Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — Debt Investor Presentation (2019)
32 slides from Lloyds Banking's debt investor presentation, 2019
Slide 1: Fixed Income Investor Presentation H1 2019
FIXED INCOME INVESTOR PRESENTATION H1 2019
Slide 2: Group Overview
LLOYDS Group Overview
Slide 3: Simple group structure with multiple issuance points
Capital, Funding & Group Overview H1 Results Appendix Liquidity Simple group structure with multiple issuance points HoldCo Main Entities Lloyds Banking Group Ratings(1) A3 / BBB+ / A+ P-2 / A-2 / F1 Example Products Senior Unsecured - Capital Ring-Fenced Sub-Group Non-Ring-Fenced Sub-Group Insuranc
Slide 4: Well diversified loan book of £441bn; credit quality remains strong
Capital, Funding & Group Overview H1 Results Appendix Liquidity Well diversified loan book of £441bn; credit quality remains strong H1 2019 Loans & Advances (£bn, %) Commercial Banking other, £4, 1% Wealth, £1bn, 0% Mid Markets, £31bn, 7% Central items, £2bn, 0% SME, £32bn, 7% • Low risk book with o
Slide 5: Opportunities for growth in targeted key segments
Capital, Funding & Group Overview H1 Results Appendix Liquidity Opportunities for growth in targeted key segments Channels market share Digital new business volumes(1) 18% Branch new business volumes(1) 21% Product market share Consumer credit card balances 24% PCA deposit balances 22% Mortgage bala
Slide 6: We are half way through GSR3, with strong progress to date
Capital, Funding & Group Overview H1 Results Appendix Liquidity We are half way through GSR3, with strong progress to date positioning us well to respond to the changing environment Multi-brand, multi- Data-driven Market leading Delivering for channel personalised efficiency customers distribution m
Slide 7: Significant transformation and unique operating model means the Group is well positioned
Capital, Funding & Group Overview H1 Results Appendix Liquidity Significant transformation and unique operating model means the Group is well positioned for the future Stable core loan book with growth in targeted segments Significant reduction in operating costs(5) (£bn) (£bn) Cost:income: 55.3% 51
Slide 8: UK economy has remained resilient but uncertainty remains
Capital, Funding & Group Overview H1 Results Appendix Liquidity UK economy has remained resilient but uncertainty remains Pay and employment (Index level, 3 month average, Jan 2016=100) 105 • Consumers remain well positioned 104 103.8 103 ‐ Employment continues to grow with real wages rising 102 102
Slide 9: H1 2019 Results
LLOYDS H1 2019 Results
Slide 10: Good financial performance with market leading efficiency and returns
Capital, Funding & Group Overview H1 Results Appendix Liquidity Good financial performance with market leading efficiency and returns £2.2bn Statutory profit after tax (4)% • Statutory profit after tax of £2.2bn with strong RoTE of 11.5% Return on tangible 11.5% equity (0.6)pp • Robust underlying pr
Slide 11: Balance sheet – growth in targeted segments while optimising the portfolio
Capital, Funding & Group Overview H1 Results Appendix Liquidity Balance sheet – growth in targeted segments while optimising the portfolio Prudent growth in targeted segments in Q2 (£bn) Open mortgage book SME & Mid Markets • Loans and advances £441bn, flat on Q1 ‐ Open mortgage book up £0.8bn on Q1
Slide 12: Net interest income down slightly with resilient margin of 290 basis points
Capital, Funding & Group Overview H1 Results Appendix Liquidity Net interest income down slightly with resilient margin of 290 basis points Net interest income and banking net interest margin Net interest income and margin (£m) (£bn, %) 2.93% 2.93% 2.90% 2.90% 3 2.93% (14)bps +8bps +3bps 2.90% 2.82%
Slide 13: Asset pricing and mix: mortgage pricing remains competitive but margin resilient
Capital, Funding & Group Overview H1 Results Appendix Liquidity Asset pricing and mix: mortgage pricing remains competitive but margin resilient Changing asset mix (Book size £bn, Gross margin %(1)) Mortgage book UK consumer finance 1.9% 1.8% 1.8% 7.1% 6.8% 6.7% 289 288 285 YoY 40 41 41 • Mortgage m
Slide 14: Liability pricing and mix: current account growth and structural hedging
Capital, Funding & Group Overview H1 Results Appendix Liquidity Liability pricing and mix: current account growth ahead of the market and prudent structural hedging programme Improving liability mix(1) Hedged balances(2) (Book size £bn, Gross margin %) (£bn) Hedge as % of 0.4% 0.5% 0.5% 461 459 461
Slide 15: Credit quality remains strong reflecting a continued prudent approach to risk
Capital, Funding & Group Overview H1 Results Appendix Liquidity Credit quality remains strong reflecting a continued prudent approach to risk Asset quality ratio • Low risk book with over 75% of lending secured and (bps) underwriting discipline maintained ‐ >60% of lending in UK mortgages 34 27 30 2
