AI assistant
SUNCORP GROUP LIMITED — Interim / Quarterly Report 2012
Nov 8, 2011
65879_rns_2011-11-08_c9780094-aedf-4a2d-944f-14a233d78f4e.pdf
Interim / Quarterly Report
Open in viewerOpens in your device viewer
ASX announcement
==> picture [152 x 53] intentionally omitted <==
9 November 2011
SUNCORP BANK APS330 UPDATE
Suncorp Bank today provided an update on asset balances, credit quality and capital as at 30 September 2011 as required under Australian Prudential Standard 330.
Credit quality remained stable despite the impacts of weather events in early 2011 and volatile investment markets.
Market conditions and consumer de-leveraging resulted in modest mortgage growth while total lending was flat for the quarter.
Suncorp Bank CEO David Foster said: “The system has been sluggish in the first quarter but renewed marketing activity in August has resulted in significantly improved mortgage pipeline growth in October.”
The deposit to loan ratio of 69.5% remains at the top end of the Bank’s 60% to 70% target range.
In the Core Bank impaired assets were $148 million, remaining stable over the quarter. The impairment charge of $7 million for the quarter represents 13 basis points or 0.13% of risk weighted assets (annualised).
Non-performing loans have reduced each month in the first quarter of the new financial year.
The quarterly result included a $20 million write back of the $25 million flood provision put in place in December 2010. Arrears in flood impacted areas have not been higher than those in other areas. The Bank has benefitted from the high levels of Suncorp flood insurance cover across its mortgage portfolio.
The non-core portfolio continues to run-off ahead of initial expectations. The portfolio reduced from $7.7 billion to $6.8 billion over the quarter.
In the Non-core Bank, impairment losses continued to reduce in the September quarter to $46 million. Impaired assets reduced 2.3% to $2,184 million.
Despite a dividend payment to the non-operating holding company and regulatory adjustments, Bank capital remains strong at 13.16% of risk weighted assets. The core equity tier 1 capital ratio is 7.08%.
Ends
For more information contact:
Media: Michelle Barry, (07) 3835 5581 Analysts/Investors: Mark Ley, (07) 3135 3991
1
Suncorp Group Ltd - ABN 66 145 290 124 - GPO Box 1453, Brisbane QLD 4001 www.suncorpgroup.com.au
ABN 66 145 290 124 Suncorp Group Limited
Suncorp Bank APS330 The quarter ended 30 September 2011
Release date: 9 November 2011
==> picture [183 x 56] intentionally omitted <==
APS330 The quarter ended 30 September 2011
Table of Contents
Basis of preparation .........................................................................................................................................................................2 Core Bank .........................................................................................................................................................................................3 Loans, advances and other receivables ........................................................................................................................................3 Impairment losses on loans and advances ....................................................................................................................................5 Impaired asset balances ...............................................................................................................................................................7 Provision for impairment ...............................................................................................................................................................8 Non-core Bank ..................................................................................................................................................................................9 Loans, advances and other receivables ........................................................................................................................................9 Impairment losses on loans and advances .................................................................................................................................. 10 Impaired asset balances ............................................................................................................................................................. 11 Provision for impairment ............................................................................................................................................................. 12 Appendix 1 – APS 330 tables......................................................................................................................................................... 13 Table 16 On balance sheet risk weighted assets ......................................................................................................................... 13 Table 17A Credit risk by gross credit exposure – outstanding as at 30 September 2011 ............................................................. 14 Table 17B Credit risk by portfolio ................................................................................................................................................ 16 Table 17C General reserves for credit losses ............................................................................................................................ 16 Appendix 2 – Consolidated Bank .................................................................................................................................................. 17 Impairment losses on loans and advances .................................................................................................................................. 17 Impaired assets balances ........................................................................................................................................................... 17 Provision for impairment ............................................................................................................................................................. 18 Appendix 3– Definitions ................................................................................................................................................................. 19
Basis of preparation
This document has been prepared by Suncorp-Metway Limited (SML), an authorised deposit-taking institution and a wholly owned subsidiary of Suncorp Group Limited. It is required to meet the disclosure obligations set down under the Australian Prudential Regulation Authority (APRA) Australian Prudential Standard (APS) 330 Capital Adequacy: Public Disclosure of Prudential information.
The Core and Non-core Bank are presented separately in this report, with consolidated tables available in the appendices. The Core and Non-core banking tables represent an indicative view of relative performance. Whilst every effort has been made to ensure that the tables are as accurate as possible, necessary assumptions around the allocation of funding and expenses have been made.
This disclosure was prepared as at 30 September 2011.
