HSBC 2015 Annual Report Download - page 131

HSBC HOLDINGS PLC
129
Strategic Report Financial Review Corporate Governance Financial Statements Shareholder Information
Europe Asia MENA
North
America
Latin
America Total
$m $m $m $m $m $m
Impaired loans at 1 January 2014 13,228 1,623 2,285 15,123 4,244 36,503
–
personal 2,938 526 317 13,669 1,348 18,798
–
corporate and commercial 9,714 1,082 1,765 1,427 2,889 16,877
–
financial 576 15 203 27 7 828
Classified as impaired during the year 3,367 1,970 346 4,724 3,342 13,749
–
personal 1,168 857 193 4,360 1,958 8,536
–
corporate and commercial 2,166 1,113 153 354 1,383 5,169
–
financial 33
–
–
10 1 44
Transferred from impaired to unimpaired during
the year (1,661) (230) (320) (2,609) (730) (5,550)
–
personal (282) (184) (178) (2,551) (364) (3,559)
–
corporate and commercial (1,319) (46) (53) (57) (366) (1,841)
–
financial (60)
–
(89) (1)
–
(150)
Amounts written off (2,037) (617) (111) (1,369) (2,048) (6,182)
–
personal (631) (470) (77) (1,007) (1,371) (3,556)
–
corporate and commercial (1,201) (147) (29) (356) (673) (2,406)
–
financial (205)
–
(5) (6) (4) (220)
Net repayments and other (2,655) (698) (219) (4,175) (1,443) (9,190)
–
personal (649) (238) (13) (3,645) (514) (5,059)
–
corporate and commercial (1,975) (457) (140) (506) (926) (4,004)
–
financial (31) (3) (66) (24) (3) (127)
Impaired loans at 31 December 2014 10,242 2,048 1,981 11,694 3,365 29,330
–
personal 2,544 491 242 10,826 1,057 15,160
–
corporate and commercial 7,385 1,545 1,696 862 2,307 13,795
–
financial 313 12 43 6 1 375
%%%% % %
Impaired loans as a percentage of gross loans 2.3 0.5 4.8 8.4 6.1 2.7
–
personal 1.4 0.4 3.7 16.6 7.8 3.9
–
corporate and commercial 3.5 0.7 8.2 1.5 7.5 2.5
–
financial 0.7 0.0 0.3 0.0 0.0 0.2
At 31 December 2014, our Brazilian impaired loans were
$1.4bn in corporate and commercial and $0.8bn in
personal.
Excluding the Brazilian reclassification to ‘Assets held for
sale’, corporate and commercial impaired loans decreased
$0.4bn including the favourable effects of a $0.8bn foreign
exchange reduction. In personal, the continued run-off of
the US CML portfolio reduced collectively assessed impaired
loan balances by a further $2.7bn. ‘Net repayments and
other’ included $2.1bn of CML portfolio assets that were
reclassified as held for sale or sold during the year. Whilst
there was a reduction in total personal impaired loans,
there was a marginal increase in the UK resulting from
improved identification of impaired residential mortgages.
Renegotiated loans and forbearance
The contractual terms of a loan may be modified for
a number of reasons, including changes in market
conditions, customer retention and other factors not
related to the current or potential credit deterioration of
a customer. ‘Forbearance’ describes concessions made on
the contractual terms of a loan in response to an obligor’s
financial difficulties. We classify and report loans on which
concessions have been granted under conditions of credit
distress as ‘renegotiated loans’ when their contractual
payment terms have been modified because we have
significant concerns about the borrowers’ ability to meet
contractual payments when due. On renegotiation, where
the existing agreement is cancelled and a new agreement
is made on substantially different terms, or if the terms
of an existing agreement are modified such that the
renegotiated loan is substantially a different financial
instrument, the loan would be derecognised and
recognised as a new loan for accounting purposes.
However, the newly recognised financial asset will retain
the renegotiated loan classification. Concessions on loans
made to customers which do not affect the payment
structure or basis of repayment, such as waivers of
financial or security covenants, do not directly provide
concessionary relief to customers in terms of their ability
to service obligations as they fall due and are therefore
not included in this classification.
The most significant portfolio of renegotiated loans
remained in North America, substantially all of which
were retail loans held by HSBC Finance Corporation
(‘HSBC Finance’).
The following tables show the gross carrying amounts of
the Group’s holdings of renegotiated loans and advances
to customers by industry sector, geography, credit quality
classification and by arrangement type.