RBS 2006 Annual Report Download - page 59
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RBS Group • Annual Report and Accounts 2006
58
Operating and financial review continued
Operating and financial review
2006 compared with 2005
Impairment losses were £1,878 million compared with £1,707
million in 2005. New impairment losses were up 11%, £214
million to £2,093 million. Recoveries of amounts previously
written-off were up £43 million, 25% to £215 million.
Consequently the net charge to the income statement was up
£171 million, 10% to £1,878 million. Improvements in Corporate
Markets reflecting a benign credit environment partly offset
higher impairment losses in Retail Markets and Citizens.
Total balance sheet provisions for impairment amounted to
£3,935 million compared with £3,887 million in 2005.
Total provision coverage (the ratio of total balance sheet
provisions for impairment to total risk elements in lending)
decreased from 65% to 62%. The ratio of total balance sheet
provisions for impairment to total risk elements in lending and
potential problem loans also decreased to 62% compared with
65% in 2005. This reflects amounts written-off and the
changing mix from unsecured to secured exposure.
Impairment losses
2006 2005
£m £m
New impairment losses 2,093 1,879
less: recoveries of amounts previously written-off (215) (172)
Charge to income statement 1,878 1,707
Comprising:
Loan impairment losses 1,877 1,703
Other impairment losses 1 4
Charge to income statement 1,878 1,707