RBS 2012 Annual Report Download - page 191

RBS GROUP 2012
189
Personal lending
The Group’s personal lending portfolio includes credit cards, unsecured loans, auto finance and overdrafts. The majority of personal lending exposures
exist in the UK and the US. Impairment charge as a proportion of average loans and receivables are shown in the following table.
2012 2011 2010
Average
loans and
receivables
£m
Impairment
charge as a %
of average
loans and
receivables
%
Average
loans and
receivables
£m
Impairment
charge as a %
of average
loans and
receivables
%
Average
loans and
receivables
£m
Impairment
charge as a %
of average
loans and
receivables
%
UK Retail cards (1) 5,624 2.3 5,675 3.06,0255.0
UK Retail loans (1) 6,513 2.5 7,755 2.8 9,863 4.8
RBS Citizens cards (2) 916 3.8 936 5.11,005 9.9
RBS Citizens auto loans (2) 5,289 0.1 4,856 0.25,256 0.6
Notes:
(1) The ratio for UK Retail assets refers to the impairment charge for the year.
(2) The ratio for RBS Citizens refers to the impairment charge in the year, net of recoveries realised in the year.
Key points
UK Retail
x The UK personal lending portfolio, comprises credit cards,
unsecured loans and overdrafts, and totalled £14.7 billion at 31
December 2012 (2011 - £16.0 billion).
x The decrease in portfolio size of 8.1% was driven by continued
subdued loan recruitment activity and a continuing general market
trend of customers repaying unsecured debt.
x The impairment charge on unsecured lending was £440 million for
the year, down 24% on 2011, reflecting the continued benefit of risk
appetite tightening in prior years, lower unsecured balances and
also the investment in collections and recoveries capability. UK
Retail continues to support customers experiencing financial
difficulties including the provision of ‘breathing space’, refer to the
disclosures on forbearance on page 178 for more information.
Impairments remain sensitive to the external environment, including
unemployment levels and interest rates.
x Industry benchmarks for cards arrears remain stable, with the Group
continuing to perform favourably.
RBS Citizens
x RBS Citizens' credit card portfolio totalled £948 million at 31
December 2012 (2011 - £968 million). RBS Citizens' credit card
business lends predominantly within the Bank's 12 state footprint
and has traditionally adopted conservative risk strategies. Given the
external climate, tighter lending criteria has been introduced leading
to an improvement in credit quality. The portfolio's quarterly
annualised loss performance in the third quarter of 2012 was 3.4%
and ranked seventh out of 20 large and regional banks tracked.
x RBS Citizens' auto loan portfolio totalled £5.4 billion at 31 December
2012 (2011 - £4.8 billion). The auto loan business originates
secured loans through a closely managed network of dealerships
mainly located in the bank’s footprint. The portfolio continues to
possess strong credit risk fundamentals. The business purchased a
£608 million auto loan portfolio from a large financial institution in the
first quarter of 2012 that possessed a comparable credit and
collateral profile. The acquired portfolio continues to outperform its
delinquency and loss forecast. The portfolio's quarterly annualised
loss performance in the third quarter of 2012 was 0.18% and
continues to perform favourable against industry.