Lloyds Banking Group plc

2022 Half-Year Results

27 July 2022

RESULTS FOR THE HALF-YEAR

"In February we announced an ambitious strategy to transform our business, generate a stronger growth trajectory and enable the Group to deliver higher, more sustainable returns. While the world has changed significantly since February, our strategic focus remains clear and disciplined. Our strong financial performance demonstrates the resilience of our business model and customer relationships, and has enabled us to enhance guidance for 2022. Just as we remain well placed to withstand the current macroeconomic uncertainty and continue to generate significant capital for our shareholders, so too do we remain committed to maintaining the support we give to our customers every day as they adapt to the challenges they face."

Charlie Nunn,
Group Chief Executive

Strong financial performance with continued business momentum

•  Mobilising for strategic priorities across all areas, supported by commencement of incremental strategic investment

•  New organisation structure from 1 July 2022 aligned to strategic delivery, with new leadership team in place

•  Statutory profit after tax of £2.8 billion (first half of 2021: £3.9 billion), given higher net income being more than offset by the non-repeat of the significant impairment release and the deferred tax credit in the first half of 2021

•  Strong revenue growth supported by continued recovery in customer activity and UK Bank Rate changes. Net income of £8.5 billion, up 12 per cent; higher net interest and other income and continued low operating lease depreciation

•  Underlying net interest income benefitting from increased average interest-earning banking assets and deposit growth in the first half of 2022 and a stronger banking net interest margin of 2.77 per cent

•  Operating costs¹ of £4.2 billion, up 5 per cent compared to the first half of 2021, reflecting stable business-as-usual costs and higher planned strategic investment and new businesses

•  Underlying profit before impairment up 34 per cent to £4.1 billion in the first half, driven by strong net income growth

•  Asset quality remains strong; portfolio well-positioned in the context of cost of living pressures. Underlying impairment of £0.4 billion reflecting stable and benign observed performance, COVID-19 releases and updated economic outlook including inflationary pressures

Continued franchise growth and strong capital generation

•  Loans and advances to customers up £7.5 billion in the first half to £456.1 billion, including continued growth in the open mortgage book (up £3.3 billion to £296.6 billion)

•  Customer deposits up £1.9 billion to £478.2 billion, with continued inflows to the Group's trusted brands. Loan to deposit ratio of 95 per cent continues to provide robust funding and liquidity and potential for growth

•  Strong pro forma capital generation² of 139 basis points in the first half based on strong banking performance and including benefits from lower risk-weighted assets and the insurance dividend. The Board has declared an interim ordinary dividend of 0.80 pence per share, up c.20 per cent on the prior year and equivalent to £550 million

•  Pro forma CET1 ratio of 14.8 per cent (CET1 ratio of 14.7 per cent), remaining ahead of the ongoing target of c.12.5 per cent, plus a management buffer of c.1 per cent. Commitment to consider excess capital returns as usual at year-end

Outlook

Given the strong financial performance in the first half of 2022 and based on current macroeconomic assumptions, the Group is enhancing its 2022 guidance:

•  Banking net interest margin now expected to be greater than 280 basis points

•  Continue to expect operating costs of c.£8.8 billion on the new reporting basis¹

•  Asset quality ratio now expected to be below 20 basis points

•  Return on tangible equity now expected to be c.13 per cent

•  Continue to expect risk-weighted assets at the end of 2022 to be c.£210 billion

•  Capital generation now expected to be greater than 200 basis points

Click on, or paste the following link into your web browser, to view the associated PDF document.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact  or visit .