Barclays 2014 Annual Report Download - page 160

158 I Barclays PLC Annual Report 2014 barclays.com/annualreport
Risk performance
Credit risk
Risk review
Home loans principal portfolios – distribution of balances by LTVa
As at 31 December
PCB – UK Africa – South Africa BNC – Italy
2014
%
2013
%
2014
%
2013
%
2014
%
2013
%
<=75% 90.2 84.2 74.6 69.6 76.3 74.9
>75% and <=80% 4.2 6.9 7.7 8.8 12.2 14.2
>80% and <=85% 2.3 3.4 5.9 7.1 5.6 6.0
>85% and <=90% 1.4 2.1 4.3 4.8 2.2 1.8
>90% and <=95% 1.0 1.3 2.5 3.3 1.0 0.9
>95% and <=100% 0.4 0.8 1.5 1.9 0.7 0.6
>100% 0.5 1.3 3.5 4.5 2.0 1.6
Portfolio marked to market LTV (%):
Balance weighted 51.6 56.3 59.9 62.3 60.0 60.0
Valuation weighted 39.8 43.6 40.2 42.1 46.2 46.5
Performing balances (%):
Balance weighted 51.5 56.2 58.6 60.5 58.0 58.6
Valuation weighted 39.7 43.5 39.5 41.1 45.5 46.5
Non-performing balances (%):
Balance weighted 62.1 68.9 87.0 92.9 107.0 98.8
Valuation weightedb49.8 55.1 64.7 71.4 69.8 67.8
For >100% LTVs:
Balances (£m) 641 1,596 390 540 284 244
Marked to market collateral (£m) 558 1,411 324 452 214 191
Average LTV: balance weighted (%) 120.9 120.5 124.2 123.1 161.4 151.1
Average LTV: valuation weighted (%) 114.8 113.2 120.3 119.5 133.0 128.2
% of balances in recoveries 4.4 3.2 37.1 45.6 66.8 62.1
Home loans principal portfolios – new lending
As at 31 December
PCB – UK Africa – South Africa BNC – Italy
2014
%
2013
%
2014
%
2013
%
2014
%
2013
%
New bookings (£m)c20,349 17,100 1,590 1,654 137 494
New mortgages proportion above 85% LTV (%) 6.6 3.8 33.5 30.4 ––
Average LTV on new mortgages: balance weighted (%) 64.8 64.2 74.8 74.9 61.2 59.8
Average LTV on new mortgages: valuation weighted (%) 57.0 57.1 65.4 64.9 51.5 52.2
UK: During 2014, there was increased appetite for new lending in the UK as confidence in the housing market improved. New bookings rose by
19% to £20.3bn, which was broadly in line with the growth in the industry.
South Africa: The proportion of new home loans above 85% LTV increased to 33.5% (2013: 30.4%) due to a revised strategy for existing bank
customers which allows a greater proportion of higher LTV loans to be booked for low risk customers.
Italy: New bookings reduced by over 70% to £137m, which was reflective of the Group’s continuing cautious lending practices in this region.
Exposures to interest-only home loans
The Group provides interest-only mortgages to customers, mainly in the UK. Under the terms of these loans, the customer makes payments of
interest only for the entire term of the mortgage, although customers may make early repayments of the principal within the terms of their
agreement. Subject to such early repayments, the entire principal remains outstanding until the end of the loan term and the customer is
responsible for repaying this on maturity. The repayment may also be a result of the sale of the mortgaged property.
Interest-only lending is subject to bespoke underwriting criteria that includes: a maximum size of loan, maximum LTV ratios, affordability and
maximum loan term among other criteria. Borrowers on interest-only terms must have a repayment strategy in place to repay the loan at maturity
and a customer contact strategy has been developed to ensure ongoing communications are in place with interest-only customers at various
points during the term of the mortgage. The contact strategy is varied dependent on our view of the risk of the customer.
Interest-only mortgages account for £51bn (2013: £53bn) of the total balance of £127bn (2013: £123bn) of the UK home loans portfolio and
consist of £42bn (2013: £45bn) to owner-occupied customers and £9bn (2013: £8bn) to buy-to-let customers.
Interest-only mortgages to owner occupied customers comprise £35bn (2013: £37bn) of interest-only mortgages and £7bn (2013: £7bn) being
the interest-only component of part and part (P&P)d mortgages.
Notes
a Portfolio marked to market based on the most updated valuation including recoveries balances. Updated valuations reflect the application of the latest house price index available
in the country as at 31 December 2014.
b Valuation weighted LTV for Italy home loans for 2013 was restated to include the recovery balances in line with other home loan disclosures.
c 2013 new bookings for South Africa home loans was revised to fully include new advances to existing customers.
d Analysis excludes the interest only portion of the part and part book which contributes £6.6bn (2013: £7.3bn) to the total interest-only balance of £41.9bn (2013: £44.5bn). Total
exposure on the part and part book is £9.8bn (2013: £11bn) and represents 7% of total UK home loans portfolio.