Lloyds Banking Group plc

Morning, everyone, and thank you for joining our 2024 full year results presentation at our brilliant new London headquarters. We will officially open the building to colleagues over the coming weeks, so we are very pleased to welcome you as our first guests. Let's hope everything goes all right. As we've now reached the end of our first phase of our five year strategic transformation, our presentation will be slightly longer today. I'll start with a brief overview before handing over to William, who'll run through the 2024 financials in detail. After this, I'm excited to share more detail on our strategic progress over the first three-year phase, as well as our plans for the remaining two years as we continue to transform the business at pace. We'll then have the usual time allocated for your questions. Let me begin on slide three. I'd like to start by highlighting three key messages. Firstly, our purpose-led strategy is continuing to deliver strong outcomes for all stakeholders. We've made excellent progress in the first phase, driving broad-based momentum and positioning us well to accelerate our transformation in the second phase. Secondly, our financial performance in 2024 was robust, in line with guidance. Our highly capital generative business model enabled strong shareholder distributions, including a 15% increase in the ordinary dividend and a share buyback of £1.7 billion. This is despite an additional £700 million provision relating to motor finance commissions taken in the fourth quarter. And finally, we're providing new guidance for 2025 and reaffirming our targets for 26. We remain confident of delivering higher, more sustainable returns. On slide four, I'll briefly cover how our purpose is driving value for all our stakeholders. We have a longstanding purpose of helping Britain prosper and a proven track record over many years of delivering outcomes that benefit all our stakeholders. Our actions provide clear benefits for our customers and communities across the UK, whilst driving business value and supporting the real economy in areas where we're well placed to lead the change. At the same time, these actions unlock new, attractive growth opportunities for the group. For example, as the UK's largest mortgage lender, we're deeply involved in the housing sector. We've now lent nearly £100 billion to first-time buyers since 2018, including £15 billion in 2024. Alongside, we've continued to build our customers' financial resilience and savings. And in the last few years, we've provided nearly £20 billion of funding to the social housing sector, £90 billion of infrastructure financing, and almost £50 billion of sustainable financing. As you heard from me at the half-year, we welcome the emphasis placed on sustainable economic growth by the government. This, combined with signs of an improving macro backdrop and resilient fundamentals for consumers and businesses, positions the UK for faster growth. We believe we're well placed to support this. Turning now to the strategic progress on slide five. I'll elaborate on this in more detail in the second part of my presentation, but I wanted to briefly highlight the strong progress we've made in the first phase of our strategic transformation across 2022 to 24. Significantly, we've returned the franchise to growth. This has been delivered through multiple levers, including leveraging our digital leadership position and increasing focus on higher value areas such as mass affluent. At the same time, we've reinforced our efficiency position with an increased focus on end-to-end digitization and the simplification of our technology estate. Our success in both areas is a result of the transformation of the group's capabilities across people, technology, and data. We've made great strides in this area, significantly increasing the hiring of key engineering talent and adopting new technologies to drive innovation, creating the platform for the next phase. Our execution in the first three years has already delivered clear financial benefits, including circa £2 billion of net income growth, a turnaround in our other income lines, and significant improvements in returns and capital distributions. On the latter, our capital distributions over the past three years exceed £11 billion. As I'll discuss later, we see further financial upside looking ahead to 2026. I'll now close this section with a brief look at our 2024 financials on slide six. Building upon our continued strategic progress, our financial performance in 2024 was robust, with positive business momentum in both the fourth quarter and over the course of the full year. Our 2024 financials also demonstrate delivery against the medium term guidance we laid out for the first phase of our strategic plan. We've delivered £0.8 billion of additional revenues from strategic initiatives ahead of our £0.7 billion target and £1.2 billion of gross cost savings, more than offsetting the impact of pay and inflation during the period. Our 2024 return on tangible equity and capital generation were impacted by the additional provision relating to motor finance commissions. However, both were ahead of the circa 13% and circa 175 basis points, excluding this. I'll provide more details on our financial performance on a three-year view, as well as the outlook to 2026 in the second part of my presentation. But for now, I'll hand over to William to cover 2024 in more detail.

