Company: LLOBF
Filing Date: 2025-07-24
Form Type: 6-K
Source: 0001654954-25-008460
Chunk: 65

Company: Lloyds Banking Group plc
Filing Date: 2025-07-24
Form: 6-K
Chunk 65
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 a longer duration between default and repossession than model assumptions use on existing and future defaults. The reduction in the period reflects latest data points on the population judged at risk.

Adjustment for specific segments: £13 million (31 December 2024: £13 million)

The Group monitors risks across specific segments of its portfolios which may not be fully captured through collective models. The judgement for fire safety and cladding uncertainty remains in place as the only Mortgages segment sufficiently material to address, given evidence of cases with defective cladding, or other fire safety issues.

**Credit cards: £9 million (31 December 2024: £(7) million) and Other Retail: £102 million (31 December 2024: £90 million)**

These adjustments principally comprise:

Lifetime extension: Credit cards: £50 million (31 December 2024: £55 million) and Other Retail: £10 million (31 December 2024: £10 million)

An adjustment is required to extend the lifetime used for Stage 2 exposures on Retail revolving products from a three-year modelled lifetime, which reflected the outcome data available when the ECL models were developed, to a more representative lifetime. Incremental defaults beyond year three are calculated through the extrapolation of the default trajectory observed throughout the three years and beyond.

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS (UNAUDITED) (continued)

Note 12: Allowance for expected credit losses (continued)

Adjustments to loss rates: Credit cards: £(45) million (31 December 2024: £(57) million) and Other Retail: £53 million (31 December 2024: £47 million)

A number of adjustments are made to the loss given default (LGD) assumptions used within unsecured and motor credit models. For unsecured portfolios, the adjustments reflect the impact of changes in collection debt sale strategy on the Group's LGD models, incorporating up to date customer performance and forward flow debt sale pricing. For UK Motor Finance, within Other Retail, the adjustment captures the latest outlook on used car prices.

**Commercial Banking: £(51) million (31 December 2024: £(259) million)**

These adjustments principally comprise:

Corporate insolvency rates: £(153) million (31 December 2024: £(253) million)

The volume of UK corporate insolvencies continues to exhibit an elevated trend beyond December 2019 levels, revealing a marked misalignment between observed UK