Investor Meet retail investor update: Presentation by Rohith Chandra-Rajan (Director, Investor Relations) and Tom Grantham (Senior Manager, Investor Relations)

Good afternoon, ladies and gentlemen, and welcome to the Lloyds Banking Group PLC Investor presentation. Questions are encouraged. They can be submitted at any time via the Q&A tab. That's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and we'll publish our responses where it's appropriate to do so on the InvestorMeet Company platform. Before we begin, we would just like to submit the following poll. And if you give that your kind attention i'm sure the company would be most grateful and i'd now like to hand you over to the team from lloyd's banking group plc rohith good afternoon sir thank you very much

for that jake and good afternoon everybody i'm rohith chandra rajan director of investor relations at lloyd's i'm joined here today by my colleague tom grantham who's a senior manager on the team we're very happy to be running another of these briefings with investor meet they're a great way to engage with our shareholders so thank you very much for joining us in terms of how this hour is intended to run we've got a short presentation covering our financials and our strategy that should take about 15 minutes and then we'll spend most of the time on your questions so with that then let's move on to the first slide so as you'll all know Lloyds is a UK focused bank with a simple operating models split across four reporting areas those are retail banking commercial banking insurance pensions and investments and equity investments and central items within these divisions we offer a comprehensive product suite to meet our customers ever-evolving financial needs and one of our core strength is our portfolio of trusted and recognized brands those include in particular lloyds bank halifax bank of scotland and scottish widows the breadth of our franchise means we're uniquely placed to meet to meet more of our customers needs as well as understanding them better to provide more tailored offerings that deliver value for both customers and to the group and its shareholders and just on to the next slide before i hand over to tom on the financials i just wanted to highlight a few of the things that we're really focused on firstly our focus purpose-led strategic delivery which is accelerating benefiting customers and wider stakeholders. Secondly we're delivering a sustained strength in financial performance and meeting our 2025 guidance and the financial performance delivered strong capital generation enabling another 15 percent dividend growth and a 1.75 billion share buyback. Finally we upgraded our guidance for 2026 financial performance and are confident in our outlook beyond this year. With that let me hand over to Tom on the numbers and an update on our strategy. Thanks Rohit and good to speak to

