Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — Debt Investor Presentation (October 2024)
26 slides from Lloyds Banking's debt investor presentation, Oct 23, 2024
Slide 1: 2024 Q3 Results Fixed Income Presentation
2024 Q3 Results Fixed Income Presentation Lloyds Banking Group 23 October 2024
Slide 2: Business and strategic update
Business and strategic update 2
Slide 3: Leading UK digital bank and integrated financial services provider
Leading UK digital bank and integrated financial services provider Lloyds Banking Group Plc 3 core Retail Retail Commercial divisions Insurance Consumer Pensions & Insurance Relationships Small and Investments Corporate & Pensions & Consumer Consumer Investments Business Medium Institutional Relatio
Slide 4: Helping Britain Prosper
Purpose driven strategy benefitting all stakeholders Purpose Helping • Strategic transformation building momentum, delivering for customers Britain • Robust financial performance Prosper • Reaffirming 2024 guidance; confident in 2026 4
Slide 5: Robust financial performance
Robust financial performance Financial summary (£m) Q3 2024 Q3 2023 YoY Q3 Q2 QoQ YTD YTD % 2024 2024 % Net interest income 9,569 10,448 (8) 3,231 3,154 2. • YTD statutory PAT £3.8bn; RoTE 14.0% Other income 4,164 3,837 9. 1,430 1,394 3. Operating lease depreciation (994) (585) (70) (315) (396) 20.
Slide 6: Continued growth in customer franchise
Continued growth in customer franchise Q3 lending increase (£bn) Q3 deposit increase (£bn) Retail Commercial Retail Commercial +£3.5bn/1% -£0.2bn/0% +£1.7bn/1% -£0.5bn/0% • Group lending £457.0bn, up £4.6bn in Q3; up 2% YTD o Retail up £3.5bn in Q3; Mortgages up £3.2bn o Growth in Credit Cards and U
Slide 7: Income growth across NII and OOI
Income growth across NII and OOI Net interest income and banking margin (bps) £3.15bn £3.23bn • Q3 NII £3.2bn, up 2% QoQ 10 o NIM 295bps, up 2bps QoQ (4) (1) o Q3 AIEAs £451.1bn, up £1.7bn QoQ; YTD £449.9bn (3) 295 293 o Q3 non-banking NII charge £118m, stable vs. Q2 • Structural hedge notional £242
Slide 8: Continued cost discipline
Continued cost discipline Operating costs (£bn) +4% (+2% ex. accelerated severance) 0.1 0.1 0.1 7.0 0.3 6.9 • Q3 operating costs £2.3bn, stable on Q2 6.7 • YTD operating costs £7.0bn, up 5% YoY, 4% (0.3) excluding BoE levy o Includes accelerated severance taken YTD Q3 2023 Cost Pay & Investment, Oth
Slide 9: Strong asset quality
Strong asset quality Impairment (£m) Q3 2024 Q3 2023 YoY Q3 Q2 QoQ YTD YTD £m 2024 2024 £m Charge (credit) pre updated MES1 597 918 (321) 172 176 (4) Retail 592 787 (195) 129 160 (31) • Strong asset quality, reflected in continued resilient Commercial Banking 16 139 (123) 44 21 23 Group credit perfo
Slide 10: Consistently reassuring performance across portfolios
Consistently reassuring performance across portfolios New to arrears (3 month rolling average, %) 1.00% • Improvement in Mortgages new to arrears and 0.75% default rates in Q3 and YTD; average LTV 43% 0.50% • Resilient performance in other portfolios 0.25% • Stable SME working capital utilisation tr
Slide 11: Capital, funding & liquidity
Capital, funding & liquidity 11
Slide 12: Key Credit Metrics
Key Credit Metrics 14.3% 19.0% 132bps CET1 ratio Total Capital ratio Capital generation post regulatory headwinds1 32.2% 5.5% 9 bps MREL ratio Leverage ratio Asset Quality Ratio1 129% 144% 43% Net Stable Funding Ratio Liquidity Coverage Ratio Average Mortgage LTV 1 – As at Q3 YTD 12
Slide 13: Strong Capital & Liquidity Ratios
Strong Capital & Liquidity Ratios 14.3% CET1 remains ahead of 10.3% MDA1 and current target of Leverage ratio stable at 5.5% 13.0% (paying down to 13.5% by end 2024). c.105bps c.400bps UK Leverage Reg 1.7% 0.60% MDA 10.3%2 Requirement 1.9% 4.45% 0.60% OSII Group leverage ratio CCYB 2.5% 5.5% 14.3% a
