ECN EXCHANGE OFFER - lloydsbankinggroup.com · legacy business (mainly PPI) UK Government commenced...

ECN EXCHANGE OFFER

Presentation to Fixed Income Investors

March 2014

1 1

DISCLAIMER

THIS DOCUMENT IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION AND FOR USE AT A PRESENTATION TO BE HELD IN CONNECTION

WITH THE INVITATIONS DESCRIBED HEREIN AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHER DISTRIBUTED TO ANY OTHER PERSON OR

PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF

APPLICABLE SECURITIES LAWS.

This presentation does not constitute an offer to sell, or a solicitation of an offer to subscribe for, any security issued by Lloyds Banking Group plc (the ‘Company’) or

any of its subsidiaries (the Company and its subsidiaries together, the ‘Group’), including the existing securities which are the subject of the exchange offers and

tender offers referred to herein (the ‘Offers’) and the new securities to be issued by the Company pursuant to the Offers, in any jurisdiction in which such offer or

solicitation is unlawful. This presentation is not for distribution, directly or indirectly, in or into Australia, South Africa, Canada, the United States or Japan or any other

state or jurisdiction in which it would be unlawful to do so. This presentation does not constitute or form a part of any offer or solicitation to purchase or subscribe for

securities in the United States.

The Offers include (i) exchange offers in respect of certain existing EUR and GBP denominated securities, to be conducted in reliance on Regulation S outside the

United States (the ‘Non-US Exchange Offers’), (ii) tender offers in respect of certain existing GBP denominated securities, to be conducted in reliance on

Regulation S outside the United States (the ‘Tender Offers’ and, together with the Non-US Exchange Offers, the ‘Non-US Offers’) and (iii) exchange offers in

respect of certain existing USD denominated securities, to be conducted outside the United States and in the United States (the ‘US Offers’). The Non-US Exchange

Offers will be conducted on the terms described in an exchange offer memorandum (the ‘Non-US EOM’), the Tender Offers will be conducted on the terms described

in a tender offer memorandum (the ‘TOM’) and the US Offers will be conducted on the terms described in a Form F-4 (the ‘F-4’) and Schedule TO (the ‘Schedule

TO’).

The securities mentioned herein include new USD denominated securities (the ‘USD AT1 Securities’) to be issued by the Company pursuant to the US Offers and

registered under the United States Securities Act of 1933 (the ‘Securities Act’). The USD AT1 Securities may be offered or sold in the United States, subject to the

requirements of the Securities Act. The other securities referred to herein (the ‘Non-registered Securities’) have not been, and will not be, registered under the

Securities Act. The Non-registered Securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration

requirements of the Securities Act. There will be no public offer of the Non-registered Securities in the United States.

This presentation is an advertisement and not a prospectus and investors should not subscribe for any securities referred to in this presentation except on the basis

of information in (i) the Non-US EOM (with respect to securities available for subscription in the Non-US Exchange Offers) or (ii) the F-4 and Schedule TO (with

respect to securities available for subscription in the US Offers). Copies of such documents are available to eligible persons from Lucid Issuer Services Limited. The

Non-US EOM and F-4 include descriptions of certain risk related to participation in the relevant Offers and an investment in the relevant output securities.

In the United Kingdom this presentation is being made only to and is directed only at (a) persons who have professional experience in matters relating to investments

who fall within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the ‘Order’) and (b) other persons to whom it may

otherwise lawfully be communicated in accordance with the Order (all such persons together being referred to as ‘relevant persons’). Any person who is not a

relevant person should not act or rely on this presentation or any of its contents.

2 2

DISCLAIMER (continued)

This presentation and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other

person. The distribution of this presentation and/or any other documents related to the Offers or any other offering of securities or the transfer or offering of securities

into any jurisdiction may also be restricted by law. Persons into whose possession this presentation comes should inform themselves about and observe any such

restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

The information in this presentation has been provided by the Company and the Group or obtained from publicly available sources. This presentation speaks as at

the date hereof and has not been independently verified. None of the Company, any Group member, their respective advisers or any other party is under any duty to

update or inform any recipient of any changes to information in this presentation, provide any recipient with access to any additional information or to correct any

inaccuracies in any such information which may become apparent. No representation or warranty (express or implied) is given by the Company, any member of the

Group or any of their respective affiliates, agents, directors, partners and employees that the information in this presentation is correct or complete, and none of them

accepts any liability whatsoever for any loss or damage howsoever arising from any use of this presentation or otherwise arising in connection therewith.

This presentation has been issued by and is the sole responsibility of the Company. None of the Joint Dealer Managers appointed in relation to any of the Offers or

their respective affiliates, agents, directors, partners and employees accepts any responsibility whatsoever for, or makes any representation or warranty, express or

implied, as to the contents of this presentation or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the

Group, the Offers or any of the securities referred to herein. Subject to applicable law, each of the Joint Dealer Managers accordingly disclaims any and all

responsibility and/or liability, whether arising in tort, contract or otherwise, which it might otherwise have in respect of this presentation or any such statement.

This presentation is published solely for informational purposes and does not constitute investment advice. Recipients should consult with their own legal, regulatory,

tax, business, investment, financial and accounting advisors to the extent that they deem it necessary, and make your own investments, hedging and trading

decisions (including decisions regarding the suitability of the Offers) based upon their own judgement as so advised, and not upon any information herein.

3 3

GROUP 2013 RESULTS AND GUIDANCE

CAPITAL STRATEGY

TRANSACTION OVERVIEW

EXECUTIVE SUMMARY

AGENDA

4 4

EXECUTIVE SUMMARY

Background and rationale

(1) All ratios stated on a pro forma basis, as reported at FY 2013 results. Leverage ratio is on a Basel III basis excluding grandfathered Tier 1 securities. CRD IV

leverage ratio of 4.1% including grandfathered Tier 1 securities. (2) Assumes £5bn of new notes issued.

