Regulatory announcement (RNS) · Annual Financial Report

Aldermore Group full year results for the year ended 30 June 2026

Aldermore Group plc · published 10 September 2026 06:54 UTC · Aldermore Bank credit rating and record

Aldermore Group PLC

Report and Accounts

for the year ended 30 June 2026

Contents

Strategic Report ......................................................................

Business Model ..............................................................................

Strategic Review ...........................................................................

Business Review ............................................................................

Key Performance Indicators .....................................................

Financial Review ............................................................................

Environmental, social and governance ...............................

Climate related financial disclosures ...................................

Energy and carbon reporting ..................................................

Section 172 statement ..................................................................

Corporate governance .........................................................

Corporate governance ..............................................................

The Wates corporate governance principles ....................

Audit Committee report .............................................................

Risk Committee report ................................................................

Remuneration Committee report ...........................................

Directors’ report ............................................................................

Risk management ...................................................................

The Group’s approach to risk ...................................................

Risk management ........................................................................

Group Risk Management Framework ..................................

Risk governance and oversight ...............................................

Stress testing ..................................................................................

Principal Risks .................................................................................

Emerging Risks ...............................................................................

Credit risk .........................................................................................

Treasury risk ....................................................................................

Financial statements .............................................................

105

Statement of Directors’ responsibilities ...............................

106

The consolidated financial statements ...............................

116

Notes to the consolidated financial statements ..............

120

Notes to the Company financial statements ....................

189

The Company financial statements ......................................

190

Additional information .........................................................

196

Country-by-country report .......................................................

197

Alternative performance measures ......................................

198

Glossary and definition of key terms ....................................

201

Company Information ................................................................

203

FY26 at a glance

FY26 has been a year of significant progress, albeit one overshadowed by the outcome of the FCA's motor finance review and its wider

implications for the Group. Through this period of change, we have remained focused on our customers, delivered against our strategic

priorities and demonstrated the strength and resilience of our business.

Consistent Financial Delivery

Strengthened Risk

Management Framework

Award Winning Franchise

Best Specialist Lender

Your Mortgage Awards 2025/26

£18.8bn ( FY25: £16.6bn)

Net loans to customers - with growth

across all three lending divisions

Rated Excellent by Trustpilot

Aldermore 4.4/5

MotoNovo 4.6/5

Optimisation of capital stack, with

dividend of £125m paid and successful

£300m Tier 2 issuance

Successful extension and upsize of

the motor warehouse facility

Embedded new risk management

framework across the business

Successful acquisition of assets and

liabilities from Octane Capital

£51.2m (FY25: £193.5m)

Statutory profit before tax - impacted by

the increase in motor finance provision

£238.9m (FY25: £254.1m)

Underlying profit before tax - reflecting

the resilience of our underlying business

Best variable rate ISA provider

2026 Moneynet Awards

Best Fixed Rate Business Savings Provider

2026 Moneynet Awards

13.6% ( FY25: 14.9%)

Common Equity Tier 1 ratio - significantly

in excess of regulatory minimum

Strategic Report

Business Model

What we do

Founded in 2009 to serve customers underserved by mainstream

providers, we are a specialist lender operating across three core

divisions funded by our savings franchise.

Property Finance

We provide specialist mortgages to

landlords and homebuyers, with lending

distributed primarily through mortgage

intermediaries and supported by direct

customer channels.

Business Finance

We provide specialist lending solutions

across asset finance, invoice finance

and commercial real estate, delivered

through both intermediary and direct

relationship channels.

Motor Finance

We provide used vehicle finance to

consumer and business customers,

alongside dealer funding solutions,

through a broad network of motor

dealer partners and brokers.

Savings

We provide savings products to

personal, business, and corporate

customers through direct and third-

party channels, supported by specialist

servicing partnerships.

Further details can be found on pages 10 to 14.

How we do it

During the year, we refreshed our strategy to ensure we remain

well positioned to compete, grow and deliver sustainable returns.

Our strategy is focused on five priorities:

• Grow our specialist lending businesses – Expand in attractive

specialist segments where we have proven expertise and

strong risk-adjusted return opportunities.

• Deepen customer and partner relationships – Strengthen our

presence across established intermediary, broker, dealer and

partner channels to broaden reach and support growth.

• Build a leading savings franchise – Grow and diversify our

funding base through competitive propositions and excellent

customer service.

• Improve productivity and scalability – Simplify processes and

leverage technology, data and automation to enhance

efficiency and support future growth.

• Deliver sustainable returns – Execute with discipline,

balancing growth, risk and capital management to create

long-term shareholder value.

What enables our success

Delivering for our customers is what drives us. Our success is

supported by a set of core strengths that differentiate us in the

market, enable the delivery of our strategy and ensure we are

delivering consistent customer outcomes.

• People and culture – Experienced colleagues with specialist

lending and savings expertise.

• Funding and capital – A resilient funding base supported by

customer deposits and prudent capital management.

• Distribution network – Established intermediary, broker, dealer

and partner relationships.

• Technology and data - Modern platforms, data capabilities

and automation that support customer service and

operational efficiency.

• Strong risk management and governance framework –

Disciplined risk management, governance and controls.

How we create value and generate returns

We create value by attracting customer deposits, maintaining a

strong capital position and deploying funds into specialist

lending markets where we have deep expertise. Through

disciplined underwriting, effective risk management and strong

customer relationships.

Our income is primarily derived from net interest income,

generated through the spread between lending returns and

funding costs. Fee income from selected products and services

provides additional revenue, while a focus on operational

efficiency, prudent risk management and capital discipline helps

deliver long-term value.

How we deliver value to stakeholders

Further details of our key stakeholder groups and our

engagement approach are set out in the Section 172 Statement

on page 42. Our principal stakeholders are:

• Customers – we put them at the centre of decision-making.

• Colleagues – we regard them as the foundation to success

with a clear value exchange, offering great benefits, working

environment and development opportunities whilst bringing

clarity on the excellence expected in return.

• Distribution Partners: Intermediaries - we provide products

and services to a number of intermediaries and brokers,

actively working with them to understand their needs and the

needs of their end customers.

• Distribution Partners: Motor Dealers – we deliver products

and services to support their business and ensure dealer

finance remains vibrant and sustainable in an evolving

market.

• Society – we utilise our key strengths and capabilities to make

a meaningful difference to society.

• Investors – we are committed to delivering sustainable,

profitable growth and maintaining a strong and resilient

financial position across our four product lines over the long

term.

• Regulators – we maintain regular, open, and transparent

dialogue, ensuring alignment on evolving regulatory priorities.

• Shareholder – As a wholly owned subsidiary of FirstRand we

support the delivery of their strategic objectives by generating

long-term value.

Strategic Review

FY26 was a year of important strategic progress for the Group. Against a backdrop of continued macroeconomic and

geopolitical uncertainty, competitive pressures and a changing regulatory environment, we delivered underlying profit

before tax of £238.9 million (FY25: £254.1 million)1, reflecting continued business momentum, disciplined execution and resilient

customer demand across our specialist lending and savings franchises.

Statutory performance was significantly impacted by the

increase in the provision relating to historic motor finance

commission arrangements, resulting in a statutory profit before

tax of £51.2 million (FY25: £193.5 million). Despite this, the Group

continued to deliver resilient growth, supported by the strength

of our customer, intermediary and partner relationships.

During the year, lending balances increased to £18.8 billion (FY25:

£16.6 billion) and customer deposits grew to £19.1 billion (FY25: £17.0

billion), whilst we maintained a prudent approach to

underwriting, capital and liquidity management. At the same

time, we continued to invest in technology, proposition

development and operational capabilities to strengthen our

position in the specialist markets we serve and improve customer

outcomes.

Alongside delivering growth, we refreshed our strategy, began

the work required to deliver the motor finance remediation

scheme and began preparations for a potential change in

ownership following FirstRand's announcement that it was

exploring a potential sale of the Group.

Throughout the year, we remained focused on our purpose of

supporting customers underserved by the mainstream banking

sector, positioning us well for the future.

FCA motor finance commission review

A significant development during the year was the outcome of

the FCA's review of historic motor finance commission

arrangements, which resulted in a material increase in the

associated provision. While this was a disappointing outcome

and a conclusion with which we don’t ultimately agree, we

respect the regulator's findings and, in the interests of providing

certainty for customers and other stakeholders and enabling the

industry to move forward, remain committed to supporting an

orderly and efficient resolution process. The proposed industry

redress scheme remains paused pending legal proceedings. Our

priority is to ensure that any future remediation programme is

delivered in a manner that maintains trust, operational resilience

and a continued focus on customer outcomes.

Following these developments, FirstRand announced its intention

to explore a potential sale of the Group. Management and the

Board remain committed to supporting FirstRand through a

smooth and orderly process while ensuring we continue to

operate effectively, support customers and deliver value for both

existing and potential future shareholders.

1 Underlying profit before tax is set out on page 17.

Leadership changes

The year saw important leadership changes with Raj Makanjee

joining as Chief Executive Officer in September 2025. Raj

succeeded Steven Cooper bringing extensive banking, digital

and customer leadership experience most recently from

FirstRand. Louise Britnell was appointed Chief Financial Officer,

succeeding Ralph Coates, and brings significant financial

services and transformation expertise, including through her

previous role as Chief Financial Officer of The Co-operative Bank.

Richard Banks and Desmond Crowley stepped down as Non-

Executive Directors during the year, while Adrian Sainsbury joined

the Board alongside Paul Lawrence, who was appointed as

Senior Independent Director.

Strategic refresh

More broadly, we have developed an updated strategy for the

next stage of our journey, reinforcing our ambition to remain the

specialist lender of choice. The strategy builds on our established

strengths while maintaining a focus on entrepreneurial thinking,

innovation and disciplined growth in underserved markets where

we can create meaningful value for customers.

Driving efficiency and operating leverage

A central focus of the year has been improving efficiency and

scalability across the business. As part of this, we have

accelerated investment in automation and artificial intelligence

to enhance both customer experience and internal productivity.

These initiatives are enabling faster decision-making, more

efficient operations and improved risk management.

Alongside these technology investments, we have advanced our

operating model through the strategic expansion of offshore

capabilities. Having identified opportunities to improve

efficiency, enhance service levels and provide support outside of

UK working hours, we entered into a partnership with an offshore

provider at the start of the year. This partnership is establishing

dedicated capabilities across our Business Finance, Property and

Motor divisions, creating a more scalable and resilient operating

model.

We are now embedding these capabilities into our day-to-day

operations and expect them to deliver both operational

efficiencies and a sustainable reduction in our cost base.

Together with our investments in technology, these initiatives are

expected to contribute to a meaningful reduction in our

cost:income ratio over time, while maintaining the high standards

of service our customers expect.

Strengthened risk management framework

Following the launch of an upgraded Group Risk Management

Framework in FY25, we continued to mature and embed our

approach to risk management during the year. This included the

delivery of a new Risk and Control Self-Assessment process to

provide a comprehensive business-wide view of risk and

controls, completion of the annual risk assurance plan under the

new assurance methodology and delivery of a refreshed set of

risk appetite statements and metrics to enable the continued

proactive management of risk exposure within appetite.

Effective partnering between our Risk team and first line business

functions is allowing the embedding of a mature risk culture,

supported by good risk awareness and judgement by

colleagues.

A particular focus during the year was on third party

management risk, enabling the proactive adoption of our risk

management practices within our outsourced and offshore

operations.

Tier 2 issuance

A key milestone during the year was the successful issuance of

£300 million of external Tier 2 capital. The overwhelming level of

investor demand, reflected in a heavily oversubscribed

transaction, highlights the confidence that capital markets place

in our business, strategic direction and financial performance.

This transaction further strengthens our capital base and

positions us well to support customers, invest in future

opportunities and deliver sustainable long-term growth.

Basel 3.1 reforms and implementation

We have continued to prepare for the implementation of Basel

3.1, which will take effect from 1 January 2027. Based on our

current assessment, the reforms are expected to increase risk-

weighted assets by around £0.5 billion and reduce our CET1 ratio

by approximately 0.6 percentage points, driven primarily by

changes to the treatment of SME lending and buy-to-let

exposures.

The impact on Pillar 1 capital requirements is expected to be

partially offset by lower Pillar 2 requirements, reducing our overall

capital requirement from 9.31% to 9.00%. With a CET1 ratio of 13.6%

at 30 June 2026 and an updated medium-term target range of

12.0%-13.0%, we remain well positioned to manage the transition

while continuing to support sustainable growth. The estimated

impact remains subject to final implementation.

Looking ahead

Looking ahead, we remain focused on supporting customers

whose financial needs require a more specialist approach, while

continuing to strengthen our business and prepare for a

potential ownership transition. Despite ongoing macroeconomic

uncertainty, we believe we are well positioned to deliver

sustainable growth through our specialist expertise, disciplined

approach to risk management and continued investment in our

customer propositions, technology and operational capabilities.

Across the Group, our strategic priorities are centred on

optimising portfolio mix, improving returns and driving greater

operational efficiency. We will continue to allocate capital

towards attractive lending and savings opportunities where we

see the strongest potential for sustainable, risk-adjusted growth,

while maintaining our prudent approach to underwriting, funding

and balance sheet management.

We also remain focused on transforming customer and

colleague experiences through digital innovation, automation

and platform modernisation. These investments will help us

improve service, increase scalability and create a more efficient

operating model, enabling us to respond more effectively to

evolving customer needs and market opportunities.

We enter FY2027 with strong foundations, clear strategic priorities

and confidence in our people, specialist franchises and resilient

business model. We remain committed to delivering positive

outcomes for our customers, colleagues, shareholders and wider

stakeholders as we continue to execute our strategy and create

long-term value. By delivering on our purpose to back more

people to go for it, in life and in business, we are strengthening

our franchise and positioning the Group for sustainable long-

term growth.

Business Review

We delivered a strong performance during the year, increasing lending and deposit balances and further strengthening our

specialist market positions. Through disciplined execution and continued investment in customer propositions, technology

and operations, we remain well positioned to deliver sustainable growth and strong customer outcomes.

Property Finance

We support professional property investors and portfolio

landlords through a comprehensive range of residential,

commercial and bridging finance solutions. Distributed through a

strong broker network, our proposition combines deep market

expertise, robust underwriting and flexible product offerings to

meet a broad spectrum of customer needs. Continued

investment in digital platforms and data capabilities supports

scalable and efficient processes across the full lending lifecycle.

The mortgage market continued to recover during the year as

falling interest rate pressures improved affordability and

supported increased activity. Growth in the specialist mortgage

market outpaced the wider market, reflecting a growing need for

lending solutions tailored to customers with more complex

circumstances. However, competition intensified as major banks

continued to expand into specialist lending, benefiting from

lower funding costs. At the same time, specialist lenders

strengthened their funding positions through new partnerships

and direct-to-consumer savings propositions, while investing in

modern origination platforms that reduced servicing times and

raised expectations among brokers and customers.

Against this backdrop, we delivered a strong performance. We

enhanced our residential mortgage proposition through

improvements to our affordability framework and a more

targeted approach to broker engagement, supporting increased

volumes and improved customer outcomes.

We also continued to optimise our credit risk strategy, selectively

expanding into higher-risk segments, including higher loan-to-

value lending, where risk-adjusted returns remained attractive

and borrower quality continued to meet our risk appetite.

Alongside strong organic growth, we completed the acquisition

of a portfolio of bridging finance loan assets and associated

capabilities from Octane Capital. Since its launch in 2017, Octane

Capital has established a strong track record in the bridging

finance market.

The transaction comprised a £465 million loan portfolio and was

funded from existing internal cash resources. It represents a

significant step in the execution of our strategy to expand our

specialist lending proposition through growth in attractive

adjacent markets. In addition to providing greater scale in

bridging finance, the acquisition enhances our capabilities in a

complementary specialist lending segment, supporting the

Group's long-term value creation objectives and strengthening

our ability to meet a broader range of customer funding needs.

Looking ahead, we expect demand for specialist residential

mortgages to continue outperforming the standard mortgage

market, driven by an increasing prevalence of affordability

challenges, adverse credit events and non-standard income

profiles. By contrast, the buy-to-let market is expected to remain

relatively subdued as landlords continue to navigate taxation

and regulatory pressures.

In response to these market dynamics, our strategic priorities are

focused on accelerating growth in higher-return segments,

including bridging finance and owner-occupied lending. We are

also investing in the transformation of broker and colleague

journeys, while delivering operational efficiencies through the

implementation of a new mortgage origination platform.

Business Finance

We provide a broad range of funding solutions to SMEs and

commercial customers, including asset finance, commercial real

estate lending, working capital and asset-based lending.

Through a combination of sector expertise, relationship-led

distribution and disciplined risk management, we support

businesses with the funding they need to grow, invest and

manage cash flow throughout the economic cycle.

The business lending markets remained challenging during the

year, with investment appetite constrained by continued fiscal

and geopolitical uncertainty. At the same time, competitive

pressures intensified as new entrants and specialist banks

expanded their presence across SME and commercial lending

markets, while major high street banks sought to increase market

share in these segments.

Despite these conditions, demand for working capital, invoice

finance and asset-backed lending remained resilient, reflecting

the structural funding gap that continues to exist for many UK

businesses. Cash flow management remained a key priority for

customers, with businesses continuing to experience working

capital pressures while maintaining a cautious approach to

investment and capital deployment.

Against this backdrop, we delivered a resilient performance,

maintaining strong positions in our core markets while selectively

expanding into more complex, higher-yielding adjacent sectors

that are expected to support improved returns over the long

term.

Within asset finance, we maintained our position as a top-ten

provider in a highly competitive market. This performance was

supported by continued enhancements to our proposition,

including the introduction of auto-decisioning for transactions

up to £250,000, improving speed and service levels for brokers

and customers. We also launched our Platinum Broker

proposition, providing our highest-value introducers with

enhanced service and direct access to senior leadership, further

strengthening key distribution relationships.

In commercial real estate ("CRE"), we repositioned our proposition

to better support specialist investors seeking to capitalise on

opportunities in the market. Through targeted partnerships and

tailored funding solutions, we delivered a significant

improvement in momentum, with the portfolio returning to

growth and increasing by approximately 5% year-on-year during

the second half of FY2026.

We also strengthened our working capital proposition through a

refresh of our asset-based lending offering and the introduction

of a revolving credit facility. These enhancements have improved

pipeline generation and position the business to deliver balance

sheet growth in the coming year.

Alongside the evolution of our customer propositions, we

continued to enhance our risk management capabilities through

the establishment of specialist teams and the strengthening of

our monitoring frameworks. We also progressed the

consolidation of back- and middle-office activities, creating a

more efficient operating model and supporting the delivery of

longer-term cost savings. Together, these actions leave the

Business Finance division well positioned to capture further

market share opportunities.

Looking ahead, we believe SME investment appetite is gradually

improving as interest rate expectations stabilise. However,

uncertainty, subdued demand and ongoing cost pressures mean

that operational efficiency and cost management remain key

priorities for many businesses, particularly those exposed to tax

changes and higher input costs. While confidence and borrowing

activity have recovered since the Autumn Budget, we continue to

see a differentiated market in which balance sheet strength

increasingly determines the ability to invest and pursue growth

opportunities. We expect asset-backed lending and invoice

finance to remain resilient, while market-based finance is likely to

face continued pressure from elevated refinancing costs,

particularly within higher-risk debt markets.

In response to these dynamics, our strategic priorities are

focused on maintaining momentum across asset finance and

commercial real estate while accelerating growth in higher-

return segments, including development finance. We will

continue to invest in automation and AI-enabled capabilities to

enhance service quality and speed of execution, helping

customers access funding more quickly. We also remain focused

on simplifying and streamlining our operating model to improve

efficiency and support sustainable, profitable growth.

Motor Finance

Through our MotoNovo business, we provide motor finance

solutions to customers across the UK through a nationwide

network of dealers and introducers. We are one of the UK's

leading motor finance providers, with approximately 9% market

share and a strong position in the used vehicle finance market.

With a strong position in the used vehicle market, our proposition

combines data-driven underwriting, market-leading technology

and deep intermediary relationships to deliver a fast and flexible

customer experience.

The UK motor finance market remained highly competitive

throughout the year. While vehicle financing volumes showed

signs of recovery, competition intensified across both new and

used vehicle segments. The market remains fragmented, with

banks, captive finance providers, specialist lenders, fintechs and

broker-led distributors all competing for market share. Larger

competitors continue to benefit from significant scale and

access to lower-cost funding, while ongoing regulatory

developments have added further complexity to the operating

environment.

Against this backdrop, we delivered a record performance,

achieving our highest-ever level of originations and further

strengthening our position as one of the UK's leading motor

finance providers.

Our performance was underpinned by continued investment in

credit decisioning and risk management capabilities.

Enhancements to automated underwriting and scorecard

models improved conversion rates, increased operational

efficiency and enabled faster decision-making for customers

and dealer partners. We also continued to optimise our product

mix, increasing penetration of personal contract purchase ("PCP")

lending through targeted criteria enhancements. This supported

higher average loan values and improved portfolio returns while

maintaining our disciplined approach to risk management.

In addition, we selectively expanded lending activity in higher-

margin customer segments where returns remained attractive

and portfolio performance remained within our risk appetite. This

measured approach enabled us to capture profitable growth

opportunities while maintaining strong asset quality.

Alongside these growth initiatives, we continued to strengthen

the foundations of the business through operational

improvements, technology investment and enhanced distribution

partnerships, ensuring we remain well positioned to compete

effectively in an evolving market.

Looking ahead, we expect the used vehicle market to remain

resilient, supported by stable consumer demand and improving

supply dynamics. Within this, the electric vehicle segment

represents a significant growth opportunity as increasing

volumes enter the used vehicle market, creating demand for

specialist lenders with the expertise and flexibility to support

customers through the transition. We also anticipate that

regulatory developments relating to historic motor finance

commission arrangements may contribute to further

consolidation across the sector, with some funders reassessing

their participation in the market.

In response to these market dynamics, our strategic priorities are

focused on simplifying and enhancing customer journeys

through continued investment in digital capabilities, including

the introduction of soft-search functionality and further

optimisation of automated decisioning processes. We will

continue to optimise front-book margins through disciplined

pricing and portfolio mix management, while increasing our

presence within the independent dealer channel, where most

used vehicle transactions occur.

We also see opportunities to diversify and strengthen our

revenue streams by exploring additional routes to market and

developing propositions that deepen customer relationships and

increase lifetime value. Alongside this, we remain focused on

improving operational efficiency through the continued

embedding of our offshore capability and organisational

redesign, creating greater speed, accountability and scalability

across the business.

We will also continue to enhance capital efficiency through the

delivery of our securitisation programme and the development of

an originate-to-distribute capability, enabling us to support

future growth while maintaining a disciplined approach to

balance sheet management.

As the industry continues to respond to the FCA's review of

historic motor finance commission arrangements, we remain

focused on supporting customers and dealer partners

throughout the process. While this remains an area of regulatory

focus, our broader strategic priorities and day-to-day operations

remain unchanged as we continue to execute our strategy and

deliver sustainable growth.

Savings

We provide a range of personal, business and corporate savings

products that support our funding strategy while delivering

competitive and straightforward savings solutions to our

customers. Our proposition is built on a combination of attractive

products, trusted service and digital capability, enabling us to

attract and retain deposits across a diverse customer base.

The UK savings market remained resilient during the year,

supported by strong household saving levels and continued

demand for cash savings products. While average savings rates

declined as interest rate expectations moderated, competition

for deposits remained intense. The market continues to be

characterised by strong competition from major high street

banks, challenger banks, building societies and specialist savings

providers, with scale, digital distribution and pricing discipline

remaining key competitive advantages.

Against this backdrop, we delivered record deposit inflows by

continuing to focus on customer segments where our specialist

proposition differentiates us. During the year, we expanded our

product range with the launch of new notice accounts for

business savings customers and introduced easy access

products for corporate clients and deposit aggregators, a

rapidly growing segment of the market. These enhancements

broadened our addressable market, strengthened our funding

proposition and contributed to strong balance growth during the

year.

Alongside product innovation, we continued to invest in our

technology capabilities. During the year, we completed the first

phase of the implementation of our new savings platform,

representing a significant milestone in the modernisation of our

savings infrastructure. The new platform provides a more

scalable and flexible foundation for future growth, improving

operational resilience and enabling the gradual

decommissioning of legacy systems.

Over time, the platform will support faster product development

and deployment, improve operational efficiency and enable

enhanced customer experiences across personal, business and

corporate savings. It will also support the expansion of our

proposition into new product areas and customer segments,

particularly within the underserved SME market.

Looking ahead, we expect growth in the savings market to

moderate as interest rates continue to normalise and household

budgets remain under pressure. However, uncertainty in the

economic environment and the continued importance of savings

as a source of financial resilience are expected to support

ongoing demand for cash savings products. Competition for

deposits is likely to remain strong, requiring providers to balance

pricing discipline with customer retention and acquisition

objectives. Potential changes to the ISA landscape may further

influence customer savings behaviours and allocation decisions.

In response to these market dynamics, our strategic priorities are

focused on further diversifying our product offering, including

expanding our business savings proposition and broadening our

presence in attractive customer segments. We will continue to

invest in the delivery of our new savings platform to improve

efficiency, enhance customer journeys and support future

product innovation. We also see continued growth in digital

savings marketplaces and intermediary platforms, reflecting

customers' increasing preference for convenient access to a

broad range of savings products. Through selected distribution

partnerships, we will continue to extend the reach of our savings

proposition while maintaining a disciplined approach to pricing

and funding.

We also remain focused on further digitising the customer

experience through enhanced online and mobile capabilities,

enabling a simpler and more efficient onboarding journey while

increasing our ability to attract and serve digitally engaged

customers. Together, these initiatives will strengthen our funding

franchise and support sustainable growth in balances over the

medium term.

Key Performance Indicators

2026 Performance: Return on equity reduced

during the year, primarily reflecting the effect of

motor finance remediation provisions and other

non-recurring costs. The Group remains focused

on delivering sustainable shareholder returns

through profitable growth, prudent capital

allocation and improved operating leverage.

Net interest margin (%)*

3.78%

3.46%

2025

2026

Return on equity (%)*

7.7%

1.9%

2025

2026

Cost:income ratio (%)*

65.1%

84.2%

2025

2026

Cost of risk (bps)*

2025

2026

2026 Performance: Underlying PBT reflects a

resilient performance despite ongoing

macroeconomic uncertainty and highly

competitive market conditions. Growth in

lending and deposits, disciplined cost

management and a focus on portfolio quality

supported profitability during the year.

2026 Performance: NIM reduced by 32bps

compared with FY2025, reflecting the combined

impact of deposit repricing, competitive market

conditions and portfolio mix effects. The Group

continued to actively manage margins through

disciplined pricing and portfolio optimisation while

maintaining strong customer propositions.

2026 Performance: Cost of risk increased by

16bps during the year, primarily reflecting

updated forward-looking macroeconomic

assumptions, including heightened

geopolitical uncertainty during the second

half of the year.

2026 Performance: The cost:income ratio was

impacted by one-off items, including

restructuring and strategic change costs. We

remain focused on improving operating leverage

through business growth, process simplification,

automation and ongoing transformation

initiatives.

Statutory PBT (£m)

193.5

51.2

2025

2026

2026 Performance: Statutory PBT was significantly

impacted by the increase in provisions relating to

historic motor finance commission arrangements,

together with costs associated with a potential sale

of the Group and restructuring activities

undertaken during the year.

Underlying PBT (£m)*

254.1

238.9

2025

2026

*Denotes an alternative performance measure, for definitions and a reconciliation to the statutory financials can be found on pages 197 to 199

Net loans (£bn)

16.6

18.8

2025

2026

CET1 Ratio (%)

14.9%

13.6%

2025

2026

Employee engagement

score

2025

2026

Senior leadership positions

filled by Women (%)

41%

44%

2025

2026

2026 Performance: Employee engagement

remained strong, reflecting continued focus on

colleague wellbeing, development and culture,

although down slightly in part due to changes

being made around the organisation. We believe

engaged colleagues are critical to delivering

sustainable performance and positive customer

outcomes.

2026 Performance: Trustpilot ratings

remained strong, reflecting our focus on

delivering positive customer outcomes and

high levels of service. Customer feedback

continues to provide valuable insight to

support ongoing improvements across the

business.

2026 Performance: We continued to strengthen

gender diversity in senior leadership roles,

reflecting our commitment to building a more

balanced and inclusive organisation and

developing diverse talent across the Group.

2026 Performance: Net loans increased

during the year, reflecting strong customer

demand and continued growth across the

Group's specialist lending businesses. Growth

was achieved while maintaining disciplined

underwriting standards and a prudent

approach to risk management.

2026 Performance: The Group continued to

grow and strengthen its funding base across

Personal Savings and Corporate Deposits.

Deposit growth supported lending expansion

while maintaining a diversified and resilient

funding profile.

2026 Performance: The CET1 ratio remained

strong and comfortably above regulatory

requirements, reflecting the Group's prudent

approach to capital management. This

provides capacity to support future growth

while maintaining resilience through changing

market conditions.

Customer deposits (£bn)

17.0

19.1

2025

2026

Trustpilot rating (blended)

4.6

4.5

2025

2026

Financial Review

In FY26, the Group reported underlying profit before tax of £238.9 million (FY25: £254.1 million), demonstrating the resilience of

the business despite continued macroeconomic uncertainty, competitive market conditions and an evolving regulatory

landscape. Statutory profit before tax was £51.2 million (FY25: £193.5 million), significantly impacted by the FCA's motor finance

redress announcement in March 2026, together with costs associated with the sale process and strategic actions taken to

strengthen the business and position it for future growth.

During the year we have focused on delivering efficiency and

scalability across the business. As part of this we have invested

in automation and targeted deployment of artificial intelligence,

and have made progress in optimising our operating model,

including the expansion of offshore capabilities to support

operational processes and reduce costs. Operating costs

excluding the exceptional charges were down 3% year-on-year.

We continued to deliver disciplined balance sheet growth across

each of our three core lending businesses, supported by ongoing

investment in distribution capability, underwriting efficiency and

product development. We delivered significant organic growth in

the year in our Property Finance division, which was further

boosted by the Octane Capital acquisition – adding £0.5bn of

balances and expanding our product capabilities.

Asset growth has helped offset the impact of reduced margins

and was underpinned by strong deposit generation across both

personal savings and corporate deposits, reflecting strong ISA

demand and the launch and scaling of our corporate access

and notice propositions. Competition for deposits remains

intense, with significant market pricing pressures, but our strong

savings franchise enables us to maintain our predominantly

deposit-led funding model while supporting balance sheet

expansion.

We maintain a robust capital base and strong liquidity position,

with significant headroom to regulatory minimums, and closed

the year in a position of strength. Our strong and well-

established customer franchise provides an excellent foundation

on which to continue to execute our strategy and deliver

sustainable returns.

Summary income statement

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Increase/

(decrease)

Net interest income

604.1

597.9

1 %

Other operating income

0.3

2.5

(88) %

Operating income

604.4

600.4

1 %

Underlying costs

(321.2)

(330.4)

(3) %

Share of profit of associate

0.9

0.7

29 %

Impairment losses on

customer loans

(45.2)

(16.6)

172 %

Underlying profit before tax

238.9

254.1

(6) %

Exceptional costs

(187.7)

(60.6)

210 %

Statutory profit before tax

51.2

193.5

(74) %

Tax

(7.6)

(52.4)

(85) %

Profit after tax

43.6

141.1

(69) %

Income

Operating income increased by 1% to £604.4 million (FY25: £600.4

million) as lending growth was partially offset by a reduction in

net interest margin (“NIM”), down 32 basis points year-on-year to

3.46% (FY25: 3.78%). NIM was impacted by both lower asset yields,

as the Bank of England reduced base rates during the period,

and continued pressure on deposit pricing, particularly within

fixed-rate savings products where pricing remained elevated

relative to swap rates. Lower NIM was offset by growth in

average lending balances.

Operating costs

Underlying operating costs decreased by 3% to £321.2 million

(FY25: £330.4 million) reflecting our careful approach to cost

management. Underlying cost growth remained well controlled

despite ongoing inflationary pressures, with continued focus on

maintaining discipline while investing in strategic capability.

At a total level, operating costs increased to £508.9 million (FY25:

£391.0 million), primarily reflecting the impact of the FCA’s motor

finance redress announcement in March 2026. The associated

provision was subsequently raised to £231.8 million (FY25: £73.1

million), contributing to an incremental charge of £164.8 million

recognised in the year (FY25: £60.6 million).

We incurred £18.1 million in the period relating to restructuring

charges, as a result of our cost efficiency and location strategy

programmes, which are designed to improve operational

efficiency and deliver sustainable benefits in the years ahead.

We also incurred £4.8 million of transaction-related expenditure

in the financial year as a result of the decision by our

shareholder, FirstRand, to seek an orderly exit of their UK

consumer finance business, which is ongoing.

As at 30 June

2026

£m

As at 30 June

2025

£m

Increase/

(decrease)

People costs

(176.4)

(176.6)

– %

Non-people costs

(144.8)

(153.8)

(6) %

Underlying costs

(321.2)

(330.4)

(3) %

Historical motor finance charge

(164.8)

(60.6)

172 %

Restructuring charges

(18.1)

– %

Transaction related costs

(4.8)

– %

Exceptional costs

(187.7)

(60.6)

210 %

Total operating costs

(508.9)

(391.0)

30 %

Our statutory cost:income ratio increased year-on-year to 84.2%

(FY25: 65.1%), primarily as a result of the additional charge relating

to historical motor finance redress. We remain committed to

improving this metric as we scale the business and realise

efficiencies from our transformation initiatives.

Credit performance

We recorded an impairment charge of £45.2 million (FY25: £16.6

million). The increase primarily reflects the impact of updated

forward-looking macroeconomic assumptions, including

heightened geopolitical uncertainty during the second half of

the year.

Analysis of Cost of Risk by division

Year ended

30 June 2026

bps

Year ended

30 June 2025

bps

Increase/

(decrease)

bps

Property Finance

(1)

(13)

Motor Finance

Business Finance

(10)

Group

Within Property Finance, a net impairment release of £1.3 million

(FY25: £10.5 million release) was recognised during the year,

representing a Cost of Risk of (1) bps (2025: (13) bps), reflecting the

partial release of overlays previously held against refinance risk.

The portfolio remains well collateralised, with low levels of

arrears and limited exposure to higher loan-to-value bands.

In Motor Finance, the impairment charge increased to £42.2

million (FY25: £30.7 million), driven primarily by the non-recurrence

of impairment releases recognised in the prior year.

Consequently, Cost of Risk increased to 96 bps (2025: 74 bps).

Excluding this impact, underlying credit performance improved

during the year, supported by stabilising arrears trends.

In Business Finance, Cost of Risk increased to 11 bps from (10) bps

in the prior year. The movement reflects a net impairment charge

of £4.3 million (FY25: £3.6 million release), driven principally by

model recalibrations, partially offset by improved performance

in selected portfolios.

Reflecting these divisional movements, our overall Cost of Risk

increased by 16 bps in the year to 26 bps (2025: 10 bps), at the

lower end of the through-the-cycle range.

Our non-performing loan (“NPL”) ratio decreased to 3.0% (2025:

3.4%), reflecting the remediation of legacy NPL exposures. The NPL

coverage ratio reduced to 22.8% (2025: 25.5%) following model

updates and the completion of remediation activity, while the

impairment coverage ratio reduced to 1.26% (2025: 1.48%),

reflecting model recalibrations and changes in economic

assumptions.

Summary balance sheet

As at 30 June

2026

£m

As at 30 June

2025

£m

Increase/

(decrease)

Net loans to customers

18,799

16,600

13 %

Cash and investments

4,439

4,186

6 %

Fixed, intangible and other

assets

246

293

(16) %

Total assets

23,484

21,079

11 %

Deposits from customers

19,111

17,048

12 %

Wholesale funding

2,013

1,581

27 %

Other liabilities

560

571

(2) %

Total liabilities

21,684

19,200

13 %

Ordinary shareholders' equity

1,650

1,729

(5) %

AT1

150

– %

Equity

1,800

1,879

(4) %

Total liabilities and equity

23,484

21,079

11 %

Lending performance

Net loans to customers increased by £2.2 billion, or 13%, during the

year to £18.8 billion (30 June 2025: £16.6 billion), with growth

delivered across all divisions. We continued to focus on selective

origination within target segments offering attractive risk-

adjusted returns.

Analysis of net loans to customers by division

As at 30 June

2026

£m

As at 30 June

2025

£m

Increase/

(decrease)

Property Finance

10,397

8,677

20 %

Motor Finance

4,484

4,076

10 %

Business Finance

3,919

3,846

2 %

Total

18,799

16,600

13 %

The Property Finance division remained the primary driver of

growth, with balances increasing by £1.7 billion to £10.4 billion (30

June 2025: £8.7 billion). This reflects continued strength in

specialist buy-to-let alongside the contribution from the

acquisition of Octane Capital which added approximately £0.5

billion of bespoke bridging, refurbishment and development exit

property finance loans to our portfolio. The acquisition also

broadens our capabilities in specialist real estate lending and

enhances our ability to support professional landlords and

developers across a wider range of financing needs.

Motor Finance balances increased by £0.4 billion to £4.5 billion (30

June 2025: £4.1 billion), supported by improved auto-decisioning

capabilities, which have reduced reliance on manual

underwriting and increased scalability.

Business Finance balances increased by £0.1 billion to £3.9 billion

(30 June 2025: £3.8 billion), with growth in asset finance,

commercial mortgages and invoice finance offsetting continued

subdued activity in development finance. Momentum was

particularly strong in commercial real estate, where we

accelerated growth in higher-return segments, including

development finance, and ended the year with a strong pipeline.

Savings performance

Customer deposits increased by £2.1 billion to £19.1 billion (2025:

£17.0 billion), representing 88% of Group liabilities (2025: 89%).

Analysis of customer deposits

As at 30 June

2026

£m

As at 30 June

2025

£m

Increase/

(decrease)

Personal savings

11,681

11,466

2 %

Business savings

2,438

2,739

(11) %

Corporate Deposits

4,992

2,843

76 %

Total

19,111

17,048

12 %

We continue to be majority deposit funded with personal savings

remaining the single largest component of funding, increasing to

£11.7 billion (30 June 2025: £11.5 billion), supported by continued

strong demand for ISA products ahead of rule changes due to

come into effect in April 2027.

Business savings balances reduced to £2.4 billion (30 June 2025:

£2.7 billion) as we actively managed pricing in response to

market conditions.

Corporate deposits increased significantly to £5.0 billion (30 June

2025: £2.8 billion), reflecting the launch and scaling of access and

notice propositions via deposit aggregators.

Our loan-to-deposit ratio increased modestly to 98% during the

year (30 June 2025: 97%), reflecting strong lending growth.

Wholesale funding

Wholesale funding increased to £2.0 billion (30 June 2025: £1.6

billion), including a £300 million Tier 2 capital issuance completed

during the year. We also completed the final planned repayment

of £0.5 billion under the Bank of England’s TFSME scheme.

Capital and liquidity

We maintained a strong capital position throughout the year,

with a CET1 ratio of 13.6% (2025: 14.9%). The year-on-year reduction

reflects the impact of the motor finance provision and the

increase in RWAs associated with lending growth and the

acquisition of Octane Capital.

Despite this reduction, our capital position remains comfortably

above regulatory requirements, providing capacity to support

continued growth and absorb potential volatility.

During the year, we issued £300 million of external Tier 2 capital.

The transaction was heavily oversubscribed, reflecting strong

investor demand.

Our liquidity position remains robust, with an LCR of 168% (2025:

195%). The reduction reflects the TFSME repayment and

optimisation of surplus liquidity, with the ratio remaining

comfortably above regulatory minimums.

We close the year in a position of strength, maintaining a robust

capital base and strong liquidity, supported by our established

customer franchise.

Basel 3.1 reforms and implementation

The Basel 3.1 framework represents the final phase of the Basel III

reforms and is intended to strengthen the resilience of the

banking sector by improving the risk sensitivity, consistency and

comparability of regulatory capital requirements. In the UK, the

Prudential Regulation Authority (PRA) published its final Basel 3.1

rules in January 2026. The requirements that are applicable to

Aldermore Group will take effect from 1 January 2027. The reforms

include changes to the calculation of risk-weighted assets, which

for Aldermore predominantly include a revised standardised

approach for credit risk, and a new standardised approach for

operational risk.

The Group has continued to assess the impact of Basel 3.1 on its

capital position, business mix and capital allocation, including

submitting an impact assessment to the PRA in line with the Basel

3.1 data collection exercise for the off-cycle review of firm-

specific Pillar 2 capital requirements. Based on the Group’s

current assessment, full implementation is expected to result in

an increase in RWAs of approximately £0.5 billion on the June

2026 balance sheet, relative to the corresponding RWAs under

the current framework. This is expected to result in an estimated

reduction in the Group’s CET1 ratio of approximately 0.6

percentage points, before taking account of future earnings,

capital generation, and balance-sheet changes. The principal

drivers of the estimated impact relates to changes in risk-

weighting of SME lending and buy-to-let exposures, partly offset

by lower Pillar 1 operational risk requirements under the new

standardised approach for operational risk.

The estimated uplift to Pillar 1 capital requirements is partly offset

by a reduction in Aldermore Group’s Pillar 2 capital requirements.

The Group’s total capital requirement will reduce to 9.00% from

9.31% from 1 January 2027, with new Pillar 2 requirements taking

account of the PRA’s SME lending adjustment.

The Group remains well positioned to manage the transition and

continues to incorporate the expected Basel 3.1 impact into its

capital planning and balance-sheet management activities. The

Group’s updated medium-term target CET1 ratio range of

12.0%-13.0% follows the revision to total capital requirements, with

the target range comparing to a 30 June 2026 CET1 ratio of 13.6%.

The Group expects to manage the CET1 ratio to within the target

range over the course of FY 2027. The Basel 3.1 estimates remain

subject to the Group’s ongoing implementation work and may

therefore change as implementation is finalised.

Looking Ahead

We enter the coming year with confidence in both the strength

of our platform and the clarity of our strategic direction.

Aldermore has built a distinctive position in specialist lending,

underpinned by deep expertise, strong customer relationships

and a clear focus on segments where we can deliver real value.

While results were significantly impacted by the motor finance

provision, the underlying performance and momentum of the

Group remained resilient. We acknowledge that the external

environment is expected to remain volatile, but we continue to

see robust customer demand across our chosen markets

evidenced by strong growth during the year. Our funding

position is stable and diversified, our liquidity position is robust,

and we have a strong capital position underpinned by our

medium term target CET1 ratio of 12.0%-13.0%.

