Non ring-fenced bank
Lloyds Bank
Corporate
Markets plc
Annual Report and Accounts 2023
Helping Britain Prosper
01Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
LBCM’s purpose is
Helping Britain
Prosper
Connecting the UK and Lloyds
Banking Group with the world
02Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
LBCM performance
Robust financial
performance from
a growing business
that’s delivering for
our customers
Total income
£908m
Continued business momentum
Sustainable financing
£2.5bn
Supporting our customers
Return on tangible equity
9.2%
Disciplined balance sheet usage
CET1 ratio
13.3%
Strongly capitalised bank
Find out more about our financial performance
on page 23
03Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
Contents
Strategic report
04-37
At a glance 04
Chair’s statement 05
Stakeholder engagement
including Section 172(1) statement 06
Chief Executive Officer’s review 12
LBCM’s strategy 15
Sustainability 21
Financial performance 23
People and culture 28
Principal risks and uncertainties 31
Financial risk management objectives
and policies 37
Governance
38-53
Our Board 39
Our Executive committee 44
Corporate governance statement 47
Other disclosures 50
Financial statements
54-126
Independent auditors’ report 55
Consolidated income statement 63
Statements of comprehensive income 63
Balance sheets 64
Statements of changes in equity 65
Cash flow statements 67
Notes to the consolidated financial
statements 68
Other information
127-129
Subsidiaries and related undertakings 128
Performance measures 129
Forward looking statements 129
Our reporting
Our reporting is designed to facilitate clear
communication to a range of stakeholders.
LBCM’s annual report and accounts provides
disclosures relating to our strategic, financial
and operational performance and provides
details on our strategy.
Key indicators of performance: the Bank’s
Board of directors regularly monitors indicators
of performance including strategic progress,
business performance and appropriate levels
of capital, funding and liquidity.
To access more content on a mobile device,
point your camera at the QR codes seen
throughout this report.
Supplementary information and disclosures are
provided in the Pillar 3 report.
This annual report and accounts document
contains forward-looking statements relating to
LBCM’s future financial condition, performance,
results, details of our strategy and objectives. For
further details, please refer to our forward-looking
statements on page 129.
Throughout this document we are proud to
feature LBCM colleagues.
Definitions
Lloyds Bank Corporate Markets plc (the Bank) and
its subsidiary undertakings (together the Group).
References within this document to LBCM refer
to the Group as defined here.
company of LBCM and is also referred to as LBG
in this document.
Approval
The 2023 annual report and accounts incorporates
the strategic report and the consolidated financial
statements, both of which have been approved
by the Board of directors.
On behalf of the Board
Carla Antunes da Silva
Chief Executive Officer (CEO)
Lloyds Bank Corporate Markets plc
19 March 2024
04Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
LBCM’s unique business model
Our purpose
Helping Britain Prosper by
connecting the UK and Lloyds
Banking Group with the world.
Our customers
The target market for these products and services in the UK and
internationally is made up of large corporates, financial institutions and
commercial customers plus retail and commercial customers in the
Crown Dependencies.
Our competitive advantages
UK centre of excellence with
deep customer insight and
part of LBG
Financial strength
and disciplined risk
management
Diversified business model,
meeting a wide range of
customer needs
Values-driven
colleagues with strong
purpose and excellent
customer service
Our geographic hubs
•
UK
•
New York, USA
•
Frankfurt, Germany
•
Jersey
•
Guernsey
•
Isle of Man
Our colleagues
Are highly-engaged and customer
focused. LBCM has a diverse
workforce with significant expertise
and experience to deliver these
products and services.
Over
1,200
Colleagues
Our values
Are the foundation
of our culture and
underpin the work
of our colleagues
and the decisions
we make.
Our structure and businesses
We are part of the Corporate and Institutional Banking (CIB)
business unit of Lloyds Banking Group and core to LBG’s growth strategy.
Our core business areas are: Financial markets, Capital markets,
Lending and in the Crown Dependencies Retail and commercial banking.
Deepening client relationships
Expanding institutional coverage
Driving LBG collaboration
LBCM is the non ring-fenced bank of LBG,
established in response to the Financial Services (Banking Reform) Act
2013 for the purpose of carrying on elements of the corporate and
institutional banking business of LBG along with the territories outside
the European Economic Area.
Lloyds Bank
Corporate
Markets plc
Ring-Fenced
Banks
Scottish Widows
Group Ltd
Insurance
LBG Equity
Investments Ltd
Equity
Investments
LBCM is investing across its businesses
Our strategy
To provide a first-class banking, financing
and risk management proposition, underpinned
by excellent customer service.
1
Enhancing our financial
markets proposition
2
Scaling our debt
capital markets franchise
3
Deepening our footprint in UK,
North America and Europe
4
Developing our Crown
Dependencies business
Lloyds Banking Group plc
People-first
Trust
Sustainable
Bold
Inclusive
At a glance
05Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Strategic report
Chair’s statement
Investing for the future
whilst growing
with purpose
Lord Lupton CBE
Chair
Our purpose and strategy
LBCM’s purpose is Helping Britain Prosper
by connecting the UK and Lloyds Banking Group
with the world. We achieve this through providing a
first-class banking, financing and risk management
proposition, underpinned by excellent customer
service. This has positioned us well to grow our
business in areas of core strategic focus and to
deepen relationships across our customer base.
We remain committed to supporting our
customers and strive to delight them. I am
immensely proud of the role LBCM plays in
Helping Britain Prosper.
Future opportunities
With regards to future opportunities, our strategic
priorities in our markets business are focused on
broader and more effective participation in core
product areas such as foreign exchange and
rates. The investments in our markets platform
will enable us to support institutional customers
across more of their needs and expand our
footprint, and to improve our pricing, risk
management and efficiency.
In our Crown Dependencies retail and commercial
franchise, we continue to build from a strong
position with the development of our new
deposits platform combined with deepening
customer relationships.
Taken together these, and other investments
across our business, will drive long-term
sustainable growth and gives me and the Board
confidence in both the strategic progress we
are making and confidence for future delivery.
Directors
We review the Board’s composition and diversity
regularly and are committed to ensuring we
have the right balance of skills and experience,
enhancing the quality of deliberations and
decisions. I am pleased to say that we continue
to exceed the FTSE Women Leaders and Parker
Review recommendations.
In February 2023 Carla Antunes da Silva was
appointed as CEO, who prior to this served on
the LBCM Board for five years as a non-executive
director. She has brought a wealth of knowledge
and experience including most recently as LBG’s
group strategy, corporate development and
investor relations director. Further detail regarding
changes to the Board can be found in the
governance report.
Governance in action
In the pages which follow you will be able to read
about the variety of ways the Board has engaged
with stakeholders across the jurisdictions in which
LBCM operates throughout 2023.
Conclusion
This will be my last report as LBCM Chair, since
I shall be retiring in May 2024. It has been an
honour for me to be LBCM’s inaugural Chair
from our inception in 2018, and I am proud of
the enormous progress all our colleagues have
made in the intervening years developing LBCM
into a focussed, customer-driven bank delivering
strong results for 2023.
Looking ahead, I remain confident that LBCM
will continue to support its customers through
the opportunities and challenges in the years
to come; and that our purpose-driven strategy
will enhance the long-term future of LBCM for
all its stakeholders.
“Our colleagues strive to
delight customers and
I am proud of that and
the role LBCM plays in
Helping Britain Prosper”
Overview
During 2023 LBCM has continued to make
significant progress, support our customers and
invest in our business to deliver our purpose-driven
strategy. Generating strong and sustainable
earnings in the long term remains a priority and we
have made good strides in executing our strategy
whilst delivering a robust financial performance.
06Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Strategic report
Governance in action
The Board continues to engage both directly
and indirectly with its stakeholders, helping not
just in providing a better understanding of their
points of view, but also of the impact LBCM
has in their day to day lives. Beyond the Board,
stakeholder engagement takes place at all levels
within the organisation, and in addition to the
direct engagement of Board members with
stakeholders discussed on the following pages,
the Board requires stakeholder implications to
be considered within all proposals submitted
from across the organisation.
Senior management routinely provides
the Board with details of stakeholder
interaction and feedback through their
regular business updates and during their
interactions both inside and outside the
boardroom. Managing stakeholder interests
also forms a key part of the Board’s delegation
of the day-to-day management of the
business to senior management.
The directors acknowledge that one of the
primary responsibilities of the Board is to ensure
the strategy of the Bank, as aligned to that of
LBG, achieves long-term success and generates
sustainable returns. Central to this is engagement
with our stakeholders and considering in all
instances the long-term implications of decisions
made and acting at all times to maintain the
highest possible standards of conduct.
Further details on key actions in this regard
are also contained within the Directors’ report
and the corporate governance statement
on pages 47 to 49.
Stakeholder engagement
including Section 172(1) statement
New York office charity park run
LBCM colleague photo competition winner LBCM colleague photo competition winner
07Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Stakeholder engagement including Section 172(1) statement continued
245,000
Personal customers and businesses
in the UK and abroad
1,300
Corporate clients in the UK and abroad
S172(1) statement
In accordance with the Companies Act 2006
(the Act) (as amended by the Companies
(Miscellaneous Reporting) Regulations 2018),
the directors provide the following statement
describing how they have had regard to the
matters set out in section 172(1) of the Act, when
performing their duty to promote the success
of the Bank under section 172.
In accordance with the Large and Medium-
sized Companies and Groups (Accounts and
Reports) Regulations 2008 (as amended by
the Companies (Miscellaneous Reporting).
Regulations 2018), the following statement
also provides details of how the directors
have engaged with and had regard to the
interests of key stakeholders.
The Bank is a subsidiary of LBG, and as such
adopts many of the processes and practices
of LBG, which are further referred to in this
statement where relevant.
Customers
The Board’s deep understanding of customers’
needs is vital in setting and achieving the
Bank’s goals. Delighting our customers and
identifying their needs through a customer-
centric approach remains therefore a key
consideration in Board decisions. The directors
ensure the Bank works towards achieving its
customers’ ambitions, treating customers
fairly, and making it easy for customers
to find, understand and access products
that are suitable for their needs.
The Board is committed to providing
meaningful support to meet the needs of
customers, aiming to provide positive
outcomes and working to mitigate or reduce
the risk of financial harm. The Board has
increased its emphasis on customers
through more focused discussions at Board,
refinement of customer goals in the Bank’s
balanced scorecard and activity to strengthen
relationships. Members of the Board have
spent time with customers at events including
the International Monetary Fund, LBCM Markets
summit and a panel of customers were invited
to the Board’s strategy day to share insights
and provide open and honest feedback.
To ensure directors truly understand the
needs of customers, customer feedback and
related management information is regularly
considered including as part of the directors’
strategic decision-making process.
The Bank regularly benchmarks its
performance and the performance of its
business units amongst its customers. The
directors use this insight along with a range
of internal and external research to ensure
ongoing improvement in customer experience.
The directors ensure the Bank plays an active
part in LBG’s wider customer ambitions, as
acknowledged in the Bank’s strategy, and
where appropriate during the course of
the year this has included the ongoing
development of market leading digital
propositions, more personalised customer
propositions and better experience for
customers across all channels.
The FCA’s Consumer Duty (the Duty) took
effect in July 2023 in addition to a new FCA
Principle for Business requiring firms ‘to act to
deliver good outcomes for retail customers’.
LBCM Financial Markets and Capital Markets
conducted a detailed review of client trading
over the period 2018 to 2022 and concluded
that there were currently no clients that should
be treated as in-scope of the Duty. However,
whilst there has been no LBCM business
directly in scope of the Duty, LBCM, including
our Crown Dependencies business, is
committed to comply with LBG’s policies
that have been updated according to
the Duty. The LBG Board Consumer Duty
Champion represents the Bank for compliance
with the Duty.
08Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Stakeholder engagement including Section 172(1) statement continued
“The Board considers
that maintaining open
dialogue with
colleagues ... is crucial in
informing its thinking ”
Colleagues
The Board considers that maintaining open
dialogue is crucial in informing its thinking,
allowing directors to hear first-hand colleague
views on the matters most important to them
as well as the Bank. Throughout 2023 the
Board received regular updates on workforce
engagement and on colleague matters through
a combination of direct colleague listening
sessions and updates from the LBCM CEO and
LBCM people director. This included review of
the findings of surveys of colleague sentiment,
including annual and ad hoc surveys, and review
of the progress being made in addressing the
matters colleagues have previously raised.
Examples of Board engagement
with colleagues included:
•
An annual review summarising all people
activity, with updates on progress and overall
colleague sentiment
•
A review of the pulse engagement reports
throughout the year, as well as the annual
colleague engagement survey, including key
themes and issues which colleagues raised
during the year
•
Members of the Board have visited offices
across the Bank’s jurisdictions, where they
met with colleagues to both share their
perspective on matters on the Board’s agenda
and discuss LBCM’s progress against its
strategic objectives
•
The Chair and non-executive directors also
attended a number of listening sessions,
allowing colleagues to share their perspective
on a range of topics including progress on
strategy, culture and diversity, equity and
inclusion matters
•
Board members held sessions with colleagues
from a number of specific business areas
to hear first hand about their concerns
and challenges
•
1:1 sessions were held with a number of senior
leaders across the business
•
The Chair continued to congratulate the
winners of awards, for colleagues making
a significant difference in delighting
customers and reducing bureaucracy
UK colleagues are remunerated by LBG (and
recharged to the Bank), while colleagues based in
the US, Germany and the Crown Dependencies are
remunerated by LBCM. UK and US colleagues are
eligible to participate in HMRC/IRAS approved share
plans which promote share ownership by giving
employees an opportunity to invest in LBG shares.
The Bank follows the LBG remuneration principles
that are designed to specifically promote
appropriate culture and colleague behaviours that
meet customer needs and regulatory expectations,
supported by the structure of the remuneration
package offered to colleagues.
In relation to base pay (salary) for UK colleagues,
the Bank aims to ensure that the pay is determined
and applied fairly and consistently to all
colleagues. For 2024 and 2025, a two-year pay
deal has been agreed, which is 4 per cent each
year for junior colleagues and 3.5 per cent pay
budget for senior colleagues below executive level.
Additionally, the most junior colleagues also
received a £500 cash payment in December 2023.
The multi-year proposal reflects the Bank’s and
LBG’s desire to provide certainty to colleagues and
help them plan for the future. For the 2024 annual
pay review, the 4 per cent and 3.5 per cent pay
budgets were applied consistently to colleagues
in the US and Germany.
The remuneration principles also apply to the
wider package including variable pay to ensure
that reward is performance-driven, recognises
success in delivering our purpose and strategy, is
talent-focussed to attract and retain high-calibre
colleagues and embodies our values: people first,
inclusive, trust, sustainable and bold.
During 2023, Flexibility Works was launched,
which is the new approach to flexible working,
bringing together different aspects of flexibility
and supportive working arrangements to make it
easier for colleagues and the business to balance
personal and team needs. The Board has ensured
that the workforce has been supported through
the transition of colleagues to working back in
our offices for a minimum of two days per week.
Further information can be found in the directors’
remuneration report within the LBG annual report
and accounts for 2023, available on the LBG website.
The Bank, within the context of LBG, seeks to
maintain a culture where our people feel
supported, included and empowered. There
are a variety of channels available to support
this, such as Human Resources, Let’s Talk (informal
resolution service) as well as Speak Up (LBG’s
Whistleblowing programme), which enables
colleagues to report their concerns confidentially
and anonymously.
Andrew McIntyre is the Bank’s Whistleblowing
Champion and is responsible for oversight
of arrangements, alongside ensuring that
colleagues are protected from any form of
victimisation. This is achieved through ensuring
that the confidential reporting system remains
a reliable and independent channel for
colleagues to report suspected wrongdoing.
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Stakeholder engagement including Section 172(1) statement continued
Communities and the environment
LBCM Board with the Isle of
Man Woodland Trust July 2023
The directors acknowledge that the Bank, as part
of one of the largest financial service providers
in the UK, has responsibilities to invest in the
communities in which it operates, to help
them prosper economically and build a more
sustainable future. As such the directors receive
regular updates on responsible and sustainable
business activities.
