Lloyds Banking Group plc

Good morning, everyone. It's great to be here to see so many people in the room today. And I'd also like to welcome everyone joining us on the webcast and the phone lines this morning. Since I joined the group, I've spent a lot of time getting to know the business and our people. It is great to have the opportunity to speak directly to you, our investors and analysts. I've been with Lloyds for over six months now, and I have to say I'm even more excited about the opportunities for the group today than I was when I joined. I've seen for myself that Lloyds Banking Group is an organisation with significant competitive strengths, a fantastic franchise, including the UK's leading digital bank, and great people. But there are also some real opportunities for the group to grow, whilst maintaining cost and capital discipline. We have a powerful group purpose, helping Britain prosper. This underpins our new strategy and is integral to everything we will do. As you will hear, I believe that building on these strong foundations and raising our ambition on our purpose, growth and efficiency will enable the group to deliver higher, more sustainable returns to investors whilst meeting the needs of our broader stakeholders. I'm pleased to be able to share the details of our new strategy with you today. But before I do that, I know you'll want to hear about our performance in 2021. So I'm going to hand over to William now to run through the strategic and financial progress the group has made over the last year. William.

Thank you, Charlie. Good morning, everyone, and once again, thank you for joining. And to those of you in the room, it's great to be with you in person today. Let me turn first to an overview of the financials on slide five. Lloyds Bank and Group delivered a solid financial performance in 2021, alongside continued business momentum. Net income of £15.8 billion is up 9% on 2020, supported by a net interest margin of 254 basis points, up two basis points on the year. We remain committed to efficiency. Our cost-income ratio for 2021 is 56.7%, and operating costs of £7.6 billion are in line with guidance. A small year-on-year increase in operating costs was driven by the accelerated rebuild of variable pay of stronger-than-expected performance, which I mentioned at the half-year. Asset quality remains strong, and combined with the improved macroeconomic outlook for the UK, supports a net impairment credit of £1.2 billion. Driven by this solid underlying financial performance, statutory profit after tax of 5.9 billion and the return on tangible equity of 13.8% are both significantly ahead of the prior year. In this context, we've seen continued balance sheet growth and strong capital build of 210 basis points in the year. The group's exceptional capital position has enabled the board to announce a share buyback of 2 billion alongside the ordinary dividend of 2 pence per share for the year. Our total distribution for 2021 is equivalent to 3.4 billion, or around 10% of the group's market value. I'll now turn to look at how we've helped Britain recover during 2021 on slide six. As you know, our purpose as an organization is to help Britain prosper. Within this, in 2021, our focus was on helping Britain recover, and specifically addressing areas where we can make the most difference. We've supported over 93,000 startups and small businesses in 2021, exceeding our original target of 75,000. We've lent over 16 billion to over 80,000 first-time buyers and provided over 3 billion of new funding to social housing. And importantly, we're also making progress against our diversity targets, although clearly we need to go further to meet our ambitions in this area. Now moving to other aspects of our strategic progress in 2021 on slide seven. We outlined strategic review 2021 a year ago for a period of transition. I'm pleased with the progress that we've made during the year. Our execution has provided a strong foundation for our new strategy. Touching briefly on some of these achievements. We've maintained our record all channel net promoter score at 69. seen 16 billion net growth in open book mortgage balances and delivered over 7 billion of net new open book assets under administration in insurance and wealth. Alongside, we saw increasing customer usage of our digital channels, including growing the number of SME products originated digitally by around 60% and onboarding three times more clients to the new cash management platform versus 2020. We've also established some important proof points in technology R&D. And finally, like many businesses, we're rolling out new hybrid ways of working. We've managed to reduce our office space by around 9% in 2021, ahead of our target of 8%. I'll now look at the group's financial performance in more detail, starting with solid net interest income performance. NAI of £11.2 billion is up 4% year-on-year, benefiting from a 2% increase in average interest-earning assets and a stronger net interest margin. AIEAs of £445 billion are up £10 billion in the year, with strong mortgage growth more than offsetting modest reductions elsewhere in the portfolio. The margin of 254 basis points was resilient, with a Q4 margin of 257 basis points up two basis points on Q3. Within Q4, the impact of competitive mortgage pricing was more than offset by rate rises and lower funding costs. We remain positively exposed to rate rises. Currently we would expect a 25 basis point parallel shift in the yield curve and associated base rate rise to benefit interest income by around 200 million in year one. This number is illustrative and based on the same assumptions including the 50% pass on as we used in Q3. We