Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — H1 2012 Earnings Presentation
70 slides from Lloyds Banking's earnings presentation, Jul 26, 2012
Slide 1: 2012 Half-Year Results
2012 HALF-YEAR RESULTS 26 July 2012
Slide 2: Agenda
AGENDA ACHIEVEMENTS AND GROUP PERFORMANCE António Horta-Osório, Group Chief Executive H1 2012 FINANCIAL RESULTS George Culmer, Culmer Group Finance Director UPDATE ON COSTS AND SIMPLIFICATION Mark Fisher, Director, Group Operations SUMMARY António Horta-Osório, Group Chief Executive 1
Slide 3: Highlights in H1 2012
HIGHLIGHTS IN H1 2012 Continued delivery of strategic objectives Further balance sheet strengthening and risk reduction Resilient underlying performance in challenging environment Good progress on strategic initiatives Strengthened management team working well Continue to work through lega
Slide 4: Balance Sheet Strengthened: Customer deposits and loan to deposit ratio
BALANCE SHEET STRENGTHENED Customer deposits increasing and loan to deposit ratio continues i to improve i GROUP CUSTOMER DEPOSITS(1) (£bn) LOAN TO DEPOSIT RATIO(2) 154% 6% 419 144% 406 135% 395 126% 6% 120% 383 114% 109% 103% Dec Jun Dec Jun Dec Jun Dec Jun 2010 2011 2011 2012 2010 2011 2011 2012 C
Slide 5: Balance Sheet Strengthened: Non-core asset reduction
BALANCE SHEET STRENGTHENED Non-core asset reduction ahead of expectations NON-CORE PORTFOLIO (£bn) RWAs: 144 129 109 93 ≤50 Substantial non-core asset reduction in H1 to £118bn 194 27% Non-core now represents 12% of total assets 162 141 £44bn reduction since June 2011 118 H1 reductions capit
Slide 6: Balance Sheet Strengthened: Capital position
BALANCE SHEET STRENGTHENED Capital position continues to improve CAPITAL 11% 16.6% 15 2% 15.2% 15.6% 15 0% 15.0% Core tier 1 ratio continues to improve, driven by: – management profit – lower RWAs 11.3% – offset by one-off items 10.8% 10.2% 10.1% Fully loaded Basel 3 core tier 1 ratio of 7.7%, u
Slide 7: Financial Performance: Resilient underlying business performance
FINANCIAL PERFORMANCE Resilient underlying business performance GROUP CORE H1 H1 Change H1 H1 Change (£m) 2012 2011 % 2012 2011 % Underlying income(1) 9,246 11,103 (17)% 8,602 9,704 (11)% Total costs (5,025) (5,332) 6% (4,647) (4,860) 4% Impairment (3,157) (5,422) 42% (978) (1,636) 40% Underlying pr
Slide 8: Investing to Grow
INVESTING TO GROW Investment in strategic initiatives driving franchise forward Over 900,000 customer registrations received for the Halifax Savers’ Prize Draw, an i increase off over 350,000 350 000 in i the th first fi t half h lf off the th year 9 million active internet banking users and 2.5
Slide 9: Core Retail Performance
CORE RETAIL PERFORMANCE Improved profitability from lower costs and reduced i impairment i CORE H1 H1 Change CORE LOANS(2) AND RWAs (£bn) (£ ) (£m) 2012 2011 % 325.1 322.0 320.1 Underlying income 4,221 4,524 (7)% Total costs (2 086) (2,086) (2 218) (2,218) 6% Impairment (735) (1,052) 30% 92.6 90.5 9
Slide 10: Core Wholesale Performance
CORE WHOLESALE PERFORMANCE Returns reflect challenging environment CORE H1 H1 Change KEY MESSAGES (£ ) (£m) 2012 2011 % Underlying income reflects reduced Underlying income 1,601 1,907 (16)% demand for lending and higher wholesale funding costs Total costs (718) (705) (2)% Total costs include co
