Lloyds Banking Group Plc · LSE:LLOY

Lloyds Banking — 9M 2012 Earnings Presentation

15 slides from Lloyds Banking's earnings presentation, Nov 1, 2012

1. Slide 1: Results for the Nine Months Ended 30 September 2012

   RESULTS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2012 1 November 2012 António Horta-Osório, Group Chief Executive George Culmer Culmer, Group Finance Director

2. Slide 2: Highlights for the First Nine Months of 2012

   HIGHLIGHTS FOR THE FIRST NINE MONTHS OF 2012 ƒ Improved underlying Group performance in a challenging environment ƒ Core business continuing to deliver returns above cost of equity ƒ Further good progress on initiatives to simplify and reshape the business ƒ Investing in our core business to improve

3. Slide 3: Financial Performance: Improved underlying Group performance

   FINANCIAL PERFORMANCE Improved underlying Group performance GROUP CORE 30 Sept 30 Sept Change 30 Sept 30 Sept Change (£m) 2012 2011 % 2012 2011 % Underlying y g income 13,831 , 16,055 ((14)% ) 12,937 , 14,227 ((9)% ) Total costs (7,508) (7,909) 5% (6,884) (7,226) 5% Impairment (4,419) (7,378) 40% (1

4. Slide 4: Further Strengthening the Balance Sheet

   FURTHER STRENGTHENING THE BALANCE SHEET Deposit growth and non-core run-down driving reduction in l loan to deposit d i ratio; i core tier i 1 ratio i further f h improved i d CUSTOMER DEPOSITS(1) (£bn) LOAN TO DEPOSIT RATIO(2) 15 (11)pp 421 135% 126% 419 124% Group 406 109% 103% 102% Core Dec Jun S

5. Slide 5: Supporting Our Customers and the UK Economy

   SUPPORTING OUR CUSTOMERS AND THE UK ECONOMY Delivering on commitments to business and personal customers ƒ UK’s UK’ llargestt llender d tot first-time fi t ti buyers, b helping h l i around d 40,000 40 000 customers t buy b their th i first home in the first nine months of the year ƒ SME net lending

6. Slide 6: Investing in Our Core Business

   INVESTING IN OUR CORE BUSINESS Building the best bank for customers ƒ Investing in customer channels – Additional investments made in our digital channels, with Retail’s active internet banking customers growing to 9.3 million and mobile customers to 2.9 million – Continue to roll out branch refurbi

7. Slide 7: Financial Performance: Improved underlying Group performance

   FINANCIAL PERFORMANCE Improved underlying Group performance GROUP CORE 30 Sept 30 Sept Change 30 Sept 30 Sept Change (£m) 2012 2011 % 2012 2011 % Net interest income 7,790 9,407 (17)% 7,422 8,297 (11)% Other income(1) 6,041 6,648 (9)% 5,515 5,930 (7)% Underlying income 13,831 16,055 (14)% 12,937 14,

8. Slide 8: Financial Performance: Income slightly ahead with stable margin trends

   FINANCIAL PERFORMANCE Income slightly ahead with stable margin trends ƒ Income slightly ahead in third quarter UNDERLYING INCOME (£m)(1) – Group income increased by 1% (Q3 vs Q2) 4,728 4,518 4,585 – Core income increased by 2% (Q3 vs Q2) 376 268 250 ƒ Non-core income now represents only 6% of total

9. Slide 9: Financial Performance: Further reductions in costs and impairment

   FINANCIAL PERFORMANCE Further reductions in costs and impairment ƒ Total costs decreased by 5%, with part of TOTAL COSTS (£bn) Simplification savings reinvested in core business 5.6 5.5 5.3 5.3 5.0 ƒ Simplification run rate cost savings increased to £660 million 2.5 ƒ Cost base expected to be close

10. Slide 10: Financial Performance: Statutory reconciliation

    FINANCIAL PERFORMANCE Statutory reconciliation 30 Sept 30 Sept KEY MESSAGES (£m) 2012 2011 Management profit 2,249 1,748 ƒ Simplification costs of £332 million contributing to further run-rate savings of Volatility arising in insurance business 236 ((737)) £418 million Simplification, Verde and inte

11. Slide 11: Further Strengthening the Balance Sheet: Wholesale funding and liquidity

    FURTHER STRENGTHENING THE BALANCE SHEET Wholesale funding reduced and liquidity coverage improved FUNDING (£bn) ƒ Overall funding reduced by £65 billion in the first (26)% 298 nine months 251 214 186 ƒ Short-term wholesale funding of £62 billion, 149 138 141 down £52 billion since December 49 124 44

12. Slide 12: Non-Core Portfolio

    NON-CORE PORTFOLIO Continued disciplined portfolio and risk reductions NON-CORE PORTFOLIO (£bn) OTHER CORPORATE (£bn) RWAs 144 109 93 85 20 Total net external assets 194 Aviation 2 Leveraged finance 3 Corporate 4 T Treasury assets t 49 22% Other 4 141 Shipping 7 UK CRE 24 23 118 12 110 Sept 2012 Oth

13. Slide 13: Further Strengthening the Balance Sheet: Capital position

    FURTHER STRENGTHENING THE BALANCE SHEET Capital position continues to improve CAPITAL 1.0% ƒ Core tier 1 ratio continues to improve, driven by: 16.6% 16.6% 15.6% – management profit 15 2% 15.2% 15 0% 15.0% – lower RWAs – offset by statutory and other items ƒ Estimated E ti t d fully-loaded f ll l d

14. Slide 14: Summary

    SUMMARY ƒ Improved business performance in third quarter – Underlying profit significantly increased; stable core returns above cost of equity – Balance sheet further strengthened and non-core assets substantially reduced – Simplification enabling further investment in core business ƒ Confident of m

15. Slide 15: 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, its current goals and expectations relating to its future financial condition and perfor

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