabilities
Regular way purchases and sales of financial assets are recognised on the settlement date, being the date on which the Group commits
to receive or deliver the asset.
Financial assets are only derecognised when the contractual rights to receive cash flows from them have expired or when the Group has
transferred substantially all risks and rewards of ownership. Within the accounts, the Society has not derecognised the mortgage loans
which have been used to secure the issue of debt securities as substantially all the risks and rewards are retained by the Society and the
Society retains control of the assets.
Financial liabilities are only derecognised when the obligation is discharged, cancelled or has expired.
(iv) Derivative financial instruments and hedge accounting
During the financial year the Group continued to apply the IAS 39 hedge accounting standards for its macro fair value hedges, as
permitted by IFRS 9. The Group applies IFRS 9 hedge accounting requirements for the accounting of the micro fair value hedges and the
macro cash flow hedge.
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently
remeasured monthly at their fair value. The need for credit valuation adjustments is considered in the determination of the fair value of
derivatives. All derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative.
All derivatives are entered into by the Group for the purpose of providing an economic hedge; however certain criteria must be met
before the instruments can be allocated to accounting hedge relationships. The Group makes use of accounting hedges to reduce
volatility in the Income Statement. If derivatives are not designated in accounting hedges, then changes in fair values are recognised
immediately in the Income Statement.
A fair value hedge is used to hedge exposures to variability in the fair value of financial assets and liabilities, such as fixed rate mortgages
and savings products. Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the
Income Statement together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
If the hedge no longer meets the criteria for hedge accounting, the relationship is de-designated and the adjustment to the carrying
amount of the hedged item is amortised to the Income Statement over the period to maturity.
For the purposes of the fair value liability hedge, the Group includes fixed rate ISAs in the population of products eligible for inclusion
in the hedge as permitted under the ‘carve out’ applied when IAS 39 was adopted for use in the European Union and subsequently
transposed into IFRS as adopted by the United Kingdom.
The Group applies macro cash flow hedge accounting to a portion of its floating rate financial liabilities, which are designated in the
hedge alongside interest rate swaps that have been transacted to economically hedge mortgage applications prior to completion of the
mortgage. Where a derivative financial instrument is designated in a macro cash flow hedge, the effective part of any gain or loss on the
derivative financial instrument is recognised directly in other comprehensive income and recycled to the Income Statement over the life
of the forecast transaction. The effective portion recognised in other comprehensive income is limited to the cumulative change in fair
value of the hedged item, determined on a present value basis. Any ineffective portion of the gain or loss on the hedging instrument is
recognised in profit or loss immediately.
To the extent that the hedge is effective, unrealised fair value gains and losses on cash flow hedging derivatives are recognised in the
cash flow hedging reserve.
If the forecast transaction is no longer expected to occur, the cumulative unrealised gain or loss recognised in equity is then recognised
immediately in the Income Statement.
(v) Offsetting
Financial assets and financial liabilities are offset, and the net amount presented within the Statement of Financial Position when, and only
when, the Group has a legally enforceable right to offset the amounts and it intends either to settle them on a net basis or to realise the
asset and settle the liability simultaneously.
The Group has entered into ISDA master netting agreements for its derivatives. The ISDA master netting agreements grant a legal right of
offset for transactions with the same counterparty but this does not necessarily result in an offset of financial assets and liabilities within
the Statement of Financial Position, as the Group does not always intend to settle the assets and liabilities simultaneously.
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1. Accounting policies (continued)
(e) Impairment of financial assets
Impairment losses are calculated for all financial assets held at amortised cost or at FVOCI. Loss provisions are also held against undrawn
loan commitments, where a loan offer has been issued to a member and remains unexpired, but the loan has not yet completed and so
has not yet been recognised in the Statement of Financial Position.
Impairment loss provisions are calculated to cover future losses expected to emerge over a defined time period, dependent on the stage
allocation of the individual asset, as set out below. This approach to impairment losses is known as the expected credit losses (ECL) basis.
• Stage 1 – assets are allocated to this stage on initial recognition and remain in this stage if there has not been a significant increase
in credit risk since initial recognition. Impairment losses are recognised to cover 12-month ECL, being the proportion of lifetime ECL
arising from default events expected within 12 months of the reporting date.
• Stage 2 – assets where it is determined that there has been a significant increase in credit risk since initial recognition, but where there
is no objective evidence of impairment. Impairment losses are recognised to cover lifetime ECL.
• Stage 3 – assets where there is objective evidence of impairment, that is when they are considered to be in default or in the cure period
following default (see below for full definition of default). Impairment losses are recognised to cover lifetime ECL.
Assets continue to be recognised, net of impairment loss provisions, until there is no reasonable prospect of recovery, which is generally
at the point at which the property securing the loan is sold. If a loss is ultimately realised, it is written off against the provision previously
made. Any subsequent recoveries are recognised directly in the Income Statement as a credit to impairment, as they arise.
(i) Impairment of loans and advances to customers
The primary driver in determining whether an individual loan has had a significant increase in credit risk is a quantitative assessment of
the increase in lifetime probability of default (PD). At each reporting date, lifetime PD is recalculated and compared to the lifetime PD
calculated on initial recognition. The loan is allocated to Stage 2 if the lifetime PD has increased over a pre-determined threshold, which
is set using a test-based approach and expressed as a percentage increase, segmented by product type and risk banding at the date of
initial recognition.
In addition to the above, qualitative criteria have been set such that loans which are considered to have a significantly increased credit
risk but would not be captured above are moved to Stage 2. These qualitative criteria include loans which have reached the end of their
contractual term and loans where the member has been identified as bankrupt but is not in arrears. A backstop is also in place such that
all loans which are 30 days past due are moved to Stage 2.
Definition of default: An individual loan is considered to be in default and is allocated to Stage 3 if the loan is more than 90 days past
due, is subject to certain forbearance activities, is in possession, meets ‘unlikely to pay’ criteria or if the member has been identified as
bankrupt and is in arrears by more than a nominal amount. A cure period is in place such that the loan would move back out of Stage 3
if the loan exits default and remains not in default for more than 12 months or, for loans subject to forbearance, if 12 consecutive full
payments are made after the forbearance activity has completed. The Group’s definition of default aligns to the regulatory definition
under the IRB approach for capital requirements.
ECL is calculated by multiplying loss given default (LGD), PD and exposure at default (EAD). Each element of the calculation is modelled
at individual account level on a monthly basis over the remaining contractual term of the loan, with the first 12 months totalled to obtain
the 12-month ECL and the lifetime ECL obtained by totalling the above over the full contractual life of the loan. Modelling assumptions
are based on historical data analysis of the impact of economic variables on loan behaviour. These assumptions are then applied to the
forecast economic scenarios to predict future loan behaviour.
The overall ECL recorded in the financial statements is calculated as the probability weighted ECL over a range of possible forecasted
macroeconomic scenarios.
The Group utilises a wide range of forbearance strategies to support members in financial difficulty, working with members on a
case by case basis to determine the most suitable approach. The implementation of a forbearance strategy does not give rise to the
derecognition of the loan.
Post Model Adjustments (PMAs): PMAs are applied to modify the level of impairment loss provisions from that calculated by the
detailed models used to determine ECL. They are used where there is a material risk that is not adequately captured within modelled ECL
as a result of a lack of historical data with which to model or due to ongoing uncertainty. Judgement is required in determining whether a
PMA should be used and the appropriate quantum of the adjustment. All PMAs are subject to approval by Credit Committee and must be
reviewed and reapproved at least annually.
At 31 December 2025, the total recognised as a result of the PMAs used by the Group was £4.2 million (2024: £15.5 million). Further
details are provided in Note 2(b)(i).
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 169
1. Accounting policies (continued)
(e) Impairment of financial assets (continued)
(ii) Impairment of liquid assets
The Group reviews the external credit ratings of its liquid assets (cash in hand and balances with the Bank of England, loans and advances
to credit institutions and investment securities) at each reporting date. Those assets which are of investment grade (external credit
rating of Aaa to Baa3 or equivalent) are considered to have low credit risk and therefore are assumed to have not had a significant
increase in credit risk since initial recognition, as allowed by IFRS 9. Liquid assets which are not of investment grade are assessed on an
individual basis.
ECL is calculated by multiplying LGD, PD and EAD. LGD is calculated based on publicly available data on historic recovery rates by product
and PDs are similarly based on public information and analysis performed by third parties to derive PDs for similar products.
(f) Interest receivable and payable and similar income and charges
Interest income and expense on all financial instruments are recognised in interest receivable or payable in the Income Statement.
Interest income and expense are calculated using the EIR method for financial assets and liabilities held at amortised cost and classified
as ‘at FVOCI’.
The EIR method is a method of allocating the interest income or interest expense to the carrying value over the relevant period. The EIR
is the rate that exactly discounts estimated future cash payments or receipts, over the expected life of the financial instrument, to the
net carrying amount of the instrument.
Specifically, for mortgage assets with a fixed interest rate period, the effect of this policy is to spread over the fixed term (or shorter
period, if deemed appropriate) the impact of cashbacks, arrangement and valuation fees, early redemption charges and costs directly
attributable and incremental to setting up the loan. Expected lives of mortgage assets are reassessed at each Statement of Financial
Position date and any changes are reflected in the EIR calculation, resulting in an adjustment to the spread that is recognised in the
Income Statement. For investment securities, the EIR method spreads any premia or discounts arising on the purchase of the asset over
the period to the maturity date of the asset.
Interest received on the collateral loan and investment securities classified as ‘at FVTPL’ is recognised within ‘Interest receivable and
similar income’. Amounts accrued and settled in relation to coupon payments and receipts which are contractually due on derivative
financial instruments are recognised within ‘Interest receivable and similar income’ for all derivatives which are economic hedges of
financial assets, regardless of whether or not they are in an accounting hedge relationship, and within ‘Interest payable and similar
charges’ for all derivatives which are economic hedges of financial liabilities. All other movements in the fair value of assets held ‘at
FVTPL’ are recognised through ‘Fair value gains less losses from financial instruments’
.
(g) Fees and commissions receivable
Fees and commissions are earned on referral of members to third party service providers. The Group’s performance obligation is
satisfied at the point of referral and income is recognised at this point. Commission received by the Group from third parties may be
required to be repaid at a later date if certain policies are cancelled.
(h) Intangible assets
An intangible asset is an identifiable non monetary asset without physical substance. An intangible asset is recognised to the extent it
is probable that expected future economic benefits will flow from it and the costs can be measured reliably. Intangible assets primarily
arise from IT development activity and the cost of the asset includes both external costs, such as software licences and IT development
services, and the costs of Group colleagues directly involved in the development of the asset.
Intangible assets are stated at cost less accumulated amortisation and any accumulated impairment. Amortisation of such assets is
charged to the Income Statement on a straight-line basis over the useful life of the asset once it is ready for use. Useful lives of intangible
assets are assessed on an individual asset basis and are reviewed at each Statement of Financial Position date. Upon initial recognition,
the Group generally applies the following useful lives:
Core systems – ten years
System enhancements or non core additions – five years
Intangible assets are reviewed for impairment at each Statement of Financial Position date or when there is an indication of impairment.
Impairment occurs when the carrying amount exceeds the recoverable amount. The recoverable amount is the higher of fair value
less costs of disposal and value in use, calculated using the discounted cash flow method. If such an indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss. Any impairment in the value of these assets is
recognised immediately as an expense in the Income Statement.
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1. Accounting policies (continued)
(i) Property, plant and equipment
Freehold and long leasehold properties are revalued every three years by an independent firm of valuers. The fair value of the properties
is determined from market-based evidence reflecting the property’s highest and best use. Any increase in value is recognised through
other comprehensive income in the revaluation reserve, unless the increase represents the reversal of a previous impairment, in which
case it is recognised through the Income Statement. Any reduction in value is recognised through other comprehensive income as the
reversal of previous revaluation gains or as an impairment through the Income Statement if no such gains exist.
No provision is made for depreciation of freehold and long leasehold properties as, in the opinion of the Board, their residual value will
not be materially different to their carrying value.
All other items of property, plant and equipment are initially recognised at cost and then depreciated. Depreciation is calculated on a
straight line basis, to write down the cost of such assets to their residual values over their estimated useful lives as follows:
Short leasehold properties unexpired lease term
Improvements to properties eight to ten years
Office and computer equipment three to five years
Property, plant and equipment are reviewed annually for indications of impairment. Impairment losses are recognised immediately as an
expense in the Income Statement.
(j) Leases
The Group classifies all contracts which give the right to control the use of an identified asset for a period of time in exchange for a
consideration as leases.
(i) Lessee
At the commencement of a lease, the Group recognises a right-of-use asset within ‘Property, plant and equipment’ and a lease liability
within ‘Other liabilities and accruals’ in the Statement of Financial Position. The lease liability is initially measured at the present value
of all contractual payments that are unpaid at the commencement date, discounted using the Group’s cost of borrowing at the date
of inception of the lease. The calculation of the lease liability reflects the Group’s judgement as to whether it will exercise a purchase,
extension or termination option. For leases of land and buildings, the Group has elected not to separate non lease components and to
account for the lease and non lease components as a single lease component.
Interest is charged on the lease liability at the Group’s cost of wholesale borrowing at the date of inception of the lease and recorded in
‘Interest payable and similar charges’ within the Income Statement.
The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is
a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its
assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way,
a corresponding adjustment is made to the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use
asset has been reduced to zero.
The right-of-use asset is initially measured at an amount equal to the lease liability. It is subsequently depreciated using the straight-line
method from the commencement date to the end of the lease term (or the end of the estimated useful life for the equivalent item of
property, plant and equipment if shorter). Right-of-use assets are reviewed annually for indications of impairment. Impairment losses
are recognised immediately as an expense in the Income Statement.
No right-of-use asset or lease liability is recognised for leases with a lease term of less than 12 months and leases of low value items.
Lease payments associated with these leases are recognised within administrative expenses on a straight-line basis over the lease term.
(ii) Lessor
All of the Group’s leases where the Group acts as a lessor are classified as operating leases. The Group recognises lease payments
received under operating leases in line with receipt of payments, within ‘Other operating income’.
(k) Retirement benefits
(i) Defined contribution pension scheme
Payments to defined contribution retirement benefit schemes are recognised as an expense in the Income Statement as they fall due.
(ii) Defined benefit pension scheme
Reported within the Statement of Financial Position is the Group’s defined benefit pension scheme obligation, which represents the fair
value of scheme assets less the present value of the defined benefit obligation. Where the fair value of the scheme assets exceeds the
present value of the defined benefit obligation, the amount reported as an asset on the Statement of Financial Position is limited to the
maximum economic benefit the Group can access, known as the asset ceiling.
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 171
1. Accounting policies (continued)
(k) Retirement benefits (continued)
(ii) Defined benefit pension scheme (continued)
Remeasurement of the defined benefit pension scheme obligation, which comprises of actuarial gains and losses, the effect of the asset
ceiling (excluding interest), and the return on plan assets (excluding interest income), is recognised immediately in the Statement of
Financial Position with a corresponding debit or credit to retained earnings through other comprehensive income. Remeasurements are
not reclassified to profit or loss in subsequent periods.
Also included within the Group’s defined benefit pension scheme obligation is the unfunded present value of the arrangement relating to
one sole member of an Employer-Financed Retirement Benefits Scheme, whose benefits are still in payment.
(l) Tax
Tax on the profits for the period comprises current tax and deferred tax. Tax is recognised in the income statement except to the extent
that it relates to items recognised directly in other comprehensive income or equity, in which case it is recognised in other comprehensive
income or equity respectively. Current tax is the expected tax payable on the taxable income for the year, using tax rates applicable at the
Statement of Financial Position date and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised where there is a temporary difference between the carrying amount of assets and liabilities in the Statement
of Financial Position and the amounts used for the calculation of corporation tax. Deferred tax liabilities are generally recognised for all
taxable temporary differences apart from those arising on investments in subsidiaries where the Group is able to control the reversal of
the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets
are recognised to the extent that it is probable that taxable profits will be available, against which deductible temporary differences can
be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or
the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the Statement of Financial
Position date.
(m) Foreign currency
Assets and liabilities denominated in foreign currencies are translated into sterling at the appropriate rates of exchange prevailing at the
Statement of Financial Position date and exchange differences are included in the Income Statement. All foreign currency income and
expense is translated into sterling at the rate of exchange on the day of receipt or payment.
(n) Segmental reporting
The Group’s chief operating decision maker has been identified as the CEO, who reviews the Group’s internal reporting and is responsible
for all significant decisions. The Group has determined that it has one reportable segment under IFRS 8 Operating Segments as the
CEO reviews performance and makes decisions on the Group as a whole. Therefore, no separate segmental reporting note has been
provided. No segmental analysis is required on geographical lines as substantially all the Group’s activities are in the United Kingdom.
2. Critical accounting estimates and judgements
The preparation of these financial statements involves making judgements in the application of accounting policies which affect the
amounts recognised in the financial statements. In addition, the Group makes estimates and assumptions which could affect the
reported amounts of assets and liabilities in the next financial year and beyond.
The Group reviews all critical judgements and estimates on a regular basis, including approval by the Audit Committee as explained on
pages 118 to 124, to ensure that these remain appropriate. The critical judgements and estimates which have a significant impact on the
financial statements of the Group are described below.
(a) Critical judgements
(i) Classification of financial assets
Management judgement is applied in the classification of financial assets in determining the business model for managing the assets and
in determining whether the contractual cash flows are solely payments of principal and interest.
In the case of the collateral loan which represents a pool of equity release mortgages, the existence of the no negative equity guarantee
(which means that certain receipts would be foregone in the event of a shortfall on sale) is judged not to be consistent with payments
being solely principal and interest. The ‘no negative equity’ feature of the equity release mortgages could be considered to represent an
insurance contract, but the accounting standards permit the continued application of IFRS 9 to this type of loan following the publication
of IFRS 17 Insurance Contracts. The collateral loan is therefore classified under IFRS 9 as a financial instrument measured ‘at FVTPL’.
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172
2. Critical accounting estimates and judgements (continued)
(a) Critical judgements (continued)
(ii) Impairment of loans and advances to customers
Significant increase in credit risk
As described in Note 1(e)(i), a test-based approach is used to determine the thresholds, expressed as a percentage increase, over which
an increase in lifetime PD compared to the lifetime PD calculated on initial recognition represents a significant increase in credit risk.
Management judgement is applied to determine the appropriate tests required to derive the thresholds. The tests, which have been
applied consistently with the previous year, aim to move loans through the stages in a timely manner, so that loans move to Stage 2 in
advance of falling into arrears and to Stage 3 in advance of default, thus minimising the reliance on the 30 days past due and 90 days past
due backstops respectively.
