Corporate
Credit Quality and Provisions
Impaired loans with loss as a percentage of closing advances increased to 1.39% (2006 1.30%), and impairment losses increased by 40% to £602m (2006 £429m), mainly in Commercial, where we have reassessed the outlook for a number of higher risk credits. This resulted in impairment losses as a percentage of average advances of 0.61% (2006 0.50%). Impairment provisions were 0.73% (2006 0.82%) of closing advances.
(The information set out below and overleaf forms an integral part of the audited financial statements as described in the Accounting Policies section of the Financial Statements on page 160.)
| Asset Quality Information | As at 31.12.2007 | As at 31.12.2006 |
| (i) Exposure | ||
| £bn | £bn | |
| Loans and advances to customers | 109.3 | 89.6 |
| Impairment provisions on advances | 0.8 | 0.7 |
| Loans and advances to customers before impairment provisions | 110.1 | 90.3 |
| Classification of advances* | % | % |
| Agriculture, forestry and fishing | 1 | 1 |
| Energy | 2 | 2 |
| Manufacturing industry | 4 | 5 |
| Construction and property: | ||
| Property investment | 19 | 17 |
| Property development | 6 | 6 |
| Housing associations | 3 | 3 |
| Housebuilders | 3 | 2 |
| Other property | 6 | 6 |
| Hotels, restaurants and wholesale and retail trade | 11 | 11 |
| Transport, storage and communication | 6 | 7 |
| Financial | 5 | 5 |
| Other services | 13 | 15 |
| Individuals | 2 | 3 |
| Non-UK residents | 19 | 17 |
| 100 | 100 | |
| (ii) Credit Quality and Collateral Corporate’s loans are predominantly secured by fixed and floating charges. These charges allow Corporate a first ranking claim on the borrower’s assets in the event a default situation occurs. |
||
| Loans and advances to customers* | As at 31.12.2007 £bn | As at 31.12.2006 £bn |
| Neither past due nor impaired (1) | 104.2 | 83.5 |
| Past due but not impaired | 2.7 | 5.1 |
| Impaired | 3.2 | 1.7 |
| Total | 110.1 | 90.3 |
| Loans neither past due nor impaired* | % | % |
| Internal rating: | ||
| Better than satisfactory risk | 34 | 26 |
| Satisfactory risk | 52 | 52 |
| Viable but monitoring | 12 | 19 |
| High Risk | 2 | 3 |
| Total | 100 | 100 |
| Loans past due but not impaired* | £m | £m |
| Past due 0 to 3 months | 2,690 | 3,417 |
| Past due 3 to 6 months | 7 | 536 |
| Past due more than 6 months | 23 | 1,158 |
| Total | 2,720 | 5,111 |
| Impaired loans* (2) | £m | £m |
| Past due 0 to 3 months | 1,033 | 227 |
| Past due 3 to 6 months | 521 | 171 |
| Past due 6 to 12 months | 645 | 572 |
| Past due over 12 months | 966 | 750 |
| Total | 3,165 | 1,720 |
| Impaired loans* | £m | £m |
| Impaired loans no loss (3) | 1,648 | 557 |
| Impaired loans with loss | 1,517 | 1,163 |
| Total | 3,165 | 1,720 |
| Impaired loans with loss as a % of closing advances | 1.39% | 1.30% |
| Impairment provisions | £802m | £735m |
| Impairment provisions as a % of closing advances | 0.73% | 0.82% |
| Impairment provisions as a % of impaired loans with loss | 53% | 63% |
(1) Included in loans and advances that are neither past due nor impaired are £2m (2006 £89m) of troubled debt restructured loans that would have been past due or impaired had their terms not been renegotiated.
(2) Period relates to when account entered impaired status.
(3) Loans categorised as impaired no loss represent loans that have been individually assessed as having impairment characteristics but where we expect, after taking into consideration collateral and other credit enhancements, full recovery of both interest and capital. As we have progressed our Basel II project, we have refined the categorisation of assets reflected in the year on year increase.
* Before impairment provisions.
(End of information that forms an integral part of the audited financial statements.)