Lloyds Loan Loss Provision Workout
- 01:59
Lloyds Loan Loss Provision Workout
Transcript
Okay, so what we're doing here is we're looking at an excerpt from the accounts of Lloyd's Bank. And in fact, we're looking at their note on loan loss provisions. What we're being asked to do here is to think about the value of Lloyd's Bank's loan loss provision for loans it is identified as performing. Now you need to say aha, right? If it's a performing loan under IFRS 9, it's considered to be at stage one, and rather handily, We've got a column here for stage one. So if we scroll down, we are being asked, what is the loan loss provision? It looks like that's 527 million Sterling. If we scroll back up, we are being asked next what is the value of Lloyd's Bank's loan loss provision adjustment for loans that were previously classified as performing, but are now show objective evidence of impairment. So again, we need to think about the different stages. So we've got performing loans at stage one, which are now showing objective evidence of impairment, and have moved to stage three. So if we have a look at the information we are given, so we've got stage one loans, transfers to stage three, we've got 32. And so what's important here is to think about the fact that these classifications are dynamic. So we are doing a review of these, and the classification can move from stage one to stage two, or stage three, or vice versa. And on that theme, if we look at the final requirement, what is the value of Lloyd's Bank's loan loss provision adjustment for loans that were previously classified as underperforming, but are now considered to be performing. So underperforming loans are sitting at stage two. And so if we look at stage two, they're now considered to be performing, so they're moving to stage one. That looks like an adjustment of 299.