REG - Lloyds Banking Group - 2023 Q1 Interim Management Statement
03/05/2023 07:00
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RNS Number : 1881Y Lloyds Banking Group PLC 03 May 2023
Lloyds Banking Group plc
Q1 2023 Interim Management Statement
3 May 2023
RESULTS FOR THE THREE MONTHS ENDED 31 MARCH 2023
"The Group has delivered a solid financial performance in the first quarter of
2023, with strong net income and capital generation, alongside resilient
observed asset quality.
The macroeconomic outlook remains uncertain. We know that this is challenging
for many people. Our purpose driven strategy, alongside our financial
strength, means we can continue to support our customers across the country,
helping Britain prosper. We are also making good progress on our ambitious
plans to transform the Group. Our experience over the last year reinforces our
belief that continued strategic delivery will create a more sustainable
business and deliver increased returns for our shareholders in the medium to
longer-term."
Charlie Nunn, Group Chief Executive
Robust business performance, supporting continued strong capital generation
• Statutory profit after tax of £1.6 billion (three months to 31 March
2022: £1.1 billion), with higher net income, partly offset by expected higher
operating costs. Strong return on tangible equity of 19.1 per cent
• Net income of £4.7 billion, up 15 per cent, reflecting ongoing recovery
and the higher rate environment
• Underlying net interest income up 20 per cent, primarily driven by a
stronger banking net interest margin of 3.22 per cent in the three months to
31 March 2023, stable on the fourth quarter of 2022, and increased average
interest-earning assets
• Other income of £1.3 billion, 6 per cent higher, reflecting continued
recovery
• Operating costs of £2.2 billion, up 5 per cent compared to the prior
year, based on higher planned strategic investment, cost of new businesses and
inflationary effects. Low remediation charge of £19 million
• Underlying profit before impairment up 28 per cent to £2.5 billion,
largely driven by strong net income growth
• Asset quality remains resilient and the portfolio is well-positioned in
the context of cost of living pressures. Underlying impairment charge of £0.2
billion and asset quality ratio of 22 basis points continue to reflect robust
observed credit trends
• Loans and advances to customers at £452.3 billion, down £2.6 billion
in the first three months of 2023, including the £2.5 billion legacy mortgage
portfolio exit, an additional reduction of £0.6 billion in the open mortgage
book and repayments of government-backed lending in Commercial Banking, partly
offset by growth in other Retail lending
• Customer deposits of £473.1 billion down £2.2 billion in the first
three months of 2023, including a reduction in Retail current account balances
of £3.5 billion, partly driven by seasonal customer outflows, including tax
payments, higher spend and a more competitive market. This was partly offset
by Commercial Banking deposit increases of £2.7 billion, including both
targeted growth in Corporate and Institutional Banking and some short term
placements
• Loan to deposit ratio of 96 per cent continues to provide robust funding
and liquidity, alongside potential for growth
• Strong and stable liquid asset portfolio with all assets hedged for
interest rate risk
• Strong capital generation of 52 basis points, based on positive banking
performance. Includes the accelerated full year £800 million payment of fixed
pension contributions for 2023
• CET1 ratio of 14.1 per cent, after 21 basis points for ordinary dividend
accrual and 18 basis points for the Tusker acquisition, remaining ahead of the
ongoing target of c.12.5 per cent, plus a management buffer of c.1 per cent
Financial guidance maintained, delivering higher, more sustainable returns
Based on our purpose driven strategy and business model, as well as our
current macroeconomic assumptions, for 2023 the Group continues to expect:
• Banking net interest margin to be greater than 305 basis points
• Operating costs to be c.£9.1 billion
• Asset quality ratio to be c.30 basis points
• Return on tangible equity to be c.13 per cent
• Capital generation to be c.175 basis points(1)
(1) Excluding capital distributions. Inclusive of dividends received from
the Insurance business.
INCOME STATEMENT - UNDERLYING BASIS(A) AND KEY BALANCE SHEET METRICS
Three months Three months Change Three months Change
ended
31 Mar ended % ended %
2023
£m 31 Mar 2022 31 Dec 2022
£m £m
Underlying net interest income 3,535 2,945 20 3,643 (3)
Underlying other income(1) 1,257 1,182 6 1,128 11
Operating lease depreciation (140) (94) (49) (78) (79)
Net income 4,652 4,033 15 4,693 (1)
Operating costs(1) (2,170) (2,059) (5) (2,356) 8
Remediation (19) (52) 63 (166) 89
Total costs (2,189) (2,111) (4) (2,522) 13
Underlying profit before impairment 2,463 1,922 28 2,171 13
Underlying impairment charge (243) (177) (37) (465) 48
Underlying profit 2,220 1,745 27 1,706 30
Restructuring (12) (24) 50 (11) (9)
Volatility and other items(1) 52 (177) (638)
Statutory profit before tax 2,260 1,544 46 1,057
Tax expense(1) (619) (399) (55) (75)
Statutory profit after tax 1,641 1,145 43 982 67
Earnings per share(1) 2.3p 1.4p 0.9p 1.3p 1.0p
Banking net interest margin(A) 3.22% 2.68% 54bp 3.22%
Average interest-earning banking assets(A) £454.2bn £448.0bn 1 £453.8bn
Cost:income ratio(A,1) 47.1% 52.3% (5.2)pp 53.7% (6.6)pp
Asset quality ratio(A) 0.22% 0.16% 6bp 0.38% (16)bp
Return on tangible equity(A,1) 19.1% 10.7% 8.4pp 11.0% 8.1pp
(A) See page 18.
(1) 2022 comparatives have been restated to reflect the impact of IFRS 17.
See page 19.
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At 31 Mar At 31 Mar At Change At 31 Dec Change
2023
2022
2022
% %
Loans and advances to customers £452.3bn £451.8bn £454.9bn (1)
Customer deposits £473.1bn £481.1bn (2) £475.3bn
Loan to deposit ratio(A) 96% 94% 2pp 96%
CET1 ratio 14.1% 14.2% (0.1)pp 15.1% (1.0)pp
Pro forma CET1 ratio(A,1) 14.1% 14.2% (0.1)pp 14.1%
Total capital ratio 19.9% 18.9% 1.0pp 19.7% 0.2pp
MREL ratio 32.1% 31.6% 0.5pp 31.7% 0.4pp
UK leverage ratio 5.6% 5.2% 0.4pp 5.6%
Risk-weighted assets £210.9bn £210.2bn £210.9bn
Wholesale funding £101.1bn £100.0bn 1 £100.3bn 1
Liquidity coverage ratio(2) 143% 138% 5pp 144% (1)pp
Net stable funding ratio(3) 129% 130% (1)pp
Tangible net assets per share(A,4) 49.6p 53.7p (4.1)p 46.5p 3.1p
(1 ) 31 December 2022 reflects the dividend received from the Insurance
business in February 2023 and the full impact of the announced share buyback,
but excludes the impact of the phased unwind of IFRS 9 relief on 1 January
2023.