CAPITAL

POSITION

Strong capital position

– 10.3% CET1 and 3.8% leverage ratio(1)

Significant capital generation

– Expect CET1 generation, including the effects of this transaction and prior to any

dividends, to be c.2.5% over the next two years and 1.5-2% per annum thereafter

TRANSACTION

OVERVIEW

The Group is inviting holders of all 33 series of Enhanced Capital Notes

(ECNs) to participate in exchange / tender offers (as applicable)

Institutional and global targeted prioritised exchange offers of ECNs into new

Additional Tier 1 (AT1) securities, capped at c.£5bn of new AT1 securities

Retail cash tender offer for eligible holders of Sterling ECNs outside US

Pricing consistent with current trading levels as at launch

Estimated one-off accounting charge of c.£1bn, based on current market

prices, more than half comprising the accelerated amortisation of the ECN

derivative; current year benefit to net interest margin of c.5bp(2)

RATIONALE

Aligns capital base to evolving CRD IV framework, delivering the Group’s

medium term AT1 requirement

Improves leverage ratios by c.0.5%(2)

Improves rating agency capital measures

Provides opportunity to mitigate ECN regulatory call uncertainty

5 5

AGENDA

EXECUTIVE SUMMARY

CAPITAL STRATEGY



6 6

2013 STRATEGIC HIGHLIGHTS

Significant progress made on our strategy, with delivery

ahead of plan

Continued focus on our customers and helping Britain prosper; core lending

returned to growth in all divisions

Financial performance substantially improved; Group underlying profit more than

doubled

Continued risk reduction: non-core assets reduced by over a third, in a capital

accretive way, our international presence further reduced and funding position

further improved

Capital significantly strengthened, meeting guidance despite additional charges for

legacy business (mainly PPI)

UK Government commenced the process of reducing its stake in the Group

Expect to apply to the PRA in second half of 2014 to restart dividend payments

7 7

FINANCIAL PERFORMANCE

Profit and returns substantially improved

UNDERLYING

PROFIT

INCOME

NIM

COSTS

IMPAIRMENT

GROUP

£6,166m

140%

£18,805m

2%

2.12%

19bp

£(9,635)m

5%

£(3,004)m

47%

CORE

£7,574m

24%

RETURN ON

RWAs

2.14%

137bp 3.26%

72bp

£18,244m

6%

2.49%

17bp

£(9,149)m

1%

£(1,521)m

21%

STATUTORY

PROFIT

£415m

Group underlying profit more than

doubled to £6.2bn with core contributing

£7.6bn

– Further improvement in core profitability

– Significant reduction in non-core losses

Costs down 5% – Simplification

programme delivering further

efficiencies, with continued investment

Further improvement in overall portfolio

quality reflected substantial reduction in

impairment charge

Higher returns driven by increased

profitability and lower RWAs

Statutory profit of £415m includes

legacy charges totalling £3.5bn

8 8

CUSTOMER DEPOSITS & CORE LENDING (£bn)

BALANCE SHEET

Core lending returned to growth, non-core assets further

reduced and capital and funding position strengthened

(1) Excluding repos and reverse repos. (2) Pro forma fully loaded common equity tier 1 capital ratio and leverage ratios including benefit of announced sales of SWIP,

Sainsbury’s Bank, Heidelberger Leben. (3) Exposure measure estimated in accordance with Jan 2014 revised Basel III leverage ratio framework. (4) Pro forma. Includes

the full value of Tier 1 instruments reported under the prevailing rules as at 31 December 2013.

Dec 2013 Jun 2013 Dec 2012

(67)%

194

63

131

Dec 2010

141

56

85

Dec 2011 Dec 2012

98

50

48

Dec 2013

64 25

39

NON-CORE ASSETS (£bn)

4% 3%

423 425

431 428

438 437

Group Core

120% 101% 100% 109%

(41)pp

154%

Dec 2010

113%

Dec 2013

121%

Dec 2012

135%

Dec 2011

FULLY LOADED COMMON EQUITY TIER 1 LOAN TO DEPOSIT RATIO(1)

Dec 2012

8.1%

3.8%

Jun 2013

9.6%

4.2%

Basel III tier 1 leverage ratio(3) CRD IV tier 1 leverage ratio(4)

(35)%

(8)pp

Non Retail Retail Customer deposits(1) Core lending(1)

Dec 2013(2)

10.3%

3.8%

4.1%

Jun 2012

7.7%

9 9

GUIDANCE

Reflects confidence in the future

2014 full year Group net interest margin expected to stabilise at around the Q4 2013 level of

2.29%, excluding impact of TSB disposal and exchange / tender offers

Costs for 2014 are expected to be around £9bn, excluding TSB running costs

Impairment charge as a percentage of average advances expected to reduce to around 50bp

for 2014

Run-off portfolio (non-core non-retail assets and certain non-core retail assets) expected to

reduce to c.£23bn and non-core non-retail assets to c.£15bn by the end of 2014

Expect, including the effects of this transaction and prior to any dividends, to generate fully

loaded CET1 capital of around 2.5 percentage points over the next two years, and thereafter

1.5-2 percentage points per annum

Expect to apply to the PRA in the second half of 2014 to restart dividend payments,

commencing at a modest level

Progressive dividend policy expected thereafter moving to a dividend payout ratio of at least

50% of sustainable earnings in the medium term

10 10

AGENDA

EXECUTIVE SUMMARY



CAPITAL STRATEGY

11 11

CAPITAL STRATEGY AND OUTLOOK

Strong sustainable returns and capital position

BUSINESS MODEL

Substantial strategic progress and improved performance

Lower risk with strong, sustainable returns

Strongly capital generative

STRONG CAPITAL

POSITION

Pro-forma CET1 ratio of 10.3%; 3% above conversion trigger and materially

above current Combined Buffer requirements (at which distribution

restrictions apply)

Expect, including the effects of the transaction and prior to any dividends, to

generate fully loaded CET1 capital of around 2.5 percentage points over the

next two years, and thereafter 1.5-2 percentage points per annum

Expect medium term, steady state CET1 target around 11%, which provides a

buffer of c.4% above the 7% trigger. This is equivalent to an increase in RWA

of c.55% (c.£155bn) or losses of c.£11bn

Lower risk, strongly capital generative business model positions the Group

well for future Combined Buffer requirements

DIVIDEND POLICY

Board expects to apply to the PRA in the second half of 2014 to restart

dividend payments, commencing at a modest level

The Board currently intends to take into account the relative ranking of the

AT1 securities in the Group’s capital structure, although the Board may at

any time depart from this policy at its sole discretion

12 12

CAPITAL POSITION – IMPACT OF TRANSACTION

Aligns capital base to evolving CRD IV capital framework

Tier 2

ECN Tier 2

CET1

(fully loaded

CRD IV)

Legacy Tier 1

Tier 2

Remaining

ECN Tier 2

CET1

(fully loaded

CRD IV)

Legacy Tier 1

New CRD IV

compliant AT1 Capital impact of proposed exchange

RESTATED CAPITAL COMPOSITION (%) YEAR END 2013 CAPITAL POSITION

Strong pro forma CET1 ratio of

10.3%

Robust Basel III leverage ratio of

3.8%

RESTATED PRO FORMA POST

EXCHANGE(1)(2)

Substantially improved quality of

capital, with c.£5bn of new AT1

Delivers 1.8% of AT1

Total Capital position unchanged

Improves Basel III fully loaded

leverage ratio to 4.3%

Improves rating agency capital

measures Basel III tier 1 leverage ratio(3) CRD IV tier 1 leverage ratio(4)

18.8

2.7

1.4

10.3

Dec 2013

Pro forma

4.4

3.8%

4.1%

18.8

9.9

1.8

1.4

1.3

4.4

Dec 2013

Restated(1)(2)

4.3%

4.6%

>10% incl. Q1

declared

Insurance

dividend of

£0.4bn

(1) Assumes c.£5bn of AT1 issued with a one-off charge of c.£1bn below underlying profit. (2) Excludes retail cash offer. (3) Exposure measure estimated in accordance with Jan 2014 revised Basel III leverage ratio framework. Excludes existing grandfathered AT1 instruments. (4) Includes the full value of Tier 1 instruments reported under the prevailing rules as at 31 December 2013.

