FINANCIALS: Lloyds: Business Banking Presentation - Changing Narrative

Lloyds Banking (LLOYDS: A3/BBB+/A): holding investor presentation this afternoon  on “Business and Commercial Banking”. Unlikely to be a credit mover but does hint at the changing management narrative from (rate-driven) growth, which is now slowing, towards this higher-returning area of the group.

• This business is around 30% of group revenues but as much as 40% of pre-tax profits. It’s unlikely that much of credit consequence will come out of this. It  does highlight that, as the tailwind from the rate benefit of the massive retail deposit base fades away, management may want to switch the narrative to a higher-returning part of the business as growth slows.
• Lloyds EUR spreads are 16bp wider in the last month but 23bp tighter YTD (€IG banks: +12bp and -36bp) so it’s been something of an underperformer. Its equity has been a small outperformer, it is 18% up YTD (2pp better than Euro peers) but with most of that performance in late-Feb after the FY23 results.

Presentations begin at 1400 (London time), available at: https://web.lumiconnect.com/175148425