Annual Report & Accounts 2009 - Anglo Irish Bank

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Notes to the financial statements continued 27. Loans and advances to customers 88 Amounts receivable under finance leases (note 28) Amounts receivable under hire purchase contracts (note 28) Other loans and advances to customers Provisions for impairment Amounts include: Due from Group undertakings 31 December 30 September 31 December 30 September 2009 2008 2009 2008 €m €m €m €m 51 72 51 59 16 37 13 21 35,631 72,956 39,952 77,963 35,698 73,065 40,016 78,043 (4,846) (914) (4,753) (732) 30,852 72,151 35,263 77,311 9,087 11,961 Provisions for impairment on The Group The Bank loans and advances to customers 31 December 30 September 31 December 30 September 2009 2008 2009 2008 €m €m €m €m At beginning of period Charge against profits - specific (note 13) Charge against profits - collective (note 13) Write-offs Unwind of discount Exchange movements Transfers to assets classified as held for sale (note 23) At end of period Specific Collective The Group The Bank The Group's loans and advances to customers at 31 December 2009 are stated following the reclassification of loans and related provisions to assets classified as held for sale of €35,602m and €10,120m respectively (note 23). The Bank's loans and advances to customers at 31 December 2009 are stated following the reclassification of loans and related provisions to assets classified as held for sale of €30,552m and €9,134m respectively (note 23). The Bank's loans and advances to customers include €771m (30 September 2008: €1,006m) lent to fund assets held in respect of liabilities to customers under investment contracts (note 40). The Group's loans and advances to customers include loans to equity-accounted joint venture interests of €1,045m (30 September 2008: €923m) and loans of €122m (30 September 2008: €99m) to joint venture interests held in respect of liabilities to customers under investment contracts. Total Impaired loans (excludes loans classified as held for sale) 914 295 732 209 13,861 224 12,889 147 583 500 573 416 (83) (67) (77) (23) (236) (13) (199) (7) (73) (25) (31) (10) (10,120) - (9,134) - 4,846 914 4,753 732 3,647 272 3,649 186 1,199 642 1,104 546 4,846 914 4,753 732 9,511 957 8,851 684 The collective provision of €1,199m (30 September 2008: €642m) has been calculated based on total performing customer loan balances, including those classified as held for sale.
Loans assigned as collateral Loans, including those classified as held for sale, of €29,691m (30 September 2008: €11,758m) have been assigned as collateral. Loans assigned include the following: (a) (b) (c) (d) Loans of €7,594m (30 September 2008: €6,295m) which have been transferred to Anglo Irish Covered Bonds LLP, a Limited Liability Partnership which is consolidated by the Group. The transferred loans secure bonds issued under the Bank's €10bn (30 September 2008: €5bn) UK covered bond programme. Bonds issued externally under this programme are included within debt securities in issue (note 39). Loans of €3,162m (30 September 2008: €5,463m) which have been assigned as collateral under commercial mortgage backed security ('CMBS') programmes. Loans of €6,445m (30 September 2008: €nil) which are included in the Anglo Irish Mortgage Bank ('AIMB') cover assets pool as collateral for €4.3bn of bonds issued under its €10bn commercial mortgage asset covered securities programme. AIMB, a wholly owned subsidiary of the Bank, was incorporated on 10 October 2008, and obtained its Irish banking licence on 10 December 2008. Its principal activity is the issuance of commercial mortgage asset covered securities, in accordance with the Asset Covered Securities Acts, 2001 and 2007. AIMB is regulated by the Financial Regulator and is a designated commercial mortgage credit institution. Loans with a carrying value of €12,490m (30 September 2008: €nil) which have been assigned as collateral under a Master Loan Repurchase Agreement with the Central Bank and Financial Services Authority of Ireland (note 37). All of the loans above remain in the Group's and the Bank's statements of financial position as substantially all of the risks and rewards relating to them are retained. Asset quality The Group monitors lending asset quality on an ongoing basis using the rating categories outlined below. These ratings provide a common and consistent framework for aggregating and comparing exposures across all lending portfolios. Good quality Both good and high quality loans are managed similarly from a risk management perspective and consequently have been aggregated in the current reporting period. Good quality ratings apply to exposures that are performing as expected and are of sound financial standing. These exposures are considered low to moderate risk. Satisfactory quality This rating applies to exposures that continue to perform satisfactorily, but are subject to closer monitoring. Lower quality but not past due or impaired This rating applies to exposures that require increased management attention to prevent any deterioration in asset quality. No evidence of specific impairment exists. Past due but not impaired These are loans and receivables where contractual interest or principal payments are one day or more past due. As at the end of the reporting period there is no objective evidence of impairment due to the level of collateral and/or personal recourse available to the Group. Impaired loans Loans are classified as impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more loss events that occurred after the initial recognition of the loan. The loan is impaired if that loss event (or events) has had an impact such that the estimated present value of future cash flows is less than the current carrying value and can be reliably measured. Anglo Irish Bank Annual Report & Accounts 2009 89
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Annual Report & Accounts 2009
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Contents Page Chairman’s statemen
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Legacy matters The Bank is continui
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Jim Brydie was appointed Head of Gr
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Business review This business revie
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Divisional lending balances by sect
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holdings, reduced investment cash f
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30 September 2008. Average total cu
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Income statement - treasury impairm
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to acquire these assets they are in
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Board of Directors Donal O’Connor
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In keeping with our environmental p
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Principal risks and uncertainties T
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Credit risk Credit risk is the risk
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Report of the Directors The Directo
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Corporate governance statement On 1
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Corporate governance statement cont
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Independent Auditors' report to the
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Consolidated income statement For t
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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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