provide further disclosure on this in the appendix. Looking forward, we expect low single digit percentage growth in AIEAs in 2022. This will be supported by growth in the mortgage book and recovering unsecured balances. We now also expect the margin for 2022 to be above 260 basis points. Given the importance of mortgages for the group, let me look at this book in more detail on slide nine. As mentioned, we saw continued strong mortgage growth in 2021. Balances were up 13.7 billion in the year, including open book mortgage growth of 16 billion. Q4 saw modest open book growth of 0.7 billion based on a somewhat slow market and our own participation choices. Meanwhile, a back book of around 64 billion is down 16% on 2020, seeing stronger attrition in Q4 given customer remortgaging in the context of rising rates. And clearly that pattern could continue. It's worth touching briefly on mortgage margins. As you know, the market has become increasingly competitive in recent quarters, with new business pricing moving below the level of maturities in the fourth quarter. This results on pressure in mortgage margins. Completion margins across Q4 were around 115 basis points, below front book maturities for around 150 basis points. Looking forward, we expect the group margin over time to continue to be impacted by maturities of high yielding business, repricing at then prevailing levels. This will of course apply to the proportion of the whole book turning over in any given period, including refinancing existing customers. To give you a sense of scale on this, in 2021, this number was around 90 billion. With that said, we continue to see mortgages as attractive from returns and from an economic value perspective. Now turning to our other asset books on slide 10. UK consumer finance balances are down 0.8 billion on 2020. However, despite an Omicron-induced pause in December, we're seeing improving spending levels and are starting to see some growth in credit cards. Balances in the card book were up 0.5 billion in the second half of 2021. A large part of the net consumer finance decline is due to the 0.7 billion reduction in motor finance balances. That was mainly in the first half, and this in turn is significantly the result of supply chain constraints seen across the motor industry, which now are showing signs of easing. Commercial banking balances are down 2.8 billion in the year. This includes a 1.2 billion reduction in government-backed lending schemes and a 1.6 billion reduction in other underlying businesses. That is driven by elevated levels of client liquidity which are likely to persist in 2022. Now looking at the other side of the balance sheet on slide 11. We continue to see significant deposit growth in 2021. Deposits increased by 25.6 billion in the year, albeit reducing 2.8 billion in Q4. The deposit margin of 15 basis points in 2021, 17 basis points in Q4, reflects a low overall funding cost. We could continue to see inflows to our trusted brands. Retail deposit balances were up almost 28 billion in the year and 3.8 billion in the fourth quarter. This has given lower levels of customer spending and, of course, higher levels of saving. Commercial deposits are down 3 billion in the year, following a reduction of 7 billion in the fourth quarter. The Q4 pattern reflected our business optimization activities. In aggregate, group deposits are now around 65 billion higher than at the end of 2019. This gives the group opportunities to further serve customers, as well as increase our pool of hedgeable balances. This is outlined on slide 12. In the context of our significant deposit growth, we've increased the structural hedge capacity by 30 billion during 2021. That's to 240 billion. Hedge capacity has now increased by 55 billion since the end of 2019 based on our continued review of deposits hedge eligibility and deposit growth of 65 billion over the same period. In response to positive movements in the yield curve in 2021, we have reinvested the nominal balance up to the approved capacity of 240 billion. Meanwhile, the weighted average duration of the hedge remains around 3.5 years, which is slightly below a neutral position of four years. Based on this, we've seen gross income of 2.2 billion from hedgeable balances over the year. Looking forward, we have around 30 billion of maturities in 2022, which gives us flexibility to invest. Together with rates moves, based upon our planning assumptions, 2022 hedge income will be ahead of 2021. And then again, we expect a further modest increase in 2023 and 2024. Now, moving to other income on slide 13. Other income is showing early signs of recovery. We delivered 5.1 billion in 2021, up 12% on the prior year. As said, the year benefited from improving performance, particularly in retail, insurance and wealth, and our equities business. Commercial banking has been broadly stable. Other income of 1.3 billion in the fourth quarter includes a benefit of around 80 million from insurance assumption and methodology changes. If you strip out this less predictable item, the underlying run rate for Q4 was around 1.2 billion, in line with my comments over recent quarters. Looking forward, we expect the underlying run rate in other income to build gradually, dependent upon customer activity levels and including our new and continued investments. You'll hear more about our strategic ambitions in other income from Charlie in the next section of the presentation. And finally, and as discussed at Q3, look out for the IFRS 17 impact in 2023. Moving on, the group has maintained its focus on cost efficiency during 2021. So let me talk more about this on slide 14. Operating costs of circa 7.6 billion for 2021 are in line