you all and thank you for joining. So first of all I'll touch on the financials and then as Roja said, I'll give a brief update on our strategy before I hand back to Roja to close off the presentation. So in terms of the financials, as just said, we delivered sustained strength in our performance in 2025 and in line with guidance. Statutory profit after tax was $4.8 billion. That was up 6% year on year. And this resulted in a return on tangible equity of 12.9% or 14.8% excluding the motor provision that we took in the third quarter of the year. Within this, we delivered robust net income of £18.3 billion, up 7% versus 2024. This was driven by sustained growth across NII and other income, up 6% and 9% respectively. We retained cost discipline over the year, with operating costs in line with guidance at £9.8 billion. Remediation of £968 million included £800 million as a result of the aforementioned motor charge. Asset quality remained strong. The impairment charge of 795 million represented an asset quality ratio of 17 basis points. And finally, as Rohit said, we delivered strong capital generation of 147 basis points, or 178 basis points excluding motor, in line with our guidance. After distributions, which I'll come on to later, this resulted in a CT1 ratio of 13.2%. So let me quickly turn to movements in the balance sheet. So pleasingly, lending and deposits both grew strongly in 2025. Lending balances closed the year at £481 billion, up £22 billion or 5%. In Q4, lending balances grew by £4 billion. Within this, retail saw growth across all of our business lines. In commercial banking, lending was down £0.2 billion in the fourth quarter. This represents further growth in targeted areas within our corporates and institutional business, offset by business-as-usual performance within BCB that included continued government-backed lending repayments. Turning to deposits, we saw a strong performance across both Q4 and the year as a whole. Total deposits were up by £13.8 billion in 2025. Q4 was down slightly by £0.2 billion. The fourth quarter saw growth in retail deposits across both savings and notably PCAs, with deposit churn continuing to ease as we have expected. Commercial deposits though fell by 1.5 billion driven by actions on low margin funding as well as by seasonal outflows in BCB. Let me now move on to income on the next slide. Net interest income for the year was 13.6 billion in line with our guidance. This represents an increase of 6% year on year with Q4 up 2% versus the prior quarter. Hedge income in 2025 was £5.5 billion, a material step up from last year and a little above our guidance. Our net interest margin increased 11 basis points to 306 basis points. Average interest earning assets of £463 billion for the full year were up 3% compared to 2024, with Q4 AIEAs just over £470 billion at £4.8 billion. For 2026, we're guiding to net interest income of around £14.9 billion. Within this, we expect margin expansion alongside continued healthy balance sheet growth across both retail and commercial. This also includes continued growth in a hedge income, rising to circa £7 billion in 2026 from that £5.5 billion I mentioned earlier before increasing further to circa 8 billion in 2027 and continue growing towards the end of the decade. Turning now to other income. 2025 was another year of encouraging and broad-based growth in other income. We expect this pattern to continue. OOI was 6.1 billion in the year, up 9% versus 2024 and up 2% in Q4 versus Q3. The latter was supported by the full acquisition of Schrodo's Personal Wealth, or Lloyd's Wealth, as it will soon be rebranded to. Growth over 2025 has been broad-based. Retail is up 12% year-on-year, commercial was up 1%, insurance, pensions and investments grew by 11%, and our equity investments business was up 15%. Turning to operating lease depreciation briefly, which is the depreciation charge for our operating fleet business. This was £1.45 billion in 2025, up 10% versus 2024. This was driven by fleet growth, high-value vehicles, and to an extent, electric vehicle price movements. However, altogether, it was essentially in line with the other income growth generated by the vehicle leasing business. Let me now move to costs on the next slide. Operating costs of £9.76 billion were in line with guidance. Year-on-year cost growth of 3% is on the back of continued strategic investment, volume growth and inflationary pressures, partly offset by further efficiencies. Looking ahead, we remain committed to delivering a 2026 cost-income ratio of less than 50%. Based on our current plan, that implies operating expenses of less than £9.9 billion. Remediation for 2025 was £968 million, including the £800 million motor provision taken in Q3. We wait to see the detail of the FCA's final proposals on motor post their consultation on Monday. Let me now turn to credit performance. Credit performance remains strong and that reflects our prime customer base, prudent approach to risk and healthy customer behaviours. Across retail new to arrears remain low and stable early warning indicators likewise are also benign in commercial after some idiosyncratic cases in h1 such as fiber the h2 picture was very constructive taking all of that together the full year impairment charge was 795 million equivalent to an asset quality ratio of 17 basis points looking forward we expect the asset quality ratio to be circa 25 basis points for 2026 that's similar to the underlying run rate that we've seen during 2025. Let me move now to the macroeconomic outlook. So it's worth saying that these are the economic assumptions as at full year results at the end of January, and so clearly were prior to the recent geopolitical disruption. It's also worth saying that we review economic forecasts every quarter. However, as at full year, our expectations were that GDP would be 1.2% in 2026 in terms of growth. Unemployment was expected to peak at 5.3% in H1 2026. We assumed two 25 basis point cuts in UK bank rate in the year and house price growth was forecast at circa 2% in 2026 and 2027. Let me now turn then to our capital distributions. We continue to grow our shareholder distributions at an attractive pace. For 2025, the board recommended a final ordinary dividend of 2.43 pence per share, taking the total dividend for 2025 to 3.65 pence, up 15% year on year. In addition, we announced a share buyback of up to 1.75 billion, and together this represents a total capital return of up to 3.9 billion, up 8% on 2024. This hopefully demonstrates our commitment to shareholder returns. Indeed, the 2025 dividend is now more than 80% versus 2021. Given our confidence in growing capital generation, we will now review excess capital distributions in addition to ordinary dividends every half year going forward. Let me now quickly wrap up the financial updates section. To summarise, in 2025 the Group's financial performance showed sustained strength. Strategic execution and business momentum delivered continued balance sheet and income growth, alongside cost discipline and asset quality allowing for growth in shareholder distributions as we look ahead to 2026 and a culmination of our current strategic plan we are confident in delivering on the financial guidance you can see set out in this slide beyond 2026 we are committed to continuing income growth improving operating leverage and stronger sustainable returns we will give far more detail on this in our strategic announcement with our half-year results this year. On that note let me speak briefly to strategy on the next slide. We continue to successfully deliver a significant transformation. Over the last four years we have meaningfully grown the balance sheet, driven diversified revenue growth, improved our cost and capital efficiency whilst significantly de-risking the business and establishing a digital and AI leadership position. These actions have both enhanced the franchise and delivered attractive returns to our shareholders, including total capital distributions of around 15 billion. We're now entering the final phase of our five-year strategic plan, with delivery accelerating and momentum growing. This is translating into significant financial benefits. In particular, let me talk about how we're thinking about AI on the next slide. In 2025, we scaled 50 Gen AI use cases into full production, demonstrating significant potential and generating 50 million of in-year P&L benefit. It should be stressed this is based on a narrow definition of the latest technology, with the full spectrum of digital and AI initiatives contributing around 70% of our upgraded strategic initiatives revenue target of $2 billion by 2026, and over 60% of the total gross cost savings, $1.9 billion, realised since 2021. This represents a strong foundation for us to accelerate our progress in 26 where we intend to increase the number of use cases with a particular focus on high value agentic opportunities this will deliver more than 100 million of pnl benefit capturing both revenues and costs with significant upside beyond this as use cases are scaled and mature this is just the start of the journey we'll talk far more about our plans in this space as part of that strategic update that i mentioned in july Let me close up then on slide 18. So as you've heard, we're successfully executing our strategy. This is reinforcing our competitive advantages and underpinning the delivery of strong shareholder outcomes. Our confidence extends beyond this and we're excited about sharing our updated strategic plan in July. We'll provide more details in the actions we'll be taking to further strengthen and grow the core franchise, address new diversified growth opportunities and deliver continued improvements in productivity, enabled by our leadership position across new and emerging technologies. We'll of course share more detail on our medium-term financials at that stage too. So with that I'll hand back to Rohit. Thank you Tom. I hope you found that useful.

