Financial Data and Key Metrics Changes - Statutory profit after tax for the first half was £2.5 billion, with a return on tangible equity of 14.1% [19] - Net income increased by 6% year-on-year to £8.9 billion, driven by growth in net interest income and a 9% increase in other operating income [20][37] - Operating costs for the first half were £4.9 billion, up 4% year-on-year, with a focus on efficiency [20][42] Business Line Data and Key Metrics Changes - Retail lending balances increased by £3.1 billion, with the mortgage book up £5.6 billion in the first half [22][29] - Commercial lending balances increased by £1.2 billion, driven by growth in the Corporate and Institutional Banking (CIB) business [32] - Other income grew by 9% year-on-year, supported by strong performance in retail and commercial banking [37] Market Data and Key Metrics Changes - Total deposits increased by £11.2 billion or 2% to £494 billion, with retail deposits up £3.7 billion [33] - The structural hedge notional increased to £244 billion, contributing significantly to income [36] - The mortgage market share of net new lending was 19% in the first half, reflecting strong underlying demand [29] Company Strategy and Development Direction - The company is focused on supporting the housing sector and has lent over £8 billion to first-time buyers [6] - Strategic initiatives are expected to deliver over £1.5 billion in additional revenues by 2026, with £1 billion already delivered on an annualized basis [13] - The company aims to maintain a cost-to-income ratio below 50% and generate over 200 basis points of capital by 2026 [14] Management's Comments on Operating Environment and Future Outlook - The UK economy is expected to show resilient but slower growth, with underlying fundamentals strengthening [8][10] - Management remains confident in delivering higher, sustainable returns and reaffirmed guidance for 2025 [5][56] - The company is well-positioned to benefit from government initiatives aimed at growth in key sectors [10] Other Important Information - The interim dividend was increased by 15% to 1.22p per share, reflecting strong capital generation [52] - The company plans to move to preliminary reporting for the full year 2025 results [54] Q&A Session Summary Question: Mortgage spreads and back-to-front book mortgage spread churn - Management indicated that mortgage spreads in Q2 were around 70 basis points, slightly tighter than Q1, and expected similar patterns to continue into Q3 [61][63] Question: Deposit flows and PCA outflows - Management confirmed that PCA outflows were down £700 million over the half, with strong ISA season performance contributing positively [62][68] Question: Structural hedge contribution and notional expectations - Management expects structural hedge contributions to be consistent with previous guidance, with a projected increase in notional balances [76][80] Question: FCA affordability changes and mortgage volume expectations - Management believes FCA changes will positively impact housing market prospects and expects continued mortgage growth in the second half [84][86]

Financial Data and Key Metrics Changes - Statutory profit after tax for the first half was £2.5 billion, with a return on tangible equity of 14.1% [16] - Net income increased by 6% year-on-year to £8.9 billion, driven by growth in net interest income and a 9% increase in other operating income [17] - Operating costs for the first half were £4.9 billion, up 4% year-on-year, in line with expectations [17] Business Line Data and Key Metrics Changes - Retail lending balances increased by £3.1 billion, with the mortgage book up £8 billion since March [19] - Commercial lending balances also saw growth, particularly in infrastructure and SPG lending [20] - Total deposits grew by £11.2 billion or 2% to £494 billion, with retail deposits up £3.7 billion [29] Market Data and Key Metrics Changes - The UK economy is forecasted to remain resilient but slower in growth, with household and business finances strengthening [6][8] - The government is focusing on growth through significant investments in high-potential sectors, which may benefit the banking sector [8] - The structural hedge notional increased to £244 billion, supporting income growth [31] Company Strategy and Development Direction - The company is focused on supporting the housing sector, having lent over £8 billion to first-time buyers in the first half [5] - Strategic initiatives are expected to deliver over £1.5 billion in additional revenues by 2026, with £1 billion already delivered on an annualized basis [11] - The company aims to maintain a cost-to-income ratio below 50% and generate over 200 basis points of capital by 2026 [12] Management's Comments on Operating Environment and Future Outlook - Management remains confident in delivering higher, sustainable returns and reaffirmed guidance for 2025 [3][15] - The economic environment is challenging but shows signs of improvement, with business confidence above long-term averages [7] - The company expects to grow faster than the wider economy by focusing on housing, transition finance, and infrastructure [9] Other Important Information - The interim dividend was increased by 15% to 1.22p per share, reflecting strong capital generation [47] - The company has undertaken significant share buyback programs, reducing the share count by approximately 16% since the end of 2021 [47] Q&A Session Summary Question: On mortgage spreads and back-to-front book mortgage spread churn - Management noted that mortgage spreads in Q2 were around 70 basis points, slightly tighter than Q1, and expect similar patterns to continue into Q3 [58][60] Question: On deposits and PCA outflows - Management confirmed that PCA outflows were down £700 million over the half, with strong ISA season performance contributing to overall deposit growth [63][64] Question: On structural hedge contribution and mortgage volume expectations - Management indicated that structural hedge contributions are expected to be £1.2 billion higher in 2025 than in 2024, with confidence in the hedge increasing due to locked-in volumes [73][76] - The FCA affordability changes are expected to positively impact housing market prospects and mortgage volumes [78][80] Question: On non-banking NII headwind and commercial deposit growth - Management stated that non-banking net interest income trends are stable, with no alarming changes expected [88] - Commercial deposit growth is driven by targeted sectors, with some uncertainty expected to reverse in the coming periods [86]

