Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — FY2011 Earnings Presentation
40 slides from Lloyds Banking's earnings presentation, 2012
Slide 1: Appendix
LLOYDS BANKING GROUP spd APPENDIX
Slide 2: Loans and Advances to Customers
LOANS AND ADVANCES TO CUSTOMERS LOANS AND ADVANCES TO CUSTOMERS £584bn(1) 31 Dec 2011 Financial, business & other services 11.0% Property companies 11.1% Personal other 5.1% Construction 1.7% Personal mortgages Manufacturing 59.6% 1.7% Corporate other 1.0% Agriculture, forestry & fishery 0.9% Lease
Slide 3: Mortgage Portfolio
MORTGAGE PORTFOLIO UK MORTGAGE PORTFOLIO £332.1bn £bn 31 Dec 2011 Specialist p Buy to let 27.3 48.3 Mainstream 256.5 2
Slide 4: Mortgage New Business Distribution
MORTGAGE NEW BUSINESS DISTRIBUTION NEW BUSINESS 12 months to 31 Dec 2010 - £30.1bn 12 months to 31 Dec 2011 - £28.0bn £bn £bn Homemovers Homemovers 11.2 9.8 First time First time buyers buyers xx% 55 5.5 37% 57 5.7 35% 18% 20% xx% xx% 15% 20% 16% 20% xx% 6.1% xx% Buy to let 10% Buy to let 9% 6.1bn%
Slide 5: Mortgage Portfolio LTVs
MORTGAGE PORTFOLIO LTVs Mainstream Buy to let Specialist Group Average LTVs 52.2% 74.0% 72.6% 55.9% New business LTVs 61 4% 61.4% 6 8% 65.8% n/a / 62 1% 62.1% ≤80% LTV 62.4% % 49 8% 49.8% % 41.9% 58 8% 58.8% >80–90% LTV 16.0% 17.3% 19.3% 16.5% >90 100% LTV >90–100% 11 2% 11.2% 17 1% 17.1% 19 0% 19.0
Slide 6: UK Mortgage Portfolio: Books performing satisfactorily with stable profiles
UK MORTGAGE PORTFOLIO Books performing satisfactorily with stable profiles 31 Dec 2011 (£bn) 31 Dec 2010 (£bn) 39.7 3.1 45.0 3.2 332.1 341.1 (12.0%) (0.9%) (13.2%) (0.9%) 5.4 0.8 29.3 5.7 0.8 27.3 (19.8%) (2.9%) (8.6%) (19.4%) (2.7%) (8%) 46.4 8.6 0.6 48.3 7.6 0.6 (13.6%) (18.5%) (1.3%) (15%) (15.7%
Slide 7: UK Mortgage Forbearance
UK MORTGAGE FORBEARANCE Stable forbearance activity CUSTOMERS NEW TO FORBEARANCE 3500 3000 2500 2000 1500 1000 500 0 Mar Jul Nov Mar Jul Nov 10 10 10 11 11 11 Based on the UK Secured December 2011 numbers, payment assistance breaks and term extensions offered to customers in financial distress are
Slide 8: UK Mortgage Portfolio Impairment Coverage
UK MORTGAGE PORTFOLIO IMPAIRMENT COVERAGE UK MORTGAGES 2011 2010 Loans and advances to customers (gross) £332.1bn £341.1bn Impaired loans £6.5bn £6.8bn Impaired loans as % of closing advances 1.9% 2.0% Impairment provisions £1.7bn £1.6bn Impairment provisions as % of impaired loans 25.6% 23.5% 7
Slide 9: Mortgage Arrears Trends
MORTGAGE ARREARS TRENDS % OF TOTAL CASES >3 MONTHS IN ARREARS Portfolio 8% Value 7% £27.3bn 6% 5% 4% Market 3% 1.98%(2) 2% £256.5bn £48.3bn 1% 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 CML total market(1) Mainstream Spec
Slide 10: Trend in Mortgage Portfolio Arrears
TREND IN MORTGAGE PORTFOLIO ARREARS CUSTOMERS NEW TO ARREARS (Value £m) 15,176 15,151 14,782 14,393 14,481 13,218 H1 09 H2 09 H1 10 H2 10 H1 11 H2 11 9
Slide 11: Secured Arrears Stable
SECURED ARREARS STABLE MORTGAGES CASES GREATER THAN 90 DAYS IN ARREARS ( (excl. l possessions) i ) £bn £bn 10.1 10.1 9.7 9.6 9.7 9.6 2.5 2.3 2.4 3.6 3.6 3.8 12 1.2 1.2 1.2 6.5 6.1 5.8 6.4 6.2 6.0 FY 2009 FY 2010 FY 2011 FY 2009 FY 2010 FY 2011 90-180 days in arrears >180 days in arrears Mainstream B
