Delivery of 2011 strategic priorities has transformed the business; strategy updated in October
· Group has been reshaped with Run-off assets reduced to £16.9 billion (2013: £33.3 billion) and international presence reduced to six countries from 30 countries in 2010
· Strong balance sheet and liquidity position attained with, post dividend, a CET1 ratio of 12.8 per cent, a total capital ratio of 22.0 per cent and a leverage ratio of 4.9 per cent
· Cost leadership position achieved with cost:income ratio of 51 per cent
· Lending and deposit growth in key customer segments and relationship brands
· Strategy updated in October with focus on creating the best customer experience, becoming simpler and more efficient and delivering sustainable growth
Continue to support customers and the UK economy
· £11.9 billion of mortgage lending to over 89,000 first-time buyers and continued growth in SME lending, up 5 per cent
· Continued to support our communities with over 2,200 apprenticeship positions and over 940,000 paid volunteer hours
Substantial increase in underlying profit and returns
· Underlying profit increased 26 per cent to £7.8 billion (2013: £6.2 billion)
· Return on risk-weighted assets increased to 3.02 per cent (2013: 2.14 per cent)
· Income of £18.4 billion, up 1 per cent excluding St. James's Place effects in 2013
- Net interest income up 8 per cent, driven by margin improvement to 2.45 per cent
- Other income down 9 per cent reflecting disposals and a challenging operating environment
· Costs down 2 per cent to £9.4 billion (cost base of £9.0 billion excluding TSB)
· Impairment charge reduced 60 per cent to £1.2 billion; asset quality ratio improved 33 basis points to 0.24 per cent
Statutory profit before tax of £1.8 billion (2013: £0.4 billion) despite legacy items
· £2.2 billion provision for PPI in the year (2013: £3.1 billion) and a £0.9 billion provision for other regulatory items
· Statutory profit after tax of £1.5 billion (2013: loss of £0.8 billion)
· Tangible net assets per share increased to 54.9p (31 Dec 2013: 48.5p)
Guidance reflects confidence in the future
· 2015 full year net interest margin expected to be around 2.55 per cent
· 2015 full year asset quality ratio expected to be around 30 basis points
· Expect other income to be broadly stable in 2015
· Targeting cost:income ratio to exit 2017 at around 45 per cent, with reductions in each year
· Expect to generate between 1.5 and 2 percentage points of common equity tier 1 per annum (pre dividend)
· Expected return on required equity of 13.5-15 per cent by the end of the strategic plan period (2017)
Dividend
· Recommending a dividend of 0.75 pence per share in respect of 2014, amounting to £535 million