Registered Office Level 18, 36 Wickham Terrace Brisbane Queensland 4000 Telephone: (07) 3835 5769 www.suncorpgroup.com.au
Investor Relations Steve Johnston EGM Group Corporate Affairs & Investor Relations Telephone: (07) 3135 3988 [email protected]
2
Core Bank
The quarter ended 30 September 2011
APS330
Core Bank
Loans, advances and other receivables
| Core Bank Loans, advances and other receivables |
|||||
|---|---|---|---|---|---|
| SEP-11 | SEP-11 | ||||
| SEP-11 | JUN-11 | SEP-10 | vs JUN-11 | vs SEP-10 | |
| $M | $M | $M | % | % | |
| Housing loans | 27,451 | 27,014 | 24,826 | 1.6 | 10.6 |
| Securitised housing loans | 3,674 | 3,980 | 4,857 | (7.7) | (24.4) |
| Total housing loans | 31,125 | 30,994 | 29,683 | 0.4 | 4.9 |
| Consumer loans | 527 | 558 | 561 | (5.6) | (6.1) |
| Retail loans | 31,652 | 31,552 | 30,244 | 0.3 | 4.7 |
| Commercial (SME) | 4,536 | 4,560 | 4,311 | (0.5) | 5.2 |
| Agribusiness | 3,535 | 3,522 | 3,298 | 0.4 | 7.2 |
| Business loans | 8,071 | 8,082 | 7,609 | (0.1) | 6.1 |
| Total lending | 39,723 | 39,634 | 37,853 | 0.2 | 4.9 |
| Other receivables | 74 | 119 | 137 | (37.8) | (46.0) |
| Gross banking loans, advances and other receivables | 39,797 | 39,753 | 37,990 | 0.1 | 4.8 |
| Provision for impairment | (121) | (120) | (106) | 0.8 | 14.2 |
| Loans, advances and other receivables | 39,676 | 39,633 | 37,884 | 0.1 | 4.7 |
| Risk weighted assets | 21,378 | 21,136 | 19,225 | 1.1 | 11.2 |
Overview
The market conditions for credit growth remain challenging with clear evidence of consumer deleveraging and subdued business confidence in Suncorp’s key markets. Total lending was flat for the quarter. System growth continues to trend below the average for recent years.
The deposit to lending ratio of 69.5% remains at the upper end of the 60% to 70% target range. Credit quality of the Core Bank is showing signs of improvement with non-performing loans decreasing every month in the quarter.
In response to current market conditions, the Core Bank has strengthened its proposition in targeted market segments. It continues to drive growth outside of Queensland and has focussed efforts on improving the efficiency and effectiveness of it’s fulfilment activities. These actions have contributed to stronger pipeline growth towards the end of the quarter.
Given the improvement in the home lending pipeline the Core Bank is increasingly confident that growth will return to the target range of 1.0 to 1.3 times system in the second quarter.
3
APS330 The quarter ended 30 September 2011
Core Bank
Retail loans
Housing lending
Housing lending growth was flat in the first quarter, up 0.4% to $31.1 billion. There is evidence of consumer caution, evidenced by a decrease in the utilisation of credit facilities linked to home loans.
Lending in the Bank’s core Queensland market has been subdued as the state recovers from a series of major weather events which occurred in early in 2011. In addition, Suncorp has a traditional strength in sub-segments which have under-performed the broader market, for example, the first time buyer segment. Combined these pressures have resulted in below system growth during the first quarter (0.53 times system).
Historical mortgage growth v RBA system (6 month rolling)
==> picture [447 x 86] intentionally omitted <==
----- Start of picture text -----
10%
RBA system SUN
8%
6%
4%
2%
0%
----- End of picture text -----
Consumer lending
Consumers remain cautious in taking on new discretionary debt and consumer lending is down 5.6% over the quarter to $527 million. This is evident in the margin lending product which accounts for approximately one third of the total consumer lending portfolio and represented the majority of the contraction.
Business loans
Commercial (SME)
Growth was flat in Suncorp’s Commercial (SME) portfolio over the quarter. Market conditions remain challenging, with evidence of subdued business confidence in key market segments. The Core Bank continues to balance its appetite for growth against the need to maintain sound credit quality across the portfolio. The Bank has continued to focus efforts on delivering organic growth through its existing customer base across regional and metropolitan areas.
Agribusiness
Trading conditions in the Agribusiness portfolio remain positive. Flat growth in the first quarter is consistent with historical seasonal trends, whereby customers actively pay down debt after the financial year end. The performance over the twelve months to September 2011 reflects investment in the Suncorp Brand and stronger growth in the expanding operations outside Queensland. Growth is expected to continue as Agribusiness customers replant, restock and invest in equipment.
4
APS330
Core Bank
The quarter ended 30 September 2011
Impairment losses on loans and advances
| SEP-11 | SEP-11 | ||||
|---|---|---|---|---|---|
| SEP-11 | JUN-11 | MAR-11 | vs JUN-11 | vs MAR-11 | |
| $M | $M | $M | % | % | |
| Collective provision for impairment | (4) | (2) | - | 100.0 | n/a |
| Specific provision for impairment | 7 | 2 | 5 | 250.0 | 40.0 |
| Actual net write-offs | 4 | 3 | - | 33.3 | n/a |
| 7 | 3 | 5 | 133.3 | 40.0 | |
| Impairment losses to risk weighted assets(annualised) | 0.13% | 0.06% | 0.11% |
Impairment losses on loans and advances were $7 million. This represents 13 basis points of risk weighted assets on an annualised basis.
The September quarter included a one-off structural shift in the collective provisioning due to a methodology change for modelling provisioning requirements for non-individually rated exposures. This change reflects the continued enhancement program undertaken on credit risk modelling, and follows the changes implemented to individually rated exposures in the 2010 financial year. This impact comprised additional credit charges of $13 million for the quarter.
