Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — Debt Investor Presentation (May 2023)
27 slides from Lloyds Banking's debt investor presentation, May 3, 2023
Slide 1: Fixed Income Presentation
Classification: Public Fixed Income Presentation Lloyds Banking Group 03 May 2023 1
Slide 2: Business and strategic update
Classification: Public Business and strategic update 2
Slide 3: Robust business performance
Classification: Public Robust business performance Purpose • Purpose driven business model, enabling continued Helping support for customers and colleagues Britain • Continued delivery against strategic objectives • Solid financial performance, supporting strong capital generation • 2023 guidance ma
Slide 4: Solid financial performance
Classification: Public Solid financial performance Financial performance (£m) Q1 2023 Q1 2022 YoY Net interest income 3,535 2,945 20% Other income 1,257 1,182 6% • Strong net income, up 15%; NIM 322bps Operating lease depreciation (140) (94) (49)% • Operating costs up 5% given investment and Net inc
Slide 5: Customer franchise resilience
Classification: Public Customer franchise resilience Q1 lending change (£bn) Q1 deposit change (£bn) Retail Commercial Retail Commercial -£2.5bn/0.7% -£0.6bn/0.6% -£4.3bn/1.4% +£2.7bn/1.6% • Mortgage balances down £3.7bn in Q1 including £2.5bn legacy portfolio exit • Unsecured lending growth in cred
Slide 6: Strong income performance
Classification: Public Strong income performance Net interest income and banking margin (£bn, bps) £3.6bn 6 £3.5bn • NII £3.5bn with stable AIEAs and resilient NIM 7 o Q1 AIEAs £454.2bn, broadly stable vs Q4 (9) (2) (2) o NIM 322bps, in line with Q4; mortgage 322 322 completion margins c.50bps in Q1
Slide 7: Operating costs in line with expectations
Classification: Public Operating costs in line with expectations Operating costs (£m) +5% 106 4 55 2,170 • Q1 operating costs £2.2bn, up 5% YoY given (54) 2,059 investment, new businesses and inflation • Q1 cost:income ratio 47.1%; 46.6% excluding Q1 2022 Cost Pay & Investment, Other Q1 2023 remedia
Slide 8: Resilient asset quality
Classification: Public Resilient asset quality Impairment1 (£m) Q1 Q4 Q1 QoQ YoY 2023 2022 2022 Charge pre updated MES2 322 383 (61) 150 172 • Resilient observed asset quality Retail 271 253 18 149 122 o Retail credit performance remains resilient; all Commercial Banking 53 121 (68) 1 52 portfolios
Slide 9: Resilience across portfolios
Classification: Public Resilience across portfolios New to arrears as a proportion of total balances (3 month rolling average, %) • Modest increase in new to arrears in some 1.00% portfolios, from a low base; still at or below pre- 0.75% pandemic levels 0.50% 0.25% o Mortgage increase driven by lega
Slide 10: Robust business performance
Classification: Public Robust business performance Purpose • Solid financial performance, supporting strong capital generation Helping • 2023 guidance maintained, delivering higher, more Britain sustainable returns o Banking NIM to be greater than 305bps o Operating costs to be c.£9.1bn o Asset qual
Slide 11: Capital, funding & liquidity
Classification: Public Capital, funding & liquidity 11
Slide 12: Capital, MREL and liquidity summary
Classification: Public Capital, MREL and liquidity summary MDA CET1 remains well ahead of 9.4%1 14.1% 14.1% both regulatory minimum and Capital CET1 CET1 the ongoing Group target of c.12.5% + c.1% management buffer FY 22 Q1 23 31.7% 32.1% MREL remains strong, and in MREL MREL MREL excess of regulato
Slide 13: Strong capital generation
Classification: Public Strong capital generation Risk weighted assets (£bn) £0bn 1.4 0.2 (1.6) • RWAs flat in Q1 at £211bn; expect update on CRD 211 211 IV later this year • Strong 52bps capital build, after full £800m 2022 Underlying Optimisation Other1 Q1 2023 fixed pension contribution lending •
Slide 14: Capital strength maintained
Classification: Public Capital strength maintained Common equity tier 1 ratio (%, bps) 14.2% 14.1% • CET1 ratio of 14.1% reflects strong capital build of 52bps 1.7% 1.7% MDA • UK CCyB rate 1% since December 2022 and set 9.4%2 0.9% to increase to 2% in July 2023, representing an 2.5% equivalent incre
Slide 15: Diversified deposit base; strong liquidity position
