HIGHLIGHTS FOR THE THREE MONTHS ENDED 31 MARCH 2017
|
|
Strong underlying performance with significant improvement in
statutory profit and returns
|
●
Increase in underlying profit to
£2.1 billion with an underlying return on tangible equity
of 15.1 per cent
|
●
Positive operating jaws while credit
quality remains strong with asset quality ratio of 12 basis
points
|
●
Statutory profit before tax increased to
£1.3 billion; statutory return on tangible equity of 8.8
per cent
|
●
Strong balance sheet maintained with CET1
ratio of 14.5 per cent (pre dividend accrual)
|
●
Tangible net assets per share increased to
56.5 pence driven by strong underlying profit
|
|
Our differentiated UK focused business model continues to
deliver
|
●
Simple, efficient and low risk business
model providing competitive advantage
|
●
Strong capital generation of
0.7 percentage points
|
●
UK government shareholding now below 2
per cent
|
|
On track to deliver the Group financial targets for 2017 with
longer term guidance maintained
|
●
Net interest margin for the year now expected
to be close to 2.80 per cent (pre MBNA)
|
●
Expect open book mortgage balances to
stabilise and then grow to close the year in line with 31 December
2016
|
●
Asset quality ratio for the year now expected
to be inside existing 25 basis points guidance (pre
MBNA)
|
●
Expect 2017 capital generation to be at the
top end of the 170-200 basis points ongoing guidance
range
|
●
Continue to target a cost:income ratio of
around 45 per cent exiting 2019 with reductions every
year
|
●
Expect to generate a statutory return on
tangible equity of between 13.5 and 15.0 per cent in
2019
|
|
|
Three months ended
|
|
Three
months ended
|
|
|
|
Three
months ended
|
|
|
|
||||||||||||||||||||
|
|
31 Mar
|
|
31
Mar
|
|
|
|
31
Dec
|
|
|
|
||||||||||||||||||||
|
|
2017
|
|
2016
|
|
Change
|
|
2016
|
|
Change
|
|
||||||||||||||||||||
|
|
£ million
|
|
£ million
|
|
%
|
|
£ million
|
|
%
|
|
||||||||||||||||||||
Net
interest income
|
|
2,928
|
|
2,906
|
|
1
|
|
2,805
|
|
4
|
|
||||||||||||||||||||
Other
income
|
|
1,482
|
|
1,477
|
|
-
|
|
1,545
|
|
(4)
|
|
||||||||||||||||||||
Total income
|
|
4,410
|
|
4,383
|
|
1
|
|
4,350
|
|
1
|
|
||||||||||||||||||||
Operating
lease depreciation
|
|
(232)
|
|
(193)
|
|
(20)
|
|
(226)
|
|
(3)
|
|
||||||||||||||||||||
Net income
|
|
4,178
|
|
4,190
|
|
-
|
|
4,124
|
|
1
|
|
||||||||||||||||||||
Operating
costs
|
|
(1,968)
|
|
(1,987)
|
|
1
|
|
(2,134)
|
|
8
|
|
||||||||||||||||||||
Impairment
|
|
(127)
|
|
(149)
|
|
15
|
|
(196)
|
|
35
|
|
||||||||||||||||||||
Underlying profit
|
|
2,083
|
|
2,054
|
|
1
|
|
1,794
|
|
16
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Volatility
and other items
|
|
(229)
|
|
(1,285)
|
|
|
|
(346)
|
|
|
|
||||||||||||||||||||
Payment
protection insurance provision
|
|
(350)
|
|
-
|
|
|
|
-
|
|
|
|
||||||||||||||||||||
Other
conduct provisions
|
|
(200)
|
|
(115)
|
|
|
|
(475)
|
|
|
|
||||||||||||||||||||
Statutory profit before tax
|
|
1,304
|
|
654
|
|
99
|
|
973
|
|
34
|
|
||||||||||||||||||||
Taxation
|
|
(414)
|
|
(123)
|
|
|
|
(535)
|
|
|
|
||||||||||||||||||||