To summarise, we're very pleased with progress so far. We're confident of meeting the objectives of our current strategy and we're excited about the next strategic phase, supporting a compelling investment case of continued growth, improving operating leverage and stronger sustainable returns. As promised, we've left plenty of time for questions, so let's now hand back to Jake

for the Q&A. Perfect, guys, that's great, and thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that's situated on the right-hand corner of your screen. But just while the team take a few moments to review those questions that have been submitted already, I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can all be accessed via your investor dashboards. Guys, as you can see there, we have received a number of questions throughout your presentation this afternoon. Thank you to all of those on the call for taking the time to submit their questions. But at this point, if I may just hand back to you to read out those questions and give your responses where it's appropriate to do so. And if I pick up from you at the end, that'd be great. Thank you. Brilliant. Thanks, Jake. So

I think the first question then, which I'll hand over to Rohith, what is the dividend policy for

the group moving forwards? Yeah, thank you very much for the question. So the dividend policy is progressive and sustainable. As Tom mentioned, we grew the dividend 15% last year. It's been growing at that pace for a while. And whilst we don't have a payout ratio, that was one of the benchmarks that we think about, particularly in terms of that dividend sustainability. So we want to grow, but we want to keep it at a sustainable level. We think there is plenty of room for continued strong dividend growth as earnings continue to expand and also as we as we gradually increase the payout ratio over time so so the policy is uh progressive and sustainable growth and we think that gives us lots of space for uh continued strong dividend growth