Financial Performance - Lloyds Banking Group's H1 2025 net income increased by 6% YoY to £8.914 billion[6, 26] - The group's underlying profit before impairment reached £4.003 billion, an 11% increase YoY[26] - The company's statutory profit after tax was £2.544 billion, with a return on tangible equity (RoTE) of 14.1%[26, 82] - The group's net interest income (NII) for H1 2025 was £6.7 billion, a 5% increase YoY[37] Lending and Deposits - Lending increased by 3% YTD, with total lending at £471.0 billion in Q2 2025, up £4.8 billion or 1% QoQ[6, 31] - Deposits increased by 2% YTD, with total deposits at £493.9 billion in Q2 2025, up £6.2 billion or 1% QoQ[6, 31] - The company provided over £8 billion in lending to first-time buyers in H1 2025[6] Capital and Efficiency - The group's capital generation was strong at 86bps in H1 2025[6] - The pro forma CET1 ratio was 13.8%[26, 27] - The company achieved gross cost savings of approximately £1.5 billion compared to 2021, with around £300 million in H1 2025[17] Strategic Initiatives and Outlook - The company expects approximately £1.2 billion higher hedge income in 2025 compared to 2024, and approximately £1.5 billion higher in 2026 compared to 2025[58] - The group reaffirms its 2025 guidance, including net interest income of approximately £13.5 billion and an asset quality ratio of approximately 25bps[5, 38, 97] - The company is targeting over £1.5 billion of additional revenues from strategic initiatives by 2026[16]

Core Viewpoint - Investors are evaluating the value propositions of Lloyds (LYG) and DBS Group Holdings Ltd (DBSDY) to determine which stock offers better value at present [1]. Valuation Metrics - Both LYG and DBSDY currently hold a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions and improving earnings outlooks [3]. - LYG has a forward P/E ratio of 10.49, while DBSDY has a forward P/E of 12.12, suggesting LYG may be undervalued compared to DBSDY [5]. - The PEG ratio for LYG is 0.86, indicating a favorable valuation when considering expected EPS growth, whereas DBSDY has a significantly higher PEG ratio of 7.72 [5]. - LYG's P/B ratio stands at 1.03, compared to DBSDY's P/B of 1.98, further supporting LYG's position as a more attractive value option [6]. Value Grades - LYG has a Value grade of B, while DBSDY has a Value grade of D, indicating that LYG is perceived as a superior value investment based on the analyzed metrics [6].

Group 1 - The US equity market has experienced a generational run compared to global equities, indicating strong performance in the domestic market [1] - PropNotes focuses on identifying high-yield investment opportunities for individual investors, simplifying complex concepts and providing actionable insights [1] - The analysis produced by PropNotes aims to assist investors in making informed decisions backed by expert research [1]

Core Viewpoint - The article compares Lloyds (LYG) and ICICI Bank Limited (IBN) to determine which stock is more attractive to value investors, highlighting the importance of various valuation metrics and Zacks Rank in the analysis [1][3]. Group 1: Zacks Rank and Earnings Outlook - Lloyds currently has a Zacks Rank of 2 (Buy), indicating a positive earnings estimate revision trend, while ICICI Bank has a Zacks Rank of 3 (Hold) [3]. - The improving earnings outlook for Lloyds makes it stand out in the Zacks Rank model, suggesting it may be the superior value option [7]. Group 2: Valuation Metrics - Lloyds has a forward P/E ratio of 11.73, significantly lower than ICICI Bank's forward P/E of 19.36, indicating that Lloyds may be undervalued [5]. - The PEG ratio for Lloyds is 0.96, while ICICI Bank's PEG ratio is 2.08, further suggesting that Lloyds offers better value relative to its expected earnings growth [5]. - Lloyds has a P/B ratio of 0.97 compared to ICICI Bank's P/B of 2.97, reinforcing the notion that Lloyds is more attractively priced based on its book value [6]. - These metrics contribute to Lloyds receiving a Value grade of B, while ICICI Bank has a Value grade of C [6].

