Elisabeth Rudman
Managing Director,
Head of EU FIG, Global FIG
+44 20 7855 6655
[email protected]
Commentary
Vitaline Yeterian
Vice President,
Global FIG
+44 20 7855 6623
[email protected]
Alan G. Reid
Group Managing Director,
Financial Institutions & Sovereign Group
+1 212 806 3232
[email protected]
DBRS: Lloyds 1Q16: Profit Down on One-off Charges; Underlying Profits Stable
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1Q16 Statutory Profit before Tax (PBT) was down 46% Year-on-Year (YoY) to GBP 654 million, largely due to a GBP 790 million charge related to the redemption of
Enhanced Capital Notes (ECNs) following a write off of the embedded derivative and premium paid on redemption of remaining notes.
On an underlying basis (and excluding TSB), PBT was flat. This reflected total income down 1% YoY with some similar trends to previous quarters: Net Interest Income
was up 3% benefitting from deposit pricing and mix, lower wholesale funding costs and ECN redemption, whereas Other Income fell 7% on lower insurance income and
pressure on fees and commissions. Meanwhile underlying costs were down 2% YoY.
Lloyds reported no additional PPI (Payment Protection Insurance) charges in 1Q16, with complaint levels in line with expectations, but a further GBP 115 million retail
conduct charges were booked.
Asset quality remained strong with NPL ratio of 2.0% and asset quality ratio of 14 bps (reflecting 22 bps gross charge and 8 bps releases/ writebacks).
Capital remained solid with the fully loaded CET1 ratio at 12.8% (including 0.2% impact of dividend accrual and 0.4% impact of ECNs) and leverage ratio at 4.7%.
4Q15
3Q15
2Q15
1Q15
IBPT/RWAs
1.4%
-2.2%
Lloyds Banking
Group plc
-0.1%
5.3%
-0.1%
Lloyds Banking
Group plc
1.8%
NPL Ratio
2.0%
16.5%
2.1%
0.4%
17.1%
Cost-to-income Ratio
76.7%
249.8%
105.9%
44.8%
Net Loans-to-Deposits Ratio
109.0%
197.0%
108.8%
CET1 Ratio
12.8%
10.1%
13.0%
1Q16
Table Key
Peer Low
Within 10% of Peer High
Peer High
Peer Low
5.3%
0.0%
Lloyds Banking
Group plc
0.0%
2.1%
0.4%
16.9%
101.7%
74.2%
42.0%
94.4%
193.0%
108.9%
24.1%
9.8%
13.7%
Peer High
Peer Low
Between 11% and 25%
Peer Group:
Peer High
Peer Low
5.2%
1.6%
Lloyds Banking
Group plc
2.3%
2.7%
0.3%
16.8%
2.8%
0.4%
100.1%
100.1%
43.0%
83.4%
70.1%
43.7%
71.8%
190.7%
108.6%
71.0%
194.1%
108.6%
68.9%
23.0%
9.8%
13.3%
22.4%
9.7%
13.4%
20.5%
Between 26% and 50%
Between 51% and 75%
Between 76% and 90%
A-Range European Banks
Banco Santander SA, CaixaBank, S.A., Banco Bilbao Vizcaya Argentaria, S.A., ING Bank N.V., ABN AMRO Group N.V., Barclays PLC, Lloyds Banking Group plc, Groupe Crédit
Agricole, Société Générale, S.A., KBC Group N.V., Intesa Sanpaolo SpA, Deutsche Bank AG, Skandinaviska Enskilda Banken AB, Swedbank AB (publ), Credit Suisse AG, UBS AG,
Danske Bank A/S
Current DBRS Ratings: Lloyds Banking Group plc
Issuer and Long-Term Debt
A
Stable
Mandatory Pay Subordinated Debt
A (low)
Stable
Peer High
5.1%
Between 91% and 100%
Lloyds 1Q16: Profit Down on One-off Charges; Underlying Profits Stable
Footnotes:
IBPT/RWAs:
NPL Ratio:
Cost-to-income ratio:
Net Loans-to-Deposits Ratio:
CET1 Ratio:
Peer Group:
DBRS.COM
Income before provisions and taxes / avg. risk-weighted-assets under Basel III
Non-performing loans / Total gross loans
Total operating expenses / total gross operating income
Net loans exclusing repos / deposits excluding repos (when available)
Fully loaded Basel III Common Equity Tier 1 (or transitional if not available)
Excludes banks that do not report on a quarterly basis
Notes:
All figures are in GBP unless otherwise noted.
Sources: Company Documents and SNL Financial
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April 29, 2016