Financial Performance - The company reported a statutory profit after tax of GBP 3.3 billion for the first nine months of the year, with a return on tangible equity (ROTE) of 11.9% [5][6] - Excluding the motor provision, ROTE was 14.6%, and the company expects ROTE for the full year to be around 12% or approximately 14% excluding motor [6][18] - Year-to-date net income reached GBP 13.6 billion, a 6% increase compared to the previous year, driven by growth in net interest income and a 9% rise in other operating income [6][10] Business Line Performance - Group lending balances increased to GBP 477 billion, up GBP 18 billion or 4% year-to-date, with retail lending growing by GBP 5.1 billion [8][9] - Year-to-date deposits grew by GBP 14 billion or 3%, with a quarter-on-quarter increase of GBP 2.8 billion in Q3 [9][10] - Other operating income for the year-to-date was GBP 4.5 billion, up 9% year-on-year, with Q3 OOI at GBP 1.6 billion, reflecting growth in motor and investments [11][12] Market Data - The company maintained a net interest margin of 3.06% in Q3, with expectations for continued growth in net interest income for the full year to be around GBP 13.6 billion [6][10] - The asset quality ratio is expected to be around 20 basis points for the full year, reflecting strong credit performance [7][16] Strategic Developments - The company completed the acquisition of Schroders Personal Wealth, now rebranded as Lloyds Wealth, which will enhance its wealth management capabilities [4][36] - Significant progress has been made in the digital asset strategy, including partnerships to deliver tokenized deposits and FX derivatives trades [5][41] Management Commentary - Management expressed confidence in the company's ability to meet its 2026 guidance despite the additional motor provision charge [4][21] - The company remains focused on creating value for customers and stakeholders through targeted growth and improved propositions [3][21] Other Important Information - The company has taken an additional GBP 800 million charge related to motor commissions, bringing the total provision to GBP 1.95 billion [4][15] - Operating costs year-to-date were GBP 7.2 billion, up 3% year-on-year, with expectations to meet full-year guidance of GBP 9.7 billion [13][14] Q&A Session Summary Question: Regarding the motor finance provision and potential top-up - Management indicated that the current provision of GBP 1.95 billion is based on scenario analysis and reflects the adverse end of expected outcomes [25][26] Question: Expectations for net interest margin (NIM) growth - Management expects NIM to increase in Q4, driven by structural hedge contributions, and anticipates continued margin expansion into 2026 [27][29] Question: Insights on the wealth management strategy and potential inorganic growth - Management emphasized the importance of integrating Lloyds Wealth into existing offerings and indicated a focus on organic growth following the acquisition [36][40] Question: Update on non-banking funding costs and other operating income trends - Management noted that non-banking net interest income is running about 10% ahead of last year, driven primarily by volume growth rather than rate increases [74][75]