Group 1 - Lloyds Banking Group has performed well year-to-date, despite tariff turmoil affecting the broader European financial sector [1] - The shares have returned significantly, indicating strong performance in the market [1] - The investment strategy focuses on a long-term, buy-and-hold approach, particularly in high-quality earnings stocks, often found in the dividend and income section [1] Group 2 - The article expresses a beneficial long position in Lloyds Banking Group shares, indicating confidence in the stock's future performance [2] - The author emphasizes that the opinions presented are personal and not influenced by external compensation [2]

[Q1 2025 Performance Overview](index=2&type=section&id=Q1%202025%20Results) [Financial Highlights and 2025 Guidance](index=2&type=section&id=Sustained%20strength%20in%20financial%20performance) Lloyds Banking Group reported strong Q1 2025 financial performance with £1.1 billion profit after tax and reaffirmed 2025 guidance Q1 2025 Key Performance Indicators | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Statutory Profit After Tax | £1.1bn | £1.2bn | -8.3% | | Net Income | £4.4bn | £4.2bn | +4% | | Underlying Net Interest Income | £3.3bn | £3.2bn | +3% | | Banking Net Interest Margin | 3.03% | 2.95% | +8 bps | | Return on Tangible Equity | 12.6% | 13.3% | -0.7 pp | | Underlying Impairment Charge | £309m | £57m | +442% | | CET1 Ratio | 13.5% | 13.9% | -0.4 pp | Reaffirmed 2025 Full-Year Guidance | Metric | 2025 Guidance | | :--- | :--- | | Underlying Net Interest Income | c.£13.5 billion | | Operating Costs | c.£9.7 billion | | Asset Quality Ratio | c.25 basis points | | Return on Tangible Equity | c.13.5% | | Capital Generation | c.175 basis points | - The Group achieved strong growth in lending and deposits, with underlying loans and advances increasing by **£7.1 billion** and customer deposits by **£5.0 billion** during the quarter[8](index=8&type=chunk) [Underlying Financial Statements Summary](index=3&type=section&id=INCOME%20STATEMENT%20%28UNDERLYING%20BASIS%29A%20AND%20KEY%20BALANCE%20SHEET%20METRICS) Underlying profit decreased 13% year-on-year to £1,532 million, impacted by higher impairment and costs, despite net income growth Q1 2025 Underlying Income Statement vs. Prior Periods (£m) | Metric | Q1 2025 | Q1 2024 | YoY Change | Q4 2024 | QoQ Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Underlying Net Interest Income | 3,294 | 3,184 | +3% | 3,276 | +1% | | Net Income | 4,391 | 4,241 | +4% | 4,378 | 0% | | Operating Costs | (2,550) | (2,402) | +6% | (2,450) | +4% | | Underlying Impairment Charge | (309) | (57) | +442% | (160) | +93% | | Underlying Profit | 1,532 | 1,757 | -13% | 993 | +54% | | Statutory Profit After Tax | 1,134 | 1,215 | -7% | 700 | +62% | Key Ratios and Balance Sheet Metrics | Metric | Q1 2025 | Q1 2024 | Q4 2024 | | :--- | :--- | :--- | :--- | | Banking Net Interest Margin | 3.03% | 2.95% | 2.97% | | Cost:Income Ratio | 58.1% | 57.2% | 73.7% | | Return on Tangible Equity | 12.6% | 13.3% | 7.1% | | Underlying Loans and Advances | £466.2bn | £448.5bn | £459.1bn | | Customer Deposits | £487.7bn | £469.2bn | £482.7bn | | CET1 Ratio | 13.5% | 13.9% | 14.2% | [Quarterly Financial Trends](index=5&type=section&id=QUARTERLY%20INFORMATIONA) Quarterly trends show stable net income, rising costs, increased impairment, and an improving banking net interest margin Key Metrics Trend (Last 5 Quarters) | Metric | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Income (£m) | 4,391 | 4,378 | 4,346 | 4,152 | 4,241 | | Underlying Profit (£m) | 1,532 | 993 | 1,853 | 1,740 | 1,757 | | Banking NIM | 3.03% | 2.97% | 2.95% | 2.93% | 2.95% | | Asset Quality Ratio | 0.27% | 0.14% | 0.15% | 0.05% | 0.06% | | CET1 Ratio | 13.5% | 14.2% | 14.3% | 14.1% | 13.9% | [Detailed Performance and Balance Sheet Review](index=7&type=section&id=REVIEW%20OF%20PERFORMANCEA) [Balance Sheet Analysis](index=7&type=section&id=BALANCE%20SHEET%20ANALYSIS) Balance sheet expanded with total assets at £909.9 billion, driven by growth in loans (£466.2 billion) and deposits Loan and Deposit Portfolio Breakdown (£bn) | Category | 31 Mar 2025 | 31 Dec 2024 | Quarterly Change | | :--- | :--- | :--- | :--- | | **Loans and Advances** | | | | | UK mortgages | 317.1 | 312.3 | +1.5% | | Credit cards | 15.9 | 15.7 | +1.3% | | Corporate & Institutional | 58.5 | 57.9 | +1.0% | | **Total Underlying Loans** | **466.2** | **459.1** | **+1.5%** | | **Deposits** | | | | | Retail current accounts | 102.5 | 101.3 | +1.2% | | Retail savings accounts | 210.1 | 208.2 | +0.9% | | Commercial Banking | 164.9 | 162.6 | +1.4% | | **Total Customer Deposits** | **487.7** | **482.7** | **+1.0%** | [Income Statement Analysis](index=11&type=section&id=Income%20statementA) Net income increased 4% year-on-year to £4,391 million, driven by growth in net interest income and other income - Underlying net interest income (NII) grew **3% YoY** to **£3,294 million**, supported by an improved banking net interest margin of **3.03%** (up **8 bps YoY**) and higher average interest-earning assets[29](index=29&type=chunk) - The sterling structural hedge contributed **£1.2 billion** to total income in Q1 2025, an increase from **£1.0 billion** in Q1 2024. The Group expects the hedge to contribute **£1.2 billion** more in 