Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — FY2024 Earnings Presentation
53 slides from Lloyds Banking's earnings presentation, Feb 20, 2025
Slide 1: 2024 Results
2024 Results Lloyds Banking Group 20th February 2025 2024 Results Lloyds Banking Group 20 February 2025 1
Slide 2: Introduction
Introduction Charlie Nunn 2
Slide 3: Significant strategic progress, building momentum
Significant strategic progress, building momentum Purpose-led strategy delivering for customers and wider stakeholders Purpose Helping First strategic chapter successfully completed, building broad momentum Britain Robust financial performance in line with guidance Prosper Strong capital generation,
Slide 4: Delivering on our purpose to drive benefits for all stakeholders
Delivering on our purpose to drive benefits for all stakeholders Purpose drives value Driving positive change at scale Increasing access to quality c.£97bn lending to first time buyers since 2018 and affordable housing c.£20bn of funding support to social housing sector since 2018 Enabling financial
Slide 5: Successfully creating a platform for growth and higher returns
Successfully creating a platform for growth and higher returns 2021 2024 c.15m mobile app users >20m mobile app users Building a >2m Mass Affluent customers >3m Mass Affluent customers1 differentiated c.10% share of BCB products originated >50% share of BCB products originated and franchise and fulf
Slide 6: Robust financial performance in 2024
Robust financial performance in 2024 Positive business momentum Meeting strategic guidance Largest UK digital bank NIM turnaround £0.8bn 22.7m (+6%) +2bps Additional revenues from strategic initiatives FY24 digitally active users 4Q24 QoQ £1.2bn OOI growth Disciplined costs Gross cost savings 9% £9.
Slide 7: Financial update
Financial update William Chalmers 7
Slide 8: Robust financial performance
Robust financial performance Financial performance (£m) FY FY YoY Q4 Q3 QoQ 2024 2023 % 2024 2024 % Net interest income 12,845 13,765 (7) 3,276 3,231 1 • Statutory PAT £4.5bn; RoTE 12.3%; 14.0% excl. motor Other income 5,597 5,123 9 1,433 1,430 - provision Operating lease depreciation (1,325) (956)
Slide 9: Growth in lending and deposits
Growth in lending and deposits Q4 lending change (£bn) Q4 deposit change (£bn) Retail Commercial Retail Commercial +£2.9bn/+1% -£0.3bn/-0% +£4.7bn/+1% +£1.9bn/+1% (+£ 3.9bn excl. securitisation) • Lending £459.1bn, up 2% in 2024, Q4 up £2.1bn 0.7 o Q4 mortgages up £2.2bn, £3.2bn excl. securitisation
Slide 10: Resilient net interest income performance
Resilient net interest income performance Average interest earning assets1 (£bn) 1.6 2.5 • 2024 NII £12.8bn, down 7% YoY, Q4 up 1% 0.7 o Growth in NII and NIM in H2; Q4 NII up after Q3 upturn 453.3 (5.7) (1.2) 451.2 • 2024 AIEAs £451.2bn; Q4 AIEAs £455.1bn • 2024 NIM 295bps; Q4 NIM 297bps, up 2bps v
Slide 11: Growth in mortgages
Growth in mortgages Mortgage book (Book size £bn, Gross margin %1) 1.16% 1.02% 0.93% 306 307 312 YoY 11 9 12 16 (31)% 24 20 10 10 10 • Mortgage balances £312.3bn, up £6.1bn in 2024, up £8.0bn 128 excl. securitisations 111 125 o 2024 flow market share c.20%, above stock share c.19% + 6% • Completion
Slide 12: Solid performance in consumer and commercial lending
Solid performance in consumer and commercial lending Cards, Loans & Motor (Book size £bn, Gross margin %1) H2 2024 16 9 8 7 40 5.56%2 H1 2024 16 8 8 8 40 5.50% • Cards, Loans & Motor up £2.8bn in 2024 H2 2023 15 7 8 7 37 5.60% o Unsecured loans up £2.2bn Cards Loans Motor (used) Motor (new)3 o Credi
Slide 13: Growing customer deposit franchise
Growing customer deposit franchise Customer deposits (Book size £bn, Gross margin %1) 1.22% 1.13% 1.19% YoY 471 475 483 101 (1)% 103 102 • Total deposits £482.7bn, up £11.3bn / 2% in 2024 • Retail deposits up £11.3bn in 2024 195 202 208 7% o Retail current accounts down £1.4bn / 1% in 2024; growing
Slide 14: Strengthening tailwind from the structural hedge
Strengthening tailwind from the structural hedge Hedged balances1 (£bn) 247 242 242 77 77 77 Structural hedge • Structural hedge notional £242bn, stable in H2 140 135 135 o Benefitting from stable current account performance, 30 30 30 strong savings growth and easing churn 511 514 523 • 2024 structu
