Strategic Shareholder Climate and Risk Financial Financial Barclays PLC 316 report information sustainability report Governance review review statements Annual Report 2022 Risk performance - Credit risk (continued) Wholesale loans: £301m (December 2021: £305m) includes an adjustment of £205m for exposures considered most at risk from inflationary concerns, supply chain constraints and consumer demand headwinds. The adjustment involves applying stage 2 coverage rates to stage 1 exposures assessed as most vulnerable. Sectors in scope are presented in the selected sectors disclosure on page 307. The remaining adjustment includes £92m to reflect possible cross default risk on Barclays’ lending in respect of clients who have taken bounce back loans. Model uncertainty provisions of £(106)m (December 2021: £184m) includes: Wholesale loans: £(106)m (December 2021: £98m) includes an adjustment to correct for the deterioration in wholesale PDs impacted by model over-sensitivity to certain macroeconomic variables. In 2021, this adjustment was held at £98m driven by an unintuitive model output from certain Q421 macroeconomic variables. Management adjustments of £72m within home loans in 2021 primarily comprised of a now retired adjustment, reflecting the non- linearity of the UK mortgages portfolio in order to generate a more appropriate level of predicted results. Other adjustments Other adjustments are operational in nature and are expected to remain in place until they can be reflected in the underlying models. These adjustments result from data limitations and model performance related issues identified through model monitoring and other established governance processes. Other adjustments of £208m (December 2021: £(206)m) includes: Home loans: £85m (December 2021: £31m) primarily includes adjustments for model performance informed by model monitoring and an adjustment for the adoption of the new definition of default under the Capital Requirements Regulation. Credit cards, unsecured loans and other retail lending: £202m (December 2021: £145m) primarily includes an adjustment for adoption of the new definition of default under the Capital Requirements Regulation and an adjustment to the qualitative measures used in identification of high-risk account management (HRAM) accounts for US cards, partially offset by a recalibration of Loss Given Default (LGD) to reflect revised recovery expectations. The £145m adjustments held in December 2021 primarily included adjustments for model performance informed by model monitoring, partially offset by an adjustment for reclassification of loans and advances from Stage 2 to Stage 1 in credit cards. The reclassification followed a review of back-testing results which indicated that accuracy of origination probability of default characteristics require management adjustment. These adjustments are no longer required due to model enhancements made during the year. Wholesale loans: £(79)m (December 2021: £(382)m) includes adjustments for model performance informed by model monitoring. Management adjustments of £(382)m within wholesale loans in 2021 consisted of an adjustment of £(380)m applied on bounce back loans to reverse out the modelled charge which did not consider the government guarantee. This adjustment is no longer needed due to model enhancements made during the year.