We see meaningful headroom for growth within our existing

franchises, alongside opportunities to expand into adjacent

areas that enhance returns and diversify our offering. Our recent

move into bridging finance is a good example of how we are

evolving the portfolio in a targeted and disciplined way.

At the same time, the actions we are taking to simplify our

operating model and embed greater use of automation, data

and AI will progressively improve efficiency and reduce costs,

supporting stronger returns and a more scalable platform.

The Group therefore enters the next financial year well

positioned to navigate ongoing economic uncertainty while

continuing to execute its strategy and deliver sustainable

returns.

Environmental, social and governance

As a specialist bank, we are well placed to make a positive contribution to society, and we take this responsibility seriously on

behalf of all our stakeholders. Our purpose — to back more people to go for it, in life and business — underpins our approach

and informs the Environmental, Social and Governance (ESG) and sustainability ambitions embedded across our corporate

strategy. These ambitions translate our purpose into intentional action within our core business activities.

This section provides a high-level overview of our ESG and

sustainability activity during the financial year, structured

around our three key areas of impact: access to credit and

savings; business ethics and services; and developing our

people. Further detail on how we create positive societal impact

is set out in our annual Report to Society.

We focus on helping people move forward, whether that means

buying a home, growing a business or saving for the future. With

more than 800,000 customers, we are proud of the role we play in

supporting individuals, communities and the wider economy. We

also recognise that being a responsible business extends beyond

the products and services we provide day to day.

Providing access to credit and savings

As a specialist bank, one of the most impactful ways we can

drive change is by using our core business to create

opportunities for the underserved in society. Through our

specialist knowledge and expertise, we provide financial

products to individuals and businesses often overlooked by high

street banks. By giving more opportunity to individuals and small

and medium-sized enterprises (SMEs), we help keep the UK

economy moving.

Highlights from our Property Business:

• This year we enhanced our mortgage affordability and Loan

to Income (LTI) frameworks to improve access to sustainable

home ownership, reducing affordability-related declines by 7%

and increasing lending above 4.5x LTI from 6.6% to 12%, while

maintaining responsible lending standards.

• Supported over 2,000 first time buyers onto the housing ladder

with funding often unavailable from high street banks.

• Provided ~£160 million in funding to ~1,500 customers through

our specialist Level 2 and Level 3 product suite. Designed to

meet the needs of creditworthy borrowers with complex

financial circumstances or adverse credit histories, these

products help address gaps in the market where access to

mainstream lending may be limited. Level 2 offers lending of

up to 90% LTV with enhanced flexibility, while Level 3 provides

lending of up to 80% LTV for customers with more significant or

recent adverse credit events.

Highlights from our Savings Business:

• Supported Personal and Business customers on their savings

journey with over ~130,000 new Savings accounts opened in

the financial year.

• Helped ~2,000 Business customers build resiliency and

optimise their Savings through our new 95 Day Notice Product

launched in November 2025.

• Recognised at the Moneynet Finance Awards with ‘Best

Variable Rate ISA Provider’ for Personal Savings and ‘Best Fixed

Rate Provider’ for Business Savings, reflecting our commitment

to helping customers strengthen financial security and

maximise returns on their savings.

Highlights from our Business Finance Business:

• Continued to support ~18,000 UK businesses, helping them

reach their potential through tailored and flexible funding

solutions.

• Became an accredited lender under the Growth Guarantee

Scheme, enhancing access to government-backed finance

for SMEs seeking to invest and grow.

• Provided over £70 million in active facilities through our Energy

and Infrastructure proposition, enabling customers to invest in

alternative energy solutions such as solar PV, battery storage

and EV charging, supporting the UK’s transition to Net Zero.

Highlights from our Motor Business:

• Supported over 152,000 customers in accessing vehicle finance

through our network of trusted dealer and broker partners,

including continued support for a broad range of customer

segments and vehicle finance needs.

• Continued to widen access to finance through enhanced

credit and affordability assessment processes. This year we

supported ~8,900 customers aged 21 and under and more than

3,800 corporate customers, while increasing lending to higher-

risk credit segments by 7% during the financial year within

responsible lending standards.

• Growth in electric vehicle finance, with cases increasing by

36% year-on-year, supporting customers in transitioning to

lower-emission vehicles.

Business ethics and services

As a digitally-enabled bank serving a diverse customer base, we

recognise that maintaining trust depends not only on regulatory

compliance, but on how we safeguard customer data, manage

third-party risks, and deliver a reliable, transparent service at

scale. These areas are material to our financial performance and

reputation, particularly as we invest in new digital platforms and

evolve our operational capabilities. We are committed to

ensuring that every part of our value chain reflects the same

high standards of integrity and service our customers and

stakeholders expect.

Digitisation

In order to keep our business moving in a rapidly evolving

environment, our focus on digitisation is centred on three core

components:

• Customer accessibility – Being available to our customers at a

time and place of their choice, through their preferred

channel (e.g. web, telephone, email, chat, etc.).

• Intermediary enablement – Providing up-to-date information

to our intermediaries - dealers, brokers, and agents, so they

can guide and serve our customers effectively.

• Internal efficiency – Enabling our front-line teams and middle

office to access the best available information quickly and

with minimal friction or effort.

This reflects our commitment to taking a holistic, end-to-end

view of our digitisation journey – one that is grounded in user

experience. By leveraging data to continuously test, learn and

adapt, we ensure we remain responsive to evolving user needs

while delivering meaningful improvements to everyday

interactions.

As a result, we have enhanced service performance through

increased digital availability of documentation, enabling faster

customer responses and more efficient loan decision-making.

We have continued to expand our self-service capabilities,

empowering both customers and intermediaries to manage their

interactions with us more effectively.

Key initiatives delivered during the year include:

• MyMotoNovo App launch – We introduced a new self-service

customer portal designed to simplify and enhance the

management of motor finance agreements. Since launch, the

app has facilitated ~350,000 settlements and recorded almost

1,000,000 logins. Ongoing customer feedback and journey

insight analysis are being used to continuously refine the

experience and introduce new, customer-focused features.

• Telephony platform transformation – We completed the

migration from three legacy telephony platforms to a single

cloud-based contact centre solution, delivering a significant

improvement in both customer experience and operational

resilience. The platform provides intelligent call routing,

enhanced self-service capabilities, improved multi-channel

engagement and real-time visibility of customer interactions,

enabling customers to access the right support more quickly

and improving first-contact resolution. It also creates a

scalable foundation for future innovations, including AI-

assisted customer journeys, speech analytics, proactive

customer communications and enhanced digital servicing,

supporting our ambition to deliver a more responsive and

digitally enabled customer experience.

Supplier service provision

Supplier service provision continues to remain a key focus area,

driven by the work being completed within our procurement,

Vendor Management and Third-party Risk teams, alongside our

business line colleagues. Our suppliers play an essential role in

delivering the high-quality goods and services that underpin our

operations by delivering predictable costs, assured outcomes

and a strong foundation for customer trust. Our suppliers can

also introduce potential risks – from regulatory breaches and

service disruptions to data security threats and reputational

damage.

Recognising this, we have taken several steps over the past 12

months to ensure our third-party relationships are both resilient

and value driven. Key initiatives included:

• Introduced a Procurement Front Door to provide colleagues

with a single route for procurement requests, improving

visibility of spend while encouraging greater use of existing

suppliers before onboarding new ones. This supports long-

term supplier partnerships, promotes fairer and more

consistent engagement with suppliers, and contributes to a

more resilient supply chain.

• Launched an External Third-Party Risk Management Oversight

Questionnaire for key suppliers, improving visibility of

operational risks and enabling more informed, risk-based

decisions when selecting and managing products and

services.

Supporting Vulnerable Customers

We are committed to treating all customers fairly, particularly

those experiencing vulnerability or financial difficulty. Through

compassionate, proactive support, we tailor our approach to

individual circumstances to help customers manage their

outstanding balances while minimising the impact on their

financial wellbeing.

In FY2026, we strengthened our approach through targeted

initiatives to improve consistency, governance and customer

outcomes.

• Enhanced vulnerable customer training for collections

colleagues in line with FCA expectations, with around 90%

completing formal accreditation to date, with results centrally

tracked and refresh cycles planned every 6–12 months. Early

results are positive, with 93% of vulnerable customer cases

assessed as delivering good customer outcomes in the latest

three-month review period.

• We also introduced a new vulnerable customer strategy

across collections & recoveries, improving how vulnerable

customers are identified, supported and managed while

aligning with regulatory expectations. The strategy provides

clearer governance and greater consistency across teams,

including recognising vulnerability even where consent to

formally record is not provided. Since implementation,

independent oversight through the VC Case Clinic has

improved decision‑making, auditability and colleague

confidence.

Risk governance

For information on Aldermore’s approach to risk governance,

including our principal risks and mitigating activities, please see

the ‘Risk Management’ section of this Report from page 74.

Human rights and Modern Slavery Act

We take a zero-tolerance approach to slavery and human

trafficking. As a UK-based group with several international

suppliers, we recognise that there is a risk, however small, of

slavery or human trafficking occurring within our supply chains.

We have taken appropriate steps to help ensure that slavery and

human trafficking are not taking place within our business or

supply chains. These steps include reviewing our business and

supply chain arrangements, enhancing our procurement

processes, strengthening our due diligence procedures, and

conducting risk assessments that consider the sectors and

geographical locations in which our suppliers operate. We also

communicate relevant information through our procurement and

due diligence processes to promote awareness of modern

slavery risks across the Group.

As part of our supplier onboarding process, we engage with

suppliers to obtain assurances regarding their anti-slavery and

human trafficking policies and to confirm that they are taking

active steps to prevent such practices within their own

businesses and supply chains. We do not support or engage with

suppliers where we become aware of slavery or human

trafficking within their operations or supply chains.

In parallel, we have reinforced our Code of Conduct to ensure all

colleagues understand and uphold our ethical standards. This is

supported through regular training and awareness campaigns.

We have also implemented a learning platform designed to

deliver, track and assess mandatory training, alongside

additional content tailored to support colleagues across a wide

range of career pathways. This approach ensures that

colleagues receive clear guidance, that their understanding is

assessed, and that they are empowered to engage in self-

directed learning, enabling them to perform their roles both

compliantly and ethically.

From January 2026, we introduced a new Supplier Code of

Conduct (the "Code") as part of our vendor onboarding and

ongoing supplier due diligence processes. The Code requires

suppliers to maintain appropriate anti-slavery policies and

controls. It also makes clear that we will not work with

organisations found to be involved in slavery or human

trafficking, child labour, or any other abuse of human rights.

We have also launched a new procurement eLearning course for

colleagues which details our supplier due diligence checks

including the requirement for Suppliers to confirm their

compliance with anti-slavery and human trafficking obligations.

Anti-Bribery & Corruption

Our Anti‑Bribery and Corruption Policy sets out the

responsibilities of all colleagues across the Aldermore Group and

clearly articulates our zero‑tolerance approach to bribery and

corruption. The policy is reviewed annually, and all colleagues

are required to complete mandatory training to ensure they

understand and adhere to the Group’s expectations. Any breach

of this policy is deemed unacceptable, will be fully investigated,

and may result in disciplinary action or criminal prosecution.

Over the last 12 months, the Group has further strengthened its

anti‑bribery and corruption control environment by implementing

centralised platforms to record, manage and monitor gifts,

hospitality and entertainment, as well as conflicts of interest. Our

objective is to achieve full compliance with both the letter and

the spirit of all applicable laws and regulations. The Group

remains firmly committed to maintaining a zero‑tolerance stance

towards any form of bribery or corruption within its business.

Tax

Aldermore Group’s business model is focused on the UK where

our customers and colleagues are largely established. We

respect that as a corporate citizen, we have a duty to act with

honesty and integrity with our approach to taxation and

recognise that through the payment of tax, we contribute

towards our stakeholders and towards wider society.

We adhere to the HMRC Code of Practice on Taxation for Banks

and maintain professional, cooperative relationships with tax

authorities. We support efforts to combat tax evasion, comply

with Corporate Criminal Offence rules, and apply tax laws in line

with their intended spirit. Our tax practices reflect transparency,

integrity and timely compliance, aligning with the values we

uphold in our products and services.

During the financial period, the business underwent its first

Business Risk Review (BRR), following its transition from HMRC’s

Mid-sized Business population to the Large Business Directorate.

The business received a ‘low risk’ rating from HMRC, following

HMRC’s assessment of the Group’s tax compliance and

concluded that it effectively manages its tax risks, maintains

strong internal governance and operates with openness and

transparency. The next Business Risk Review will be due in three

years, reflecting HMRC’s review cycle for businesses assessed as

low risk.

We measure our Total Tax Contribution for a financial year by

reference to the tax payments we have made in that financial

year, not in respect of the calendar year. The Group monitors

and updates its Total Tax Contribution records annually for all

new forms of taxation including any in-scope environmental

taxes.

Our Total Tax Contribution for 2026 was £92.1 million (2025: £111.3

million) comprising taxes borne and collected. Taxes borne

represent the direct cost to the Group of taxes which impact the

financial results of the business, and for 2026 were £54.9 million

(2025: £78.7 million), with the reduction due to lower profits. In

addition to taxes borne, we also collect and administer taxes on

behalf of the UK tax authority (HMRC). For 2026, the Group

collected £37.2 million of taxes (2025: £32.6 million).

Developing our people:

We recognise that attracting and developing top talent,

alongside fostering diversity of thought, depends on an inclusive

and rewarding environment where colleagues can thrive. Central

to this commitment is our focus on cultivating a high-

performance culture, strengthening organisational resilience to

change, and driving innovation across our people practices to

enhance efficiency and impact.

Over the past year, we have prioritised workforce learning,

technical capability development, mental wellbeing and

resilience, as well as improving gender representation across the

organisation.

Technical & AI Skills Investment

• Funded Learning Scheme: Invested £89,000 in professional and

technical training for 98 colleagues year-to-date.

• Allocated over £335,700 from apprenticeship levy funding,

supporting 23 new apprenticeships while 30 colleagues

completed their end-point assessments.

• AI Skills Programme: Launched a Group-wide AI skills

programme alongside the roll out of Copilot and ChatGPT,

and a new mandatory learning module covering AI

fundamentals, prompt engineering, and data responsibilities.

Wellbeing & Resilience

• Every Mind Partnership: Deployed a network of 45 trained

Mental Health allies and supporters providing peer-led

guidance.

• Wellbeing Activity: Delivered over 25 individual initiatives of

targeted wellbeing activities year-to-date.

• Supported 60+ colleagues through parental leave and

returner programmes, connecting new parents to policies,

learning resources, peer buddies and family support networks,

strengthening our early-years parent community.

Gender Representation & Pay Equity

• Senior Leadership: Reached 44% female representation in

senior leadership, exceeding our internally set Women in

Finance Charter target of 40%.

• Executive & Board Levels: Improved female representation to

40% on the Executive Committee and 36% at the Board level,

reflecting sustained focus on building a diverse leadership

pipeline.

• Gender Pay Gap: Recorded year-on-year reductions in both

mean and median gender pay gaps, alongside more

balanced bonus outcomes. Further details are outlined in our

Gender Pay Gap report.

• Mentorship: Continued our partnership with Moving Ahead for

a cross-company mentoring programme involving 40 mentor

and mentee pairs to support women's career progression.

Community Partnerships

• Reading Rockets basketball team sponsorship: Through our

annual investment of £55,000, we supported Reading Rockets

in engaging with more than 42,000 people each year,

including players, volunteers, staff, young participants, and

the wider community, through inclusive sport, mentoring, and

community programmes. Our sponsorship also contributed to

the club generating over £2 million in annual social value,

including £91,000 in health value, £662,000 in wellbeing value,

and more than 92,000 hours of social interaction.

• Community Giving: Led a £124,000 annual community

investment programme with more than 2,400 colleague

volunteering hours delivered across 40+ initiatives. A flagship

example is our long-standing partnership with The Money

Charity, which delivers financial wellbeing training to promote

financial inclusion. Through our support, this year the charity

delivered targeted workshops to over 2,900 underserved

children, young people, and adults - equipping them with

essential money management skills and the confidence to

make informed financial decisions.

Climate related financial disclosures

Aldermore is in scope of the UK Government’s climate-related financial disclosures (“CFD”) requirements2. This report

addresses CFD requirements beneath the headings of: Governance; Risk Management; Strategy; and Metrics & Targets. The

introduction to each section outlines which CFD requirements (A-H) are being addressed.

In December 2025, the Prudential Regulation Authority (PRA) published Supervisory Statement 5/25 on climate risk

management. In line with the PRA expectations, Aldermore conducted a comprehensive gap analysis against the new

requirements and developed an implementation plan, approved by the Executive Credit Committee in April 2026. The

framework described in this chapter is expected to evolve over the coming months as the implementation plan is executed.

Section 1: Governance

This section summarises: (1) the climate risk governance structure; and (2) management and board responsibilities. It addresses CFD

disclosure item A.

a. Governance Structure overview

During the financial year, the Group approved a new

Governance Structure around Climate risks within its Strategic

Risk Management Framework. The chart shown below depicts

how items are escalated upwards through the business and

ultimately to the Board.

2 The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 (legislation.gov.uk)

b. Board responsibilities

The Board maintains oversight of the Group’s climate risks. The

Board Risk Committee receives updates on climate risk topics

through CRO reports, and reviews, together with the Audit

Committee, the Group’s annual climate-related disclosures. The

Remuneration Committee receives updated climate-risk metrics

which support its decisions.

c. Management responsibilities

Committees and Forums

The Executive Credit Committee (ECC), which includes

representation from the Group’s Executive Committee, serves as

the primary governance body overseeing climate risks. Its core

mandate is to review the Group’s overall Credit Risk Profile and

ensure that credit risk is managed in line with appetite. In this

capacity, the ECC monitors portfolio performance against

climate risk indicators quarterly, providing oversight and

challenge where required. The ECC also oversees the

enhancement of the climate risk management framework,

including review and approval of the Gap Analysis and

Implementation plan developed to support compliance with the

PRA’s new expectations on climate-related risks (SS5/25).

Similarly to the ECC, the ESG Management Committee has

representation from the Executive team. Its purpose is to provide

oversight of the Group’s ESG activities by coordinating progress

and challenges relating to ESG Plan deliverables (including those

related to climate risks) as part of the Group’s non-financial

scorecard.

Various other forums and committees have received climate risk

updates during the financial year, including the Executive Risk

Committee and the Business Line Risk Forums for Property

Finance, Business Finance and Motor Finance.

Individual responsibilities

The Group’s Climate Risk Framework outlines roles and

responsibilities for the management of these risks across the

three lines of defence. The Risk Function produces climate risk

metrics reports, develops the Group’s financed emissions

calculations and coordinates the development of climate risk

capabilities across the Group, including for scenario analysis.

Accordingly, the Chief Risk Officer (CRO) holds Senior

Management Function responsibilities for climate risks across the

Group.

Remuneration

During the financial year, the delivery of the ESG plan was part of

the Group’s non-financial scorecard. In addition, climate risk

metric performance was integrated into the CRO’s year-end

report to the Remuneration Committee. The report supports the

Committee’s decisions on variable pay outcomes.

FirstRand

Aldermore engages regularly with its parent company on climate

change, with representation at the FirstRand Climate &

Environmental Risk Committee. Aldermore provides quarterly

updates on its climate risk exposures and development of its

climate risk capabilities to FirstRand.

Section 2: Risk Management

This section addresses CFD disclosure items B and C and

explains: (1) Aldermore’s approach to identifying, assessing and

managing climate-related risks and opportunities; and (2) the

integration of climate risk into the overall risk management

process. These activities are either coordinated at Group level or

undertaken at divisional level. The Climate Risk Framework

outlines the Group’s approach to managing climate-related risks

and opportunities.

a. Identification, assessment and management of climate-

related risks and opportunities

Group activity

The identification and assessment of climate risk is supported at

Group level through annual materiality assessments and

scenario analysis, quarterly climate risk reporting (via the Climate

Risk Dashboard), and regular industry engagement. The climate

risk dashboard was restructured during the Financial Year, and

reporting of this to the Executive Credit Committee started in

February 2026. The management of climate risk is further

supported by annual mandatory employee training. The Group

continues to build its understanding of climate-related risks

through investment in data. In the financial year an updated

suite of physical risk data for Property has been sourced,

alongside updated emissions data for Motor Finance.

Techniques for identifying, assessing and managing climate-

related risks and opportunities have been supported through

two specialist roles: an ESG & Sustainability Lead; and a Strategic

Risk Lead.

Property Finance

At origination, an assessment of the property and its suitability is

undertaken. The Group assesses energy efficiency, ground

stability (including movement) and flood risk. Valuations are

completed by the Royal Institution of Chartered Surveyors (RICS)

who are experienced within the local area and its related climate

concerns. Flood risk, potential impacts and Energy Performance

Certificate (EPC) rating are factored into the valuation of the

property. Where there are concerns or issues related to flood risk,

ground stability and other climate factors, the Group’s valuers

will highlight these for further review, or confirm the property as

unacceptable for lending.

The Group's lending criteria require all properties to be

adequately insured, with insurance obtained at standard market

rates. In addition, Buy to Let properties with an Energy

Performance Certificate (EPC) rating below E, which do not meet

the Government’s Minimum Energy Efficiency Standards (MEES),

are not considered acceptable collateral. The same restriction is

applied to lending in Scotland, despite no minimum EPC rating

requirement for privately rented properties.

Business Finance

Climate risk is assessed as part of the overarching Business

Finance strategy, policies, procedures and credit underwriting.

Climate risk is considered at sector level; the Group determines

sectors to operate within and then assesses and documents the

associated risks. These risks are then reviewed annually. Larger

transactions are subject to consideration of climate risk in credit

papers at an individual level.

For funded properties, the Bank’s valuation standards include

restrictions on properties with EPC ratings of F and G, as well as

subject to material flood risk.

For vehicles funded through Business Finance, the ‘fuel type’ (e.g.,

petrol, diesel, hybrid, electric) is recorded and monitored.

The Group’s Energy & Infrastructure proposition supports the UK

transition to net zero through financing renewable energy

infrastructure including solar, wind, battery storage and Electric

Vehicle (EV) Charging Infrastructure.

Motor Finance

Climate risk is not assessed specifically as part of the customer

onboarding journey. Finance applications are introduced

through an approved network of dealer and brokers partners,

therefore changes to the Motor Finance portfolio regarding fuel

type are led by changes to the dealer showroom, driven by

consumer demands and needs.

The transition away from internal combustion engine (“ICE”)

vehicles requires careful management of residual value risk. This

is now supported by a dedicated Residual Value Manager within

Motor Finance. The Group engages with industry bodies and

market experts to help monitor market developments and

emerging financial risks, including those associated with the

transition to net zero. Together with the use of data and

analytics, this enables timely identification of risks and

opportunities and supports informed decision-making.

b. Integrating processes for identifying, assessing, and

managing climate-related risks into the overall risk

management process

Climate risk integration into the overall risk management process

is supported through:

• Risk Taxonomy: Climate and ESG Risks are both included in the

Group’s Risk Taxonomy under the Principal Strategic Risk.

• Frameworks / Policies: The Climate Risk Framework outlines the

approach to the management and disclosure of climate-

related risks. Climate risk provisions are integrated into certain

other Risk frameworks, including the Credit Risk Management

Framework.

• Metric performance and reporting: performance against

climate-related metrics is included within risk reports, and

tabled at risk committees. These cover metrics across

transition and physical risk.

• Scenario analysis: climate-related scenario analysis is

embedded into the Group’s frameworks as outlined in section

3 below. This includes climate assessments within the Group’s

Internal Capital Adequacy Assessment Process (ICAAP).

Section 3: Strategy

This section explores the principal climate-related risks (actual and potential) and opportunities that the Group is exposed to. It also

assesses Aldermore’s resilience under different climate-related scenarios. The section addresses CFD disclosure items D, E and F.

Risks and opportunities are identified over short (0-1 year), medium (1-5 years) and long-term (period to 2050) time periods. These were

selected with reference to the Group's planning and budgeting process.

In 2026, Aldermore undertook an enhanced materiality assessment of climate-related risks across its Property, Motor and Business

Finance portfolios, to better understand the potential severity and likelihood of these risks to the business.

The Group’s main climate‑related risks and opportunities arising from its business activities are summarised below, alongside: (1) affected

business lines; (2) time horizons; and (3) current and future mitigating actions.

a. Climate-related physical risks

Ref

Physical Risk

Description

Business lines

Time horizon

Mitigations

1.1

Acute

Increased severity of extreme

weather events could:

• Result in physical damage

to underlying lending

collateral

• Reduce property values

and result in stranded

assets

• Cause operational issues,

including supplier outages

and buildings access

issues

Property, Business Finance,

Operations

Long

• Monitoring and reporting on flood risk,

subsidence, and coastal erosion risks for

Property exposure in England

• Monitoring and reporting on exposure to

Business Finance sectors with elevated

physical risk

• Data sourced on flood, subsidence and

coastal erosion risk for residential properties

under different climate-related scenarios

• Collateral restrictions for properties subject to

material flood risk across both the Property

and Commercial Real Estate portfolios

• Scenario analysis (see Section 3)

• Mandatory employee training undertaken

• Industry engagement

1.2

Chronic

Changes in precipitation

patterns and temperatures

could impact asset values, e.g.

through subsidence on

properties

Property, Business Finance,

Operations

Long

b. Climate-related transition risks

Ref

Transition Risk

Description

Business line

Time horizon

Mitigations

2.1

Policy

Changing regulations can result in volatility,

asset impairments and increased compliance

costs. This includes deterioration of margins

for clients operating in high-transition risk

sectors, pressure on landlords through EPC

minimums, reductions of collateral values for

ICE vehicles cars

Property,

Motor,

Business

Finance,

Operations

Medium – Long

• Monitoring and reporting on the Group Property

portfolio’s distribution of EPC ratings

• Monitoring and reporting on the Group Motor portfolio’s

distribution of fuel-types

• Monitoring and reporting on the Group Business Finance’s

lending to higher transition risk sectors

• Collateral restrictions for properties with EPC ratings of F

and G across both the Property (BTL) and CRE portfolios

• Introduction of a Residual Value Manager (Motor

Finance)

• Mandatory employee training undertaken

• Scenario analysis (see Section 3 of this chapter)

• Industry Engagement

2.2

Market

Changing consumer preferences could

negatively impact the value of lower energy

efficient vehicles

Motor,

Business

Finance

Medium – Long

2.3

Technology

Technologies could accelerate adoption of

lower emitting vehicles, impacting ICE vehicles’

residual values. Advancements could also

impact older EVs

Motor,

Business

Finance

Medium – Long

2.4

Reputation

Reputational risk may arise from evolving

understanding of the climate impacts of our

lending activities and changing societal

expectations regarding acceptable lending

practices and sustainability-related claims.

All

Medium – Long

• Provisions of the Reputational Risk policy

• Compliance with relevant regulation and prudential

requirements

• Industry Engagement

• Periodic review of the Group’s approaches to the

identification of high transition risk exposures

c. Climate-related opportunities

Ref

Opportunity

Description

Time horizon

Action taken

3.1

Financing the

transition

The transition to a low carbon future

presents opportunities across all business

lines

Short – Medium – Long

The Group’s offering includes financing for renewable energy

infrastructure and a Buy to Let product for EPC A-C rated properties

3.2

Data

Data quality improvements can support

effective management of climate-related

risks and opportunities

Short – Medium

Opportunities to enhance data and metrics have been identified as

part of the SS5/25 gap analysis, with actions embedded in the

implementation plan

3.3

Partnerships

Collaboration is important to improve

understanding and identify opportunities

Short – Medium

The Group uses Partnership for Carbon Accounting Financials

methodologies to calculate its financed emissions, and remains a

signatory to the United Nations Environment Programme Initiative

(UNEP FI) Principles for Responsible Banking

d. Resilience of business model and strategy, considering

different climate-related scenarios

Aldermore undertakes qualitative climate-related scenario

analysis as part of its climate-materiality assessment, and

quantitative scenario analysis within its annual ICAAP. In

addition, third party scenario analysis is also used to assess

climate-related physical risks.

Climate Materiality Assessment

Cross‑business working groups undertook horizon scanning of

emerging climate‑related policies, regulation, and key market

and technological developments. Building on this analysis, they

identified transition and physical risk transmission channels that

could give rise to financial risks for the Group across the short-,

medium- and long term.

Narrative‑based scenarios were then developed, with their

likelihood and potential impact assessed through expert

judgement. The assessment concluded that the business has a

relatively low overall exposure to climate‑related risks.

The results of this assessment have informed the actions

identified to support the implementation of SS5/25 and have

been integrated into other risk management processes.

ICAAP Scenario Analysis

As part of the Group’s ICAAP, the following assessments were

carried out:

• Property: Analysis was undertaken to examine the relationship

between long-term, forward-looking changes in flood risk

exposure and potential impacts on asset valuation and

expected losses within the Group’s Property portfolio.

• Motor: Sensitivity analysis was conducted to explore potential

reductions in the valuations of EVs and ICE vehicles, and the

corresponding impacts on residual values, voluntary

termination rates and expected loss.

This analysis indicated limited impacts for the Group for the

scenarios assessed.

Long-Term Physical Risk Assessment

Long-term scenarios have typically utilised industry pathways

where appropriate to support comparability, including those

from the Intergovernmental Panel on Climate Change. During the

financial year, Aldermore sourced updated physical risk analysis

on its Property portfolio. The analysis provides insights around

physical risk vulnerabilities under low, medium and high3

emissions scenarios, including the following:

• Flood risk: most properties remain at negligible risk of flooding

today, and in future scenarios. Under higher emissions

scenarios, some properties’ flood risk increases.

• Subsidence risk: the majority of the Group’s properties have

low subsidence risk. Those which are at higher risk levels are

mainly concentrated in Greater London and the South East.

• Coastal erosion risk: under all scenarios, the Group’s coastal

erosion risk is negligible.

3 Emissions scenarios: Representative Concentration Pathways 2.6, 6.0 and 8.5.

Key assumptions and estimates

The climate risk assessments described above have been

developed using methodologies and toolkits proportionate to the

materiality of the risks to the Group. These are aligned with

industry practice, considered conceptually sound, and leverage

existing business frameworks (e.g. ECL models) to assess

climate‑related risk drivers.

Industry approaches and datasets supporting climate scenario

analysis, including those used by the Group, are still at an early

stage of development. Selected key assumptions and limitations

are outlined below.

The materiality assessment exercise, which explored a wide

range of transmission channels and scenario narratives, is

qualitative in nature, informed, when available, by the result of

quantitative scenario analysis carried out during the previous

year’s ICAAP.

The Climate Materiality Assessment and the ICAAP climate

assessments relied considerably on expert judgement to

estimate potential impact. The latest ICAAP Flood Risk

Assessment, which fell within the scope of Model Governance,

was subject to independent validation.

The long-term scenario analysis on climate-physical risks relies

on methodology and data from a third party, with limitations

including: (1) uncertainty stemming from the extended time

horizons; and (2) the use of a static balance sheet.

Evaluation: impacts on business model and strategy

The scenario analysis carried out during the financial year has

not identified any material climate-related issues which the

Group would be unable to mitigate.

Section 4: Metrics and Targets

This section addresses CFD disclosure requirements G and H.

a. Metrics

Aldermore’s climate risk dashboard includes indicators covering

transition risks, physical risks, and financed emissions. Where

possible, these metrics are benchmarked against UK‑wide

comparators to ensure that the Group does not hold

concentrations of climate‑related risks in excess of the sectors it

finances, and that it remains aligned with the UK’s transition to

Net Zero.

The climate risk dashboard is monitored quarterly by the

Executive Credit Committee and distributed to other committees

as appropriate.

A summary of the Group’s Property Finance EPC rating

distribution is included in the figure below, where EPC matches

have been obtained.

EPC rating

Property EPC distribution

A-C

50%

39%

10%

F-G

b. Targets & KPIs

Environmental impacts

Aldermore is targeting reducing its environmental impacts across

its operational and financed emissions.

Operational emissions

The Group is targeting net zero Scope 1 and 2 emissions by 2030.

The target was set in the 2023 financial year and is relevant to

the Policy and Reputation transition risks identified in Section 3,

together with the ‘Partnership’ opportunity.

Performance against target: The Group partners with a third

party to quantify its operational emissions. Details of the Group's

Scope 1 and 2 emissions profile, together with the actions being

taken to achieve its 2030 target, are provided in the Energy &

Carbon Reporting section of this report.

Financed emissions

The Group committed to achieving net zero for its financed

emissions by 2050. The target was set in 2023 and is relevant to all

transition risks and opportunities identified in Section 3.

The financed emissions associated with the Group’s portfolios

reflect the carbon emissions of the sectors that it finances in the

UK as a whole. In June 2019 the UK Government legislated a net

zero emissions target by 2050. The weighted average carbon

intensity of the Group’s assets is expected to decrease broadly in

line with the UK economy, as the UK decarbonises.

The Group monitors that its portfolio performance does not lag

behind the wider UK reference sectors, using key indicators such

as EPC rating distribution for Property and ‘fuel type’ for its Motor

portfolio. KPIs for the business finance portfolio will be explored in

2027.

Performance against commitment: The EPC rating distribution of

the Property Finance portfolio, and the fuel type (EV / ICE)

distribution of the Motor Finance portfolio remain broadly in line

with the UK benchmarks used by the bank.

Financed emissions and Financed Emissions Intensity for the

Property and Motor portfolios are documented within the Energy

& Carbon Reporting section of this report.

c. Data

The datasets underpinning the Group’s climate metrics and

climate scenario analysis comprise internal sources, third-party

datasets, and government databases.

Controls over this data are proportionate to the materiality of

the associated risks to the Group and the early stage of

development of the metrics that the data supports.

Forward-looking data has been used by the Group to support: (i)

the flood risk assessment; and (ii) the assessment of transition

risk impacts on the Business Finance Portfolio, completed after

the end of the financial year using selected short-term scenario

data from the Network for Greening the Financial System (NGFS).

Energy and carbon reporting

Energy consumption and Greenhouse Gases (“GHG”) emissions

UK energy use and associated greenhouse gas

emissions

Current UK based annual energy usage and associated annual

greenhouse gas (“GHG”) emissions are reported pursuant to the

Companies (Directors’ Report) and Limited Liability Partnerships

(Energy and Carbon Report) Regulations 2018 (“the 2018

Regulations”) that came into force on 1 April 2019.

Organisational boundary

In accordance with the 2018 Regulations, the energy use and

associated GHG emissions are for those assets owned or

controlled within the UK only as defined by the operational

control boundary. Therefore, energy use and emissions are

aligned with financial reporting for the UK subsidiaries of

Aldermore Group PLC. There are no non-UK based subsidiaries

that would not qualify under the 2018 Regulations in their own

right.

Reporting period

The Group’s financial reporting period is 1 July to 30 June each

year and the reporting energy and carbon emissions are aligned

to this period.

Quantification and reporting methodology

This report follows the 2019 UK Government Environmental

Reporting Guidelines and the GHG Protocol Corporate

Accounting and Reporting Standard (revised edition).

The Group's greenhouse gas emissions have been calculated

using the UK Government GHG Conversion Factors for Company

Reporting 2026, published by the Department for Energy Security

and Net Zero (DESNZ) on 11 June 2026.

These factors have been applied consistently across the

reporting period, as they represented the most recently available

Government conversion factors at the time of reporting.

Comparative year emissions have been calculated using the UK

Government GHG Conversion Factors for Company Reporting

2025.

This report has been independently reviewed by CBRE.

Electricity consumption data was obtained from monthly meter

readings and landlord-provided information where available.

Where direct consumption data was unavailable, electricity

consumption was estimated using service charge information

and converted to kilowatt hours (kWh) using DESNZ non-domestic

electricity price statistics.

Estimated consumption was benchmarked against comparable

office locations and published UK office energy intensity data to

assess reasonableness.

Gas consumption was obtained from landlord-provided

information where available. Where direct consumption data

was unavailable, gas consumption was estimated using service

charge information and converted to kWh using DESNZ non-

domestic gas price statistics.

Estimated consumption was benchmarked against comparable

office locations and published UK office energy intensity data to

assess reasonableness.

Emissions associated with company vehicles and employee-

owned vehicles used for business travel were calculated using

mileage data obtained from fuel card records and employee

expense submissions. Emissions from company vehicles have

been reported within Scope 1 emissions, while emissions from

employee-owned vehicles used for business travel have been

reported within Scope 3 emissions.

The reporting period includes 22,432 miles relating to business

travel claims submitted during the year but attributable to earlier

periods, equivalent to 3.27 tCO₂e. These emissions have been

recognised in the current reporting period as their impact on

total reported emissions and year-on-year comparability was

assessed as immaterial.

Energy intensity ratios based on floor area have been calculated

on a time-weighted basis. Where a site was occupied for only

part of the reporting period, floor area has been apportioned

according to the period of occupation, consistent with the

treatment of energy consumption.

In accordance with the Companies (Directors' Report) and

Limited Liability Partnerships (Energy and Carbon Report)

Regulations 2018, emissions have been classified between

mandatory SECR disclosures and additional voluntary

disclosures.

Emissions are further categorised by reporting scope. Scope 1

emissions comprise direct emissions from fuel combustion and

the operation of assets under the Group's control. Scope 2

emissions comprise indirect emissions associated with

purchased electricity. Scope 3 emissions comprise other indirect

emissions arising from the Group's activities but generated from

sources not owned or controlled by the Group.

Breakdown of energy consumption used to calculate

emissions (kWh)

Mandatory requirements

Year ended

30 June 2026

Year ended

30 June 2025

(Restated)

Gas

339,486

722,400

Purchased electricity

1,194,968

1,941,764

Transport: Company-owned vehicles

428,617

419,027

Transport: Employee-owned vehicles

426,895

451,026

Total energy (mandatory)

2,389,966

3,534,217

The prior period has been restated to reflect a change in the calculation methodology,

improving consistency with the current reporting approach.

Breakdown of emissions associated with the reported

energy use (tCO2e)

Year ended

30 June 2026

Year ended

30 June 2025

(Restated)

Scope 1

Company owned vehicles

49.5

52.4

Total Scope 1

49.5

52.4

Scope 2

Purchased electricity (market-based)

102.4

322.5

Purchased heat (natural gas)

68.6

146.4

Company owned vehicles

28.4

35.0

Total Scope 2

199.4

503.9

Scope 3

Category 6 business travel (grey fleet)

102.0

109.4

Total Scope 3

102.0

109.4

Total gross emissions (mandatory)

350.9

665.7

The prior period has been restated to reflect a change in the calculation methodology,

improving consistency with the current reporting approach.

Intensity ratio

The primary intensity ratio is the total gross emissions in metric

tonnes CO2e per employee. The employee figure relates to UK

operations only to align with the energy and emission reporting

boundary. This metric is considered the most relevant to the

Company’s energy consuming activities and provides a good

comparison of performance over time and across different

organisations and sectors.

Year ended

30 June 2026

Year ended

30 June 2025

Tonnes of CO2e per employee

0.23

0.36

Change from previous year

(36) %

The prior period has been restated to reflect a change in the calculation methodology,

improving consistency with the current reporting approach.

Energy efficiency action during current financial year

To support its commitment to achieving net zero Scope 1 and

Scope 2 emissions by 2030, the Group continued to implement a

range of initiatives during the financial year ended 30 June 2026

aimed at reducing operational energy consumption, improving

efficiency and accelerating decarbonisation.

Key actions included the procurement of 100% renewable

electricity for its Reading and Cardiff offices, the upgrade of the

Variable Refrigerant Flow system at the Manchester office, and

the closure of the Wilmslow office, reducing the Group's overall

property footprint. The Group also worked closely with landlords

to support building decarbonisation initiatives and the adoption

of renewable energy contracts.

Further progress was made in reducing emissions from business

operations and transport. The Building Management System at

the Reading office was optimised through the adjustment of

operational schedules and the refinement of temperature set

points, with cooling and heating thresholds reset to 24°C and 21°C

respectively, improving energy efficiency while maintaining

occupant comfort.

The Group also enhanced its driver efficiency programme

through updated guidance within the Drivers Handbook and

continued the transition to an electric vehicle fleet. During the

year, a £600 grant was received to support the installation of EV

charging infrastructure, and all additional company cars

acquired were electric vehicles.

These measures form part of the Group's broader

decarbonisation pathway and contribute to progress towards its

2030 net zero target.

Financed emissions

The financed emissions and financed emissions intensities

associated with the Group’s Property Finance4 and Motor

Finance5 portfolios are displayed in the table below. These are

provided alongside the financial year 2025 numbers for

comparative purposes.

Property Finance

Year ended

30 June 2026

Year ended

30 June 2025

Total gross advances6

£10.0bn

£8.7bn

Financed emissions (tCO₂e)

180,965

160,048

Emissions intensity (gCO₂e/£)

18.1

18.3

Data coverage

96 %

100 %

Data quality score (PCAF score)

3.4

3.3

The increase in total financed emissions within the Property

Finance portfolio was primarily driven by higher lending volumes

(+15% year-on-year). Financed emissions intensity (gCO₂e/£)

remained broadly stable during the financial year.

Motor Finance

Year ended

30 June 2026

Year ended

30 June 2025

Total gross advances

£4.6bn

£4.2bn

Financed emissions (tCO₂e)

665,749

626,325

Emissions intensity (gCO₂e/£)

143.8

148.2

Data coverage

100 %

Data quality score (PCAF score)

2.9

2.5

As with the Property Finance portfolio, financed emissions in the

Motor Finance portfolio increased year-on-year, primarily driven

by portfolio growth (+10% year-on-year).

The portfolio's emissions intensity decreased, reflecting a higher

proportion of electric and hybrid vehicles within the book and

supporting the portfolio's ongoing decarbonisation. This shift in

the portfolio mix was also the primary driver of the change in the

data quality score. Under the current methodology, emissions

associated with electric and hybrid vehicles require the

estimation of indirect emissions from electricity consumption and

are therefore assigned a higher (i.e. lower-quality) PCAF data

quality score.

4 Where possible, Property emissions have been calculated by examining property-level Energy Performance Certificate data, which includes details on fuel type, floor area and energy consumption. In these

instances, a PCAF score of 3 has been applied. Where property-level EPC data has not been retrieved, approximate or averages have been used, with a PCAF score of 5 applied. 2025 UK Government Greenhouse

Gas conversion factors are used to determine the emissions associated with different fuel types.

5 Motor emissions have been calculated by multiplying the estimated annual distance travelled by the vehicle’s gCO2e per km. Where data is unavailable, statistics on average mileage, average vehicle efficiency,

or average vehicle type emissions are used. Where gCO2e per km are derived from the New European Driving Cycle (NEDC) test, an uplift has been applied to more closely reflect estimates in the Worldwide

Harmonised Light-Vehicle Testing Procedure (WLTP).

