2004 interim results presentation - lloyds banking group€¦ · self funding double digit growth...

Interim ResultsInterim Results28th July 200428th July 2004

James CrosbyJames CrosbyChief ExecutiveChief Executive

HBOS BenchmarksHBOS Benchmarks

Sub 40% cost:income ratio

Self funding double digit growth

15-20% market shares potential

Sustainable and improved returns

Sub 40% cost:income ratio

Self funding double digit growth

15-20% market shares potential

Sustainable and improved returns

2004 Interims… Key Themes2004 Interims… Key Themes

Earnings momentum

Measured growth

Improved efficiency

Stable credit

Higher shareholder returns

Earnings momentum

Measured growth

Improved efficiency

Stable credit


2004… Clear Choices2004… Clear Choices

Capital… retention vs distribution

Retail… prudence vs volume

Insurance… manufacturing vs broking

Investment… transparency vs opacity

Corporate… quality vs quantity

Capital… retention vs distribution

Retail… prudence vs volume

Insurance… manufacturing vs broking

Investment… transparency vs opacity

Corporate… quality vs quantity

Today’s AgendaToday’s Agenda

Financials

Retail

Corporate and Treasury

International

Insurance & Investment

Financials

Retail

Corporate and Treasury

International


Mike EllisMike EllisGroup Finance DirectorGroup Finance Director

Key FinancialsKey Financials

30.06.0430.06.04 30.06.0330.06.03%%

GrowthGrowth

** Before exceptional items and goodwill amortisationBefore exceptional items and goodwill amortisation

**** Before exceptional items and after adjusting for the impact of short term fluctuations in investment returnsBefore exceptional items and after adjusting for the impact of short term fluctuations in investment returns

Profit Before Tax - PBT (£m)Profit Before Tax - PBT (£m) 2,1612,161 1,7811,781 2121

Underlying Earnings Per Share* (p)Underlying Earnings Per Share* (p) 38.738.7 32.432.4 1919

Dividend Per Share (p)Dividend Per Share (p) 10.810.8 10.310.3 55

PBT and Exceptional Items - PBTE (£m)PBT and Exceptional Items - PBTE (£m) 2,1832,183 1,8251,825 2020

PBTE and Short Term Fluctuations ** (£m)PBTE and Short Term Fluctuations ** (£m) 2,2442,244 1,8421,842 2222

Post-Tax Return On Mean EquityPost-Tax Return On Mean Equity

30.06.04%

30.06.04%

30.06.03%

30.06.03%

** Before exceptional itemsBefore exceptional items

**** Before exceptional items and after adjusting for the impact of short term fluctuations in investment returnsBefore exceptional items and after adjusting for the impact of short term fluctuations in investment returns

****** Group ‘Target’ RoE after allowing for the estimated reduction in profit arising from the commencement of household insurance underwritingGroup ‘Target’ RoE after allowing for the estimated reduction in profit arising from the commencement of household insurance underwriting

Group Return on Equity*Group Return on Equity* 18.618.6 17.217.2

Group ‘Target’ Return on Equity**Group ‘Target’ Return on Equity** 19.119.1 17.417.4

19.419.4Group ‘Adjusted Target’ Return on Equity***Group ‘Adjusted Target’ Return on Equity*** 17.417.4

Financial Performance…Divisional PBTEFinancial Performance…Divisional PBTE

30.06.0430.06.04£m£m

30.06.0330.06.03£m£m

%%GrowthGrowth

RetailRetail

CorporateCorporate

TreasuryTreasury

Insurance & InvestmentInsurance & Investment

InternationalInternational

Group ItemsGroup Items

972972

667667

137137

408408

149149

(150)(150)

2,1832,183

827827

514514

109109

389389

118118

(132)(132)

1,8251,825

1818

3030

2626

55

2626

(14)(14)

2020TotalTotal

Financial Performance…Group PBTEFinancial Performance…Group PBTE

30.06.0430.06.04£m£m

30.06.0330.06.03£m£m

%%GrowthGrowth

** Excludes exceptional items** Excludes exceptional items* Includes general insurance claims and amounts written off fixed asset investments* Includes general insurance claims and amounts written off fixed asset investments

