Lloyds Banking Group plc
2024 Half-Year Results
25 July 2024
Part 1 of 2
CONTENTS
Results for the half-year |
1 |
Income statement (underlying basis) and key balance sheet
metrics |
3 |
Quarterly information |
4 |
Balance sheet analysis |
5 |
Group results - statutory basis |
6 |
Group Chief Executive's statement |
7 |
Summary of Group results |
9 |
|
|
Divisional results |
|
Segmental analysis - underlying basis |
16 |
Retail |
18 |
Commercial Banking |
20 |
Insurance, Pensions and Investments |
22 |
Equity Investments and Central Items |
25 |
|
|
Alternative performance measures |
26 |
|
|
Risk management |
|
Principal risks and uncertainties |
32 |
Capital risk |
33 |
Credit risk |
38 |
Liquidity risk |
50 |
Interest rate sensitivity |
54 |
|
|
Statutory information |
|
Condensed consolidated half-year financial statements
(unaudited) |
55 |
Condensed consolidated income statement (unaudited) |
56 |
Condensed consolidated statement of comprehensive income
(unaudited) |
57 |
Condensed consolidated balance sheet (unaudited) |
58 |
Condensed consolidated statement of changes in equity
(unaudited) |
59 |
Condensed consolidated cash flow statement (unaudited) |
62 |
Notes to the condensed consolidated half-year financial
statements (unaudited) |
63 |
|
|
Statement of directors' responsibilities |
99 |
Independent review report to Lloyds Banking Group plc |
100 |
Key dates |
101 |
Basis of presentation |
101 |
Forward-looking statements |
102 |
Contacts |
103 |
Alternative performance measures
The Group uses a number of alternative performance measures,
including underlying profit, in the description of its business
performance and financial position. These measures are labelled
with a superscript 'A' throughout this document, with the exception
of content on pages 1 to 2 and pages 7 to 8
which is, unless otherwise stated, presented on an underlying
basis. Further information on these measures is set out on
page 26.
Forward-looking statements
This news release contains forward-looking statements. For further
details, reference should be made to page 102.
RESULTS FOR THE HALF-YEAR
"In the first six months of 2024, the Group delivered robust
financial results with solid income performance and cost discipline
alongside strong capital generation.
2024 is a key year for our strategic delivery. We continue to
deliver on our strategic transformation, as illustrated in the
fourth of our investor seminars last month. We remain on track to
meet our 2024 targeted outcomes. Indeed, our progress to date
enables us to reaffirm 2024 guidance and remain confident in
achieving our 2026 strategic objectives and guidance.
Guided by our purpose, we continue to support customers in reaching
their financial goals and successfully transform our Group. This
underpins our ambition of higher, more sustainable returns that
will deliver for all of our stakeholders as we continue to Help
Britain Prosper."
Charlie Nunn, Group Chief Executive
Delivering on our purpose driven strategy; on track to meet 2024
and 2026 strategic outcomes
• Supporting customers to reach financial goals, by meeting a
broad range of their financial needs
• Continued strategic transformation, with c.£3 billion
planned investment between 2022 and the end of 2024, enabling
delivery of business and financial benefits
• Successful execution demonstrated through four strategic
seminars, delivered over the last twelve months
Robust financial performance, in line with
expectations1
• Statutory profit after tax of £2.4 billion (half-year to 30
June 2023: £2.9 billion) with net income down 9 per cent on the
prior year and operating costs up 7 per cent (including Bank of
England Levy), partly offset by a lower impairment charge
• Return on tangible equity of 13.5 per cent (half-year to 30
June 2023: 16.6 per cent)
• Underlying net interest income of £6.3 billion, down 10 per
cent with a lower banking net interest margin, as expected, of 2.94
per cent and average interest-earning banking assets of £449.2
billion
• Underlying other income of £2.7 billion, 8 per cent higher,
driven by continued recovery in customer and market activity and
the benefit of strategic initiatives
• Operating lease depreciation of £679 million, up on the
prior year reflecting growth in the fleet size, depreciation of
higher value vehicles and declines in used electric car prices
• Operating costs of £4.7 billion, up 7 per cent, with cost
efficiencies helping to offset higher ongoing strategic investment,
planned elevated severance charges and continued inflationary
pressures, alongside c.£0.1 billion in the first quarter relating
to the sector-wide change in the charging approach for the Bank of
England Levy (excluding this, operating costs were up 4 per
cent)
• Remediation costs of £95 million (half-year to 30 June
2023: £70 million), largely in relation to pre-existing
programmes
• Underlying impairment charge of £101 million and asset
quality ratio of 5 basis points. Excluding the impact of
improvements to the economic outlook, the asset quality ratio was
19 basis points. The portfolio remains well-positioned with
resilient credit performance and strong asset quality
Growth in customer franchise
• Loans and advances to customers increased by £2.7 billion
during the half-year period to £452.4 billion, with growth across
Retail, including mortgages and unsecured loans
• Customer deposits of £474.7 billion increased by £3.3
billion, with growth in Retail deposits of £4.9 billion partly
offset by a reduction in Commercial Banking deposits of
£1.6 billion
RESULTS FOR THE HALF-YEAR (continued)
Strong capital generation, in line with expectations, enabling
an increased interim dividend
• Strong capital generation of 87 basis points, after
regulatory headwinds of 7 basis points
• CET1 ratio of 14.1 per cent after 48 basis points for
ordinary dividend accrual. Significantly above our ongoing target
of c.13.0 per cent by 2026
• Risk-weighted assets of £222.0 billion up £2.9 billion in
the period, reflecting lending growth and other movements, partly
offset by effective management of risk-weighted assets
• Tangible net assets per share of 49.6 pence, down from 50.8
pence at 31 December 2023 after capital distributions, alongside
the impact of increased longer-term rates on the cash flow hedge
reserve and pension surplus
• Interim ordinary dividend of 1.06 pence per share
(equivalent to £662 million), up 15 per cent on the prior year
Reaffirming guidance for 2024
Based on our current macroeconomic assumptions, for 2024 the Group
continues to expect:
• Banking net interest margin of greater than 290 basis
points
• Operating costs of c.£9.4 billion including the c.£0.1
billion Bank of England Levy
• Asset quality ratio now expected to be less than
20 basis points
• Return on tangible equity of c.13 per cent
• Capital generation of c.175 basis points
2
• Risk-weighted assets between £220 billion and £225
billion
• To pay down to a CET1 ratio of c.13.5 per cent
Confident in 2026 guidance:
Based on our current macroeconomic assumptions and confidence in
our strategy, the Group is maintaining its medium-term guidance for
2026:
• Cost:income ratio of less than 50 per cent
• Return on tangible equity of greater than 15 per cent
• Capital generation of greater than 200 basis
points
2
• To pay down to a CET1 ratio of c.13 per cent
1 See the basis of presentation on
page 101.
2 Excluding capital distributions. Inclusive of
ordinary dividends received from the Insurance business in February
of the following year.
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