13 13

Medium term steady state CET1

target of around 11% to cover

Individual Capital Guidance(2) and

systemic buffers

Total capital target ratio to be in

excess of 17%

Expect a c.4% buffer to 7% trigger

(buffer currently 3%), equating to an

increase in RWA of c.55% (c.£155bn)

or losses of c.£11bn

Materially above current Combined

Buffer requirements (at which

distribution restrictions apply)

Lower risk capital generative

business model positions the Group

well for future Combined Buffer

requirements

TARGET CAPITAL POSITION

Optimises capital base in the context of evolving capital

framework

(1) Assumes c.£5bn of AT1 issued with a one-off charge of c.£1.0bn below underlying profit. (2) Individual Capital Guidance (ICG) is a PRA requirement under Pillar 2a. (3) CRD IV as implemented in the UK by the PRA through PS 7/13. (4) Includes grandfathered securities.

Tier 2

Remaining

ECN Tier 2

CET1

Legacy Tier 1

AT1

‘Steady State’

CRD IV(3)

Requirement

>17%

Mgt Buffer

19% of ICG

+Min 1.5%

Mgt Buffer

Systemic

Buffers

0-3%

CCB 2.5%

56% of ICG

Min 4.5%

CAPITAL COMPOSITION

18.8%

1.8%

1.4%

1.3%

4.4%

Dec 2013

Pro Forma

Post Exchange(1)

9.9% Mgt

Buffer

1 Jan 2014

CRD IV(3)

Requirement

>17%

Min 1.5%

100% of ICG

+Min 2.5%

Min 4.0%

Mgt Buffer Tier 2

CET1

AT1

Combined

Buffer

TRANSITION TO 1 JAN 2019

25% of ICG

+Min 2%

Tier 2(4)

CET1

AT1(4)

14 14

AGENDA


CAPITAL STRATEGY

EXECUTIVE SUMMARY


15 15

SUMMARY OF TRANSACTION

Overview

Holders of ECNs have the opportunity to exchange their ECNs for new AT1

securities via two separate offers (Non US exchange offer, USD exchange offer)

Eligible retail holders of Sterling ECNs have the opportunity to participate in a cash

tender

The AT1 securities offered in the exchange offers will be capped at c.£5bn

The offers are priced consistent with current trading levels

There is a waterfall mechanism which will determine the acceptance of ECNs in both

the exchange offers and the tender offer

The Non US and USD exchange offers are open for 10 and 20 business days

respectively

The retail offer will have a 10 business day information period and a 20 business

day submission period

16 16


ECNs and regulatory call feature

CURRENT

RISKS

ECN Conditions include a Regulatory Call Right which would be triggered if, amongst other

things, the ECNs cease to be taken into account for the purposes of any ‘stress test’ applied

by the PRA (successor to the Financial Services Authority) in respect of core capital

Whilst still uncertain, management believes recent developments resulting in higher capital

requirements for banks, including a changed definition of core capital, make it likely that the

ECNs will not provide going concern benefit under future stress tests

For most Series of ECNs, the relevant Regulatory Call Price is substantially lower than the

Exchange Price

The offers provide eligible holders with a means to mitigate the uncertainty around the

Regulatory Call Right in the ECNs, whilst aligning the Group’s capital base to the evolving

CRD IV framework

If the Regulatory Call Right were to be used by the Issuer, the Group currently intends that it

would prioritise redemption of the Series accepted or which ranks higher than an accepted

Series in the various waterfalls of this transaction, over those Series which were not able to be

accepted or were prorated

PURPOSE OF

ECNs

ECNs were originally issued in 2009 for the purpose of qualifying as core capital for stress

test purposes

They contain a 5% core capital equity conversion trigger(1), above the then prevailing

regulatory capital minimum

This trigger is well below(2) the minimum 4% fully loaded CET1 ratio specified under CRD IV

applicable from 1 January 2014 (4.5% from 2015)

The Group would be in breach of current minimum capital regulations before the ECNs

contractually convert

(1) Based on the definition of Core Tier 1 (CT1) as communicated by the FSA in a letter to the British Banking Association, dated 1 May 2009. (2) Using 31 Dec 2013

published ratios, the Group’s fully loaded CET1 ratio was 4.0% lower than its CT1 ratio. This difference applied to a 5% CT1 ratio gives a CET1 ratio of 1.0%.

17 17

ELIGIBILITY Available to holders who own at least €200,000 or £200,000 in each series (nominal)

Not available to US investors and subject to other applicable securities laws

OFFER PERIOD

Launch 6 March 2014

10 business day offer period, expiring on 19 March 2014

Results announced 20 March 2014

NON US EXCHANGE OFFER

Overview

TARGET

NOTES

EUR denominated ECNs: 7 Series with c.€2.4bn outstanding

Sterling denominated ECNs: 22 Series with c.£4.7bn outstanding

OFFER TYPE

AND PRICING

AT1 output securities

– € 6.375% PNC6 Maximum €750m AT1 Securities

– £ 7.000% PNC5 Maximum £1.25bn AT1 Securities

– £ 7.625% PNC9 Maximum £1.25bn AT1 Securities

– £ 7.875% PNC15 Maximum £750m AT1 Securities

Pricing consistent with current trading levels

RATIONALE

Aligns capital base to the evolving CRD IV framework, delivering the Group’s medium term

AT1 requirement

Improves leverage ratio metrics and rating agency capital measures


18 18

OFFER PERIOD

Launch 6 March 2014

USD Exchange – minimum 20 US business day offer period, depending on SEC review.

