In July 2018 a decision was sought from the High Court in respect of the requirement to equalise the Guaranteed Minimum Pension (GMP) benefits accrued between 1990 and 1997 from contracting out of the State Earnings Related Pension Scheme. In its judgment handed down on 26 October 2018 the High Court confirmed the requirement to treat men and women equally with respect to these benefits and a range of methods that the Trustee is entitled to adopt to achieve equalisation. The Group recognised a past service cost of £108 million in respect of equalisation in 2018 and, following agreement of the detailed implementation approach with the Trustee, a further £33 million has been recognised in 2019.
Net amount recognised in the balance sheet 550 1,146 2019 £m 2018 £m
O ther inform ation Lloyds Banking Group Annual Report and Accounts 2019 255
Corporate and other debt securities 10,588 – 10,588 8,813 – 8,813
The pension schemes’ pooled investment vehicles comprise: 2019 £m 2018 £m
Life expectancy for member aged 60, on the valuation date: Life expectancy for member aged 60, 15 years after the valuation date: The mortality assumptions used in the UK scheme valuations are based on standard tables published by the Institute and Faculty of Actuaries which were adjusted in line with the actual experience of the relevant schemes. The table shows that a member retiring at age 60 at 31 December 2019 is assumed to live for, on average, 27.5 years for a male and 29.2 years for a female. In practice there will be much variation between individual members but these assumptions are expected to be appropriate across all members. It is assumed that younger members will live longer in retirement than those retiring now. This reflects the expectation that mortality rates will continue to fall over time as medical science and standards of living improve. To illustrate the degree of improvement assumed the table also shows the life expectancy for members aged 45 now, when they retire in 15 years’ time at age 60.
Sensitivity analysis The effect of reasonably possible changes in key assumptions on the value of scheme liabilities and the resulting pension charge in the Group’s income statement and on the net defined benefit pension scheme asset, for the Group’s three most significant schemes, is set out below. The sensitivities provided assume that all other assumptions and the value of the schemes’ assets remain unchanged, and are not intended to represent changes that are at the extremes of possibility. The calculations are approximate in nature and full detailed calculations could lead to a different result. It is unlikely that isolated changes to individual assumptions will be experienced in practice. Due to the correlation of assumptions, aggregating the effects of these isolated changes may not be a reasonable estimate of the actual effect of simultaneous changes in multiple assumptions.
The inflation assumption sensitivity applies to both the assumed rate of increase in the Consumer Prices Index (CPI) and the Retail Prices Index (RPI) , and include the impact on the rate of increases to pensions, both before and after retirement. These pension increases are linked to inflation (either CPI or RPI) subject to certain minimum and maximum limits.
Maturity analysis of benefits expected to be paid: In more than 45 years 3,160 4,270
Other post-retirement benefit schemes The Group operates a number of schemes which provide post-retirement healthcare benefits to certain employees, retired employees and their dependants. The principal scheme relates to former Lloyds Bank staff and under this scheme the Group has undertaken to meet the cost of postretirement healthcare for all eligible former employees (and their dependants) who retired prior to 1 January 1996. The Group has entered into an insurance contract to provide these benefits and a provision has been made for the estimated cost of future insurance premiums payable.
During the December 2019 election campaign, the UK government stated its intention to maintain the corporation tax rate at 19 per cent on 1 April 2020. Had this rate change been substantively enacted at 31 December 2019, the effect would have been to increase net deferred tax assets by £294 million.
On 29 October 2018, the UK government announced its intention to restrict the use of capital tax losses to 50 per cent of any future gains arising. Had this restriction been substantively enacted at 31 December 2019, the effect would have been to reduce net deferred tax assets by £50 million.
Other (charge) credit to equity – – – – (5) – – (5)
(Charge) credit to the income statement 162 142 (67) (19) (33) 7 192
Exchange and other adjustments – – – – – 6 6
(Charge) credit to other comprehensive income – – 64 (148) 83 – (1)
Deferred tax assets of approximately £48 million (2018: £78 million) have not been recognised in respect of £280 million of UK tax losses and other temporary differences which can only be used to offset future capital gains. UK capital losses can be carried forward indefinitely.
At 31 December 2019, a provision of £1,578 million remained unutilised relating to complaints and associated administration costs excluding amounts relating to MBNA. Total cash payments were £2,201 million during the year ended to 31 December 2019.
Sensitivities The total amount provided for PPI represents the Group’s best estimate of the likely future cost. A number of risks and uncertainties remain including processing the remaining PIRs and outstanding complaints. The cost could differ from the Group’s estimates and the assumptions underpinning them, and could result in a further provision being required. These may also be impacted by any further regulatory changes and potential additional remediation arising from the continuous improvement of the Group’s operational practices.
Customer claims in relation to insurance branch business in Germany The Group continues to receive claims in Germany from customers relating to policies issued by Clerical Medical Investment Group Limited (subsequently renamed Scottish Widows Limited), with smaller numbers received from customers in Austria and Italy. The industry-wide issue regarding notification of contractual 'cooling off' periods continued to lead to an increasing number of claims in 2016 and 2017. Whilst complaint volumes have declined, new litigation claim volumes per month have remained fairly constant throughout 2019. Up to 31 December 2019 the Group had provided a total of £656 million. The validity of the claims facing the Group depends upon the facts and circumstances in respect of each claim. As a result, the ultimate financial effect, which could be significantly different from the current provision, will be known only once all relevant claims have been resolved.
