Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — Debt Investor Presentation (2021)
31 slides from Lloyds Banking's debt investor presentation, 2021
Slide 1: Fixed Income Investor Presentation H1 2021
FIXED INCOME INVESTOR PRESENTATION H1 2021
Slide 2: Group Overview
Classification: Public Group Overview 2
Slide 3: Simple group structure with multiple issuance points
Capital, Funding & Classification:Results Group Overview Public Liquidity Appendix Simple group structure with multiple issuance points HoldCo Lloyds Banking Group Main Entities A2 / BBB+ / A Ratings1 P-1 / A-2 / F1 Sta / Sta / Sta Example Products Senior Unsecured - Capital Ring-Fenced Sub-Group No
Slide 4: Well positioned to continue delivering for all stakeholders
Classification: Public Well positioned to continue delivering for all stakeholders • Ongoing support for customers whilst Helping Britain Recover • Good progress on Strategic Review 2021 priorities • Solid financial performance and business momentum OUR Helping Britain • Continued balance sheet grow
Slide 5: Strategic Review 2021: Progress on Helping Britain Recover
Classification: Public Strategic Review 2021: Progress on Helping Britain Recover Focused where we can make a difference H1 progress vs. 2021 targets1 Expand availability of affordable c.£9bn lent to first time buyers; almost reaching FY target of £10bn Helping Britain and quality homes >£2bn of soc
Slide 6: Strategic Review 2021: Progress against our customer ambitions
Classification: Public Strategic Review 2021: Progress against our customer ambitions Preferred financial partner for personal customers Strategic actions taken to enhance Helping wealth offering Britain Mass market Recover 71 >£12bn digital offering Mass affluent HNW/UHNW Record all channel NPS, up
Slide 7: Strategic Review 2021: Progress in enhancing our capabilities
Classification: Public Strategic Review 2021: Progress in enhancing our capabilities Modernised technology architecture Integrated payments Helping Increase in clients onboarded to cash Britain Mobile app releases in H1 as % of HY20 Recover c.175% Target: Double number of releases in 2021 c.2x manag
Slide 8: Significant progress across our ESG ambitions in the past 12 months
Classification: Public Significant progress across our ESG ambitions in the past 12 months Announced ambitious goals to reach net zero emissions in our lending and investment portfolios by 2050 or sooner, Environmental with intermediate goals to - Help reduce carbon emissions we finance by >50% by
Slide 9: Long-term ESG focus supported by memberships, awards and ratings
Classification: Public Long-term ESG focus supported by memberships, awards and ratings 1985 2008 2018 2020 Independent charitable Adopted the Equator Launched our Launched our Race Foundations established Principles Sustainability strategy Action Plan 2002 2014 2019 2021 Investment in energy saving
Slide 10: Continuing economic recovery, although uncertainties remain
Classification: Public Continuing economic recovery, although uncertainties remain UK GDP1 Employments furloughed per day2 (Indexed to February 2020 = 100) (Millions) 105 12 100 10 95 8 90 6 4 85 2 80 0 75 Mar 20 Jun 20 Sep 20 Dec 20 Mar 21 Jun 21 J F M A M J J A S O N D J F M A M Employments furlou
Slide 11: Financial Update
Classification: Public Financial Update 11
Slide 12: Solid financial performance, continued business momentum
Classification: Public Solid financial performance, continued business momentum H1 2021 Net income £7.6bn • Net income recovering, 2% ahead of H1 2020, 8% ahead of H2 2020 - NII £5.4bn with AIEAs £441bn and H1 NIM 250bps Cost:income ratio 54.9% (incl. remediation) - Other income of £2.4bn; operating
Slide 13: Strong balance sheet and resilient net interest income
Classification: Public Strong balance sheet and resilient net interest income Average interest earning assets (£bn) +1% 10 1 441 437 (2) (5) • H1 AIEAs at £441bn up c.£4bn versus H2 2020 • NII of £5.4bn, down 1% on H1 2020 impacted by lower rates; up 2% on H2 • H1 NIM of 250bps, with Q2 margin of 25
Slide 14: Continued lending growth in mortgages; robust asset margins
Classification: Public Continued lending growth in mortgages; robust asset margins Changing asset mix (Book size £bn, Gross margin %1) Mortgage book UK consumer finance2 1.85% 1.82% 1.86% YoY 6.81% 6.72% 6.70% 305 +7% 294 39 37 36 285 24 25 9 9 8 Motor - New3 • Total mortgage book up £11.4bn in H1 2
Slide 15: Franchise strength further building hedge sustainability
Classification: Public Franchise strength further building hedge sustainability Hedged balances1 (£bn) 185 190 210 225 179 180 186 215 65 • Structural hedge capacity of £225bn, up £15bn in H1 60 60 62 and £40bn since year end 2019, largely driven by 90 90 94 120 continued strong deposit growth c.41%
Slide 16: Resilient other income, some early signs of recovery