Thanks, Charlie. Good morning, everybody. Thank you again for joining. As usual, I'll provide an overview of the Group's financial performance, starting on slide 8. Lloyds Bank and Group delivered a robust financial performance in Q4, and indeed in 2024 as a whole. Statutory profit after tax for the year was £4.5 billion, or £5 billion excluding the Q4 motor provision. This equates to a return on tangible equity of 12.3%, or 14%, ex-motor. Supported by franchise growth, net income for the full year was £17.1 billion. This includes a net interest margin of 2.95% in line with guidance, alongside 9% growth in other operating income. In Q4 net income was 4.4 billion, up 1% versus Q3. This was driven by 1% growth in net interest income in turn supported by a rising quarterly net interest margin consistent with the improvement that started in Q3. Full year operating costs of 9.4 billion were up 3% year on year, again in line with our guidance. Asset quality remains strong. The impairment charge for the year of 433 million equates to an asset quality ratio of 10 basis points, or 19 basis points, pre-releases from changes to our economic assumptions. Meanwhile, TNAV per share increased to 52.4 pence, up 1.6 pence in the year. Our performance delivered capital generation of 148 basis points in the year, or 177 basis points, excluding the Q4 mode of provision. I'll now turn to slide 9 to talk through our balance sheet growth. Lending and deposits continue to exhibit robust growth in 2024. Group lending balances of 459 billion were up 9 billion or 2% in the year and over 2 billion in Q4. Within this, we delivered another strong quarter of mortgage growth, up 2.2 billion or 3.2 billion, excluding legacy book securitization. Staying within retail lending, in Q4, credit card balances were flat, slightly reduced spend offset by lower repayment rates. Unsecured lending balances were up slightly, whilst motor finance in Blackhorse was down, driven by lower dealer stocking. Commercial lending balances were down slightly, by one billion in 2024, although up when excluding government-backed lending repayments. In Q4, a reduction of 0.3 billion was led by lower balances in BCB, outweighing growth in our CIB franchise. Turning to the liability franchise, deposits grew by 2% or $11 billion during the year. The year finished with Q4 growth in deposits of $7 billion. Within this, we saw an increase of 1% quarter on quarter in retail, with savings accounts up $4 billion and current accounts up $0.7 billion. Deposit churn continues to ease as we had anticipated. In PCA, there was some benefit in the quarter from calendar effects and the impact of the October budget, but the underlying stability in balances is an encouraging performance. Q4 commercial deposits were up 1.9 billion quarter on quarter. This was mainly driven by CIB, reflecting growth in targeted sectors as well as some positive FX impacts. Alongside these developments, insurance, pensions and investments saw 5.3 billion of net new money in 2024, 1.8 billion in Q4. Turning now to interest income on slide 10. The group delivered net interest income of 12.8 billion in 2024. This included growth of 1% in Q4 over the prior quarter, continuing the upturn that started in Q3. Average interest earning assets for the year were 451 billion, in line with our guidance. Q4 AIAs were 455 billion, up 4 billion off the back of the lending growth that we saw in the second half of the year. The full year net interest margin was 295 basis points. Q4 margin was 297 basis points, up two basis points on Q3 and continuing to increase at a gradual pace as we had anticipated. The 2024 non-banking and IE charge was £469 million, with a Q4 charge of £122 million, probably a little lower than we had expected. Going forward, we will focus on net interest income in our guidance. This is to simplify our approach and to focus on what matters, IE income. In 2025, we expect net interest income to grow to around $13.5 billion, up about $700 million from last year. This guidance is built on expected further robust lending and deposit growth and a significant increase in the contribution from the structural hedge. These tailwinds will be partly offset by some further churning deposits and the impact of rate reductions alongside the continuation of the mortgage refinancing headwind. These pressures remain meaningful, but they will gradually ease through the year. As said, we'll no longer be providing guidance around our net interest margin. However, to support the transition, our 2025 net interest income expectations are consistent with a banking NIM of around 305 basis points. Let me now move to our mortgage book on slide 11. Mortgage performance in 2024 was strong. Mortgage book grew by 6.1 billion in the year or 8 billion, excluding legacy book securitizations. This growth is a result of a recovering market and our strategic initiatives helping to support a 20% share of new lending over the year, around one percentage point ahead of our share of stock. Our expectation is for further growth in the mortgage book this year, supported by a continued recovery in the market and robust new business share. Completion margins in the fourth quarter remain resilient at around 75 basis points. stable on Q3. This remains below margins on our maturing mortgages. However, the difference will continue to narrow this year before then playing itself out in 2026. Let me now turn to our other asset books on slide 12. We saw a solid performance in our consumer and commercial lending portfolios in 2024. Combined balances for cards, unsecured loans and motor were up 2.8 billion in the year, or 8%. Within this, unsecured loans were up 2.2 billion on the back of organic growth as well as lower repayment volumes following a securitisation in 2023. Cards were up 0.6 billion, or 4%. Motor balances were flat as we focused on attractive growth opportunities in the leasing business, and in particular, Tusker. Turning to commercial banking, lending was down one billion in the year. Targeted growth in CIB, including in key strategic areas such as infrastructure and project finance, was more than offset by net repayments in BCB, including the 1.6 billion of government-backed lending. Let's take a look at deposits on slide 13. Our deposit franchise did well in 2024. Total deposits were up by over 11 billion or 2% to 483 billion. In retail, we continue to see the benefits of our attractive and differentiated propositions. Total retail balances were up 11 billion in the year. Current account balances ended at 101 billion, reflecting a slightly better performance than expected with increasing wages, gyro credits and slow spend. In particular, it was pleasing to see our market share of balances increasing over the period. Savings were up $13.4 billion in the year, supported by continued significant inflows, in particular to our limited withdrawal products. Given the rate environment, we saw a further deposit