The Bank has aligned with LBG’s sustainability
objectives, including the current ‘Net Zero by 2050’
climate pledge, which is a key part of the Bank’s
sustainability strategy and directly supports global
external goals. Refer to the sustainability section
of this report for full details of the progress being
made by LBCM, as part of LBG.
2023 saw the launch of LBG’s new charity
partnership in the UK with Crisis – a national
charity for people experiencing homelessness.
A number of the Bank’s colleagues took part in
various LBG wide fundraising and volunteering
activities to support Crisis from a ‘coffee and
cake’ event to three of the Bank’s colleagues
participating in a trek in Iceland. Colleagues also
undertook a series of volunteering days in Crisis’s
warehouses, to help the charity prepare for their
end-of-year campaign.
In North America, the Bank was recognised with
the ‘Corporate Vision Award’ by charity partner
Birch Family Services for their contribution to
the charity’s mission. Colleagues have run half
marathons, competed in golf days and made
adaptive storybooks in aid of Birch.
In the Crown Dependencies we continue to work
with the Lloyds Bank Foundation for the Channel
Islands to support a wide range of local charities
and initiatives across Jersey and Guernsey.
Through a mentorship scheme, colleagues have
used their transferable skills to support charities
in many ways, such as setting up engagement
surveys, sharing interview and CV writing tips,
building web pages and the managing of social
media channels.
The environment has also benefited from the
Bank’s support. Teams have collaborated with
the Isle of Man Woodland Trust and Manx BirdLife
to help plant trees, remove invasive non-native
species and rebuild paths. The Bank is also the
proud sponsors of the Manx Wildlife Trust
Community Ranger in the Isle of Man.
Colleagues continue to undertake a variety of
activities to support charities big and small,
including cooking and delivering meals and
organising coffee mornings and family fun days.
In addition, the Isle of Man Colleague Charity
Fund has also generously donated over £12,000
to colleagues’ chosen charities.
At the end of 2023, the LBCM Charity, Volunteering
and Fundraising Forum launched a pan-LBCM
fundraiser – the Auction of Promises. Celebrating
the skills, talent and experiences of colleagues, it
also raised funds for our respective charity partners.
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Stakeholder engagement including Section 172(1) statement continued
Shareholder
The Bank is a wholly owned subsidiary of LBG,
forming part of its Corporate & Institutional
Banking (CIB) business unit. As a wholly
owned subsidiary, the Board ensures that
the strategy, priorities, processes and
practices of LBCM are aligned where
appropriate to those of LBG, ensuring that
its interests as the Bank’s shareholder are
duly acknowledged. The Bank’s Corporate
Governance Framework which was
refreshed in 2023 sets out the Bank’s
relationship with LBG and the reporting
of material matters.
The LBCM Board and its committees provide
regular updates to the LBG Board and its
committees on the Bank’s activities and
performance. There is regular engagement
with the LBG Chief Executive Officer, LBG
Chair and CIB Chief Executive Officer on
such matters as the Bank’s strategy in the
context of CIB and LBG. LBG’s non-executive
directors (NEDs) are also invited to attend
Board and committee meetings during the
year at which the Board can share insights
and hear the LBG perspective increasing
shareholder engagement. These
arrangements ensure the Bank’s Board
has a clear understanding of the views
of its shareholder.
Further information in respect of the
relationship of LBG with its shareholders is
included in the Strategic Report within the
LBG Annual Report and Accounts for 2023,
available on the LBG website.
Scan the QR code to be taken to the LBG
Annual Report and Accounts.
Diversity, equity and inclusion
The Board believes a diverse workforce is
key to the Bank’s success and values the
differences each colleague brings to their
role, making the Bank stronger and better
able to meet the needs of its customers.
The Board supports colleague engagement
through the Bank’s Race Action Plan
introduced in July 2020 and an array of
talent programmes for women, Black, Asian
and Minority Ethnic colleagues in order to
drive race and gender-related cultural
change, recruitment and progression to
attract and retain diverse talent in the Bank.
The Bank continues to focus on increasing
the representation of Black, Asian and
Minority Ethnic colleagues in senior roles to
at least 13 per cent, representation of Black
heritage colleagues in senior roles to at
least 3 per cent, and 50 per cent women
in senior roles by 2025 in line with LBG’s
diversity agenda.
The Board’s focus on diversity, equity and
inclusion covers all the jurisdictions in which
LBCM operates which have their own
demographic profile. The Bank has a
dedicated forum to support the progress of
initiatives including the Race Action Plan,
gender and LGBTQ+ initiatives and diversity
priorities such as disability awareness
across all jurisdictions.
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Stakeholder engagement including Section 172(1) statement continued
Suppliers
The Board recognises the importance of
partners who provide aspects of the Bank’s
operations through the shared service
model with LBG and their importance to our
customers. The Bank’s approach to external
supplier management utilises the LBG
framework and aligns to the standards set out
by our regulators. The supply chain is crucial to
the way the Bank and LBG serves its customers,
and through it the reach is considerable.
Importance is placed on having the right
supplier framework to operate responsibly.
LBG’s Sourcing and Supply Chain
Management Policy applies to all areas
and subsidiaries of LBG, including the Bank,
with the directors assuming ultimate
responsibility for its application as relevant
to the Bank. This policy has been designed
to assist in managing the inherent risk in
outsourcing services, and in dealing with
third-party suppliers. Suppliers are required
to adhere to relevant LBG policies and comply
with LBG’s Code of Supplier Responsibility
which can be found on the LBG website. This
defines expectations for responsible business
behaviour, underpinning the efforts of the
Bank and LBG to share and extend good
practice. All material contracts are subject
to rigorous cost management governance
with regular review of key supplier risks
which includes increasing focus on resilience
and sustainability.
The Bank and LBG also seek to improve
the experience of suppliers, with feedback
regularly sought on related assurance
processes to ensure continued improvement
in the process. Suppliers are also encouraged
to express their satisfaction or otherwise
and have access to LBG and the Bank’s
whistleblowing service.
The operation of the Bank’s supply chain is
through LBG. The Board supports LBG’s zero
tolerance attitude towards modern slavery in
LBG’s supply chain and an assurance process
of the measures which address the risk of
human trafficking and modern slavery in
the wider supply chain is undertaken by LBG.
Regulators and regulatory agenda
The Bank and its directors maintain an open and transparent relationship with relevant
regulators and other authorities, and liaise regularly both directly and as part of LBG
to ensure the business aligns to the requirements of these important stakeholders.
The Chair and individual directors have in the ordinary course of business had
continuing discussions with the Financial Conduct Authority and Prudential Regulation
Authority on a number of aspects of the regulatory agenda. The Board in turn reviewed
regular updates on this and progress is being made in addressing key regulatory
priorities. Key areas of interest for the Board have included ensuring robust prudential
standards, the fair treatment of customers and the response to market changes.
Regular updates to the Board Risk Committee also cover all aspects of the regulatory
agenda including emerging regulatory and legal risks. This provides a focused view
of areas of priority alongside detail of regulator’s actions.
The Board continues to closely monitor the status of the Bank’s regulatory relationships
across all the jurisdictions in which it has a presence, seeking to enhance engagement
particularly in key areas of regulatory change. During the coming year, this is expected
to include financial and operational resilience including for the prevention of financial
crime, model risk management and change/execution risk.
12Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Strategic report
Chief Executive Officer’s review
Robust 2023
performance and
well-positioned
for future growth
Carla Antunes da Silva
Chief Executive Officer
Robust results in 2023
LBCM has delivered a robust set of financial
results in 2023 against a backdrop of market
volatility and inflationary pressures. Total income
was £908 million reflecting good growth; with
profit before tax of £427 million demonstrating
diligent control of costs and balance sheet
management, offset by increased hedging
and funding costs.
LBCM will return £450 million of capital to LBG via
dividend and maintained a robust capital position
reporting a strong CET1 ratio of 13.3 per cent and
leverage ratio of 4.7 per cent, with risk-weighted
assets of £20.5 billion. Return on tangible equity
of 9.2 per cent demonstrates solid returns from
disciplined balance sheet usage. For more details
on the results please refer to the financial
performance section on page 23.
A growing business that’s
delivering for our customers
2023 saw strong strategic and financial progress,
particularly in respect of bringing LBCM closer to
our Corporate and Institutional Banking business
and to the broader LBG, resulting in noticeable
growing customer engagement and relevance.
LBCM has a broad range of customers, from
individual retail to large corporate and financial
institutions. I am mindful of the impact of higher
interest rates and inflation on them this year and
LBCM colleagues have worked hard across the
year to provide support, options and product
choices in an evolving environment and
uncertain economic outlook.
We believe our day-to-day business activities
that are helping customers finance their
ambitions and growth, are underpinned
by our purpose.
“We are successfully
executing our strategy by
supporting our customers’
needs and providing
diversification benefits to
Lloyds Banking Group”
LBCM is Helping Britain Prosper
By connecting the UK and LBG with the world
•
Robust 2023 financial performance
with total income of £908 million and
return on tangible equity of 9.2 per cent
•
Continuing to support our customers’
needs in an uncertain economic
environment
•
Purpose-driven growth and strategic
progress across our businesses
•
Continued significant investment in
systems including cash management
and payments, and foreign exchange
•
Capital markets
o Full year 2023 issuance c£23 billion
(81 per cent growth vs market 5 per cent)
o Remain ranked as 2nd in UK issuers for
GBP bookrunner across all bonds and
4th for UK issuers in G3 currencies
o Ranked 1st in the league tables for
structured finance in GBP, compared
with a ranking of 5th at 2022 year end
•
Financial markets
o GBP Interest Rate Swap ranking 3rd
o FX share of wallet position of over
6 per cent
o FX market share ranking also continues
to track well
•
Crown Dependencies
o Voted number 1 ‘best all rounder bank’
for UK expats (Forbes Advisor)
o Launch of new deposits platform; a
market-leading API-enabled system
with client onboarding ahead of target
13Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
Chief Executive Officer’s statement continued
This has been an important year for LBCM in
successfully executing its strategy to sustainably
grow the business. Growth has been broad based
across our many businesses including the
significant progress delivered by our capital and
financial markets businesses, and in our suite of
sustainability linked client solutions. This has been
achieved through the strong collaboration of our
colleagues based in the UK, New York and Frankfurt.
Additionally, our local expertise supporting our
customers in the Crown Dependencies, in
particular developing our products and offering
for our commercial banking and international
private banking customers, demonstrates ways
in which we’re Helping Britain Prosper.
Looking ahead to 2024, an important focus will
be continuing to grow our collaboration across
Lloyds Banking Group to deliver customer
solutions tailored to their needs. Over 2024, we
will continue to focus on the sustainability of our
business, by serving more of the financial needs
of our customers, as well as continuing to think
of what Lloyds Banking Group can offer as a
differentiating factor to our client base.
Colleagues
LBCM customer delivery and business growth
is only possible as a result of the hard work,
determination and dedication of colleagues
across the whole LBCM business, as well as those
supporting them within Lloyds Banking Group.
A special thanks from me for a tremendous year
where we achieved so much.
Making LBCM a great place to work will always be
a priority for me and my leadership team and I
am committed to using colleague feedback to
create a place where everyone can thrive and be
the best version of themselves, particularly given
the different geographies and business areas
that make up our business.
We have worked with our senior colleagues to
help them become better leaders for our teams,
focusing on improving our culture, sense of
unity and for colleagues to feel able to deliver.
Developing our colleagues with critical skills
training has also been a key feature. Personally,
one of my favourite moments of the year came
with the 5th anniversary of LBCM in May 2023,
where colleagues were able to celebrate and
showcase our contribution to Lloyds Banking
Group and how far we have come.
More details of the achievements in this area
are included in our people section including our
progress on diversity, equity and inclusion as part
of LBG, an area where we are making progress,
but where much more can be done.
LBCM in the media
Raising LBCM’s profile and providing exposure has
been important to me in my first year as CEO.
LBCM has been featured in external articles in The
Banker and Euromoney magazines, highlighting
the range of our businesses and depth of thought
leadership we offer to our Markets clients in
particular, as well as a focus on our sustainability
credentials. Within the Lloyds Banking Group, we
have also been successful in telling the LBCM
story, through a series of internal pieces focusing
on areas as varied as our FX offering, our New
York business, our role in Lloyds Banking Group’s
cash management and payments improvements
and our client interactions.
LBCM Chair
I would like to take this opportunity to express my
sincere thanks to James Lupton and wish him the
best for his well-deserved retirement. James’
stewardship as the inaugural LBCM Chair was
instrumental in building a business that is delivering
solutions for its clients, alongside a strong culture
for its colleagues. James’ mentorship and
guidance has been of great value, both as a LBCM
board member and more recently as CEO.
I am pleased to welcome Nathan Bostock as our
new Chair from 1st August (subject to regulatory
approval). LBCM will significantly benefit from
Nathan’s wealth of experience and I look forward
to working with him as we look to build on our
success and continue to grow sustainably.
Conclusion
I am delighted with the great progress made
by our business in my first year as CEO and the
momentum for growth that is in place. With 2023
as a positive backdrop in terms of financials and
overall strategic progress, in 2024 we aim to
further consolidate and accelerate some of these
trends by continuing to invest in our systems,
products and colleagues, while collaborating
further with Lloyds Banking Group to achieve
the best outcomes for our clients. Although the
macroeconomic outlook remains uncertain, our
financial strength, purpose-driven strategy and
above all dedicated team means I am confident
we will continue to deliver for our stakeholders,
support our customers and Help Britain Prosper.
Carla Antunes da Silva
Chief Executive Officer
14Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
“We’re making
great strategic
progress in CIB
where we have
placed renewed
focus in recent
years.”
Charlie Nunn, LBG CEO
Investor presentation: developing
our corporate and institutional business
LBCM is an integral part of the Corporate and
Institutional banking (CIB) business unit of LBG
and on 28 November Charlie Nunn (LBG CEO),
John Winter (CIB CEO) and Carla Antunes da Silva
(LBCM CEO) presented a CIB strategy update to
equity investors and analysts. LBCM as part of CIB
plays a critical part in supporting the purpose
of Helping Britain Prosper, and this is delivered
across the breadth of the CIB businesses.
The presentation was a chance to tell the story
of CIB, highlighting the positive momentum of the
business over the past two years where we’ve
delivered significant revenue growth and showcase
the investments made into our proposition, which
are delivering benefits to our customers. This
included our leading payments platform, our
market-leading positions in infrastructure,
sustainable issuance, DCM, rates swaps and
our award-winning trade finance business.
CIB is a core part of LBG’s growth strategy. We’ve
made a strong start in this area and we’re on track
to achieve our targeted strategic outcomes of:
•
Delivering £15 billion sustainable financing
•
Maintaining a top 5 GBP interest rate swap
position and increasing our FX volumes
•
Growing other operating income by greater
than 20 per cent
•
Maintaining net risk-weighted asset growth
under £3 billion
Our strategy is built around our clear cash debt
risk management offering with a particular
focus on transaction banking and markets.
We are deepening and expanding client
relationships as well as providing a platform
for broader LBG collaboration. CIB is making a
growing contribution to LBG’s revenues and
importantly, this represents a significant other
income growth opportunity.
The reaction to the presentation was positive
with investors commenting on the clarity of our
story, ambition and LBG’s positive stance on the
CIB business.
Successfully executed, CIB will prove to be an
important source of LBG’s revenue growth and
diversification. Indeed, it is expected to deliver
around 25 per cent of LBG’s additional strategic
revenues by 2026. This is being achieved through
less than 10 per cent of LBG’s incremental
investment spend to 2024, representing a strong
return on investment delivered in a capital
efficient manner.
Scan the QR code to see our
CIB investor presentation
Charlie Nunn,
LBG CEO
Carla Antunes da Silva,
LBCM CEO
John Winter,
CIB CEO
Chief Executive Officer’s statement continued
15Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
LBCM’s strategy
How LBCM is
Helping
Britain
Prosper
We are connecting the UK and
LBG with the world through a
first-class banking, financing
and risk management
proposition, underpinned by
excellent customer service.
We have a clear strategy of investing in
our markets and international businesses
that is delivering sustainable income growth
and returns.
LBCM is part of the Corporate and Institutional
Banking business unit of LBG and core to LBG’s
growth strategy.
Our strategy
Investing across our markets
and international businesses.
The strategy of LBCM is aligned to
that of CIB within Lloyds Banking Group.