Slide 11: Core Commercial Performance
CORE COMMERCIAL PERFORMANCE Delivering consistent market outperformance CORE H1 H1 Change NET LENDING GROWTH (£ ) (£m) 2012 2011 % 4% Underlying income 792 826 (4)% Total costs (430) (468) 8% Market(2) Impairment (116) (160) 28% LBG(3) Underlying profit 246 198 24% (4)% CUSTOMER DEPOSITS(4) (£bn) Ba
Slide 12: Core Insurance Performance
CORE INSURANCE PERFORMANCE Returns impacted by market volatility and adverse weather conditions di i CORE H1 H1 Change KEY MESSAGES (£ ) (£m) 2012 2011 % Underlying income impacted by lower Underlying income 1,085 1,252 (13)% economic assumptions (£99m) and reduced creditor income of £25m Weather
Slide 13: Core Wealth, Asset Finance and International Performance
CORE WEALTH, ASSET FINANCE AND INTERNATIONAL PERFORMANCE C Continued i d good d returns and d strong deposit d i growth h CORE H1 H1 Change CORE ASSETS AND RWAs (£bn) (£ ) (£m) 2012 2011 % (6)% (7)% Underlying income 1,123 1,163 (3)% 13.3 12.5 10.8 10.0 Total costs (914) (953) 4% Impairment (16) (17
Slide 14: Best Bank for Customers: Customer experience
BEST BANK FOR CUSTOMERS Integrated customer service plans are driving improved customer experience i across all ll brands b d and d channels h l NPS(1) BY BRAND GROUP NPS(1) 11% 8% 49 22% 20% 54 44 50 38 45 42 35 37 Halifax Bank of Scotland Lloyds y TSB 2010 2011 H1 2012 2011 H1 2012 Continued focus
Slide 15: Best Bank for Customers: Reducing complaints
BEST BANK FOR CUSTOMERS Further good progress on reducing complaints FSA REPORTABLE COMPLAINTS FOS CHANGE RATE(2) BANKING COMPLAINTS PER 1,000 ACCOUNTS(1) 55% Bank A 42% 54% 50% 24 2.4 45% 2.1 Bank B 42% 40% Bank C 36% 1.7 35% 1.5 30% 1.4 Bank D 28% 25% 23% 20% H1 H2 H1 H2 H1 H2 H1 H2 H1 2010 2010 2
Slide 16: Best Bank for Customers: Growth in customer deposits
BEST BANK FOR CUSTOMERS Continued cost-effective growth in customer deposits RETAIL DEPOSITS H1 2012 CASH ISAs(3) (YEAR-ON-YEAR GROWTH) (HEADLINE ADVERTISED RATE) 3.30% 2011 June 2012 3.05% 8% 2.75% 2.50% 4.9% 5 1% 5.1% 5% 2.35% 2.35% 4.0% 3% 2.00% 2 6% 2.6% UK LBG UK LBG Lloyds Halifax Other Bank L
Slide 17: Agenda
AGENDA ACHIEVEMENTS AND GROUP PERFORMANCE António Horta-Osório, Group Chief Executive H1 2012 FINANCIAL RESULTS George Culmer, Culmer Group Finance Director UPDATE ON COSTS AND SIMPLIFICATION Mark Fisher, Director, Group Operations SUMMARY António Horta-Osório, Group Chief Executive 16
Slide 18: Financial Performance: Resilient underlying business performance
FINANCIAL PERFORMANCE Resilient underlying business performance GROUP CORE H1 H1 Change H1 H1 Change (£m) 2012 2011 % 2012 2011 % Net interest income 5,215 6,355 (18)% 4,948 5,536 (11)% Other operating income(1) 4,031 4,748 (15)% 3,654 4,168 (12)% Underlying income 9,246 11,103 (17)% 8,602 9,704 (11
Slide 19: Income
INCOME Income reflects subdued demand, non-core asset reduction and d lower l margin i GROUP UNDERLYING INCOME(1) (£m) (17)% 11,103 Lower customer balances and higher (648) (78) 9,246 wholesale funding (254) (266) (197) costs (257) (157) Insurance impacted £360m Core by economic £288m Non-core a