Slide 15: Momentum in other income
Momentum in other income Divisional other income (£m) 5,597 YoY 5,123 • OOI £5.6bn in 2024, up 9% YoY; Q4 flat QoQ 4,666 1,292 7% • Broad based other income momentum in 2024 1,209 o Retail: Growing Motor and resilient banking income 960 1,825 o Commercial: Strong Markets performance 8% 1,691 o IP&I:
Slide 16: Continued discipline on costs
Continued discipline on costs Operating costs (£bn) +3% (+2% excl. BoE charge) 0.1 0.2 9.4 • 2024 operating costs £9.4bn, delivered guidance; reflects 0.1 9.3 0.3 BoE charge, strategic investment, inflation and cost saves 9.1 o Q4 £2.5bn, inc. Bank Levy (0.4) • 2024 cost:income 60.4%; 55.2% excl. re
Slide 17: Motor finance commissions update
Motor finance commissions update Motor finance commissions provision (£m) Total provision £1,150m 700 • £700m provision in Q4 2024 in relation to potential 450 impact of motor finance commissions 2023 2024 • Reflects Court of Appeal judgment that goes beyond scope of FCA review Methodology and key a
Slide 18: Strong asset quality
Strong asset quality Impairment (£m) Q4 2024 2023 YoY Charge (credit) pre updated MES1 230 827 565 (46)% • Strong asset quality, with improved credit performance Retail 197 789 1064 26% Commercial Banking 32 48 (487) - o Arrears either stable or improving Other 1 (10) (12) (17)% • 2024 impairment ch
Slide 19: Low risk portfolio, resilient through the cycle
Low risk portfolio, resilient through the cycle New to arrears and UK Bank Base Rate (3 month rolling average, %) UK base rate 4.75% • Very low and improving mortgage book new to arrears and default rates in 2024 0.70% 0.62% 0.50% o Over two thirds of fixed book now on pay rate >3%, 0.40% 0.34% with
Slide 20: Updated macroeconomic outlook
Updated macroeconomic outlook UK Bank Rate CPI inflation 6% 12% 5% 10% 4% 8% 3% 6% 2% 4% • Stable economic outlook with minor forecast changes since Q3: 1% 2% 0% 0% o Slightly weaker GDP growth in 2025, forecast at 1.0% Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 22 23 23 24 24 25 25 26 26
Slide 21: Robust return on tangible equity
Robust return on tangible equity Statutory profit (£m) 2024 2023 YoY Underlying profit 6,343 7,809 (19)% Restructuring (40) (154) 74% Volatility and other items (332) (152) - • 2024 RoTE 12.3%; 14.0% excl. motor provision Statutory profit before tax 5,971 7,503 (20)% Tax expense (1,494) (1,985) 25%
Slide 22: Strong capital generation
Strong capital generation Risk weighted assets (£bn) 2.8 3.3 6.1 0.4 (7.1) 224.6 219.1 • RWAs £224.6bn, in line with guidance; up £5.5bn, inc. £1.3bn in Q4 o CRD IV: Now expect modestly >£5bn1 uplift, inc. £3.3bn 2023 Underlying Credit / CRD IV1 Op. risk Optimisation 2024 taken in 2024 (£2.6bn in Q4
Slide 23: Strong distributions, with increased final dividend
Strong distributions, with increased final dividend Dividend per share (p) YoY +59% 3.17 2.76 2.40 • Strong capital generation enables growth in shareholder 2.00 distributions 2.11 1.84 1.33 1.60 15% • Capital return of up to £3.6bn, c.9% market cap2 1.06 o Final dividend 2.11p; total 3.17p, up c.15
Slide 24: Confidence in delivering higher, more sustainable returns
Confidence in delivering higher, more sustainable returns 2025 2026 Income NEW: NII c.£13.5bn Costs NEW: c.£9.7bn operating costs <50% cost:income ratio Asset quality ratio NEW: c.25bps Return on tangible equity NEW: c.13.5% >15% Capital generation NEW: c.175bps >200bps CET1 ratio target Expect to p
Slide 25: Business and strategic update
Business and strategic update Charlie Nunn 25
Slide 26: Purpose-driven strategy delivering Helping Britain Prosper
Purpose-driven strategy delivering Helping Britain Prosper …supported by a clear strategic plan… Grow Focus Change Drive revenue growth and diversification Strengthen cost and capital efficiency Maximise the potential of people, tech and data …driving competitive advantage… Market leader Proven cost
Slide 27: Strategy designed to drive long-term competitive advantage