Deepening client
relationships
Expanding institutional
coverage
Driving LBG
collaboration
opportunities
1
Enhancing our financial
markets proposition
2
Scaling our debt
capital markets franchise
3
Deepening our footprint in UK,
North America and Europe
4
Developing our Crown
Dependencies business
16Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
LBCM’s strategy continued
Our markets franchise is built on two
complementary businesses: capital
markets and financial markets.
Our capital markets business supports our
customers in raising long-term funds in Sterling,
Euros and US Dollars, as well as related credit
trading and rates risk management on the
back of issuance.
Financial markets supports our clients with
risk management across FX, rates, repo and
commodities. We have leading market positions
across our proposition, including Sterling interest
rate swaps and debt capital markets, as well
as repo.
Our LBCM markets business is a top five Sterling
interest rate swap counterparty and we support
the UK Debt Management Office on their gilt
issuance. With both capital and financial markets
sitting in the same business area, we adopt
a holistic approach to financing and risk
management. This allows us to meet client
needs in one place within our sophisticated
risk and compliance framework.
Our markets business also acts as a centre
of excellence for the broader CIB and LBG
supporting access to funding and balance
sheet management.
This is a clear example of synergies that exist
across our business and how investing in LBCM
supports other areas of LBG. From a financial
perspective, our markets business delivers a
diversified other income focused revenue stream
with an attractive returns profile.
Making great progress
We have made great progress across markets
over the past couple of years and there is
potential for further upside. Within capital
markets, given the majority of UK PLC debt
issuance is Euros or US Dollars, we have
recognised the importance of building our
presence in these markets to better serve
our clients.
Testament to this, we have outperformed the
market in key product lines across our main
currencies, including being ranked number one in
structured finance. We have also seen significant
growth in Euro and Dollar issuances, with our
financial institutions debt capital management
teams supporting twice the number of
transactions so far this year versus the same
period last year, as well as being a top five
franchise for sustainable issuance.
We have seen similar strength in our financial
markets business. Executed FX volumes have
increased significantly since year end 2021,
well above market growth, deepening our share
of wallet. Similarly, in inflation-linked gilts, our
volumes have grown well above the market
and we maintain a top 10 position.
Future opportunities
With regards to future opportunities, our
strategic priorities in financial markets are
focused on broader and more effective
participation in core product areas such
as FX and rates. Whilst investment in
technology enables us to improve our
pricing, risk management and efficiency
to drive long-term sustainable growth.
Linked to this, the investments in our
markets platform will enable us to support
institutional clients across more of their
needs and expand our footprint. These
increased flows will benefit corporates
with an enhanced service demonstrating
synergies between these two client groups.
The sustained performance we have
delivered in markets is demonstrative of
the strategic progress we are making.
Markets summit: ‘Forwards and up’
Our relaunched flagship conference took
place during the year. It was a perfect
opportunity to showcase the thought
leadership and client insights LBCM, CIB
and the wider LBG provide, with the keynote
address delivered by Andy Haldane, the
former Chief Economist of the Bank of
England. He covered the outlook for the
UK economy and there were insights from
speakers across panel sessions themed
around growth, attracting debt funding
for UK energy and infrastructure and the
financial markets outlook for 2024.
This was an important step towards
increasing LBCM’s presence in the market.
LBCM has a well-
positioned markets
franchise.
Ranked number 1 in structured finance
No 1
Franchise for sustainable issuance
Top 5
Executed FX volumes
increased significantly
Position in inflation-linked gilts
Top 10
Markets
17Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
LBCM’s strategy continued
Delivering product choice:
Financial markets
Enhancing our financial
markets proposition
LBCM is investing in its markets architecture across
its rates and foreign exchange client propositions in an
increasingly fast-paced and competitive marketplace.
The investments into our platforms will deliver an
enhanced client experience, broaden our proposition
and deliver operational efficiencies.
These proposition and technology investments are
intended to increase our flows and capture our natural
presence, especially with our institutional base. Our
intention is to partner with clients across a greater
proportion of their risk management and hedging
activities whilst taking a disciplined approach to risk
and capital allocation.
“Our financial markets
business supports our
customers with risk
management...
we have leading market
positions across several
product types including
Sterling interest rate
swaps and repo.”
Markets
Strategic progress
• Number 3 Sterling interest rate swaps ranking,
in line with CIB’s targeted outcome to
maintain a top 5 position
• Deepened our FX share of wallet with 31 per cent
increase in volumes, seven times more than
the market
• Two-fold increase in inflation linked bonds
versus 2022, significantly outpacing the market
• First sustainability linked FX trade supporting
our clients’ transitions to net zero
Rates
Repo
Foreign exchange
Commodities
18Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
LBCM’s strategy continued
“Our capital markets
business supports our
customers in raising long-
term funds in Sterling,
Euros and US Dollars...
as well as related credit
trading and rates risk
management on the
back of issuance.”
Scaling our debt capital
markets franchise
LBCM has a well-established presence in the deep
capital markets of the UK, the US and Europe. Our
capital markets business supports our customers with
their specialised expertise across financing structures
including more complex and structured finance,
liability management and sustainability.
The business is investing in its sustainability proposition
to support our customers with both financing and
thought leadership, including the implementation
of ESG frameworks.
The ongoing investments in our capital markets business
has supported CIB in increasing its other income by
more than 20 per cent since the start of its current
strategy in 2021, in line with CIB’s targeted outcomes.
Delivering product choice:
Capital markets
Strategic progress
• Ranked number 1 for structured finance in
Sterling (excl CDOs) UK issuers (G3 currencies),
up from number 5 last year
• Supported CIB in achieving its £15 billion
sustainable financing targeted outcome
1 year early
• Achieved No 4 league table position in ‘All Bonds’
(excl SSA) UK issuers G3 currencies, up from
number 7 last year
Debt capital markets
Credit trading
Securitisation
Corporate risk
management
solutions
Markets
LBCM’s strategy continued
19Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
Strategic progress
• Broadened proposition through provision of
revolving credit facilities to large corporates
in the US
• Tripled our volume of risk distribution
transactions with US sponsors
• Significant US private placement and public
bond in the housing association sector
• Growth in bonds business in our Frankfurt
based operation
Delivering product choice:
US and European
propositions
Deepening our footprint in UK,
North America and Europe
A core pillar of CIB’s strategy is to deepen its customer
relationships with its UK-centric customer base. A large
proportion of UK issuers’ capital markets issuance is in
Euros and US Dollars and around 70 per cent of CIB
clients trade internationally, with Europe and the US
being core trading partners to the UK.
LBCM is focused on developing propositions to partner
with our customers across a greater proportion of their
financing and risk management activities. In the US, a
key development this year is within our risk distribution
capabilities, supporting CIB’s targeted outcome
of maintaining risk-weighted asset growth to 2024
below £3 billion.
“We have local
expertise in the deep
capital markets of
the US and Europe...
LBCM is focused on
supporting UK-linked
clients with a
broad spectrum
of products in their
key geographies.”
Capital markets
Financial markets
Lending
International
LBCM’s strategy continued
20Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
LBCM’s strategy continued
Delivering product choice:
Retail and
commercial banking
Developing our Crown
Dependencies business
2023 has been a transformational year for our Crown
Dependencies business with the delivery of a new
cash management platform to support our corporate
customer base, as well as investments into the digital
proposition for our retail customers.
Our ambition is to be the most recommended bank to
expats globally and customers with international needs.
Therefore, via our international private bank, we continue
to invest in our offering and servicing.
Strategic progress
• Voted No 1 ‘best all rounder bank’ for UK expats
(Forbes Advisor)
• Launch of new deposits platform; a market-
leading API-enabled system with client
onboarding ahead of target
• Launch of digital account onboarding journey
for the community bank
“Our retail and commercial
banking businesses
serves customers,
communities and
businesses in Jersey,
Guernsey and Isle of Man...
with a diverse range of
products and services
to support their needs.”
Community banking
International
private banking
Motor finance
Commercial
banking
International
21Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023 21Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
Our journey to a
sustainable future
Sustainability is a priority for LBCM
LBCM contributes towards the targets, goals and
ambition of LBG, our parent company. LBG’s updated
strategy, is founded on a sustainable and inclusive
future and is key to LBCM’s delivery of our purpose of
Helping Britain Prosper. Supporting the transition to a
low carbon economy is vital. As part of LBG, a founding
member of the Net Zero Banking Alliance, we:
•
work with our customers, governments and the
broader market to help reduce the carbon
emissions we finance by 50 per cent by 2030
on the path to net zero by 2050 or sooner
1
•
reduce the carbon emissions generated through
our supply chain by 50 per cent by 2030 on the
path to net zero by 2050 or sooner
2
•
will achieve net zero carbon operations by 2030
and reduce direct carbon emissions by at least
90 per cent
3
LBG financed emissions are multiple times larger than
operational emissions, therefore supporting customers
on their sustainability journey is critical to meeting net
zero ambitions. LBCM has provided sustainable financing
of £2.5 billion in 2023. We committed to lending more
sterling green bonds for UK corporates than any other
bank; and in 2023 acted as active bookrunner/sole
arranger on green, social and sustainability-linked bond
transactions, supporting clients on their crucial journey
to a more sustainable future.
LBCM is cognisant of the release of the Global GHG
Accounting and Reporting Standard for Capital Markets
(Part B) published by the Partnership for Carbon
Accounting Financials in December 2023. This update
will enable LBG to move towards calculating and
disclosing its facilitated emissions in relation to its
capital markets activities. We note that these will
be measured and reported at an LBG level.
More details can be found in the LBG Sustainability
Report 2023, which is available to download from the
LBG website or via this QR code.
1 From a 2018 baseline, covering Scope 1 and 2 emissions.
2 All from a 2018/2019 baseline.
3 From a 2021/2022 baseline.
Sustainability
22Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
2222
Sustainability continued
Delivering product choice:
Sustainability-linked
financing
As our clients seek to transition to more sustainable business models,
it is critical we establish a range of products and services to meet
these needs. We support clients across a range of sectors with
financing to directly support corporate investment in improving
carbon efficiency. Our range of products and services continue
to evolve as our client needs evolve.
LBCM offers sustainable financing, complimented with sharing
insights and knowledge on sustainability which can support wider
client conversations across LBG. Consultative services may include
ESG ratings advisory, advising on establishing or developing existing
ESG frameworks and sustainability-led consultancy. We strive to
give customers the right tools, products and services to transition
towards being low-carbon sustainable businesses.
Sustainability-linked bonds or loans are primarily for the general
purposes of a borrower in pursuit of identified sustainability
performance targets, supported by detailed key performance
indicators that offer a preferential rate if met.
Sustainability-linked derivatives are those whose cash flows are
contingent on a set of externally verified key performance indicators.
Emissions Allowance derivatives assist customers in buying or
selling carbon emissions under the UK/EU mandatory schemes.
Use of proceeds bonds or loans are used for specific projects
or to finance a sustainable economic activity that is linked to the
borrower’s investment framework.
“LBCM aims to
support its clients
through their full
transition journey
towards net zero…
whilst delivering its
purpose of Helping
Britain Prosper.”
23Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023 23Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
Financial performance
Robust
financial
performance
LBCM has recorded a robust
financial performance in 2023
from a growing business that’s
delivering for our customers.
Statutory return on tangible equity
1,2
(%)
9.2%
Profit before tax
1
(£m)
£427m
Common equity tier 1 ratio
3
(%)
13.3%
1 LBCM Group.
2 Refer to other information section for basis of calculation.
3 Bank.
368
45
289
477
427
20
19
21 22 23
7
0.1
7.4
13.4
9.2
20
19
21 22 23
14
14.8
13.1
14.6
13.3
20
19
21 22 23
24Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
Financial performance continued
LBCM delivered growth in other income in 2023
Income statement
Total income was £908 million comprising net
interest income of £198 million, net fee and
commission income of £264 million, net trading
income of £442 million and other operating
income of £4 million.
Overall, net interest income has reduced in 2023
predominantly as a result of interest expense
being impacted by significant charges relating
to the structural hedge and higher funding costs
compared to the prior period.
Lending average portfolio margin has remained
strong, with lending utilisation being slightly
down at year end as a result of underlying
client demand.
Net fee and commission income has grown
by £72 million or 38 per cent year-on-year, with
strong performance on bond issuance from
our markets business along with fees from
customer lending.
Within net trading income the markets business
has excelled in 2023, with an increase in FX
volume and market share as well as being ranked
first for Sterling structured finance. Highlights
also include writing our first sustainability-linked
FX trade and the issuance of an inaugural
sustainability-linked bond, showcasing LBCM
as a trusted sustainability product provider.
The 2023 reporting is impacted by foreign currency
revaluation charges on the AT1 instruments which
were a gain in 2022 but in 2023 a charge, masking
the underlying business performance.
Contribution to CIB and LBG: Taken together,
this strong growth in net fee and commission
income and performance in net trading income
is positively reflected in the results of our parent
company; with LBCM contributing a large
proportion of CIB other income and 13 per cent
of LBG.
Operating expenses in the year were £509 million
and predominantly consist of management
charges relating to the intra-group agreement
and staff costs payable to Lloyds Bank plc.
Cost management in the year has again
been diligent and focused, with the increase
predominantly relating to the costs of investment
in our business now flowing through along with
general inflationary pressures.
An impairment credit of £28 million has been
recognised in the period. This expected credit loss
income relates to stages 1 and 2 and is driven by
the improving macroeconomic conditions. There
have been no significant new credit impaired
cases (stage 3 impairment) in the year. Please
refer to note 14 for more details.
A tax charge of £89 million was recorded
and more details are contained in note 10.
Income statement
2023
£m
2022
£m
Movement
£m
Movement
%
Net interest income 198 275 (77) (28%)
Fee and commission income 264 192 72 38%
Net trading income 442 495 (53) (11%)
Other income 4 5 (1)
Total income 908 967 (59) (6%)
Operating expenses (509) (444) (65) 15%
Impairment release/(charge) 28 (46) 74
Profit before tax 427 477 (50) (10%)
Tax charge (89) (97) 8
Profit after tax 338 380 (42) (11%)
Total income
£908m
Net trading income
£442m
Fee and commission income
£264m
25Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
Total Deposits
Financial liabilities
at fair value through
profit or loss
Derivative financial
instruments
Debt securities
in issue
Subordinated
liabilities
Other liabilities
Financial performance continued
Total assets were £90,327 million at 31 December
2023, an increase of £3,668 million on the prior
year. Cash and balances at central banks and
financial assets at fair value through profit or
loss have increased compared to the prior year
end, while derivative financial instruments
and financial assets at amortised cost
have decreased.
The increase in cash and balances at central
banks is as a result of an increase in the liquid
asset portfolio. Financial assets at fair value
through profit or loss increased as a result
of planned business growth in the reverse
repurchase agreements and gilts business
area. While derivative financial instruments
decreased largely due to changes in fair value.
Financial assets at amortised cost includes loans
and advances to banks of £1,753 million, loans
and advance to customers of £16,447 million
and reverse repurchase agreements of £6,020
million. The overall decrease noted is driven
by a reduction in lending to customers, plus the
strengthening of the period end Sterling rate
against US Dollar from December 2022 to 2023.
Total liabilities were £86,451 million at
31 December 2023, compared to £83,264 million
at 31 December 2022. Deposits from customers
and financial liabilities at fair value through profit
and loss have increased compared to the prior
year. Deposits from banks along with derivative
financial instruments and debt securities in
issue have reduced
Deposits from customers increased year-on-
year in line with LBCM’s strategy to grow deposits.
The increase in financial liabilities at fair value
through profit or loss is a result of planned
business growth in repurchase agreements
over the year.
Derivative financial instruments decreased
largely due to movements in the fair value. Debt
securities in issue include commercial paper,
certificates of deposit and Euro Medium Term
Notes and reduced as a result of maturities in
the period and a reduced funding requirement.
