Summary of Lloyds Banking Group Conference Call (November 18, 2025) Company Overview - **Company**: Lloyds Banking Group (NYSE:LYG) - **Date of Conference**: November 18, 2025 Key Points Industry and Economic Context - The banking sector is currently facing political and fiscal risks that are reflected in stock valuations, with Lloyds trading at 8.1 times P/E and 1.3 times price to book, with a projected ROT of 18% in 2027 [3][4] - The macroeconomic environment is described as supportive despite being unspectacular, with GDP growth expected at 1.3% for the current year and around 1% for the next year [4] - Unemployment is projected to peak at around 5%, and interest rates are expected to stabilize around 4% [4] Financial Performance - Lloyds has experienced a lending increase of approximately 4% year-to-date, translating to about GBP 18 billion, with GBP 6.1 billion of that occurring in Q3 [5] - Asset quality ratios are stable, with a year-to-date performance of 18 basis points, and an expectation of around 20 basis points for the year [6] - The bank is focused on maintaining strong ROEs and capital generation, which supports capital distributions [7] Regulatory Environment - The government and regulators emphasize the importance of a healthy banking sector for UK economic growth, with ongoing reviews and consultations regarding conduct, prudential, and fiscal regimes [9][10] - There is a positive direction of travel regarding conduct and prudential regimes, with expectations of meaningful changes from the FPC Capital Review and ring-fencing reviews [12][13] Strategic Focus and Future Plans - Lloyds is in the final year of a five-year strategic plan, with a focus on delivering on commitments made to the market [15] - The next phase of strategy will include the continuation of existing initiatives, particularly in wealth management and data transformation [17] - Digital transformation and AI are key components of the strategy, with significant progress in mobile onboarding and cloud migration [19] Cost Management - The bank aims for a cost-to-income ratio below 50% in 2026, driven by disciplined cost management and efficiency improvements [21][22] - Cost growth is expected to flatten in 2026, with a target of GBP 9.7 billion in costs for the current year, reflecting a 3% increase from the previous year [22] Net Interest Income (NII) Outlook - NII is projected to be GBP 13.6 billion for the current year, with expectations of material growth in 2026 and beyond [29] - The structural hedge is a significant driver of NII growth, with expected earnings of about $5.4 billion this year, increasing by $1.5 billion next year [30][31] Other Operating Income (OOI) - OOI has been growing at 8%-10% annually, with a focus on diversifying income streams away from interest income [36][37] - The bank has invested significantly in developing OOI propositions, resulting in a 9% growth year-to-date [39] Wealth Management Strategy - The acquisition of Schroders Personal Wealth (now Lloyds Wealth) is seen as a key strategic move to enhance the bank's wealth management capabilities [60] - The bank aims to build a three-pronged approach to wealth management, focusing on direct-to-consumer, digitally assisted, and face-to-face propositions [62] Capital Distribution and Buyback Policy - The bank has a strong commitment to capital distribution, with expectations of generating over 200 basis points of capital in 2026 [68] - There is a discussion about potentially moving away from annual share buybacks, with a focus on maintaining flexibility for the business [69][70] Conclusion - The outlook for Lloyds Banking Group appears strong, with a focus on strategic growth, cost management, and capital distribution, while navigating the challenges posed by the current economic and regulatory environment [78]

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]

Summary of Nordea Bank FY Conference Call - September 08, 2025 Company Overview - **Company**: Nordea Bank (OTCPK:NBNK.F) Key Industry Insights - **Bank Taxation**: No significant political pressure for new bank taxes in Nordic countries, despite existing taxes in Sweden and higher corporate tax rates in Denmark and Norway [3][3] - **Net Interest Income**: Resilience observed in net interest margin, expected to stabilize around 2% in the coming years. Further rate cuts could be damaging [5][5] - **Customer Behavior**: Increased interest in deposits and asset management products as rates decline, indicating a shift in customer preferences [8][8] Financial Performance and Targets - **2025 Targets**: Confident in achieving above 15% Return