If all loans were assessed as having experienced a significant increase in credit risk and therefore provisions were recognised to cover
lifetime ECL (i.e. all loans currently classified as Stage 1 were moved to Stage 2), impairment loss provisions at 31 December 2025 would
increase modelled ECL by £12.6 million (2024: £13.8 million).
Definition of default
The definition of default is set out in Note 1(e)(i). Management has judged that the definition of default for impairment loss calculations
should be aligned to the IRB regulatory definition of default. Further, it is management’s judgement that 12 months is the appropriate
cure period for recovery from default.
Climate-related risks
Management has considered and reflected on the potential impact of climate-related risks on the Group’s financial position and
performance. The assessment highlighted a material impact on the Group’s residential loan portfolio. To quantify the risk, Management
performed an assessment over the Group’s loan portfolio to evaluate whether the potential effects of physical and transitional risk of
climate change would have a material impact on the Group’s financial position as at 31 December 2025. This resulted in the recognition
of an in-model adjustment of £1.5 million (31 December 2024: £1.7 million) which reflects the additional ECL that could potentially
be incurred due to the physical risk of flooding or coastal erosion. The transitional risk element of climate change has been explored,
specifically in relation to the potential impact of minimum EPC requirements on impairment loss provisions, however the current level
of risk is immaterial. This is further supported by the limited information that is available in relation to future UK government policies
concerning minimum EPC requirements. Currently, the impact of climate-related risks on the Group is minimal, with the primary impact
relating to ECL which is considered via the in-model adjustment for physical risk. As future government policies and economic and
regulatory responses to climate-related risks continue to evolve, future impacts remain inherently uncertain and cannot be reliably
incorporated into assessments at this stage.
(iii) Intangible assets
The Group applies judgement as to whether IT development activity results in an asset that qualifies for recognition as an intangible
asset. For an asset to be recognised under IAS 38 Intangible Assets it must be probable that future economic benefits will flow from the
asset and the cost of the asset must be able to be measured reliably. For each significant project undertaken by the Group, an assessment
is performed by the relevant business area of whether a separately identifiable asset is being developed and the level of future benefits
flowing from the asset.
Intangible assets are reviewed annually for indications of impairment, which includes the application of judgement as to whether it is
probable that future economic benefits will be realised from the asset, and whether the value in use of the asset is in excess of the carrying
value (see Note 17 for further information).
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 173
2. Critical accounting estimates and judgements (continued)
(b) Significant accounting estimates and assumptions
(i) Impairment losses on loans and advances to customers
Wherever possible, the calculation of impairment loss provisions for loans and advances to customers has been performed using
statistical modelling. For the UK residential mortgage portfolio, PD is modelled based on analysis of how macroeconomic variables have
impacted the performance of loans with similar credit risk characteristics historically. LGD is modelled based on projected house prices
combined with analysis of historic experience of forced sale discounts.
The significant estimates required for the calculation of impairment loss provisions are forecast UK macroeconomic variables, the
probability weightings of the macroeconomic scenarios used and the calculation of post model adjustments.
Macroeconomic scenarios and probability weightings
The Group has used four macroeconomic scenarios (2024: four), which are considered to represent a reasonable range of possible
outcomes, in determining impairment loss provisions.
Scenarios are developed by the Group based on analysis of third party published economic data and forecasts. The relative weighting
of the macroeconomic scenarios is derived by determining the point in the economic cycle at which the UK economy sits at the date
of the Statement of Financial Position. This indicates a possible range of outcomes for each scenario based on defined boundaries.
Management judgement is then applied to determine the appropriate point within the ranges, informed by current relevant market,
macroeconomic and political factors and the degree of uncertainty inherent in the UK economy.
The scenarios have been revised during the year, through updates to the underlying macroeconomic assumptions and the associated
probability weightings. Compared with the prior year, the weighting applied to the central scenario has been reduced by 10%, with a
corresponding increase in the downside scenario, to reflect heightened uncertainty in the UK economic outlook, driven by increased
volatility and elevated downside risks arising from geopolitical tensions.
31 Dec
31 Dec
2025
2024
Central scenario
Central scenario reflecting slightly stronger growth in the economy in later years as inflation drops back to target.
Economic growth in this scenario is further supported through reductions in the Bank of England base rate (BBR)
40%
50%
in the near-term, which is then maintained at 3.50% (2024: 3.25%), and increasing levels of government spending
and investment. The scenario assumes a resilient labour market, with modest improvement in the level of
unemployment over the medium term and stabilisation in the longer term.
Downside scenario
Downside scenario as modelled in the Group’s risk management process reflecting a ‘1 in 20’ stress scenario, with
weak consumer spending resulting in a reduction in gross domestic product (GDP), a rise in unemployment and
reductions in house prices due to heightened uncertainty and higher interest rates. The scenario assumes that BBR
35%
25%
initially rises to help reduce entrenched level of higher inflation, before being cut in order to tackle the effects of the
would-be recession on the UK economy.
Alternative downside scenario
Alternative scenario representing a more severe downturn than in the downside scenario. This initially has very high
levels of persistent inflation resulting in a period of higher BBR to reduce demand, with the economy then subject
to a further external shock resulting in sharp falls to consumer confidence, steep falls in demand, and falling growth.
10%
10%
These conditions drive increased unemployment for a prolonged period, with a fall in demand across the housing
market, causing greater reductions in house prices in the earlier years of the forecast. As demand collapses, BBR is
then reduced quickly to try and stimulate the economy.
Growth scenario
Growth scenario representing a more optimistic view of the current economic outlook than assumed in the
central scenario. This includes higher GDP as investment spend in artificial intelligence and associated supporting
infrastructure picks up, improving productivity growth and supporting higher real wages. This higher level of
aggregate demand has a positive impact on the unemployment rate which is lower than the central scenario.
15%
15%
The scenario assumes that as inflation returns to target, there are further reductions in BBR to a long run rate
of 3.00% (2024: 3.00%), which contribute to mortgage rates falling further.
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2. Critical accounting estimates and judgements (continued)
(b) Significant accounting estimates and assumptions (continued)
(i) Impairment losses on loans and advances to customers (continued)
The tables on pages 175 show the macroeconomic assumptions used in each scenario. The variables with the most significant impact on
the calculated impairment loss provisions are house price inflation and unemployment rate. The tables show the full year rates for house
price inflation and GDP growth, together with the year end position for unemployment rate and base rate. Beyond the five-year period
shown, assumptions move towards historic long run averages over the following five years and then remain constant at these rates
thereafter.
The charts below illustrate the unemployment assumptions and the cumulative impact of the annual house price inflation assumptions
across all four scenarios.
Unemployment rate (%)
0
2
4
6
8
10
Dec
2025
Dec
2026
Dec
2027
Dec
2028
Dec
2030
Dec
2029
Central Downside Alternative Downside Growth Weighted Key:
-30
-20
-10
0
10
20
30
Dec
2025
Dec
2026
Dec
2027
Dec
2028
Dec
2030
Dec
2029
Central Downside Alternative Downside Growth Weighted Key:
House price inflation (December 2025 = 0)
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 175
2. Critical accounting estimates and judgements (continued)
(b) Significant accounting estimates and assumptions (continued)
(i) Impairment losses on loans and advances to customers (continued)
Macroeconomic assumptions as at 31 December 2025
2026
2027
2028
2029
2030
Scenario/weighting
Assumption
%
%
%
%
%
Central
House price inflation
2.00
3.00
3.00
3.00
3.00
Unemployment rate (31 December)
4.80
4.60
4.50
4.50
4.50
40%
Gross domestic product growth
1.30
1.50
1.50
1.50
1.50
Base rate (31 December)
3.50
3.50
3.50
3.50
3.50
Year 1
Year 2
Year 3
Year 4
Year 5
Downside
House price inflation
(13.70)
(2.00)
0.00
0.00
1.00
Unemployment rate (31 December)
6.50
7.30
6.20
5.80
5.80
35%
Gross domestic product growth
(0.75)
(1.25)
1.00
1.00
1.00
Base rate (31 December)
6.00
3.00
0.75
0.25
0.25
Alternative
House price inflation
(20.00)
(5.00)
(4.00)
0.00
1.00
downside
Unemployment rate (31 December)
7.80
8.40
7.90
7.80
7.80
Gross domestic product growth
(0.20)
(4.20)
2.10
1.50
1.50
10%
Base rate (31 December)
6.50
4.50
1.00
0.10
0.10
Growth
House price inflation
3.00
3.00
3.00
3.60
3.30
Unemployment rate (31 December)
4.30
4.10
4.00
4.00
3.70
15%
Gross domestic product growth
1.60
2.00
2.00
2.00
2.10
Base rate (31 December)
3.75
3.50
3.25
3.00
3.00
Weighted*
House price inflation
(5.50)
0.45
1.25
1.70
2.15
Unemployment rate (31 December)
5.60
5.90
5.40
5.20
5.20
Gross domestic product growth
0.60
0.05
1.50
1.40
1.40
Base rate (31 December)
4.70
3.40
2.25
1.95
1.95
Macroeconomic assumptions as at 31 December 2024
2025
2026
2027
2028
2029
Scenario/weighting
Assumption
%
%
%
%
%
Central
House price inflation
2.80
3.00
3.00
2.50
2.50
Unemployment rate (31 December)
4.40
4.30
4.20
4.20
4.20
50%
Gross domestic product growth
1.50
1.60
1.60
1.60
1.50
Base rate (31 December)
4.00
3.50
3.25
3.25
3.25
Year 1
Year 2
Year 3
Year 4
Year 5
Downside
House price inflation
(13.70)
(2.00)
0.00
0.00
1.00
Unemployment rate (31 December)
6.50
7.30
6.20
5.80
5.80
25%
Gross domestic product growth
(0.75)
(1.25)
1.00
1.00
1.00
Base rate (31 December)
6.00
3.00
0.75
0.25
0.25
Alternative
House price inflation
(20.00)
(5.00)
(4.00)
0.00
1.00
downside
Unemployment rate (31 December)
7.80
8.40
7.90
7.80
7.80
Gross domestic product growth
(0.20)
(4.20)
2.10
1.50
1.50
10%
Base rate (31 December)
6.50
4.50
1.00
0.10
0.10
Growth
House price inflation
4.20
3.00
3.00
3.00
2.75
Unemployment rate (31 December)
4.20
4.00
3.80
3.80
3.70
15%
Gross domestic product growth
1.90
2.20
2.20
2.20
2.10
Base rate (31 December)
4.00
3.50
3.25
3.00
3.00
Weighted*
House price inflation
(3.40)
0.95
1.55
1.70
2.00
Unemployment rate (31 December)
5.20
5.40
5.00
4.90
4.90
Gross domestic product growth
0.80
0.40
1.60
1.50
1.50
Base rate (31 December)
4.75
3.50
2.40
2.15
2.15
* Note that ECLs are calculated for each loan in each scenario and then probability weighted, so the weighted figure here is for illustrative
purposes only.
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2. Critical accounting estimates and judgements (continued)
(b) Significant accounting estimates and assumptions (continued)
(i) Impairment losses on loans and advances to customers (continued)
Modelled residential impairment loss provisions totalled £39.5 million at 31 December 2025 (2024: £29.9 million), with PMAs of £4.2
million (2024: £15.5 million) contributing to total provisions of £43.7 million (2024: £45.4 million). Overall, total loss provisions decreased
during the year, primarily driven by incorporation of PMAs into the ECL model calculations. The affordability PMA decreased once
modelled, with the element of the model risk PMA relating to high-risk lending also decreasing once modelled. This decrease following
model changes was offset slightly by updated macroeconomic scenarios.
The sensitivity of modelled impairment loss provisions at 31 December 2025 to changes in key individual macroeconomic variables,
with all other assumptions held constant, is illustrated below. Note that due to the interaction between different economic variables
within the impairment loss provision models, the impacts of such single variable sensitivities may be distorted and are not
representative of realistic alternative downside scenarios.
The impact of changing the assumption for annual house price inflation in each of the first two years of the central scenario is as follows:
+ 10.0
+ 5.0
- 5.0
- 10.0
percentage
percentage
percentage
percentage
points
points
points
points
(Decrease)/increase in impairment loss provisions (£M)
(1.3)
(0.8)
0.7
1.8
The impact of changing the assumption for unemployment in each of the first two years of the central scenario is as follows:
+ 2.0
+ 1.0
- 1.0
- 2.0
percentage
percentage
percentage
percentage
points
point
point
points
Increase/(decrease) in impairment loss provisions (£M)
2.0
0.7
(0.4)
(0.5)
In practice, the above variables are unlikely to move in isolation. The combined impact of movements in a number of variables can be
illustrated by the sensitivity of calculated provisions to scenario weightings. The table below shows the movement in impairment loss
provisions if each of the scenarios were weighted 100%:
2025
2024
£M
£M
(Decrease)/increase in impairment loss provisions if scenarios are weighted 100%:
Central
(21.5)
(12.3)
Downside
11.0
12.8
Alternative downside
145.4
91.9
Growth
(22.1)
(12.8)
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 177
2. Critical accounting estimates and judgements (continued)
(b) Significant accounting estimates and assumptions (continued)
(i) Impairment losses on loans and advances to customers (continued)
The total residential impairment loss provisions (including PMAs) if the central scenario was weighted 100% would be £22.2 million
(2024: £33.1 million) compared to £43.7 million (2024: £45.4 million) when the scenarios are weighted. The increased sensitivity to 100%
weighting of the alternative downside scenario in 2025 is due to enhancements made to the underlying ECL models, which increase the
probability of default under the severe economic conditions specific to the alternative downside scenario.
Changes to macroeconomic assumptions, as expectations change over time, are likely to lead to volatility in impairment loss provisions
and may lead to procyclicality in the recognition of impairment losses.
Post model adjustments (judgemental adjustments)
At 31 December 2025, the total of PMAs applied by the Group was £4.2 million (2024: £15.5 million). These adjustments were applied to
cover the following:
• The residual risk in a limited subset of legacy shared ownership cases, where historical documentation retention may restrict
recoveries under the Mortgagee Protection Clause resulting in losses.
• Uncertainty over the timing of remediation of cladding issues in high rise flats. This could result in lower valuations and challenges
obtaining new mortgages on these properties, with the potential to impact on the value of the Group’s collateral and thus calculated
losses in the event of default.
• The risk of inherent bias in house price indexes for a specific cohort of properties in the Group’s portfolio due to market conditions
during the Covid-19 pandemic. This could result in higher valuations and lead to the calculation of understated losses in the event of
default.
• The risk associated with the calibration of the ECL models using Covid-19 impacted possessions data, which may underestimate the
probability of possession following a default event.
The affordability PMA of £8.0 million at 31 December 2024, which addressed the potential impacts of inflationary pressures, the cost of
living crisis and residential mortgage rate increases on member affordability has been removed as this risk has now been incorporated
into the ECL model calculations.
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178
2. Critical accounting estimates and judgements (continued)
(b) Significant accounting estimates and assumptions (continued)
(i) Impairment losses on loans and advances to customers (continued)
Consent to mortgage PMA – £1.6 million (2024: nil)
The Group has recognised a new PMA in 2025 which addresses the residual loss risk following the retightening of the Group’s shared
ownership lending policy, identified during an internal review of properties in possession. The PMA reflects the potential impact of historical
consent to mortgage documentation retention in a subset of legacy shared ownership loans, which could constrain recoveries under the
Mortgagee Protection Clause. Losses for relevant accounts have been estimated using costs and forced sale discount estimates from the
ECL model.
Inadequate cladding PMA – £1.1 million (2024: £1.0 million)
Applying a consistent approach with the prior year, this PMA has been estimated by identifying properties at the highest risk of cladding
issues by matching the Group’s portfolio to third party postcode data and applying a range of haircuts to property valuations and making
an allowance for remediation costs. The PMA is based on modelled ECL coverage, which increased following model updates and also
updates to macroeconomic scenarios and weightings. The increase in the PMA was partially offset by the continued reduction in the
number of accounts contributing to the PMA. This reflects that several lenders are beginning to offer mortgages on clad properties,
combined with remediation work continuing.
Transaction bias PMA – £1.0 million (2024: £1.1 million)
This PMA addresses the risk that house price indexation bias exists in a specific cohort of the Group’s portfolio due to market conditions
present during the Covid-19 pandemic resulting in potential overvaluation, which when adjusted would result in an increase to ECL. The
same methodology has been applied as previous reporting periods, by comparing the increases in indexed valuations on the Group’s
portfolio with alternative third party data and applying a haircut to collateral valuations.
Model risk PMA – £0.5 million (2024: £5.4 million)
This PMA addresses the risks associated with the calibration of the ECL models using Covid-19 impacted possessions data, which does
not necessarily represent the risk going forwards and may underestimate the probability of possession following a default event. This
uncertainty around possession emergence has led to a PMA of £0.5 million at 31 December 2025 (2024: £1.0 million). Previously, the PMA
also consisted of a second element of model risk, that being uncertainty around how a segment of purpose-led lending with higher average
LTV and LTI profiles would perform. This risk has now been incorporated into the ECL model calculations (2024: £4.4 million).
(ii) Fair value of the collateral loan
The Group measures the collateral loan which represents a pool of equity release mortgages at FVTPL. The fair value of this loan is
calculated using a model which uses a combination of observable market data (such as interest rate curves and RPI swap rates) and
unobservable inputs which require estimation, such as the discount rate, property price volatility and the haircut applied to individual
sales prices. The model projects the future cash flows anticipated from the loan based on the contractual terms with the third party from
which the mortgages were acquired, with the timing of those cash flows determined with reference to mortality tables (which are subject
to estimation uncertainty). The model also calculates a value for the ‘no negative equity guarantee’ provided to the member using a
stochastic methodology applying a variant of the Black-Scholes formula.
The key estimates used in the model and the basis of estimation are summarised below:
Assumption
Basis of estimation
Discount rate
Derived from current market rates for new equity release mortgages adjusted for the specific profile of the Group's portfolio,
also reflects liquidity term premium in current market funding costs
Property price volatility
Analysis of historic property price volatility and external research
Sales price haircut
Average actual discounts observed on the portfolio during the 2025 and 2024 financial years
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 179
2. Critical accounting estimates and judgements (continued)
(b) Significant accounting estimates and assumptions (continued)
(ii) Fair value of the collateral loan (continued)
At 31 December 2025, the carrying value of the collateral loan was £138.9 million (2024: £145.0 million), with the reduction primarily
driven by movements in underlying collateral valuations. The sensitivity of this value to the estimates shown above is as follows:
Assumption
Sensitivity modelled for current assumption
(Decrease)/increase in fair value of collateral loan (£M)
Discount rate
+/- 1 percentage point
(9.2)/10.3
Property price volatility
+/- 3 percentage points
(3.7)/3.4
Sales price haircut
+/- 5 percentage points
(3.2)/2.8
The sensitivities shown reflect a range of alternative assumptions based on observed historic data.
