Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — Debt Investor Presentation (February 2025)
36 slides from Lloyds Banking's debt investor presentation, Feb 20, 2025
Slide 1: 2024 Results Fixed Income Presentation
2024 Results Fixed Income Presentation Lloyds Banking Group 20 February 2025
Slide 2: Leading UK digital bank and integrated financial services provider
Leading UK digital bank and integrated financial services provider he BANKING GROUP Lloyds Banking Group Retail Commercial Insurance, Pensions & Consumer Consumer ets Corporate & Investments Beletionships fending Commercial Institutional + Current accounts + Mortgages + Business loans + Lending & de
Slide 3: Significant strategic progress, building momentum
Significant strategic progress, building momentum Purpose-led strategy delivering for customers and wider stakeholders Purpose e H el pl ng First strategic chapter successfully completed, building broad momentum e e B rital n Robust financial performance in line with guidance Prosper Strong capital
Slide 4: Successfully creating a platform for growth and higher returns
Successfully creating a platform for growth and higher returns os Buildinga differentiated franchise Unlocking higher, more sustainable returns 1- Includes existing customers who have rece 2021 c.15m mobile app users >2m Mass Affluent customers c.10% share of BCB products originated and fulfilled di
Slide 5: Robust financial performance in 2024
Robust financial performance in 2024 Positive business momentum Largest UK digital bank 22.7m (+6%) FY24 digitally active users OO! growth 9% FY24 YoY Loan! / deposit growth 3% [2% FY24 NIM turnaround +2bps 4Q24 QoQ Disciplined costs £9.4bn FY24 operating costs Open book AUA growth 13% FY24 oe LLOYD
Slide 6: Financial update
Financial update
Slide 7: Robust financial performance
Robust financial performance Financial performance (£m) FY FY YoY Q4 Qs 2024 2023 % 2024 2024 Net interest income 12,845 13,765 (7) ~—-3,276 3,231 Other income 5,597 5,123 9 1,433 1,430 Operating lease depreciation (1,325) (956) (39) G31) (315) Net income 17,117 17,932 (5) 4,378 4,346 Operating cost
Slide 8: Growth in lending and deposits
Growth in lending and deposits Q4 lending change (£bn) Retail Commercial +£2.9bn/+1% -£0,3bn/-0% (+£3.9bn excl. securitisation) 3.2 0.3 (0.3) (1.0) (1.0) Mortgages Corporate and (ex. securitisation) Ml Institutional Banking (CIB) [By vnsecured loans Hh other Motor Finance Business and Commercial Ban
Slide 9: Resilient net interest income performance
Resilient net interest income performance os BANKING GROUP Average interest earning assets! (bn) 1.6 oy 25 2024 NII £12.8bn, down 7% YoY, Q4 up 1% 4535 en) o Growth in NII and NIM in H2; Q4 Nil up after Q3 upturn 2) 2024 AIEAs £451.2bn; Q4 AIEAs £455.1bn 2024 NIM 295bps; Q4 NIM 297bps, up 2bps vs. Q
Slide 10: Growth in mortgages
oe Growth in mortgages LLOvDs Mortgage book (Book size bn, Gross margin %!) 1.16% 1.02% 0.93% 306 307 312 YoY ee 3% 24 20 10 = - 10 Mortgage balances £312.3bn, up £6.1bn in 2024, up £8.0bn excl. securitisations o 2024 flow market share c.20%, above stock share c.19% Completion margins? c.75bps in Q4
Slide 11: Solid performance in consumer and commercial lending
Solid performance in consumer and commercial lending wes BANKING GROUP Cards, Loans & Motor (Book size £bn, Gross margin %!) H2 2024 5.56%? H1 2024 5.50% . * Cards, Loans & Motor up £2.8bn in 2024 H2 2025 5.60% o Unsecured loans up £2.2bn BB caras Loans Motor (used) — ] Motor (new)s 9 Creche cares u
Slide 12: Growing customer deposit franchise
Growing customer deposit franchise Customer deposits (Book size £bn, Gross margin %') 1.22% 1.13% 1.19% YoY 47 475 485 103 102 101 (% 7% _ : —a 10 10 H2 2023 H1 2024 H2 2024 Retail current accounts Other Retail savings accounts BB weaith HE commercial Banking deposits 1- Gross margin is short term f
Slide 13: Strengthening tailwind from the structural hedge
Strengthening tailwind from the structural hedge wes BANKING GROUP Hedged balances! (£bn) 247 242 242 77 7 ad Structural hedge * Structural hedge notional £242bn, stable in H2 o Benefitting from stable current account performance, a ee strong savings growth and easing churn a 514 523 * 2024 structur
Slide 14: Momentum in other income
