Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — Debt Investor Presentation (2018)
29 slides from Lloyds Banking's debt investor presentation, 2018
Slide 1: Fixed Income Investor Presentation Q3 2018
FIXED INCOME INVESTOR PRESENTATION Q3 2018
Slide 2: Simple, low risk customer focused UK bank with strong multi-channel franchise
Simple, low risk customer focused UK bank with strong multi-channel franchise Clear strategic plan Iconic brands serving over 27m Strong franchise across key channels and products retail customers Channels market share Digital new business volumes(1) 22% OUR Helping Britain Branches market share 21%
Slide 3: Simple, single point of entry Group structure
Simple, single point of entry Group structure HoldCo (Lloyds Banking Group plc) Ring-Fenced Sub-Group (Lloyds Non-Ring-Fenced Sub-Group Insurance Sub-Group Equity Investments Bank plc) (LBCM) (Scottish Widows) Sub-Group Majority of Group activities, including: Primary business lines include: • Curre
Slide 4: >£3bn strategic investment
Significant strategic progress with strong start to the Group’s latest strategic plan Transforming the Group for Strategic investment of £0.6bn in 2018 with focus on enhancing processes success in a digital world and customer experience Digitising the Group • Investment in robotics driving significa
Slide 5: >£3bn strategic investment
Significant strategic progress with strong start to the Group’s latest strategic plan Transforming the Group for success in a digital world Maximising Group Capabilities – Financial Planning & Retirement • Strong performance to date with Insurance & Wealth open book AuA growth ahead of plan at >£11b
Slide 6: Creating a market leading wealth proposition for customers
Creating a market leading wealth proposition for customers Clear rationale for strategic partnership between Client Needs Mass Market two of UK’s strongest financial services businesses ‘Help me invest • Digitally enabled direct Financial Planning & my ISA Retirement offering Unique client base allo
Slide 7: Strong financial performance with continued growth in profits and returns
Strong financial performance with continued growth in profits and returns Net income £13.4bn • Statutory profit after tax of £3.7bn up 18% with underlying profit up +2% 5% at £6.3bn Cost:income ratio 47.5% ‐ Net income of £13.4bn, 2% higher, with NIM stable at 2.93% (incl. remediation) (2.5)pp ‐ Cos
Slide 8: Low risk business model with prudent participation choices and no deterioration seen across portfolio
Low risk business model with prudent participation choices and no deterioration seen across portfolio Asset quality ratio (bps) • Gross AQR stable at 28bps despite including MBNA; net AQR up due to lower releases and write backs -10 -6 -13 • Underlying credit quality remains strong with no 28 28 28
Slide 9: Continued growth in targeted segments while continuing to optimise the portfolio
Continued growth in targeted segments while continuing to optimise the portfolio Loans and advances (£bn) • Delivering prudent lending growth in targeted segments Q3 2018 267 41 100 37 445 - Open mortgage book in line with start of the year; continue to expect modest book growth in 2018 1 Jan - Cont
Slide 10: Responsible Business progress recognised by market participants
Responsible Business progress recognised by market participants • The Group’s success is inextricably linked to the Helping Britain Prosper Plan priorities 2018(1) 2020(2) British economy – ESG already a key part of our strategy Lending to first time buyers £10bn £30bn People Individuals, businesses
Slide 11: UK economy remains resilient
UK economy remains resilient Employment rate(1) and GDP growth CPI inflation and pay growth(2) (%) (%) 4 62 7 2 61 5 0 3 60 (2) 1 59 (4) (1) (6) 58 (3) (8) 57 2007 2009 2011 2013 2015 2017 2007 2009 2011 2013 2015 2017 GDP growth (lhs) Employment rate (rhs) CPI inflation BoE estimates of Basle III T
Slide 12: Capital & MREL
LLOYDS Capital & MREL 11
Slide 13: Strong buffers maintained to current and end-state MDA
Strong buffers maintained to current and end-state MDA 14.6% c.13% + c.1% • CET1 ratio of 14.6% post dividend accrual; Management buffer 162bps of CET1 build YTD 5.2% SRB 0.9% MDA trigger • Capital build of 200bps expected in 2018 and CCyB 0.4% MDA trigger 170-200bps through the plan CCyB 2.5% 1.875
Slide 14: Group ahead of 2020 MREL requirements and on track for 2022
Group ahead of 2020 MREL requirements and on track for 2022 31.0% HoldCo Senior • Strong total capital base: 21.8% at September 2018 (2 x P1) + P2A = 20.7% + Buffers HoldCo Senior • 31.0% MREL at September 2018; ahead of interim MREL requirement MREL eligible Total Capital MREL eligible Total Capita
