Barclays 2009 Annual Report Download - page 105

www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 103
Credit Risk Loans
The Group’s Credit Risk Loans (CRLs) rose 43% to £22,388m
(31st December 2008: £15,700m) in 2009. Balances were higher across
Retail Home Loans, Retail Unsecured and Other and Corporate and
Wholesale exposures reflecting the deterioration in credit conditions in the
past year across Barclays areas of operations. The most notable increases
were in the international businesses in Global Retail and Commercial
Banking, with GRCB – Western Europe increasing the most as credit
conditions deteriorated in Spain, Italy and Portugal. However, the rate of
increase to the Group numbers has fallen during each quarter of 2009 from
17% in Q1 09 to 5% in Q4 09.
CRLs in Retail Home Loans increased by £1,076m (43%) to £3,604m
(31st December 2008: £2,528m) and in Retail Unsecured and Other
portfolios by £2,757m (55%) to £7,737m (31st December 2008: £4,980m)
as credit conditions deteriorated and arrears balances rose in a number of
regions, notably in: Absa Home Finance and Cards, GRCB – Western Europe,
particularly in Spain and Italy; Barclaycard US cards; and in UK Retail Banking
unsecured lending. CRLs also increased in GRCB – Western Europe following
the purchase of the Citigroup cards portfolio in Portugal in December 2009.
CRLs in the Corporate and Wholesale portfolios rose 35% to £11,047m
(31st December 2008: £8,192m). CRL balances were higher in all
businesses, as economic conditions led to deterioration across default
grades and a rise in impairment in most wholesale portfolios. The largest
increases were in GRCB – Western Europe, Barclays Capital and Barclays
Commercial Bank.
Potential Problem Loans
Balances within the Group’s Potential Problem Loans (PPLs) category
rose by 37% to £3,368m (31st December 2008: £2,456m). The principal
movements were in the Corporate and Wholesale portfolios, where PPLs
rose £715m to £2,674m (31st December 2008: £1,959m). PPL balances
increased in the retail portfolios to £694m (31st December 2008: £497m)
as balances increased in the Retail Unsecured and Other portfolios. This
was partially offset by a fall in PPL balances in Retail Home Loans.
Potential Credit Risk Loans
As a result of the increases in CRLs and PPLs, Group Potential Credit Risk
Loan (PCRL) balances rose 42% to £25,756m (31st December 2008:
£18,156m).
PCRL balances rose in Retail Home Loans by 34% to £3,739m
(31st December 2008: £2,795m) and in Retail Unsecured and Other
portfolios by 59% to £8,296m (31st December 2008: £5,210m) as
delinquency rates rose across a number of portfolios, particularly in the UK,
US, Spain and South Africa.
Total PCRL balances in the Corporate and Wholesale portfolios
increased by 35% to £13,721m (31st December 2008: £10,151m) after a
number of customers migrated into the CRL and PPL categories, reflecting
higher default probabilities in the deteriorating global wholesale
environment.
Impairment Allowances and Coverage Ratios
Impairment allowances increased 64% to £10,796m (31st December 2008:
£6,574m), reflecting increases across the majority of businesses as credit
conditions deteriorated during the year.
Retail impairment allowances rose by 99% in Retail Home Loans to £639m
(31st December 2008: £321m) and by 61% in Retail Unsecured and Other
portfolios to £5,492m (31st December 2008: £3,418m). The CRL coverage
ratio in Retail Home Loans increased to 17.7% (31st December 2008:
12.7%), and the PCRL coverage ratio increased to 17.1% (31st December
2008: 11.5%). The CRL coverage ratio in Retail Unsecured and Others
portfolios increased to 71.0% (31st December 2008: 68.6%). The PCRL
coverage ratio increased to 66.2% (31st December 2008: 65.6%).
In the Corporate and Wholesale portfolios, impairment allowances
increased 65% to £4,665m (31st December 2008: £2,835m). The CRL
coverage ratio rose to 42.2% (31st December 2008: 34.6%), and the PCRL
coverage ratio rose to 34.0% (31st December 2008: 27.9%).
The CRL coverage ratios in Retail Home Loans, Retail Unsecured and
Other and Corporate and Wholesale portfolios remain within the ranges
which are the typical severity rates for these types of products. As a result
of the movements across these three portfolios, the Group’s CRL coverage
ratio increased to 48.2% (31st December 2008: 41.9%), and its PCRL
coverage ratio also increased to 41.9% (31st December 2008: 36.2%).
Potential Credit Risk Loans and Coverage Ratios CRLs PPLs PCRLs
31.12.09 31.12.08 31.12.09 31.12.08 31.12.09 31.12.08
£m £m £m £m £m £m
Home Loans 3,604 2,528 135 267 3,739 2,795
Unsecured and other 7,737 4,980 559 230 8,296 5,210
Retail 11,341 7,508 694 497 12,035 8,005
Corporate/Wholesale 11,047 8,192 2,674 1,959 13,721 10,151
Group 22,388 15,700 3,368 2,456 25,756 18,156
Impairment allowance CRL coverage PCRL coverage
31.12.09 31.12.08 31.12.09 31.12.08 31.12.09 31.12.08
£m £m %%%%
Home Loans 639 321 17.7 12.7 17.1 11.5
Unsecured and other 5,492 3,418 71.0 68.6 66.2 65.6
Retail 6,131 3,739 54.1 49.8 50.9 46.7
Corporate/Wholesale 4,665 2,835 42.2 34.6 34.0 27.9
Group 10,796 6,574 48.2 41.9 41.9 36.2