RBS 2007 Annual Report Download - page 48

RBS Group • Annual Report and Accounts 2007
46
Business review continued
Business review
2007 compared with 2006
Impairment losses were £2,128 million compared with £1,878
million. Impairment losses in ABN AMRO in the period since
acquisition were £263 million. Adjusting for this, impairment
losses fell by £13 million, 1%. This reflected improvement in
Corporate Markets and Retail Markets partially offset by higher
impairment in Citizens. New impairment losses were up 20%,
£425 million to £2,518 million. Recoveries of amounts
previously written-off were up £175 million, 81% to £390
million. Consequently the net charge to the income statement
was up £250 million, 13% to £2,128 million.
Total balance sheet provisions for impairment, including ABN
AMRO, amounted to £6,441 million compared with £3,935
million in 2006.
Total provision coverage (the ratio of total balance sheet
provisions for impairment to total risk elements in lending)
decreased from 62% to 60%. The ratio of total balance sheet
provisions for impairment to total risk elements in lending and
potential problem loans also decreased to 56% compared with
62% in 2006. This reflects amounts written-off and the slightly
lower risk profile of the portfolio.
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
2007 2006 2005
£m £m £m
New impairment losses 2,518 2,093 1,879
less: recoveries of amounts previously written-off (390) (215) (172)
Charge to income statement 2,128 1,878 1,707
Comprising:
Loan impairment losses 2,106 1,877 1,703
Other impairment losses 22 14
Charge to income statement 2,128 1,878 1,707