(2) The liquidity coverage ratio is calculated as a simple average of
month-end observations over the previous 12 months.
(3) Net stable funding ratio is disclosed for the first time and is based on
an average of the four previous quarters.
(4) 2022 comparatives have been restated to reflect the impact of IFRS 17.
See page 19.
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QUARTERLY INFORMATION(A)
Quarter Quarter Quarter ended Quarter ended Quarter
ended ended 30 Sep 2022 30 Jun 2022 ended
31 Mar 31 Dec £m £m 31 Mar
2023 2022 2022
£m £m £m
Underlying net interest income 3,535 3,643 3,394 3,190 2,945
Underlying other income(1) 1,257 1,128 1,171 1,185 1,182
Operating lease depreciation (140) (78) (82) (119) (94)
Net income 4,652 4,693 4,483 4,256 4,033
Operating costs(1) (2,170) (2,356) (2,145) (2,112) (2,059)
Remediation (19) (166) (10) (27) (52)
Total costs (2,189) (2,522) (2,155) (2,139) (2,111)
Underlying profit before impairment 2,463 2,171 2,328 2,117 1,922
Underlying impairment charge (243) (465) (668) (200) (177)
Underlying profit 2,220 1,706 1,660 1,917 1,745
Restructuring (12) (11) (22) (23) (24)
Volatility and other items(1) 52 (638) (1,062) (289) (177)
Statutory profit before tax 2,260 1,057 576 1,605 1,544
Tax expense(1) (619) (75) (82) (303) (399)
Statutory profit after tax 1,641 982 494 1,302 1,145
Banking net interest margin(A) 3.22% 3.22% 2.98% 2.87% 2.68%
Average interest-earning banking assets(A) £454.2bn £453.8bn £454.9bn £451.2bn £448.0bn
Cost:income ratio(A,1) 47.1% 53.7% 48.1% 50.3% 52.3%
Asset quality ratio(A) 0.22% 0.38% 0.57% 0.17% 0.16%
Return on tangible equity(A,1) 19.1% 11.0% 4.2% 13.0% 10.7%
Loans and advances to customers £452.3bn £454.9bn £456.3bn £456.1bn £451.8bn
Customer deposits £473.1bn £475.3bn £484.3bn £478.2bn £481.1bn
Loan to deposit ratio(A) 96% 96% 94% 95% 94%
Risk-weighted assets £210.9bn £210.9bn £210.8bn £209.6bn £210.2bn
Tangible net assets per share(A,1) 49.6p 46.5p 44.5p 51.4p 53.7p
(1 ) 2022 comparatives have been restated to reflect the impact of IFRS
17. See page 19.
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BALANCE SHEET ANALYSIS
At 31 Mar At 31 Mar Change At 31 Dec Change
2023
2022
£bn 2022(1) %
£bn %
£bn
Loans and advances to customers
Open mortgage book 298.6 295.0 1 299.6
Closed mortgage book 8.9 13.7 (35) 11.6 (23)
Credit cards 14.4 13.8 4 14.3 1
UK Retail unsecured loans 9.0 8.2 10 8.7 3
UK Motor Finance 14.7 14.1 4 14.3 3
Overdrafts 1.0 1.0 1.0
Retail other(2) 14.2 11.5 23 13.8 3
Wealth 0.9 1.0 (10) 0.9
Small and Medium Businesses 36.4 41.9 (13) 37.7 (3)
Corporate and Institutional Banking 56.7 53.2 7 56.0 1
Central items(3) (2.5) (1.6) (56) (3.0) 17
Loans and advances to customers 452.3 451.8 454.9 (1)
Customer deposits
Retail current accounts 110.5 113.1 (2) 114.0 (3)
Retail relationship savings accounts 166.7 165.5 1 166.3
Retail tactical savings accounts 16.4 16.7 (2) 16.1 2
Wealth 12.9 15.1 (15) 14.4 (10)
Commercial Banking deposits 166.5 170.3 (2) 163.8 2
Central items 0.1 0.4 (75) 0.7 (86)
Total customer deposits 473.1 481.1 (2) 475.3
Total assets(4) 885.7 904.9 (2) 873.4 1
Total liabilities(4) 837.8 855.0 (2) 829.5 1
Ordinary shareholders' equity(4) 40.6 44.2 (8) 38.4 6
Other equity instruments 7.1 5.5 29 5.3 34
Non-controlling interests 0.2 0.2 0.2
Total equity 47.9 49.9 (4) 43.9 9
Ordinary shares in issue, excluding own shares 66,396m 70,148m (5) 66,944m (1)
(1 ) The portfolios shown reflect the new organisation structure;
comparatives have been presented on a consistent basis. See page 19.
(2 ) Primarily Europe.
(3) Includes central fair value hedge accounting adjustments. 31 March 2022
included a £200 million ECL central adjustment that was not allocated to
specific portfolios. In the third quarter of 2022 this central adjustment was
released.
(4 ) 2022 comparatives have been restated to reflect the impact of IFRS
17. See page 19.
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GROUP RESULTS - STATUTORY BASIS
Summary income statement Three months Three months Change
ended
31 Mar ended %
2023
£m 31 Mar 2022(1)
£m
Net interest income 3,434 2,899 18
Other income 5,875 (5,009)
Total income 9,309 (2,110)
Net financial income in respect of insurance and investment contracts (4,501) 6,031
Total income, after net financial income in respect of insurance and 4,808 3,921 23
investment contracts
Operating expenses (2,306) (2,200) (5)
Impairment (242) (177) (37)
Profit before tax 2,260 1,544 46
Tax expense (619) (399) (55)
Profit for the period 1,641 1,145 43
Profit attributable to ordinary shareholders 1,510 1,010 50
Ordinary shares in issue (weighted-average - basic) 66,972m 70,862m (5)
Basic earnings per share 2.3p 1.4p 0.9p
(1) 2022 comparatives have been restated to reflect the impact of IFRS 17.
See page 19.
REVIEW OF PERFORMANCE(A)
Robust business performance, supporting continued strong capital generation
The Group's statutory profit before tax for the first three months of 2023 was
£2,260 million, £716 million higher than the same period in 2022. Higher
income, partly offset by higher operating expenses and the impact of an
increased impairment charge, led to an improved result. Statutory profit after
tax was £1,641 million (three months to 31 March 2022: £1,145 million).
The Group's underlying profit was £2,220 million, compared to £1,745 million
in the prior year. Growth in net income was partly offset by higher operating
costs and an increased impairment charge. Underlying profit before impairment
for the period was up 28 per cent to £2,463 million, as a result of strong
net income growth.
