Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — Debt Investor Presentation (April 2024)
31 slides from Lloyds Banking's debt investor presentation, Apr 24, 2024
Slide 1: Q1 2024 Results Fixed Income Presentation
Classification: Public Q1 2024 Results Fixed Income Presentation Lloyds Banking Group 24 April 2024
Slide 2: Business and strategic update
Classification: Public Business and strategic update 2
Slide 3: Leading UK digital bank and integrated financial services provider
Classification: Public Leading UK digital bank and integrated financial services provider Lloyds Banking Group Plc 3 core Retail Commercial Retail divisions Insurance Consumer Pensions & Insurance Relationships Small and Investments Corporate & Pensions & Consumer Consumer Investments Business Mediu
Slide 4: Our competitive strengths differentiate our proposition
Classification: Public Our competitive strengths differentiate our proposition 1 Largest UK bank Leading UK customer franchise with deep customer insight 2 Dedicated colleagues with £890bn 27m 50% Total assets Active customers % relationship with UK adults strong values 3 Operating at scale with dis
Slide 5: Helping Britain Prosper: Delivering in line with expectations
Classification: Public Delivering in line with expectations Purpose Helping • Continuing to deliver against strategic outcomes Britain • Robust financial performance in line with expectations Prosper • Confidence in 2024 and 2026 guidance 5
Slide 6: Financial update
Classification: Public Financial update 6
Slide 7: Robust financial performance in line with expectations
Classification: Public Robust financial performance in line with expectations Financial performance (£m) Q1 2024 Q4 2023 QoQ % Q1 2023 YoY % Net interest income 3,184 3,317 (4) 3,535 (10) Other income 1,340 1,286 4 1,257 7 Operating lease depreciation (283) (371) 24 (140) • Stat profit after tax £1.
Slide 8: Resilience in customer franchise
Classification: Public Resilience in customer franchise Q1 lending change (£bn) Q1 deposit change (£bn) Retail Commercial Retail Commercial • Mortgage balances down £1.6bn in Q1 driven by -£0.1bn/0% -£0.8bn/-1% +£1.3bn/0% -£3.5bn/-2% expected roll over of Q4 refinancing 0.7 0.4 • Growth across cards
Slide 9: Solid income performance
Classification: Public Solid income performance Net interest income and banking net interest margin (£bn, bps) £3.3bn £3.2bn 4 • NII £3.2bn; NIM 295bps - (3) (4) o NIM 3bps lower in Q1, quarterly decline slowing 298 as expected 295 o Q1 AIEAs £449bn, down £4bn vs Q4 o Hedge notional of £244bn, down
Slide 10: Continued cost discipline
Classification: Public Continued cost discipline Operating costs (£bn) +6% 0.1 0.1 • Operating costs £2.4bn, +11% YoY; +6% ex. BoE levy 0.1 2.4 o Includes expected higher severance charge 2.3 2.2 0.1 • Q1 cost:income ratio 57.2%; 54.4% ex. remediation and BoE levy Q1 2023 Cost Pay & Investment, Q1 2
Slide 11: Strong asset quality
Classification: Public Strong asset quality Impairment (£m) Q1 Q4 Q1 • Strong asset quality QoQ YoY 2024 2023 2023 Charge (credit) pre updated MES1 249 (353) 602 322 (73) o Mortgage new to arrears and default rates Retail 303 277 26 271 32 improving; all other portfolios stable Commercial Banking (4
Slide 12: Stable credit performance across portfolios
Classification: Public Stable credit performance across portfolios New to arrears (3 month rolling average, %) 1.00% • Mortgage book resilient with new to arrears 0.75% improving in quarter; average LTV 43% 0.50% • Consumer finance trends stable; new to arrears 0.25% broadly at, or lower than, pre-p
Slide 13: Helping Britain Prosper: Delivering in line with expectations
Classification: Public Delivering in line with expectations • Continuing to deliver against strategic outcomes Purpose Helping • Robust financial performance in line with expectations • 2024 guidance reaffirmed Britain o NIM >290bps Prosper o Operating costs c.£9.3bn plus c.£0.1bn BoE levy o AQR <30
Slide 14: Capital, funding & liquidity
Classification: Public Capital, funding & liquidity 14
Slide 15: Key Credit Metrics
Classification: Public Key Credit Metrics 13.9% 19% 32% CET1 ratio Total Capital ratio MREL ratio 40bps 23 bps 5.6% Capital generation post Asset Quality Ratio1 Leverage ratio regulatory headwinds 43% 130% 143% Average Mortgage LTV Net Stable Funding Ratio Liquidity Coverage Ratio 1 – AQR of 23bps e
Slide 16: Strong Capital, MREL and Liquidity Ratios
Classification: Public Strong Capital, MREL and Liquidity Ratios 5.6% • CET1 remains ahead of 10.3% MDA4 and 13.9% Capital 13.7% 5.8% the Group target of 13.5% by 2024, 13% CET11 CET1 Leverage Leverage by 2026 FY 23 Q1 24 FY 23 Q1 24 31.9% • MREL remains strong and in excess of 32.0% MREL MREL MREL