Earliest expiration on 2 April 2014(1)

Results announced 3 April 2014

OFFER TYPE

AND PRICING

AT1 output securities: $ 7.500% PNC10 Maximum $1.675bn AT1 Securities

Pricing consistent with current trading levels

ELIGIBILITY Holders will receive AT1 only if the principal amount of the AT1 Securities issued is at least

equal to or greater than $200,000 (both before and after scaling, if any)

Global offer, subject to applicable securities laws

USD EXCHANGE OFFER

Overview

TARGET

NOTES USD denominated ECNs: 4 Series with c.$2.9bn outstanding

RATIONALE

Aligns capital base to the evolving CRD IV framework, delivering the Group’s medium term

AT1 requirement

Improves leverage ratio metrics and rating agency capital measures


(1) Expiration subject to SEC declaring registration statement and schedule TO effective.

19 19

KEY METRICS AND ACCOUNTING

The anticipated impact of the exchange on key metrics

IMPACT ON

KEY METRICS

Note: impact on key metrics assumes £5bn of new AT1s.

ACCOUNTING

The AT1 instruments will be equity accounted

– AT1 coupons will be shown as dividends in the statement of changes in equity – not part of the P&L

– Positive effect on the Group’s net interest margin of c.5bp in 2014

– There will be no new embedded derivative option on the balance sheet

– Coupon payments will be tax deductible for UK corporate income tax purposes

On completion of the offers there will be a one-off charge of c.£1bn, below underlying profit

– The amortisation of the ECN embedded derivative option will be accelerated (>50% of the one-off

charge)

– The exchange price is at a premium to the book value of the ECN liability

– The embedded derivative option on residual ECNs remains outstanding

CET1 Ratio 0.4% Impact of one-off charge (included in current capital

guidance)

Tier 1 Ratio 1.4%

Basel III & CRD IV

Leverage Ratio 0.5% AT1 notes contribute to all of these ratios

S&P RAC Ratio 0.8%

Underlying Profit £0.4bn pa Removal of interest expense of exchanged ECNs

Tangible Net Asset

Value (TNAV) £0.8bn Impact of one-off charge, net of tax

Net Interest Margin c.5bp In 2014

Coupons on AT1s £(0.3)bn pa AT1 coupons will be accounted for as dividends,

net of tax

20 20

INSTITUTIONAL EXCHANGE OFFERS

Overview

€ 6.375% PNC6

Maximum €750m AT1 Securities

£ 7.000% PNC5

Maximum £1.25bn AT1 Securities

£ 7.625% PNC9

Maximum £1.25bn AT1 Securities

£ 7.875% PNC15

Maximum £750m AT1 Securities

NON US

EXCHANGE

OFFER

USD EXCHANGE

OFFER

€ ECNs

7 Series

€2.4bn

$ 7.500% PNC10

Maximum $1.675bn AT1

Securities

$ ECNs

4 Series

$2.9bn

£ ECNs

22 Series

£4.7bn

£ ECNs

6 Series

£1.5bn

£ ECNs

5 Series

£1.6bn

£ ECNs

11 Series

£1.6bn

21 21

NON US AND USD EXCHANGE OFFERS

Summary terms of the output AT1 securities

Detailed terms in Appendix. Please refer to offering document for full terms.

ISSUER Lloyds Banking Group plc

EXPECTED ISSUE

RATINGS BB- (S&P); BB- (Fitch)

AT1 SECURITIES Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible Securities

ISSUE FORMAT EUR: Perp NC6

GBP: Perp NC5 / Perp NC9 / Perp NC15

USD: Perp NC10

DENOMINATIONS 200,000, integral multiples of 1,000 in excess thereof

COUPON STRUCTURE Fixed until first call date, reset every 5 years thereafter (non-step)

Payable quarterly in arrear, subject to Interest Cancellation

INTEREST CANCELLATION Non-cumulative, fully discretionary, subject to sufficient distributable items, solvency test and any other MDA restriction

OPTIONAL REDEMPTION On the first call date and every 5 years thereafter at par with accrued interest, subject to regulatory approval

Callable on Capital Disqualification Event or Tax Event at par with accrued interest, subject to regulatory approval

CAPITAL

DISQUALIFICATION

EVENT All of the principal amount fully ceases (or would fully cease) to count towards Tier 1 Capital of the Group

TAX EVENT As a result of a change in tax law, occurrence of various tax events as described more fully in the appendix

CONVERSION INTO

ORDINARY SHARES Conversion into LBG ordinary shares upon a breach of the Conversion Trigger at a fixed conversion price of £0.643, €0.780,

$1.072, (subject to limited anti-dilution adjustments)

CONVERSION TRIGGER Group CET1 Ratio < 7% (CRD IV fully loaded basis)

CONVERSION SHARES

OFFER The Issuer may elect that some or all of ordinary shares issued upon a breach of the conversion trigger, first be offered for sale to

existing shareholders at no less than the Conversion Price (Sterling equivalent)

POINT OF NON-VIABILITY Statutory, see Risk Factors for details

USD AT1 Securityholders will be deemed to have acknowledged that the AT1 Securities will be subject to the UK resolution

framework

22 22

RETAIL TENDER OFFER

Overview

TARGET NOTES

Sterling denominated ECNs; 22 Series with c.£4.7bn outstanding

Announced 20 March: only ECNs some part of which (or of a series with a lower

acceptance priority level) is accepted in Exchange Offers,

OFFER TYPE

AND PRICING

Cash tender offer at fixed prices equal to those offered in Sterling Exchange Offers

ECNs accepted in the retail offer will not be prorated

OFFER PERIOD 10 business day information period followed by 20 business day submission period

Longer than Non US institutional offer

DISTRIBUTION Separately documented from Exchange Offers in retail friendly manner

The Group will support information distribution to brokers and clients

ELIGIBILITY(1)

Holdings in individual Series of Sterling ECNs of less than £200,000 nominal; and

Representation as a non-investment professional, or acting on non discretionary or

advisory basis for a beneficial owner who is not an investment professional

RATIONALE

Allow eligible retail investors to exit their Sterling ECN holdings in light of the

potential regulatory call risk as well as the likely reduced (post Exchange Offers)

secondary market liquidity

Offer retail holders cash instead of new AT1 securities

(1) Full restrictions for Eligible Retail Investors set out in Tender Offer Memorandum.