Momentum in other income Divisional other income (£m) 5,597 YoY a 5,123 4,666 1,292 7% 960 8% 10% 1,731 2022 2023 2024 EBB Equity Investments & Central Items Commercial Banking BB retail Insurance, Pensions and Investments (IP&) oe LLOYDS BANKING GROUP + OOI £5.6bn in 2024, up 9% YoY; Q4 flat Q0Q. *
Slide 15: Continued discipline on costs
Continued discipline on costs Operating costs (£bn) +3% (+2% excl. BoE charge) 0.1 0.3 (0.4) 2023 Costsavings — Pay& inflation Investment, depreciation & strategic opex Cost:income ratio (%) H2 2024| H1 2024 H2 2023 [BB cost:incomeratio excl. Remediation Other 2024 ex. BoE charge Remediation BoE cha
Slide 16: Motor finance commissions update
Motor finance commissions update thos BANKING GROUP Motor finance commissions provision (£m) £700m provision in Q4 2024 in relation to potential impact of motor finance commissions Reflects Court of Appeal judgment that goes beyond scope of FCA review 2023 2024 Methodology and key assumptions for pr
Slide 17: Strong asset quality
Strong asset quality Impairment (£m) Q4 2024 2023 YoY Charge (credit) pre updated MES! 230 827 565 (46)% Retail 197 789 1064 26% Commercial Banking 32 48 (487) - Other 1 (10) (12) (17)% Updated economic outlook (70) (394) (257) 53% Retail (63) (332) (233) 42% Commercial Banking (7) (62) (24) - Total
Slide 18: Low risk portfolio, resilient through the cycle
Low risk portfolio, resilient through the cycle eos BANKING GROUP New to arrears and UK Bank Base Rate (3 month rolling average, %) UK base rate em ° Very low and improving mortgage book new to arrears and default rates in 2024 0.70% 0.50% 0.62% Over two thirds of fixed book now on pay rate >3%, 0.4
Slide 19: Updated macroeconomic outlook
UK Bank Rate 6% 5% 4% 3% 2% 1% oe 0% ® QO G2 Q% Q2 Qh Q2 Q4 G2 G4 22 23 23 24 24 25 25 26 26 Unemployment 5% % no 3% Updated macroeconomic outlook LLovps CPI inflation 12% 10% 8% 6% 4% * Stable economic outlook with minor forecast changes since Q3: 2% 0% Slightly weaker GDP growth in 2025, forecast
Slide 20: Confidence in delivering higher, more sustainable returns
Confidence in delivering higher, more sustainable returns eee Costs Asset quality ratio Return on tangible equity Capital generation CETI1 ratio target Capital distribution BANKING GROUP 2025 2026 NEW: NII c.£13.5bn NEW: c.£9.7bn operating costs <50% cost:income ratio NEW: c.25bps NEW: ¢.13.5% NEW:
Slide 21: Capital, Funding & Liquidity
Capital, Funding & Liquidity
Slide 22: Prudent Capital Ratios
Prudent Capital Ratios 13.5% pro forma CET1 remains ahead of 10.3% MDA! and current target of c.13.0% 4 ¢.320bps 1.7% MDA 10.392 OSII CCYB =CCB = Pillar 2A = Pillar 1 Regulatory Requirement FY24 CET! Ratio MREL remains strong and above regulatory requirement of 27.3% MREL gonna nano nrc r encore eee
Slide 23: Strong capital generation
eo ° ° Strong capital generation LLovps Risk weighted assets (£bn) 2.8 33 6.1 0.4 (7.1) AD * RWAs £224.6bn, in line with guidance; up £5.5bn, inc. £1.3bn in Q4 a | a | o CRD IV: Now expect modestly >£5bn! uplift, inc. £3.3bn 2025" Underlying" Credit)" CRDIV Op.risk Optimisation” 2024 taken in 2024 (
Slide 24: Active capital & risk management
Active capital & risk management 2024 risk transfer transactions Synthetic SRT Securitised Sale Investors provide credit protection against the junior part of a reference portfolio of assets + Assets are fully or partially derecognised from the balance sheet * There is no obligation to take assets +
Slide 25: 2024 CET1 at 13.5%; target CET1 of c.13.0% by 2026
2024 CETI at 13.5%; target CET1 of c.13.0% by 2026 sos CETI resources at c.13.0% target (£bn) 292 Capital target of c.13.0% supported by derisking and regulatory developments * Low risk profile and prudent underwriting standards, demonstrated by: Average LTV on mortgage portfolio 43.7% 28.5 27.6 274
Slide 26: Diversified deposit base and robust liquidity portfolio
oe Diversified deposit base and robust liquidity portfolio LLOYDS Deposits have steadily increased since 2019 driven primarily by Retail growth and remain stable (£bn) 482 451 476 475 472 412 163 170 168 164 163 163 112 114 7 97 2023 2024 ™Retail Savings & Wealth = Retail Current A/C» Commercial Ban
Slide 27: 2025 Forecast Wholesale Issuance
2025 Forecast Wholesale Issuance Capital Issuance principles Refinancing maturities across core and non-core currencies Support the Group’s balance sheet growth Ongoing refinancing to c.2.0% AT1 target and c.2.5% Tier 2 target Issuance across core and non-core currencies FY24 Ratios: o ATIratio c.2.
