RBS 2007 Annual Report Download - page 222

RBS Group • Annual Report and Accounts 2007
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Additional information continued
Additional information
IFRS
2007 2006 2005 2004
£m £m £m £m
Loans accounted for on a non-accrual basis (2):
Domestic 5,599 5,420 4,977 3,658
Foreign 4,763 812 949 1,075
Total 10,362 6,232 5,926 4,733
Accruing loans which are contractually overdue 90 days or more as to principal or interest (3):
Domestic 217 81 2 634
Foreign 152 24 7 79
Total 369 105 9 713
Loans not included above which are classified as ‘troubled debt restructurings’ by the SEC:
Domestic — —214
Foreign ———10
Total ——224
Total risk elements in lending 10,731 6,337 5,937 5,470
Potential problem loans (4)
Domestic 63 47 14 173
Foreign 608 5 5 107
Total potential problem loans 671 52 19 280
Closing provisions for impairment as a % of total risk elements in lending 60% 62% 65% 76%
Closing provisions for impairment as a % of total risk elements in lending and potential
problem loans 56% 62% 65% 72%
Risk elements in lending as a % of gross lending to customers excluding reverse repos 1.55% 1.55% 1.60% 1.83%
Notes:
(1) For the analysis above, ‘Domestic’ consists of the United Kingdom domestic transactions of the Group. ‘Foreign’ comprises the Group’s transactions conducted through offices
outside the UK and through those offices in the UK specifically organised to service international banking transactions.
(2) All loans against which an impairment provision is held are reported in the non-accrual category.
(3) Loans where an impairment event has taken place but no impairment recognised. This category is used for fully collateralised non-revolving credit facilities.
(4) Loans for which an impairment event has occurred but no impairment provision is necessary. This category is used for fully collateralised advances and revolving credit facilities
where identification as 90 days overdue is not feasible.
IFRS
2007 2006 2005 2004
£m £m £m £m
Gross income not recognised but which would have been
recognised under the original terms of non-accrual and restructured loans
Domestic 390 370 334 235
Foreign 155 77 62 58
545 447 396 293
Interest on non-accrual and restructured loans included in net interest income
Domestic 165 142 130 58
Foreign 16 15 14 7
181 157 144 65
Amounts in accordance with IFRS (continued)
Risk elements in lending and potential problem loans
The Group’s loan control and review procedures do not include
the classification of loans as non-accrual, accruing past due,
restructured and potential problem loans, as defined by the
SEC in the US. The following table shows the estimated amount
of loans that would be reported using the SEC’s classifications.
The figures are stated before deducting the value of security
held or related provisions.
IFRS require interest to be recognised on a financial asset
(or a group of financial assets) after impairment at the rate of
interest used to discount recoveries when measuring the
impairment loss. Thus, interest on impaired financial assets is
credited to profit or loss as the discount on expected
recoveries unwinds. Despite this, such assets are not
considered performing. All loans that have an impairment
provision are classified as non-accrual. This is a change from
practice in 2004 and earlier years where certain loans with
provisions were classified as past due 90 days or potential
problem loans (and interest accrued on them).