RBS 2009 Annual Report Download - page 145

Business review
Risk, capital and liquidity management
143RBS Group Annual Report and Accounts 2009
Risk elements in lending and potential problem loans
2009 2008 2007
Group Group Group
before RFS RFS before RFS before RFS
Holdings Holdings Holdings Holdings
minority minority minority minority
Core Non-Core interest interest Group interest Group interest Group
£m £m £m £m £m £m £m £m £m
Loans accounted for on a
non-accrual basis(2):
Domestic 6,348 7,221 13,569 3 13,572 8,579 8,588 5,599 5,599
Foreign 4,383 13,859 18,242 3,211 21,453 8,503 10,891 2,350 4,763
10,731 21,080 31,811 3,214 35,025 17,082 19,479 7,949 10,362
Accruing loans which are
contractually overdue 90 days
or more as to principal interest (3):
Domestic 1,135 1,089 2,224 — 2,224 1,201 1,201 217 217
Foreign 223 731 954 46 1,000 508 581 85 152
1,358 1,820 3,178 46 3,224 1,709 1,782 302 369
Total REIL 12,089 22,900 34,989 3,260 38,249 18,791 21,261 8,251 10,731
Potential problem loans (4):
Domestic 137 287 424 — 424 218 218 63 63
Foreign 135 365 500 85 585 8 8 68 608
Total PPL 272 652 924 85 1,009 226 226 131 671
REIL as a % of gross lending
to customers excluding
reverse repos (5) 2.8% 15.1% 6.1% 2.4% 5.4% 2.7% 2.5% 1.5% 1.6%
REIL and PPL as a % of gross
lending to customers
excluding reverse repos (5) 2.9% 15.5% 6.2% 2.5% 5.5% 2.7% 2.5% 1.5% 1.6%
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 the offices outside the UK
and 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.
(5) Includes gross loans relating to disposal groups in 2009.
Key points
•At 31 December 2009 REIL were 80% greater than at 31 December
2008. The majority of this growth was attributable to property assets,
particularly in Non-Core which had a 107% increase in REIL.
•PPL also increased compared with 31 December 2008.
•REIL growth slowed in the second half of the year (15%) compared
with the first half (57%), reflecting the moderating asset quality trend
observed as the year progressed. REIL levels in the fourth quarter
were flat to the third quarter.
•REIL and PPL represented 5.5% of gross lending to customers, up
from 2.5% at the end of 2008.