Strategy designed to drive long-term competitive advantage Address strategic opportunities (FY21) Deliver 2026+ differentiation Unlock balance sheet growth potential, growing share Market leadership positions Grow Mitigate revenue headwinds (e.g. reducing SVR book, low yielding structural hedge) Gro
Slide 28: Successfully delivered 2022-2024 strategic outcomes
Successfully delivered 2022-2024 strategic outcomes c.80% of 2022-2024 strategic outcomes delivered... ..with clear benefits Example progress against targeted outcomes £0.8bn c.25% +1.5pp Additional revenues Grow Growth in digitally active users Increase in credit card spend share from strategic ini
Slide 29: Building momentum across the business
Grow Focus Change Building momentum across the business c.£2bn net income growth 2021-24 Diversifying income Net income (£bn) c.£2bn hedge uplift more than offset c.£3bn net income by headwinds and OpLD normalisation generated by core franchise 11% 17.1 3-year OOI CAGR across three main divisions1 1
Slide 30: Multiple levers driving revenue growth
Grow Focus Change Multiple levers driving revenue growth Growing the core franchise Deepening relationships Gross mortgage lending market share CIB OOI >30% 20% >£1.2bn 18% >£0.9bn 2021 2024 2021 2024 Growing in high value areas Driving cross-Group collaboration Mass Affluent banking balances1 held
Slide 31: Strong focus on efficiency, reinforcing cost advantage
Grow Focus Change Strong focus on efficiency, reinforcing cost advantage £1.2bn gross cost savings mitigating inflation and enabling investment Clear execution Operating costs (£bn) Pay & inflation more than offset by £1.2bn gross Driving growth in the cost savings (upgraded from £1bn initial target
Slide 32: Clear approach to capital management
Grow Focus Change Clear approach to capital management £18bn RWA optimisation offsetting headwinds Disciplined approach RWAs (£bn) Optimisation offsetting headwinds £4bn / £7bn / £7bn 224.6 2022/23/24 gross RWA optimisation 1 212.2 >1.5pp Improvement in CIB Income / average RWA 13 SRT transactions u
Slide 33: Extending digital leadership across the Group
Grow Focus Change Extending digital leadership across the Group Delivering best-in-class digital experiences to drive engagement in all businesses Consumer IP&I BCB Refreshed mobile app rolled out H2 2024 Refreshed Scottish Widows app rolled out H1 2024 Refreshed mobile app rolled out H2 2024 20.2m
Slide 34: Investment in enablers supporting increased innovation
Grow Focus Change Investment in enablers supporting increased innovation Delivering innovative propositions across the Group 2022 2024 Lloyds Bank Your Home Hub Tusker Ready-Made BCA digital Ready-Made Scottish Refreshed CIB digital Whole of Market Credit Score ecosystem acquired Investments origina
Slide 35: Unlocking higher, more sustainable returns
Second phase of strategy will accelerate our transformation Building on clear competitive ...with momentum across ...accelerating transformation advantages... 2022-24... across 2025-26 Market leader Returned to growth Differentiated growth #1 in key markets Growing core franchise Growing in high-val
Slide 36: Deepening consumer relationships
25-26 priorities – Retail Deepening consumer relationships Building on strengths... 28m £320bn #1 #1 Customers Customer deposits Largest UK digital bank – PCA balance share 22.7m digitally active users ...to deepen relationships through market-leading, mobile-first and personalised experiences Drivi
Slide 37: Creating differentiated Retail lending propositions
25-26 priorities – Retail Creating differentiated Retail lending propositions Building on strengths... £372bn #1 #1 #1 Customer loans Mortgage share Credit cards and loans share UK vehicle financing and leasing provider1 ...to deliver market leading digital journeys, expanded propositions and impact
Slide 38: Transforming engagement to drive IP&I growth
25-26 priorities – IP&I Transforming engagement to drive IP&I growth Building on strengths... 10m £5.0bn #1 #2 IP&I customers Deferred profit, with strong Home Insurance share Workplace and Individual value generation annuities share ...to deliver innovative digital solutions and expanded propositio
Slide 39: Digitising and diversifying in BCB