Cash and balances
at central banks
Financial assets at
fair value through
profit or loss
Derivative financial
instruments
Financial assets
at amortised cost
Other assets
Balance sheet assets
2023
£m
2022
£m
Movement
£m
Movement
%
Cash and balances at central banks 20,201 19,382 819 4%
Financial assets at fair value through profit or loss 21,989 14,780 7,209 49%
Derivative financial instruments 22,606 24,621 (2,015) (8%)
Financial assets at amortised cost 24,891 27,424 (2,533) (9%)
Other assets 640 452 188 41%
Total assets 90,327 86,659 3,668 4%
Balance sheet liabilities
2023
£m
2022
£m
Movement
£m
Movement
%
Deposits from banks 2,078 2,456 (378) (15%)
Deposits from customers 29,439 29,152 287 1%
Due to fellow LBG undertakings 1,213 1,481 (268) (18%)
Financial liabilities at fair value through profit or loss 19,686 12,578 7,108 57%
Derivative financial instruments 17,576 20,070 (2,494) (12%)
Debt securities in issue 15,378 16,131 (753) (5%)
Subordinated liabilities 755 761 (6) (1%)
Other liabilities 326 635 (309) (49%)
Total liabilities 86,451 83,264 3,187 4%
26Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance Financial statements Other information
Strategic report
Financial performance continued
Share capital
Other reserves
Retained profits
Other equity
instruments
Balance sheet equity
2023
£m
2022
£m
Movement
£m
Share capital 370 370 -
Other reserves (313) (525) 212
Retained profits 3,011 2,768 243
Ordinary shareholder equity 3,068 2,613 455
Other equity instruments 808 782 26
Total equity 3,876 3,395 481
Total equity at year end was £3,876 million
compared to £3,395 million at 31 December
2022. The increase in retained profits reflects
the profit for the period after tax, attributable
to shareholders.
The movement in other reserves of £212 million
mainly relates to the cash flow hedging reserve,
representing the fair value movements and
transfers to income statement on the structural
hedge. More details are contained in note 23.
Regulatory capital
The capital position of Lloyds Bank Corporate Markets plc (the Bank) is presented on an
unconsolidated basis.
2023
£m
2022
£m
Movement
£m
Common equity tier 1 capital 2,725 2,948 (223)
Tier 1 capital 3,508 3,705 (197)
Total capital 4,109 4,285 (176)
Total risk-weighted assets 20,492 20,195 297
CET1 % 13.3% 14.6% (1.3)pp
Leverage % 4.7% 5.4% (0.7)pp
The Bank’s common equity tier 1 (CET1) capital ratio decreased to 13.3 per cent (31 December 2022: 14.6
per cent). Profit for the year was offset by an accrual for the foreseeable ordinary dividend for 2023 of
£450 million to be paid to the Bank’s parent company and a slight increase in risk-weighted assets (RWAs).
The Bank’s total capital ratio decreased to 20.1 per cent (31 December 2022: 21.2 per cent), largely
reflecting the accrual for the foreseeable dividend and increase in risk-weighted assets.
RWAs increased by £297 million, or 1.5 per cent, to £20,492 million at 31 December 2023 (31 December 2022
£20,195 million), largely reflecting an increase in RWAs relating to operational and market risk, partially
offset by a decrease in credit risk. Full details are included within the LBCM 2023 year-end Pillar 3 report.
Balance sheet equity 2023
27Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Strategic report
Financial performance continued
The Bank’s UK leverage ratio decreased to 4.7 per cent at 31 December 2023 (31 December 2022: 5.4 per
cent). This largely reflects the accrual for the foreseeable dividend and an increase in the exposure
measure, as a result of the planned business growth in securities financing transactions and gilts and
an increase in off-balance sheet items, partially offset by the decrease in derivatives and lending
to customers.
The Bank’s capital position as at 31 December 2023, after applying IFRS9 transitional arrangements,
is set out in the following table.
Capital resources of the Bank (audited)
At
31 December
2023
£m
At
31 December
2022
£m
Common equity tier 1
Shareholders’ equity per balance sheet 3,091 2,650
Adjustment to retained earnings for foreseeable dividends (450) –
Cash flow hedging reserve 289 519
Debit valuation adjustment (22) (34)
Other adjustments
1
-
7
2,908
3,142
Less: deductions from common equity tier 1
Prudent valuation adjustment (142) (162)
Excess of expected losses over impairment provisions and value adjustments (41) (32)
Common equity tier 1 capital 2,725 2,948
Additional tier 1
Additional tier 1 instruments 783 757
Total tier 1 capital 3,508 3,705
Tier 2
Tier 2 instruments 699 706
Other adjustments (98) (126)
Total tier 2 capital 601 580
Total capital resources 4,109 4,285
Risk-weighted assets of the Bank (unaudited) 20,492 20,195
Capital ratios of the Bank (unaudited)
Common equity tier 1 capital ratio 13.3% 14.6%
Tier 1 capital ratio 17.1% 18.3%
Total capital ratio 20.1% 21.2%
1 No relief under the IFRS9 transitional arrangements for capital was applied at 31 December 2023. The comparatives for 31 December 2022
include an adjustment applied to reserves to reflect the application of the IFRS 9 transitional arrangements for capital.
29Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Strategic report
People and culture continued
As part of LBG, we will
continue to support our
colleagues and create a
fully-inclusive organisation
that is representative of
modern-day Britain, where
differences are embraced
and everyone can reach
their potential.
12%
Colleagues with disabilities
In April 2023 LBG committed to doubling
the number of colleagues with disabilities
in senior management roles by 2025.
Since launching our goal, we have seen a
significant uplift in colleagues sharing their
disability data. We believe the announcement
of our goal has played a key role in this, raising
awareness and encouraging colleagues to share
their disability data with us.
At the time of setting our goal, 6 per cent of our
senior management colleagues had shared that
they had a disability, making our ambition to
double representation feel like the right first step.
At the end of 2023, 12.4 per cent of our senior
management colleagues have shared their
disability, meaning that LBG has achieved its
representation of senior colleagues with
disabilities goal earlier than anticipated.
50%
Women in senior roles by 2025
LBG has seen an increase in women in senior
roles to 40 per cent during 2023, showing
progress towards meeting our 2025 ambition.
We set our ambition to achieve gender
diversity in our senior leadership knowing
it was stretching and ambitious.
We recognise that the journey to 50 per cent
will be challenging and we may not reach total
parity by 2025, but we remain focused on
actions that support this ambition and which
will help us achieve this as soon as we can.
13%
Black, Asian and Minority Ethnic
colleagues representation at senior
management levels by 2025
During 2023, LBG has increased the representation
of Black, Asian and Minority Ethnic colleagues in
senior roles from 10.2 to 11.3 per cent and increased
the representation of Black Heritage colleagues
in senior roles by 0.3 to 1.7 per cent.
The LBG Race Action Plan was launched in
2020 to drive recruitment, progression, cultural
change and focus across the organisation.
Diversity, equity and inclusion
LBCM, as part of LBG, aims to create a fully-
inclusive environment for all our colleagues,
customers and communities. Getting this right
is at the heart of Helping Britain Prosper.
Our dedicated LBCM Diversity, Equity and
Inclusion forum continues to implement
LBCM specific actions, while leveraging LBG
and CIB initiatives.
Key LBCM priorities in 2023 included making
progress on diverse recruitment, disability
awareness campaigns, the launch of the
‘Women in Markets’ initiative including senior
management hosted breakfasts, for line
managers culture training and the role out
of psychological safety workshops for leaders.
Read more about our aspirations relating
to diversity, equity and inclusion in LBG 2023
annual report and accounts.
LBCM colleague photo
competition winner
30Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Strategic report
People and culture continued
Recognition plays an
important role in LBCM,
helping us cultivate a
purpose-led culture
and embedding
our values.
“I am passionate about LBCM
colleagues going the extra
mile to provide a top class
service to our customers and
it is a pleasure to congratulate
the winners on behalf of
the Board.”
Lord Lupton CBE
Chair of the Board
Delighting the client award winners
Delighting the Client is LBCM’s unique recognition
programme that celebrates colleagues and
teams going further for our clients. LBCM’s
Executive Committee regularly chooses a
colleague or team from the many nominations
submitted from across our business.
Congratulations and thank you to our winners
who have demonstrated our values and delivered
a first-class service to our customers.
Our values
Arne Almasi
Chiamaka Attuh
Alex Bennett
Joerg Ehm
Hannah Jones
Eve Marlborough
Ram Narayanaswamy
Mark Timberlake
Chelsie Watterson
Ross Willard
Our values
They are the foundation of our culture and guide
how our colleagues work together to deliver our
growth strategy. Throughout the year, we have
been further embedding our purpose and values
across LBCM, helping colleagues understand how
our values guide not only the way we work
together, but also how we make decisions.
In driving the change, senior leaders are
supported by a movement of catalysts across
LBCM. These changemakers role model our
values and purpose, share stories and drive
improvements by challenging the status quo.
They have helped unblock issues that get in the
way of how we work, whilst instilling a growth
mindset as we transform the business. LBCM is
benefitting from this investment in our people
and enabling us to grow with purpose.
People-first
We put people first
to go further for customers.
We listen and care for people
as individuals.
Bold
We’re bold and take action. We
innovate and do things differently
to better serve our customers
and grow with purpose.
Inclusive
We’re inclusive to value everyone.
We learn about and embrace
our differences, and seek out
diverse perspectives.
Trust
We trust each other
to achieve more together.
We give each other the space
and support to take things
on and see them through.
Sustainable
We champion sustainability
to care for our planet. We take
responsibility for the impact
of our actions on nature and
Britain’s transition to net zero.
Our winners
31Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Principal risks and uncertainties
Our enterprise risk management framework
The LBG enterprise risk management framework
(ERMF) applies to all legal entities and is the foundation
for the delivery of effective and consistent risk control.
It enables proactive identification, active management
and monitoring of LBCM’s risks, which is supported
by our One Risk and Control Self-Assessment
(RCSA) approach.
LBCM has adopted the ERMF, supplemented with
additional tailored practices set out to address
LBCM-specific requirements. The ERMF and the
LBCM RMF applies to LBCM business across all legal
entities and locations.
LBG is in the process of conducting a detailed review
of the ERMF, which will result in a reclassification of our
principal risks in 2024.
LBCM’s risk appetite, principles, policies, procedures,
controls and reporting are regularly reviewed and
updated to ensure they remain in line with regulation,
law, corporate governance and industry good practice.
Risk appetite is defined within LBCM as the amount
and type of risk that it is prepared to seek, accept or
tolerate in delivering its strategy. As a separate legal
group with its own Board, LBCM maintains its own risk
appetite which is aligned to the LBG approach but is
adjusted to reflect the specific characteristics of LBCM’s
balance sheet and portfolio, including its international
presence. The LBCM Board is responsible for annually
approving LBCM’s risk appetite statement. Board-level
risk appetite metrics are supported by executive-level
metrics and cascaded into more detailed business
metrics and limits.
Regular close monitoring and comprehensive reporting
to management and the Board ensures risk appetite
limits are maintained and subject to stress analysis at
a risk type and portfolio level, as appropriate.
Principal risks
and uncertainties
The principal risks that could impact LBCM’s
ability to deliver its long-term strategic
objectives and the approach to managing
each risk is reviewed and reported to the
Board Risk Committee regularly, in alignment
with the risk management framework.
32Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Strategic report
Principal risks and uncertainties continued
Governance is maintained through delegation of
authority from the Board down to subsidiary boards
and to individuals. Senior executives are supported
by a committee-based structure which is designed
to ensure open challenge and enable effective
Board engagement and decision-making.
The Board and senior management play a vital
role in shaping and embedding a supportive risk
culture. Senior leaders set a clear tone from the
top and lead by example reflecting LBG values,
encouraging a culture of intellectual curiosity,
innovation and proactive risk management
amongst all colleagues.
1
Role of the Board and
senior management
The Board delegates executive authorities to ensure there is effective
oversight of risk management. LBCM operates its own Board separate
from LBG.
2
Risk culture and
the customer
The appropriate culture ensures performance, risk and reward are
aligned. LBCM follows the same approach as set out in the ERMF.
3
Risk appetite
The framework ensures our risks are managed in line with our risk
appetite. LBCM has its own risk appetite which is approved by the LBCM
Board and noted by the LBG Board, but follows the same approach as
set out in the ERMF
4
Risk and control
self-assessment
The identification, measurement and control of our risks form an integral
part of our RCSA. LBCM follows the same approach as set out in the
ERMF.
5
Risk governance
The governance framework supports a consistent approach to
enterprise-wide behaviour and decision-making. LBCM has its own risk
management committee structure.
6
Three lines
of defence
The robust approach to monitoring oversight and assurance ensures
effective risk management across LBG. LBCM follows the same
approach as set out in the ERMF.
Enterprise risk management framework
33Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Emerging risk theme Concerns for LBCM and key considerations
Customer propositions &
market competition
The potential impacts of a failure to adapt our propositions to the continually evolving expectations and demographic of
consumers, the evolution of and expectations relating to cyber crime, the threats posed by technology-enabled players and
the risk of market disintermediation.
Generative AI and ethical
data practices
Failure to keep pace with technological advancements relating to generative AI and machine learning whilst balancing the
competing requirements to: i) maximise customer opportunities through adoption, ii) maintain trust and confidence in customer
data privacy, iii) protect our customers from fraud and economic crime, iv) ensure transparency on data ethics practices,
v) adhere to evolving data protection regulations, and vi) prepare for potential business model disruptions caused by adoption
of the technology.
Global macroeconomic &
political environment
Inability to navigate changing international regulations, including sanction and trade compliance, economic fragmentation,
deglobalisation, and geopolitical events that may impact operations, customers and suppliers.
Operational elasticity Failure to adequately prepare for the aggregate threat posed by cyber-attacks, disruption of service including shared services,
third-or fourth-party supplier failure, technology outages or severe data loss.
Regulatory landscape Failure to keep pace with the rapidly evolving regulatory reforms across various jurisdictions. We continue to monitor for reforms
likely to increase cost and complexity for LBCM, including divergence between UK, EU and US. Additionally, with the emergence of
artificial intelligence, digital currencies and distributed ledger technologies for example, regulators are preparing new regulatory
regimes to optimise opportunities against the perceived risks.
Strategic workforce vision Failure to evolve the structure and skillset of a dynamic workforce both within LBCM and through the shared services in line with
LBG’s strategy, whilst maintaining pace with the industry and delivering strong customer outcomes.
Sustainability
expectations
Investor, shareholder and public perception of LBCM’s: i) awareness of the ecological and environmental impacts associated
with its operations and investments, ii) ability to offer sustainable financing options and services at pace, against a continuously
evolving environmental and regulatory backdrop, and iii) role in supporting the UK to transition to a low-carbon economy.
Technological advances Failure to: i) adopt new technologies, streamline and transform group operations and customer propositions, and to ii) create a
competitive advantage through the use of and continual investment into technological development directly or through the LBG
shared services.
UK economic environment Failure to anticipate the longer-term impacts of a weak UK economy, quantitative tightening, change in government and the
resulting policy and regulatory shifts and the potential consequences of the UK becoming less attractive to external investors.
Emerging risks
Principal risks and uncertainties continued
Emerging risks
Emerging risks are a key component of LBCM‘s risk
framework. LBCM’s horizon scanning activity enables
identification of the most pertinent internal and
external operating trends. This insight informs LBCM‘s
strategy, which in turn impacts LBCM’s risk profile.
As part of its risk framework, LBCM needs to identify
risks and opportunities, and to respond through
strategic planning and appropriate risk mitigation.
Although emerging risks are not principal risks, if
left undetected emerging risks have the potential
to adversely impact LBCM or result in missed
opportunities. Where an emerging risk is
considered material enough in its own right, LBCM
may choose to recognise the risk as a principal
risk. Such elevations are considered and approved
through the Board as part of the annual refresh
of the enterprise risk management framework.
LBCM’s focus on the emerging risk landscape and
assessment approach has evolved during 2023 to
reflect the scale of transformation LBG is delivering.
A review of the key emerging risks has taken place
during the year and the following table illustrates
LBCM’s key emerging risks, enabling greater
management concentration on developing
the appropriate responses.
LBCM continues to explore how existing and
new emerging risks may impact its future
strategy, and how it can continue to best protect
its customers, colleagues and shareholders.
Other areas of focus in 2023
In addition to the emerging risks mentioned above,
and in line with LBG, LBCM continues to focus on
model risk as the risks associated with the use
of proprietary models have increased in recent
years due to the limitations of historical data,
the recent extreme market volatility, and the
risk of ineffectiveness in parameterisation,
implementation, oversight and monitoring.
34Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Strategic report
Principal risks and uncertainties continued
Risk category Risk description Key mitigating actions
Capital risk
The risk that an insufficient quantity
or quality of capital is held to meet
regulatory requirements or to
support business strategy, an
inefficient level of capital is held or
that capital is inefficiently deployed
across LBCM.
• A comprehensive capital management framework that includes setting
of capital risk appetite, capital planning and stress-testing activities,
with well-established capital policies and procedures that are well
established and subject to independent oversight.
• Monitoring of capital and leverage ratios to ensure that LBCM meets
regulatory requirements, remains within Board risk appetite and which
results in efficient deployment of capital resources.
• Maintaining a recovery plan setting out a range of potential mitigating
actions that could be taken in response to a stress, including the capital
contingency framework designed to identify emerging capital concerns
at an early stage.
• Managing the demand for capital through management actions
including adjusting the lending strategy, risk hedging strategies and
through business disposals.
Change &
execution
risk
The risk that, in delivering its
change agenda, LBCM fails to
ensure compliance with laws and
regulations, maintain available and
effective customer and colleague
services, and/or operate within
LBCM’s risk appetite.
• Setting (and operating within) the Board level risk appetite for change
and execution risk. LBCM monitors metrics provided by LBG as service
provider at Board and sub-Board level. Change and execution risk is
measured through a combination of risk indicators and quality &
delivery indicators. These are under evolution and enhancement to
ensure ongoing support of the change and transformation agenda.
• Ensuring compliance with the change policy and associated policies
and procedures, which set out the principles and key controls that apply
across the business and are aligned to LBCM’s risk appetite.
• Assessment by the business of the potential impacts of undertaking
change activity on its ability to execute effectively, on customers and
colleagues and the potential consequences for the existing risk profiles.
• Implementation of effective governance and control frameworks to
ensure the adequacy of controls to manage the change activity and
act to mitigate the change/execution risks identified. These controls are
monitored in line with the change policy and enterprise risk
management framework.
• Escalation of events related to change activities to ensure that they are
managed appropriately in line with risk framework guidance.
Risk category Risk description Key mitigating actions
Conduct risk
The risk of detriment across the
customer life cycle including:
failures in product management,
distribution and servicing activities,
from other risks materialising, or
other activities which could
undermine the integrity of the
market or distort competition,
leading to unfair customer
outcomes, regulatory censure,
reputational damage or
financial loss.
Customer harm or detriment is
defined as consumer loss, distress
or inconvenience to customers
due to breaches of regulatory or
internal requirements or our wider
duty to act fairly and reasonably.
The introduction of Consumer
Duty has increased regulatory
expectations in relation to
customer outcomes for consumers.
The direct impact for LBCM,
considering its business and
customer base, is limited, however
LBCM reflects LBG standards where
appropriate.
• Conduct risk appetite and associated metrics provide a granular
view of how LBCM’s products and services are performing for customers
through the customer life cycle.
• Conduct policies and procedures are in place to ensure appropriate
controls and systems that deliver fair customer outcomes and support
market integrity and competition requirements.
• Customer needs are considered through customer plans, which have
an integral conduct lens.
• Create a values-led culture through a focus on behaviours to ensure
LBCM is transforming its culture for success in a digital world. This
is supported by strong direction and tone from senior executives and
the Board.
• Robust product governance framework to ensure products continue to
offer customers fair value, and consistently meet their needs throughout
their product lifecycle.
• Root cause analysis, complaint management and customer
accountabilities for colleagues, with rewards driven by customer-
centric metrics.
• Ongoing enhancements and embedding of LBCM’s framework to
support customers, in particular those in vulnerable circumstances.
• Continued focus on market conduct; membership to the Fixed
Income, Currencies and Commodities Markets Standard Board; and
commitment to conducting market activities consistent with the
principles of the UK Money Markets Code, the Global Precious Metals
Code and the FX Global Code.
• Adoption of robust change delivery methodology to enable prioritisation
and delivery of initiatives to address conduct challenges.
• Continued focus on proactive identification and mitigation of conduct
risk in LBCM’s strategy.
• Active engagement with regulatory bodies and other stakeholders
to develop understanding of concerns related to customer
treatment, effective competition and market integrity, to ensure
that LBCM’s strategic conduct focus continues to meet evolving
stakeholder expectations.
• Review and oversight of thematic conduct agenda items at senior
committees, ensuring holistic consideration of key conduct risks.
• Robust recruitment and training, with a continued focus on
how LBCM manages colleagues’ performance with clear
customer accountabilities.
• Ongoing engagement with third parties involved in serving
LBCM’s customers to ensure consistent delivery.
35Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Strategic report
Principal risks and uncertainties continued
Risk category Risk description Key mitigating actions
Credit risk
The risk that parties with whom
LBCM has contracted fail to meet
their financial obligations (both on
and off-balance sheet).
• Prudent, through-the-cycle credit principles, risk policies and appetite
statements to manage risk effectively.
• Robust risk assessment and credit sanctioning to ensure appropriate
and responsible lending.
• Extensive and thorough credit processes and controls to ensure
effective and timely risk identification, management and oversight.
• Early identification of signs of stress leading to engagement
with customers.
• Regular and robust independent credit risk assurance.
Data risk
The risk of LBCM failing to effectively
govern, manage and control its
data, including data processed by
third-party suppliers, or failure to
drive value from data; leading to
unethical decisions making, poor
customer outcomes, loss of value
to LBCM and mistrust.
Mitigation strategies are adopted to reduce data governance,
management, privacy and ethical risks. Control assessments are logged
and tracked on the RCSA system with supporting metrics. Investment
continues to be made to deliver a comprehensive data strategy to:
• Embed a data-led culture.
• Build robust data foundations with front-to-back controls, quality
and governance.
• Invest in fit for purpose, scalable data platforms and analytical tooling.
• Deliver real-time data insight capability and increase data
value-generation.
Funding and
liquidity risk
The risk that LBCM does not have
sufficiently stable and diverse
sources of funding or that the
funding structure is inefficient; and
the risk that financial resources are
insufficient to meet commitments
as they fall due or can only be
obtained at excessive cost.
• Ensuring that LBCM’s liquidity risk management framework is adequate
regarding the internal risk appetite, strategy and regulatory
requirements. Liquidity policies and procedures are subject to
independent internal oversight by the risk team.
• Holding a liquidity buffer to cover potential cash and collateral net
outflows calibrated to support strategic and operational needs as well
as regulatory requirements and internal risk appetite.
• Undertaking monitoring against a number of market and entity-specific
early warning indicators complemented with stress-testing analysis.
• Maintaining a contingency funding plan detailing actions and strategies
available in stressed conditions.
• Maintaining diversified funding sources including a ‘Euro Medium Term
Note’ programme.
Market risk
The risk that LBCM’s capital or
earnings profile is affected by
adverse moves in market rates, in
particular changes and volatility in
interest and foreign exchange
rates, inflation rates, commodity
prices and credit spreads in the
banking and markets businesses.
• Setting an appropriate market risk policy in line with risk appetite,
operating within its parameters and the supplementary procedures
that underpin it.
• Undertaking regular monitoring of market risk positions versus limits
and triggers to ensure they remain within limits which are calibrated
in line with risk appetite.
• Reducing risk in a cost-effective manner including the externalisation
to financial markets where market liquidity allows.
• Structural hedge programmes implemented to manage liability
margins and the risk of margin compression.
Risk category Risk description Key mitigating actions
Model risk
The risk of financial loss, regulatory
censure, reputational damage or
customer detriment from
deficiencies in developing,
applying and operating models
and rating systems.
• A comprehensive model risk management framework provides
the foundation for managing and mitigating model risk within LBCM.
• Defined roles and responsibilities, including clear ownership and
accountability, independent oversight and approval.
• Principles and controls regarding data integrity, development,
validation, implementation, on-going maintenance and revalidation,
monitoring, and the process for non-compliance.
• Model monitoring, independent review and periodic validation and
re-approval.
Operational
resilience
risk
The risk that LBCM fails to
design resilience into business
operations (including those that
are outsourced), underlying
infrastructure and controls
(people, property, processes
and technology) to withstand
external or internal events that
could impact the continuity of
operations and fails to respond
in a way which meets customer
and stakeholder expectations
and needs when the continuity
of operations is compromised.
• Designing resilience into LBCM’s operations through embedding
of an enhanced target operating model.
• Identification of LBCM’s important business services and impact
tolerance for disruption.
• Continued optimisation of LBCM’s approach to IT and operational
resilience, through LBG, by investing in technology improvements
and enhancing the resilience of systems that support LBCM’s critical
business processes and important business services.
• Investment continues to improve LBCM’s approach to identity and
access management, capability to detect, respond and recover from
cyber-attacks and ability to manage vulnerabilities across the estate.
• Ensuring that the operational resilience risk profile needs are reassessed
and prioritised in line with strategic change.
• Setting and monitoring Board level risk appetite, and testing ability
to remain within impact tolerance.
• Continued optimisation and investment in people controls and
processes, property and sourcing assets supporting important
business services.
36Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Principal risks and uncertainties continued
Risk category Risk description Key mitigating actions
Operational
risk
The risk of inadequate or failed
internal processes, people or
systems, or external events, leading
to loss such as cyber-attack,
internal and/or external fraud or
financial crime, IT systems failures
as well as failure to ensure
compliance with regulation. This
includes the provision of services to
LBCM (including people, systems
and processes) outsourced to
Lloyds Bank plc via a shared service
provision model or by external
providers via Lloyds Bank plc.
• The risk management framework establishes robust arrangements for
risk governance, in particular through clear definition of individual and
collective accountabilities for risk management, risk oversight and risk
assurance through a three lines of defence model which supports the
discharge of responsibilities to customers, shareholders and regulators.
• Service provision arrangements to assess, monitor and act on risks
arising from the shared service model, governed by an intra-group
agreement (IGA).
• Continued investment in the control environment by both LBCM
and its shared service provider, included third-party providers, with
a focus on moving towards automated preventative and real-time
detective controls.
• Manual and detective controls deployed on an interim basis to
prevent gaps as more strategic automated controls are developed
and deployed.
• Deployment of enhanced cyber controls to detect, protect against and
respond to threats to the confidentiality or integrity of information
assets, or the availability of systems, and to ensure effective assurance
of third-party provision.
• Enhancing technology infrastructure and the resilience of systems
(including focus on simplification of IT architecture and the
decommissioning of legacy systems) that support critical
business processes.
• Application of a risk-based approach to mitigate financial crime
and both internal and external fraud risk.
• Working with industry bodies and law enforcement agencies to identify
and combat fraud and money laundering.
• Rigorous oversight of relevant management at business area and
entity-level committees.
Risk category Risk description Key mitigating actions
People risk
The risk that LBCM fails to provide
an appropriate colleague and
customer-centric culture,
supported by robust reward and
wellbeing policies and processes;
effective leadership to manage
colleague resources; effective
talent and succession
management; and control
framework to ensure all colleague
related requirements are met.
LBCM has sought to implement mitigating actions with respect to people
risk. Key areas of focus include:
• Focusing on leadership and colleague engagement, through targeted
strategies to attract, retain and develop high-calibre people together
with implementation of effective succession planning.
• Continued focus on LBCM’s culture and inclusivity strategy by
developing and delivering initiatives that reinforce the appropriate
behaviours which generate the best possible long-term outcomes for
customers and colleagues.
• Managing organisational capability and capacity to ensure that LBCM
has the right skills and resources to meet customer needs and deliver
its strategic plan.
• Maintaining remuneration arrangements to ensure they promote an
appropriate culture and colleague behaviours that meet customer
needs and regulatory expectations.
• Ensuring colleague wellbeing strategies and support are in place to
meet colleague needs and alongside skills and capability growth
required to maximise the potential of our people.
• Ensuring compliance with legal and regulatory requirements related to
SM&CR, embedding compliant and appropriate colleague behaviours
in line with LBG policies, values and its people risk priorities.
• Reviewing and enhancing people processes to ensure they are fit for
purpose and operationally resilient.
• Key people resources provided under the shared service model are
managed under an adequate people services agreement.
37Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Strategic report
Principal risks and uncertainties continued
Risk category Risk description Key mitigating actions
Regulatory
and legal
risk
The risk arising from the failure to
identify, assess, correctly interpret
or, comply with regulatory and/or
legal requirements, leading to
customer detriment, failure to
prevent and/or detect economic
crime, financial penalties,
regulatory censure, criminal or civil
enforcement action.
• The Board has an established risk appetite and metrics for regulatory
and legal risk.
• Compliance and legal risk management policies and procedures
are designed to ensure appropriate controls and systems are in place
to comply with applicable laws, rules and regulations.
• Framework and processes are in place to monitor ongoing compliance
with new legislation.
• Ongoing investment in people, processes, training and IT is being made
to impact assess and help meet its legal and regulatory commitments.
• Ongoing horizon scanning is undertaken to identify and address
changes in regulatory and legal requirements.
• Engagement with regulatory authorities and industry bodies on
forthcoming regulatory changes, market reviews and investigations is
taking place.
• Mechanisms for the business are in place to identify, assess and monitor
risks, providing appropriate management information, and with robust
oversight and escalation routes.
• Oversight, proactive support and constructive challenge to the business
in identifying and managing regulatory and legal issues is undertaken
by the compliance and legal functions.
• Thematic reviews of regulatory compliance and oversight of regulatory
compliance assessments across businesses and divisions are
undertaken where appropriate.
Strategic
risk
The risk which results from:
• Incorrect assessments of internal
or external operating
environments.
• Failure to understand the
potential impact of strategic
responses and business plans on
existing risk types.
• Failure to respond appropriately
to material changes in the
external or internal operating
environments.
• Horizon scanning is conducted across LBCM to identify potential threats,
risks, emerging issues and opportunities and to explore future trends.
• LBCM’s business planning processes include formal assessment of the
strategic risk implications of new business, product entries and other
strategic initiatives.
• LBCM’s governance framework mandates individuals’ and committees’
responsibilities and decision-making rights, to ensure that strategic risks
are appropriately reported and escalated.
Financial risk management
objectives and policies
Information regarding the financial risk
management objectives and policies of LBCM,
in relation to the use of financial instruments,
is given in notes 31 and 33 to the accounts.
LBCM’s approach to risk management including
risk policies, risk appetite, measurement bases
and sensitivities, in particular for credit risk,
market risk and liquidity risk, is aligned to those
of Lloyds Banking Group plc, the Bank’s ultimate
parent. Further information can be found in
the Lloyds Banking Group plc annual report.
LBCM maintains risk management systems and
internal controls relating to the financial reporting
processes designed to:
•
Ensure that accounting policies are
appropriately and consistently applied.
•
Enable the calculation, preparation and
reporting of financial outcomes in line with
applicable standards.
•
Ensure that disclosures are made on a timely
basis in accordance with statutory and
regulatory requirements.
38Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance
Financial statements Other informationStrategic report
Governance
Our Board 39
Our Executive Committee 44
Corporate governance statement 47
Other disclosures 50
The directors present their annual
report and audited consolidated
financial statements for the year
ended 31 December 2023.
Information included in the strategic
report incorporated in the directors’ report
by reference:
•
Statement of employee engagement:
page 8
•
Statement of other stakeholder
engagement: pages 6-11
•
Principal risks and uncertainties:
pages 31-37
•
Environmental, social and corporate
governance: pages 21-22
LBCM Head Office,
10 Gresham St, London
39Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance
Financial statements Other informationStrategic report
Our Board
Good corporate governance
underpins LBCM’s ability to
support our customers and
to meet the needs of our
stakeholders.
The role of the Board
The Board is collectively responsible for
promoting and assessing the long-term,
sustainable success of LBCM, generating value
and contributing to wider society. The Board
establishes the purpose, values and strategy
and seeks to ensure that LBCM is Helping
Britain Prosper by connecting the UK and
LBG with the world.
The key decisions and matters reserved for the
Board’s approval, such as LBCM’s long-term
strategy and priorities, are set out in the
Corporate Governance Framework, which is
reviewed periodically by the Board and was
refreshed in 2023. The Board is supported
by its committees which make decisions or
recommendations on matters as delegated
to them under the Corporate Governance
Framework, including Board appointments, the
effectiveness of internal controls and the risk
management framework, financial reporting,
governance and remuneration policies.
