Great-West Lifeco (OTCPK:GRWF.F) FY Conference September 08, 2025 03:30 PM ET Company ParticipantsJon Nielsen - EVP, CFO & Interim Chief Investment OfficerNoneAll right. We will get the next session started here. First thing I'd like to do is thank John Nielsen for being here, CFO of Great West. You all I know the better is empowered from my four zero one plan, but fantastic to have you here. I can't wait to jump into the conversation.I wanted to start with a broad strategy update type of question here. I m ...

Financial Data and Key Metrics Changes - Income grew by 14% year on year to GBP 7.2 billion, profit before taxes increased by 28% to GBP 2.5 billion, and earnings per share rose by 41% to 11.7p [3][4] - Return on tangible equity (RoTE) was 12.3% in Q2, up from 9.9% in the same quarter last year, with a cost-to-income ratio of 59%, improving by four percentage points year on year [4][15] - The CET1 ratio stood at 14%, supporting a £1 billion buyback announcement, up from £750 million in 2024 [4][5] Business Line Data and Key Metrics Changes - All divisions generated double-digit RoTE in Q2, with the investment bank's RoTE improving by 2.6 percentage points year on year to 12.2% [6][15] - The U.S. Consumer Bank's RoTE increased to 10.2%, up from 9.2% in Q2 2024 [38] - Barclays UK reported a RoTE of 19.7%, with net interest income (NII) increasing by 16% year on year [26] Market Data and Key Metrics Changes - The group net interest income increased by 12% year on year to GBP 3.1 billion, supported by stable deposits and lending momentum [16][17] - The structural hedge is expected to deliver multiyear NII growth, with GBP 11.1 billion of gross structural hedge income locked in for 2025 and 2026 [18] - U.S. Consumer Bank's total income increased by 7% year on year, reflecting net receivables growth of 5% [39] Company Strategy and Development Direction - The company is committed to achieving a return on tangible equity of approximately 11% in 2025 and more than 12% in 2026, focusing on operational improvements across divisions [5][9] - The three-year plan aims to produce higher and more balanced returns, with a target of deploying GBP 30 billion of business growth risk-weighted assets in the UK by 2026 [10][24] - Structural improvements are expected to drive higher returns and shareholder distributions, with a focus on deepening client relationships and enhancing operational efficiency [11][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the full objectives of the three-year plan, highlighting strong operational and financial progress [5][46] - The economic environment remains resilient, with low delinquencies and stable credit performance, supporting the outlook for future growth [21][72] - Management anticipates continued momentum in income growth and efficiency improvements, positioning the company well for future performance [9][80] Other Important Information - The company announced a total of GBP 1.4 billion in shareholder distributions for 2025, up 21% year on year, including a dividend of 3p per share [5][41] - The acquisition of Tesco Bank contributed to increased costs, but the company remains focused on achieving its cost-to-income ratio targets [19][27] - The company has maintained a strong liquidity position, with a loan-to-deposit ratio of 74% and a net stable funding ratio of 136% [42][43] Q&A Session Summary Question: Capital position and distribution strategy - Management indicated that the capital position is comfortable post-buyback, with a focus on generating higher returns and progressive distributions [48][51] Question: Investment banking fees in a low volatility environment - Management acknowledged that while investment banking fees have been challenged, they expect deal activity to increase, benefiting future performance [50][58] Question: Impact of historic swap maturity on product margins - Management clarified that the swap maturity impact is an accounting timing issue, with expectations for improved product margins in H2 [62][68] Question: Impairment outlook for U.S. Consumer Bank - Management expressed confidence in maintaining impairment guidance, with expectations for normal seasonal trends and a manageable impact from the General Motors card acquisition [65][70]