Classification: Public Diversified deposit base; strong liquidity position Loan to deposit ratio 96%, Net stable funding ratio 129%, Liquidity coverage ratio 143% c.65% of deposits in Retail; diversified Commercial >90% of deposit growth since 2019 in diversified Retail3 (£bn) balances (£bn) 451 476
Slide 16: Funding requirements returning to more normalised levels over strategic plan period
Classification: Public Funding requirements returning to more normalised levels over strategic plan period Issuance 20231 principles HoldCo Refinancing of Senior <£5bn maturities • Expect c.£15bn total issuance in 2023 given more normalised OpCo funding needs vs c.£13bn redemptions in 2023 £2-4bn ac
Slide 17: Appendix
Classification: Public Appendix 17
Slide 18: Wholesale funding requirements supported by redemption profile
Classification: Public Wholesale funding requirements supported by redemption profile HoldCo redemption profile (£bn)1 10.3 1.9 8.0 1.4 6.4 1.9 4.9 0.8 0.8 0.1 0.7 3.5 7.0 0.4 5.3 5.6 4.1 1.7 • Redemption profile supports increased future 1.4 issuance, with net supply increasing 2023 2024 2025 2026
Slide 19: Diverse funding portfolio as at Q1 2023
Classification: Public Diverse funding portfolio as at Q1 2023 Wholesale funding portfolio by type 13% 27% MM Funding Covered Bond £101bn Securitisation OpCo Senior Wholesale funding portfolio by currency 30% 12% HoldCo Senior Sub Debt 8% 15% 3% 23% 23% GBP USD Wholesale funding portfolio by maturit
Slide 20: Simple group structure with multiple issuance points
Classification: Public Simple group structure with multiple issuance points HoldCo Lloyds Banking Group BBB+ / A3 / A1 A-2 / P-2 / F1 Sta / Sta / Sta Senior Unsecured - Capital Ring-Fenced Sub-Group Non-Ring-Fenced Sub-Group Insurance Sub-Group Equity Investments Sub-Group Lloyds Bank, Bank of Scotl
Slide 21: Strong credit ratings across the Group
Classification: Public Strong credit ratings1 across the Group Non-Ring-Fenced Insurance HoldCo Ring-Fenced Bank Bank Sub-Group Lloyds Banking Lloyds Bank, Lloyds Bank UK Sovereign Scottish Widows2 Group Bank of Scotland Corporate Markets AA BBB+ A+ A S&P Stable Stable Stable - Stable A-2 A-1 A-1 A3
Slide 22: Strong ESG ratings supported by clear deliverables
Classification: Public Strong ESG ratings supported by clear deliverables Focus on opportunities to support housing and physical We have regeneration MSCI 1 Enabling regional identified 4 AA AA AA Increase regional productivity and create high-quality jobs AA development Encourage inclusive growth b
Slide 23: Our Group Climate Transition Plan
Classification: Public Our Group Climate Transition Plan We have identified 4 We have set focus net several areas zero No new direct financing of new FFirst round of Net Zero Banking F Support oil and gas clients to establish F £10bn green mortgage lending F £20-25bn SW investment in F 50% reduction
Slide 24: Quarterly P&L and key ratios
Classification: Public Quarterly P&L and key ratios (£m) Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Net interest income 3,535 3,643 3,394 3,190 2,945 Other income 1,257 1,128 1,171 1,185 1,182 Operating lease depreciation (140) (78) (82) (119) (94) Net income 4,652 4,693 4,483 4,256 4,033 Operating cos
Slide 25: Updated economic scenarios
Classification: Public Updated economic scenarios Scenario ECL (£m) Measure (%) 2023 vs Q4 2022 2024 2025 2026 2027 Ave. 23-27 GDP 0.6 0.5 1.8 1.9 1.8 1.7 1.5 Unemployment rate 3.0 0.2 2.8 2.9 2.9 3.0 2.9 HPI growth (3.1) (0.3) 4.9 7.1 5.9 4.8 3.8 Upside (30%) 3,814 CRE price growth 6.9 (1.6) 3.3 2.
Slide 26: Disclaimer
Classification: Public Disclaimer Important notice The information, statements, views and opinions contained in this document and accompanying discussion (“this Presentation”) are for informational and reference purposes only. This Presentation has been provided by the Group (defined below). This Pr
Slide 27: Contacts
Classification: Public Contacts Group Corporate Treasury Peter Green Liz Padley Richard Shrimpton Managing Director, Non Bank Head of Senior Funding & Covered Deputy Treasurer Entities Treasurer & Head of Capital Richard.Shrimpton@Lloydsbanking.com Bonds Peter.Green@Lloydsbanking.com and Recovery an
Lloyds Banking Group — Debt Investor Presentation (May 2023) on 6ix