The September quarter also included a $20 million write back of the $25 million flood provision put in place in December 2010. Investigations have shown that arrears in flood impacted areas have not been higher than those in other areas. The remaining provision has been retained to cover a small number of individual, flood affected agribusiness exposures.
Excluding the one-off items noted above, the underlying impairment loss for the quarter was $14 million. The increase in underlying impairment losses related largely to higher provisions on a small number of Agribusiness loans with no systemic issues evident. The portfolio continues to perform within the Core Bank’s risk appetite.
5
APS330 The quarter ended 30 September 2011
Core Bank
Non-performing loans
Non-performing loans have reduced each month during the first quarter of the new financial year as conditions have normalised. Improvement has been most evident in the Retail Lending portfolio.
Core non-performing loans trends ($m)
==> picture [453 x 239] intentionally omitted <==
----- Start of picture text -----
600
500
400
250 299
230
167
182 161
300 165 175
174
126 114
62
200 130 75 48 58 65 66 63 76 87 93
100 197 179 175
145 153 142 135 150 146 148
108
0
Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11
Impaired assets > 90 days SME & Agribusiness > 90 days retail
----- End of picture text -----
Past due loans to gross loans
==> picture [460 x 127] intentionally omitted <==
----- Start of picture text -----
1.20%
Home lending (QLD) Total home lending
1.00%
0.96%
0.80%
0.60% 0.59% 0.73%
0.60% 0.64%
0.43% 0.35% 0.47%
0.40% 0.42%
0.29% 0.25%
0.20%
0.00%
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11
----- End of picture text -----
6
APS330
Core Bank
The quarter ended 30 September 2011
Impaired asset balances
| Impaired asset balances | |||||
|---|---|---|---|---|---|
| SEP-11 | SEP-11 | ||||
| SEP-11 | JUN-11 | MAR-11 | vs JUN-11 | vs MAR-11 | |
| $M | $M | $M | % | % | |
| Gross balances of individually impaired loans | |||||
| with specific provisions set aside | 135 | 136 | 169 | (0.7) | (20.1) |
| without specific provisions set aside | 13 | 10 | 6 | 30.0 | 116.7 |
| Gross impaired assets | 148 | 146 | 175 | 1.4 | (15.4) |
| Specific provision for impairment | (44) | (39) | (41) | 12.8 | 7.3 |
| Net impaired assets | 104 | 107 | 134 | (2.8) | (22.4) |
| Size of gross impaired assets | |||||
| Less than one million | 23 | 22 | 15 | 4.5 | 53.3 |
| Greater than one million but less than ten million | 94 | 87 | 104 | 8.0 | (9.6) |
| Greater than ten million | 31 | 37 | 56 | (16.2) | (44.6) |
| 148 | 146 | 175 | 1.4 | (15.4) | |
| Past due loans not shown as impaired assets | 323 | 386 | 326 | (16.3) | (0.9) |
| Gross non-performing loans | 471 | 532 | 501 | (11.5) | (6.0) |
| Interest income on impaired assets recognised in the | |||||
| contribution to profit | - | 1 | 1 | n/a | n/a |
| Analysis of movements in gross impaired assets | |||||
| Balance at the beginning of the period | 146 | 175 | 179 | (16.6) | (18.4) |
| Recognition of new impaired assets | 18 | 15 | 11 | 20.0 | 63.6 |
| Increases in previously recognised impaired assets | 1 | 6 | 2 | (83.3) | (50.0) |
| Impaired assets written off/sold during the period | - | (1) | (1) | n/a | n/a |
| Impaired assets which have been restated as performing assets | |||||
| or repaid | (17) | (49) | (16) | (65.3) | 6.3 |
| Balance at the end of theperiod | 148 | 146 | 175 | 1.4 | (15.4) |
Gross impaired asset balances have remained broadly stable over the quarter. Newly impaired assets were predominantly in the business lending portfolio. These additions were largely offset by existing impaired loans being progressively repaid.
