RBS 2012 Annual Report Download - page 227

RBS GROUP 2012
225
Credit metrics
Gross loans to
Banks Customers REIL Provisions
REIL as a %
of gross loans
to customers
Provisions
as a %
of REIL
Impairment
charge
Amounts
written-off
2010 £m £m £m £m % % £m £m
UK Retail 408 108,405 4,620 2,741 4.3 59 1,160 1,135
UK Corporate 126 113,782 3,981 1,746 3.5 44 768 357
Wealth 2,220 16,130 223 66 1.4 30 18 9
International Banking 3,982 63,173 1,484 855 2.3 58 125 92
Ulster Bank 2,928 36,858 3,619 1,633 9.8 45 1,161 48
US Retail & Commercial 145 48,602 914 509 1.9 56 485 550
Retail & Commercial 9,809 386,950 14,841 7,550 3.8 51 3,717 2,191
Markets 45,084 25,300 366 316 1.4 86 20 33
Direct Line Group and other 2,140 601 — — — — — —
Core 57,033 412,851 15,207 7,866 3.7 52 3,737 2,224
Non-Core 1,656 113,001 23,444 10,352 20.7 44 5,407 3,818
Group 58,689 525,852 38,651 18,218 7.4 47 9,144 6,042
Key points
x Total REIL decreased by £1.3 billion to £41.1 billion compared with
December 2011 as improvements in International Banking and in
Non-Core were partially offset by the continued increase in REIL in
UK Corporate and Ulster Bank Core mortgage and corporate
portfolios.
x Non-Core REIL decreased by £2.6 billion or 11% reflecting a mixture
of repayments and write-offs within UK Corporate, Markets and
International Banking corporate portfolios.
x Conditions in Ireland remain difficult and economic indicators
continue to be weak, this is reflected in the Ulster Bank credit
metrics with Core REIL increasing by £2.0 billion since 31 December
2011, primarily within mortgage and commercial real estate
portfolios, to £7.5 billion and is now 23% of loans and advances to
customers. Impairments continue to outpace write-offs.
x The provision coverage increased to 52% at 31 December 2012
from 49% at 31 December 2011 as the economic conditions remain
challenging particularly in relation to Ulster Bank and commercial
real estate portfolios.
x The impairment charge for 2012 of £5.3 billion was 26% lower than
in 2011. The main drivers were lower impairment across Non-Core
portfolios (down £1.5 billion or 40%) mainly as a result of lower
impairments across Ulster Bank’s commercial real estate portfolio
(down £1.3 billion or 58%) and continued improvement across Core
UK portfolios.
Commercial real estate lending metrics were as follows:
Total Non-Core (1)
2012 2011 2012 2011
Lending (gross) £63.0bn £74.8bn £26.4bn £34.3bn
Of which REIL £22.1bn £22.9bn £17.1bn £18.8bn
Provisions £10.1bn £9.5bn £8.3bn £8.2bn
REIL as a % of gross loans to customers 35.1% 30.6% 64.8% 54.8%
Provisions as a % of REIL 46% 41% 49% 44%
Note:
(1) Excludes property related lending to customers in other sectors managed by Real Estate Finance.
Ulster Bank is a significant contributor to Non-Core commercial real estate lending. For further information refer to the section on Ulster Bank Group
(Core and Non-Core).