with our guidance. As mentioned previously, the 1% increase in operating costs includes rebuilding variable pay, which in turn was driven by our stronger than expected financial performance. Remediation of 1.3 billion is significantly higher than 2020. Importantly, this includes a charge of 790 million for HPOS Reading, with 600 million recognised in the fourth quarter. Q4 charge reflects the estimated future operational cost and redress for HPOS Reading. In respect of this, please note that uncertainties remain around the timing, the flow, and indeed the ultimate cost of decisions from the ongoing independent panel review. Continuing our recent moves towards increased transparency and holistic cost management, from Q1 we will report all restructuring costs except M&A related costs within our operating cost line. In line with this, from Q1, we will also move certain fraud costs out of impairment into operating costs, better reflecting the nature of these transaction-driven expenses. Using 2021 as an illustration, combined impact of these reallocations would have increased above the line costs by around 685 million to 8.3 billion. I stress this is simply a reallocation and will clearly have no impact on the bottom line. After this move, our 2021 pro forma cost income ratio would be 61%. Though as you know, that number includes an unusually significant remediation charge. If we exclude that, we strip that out, the cost income ratio is around 53%, which remains sector leading in the UK. Importantly, looking forward, the group will maintain longstanding cost discipline and rigorous approach to managing BAU costs. Despite inflationary pressures, 2022 will see stable BAU costs. An uplift in total costs is planned, driven by the temporary increase from investment in our new strategy. That's together with the new business lines of Embarc and Citra. As a result, we expect 2022 operating costs to be around 8.8 billion, compared to 8.3 billion in 2021 on our revised basis. I'll address this again later on in my comments. Looking now at impairment on slide 15. Asset quality remains strong and new to arrears remain very low, with underlying charges below pre-pandemic levels. The net impairment credit of £1.2 billion for the year, including a £467 million net credit in the fourth quarter, reflects the improved macroeconomic outlook for the UK. Our base case economic assumptions now incorporate the favourable 2021 outcomes. And for 2022, we forecast GDP growth of 3.7%, an unemployment rate of 4.3%, and flat house prices. In this context, our expected credit loss provision stands at 4.5 billion, which remains around 0.3 billion higher than at the end of 2019, before the pandemic. Within our ECL, we've retained around 800 million of COVID-related additional management judgments. That includes the 400 million central adjustment, which we booked in Q4 2020. And this compares to 1.2 billion COVID management judgments that we held as of Q3. Looking forward, in 2022, we expect the asset quality ratio to be around 20 basis points. Now, looking below the line on slide 16. Restructuring costs of 956 million include 570 million in the fourth quarter. This includes a 400 million write-off as the group invests in new technology and in systems infrastructure. Excluding that write-off, restructuring costs are broadly in line with 2020 levels. Previously guided higher technology R&D costs were offset by lower severance and lower property transformation costs. As mentioned, most restructuring costs will be reported above the line from Q1. This is equivalent to £504 million in 2021. And from that point on, only M&A integration-related costs and exceptional write-offs will remain within restructuring. And of course, we do not currently anticipate any further write-offs on this line. The volatility line benefits from positive insurance and banking volatility. It also includes the usual charges of around $200 million for fair value unwind and $70 million for the amortization of purchased intangibles. After these items, statutory profit before tax of £6.9 billion in 2021 is significantly ahead of the prior year. Likewise, statutory profit after tax of £5.9 billion, which also benefits from the £1 billion tax credit in Q2. Return on tangible equity was 13.8% for 2021, or 11.4% excluding the tax credit. This is ahead of guidance, although also clearly benefiting from the net credit impairment during the year. Based on our forecasts, I expect our 2022 return on tangible equity to be circa 10%. Now turning to the next slide and looking at risk-weighted asset developments during the year. Risk-weighted assets decreased from 203 billion to 196 billion in 2021. That's in line with our guidance. We saw limited credit migration across the group in the year, supported by continued increases in house prices. The £7 billion reduction was significantly driven by our continued economic optimisation of the commercial banking portfolio, more than offsetting the impact of increased lending. This was particularly the case in Q4, and alongside some model adjustments reflecting improved credit quality, led to the £4.7 billion reduction during the quarter. Further opportunities remain in optimization, although I expect the pace to slow slightly this year. I've talked before about the regulatory RWA inflation on the 1st of January 2022. The net impact of that was around 16 billion, meaning the pro forma RWA position on the 1st of January was 212 billion. I should note there's still some uncertainty around this number given ongoing model refinements. In line with our guidance of Q3, we expect 2022 closing RWAs to be around 210 billion. Anticipated balance sheet growth is expected to be more than