Following a successful pilot, the Board has
adopted a new approach to its meetings which
allows for fewer but deeper conversations.
These ‘cornerstone conversations’ are allocated
material time on the agenda and anchor the
meeting focusing on what is important for the
Bank and its Board. This enables the Board to
spend a greater proportion of its time on
strategic, forward-looking matters.
Board Board committees
Chair
Lord Lupton CBE
Executive directors
Chief Executive Officer
Carla Antunes da Silva
Chief Financial Officer
Julienne Daglish
Mark Basten
Eve Henrikson
Cecile Hillary
Andrew McIntyre
John Owen*
Rose St Louis
* Senior independent director
Sharon Slattery
Non-executive
directors
Company
Secretary
LBCM Board and governance structure
Nomination and Governance
Committee
Audit Committee
Board Risk Committee
Remuneration Committee
40Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance
Financial statements Other informationStrategic report
Our Board continued
Nomination and Governance Committee Audit Committee Board Risk Committee Remuneration Committee
Succession planning of the
executive and Board remains
a key focus of the Committee.
Committee purpose and responsibilities
The purpose of the Committee is to keep the
Board’s governance, composition, skills,
experience, knowledge, independence and
succession arrangements under review and
to make appropriate recommendations to
the Board to ensure the Bank’s arrangements
are consistent with the highest corporate
governance standards.
Committee composition,
skills, experience and operation
The Committee comprises three independent
non-executive directors and is chaired by
Lord Lupton whose biography can be found
on page 42.
Ensuring oversight of financial
and narrative reporting and the
internal control environment.
Committee purpose and responsibilities
The purpose of the Committee is to monitor
and review the formal arrangements
established by the Board in respect to the
integrity of the financial and narrative
reporting of the Bank and Group, the
independence and effectiveness of the
internal and external audit functions, the
effectiveness of the internal controls and
the risk management framework and the
adequacy and security of the arrangements
for whistleblowing. This includes the statutory
audit of the consolidated financial statements.
Committee composition,
skills, experience and operation
The Committee comprises four independent
non-executive directors and is chaired by
Andrew McIntyre. See his biography on page
42. The Committee held separate sessions
with the audit teams, without members of the
executive management present.
Effective risk management is core to
successful delivery of the Bank’s strategy
which is aligned with the strategy of the
wider Lloyds Banking Group.
Committee purpose and responsibilities
The Board Risk Committee is responsible for
assisting the Board in fulfilling its risk
governance and oversight responsibilities.
It is also responsible for providing advice,
oversight and challenge to the Board to
embed and maintain a supportive risk culture
throughout the Bank and Group and supports
the Bank’s agreed risk appetite, policies and
procedures including the appropriateness of
LBG policies for the Bank. The Committee is
responsible for reviewing and reporting its
conclusions to the Board on the Bank’s risk
management framework, which captures all
risk policies and principles. It also provides
oversight and challenge on the quality
of services provided by the Ring-fenced
Bank through the IGA and where needed,
facilitate escalation to the Board.
Committee composition,
skills, experience and operation
The Committee comprises five independent
non-executive directors. It is chaired by Mark
Basten who joined the Board in February 2023
and became Chair of the Board Risk
Committee, to succeed Rupert Mingay who
became Chief Risk Officer in September 2022.
See his biography on page 43.
Ensuring oversight of the reward package
to ensure it supports the delivery of LBG’s
purpose of Helping Britain Prosper and
encourages effective risk disciplines.
Committee purpose and responsibilities
The Remuneration Committee is responsible
for reviewing and making recommendations to
the Board on the remuneration policy for LBCM;
reviewing performance and approving
remuneration arrangements for LBCM
colleagues under the Committee’s purview;
and for performing other regulator-prescribed
duties for remuneration committees, taking
into account the principles, policies and
governance requirements of LBG and the
recommendations of LBG’s Group
Remuneration Committee. The Committee
also reviews the remuneration opportunities
for colleagues under the Committee’s
purview to ensure they remain reflective
of contribution and aligned to market.
Committee composition,
skills, experience and operation
The Committee comprises three independent
non-executive directors and is chaired by
John Owen. See his biography on page 42.
Board Committees
41Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance
Financial statements Other informationStrategic report
Our Board continued
The LBCM Board
Establishing our purpose, values and strategy
Cecile Hillary
Internal non-executive
director
Lord Lupton CBE
Chair
A
BR
NG
Re
Rose St Louis
Internal non-executive
director
John Owen
Senior independent
non-executive
director
A
BR
NG
Re
Andrew McIntyre
Independent non-
executive director
AC
BR
NG
Carla Antunes
da Silva
Executive director and
Chief Executive Officer
Julienne Daglish
Executive director and
Chief Financial Officer
Sharon Slattery
Company Secretary
Eve Henrikson
Independent non-
executive director
BR
Mark Basten
Independent non-
executive director
A
BR
Re
Committee Chair
A
Audit Committee member
BR
Board Risk Committee member
NG
Nomination and Governance Committee member
Re
Remuneration Committee member
42Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance
Financial statements Other informationStrategic report
Our Board continued
The LBCM Board continued
Establishing our purpose, values and strategy
Lord Lupton CBE
Chair
Appointed: August 2017
Lord Lupton has extensive international
corporate experience having advised UK
and international companies on a wide
variety of major transactions. He was
Deputy Chairman of Baring Brothers
for three years, until 1998. He went on to
co-found the London office of Greenhill
& Co. and was Chairman of Greenhill
Europe until May 2017. A former Treasurer
of the Conservative Party, he became a
Life Peer in 2015, serving on the House of
Lords Select Committee on Charities.
External appointments:
Senior Advisor to Greenhill Europe;
Trustee of The Lovington Foundation;
Chairman of the Board of Visitors of
The Ashmolean Museum.
John Owen
Senior independent non-executive director
Appointed: September 2017
John has extensive international banking
experience. He worked for the Bank of
America in London and UBS in both the
UK and Switzerland before spending 13
years in various senior management
positions at Credit Suisse. In 2011, he
joined RBS where he was the Head of
EMEA and then CEO International
Banking, responsible for client coverage
teams, the international network, lending
and transaction services products as
well as the provision of Markets products.
External appointments:
Local Authority Governor for Mayflower
Primary School, Tower Hamlets.
Cecile Hillary
Internal non-executive director
Appointed: November 2022
Cecile became LBG’s Treasurer in
October 2021, having joined as Deputy
Treasurer in March 2021. Prior to that, she
had a 24-year career in banking at
JPMorgan, Morgan Stanley and Barclays,
based in London. During that time, she
worked and ran businesses across client
advisory, securitisation, capital markets
and derivatives.
External appointments:
None.
Rose St Louis
Internal non-executive director
Appointed: September 2022
Rose joined Lloyds Banking Group in
March 2021 as a Protection Director
responsible for leading the Group’s
protection business across the
intermediary, retail and digital channels.
She has over 25 years’ experience in the
financial services industry in a diverse
range of roles from insurance to wealth
management. Rose is a leading figure
in the UK protection market and is
recognised for her inclusive approach
to customer delivery underpinned by
purpose and culture.
External appointments:
Member of the Association of British
Insurers Health and Protection Board;
member of the Insurance United Against
Dementia board.
Andrew McIntyre
Independent non-executive director
Appointed: September 2017
Andrew is a Chartered Accountant and
has broad boardroom experience with
major public companies. He chaired the
board of Southern Housing Group
for nine years and has served as a
non-executive director at both the
Centre for Economic Policy Research
and National Bank of Greece. He spent
most of his executive career at Ernst
& Young, acting for many of the firm’s
largest financial services clients.
External appointments:
Senior Independent Director, Non-
Executive Director and Audit/Risk
Committee Chair at C. Hoare & Co; Audit
Committee Chair Cavamont Holdings
Limited; Non-Executive Director and
Audit Committee Chair at Target Group
Limited; member of the Federated
Hermes Property Unit Trust Appointments
Committee and Chair of the Federated
Hermes Property Unit Trust Audit
Committee; and Trustee Treasurer
of the Foundling Museum.
43Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Financial statements Other informationStrategic report
Our Board continued
The LBCM Board continued
Establishing our purpose, values and strategy
Mark Basten
Independent non-executive director
Appointed: February 2023
Mark is an experienced risk
management professional, with a broad
range of experience across a variety of
sectors, geographies and risk disciplines
including governance forums. He’s
led risk management functions at
international banks for more than 25
years. He was Group Head of Credit for
Nomura Securities and Head of Risk for
Nomura International until 2011, when he
went on to serve as Chief Risk Officer
for ICBC Standard Bank plc until 2020.
External appointments:
None.
Carla Antunes da Silva
Executive director and Chief Executive Officer
Appointed: February 2023
Carla was appointed as the CEO for LBCM
in February 2023, having previously
served as internal non-executive director
for five years. From 2015 to January 2023,
Carla led LBG’s strategic work as Group
Strategy, Corporate Development
and IR Director in the Group Executive
Committee. She was responsible for
making recommendations on all areas
of major strategic significance for LBG
including M&A and fintech investments,
and managing relationships with the
wider investment community. Prior to
that, Carla spent 18 years as an Equity
Analyst covering European banks,
working for Deutsche Bank, JP Morgan
and Credit Suisse.
External appointments:
Non-Executive Director and member of
Nomination & Governance Committee
of Novo Banco and Member of the
Investment Committee, St. Edmund
Hall, University of Oxford.
Julienne Daglish
Executive director and Chief Financial Officer
Appointed: April 2021
Julienne was appointed Chief Financial
Officer LBCM in April 2021. She previously
held the role of Chief Risk Officer for
LBCM. She has more than 25 years of
Markets experience, where she ran
Structured Products within Trading
before taking on the role of Chief
Operating Officer for Financial Markets in
LBG. In addition, she has held customer
facing roles in Commercial Banking and
International Private Banking and spent
time in Strategic Development.
External appointments:
Member and Deputy Chair of the Audit
Risk and Compliance Committee for
King’s College London; Co-Optee on
Audit Investment and Risk Committee for
Lloyds Bank Foundation for England and
Wales.
Sharon Slattery
Company Secretary
Appointed: August 2017
Sharon joined Lloyds Banking Group over
25 years ago following its acquisition of
Lloyds Abbey life in 1996. She has over 30
years’ experience in corporate
governance and company secretarial
practice. Sharon has held a variety
of roles within LBG as secretary to
boards, board committees and senior
management committees at all levels of
the organisation. She has broad UK listed
company experience from managing
continuing obligation requirements,
annual reporting and AGM project
management through to share capital
and employee share plan administration.
During her career she has worked on a
number of corporate actions including
the acquisitions of Lloyds Abbey Life,
Scottish Widows and HBOS.
External appointments:
None.
Eve Henrikson
Independent non-executive director
Appointed: September 2020
Eve has extensive experience in Digital in
a variety of industries and international
markets, spanning Europe, the US and
Asia. She has been leading Digital
businesses and transformation for
over 20 years, including large online
operations and P&Ls at Tesco and Uber.
She is currently managing Europe,
Middle East and Africa for Uber Eats.
In her non-executive career, she has
held roles with Scout Shop Limited and
World Scout Shops Limited.
External appointments:
Regional General Manager Delivery
EMEA, Uber Portier B.V. (Uber Eats);
Non-Executive Director and Member
of the Board and Audit & Financial and
Remuneration Committees of Sonae,
GSPS, SA.
44Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance
Financial statements Other informationStrategic report
The LBCM Executive Committee
Delivering our strategy and day-to-day management
Adele Bohlen
Chief Executive
Officer Crown
Dependencies
M
Stephen Ellis
Chief Operating
Officer
M
Rob Hale
Managing Director
- Head of
Financial Markets
M
Samir Lalvani
Chief Executive
and Country Head,
North America
M
Nick Hughes
Head of Capital
Markets and
LBCMW
M
Jon Alexander
General Counsel
A
Julienne
Daglish
Executive director
and Chief
Financial Officer
M
Linda Rae
Winter
Chief Internal
Auditor
A
Carla Antunes
da Silva
Executive director
and Chief
Executive Officer
C
Rupert Mingay
Chief Risk Officer
M
Sharon Slattery
Company
Secretary
A
Fiona Murtagh
People Director
M
Committee chair
M
Committee member
A
Committee attendee
Our Executive Committee
The executive directors make decisions within the parameters and principles set out in the Corporate
Governance Framework, which aims to ensure that decisions are made by management under the
correct authority. There are executive committees established to support and advise the Chief
Executive Officer, in particular the Executive Committee. The other committees which bring subject
matter expertise and analysis are the Asset and Liability, Operating and Risk Committees.
45Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
Governance
Financial statements Other informationStrategic report
The LBCM Executive Committee continued
Delivering our strategy and day-to-day management
Carla Antunes da Silva
Executive director and
Chief Executive Officer
Read her biography on page 43.
Julienne Daglish
Executive director and
Chief Financial Officer
Read her biography on page 43.
Jon Alexander
General Counsel
Jon has over 25 years’ experience
working in private practice law
firms and in-house and he is
qualified to practise law in
England and Wales, New South
Wales, Australia and Scotland. As
General Counsel for LBCM, Jon
provides advice to the Executive
Committee, Board and wider
business on corporate-level and
business-specific issues. He
commenced his role with LBCM in
2020 having joined LBG in 2004,
and he previously held various
leadership roles in the Group’s
Retail and Commercial Banking
Legal teams. Before joining the
Group, he worked in private
practice law firms in Edinburgh
and Sydney.
Adele Bohlen
Chief Executive Officer
Crown Dependencies
Adele joined LBCM in 2023 as
Crown Dependencies Director
and CEO. With over 30 years’
experience in the finance industry
gained across a number of clients
segments and disciplines both on
and offshore, Adele is passionate
about ensuring the focus is on
clients and building long-term
mutually beneficial relationships.
Prior to joining LBCM, Adele worked
for Barclays International for over
seven years, where she was
Country Head for the Isle of Man
Business and Global Head of
Fiduciary Business. Adele holds
the Step Diploma in International
Trust Management, is a Chartered
Member of the Institute of
Securities and Investments.
She also holds a Diploma in
International Anti Money
Laundering and has attained
Private Client Investment Advice
and Management – Level 6.
Stephen Ellis
Chief Operating Officer
Stephen is the SMF 24, Chief
Operations function role holder for
LBCM. He is responsible for
supporting and delivering the LBCM
operating model. Stephen has over
20 years’ experience with Lloyds
Banking Group and spent time in
leadership roles in London, Tokyo,
Hong Kong and New York, where he
gained a US Broker Dealer Principal
license while serving as Head of
Treasury and Trading North
America. Stephen has sat on the
board of two Lloyds Bank subsidiary
companies and is a member of
the Technology & Operations
Committee of the Association
for Financial Markets in Europe.
Rob Hale
Managing Director -
Head of Financial Markets
Rob started his career in
derivatives trading in the late
1990s and has worked at a
number of Investment banks
before joining Lloyds in 2007
to build out the Rates Trading
business and establish Lloyds as
a GEMM (Gilt Edged Market Maker).
He went on to lead the FX &
Commodities business from 2015,
before becoming Head of Traded
Products for LBCM in 2018. Rob was
also the Accountable Executive for
Ring Fencing Delivery, responsible
for the design and delivery of
LBCM Markets in the Commercial
Bank. Since 2021, Rob has been
Head of Financial Markets,
responsible for all Financial
Markets activity across London
and New York. Additionally, he is
also jointly accountable for the
Markets Platform and delivery of
transformation and technology
programmes for LBCM, which are
key to our strategic ambitions and
future growth. Externally, Rob sits
on the Global Foreign Exchange
Division Board and Financial
Markets Standard Board helping
to establish global standards
for fair and effective markets.
Our Executive Committee continued
46Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Financial statements Other informationStrategic report
The LBCM Executive Committee continued
Delivering our strategy and day-to-day management
Nick Hughes
Head of Capital Markets and LBCMW
Nick leads LBCM’s Capital Markets
business globally. The Capital
Markets business provides
Corporate and Institutional clients
with comprehensive debt capital
markets, financing and risk
management expertise from
locations in the UK, US and
Germany. Products and activities
include primary market bond
issuances and US private
placements, liability management
and balance sheet advisory,
securitised products, secondary
market credit sales and trading,
and interest rate and inflation risk
management. Nick started his
career at Lloyds in 1999 and has
worked in the Markets business
since 2006 in various client facing
and structuring roles serving
Corporate and Institutional clients.
