Appendix 2 TM Prudential Indicators - 24.09.2025

Noted · Received for information; no decision followed.

This report sets out the Council's treasury management performance for Quarter 1 of 2025/26, measured against benchmarks and the key indicators in the Council's Treasury Management Strategy from the Full Council meeting of 11 February 2025. p2p3

Cash investment balances fell 36% over the year to £137.2m as at 30 June 2025, and the average investment return of 4.74% was 42 basis points above the benchmark rate. p4

Investment risk stayed well within the Council's risk benchmark of 0.050%, with the actual indicator ranging between 0.007% and 0.008% during the quarter. p8

Total external borrowing stood at £200.142m at an average rate of 4.38%; during the quarter the Council repaid its only market loan, held with Barclays, early, arranging a discount of just over £1m in its favour. p10p12p13

The Council's borrowing remained within the operational boundary and borrowing limits set out in the Treasury Management strategy for 2025/26, and the maturity profile of borrowing was within the limits set in the strategy. p22p30

Show the 9 passages this is based on

• p2Treasury Management Prudential Indicators – Q1 2025/26
• p3The Chartered Institute of Public Finance and Accountancy published the revised Treasury and Prudential codes in 2021, which now requires quarterly reporting of performance against forward looking prudential indicators. The performance of the Council’s treasury management activity, against benchmarks and the key indicators in the Council’s Treasury Management Strategy, as approved by Full Council at its meeting of 11 February 2025, are set out below. Investments
• p4Cash investment balances as at 30 June 2025 have fallen by 36% in one year, from £213.7m at Q1 2024/25 to £137.2m. The average investment return over Q1 was 4.74% performing above the benchmark rate by 42 basis points (or 0.42 percentage points). Performance has improved as a result of reinvesting maturing investments in a duration matched to a peak in the forecast Bank of England (BoE) bank interest rate.
• p8During Q1 we have monitored the security of the Council’s investments, to assess the risk of those investments losing their value. These risks were assessed using the financial standing of the groups invested in, the length of each investment, and the historic default rates. Our investment strategy sets an allowable risk level of 0.050% (i.e. that there is a 99.95% probability that the Council will get its investments back). The actual indicator ranged between 0.007% and 0.008%, reflecting the high proportion of investments held in highly secure and/or very liquid investments.
• p100.008% Borrowing The table below shows the Council’s total external borrowing and average rate as at 30 June 2025.
• p12PWLB 200.142 4.38% Market Loans - - Total Borrowing
• p13200.142 4.38% During Q1 an opportunity was taken to repay the Council’s only market loan held with Barclays of £6.450m early. The loan was due to mature in 2058/59 and was at a rate of 4.25%. Assistance was provided by Treasury Advisors (MUFG) to arrange a repayment where an appreciable discount was calculated in favour of the Council of just over £1m. Under accounting regulations this discount can be spread over a 10 year period equally to 2034/35.
• p22The table below shows that the Council is operating within the Operational Boundary and Authorised Borrowing Limits set within the Treasury Management strategy and has sufficient headroom to cover any unforeseen borrowing need arising from the year’s capital programme.
• p30The maturity profile of the Authority’s borrowing is within the limits set within the strategy.