DJ EQS-News: 2023 Full Year Results

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EQS-News: Lloyds Banking Group PLC / Key word(s): Annual Results
2023 Full Year Results
2024-02-22 / 08:55 CET/CEST
The issuer is solely responsible for the content of this announcement.
Lloyds Banking Group plc
2023 Results
News Release
22 February 2024




CONTENTS

Results for the full 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         10 

Divisional results

Retail           19 
Commercial Banking         22 
Insurance, Pensions and Investments       24 
Equity Investments and Central Items       27 
Segmental analysis - underlying basis       28 

Alternative performance measures 29

Risk management

Capital risk          35 
Credit risk          40 
Funding and liquidity risk         51 
Interest rate sensitivity         52 

Statutory information

Consolidated income statement        53 
Consolidated statement of comprehensive income      54 
Consolidated balance sheet        55 
Consolidated statement of changes in equity       56 
Consolidated cash flow statement        58 
Notes to the condensed consolidated financial statements     59 

Key dates          81 
Basis of presentation         81 
Forward-looking statements        82 
Contacts           83 

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 9 which is, unless otherwise stated, presented
on an underlying basis. Further information on these measures is set out on page 29.
Forward-looking statements
This news release contains forward-looking statements. For further details, reference should be made to page 82.

RESULTS FOR THE FULL YEAR
"In 2023 the Group remained focused on proactively supporting people and businesses through persistent cost-of-living
pressures, whilst financing their ambitions and growth. This has come alongside strong progress on our strategy and
delivering increased shareholder returns, guided as always by our core purpose of Helping Britain Prosper.
The Group delivered a robust financial performance, meeting our 2023 guidance, driven by income growth, cost discipline
and strong asset quality. This performance enabled strong capital generation and increased shareholder distributions.
2023 was a critical year in building towards the ambitious strategy we announced two years ago, as we look to grow our
business and deepen relationships with our customers. As demonstrated in our recent strategic seminars, we have made
significant progress and are on track to meet our 2024 and 2026 strategic outcomes, helping us build towards higher and
more sustainable returns.
Our strategy is purpose-driven. Building a more sustainable and inclusive future is central to this, including our
commitment to supporting the environmental transition, social housing and broader purpose-aligned objectives. We are
excited about the opportunities that lie ahead as we continue to deliver for all of our stakeholders."
Charlie Nunn, Group Chief Executive
Delivering on our purpose-driven strategy, on track to meet 2024 and 2026 strategic outcomes

.  Pro-actively contacted 7.5 million customers^1 to offer support and enhance financial resilience 
.  Continued strategic progress, underpinned by GBP1.3 billion of additional investment in 2023 
.  On track to achieve 2024 strategic outcomes; c.GBP0.7 billion incremental income and c.GBP1.2 billion of gross cost 

savings
. On track to achieve 2026 strategic outcome of c.GBP1.5 billion incremental income given progress on medium-term
transformation
. Launched innovative new propositions, including mobile-first mortgage on-boarding, 'Lloyds Bank 360' in mass
affluent and a digital invoice finance platform as part of digitising the Small and Medium Businesses portfolio
. Highlighted our progress on strategic transformation with two seminars in 2023. Two further seminars planned for the
first half of 2024
. Building on our ambition to create a more sustainable and inclusive future, with GBP29 billion^2 of sustainable
financing and significant commitments for social housing
Continued robust financial performance, in line with guidance, supported by building business momentum
. Statutory profit after tax of GBP5.5 billion (GBP1.2 billion in the fourth quarter) with net income of GBP17.9 billion up
3 per cent and a low impairment charge. Strong return on tangible equity of 15.8 per cent (13.9 per cent in the fourth
quarter). Significant growth in profit materially driven by restatement of earnings for the IFRS 17 accounting change
in 2022
. Underlying net interest income of GBP13.8 billion up 5 per cent, with a net interest margin of 3.11 per cent, in line
with guidance. Banking net interest margin of 2.98 per cent in the fourth quarter, down 10 basis points in the quarter
given mortgage pricing and deposit mix headwinds, partly mitigated by the structural hedge. Average interest-earning
banking assets of GBP453.3 billion, down slightly on the fourth quarter of 2022 as expected
. Underlying other income of GBP5.1 billion, 10 per cent higher, reflecting the broad-based recovery of customer
activity and ongoing investment in the business
. Operating lease depreciation of GBP956 million, up on 2022 given declines in used car prices (notably in the fourth
quarter), impacting portfolio valuations and gains on disposals, the depreciation cost of higher value vehicles and the
Tusker acquisition and its subsequent growth
. Operating costs of GBP9.1 billion, in line with guidance, up 5 per cent. The Group continues to maintain cost
discipline in the context of higher planned strategic investment, severance charges, new business costs and
inflationary pressures
. Remediation costs of GBP675 million in the year (2022: GBP255 million), in relation to pre-existing programmes and a
GBP450 million provision for the potential impact of the recently announced FCA review into historical motor finance
commission arrangements
. Underlying impairment charge of GBP308 million and asset quality ratio of 7 basis points. Excluding both a significant
write-back in the fourth quarter and economic outlook improvements across the year, the asset quality ratio was
29 basis points. The portfolio remains well-positioned in the context of the economic environment with broadly stable
credit trends and strong asset quality

^1  Since April 2022. 
^2  From 1 January 2022. 

