Lloyds Banking Group plc · LSE:LLOY
Lloyds Banking — Morgan Stanley Financials Conference 2019
15 slides from Lloyds Banking's conference presentation, Mar 19, 2019
Slide 1: Morgan Stanley Financials Conference
MORGAN STANLEY FINANCIALS CONFERENCE António Horta-Osório | 19 March 2019
Slide 2: 2018 was a year of strong financial performance with continued growth in profits and returns
2018 was a year of strong financial performance with continued growth in profits and returns Statutory profit after £4.4bn tax +24% • Statutory profit after tax of £4.4bn up 24%, with EPS 27% higher 5.5p Earnings per share +27% • Underlying profit up 6% at £8.1bn £8.1bn ‐ Net income of £17.8bn, 2% h
Slide 3: We have executed on a clear strategic path since 2011, reflecting constant evolution
We have executed on a clear strategic path since 2011, reflecting constant evolution GSR1 (2011-2014) GSR2 (2015-2017) GSR3 (2018-2020) Unchanged Helping Britain Prosper purpose Reshape our portfolio Deliver sustainable growth Leading customer experience Simplify the Group Key strategic Become simpl
Slide 4: Material transformation of the business since 2011, with significant balance sheet restructuring complete
Material transformation of the business since 2011, with significant balance sheet restructuring complete Significantly de-risking the balance sheet Material improvements in credit quality RWAs1 and run-off assets2, £bn Gross asset quality ratio, bps -50% -88% 415 231 240 211 206 194 52 28 28 17 9 3
Slide 5: We have restructured our core loan book, but not at the detriment of scale
We have restructured our core loan book, but not at the detriment of scale… Mortgage book2,4, £bn, gross margin, % Re-shaping the core loan book Gross margin 2.3% 1.9% Core loans and advances to customers1,2, £bn 301 291 288 43 37 32 LTD3 154% 107% 83 72 Back book ratio 123 22 23 72 33 28 64 Front b
Slide 6: …and transformed our funding profile
…and transformed our funding profile Transformed funding profile Wholesale funding less than 1 year, £bn Customer deposits1, £bn % of total 50% 27% Gross margin (0.2)% 0.4% 149 423 416 416 45 19 17 14 14 358 15 41 33 29 48 132 130 12 124 2010 2014 2017 2018 114 Hedged balances2, (£bn) 150 146 460 45
Slide 7: The combination of these has enabled us to restore profitability within a solid and prudent balance sheet
The combination of these, and our significant cost advantage, has enabled us to restore profitability within a solid and prudent balance sheet Re-shaped balance sheet driving higher income Restoring profitability Net interest margin, % Pre-impairment provision underlying operating profit1, £bn Net i
Slide 8: Our cultural focus on costs has delivered a best-in-class efficiency position
Our cultural focus on costs has delivered a best-in-class efficiency position… Continued focus on BAU cost reduction Operating costs(1), £bn Cost:income • Operating costs 15% lower than 2010; -4% BAU cost 55.3 51.8 49.3 Low ratio (%)(1): CAGR more than offsetting increasing investment 40s 2020 Exit
Slide 9: …which creates capacity for increased investment
…which creates capacity for increased investment… Top quartile investment supported by market leading efficiency IT / Technology cash spend as % of Reported cost:income ratio operating costs1 19% 2020 Low 40s (Exit) 18% 2018 49% • Significantly increasing investment over the course of 2020 >16% 49%
Slide 10: …whilst supporting the delivery of strong capital build
…whilst supporting the delivery of strong capital build... Strong and consistent capital generation Pre-dividend capital build, bps Irish sale • Strongly capital generative business model; expect ongoing capital build of 170-200bps every year: 210 c.185 25 170-200 - Represents free capital build, ov
Slide 11: …and increasing shareholder returns
…and increasing shareholder returns Improving shareholder return Total capital return to shareholders, £bn 4.0 • c.£12bn returned to shareholders over last 5 years, 3.2 (c.25% of market cap) following dividend resumption in 1.8 2014 1.0 2.2 • £4bn returned to shareholders in 2018 alone, up 26% 2.0 Y
Slide 12: Our strategic execution has positioned us well to respond to opportunities and challenges
Our strategic execution has positioned us well to respond to both opportunities and challenges provided by our evolving operating environment Recognising the emerging trends impacting our industry Further improving our efficiency advantage Cost:income ratio1 2018 Further enhancing the customer exper
Slide 13: Over the course of 2018 we executed against a number of our strategic priorities
Over the course of 2018 we executed against a number of our strategic priorities 2018 strategic deliverables Further developing our leading digital bank • Launched Open Banking aggregation functionality 15.7m Digitally users active • Single Customer View to >3m customers Mobile app • Further improve
Slide 14: In 2019, we have clear strategic plans and our financial guidance
In 2019, we have clear strategic plans and our financial guidance reflects confidence in our future prospects 2019 strategic deliverables 2019 financial guidance • Open Banking extended to all active mobile app customers; >9m on Single Customer View by end of plan period c.290bps <£8bn <30bps NIM Op
Slide 15: Forward looking statements and basis of presentation
Forward looking statements and basis of presentation Forward looking statements This document contains certain forward looking statements with respect to the business, strategy, plans and /or results of the Group and its current goals and expectations relating to its future financial condition and p
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