Financial Performance and Key Metrics - The group reported a statutory profit after tax of £3.3 billion for the first nine months of 2025, with a return on tangible equity (ROTE) of 11.9% [5][6] - Excluding the motor provision, ROTE was 14.6%, and the full-year ROTE is now expected to be around 12% or 14% excluding motor [6][17] - Year-to-date net income reached £13.6 billion, a 6% increase compared to the previous year, driven by growth in net interest income and a 9% rise in other operating income [6][12] - Operating costs for the year-to-date were £7.2 billion, up 3% year-on-year, in line with expectations [7][14] - The closing CET1 ratio stood at 13.8%, reflecting strong capital generation of 110 basis points year-to-date [19] Business Line Performance - Group lending balances increased to £477 billion, up £18 billion or 4% year-to-date, with retail lending growing by £5.1 billion [9][10] - Year-to-date deposits grew by £14 billion or 3%, with a quarterly increase of £2.8 billion [10] - Net interest income for the first nine months was £10.1 billion, up 6% year-on-year, with a net interest margin of 3.06% [11][12] - Other operating income (OOI) reached £4.5 billion year-to-date, up 9% year-on-year, with Q3 OOI at £1.6 billion, a 3% increase from Q2 [12][68] Market Data and Key Indicators - The retail business saw continued growth across cards, loans, and motor businesses, while commercial lending balances increased by £1.3 billion in Q3 [9][10] - The insurance, pensions, and investments segment experienced steady growth, with approximately £3.3 billion of open book net new money year-to-date [10] Company Strategy and Industry Competition - The company completed the acquisition of Schroders Personal Wealth, now rebranded as Lloyds Wealth, which will enhance its wealth management capabilities [4][33] - Significant advancements were made in the digital asset strategy, including partnerships to deliver tokenized deposits and FX derivatives trades [5][39] - The company aims to integrate Lloyds Wealth into its broader offerings, enhancing customer propositions and driving shareholder value [34][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying business performance despite the additional £800 million charge related to motor commissions [4][19] - The company anticipates continued growth in net interest income and margin expansion into 2026, driven by structural hedge contributions and lending growth [26][27] - The outlook for asset quality remains strong, with an expected asset quality ratio of around 20 basis points for the full year [16] Other Important Information - The company maintained strong cost discipline, with year-to-date operating costs in line with expectations, and plans to meet its full-year guidance [14][19] - The total provision for motor finance remediation now stands at £1.95 billion, reflecting the adverse outcomes from FCA proposals [15][44] Q&A Session Summary Question: Regarding motor finance provisions and potential top-ups - Management indicated that the current provision of £1.95 billion is a best estimate and that the FCA's proposals are heavily weighted in their scenario analysis, suggesting limited movement in overall provisioning [22][24] Question: Expectations for net interest margin (NIM) growth - Management expects NIM to continue to grow in Q4, driven by structural hedge contributions, and anticipates continued margin expansion into 2026 [26][27] Question: Insights on the wealth management strategy post-acquisition - The acquisition of Lloyds Wealth is seen as a significant step forward, with plans to integrate it into existing customer propositions and enhance advisory capabilities [33][34] Question: Thoughts on tokenized assets and their impact on banking revenues - Management views tokenized assets as an opportunity rather than a threat, with ongoing projects aimed at developing programmable currency and enhancing customer value [39][40] Question: Distribution strategy and potential for more frequent buybacks - Management remains committed to distributing excess capital and will consider the form and timing of distributions at the end of the year, with no immediate plans for more frequent buybacks [42][44] Question: Trends in non-banking net interest income and other operating income - Non-banking net interest income is running about 10% ahead of last year, primarily driven by volume growth, while other operating income is expected to continue growing, albeit with some variability across divisions [62][66][68]

Core Insights - The GENIUS Act represents a significant step towards regulating the cryptocurrency and stablecoin sectors, but its effectiveness will depend on how regulators address existing gaps and implement the law [1][3][4] Regulatory Framework - The GENIUS Act is seen as a foundational framework rather than a complete regulatory architecture, indicating that further work is needed to establish detailed rules [3] - Federal and state regulators' interpretations and enforcement of the GENIUS Act will be crucial in determining the stability and trustworthiness of the U.S. stablecoin ecosystem [4][5] Reserve Asset Risks - The act allows for digital assets like Bitcoin to be used as reserve assets for stablecoins, which could introduce volatility and undermine the stability implied by the term "stablecoin" [5][6][7] - There are concerns regarding the inclusion of uninsured deposits in reserve requirements, reminiscent of past banking failures [9][10] Regulatory Fragmentation - The GENIUS Act empowers multiple federal and state agencies to oversee stablecoin issuers, which may lead to inconsistent regulations and a "race to the bottom" in oversight [11][12] - The broad definition of permissible activities for stablecoin issuers could create regulatory ambiguities, where one regulator's approved activity may be viewed as prohibited by another [13][14] Alternative Solutions - Tokenized deposits are presented as a viable alternative to stablecoins, offering the benefits of traditional banking, such as deposit insurance and regulatory oversight, while still enabling digital transactions [16][17][18]

