Annual report and accounts 2009 (PDF) - Coventry Building Society

40. FINANCIAL INSTRUMENTS (continued)Credit risk (continued)The Group adopts a responsible approach to lending. The credit quality of borrowers is assessed before loans are approved toensure that the servicing of the loan falls within the customer’s capacity to repay. This assessment process utilises automatedcredit scoring systems for decisions on small advances and multiple external ratings methodologies to inform the decision onindividual large values. Actual retail exposures against limits are monitored monthly; non-retail exposures are monitored daily.Maximum credit risk exposure at 31 December 2009 approximates to the carrying value for all assets and loan commitments.Of the £14,074.7 million ‘loans and advances to customers’, £13,991.3 million (99.4%) (2008 - 99.2%) is fully secured onresidential property and land. Only £83.4 million (0.6%) (2008 - 0.8%) is therefore unsecured and this is comprised of personalloans.The average current loan to value ratio of the Group’s loans and advances to customers is 51% (2008 - 53%).Outstanding balances for customers classed as ‘credit impaired’ represent only 0.48% (2008 - 0.58%) of the Group’s loans andadvances to customers.The Group’s number of customers in arrears as a percentage of loans and advances to customers compared to the Council ofMortgage Lenders’ (CML) data is shown below:2009 2008Group CML* Group CML% % % %Greater than three months 1.18 2.38 0.87 1.88Greater than six months 0.55 1.40 0.30 0.87Greater than one year 0.12 0.60 0.05 0.25In possession 0.06 0.14 0.11 0.21*Council of Mortgage Lenders’ data (as at 31 December 2009)The table below provides further information by payment due status:2009 2008£m % £m %Not impairedNeither past due nor impaired 13,376.7 95.04 12,581.1 95.51Past due up to three months but not impaired 484.5 3.44 443.5 3.37ImpairedPast due over three to six months 104.4 0.74 83.2 0.63Past due over six months or in litigation 96.6 0.69 45.4 0.34In possession 12.5 0.09 19.6 0.15The Group has no exposure to commercial property lending.14,074.7 100.00 13,172.8 100.00£12.5 million (2008 - £16.3 million) of collateral is held against loan repossession cases which are classified in ‘loans andadvances to customers’ in the balance sheet.67