(iii) Fair value of the RPI-linked equity release swap
One of the Group’s equity release swaps is linked to the RPI and is valued using a discounted cash flow model which uses observable
market data for RPI and the discount rate used to discount future cash flows and unobservable input assumptions for prepayment
rates. Wherever possible these input assumptions are calculated with reference to actual historic experience and are aligned to those
assumptions used in the valuation of the collateral loan. The variable which is considered to have the largest impact on the value of the
swap is the prepayment rate.
A one percentage point increase in the assumed prepayment rate would reduce the value of the swap liability by £0.1 million, resulting
in a corresponding fair value gain in the Income Statement. A one percentage point reduction in the assumed prepayment rate would
increase the value of the swap liability by £0.1 million, resulting in a corresponding fair value loss in the Income Statement.
3. Interest receivable and similar income
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
Interest receivable calculated using the effective interest rate method:
On instruments held at amortised cost:
On loans fully secured on residential property
1,140.1
972.7
1,140.1
972.7
On other loans and advances to customers
0.4
0.4
0.4
0.4
On liquid assets
77.3
160.4
72.5
154.0
On amounts owed by subsidiary undertakings
–
–
(27.9)
–
Total interest receivable on instruments held at amortised cost
1,217.8
1,133.5
1,185.1
1,127.1
On instruments held at fair value through other comprehensive income:
On investment securities
177.2
150.1
181.7
152.8
Total interest receivable calculated using the effective interest rate
method
1,395.0
1,283.6
1,366.8
1,279.9
Similar income on instruments held at fair value through profit or loss:
On other loans and advances to customers
12.9
13.9
12.9
13.9
Net income on derivatives that hedge financial assets and are designated in
accounting hedge relationships
165.6
287.0
165.6
287.0
Net (expense)/income on derivatives that hedge financial assets and are
not designated in accounting hedge relationships
(1.4)
7.6
22.2
3.2
Total similar income on instruments held at fair value through profit or loss
177.1
308.5
200.7
304.1
Total interest receivable and similar income
1,572.1
1,592.1
1,567.5
1,584.0
Included in the above is:
Interest receivable on impaired financial assets
16.1
16.7
16.1
16.7
Strategic Report
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Governance Financial Statements Other Information
180
4. Interest payable and similar charges
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
Interest payable on instruments held at amortised cost:
On shares held by individuals
974.6
904.7
974.6
904.7
On deposits and other borrowings:
Wholesale and other funding
172.5
246.9
137.5
217.8
Lease liabilities
0.2
0.2
0.2
0.2
On amounts owed to subsidiary undertakings
–
–
(4.8)
–
On subordinated liabilities
17.6
6.2
17.6
6.2
On subscribed capital
0.3
1.2
0.3
1.2
Total interest payable on instruments held at amortised cost
1,165.2
1,159.2
1,125.4
1,130.1
Similar charges on instruments held at fair value through profit or loss:
Net charges on derivatives which hedge financial liabilities and are designated in
accounting hedge relationships
5.0
48.3
5.0
58.4
Net (income)/charges on derivatives which hedge financial liabilities and are not
designated in accounting hedge relationships
(0.6)
21.7
35.1
32.9
Total similar charges on instruments held at fair value through profit or loss
4.4
70.0
40.1
91.3
Total interest payable and similar charges
1,169.6
1,229.2
1,165.5
1,221.4
5. Other operating income/(expense)
In January 2025, the Society repurchased £223.2 million of subordinated liabilities at a discounted rate which resulted in the recognition
of a £6.8 million gain in the other operating income/(expense) line in the Income Statement. The amount reported in 2024 includes the
upfront cost (£23.4 million) of the Society’s Permanent Interest-Bearing Shares (PIBS) buy back.
6. Fair value (losses)/gains from financial instruments
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
Fair value hedge relationships
Derivatives designated in fair value hedge relationships
(284.0)
(3.3)
(284.0)
(3.3)
Fair value adjustment for hedged risk of hedged items
249.4
(20.7)
249.4
(20.7)
Cash flow hedge relationships
Derivatives designated in cash flow hedge relationships
29.7
29.9
29.7
29.9
Derivatives not designated in accounting hedge relationships
Equity release swaps
4.0
11.1
4.0
11.1
Cross currency swaps
(0.1)
0.9
(0.1)
–
Other derivatives
–
–
7.8
(3.4)
Other financial instruments measured at fair value through profit or loss
Collateral loan which represents a pool of equity release mortgages
(3.9)
(7.6)
(3.9)
(7.6)
Total fair value (losses)/gains from financial instruments
(4.9)
10.3
2.9
6.0
Fair value gains and losses arise due to accounting ineffectiveness on designated hedges, movements in the SONIA curve, or because
hedge accounting could not be applied to certain items. Volatility also arises from the collateral loan which represents a pool of equity
release mortgages and is measured at FVTPL. Fair value movements on the associated RPI-linked equity release swap, which is also
measured at FVTPL, provide an element of economic offset to this volatility. For further information refer to Notes 31 and 32.
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 181
7. Administrative expenses
Group &
Group &
Society
Society
2025
2024
£M
£M
Staff costs
Wages and salaries
86.0
80.3
Social security costs
10.7
8.9
Pension costs
12.9
12.1
Temporary staff
2.7
3.1
Other staff costs
1.9
1.7
Remuneration of auditor (see below)
1.3
1.2
Other administrative expenses
Technology
21.1
19.8
Development activity
29.1
23.8
Property
7.3
7.6
Legal and professional fees
5.1
3.8
Marketing
5.8
6.1
Regulatory fees
8.7
7.1
Postage and stationery
3.3
2.5
Recruitment and training
1.5
1.6
Other
6.2
5.8
Total administrative expenses
203.6
185.4
There are 32 directors, senior managers and colleagues whose actions have a material impact on the risk profile of the Group, with fixed
remuneration of £7.9 million and variable remuneration of £1.7 million (2024: 34 individuals, £8.0 million and £1.2 million). Further details
of directors’ remuneration can be found on page 133 of the Directors’ Remuneration Report.
Administrative expenses include £25.3 million of IT transformation spend in 2025 (2024: £19.4 million). This is primarily reported as
development activity in the table above.
The analysis of auditor’s remuneration is as follows:
Group &
Group &
Society
Society
2025
2024
£M
£M
Fee payable to the Society’s auditor for the audit of the Society’s annual accounts
1.0
1.0
Fees payable to the Society’s auditor for the audit of the Society’s subsidiaries
0.2
0.1
Total audit fees
1.2
1.1
Assurance services
0.6
0.1
Total non-audit fees
0.6
0.1
Total auditor’s remuneration
1.8
1.2
The above figures relating to auditor’s remuneration exclude value added tax.
Strategic Report
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Governance Financial Statements Other Information
182
8. Staff numbers
The average number of colleagues employed during the year was as follows:
Group &
Group &
Society
Society
2025
2024
Number
Number
Central administration
1,575
1,551
Branches
299
295
Total monthly average number of people employed
1,874
1,846
Total monthly average number of full time equivalent employees
1,742
1,712
At 31 December 2025 the total number of colleagues employed by the Group and the Society was 1,859 (2024: 1,863).
9. Impairment on loans and advances to customers
Loans fully
secured on
Loans fully
residential
secured
property
on land
Total
Group & Society 2025
£M
£M
£M
Impairment loss provision:
At 1 January 2025
45.4
0.5
45.9
Reclassification*
0.4
(0.4)
–
Charge for the year
0.2
–
0.2
Amounts written off during the year
(2.7)
–
(2.7)
Movement in foreign exchange rate
0.4
–
0.4
At 31 December 2025
43.7
0.1
43.8
Income Statement
Charge for the year
0.2
–
0.2
Recoveries of amounts previously written off
(0.1)
–
(0.1)
Total income statement charge
0.1
–
0.1
* One housing association loan has been reclassified from ‘Loans fully secured on land’ to ‘Loans fully secured on residential property’ for
reporting purposes.
Loans fully
secured on
Loans fully
residential
secured
property
on land
Total
Group & Society 2024
£M
£M
£M
Impairment loss provision:
At 1 January 2024
53.5
1.4
54.9
Credit for the year
(4.6)
(0.9)
(5.5)
Amounts written off during the year
(3.1)
–
(3.1)
Movement in foreign exchange rate
(0.4)
–
(0.4)
At 31 December 2024
45.4
0.5
45.9
Income Statement
Credit for the year
(4.6)
(0.9)
(5.5)
Recoveries of amounts previously written off
(0.2)
–
(0.2)
Total income statement charge/(credit)
(4.8)
(0.9)
(5.7)
The Group’s policy for calculating impairment of loans and advances to customers (including retail mortgages and loan commitments)
is detailed in Note 1(e). Details of the significant accounting estimates and judgements required in the calculation of impairment loss
provisions, including the incorporation of forward looking information, are provided in Note 2.
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 183
9. Impairment on loans and advances to customers (continued)
The table below summarises the Group’s retail mortgage balances, loan commitments and associated impairment loss provisions.
The classification of loans into stages for impairment purposes is explained in Note 1(e).
Group & Society 2025
Group & Society 2024
Impairment
Impairment
Gross
loss
Provision
Gross
loss
Provision
exposure
provision
coverage
exposure
provision
coverage
£M
£M
%
£M
£M
%
Retail mortgages
Stage 1
21,518.6
5.3
0.02
19,674.0
7.9
0.04
Stage 2 and <30 days past due
3,954.1
21.3
0.54
4,385.8
21.5
0.49
Stage 2 and 30+ days past due
108.4
2.1
1.94
95.5
1.8
1.88
Stage 3 and <90 days past due
135.3
1.8
1.33
145.4
2.0
1.38
Stage 3 and 90+ days past due
147.9
12.9
8.72
147.4
11.9
8.07
Total retail mortgages
25,864.3
43.4
0.17
24,448.1
45.1
0.18
Loan commitments
Stage 1
1,242.2
0.3
0.02
1,640.6
0.3
0.02
Total impairment loss provision
27,106.5
43.7
0.16
26,088.7
45.4
0.17
The tables below provide information on movements in the gross retail mortgage exposures and associated impairment loss provisions
during the year:
Stage 1
Stage 2
Stage 3
Total
Provision
Provision
Gross
Provision
Gross
Lifetime
Gross
Lifetime
Gross
exposure
12m ECL
exposure
ECL
exposure
ECL
exposure
Provision
Group & Society 2025
£M
£M
£M
£M
£M
£M
£M
£M
At 1 January 2025
19,674.0
7.9
4,481.3
23.3
292.8
13.9
24,448.1
45.1
Transfers resulting in increased
impairment loss provision:
From Stage 1 to Stage 2
(1,601.5)
(0.5)
1,601.5
7.6
–
–
–
7.1
From Stage 1 to Stage 3
(33.3)
–
–
–
33.3
0.6
–
0.6
From Stage 2 to Stage 3
–
–
(67.2)
(0.7)
67.2
2.6
–
1.9
Transfers resulting in reduced
impairment loss provision:
From Stage 2 to Stage 1
1,662.3
0.3
(1,662.3)
(2.8)
–
–
–
(2.5)
From Stage 3 to Stage 1
16.4
–
–
–
(16.4)
(0.1)
–
(0.1)
From Stage 3 to Stage 2
–
–
35.1
0.5
(35.1)
(0.6)
–
(0.1)
Change in impairment loss
–
–
–
–
–
0.6
–
0.6
provision resulting from loan
modifications
Other remeasurement of
impairment loss provision
–
(3.8)
10.6
(5.7)
–
1.9
10.6
(7.6)
(no movement in Stage)
New advances
6,172.8
2.0
228.6
2.4
3.5
0.1
6,404.9
4.5
Redemptions and repayments
(4,372.1)
(0.6)
(565.1)
(1.2)
(49.7)
(2.0)
(4,986.9)
(3.8)
Write offs
–
–
–
–
(12.4)
(2.3)
(12.4)
(2.3)
At 31 December 2025
21,518.6
5.3
4,062.5
23.4
283.2
14.7
25,864.3
43.4
Strategic Report
Risk Management
Report
Governance Financial Statements Other Information
184
9. Impairment on loans and advances to customers (continued)
Stage 1
Stage 2
Stage 3
Total
Provision
Provision
Gross
Provision
Gross
Lifetime
Gross
Lifetime
Gross
exposure
12m ECL
exposure
ECL
exposure
ECL
exposure
Provision
Group & Society 2024
£M
£M
£M
£M
£M
£M
£M
£M
At 1 January 2024
17,670.1
4.8
3,902.4
31.9
263.9
16.5
21,836.4
53.2
Transfers resulting in increased
impairment loss provision:
From Stage 1 to Stage 2
(2,290.0)
(0.6)
2,290.0
4.4
–
–
–
3.8
From Stage 1 to Stage 3
(42.4)
(0.1)
–
–
42.4
0.9
–
0.8
From Stage 2 to Stage 3
–
–
(76.8)
(0.9)
76.8
2.1
–
1.2
Transfers resulting in reduced
impairment loss provision:
From Stage 2 to Stage 1
1,319.2
0.3
(1,319.2)
(3.1)
–
–
–
(2.8)
From Stage 3 to Stage 1
7.5
–
–
–
(7.5)
–
–
–
From Stage 3 to Stage 2
–
–
32.3
0.1
(32.3)
(0.5)
–
(0.4)
Change in impairment loss
–
–
–
–
–
0.5
–
0.5
provision resulting from loan
modifications
Other remeasurement of
impairment loss provision
–
2.1
–
(8.8)
–
(0.9)
–
(7.6)
(no movement in Stage)
New advances
6,674.3
2.1
120.5
0.6
1.2
–
6,796.0
2.7
Redemptions and repayments
(3,664.7)
(0.7)
(467.9)
(0.9)
(51.7)
(1.6)
(4,184.3)
(3.2)
Write offs
–
–
–
–
–
(3.1)
–
(3.1)
At 31 December 2024
19,674.0
7.9
4,481.3
23.3
292.8
13.9
24,448.1
45.1
In the above tables, the impact of changes to accounting estimates and judgements, including macroeconomic scenarios and probability
weightings, is included within ‘other remeasurement of impairment loss provision’ unless the change results in the transfer of a loan
between stages in which case it is included in the relevant transfer row.
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 185
10. Tax expense
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
Analysis of charge in the year
Current tax
UK corporation tax on profits for the year
54.6
38.5
54.7
38.5
Adjustments in respect of prior year
0.5
0.1
0.5
0.1
Total current tax
55.1
38.6
55.2
38.6
Deferred tax
Current year
(1.7)
(0.8)
0.4
(2.2)
Adjustments in respect of prior year
(0.4)
–
(0.4)
–
Adjustments for changes in tax rates
0.1
(0.2)
0.1
(0.2)
Total deferred tax
(2.0)
(1.0)
0.1
(2.4)
Total tax charge
53.1
37.6
55.3
36.2
Tax charged/(credited) to other comprehensive income
Tax (benefit) on cash flow hedge reserve
(10.8)
(2.4)
(10.8)
(2.4)
Tax expense/(benefit) on investment securities
2.9
(5.4)
2.9
(5.4)
Tax expense on revaluation loss on properties
0.1
–
0.1
–
Tax benefit on actuarial gains/losses on retirement benefit obligations
(0.9)
(1.0)
(0.9)
(1.0)
Total tax credit to other comprehensive income
(8.7)
(8.8)
(8.7)
(8.8)
Factors affecting total tax charge for the year:
Profit on ordinary activities before tax
198.6
137.5
206.3
133.9
Profit on ordinary activities multiplied by standard rate of corporation tax
in the UK of 25% (2024: 25%)
49.7
34.4
51.6
33.5
Effects of:
Banking surcharge
3.2
1.5
3.2
1.5
Adjustments in respect of prior year (current tax)
0.1
–
0.1
–
Expenses not deductible for tax purposes
0.4
1.3
0.4
1.3
Other differences
(0.3)
0.4
–
(0.1)
Total current tax
53.1
37.6
55.3
36.2
Adjustments in respect of prior year relate to differences between the balances in the prior year’s Statements of Financial Position and
the finalised balances upon completion of the prior year tax return.
The standard rate of UK corporation tax applicable to the Group for the year ended 31 December 2025 was 25% (year ended 31
December 2024: 25%) and the banking surcharge remained at 3% of taxable profits above a £100 million threshold.
Deferred tax balances have been calculated at a rate of 28% (2024: 28%), reflecting the corporation tax rate and the banking surcharge.
Consideration has been given to uncertain tax positions, and none exist (2024: none).
Strategic Report
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Governance Financial Statements Other Information
186
11. Classification of financial assets and liabilities
The following tables summarise the classification and carrying value of the Group’s and Society’s financial assets and liabilities:
Amortised
cost
FVOCI
FVTPL
Total
Group 2025
£M
£M
£M
£M
Financial assets:
Cash in hand and balances with the Bank of England
1,413.4
–
–
1,413.4
Loans and advances to credit institutions
115.2
–
–
115.2
Investment securities
–
3,921.9
–
3,921.9
Derivative financial instruments
–
(0.5)
130.0
129.5
Loans and advances to customers:
Loans fully secured on residential property*
25,896.1
–
–
25,896.1
Other loans
3.0
–
138.9
141.9
Other assets, prepayments and accrued income
231.8
–
–
231.8
Total financial assets
27,659.5
3,921.4
268.9
31,849.8
Financial liabilities:
Shares*
26,081.6
–
–
26,081.6
Derivative financial instruments
–
–
119.9
119.9
Amounts owed to credit institutions
0.5
–
–
0.5
Amounts owed to other customers
138.8
–
–
138.8
Debt securities in issue*
3,237.6
–
–
3,237.6
Other liabilities and accruals
43.4
–
–
43.4
Subordinated liabilities*
438.1
–
–
438.1
Subscribed capital
8.0
–
–
8.0
Total financial liabilities
29,948.0
–
119.9
30,067.9
Amortised
cost
FVOCI
FVTPL
Total
Group 2024
£M
£M
£M
£M
Financial assets:
Cash in hand and balances with the Bank of England
2,443.2
–
–
2,443.2
Loans and advances to credit institutions
152.3
–
–
152.3
Investment securities
10.5
3,939.5
–
3,950.0
Derivative financial instruments
–
8.1
363.0
371.1
Loans and advances to customers:
Loans fully secured on residential property*
24,229.6
–
–
24,229.6
Other loans
2.8
–
145.0
147.8
Other assets, prepayments and accrued income
221.4
–
–
221.4
Total financial assets
27,059.8
3,947.6
508.0
31,515.4
Financial liabilities:
Shares*
24,538.6
–
–
24,538.6
Derivative financial instruments
–
–
98.0
98.0
Amounts owed to credit institutions
1,244.2
–
–
1,244.2
Amounts owed to other customers
159.3
–
–
159.3
Debt securities in issue*
3,131.7
–
–
3,131.7
Other liabilities and accruals
316.7
–
–
316.7
Subordinated liabilities*
334.2
–
–
334.2
Subscribed capital
8.0
–
–
8.0
Total financial liabilities
29,732.7
–
98.0
29,830.7
* Loans fully secured on residential property, Shares, Debt securities in issue and Subordinated liabilities are presented net of fair value
adjustment for hedged risk. The Group and Society 2024 comparatives have been represented to reflect this.
