Company: LLOBF
Filing Date: 2025-02-20
Form Type: 6-K
Source: 0001654954-25-001688
Chunk: 35

Company: Lloyds Banking Group plc
Filing Date: 2025-02-20
Form: 6-K
Chunk 35
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 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. Over time, these POCI assets will run off as the loans redeem, pay down or losses crystallise. 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. The Group uses the underlying basis to monitor the creditworthiness of the lending portfolio and related ECL allowances. 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.

ALTERNATIVE PERFORMANCE MEASURES (continued)

The Group calculates a number of metrics that are used throughout the banking and insurance industries on an underlying basis. These metrics are not necessarily comparable to similarly titled measures presented by other companies and are not any more authoritative than measures presented in the financial statements, however management believes that they are useful in assessing the performance of the Group and in drawing comparisons between years. A description of these measures and their calculation, is given below. Alternative performance measures are used internally in the Group's Monthly Management Report.

| Asset quality ratio                                    |     | The underlying impairment charge or credit for the period in        
 respect of loans and advances to customers, both drawn and undrawn, 
 expressed as a percentage of average gross loans and advances to    
 customers for the period. This measure is useful in assessing the   
 credit quality of the loan book.                                    |
| Banking net interest margin                            |     | Banking net interest income on customer and product balances in the 
 banking businesses as a percentage of average gross                 
 interest-earning banking assets for the period. This measure is     
 useful in assessing the profitability of the banking                
 business.                                                           |
| Cost:income ratio                                      |     | Total costs as a percentage of net income calculated on an          
 underlying basis. This measure is useful in assessing the           
 profitability of the Group's operations before the effects of the   
 underlying impairment credit or charge.                             |
| Gross written premiums                                 |     | Gross written premiums is a measure of the volume of General        
 Insurance business written during the period. This measure is       
 useful for assessing the growth of