Lloyds Banking Group Plc · LSE:LLOY
Lloyds Banking — Q1 2013 Earnings Presentation
16 slides from Lloyds Banking's earnings presentation, Apr 30, 2013
Slide 1: Results for Quarter Ended 31 March 2013
RESULTS FOR QUARTER ENDED 31 MARCH 2013 30 April 2013 António Horta-Osório, Group Chief Executive George Culmer Culmer, Group Finance Director
Slide 2: Highlights for the First Three Months of 2013
HIGHLIGHTS FOR THE FIRST THREE MONTHS OF 2013 Strong performance, on track to meet 2013 guidance Substantial increase in Group underlying and statutory profit Group net interest margin increased, consistent with guidance for 2013 full year Further substantial reductions in Group costs and impa
Slide 3: Financial Performance: Profitability and returns substantially improved
FINANCIAL PERFORMANCE Profitability and returns substantially improved (£m) Q1 2013 Q1 2012(1) Change % Substantial S b t ti l increase i in i Group G underlying d l i and statutory profit Group income(2) 4,889 4,728 3% – Includes £394m gain relating to the sale of Group NIM 1.96% 1.95% 1bp shares
Slide 4: Balance Sheet: Strong balance sheet
BALANCE SHEET Strong balance sheet CUSTOMER DEPOSITS(1) (£bn) NON-CORE ASSETS (£bn) 4% (28)% 1% 128 (6)% 423 428 412 98 92 Mar 2012 Dec 2012 Mar 2013 Mar 2012 Dec 2012 Mar 2013 LOAN TO DEPOSIT RATIO(2) CORE TIER 1 CAPITAL RATIO (11)pp 1.5pp (2)pp 0.5pp 130% 12.0% 12.5% 121% 119% 11.0% 105% 101% 8.1%
Slide 5: Supporting Our Customers and the UK Economy
SUPPORTING OUR CUSTOMERS AND THE UK ECONOMY Corporate lending driving return to growth in core loan book, ahead h d off guidance id Committed more than £18bn to UK CORE LOANS AND ADVANCES(1) (£bn) customers t through th h Funding F di forf Lending L di – Scheme now extended to January 2015 430 429
Slide 6: Substantial increase in Group underlying and statutory profit
FINANCIAL PERFORMANCE Substantial increase in Group underlying and statutory profit GROUP (£m) Q1 2013 Q1 2012 Change % Underlying income higher reflecting the Net Interest Income 2,553 2,633 (3)% £394m gain relating to the sale of shares Other Income 2,336 2,095 12% in St. James’s Place Underlyin
Slide 7: Stabilising income trends and improved margin
FINANCIAL PERFORMANCE Stabilising income trends and improved margin CORE UNDERLYING INCOME(1) (£m) 4,538 4,341 4,320 4,389 4,631 4,235 1,942 1,902 2,179 Core income of £4.6bn, up 7% year-on-year 1,891 1,763 1,861 Other income was down 3% compared to Q4 2,596 2,450 2,472 2,459 2,487 2,452 2012, e
Slide 8: Improving Group margin driven by positive deposit margin
FINANCIAL PERFORMANCE Improving Group margin driven by positive deposit margin GROUP MARGINS 0.08% 1.94% 0.01% 1.96% (0.02)% (0.04)% (0.01)% Positive deposit margin more than offsetting ff tti lower l assett margins, i and d impact, i t as expected, of government bond sales and structural hedge Q4
Slide 9: Further reduction in Group costs
FINANCIAL PERFORMANCE Further reduction in Group costs TOTAL COSTS(1) (£bn) (14)% 2,803 (6)% Total costs decreased by 6% vs. Q1 2012 2,574 2,408 Simplification run-rate savings increased to £1,007m (at December 2012: £847m) Q1 Q1 Q1 2011 2012 2013 COST GUIDANCE(1) (£bn) Now expect 2013 Group t
Slide 10: Further reduction in impairment
FINANCIAL PERFORMANCE Further reduction in impairment GROUP IMPAIRMENT (£bn) (40)% Impairment charge down by 40% vs. Q1 2012 1,657 (22)% 1,500 – Further improvement in portfolio and asset 1,262 1,278 quality 1,245 1,002 934 889 710 – Non-core asset reduction 511 568 Core down 14% in the quarter;
Slide 11: Legacy Issues – PPI
LEGACY ISSUES – PPI Complaint volumes declining in line with expectations AVERAGE COMPLAINT VOLUMES PER MONTH(1) 140,000 (15)% 110,000 (24)% No further PPI provision taken in Q1 2013 (28)% Complaint volumes continue to fall: 80,000 – Down 28% on the last quarter 50,000 – Over 50% down on Q2 2012
Slide 12: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS Strong balance sheet QoQ GROUP Mar Dec D Sep Change S Ch % Movements (£bn) 2013 2012 2012 Mar/Dec (£bn) Q1 2013 Q4 2012 ASSETS Core loans and advances(1) 426 425 426 - Non-core N d ti (4) assett reduction 6 12 Non-core assets 92 98 110 (6)% Primary liquid asset decrease 7 7
Slide 13: Non-Core Portfolio
NON-CORE PORTFOLIO Further capital accretive reduction of £9bn (£6bn after currency effects), ff ) driven di by b non-retail il reduction d i NON RETAIL (£bn) RETAIL (£bn) RWAs 74 (42)% 43 (16)% 36 RWAs 35 (14)% 30 - 30 Impaired Loans 41 (29)% 29 (10)% 26 Impaired Loans 5 (20)% 4 - 4 Total net exter
Slide 14: Further Strengthening the Balance Sheet
FURTHER STRENGTHENING THE BALANCE SHEET A strongly capital generative business CORE TIER 1 RATIO 0.4% 0.2% 12.5% 12.0% 0.3% (0.4)% Core tier 1 ratio improved to 12.5% Pension accounting changes more than offset by Dec IAS 19 RWAs Underlying SJP Mar – Reduction in risk-weighted 0 (1) 2012 Effect
Slide 15: Summary
SUMMARY Strong performance in the first three months of 2013 – Substantial increase in Group underlying and statutory profit – Core profitability and returns further improved – Strongly capital generative business; remain confident in capital position On track to meet guidance for 2013 Expect
Slide 16: 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