Net income of £4,652 million was up 15 per cent on the prior year, with
higher net interest income and other income, partially offset by a continued
low, albeit increasing charge for operating lease depreciation.
Net interest income of £3,535 million was up 20 per cent on the prior year,
driven by a stronger banking net interest margin of 3.22 per cent (three
months to 31 March 2022: 2.68 per cent, three months to 31 December 2022: 3.22
per cent) and higher average interest-earning banking assets. Relative to the
prior year, the net interest margin benefitted from UK Bank Rate increases and
structural hedge earnings from the rising rate environment, partly offset by
lower mortgage margins. Average interest-earning banking assets were up 1 per
cent compared to the first three months of 2022 at £454.2 billion, supported
by growth in the open mortgage book, Retail unsecured and the European retail
business. The Group continues to expect the banking net interest margin for
2023 to be greater than 305 basis points.
The Group manages the risk to earnings and capital from movements in interest
rates by hedging the net liabilities which are stable or less sensitive to
movements in rates. As at 31 March 2023, the Group's structural
hedge had an approved capacity of £255 billion (31 December 2022: £255
billion). The nominal balance of the structural hedge was £255 billion at 31
March 2023 (31 December 2022: £255 billion) with a weighted-average duration
of approximately three-and-a-half years (31 December 2022: approximately
three-and-a-half years). The Group continues to review the stability and mix
of underlying deposits and their eligibility for the structural hedge. The
Group generated £0.8 billion of total gross income from structural hedge
balances in the first three months of 2023, representing material growth over
the prior year (three months to 31 March 2022: £0.6 billion).
REVIEW OF PERFORMANCE (continued)
Underlying other income of £1,257 million was 6 per cent higher compared to
£1,182 million in the prior year. This reflected growth in Retail, Commercial
Banking and Insurance, Pensions and Investments, partially offset by reduced
income from the Group's equity investment businesses. Retail other income was
up 15 per cent on prior year, including improved Lex performance and increased
credit card and current account activity, alongside a gain from the exit of
legacy Retail mortgage loans. Commercial Banking other income was up 24
per cent versus the prior year, primarily reflecting improved trading
conditions. Insurance, Pensions and Investments other income was 26 per cent
higher than the prior year, through higher contractual service margin and risk
adjustment releases to income from 2022 adjustments. The general insurance
business contribution also increased, with benign weather in the first quarter
of 2023 versus adverse weather experience in the comparative period of 2022.
Other income from the Group's equity investments businesses, including Lloyds
Development Capital, was lower than the prior year, reflecting more normalised
market conditions in the first quarter of 2023.
The Group delivered good organic growth in Insurance, Pensions and Investments
and Wealth (reported within Retail) assets under administration (AuA), with
combined £2 billion net new money in open book AuA over the period. In total,
open book AuA currently stand at c.£165 billion.
Operating lease depreciation of £140 million increased by 49 per cent
compared to the prior year, reflecting expected softening of used car prices
and the impact of a recovering Lex fleet size.
Total costs of £2,189 million were 4 per cent higher than in the prior year,
with increased operating costs of £2,170 million (up 5 per cent). This
reflects higher planned strategic investment (expected to peak in 2023), new
business costs and inflationary effects. The Group's cost:income ratio for the
first three months of 2023 was 47.1 per cent, compared to 52.3 per cent in
the prior year. The Group maintains ongoing cost discipline, in part
mitigating inflationary pressures. Consistent with guidance, operating costs
are expected to be higher in 2023 at c.£9.1 billion (2022: £8.7 billion),
given the Group's planned strategic investment and inflationary effects,
partially mitigated by continued cost efficiency.
In the first three months of 2023 the Group recognised remediation costs of
£19 million in relation to pre-existing programmes (three months to 31 March
2022: £52 million). There have been no further charges relating to HBOS
Reading since the year end and the provision held continues to reflect the
Group's best estimate of its full liability, albeit uncertainties remain.
Following the FCA's Motor Market review, the Group continues to receive
complaints and is engaging with the Financial Ombudsman Service in respect of
historical motor commission arrangements. The remediation and financial
impact, if any, is uncertain.
Asset quality remains resilient with impairment levels low. Due to the ongoing
inflationary pressures on affordability, the Group has observed modest
increases in levels of new to arrears in some portfolios and flows to default,
although levels remain at or below pre-pandemic experience. Underlying
impairment was a net charge of £243 million (three months to 31 March 2022:
£177 million), resulting in an asset quality ratio of 22 basis points. This
charge is after a £79 million multiple economic scenarios (MES) credit
(three months to 31 March 2022: £27 million charge), as a result of the
slightly improved economic outlook in the first quarter. This reflects a
pre-updated MES charge of £322 million in the period (three months to 31
March 2022: £150 million, three months to 31 December 2022: £383 million),
equivalent to an asset quality ratio of 28 basis points. The increase reflects
the expected credit loss (ECL) allowance build from Stage 1 loans rolling
forward into a more adverse economic outlook, as well as increased flows to
default primarily driven by legacy UK mortgage portfolios and charges on
existing Stage 3 clients in Commercial Banking.
Modest observed deterioration has translated to a small underlying net
increase in Stage 3 balances within UK mortgages (when excluding the impact
from the exit of £2.5 billion of legacy Retail mortgage loans). Unsecured
flow to default rates are essentially flat. Stage 2 loans and advances to
customers decreased to £60.9 billion (31 December 2022: £65.7 billion)
largely as a result of the updated economic outlook, with 92 per cent of Stage
2 loans up to date (31 December 2022: 93 per cent). Stage 3 assets were
£10.4 billion as at 31 March 2023 (31 December 2022: £10.8 billion). The
Group continues to expect the asset quality ratio to be c.30 basis points in
2023.
Restructuring costs remain low at £12 million (three months to 31 March 2022:
£24 million). Volatility and other items were a net gain of £52 million for
the first three months of 2023 (three months to 31 March 2022: net loss of
£177 million), comprising £92 million of positive market volatility and
other statutory items, partly offset by £40 million relating to the
amortisation of purchased intangibles and fair value unwind (three months to
31 March 2022: £57 million). Market volatility included positive banking
volatility of £106 million. This compares to volatility losses during the
first three months of 2022 of £120 million, largely resulting from negative
insurance and banking contributions.
REVIEW OF PERFORMANCE (continued)
Tangible net assets per share as at the end of the quarter were 49.6 pence, up
from 46.5 pence at 31 December 2022. This is as a result of accumulated
profits, a reduction in shares from the ongoing ordinary share buyback, cash
flow hedge reserve movements and pensions remeasurement.
The return on tangible equity for the first three months of 2023 was 19.1 per
cent, reflecting the Group's solid financial performance and positive market
volatility in the first quarter (three months to 31 March 2022: 10.7 per
cent). The Group continues to expect the return on tangible equity to be c.13
per cent in 2023. Earnings per share were 2.3 pence (three months to 31 March
2022: 1.4 pence).
