Barclays 2010 Annual Report Download - page 105

In 2010 Barclays increased lending to meet customer demand, most
notably in the UK, whilst maintaining a broadly stable risk appetite.
Total Home Loans net of impairment to retail customers rose 13% to
£168,055m (2009: £149,099m) principally due to an increase in the
Home Loans portfolios within UK Retail Banking which grew 15% to
£101,210m (2009: £87,943m). Home Loans represented 74% of total
retail loans and advances to customers net of impairment on 31st
December 2010 (2009: 72%).
Home Loans was a principal driver of retail asset growth in 2010.
The growth was mainly in the UK Home Loans portfolio driven by the
acquisition of Standard Life Bank and increased lending. The gross new
lending in Home Loans in 2010 was £16,875m in the UK (2009: £14,180m),
£1,898m in South Africa (2009: £1,583m), £1,963m in Spain (2009:
£2,352m), £3,561m in Italy (2009: £2,860m).
Improvements in arrears rates during 2010 were driven by balance
growth and increased customer affordability supported by the low base
rate environment. The improvement in arrears rates drove lower gross
charge-off rates in the majority of portfolios.
Three month arrears rates within the South African portfolio improved as
debt counselling balances held in late stage delinquency cycles moved to
recoveries. Recoveries as a proportion of outstanding balances increased
throughout 2010 as accounts remained in recoveries for an extended
period as a result of a longer time taken to realise securities due to
increased debt counselling balances moving into recoveries.
The asset quality of Barclays principal Home Loan portfolios has continued
to be within expectations in the current economic conditions, as a result
of the moderate average LTV of the existing portfolio and the range of
LTVs of new mortgage lending.
Credit cards and unsecured loans principal portfolios
One month
arrearsa
%
Three
month
arrearsa
%
Gross
charge-off
ratesb
%
Recoveries
proportion of
outstanding
balances
%
Recoveries
impairment
coverage
ratioc
%
As at 31st December 2010
UK Cards 3.4 1.5 8.4 9.1 83.9
UK Loans 4.7 2.6 7.9 18.5 82.5
US Cards 4.6 2.5 12.2 8.1 93.8
As at 31st December 2009
UK Cards 4.2 1.8 7.4 8.5 81.3
UK Loansd6.1 3.8 8.2 16.8 80.7
US Cards 6.1 3.3 12.2 6.4 91.7
Barclays has broadly maintained its risk appetite in 2010. There has been
an increase across all portfolios in the average LTV on new mortgages,
offset by redemptions resulting in year end marked to market LTVs broadly
remaining unchanged compared to December 2009.
The increase of average LTV for new mortgage business in the UK and
Spain was driven by an increased proportion of new mortgages from
house purchase as the remortgage sector contracted significantly.
In South Africa, the increase was driven by targeted acquisition criteria
for higher LTV lending to better quality customers with an existing banking
relationship with Absa.
In the UK, buy to let mortgages comprised 6% of the total stock as at
31st December 2010.
Credit Cards and Unsecured Loans
The Group’s principal Credit Cards and Unsecured Loans portfolios are
primarily comprised of UK Cards (28% of Group’s total Credit Cards and
Unsecured Loans), UK Loans (14%) and US Cards (17%). These account
for 59% of the Group’s Credit Cards and Unsecured Loans.
Gross new lending in 2010 for UK Cards was £2,298m (2009: £1,414m),
for UK Loans was £2,212m (2009: £2,339m), and for US Cards was
£4,126m (2009: £4,837m), representing the three main Credit Cards
and Unsecured Loans retail portfolios in the Group. Loans and advances
to customers net of impairment allowances remained broadly flat in 2010
at £39,171m (2009: £39,012m).
Three month arrears rates improved across all of Group’s largest unsecured
portfolios in 2010. UK Cards arrears rates fell to 1.5% (2009: 1.8%),
reflecting the impact of improving economic conditions during 2010, while
UK Loans arrears rates fell to 2.6% (2009: 3.8%) and US Cards arrears
rates fell to 2.5% (2009: 3.3%).
Notes
a Defined as balances greater than 30 or 90 days delinquent but not charged off to
recoveries, expressed as a percentage of outstanding balances excluding balances
in recovery. Percentages include accounts in forbearance programmes.
b Defined as balances that charged-off to recoveries in the reporting period, expressed
as a percentage of average outstanding balances excluding balances in recoveries.
c Defined as impairment allowance held against recoveries balances, expressed as a
percentage of balances in recoveries.
d UK Loans three month arrears rates for 2009 have been restated from 2.74% to align
with new arrears definitions as per Group policy.
Barclays PLC Annual Report 2010 www.barclays.com/annualreport10 103
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