Profit for the period
|
|
890
|
|
531
|
|
68
|
|
438
|
|
103
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Earnings
per share
|
|
1.1p
|
|
0.6p
|
|
83
|
|
0.4p
|
|
175
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Banking
net interest margin
|
|
2.80%
|
|
2.74%
|
|
6bp
|
|
2.68%
|
|
12bp
|
|
||||||||||||||||||||
Average
interest-earning banking assets
|
|
£431bn
|
|
£438bn
|
|
(2)
|
|
£434bn
|
|
(1)
|
|
||||||||||||||||||||
Cost:income
ratio
|
|
47.1%
|
|
47.4%
|
|
(0.3)pp
|
|
51.7%
|
|
(4.6)pp
|
|
||||||||||||||||||||
Asset
quality ratio
|
|
0.12%
|
|
0.14%
|
|
(2)bp
|
|
0.17%
|
|
(5)bp
|
|
||||||||||||||||||||
Return
on risk-weighted assets
|
|
3.93%
|
|
3.70%
|
|
23bp
|
|
3.26%
|
|
67bp
|
|
||||||||||||||||||||
Underlying
return on tangible equity
|
|
15.1%
|
|
15.0%
|
|
0.1pp
|
|
12.8%
|
|
2.3pp
|
|
||||||||||||||||||||
Statutory
return on tangible equity
|
|
8.8%
|
|
5.7%
|
|
3.1pp
|
|
4.7%
|
|
4.1pp
|
|
||||||||||||||||||||
Statutory
return on required equity
|
|
8.2%
|
|
4.4%
|
|
3.8pp
|
|
3.5%
|
|
4.7pp
|
|
|
|
At 31 Mar
|
|
At 31 Dec
|
|
Change
|
|
||||||
|
|
2017
|
|
2016
|
|
%
|
|
||||||
Loans
and advances to customers1
|
|
£445bn
|
|
£450bn
|
|
(1)
|
|
||||||
Customer
deposits2
|
|
£415bn
|
|
£413bn
|
|
-
|
|
||||||
Loan to
deposit ratio
|
|
107%
|
|
109%
|
|
(2)pp
|
|
||||||
Total
assets
|
|
£817bn
|
|
£818bn
|
|
-
|
|
||||||
Common
equity tier 1 ratio pre 2017 dividend accrual3
|
|
14.5%
|
|
13.8%
|
|
0.7pp
|
|
||||||
Common
equity tier 1 ratio3
|
|
14.3%
|
|
13.8%
|
|
0.5pp
|
|
||||||
Transitional
total capital ratio
|
|
21.9%
|
|
21.4%
|
|
0.5pp
|
|
||||||
Leverage
ratio3
|
|
5.0%
|
|
5.0%
|
|
-
|
|
||||||
Risk-weighted
assets
|
|
£214bn
|
|
£216bn
|
|
(1)
|
|
||||||
Tangible
net assets per share
|
|
56.5p
|
|
54.8p
|
|
1.7p
|
|
|
|
1
|
Excludes
reverse repos of £11.2 billion (31 December 2016:
£8.3 billion).
|
2
|
Excludes
repos of £0.4 billion (31 December 2016:
£2.5 billion).
|
3
|
The
common equity tier 1 and leverage ratios at 31 December 2016
were reported on a pro forma basis, including the dividend paid by
the Insurance business in February 2017 relating to 2016
earnings.
|
|
|
Three months ended
|
|
Three
months ended
|
|
|
|
Three
months ended
|
|
|
||||||||||
|
|
31 Mar
|
|
31
Mar
|
|
|
|
31
Dec
|
|
|
||||||||||
|
|
2017
|
|
2016
|
|
Change
|
|
2016
|
|
Change
|
||||||||||
|
|
£ million
|
|
£ million
|
|
%
|
|
£ million
|
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net
interest income
|
|
2,928
|
|
2,906
|
|
1
|
|
2,805
|
|
4
|
||||||||||
Other
income
|
|
1,482
|
|
1,477
|
|
-
|
|
1,545
|
|
(4)
|
||||||||||
Total income
|
|
4,410
|
|
4,383
|
|
1
|
|
4,350
|
|
1
|
||||||||||
Operating
lease depreciation¹
|
|
(232)
|
|
(193)
|
|
(20)
|
|
(226)
|
|
(3)
|
||||||||||
Net income
|
|
4,178
|
|
4,190
|
|
-
|
|
4,124
|
|
1
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Banking
net interest margin
|
|
2.80%
|
|
2.74%
|
|
6bp
|
|
2.68%
|
|
12bp
|
||||||||||
Average
interest-earning banking assets
|
|
£430.9bn
|
|
£438.2bn
|
|
(2)
|
|
£434.0bn
|
|
(1)
|
|
|
1
|
Net of
gains on disposal of leased assets.