The Group has commenced the share buyback programme announced in February
2023, with 0.8 billion shares repurchased as at 31 March 2023.
Balance sheet
Loans and advances to customers fell by £2.6 billion in the first three
months of 2023 to £452.3 billion. This largely resulted from the exit of
£2.5 billion of legacy Retail mortgage loans (including £2.1 billion in the
closed mortgage book), an additional reduction of £0.6 billion in the open
mortgage book and repayments of government-backed lending in Commercial
Banking, partly offset by £1.2 billion growth in other Retail lending,
principally unsecured.
Customer deposits at £473.1 billion decreased by £2.2 billion (0.5 per
cent) since the end of 2022. The reduction in the first quarter included a
decrease in Retail current account balances of £3.5 billion from seasonal
customer outflows, including tax payments, higher spend and a more competitive
market, including from UK Government National Savings and Investments offers
and the Group's own savings rates. This was partly offset by Commercial
Banking deposit increases of £2.7 billion, including both targeted growth in
Corporate and Institutional Banking and some short term placements which are
expected to reverse in the second quarter. Retail savings increased slightly
during the quarter, capturing some of the movements from elsewhere in the
deposit base.
The Group has a strong and stable liquid asset portfolio held mainly in cash
and government bonds, with all assets hedged for interest rate risk. The
Group's liquid assets continue to significantly exceed regulatory requirements
and internal risk appetite, with a strong and stable liquidity coverage ratio
of 143 per cent (31 December 2022: 144 per cent) and a strong net stable
funding ratio of 129 per cent (31 December 2022: 130 per cent) as at 31 March
2023.
Capital
The Group's CET1 capital ratio at 31 March 2023 was 14.1 per cent (31 December
2022: 14.1 per cent pro forma). On 1 January 2023 IFRS 9 static transitional
relief came to an end and the transitional factor applied to IFRS 9 dynamic
relief reduced by a further 25 per cent, resulting in an overall reduction in
capital of 15 basis points. Excluding this, capital generation during the
first quarter amounted to 52 basis points, primarily reflecting strong banking
build, partially offset by the accelerated full year payment (£800 million)
of fixed pension deficit contributions made to the Group's three main defined
benefit pension schemes. As usual, this represented an efficient utilisation
of capital generated in the first quarter, whilst not altering the total
contributions to be paid for the year under the current agreement with the
Trustee. The Group has accrued a foreseeable ordinary dividend of 21 basis
points, based upon a pro-rated amount of the 2022 full year dividend. The
Group continues to expect 2023 capital generation to be c.175 basis points.
As previously announced, on 21 February 2023 the Group acquired Tusker, which
together with its subsidiaries operates a vehicle management and leasing
business. Approximately 18 basis points of available capital has been utilised
for the acquisition.
Risk-weighted assets have remained flat during the first quarter at £211
billion at 31 March 2023. This largely reflected capital efficient
securitisation activity and other optimisation, in addition to a reduction in
threshold risk-weighted assets, offset by the growth in Retail unsecured
lending and other movements. CRD IV model changes reflecting the revised
regulatory standards introduced in 2022 remain subject to approval by the PRA
with the resultant risk-weighted asset outcome dependent upon this. Further
clarification is expected later this year. The Group expects an increase in
risk-weighted assets from this clarification, however the Group's 2024
risk-weighted assets guidance, provided in February, remains unchanged.
The current sum of the Group's regulatory CET1 capital requirement and capital
buffers remains at around 11 per cent. This is expected to increase to around
12 per cent from July 2023 due to the planned increase in the UK
countercyclical capital buffer (CCyB) rate to 2 per cent, which will increase
the Group's CCyB rate to around 1.8 per cent in total. The Board's view of
the ongoing level of CET1 capital required to grow the business, meet current
and future regulatory requirements and cover uncertainties continues to be
around 12.5 per cent, plus a management buffer of around 1 per cent.
ADDITIONAL INFORMATION
CAPITAL GENERATION
Pro forma CET1 ratio as at 31 December 2022(1) 14.1%
Phased unwind of IFRS 9 relief on 1 January 2023 (bps) (15)
Pro forma CET1 ratio as at 1 January 2023 14.0%
Banking build (including impairment charge) (bps) 74
Risk-weighted assets (bps) (5)
Fixed pension deficit contributions (bps) (30)
Other movements (bps) 13
Capital generation (bps) 52
Tusker acquisition (bps)(2) (18)
Ordinary dividends (bps) (21)
CET1 ratio as at 31 March 2023 14.1%
(1) 31 December 2022 ratio reflects the dividend received from the Insurance
business in February 2023 and the full impact of the ordinary share buyback.
(2) Approximate, subject to the finalisation of the fair value of the
individual assets and liabilities acquired including the associated
identifiable intangible assets and goodwill.
IMPAIRMENT DETAIL
Three months ended Three months ended Change Three months ended Change
31 Mar 2023
£m 31 Mar 2022(1) % 31 Dec 2022 %
£m £m
Charges pre-updated MES(2)
Retail 271 149 (82) 253 (7)
Commercial Banking 53 1 121 56
Other (2) - 9
322 150 383 16
Updated economic outlook
Retail (66) (10) 59
Commercial Banking (13) 37 23
(79) 27 82
Underlying impairment charge(A) 243 177 (37) 465 48
Asset quality ratio(A) 0.22% 0.16% 6bp 0.38% (16)bp
(1) Impairment charges for Retail, Commercial Banking and Other reflect the
new organisation structure; comparatives have been presented on a consistent
basis. See page 19.
(2) Impairment charges excluding the impact from updated economic outlook
taken each quarter.