Net Interest IncomeNet Interest Income 2,8502,850 2,6482,648 88

Non-interest Income* Non-interest Income* 1,8531,853 1,5671,567 1818Operating Expenses**Operating Expenses** (2,005)(2,005) (1,913)(1,913) 55

Operating Profit Before Provisions**Operating Profit Before Provisions** 2,6982,698 2,3022,302 1717

ProvisionsProvisions (578)(578) (499)(499) 1616

Share of Profits of Associates & JVs andProfit on Disposal of Fixed Assets

Share of Profits of Associates & JVs andProfit on Disposal of Fixed Assets 6363 2222 ----

Profit Before Tax and Exceptional ItemsProfit Before Tax and Exceptional Items 2,1832,183 1,8251,825 2020

Financial Performance…Group PBTE (excluding Insurance & Investment)Financial Performance…Group PBTE (excluding Insurance & Investment)

** Excludes exceptional items** Excludes exceptional items* Includes general insurance claims and amounts written off fixed asset investments* Includes general insurance claims and amounts written off fixed asset investments

Net Interest IncomeNet Interest Income 2,8122,812 2,6222,622 77

Non-interest Income* Non-interest Income* 1,3521,352 1,0741,074 2626Operating Expenses**Operating Expenses** (1,880)(1,880) (1,790)(1,790) 55

Operating Profit Before Provisions**Operating Profit Before Provisions** 2,2842,284 1,9061,906 2020

ProvisionsProvisions (578)(578) (499)(499) 1616

Share of Profits of Associates & JVs andProfit on Disposal of Fixed Assets

Share of Profits of Associates & JVs andProfit on Disposal of Fixed Assets 6969 2929 ----

Profit Before Tax and Exceptional ItemsProfit Before Tax and Exceptional Items 1,7751,775 1,4361,436 2424

30.06.0430.06.04£m£m

30.06.0330.06.03£m£m

%%GrowthGrowth

Financial Performance…Net interest Income - Margin TrendsFinancial Performance…Net interest Income - Margin Trends

Half YearEnded

31.12.03 %

Half YearEnded

31.12.03 %

Half Year Ended

30.06.03%

Half Year Ended

30.06.03%

Half YearEnded

30.06.04%

Half YearEnded

30.06.04%

1.821.82RetailRetail 1.861.86 1.971.97

1.921.92CorporateCorporate 1.911.91 2.012.01

1.681.68 1.721.72 1.821.82GroupGroup

TreasuryTreasury 0.110.11 0.130.13 0.130.13

InternationalInternational 1.941.94 2.242.24 2.332.33

Financial Performance…Non-interest Income (excl. Insurance & Investment)Financial Performance…Non-interest Income (excl. Insurance & Investment)

%%GrowthGrowth

EndedEnded30.06.0430.06.04

Half YearHalf Year

££

EndedEnded30.06.0330.06.03

Half YearHalf Year

££

RetailRetail 479479 395395 2121

Corporate*Corporate* 670670 533533 2626

TreasuryTreasury 104104 6565 6060

International*International* 9999 8181 2222

Total*Total* 1,3521,352 1,0741,074 2626

* Includes amounts written off fixed asset investments* Includes amounts written off fixed asset investments

Financial Performance…Operating ExpensesFinancial Performance…Operating Expenses

%%GrowthGrowth

EndedEnded30.06.0430.06.04

Half YearHalf Year

££

EndedEnded30.06.0330.06.03

Half YearHalf Year

££

Operating ExpensesOperating Expenses 2,0272,027 1,9571,957 44

Exceptional ItemsExceptional Items (22)(22) (44)(44) (50)(50)

2,0052,005 1,9131,913 55

Goodwill AmortisationGoodwill Amortisation (52)(52) (46)(46) 1313

Operating Lease DepreciationOperating Lease Depreciation (203)(203) (159)(159) 2828

Underlying Operating ExpensesUnderlying Operating Expenses 1,7501,750 1,7081,708 22