7
APS330 The quarter ended 30 September 2011
Core Bank
Provision for impairment
| Provision for impairment | |||||
|---|---|---|---|---|---|
| SEP-11 | SEP-11 | ||||
| SEP-11 | JUN-11 | MAR-11 | vs JUN-11 | vs MAR-11 | |
| $M | $M | $M | % | % | |
| Collective provision | |||||
| Balance at the beginning of the period | 81 | 83 | 83 | (2.4) | (2.4) |
| Charge against contribution to profit | (4) | (2) | - | 100.0 | n/a |
| Balance at the end of the period | 77 | 81 | 83 | (4.9) | (7.2) |
| Specific provision | |||||
| Balance at the beginning of the period | 39 | 41 | 40 | (4.9) | (2.5) |
| Charge against impairment losses | 7 | 2 | 5 | 250.0 | 40.0 |
| Write-off of impaired assets | - | (1) | (1) | n/a | n/a |
| Unwind of interest | (2) | (3) | (3) | (33.3) | (33.3) |
| Balance at the end of the period | 44 | 39 | 41 | 12.8 | 7.3 |
| Total provision for impairment- Banking activities | 121 | 120 | 124 | 0.8 | (2.4) |
| Equity reserve for credit loss | |||||
| Balance at the beginning of the period | 74 | 70 | 72 | 5.7 | 2.8 |
| Transfer (to)/from retained earnings | 28 | 4 | (2) | Large | n/a |
| Balance at the end of the period | 102 | 74 | 70 | 37.8 | 45.7 |
| Pre-tax equivalent coverage | 146 | 106 | 100 | 37.7 | 46.0 |
| Total provision for impairment and equity reserve for credit | |||||
| loss coverage - Core Banking activities | 267 | 226 | 224 | 18.1 | 19.2 |
| % | % | % | |||
| Provision for impairment expressed as a percentage of gross | |||||
| impaired assets are as follows: | |||||
| Collective provision | 52 | 55 | 47 | ||
| Specific provision | 30 | 27 | 23 | ||
| Total provision | 82 | 82 | 71 | ||
| Equity reserve for credit loss coverage | 99 | 73 | 57 | ||
| Totalprovision and equityreserve for credit loss coverage | 180 | 155 | 128 |
The first quarter result includes a one-off structural shift in the collective provision and the equity reserve for credit loss due to the aforementioned modelling enhancements. As a result, provision coverage has increased from 155% at June 2011 to 180% as at September 2011.
8
APS330
Non-core Bank
The quarter ended 30 September 2011
Non-core Bank
Loans, advances and other receivables
| SEP-11 | SEP-11 | ||||
|---|---|---|---|---|---|
| SEP-11 | JUN-11 | SEP-10 | vs JUN-11 | vs SEP-10 | |
| $M | $M | $M | % | % | |
| Corporate | 1,391 | 1,624 | 2,110 | (14.3) | (34.1) |
| Development finance | 2,385 | 2,478 | 3,631 | (3.8) | (34.3) |
| Property investment | 2,717 | 3,233 | 4,609 | (16.0) | (41.1) |
| Lease finance | 330 | 409 | 714 | (19.3) | (53.8) |
| Non-core portfolio | 6,823 | 7,744 | 11,064 | (11.9) | (38.3) |
| Other receivables | 1,218 | 1,761 | 2,379 | (30.8) | (48.8) |
| Gross banking loans, advances and other receivables | 8,041 | 9,505 | 13,443 | (15.4) | (40.2) |
| Provision for impairment | (420) | (444) | (623) | (5.4) | (32.6) |
| Loans, advances and other receivables | 7,621 | 9,061 | 12,820 | (15.9) | (40.6) |
| Risk weighted assets | 7,750 | 8,778 | 12,528 | (11.7) | (38.1) |
Overview
The non-core portfolio continues to run-off ahead of initial expectations. The focus remains on responsibly managing the portfolio to maximise the value of distributable capital that can be returned to the Group.
Gross loans and advances in the Non-core Bank reduced to $6.8 billion over the quarter. The number of loans of $50 million or greater has reduced from 53 to 51.
Clients are demonstrating an appetite to restructure exposures and make divestments where there is capacity in the market.
While the trend in impairment losses continues to be positive the Group is continually mindful that risks still exist. These primarily relate to the residual Non-core book having a high concentration of large exposures and the impact of volatility in credit and equity markets on investor appetite for the impaired asset sector of the market.
Non-core Bank run-off profile
==> picture [471 x 182] intentionally omitted <==
9
APS330 The quarter ended 30 September 2011
Non-core Bank
Business portfolios
Corporate lending
Refinance markets are generally robust in this segment of the portfolio. Favourable pricing terms for many accounts in this portfolio means there is little incentive to refinance.
Development finance
Conditions in development finance markets remain difficult with excess supply in some areas. Sale opportunities continue for completed projects, and for affordable product.
Property investment
Property investment includes assets such as shopping centres, commercial offices, and industrial warehouses and excludes construction projects.
With vacancy rates continuing at relatively low levels, appetite has slowly improved for investors and financiers in this segment. Loan to valuation ratios following property price depreciation constrains refinance activity by investors. Purchasers are showing interest in acquiring quality properties in proven locations.
Lease finance
Lease finance exposures continue to reduce in line with the natural portfolio amortisation.
Impairment losses on loans and advances
| SEP-11 | SEP-11 | ||||
|---|---|---|---|---|---|
| SEP-11 | JUN-11 | MAR-11 | vs JUN-11 | vs MAR-11 | |
| $M | $M | $M | % | % | |
| Collective provision for impairment | (3) | (25) | 16 | (88.0) | n/a |
| Specific provision for impairment | 43 | 70 | 36 | (38.6) | 19.4 |
| Actual net write-offs | 6 | 5 | 2 | 20.0 | 200.0 |
| 46 | 50 | 54 | (8.0) | (14.8) | |
| Impairment losses to risk weighted assets(annualised) | 2.35% | 2.28% | 1.75% |
Impairment losses on non-core loans and advances were $46 million for the quarter. Market uncertainty has contributed to extensions on workout dates for certain impaired assets. Under IFRS these extensions require the Bank to increase specific provisions and this has contributed $28 million to the impairment expense for the quarter. Impairment charges continue to be predominantly focused on the property investment and development finance portfolios.