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ADDITIONAL INFORMATION (continued)
IMPAIRMENT DETAIL (continued)
Loans and advances to customers and expected credit loss allowance (underlying
basis)(A)
At 31 March 2023 Stage 1 Stage 2 Stage 3 Total Stage 2 Stage 3
£m £m £m £m as % of as % of
total total
Loans and advances to customers
UK mortgages 259,801 42,977 6,243 309,021 13.9 2.0
Credit cards 11,457 3,301 302 15,060 21.9 2.0
Loans and overdrafts 8,524 1,776 254 10,554 16.8 2.4
UK Motor Finance 12,213 2,585 148 14,946 17.3 1.0
Other 14,407 618 156 15,181 4.1 1.0
Retail(1) 306,402 51,257 7,103 364,762 14.1 1.9
Small and Medium Businesses 30,261 5,059 1,619 36,939 13.7 4.4
Corporate and Institutional Banking 51,722 4,545 1,720 57,987 7.8 3.0
Commercial Banking 81,983 9,604 3,339 94,926 10.1 3.5
Equity Investments and Central Items(2) (2,568) - 6 (2,562)
Total gross lending 385,817 60,861 10,448 457,126 13.3 2.3
ECL allowance on drawn balances (778) (1,795) (2,281) (4,854)
Net balance sheet carrying value 385,039 59,066 8,167 452,272
Customer related ECL allowance (drawn and undrawn)
UK mortgages 147 577 768 1,492
Credit cards 182 454 121 757
Loans and overdrafts 191 350 130 671
UK Motor Finance(3) 94 83 78 255
Other 18 18 52 88
Retail(1) 632 1,482 1,149 3,263
Small and Medium Businesses 126 267 153 546
Corporate and Institutional Banking 156 223 979 1,358
Commercial Banking 282 490 1,132 1,904
Equity Investments and Central Items - - 4 4
Total 914 1,972 2,285 5,171
Customer related ECL allowance (drawn and undrawn) as a percentage of loans
and advances to customers(4)
UK mortgages 0.1 1.3 12.3 0.5
Credit cards 1.6 13.8 51.9 5.0
Loans and overdrafts 2.2 19.7 64.7 6.4
UK Motor Finance 0.8 3.2 52.7 1.7
Other 0.1 2.9 33.3 0.6
Retail(1) 0.2 2.9 16.5 0.9
Small and Medium Businesses 0.4 5.3 15.1 1.5
Corporate and Institutional Banking 0.3 4.9 57.0 2.3
Commercial Banking 0.3 5.1 41.5 2.0
Equity Investments and Central Items - 66.7
Total 0.2 3.2 23.5 1.1
(1 ) Retail balances exclude the impact of the HBOS
acquisition-related adjustments.
(2 ) Contains centralised fair value hedge accounting adjustments.
(3 ) UK Motor Finance for Stages 1 and 2 include £94 million relating to
provisions against residual values of vehicles subject to finance leasing
agreements. These provisions are included within the calculation of coverage
ratios.
(4 ) Total and Stage 3 ECL allowances as a percentage of drawn balances
exclude loans in recoveries in Credit cards of £69 million, Loans and
overdrafts of £53 million, Small and Medium Businesses of £608 million and
Corporate and Institutional Banking of £1 million.
ADDITIONAL INFORMATION (continued)
IMPAIRMENT DETAIL (continued)
Loans and advances to customers and expected credit loss allowance (underlying
basis)(A) (continued)
At 31 December 2022 Stage 1 Stage 2 Stage 3 Total Stage 2 Stage 3
£m £m £m £m as % of as % of
total total
Loans and advances to customers
UK mortgages 259,843 46,347 6,529 312,719 14.8 2.1
Credit cards 11,416 3,287 289 14,992 21.9 1.9
Loans and overdrafts 8,357 1,713 247 10,317 16.6 2.4
UK Motor Finance 12,174 2,245 154 14,573 15.4 1.1
Other 13,990 643 157 14,790 4.3 1.1
Retail(1) 305,780 54,235 7,376 367,391 14.8 2.0
Small and Medium Businesses 30,781 5,654 1,760 38,195 14.8 4.6
Corporate and Institutional Banking 49,728 5,839 1,611 57,178 10.2 2.8
Commercial Banking 80,509 11,493 3,371 95,373 12.1 3.5
Equity Investments and Central Items(2) (2,972) - 6 (2,966)
Total gross lending 383,317 65,728 10,753 459,798 14.3 2.3
ECL allowance on drawn balances (700) (1,936) (2,263) (4,899)
Net balance sheet carrying value 382,617 63,792 8,490 454,899
Customer related ECL allowance (drawn and undrawn)
UK mortgages 92 681 817 1,590
Credit cards 173 477 113 763
Loans and overdrafts 185 367 126 678
UK Motor Finance(3) 95 76 81 252
Other 16 18 52 86
Retail(1) 561 1,619 1,189 3,369
Small and Medium Businesses 129 271 149 549
Corporate and Institutional Banking 144 231 925 1,300
Commercial Banking 273 502 1,074 1,849
Equity Investments and Central Items - - 4 4
Total 834 2,121 2,267 5,222
Customer related ECL allowance (drawn and undrawn) as a percentage of loans
and advances to customers(4)
UK mortgages - 1.5 12.5 0.5
Credit cards 1.5 14.5 50.9 5.1
Loans and overdrafts 2.2 21.4 64.6 6.6
UK Motor Finance 0.8 3.4 52.6 1.7
Other 0.1 2.8 33.1 0.6
Retail(1) 0.2 3.0 16.4 0.9
Small and Medium Businesses 0.4 4.8 12.9 1.5
Corporate and Institutional Banking 0.3 4.0 57.5 2.3
Commercial Banking 0.3 4.4 38.9 2.0
Equity Investments and Central Items - 66.7
Total 0.2 3.2 22.6 1.1
(1 ) Retail balances exclude the impact of the HBOS acquisition-related
adjustments.
(2 ) Contains centralised fair value hedge accounting adjustments.
(3 ) UK Motor Finance for Stages 1 and 2 include £92 million relating to
provisions against residual values of vehicles subject to finance leasing
agreements. These provisions are included within the calculation of coverage
ratios.
(4 ) Total and Stage 3 ECL allowances as a percentage of drawn balances
exclude loans in recoveries in Credit cards of £67 million, Loans and
overdrafts of £52 million, Small and Medium Businesses of £607 million and
Corporate and Institutional Banking of £1 million.
(
)
ADDITIONAL INFORMATION (continued)
IMPAIRMENT DETAIL (continued)
Total ECL allowance by scenario
The table below shows the Group's ECL for the probability-weighted, upside,
base case, downside and severe downside scenarios, the severe downside
scenario incorporating adjustments made to CPI inflation and UK Bank Rate
paths.
Underlying basis(A) Probability- Upside Base case Downside Severe
weighted £m £m £m downside
£m £m
At 31 March 2023 5,221 3,814 4,531 5,704 10,062
At 31 December 2022 5,284 3,903 4,593 5,773 10,032
Base case and MES economic assumptions
The Group's updated base case scenario has three conditioning assumptions:
first, the war in Ukraine remains contained within its borders; second, the
financial stress emerging from some weak bank/insurer business models in the
context of rising bond yields does not become systemic; and third, the Bank of
England accommodates above-target inflation in the medium term, recognising
the economic costs and financial stability risks that might arise from a rapid
return to the two per cent target.
Based on these assumptions and incorporating the economic data published in
the first quarter for 2023, the Group's base case scenario is for a mild
contraction in economic activity and a modest rise in the unemployment rate
alongside declines in residential and commercial property prices, following
increases in UK Bank Rate in response to persistent inflationary pressures.
Risks around this base case economic view lie in both directions and are
largely captured by the generation of alternative economic scenarios.
UK economic assumptions - base case scenario by quarter
Key quarterly assumptions made by the Group in the base case scenario are
shown below. Gross domestic product is presented quarter-on-quarter. House
price growth, commercial real estate price growth and CPI inflation are
presented year-on-year, i.e. from the equivalent quarter in the previous year.
