Company: LLOBF
Filing Date: 2025-02-20
Form Type: 6-K
Source: 0001654954-25-001688
Chunk: 44

Company: Lloyds Banking Group plc
Filing Date: 2025-02-20
Form: 6-K
Chunk 44
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 - |     |    -7 |     |        - |     |     -7 |     |     -7 |
| Total impairment charge (credit)     
 (underlying basis)A                  | 507 |           | -7 |     |         -6 |               | -3 |     |    -7 |     |      -51 |     |    433 |     |    308 |
| Asset quality ratioA                 |     |           |    |     |            |               |    |     |       |     |          |     | 0.10 % |     | 0.07 % |

#### Credit risk balance sheet basis of presentation
The balance sheet analyses which follow have been presented on two bases; the statutory basis which is consistent with the presentation in the Group's accounts and the underlying basis which is used for internal management purposes. A reconciliation between the two bases has been provided.

In the following statutory basis tables, purchased or originated credit-impaired (POCI) assets include a fixed pool of mortgages that were purchased as part of the HBOS acquisition at a deep discount to face value reflecting credit losses incurred from the point of origination to the date of acquisition. The residual expected credit loss (ECL) allowance and resulting low coverage ratio on POCI assets reflects further deterioration in the creditworthiness from the date of acquisition. Over time, these POCI assets will run off as the loans redeem, pay down or as loans are written off.

The Group uses the underlying basis to monitor the creditworthiness of the lending portfolio and related ECL allowances because it provides a different perspective of the credit performance of the POCI assets purchased as part of the HBOS acquisition. The underlying basis assumes that the lending assets acquired as part of a business combination were originated by the Group and are classified as either Stage 1, 2 or 3 according to the change in credit risk over the period since origination. Underlying ECL allowances have been calculated accordingly. Unless otherwise stated, the following credit risk commentary is provided on an underlying basis.

The statutory basis also includes an accounting adjustment within UK Motor Finance required under IFRS 9 to recognise a continuing involvement asset following the partial derecognition of a component of the Group's finance lease book via a securitisation in the third quarter of 2024.

CREDIT RISK (continued)

Total expected credit loss allowance - statutory and underlying A basis

|                                      | At 31 Dec 
      2024 
        £m |