LYG - Lloyds Banking Group plc (LYG) Q1 2025 Earnings Call Transcript
2025-05-01 09:55:09 ET
Lloyds Banking Group plc (LYG)
Q1 2025 Earnings Conference Call
May 01, 2025 04:30 AM ET
Company Participants
William Chalmers - Executive Director and Chief Financial Officer
Conference Call Participants
Guy Stebbings - Exane BNP
Aman Rakkar - Barclays Capital
Ben Toms - RBC
Ed Firth - KBW
Jonathan Pierce - Jefferies
Amit Goel - Mediobanca
Robin Down - HSBC
Andrew Coombs - Citi
Chris Cant - Autonomous
Ben Caven-Roberts - Goldman Sachs
Presentation
Operator
Thank you for standing by, and welcome to the Lloyds Banking Group 2025 Interim Management Statement Call. At this time, all participants are in a listen-only mode. There will be a presentation from William Chalmers followed by a question-and-answer session. [Operator Instructions]. Please note this call is scheduled for one hour and is being recorded.
I will now hand over to William Chalmers. Please go ahead.
William Chalmers
Thank you, operator. Good morning, everybody and thank you for joining our Q1 results call. As usual, I'll run through the group's financial performance before we then open the line for Q&A. Let me start with an overview of our key messages on Slide 2. In Q1, we continued to deliver on our purpose-driven strategy. As you've heard at our full-year results presentation, strategic execution underpins our ambition to meet more customer needs and secure higher, more sustainable returns for our shareholders.
In the first quarter, the group demonstrated sustained strength in its financial performance. This included further growth in income following the upward trajectory established in the second half of last year. We've also maintained our cost discipline and asset quality remains strong. In the context of evolving global economic risks, our differentiated business model is resilient. Tariffs will have a very limited direct impact on our business, and we will of course continue to monitor the broader U.K. economic implications.
In this context, our focused strategy, our strong customer base and franchise and our sustained financial performance all give us confidence in the outlook for our business and underpin our guidance for 2025 and 2026.
Let's turn to our financial overview on Slide 3. As said, Lloyds Banking Group demonstrated sustained strength in its financial performance in the first quarter of this year. Statutory profit after tax were £1.1 billion with a return on tangible equity of 12.6%.
In Q1, net income of £4.4 billion was up 4% compared with the first quarter of the prior year. This was driven by continued growth in both net interest income and other operating income, partly offset by a higher operating lease depreciation charge. The net interest margin was 3.03%, 6 basis points higher than the prior quarter.
Operating costs were £2.6 billion, up 6% year-on-year. This includes a planned increase in front-loaded severance costs, without which it would be 3% year-on-year. Asset quality remains resilient. First quarter impairment charge of £309 million equates to an asset quality ratio of 27 basis points. This includes a net £35 million multiple economic scenarios impact. TNAV per share is now 54.4p, up 2p from the end of 2024. This performance resulted in capital generation of 27 basis points, which was a strong underlying performance impacted by the front-loaded severance costs and a temporary 14 basis point increase in RWAs primarily linked to hedging activity. The group CET1 ratio stands at 13.5%....
Lloyds Banking Group plc (LYG) Q1 2025 Earnings Call Transcript