|
|
|
Three months ended
|
|
Three
months ended
|
|
|
|
Three
months ended
|
|
|
||||||||||
|
|
31 Mar
|
|
31
Mar
|
|
|
|
31
Dec
|
|
|
||||||||||
|
|
2017
|
|
2016
|
|
Change
|
|
2016
|
|
Change
|
||||||||||
|
|
£ million
|
|
£ million
|
|
%
|
|
£ million
|
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating
costs
|
|
1,968
|
|
1,987
|
|
1
|
|
2,134
|
|
8
|
||||||||||
Cost:income
ratio
|
|
47.1%
|
|
47.4%
|
|
(0.3)pp
|
|
51.7%
|
|
(4.6)pp
|
||||||||||
Operating
jaws
|
|
1%
|
|
|
|
|
|
|
|
|
||||||||||
Simplification
savings annual run-rate
|
|
1,051
|
|
495
|
|
|
|
947
|
|
|
|
|
Three months ended
|
|
Three
months ended
|
|
|
|
Three
months ended
|
|
|
|
|||||||||||||
|
|
31 Mar
|
|
31
Mar
|
|
|
|
31
Dec
|
|
|
|
|||||||||||||
|
|
2017
|
|
2016
|
|
Change
|
|
2016
|
|
Change
|
|
|||||||||||||
|
|
£ million
|
|
£ million
|
|
%
|
|
£ million
|
|
%
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total
impairment charge
|
|
127
|
|
149
|
|
15
|
|
196
|
|
35
|
|
|||||||||||||
Asset
quality ratio
|
|
0.12%
|
|
0.14%
|
|
(2)bp
|
|
0.17%
|
|
(5)bp
|
|
|||||||||||||
Gross
asset quality ratio
|
|
0.23%
|
|
0.22%
|
|
1bp
|
|
0.31%
|
|
(8)bp
|
|
|||||||||||||
Impaired
loans as a % of closing advances
|
|
1.8%
|
|
2.0%
|
|
(0.2)pp
|
|
1.8%
|
|
−
|
|
|||||||||||||
Provisions
as a % of impaired loans
|
|
43.2%
|
|
44.7%
|
|
(1.5)pp
|
|
43.4%
|
|
(0.2)pp
|
|
|
|
Three months ended
|
|
Three
months ended
|
|
|
|
Three
months ended
|
|
|
|||||||||||
|
|
31 Mar
|
|
31
Mar
|
|
|
|
31
Dec
|
|
|
|||||||||||
|
|
2017
|
|
2016
|
|
Change
|
|
2016
|
|
Change
|
|||||||||||
|
|
£ million
|
|
£ million
|
|
%
|
|
£ million
|
|
%
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Underlying profit
|
|
2,083
|
|
2,054
|
|
1
|
|
1,794
|
|
16
|
|||||||||||
Volatility
and other items
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Enhanced Capital
Notes
|
|
-
|
|
(790)
|
|
|
|
-
|
|
|
|||||||||||
Market
volatility and asset sales
|
|
12
|
|
(203)
|
|
|
|
46
|
|
|
|||||||||||
Amortisation of
purchased intangibles
|
|
(23)
|
|
(84)
|
|
|
|
(85)
|
|
|
|||||||||||
Restructuring
costs
|
|
(157)
|
|
(161)
|
|
|
|
(232)
|
|
|
|||||||||||
Fair
value unwind
|
|
(61)
|
|
(47)
|
|
|
|
(75)
|
|
|
|||||||||||
|
|
(229)
|
|
(1,285)
|
|
|
|
(346)
|
|
|
|||||||||||
Payment
protection insurance provision
|
|
(350)
|
|
-
|
|
|
|
-
|
|
|
|||||||||||
Other
conduct provisions
|
|
(200)
|
|
(115)
|
|
|
|
(475)
|
|
|
|||||||||||
Statutory profit before tax
|
|
1,304
|
|
654
|
|
99
|
|
973
|
|
34
|
|||||||||||
Taxation
|
|
(414)
|
|
(123)
|
|
|
|
(535)
|
|
|
|||||||||||
Profit for the period
|
|
890
|
|
531
|
|
68
|
|
438
|
|
103
|
|
|
At 31 Mar
|
|
At 31 Dec
|
|
Change
|
||||||
|
|
2017
|
|
2016
|
|
%
|
||||||
|
|
|
|
|
|
|
||||||
Loans
and advances to customers1
|
|
£445bn
|
|
£450bn
|
|
(1)
|
||||||
Customer
deposits2
|
|
£415bn
|
|
£413bn
|
|
-
|
||||||
Loan to
deposit ratio
|
|
107%
|
|
109%
|
|
(2)pp
|
||||||
|
|
|
|
|
|
|
||||||
Wholesale
funding
|
|
£106bn
|
|
£111bn
|
|
(4)
|
||||||
Wholesale
funding <1 year maturity
|
|
£31bn
|
|
£35bn
|
|
(13)
|
||||||
Of
which money-market funding <1 year maturity3
|
|
£15bn
|
|
£14bn
|
|
12
|
||||||
Liquidity
coverage ratio - eligible assets
|
|
£133bn
|
|
£121bn
|
|
10
|
||||||
|
|
|
|
|
|
|
||||||
Common
equity tier 1 ratio pre 2017 dividend accrual4
|
|
14.5%
|
|
13.8%
|
|
0.7pp
|
||||||
Common
equity tier 1 ratio4
|
|
14.3%
|
|
13.8%
|
|
0.5pp
|
||||||
Leverage
ratio4
|
|
5.0%
|
|
5.0%
|
|
-
|
||||||
|
|
|
|
|
|
|
||||||
Tangible
net assets per share
|
|
56.5p
|
|
54.8p
|
|
1.7p
|
|
|
1
|
Excludes
reverse repos of £11.2 billion (31 December 2016:
£8.3 billion).
|
2
|
Excludes
repos of £0.4 billion (31 December 2016:
£2.5 billion).
|
3
|
Excludes
balances relating to margins of £2.7 billion
(31 December 2016: £3.2 billion) and settlement
accounts of £1.2 billion (31 December 2016:
£1.8 billion).
|
4
|
The
common equity tier 1 and leverage ratios at 31 December 2016
were reported on a pro forma basis, including the dividend paid by
the Insurance business in February 2017 relating to 2016
earnings.