10
APS330
Non-core Bank
The quarter ended 30 September 2011
Impaired asset balances
| SEP-11 | SEP-11 | ||||
|---|---|---|---|---|---|
| SEP-11 | JUN-11 | MAR-11 | vs JUN-11 | vs MAR-11 | |
| $M | $M | $M | % | % | |
| Gross balances of individually impaired loans | |||||
| with specific provisions set aside | 2,152 | 2,202 | 2,295 | (2.3) | (6.2) |
| without specific provisions set aside | 32 | 33 | 34 | (3.0) | (5.9) |
| Gross impaired assets | 2,184 | 2,235 | 2,329 | (2.3) | (6.2) |
| Specific provision for impairment | (327) | (348) | (358) | (6.0) | (8.7) |
| Net impaired assets | 1,857 | 1,887 | 1,971 | (1.6) | (5.8) |
| Size of gross impaired assets | |||||
| Less than one million | 7 | 8 | 13 | (12.5) | (46.2) |
| Greater than one million but less than ten million | 194 | 213 | 221 | (8.9) | (12.2) |
| Greater than ten million | 1,983 | 2,014 | 2,095 | (1.5) | (5.3) |
| 2,184 | 2,235 | 2,329 | (2.3) | (6.2) | |
| Past due loans not shown as impaired assets | 257 | 125 | 137 | 105.6 | 87.6 |
| Gross non-performing loans | 2,441 | 2,360 | 2,466 | 3.4 | (1.0) |
| Interest income on impaired assets recognised in the | |||||
| contribution toprofit | - | 2 | 2 | n/a | n/a |
| Analysis of movements in gross individually impaired assets | |||||
| Balance at the beginning of the period | 2,235 | 2,329 | 2,337 | (4.0) | (4.4) |
| Recognition of new impaired assets | 53 | 56 | 155 | (5.4) | (65.8) |
| Increases in previously recognised impaired assets | 12 | 19 | 12 | (36.8) | - |
| Impaired assets written off/sold during the period | (27) | (42) | (12) | (35.7) | 125.0 |
| Impaired assets which have been restated as performing assets | |||||
| or repaid | (89) | (127) | (163) | (29.9) | (45.4) |
| Balance at the end of theperiod | 2,184 | 2,235 | 2,329 | (2.3) |
(6.2) |
Gross impaired assets reduced by 2.3% in the September quarter. The rate of significant new impairments has slowed with only two new medium sized exposures added in the first quarter. The Bank remains appropriately provisioned and capitalised and is managing impaired asset workouts in a controlled manner to maximise shareholder value.
Past due loans not shown as impaired have increased to $257 million over the quarter. This increase relates to one single name commercial investment exposure that has been on watchlist for some time and is at risk of becoming impaired in the near term.
11
APS330 The quarter ended 30 September 2011
Non-core Bank
Provision for impairment
| Provision for impairment | |||||
|---|---|---|---|---|---|
| SEP-11 | SEP-11 | ||||
| SEP-11 | JUN-11 | MAR-11 | vs JUN-11 | vs MAR-11 | |
| $M | $M | $M | % | % | |
| Collective provision | |||||
| Balance at the beginning of the period | 96 | 121 | 105 | (20.7) | (8.6) |
| Charge against contribution to profit | (3) | (25) | 16 | (88.0) | n/a |
| Balance at the end of the period | 93 | 96 | 121 | (3.1) | (23.1) |
| Specific provision | |||||
| Balance at the beginning of the period | 348 | 358 | 374 | (2.8) | (7.0) |
| Charge against impairment losses | 43 | 70 | 36 | (38.6) | 19.4 |
| Write-off of impaired assets | (27) | (42) | (12) | (35.7) | 125.0 |
| Unwind of interest | (37) | (38) | (40) | (2.6) | (7.5) |
| Balance at the end of the period | 327 | 348 | 358 | (6.0) | (8.7) |
| Total provision for impairment- Banking activities | 420 | 444 | 479 | (5.4) | (12.3) |
| Equity reserve for credit loss | |||||
| Balance at the beginning of the period | 83 | 82 | 90 | 1.2 | (7.8) |
| Transfer (to)/from retained earnings | (13) | 1 | (8) | n/a | 62.5 |
| Balance at the end of the period | 70 | 83 | 82 | (15.7) | (14.6) |
| Pre-tax equivalent coverage | 100 | 118 | 117 | (15.3) | (14.5) |
| Total provision for impairment and equity reserve for credit | |||||
| loss coverage - Non-core Banking activities | 520 | 562 | 596 | (7.5) | (12.8) |
| % | % | % | |||
| Provision for impairment expressed as a percentage of gross | |||||
| impaired assets are as follows: | |||||
| Collective provision | 4 | 4 | 5 | ||
| Specific provision | 15 | 16 | 15 | ||
| Total provision | 19 | 20 | 21 | ||
| Equity reserve for credit loss coverage | 5 | 5 | 5 | ||