23 23

TRANSACTION SEQUENCING AND TIMELINE

All offers launched concurrently and run for periods between

10 to 30 business days

Calendar Month March April

Week Days 6 7 10 11 12 13 14 17 18 19 20 21 24 25 26 27 28 31 1 2 3 4 7 8 9 10 11 14 15 16 17 18 21 22 23 24

Launch of Exchange Offers

Non US Exchange Offer Period

Non US Exchange Offer Results

Announcement

Non US Exchange Settlement Date

USD Exchange Offer Period

USD Exchange Offer Results

Announcement

USD Exchange Offer Settlement Date

Launch of Retail Cash Offer

Retail Cash Offer Information Period

Retail Cash Offer Submission Period

Retail Cash Offer Results

Announcement

Settlement of Retail Cash Offer

All offers commenced 6 March 2014

– Non US Exchange Offer: 10 business day offer period

– USD Exchange Offer: 20 business day offer period

– Retail Cash Offer: 10 business day information period followed by 20 business day submission period

24 24


Key messages

The Group has:

– a strong capital position with 10.3% CET1 and 3.8% leverage ratios(1)

– a lower risk business model with strong, sustainable returns and capital generation

These offers align the Group’s capital base to the evolving CRD IV capital framework

– Delivers the Group’s medium term AT1 requirement

– Improves leverage ratios by c.0.5%(2)

– Improves rating agency capital measures

– Improves Group net interest margin by c.5bp in 2014(2)

– Estimated one-off accounting charge of c.£1bn(2)

Investors are offered an exchange, at pricing consistent with current trading levels, into

new AT1 securities

Eligible retail holders are offered cash instead of new AT1 securities

Provides investors with an opportunity to mitigate ECN regulatory call uncertainty

(1) All ratios stated on a pro forma basis, as reported at FY 2013 results. Leverage ratio is on a Basel III basis excluding grandfathered Tier 1 securities. CRD IV

leverage ratio of 4.1% including grandfathered Tier 1 securities (2) Assumes £5bn of new notes, based on current market prices.

25 25

APPENDIX

26 26

NON US EXCHANGE OFFERS

€ 6.375% PNC6

Maximum €750m AT1

Securities

£ 7.000% PNC5

Maximum £1.25bn AT1

Securities

£ 7.625% PNC9

Maximum £1.25bn AT1

Securities

£ 7.875% PNC15

Maximum £750m AT1

Securities

No.1 PLC relates to LBG Capital No.1 plc - guarantor: Lloyds Banking Group plc

No.2 PLC relates to LBG Capital No.2 plc - guarantor: Lloyds Bank plc

Exchange

Priority

Type

LBG Capital

Issuer

C'cy

Denominations

Minimum Increment

Amount

Oustanding

(m)

Current

Coupon

(%/bp)

Maturity

First Call

Date

Exchange

Price

(% par)

Euro PNC6 Exchange Offer

1 LT2 NO.1 PLC EUR 50k 1k 711 6.439 May-20 n/a 105.50

2 LT2 NO.2 PLC EUR 1k 1k 662 6.385 May-20 n/a 105.50

3 LT2 NO.1 PLC EUR 1k 1k 226 7.625 Oct-20 n/a 106.50

4 LT2 NO.2 PLC EUR 1k 1k 125 8.875 Feb-20 n/a 110.50

5 LT2 NO.1 PLC EUR 1k 1k 95 7.375 Mar-20 n/a 106.00

6 LT2 NO.1 PLC EUR 1k 1k 53 3mE+310 Mar-20 n/a 93.00

7 LT2 NO.2 PLC EUR 50k 1k 487 15.000 Dec-19 n/a 152.50

Sterling PNC5 Exchange Offer

1 LT2 NO.1 PLC GBP 50k 1k 736 11.040 Mar-20 n/a 111.75

2 LT2 NO.1 PLC GBP 1k 1k 331 7.8673 Dec-19 n/a 106.50

3 LT2 NO.2 PLC GBP 1k 1k 208 9.334 Feb-20 n/a 108.00





1 LT2 NO.1 PLC GBP 1k 1k 732 7.5884 May-20 n/a 106.25

2 LT2 NO.1 PLC GBP 50k 1k 597 7.869 Aug-20 n/a 106.50

3 LT2 NO.2 PLC GBP 1k 1k 148 9.125 Jul-20 n/a 107.50

4 LT2 NO.2 PLC GBP 10k 10k 57 12.750 Aug-20 n/a 114.00

5 LT2 NO.2 PLC GBP 1k 1k 39 11.125 Nov-20 n/a 110.50


1 LT2 NO.1 PLC GBP 1k 1k 102 7.975 Sep-24 n/a 105.00


3 LT2 NO.2 PLC GBP 50k 50k 79 14.500 Jan-22 n/a 120.75

4 LT2 NO.2 PLC GBP 1 1 69 10.500 Sep-23 n/a 109.50


6 LT2 NO.2 PLC GBP 1k 1k 57 9.875 Feb-23 n/a 107.50


8 LT2 NO.2 PLC GBP 1k 1k 107 9.000 Jul-29 n/a 107.50

9 LT2 NO.2 PLC GBP 1k 1k 104 8.500 Jun-32 n/a 106.75


11 LT2 NO.2 PLC GBP 100k 1k 68 15.000 Jan-29 n/a 162.50

27 27

USD EXCHANGE OFFER

$ 7.500% PNC10

Maximum $1.675bn AT1 Securities

Exchange LBG Capital

Amount

Oustanding

Current

Coupon First Call

Exchange

Price

Priority Type Issuer C'cy Minimum Increment (m) (%/bps) Maturity Date (% par)