thanks rahith um so we've had another question um how does the group measure roi on digital investments uh particularly in customer acquisition and retention and is there evidence that digital engagement is deepening product penetration per customer so maybe i'll start on that one so in terms of how we measure i guess the return on investment in general i'd probably point to the strategic targets that we set at 22 26. so as mentioned in the presentation um we invested over 4 billion over the over the period of time we are planning on generating over two well circa 2 billion a strategic of income related to those strategic initiatives and circa 1.9 billion of of gross cost saves as of 25. We haven't got a target for 26. In terms of your question on digital and specifically, so digital and AI underpinned essentially 70% of those revenues and about 60% of those costs. And so from our perspective, there is strong return on those investments. And we do have stats internally to back those up, but we haven't disclosed those. But clearly, when we come to our next strategy, we will talk about essentially the ways that we'll measure and continue to make sure that we're generating sufficient ROI on those investments. In terms of any evidence that it's deepening product penetration with customers, I think there is. So one of the key tenets of our strategy was deepening relationships with customers. We actually set out a target of increasing products per customer by 5% out of 2024. We achieved that. And we have a target 24 to 26 to increase products per customer by 3%. And so we'll obviously update that as we get to the end of this year and but maybe some other stats to to justify it so clearly being able to utilize the fact that we have an insurance business and make sure that our retail customers can fully take advantage of that one product in particular is protection insurance previously with new mortgages for lloyds we sold less than 10 percent protection insurance products to those mortgage customers we now sell more like 20 percent and so you can see that that's one example, but there are other examples of where we are getting much better of deepening those relationships with customers. So next question here on wealth. Given the rise of free to trade share dealing services, do you expect a reduction in revenue? And maybe Rohit,

you can take that one. Yeah, thank you, Tom. So we do have one of the top four platforms in Halifax share dealing. So we operate in that space. As Tom mentioned, we've also now just recently brought uh schroder's personal worth which was a joint venture with schroder's uh back into uh into the group so it's now fully integrated into the group and as tom mentioned uh will be rebranded uh lloyd's wealth and that's part of a broader uh investment franchise which spans you know that that's that's very much advice led uh so face to face uh you know but we are also in the process of and as i mentioned we've got alifax share dealing we're also in the process of developing um an ai supported investment tool which will um provide much more tailored guidance to customers um you know in terms of not just understanding their risk appetite but also a bit more about their personal circumstances and their goals to help tailor portfolios of low-cost investments for them so that's where we think there's significant growth we are developing that in conjunction with the regulator with the with the fca uh in a um in a sandbox or regulatory environment where where they have oversight of the testing it's being tested with friends and family so internally at the moment and something we expect to launch later in the year and we think with that that that tool in particular is really important in terms of democratizing if you would like uh investments for for the public in the uk where the government obviously is keen to move people out of cash savings and get people investing a lot more we think those types of tools can be very helpful and then there's a combination then of all all of those three platforms uh that will give you potentially some hybrid operation where you know if you're doing something that's slightly more complex that you don't just want to rely on the ai tool uh you're happy to let the ai tool guide you but you want to speak to a real person uh before you actually execute against those plans you know that's potentially also uh um part of that offering so yes it's a very competitive space It's an area that we are expanding where we think there's a big customer need, which the government also seems to be in favour of. So we think this is a long term trend that we are uniquely positioned to benefit from and to support customers with.

Brilliant. Thanks, Raith. And I think this is probably another question for you. Are there any signs of competitive pressure on mortgage margins or deposit pricing?

uh a short answer yes so the uk is a um it's a it's a fairly consolidated banking market uh but but by the same token still a very competitive one uh so in terms of new mortgages we are writing new mortgage business uh at above 70 0.7 above what it was costing us to fund that business uh through last year uh that that was actually coming down very marginally so 0.01 or 0.02 percent per quarter uh we started the year um also very competitive uh there are there were a lot of mortgages written uh in late 2020 early 2021 and those were on five-year fixed rates are in the process of maturing uh you know those were uh very profitable mortgages for us uh and we took an outsized market share of them but the market is now jockeying to um to win that refinancing activity as it as it matures uh so it's a it's a very competitive market it's also quite a tricky market at the moment in that um as you would have seen from from the from the news flow uh interest rate expectations have moved are moving around a lot uh they're not moving day to day they are moving intraday which makes it very difficult to know we can see where our competitors are pricing we don't know quite how much they're making when they are selling new mortgages today because we don't know what their funding costs are so at the moment it's quite a volatile and quite a tricky market you know we're looking to be there to support customers but also to win good market share at good value for for the group and for investors And on the deposit side, you know, I think there are really different segments to the market. So the current account market is, number one, very sticky, but also very competitive in a way, certainly in terms of new account openings, the likes of the neobanks or the digital banks, you know, the likes of Monzo's, Chase, etc. have been very competitive. they have been winning a lot of new accounts however what I would say is that we've been winning share in balances quite consistently over recent years despite that very elevated competition you know I think the same also to a degree is true of instant access accounts although again there are some very competitive offers there I think what is particularly stark at the moment is uh as we head into isa season where ices and time deposits are being priced that that is a that that's an extraordinarily competitive market again this year uh now we we don't yet know whether that's uh that that pricing pressure is going to persist or whether it's a peculiarity of um you know this being the final year that you'll be able to put all of your 20 000 pound uh isa um limit into cash savings uh compared to 12 000 from from next year so it's unclear at the moment uh you know how the market is going to evolve but certainly for the for the time being it remains a very competitive market uh where we are competing selectively uh looking for value rather than uh needing to drive volumes uh in terms of deposits