Repurchases and redemptions during the year1 (3) (49) (53) (713) (818)
Preferred securities £m 6.461% Guaranteed Non-voting Non-cumulative Perpetual Preferred Securities 600
O ther inform ation Lloyds Banking Group Annual Report and Accounts 2019 263
Issued under employee share schemes 775,882,951 768,551,098 518,293,181 78 77 51
Ordinary shares The holders of ordinary shares, who held 100 per cent of the total ordinary share capital at 31 December 2019, are entitled to receive the Company’s report and accounts, attend, speak and vote at general meetings and appoint proxies to exercise voting rights. Holders of ordinary shares may also receive a dividend (subject to the provisions of the Company’s articles of association) and on a winding up may share in the assets of the Company.
Note 41: Share premium account 2019 £m 2018 £m 2017 £m
The merger reserve primarily comprises the premium on shares issued in January 2009 as part of the recapitalisation of the Group and the acquisition of HBOS plc.
Under a similar programme in 2018, the Group bought back and cancelled 1,578 million shares for a total consideration, including expenses, of £1,005 million; £158 million was transferred to the capital redemption reserve.
Income statement transfer in respect of disposals (note 9) (196) (275)
O ther inform ation Lloyds Banking Group Annual Report and Accounts 2019 267
Gains and losses attributable to own credit risk (net of tax) 3 (306) 389 (40)
Issued in the year: US dollar notes ($1,500 million nominal) – 1,136 –
The trustees of the following holdings of Lloyds Banking Group plc shares in relation to employee share schemes retain the right to receive dividends but have chosen to waive their entitlement to the dividends on those shares as indicated: the Lloyds Banking Group Share Incentive Plan (holding at 31 December 2019: 6,508,529 shares, 31 December 2018: 5,538,164 shares, waived rights to all dividends) , the HBOS Share Incentive Plan Trust (holding at 31 December 2019: 445,625 shares, 31 December 2018: 445,625 shares, waived rights to all dividends) , the Lloyds Banking Group Employee Share Ownership Trust (holding at 31 December 2019: 11,656,155 shares, 31 December 2018: 5,679,119 shares, on which it waived rights to all dividends) and Lloyds Group Holdings (Jersey) Limited (holding at 31 December 2019: nil, 31 December 2018: 42,846 shares, waived rights to all but a nominal amount of one penny in total) .
The weighted average fair value of SAYE options granted during 2019 was £0.10 (2018: £0.13) . The fair values of the SAYE options have been determined using a standard Black-Scholes model.
Other share option plans Lloyds Banking Group Executive Share Plan 2003 The Plan was adopted in December 2003 and under the Plan share options may be granted to senior employees. Options under this plan have been granted specifically to facilitate recruitment (to compensate new recruits for any lost share awards) , and also to make grants to key individuals for retention purposes. In some instances, grants may be made subject to individual performance conditions.
The weighted average fair value of options granted in the year was £0.59 (2018: £0.55) . The fair values of options granted have been determined using a standard Black-Scholes model. The weighted average share price at the time that the options were exercised during 2019 was £0.60 (2018: £0.65) . The weighted average remaining contractual life of options outstanding at the end of the year was 3.8 years (2018: 5.2 years) .
Fixed share awards Fixed share awards were introduced in 2014 in order to ensure that total fixed remuneration is commensurate with role and to provide a competitive reward package for certain Lloyds Banking Group employees, with an appropriate balance of fixed and variable remuneration, in line with regulatory requirements. The fixed share awards are delivered in Lloyds Banking Group shares, released over five years with 20 per cent being released each year following the year of award. The number of shares purchased in 2019 was 8,239,332 (2018: 8,965,562) .
Note 47: Related party transactions Key management personnel Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of an entity; the Group’s key management personnel are the members of the Lloyds Banking Group plc Group Executive Committee together with its Non-Executive Directors.
Exercised/lapsed (includes entitlements of former key management personnel) – (1) (2)
Repayments (includes loans of former key management personnel) (1) (1) (3)
No provisions have been recognised in respect of loans given to key management personnel (2018 and 2017: £nil) .
Withdrawn (includes deposits of former key management personnel) (41) (33) (33)
Joint ventures and associates At 31 December 2019 there were loans and advances to customers of £75 million (2018: £57 million) outstanding and balances within customer deposits of £5 million (2018: £2 million) relating to joint ventures and associates.
As discussed in note 23, in October 2019, the Group established a wealth management joint venture with Schroders. The Group subsequently transferred approximately £12 billion of managed assets at fair value.
It is currently not possible to predict the scope and ultimate outcome on the Group of the various outstanding regulatory investigations not encompassed by the settlements, any private lawsuits or any related challenges to the interpretation or validity of any of the Group's contractual arrangements, including their timing and scale.