In August 2021 Nick was appointed
as head of the Capital Markets
business within LBCM, prior to
which he was responsible for the
Derivative Sales and Structuring
business within LBCM.
Samir Lalvani
Chief Executive and Country Head,
North America
Samir joined LBG in 2009 from
Citigroup, where he worked for
10 years in Structured Corporate
Finance and the Markets
businesses. Prior to Citigroup,
Samir spent eight years in the
branded consumer industry,
working at Procter & Gamble
and Nabisco. Samir served as
President of Lloyds Securities Inc.
and Head of Capital Markets,
playing an instrumental role in
establishing Lloyds Securities Inc.
and developing the Bank’s
product capabilities in the US. In
2015, Samir joined ANZ Banking
Group, where he was Head of
Coverage, International Banking
and Deputy CEO, North America.
He returned to LBG in 2016, where
he resumed his role as President
of Lloyds Securities Inc. and
served as Head of Corporate
and Institutional Coverage before
becoming Country Head and
CEO in March 2022.
Rupert Mingay
Chief Risk Officer
Rupert joined LBCM as a non-
executive director and Chair of
the Board Risk Committee in 2022
before becoming CRO. He was
previously Treasurer of NatWest
Markets during the implementation
of ring-fencing, Brexit and the
onset of COVID. Prior to that, he
was Group Treasurer of Standard
Chartered and held other senior
roles in London and Singapore in
Group corporate development,
consumer and private banking
and treasury. Rupert has more
than 30 years’ experience in
banking, starting his career in
investment banking at Goldman
Sachs and JPMorgan. He also
co-founded an advisory firm in
Hungary in partnership with the
European Bank for Reconstruction
and Development.
Fiona Murtagh
People Director
Fiona has spent her career in
Human Resources, having held
a number of generalist HR roles
as well as leading large scale
People change projects,
including the successful
integration of Lloyds TSB and
Halifax Bank of Scotland. She
spent a number of years
specialising in the areas of Talent
& Development, supporting the
Commercial Banking business.
Following this, she was appointed
as Head of Human Resources for
North America (NA) and Global
Large Corporates, covering North
America, Asia and Europe. Fiona’s
role subsequently expanded and
is currently the People Director
for LBCM. Fiona played netball
for England for over 13 years,
obtained over 100 caps, and
was awarded an MBE for
services to netball.
Sharon Slattery
Company Secretary
Read her biography on page 43.
Linda Rae Winter
Chief Internal Auditor
Linda is the Chief Internal Auditor
for LBCM, a position she has held
since April 2018. In this role she is
responsible for challenging LBCM
executive management to
improve the effectiveness
of LBCM governance, risk
management and internal
controls, consistent with the LBCM
risk management framework.
Prior to joining LBG, Linda held
a senior position in Barclay
heading up a first line controls
function across Barclays
Corporate product and
sales divisions and gained
considerable global experience.
In her career with American
Express Bank and JP Morgan,
she worked in Audit building
her extensive knowledge of
numerous banking products
and helping to improve
risk management and
control disciplines.
Our Executive Committee continued
47Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Financial statements Other informationStrategic report
Corporate governance statement
LBCM’s corporate governance statement
Approach to corporate governance
Fundamental to LBCM’s strategy are high
standards of corporate governance.
A Corporate Governance Framework is in place for
the Bank, which sets the approach and applicable
standards in respect of the Bank’s corporate
governance arrangements whilst addressing the
matters set out in the Wates Corporate
Governance Principles for Large Private Companies
(the Principles). This includes the matters reserved
to the Board, and the matters the Board has
chosen to delegate to management, including
decision-making on operational matters such as
those relating to credit, liquidity and the day-to-
day management of risk, and the governance
requirements of the operation of the Bank as an
entity outside of LBG’s Ring-Fenced Bank.
In accordance with the Large and Medium-sized
Companies and Group (Accounts and Reports)
Regulations 2008 (as amended by the
Companies (Miscellaneous Reporting)
Regulations 2018) (the Regulations), for the year
ended 31 December 2023, LBCM plc and its
subsidiaries have in their corporate governance
arrangements applied the Wates Corporate
Governance Principles for Large Private
Companies (the Principles) which are available
at www.frc.org.uk. The following section explains
the Bank’s approach to corporate governance
and its application of the Principles.
Governance arrangements, including the
Corporate Governance Framework, are reviewed
to ensure they remain fit for purpose. The
Corporate Governance Framework of the Bank
further addresses the requirements of the
Principles as follows.
Principle one – purpose and leadership
The Board is collectively responsible for the
long-term success of the Bank. It achieves this by
agreeing the Bank’s strategy, within the wider
strategy of LBG, and overseeing delivery against
it. The Bank’s strategy is discussed further in the
strategic report. The Board also assumes
responsibilities for setting the culture, values and
wider standards of the Bank, within the equivalent
standards set by LBG.
Consideration of the needs of all stakeholders is
fundamental to the way the Bank operates, as is
maintaining the highest standards of business
conduct, which along with ensuring delivery for
customers is a vital part of the corporate culture.
The Bank’s approach is further influenced by the
need to build a culture in which everyone feels
included, empowered and inspired to do the right
thing for customers. To this end, the Board plays
a lead role in establishing, promoting and
monitoring the Bank’s corporate culture
and values, with the Corporate Governance
Framework ensuring such matters receive the
level of prominence in Board and executive
decision-making which they require. The Board
receives regular updates on LBCM’s culture
including progress on the cultural transformation
journey, which is closely aligned to those of LBG,
which are discussed in more detail in the LBG
annual report and accounts for 2023.
Principle two – Board composition
The Board is chaired by a non-executive member
of the LBG Board and contains a balance of
independent non-executive directors (iNED), LBG
executives (serving as non-executives) and
executive directors. This composition supports
its legal and regulatory requirements for
independent decision-making within the overall
framework of LBG policies and controls. Further
details of the directors can be found within this
annual report. There were two changes to the
Board during the year which were overseen by
the Nomination and Governance Committee.
On 1 February 2023, Carla Antunes da Silva was
appointed CEO following Eduardo Stock da
Cunha’s retirement. Carla had served on the Board
for five years as one of the Bank’s two internal
NEDs and was LBG’s Group Strategy, Corporate
Development and Investor Relations Director
until her appointment as the Bank’s CEO. Carla’s
strategic thinking and customer orientation is
providing the leadership needed to deliver on the
Bank’s medium and long-term plans for growth,
including delivering for the Bank a sustainable
strategy, a people culture and continuing to
integrate the Bank within the wider LBG. Carla
continues to deliver the strategy to extend
digitisation, especially in the Bank’s Retail and
Financial Markets businesses, as well as growing
Capital Markets and banking presence both in the
UK and internationally in Europe and the US.
On 9 February 2023, Mark Basten joined the
Board as an independent non-executive
director, member of the Audit and Remuneration
Committees and Chair of Board Risk Committee
to succeed Rupert Mingay who stepped down
from the Board in September 2022 to take up
the position as the Bank’s Chief Risk Officer.
Mark brings strong experience in both credit
and operational risk areas which are important
to the Board.
The Nomination and Governance Committee
continues to keep under review, on an ongoing basis,
the structure, size and composition of the Board and
its committees, making recommendations to the
LBCM Board as appropriate.
Consideration is given to the need to ensure
the appropriate mix of knowledge, skills and
experience, and diversity. The Board has adopted
the LBG Board Diversity Policy and LBG Board
Diversity Objectives as applicable to the Bank
and reflecting the relative size of the Board. The
Board’s commitment is to maintain at least three
women Board members so long as the Board
size is nine directors.
The Board structure is nine directors: a Chair
independent on appointment, four iNEDs, two
internal NEDs and two executive directors. The
Board has made good progress on diversity
at Board-level in its broadest sense – gender,
48Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Corporate governance statement continued
LBCM’s corporate governance statement continued
race, nationality, social mobility and age. It is a
multinational Board (German, French, Portuguese
and British), with age diversity from 43 years
upwards, Black, Asian and Minority Ethnic
representation of 11 per cent, 55 per cent
of the Board currently comprising women
directors and LGBTQ+ 11 per cent.
Both the CEO and CFO are women and the Board
therefore continues to exceed the FTSE Women
Leaders Review recommendation of 40 per cent
board and leadership positions held by women
and at least one woman appointed as chair,
senior independent director, CEO or CFO by the
end of 2025.
The Board meets the objective of the Parker
Review of having at least one Black, Asian and
Minority Ethnic Board member and continues its
ambition to achieve the LBG Diversity objectives
relative to its size and reflecting the Bank is a
subsidiary and not a listed entity.
Reflecting the size and complexity of the business,
the Board has established a Committee structure
comprising a Board Risk Committee, Audit
Committee, Remuneration Committee and
Nomination and Governance Committee
(‘the Committees’). The Committees make
recommendations to the Board on matters
delegated to them, in particular in relation to
internal control, risk, financial reporting and
remuneration matters. Each committee has written
terms of reference setting out its delegated
responsibilities and comprises iNEDs with
appropriate skills and experiences and chaired
by an experienced Chair. The Committee Chairs
report to the Board at each Board meeting.
The Board undertakes an annual review of its
effectiveness, which provides an opportunity to
consider ways of identifying greater efficiencies,
ways to maximise strengths and highlights areas
of further development. Given the appointment of
a new Chief Executive Officer in February 2023
and ongoing strategy development, the Board
agreed that it was too soon for an external
evaluation and an internal evaluation, overseen
by the Nomination and Governance Committee
and conducted by the Company Secretary, was
undertaken in 2023 with consideration for an
external evaluation at a future date.
The internal review process included a
confidential open-ended questionnaire to the
Board and its committees, seeking views on
what’s working well and areas for improvement.
Time was set aside on the agenda of the Board
and each committee for an open discussion
of the key themes and outputs from the
questionnaire. Alongside this, the Chair undertook
individual assessments of the non-executive
directors, with the performance evaluation of
the Chair carried out by the non-executive
directors, led by the senior independent director,
considering the views of the executive directors.
The evaluation concluded that the performance
of the Board, its committees, the Chair and each
of the directors continues to be effective. All
directors demonstrated commitment to their
roles and contributed effectively. The Board is
regarded as very able, with good diversity of
expertise and skills and trusted relationships
amongst the directors, led by the Chair, leading
to open and honest conversations and strong
governance, challenge and debate.
The key findings and areas for consideration
include: (1) further enhancements to sharpen the
focus of Board papers for even greater openness
and transparency especially for complex matters
and demonstrating how learnings are being
applied; (2) being more creative and allowing
more time for focus on strategic thinking and
key topics; (3) more visibility of the wider senior
management population at Board; and (4)
looking for opportunities to further streamline
meetings to make them more effective.
In response to the findings from the 2022
evaluation, the main focus in improvements to
Board effectiveness in 2023 has been on creating
room for more forward-looking and strategic
discussions and building a sense of ‘team’.
These enhancements have been achieved by:
(1) adoption of a new Board agenda, with time
allocated for focused ‘cornerstone’ conversations
on substantive strategic and supervisory topics;
(2) deepening Bank and LBG collaboration and
relationships through LBG directors and senior
management attending LBCM Board meetings
and other LBCM events; (3) further enhancements
to Board paper templates to encourage more
openness and how decision-making process
is shaped by LBCM’s values to benefit its
stakeholders, and to deliver LBCM’s purpose;
(4) strengthening Board relationships, with a
particular focus on welcoming new Board
members and offering support through in-depth
and tailored inductions; and (5) a comprehensive
non-executive directors training programme
delivered in 2023 on topics important to the Board
including data ethics, sustainability and consumer
duty. The Board was pleased with the progress
against the actions from the 2022 review.
49Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Corporate governance statement continued
LBCM’s corporate governance statement continued
Principle three – director responsibilities
The Board has established and maintains
corporate governance practices that provide
clear lines of accountability and responsibility to
support effective decision-making through the
Corporate Governance Framework. This also helps
clarify the relationship between the Bank and its
parent company in order to deliver long-term
sustainable success. Policies are also in place in
relation to potential conflicts of interest which may
arise. All directors have access to the services of
the Company Secretary, and independent
professional advice is available to the directors at
the expense of LBG, where they judge it necessary
to discharge their duties as directors.
The Board is supported by its Committees which
make recommendations on matters delegated
to them under the Corporate Governance
Framework which was refreshed in 2023. The
management of all committees is in keeping with
the basis on which meetings of the Board are
managed, with open debate and adequate time
for members to consider proposals which are put
forward. The Chair of the Board and each of its
Committees assumes responsibility with support
from the Company Secretary for the provision to
each meeting of accurate and timely information.
Principle four – opportunity and risk
The Board oversees the development and
implementation of the Bank’s strategy, within the
context of the wider strategy of LBG. Consideration
is given to strategic opportunities, and the
Board’s annual cycle of meetings includes
‘steering’ agenda items dedicated to debating
the Bank’s strategic priorities and business
updates and key risk areas, as well as one
meeting focused on strategy.
The Board is also responsible for the long-term
sustainable success of the Bank, ensuring it
generates value for its shareholder and delivers
a positive contribution to society.
The Board agrees the Bank’s culture, purpose,
values and strategy within those set by LBG, and
sets expectations for risk management, financial
performance and reporting. The specific aims
and objectives of the Board are formalised within
the Bank’s Corporate Governance Framework,
which also sets out the key decisions and matters
reserved for the Board’s approval.
Strong risk management is central to the
Bank’s strategy along with a robust risk control
framework which acts as the foundation for
sustainable business growth. The Board agrees
the Bank’s risk appetite, within the overarching risk
appetite of LBG, and monitors the effectiveness of
risk management with the support of the Board
Risk Committee. Board-level engagement,
coupled with the direct involvement of senior
management ensures that escalated risk issues
are promptly addressed and remediation plans
are initiated where required.
The Bank’s risk appetite, principles, policies,
procedures, controls and reporting are managed
in conjunction with those of LBG and are regularly
reviewed to ensure they remain in line with
regulations, law, corporate governance, and
industry best practice. The Bank’s principal risks
are discussed further in the strategic report.
Principle five – remuneration
The Remuneration Committee of the Board
is responsible for reviewing and making
recommendations to the Board on the
remuneration policy for the Bank. This includes
reviewing performance and approving
remuneration arrangements ranging from the
remuneration of directors and members of the
executive to that of all other colleagues where
the regulators require the Bank to implement a
specific approach to their remuneration, such as
senior managers and other material risk takers.
The activities of the Remuneration Committee
extend to matters of remuneration relevant to
subsidiaries of LBCM, taking into account the
principles, policies and governance requirements
of LBG and the recommendations of LBG’s Group
Remuneration Committee.
Principle six – stakeholders
The Bank, as part of LBG, operates under LBG’s
wider responsible business approach, which
acknowledges that the Bank has a responsibility
to help address the economic, social and
environmental challenges which the UK faces,
and as part of this understand the needs of the
Bank’s external stakeholders, including in the
development and implementation of strategy.
Central to this is LBG’s purpose Helping Britain
Prosper by connecting the UK and LBG with the
world by building a more inclusive, sustainable
future for all: driving long-term, profitable growth
by shaping finance as a force for good.
The workforce, as a key stakeholder, includes the
Bank’s permanent employees, contingent workers
and third-party suppliers delivering services
to customers and supporting key business
operations. This also includes LBG colleagues
providing services to the Bank under the shared
service model. The Board’s approach to workforce
engagement includes an annual programme of
engagement activity and oversight of policies on
remuneration structures and practices that take
account of the broader operating context,
including the pay and conditions of the wider
workforce and the Bank’s response to matters
such as any gender pay gap.
50Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Other disclosures
Other disclosures relating to directors
Appointment and retirement of directors
The appointment of directors is governed by the Bank’s articles of association and the Companies Act
2006. The Bank’s articles of association may only be amended by a special resolution of the shareholder
in a general meeting.
