HSBC 2009 Annual Report Download - page 240

HSBC HOLDINGS PLC
Report of the Directors: Risk (continued)
Credit risk > Impairment allowances > Charge // Impaired loans > 2009
238
Charge for impairment losses as a percentage of average gross loans and advances to customers8
(Unaudited)
2009 2008 2007 2006 2005
% % % % %
New allowances net of allowance releases ................................. 2.92 2.54 2.09 1.49 1.25
Recoveries ................................................................................... (0.10) (0.09) (0.12) (0.10) (0.09)
Total charge for impairment losses ............................................. 2.82 2.45 1.97 1.39 1.16
Amount written off net of recoveries .......................................... 2.71 1.75 1.36 1.15 1.26
For footnote, see page 291.
Charge for impairment losses as a percentage of average gross loans and advances to customers by
geographical region8
(Unaudited)
Europe
Hong
Kong
Rest of
Asia-
Pacific7
Middle
East7
North
America
Latin
America Total
% % % % % % %
2009
New allowances net of allowance releases .............. 1.19 0.49 1.31 5.25 6.24 6.11 2.92
Recoveries ................................................................ (0.07) (0.03) (0.17) (0.11) (0.04) (0.73) (0.10)
Total charge for impairment losses .......................... 1.12 0.46 1.14 5.14 6.20 5.38 2.82
Amount written off net of recoveries ....................... 0.63 0.33 0.94 1.40 7.14 5.03 2.71
2008
New allowances net of allowance releases .............. 0.86 0.63 1.04 1.12 5.73 5.32 2.54
Recoveries ................................................................ (0.07) (0.04) (0.12) (0.11) (0.03) (0.51) (0.09)
Total charge for impairment losses .......................... 0.79 0.59 0.92 1.01 5.70 4.81 2.45
Amount written off net of recoveries ....................... 0.52 0.19 0.64 0.50 4.16 3.73 1.75
For footnotes, see page 291.
Impaired loans and new loan impairment
allowances
2009 compared with 2008
(Unaudited)
Loan impairment charges increased by 3 per cent to
US$24.9 billion from US$24.1 billion in 2008. The
commentary on net loan impairment allowances is
on a constant currency basis while the commentary
on impaired loans is on a reported basis.
New allowances for loan impairment charges
rose by 7 per cent compared with 2008 to
US$26.4 billion. Releases and recoveries of
allowances increased by 17 per cent to US$1.5 billion.
Total impaired loans to customers at 31 December
2009 were US$31 billion, an increase of 21 per cent
compared with the end of 2008. Impaired loans
remained at 3 per cent of customer loans and
advances at 31 December 2009.
In Europe, new loan impairment allowances
increased by 37 per cent to US$4.9 billion in 2009,
driven by credit quality deterioration in individually
impaired loans. Impaired loans increased by 59 per
cent to US$10.9 billion at 31 December 2009.
In the UK, higher new loan impairment
allowances reflected a small number of large
individually assessed impairments against corporate
and commercial exposures, together with the effects
of credit quality deterioration in the personal lending
portfolio. In the unsecured portfolios, credit quality
declined in the cards and personal loans portfolios
reflecting the deterioration in the economic
environment. In the residential mortgage portfolios,
credit quality remained strong despite higher
unemployment in the UK. HSBC’s exposure to this
market remained well secured with typical loan-to-
value ratios of below 60 per cent.
In Europe, releases and recoveries were
US$520 million, a decrease of 5 per cent compared
with 31 December 2008.
In Hong Kong, new loan impairment
allowances were US$548 million, a decline of 12 per
cent compared with 2008. Credit quality within the
commercial lending portfolios improved compared
with 2008, when significant impairments were taken
on some exporters due to the contraction in global
trade. New loan impairment allowances increased in
the unsecured personal portfolios, reflecting the rise