Barclays 2008 Annual Report Download - page 274

Notes to the accounts
For the year ended 31st December 2008
272 Barclays PLC Annual Report 2008 |Find out more at www.barclays.com/annualreport08
47 Credit risk (continued)
Credit quality of loans and advances neither past due nor individually impaired
2008 2007
Strong Satisfactory Higher risk Total Strong Satisfactory Higher risk Total
£m £m £m £m £m £m £m £m
Trading portfolio:
Traded loans 759 220 91 1,070 223 1,228 329 1,780
Financial assets designated at fair value
held on own account:
Loans and advances 25,665 2,792 725 29,182 13,687 6,186 3,104 22,977
Other financial assets – 1,469 – 1,469 98 ––98
Loans and advances to banks 40,181 6,384 100 46,665 35,635 1,955 11 37,601
Loans and advances to customers:
Residential mortgage loans 82,363 42,770 1,230 126,363 60,563 38,000 1,760 100,323
Credit card receivables – 20,426 666 21,092 – 12,582 5 12,587
Other personal lending 7,549 21,750 1,240 30,539 5,061 22,619 889 28,569
Wholesale and corporate loans and advances 141,868 94,453 10,184 246,505 114,693 54,828 2,428 171,949
Finance lease receivables 4,214 7,504 649 12,367 4,586 6,036 268 10,890
Total loans and advances 302,599 197,768 14,885 515,252 234,546 143,434 8,794 386,774
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% 11-14
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.