Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — UBS Global Financial Services Conference 2012
26 slides from Lloyds Banking's conference presentation, May 8, 2012
Slide 1: Presentation to the UBS Global Financial Services Conference
PRESENTATION TO THE UBS GLOBAL FINANCIAL SERVICES CONFERENCE 8 May 2012 New York Andrei Magasiner Group Corporate Treasurer
Slide 2: Agenda
AGENDA UK ECONOMIC OUTLOOK THE UK BANKING SECTOR LLOYDS’ TRAJECTORY ON THE HORIZON SUMMARY 1
Slide 3: UK Economic Outlook Overview
UK ECONOMIC OUTLOOK Overview Growth driven by a diversified business mix STRUCTURAL Ease of doing business is high STRENGTHS Floating currency provides flexibility MANAGEABLE Despite the crisis crisis, government finances are manageable GOVERNMENT Political and social will to manage debt d
Slide 4: Favourable Fundamentals Help the UK Outlook
FAVOURABLE FUNDAMENTALS HELP THE UK OUTLOOK The UK has a strong productivity record, is well diversified and d conducive d i forf business b i PRE-CRISIS UK GROWTH WAS STRONG….(1) ….ACROSS A BROAD BASE(2) Annual average per capita GDP growth 2.9% 2 9% 1997 - 2007 Financial 0.4 2.4 1997 - 2010 interm
Slide 5: Manageable Government Finances in the UK
MANAGEABLE GOVERNMENT FINANCES IN THE UK Relatively low public debt, long debt maturity and low debt servicing i i costs help h l makek UK’s UK’ fiscal fi l adjustment dj manageable bl UK DEBT AT MANAGEABLE LEVELS…. WITH LONG MATURITY 2017 expected gross public debt(1) Average term to maturity in 20
Slide 6: Eurozone Outlook Worsening Relative to UK
EUROZONE OUTLOOK WORSENING RELATIVE TO UK Consensus forecasts for UK 2012 GDP growth have fallen, b for but f the h Eurozone E they h now pointi to a deeper d recession i EUROZONE’S GROWTH PROSPECTS WEAKEN JOB MARKET OUTLOOK WORSEN TOO CONSENSUS FORECAST ON 2012 CONSENSUS FORECASTS ON 2012 REAL GDP(
Slide 7: Current UK Economic Outlook
CURRENT UK ECONOMIC OUTLOOK Slow but steady recovery GDP Flat in 2012, with modest recovery in 2013 UK BASE RATE To remain at current low levels into 2013 UNEMPLOYMENT Peaking at around 9% in 2013 PROPERTY PRICES Broadly flat 6
Slide 8: Agenda
AGENDA UK ECONOMIC OUTLOOK THE UK BANKING SECTOR LLOYDS’ TRAJECTORY ON THE HORIZON SUMMARY 7
Slide 9: UK Banking Sector Resilience
UK BANKING SECTOR RESILIENCE UK banks have been proactively strengthening their balance sheets h since i the h start off the h crisis i i ROBUST CORE TIER 1 CAPITAL(1) IMPROVED FUNDING(1) Core tier 1 capital ratio Loan to deposit ratio 12% 160% 10.7% 145% 10% 140% 8% 6.6% 6% 120% 113% 4% 100% 2% 0%
Slide 10: UK Banking Sector Resilience: EBA Stress Tests
UK BANKING SECTOR RESILIENCE … as a result, UK banks passed both the EBA stress and capital i l test NUMBER OF FAILING BANKS ADDITIONAL CAPITAL REQUIRED: 2011 EBA STRESS TESTS(1) DEC 2011 EBA CAPITAL EXERCISE(2) €bn 10 35.0 30.0 8 25.0 6 20.0 15.0 4 10.0 2 5.0 0 0.0 Ireland Greece Slovenia Austria F
Slide 11: Agenda
AGENDA UK ECONOMIC OUTLOOK THE UK BANKING SECTOR LLOYDS’ TRAJECTORY ON THE HORIZON SUMMARY 10
Slide 12: Accelerating Balance Sheet Strength
ACCELERATING BALANCE SHEET STRENGTH Substantial reduction in our loan to deposit ratio, underpinned b strong capital by i l position ii LOAN TO DEPOSIT RATIO CAPITAL POSITION 148% 16.2% 15.6% 135% 14.8% 130% 116% 11.0% 109% 10.8% 105% 10 0% 10.0% Mar 2011 Dec 2011 Mar 2012 Mar 2011 Dec 2011 Mar 2012
Slide 13: Wholesale Funding
WHOLESALE FUNDING Falling funding requirement and increasing liquidity WHOLESALE FUNDING MATURITY WHOLESALE FUNDING £231BN PROFILE £bn > 1 year 60% 326 2 – 5 years 298 £58bn (8)% 251 >5 years 50% 231 £57b £57bn 50% 1 – 2 years £25bn 55% 60% £55bn £13bn money CGS market 50% 50% £23bn 45% term 40% Pri
Slide 14: Wholesale Funding: 2012 Term Funding Plan Completed
