Barclays 2012 Annual Report Download - page 136

UK business lending gross loans and advances increased 2% to £8,053m (2011: £7,929m). Loan loss rates improved to 140bps (2011: 213bps)
whilst a broadly stable credit policy has been maintained. Business lending gross loans and advances in Europe reduced 27% in 2012 to £1,742m
(2011: £2,395m) primarily due to the tightening of credit policy, reducing new business volumes and currency movements. Spain gross loans and
advances reduced 31% to £1,095m (2011: £1,576m). Loan loss rates increased to 210bps (2011: 115bps) reflecting both increasing arrears in the
difficult macro environment and the reducing balances. Early Warning List (EWL) balances reflect the close monitoring of the portfolio, with over
75% of EWL balances not in arrears. Portugal gross loans and advances reduced 21% to £596m (2011: £758m). Loan loss rates increased to
503bps (2011: 238bps) reflecting both increasing arrears in the difficult macro environment and reducing balances.
Retail forbearance programmes
Retail forbearance is available to customers experiencing financial difficulties. Forbearance solutions may take a number of forms depending on
the extent of the financial dislocation. Short term solutions normally focus on temporary reductions to contractual payments and switches from
capital and interest payments to interest only. For customers with longer term financial difficulties, term extensions may be offered, which may
also include interest rate concessions and conversion to fully amortising balances for card portfolios.
Forbearance on the Group’s principal portfolios in the US, UK and Europe is presented below.
In South Africa, forbearance and rehabilitation balances are not published as local practices are in the process of being aligned to the Barclays
Group policy. In other retail portfolios the level of forbearance extended to customers is not material and typically is not a significant factor in the
management of customer relationships.
Loans in forbearance in the principal home loans portfolios increased 3% to £1,987m, mainly due to an increase in Spain and Italy home loans.
Within UK home loans, term extensions account for over 80% of forbearance balances with the majority of the remainder being switches from
capital and interest to interest only. In Spain forbearance accounts are predominantly full account restructures. In Italy the majority of the balances
relate to specific schemes required by the Italian government (e.g. debt relief scheme following the earthquake of 2009) and amendments are
weighted towards payment holidays and interest suspensions.
Principal portfolios
Gross L&A
subject to
forbearance
programmes
£m
Forbearance
programmes
proportion
of
outstanding
balances
%
Impairment
coverage on
gross L&A
subject to
forbearance
programmes
%
Marked to
market LTV
of home loan
forbearance
balancesa
%
As at 31 December 2012
Home loans
UK 1,596 1.4 0.8 36.6
Spain 174 1.3 5.8 68.9
Italy 217 1.4 2.9 49.1
Credit cards, overdrafts and unsecured loans
UK cardsb,c 991 6.3 37.8 n/a
UK personal loans 168 3.4 29.0 n/a
US cardsd116 1.3 15.0 n/a
Business lendinge
UK 203 2.5 15.4 n/a
As at 31 December 2011
Home loans
UK 1,613 1.5 0.8 31.6
Spain 145 1.0 3.7 67.4
Italy 171 1.1 2.6 46.5
Credit cards, overdrafts and unsecured loans
UK cardsb,c 989 6.5 38.2 n/a
UK personal loans 201 3.8 29.5 n/a
US cardsd125 1.7 19.7 n/a
Notes
a UK and Italy marked to market methodology is based on valuation weighted approach. Valuation weighted LTV is the ratio between total outstanding balance and
the value of total collateral held against these balances. Spain marked to market methodology is based on balance weighted approach. Balance weighted LTV
approach is derived by calculating individual LTVs at account level and weighting it by the individual loan balances to arrive at the average position. This is in line with
local reporting practice.
b Impairment allowances against UK cards forbearance decreased, reflecting improved expectations on debt repayment. As a result, the impairment coverage ratio
decreased during 2012. UK cards includes Barclays Branded Card and Partnership Card assets.
c UK cards includes balances related to the acquired Egg credit card assets, which totalled £1.7bn at acquisition. The outstanding acquired balances have been
excluded from the forbearance impairment coverage ratio on the basis that the portfolio has been recognised on acquisition at fair value during 2011 (with no related
impairment allowance). Impairment allowances have been recognised as appropriate where these relate to the period of post acquisition.
d US Cards includes the U-promise portfolio in 2012. The outstanding acquired balances have been excluded from the forbearance impairment coverage ratio on the
basis that the portfolio has been recognised on acquisition at fair value during 2011.
e Forbearance policies for Business lending were implemented in 2012. Comparable figures for previous periods are not available.
barclays.com/annualreport134 I Barclays PLC Annual Report 2012
Risk review
Credit risk continued