Slide 12: Mortgage Portfolio – Properties in Repossession
MORTGAGE PORTFOLIO – PROPERTIES IN REPOSSESSION PROPERTIES IN REPOSSESSION NEW REPOSSESSIONS(2) (% off ttotal t l mortgage t cases)) (% off ttotal t l mortgage t cases)) 0.12% 0.09% 0 09% 0.08% (3,054) 0.05% (1,772) CML Lloyds CML Lloyds average(1) Banking average(1) Banking Group Group 31 Dec 31 De
Slide 13: Mortgage Portfolio – Properties in Repossession
MORTGAGE PORTFOLIO – PROPERTIES IN REPOSSESSION PROPERTIES IN REPOSSESSION % of mortgage cases 25% 20% 15% 0.12% 10% 0.09% 5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 Lloyds Banking Group % CML %(1) (1) Council of Mortgage Lenders Dec 2011. 12
Slide 14: Mortgage Portfolio – New Repossessions
MORTGAGE PORTFOLIO – NEW REPOSSESSIONS NEW REPOSSESSIONS (% off ttotal t l cases)) 0.08% 0.07% 0.05% 0.05% CML(1) Lloyds CML(3) Lloyds Banking Banking Group(2) Group(4) 31 Dec 31 Dec 31 Dec 31 Dec 2011 2011 2010 2010 (1) Source: Council of Mortgage Lenders Dec 2011. (2) Lloyds Banking Group Dec 2011
Slide 15: Unsecured Lending Portfolio
UNSECURED LENDING PORTFOLIO UNSECURED PORTFOLIO £24.8bn £bn 31 Dec 2011 10.2 Credit cards Personal current accounts 2.6 12.0 Loans Cards Loans Impairment charge as a % of average lending 5.99% 4.47% 14
Slide 16: Unsecured Lending Portfolio
UNSECURED LENDING PORTFOLIO UNSECURED IMPAIRED LOANS (£m) 3,603 2 981 2,981 2,695 2,370 Jun 10 Dec 10 Jun 11 Dec 11 L Loans C d Cards C Current tAAccounts t 15
Slide 17: Unsecured Lending Portfolio
UNSECURED LENDING PORTFOLIO CUSTOMERS NEW TO ARREARS (value £m) 3,367 3,130 2,632 2,250 Jun 10 Dec 10 Jun 11 Dec 11 16
Slide 18: Loans and Advances to Corporate Customers
LOANS AND ADVANCES TO CORPORATE CUSTOMERS LOANS AND ADVANCES TO CORPORATE CUSTOMERS £206bn(1) 31 Dec 2011 Transport, distribution and hotels 15.9% Property companies 31.4% Construction 4.7% Manufacturingg 4.9% Corporate Other 2.9% Agriculture, forestry and fishing 2.5% Lease financing g and hire pur
Slide 19: Commercial/Residential Property
COMMERCIAL/RESIDENTIAL PROPERTY £bn 58.4(1) 36.6 63% 37% 21.8 Lloyds Banking Group UK Lloyds Banking Group Overseas(2) (1) Gross (pre FV adjustment and impairment). Includes full recognition of joint ventures. Excludes £10.2bn of social housing exposure (local 18 authority cashflows) and £2.7bn of h
Slide 20: UK Commercial/Residential Property
UK COMMERCIAL/RESIDENTIAL PROPERTY Commercial Property Residential Property (£28.3bn) (£8.3bn) Through the cycle policy, £36.6bn(1) Larger residential property supporting existing customer companies franchise Some concentration seen in South East and London, although lth h wellll spread d acro
Slide 21: UK Commercial/Residential Property
UK COMMERCIAL/RESIDENTIAL PROPERTY(1) £bn 53.0 46.8 10.2 Recent reduction reflects strategic focus 36.6 12.9(2) Excluding Social Housing (local c. 35% authority cash flows) and Business Support managed assets, mainstream exposure p totalled c. 45% £23.7bn at the end of December. 23.7 This compri
Slide 22: Overseas Property Lending
