Just group PLC | Annual Report and accounts 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
33 FINANCIAL AND INSURANCE RISK MANAGEMENT continued The following table indicates the earlier of contractual repricing or maturity dates for the Group’s significant financial assets.
No fixed term £m
Over ten years £m
Five to ten years £m
One to five years £m
Less than one year £m 1,174.4
Total £m
2022
–
– –
– –
– –
1,174.4
Units in liquidity funds
82.7
338.3
421.0
Investment funds
676.2 1,424.5 2,405.0 6,864.7
– 11,370.4
Debt securities and other fixed income securities
907.6
– –
– –
– –
–
907.6
Deposits with credit institutions
–
5,305.9 5,305.9
Loans secured by residential mortgages Loans secured by commercial mortgages
67.1
338.5
125.1
53.0
– – – – –
583.7 246.9
– –
–
–
246.9 871.9
Loans secured by ground rents
24.2
160.3
1,056.4
Infrastructure loans
1.5
117.9 157.4
6.4
8.5
134.3
Other loans
51.8
322.3 1,745.1
2,276.6
Derivative financial assets
Total
2,961.3 2,400.8 3,019.1 9,790.1 5,305.9 23,477.2
No fixed term £m
Over ten years £m
Five to ten years £m
One to five years £m
Less than one year £m 1,310.5
Total £m
2021
Units in liquidity funds
–
– –
– –
– –
1,310.5
Investment funds
68.4
233.4
301.8
Debt securities and other fixed income securities
733.5
1,920.0
2,345.9
7,924.6
– 12,924.0
Deposits with credit institutions
52.9
–
–
–
– –
52.9
Derivative financial assets
8.0
62.7
96.4
524.1
691.2
Loans secured by residential mortgages Loans secured by commercial mortgages
–
–
–
–
7,422.8
7,422.8
43.4
395.0
189.8
49.6
– – – –
677.8 189.7 993.1 117.9
Loans secured by ground rents
– –
–
–
189.7 844.3
Infrastructure loans
25.3
123.5
Other loans
0.9
108.3
3.2
5.5
Total
2,217.6
2,744.7
2,758.8
9,537.8
7,422.8 24,681.7
A sensitivity analysis of the impact of interest rate movements on profit before tax is included in note 23(e).
(ii) Property risk The Group’s exposure to property risk arises from the provision of lifetime mortgages which creates an exposure to the UK residential property market. A substantial decline or sustained underperformance in UK residential property prices, against which the Group’s lifetime mortgages are secured, could result in the mortgage debt at the date of redemption exceeding the proceeds from the sale of the property. Demand for lifetime mortgage products may also be impacted by a fall in property prices. It may diminish consumers’ propensity to borrow and reduce the amount they are able to borrow due to reductions in property values. The risk is managed by controlling the loan value as a proportion of the property’s value at outset and obtaining independent third party valuations on each property before initial mortgages are advanced. Lifetime mortgage contracts are also monitored through dilapidation reviews. House prices are monitored and the impact of exposure to adverse house prices (both regionally and nationally) is regularly reviewed. Further mitigation is through management of the volume of Lifetime Mortgages, including disposals, in the portfolio in line with the Group’s LTM backing ratio target, and the establishment of the NNEG hedges. The Group has managed its property risk exposure in the year via a reduction in the LTM backing ratio and an additional LTM portfolio sale. A sensitivity analysis of the impact of residential property price movements is included in note 17 and note 23(e). These notes also discuss the Group’s consideration of the impact of COVID-19 on property assumptions at 31 December 2022. The Group is also exposed to commercial property risk indirectly through the investment in loans secured by commercial mortgages. Mitigation of such risk is covered by the credit risk section below.
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