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 187
11. Classification of financial assets and liabilities (continued)
Amortised
cost
FVOCI
FVTPL
Total
Society 2025
£M
£M
£M
£M
Financial assets:
Cash in hand and balances with the Bank of England
1,413.4
–
–
1,413.4
Loans and advances to credit institutions
6.1
–
–
6.1
Investment securities
–
3,921.9
–
3,921.9
Derivative financial instruments
–
(0.5)
130.0
129.5
Loans and advances to customers:
Loans fully secured on residential property*
25,896.1
–
–
25,896.1
Other loans
3.0
–
138.9
141.9
Other assets, prepayments and accrued income
346.7
–
–
346.7
Total financial assets
27,665.3
3,921.4
268.9
31,855.6
Financial liabilities:
Shares*
26,081.6
–
–
26,081.6
Derivative financial instruments
–
–
130.7
130.7
Amounts owed to credit institutions
0.5
–
–
0.5
Amounts owed to other customers
944.9
–
–
944.9
Debt securities in issue*
2,429.2
–
–
2,429.2
Other liabilities and accruals
39.7
–
–
39.7
Subordinated liabilities*
438.1
–
–
438.1
Subscribed capital
8.0
–
–
8.0
Total financial liabilities
29,942.0
–
130.7
30,072.7
Amortised
cost
FVOCI
FVTPL
Total
Society 2024
£M
£M
£M
£M
Financial assets:
Cash in hand and balances with the Bank of England
2,443.2
–
–
2,443.2
Loans and advances to credit institutions
15.2
–
–
15.2
Investment securities
10.5
3,939.5
–
3,950.0
Derivative financial instruments
–
8.1
363.0
371.1
Loans and advances to customers:
Loans fully secured on residential property*
24,229.6
–
–
24,229.6
Other loans
2.8
–
145.0
147.8
Other assets, prepayments and accrued income
298.0
–
–
298.0
Total financial assets
26,999.3
3,947.6
508.0
31,454.9
Financial liabilities:
Shares*
24,538.6
–
–
24,538.6
Derivative financial instruments
–
–
117.2
117.2
Amounts owed to credit institutions
1,244.2
–
–
1,244.2
Amounts owed to other customers
791.1
–
–
791.1
Debt securities in issue*
2,495.6
–
–
2,495.6
Other liabilities and accruals
310.7
–
–
310.7
Subordinated liabilities*
334.2
–
–
334.2
Subscribed capital
8.0
–
–
8.0
Total financial liabilities
29,722.4
–
117.2
29,839.6
* Loans fully secured on residential property, Shares, Debt securities in issue and Subordinated liabilities are presented net of fair value
adjustment for hedged risk. The Group and Society 2024 comparatives have been represented to reflect this.
Other assets, prepayments and accrued income relates to collateralised balances, representing amounts owed by credit institutions
on cash collateralisation of derivatives, and Albion Z notes held by the Society. Other liabilities and accruals relates to collateralised
balances, representing amounts owed to credit institutions on cash collateralisation of derivatives. Both meet the criteria for
classification of financial instruments under IFRS 9.
Strategic Report
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Report
Governance Financial Statements Other Information
188
12. Cash and cash equivalents
For the purposes of the Statements of Cash Flows, cash and cash equivalents comprise the following balances with a maturity of less
than three months.
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
Cash in hand
1.9
2.0
1.9
2.0
Balances with the Bank of England
1,411.5
2,441.2
1,411.5
2,441.2
Cash in hand and Balances with the Bank of England
1,413.4
2,443.2
1,413.4
2,443.2
Loans and advances to credit institutions
115.2
152.3
6.1
15.2
Total cash and cash equivalents
1,528.6
2,595.5
1,419.5
2,458.4
The Group’s loans and advances to credit institutions includes £109.1 million (2024: £137.1 million) of balances belonging to the Society’s
securitisation programmes which are not available for use by the Society.
13. Investment securities
All of the investment securities held by the Group are listed and at 31 December 2025 are of investment grade. The tables below show
the changes in fair value during the year. No impairment loss provision is held against these assets since calculated ECL is immaterial
(2024: no provision).
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
At 1 January
3,950.0
2,515.6
3,950.0
2,515.6
Additions
3,917.4
5,124.3
3,917.4
5,124.3
Disposals (sale and redemption)
(3,984.9)
(3,689.3)
(3,984.9)
(3,689.3)
Movement in fair value
39.4
(0.6)
39.4
(0.6)
At 31 December
3,921.9
3,950.0
3,921.9
3,950.0
At 31 December 2025, no investment securities were pledged as collateral under sale and repurchase agreements (2024: none).
14. Loans and advances to customers
Impairment
Gross
loss
exposure
provision
Total
Group & Society 2025
£M
£M
£M
Loans fully secured on residential property
25,864.3
(43.7)
25,820.6
Loans fully secured on land
3.1
(0.1)
3.0
Other loans
138.9
–
138.9
Total loans and advances to customers
26,006.3
(43.8)
25,962.5
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 189
14. Loans and advances to customers (continued)
Impairment
Gross
loss
exposure
provision
Total
Group & Society 2024
£M
£M
£M
Loans fully secured on residential property
24,448.1
(45.4)
24,402.7
Loans fully secured on land
3.3
(0.5)
2.8
Other loans
145.0
–
145.0
Total loans and advances to customers
24,596.4
(45.9)
24,550.5
The Group has previously acquired a pool of equity release mortgages from a third party. The Group assumed a number of, but not all,
risks arising from these loans. The remaining risks were retained by the third party, which also retained a proportion of the income from
the underlying equity release mortgages. As a consequence, these mortgages have been recognised as a collateral loan to the third party
within other loans in the table above. This loan is measured at fair value through profit or loss.
The net fair value movement on loans and advances to customers at fair value through profit or loss was a loss of £3.9 million (2024: £7.6
million loss) for both the Group and Society. The interest rate risk associated to the equity release mortgages is partially hedged with the
use of an interest rate swap and as a result the fair value loss recognised on the mortgages was offset by a net fair value gain on the swap
of £4.0 million (2024: £11.1 million gain).
Loans and advances to customers, for both the Group and Society, include £3,702.2 million (2024: £3,900.9 million) of loans which have
been ringfenced from the Society for its associated secured funding vehicles.
The Group’s asset encumbrance as at 31 December 2025 relating to mortgages used to collateralise the covered bond and securitisation
programmes is detailed on page 74.
LBS
Covered
Bonds
Albion
Albion
Albion
LLP
No. 5 PLC
No. 6 PLC
No. 7 PLC
Total
2025
£M
£M
£M
£M
£M
Loans and advances transferred from the Society to secured funding vehicles
2,850.3
245.9
254.2
351.8
3,702.2
Outstanding loan notes issued by the Group
2,000.0
227.1
239.6
334.3
2,801.0
LBS
Covered
Bonds
Albion
Albion
Albion
LLP
No. 5 PLC
No. 6 PLC
No. 7 PLC
Total
2024
£M
£M
£M
£M
£M
Loans and advances transferred from the Society to secured funding vehicles
3,241.6
307.3
352.0
–
3,900.9
Outstanding loan notes issued by the Group
2,100.0
291.4
337.7
–
2,729.1
The covered bonds and residential mortgage backed securities issued have been used to secure long term funding from other financial
institutions. The loans are retained in the Society’s Statement of Financial Position, with judgement required in assessing whether risks
or rewards of ownership of the mortgage portfolio have been transferred by the Society to another Group entity. It was determined to be
inappropriate for the mortgage portfolio to be derecognised by the Society as it has retained significant risks and rewards of ownership
of these financial assets.
15. Other assets, prepayments and accrued income
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
Collateral
231.8
221.4
231.8
221.4
Prepayments
15.6
10.5
15.6
10.5
Other assets
5.9
6.2
137.7
212.6
Total other assets, prepayments and accrued income
253.3
238.1
385.1
444.5
In the above table, collateral represents amounts owed by credit institutions on cash collateralisation of derivatives. The Society balance
for other assets includes amounts owed by subsidiary undertakings, including collateral in relation to intragroup derivatives.
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16. Investments in subsidiary undertakings
The Society holds the following interests in subsidiary undertakings at 31 December 2025, all of which are incorporated in the UK and
registered in England. At 31 December 2025, the carrying value of shares in subsidiaries was £1,040 (2024: £1,040).
Name
Major Activities
Class of Shares
Interest of
Address
held
Society
Leeds Mortgage Funding
Non trading
Ordinary £1 shares
100%
26 Sovereign Street, Leeds,
Limited
LS1
4BJ
Leeds Building Society Covered
Provision of mortgage assets
* * 26 Sovereign Street, Leeds,
Bonds LLP
and guarantor of covered bonds
LS1
4BJ
Leeds Covered Bonds
First designated member of
* * 10th Floor 5 Churchill Place,
Designated Member (No. 1)
Leeds Building Society Covered
London, E14 5HU
Limited
Bonds LLP
Leeds Covered Bonds
Second designated member of
* * 10th Floor 5 Churchill Place,
Designated Member (No. 2)
Leeds Building Society Covered
London, E14 5HU
Limited
Bonds LLP
Leeds Covered Bonds Holdings
Holding company to both Leeds
* * 10th Floor 5 Churchill Place,
Limited
Covered Bonds Designated
London, E14 5HU
Member (No. 1) and (No. 2)
Limited
Albion No.5 PLC
Provision of residential
* * Level 6 Duo, 280 Bishopsgate,
mortgage backed securities
London, EC2M 4RB
Albion No.5 Holdings Limited
Holding company to
* * Level 6 Duo, 280 Bishopsgate,
Albion No. 5 PLC
London, EC2M 4RB
Albion No.6 PLC
Provision of residential
* * Level 6 Duo, 280 Bishopsgate,
mortgage backed securities
London, EC2M 4RB
Albion No.6 Holdings Limited
Holding company to
* * Level 6 Duo, 280 Bishopsgate,
Albion No. 6 PLC
London, EC2M 4RB
Albion No.7 PLC
Provision of residential
* * 10th Floor 5 Churchill Place,
mortgage backed securities
London, E14 5HU
Albion No.7 Holdings Limited
Holding company to
* * 10th Floor 5 Churchill Place,
Albion No. 7 PLC
London, E14 5HU
* The Society’s interest is equivalent to being a 100% owned subsidiary as these entities pass the test of control under IFRS 10
Consolidated Financial Statements. Consequently, they have been consolidated in the Group accounts. Although the Society does not
legally own these entities, it is deemed to control them, as it has power over the activities undertaken by the subsidiaries through the
management and operational structures in place, and it has exposure to variable returns through the purchase of loan notes, deferred
consideration and intragroup loans.
In June 2025, the Group issued £350 million of RMBS Class A notes through a newly incorporated securitisation vehicle named Albion
No.7 PLC. The first statutory accounts will be submitted for the period ended 31 December 2025.
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 191
17. Intangible assets
Core
System
systems
enhancements
Total
Group & Society 2025
£M
£M
£M
Cost
At 1 January
16.1
42.9
59.0
Additions
12.3
4.6
16.9
Disposals
–
(0.2)
(0.2)
At 31 December
28.4
47.3
75.7
Amortisation and impairment
At 1 January
6.9
17.0
23.9
Amortisation charged in the year
1.6
6.3
7.9
Disposals
–
(0.2)
(0.2)
Impairment charged in the year
–
0.2
0.2
At 31 December
8.5
23.3
31.8
Net book value
At 31 December
19.9
24.0
43.9
Core
System
systems
enhancements
Total
Group & Society 2024
£M
£M
£M
Cost
At 1 January
16.1
30.7
46.8
Additions
–
12.4
12.4
Disposals
–
(0.2)
(0.2)
At 31 December
16.1
42.9
59.0
Amortisation and impairment
At 1 January
5.3
11.7
17.0
Amortisation charged in the year
1.6
4.6
6.2
Disposals
–
(0.1)
(0.1)
Impairment charged in the year
–
0.8
0.8
At 31 December
6.9
17.0
23.9
Net book value
At 31 December
9.2
25.9
35.1
During 2025, the Group continued its programme of works that met the definition of an intangible asset. This included software licences, IT
development service costs and certain colleague costs. Amortisation of such assets is charged to the Income Statement on a straight line
basis over the useful life of the asset once it is brought into use. The useful life of such assets is determined to be ten years for core systems
and five years for system enhancements as stated in Note 1(h), with useful lives reviewed on an asset by asset basis each year.
Our new core banking platform is currently in development and as at 31 December 2025, £12.3 million has been capitalised. The next most
significant intangible assets are the Mortgage Hub mortgage application system, with a net book value of £7.6 million and a useful remaining
life of four years (2024: £9.2 million), and the system which is used to deliver our online digital experience with a net book value of £5.9
million (2024: £5.6 million) with a useful remaining life of five years.
Intangible assets are reviewed annually for indications of impairment. This review includes an assessment of whether it is probable that
future economic benefits will be realised from the asset, and whether the value in use of the asset is in excess of the carrying value. In 2025,
£0.2 million (2024: £0.8 million) of impairment was recognised in the income statement.
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18. Property, plant and equipment
Long
Short
Office and
Freehold
leasehold
leasehold
computer
Right-of-
premises
premises
premises
equipment
use assets
Total
Group & Society 2025
£M
£M
£M
£M
£M
£M
Cost or valuation
At 1 January
52.1
0.2
0.9
44.5
11.3
109.0
Additions
0.3
–
–
3.1
1.5
4.9
Disposals
(0.1)
–
–
(19.6)
–
(19.7)
Revaluation movement
0.5
–
–
–
–
0.5
At 31 December
52.8
0.2
0.9
28.0
12.8
94.7
Depreciation and impairment
At 1 January
21.1
–
0.9
35.2
6.4
63.6
Disposals
–
–
–
(19.6)
–
(19.6)
Depreciation charged in the year
–
–
–
2.7
1.1
3.8
Reversal of previous impairment losses
(0.2)
–
–
–
–
(0.2)
At 31 December
20.9
–
0.9
18.3
7.5
47.6
Net book value
At 31 December
31.9
0.2
–
9.7
5.3
47.1
Long
Short
Office and
Freehold
leasehold
leasehold
computer
Right-of-
premises
premises
premises
equipment
use assets
Total
Group & Society 2024
£M
£M
£M
£M
£M
£M
Cost or valuation
At 1 January
51.8
0.2
0.9
46.7
12.6
112.2
Additions
0.3
–
–
2.7
0.6
3.6
Disposals
–
–
–
(4.9)
(1.9)
(6.8)
At 31 December
52.1
0.2
0.9
44.5
11.3
109.0
Depreciation and impairment
At 1 January
4.8
–
0.9
36.5
5.5
47.7
Disposals
–
–
–
(4.9)
(0.3)
(5.2)
Depreciation charged in the year
–
–
–
3.2
1.2
4.4
Impairment charge in the year
16.3
–
–
0.4
–
16.7
At 31 December
21.1
–
0.9
35.2
6.4
63.6
Net book value
At 31 December
31.0
0.2
–
9.3
4.9
45.4
The Group’s accounting policy is for all freehold and long leasehold premises to be revalued at least every three years, with the last
full valuation undertaken as at 31 December 2025. In the periods between formal valuations, an assessment is made to ascertain
whether there are indications of material changes in property values. Details of the judgements involved in this assessment can be
found in Note 2a(iv).
Where portions of freehold premises are leased out, these properties do not meet the definition of investment property under IAS 40
Investment Property as the leased out portions could not be sold separately and the Group retains the use of a significant portion of
the property.
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 193
18. Property, plant and equipment (continued)
The amount of freehold and long leasehold premises (included above at valuation) determined according to the historical cost
convention is as follows:
Group &
Group &
Society
Society
2025
2024
£M
£M
Freehold premises
33.6
32.9
Long leasehold premises
0.2
0.2
At 31 December
33.8
33.1
The average remaining lease term of right-of-use assets is 3.9 years (2024: 5.0 years). The Group leases properties to use as Society
branches in order to serve members.
19. Shares
Group &
Group &
Society
Society
2025
2024
£M
£M
Held by individuals
26,066.5
24,526.2
Other shares
3.4
3.6
Total shares
26,069.9
24,529.8
20. Amounts owed to other customers
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
Amounts owed to subsidiary undertakings
–
–
806.0
631.8
Other deposits
138.8
159.3
138.9
159.3
Total amounts owed to other customers
138.8
159.3
944.9
791.1
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21. Debt securities in issue
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
Certificates of deposit
85.0
60.3
85.0
60.3
Senior unsecured debt
334.4
319.3
334.4
319.3
Covered bonds
2,009.8
2,116.0
2,009.8
2,116.0
Residential mortgage backed securities
808.4
636.1
–
–
Total debt securities in issue
3,237.6
3,131.7
2,429.2
2,495.6
The underlying security for the covered bonds and residential mortgage backed securities (RMBS) is certain loans and advances to
customers (see Note 14 for further detail).
In June 2025, the Group issued £350 million of RMBS Class A notes from Albion No 7 PLC, which are denominated in sterling and have a
floating interest rate.
22. Other liabilities and accruals
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
Accruals
21.7
18.4
21.7
18.4
Lease liabilities
Current
1.2
1.2
1.2
1.2
Non-current
4.5
4.3
4.5
4.3
Other payables
50.5
323.4
71.4
392.1
Total other liabilities and accruals
77.9
347.3
98.8
416.0
Other payables within Group and Society includes £43.4 million (2024: £316.7 million) owed to credit institutions on cash collateralisation
of derivatives. The Society balance for other payables includes amounts owed to subsidiary undertakings, including collateral in relation to
intragroup derivatives.
The maturity of lease liabilities is shown below.
Group &
Group &
Society
Society
2025
2024
Maturity analysis – contractual undiscounted cash flows
£M
£M
Less than one year
1.3
1.3
One to five years
4.4
3.1
More than five years
1.3
0.9
Total undiscounted cash flows at 31 December
7.0
5.3
At 31 December 2025, the Group and Society had less than £0.1 million of commitments under short term leases (2024: less than
£0.1 million). Total lease commitments for low value assets were £0.1 million (2024: £0.1 million).
