IBRC annual report for 2011 - Irish Bank Resolution Corporation ...

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Notes to the financial statements continued50. Risk management continuedCredit risk continuedLending asset qualityCredit risk arises primarily on loans and advances to customers and loans classified as held for sale. At 31 December 2011 loansand advances to customers were €28,028m (2010: €33,941m) before provisions for impairment of €10,339m (2010: €9,577m)and loans classified as held for sale were €365m (2010: €2,188m) before provisions for impairment of €103m (2010: €565m).The Group monitors lending asset quality, including on loans classified as held for sale, on an ongoing basis using the ratingcategories outlined below. These ratings provide a common and consistent framework for aggregating and comparingexposures across all the commercial and residential mortgage lending portfolios.Good qualityGood quality ratings apply to exposures that are performing as expected and are of sound financial standing. These exposuresare considered low to moderate risk.Satisfactory qualityThis rating applies to exposures that continue to perform satisfactorily, but are subject to closer monitoring.Lower quality but not past due or impairedThis rating applies to exposures that require increased management attention to prevent any deterioration in asset quality. Noevidence of specific impairment exists.Past due but not impairedThese are loans and receivables where contractual interest or principal payments are one day or more past due. As at the endof the reporting period there is no objective evidence of impairment due to the level of collateral and/or personal recourseavailable to the Group.Impaired loansLoans are classified as impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment asa 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 valueand can be reliably measured.112
Irish Bank Resolution Corporation LimitedAnnual Report & Accounts 2011Loans and advances to customersAsset quality - profile of loans and advances to customersThe Group2011Business Residential OtherCommercial Residential Banking Mortgages Lending Total€m €m €m €m €m €mGood qualitySatisfactory qualityLower quality but not past dueor impairedTotal neither past dueor impairedPast due but not impairedImpaired loansProvisions for impairmentLess:Lending to policyholders in respectof investment contracts (note 40)Total2,751 186 344 637 479 4,3977 8 72 150 3 2402,968 50 385 38 169 3,6105,726 244 801 825 651 8,2471,916 382 165 245 315 3,02311,869 899 2,174 803 1,737 17,48219,511 1,525 3,140 1,873 2,703 28,752(5,960) (647) (1,872) (496) (1,364) (10,339)13,551 878 1,268 1,377 1,339 18,413(724)17,689Provisions for impairment on loansThe Groupand advances to customers2011Business Residential OtherCommercial Residential Banking Mortgages Lending Total€m €m €m €m €m €mAt beginning of year 5,702 692 1,865 - 1,318 9,577Acquired under the INBSTransfer Order 164 50 - 421 32 667Charge against profits 1,125 100 169 80 36 1,510Write-offs (169) (23) (159) - - (351)Recoveries 1 - 5 - - 6Unwind of discount (142) (12) (14) (9) (10) (187)Exchange movements 21 (16) 28 - 22 55Net transfers (to)/from assetsclassified as held for sale andsectoral reclassification (742) (144) (22) 4 (34) (938)At end of year 5,960 647 1,872 496 1,364 10,339Specific 5,532 608 1,777 361 1,288 9,566Collective 428 39 95 135 76 773Total 5,960 647 1,872 496 1,364 10,339The charge against profits includes collective provisions for impairment analysed on a portfolio basis.Residential lending comprises residential development and residential investment, and incorporates large value developmentand investment transactions. Residential mortgages consists of the portfolio of residential loans transferred to the Bank on1 July 2011 under the INBS Transfer Order and incorporates owner occupier and buy to let mortgages. Other lending includes€18m of loans advanced for the purchase of the borrower's principal private residence.113
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Irish Bank Resolution Corporation L
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ContentsIrish Bank Resolution Corpo
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Chairman’s statementIrish Bank Re
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Group Chief Executive’s reviewIri
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Group Chief Executive’s review co
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Business review continuedIrish Bank
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Board of DirectorsIrish Bank Resolu
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Corporate Responsibility continuedI
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Principal risks and uncertainties c
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Principal risks and uncertainties c
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Report of the DirectorsIrish Bank R
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Corporate governance statementIrish
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Corporate governance statement cont
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Corporate governance statement cont
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OpinionIn our opinion:• the Group
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Consolidated statement of comprehen
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Bank statement of financial positio
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