HSBC 2012 Annual Report Download - page 163

161
Overview Operating & Financial Review Corporate Governance Financial Statements Shareholder Information
Gross loan portfolio of HSBC Finance real estate secured balances
(Unaudited)
Re-aged13
Modified
and re-aged Modified
Total re-
negotiated
loans
Total non-
renegotiated
loans
Total
gross
loans
Total
impair-
ment
allowances
Impair-
ment
allowances/
gross loans
US$m US$m US$m US$m US$m US$m US$m %
31 December 2012 ........ 9,640 11,660 1,121 22,421 16,261 38,743 4,481 12
31 December 2011 ......... 10,265 12,829 1,494 24,588 19,540 44,128 5,088 12
For footnote, see page 249.
Movement in HSBC Finance renegotiated real estate balances
(Unaudited)
2012
US$m
At 1 January .............................................................................................................................................................................. 24,588
Additions ................................................................................................................................................................................... 1,221
Payments ................................................................................................................................................................................... (1,133)
Write-offs .................................................................................................................................................................................. (1,796)
Transfer to ‘Assets held for sale’ and ‘Other assets’ ............................................................................................................... (459)
At 31 December ........................................................................................................................................................................ 22,421
Number of renegotiated real estate secured accounts remaining in HSBC Finance’s portfolio
(Unaudited)
Number of renegotiated loans (000s)
Re-aged
Modified
and re-aged Modified Total
Total
number of
loans (000s)
31 December 2012 ........................................................... 117 107 11 235 427
31 December 2011 ............................................................ 121 112 14 246 469
During 2012, the aggregate number of
renegotiated loans reduced due to the run-off of the
portfolio. Within the constraints of our Group credit
policy, HSBC Finance’s policies allow for multiple
renegotiations under certain circumstances, and a
significant number of accounts received a second (or
further) renegotiation during the year which does not
appear in the statistics tabulated above because they
present a loan as an addition to the volume of
renegotiated loans on its first renegotiation only.
At 31 December 2012, renegotiated loans were 58%
(2011: 56%) of the total portfolio of HSBC
Finance’s real estate secured accounts.
Corporate and commercial forbearance
(Unaudited)
For the current policies and procedures
regarding forbearance in the corporate and
commercial sector, see the Appendix to Risk
on page 257.
Renegotiated loan balances in the corporate and
commercial sector decreased by US$1.8bn. The
majority of the decrease was due to falling
renegotiated loan balances in the commercial real
estate and other property-related sector in 2012,
which fell by US$1.3bn. This was primarily in
Europe although the commercial real estate sector,
particularly in the UK, continued to experience
weaker property values, with fewer financial
institutions financing commercial real estate lending,
renegotiated loan balances fell as refinements in
forbearance identification procedures reduced the
renegotiated loan balances in UK commercial real
estate and other property-related lending. Excluding
the change in basis of reporting renegotiated loans,
total renegotiated loans in the commercial real estate
and other property-related sector remained broadly
unchanged.
Within the commercial real estate and other
property-related loans, the balances classified as
‘impaired’ declined marginally compared with 2011.
Balances classified as ‘past due but not impaired’
declined by US$112m, mainly in the Middle East
and North Africa relating to a small number of
exposures in the UAE. Balances classified as
‘neither past due nor impaired’ declined by 39%,
mainly in Europe reflecting the reduction in balances
in the commercial real estate sector described above.
The commercial real estate mid-market
sector continued to experience higher levels of
renegotiation activity than larger corporates, where
borrowers remained generally better capitalised
with access to wider funding market opportunities.
When considering acceptable restructuring terms
for commercial real estate loans in Europe, we take
into account the ability of the customer to service