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 195
22. Other liabilities and accruals (continued)
Amounts recognised in Income Statement in respect of leases
Group &
Group &
Society
Society
2025
2024
£M
£M
Interest payable on lease liabilities
0.2
0.2
Depreciation of right-of-use assets
1.1
1.2
Expenses relating to short term leases
0.1
0.1
Expenses relating to leases of low value assets, excluding short term leases of low value assets
0.1
0.1
Total recognised in Income Statement in the year
1.5
1.6
Amounts recognised in the Statement of Cash Flows in respect of leases
Group &
Group &
Society
Society
2025
2024
£M
£M
Total cash outflow for leases
2.1
2.1
23. Provisions for liabilities and charges
Voluntary
financial
Other
support
provisions
Total
Group & Society 2025
£M
£M
£M
At 1 January 2025
3.6
0.6
4.2
Provision charge in the year
–
0.1
0.1
Amounts released during the year
(1.2)
(0.4)
(1.6)
Amounts paid during the year
(1.9)
(0.2)
(2.1)
At 31 December 2025
0.5
0.1
0.6
Voluntary
financial
Other
support
provisions
Total
Group & Society 2024
£M
£M
£M
At 1 January 2024
–
1.3
1.3
Provision charge in the year
10.3
0.3
10.6
Amounts released during the year
–
(0.3)
(0.3)
Amounts paid during the year
(6.7)
(0.7)
(7.4)
At 31 December 2024
3.6
0.6
4.2
The amount reported for provisions for liabilities and charges at 31 December 2025 includes a provision of £0.5 million in respect of the
voluntary financial support we have agreed to offer members impacted by the actions of Philips Trust Corporation. This provision will be
utilised during 2026 as we process all remaining compensation payments and settle associated legal costs.
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196
24. Subordinated liabilities
Subordinated liabilities comprise £438.1 million (2024: £334.2 million) of senior non-preferred fixed rate reset notes which were issued
under the Group’s £2 billion Euro Medium Term Note Programme.
In January 2025, following a tender process, the Group repurchased £223.2 million of the £350.0 million of notes issued in 2021. At the
same time the Group issued £300.0 million of new notes which mature on 30 January 2031.
The below table sets out the details of the debt issued under the programme:
Outstanding
Issued
Rate and maturity
notional (£M)
126.8
16 March
Pay semi annual at 1.5% until 16 March 2026, followed by a further year at the benchmark gilt rate plus 1.3% until
2021
maturity on 16 March 2027
300.0
30 January
Pay semi annual at 5.5% until 30 January 2030, followed by a further year at the benchmark gilt rate plus 1.3% until
2025
maturity on 30 January 2031
The total amount reported in the Statements of Financial Position represents the nominal value of £426.8 million (2024: £350.0 million)
plus accrued interest and a fair value adjustment for hedged risk.
The notes rank behind the claims of all other creditors and members of the Society, other than holders of tier 2 capital.
25. Subscribed capital
Group &
Group &
Society
Society
2025
2024
£M
£M
3 ¾% tier 2 capital
8.0
8.0
Total
8.0
8.0
The Society continues to meet its current and forecasted Minimum Requirement for Own Funds and Eligible Liabilities (MREL).
This requirement ensures that institutions have a minimum amount of liabilities that can bear losses before and in resolution,
allowing the resolution authority to use these financial resources to absorb losses and recapitalise the continuing business.
26. Retirement benefit obligation
(a) Overview of the Society’s pension arrangements
The Group operates both defined benefit and defined contribution schemes. In addition, the Group has an employer funded retirement
benefits scheme for one individual (2024: one individual). The schemes have been accounted for under IAS 19 Employee Benefits.
The defined benefit scheme (‘the scheme’) provides benefits based on final salary for certain employees. The assets of the scheme are
held in a separate trustee-administered fund. Contributions to the defined benefit section are assessed in accordance with the advice
of an independent qualified actuary using the projected unit method. The defined benefit section was closed to new entrants from 1
January 2000 and closed to future benefit accrual from 31 December 2014. As at 31 December 2025 there were 244 deferred defined
benefit members (2024: 244). The 2024 and 2025 membership numbers are approximate based on the position as at 31 December 2023,
this being the date of the last triennial valuation. The scheme surplus is capped at the maximum economic benefit the Group can access
when the fair value of the scheme assets exceeds the present value of the defined benefit obligation. The Society’s unfunded liability is
£0.5 million (2024: £0.5 million) and is detailed below.
The scheme operates under UK trust law and the trust is a separate legal entity from the Society. The scheme is governed by a trustee
company: Leeds Building Society Staff Pension Scheme Limited. Directors of the trustee company are required by law to act in the best
interests of scheme members and are responsible for setting certain policies, such as investment and funding, together with the Society.
Trustees are appointed in line with UK law and the scheme’s Trust Deed and Rules.
The scheme’s adopted and agreed funding target is 100% of its technical provisions. The trustees will continue to make annual checks
on the funding position of the scheme, to confirm whether the scheme remains in line to meet any funding targets agreed.
The average duration of the benefit obligation is estimated to be 12 years (2024: 13 years).
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 197
26. Retirement benefit obligation (continued)
(a) Overview of the Society’s pension arrangements (continued)
The scheme is funded by the Society. Funding of the scheme is based on a separate actuarial valuation for funding purposes, for which
the assumptions may differ from the assumptions below. The last actuarial valuation of the scheme was undertaken at 31 December
2023. Funding requirements are formally set out in the Statement of Funding Principles, Schedule of Contributions and Recovery Plan
agreed between the trustees and the Society.
The defined benefit obligation at 31 December 2025 can be approximately attributed to the scheme members as follows:
− Deferred members: 42% (2024: 42%)
− Pensioner members: 58% (2024: 58%)
(b) Actuarial risks
The defined benefit scheme exposes the Group to actuarial risks, as detailed below:
Risk
Impact
Interest rate risk
A decrease in corporate bond yields results in an increase in the present value of the scheme liabilities because the
discount rate is linked to corporate bond yields
Inflation risk
An increase in inflation results in higher benefit increases for scheme members, increasing the scheme liabilities
Longevity risk
An increase in life expectancies results in a longer benefit payment period which in turn increases the scheme liabilities
Investment market risk
The value of the scheme’s assets is impacted by the market prices of those assets
Actuarial gains and losses are recognised immediately in full through the Statements of Comprehensive Income.
(c) Valuation assumptions
Principal actuarial assumptions at the balance sheet date (expressed as weighted averages):
2025
2024
Discount rate
5.45%
5.40%
Price inflation
RPI
2.85%
3.15%
CPI
2.35%
2.65%
Future pension increases
RPI max 5%
2.75%
2.95%
RPI min 3% max 5%
3.60%
3.70%
Life expectancy
Male at age 63
23.1 years
22.8 years
Female at age 63
25.6 years
25.4 years
Male at age 63 (currently aged 43)
24.1 years
23.8 years
Female at age 63 (currently age 43)
26.7 years
26.6 years
The table above includes the life expectancy assumptions used in the accounting assessments. Pensioner life expectancies are for a
member currently aged 63 retiring now. Non pensioner life expectancies are for a member retiring at age 63 currently aged 43.
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198
26. Retirement benefit obligation (continued)
(d) Reconciliation
Group &
Group &
Society
Society
2025
2024
£M
£M
Present value of funded obligations
(59.3)
(61.0)
Present value of unfunded obligations
(0.5)
(0.5)
Fair value of scheme assets
66.9
65.2
Effect of the asset ceiling
(7.6)
(4.2)
Retirement benefit obligation
(0.5)
(0.5)
Changes in the present value of the scheme’s liabilities are as follows:
Group &
Group &
Society
Society
2025
2024
£M
£M
At 1 January
61.5
70.8
Interest cost
3.2
3.1
Benefits paid
(4.2)
(4.2)
Actuarial losses/(gains) arising from changes in demographic assumptions
0.5
(0.7)
Actuarial (gains) arising from changes in financial assumptions
(1.7)
(6.0)
Actuarial losses/(gains) on experience adjustment
0.5
(1.5)
At 31 December
59.8
61.5
Changes in the fair value of the scheme’s assets are as follows:
Group &
Group &
Society
Society
2025
2024
£M
£M
At 1 January
65.2
73.7
Interest income
3.5
3.3
Contribution by employer
3.8
0.4
Benefits paid
(4.2)
(4.2)
Administrative expenses
(0.4)
(0.5)
Return on scheme assets excluding interest income
(1.0)
(7.5)
At 31 December
66.9
65.2
Changes in impact of asset ceiling:
Group &
Group &
Society
Society
2025
2024
£M
£M
Restriction due to asset ceiling at beginning of period
(4.2)
–
Interest on the asset ceiling
(0.3)
–
Change in the asset ceiling excluding interest
(3.1)
(4.2)
Restriction due to asset ceiling at end of period
(7.6)
(4.2)
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 199
26. Retirement benefit obligation (continued)
(e) Scheme assets
The major categories of scheme assets are as follows:
Group &
Group &
Society
Society
2025
2024
£M
£M
Cash and cash equivalents
23.4
2.8
Corporate bonds
15.5
29.9
Index linked government bonds
11.8
12.8
Asset backed securities
10.1
18.3
Fixed interest government bonds
6.1
1.4
Total assets
66.9
65.2
All assets have quoted market prices in active markets. The pension scheme assets include no assets from the Society's own financial
issuances (unchanged from 2024). The pension scheme assets include no property occupied by, or other assets used by, the Society
(unchanged from 2024).
(f) Amounts recognised in the Income Statements
Group &
Group &
Society
Society
2025
2024
£M
£M
Administration expenses
0.4
0.5
Net interest on the defined benefit asset
–
(0.2)
Total cost – defined benefit scheme
0.4
0.3
(g) Amounts recognised in the Statements of Comprehensive Income
Group &
Group &
Society
Society
2025
2024
£M
£M
Actuarial (losses)/gains on experience adjustment
(0.5)
1.5
Actuarial (losses)/gains arising from changes in demographic assumptions
(0.5)
0.7
Actuarial gains arising from changes in financial assumptions
1.7
6.0
Change in the asset ceiling excluding interest
(3.1)
(4.2)
Return on scheme assets excluding interest income
(1.0)
(7.5)
Total loss recognised in SOCI during the year
(3.4)
(3.5)
The cumulative amount of actuarial gains and losses recognised in other comprehensive income since the date of transition to IFRS is a
net loss of £29.5 million (2024: £26.1 million loss).
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26. Retirement benefit obligation (continued)
(h) Sensitivity to changes in key assumptions
The table below gives a broad indication of the impact on the pension obligation of changes in assumptions and experience. All figures
are before allowing for deferred tax. Although the analysis does not take account of the full distribution of cash flows expected, it does
provide an approximation of the sensitivity of the assumptions shown.
Group & Society 2025
Approximate (increase)/decrease to defined benefit obligation
£M
Increase discount rate by 1.0%
6.3
Increase inflation assumption by 0.5%
(2.4)
Change long term trend of increases in mortality improvement to 1.25%
(0.3)
(i) Estimated contributions for 2026 financial year
The estimated employer contributions for the 2026 financial year are £0.4 million. Annual agreed contributions will remain at this level
until they are reviewed following the next actuarial valuation to be undertaken based on the position at 31 December 2025.
(j) Other considerations
In 2023, the UK High Court issued a ruling in the case of Virgin Media Limited versus NTL Pension Trustees II Limited and others relating
to the validity of certain historical pension changes. This case had potential implications for other defined benefit schemes in the UK. In
response to the ruling, the Leeds Building Society pension scheme trustees undertook a review of historical pension amendments to
determine if there was any potential impact on the Group defined benefit scheme valuation and no material issues were identified.
In June 2025, the Department for Work and Pensions confirmed that the government will introduce legislation to give affected pension
schemes the ability to, retrospectively, obtain written actuarial confirmation that confirmations around historic benefit changes met the
necessary standards. Further update on the approach and process for this retrospective confirmation is expected to follow in due course
but based on the results of the trustees’ review of amendments, it’s unlikely that any further action will be required.
27. Deferred tax
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
Deferred tax
At 1 January
(25.6)
(35.4)
(21.1)
(32.3)
Credit in other comprehensive income for the period
8.7
8.8
8.7
8.8
Credit/(charge) to income statement for the period
2.0
1.0
(0.1)
2.4
At 31 December
(14.9)
(25.6)
(12.5)
(21.1)
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
Deferred tax liabilities
IFRS 9 transitional adjustment
1.5
2.2
1.5
2.2
Cash flow hedge reserve
(15.1)
(25.9)
(15.1)
(25.9)
Revaluation reserve
(0.8)
(0.7)
(0.8)
(0.7)
Pensions
0.8
0.1
0.8
0.1
Fair value reserve
0.7
(0.9)
0.7
3.6
Fixed assets
(1.0)
(0.9)
(1.0)
(0.9)
Trading items
(1.0)
0.5
1.4
0.5
Total deferred tax
(14.9)
(25.6)
(12.5)
(21.1)
The Society has an unrecognised outside basis taxable temporary difference of £1.9 million (2024: £1.9 million) in relation to Leeds
Building Society Covered Bonds LLP’s cumulative undistributed losses for which the Society has already claimed a corporation tax
deduction.
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 201
28. Cash flows from financing activities
For the purposes of the Statements of Cash Flows, the following items are classified as liabilities arising from financing activities:
debt securities in issue, subordinated liabilities and subscribed capital:
Group
Group
Society
Society
2025
2024
2025
2024
£M
£M
£M
£M
At 1 January
3,473.9
3,065.4
2,837.8
2,718.0
Cash flows:
Net proceeds from issue of debt securities
874.3
910.1
524.4
560.2
Repayments of debt securities in issue
(777.3)
(503.8)
(599.3)
(433.4)
Accrued interest movements*
(5.8)
6.1
(6.2)
4.7
Movement in fair value adjustment for hedged risk*
14.7
10.8
14.7
3.0
Debt securities in issue
105.9
423.2
(66.4)
134.5
Net proceeds from issue of subordinated liabilities
299.2
–
299.2
–
Repayments of subordinated liabilities
(217.0)
–
(217.0)
–
Accrued interest movements*
6.0
0.5
6.0
0.5
Movement in fair value adjustment for hedged risk*
20.9
9.8
20.9
9.8
Amortisation of discount on issue
(5.2)
–
(5.2)
–
Subordinated liabilities
103.9
10.3
103.9
10.3
Repayments of subscribed capital
–
(48.4)
–
(48.4)
Loss on repurchase of subscribed capital
–
23.4
–
23.4
Subscribed capital
–
(25.0)
–
(25.0)
At 31 December
3,683.7
3,473.9
2,875.3
2,837.8
* The 2024 Group and Society comparatives has been represented to split accrued interest movements and movement in fair value
adjustment for hedged risk between debt securities in issue and subordinated liabilities.
29. Guarantees and other financial commitments
(a) Subsidiary undertakings
The Society is obliged under the Building Societies Act 1986 to discharge the liabilities of its subsidiary undertakings to the extent they
were incurred before 11 June 1996 and insofar as those bodies are unable to discharge their liabilities out of their own assets.
(b) Capital commitments
The Group has no capital commitments contracted for but not accrued for under executory contracts in the year (2024: no
commitments). As at 31 December 2025, there are no long term multi-year contractual capital commitments for technology investment
programmes (intangible assets and property, plant and equipment) (2024: no commitments).
(c) Other commitments
The Group is committed to multi-year service contracts for the provision and maintenance of its IT infrastructure. The remaining
commitment at 31 December 2025 is £41.8 million (2024: £37.0 million). These service contracts are not capital commitments and do
not meet the definition of a lease under IFRS 16 since they do not give the Group the right to control the assets used to provide the
service. They will be expensed in the Income Statement as they are incurred.
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30. Related party transactions
Key management personnel compensation
As defined by IAS 24 ‘Related Party Disclosures’, members of the Group Executive Committee and the non-executive directors of Leeds
Building Society are considered to be the Group’s key management personnel.
Key management personnel comprise the executive directors and non-executive directors, who are responsible for ensuring that the
Society and its subsidiary undertakings meet their strategic and operational objectives. The Group enters into transactions in the ordinary
course of business with directors of the Group and persons connected with the directors of the Group, on normal commercial terms.
Total compensation for key management personnel for the period was as follows:
Key management personnel compensation
Group & Society
2025
2024
£M
£M
Short term remuneration
3.4
3.0
Long term remuneration
0.2
0.1
Employer pension contributions
0.3
0.2
Total
3.9
3.3
Other long term benefits include amounts relating to long term bonus schemes, some of which will be paid in future periods.
Further information on these can be found in the Directors' Remuneration Report.
No directors are active members of the defined benefit section of the Leeds Building Society Pension Scheme (2024: none). Two directors
were active members of the defined contribution section of the Leeds Building Society Pension Scheme during 2025 (2024: two).
Outstanding balances of related party transactions, with key management personnel, at the year end are as follows:
Group & Society
2025
2024
£M
£M
Mortgage loans
–
–
Savings balances
0.8
0.9
All loans and deposits with key management personnel were made in line with normal operational activity, at substantially the same
terms, including interest rates and security, as generally available to other members for comparable transactions. These transactions did
not involve more than normal risk of repayment or present other unfavourable features.
A register is maintained by the Society containing details of loans and arrangements made between the Society or its subsidiary
undertakings and directors of the Society or persons connected with directors of the Society. The register will be available for inspection
by members at the Annual General Meeting on 23 April 2026 and during normal office hours at the Society’s Head Office (26 Sovereign
St, Leeds, LS1 4BJ) during the period of 15 days prior to the meeting.
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 203
30. Related party transactions (continued)
Related party transactions
Details of the Society’s shares in group undertakings and subsidiaries are given in Note 16. A number of transactions are entered into
with these related parties, these include loans, deposits and the payment and recharge of administrative expenses.
The outstanding balances for these related party transactions at the period end, and the associated income and expenses for the period,
are as follows:
LBS
Covered
Albion
Albion
Albion
Bonds LLP
No. 5 PLC
No. 6 PLC
No. 7 PLC
Total
2025
£M
£M
£M
£M
£M
Loans payable by the Society
–
(240.2)
(247.4)
(347.0)
(834.6)
Loans receivable by the Society
106.9
–
–
–
106.9
Deposits payable by the Society
–
26.6
32.7
28.0
87.3
Net interest income
4.8
(12.3)
(13.9)
(9.2)
(30.6)
Other income and expenses
0.1
0.1
0.2
0.1
0.5
Collateral
28.7
–
–
–
28.7
LBS
Covered
Albion
Albion
Albion
Bonds LLP
No. 5 PLC
No. 6 PLC
No. 7 PLC
Total
2024
£M
£M
£M
£M
£M
Loans payable by the Society
–
(303.5)
(347.7)
–
(651.2)
Loans receivable by the Society
132.8
–
–
–
132.8
Deposits payable by the Society
–
28.0
31.3
–
59.3
Net interest income
(7.1)
(18.0)
(11.3)
–
(36.4)
Other income and expenses
0.1
0.2
0.1
–
0.4
Collateral
81.0
–
–
–
81.0
Transactions with Group companies arise in the normal course of operations.
