Lloyds Banking Group plc · LSE:LLOY
Lloyds Banking — H1 2011 Earnings Presentation
24 slides from Lloyds Banking's earnings presentation, Aug 4, 2011
Slide 1: 2011 Half-Year Results
2011 HALF-YEAR RESULTS 4 August 2011 António Horta-Osório Group Chief Executive
Slide 2: Resilient business performance, in line with expectations
“Resilient business performance, in line with expectations, despite challenging market conditions”
Slide 3: Agenda
AGENDA ECONOMIC AND REGULATORY ENVIRONMENT BUSINESS PERFORMANCE STRATEGIC REVIEW GUIDANCE AND SUMMARY 2
Slide 4: Macro Economic and Regulatory Environment: Challenging market conditions
MACRO ECONOMIC AND REGULATORY ENVIRONMENT Challenging market conditions ECONOMIC ENVIRONMENT REGULATORY ENVIRONMENT Weak UK economic recovery – GDP, ICB – ring fencing/competition interest rates, unemployment, property prices Capital/liquidity requirements – CRD IV Uncertainty derived from t
Slide 5: Macro Economic Environment: A cautious outlook for the UK economy
MACRO ECONOMIC ENVIRONMENT A cautious outlook for the UK economy NORMALISING REAL GROWTH(1) RISING BASE RATES(2) REAL GDP GROWTH (%) BANK OF ENGLAND BASE RATE (%) 4 7.0 6.0 2 5.0 0 4.0 -2 3.0 Consensus Range of market 2.0 -4 projections 1.0 -6 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20
Slide 6: Agenda
AGENDA ECONOMIC AND REGULATORY ENVIRONMENT BUSINESS PERFORMANCE STRATEGIC REVIEW GUIDANCE AND SUMMARY 5
Slide 7: Business Performance: Resilient underlying performance despite challenging conditions
BUSINESS PERFORMANCE Resilient underlying business performance, in line with expectations, despite challenging market conditions GROUP £m H1 2010 H2 2010 H1 2011 Combined businesses underlying profit before tax of £1.3bn Underlying income(1) 11,866 11,775 10,414 (12)% Statutory loss before tax o
Slide 8: Performance: Integration, focus moving to transformation
BUSINESS PERFORMANCE: INTEGRATION Strong delivery on integration: focus now moving to transformation RUN RATE STRONG PERFORMANCE IN H1 2011 Majority of integration projects now in final £2,000m stages £1,750m Core IT system integration to occur in H2 – to include migration of HBOS data to £1,379
Slide 9: Performance: Reducing the risk profile of the Group
BUSINESS PERFORMANCE Significant progress in reducing the risk profile of the Group NON CORE PORTFOLIO REDUCTIONS 16% £194bn £162bn Reduction in non-core assets to £162bn Excellent progress against term funding objectives with £25bn of wholesale term issuance in the half Dec 2010 H1 2011 Furth
Slide 10: Performance: Verde disposal progress
BUSINESS PERFORMANCE: VERDE PROGRESS The Verde disposal continues to progress at pace Verde disposal process accelerated Information Memorandum issued to prospective buyers Initial bids now being reviewed Expect to identify purchaser by the end of 2011 Total implementation costs will vary
Slide 11: Performance: Continued strong support for UK customers
BUSINESS PERFORMANCE: LENDING Continued strong support for UK customers CUSTOMER LENDING Continue to prioritise active support for the UK’s economic recovery On track to deliver full year contribution on Merlin lending agreement CUSTOMER LENDING – CORPORATE CUSTOMER LENDING – RETAIL £21.2bn of
Slide 12: Performance: Retail customer deposits
BUSINESS PERFORMANCE: RETAIL CUSTOMER DEPOSITS Maintained strong deposit growth in a weakening market UK household deposit growth has slowed Lloyds Banking Group has maintained growth in H1 2011 Good performance in our high street brands supported by customer led products Growth delivered th
Slide 13: Performance: Good progress on customer service
BUSINESS PERFORMANCE: CUSTOMER SERVICE Good progress on customer service CUSTOMER SERVICE Process simplification embedding across the Group to drive better end-to-end customer experience All Halifax branches to open every Saturday by the end of August Using customer insight to develop products
Slide 14: Performance: Good progress on complaint handling
BUSINESS PERFORMANCE: CUSTOMER SERVICE Good progress on complaint handling TARGET ACHIEVEMENT In March we announced stretching targets: Reduce the overall number of FSA reportable 9 24% reduction in level of complaints complaints we receive by 20% (excluding PPI) between H1 2010 & H1 2011 (excludi
Slide 15: Agenda
AGENDA ECONOMIC AND REGULATORY ENVIRONMENT BUSINESS PERFORMANCE STRATEGIC REVIEW GUIDANCE AND SUMMARY 14
Slide 16: Strategic Review: Best bank for customers and shareholders
STRATEGIC REVIEW A clear focus on being the best bank for customers and subsequently shareholders THE BEST BANK FOR CUSTOMERS STRONG BROAD STRONG CUSTOMER CUSTOMER MULTI- INTEGRATED ICONIC FOCUSED RELATION- CHANNEL PLATFORM BRANDS PEOPLE SHIPS DISTRIBUTION THE BEST BANK FOR SHAREHOLDERS CUSTOMER- CA
Slide 17: Strategic Review: Four key elements to deliver the strategy
STRATEGIC REVIEW Four key elements to deliver the strategy RESHAPE our business portfolio to fit Sustainable, predictable RoE, our assets, capabilities in excess of our CoE and risk appetite SIMPLIFY the Group Significant to improve agility, service, cost savings and positive and efficiency operatin
Slide 18: Strategic Review: Simplification
STRATEGIC REVIEW: SIMPLIFICATION Over £1.5billion of annual savings to be delivered in 2014 from over 100 projects WORKSTREAM PROGRAMME EXAMPLE PROJECT ACTIVITY End-to-end Processes Reduce account switching time by 30% OPERATIONS Develop a service orientated architecture & PROCESSES IT Simplificatio
Slide 19: Strategic Review: Investment initiatives
STRATEGIC REVIEW: INVESTMENT INITIATIVES Specific investment initiatives to drive revenue growth 18
Slide 20: Agenda
AGENDA ECONOMIC AND REGULATORY ENVIRONMENT BUSINESS PERFORMANCE STRATEGIC REVIEW GUIDANCE AND SUMMARY 19
Slide 21: Guidance: Group Financial Targets 2014
GUIDANCE Group Financial Targets 2014 Additional discretionary investment to £500m pa by 2014 CUSTOMER- grow our core customer franchise DRIVEN DIVERSIFIED Core income growth > nominal GDP growth OOI as % of total income(1) c50% of Group income INCOME Net interest margin 2.15 – 2.30%
Slide 22: Business Summary
BUSINESS SUMMARY Good progress in reducing the Group’s risk profile Reduction in non core assets Reduction in loan to deposit ratio Growth in customer relationship deposits Accelerated reduction in government and central bank facilities Provided clarity on PPI provisioning Resilient busine
Slide 23: 2011 Half-Year Results
2011 HALF-YEAR RESULTS 4 August 2011 António Horta-Osório Group Chief Executive
Slide 24: 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