| Totalprovision and equityreserve for credit loss coverage | 24 | 25 | 26 | ||
12
APS330 The quarter ended 30 September 2011
Appendices
Appendix 1 – APS 330 tables
Table 16
On balance sheet risk weighted assets
| Table 16 On balance sheet risk weighted assets |
|||
|---|---|---|---|
| RISK WEIGHTED BALANCE | |||
| SEP-11 | JUN-11 | MAR-11 | |
| $M | $M | $M | |
| On Balance Sheet Risk weighted assets | |||
| Assets | |||
| Cash items | 51 | 20 | 33 |
| Claims on Australian and foreign governments | 2 | 5 | 2 |
| Claims on central banks, international banking agencies, regional development banks, | |||
| ADIs and overseas banks | 1,347 | 1,268 | 1,236 |
| Claims on securitisation exposures | 346 | 352 | 243 |
| Claims secured against eligible residential mortgages | 12,238 | 12,087 | 11,881 |
| Past due claims | 3,544 | 3,409 | 3,504 |
| Other retail assets | 1,110 | 1,156 | 1,164 |
| Corporate | 10,281 | 11,450 | 12,407 |
| Other assets and claims | 209 | 167 | 197 |
| Total Banking assets | 29,128 | 29,914 | 30,667 |
Off balance sheet risk weighted assets
| Off balance sheet risk weighted assets | |||
|---|---|---|---|
| RISK WEIGHTED BALANCE | |||
| SEP-11 | JUN-11 | MAR-11 | |
| $M | $M | $M | |
| Off balance sheet positions | |||
| Guarantees entered into in the normal course of business | 171 | 144 | 145 |
| Commitments to provide loans and advances | 807 | 699 | 1,194 |
| Capital commitments | - | - | - |
| Foreign exchange contracts | 121 | 112 | 122 |
| Interest rate contracts | 139 | 91 | 95 |
| Securitisation exposures | 33 | 33 | 34 |
| Total off balance sheetpositions | 1,271 | 1,079 | 1,590 |
| Total credit risk capital charge | 30,399 | 30,993 | 32,257 |
| Market risk capital charge | 415 | 363 | 428 |
| Operational risk capital charge | 3,030 | 3,010 | 3,072 |
| Total assessed risk | 33,844 | 34,366 | 35,757 |
| Risk weighted capital ratios | % | % | % |
| Tier 1 | 9.39 | 9.58 | 9.18 |
| Total risk weighted capital ratios | 13.16 | 13.40 | 13.86 |
| $M | $M | $M | |
| Core Equity Tier 1 capital | 2,396 | 2,450 | 2,444 |
| % | % | % | |
| Core Equity Tier 1 ratio | 7.08 | 7.13 | 6.83 |
The movement in the Core Equity Tier 1 ratio reflects dividend payments and movements in regulatory deductions, a large portion of which relates to the increase in the equity reserve for credit losses and deferred tax assets.
In line with the Suncorp Group’s stated capital management strategy, an amount of capital equivalent to 0.5% of the Bank’s capital targets is now included in the target capital base of the Non-Operating Holding Company.
13
APS330 The quarter ended 30 September 2011
Appendices
Table 17A
Credit risk by gross credit exposure – outstanding as at 30 September 2011
| RECEIVABLES DUE FROM OTHER BANKS TRADING SECURITIES INVESTMENT SECURITIES LOANS, ADVANCES AND OTHER RECEIVABLES CREDIT COMMITMENTS DERIVATIVE INSTRUMENTS $M $M $M $M $M $M |
TOTAL CREDIT RISK IMPAIRED ASSETS PAST DUE NOT IMPAIRED > 90 DAYS $M $M $M |
|
|---|---|---|
| Agribusiness Construction & development Financial services Hospitality Manufacturing Professional services Property investment Real estate - Mortgage Personal Government/public authorities Other commercial & industrial Total gross credit risk Eligible securitised loans Total including eligible securitised loans Impairment provision TOTAL |
- - - 3,341 151 - - - - 2,962 110 - 260 4,524 5,523 2,451 10 642 - - - 1,148 38 - - - - 522 23 - - - - 342 12 - - - - 3,485 82 - - - - 29,612 852 - - - - 345 12 - - - - 3 - - - - - 2,156 127 - |
3,492 203 23 3,072 1,431 220 13,410 - - 1,186 49 10 545 16 1 354 4 2 3,567 517 69 30,464 23 225 357 - 4 3 - - 2,283 89 26 |
| 260 4,524 5,523 46,367 1,417 642 - - 1,728 1,663 29 7 |
58,733 2,332 580 3,427 - - |
|
| 260 4,524 7,251 48,030 1,446 649 |
62,160 2,332 580 |
|
| (541) (371) (70) |
||
| 61,619 1,961 510 |
During the quarter the Bank introduced enhanced credit commitment systems as part of a continuous improvement process. The impact of introducing this system is immaterial to reported balances although individual industry classifications may have changed.