WHOLESALE FUNDING 2012 term funding plan already completed £bn WHOLESALE TERM ISSUANCE(1) 4.4 24.7 24.7 2.5 4.7 1.9 7.5 Unsecured 2012 SUMMARY 11.2 issuance 1.7 Term funding 13.9 1.1 completed 0.6 Private No benchmarks issuance 3.9 (2) planned 17.2 Secured Modest 13.5 issuance opportunistic Pu
Slide 15: Wholesale Funding: Variety of Products and Sources
WHOLESALE FUNDING Access to a wide variety of funding products and sources PUBLIC TERM ISSUANCE FOR 2012 PUBLIC TERM ISSUANCE FOR 2012 BY PRODUCT BY CURRENCY 40% 33% 39% 8% 28% 24% 28% Securitisations Covered bonds USD Euro Medium term notes GBP Other To April 2012 To April 2012 14
Slide 16: Wholesale Funding: Successful Term Funding
WHOLESALE FUNDING Successful term funding over the last few years £bn TERM FUNDING 50.0 Successful track record of term funding 35.3 Issuance levels are 24.7 sustainable Flexibility for additional i issuance Continue to expect £20 – £25bn of wholesale term funding per year 2010 2011 2012 Med
Slide 17: Delivering Our Strategy
DELIVERING OUR STRATEGY Four key pillars to be the best banks for customers and shareholders h h ld Continue to STRENGTHEN Robust CORE TIER 1 RATIO and our balance sheet and stable funding base liquidity position RESHAPE our Sustainable, predictable RoE, in business portfolio to fit our assets, exce
Slide 18: Agenda
AGENDA UK ECONOMIC OUTLOOK THE UK BANKING SECTOR LLOYDS’ TRAJECTORY ON THE HORIZON SUMMARY 17
Slide 19: Capital: CRD IV
CAPITAL: CRD IV Capital adequacy to remain solid at Lloyds Date of rule Estimated impact if applied change to December 2011 core tier 1 RWA increases largely from derivative valuation adjustments, c. £25-30bn RWAs c. (0.8)% January changes in definition of default for retail mortgages and ––––––––––
Slide 20: Senior Unsecured Bail-in Would Be Unnecessary
SENIOR UNSECURED BAIL-IN WOULD BE UNNECESSARY Senior unsecured debt is protected by significant loss absorbency b b at Lloyds Ll d CAPITAL STRUCTURE – DEC 2011 £79bn £55bn Ineligible sub debt Tier 2 Tier 1 Core tier 1 R Regulatory l t ti (1) Accounting A (1) Excludes regulatory deductions on core ti
Slide 21: Independent Commission on Banking – Ringfencing
INDEPENDENT COMMISSION ON BANKING – RINGFENCING Most of Lloyds’ business would be in the ring fenced bank POST ICB ENTITIES INDICATIVE SIZE (2014) c. 20% Insurance ICB follow up still under discussion c. 10% Insurance unaffected c. 70% Non-ring fenced bank is expected to include non- EEA, fina
Slide 22: Credit Rating Agencies
CREDIT RATING AGENCIES Lloyds’ underlying strength and stability should be recognised i d by b the h rating i agencies i over timei Lloyds continues to strengthen its balance Over time, the rating agencies will sheet and is managing rating agency characterise Lloyds by its underlying core headwinds
Slide 23: Agenda
AGENDA UK ECONOMIC OUTLOOK THE UK BANKING SECTOR LLOYDS’ TRAJECTORY ON THE HORIZON SUMMARY 22
Slide 24: Summary
SUMMARY Well placed to realise over time the Group’s full potential for growthh Floating currency UK ECONOMY Diverse and flexible economy Fiscallyy Responsible p Government UK BANKING Strong and supportive institutions SECTOR Proactive in the crisis Resilient core business p performance
Slide 25: Forward Looking Statements and Basis of Preparation
FORWARD LOOKING STATEMENTS AND BASIS OF PREPARATION FORWARD LOOKING STATEMENTS This presentation contains forward looking statements with respect to the business, business strategy and plans of the Lloyds Banking Group, Group its current goals and expectations relating to its future financial condit
Slide 26: Presentation to the UBS Global Financial Services Conference
PRESENTATION TO THE UBS GLOBAL FINANCIAL SERVICES CONFERENCE 8 May 2012 New York Andrei Magasiner Group Corporate Treasurer
Lloyds Banking Group — UBS Global Financial Services Conference 2012 on 6ix