on Equity (ROE) and a cost-income ratio of 44% to 46% [4][4] - **Loan and Deposit Growth**: Strong competition in lending, with market share gains in Sweden, but challenges in Denmark due to aggressive competitors [6][6][36][36] Cost Management - **IT Expenses**: Elevated IT expenses due to significant investments in technology and risk management, with a commitment to cap cost growth at 2% to 2.5% for 2025 [14][15][19][19] - **Employee Reduction**: Anticipated reduction in full-time employees due to technology investments and automation in financial crime prevention [16][18][18] Asset Quality and Risk Management - **Asset Quality**: Robust asset quality with low incidence of specific provisions; no major areas of concern identified [20][20] - **Regulatory Risks**: Ongoing Danish AML court case expected to take nearly a year for resolution, with adequate provisions in place [22][22] Capital Strategy - **M&A Activity**: Interest in bolt-on acquisitions remains, particularly in banking portfolios and life insurance, but no acquisitions announced for the year [25][25][26][26] - **Capital Returns**: Focus on returning excess capital to shareholders through buybacks if no suitable investment opportunities arise [26][26] Future Outlook - **Financial Targets**: Upcoming Capital Markets Day expected to provide updates on financial targets and growth strategies [31][31][32][32] - **Market Share Gains**: Strongest performance in Sweden, with efforts to regain ground in Denmark and maintain growth in Finland and Norway [36][36][37][37] Conclusion - **Overall Sentiment**: Nordea Bank expresses confidence in meeting financial targets, maintaining asset quality, and strategically managing costs while exploring growth opportunities through acquisitions and market share expansion.

Financial Data and Key Metrics Changes - Customer lending grew by 3.2% to GBP 384 billion, while customer deposits increased by 1% to GBP 436 billion [4][5] - Assets under management and administration rose by 5.9% to GBP 52 billion [5] - Income increased by 13.7% to GBP 8 billion, and costs decreased by 1.4% to GBP 3.9 billion, resulting in an operating profit of GBP 3.6 billion and an attributable profit of GBP 2.5 billion [5][6] - Return on tangible equity was reported at 18.1%, with earnings per share up 28% to 31p [5][6] - An interim dividend of 9.5p was announced, reflecting a 58% increase [6] Business Line Data and Key Metrics Changes - Retail Banking saw a 3% increase in lending and a 1% rise in deposits, with a 4% increase in application share for mortgages [8][10] - Commercial and Institutional lending grew by 4% and deposits by 2%, driven by project finance and sustainable finance [10][11] - Private Banking and Wealth Management experienced a 2% increase in lending and net new inflows of GBP 1.5 billion, representing 8.1% of opening assets under management [11] Market Data and Key Metrics Changes - The bank attracted over 100,000 new customers through organic growth and the Sainsbury's transaction, which added approximately 1 million new customers [7][8] - The bank's share in credit cards increased from 9.7% to 11% due to the Sainsbury's acquisition [10] Company Strategy and Development Direction - The company is focused on disciplined growth, simplification, and enhancing customer experience through digitalization and technology upgrades [11][12][14] - A new target of delivering GBP 200 billion in climate and transition finance by 2030 was announced, building on previous commitments [11] - The bank is actively managing its balance sheet and has reduced its cost-to-income ratio from around 56% to 49% [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to continue driving lending growth despite a challenging UK economic backdrop [50][51] - The bank upgraded its 2025 guidance for income to over GBP 16 billion and return on tangible equity above 16.5% [16][30] - Management noted that the diversified prime loan book is performing well, with expectations for a loan impairment rate below 20 basis points for the full year [27][30] Other Important Information - The bank's CET1 ratio remained stable at 13.6%, with strong capital generation allowing for investments and shareholder returns [6][29] - A new share buyback program of GBP 750 million was announced, bringing total distributions to shareholders in the first half to around GBP 1.5 billion [6][29] Q&A Session Summary Question: On deposit flows and management of yields - Management acknowledged the impact of the Sainsbury's acquisition on deposit growth and confirmed that overall deposit share remained stable despite some current