churn in 2024, but as anticipated, it has eased over the year. Commercial deposits were broadly stable in the year. BCB balances increased by 1.3 billion due to targeted growth initiatives in mid-corporates, offset by an expected outflow in CIB concentrated in the third quarter. The performance of our deposit franchise supports the structural hedge, so let me now turn to that. The structural hedge is a significant and strengthening tailwind to income. The hedge notional currently stands at £242 billion. While down £5 billion in 2024, the notional was stable in the second half of the year, off the back of our strong deposit performance. Last year, hedge income was £4.2 billion, £0.8 billion higher than 2023. The average yield on the hedge was 1.7%, increasing to over 1.9% in the fourth quarter. And as you know, the reinvestment rate as the hedge rolls over continues to be significantly higher than the current yield. The weighted average life of the hedge meanwhile remains stable at around three and a half years. Looking forward, based on our notional and swap rate expectations, we're guiding for hedge income this year to be 1.2 billion higher than in 2024. Thereafter, we expect 2026 hedge income to be a further 1.5 billion higher than in 2025. Moving to other income on slide 15. 2024 was another year of encouraging and broad-based growth in other income. We expect this pattern to continue. Other income of £5.6 billion was 9% higher than the prior year. Despite Q4 being a seasonally weaker quarter, it was flat versus Q3 and indeed 11% up year on year. Growth during the year was evidenced across the divisions, driven by higher customer activity and by our strategic investment. Retail was up 10% year on year, supported by a strengthening contribution from our motor leasing business and a resilient performance across our other banking income lines. Commercial was up 8% versus 2023, driven by a positive performance in our markets business across the year. Growth was supported by share gains as well as by higher client activity. Insurance, pensions and investments OI was up 7% year on year. This included healthy growth within general insurance as well as workplace pensions and individual annuities. We also saw growth in other income associated with the group's equity investment businesses in the year. This was driven by Lloyds Living, previously Citra, and LDC. Looking forward, as we continue to invest in our strategic initiatives across the business, we expect strong growth in other income to continue. Turning to operating lease appreciation. The 2024 charge of 1.3 billion included 331 million in Q4. Car price developments followed our expectations as we set out at H1. Looking forward, we expect this charge to grow in line with fleet growth and higher value vehicles, supporting progress in other income. Let me move to costs on slide 16. Operating costs were 9.4 billion in 2024, again in line with our guidance. This represents 3% growth year on year, or 2% excluding the sector-wide BOE charge introduced in the first quarter. Cost discipline remains an imperative for the group. Last year, we continued to invest while offsetting inflationary pressure with further cost savings. We now hit our target of 1.2 billion of gross cost saves versus 2021. Most recently, Q4 operating costs were 2.5 billion, stable on Q3, excluding the annual payment of the bank levy. Looking ahead to this year, we expect operating costs of circa 9.7 billion. This is in the context of continued investment alongside inflationary pressures, partly offset by ongoing efficiency benefits. It also includes the impact of higher national insurance contributions, which are equivalent to about 100 million per annum. Our continued tight BAU cost control enables us to make ongoing investment into the business to support our growth ambitions within our planned cost budgets. This means that our investment in severance spent 2026 will be slightly higher than previously planned, driving further income growth, cost savings and reinforcing operating leverage. All of this is consistent with our 2026 ambitions, including the below 50% cost to income ratio. The remediation charge is 899 million for the full year and 775 million in the quarter. 700 million of the charge relates to the incremental motor finance provision. Stepping back for the typical full year run rate, we still see 200 to 300 million as an appropriate guide. I'll elaborate on motor finance on the next slide. In Q4, we took an additional 700 million provision for the potential remediation costs relating to motor commission arrangements. This provision is following the recent Court of Appeal judgment, which changes the previously understood law around the disclosure and consent to motor commissions. It also goes beyond the scope of the original FCA review. In this context, we welcome the expedited Supreme Court hearing at the beginning of April. I'll take a moment to explain the framework around the provision. The provision is built upon a number of key inputs, including the potential outcomes from the Supreme Court appeal, any subsequent FCA intervention, and depending on that, the potential remedy per case, the customer claim rate, the potential rate of interest applied, and so forth. These inputs give rise to a range of scenarios against which we assess probabilities to determine the probability-weighted provision. Clearly there's significant uncertainty around each of these inputs, but combined with the previous provision of 450 million, the total amount of 1.15 billion represents our best estimate. Final financial impact could of course differ meaningfully, both higher or lower from the amount that we have provided. Let me now turn to asset quality on slide 18. Asset quality remains very strong. It reflects our prime customer base and a prudent approach to risk. The 2024 impairment charge was $433 million, equivalent to an asset quality ratio of 10 basis points. This incorporates a low underlying charge, as well as some one-offs, such as the release of inflationary judgments. It also benefits from improvements in our economic assumptions, or MES, throughout the year. On a pre-MES basis, the impairment charges are still