OVERSEAS PROPERTY LENDING Ireland Australia (Gross £10.9bn/Net £4.7bn) (Gross £2.5bn/Net £1.3bn) 54% Property investment, of 46% Property investment, of £21.8bn(1) which 84% is impaired which 74% is impaired 46% Property development, 54% Property development, of of which 99% is impaired x wh
Slide 23: Leveraged Finance Lending
LEVERAGED FINANCE LENDING Lloyds Acquisition Finance Lloyds International (Gross £8.3bn/Net £6.9bn) (Gross £1.8bn/Net £1.6bn) Key product is cash flow lending. Gross drawn exposure has The business originates originates, executes £10.1bn reduced by £1.1bn £1 1bn in 2011 and portfolio manages dea
Slide 24: Wholesale Equity Portfolio at Carry Value
WHOLESALE EQUITY PORTFOLIO AT CARRY VALUE(1) MANAGE FOR GROWTH MANAGE FOR VALUE Lloyds Development Capital (£1.6bn) Fund Investments (£2.0bn) Ongoing direct equity business Generally, Limited Partner Investments g managed being g for g growth £3.9bn(2) in private equity funds; well diversified u
Slide 25: Insurance: Continued focus on value over volume
INSURANCE Continued focus on value over volume LP&I UK – EEV margin up and sales down(1) (£m) LP&I UK – Capital position – IGD(2) (£bn) HBOS Scottish Widows Scottish Widows Group 50bps 28% 3.7 4.2% 3.7% 2.9 1.6 10,316 10,219 1.3 2010 2011 2010 2011 LP&I UK – Increased new business profit (£m) Genera
Slide 26: Impairment Losses on Loans and Advances to Customers
IMPAIRMENT LOSSES ON LOANS AND ADVANCES TO CUSTOMERS 2010 2011 % of average lending Impairment £m £m 2010 2011 Retail 2 747 2,747 1 970 1,970 0 74% 0.74% 0 54% 0.54% – Secured (mortgages) 292 463 0.09% 0.14% – Unsecured 2,455 1,507 8.11% 5.65% Wholesale 3,855 2,828 2.23% 1.95% Commercial 371 313 1.2
Slide 27: Impaired Asset Ratios – Group
IMPAIRED ASSET RATIOS – GROUP 2011 Retail Wholesale Commercial Wealth & Group International Loans and advances to customers (gross) £357bn £135bn £30bn £56bn £595bn(1) Impaired loans £9bn £28bn £3bn £21bn £60bn Impaired loans as % of closing advances 2.5% 20.5% 9.8% 36.8% 10.1% Impairment provisions
Slide 28: Irish Portfolio: Limited portfolio reductions, increased provisioning
IRISH PORTFOLIO Limited portfolio reductions (local currency basis), with i increased d provisioning i i i PORTFOLIO BREAKDOWN (£bn) 31 Dec 2010 31 Dec 2011 Portfolio size: £27.5bn (€31.8bn) Portfolio size: £24.8bn (€29.6bn) 27.5 14.4 7.8 24.8 16.4 10.2 7.7 0.9 0.6 7.0 1.4 10 1.0 8.1 4.3 6.9 5.1 2.4
Slide 29: Irish Portfolio: Coverage level increased
IRISH PORTFOLIO Coverage level increased due to economic uncertainties but portfolio f li stabilised bili d IMPAIRED/UNIMPAIRED ASSETS 62% 56% Unimpaired 54% Impaired 42% Coverage ratio 40% 37% 66% 64% 53% 44% 33% 14% H1/09 H2/09 H1/10 H2/10 H1/11 H2/11 Weakness in Irish economy continues Cash f
Slide 30: Irish Portfolio: Impaired loan rate and coverage ratio trend
IRISH PORTFOLIO Coverage level increased due to economic uncertainties IMPAIRED LOAN RATE AND COVERAGE RATIO TREND Ireland Wholesale Ireland Retail((1)) 70% 65% 65% 61% 55% 53% 45% 40% 39% 40% 36% 84% 84% 69% 58% 13% 44% 17% 15% 20% 7% 9% 11% 6% H1/09 H2/09 H1/10 H2/10 H1/11 H2/11 H1/09 H2/09 H1/10
Slide 31: Ireland Wholesale Portfolio
