Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — Q1 2021 Earnings Presentation
20 slides from Lloyds Banking's earnings presentation, Apr 28, 2021
Slide 1: Q1 Interim Management Statement
Q1 INTERIM MANAGEMENT STATEMENT Presentation to analysts and investors | 28 April 2021
Slide 2: Introduction
Classification: Public Introduction António Horta-Osório Group Chief Executive 1
Slide 3: Solid business momentum in Q1 with improved economic outlook
Classification: Public Solid business momentum in Q1 with improved economic outlook • Continued support for customers and businesses across our Helping Britain Recover focus areas • Solid financial performance in Q1 as business continues to recover • Balance sheet momentum driven by £6bn growth in o
Slide 4: Financial and strategic update
Classification: Public Financial and strategic update William Chalmers Chief Financial Officer 3
Slide 5: Solid financial performance, ahead of expectations
Classification: Public Solid financial performance, ahead of expectations Q1 2021 £3.7bn Net income1 • Net income recovering (7)% / +2% Cost:income ratio 52.3% - NII of £2.7bn; Q1 NIM of 2.49% and AIEAs of £439bn, both ahead of our expectations (incl. remediation)1 +2.6pp / (7.6)pp - Other income of
Slide 6: Strong start on delivering Strategic Review 2021
Classification: Public Strong start on delivering Strategic Review 2021 Selected examples of 2021 progress Helping Britain Recover Customer ambitions Enhanced capabilities Pay As You Grow and Recovery Preferred financial partner for Modernised technology architecture: Loan Scheme launched to support
Slide 7: Continued franchise growth
Classification: Public Continued franchise growth Q1 lending change Q1 deposit change (£bn) (£bn) Retail Commercial Retail Commercial +£4.5bn -£0.2bn +£9.5bn +£2.4bn 0.2 • Total mortgage balances up £5.4bn to £299.2bn, driven by £6bn increase in open mortgage book 4.1 • Unsecured balances down c.£1b
Slide 8: Resilient income with improved margins
Classification: Public Resilient income with improved margins Net interest margin (bps) +3bps • NII of £2.7bn in line with Q4 2020 2 249 • Q1 NIM of 2.49% and AIEAs of £439bn 246 1 2 • Structural hedge notional balance increased £21bn to (1) (1) £207bn; c.£40bn of maturities remaining in 2021 Q4 202
Slide 9: Operating costs continue to provide competitive advantage
Classification: Public Operating costs continue to provide competitive advantage Total costs (£m) (2)% 1,964 26 19 1,916 • Total costs of £1.9bn down 2% with operating (22) costs 1% lower (49) (22) - Sustained cost discipline Q1 2020 Cost savings Pay & inflation Investment & dep’n Other Remediation
Slide 10: Strong asset quality and improved economic outlook resulting in impairment release
Classification: Public Strong asset quality and improved economic outlook resulting in impairment release in the quarter Impairment (£m) Q1 21 Q1 20 YoY change Charges pre-updated MES1 209 368 (159) • Asset quality strong with new to arrears stable Retail 321 325 (4) - Retail credit experience remai
Slide 11: Credit quality remains strong with new to arrears stable
Classification: Public Credit quality remains strong with new to arrears stable Retail new to arrears (%) 1.2% • Observed credit experience remains benign, with 1.0% support schemes effective 0.8% 0.6% • Strong performance on Retail payment holidays with 0.4% 95% now fully matured; of which 94% repa
Slide 12: Statutory profit after tax improved to £1.4bn
Classification: Public Statutory profit after tax improved to £1.4bn (£m) Q1 21 Q4 20 Change Q1 20 Change • Restructuring costs of £173m largely driven by severance, technology R&D and property Underlying profit 2,071 1,312 58% 558 271% costs Restructuring costs (173) (233) 26% (63) (175)% • Volatil
Slide 13: RWAs lower with strong capital build in the quarter
Classification: Public RWAs lower with strong capital build in the quarter RWAs (£bn) £(3.8)bn • RWAs reduced by £3.8bn, primarily driven by 202.7 0.1 optimisation activity • Limited credit migration given quality of book (2.5) 198.9 (0.1) (1.1) (0.2) • 2021 RWAs to be broadly stable on 2020 FY 2020
Slide 14: Solid business momentum in Q1 with enhanced 2021 guidance
Classification: Public Solid business momentum in Q1 with enhanced 2021 guidance 2021 guidance based on Group’s current economic assumptions: • Helping Britain Recover: continued support for customers • Net interest margin now expected to be in excess of 245bps • Strategic Review 2021 delivering mom
Slide 15: Questions and Answers
Classification: Public Questions and Answers 14
Slide 16: Appendix
Classification: Public Appendix 15
Slide 17: Prudent economic scenarios
Classification: Public Prudent economic scenarios Current scenario (%) Change since Scenario ECL (£m) Economic measure 2021 FY 20201 2022 2023 2024 2025 2021-25 GDP 5.7 2.0 4.6 1.4 1.3 1.2 2.8 Interest rate 0.81 (0.33) 1.19 0.98 1.20 1.43 1.12 Upside 5,256 Unemployment rate 4.9 (0.5) 4.9 4.4 4.2 4.1
Slide 18: Modest reduction in coverage reflecting updated economic outlook
Classification: Public Modest reduction in coverage reflecting updated economic outlook L&A to Coverage1 (excl. Recoveries) Q4 2020 Total Net ECL P&L Write- Write-offs Customers Coverage ECL increase / charge / offs & ECL & Other (£m) (£bn) Stage 1 Stage 2 Stage 3 Total Total1 Q1 2021 (decrease) (cr
Slide 19: Continued low mortgage LTVs
Classification: Public Continued low mortgage LTVs Q1 20211 20201 20101 Mainstream Buy to let Specialist Total Total Total Average LTVs 42.7% 49.9% 40.5% 43.7% 43.5% 55.6% New business LTVs 62.2% 60.3% n/a 61.9% 63.9% 60.9% ≤ 80% LTV 90.2% 98.9% 94.8% 91.9% 91.6% 57.0% >80–90% LTV 9.4% 0.7% 1.8% 7.6
Slide 20: Forward looking statements
Classification: Public 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, p