low, 827 million, an AQR of 19 basis points. The Q4 impairment charge is 160 million, or 14 basis points, including a 70 million MES credit. Pre-MES, the charge is 20 basis points. Our stock of ECLs on the balance sheet is now 3.7 billion, about 450 million in excess of our base case, and like for like, higher than pre-pandemic levels. Looking forward, we expect the asset quality ratio to be circa 25 basis points, 2025, based upon our stated economic assumptions. Let me move to slide 19 and briefly look at our portfolio. Our portfolio is low risk and highly resilient. New to arrears and UK mortgages improved throughout 2024. Over two thirds of our book are now on pay rates in excess of 3%, with the portfolio, of course, having been stress tested to much higher rates. Our mortgage book average LTV stands at 43.7%. Arrears and defaults across other portfolios remain low and in most cases falling. Importantly, across retail and commercial, early warning indicators continue to be reassuring. In retail, for example, minimum payers in cards remain low and stable. Commercial, we're seeing stable SME working capital utilization trends. Our asset quality performance has been underpinned by extensive de-risking in recent years, both in retail and in commercial portfolios. A lower ECL and our improved results in recent external stress tests testify to this progress. Moving on, I'll turn to slide 20 to take a look at the updated macroeconomic outlook. The macroeconomic outlook continues to be stable. In the fourth quarter, we've made only minor revisions to our forecasts in Q3. We now forecast 1% growth in GDP for 2025. We expect three 25 basis point cuts in the UK bank rate this year. We then expect a further two cuts in 2026. Our unemployment forecast remains largely unchanged, averaging 4.7% both in 2025 and in 2026. We expect modest house price growth of around 2% this year, supported by a lower rate environment. As usual, we present the full set of economic and associated ECL provisions in the appendix. So moving on, let's turn to slide 21 to look at the below the line items, TNAV and ROTE. Return on tangible equity for 2024 was 12.3%. Excluding the motor provision, the full year ROTE was 14%. Within this, restructuring costs were low at 40 million in the year and 19 million in Q4. The volatility in other items charged was 332 million in the year and 150 million in the final three months. The fourth quarter charge in particular was significantly driven by negative insurance volatility in the rates movements that we saw. Tangible net assets per share at 52.4 pence were up 1.6 pence in 2024. The increase over the year was driven by profits and a reduced share count from our buyback programme. This was offset by shareholder distributions. Q4 growth in TNAV per share, dampened by the motor provision, was more than offset by the impact of higher rates on the cash flow hedge reserve and the pension surplus. Looking ahead, we expect TNAV per share to materially grow as the business builds alongside support from the unwind of the cash flow hedge reserve and the reduced share count from the buyback. In 2025, including the impact of a growing TNAV, we expect a return on tangible equity circa 13.5%. Let me now turn to capital generation on slide 22. Scrooge delivered capital generation in a year of 148 basis points, or 177 basis points, excluding the motor provision. This strong underlying capital build is in line with our expectations and before motor, consistent with our target of circa 175 basis points for the full year. Within this, risk-weighted assets were $224.6 billion, in line with the guidance that we set out in 2022. The 5.5 billion increase in the year includes lending growth, as well as 3.3 billion relating to our adjustments for CRD4 secured risk weightings. We previously guided that CRD4 was going to result in about 5 billion of incremental RWA growth in 2024-26. We now expect the ultimate impact may be modestly greater than this, depending upon our discussions with the PRA. Suffice to say, we will continue to focus on RWA efficiency and optimization to offset these regulatory pressures. While on the topic of regulatory change, you'll know that BAL 3.1 has now been delayed to the start of 2027. We expect this to lead to a moderate reduction in RWAs when it is eventually implemented. At end 2024, our closing CET1 ratio after our dividend and buyback distributions is 13.5%. This meets our guidance to pay down to this level by the end of the year. Looking forward, we expect 2025 capital generation to be circa 175 basis points and to move to our target CET1 ratio of 13% by the end of 2026. I'll now move to slide 23 to discuss distributions. We remain highly committed to returning capital to shareholders. Our consistent capital generation underpins strong distributions. For 2024, the robust financial performance and capital position enables the Board to announce a final ordinary dividend of 2.11 pence per share for a total of 3.17 pence. This is up 15% on the prior year. In addition to the final dividend, today we are announcing a buyback of 1.7 billion. This is a good result after taking into account the additional motor provision. Together, this means that the group will distribute a total of up to 3.6 billion in respect to 2024, around 9% of our market cap. Dividend is now around 60% higher than it was in 2021. Our consecutive buyback programs, meanwhile, have so far reduced share count by more than 15% over the same period. Going forward, prospects for continued healthy growth in our distributions are good. Let me now wrap up the financial section of the presentation on slide 24. In sum, 2024 represented another robust financial performance, reflecting income growth in the second half of the year, as well as continued cost discipline and reassuring asset quality. Together, this offers strong capital generation and healthy distributions. We are building firm foundations. For 2025, we now expect net interest income to be circa 13.5 billion. Operating costs to be circa 9.7 billion. The asset quality ratio to be circa 25 basis points. The return on tangible equity to be circa 13.5%. And capital generation to be circa 175 basis points. We also reconfirm our 2026 targets, which you've seen before and are laid out here on this slide. We are confident of delivering higher, more sustainable returns. That concludes my comments for this morning. Thank you for listening. I'll now hand back to Charlie to provide an update on our strategic progress.