RESULTS FOR THE FULL YEAR (continued)
Resilient customer franchise
. Loans and advances to customers reduced GBP5.2 billion to GBP449.7 billion. This included the securitisation of
GBP2.5 billion of legacy Retail mortgages in the first quarter and GBP2.7 billion of Retail unsecured loans in the fourth
quarter; excluding these, loans and advances to customers were flat
. Customer deposits of GBP471.4 billion reduced by GBP3.9 billion (1 per cent), including an GBP11.3 billion reduction in
Retail current accounts, partly offset by a combined increase across Retail savings and Wealth of GBP8.9 billion. The
trend of customer deposit mix change in a higher rate environment was slower in the fourth quarter versus the third
quarter
Strong capital generation driving increased capital return
. Strong pro forma capital generation^1 of 173 basis points in line with guidance, after regulatory headwinds of 50
basis points, including 35 basis points from Retail secured CRD IV model changes (14 basis points in the fourth
quarter) and 15 basis points from the phased unwind of IFRS 9 relief. Pro forma capital generation before regulatory
headwinds was 223 basis points. The 173 basis points of capital generation includes both the significant impairment
write-back and the higher remediation charge in the fourth quarter
. Risk-weighted assets of GBP219.1 billion up by GBP8.2 billion, reflecting the impact of Retail secured CRD IV model
updates (GBP5 billion, with GBP2 billion in the fourth quarter), operational risk and lending increases, model calibrations
and other movements, offset by balance sheet management through securitisations
. Pensions triennial valuation completed with an additional contribution of GBP250 million paid in December 2023 to
clear the remaining deficit. There will be no further deficit contributions in this triennial period
. Pro forma CET1 ratio^2 of 13.7 per cent, ahead of revised ongoing target of c.13.0 per cent and previous target of
c.13.5 per cent. In order to manage risks and distributions in an orderly way, the Group expects to pay down to the
revised target by the end of 2026
. Tangible net assets per share of 50.8 pence, up 4.3 pence on 31 December 2022 and 3.6 pence in the fourth quarter,
given continued profitability and movements in the cash flow hedge reserve, partly offset by pensions surplus changes
. The Board has recommended a final ordinary dividend of 1.84 pence per share, resulting in a total ordinary dividend
for 2023 of 2.76 pence per share, up 15 per cent on prior year and in line with the Group's progressive and sustainable
ordinary dividend policy
. Given the Group's strong capital position, the Board has also announced its intention to implement an ordinary share
buyback programme of up to GBP2.0 billion
. Total capital returns in respect of 2023 of up to GBP3.8 billion, are equivalent to c.14 per cent^3 of the Group's
market capitalisation value
2024 guidance
Based on our current macroeconomic assumptions, for 2024 the Group expects:

.  Banking net interest margin of greater than 290 basis points 
.  Operating costs of c.GBP9.3 billion 
.  Asset quality ratio of less than 30 basis points 

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.  Return on tangible equity of c.13 per cent 
.  Capital generation of c.175 basis points^4 
.  To pay down to a CET1 ratio of c.13.5 per cent 

2026 guidance
Based on the expected macroeconomic environment 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^4 

The Group also now expects to pay down to a CET1 ratio of c.13.0 per cent by the end of 2026.
^1 Excluding capital distributions, variable pension contributions and the impact of the Tusker acquisition. Inclusive
of the ordinary dividend received from the Insurance business in February 2024.
^2 Includes both the full impact of the share buyback announced 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  Market capitalisation as at 16 February 2024. 
^4  Excluding capital distributions. Inclusive of ordinary dividends received from the Insurance business in February 

of the following year.


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http://www.rns-pdf.londonstockexchange.com/rns/0120E_1-2024-2-21.pdf


2024-02-22 CET/CEST Dissemination of a Corporate News, transmitted by EQS News - a service of EQS Group AG.
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Language:     English 
Company:      Lloyds Banking Group PLC 

Gresham Street
EC2V 7HN London
United Kingdom

Phone:        020 7626 1500 
Internet:     www.lloydsbankinggroup.com 
ISIN:         GB0008706128 
WKN:          871784 
Listed:       Regulated Unofficial Market in Berlin, Dusseldorf, Frankfurt, Hamburg, Hanover, Munich, Stuttgart, 

Tradegate Exchange; London, BX, SIX
EQS News ID: 1842557

End of News EQS News Service
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1842557 2024-02-22 CET/CEST

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February 22, 2024 02:55 ET (07:55 GMT)