Lloyds Banking Group (LLOY) investor relations material

Macroeconomic and sector outlook

• U.K. households and businesses have shown strong resilience despite political and economic volatility over the past five years.

• Business cash flows remain stable, though investment has slowed; confidence has slightly strengthened over the summer.

• The outlook is for 1%-2% real GDP growth over the next few years, with continued resilience but not rapid expansion.

• Policy frameworks encouraging investment could unlock higher growth, but current expectations remain cautious.

Strategic plan and growth ambitions

• The group has completed a phase focused on de-risking, cost efficiency, and market share gains, enabling further investment.

• Ambitions include maintaining leadership in retail and SME segments, deepening customer relationships, and launching new businesses such as connected commerce and digital assets.

• Plans call for mid-single digit revenue growth and high single-digit other operating income growth over the next four years.

• Assumptions include a 3.5% terminal rate for reinvestment and tight margins due to competition; faster AI adoption could provide upside.

• Committed to a cost-income ratio below 45% by 2030, with significant capital generation and sustainability.

Mortgage and deposit market trends

• Mortgage demand remains resilient, with stable volumes and margins, though growth is slower than last year.

• Direct-to-customer mortgage applications are increasing, enabling better cross-sell and customer experience, while broker channels remain important.

• AI and digital assets are expected to further streamline mortgage processes in the next decade.

• Deposit competition has intensified due to macro factors and aggressive pricing by competitors; focus remains on growing current account market share and innovating product offerings.

• The group avoids chasing market share at the expense of returns, prioritizing sustainable growth.