6 Property Finance gross advances exclude the Octane Capital loans acquired during the period: £427.3m at 30 June 2026.

Section 172 statement

This statement describes how the Directors of Aldermore Group plc (“The Company”) have had regard to the matters set out

in section 172(1) (a) to (f) of the Companies Act 2006 in carrying out their duties during the year. The Companies Act 2006 sets

out the general duties owed by Directors to a company, including a list of matters of which Director’s must have regard.

Directors must act in the way they consider, in good faith, would

be most likely to promote the success of the Company for the

benefit of its members as a whole and in doing so have regard

(amongst other matters) to:

• the likely consequences of any decision in the long term.

• the interests of the Company's employees.

• the need to foster the Company's business relationships with

suppliers, customers, and others.

• the impact of the Company's operations on the community

and the environment.

• the desirability of the Company maintaining a reputation for

high standards of business conduct.

• the need to act fairly as between members of the Company.

Aldermore Group PLC is the parent company within the

Aldermore Group (the “Group”). Its principal subsidiaries are

Aldermore Bank PLC and MotoNovo Finance Limited, through

which the Group's business is conducted. In carrying out their

duties, the Directors therefore have regard to the interests of

stakeholders across the Group, together with the long-term

consequences of decisions made on behalf of the Group.

The Board receives information on the interests of the Group's

key stakeholders through direct engagement and reporting from

management. The sections below describe how the Board has

has had regard to the interests those stakeholders during the

year ended 30 June 2026 and the principal matters considered.

Capital support for MotoNovo Finance Limited

During the year, the Board approved a subscription of £80 million

for A2 preference shares issued by MotoNovo Finance Limited.

The decision followed the recognition of a provision in respect of

potential customer redress arising from the FCA's review of

historical motor finance commission arrangements and was

intended to ensure MotoNovo Finance Limited maintained an

appropriate capital position.

In reaching its decision, the Directors considered the long-term

interests of the Company and the wider Group, including the

impact on the Company's own capital resources, financial

resilience and ability to support the Group's strategic objectives.

The Directors also considered the importance of maintaining

confidence amongst regulators, customers, employees and

creditors and ensuring that MotoNovo Finance Limited remained

appropriately capitalised to meet its regulatory requirements

and continue serving customers effectively.

Having balanced these considerations, the Directors concluded

that subscribing for the A2 preference shares was in the best

interests of the Company and would promote its long-term

success for the benefit of its shareholder, while supporting the

resilience and sustainability of the wider Group, in accordance

with section 172 of the Companies Act 2006.

Customers

Customers remain central to the Group’s purpose of ‘Backing

more people to go for it in life and business’ and are a key

consideration in Board decision-making. The Board receives

regular reporting on strategy, customer outcomes, complaints,

product governance and Consumer Duty, enabling it to consider

the evolving needs of these customer groups when making

strategic decisions.

The Company serves a diverse UK customer base across four

specialist business areas: Property, Business Finance, Motor

Finance and Savings. Its customers include personal savers,

mortgage holders and vehicle finance customers; landlords and

commercial real estate borrowers; SMEs and corporates with

financing and deposit needs; and property investors and

developers seeking funding. Customer research and insight

inform the ongoing development of products and services to

meet the evolving needs of these customers.

During the year, the Board received regular updates on a range

of customer initiatives supporting delivery of the Group’s

strategy, including the launch of flexible ISA products,

enhancements to the Motor Finance proposition to improve

access to finance, improvements to customer service and the

introduction of an Energy & Infrastructure proposition.

The Board also considered customer insight more broadly,

including dedicated customer insight and benchmarking

presentations at the Board strategy offsite and direct

engagement with customers and intermediaries through a

customer panel, which provided valuable perspectives on

customer needs, market trends and the competitive landscape

and helped to inform the ongoing review of the Group’s strategy.

In overseeing the Group’s transformation agenda, the Board

continued to monitor the Group’s technology strategy, including

the ongoing transformation of customer delivery platforms, and

considered the evolution of the Group’s workforce and operating

model, including changes to the geographic location of roles, to

ensure these supported long-term customer outcomes,

operational resilience and the effective delivery of the Group’s

strategy.

The Board reviewed the annual Consumer Duty assessment,

together with regular reporting on customer outcomes,

vulnerability and complaints. It also monitored management’s

implementation of the refreshed Vulnerable Customer Policy,

updated in October 2025, and associated support arrangements

to help ensure customers experiencing temporary or permanent

vulnerabilities are treated fairly, consistently, and with

appropriate care across all interactions.

People

This has been a year of significant transformation for the Group,

including the continued evolution of our workforce structure and

operating model to support long-term, sustainable success. The

Board recognises that engaged colleagues and a strong

organisational culture are central to the Group's success and

therefore remained focused on ensuring fair and consistent

outcomes for colleagues throughout this period of change.

As part of its oversight of changes to the Group's operating

model, the Board considered the impact on colleagues alongside

the longer-term needs of the business. This included

consideration of colleague communications and engagement,

retention and attrition, career pathways, skills and leadership

capability, as well as the support required for colleagues and

teams operating within the future model. The Board recognised

the importance of balancing the impact of transformation on

colleagues with the need to build a more efficient, resilient and

appropriately skilled organisation capable of supporting the

Group's long-term sustainable success.

The Board considered matters relating to leadership, skills

development, reward, recognition and engagement, as well as

the long-term geographic footprint of the Group's workforce and

opportunities to improve effectiveness and productivity.

These discussions supported the Board in balancing the interests

of colleagues while ensuring the Group's workforce remained

well positioned to deliver its long-term strategy.

The Board considers defined remuneration principles that

promote sustainable long-term performance, responsible risk

management, collaboration, and ethical behaviour when making

decisions relating to pay. The aim of the framework is to attract,

retain, and motivate talent, while fostering a culture of high

performance, accountability, and teamwork, as well as

protecting the financial integrity of the Group.

When considering colleague remuneration, the Board have

focused on ensuring outcomes are fair, motivating and market

competitive. Further, remuneration-related regulatory changes

have been monitored during the year to ensure managements’

ongoing adherence to appropriate governance standards,

ensuring that compliance and conduct-related risks are

appropriately managed and mitigated.

The Board is committed to promoting a diverse, inclusive and

supportive workplace culture, recognising that employee

wellbeing, engagement and a strong leadership pipeline

contribute to long-term business resilience. During the year, the

Board, supported by the Corporate Governance & Nomination

Committee (CGNC), oversaw succession planning across the

Executive Committee and senior leadership population.

The CGNC reviewed the strength and depth of succession plans,

including the identification of 'ready now' and longer-term

successors, leadership development initiatives and retention

priorities, while considering the diversity of the senior

management pipeline as part of succession planning and senior

appointment processes.

The Board also reviewed the Group's diversity and inclusion

agenda, noting that female representation in senior leadership

had increased to 44%, exceeding the Group's target of 40%, and

supported continued initiatives to improve the representation

and progression of women in financial services through

programmes such as Moving Ahead. Further information on

Board diversity is provided in the Wates Corporate Governance

Principles report on page 52.

Suppliers and Distribution Partners

The Group’s business model continues to rely on a range of

distribution channels and third-party relationships across its

lending and savings businesses. During the year, the Board

received updates on the performance of key business lines,

including the role of intermediary, introducer and partnership

channels in supporting customer acquisition and growth.

The Board also considered matters relating to the Group’s

strategic supplier relationships, particularly in connection with

technology transformation, offshoring, outsourcing and

operational resilience. This included oversight of significant third-

party arrangements, supplier performance, delivery capability,

the governance supporting major transformation programmes.

As the Group continued to modernise its operations and

technology platforms, the Board oversaw the evolution of the

Group's operating model, including consideration of the long-

term geographic distribution of roles and how this would support

greater organisational effectiveness, productivity and resilience.

Alongside this, the Board maintained oversight of supplier

management, procurement capability and third-party

governance arrangements to ensure that key strategic

partnerships continued to support the successful delivery of the

Group's strategy.

Aldermore Bank PLC and MotoNovo Finance Limited report twice

yearly on their payment metrics, including the average time

taken to pay supplier invoices.

In addition, the Board considered the annual statement setting

out the steps taken to prevent modern slavery in the business

and its supply chains. Aldermore Group PLC, including its

subsidiaries, adopts a zero tolerance policy towards slavery and

human trafficking. Acknowledging the risks associated with

international supply chains, Aldermore implements due diligence

and procurement processes to prevent such practices.

The Company engages with its suppliers to ensure they have

anti-slavery policies in place and will not work with those found

to be involved in slavery or human trafficking. Further details are

set out in the Group’s Modern Slavery Statement, which is

articulated on page 26.

Communities and Environment

The Board recognises the importance of the Group's contribution

to the communities in which it operates and the impact of its

activities on the environment. These considerations form part of

the Board's discussions on the Group's purpose, strategy and

long-term sustainable success.

The Group’s purpose is to improve access to finance for

individuals and businesses whose needs may not be fully met by

larger financial institutions. In doing so, the Group seeks to

support greater financial inclusion and contribute positively to

the communities in which it operates.

The Group has a central role in the Purpose Coalition, a cross-

party initiative that is supported by a mix of private and public

sector organisations committed to “levelling up” on the ground in

the UK. The Group has published its Report to Society which

provides details on the work undertaken to support the Purpose

Coalition and this can be found on the Group’s website.

The Group recognises the role it has in supporting the transition

to a resilient, low-carbon economy. Further information on the

Group‘s approach to ESG & Sustainability can be found on page

23. The Group’s Climate-related Financial Disclosure (“CFD”)

requirements are included within this report from page 29 and

describe progress in developing the Group’s climate risk

capabilities together with its future areas of focus.

Investors

The Company is a wholly owned subsidiary of FirstRand

International Limited, which is ultimately owned by FirstRand

Limited. The interests of the Group's ultimate shareholder are

represented on the Board by two shareholder appointed non-

executive directors. Their presence on the Board supports

ongoing engagement with the shareholder and provides insight

into the wider FirstRand group, while the Board continues to

exercise its duties in the best interests of the Company.

Shareholder representatives also attend meetings of the Audit

Committee, Risk Committee and Remuneration Committee. The

Group maintains engagement with FirstRand through a range of

governance forums, with Executive Committee members

participating in relevant FirstRand governance and management

forums. The CEO represents the Group at the FirstRand Strategic

Committee (‘StratCo’) and Financial Resource Management

(‘FRM’) forum.

Additionally, the Aldermore Board Risk Committee Chair and

Aldermore Audit Committee Chair provide reporting into the

FirstRand Risk, Capital Management and Compliance Committee

(‘RCCC’) and FirstRand Audit Committee respectively on

conclusions reached at the Aldermore Committees. This supports

FirstRand’s understanding of the Group’s risk profile and

emerging risks as part of its oversight of the wider FirstRand

group. The Group also engages with debt investors in support of

its wholesale funding and subordinated capital issuance.

Regulators

Maintaining open, constructive and transparent dialogue with

the Group’s regulators remains a key priority for the Board.

Throughout the year, the Executive Directors, including the Chief

Executive Officer, have met with the Financial Conduct Authority

(“FCA”), Prudential Regulation Authority (“PRA”) and the South

African Reserve Bank, the ultimate Parent Company’s regulator.

The Board receives regular updates on regulatory developments

and management’s implementation of new regulatory

requirements. The Board also received updates on the FCA's

review of historical motor finance commission arrangements and

considered the potential implications for the Group, its

customers and other stakeholders.

This Strategic Report on pages 4 to 49 and the principal risks and

uncertainties on pages 82 to 86 were approved by the Board and

signed on its behalf by:

Raj Makanjee

Chief Executive Officer

9 September 2026

Non-financial and ESG information statement

The Group’s non-financial and sustainability information statement has been prepared in accordance with the requirements

set out in sections 414CA and 414CB of the Companies Act 2006.

Reporting requirement

What are our relevant policies, principles and

statements?

Information necessary to understand our approach, impact and outcomes

Our employees

FirstRand Code of Ethics

Recruitment Policy

Environmental Social and Governance section (Page 23)

Section 172 Statement (Page 42)

Our suppliers

Third-Party Supplier Policy

Supplier Code of Conduct Procurement

Operating Standard

Environmental Social and Governance section (Page 23)

Environmental matters

Climate Risk Framework

Environmental Social and Governance section (Page 23)

Energy and Carbon Reporting (Page 38)

Social matters

Equal Opportunities and Respect at Work Policy

Complaints Handling

Environmental Social and Governance section (Page 23)

Section 172 Statement (Page 42)

Human rights and modern slavery

approach

Modern Slavery Policy

Environmental Social and Governance section (Page 23)

Section 172 Statement (Page 42)

Anti-corruption and bribery

Group Anti Bribery and Corruption

Environmental Social and Governance section (Page 23)

Principal Risks (Page 82)

Principal risks and uncertainties

Risk Appetite Framework

Group Risk Management Framework (GRMF)

Environmental Social and Governance section (Page 23)

Principal Risks (Page 82)

Reporting requirement

Information necessary to understand our approach, impact and outcomes

Description of the business model

Business Model (Page 5).

Non-financial key performance indicators

Environmental. Social and Governance Report (Page 23) , Energy and Carbon Reporting (Page 38), Section 172

(Page 42).

Climate-related disclosures as required by

Section 414CB of the Companies Act 2006

Governance arrangements in relation to assessing and managing climate-related risks and opportunities (Page

29).

Identification, assessment and management of climate-related risks and opportunities, and integration of these

processes into the overall risk management process (Page 29).

The Group’s principal climate-related risks and opportunities, related time periods, and actual and potential

impacts (Page 29).

Resilience of the Group’s business model and strategy considering different climate-related scenarios (Page 29).

Targets used to manage climate-related risks, and related Key Performance Indicators (Page 29).

Wider information on the Group’s policies

The table below summarises the Group’s key policies relevant to these requirements. Unless otherwise stated, all policy references are to

Aldermore Group policies.

Policy

Overview

FirstRand Code of Ethics

This code of ethics is designed to provide guidance on ethical decision-making and behaviour. It creates a common

understanding of how the Group expects its people to behave. As a financial services group, looking after the financial

interests, personal and other information of customers is a responsibility that requires the highest standards of integrity

and confidentiality.

Recruitment Policy

This policy sets out the Group’s commitment to recruiting the most suitable person for each role, whose skills and

experience are a clear match to the profile, coupled with the candidate’s clear demonstration of a match to the Group’s

behavioural framework.

Third-Party Supplier Policy

This policy sets out the key requirements and minimum standards that must be followed when engaging, working with and

exiting from relationships with third-party service providers to support business activities, critical functions, services,

systems, or processes across the Group’s operating businesses.

Supplier Code of Conduct

This code of conduct sets out the expectations for suppliers engaged with Aldermore Group Plc and its subsidiaries. It

forms part of the vendor onboarding and ongoing due diligence process, including requirements for suppliers to maintain

appropriate anti-slavery policies. The code makes clear that Aldermore Group Plc will not engage with organisations

involved in slavery, human trafficking, child labour, or any other abuse of human rights, reinforcing the Group’s

commitment to ethical business practices.

Procurement Operating Standard

This standard outlines the activities, roles and responsibilities, and governance across all stages of the Source-to-Pay

process. It applies to the procurement department and all individuals involved in the management of suppliers to

Aldermore Group. The primary objectives of the Standard are to support the procurement department in managing risk

and controlling cost. Together with the Procurement Policy, procedures, and processes, the Standard provides structure to

all guidance content and promotes consistent culture and behaviours across the Group.

Climate Risk Framework

This framework outlines the Group’s approach to identifying, assessing, managing, mitigating, and disclosing climate-

related risks and opportunities.

Equal Opportunities and Respect at

Work Policy

This policy sets out the Group’s commitment to promoting equality of opportunity for all staff and job applicants. It reflects

the aim to create a working environment where individuals can fully utilise their skills, free from unlawful discrimination or

harassment, and where all decisions are made based on merit.

Complaints Handling

This policy outlines the Group’s approach and processes for effectively handling complaints.

Group Anti Bribery and Corruption

Our Anti Bribery and Corruption Policy sets out the responsibilities of all colleagues across the Aldermore Group and clearly

articulates our zero tolerance approach to bribery and corruption. The policy is reviewed annually, and all colleagues are

required to complete mandatory training to ensure they understand and adhere to the Group’s expectations. Any breach

of this policy is deemed unacceptable, will be fully investigated, and may result in disciplinary action or criminal

prosecution.

The Risk Appetite Framework

This framework defines the Group’s interpretation of risk appetite as it applies to the Aldermore Group, and to articulate

the principles for setting risk appetite across the financial and non financial risks in alignment with the Board approved

strategy. It outlines the roles and responsibilities related to risk appetite for committees, senior management, and

colleagues across the three lines of defence, and sets governance and monitoring requirements for risk appetite

statements, metrics, limits, and triggers.

Group Risk Management Framework

(GRMF)

This framework covers the systems, structures, policies, processes and people that identify, evaluate, respond to, monitor

and report both internal and external sources of material risk. It defines the governance and approach to risk management

across the Group, outlines the roles and responsibilities of those involved in risk management process, and assists the Board

and Management to make informed decisions that support the delivery of our strategy.

Corporate governance

Corporate governance structure

As the Group’s sole shareholder, FirstRand International Limited

holds the Board accountable for the effective governance of the

Group. The Board is committed to maintaining high standards of

corporate governance and recognises that effective

governance is key to the successful delivery of the Group’s

strategy and the creation of long-term sustainable value for its

shareholder and wider stakeholders. During the year ended 30

June 2026, the Group has applied the Wates Corporate

Governance Principles for Large Private Companies.

Aldermore Bank PLC (the "Bank") and MotoNovo Finance Limited

("MNFL") are wholly owned operating subsidiaries of Aldermore

Group PLC (the "Group"). To support effective governance across

the Group, the Boards of Aldermore Group PLC and Aldermore

Bank PLC comprise the same directors and meetings are held

concurrently. The MNFL Board comprises Pat Butler (Chair), Paul

Lawrence, Desmond Crowley, Ruth Handcock, Alasdair Lenman,

Romy Murray and Adrian Sainsbury as independent Non-

Executive Directors, together with Raj Makanjee (Chief Executive

Officer), Louise Britnell (Chief Financial Officer) and Stephan

Bothma (Chief Executive Officer, MNFL) as Executive Directors. The

MNFL Board operates within the Group's governance framework

while maintaining oversight of MNFL's business and regulatory

responsibilities.

The Board has established a number of committees to support

the effective discharge of its responsibilities. The Board

Committees draw on the expertise and experience of their

members to consider matters within their respective remits in

greater detail and, where appropriate, make recommendations

to the Board. This delegation allows the Board to focus its time on

strategic and other broader matters. The Chairs of the Board

Committees provide the Board with an update on matters

discussed at each meeting and Board Committee papers and

minutes are made available to the whole Board through a secure

online portal.

The Board has delegated responsibility for the day-to-day

management of the Group to the CEO subject to the Schedule of

Matters Reserved for the Board and any matters delegated to

Board Committees. The CEO is accountable to the Board for the

Group's delivery of its strategic objectives.

The CEO is supported by the executive team, which is responsible

for implementing the strategic objectives as agreed by the

Board. The executive manages the business through the

Executive Committee, Executive Risk Committee, Commercial

Performance Executive Committee, Asset & Liability Committee,

Transformation Committee, Regulatory Reporting Governance

Committee, Customer & Product Committee, Executive Credit

Committee, Non-Financial Risk Committee, and the Model Risk

Committee. These executive committees support the effective

management of the Group and provide regular reporting and

escalation to the relevant Board Committees and the Board.

Report and Accounts for the year ended 30 June 2026

Corporate Governance Structure

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The Wates corporate governance principles

The Group is committed to maintaining high standards of corporate governance, supported by a robust governance

framework, effective board oversight and well established policies and controls, including its risk management framework.

For the year ended 30 June 2026, as in the previous year, the Group has applied the Wates Corporate Governance Principles

for Large Private Companies (the “Wates Principles” or the “Principles”), published by the Financial Reporting Council (“FRC”) in

December 2018.

The Wates Principles provide a framework for the Board to assess the effectiveness of the Group’s corporate governance

arrangements and to support continuous improvement. Their application helps to ensure that the Group remains aligned

with its purpose and considers the interests of its key stakeholders, including customers, distribution partners, employees,

suppliers and the communities in which it operates, whilst also recognising the environmental impacts of its activities.

The table below summarises the six Wates Principles, explains how the Board has applied each Principle during the year, and provides

cross-references to further information that can be found in the Strategic and Governance reports.

Principle

Summary

Page

Purpose and

leadership

The Board is responsible for the overall leadership of the Group and for promoting its culture and values. It oversees the Group’s system

of governance and internal controls, ensuring that risks are identified, assessed and managed effectively. In carrying out its

responsibilities, the Board has regard to the Group's position within the wider FirstRand group and ensures that, where appropriate,

relevant policies and decisions of its parent and ultimate shareholder, FirstRand Limited, are implemented.

The Board approves the Group’s strategy and oversees its delivery to support the creation of long-term sustainable value. In doing so,

it ensures that the Group’s purpose remains central to strategic decision-making and the delivery of sustainable outcomes for

customers, colleagues and other stakeholders.

As part of the FirstRand Group, Aldermore’s enduring purpose aligns with FirstRand’s commitment to enrich lives, by backing more

people to go for it, in life and business. This purpose underpins the Group’s strategy and guides its approach to serving undervalued

and underserved customers, helping them to take the action needed to move forward in life by meeting needs that may not be met by

other financial institutions.

The Board oversees how the Group’s purpose is embedded across the business, ensuring that it remains central to the Group’s activities

and strategic decision-making. This includes oversight of how the Group's purpose, strategic priorities and expected behaviours are

embedded across the organisation, supporting the delivery of the Group's strategy and long-term sustainable success.

Page

Report and Accounts for the year ended 30 June 2026

Board

composition

The current membership of the Board, including all directors who served on the Board during the year, can be found on page 203.

As at 30 June 2026, the Board comprised eleven directors: the Chair, two executive directors, six independent non-executive directors,

and two shareholder non-executive directors. Collectively, the non-executive directors bring a breadth of experience across finance,

banking, strategy, risk, communications, brand and technology. The independent non-executive directors provide independent

judgement, constructive challenge and support to the executive directors, while the shareholder non-executive directors contribute

valuable insight from their experience of the wider FirstRand Group and international financial services sector. The composition of the

Board is partly determined by agreement with the shareholder.

The Board is committed to its ongoing development and effectiveness. The Board's collective training and development needs are

reviewed regularly, and a Board training programme is developed on an annual basis to ensure that the directors maintain the

knowledge and skills required to discharge their responsibilities effectively, taking into account the Group's strategic priorities and the

evolving regulatory environment.

The Board recognises that diversity of thought, skills, experience and background strengthens its effectiveness and supports better

decision-making. These principles inform the Board's approach to succession planning, appointments and ongoing Board

development. In February 2021, the Board adopted the targets of the Hampton-Alexander Review (33% female representation on the

Board) and the Parker Review (at least one director from an ethnic minority background). As at the date of this report, the Board

comprised 36% women and two directors from an ethnic minority background.

Two new directors were appointed to the Board during the period. All Board appointments are subject to a formal, rigorous and

transparent process based on individual merit against clearly defined criteria. The Corporate Governance and Nomination Committee

oversees Board appointments and succession planning, ensuring that candidates from a diverse range of backgrounds are

considered against objective criteria and that the Board maintains an appropriate balance of skills, experience, independence and

diversity. In line with its governance framework, the Company seeks to ensure that at least half of the Board, excluding the Chair,

comprises independent non-executive directors, while maintaining a clear division of responsibilities between the Chair and the Chief

Executive Officer.

The effectiveness of the Board and its committees is reviewed on an annual basis. During the year, the Board undertook an externally

facilitated Board effectiveness evaluation which included observations of Board and Committee meetings, interviews with directors,

senior management and advisers, and a review of the Board's governance arrangements. The evaluation concluded that the Board

and its committees continue to operate effectively and recognised the significant progress made in strengthening governance, Board

culture and constructive challenge, while identifying opportunities to further enhance Board effectiveness, succession planning and

strategic focus. The Board and the Corporate Governance and Nomination Committee have overseen the implementation of the

recommendations arising from the evaluation as part of the Board's ongoing commitment to continuous improvement.

Page

Report and Accounts for the year ended 30 June 2026

Director’s

Responsibilities

The Board is led by an independent non-executive Chair, who is responsible for the effective leadership of the Board and promoting

constructive challenge and open discussion in Board deliberations. The roles of the Chair and the Chief Executive Officer are separate,

ensuring a clear distinction between leadership of the Board and the day-to-day management of the Group. The independent non-

executive directors bring independent judgement, oversight and constructive challenge to support effective decision-making.

Collectively, the Board is responsible for ensuring that the Group operates within an appropriate governance framework and complies

with all applicable legislative and regulatory requirements.

The Board maintains a formal schedule of matters reserved for its approval, which sets out those decisions that can only be taken by

the Board. To support the effective discharge of its responsibilities, the Board has established an Audit Committee, a Risk Committee, a

Remuneration Committee a Corporate Governance and Nomination Committee and a Disclosure Committee. Each committee has

clearly defined Terms of Reference, which are reviewed at least annually, and reports regularly to the Board on matters within its remit.

The Audit, Risk, Remuneration and Corporate Governance and Nomination Committees are comprised entirely of non-executive

directors, the majority of whom are independent.

The Board receives regular reports on the Group’s strategic progress, financial and operational performance, risk management,

colleague matters, stakeholder engagement and regulatory developments, enabling it to discharge its responsibilities effectively.

Page

106

Opportunity and

Risk

The Board is responsible for overseeing the Group’s approach to identifying, assessing and managing risk, ensuring that strategic

decisions are taken within the Group’s approved risk appetite and support the Group’s long-term sustainable success.

The Board is supported by the Risk Committee, which oversees the Group’s risk profile, monitors performance against the Board-

approved risk appetite and advises the Board on the effectiveness of the Group’s Risk Management Framework and the Group’s future

risk strategy.

The Executive Risk Committee supports the Chief Risk Officer in overseeing the effective operation of the Group’s Risk Management

Framework. It monitors adherence to the Group’s risk appetite, oversees the identification, assessment and management of the Group’s

principal risks, and reports regularly to the Risk Committee on these matters.

Page

Report and Accounts for the year ended 30 June 2026

Remuneration

The Board has delegated responsibility for oversight of remuneration matters to the Remuneration Committee, which operates under

clearly defined Terms of Reference, that are reviewed at least annually. The Committee is responsible for overseeing the Group’s

remuneration framework, including setting the remuneration policy and recommending and monitoring the remuneration of the Chair

of the Board, executive directors, members of the Executive Committee and any Material Risk Takers (“MRTs”), including any

compensation payments.

In carrying out its responsibilities, the Committee seeks to ensure that the Group’s remuneration framework supports its strategy,

values and long-term sustainable success, promotes prudent risk taking and takes into consideration pay and conditions across the

wider workforce.

The Committee is supported by independent external advisers, who provide advice on legislative and regulatory developments,

market practice and remuneration benchmarking.

Further details of the Group’s remuneration arrangements are set out in the Remuneration Committee Report on page 67.

Page

Stakeholder

relationships and

engagement

The Board recognises the importance of engaging with the Group’s stakeholders and having regard to their interests in decision-

making. It promotes a culture, values and standards that place customers at the centre of the Group’s activities, while recognising the

interests of the Group’s wider stakeholders.

The Group’s Purpose – “Back more people to go for it, in life and business” – underpins its approach to serving customers, supporting

intermediary partners and creating long-term value for colleagues, shareholders, and the communities in which it operates.

The Board and its Committees receive regular reports on customer outcomes, colleague matters and the Group's engagement with

customers, colleagues and intermediary partners, enabling them to understand how the Group's activities and decisions affect its key

stakeholders.. Further information on how the Board has had regard to the matters set out in section 172 of the Companies Act 2006 is

provided in the Section 172 Statement on page 42. Additional information on the Group’s engagement with customers, colleagues,

intermediary partners and communities is set out in the Strategic Report on page 4.

Page

Report and Accounts for the year ended 30 June 2026

Audit Committee report

I am pleased to present the Audit Committee’s report for the year ended 30 June 2026.

I have served as Chair of the Audit Committee since 31 March

2025. The Committee is comprised of non-executive Directors

and, during the year, its members were Desmond Crowley, Romy

Murray, Markos Davias and Richard Banks. Richard Banks

stepped down from the Committee on 5 January 2026 and was

succeeded by Paul Lawrence, who joined the Committee on 1

December 2025.

The Committee met regularly throughout the year. Meetings were

attended by the Chief Executive Officer (“CEO”), Chief Financial

Officer (“CFO”), Chief Risk Officer (“CRO”), Chief Internal Auditor,

the external auditor and other members of senior management,

as appropriate.

Throughout the year, the Committee received regular updates

from management on the Group's financial reporting, regulatory

reporting governance and key accounting judgements.

Particular focus was given to the proposed redress scheme for

historical motor finance commissions, evolving macroeconomic

uncertainty, and the continuing enhancement of the Group's

regulatory reporting and control environment. The Committee

also supported enhancements to the Group's financial reporting

governance, including strengthening its oversight of the half-

year reporting process following the Group's listed debt issuance,

to improve governance over interim financial reporting and

support future capital management flexibility.

The Committee oversaw the work of the Group Internal Audit

(“GIA”) function, including approving quarterly updates to the

Internal Audit Plan and reviewing outcomes of assurance

activity. During the year, the Committee received assurance over

key areas of the Group’s governance, risk management, and

internal control framework, including transformation activities

and the evolving operating model, to support its assessment of

the effectiveness of the Group’s control environment.

The Committee continued to oversee the Group’s Concern at

Work (Whistleblowing) arrangements, including the effectiveness

of the Group’s process for raising, investigating and reporting

concerns.

The Committee’s principal responsibilities and key matters

considered during the year are summarised below.

Financial Reporting

The Committee is responsible for monitoring the integrity of the

Group’s financial statements, including reviewing the

appropriateness of accounting policies, significant accounting

judgements and estimates and the quality of financial reporting

disclosures.

During 2025/26, the Committee:

• approved the half-year and full-year Pillar 3 disclosures and

the updated Pillar 3 Reporting Policy and endorsed

enhancements to the Group's half-year financial reporting

governance framework to strengthen the Committee's

oversight of interim financial reporting, key accounting

judgements and disclosures in light of the Group's listed debt

obligations.

• provided oversights of the Annual Report and Accounts of the

Company, the Bank and MotoNovo Finance for the year-

ended 30 June 2026 and recommended them to the respective

Boards for approval;

Report and Accounts for the year ended 30 June 2026

• provided oversights of the consistency of, and any changes

to, significant accounting policies both on a year-on-year

basis and across the financial statements;

• provided oversights of whether appropriate accounting

standards had been followed and appropriate estimates and

judgements made, taking into account the views of the

external auditor;

• provided oversights of the clarity and completeness of

disclosure in the financial reports and the context in which

statements are made;

• provided oversights of all material information presented with

the financial statements, including the strategic report and

the corporate governance statements relating to audit and

risk management.

Significant accounting judgements and estimates over which the

Committee provided oversights in respect of the Annual Report

and Accounts for the year ended 30 June 2026 were:

Expected Credit Loss (“ECL”) provisioning

Throughout the year, the Committee reviewed and provided

oversight of management’s approach to IFRS 9 provisioning,

including macroeconomic scenarios, probability weightings,

forward-looking indicators, management overlays and post

model adjustments. Particular focus was given to changing

macroeconomic conditions, including unemployment, inflation

and house price assumptions, and the extent to which these

were appropriately reflected in the ECL. The Committee

challenged the weighting and calibration of macroeconomic

scenarios, including whether probability weightings

appropriately reflected increased economic uncertainty, and

considered the relationship between movements in the forward-

looking credit index and improving underlying portfolio

performance. The Committee also considered model

performance and the continued appropriateness of overlays

and post model adjustments, including those relating to motor

finance voluntary terminations and residual value risks. Regular

updates were received on portfolio performance, arrears trends

and collections activity, together with revisions to the Group’s

IFRS 9 models and benchmarking against peers. Following its

review and challenge, the Committee concluded that

management’s approach to ECL provisioning and the related

financial statement disclosures remained appropriate.

Effective Interest Rate (“EIR”) models

The Committee monitored the effectiveness of the Group’s

Effective Interest Rate (“EIR”) models throughout the year, with

particular focus on the mortgage portfolio. This included

reviewing changes in customer behaviour, notably the expected

period on average spent on standard variable rate (“SVR”) at the

end of the introductory fixed rate period. In addition, the

Committee reviewed and challenged management’s change in

estimation methodology, which replaced the use of origination

date SVR assumptions with a forward-looking estimate of the

SVR expected to apply when customers enter the reversionary

period. The Committee challenged management’s assumptions

relating to behavioural lives and prepayment curves, including

the supporting evidence, sensitivities and range of potential

accounting outcomes. The Committee also reviewed and

challenged the related financial statement disclosures, including

whether the key judgements, assumptions and estimation

uncertainty associated with the methodology were clearly and

appropriately presented. Following its review and challenge, the

Committee was satisfied that management’s significant

accounting judgements and the related financial statement

disclosures were appropriate.

Report and Accounts for the year ended 30 June 2026

Motor Finance provision

The Committee received regular updates on the FCA review of

historical Motor Finance commission arrangements and the

Group’s associated remediation and redress programme. The

Committee reviewed and challenged management’s

assumptions supporting the provision, taking into account the

FCA Policy Statement, ongoing legal developments and broader

market practice. The Committee also considered the governance

and assurance arrangements supporting the redress

programme and reviewed and challenged the related financial

statement disclosures, with particular focus on whether the

significant judgements, key assumptions, sensitivities and

estimation uncertainty associated with the provision were clearly

and transparently presented. Following its review and challenge,

the Committee concluded that management's assumptions, the

resulting provision, and the related financial statement

disclosures remained appropriate. In reaching this conclusion,

the Committee recognised the significant uncertainty associated

with the matter, which continued to exist at the date of approval

of the financial statements.

Going Concern

The Committee provided oversight of management’s going

concern assessment and associated stress testing, taking into

account macroeconomic uncertainty, regulatory developments,

the proposed sale of the Group by its parent, Motor Finance

provisions and capital planning. Following this review, the

Committee recommended that the financial statements continue

to be prepared on a going concern basis.

Overall, the Committee concluded that management's

accounting judgements and related disclosures remained

appropriate and that the Group's financial reporting continued

to be supported by a robust governance framework, with

significant judgements subject to appropriate challenge and

oversight throughout the reporting cycle.

Internal Controls

The Committee is responsible for monitoring the effectiveness of

the Group’s internal control environment.

During 2025/26, the Committee:

• reviewed the external auditor’s observations arising from its

testing of the Group’s internal controls;.

• considered the findings of the GIA’s audit reviews which were

completed throughout the year;

• assessed the Group’s systems of risk management and

internal controls, including whether the financial statements

were free from material misstatement due to fraud;

• reviewed the effectiveness of Group’s whistleblowing

framework and approved the revised Whistleblowing Policy;

• ratified management’s annual assessment of internal

financial controls prepared to fulfil FirstRand Limited’s listing

obligations;

• monitored the Group’s integrated assurance framework and

the development of more coordinated assurance coverage

across first, second and third line functions;

• approved an attestation from management that the Group’s

regulatory reporting throughout the year was as complete

and accurate as reasonably possible.

The Committee concluded that the continued enhancement of

integrated assurance, regulatory reporting governance and the

wider control framework had improved the coordination of

assurance across the three lines of defence, strengthening the

Committee's oversight of the Group's governance, risk

management and internal control environment.

Report and Accounts for the year ended 30 June 2026

Whilst enhancement activity remained ongoing, the Committee

considered the overall control environment to be appropriate for

the scale and complexity of the business.

Group Internal Audit

The Committee oversees the effectiveness of the GIA function,

reviews GIA reports and monitors management’s responsiveness

to findings and recommendations

Specifically, during 2025/26, the Committee:

• approved updates to the annual audit plan and reviewed

quarterly reports on progress against the plan.

• reviewed thematic audit findings and monitored recurring

themes relating to documentation, roles and responsibilities,

governance and control embedding.

• monitored management’s remediation activity across all

reviews and approved extensions where appropriate.

• reviewed the results of the independent quality assurance

review of GIA undertaken by Grant Thornton.

• concluded that the GIA function remained independent,

appropriately resourced and effective.

• reviewed and challenged the proposed 2026/27 Annual Audit

Plan.

• monitored recruitment, retention and succession planning

within GIA.

• held regular private sessions with the Chief Internal Auditor.

The Committee concluded that GIA remained effective and

appropriately resourced, providing independent assurance over

the Group's principal risks. The continued development of

integrated assurance arrangements also enabled greater

coordination between first, second and third line assurance

activities, supporting a more risk-focused and efficient

assurance framework.

External Audit

The Committee oversees the relationship with, and

independence of, the external auditor, KPMG.

During 2025/26, the Committee:

• reviewed and approved KPMG’s audit strategy, engagement

terms and proposed audit fees for the 2025/26 financial year;

• monitored KPMG’s independence and objectivity, including

consideration of all non-audit services provided by KPMG;

• approved revisions to the Auditor Independence Policy and

the Combined Policy on Non-Audit Services and Employment

of Former Employees of the Auditor;

• monitored governance arrangements in relation to the

engagement for non-audit services of EY, the joint auditor of

the FirstRand group;

• reviewed representation letters provided to the external

auditor and recommended these for Board approval.

• regularly met privately with senior members of the KPMG audit

team;

• considered the feedback regarding the effectiveness of the

external audit process and continued performance following

KPMG’s first full audit cycle as the Group’s external auditor.

The Committee remained satisfied that KPMG continued to

provide an independent, objective and robust audit, with

appropriate challenge over management's judgements,

supporting confidence in the integrity of the Group's financial

reporting.

Report and Accounts for the year ended 30 June 2026

Other governance matters

The Committee also:

• received updates on regulatory reporting developments

across the Group in both the UK and South Africa;

• reviewed the Committee’s Terms of Reference;

• considered the findings and recommendations relevant to the

Committee arising from the externally facilitated Board

effectiveness review conducted during the year and agreed

associated actions.

Collectively, these activities strengthened the Group's

governance framework by ensuring that regulatory expectations,

evolving governance arrangements and Committee

responsibilities continued to develop alongside the Group's

changing operating environment.

The Committee would like to thank management, GIA, KPMG and

all colleagues involved in supporting the Committee throughout

the year.

Alasdair Lenman

Audit Committee Chair

Report and Accounts for the year ended 30 June 2026

Risk Committee report

This report provides an overview of the Committee's work for the

year ended 30 June 2026.

During the year, the Committee has continued to oversee the

Group's risk profile against a backdrop of economic uncertainty,

evolving geopolitical developments and significant strategic

change. The Committee considered the implications of persistent

inflationary pressures, interest rate expectations and the

continued evolution of the credit cycle, together with

developments affecting the UK banking sector and wider

financial markets. Alongside these external factors, the

Committee provided oversight of the Group's strategic

transformation programmes.

Throughout the year, the Committee placed particular emphasis

on organisational capacity, capability and prioritisation to

ensure that the Group's strategic objectives continued to be

supported by effective risk management and governance. This

focus helped ensure that the Group's risk management

arrangements continued to mature alongside significant

strategic change, with enhanced governance, clearer risk

ownership and strengthened oversight of the Group's principal

risks.

It is the Committee's role to provide oversight of, and advice to,

the Board on current and future risk exposures and to shape the

Group's risk strategy. This includes overseeing the Group Risk

Management Framework ("GRMF"), maintaining appropriate

governance and risk management arrangements across the

Group and receiving regular updates on the effectiveness of risk

management. The Committee recommends the Group's Risk

Appetite Framework ("RAF") annually to the Board for approval

and maintains oversight of its application through regular

monitoring of performance against approved limits and triggers.

The Committee is comprised of Non-Executive Directors. Paul

Lawrence was appointed Chair of the Committee during the

year, succeeding Richard Banks. The other members of the

Committee during the year were Desmond Crowley, Ruth

Handcock, Romy Murray, Markos Davias and Alasdair Lenman. In

addition to its standing members, meetings are attended by the

Chief Risk Officer ("CRO"), Chief Executive Officer ("CEO"), Chief

Financial Officer ("CFO") and other members of senior

management, together with representatives from Group Internal

Audit and the external auditor where appropriate.

The structure of Committee meetings enables members to

provide effective challenge and independent oversight, drawing

on their diverse experience while maintaining constructive

dialogue with management. Throughout the year, the Committee

continued to receive regular updates from the CRO covering the

Group's overall risk profile, emerging risks, regulatory

developments and progress in strengthening the Group's risk

management capabilities.

During the year, the Committee oversaw the continued

embedding of the enhanced Risk Target Operating Model ("Risk

TOM"), the further development of the Group's risk culture and

ongoing improvements to governance, assurance and

management information.

The Committee places significant importance on maintaining

open and constructive relationships with its regulators. During

the year, the Committee received regular updates on

engagement with the Prudential Regulation Authority ("PRA"), the

Financial Conduct Authority ("FCA") and the South African

Report and Accounts for the year ended 30 June 2026

Prudential Authority ("SARB"), covering areas including collections

capability, financial crime, capital and liquidity, operational

resilience and customer outcomes.

Areas of focus

The Committee has provided oversight and consideration of the

following key areas:

• Group Risk Management Framework ("GRMF")

• Group Risk Profile ("GRP") including continued oversight of the

Group's Risk Management Effectiveness Assessments

("RMEAs") and Residual Risk Profiles across financial and non-

financial risks.

• Risk Culture

• Annual review and enhancement of the Group's Risk Appetite

Framework (“GRAF”), including qualitative risk appetite

statements and financial and non-financial risk appetite

metrics.

• Ongoing monitoring of macroeconomic conditions and their

impact on portfolio performance, customer affordability and

credit quality.

• Oversight of the Group's collections transformation

programme and improvements to recoveries capability.

• Continued enhancement of the Group's financial crime

framework and management action plan.

• Capital and liquidity planning, stress testing and recovery

planning.

• Oversight of operational resilience, technology, cyber security,

third-party risk management and the continued development

of the Group's approach to managing risks associated with

artificial intelligence ("AI").

• Oversight of the integration of Octane Capital and wider

strategic transformation programmes.

At each meeting the Committee received a report from the CRO

covering the Group's financial and non-financial risk profile,

governance, emerging risks and regulatory developments. The

Committee used a forward planning framework to ensure that all

principal risk areas received appropriate attention throughout

the year.

