LYG - Lloyds Banking reports Q4 earnings; initiates FY23 and beyond guidance

• Lloyds Banking press release ( NYSE: LYG ): Q4 GAAP EPS of 7.30p.
• Net interest income of £13.17B (+18.0% Y/Y).
• Loans and advances to customers at £454.9 billion were up £6.3 billion in the year, with continued growth in the open mortgage book.
• Customer deposits of £475.3 billion down £1.0 billion in 2022, with Retail current account growth of £2.5 billion more than offset by reductions in Commercial Banking deposits.
• Strong pro forma capital generation of 245 basis points3 in the year, based on robust banking performance.
• Pro forma CET1 ratio of 14.1 per cent after capital distributions and further pension contributions, remaining ahead of the ongoing target of 12.5 per cent, plus a management buffer of 1 per cent.
• 2023 Guidance : Based on our current macroeconomic assumptions, for 2023 the Group expects: Banking net interest margin to be greater than 305 basis points; Operating costs to be £9.1 billion; Asset quality ratio to be c.30 basis points; Return on tangible equity to be c.13 per cent; Capital generation to be 175 basis points.
• 2024 and 2026 guidance : Operating costs now expected to be £9.2 billion in 2024, with a cost:income ratio of less than 50 per cent by 2026; Asset quality ratio now expected to be 30 basis points in 2024; Return on tangible equity now expected to be 13 per cent in 2024 and greater than 15 per cent by 2026; Additional revenues from strategic initiatives of £0.7 billion by 2024 and £1.5 billion by 2026; Risk-weighted assets to be between £220 billion and £225 billion at the end of 2024; Capital generation now expected to be 175 basis points in 2024, increasing to greater than 200 basis points by 2026; The Group will maintain its progressive and sustainable ordinary dividend policy, whilst the board expects to pay down to its target CET1 ratio by the end of 2024 .

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