UK shareholder litigation In August 2014, the Group and a number of former directors were named as defendants in a claim by a number of claimants who held shares in Lloyds TSB Group plc (LTSB) prior to the acquisition of HBOS plc, alleging breaches of duties in relation to information provided to shareholders in connection with the acquisition and the recapitalisation of LTSB. Judgment was delivered on 15 November 2019. The Group and former directors successfully defended the claims. The claimants have sought permission to appeal. It is currently not possible to determine the ultimate impact on the Group (if any).
Note 48: Contingent liabilities, commitments and guarantees continued approximately £800 million (including interest) and a reduction in the Group’s deferred tax asset of approximately £250 million. The Group does not agree with HMRC’s position and, having taken appropriate advice, does not consider that this is a case where additional tax will ultimately fall due. There are a number of other open matters on which the Group is in discussion with HMRC (including the tax treatment of certain costs arising from the divestment of TSB Banking Group plc), none of which is expected to have a material impact on the financial position of the Group.
(B) Consolidated collective investment vehicles and limited partnerships The assets of the Insurance business held in consolidated collective investment vehicles, such as Open-Ended Investment Companies and limited partnerships, are not directly available for use by the Group. However, the Group’s investment in the majority of these collective investment vehicles is readily realisable. As at 31 December 2019, the total carrying value of these consolidated collective investment vehicle assets and liabilities held by the Group was £68,724 million (2018: £62,648 million) .
(C) Unconsolidated collective investment vehicles and limited partnerships The Group’s direct interests in unconsolidated structured entities comprise investments in collective investment vehicles, such as Open-Ended Investment Companies, and limited partnerships with a total carrying value of £38,177 million at 31 December 2019 (2018: £26,028 million) , included within financial assets designated at fair value through profit and loss (see note 16) . These investments include both those entities managed by third parties and those managed by the Group. At 31 December 2019, the total asset value of these unconsolidated structured entities, including the portion in which the Group has no interest, was £2,363 billion (2018: £2,435 billion) .
Loans and advances to customers – – – – – 494,988 – 494,988
Derivative financial instruments 1,105 24,674 – – – – – 25,779
Notes in circulation – – – – – 1,079 – 1,079
Loans and advances to customers – – – – – 484,858 – 484,858
(3) Financial assets and liabilities carried at fair value (A) Financial assets, excluding derivatives Valuation hierarchy At 31 December 2019, the Group’s financial assets carried at fair value, excluding derivatives, totalled £185,281 million (31 December 2018: £183,344 million) . The table below analyses these financial assets by balance sheet classification, asset type and valuation methodology (level 1, 2 or 3, as described on page 277) . The fair value measurement approach is recurring in nature. There were no significant transfers between level 1 and 2 during the year.
Total financial assets carried at fair value, excluding derivatives 112,913 56,247 14,184 183,344
Gains recognised in the income statement within other income 794 – 794 439 – 439
Equity investments Unlisted equity and fund investments are valued using different techniques in accordance with the Group’s valuation policy and International Private Equity and Venture Capital Guidelines.
Liabilities designated at fair value through profit or loss – 7,483 48 7,531
Total financial liabilities carried at fair value, excluding derivatives 2,781 18,657 48 21,486
O ther inform ation Lloyds Banking Group Annual Report and Accounts 2019 281
Gains recognised in the income statement, within other income, relating to the change in fair value of those liabilities held at 31 December – –
Where the Group’s derivative assets and liabilities are not traded on an exchange, they are valued using valuation techniques, including discounted cash flow and options pricing models, as appropriate. The types of derivatives classified as level 2 and the valuation techniques used include: – Interest rate swaps which are valued using discounted cash flow models; the most significant inputs into those models are interest rate yield curves which are developed from publicly quoted rates. – Foreign exchange derivatives that do not contain options which are priced using rates available from publicly quoted sources. – Credit derivatives which are valued using standard models with observable inputs, except for the items classified as level 3, which are valued using publicly available yield and credit default swap (CDS) curves. – Less complex interest rate and foreign exchange option products which are valued using volatility surfaces developed from publicly available interest rate cap, interest rate swaption and other option volatilities; option volatility skew information is derived from a market standard consensus pricing service. For more complex option products, the Group calibrates its models using observable at-the-money data; where necessary, the Group adjusts for out-of-themoney positions using a market standard consensus pricing service.
The Group has also recognised a Funding Valuation Adjustment to adjust for the net cost of funding uncollateralised derivative positions. This adjustment is calculated on the expected future exposure discounted at a suitable cost of funds. A ten basis points increase in the cost of funds will increase the funding valuation adjustment by approximately £21 million.
Interest rate spreads (bps) 47bps/108bps 10,912 401 (384) 10,565 380 (371)
Derivatives Reasonably possible alternative assumptions have been determined in respect of swaptions in the Group’s derivative portfolios which are priced using industry standard option pricing models. Such models require interest rate volatilities which may be unobservable at longer maturities. To derive reasonably possible alternative valuations these volatilities have been flexed within a range of 10 per cent to 128 per cent (2018: 19 per cent to 80 per cent) .
(B) Financial liabilities Valuation hierarchy The table below analyses the fair values of the financial liabilities of the Group which are carried at amortised cost by valuation methodology (level 1, 2 or 3, as described on page 277) .
Repos included in above amounts: Deposits from banks 18,105 18,105 – 18,105 –
(5) Reclassifications of financial assets Other than the reclassifications on adoption of IFRS 9 on 1 January 2018, there have been no reclassifications of financial assets in 2018 or 2019.