Slide 14: Strong capital generation in line with expectations
Strong capital generation in line with expectations Risk weighted assets (£bn) 2.4 0.7 0.8 4.6 (4.3) 223.3 • Strong YTD capital generation of 132bps 219.1 • RWAs £223.3bn, up £4.2bn YTD, incl. £1.3bn in Q3 o Lending offset by optimisation Q4 2023 Underlying Credit / CRD IV1 Market risk Optimisation
Slide 15: Continued risk reduction supporting a low-risk balance sheet
Continued risk reduction supporting a low-risk balance sheet Lower mortgage LTV and CRE exposure 2012 Q3 24 Movement • De-risking across retail and commercial portfolios Mortgages o 2006-08 mortgage portfolio halved since 2018 (£26bn vs £65bn) Average LTVs 56.4% 43.4% (13.0)pp o c.90% of SME lending
Slide 16: Diversified deposit base; strong liquidity position
Diversified deposit base; strong liquidity position Loan to deposit ratio 96%, Net stable funding ratio 129%, Liquidity coverage ratio 144% c.66% of deposits in Retail; diversified Commercial Deposit growth since 2019 led by Retail2 (£bn) balances (£bn) 412 451 476 475 471 476 Corporate and Institut
Slide 17: 2024 wholesale issuance
2024 wholesale issuance Completed Issuance 2024 principles • 2024 issuance programme is now complete: o Issued €1bn Senior HoldCo, AUD $750m Tier 2, €500m £7.3bn Pfandbriefe, €500m Candide in Q3 and USD $1bn AT1 in HoldCo Refinancing of October maturities Senior guided to £7-8bn o Deposit strength h
Slide 18: Appendix
Appendix LLOYDS
Slide 19: Simple group structure with multiple issuance points
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 Scotland Lloyds Bank Corpora
Slide 20: Reaffirming strong ratings across the Group
Reaffirming strong ratings across the Group Credit ratings1 ESG ratings1 Lloyds Banking Group Ring-Fenced Bank Non-Ring-Fenced Bank Lloyds Bank, Lloyds Bank Corporate UK Sovereign LBG HoldCo LBG Tier 2 LBG AT1 Bank of Scotland Markets MSCI AA AA AA BBB+ A+ A AA BBB- BB- S&P Stable Stable Stable Stab
Slide 21: Sustainable Bond Issuance
Sustainable Bond Issuance Sustainable % of • Updated framework published in April 2024 Portfolio ICMA Theme Example Definitions1 Eligible Portfolio2 o Sets out clear eligibility criteria for Green and Social eligible asset portfolios Construction, acquisition or retrofitting of Green Buildings comme
Slide 22: 2024 and 2026 guidance
2024 and 2026 guidance 2024 2026 Income NIM >290bps c.£9.4bn operating costs inc c.£0.1bn Costs <50% cost:income ratio BoE levy Asset quality ratio <20bps Return on tangible equity c.13% >15% Risk weighted assets £220bn - £225bn Capital generation c.175bps >200bps Capital target Expect to pay down t
Slide 23: Quarterly P&L and key ratios
Quarterly P&L and key ratios (£m) Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Net interest income 3,231 3,154 3,184 3,317 3,444 3,469 3,535 Other income 1,430 1,394 1,340 1,286 1,299 1,281 1,257 Operating lease depreciation (315) (396) (283) (371) (229) (216) (140) Net income 4,346 4,152
Slide 24: Updated economic scenarios
Updated economic scenarios Scenario ECL1 (£m) Measure (%) 2024 vs. Q2 2024 2025 2026 2027 2028 Ave. 24-28 GDP 1.2 0.1 2.4 1.9 1.5 1.4 1.7 Unemployment rate 4.2 0.1 3.3 2.8 2.7 2.8 3.1 HPI growth 3.5 1.3 4.6 7.1 6.4 5.1 5.3 Upside (30%) 2,806 CRE price growth 1.6 (0.6) 9.0 4.2 1.8 0.7 3.4 UK Bank Rat
Slide 25: Contacts
Contacts Group Corporate Treasury Richard Shrimpton Kris Middleton Youmei Koh Deputy Treasurer & Treasury Head of Term Issuance and Capital Associate Director, Debt Investor Markets Director Structuring Relations Richard.Shrimpton@Lloydsbanking.com Kristofer.Middleton@Lloydsbanking.com Youmei.Koh@Ll
Slide 26: 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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