Lloyds Banking Group plc · LSE:LLOY

Lloyds Banking — Investor Presentation (December 2023)

23 slides from Lloyds Banking's investor presentation, Dec 5, 2023

  1. Slide 1: Lloyds Banking Group

    Classification: Public Lloyds Banking Group 5 December 2023 1

  2. Slide 2: Welcome and introduction

    Classification: Public Welcome and introduction Douglas Radcliffe, Group Investor Relations Director 2

  3. Slide 3: Economic update

    Classification: Public Economic update Andrew Pipe, Head Economist 3

  4. Slide 4: UK economy has proved resilient

    Classification: Public UK economy has proved resilient Consensus forecasts for UK GDP growth1 UK GDP2 % change vs previous year, year average index, 2019 Q4 = 100 2.4 110 2.2 2.0 105 1.8 1.6 100 1.4 1.2 1.0 2024 95 0.8 0.6 90 0.4 0.2 85 0.0 -0.2 -0.4 2023 80 -0.6 -0.8 75 -1.0 '15 '16 '17 '18 '19 '20

  5. Slide 5: Government support to households has been key

    Classification: Public Government support to households has been key UK government financial balance1,2 Labour market demand1 Cyclically adjusted, % of GDP Change in levels since Dec 2019, millions 0.6 Total labour vacancies demand 0.4 -2.2 -2.7 -2.9 -3.1 0.2 -4.8 0.0 -6.1 -6.0 -0.2 -0.4 employment

  6. Slide 6: Inflation burst easing, but a >3% hit to national net income

    Classification: Public Inflation burst easing, but a >3% hit to national net income UK CPI ‘core’ inflation1 Price level of necessities1 % (seasonally adjusted by LBG) Consumer price index, adjusted to Dec 2019 = 100 12 200 Energy Food 10 180 8 160 6 4 140 2 120 0 Price change vs previous month 100

  7. Slide 7: Remainder of cost-of-living squeeze still to come

    Classification: Public Remainder of cost-of-living squeeze still to come Mortgage interest rates1 Fiscal impulse2 % % of GDP 6 4 New mortgage lending (11.8) All mortgage balances 3 5 Bank Rate 2 4 1 5yr rolling average 3 0 -1 2 -2 1 (-8.9) -3 2001-02 2003-04 2005-06 2007-08 2009-10 2011-12 2013-14 2

  8. Slide 8: Prudent forecast at Q3

    Classification: Public Prudent forecast at Q3 Real-terms GDP1 UK CPI inflation1 One-quarter % change %, quarter average Memo: MES ‘Severe’ Scenario (10% weight) • 4.3% peak-to-trough decline in GDP • -6.3% in 2008-9 • 10.5% peak in unemployment • 8.5% peak in 2011 Unemployment rate1 UK house prices2

  9. Slide 9: UK longer term prospects relatively good

    Classification: Public UK longer term prospects relatively good Real-terms interest rates vs productivity growth1 Working-age population growth forecasts2 (% per year) (% per year, average 2024-33) 3 2.5 0.3 0.1 0.1 2 -0.2 2 1 -0.8 -0.9 1.5 -1.1 Canada USA UK France Japan Germany Italy 0 1 -1 Old-ag

  10. Slide 10: Business and financial update

    Classification: Public Business and financial update Douglas Radcliffe, Group Investor Relations Director 10

  11. Slide 11: Lloyds Banking Group in context

    Classification: Public Lloyds Banking Group in context Largest UK Purpose bank Active customers Loans and advances UK distribution network Helping Britain A trusted brand portfolio Robust financials year to date Net interest margin Asset quality ratio Return on tangible equity (NIM) (AQR) (RoTE) 11

  12. Slide 12: Progressing our strategic transformation

    Classification: Public Progressing our strategic transformation A clear strategic vision… …driving a 5-year transformation… …with regular progress updates 2022 Oct 2023 - Investor seminar Laying the foundations, early benefits delivery Deepen and Innovate in Consumer’ UK customer-focused digital lea