Financial assets at fair value through profit or loss 9,186 3,364 6,815 961
Financial assets at fair value through other comprehensive income 7,897 5,875 7,279 5,337
O ther inform ation Lloyds Banking Group Annual Report and Accounts 2019 287
Financial assets at fair value through profit or loss: Loans and advances to banks: Loans and advances to customers: Financial assets at fair value through other comprehensive income 25,092 – 25,092 – (5,859) 19,233
O ther inform ation Lloyds Banking Group Annual Report and Accounts 2019 289
The primary risks affecting the Group through its use of financial instruments are: credit risk; market risk, which includes interest rate risk and foreign exchange risk; liquidity risk; capital risk; and insurance risk. Information about the Group’s exposure to each of the above risks and capital can be found on pages 129 to 187. The following additional disclosures, which provide quantitative information about the risks within financial instruments held or issued by the Group, should be read in conjunction with that earlier information.
The Group’s risk management policy is to optimise reward whilst managing its market risk exposures within the risk appetite defined by the Board. The largest residual risk exposure arises from balances that are deemed to be insensitive to changes in market rates (including current accounts, a portion of variable rate deposits and investable equity) , and is managed through the Group’s structural hedge. The structural hedge consists of longer-term fixed rate assets or interest rate swaps and the amount and duration of the hedging activity is reviewed regularly by the Group Asset and Liability Committee. Further details on the Group market risk policy can be found on page 182.
In addition the Group has cash flow hedges which are primarily used to hedge the variability in the cost of funding within the commercial business. The notional principal of the interest rate swaps designated as cash flow hedges at 31 December 2019 was £426,740 million (2018: £556,945 million) with a net fair value liability of £388 million (2018: liability of £486 million) (note 17) . In 2019, ineffectiveness recognised in the income statement that arises from cash flow hedges was a gain of £134 million (2018: loss of £25 million) .
– any reclassification of amounts in cash flow hedge reserves to profit or loss have been based on assessing whether the hedged cash flows are no longer expected to occur assuming that the interest rate benchmark on which the hedged cash flows are based is not altered as a result of the interest rate benchmark reform; and – all benchmark rate referenced hedged items and hedging instruments included in hedging relationships are subject to uncertainty due to interest rate benchmark reform.
At 31 December 2019, the notional amount of the hedging instruments in hedging relationships to which these amendments apply was £604,602 million, of which £117,076 million relates to Sterling LIBOR fair value hedges and £400,439 million relates to Sterling LIBOR cash flow hedges.
(B) Currency risk The corporate and retail businesses incur foreign exchange risk in the course of providing services to their customers. All non-structural foreign exchange exposures in the non-trading book are transferred to the trading area where they are monitored and controlled. These risks reside in the authorised trading centres who are allocated exposure limits. The limits are monitored daily by the local centres and reported to the market and liquidity risk function in London. Associated VaR and the closing, average, maximum and minimum are disclosed on page 187. The Group also manages foreign currency risk via cash flow hedge accounting, utilising currency swaps.
The Group’s main overseas operations are in the Americas and Europe. Details of the Group’s structural foreign currency exposures are as follows: (C) Functional currency of Group operations
O ther inform ation Lloyds Banking Group Annual Report and Accounts 2019 291
Financial assets at fair value through other comprehensive income3 24,865 – 24,865 24,794 – 24,794
Total loans and advances to customers 449,975 28,543 6,015 13,714 498,247
O ther inform ation Lloyds Banking Group Annual Report and Accounts 2019 297
Total loans and advances to customers 129,634 3,741 99 79 133,553
Total loans and advances to customers 95 77 5 – 177
Expected credit losses in respect of drawn exposures PD range £m £m £m
Loans and advances to banks: Loans and advances to customers: Retail - mortgages
Total loans and advances to customers 525 994 1,553 78 3,150
Asset-backed securities: Corporate and other debt securities 1,650 14 1,664 1,176 16 1,192
Note 53: Financial risk management continued Debt securities, treasury and other bills held at fair value through profit or loss An analysis of the Group’s financial assets at fair value through profit or loss is included in note 16. The credit quality of the Group’s debt securities, treasury and other bills held at fair value through profit or loss is set out below: Investment grade1 £m Other2 £m Total £m
Trading assets: Asset-backed securities: Corporate and other debt securities 232 1 233 228 19 247
Asset-backed securities: Corporate and other debt securities 15,932 2,051 17,983 16,141 1,922 18,063
Treasury bills and other bills 19 – 19 20 – 20
Loans and advances to banks There were reverse repurchase agreements which are accounted for as collateralised loans within loans and advances to banks with a carrying value of £1,555 million (2018: £461 million) , against which the Group held collateral with a fair value of £1,516 million (2018: £481 million) .
The Group credit risk disclosures for unimpaired non-mortgage retail lending report assets gross of collateral and therefore disclose the maximum loss exposure. The Group believes that this approach is appropriate.
