Barclays 2005 Annual Report Download - page 169

Barclays PLC
Annual Report 2005 167
3.5
18 Allowance for impairment/provisions for bad and doubtful debts
Movement in the allowance for impairment/provisions for bad and doubtful debts is as follows:
2005 2004
£m £m
At beginning of year(a) 2,637 2,946
Acquisitions and disposals 555 21
Unwind of discount (76) n/a
Exchange and other adjustments 125 (33)
Amounts written off (1,587) (1,582)
Recoveries 222 255
Amounts charged against profit(b) 1,574 1,104
At end of year 3,450 2,711
Allowances for loan impairment represent management’s estimate of the losses incurred in the loan portfolios at the balance sheet date. For the
retail and small business portfolios, which comprise large numbers of small homogenous assets with similar risk characteristics, statistical
techniques are used to calculate impairment allowances on a portfolio basis. These models do not contain judgemental inputs. The impairment
charge in relation to retail and small business portfolios is £1,254m or 80% of the total impairment charge in 2005. For larger accounts, impairment
allowances are calculated on an individual basis using discounted expected future cash flows. Subjective judgements are made in this process.
Changes in these estimates could result in a change in allowances and have a direct impact on the impairment charge. However, the impairment
charge in relation to larger accounts is £320m or 20% of the total impairment charge in 2005.
2005 2004
Allowance for impairment/provisions for bad and doubtful debts at 31st December £m £m
United Kingdom 2,266 1,683
Other European Union 284 149
United States 130 155
Africa 647 70
Rest of the World 123 90
General Provisions n/a 564
Allowance for impairment/provisions for bad and doubtful debts at 31st December 3,450 2,711
2005 2004
Non-performing loans £m £m
Impaired loans 4,550 n/a
Non-accrual loans n/a 2,115
Accruing loans where interest is being suspended with or without provision n/a 492
Other accruing loans against which provisions have been made n/a 943
4,550 3,550
Accruing loans which are contractually overdue 90 days or more as to principal or interest 609 550
Restructured loans 51 15
Non-performing loans 5,210 4,115
Notes
(a) The 2005 opening balance has been adjusted to reflect the application of IAS 32, IAS 39 and IFRS 4.
(b) Does not reflect the impairment on available for sale investments or other credit risk provisions in 2005.