Financial Data and Key Metrics Changes - The company reported net income of $3.8 billion and earnings per share (EPS) of $1.86, with a return on tangible common equity (ROTCE) of 8% [4][16] - Adjusted EPS, excluding goodwill impairment from the Banamex transaction, was $2.24, with an adjusted ROTCE of 9.7% [4][16] - Revenues increased by 9% year-over-year, reaching $22.1 billion [4][16] - Total markets revenues were up 15%, with expenses of $14.3 billion increasing by 9% [17][24] Business Line Data and Key Metrics Changes - Services had record revenues growing by 7%, with assets under custody and administration up 13% [5][24] - Markets revenues increased by 15%, driven by fixed income and equities, with equities revenues up 24% [25][26] - Banking revenues surged by 34%, with investment banking fees up 17% [27][28] - Wealth management revenues rose by 8%, with record net new investment assets of $18.6 billion [7][29] - U.S. Personal Banking (USPB) revenues increased by 7%, with branded cards revenues up 8% [31] Market Data and Key Metrics Changes - Cross-border transactions increased by 10%, and U.S. dollar clearing volume was up 5% [24] - The company reported a 115% average liquidity coverage ratio (LCR) and maintained over $1 trillion in available liquidity resources [22] Company Strategy and Development Direction - The company is focused on simplifying operations and investing in technology to enhance agility and modernize banking services [10] - A new partnership with BlackRock was announced to manage $80 billion of client assets, aligning with an open architecture strategy [7] - The company aims to achieve an ROTCE target of 10% to 11% next year, with continued investments in transformation and technology [40] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment is resilient, with the U.S. economy driven by consumer spending and tech investments [12][14] - The company is cautious about pockets of valuation frothiness in the market and is focused on maintaining discipline [12] - The outlook for 2025 includes expectations for revenue growth exceeding $84 billion, with net interest income (NII) expected to rise around 5.5% [38][39] Other Important Information - The company returned over $6 billion in capital to shareholders during the third quarter, with $5 billion in share repurchases [9][22] - The agreement to purchase a 25% equity stake in Banamex is a significant step towards divestiture and de-consolidation [9][36] Q&A Session Summary Question: Update on actions related to the consent order regarding risk compliance and controls - Management reported that over two-thirds of programs are at or near target state, with significant progress in compliance and risk management [42][43] Question: Transformation expense for 2025 - The transformation expense is expected to be slightly under $3.5 billion in 2025, with efforts to execute more efficiently [46] Question: Thoughts on the Banamex transaction and timing for IPO - The 25% stake is a significant step towards de-consolidation, with regulatory approval expected to take 9 to 12 months [52][54] Question: Pace of Stablecoin adoption and its importance - Management sees tokenized deposits as a key area of investment, with increasing demand for real-time money movement solutions [60][61] Question: Efficiency path for next year and potential for lower expenses - Management anticipates a path for lower expenses in 2026, targeting an efficiency ratio below 60% [70][72]

🚨 BIG: $55.8T BNY Mellon is exploring tokenized deposits and blockchain-based payments, per Bloomberg. https://t.co/9yjHvIQCn1 ...

BREAKING: 🇺🇸 THE WORLD’S LARGEST CUSTODIAN BANK, BNY MELLON, IS EXPLORING TOKENIZED DEPOSITS AND BLOCKCHAIN-BASED PAYMENTS.BULLISH 🚀 ...

🚨JUST IN: BNY MELLON, THE WORLD’S LARGEST CUSTODIAN BANK, IS EXPLORING TOKENIZED DEPOSITS AND BLOCKCHAIN-BASED PAYMENTS ~ WATCHERGURU ...