Many thanks, William. So, it's now been three years since we presented our strategic plan covering the period to 2026, with 2024 representing a major checkpoint along this journey. I'm very encouraged with the progress we've made to date, and I'm highly confident of delivering long-term differentiation across our businesses, cementing our position as a leading national champion. In this section, I want to share with you the following key messages. Firstly, our purpose-driven strategy is delivering and driving long-term competitive advantage across the business. Secondly, there have been a number of key strategic deliveries in the first phase, which are creating broad-based momentum. And thirdly, we are excellently positioned to accelerate our transformation in the second phase and deliver an enhanced financial profile to 2026. Let me start on slide 26 with an overview of our strategy. We have a clear strategy anchored around our purpose of helping Britain prosper. Our strategic priorities of grow, focus and change build upon and reinforce our competitive advantages that come from our deep scale customer relationships, our proven track record and efficiency, and our commitment to being a leader when it comes to digital and technology. Our strategic execution is enhancing our customer proposition, whilst at the same time delivering a compelling investment case for our shareholders. This is characterized by growing revenues and significant operating leverage, supporting strong returns and increased distribution capacity. Building on this, on slide 27, I'll provide a brief reminder of the opportunities we identified when we started our transformation in 2022. Our strategy is built upon strong foundations. As a leading integrated financial services provider in the UK, the group's scale, distinctive customer propositions, broad product offering and trusted brands provide a platform from which we can unlock our full potential. To achieve this, a number of strategic opportunities were identified in 2022. This included returning the group to growth, de-risking in a number of areas, further improving our cost and capital efficiency, and transforming our digital AI and talent to further differentiate our services for customers and position us for the future. There are a few specific targeted outcomes that we did not deliver in the first phase. But overall, we've made excellent progress in this regard. And I'll provide examples of this over the coming slides. Looking ahead, with the majority of de-risking activities now complete, we see the opportunity to accelerate the scale of our transformation over the next two years as we become unencumbered by some of these challenges. This will support the delivery of a truly differentiated franchise for both our customers and shareholders by 2026, and a stronger competitive position for us to progress into the future. Starting on slide 28, I'll highlight the progress we've made across our three strategic pillars. When we laid out the strategy in February 22, we provided you with a selection of targeted outcomes that would help you track the progress we were making to 2024. Encouragingly, we've successfully delivered 80% of these. In a few areas, we're slightly behind our original expectations, such as mass affluent investment flows, as higher interest rates drove a shift to savings instead. However, this has been more than offset by meaningfully surpassing our targets in other areas. a full scorecard of our progress has been provided in the appendix. As a result, we've delivered £0.8 billion of additional revenues from strategic initiatives ahead of target and realised £1.2 billion of gross cost savings, having increased this from £1 billion We've delivered this at the same time as undertaking significant de-risking activity, such as addressing a seven billion pound pension deficit, more than halving our legacy mortgage portfolio, removing circa 650 legacy technology applications, and achieving 18 billion pounds of RWA optimization over the three years. The ability to deliver these outcomes, whilst also growing the core franchise, demonstrates a shift in organizational agility. Looking at our strategic priorities in order, on slide 29, I'll highlight the strong revenue momentum our growth has delivered in the first three years. The first phase of our strategy represented a clear shift in focus towards growth. Aligned to this, we've built momentum across the business and in turn delivered net income growth of nearly two billion pounds since 2021. We've seen meaningful headwinds during this period, including margin pressures for the runoff of our SVR mortgage book and a prolonged period of weaker front book margins. Operating lease depreciation has also normalized from historically low levels, whilst the runoff of government-backed lending has acted as a drag on our commercial banking business. In aggregate, this headwind has more than offset a two billion pound increase in structural hedge income in the period. However, this has been outweighed by approximately £3 billion of net income growth from the core franchise. This includes the £0.8 billion of additional revenues from strategic initiatives, combined with more than £2 billion of BAU income growth. Whilst the latter does capture the benefit of higher rates, it also reflects strong growth not linked to our strategic investment, such as in IP&I and CIB, where we've benefited from increased focus. Our revenue growth also includes a significant contribution from other income, with an 11% CAGR over the period across our three main reporting divisions. This is in line with our focus on growing more diversified revenue streams and reducing long-term NII reliance. Let me now explain on slide 30 how we've delivered this strong growth. As you've heard in our half-yearly updates and through our investor seminars, we have multiple levers to drive