Brilliant. Thanks, Reyes. We've had one question of what is the share price target for year-end 2026. Maybe I'll just briefly answer. So we obviously don't have a share price target or give an expectation. I guess it's worth saying that what we do do, we obviously concentrate on our own performance. We have a commitment to a greater than 16% roti and growing returns beyond this year as well in terms of what we've given for our outlook and what we're saying about our next strategy and we also expect tangible net asset value of the business to grow as well so that's our I guess commitment to improving returns and generating sustainable returns which will ultimately deliver capital generation and therefore capital returns to investors clearly though the share price is impacted by a number of different things particularly the external environment and the geopolitical environment so very difficult to say what we expect the share price to be at the year end. Rohith if you want to add. Yeah maybe I'll just

add to that. As Tom said, the management team here is focused on running the business and running the business for good shareholder value. Our belief is that those aspirations and expectations are not yet fully embedded in the share price, obviously at the moment particularly impacted by geopolitics, but it's you as our investors and the broader market that sets the share price, not us, but we are, you know, the business is absolutely being run

for shareholder value. And maybe a question now on capital allocation, you touched upon it earlier in terms of the different choices we can make, but one question of will you be considering

special dividends this year? So the board, so in terms of how we think about capital allocation, Number one is the ordinary dividend. As we discussed before, the policy there is a progressive and sustainable dividend. So that is the number one priority. Historically, the board has then reviewed what to do with any surplus capital each year end. What we've announced now, you know, given we are more confident on both profitability, the broader environment and particularly the regulatory environment, is that the board will now think about those surplus capital distributions every half year. Typically, that's taken the form of a share buyback, but special dividends and other forms of distribution or other uses of capital, including occasionally M&A, are also included in those board discussions.

Brilliant. Thanks, Rahel. One quick question, which maybe I'll address. So what is your net shares and issue target given buybacks offset by staff share allocation? so you're correct and that is essentially the the function for what determines the net shares in issue it's the the buybacks which ultimately leads to a reduction shares offset by some staff allocations it's probably worth saying here that we because we have been committed to share buybacks and we've done a succession of buybacks over the last few years we've reduced shares in issues shares in issue as of full year 25 by about 17 versus the end of 2021 so that gives a sense of direction travel that now takes us to i think under about 60 billion shares an issue we don't give a target um for where we'll go from here but clearly the fact that we announced a further buy back uh with the full year 25 results of 1.75 billion will be supportive to that continued deduction and shares an issue but we don't have an absolute target another question um was what measures have lloyds put in place to avoid issues like the recent breach of data and car loans and other expensive remediation issues i'd like to see more stability with the news uh being more positive rather negative and potentially expensive so uh roth do you want to maybe start on that and