Unemployment rate and UK Bank Rate are presented as at the end of each
quarter.
At 31 March 2023 First Second Third Fourth First Second Third Fourth
quarter quarter quarter quarter quarter quarter quarter quarter
2023 2023 2023 2023 2024 2024 2024 2024
% % % % % % % %
Gross domestic product (0.2) (0.2) (0.3) 0.1 0.3 0.5 0.4 0.4
Unemployment rate 3.9 4.2 4.4 4.7 4.9 4.9 5.0 5.0
House price growth 0.4 (5.1) (7.5) (5.3) (6.8) (5.4) (3.1) (1.2)
Commercial real estate price growth (19.3) (21.9) (17.8) (2.8) (1.3) (0.8) (0.7) (0.3)
UK Bank Rate 4.25 4.25 4.25 4.25 4.00 3.75 3.50 3.50
CPI inflation 10.0 7.2 5.3 3.2 3.0 2.8 3.3 3.2
UK economic assumptions - scenarios by year
Key annual assumptions made by the Group are shown below. Gross domestic
product and Consumer Price Index (CPI) inflation are presented as an annual
change, house price growth and commercial real estate price growth are
presented as the growth in the respective indices within the period.
Unemployment rate and UK Bank Rate are averages for the period.
ADDITIONAL INFORMATION (continued)
IMPAIRMENT DETAIL (continued)
At 31 March 2023 2023 2024 2025 2026 2027 2023-2027
% % % % % average
%
Upside
Gross domestic product 0.6 1.8 1.9 1.8 1.7 1.5
Unemployment rate 3.0 2.8 2.9 2.9 3.0 2.9
House price growth (3.1) 4.9 7.1 5.9 4.8 3.8
Commercial real estate price growth 6.9 3.3 2.4 3.2 3.2 3.8
UK Bank Rate 4.88 5.36 5.11 5.15 5.16 5.13
CPI inflation 6.5 3.4 3.4 3.3 4.0 4.1
Base case
Gross domestic product (0.6) 0.8 1.8 1.8 1.7 1.1
Unemployment rate 4.3 4.9 5.0 4.7 4.6 4.7
House price growth (5.3) (1.2) 1.0 2.0 2.8 (0.2)
Commercial real estate price growth (2.8) (0.3) 1.4 2.7 3.2 0.8
UK Bank Rate 4.25 3.69 3.25 3.25 3.25 3.54
CPI inflation 6.4 3.1 2.6 2.1 2.5 3.3
Downside
Gross domestic product (1.8) (0.6) 1.6 1.8 1.7 0.5
Unemployment rate 5.6 7.3 7.3 6.9 6.6 6.7
House price growth (7.2) (7.2) (5.8) (2.5) 0.4 (4.5)
Commercial real estate price growth (11.6) (6.1) (1.2) 0.6 2.3 (3.3)
UK Bank Rate 3.60 1.84 1.18 1.13 1.11 1.77
CPI inflation 6.5 2.9 1.8 0.8 0.9 2.6
Severe downside
Gross domestic product (3.4) (1.8) 1.2 1.6 1.7 (0.2)
Unemployment rate 7.6 10.4 10.3 9.7 9.1 9.4
House price growth (9.6) (15.4) (14.7) (8.8) (3.0) (10.4)
Commercial real estate price growth (24.1) (14.4) (8.8) (2.1) 2.6 (9.9)
UK Bank Rate - modelled 2.63 0.21 0.04 0.03 0.02 0.59
UK Bank Rate - adjusted(1) 5.94 6.25 3.81 3.25 3.25 4.50
CPI inflation - modelled 6.4 2.4 0.6 (1.0) (1.2) 1.4
CPI inflation - adjusted(1) 11.7 9.5 5.2 4.5 4.0 7.0
Probability-weighted
Gross domestic product (0.9) 0.4 1.7 1.8 1.7 0.9
Unemployment rate 4.6 5.6 5.6 5.3 5.2 5.2
House price growth (5.6) (2.6) (0.8) 0.7 2.1 (1.3)
Commercial real estate price growth (4.7) (2.4) (0.1) 1.8 2.9 (0.5)
UK Bank Rate - modelled 4.08 3.29 2.86 2.86 2.86 3.19
UK Bank Rate - adjusted(1) 4.41 3.89 3.24 3.18 3.18 3.58
CPI inflation - modelled 6.5 3.1 2.4 1.8 2.1 3.2
CPI inflation - adjusted(1) 7.0 3.8 2.8 2.3 2.6 3.7
(1) The adjustment to UK Bank Rate and CPI inflation in the severe downside
is considered to better reflect the risks around the Group's base case view in
an economic environment where supply shocks are the principal concern.
ADDITIONAL INFORMATION (continued)
IMPAIRMENT DETAIL (continued)
Period end and average LTVs across the Retail mortgage portfolios - underlying
basis(A)
At 31 March 2023 Mainstream Buy-to-let Specialist Total
% % % %
Less than 60 per cent 58.6 69.3 85.3 60.8
60 per cent to 70 per cent 18.7 21.4 8.7 19.0
70 per cent to 80 per cent 13.8 9.1 2.5 12.8
80 per cent to 90 per cent 6.7 0.1 1.2 5.5
90 per cent to 100 per cent 2.1 0.0 1.0 1.8
Greater than 100 per cent 0.1 0.1 1.3 0.1
Total 100.0 100.0 100.0 100.0
Average loan to value(1):
Stock of residential mortgages 41.6 47.3 35.1 42.3
New residential lending 59.4 54.7 n/a 59.0
At 31 December 2022
Less than 60 per cent 60.3 71.6 86.0 62.8
60 per cent to 70 per cent 19.1 20.3 7.9 19.0
70 per cent to 80 per cent 13.2 7.7 2.5 12.1
80 per cent to 90 per cent 5.7 0.2 1.2 4.7
90 per cent to 100 per cent 1.6 0.1 1.0 1.3
Greater than 100 per cent 0.1 0.1 1.4 0.1
Total 100.0 100.0 100.0 100.0
Average loan to value(1):
Stock of residential mortgages 40.9 46.8 35.0 41.6
New residential lending 62.3 58.1 n/a 61.7
(1) Average loan to value is calculated as total loans and advances as a
percentage of the total indexed collateral of these loans and advances; the
balances exclude the impact of HBOS acquisition adjustments.
