23.10.2024 / 08:00 CET/CEST The issuer is solely responsible for the content of this announcement.
Lloyds Banking Group plc Q3 2024 Interim Management Statement 23 October 2024 RESULTS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2024 "The Group delivered a robust financial performance in the third quarter of 2024, with growth in income alongside continued cost discipline and strong asset quality. Our performance allows us confidently to reaffirm our 2024 guidance. As mentioned during our Half-Year 2024 results update, we are making good progress on our strategy and remain on track to deliver higher, more sustainable returns. As ever, we are guided by our purpose of Helping Britain Prosper and continuing to provide support to our customers. The strength of the Group's franchise, alongside our financial performance, enables us to deliver for all stakeholders." Charlie Nunn, Group Chief Executive Robust financial performance, in line with expectations1 Statutory profit after tax of £3.8 billion (nine months to 30 September 2023: £4.3 billion) with net income down 7 per cent on the prior year and operating costs up 5 per cent (including the Bank of England Levy), partly offset by a lower impairment charge Underlying net interest income of £9.6 billion, down 8 per cent with a lower banking net interest margin of 2.94 per cent and average interest-earning banking assets of £449.9 billion. Underlying net interest income of £3.2 billion increased by 2 per cent in the third quarter, with a banking net interest margin of 2.95 per cent, up from 2.93 per cent in the second quarter Underlying other income of £4.2 billion, 9 per cent higher than the prior year, driven by strengthening customer and market activity and the benefit of strategic initiatives Operating lease depreciation of £994 million, up on the prior year reflecting growth in the fleet size, depreciation of higher value vehicles and declines in used electric car prices. The third quarter charge of £315 million was in line with expectations Operating costs of £7.0 billion, up 5 per cent, with cost efficiencies helping to partially offset higher ongoing strategic investment, planned accelerated severance charges and inflationary pressure, 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 Remediation costs of £124 million (first nine months of 2023: £134 million), largely in relation to pre-existing programmes Underlying impairment charge of £273 million in the year to date and asset quality ratio of 9 basis points. Excluding the impact of improvements to the economic outlook, the asset quality ratio was 18 basis points. The portfolio remains well-positioned with resilient credit performance Underlying loans and advances to customers increased by £7.3 billion in the year to date, including £4.6 billion in the third quarter, to £457.0 billion. The growth in the year to date includes £7.4 billion across Retail, while Commercial Banking remained broadly stable Customer deposits of £475.7 billion increased by £4.3 billion in the year to date, with growth in Retail deposits of £6.6 billion, partly offset by a reduction in Commercial Banking deposits of £2.1 billion. Customer deposits continued to grow in the third quarter, with an increase of £1.0 billion Strong capital generation of 132 basis points in the year to date. CET1 ratio of 14.3 per cent, after 71 basis points for the interim ordinary dividend paid and the foreseeable ordinary dividend accrual, significantly