RBS 2011 Annual Report Download - page 441

RBS Group 2011 439
Risk elements in lending
Risk elements in lending (REIL) comprises impaired loans and
accruing loans past due 90 days or more as to principal or interest.
Impaired loans are all loans for which an impairment provision has
been established; for collectively assessed loans, impairment loss
provisions are not allocated to individual loans and the entire portfolio
is included in impaired loans.
Loans are classified as accruing loans past due 90 days or more
where they are past due 90 days but where no impairment provision is
required because they are fully collateralised.
2011
£m
2010
£m
2009
£m
2008
£m
2007
£m
Impaired loans (2)
Domestic 14,528 15,471 13,572 8,588 5,599
Foreign 24,219 20,230 21,453 10,891 4,763
Total 38,747 35,701 35,025 19,479 10,362
Accruing loans which are contractually overdue 90 days or more as to
principal or interest
Domestic 1,697 2,363 2,224 1,201 217
Foreign 401 534 1,000 581 152
Total 2,098 2,897 3,224 1,782 369
Total risk elements in lending 40,845 38,598 38,249 21,261 10,731
Closing provisions for impairment as a % of total risk elements in lending 49% 47% 46% 52% 60%
Risk elements in lending as a % of gross lending to customers excluding
reverse repos (3) 8.6% 7.3% 5.4% 2.5% 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 offices outside the UK and
through those offices in the UK specifically organised to service international banking transactions.
(2) The write-off of impaired loans affects the closing provisions for impairment as a % of total risk elements in lending (the coverage ratio). The coverage ratio reduces if the loan written off carries a
higher than average provision and increases if the loan written off carries a lower than average provision.
(3) Includes REIL and gross lending relating to disposal groups.
2011
£m
2010
£m
2009
£m
2008
£m
2007
£m
Gross income not recognised but which would have been recognised under the
original terms of impaired loans
Domestic 636 579 625 393 390
Foreign 964 830 1,032 338 64
1,600 1,409 1,657 731 454
Interest on impaired loans included in net interest income
Domestic 220 214 226 150 165
Foreign 264 241 182 42 15
484 455 408 192 180
Potential problem loans
Potential problem loans (PPL) are loans for which an impairment event has taken place but no impairment provision is required. This category is used
for fully collateralised advances which are not past due 90 days or revolving credit facilities where identification as 90 days overdue is not feasible.
2011
£m
2010
£m
2009
£m
2008
£m
2007
£m
Potential problem loans 739 633 1,009 226 671
Both REIL and PPL are reported gross and take no account of the value of any security held which could reduce the eventual loss should it occur, nor of
any provision marked. Therefore impaired assets which are highly collateralised, such as mortgages, will have a low coverage ratio of provisions held
against the reported impaired balance.