revenue growth. Firstly, we've delivered growth through the core franchise, supported by our renewed growth focus and strengthened capabilities. For example, our gross mortgage lending share in 2024 was the highest for over a decade. We delivered strong growth in segments of strength, such as first-time buyers, whilst investments in intermediary journeys and our home hub ecosystem are driving improved acquisition and retention outcomes. Secondly, we're deepening relationships across the group, leveraging our broad offering to meet more needs for our customers and clients. Our market-leading digital experiences, trusted relationship teams, and advanced data insights are key to this. Thirdly, we're driving growth in high-value areas such as mass affluent. Previously, we did not have a dedicated proposition for this important customer group. But in the past three years, we've grown our customer base to over 3 million and increased banking balances by around £25 billion. And finally, we're driving greater cross-group collaboration, increasing the penetration of protection, home insurance and investments across our retail customer base and driving greater links between our workplace business and CIB clients. This is an area where we see more opportunity looking forward, increasing access to the group's unique breadth of businesses. Turning now to our second strategic pillar, focus, which covers both cost and capital efficiency. I'll start with costs on slide 31. Our commitment to cost efficiency is equally important as our growth focus, with both contributing to improving operating leverage. Our £1.2 billion of gross cost savings have more than offset elevated pay and inflation in the period. These savings were broad-based, but with meaningful contributions from our technology decommissioning efforts, the consolidation of our office footprint, and improving efficiency within our branch network as we shift to mobile first. These savings have mitigated headwinds and created capacity to drive growth in the business. This investment capacity will help unlock the additional revenues from strategic initiatives that we've targeted for 2026, with many of these having a lower marginal cost income ratio than the group today. As well as enabling further gross cost savings, we continue to target a cost income ratio of less than 50% by 2026. As you'd expect from us, costs will remain a key area of focus over the next two years and beyond. Turning now to capital efficiency, our second priority within the focus pillar on slide 32. Our strategic participation choices are supportive of driving improved capital efficiency, growing in fee-generating capital light areas. However, we've also proactively delivered significant RWA optimisation since 2021, supported by growing originate to distribute capabilities within our CIB business and increasing adoption of SRT transactions. This optimisation activity has more than offset regulatory inflation in the period, ensuring that RWA growth has more closely aligned to business growth with our end 2024 position within the £220 to £225 billion guidance we provided three years ago. Ongoing optimization actions combined with portfolio de-risking we've undertaken increased the predictability of capital generation going forward. On slide 33, I'll move to our third pillar, change. Critical to our growth priorities is the way we leverage our strengths in technology and data to drive improved customer and business outcomes. Having established the largest UK retail digital bank with over 20 million app users and over 6 billion logons, our focus has been twofold. Firstly, to replicate this success across the group, delivering best-in-class digital experiences that drive superior levels of engagement in areas such as IP&I and BCB. I'm going to have to take a quick break. Do you mind if I just take two minutes? I'm just going to go to the restroom. Apologies, everyone. I won't finish comfortably if I don't. I'll be back in one minute. Sorry about. Sorry about that. No, not planned. I think it's the first for me. But I wanted to be really focused on the next part because I get to talk about the transformation going forward. It's not to try and shorten the Q&A. We've got plenty of time for that. Sorry about that. No, not planned. I think it's the first for me. But I wanted to be really focused on the next part because I get to talk about the transformation going forward. It's not to try and shorten the Q&A. We've got plenty of time for that. So let me go back to this. It's early days in both areas, but our progress is encouraging. For example, our Scottish Widows app was rolled out to workplace customers during 2024 and has already recorded 8 million log-ons as customer interaction increases off the back of personalised experiences and innovative gamification. This level of engagement is significant in an area that customers have historically neglected, and we see scope for further improvements over time as we extend this to more of our IP&I customer base and eventually the open market. Secondly, we're focused on driving greater value from our engagement, shifting our digital businesses from a servicing channel to one of acquisition too. To enable this shift, we've delivered a number of innovative propositions over the last three years. I'll cover some of these on slide 34. We have meaningfully increased the pace of innovation since 2021, building and scaling unique mobile-first propositions across our core customer ecosystems. By leveraging new technologies and harnessing the power of the significant data asset, we've been able to meet clear customer needs, drive greater engagement, and ultimately deliver business value. For example, our mobile-first home hub ecosystem, available to both relationship and intermediary customers, is a one-stop shop helping customers to improve their home ownership experience, from understanding the value of their homes to sourcing retrofit solutions. This has driven increased direct customer engagement in a highly intermediated market and is ultimately improving our retention experience and building deeper relationships. Similarly, we have meaningfully scaled and expanded your credit