Slide 20: Group Net Interest Margin
GROUP NET INTEREST MARGIN Stable core margin NET INTEREST MARGIN GROUP MARGINS 2.01% 0.08% 1.93% (0.08)% (0.06)% (0.02)% 2.47% 2.39% 2.47% 2.34% 2.32% 2.32% 2.16% 2.09% 2.05% 1.97% 1.95% 1.91% H2 Asset Deposit Wholesale Other H1 2011 pricing spread funding 2012 & mixi & mix i costs 1.24% CORE MARGIN
Slide 21: Reshaping Our Portfolio: Asset quality
RESHAPING OUR PORTFOLIO Asset quality improvement as a result of robust risk management ASSET QUALITY RATIO 5.68% 5.41% Overall Group improvement driven by 4.87% continued good credit experience and 4.32% reduced non-core assets: 3.33% – Retail: tightened credit policy and ongoing effective portfo
Slide 22: Impairment
IMPAIRMENT Improving risk criteria and non-core asset reduction reduce i impairment i GROUP (£bn) RETAIL (£bn) COMMERCIAL (£bn) 42% 35% 32% 6.6 1.2 0.8 0.9 5.4 0.6 0.2 0.1 4.4 H1 H1 H1 H1 2011 2012 2011 2012 47 4.7 S Secured d U Unsecured d 3.8 3.2 WHOLESALE (£bn) W,AF&I (£bn) 3.1 31% 51% 22 2.2 26
Slide 23: New to Arrears and Impairments
NEW TO ARREARS AND IMPAIRMENTS Improving portfolio trends at divisional level RETAIL SECURED (£bn) RETAIL UNSECURED (£bn) New to arrears New to arrears 14.5 13.2 12.5 2.6 2.2 1.8 H1 H2 H1 H1 H2 H1 2011 2011 2012 2011 2011 2012 WHOLESALE (£m) COMMERCIAL (£m) 4,680 New to impaired New to impaired 3 83
Slide 24: Financial Performance: Statutory reconciliation
FINANCIAL PERFORMANCE Statutory reconciliation H1 H1 KEY MESSAGES (£m) 2012 2011 Management profit 1,165 1,104 Simplification costs of £274m with further run-rate savings of £270m Volatility arising in insurance business (24) (177) Verde costs in the first half of £239m Integration, Simplificati
Slide 25: Balance Sheet Progress
BALANCE SHEET PROGRESS Continued risk reduction; key balance sheet ratios improved Change 2012 MOVEMENTS GROUP Jun Mar Dec % (£bn) 2012 2012 2011 Jun/Dec (£bn) Q1 Q2 Total ASSETS Loans and advances(1) 529 536 549 (4)% Deposit growth 6 7 13 –Core loans and Lower core loans and 429 430 437 (2)% 7 1 8
Slide 26: Non-Core Reductions
NON-CORE REDUCTIONS Continued disciplined portfolio and risk reductions NON-CORE PORTFOLIO (£bn) OTHER CORPORATE (£bn) RWAs 144 109 93 ≤50 23 Total net Aviation 2 external assets 194 Leveraged finance 4 Corporate 4 T Treasury assets t 49 5 Other 141 Shipping 8 UK CRE 24 23 118 Jun 2012 19 12 Other c
Slide 27: Wholesale Funding
WHOLESALE FUNDING Lower wholesale funding due to non-core reduction and strong deposit d i growth h WHOLESALE FUNDING MATURITY PROFILE (£bn) 298 (15)% Overall wholesale funding 251 requirement reduced by £37bn in the 231 first half 214 149 Short-term wholesale funding now reduced to £73bn from £
Slide 28: Liquidity
LIQUIDITY Strong liquid asset positions provide future flexibility PRIMARY AND SECONDARY LIQUIDITY (£bn) 295% 215 179% 202 coverage coverage Strong primary liquidity in excess of 110 short-term funding requirement 107 Total liquidity covers short-term funding requirement by nearly 3 times Stro
Slide 29: Capital
