Coronavirus Update

Lloyds Banking Group PLC Q1 2021 Interim Management Statement

This content has been sourced from: https://www.investegate.co.uk/lloyds-banking-group...

"The coronavirus pandemic continues to have a significant impact on people, businesses and communities in the UK and around the world. Whilst we are seeing positive signs, notably the progress of the vaccine roll-out and the emergence from lockdown restrictions, the outlook remains uncertain. The Group remains absolutely focused on supporting its customers and Helping Britain Recover from the financial effects of the pandemic.

The long-run transformation of the Group has positioned the business well to address the challenges of the pandemic. We have made a strong start to the year with the quarterly results and on delivering Strategic Review 2021.

It is with both pride and sadness that I will step down as Group Chief Executive later this month. Most importantly, the Group is well placed for sustainable success and the publication of Strategic Review 2021 in February shows that the Group has clear execution outcomes for 2021, underpinned by long-term strategic vision. The Group also has exceptional people. I am very proud of all of our colleagues across the Group, who have again shown their continued dedication and relentless focus on supporting their customers through these challenging times."

António Horta-Osório, Group Chief Executive

"As this is António's last set of results, I would like to take this opportunity to thank him, on behalf of the Board, for his outstanding contribution. Over the last decade he has led the transformation of the business; delivering its purpose of Helping Britain Prosper whilst creating a truly customer focussed business underpinned by strong financial foundations."

Robin Budenberg, Chair

 

 

INCOME STATEMENT − UNDERLYING BASIS

 

Quarter
ended
31 Mar
2021

 

 

Quarter
ended
31 Mar
2020

 

 

Change

 

Quarter
ended
31 Dec 2020

 

 

Change

 

£m

 

 

£m

 

 

%

 

£m

 

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

2,677 

 

 

 

2,950 

 

 

 

(9)

 

 

2,677 

 

 

 

 

Other income

1,135 

 

 

 

1,226 

 

 

 

(7)

 

 

1,066 

 

 

 

 

Operating lease depreciation

(148)

 

 

 

(224)

 

 

 

34 

 

 

(150)

 

 

 

 

Net income

3,664 

 

 

 

3,952 

 

 

 

(7)

 

 

3,593 

 

 

 

 

Operating costs

(1,851)

 

 

 

(1,877)

 

 

 

 

 

(2,028)

 

 

 

 

Remediation

(65)

 

 

 

(87)

 

 

 

25 

 

 

(125)

 

 

 

48 

 

Total costs

(1,916)

 

 

 

(1,964)

 

 

 

 

 

(2,153)

 

 

 

11 

 

Trading surplus

1,748 

 

 

 

1,988 

 

 

 

(12)

 

 

1,440 

 

 

 

21 

 

Impairment

323 

 

 

 

(1,430)

 

 

 

 

 

(128)

 

 

 

 

Underlying profit

2,071 

 

 

 

558 

 

 

 

 

 

1,312 

 

 

 

58 

 

Restructuring

(173)

 

 

 

(63)

 

 

 

 

 

(233)

 

 

 

26 

 

Volatility and other items

 

 

 

(421)

 

 

 

 

 

(202)

 

 

 

 

Payment protection insurance provision

 

 

 

 

 

 

 

 

(85)

 

 

 

 

Statutory profit before tax

1,898 

 

 

 

74 

 

 

 

 

 

792 

 

 

 

 

Tax (expense) credit

(501)

 

 

 

406 

 

 

 

 

 

(112)

 

 

 

 

Statutory profit after tax

1,397 

 

 

 

480 

 

 

 

 

 

680 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

1.8p

 

 

0.5p

 

 

 

 

0.7p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking net interest margin

2.49%

 

 

2.79%

 

 

(30)bp

 

2.46%

 

 

3bp

Average interest-earning banking assets

£439bn

 

 

£432bn

 

 

 

 

£437bn

 

 

 

Cost:income ratio

52.3%

 

 

49.7%

 

 

2.6pp

 

59.9%

 

 

(7.6)pp

Asset quality ratio

(0.29)%

 

 

1.30%

 

 

(159)bp

 

0.11%

 

 

(40)bp

Return on tangible equity

13.9%

 

 

3.7%

 

 

10.2pp

 

5.9%

 

 

8.0pp

 

 

KEY BALANCE SHEET METRICS

 

At 31 Mar
2021

 

At 31 Mar 2020

 

Change

%

 

At 31 Dec 2020

 

Change

%

 

 

 

 

 

 

 

 

 

 

Loans and advances to customers1

£444bn

 

£443bn

 

 

 

£440bn

 

 

Customer deposits2

£462bn

 

£428bn

 

 

 

£451bn

 

 

Loan to deposit ratio

96%

 

103%

 

(7)pp

 

98%

 