maybe i'll add if there's anything to add yeah yes so uh you know um we so number one we share your sentiment uh you know we we don't want those uh issues to persist uh i think a lot of them are legacy issues notwithstanding the the recent issues with the app you know motor finance as an example we will find out from the FCA on Monday how it if and how it expects to run a remuneration scheme or remediation scheme for affected historical customers you know have raised a 1.95 billion provision in relation to that you know we will have to take a view how the final proposals compared to the provision that we've raised our expectation is given that the fca's proposals back in october were the highest weighted scenario that we used in coming to that provision you know we're not far off you know unless there's very substantial change in what the fca um proposes or or enforces uh there should not be a significant change or a material change in the provision but it could move up uh you know up or down to some degree uh we expect relatively modestly but more broadly i think from a conduct perspective uh or regulation perspective more broadly actually the government has tasked both uh the regulators who look at conduct so the fca but also capital liquidity in terms of the pra to support competitiveness and growth of the uk economy as well as their primary remits in terms of regulation i think you see that most clearly from a from a conduct perspective where actually what you see from the fca i think over the last year or so has been much more inclusive so i think the conduct agenda in the uk is evolving in a positive way and whilst it doesn't always feel like i think the fca has been focused on you know trying to manage um the motor finance process uh to resolve it expediently and to have control of that process so actually i think you know they're trying to do something that's positive for the industry uh in terms of how we we we manage the business as i said a lot of those issues are legacy on the um recent app issue uh it was uh an incident that was uh whilst very regrettable uh was one that was short-lived uh what as soon as we were aware of it it was corrected within a couple of hours um the there was a relatively small number of customers impacted and we reported it to the regulator very promptly. We put a lot of updates through the app in terms of new releases, new functionality, so this is very much an isolated incident but one that we are looking at in a lot of detail to ensure it's not repeated.

brilliant and so next question what is the process for ensuring you don't pay too much

for share buybacks and rose do you want to take that one uh yes so share buybacks so we take a view at the beginning or the board takes a view at the beginning of the year or as i said going forward every half year as to whether number one that's the right use of capital and well if we have surplus capital should we be retaining it spending it or returning it if the view is that we're going to return it there is you know a numerous mechanisms that that can be used to do that of which a share buyback is one you know and that that is driven by that decision is driven by you know do a number of things including whether we or not we see continued value in the shares so we continue to see upside it makes sense to buy um the shares at below fair value uh you know also we we um you know have an ongoing dialogue uh with our investors uh in terms of uh whether they think that's an appropriate uh an appropriate tool to be using so it's you know it's a combination of things in terms of what the right cat allocation is uh where the valuations are and what investor appetite is i guess in terms of the way the share buyback is structured it is in part programmatic and in part there is some uh flex around that where the broker that that executes it for us you know is incentivized actually to buy um to accelerate share buyback when when the price is low uh we report it every day and you will have seen a pickup actually in the recent share price weakness so we you know we look to take advantage of um points of share price weakness to accelerate