account losses [39][40] Question: On lending outlook and economic backdrop - Management expressed confidence in continued lending growth, supported by strong performance in both retail and commercial sectors [50][51] Question: On capital management and potential M&A - Management clarified that there is no intention to build a buffer for M&A, focusing instead on organic growth and shareholder returns [53][54] Question: On revenue guidance and drivers - Management indicated that the upgraded revenue guidance is supported by continued volume growth, the full run rate from Sainsbury's, and higher structural hedge income [78][81] Question: On mortgage spreads and market dynamics - Management noted that mortgage spreads are stabilizing and emphasized the importance of broadening the mortgage proposition to capture market opportunities [64][66]

Financial Data and Key Metrics Changes - Customer lending grew 3.2% to GBP 384 billion, while customer deposits increased by 1% to GBP 436 billion [3][4] - Income rose 13.7% to GBP 8 billion, and costs decreased by 1.4% to GBP 3.9 billion, resulting in an operating profit of GBP 3.6 billion and attributable profit of GBP 2.5 billion [4][5] - Return on tangible equity was 18.1%, and earnings per share increased by 28% to 31p [4][5] - Interim dividend announced at 9.5p, up 58%, with TNAV per share growing 16% to 351p [5] Business Line Data and Key Metrics Changes - Retail Banking saw lending growth of 3%, with deposits up 1% [7] - Commercial and Institutional lending increased by 4% and deposits by 2%, driven by project finance and sustainable finance [8] - Private Banking and Wealth Management experienced a 2% growth in lending and net new inflows of GBP 1.5 billion, representing 8.1% of opening AUM [9] Market Data and Key Metrics Changes - The bank attracted over 100,000 new customers through organic growth and the Sainsbury's transaction, which added around 1 million new customers [6][7] - The bank's share in credit cards increased from 9.7% to 11% due to the Sainsbury's acquisition [8] Company Strategy and Development Direction - The company is focused on disciplined growth, customer base expansion, and enhancing customer experience through digitization and simplification [6][10] - A new target of delivering GBP 200 billion in climate and transition finance by 2030 has been set, building on previous achievements [9][10] - The bank is modernizing its technology and operational model, including a strategic collaboration with AWS and Accenture to enhance data capabilities [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to continue delivering broad-based lending growth despite a challenging UK economic backdrop [49][50] - The bank upgraded its 2025 guidance for income to greater than GBP 16 billion and return on tangible equity above 16.5% [15][29] - Management noted that the diversified loan book is performing well, with expectations of a loan impairment rate below 20 basis points for the full year [25][29] Other Important Information - The CET1 ratio remained stable at 13.6%, with strong capital generation allowing for investments and shareholder returns [5][28] - The bank is actively managing its balance sheet, generating 101 basis points of capital in the first half [14] Q&A Session All Questions and Answers Question: On deposit flows and current accounts - Management acknowledged the growth in deposits but noted some loss in current accounts, attributing it to a disciplined pricing strategy amid competitive conditions [34][39] Question: On lending outlook and revenue guidance - Management expressed confidence in continued lending growth, supported by strong volumes and the full run rate from the Sainsbury's acquisition [46][49] Question: On capital management and potential M&A - Management clarified that they are not building a buffer for M&A but are focused on organic growth and maintaining a balanced capital allocation strategy [52][53] Question: On structural hedge and mortgage spreads - Management indicated that the structural hedge is performing well, with expectations of continued support for income, while mortgage spreads are stabilizing [57][63] Question: On FX risk management derivatives - Management explained that FX risk management activities are designed to take advantage of market volatility, contributing positively to overall income despite appearing as negative NII [98][101] Question: On lead reforms and mortgage market opportunities - Management expressed support for lead reforms, anticipating positive impacts on the mortgage market and increased borrowing capacity for first-time buyers [104][106]