Slide 17: Strong capital generation
Classification: Public Strong capital generation Risk weighted assets (£bn) 2.0 2.2 0.3 - (0.8) 222.8 • RWAs £222.8bn, up £3.7bn in Q1 219.1 o Includes a c.£1.5bn temporary RWA increase expected to reverse in Q2 Q4 2023 Underlying Credit / CRDIV1 Optimisation Market risk Q1 2024 • Strong 40bps capit
Slide 18: Low risk balance sheet post targeted risk reduction
Classification: Public Low risk balance sheet post targeted risk reduction Lower mortgage LTV and CRE exposure 2012 Q1 24 Movement Mortgages • De-risking across retail and commercial portfolios Average LTVs 56.4% 43.0% (13.4)pp o 2006-08 mortgage portfolio halved since 2018 (£31bn New business LTVs
Slide 19: CET1 resources and target
Classification: Public CET1 resources and target The CET1 equivalent of 13.0% has increased 32.0 • Medium-term CET1 target revised by Board at year- 30.0 end, taking into account 28.0 o Low risk balance sheet post targeted risk reduction 28.5 27.6 27.4 26.0 26.4 26.4 o Improved certainty with respec
Slide 20: Diversified deposit base; strong liquidity position
Classification: Public Diversified deposit base; strong liquidity position Loan to deposit ratio 96%, Net stable funding ratio 130%, Liquidity coverage ratio 143% c.65% of deposits in Retail; diversified Commercial Deposit growth since 2019 led by Retail2 (£bn) balances (£bn) 451 476 475 471 469 412
Slide 21: Wholesale issuance outlook
Classification: Public Wholesale issuance outlook Issuance 2024 principles • Expect c.£15bn of issuance in 2024 across all entities and products HoldCo Refinancing of Senior £7-8bn maturities o Stable supply vs 2023 o Good progress made in Q1 with c.40% issuance completed £1-2bn across AT1 Ongoing r
Slide 22: Appendix
Classification: Public Appendix 22
Slide 23: Modest net issuance volumes in 2024
Classification: Public Modest net issuance volumes in 2024 The Group has access to a diverse range of funding programmes, products, and markets HoldCo redemption profile (£bn) 10.4 2.3 7.8 7.3 1.3 6.8 1.5 1.3 5.7 0.8 0.4 1.4 1.7 6.8 6.8 5.2 4.9 3.6 2024 2025 2026 2027 2028 Senior HoldCo T2 AT1 OpCo
Slide 24: Diverse funding portfolio as at Q1 2024
Classification: Public Diverse funding portfolio as at Q1 2024 Wholesale funding portfolio by type 13% 23% MM Funding Covered Bond £100bn Securitisation OpCo Senior Wholesale funding portfolio by currency 31% 13% HoldCo Senior Sub Debt 8% 15% 5% 26% 23% GBP USD EUR Other Wholesale funding portfolio
Slide 25: Simple group structure with multiple issuance points
Classification: Public Simple group structure with multiple issuance points HoldCo Lloyds Banking Group BBB+ / A3 / A1 A-2 / P-2 / F1 Sta / Sta / Sta Senior Unsecured - Capital Ring-Fenced Sub-Group Non-Ring-Fenced Sub-Group Insurance Sub-Group Equity Investments Sub-Group Lloyds Bank, Bank of Scotl
Slide 26: Strong ratings across the Group
Classification: Public Strong ratings across the Group Credit ratings1 Non-Ring-Fenced Insurance HoldCo Ring-Fenced Bank Bank Sub-Group ESG ratings1 Lloyds Banking Lloyds Bank, Lloyds Bank UK Sovereign Scottish Widows2 Group Bank of Scotland Corporate Markets MSCI AA AA AA BBB+ A+ A S&P AA Stable St
Slide 27: 2024 and 2026 guidance
Classification: Public 2024 and 2026 guidance 2024 2026 Income NIM >290bps c.£9.3bn operating costs plus Costs <50% cost:income ratio c.£0.1bn BoE levy Asset quality ratio <30bps Return on tangible equity c.13% >15% Risk weighted assets £220bn-£225bn Capital generation c.175bps >200bps Capital targe
Slide 28: Quarterly P&L and key ratios
Classification: Public Quarterly P&L and key ratios (£m) Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Net interest income 3,184 3,317 3,444 3,469 3,535 3,643 3,394 3,190 2,945 Other income 1,340 1,286 1,299 1,281 1,257 1,128 1,171 1,185 1,182 Operating lease depreciation (
Slide 29: Updated economic scenarios
Classification: Public Updated economic scenarios Scenario ECL (£m) Measure (%) 2024 vs Q4 2023 2025 2026 2027 2028 Ave. 24-28 GDP 1.1 (0.4) 2.0 1.7 1.6 1.6 1.6 Unemployment rate 3.2 (0.1) 3.0 3.0 2.9 2.9 3.0 HPI growth 3.7 2.9 6.7 6.5 5.3 4.9 5.4 Upside (30%) 2,837 CRE price growth 6.5 (2.5) 4.8 1.
Slide 30: Contacts
Classification: Public Contacts Group Corporate Treasury Richard Shrimpton Liz Padley Deputy Treasurer Managing Director, Capital and Term Funding Richard.Shrimpton@Lloydsbanking.com Claire-Elizabeth.Padley@Lloydsbanking.com Pascale Dorey Youmei Koh Director, Debt Investor Relations Associate Direct
Slide 31: Disclaimer
Classification: Public 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 Pr
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