Slide 28: Strong ratings reaffirmed across the Group
oe . ° Strong ratings reaffirmed across the Group LLOYDS 4 Ring-fenced Non-ring- angel Lloyds Banking Group bank fenced bank ESG Ratings LBG Tie LBG ATI Pea Bias LBCM S&P CSA 61 BBB+ At A S&P Stable seule Stable Stable 52 85 - ~ . oo 2022 2023 2024 MSCI AA AA AA A3 Al Al Moody’s Aa3 Baal Baa3 ly Sta
Slide 29: Appendix
Appendix
Slide 30: Simple group structure with multiple issuance points
Simple group structure with multiple issuance points sos HoldCo Lloyds Banking Group BBB+ /A3/A+! Sta /Sta/Sta A2/P2/ FI Senior Unsecured . Capital Ring-fenced Sub-Group Non-Ring-fenced Sub-Group Insurance Sub-Group Equity Investments Sub-Group Lloyds Bank, Bank of Scottish Widows? Scotland A+/Al/ A
Slide 31: Diverse funding portfolio as at FY2024
Diverse funding portfolio as at FY2024 Wholesale funding portfolio by type 15% = MM Funding = Covered Bond £93bn Securitisation * OpCo Senior = HoldCo Senior Sub Debt 6% Wholesale funding portfolio by maturity ~® = <1Year (MM) =<1Year 12 Mths 2 Yrs =2Yrs<5 Yrs 1% =5Yrs+ oe LLOYDS BANKING GROUP Whole
Slide 32: Quarterly P&L and key ratios
Quarterly P&L and key ratios oe TLONPS (£m) 42024 Q3 2024 Q22024 Q1 2024 42023 Q3 2023 Q22023 Q1 2023 Net interest income 3,276 3,231 3,154 3,184 3,317 3,444 3,469 3,535 Other income 1,433 1,430 1,394 1,340 1,286 1,299 1,281 1,257 Operating lease depreciation (331) (315) (396) (283) (371) (229) (216
Slide 33: Updated economic scenarios
Updated economic scenarios oe tLovDs Scenario ECL (£m) Measure (%) 2024 2025 2026 2027 2028 Ave. 24-28 GDP 0.8 1.9 2.2 15 1.4 1.6 Unemploymentrate 43 3.5 28 27 28 3.2 . HPI growth 3.4 37 6.5 6.6 5.4 5. Upside (50%) 2,654 CRE price growth 07 78 67 3.2 0.5 37 UK Bank Rate 5.06 47 5.02 5.19 5.42 5.08 C
Slide 34: Low mortgage LTVs
Low mortgage LTVs Average LTVs New business LTVs <80% LTV >80-90% LTV >90-100% LTV >100% LTV Value >80% LTV Value >100% LTV Gross lending oe LLOYDS BANKING GROUP December 2024! 2023! 2010! Mainstream Buy to let Specialist Total Total Total 43.2% 47.4% 33.2% 43.7% 43.6% 55.6% 64.1% 56.4% N/A 63.2% 61
Slide 35: Contacts
oe Contacts LLOYDS BANKING GROUP Group Corporate Treasur' Group Investor Relations Richard Shrimpton, Deputy Treasurer & Treasury Markets Director Richard.Shrimpton@lloydsbanking.com Niamh O’Connor, Head of Debt Investor Relations Niamh.O’Connor@lloydsbanking.com Kris Middleton, Head of Term Issuanc
Slide 36: Disclaimer
oe Disclaimer LLOYDS BANKING GROUP Important notice The information, statements, views and opinions contained in this document and accompanying discussion (“this Presentation’) are for informational and reference purposes only. This Presentation has been provided by the Group (defined below). This P
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