12. Impairment Charges on Loans and Receivables
| Group | 2014 €’000 |
2013 €’000 |
|---|---|---|
| Balance at the beginning of the year | 4,125,260 | 3,263,422 |
| Increase in specific provision | 1,528,026 | 847,227 |
| Release of specific provision | (1,384,749) | (295,026) |
| (Release)/increase in collective provision | (747,762) | 309,637 |
| Total movement in provision | (604,485) | 861,838 |
| Balance at the end of the year | 3,520,775 | 4,125,260 |
| Recognised in the income statement | 137,371 | 914,345 |
| Recognised against loans and receivables (Note 19) | (741,856) | (52,507) |
| Total movement in provision | (604,485) | 861,838 |
| Balance as at 31 December analysed as: | ||
| Specific impairment | 3,446,050 | 3,302,773 |
| Collective impairment | 74,725 | 822,487 |
| Total impairment provision at the end of the year | 3,520,775 | 4,125,260 |
The impairment provision for each specifically assessed debtor connection is calculated as the difference between the carrying value of each debtor connection’s total loans and the present value of expected future cash flows for the connection. The release in the specific provision includes the crystallisation of impairment on disposals, and the effect of an increase in the expected disposal value or accelerated disposal of property collateral and loan sales across a number of debtor connections.
In 2014 the majority of debtor connections, both NAMA and Participating Institution / Service Provider managed, were individually assessed for impairment. This differs to 2013, where the individually assessed debtors related to NAMA managed connections only, and Participating Institution / Service Provider managed connections were grouped together and collectively assessed for impairment. Enhancement of the impairment assessment process was undertaken in 2014 and as a result a significant number of Participating Institution / Service Provider managed connections which were included in the collective provision at 31 December 2013 are included in the specific provision at 31 December 2014, contributing to the increase in the specific provision and the release in the collective provision.
Debtor connections where detailed cash flows were not prepared, representing €78m of NAMA debt and less than 1% of the loan portfolio, are grouped together and collectively assessed for impairment. An impairment rate of 95% has been applied to the collectively assessed portfolio.
Further information on the impairment of loans and receivables is included in Note 3, Critical accounting estimates and judgements, Note 19, Loans and receivables and Note 22, Credit Risk.