Lloyds Banking Group plc

Thank you for standing by and welcome to the Lloyds Banking Group Q1 2021 Interim Management Statement Call. At this time, all participants are in a listen-only mode. There will be a presentation by Antonio Orto-Ozorio and William Chalmers, followed by a question and answer session, at which time, if you wish to ask a question, you will need to press star 1 on your telephone. For operator assistance during today's call, please press star 0 to signal for assistance. Please note this call is scheduled for one hour. I must advise you that this call is being recorded today. I will now hand you over to Antonio Orto Osorio. Please go ahead, sir.

Good morning, everyone.

Thank you for joining our Q1 2021 results presentation. I will begin by providing a brief overview of Q1 performance before William will discuss our recent strategic progress and financials in more detail. Turning to slide two of the presentation. We are now more than a year on from the start of the pandemic, and whilst we are starting to see some positive signs, the significant impact on people, businesses, and communities in the UK and around the world is clear to see. The group remains absolutely focused on supporting all of its customers and on helping Britain recover from the financial effects of the pandemic. And we are continuing to support our customers and businesses across the group. For example, through payment holidays and government-backed loans, whilst maintaining the excellent customer satisfaction scores we spoke to you about with our full year results, which are the highest in the last 10 years. Our colleagues across the group continue to demonstrate extraordinary resilience and dedication, supporting our customers and communities in these very difficult circumstances. And I would like to thank them again for it. And in what continues to be a challenging environment, we have seen good momentum and encouraging franchise growth in the first quarter of 2021. Both NIEM and IIEAs are up versus Q4 2020, and are better than our expectations, with NII at 2% when adjusted for the number of days. Whilst our continued cost discipline means total costs were down 2%, with operating costs down 1% year on year. Given our prudent low-risk business model and the success of the measures put in place by the government, regulators, and the banking sector, The underlying asset quality of our different portfolios has remained strong, with credit experience benign. Although uncertainty remains, the UK economy is performing better than expected, on the back of a very successful vaccination program. As a result, we have seen an improvement to our economic outlook, predominantly in unemployment and HPI expectations. which has resulted in an impairment release of £459 million, which, together with the positive behavior of the underlying asset quality, has produced an impairment credit in the income statement in Q1 of £323 million. William will talk more about this later. Relating to the balance sheet, we have to continue to take advantage of the strong mortgage market with six billion pounds open book growth during Q1. We are now seeing growth for the third consecutive quarter in a market where economics have improved substantially. Retail deposits were up more than nine billion pounds in the quarter, including current account growth of 5.6 billion pounds, demonstrating again the strength of the franchise. Another area of strength has been our capital build, and during the quarter, our CQ1 ratio increased to 16.7%, and our strong capital base remains significantly above both our ongoing internal capital target of circa 13.5% and our regulatory capital requirement of around 11%. Regarding Strategic Review 2021, launched in February, we are already making good progress across a number of areas. Our clear execution outcomes for 2021, underpinned by long-term strategic vision, position the group well for future success. William will further elaborate on this. Finally, given the trends we have seen and reflecting the solid business momentum, we are today enhancing our overall guidance for 2021. I will now hand over to William, who will run you through the new guidance, the financials, and the Strategic Review 2021 progress in more detail.