score, improving credit worthiness and driving increased conversion rates and lending volumes for the business. Having initially focused on eligibility linked to personal loans, customers are now able to consider the full suite of retail products from car finance to mortgages. This level of innovation would not have been possible three years ago and is testament to the organizational and cultural change that has taken place. This has been supported by our targeted investments in technology and talent in key areas, including the hiring of more than 4,000 technology and data specialists. Having covered our progress to date, I'll now shift to focus on the second phase and cover our exciting plans for 2025 and 26, starting on slide 35. Our strategy is a five-year one, and therefore many of the items that I've discussed in the first phase will continue to be relevant as we move through to 2025 and 26. Before commenting on our strategic priorities, let me take a moment to reflect on the external environment we see over the next few years. We believe this provides a supportive backdrop for our strategy during this period and for broader investment in the UK. As William said, our current forecast for the UK is for a resilient but slow growth economy. However, we see both the opportunity for economic growth to accelerate and for Lloyds Banking Group to grow faster than the economy. This is for a few key reasons. Firstly, households and businesses' financial health has strengthened again in 2024. The government is committed to growth and regulatory reform and sees financial services as an important part of enabling it. Although there's significant geopolitical uncertainty, we see the UK as well-placed to navigate it relative to other economies and expect base rates to continue to come down through 2026. And finally, our strategy is focused on higher growth economic areas, such as housing, infrastructure, transition finance, pensions, and mass affluent customers. In that context, during the next two years, we will build on the strong foundations and business momentum we've developed in the first phase to drive growth across the group with a focus on high value areas. Our commitment to cost and capital efficiency will be reinforced by further savings, delivering strong operating leverage, whilst we will extend optimization capabilities further to mitigate headwinds and facilitate growth. and we'll begin the next phase of our technology transformation, increasing the adoption of new technologies, including extending GenAI use cases across the group, driving benefits in both the near and longer term. Over the coming slides, I'll talk through our priorities for each of the main business units, where we're building upon our existing strengths to drive long-term competitive advantage. Let me start with our consumer relationships business within retail on slide 36. Our consumer business has significant scale and reach. We have relationships with over half of the UK adult population, with leading positions across both products and channels. Our strategic focus within consumer relationships is to deliver market-leading, mobile-first and highly personalised experiences. This, complemented by targeted human interactions, will drive more meaningful engagement with our customers, allowing us to meet more of their broader lifetime needs and further increase depth of relationship. In line with our focus on growing in high-value areas, we are further enhancing our mass affluent offering. Our new PCA proposition will be a key lever for increasing customer acquisition and building deeper relationships with a customer group that has more needs than that of the mass market. We're also exploring the use of GenAI as a channel, providing personalized financial goal planning and money management journeys for customers as we continue to identify ways to close the advice gap. Turning now to consumer lending on slide 37. We are a leading provider across all the main retail lending product lines in which we participate, with number one shares in mortgages, credit cards, loans, and transport. Our focus is to maintain these leadership positions through ongoing improvements to customer journeys across all channels, whilst delivering innovative new solutions to drive deeper customer engagement and value. In mortgages, we focus on maintaining strong gross lending flows, increasing participation in high-value areas, and meeting more needs across the home's ecosystem. In unsecured, we will build upon the strong progress in the first phase, where we grew share in key areas such as credit card spend and loans, the latter by around three percentage points. Over the next two years, we plan to drive further value from the Your Credit Score and scale our differentiated embedded finance offering, FlexPay, having launched this at the end of 2024. And in transport, we will maintain our strong share through targeted participation in higher growth areas, including our fast-growing salary fat sacrifice business, Tusca. I'll now cover IP&I on slide 38. IPNI enables us to deliver a truly differentiated experience. With 10 million customers, of which only roughly 2 million have a banking relationship with the group, there is significant opportunity for driving deeper relationships through an integrated bank assurance model. As I mentioned earlier, we're driving increased engagement with this customer base and plan to scale the Scottish Widows app from 400,000 customers today to more than 1.5 million by the end of 2026. We're embedding IP&I products and experiences into the retail banking app, including investment solutions. This is an important lever for increasing penetration of our banking customers. Finally, in workplace pensions, we'll continue to build profitable scale supported by increased connectivity with the rest of the group, particularly our CIB clients. Our repositioning of the IP&I business will ensure that it continues to be a sustainable source of earnings and dividends for the group. Turning now to commercial banking and firstly our BCB business on slide 39. BCB is a highly profitable business and we're well established in this area with trusted, long-standing relationships