Financial Performance…Underlying Operating ExpensesFinancial Performance…Underlying Operating Expenses

%%GrowthGrowth

EndedEnded30.06.0430.06.04

Half YearHalf Year

££

EndedEnded30.06.0330.06.03

Half YearHalf Year

££

TreasuryTreasury

Insurance & InvestmentInsurance & Investment

InternationalInternational

TotalTotal

CorporateCorporate

Group ItemsGroup Items

Retail Retail

5252

125125

124124

1,7501,750

325325

9898

1,6251,625

1,0261,026

4040

123123

124124

1,7081,708

311311

8686

1,5851,585

1,0241,024

3030

22

--

22

55

1414

33

--

Financial Performance…Provisions ChargeFinancial Performance…Provisions Charge

578578TotalTotal 0.200.20 499499

RetailRetail 320320 0.160.16 240240 0.140.14

CorporateCorporate 241241 0.330.33 232232 0.350.35

International International 1717 0.090.09 2727 0.180.18

0.200.20

30.06.0430.06.04

£m£m

% ofAverageCustomerAdvances


30.06.0330.06.03

£m£m



Financial Performance…Closing Provisions, Suspended Interest andNon Performing Assets (NPAs)

Financial Performance…Closing Provisions, Suspended Interest andNon Performing Assets (NPAs)

CustomerCustomerAdvancesAdvances NPAsNPAs

NPAs as %NPAs as %of Customerof Customer

AdvancesAdvances

ProvisionsProvisions& Interest& Interest

in Suspensein Suspense

ProvisionsProvisions& Interest& Interest

in Suspensein Suspenseas % ofas % of

NPAsNPAs£bn£bn £m£m %% £m£m %%

As at 30.06.04As at 30.06.04Retail ResidentialRetail Residential

MortgagesMortgages 184.7184.7 2,2122,212 1.201.20 416416 1919Other BankingOther Banking 114.4114.4 3,0053,005 2.632.63 2,1662,166 7272

TotalTotal 299.1299.1 5,2175,217 1.741.74 2,5822,582 4949

As at 31.12.03As at 31.12.03Retail ResidentialRetail Residential

MortgagesMortgages 175.8175.8 2,0562,056 1.171.17 407407 2020Other BankingOther Banking 107.7107.7 2,8952,895 2.692.69 1,9931,993 6969

TotalTotal 283.5283.5 4,9514,951 1.751.75 2,4002,400 4848

Financial Performance…Insurance & Investment PBTEFinancial Performance…Insurance & Investment PBTE

30.06.0430.06.04£m£m

30.06.0330.06.03£m£m

%%GrowthGrowth

Profit Before Tax and Exceptional ItemsProfit Before Tax and Exceptional Items 408408 389389

Net Interest IncomeNet Interest Income 3838 2626 4646

Non-interest Income*Non-interest Income* 501501 493493 22

Operating Expenses**Operating Expenses** (125)(125) (123)(123) 22

Operating Profit Before Provisions**Operating Profit Before Provisions** 414414 396396 55

Share of Profits of Associates & JVsShare of Profits of Associates & JVs (6)(6) (7)(7) 1414

55

** Excludes exceptional items** Excludes exceptional items

* Net of general insurance claims of £86m in 2004 and £42m in 2003 and amounts written off fixed asset investments of £nil in 2004 and £2m in 2003

* Net of general insurance claims of £86m in 2004 and £42m in 2003 and amounts written off fixed asset investments of £nil in 2004 and £2m in 2003

Financial Performance…Group Risk Weighted Assets & CapitalFinancial Performance…Group Risk Weighted Assets & Capital

Risk Weighted AssetsRisk Weighted Assets 221,938221,938 215,790215,790

Tier 1 CapitalTier 1 Capital 17,90817,908 16,44416,444

Tier 2 CapitalTier 2 Capital 13,39513,395 12,52412,524

Total DeductionsTotal Deductions (5,353)(5,353) (5,100)(5,100)

Total CapitalTotal Capital 25,95025,950 23,86823,868

Tier 1 Capital RatioTier 1 Capital Ratio 8.18.1 7.67.6

Total Capital RatioTotal Capital Ratio 11.711.7 11.111.1

%% %%

30.06.0430.06.04£m£m

31.12.0331.12.03£m£m

Conclusion...Conclusion...