Commercial Banking UK Direct Real Estate
Commercial Banking UK Direct Real Estate (CRE) committed drawn lending stood
at £11.0 billion at 31 March 2023 (net of £4.2 billion exposures subject to
protection through Significant Risk Transfer (SRT) securitisations), stable on
31 December 2022.
The portfolio is well-positioned and proactively managed. Lending continues to
be heavily weighted towards investment real estate (c.90 per cent) rather than
development. Of these investment exposures, c.95 per cent have an LTV of less
than 70 per cent, with an average LTV of 44 per cent. The average interest
cover ratio was 4.1 times, with 84 per cent having interest cover of above 2
times. The portfolio is well diversified with no speculative development
lending. Approximately 47 per cent of exposures relate to commercial real
estate, including c.14 per cent secured by office assets, c.10 per cent by
retail assets and c.11 per cent by industrial assets. Approximately 51 per
cent of the portfolio relates to residential real estate.
ADDITIONAL INFORMATION (continued)
INTEREST RATE SENSITIVITY
The Group manages the risk to its earnings and capital from movements in
interest rates centrally by hedging the net liabilities which are stable or
less sensitive to movements in rates. As at 31 March 2023, the Group's
structural hedge had an approved capacity of £255 billion (stable on 31
December 2022) and a nominal balance of £255 billion, including a portion of
the c.£60 billion net deposit growth since the start of the coronavirus
pandemic.
Illustrative cumulative impact of parallel shifts in interest rate curve(1)
The table below shows the banking book net interest income sensitivity to an
instantaneous parallel increase in interest rates. Sensitivities reflect
shifts in the interest rate curve. The marginal reduction in Year 1
sensitivity compared to the year-end and half-year is driven by structural
hedge maturity reinvestment schedule in future periods. The actual impact will
also depend on the prevailing regulatory and competitive environment at the
time. This sensitivity is illustrative and does not reflect new business
margin implications and/or pricing actions today or in future periods, other
than as outlined.
The following assumptions have been applied:
• Instantaneous parallel shift in interest rate curve, including UK Bank
Rate
• Balance sheet remains constant
• Illustrative 50 per cent pass-through on deposits and 100 per cent
pass-through on assets, which could be different in practice
Year 1 Year 2 Year 3
£m
£m
£m
+50bps c.300 c.525 c.800
+25bps c.150 c.250 c.400
-25bps (c.200) (c.250) (c.400)
(1) Sensitivity based on modelled impact on banking book net interest
income, including the future impact of structural hedge maturities. Annual
impacts are presented for illustrative purposes only and are based on a number
of assumptions which are subject to change. Year 1 reflects the 12 months from
the 31 March 2023 balance sheet position.
FUNDING AND LIQUIDITY
At 31 Mar 2023 At 31 Mar 2022 At 31 Dec 2022
Liquidity coverage ratio(1) 143% 138% 144%
High Quality Liquid Assets(2) £140.5bn £144.2bn £144.7bn
Net stable funding ratio(3) 129% 130%
(1) The liquidity coverage ratio and its components are calculated as simple
averages of month-end observations over the previous 12 months.
(2) The vast majority (97 per cent) of High Quality Liquid Assets (HQLA)
consist of LCR Level 1 assets, with Level 1 assets primarily held in central
bank reserves and UK government bonds. HQLA is calculated as a simple average
of month-end observations over the previous 12 months.
(3) Net stable funding ratio is disclosed for the first time and is based on
an average of the four previous quarters.
The liquidity coverage ratio remains strong and stable at 143 per cent as at
31 March 2023 (31 December 2022: 144 per cent). The net stable funding ratio
is strong at 129 per cent (31 December 2022: 130 per cent). High Quality
Liquid Assets have reduced to £140.5 billion, from £144.7 billion at 31
December 2022. In addition to the Group's reported High Quality Liquid Assets,
the Group maintains borrowing capacity at central banks which averaged £74
billion in the 12 months to 31 March 2023.
ADDITIONAL INFORMATION (continued)
ALTERNATIVE PERFORMANCE MEASURES
The statutory results are supplemented with a number of metrics that are used
throughout the banking and insurance industries on an underlying basis. A
description of these measures and their calculation, which remain unchanged
since the year-end, is set out on pages 31 to 35 of the Group's 2022 Results
news release.
( )
Three months ended Three months ended
31 Mar 2023 31 Mar 2022
Banking net interest margin(A)
Underlying net interest income (£m) 3,535 2,945
Remove non-banking underlying net interest expense (£m) 76 20
Banking underlying net interest income (£m) 3,611 2,965
Statutory net loans and advances to customers (£bn) 452.3 451.8
Add back expected credit loss allowance (drawn) (£bn) 4.5 3.9
Acquisition related fair value adjustments (£bn) 0.3 0.4
Underlying gross loans and advances to customers (£bn) 457.1 456.1
Adjustment for non-banking and other items:
Fee-based loans and advances (£bn) (7.8) (6.3)
Other (£bn) 5.7 1.5
Interest-earning banking assets (£bn) 455.0 451.3
Averaging (£bn) (0.8) (3.3)
Average interest-earning banking assets (£bn)(A) 454.2 448.0
Banking net interest margin(A) 3.22% 2.68%
( )
Three months ended Three months ended
31 Mar 2023 31 Mar 2022
Return on tangible equity(A)
Profit attributable to ordinary shareholders (£m)(1) 1,510 1,010
Average shareholders' equity (£bn)(1) 39.5 44.7
Remove average intangible assets (£bn) (7.5) (6.4)
Average tangible equity (£bn) 32.0 38.3
Return on tangible equity(A,1) 19.1% 10.7%
(1) 2022 comparatives have been restated to reflect the impact of IFRS 17.
See page 19.
KEY DATES
Annual General Meeting 18 May 2023
Final 2022 dividend paid 23 May 2023
2023 Half-year results 26 July 2023
Q3 2023 Interim Management Statement 25 October 2023
BASIS OF PRESENTATION
This release covers the results of Lloyds Banking Group plc together with its
subsidiaries (the Group) for the three months ended 31 March 2023. Unless
otherwise stated, income statement commentaries throughout this document
compare the three months ended 31 March 2023 to the three months ended 31
March 2022, and the balance sheet analysis compares the Group balance sheet as
at 31 March 2023 to the Group balance sheet as at 31 December 2022. The Group
uses a number of alternative performance measures, including underlying
profit, in the discussion of its business performance and financial position.
These measures are labelled with a superscript 'A' throughout this document.
Further information on these measures is set out on page 18. Unless otherwise
stated, commentary on page 1 is given on an underlying basis. The Group's Q1
2023 Interim Pillar 3 Report can be found at:
www.lloydsbankinggroup.com/investors/financial-downloads.html.
Implementation of IFRS 17: The Group adopted the IFRS 17 Insurance Contracts
accounting standard from 1 January 2023. IFRS 17 does not require that
comparatives are restated other than for the year, including interim periods,
immediately prior to adoption. The Group has selected a transition date of 1
January 2022 and, as permitted by IFRS 17, will not restate comparatives for
earlier periods. Further information on the impact of this change is set out
in the Group's IFRS 17 Transition Document, which was published on 4 April
2023 and can be found at:
www.lloydsbankinggroup.com/investors/financial-downloads.html.
