RBS 2011 Annual Report Download - page 60

58 RBS Group 2011
Impairment losses
Managed Statutory
2011 2010 2009 2011 2010 2009
£m £m £m £m £m £m
New impairment losses 7,966 9,667 14,224 9,236 9,667 14,224
Less: recoveries of amounts previously written-off (527) (411) (325) (527) (411) (325)
Charge to income statement 7,439 9,256 13,899 8,709 9,256 13,899
Comprising:
Loan impairment losses 7,241 9,144 13,090 7,241 9,144 13,090
Securities
- sovereign debt impairment — — — 1,099 — —
-interest rate hedge adjustments on impaired available-for-sale
Greek government bonds — — — 169 — —
-other 198 112 809 200 112 809
Charge to income statement 7,439 9,256 13,899 8,709 9,256 13,899
2011 compared with 2010 - managed
Impairment losses decreased by 20% compared with 2010, driven largely
by a £1,569 million reduction in Non-Core loan impairments, despite
continuing challenges in Ulster Bank and corporate real estate portfolios.
Retail & Commercial impairment losses fell by £153 million, driven by
improving credit metrics in UK Retail and US Retail & Commercial
partially offset by increases in Ulster Bank, largely reflecting a
deterioration in credit metrics on the mortgage portfolio, and a single
name provision in Global Transaction Services (GTS).
Total Core and Non-Core Ulster Bank impairment losses decreased by
4%, as the £223 million increase in Core Ulster Bank losses was more
than offset by a decrease in losses recognised in Non-Core.
2011 compared with 2010 - statutory
Impairment losses decreased by6% compared with 2010, driven largely
by a £1,569 million reduction in Non-Core loan impairments, despite
continuing challenges in Ulster Bank and corporate real estate portfolios.
This was partially offset by impairments taken on the Group’s available-
for-sale bond portfolio, as a result of the decline in the value of Greek
sovereign bonds.
Retail & Commercial impairment losses fell by £153 million, driven by
improving credit metrics in UK Retail and US Retail & Commercial
partially offset by increases in Ulster Bank, largely reflecting a
deterioration in credit metrics on the mortgage portfolio, and a single
name provision in GTS.
Total Core and Non-Core Ulster Bank impairment losses decreased by
4%, as the £223 million increase in Core Ulster Bank losses was more
than offset by a decrease in losses recognised in Non-Core.
The Group holds Greek government bonds with a notional amount of
£1.45 billion. As a result of Greece’s continuing fiscal difficulties, the
Group recorded impairment charges on these bonds totalling £1,099
million during the year. These charges were recorded to write the bonds
down to their market price as at 31 December 2011 (c.21% of notional).
2010 compared with 2009 - managed and statutory
Impairment losses were £9,256 million, compared with £13,899 million in
2009. The 33% decrease reflects an overall improvement in the
economic environments in which the Group operates.
Impairments fell in all Core businesses, except Ulster Bank Group, which
faced an economic environment that remains challenging, with rising
default levels across both personal and corporate portfolios.
Impairments for Ulster Bank Group (Core and Non-Core) increased to
£3,843 million compared with £1,927 million in 2009.
Asignificant proportion of the reduction in Core impairments relates to
lower specific and latent provisions in UK Corporate, US Retail &
Commercial and GBM.
Non-Core impairments fell by 41% in 2010 reflecting the gradual
improvement in the economic environment through 2010 and lower
specific provisions, alongside a non-repeat of the large single name
losses seen in 2009.
Business review continued