|
|
|
|
|
|
|
|||
|
|
Threemonthsended
|
|
Threemonthsended
|
|
|||
|
|
31 Mar
|
|
31
Mar
|
|
|||
|
|
2017
|
|
2016
|
|
|||
Income statement
|
|
£ million
|
|
£ million
|
|
|||
|
|
|
|
|
|
|||
Net
interest income
|
|
2,363
|
|
2,761
|
|
|||
Other
income, net of insurance claims
|
|
2,027
|
|
612
|
|
|||
Total income, net of insurance claims
|
|
4,390
|
|
3,373
|
|
|||
Total
operating expenses
|
|
(2,980)
|
|
(2,586)
|
|
|||
Impairment
|
|
(106)
|
|
(133)
|
|
|||
Profit before tax
|
|
1,304
|
|
654
|
|
|||
Taxation
|
|
(414)
|
|
(123)
|
|
|||
Profit for the period
|
|
890
|
|
531
|
|
|||
|
|
|
|
|
|
|||
Profit
attributable to ordinary shareholders
|
|
766
|
|
405
|
|
|||
Profit
attributable to other equity holders1
|
|
105
|
|
101
|
|
|||
Profit attributable to equity holders
|
|
871
|
|
506
|
|
|||
Profit
attributable to non-controlling interests
|
|
19
|
|
25
|
|
|||
Profit for the period
|
|
890
|
|
531
|
|
|
|
At 31 Mar
|
|
At 31 Dec
|
|||||
Balance sheet
|
|
2017
|
|
2016
|
|||||
|
|
£ million
|
|
£ million
|
|||||
Assets
|
|
|
|
|
|||||
Cash
and balances at central banks
|
|
56,461
|
|
47,452
|
|||||
Trading
and other financial assets at fair value through profit or
loss
|
|
166,068
|
|
151,174
|
|||||
Derivative
financial instruments
|
|
32,589
|
|
36,138
|
|||||
Loans
and receivables
|
|
465,972
|
|
488,257
|
|||||
Available-for-sale
financial assets
|
|
54,330
|
|
56,524
|
|||||
Other
assets
|
|
41,996
|
|
38,248
|
|||||
Total assets
|
|
817,416
|
|
817,793
|
|||||
|
|
|
|
|
|||||
Liabilities
|
|
|
|
|
|||||
Deposits
from banks
|
|
22,198
|
|
16,384
|
|||||
Customer
deposits
|
|
415,149
|
|
415,460
|
|||||
Trading
and other financial liabilities at fair value through profit or
loss
|
|
56,362
|
|
54,504
|
|||||
Derivative
financial instruments
|
|
32,075
|
|
34,924
|
|||||
Debt
securities in issue
|
|
73,862
|
|
76,314
|
|||||
Liabilities
arising from insurance and investment contracts
|
|
117,286
|
|
114,502
|
|||||
Subordinated
liabilities
|
|
18,969
|
|
19,831
|
|||||
Other
liabilities
|
|
31,403
|
|
37,059
|
|||||
Total liabilities
|
|
767,304
|
|
768,978
|
|||||
|
|
|
|
|
|||||
Shareholders'
equity
|
|
44,303
|
|
43,020
|
|||||
Other
equity instruments
|
|
5,355
|
|
5,355
|
|||||
Non-controlling
interests
|
|
454
|
|
440
|
|||||
Total equity
|
|
50,112
|
|
48,815
|
|||||
Total equity and liabilities
|
|
817,416
|
|
817,793
|
|
|
1
|
The
profit after tax attributable to other equity holders of £105
million (three months to 31 March 2016: £101 million) is
offset in reserves by a tax credit attributable to ordinary
shareholders of £26 million (three months to 31 March 2016:
£20 million).
