Annual report 2009 - Santander

155Analysis of the mortgage portfolio of individual customersOf note, within standardised risks because of their importance inthe Group’s total lending in Spain, is the portfolio of mortgageloans to individuals.This portfolio has been affected by the gradual downturn in thereal economy, which caused demand for loans to drop in 2008and in 2009. The following charts, however, show that in theretail networks in Spain the number of mortgage loan requestsshowed signs of picking up in the fourth quarter of 2009. In thiscontext, Santander continued to apply its established admissioncriteria and policies (the authorisation rate remained at averagelevels of around 70%).Spain: Quarterly evolution of number of mortgage requestsby individualsPortfolio of individuals: rate of final authorisationNumber of requestsAuthorisation rate33,00031,00029,00027,00025,00023,00021,00019,00017,00015,000Excluding novations.1Q 09 2Q 09 3Q 09 4Q 0975%70%65%60%55%50%The measures taken in admission improved the credit qualityand maintained the authorisation rates. For new loans between2007 and 2009, the quarterly maturity of vintages was asfollows.Santander Spain: PortfolioEvolution of the default rate by the number of operations by vintages5.0%4.5%4.0%3.5%3.0%2.5%2.0%1.5%1.0%0.5%0.0%2007-1 2007-2 2007-3 2007-4 2008-1 2008-22008-3 2008-4 2009-1 2009-2 2009-3 2009-40 5 10 15 20 25 30 35 40At the end of 2009, the non-performing loan ratio of theGroup’s residential mortgage portfolio in Spain was 2.46%,below the average rates in the Spanish financial system.In the face of the deterioration in the scenario, the medium lowrisk profile of this portfolio enables one to estimate an impact atGroup level and a low estimated final loss, thanks to realguarantees. The portfolio, and thus its risk profile, ischaracterised by a predominance of first homes, an averageloan-to-value (LTV) of 52% (with values updated on the basis ofthe house price index of the Housing Ministry) and anaffordability rate in admission of 31%.Residential mortgage loans account for 31.8% of the total creditrisk of Santander Retail Banking and Banesto, with a LTV below80% for 85% of the portfolio of residential mortgages.Santander Spain: PortfolioMillion eurosDec. 09Portfolio %Residential mortgages 68,601 31.8First home 64,403 93.9Second home and others 4,198 6.1Risk management Annual Report 2009