Strategic Shareholder Climate and Risk Financial Financial Barclays PLC 315 report information sustainability report Governance review review statements Annual Report 2022 Risk performance - Credit risk (continued) Management adjustments to models for impairment (audited) Management adjustments to impairment models are applied in order to factor in certain conditions or changes in policy that are not fully incorporated into the impairment models, or to reflect additional facts and circumstances at the period end. Management adjustments are reviewed and incorporated into future model development where applicable. Management adjustments are captured through “Economic uncertainty” and “Other” adjustments presented by product below: a Management adjustments to models for impairment allowance presented by product (audited) Proportion of Impairment Economic Management allowance pre uncertainty Other Management Total adjustments to management adjustments adjustments adjustments impairment total impairment b C adjustments (a) (b) (a+b) allowance allowance As at 31 December 2022 £m £m £m £m £m % Home loans 427 4 85 89 516 17.2 Credit cards, unsecured loans and other retail lending 3,543 118 202 320 3,863 8.3 Wholesale loans 1,680 195 (79) 116 1,796 6.5 Total 5,650 317 208 525 6,175 8.5 As at 31 December 2021 £m £m £m £m £m % Home loans 372 72 31 103 475 21.7 Credit cards, unsecured loans and other retail lending 2,798 1,217 145 1,362 4,160 32.7 Wholesale loans 1,628 403 (382) 21 1,649 1.3 Total 4,798 1,692 (206) 1,486 6,284 23.6 Economic uncertainty adjustments presented by stage (audited) Stage 1 Stage 2 Stage 3 Total As at 31 December 2022 £m £m £m £m Home loans 1 3 — 4 Credit cards, unsecured loans and other retail lending 24 93 1 118 Wholesale loans 181 14 — 195 Total 206 110 1 317 Stage 1 Stage 2 Stage 3 Total As at 31 December 2021 £m £m £m £m Home loans 5 35 32 72 Credit cards, unsecured loans and other retail lending 403 803 11 1,217 Wholesale loans 333 70 — 403 Total 741 908 43 1,692 Notes a Positive values reflect an increase in impairment allowance and negative values reflect a reduction in the impairment allowance. b Includes £4.8bn (December 2021: £4.2bn) of modelled ECL, £0.4bn (December 2021: £0.5bn) of individually assessed impairments and £0.5bn (December 2021: £0.1bn) ECL from non-modelled exposures. c Total impairment allowance consists of ECL stock on drawn and undrawn exposure. Economic uncertainty adjustments Models have been developed with data from non-inflationary periods establishing a relationship between input variables and customer delinquency based on past behaviour. Additionally, models are trying to interpret significant rates of change in macroeconomic variables and applying these to stable probability of default (PD) levels. As such there is a risk that the modelled output fails to capture the appropriate response to changes in macroeconomic variables and rising costs with modelled impairment provisions impacted by uncertainty. This uncertainty continues to be captured in two ways. Firstly, customer uncertainty: the identification of customers and clients who may be more vulnerable to economic instability; and secondly, model uncertainty: to capture the impact from model limitations and sensitivities to specific macroeconomic parameters which are applied at a portfolio level. In 2022, previously established economic uncertainty adjustments have been partially released, informed by some normalisation of customer behaviour, refreshed scenarios and a rebuild of certain models to better capture the macroeconomic outlook. The balance as at 31 December 2022 is £317m (December 2021: £1,692m) and includes: Customer and client uncertainty provisions of £423m (December 2021: £1,508m) includes: Credit cards, unsecured loans and other retail lending includes an adjustment of £118m (December 2021: £1,203m) which has been applied to customers and clients considered most vulnerable to affordability pressures. This adjustment is predominantly held in Stage 2 in line with customer risk profiles. The reduction is informed by the release of COVID-19 related adjustments as credit performance stabilises at or below pre-pandemic levels which is reflected in the models, and a rebuild of certain models to better capture the macroeconomic outlook.