|
|
|
Shareholders'equity
|
|
Otherequityinstruments
|
|
Non-controllinginterests
|
|
Totalequity
|
|
||||||||||||
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance
at 1 January 2017
|
|
43,020
|
|
5,355
|
|
440
|
|
48,815
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Profit
for the period
|
|
871
|
|
-
|
|
19
|
|
890
|
|
||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
−
|
|
||||||||||||
Post-retirement
defined benefit pension schemeremeasurements
|
|
440
|
|
-
|
|
-
|
|
440
|
|
||||||||||||
Movements
in revaluation reserve in respect ofavailable-for-sale financial
assets
|
|
330
|
|
-
|
|
-
|
|
330
|
|
||||||||||||
Cash
flow hedging reserve
|
|
(37)
|
|
-
|
|
-
|
|
(37)
|
|
||||||||||||
Currency
translation differences and other
|
|
(9)
|
|
-
|
|
-
|
|
(9)
|
|
||||||||||||
Tax
|
|
(167)
|
|
-
|
|
-
|
|
(167)
|
|
||||||||||||
Total other comprehensive income
|
|
557
|
|
-
|
|
-
|
|
557
|
|
||||||||||||
Total comprehensive income
|
|
1,428
|
|
-
|
|
19
|
|
1,447
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Transactions with owners
|
|
|
|
|
|
|
|
|
|
||||||||||||
Distributions
on other equity instruments, net of tax
|
|
(79)
|
|
-
|
|
-
|
|
(79)
|
|
||||||||||||
Issue
of ordinary shares
|
|
8
|
|
-
|
|
-
|
|
8
|
|
||||||||||||
Treasury
shares and employee award schemes
|
|
(74)
|
|
-
|
|
-
|
|
(74)
|
|
||||||||||||
Changes
in non-controlling interests
|
|
-
|
|
-
|
|
(5)
|
|
(5)
|
|
||||||||||||
Total transactions with owners
|
|
(145)
|
|
-
|
|
(5)
|
|
(150)
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at 31 March 2017
|
|
44,303
|
|
5,355
|
|
454
|
|
50,112
|
|
|
|
|
|
Removal of:
|
|
|
|
|
|
|
|
|
|||
|
|
Lloyds
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
Banking
|
|
Volatility
|
|
|
|
|
|
Other
|
|
|
|||
|
|
Group
|
|
and other
|
|
Insurance
|
|
|
|
conduct
|
|
Underlying
|
|||
|
|
statutory
|
|
items1
|
|
gross up2
|
|
PPI
|
|
provisions
|
|
basis
|
|||
Three months ended 31 March 2017
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Net
interest income
|
|
2,363
|
|
66
|
|
499
|
|
-
|
|
-
|
|
2,928
|
|||
Other
income, net of insurance claims
|
|
2,027
|
|
(21)
|
|
(524)
|
|
-
|
|
-
|
|
1,482
|
|||
Total income
|
|
4,390
|
|
45
|
|
(25)
|
|
-
|
|
-
|
|
4,410
|
|||
Operating
lease depreciation
|
|
|
|
(232)
|
|
-
|
|
-
|
|
-
|
|
(232)
|
|||
Net income
|
|
4,390
|
|
(187)
|
|
(25)
|
|
-
|
|
-
|
|
4,178
|
|||
Operating
expenses3
|
|
(2,980)
|
|
437
|
|
25
|
|
350
|
|
200
|
|
(1,968)
|
|||
Impairment
|
|
(106)
|
|
(21)
|
|
-
|
|
-
|
|
-
|
|
(127)
|
|||
Profit before tax
|
|
1,304
|
|
229
|
|
-
|
|
350
|
|
200
|
|
2,083
|
|
|
|
|
Removal
of:
|
|
|
||||||||||||||||||||
|
|
Lloyds
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Banking
|
|
Volatility
|
|
|
|
|
|
Other
|
|
|
||||||||||||||
|
|
Group
|
|
and other
|
|
Insurance
|
|
|
|
conduct
|
|
Underlying
|
||||||||||||||
|
|
statutory
|
|
items4
|
|
gross up2
|
|
PPI
|
|
provisions
|
|
basis
|
||||||||||||||
Three
months ended 31 March 2016
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net
interest income
|
|
2,761
|
|
69
|
|
76
|
|
-
|
|
-
|
|
2,906
|
||||||||||||||
Other
income, net of insurance claims
|
|
612
|
|
979
|
|
(114)
|
|
-
|
|
-
|
|
1,477
|
||||||||||||||
Total
income
|
|
3,373
|
|
1,048
|
|
(38)
|
|
-
|
|
-
|
|
4,383
|
||||||||||||||
Operating
lease depreciation
|
|
|
|
(193)
|
|
-
|
|
-
|
|
-
|
|
(193)
|
||||||||||||||
Net
income
|
|
3,373
|
|
855
|
|
(38)
|
|
-
|
|
-
|
|
4,190
|
||||||||||||||
Operating
expenses3
|
|
(2,586)
|
|
446
|
|
38
|
|
-
|
|
115
|
|
(1,987)
|
||||||||||||||
Impairment
|
|
(133)
|
|
(16)
|
|
|
|
-
|
|
-
|
|
(149)
|
||||||||||||||
Profit
before tax
|
|
654
|
|
1,285
|
|
-
|
|
-
|
|
115
|
|
2,054
|
|
|
1
|
Comprises
the effects of asset sales (losses of £12 million);
volatile items (gain of £20 million); liability
management (gain of £4 million; the amortisation of
purchased intangibles (£23 million); restructuring costs
(£157 million, comprising severance costs relating to the
Simplification programme, the announced rationalisation of the
non-branch property portfolio and the work on implementing the
ring-fencing requirements); and the fair value unwind and other
items (loss of £61 million).
|
2
|
The
Group's insurance businesses' income statements include income and
expenditure which are attributable to the policyholders of the
Group's long-term assurance funds. These items have no impact in
total upon the profit attributable to equity shareholders and, in
order to provide a clearer representation of the underlying trends
within the business, these items are shown net within the
underlying results.
|
3
|
The
statutory basis figure is the aggregate of operating costs and
operating lease depreciation.
