Lloyds Banking Group cut £6.2bn off its commercial real estate exposure through 2014 with the run-off book slashed by more than half to £3.3bn, according to the company’s end-of-year results.
In particular the bank made significant reductions to the impact of Irish commercial real estate (CRE) exposure.
At the end of December 92.3% of the total £1.8bn of Irish CRE loans held across the group remained impaired, unchanged on 2013 but the number of Irish impaired loans was reduced to £1.39bn from £5bn in 2013.
Irish CRE loan held in run-off were down to £0.4bn from just over £1.7bn in 2013. Irish impaired loans in run-off were cut from £996m to £118m by the year end. Of these just £49m were on properties with an LTV of more than 140%.
A greater proportion of impaired loans (15%) were now at an LTV of less than 60% compared to 2013. This represented just £18m in total loans, down from £109m for the same LTV last year.
The banks’ commercial banking division retained £18.3bn of CRE exposure as of the end of December 2014, down from £20.2bn in 2013, which the bank said was of lower risk.
A total of 48% of UK CRE loans over £5m were lent at less than 60% LTV according to the annual statement. 17.1% or £1.45bn was either unsecured or at an LTV higher than 120%. This was, however, a reduction on 2013’s £1.9bn exposure of 25%.
Impaired loans in the UK CRE book were down to £443m from just over £1bn in 2013.
The run-off division held £2.7bn in UK CRE loans at the end of 2014. Of these £1.3bn were impaired. Lloyds made a £547m provision for these leaving an exposure of £737m to non-performing CRE loans in the UK.
The total UK exposure to impaired loans held in run off was reduced by 74% in 2014 down from just under £5bn in 2013.
Overall, CRE lending at Lloyds Commercial Banking was not separated out in the result s but overall commercial lending from the division was cut by 5%.
The 2014 end-of-year results marked the first time the bank had been able to deliver a dividend to shareholders since being rescued by the UK government.
Lloyds Banking Group posted a pre-tax profit of £1.7bn, up from a loss of £802m in 2013.