O ther inform ation Lloyds Banking Group Annual Report and Accounts 2019 311
Financial assets at fair value through profit or loss (excluding equity shares) Included in financial assets at fair value through profit or loss are reverse repurchase agreements treated as collateralised loans with a carrying value of £11,269 million (2018: £28,356 million) . Collateral is held with a fair value of £11,081 million (2018: £36,101 million) , all of which the Group is able to repledge. At 31 December 2019, £9,605 million had been repledged (2018: £31,013 million) .
Financial liabilities at fair value through profit or loss 9,693 10,984 7,553 930 10,771 39,931
The principal amount for undated subordinated liabilities with no redemption option is included within the over five years column; interest of approximately £29 million (2018: £27 million) per annum which is payable in respect of those instruments for as long as they remain in issue is not included beyond five years.
1 Includes £82 million (2018: £27 million; 2017: £2 million) in respect of lease liabilities.
Payments in respect of payment protection insurance provision (2,461) (2,104) (1,657)
(D) Analysis of cash and cash equivalents as shown in the balance sheet 2019 £m 2018 £m 2017 £m
Total cash and cash equivalents 57,811 55,224 60,982 1 Mandatory reserve deposits are held with local central banks in accordance with statutory requirements; these deposits are not available to finance the Group’s day-to-day operations.
(E) Acquisition of group undertakings and businesses 2019 £m 2018 £m 2017 £m
Net cash outflow arising from acquisition of subsidiaries and businesses 20 26 1,893
Note 56: Future accounting developments The following pronouncements are not applicable for the year ending 31 December 2019 and have not been applied in preparing these financial statements. Save as disclosed below, the impact of these accounting changes is still being assessed by the Group and reliable estimates cannot be made at this stage.
Movement in treasury shares – – – 74 74 – 74
Net cash (used in) provided by investing activities 13,713 (5,911) (5,058)
Note 4: Share capital, share premium and other equity instruments Details of the Company’s share capital, share premium account and other equity instruments are as set out in notes 40, 41 and 44 to the consolidated financial statements.
Note 8: Subordinated liabilities These liabilities will, in the event of the winding-up of the issuer, be subordinated to the claims of depositors and all other creditors of the issuer. Any repayments of subordinated liabilities require the consent of the Prudential Regulation Authority.
Issued in the year: 1.75% Subordinated Fixed Rate Notes 2028 callable 2023 – – 664 664 4.344% Subordinated Fixed Rate Notes callable 2048 – – 1,065 1,065
Redemption: 6.3673% Non-cumulative Fixed to Floating Rate Preference Shares callable 2019 (3) – – (3)
Note 9: Financial liabilities at fair value through profit or loss Financial liabilities designated at fair value through profit or loss, which were all issued in 2019, represent debt securities in issue which are accounted for at fair value to significantly reduce an accounting mismatch. The changes in the credit risk of these liabilities are linked to the changes in credit risk on corresponding assets that the Company holds at fair value through profit or loss, representing debt securities issued by subsidiaries. Given the economic relationship between these assets and liabilities, the Company presents changes in the credit risk of its liabilities in profit or loss in order to avoid creating or enlarging an accounting mismatch.
The amount contractually payable on maturity of the debt securities held at fair value through profit or loss at 31 December 2019 was £3,393 million, which was £71 million lower than the balance sheet carrying value. At 31 December 2019 there was a cumulative £101 million increase in the fair value of these liabilities attributable to changes in credit risk, all of which arose in 2019; this is determined by reference to the quoted credit spreads of the Company.
Note 10: Related party transactions Key management personnel The key management personnel of the Group and the Company are the same. The relevant disclosures are given in note 47 to the consolidated financial statements.
Ordinary share capital Other capital instruments Total 2019 £m 2018 £m 2019 £m 2018 £m 2019 £m 2018 £m
Details of the subsidiaries and related undertakings are given on pages 332 to 337 and are incorporated by reference.
In addition the Company carries out banking activities through its subsidiary, Lloyds Bank plc. At 31 December 2019, the Company held deposits of £29 million with Lloyds Bank plc (2018: £55 million) . Given the volume of transactions flowing through the account, it is not meaningful to provide gross inflow and outflow information. Included within other liabilities is £105 million (2018: £51 million) due to subsidiary undertakings. In addition, at 31 December 2019 the Company had interest rate and currency swaps with Lloyds Bank plc and Lloyds Bank Corporate Markets plc with an aggregate notional principal amount of £37,555 million and a net positive fair value of £338 million (2018: notional principal amount of £1,379 million and a net positive fair value of £47 million) . Of this amount an aggregate notional principal amount of £21,164 million and a net positive fair value of £707 million (2018: notional principal amount of £1,275 million and a net positive fair value of £150 million) were designated as fair value hedges to manage the Company’s issuance of subordinated liabilities.
Financial assets at fair value through profit or loss – – 12,516 – – 12,516
Financial assets at fair value through profit or loss – – 588 – – 588
Financial liabilities: Derivative financial instruments – 209 – – – 209
Financial liabilities at fair value through profit or loss 30 31 41 3,554 – 3,656
O ther inform ation Lloyds Banking Group Annual Report and Accounts 2019 325
Other information Shareholder information 327 Five year financial summary 329 Forward looking statements 330 Abbreviations 331 Alternative performance measures 331 Subsidiaries and related undertakings 332 326 Lloyds Banking Group Annual Report and Accounts 2019
O ther inform ation Lloyds Banking Group Annual Report and Accounts 2019 329
Number of ordinary shares in issue (millions) 6 70,053 71,164 71,973 71,374 71,374
Return on risk-weighted assets Underlying profit before tax divided by average risk-weighted assets.
