Lloyds Banking Group plc · LSE:LLOY
Lloyds Banking — Morgan Stanley European Financials Conference 2012
26 slides from Lloyds Banking's conference presentation, Mar 27, 2012
Slide 1: Presentation to the Morgan Stanley European Financials Conference
Presentation to the Morgan Stanley European Financials Conference 27 March 2012 António Horta-Osório Group Chief Executive
Slide 2: Agenda
AGENDA ECONOMIC, CO O C COCOMMERCIAL C AND REGULATORY G O ENVIRONMENT O OUR STRATEGY TO BE THE BEST BANK FOR CUSTOMERS RESILIENT CORE BUSINESS PERFORMANCE CONCLUSION 1
Slide 3: Macro Economic Environment: Global imbalances start to widen again
MACRO ECONOMIC ENVIRONMENT Global imbalances start to widen again 3 CURRENT ACCOUNT BALANCES, % OF WORLD GDP(1) 2 1 0 -1 -2 -3 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Germany and Japan Emerging Asia UK/Europe (ex Germany) Rest of World Oil Exporters US World
Slide 4: Global Structural Imbalances
GLOBAL STRUCTURAL IMBALANCES Sector eleverage in the Private S Need to de Need to deleverage in the Public Sector 3
Slide 5: A cautious outlook for the UK economy
MACRO ECONOMIC ENVIRONMENT A cautious outlook for the UK economy… High levels of National Debt with shrinking public deficits Weak real growth with inflation coming down Flat base rates for longer with stronger QE Rising unemployment until 2013 4
Slide 6: Subdued market conditions
MACRO ECONOMIC ENVIRONMENT …resulting in subdued market conditions PRIVATE SECTOR LENDING GROWTH LENDING TO INDIVIDUALS ( (Annual growth rate)) (%)(1) ( (Annual growth rate)) (%)(1) 16 20 14 15 12 10 10 8 6 5 4 2 0 0 1993 1997 2001 2005 2009 2011 -5 5 1990 1994 1998 2002 2006 2011 Total lending to i
Slide 7: Regulatory Environment
REGULATORY ENVIRONMENT A STRINGENT REGULATORY …BUT BUT GREATER CLARITY ENVIRONMENT…. EMERGING Capital and liquidity ICB Report Demanding standards Endorsed by UK Government Consumer protection Ring-fencing Greater focus Retail banking operations Recovery and resolution Capital proposals
Slide 8: Rising Customer Expectations
RISING CUSTOMER EXPECTATIONS Simple and Better value transparent for money products CUSTOMERS ARE SEEKING …. A quality, Advice for multi-channel saving and experience retirement Community support 7
Slide 9: Agenda
AGENDA ECONOMIC, CO O C COCOMMERCIAL C AND REGULATORY G O ENVIRONMENT O OUR STRATEGY TO BE THE BEST BANK FOR CUSTOMERS RESILIENT CORE BUSINESS PERFORMANCE CONCLUSION 8
Slide 10: Strategy Summary Presented in June 2011
STRATEGY SUMMARY PRESENTED IN JUNE 2011 Four key pillars to deliver our strategy to be the best bank for customers and d shareholders h h ld Continue to STRENGTHEN Robust CORE TIER 1 RATIO and our balance sheet and stable funding base liquidity position RESHAPE our Sustainable, predictable RoE, in b
Slide 11: Accelerating Balance Sheet Strength
ACCELERATING BALANCE SHEET STRENGTH Non-core assets and RWA reduction, above market deposit growth h and d reduction d i in i wholesale h l l funding f di requirement i (£bn) FUNDED ASSETS(1) CUSTOMER DEPOSITS(3) Core loans & advances Non-core loans and advances STRENGTHEN and other funded assets an
Slide 12: Accelerating Balance Sheet Strength: loan to deposit ratio
ACCELERATING BALANCE SHEET STRENGTH Substantial reduction in our loan to deposit ratio, underpinned b strong capital by i l position ii LOAN TO DEPOSIT RATIO STRENGTHEN 154% our balance sheet and IMPROVEMENTS IN 2011 liquidity position 135% 10% reduction in funded 130% assets RESHAPE our 120% St
Slide 13: Reshaping Our Business Portfolio: non-core reductions
RESHAPING OUR BUSINESS PORTFOLIO Continued disciplined reductions in non-core portfolio £bn £53BN(1) NON-CORE REDUCTION IN 2011 STRENGTHEN our balance RWA 144 109 ≤65 sheet and £4.8bn UK CRE disposals; liquidity c. 80% of which is outside position Total assets 194 27% London Treasury Substantial
Slide 14: Reshaping Our Business Portfolio: core profit growth
