Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — Debt Investor Presentation (May 2023)
24 slides from Lloyds Banking's debt investor presentation, May 17, 2023
Slide 1: Lloyds Banking Group 17th May 2023
Classification: Limited Lloyds Banking Group 17th May 2023
Slide 2: Strategy, Performance, Solvency, Q&A
1. Strategy 2. Performance 3. Solvency 4. Q&A
Slide 3: Strategy overview
Strategy overview Lloyds Banking Group 17th May 2023
Slide 4: Simplified Insurance Group
Classification: Limited Insurance Sub-Group Simplified Scottish Widows Group Ltd Insurance Group Lloyds Bank Scottish Widows Scottish General Embark Financial Widows Ltd Insurance Group Services Holdings Holdings Ltd Lloyds Bank Scottish Widows St Andrews General Europe Insurance plc Insurance Ltd 4
Slide 5: Helping Britain Prosper
Our strategy serves our purpose and builds upon our participation choices Purpose Strategic participation choices Strategic vision Customer focus Helping UK consumers and UK-linked businesses and corporates UK customer-focused Britain digital leader and Product focus Meeting all consumer and busines
Slide 6: Strong momentum and clear path to leadership in our chosen markets
Strong momentum and clear path to leadership in our chosen markets Share New business CAGR Our Ambition Market position 1 Market Share 2, FY22 2015 – 2022 3 Ambitions (FY22) (FY15) Market Individual Protection 5.2% Top 3 provider, (1.2%) +27% +3% #1 in Bank market (#8) Workplace Pensions 17.7% #1 fo
Slide 7: UK societal needs and insurance alignment with growth drivers
UK societal needs (selected) > Insurance alignment with growth drivers Growth drivers Insurance capabilities - Post-RDR reduction in supply ✓ Ethical data-driven, personalised people will suffer an illness that limits their ability to work nudges, guidance & tools 1 in 4 Advice Gap - Greater complex
Slide 8: Embedding responsible investment activities throughout the business
We continue to enhance and embed responsible investment activities throughout the business Our Six Principles of Responsible Investment We will be a responsible investor. We will strive to Protect our investments from 1. 6. Private 1. Invest material ESG-related risks and seek to capitalise on ESG-r
Slide 9: Performance
Lloyds Banking Group 17th May 2023
Slide 10: Life Pensions & Investments income, profit, sales and costs
34 Life Pensions & Investments (SWL) IP&I Total Underlying Income (£m) 34 IP&I Underlying Profit (£m) 340 - New Business Income (£m) 590 1,054 288 244 223 781 805 209 740 701 669 349 343 603 327 162 161 150 251 254 137 30 (90) H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 2
Slide 11: High quality, diversified UK focused portfolio
High quality, diversified UK focused portfolio Shareholder portfolio £21.1bn • High quality portfolio; 75% A or better Credit Ratings Asset Type Other (un- • UK focused – 70% of portfolio invested in UK rated assets), Cash, 1.0 AAA, 0.4 17.0% Liquidity • Portfolio well spread across sector and Funds
Slide 12: New claim volumes are reducing over the longer term
New claim volumes are reducing over the longer term Provisions ▪ Volumes for the more expensive non-revocation claims continue to decline, having peaked in 2012 Basis Settled Remaining Total ▪ German revocation claim volumes have largely been YE 2022 Best Estimate IFRS £620m £88m £708m declining sin
Slide 13: IFRS 4 vs IFRS 17 profit recognition
IFRS 4 IFRS 17 Day 1 P&L impact deferred New Expected profit on balance sheet and business recognised on spread over contract life profit day 1 in income through CSM release Day 1 P&L impact deferred Recognised Assumption on balance sheet and 2022 net income (£m) IFRS 4 IFRS 17 immediately in change
Slide 14: IFRS 17 overview, balance sheet and capital
Classification: Limited • IFRS 17 does not impact the economic value of the Insurance business or the total profit recognised over the lifetime of any insurance contract. The move to IFRS 17 is an accounting change impacting the phasing of profit recognition on insurance contracts Overview • Impleme
Slide 15: Solvency
Classification: Limited Lloyds Banking Group 17th May 2023
Slide 16: Scottish Widows Limited solvency ratio on a regulatory basis
175% ▪ Figures shown are for Scottish Widows Limited (SWL) on a regulatory basis – consistent with annual SFCR disclosures ▪ Scottish Widows manages capital on a shareholder basis (i.e. excluding With Profits impact). Equivalent SWL shareholder solvency ratio of 191% (post dividend of 188%) Gross Ri
Slide 17: SWL Capital Generation
175% Transitionals YE 2022 (£bn) SWL SWG Own Funds 5.9 5.5 SCR 3.3 3.6 Matching Adjustment Regulatory Ratio* 175% 152% Shareholder Ratio 191% 163% *includes foreseeable dividends paid in Q1 2023 SWL Capital Generation – Capital generation over 2022 is primarily due to: • The positive impact of long
Slide 18: SCR breakdown by risk category
Market Risk (pre Diversification) (£bn) Interest Rate Totals £5.9bn £12.3bn £5.1bn £0.8bn £6.4bn £3.0bn £3.3bn Risk 0.6 Equity Other, 1.3 0.5 Risk 2.1 Operational Risk, 1.9 Within Risk Diversification, Credit & Swap 0.2 Spread Risk Other 5.1 Risk Between risk category Market Risk, 3.4 diversificatio
Slide 19: SWL capital movements consistent with SWG
As the predominant entity within Insurance Group, SWL’s capital movements are materially consistent with SWG £m Eligible Own Funds SCR Opening balance : 31 December 2021 7,779 4,573 M&A (409) 19 Regulatory & other model changes (75) 20 Operating impact: New business contribution 22 270 Expected in-f
Slide 20: Sensitivities
Change in working Change in working Sensitivities (£m) capital excluding TMTP capital including TMTP recalculation recalculation 25% equity fall 27 6 • Equity risk is materially removed through the 100 bps rise in interest rate 154 51 equity hedging program (parallel shift) 100 bps fall in interest
Slide 21: Embark acquisition, market impacts and dividends
• SWG completed the acquisition of Embark Group in the first quarter of 2022 • The purchase was supported by a capital injection from Lloyds Banking Group Embark Acquisition • The acquisition of Embark will enable significant transformation of our Financial Planning & Retirement business, creating a
Slide 22: Liquidity monitoring
• Liquidity is monitored on a Primary (3 month) and Total (12 month) basis • Primary classes liquid assets as cash and gilts. Total liquidity also classes bonds as liquid assets Liquidity • Two metrics are monitored for both Primary and Total liquidity Monitoring • Liquidity coverage = Available liq
Slide 23: Q&A
Classification: Limited Q&A
Slide 24: Disclaimer
Disclaimer Important notice The information, statements, views and opinions contained in this document and accompanying discussion (“this Presentation”) are for informational and reference purposes only. This Presentation has been provided by the Group (defined below). This Presentation does not pur
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