Euro PNC7 Exchange Offer

1 LT2 NO.1 PLC EUR 50k 1k 711 6.439 May-20 n/a [ ]

2 LT2 NO.2 PLC EUR 1k 1k 662 6.385 May-20 n/a [ ]

3 LT2 NO.1 PLC EUR 1k 1k 226 7.625 Oct-20 n/a [ ]

4 LT2 NO.2 PLC EUR 1k 1k 125 8.875 Feb-20 n/a [ ]

5 LT2 NO.1 PLC EUR 1k 1k 95 7.375 Mar-20 n/a [ ]

6 LT2 NO.1 PLC EUR 1k 1k 53 3mE+310 Mar-20 n/a [ ]

7 LT2 NO.2 PLC EUR 50k 1k 487 15.000 Dec-19 n/a [ ]


1 LT2 NO.1 PLC GBP 50k 1k 736 11.040 Mar-20 n/a [ ]

2 LT2 NO.1 PLC GBP 1k 1k 331 7.8673 Dec-19 n/a [ ]

3 LT2 NO.2 PLC GBP 1k 1k 208 9.334 Feb-20 n/a [ ]





1 LT2 NO.1 PLC GBP 1k 1k 732 7.5884 May-20 n/a [ ]

2 LT2 NO.1 PLC GBP 50k 1k 597 7.869 Aug-20 n/a [ ]

3 LT2 NO.2 PLC GBP 1k 1k 148 9.125 Jul-20 n/a [ ]

4 LT2 NO.2 PLC GBP 10k 10k 57 12.750 Aug-20 n/a [ ]

5 LT2 NO.2 PLC GBP 1k 1k 39 11.125 Nov-20 n/a [ ]


1 LT2 NO.1 PLC GBP 1k 1k 102 7.975 Sep-24 n/a [ ]


3 LT2 NO.2 PLC GBP 50k 50k 79 14.500 Jan-22 n/a [ ]

4 LT2 NO.2 PLC GBP 1 1 69 10.500 Sep-23 n/a [ ]


6 LT2 NO.2 PLC GBP 1k 1k 57 9.875 Feb-23 n/a [ ]


8 LT2 NO.2 PLC GBP 1k 1k 107 9.000 Jul-29 n/a [ ]

9 LT2 NO.2 PLC GBP 1k 1k 104 8.500 Jun-32 n/a [ ]


11 LT2 NO.2 PLC GBP 100k 1k 68 15.000 Jan-29 n/a [ ]

USD PNC10 Exchange Offer

1 LT2 NO.1 PLC USD 100k 1k 986 7.875 Nov-20 n/a [ ]

2 LT2 NO.2 PLC USD 100k 1k 408 7.875 Mar-20 n/a [ ]

3 UT2 NO.1 PLC USD 100k 1k 1,259 8.000 Perp. Jun-20 [ ]

4 UT2 NO.1 PLC USD 100k 1k 277 8.500 Perp. Dec-21 [ ]

Denominations

No.1 PLC relates to LBG Capital No.1 plc - guarantor: Lloyds Banking Group plc

No.2 PLC relates to LBG Capital No.2 plc - guarantor: Lloyds Bank plc

USD PNC10 Exchange Offer

1 LT2 NO.1 PLC USD 100k 1k 986 7.875 Nov-20 n/a 106.00

2 LT2 NO.2 PLC USD 100k 1k 408 7.875 Mar-20 n/a 106.25

3 UT2 NO.1 PLC USD 100k 1k 1,259 8.000 Perp. Jun-20 105.75

4 UT2 NO.1 PLC USD 100k 1k 277 8.500 Perp. Dec-21 106.00

28 28

ECN EXCHANGE OFFER AND TENDER OFFER

Eligibility criteria

NON US EXCHANGE

OFFER

(£ & € ECNs)

Offers to Exchange from Holders of a Series of ECNs will be accepted only if the principal

amount of such ECNs is at least equal to or greater than €200,000 or £200,000, as

applicable (both before and after scaling, if any)

If the principal amount of such ECNs submitted in the Exchange is less than €200,000 or

£200,000, as applicable (both before and after scaling) such Securities will not be

accepted and will be returned to Holders

Not available to US investors and subject to other applicable securities laws

USD EXCHANGE

OFFER

(US$ ECNs)

Offers to Exchange from Holders of a Series of ECNs will be accepted for new AT1

Securities, only if the principal amount of the AT1 Securities issued in exchange for such

ECNs is at least equal to or greater than $200,000 (both before and after scaling, if any)

If the principal amount of AT1 Securities issued in exchange for submitted ECNs is less

than $200,000 (both before and after scaling, if any) Holders will receive a cash payment.

However, the Offerors have the right to reject any exchange instruction subject to

applicable law. Holders may not submit multiple exchange instructions

Available to all investors, subject to applicable securities laws

RETAIL CASH

TENDER OFFER(1)

Holdings in individual Series of Sterling ECNs of less than £200,000 nominal; and

Representation as to being a non-investment professional, or acting on a non-discretionary

or advisory basis for a beneficial owner who is not an investment professional

Not open to US investors and subject to other applicable securities laws

(1) £ ECNs that were accepted in whole or in part in the Non US Offer.

29 29


Structural comparison with other AT1 notes

AT1 Securities

AT1 Notes

AT1 Notes

AT1 Notes

AT1 Notes

Issue Date/

Format

GBP: PerpNC5 / NC9 / NC15

EUR: PerpNC6

USD: PerpNC10

EUR 1.5bn : PerpNC5 – Mar-

2014

GBP 1bn : PerpNC5 – Mar-2014 EUR1.5bn: Perp NC5 – Feb 2014 USD2.0bn: Perp NC5 - Nov 2013

EUR1.0bn: Perp NC7- Dec 2013

Issue Rating BB- (S&P); BB- (Fitch) Ba2 / NR / NR NR / BB+ / BB+ NR/NR/BB- NR/B+/ BB+

Coupon GBP: 7.000% / 7.625% / 7.875%

EUR: 6.375%

USD: 7.500%

6.25% 6.875% 7.000% USD: 8.250%

EUR: 8.000%

Coupon

Structure

Fixed until first call date, reset

every 5 years thereafter (non-

step)



step)



step)



step)



step)

Interest

Cancellation

Fully discretionary (no pusher or

stopper)

Mandatory upon insufficient

distributable items, breach of

MDA or breach of solvency test


stopper)



MDA or minimum capital

requirements, regulator

request


stopper)





stopper)



MDA or minimum capital

requirements, regulator

request


stopper)




Call Options

Years 5/9/15 for GBP; 6 for EUR;

and 10 for USD and every 5-

years thereafter at par

Regulatory and tax calls at par

Year 5 and any Coupon

Payment Date thereafter

(quarterly) at par

Regulatory and tax call at par

Year 5 and every five years

thereafter at par

Regulatory and tax call at par

Year 5 and any time thereafter

at par


Year 5 for USD / 7 for EUR and

reset dates thereafter at par


Loss

Absorption

Full conversion into ordinary

shares upon conversion trigger

breach at conversion price

subject to conversion shares offer


shares upon trigger breach at

conversion price s which is higher

of current market price of a

common share and nominal value

of common share at the time of

conversion with a floor price of

€4.34 (66%).

Full conversion into Core

Capital Deferred Shares upon

conversion trigger breach at

conversion price of £80



conversion price which is the

higher of the 5-day arithmetic

mean of the closing price prior to

the conversion notice, the floor

price (50% of share price at

issuance) and the nominal value

of the shares



conversion price (66.6% of share

price at issuance) subject to

conversion shares offer

Trigger for

Principal Loss

Absorption

Group CET1 < 7.000%

Fully Loaded

CET1 < 5.125%

Transitional

CET1 < 7.000%

Fully loaded

CET1 < 5.125%

Transitional

CET1 < 7.000%

Fully loaded

PoNV Statutory Statutory Statutory Statutory Statutory

30 30

REGULATORY CALL RISK FACTORS

Regulatory Calls of Existing Notes.