offset by optimization activity through the rest of this year. Solid financial performance and effective RWA management have allowed strong capital build and shareholder distributions. So let me turn to this on slide 18. The Group's strong capital position has enabled the Board to recommend a final ordinary dividend of 1.33 pence per share, resulting in a total ordinary dividend for 2021 of 2 pence per share. Alongside this, we've announced a shared buyback programme of 2 billion. This significant increase in shareholder distributions totals 3.4 billion and has been supported by the Group's exceptionally strong capital position at year-end 2021. Capital build in the year was significant, Proforma CET1 ratio of 16.3% after dividends and buybacks includes 210 basis points of capital build, with 51 basis points in the fourth quarter. CET1 position is after taking account of the in-year fixed and variable contributions to pension schemes, and around 30 basis points for the acquisition of Embark. Proforma position also includes a 300 million dividend from the insurance business, which is the first payment to the group since 2019. As mentioned, there are capital adjustments from the 1st of January. These include the RWA inflation, which I mentioned a moment ago, but also the reversal of the intangible software benefit and the unwind of IFRS 9 transitionals. The total impact of all of these elements together is around 230 basis points. Even after this regulatory inflation, the Group's pro forma CET1 level of 14% as of 1 January remains ahead of our ongoing target of 12.5% plus the management buffer of 1%. It is also well ahead of our regulatory capital requirement of 11%. Looking forward, I expect 2022 capital build to be lower than 2021 after our increased levels of investment, although it will still be resilient based on our expectations of performance, as I've outlined. So with that, I'll conclude my remarks on the strategic and financial performance for 2021. Thank you very much indeed again for listening. Let me now hand back to Charlie, who will outline our new strategy. Thank you.

Thank you, William, and thank you all for listening to our 2021 full year results presentation. It's great to be able to now share with you our new strategy, which will define the priorities for the group going forward. This strategy is grounded in a three-year operating plan with clear strategic and financial outcomes that we will continue for both the next three and five years. I hope that by the end you'll be as excited as I am about the group's future and how we intend to build on the strong foundations we have today to deliver higher and more sustainable value to all of our stakeholders. Let me start by highlighting the key points of our new strategy on slide 20. Our strategy and transformation plan will set the group on a higher growth trajectory with more diversified revenues. The strategic initiatives that I'll outline later are expected to generate an additional revenue of £700 million by 2024, increasing to a full run rate of £1.5 billion by 2026, split evenly between interest and non-interest income. This is a significant shift in the group towards growth. Having said that, we will retain our focus on cost discipline, committing to keep costs flat in 2024 compared to 2022, despite the inflationary headwinds. We're targeting an improvement to our operational leverage, setting us on a path towards a cost income ratio of less than 50% by 2026. I'm confident that through our strategy, we'll create higher, more sustainable returns and capital generation. Return on tangible equity is expected to exceed 10% by 2024 and be higher than 12% by 2026, as the full benefits of our investments are realized. As you've seen today, we remain committed to returning excess capital to shareholders and plan to pay down to our target capital ratio by 2024 at the latest. As a result of our higher profitability, there'll be significant improvements in annual capital generation to 175 to 200 basis points by 2026. Turning to slide 21. Our new strategy is designed to build upon our strong foundations and develop an even stronger competitive position in the UK going forward. As you can see on this slide, we are the largest bank and sole integrated provider of banking, insurance and wealth services in the UK. Half of the UK adults and about one million businesses turn to our trusted brands for meeting their financial needs, both directly and through our intermediaries. Our customers' one billion monthly transactions give us an unparalleled insight into their financial needs and behaviour, helping us provide them with relevant solutions. We have 26 million customers and 18.3 million active digital users, making us the largest digital bank in the UK, with a digital user base greater than all the neobanks combined and also 50% more than the next incumbent. Our dedicated colleagues, with their breadth of experience and expertise, are also a key strength. To add to these, over the last decade, the group has created an exceptionally strong balance sheet with disciplined risk management. We intend to build on these strengths to realize our opportunities. Turning to slide 22. Given the changes in the external environment, I think there are now a number of opportunities the group needs to focus on to strengthen its competitive position going forward. We need to grow our business and diversify to reduce our dependence on interest income. This is all the more important in a low, albeit rising, rate environment, with margin pressures likely to persist for the industry. To achieve this, we have a unique opportunity to deepen relationships with our existing customers, both with consumers