Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — 9M 2013 Earnings Presentation
18 slides from Lloyds Banking's earnings presentation, Oct 29, 2013
Slide 1: Results for the Nine Months Ended 30 September 2013
RESULTS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2013 29 October 2013 António Horta-Osório,, Group p Chief Executive George Culmer, Group Finance Director
Slide 2: Key Highlights for the First Nine Months of 2013
KEY HIGHLIGHTS FOR THE FIRST NINE MONTHS OF 2013 Significant progress in delivering our strategy and supporting i our customers Continue to support the UK economy through lending to SMEs and first time buyers Core loan book now growing in all divisions; mortgage lending grew in third quarter R
Slide 3: Financial Performance: Profit and returns substantially improved
FINANCIAL PERFORMANCE Profit and returns substantially improved GROUP((1)) CORE((1)) INCOME £14,019m £13,500m Continued strong underlying 1% 5% performance driven by: 2.06% 2.44% – Good NII growth reflecting increased NIM 13bp 12bp margin and increased core lending volumes in all divisions £(7,110
Slide 4: Balance Sheet: Capital and funding position continues to strengthen
BALANCE SHEET Capital and funding position continues to strengthen; non-core assets, including i l di international i i l exposure, further f h reduced d d CUSTOMER DEPOSITS(1) (£bn) NON-CORE ASSETS (£bn) 2% (29)% 433 98 431 83 428 70(2) c.66 423 48 36 30 c.26 50 47 40 Dec 2012 Jun 2013 Sept 2013 De
Slide 5: Supporting Our Customers and the UK Economy: Core loan book growing
SUPPORTING OUR CUSTOMERS AND THE UK ECONOMY Core loan book now growing in all divisions. C Continued i d support for f corporate and d SME customers CORE LOANS AND ADVANCES (£bn) 1% 430 Core loan book grown 1% since beginning of 428 the year, against market contraction of 1%(3) 425 426 Committed
Slide 6: Supporting Our Customers and the UK Economy: Retail loan book
SUPPORTING OUR CUSTOMERS AND THE UK ECONOMY Core retail loan book now growing and strong first time b buyer performance f RETAIL CORE LOAN BOOK (£bn) 0.9 RETAIL – Core loan book returned to growth in Q3 with (0.2) growth in line with the market in the quarter (1.7) MORTGAGES Q1 2013 Q2 2013 Q3 2
Slide 7: Financial Performance: Substantial increase in Group underlying profit
FINANCIAL PERFORMANCE Substantial increase in Group underlying profit Nine Nine th to months t months th to t 30 Sept 30 Sept Change £2.5bn increase in underlying profit (£m) 2013 2012 % to £4.4bn Net interest income 7 967 7,967 7 790 7,790 2% Net interest income growth driven by improved net in
Slide 8: Financial Performance: Increased Group statutory profit
FINANCIAL PERFORMANCE Increased Group statutory profit Nine Nine Loss on asset sales of £637m h to months months h to includes non-core disposals, 30 Sept 30 Sept including HLE (c.£330m) and Spain (£m) 2013 2012 (£256m) Underlying profit 4 426 4,426 1 875 1,875 Volatile items includes positive A
Slide 9: Financial Performance: Positive net interest income trends
FINANCIAL PERFORMANCE Positive net interest income trends CORE UNDERLYING INCOME(1) (£m) Core income year-to-date of £13,500m up 5%, 5% 2% excluding SJP Q3/Q3 4,631 4,440 4,429 4,320 4,389 Core income in the quarter of £4,429m 82 107 480 50 18 up 3% on Q3 2012, 4% up excluding 1,780 1,796 1,700
Slide 10: Financial Performance: Improving Group margin driven by deposit margin
FINANCIAL PERFORMANCE Improving Group margin driven by positive deposit margin GROUP MARGINS 0.28% 2.06% 1.93% (0.06)% (0.08)% (0.01)% Margin g improvement p in Group p and core driven by deposit margin Reduction in core asset margins FY Deposit Asset Gov t Gov’t Structural YTD primarily in Reta
Slide 11: Financial Performance: Continued reductions in absolute costs
FINANCIAL PERFORMANCE Continued reductions in absolute costs TOTAL COSTS (£m) (6)% 7,537 129 23 7,110 6% Year-on-year cost reduction (485) (83) (11) – Driven Di b by strong t Si Simplification lifi ti savings – Further investment in strategic Q3 2012 Simplification Si lifi ti St St. IInflation fl
Slide 12: Financial Performance: Continued progress towards a lower risk business
FINANCIAL PERFORMANCE Continued progress towards a lower risk business GROUP IMPAIRMENT (£m) GROSS IMPAIRED LOANS (£bn) % of 5,422 book(1) 10.1% 9.4% 8.6% 7.7% 7.2% 4,365 60 53 3,157 46 40 3 786 3,786 3 114 3,114 2 540 2,540 46 37 1,813 40 2,179 33 28 1,599 25 906 670 28 25 1,636 22 20 1,251 978 941
Slide 13: Legacy Issues: PPI complaint volumes falling, but more slowly than projected
LEGACY ISSUES PPI complaint volumes falling, but more slowly than projected AVERAGE COMPLAINT VOLUMES PER MONTH(1) 150000 (15)% 125000 (24)% 100000 (28)% Complaint volumes continue to fall, (12)% but more slowly than projected 75000 (8)% – Down 8% in the third quarter 50000 25000 Costs to end e
Slide 14: Non-Core Portfolio: Year end targets achieved
NON-CORE PORTFOLIO Year end targets achieved. Further capital accretive reduction off £29b £29bn (£28bn (£28b after f currency effects) ff ) NON RETAIL (£bn) RETAIL (£bn) Total net 131 external assets Treasury 49 assets (29)% (65)% 85 (20)% (38)% Total net 23 external assets 63 ((15)% ) UK CRE(1) 24
Slide 15: Further Strengthening the Balance Sheet
FURTHER STRENGTHENING THE BALANCE SHEET A strongly capital generative business FULLY LOADED CORE TIER 1 RATIO – JUNE TO SEPT 0.5% 0.4% 9.9% 9.6% 0.4% (0.3)% (0.3)% (0.4)% Estimated pro forma fully loaded CRD IV core tier 1 ratio improved to 9.9% Jun Underlying Non-core/ Pension Legacy Other Dispos
Slide 16: Guidance: Enhanced for margin and non-core assets
GUIDANCE Guidance enhanced for margin and non-core assets Now expect p full year y 2013 net interest margin g of 2.11% Non-core assets to reduce to around £66bn by end 2013 Non-retail non-core assets at around £26bn at end 2013 and around £15bn at end 2014 Targeting a fully loaded core tier
Slide 17: Summary: Strong progress in delivering clearly differentiated strategy
SUMMARY Strong progress in delivering clearly differentiated strategy Significant progress in delivering our strategy and supporting pp g customers Remain confident in delivering g our strategic plan Substantial increase in Group underlying y g profit p and returns UK g government commenced
Slide 18: Forward Looking Statements and Basis of Presentation
FORWARD LOOKING STATEMENTS AND BASIS OF PRESENTATION FORWARD LOOKING STATEMENTS This presentation contains forward looking statements with respect to the business, strategy and plans of the Lloyds Banking Group and its current goals and expectations relating to its future financial condition and per