Annual report 2024

Aligning purpose with profitability

2024 has been another year of significant progress for Lloyds Banking Group. We have continued to invest and transform the business, delivering innovative new products and services for our customers. At the same time we navigated a complex external environment while maintaining our commitment to customers, communities and shareholders.

We recognise that the recent Court of Appeal ruling regarding motor finance has created uncertainty for customers and shareholders alike. The Group continues to assess the potential impacts of this ruling and would hope to have greater clarity soon..

The Group has successfully completed the first phase of our five-year purpose-driven strategy and delivered robust financial results in 2024. There have been a number of notable achievements, as identified below.

Shareholder returns

Attractive capital returns are critical to our shareholders. We were pleased to be able to increase the total ordinary dividend again, by 15 per cent to 3.17 pence, whilst also announcing a further share buyback of £1.7 billion. In total we have made a distribution of £3.6 billion for 2024.

Purpose-driven strategy

The Group has purpose at its core. Our commitment to Helping Britain Prosper enables us to meet customers’ holistic financial services needs, whilst delivering sustainable profit and growth for shareholders. These aims support each other, and our strategy balances them effectively.

Having successfully completed the first phase of our strategy, I am pleased with the strategic progress being made. I am delighted to report that we have delivered £0.8 billion of additional revenues in 2024 from our strategic initiatives, surpassing our initial target of c.£0.7 billion.

I am really proud of the increased pace of delivery and provision of digitally enabled services and solutions for our customers, which helps increase financial empowerment. This exciting progress spans the entire Group.

Our consumer lending teams are simplifying credit score management and mortgage journeys. Our consumer relationships teams are redesigning the app experience for Lloyds customers and are preparing to launch a new brand experience for Halifax and Bank of Scotland next year. Our insurance, pension and investment colleagues are rethinking how customers engage with their future, while our business and commercial banking teams are enhancing digital servicing and origination, enabling customers to meet their needs more easily. Our corporate and institutional banking teams are providing valuable insights into customer retail network usage and leveraging our understanding of the UK economy to benefit our clients.

Once again, I am hugely proud of how our colleagues helped to make a real difference in 2024. Consistent with our purpose, our actions across the Group are supporting our aim to provide strong, sustainable communities, high-quality infrastructure and regional regeneration.

Providing a full range of housing options for our communities is a core priority for the Group and during 2024 we have taken a number of actions, including:

• Getting more people on the housing ladder by lending more than £15 billion to first-time buyers
• Expanding the availability of affordable homes by supporting more than £2 billion of new funding to the social housing sector
  

Climate risk and the green economy are changing the way we live, work and do business. We are committed to enabling the transition to net zero by working closely with our clients. Since 2022, we provided more than £20 billion for sustainable financing in EPC A and B mortgage lending and financing for electric vehicles and plug-in hybrid vehicles for retail customers, surpassing our aggregate target for these activities of £18 billion.

We enter the second phase of the strategy with momentum across the business and remain confident in achieving our 2026 strategic outcomes and financial guidance.

Culture

The Board and senior management have a vital role to play in shaping, role modelling and embedding a healthy corporate culture. This continued to be a focus in 2024. Our business insights help shape our focus on inclusion and commerciality. We continue to measure our progress on gender, ethnic minorities and our colleagues with disabilities. Setting out clear ambitions that enable us to measure our progress is important, both as a signal of commitment and intent, and because it provides focus and means that inclusion is approached like any other business issue.

This year we are the highest-ranked bank (5th) in the FTSE 100 in the FTSE Women Leaders Review (February 2024 report) for women on Boards and in leadership. We have achieved all of the FTSE Women Leaders recommendations ahead of the 2025 deadline. Whilst we are pleased with the progress we have made, we recognise that we are not yet where we want to be and have more to do to achieve gender balance in our organisation.

As we reflect on all the great work we have done to support Black heritage customers, communities and colleagues, this support hasn’t yet achieved its full potential for our colleagues. Currently 1.8 per cent of senior colleagues are of Black heritage against a goal of 3 per cent by 2025. We continue to build our understanding of how we can unlock further potential in this space. Meanwhile, we are pleased to have surpassed our ambition of having 12 per cent of senior roles filled by colleagues with disabilities ahead of time, with current representation at 16.1 per cent. Inclusion remains a focus area for our business as it’s important for us to reflect our customers and the society in which we operate especially given our scale and reach.

Directors

We review the Board’s composition and diversity regularly and are committed to ensuring we have the right balance of skills and experience within the Board. As announced previously, Alan Dickinson and Lord Lupton stepped down following the AGM in May 2024. In August 2024, Nathan Bostock joined the Board as a non-executive director and also became Chair of Lloyds Bank Corporate Markets plc. Nathan’s financial services experience and UK banking market knowledge are invaluable to the Group.

Remuneration

We know that as we deliver the next phase of our strategy it is vital that we are able to attract and retain talent and reward our colleagues appropriately. All awards are determined by the Board’s Remuneration Committee following careful consideration and aligned with market conditions, the changing regulatory framework, Group performance and the sentiment of our shareholders.

Summary

We’re proud that we’ve delivered on the commitments we set out in 2022 for the first phase of our strategic plan, further strengthening our track record of consistent performance. We have continued to deliver in line with our purpose of Helping Britain Prosper and see further opportunities to contribute to sustainable economic growth.

Our financial results continue to demonstrate resilience, with strong capital generation and good shareholder distributions. Looking ahead, we need to continue to change and transform the Group. Building on the strong progress to date, we are confident in our ability to achieve higher, more sustainable returns and capital generation by 2026.