|
4
|
Comprises
the write-off of the ECN embedded derivative and premium paid on
redemption of the remaining notes (loss of £790 million);
the effects of asset sales (loss of £1 million); volatile
items (loss of £201 million); liability management (loss
of £1 million; the amortisation of purchased intangibles
(£84 million); restructuring costs
(£161 million, principally comprising the severance
related costs under phase II of the Simplification programme); and
the fair value unwind and other items (loss of
£47 million).
|
|
|
Three months ended
|
|
Three
months ended
|
|||||
|
|
31 Mar
|
|
31
Mar
|
|||||
|
|
2017
|
|
2016
|
|||||
|
|
£bn
|
|
£bn
|
|||||
Underlying return on tangible equity
|
|
|
|
|
|||||
Average
shareholders' equity
|
|
43.7
|
|
42.3
|
|||||
Average
intangible assets
|
|
(3.9)
|
|
(4.0)
|
|||||
Average tangible equity
|
|
39.8
|
|
38.3
|
|||||
|
|
|
|
|
|||||
Underlying
profit after tax (£m)
|
|
1,527
|
|
1,490
|
|||||
Add
back amortisation of intangible assets (post tax)
(£m)
|
|
49
|
|
43
|
|||||
Less
profit attributable to other equity holders (£m)
|
|
(79)
|
|
(81)
|
|||||
Less
profit attributable to non-controlling interests
(£m)
|
|
(19)
|
|
(25)
|
|||||
Adjusted
underlying profit after tax
|
|
1,478
|
|
1,427
|
|||||
|
|
|
|
|
|||||
Underlying
return on tangible equity
|
|
15.1%
|
|
15.0%
|
|||||
|
|
|
|
|
|||||
Statutory return on tangible equity
|
|
|
|
|
|||||
Group
statutory profit after tax (£m)
|
|
890
|
|
531
|
|||||
Add
back amortisation of intangible assets (post tax)
(£m)
|
|
49
|
|
43
|
|||||
Add
back amortisation of purchased intangible assets (post tax)
(£m)
|
|
26
|
|
73
|
|||||
Less
profit attributable to other equity holders (£m)
|
|
(79)
|
|
(81)
|
|||||
Less
profit attributable to non-controlling interests
(£m)
|
|
(19)
|
|
(25)
|
|||||
Adjusted
statutory profit after tax
|
|
867
|
|
541
|
|||||
|
|
|
|
|
|||||
Statutory
return on tangible equity
|
|
8.8%
|
|
5.7%
|
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|||||||||||
|
|
ended
|
|
ended
|
|
ended
|
|
ended
|
|
ended
|
|||||||||||
|
|
31 Mar
|
|
31 Dec
|
|
30 Sept
|
|
30 June
|
|
31 Mar
|
|||||||||||
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
|
2016
|
|||||||||||
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net
interest income
|
|
2,928
|
|
2,805
|
|
2,848
|
|
2,876
|
|
2,906
|
|||||||||||
Other
income
|
|
1,482
|
|
1,545
|
|
1,427
|
|
1,616
|
|
1,477
|
|||||||||||
Total income
|
|
4,410
|
|
4,350
|
|
4,275
|
|
4,492
|
|
4,383
|
|||||||||||
Operating
lease depreciation
|
|
(232)
|
|
(226)
|
|
(241)
|
|
(235)
|
|
(193)
|
|||||||||||
Net income
|
|
4,178
|
|
4,124
|
|
4,034
|
|
4,257
|
|
4,190
|
|||||||||||
Operating
costs
|
|
(1,968)
|
|
(2,134)
|
|
(1,918)
|
|
(2,054)
|
|
(1,987)
|
|||||||||||
Impairment
|
|
(127)
|
|
(196)
|
|
(204)
|
|
(96)
|
|
(149)
|
|||||||||||
Underlying profit
|
|
2,083
|
|
1,794
|
|
1,912
|
|
2,107
|
|
2,054
|
|||||||||||
Enhanced
Capital Notes
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(790)
|
|||||||||||
Market
volatility and asset sales
|
|
12
|
|
46
|
|
265
|
|
331
|
|
(203)
|
|||||||||||
Amortisation
of purchased intangibles
|
|
(23)
|
|
(85)
|
|
(87)
|
|
(84)
|
|
(84)
|
|||||||||||
Restructuring
costs
|
|
(157)
|
|
(232)
|
|
(83)
|
|
(146)
|
|
(161)
|
|||||||||||
Fair
value unwind and other items
|
|
(61)
|
|
(75)
|
|
(46)
|
|
(63)
|
|
(47)
|
|||||||||||
Payment
protection insurance provision
|
|
(350)
|
|
-
|
|
(1,000)
|
|
-
|
|
-
|
|||||||||||
Other
conduct provisions
|
|
(200)
|
|
(475)
|
|
(150)
|
|