The Existing Notes were issued for the purpose of counting as both lower tier 2 capital and ‘stress test’ core capital of the Group. Pursuant to the

Existing Notes Conditions, should any Series of Existing Notes cease to qualify for inclusion in the lower tier 2 capital of the Group or, as a result of

changes to the Regulatory Capital Requirements or the interpretation or application thereof by the PRA (successor to the FSA), cease to be taken

into account for the purposes of any ‘stress test’ applied by the PRA, in each case as more fully described in Condition 8(e) of the relevant Existing

Notes Conditions, the issuer of the relevant Series of Existing Notes has the Regulatory Call Right.

In 2009, the Group was required by the FSA to raise going concern capital sufficient to remain a viable banking group in the event of various stress

scenarios by reinforcing the Group’s capital ratios in stress conditions; the Existing Notes formed part of that capital raising. As described above, if

the Existing Notes cease to fulfil this purpose, the Group has the Regulatory Call Right.

There can be no assurance that the Existing Notes will continue to count for the purposes of ‘stress tests’ to be applied by the PRA to the Group.

Whilst still uncertain, management of LBG believes recent developments resulting in higher capital requirements for banks, including a changed

definition of core capital, make it likely that the Existing Notes will not provide going concern benefit under future stress tests.

Holders should be aware that, in the event an issuer exercises the Regulatory Call Right, pursuant to the terms of the relevant Series of Existing

Notes, such call will be exercised at par or at the applicable Make Whole Redemption Price (as defined in the relevant Existing Notes Conditions),

as the case may be, together with accrued but unpaid interest (the ‘Regulatory Call Price’). For most Series of Existing Notes, the relevant

Regulatory Call Price is substantially lower than the Exchange Price pursuant to the relevant Exchange Offer.

The Regulatory Call Right applies to each separate Series of Existing Notes and, where available, the relevant Offeror may choose which

individual Series to call.

The Regulatory Call Right applies to each separate Series of Existing Notes. Notice of redemption pursuant to the Regulatory Call Right would be

required to be given on a per-Series basis. Such notice may be given in relation to any one or more Series of Existing Notes without triggering the

redemption of any remaining Series of Existing Notes. If the Regulatory Call Right were, by its terms, ever to become exercisable and the relevant

Offeror wished to make use of it, LBG and the Offerors currently intend that they would prioritise the redemption of those Series of Existing Notes

some part of which Series is accepted for exchange in one of the Exchange Offers and (if such Series is subject to the Retail Holdings Offer)

accepted for purchase in the Retail Holdings Offer, or which rank in the relevant Exchange Priority or (if such Series is subject to the Retail

Holdings Offer) the tender priority pursuant to such Retail Holdings Offer, ahead of those Series of Existing Notes which have been so accepted for

exchange or purchase except if the relevant Series of Existing Notes is pro-rated by the relevant Offeror pursuant to the relevant Exchange Offer.

Source: Exchange Offer Memoranda, dated 6 March 2014.

31 31

CONVERSION MECHANISM

Upon occurrence of Conversion Trigger, the AT1 Securities will fully convert on the Conversion Date into ordinary shares of the Issuer at the

Conversion Price

The relevant ordinary shares will be delivered to the Settlement Shares Depositary. The Issuer may elect that, some or all of the Ordinary Shares

issued on the Conversion Date will be offered for sale to all or some of the Issuer’s shareholders at not less than the Conversion Price (Sterling

equivalent) (‘Conversion Shares Offer’)

Upon the completion of the Conversion Shares Offer the Holders of the AT1 Securities will receive (in currency of issue), net of any costs, either

– If all of the Ordinary Shares are sold, a pro rata share of the cash proceeds from the sale of the Ordinary Shares, or

– If some but not all of the Ordinary Shares are sold, a pro rata share of the cash proceeds from the sale of the Ordinary Shares and a pro rata share of the

Ordinary Shares not sold, or

– If no Ordinary Shares are sold, the relevant number of Ordinary Shares that would have been received had the Issuer not elected to carry out a

Conversion Shares Offer;

The Issuer’s obligations under the AT1 Securities shall be irrevocably discharged and satisfied by the issuance and delivery of the relevant

Ordinary Shares to the Settlement Shares Depositary on the Conversion Date

Upon occurrence of a Conversion Trigger, AT1 Security holders will be required to deliver a Conversion Notice before the Notice Cut-off Date

specified in the Conversion Notice, which shall be at least 20 days following the Conversion Date, in order to obtain delivery of the relevant

ordinary shares

Conversion Date

T=0

Conversion Shares Offer Election

Notice

Max T+10

Conversion Shares Offer Period

Max T+50

Settlement Date

T+52 Onwards

AT1 Securities converted into

Ordinary Shares of the Issuer

following a Conversion Trigger

Within 10 business days of the

Conversion Date, the Issuer may

decide to make a Conversion

Shares Offer

Offer open to the Issuer’s

Shareholders to purchase

Ordinary Shares

The Group retains ability to

cancel Conversion Shares Offer

at any time

Settlement Shares

Depositary to deliver cash

proceeds, Ordinary Shares

or a combination of both to

the relevant AT1 Security

holder

Conversion Date

T=0

Conversion Shares Offer Election

Notice

Max T+10

Settlement Date

T+12 Onwards

Con

ve

rsio

n

Tri

gg

er

If the Group does not elect to utilise the Conversion Shares Offer

If the Group elects to utilise the Conversion Shares Offer

32 32


Terms of the output AT1 securities

ISSUER Lloyds Banking Group plc

ISSUER RATING A3 (neg) / A- (neg) / A (stable) (Moody’s / S&P / Fitch)

EXPECTED ISSUE RATINGS BB- (S&P); BB- (Fitch)

AT1 SECURITIES Fixed Rate Reset Additional Tier 1 Perpetual Subordinated Contingent Convertible Securities

ISSUE FORMAT EUR: Perp NC6

GBP: Perp NC5 / NC9 / NC15

USD: Perp NC10

STATUS Prior to a Conversion Trigger, ranking junior to unsubordinated creditors and subordinated creditors (except those whose claims rank or are expressed to rank pari passu

with or junior to the holders of AT1 Securities)

All payments conditional upon the Issuer being solvent at the time of payment (solvency test)

COUPON STRUCTURE Fixed until first call date, reset every 5 years thereafter to the applicable prevailing 5 year mid-swap rate plus the Initial Margin (non-step)

Payable quarterly in arrear, subject to Interest Cancellation

INTEREST CANCELLATION

Non-cumulative

Fully discretionary (no pusher or stopper)

