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.