As at 31 December 2025, the Society held intercompany derivative financial instruments of £(10.8) million (2024: £(19.2) million).
These are interest rate swaps entered into with the securitisation vehicles. For more information see Note 31.
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31. Derivative financial instruments and hedge accounting
(a) Derivative financial instruments
Derivative financial instruments are contracts or arrangements whose value is derived from one or more underlying price, rate or index
inherent in the contract or arrangement, such as interest rates or foreign exchange rates. These types of instruments tend to have a
smaller or no initial net investment relative to financial assets or liabilities offering the same risk and return, as cash flows are generally
settled at a future date.
Derivatives are only used by the Group in accordance with Section 9A of the Building Societies Act 1986, to reduce the risk of loss arising
from changes in interest rates or other factors of a prescribed description which affect the business. Accordingly, such instruments are
not used in trading activity or for speculative purposes. The Group utilises its derivative instruments for hedging purposes only.
The main derivatives used by the Group are interest rate swaps and cross currency swaps. The following table describes the significant
activities undertaken by the Group, the related risks associated with such activities and the types of derivatives which are typically used in
managing such risks. These risks may alternatively be managed using natural hedges that exist in the Group Statement of Financial Position.
Activity
Risk
Type of derivative
Hedge accounting
Fixed rate mortgage lending
Sensitivity to changes in interest rates
Pay fixed interest rate swaps
Fair value hedge
Cash flow hedge*
Fixed rate asset investments
Sensitivity to changes in interest rates
Pay fixed interest rate swaps
Fair value hedge
Fixed rate savings products
Sensitivity to changes in interest rates
Receive fixed interest rate swaps
Fair value hedge
Fixed rate wholesale funding
Sensitivity to changes in interest rates
Receive fixed interest rate swaps
Fair value hedge
Equity release mortgages
Sensitivity to changes in interest rates
Pay fixed interest rate swaps
–
Investment and funding in foreign currency
Sensitivity to changes in foreign
Cross currency interest rate swaps
–
exchange rates
and foreign exchange contracts
* In the Group’s macro cash flow hedge, pay fixed interest rate swaps are matched with floating rate financial liabilities to economically
hedge mortgage applications, prior to completion of the fixed rate mortgage.
The Group manages risk within its risk tolerance, regardless of the accounting treatment. Derivatives are entered into only when the
underlying position being hedged contains the same risk features. The derivative used will match the risks of the underlying asset or
liability and therefore hedge the associated market risk.
All derivatives entered into by the Group are used for hedging purposes, however not all are designated as such for accounting purposes.
Some derivatives are held as economic hedges to which hedge accounting does not need to be applied. In these cases a natural offset
may be achieved; these types of hedges are only entered into where a high degree of effectiveness can be achieved.
Cross currency interest rate swaps are used to reduce both the interest rate risk and exchange rate risk exposures that come from
funding in foreign currency.
The table below shows the value of derivatives by type:
Group 2025
Group 2024
Contract or
Contract or
underlying
underlying
principal
Positive
Negative
principal
Positive
Negative
amount
fair value
fair value
amount
fair value
fair value
£M
£M
£M
£M
£M
£M
Interest rate swaps available to designate in
accounting hedges
29,476.7
129.5
(116.8)
28,753.6
369.4
(90.3)
Derivatives not designated in accounting hedges:
Equity release swaps
17.5
–
(1.6)
57.2
–
(7.7)
Interest rate swaps
–
–
–
–
–
–
Cross currency swaps
35.7
–
(1.5)
43.8
1.7
–
Total derivatives held for hedging purposes
29,529.9
129.5
(119.9)
28,854.6
371.1
(98.0)
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 205
31. Derivative financial instruments and hedge accounting (continued)
(a) Derivative financial instruments (continued)
Society 2025
Society 2024
Contract or
Contract or
underlying
underlying
principal
Positive
Negative
principal
Positive
Negative
amount
fair value
fair value
amount
fair value
fair value
£M
£M
£M
£M
£M
£M
Interest rate swaps available to designate in
accounting hedges
29,476.7
129.5
(116.8)
28,753.6
369.4
(90.3)
Derivatives not designated in accounting hedges:
Equity release swaps
17.5
–
(1.6)
57.2
–
(7.7)
Interest rate swaps
860.4
–
(10.8)
658.1
–
(19.2)
Cross currency swaps
35.7
–
(1.5)
43.8
1.7
–
Total derivatives held for hedging purposes
30,390.3
129.5
(130.7)
29,512.7
371.1
(117.2)
The following tables analyse derivatives by contractual maturity:
Group 2025
Group 2024
Notional
Notional
principal
Replacement
principal
Replacement
amount
cost
amount
cost
£M
£M
£M
£M
Less than 1 year
12,104.2
30.9
10,961.7
29.0
Between 1 and 5 years inclusive
16,606.5
87.7
16,877.9
311.9
More than 5 years
819.2
10.9
1,015.0
30.2
Total derivatives
29,529.9
129.5
28,854.6
371.1
Society 2025
Society 2024
Notional
Notional
principal
Replacement
principal
Replacement
amount
cost
amount
cost
£M
£M
£M
£M
Less than 1 year
12,104.2
30.9
10,961.7
29.0
Between 1 and 5 years inclusive
17,466.9
87.7
17,536.0
311.9
More than 5 years
819.2
10.9
1,015.0
30.2
Total derivatives
30,390.3
129.5
29,512.7
371.1
(b) Hedge accounting
The Group holds a portfolio of fixed rate mortgages, savings and investments and is therefore exposed to changes in interest rate risk
(see Risk Management Report, page 76). As shown in the table on page 204 the Group manages this risk by entering into interest rate
swaps that either pay or receive a fixed rate.
By entering into these swaps the Group is hedging interest rate risk only. Other risks, such as credit risk, are managed but not hedged.
These risks are managed by entering into swap contracts with high quality counterparties, requiring the posting of collateral and clearing
swaps through central counterparties.
The exposure from interest rate risk fluctuates due to new products being added, products maturing and early repayments in the case of
mortgage products. For this reason the Group utilises a dynamic hedge accounting strategy (also known as macro hedging) to manage
the exposure created by entering into swap contracts this way.
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206
31. Derivative financial instruments and hedge accounting (continued)
(b) Hedge accounting (continued)
The notional value of interest rate swaps designated into accounting hedge relationships is as follows, analysed by maturity date:
Less than
3 to 12
1 to 5
More than
3 months
months
years
5 years
Group 2025
£M
£M
£M
£M
Macro fair value hedges
Loans and advances to customers
Swap notional
617.7
3,215.3
11,617.6
95.7
Average fixed rate
2.7%
3.1%
3.3%
1.3%
Investment securities
Swap notional
–
30.0
1,395.3
452.3
Average fixed rate
–
4.4%
3.9%
4.0%
Shares
Swap notional
614.5
5,891.0
808.7
–
Average fixed rate
4.3%
3.9%
3.9%
–
Micro fair value hedges of wholesale funding denominated in Sterling
Swap notional
–
–
650.0
–
Average fixed rate
–
–
3.3%
–
Macro cash flow hedges
Swap notional
–
–
–
250.0
Average fixed rate
–
–
–
3.7%
Less than
3 to 12
1 to 5
More than
3 months
months
years
5 years
Group 2024
£M
£M
£M
£M
Macro fair value hedges
Loans and advances to customers
Swap notional
13.1
2,714.8
12,910.3
428.8
Average fixed rate
1.1%
3.9%
3.1%
3.1%
Investment securities
Swap notional
–
–
–
–
Average fixed rate
–
–
–
–
Shares
Swap notional
1,024.0
6,141.0
1,837.5
–
Average fixed rate
4.8%
4.7%
4.4%
–
Micro fair value hedges of wholesale funding denominated in Sterling
Swap notional
–
–
700.0
–
Average fixed rate
–
–
1.4%
–
Macro cash flow hedges
Swap notional
–
–
–
525.0
Average fixed rate
–
–
–
3.6%
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 207
31. Derivative financial instruments and hedge accounting (continued)
(b) Hedge accounting (continued)
(i) Fair value hedge accounting
The Group uses macro fair value hedges to recognise the changes in fair value of the hedged items (mortgage and savings products) due
to the changes in interest rates and therefore can mitigate the impact on profit and loss that would arise if only the changes in fair value
from the interest rate swaps were recognised.
In addition to the macro fair value hedges used to manage the interest rate risk of mortgages and savings, the Group also uses one to
one hedges, known as micro hedges, to manage the interest rate risk of fixed rate wholesale funding issuances. In this type of hedge,
a single swap is matched directly against a fixed rate bond and remains matched until maturity or a de-designation event (such as
becoming ineffective). The changes in fair value are recognised in the same way as the macro hedge, with the change in the fair value
of the bond and swap being offset to reduce volatility in the Income Statement.
The tables below provide analysis of the impacts of fair value hedge accounting on the Statement of Financial Position and the
Income Statement:
Interest rate swaps
Hedged items
Accumulated fair
Carrying amount (Note 1)
Carrying amount
value adjustments
Notional
amount
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
SOFP line
Group 2025
£M
£M
£M
£M
£M
£M
£M
item
Loans and advances
15,546.3
98.7
(78.1)
15,529.4
–
80.0
(80.6)
Note 2
to customers
Investment securities
1,877.6
0.9
(19.5)
1,905.3
–
19.4
(0.9)
Note 3
Shares
7,314.2
14.8
–
–
7,363.1
–
(12.9)
Note 4
Wholesale funding
650.0
4.8
(16.1)
–
650.0
16.1
(4.8)
Note 5
denominated in Sterling
Interest rate swaps
Hedged items
Accumulated fair
Carrying amount (Note 1)
Carrying amount
value adjustments
Notional
amount
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
SOFP line
Group 2024
£M
£M
£M
£M
£M
£M
£M
item
Loans and advances
16,067.0
319.6
(29.2)
16,751.3
–
28.9
(324.8)
Note 2
to customers
Investment securities
–
–
–
–
–
–
–
Note 3
Shares
9,002.5
14.2
(6.5)
–
8,876.1
6.4
(12.9)
Note 4
Wholesale funding
700.0
–
(46.9)
–
700.0
47.0
–
Note 5
denominated in Sterling
Notes:
The Statement of Financial Position lines that include the items noted above are:
1. ‘Derivative financial instruments’.
2. ‘Fair value adjustment for hedged risk on loans and advances to customers’.
3. ‘Investment securities’
4. ‘Fair value adjustment for hedged risk on shares’.
5. ‘Debt securities in issue’ and ‘Subordinated liabilities’.
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208
31. Derivative financial instruments and hedge accounting (continued)
(b) Hedge accounting (continued)
(i) Fair value hedge accounting (continued)
Accumulated
amount of
Change in fair
fair value
value of hedging
Change in fair
Total hedge
adjustments
instrument
value of hedged
ineffectiveness
remaining in the
(Note 1)
item (Note 1)
(Note 2)
SOFP
Group 2025
£M
£M
£M
£M
Loans and advances to customers
(269.9)
295.3
25.4
76.1
Investment securities
(18.5)
18.5
–
0.1
Shares
7.0
(6.4)
0.6
1.1
Wholesale funding denominated in Sterling
35.7
(35.7)
–
–
Accumulated
amount of
Change in fair
fair value
value of hedging
Change in fair
Total hedge
adjustments
instrument
value of hedged
ineffectiveness
remaining in the
(Note 1)
item (Note 1)
(Note 2)
SOFP
Group 2024
£M
£M
£M
£M
Loans and advances to customers
4.9
(15.3)
(10.4)
122.9
Investment securities
–
–
–
–
Shares
(25.0)
35.7
10.6
(2.4)
Wholesale funding denominated in Sterling
12.8
(12.8)
–
–
Notes
1. The change in fair value during the period was used as the basis for calculating hedge ineffectiveness and was recognised in the
‘Fair value gains/(losses) from financial instruments’ line in the Income Statement.
2. The amount of hedge ineffectiveness during the period was recognised in the ‘Fair value gains/(losses) from financial instruments’
line in the Income Statement.
Macro fair value hedge effectiveness is assessed by comparing the changes in the fair value of the hedging instruments with changes in
the fair value of the hedged items attributable to the hedged risk, using the Dollar Offset method.
Possible sources of ineffectiveness are as follows:
• Differences in timing of cash flows between the derivative and the hedged item.
• 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.
(ii) Cash flow hedge accounting
The Group applies macro cash flow hedge accounting to a portion of its floating rate financial liabilities which are matched (for the
purposes of hedge accounting only) with pay fixed, receive floating rate interest rate swaps which have been transacted to economically
hedge mortgage applications, prior to completion of the mortgage. Any movements in fair value of the swaps arising due to movements
in interest rates are recognised in other comprehensive income to the extent that the hedge relationship is effective. The Group aims
to maintain a position where the principal amount of the hedged items (floating rate financial liabilities) is greater than or equal to the
notional amount of the corresponding interest rate swaps used as the hedging instruments. The hedge accounting relationship is
reassessed on a monthly basis with the composition of hedging instruments and hedged items changing frequently in line with the
underlying risk exposures.
The table below provides further detail on the Group’s cash flow hedge accounting relationships.
Interest rate swaps
Hedged items
Carrying amount (Note 1)
Carrying amount
Notional
amount
Assets
Liabilities
Assets
Liabilities
SOFP line
Group 2025
£M
£M
£M
£M
£M
item
Floating rate liabilities
250.0
–
0.5
–
(250.0)
Note 2
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 209
31. Derivative financial instruments and hedge accounting (continued)
(b) Hedge accounting (continued)
(ii) Cash flow hedge accounting (continued)
Interest rate swaps
Hedged items
Carrying amount (Note 1)
Carrying amount
Notional
amount
Assets
Liabilities
Assets
Liabilities
SOFP line
Group 2024
£M
£M
£M
£M
£M
item
Floating rate liabilities
525.0
8.1
–
–
(525.0)
Note 2
Notes:
The Statement of Financial Position lines that include the items noted above are:
1. ‘Derivative financial instruments’.
2. ‘Debt securities in issue’.
Accumulated
amount of
Gains reclassified
Change in fair
fair value
from OCI
value of hedging
Change in fair
Total hedge
adjustments
to Income
instrument
value of hedge
ineffectiveness
remaining in OCI
Statement
(Note 1)
item
(Note 2)
(Note 3)
(Note 4)
Group 2025
£M
£M
£M
£M
£M
Floating rate liabilities
(68.9)
68.9
–
53.8
(29.7)
Accumulated
Gains reclassified
Change in fair
amount of fair
from OCI
value of hedging
Change in fair
Total hedge
value adjustments
to Income
instrument
value of hedge
ineffectiveness
remaining in OCI
Statement
(Note 1)
item
(Note 2)
(Note 3)
(Note 4)
Group 2024
£M
£M
£M
£M
£M
Floating rate liabilities
28.8
(29.3)
0.5
92.5
29.4
Notes:
1. The change in fair value during the period was used as the basis for calculating hedge ineffectiveness and was recognised in the
‘Cash flow hedge reserve’ line in the Statement of Financial Position.
2. The amount of hedge ineffectiveness during the period was recognised in the ‘Fair value gains/(losses) from financial instruments’
line in the Income Statement.
3. The accumulated amount of fair value adjustments remaining in OCI are reported in the ‘Cash flow hedge reserve’ line in the
Statement of Financial Position.
4. The gains that were reclassified from OCI to the Income Statement during the period were recognised in the ‘Fair value gains/
(losses) from financial instruments’ line in the Income Statement.
Macro cash flow hedge effectiveness is assessed by comparing the changes in the fair value of the hedging instruments with changes in
the fair value of the hedged items attributable to the hedged risk, using the hypothetical derivative method.
Possible sources of ineffectiveness are as follows:
• Differences in timing of cash flows between the derivative and the hedged item.
• 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.
Strategic Report
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210
32. Fair values
(a) Carrying value and fair value of financial instruments not carried at fair value
The classification and measurement categories of the Group’s financial assets and liabilities are detailed in Note 10.
The following tables summarise the carrying amounts and fair values of those financial assets and liabilities not carried at fair value in the
Statement of Financial Position. Where available, market values have been used to determine fair values. Where market values are not
available, fair values have been calculated for other financial instruments by discounting cash flows at prevailing interest rates.
Group 2025
Society 2025
Fair value
Carrying
Fair
Carrying
Fair
hierarchy
value
value
value
value
Notes
level
£M
£M
£M
£M
Financial assets:
Cash in hand and balances with the Bank of England
Level 1
1,413.4
1,413.4
1,413.4
1,413.4
Loans and advances to credit institutions
i)
Level 2
115.2
115.2
6.1
6.1
Investment securities
v)
Level 1
–
–
–
–
Loans and advances to customers
Loans fully secured on residential property*
ii)
Level 3
25,896.1
26,362.3
25,896.1
26,362.3
Other loans
ii)
Level 2
3.0
3.0
3.0
3.0
Other assets, prepayments and accrued income
vi)
Level 1
231.8
231.8
231.8
231.8
Other assets, prepayments and accrued income
vi)
Level 2
–
–
114.9
114.9
Financial liabilities:
Shares**
iii)
Level 2
26,081.6
26,052.6
26,081.6
26,052.6
Amounts owed to credit institutions
i)
Level 2
0.5
0.5
0.5
0.5
Amounts owed to other customers
i)
Level 2
138.8
138.8
944.9
944.9
Debt securities in issue***
iv)
Level 1
2,429.1
2,438.5
2,429.2
2,438.5
Debt securities in issue
iv)
Level 2
808.5
801.0
–
–
Other liabilities and accruals
vi)
Level 2
43.4
43.4
39.7
39.7
Subordinated liabilities***
v)
Level 1
438.1
440.2
438.1
440.2
Subscribed capital
v)
Level 1
8.0
8.1
8.0
8.1
Group 2024
Society 2024
Fair value
Carrying
Fair
Carrying
Fair
hierarchy
value
value
value
value
Notes
level
£M
£M
£M
£M
Financial assets:
Cash in hand and balances with the Bank of England
Level 1
2,443.2
2,443.2
2,443.2
2,443.2
Loans and advances to credit institutions
i)
Level 2
152.3
152.3
15.2
15.2
Investment securities
v)
Level 1
10.5
10.5
10.5
10.5
Loans and advances to customers
Loans fully secured on residential property*
ii)
Level 3
24,229.6
24,353.9
24,229.6
24,353.9
Other loans
ii)
Level 2
2.8
2.8
2.8
2.8
Other assets, prepayments and accrued income
vi)
Level 1
221.4
221.4
221.4
221.4
Other assets, prepayments and accrued income
vi)
Level 2
–
–
76.6
76.6
Financial liabilities:
Shares**
iii)
Level 2
24,538.6
24,501.0
24,538.6
24,501.0
Amounts owed to credit institutions
i)
Level 2
1,244.2
1,244.2
1,244.2
1,244.2
Amounts owed to other customers
i)
Level 2
159.3
159.3
791.1
791.1
Debt securities in issue***
iv)
Level 1
2,495.6
2,506.1
2,495.6
2,506.1
Debt securities in issue
iv)
Level 2
636.1
628.7
–
–
Other liabilities and accruals
vi)
Level 2
316.7
316.7
310.7
310.7
Subordinated liabilities***
v)
Level 1
334.2
337.3
334.2
337.3
Subscribed capital
v)
Level 1
8.0
8.0
8.0
8.0
* Net of fair value adjustment for portfolio hedged risk on loans and advances to customers. The Group and Society 2024 comparatives have been
re-presented to include the fair value adjustment for portfolio hedged risk on loans and advances to customers.