Slide 15: Funding & Liquidity
Funding & Liquidity 14
Slide 16: Composition of wholesale funding as at September 2018
Composition of wholesale funding as at 30 September 2018 Product, currency and maturity – £124bn £19bn(1) Gross Term Issuance £bn 10 9 8.8 7% 8 23% 22% MM Funding (< 1year) 7 23% Subdebt GBP 6 HoldCo Senior EUR 36% 5 15% Securitisation USD 3.9 4 21% Covered Bond OTHER 3 2.8 34% OpCo 16% 2 1.7 1.8 1
Slide 17: Global issuance capability supported by strong credit ratings
Global issuance capability supported by strong credit ratings LBG entity Credit Rating Product Programmes Senior Unsecured EMTN, SEC Registered Shelf, HoldCo Long-term A3 / Stable BBB+ / Stable A+ / Stable Lloyds Banking Subordinated debt Kangaroo, Samurai Group Short-term P-2 A-2 F1 - - Ring-fenced
Slide 18: Appendix
vom Appendix > i Fans | I
Slide 19: Cost discipline enables greater investment capacity and increased returns
Cost discipline enables greater investment capacity and increased returns Market leading efficiency position Cost:income ratio(1), % 51.9 Low 40s incl. Market leading 47.7 remediation Freeing up efficiency capital for >£3.0bn 45.8 44.9 Higher NPS scores strategic investment H1 2017 H1 2018 2020 (Exi
Slide 20: Loans and Advances to Customers (H1 2018)
Loans and Advances to Customers (H1 2018)(1) Other personal lending, £29bn, 6% Lease financing, £2bn, 0.4% Postal and telecommunications, Hire purchase, £15bn, 3% £2bn, 1% Property companies, £27bn, 6% Mortgages, £299bn, 63% Transport, distribution and Other Industries, £65bn, 14% hotels, £14bn, 3%
Slide 21: H1 2018 Credit quality – diversified, high quality £290bn UK mortgage portfolio
H1 2018 Credit quality – diversified, high quality £290bn UK mortgage portfolio Mortgage portfolio quality Geographically diversified mortgage portfolio(1) (%) (£bn) 56.4 53.3 49.2 46.1 Lloyds 43% 43% 14% 44.0 43.6 43.5 81.9 86.4 89.0 89.5 88.8 70.4 Rest of 59.6 50% 40% 10% market 2012 2013 2014 201
Slide 22: H1 2018 Strong Mortgage LTVs reflecting low risk profile of our business
H1 2018 Strong Mortgage LTVs reflecting low risk profile of our business Jun 2018 Dec 2017 Dec 2016 Dec 2010 Mainstream Buy to let Specialist Total Total Total Total(1) Average LTVs 41.7% 52.2% 46.2% 43.5% 43.6% 44.0% 55.6% New business LTVs 63.2% 57.6% n/a 62.3% 63.0% 64.4% 60.9% ≤ 80% LTV 87.7% 94
Slide 23: H1 2018 Credit quality – consumer finance portfolio
H1 2018 Credit quality – consumer finance portfolio benefits from conservative underwriting and prudent assumptions Credit cards – new to arrears as proportion of total book (%) • Prime credit card book with conservative risk appetite 2.0% ‐ No deterioration seen across the portfolio 1.5% ‐ New to a
Slide 24: H1 2018 Net interest income increase driven by improved margin and AIEA growth
H1 2018 Net interest income increase driven by improved margin and AIEA growth Net interest income and margin • Net interest income up 7% to £6.3bn driven by an (£bn, %) 2.90% 2.93% 3 improved margin of 2.93% and higher AIEAs 2.82% 2.74% 2.69% ‐ Lower funding and deposit costs more than offset 2.8 m
Slide 25: Regulatory Stress Testing
Regulatory Stress Testing PRA 2018 PRA 2017 PRA 2016 PRA 2015 PRA 2014 EBA 2018 EBA 2016 – High inflation – High inflation – Low inflation – Low inflation – High inflation – Deflationary – Low inflation Description – Sterling fell 27% – Sterling fell 27% – Sterling fairly flat – Sterling up vs euro
Slide 26: Sustainability Initiatives
Sustainability Initiatives Our vision is to be the best bank for customers. By putting customers at the heart of everything we do, and operating sustainably and responsibly, we believe we will create long-term value for our customers and shareholders Helping People Helping Businesses Housing Growth
Slide 27: Notes
Notes LLOYDS 26
Slide 28: Debt Investor Relations Contacts
Debt Investor Relations Contacts Website: www.lloydsbankinggroup.com/investors/fixed-income-investors INVESTOR RELATIONS LONDON Douglas Radcliffe Edward Sands Group Investor Relations Director Director, Investor Relations +44 (0)20 7356 1571 +44 (0)20 7356 1585 douglas.radcliffe@lloydsbanking.com ed
Slide 29: Forward looking statements and basis of presentation
Forward looking statements and basis of presentation Forward looking statements This document contains certain forward looking statements with respect to the business, strategy, plans and /or results of the Group and its current goals and expectations relating to its future financial condition and p
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