Barclays 2011 Annual Report Download - page 100

Arrears rates remained stable in the UK as targeted balance growth and better customer affordability criteria continued to be supported by the low
base rate environment.
Arrears rates for South Africa Home Loans decreased but gross charge-off rates increased as contracts in debt counselling were terminated and legal
actions were commenced which resulted in an increase in the recoveries book. The fall in recoveries impairment coverage ratio for South Africa Home
Loans reflected, in part, the impact of a revised LGD model implementation in the second half of 2011. The lower LGD reflected higher levels of cash
collected in the recoveries portfolio.
Arrears rates in Spain remained broadly stable, but increased in Portugal and Italy due to the deterioration in economic conditions including the impact
of austerity measures.
Principal home loans portfolios – distribution of balances by LTV (updated valuations)a
UK SpainbSouth Africa Italy Portugalb
As at 31 December 2011
%
2010
%
2011
%
2010
%
2011
%
2010
%
2011
%
2010
%
2011
%
2010
%
<=75% 77.6 78.5 72.1 75.7 58.8 56.1 70.7 72.3 49.0 51.0
>75% and <=80% 7.5 6.8 6.6 6.6 8.7 8.1 16.8 16.8 11.4 12.5
>80% and <=85% 5.3 4.8 5.7 5.5 8.3 8.5 10.2 8.6 13.7 11.8
>85% and <=90% 3.6 3.6 4.0 3.2 7.2 7.9 1.3 1.3 9.4 10.5
>90% and <=95% 2.4 2.6 2.6 2.3 5.3 6.6 0.5 0.4 8.8 8.9
>95% 3.6 3.7 9.0 6.7 11.7 12.8 0.5 0.6 7.7 5.3
Marked to market LTVc44.3 42.6 60.1 57.5 45.2 45.0 46.9 45.3 69.6 68.0
Average LTV on new mortgages 54.0 51.6 61.3 61.1 61.2 61.0 59.6 59.0 67.7 69.0
New mortgages proportion above 85% LTV 0.8 0.5 1.3 0.7 29.9 29.8 – – 5.5 12.2
New mortgages (£m) 17,202 16,875 502 1,963 1,381 1,593 3,719 3,544 495 633
The risk profile on the principal home loan portfolios is reflected by the moderate average Loan to Value (LTV) of the existing portfolios and range
of LTVs of new mortgage lending. Although period end marked to market LTVs have increased marginally across all principal home loan portfolios
compared to December 2010, the portfolios continued to remain well secured. The increase in average LTV for new mortgage business in the UK
was driven by more tailored lending criteria which allowed for additional business to be written at higher LTVs within the existing underwriting criteria.
There was no material impact on impairment as a result, in 2011. Any increase to impairment from the change in risk profile is factored into impairment
models. In the UK, buy to let mortgages comprised 6% of the total stock (2010: 6%). The average LTV on new mortgages for Spain remained stable
and was within the Group approved risk profile. New lending has primarily been driven by new mortgages for house purchase rather than remortgages,
for which the demand contracted significantly.
Risk management
Credit risk continued
Notes
a Excluded from the above analysis are: Wealth Home Loans, which are managed on the basis of individual customer exposures, France Home Loans and other small Home Loans portfolios.
b Spain and Portugal marked to market methodology based on balance weighted approach.
c Portfolio marked to market based on current valuations, including recoveries balances.
98 Barclays PLC Annual Report 2011 www.barclays.com/annualreport