25-26 priorities – Commercial Banking Digitising and diversifying in BCB Building on strengths... >1m £78bn c.20% >20% Customers Customer deposits SME relationship share1 3-year average RoTE ...to build the best digitally-led relationship bank, meeting broader customer needs Retaining deposit streng
Slide 40: Delivering diversification through growth in CIB
25-26 priorities – Commercial Banking Delivering diversification through growth in CIB Building on strengths... #1 #2 Top-3 c.25% UK Infrastructure and GBP Interest Rate Swap Sterling DCM Group OOI Project Finance provider ranking (FY24) provider contribution ...to deliver the bank of choice for cas
Slide 41: Progressing towards a technology step change
25-26 priorities – Enablers Progressing towards a technology step change Addressing technology debt... ...and investing for the future Decommissioning legacy applications Increasing new technology adoption 20% reduction in legacy technology applications by >30% of applications on modern technology b
Slide 42: Delivering an enhanced financial performance
Delivering an enhanced financial performance Unlocking higher, more sustainable returns in second phase c.£2bn net income growth despite headwinds £1.2bn gross cost savings, mitigating investment and inflationary pressures 2022-2024 £18bn RWA optimisation, growing SRT capabilities Growing returns an
Slide 43: Significant revenue upside in second phase
Significant revenue upside in second phase Delivering net income growth to 2026... ...supported by Net income (£bn) strategic revenues >£1.5bn additional revenues from strategic initiatives £0.8bn by 2024 >£0.7bn incremental to 2026 >£0.1bn IP&I c.£2.7bn hedge uplift (+£1.2bn YoY FY25, +£1.5bn YoY F
Slide 44: Higher, more sustainable returns and capital generation
Higher, more sustainable returns and capital generation 2026 guidance >£1.5bn Additional revenues from strategic initiatives Growing and diversifying revenues… 50:50 NII:OOI split across strategic revenues …enhancing cost and capital <50% Cost:Income ratio efficiency… c.13.0% CET1 ratio …to deliver
Slide 45: Q&A
Q&A 45
Slide 46: Appendix
Appendix 46
Slide 47: Quarterly P&L and key ratios
Quarterly P&L and key ratios (£m) Q4 2024 Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 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) (1
Slide 48: Updated economic scenarios
Updated economic scenarios Scenario ECL (£m) Measure (%) 2024 2025 2026 2027 2028 Ave. 24-28 GDP 0.8 1.9 2.2 1.5 1.4 1.6 Unemployment rate 4.3 3.5 2.8 2.7 2.8 3.2 HPI growth 3.4 3.7 6.5 6.6 5.4 5.1 Upside (30%) 2,634 CRE price growth 0.7 7.8 6.7 3.2 0.5 3.7 UK Bank Rate 5.06 4.71 5.02 5.19 5.42 5.08
Slide 49: Low mortgage LTVs
Low mortgage LTVs December 20241 20231 20101 Mainstream Buy to let Specialist Total Total Total Average LTVs 43.2% 47.4% 33.2% 43.7% 43.6% 55.6% New business LTVs 64.1% 56.4% N/A 63.2% 61.7% 60.9% ≤80% LTV 86.2% 99.7% 96.8% 88.4% 89.3% 57.0% >80–90% LTV 11.9% 0.1% 1.2% 10.0% 7.8% 16.2% >90–100% LTV
Slide 50: Strong progress on 2022-2024 strategic outcomes (1/2)
Strong progress on 2022-2024 strategic outcomes (1/2) All outcomes relate to 2024 vs. 2021 position unless otherwise stated Measure Targeted outcome Achieved Depth of Relationship1 >5% increase Digitally active customers >10% increase Customers served per distribution FTE >10% increase Credit card s
Slide 51: Strong progress on 2022-2024 strategic outcomes (2/2)
Strong progress on 2022-2024 strategic outcomes (2/2) All outcomes relate to 2024 vs. 2021 position unless otherwise stated Measure Targeted outcome Achieved Mid-sized SME Transaction Banking and Working Capital income >15% growth ✗ Growth in new Merchant Services clients 20% growth p.a. ✗ BB & SME
Slide 52: Investor relations contacts
Investor relations contacts Douglas Radcliffe, Group Investor Relations Director Sarah Robson, Senior Manager, Investor Relations +44 (0)20 7356 1571 +44 (0)7494 513 983 Douglas.Radcliffe@lloydsbanking.com Sarah.Robson2@lloydsbanking.com Nora Thoden, Director, Investor Relations – ESG Tom Grantham,
Slide 53: Disclaimer
Disclaimer 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 Presentation does not pur