Lloyds Banking Group plc · LSE:LLOY
Lloyds Banking — FY2021 Earnings Presentation
22 slides from Lloyds Banking's earnings presentation, Apr 7, 2022
Slide 1: ShareSoc Webinar Lloyds Banking Group
Classification: Public ShareSoc Webinar Lloyds Banking Group Carla Antunes da Silva, Group Strategy, Corporate Development & Investor Relations Director Douglas Radcliffe, Group Investor Relations Director 7 April 2022
Slide 2: 2021 strategic and financial progress
Classification: Public 2021 strategic and financial progress Douglas Radcliffe, Group Investor Relations Director 2
Slide 3: Solid financial performance in 2021
Classification: Public Solid financial performance in 2021 • Solid net income, up 9%, NIM 254bps • Maintained focus on operating costs, 1% higher YoY including variable pay £15.8bn 56.7% • Strong asset quality, £1.2bn net Net income up 9% Cost:income ratio up impairment credit vs 2020 1.4pp vs 2020
Slide 4: Helping Britain Recover
Classification: Public Helping Britain Recover Performance against commitments for 20211 >93k >£16bn Start-ups and small businesses Lent to first-time homebuyers Group’s focus areas for 2021 supported vs target 75k2 vs target £10bn • Recovery and growth of businesses • Financial health of households
Slide 5: Progress against Strategic Review 2021
Classification: Public Progress against Strategic Review 2021 Our customer ambitions Enhanced capabilities +69 Maintained record all-channel NPS (FY21) 1.8x Mobile app releases in 2021 vs 2020 (target 2x) £16bn Net growth in open mortgage book in 2021 3x Corporate clients onboarded to new cash manag
Slide 6: Solid net interest income performance
Classification: Public Solid net interest income performance Average interest-earning assets (AIEAs) (£bn) +2% 15 • NII £11.2bn, up 4% on 2020, benefitting 1 445 (3) from increased AIEAs and stronger NIM (3) 435 − 2021 AIEAs £445bn, up £10bn on 2020 − Full year NIM 254bps, 257bps in Q4, up 2bps on Q
Slide 7: Strong mortgage growth with tighter new business margins
Classification: Public Strong mortgage growth with tighter new business margins Mortgage book (Book size £bn, Gross margin %1) 1.82% 1.86% 1.84% • Mortgage balances up £13.7bn to 305 308 YoY £307.5bn, open book growth £16bn 294 • Back book c.£64bn, Q4 YoY attrition c.16% 115 132 139 +21% • 2021 new
Slide 8: Other income showing signs of recovery
Classification: Public Other income showing signs of recovery Other income • Other income of £5.1bn in 2021, with (£bn) £1.3bn in Q4 − Retail seeing recovering customer activity levels, offset by reduced Lex fleet 1.2 1.2 1.3 1.3 1.3 1.0 1.1 1.1 − Broadly stable performance overall in Commercial Ban
Slide 9: Maintained focus on efficiency
Classification: Public Maintained focus on efficiency Operating costs • Sustained cost discipline; cost:income ratio (£m) +1% of 56.7% and operating costs of c.£7.6bn 253 7,630 7,585 (24) • Remediation of £1.3bn includes £790m for 92 HBOS Reading, £600m in Q4 reflecting (12) (264) estimated future c
Slide 10: Strong asset quality and low new to arrears
Classification: Public Strong asset quality and low new to arrears Total impairment costs (£m) £4,247 charge 403 2234 • £1.2bn net impairment credit for 2021, £467m credit in Q4, both given improved macroeconomic outlook £1,207 credit 1610 • Sustained low levels of new to arrears and 557 underlying
Slide 11: Strong capital build enabling total distribution of £3.4bn
Classification: Public Strong capital build enabling total distribution of £3.4bn • Total capital return equivalent to £3.4bn, c.10% of market cap Common equity tier 1 ratio − Final ordinary dividend of 1.33p per (%, bps) share; total ordinary dividend of 2p Capital build 210bps (Q4 51bps) − Share b
Slide 12: Strategy update
Classification: Public Strategy update Carla Antunes da Silva, Group Strategy, Corporate Development & Investor Relations Director 12
Slide 13: Key messages
Classification: Public Key messages Higher, more diversified, revenues c.£0.7bn additional revenues from strategic initiatives in 2024; c.£1.5bn with a 50:50 NII/OOI split by 2026 Maintaining strong focus on cost discipline Transformation plan Flat costs in 2024 vs. 2022, with savings offsetting cos
Slide 14: Building on our strong foundations
Classification: Public Building on our strong foundations Our strong foundations… …have created distinct competitive strengths Leading UK customer franchise with trusted brands Maintained leading market shares; 19% since 2017 >1m business client Relationship with relationships c.50% of UK adults Lar
Slide 15: Changing environment, opportunity to do more
Classification: Public Changing environment, opportunity to do more Key challenges Key opportunities High NII dependency in a low rate environment Grow and diversify revenue base Customer behaviour and competition driving disintermediation Create more valuable relationships as integrated provider Ac
Slide 16: Transforming to create higher and more sustainable value
Classification: Public Transforming to create higher and more sustainable value A clear strategic vision… …with a transformation plan… …creating higher and more sustainable value Purpose Helping Britain Prosper Drive revenue growth and diversification Grow Strategic vision UK customer-focused digita
Slide 17: Higher, more sustainable, returns and capital generation
Classification: Public Higher, more sustainable, returns and capital generation c.£3bn incremental strategic investment by 2024… …will create higher, more sustainable, returns >10% RoTE by 2024 Drive revenue growth and diversification c.£0.7bn additional revenues from strategic initiatives Grow c.£8
Slide 18: Drive revenue growth and diversification
Classification: Public Drive revenue growth and diversification Key outcomes from strategic initiatives c.£1.5bn per annum Deepen and Create a new Additional revenues in 2026 1 innovate in 2 mass affluent (c.£0.7bn in 2024) Consumer offering 50:50 NII/OOI split from strategic initiatives by 2026 Tar
Slide 19: Strengthen cost efficiency
Classification: Public Strengthen cost efficiency Key priorities: c.£1bn incremental strategic investment over 3 years 2024 outcomes: Lower cost of technology Simplify our technology estate through decommissioning or migration to more efficient infrastructure >15% Reduction in legacy applications Lo
Slide 20: Maximise the potential of people, technology and data
Classification: Public Maximise the potential of people, technology and data People 2024 outcomes: Transforming ways of working, recruiting and Improve developing new skills; building an inclusive organisation Employee Engagement Index Technology Further embedding an agile technology model, 20% driv
Slide 21: Strategic vision delivering higher, more sustainable, returns
Classification: Public Strategic vision delivering higher, more sustainable, returns A clear strategic vision… …to create higher, more sustainable, returns Higher, more diversified, revenues Strong focus on cost discipline UK customer-focused digital leader and integrated financial Enabling our stra
Slide 22: Q&A
Classification: Public Q&A 22