IRELAND WHOLESALE PORTFOLIO WHOLESALE IRELAND AS AT 31 DECEMBER 2011 (£bn) % of 17.8 Portfolio Impaired 15.0 Rate(1) 84% 6.9 39% 5.1 74% Coverage 9.1 Ratio(2) 61% 5.0 28% 4.9 98% 2.9 57% CRE CRE 10.9 9.9 3.8 78% CRE 5.9 33% 5.0 85% 6.2 2.4 48% Gross Drawn Assets Impaired Loan Balance Impairment Prov
Slide 32: Ireland Mortgages: Peer comparison
IRELAND MORTGAGES Peer comparison Lloyds Banking Four peers in €24 € – 28bn gross loan ranges Group Dec June 2011 2011 June 2011 A B C D Gross Loans(1) €8,337m €8,439m Not – Owner occupied % 84% 84% 74% 69% 75% Disclosed Not – Buy to let % 16% 16% 26% 31% 25% Disclosed Total book % Impaired 20% 15%
Slide 33: Performance Drivers – Net Interest Margin
PERFORMANCE DRIVERS – NET INTEREST MARGIN Trends continue to be dominated by external factors INTERNAL EXTERNAL ((‘Inside’ Inside Management Control) ((‘Outside’ Outside Management Control) Pricing of new business and repricing of Base rate lower for longer existing book Wholesale funding f co
Slide 34: Projected Fair Value Unwind
PROJECTED FAIR VALUE UNWIND £bn 1.9(1) 0.5 0.2 0.0 (0.3) 2011 2012 2013 2014 2015 Further fair value unwind expected (1) Actual fair value unwind in 2011. 33
Slide 35: Net Tangible Assets
NET TANGIBLE ASSETS NET TANGIBLE ASSETS (£bn) NET TANGIBLE ASSETS PER SHARE (p) 59.2 4.1 58.6 40.3 2.8 40.3 (0 6) (0.6) (4.1) (2.8) 2010 2011 Other 2011 2010 Share 2011 Other (1) 2011 Earnings issues Earnings impact impact (1) Primarily gains in AFS and cashflow hedging reserve. 34
Slide 36: Reducing Our Wholesale Funding Requirements
REDUCING OUR WHOLESALE FUNDING REQUIREMENTS Maintaining broad spread of wholesale funding £bn 31 Dec 31 Dec 2011 2010 Bank deposits(1) 25 26 Certificates of deposit 28 42 Medium-term notes 70 88 Clear benefit delivered by Covered bonds 37 32 managing balance sheet down C Commercial i l paper 18 33
Slide 37: Successful Term Issuance – Achieved in 2011
SUCCESSFUL TERM ISSUANCE - ACHIEVED IN 2011 Utilising a wide variety of funding products and sources TERM ISSUANCE 2011 PUBLIC TERM 2011 PUBLIC TERM ISSUANCE BY PRODUCT ISSUANCE BY CURRENCY 14 7 14.7 c£24.7bn of public term issuance and c£10.6bn 39.7 45.6 15.4 42.0 of private placements completed
Slide 38: Core and Non-Core Income Statement
CORE AND NON-CORE INCOME STATEMENT Total Core Non-Core 2011 2010 2011 2010 2011 2010 £ million £ million £ million £ million £ million £ million Net interest income 12,233 14,143 10,916 11,745 1,317 2,398 Other income 9,307 9,936 8,360 8,769 947 1,167 Effects of liability management, volatile items
Slide 39: Effects of Liability Management, Volatile Items and Asset Sales
EFFECTS OF LIABILITY MANAGEMENT, VOLATILE ITEMS AND ASSET SALES Total Core Non-Core 2011 2010 2011 2010 2011 2010 £ million £ million £ million £ million £ million £ million Liability management gains 1,295 423 1,295 423 - - Banking Volatility 3 347 3 347 - - Change in fair valuation of equity conve
Slide 40: Forward Looking Statements and Basis of Presentation
FORWARD LOOKING STATEMENTS AND BASIS OF PRESENTATION FORWARD LOOKING STATEMENTS This announcement contains forward looking statements with respect to the business, strategy and plans of the Lloyds Banking Group, its current goals and expectations relating to its future financial condition and perfor