Collectively, these activities strengthened the Committee's

oversight of the Group's evolving risk profile and supported

continued enhancements to the Group's governance framework,

risk management capability and resilience during a period of

significant organisational change.

Some of the key matters discussed by the Committee are

explored further below. Additionally, set out on pages 82 to 88 is a

summary of the Group’s principal risks and key mitigants,

together with an overview of emerging risks and recent and

anticipated future developments. More information on the

Group’s approach to risk management, the governance

framework for managing risks and stress testing, together with a

full analysis of the Group’s principal risks, can be found in the risk

management section from page 74.

Credit Risk

The Committee oversaw the Group's credit risk profile, ensuring

alignment with the Board-approved Risk Appetite Framework.

Particular focus was given to portfolio performance, arrears

trends, macroeconomic developments and the continued

enhancement of collections and recoveries capability.

Throughout the year the Committee monitored delivery of the

collections transformation programme, including improvements

to operational capability, technology and management

information. These enhancements strengthened oversight of

portfolio performance and supported earlier intervention for

Report and Accounts for the year ended 30 June 2026

customers experiencing financial difficulty, while contributing to

the continued reduction of legacy arrears portfolios.

The Committee also approved the annual refresh of the Credit

Risk Appetite Framework, strengthening the alignment between

the Group's growth strategy, risk capacity and Board oversight of

credit risk. The Committee maintained oversight of strategic

lending initiatives, including the integration of Octane Capital,

ensuring that business growth remained consistent with the

Group's risk appetite.

Capital and Liquidity Risk

The Committee received regular updates on the Group's capital

and liquidity position, including actual and forecast performance

against the Risk Appetite Framework.

During the year, the Committee reviewed and endorsed the

Group's ICAAP, ILAAP, Recovery Plan and inaugural Solvent Exit

Analysis for Board approval. These reviews provided assurance

that the Group maintained appropriate capital and liquidity

resilience under both business-as-usual and stressed conditions,

while supporting continued enhancement of recovery planning

and risk management.

The Committee also approved enhancements to capital and

liquidity risk appetite metrics, improving alignment between the

Group's strategic objectives, risk appetite and capital planning

framework.

Market Risk

The Group continues to maintain a low appetite for market risk.

During the year, the Committee reviewed interest rate risk in the

banking book together with enhancements to market risk

appetite metrics and Treasury risk management processes.

These enhancements provided additional operational flexibility

while maintaining the Group's prudent approach to market risk

and supporting effective balance sheet management.

Operational Risk

Operational resilience remained a significant area of focus

throughout the year. The Committee considered detailed

updates on technology resilience, cyber security, outsourcing,

third-party risk management and the delivery of major strategic

transformation programmes.

Through this oversight, the Committee supported continued

strengthening of the Group's operational resilience framework

while ensuring that major change programmes continued to be

delivered within the Group's risk appetite.

The Committee also monitored operational resilience testing

together with enhancements to operational risk reporting and

assurance, improving visibility of operational risks and

supporting more effective Board oversight.

Compliance and Regulatory Risk

The Committee continued to oversee the Group's compliance

and regulatory risk profile, including customer outcomes,

financial crime and regulatory engagement.

A significant area of focus during the year was the Financial

Crime Transformation Management Action Plan. Through regular

oversight of progress against the programme, the Committee

monitored improvements to governance, customer due diligence,

systems, controls and operational capability, providing greater

transparency over remediation activity and supporting

continued enhancement of the Group's financial crime control

environment.

The Committee also monitored developments relating to motor

finance commission arrangements, customer outcomes and

Report and Accounts for the year ended 30 June 2026

ongoing engagement with the PRA, FCA and SARB, helping ensure

that emerging regulatory developments received appropriate

Board oversight.

Model Risk

The Committee received regular reports from the Model Risk

Committee and continued to oversee the Group's model

governance arrangements.

During the year, the Committee approved enhancements to the

Model Risk Management Framework, extending governance over

deterministic quantitative methods and AI-enabled tools where

appropriate. These enhancements strengthened oversight of

analytical techniques used across the Group while supporting

readiness for evolving regulatory expectations.

Three Lines of Defence Model

The Group continues to operate a recognised Three Lines of

Defence model which clearly defines risk management

responsibilities across the organisation.

During the year, the Committee continued to oversee the

effectiveness of the Three Lines of Defence model, supporting

clearer accountability for risk management responsibilities

together with enhanced second line assurance across the Group.

Risk Frameworks and Policies

The Committee oversaw the effectiveness of the Group's

principal risk management frameworks and approved a number

of enhancements during the year, including updates to the

Group Risk Management Framework, Risk Appetite Framework

and supporting principal risk management frameworks. These

enhancements strengthened the Group's governance framework

and ensured that the principal risk management frameworks

continued to evolve alongside changes to the Group's operating

model, strategic priorities and regulatory expectations.

The Committee also reviewed its own Terms of Reference during

the year and recommended updates to the Board.

Risk Culture

The Board remains committed to maintaining a strong risk

culture as a fundamental component of the Group's overall

governance framework.

The Committee monitored progress in embedding the Group's

target risk culture, the continued embedding of risk management

across the Three Lines of Defence, and enhancements to

management information, assurance and governance. Together,

these activities supported more consistent risk management

practices across the organisation and the continuing maturity of

the Group Risk Management Framework.

Remuneration matters

The CRO continued to provide an independent assessment of the

Group's risk environment to the Remuneration Committee,

including consideration of the risk approach and awareness of

Material Risk Takers and individuals eligible for variable

remuneration. During the year, the Committee was satisfied that

remuneration outcomes continued to reflect the Group's risk

profile and that no material risk-related concerns were identified.

All colleagues continue to be required to demonstrate effective

management of risk as part of their performance objectives,

reinforcing individual accountability for risk management across

the Group.

Emerging/Horizon Risks

The Committee reviewed emerging risks throughout the year,

including geopolitical developments, macroeconomic

uncertainty, artificial intelligence ("AI"), financial crime and cyber

security.

Report and Accounts for the year ended 30 June 2026

Recognising the rapid development of AI technologies and the

evolving regulatory landscape, the Committee received updates

on management's ongoing work to assess AI-related risks and to

develop an appropriate governance approach. The Committee

will continue to oversee this work as the Group's use of AI evolves.

The Committee also continued to monitor climate-related

developments and other external risks as part of its ongoing

oversight responsibilities.

The key emerging risks relevant to the Group are captured in the

Emerging Risk section on page 86.

Paul Lawrence

Risk Committee Chair

Report and Accounts for the year ended 30 June 2026

Remuneration Committee report

As Chair of the Remuneration Committee my report provides an overview of the Committee’s work for the financial year

ended 30 June 2026 as well as its key areas of focus over the course of the year, and our key remuneration policies and

practices. We also report our directors’ emoluments in accordance with the Group’s annual reporting requirements. This

should be read in conjunction with the Remuneration section of the Aldermore Group Pillar 3 Disclosures.

The Board applies the Wates Corporate Governance Principles for Large Private Companies. I can confirm that we adhere to

these principles in so far as they relate to our overall approach to remuneration at Aldermore, and we have no relevant

deviations to disclose.

Our Committee

The Remuneration Committee (the Committee) is primarily

responsible for overseeing the development and implementation

of the Group’s remuneration policies and practices, and setting

and overseeing the level and structure of remuneration for senior

individuals of the Group. Our approach to remuneration is to

promote the long-term success of the Company, and to attract,

motivate and retain colleagues of a high calibre who can deliver

sustained performance consistent with our strategic goals,

appropriate risk management and the Company’s values and

culture.

The Committee is comprised of a majority of independent Non-

Executive Director members, and I was appointed as Chair with

effect from December 2022. The other members of the Committee

are Pat Butler (Chair of the Board), Markos Davias (FirstRand

CFO), both serving for the full year, and Paul Lawrence (Chair of

the Risk Committee). Paul joined in January 2026, replacing

Richard Banks who previously performed the same role. I would

like to thank Richard for his invaluable support to the Committee.

As the Group is wholly owned by our parent company FirstRand

Group, Markos is one of two shareholder appointed non-

executive directors on the Board.

In addition to our members, the Committee invites our Executive

Directors and key members of management to provide subject

matter expertise to the Committee as appropriate. No director is

involved in a decision about their own remuneration.

Deloitte LLP have acted as our Committee’s independent

remuneration advisors for the full year. I can confirm that they

did not provide any additional services to the Group that would

create a conflict of interest during their time in post.

Key areas of focus

Our pay philosophy remains unchanged, applies to all

colleagues, and is anchored on the principles of fairness,

competitiveness, and performance.

• Clear and Simple: our approach to pay and bonus is easy to

understand and to explain to others.

• Fair: everyone is entitled to equal pay for performing equal

work.

Report and Accounts for the year ended 30 June 2026

• Consistent: we have transparent frameworks that enable us

to be clear and consistent in all pay decisions.

• Motivating: compensation drives and rewards high

performance and the right behaviours, whilst encouraging

teamwork and collaboration across the organisation.

• Market competitive: we are competitive to the market, whilst

reflecting our organisation size and brand.

As in previous years, we are guided by our pay philosophy when

considering the design and operation of our remuneration

schemes and policy. We made several updates to our Group

Remuneration Policy throughout the year to continue to support

this philosophy and ensure that our approach is clear, simple,

easy to understand and explain, and that we promote

consistency in our pay decisions.

One of our key focus areas was to consider our Group’s response

to new PRA and FCA remuneration rules announced in October

2025. We supported the rule changes and felt they make the UK

regulatory framework more streamlined, proportionate and

competitive. As a result of the revised regime, we agreed a

number of changes to our approach to variable pay to ensure

coherence with the new regulatory rules.

Following the amendments to regulatory minimum requirements

for MRT deferrals, we have revised our approach to deferrals for

MRTs and we also applied a proportionate update to the

deferral scheme that applies to all other colleagues. Further, as a

result of the associated changes to deferral schedules, we were

able to revise our LTIP granting methodology and CEO minimum

shareholding requirement in recognition of the reduced impact

and extent of deferrals.

In terms of wider regulatory changes, we have been monitoring

the evolving market response to the removal of the bonus cap.

As a result, we updated our maximum variable to fixed pay ratio

to 3:1 which provides us with greater flexibility (albeit we continue

to broadly operate on a 2:1 basis). We continue to be committed

to ensuring an appropriate balance between fixed and variable

remuneration.

Creating sustainable growth across the Group is key to our

success and so we were delighted to have supported the pay

harmonisation required as a result of the Octane Capital

transaction.

This year, the Committee oversaw the leaver arrangements for

Ralph Coates, our previous CFO, who left Aldermore in September

2025 and Steven Cooper, our previous CEO, who left in October

2025. We also determined the remuneration of their subsequent

replacements, Louise Britnell, CFO (appointed in September 2025)

and Raj Makanjee, Group Chief Executive (appointed in

November 2025), ensuring appropriateness and consistency with

our Group Remuneration Policy.

Finally, we have been considering key remuneration matters in

the context of an intended ownership transition following an

announcement to shareholders by our parent, the FirstRand

Group, that they will be looking to progress the sale of Aldermore

Group.

Group wide remuneration

In line with our philosophy, Aldermore seeks to pay all its staff

competitively and fairly for the roles they undertake and applies

similar principles for remuneration across the workforce to those

which apply to our Executive Directors. Whilst most colleagues

exceed it, as a minimum, we commit to paying all colleagues the

Real Living Wage to ensure our pay always meets the cost of

living.

In addition to salary, permanent employees are eligible to

receive variable pay on a discretionary basis. Bonus awards are

based on an assessment of Group, business area and individual

performance, with measures set by the Remuneration Committee

at the beginning of the financial year and assessed following

Report and Accounts for the year ended 30 June 2026

year-end. As in past years, we have considered carefully the

performance measures used to determine the overall bonus pool

for the Group, ensuring an appropriate balance of financial, risk

and non-financial measures, and alignment to the Group’s key

strategic objectives.

For our most senior colleagues and those subject to certain

regulatory requirements, a proportion of the award is subject to

deferral, and malus and clawback provisions apply, promoting

behaviours that support prudent risk taking and long-term,

sustainable success.

Remuneration for our directors in financial year ended 30 June 2026

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

All Directors

(incl. highest

paid) (4)

Highest paid

Director (4)

All Directors

(incl. highest

paid) (4)

Highest paid

Director (4)

1) Total emoluments

3.7

1.3

4.4

2.3

2) Cash in lieu of pension

0.1

0.0

0.1

3) Long term incentive schemes

0.0

0.9

Total

3.8

1.3

5.4

3.3

Notes to table:

Total emoluments consist of salary or fees paid for qualified services,

market adjusted allowances where applicable, awarded annual bonus

through the Group’s Annual Incentive Plan (AIP), retention awards, and any

taxable benefits paid. NED fees are reviewed annually, considering time

commitments and equivalent benchmarks to those used for the Executive

Directors. Fees are structured as a basic fee with additional fees for

chairmanship or membership of Board Committees or further

responsibilities (such as acting as Senior Independent Director). The

Chairman receives a basic fee only. Variable pay is awarded 50% in cash

and 50% in equity-linked instruments which mirror the percentage change in

FirstRand’s share price, albeit not subject to changes in the Rand: GBP

exchange rate. A portion of variable pay will be deferred in line with the

applicable regulatory remuneration rules, and any upfront equity-linked

awards are subject to a one-year retention period. Malus and clawback

provisions apply to both the upfront and deferred bonus (whether cash or

equity-linked). Non-Executive Directors are not eligible to receive variable

remuneration.

Aldermore currently operates a defined contribution pension scheme for all

employees including Executive Directors. Company contributions are set as

a percentage of salary and an individual may elect to receive some or all of

their pension allowance as cash in lieu of pension contribution. The

maximum allowance for all employees is set at 10 per cent of base salary

(minus employer NICs). No company contributions were paid into the

pension scheme in respect of directors’ qualifying services during the year

ended 30 June 2026 (30 June 2025: nil).

To motivate senior management and incentivise delivery of high

performance over the long-term, executive directors are eligible to

participate in the Group’s Long Term Incentive Plan (“LTIP”). The Committee

sets performance measures at the point awards are granted with vesting

subject to a 3-year performance period. LTIP awards were previously

subject to a balance of measures; 20% against FirstRand performance

conditions and 80% against an Aldermore balanced scorecard of financial

and risk related measures. This includes LTIPs that vested for any director

who held office during the specified reporting periods. LTIP Grants awarded

from 2024 onwards are 100% linked to FirstRand performance conditions. For

clarity, any grants made under the LTIP Scheme are delivered in FirstRand

equity-linked instruments, which are settled in cash should there be an

outturn at the end of the performance period.

As the Group is wholly owned by our parent company FirstRand, the Group

Board of Directors has two shareholder appointed non-executive directors.

Mary Vilakazi and Markos Davias were both formally appointed to the

Group’s Board on 1st April 2024 and in line with the remuneration practices

for their predecessors, no remuneration is directly paid by the Group to

either non-executive director.

No compensation was paid to directors or past directors in respect of loss

of office in 2026 (2025: nil).

Report and Accounts for the year ended 30 June 2026

Looking ahead

Moving into the new financial year, the Committee and I are focussed on ensuring our approach to remuneration supports the strategic

direction of the Group, which includes ensuring we are aligned on continued commercial delivery, a strong growth agenda, and preparing

for an ownership transition.

Romy Murray

Remuneration Committee Chair

Report and Accounts for the year ended 30 June 2026

Directors’ report

The Directors present their report and the financial statements of the Group for the twelve months ended 30 June 2026.

As permitted by legislation, some of the matters normally included in the Directors’ report are included by reference as detailed below.

Requirement

Detail

Section

Location

Business Review

Information regarding the business review and future developments, key performance indicators and

principal risks are contained within the Strategic Report.

Strategic Report

Page 5

(Business

overview)

Page15 (Key

performance

indicators)

Page 82

(Principal risks)

Strategic Report

The contents of the Strategic Report fulfil Section 414C of the Companies Act 2006.

Strategic Report

Page 4

Results

The results for the year are set out in the income statement. The profit before taxation for the year ended 30

June 2026 was £51.2 million (year ended 30 June 2025: £193.5 million). A review of the financial performance of

the Group is included within the Strategic Report.

Income

Statement

Strategic Report

Page 116

Page 4

Dividend

The Directors do not recommend a final dividend in respect of the year ended 30 June 2026. (2025: 5p per

ordinary share).

Note33 to the

consolidated

financial

statements

Page 188

Post balance

sheet events

There have been no post balance sheet events.

Note 34 to the

consolidated

financial

statements

Page 188

Share Capital

At 30 June 2026, the Company’s share capital comprised 2,439,016,380 ordinary shares of £0.10 each.

The Company did not issue or repurchase any of the issued ordinary shares during the twelve months ended

30 June 2026 or up to the date of this report.

Details of the Company’s share capital are provided in note26 to the consolidated financial statements.

Note 26 to the

consolidated

financial

statements

Page 177

Report and Accounts for the year ended 30 June 2026

Rights and

obligations

attaching to

There are no restrictions on the transfer of the Company’s ordinary shares or on the exercise of the voting

rights attached to them, except for:

• Where the company has exercised its right to suspend their voting rights or prohibit their transfer following

the omission by their holder or any person interested in them to provide the company with information

requested by it in accordance with Part 22 of the Companies Act 2006;

• Where their holder is precluded from exercising voting rights by the Financial Conduct Authority’s Listing

Rules or the City Code on Takeovers and Mergers.

All the Company’s ordinary shares are fully paid and rank equally in all respects and there are no special

rights with regard to control of the company.

Employee share

scheme rights

Details of how rights of shares in employee share schemes are exercised when not directly exercisable by

employees are provided in note 30 to the consolidated financial statements.

Note 25 to the

consolidated

financial

statements

Page 175

Employees

Information on the Group's engagement with employees and on how the Board has had regard to their

interests in accordance with section 172(1) of the Companies Act 2006 is set out in the Section 172 Statement

beginning on page 42.

Strategic Report

Page 4

Suppliers &

Customers

Information on the Group's engagement with suppliers and customers, and on how the Board has had

regard to their interests in accordance with section 172(1) of the Companies Act 2006, is set out in the Section

172 Statement from page 42

Strategic Report

Page 4

Corporate

governance

arrangements

For the year ended 30 June 2026, under the Companies (Miscellaneous Reporting) Regulations 2018, the

Aldermore Group PLC applied the Wates Corporate Governance Principles for Large Private Companies,

published by the Financial Reporting Council (“FRC”) in December 2018.

An explanation of how the Wates Principles have been applied is set out from page 52.

Corporate

Governance

Page 52

Directors

The names of the Directors who served on the Board during the year, together with details of changes to the

Board’s composition, are set out on page 203 and are incorporated into this Directors’ Report by reference.

Company

Information

Page 203

Appointment

and retirement

of Directors

The appointment and retirement of the Directors is governed by the Company’s Articles of Association and

the Companies Act 2006. The Company’s Articles of Association may only be amended by a special resolution

passed by shareholders at a general meeting.

According to the Company’s Articles of Association, each Director shall retire at the Annual General Meeting

held in the third calendar year following the year in which the Director was elected or last re-elected by the

Company, or at such earlier Annual General Meeting as the Directors may resolve.

Company

Information

Page 203

Directors’

indemnities

The Directors who served on the Board up to the date of this report have benefitted from qualifying third-

party indemnity provisions by virtue of deeds of indemnity entered into by the Directors and the company.

The deeds indemnify the Directors to the maximum extent permitted by law and by the Articles of

Association of the company, in respect of liabilities (and associated costs and expenses) incurred in

connection with the performance of their duties as a director of the company and any associated

company, as defined by section 256 of the Companies Act 2006.

The Group also maintains Directors’ and Officers’ liability insurance which provides appropriate cover for

legal actions brought against its Directors.

Significant

agreements

None for year ended 30 June 2026 (year ended 30 June 2025: None)

Report and Accounts for the year ended 30 June 2026

Political

donations

Nil for year ended 30 June 2026 (year ended 30 June 2025: nil)

Going concern

The financial statements are prepared on a going concern basis. The Directors are satisfied that the Group

has adequate resources to continue in operational existence for at least 12 months from the date of

approval of the financial statements and that there are no material uncertainties to disclose. Further details

on the assessment undertaken by the Directors are set out on page 122.

Disclosure of

information to

the independent

auditor

Each person who is a director at the date of this Directors’ Report confirms that:

• So far as the Director is aware, there is no relevant audit information of which the Group’s auditor is

unaware; and

• He or she has taken all the steps that he or she ought to have taken as a Director to make himself or

herself aware of any relevant audit information and to establish that the Group’s auditor is aware of that

information. This confirmation is given and should be interpreted in accordance with the provisions of the

Companies Act 2006.

Auditor

KPMG LLP was reappointed as the Company's auditor at the 2025 Annual General Meeting (AGM), and a

resolution authorising the Directors to determine the auditor's remuneration was also passed.

This report was approved by the Board on 9 September 2026 and signed on its behalf:

Raj Makanjee

Chief Executive Officer

Report and Accounts for the year ended 30 June 2026

Risk management.

The Group’s approach to risk

The Board is ultimately responsible for establishing and ensuring maintenance of a sound system of risk management and internal

controls and approving the Group’s overall risk appetite.

Effective risk management enables the Group to fulfil its purpose of backing more people to go for it in life and business. The Group takes

risks it understands and can manage to support customers in achieving their goals. The Group needs to be adaptive to the changing

landscape of threats and opportunities and take the right risks, with a strong emphasis on customer outcomes, resilience, security and

safety.

The Group Risk Management Framework (“GRMF”) supports decision making across the Group and facilitates the achievement of the

Group’s strategic objectives in a controlled and risk-aware manner. The following sections provide a summary of the GRMF. They highlight

the governance structure, approach to risk appetite, key risk management processes and the principal and emerging risks the Group

faces.

Report and Accounts for the year ended 30 June 2026

Risk management

The Group’s risk management and internal control systems are designed to identify, evaluate, respond, monitor and report on material

risks to which the Group is exposed.

The effectiveness of the risk management processes and internal controls is regularly considered by the Board, Board Audit Committee

(“BAC”) and Board Risk Committee (“BRC”) during the year, which incorporates reviewing reports from management. The BAC monitors the

integrity of the financial statements of the Group, extending to disclosures regarding material risks. This includes a responsibility in

conjunction with the BRC, to review the statements to be included in the Group’s annual report and accounts concerning internal controls

and risk management and recommend their approval to the Board.

In addition, the BAC monitors the strength of the internal control environment and annually assesses the role and effectiveness of the

Group’s Internal Audit function. Based on the review undertaken during the period and the monitoring and oversight activities performed,

the BAC, in conjunction with the BRC, concluded that the Group’s risk management and internal control systems were effective. The BAC

recommended a statement to this effect to the Board.

Based on this assessment, the Board is satisfied with the effectiveness of the Group’s risk management and internal control systems.

Report and Accounts for the year ended 30 June 2026

Group Risk Management Framework

The GRMF defines Aldermore Group’s overall approach to risk management across the organisation and material risk types; it is the

Group’s foremost risk document, to which all subsidiary risk policies and frameworks must align. The GRMF is subject to approval annually

and is a framework reserved for Board approval. It describes the Group’s approach to risk management, the roles and responsibilities and

outlines the approach to each material risk to which it is exposed. The GRMF also articulates the Group’s principal risks, i.e. the risks that

are most significant given the Group’s business model and operating environment.

Report and Accounts for the year ended 30 June 2026

Risk governance and oversight

Three Lines of Defence

The Group employs a “Three Lines of Defence” (3LOD) model to

help articulate the risk management roles and responsibilities of

individuals between: (1) risk management as part of business

activities; (2) risk oversight; and (3) independent assurance. All

three lines of defence work together in a supportive,

collaborative, and open manner and all employees are

responsible for supporting and developing a culture of risk

awareness and enabling the Group to operate within its Board

approved Risk Appetite.

First Line of Defence (own and manage risks)

The first line of defence comprises all employees from the

Business lines and centralised/ support functions (except for the

Risk Function and Internal Audit). The first line of defence is

responsible for:

• Identifying and managing risk within appetite as part of their

accountability for achieving objectives;

• Building the necessary knowledge, skills and information

under appropriate authority to operate the relevant

frameworks, policies and standards to effectively control the

risk; and

• Ensuring that risk controls and associated processes are

designed, implemented, remediated, monitored and tested via

an effective control environment, escalating instances of

control failures and incidents accordingly.

Second Line of Defence (oversee or specialise in the

management of risk)

The Risk Function operates as the second line of defence and

exists to provide insight, oversight and challenge to support the

business’s delivery of its strategy within risk appetite.

When risks are owned by the Second Line, assurance over the

risk is enabled by a combination of an independent Second Line

(not under the line management of the Risk Owner) control

testing, targeted reviews by the independent Second Line or the

parent Group, and/or independent assurance provided by Group

Internal Audit. In some cases, assurance may be provided by

third parties.

Furthermore, the Second Line:

• Define frameworks, policies, standards, tools and techniques

that enable risk to be identified and managed in the first line;

• Provide education and advice to the first line on managing

risks, guiding them in decision-making and providing options

and solutions to support decision-making processes within risk

parameters;

• Interpret regulatory rules and determine the applicability to

the Group, in partnership with first line;

• Conduct monitoring and assurance activities to determine

how effectively risk is being managed; and

• Help ensure consistency of definitions and measurement of

risk.

Report and Accounts for the year ended 30 June 2026

Third Line of Defence (provide independent assurance)

The independent third line of defence comprises all employees in

the Internal Audit function. Internal Audit sits outside the risk

management processes of the first two lines of defence. Its main

roles are to:

• Provide reasonable assurance over the effectiveness of

governance, risk and controls operated by the first two lines;

• Develop actions in collaboration with auditees to address any

areas for improvement identified; and

• To report the outcomes of audits and progress on closure of

actions to the BAC.

Risk Appetite Framework (“RAF”)

Risk Appetite is defined as the amount of risk the Board is

prepared to accept in pursuit of the Group’s strategy and

business objectives. It is expressed in both qualitative and

quantitative form in a Risk Appetite Statement for each Principal

and Level 1 Risk, supported by quantitative metrics with defined

thresholds (Trigger and Limit). The Trigger represents an ‘early

warning’ indicator that the metric is nearing the Limit and actions

might need to be taken to avoid a breach of Limit. The Limit

represents the level of risk for which the Group has appetite,

after which the risk appetite is breached.

The RAF is subject to Board approval annually and sets the

principles for the setting of risk appetite in alignment with the

Board approved strategy, outlines roles and responsibilities and

sets governance and monitoring requirements.

The responsibilities in relation to the RAF include:

• The Board is responsible for approving the Group’s Risk

Appetite annually. Elements can be dynamically updated and

approved as required.

• The BRC considers the approach to Risk Appetite and

recommends a Risk Appetite Statement to the Board.

• The Chief Risk Officer (“CRO”) is the Accountable Executive for

the RAF and is responsible for recommending updates to the

Board, following endorsement from the Executive Risk

Committee (“ERC”) and the BRC.

Risk Culture

Aldermore’s target risk culture is defined as:

“a culture where colleagues consistently demonstrate sound risk

awareness and exercise good judgement, underpinned by skill,

knowledge, and a clear tone from the top which embraces

diverse perspectives that encourage concerns to be raised.

Through creating this environment, we help to protect our

business, people, customers, and the broader financial system

from harm, whilst enabling sustainable growth.”

This risk culture is embedded throughout the business model,

strategy, performance management and remuneration

decisions, and the Aldermore behaviours to ensure this resonates

with colleagues.

The Board has a fundamental role in defining and monitoring the

successful embedding of an effective risk culture.

Report and Accounts for the year ended 30 June 2026

Stress testing

Stress testing is an important risk management tool, with

specific approaches documented for the Group’s key

annual assessments including the Internal Capital

Adequacy Assessment Process (“ICAAP”), Individual

Liquidity Adequacy Assessment Process (“ILAAP”) and the

Recovery Plan (“RP”), including Reverse Stress Testing (“RST”).

The Group maintains a Stress Testing policy (“STP”) which is

updated on an annual basis, or more frequently if required. This

sets the approach and rules for analysis of the key risks,

scenarios and sensitivities that may adversely impact the

financial or operational position of the Group. The STP sits under

the Capital, Liquidity and Market Risk Management Framework,

the latter is reserved for Board Risk Committee approval. The

Board Risk Committee reviews the ICAAP, ILAAP and the RP

ensuring the processes are in accordance with regulatory rules

and makes recommendations to the Board for approval.

To ensure a coherent approach to stress testing, the Group

adheres to the following core principles:

• Stress testing is an integral part of risk management. Results

inform decision making at the appropriate level, including

strategic decisions made by the Board and senior

management.

• Stress testing draws on the experience and skills of staff

across an appropriately wide range of disciplines.

• Written policies and procedures govern the Group’s approach

to stress testing, with dedicated policies maintained for

material asset classes and types of stress test.

• Taken as a whole, stress tests span a range of analytical

techniques, risk types, scenarios and severities to ensure a

complete view of material risks. Stress testing systems and

procedures must be sufficiently flexible to facilitate this

approach, while remaining proportionate to the Group’s size

and activities.

• The STP relies upon and supports the Capital, Liquidity and

Market Risk Management Framework, Capital Planning

Management policy, the Liquidity and Funding policy, the

Operational and Credit Risk Frameworks, all of which provide

detail of how the STP has been implemented within these

specific areas.

Report and Accounts for the year ended 30 June 2026

Scope of the stress testing framework

Purpose of Stress Tests

Type of Stress Tests

Result of Stress Tests

ICAAP

Annual process that determines capital

requirements

Top Down (e.g. High Level Shape)/Bottom up

Tests overall financial resilience to adverse events

Capital

Estimates the impact of balance sheet

movement and financial losses (typically

credit related) on capital resources and

requirements

ILAAP

Annual process that determines liquidity

requirements

Sensitivity Analysis

Tests the overall impact of a single risk driver,

typically an economic variable

Liquidity

Estimates cashflows, funding supply and

liquid asset availability under a market-

wide idiosyncratic or combined liquidity

shock

Recovery & Solvent Exit Plan

Annual process that determines recovery options

and tests their efficiency

Reverse Stress Test

Identifies the severity of stress that would cause the

Group to fail

Other

Internal stress tests that support strategic

decision making e.g. Budget, Risk Appetite, Climate

Risk

Report and Accounts for the year ended 30 June 2026

Principal Risks

The following section summarises the principal risks, which are the categories of risk that are most significant given the

Group’s business model and operating environment, along with the approach to their mitigation.

Principal Risk

Our Response

Risk Position

Credit Risk

The risk of financial loss

arising from a borrower or a

counterparty failing to meet

financial obligations to the

Group according to agreed

terms.

• Aldermore aims to operate in markets and segments where

lending can generate shareholder value, within the risk appetite

constraints set by the Board, in both normal and stress

conditions.

• Credit risk is managed to make sure that:

◦

The variability in the target range for impairment losses

resulting from the economic cycle is kept to acceptable

levels.

◦

Credit concentration and portfolio structure remain at

appropriate levels.

• Origination is supported by a strong focus on counterparty

quality, debt-serviceability and robust post- completion credit

stewardship and in- life management of the credit portfolio.

• Where appropriate, physical or financial collateral is obtained.

• The Credit risk profile is monitored and reported systematically

against appetite through a set of credit risk limits.

The Credit profile remains stable and performing in line with

expectations at this point in the macro-economic cycle, and is

within the stated risk appetite. The underlying performance of

originations in the last few years is strong. Affordability stresses are

no longer easing; however, the portfolio remains strongly

collateralised across all lines of business.

Capital Risk

The risk that a firm has

insufficient capital

resources or composition

of capital to meet

regulatory requirements

and internal risk appetite,

or to support its strategic

plans under normal

operating environments

and stress conditions.

Robust controls for Pillar 1 reporting;

• A comprehensive annual ICAAP assessment of all material

capital risks.

• A forward-looking capital plan, formally assessing confirmed

and potential changes in regulatory rules.

• Regular sensitivity analysis.

• An appropriately sized internal capital buffer over and above

regulatory requirements applied both at a point in time and on a

forward-looking basis to protect against unexpected losses or

risk-weighted asset growth.

The Group has maintained a strong capital position over the period,

with capital ratios remaining well above regulatory minimums and

internal risk appetite.

Report and Accounts for the year ended 30 June 2026

Liquidity Risk

The risk that the firm,

although solvent, does

not have sufficient

available financial

resources to enable it to

meet its obligations as

they fall due.

• Retain a sufficient portfolio of cash and high-quality liquid

assets (“HQLA”) to absorb liquidity shocks.

• Maintain further overall contingent liquidity resources to absorb

longer term liquidity stresses.

• Perform a comprehensive annual ILAAP assessment of all

material liquidity risks and meet internal buffers on an ongoing

basis.

• Monitor the Group’s liquidity position on a daily and forward-

looking basis, with intra-month escalation of material risks as

appropriate.

The Group has maintained a strong liquidity position over the

period, remaining well above regulatory minimums and within

internal risk appetite.

Market Risk

The risk of losses resulting

from adverse changes in

the value of positions

arising from movements

in market prices across

commodity, credit, equity,

foreign exchange and

interest rates risk factors.

• Seek to match the interest rate structure of assets and liabilities,

creating a natural hedge.

• Where a natural hedge is not possible or desirable, hedge any

material market risk exposure by using financial instruments as

outlined in the Treasury Counterparty Credit Risk Limits and

Policy.

• Perform a comprehensive assessment of market risk drivers as

part of the ICAAP and assess new/emerging risks on an ongoing

basis.

• Maintain a strong control framework to ensure exposures are

managed in line with risk appetite.

• Daily monitoring of the Group’s Market Risk exposure, with intra-

month escalations as appropriate.

The Group’s approach remains prudent in response to any external

economic uncertainty and underlying risks remain unchanged.

Report and Accounts for the year ended 30 June 2026

Operational Risk

The risk of loss resulting

from inadequate,

ineffective or failed

internal processes, people

and systems or from

external events.

The Group operates an Operational Risk Management Framework

(“ORMF”), within which Operational risks are identified, assessed,

and managed.

The ORMF applies to all entities in the Aldermore Group and aims

to:

• Ensure the Group’s ORMF is proportionate, and in line with

industry and regulatory expectations.

• Maintain a sound control environment and risk-aware culture.

• Proactively manage operational risk within the business units

with independent oversight.

• Ensure appropriate capabilities are in place to support the

achievement of business strategies and plans whilst remaining

within risk appetite.

• Embed simple, efficient and effective operational risk

management tools.

• Provide risk management training and information that is used

in business decision-making.

• Calculate and allocate appropriate levels of operational risk

capital.

The Operational Risk Profile has improved since the prior year

reflecting a maturing of the control, governance and risk

management arrangements across the underlying Level 1 risks.

The Group is undertaking a significant transformation, including

offshoring of operational processes which will deliver efficiency and

cost benefits, and associated people and change risks are being

carefully managed.

Compliance and

Regulatory Risk

The risk of legal or

regulatory sanctions,

material financial loss, or

loss to reputation as a

result of a failure to

comply with applicable

laws and regulations,

codes of conduct and

standards of good

practice.

• Maintain a well-defined and embedded process for regulatory

and legislative horizon scanning, and preparation for confirmed

and potential changes.

• Maintain processes that focus on good customer outcomes and

the delivery of Consumer Duty requirements, including oversight

of a range of metrics such as staff performance, training,

customer feedback, complaints and outcome testing.

• Ensure that recruitment and training processes have a clear

conduct risk focus, including the use of mandatory training

modules.

• Maintaining that the approach to remuneration helps to drive

good customer outcomes and prudent decision-making within

risk appetite.

• Where any instance of non-compliance is identified the

immediate focus is to remediate where appropriate, whilst

ensuring that lessons are learnt and solutions are implemented

to address root causes.

Regulatory Risk remains steady, albeit elevated, reflecting open

issues, the regulatory environment, and macroeconomic factors.

In addition to ongoing compliance with all applicable laws and

regulations, significant focus remains on embedding Consumer

Duty, including the management of vulnerable customers, to ensure

the Group’s products and services support the consistent delivery of

good customer outcomes. Focus also remains on delivering actions

designed to improve the Financial Crime control environment.

Report and Accounts for the year ended 30 June 2026

Model Risk

The potential for adverse

consequences from

decisions based on

incorrect or misused

model outputs and

reports.

Consequences can

include poor business

decisions, financial loss or

the misstatement of

financial and/or

regulatory reports.

The Model Risk Management (“MRM”) function is responsible for

the independent oversight of model risk throughout the model

lifecycle.

Model Risk is managed through a robust Model Risk Management

Framework, that includes:

• Maintaining a central model inventory and documentation

repository.

• Assigning a model risk tier based on materiality and inherent risk

to the Group. The tier drives the frequency of performance

monitoring and independent validation.

• Second line chairing of the Model Governance Forum and Model

Risk Committee to provide appropriate oversight of the Group’s

model risk.

• Performing independent model validations to assess the model

compliance against the model risk framework requirements.

• Applying model risk mitigants, by means of Post Model

Adjustments (“PMAs”) where model limitations have been

identified.

Model performance has been acceptable. Models have been

assessed via regular monitoring, annual reviews, and independent

validations. Suitable mitigants are applied where model limitations

are identified if required. Enhancing the control environment around

models and other complex calculations continues to be a priority

area of focus and investment for the Group.

Strategic Risk

The risks to the Group's

current or prospective

financial condition and

resilience arising from

adverse business

decisions, poor

implementation of

business decisions, or lack

of responsiveness to

changes in the banking

industry and business

environment. Strategic

risks exclude risks that are

captured in other

Principal risk frameworks..

Strategic risks are inherently crosscutting, multi-faceted and

dynamic. They interact with the other principal risks of the Group by

increasing their likelihood and/or potential severity. As such, they

are primarily addressed through proportionate integration into the

frameworks governing other Principal or Level 1 risks.

During the financial year, the Group approved its first Strategic Risk

Management Framework. The framework covers Business Model

and Strategy Execution Risk (including emerging risks), Artificial

Intelligence Risk, Climate Risk, ESG Risk, Reputational and Corporate

Ethics Risk, and ‘lookback’ Risk. The Group:

• Has defined a new qualitative risk appetite statement and overall

approach to strategic risk

• Manages Business Model and Strategy Execution risks through its

strategy development and periodic review process

• Identifies, reviews, and monitors emerging risks

• Monitors and manages climate risks in its portfolios

• Oversees the implementation of its ESG strategy and action plan

• Manages reputational risks in line with the provisions of its

reputational risk policy

Strategic risks for the Group reflect internal drivers such as the

deployment of new technologies and artificial intelligence, and

external factors including heightened geopolitical uncertainty,

persistent margin pressure arising from competitive, regulatory and

macroeconomic conditions, and increased PRA scrutiny of climate-

related risks.

Margin pressure may affect earnings resilience, the viability of

certain business lines and the Group's ability to deliver its strategic

objectives, and is therefore considered within the assessment of

Business Model and Strategy Execution Risk.

These cross-cutting risks are managed well within appetite through

the Bank’s Strategic Risk Management Framework and their

appropriate consideration within other Principal Risks. The Group is

now focused on the continued development and operationalisation

of its framework, with particular emphasis on ensuring compliance

with the new expectations on climate risk management of the PRA

and continuing to evolve its approach to Artificial Intelligence-

related risks.

Report and Accounts for the year ended 30 June 2026

Emerging Risks

The Group defines emerging risks as those risks that have not been previously recognised or experienced, familiar risks in new

or unfamiliar contexts, significantly increasing or evolving risks or a novel combination of risks.

The key emerging risks identified for the Group are:

Emerging Risk

Summary

Our Response

Political and Economic Environment

Geopolitical Risk

Geopolitical risk remains elevated amid ongoing

conflicts in the Middle East and Ukraine, alongside

weakening multilateral cooperation and increasing

global fragmentation. These developments are

contributing to significant disruption in global energy

markets. This may trigger new inflationary pressures,

weighing on growth and labour markets, and create

headwinds for sectors in which the Group operates,

including Property (through upward pressure on

interest rates), Motor (via interest rates and reduced

demand), and Business Finance (through margin

compression for energy-intensive companies).

Further escalation in key regions — including the

Middle East, Taiwan, the South China Sea, the Indian

subcontinent— could fragment global trade flows,

disrupt supply chains, and increase volatility in

financial and commodity markets.

The impact from continued geopolitical uncertainty is

assessed across Aldermore’s principal risks and

managed through the Group’s Risk Management

Framework (GRMF).

Extraordinary meetings of Executive Committees are

convened in response to specific geopolitical events,

where deemed necessary (e.g. following the beginning

of the Iran conflict).

Macroeconomic uncertainty Risk

The global economy continues to navigate the impact

of significant price and interest rate shocks. Current

geopolitical developments have weakened the global

outlook and increased uncertainty, with heightened

downside risks to growth across major economies.

These developments, combined with UK-specific

factors, including unprecedented political turnover,

with a seventh government taking office in ten years,

evolving policy direction under the new cabinet and

renewed cost of living pressures, may translate into

more challenging operating conditions for UK banks,

including pressure on revenues and increased credit,

funding and liquidity risks.

The Group remains cautious about the changing

macroeconomic outlook.

Impacts are monitored and managed through the

Group’s business-as-usual risk management

processes, including its Recession Readiness

Framework.

Report and Accounts for the year ended 30 June 2026

Competitive Environment

Competition Risk

The competitive environment is increasingly

demanding, with high-street banks expanding into

segments traditionally served by specialist lenders

which is putting pressure on margin, alongside

growing competition from non‑bank lenders. This

dynamic is expected to compress margins and may

require strategic repositioning by specialist lenders

such as Aldermore, while also increasing the likelihood

of market consolidation.

The Group manages these risks through its strategy

and financial planning processes, with a focus on

delivering sustainable growth while enhancing

profitability and resilience.

Aldermore will continue to strengthen its focus on its

core markets and tailor its offering to segments

aligned to its strategic priorities.

Operating Environment

Regulatory Withdrawal

The ongoing process of banking deregulation and

regulatory simplification in the UK could, if taken too

far, lead to a relaxation of standards across the

industry. Recent adjustments to affordability

requirements in mortgage lending may indicate a

broader trend extending to other areas, which could

ultimately contribute to a build‑up of systemic risk over

the longer term.

Greater reliance on firm‑specific implementation may

result in divergent practices across the sector,

increasing competitive pressures, future regulatory

scrutiny and ‘lookback’ risk.

Aldermore maintains a strong capital position, a

resilient funding base, and a prudent risk

management framework, with a low appetite for any

reduction in control standards across areas of

material risk.