Cloak Lane Funding S.A.R.L. 56 Cloak Lane Investments S.A.R.L. 56 CM Venture Investments Ltd 23 iv Conquest Securities Ltd 1 iv vi Corbiere Asset Investments Ltd 1 i ii Create Services Ltd 1 Dalkeith Corporation 24 Dunstan Investments (UK) Ltd 1 Eurolead Services Holdings Ltd 9 First Retail Finance (Chester) Ltd 4 Forthright Finance Ltd 2 France Industrial Premises Holding Company 28 General Leasing (No. 12) Ltd 1 General Reversionary and Investment Company 20 Gresham Nominee 1 Ltd 1 Gresham Nominee 2 Ltd 1 Halifax Credit Card Ltd (in liquidation) 13 i ii vii Halifax Financial Brokers Ltd 4 Halifax Financial Services (Holdings) Ltd 4 Halifax Financial Services Ltd 4 Halifax General Insurance Services Ltd 4 Halifax Group Ltd 4 Halifax Investment Services Ltd 4 Halifax Leasing (June) Ltd (In liquidation) 13 Halifax Leasing (March No.2) Ltd 1 Halifax Leasing (September) Ltd 1 Halifax Life Ltd 4 Halifax Ltd 4 Halifax Loans Ltd 4 Halifax Mortgage Services Ltd 4 Halifax Nominees Ltd 4 Halifax Pension Nominees Ltd 29 Halifax Premises Ltd (in liquidation) 13 Halifax Share Dealing Ltd 4 Halifax Vehicle Leasing (1998) Ltd 4 HBOS Covered Bonds LLP 4 * HBOS Final Salary Trust Ltd 5 HBOS Financial Services Ltd 20 HBOS Insurance & Investment Group Ltd 20 HBOS International Financial Services Holdings
Lloyds Bank (Colonial & Foreign) Nominees Ltd 1 Lloyds Bank (Fountainbridge 1) Ltd 5 Lloyds Bank (Fountainbridge 2) Ltd 5 Lloyds Bank (I.D.) Nominees Ltd 1 Lloyds Bank (International Services) Ltd 58 Lloyds Bank (Stock Exchange Branch) Nominees
Lloyds Bank Insurance Services Ltd 1 Lloyds Bank International Ltd 58 Lloyds Bank Leasing (No. 6) Ltd 1 Lloyds Bank Leasing (No. 8) Ltd (In liquidation) 13 Lloyds Bank Leasing Ltd 1 Lloyds Bank Maritime Leasing (No. 10) Ltd 1 Lloyds Bank Maritime Leasing (No. 13) Ltd (In liquidation)
Lloyds Bank Maritime Leasing (No. 17) Ltd 1 Lloyds Bank MTCH Ltd 1 Lloyds Bank Nominees Ltd 1 Lloyds Bank Offshore Pension Trust Ltd 33 Lloyds Bank Pension ABCS (No. 1) LLP 1 * Lloyds Bank Pension ABCS (No. 2) LLP 1 * Lloyds Bank Pension Trust (No. 1) Ltd 1 Lloyds Bank Pension Trust (No. 2) Ltd 1 Lloyds Bank Pensions Property (Guernsey) Ltd 34 i ii Lloyds Bank plc 1 ̂ x Lloyds Bank Properties Ltd (in liquidation) 13 Lloyds Bank Property Company Ltd 1 Lloyds Bank S.F. Nominees Ltd 1 Lloyds Bank Subsidiaries Ltd 1 Lloyds Bank Trustee Services Ltd 1 Lloyds Banking Group Pensions Trustees Ltd 1 Lloyds Capital GP Ltd 31 * Lloyds Commercial Leasing Ltd (In liquidation) 13 Lloyds Commercial Properties Ltd (In liquidation) 13 Lloyds Commercial Property Investments Ltd (In liquidation)
Lloyds Property Investment Company No. 4 Ltd 1 Lloyds Property Investment Company No.5 Ltd 1 Lloyds Secretaries Ltd 1 Lloyds Securities Inc. 11 Lloyds TSB Pacific Ltd 51 Lloyds UDT Asset Leasing Ltd (In liquidation) 13 Lloyds UDT Asset Rentals Ltd (in liquidation) 13 Lloyds UDT Hiring Ltd (In liquidation) 13 Lloyds UDT Leasing Ltd 1 Lloyds UDT Ltd (in liquidation) 13 Lloyds Your Tomorrow Trustee Ltd 1 Loans.co.uk Ltd 47 London Taxi Finance Ltd 1 i ii London Uberior (L.A.S. Group) Nominees Ltd 5 * Lotus Finance Ltd 50 i ii # LTGP Limited Partnership Incorporated 34 * Mainsearch Company Ltd 47 Maritime Leasing (No. 19) Ltd 1 MBNA Direct Ltd 47 MBNA Europe Finance Ltd 46 MBNA Europe Holdings Ltd 47 MBNA Global Services Ltd 47 MBNA Indian Services Private Ltd (applied for