14
APS330
The quarter ended 30 September 2011
Appendices
Table 17A
Credit risk by gross credit exposure – average gross exposure over period 1 July 2011 to 30 September 2011
| RECEIVABLES DUE FROM OTHER BANKS TRADING SECURITIES INVESTMENT SECURITIES LOANS, ADVANCES AND OTHER RECEIVABLES CREDIT COMMITMENTS DERIVATIVE INSTRUMENTS $M $M $M $M $M $M |
TOTAL CREDIT RISK IMPAIRED ASSETS PAST DUE NOT IMPAIRED > 90 DAYS $M $M $M |
|
|---|---|---|
| Agribusiness Construction & development Financial services Hospitality Manufacturing Professional services Property investment Real estate - Mortgage Personal Government/public authorities Other commercial & industrial Total gross credit risk Eligible securitised loans Total including eligible securitised loans Impairment provision TOTAL |
- - - 3,364 83 - - - - 3,043 118 - 243 4,738 4,746 2,803 5 569 - - - 1,146 19 - - - - 545 12 - - - - 353 6 - - - - 3,744 41 - - - - 29,472 1,001 - - - - 350 6 - - - - 3 - - - - - 2,253 111 - |
3,447 210 28 3,161 1,426 156 13,104 - - 1,165 49 9 557 16 2 359 5 2 3,785 528 60 30,473 22 259 356 - 5 3 - - 2,364 103 26 |
| 243 4,738 4,746 47,076 1,402 569 - - 1,745 1,755 29 7 |
58,774 2,359 547 3,536 - - |
|
| 243 4,738 6,491 48,831 1,431 576 |
62,310 2,359 547 |
|
| (553) (379) (59) |
||
| 61,757 1,980 488 |
15
APS330 The quarter ended 30 September 2011
Appendices
Table 17B Credit risk by portfolio
| GROSS CREDIT RISK EXPOSURE AVERAGE GROSS EXPOSURE IMPAIRED ASSETS PAST DUE NOT IMPAIRED > 90 DAYS SPECIFIC PROVISIONS CHARGES FOR SPECIFIC PROVISIONS & WRITE OFFS $M $M $M $M $M $M |
|
|---|---|
| Claims secured against eligible residential mortgages Other retail Financial services Government and public authorities Corporate and other claims Total |
30,464 30,473 23 225 6 1 357 356 - 4 - - 13,410 13,104 - - - - 3 3 - - - - 14,499 14,838 2,309 351 365 59 |
| 58,733 58,774 2,332 580 371 60 |
Table 17C General reserves for credit losses
| $M | |
|---|---|
| General Reserve for Credit losses Collective provision for impairment Ineligible Collective Provisions on Past Due not Impaired Eligible Collective Provisions FITB relating to eligible collective provision Equity Reserve for credit losses |
170 (70) |
| 100 (30) 172 |
|
| 242 |
16
APS330
Appendices
The quarter ended 30 September 2011
Appendix 2 – Consolidated Bank
Impairment losses on loans and advances
| CORE NON-CORE TOTAL CORE NON-CORE TOTAL SEP-11 SEP-11 SEP-11 JUN-11 JUN-11 JUN-11 $M $M $M $M $M $M |
CORE NON-CORE TOTAL |
|---|---|
| MAR-11 MAR-11 MAR-11 |
|
| $M $M $M |
|
| Collective provision for impairment (4) (3) (7) (2) (25) (27) Specific provision for impairment 7 43 50 2 70 72 Actual net write-offs 4 6 10 3 5 8 |
- 16 16 5 36 41 - 2 2 |
| 7 46 53 3 50 53 |
5 54 59 |
| Impairment losses to risk weighted assets (annualised) 0.13% 2.35% 0.72% 0.06% 2.28% 0.71% |
0.10% 2.14% 0.78% |
Impaired assets balances
| Impaired assets balances | Impaired assets balances |
|---|---|
| CORE NON-CORE TOTAL CORE NON-CORE TOTAL CORE NON-CORE TOTAL SEP-11 SEP-11 SEP-11 JUN-11 JUN-11 JUN-11 MAR-11 MAR-11 MAR-11 $M $M $M $M $M $M $M $M $M |
|
| Gross balances of individually impaired loans with specific provisions set aside 135 2,152 2,287 136 2,202 2,338 169 2,295 2,464 without specific provisions set aside 13 32 45 10 33 43 6 34 40 |
|
| Gross impaired assets 148 2,184 2,332 146 2,235 2,381 175 2,329 2,504 Specific provision for impairment (44) (327) (371) (39) (348) (387) (41) (358) (399) |
|
| Net impaired assets 104 1,857 1,961 107 1,887 1,994 134 1,971 2,105 |
|
| Size of gross individually impaired assets Less than one million 23 7 30 22 8 30 15 13 28 Greater than one million but less than ten million 94 194 288 87 213 300 104 221 325 Greater than ten million 31 1,983 2,014 37 2,014 2,051 56 2,095 2,151 |
|
| 148 2,184 2,332 146 2,235 2,381 175 2,329 2,504 |
|
| Past due loans not shown as impaired assets 323 257 580 386 125 511 326 137 463 |
|
| Gross non-performing loans 471 2,441 2,912 532 2,360 2,892 501 2,466 2,967 |
|
| Interest income on impaired assets recognised in the contribution to profit Net interest charged and recognised as revenue in the contribution to profit during the year was - - - 1 2 3 1 2 3 |
|