CAPITAL Strong capital position CORE TIER 1 RATIO 0.5% 0.1% 11.3% Core tier 1 ratio improved to 10.8% 0.4% 11.3% and ‘fully loaded’ Basel (0.5)% 3 core tier 1 ratio increased to 20% Core 7.7% 80% Non Non-core core Risk-weighted assets Improvements driven by: Dec 2011 Management Balance Risk prof
Slide 30: Agenda
AGENDA ACHIEVEMENTS AND GROUP PERFORMANCE António Horta-Osório, Group Chief Executive H1 2012 FINANCIAL RESULTS George g Culmer,, Group p Finance Director UPDATE ON COSTS AND SIMPLIFICATION Mark Fisher, Director, Group Operations SUMMARY António Horta-Osório, Group Chief Executive 29
Slide 31: H1 2012 Total Costs
H1 2012 TOTAL COSTS Total costs reduced 6% H1 2012 vs. H1 2011 TOTAL COSTS H1 H1 Change H2 ((£m)) 2012 2011 % 2011 Total costs 5,025 5,332 6% 5,289 Simplification savings annual run rate 512 – – 242 Simplification investment costs 274 – – 185 30
Slide 32: Total Costs – Trend 2009 to 2012
TOTAL COSTS – TREND 2009 TO 2012 Good momentum in cost reduction TOTAL COSTS (£m) 5,891 5,718 5,585 5,493 5,332 5,289 5,025 H1 H2 H1 H2 H1 H2 H1 2009 2009 2010 2010 2011 2011 2012 31
Slide 33: Total Costs – H1 2011 to H1 2012
TOTAL COSTS – H1 2011 TO H1 2012 Simplification and remaining integration synergies drive a cost reduction d i off £307m £307 (6%) ffrom H1 2011 TOTAL COSTS (£m) 6% 5,332 , (168) 46 5,025 135 (22) (298) H1 Integration Simplification Incremental Wage Other cost H1 2011 synergies i costt savings i GSI
Slide 34: Simplification on Track
SIMPLIFICATION ON TRACK Strong progress in first half of 2012 £512m annual run rate savings 4,555 FTE reductions announced YTD and 6,653 cumulative Over half FTE reductions through natural attrition, management of existing vacancies and redeployment Number of suppliers now reduced from c18,0
Slide 35: Benefits for Customers Being Delivered
BENEFITS FOR CUSTOMERS BEING DELIVERED Simplification is improving the customer experience, examples l include i l d Switchers 100,000+ 100 000+ account transfers since launch in April (Account Transfer) Error rates reduced by two-thirds ISA / Fixed Term 69% higher tax year end volumes managed
Slide 36: Simplification Cost Savings
SIMPLIFICATION COST SAVINGS Good pipeline of early deliverables in first year of programme SIMPLIFICATION RUN RATE SAVINGS (£bn) 2.0 £1.9bn exit run rate at end of 2014 1.5 E2E Processes 1.0 Sourcing g 0.5 Organisation Location, Channel, Product & IT Landscape Q3 2011 H1 2012 2013 2014 2015 2011 201
Slide 37: Agenda
AGENDA ACHIEVEMENTS AND GROUP PERFORMANCE António Horta-Osório, Group Chief Executive H1 2012 FINANCIAL RESULTS George g Culmer,, Group p Finance Director UPDATE ON COSTS AND SIMPLIFICATION Mark Fisher, Director, Group Operations SUMMARY António Horta- Horta-Osório, Group Chief Executive 36
Slide 38: Summary
SUMMARY Continued reshaping of the balance sheet and risk reduction together h with i h resilient ili business b i performance f Continued progress in strategy implementation – Balance sheet further strengthened and risk reduced – Resilient earnings in challenging environment – Strengthened manage
Slide 39: Outlook
OUTLOOK Our strategy and operating model positions us well to deliver i the in h new externall environment i The operating environment remains challenging – The outlook for the UK economy remains uncertain – Deleveraging will continue and interest rates likely to remain lower for longer – Regulato