Classification: Public Resilient other income, some early signs of recovery Divisional other income (£bn) H1 2021 0.8 0.7 0.7 2.4 H2 2020 0.8 0.6 0.4 2.1 • Other income of £2.4bn YTD with £1.3bn in Q2 H1 2020 0.9 0.7 0.9 2.5 - Q2 benefits from strong contribution from Equity Investments business and
Slide 17: Strong asset quality and improved economic outlook
Classification: Public Strong asset quality and improved economic outlook H1 Q2 H1 YoY Impairment (£m) 2021 2021 2020 change Charges pre-updated MES1 252 43 788 (536) Retail 527 206 578 (51) Commercial Banking (272) (161) 206 (478) • Asset quality remains strong with low new to arrears and underlyin
Slide 18: Capital, Funding & Liquidity
Classification: Public Capital, Funding & Liquidity 18
Slide 19: Capital, Funding & Liquidity summary
Capital, Funding & Classification:Results Group Overview Public Liquidity Appendix Capital, Funding & Liquidity summary Significant CET1 headroom to 2022 RWA regulatory headwinds, although MREL strongly positioned - c.840bps regulatory minimum and Group target uncertainties remain above expected req
Slide 20: Enhanced capital strength with significant headroom over target and requirements
Capital, Funding & Classification:Results Group Overview Public Liquidity Appendix Enhanced capital strength with significant headroom over target and requirements Common equity tier 1 ratio 16.7% • CET 1 ratio 16.7% underpinned by strong capital build with 93bps in H1 • CET 1 ratio 15.5% excluding
Slide 21: RWAs down £1.8bn in H1; regulatory pressure in 2022
Classification: Public RWAs down £1.8bn in H1; regulatory pressure in 2022 Risk-weighted assets (£bn) £(1.8)bn 1.4 202.7 1.2 200.9 • RWAs down £1.8bn in H1 to £201bn, driven by (0.6) Commercial Banking optimisation (3.8) • Limited credit migration seen to date, supported by high quality book and HPI
Slide 22: Well positioned for end-state MREL requirements
Capital, Funding & Classification:Results Group Overview Public Liquidity Appendix Well positioned for end-state MREL requirements Transitional MREL ratio 36.3% • Strongly positioned with total capital ratio of 23.1% and SRB 1.7% MREL ratio of 36.3%; c.£1.4bn of MREL eligible senior unsecured and £5
Slide 23: Scale of legacy capital securities limited in context of wider capital stack
Capital, Funding & Classification:Results Group Overview Public Liquidity Appendix Scale of legacy capital securities limited in context of wider capital stack Legacy Securities (£bn) • Legacy capital securities constitute only £3.5bn, of which: 0.3 £1bn preference shares issued from the resolutio
Slide 24: Prudent funding and liquidity position with limited funding requirements
Capital, Funding & Classification:Results Group Overview Public Liquidity Appendix Prudent funding and liquidity position with limited funding requirements Wholesale funding portfolio by maturity and type 2021 Funding by currency • Average LCR remains comfortably above 13% regulatory minimum at 131%
Slide 25: Rating outlooks improved to stable
Capital, Funding & Classification:Results Group Overview Public Liquidity Appendix Rating outlooks improved to stable Ring-Fenced Non-Ring- HoldCo Bank Fenced Bank Lloyds Bank, Lloyds Bank Lloyds UK Sovereign 1 Bank of Corporate Commentary Banking Group 1 Scotland Markets 1 • In June, S&P returned t
Slide 26: Appendix
Classification: Public Appendix 26
Slide 27: Prudent economic scenarios
Classification: Public Prudent economic scenarios Economic measure Change since Scenario ECL (£m) (%) 2021 FY 20201 2022 2023 2024 2025 2021-25 GDP 6.1 2.4 5.5 1.4 1.4 1.2 3.1 Interest rate 0.52 (0.62) 1.27 1.09 1.32 1.58 1.16 Upside 4,807 Unemployment rate 4.7 (0.7) 4.9 4.4 4.2 4.1 4.5 (30%) HPI gr
Slide 28: Modest reduction in coverage reflecting updated economic outlook
Classification: Public Modest reduction in coverage reflecting updated economic outlook Gross Coverage (excl. Recoveries)1 Q4 2020 Net ECL P&L Write-offs customer Total Total ECL increase / charge / Write-offs ECL & Other (£m) L&A (£bn) Stage 1 Stage 2 Stage 3 Total Coverage1 HY 2021 (decrease) (cre
Slide 29: Continued low mortgage LTVs
Classification: Public Continued low mortgage LTVs June 20211 20201 20101 Mainstream Buy to let Specialist Total Total Total Average LTVs 42.2% 48.8% 39.2% 43.1% 43.5% 55.6% New business LTVs 63.6% 60.2% N/A 63.1% 63.9% 60.9% ≤ 80% LTV 92.8% 99.3% 95.4% 94.0% 91.6% 57.0% >80–90% LTV 6.8% 0.4% 1.5% 5
Slide 30: Debt Investor Relations Contacts
Classification: Public Debt Investor Relations Contacts Website: www.lloydsbankinggroup.com/investors/fixed-income-investors GROUP INVESTOR RELATIONS Douglas Radcliffe Edward Sands Eileen Khoo Group Investor Relations Director Director, Investor Relations Director, Investor Relations +44 (0)20 7356
Slide 31: 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
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