  13. Slide 13: Continued robust financial performance

    Classification: Public Continued robust financial performance Financial performance (£m) Q3 2023 Q3 2022 YoY1 YTD YTD1 Net interest income 10,448 9,529 10% Other income 3,837 3,538 8% • Statutory profit after tax £4.3bn; RoTE 16.6% Operating lease depreciation (585) (295) (98)% Net income 13,700 12,

  14. Slide 14: Ongoing resilience in customer franchise

    Classification: Public Ongoing resilience in customer franchise Q3 lending change1 (£bn) Q3 deposit change3 (£bn) Retail Commercial Retail Commercial +£1.2bn/0.3% -£0.6bn/0.7% +£0.7bn/0.2% +£0.1bn/0.1% • Total loans up £1.4bn in Q3; down 0.6% YTD o Retail up £1.2bn in Q3; total mortgages stable 0.2

  15. Slide 15: Solid income performance

    Classification: Public Solid income performance Net interest income and banking margin (£bn, bps) £3.5bn £3.4bn 7 • NII £10.4bn YTD, £3.4bn in Q3 - • YTD NIM 315bps; 308bps in Q3, down 6bps vs (6) (7) 314 Q2, given expected headwinds 308 • Continue to expect 2023 NIM >310bps Q2 2023 Base rate / Stru

  16. Slide 16: Costs in line with expectations

    Classification: Public Costs in line with expectations Operating costs (£m) +5% 81 236 210 • YTD operating costs £6.7bn, up 5% given planned strategic investment, new 6,654 (189) business and inflation 6,316 • Cost:income 49.5%; 48.6% ex. remediation Q3 2022 Cost Pay & Investment, Other Q3 2023 YTD

  17. Slide 17: Resilient observed asset quality

    Classification: Public Resilient observed asset quality Impairment (£m) Q3 2023 Q3 2022 Q3 2023 YoY YTD YTD Charge (credit) pre updated MES1 261 918 532 386 Retail 236 787 520 267 Commercial Banking 31 139 1 138 Other (6) (8) 11 (19) • Q3 YTD impairment charge £849m, AQR Updated economic outlook (74

  18. Slide 18: Reassuring performance across portfolios

    Classification: Public Reassuring performance across portfolios Mortgage portfolio mix and new to arrears (Balances £bn, NTAs %, LTV %) 290 295 309 313 308 308 • Mortgage book remains resilient with 0.36% arrears below 2019 0.31% 0.27% 0.26% 0.25% 0.21% • Underlying consumer finance trends stable; 4

  19. Slide 19: Underlying and statutory profit converge

    Classification: Public Underlying and statutory profit converge Statutory profit (£m) Q3 2023 Q3 2022 YoY YTD YTD Underlying profit 6,063 5,322 14% Restructuring (69) (69) Volatility and other items (266) (1,528) 83% Statutory profit before tax 5,728 3,725 54% • YTD restructuring £69m with £44m in Q

  20. Slide 20: Continued strong capital generation; clear distribution policy

    Classification: Public Continued strong capital generation; clear distribution policy Risk weighted assets (RWA) (£bn) • RWAs £217.7bn, up £6.8bn YTD; £2.4bn in Q3 1.9 2.0 2.9 3.0 (3.0) • Strong 165bps capital generation; 129bps after regulatory headwinds 217.7 210.9 • CET1 ratio 14.6% ahead of ongo

  21. Slide 21: Consistent delivery

    Classification: Public Consistent delivery Purpose • Continued robust financial performance Helping • 2023 financial guidance Britain o Net interest margin of >310bps o Operating costs of c.£9.1bn o Asset quality ratio now expected to be <30bps o Return on tangible equity of >14% o Capital generatio

  22. Slide 22: Q&A

    Classification: Public Q&A Douglas Radcliffe, Group Investor Relations Director Andrew Pipe, Head Economist 22

  23. Slide 23: Disclaimer

    Classification: Public 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 Pr

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