Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — Debt Investor Presentation (2021)
27 slides from Lloyds Banking's debt investor presentation, 2021
Slide 1: Fixed Income Investor Presentation Q1 2021
FIXED INCOME INVESTOR PRESENTATION Q1 2021
Slide 2: Group Overview
Classification: Public Group Overview 2
Slide 3: Simple group structure with multiple issuance points
Capital, Funding & Group Overview Classification:Results Public Liquidity Appendix Simple group structure with multiple issuance points HoldCo Lloyds Banking Group Main Entities A3 / BBB+ / A+ Ratings1 P-2 / A-2 / F1 Neg / Neg / Neg Example Products Senior Unsecured - Capital Ring-Fenced Sub-Group N
Slide 4: 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 5: Strong start on delivering Strategic Review 2021
Classification: Public Strong start on delivering Strategic Review 2021 Selected examples of 2021 progress against our strategic priorities Helping Britain Recover Customer ambitions Enhanced capabilities Pay As You Grow and Recovery Preferred financial partner for Modernised technology architecture
Slide 6: Financial Update
Classification: Public Financial Update 6
Slide 7: 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 8: 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 9: 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 10: 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 Pay & Investment Other Remediation Q1 2021 • Strategic invest
Slide 11: 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 12: 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 13: 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 14: Capital, Funding & Liquidity
Classification: Public Capital, Funding & Liquidity 14
Slide 15: Robust metrics across Capital, Funding & Liquidity
Capital, Funding & Group Overview Classification:Results Public Liquidity Appendix Robust metrics across Capital, Funding & Liquidity Significant CET1 headroom to £9.9bn of issuance in 2020 Strong liquidity metrics through the regulatory minimum and Group target pandemic 16.7% £bn 5 c.12.5% + mgt bu
Slide 16: 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 17: Increased headroom over capital requirements
Capital, Funding & Group Overview Classification:Results Public Liquidity Appendix Increased headroom over capital requirements 1 Common equity tier 1 ratio • CCyB confirmed at 0% until at least Q4 2021; earliest 16.7% implementation of any change now Q4 2022 • O-SII buffer (formerly Systemic Risk B
Slide 18: Well positioned for end-state MREL requirements
Capital, Funding & Group Overview Classification:Results Public Liquidity Appendix Well positioned for end-state MREL requirements Transitional MREL ratio 36.1% • Strongly positioned with total capital ratio of 23.0% and SRB 1.7% MREL ratio of 36.1%; c.£1.4bn of MREL eligible senior CCB 2.5% unsecur
Slide 19: Successful execution of 2020 funding plan; prudent funding and liquidity position
Capital, Funding & Group Overview Classification:Results Public Liquidity Appendix Successful execution of 2020 funding plan; prudent funding and liquidity position Wholesale funding portfolio by maturity and type 2020 Funding by currency • Average LCR remains comfortably above 13% regulatory minimu
Slide 20: Credit ratings remain strong, with negative pressures due to the pandemic
Capital, Funding & Group Overview Classification:Results Public Liquidity Appendix Credit ratings remain strong, with negative pressures due to the pandemic Ring-Fenced Non-Ring- HoldCo Bank Fenced Bank Lloyds Bank, Lloyds Bank Lloyds UK Sovereign 1 Bank of Corporate Commentary Banking Group 1 Scotl
Slide 21: Appendix
Classification: Public Appendix 21
Slide 22: Significant progress across our ESG ambitions
Classification: Public Significant progress across our ESG ambitions Ambitious goal to help reduce emissions we finance by >50% by 2030, on path to net zero by 2050 or sooner Environmental Developed three new operational climate pledges including net zero carbon operations by 2030 Calculated i
Slide 23: 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 24: 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 25: 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 26: Debt Investor Relations Contacts
Classification: Public Debt Investor Relations Contacts Website: www.lloydsbankinggroup.com/investors/fixed-income-investors INVESTOR RELATIONS Douglas Radcliffe Edward Sands Eileen Khoo Group Investor Relations Director Director, Investor Relations Director, Investor Relations +44 (0)20 7356 1571 +
Slide 27: 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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