Asset GrowthOperating IncomeOperating ExpensesCredit QualityProfitabilityCapital StrengthRoE

Asset GrowthOperating IncomeOperating ExpensesCredit QualityProfitabilityCapital StrengthRoE

Andy HornbyAndy HornbyChief Executive, RetailChief Executive, Retail

More Profitable GrowthMore Profitable Growth

Net interest income up 7% despite yield curve

Non-interest income up 21%

Net interest margin down just 4 bps on H2 2003

Operating costs up only 0.2%

Cost:income Ratio down from 49.3% to 45.1%

Net interest income up 7% despite yield curve

Non-interest income up 21%

Net interest margin down just 4 bps on H2 2003

Operating costs up only 0.2%

Cost:income Ratio down from 49.3% to 45.1%

Strong “Jaws”Strong “Jaws”

IncomeIncome CostsCosts “JAWS”“JAWS”

+9.7%+9.7%

+0.2%+0.2%

+9.5%+9.5%

Volume Growth Still StrongVolume Growth Still Strong

Net mortgage lending share of 17%

560,000 new bank accounts

770,000 new credit cards

£6.1bn growth in savings/banking balances

Net mortgage lending share of 17%

560,000 new bank accounts

770,000 new credit cards

£6.1bn growth in savings/banking balances

Margins Robust Despite LIBOR Related Funding PressuresMargins Robust Despite LIBOR Related Funding Pressures

Movement in MarginMovement in Margin Basis PointsBasis Points

Net Interest Margin for H2 ended Dec 2003 186

Mortgages/Savings 2Banking 5Personal Lending (3Credit Cards (2

Product Spreads 2Wholesale Funding (5Capital Earnings (1

Total (4Net Interest Margin for H1 ended June 2004 182

Net Interest Margin for H2 ended Dec 2003 186

Mortgages/Savings 2Banking 5Personal Lending (3Credit Cards (2

Product Spreads 2Wholesale Funding (5Capital Earnings (1

Total (4Net Interest Margin for H1 ended June 2004 182

))

))

)

))

))

)

Strong Momentum in Non-Interest IncomeStrong Momentum in Non-Interest Income

Non-Interest Income up 21%

Strong fee growth in all product categories– mortgages, banking, credit cards

Fee Income benefiting from 3 years of book growth in current accounts and cards

Strong trends will continue into 2005

Non-Interest Income up 21%

Strong fee growth in all product categories– mortgages, banking, credit cards

Fee Income benefiting from 3 years of book growth in current accounts and cards

Strong trends will continue into 2005

A Prudent Approach to CreditA Prudent Approach to Credit

NPAs up marginally to 1.88% (Dec 2003 1.81%)

NPA provisions cover stable at 40% (Dec 2003 40%)

Net mortgage lending share reduced to 17% (2003 25%)

Average mortgage book LTV 42% (Dec 2003 43%)

Only 7.7% of mortgage book above 85% LTV

Personal loan NPAs up to 12.5% but recent delinquency rates improving

Credit card NPAs stable at 9.2% and lead indicators strong

NPAs up marginally to 1.88% (Dec 2003 1.81%)

NPA provisions cover stable at 40% (Dec 2003 40%)

Net mortgage lending share reduced to 17% (2003 25%)

Average mortgage book LTV 42% (Dec 2003 43%)

Only 7.7% of mortgage book above 85% LTV

Personal loan NPAs up to 12.5% but recent delinquency rates improving

Credit card NPAs stable at 9.2% and lead indicators strong

Ruthless Cost ControlsRuthless Cost Controls

Costs up only 0.2% over H1 2003

Low cost scale IT systems drive productivity

Significant central cost reductions

Cost:income ratio 45.1% (H1 2003 49.3%)

3% cost target for 2004 will be beaten

Costs up only 0.2% over H1 2003

Low cost scale IT systems drive productivity

Significant central cost reductions

Cost:income ratio 45.1% (H1 2003 49.3%)

3% cost target for 2004 will be beaten

Retail Has Potential For Further Profitable GrowthRetail Has Potential For Further Profitable Growth

Long-term scope for 15%-20% share in all key markets

LIBOR related funding pressures should ease in 2005

Strong momentum in non-interest income

Further tightening of LTVs to protect asset quality

Rigorous cost control

Long-term scope for 15%-20% share in all key markets

LIBOR related funding pressures should ease in 2005

Strong momentum in non-interest income

Further tightening of LTVs to protect asset quality

Rigorous cost control

Further reductions in cost:income ratioFurther reductions in cost:income ratio

George MitchellGeorge MitchellChief Executive,

CorporateChief Executive,

Corporate

Corporate: PerformanceCorporate: Performance

6 Monthsto June 036 Monthsto June 03

Net Interest Income (£m) 730 671 +9%

Non-interest Income (£m) 676 543 +24%

Operating Income (£m) 1,406 1,214 +16%

Underlying Expenses* (£m) 325 311 +5%

Cost:income Ratio (%) 26.9 29.8

PBTE (£m) 667 514 +30%

Net Interest Income (£m) 730 671 +9%

Non-interest Income (£m) 676 543 +24%

Operating Income (£m) 1,406 1,214 +16%

Underlying Expenses* (£m) 325 311 +5%


PBTE (£m) 667 514 +30%


* Underlying expenses before exceptionals and operating lease depreciation* Underlying expenses before exceptionals and operating lease depreciation

Corporate: Volume and MarginCorporate: Volume and Margin

Lending Growth (annualised) 9%RWA Growth (annualised) 13%Deposits Growth (annualised) 12%

Lending Growth (annualised) 9%RWA Growth (annualised) 13%Deposits Growth (annualised) 12%

6 Months to June 046 Months to June 04

6 Monthsto Dec 036 Monthsto Dec 03

Net Interest Spread (bps) 170 166Net Interest Margin (bps) 192 191

Net Interest Spread (bps) 170 166Net Interest Margin (bps) 192 191


Corporate: Provisions ChargeCorporate: Provisions Charge

% of AverageAdvances

% of AverageAdvances

6 months to June 2003 232 0.35

6 months to December 2003 211 0.30



6 months to December 2003 211 0.30


£m£m

Corporate: Non Performing AssetsCorporate: Non Performing Assets

% of Advances% of Advances

As at June 2003 1,352 1.97As at December 2003 1,309 1.81As at June 2004 1,260 1.67

Provisions as a % of NPAs

As at June 2003 61%As at December 2003 65%As at June 2004 72%

As at June 2003 1,352 1.97As at December 2003 1,309 1.81As at June 2004 1,260 1.67

Provisions as a % of NPAs

As at June 2003 61%As at December 2003 65%As at June 2004 72%

£m£m

Treasury: PerformanceTreasury: Performance


Net Interest Income (£m) 85 84

Net Interest Margin (bps) 11 13

Non-interest Income (£m) 104 65

Expenses (£m) 52 40


PBTE (£m) 137 109

Net Interest Income (£m) 85 84

Net Interest Margin (bps) 11 13

Non-interest Income (£m) 104 65

Expenses (£m) 52 40


PBTE (£m) 137 109


Treasury: Credit QualityTreasury: Credit Quality

June 03 NILDecember 03 NILJune 04 NIL


Non performing assets as at:Non performing assets as at:



Provisions charge for 6 months to:Provisions charge for 6 months to:

OutlookOutlook

Controlled asset growth

Strong growth in non-interest income

Tightly controlled costs

Improving credit quality

All leading to improved returns

Controlled asset growth

Strong growth in non-interest income

Tightly controlled costs

Improving credit quality

All leading to improved returns

Colin MatthewColin MatthewChief Executive,

InternationalChief Executive,

International

H1 ResultsH1 Results

Profit Before Tax and Exceptional ItemsProfit Before Tax and Exceptional Items

June 2003June 2003June 2004June 2004

£118m£118m£149m£149m

%%

+26%+26%

Advances A$33.2bn (5% growth)

Deposits A$12.5bn (6% growth)

Net Interest Margin 2.07% (H2 03 2.17%)

Operating Income A$537m (12% increase)

Operating Expenses* A$251m (1.6% increase)

Cost:income 46.2% (H1 03 50.4%)

Provisions Charge A$30m (H1 03 A$46m)

PBTE A$258m (H1 03 A$191m)

Advances A$33.2bn (5% growth)

Deposits A$12.5bn (6% growth)


Operating Income A$537m (12% increase)

Operating Expenses* A$251m (1.6% increase)

Cost:income 46.2% (H1 03 50.4%)

Provisions Charge A$30m (H1 03 A$46m)

PBTE A$258m (H1 03 A$191m)

H1 2004 - AustraliaH1 2004 - Australia


H1 2004 - IrelandH1 2004 - Ireland

Advances €9.2bn (17% growth)

Deposits €5.3bn (21% growth)


Operating Income €129m (23% increase)

Operating Expenses* €55m (15.8% increase)

Cost:income 37.6% (H1 03 36.5%)

Provisions Charge €9m (H1 03 €11m)

PBTE €65m (H1 03 €58m)

Advances €9.2bn (17% growth)

Deposits €5.3bn (21% growth)


Operating Income €129m (23% increase)

Operating Expenses* €55m (15.8% increase)

Cost:income 37.6% (H1 03 36.5%)

Provisions Charge €9m (H1 03 €11m)

PBTE €65m (H1 03 €58m)


Objectives - AustraliaObjectives - Australia

Drive through integration of our four businesses

Ensure continuation of business as usual growth

Invest in and launch new initiatives across all our business lines

Firmly establish our brands in the Customer Champion space

Drive through integration of our four businesses

Ensure continuation of business as usual growth

Invest in and launch new initiatives across all our business lines

Firmly establish our brands in the Customer Champion space

Objectives - IrelandObjectives - Ireland

No. 1 Business Bank by 2005

Driver of change in switching, transparency and transmission

Expansion of retail franchise

No. 1 Business Bank by 2005

Driver of change in switching, transparency and transmission

Expansion of retail franchise

Phil HodkinsonPhil HodkinsonChief Executive,

Insurance & InvestmentChief Executive,


First Half ResultsFirst Half Results

ProfitsReported PBTE up 5% to £408mAdjusted* PBTE up 16% to £451m

– Insurance up 13% to £239m– Investment up 20% to £212m

SalesInsurance up 12% to £840m Investment up 5% to £634m (up 6% in UK)

ProfitsReported PBTE up 5% to £408mAdjusted* PBTE up 16% to £451m

– Insurance up 13% to £239m– Investment up 20% to £212m

SalesInsurance up 12% to £840m Investment up 5% to £634m (up 6% in UK)

* After adjusting for £43m household insurance underwriting impact* After adjusting for £43m household insurance underwriting impact

Household Insurance UnderwritingHousehold Insurance Underwriting

Market Presence17% growth in 1H 2004; 20% in 20038% market share … top 5 player in 2003“Best Direct Home and Contents Provider”*

Shareholder ReturnsLow cost distributionStrong underwriting and claims managementWeather event protection above £25m

Market Presence17% growth in 1H 2004; 20% in 20038% market share … top 5 player in 2003“Best Direct Home and Contents Provider”*

Shareholder ReturnsLow cost distributionStrong underwriting and claims managementWeather event protection above £25m

* Your Money Direct Awards* Your Money Direct Awards

Growth in Insurance BookGrowth in Insurance Book

0

2

4

6

8

10

2002 HY1 2002 HY2 2003 HY1 2003 HY2 2004 HY1

0

2

4

6

8

10

2002 HY1 2002 HY2 2003 HY1 2003 HY2 2004 HY1

RepaymentRepayment HouseholdHousehold MotorMotor OtherOther

Policies (millions)Policies (millions)

Insurance Business ProspectsInsurance Business Prospects

HouseholdStrong growth, up 17% with great opportunityto grow towards 15%+ market share

RepaymentAlready at 15% market share and holding up resiliently in face of slow growth in loans market

MotorStrong growth, up 36% and with First Alternative now on-stream, 10%+ share is achievable

HouseholdStrong growth, up 17% with great opportunityto grow towards 15%+ market share

RepaymentAlready at 15% market share and holding up resiliently in face of slow growth in loans market

MotorStrong growth, up 36% and with First Alternative now on-stream, 10%+ share is achievable

UK Investment Sales GrowthUK Investment Sales Growth

BancassuranceBancassurance UK IntermediaryUK Intermediary Wealth ManagementWealth Management

£m EPI£m EPI

0100

200300

400500600

2001HY1

2001HY2

2002HY1

2002HY2

2003HY1

2003HY2

2004HY1

0100

200300

400500600

2001HY1

2001HY2

2002HY1

2002HY2

2003HY1

2003HY2

2004HY1

0

10

20

30

40

Bancassurance Intermediary WealthManagement

Overall

0

10

20

30

40

Bancassurance Intermediary WealthManagement

Overall

New Business ProfitabilityNew Business Profitability

% EPI% EPI

20012001 20022002 2004200420032003

With Profits Products – “Not An Issue”With Profits Products – “Not An Issue”

Less than 3% of UK investment sales

Equity backing ratio is 55%, temporarily hedged whilst markets remain uncertain

Realistic balance sheet likely to be sameor slightly stronger than statutory position

Less than 3% of UK investment sales

Equity backing ratio is 55%, temporarily hedged whilst markets remain uncertain

Realistic balance sheet likely to be sameor slightly stronger than statutory position

Investment Business ProspectsInvestment Business Prospects

Wealth ManagementStrong recovery in HNW demand; partnership continues to go from strength to strength

IntermediaryOpportunity to optimise balance between market share and profitability from position of strength

BancassuranceContinues to perform; perfectly aligned with Treasury’s “stakeholder” product proposals

Wealth ManagementStrong recovery in HNW demand; partnership continues to go from strength to strength

IntermediaryOpportunity to optimise balance between market share and profitability from position of strength

BancassuranceContinues to perform; perfectly aligned with Treasury’s “stakeholder” product proposals

Stakeholder ProductsStakeholder Products

Treasury Proposals

1.5% p.a. maximum

No front end charges

No exit penalties

Balanced & smoothed investment funds

Simple, clear design

Basic advice process

Profitability = ?

Treasury Proposals

1.5% p.a. maximum


No exit penalties



Basic advice process

Profitability = ?

HBOS Bancassurance1.1% p.a. on average


No exit penalties



Full advice process

Profitability = 29% EPI

HBOS Bancassurance1.1% p.a. on average


No exit penalties



Full advice process

Profitability = 29% EPI

Profitable Momentum…Profitable Momentum…

Multi-brand … Halifax, Clerical Medical, Insight, esure, SJPC … with appeal to different markets

Multi-distribution … bancassurance, direct, intermediary and wealth management

Scale … a significant player in key markets with low cost access to customers and efficiency

Regulation … competitive barrier being turned to our advantage

Profitability … a focus on sustainable margins

Multi-brand … Halifax, Clerical Medical, Insight, esure, SJPC … with appeal to different markets

Multi-distribution … bancassurance, direct, intermediary and wealth management

Scale … a significant player in key markets with low cost access to customers and efficiency

Regulation … competitive barrier being turned to our advantage

Profitability … a focus on sustainable margins

2004 Interims… Key Themes2004 Interims… Key Themes

Earnings momentum

Measured growth

Improved efficiency

Stable credit


Earnings momentum

Measured growth

Improved efficiency

Stable credit


Questionsand

Answers

Questionsand

Answers

2004 interim results presentation - lloyds banking group€¦ · self funding double digit growth...

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