and businesses of all sizes. We can do this by making it easier for them to access our great products and by making our channels simpler and more personalized to use. In parallel, there are new opportunities for us to work with our intermediaries and third-party platforms by leveraging our market-leading digital capability, scale product offering and specialist brands. There is an opportunity to be faster than we have been historically in modernizing our technology estate, more effectively using our data and creating end-to-end efficiency. COVID has further accelerated customers' digital adoption, engagement and transactions. Whilst we have a digital leadership position amongst incumbents today in the consumer space, for future competitiveness, it is essential to achieve a step change in the speed at which we create new propositions, deliver change, and reduce our cost to serve across the whole group. Finally, we need to ensure that there is a strong alignment between our purpose and value creation so that we can profitably deliver for all of our stakeholders. This also represents a significant growth opportunity for the group. I believe in the next decade, it is only by doing right by our customers, colleagues and communities that we can deliver higher, more sustainable returns to our shareholders. Let me talk a bit more about our purpose and strategy on the next slide. Helping Britain prosper guides our business model and strategic participation choices. Going forward, we will increase the alignment between our purpose, our strategy for growth, and the commercial outcomes we deliver in order to be a truly purpose-driven organization. Our strategy will build on our current participation choices, which we believe are the right ones to pursue growth and further strengthen our foundations. We have a clear strategic vision to be a UK customer-focused digital leader and integrated financial services provider, capitalizing on new opportunities at scale. Slide 24 outlines the key pillars of our strategy and execution. We will create higher, more sustainable value for all of our stakeholders through three pillars. Driving revenue growth and diversification across our main businesses through increasing depth of relationships and breadth of products. Focusing on strengthening the group's cost and capital efficiency further, building on our strong foundations. and executing by building a powerful enabling platform combining people, technology, and data to support our bold business ambitions. In that context, we have constructed a portfolio which ensures an appropriate mix of priorities to grow revenues and increase efficiency. And these will deliver value across both the short term and the longer term. Turning to slide 25. We want to drive positive impact for our customers, for our colleagues and the communities we serve. Given our scale and leading position, we are better placed than any other financial services business in the UK to make this a reality. I believe that our focus should be on building an inclusive society and supporting the transition to a more sustainable and low-carbon economy. This is where we can make the biggest difference and create new avenues for growth. To build a more inclusive society, we will focus on improving access to quality housing, supporting financial inclusion, enabling access to cash and improving the financial resilience of our customers. We also see an opportunity to help more customers in the UK have access to simple and helpful investments and protection solutions. Through our commercial bank, we will support regional development by helping businesses in target sectors across the UK. We will also lead by example by reiterating our ambitious targets to create a more inclusive and diverse workforce. To support the transition to a low-carbon economy, we are reinforcing our prior commitments, targeting net zero for the activities we finance by 2050 or sooner. This will also enable us to access fast-growing areas linked to sustainability, such as green infrastructure finance, green mortgages, electric vehicle financing and others. In addition, our own operations are set to be net zero by 2030. Turning to slide 26. As I mentioned, our strategy will deliver in excess of 10% return on tangible equity by 2024, and more than 12% by 2026, with a step change in capital generation driven by increased profitability. This is supported by incremental investments of three billion pounds over the next three years and a total of four billion pounds over five years. Increased profitability will be driven by revenue uplift from the strategic initiatives of 0.7 billion pounds by 2024 and more than double that by 2026 to 1.5 billion pounds. In parallel, we're committing to keeping costs flat in 2024 relative to 2022 and driving towards a cost-income ratio of less than 50% by 2026. We recognise the importance of distribution for our shareholders and will pay down to our target capital ratio by 2024 at the latest. Let me provide some details on how we plan to deliver these benefits through our strategy, starting on slide 28 with growing and diversifying our revenues. William's then going to provide more details on the underpinning financials in the next section. Growth is a core focus of our strategy. About two-thirds of our incremental strategic investment is aligned to growing and diversifying revenue. We have carefully prioritized opportunities across each of our businesses to ensure we generate value in the near term, as well as creating new revenue streams which will deliver over the longer term. In the consumer segment, we aim to bring more of our products and services to our existing customers, as well as to innovate and