** Net of fair value adjustment for portfolio hedged risk on shares. The Group and Society 2024 comparatives have been re-presented to include the fair
value adjustment for portfolio hedged risk on shares.
*** The Group and Society 2024 comparatives have been re-presented to include the fair value adjustment for hedged risk on wholesale debt issuances.
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 211
32. Fair values (continued)
(a) Carrying value and fair value of financial instruments not carried at fair value (continued)
Fair value represents the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in
an arm’s length transaction. The following methods and assumptions have been applied in determining fair value:
i. The carrying amount of loans and advances to credit institutions, amounts owed to other customers and amounts owed to credit
institutions is assumed to equate to their fair value due to the short term nature of these commitments.
ii. The fair value of loans and advances to customers is calculated on the discounted cash flow basis using projected future cashflows
and expected prepayment behaviour of borrowers, which also includes an assessment of future credit loss where appropriate.
iii. The fair value of fixed deposits is determined from the estimated cashflows discounted at the market rate for equivalent deposits.
Variable rate deposits, which are available on demand, are assumed to be at market value and so equate to their fair value.
iv. Debt securities in issue are valued by reference to their market value where an active market exists. Where no active market exists,
a discounted cash flow approach is used.
v. The fair value of investment securities, subordinated liabilities and subscribed capital is obtained from market prices.
vi. The carrying amount of other assets and other liabilities are assumed to equate to their fair value as these are not market tradable.
Level 1 financial instruments reported in this category relate to cash collateral on derivatives.
(b) Fair value measurement basis for financial instruments carried at fair value
The table below classifies all assets and liabilities carried at fair value in the Statement of Financial Position according to the method used
to establish their fair value.
The fair value adjustments for hedged risks have been excluded from the below tables; the 2024 Group and Society comparatives have
been represented to reflect this.
Level 1
Level 2
Level 3
Total
Group 2025
£M
£M
£M
£M
Assets:
Investment securities
3,921.9
–
–
3,921.9
Derivative financial instruments
–
129.5
–
129.5
Loans and advances to customers
–
–
138.9
138.9
Total assets
3,921.9
129.5
138.9
4,190.3
Liabilities:
Derivative financial instruments
–
118.3
1.6
119.9
Total liabilities
–
118.3
1.6
119.9
Level 1
Level 2
Level 3
Total
Group 2024
£M
£M
£M
£M
Assets:
Investment securities
3,939.5
–
–
3,939.5
Derivative financial instruments
–
371.1
–
371.1
Loans and advances to customers
–
–
145.0
145.0
Total assets
3,939.5
371.1
145.0
4,455.6
Liabilities:
Derivative financial instruments
–
92.1
5.9
98.0
Total liabilities
–
92.1
5.9
98.0
Strategic Report
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Governance Financial Statements Other Information
212
32. Fair values (continued)
(b) Fair value measurement basis for financial instruments carried at fair value (continued)
Level 1
Level 2
Level 3
Total
Society 2025
£M
£M
£M
£M
Assets:
Investment securities
3,921.9
–
–
3,921.9
Derivative financial instruments
–
129.5
–
129.5
Loans and advances to customers
–
–
138.9
138.9
Total assets
3,921.9
129.5
138.9
4,190.3
Liabilities:
Derivative financial instruments
–
118.3
12.4
130.7
Total liabilities
–
118.3
12.4
130.7
Level 1
Level 2
Level 3
Total
Society 2024
£M
£M
£M
£M
Assets:
Investment securities
3,939.5
–
–
3,939.5
Derivative financial instruments
–
371.1
–
371.1
Loans and advances to customers
–
–
145.0
145.0
Total assets
3,939.5
371.1
145.0
4,455.6
Liabilities:
Derivative financial instruments
–
92.1
25.1
117.2
Total liabilities
–
92.1
25.1
117.2
Level 1: Relates to financial instruments where fair values are taken from quoted prices in active markets for identical assets or liabilities
without adjustment.
Level 2: Valuations of financial instruments for which significant inputs are taken from observable market data for the asset and liability.
These include quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or
liabilities in markets which are not active. These also include where valuation models are used to calculate the present values of
expected future cash flows, using solely inputs (such as interest rate curves) from published market observable sources.
Level 3: The valuation of the asset or liability is not solely based on observable market data and includes unobservable inputs.
Valuation techniques include net present value and discounted cash flow methods. The assumptions used in such models
include risk-free benchmark interest rates, foreign currency exchange rates and expected price volatilities. The objective of the
valuation techniques is to determine a fair value that reflects the price of the financial instrument that would have been used by
two counterparties in an arm’s length transaction.
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 213
32. Fair values (continued)
(c) Reconciliation of level 3 fair value measurements of financial instruments
Derivative
Loans and
financial
advances to
instruments
customers
Total
Group 2025
£M
£M
£M
At 1 January 2025
(5.9)
145.0
139.1
Total gains/(losses) in the Income Statement
4.3
(3.9)
0.4
Net repayment in the year
–
(2.2)
(2.2)
At 31 December 2025
(1.6)
138.9
137.3
Derivative
Loans and
financial
advances to
instruments
customers
Total
Group 2024*
£M
£M
£M
At 1 January 2024
(14.9)
153.6
138.7
Total gains/(losses) in the Income Statement
9.0
(7.6)
1.4
Net repayment in the year
–
(1.0)
(1.0)
At 31 December 2024
(5.9)
145.0
139.1
Derivative
Loans and
financial
advances to
instruments
customers
Total
Society 2025
£M
£M
£M
At 1 January 2025
(25.1)
145.0
119.9
Total gains/(losses) in the Income Statement
12.7
(3.9)
8.8
Net repayment in the year
–
(2.2)
(2.2)
At 31 December 2025
(12.4)
138.9
126.5
Derivative
Loans and
financial
advances to
instruments
customers
Total
Society 2024*
£M
£M
£M
At 1 January 2024
(31.2)
153.6
122.4
Total gains/(losses) in the Income Statement
6.1
(7.6)
(1.5)
Net repayment in the year
–
(1.0)
(1.0)
At 31 December 2024
(25.1)
145.0
119.9
Total gains/(losses) for the year are included in ‘Fair value gains/(losses) from financial instruments’ in the Income Statement.
*The Group and Society 2024 comparatives have been represented to exclude movement in fair value adjustment for portfolio hedged
risk on loans and advances to customers.
No transfers were made into or out of Level 3 within the year
Strategic Report
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214
32. Fair values (continued)
(d) Recurring fair value measurement
Relationship of
Fair value at
Fair value at
Significant
unobservable
Financial assets/
31 December
31 December
Fair value
Valuation technique(s) and
unobservable
inputs to
financial liabilities
2025
2024
hierarchy
key input(s)
input(s)
fair value
Investment
Group
Group
Level 1
Quoted bid prices in an active
N/A
N /A
securities
Assets -
Assets -
market sourced from third party
£3,921.9
£3,939.5
data providers.
million
million
Society
Society
Assets -
Assets -
£3,921.9
£3,939.5
million
million
Derivative financial
Group
Group
Level 2
Discounted cash flow. Future
N/A
N /A
instruments
Assets -
Assets -
cash flows are estimated based
(interest rate
£129.5 million
£369.4 million
on forward interest rates (from
swaps)
and Liabilities -
and Liabilities -
observable yield curves at the
£116.8 million
£90.3 million
end of the reporting period) and
Society
Society
contract interest rates, discounted
Assets -
Assets -
at a rate that reflects the credit
£129.5 million
£369.4 million
risk exposure to the various
and Liabilities -
and Liabilities -
counterparties.
£116.8 million
£90.3 million
Derivative financial
Group
Group
Level 2
Discounted cash flow. Future
N/A
N /A
instruments (cross
Assets -
Assets -
cash flows are estimated based
currency swaps)
£1.5 million
£1.7 million
on forward interest rates (from
Society
Society
observable yield curves at the
Assets -
Assets -
end of the reporting period) and
£1.5 million
£1.7 million
contract interest rates discounted
at a rate that reflects the credit
risk exposure to the various
counterparties. Any foreign
currency amounts are translated
into sterling at the contract
exchange rate.
Derivative financial
Group
Group
Level 2
Discounted cash flow. Future
N/A
N /A
instruments (equity
Liabilities - nil
Liabilities -
cash flows are estimated based
release swaps)
Society
£1.8 million
on forward interest rates (from
(Level 2)
Liabilities - nil
Society
observable yield curves at the
Liabilities -
end of the reporting period) and
£1.8 million
contract interest rates discounted
at a rate that reflects the credit
risk exposure to the counterparty.
The profile of future notional
amounts is specified in the
contract.
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 215
32. Fair values (continued)
(d) Recurring fair value measurement (continued)
Relationship of
Fair value at
Fair value at
Significant
unobservable
Financial assets/
31 December
31 December
Fair value
Valuation technique(s) and
unobservable
inputs to
financial liabilities
2025
2024
hierarchy
key input(s)
input(s)
fair value
Derivative financial
Group
Group
Level 3
Discounted cash flow. Future
Assumptions
An increase in
instruments (equity
Liabilities -
Liabilities -
cash flows are estimated based
on future life
life expectancy
release swaps)
£1.6 million
£5.9 million
on a projection of interest rates
expectancy of
or reduction in
(Level 3)
Society
Society
and RPI, a discount rate to
customers based
prepayments will
Liabilities -
Liabilities -
reflect the counterparty risk and
on best estimate
increase the value
£1.6 million
£5.9 million
assumptions for prepayment
mortality data.
of the liability.
which determines the profile of
Assumptions
future notional amounts.
on the level of
prepayment.
Derivative financial
Society
Society
Level 3
Discounted cash flow. The
Assumptions on
An increase in
instruments
Liabilities -
Liabilities -
valuations are based on a
future notional
prepayment rates
(securitisation
£10.8 million
£19.2 million
discounted cash flow model
balances related
will increase the
swaps)
which uses a projection of
to mortgage
fair value of the
interest rates, a discount rate
prepayment
swaps.
to reflect the counterparty risk
rates.
and assumptions for future
prepayment. The notional profile
of the swaps tracks the balance
of a loan portfolio which is subject
to assumptions about the rate of
prepayment.
Loans and advances
Group
Group
Level 3
Discounted cash flow. The
Assumptions
An increase in
to customers
Assets -
Assets -
valuations are based on a
on future life
life expectancy
(collateral loan)
£138.9 million
£145.0 million
discounted cash flow model
expectancy of
or reduction in
Society
Society
which uses unobservable input
customers based
prepayment will
Assets -
Assets -
assumptions for property price
on best estimate
increase the value
£138.9 million
£145.0 million
volatility, sales price haircut the
mortality data.
of the asset. An
discount rate used to discount
Assumptions
increase in house
future cash flows. The no negative
on the level of
price volatility or
equity component of the loan
repayment, house
the discount rate
is valued using a stochastic
price volatility and
will reduce the
modelling technique.
the discount rate.
value of the asset.
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Governance Financial Statements Other Information
216
32. Fair values (continued)
(e) Level 3 unobservable inputs
(i) Derivative financial instruments (securitisation swaps and Level 3 equity release swaps)
The valuation of securitisation swaps is performed using a combination of observable market interest rate data and unobservable
assumptions about future mortgage prepayment. At 31 December 2025, a 10% proportionate increase in prepayments would lead to a
decrease in the swaps, which are currently recognised as liability, of £1.2 million. A 10% proportionate reduction in prepayments would
increase the net value of the swap liabilities by £1.2 million. These sensitivities reflect the variability in prepayment rates observed
historically.
The equity release swap is linked to RPI and is valued using a discounted cash flow model which uses observable market data for RPI and
the discount rate used to discount future cash flows and unobservable input assumptions for prepayment rates. Wherever possible,
these input assumptions are calculated with reference to actual historic experience. The variable which is considered to have the
largest impact on the value of the swap is the prepayment rate. At 31 December 2025, a one percentage point increase in the assumed
prepayment rate would reduce the value of the swap liability by £0.1 million, resulting in a corresponding fair value gain in the Income
Statement. A one percentage point reduction in the assumed prepayment rate would increase the value of the swap liability by £0.1
million, resulting in a corresponding fair value loss in the Income Statement.
(ii) Loans and advances to customers (collateral loan)
The collateral loan which represents a closed book of equity release mortgages is valued using a discounted cash flow model which uses
unobservable input assumptions for property price volatility, sales price haircut, mortality, prepayment and the discount rate used to
discount future cash flows. Wherever possible these input assumptions are calculated with reference to actual historic experience. The
pool of equity release mortgages includes an aging borrower base. Any associated increase in risk is considered and reflected within the
assumptions adopted. The variables which are considered to have the largest impact on the value of the loan are discount rate, property
price volatility and the sales price haircut. The sensitivities below reflect a range of alternative assumptions based on observed historic
data and regulatory guidance.
Assumption
Sensitivity modelled for current assumption
(Decrease)/increase in fair value of collateral loan (£M)
Discount rate
+/- 1 percentage point
(9.2)/10.3
Property price volatility
+/- 3 percentage points
(3.7)/3.4
Sales price haircut
+/- 5 percentage points
(3.2)/2.8
(iii) Fair value adjustment for hedged risk on loans and advances to customers
The Group designates a portfolio of fixed rate mortgages into hedge relationships to mitigate interest rate risk. The calculation of the
fair value uses observable market interest rate data and assumptions about projected prepayments. These prepayment assumptions
are unobservable inputs that are calculated using historic data and reviewed periodically so that projections are broadly in line with
actual data, with sensitivities calculated based on historic observed variability.
At 31 December 2025, a 20% proportionate increase in mortgage prepayments would lead to a reduction in the fair value of the
mortgages in the hedge relationship of £0.3 million. A 20% proportionate decrease in mortgage prepayments would lead to an increase
in the fair value of the mortgages of £ 0.2 million.
33. Events after the date of the Statement of Financial Position
There have been no subsequent events between 31 December 2025 and the date of approval of these Annual Report and Accounts by
the Board which would have had a material impact on the financial position of the Group or the Society.
Notes to the Accounts continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 217
Other
Information
Strategic Report
Risk Management
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Governance Financial Statements Other Information
218
Annual Business Statement
Year ended 31 December 2025
1. Statutory percentages
31 December
2025
Statutory
limit
Lending limit 2.3% 25%
Funding limit 11.5% 50%
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 business assets not in the form of loans fully secured on residential property. Business
assets are the total assets of the Group as shown in the Statement of Financial Position, plus impairment provisions for loans and
advances to customers, less liquid assets, intangible assets and property, plant and equipment.
The funding limit measures the proportion of shares and borrowings (excluding fair value adjustment for hedged risk) not in the form
of shares held by individuals.
2. Other percentages
31 December
2025
31 December
2024
As a percentage of shares and borrowings:
Gross capital 7.78% 7.10%
Free capital 7.47% 6.82%
Liquid assets 18.51% 22.52%
Profit for the financial year as a percentage of mean total assets 0.46% 0.33%
Management expenses as a percentage of mean total assets 0.68% 0.66%
The above percentages have been prepared from the Group’s consolidated accounts and in particular:
• ‘Shares and borrowings’ represent the total of shares, amounts owed to credit institutions, amounts owed to other customers and
debt securities in issue.
• ‘Gross capital’ represents the aggregate of general reserve, other reserve, revaluation reserve, fair value reserve, cash flow hedge
reserve, subordinated liabilities and subscribed capital.
• ‘Free capital’ represents the aggregate of gross capital less intangible assets and property, plant and equipment.
• ‘Liquid assets’ represent the total of cash in hand and balances with the Bank of England, loans and advances to credit institutions
and investment securities.
• ‘Mean total assets’ represent the amount produced by halving the aggregate of total assets at the beginning and end of the
financial year.
• ‘Management expenses’ represent the aggregate of administrative expenses, depreciation and amortisation.
3. Principal Office
Leeds Building Society is a building society, incorporated and domiciled in the United Kingdom. The address of the Principal Office is:
26 Sovereign Street, Leeds, West Yorkshire, LS1 4BJ
Leeds Building Society | Annual Report and Accounts 2025 219
4. Information relating to the directors at 31 December 2025
Name Occupation Date of
Birth
Date first
appointed
Other directorships/appointments
Chair
B McCafferty
Chair from 1 March 2025
Chair 06.06.1967 01.09.2024 Academy Insurance Services Ltd
Salinas Midco Limited
Vmans Limited
The Unbeatable Group Limited
BDH Group Limited
Salinas Topco Limited
Caritas Diocese of Salford
Catholic Truth Society (Diocese of Salford)
Blueprint Trust
The Salford Diocesan Trust
Nest Corporation
Vice Chair
N A Fuller
Vice Chair and Interim Senior Independent
Director from 23 June 2025
Non-Executive Director 17.12.1966 01.12.2020 Cynergy Bank plc
Interim Chief Executive Officer
*A M Barnes
Interim Chief Executive from 23 June 2025
Interim Chief Executive
Officer
10.11.1968 01.02.2019 Globaldata plc
Stratos Markets Ltd (trading as FXCM UK
and Tradu)
Deputy Chief Executive Officer
*A J Greenwood
Deputy Chief Executive Officer from
1 May 2021
Deputy Chief Executive
Officer
11.12.1969 08.01.2015
Leeds Teaching Hospitals NHS Trust
Shared Ownership Code Limited
Directors
F A Buckley Non-Executive Director 12.05.1980 01.04.2023 Aurora UK Alpha plc
Caledonia Investments plc
Apollo Syndicate Management Ltd
***A P Conroy Chief Financial Officer 11.12.1975 06.01.2020 None
**D Fisher Non-Executive Director 02.08.1958 27.03.2012 None
*R J Howse Chief Operating Officer 03.12.1970 01.05.2021 The Grammar School at Leeds
P E Rowland Non-Executive Director 22.12.1961 01.05.2023 Saga Services Ltd
A Tadayon Non-Executive Director 10.06.1966 22.10.2021 Tadayon Consulting Ltd
*Executive directors.