MBNA Ltd 47 MBNA R & L S.A.R.L. 53 MBNA Receivables Ltd 63 Membership Services Finance Ltd 4 Mitre Street Funding S.A.R.L. 56 Moor Lane Holdings Ltd (in liquidation) 39 NFU Mutual Finance Ltd 2 i ii vii # Nominees (Jersey) Ltd 58 Nordic Leasing Ltd 1 NWS Trust Ltd 5 Ocean Leasing (July) Ltd (In liquidation) 13 Oystercatcher Nominees Ltd (in liquidation) 13 Oystercatcher Residential Ltd (in liquidation) 13 Pacific Leasing Ltd 1 Pensions Management (S.W.F.) Ltd 54 * Peony Eastern Leasing Ltd (In liquidation) 13 Peony Leasing Ltd (In liquidation) 13 Peony Western Leasing Ltd (In liquidation) 13 Perry Nominees Ltd 1 PIPS Asset Investments Ltd 1 i ii Prestonfield Investments Ltd 5 Proton Finance Ltd 50 i ii # R.F. Spencer And Company Ltd 2 Ranelagh Nominees Ltd 1 Retail Revival (Burgess Hill) Investments Ltd 1 Saint Michel Holding Company No1 28 Saint Michel Investment Property 28 Saint Witz 2 Holding Company No1 28 Saint Witz 2 Investment Property 28 Savban Leasing Ltd 1 Scotland International Finance B.V. 21 Scottish Widows Administration Services
Scottish Widows Group Ltd 3 i ii x Scottish Widows Industrial Properties Europe B.V. 18 Scottish Widows Ltd 1 Scottish Widows Pension Trustees Ltd 3 Scottish Widows Property Management Ltd 54 Scottish Widows Schroder Personal Wealth (ACD)
Ground Floor, Redcentral, 60 High Street, Redhill, RH1 1SH xvii xvi & Cleanslate Ashford Ltd 50% Chobham Farm, Sandpit Hall Road, Chobham, Surrey, GU24 8 HA i Connery Ltd 20% 44 Esplanade St Helier Jersey JE4 9WG & Croud Holdings Ltd 99% First Floor, 39 Tabernacle Street, London EC2A 4AA i Cruden Homes (Aberlady) Ltd 50% Baberton House, Juniper Green, Edinburgh, EH14 3HN, United Kingdom i Cruden Homes (Longniddry) Ltd 50% Baberton House, Juniper Green, Edinburgh, EH14 3HN, United Kingdom i D.U.K.E Real Estate Ltd 100% 1st Floor, Exchange Place, 3 Semple Street, Edinburgh, EH3 8BL ii ~ Delancy Arnold UK Ltd (in liquidation) 50% 4th Floor, 4 Victoria Street, St Albans, Hertfordshire, AL1 3T ii Delancy Rolls UK Ltd (in liquidation) 50% 4th Floor, 4 Victoria Street, St Albans, Hertfordshire, AL1 3T ii Devonshire Homes (Cullompton) Ltd 50% Devonshire House, Lowman Green, Tiverton, Devon, EX16 4LA i Devonshire Homes (Landkey) Ltd 50% Devonshire House, Lowman Green, Tiverton, Devon, EX16 4LA, United Kingdom i Devonshire Homes (St Austell) Ltd 50% Devonshire House, Lowman Green, Tiverton, Devon, EX16 4LA, United Kingdom i DHHG1 Ltd 50% Alexander Fleming House, 8, Southfield Drive, Elgin, Morayshire, IV30 6GR i Dino Newco Ltd 89.25% Unit 2, Orchard Place, Nottingham Business Park, Nottingham, NG8 6PX i & Duchy Homes (Bowgreave) Ltd 50% Middleton House, Westland Road, Leeds, West Yorkshire, LS11 5UH i Duchy Homes (North Cave) Ltd 50% Middleton House, Westland Road, Leeds, West Yorkshire, LS11 5UH i Duchy Homes (Penistone) Ltd 50% Middleton House, Westland Road, Leeds, West Yorkshire, LS11 5UH i Duchy Homes (Scawthorpe) Ltd 50% Middleton House, Westland Road, Leeds, West Yorkshire, LS11 5UH i Duchy Homes (Winterley) Ltd 50% Middleton House, Westland Road, Leeds, West Yorkshire, LS11 5UH i Duncan and Todd Holdings Ltd 89.25% 6 Queens Road, Aberdeen, AB15 4ZT i & Ediston Homes Sauchie Ltd 50% 39/1 George Street, Edinburgh, EH2 2HN i Eley Group Ltd 85.86% Selco Way, Off First Avenue, Minworth Industrial Estate, Minworth, Sutton Coldfield, B76 1BA i & Ellis Whittam (Holdings) Ltd 89.25% Woodhouse, Aldford, Chester, CH3 6JD i & Ensco 997 Ltd 30.76%
Kenmore Capital Ltd (In liquidation) 100% Grant Thornton UK LLP, 110 Queen Street, Glasgow, G1 3BX ii ~ Keoghs Topco Ltd 99% 2 The Parklands, Bolton, Lancashire, BL6 4SE ii KHL 2017 Ltd 84.4%