Slide 40: Questions & Answers
LLOYDS BANKING GROUP ce QUESTIONS & ANSWERS
Slide 41: Appendix
LLOYDS BANKING GROUP spd APPENDIX
Slide 42: Loans and Advances to Customers
LOANS AND ADVANCES TO CUSTOMERS LOANS AND ADVANCES TO CUSTOMERS £552.4bn(1) 30 Jun 2012 Financial, business and other services 9% Property companies 11% Personal other 5% Construction 2% Manufacturing Personal mortgages 2% 62% Corporate Other 1% Agriculture, forestry and fishery 1% Lease financing a
Slide 43: Mortgage New Business Distribution
MORTGAGE NEW BUSINESS DISTRIBUTION UK MORTGAGE PORTFOLIO £327.2bn(1) NEW BUSINESS £12.3bn 30 Jun 2012 6 months to 30 June 2012 Specialist Homemovers 4.7 First time 26.5 buyers 28 2.8 38% Buy to let 48.7 23% 252.0 14% 16% Buy to let 9% 1.7 Remortgages M i t Mainstream 20 2.0 Further advances 1.1 (1)B
Slide 44: Mortgage Portfolio LTVs
MORTGAGE PORTFOLIO LTVs Mainstream Buy to let Specialist Total Average LTVs 52.1% 73.5% 72.2% 55.7% New business LTVs 62.0% % 63.9% % n/a / 62.3% % ≤80% LTV 63.6% 52.1% 42.3% 60.1% >80–90% LTV 16.4% 16.3% 19.9% 16.7% >90–100% LTV 10.6% 16.4% 18.5% 12.1% >100% LTV 9.4% 15.2% 19.3% 11.1% Value >100% L
Slide 45: UK Mortgage Portfolio
UK MORTGAGE PORTFOLIO Books performing satisfactorily with stable profiles 31 DEC 2011 (£bn) 30 JUN 2012 (£bn) 39.7 3.1 36.4 2.9 332.1 327.2 (12.0)% (0.9)% (11.1)% (0.9)% 27.3 5.4 0.8 26.5 5.1 0.8 (8.2)% (19.8)% ((2.9)% ) ((8.1)% ) ((19.2)% ) (3 0)% (3.0)% 48.3 7.6 0.6 48.7 7.5 (15.7)% 0.5 (14.6)% (
Slide 46: UK Mortgage Forbearance
UK MORTGAGE FORBEARANCE Stable forbearance activity CUSTOMERS NEW TO FORBEARANCE 2500 2000 1500 1000 500 0 Mar Jun Sep Dec Mar Jun Sept Dec Mar Jun 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 Based on the UK Secured June 2012 numbers, payment assistance breaks and term extensions offered to
Slide 47: UK Mortgage Portfolio Impairment Coverage
UK MORTGAGE PORTFOLIO IMPAIRMENT COVERAGE UK MORTGAGES JUN 2012 JUN 2011 Loans and advances to customers (gross) (1) £327bn £336bn Impaired loans £6.4bn £6.7bn Impaired loans as % of closing advances 1.9% 2.0% Impairment provisions £1.6bn £1.7bn Impairment provisions as % of impaired loans 25.5% 25.
Slide 48: Mortgage Portfolio Trends
MORTGAGE PORTFOLIO TRENDS NUMBER OF TOTAL CASES >3 MONTHS IN ARREARS (000’s) Percentage of total cases >3 months in arrears 60 2.1% 50 40 CML(1) 2.0% 30 20 7.7% 10 1.7% 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12
Slide 49: 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 12,530 H1 H2 H1 H2 H1 H2 H1 2009 2009 2010 2010 2011 2011 2012 48
Slide 50: Secured Arrears Stable
SECURED ARREARS STABLE MORTGAGE CASES >90 DAYS IN ARREARS (£bn) (EXCL. REPOSSESSIONS) 10.1 10.1 9.5 9.7 9.6 9.6 9.6 9.5 9.7 9.6 9.6 9.6 2.5 2.3 2.3 2.4 2.4 2.4 66 6.6 57 5.7 1.2 12 1.2 58 5.8 11 1.1 12 1.2 12 1.2 11 1.1 6.1 6.1 5.9 6.4 6.1 6.2 6.0 6.0 6.1 3.7 3.8 3.9 3.5 3.4 3.6 H2 H1 H2 H1 H2 H1 H2
Slide 51: Mortgage Portfolio – New Repossessions
