Barclays 2013 Annual Report Download - page 172

Risk review
Credit risk continued
Recovery coverage increased significantly for UK cards, while the proportion of recovery balances was lower. This was driven by increased
debt sale activity which also resulted in a lower recovery expectation across the remaining recovery book, thereby resulting in a higher
impairment requirement.
Significant improvement in US cards arrears rates was driven by a targeted strategy focused on growth in high quality customers and
low-risk Partnerships.
In the UK personal loans arrears rates reduced due to the improved performance of new bookings following changes to credit criteria.
In South Africa cards, delinquency and charge-off rates deterioration reflected the change in product mix following the acquisition of the Edcon
portfolio in late 2012, maturing vintages and portfolio seasoning. Charge-off rates excluding Edcon would be 4.9% for 2013 (2012: 4.2%).
The Italy salary advance loans portfolio was closed to new business in August 2012, and the increasing proportion of outstanding balances in
recovery primarily reflects the reduction in loans and advances.
Iberia cards portfolios showed improved arrears rates, notably during the second half of 2013 reflecting the tightening of credit risk strategies
through the recessionary period, combined with the non-recurrence of one-off events in 2012 which included challenges in migrating to a new
card management system and enhancing some collections tools.
Re-age activity
Re-age is applicable only to revolving products where a minimum due payment is required. Re-age refers to returning of a delinquent account to
up-to-date status without collecting the full arrears (principal, interest and fees). The changes in timing of cash flows following re-aging do not
result in any additional cost to Barclays. The following are the principal portfolios in which re-age activity occurs.
Principal portfolios
Re-aged balances in total
outstanding, excluding
recoveries balances
Re-aged balances as
proportion of total
outstanding, excluding
recoveries balances
30 day arrears of re-aged
balances at 12 months
on booka
As at 31 December 2013 2013
£m
2012
£m
2013
£m
2012
£m
2013
£m
2012
£m
UK cards 209 232 1.3 1.6 14.0 17.2
US cards 88 96 0.9 1.1 12.8 13.8
Re-aged balances as a percentage of total outstanding, excluding recoveries balances decreased in the UK cards portfolios. The decrease in US
cards has been driven by improved ability of customers to self cure from a position of delinquency. The re-age activity in South Africa and Europe
RBB cards portfolios are not considered to be material.
For further detail on policy relating to the re-aging of loans, please refer to the Risk Management section on page 402.
Other secured retail lending
The principal portfolio listed below accounts for 48% (2012: 50%) of total other secured retail lending loans in the Group’s retail portfolios.
The balances have reduced reflecting foreign currency movements.
Principal portfolios
South Africa auto loans
Gross
loans and
advances
£m
30 day
arrears
£m
90 day
arrears
£m
Annualised
gross
charge-off
ratesb
£m
Recoveries
proportion of
outstanding
balances
£m
Recoveries
impairment
coverage
ratio
£m
As at 31 December 2013 2,546 1.6 0.4 3.2 1.9 51.6
As at 31 December 2012 3,081 2.0 0.7 3.6 3.0 57.6
The reduction in arrears and charge-off rates in South Africa is driven by improvements in collections capabilities and stable performance of the
existing portfolio.
Notes
a Defined as the yearly average of 30+ delinquency at 12 months on book (maturing in 2012 and 2013) for accounts re-aged during 2011 and 2012.
b Gross charge-off rates are calculated over average monthly outstanding balances through the year.
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170 Barclays PLC Annual Report 2013