The Group also actively monitors industry

developments and maintains an open and productive

relationship with its primary UK regulators, the PRA and

FCA.

Risks From Emerging Technologies, Including

Artificial Intelligence (AI)

The pace of development in emerging technologies,

including artificial intelligence, may outstrip the

industry’s ability to maintain effective control

environments. The adoption of AI introduces risks such

as algorithmic bias, lack of transparency and

explainability, and the potential for discriminatory

outcomes or the exploitation of vulnerable customers.

Externally it can be used to support quicker and more

sophisticated cyber-attacks and fraud.

These risks may impact multiple risk types, including

credit (e.g. automated decisions not aligned with risk

appetite), operational (e.g. failures of AI tools

supporting critical business services, or heightened

cyber and fraud risks from hostile actors), compliance

(e.g. AI-enabled customer outcomes not meeting

regulatory expectations), model risk (e.g. biased

outputs from AI models), and reputational risk (e.g. use

of deepfakes against the bank or its representatives).

The Group continues to enhance its approach to AI

risk including the development of an overarching AI

framework to strengthen governance and controls

across the full AI lifecycle.

A Generative AI Policy has been implemented, and

Data Privacy Impact Assessments are in place to

evaluate AI use cases, while potential risks are also

considered through an AI assessment.

The Group continues to strengthen the cyber and

wider resilience capabilities.

In addition, the Model Risk Management Framework

sets out the principles and processes to manage risk

associated with AI models.

Report and Accounts for the year ended 30 June 2026

Credit risk

Credit risk is the risk of financial loss arising from the borrower or a counterparty failing to meet their financial obligations to

the Group in accordance with agreed terms. The risk primarily crystallises by customers defaulting on lending facilities. Credit

risk also arises from treasury investments and off-balance sheet activities and any other receivables, which are typically sub-

categorised as counterparty credit risk.

The credit risk section of this report includes information on the

following:

The Group’s maximum exposure to credit risk;

Credit quality and performance of loans;

Forbearance granted through the flexing of contractual

agreements;

Diversity and concentration within the Group’s loan portfolio;

and

Details of provisioning coverage and the value of assets

against which loans are secured.

Due to the more bespoke nature of the Property Development

business, the portfolio is excluded from a number of the following

tables, as indicated by the footnotes. Gross Property

Development exposure at 30 June 2026 was £45.2 million (30 June

2025: £48.7 million), and net exposure was £43.9 million (30 June

2025: £46.0 million).

The Group’s maximum exposure to credit risk

The following table presents the Group’s maximum exposure to

credit risk of financial instruments on the Statement of Financial

Position and commitments to lend before taking into account

any collateral held or other credit enhancements. The maximum

exposure to credit risk for loans, investment securities, derivatives

and other on-balance sheet financial instruments is the carrying

amount and for loan commitments, the full amount of any

commitment to lend that is either irrevocable or revocable only in

response to material adverse change.

The Group’s net credit risk exposure as at 30 June 2026 was

£24,087.8 million (30 June 2025: £21,540.9 million), an increase of

11.8%. The main factors contributing to the increase were:

i. the growth in gross loans and advances to customers (the

Group’s largest credit risk exposure), by £2,189.8 million;

ii. the growth in cash and balances at central banks by £971.2

million;

iii.the growth in loans and advances to banks by £20.1 million;

partly offset by

iv.a reduction in investment securities by £737.6 million; and

v. a reduction in derivatives held for risk management by £43.0

million.

Report and Accounts for the year ended 30 June 2026

Table 1: Maximum exposure to credit risk

Included in the statement of

financial position:

Note

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Cash and balances at central

banks

2,153.5

1,182.3

Loans and advances to banks

312.4

292.3

Investment securities

1,966.6

2,704.2

Derivatives held for risk

management

135.6

178.6

Gross loans and advances to

customers

19,047.5

16,857.7

Other assets

25.7

13.0

Total

23,641.3

21,228.1

Irrevocable commitments to lend

695.1

570.8

Gross credit risk exposure

24,336.4

21,798.9

Less: allowance for impairment

losses

(248.6)

(258.0)

Net credit risk exposure

24,087.8

21,540.9

Credit quality and performance of loans

The credit quality of loans and advances to customers are

analysed internally in the following tables, which also include the

fair value of collateral held capped at the gross exposure

amount.

The greater proportion of the Group’s ‘Low risk’ stage 1 loans and

advances to customers as at 30 June 2026, compared with the

prior year, primarily reflects growth in originations within the

Property portfolio and recalibration of model estimates, resulting

in lower Probability of Default (“PD”) estimates.

The increase in ‘High risk’ exposures in both stage 1 and stage 2 is

primarily attributable to growth in partnership portfolios, where

no PD is calculated. This has affected the overall risk distribution

and does not, in isolation, indicate a deterioration in underlying

credit quality.

The risk categories used in the following tables are defined as

follows:

• Low risk: Representing a 12 month PD of <= 1.2%.

• Medium risk: Representing a 12 month PD of 1.2%-3.05%.

• High risk: Representing a 12 month PD greater than 3.05% and

defaulted exposures, and where no PD is calculated.

Table 2: Credit quality of stage 1 loans

As at 30 June 2026

Property

Finance

£m

Motor

Finance

£m

Business

Finance

£m

Total

£m

Low risk

8,164.3

2,624.2

1,780.7

12,569.2

Medium risk

825.5

1,222.3

1,088.8

3,136.6

High risk

625.6

321.5

601.5

1,548.6

Total

9,615.4

4,168.0

3,471.0

17,254.4

Fair value of

collateral

held

9,219.3

3,296.9

2,786.0

15,302.2

As at 30 June 2025

Property

Finance

£m

Motor

Finance

£m

Business

Finance

£m

Total

£m

Low risk

7,001.6

2,642.9

1,725.2

11,369.7

Medium risk

663.7

894.0

1,019.3

2,577.0

High risk

254.9

192.0

730.5

1,177.4

Total

7,920.2

3,728.9

3,475.0

15,124.1

Fair value of

collateral

held

7,918.6

2,974.5

2,595.0

13,488.1

Report and Accounts for the year ended 30 June 2026

Table 3: Credit quality of stage 2 loans

As at 30 June 2026

Property

Finance

£m

Motor

Finance

£m

Business

Finance

£m

Total

£m

Medium risk

99.9

54.9

232.3

387.1

High risk

371.2

274.6

183.3

829.1

Total

471.1

329.5

415.6

1,216.2

Fair value of

collateral

held

397.2

252.6

322.1

971.9

As at 30 June 2025

Property

Finance

£m

Motor

Finance

£m

Business

Finance

£m

Total

£m

Medium risk

211.5

110.2

196.6

518.3

High risk

254.6

238.8

152.1

645.5

Total

466.1

349.0

348.7

1,163.8

Fair value of

collateral

held

465.9

260.3

267.7

993.9

Table 4: Credit quality of stage 3 loans

As at 30 June 2026

Property

Finance

£m

Motor

Finance

£m

Business

Finance

£m

Total

£m

High risk

358.4

131.8

86.7

576.9

Total

358.4

131.8

86.7

576.9

Fair value of

collateral

held

344.0

83.2

74.3

501.5

As at 30 June 2025

Property

Finance

£m

Motor

Finance

£m

Business

Finance

£m

Total

£m

High risk

342.1

147.6

80.1

569.8

Total

342.1

147.6

80.1

569.8

Fair value of

collateral

held

340.7

88.6

68.5

497.8

The credit quality in respect of irrevocable commitments to lend,

which also includes the fair value of collateral to be provided

capped at the gross exposure amount, is:

Table 5: Credit quality of irrevocable commitments

As at 30 June 2026

Property

Finance

£m

Motor

Finance

£m

Business

Finance

£m

Total

£m

Low risk

425.9

16.2

62.1

504.2

Medium risk

43.2

7.6

48.6

99.4

High risk

33.2

2.0

41.9

77.1

Total

502.3

25.8

152.6

680.7

Assessed fair

value of

collateral to

be provided

481.6

20.4

122.4

624.4

As at 30 June 2025

Property

Finance

£m

Motor

Finance

£m

Business

Finance

£m

Total

£m

Low risk

406.3

23.8

24.6

454.7

Medium risk

38.6

6.5

19.7

64.8

High risk

15.1

0.1

9.1

24.3

Total

460.0

30.4

53.4

543.8

Assessed fair

value of

collateral to

be provided

459.9

24.2

39.8

523.9

The above analysis excludes Property Development.

Report and Accounts for the year ended 30 June 2026

Not included in the above are £14.5 million (30 June 2025: £27.1

million) of irrevocable commitments to lend for Property

Development. The Group uses “loan-to-gross-development-

value” as an indicator of the quality of credit security of

performing loans for the Property Development portfolio. Loan-

to-gross-development-value is a measure used to monitor the

loan balance compared with the expected gross development

value once the development is complete. The anticipated gross

development value of the committed lending for Property

Development is £127.8 million (30 June 2025: £146.8 million).

The categorisation of high, medium and low risk is based on an

internal IFRS 9 Probability of Default (“PD”) model. Drivers for the

PDs include external credit reference agency data, qualitative

factors and macroeconomic adjustments.

Forbearance granted through the flexing of

contractual agreements

Forbearance is defined as any concessionary arrangement that

is made for a period of three months or more where financial

difficulty is present or imminent. It is inevitable that some

borrowers experience financial difficulties which impact their

ability to meet their obligations as per the contractual terms. The

Group seeks to identify borrowers who are experiencing financial

difficulties, as well as contacting borrowers whose loans have

gone into arrears, consulting with them in order to ascertain the

reason for the difficulties and to establish the best course of

action to bring the account up to date. In certain circumstances,

where the borrower is experiencing financial distress, the Group

may use forbearance measures to assist the borrower. These are

considered on a case-by-case basis and must result in a fair

outcome. The forbearance measures are undertaken in order to

achieve a good outcome for both the customer and the Group

by dealing with financial difficulties and arrears at an early

stage.

The most widely used methods of forbearance are temporarily

reduced monthly payments and deferral of payment to reduce

the borrower’s financial pressures. Where the arrangement is

temporary, borrowers are expected to resume normal payments

within six months. Forborne amounts disclosed as stage 1 in the

below table relate to accounts which are now performing but still

reported as forborne following the end of concessionary

arrangements. In all cases, the above definitions are subject to

no further concessions being made and the customers’

compliance with the new terms.

Table 6: Loans subject to forbearance arrangements by stage

As at 30 June 2026

Property

Finance

£m

Motor

Finance

£m

Business

Finance

£m

Total

£m

Stage 1

11.1

0.6

0.4

12.1

Stage 2

11.0

3.1

0.5

14.6

Stage 3

96.8

15.5

38.8

151.1

Total

118.9

19.2

39.7

177.8

As at 30 June 2025

Property

Finance

£m

Motor

Finance

£m

Business

Finance

£m

Total

£m

Stage 1

6.0

0.4

0.1

6.5

Stage 2

9.5

2.8

14.4

26.7

Stage 3

80.8

23.3

0.3

104.4

Total

96.3

26.5

14.8

137.6

The above analysis excludes Property Development and Octane Capital.

Report and Accounts for the year ended 30 June 2026

As at 30 June 2026, the Group had undertaken forbearance

measures as follows in the following segments:

Table 7: Property Finance loans subject to forbearance arrangements

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Capitalisation

16.7

Temporary or permanent switch to interest

only

0.1

Reduced monthly payments

40.5

44.7

Payment waiver or lower rate product switch

42.8

35.1

Deferred payment

10.4

11.3

Loan term extension

8.5

5.1

Total

118.9

96.3

Forborne as a percentage of the total

divisional gross lending book (%)

1.14 %

1.10 %

The above analysis excludes Octane Capital.

Table 8: Motor Finance loans subject to forbearance arrangements

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Deferred payment

19.2

26.5

Total

19.2

26.5

Forborne as a percentage of the total

divisional gross lending book (%)

0.41 %

0.63 %

Table 9: Business Finance loans subject to forbearance arrangements

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Capitalisation

0.5

Reduced monthly payments

0.2

0.1

Deferred payment

38.7

14.6

Loan term extension

0.3

0.1

Total

39.7

14.8

Forborne as a percentage of the total

divisional gross lending book (%)

1.00 %

0.38 %

The above analysis excludes Property Development.

Table 10: Total loans subject to forbearance arrangements

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Capitalisation

17.2

Temporary or permanent switch to interest

only

0.1

Reduced monthly payments

40.7

44.8

Payment waiver or lower rate product switch

42.8

35.1

Deferred payment

68.3

52.4

Loan term extension

8.8

5.2

Total

177.8

137.6

Forborne as a percentage of the total

divisional gross lending book (%)

0.93 %

0.82 %

Diversity and concentration within the Group’s loan

portfolio

As shown below, the Group monitors concentration of credit risk

by segment, geography, sector and size of loan.

Table 11: Net lending by business segment

As at 30 June 2026

As at 30 June 2025

£m

Property

Finance

10,396.7

55 %

8,677.2

52 %

Motor Finance

4,483.6

24 %

4,076.3

25 %

Business

Finance

3,918.6

21 %

3,846.2

23 %

Total

18,798.9

100 %

16,599.7

100 %

The above analysis includes Property Development.

Report and Accounts for the year ended 30 June 2026

Table 12: Loans and advances by geographical exposure

30 June 2026

30 June 2025

East Anglia

9.8

9.7

East Midlands

7.7

7.4

Greater London

14.7

15.7

North East

1.4

North West

15.0

14.5

Northern Ireland

1.1

1.2

Scotland

7.3

7.1

South East

16.3

16.7

South West

7.8

8.1

Wales

3.3

3.4

West Midlands

7.8

7.2

Yorkshire and Humberside

7.8

7.6

Total

100.0

An analysis of the Group’s loans and advances to customers by

sector, aligned to the methodology applied for the purposes of

the Group’s regulatory reporting, is shown in the table below:

Table 13: Loans and advances by industrial sector

30 June 2026

30 June 2025

Agriculture

0.1

Financial institutions

1.7

3.0

Building and property development

2.3

2.1

Government and central banks

0.1

Individuals

55.1

56.7

Manufacturing

3.7

4.7

Mining

0.1

Transport and communication

1.6

1.7

Other

35.5

31.5

Total

100.1

100.0

The above analysis includes Property Development.

Table 14: Loans and advances by quantum of exposure

As at 30 June 2026

Property

Finance

£m

Motor

Finance

£m

Business

Finance

£m

Total

£m

£0 - £50k

275.0

4,265.6

623.1

5,163.7

£50 - £100k

1,298.1

138.4

399.1

1,835.6

£100 - £150k

1,448.6

12.1

270.0

1,730.7

£150 - £200k

1,239.1

4.3

168.7

1,412.1

£200 - £300k

1,929.0

6.1

201.4

2,136.5

£300 - £400k

1,281.3

5.8

113.0

1,400.1

£400 - £500k

725.4

5.9

90.8

822.1

£500k - £1m

1,278.9

17.1

241.1

1,537.1

£1m - £2m

587.7

9.5

230.5

827.7

£2m+

333.7

18.8

1,536.9

1,889.4

Total

10,396.8

4,483.6

3,874.6

18,755.0

As at 30 June 2025

Property

Finance

£m

Motor

Finance

£m

Business

Finance

£m

Total

£m

£0 - £50k

131.7

3,909.0

651.2

4,691.9

£50 - £100k

1,071.8

82.7

376.0

1,530.5

£100 - £150k

1,232.7

6.4

248.3

1,487.4

£150 - £200k

1,086.5

3.8

169.5

1,259.8

£200 - £300k

1,733.9

8.6

223.0

1,965.5

£300 - £400k

1,124.0

7.7

140.9

1,272.6

£400 - £500k

604.2

5.2

96.9

706.3

£500k - £1m

1,050.4

25.2

288.6

1,364.2

£1m - £2m

449.5

12.5

261.0

723.0

£2m+

192.5

15.2

1,344.7

1,552.4

Total

8,677.2

4,076.3

3,800.1

16,553.6

The above analysis excludes Property Development.

Report and Accounts for the year ended 30 June 2026

Details of provisioning coverage and value of assets

against which loans are secured

The principal indicators used to assess the credit security of

performing loans are loan-to-value (“LTV”) ratios for SME

Commercial which falls within Business Finance.

Property Finance

Buy-to-let mortgages

Loan-to-value on indexed origination information on the Group’s

Property Finance portfolio is set out in the tables below:

Table 15: Buy-to-let mortgages by loan-to-value

As at 30 June

2026

£m

As at 30 June

2025

£m

100%+

15.0

17.9

95-100%

7.2

11.2

90-95%

23.8

30.4

85-90%

74.5

61.0

80-85%

253.8

252.7

75-80%

1,226.4

1,030.3

70-75%

1,537.1

1,309.0

60-70%

2,363.8

1,963.2

50-60%

1,273.3

1,174.5

0-50%

907.5

851.0

Total

7,682.4

6,701.2

Capital Repayment

490.7

403.4

Interest only

7,191.7

6,297.8

Total

7,682.4

6,701.2

Average loan-to-value percentage

65.29 %

64.88 %

The above analysis includes the Octane Capital Buy-to-Let accounts (£157.7

million).

Residential mortgages

Table 16: Residential mortgages by loan-to-value

As at 30 June

2026

£m

As at 30 June

2025

£m

100%+

7.3

9.3

95-100%

23.6

8.8

90-95%

103.5

48.5

85-90%

181.2

132.5

80-85%

195.4

129.7

75-80%

208.4

162.8

70-75%

248.5

188.9

60-70%

572.4

402.8

50-60%

469.0

356.6

0-50%

705.1

536.1

Total

2,714.4

1,976.0

Capital Repayment

2,298.9

1,820.8

Interest only

415.5

155.2

Total

2,714.4

1,976.0

Average loan-to-value percentage

63.10 %

60.96 %

The above analysis includes the Octane Capital Bridging accounts (£268.4 million)

and the second charge portfolio (£274.1 million). The LTV calculated for the second

charge portfolio includes the first charge balance at origination.

Report and Accounts for the year ended 30 June 2026

Motor Finance

In respect of Motor Finance, collateral is provided by the Group’s

rights and/or title to the underlying assets. A proportion of loans

are sanctioned at LTVs higher than 100% of the estimated retail

value and, although the whole agreement is secured on the

vehicle, there may be a shortfall in the event of repossession.

Loans where LTV exceeds 100% are subject to more stringent

underwriting criteria. LTV information based on retail valuations

for Motor Finance’s vehicle finance portfolio is set out as follows:

Table 17: Motor Finance by loan-to-value

As at 30 June

2026

£m

As at 30 June

2025

£m

110%+

364.0

262.1

100-110%

1,025.0

828.0

95-100%

635.8

620.2

90-95%

591.6

547.1

85-90%

505.0

471.4

80-85%

389.4

376.9

75-80%

276.1

273.2

70-75%

195.5

197.2

60-70%

255.9

254.4

50-60%

139.0

138.9

0-50%

106.3

106.9

Total

4,483.6

4,076.3

Business Finance

Loan-to-value on indexed origination information on the Group’s

Business Finance portfolio is set out in the table below:

Commercial mortgages

Table 18: Commercial mortgages by loan-to-value

As at 30 June

2026

£m

As at 30 June 2025

£m

100%+

13.8

22.9

95-100%

3.2

10.2

90-95%

9.6

13.8

85-90%

32.8

48.9

80-85%

50.8

49.7

75-80%

98.0

69.0

70-75%

146.9

154.7

60-70%

547.9

260.0

50-60%

234.4

293.6

0-50%

257.7

259.4

Total

1,395.1

1,182.2

Capital Repayment

506.8

576.7

Interest only

888.3

605.5

Total

1,395.1

1,182.2

Average loan-to-value percentage

62.73 %

62.23 %

The above analysis excludes Property Development.

Report and Accounts for the year ended 30 June 2026

Invoice Finance

In respect of Invoice Finance, collateral is provided by the

underlying receivables (e.g. trade invoices). As at 30 June 2026,

the average advance rate against the fair value of sales ledger

balances which have been assigned to the Group, net of

amounts considered to be irrecoverable, is 69.4% (30 June 2025:

70.1%).

In addition to the value of the underlying sales ledger balances,

the Group will wherever possible, obtain additional collateral

before offering invoice finance facilities to a client. These may

include limited personal guarantees from major shareholders,

charges over personal and other business property, cross

guarantees from associated companies and unlimited

warranties in the case of frauds or certain other breaches. These

additional forms of security are impractical to value given their

nature.

Asset Finance

In respect of Asset Finance, collateral is provided by the Group’s

rights and/or title to the underlying assets, which the Group is

able to repossess in the event of default. Where appropriate, the

Group will also obtain additional security, such as parent

company or personal guarantees. Asset Finance also undertakes

unsecured lending where the Group has obtained an

understanding of the ability of the borrower’s business to

generate cash flows to service and repay the facilities provided.

As at 30 June 2026, the total amount of such unsecured lending

was £13.8 million (30 June 2025: £8.4 million).

Property Development

The Group uses “loan-to-gross-development-value” as an

indicator of the quality of credit security of performing loans for

the Property Development portfolio. Loan-to-gross-

development-value is a measure used to monitor the loan

balance compared with the expected gross development value

once the development is complete.

Average loan-to-gross-development-value at origination for

Property Development loans at 30 June 2026 was 66.0% (30 June

2025: 64.7%).

Group impairment coverage ratio

Table 19: Coverage ratio by stage

As at 30 June 2026

Gross

carrying

amount

£m

Provisions

£m

Coverage

ratio

Stage 1

17,254.4

69.4

0.40 %

Stage 2

1,216.2

46.3

3.81 %

Stage 3

576.9

131.7

22.83 %

Undrawn loan facilities

695.1

1.2

0.17 %

Total

19,742.6

248.6

1.26 %

As at 30 June 2025

Gross

carrying

amount

£m

Provisions

£m

Coverage

ratio

Stage 1

15,124.1

67.2

0.44 %

Stage 2

1,163.8

44.5

3.82 %

Stage 3

569.8

145.3

25.50 %

Undrawn loan facilities

570.8

1.0

0.18 %

Total

17,428.5

258.0

1.48 %

The coverage in stage 1 has reduced due to the recalibration of

the PD model estimates to incorporate recent experience and

the coverage in stage 2 has remained stable year-on-year.

The non-performing loans (“NPL” - stage 3) coverage ratio

reduced to 22.8% (30 June 2025: 25.5%) due to the remediation of

legacy NPL exposures in Property and Motor Finance as well as

the recalibration of LGD model estimates to incorporate recent

experience, with underlying coverage remaining adequate.

Report and Accounts for the year ended 30 June 2026

Treasury risk

Offsetting financial assets and liabilities - (audited)

It is the Group’s policy to enter into master netting and margining agreements with all derivative counterparties. In general, under master

netting agreements the amounts owed by each counterparty that are due on a single day in respect of all transactions outstanding in

the same currency under the agreement are aggregated into a single net amount being payable by one party to the other. In certain

circumstances, for example when a credit event such as a default occurs, all outstanding transactions under the agreement are

terminated.

Under the margining agreements, where the Group has a net asset position with a counterparty valued at current market values in

respect of derivatives, then that counterparty will place collateral, usually cash, with the Group in order to cover the position. Similarly, the

Group will place collateral, usually cash, with the counterparty where it has a net liability position.

As these only allow for offsetting in certain circumstances such as default, they do not meet the criteria for offsetting in the statement of

financial position.

There are similar arrangements in place for repo-based operations under the Bank of England Sterling Monetary Framework.

The following tables detail amounts of financial assets and liabilities subject to offsetting, enforceable master netting agreements and

similar arrangements. The Group’s securitisation vehicles are party to derivative contracts governed by specific ISDA agreements and

one-way CSAs. During the period, there were no margin balances outstanding with derivative counterparties.

Report and Accounts for the year ended 30 June 2026

Table 20: Financial assets and liabilities subject to offsetting

Related amounts not offset in the statement of financial position

Type of financial instrument

30 June 2026

Gross amount of

recognised

financial

instruments

£m

Net amount of financial

instruments presented in

the statement of

financial position

£m

Financial

instruments

£m

Cash collateral

paid / (received)

£m

Net amount

£m

Assets

Loans and advances to customers (amounts pre-

positioned as collateral under the Sterling

Monetary Framework (“SMF”))

1,767.4

(531.4)

1,236.0

Loans and advances to banks (margin accounts)

106.2

(64.4)

41.8

Derivatives held for risk management

135.6

(53.7)

81.9

Total

2,009.2

(595.8)

(53.7)

1,359.7

Liabilities

Amounts due to banks (central bank under the

Sterling Monetary Framework (“SMF”))

(531.4)

531.4

Amounts due to banks (margin accounts)

(53.7)

53.7

Derivatives held for risk management

(64.4)

62.1

(2.3)

Total

(649.5)

585.1

62.1

(2.3)

Related amounts not offset in the statement of financial position

Type of financial instrument

30 June 2025

Gross amount

of recognised

financial

instruments

£m

Net amount of financial

instruments presented in

the statement of

financial position

£m

Financial instruments

£m

Cash collateral

paid / (received)

£m

Net amount

£m

Assets

Loans and advances to customers (amounts pre-

positioned as collateral under the Sterling Monetary

Framework (“SMF”))

2,143.5

(550.5)

1,593.0

Investment securities (amounts pre-positioned as

collateral under the Short Term Repo (“STR”) facility)

150.6

(150.1)

0.5

Loans and advances to banks (margin accounts)

149.2

(98.5)

50.7

Derivatives held for risk management

178.6

(95.3)

83.3

Total

2,621.9

(799.1)

(95.3)

1,727.5

Liabilities

Amounts due to banks (central bank under the

Sterling Monetary Framework (“SMF”))

(700.5)

700.5

Amounts due to banks (margin accounts)

(95.3)

95.3

Derivatives held for risk management

(98.5)

98.5

Total

(894.3)

795.8

98.5

Report and Accounts for the year ended 30 June 2026

Information on credit risk within the Group’s treasury

operations

Credit risk exists where the Group has acquired securities or

placed cash deposits with other financial institutions as part of

its treasury portfolio of assets. The Group considers the credit risk

of treasury assets to be low. No assets are held for speculative

purposes or actively traded. Certain high-quality liquid assets

are held as part of the Group’s liquidity buffer.

Credit quality of treasury assets - (audited)

As at 30 June 2026 and at 30 June 2025, all treasury assets were

classified as stage 1 assets per IFRS 9 and no treasury assets

were past due or impaired. The Group deems the likelihood of

default across the respective asset counterparties as immaterial

and hence does not recognise a provision against the carrying

balances.

The analysis presented below is derived using ratings provided

by Standard and Poor’s and Moody’s. The worst rating from the

credit agencies for each of the counterparties is used as the

basis for assessing the credit risk of treasury financial assets.

Table 21: Credit quality of treasury assets

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Rated AA - to A+

2,465.9

1,474.6

Cash and balances at central banks and

Loans and advances to banks

2,465.9

1,474.6

Rated AAA

834.7

1,810.5

Rated AA+ to AA-

1,132.0

893.7

Investment securities

1,966.7

2,704.2

Rated A+ to A-

135.6

178.6

Derivatives held for risk management

purposes

135.6

178.6

Total

4,568.2

4,357.4

Funding and liquidity risk

Liquidity risk is the risk that the Group is unable to meet financial

obligations, such as repaying depositors and counterparties, as

they fall due, or can only do so at excessive cost.

To protect the Group and its depositors against liquidity risk, the

Group maintains a liquidity buffer which is based on its liquidity

needs under stressed conditions. The liquidity buffer is monitored

on a daily basis to ensure there are sufficient liquid assets at all

times to cover cash flow movements and fluctuations in funding,

enabling the Group to meet all financial obligations and to

support anticipated asset growth.

Analysis of the liquidity buffer

The components of the Group’s liquidity buffer, in line with the

Liquidity Coverage Ratio, are:

Table 22: Components of liquidity buffer

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Bank of England reserve account

2,122.4

1,153.0

UK gilts and Treasury bills, other Sovereign,

Supranational and Covered bonds

1,642.4

2,212.3

Level 1

3,764.8

3,365.3

Level 2A

89.1

108.3

Level 2B

225.1

255.6

Total

4,079.0

3,729.2

Balances are unencumbered and presented pre-haircut.

The structure of the disclosure has been improved in the current financial year to

separate Level 2 assets between Level 2A and Level 2B assets. The prior year has

been re-presented to ensure consistency and comparability for users of the

financial statements.

Report and Accounts for the year ended 30 June 2026

Liquidity Coverage Ratio

Over the year, the Group has continued to operate a simple and

low risk business model with a strong liquidity and funding

position, and has maintained a strong cash and High-Quality

Liquid Assets (“HQLA”) position above its binding constraint of an

internal view of liquidity requirements. The decrease in the

Group’s Liquidity Coverage Ratio (“LCR”) reflects the utilisation of

surplus liquidity to support strategic growth, in particular the

Octane Capital transaction. As at 30 June 2026, the Group’s LCR

was 167.6% (30 June 2025: 195.4%). The 12-month average Group LCR

up to 30 June 2026 was 169.7% (30 June 2025: 202.5%).

Table 23: Liquidity coverage ratio

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Eligible liquidity pool (post-haircut)

3,997.4

3,609.5

Net stress outflows

2,384.5

1,846.8

Liquidity surplus

1,612.9

1,762.7

LCR (%)

167.6 %

195.4 %

Customer deposits and wholesale funding - (audited)

As at 30 June 2026, customer deposits have grown by 12.1% to £19.1

billion (30 June 2025: £17.0 billion) and the Group continues to

maintain diversified sources of funding and contingent facilities,

including utilising cost effective sources offered by the Bank of

England.

Between August 2020 and October 2021, the Group borrowed

£1,065.0 million under the Bank of England’s Term Funding Scheme

with additional incentives for SMEs (TFSME), repayments

commenced from August 2024. The final balance of £265.7 million

was repaid in October 2025. The Group maintains access to the

Bank of England's Sterling Monetary Framework, including a

reserves account. Borrowings through the Indexed Long-term

Repo (ILTR) facility were £531.4 million at 30 June 2026 (30 June

2025: £80.3 million). Of this amount, £521.4 million was against Level

C residential property collateral (30 June 2025: £80.3 million). The

increase in ILTR usage is a reflection of the Bank of England

encouraging firms to use their repo facilities for routine liquidity

management.

The Group’s residential mortgage backed securitisations

• In March 2025, the Group issued another residential mortgage

backed securitisation (Oak No. 5) providing £410.9 million of

funding. The Group retained £110.9 million and sold £300.0

million of the senior notes to investors, with £222.8 million in

issue to external investors as at 30 June 2026, including

accrued interest (30 June 2025: £302.6 million). The underlying

mortgages within the outstanding Oak No.5 securitisation will

continue to be repaid, with an Optional Redemption Date in

July 2030.

• The Group’s Oak No.4 residential mortgage backed

securitisation was issued in May 2023 providing £446.6 million

of funding, The Group retained £44.1 million and sold £402.5

million of the senior notes to investors, with £168.2 million in

issue as at 30 June 2026, including accrued interest (30 June

2025: £219.2 million). The securitisation transaction has an

Optional Redemption Date in February 2028.

The Group’s motor finance loan backed securitisation

• The Group maintains a motor finance loan backed warehouse

facility (MotoMore) for funding motor finance loans. The

facility was renewed and increased in size in June 2026 with

£799.9 million in issue as at 30 June 2026 (30 June 2025: £407.6

million).

The Group had £150.0 million of Additional Tier 1 (“AT1”) capital

outstanding as at 30 June 2026 (30 June 2025: £150.0 million),

comprising perpetual subordinated capital notes issued to

FirstRand Bank Limited, a fellow subsidiary of FirstRand Limited.

On 1 October 2025 the Group successfully completed its inaugural

£300.0 million Tier 2 public issuance, utilising previously unused

Tier 2 capital capacity and advancing the Group’s strategy to

Report and Accounts for the year ended 30 June 2026

100

optimise the composition of its regulatory capital base. Rated

Baa3 by Moody’s, the issuance established the Group’s presence

in the public subordinated debt market. The transaction was

accompanied by the redemption of £100.0 million of Tier 2 capital

issued to FirstRand Bank Limited. The Group has £300.4 million of

Tier 2 capital outstanding as at 30 June 2026 (30 June 2025: £100.9

million).

The Group maintains contingent liquidity facilities with FirstRand

Bank Limited. In December 2025, the Group renewed and

increased its uncommitted liquidity facility with FirstRand Bank

Limited (as lender) from £400.0 million to £650.0 million, with an

implied final repayment date of December 2026. Concurrently,

the Group’s £100.0 million committed liquidity facility was

terminated. There were no outstanding drawings under the

uncommitted facility as at 30 June 2026 (30 June 2025: nil).

Table 24: Group funding sources

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Retail deposits

11,680.9

11,465.6

SME deposits

2,437.6

2,738.5

Corporate deposits - Deposit aggregators

3,860.3

2,069.0

Corporate deposits - Other

1,132.1

774.5

Customer deposits

19,110.9

17,047.6

Term Funding Scheme for SMEs (“TFSME”)

470.2

Residential Mortgages Backed Securities

(“RMBS”)

391.0

521.8

Warehouse backed by auto loans

799.9

407.6

Indexed Long-term Repo (“ILTR”)

521.4

80.3

Subordinated liabilities

300.4

100.9

Intercompany funding

0.1

0.3

Wholesale funding

2,012.8

1,581.1

Total funding

21,123.7

18,628.7

Asset-liability gap risk

Asset-liability gap risk is the risk that market movements in

interest rates may impact the value or income arising from

mismatched asset and liability positions which are sensitive to

changes in interest rates. The Group is not exposed to significant

foreign exchange or equity price risk.

Where possible, the Group seeks to match the interest rate

structure of assets with liabilities, creating a natural hedge.

Where this is not possible, the Group may enter into interest rate

swap transactions to convert the fixed rate exposures on loans

and advances, customer deposits and fair value through other

comprehensive income (“FVOCI”) securities into variable rate

SONIA assets and liabilities.

Given timing differences, operational costs, and the price of

hedging small asset-liability gaps, it is not always efficient to

eliminate all mismatches. This residual interest rate risk exposure

of the overall asset-liability gap is monitored against approved

limits using changes in the economic value of the residual

exposure as a result of a modelled 2 percentage point shift in the

yield curve.

The impact on profit/(loss) of a 2 percentage point shift in the

yield curve is as follows. It should be noted that these sensitivities

are a simplified metric, and represent just one of several

(including more comprehensive and complex assessments) used

to manage market risk in practice.

Report and Accounts for the year ended 30 June 2026

101

Table 25: Interest rate sensitivity

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

2% shift up the yield curve

As at year end

(3.6)

7.3

Average of month end positions

(0.7)

1.8

2% shift down the yield curve

As at year end

4.1

(8.1)

Average of month end positions

0.8

(2.1)

Gross undiscounted contractual cash flows - (audited)

The following is an analysis of gross undiscounted contractual

cash flows payable under financial liabilities. The analysis has

been prepared on the basis of the earliest date at which

contractual repayments may take place. This includes

consideration of where the Group has the contractual right to

call, irrespective of whether any decision to call has been made.

Table 26: Undiscounted contractual cashflows payable under

financial liabilities

As at 30 June 2026

Up to 3

months

£m

4 to 12

months

£m

Over 1 year

and non-

contractual

£m

Total

£m

Amounts due to

banks

466.6

122.5

589.1

Deposits from

customers

13,348.3

4,560.8

1,440.3

19,349.4

Other liabilities

88.7

3.4

24.2

116.3

Debt securities in

issue

42.3

112.7

1,117.0

1,272.0

Subordinated notes

18.0

363.0

381.0

Unrecognised loan

commitments

695.1

Non-derivative

liabilities

14,641.0

4,817.4

2,944.5

22,402.9

Derivatives held for

risk management

settled net

9.4

26.9

30.6

66.9

Derivative

liabilities

9.4

26.9

30.6

66.9

Report and Accounts for the year ended 30 June 2026

102

As at 30 June 2025

Up to 3

months

£m

4 to 12

months

£m

Over 1 year

and non-

contractual

£m

Total

£m

Amounts due to

banks

451.3

350.3

801.6

Deposits from

customers

9,430.8

5,191.0

2,782.3

17,404.1

Other liabilities

50.1

2.5

13.1

65.7

Debt securities in

issue

50.9

124.5

829.6

1,005.0

Subordinated notes

2.7

5.9

119.2

127.8

Unrecognised loan

commitments

815.4

Non-derivative

liabilities

10,801.2

5,674.2

3,744.2

20,219.6

Derivatives held for

risk management

settled net

3.1

14.5

91.0

108.6

Derivative

liabilities

3.1

14.5

91.0

108.6

The Group has updated the presentation of its IFRS 7 maturity analysis disclosure.

Previously separate categories for ‘1 to 5 years’ and ‘more than 5 years’ have now

been consolidated into a single maturity grouping of ‘Over 1 year and non-

contractual’.

Capital risk

Capital risk is the risk that the Group has insufficient capital to

cover regulatory requirements and/or support its growth plans.

All disclosures presented below fall within the scope of the

independent auditor’s opinion, with the exception of those

pertaining to capital ratios, which are accompanied by a

footnote clarifying their exclusion.

The Group operated in line with its capital risk appetite as set by

the Board and above its regulatory capital requirements

throughout the years ended 30 June 2026 and 30 June 2025.

Table 27: Capital resources

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Common Equity Tier 1 capital (“CET1”)

Share capital

243.9

Share premium account

74.4

Capital redemption reserve

0.2

FVOCI reserve

9.5

(5.0)

Retained earnings

1,322.0

1,415.4

IFRS 9 transitional adjustment1

12.7

Less: Goodwill, intangible assets and

prudential valuation adjustment

(17.5)

(11.3)

Less: Foreseeable dividend

(125.0)

Total CET1

1,632.5

1,605.3

Additional Tier 1

150.0

Total Tier 1 capital

1,782.5

1,755.3

Tier 2 capital

Subordinated notes

300.0

100.0

Total Tier 2 capital

300.0

100.0

Total Capital resources2

2,082.5

1,855.3

Risk weighted assets - Pillar 11,3

11,959.8

10,738.5

Capital ratios - regulatory basis3 (%)

Common Equity Tier 1 ratio

13.6 %

14.9 %

Tier 1 capital ratio

14.9 %

16.3 %

Total capital ratio

17.4 %

17.3 %

Leverage ratio

8.3 %

8.8 %

1 The Group had adopted the regulatory transitional arrangements for IFRS 9 as

set out in Article 473a of the UK CRR. These arrangements were fully phased out

effective July 2025. The Group’s June 2025 position is presented on a Transitional

Basis.

2 The Group’s Total Capital resources increased by £228 million to £2,083 million

(30 June 2025: £1,855 million). This primarily reflects a £300 million external Tier 2

Subordinated Debt issuance offset by a £100 million Tier 2 redemption in October

2025.

3Risk weighted assets and capital ratios are not covered by the independent

auditor’s opinion.

Report and Accounts for the year ended 30 June 2026

103

At 30 June 2025, the Group was still able to apply IFRS 9

transitional adjustments, which have since been fully phased

out. On a comparable fully loaded basis, the Group's capital

ratios would be as follows:

Table 28: Capital rations - fully loaded basis1

30 June 2026

30 June 2025

Common Equity Tier 1 ratio

13.6 %

14.8 %

Tier 1 capital ratio

14.9 %

16.2 %

Total capital ratio

17.4 %

17.2 %

1Capital ratios are not covered by the independent auditor’s opinion.

Table 29: Reconciliation of equity per statement of financial position

to capital resources

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Equity per statement of financial position

1,800.0

1,878.9

Add: subordinated notes

300.0

100.0

Add: IFRS 9 transitional adjustment

12.7

Less: Goodwill, intangible assets and

prudential valuation adjustment

(17.5)

(11.3)

Less: foreseeable dividend

(125.0)

Total capital resources

2,082.5

1,855.3

Report and Accounts for the year ended 30 June 2026

104

105

Financial statements

Statement of

Directors’

responsibilities

Statement of Directors’ responsibilities in respect of the Report and

accounts and the financial statements

The Directors are responsible for

preparing the Report and accounts and

the Group and parent Company

financial statements in accordance with

applicable law and regulations.

Company law requires the directors to

prepare Group and parent Company

financial statements for each financial

year. Under that law they are required

to prepare the Group financial

statements in accordance with UK-

adopted international accounting

standards and applicable law and have

elected to prepare the parent Company

financial statements on the same basis.

Under company law the Directors must

not approve the financial statements

unless they are satisfied that they give a

true and fair view of the state of affairs

of the Group and parent Company and

of their profit or loss for that period. In

preparing each of the Group and parent

Company financial statements, the

Directors are required to:

• select suitable accounting policies

and then apply them consistently;

• make judgements and estimates that

are reasonable, relevant and reliable;

• state whether they have been

prepared in accordance with UK-

adopted international accounting

standards;

• assess the Group and parent

Company’s ability to continue as a

going concern, disclosing, as

applicable, matters related to going

concern; and

• use the going concern basis of

accounting unless they either intend

to liquidate the Group or the parent

Company or to cease operations, or

have no realistic alternative but to do

so.

The Directors are responsible for keeping

adequate accounting records that are

sufficient to show and explain the parent

Company’s transactions and disclose

with reasonable accuracy at any time

the financial position of the parent

Company and enable them to ensure

that its financial statements comply with

the Companies Act 2006. They are

responsible for such internal control as

they determine is necessary to enable

the preparation of financial statements

that are free from material

misstatement, whether due to fraud or

error, and have general responsibility for

taking such steps as are reasonably

open to them to safeguard the assets of

the Group and to prevent and detect

fraud and other irregularities.

Under applicable law and regulations,

the Directors are also responsible for

preparing a Strategic Report, Directors’

Report, and Corporate Governance

Statement that complies with that law

and those regulations.

The Directors are responsible for the

maintenance and integrity of the

corporate and financial information

included on the Company’s website.

Legislation in the UK governing the

preparation and dissemination of

financial statements may differ from

legislation in other jurisdictions.

In accordance with Disclosure Guidance

and Transparency Rule (“DTR”) 4.1.16R, the

financial statements will form part of the

annual financial report prepared under

DTR 4.1.17R and 4.1.18R. The auditor’s

report on these financial statements

provides no assurance over whether the

annual financial report has been

Report and Accounts for the year ended 30 June 2026

106

prepared in accordance with those

requirements.

