RBS 2012 Annual Report Download - page 265

RBS GROUP 2012
263
Key points*
x Ulster Bank Group’s (UBG) Irish exposure comprises personal
lending (largely mortgages) and corporate lending and commitments,
plus some lending to financial institutions (refer to the Ulster Bank
Group (Core and Non-Core) section on page 190 for further details).
In addition, International Banking has lending exposure and
commitments, and Markets has derivative and repo exposure to
financial institutions and large international clients with funding
subsidiaries based in Ireland.
x Group exposure decreased further during 2012, principally lending,
which fell £3.3 billion as a result of de-risking of the portfolio and
currency movements.
Government and central bank
x Exposure to the central bank fluctuates, driven by regulatory
requirements and deposits of excess liquidity. It was reduced as part
of asset and liability management.
Financial institutions
x Markets, International Banking and UBG account for the large
majority of the Group’s exposure to financial institutions, the main
categories being derivatives and repos, where exposure is affected
predominantly by market movements and much of it is collateralised.
Corporate
x Lending exposure fell by £1.1 billion during 2012, driven by
exchange rate movements and write-offs. Commercial real estate
lending amounted to £10.4 billion at 31 December 2012, down £0.5
billion from 31 December 2011 amid continuing adverse market
conditions. The commercial real estate lending exposure was nearly
all in UBG (£7.7 billion of this in Non-Core) and included REIL of
£8.0 billion which were 55% covered by provisions.
Personal
x Overall lending exposure fell by £1.0 billion as a result of exchange
rate movements, amortisation, maturities, a small amount of write-
offs, low new business volumes and active risk management.
Residential mortgage loans amounted to £16.9 billion at 31
December 2012, including REIL of £3.0 billion and loan provisions of
£1.5 billion. The housing market continues to suffer from weak
domestic demand, with house prices that stabilised in the course of
2012 at approximately 50% below their 2007 peak.
Non-Core (included above)
x Non-Core lending exposure was £9.5 billion at 31 December 2012,
down £0.7 billion since 31 December 2011. The lending portfolio
largely consisted of exposures to commercial real estate (82%),
retail (4%) and leisure (4%).
*unaudited