MORTGAGE PORTFOLIO – NEW REPOSSESSIONS PROPERTIES IN REPOSSESSION NEW REPOSSESSIONS (% OF MORTGAGE CASES) (% OF TOTAL CASES) 0.25% 0.20% 0 09% 0.09% 0.15% 0.12% 0.06% 0.09% 0 10% 0.10% CML(1) Lloyds Banking 0.05% Group(2) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 31 March 30 June 08 08 0
Slide 52: Unsecured Lending Portfolio
UNSECURED LENDING PORTFOLIO UNSECURED PORTFOLIO £23.4bn(1) 30 Jun 2012 9.7 Credit cards Personall currentt P 2.5 accounts 11.2 Loans Cards Loans Impairment charge as a % of average lending 4.38% 3.55% (1)Before allowance for impairment losses and fair value adjustments. 51
Slide 53: Unsecured Lending Portfolio
UNSECURED LENDING PORTFOLIO IMPAIRED BALANCE (£m) NEW TO ARREARS (£m) 3,603 3,367 413 3,130 2,981 775 333 2,695 746 2,632 243 2,370 1,619 , 2 250 2,250 295 2,014 688 1,416 253 519 1,807 1,350 1,748 1,100 1,653 475 923 1,361 1,172 1,571 956 1,232 1,102 975 844 838 731 583 559 376 Jun Dec Jun Dec Jun
Slide 54: Loans and Advances to Corporate Customers
LOANS AND ADVANCES TO CORPORATE CUSTOMERS LOANS AND ADVANCES TO CORPORATE CUSTOMERS £181.2bn(1) 30 Jun 2012 Transport, distribution and hotels 17% Property companies 33% Construction 5% Manufacturing 5% Corporate Other 3% Agriculture, forestry and fishing 3% Lease financing and hire purchase 7% Fina
Slide 55: Commercial/Residential Property
COMMERCIAL/RESIDENTIAL PROPERTY COMMERCIAL/RESIDENTIAL PROPERTY Core TOTAL Non Core £51.9bn(1) UK UK Business OVERSEAS MAINSTREAM Support pp Unit £21.9bn £12.8bn £17.2bn(2) c78% (£17.0bn) Commercial Real Gross £12.8bn/Net £9.2bn Ireland (Gross £10.0bn/Net £3.8bn) Estate 92% impaired, with a co
Slide 56: UK Commercial/Residential Property
UK COMMERCIAL/RESIDENTIAL PROPERTY UK COMMERCIAL/RESIDENTIAL PROPERTY BOOK £34.7bn(1) (28)% 48.5 43.9 40.8 36.6 34.7 J Jun D Dec J Jun D Dec J Jun 2010 2010 2011 2011 2012 Recent reduction reflects strategic focus (1)Gross (pre FV adjustment and impairment). Includes Joint Ventures. Excludes £10.0bn
Slide 57: Leveraged Finance Lending
LEVERAGED FINANCE LENDING LEVERAGE FINANCE LENDING (£bn) Lloyds Acquisition Finance Gross £7.1bn / Net £5.8bn Portfolio exposure has reduced with new business more than offset by asset repayment, sales & write offs 16.2 A highly selective origination 1.5 14.5 strategy. Predominantly UK focused 1
Slide 58: Irish Portfolio
IRISH PORTFOLIO Robust coverage which minimises downside risks PORTFOLIO BREAKDOWN (£bn) 31 Dec 2011 30 Jun 2012 Portfolio size: £24.8bn (€29.6bn) Portfolio size: £22.9bn (€28.2bn) 24.8 16.4 10.2 22.9 15.3 10.3 7.0 6.7 1.4 1.0 1.5 1.1 6.9 5.1 6.2 29 2.9 4.7 3.0 10.9 10.0 98 9.8 91 9.1 6.2 6.2 Loan I
Slide 59: Irish Portfolio
IRISH PORTFOLIO Robust coverage which minimises downside risks IMPAIRED LOAN RATE AND COVERAGE RATIO TREND Ireland Wholesale Ireland Retail(1) 70% 70% 67% 65% 65% 61% 55% 53% 45% 40% 39% 86% 40% 36% 84% 84% 69% 58% 44% 13% 20% 22% 17% 15% 7% 11% 9% 6% H1 09 H2 09 H1 10 H2 10 H1 11 H2 11 H1 12 H1 09
Slide 60: Irish Wholesale Portfolio
IRISH WHOLESALE PORTFOLIO Robust coverage which minimises downside risks WHOLESALE IRELAND AS AT 30 JUN 2012 (£bn) 16.2 % of Portfolio Impaired 13.8 Rate(1) 85.5% 6.2 38% 4.7 76% Coverage 92 9.2 R ti (2) 66.8% Ratio 66 8% 4.6 28% 3.0 65% 4.5 99% CRE CRE £10.0 £9.1 3.7 81% CRE 5.4 34% 4.6 85% £6.2 2.