2025 than in 2024[31](index=31&type=chunk) - Underlying other income increased **8% YoY** to **£1,452 million**, driven by a **16%** rise in Retail (primarily UK Motor Finance) and an **8%** increase in Insurance, Pensions and Investments[32](index=32&type=chunk) - Operating lease depreciation increased to **£355 million** from **£283 million** in Q1 2024, attributed to fleet growth, higher value vehicles, and declines in used electric car prices[33](index=33&type=chunk) [Costs, Asset Quality, and Capital](index=12&type=section&id=REVIEW%20OF%20PERFORMANCE%20%28continued%29) Operating costs rose 6% to £2,550 million, impairment increased, and the CET1 ratio remained strong at 13.5% - Operating costs increased **6% YoY**, driven by inflation and planned higher severance costs front-loaded into Q1. The cost:income ratio was **58.1%**[34](index=34&type=chunk)[36](index=36&type=chunk) - No new remediation charges were recognized in Q1 2025. The Group awaits a Supreme Court judgment in July regarding motor finance commission arrangements, which will inform the FCA's next steps[35](index=35&type=chunk) - The underlying impairment charge was **£309 million** (Asset Quality Ratio of **27 bps**), which included a **£100 million** central adjustment to address downside risks related to potential US tariff policies[37](index=37&type=chunk) - The CET1 ratio was **13.5%**, with **27 basis points** of capital generated during the quarter. Risk-weighted assets (RWAs) increased by **£5.5 billion** to **£230.1 billion**, partly due to a temporary **£2.5 billion** increase from hedging activity[45](index=45&type=chunk)[46](index=46&type=chunk) [Risk, Capital, and Economic Outlook](index=14&type=section&id=ADDITIONAL%20INFORMATION) [Credit Risk and Impairment Details](index=14&type=section&id=Underlying%20impairmentA) Q1 2025 impairment charge was £309 million, including a £100 million central adjustment for tariff risks Underlying Impairment Charge Breakdown (£m) | Component | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Charges pre-updated MES | 274 | 249 | | Updated economic outlook (MES) | 35 | (192) | | **Underlying impairment charge** | **309** | **57** | Loans and ECL Allowance by Stage (31 Mar 2025) | Category | Stage 1 | Stage 2 | Stage 3 | Total | | :--- | :--- | :--- | :--- | :--- | | **Gross Lending (£m)** | 413,103 | 47,307 | 9,251 | 469,661 | | *% of Total* | *87.9%* | *10.1%* | *2.0%* | *100%* | | **ECL Allowance (£m)** | 902 | 1,344 | 1,477 | 3,723 | - The ECL allowance includes a **£100 million** central adjustment to address downside risks from potential US tariff policies, which were not fully captured in the standard models[37](index=37&type=chunk)[56](index=56&type=chunk)[62](index=62&type=chunk) [Economic Assumptions and Scenarios](index=17&type=section&id=Base%20case%20and%20MES%20economic%20assumptions) UK base case anticipates slow GDP growth, rising unemployment, and gradual rate cuts, with a £100 million ECL adjustment for tariff risks UK Economic Assumptions - Base Case Scenario (2025) | Metric | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | | :--- | :--- | :--- | :--- | :--- | | GDP Growth (QoQ) | 0.2% | 0.2% | 0.3% | 0.3% | | Unemployment Rate (end of Q) | 4.6% | 4.7% | 4.8% | 4.8% | | House Price Growth (YoY) | 3.8% | 3.8% | 2.4% | 1.7% | | UK Bank Rate (end of Q) | 4.50% | 4.25% | 4.00% | 4.00% | | CPI Inflation (YoY) | 2.8% | 3.6% | 3.6% | 3.5% | - The Group's base case assumes a slow economic expansion, with risks largely captured through alternative scenarios (upside, downside, severe downside)[60](index=60&type=chunk) - A **£100 million** central adjustment was made to reflect potential ECL impact from US tariff announcements in early April, as these were deemed not fully captured in the quarter-end models[62](index=62&type=chunk) [Supplementary and Statutory Information](index=9&type=section&id=Supplementary%20Information) [Statutory Results](index=9&type=section&id=GROUP%20RESULTS%20%E2%80%93%20STATUTORY%20BASIS) Statutory profit before tax decreased 7% to £1,517 million due to higher expenses and impairment, despite income growth Statutory Income Statement Summary (£m) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | 3,204 | 3,045 | +5% | | Total Income | 4,695 | 4,387 | +7% | | Operating Expenses | (2,868) | (2,703) | +6% | | Impairment Charge | (310) | (56) | +454% | | Profit Before Tax | 1,517 | 1,628 | -7% | | Profit After Tax | 1,134 | 1,215 | -7% | | Basic Earnings Per Share | 1.7p | 1.7p | 0% | [Alternative Performance Measures (APMs)](index=19&type=section&id=ALTERNATIVE%20PERFORMANCE%20MEASURES) This section reconciles key non-statutory metrics, including banking net interest margin and return on tangible equity Banking Net Interest Margin (NIM) Reconciliation | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Banking Underlying Net Interest Income (£m) | 3,406 | 3,289 | | Average Interest-Earning Banking Assets (£bn) | 455.5 | 449.1 | | **Banking Net Interest Margin** | **3.03%** | **2.95%** | Return on Tangible Equity (RoTE) Reconciliation | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Profit Attributable to Ordinary Shareholders (£m) | 1,006 | 1,069 | | Average Tangible Equity (£bn) | 32.3 | 32.4 | | **Return on Tangible Equity** | **12.6%** | **13.3%** |

