HSBC 2012 Annual Report Download - page 161

159
Overview Operating & Financial Review Corporate Governance Financial Statements Shareholder Information
Europe
Hong
Kong
Rest of
Asia-
Pacific MENA
North
America
Latin
America Total
US$m US$m US$m US$m US$m US$m US$m
31 December 2011
Personal ........................................................... 2,524 285 267 220 27,773 590 31,659
First lien residential mortgages................... 1,630 86 85 93 23,442 72 25,408
Other personal1 ........................................... 894 199 182 127 4,331 518 6,251
Corporate and commercial ............................. 8,453 157 181 2,198 700 1,877 13,566
Manufacturing and international
trade services .......................................... 3,013 32 104 887 174 1,196 5,406
Commercial real estate and other
property-related ...................................... 4,897 29 45 913 522 215 6,621
Governments .............................................. – – – 5 – 242 247
Other commercial9 ...................................... 543 96 32 393 4 224 1,292
Financial ......................................................... 487 5 – 237 2 9 740
11,464 447 448 2,655 28,475 2,476 45,965
Total impairment allowances on
renegotiated loans ....................................... 1,821 20 64 300 5,017 448 7,670
Individually assessed .................................. 1,760 19 41 300 44 147 2,311
Collectively assessed .................................. 61 1 23 – 4,973 301 5,359
For footnotes, see page 249.
2012 compared with 2011
(Unaudited)
Renegotiated loans totalled US$42bn at
31 December 2012 (2011: US$46bn). North
America accounted for the largest volume of
renegotiated loans which amounted to US$26bn or
62% of total renegotiated loans at 31 December 2012
(2011: US$28bn or 62%), most of which were first
lien residential mortgages held by HSBC Finance.
Of the total renegotiated loans in North America,
US$17bn were impaired at 31 December 2012
(2011: US$18bn). The ratio of total impairment
allowances to impaired loans at 31 December 2012
was 23% (2011: 28%). This decrease was driven by
a reduction in both impaired loans and impairment
allowances as we continued to run-off the CML
portfolio. As the portfolio has been closed to new
business since 2007, the volume of first time
renegotiations has reduced significantly.
In Europe, renegotiated loans at 31 December
2012 amounted to US$10bn (2011: US$11bn),
constituting 24% of total renegotiated loans (2011:
25%). Of the total renegotiated loans in Europe,
US$5.7bn were impaired at 31 December 2012
(2011: US$6.0bn), and the ratio of total impairment
allowances to impaired loans at 31 December 2012
was 27% (2011: 30%). This decline was driven by a
reduction in both impaired loans and impairment
allowances due to releases and write-offs of a
number of non-performing loans as well as the sale
of a number of exposures. The renegotiated loans in
Europe largely consisted of commercial real estate
and other property-related sector lending of 37%
(2011: 43%) mainly in the UK, and manufacturing
and international trade services sector lending of
30% (2011: 26%).
Forbearance within Latin America (primarily in
Mexico and Brazil) was predominantly undertaken
in the manufacturing and international trade services
sector. The largest increase in renegotiated loans
compared with 2011 was in this sector in Mexico.
In addition, renegotiation activity in the personal
lending portfolios increased in Brazil, where a
collections campaign led to a significant increase
in both the refinancing and debt consolidation
portfolios.
In the Middle East and North Africa,
renegotiated loans decreased compared with 2011,
mainly in the corporate and commercial sector due to
repayments and reduced exposures. Forbearance
activity in Hong Kong and Rest of Asia-Pacific
remained insignificant.
HSBC Finance loan modifications and re-ageing
(Unaudited)
HSBC Finance maintains loan modification and
re-age (‘loan renegotiation’) programmes in order to
manage customer relationships, improve collection
opportunities and, if possible, avoid foreclosure.
Since 2006, HSBC Finance has implemented
an extensive loan renegotiation programme, and a
significant portion of its loan portfolio has been
subject to renegotiation at some stage in the life of
the customer relationship as a consequence of the
economic conditions in the US and the nature of
HSBC Finance’s customer base.