Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — Debt Investor Presentation (2017)
22 slides from Lloyds Banking's debt investor presentation, Jun 28, 2017
Slide 1: Presentation to Fixed Income Investors
TITLE SLIDE IS IN SENTENCE Q1 INTERIM MANAGEMENT CASE. STATEMENT GREEN BACKGROUND. Presentation to Fixed Income Investors 00 Q1Month 2017 0000 Presenters Name
Slide 2: Highlights
HIGHLIGHTS Strong financial performance continues to demonstrate the strength of the business model • Strong underlying performance with significant improvement in statutory profit and returns – Increase in underlying profit to £2.1bn with an improved underlying return on tangible equity of 15.1% –
Slide 3: Underlying Financial Performance
UNDERLYING FINANCIAL PERFORMANCE Strong underlying performance Q1 Q1 (£m) 2017 2016 Change • Increase in underlying profit to £2.1bn Net interest income 2,928 2,906 1% Other income 1,482 1,477 – – NII increased 1% to £2.9bn reflecting an improved margin of 2.80% primarily due to lower funding and de
Slide 4: Income
INCOME Total income of £4.4bn with increased NII and stable other income Net interest margin – vs Q4 2016 (%) Other income trend (£bn) 12bps 1.6 0.03 2.80 1.5 1.5 1.5 0.11 2.68 1.4 (0.02) Q4 Asset Liability Wholesale Q1 Q1 Q2 Q3 Q4 Q1 2016 spread spread funding 2017 2016 2016 2016 2016 2017 & mix &
Slide 5: Statutory Financial Performance
STATUTORY FINANCIAL PERFORMANCE Significant increase in statutory profit reflecting lower below the line charges Q1 Q1 (£m) 2017 2016 • Market volatility and other items in 2016 included the £790m ECN redemption charge Underlying profit 2,083 2,054 • Restructuring costs include Simplification, non-b
Slide 6: Balance Sheet
BALANCE SHEET Strong capital generation in the quarter Common equity tier 1 ratio (%) 0.7% • CET1 ratio of 14.5% pre dividend accrual 13.8 0.7 0.2 0.1 14.5 14.3 – Q1 capital generation of 0.7% with strong (0.3) (0.2) financial performance and continued de-risking – Around 0.8% of capital still retai
Slide 7: Summary
SUMMARY Confidence in the Group’s future prospects is reflected in our strong financial targets Financial targets • Strong financial targets reflecting strength of • Our differentiated business model is delivering business model – Simple, efficient and low risk business model – Now expect 2017 FY NI
Slide 8: Funding and Liquidity
TITLE SLIDE IS IN SENTENCE FUNDING ANDCASE.LIQUIDITY GREEN BACKGROUND. 00 Month 0000 Presenters Name
Slide 9: Group Structure and Future Regulatory Requirements
GROUP STRUCTURE AND FUTURE REGULATORY REQUIREMENTS Simple, UK focused business model positions the Group well for ring-fencing Simplified Group structure Simplified structure under ring-fencing • Senior Unsecured (MREL) LLOYDS BANKING GROUP PLC • Subordinated Debt LLOYDS BANKING GROUP PLC • Equity •
Slide 10: Credit Ratings
CREDIT RATINGS All ratings on stable outlook unless specified LBG (HoldCo) Lloyds Bank HBOS Bank of Scotland MOODY’S Long Term Baa1 A1 A1 A1 Short Term P-2 P-1 P-1 P-1 S&P Negative Negative Negative Negative Outlook Outlook Outlook Outlook Long Term BBB+ A BBB+ A Short Term A-2 A-1 A-2 A-1 FITCH Lon
Slide 11: Wholesale Funding
WHOLESALE FUNDING Composition of wholesale funding as at 31 March 2017 Product, currency and maturity – £106bn Senior unsecured debt maturities(1) LB PLC (£27bn total) LBG PLC (£5bn total) 6% 18% 18% MM Funding 26% GBP - Covered Bonds EUR - - 32% Securitisation USD - 1.6 24% Senior Other 5.2 4.8 - 4
Slide 12: Wholesale Funding: LBG (HoldCo)
