Barclays 2009 Annual Report Download - page 279

www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 277
47 Credit risk continued
Credit quality of loans and advances neither past due nor individually impaired
2009 2008
Strong Satisfactory Higher risk Total Strong Satisfactory Higher risk Total
£m £m £m £m £m £m £m £m
Trading portfolio:
Traded loans 1,366 1,290 306 2,962 759 220 91 1,070
Financial assets designated at fair value
held on own account:
Loans and advances 15,909 3,809 2,492 22,210 25,665 2,792 725 29,182
Other financial assets 261 – 296 557 – 1,469 – 1,469
Loans and advances to banks 35,825 2,492 542 38,859 40,181 6,384 100 46,665
Loans and advances to customers:
Residential mortgage loans 66,956 69,919 2,324 139,199 86,937 42,770 1,310 131,017
Credit card receivables – 20,038 157 20,195 – 20,426 666 21,092
Other personal lending 3,417 18,108 2,271 23,796 2,975 21,750 1,160 25,885
Wholesale and corporate loans and advances 119,764 70,132 9,904 199,800 141,868 94,453 10,184 246,505
Finance lease receivables 2,664 7,082 382 10,128 4,214 7,504 649 12,367
Total loans and advances 246,162 192,870 18,674 457,706 302,599 197,768 14,885 515,252
For the purposes of the analysis of credit quality, the following internal measures of credit quality have been used:
Retail lending Wholesale lending
Financial statements description Probability of default Probability of default Default grade
Strong 0.0-0.60% 0.0-0.05% 1-3
0.05-0.15% 4-5
0.15-0.30% 6-8
0.30-0.60% 9-11
Satisfactory 0.60-10.00% 0.60-2.15% 12-14
2.15-11.35% 15-19
Higher risk 10.00% + 11.35% + 20-21
Financial statement descriptions can be summarised as follows:
Strong – there is a very high likelihood of the asset being recovered in full.
Satisfactory – whilst there is a high likelihood that the asset will be recovered and therefore, of no cause for concern to the Group, the asset may not be
collateralised, or may relate to retail facilities, such as credit card balances and unsecured loans, which have been classified as satisfactory, regardless of the
fact that the output of internal grading models may have indicated a higher classification. At the lower end of this grade there are customers that are being
more carefully monitored, for example, corporate customers which are indicating some evidence of some deterioration, mortgages with a high loan to value
ratio, and unsecured retail loans operating outside normal product guidelines.
Higher risk – there is concern over the obligor’s ability to make payments when due. However, these have not yet converted to actual delinquency. There
may also be doubts over value of collateral or security provided. However, the borrower or counterparty is continuing to make payments when due and is
expected to settle all outstanding amounts of principal and interest.