HSBC 2012 Annual Report Download - page 172

HSBC HOLDINGS PLC
Report of the Directors: Operating and Financial Review (continued)
Risk > Credit risk > Impairment of loans and advances
170
Net loan impairment charge to the income statement by geographical region
(Unaudited)
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
2012
Individually assessed impairment allowances ......... 1,387 (8) 97 205 258 200 2,139
New allowances .................................................... 1,960 32 239 369 380 292 3,272
Release of allowances no longer required ........... (516) (34) (117) (133) (85) (49) (934)
Recoveries of amounts previously written off ..... (57) (6) (25) (31) (37) (43) (199)
Collectively assessed impairment allowances ......... 487 92 243 50 3,204 1,945 6,021
New allowances net of allowance releases .......... 839 117 368 94 3,296 2,254 6,968
Recoveries of amounts previously written off ..... (352) (25) (125) (44) (92) (309) (947)
Total charge for impairment losses .......................... 1,874 84 340 255 3,462 2,145 8,160
Customers ............................................................ 1,874 84 340 255 3,462 2,145 8,160
2011
Individually assessed impairment allowances ......... 1,262 18 67 199 243 126 1,915
New allowances .................................................... 1,670 79 207 328 398 222 2,904
Release of allowances no longer required ........... (378) (41) (114) (80) (111) (74) (798)
Recoveries of amounts previously written off ..... (30) (20) (26) (49) (44) (22) (191)
Collectively assessed impairment allowances ......... 640 99 207 93 6,807 1,744 9,590
New allowances net of allowance releases .......... 1,181 126 366 147 6,894 2,111 10,825
Recoveries of amounts previously written off ..... (541) (27) (159) (54) (87) (367) (1,235)
Total charge for impairment losses .......................... 1,902 117 274 292 7,050 1870 11,505
Banks ................................................................... (11) – – – (5) – (16)
Customers ............................................................ 1,913 117 274 292 7,055 1,870 11,521
2012 compared with 2011
(Unaudited)
The following commentary is on a constant currency
basis.
Loan impairment allowances were US$16.2bn, a
decline of 9% compared with 2011, reflecting lower
lending balances in our US CML portfolio which
included the reclassification of impairment
allowances on non-real estate personal loan
balances to ‘Assets held for sale’. Releases and
recoveries of US$2.1bn were 3% lower, mainly in
North America due to lower customer repayments in
the corporate and commercial sector, as well as the
non-recurrence of a number of releases and
recoveries incurred in 2011 in Hong Kong and Rest
of Asia-Pacific.
Impaired loans were 3% of total gross loans and
advances at the end of 2012, compared with 4% at
31 December 2011.
In Europe, new loan impairment allowances
were US$2.8bn, broadly unchanged compared with
2011. New collectively assessed loan impairment
allowances declined by 28%, mainly in the UK
personal lending book, as we focused our lending
growth on higher quality assets and continued to
pro-actively identify and monitor customers
facing financial hardship. This resulted in lower
delinquency rates across both the secured and
unsecured lending portfolios. Individually assessed
new loan impairment allowances increased by 21%
across a range of sectors reflecting the challenging
economic conditions in the UK, Greece, Spain and
Turkey. In addition, a rise in impairments in Turkey
was due to strong balance sheet growth in customer
loans and advances in RBWM, notably in credit
cards and personal loans, driven by business
expansion. Impaired loans of US$11.1bn were 9%
lower than at 31 December 2011, mainly due to
increased focus on higher quality loans, lower
delinquency rates and the continued low interest
rate environment.
Releases and recoveries in Europe were
US$925m, broadly unchanged on 2011.
In Hong Kong, new individually assessed loan
impairment allowances fell by 28% compared
with 2011 due to lower specific impairment charges
in CMB. New collectively assessed loan impairment
allowances also declined as delinquency rates
continued to improve, reflecting stable loan growth
and sound underlying economic conditions. Impaired
loans declined by 22% from 31 December 2011, as a
number of corporate loans in the international