Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — Debt Investor Presentation (2020)
31 slides from Lloyds Banking's debt investor presentation, 2020
Slide 1: Fixed Income Investor Presentation Q3 2020
FIXED INCOME INVESTOR PRESENTATION Q3 2020
Slide 2: Group Overview & Strategy
Classification: Limited Group Overview & Strategy 2
Slide 3: Simple group structure with multiple issuance points
Capital, Funding & Classification:Results Group Overview Limited Liquidity Appendix Simple group structure with multiple issuance points HoldCo Lloyds Banking Group Main Entities A3 / BBB+ / A+ Ratings1 P-2 / A-2 / F1 Neg / Neg / Neg Example Products Senior Unsecured - Capital Ring-Fenced Sub-Group
Slide 4: Encouraging business recovery with return to profitability in Q3
Capital, Funding & Group Overview Classification:Results Limited Liquidity Appendix Encouraging business recovery with return to profitability in Q3 • Open mortgage book up £3.5bn in Q3 and 22% share of approvals1 Encouraging business recovery in a • Supporting businesses with 18% share of governmen
Slide 5: Continuing to build an inclusive and more sustainable future
Capital, Funding & Group Overview Classification:Results Limited Liquidity Appendix Continuing to build an inclusive and more sustainable future Proactive response to coronavirus pandemic • Working with the Government, regulators and other stakeholders to help Britain recover • Proactively supportin
Slide 6: Well placed to deliver for shareholders
Capital, Funding & Group Overview Classification:Results Limited Liquidity Appendix Well placed to deliver for shareholders • Return to profitability with Q3 statutory profit after tax £688m and RoTE 7.4% OUR Helping Britain • Mortgage activity picking up strongly and increase in Retail current acco
Slide 7: Q3 2020 Results
Classification: Limited Q3 2020 Results 7
Slide 8: Resilient business model with return to profitability in Q3
Capital, Funding & Group Overview Classification:Results Limited Liquidity Appendix Resilient business model with return to profitability in Q3 Q3 20201 2020 YTD1 £3.4bn £10.8bn Net income (2)% (17)% Cost:income ratio 56.9% 53.8% • Q3 net income £3.4bn, down 2% on Q2; Q3 NIM 2.42% (incl. remediation
Slide 9: Strength of customer franchise in Q3
Capital, Funding & Group Overview Classification:Results Limited Liquidity Appendix Strength of customer franchise in Q3 Movement in lending in Q3 Movement in deposits in Q3 (£bn) (£bn) Retail Commercial Retail Commercial • £3bn net growth in mortgages in Q3 with £3.5bn +£2.6bn -£3.8bn +£5.4bn +£0.6
Slide 10: Emerging margin stability with stronger volume growth
Capital, Funding & Group Overview Classification:Results Limited Liquidity Appendix Emerging margin stability with stronger volume growth Net interest income and banking net interest margin (£, bps) £2.5bn £2.6bn +2bps • NII of £8.1bn YTD, £2.6bn in Q3 5 2 242 240 - Q3 NIM of 242bps, consistent with
Slide 11: Low level of customer activity continues to impact other income
Capital, Funding & Group Overview Classification:Results Limited Liquidity Appendix Low level of customer activity continues to impact other income Other income • Other income of £3.4bn YTD with £1.0bn in Q3 (£bn) • Q3 impacted by lower activity and c.£80m one-off charge relating to Asset Management
Slide 12: Continued progress in efficiency enabling ongoing strategic investment
Capital, Funding & Group Overview Classification:Results Limited Liquidity Appendix Continued progress in efficiency enabling ongoing strategic investment Total costs (£m) (4)% 6,043 78 (163) (65) 28 5,811 • Total costs of £5.8bn down 4% with operating costs down 4% (110) - 5% lower BAU costs enable
Slide 13: Strong underlying credit performance in Q3, although uncertainty remains
Capital, Funding & Group Overview Classification:Results Limited Liquidity Appendix Strong underlying credit performance in Q3, although uncertainty remains Impairment charges (£m) Q3 YTD Q3 20 H1 20 PY YTD Incr. Charges pre-updated MES 1,192 404 788 950 242 Retail 976 3981 578 816 160 • Impairment
Slide 14: Maintained prudent reserving across business lines
Capital, Funding & Group Overview Classification:Results Limited Liquidity Appendix Maintained prudent reserving across business lines ECL Net ECL P&L Write- ECL (£m) Q3 2020 increase charge offs 2019 Retail 4,289 1,493 2,418 (925) 2,796 Secured 1,772 556 624 (68) 1,216 • YTD impairment charge of £4
Slide 15: Diversified commercial portfolio with limited exposure to most impacted sectors
Capital, Funding & Group Overview Classification:Results Limited Liquidity Appendix Diversified commercial portfolio with limited exposure to most impacted sectors Lending in key coronavirus-impacted sectors1 (£bn) • Small reduction in balances in coronavirus-impacted sectors since half year Oil & g