with businesses that make a significant contribution to the UK economy. We're building the best digitally-led relationship bank, bringing together the expertise and knowledge of our team of dedicated relationship managers with compelling mobile-first experiences. Building upon our deposit franchise, we see opportunities to diversify across both products and sectors. We're targeting growth in sectors such as manufacturing that have a broader range of needs beyond lending and therefore tend to have higher product holdings. We've got headroom here in product areas that support capital light, returns accretive growth. Our focus on digitization is front to back. Having made strong progress on digital origination in the first phase, we're now focused on digitizing key servicing journeys, improving experience and driving efficiencies for the group. More broadly, we believe the capabilities we've built thus far position us well to capitalize on an improving outlook for businesses and are already seeing green shoots across priority lending areas to evidence this. I'll now move to CIB on slide 40. CIB is an exciting growth area and one where we've made great strides in the first phase. The business is built upon leading positions in core areas such as UK infrastructure and project finance and Serling DCM. Underpinning this is a simple business model with disciplined participation across cash, debt and risk management. We've made great progress on becoming a broader solutions provider, meeting more transaction banking and markets needs. The latter has been an important source of revenue diversification and will continue to be so as we seek to grow CIB-OOI by circa 45% over the five-year period. Over the next two years, we will solidify our position as well as growing selectively in Europe and the US, supporting UK-linked clients. A continued focus on capital efficiency ensures disciplined growth. We've improved our income per average RWA by more than 150 basis points over the last three years, targeting a further meaningful increase by 2026. Turning now to slide 41, where I'll briefly cover the technology step change we are driving. Our technology strategy over the next two years will have two distinct elements. Ongoing modernization and rationalization of our state will continue to deliver savings and improve efficiency, providing the capacity for investment in new technologies. With regard to the latter, we're well positioned as an AI leader, with 800 AI models live today, supporting our colleagues and customers, whilst we continue to attract key hires at all levels. Having established the necessary capabilities, we've already launched a significant number of GenAI AI use cases across the group, including rolling out a knowledge management tool to more than 10,000 of our frontline colleagues to help them better support customers. We see opportunities to scale and extend these use cases over the next few years, improving speed to market, lowering cost to serve, and delivering more personalized experiences. While some of these use cases will extend beyond the current plan period, these investments are critical to driving structural advantage that will support long-term financial benefits and reinforce the group's technology leadership position into the future. Let me turn now to the financials in 2026, starting with slide 42. The acceleration in our strategic transformation over the next two years will further enhance our franchise and financial performance. Building upon the improvements in financial performance in the first phase, we see further upside over the final two years. This is supported by growing revenue momentum and a continued commitment to cost savings, along with reduced headwinds relative to those in the first phase. This will support increasing levels of capital generation with a reducing number of claims. To bring this to life, let me elaborate on our revenue outlook on slide 43. We're entering this next phase with a net income position of circa 17 billion pounds in 2024, having increased this by almost two billion pounds over the preceding three years. Headwinds to our revenue growth will persist over the next two years to some degree, namely the ongoing but easing mortgage headwind and the timing and impact of base rate cuts. However, as we see it today, we expect the headwinds to be smaller than they were in the years to 2024. As we've guided for some time, we continue to expect year on year progression in our structural hedge earnings across both 2025 and 26. We are today quantifying this impact with a combined uplift of around 2.7 billion pounds. Importantly, we expect the hedge tailwind to be materially larger than the headwinds in the second phase. Added to this, we expect to see further growth across our strategic initiatives and BAU activities. On strategic initiatives, based on our performance in the first three years, we are upgrading our guidance to greater than 1.5 billion of additional revenues. Taking these factors together, we're confident in the outlook for net income growth. Let me now close with the full suite of 2026 guidance on slide 44. The group is on a clear path to delivering an enhanced financial performance in 2026. As I've just mentioned, we see strong revenue upside in the second phase, including further OOI growth. Alongside, we'll retain our clear focus on cost and capital efficiency, delivering additional savings and RWA optimization. This will support a cost-income ratio of below 50%, and we remain committed to managing to a 13% CET1 ratio by 2026. The significant operating leverage we're generating in the second phase will support higher, more sustainable returns and capital generation. For 2026, this represents a return on tangible equity of greater than 15% and greater than 200 basis points of capital generation. I hope you found this to be a useful update on our progress to date and future plans. To summarize, I'm very pleased with the strong progress so far, and I'm excited about the opportunities to accelerate our transformation as we deliver a highly compelling investment case for shareholders. Thank you for listening. I'll now hand over to Douglas, who'll manage the Q&A. Douglas.