Slide 61: Australasian Wholesale CRE Portfolio
AUSTRALASIAN WHOLESALE CRE PORTFOLIO Significant progress made in de-risking the Australasian CRE portfolio f li NET EXPOSURE (£bn) 5.2 4.4 3.2 1.3 04 0.4 Jun Dec Jun Dec Jun 2010 2010 2011 2011 2012 60
Slide 62: Impairment Losses on Loans and Advances to Customers
IMPAIRMENT LOSSES ON LOANS AND ADVANCES TO CUSTOMERS H1 2012 H1 2011 % of average lending Impairment £m £m H1 2012 H1 2011 Retail 758 1,173 0.43% 0.65% – Secured (mortgages) 173 295 0.11% 0.18% – Unsecured 585 878 4.80% 6.46% Wholesale 993 1,442 1.52% 1.98% Commercial 109 160 0.72% 1.07% Wealth, Ass
Slide 63: Impaired Asset Ratios – Group
IMPAIRED ASSET RATIOS – GROUP Wealth, Asset 30 Jun 2012 Retail Wholesale Commercial Finance and Group(1) International Loans and advances £350.6bn £118.0bn £30.2bn £56.5bn £561.3bn to customers (gross)(2) Impaired loans £8 4bn £8.4bn £22 5bn £22.5bn £2 9bn £2.9bn £19 2bn £19.2bn £53 0bn £53.0bn Impa
Slide 64: Non-Core Reductions
NON-CORE REDUCTIONS Non-core reductions continue to be capital accretive H1 2012 FY 2011 Loss before tax(1) (£m) (1,550) (3,664) Post tax loss ‘capital consumed’ (£m) (1,163) (2,693) Reduced RWAs (£bn) 15.4 35.1 at 10% ‘capital released’ (£m) 1,540 3,513 Increase in EEL(2) ((£m)) 14 ((515)) Net capi
Slide 65: Selected Eurozone Exposures
SELECTED EUROZONE EXPOSURES Substantial reductions achieved and minimal sovereign exposures remaini Banks & other Insurance Sovereign financial shareholder £m debt institutions ABS Wholesale Personal assets Total I l d Ireland – 895 344 7 603 7,603 5 410 5,410 111 14 363 14,363 Spain 31 1,261 206 2,
Slide 66: Reducing Our Wholesale Funding Requirements
REDUCING OUR WHOLESALE FUNDING REQUIREMENTS Maintaining broad spread of wholesale funding £bn Jun 2012 Dec 2011 WHOLESALE FUNDING £214bn Bank deposits(1) 22 25 > 1 year 66% Certificates of deposit 17 28 M di Medium-term t notes t 53 70 2 – 5 years £58bn >5 years Covered bonds 41 37 £57bn Commercial
Slide 67: Successful Term Issuance – Achieved in H1 2012
SUCCESSFUL TERM ISSUANCE – ACHIEVED IN H1 2012 Utilising a wide variety of funding products and sources H1 2012 PUBLIC TERM H1 2012 PUBLIC TERM TERM ISSUANCE ISSUANCE BY PRODUCT (£bn) ISSUANCE BY CURRENCY (£bn) 1.0 c£11.9bn of public term issuance and c£7.6bn of 4.1 4.3 2.5 private placements comp
Slide 68: Projected Fair Value Unwind
PROJECTED FAIR VALUE UNWIND PROJECTED FAIR VALUE UNWIND (£bn) 0.9 2012 Fair value unwind including fair value unwind from asset sales in H1 only y 2013–2015 Fair value unwind excluding fair value unwind on asset sales (0.1) (0.1) (0.3) 2012 2013 2014 2015 Further fair value unwind expected 67
Slide 69: Net Tangible Assets
NET TANGIBLE ASSETS NET TANGIBLE ASSETS (£bn) NET TANGIBLE ASSETS PER SHARE (p) 58.6 40.3 0.6 40.4 (0.5) 0.5 57.4 (1.0) (0 7) (0.7) Dec H1 2012 Other June Dec Share H1 2012 Other June 2011 Earnings 2012 2011 issues Earnings 2012 impact impact 68
Slide 70: Forward Looking Statements and Basis of Presentation
FORWARD LOOKING STATEMENTS AND BASIS OF PRESENTATION FORWARD LOOKING STATEMENTS This presentation 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