above our ongoing target of c.13.0 per cent by 2026 Risk-weighted assets of £223.3 billion up £4.2 billion in the period, reflecting lending growth and other movements, partly offset by efficient management of risk-weighted assets Tangible net assets per share of 52.5 pence, up from 50.8 pence at 31 December 2023 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 to be less than 20 basis points Return on tangible equity of c.13 per cent Capital generation of c.175 basis points2 Risk-weighted assets between £220 billion and £225 billion To pay down to a CET1 ratio of c.13.5 per cent See the basis of presentation on page 14. Excluding capital distributions. Inclusive of ordinary dividends received from the Insurance business in February of the following year. INCOME STATEMENT (UNDERLYING BASIS)A AND KEY BALANCE SHEET METRICS
Nine months ended 30 Sep 2024 £m
Nine months ended 30 Sep 2023 £m
Change %
Three months ended 30 Sep 2024 £m
Three months ended 30 Sep 2023 £m
Change %
Underlying net interest income
9,569
10,448
(8)
3,231
3,444
(6)
Underlying other income
4,164
3,837
9
1,430
1,299
10
Operating lease depreciation
(994)
(585)
(70)
(315)
(229)
(38)
Net income
12,739
13,700
(7)
4,346
4,514
(4)
Operating costs
(6,992)
(6,654)
(5)
(2,292)
(2,241)
(2)
Remediation
(124)
(134)
7
(29)
(64)
55
Total costs
(7,116)
(6,788)
(5)
(2,321)
(2,305)
(1)
Underlying profit before impairment
5,623
6,912
(19)
2,025
2,209
(8)
Underlying impairment charge
(273)
(849)
68
(172)
(187)
8
Underlying profit
5,350
6,063
(12)
1,853
2,022
(8)
Restructuring
(21)
(69)
70
(6)
(44)
86
Volatility and other items
(182)
(266)
32
(24)
(120)
80
Statutory profit before tax
5,147
5,728
(10)
1,823
1,858
(2)
Tax expense
(1,370)
(1,444)
5
(490)
(438)
(12)
Statutory profit after tax
3,777
4,284
(12)
1,333
1,420
(6)
Earnings per share
5.3p
5.9p
(0.6)p
1.9p
2.0p
(0.1)p
Banking net interest marginA
2.94%
3.15%
(21)bp
2.95%
3.08%
(13)bp
Average interest-earning banking assetsA
£449.9bn
£453.5bn
(1)
£451.1bn
£453.0bn
Cost:income ratioA
55.9%
49.5%
6.4pp
53.4%
51.1%
2.3pp
Asset quality ratioA
0.09%
0.25%
(16)bp
0.15%
0.17%
(2)bp
Return on tangible equityA
14.0%
16.6%
(2.6)pp
15.2%
16.9%
(1.7)pp
At 30 Sep 2024
At 30 Jun 2024
Change %
At 31 Dec 2023
Change %
Underlying loans and advances to customersA
£457.0bn
£452.4bn
1
£449.7bn
2
Customer deposits
£475.7bn
£474.7bn
£471.4bn
1
Loan to deposit ratioA
96%
95%
1pp
95%
1pp
CET1 ratio
14.3%
14.1%
0.2pp
14.6%
(0.3)pp
Pro forma CET1 ratioA,1
14.3%
14.1%
0.2pp
13.7%
0.6pp
Total capital ratio
19.0%
18.7%
0.3pp
19.8%
(0.8)pp
MREL ratio
32.2%
31.7%
0.5pp
31.9%
0.3pp
UK leverage ratio
5.5%
5.4%
0.1pp
5.8%
(0.3)pp
Risk-weighted assets
£223.3bn
£222.0bn
1
£219.1bn
2
Wholesale funding
£93.3bn
£97.6bn
(4)
£98.7bn
(5)
Liquidity coverage ratio2
144%
144%
142%
2pp
Net stable funding ratio3
129%
130%
(1)pp
130%
(1)pp
Tangible net assets per shareA
52.5p
49.6p
2.9p
50.8p
1.7p
A See page 14. 1 31 December 2023 reflects both the full impact of the share buyback in respect of 2023 and the ordinary dividend received from the Insurance business in February 2024, but excludes the impact of the phased unwind of IFRS 9 relief on 1 January 2024. 2 The liquidity coverage ratio is calculated as a simple average of month-end observations over the previous 12 months. 3 The net stable funding ratio is calculated as a simple average of month-end observations over the previous four quarter-ends. QUARTERLY INFORMATIONA
Quarter ended 30 Sep 2024 £m
Quarter ended 30 Jun 2024 £m