| Analysis of movements in gross individually impaired assets Balance at the beginning of the period 146 2,235 2,381 175 2,329 2,504 179 2,337 2,516 Recognition of new impaired assets 18 53 71 15 56 71 11 155 166 Increases in previously recognised impaired assets 1 12 13 6 19 25 2 12 14 Impaired assets written off/sold during the period - (27) (27) (1) (42) (43) (1) (12) (13) Impaired assets which have been restated as performing assets or repaid (17) (89) (106) (49) (127) (176) (16) (163) (179) |
|
| Balance at the end of theperiod 148 2,184 2,332 146 2,235 |
2,381 175 2,329 2,504 |
17
APS330 The quarter ended 30 September 2011
Appendices
Provision for impairment
| CORE | NON-CORE | TOTAL | CORE | NON-CORE | TOTAL | CORE | NON-CORE | TOTAL | |
|---|---|---|---|---|---|---|---|---|---|
| SEP-11 | SEP-11 | SEP-11 | JUN-11 | JUN-11 | JUN-11 | MAR-11 | MAR-11 | MAR-11 | |
| $M | $M | $M | $M | $M | $M | $M | $M | $M | |
| Collective provision | |||||||||
| Balance at the beginning of the period | 81 | 96 | 177 | 83 | 121 | 204 | 83 | 105 | 188 |
| Charge against contribution to profit | (4) | (3) | (7) | (2) | (25) | (27) | - | 16 | 16 |
| Balance at the end of the period | 77 | 93 | 170 | 81 | 96 | 177 | 83 | 121 | 204 |
| Specific provision | |||||||||
| Balance at the beginning of the period | 39 | 348 | 387 | 41 | 358 | 399 | 40 | 374 | 414 |
| Charge against impairment losses | 7 | 43 | 50 | 2 | 70 | 72 | 5 | 36 | 41 |
| Write-off of impaired assets | - | (27) | (27) | (1) | (42) | (43) | (1) | (12) | (13) |
| Unwind of interest | (2) | (37) | (39) | (3) | (38) | (41) | (3) | (40) | (43) |
| Balance at the end of the period | 44 | 327 | 371 | 39 | 348 | 387 | 41 | 358 | 399 |
| Total provision for impairment - Banking | |||||||||
| activities | 121 | 420 | 541 | 120 | 444 | 564 | 124 | 479 | 603 |
| Equity reserve for credit loss | |||||||||
| Balance at the beginning of the period | 74 | 83 | 157 | 70 | 82 | 152 | 72 | 90 | 162 |
| Transfer to retained earnings | 28 | (13) | 15 | 4 | 1 | 5 | (2) | (8) | (10) |
| Balance at the end of the period | 102 | 70 | 172 | 74 | 83 | 157 | 70 | 82 | 152 |
| Pre-tax equivalent coverage | 146 | 100 | 246 | 106 | 118 | 224 | 100 | 117 | 217 |
| Total provision for impairment and equity reserve | |||||||||
| for credit loss - Banking activities | 267 | 520 | 787 | 226 | 562 | 788 | 224 | 596 | 820 |
| % | % | % | % | % | % | % | % | % | |
| Provision for impairment expressed as a | |||||||||
| percentage of gross impaired assets are as | |||||||||
| follows: | |||||||||
| Collective provision | 52 | 4 | 7 | 55 | 4 | 7 | 47 | 5 | 8 |
| Specific provision | 30 | 15 | 16 | 27 | 16 | 16 | 23 | 15 | 16 |
| Total provision | 82 | 19 | 23 | 82 | 20 | 24 | 71 | 21 | 24 |
| Equity reserve for credit loss coverage | 99 | 5 | 11 | 73 | 5 | 9 | 57 | 5 | 9 |
| Total provision and equity reserve for credit loss | |||||||||
| coverage | 180 | 24 | 34 | 155 | 25 | 33 | 128 | 26 | 33 |
18
Appendices
The quarter ended 30 September 2011
APS330
Appendix 3– Definitions
| Capital adequacy ratio | Capital base divided by total assessed risk, as defined by |
|---|---|
| APRA | |
| Core equity tier 1 | Core equity tier 1 includes ordinary shareholder equity and |
| retained profits less tier 1 and tier 2 regulatory deductions | |
| Deposit to loan ratio | Total retail deposits divided by total loans and advances, |
| excluding other receivables | |
| Equity reserve for credit losses | The equity reserve for credit losses is a reserve held against |
| potential losses reasonably assessed to be possible (but not | |
| certain) to arise from existing facilities which are currently | |
| satisfying their contractual terms. It is the credit loss intrinsic in | |
| the business which an ADI undertakes | |
| Gross non-performing loans | Gross impaired assets plus past due loans |
| Impairment losses to gross loans | Impairment losses on loans and advances divided by gross |
| and advances | banking loans, advances and other receivables |
| Impairment losses to risk weighted | Impairment losses on loans and advances divided by risk |
| assets | weighted assets |
| Past due | Loans outstanding for more than 90 days |
| Provision coverage | Total provisions and equity reserve for credit loss coverage of |
| gross impaired assets | |
| Risk weighted assets | Total of the carrying value of each asset class multiplied by |
| their assigned risk weighting, as defined by APRA | |
| Total assessed risk | Risk weighted assets, off balance sheets positions and market |
| risk capital charge and operational risk charge, as defined by | |
| APRA |
19