broaden our product offerings and make it easier for customers to access them through our intermediary partners. In addition, we will create a new mass affluent proposition to grow in this attractive segment and underserved segment across banking, protection, and simple wealth. In our SME business, we aim to digitize our offering and grow and diversify our revenues in products and sectors where we have a lower market share today. And we will target disciplined growth of our corporate and institutional businesses. Let me take each of these opportunities in turn, starting with consumer on the next slide. As you can see, on the left-hand side here, we start from a very strong position as the UK's largest consumer franchise, with a full set of products, iconic financial services brands, and record levels of service across our channels. With a market leader in mortgages, current accounts, savings, and credit cards, and a top three home insurance and workplace pension provider, With 26 app logons on average per customer per month and a digital NPS of plus 69, our customers engage with us nearly once a day on average. In addition, we have the largest branch network across the UK, working closely with local communities and customers. Having said that, we currently fulfill fewer needs and earn less revenue per customer compared to our potential. UK consumers hold over seven financial products on average, but our customers hold only 2.4 of them currently with us. We see a significant growth opportunity to enable our existing customers to choose more of our products by providing them with an even simpler and more personalised experience. For every 5% increase in the average needs we meet of our existing customers, we can generate additional revenue of £200 million per annum. Given our strong specialist brands, unique to our group, the second growth area in the consumer space is for us to increase our market share in products brought through intermediaries such as brokers, IFAs, online platforms, and car dealerships. Intermediaries constitute a significant proportion of the market for certain key products, and we generate about 40% of the consumer income through this channel. Although we have a leading position in mortgages, we have significant headroom for growth by getting closer to our natural share in products such as motor finance, home insurance, protection, individual pensions, and investments. We will look to emulate our success in workplace pensions, where we have grown market share from 10% to 19% over the last few years. I'll take these two opportunities in turn, starting with slide 30 on our priorities to deepen our existing relationships. We serve consumers directly through our three strong and trusted relationship brands, Lloyd's, Halifax, and Bank of Scotland. Increasing the depth of these relationships through our breadth of products requires more personalized engagement. It also requires offering a simple, convenient way for customers to fulfill and service more of their needs in one place, consistent with their desire for a more unified experience. Therefore, we will enhance our data and analytics capability and further cement our digital leadership to deliver personalized engagement, offers, pricing, and credit risk decisions. This will result in more customers being digitally active, drive a higher depth of relationship and revenues. Payments will be a key anchor to drive greater engagement, and we aim to grow our market share in credit card spend, which is currently below our share of credit card balances. Home buying is a great example of a key life event which creates a variety of linked and recurring needs for our customers. We aim to provide them with a unified experience to fulfil these needs by building a more integrated home ecosystem with mortgages, green retrofit solutions and associated insurance and protection products. In addition, to broaden our product suite further, we will innovate to meet emerging customer needs, such as launching new financing solutions for electric vehicles and charging points. We will continue to help our customers through all channels and be a leader in providing support and education to build their financial resilience and opportunities. Turning now to our intermediary partner priorities on slide 31. Growing market share of our intermediary partners needs scale and expertise to deliver high quality products and services with frictionless processes that are increasingly embedded in third party platforms. We already have the first part in place with a broad product suite delivered via a stable of strong specialist brands. The opportunity is to capitalize on this by digitizing product processes, specifically in insurance and investments. As an example, our intermediary proposition will build upon our Embarc acquisition and contribute towards our target of generating more than 55 billion pounds of new open book net flows in investments and retirements by 2024. We will maintain our value maximizing approach in mortgages and look to grow market share in car leasing. Specifically, we will finance over 200,000 electric vehicles for our Blackhorse and Lex businesses. We will also drive growth by innovating to develop new propositions in embedded finance and flexible motor financing solutions and scaling our Citra private rental housing business. Moving to our mass affluent opportunity on slide 32. The mass affluent market in the UK is growing at close to 10% per annum and there is a clear gap in the market for a digital first integrated offering combining a full set of banking, insurance and investment products. we already have the largest mass affluent customer base in the UK. However, they are