Responsibility statement

We confirm that to the best of our

knowledge:

• the financial statements, prepared in

accordance with the applicable set of

accounting standards, give a true

and fair view of the assets, liabilities,

financial position and profit or loss of

the Company and the undertakings

included in the consolidation taken as

a whole; and

• the strategic report includes a fair

review of the development and

performance of the business and the

position of the issuer and the

undertakings included in the

consolidation taken as a whole,

together with a description of the

principal risks and uncertainties that

they face.

Raj Makanjee

Chief Executive Officer

9 September 2026

Report and Accounts for the year ended 30 June 2026

107

Independent Auditor’s report to the members

of Aldermore Group PLC

Our opinion is unmodified

We have audited the financial statements of

Aldermore Group PLC (“the Company” and

together with its subsidiaries, “the Group”) for the

year ended 30 June 2026 which comprise the

Consolidated income statement, Consolidated

statement of comprehensive income, Consolidated

and Company statement of financial position,

Consolidated and Company statement of

cashflows, Consolidated and Company statement

of changes in equity, and the related notes,

including the accounting policies in notes 1 and 2.

In our opinion:

– the financial statements give a true and fair

view of the state of the Group’s and of the

parent Company’s affairs as at 30 June 2026

and of the Group’s profit for the year then

ended;

– the Group financial statements have been

properly prepared in accordance with UK-

adopted international accounting standards;

– the parent Company financial statements have

been properly prepared in accordance with UK-

adopted international accounting standards and

as applied in accordance with the provisions of

the Companies Act 2006; and

– the financial statements have been prepared in

accordance with the requirements of the

Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with

International Standards on Auditing (UK) (‘ISAs

(UK)’) and applicable law. Our responsibilities are

described below. We believe that the audit evidence

we have obtained is a sufficient and appropriate

basis for our opinion. Our audit opinion is consistent

with our report to the Audit Committee.

We were first appointed as auditor by the directors

on 1 October 2024. The period of total uninterrupted

engagement is for the two financial years ended 30

June 2026. We have fulfilled our ethical

responsibilities under, and we remain independent

of the Group in accordance with, UK ethical

requirements including the FRC Ethical Standard as

applied to public interest entities. No non-audit

services prohibited by that standard were provided.

Key audit matters: our assessment of

risks of material misstatement

Key audit matters are those matters that, in our

professional judgement, were of most significance in

the audit of the financial statements and include the

most significant assessed risks of material

misstatement (whether or not due to fraud) identified

by us, including those which had the greatest effect

on: the overall audit strategy; the allocation of

resources in the audit; and directing the efforts of

the engagement team. We summarise below the

key audit matters (unchanged from 2025), in

decreasing order of audit significance, in arriving at

our audit opinion above, together with our key audit

procedures to address those matters and, as

required for public interest entities, our results from

those procedures. These matters were addressed,

and our results are based on procedures

undertaken, in the context of, and solely for the

purpose of, our audit of the financial statements as

a whole, and in forming our opinion thereon, and

consequently are incidental to that opinion, and we

do not provide a separate opinion on these matters.

Report and Accounts for the year ended 30 June 2026

108

Overview

Materiality:

£11.0 million (2025: £10.5 million)

Group financial

statements as a whole

5.2% of normalised profit before tax

from continuing operations

(2025: 4.2% of normalised profit

before tax from continuing

operations)

Key audit matters

vs 2025

Risks

Expected credit losses

on loans and

advances to

customers

Interest receivable on

originated loan

accounts

Recoverability of

Parent Company’s

investment in

subsidiaries

Event driven

Customer redress

provision - FCA review

into historic motor

finance commissions

The risk

Our response

Expected

credit

losses on

loans and

advances to

customers

Risk vs

2025: <>

(£248.6

million; 2025:

£258.0

million)

Refer to

page 88

credit risk,

Note 2d

accounting

policy, note

3a Use of

estimates

and

judgements

and Note 14

financial

disclosures.

Subjective estimate

The measurement of expected credit losses

(‘ECL’) on loans and advances to customers

involves significant judgements and estimates.

The risk of material misstatement of ECL remains

heightened in the current year due to the

judgement and estimation uncertainty as a result

of the ongoing economic and geopolitical

uncertainties. The key areas where we have

identified greater levels of management

judgement and therefore increased levels of audit

focus in the Group’s estimation of ECL are:

• Economic scenarios: IFRS 9 requires the Group

to measure ECL on an unbiased forward-looking

basis reflecting a range of future economic

conditions. Significant management judgement is

applied to determine the economic scenarios

used, particularly in the current economic

environment, and the probability weightings

assigned to each economic scenario.

• Model estimations:inherently judgemental

modelling is used to estimate ECL, which

involves determining Probabilities of Default

(‘PD’), Loss Given Default (‘LGD’) and Exposures

at Default (‘EAD’). Certain IFRS 9 models and

model assumptions such as the property finance

LGD model, the motor finance PD model and the

forwardlooking information (‘FLI’) model used

across modelled portfolios, are the key drivers of

the Group’s ECL and represent the areas

involving the most significant judgement within

the Group’s ECL modelling framework.

• Significant Increase in Credit Risk (‘SICR’):the

staging criteria selected to identify a significant

increase in credit risk are a key area of

judgement within the Group’s ECL calculation as

these criteria determine whether a 12-month or

lifetime provision is recorded.

• Post-model adjustments (‘PMAs’) and

overlays: PMAs and overlays are raised by the

Group to address known impairment model

limitations or emerging trends as well as risks not

captured by models. There is a high degree of

estimation uncertainty and judgement is involved

in assessing the completeness of PMAs and

overlays.

The effect of these matters is that, as part of our

risk assessment, we determined that the ECL on

loans and advances to customers has a high

degree of estimation uncertainty, with a potential

range of reasonable outcomes greater than our

materiality for the financial statements as a whole,

and possibly many times that amount. As a

consequence of the inherent estimation

uncertainty associated with the economic

scenarios and the completeness of PMAs and

overlays, we identified specific fraud risks in these

areas.

Disclosure quality

In addition, the disclosures regarding the Group’s

application of IFRS 9 are important to explaining

the key judgements and material inputs to the

IFRS 9 results, as well as the sensitivity of ECL

results.

We performed the following audit procedures rather

than seeking to rely on the Group’s controls

because the nature of the balance is such that we

would expect to obtain audit evidence primarily

through the detailed procedures described. Our

procedures included: Our procedures included:

• Our economic scenario expertise: we involved

our own economic specialists to assist us in:

◦

assessing the reasonableness of the Group’s

methodology for determining the economic

scenarios used and the probability

weightings applied to them; and

◦

assessing the overall reasonableness of the

economic forecasts by comparing the

Group’s forecasts to our own modelled

forecasts.

• Our credit risk modelling expertise: we

involved our own credit risk modelling specialists

to assist us in evaluating the Group’s ECL

models. We used our knowledge of the Group

and our experience of the industry that the Group

operates in to independently challenge the

appropriateness of certain of the Group’s ECL

models.

• Test of details: we recalculated the ECL

measured for each of the Group’s loan portfolios

with a risk of material misstatement. We

performed testing over key inputs, data and

assumptions to assess the reasonableness of

key aspects of the ECL calculations.

• SICR: we assessed the technical compliance and

completeness of the Group's SICR criteria and its

ongoing effectiveness. In addition, we

independently applied the Group’s staging

methodology for a selection of loan portfolios to

assess whether each loan has been assigned to

the correct stage per the Group’s approved

staging criteria.

• PMAs and overlays: we assessed the

completeness of PMAs and overlays recognised,

including in response to model limitations, data

limitations and the evolving macroeconomic

outlook, by using our knowledge of the Group

and its industry to challenge the completeness of

risks addressed. In evaluating completeness, we

also performed benchmarking to comparable

peer organisations.

• Assessing transparency: we evaluated whether

the disclosures appropriately reflect and address

the uncertainty which exists when determining

the Group’s overall ECL. As part of this, we

assessed the sensitivity analysis that is

disclosed. In addition, we challenged whether the

disclosure of the key judgements and

assumptions made is sufficiently clear.

Our results

We found the resulting estimate of the expected

credit losses on loans and advances to customers

and the associated disclosures made to be

acceptable (2025: acceptable).

Report and Accounts for the year ended 30 June 2026

109

The risk

Our response

Customer

redress

provision -

FCA review

into historic

motor

finance

commissions

Risk vs 2025:

(£231.8

million; 2025:

£73.1 million)

Refer to note

21 of the

financial

disclosures.

Subjective estimate

Under IAS 37 Provisions, Contingent

Liabilities and Contingent Assets, significant

judgement is required in determining whether

a present obligation exists or whether an

outflow is probable, and in estimating the

amount required to settle the obligation.

Significant uncertainties can arise in

measuring potential obligations due to the

range of possible outcomes relating to

operational, legal and regulatory matters. The

most significant matter in this regard is the

Group’s customer redress provision in respect

of motor finance commissions, recognised at

30 June 2026.

The Directors’ estimate is based on the

information available following the FCA Policy

Statement on the motor finance consumer

redress scheme issued on 30 March 2026.

The key areas of estimation uncertainty in the

provision estimate are the ‘opt-in’ rate on

eligible agreements, along with management’s

approach to rebuttals for tied arrangements

and no better deal. Due to the inherent

estimation uncertainty, we have identified

these areas to have a specific fraud risk.

The effect of these matters is that, as part of

our risk assessment, we determined that the

customer redress provision in respect of

motor finance commissions has a high degree

of estimation uncertainty, with a potential

range of reasonable outcomes greater than

our materiality for the financial statements as

a whole, and possibly many times that

amount.

Disclosure quality

The disclosures regarding the Group’s

approach to determining the customer redress

provision in respect of motor finance

commissions are important in explaining the

key judgements and material inputs to the

provision calculations, as well as the

sensitivity of provision amounts to changes in

management’s assumptions, in light of the

estimation uncertainty arising.

We performed the following audit procedures

rather than seeking to rely on the Group’s controls

because the nature of the balance is such that we

would expect to obtain audit evidence primarily

through the detailed procedures described. Our

procedures included:

Our procedures included:

• Methodology implementation: we assessed

the methodology applied by the Group to

calculate the provision against the requirements

of IAS 37 and in the context of the FCA Policy

Statement.

• Test of details: we performed an independent

rebuild of the Group’s provision calculation. We

performed testing over the key inputs, including

data and assumptions to assess the

reasonableness of key aspects of the provision

calculation.

• Assumptions: we evaluated the

appropriateness of key assumptions including

the opt-in rate, rebuttal of tied arrangements and

no better deal, assessing the information

available to the Directors at the reporting date.

Through sensitivity analysis, we assessed the

impact on the provision of applying alternative

assumption amounts.

• Assessing transparency: we assessed

whether the Group's disclosures appropriately

reflect and address the uncertainty which exists

in determining the customer redress provision in

respect of motor finance commissions, and

whether the key judgements and assumptions

applied by management are clearly disclosed.

Our results

We found the customer redress provision in

respect of motor finance commissions and the

related disclosures to be acceptable (2025:

acceptable).related disclosures to be acceptable.

Report and Accounts for the year ended 30 June 2026

110

Report and Accounts for the year ended 30 June 2026

111

The risk

Our response

Interest

receivable on

originated

loan accounts

Risk vs 2025:

(£1,169.2

million; 2025:

£1,087.1

million)

Refer to note

3b Use of

estimates and

judgements

and Note 5

accounting

policy and

financial

disclosures

Subjective estimate

The recognition of interest receivable on

originated loan accounts for the property portfolio

under the effective interest rate (‘EIR’) method

requires management to apply judgement, with

the most critical estimate being the loans’

expected behavioural life and the expectations

regarding future standard variable rates (‘SVR’).

The expected behavioural life assumption utilises

repayment profiles which represent how

customers are expected to pay, informed by

historical experience and an assessment of

anticipated customer behaviour given forward

looking economic conditions. These profiles

extend significantly into the future which creates a

high degree of estimation uncertainty and subjects

the judgement to future market changes. The

expected future SVR is informed by anticipated

changes to UK interest rate levels.

As a consequence of the inherent estimation

uncertainty arising from the expected life

assumption, we have identified the assumption to

have a specific fraud risk.The effect of these

matters is that, as part of our risk assessment, we

determined that the EIR adjustment and

corresponding EIR income on originated loan

accounts has a high degree of estimation

uncertainty, with a potential range of reasonable

outcomes greater than our materiality for the

financial statements as a whole.

Disclosure quality

The disclosures regarding the Group’s application

of EIR accounting are important in explaining the

key judgements and material inputs to the EIR

adjustment, in light of the estimation uncertainty

arising.

We performed the following audit procedures rather

than seeking to rely on the Group’s controls

because the nature of the balance is such that we

would expect to obtain audit evidence primarily

through the detailed procedures described.

Our procedures included:

• Historical comparison: we critically assessed

the Group’s analysis and key assumptions over

the repayment profiles by comparing them to the

historical trends and actual portfolio behaviour

and considered the potential impact of

uncertainties arising from the current and

forward-looking economic environment on the

behavioural life forecasts. We also applied

alternative repayment profiles based on our

recalculations.

• Our sector experience: we critically assessed

key assumptions behind the Group’s expected

behavioural lives and SVR against our own

knowledge of industry experience and trends,

including market rates. We also challenged the

appropriateness of the level of segmentation

applied to the loan portfolios by management.

For the SVR assumption, we compared expected

movements in interest rates to latest UK

consensus forecasts.

• Sensitivity analysis: we performed sensitivity

analysis over the repayment profiles and SVR

rates by applying alternative assumptions based

upon the above procedures.

• Assessing transparency: we evaluated whether

the disclosures appropriately reflect and address

the uncertainty which exists when determining

the Group’s EIR adjustments and corresponding

EIR income. As part of this, we assessed the

sensitivity analysis that is disclosed. In addition,

we challenged whether the disclosure of the

critical estimates and assumptions made is

sufficiently clear.

Our results

We found the interest receivable on originated loan

accounts and the related disclosures to be

acceptable (2025: acceptable).

Recoverability

of parent

Company’s

investment in

subsidiaries

Risk vs 2025:

(£584.6 million;

2025: £504.6

million)

Refer to note

37 financial

disclosures.

Low risk, high value

The carrying amount of the Company’s

investments in subsidiaries represents the majority

of the Company’s total assets.

Their recoverability is not at a high risk of material

misstatement or subject to significant judgement.

However, due to their materiality in the context of

the Company financial statements, this is the area

that had the greatest effect on our audit of the

parent Company’s financial statements.

We performed the following audit procedure rather

than seeking to rely on any of the Company’s

controls because the nature of the balance is such

that we would expect to obtain audit evidence

primarily through the detailed procedures described

below.

Our procedures included:

• Tests of detail: we compared the carrying

amount of 100% of investments with the relevant

subsidiary’s financial statements to identify

whether its net assets, being an approximation of

its minimum recoverable amount, are in excess

of its carrying amount. We also assessed

whether the subsidiary has historically been

profit-making.

• Comparing valuations: for any subsidiary

whose net assets are less than the carrying

value, we evaluated the appropriateness of

adjustments made to the value in use estimates

to reflect the subsidiary’s equity value to assess

whether there was any impairment of investment.

Our results: we found the parent Company’s

conclusion that there is no impairment of its

investments in subsidiaries to be acceptable

(2025: acceptable).

Our application of materiality and an

overview of the scope of our audit

Materiality for the Group financial statements as a

whole was set at £11.0 million, determined with

reference to a benchmark of Group profit before tax,

normalised to exclude the impact of the customer

redress provision in respect of motor finance

commissions as disclosed in note 21, of £158.7

million, (2025: £10.5 million, determined with

reference to a benchmark of Group profit before tax,

normalised to exclude the impact of customer

redress provision in respect of motor finance

commissions of £58.5 million). We adjusted for

these items because they do not represent the

normal, continuing operations of the Group. This

materiality level represents 5.2% (2025: 4.2%) of the

stated benchmark. We performed audit procedures

on the items excluded from the normalised Group

profit before tax used as the benchmark for our

materiality.

Materiality for the parent Company financial

statements as a whole was set at £9.0 million (2025:

£7.5 million), determined with reference to a

benchmark of Company total assets, of which it

represents 0.8% (2025: 0.9%). In line with our audit

methodology, our procedures on individual account

balances and disclosures were performed to a lower

threshold, performance materiality, so as to reduce

to an acceptable level the risk that individually

immaterial misstatements in individual account

balances add up to a material amount across the

financial statements as a whole.

Performance materiality was set at 75% (2025:

65%) of materiality for the financial statements as a

whole, which equates to £8.2 million (2025: £6.8

million) for the Group and £6.8 million (2025: £4.9

million) for the parent Company. We increased the

percentage applied in our determination of

performance materiality compared to prior year

because we did not identify any factors indicating an

elevated level of risk.

We agreed to report to the Audit Committee any

corrected or uncorrected identified misstatements

exceeding £0.55 million (2025: £0.53 million) for the

Group and £0.45 million (2025: £0.38 million) for the

parent Company, in addition to other identified

misstatements that warranted reporting on

qualitative grounds.

Overview of the scope of our audit

We identified the Group as a whole to be a single

component (2025: single component), having

considered our evaluation of the Group’s operational

structure, the Group’s legal structure, the existence

of common information systems, and our ability to

perform audit procedures centrally.

Accordingly, we performed audit procedures on the

single component that accounted for 100% of Group

profit before tax and 100% of Group total assets.

We have audited the item excluded from the

normalised Group profit before tax used as the

benchmark for our materiality.

The audit was performed using the materiality and

performance materiality levels set out above.

Impact of controls on our audit

We were able to rely upon the Group’s internal

control over financial reporting in several areas of

our audit, where our controls testing supported this

approach, which enabled us

to reduce the scope of our substantive audit work; in

the other areas the scope of the audit work

performed was fully substantive.

Report and Accounts for the year ended 30 June 2026

112

Going concern

The Directors have prepared the financial

statements on the going concern basis as they do

not intend to liquidate the Group or the Company or

to cease their operations, and as

they have concluded that the Group’s and the

Company’s financial position means that this is

realistic. They have also concluded that there are no

material uncertainties that could have cast

significant doubt over their ability to continue as a

going concern for at least a year from the date of

approval of the financial statements (‘the going

concern period’). We used our knowledge of the

Group, its industry, and the general economic

environment to identify the inherent risks to its

business model and analysed how those risks might

affect the Group’s and Company’s financial

resources or ability to continue operations over the

going concern period. The risks that we considered

most likely to adversely affect the Group’s and

Company’s available financial resources over this

period were:

• the availability of funding and liquidity in the

event of a market wide stress scenario; and

• the impact on regulatory capital in the event of a

market wide stress scenario.

We considered whether these risks could plausibly

affect the liquidity in the going concern period by

comparing severe, but plausible downside scenarios

that could arise from these risks individually and

collectively against the level of available financial

resources indicated by the Group’s financial

forecasts.

We considered whether the going concern

disclosure in note 1 to the financial statements gives

a full and accurate description of the Directors’

assessment of going concern. Our conclusions

based on this work:

— we consider that the Directors’ use of the going

concern basis of accounting in the preparation of

the financial statements is appropriate; and

— we have not identified, and concur with the

Directors’ assessment that there is not, a material

uncertainty related to events or conditions that,

individually or collectively, may cast significant doubt

on the Group’s and Company's ability to continue as

a going concern for the going concern period.

We found the going concern disclosure in note 1 to

be acceptable.

However, as we cannot predict all future events or

conditions and as subsequent events may result in

outcomes that are inconsistent with judgements that

were reasonable at the time they were made, the

above conclusions are not a guarantee that the

Group or the Company will continue in operation.

Fraud and breaches of laws and

regulations – ability to detect

Identifying and responding to risks of material

misstatement due to fraud

To identify risks of material misstatement due to

fraud (‘fraud risks’) we assessed events or

conditions that could indicate an incentive or

pressure to commit fraud or provide an opportunity

to commit fraud. Our risk assessment procedures

included :

• Enquiring of Directors, the Audit Committee,

Internal Audit and inspection of policy

documentation as to the Group’s high-level

policies and procedures to prevent and detect

fraud, including the Internal Audit function, and

the Group’s channel for ‘whistleblowing’, as well

as whether they have knowledge of any actual,

suspected or alleged fraud.

• Reading Board, Audit Committee, and Risk

Committee meeting minutes.

• Considering remuneration incentive schemes

and performance targets for management and

directors.

• Using analytical procedures to identify any

unusual or unexpected relationships.

We communicated identified fraud risks throughout

the audit team and remained alert to any indications

of fraud throughout the audit.

As required by auditing standards, and taking into

account possible pressures to meet profit targets

and our overall knowledge of the control

environment, we perform procedures to address the

risk of management override of controls and the risk

of fraudulent revenue recognition, in particular:

• the risk that interest receivable on originated

loan accounts for the property portfolio under the

effective interest rate (“EIR”) method is

misstated, and

• the risk that management may be in a position to

make inappropriate accounting entries,

Further detail in respect of expected credit losses on

loans and advances to customers, interest

receivable on originated loan accounts and the

customer redress provision in respect of motor

finance commissions is set out in the key audit

matter disclosures in section 2 of this report.We also

performed procedures including:

• Identifying journal entries with unusual

characteristics compared to the total journal

population; and

• Assessing whether the judgements made in

making accounting estimates are indicative of a

potential bias.

Report and Accounts for the year ended 30 June 2026

113

Identifying and responding to risks of material

misstatement due to non-compliance with laws

and regulations

We identified areas of laws and regulations that

could reasonably be expected to have a material

effect on the financial statements from our general

commercial and sector experience, and through

discussion with the Directors and other

management (as required by auditing standards),

and from inspection of the Group’s regulatory and

legal correspondence and discussed with the

Directors and other management the policies and

procedures regarding compliance with laws and

regulations.

As the Group is regulated, our assessment of risks

involved gaining an understanding of the control

environment including the entity’s procedures for

complying with regulatory requirements.

We communicated identified laws and regulations

throughout our team and remained alert to any

indications of non-compliance throughout the audit.

The potential effect of these laws and regulations on

the financial statements varies considerably.

Firstly, the Group is subject to laws and regulations

that directly affect the financial statements including

financial reporting legislation (including related

companies legislation), distributable profits

legislation and taxation legislation and we assessed

the extent of compliance with these laws and

regulations as part of our procedures on the related

financial statement items.

Secondly, the Group is subject to many other laws

and regulations where the consequences of non-

compliance could have a material effect on amounts

or disclosures in the financial statements, for

instance through the imposition of fines or litigation

or the loss of the Group’s licence to operate. We

identified the following areas as those most likely to

have such an effect: regulatory capital and liquidity,

conduct (including consumer duty), money

laundering and financial crime and certain aspects

of company legislation recognising the financial and

regulated nature of the Group’s activities and its

legal form. Auditing standards limit the required

audit procedures to identify non-compliance with

these laws and regulations to enquiry of the

Directors and other management and inspection of

regulatory and legal correspondence, if any.

Therefore, if a breach of operational regulations is

not disclosed to us or evident from relevant

correspondence, an audit will not detect that breach.

For the historical motor finance commissions

conduct matter discussed in note 21, we assessed

the provision recognised and the Group’s

disclosures against our understanding from

inspecting regulatory correspondence, holding

enquiries with the Group’s internal legal counsel,

inspecting relevant public regulatory

announcements and performing audit procedures to

respond to the risks of material misstatement

identified.

Context of the ability of the audit to detect

fraud or breaches of law or regulation

Owing to the inherent limitations of an audit, there is

an unavoidable risk that we may not have detected

some material misstatements in the financial

statements, even though we have properly planned

and performed our audit in accordance with auditing

standards. For example, the further removed non-

compliance with laws and regulations is from the

events and transactions reflected in the financial

statements, the less likely the inherently limited

procedures required by auditing standards would

identify it. In addition, as with any audit, there

remained a higher risk of non-detection of fraud, as

these may involve collusion, forgery, intentional

omissions, misrepresentations, or the override of

internal controls. Our audit procedures are designed

to detect material misstatement. We are not

responsible for preventing non-compliance or fraud

and cannot be expected to detect non-compliance

with all laws and regulations.

We have nothing to report on the other

information in the Annual Report

The Directors are responsible for the other

information presented in the Annual Report together

with the financial statements. Our opinion on the

financial statements does not cover the other

information and, accordingly, we do not express an

audit opinion or, except as explicitly stated below,

any form of assurance conclusion thereon. Our

responsibility is to read the other information and, in

doing so, consider whether, based on our financial

statements audit work, the information therein is

materially misstated or inconsistent with the financial

statements or our audit knowledge. Based solely on

that work we have not identified material

misstatements in the other information.

Strategic report and directors’ report

Based solely on our work on the other information:

– we have not identified material misstatements in

the strategic report and the directors’ report;

– in our opinion the information given in those

reports for the financial year is consistent with

the financial statements; and

– in our opinion those reports have been prepared

in accordance with the Companies Act 2006.

Report and Accounts for the year ended 30 June 2026

114

We have nothing to report on the other

matters on which we are required to

report by exception

Under the Companies Act 2006, we are required to

report to you if, in our opinion:

– adequate accounting records have not been

kept by the parent Company, or returns

adequate for our audit have not been received

from branches not visited by us; or

– the parent Company financial statements are not

in agreement with the accounting records and

returns; or

– certain disclosures of directors’ remuneration

specified by law are not made; or

– we have not received all the information and

explanations we require for our audit.

We have nothing to report in these respects.

Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set out on

page 106, the Directors are responsible for: the

preparation of the financial statements including

being satisfied that they give a true and fair view;

such internal control as they determine is necessary

to enable the preparation of financial statements

that are free from material misstatement, whether

due to fraud or error; assessing the Group and

parent Company’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 they either intend to liquidate the

Group or the parent Company or to cease

operations, or have no realistic alternative but to do

so.

Auditor’s responsibilities

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 our opinion in an

auditor’s report. Reasonable assurance is a high

level of assurance, but does not guarantee that an

audit conducted in accordance with ISAs (UK) will

always detect a material misstatement when it

exists. Misstatements can arise from fraud or error

and are considered material if, individually or in

aggregate, they could reasonably be expected to

influence the economic decisions of users taken on

the basis of the financial statements.

A fuller description of our responsibilities is provided

on the FRC’s website at www.frc.org.uk/

auditorsresponsibilities.

The purpose of our audit work and to

whom we owe our responsibilities

This report is made solely to the Company’s

members, as a

body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006 and the terms of our

engagement by the Company. Our audit work has

been undertaken so that we might state to the

Company’s members those matters we are required

to state to them in an auditor’s report, and the

further matters we are required to state to them in

accordance with the terms agreed with the

Company and for no other purpose. To the fullest

extent permitted by law, we do not accept or

assume responsibility to anyone other than the

Company and the Company’s members, as a body,

for our audit work, for this report, or for the opinions

we have formed.

Pamela McIntyre (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory

Auditor

Chartered Accountants

15 Canada Square

London

E14 5GL

9 September 2026

Report and Accounts for the year ended 30 June 2026

115

The consolidated financial statements

Consolidated income statement

Note

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Interest income

1,383.4

1,414.8

Interest expense

(779.3)

(816.9)

Net interest income

604.1

597.9

Fee and commission income

11.8

9.2

Fee and commission expense

(18.3)

(15.2)

Net fee and commission expense

(6.5)

(6.0)

Net gains / (losses) from derivatives and other financial

instruments at fair value through profit or loss

7.4

(1.9)

Net gains on disposal of financial assets at fair value through

other comprehensive income

1.7

1.1

Net losses on financial assets at amortised cost

(3.2)

Other operating income

0.9

9.3

Total operating income

604.4

600.4

Provisions

(166.8)

(63.9)

Other expenses and staff costs

(342.1)

(327.1)

Administrative expenses

(508.9)

(391.0)

Operating profit before impairment losses

95.5

209.4

Share of profit of associate

0.9

0.7

Impairment losses on loans and advances to customers

(45.2)

(16.6)

Profit before taxation

51.2

193.5

Taxation

(7.6)

(52.4)

Profit after taxation - attributable to equity holders of the Group

43.6

141.1

The notes and information from page 120 onwards form part of these consolidated

financial statements.

Consolidated statement of comprehensive income

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Profit after taxation

43.6

141.1

Changes in fair value through other comprehensive income:

Net changes in fair value recognised directly in equity

21.0

(4.6)

Transfers from equity to income or expense

(1.7)

(1.1)

Taxation

(4.8)

1.4

Total other comprehensive income / (expense) net of taxation

14.5

(4.3)

Total comprehensive income attributable for the year to equity holders of

the Group

58.1

136.8

Report and Accounts for the year ended 30 June 2026

116

Consolidated statement of financial position

Note

As at 30 June

2026

£m

As at 30 June

2025

£m

Assets

Cash and balances at central banks

2,153.5

1,182.3

Loans and advances to banks

312.4

292.3

Investment securities

1,966.6

2,704.2

Derivatives held for risk management

135.6

178.6

Loans and advances to customers

18,798.9

16,599.7

Fair value adjustment for portfolio hedged risk

(22.8)

21.3

Other assets

25.7

13.0

Prepayments and accrued income

33.4

26.8

Current tax assets

36.5

11.0

Deferred tax assets

1.0

6.5

Investment in associates

6.3

7.0

Property, plant and equipment

21.2

27.5

Intangible assets

15.4

8.6

Total assets

23,483.7

21,078.8

Liabilities

Amounts due to banks

585.1

795.8

Deposits from customers

19,110.9

17,047.6

Fair value adjustment for portfolio hedged risk

1.7

16.4

Derivatives held for risk management

64.4

98.5

Other liabilities, accruals and deferred income

182.4

128.4

Deferred tax liabilities

0.1

Provisions

247.8

82.9

Debt securities in issue

1,190.9

929.4

Subordinated notes

300.4

100.9

Total liabilities

21,683.7

19,199.9

Equity

Share capital

243.9

Share premium account

74.4

Additional tier 1 capital

150.0

Capital redemption reserve

0.2

Fair value through other comprehensive income

9.5

(5.0)

Retained earnings

1,322.0

1,415.4

Total equity

1,800.0

1,878.9

Total liabilities and equity

23,483.7

21,078.8

The notes and information from page 120 onwards form part of these consolidated

financial statements.

These financial statements were approved by the Board and were signed on its behalf

by:

Raj Makanjee

Chief Executive Officer

9 September 2026

Registered number: 06764335

Louise Britnell

Chief Financial Officer

9 September 2026

Report and Accounts for the year ended 30 June 2026

117

Consolidated statement of cash flows

Note

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Cash flows from / (used in) operating activities

Profit before taxation

51.2

193.5

Adjustments for non-cash items

(6.8)

(37.4)

Change in operating assets

(1,664.4)

(1,274.3)

Change in operating liabilities

2,024.1

281.0

Interest received on investment securities

118.6

95.2

Interest paid on debt securities in issue

(40.4)

(39.3)

Interest paid on subordinated notes

(11.8)

(7.9)

Dividend received

1.7

1.1

Dividend paid

(125.0)

Income tax paid

(32.5)

(59.9)

Net cash flows from / (used in) operating activities

314.7

(848.0)

Cash flows from (used in) investing activities

Purchase of investment securities

(2,129.5)

(1,618.2)

Proceeds from sale and maturity of investment securities

2,831.6

1,278.3

Capital repayments of investment securities

47.6

81.5

Business combination

(476.5)

Purchase of property, plant and equipment

(0.1)

(7.0)

Net cash flows generated from / (used) in investing activities

273.1

(265.4)

Cash flows from financing activities

Redemption of subordinated notes

(100.0)

Net proceeds from issue of subordinated notes

297.8

Net proceeds from issue of debt securities

492.0

300.0

Capital repayments of debt securities issued

(228.8)

(150.0)

Redemption of Additional tier 1 capital

(61.0)

Issuance of Additional tier 1 capital

50.0

Coupons paid on Additional tier 1 capital

(12.0)

(11.3)

Lease liabilities - principal payments

(3.8)

(3.9)

Net cash generated from financing activities

445.2

123.8

Net increase / (reduction) in cash and cash equivalents

1,033.1

(989.6)

Cash and cash equivalents at start of the period

1,311.1

2,300.6

Movement during the period

1,033.1

(989.6)

Cash and cash equivalents at end of the period

2,344.0

1,311.1

Interest received in the year was £1,260.8 million (2025: £1,368.0 million) and interest paid in

the year was £789.0 million (2025: £836.5 million).

Report and Accounts for the year ended 30 June 2026

118

Consolidated statement of changes in equity

Note

capital

£m

premium

account

£m

Additional

tier 1

capital

£m

Capital

redemption

reserve

£m

FVOCI

reserve

£m

Retained

earnings

£m

Total

£m

Year ended 30 June 2026

As at 1 July

2025

243.9

74.4

150.0

0.2

(5.0)

1,415.4

1,878.9

Profit after

taxation

43.6

Other

comprehensive

income

14.5

Dividend paid

(125.0)

Coupon paid

on Additional

tier 1 capital

securities

(12.0)

As at 30 June

2026

243.9

74.4

150.0

0.2

9.5

1,322.0

1,800.0

Note

capital

£m

premium

account

£m

Additional

tier 1

capital

£m

Capital

redemption

reserve

£m

FVOCI

reserve

£m

Retained

earnings

£m

Total

£m

Year ended 30 June 2025

As at 1 July

2024

243.9

74.4

161.0

0.2

(0.7)

1,285.6

1,764.4

Profit after

taxation

141.1

Other

comprehensive

loss

(4.3)

Redemption of

Additional tier 1

capital

(61.0)

Issuance of

Additional Tier 1

Capital

50.0

Coupon paid

on Additional

tier 1 capital

securities

(11.3)

As at 30 June

2025

243.9

74.4

150.0

0.2

(5.0)

1,415.4

1,878.9

The notes and information from page 120 onwards form part of these consolidated

financial statements.

Report and Accounts for the year ended 30 June 2026

119

120

Notes to the consolidated

financial statements

Basis of preparation

a. Accounting basis

The consolidated financial statements of

Aldermore Group PLC (the “Company”)

include the assets, liabilities and results

of the operations of the Company and

its subsidiary undertakings (together, the

“Group”) which includes Aldermore Bank

PLC (the “Bank”) and MotoNovo Finance

Limited.

By including the separate balance sheet

of the Company, together with the

consolidated financial statements, the

Company is taking advantage of the

exemption in Section 408 of the

Companies Act 2006 not to present its

individual income statement and related

notes that form a part of these

approved financial statements, see

page 190 for the Company profit

disclosure.

The principal activities of the Group are

lending and savings. The Company is

public and limited by shares. The

address of the Company’s registered

office is given on page 203.

Both the consolidated and separate

financial statements of the Company

have been prepared and approved by

the Directors in accordance with UK-

adopted international accounting

standards.

b. Basis of consolidation

Subsidiaries

The consolidated financial statements

incorporate the financial statements of

the Company and its subsidiaries which

are entities controlled by the Company,

jointly referred to as the Group, for the

year ended 30 June 2026.

Control is achieved when the Group:

• Has power over the investee;

• Is exposed, or has rights, to variable

returns from its involvement with the

investee; and

• Has the ability to use its power to

affect returns.

If facts and circumstances indicate that

there are changes to one or more of the

three elements of control listed above,

the Group reassesses whether or not it

controls an investee.

Subsidiaries are consolidated from the

date on which control is transferred to

the Group and are deconsolidated from

the date that control ceases. Uniform

accounting policies are applied

consistently across the Group.

Intercompany transactions and

balances are eliminated upon

consolidation. On initial recognition in

the consolidated financial statements,

subsidiaries acquired are accounted for

by applying the acquisition method of

accounting to business combinations.

Unrealised losses on transactions

between Group entities are also

eliminated unless the transaction

provides evidence of impairment of the

transferred asset, in which case the

transferred asset will be tested for

impairment in accordance with the

Group’s impairment policies.

Business combinations

Business combinations are accounted

for using the acquisition method.

Consideration transferred and the

identifiable assets acquired and

liabilities assumed as part of the

business combination are generally, with

some limited exceptions, recognised at

their acquisition date fair values.

The excess or shortage of the sum of the

consideration transferred, the value of

non-controlling interest, the fair value of

any existing interest, compared to the

fair value of identifiable net assets, is

recognised as goodwill, or a gain on

bargain purchase. Transaction costs are

included in operating expenses within

profit or loss when incurred.

Securitisation vehicles

The Group has securitised certain loans

and advances to customers by the

transfer of the beneficial interest in such

loans to securitisation vehicles. The

securitisation enabled the subsequent

Report and Accounts for the year ended 30 June 2026

121

issue of debt securities by a

securitisation vehicle to investors who

have the security of the underlying

assets as collateral. The securitisation

vehicles are fully consolidated into the

Group’s accounts as the Group has met

the criteria of control, as defined above,

over the securitisation vehicles.

The transfer of the beneficial interest in

these loans to the securitisation vehicle

are not treated as a derecognition

event. The Group continues to recognise

these assets within its own Statement of

Financial Position after the transfer as it

continues to retain substantially all the

risks and rewards from the assets.

c. Going concern

The Directors have assessed the Group's

ability to continue as a going concern

and are satisfied that it remains

appropriate to prepare the financial

statements on that basis.

In making this assessment, the Directors

considered all available information

covering a period of at least 12 months

from the date of approval of these

financial statements, including the

Group's current financial position,

forecast profitability, liquidity, capital

resources and principal risks.

On 7 April 2026, FirstRand Limited

announced its intention to facilitate an

orderly ownership transition of the Group

through a sale of its shares. This process

remains ongoing as at the date of these

financial statements and there is no

guarantee that it will result in any

eventual transaction. As such the

Directors have considered the

implications of this process and

concluded that it does not affect the

Group's ability to continue as a going

concern. The assessment has therefore

been performed on the basis of the

Group's existing Board-approved

strategy.

The Directors reviewed the Group's

forecasts under both base case and

stressed scenarios, including the results

of the ICAAP and ILAAP, which

incorporate severe but plausible stress

testing and reverse stress testing.

Particular consideration was given to the

impact of Motor Finance provisions,

economic uncertainty, credit losses,

operational resilience risks and the

Group's ability to maintain sufficient

capital and liquidity resources.

Based on this assessment, the Directors

are satisfied that the Group will maintain

adequate capital and liquidity resources

and remain compliant with its regulatory

requirements throughout the

assessment period. Accordingly, the

Directors have a reasonable expectation

that the Group will continue in

operational existence for the

foreseeable future and have therefore

prepared the financial statements on a

going concern basis. No material

uncertainties have been identified in

relation to the Group's ability to continue

as a going concern.

d. Basis of measurement

The financial statements have been

prepared on the historical cost basis

except for the following material items in

the financial statements:

• Derivative financial instruments are

measured at Fair Value Through Profit

or Loss (FVTPL);

• Fair Value Through Other

Comprehensive Income (FVOCI)

investment securities are valued at

FVOCI; and

• Fair value adjustments for portfolios

of financial assets and financial

liabilities designated as hedged items

in qualifying fair value hedge

relationships, which reflect changes in

fair value attributable to the risk

being hedged and are reflected

through profit or loss in order to

match the gains or losses arising on

the derivative financial contracts that

qualify as hedging instruments.

e. Functional and presentation currency

Items included in the Group’s financial

statements are presented in pounds

sterling, which is the functional currency

of the Group.

Report and Accounts for the year ended 30 June 2026

122

f. Presentation of risk and capital

disclosures

The disclosures required under IFRS 7:

Financial instruments: disclosures and

IAS 1: Presentation of financial

statements have been included within

the Risk Management section between

page 74 and 105.

Disclosures within the Credit Risk section

between pages 88 and 97 are covered

by the Independent Auditor’s report on

page 108.

Disclosures included in the Treasury Risk

section from page 97 to page 105 are

covered by the Independent Auditor’s

report on page 108 where referenced as

audited.

g. New accounting standards

During the year ended 30 June 2026,

there were no new IFRS standards which

became effective that impacted the

Group’s reported earnings, financial

position or reserves, or accounting

policies.

h. Amendments to existing standards

adopted in the current year

The Group has adopted the following

new amendments to existing standards

which were effective for accounting

periods starting on or after 1 January

2025:

Amendments to IAS 21 - The Effects of

Changes in Foreign Exchange Rates

became effective in the current year.

This amendment has not impacted the

Group’s reported earnings, financial

position or reserves, or the accounting

policies.

Standards and interpretation issued

not yet effective

The following new and revised standards

and interpretations, all of which have

been endorsed for use within the UK, are

applicable to the business of the Group.

The Group will comply with these from

the stated effective date.

Report and Accounts for the year ended 30 June 2026

123

New and Amended

accounting standards

Description of change

Impact on the Group

Amendments to IFRS 9

and IFRS 7 – Disclosures:

Classification and

Measurement of

Financial Instruments

The amendments clarify:

• that a financial liability is

derecognised on the settlement

date. It also introduces an

accounting policy option to

derecognise financial liabilities that

are settled through an electronic

payment system before settlement

date if certain conditions are met.

• how to assess the contractual cash

flow characteristics of financial

assets that include environmental,

social and governance (ESG)-linked

features and other similar contingent

features.

• the treatment of non-recourse assets

and contractually linked instruments.

• Additional disclosure requirements

for financial assets and liabilities with

contractual terms that reference a

contingent event.

Effective date: Annual periods

commencing on or after 1 January

2026.

The Group does not expect this

amendment to have a significant

impact on the annual financial

statements.

Amendments to IFRS 9

and IFRS 7 – Disclosures:

Contracts referencing

nature-dependent

electricity

The amendments include:

• Clarifying the application of the

‘own-use’ requirements.

• Permitting hedge accounting if these

contracts are used as hedging

instruments.

• Adding new disclosure requirements

to enable investors to understand

the effect of these contracts on a

company’s financial performance

and cash flows.

Effective date: Annual periods

commencing on or after 1 January

2026.

The Group does not expect this

amendment to have a significant

impact on the annual financial

statements.

Introduction of IFRS 18:

Presentation and

Disclosure in Financial

Statements

IFRS 18 aims to improve how companies

communicate in their financial

statements, with a focus on information

about financial performance in the

statement of profit or loss. IFRS 18 is

accompanied by limited amendments to

the requirements in IAS 7 Statement of

Cash Flows.

The introductions include:

• requiring additional defined

subtotals in the statement of profit or

loss;

• requiring disclosures about

management-defined performance

measures; and

• adding new principles for grouping

(aggregation and disaggregation) of

information.

Effective date: Annual periods

commencing on or after 1 January

2027.

The new standard is expected to

impact the Group’s presentation

of its statement of profit or loss

and introduce additional

disclosure requirements, including

in respect of management-

defined performance measures

(“MPMs”).

Introduction of IFRS 19:

Subsidiaries without

Public Accountability

IFRS 19 enables eligible entities to provide

reduced disclosures compared to the

requirements in other IFRS accounting

standards. Entities that elect IFRS 19 are

still required to apply recognition,

measurement and presentation

requirements of other IFRS accounting

standards.

