Company: LLOBF
Filing Date: 2025-10-28
Form Type: 424B2
Source: 0000950103-25-013729
Chunk: 28

Company: Lloyds Banking Group plc
Filing Date: 2025-10-28
Form: 424B2
Chunk 28
---
 way as, or take
mitigating actions, to prevent its CET1 Ratio from falling below 7.00%, maintain or increase its CET1 Ratio or otherwise consider the
interests of the holders of the Additional Tier 1 Securities in connection with any of its business decisions that might affect LBG’s
CET1 Ratio.

The calculation of LBG’s CET1 Ratio may
also be affected by changes in applicable accounting rules, which may result in increased impairment charges (or volatility in impairment
charges as was the case with IFRS 9), or by changes to regulatory adjustments which modify the regulatory capital impact of accounting
rules. Impairment charges may cause significant decreases in our CET1 Ratio, especially given that the transitional arrangements which
have softened the impact of IFRS 9 on our loan loss allowances and allowed financial institutions to add-back increases in expected credit
loss provisions to CET1 capital have been phased out at the end of 2024. Even if changes in applicable accounting rules, or changes to
regulatory adjustments that modify the regulatory impact of accounting rules, are not yet in force as of the relevant calculation date,
the Relevant Regulator could require us to reflect such changes in any particular calculation of the CET1 Ratio. Moreover, the Group’s
CET1 Ratio is a non-IFRS measure, and our interpretation of Regulation (EU) No. 575/2013 as amended or supplemented, as it forms part
of domestic law in the United Kingdom by virtue of the EUWA and as amended (the “U.K. CRR”) and/or the Applicable Regulations
and the basis of our calculation of this financial measure may be different from those of other financial institutions. Accordingly, accounting
changes or regulatory changes may have a material adverse impact on LBG’s calculations of regulatory capital resources and requirements,
including CET1 Capital and Risk Weighted Assets, and LBG’s CET1 Ratio.

Further, the Basel Committee has continued its
post-crisis work on risk weighted assets. In December 2017, the Basel Committee revised the Basel III capital framework to, among other
things: (i) strengthen risk sensitivity and comparability in credit risk by adopting minimum “input” floors for certain metrics;
(ii) introduce a standardized approach to credit valuation adjustment risk; (iii) introduce a standardized approach to operational risk;
and (iv) introduce an “output floor” which is set at 72.5% of total RWAs calculated using the standardized approach. The