meeting a number of their banking and investment needs elsewhere. This presents a material opportunity which Lloyds is uniquely placed to capture. In order to ensure the right choices for customers, a provider must also be able to support them in the accumulation and deaccumulation stage of their lives by joining up services across banking, housing, pensions and investments. Tech-led competitors only offer solutions for a small set of customer needs, whilst banks operate a higher touch model geared towards more affluent and wealthy customers, similar to our Schroeder's Personal Wealth and Casanova's offerings. We intend to focus on this gap in the market, which is the broader pool of mass affluent customers with income or wealth above £75,000, with a scaled digital wealth offering and integrated banking solution. On the next slide, I'll provide an overview of our priorities in this space. For our new mass affluent offering, we will combine a more tailored banking proposition with investments, protection, and advice, leveraging the Embark platform. Whilst we will offer a premium service model across channels, we will be digital first, consistent with customer preferences. I believe value in this space is skewed heavily towards banking products such as savings, housing, lending, and payments. This plays to our current strengths and will allow us to quickly set up the initial proposition, which we will further refine over time. We will bring to bear our personalization capabilities developed in the consumer segment to meet customers' banking needs through tailored products such as higher-value mortgages and lending solutions. In addition, customers would be able to meet their daily transaction and payment needs through a convenient and easy-to-use digital interface. And for their investment needs, the customers will be able to access digital guided advice for simple wealth solutions and an option to access human support if needed. I'll now move on to our SME business on slide 34. As you can see on the left hand side here, we have a well established and significant SME franchise of roughly one million micro businesses and 70,000 small and medium sized businesses across the UK. We have a 20% primary relationship share with SMEs and a top three share across purpose aligned sectors such as agriculture, healthcare and real estate. We can build on these to grow our market share in other trading sectors and meet more of our customers' non-term lending and transactional needs. Our strong set of relevant transaction banking products and more than 1,000 relationship and product specialists across the UK provide a firm foundation for growth. We need to digitize to improve client experience and enable them to conveniently and quickly self-serve and meet their day-to-day needs. This is also essential given changing client expectations, increasing digital engagement, and competition. In conjunction, we need to selectively build out key products like asset finance, invoice discounting, trade, merchant acquiring, and e-commerce solutions. These are important relationship anchors, and we currently punch below our weight. For example, in merchant acquiring, where volumes are growing at around 20% year on year led by online transactions, we only have a 5% market share today. Let me talk through our priorities on SME in the next slide. We plan to digitize front to back to allow our clients to engage, transact, and fulfill needs for a digitally integrated front end across all of our products. We'll provide a personalized experience by using data and analytics, both for self-serve and for insights to relationship managers to better support our clients. We aim to grow our digital product origination and fulfillment to more than 50% of total volumes. with automated lending decisions for smaller loans improving time to cash. And for new customers, we'll provide a quick and intuitive onboarding experience. Whilst we'll be digital first, our customers will continue to be supported by our sector and product specialists for their more complex needs. Alongside digitization, we'll expand our SME proposition through merchant services, trade, cash flow lending, and broader value-added services like supporting SMEs on their transition to net zero. We are targeting more than 15% income growth from transaction banking and working capital solutions. And we're also aiming for a 20% annual growth in new merchant servicing clients. Moving to slide 36 to talk about our opportunities in the large corporate and institutional business. We have built a targeted franchise supporting corporate and institutional clients with a strong UK focus, including two thirds of the FTSE 350 firms as our clients today. In recent years, we've improved returns and can build on this in key sectors aligned to our purpose and areas of core expertise in cash, debt, and risk management products. Peer benchmarks indicate that we have substantial headroom to grow our ancillary income. Whilst balance sheet provision is a key relationship anchor in this space, our clients have a broad range of needs which can be fulfilled through our markets and transaction banking products. Moreover, we will continue to build on the synergies with the rest of the group by providing banking, FX and rates capability to our consumer and SME franchises, and making the most of Lex and Scottish Widows by seeking to grow the £500 million of annual revenues that our clients currently generate using the group's motor, insurance and pension propositions. Finally, as a leading green finance provider in the UK, we are well-placed to support our clients through ESG advisory and sustainable financing to support their transition and the UK's