Change %
Quarter ended 31 Mar 2024 £m
Quarter ended 31 Dec 2023 £m
Quarter ended 30 Sep 2023 £m
Quarter ended 30 Jun 2023 £m
Quarter ended 31 Mar 2023 £m
Underlying net interest income
3,231
3,154
2
3,184
3,317
3,444
3,469
3,535
Underlying other income
1,430
1,394
3
1,340
1,286
1,299
1,281
1,257
Operating lease depreciation
(315)
(396)
20
(283)
(371)
(229)
(216)
(140)
Net income
4,346
4,152
5
4,241
4,232
4,514
4,534
4,652
Operating costs
(2,292)
(2,298)
(2,402)
(2,486)
(2,241)
(2,243)
(2,170)
Remediation
(29)
(70)
59
(25)
(541)
(64)
(51)
(19)
Total costs
(2,321)
(2,368)
2
(2,427)
(3,027)
(2,305)
(2,294)
(2,189)
Underlying profit before impairment
2,025
1,784
14
1,814
1,205
2,209
2,240
2,463
Underlying impairment (charge) credit
(172)
(44)
(57)
541
(187)
(419)
(243)
Underlying profit
1,853
1,740
6
1,757
1,746
2,022
1,821
2,220
Restructuring
(6)
(3)
(12)
(85)
(44)
(13)
(12)
Volatility and other items
(24)
(41)
41
(117)
114
(120)
(198)
52
Statutory profit before tax
1,823
1,696
7
1,628
1,775
1,858
1,610
2,260
Tax expense
(490)
(467)
(5)
(413)
(541)
(438)
(387)
(619)
Statutory profit after tax
1,333
1,229
8
1,215
1,234
1,420
1,223
1,641
Earnings per share
1.9p
1.7p
0.2p
1.7p
1.7p
2.0p
1.6p
2.3p
Banking net interest marginA
2.95%
2.93%
2bp
2.95%
2.98%
3.08%
3.14%
3.22%
Average interest-earning banking assetsA
£451.1bn
£449.4bn
£449.1bn
£452.8bn
£453.0bn
£453.4bn
£454.2bn
Cost:income ratioA
53.4%
57.0%
(3.6)pp
57.2%
71.5%
51.1%
50.6%
47.1%
Asset quality ratioA
0.15%
0.05%
10bp
0.06%
(0.47)%
0.17%
0.36%
0.22%
Return on tangible equityA
15.2%
13.6%
1.6pp
13.3%
13.9%
16.9%
13.6%
19.1%
At 30 Sep 2024
At 30 Jun 2024
Change %
At 31 Mar 2024
At 31 Dec 2023
At 30 Sep 2023
At 30 Jun 2023
At 31 Mar 2023
Underlying loans and advances to customersA,1
£457.0bn
£452.4bn
1
£448.5bn
£449.7bn
£452.1bn
£450.7bn
£452.3bn
Customer deposits
£475.7bn
£474.7bn
£469.2bn
£471.4bn
£470.3bn
£469.8bn
£473.1bn
Loan to deposit ratioA
96%
95%
1pp
96%
95%
96%
96%
96%
CET1 ratio
14.3%
14.1%
0.2pp
13.9%
14.6%
14.6%
14.2%
14.1%
Pro forma CET1 ratioA,2
14.3%
14.1%
0.2pp
13.9%
13.7%
14.6%
14.2%
14.1%
Total capital ratio
19.0%
18.7%
0.3pp
19.0%
19.8%
19.9%
19.7%
19.9%
MREL ratio
32.2%
31.7%
0.5pp
32.0%
31.9%
32.6%
31.0%
32.1%
UK leverage ratio
5.5%
5.4%
0.1pp
5.6%
5.8%
5.7%
5.7%
5.6%
Risk-weighted assets
£223.3bn
£222.0bn
1
£222.8bn
£219.1bn
£217.7bn
£215.3bn
£210.9bn
Wholesale funding
£93.3bn
£97.6bn
(4)
£99.9bn
£98.7bn
£108.5bn
£103.5bn
£101.1bn
Liquidity coverage ratio3
144%
144%
143%
142%
142%
142%
143%
Net stable funding ratio4
129%
130%
(1)pp
130%
130%
130%
130%
129%
Tangible net assets per shareA
52.5p
49.6p
2.9p
51.2p
50.8p
47.2p
45.7p
49.6p
1 The increase between 31 March 2024 and 30 June 2024 is net of the impact of the securitisation of £0.9 billion of legacy Retail mortgages in May 2024. The reduction between 30 September 2023 and 31 December 2023 is net of the impact of the securitisation of £2.7 billion of UK Retail unsecured loans. 2 31 December 2023 reflects both the full impact of the share buyback in respect of 2023 and the ordinary dividend received from the Insurance business in February 2024, but excludes the impact of the phased unwind of IFRS 9 relief on 1 January 2024. 3 The liquidity coverage ratio is calculated as a simple average of month-end observations over the previous 12 months. 4 The net stable funding ratio is calculated as a simple average of month-end observations over the previous four quarter-ends. BALANCE SHEET ANALYSIS
