Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — Q1 2020 Earnings Presentation
20 slides from Lloyds Banking's earnings presentation, Apr 30, 2020
Slide 1: Q1 Interim Management Statement
Q1 INTERIM MANAGEMENT STATEMENT Presentation to analysts and investors | 30 April 2020
Slide 2: Introduction
Introduction António Horta-Osório Group Chief Executive 1
Slide 3: Actively supporting customers and colleagues in difficult times
Actively supporting customers and colleagues in difficult times • Active support for customers - Flexible and sensitive treatment of retail customers with 880k payment holidays granted to date2 OUR Helping Britain PURPOSE Prosper - Priority support provided for elderly customers and NHS staff - Incr
Slide 4: Actively supporting customers, including through Government initiatives
Actively supporting customers, including through Government initiatives Supporting our personal customers Supporting small businesses and corporates • Debt payment holidays of up to 3 months to help • Payment holidays and working capital through our customers through temporary financial difficulties
Slide 5: Challenging and uncertain economic outlook
Challenging and uncertain economic outlook GDP forecasts for 2020-221 (% change vs same period a year earlier) 2020 2021 2022 • Significant uncertainty remains with a 3.5 challenging economic outlook 3.0 • Final impact will depend on severity and duration of the shock -5.0 • Government and Bank of E
Slide 6: Well placed to play our part
Well placed to play our part • Strong balance sheet benefitting from prudent approach to lending Low risk - Core loan book of c.£440bn remaining stable over last 10 years and >80% secured1 balance sheet - More than 75% of Group lending within prime retail portfolio, of which >90% secured - Remaining
Slide 7: Financial update
Financial update William Chalmers Chief Financial Officer 6
Slide 8: Resilient business model in a challenged economic environment
Resilient business model in a challenged economic environment Statutory profit £74m • Statutory profit before tax £74m after higher impairment charge before tax (95)% • Pre-provision operating profit of £2.0bn £4.0bn Net income (11)% - Supported by NIM of 279bps and continued focus on costs - Busine
Slide 9: Solid pre-provision profit
Solid pre-provision profit Net interest income and margin1 Operating costs (£m) (£m) 2.91% (4)bps (3)bps (5)bps 2.79% (4)% (4)% 1,957 26 4 3,083 1,877 2,950 (61) (31) (49) (30) (72) Q1 2019 Asset spread Liability Wholesale Q1 2020 Q1 2019 Cost Pay & Investment & Other Q1 2020 & mix spread & mix fund
Slide 10: Increased impairment charge reflecting economic assumptions
Increased impairment charge reflecting economic assumptions Impairment charges (£m) Q1 2020 Q1 2019 Increase • Underlying credit quality robust but significant Underlying charges 368 275 93 uncertainty exists Retail 325 302 23 • Increased charge primarily reflects updated Commercial Banking 52 1 51
Slide 11: Balance sheet well positioned, AQRs driven by increase in ECL
Balance sheet well positioned, AQRs driven by increase in ECL Group loans and advances of which (£bn) corona- of which Net AQR virus under- Net AQR 27 (bps) Q1 2020 ECL5 lying Q1 2019 Increase Retail secured1 Retail 104 66 38 36 68 76 SME & Mid Corporates Commercial 232 210 22 1 231 secured lending2
Slide 12: Retail book focused on prime portfolios
Retail book focused on prime portfolios Mortgages and credit cards – new to arrears as proportion of total book1 1.5% • No net expansion and significant de-risking of core 1.0% loan book over the last 10 years • Significant exposure to high quality retail mortgages 0.5% - Average LTV 44% and c.90% w
Slide 13: Commercial portfolio benefits from diverse client base and sector limits
Commercial portfolio benefits from diverse client base and sector limits Lending in key coronavirus-impacted sectors1 (£bn) • <3% of Group lending, or c.12% of Commercial, Retail non-food 2.6 1.2 exposed to most impacted sectors; working closely Automotive dealerships 2.3 1.3 with clients to support
Slide 14: Capital, liquidity and funding remain strong
Capital, liquidity and funding remain strong Funding position in Q1 Group capital structure (£bn) (%) Q1 2020 FY 2019 Change Customer deposits 428 412 16 Liquid assets 144 118 26 4.5 2.6 2.5 1.7 Wholesale funding1 126 124 2 MM funding1 26 25 1 Term funding 100 99 1 Pillar 1 Pillar 2A Capital Conserv
Slide 15: Well positioned to deliver for customers and shareholders beyond the crisis
Well positioned to deliver for customers and shareholders beyond the crisis • We are focused on supporting our customers, whilst protecting our OUR Helping Britain Prosper colleagues and being present in communities across the UK, including PURPOSE active support for all Government schemes • Multi-c
Slide 16: Questions and Answers
Questions and Answers António Horta-Osório, Group Chief Executive William Chalmers, Chief Financial Officer 15
Slide 17: Appendix
LLOYDS Appendix 16
Slide 18: CET1 and TNAV progression
CET1 and TNAV progression Common equity tier 1 ratio (%) 45bps (38)bps 56 83 14.2 13.8 (56) (38) FY 2019 Pre-impairment Impairments RWA and Cancellation Q1 2020 build other of 2019 final movements dividend Movement in TNAV per share in Q1 (pence) +6.6p 1.1 57.4 4.9 50.8 0.6 Q4 2019 Statutory Pension
Slide 19: Economic scenarios
Economic scenarios Current scenario (%) Probability Expected credit Scenario weighting (%) loss (£m) Economic measure 2020 2021 2022 2020-22 GDP (5.0) 3.0 3.5 1.2 Interest rate 0.10 0.25 0.25 0.20 Base case 30 4,929 Unemployment rate 5.9 5.4 4.7 5.3 House price growth (5.0) 2.0 2.5 (0.7) CRE price g
Slide 20: Forward looking statements
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, plans and/or results of