RBS 2011 Annual Report Download - page 159

RBS Group 2011 157
Ulster Bank Group (Core and Non-Core)
At 31 December 2011, Ulster Bank Group accounted for 10% of the
Group’s total customer loans (2010 - 10%; 2009 - 10%) and 9% of the
Group’s Core customer loans (2010 - 9%; 2009 - 9%). Ulster Bank’s
financial performance continues to be overshadowed by the challenging
economic climate in Ireland, with impairments remaining elevated as high
unemployment, coupled with higher taxation and limited liquidity in the
economy, continues to depress the property market and domestic
spending.
The impairment charge of £3,717 million for 2011 (2010 - £3,843 million;
2009 - £1,926 million) was driven by a combination of new defaulting
customers and deteriorating security values. Provisions as a percentage
of risk elements in lending increased from 44% in 2010, to 53% at 31
December 2011, predominantly as a result of the deterioration in the
value of the Non-Core commercial real estate development portfolio.
Core
The impairment charge for the year of £1,384 million (2010 - £1,161
million; 2009 - £649 million) reflects the difficult economic climate in
Ireland, with elevated default levels across both mortgage and other
corporate portfolios. The mortgage sector accounted for £570 million
(41%) of the total 2011 impairment charge.
Non-Core
The impairment charge for the year was £2,333 million (2010 - £2,682
million; 2009 - £1,277 million), with the commercial real estate sector
accounting for £2,160 million (93%) of the total 2011 charge.
Loans, risk elements in lending (REIL) and impairments by sector
Gross
loans REIL Provisions
REIL
as a % o
f
gross loans
Provisions
as a % o
f
REIL
Provisions
as a % o
f
gross loans
Impairment
charge
Amounts
written-of
f
2011 £m £m £m % % % £m £m
Core
Mortgages 20,020 2,184 945 10.9 43 4.7 570 11
Personal unsecured 1,533 201 184 13.1 92 12.0 56 25
Commercial real estate
- investment 3,882 1,014 413 26.1 41 10.6 225 —
- development 881 290 145 32.9 50 16.5 99 16
Other corporate 7,736 1,834 1,062 23.7 58 13.7 434 72
34,052 5,523 2,749 16.2 50 8.1 1,384 124
Non-Core
Commercial real estate
- investment 3,860 2,916 1,364 75.5 47 35.3 609 1
- development 8,490 7,536 4,295 88.8 57 50.6 1,551 32
Other corporate 1,630 1,159 642 71.1 55 39.4 173 16
13,980 11,611 6,301 83.1 54 45.1 2,333 49
Ulster Bank Group
Mortgages 20,020 2,184 945 10.9 43 4.7 570 11
Personal unsecured 1,533 201 184 13.1 92 12.0 56 25
Commercial real estate
- investment 7,742 3,930 1,777 50.8 45 23.0 834 1
- development 9,371 7,826 4,440 83.5 57 47.4 1,650 48
Other corporate 9,366 2,993 1,704 32.0 57 18.2 607 88
48,032 17,134 9,050 35.7 53 18.8 3,717 173