(345)
|
|
(115)
|
|||||||||||
Statutory profit before tax
|
|
1,304
|
|
973
|
|
811
|
|
1,800
|
|
654
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Banking
net interest margin
|
|
2.80%
|
|
2.68%
|
|
2.69%
|
|
2.74%
|
|
2.74%
|
|||||||||||
Average
interest-earning banking assets
|
|
£430.9bn
|
|
£434.0bn
|
|
£435.9bn
|
|
£435.6bn
|
|
£438.2bn
|
|||||||||||
Cost:income
ratio
|
|
47.1%
|
|
51.7%
|
|
47.5%
|
|
48.2%
|
|
47.4%
|
|||||||||||
Asset
quality ratio
|
|
0.12%
|
|
0.17%
|
|
0.18%
|
|
0.09%
|
|
0.14%
|
|
|
At 31 Mar
|
|
At 31
Dec
|
|||
|
|
2017
|
|
2016
|
|||
|
|
£m
|
|
£m
|
|||
|
|
|
|
|
|||
Shareholders'
equity
|
|
44,303
|
|
43,020
|
|||
Goodwill
|
|
(2,016)
|
|
(2,016)
|
|||
Intangible
assets
|
|
(1,742)
|
|
(1,681)
|
|||
Purchased
value of in-force business
|
|
(331)
|
|
(340)
|
|||
Other,
including deferred tax effects
|
|
155
|
|
170
|
|||
Tangible net assets
|
|
40,369
|
|
39,153
|
|||
|
|
|
|
|
|||
Ordinary
shares in issue, excluding Own shares
|
|
71,476m
|
|
71,413m
|
|||
Tangible
net assets per share
|
|
56.5p
|
|
54.8p
|
|
|
|
|
|
|
|
|
|
|
|
|
Transitional
|
|
|
|
Fully loaded
|
|
|
|
At 31 Mar
|
|
At 31 Dec
|
|
At 31 Mar
|
|
At 31 Dec
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Capital resources
|
|
£ million
|
|
£ million
|
|
£ million
|
|
£ million
|
Common
equity tier 1
|
|
|
|
|
|
|
|
|
Shareholders'
equity per balance sheet
|
|
44,303
|
|
43,020
|
|
44,303
|
|
43,020
|
Deconsolidation
adjustments1
|
|
1,848
|
|
1,342
|
|
1,848
|
|
1,342
|
Other
adjustments
|
|
(4,317)
|
|
(3,893)
|
|
(4,317)
|
|
(3,893)
|
Deductions
from common equity tier 1
|
|
(11,246)
|
|
(11,185)
|
|
(11,246)
|
|
(11,185)
|
Common equity tier 1 capital
|
|
30,588
|
|
29,284
|
|
30,588
|
|
29,284
|
|
|
|
|
|
|
|
|
|
Additional
tier 1 instruments
|
|
8,075
|
|
8,626
|
|
5,320
|
|
5,320
|
Deductions
from tier 1
|
|
(1,292)
|
|
(1,329)
|
|
-
|
|
-
|
Total tier 1 capital
|
|
37,371
|
|
36,581
|
|
35,908
|
|
34,604
|
|
|
|
|
|
|
|
|
|
Tier 2
instruments and eligible provisions
|
|
11,032
|
|
11,113
|
|
7,580
|
|
7,918
|
Deductions
from tier 2
|
|
(1,640)
|
|
(1,571)
|
|
(2,932)
|
|
(2,900)
|
Total capital resources
|
|
46,763
|
|
46,123
|
|
40,556
|
|
39,622
|
|
|
|
|
|
|
|
|
|
Total risk-weighted assets
|
|
213,715
|
|
215,534
|
|
213,715
|
|
215,534
|
|
|
|
|
|
|
|
|
|
Leverage
|
|
|
|
|
|
|
|
|
Statutory
balance sheet assets
|
|
|
|
|
|
817,416
|
|
817,793
|
Deconsolidation
and other adjustments1
|
|
|
|
|
|
(160,140)
|
|
(169,370)
|
Off-balance
sheet items
|
|
|
|
|
|
58,536
|
|
58,685
|
Total exposure measure
|
|
|
|
|
|
715,812
|
|
707,108
|
|
|
|
|
|
|
|
|
|
Ratios
|
|
|
|
|
|
|
|
|
Common
equity tier 1 capital ratio
|
|
14.3%
|
|
13.6%
|
|
14.3%
|
|
13.6%
|
Tier 1
capital ratio
|
|
17.5%
|
|
17.0%
|
|
16.8%
|
|
16.1%
|
Total
capital ratio
|
|
21.9%
|
|
21.4%
|
|
19.0%
|
|
18.4%
|
Leverage
ratio2
|
|
|
|
|
|
5.0%
|
|
4.9%
|
Modified
UK leverage ratio3
|
|
|
|
|
|
5.4%
|
|
5.2%
|
Average
modified UK leverage ratio4
|
|
|
|
|
|
5.3%
|
|
|
Average
modified UK leverage exposure measure5
|
|
|
|
|
|
663,917
|
|
|
|
|
1
|
Deconsolidation
adjustments relate to the deconsolidation of certain Group entities
for regulatory capital and leverage purposes, being primarily the
Group's Insurance business.
|
2
|
The
countercyclical leverage ratio buffer is currently
nil.
|
3
|
The
Group's leverage ratio on a modified basis, excluding qualifying
central bank claims from the exposure measure in accordance with
the rule modification applied to the UK Leverage Ratio
Framework.