Segmental information: On 1 July 2022 the Group adopted a new organisation
structure, aligned to our strategic objectives and our existing three
customer-facing divisions. Disclosure will continue to be based on these three
divisions, reflecting the basis on which management runs the Group. To reflect
the new organisation structure, the Group migrated certain business units
between these divisions, with Business Banking and Commercial Cards moving
from Retail to Commercial Banking and Wealth moving from Insurance, Pensions
and Investments (previously Insurance and Wealth) to Retail. Comparatives have
been represented accordingly. Total Group figures are unaffected by this
change.
FORWARD LOOKING STATEMENTS
This document contains certain forward-looking statements within the meaning
of Section 21E of the US Securities Exchange Act of 1934, as amended, and
section 27A of the US Securities Act of 1933, as amended, with respect to the
business, strategy, plans and/or results of Lloyds Banking Group plc together
with its subsidiaries (the Group) and its current goals and expectations.
Statements that are not historical or current facts, including statements
about the Group's or its directors' and/or management's beliefs and
expectations, are forward looking statements. Words such as, without
limitation, 'believes', 'achieves', 'anticipates', 'estimates', 'expects',
'targets', 'should', 'intends', 'aims', 'projects', 'plans', 'potential',
'will', 'would', 'could', 'considered', 'likely', 'may', 'seek', 'estimate',
'probability', 'goal', 'objective', 'deliver', 'endeavour', 'prospects',
'optimistic' and similar expressions or variations on these expressions are
intended to identify forward looking statements. These statements concern or
may affect future matters, including but not limited to: projections or
expectations of the Group's future financial position, including profit
attributable to shareholders, provisions, economic profit, dividends, capital
structure, portfolios, net interest margin, capital ratios, liquidity,
risk-weighted assets (RWAs), expenditures or any other financial items or
ratios; litigation, regulatory and governmental investigations; the Group's
future financial performance; the level and extent of future impairments and
write-downs; the Group's ESG targets and/or commitments; statements of plans,
objectives or goals of the Group or its management and other statements that
are not historical fact; expectations about the impact of COVID-19; and
statements of assumptions underlying such statements. By their nature, forward
looking statements involve risk and uncertainty because they relate to events
and depend upon circumstances that will or may occur in the future. Factors
that could cause actual business, strategy, plans and/or results (including
but not limited to the payment of dividends) to differ materially from forward
looking statements include, but are not limited to: general economic and
business conditions in the UK and internationally; political instability
including as a result of any UK general election and any further possible
referendum on Scottish independence; acts of hostility or terrorism and
responses to those acts, or other such events; geopolitical unpredictability;
the war between Russia and Ukraine; the tensions between China and Taiwan;
market related risks, trends and developments; exposure to counterparty risk;
instability in the global financial markets, including within the Eurozone,
and as a result of the exit by the UK from the European Union (EU) and the
effects of the EU-UK Trade and Cooperation Agreement; the ability to access
sufficient sources of capital, liquidity and funding when required; changes to
the Group's credit ratings; fluctuations in interest rates, inflation,
exchange rates, stock markets and currencies; volatility in credit markets;
volatility in the price of the Group's securities; tightening of monetary
policy in jurisdictions in which the Group operates; natural pandemic
(including but not limited to the COVID-19 pandemic) and other disasters;
risks concerning borrower and counterparty credit quality; risks affecting
insurance business and defined benefit pension schemes; risks related to the
uncertainty surrounding the integrity and continued existence of reference
rates; changes in laws, regulations, practices and accounting standards or
taxation; changes to regulatory capital or liquidity requirements and similar
contingencies; the policies and actions of governmental or regulatory
authorities or courts together with any resulting impact on the future
structure of the Group; risks associated with the Group's compliance with a
wide range of laws and regulations; assessment related to resolution planning
requirements; risks related to regulatory actions which may be taken in the
event of a bank or Group failure; exposure to legal, regulatory or competition
proceedings, investigations or complaints; failure to comply with anti-money
laundering, counter terrorist financing, anti-bribery and sanctions
regulations; failure to prevent or detect any illegal or improper activities;
operational risks; conduct risk; technological changes and risks to the
security of IT and operational infrastructure, systems, data and information
resulting from increased threat of cyber and other attacks; technological
failure; inadequate or failed internal or external processes or systems; risks
relating to ESG matters, such as climate change (and achieving climate change
ambitions), including the Group's ability along with the government and other
stakeholders to measure, manage and mitigate the impacts of climate change
effectively, and human rights issues; the impact of competitive conditions;
failure to attract, retain and develop high calibre talent; the ability to
achieve strategic objectives; the ability to derive cost savings and other
benefits including, but without limitation, as a result of any acquisitions,
disposals and other strategic transactions; inability to capture accurately
the expected value from acquisitions; assumptions and estimates that form the
basis of the Group's financial statements; and potential changes in dividend
policy. A number of these influences and factors are beyond the Group's
control. Please refer to the latest Annual Report on Form 20-F filed by Lloyds
Banking Group plc with the US Securities and Exchange Commission (the SEC),
which is available on the SEC's website at www.sec.gov, for a discussion of
certain factors and risks. Lloyds Banking Group plc may also make or disclose
written and/or oral forward-looking statements in other written materials and
in oral statements made by the directors, officers or employees of Lloyds
Banking Group plc to third parties, including financial analysts. Except as
required by any applicable law or regulation, the forward-looking statements
contained in this document are made as of today's date, and the Group
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward looking statements contained in this
document whether as a result of new information, future events or otherwise.
The information, statements and opinions contained in this document do not
constitute a public offer under any applicable law or an offer to sell any
securities or financial instruments or any advice or recommendation with
respect to such securities or financial instruments.
CONTACTS
For further information please contact:
INVESTORS AND ANALYSTS
Douglas Radcliffe
Group Investor Relations Director
020 7356 1571
douglas.radcliffe@lloydsbanking.com
Edward Sands
Director of Investor Relations
020 7356 1585
edward.sands@lloydsbanking.com
Nora Thoden
Director of Investor Relations - ESG
020 7356 2334
nora.thoden@lloydsbanking.com
CORPORATE AFFAIRS
Grant Ringshaw
External Relations Director
020 7356 2362
grant.ringshaw@lloydsbanking.com
Matt Smith
Head of Media Relations
020 7356 3522
matt.smith@lloydsbanking.com
Copies of this News Release may be obtained from:
Investor Relations, Lloyds Banking Group plc, 25 Gresham Street, London EC2V
7HN
The statement can also be found on the Group's website -
www.lloydsbankinggroup.com
Registered office: Lloyds Banking Group plc, The Mound, Edinburgh, EH1 1YZ
Registered in Scotland No. SC095000
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