Slide 16: Summary – well placed to deliver sustainable, superior performance
Capital, Funding & Group Overview H1 Results Appendix Liquidity Summary – well placed to deliver sustainable, superior performance Statutory profit after tax(1) • Strong strategic progress and the right strategy in the (£bn) current environment • Good financial performance supporting increased inter
Slide 17: Capital, Funding & Liquidity
Capital, Funding & Liquidity 17
Slide 18: Strong capital build through H1, end state capital requirements confirmed
Capital, Funding & Group Overview H1 Results Appendix Liquidity Strong capital build through H1, end state capital requirements confirmed CET1 Ratio • Systemic Risk Buffer confirmed at 2.0% for the ring-fenced 14.5% 13.9% 14.0% subgroup (equivalent to 1.7% at Group) • Capital build of 70bps in H1 (p
Slide 19: MREL ratio ahead of interim requirement, well on-track for end-state
Capital, Funding & Group Overview H1 Results Appendix Liquidity MREL ratio ahead of interim requirement, well on-track for end-state Transitional MREL Ratio Total Capital Ratio 32.6% 32.2% H1 2019 14.0% 2.8% 4.9% 21.7% FY 2018 13.9% 3.6% 4.7% 22.2% • Total capital remains strong at 21.7% 25.8% H1 20
Slide 20: Strong progress against funding plan; LBCM EMTN programme launched
Capital, Funding & Group Overview H1 Results Appendix Liquidity Strong progress against funding plan; LBCM EMTN programme launched H1 2019 Funding by Product Funding Portfolio by Maturity (at H1 19) £bn 5 • c.£6bn sterling equivalent issued 4 < 1 Year (MM) (3) across 7 public transactions in H1 24%
Slide 21: Appendix
Appendix , | i
Slide 22: PPI activity significantly increased in the second quarter
Capital, Funding & Group Overview H1 Results Appendix Liquidity PPI activity significantly increased in the second quarter PPI information requests received (Average per week, #k) • £550m charge in Q2 primarily driven by significant increase in PPI information request (PIR) volumes c.190 c.150 • PIR
Slide 23: Creating a market leading wealth proposition
Capital, Funding & Group Overview H1 Results Appendix Liquidity Creating a market leading wealth proposition A full service offering for LBG clients Supported by a number of key differentiators Partnership will provide a full service offering for Leveraging the strengths between two of the UK’s stro
Slide 24: Group's strong focus on sustainability reflected in ESG ratings
Capital, Funding & Group Overview H1 Results Appendix Liquidity Group’s strong focus on sustainability reflected in ESG ratings BUSINESS • £2bn Clean Growth Finance Initiative: Metroline low emission bus fleet; and the Environmental world’s largest wind farm. Updated sector policies for Coal, Defenc
Slide 25: LBCM
LLOYDS 25
Slide 26: FY 2018 | Legal entity balance sheet analysis
Capital, Funding & Group Overview H1 Results Appendix Liquidity FY 2018 | Legal entity balance sheet analysis Lloyds Bank Corporate Markets Plc Lloyds Bank Plc (RFB) (NRFB) £593bn £593bn £78bn £78bn Other Other 30 2 51 Derivatives Other Derivatives 11 Other 8 11 18 Financial RWAs £174.4bn RWAs £19.9
Slide 27: FY 2018 | LBCM Balance Sheet
Capital, Funding & Group Overview H1 Results Appendix Liquidity FY 2018 | LBCM Balance Sheet Loans & Advances (ex. Reverse Repo) £19bn Assets £78bn Financials • Well diversified balance sheet; clear 14% Manufacturing Other 8 focus on providing core distribution & Lending to Customers 8% Property Com
Slide 28: FY 2018 | LBCM Balance Sheet
Capital, Funding & Group Overview H1 Results Appendix Liquidity FY 2018 | LBCM Balance Sheet Deposits Derivatives £30bn £15bn Liabilities £78bn Deposits from Interest Rate Customers 2 Other 11% Deposits from 30% Exchange 15 Derivatives • Commercial and non-EEA Banks Rate (mainly Crown Dependency) 68
Slide 29: Notes
LLOYDS Notes earieeartid 29
Slide 30: Debt Investor Relations Contacts
Debt Investor Relations Contacts Website: www.lloydsbankinggroup.com/investors/fixed-income-investors INVESTOR RELATIONS LONDON Douglas Radcliffe Edward Sands Nora Thoden Group Investor Relations Director Director, Investor Relations Director, Investor Relations +44 (0)20 7356 1571 +44 (0)20 7356 15
Slide 31: Forward looking statements and basis of presentation
Forward looking statements and basis of presentation Forward looking statements This document contains certain forward looking statements with respect to the business, strategy, plans and/or results of the Group and its current goals and expectations relating to its future financial condition and pe
Slide 32: LLoyDs
LLoyDs
Lloyds Banking Group — Debt Investor Presentation (2019) on 6ix