Effective date: Annual periods

commencing on or after 1 January

2027.

IFRS 19 would not be applicable to

the Group’s annual financial

statements.

Report and Accounts for the year ended 30 June 2026

124

2. Material accounting policies

This section sets out the Group’s accounting policies which relate to the

consolidated and separate financial statements as a whole. Where an

accounting policy relates specifically to a note then the accounting policy is set

out within the respective note.

a. Financial instruments - recognition

and derecognition

i. Recognition

The Group initially recognises loans and

advances, amounts due to banks,

deposits from customers and

subordinated notes issued on the date

that they are originated.

Regular purchases and sales of

investment securities and derivatives are

recognised on the trade date at which

the Group commits to purchase or sell

the asset. All other financial assets and

liabilities are initially recognised on the

trade date at which the Group becomes

a party to the contractual provisions of

the instrument.

ii. Derecognition

Financial assets are derecognised when

and only when:

• The contractual rights to receive the

cash flows from the financial asset

expire; or

• The Group has transferred

substantially all the risks and rewards

of ownership of the assets.

When a financial asset is derecognised

in its entirety, the difference between the

carrying amount, the sum of the

consideration received (including any

new asset obtained less any new liability

assumed), and any cumulative gain or

loss that had been recognised in other

comprehensive income is recognised in

gains on disposal of FVOCI in the income

statement.

A financial liability is derecognised when

the obligation is discharged, cancelled

or expires. Any difference between the

carrying amount of a financial liability

derecognised and the consideration

paid is recognised in the income

statement.

b. Financial assets

i. Classification

Management determines the

classification of its financial assets at

initial recognition, based on:

• The Group’s business model for

managing the financial assets; and

• The contractual cash flow

characteristics of the financial asset.

The Group distinguishes three main

business models for managing financial

assets:

• Holding financial assets to collect

contractual cash flows;

• Managing financial assets and

liabilities on a fair value basis or

selling financial assets; and

• A mixed business model of collecting

contractual cash flows and selling

financial assets.

The business model assessment is not

performed on an instrument by

instrument basis, but at a level that

reflects how groups of financial assets

are managed together to achieve a

particular business objective. This

assessment is done on a portfolio or

sub-portfolio level depending on the

manner in which groups of financial

assets are managed.

In considering whether the business

objective of holding a group of financial

assets is achieved primarily through

collecting contractual cash flows,

amongst other considerations,

management monitors the frequency

and significance of sales of financial

assets out of these portfolios for

purposes other than managing credit

risk. For the purposes of performing the

business model assessment, the Group

only considers a transaction a sale if the

Report and Accounts for the year ended 30 June 2026

125

asset is derecognised for accounting

purposes. For example, a repo

transaction where a financial asset is

sold with the commitment to buy back

the asset at a fixed price at a future

date is not considered a sale transaction

as substantially all the risks and rewards

relating to the ownership of the asset

have not been transferred and the asset

is not derecognised from an accounting

perspective.

If sales of financial assets are infrequent,

the significance of these sales are

considered by comparing the carrying

amount of assets sold during the period

and cumulatively to the total carrying

amount of assets held in the business

model. If sales are either infrequent or

insignificant, these sales will not impact

the conclusion that the business model

for holding financial assets is to collect

contractual cash flows. In addition,

where the issuer initiates a repurchase

of the financial assets which was not

anticipated in the terms of the financial

asset, the repurchase is not seen as a

sale for the purposes of assessing the

business model of that group of financial

assets.

A change in business model of the Group

only occurs on the rare occasion when

the Group changes the way in which it

manages financial assets. Any changes

in business models would result in a

reclassification of the relevant financial

assets from the start of the next

reporting period.

In order for a debt security to be

measured at amortised cost or FVOCI,

the cash flows on the asset have to be

solely payments of principal and interest

(“SPPI”), i.e. consistent with those of a

basic lending agreement. The SPPI test is

applied to individual securities at initial

recognition, based on the cash flow

characteristics of the asset.

All investment securities held as at 30

June 2026 passed the SPPI test. The

Group held three portfolios of

investment securities, the first as part of

a mixed business model whose

objectives include both the collection of

contractual cash flows and the sale of

financial assets, the second as part of a

held to collect model whose objective is

to collect contractual cash flows until

maturity, and the third as part of the

Aldermore Group Capital Investment

Strategy which seeks to stabilise

earnings volatility by extending the

investment term of equity capital.

Investment securities held in the mixed

business model have been classified as

measured at FVOCI, and those held in

the held to collect model and Capital

Investment Strategy have been

classified as measured at amortised

cost.

The SPPI test is applied on a portfolio

basis for loans and advances to

customers, cash and balances at central

banks and loans and advances to

banks, as the cash flow characteristics

of these assets are standardised. This

included consideration of any

prepayment charges, which in all cases

were reasonable compensation and

therefore did not cause these assets to

fail the SPPI test. As all of these financial

assets were held as part of business

models with the objective of collecting

contractual cash flows and they all

passed the SPPI test, they have all been

classified as financial assets to be

measured at amortised cost.

ii. Measurement

Financial assets measured at amortised

cost

These are initially measured at fair value

plus transaction costs that are directly

attributable to the financial asset.

Subsequently, these are measured at

amortised cost using the effective

interest rate (“EIR”) method. The

amortised cost is the amount advanced

less principal repayments, plus or minus

the cumulative amortisation using the

EIR method of any difference between

the amount advanced and the maturity

amount, less impairment provisions for

expected losses. Financial assets

measured at amortised cost mainly

comprise loans and advances to

customers and loans and advances to

banks.

Report and Accounts for the year ended 30 June 2026

126

Financial assets measured at FVOCI

These are initially measured at fair value

plus transaction costs that are directly

attributable to the financial asset.

Subsequently, they are measured at fair

value based on current, quoted bid

prices in active markets for identical

assets that the Group can access at the

reporting date. Where there is no active

market, or the investment securities are

unlisted, the fair values are based on

valuation techniques including

discounted cash flow analysis, with

reference to relevant market rates and

other commonly used valuation

techniques. Interest income is

recognised in the income statement

using the EIR method. Impairment

provisions for expected losses are

recognised in the income statement

which does not reduce the carrying

amount of the investment security but is

transferred from the FVOCI reserve in

equity. Other fair value movements are

recognised in other comprehensive

income and presented in the FVOCI

reserve in equity. On disposal, the gain or

loss accumulated in equity is reclassified

to the income statement. Gains or losses

arising from ineffectiveness of fair value

hedges are recognised in the income

statement.

Financial assets at fair value through

profit or loss

These are measured both initially and

subsequently at fair value with

movements in fair value recorded in the

income statement. Any costs that are

directly attributable to their acquisition

are recognised in profit or loss when

incurred. The Group only measures

derivative financial assets under this

classification. Gains or losses arising

from ineffectiveness of fair value hedges

are recognised in the income statement.

Modification of financial instruments

The Group derecognises a financial

asset, such as a loan to a customer,

when the terms and conditions have

been renegotiated to the extent that,

substantially, it becomes a new loan,

with the difference recognised as a

derecognition gain or loss, to the extent

that an impairment loss has not already

been recorded. The newly recognised

loans are classified as stage 1 for

expected credit loss (“ECL”)

measurement purposes, unless the new

loan is deemed to be POCI (“Purchased

or Originated Credit-Impaired”).

If the modification does not result in

cash flows that are substantially

different the modification does not result

in derecognition. Based on the change in

cash flows discounted at the original EIR,

the Group records a modification gain or

loss, to the extent that an impairment

loss has not already been recorded.

Modification gains and losses are

calculated on an individual contract

basis. This is calculated by discounting

the modified cash flows at the original

interest rate and results in a

modification gain/loss in impairments in

the financial year. The resultant gain/

loss is recognised in the consolidated

income statement.

c. Financial liabilities

i. Overview

Financial liabilities are contractual

obligations to deliver cash or another

financial asset. Financial liabilities are

recognised initially at fair value, net of

directly attributable transaction costs

for financial liabilities other than

derivatives. Financial liabilities, other

than derivatives, are subsequently

measured at amortised cost.

ii. Financial liabilities at amortised cost

Financial liabilities at amortised cost are

recognised initially at fair value net of

transaction costs incurred. They are

subsequently measured at amortised

cost. Any difference between the fair

value and the redemption value is

recognised in the income statement over

the period of the borrowings using the

EIR method.

d. Impairment - financial assets

The Group Impairment Framework and

associated policies applies to:

• Financial assets measured at

amortised cost;

Report and Accounts for the year ended 30 June 2026

127

• Investment securities measured at

FVOCI;

• Loan commitments; and

• Finance lease receivables where the

Group is the lessor.

IFRS 9 establishes a three-stage

approach for impairment of financial

assets:

• Stage 1 – at initial recognition of a

financial asset, or when an

irrevocable loan commitment is made

if this occurs before a financial asset

is recognised, the asset or loan

commitment is classified as stage 1

and 12 month expected credit losses

(ECL) are recognised, which are credit

losses related to default events

expected to occur within the next 12

months;

• Stage 2 – if the asset has experienced

a significant increase in credit risk

since initial recognition, the asset is

classified as stage 2 and lifetime

expected credit losses are

recognised; and

• Stage 3 – credit impaired assets are

classified as stage 3, the asset is

classified as stage 3 and lifetime

expected credit losses are

recognised.

i. Collective and individual assessment

The Group uses an in-house engine to

estimate ECL on a collective basis for all

loans to customers and loan

commitments. The collective assessment

groups loans with shared credit risk

characteristics through lines of business.

The engine captures model outputs from

the 12-month Probability of Default (“PD”),

Exposure at Default (“EAD”), Loss Given

Default (“LGD”), Lifetime PD,

macroeconomic models and Staging

analysis to derive an ECL estimate for

each account.

Statistical modelling techniques are

used to determine which borrower and

transaction characteristics are

predictive of certain behaviours, based

on relationships observed in historical

data related to the group of accounts to

which the model will be applied. These

result in the production of models that

are used to predict impairment

parameters (PD, LGD, and EAD) based on

the predictive characteristics identified

through the statistical modelling

process.

When impairments are calculated, each

exposure is assigned unique impairment

parameters (a PD, LGD and EAD) based

on that exposure’s individual

characteristics. These account-level

impairment parameters are then used to

calculate account-level expected credit

losses. Individually assessed provisions

are considered for watchlist exposures in

stage 3.

In respect of Investment securities and

loans to banks, estimates of expected

losses are calculated on the current

individual credit grading of the exposure

and externally sourced expected loss

rates. The Group deems the likelihood of

default across the respective asset

counterparties as immaterial, and hence

does not recognise a provision against

the carrying balances.

ii. Significant increase in credit risk

(movement to stage 2) (“SICR”)

In assessing whether loans to customers

and loan commitments have been

subject to a significant increase in credit

risk the Group applies the following

criteria in order:

• A presumption that an account which

is more than 30 days past due has

suffered a significant increase in

credit risk. IFRS 9 allows this

presumption to be rebutted, but the

Group believes that more than 30

days past due to be an appropriate

back stop measure and therefore has

not rebutted the presumption;

• Quantitative criteria based upon a

change in the modelled probability of

default of individual credit exposures.

Staging models using statistical

techniques have been developed on

a portfolio basis to determine the

levels of changes in PDs since

origination which correlate to a

significant increase in the likelihood of

delinquency among historic loans

with similar characteristics; and

Report and Accounts for the year ended 30 June 2026

128

• Qualitative criteria, where an

exposure is subject to a non-

distressed restructure or has been

placed on a watchlist as a result of

possessing certain qualitative

features based on the Basel

Committee On Banking Supervision

“Guidance on credit risk and

accounting for expected credit

losses”, including such matters as

significant change in the operating

results of the borrower or in the value

of the collateral provided.

In respect of Investment securities and

loans to banks, use is made of the low

credit risk expedient permitted by IFRS 9

whereby the credit risk is not considered

to have increased significantly where

the exposures are assumed to be “low”

credit risk at the reporting date or/and

where they continue to be investment

grade, or equivalent.

iii.Definition of credit impaired

(movement to stage 3)

The Group has identified certain

quantitative and qualitative criteria to

be considered in determining when an

exposure is credit impaired and should

therefore be moved into stage 3, these

include the following:

• The exposure becomes 90 days past

due. IFRS 9 allows this assumption to

be rebutted, but at present the Group

has not done so; and

• Qualitative criteria, which vary

according to the type of lending

being undertaken, but include

indicators such as fraud, company

failures, consumer bankruptcies,

Individual Voluntary Arrangements

and distressed restructures.

The Group has used the same definition

of default as that for the purpose of

calculating PDs used in its credit models.

In addition, the definition has been

aligned with those used for regulatory

reporting purposes. Refer to note 3 for

further details on the definition of

default applied by the Group.

iv.Movements back to stages 1 and 2

Exposures will move out of stage 3 to

stage 1 or 2 when they no longer meet

the criteria for inclusion and have

completed agreed probation periods set

according to the type of lending.

Movement into stage 1 will only occur

when the SICR criteria are no longer met.

v. Write-Off and Recoveries

Write-off shall occur when either part, or

all, of the outstanding debt is considered

irrecoverable and all viable options to

recover the debt have been exhausted.

Any amount received after a provision

has been raised or debt has been

written-off, will be recorded as a

recovery and reflected as a reduction in

the impairment loss reflected in the

income statement.

vi.Forward-looking macroeconomic

scenarios

ECL and SICR take into account

forecasts of future economic conditions

in addition to current conditions. The

Group has developed a macroeconomic

model which adjusts the modelled ECLs

to reflect a range of forward looking

macroeconomic scenarios, the final ECL

is a probability weighted average across

the scenarios.

e. Financial instruments - fair value

measurement

Fair value is the price that would be

received to sell an asset, or paid to

transfer a liability, in an orderly

transaction between market

participants at the measurement date in

the principal market, or in its absence,

the most advantageous market to which

the Group has access at that date. The

fair value of a liability reflects its non-

performance risk.

Where applicable, the Group measures

the fair value of an instrument using the

quoted price in an active market for that

instrument. A market is regarded as

active if transactions for the asset or

liability take place with sufficient

frequency and volume to provide pricing

on an ongoing basis.

Where there is no quoted price in an

active market, the Group uses valuation

techniques that maximise the use of

relevant observable inputs and minimise

the use of unobservable inputs. The

Report and Accounts for the year ended 30 June 2026

129

chosen valuation techniques

incorporate factors that market

participants would take into account in

pricing a transaction.

The best evidence of fair value of a

financial instrument at initial recognition

is normally the transaction price. If an

asset measured at fair value has a bid

and an offer price, the Group measures

assets and long positions at the bid

price and liabilities at the offer price.

f. Assets leased to customers

Leases of assets to customers are

finance leases as defined by IFRS 16.

When assets are leased to customers

under finance leases, the present value

of the lease payments is recognised as a

receivable. The difference between the

gross lease payments receivable and

the present value of the receivable

represents the unearned finance income

which is recognised as finance income

over the term of the lease. Lease income

is recognised within interest income in

the income statement over the term of

the lease which reflects a constant

periodic rate of return ignoring tax cash

flows.

g. Assets leased from third parties

The Group applies a single recognition

and measurement approach for all

leases, except for short-term leases and

leases of low-value assets. The Group

elected to apply the short-term lease

exemption to leases with a lease term of

less than 12 months. The Group

recognised lease liabilities at the present

value of the lease payments outstanding

at commencement date, discounted by

using the rate implicit in the lease. If this

rate cannot be readily determined, the

Group uses its incremental borrowing

rate. Each lease payment is allocated

between lease liability and interest

expense.

Interest expense is charged to the

income statement over the lease period

so as to produce a constant periodic

rate of interest on the remaining

balance of the liability for each period.

The right-of-use assets are recognized

at cost, comprising the amount of initial

measurement of the lease liability plus

initial direct costs. The right-of use asset

is subsequently depreciated over the

lease term on a straight-line basis.

h. Foreign currencies

Transactions in foreign currencies are

recorded using the rate of exchange

ruling at the date of the transaction.

Monetary assets and liabilities held at

the statement of financial position date

are translated into sterling using the

exchange rates ruling at the statement

of financial position date. Exchange

differences are charged or credited to

the income statement.

Shareholder funds

i. Capital instruments

The Group classifies capital instruments

as financial liabilities or equity

instruments in accordance with the

substance of the contractual terms of

the instruments. Where an instrument

contains no obligation on the Company

to deliver cash or other financial assets,

or to exchange financial assets or

financial liabilities with another party

under conditions that are potentially

unfavourable to the Group, or where the

instrument will or may be settled in the

Company’s own equity instruments but

includes no obligation to deliver a

variable number of the Company’s own

equity instruments, then it is treated as

an equity instrument. Accordingly, the

Company’s share capital and Additional

Tier 1 capital securities are presented as

components of equity. Any dividends,

interest or other distributions on capital

instruments are also recognised in

equity.

ii. Share premium

Share premium is the amount by which

the fair value of the consideration

received exceeds the nominal value of

the shares issued.

Capital raising costs

Costs directly incremental to the raising

of convertible securities included in

equity are offset against the proceeds

from the issue within equity.

Report and Accounts for the year ended 30 June 2026

130

3. Use of estimates and judgements

The preparation of financial information requires management to make judgements,

estimates and assumptions that affect the application of accounting policies and the

reported amounts of assets, liabilities, income and expenses. Actual results may differ

from these estimates.

Estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognised in the period in which the estimate is revised and in any future

periods affected.

The judgements and assumptions that are considered to be the most important to the

portrayal of the Group’s financial condition and impact the results for the current year

and future reporting periods are those relating to loan impairment provisions (further

information in section a below), EIR (section b) and Provisions (section c).

a. Loan impairment provisions

The key judgements made in applying the accounting policies were as follows:

i. Definition of default

IFRS 9 does not define default for the purpose of defining the probability of default as

used when calculating ECLs and impairment provisions for stage 1 and stage 2 assets. As

detailed in note 2(d), the Group has defined default on a basis that is consistent with the

definition it uses for determining whether an asset is credit impaired, and is therefore

classified as stage 3, and with the definition of default that is used for regulatory

reporting purposes.

ii. Significant increase in Credit Risk for classification in stage 2

As explained in note 2(d), loan impairment provisions are measured as an allowance

equal to 12-month ECL for stage 1 assets, or lifetime ECL for stage 2 or stage 3 assets. An

asset moves to stage 2 when its credit risk has increased significantly since initial

recognition. IFRS 9 does not define what constitutes a significant increase in credit risk. In

assessing whether the credit risk of an asset has significantly increased, the Group takes

into account qualitative and quantitative reasonable and supportable forward looking

information. Refer to note 2(d) for more details.

iii.The probation period for reclassification from stage 3 into stage 1 or 2

As explained in note 2(d), loans are only considered for reclassification from stage 3 into

stage 2 when they no longer meet the criteria for inclusion and have completed agreed

probation periods. The probation periods are set according to the type of lending and

are based upon professional judgement as to when the risk of a return to stage 3 is

considered minimal. It should be noted that £5.5 million of the stage 3 ECL at 30 June 2026

no longer meets the criteria for inclusion but remains in stage 3 pending completion of

the agreed probation periods (30 June 2025: £7.8 million). Reclassifications from stage 2 to

stage 1 are only possible when the SICR criteria are no longer met.

The key estimates made in applying the accounting policies relate to statistical models

(PD, LGD and macroeconomic) with judgements applied where data and model

limitations exist. The full model suite was re-developed and calibrated using the latest

data, improving the accuracy and stability of estimates used in year-end ECL

calculations. While improvements were made, management recognise the limitations of

available data, requiring adjustments to ensure the Group is adequately provided.

Report and Accounts for the year ended 30 June 2026

131

iv.The key estimates made in applying the accounting policies were as follows:

PD models

The Group has employed a number of PD models, tailored to different types of lending

with shared characteristics, to assess the likelihood of default within the next 12 months

and over the lifetime of each loan. The models calculate estimates of PDs based upon

current characteristics of the borrower and observed historical default rates.

A 10.0% relative deterioration in the modelled PDs would result in an increase in

impairment provisions by £7.3 million as at 30 June 2026 (30 June 2025: £7.3 million), this

includes an increase of £5.5m in stage 2 due to an increased number of customers

meeting the quantitative PD threshold for significant increase in credit risk.

LGD models

The Group has developed LGD models for the different types of lending. The models use

a number of estimated inputs including Forced Sale Discounts (“FSD”) and the valuation of

collateral to be collected reflecting the impact of changes in House Price Indices (“HPI”)

other valuation measures and FSD. The models are most sensitive to changes in FSD rates

and collateral valuations. These sensitivities were applied on all macroeconomic

scenarios:

A 10.0% relative reduction in the HPI would increase the total impairment provisions for

property and commercial real estate lending by £16.7 million as at 30 June 2026 (30 June

2025: £17.1 million).

A 5.0% absolute increase in the FSD would increase the total impairment provisions for

property and commercial real estate lending by £11.1 million as at 30 June 2026 (30 June

2025: £10.3 million).

Forward looking macroeconomic scenarios

The probability weighted average scenarios are used to model impacts on ECL through

an expert judgement-based model. The model combines a cohort of carefully selected

macroeconomic variables with expert judgement assigned weightings to produce an

index ranging between 0 and 100. An index level of 50 corresponds to a through the cycle

level. An index level below 50 indicates worse than average economic conditions and an

index level above 50 describes better than average economic conditions.

As the forecast moves further into the horizon, mean reversion is introduced to bring the

index level toward the mean as the forecast date moves over the 5 year forecast period.

The IFRS 9 scenarios used at 30 June 2026 use forecast-error distributions as outlined

below:

• Upside scenario.

• Base scenario.

• Downside scenario.

• Severe downside scenario.

The Group, by exception and with sufficient rationale, may reject scenarios or adjust

scenario weightings. Scenarios and weightings are approved at ALCO prior to

deployment for use in the ECL.

The base case adopted for year-end reflected ongoing geopolitical uncertainty and

domestic economic policy changes. The revised scenarios reflect a deterioration in the

‘Base case’ primarily driven by the expected economic impact of ongoing conflicts in the

Middle East. While scenario severity (peak-to-troughs impacts) remain consistent with the

prior scenarios, probability weightings have been re-calibrated to account for increased

Report and Accounts for the year ended 30 June 2026

132

risks to the downside, re-allocating 2% from the ‘Upside’ to the ‘Severe Downside’

scenario.

As at 30 June 2026, the following forward-looking macroeconomic scenarios, together

with their probability weighting average and key economic variables, were used in

calculating the ECLs used for determining impairment provisions:

Economic variables per scenario – average next 5 years

Scenario

Probability

weighting

GDP growth

Bank of

England base

rate

Unemployment

rate

HPI

Consumer

price index

Upside

18%

2.4%

2.75%

4.1%

3.9%

2.2%

Base

55%

1.3%

3.26%

5.0%

2.8%

2.4%

Downside

20%

0.4%

2.63%

5.4%

0.1%

1.9%

Severe

downside

(0.6)%

5.25%

7.4%

(4.1)%

3.3%

As at 30 June 2026, applying a 100% weighting to the severe downside scenario would

result in an incremental £96.3 million of provisions being required (30 June 2025: £101.5

million). Applying a 100% weighting to the upside scenario would result in a £27.8 million

reduction of provisions being required (30 June 2025: £27.9 million).

As at 30 June 2025, the following forward-looking macroeconomic scenarios, together

with their probability weighting and key economic variables, were used in calculating the

ECLs used for determining impairment provisions:

Scenario

Probability

weighting

GDP growth

Bank of

England base

rate

Unemployment

rate

HPI

Consumer

price index

Upside

20%

2.3%

2.80%

3.9%

4.3%

2.1%

Base

55%

1.3%

3.63%

4.5%

3.2%

2.3%

Downside

20%

0.4%

2.74%

5.3%

0.4%

1.9%

Severe

downside

(0.6)%

5.28%

7.5%

(2.8)%

3.1%

Post Model Adjustments

The Group applies post-model adjustments ("PMAs") and management overlays to its

modelled IFRS 9 expected credit loss ("ECL") provisions. These PMAs and overlays are

reviewed and approved periodically by the Aldermore Group Executive Credit Committee

and the Chief Financial Officer.

Following the annual review of the IFRS 9 model suite, and the implementation of

recalibrations, a bottom-up assessment of model estimates and known limitations was

undertaken. Key credit risk judgements were updated to reflect the increased use of

statistically derived adjustments, reducing reliance on judgements related to data

limitations. Adjustments previously applied in respect of cost-of-living pressures were

removed, as these risks are now considered to be adequately captured within the

macroeconomic forecasts and forward-looking models.

In addition, provisions are held for the financial risks associated with Residual Value and

Voluntary Termination exposures within the Motor Finance portfolio, which are sensitive

to changes in vehicle values.

Report and Accounts for the year ended 30 June 2026

133

The key judgmental overlays applied at 30 June 2026 are:

Residual Value and Voluntary Termination Risk: losses arising from PCP hand backs and

Voluntary Terminations on the Motor portfolio are accounted for through modelled

provisions and are not considered a credit default event. The provisions are calculated

using expected loss models calibrated to internal experience and calibrated across the

four IFRS9 macro-economic scenarios where the same weightings apply. Provisions for

the financial risk associated with PCP handbacks and voluntary terminations on the

Motor portfolio represent £22.6 million (30 June 2025: £18.2 million).

The risk of defaults on large exposures in the commercial portfolios has been reassessed,

to cover the risk that modelled ECL stock does not fully capture the credit risk of large

exposures during a downturn economic scenario. It is designed to incorporate

idiosyncratic risks associated with larger exposures, including the largest Private Credit

exposures, representing £4.3 million (30 June 2025: £8.6 million).

Data Limitations and Downside LGDs PMA: to address the risk of understated downside

scenario losses due to the absence of economic downturn data available to the models.

Owner occupied and Buy to Let mortgage methodology has been revised with direct

component-level LGD adjustments are applied to better reflect downturn conditions.

Commercial Real Estate Modelled LGDs in the ‘Downside’ and ‘Severe Downside’

scenarios are compared to LGD floors to calculate a coverage uplift by IFRS9 stage, this

is applied to the exposure to determine an impairment impact. Asset and Invoice

Financing use scenario-driven sector-specific adjustments made to LGDs, which

represents £10.7 million (30 June 2025: £8.0 million).

The total value of PMAs and Overlays is £44.2 million (30 June 2025: £52.1 million). This

includes:

• £16.7 million of PMAs for known data and model limitations to be incorporated into the

models in future

• £4.9 million of temporary judgements related to idiosyncratic risks associated with

large exposures and other product specific provisions

• £22.6 million provisions for the financial risk associated with PCP hand backs and

voluntary terminations on the Motor portfolio.

b. Effective interest rate (“EIR”)

During the period, the Group undertook a review of the methodology used to estimate

expected future cash flows within the effective interest rate (“EIR”) calculation. The

Group’s accounting policy, under IFRS 9, of recognising expected future cash flows arising

from customers transitioning from a fixed rate period to the standard variable rate

(“SVR”), where appropriate, remains unchanged.

Historically, expected SVR cash flows were estimated using the prevailing SVR at the

inception of the loans. However, this approach has been reassessed following a

prolonged period of heightened interest rate volatility. This includes developments over

the past year, where interest rates that were previously anticipated to fall are now

expected to remain higher for longer.

In addition, the Group now has significantly more observed data available on interest

rate movements and associated customer behaviour in different rate environment. The

Group was founded in 2009 and has therefore primarily operated in a low interest rate

environment, with data on customer behaviour in higher rate environments only being

observed over the past couple of years. As a result, earlier estimates were based on a

more limited range of interest rate outcomes than is now observable.

Taking these factors together, the Group has concluded that the prevailing SVR at loan

inception no longer provides the most representative estimate of the SVR that customers

are expected to transition onto.

Report and Accounts for the year ended 30 June 2026

134

Accordingly, the estimation methodology has been refined to forecast the expected SVR

applicable at the point customers are anticipated to transition from their fixed rate to

the SVR. This forecast incorporates market conditions and behavioural assumptions

consistent with the Group’s forward-looking macroeconomic information. At the same

time, the behavioural curve used to estimate customer transition and retention patterns

has been updated on a forward-looking basis. This ensures that the forecast SVR and

behavioural assumptions are aligned and reflect a consistent view of future market

conditions.

This refinement results in cash flows that are more representative of those expected to

arise over the remaining life of the asset, thereby improving the reliability of the EIR

calculation. The change represents an enhancement to the estimation of expected

future cash flows and does not constitute a change in accounting policy or in the

principle applied in determining the effective interest rate under IFRS 9.

The effect of the changes made to EIR assumptions, recognised in interest income during

the period, is presented in the table below.

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Property Finance - organic lending

6.0

2.1

Business Finance - organic lending

5.4

(0.7)

Total

11.4

1.4

EIR Sensitivities

The current mortgage prepayment curves assume that customers will stay on a variable

reversion rate for an average of six months following the end of their fixed rate mortgage.

Increasing / decreasing the length of the behavioural lives of the Group’s Property

portfolio by 1 month would have resulted in an adjustment of £7.3 million credit/ £7.8

million debit to the income statement respectively.

In addition, the impact of revising the reversion rates by +/- 0.5% would result in an

adjustment of £16.9 million credit / debit respectively to the income statement.

c. Provisions

The measurement of the provision relating to the FCA’s review of historical motor finance

commission arrangements represents a key source of estimation uncertainty for the

Group.

At 30 June 2026, the Group recognised a provision of £231.8 million (30 June 2025: £73.1

million) in respect of this matter. The increase in the provision during the year reflects

developments in the regulatory framework, in particular the FCA’s publication of its final

Policy Statement on 30 March 2026, which has informed management’s assumptions

regarding the scope and operation of the proposed redress scheme.

The provision represents management’s best estimate of the redress and compensatory

interest that may be payable to impacted customers, together with associated

remediation and implementation costs.

In determining the provision, the Group has modelled the FCA’s redress scheme

requirements, including the population of customers impacted and the expected redress

amounts. The estimate at 30 June 2026 has been based on a single scenario aligned to

the FCA’s final Policy Statement and, as such, does not incorporate multiple

probability‑weighted scenarios, as was the case in the prior year.

The key areas of estimation uncertainty include:

Report and Accounts for the year ended 30 June 2026

135

• the proportion of eligible customers who elect to participate in the scheme (opt‑in

rates);

• the identification and assessment of any rebuttals under the FCA’s remediation

scheme; and

• the potential for changes to the FCA’s redress scheme, including as a result of ongoing

legal challenges.

Given these uncertainties, the ultimate financial impact may differ materially from the

amount currently recognised as a provision. Refer to Note 21 ‘Provisions’ for further details.

4. Segmental information

The Group has four reportable segments which consist of its three distinct customer

facing businesses: Property Finance, Motor Finance and Business Finance plus Central

Functions (which includes the Group’s Savings division and Treasury function).

For each of the reportable segments, the Executive Committee, which is the Group’s chief

operating decision maker, reviews internal management reports every month. The

following summary describes the operations in each of the Group’s reportable segments:

• Property Finance – offering mortgages to landlords and homebuyers, working with

intermediaries.

• Motor Finance – providing user vehicle finance to customers, working with dealer

partners.

• Business Finance - offering distinctive, specialist lending across Asset Finance, Invoice

Finance and Commercial Real Estate, working with intermediaries.

• Central Functions - include the Group’s Treasury and Savings functions which are

responsible for raising finance on behalf of the operating segments, as well as the

reconciling items between the Group’s reportable segments and the consolidated

income statement.

Common costs are incurred on behalf of the reportable segments and typically

represent savings administration, back office and support function costs such as

Finance, IT, Risk and Human Resources. The costs are not directly attributable to the

operating segments.

Information regarding the results of each reportable segment and their reconciliation to

the total results of the Group is shown below. Performance is measured based on the

segmental result as included in the internal management reports.

The Group does not have reliance on any major customers, and all lending is in the UK.

Report and Accounts for the year ended 30 June 2026

136

Year ended 30 June 2026

Property

Finance

£m

Motor

Finance

£m

Business

Finance

£m

Central

Functions

£m

Total

£m

Interest income - external customers

548.3

334.4

286.9

213.8

1,383.4

Interest expense - external customers

(779.3)

Interest (expense) / income - internal

(371.1)

(160.5)

(143.3)

674.9

Net fee and other income - external

customers

(3.2)

(3.8)

3.5

3.8

0.3

Total operating income

174.0

170.1

147.1

113.2

604.4

Administrative expenses including

depreciation and amortisation

(95.7)

(264.9)

(83.0)

(65.3)

(508.9)

Impairment gains/(losses)

1.3

(42.2)

(4.3)

(45.2)

Share of profit of associate

0.9

Segmental result

79.6

(137.1)

59.8

48.9

51.2

Taxation

(7.6)

Profit after taxation

79.6

(137.1)

59.8

41.2

43.6

Assets

10,397.3

4,510.8

3,919.5

4,656.1

23,483.7

Liabilities

(21,683.7)

Net assets / (liabilities)

10,397.3

4,510.8

3,919.5

(17,027.6)

1,800.0

Year ended 30 June 2025

Property

Finance

£m

Motor

Finance

£m

Business

Finance

£m

Central

Functions

£m

Total

£m

Interest income - external customers

473.1

321.7

292.4

327.6

1,414.8

Interest expense - external customers

(816.9)

Interest (expense) / income - internal

(323.7)

(143.2)

(144.6)

611.5

Net fee and other income - external

customers

(2.8)

3.6

4.5

2.5

Total operating income

146.6

175.7

151.4

126.7

600.4

Administrative expenses including

depreciation and amortisation

(86.3)

(165.1)

(73.2)

(66.3)

(391.0)

Impairment losses

10.5

(30.7)

3.6

(16.6)

Share of profit of associate

0.7

Segmental result

70.8

(20.2)

81.8

61.0

193.5

Taxation

(52.4)

Profit after taxation

70.8

(20.2)

81.8

8.6

141.1

Assets

8,677.2

4,101.6

3,847.4

4,452.6

21,078.8

Liabilities

19,199.9

Net assets / (liabilities)

8,677.2

4,101.6

3,847.4

(14,747.4)

1,878.9

Report and Accounts for the year ended 30 June 2026

137

5. Net interest income

Accounting Policy

Interest income and expense are recognised in the income statement on an effective

interest rate (“EIR”) basis. The EIR is the rate that, at the inception of the financial asset or

liability, exactly discounts expected future cash payments and receipts over the

expected life of the instrument back to the initial carrying amount. When calculating the

EIR, the Group estimates cash flows considering all contractual terms of the instrument

(for example, prepayment options) but does not consider the assets’ future credit losses.

Interest on impaired financial assets is recognised at the same EIR as applied at the

initial recognition of the financial asset but applied to the book value of the financial

asset net of any impairment allowance.

At each reporting date, management makes an assessment of the expected remaining

life of its financial assets, including any acquired loan portfolios, and where there is a

change in those assessments, the remaining amount of any unamortised discount or

premiums is adjusted so that the interest income continues to be recognised

prospectively on the amortised cost of the financial asset at the original EIR. The

adjustment is recognised within interest income in the income statement for the current

period.

The calculation of the EIR includes all transaction costs and fees, paid or received, that

are an integral part of the interest rate together with the discounts or premium arising on

the acquisition of loan portfolios. Transaction costs include incremental costs that are

directly attributable to the acquisition or issue of a financial asset or liability.

Interest income and expense presented in the income statement includes:

Interest on financial assets and financial liabilities measured at amortised cost

calculated on an EIR basis;

• Interest on FVOCI investment securities calculated on an EIR basis;

• Interest income recognised on finance leases where the Group acts as the lessor (see

note 14);

• Interest on capitalised leases where the Group is the lessee;

• Interest income is net of adjustments to contractual interest income to reflect

remediation decisions following assessment of non-compliance; and

• Interest income charged to Invoice Finance clients each day on the balance of their

outstanding loans on an EIR basis.

Interest income

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Interest income calculated using effective interest rate:

On loans and advances to customers

1,169.2

1,087.1

On loans and advances to banks

70.0

78.6

On investment securities

109.7

109.0

1,348.9

1,274.7

On financial assets at fair value through profit or loss:

Interest income on financial instruments hedging assets

34.5

140.1

Total

1,383.4

1,414.8

Report and Accounts for the year ended 30 June 2026

138

Interest expense

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

On financial liabilities at amortised cost:

Deposits from customers

(692.0)

(713.9)

Amounts due to banks

(35.3)

(47.9)

Debt securities in issue

(38.7)

(41.2)

Subordinated notes

(15.8)

(7.9)

Lease liabilities

(0.4)

Other

(0.1)

(0.2)

(782.3)

(811.5)

On financial liabilities at fair value through profit or loss:

Net interest expense on financial instruments hedging liabilities

3.0

(5.4)

Total

(779.3)

(816.9)

Report and Accounts for the year ended 30 June 2026

139

6. Net fee and commission expense

Accounting policy

Fee and commission income

The Group earns fee and commission income from a diverse range of financial services it

provides to its customers. Fee and commission income is recognised at an amount that

reflects the consideration to which the Group expects to be entitled in exchange for

providing the services.

Fees and commissions that form an integral part of the effective interest rate are

excluded from fees and commissions from customers. Arrangement fees, factoring fees

for managing the customer sales ledgers within Invoice Finance and other fees relating

to loans and advances which meet the criteria for inclusion within interest income are

included as part of the EIR.

Other fee and commission income includes fees charged for mortgage services, arrears

and other administration services.

Fee income is recognised as the Group satisfies its performance obligations, which can

either be satisfied at a point in time or over a period of time.

The vast majority of fee and commission income is earned on the execution of a single

performance obligation and as such, it is not necessary to make significant judgements

when allocating the transaction price to the performance obligation. As such, fee and

commission income is recognised at a point in time.

For fees earned on the execution of a significant act, the performance obligation is

satisfied when the significant act or transaction takes place. Where the performance

obligation is satisfied over a period of time, the fees are recognised as follows:

• Fees for services rendered are recognised on an accruals basis as the service is

rendered and the Group’s performance obligation is satisfied; and

• Commission income is credited to profit or loss over the life of the relevant instrument

on a time apportionment basis.

Fee and commission expense

Fee and commission expense comprises introducer commissions, legal and valuation

fees, and company search fees that are not directly attributable to the origination of

financial instruments and therefore not included as part of EIR.

Fee and commission income

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Invoice finance fees

3.2

3.3

Valuation fees

0.1

0.2

HP income, option and secondary rental fees

4.8

3.4

Annual administration and arrears fees

1.1

0.5

Other fees

2.6

1.8

Total

11.8

9.2

Report and Accounts for the year ended 30 June 2026

140

Fee and commission expense

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Legal and valuation fees

(4.1)

(2.8)

Company searches and other fees

(12.9)

(10.1)

Credit protection and insurance charges

(1.3)

(2.3)

Total

(18.3)

(15.2)

Report and Accounts for the year ended 30 June 2026

141

7. Net gains / (losses) from derivatives and other financial

instruments at fair value through profit or loss

Accounting policy

Net gains/(losses) from derivatives and other financial instruments at fair value through

profit or loss relate to changes in fair value on the derivatives held for risk management

purposes and fair value changes attributable to hedged risk for financial instruments

designated in hedge relationships. It includes unrealised fair value movements and

foreign exchange differences.

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Net gains on derivatives that are not part of a qualifying hedging

arrangement

6.2

1.4

Net gains / (losses) on IAS 39 portfolio fair value hedge relationships

1.4

(3.7)

Net (losses) / gains on fair value hedge relationships of bonds held at FVOCI

(0.2)

0.4

Total

7.4

(1.9)

Included within net gains / (losses) on derivatives and other financial instruments at fair

value through profit or loss are gains of £42.2 million (30 June 2025: £155.6 million losses) on

derivatives held in qualifying fair value hedging arrangements to hedge interest rate risk

associated with loans and advances to customers, together with losses of £44.1 million (30

June 2025: £151.7 million gains) representing changes in the fair value of the hedged

interest rate risk.

Also included are losses of £10.9 million (30 June 2025: £10.0 million gains) on derivatives

held in qualifying fair value hedging arrangements to hedge interest rate risk associated

with customer deposits, together with gains of £14.7 million (30 June 2025: £9.8 million

losses) representing changes in the fair value of the hedged interest rate risk.

Report and Accounts for the year ended 30 June 2026

142

8. Administrative expenses

Note

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

(re-presented)

Wages and salaries

(143.8)

(143.5)

Social security costs

(19.7)

(18.1)

Pension costs

(9.9)

(9.6)

Share based payments

(1.4)

(1.5)

Staff benefits

(3.7)

(3.9)

Staff costs

(178.5)

(176.6)

Legal and professional and other services

(59.1)

(46.0)

Information technology costs

(59.3)

(63.9)

Fees and levies

(7.4)

(4.4)

Office costs

(8.9)

(11.2)

Depreciation and amortisation

16,17

(6.7)

(8.5)

Provisions

(7.5)

(5.3)

Other

(16.7)

(14.5)

Non-staff costs

(165.6)

(153.8)

Total excluding historical Motor Finance commission

(344.1)

(330.4)

Historical Motor Finance commission provision

(159.3)

(58.5)

Historical Motor Finance commission related costs incurred

(5.5)

(2.1)

Total historical Motor Finance commission

(164.8)

(60.6)

Total

(508.9)

(391.0)

During the year, the Group revised the presentation of administration expenses to

include the related irrecoverable VAT within each relevant expense category rather than

presenting all VAT within “Other”. Prior year comparatives have been re-presented to

reflect the updated classification of administration expenses.

Increased legal and professional expenditure in the year reflects the transaction-related

costs associated with the potential sale of the Group and the Octane Capital

transaction.

Included in legal and professional and other services is remuneration to the Group’s

external auditor (KPMG LLP):

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Audit of the Group and Company financial statements

(0.2)

(0.1)

Audit of the financial statements of the Company’s subsidiaries

(2.5)

(2.2)

Other assurance services

(0.1)

Total

(2.8)

(2.4)

The average number of persons employed by the Group during the period, including

Non-Executive Directors, is disclosed below:

Report and Accounts for the year ended 30 June 2026

143

As at 30 June

2026

As at 30 June

2025

Property Finance

249

278

Motor Finance

581

628

Business Finance

222

232

Central functions and Savings

785

821

Total

1,837

1,959

Details of the remuneration of Directors including the highest paid Director are set out in

the Remuneration Committee Report on page 67.

9. Pension and other post-retirement benefit commitments

Accounting policy

The cost of providing retirement benefits is charged to the income statement at the

amount of the defined contributions payable for each year. Differences between

contributions payable and those actually paid are shown as accruals or prepayments.