Slide 16: Majority of first payment holidays matured with high proportion repaying
Capital, Funding & Group Overview Classification:Results Limited Liquidity Appendix Majority of first payment holidays matured with high proportion repaying Current status of Retail payment holidays and balances1 (£bn) PHs granted 62.7 1.6 2.1 2.2 • Payment holidays granted on £69bn of lending, with
Slide 17: Capital, Funding & Liquidity
Classification: Limited Capital, Funding & Liquidity 17
Slide 18: Improved CET1 position with significant resources to support customers
Capital, Funding & Classification:Results Group Overview Limited Liquidity Appendix Improved CET1 position with significant resources to support customers Common equity tier 1 ratio (%, bps) • Enhanced capital strength with CET1 ratio of 15.2% (14.0% excl. transitionals) +145bps • Q3 capital build o
Slide 19: Increased headroom over capital requirements
Capital, Funding & Classification:Results Group Overview Limited Liquidity Appendix Increased headroom over capital requirements Common equity tier 1 ratio 15.2% 13.8% Buffer to • UK CCyB – reduced to 0% in March; earliest Requirements c.4.2% implementation date for any increase is March 2022 1.7% •
Slide 20: Capital strength through the capital stack, with headroom above requirements
Capital, Funding & Classification:Results Group Overview Limited Liquidity Appendix Capital strength through the capital stack, with headroom above regulatory requirements Q3 20 Total Capital Stack Total Capital 22.6% Total Requirements c.16.3% • Total capital stack shows prudent headroom to regulat
Slide 21: Well positioned for end-state MREL requirements
Capital, Funding & Classification:Results Group Overview Limited Liquidity Appendix Well positioned for end-state MREL requirements Transitional MREL Ratio 36.5% • BOE Resolvability timeline unchanged at 1 Jan 2022; final SRB 1.7% requirement to be confirmed in Q4 CCB 2.5% • PRA reduced Group Pillar
Slide 22: Strong liquidity position maintained
Capital, Funding & Classification:Results Group Overview Limited Liquidity Appendix Strong liquidity position maintained 1 LCR well above regulatory minimum1 High Quality Liquidity Pool2 £125bn £126bn £130bn £139bn • Average LCR % remains comfortably above regulatory minimum at 138% 137% 138% • Liqu
Slide 23: Group funding portfolio strongly positioned, with 2020 issuance plan largely complete
Capital, Funding & Classification:Results Group Overview Limited Liquidity Appendix Group funding portfolio strongly positioned, with 2020 issuance plan largely complete Funding Portfolio by Maturity at Q3 2020 9M 2020 Funding by Product £bn • Steady-state requirements remain 1 5 < 1 Year (MM) c.£15
Slide 24: Credit ratings remain strong, with negative pressures due to the pandemic
Capital, Funding & Classification:Results Group Overview Limited Liquidity Appendix Credit ratings remain strong, with negative pressures due to the pandemic Ring-Fenced Non-Ring- HoldCo Bank Fenced Bank Lloyds Bank, Lloyds Bank Lloyds UK Sovereign Bank of Corporate Commentary Banking Group Scotland
Slide 25: Appendix
Classification: Limited Appendix 25
Slide 26: Prudent economic scenarios
Capital, Funding & Group Overview Classification:Results Limited Liquidity Appendix Prudent economic scenarios Current scenario (%) Probability Balance sheet Scenario weighting (%) ECL (£m) Economic measure 2020 2021 2022 2020-22 GDP (10.0) 6.0 3.0 (1.7) Interest rate 0.10 0.10 0.10 0.10 Base case 3
Slide 27: Coverage across business lines
Capital, Funding & Group Overview Classification:Results Limited Liquidity Appendix Coverage across business lines Drawn balances (£m)1 Expected credit loss provisions (£m) 1 Coverage (excl. Recoveries) Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Retail
Slide 28: Continued low mortgage LTVs
Capital, Funding & Group Overview Classification:Results Limited Liquidity Appendix Continued low mortgage LTVs September 20201 Dec 20191 Dec 20101 Mainstream Buy to let Specialist Total Total Total Average LTVs 42.4% 50.0% 41.5% 43.5% 44.9% 55.6% New business LTVs 65.2% 57.4% n/a 63.9% 64.3% 60.9%
Slide 29: Notes
Classification: Limited Notes 29
Slide 30: Debt Investor Relations Contacts
Classification: Limited Debt Investor Relations Contacts Website: www.lloydsbankinggroup.com/investors/fixed-income-investors INVESTOR RELATIONS LONDON Douglas Radcliffe Edward Sands Group Investor Relations Director Director, Investor Relations +44 (0)20 7356 1571 +44 (0)20 7356 1585 Douglas.Radcli
Slide 31: Forward looking statements
Classification: Limited Forward looking statements This document contains certain forward looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and section 27A of the US Securities Act of 1933, as amended, with respect to the business, strategy,
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