the buyback selectively during the year great thanks right there's one more question well not one more question there's a question i'll answer and maybe um right do you want to turn on and turn off your camera because i think you may have frozen um but the question is how will revolute impact your plans so and there we go i think right you're you're back and so i guess the first thing to say Revolut has been around for a while and it has impacted, it's clearly been a major competitor alongside other fintechs that we all know in the market. And so them getting their banking license clearly gives them optionality and allows them to do additional things. But from our perspective, it doesn't change our view of ultimately where the competitive landscape is heading. And I think if anything, emphasizes the direction of our strategy. And maybe I'll just talk a little bit about what I mean by that. Ultimately, when we think about what we've done over the last few years we have been keen to invest in the app and invest in the customer facing elements of the group but also invest in the back office what that has meant is that we can now be far more agile and we can be far more agile in line with some of those leading fintechs so for example for customers that want to onboard onto our app for a current account it now only takes seven minutes and that is in line with some of those leading fintechs and actually it's far better than we were a few years ago likewise when we onboard customers onto deposits and loans we we onboard them onto our core banking platform that's a cloud-based platform so again it means that we can access that data much more efficiently it also means we can change things much more quickly and so we have advantages now that are now in line with some of those leading fintechs and I think to your point to the point of the question the fact that Revolut have their full banking license only emphasizes the importance of doing that I think the other point to say here is that if we think about why customers choose Lloyds there's a multitude of reasons and I think those are things that we will emphasize and lean into when it comes to competing with the likes of Revolut. Firstly, it's the trust element. I think people trust Lloyd's and it's a trusted brand, and that gives us an advantage, particularly when we install maybe new products, things like HNCKI, things like digital assets. Having a brand that you trust is really important there. Secondly, we have scale and we have that data, and therefore we have advantages in terms of how we're able to utilize that and make sure we can come out with good propositions for customers. And then finally, I guess most relevant to competing with the likes of Revolut but other fintechs is we have that breadth and so i think the importance here is that we need to lean into those things so that when customers choose us we can make sure that we introduce them to the full breadth of the franchise and make sure that we can deepen that relationship to ensure that we can continue to win against those types of fintechs so to your to answer your question very quickly it emphasizes the need to continue with our transformation but it also means that we need to continue to deal with high levels of competition which we're used to dealing with and we need to lean into our strengths so I think that hopefully answers the question we've had one other question here on AI does the AI push drive your energy costs if so how can you mitigate this so I can't answer that specifically what I will say is that obviously we've dealt with inflation over the last few years and that's not just inflation in energy costs it's inflation in people costs it's inflation in other aspects of the business clearly like you say there will be impacts of some of the investments that we put in i can't answer your question to what extent the push into ai impacts energy costs and but clearly there will be offsets there because we've decommissioned some things such as legacy data centers and reintroduce things like the cloud so there'll be some offsets some puts and some takes overall though how do we mitigate those increasing costs well we do it by essentially being more efficient by generating gross cost saves and you heard earlier me talk about the the 1.9 billion of gross cost saves that we have generated a business that is by for example investing more efficiently being more agile it's also by reducing some of our property consolidating some of our property it's also by automating customer journeys and so one good stat actually is that customer facing colleagues can now serve 45 percent more customers than they could before the start of the strategy so i can't speak specifically to energy but overall costs have clearly increased over the last few years in line with inflation and definitely some of the investments have increased costs as well but we continue to mitigate that to make sure that we can continue to invest into the business. I think we've got one more sort of motor adjacent question Rohit. So with motor the question is and you touched upon it a little bit earlier has something changed in the way that we look at motor finance products to eradicate the possibility of a similar occurrence and are there any penalties applied to those um that have maybe benefited from the uh from the previous sale of those products

uh yeah thank you tom so there are a few things that have changed in the motor finance industry so you know i i guess just going back a few years uh you know this is all about the commission arrangements with uh with motor dealers and that was something that was reviewed by the fca between 2017 and 2019 uh they had a look at it at the time and they said they didn't really like these adjustable commission agreements which were prevalent in the market at the time they were no by no way lloyd by no means lloyd specific that was standard market practice so in 2020 they came to the decision that they that would no longer be allowable and we and our competitors changed the way that we sold motorfoil change the remuneration for the for the dealers on motor finance from 2021 onwards so that has been a change in the market then also the year before last there was a case that came to the court of appeal around whether the customer knew that the whether the customer really knew that the dealer was receiving a commission in response to that ruling we withdrew the products for about two weeks redrew all of our contracts uh which now require um customers to explicitly indicate uh that they understand that they could that the dealer is uh receiving a commission uh and then we read we we reopen the product and to be frank that's made very little difference to um to the volumes of business that we've been writing so that there has been a change in the way the industry operates uh we we all through this have complied with the law and the regulation, but the regulation has now changed. The law has now changed, and we've made sure that we kept up to date with it. Brilliant. Thanks, Ray. I think

that gets us to the end of the questions that have been submitted. Jake, just to double-check

that's the case from your side. Absolutely, guys, and thank you very much indeed for being so generous of your time then, addressing all of those questions that came in from investors this afternoon and of course if there are any further questions that do come through we'll make these available to you after the presentation is ended just for you to review but Rohif perhaps before really now just looking to redirect those on the call to provide you with their feedback which I know is particularly important to yourself and the company if I could please just ask you for a few

closing comments just to wrap up with that'd be great yes thank you so thank you again for joining us we really do appreciate your time and your interest and would welcome your feedback I hope found that a useful session uh and uh and thank you very much also to invest the meat for hosting us uh and we look forward to updating you uh on the next phase of our strategy later in the year

thank you perfect bro have tom that's great thank you once again for updating investors this afternoon could i please ask investors not to close this session as you'll now be automatically redirected to provide your feedback on behalf management team with lloyd's banking group plc we would like to thank you for attending today's presentation that now concludes today's session so good afternoon to you all