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, with the aim of buying high and selling higher, capitalizing on established price movements [1] Company Summary: Lloyds (LYG) - Lloyds currently holds a Momentum Style Score of B, indicating a positive momentum characteristic [2] - The stock has a Zacks Rank of 2 (Buy), suggesting it is expected to outperform the market [3] - Over the past week, Lloyds shares increased by 4.74%, outperforming the Zacks Banks - Foreign industry, which rose by 3.96% [5] - In the last quarter, Lloyds shares rose by 26.54%, and over the past year, they increased by 55.16%, while the S&P 500 experienced declines of -9.81% and a modest gain of 9.65% respectively [6] - The average 20-day trading volume for Lloyds is 32,956,570 shares, indicating strong trading activity [7] Earnings Outlook - In the past two months, three earnings estimates for Lloyds have been revised upwards, with no downward revisions, leading to an increase in the consensus estimate from $0.27 to $0.37 [9] - For the next fiscal year, three estimates have also moved upwards, reflecting a positive earnings outlook [9] Conclusion - Considering the positive momentum indicators and earnings outlook, Lloyds is positioned as a 2 (Buy) stock with a Momentum Score of B, making it a potential candidate for near-term investment [10][11]

Core Insights - Unisys has partnered with Thought Machine to deliver end-to-end core and branch banking solutions that enhance technology-first strategies for banks [1][2] - The integrated solution combines Unisys's advanced branch technology with Thought Machine's Vault Core platform, utilizing AI and advanced security features to improve service quality [2][3] - The collaboration aims to transform branch banking into a more efficient, secure, and customer-centric experience, referred to as "branch banking 2.0" [3] Company Overview - Thought Machine is recognized for its cloud-native core banking and payments technology, with its Vault Core platform being utilized by major banks globally [5] - Unisys is a global technology solutions provider that offers a range of services including cloud, AI, and enterprise computing, aimed at helping organizations unlock their potential [6]