RBS 2012 Annual Report Download - page 165

RBS GROUP 2012
163
Credit risk assets*
The tables and commentary below refer to credit risk assets, which
consist of:
x Lending - Comprises gross loans and advances to: central and local
governments; central banks, including cash balances; other banks
and financial institutions, incorporating overdraft and other short-
term credit lines; corporates, in large part loans and leases; and
individuals, comprising mortgages, personal loans and credit card
balances.
x Derivatives - Comprises the mark-to-market (mtm) value of such
contracts after the effect of enforceable netting agreements, but
before the effect of collateral. Figures shown apply counterparty
netting within the regulatory capital model used.
x Contingent obligations - Comprises primarily letters of credit and
guarantees.
Credit risk assets exclude issuer risk (primarily debt securities) and
reverse repurchase arrangements. They take account of legal netting
arrangements that provide a right of legal set-off, but do not meet the
offset criteria under IFRS.
Divisional analysis
2012 2011 2010
£m £m £m
UK Retail 114,120 111,070 108,302
UK Corporate 101,148 105,078 108,663
Wealth 19,913 20,079 18,875
International Banking 64,518 72,737 80,166
Ulster Bank 34,232 37,781 40,750
US Retail & Commercial 55,036 56,546 51,779
Retail & Commercial 388,967 403,291 408,535
Markets 106,336 114,327 124,330
Other 65,186 64,517 36,659
Core 560,489 582,135 569,524
Non-Core 65,220 92,709 125,383
625,709 674,844 694,907
Key points
x 56% of the £49 billion reduction in total credit risk assets was in the
Non-Core division. Exposure decreased in all divisions except UK
Retail and Group Treasury (shown in ‘Other’). At the year end Non-
Core accounted for 10% of the overall assets (2011 - 14%).
x Credit risk assets in Retail & Commercial continued to increase as a
proportion of the total portfolio. At the year end the Retail &
Commercial divisions increased to 62% of the total credit risk assets
(2011 - 60%). UK Retail mortgage exposure increased by £4 billion
during the year, partially offset by reduced unsecured exposures.
The fall in exposure in International Banking was spread across all
sectors and geographies.
x The fall in the Markets division predominantly reflected reduction in
exposure to banks, other financial institutions and sovereigns in
Western Europe.
x Non-Core declined £27 billon (30% of the 2011 portfolio) during
2012 driven by material disposals, repayments and run off.
Reduction has taken place across all material segments as the
Group continues to de-risk the portfolio. Significant actions were
taken to reduce exposure within the property, transport and other
financial institution sectors. These sectors accounted for 69% of the
reduction in Non-Core.
x Other predominantly relates to Group Treasury’s exposure to central
banks in the UK, USA and Germany and is a function of the Group’s
liquidity requirements and cash positions.
*unaudited