Mandatory cancellation upon insufficient distributable items or upon breach of solvency test. Interest shall also not be paid if, when aggregated with other discretionary

distributions, any applicable MDA would be exceeded

OPTIONAL REDEMPTION

On the first call date and every 5-years thereafter at the principal amount with any accrued interest

The Issuer may redeem the AT1 Securities at the principal amount with any accrued interest at any time in case of a Tax Event or a Capital Disqualification Event, subject

to applicable law and regulatory approval

Subject to regulatory approval, the Issuer being solvent at the time of redemption and no Conversion Trigger Notice has been given

CAPITAL DISQUALIFICATION

EVENT As a result of a change in the regulatory classification of AT1 Securities, all of the principal amount of the AT1 Securities fully ceases (or would fully cease) to be included

in, or count towards the Tier 1 Capital of the Group (the Issuer and its Subsidiaries)

TAX EVENT As a result of a tax law change, (i) the Issuer has paid or will be required to pay Additional Amounts, (ii) interest payments on the AT1 Securities are not tax deductible or

the amount of such deduction is materially reduced, (iii) the AT1 Securities are not treated as a loan relationship for UK tax purposes, (iv) the Issuer is de-grouped for UK

tax purposes, (v) Conversion into equity would result in a tax liability, or (vi) the AT1 Securities are treated as a derivative for tax purposes

CONVERSION INTO ORDINARY

SHARES Full mandatory conversion of principal into ordinary shares of the Issuer upon a breach of the Conversion Trigger at the conversion price of £0.643, €0.780 or $1.072 as

applicable subject to certain anti-dilution adjustments and subject to a Conversion Shares Offer

CONVERSION TRIGGER Group CET1 Ratio < 7% calculated on a CRD IV fully loaded basis

CONVERSION SHARES OFFER The Issuer may elect that, some or all of the ordinary shares issued upon a breach of the Conversion Trigger, will first be offered for sale to all or some of the then

shareholders of the Issuer at no less than the Conversion Price (Sterling equivalent). Thereafter, the AT1 Securityholders may receive (net of costs) either (i) pro rata

share of the cash proceeds from the sale of the ordinary shares to the shareholders, (ii) ordinary shares or (iii) a mixture of both (see slide on Conversion Mechanism)

POINT OF NON-VIABILITY Statutory, see Risk Factors for details

USD AT1 Securityholders will be deemed to have acknowledged that the AT1 Securities will be subject to the UK resolution framework

DENOMINATIONS 200,000, integral multiples of 1,000 in excess thereof

LISTING Expected to be Ireland (GEM market)

GOVERNING LAW EUR and GBP Denominated Notes: English law, save for subordination which will be governed by Scots law

USD Denominated Notes: New York law, save for subordination which will be governed by Scots law

This presentation contains certain forward looking statements with respect to the business, strategy and plans of Lloyds Banking Group and its current goals and expectations

relating to its future financial condition and performance. Statements that are not historical facts, including statements about Lloyds Banking Group’s or its directors’ and/or

management’s beliefs and expectations, are forward looking statements. Words such as ‘believes’, ‘anticipates’, ‘estimates’, ‘expects’, ‘intends’, ‘aims’, ‘potential’, ’will’, ‘would’,

‘could’, ‘considered’, ‘likely’, ‘estimate’ and variations of these words and similar future or conditional expressions are intended to identify forward looking statements but are not

the exclusive means of identifying such statements. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend upon

circumstances that will or may occur in the future.

Examples of such forward looking statements include, but are not limited to: projections or expectations of the Group’s future financial position including profit attributable to

shareholders, provisions, economic profit, dividends, capital structure, expenditures or any other financial items or ratios; statements of plans, objectives or goals of Lloyds

Banking Group or its management including in respect of certain synergy targets; statements about the future business and economic environments in the United Kingdom

(UK) and elsewhere including, but not limited to, future trends in interest rates, foreign exchange rates, credit and equity market levels and demographic developments;

statements about competition, regulation, disposals and consolidation or technological developments in the financial services industry; and statements of assumptions

underlying such statements.

Factors that could cause actual business, strategy, plans and/or results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such

forward looking statements made by the Group or on its behalf include, but are not limited to: general economic and business conditions in the UK and internationally; inflation,

deflation, interest rates and policies of the Bank of England, the European Central Bank and other G8 central banks; fluctuations in exchange rates, stock markets and

currencies; the ability to access sufficient funding to meet the Group’s liquidity needs; changes to the Group’s credit ratings; the ability to derive cost savings and other benefits

including, without limitation, as a result of the Group’s Simplification Programme; changing demographic developments including mortality and changing customer behaviour

including consumer spending, saving and borrowing habits; changes in customer preferences, changes to borrower or counterparty credit quality; instability in the global

financial markets, including Eurozone instability and the impact of any sovereign credit rating downgrade or other sovereign financial issues; technological changes; natural and

other disasters, adverse weather and similar contingencies outside the Group’s control; inadequate or failed internal or external processes, people and systems; terrorist acts

and other acts of war or hostility and responses to those acts, geopolitical, pandemic or other such events; changes in laws, regulations, taxation, accounting standards or

practices; regulatory capital or liquidity requirements and similar contingencies outside the Group’s control; the policies and actions of governmental or regulatory authorities in

the UK, the European Union (EU), the US or elsewhere; the implementation of the draft EU crisis management framework directive and banking reform, following the

recommendations made by Independent Commission on Banking; the ability to attract and retain senior management and other employees; requirements or limitations

imposed on the Group as a result of HM Treasury’s investment in the Group; the ability to complete satisfactorily the disposa l of certain assets as part of the Group’s EU State

Aid obligations; the extent of any future impairment charges or write-downs caused by depressed asset valuations, market disruptions and illiquid markets; market related

trends and developments; exposure to regulatory scrutiny, legal proceedings, regulatory investigations or complaints; changes in competition and pricing environments; the

inability to hedge certain risks economically; the adequacy of loss reserves; the actions of competitors, including non-bank financial services and lending companies; and the

success of the Group in managing the risks of the foregoing.

Lloyds Banking Group may also make or disclose written and/or oral forward looking statements in reports filed with or furnished to the US Securities and Exchange

Commission, Lloyds Banking Group annual reviews, half-year announcements, proxy statements, offering circulars, prospectuses, press releases and other written materials

and in oral statements made by the directors, officers or employees of Lloyds Banking Group to third parties, including financial analysts. Except as required by any applicable

law or regulation, the forward looking statements contained in this presentation are made as of the date hereof, and Lloyds Banking Group expressly disclaims any obligation or

undertaking to release publicly any updates or revisions to any forward looking statements contained in this presentation to reflect any change in Lloyds Banking Group’s

expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

FORWARD LOOKING STATEMENTS

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