The Group has no defined benefit pension scheme.

The Group operates two defined contribution pension schemes. The assets of the

schemes are held separately from those of the Group in independently administered

funds. Pension contributions of £9.9 million (30 June 2025: £9.6 million) were charged to the

income statement during the year in respect of these schemes.

At the year end, accrued contributions amounted to £1.5 million (30 June 2025: £1.4 million).

10. Taxation

Accounting policy

The Group follows IAS 12 Income Taxes in accounting for taxes on income. Taxation

comprises current and deferred tax.

Current tax is the expected tax payable or receivable on taxable profits or tax allowable

losses for the period, together with any adjustment in respect of previous years. Current

income tax arising from distributions made on other equity instruments is recognised in

the income statement as the distributions are made from retained earnings arising from

profits previously recognised in the income statement.

Deferred tax assets arise from deductible temporary differences and are recognised only

to the extent that it is probable that they will be utilised against future taxable profits,

based on management's assessment of budget and forecast information. Deferred tax is

measured using tax rates and laws that have been enacted or substantively enacted at

the reporting date and are expected to apply when the deferred tax asset is realised.

Deferred tax is not discounted. Deferred tax assets and liabilities are offset only when

there is a legally enforceable right of set-off and an intention to settle on a net basis.

The Group reviews the carrying amount of deferred income tax assets at each reporting

date and reduces the carrying amount to the extent that it is no longer probable that

sufficient taxable profits will be available to allow all or part of the assets to be

recovered.

The Group considers an uncertain tax position to exist where, upon a review of that

uncertainty by a tax authority, the tax recognised in the financial statements differs from

the cash tax expected to be payable or receivable based on the tax returns of the Group.

In accordance with IFRIC 23, a current tax provision for an uncertain tax position will be

Report and Accounts for the year ended 30 June 2026

144

based upon interpretation of current tax legislation and guidance and the tax provision

re-measured at each balance sheet date to reflect the up-to-date position.

Deferred tax provision adjustments will be recognised where, in management’s view, the

outcome of a review by a tax authority of an uncertain tax position will result in a

reduction in the carrying value of the deferred tax asset. The measurement of an

underlying deferred tax asset will be adjusted according to the expected impact on the

loss or temporary difference giving rise to the deferred tax asset of resolving the

uncertain tax position.

In assessing provision levels, it will be assumed that a tax authority will review all

uncertain tax positions and all facts will be fully and transparently disclosed.

The Group does not consider there to be a significant risk of material adjustment to the

current and deferred tax balances, including provisions for uncertain tax positions for the

next financial year. Tax provisions cover all known issues and reflect external advice

where applicable.

a. Tax charge

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Current tax on profits for the year

6.7

50.1

Adjustment in respect of prior periods

0.2

0.4

Current tax charge

6.9

50.5

Deferred tax in respect of current year

0.6

2.2

Adjustment in respect of prior periods

0.1

(0.4)

Deferred tax charge

0.7

1.8

Total tax charge

7.6

52.4

Current tax on profits reflects UK corporation tax at the mainstream rate of 25% for the 12

month period ending 30 June 2026 (30 June 2025: 25%) and the banking surcharge levied

at 3% (30 June 2025: 3%) on the profits of banking companies chargeable to corporation

tax after a surcharge allowance of £100 million (30 June 2025: £100 million) per annum.

A deferred tax charge of £4.8 million (30 June 2025: £1.4 million tax credit) was recognised

in other comprehensive income in respect of fair value movements on debt securities

measured at fair value through other comprehensive income.

Contingent convertible security coupons recorded in equity give rise to tax relief through

the current tax charge for the consolidated Group for the year of £2.9 million (30 June

2025: £2.9 million), of which £0.1 million (30 June 2025: £0.1 million) relates to the banking

surcharge.

Report and Accounts for the year ended 30 June 2026

145

b. Factors effecting tax charge for the year

The tax assessed for the year is different to that resulting from applying the mainstream

rate of corporation tax in the UK of 25% (30 June 2025: 25%) explained by the differences

below:

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

(re-presented)

Profit before tax

51.2

193.5

Tax at 25%

12.8

48.4

Effects of:

Expenses not deductible for tax purposes

4.4

0.3

Adjustment in respect of prior periods

0.3

Effect of banking tax surcharge

2.1

3.4

Non-taxable income

(0.5)

(0.4)

Tax credit relief for contingent convertible securities coupon

(2.9)

Tax under the securitisation regime

(8.6)

3.6

Total tax charge

7.6

52.4

The Group's Effective Tax Rate (“ETR”) of 14.9% (2025: 27.1%) is below the UK corporation tax

rate of 25%, principally due to the operation of the UK securitisation tax regime.

Securitisation companies are generally taxed only on their retained profits, resulting in

taxable profits that are significantly lower than the accounting profits recognised in the

Group's consolidated financial statements. Consequently, profits generated by

securitisation companies reduce the Group's overall ETR. The decrease in ETR compared

with the prior year primarily reflects profits arising in securitisation companies in the

current year, whereas securitisation losses increased the ETR in the prior year. The impact

of the securitisation regime was partially offset by non-deductible expenses, the banking

surcharge and adjustments in respect of prior periods.

In addition, profit before tax was lower than the prior year following the recognition of an

additional charge in relation to the historical motor finance commission matter. Tax relief

has been obtained for these costs, including through group relief where appropriate,

reducing the current-year tax charge but not materially affecting the Group's ETR.

c. Deferred taxation

Deferred tax assets are recognised only where it is probable that future taxable profits

will be available against which the underlying deductible temporary differences, tax

losses or tax credits can be utilised. The recoverability of deferred tax assets is assessed

using all available evidence at the reporting date.

Analysis of recognised deferred tax asset/(liability) is as below:

Report and Accounts for the year ended 30 June 2026

146

Deferred tax asset

Year ended

30 June 2025

£m

Recognised in

income

statement

£m

Recognised in

other

comprehensive

income

£m

Year ended

30 June 2026

£m

Capital allowances less than

depreciation

2.6

(1.0)

1.6

Gain on investment securities held

at fair value

1.6

(4.8)

(3.2)

IFRS 9 transition adjustment

0.8

(0.3)

0.5

Other temporary differences

1.5

0.6

2.1

Total

6.5

(0.7)

(4.8)

1.0

Deferred tax liability

Year ended

30 June 2025

£m

Recognised in

income

statement

£m

Recognised in

other

comprehensive

income

£m

Year ended

30 June 2026

£m

Capital allowances less than

depreciation

0.1

Other temporary differences

(0.2)

Total

(0.1)

Deferred tax asset

Year ended

30 June 2024

£m

Recognised in

income

statement

£m

Recognised in

other

comprehensive

income

£m

Year ended

30 June 2025

£m

Capital allowances less than

depreciation

3.7

(1.1)

2.6

Loss on investment securities held

at fair value

0.2

1.4

1.6

IFRS 9 transition adjustment

1.0

(0.2)

0.8

Other temporary differences

2.0

(0.5)

1.5

Total

6.9

(1.8)

1.4

6.5

The deferred tax asset at 30 June 2026 of £1.0 million (30 June 2025: £6.5 million) has been

based on the substantively enacted tax rates at the balance sheet date. These rates

should apply when the temporary differences giving rise to the deferred tax are

expected to reverse. The deferred tax asset relates mainly to timing differences between

capital allowances and depreciation and other temporary differences. The significant

reduction in the deferred tax asset during the year principally reflects deferred tax

recognised in other comprehensive income in respect of fair value movements on

investment securities measured at fair value through other comprehensive income.

The deferred tax liability at 30 June 2026 of £0.1 million (30 June 2025: nil) relates mainly to

timing differences between the tax and accounting treatment of fixed assets and other

temporary differences. The increase in the deferred tax liability in the year is principally

attributable to taxable temporary differences recognised through the income statement.

There were no unrecognised deferred tax balances at 30 June 2026 (30 June 2025: £nil).

The Finance (No. 2) Act 2023 enacted the OECD Pillar Two model rules in the UK. The

legislation introduces a global minimum effective tax rate of 15% for multinational groups

within the scope of the rules. The group operates principally in the United Kingdom,

where the mainstream corporation tax rate is 25%. Management has assessed the

Group’s Pillar Two position for the year ended 30 June 2026 and concluded that the

relevant transitional safe harbour provisions apply. Accordingly, no Pillar Two top-up tax

is expected to arise in respect of the current financial year.

Report and Accounts for the year ended 30 June 2026

147

The Group's effective tax rate (ETR) is 14.9%, with the lower rate principally driven by profits

arising in securitisation entities, which are taxed under the UK securitisation regime.

However, these securitisation entities are treated as Excluded Entities for Pillar Two

purposes and are therefore excluded from the Pillar Two transitional safe harbour

calculations for the year ended 30 June 2026.

In accordance with the amendments to IAS 12 Income Taxes, the Group has applied the

mandatory temporary exception from recognising and disclosing deferred tax assets

and liabilities related to Pillar Two income taxes.

The Group will continue to monitor developments in Pillar Two legislation and assess the

impact of the rules in future reporting periods.

11. Loans and advances to banks

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Included in cash and cash equivalents: balances with less than three

months to maturity at inception

190.5

128.8

Cash collateral on derivatives placed with banks

106.2

149.2

Other loans and advances to banks

15.7

14.3

Total

312.4

292.3

Amounts include:

Expected to be recovered more than 12 months after the reporting date

15.7

14.3

Included within loans and advances to banks above is restricted cash balances of £15.7

million (30 June 2025: £14.3 million) which are required to be retained within the Group’s

securitisation vehicles as specified within the relevant Transaction Documentation.

All loans and advances to banks were stage 1 assets under IFRS 9 as at 30 June 2026 and

as at 30 June 2025. As at 30 June 2026, no ECL has been recorded against loans and

advances to banks (30 June 2025: £nil).

Report and Accounts for the year ended 30 June 2026

148

12. Investment securities

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Investment securities held at fair value:

UK Government gilts

801.7

259.1

Supranational bonds

575.5

1,188.8

Corporate bonds

22.1

Asset-backed securities

225.1

255.2

Covered bonds

207.2

672.0

Treasury bills

89.1

Investment securities held at amortised cost:

UK Government gilts

45.9

256.8

Supranational bonds

72.3

Total

1,966.6

2,704.2

Amounts include:

Expected to be recovered more than 12 months after the reporting date

1,102.4

2,253.1

All investment securities were stage 1 assets under IFRS 9 as at 30 June 2026 and as at 30

June 2025. As at 30 June 2026, no ECL has been recorded against investment securities (30

June 2025: £nil).

13. Derivatives held for risk management

Accounting policy

Derivative financial instruments

The Group enters into derivative transactions only for the purpose of reducing exposures

to fluctuations in interest rates, exchange rates and market indices. They are not used for

trading purposes.

Derivatives are carried at fair value, with movements in fair values recorded in gains from

derivatives and other financial instruments at fair value through profit or loss in the

income statement.

Derivative financial instruments are principally valued by discounted cash flow models

using yield curves that are based on observable market data or are based on valuations

obtained from counterparties. As the Group’s derivatives are covered by master netting

agreements with the Group’s counterparties, with any net exposures then being further

covered by the payment or receipt of periodic cash margins, the Group has used a risk-

free discount rate for the determination of their fair values.

All derivatives are classified as assets where their fair value is positive and liabilities

where their fair value is negative. Where there is the current legal ability and intention to

settle net, then the derivative is classified as a net asset or liability, as appropriate.

Where cash collateral is received, to mitigate the risk inherent in amounts due to the

Group, it is included as a liability within ‘Amounts due to banks’. Where cash collateral is

given, to mitigate the risk inherent in amounts due from the Group, it is included as an

asset in ‘Loans and advances to banks’.

Report and Accounts for the year ended 30 June 2026

149

Hedge accounting

The Group exercised the accounting policy choice to continue using IAS 39 hedge

accounting for portfolio assets and liabilities being hedged by applying fair value hedge

accounting.

The Group designates certain derivatives held for risk management as hedging

instruments in qualifying hedging relationships. On initial designation of the hedge, the

Group formally documents the relationship between the hedging instruments and

hedged items, including the risk management objective, the strategy in undertaking the

hedge and the method that will be used to assess the effectiveness of the hedging

relationship.

The Group makes an assessment, both at the inception of the hedge relationship, as well

as on an ongoing basis, as to whether the hedging instruments are expected to be highly

effective in offsetting the movements in the fair value of the respective hedged items

during the period for which the hedge is designated.

Fair value hedge accounting for portfolio hedges of interest rate risk

The Group applies fair value hedge accounting for portfolio hedges of interest rate risk.

As part of its risk management process, the Group identifies portfolios whose interest

rate risk it wishes to hedge. The portfolios comprise either only assets or only liabilities.

The Group analyses each portfolio into repricing time periods based on expected

repricing dates, by scheduling cash flows into the periods in which they are expected to

occur. Using this analysis, the Group designates as the hedged item an amount of the

assets or liabilities from each portfolio that it wishes to hedge.

The amount to hedge is determined based on a movement in the present value of a

portfolio of assets or liabilities for a 1 basis point shift in the yield curve used to value the

instruments (“PV01”), to ensure the mismatches in expected repricing buckets are within

the limits set by the Board on the sensitivity analysis approach using a hypothetical shift

in interest rates.

The Group measures the movements in fair value of the portfolio relating to the interest

rate risk that is being hedged on a monthly basis. Provided that the hedge has been

highly effective, the Group recognises the change in fair value of each hedged item in

the income statement with the cumulative movement in their value being shown on the

statement of financial position as a separate item, ‘Fair value adjustment for portfolio

hedged risk’, either within assets or liabilities as appropriate.

The Group measures the fair value of each hedging instrument monthly. The value is

included in derivatives held for risk management in either assets or liabilities as

appropriate, with the change in value recorded in net gains from derivatives and other

financial instruments at fair value through profit or loss in the income statement. Any

hedge ineffectiveness is recognised in net gains from derivatives and other financial

instruments at fair value through profit or loss in the income statement as the difference

between the change in fair value of the hedged item and the change in fair value of the

hedging instrument.

A derivative may be embedded in a financial liability at amortised cost, known as the

host contract. Where the economic characteristics and risks of an embedded derivative

are not closely related to those of the host contract (and the host contract is not carried

at fair value through profit or loss), the embedded derivative is separated from the host

and held on the statement of financial position with ‘Derivatives held for risk

management’ at fair value. Movements in fair value are recognised in net gains from

derivatives and other financial instruments at fair value through profit or loss in the

income statement, whilst the host contract is accounted for according to the relevant

accounting policy for that particular asset or liability.

Report and Accounts for the year ended 30 June 2026

150

Embedded derivatives

Embedded derivatives contained within equity instruments are considered separately.

The embedded derivatives on the Additional Tier 1 instruments are not separated as the

Group has an accounting policy not to separate features that have already been

considered in determining that the entire issues are non-derivative equity instruments.

Amounts included in the statement of financial position are analysed as follows:

Financial instrument type

Year ended 30 June 2026

Year ended 30 June 2025

Assets

£m

Liabilities

£m

Assets

£m

Liabilities

£m

Interest rate (not in hedging relationships)

14.4

12.2

17.9

18.5

Interest rate (fair value hedges)

121.2

52.2

160.7

79.9

Foreign exchange

0.1

Total

135.6

64.4

178.6

98.5

a. Fair value hedges of interest rate risk

In accordance with its risk management strategy, and as described from page 74 the

Group enters into interest rate swap contracts to manage the interest rate risk arising in

respect of the fixed rate interest exposures on loans and advances to customers,

investment securities and customer deposits, which are each treated as separate

portfolios.

The Group hedges the fixed interest rate risk on each portfolio firstly by looking for direct

offsets between the asset and liability exposures and then by using the interest rate

swaps between fixed interest rates and market reference rates such as SONIA in order to

manage the Group’s overall interest rate risk exposure. The Group applies hedge

accounting in respect of the interest rate risk arising on these portfolios as described in

the accounting policy above. The Group manages all other risks derived by these

exposures, such as credit risk, but does not apply hedge accounting for these risks.

The Group assesses prospective hedge effectiveness by comparing the changes in fair

value of each portfolio resulting from changes in market interest rates with the changes

in fair value of allocated interest rate swaps used to hedge the exposure.

The Group has identified the following possible sources of ineffectiveness:

• The use of derivatives as a protection against interest rate risk creates an exposure to

the derivative counterparty’s credit risk which is not offset by the hedged item. This risk

is minimised by entering into derivatives which are subject to daily margining through

a recognised exchange;

• Different amortisation profiles on hedged item principal amounts and interest rate

swap notionals;

• For derivatives the discounting curve used depends on collateralisation and the type

of collateral used; and

• Differences in the timing of settlement of hedging instruments and hedged items.

No other sources of ineffectiveness were identified in these hedge relationships.

The tables below summarise the derivatives designated as hedging instruments in

qualifying portfolio hedges of interest rate risk:

Report and Accounts for the year ended 30 June 2026

151

Fair value

hedges

Interest rate

risk

Nominal

amount of the

hedging

instruments

Year ended 30

June 2026

£m

Carrying amount of the

hedged items

Year ended 30 June 2026

Line item in the

statement of

financial position

where the

hedging

instrument is

located

Changes in fair

value used for

calculating hedge

ineffectiveness

Year ended 30 June

2026

£m

Assets

£m

Liabilities

£m

Interest rate

swaps

17,846.2

121.2

52.2

Derivatives held

for risk

management

36.0

Fair value

hedges

Interest rate

risk

Nominal

amount of the

hedging

instruments

Year ended 30

June 2025

£m

Carrying amount of the

hedged items

Year ended 30 June 2025

Line item in the

statement of

financial

position where

the hedging

instrument is

located

Changes in fair

value used for

calculating hedge

ineffectiveness

Year ended 30 June

2025

£m

Assets

£m

Liabilities

£m

Interest rate

swaps

16,571.9

160.7

79.9

Derivatives held

for risk

management

(173.9)

The amounts relating to portfolios designated as hedged items in fair value hedge

relationships to manage the Group’s exposure to interest rate risk were as follows:

Fair value

hedges interest

rate risk

Carrying amount of the hedged

items

Year ended 30 June 2026

Accumulated amount of fair value

hedge adjustments on the hedged

item

Year ended 30 June 2026

Line item in the

statement of

financial

position where

the hedged

items are

included

Assets

£m

Liabilities

£m

Assets

£m

Liabilities

£m

Loans and

advances to

customers

10,174.7

N/A

(22.8)

N/A

Fair value

adjustment for

portfolio

hedged risk

FVOCI

investment

securities

805.6

N/A

(23.3)

N/A

Investment

securities

Deposits from

customers

N/A

5,583.4

N/A

1.7

Fair value

adjustment for

portfolio

hedged risk

Subordinated

notes

N/A

300.4

N/A

(2.3)

Subordinated

notes

Report and Accounts for the year ended 30 June 2026

152

Fair value

hedges interest

rate risk

Carrying amount of the hedged

items

Year ended 30 June 2025

Accumulated amount of fair value

hedge adjustments on the hedged

item

Year ended 30 June 2025

Line item in the

statement of

financial

position where

the hedged

items are

included

Assets

£m

Liabilities

£m

Assets

£m

Liabilities

£m

Loans and

advances to

customers

8,921.2

N/A

21.3

N/A

Fair value

adjustment for

portfolio

hedged risk

FVOCI

investment

securities

1,416.8

N/A

(15.4)

N/A

Investment

securities

Deposits from

customers

N/A

5,972.5

N/A

(16.4)

Fair value

adjustment for

portfolio

hedged risk

The table below summarises the hedge ineffectiveness recognised in profit or loss during

the financial year ended 30 June 2026 and the comparative period, for the Group’s

designated fair value hedge relationships:

Ineffectiveness recognised in the

income statement

Year ended 30 June 2026

£m

Line item in the statement of

financial position where the

hedged instrument is included

Fair value hedges

Interest rate risk

1.1

Net gains / (losses) from

derivatives and other financial

instruments at fair value through

profit or loss.

Ineffectiveness recognised in the

income statement

Year ended 30 June 2025

£m

Line item in the statement of

financial position where the

hedged instrument is included

Fair value hedges

Interest rate risk

(3.4)

Net (losses) / gains from

derivatives and other financial

instruments at fair value through

profit or loss.

b. Other derivatives held for risk management

The Group uses other derivatives, not designated in qualifying hedge accounting

relationships, to manage its exposure to the following:

• Interest rate basis risk on certain mortgage loans;

• Equity market risk on equity-linked products offered to depositors;

• Foreign exchange risk on currency loans provided to Invoice Finance customers; and

• The Group has to entered into a pool of swaps to provide hedging for equity

investment strategy.

Report and Accounts for the year ended 30 June 2026

153

14. Loans and advances to customers

As at 30 June

2026

£m

As at 30 June

2025

£m

Gross loans and advances

19,047.5

16,857.7

less: allowance for impairment losses

(248.6)

(258.0)

Total

18,798.9

16,599.7

Amounts include:

Expected to be recovered more than 12 months after the reporting date

16,141.1

14,267.0

At 30 June 2026, loans and advances to customers of £1,767.4 million (30 June 2025: £2,143.5

million) were pre-positioned into a Single Collateral Pool with the Bank of England under

the Sterling Monetary Framework (“SMF”). These loans and advances were available for

use as collateral under the Framework. Details of amounts drawn on these facilities are

shown in note 18.

At 30 June 2026, loans and advances to customers included £1,437.3 million (30 June 2025:

£1,132.9 million) which have been used in secured funding arrangements, resulting in the

beneficial interest in these loans being transferred to securitisation vehicles consolidated

into these financial statements. All the assets pledged are retained within the statement

of financial position as the Group retains substantially all the risks and rewards relating

to the loans.

Divisional analysis of net loans and advances

As at 30 June

2026

£m

As at 30 June

2025

£m

Property Finance

Gross loans and advances

10,444.9

8,728.3

less: allowance for impairment losses

(48.2)

(51.1)

Total

10,396.7

8,677.2

Motor Finance

Gross loans and advances

4,629.4

4,225.5

less: allowance for impairment losses

(145.8)

(149.2)

Total

4,483.6

4,076.3

Business Finance

Gross loans and advances

3,973.2

3,903.9

less: allowance for impairment losses

(54.6)

(57.7)

Total

3,918.6

3,846.2

Group

Gross loans and advances

19,047.5

16,857.7

less: allowance for impairment losses

(248.6)

(258.0)

Total

18,798.9

16,599.7

Report and Accounts for the year ended 30 June 2026

154

Analysis of gross loans and advances

Gross loans and advances (amortised cost)

Stage 1

£m

Stage 2

£m

Stage 3

£m

Total

£m

Amount as at 1 July 2025

15,124.1

1,163.8

569.8

16,857.7

Improvement in credit exposure

Stage 2 to stage 1

486.6

(486.6)

Stage 3 to stage 1

24.3

(24.3)

Stage 3 to stage 2

21.5

(21.5)

Deterioration of credit exposure

Stage 1 to stage 2

(669.7)

669.7

Stage 1 to stage 3

(143.4)

143.4

Stage 2 to stage 3

(83.0)

83.0

Opening balance after transfers

14,821.9

1,285.4

750.4

16,857.7

Acquisition of business

407.3

54.4

8.3

470.0

Repayments of loans and advances

(3,773.8)

(347.7)

(121.9)

(4,243.4)

Change in exposure due to new business in

the current year

5,799.0

224.1

18.9

6,042.0

Bad debts written off

(78.8)

Amount as at 30 June 2026

17,254.4

1,216.2

576.9

19,047.5

Gross loans and advances (amortised cost)

Stage 1

£m

Stage 2

£m

Stage 3

£m

Total

£m

Amount as at 1 July 2024

14,198.7

924.0

525.0

15,647.7

Improvement in credit exposure

Stage 2 to stage 1

322.4

(322.4)

Stage 3 to stage 1

28.1

(28.1)

Stage 3 to stage 2

27.8

(27.8)

Deterioration of credit exposure

Stage 1 to stage 2

(672.2)

672.2

Stage 1 to stage 3

(131.0)

131.0

Stage 2 to stage 3

(96.4)

96.4

Opening balance after transfers

13,746.0

1,205.2

696.5

15,647.7

Repayments of loans and advances

(3,421.0)

(356.5)

(69.6)

(3,847.1)

Change in exposure due to new business in

the current year

4,799.1

315.1

25.8

5,140.0

Bad debts written off

(82.9)

Amount as at 30 June 2025

15,124.1

1,163.8

569.8

16,857.7

Report and Accounts for the year ended 30 June 2026

155

Analysis of loss allowances

Allowance for impairment losses

Stage 1

£m

Stage 2

£m

Stage 3

£m

Total

£m

Amount as at 1 July 2025

68.2

44.5

145.3

258.0

Improvement in credit exposure

Stage 2 to stage 1

9.5

(9.5)

Stage 3 to stage 1

1.7

(1.7)

Stage 3 to stage 2

1.8

(1.8)

Deterioration of credit exposure

Stage 1 to stage 2

(2.7)

2.7

Stage 1 to stage 3

(0.8)

0.8

Stage 2 to stage 3

(5.8)

5.8

Opening balance after transfers

75.9

33.7

148.4

258.0

Change in exposure attributable to change

in measurement basis

(3.0)

Change in exposure attributable to change

in risk parameters

(24.3)

3.0

55.7

34.4

Change in exposure of back book in the

current year

(24.3)

55.7

31.4

Change in exposure due to new business in

the current year

19.0

12.6

6.4

38.0

Bad debts written off

(78.8)

Amount as at 30 June 2026

70.6

46.3

131.7

248.6

Included in the total loss allowance

Netted against loans and advances to

customers

69.4

46.3

131.7

247.4

Included in respect of loan commitments*

1.2

Other components of the total loss allowance

Forward looking information

11.9

7.6

5.5

25.0

Changes in models

(8.4)

(6.5)

(4.8)

(19.7)

Report and Accounts for the year ended 30 June 2026

156

Allowance for impairment losses

Stage 1

£m

Stage 2

£m

Stage 3

£m

Total

£m

Amount as at 1 July 2024

94.0

44.1

172.7

310.8

Improvement in credit exposure

Stage 2 to stage 1

11.0

(11.0)

Stage 3 to stage 1

2.5

(2.5)

Stage 3 to stage 2

2.6

(2.6)

Deterioration of credit exposure

Stage 1 to stage 2

(3.1)

3.1

Stage 1 to stage 3

(0.9)

0.9

Stage 2 to stage 3

(7.7)

7.7

Opening balance after transfers

103.5

31.1

176.2

310.8

Change in exposure attributable to change

in measurement basis

(2.3)

Change in exposure attributable to change

in risk parameters

(48.3)

6.2

47.2

5.1

Change in exposure of back book in the

current year

(48.3)

3.9

47.2

2.8

Change in exposure due to new business in

the current year

13.0

9.5

4.8

27.3

Bad debts written off

(82.9)

Amount as at 30 June 2025

68.2

44.5

145.3

258.0

Included in the total loss allowance

Netted against loans and advances to

customers

67.2

44.5

145.3

257.0

Included in respect of loan commitments*

1.0

Other components of the total loss allowance

Forward looking information

5.8

5.6

6.4

17.8

Changes in models

(4.9)

4.1

(1.3)

(2.1)

*Includes committed undrawn facilities as the credit risk of the undrawn component is managed and monitored with the

drawn component as a single EAD. The EAD on the entire facility is used to calculate the ECL and is therefore included in the

ECL allowance.

Breakdown of impairment charge recognised during the year

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Included in provisions in respect of loan commitments

0.2

(0.6)

Change in exposure of back book in the current year

31.4

3.3

Change in exposure due to new business in the current year

38.0

27.3

Interest income suspended

(12.0)

(9.5)

Increase in loss allowance

57.6

20.5

Recoveries of bad debts

(12.4)

(3.9)

Total

45.2

16.6

Basis of preparation of the gross carrying amount and loss allowance

The reconciliation of the gross carrying amount and loss allowance is prepared using a

year-to-date view. This means that the Group reports exposures based on the

impairment stage at the end of the reporting period. The Group transfers opening

balances (back book), at the value as at 1 July 2025, based on the impairment stage at

the end of the reporting period. Any additional ECL raised or released is included in the

impairment stage as at the end of the reporting period. Exposures in the back book, can

move directly from stage 3 to stage 1, if the curing requirements have been met in a

reporting period. All new business (as defined below) is included in the change in

exposure due to new business in the current year based on the exposures’ impairment

stage at the end of the reporting period. Similarly, exposures in the new business lines

can be reported in stage 3 at the end of the reporting date.

Report and Accounts for the year ended 30 June 2026

157

The impairment charge is split between the back book and new business in the gross

carrying amount and ECL reconciliation as management believes that providing this split

provides meaningful information to the user in gaining an understanding of the

performance of advances overall.

Changes in exposure reflect the net amount of:

• Additional amounts advanced on the back book and any settlements. Transfers on

the back book are reflected separately; and

• New business originated during the financial year, the transfers between stages of the

new origination and any settlements.

Decreases in the advance as a result of write-off are equal to the decrease in ECL as

exposures are 100% provided for before being written off. The total contractual amount

outstanding on financial assets that were written off during the period and are still

subject to enforcement activity is £78.8 million (30 June 2025: £82.9 million).

The reconciliation of the gross carrying amount and loss allowances has been prepared

for the Group’s three distinct customer facing businesses: Property Finance (made up of

Residential Owner-occupied Mortgages and Buy to Let Mortgages), Motor Finance (made

up of MotoNovo Finance) and Business Finance (made up of Asset Finance, Invoice

Finance and SME Commercial Mortgages).

Report and Accounts for the year ended 30 June 2026

158

Reconciliation of the allowance for impairment losses by division

Property Finance

Stage 1

Stage 2

Stage 3

Total

£m

Amount as at 1 July 2025

11.5

8.8

30.8

51.1

Improvement in credit exposure

Stage 2 to stage 1

2.5

(2.5)

Stage 3 to stage 1

0.2

(0.2)

Stage 3 to stage 2

0.2

(0.2)

Deterioration of credit exposure

Stage 1 to stage 2

(0.3)

0.3

Stage 1 to stage 3

(0.1)

0.1

Stage 2 to stage 3

(1.2)

1.2

Opening balance after transfers

13.8

5.6

31.7

51.1

Change in exposure attributable to change

in measurement basis

1.1

Change in exposure attributable to change

in risk parameters

(6.6)

0.5

3.3

(2.8)

Change in exposure of back book in the

current year

(6.6)

1.6

3.3

(1.7)

Change in exposure due to new business in

the current year

1.6

0.8

0.2

2.6

Bad debt written off

(3.8)

Amount as at 30 June 2026

8.8

8.0

31.4

48.2

Included in the total loss allowance

Netted against loans and advances to

customers

8.0

31.4

47.4

Included in respect of loan commitments*

0.8

Other components of total loss allowance

Forward looking information

3.3

2.5

4.5

10.3

Changes in models

(3.2)

(5.1)

(5.5)

(13.8)

Stage 1

Stage 2

Stage 3

Total

£m

Amount as at 1 July 2024

19.7

6.8

33.7

60.2

Improvement in credit exposure

Stage 2 to stage 1

0.9

(0.9)

Stage 3 to stage 1

0.4

(0.4)

Stage 3 to stage 2

0.3

(0.3)

Deterioration of credit exposure

Stage 1 to stage 2

(0.4)

0.4

Stage 1 to stage 3

(0.2)

0.2

Stage 2 to stage 3

(1.5)

1.5

Opening balance after transfers

20.4

5.1

34.7

60.2

Change in exposure attributable to change

in measurement basis

1.7

Change in exposure attributable to change

in risk parameters

(10.0)

0.7

(3.2)

(12.5)

Change in exposure of back book in the

current year

(10.0)

2.4

(3.2)

(10.8)

Change in exposure due to new business in

the current year

1.1

1.3

0.3

2.7

Bad debt written off

(1.0)

Amount as at 30 June 2025

11.5

8.8

30.8

51.1

Included in the total loss allowance

Netted against loans and advances to

customers

10.7

8.8

30.8

50.3

Included in respect of loan commitments*

0.8

Other components of total loss allowance

Forward looking information

2.0

2.4

4.2

8.6

Changes in models

(0.7)

2.8

(2.0)

0.1

Report and Accounts for the year ended 30 June 2026

159

Motor Finance

Stage 1

Stage 2

Stage 3

Total

£m

Amount as at 1 July 2025

34.1

21.8

93.3

149.2

Improvement in credit exposure

Stage 2 to stage 1

4.8

(4.8)

Stage 3 to stage 1

0.6

(0.6)

Stage 3 to stage 2

1.0

(1.0)

Deterioration of credit exposure

Stage 1 to stage 2

(1.0)

1.0

Stage 1 to stage 3

(0.4)

0.4

Stage 2 to stage 3

(3.8)

3.8

Opening balance after transfers

38.1

15.2

95.9

149.2

Change in exposure attributable to change

in measurement basis

(3.5)

Change in exposure attributable to change

in risk parameters

(7.2)

3.0

42.4

38.2

Change in exposure of back book in the

current year

(7.2)

(0.5)

42.4

34.7

Change in exposure due to new business in

the current year

11.6

9.1

4.8

25.5

Bad debt written off

(63.6)

Amount as at 30 June 2026

42.5

23.8

79.5

145.8

Included in the total loss allowance

Netted against loans and advances to

customers

42.5

23.8

79.5

145.8

Other components of total loss allowance

Forward looking information

5.8

3.9

0.9

10.6

Changes in models

(1.2)

(3.1)

(4.3)

Stage 1

Stage 2

Stage 3

Total

£m

Amount as at 1 July 2024

43.7

18.5

115.6

177.8

Improvement in credit exposure

Stage 2 to stage 1

3.0

(3.0)

Stage 3 to stage 1

1.4

(1.4)

Stage 3 to stage 2

1.2

(1.2)

Deterioration of credit exposure

Stage 1 to stage 2

(1.5)

1.5

Stage 1 to stage 3

(0.4)

0.4

Stage 2 to stage 3

(4.7)

4.7

Opening balance after transfers

46.2

13.5

118.1

177.8

Change in exposure attributable to change

in measurement basis

(2.1)

Change in exposure attributable to change

in risk parameters

(18.8)

3.5

38.5

23.2

Change in exposure of back book in the

current year

(18.8)

1.4

38.5

21.1

Change in exposure due to new business in

the current year

6.7

6.9

2.8

16.4

Bad debt written off

(66.1)

Amount as at 30 June 2025

34.1

21.8

93.3

149.2

Included in the total loss allowance

Netted against loans and advances to

customers

34.1

21.8

93.3

149.2

Other components of total loss allowance

Forward looking information

2.2

1.9

6.4

Changes in models

(2.0)

6.6

(0.4)

4.2

Report and Accounts for the year ended 30 June 2026

160

Business Finance

Stage 1

Stage 2

Stage 3

Total

£m

Amount as at 1 July 2025

22.7

13.8

21.2

57.7

Improvement in credit exposure

Stage 2 to stage 1

2.2

(2.2)

Stage 3 to stage 1

0.9

(0.9)

Stage 3 to stage 2

0.5

(0.5)

Deterioration of credit exposure

Stage 1 to stage 2

(1.3)

1.3

Stage 1 to stage 3

(0.3)

0.3

Stage 2 to stage 3

(0.8)

0.8

Opening balance after transfers

24.2

12.6

20.9

57.7

Change in exposure attributable to change

in measurement basis

(0.7)

Change in exposure attributable to change

in risk parameters

(10.5)

(0.4)

10.0

(0.9)

Change in exposure of back book in the

current year

(10.5)

(1.1)

10.0

(1.6)

Change in exposure due to new business in

the current year

5.6

3.0

1.3

9.9

Bad debt written off

(11.4)

Amount as at 30 June 2026

19.3

14.5

20.8

54.6

Included in the total loss allowance

Netted against loans and advances to

customers

18.9

14.5

20.8

54.2

Included in respect of loan commitments*

0.4

Other components of total loss allowance

Forward looking information

2.9

1.2

0.1

4.2

Changes in models

(4.0)

(1.4)

3.8

(1.6)

Stage 1

Stage 2

Stage 3

Total

£m

Amount as at 1 July 2024

30.5

18.8

23.5

72.8

Improvement in credit exposure

Stage 2 to stage 1

7.1

(7.1)

Stage 3 to stage 1

0.8

(0.8)

Stage 3 to stage 2

1.0

(1.0)

Deterioration of credit exposure

Stage 1 to stage 2

(1.3)

1.3

Stage 1 to stage 3

(0.3)

0.3

Stage 2 to stage 3

(1.4)

1.4

Opening balance after transfers

36.8

12.6

23.4

72.8

Change in exposure attributable to change

in measurement basis

(2.0)

Change in exposure attributable to change

in risk parameters

(19.3)

1.9

11.9

(5.5)

Change in exposure of back book in the

current year

(19.3)

(0.1)

11.9

(7.5)

Change in exposure due to new business in

the current year

5.2

1.3

1.8

8.3

Bad debt written off

(15.9)

Amount as at 30 June 2025

22.7

13.8

21.2

57.7

Included in the total loss allowance

Netted against loans and advances to

customers

22.5

13.8

21.2

57.5

Included in respect of loan commitments*

0.2

Other components of total loss allowance

Forward looking information

1.6

0.9

0.3

2.8

Changes in models

(2.2)

(5.3)

1.1

(6.4)

Report and Accounts for the year ended 30 June 2026

161

Lease modifications

The table below includes stage 2 and stage 3 finance lease receivables, where the Group

acts as lessor, that were modified during the period and consequently treated as

forborne, together with the related modification loss recognised in the income statement.

The table also shows the gross carrying amount of previously modified finance lease

receivables for which the loss allowance reverted to a 12-month ECL measurement during

the period.

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Gross carrying amounts of assets modified while in stage 2 or stage 3 and

now in stage 1

0.1

0.5

Finance lease receivables

Loans and advances to customers include the following finance leases where the Group

is the lessor:

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Gross investment in finance leases, receivable:

Less than one year

2,024.4

1,970.1

Between one and five years

5,132.6

4,653.0

More than five years

181.6

201.1

Total

7,338.6

6,824.2

Unearned finance income

(1,181.5)

(1,042.6)

Net investment in finance leases

6,157.1

5,781.6

Net investment in finance leases, receivable:

Less than one year

1,667.3

1,637.1

Between one and five years

4,336.2

3,971.7

More than five years

153.6

172.8

Total

6,157.1

5,781.6

The Group enters into finance lease and hire purchase arrangements with customers in a

wide range of sectors including plant and machinery, cars and commercial vehicles. The

accumulated allowance for uncollectable minimum lease payments receivable is £175.0

million (30 June 2025: £177.4 million).

The Group is not exposed to any significant residual value risk on its finance lease

portfolio at 30 June 2026 (30 June 2025: none).

Commitments

At 30 June 2026, the Group had undrawn commitments to lend totalling £695.1 million (30

June 2025: £570.8 million). These commitments arise primarily from irrevocable lines of

credit extended to customers in the normal course of business.

Report and Accounts for the year ended 30 June 2026

162

15. Investment in associate

Accounting policy

An associate is a company over which the Group has significant influence and that is

neither a subsidiary undertaking nor an interest in a joint venture. Significant influence is

the power to participate in the financial and operating policy decisions of the investee

but is neither control nor joint control over the investee.

The results and assets of associates are accounted for in these consolidated financial

statements using the equity method of accounting. Investments are measured at cost,

which includes transaction costs. Subsequent to initial recognition, the Group includes its

share of profit or loss and other comprehensive income of equity-accounted investees,

until the date on which significant influence ceases.

The Group acquired a 48% stake in AFS Group Holdings Limited (“AFS”) on 28 September

2017. In 2023, the Group approved the sale of its shares in AFS, at which point in time the

carrying amount of the investment was reclassified as assets held for sale per IFRS 5.

During the previous financial year, the Group revised its position and hence the

investment was reclassified back to an investment in associate.

Details of the investment at 30 June 2026:

Entity information

Principal activity

Registered

office

Proportion of

ownership interest/

voting rights held by

the Group

AFS Group Holdings Limited

(Company number 0943803)

Financial

Services Intermediary

UKi

48% ii

i Registered address: Greenbank Court Challenge Way, Greenbank Business Park, Blackburn, United Kingdom,

BB1 5QB.

ii Class B ordinary shares.

The above associate is accounted for using the equity method in these consolidated

financial statements. The carrying amount of the investment as at 30 June 2026 is £6.3

million. This includes a £0.9 million share of profit of associate which has been recognised

in the Consolidated Income Statement for the year ended 30 June 2026 (30 June 2025: £0.7

million). The Group received dividends of £1.7 million from its associate during the year

ended 30 June 2026 (30 June 2025: £1.1 million).

The financial year end date of AFS Group Holdings is 30 April. Summarised financial

information in respect of the associate as at 30 June 2026 is set out below. For the

purposes of applying the equity method of accounting, the management accounts of

AFS Group Holdings Limited for the 12 months ended 30 June 2026 have been used.

Summary statement of financial position

Year ended

30 April 2026

£m

Year ended

30 April 2025

£m

Current assets

11.4

11.9

Non-current assets

1.4

Current liabilities

(7.5)

(6.8)

Non-current liabilities

(0.3)

(0.4)

Report and Accounts for the year ended 30 June 2026

163

Summary income statement

Year ended

30 April 2026

£m

Year ended

30 April 2025

£m

Revenue

68.1

58.7

Profit from continuing operations

2.9

3.0

Profit for the period

2.9

3.0

Total comprehensive income for the period

2.9

3.0

Dividends received from the associate during the period

1.7

1.1

A reconciliation of the above summarised financial information to the carrying amount of

the interest in AFS Group Holdings Limited recognised in the consolidated financial

statements is shown in the table below.

Year ended

30 June 2026

£m

Year ended

30 June 2025

£m

Net assets of the associate

3.7

5.1

Proportion of the Group’s ownership interest in the associate

48 %

Group share of net assets of the associate

1.8

2.5

Goodwill

4.5

Carrying amount of the Group’s interest in the associate

6.3

7.0

Report and Accounts for the year ended 30 June 2026

164

16. Property, plant and equipment

Accounting policy

Items of property, plant and equipment are stated at cost less accumulated

depreciation and accumulated impairment. Cost includes expenditure that is directly

attributable to the acquisition of the asset or costs incurred in bringing the asset to the

location and condition necessary for it to be capable of operating in the manner

intended by management. Depreciation is provided on all property, plant and equipment

at rates calculated to write-off the cost of each asset to realisable values on a straight-

line basis over its expected useful life, as follows: