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Lloyds Banking Group unable to pay dividend at 2013 interim stage

Investment Tools Ltd.
Lloyds Banking Group  unable to pay dividend at 2013 interim stage

RESULTS SUMMARY

Substantial increase in Group underlying profit and return to statutory profit

Group underlying profit of £2,902 million (half-year to 30 June 2012: £1,044 million).

Statutory profit before tax of £2,134 million (half-year to 30 June 2012: £456 million loss).

Group return on risk-weighted assets increased from 0.61 per cent to 1.95 per cent.

Total underlying income of £9,464 million, up 2 per cent; decreased 2 per cent excluding St. James's Place effects.

Group net interest margin increased to 2.01 per cent, ahead of guidance.

Costs further reduced by 6 per cent to £4,749 million; Simplification run-rate savings increased to £1,160 million.

43 per cent reduction in impairment charge to £1,813 million (half-year to 30 June 2012: £3,157 million).

Core returns further improved and increased core underlying profit

Core underlying profit increased by 26 per cent to £3,696 million (half-year to 30 June 2012: £2,931 million).

Return on risk-weighted assets increased from 2.44 per cent to 3.16 per cent.

Core underlying income of £9,071 million, up 6 per cent; increased 1 per cent excluding St. James's Place effects.

Loans and advances increased by £3.0 billion or 1 per cent in the first half of 2013.

Net interest margin of 2.39 per cent improved by 7 basis points.

4 per cent reduction in core costs to £4,468 million (half-year to 30 June 2012: £4,667 million).

Strong balance sheet; continue to de-risk and strengthen balance sheet and capital position

Fully loaded core tier 1 ratio significantly improved at 9.6 per cent, after legacy charges of £575 million, driven by underlying capital generation, capital accretive non-core reduction and management actions.

Core tier 1 capital ratio increased to 13.7 per cent (31 December 2012: 12.0 per cent).

Tier 1 leverage ratio of 4.2 per cent (31 December 2012: 3.8 per cent).

Continued capital-accretive non-core asset reduction of £17 billion on a constant currency basis, £16 billion after currency effects. Non-core assets now £83 billion, including non-retail assets of £36 billion.

Ahead of target in reducing our international presence with 17 countries or overseas branches now exited, or exit announced; now targeting a presence in less than 10 countries by end 2014.

Core loan to deposit ratio of 100 per cent; Group loan to deposit ratio of 117 per cent; deposit growth of 2 per cent in the half-year.

Supporting customers and the UK economic recovery

Commercial Banking core loan book returned to growth (4 per cent growth in the half-year).

Positive SME net lending growth of 5 per cent in the last twelve months, against market contraction of 3 per cent.

Over £1 billion committed to manufacturing in the last nine months; original £1 billion target achieved three months early.

Supported over 33,000 first-time buyers in the first half of 2013; committed to helping around 60,000 in 2013.

TSB returning to the high street in September; IPO preparation progressing.

Enhanced guidance reflects continued strong performance and business momentum

Expect a Group net interest margin of close to 2.10 per cent for full year 2013.

Expect to reach our non-core assets target of less than £70 billion by the end of 2013, 12 months ahead of plan, and to cease reporting non-core separately after full year 2013 results.

Non-retail non-core assets expected to be less than £30 billion at end 2013, and less than £20 billion at end 2014.

As guided in the first quarter results, now expect total costs to be around £9.6 billion in 2013, £200 million lower than previous guidance, and around £9.15 billion in 2014, assuming Verde IPO in mid 2014.

Targeting an estimated pro forma fully loaded CRD IV core tier 1 ratio of above 10 per cent by end of 2013, a year ahead of previous guidance.

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