Barclays 2006 Annual Report Download - page 185

Barclays PLC
Annual Report 2006 181
Financial statements
3
17 Allowance for impairment
The movement in the allowance for impairment is as follows:
2006 2005
£m £m
At beginning of year 3,450 2,637
Acquisitions and disposals (23) 555
Unwind of discount (98) (76)
Exchange and other adjustments (153) 125
Amounts written off (2,174) (1,587)
Recoveries 259 222
Amounts charged against profit 2,074 1,574
At end of year 3,335 3,450
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 homogeneous assets with similar risk characteristics, statistical
techniques are used to calculate impairment allowances on a portfolio basis. These models contain judgemental inputs. The impairment charge
in relation to retail and small business portfolios is £1,809m or 87% (2005: £1,254m or 80%) of the total impairment charge in 2006. 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.
The impairment charge in relation to larger accounts is £265m or 13% (2005: £320m or 20%) of the total impairment charge in 2006.
2006 2005
Allowance for impairment at 31st December £m £m
United Kingdom 2,477 2,266
Other European Union 311 284
United States 100 130
Africa 417 647
Rest of the World 30 123
Allowance for impairment at 31st December 3,335 3,450
2006 2005
Non-performing loans £m £m
Impaired loans 4,444 4,550
Accruing loans which are contractually overdue 90 days or more as to principal or interest 598 609
Restructured loans 46 51
Non-performing loans 5,088 5,210