Lloyds Banking Group (LYG) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 26, 2023 4:30 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Thank you for standing by. And welcome to the Lloyds Banking Group 2023 Half Year Results Call. At this time, all participants are in a listen-only mode. There will be presentations from Charlie Nunn; and William Chalmers followed by a question-and-answer session. [Operator Instructions]

Please note, this call is scheduled for 90 minutes and is being recorded. I will now hand over to Charlie Nunn. Please go ahead.

Charlie Nunn

Thank you, and good morning, everyone. And thank you for joining our 2023 half year results presentation. Another dynamic media morning for us to do our results. I’ll begin with a short overview of the Group’s financial and strategic performance. I’ll also highlight some of the actions that we’re taking to support customers given the ongoing changes in the macroeconomic environment. William will then provide the usual detail on our financials. And following a brief summary, we’ll take your questions.

Let me begin on slide three. The external environment continues to change significantly with persistently high inflation and higher-than-anticipated interest rates. Against this backdrop, I’d like to take away four key points from the presentation today.

Firstly, uncertainty for our customers has increased given the changes in the external environment. To this end, we once again stepped up our support for customers, especially for those most in need. I’ll discuss specific actions we’ll be taken shortly.

Secondly, in line with our guidance, our Q2 profits and net interest margin have stepped down versus our first quarter. This is due to the continued low margins on mortgages, as well as passing on more to our savings customers. However, the Group is performing well and our financial performance remains robust. As you’ll hear later in the presentation, we’ve either reconfirmed or slightly enhanced our guidance for 2023.

Thirdly, we’re making good progress on delivering our strategy. We remain on track to deliver the strategic benefits we laid out in February of last year for both 2024 and 2026. This is despite a more challenging environment, and as a result, slower growth in AIEAs. Our performance in other income in the first half shows positive business momentum and is an example of the progress we’re making.

And finally, as we look ahead, our capital position and financial strength, together with our prudent approach to risk positions us well. Regardless of future uncertainties, we are well placed to support our customers, safeguard deposits, support the U.K. economy and continue to deliver for our shareholders.