RBS 2013 Annual Report Download - page 261
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Business review Risk and balance sheet management
259
UK Retail Ulster Bank RBS Citizens (1)
Non- Non- Non-
Performing performing Total Performing performing Total Performing performing Total
Loan-to-value ratio £m £m £m £m £m £m £m £m £m
2011
<= 50% 21,537 285 21,822 2,568 222 2,790 4,745 49 4,794
> 50% and <= 70% 25,598 390 25,988 1,877 157 2,034 4,713 78 4,791
> 70% and <= 90% 33,738 671 34,409 2,280 223 2,503 6,893 125 7,018
> 90% and <= 100% 7,365 343 7,708 1,377 128 1,505 2,352 66 2,418
> 100% and <= 110% 3,817 276 4,093 1,462 130 1,592 1,517 53 1,570
> 110% and <= 130% 1,514 199 1,713 2,752 322 3,074 1,536 53 1,589
> 130% and <= 150% 60 15 75 2,607 369 2,976 626 28 654
> 150% — — — 2,798 748 3,546 588 27 615
Total with LTVs 93,629 2,179 95,808 17,721 2,299 20,020 22,970 479 23,449
Other (2) 567 13 580 — — — 681 23 704
Total 94,196 2,192 96,388 17,721 2,299 20,020 23,651 502 24,153
Total portfolio average LTV (3) 67% 80% 67% 104% 125% 106% 76% 91% 77%
A
verage LTV on new originations during the year (3) 63% 74% 63%
Notes:
(1) Includes residential mortgages and home equity loans and lines (refer to page 260 for a breakdown of balances).
(2) Where no indexed LTV is held.
(3) Average LTV weighted by value is calculated using the LTV on each individual mortgage and applying a weighting based on the value of each mortgage.
Key points
UK Retail
• The UK Retail mortgage portfolio was £99.3 billion at 31 December
2013, an increase of 0.3% from 31 December 2012. The mortgages
included £9.1 billion (2012 - £7.9 billion) of residential buy-to-let
lending.
• As at 31 December 2013, approximately 43% of the portfolio
consisted of fixed rate, 5% a combination of fixed and variable rates
and the remainder were variable rate mortgages (including those on
managed rates). The interest only proportion of the total portfolio
was 26%.
• Gross new mortgage lending amounted to £14.4 billion and the
average LTV by volume was 62.7% compared to 61.3% at
31 December 2012. The average LTV calculated by weighted LTV
of lending was 66.6% (2012 - 65.2%).
• Based on the Halifax Price Index at September 2013, the portfolio-
average indexed LTV by volume was 54.1% (2012 - 58.1%) and
62.0% by weighted value of debt outstanding (2012 - 66.8%). The
ratio of total outstanding balances to total indexed property
valuations was 45.1% (2012 - 48.5%).
*unaudited
• All new mortgage business is subject to a comprehensive
assessment. This includes: i) an affordability test which includes a
stressed interest rate that is higher than the customer pay rate; ii)
credit scoring; iii) a maximum loan-to-value of 90% with the
exception of the UK Government backed schemes Help-to-Buy
(from the fourth quarter of 2013), New Buy and My New Home
products where lending of up to 95% is provided; and iv) a range of
policy rules that restrict the availability of credit to borrowers with
higher risk characteristics, for example highly indebted and/or
adverse payment behaviour on previous borrowings.
• The arrears rate (defined as more than three payments in arrears,
excluding repossessions and shortfalls post property sale), fell to
1.3% (2012 - 1.5%). The number of properties repossessed in 2013
was 1,532 compared with 1,426 in 2012. Arrears rates remained
sensitive to economic developments and benefited from the low
interest rate environment.
• The impairment charge for mortgage loans was £30 million for 2013
compared to £92 million in 2012, reflecting a lower level of defaults
and reduced loss rates as valuations improved on properties held as
security on defaulted debt.