Barclays 2013 Annual Report Download - page 151

Balance sheet credit quality
The following tables present the credit quality of Group assets exposed to credit risk.
Basis of preparation
For performing loans that are neither past due nor impaired, which form the majority of loans in the portfolios, the following internal measures of
credit quality have been used for the purposes of this analysis:
 Strong – there is a very high likelihood of the asset being recovered in full, these include investment grade;
 Satisfactory – while there is a high likelihood that the asset will be recovered and, therefore, is of no current cause for concern to the Group, the
asset may not be collateralised, or may relate to facilities such as unsecured loans and credit card balances; and
 Higher risk – there is concern over the obligor’s ability to make payments when due. However, these have not yet converted to actual
delinquency.
Non-performing loans – loans that are impaired or are past due but not impaired – have been included in the Higher risk category for this analysis
with prior year comparatives restated to align presentation. An age analysis of both is presented on pages 155 and 156.
For assets held at fair value, the carrying value on the balance sheet will include, among other things, the credit risk of the issuer. Most listed and
some unlisted securities are rated by external rating agencies. The Group mainly uses external credit ratings provided by Standard & Poor’s or
Moody’s. Where such ratings are not available or are not current, the Group will use its own internal ratings for the securities.
For further information on the way in which Barclays measures the credit quality of its loan portfolios, refer to page 404.
Overview
As at 31 December 2013, the proportion of the Group’s assets classified as strong remains flat at 83% (2012: 83%) of total assets exposed to
credit risk.
Traded assets remain mostly investment grade within the strong category, with counterparties to 95% (2012: 94%) of total derivative financial
instruments, and issuers of 95% (2012: 93%) of debt securities held for trading and 96% (2012: 94%) of debt securities held available for sale
being investment grade. The credit quality of counterparties to reverse repurchase agreements held at amortised cost remained broadly stable at
76% (2012: 73%). The credit risk of these assets is significantly reduced due to the high levels of collateralisation held.
In the loan portfolios, 85% of home loans (2012: 82%) to customers are measured as strong, The increase in the period reflects the acquisition
of the largely strong credit quality portfolio in Barclays Direct during the year and improvements in the UK portfolio. The majority of credit card,
unsecured and other retail lending remained satisfactory, reflecting the unsecured nature of a significant proportion of the balance, comprising
71% of the total (2012: 69%). The credit quality profile of the Group’s wholesale lending improved with counterparties rated strong increasing to
69% (2012: 66 %), primarily due to increases in settlement and collateral balances which are generally rated strong in the Investment Bank.
Further analysis of debt securities by issuer and issuer type is presented on page 178
Further information on netting and collateral arrangements on derivatives financial instruments is presented on pages 179 and 180
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