Lloyds Banking Group plc · LSE:LLOY
Lloyds Banking — Investor Presentation (March 2023)
25 slides from Lloyds Banking's investor presentation, Mar 28, 2023
Slide 1: Retail investor presentation, 28 March 2023
Classification: Public Douglas Radcliffe, Group Investor Relations Director Adam Williams, Head of Competitor Analysis, Group Strategy 28 March 2023 1
Slide 2: Welcome and introduction
Classification: Public Welcome and introduction Douglas Radcliffe, Group Investor Relations Director 2
Slide 3: Strong performance; confidence in continued delivery
Classification: Public Strong performance; confidence in continued delivery Purpose • Purpose driven business underpinned by financial strength; supporting customers and colleagues Helping • Robust financial performance driving increased capital returns Britain • Reaffirming strategy in a changing e
Slide 4: Purpose driven business; delivering for our stakeholders
Classification: Public Purpose driven business; delivering for our stakeholders >200k mortgage customers offered support given rising rates Proactive support >550k businesses offered financial resilience support if required Purpose for customers and Ongoing support for colleagues, including early ce
Slide 5: Robust financial performance; continued business momentum
Classification: Public Robust financial performance; continued business momentum £18.0bn 50.4% 13.5% Net income, Cost:income ratio, Return on tangible equity, up 14% vs 2021 down 10.6pp vs 2021 down 0.3pp vs 2021 245bps 14.1% £3.6bn Pro forma capital Pro forma CET1 ratio2 Total capital distribution
Slide 6: Strategic update
Classification: Public Strategic update Adam Williams, Head of Competitor Analysis, Group Strategy 6
Slide 7: Delivering our strategy is our focus
Classification: Public Delivering our strategy is our focus Purpose driven strategy… …to deliver sustainable growth across our businesses Drive revenue growth and diversification Create a new mass Deepen and innovate Grow in Consumer affluent offering Strengthen cost and capital efficiency Focus Max
Slide 8: Changing environment reinforces our strategy
Classification: Public Changing environment reinforces our strategy Changes since February 2022 Areas of increased focus Enhanced importance of purpose driven More challenging environment for strategy in increasing our support to customers given increased cost of living customers and colleagues Shar
Slide 9: Significant strategic action; early evidence of delivery
Classification: Public Significant strategic action; early evidence of delivery Grow Purpose driven strategy… …as part of a 5 year transformation… …with significant action taken in 2022 Drive revenue growth 2022 Investing in growth Laying the foundations, early benefits delivery £0.9bn strategic inv
Slide 10: Driving revenue growth and diversification: Consumer
Classification: Public Driving revenue growth and diversification: Consumer Grow Progress in 2022 2023 implementation 19.8m digitally active customers, up 8% Launch intermediary Protection proposition Deepen and c.1pp growth in Protection share1 Scale HomeHub ecosystem with innovate in improved rete
Slide 11: Driving revenue growth and diversification: Commercial
Classification: Public Driving revenue growth and diversification: Commercial Grow Progress in 2022 2023 implementation >20% growth in new merchant services clients and Digitised merchant services onboarding journeys with proven new digital onboarding capability straight through processing Digitise
Slide 12: Investing in enablers to improve delivery
Classification: Public Investing in enablers to improve delivery Focus Progress in 2022 2023 implementation Refining service model with c.200 branch closures Deliver further improvements in self service capabilities and digital investment and end to end journey digitisation Strengthen cost and capit
Slide 13: Confidence building in financial benefits
Classification: Public Confidence building in financial benefits Incremental income and gross cost saves1... …with momentum building into 2023 and beyond Additional revenues p.a. from strategic initiatives (£bn) Delivered early stages of targeted additional 2024 1.5 revenues 0.7 Increasing penetrati
Slide 14: Financial update
Classification: Public Financial update Douglas Radcliffe, Group Investor Relations Director 14
Slide 15: Robust financial performance
Classification: Public Robust financial performance Financial performance (£m) 2022 2021 YoY Net interest income 13,172 11,163 18% Other income 5,249 5,060 4% • Customer led franchise growth Operating lease depreciation (373) (460) 19% Net income 18,048 15,763 14% • Net income up 14%; NIM 294bps Ope
Slide 16: Ongoing strength in customer franchise
Classification: Public Ongoing strength in customer franchise 2022 lending change (£bn) 2022 deposit change (£bn) Retail Commercial Retail Commercial +£7.9bn/2% +£1.2bn/1% +£2.4bn/1% -£3.7bn/2% • Mortgage balances up £3.7bn in 2022, including £1.2bn open book growth in Q4 3.7 • Credit cards up £0.5b
Slide 17: Strong net interest income performance
Classification: Public Strong net interest income performance Average interest earning assets (£bn) 1 1 6 • NII £13.2bn, up 18% on 2021, benefitting from (1) increased AIEAs and stronger NIM 452 o 2022 AIEAs £452bn, up 2% on 2021 445 o Full year NIM 294bps, up 40bps on 2021 o Q4 NIM 322bps, benefitt
Slide 18: Stable BAU costs; increased investment as planned
Classification: Public Stable BAU costs; increased investment as planned Operating costs (£m) +6% 489 stable • Operating costs £8.8bn, up 6% given planned 134 investment and new businesses 238 (6) (48) 8,835 o BAU costs stable and overall costs in line with 8,346 8,312 (284) expectations, delivered
Slide 19: Strong observed asset quality; updated economic scenarios
Classification: Public Strong observed asset quality; updated economic scenarios Impairment1 (£m) Q4 2022 2021 YoY Charge (credit) pre updated MES2 383 915 314 601 • Asset quality remains strong Retail 253 773 672 101 Commercial Banking 121 122 (357) 479 • Impairment charge £1,510m, AQR of 32bps Oth
Slide 20: Resilient portfolio performance
Classification: Public Resilient portfolio performance New to arrears as a proportion of total balances (3 month rolling average, %) 1.00% • Customers showing resilience across asset 0.75% classes, with sustained low levels of new to 0.50% arrears 0.25% • Cards charge offs remain low and below 0.00%
Slide 21: Statutory profit after tax £5.6bn
Classification: Public Statutory profit after tax £5.6bn Statutory profit (£m) 2022 2021 YoY • Underlying and statutory profit converging Underlying profit 7,448 7,536 (1)% Restructuring (80) (452) 82% • Restructuring costs £80m, including Embark Volatility and other items (440) (182) integration co
Slide 22: Strong capital generation; enhanced guidance
Classification: Public Strong capital generation; enhanced guidance Risk weighted assets (£bn) -£1bn 4 16 2 • RWAs down £1bn since 1 Jan 2022, given (3) optimisation and credit/model reductions (4) • CET1 14.1%1, after additional £400m variable 212 211 pension contribution in Q4 196 • Strong 245bps
Slide 23: Enhanced guidance highlighting higher, more sustainable, returns
Classification: Public Enhanced guidance highlighting higher, more sustainable, returns 2023 2024 2026 Income NEW: NIM >305bps Costs NEW: c.£9.1bn operating costs NEW: c.£9.2bn operating costs <50% cost:income ratio Asset quality ratio NEW: c.30bps NEW: c.30bps Return on NEW: c.13% NEW: c.13% NEW: >
Slide 24: Closing Remarks: Strong performance; confidence in continued delivery
Classification: Public Closing Remarks: Strong performance ; confidence in continued delivery Purpose • Purpose driven business underpinned by financial strength; supporting customers and colleagues Helping • Robust financial performance driving increased capital returns Britain • Reaffirming strate
Slide 25: Q&A
Classification: Public Q&A 25
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