Industry Trend - The world's largest custodian bank, BNY Mellon, is exploring tokenized deposits and blockchain payments [1]

Core Viewpoint - VersaBank is advancing its Digital Deposit Receipts (DDRs) pilot programs in Canada and the U.S., aiming to leverage its unique position as the only nationally licensed bank with tokenized deposit capabilities in both countries, to facilitate secure and efficient cross-border transactions [1][2][3]. Group 1: Pilot Programs - The CADVB Pilot Refresh is designed to validate the functionality, security, and compliance of DDRs with Canadian regulations, following enhancements to the bank's core technology since the initial pilot in 2022 [1][2]. - The integration of the CADVB Pilot Refresh with the USDVB Pilot Program aims to showcase the bank's capacity for high-speed, low-cost, and secure cross-border payments using DDRs as digital representations of actual deposits [2]. - Both pilot programs are expected to conclude by the end of 2025, with a commercial launch anticipated shortly thereafter, subject to regulatory requirements [2]. Group 2: Market Opportunity - Approximately CAN$1 trillion in trade occurs annually between the U.S. and Canada, presenting a significant opportunity for VersaBank to provide blockchain-secured foreign exchange transactions [3]. - DDRs offer advantages over non-bank stablecoins, including the ability to pay interest and provide deposit insurance, which are critical for businesses seeking secure digital transaction solutions [3][4]. - The bank is actively pursuing opportunities to monetize its proprietary DDR technology, which is positioned as a market-ready solution for various financial entities [3]. Group 3: Technology and Security - DDRs are bank-issued tokenized deposits that provide enhanced security, stability, and regulatory compliance compared to traditional stablecoins, combining traditional banking safety with blockchain efficiency [4][6]. - The issuance and management of CADVBs will utilize VersaBank's proprietary VersaVault platform, ensuring secure handling of sensitive data and compliance with regulatory standards [5][8]. - VersaVault is designed to manage highly sensitive digital assets and ensure end-to-end security for the lifecycle of DDRs, addressing the need for regulated custody in the digital asset space [8]. Group 4: Company Overview - VersaBank operates as a branchless, digital bank in North America, focusing on underserved segments of the banking industry through its innovative technology [9]. - The bank has successfully launched its Receivable Purchase Program in the U.S., expanding its operations into a multi-trillion-dollar market [9]. - VersaBank also owns DRT Cyber Inc., a leader in cybersecurity services, enhancing its capabilities to address the growing cyber threats faced by financial institutions [9].

Core Viewpoint - VersaBank has launched a pilot program for its proprietary Digital Deposit Receipts (DDRs) in the United States, positioning them as a secure and compliant alternative to traditional stablecoins, with the ability to pay interest and FDIC insurance [1][2][3] Group 1: Digital Deposit Receipts (DDRs) - DDRs are bank-issued tokenized deposits that represent actual cash deposits on a 1:1 basis, offering enhanced security, stability, and regulatory compliance compared to stablecoins [1][4] - The USDVB Pilot Program aims to demonstrate the functionality and operational integrity of DDRs in a US dollar environment while ensuring compliance with US banking regulations [2][3] - DDRs were developed in collaboration with law enforcement to serve as a trusted alternative for mainstream financial applications, addressing the growing trend of digital asset management [4] Group 2: Pilot Program Details - The USDVB Pilot Program will involve phased testing with thousands of transactions, starting with controlled internal testing and expanding to limited external deployment [3] - USDVBs will be issued at a rate of 1 USDVB for each US$1.00 on deposit, managed through VersaBank's proprietary digital vault platform [3][6] - The pilot program is expected to be completed by the end of 2025, with plans for commercial launch shortly thereafter [3] Group 3: Company Overview - VersaBank operates as a federally chartered bank in both Canada and the US, focusing on a digital, business-to-business banking model [7] - The bank has successfully launched a Receivable Purchase Program in the US, expanding its services to underserved markets [7] - VersaBank also owns DRT Cyber Inc., a leader in cybersecurity services, enhancing its capabilities in managing digital assets securely [7]