|
4
|
The
average modified UK leverage ratio is based on the average of the
month end tier 1 capital and modified exposure measures over the
quarter (1 January 2017 to 31 March 2017). The average of 5.3 per
cent reflected a strengthening tier 1 capital position against a
broadly flat exposure measure over the quarter.
|
5
|
The
average modified UK leverage exposure measure is based on the
average of the month end exposure measures over the quarter (1
January 2017 to 31 March 2017).
|
|
|
|
|
|
||
Asset
quality ratio
|
The
underlying impairment charge for the period (on an annualised
basis) in respect of loans and advances to customers after releases
and write-backs, expressed as a percentage of average gross loans
and advances to customers for the period
|
|
||
Banking
net interest margin
|
Banking
net interest income on customer and product balances in the banking
businesses as a percentage of average gross banking
interest-earning assets for the period
|
|
||
Cost:income
ratio
|
Operating
costs as a percentage of net income calculated on an underlying
basis
|
|
||
Gross
asset quality ratio
|
The
underlying impairment charge for the period (on an annualised
basis) in respect of loans and advances to customers before
releases and write-backs expressed as a percentage of average gross
loans and advances to customers for the period
|
|
||
Impaired
loans as a percentage of closing advances
|
Impaired
loans and advances to customers adjusted to exclude Retail and
Consumer Finance loans in recoveries expressed as a percentage of
closing gross loans and advances to customers
|
|
||
Loan to
deposit ratio
|
The
ratio of loans and advances to customers net of allowance for
impairment losses and excluding reverse repurchase agreements
divided by customer deposits excluding repurchase
agreements
|
|
||
Operating
jaws
|
The
difference between the period on period percentage change in net
income and the period on period change in operating costs
calculated on an underlying basis
|
|
||
Present
value of new business premium
|
The
total single premium sales received in the period (on an annualised
basis) plus the discounted value of premiums expected to be
received over the term of the new regular premium
contracts
|
|
||
Required
equity
|
The
amount of shareholders' equity and non-controlling interests
required to achieve a common equity tier 1 ratio of 12.0 per cent
after allowing for regulatory adjustments and
deductions
|
|
||
Return
on assets
|
Underlying
profit before tax divided by average total assets for the
period
|
|
||
Return
on required equity
|
Statutory
profit after tax adjusted to reflect the notional earnings on any
excess or shortfall in equity less the post-tax profit attributable
to other equity holders, divided by the average required equity for
the period
|
|
||
Return
on risk-weighted assets
|
Underlying
profit before tax divided by average risk-weighted
assets
|
|
||
Return
on tangible equity
|
Statutory
profit after tax adjusted to add back amortisation of intangible
assets, and to deduct profit attributable to non-controlling
interests and other equity holders, divided by average tangible net
assets
|
|
||
Tangible
net assets per share
|
Net
assets excluding intangible assets such as goodwill and
acquisition-related intangibles divided by the weighted average
number of ordinary shares in issue
|
|
||
Underlying
profit
|
Statutory
profit adjusted for certain items as detailed in the Basis of
Preparation
|
|
||
Underlying
return on required equity
|
Underlying
profit after tax at the standard UK corporation tax rate adjusted
to reflect the banking tax surcharge and the notional earnings on
any excess or shortfall in equity less the post-tax profit
attributable to other equity holders divided by the average
required equity for the period
|
|
||
Underlying
return on tangible equity
|
Underlying
profit after tax at the standard UK corporation tax rate adjusted
to add back amortisation of intangible assets, and to deduct profit
attributable to non-controlling interests and other equity holders,
divided by average tangible net assets
|
|
||
|
|
|
|
|
|
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 2017.
|
Statutory basis: Statutory information
is set out on page 7. However, a number of factors have had a
significant effect on the comparability of the Group's financial
position and results. Accordingly, the results are also presented
on an underlying basis.
|
Underlying basis: The statutory results
are adjusted for certain items which are listed below, to allow a
comparison of the Group's underlying performance.
−
losses on redemption of the Enhanced Capital Notes and the
volatility in the value of the embedded equity conversion
feature;
−
market volatility and asset sales, which includes the effects of
certain asset sales, the volatility relating to the Group's own
debt and hedging arrangements and that arising in the insurance
businesses and insurance gross up;
−
the unwind of acquisition-related fair value adjustments and the
amortisation of purchased intangible assets;
−
restructuring costs, comprising severance related costs relating to
the Simplification programme, the costs of implementing regulatory
reform and ring-fencing and the rationalisation of the non-branch
property portfolio; and
−
payment protection insurance and other conduct
provisions.
|
Unless
otherwise stated, income statement commentaries throughout this
document compare the three months ended 31 March 2017 to the
three months ended 31 March 2016, and the balance sheet
analysis compares the Group balance sheet as at 31 March 2017
to the Group balance sheet as at 31 December
2016.
Alternative performance measures: The
Group uses a number of alternative performance measures, including
underlying profit, in the discussion of its business performance
and financial position on pages 2 to 6. Further information on
these measures is set out on page 13.
|