RBS 2014 Annual Report Download - page 168

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33
RBS – Interim Results 2015
Appendix 1 Capital and risk management
Key points* (continued)
Ulster Bank (continued)
• The number of customers approaching Ulster Bank for the first time in respect to forbearance
assistance declined through H1 2015. The majority (78%) of forbearance arrangements were less than
90 days in arrears.
• There was an overall release of impairment provisions for personal mortgages in H1 2015 compared
with a charge in H1 2014. Reducing defaulted balances have reduced loss expectations driving
collective and latent releases.
CFG
• The mortgage portfolio at 30 June 2015 consisted of £8 billion of residential mortgages (1% in second
lien position) and £12.5 billion of home equity loans and lines of credit (HELOC) - first and second
liens. Home equity consisted of 46% in first lien position. A Serviced By Others (SBO) portfolio, which
is predominantly (95%) second lien, is included in the home equity book. Excluding the effect o
f
exchange rates, the portfolio decreased 2% from the 2014 year end as a result of contraction in
HELOC and run-off in the construction legacy serviced by others portfolios.
• CFG continued to focus on its footprint states of New England, Mid-Atlantic and the Mid-West. At 30
June 2015, £16.7 billion (81% of the total portfolio) was within footprint.
• The SBO portfolio, which was closed to new purchases in Q3 2007, decreased from £1.3 billion in Q1
2015 to £1.1 billion in Q2 2015.
• The overall mortgage portfolio credit characteristics are stable with a weighted average LTV of 65% at
30 June 2015. The weighted average LTV of the portfolio, excluding SBO, was 63%.
• CFG participates in the US-government mandated Home Affordable Modification Program (HAMP), as
well as its own proprietary programme. The 12-month default rate, on a value basis, for customers
who were granted forbearance, was 17.4% in H1 2015 (2014 - 15%). The increase in default rate was
driven by a regulatory requirement to start tracking co-borrower bankruptcies. Additionally, many
HAMP mortgages, which receive a below market rate for five years, began to reset at higher rates to
adjust to the market rate, increasing defaults.
*Not within the scope of Deloitte LLP’s review report