RBS 2013 Annual Report Download - page 269
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Business review Risk and balance sheet management
267
Key points
• The commercial real estate lending portfolio for Ulster Bank Group
(Core and Non-Core) totalled £14.3 billion at 31 December 2013, of
which £10.1 billion or 71% was in Non-Core. The geographic split of
the total Ulster Bank Group commercial real estate portfolio
remained similar to 2012 with 64% (2012 - 63%) in the Republic of
Ireland, 26% (2012 - 26%) in Northern Ireland, 10% (2012 - 11%) in
the UK (excluding Northern Ireland) and the balance (0.1%) in Rest
of World (primarily Europe).
• Provisions covered CRE REIL by 78%, up from 58% at the end of
2012, with the investment portfolio being covered 80% and the
development portfolio 95%.
• Of the total corporate impairment charge recorded during the
second half of 2013 of £3.9 billion, £3.4 billion related to all loans
that will be transferred to RCR, of which £2.9 billion related to
commercial real estate loans and £0.5 billion related to corporate
loans.
Investment Development
Commercial Residential Commercial Residential Total
Commercial real estate £m £m £m £m £m
2013
ROI 3,227 806 1,402 3,684 9,119
NI 1,083 223 517 1,848 3,671
UK (excluding NI) 1,232 50 56 112 1,450
RoW 9 — 8 6 23
5,551 1,079 1,983 5,650 14,263
2012
ROI 3,546 779 1,603 3,653 9,581
NI 1,083 210 631 2,059 3,983
UK (excluding NI) 1,239 86 82 290 1,697
RoW 14 1 8 10 33
5,882 1,076 2,324 6,012 15,294
2011
ROI 3,775 853 1,911 4,095 10,634
NI 1,322 279 680 2,222 4,503
UK (excluding NI) 1,371 111 95 336 1,913
RoW 27 4 — 32 63
6,495 1,247 2,686 6,685 17,113
Key points
• Commercial real estate continued to be the primary sector driving
the Ulster Bank Group defaulted loan book. Exposure to the sector
fell during 2013 by £1.0 billion, reflecting Ulster Bank’s continuing
strategy to reduce concentration risk in this sector.
• The outlook for the property sector remains challenging. While there
may be some signs of stabilisation in main urban centres, the
outlook continues to be negative for secondary property locations on
the island of Ireland.
• Ulster Bank experienced further migration of commercial real estate
exposures to its problem management framework, where various
measures may be agreed to assist customers whose loans are
performing, but who are experiencing temporary financial difficulties.
Residential mortgages
Mortgage lending portfolio analysis by country of location of the underlying security is set out below.
2013 2012 2011
£m £m £m
ROI 16,779 16,873 17,767
NI 2,255 2,289 2,253
19,034 19,162 20,020
*unaudited