WHOLESALE FUNDING Diverse and simple term funding model has enabled successful execution £3.5bn Term issuance in Q1 Issuer Funding platforms GBP EUR USD Other Capital/ MREL(2) issuance Lloyds Banking • Subordinated debt: AT1, Tier 2 LBG (HoldCo) HoldCo senior Group (Baa1/BBB+/A+)(1) • Senior unsecur
Slide 13: Liquidity
LIQUIDITY Strong liquidity position Primary/LCR eligible liquid assets(1) (£bn) 123 121 133 • The Group maintains a strong liquid asset portfolio (2) 105 comprised largely of cash and LCR eligible securities • The increase in liquid assets in the quarter reflects actions taken in anticipation of the
Slide 14: Capital Position and Banking Reform
TITLE SLIDE CAPITAL IS IN POSITION AND SENTENCE BANKING CASE. REFORM GREEN BACKGROUND. 00 Month 0000 Presenters Name
Slide 15: Strong Capital Base
STRONG CAPITAL BASE Well positioned in an evolving regulatory environment Capital composition(1) (%) Capital Resources (£bn) 21.9 46.8 • Strong capital position 21.4 21.5 Tier 2 4.4 4.2 4.4 9.4 – Fully loaded CET1 of 14.3% (post dividend accrual) with c.0.8% still retained for MBNA Tier 1 0.9 0.9 0.
Slide 16: Evolution of CET1 Regulatory Buffers
EVOLUTION OF CET1 REGULATORY BUFFERS Strong capital generative business provides comfort for meeting regulatory buffers LBG capital buffer evolution (%) • Differentiated low risk business model with strong capital generation PRA + MB • PRA Buffer reduced reflecting de-risking; target CET1 SRB ratio
Slide 17: Relative Capital Strength
RELATIVE CAPITAL STRENGTH Well capitalised relative to global peers LBG capital composition - strong relative to peers(1) CET1 Tier 1 Total Capital 21.9% LBG Total Capital 20.2% 17.5% LBG Tier 1 Capital 3.2% 15.1% 2.9% 14.0% 1.2% 1.9% 1.6% 17.5% 14.3% 13.4% 12.9% 11.1% 10.3% LBG UK Average France Av
Slide 18: UK Approach to Resolution
UK APPROACH TO RESOLUTION Defined approach underpinned by clear preference for structural subordination 1 Losses occur at the OpCo and are passed to HoldCo via write down of intercompany HoldCo Loss Absorption Hierarchy assets HoldCo Senior Unsecured Losses arise at OpCo OpCo Loss Absorption Hierarc
Slide 19: Future Capital Requirements
FUTURE CAPITAL REQUIREMENTS Progress toward interim and final MREL requirements from a position of strength due to strong capital and diversified funding MREL requirement • MREL to be met with regulatory capital Flexibility to achieve MREL target by partially refinancing maturing OpCo senior liabili
Slide 20: Loss Absorbency Framework
LOSS ABSORBENCY FRAMEWORK UK loss absorption hierarchy is well defined UK resolution framework well established providing certainty to issuers and investors • Stated preference for structural subordination by UK Resolution Authority – senior HoldCo issuers • NCWO principle respected – creditor hiera
Slide 21: Summary
SUMMARY Well positioned to face any regulatory headwinds and loss absorbency requirements • LBG is well capitalised relative to peers – 14.3% CET1 (post dividend accrual), 21.9% Total Capital and 5.0% Leverage ratio • Strong capital generation and simple low risk business model means LBG is well pos
Slide 22: Forward Looking Statement and Basis of Presentation
FORWARD LOOKING STATEMENT AND BASIS OF PRESENTATION FORWARD LOOKING STATEMENTS This document contains certain forward looking statements with respect to the business, strategy and plans of Lloyds Banking Group and its current goals and expectations relating to its future financial condition and perf
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