broader net zero goals. Turning to slide 37. Whilst there's no doubt that the large corporate and institutional market is a competitive space, we are well-placed to selectively and profitably grow the business within our current risk appetite. We are not looking to expand into regions where we do not have sufficient scale, capability or a clear UK link. Also, we will not participate outside of our core capabilities. This ensures that our ambition is bold but grounded. As we grow in key sectors, we will increase our balance sheet velocity through a scaled originate to distribute model, building ancillary income in a capital efficient manner with modest RWA growth. Through this focus and strengthening our product capabilities, we aim to grow other operating income by more than 20% by 2024. We will continue to invest in our transaction banking capabilities and build on the momentum in onboarding clients to our new payments and cash management platform, which continues to drive growth and value. We will also be launching a new supply chain proposition this year. In debt and risk management products, we will enhance our DCM capability, including developing our US dollar franchise and investing in FX and rates capabilities. And finally, we will continue to drive our purpose outcomes by supporting regional development and supporting more clients with their transition plans. As a result, sustainable finance will represent 20% of our corporate lending book by the end of 2024, more than double the proportion today. This concludes our four areas of growth. Now moving on to slide 38. As we invest to grow and diversify revenues, it will be essential to maintain our disciplined cost and capital management approach, a key strength of Lloyd's. I can see there remain significant technology enabled efficiency opportunities in the group. These are important to create capacity for investment and growth, to increase the pace at which we can change and improve our services, and to further strengthen our resilience. Let me briefly touch upon the strategic imperatives of these, and William can add details from the financial implications later. One of the key imperatives is to reduce our total cost of technology run and change. We're targeting a 15% reduction by 2024 through modernizing our technology estate, leveraging public and private cloud, and adopting a more agile operating model, whilst increasing the throughput of change. We also need to reduce the cost to serve our customers through our further end-to-end digitization of processes, which will drive greater efficiency in distribution, operations, and servicing. Our aim is to increase customers served per distribution FTE by more than 10% by 2024. Finally, we need to reduce our central functions and property overheads. The former will be addressed through automation and process simplification, and the latter will benefit from the move to hybrid working and transformed workspaces. We aim to reduce our office footprint by more than an additional 30% by 2024. Moving to capital efficiency on the next slide. Higher capital efficiency largely flows from the strategic choices we've made to drive growth. Our focus to increase the proportion of non-interest fee businesses will deliver revenues in a capital-like manner. Building and scaling an originate to distribute model in the commercial bank and leveraging our synergies with Scottish widows will increase balance sheet velocity and generate higher fee income. We will continue to maintain rigid discipline in managing our portfolio and the recycling of our WA's into higher returning and growing businesses. On slide 40, let me touch upon execution, which will be key to achieve our strategic ambition. Delivering this strategy will require the group to build on the capabilities and new ways of working it has developed over the last few years and accelerate the pace at which it uses digital technologies and data to support our customers. Having built the largest UK retail digital bank gives us confidence to replicate that success end to end and on a larger scale across the group. Our prior investments in technology and data provide a strong foundation for delivering on our new strategy. As I mentioned earlier, our colleagues are a key strength. Their expertise and skills will be instrumental to our success, and I've been really impressed by the management teams and the people we have at the group since I joined. It is our people who offer the most distinctive customer experience, drive us to innovate, take thoughtful risk, and enable change at greater pace. Going forward, we will need to invest in our people and how the organization works to deliver this strategy. This will include further developing our ways of working and culture to enable greater empowerment for the team serving customers and innovating our products with clear accountability to drive growth and maintain our disciplined risk and efficiency approach. We will also increase collaboration and organizational joining up to serve customers to deliver a more integrated experience across our businesses. Turning to slide 41. I hope this presentation provides you with a good sense for how we will build on our strong foundations to capitalise on the opportunities for significant value creation. We look forward to updating the market on our progress over the coming quarters as we start to execute against these priorities. Let me summarise by reiterating that our new strategy represents a significant shift for the group towards growth whilst maintaining our cost and capital discipline. With this, I'll hand over to William to provide more details on the financials underpinning the strategy. Thank you very much.