**D Fisher is a non independent non-executive director
*** A P Conroy was previously an executive director and his last day
in post was 31 December 2025.
The Society’s executive director service contracts can be
terminated on twelve months’ notice by either the Society or the
director. Documents may be served on the above-named directors
at: Addleshaw Goddard LLP, One St Peter’s Square, Manchester
M2 3DE. More information on director appointments can be found
within the 2025 Pillar 3 document which is available on the society’s
website at leedsbuildingsociety.co.uk/your-society/financial-
results.
Year ended 31 December 2025
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220
Country by Country Reporting
Year ended 31 December 2025
Leeds Building Society provides disclosures below in accordance with the Capital Requirements (Country by Country Reporting)
Regulations 2013. The information below has been audited in accordance with the standards required by Directive 2006/43/EC.
Nature and location of the Group’s activities
The Society is the UK’s fifth largest building society with 51 branches (2024: 51), total assets of £32.0 billion (2024: £31.6 billion) and
1,011,000 members (2024: 991,000). The Society’s mortgage book primarily relates to properties in the UK, with a small proportion of
historic balances, but no new lending, in Spain and Gibraltar.
The Society’s subsidiary undertakings, their country of incorporation and their principal activities are detailed in Note 16. The Society
and its subsidiaries are all tax resident in the United Kingdom.
The Society has no physical presence or regulatory branch in Spain, with all mortgages administered from the UK. The results of the
Society’s activity in Spain are included in the results of the Society and subject to taxation in the UK.
The Society has no permanent establishment in Gibraltar, with all mortgages administered from the UK. The results of the Society’s
activity in Gibraltar are included in the results of the Society and subject to taxation in the UK.
Results by country
The information for the year ended 31 December 2025 presented below is at a full Group level of consolidation, which has been prepared
under IFRS.
Total income is defined as net interest income plus fees and commissions receivable (net of fees and commissions payable), fair value
gains less losses from financial instruments, together with all other components of operating income. Total income, profit before tax and
corporation tax charge are as disclosed in the Group’s Income Statement.
Average monthly number of employees is shown on a full time equivalent (FTE) basis. Colleague costs comprise wages and salaries,
social security costs and pension costs as disclosed in Note 8.
Corporation tax paid represents the total payments as reported in the Statement of Cash Flows on page 164.
2025 UK* Spain Total *UK includes Gibraltar
Total income (£M) 411.8 0.7 412.5 0.3
Profit before tax (£M) 196.9 1.7 198.6 0.3
Total assets (£M) 31,940.3 22.1 31,962.4 3.2
Total assets less liabilities (£M) 1,821.9 22.1 1,844.0 3.2
Average number of FTEs 1,742.0 – 1,742.0 –
Staff costs (£M) 114.2 – 114.2 –
Corporation tax charge (£M) 53.1 – 53.1 –
Current tax charge 55.1 – 55.1 –
Deferred tax credit (2.0) – (2.0) –
Corporation tax paid (£M) 53.6 – 53.6 –
2024 UK* Spain Total *UK includes Gibraltar
Total income (£M)
353.9 1.7 355.6 0.4
Profit before tax (£M)
136.6 0.9 137.5 0.4
Total assets (£M)
31,586.6 26.0 31,612.6 4.6
Total assets less liabilities (£M)
1,694.4 26.0 1,720.4 4.6
Average number of FTEs
1,712 – 1,712 –
Staff costs (£M)
106.1 – 106.1 –
Corporation tax charge (£M)
37.6 – 37.6 –
Current tax charge 38.6 – 38.6 –
Deferred tax charge (1.0) – (1.0) –
Corporation tax paid (£M)
28.2 – 28.2 –
Return on assets
The return on assets, calculated as profit before tax divided by mean total assets, was 0.62% (2024: 0.50%) for the year ended
31 December 2025.
Public subsidies received
The Group received no public subsidies in the year ended 31 December 2025.
Leeds Building Society | Annual Report and Accounts 2025 221
Glossary of Terms
Alternative Performance Measures
The table below sets out the Alternative Performance Measures (APM) used within the Annual Report and Accounts. These are financial
measures of the Group’s performance or position which are not defined or specified under IFRS but which are useful in understanding
how the Group has performed. The measures used are common practice across the financial services industry and facilitate
comparisons with other institutions.
The table explains how the APM is calculated and provides a reconciliation to the closest equivalent statutory measure, as defined or
specified under IFRS.
Measure Definition and purpose How the measure is calculated
Reconciliation to statutory
measure under IFRS
Cost to income ratio A measure of the efficiency of the
Group in generating its income by
showing the level of costs incurred
relative to the level of income
generated. This measure is used by
the Group to monitor and manage its
cost base.
Management expenses
(administrative expenses plus
depreciation and amortisation)
divided by total income, as recorded
in the Income Statement.
No equivalent statutory measure but
all elements of the calculation are
separately disclosed in the Income
Statement.
Cost to mean asset ratio A measure of the efficiency of the
Group in maintaining its asset base,
showing the level of costs incurred
relative to the size of the Group’s
balance sheet. This measure is used
by the Group to monitor and manage
its cost base.
Management expenses
(administrative expenses plus
depreciation and amortisation) for
the period divided by the mean of
the opening and closing total assets
for the period, as recorded in the
Statement of Financial Position.
No equivalent statutory measure,
but all elements of the calculation are
separately disclosed in the Income
Statement or Statement of Financial
Position.
Net interest margin Net interest income (the difference
between interest receivable and
interest payable) is the primary
source of income for the Group.
This is a key measure for monitoring
and managing the level of income
generated by the Group’s balance
sheet.
Net interest receivable, as recorded
in the Income Statement, divided
by the mean of the opening and
closing total assets for the period,
as recorded in the Statement of
Financial Position.
No equivalent statutory measure,
but all elements of the calculation are
separately disclosed in the Income
Statement or Statement of Financial
Position.
Net residential lending The increase in the size of the
Group’s residential mortgage book
during the year. Used by the Group to
monitor and manage the growth of
the business.
Gross residential lending less
redemptions, contractual
repayments and other capital
repayments.
This is approximately equal to the
difference between the opening
and closing balance of loans and
advances fully secured on residential
property in the Statement of
Financial Position, adjusted for
movements in impairment loss
provisions and other accounting
adjustments.
New (gross) residential lending The total amount of new loans and
advances to customers secured on
residential property advanced by the
Group during the year.
No calculation required. No equivalent statutory measure.
Underlying profit before tax Profit before tax with one-off items
added back, to allow comparison to
prior periods.
Profit before tax add back one-off
items.
Profit before tax add back one-off
items.
Year ended 31 December 2025
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Governance Financial Statements Other Information
222
Glossary
Set out below are the definitions of terms used within the Annual Report and Accounts to assist the reader and to facilitate comparison
with other financial institutions.
Arrears
A mortgage member is in arrears when they are behind in fulfilling
their payment obligations with the result that an outstanding loan
commitment is overdue. Such a member can also be said to be in a
state of delinquency.
Basel 3
Basel 3 is the third Capital Adequacy Framework issued by the
Basel Committee on Banking Supervision, which defines the capital
and liquidity rules for banks and building societies. The framework
has been embedded into UK law through the European Capital
Requirements Directive V (CRD V).
Basis point
One hundredth of one per cent (0.01%), so 100 basis points is
1%. Used in quoting movements in interest rates or yields on
securities.
Commercial loans
Loans secured on commercial property.
Common Equity Tier 1 (CET1) ratio
This is a regulatory ratio, calculated as the total of CET1 capital
divided by Risk Weighted Assets (RWAs). CET1 capital is the
highest quality form of capital and comprises general reserves
from retained profits, less the book values of any pension surplus,
goodwill and intangible assets and other regulatory adjustments as
defined under Capital Requirements Directive (CRD) V.
Contractual maturity
The final payment date of a loan or other financial instrument, at
which point all the remaining outstanding principal and interest is
due to be repaid.
Covered bonds
Debt securities backed by a portfolio of mortgages that is
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
This is the risk that a member or counterparty is unable to pay the
interest or to repay the capital on a loan when required.
Debt securities in issue
Transferable certificates of indebtedness of the Group to the
bearer of the certificates. These are liabilities of the Group and
include certificates of deposit.
Default
An account is classified as in default for impairment provisioning
Default occurs when a borrower is deemed unlikely to repay their
loan or other amount due to the Group.
Derivative financial instruments
A derivative financial instrument is a type of financial instrument
(or an agreement between two parties) whose value is based
on the underlying asset, index or reference rate to which it is
linked. The Group uses derivative financial instruments to hedge
its exposures to market risks, such as interest rate and foreign
currency risk.
Effective interest rate method (EIR)
The method used to measure the carrying value of a financial asset
or a liability and to allocate associated interest income or expense
to produce a level yield over the relevant period.
Expected credit loss (ECL)
A calculation to estimate potential losses on current exposures
due to potential defaults; the term is used in relation to
impairment loss provisioning under IFRS 9 and is derived from the
multiplication of the PD, LGD and EAD.
Exposure at default (EAD)
An estimate of the maximum loss that an entity might suffer if a
borrower or other counterparty fails to meet their obligations at
default.
Fair value
Fair value is the amount for which an asset could be exchanged,
or a liability settled, between willing parties in an arm’s length
transaction.
Financial Services Compensation Scheme (FSCS)
The UK’s compensation fund of last resort for members
of authorised financial services firms. The FSCS may pay
compensation to members if a firm is unable, or likely to be unable,
to pay claims against it, usually because it has stopped trading or
has been declared in default. The FSCS is funded by the financial
services industry. Every firm authorised by the FCA and PRA is
obliged to pay an annual levy, which goes towards its running costs
and compensation payments.
Forbearance strategies
Strategies to assist borrowers in financial difficulty, such as
agreeing a temporary reduction in payments, extending loan
terms and temporarily converting loans to an interest only basis.
Forbearance strategies aim to avoid repossession where it is in the
interest of the borrower.
Free capital
The aggregate of gross capital less intangible assets and property,
plant and equipment.
Funding limit
Measures the proportion of shares and borrowings (excluding the
fair value adjustment for hedged risk) not in the form of shares held
by individuals.
Glossary of Terms continued
Year ended 31 December 2025
Leeds Building Society | Annual Report and Accounts 2025 223
General reserves
The accumulation of the Group’s profit after tax since inception.
It is the Group’s main component of Common Equity Tier 1 capital
which is a measure of strength and stability.
Gross capital
The aggregate of the general reserve, cash flow hedge reserve,
fair value reserve, other reserve, revaluation reserve, subordinated
liabilities and subscribed capital.
Impaired loans
Loans where there is objective evidence that an impairment event
has occurred, meaning that the Group does not expect to collect
all the contractual cash flows or expect to collect them when they
are contractually due.
Internal Capital Adequacy Assessment Process (ICAAP)
The Group’s own assessment, as part of CRD V requirements, of
the levels of capital that it needs to hold in respect of regulatory
capital requirements for risks it faces under a business as usual
scenario and a number of stressed scenarios.
Internal Liquidity Adequacy Assessment Process (ILAAP)
The Group’s own internal assessment of the level of liquidity that
it needs to hold in respect of regulatory liquidity requirements in
relation to a number of stressed scenarios.
Internal Ratings Based (IRB) Approach
An approach for measuring exposure to credit risk which is
more sophisticated than the Standardised Approach, where an
entity can calculate its own risk weights for certain assets. IRB
approaches can only be used with the permission of the Prudential
Regulation Authority.
International Swaps and Derivatives Association (ISDA)
master agreement
A standardised contract developed by ISDA and used to enter into
bilateral derivative transactions granting legal rights of offsetting
for derivative transactions with the same counterparty.
Investment securities/debt securities
Assets held by the Group representing certificates of indebtedness
of credit institutions, public bodies or other undertakings excluding
those issued by central banks.
Lending limit
Measures the proportion of business assets not in the form of
loans fully secured on residential property.
Leverage ratio
A regulatory ratio which measures the value of the Society’s Tier 1
capital as a proportion of total relevant non-risk weighted assets.
The CRR leverage ratio is defined by the EU’s Capital Requirements
Regulation, while the UK leverage ratio modifies this ratio to
exclude central bank reserves. The UK regime does not apply to the
Society as the applicable threshold set by the regulator (greater
than £50 billion of retail deposits increasing to greater than £75bn
from 1 January 2026).
Liquid assets
Assets which are either in the form of cash or are readily
convertible into cash. Total of cash in hand and balances with the
Bank of England, loans and advances to credit institutions, and
investment securities.
Liquidity Coverage Ratio (LCR)
A regulatory standard ratio implemented by the Basel 3 Reforms.
It is calculated as the stock of high quality liquid assets divided by
the total net stressed cash outflows over the next 30 calendar days
expressed as a percentage.
Liquidity risk
The risk that the Group is not able to meet its financial obligations
as they fall due, or will only be able to do so at an excessive cost.
This risk arises from timing mismatches of cash inflows and
outflows.
Loan to income ratio (LTI)
A ratio which expresses the amount of a mortgage as a percentage
of the borrower’s income, used to assess affordability and
determine borrowing limits.
Loan to value ratio (LTV)
A ratio which expresses the amount of a mortgage as a percentage
of the value of the property. The Group calculates residential
mortgage LTV on an indexed basis (the value of the property is
updated on a quarterly basis to reflect changes in the house price
index).
Loans past due/past due loans
Loans are past due when a counterparty has failed to make a
payment when contractually due.
Loss given default (LGD)
A parameter used in relation to credit risk exposures modelled
under IFRS 9; an estimate of the difference between the EAD and
the net amount recovered, expressed as a percentage of the EAD.
Management expenses
Management expenses represent the aggregate of administrative
expenses, depreciation and amortisation as recorded in the
Income Statement.
Market risk
The risk that movements in market risk factors, including foreign
exchange rates, interest rates and member driven factors, will
create losses or decrease portfolio values.
Mean total assets
Represents the amount produced by halving the aggregate of total
assets at the beginning and end of the financial year.
Member
A person who has a share investment or a mortgage loan with the
Society which satisfies the Society’s rules for membership.
Minimum Requirements for Own Funds
and Eligible Liabilities (MREL)
The total loss absorbing capital a financial institution must hold to
facilitate the recapitalisation of the institution in resolution.
Net interest income
The difference between interest receivable and similar income
and interest payable and similar charges. This is the same as net
interest receivable in the Income Statement.
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Net Promoter Score®
The Net Promoter Score® (NPS) is a measure of satisfaction and
loyalty to the Group based on survey responses. It measures the
proportion of promoters (positive responses) less the proportion
of detractors (negative responses). We use the NPS methodology
to measure satisfaction among our broker partners.
Net Stable Funding Ratio (NSFR)
A regulatory standard ratio implemented by the Basel 3 reforms
which is the total amount of stable funding divided by the total
amount of required stable funding, expressed as a percentage.
The NSFR is currently an observable measure which became a
minimum standard in 2022 with the implementation of CRR2.
Notional principal amount
The notional principal amount indicates the amount on which cash
flows on derivative financial instruments are calculated and does
not represent amounts at risk.
Operational risk
The risk of loss arising from inadequate or failed internal processes,
people and systems or from external events.
Probability of default (PD)
An estimate of the likelihood a borrower will not be able to meet
their debt obligations as they fall due.
Permanent interest bearing shares (PIBS)
Unsecured deferred shares that are a form of capital. PIBS rank
behind the claims of all subordinated debt holders, depositors,
payables and investing members of the Group.
Replacement cost
The amount the Group would need to pay to replace derivative
contracts that are favourable to the Group if the counterparty
with whom the contract was held were unable to honour their
obligation.
Repurchase agreements (Repo)
A repurchase agreement allows a borrower to use a financial
security as collateral for a cash loan at a fixed rate of interest. In
a repo, the borrower agrees to sell a commitment to repurchase
the asset at a specified price on a given future date. For the party
selling the security and agreeing to repurchase the asset in the
future, it is a repo, for the party purchasing the security and
agreeing to resell, it is a reverse repo.
Residential loans
Loans which are secured against residential property.
Residential mortgage backed securities (RMBS)
A category of asset backed security that represents interests in
a group of residential mortgages. Investors in these securities
have the right to cash received from future mortgage payments
(interest/principal).
Risk appetite
The articulation of the level of risk that the Group is willing to take
(or not take) in order to safeguard the interests of the Society’s
members while achieving business objectives.
Risk-weighted assets (RWAs)
A regulatory measure which adjusts the value of assets as recorded
in the Statement of Financial Position to reflect the relative level
of risk. This measure is used in calculating regulatory capital
requirements.
Securitisation
The process by which a group of assets (usually loans) is
aggregated into a pool which is used to back the issuance of new
securities. A company transfers assets to a special purpose entity
which issues securities backed by those assets. The Society has
established securitisation structures (using residential mortgages)
as part of its funding activities.
Shares
Money deposited by a person in a retail savings account with the
Group. Such funds are recorded as liabilities for the Group.
Shares and borrowings
The total of shares, amounts owed to credit institutions, amounts
owed to other customers and debt securities in issue.
SONIA
The Sterling Over Night Index Average rate. The risk free rate
calculated as the weighted average overnight sterling deposit rate
for each business day.
Subordinated liabilities
Debt securities issued by the Group which have certain terms
and conditions attached relating to the payment of interest and
principal such that they are ranked behind the claims of all other
creditors and members of the Society, other than subscribed
capital.
Subscribed capital
Debt securities issued by the Group which have certain terms
and conditions attached relating to the payment of interest and
principal such that they are treated as capital.
Tier 1 capital
A measure of financial strength as defined by the PRA. Tier 1
capital is divided into Common Equity Tier 1 and other Tier 1
capital. Common Equity Tier 1 capital is defined above, while other
Tier 1 capital includes qualifying capital instruments such as PIBS.
Tier 2 capital
A further component of regulatory and financial capital as defined
by CRD V.
Wholesale funding
The total of amounts owed to credit institutions, amounts owed to
other customers and debt securities in issue.
Glossary of Terms continued
Year ended 31 December 2025