16 Kirby Street, London, EC1N 8TS xvii & xvi Patrick Parsons Holdings Ltd 89.25% Fourth Floor Central Square, Forth Street, Newcastle upon Tyne NE1 3PJ xvii & Pertemps Network Group Ltd 93.83% Meriden Hall, Main Road, Meriden, Coventry ii & Personal Touch Holdings Ltd (in liquidation) 49.9% Two Snowhill, Snow Hill Queensway, Birmingham, West Midlands, B4 6GA i & PIHL Equity Administration Ltd 35% Cavendish House, 18 Cavendish Square, London, W1G 0PJ ii PIMCO (Holdings) Ltd 82.5% Four Brindleyplace, Birmingham, B1 2HZ, United Kingdom i & Prestbury 1 Limited Partnership n/a Cavendish House, 18 Cavendish Square, London, W1G 0PJ * & Project Belize Ltd 89.25% Sawley Marina, Long Eaton, Nottinghamshire, NG10 3AE i & Project Chestnut Topco Ltd 99% Alton House, Alton Business Park, Alton Road, Ross-on-Wye, HR9 5BP i & Project Chicago Newco Ltd 89.25% Church Lane, Church Lane, Norton, Worcester, WR5 2PR i & Project Polka TopcoLtd 89.25% Roundhouse Road, Faverdale Industrial Estate, Darlington, County Durham, DL3 0UR, United Kingdom ii & Project Dart Topco Ltd 97.92% 3 Long Acres Willow Farm Castle Donington Derbyshire DE74 2UG i & Project Sketch Ltd 88.30% 11 Vantage Way, Erdington, Birmingham, B24 9GZ i & Quantum (Flimwell) Ltd 50% Kings Parade, Lower Coombe Street, Croydon, CR0 1AA i Quentin Park (Cumwhinton) Ltd 50% 4 Cowper Road, Gilwilly Industrial Estate, Penrith CA11 9BN i Ramco Acquisition Ltd 89.45%
Deloitte LLP, 1 City Square, Leeds, LS1 2AL i & xvii Thistlerow Ltd 50% Radleigh House 1 Golf Road, Clarkston, Glasgow, G76 7HU i Timec 1634 Ltd 89.25% 5 Silverton Court, Cramlington, Northumberland, NE23 7RY, United Kingdom xvii & Timec 1667 Ltd 99% Unit 7 & 8 Diamond Court, Newcastle Upon Tyne, NE3 2EN i & Travellers Cheque Associates Ltd 36% Belgrave House, 76 Buckingham Palace Road, London, SW1W 9AX United House Group Holdings Ltd 82.5% 26 Kings Hill Avenue, Kings Hill, West Malling, Kent, ME19 4AE i & Whittington Facilities Ltd (applied for strike off) 100% Third Floor Broad Quay House, Prince Street, Bristol, BS1 4DJ v Williams Topco Ltd 89.25% The Old Post Office, St. Nicholas Street, Newcastle Upon Tyne, United Kingdom, NE1 1RH i & ZWPV Ltd 89.25% Zip World Base Camp, Denbigh Street, Llanrwst, LL26 0LL i &
ABERDEEN INVESTMENT ICVC 8 Aberdeen European Property Share Fund 37% Aberdeen Sterling Bond Fund 82% Aberdeen European Global High Yield Bond Fund 23% Aberdeen Sterling Opportunistic Corporate Bond
BNY MELLON INVESTMENTS FUNDS ICVC 10 BNY Mellon US Opportunities Fund 37% Insight Global Multi-Strategy Fund 44% Insight Global Absolute Return Fund 75% Newton Multi-Asset Growth Fund 26% Newton UK Opportunities Fund 54% Newton UK Income Fund 27%
HBOS ACTIVELY MANAGED PORTFOLIO FUNDS ICVC 1 Diversified Return Fund 94% Absolute Return Fund 93% Dynamic Return Fund 97%
MGI FUNDS PLC 28 Mercer Diversified Retirement 72% Mercer Multi Asset Defensive 62% Mercer Multi Asset Growth 49% Mercer Multi Asset High Growth 81% Mercer Multi Asset Moderate Growth 53% MGI UK Equity 34%
Corporate Bond Fund 62% UK Growth Fund 62% Gilt Fund 97% High Income Bond Fund 28% Strategic Income Fund 65% Environmental Investor Fund 72% Ethical Fund 78%
Luxembourg (19) Jackson House, 18 Saville Row, London, W1S 3PW (20) The Grange, Bishops Cleave, Cheltenham, GL52 8XX (21) Thesis Unit Trust Management Ltd, Exchange Building, St. John’s Street, Chichester, West
Registered office addresses (1) 25 Gresham Street, London, EC2V 7HN (2) Charterhall House, Charterhall Drive, Chester, CH88 3AN (3) Port Hamilton, 69 Morrison Street, Edinburgh, EH3 8YF (4) Trinity Road, Halifax, HX1 2RG (5) The Mound, Edinburgh, EH1 1YZ (6) 40a Station Road Upminster Essex RM14 2TR (7) 116 Cockfosters Road, Barnet, Hertfordshire, EN4 0DY (8) Minter Ellison, Governor Macquire Tower, Level 40, 1 Farrer Place, Sydney, NSW 2000,