(2)pp

CET1 ratio3

16.7%

 

14.2%

 

2.5pp

 

16.2%

 

0.5pp

CET1 ratio pre IFRS 9 transitional relief3,4

15.8%

 

13.9%

 

1.9pp

 

15.0%

 

0.8pp

Transitional MREL ratio3

36.1%

 

34.5%

 

1.6pp

 

36.4%

 

(0.3)pp

UK leverage ratio3

6.0%

 

5.3%

 

0.7pp

 

5.8%

 

0.2pp

Risk-weighted assets

£199bn

 

£209bn

 

(5)

 

 

£203bn

 

(2)

 

Wholesale funding

£106bn

 

£126bn

 

(16)

 

 

£109bn

 

(4)

 

Liquidity coverage ratio (12 month average)

134%

 

138%

 

(4)pp

 

136%

 

(2)pp

Tangible net assets per share

52.4p

 

57.4p

 

(5.0)p

 

52.3p

 

0.1p

1  Excludes reverse repos of £52.8 billion (31 March 2020: £55.2 billion; 31 December 2020: £58.6 billion).

2  Excludes repos of £8.5 billion (31 March 2020: £9.4 billion; 31 December 2020: £9.4 billion).

3  Incorporating profits for the period that remain subject to formal verification in accordance with the Capital Requirements Regulation.

4  CET1 ratio pre IFRS 9 transitional relief reflects the full impact of IFRS 9, prior to the application of transitional arrangements for capital that provide relief for the impact of IFRS 9.

 

QUARTERLY INFORMATION

 

Quarter
ended
31 Mar
2021

 

 

Quarter
ended
31 Dec
2020

 

 

Quarter
ended
30 Sep
2020

 

 

Quarter
ended
30 Jun
2020

 

 

Quarter
ended
31 Mar
2020

 

 

£m

 

 

£m

 

 

£m

 

 

£m

 

 

£m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

2,677 

 

 

 

2,677 

 

 

 

2,618 

 

 

 

2,528 

 

 

 

2,950 

 

 

Other income

1,135 

 

 

 

1,066 

 

 

 

988 

 

 

 

1,235 

 

 

 

1,226 

 

 

Operating lease depreciation

(148)

 

 

 

(150)

 

 

 

(208)

 

 

 

(302)

 

 

 

(224)

 

 

Net income

3,664 

 

 

 

3,593 

 

 

 

3,398 

 

 

 

3,461 

 

 

 

3,952 

 

 

Operating costs

(1,851)

 

 

 

(2,028)

 

 

 

(1,858)

 

 

 

(1,822)

 

 

 

(1,877)

 

 

Remediation

(65)

 

 

 

(125)

 

 

 

(77)

 

 

 

(90)

 

 

 

(87)

 

 

Total costs

(1,916)

 

 

 

(2,153)

 

 

 

(1,935)

 

 

 

(1,912)

 

 

 

(1,964)

 

 

Trading surplus

1,748 

 

 

 

1,440 

 

 

 

1,463 

 

 

 

1,549 

 

 

 

1,988 

 

 

Impairment

323 

 

 

 

(128)

 

 

 

(301)

 

 

 

(2,388)

 

 

 

(1,430)

 

 

Underlying profit (loss)

2,071 

 

 

 

1,312 

 

 

 

1,162 

 

 

 

(839)

 

 

 

558 

 

 

Restructuring

(173)

 

 

 

(233)

 

 

 

(155)

 

 

 

(70)

 

 

 

(63)

 

 

Volatility and other items

 

 

 

(202)

 

 

 

29 

 

 

 

233 

 

 

 

(421)

 

 

Payment protection insurance provision

 

 

 

(85)

 

 

 

 

 

 

 

 

 

 

 

Statutory profit (loss) before tax

1,898 

 

 

 

792 

 

 

 

1,036 

 

 

 

(676)

 

 

 

74 

 

 

Tax (expense) credit

(501)

 

 

 

(112)

 

 

 

(348)

 

 

 

215 

 

 

 

406 

 

 

Statutory profit (loss) after tax

1,397 

 

 

 

680 

 

 

 

688 

 

 

 

(461)

 

 

 

480 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Banking net interest margin

2.49%

 

 

2.46%

 

 

2.42%

 

 

2.40%

 

 

2.79%

 

Average interest-earning banking assets

£439bn

 

 

£437bn

 

 

£436bn

 

 

£435bn

 

 

£432bn

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost:income ratio

52.3%

 

 

59.9%

 

 

56.9%

 

 

55.2%

 

 

49.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset quality ratio

(0.29)%

 

 

0.11%

 

 

0.27%

 

 

2.16%

 

 

1.30%

 

Gross asset quality ratio

(0.18)%

 

 

0.16%

 

 

0.28%

 

 

2.19%

 

