Annual Report & Accounts 2009 - Anglo Irish Bank

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Business review continued Analysis of customer lending¹ - €bn 08 Held for sale % Loans and advances to customers % Total % Ireland 26.8 75% 17.2 47% 44.0 61% UK 6.8 19% 12.0 33% 18.8 26% US 2.0 6% 7.3 20% 9.3 13% Total 35.6 100% 36.5 100% 72.1 100% Impairment provisions - balance sheet (10.1) (4.9) (15.0) Customer lending net of impairment 25.5 31.6 57.1 Provisions as a % of loan balances 28% 13% 21% Total held for sale assets (loans expected to transfer to NAMA) can be broken down as follows; €26.8 billion relates to Ireland representing 61% of total Irish lending, €6.8 billion relates to the UK representing 36% of total UK lending and €2.0 billion relates to the US representing 22% of total US lending. Of the total gross held for sale assets €16.3 billion are land and development loans, which amounts to 94% of the Group’s land and development exposure with a further €19.3 billion of associated lending. Customer lending The Bank’s lending focus during the period under review has been to work with clients to de-risk the Bank‘s exposure, the ongoing monitoring of asset quality and preparation for the transfer of assets to NAMA. Customer lending balances by division 1 - €bn 31 December 2009 % 30 September 2008 2 % Ireland 44.0 61% 42.6 60% UK 18.8 26% 19.2 27% US 9.3 13% 9.3 13% Total 72.1 100% 71.1 100% During the period new lending remained low bringing total customer loans pre-impairment to €72.1 billion. The Bank’s Ireland division accounts for 61% of all lending with 26% and 13% in the UK and US respectively. Loan balances include €14.8 billion to the Bank’s top 20 regulatory customer groups at the end of December 2009 (30 September 2008: €13.9 billion). Each of these groups consists of a number of connected entities and the balances represent multiple individual loans secured by diverse portfolios of assets and multiple contracted cash flows. During 2009 the Bank entered into a Subscription Agreement with the Irish Government, which in line with EC guidance requires that all new lending is solely to the Bank’s existing customer base, confined to amounts which were previously committed or approved to protect asset quality and is aimed at reducing overall risk to the Bank. Included in lending balances is an amount of €1.2 billion of interest capitalised during the period. The Bank’s Credit Policy has recently been revised to significantly restrict interest roll-up facilities going forward. Interest on loans and advances to customers includes margin interest and arrangement fees amortised over the expected lives of the related loans and has reduced materially during the period reflecting the increase in the portion of the loan book transferring to impaired loans.
Divisional lending balances by sector 1 - €bn Lending asset quality Grading analysis - €bn Investment, Business Banking & Other Held for sale % Commercial Development Loans and advances to customers % Total % Anglo Irish Bank Annual Report & Accounts 2009 Residential Development Total Held for sale 19.3 8.4 7.9 35.6 Loans and advances to customers Ireland 16.8 0.2 0.2 17.2 UK 11.7 0.1 0.2 12.0 US 7.0 0.2 0.1 7.3 35.5 0.5 0.5 36.5 Total 54.8 8.9 8.4 72.1 Investment, business banking and other lending across the Group totals €54.8 billion and comprises investment property lending across all sectors including retail, office, leisure and industrial, together with business lending to the SME and corporate sector and lending for personal investment. Post NAMA it is anticipated that this type of lending will represent 97% of customer loans. A detailed geographic and sectoral analysis of the post NAMA loan book is contained in note 51 to the Annual Report. 94% of the Group’s total development lending of €17.3 billion is scheduled to transfer to NAMA. The remaining balances consist of smaller relationships (less than €5 million) and relationships where development exposure represents a low percentage of the total client exposure. Impairment provisions on the balance sheet held against development loans total €5.9 billion or 34% of loan balances and 80% of this portfolio is impaired at 31 December 2009. At 31 December 2009 committed lending work in progress (‘WIP’) totalled €1.9 billion (30 September 2008: €6.3 billion). The substantial reduction in the period reflects the conditions of the Subscription Agreement, the re-evaluation by both clients and the Bank of previously approved projects due to the changed economic environment, and the expiry of previously approved facilities. 30 September 2008 2 Good quality 5.2 15% 16.3 45% 21.5 30% 59.9 Satisfactory quality 0.4 1% 0.7 2% 1.1 2% 6.1 Lower quality but not past due or impaired 1.0 3% 5.2 14% 6.2 8% 2.6 Total neither past due or impaired 6.6 19% 22.2 61% 28.8 40% 68.6 Past due but not impaired 3.9 11% 4.8 13% 8.7 12% 1.6 Impaired loans 25.1 70% 9.5 26% 34.6 48% 0.9 35.6 100% 36.5 100% 72.1 100% 71.1 Provisions for impairment (10.1) (4.9) (15.0) (0.9) Total 25.5 31.6 57.1 70.2 09 9
Page 1 and 2: Annual Report & Accounts 2009
Page 3 and 4: Contents Page Chairman’s statemen
Page 5 and 6: Legacy matters The Bank is continui
Page 7 and 8: Jim Brydie was appointed Head of Gr
Page 9: Business review This business revie
Page 13 and 14: holdings, reduced investment cash f
Page 15 and 16: 30 September 2008. Average total cu
Page 17 and 18: Income statement - treasury impairm
Page 19 and 20: to acquire these assets they are in
Page 21 and 22: Board of Directors Donal O’Connor
Page 23 and 24: In keeping with our environmental p
Page 25 and 26: Principal risks and uncertainties T
Page 27 and 28: Credit risk Credit risk is the risk
Page 30 and 31: Report of the Directors The Directo
Page 32 and 33: Corporate governance statement On 1
Page 34 and 35: Corporate governance statement cont
Page 36 and 37: Independent Auditors' report to the
Page 38 and 39: Consolidated income statement For t
Page 40 and 41: Consolidated statement of financial
Page 42 and 43: Consolidated statement of changes i
Page 44 and 45: Statement of cash flows For the 15
Page 46 and 47: Notes to the financial statements I
Page 48 and 49: Notes to the financial statements c
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Notes to the financial statements c
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Supplementary information Consolida
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www.angloirishbank.com Anglo Irish
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