RESHAPING OUR BUSINESS PORTFOLIO All core businesses, apart from Wholesale, have good profit growth, h while hil we are exiting i i non-core activities i ii STRENGTHEN FOCUS ON THE CORE UNDERLYING ...WHILE DECREASING NON-CORE our balance BUSINESS… AND STRENGTHENING CAPITAL sheet and AND FUNDING liqu
Slide 15: Growth in core Retail deposit business
RESHAPING OUR BUSINESS PORTFOLIO Growth in our core Retail deposit business, above the UK market… k RETAIL DEPOSITS (YEAR ON YEAR GROWTH) (YEAR-ON-YEAR STRENGTHEN UK household deposit our balance growth has slowed sheet and 8% liquidity position LBG increased the growth differential in 2011, gro
Slide 16: Driven by value (ISA example)
RESHAPING OUR BUSINESS PORTFOLIO …driven by value (ISA example) 2011 CASH 2011 CASH ISAs ISA STRENGTHEN ISA GROWTH(1) (HEADLINE ADVERTISED RATE) our balance sheet and liquidity 20% position 8% 3.25% 3.30% RESHAPE our 3.10% 3.00% 3.00% business portfolio Market Group 2.65% SHARE OF CASH ISA NEW 2.50%
Slide 17: Growing core Commercial net lending
RESHAPING OUR BUSINESS PORTFOLIO …and growing our core Commercial net lending, in a contracting i market k 2011 2012 STRENGTHEN our balance CORE COMMERCIAL NET LENDING sheet and (YEAR-ON-YEAR GROWTH 2010-2011) liquidity 3% position Market RESHAPE our Positive growth in business portfolio LBG net l
Slide 18: Simplifying the Group: operating expenses
SIMPLIFYING THE GROUP Successful execution of integration, strong initial progress on simplification i lifi i and d a 6% reduction d i in i operating i expenses 2011 2012 / 2014 STRENGTHEN £bn our balance sheet and liquidity OPERATING EXPENSES(1) position ((6)% ) 10,882 10,253 Further cost reducti
Slide 19: Simplifying the Group: customer service progress
SIMPLIFYING THE GROUP …and we are accelerating our Simplification plans whilst we make k ffurther h progress on customer service i STRENGTHEN FSA REPORTABLE BANKING COMPLAINTS PER 1,000 ACCOUNTS(1) our balance sheet and liquidity position RESHAPE our business portfolio 2.4 2.1 1.7 SIMPLIFY the 1.5 1
Slide 20: Investing to Grow Our Core Customer Businesses
INVESTING TO GROW OUR CORE CUSTOMER BUSINESSES We continue to invest to grow our core customer businesses b based d on the h 5 key k growth h initiatives i ii i mentioned i d in i June J 2011 Multibrand strategy STRENGTHEN Halifax Halifax as a “challenger” brand our balance “Every branch open
Slide 21: Agenda
AGENDA ECONOMIC, CO O C COCOMMERCIAL C AND REGULATORY G O ENVIRONMENT O OUR STRATEGY TO BE THE BEST BANK FOR CUSTOMERS RESILIENT CORE BUSINESS PERFORMANCE CONCLUSION 20
Slide 22: Resilient income statement performance
CORE BUSINESS PERFORMANCE Resilient income statement performance Underlying Income(1) (£m) Operating expenses(2) (£m) (5)% 5% 19,972 9,838 9,369 18,933 Underlying y g profit p before tax and fair value unwind(4) (£m) (2)% 6,490 6,374 2010 2011 2010 2011 Net interest margin (%) Impairments (3) (£m) 2
Slide 23: Balance sheet further strengthened
CORE BUSINESS PERFORMANCE Balance sheet further strengthened Core loan to deposit ratio (%) Core customer deposits (ex repos) (£bn) 120% 6% 402 109% Underlying pre-tax pre tax return on risk weighted assets(1)(%) 377 2.5% 2 2% 2.2% 2010 2011 2010 2011 Core loans and advances Group Core Tier 1 and RW
Slide 24: Conclusion
CONCLUSION Building a strong and resilient core bank High g capital p levels Well positioned to: Improving portfolio quality Realise over time the Stronger funding position Group s full potential Group’s for growth Building high levels of efficiency Deliver strong, g stable Strengtheni
Slide 25: Presentation to the Morgan Stanley European Financials Conference
Presentation to the Morgan Stanley European Financials Conference 27 March 2012 António Horta-Osório Group Chief Executive
Slide 26: Forward Looking Statements and Basis of Presentation
FORWARD LOOKING STATEMENTS AND BASIS OF PRESENTATION FORWARD LOOKING STATEMENTS This announcement 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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