 

1.35%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on tangible equity1

13.9%

 

 

5.9%

 

 

6.0%

 

 

(6.1)%

 

 

3.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans and advances to customers2

£444bn

 

 

£440bn

 

 

£439bn

 

 

£440bn

 

 

£443bn

 

Customer deposits3

£462bn

 

 

£451bn

 

 

£447bn

 

 

£441bn

 

 

£428bn

 

Loan to deposit ratio

96%

 

 

98%

 

 

98%

 

 

100%

 

 

103%

 

Risk-weighted assets

£199bn

 

 

£203bn

 

 

£205bn

 

 

£207bn

 

 

£209bn

 

Tangible net assets per share

52.4p

 

 

52.3p

 

 

52.2p

 

 

51.6p

 

 

57.4p

 

1  Revised basis, calculation shown on page 10.

2  Excludes reverse repos.

3  Excludes repos.

 

BALANCE SHEET ANALYSIS

 

At 31 Mar
2021

 

At 31 Mar 2020

 

Change

 

At 31 Dec 2020

 

Change

 

£bn

 

£bn

 

%

 

£bn

 

%

 

 

 

 

 

 

 

 

 

 

Loans and advances to customers

 

 

 

 

 

 

 

 

 

Open mortgage book

283.3 

 

 

268.1 

 

 

 

 

277.3 

 

 

 

Closed mortgage book

15.9 

 

 

17.9 

 

 

(11)

 

 

16.5 

 

 

(4)

 

Credit cards

13.5 

 

 

16.7 

 

 

(19)

 

 

14.3 

 

 

(6)

 

UK Retail unsecured loans

7.8 

 

 

8.6 

 

 

(9)

 

 

8.0 

 

 

(3)

 

UK Motor Finance

14.9 

 

 

15.8 

 

 

(6)

 

 

14.7 

 

 

 

Overdrafts

0.9 

 

 

1.2 

 

 

(25)

 

 

0.9 

 

 

 

Retail other1

10.3 

 

 

9.3 

 

 

11 

 

 

10.4 

 

 

(1)

 

SME2

41.1 

 

 

32.0 

 

 

28 

 

 

40.6 

 

 

 

Mid Corporates

4.0 

 

 

4.7 

 

 

(15)

 

 

4.1 

 

 

(2)

 

Corporate and Institutional

45.6 

 

 

60.9 

 

 

(25)

 

 

46.0 

 

 

(1)

 

Commercial Banking other

4.1 

 

 

4.9 

 

 

(16)

 

 

4.3 

 

 

(5)

 

Wealth

1.0 

 

 

0.9 

 

 

11 

 

 

0.9 

 

 

11 

 

Central items

1.1 

 

 

2.1 

 

 

(48)

 

 

2.2 

 

 

(50)

 

Loans and advances to customers3

443.5 

 

 

443.1 

 

 

 

 

440.2 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer deposits

 

 

 

 

 

 

 

 

 

Retail current accounts

103.0 

 

 

79.9 

 

 

29 

 

 

97.4 

 

 

 

Commercial current accounts2,4

47.2 

 

 

34.5 

 

 

37 

 

 

47.6 

 

 

(1)

 

Retail relationship savings accounts

158.2 

 

 

144.1 

 

 

10 

 

 

154.1 

 

 

 

Retail tactical savings accounts

13.8 

 

 

12.7 

 

 

 

 

14.0 

 

 

(1)

 

Commercial deposits2,5

125.5 

 

 

142.5 

 

 

(12)

 

 

122.7 

 

 

 

Wealth

14.1 

 

 

13.3 

 

 

 

 

14.1 

 

 

 

Central items

0.6 

 

 

1.4 

 

 

(57)

 

 

0.8 

 

 

(25)

 

Total customer deposits6

462.4 

 

 

428.4 

 

 

 

 

450.7 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

869.5 

 

 

861.7 

 

 

 

 

871.3 

 

 

 

Total liabilities

820.0 

 

 

809.0 

 

 

 

 

821.9 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ordinary shareholders' equity

43.4 

 

 

46.6 

 

 

(7)

 

 

43.3 

 

 

 

Other equity instruments

5.9 

 

 

5.9 

 

 

 

 

5.9 

 

 

 

Non-controlling interests

0.2 

 

 

0.2 

 

 

 

 

0.2 

 

 

 

Total equity

49.5 

 

 

52.7 

 

 

(6)

 

 

49.4 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ordinary shares in issue, excluding own shares

70,936m

 

70,411m

 

 

 

70,812m

 

 

1  Primarily Europe.

2  Includes Retail Business Banking.

3  Excludes reverse repos.

4  Primarily non interest-bearing Commercial Banking current accounts.

5  Primarily Commercial Banking interest-bearing accounts.

6  Excludes repos.