Directors
The names of the current directors are shown in this report on pages 41 to 43. Changes to the
composition of the Board since 1 January 2023 up to the date of this report are shown in the table below.
Joined the Board Left the Board
Carla Antunes da Silva (executive director) 1 February 2023
Mark C Basten 9 February 2023
Eduardo J Stock
da Cunha
31 January 2023
In February 2024, Lord Lupton announced his decision to retire from his position with LBG and as Chair of
the Bank at the close of LBG’s AGM on 16 May 2024. Lord Lupton is the inaugural Chair of the Bank having
led the Board since LBCM’s inception and has steered it through the early years as it developed, grew and
matured. John Owen, Senior Independent Director, who has also been a non-executive director of LBCM
since inception, will take on the position of Interim Chair until Lord Lupton’s successor, Nathan Bostock,
commences in role as Chair with effect from 1 August 2024 (subject to regulatory approval). Nathan has
worked in financial services for four decades and brings a wealth of experience from his previous roles
including, most recently, CEO of Santander UK from 2014 to 2022. He previously held executive roles at
RBS and, before that, served on the board of Abbey National. The Board looks forward to welcoming
Nathan to LBCM.
Directors’ indemnities and directors’ and officers’ liability insurance
The directors of the Bank, including the former director who resigned during the year, have entered into
individual deeds of indemnity with LBG which constitute ‘qualifying third-party indemnity provisions’ for
the purposes of the Companies Act 2006. The deeds were in force during the whole of the financial year
or from the date of appointment in respect of the directors who joined the Board during 2023. Directors
no longer in office but who served on the Board at any time in the financial year had the benefit of this
deed of indemnity during that period of service. The indemnity remains in force for the duration of a
director’s period of office. The deeds indemnify the directors to the maximum extent permitted by law.
In addition, LBG has appropriate directors and officers liability insurance cover which was in place
throughout the financial year. Deeds for existing directors are available for inspection at the Bank’s
registered office.
LBG has also granted deeds of indemnity by deed poll and by way of entering into individual deeds, which
constitute ‘qualifying third-party indemnity provisions’ to the Directors of LBG’s subsidiary companies,
including former directors who retired during the year, and to colleagues subject to the provisions of the
Senior Managers and Certification Regime. Such deeds were in force during the financial year ended
31 December 2023 and remain in force as at the date of this report. Qualifying pension scheme indemnities
were granted to the Trustees of the Lloyds Banking Group’s Pension Scheme relevant to the Bank, which were
in force during the financial year ended 31 December 2023 and remain in force as at the date of this report.
Change of control
The Bank is not party to any significant agreements which take effect, alter or terminate upon a change of
control of the Bank following a takeover bid. There are no agreements between the Bank and its directors or
employees providing compensation for loss of office or employment that occurs because of a takeover bid.
Directors’ interests
The directors do not have any direct interest in the shares of the Bank. Lord Lupton is also a director of LBG.
Lord Lupton’s interest in shares of LBG is shown in the report and accounts of that company.
Conflicts of interest
The Board has a comprehensive procedure for reviewing and, as permitted by the Companies Act 2006
and the Bank’s articles of association, approving actual and potential conflicts of interest. Directors have
a continuing duty to notify the Chair and the Company Secretary as soon as they become aware of
actual or potential conflict situations. Changes to the commitments of all directors are reported to
the Board via Nomination and Governance Committee and a register of potential conflicts and time
commitments is regularly reviewed and authorised by that Committee on behalf of the Board to ensure
the authorisation status remains appropriate.
Lord Lupton is a senior adviser to Greenhill Europe, an investment bank focused on providing financial
advice on significant mergers, acquisitions, restructurings, financings and capital raising to corporations,
partnerships, institutions and governments. The Board has recognised that potential conflicts may arise as
a result of this position. The Board has authorised the potential conflicts and requires Lord Lupton to recuse
himself from discussions, should the need arise.
Andrew McIntyre is NED, senior independent director and Chair of the Audit and Risk Committee of C.
Hoare & Co., a UK regulated private bank, and NED and Chair of Audit Committees of Target Group Limited
and its subsidiaries, a wholly owned subsidiary group of Tech Mahindra Limited based in India which
provides transformational outsourcing, business process management and managed services to the
financial services sector. The Board has recognised that potential conflicts may arise in relation to these
positions. The Board has authorised the potential conflicts and requires Andrew McIntyre to recuse
himself from discussions, should the need arise.
51Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Eve Henrikson is NED and member of the Audit & Financial and Remuneration Committees of Sonae, SGOS,
SA, a Portuguese publicly listed entity which is a diversified enterprise with presence in a number of areas
including financial services. The Board did not consider that the position would result in any actual conflict
of interest but, for the sake of good order, authorised the potential conflicts and time commitments.
Carla Antunes da Silva is an executive director and CEO of the Bank and has also taken on a role to
provide guidance and advice on strategy to the LBG Corporate and Institutional Banking business unit
which includes the Bank and Ring-Fenced Bank. Whilst this is a permitted interest under the Bank’s
articles of association, for the sake of good order the Board authorised the potential conflict and time
commitment that may arise as a result of the role and requires Carla to recuse herself from discussions
should the need arise.
The following NEDs hold executive roles within LBG and whilst these are permitted interests under the
Bank’s articles of association, for the sake of good order the Board authorised the potential conflicts that
may arise as a result of those roles and required the individuals listed below to recuse themselves from
discussions, should the need arise. These individuals do not act as representative of LBCM’s sole
shareholder, LBG, in their capacity as NEDs of the Bank’s Board:
Name LBG Role
Cecile Hillary Group Treasurer, Lloyds Banking Group
Rose M St Louis Protection Director, Insurance Pensions and Investments and Chief Executive
of Cavendish Online Limited
Other disclosures continued
Other disclosures relating to directors continued
“LBCM’s growth opportunity,
as an integral part of CIB and
LBG, is focused on meeting
more needs of our corporate
and institutional clients, as
well as connecting more of
these relationships to the
rest of our LBG offering.”
John Winter,
Corporate and Institutional Banking CEO
52Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Other disclosures continued
Other statutory and regulatory reporting
Results
The consolidated income statement on page
63 in this annual report and accounts shows
a statutory profit before tax for the year
ended 31 December 2023 of £427 million
(year ended 31 December 2022: £477 million).
Dividends
During the year the Bank did not pay an interim
dividend (2022: £220 million). The directors have
not recommended a final dividend for the year
ended 31 December 2023. In March 2024 the
directors approved the payment of an interim
dividend of £450 million which will be paid by
the end of April 2024. Refer note 26 on page 93.
Share capital
Information about share capital is shown in note
22 on page 92. This information is incorporated
into this report by reference.
The Bank did not repurchase any of its own
shares during the year and there are no
restrictions on the transfer of shares in the Bank
other than set out in the articles of association
and certain restrictions which may from time to
time be imposed by law and regulations.
Post balance sheet events
Details of events after the balance sheet date are
set out in note 36 on page 126.
Going concern
The going concern of the Bank and LBCM Group
is dependent on successfully funding their
respective balance sheets and maintaining
adequate levels of capital.
In order to satisfy themselves that the Bank
and LBCM Group have adequate resources to
continue to operate for the foreseeable future,
the directors have reviewed the Bank and LBCM
Group’s operating plan and its funding and
capital positions, including a consideration of
the implications of climate change. The directors
have also taken into account the impact of
further stress scenarios. Accordingly, the directors
conclude that the Bank and LBCM Group have
adequate resources to continue in operational
existence for a period of at least 12 months
from the date of the approval of the financial
statements and therefore it is appropriate
to continue to adopt the going concern basis
in preparing the accounts.
Branches, future developments and financial
risk management objectives and policies
LBCM provides a wide range of banking and
financial services through branches and offices
in the UK, US, Germany, and the Crown
Dependencies. The Bank has six branches in the
Crown Dependencies following a strategic review
in 2022 to reduce the branches footprint from
nine to six. The banking licence for the Singapore
branch was surrendered at the end of 2022 with
all activities ceasing in early 2023.
Information regarding future developments
and financial risk management objectives and
policies of LBCM in relation to the use of financial
instruments that would otherwise be required to
be disclosed in the directors’ report, and which
is incorporated into this report by reference, can
be found in the strategic report.
Information required under DTR 7.2
Certain information is incorporated into this report
by reference. Information about internal control and
risk management systems relating to the financial
reporting process can be found on page 37.
Information about share capital is shown in the
notes to these accounts. The Bank is a wholly
owned subsidiary of LBG, which holds all of the
Bank’s issued ordinary share capital.
The directors manage the business of the Bank
under the powers set out in the Companies Act
2006 and the Bank’s articles of association. These
powers include those in relation to the issue or
buy back of the Bank’s shares.
Research and development activities
During the ordinary course of business, LBCM
develops new products and services within its
business units.
Employees
LBCM employed an average of 837 colleagues
(note 7) during 2023 (2022: 850) reflecting
colleagues based in the US, Germany and Crown
Dependencies. Information concerning the
employees of LBG is available in the LBG’s 2023
annual report and accounts.
Supporting disability
As part of LBG, the Bank aims to be a leader in
disability inclusion and to create an inclusive
and accessible working environment in which all
colleagues feel psychologically and physically safe,
have access to equal opportunities and where
everyone is supported to reach their full potential.
LBG continues to hold the Business Disability Forum
Gold Standard accreditation and Leading Disability
Confident status from the Department for Work
and Pensions. LBG offers bespoke training, career
development and adjustments for colleagues and
applicants with disabilities, including those who
became disabled while employed. LBCM leverages
the activities within LBG whenever possible. For
more details on this refer to page 31 of the LBG
annual report and accounts. During 2023 there has
been additional focus on increasing the awareness
and understanding of visible and non-visible
disabilities, with bespoke content delivered
to all colleagues, including a spotlight on the
support available.
Sustainability
Refer to the sustainbility section within the
strategic report (pages 21-22) for details of
LBCM’s sustainability progress, along with
references to LBG’s sustainability report. The
report covers LBG’s progress against the Task
Force on Climate related Financial Disclosures
(TCFD) recommendations and recommended
disclosures, along with our approach to
addressing the broader environmental and
associated governance areas. Alongside
TCFD disclosures, the report includes the LBG
climate transition plan, which is informed by
emerging guidance.
LBCM have taken advantage of the exemption
from the Companies (Strategic Report) (Climate-
related Financial Disclosure) Regulations 2022
reporting requirements in respect of its own
Strategic Report, as the required disclosures are
included in the 2023 annual report and accounts
of its ultimate parent company, Lloyds Banking
Group plc, available at www.lloydsbankinggroup.
com/investors/financial-downloads.html.
53Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Other disclosures continued
Other statutory and regulatory reporting continued
Streamlined energy and carbon reporting
The Bank has taken advantage of the exemption
from Streamlined Energy and Carbon Reporting
(SECR) reporting requirements in its own directors’
report as it is covered by the LBG SECR report
in the Lloyds Banking Group plc 2023 annual
report and accounts available at
www.lloydsbankinggroup.com/investors/
financial-downloads.html.
Significant contracts
LBCM has a shared service contract with Lloyds
Bank plc for the provision of services (note 7). Details
of related party transactions are set out in note 28.
Statement of directors’ responsibilities
The directors are responsible for preparing the
annual report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare
financial statements for each financial year.
Under that law, the directors are required to
prepare the Bank’s and the Group’s financial
statements in accordance with international
accounting standards in conformity with the
requirements of the Companies Act 2006.
Under company law, the directors must not
approve the financial statements unless they are
satisfied that they give a true and fair view of the
state of affairs of the Bank and the Group and of
the profit or loss of the Bank and the Group for
that period. In preparing these financial
statements, the directors are required to properly
select and apply accounting policies; present
information, including accounting policies in
a manner that provides relevant, reliable,
comparable and understandable information;
provide additional disclosures when compliance
with the specific requirements in international
accounting standards in conformity with the
requirements of the Companies Act 2006 are
insufficient to enable users to understand the
impact of particular transactions, other events
and conditions on the entity’s financial position
and financial performance; and make an
assessment of the Bank’s ability to continue
as a going concern.
The directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the Bank’s transactions and
disclose with reasonable accuracy at any time
the financial position of the Bank and the Group
and enable them to ensure that the financial
statements comply with the Companies Act 2006.
They are also responsible for safeguarding the
assets of the Bank and the Group and hence for
taking reasonable steps for the prevention and
detection of fraud and other irregularities.
A copy of the financial statements is placed on
the website www.lloydsbankinggroup.com/
investors/financial-downloads.html. The directors
are responsible for the maintenance and integrity
of all information relating to the Bank on that
website. Legislation in the UK governing the
preparation and dissemination of financial
statements may differ from legislation in
other jurisdictions.
Each of the current directors who are in office
as at the date of this report, and whose names
and functions are listed in the directors’ report on
pages 41 to 43, confirm that, to the best of his
or her knowledge:
•
The Bank’s and the Group’s financial
statements, which have been prepared in
accordance with international accounting
standards in conformity with the requirements
of the Companies Act 2006 give a true and fair
view of the assets, liabilities, financial position
and profit or loss of the Bank and the Group.
•
The strategic report and the directors’ report,
includes a fair review of the development and
performance of the business and the position
of the Bank and the Group together with a
description of the principal risks and
uncertainties they face.
•
The annual report and accounts, taken as a
whole, are fair, balanced, and understandable
and provides the information necessary for
shareholders to assess the Bank’s and the
Group’s position, performance, business model
and strategy. The directors have also separately
reviewed and approved the strategic report.
Independent auditors and audit information
Each person who is a director at the date of
approval of this report confirms that, so far as the
director is aware, there is no relevant audit
information which the Bank’s auditor is unaware
and each director has taken all the steps that he or
she ought to have taken as a director to make
himself or herself aware of any relevant audit
information and to establish that the Bank’s auditor
is aware of that information. This confirmation is
given and should be interpreted in accordance
with the provisions of the Companies Act 2006.
Deloitte LLP were re-appointed as external
auditors at the annual general meeting on
14 June 2023 and will hold office until conclusion
of the next general meeting at which accounts
are laid before the Bank.
Financial statements
The financial statements were approved by
the Board and signed on its behalf by
Julienne Daglish
Director
19 March 2024
Lloyds Bank Corporate Markets plc
Registered in England and Wales
Company number 10399850
54Lloyds Bank Corporate Markets plc Annual Report and Accounts 2023
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Other informationStrategic report
Financial
statements
Independent auditors’ report 55
Consolidated income statement 63
Statements of comprehensive income 63
Balance sheets 64
Statements of changes in equity 65
Cash flow statements 67
Notes to the consolidated financial
statements 68
1. Basis of preparation 68
2. Accounting policies 68
3. Critical accounting judgements and
key sources of estimation uncertainty 72
4. Net interest income 73
5. Net fee and commission income 73
6. Net trading income 73
7. Operating expenses 74
8. Auditors’ remuneration 74
9. Impairment 75
10. Tax 75
11. Derivative financial instruments 79
12. Loans and advances to customers 82
13. Finance lease receivables 84
14. Allowance for expected credit losses 85
15. Property, plant and equipment 90
16. Investment in subsidiary undertakings
of the Bank 91
17. Other assets 91
18. Debt securities in issue 91
19. Other liabilities 91
20. Other provisions 91
21. Subordinated liabilities 92
22. Share capital 92
23. Other reserves 92
24. Retained profits 93
25. Other equity instruments 93
26. Dividends on ordinary shares 93
27. Share-based payments 93
28. Related party transactions 95
29. Contingent liabilities, commitments
and guarantees 97
30. Measurement basis of financial
assets and liabilities 98
31. Fair values of financial assets
and liabilities 102
32. Offsetting of financial assets
and liabilities 112
33. Financial risk management 114
34. Capital 124
35. Cash flow statements 125
36. Events since the balance sheet date 126
37. Other information 126
Financial statements and notes to the
consolidated financial statements for
the year ended 31 December 2023
Independent auditor’s report
to the members of Lloyds Bank Corporate Markets plc
Report on the audit of the financial statements
1. Opinion
In our opinion:
• the financial statements of Lloyds Bank Corporate Markets plc (the ‘Bank’) and its subsidiaries (the ‘Group’ or ‘LBCM’)
give a true and fair view of the state of the Group’s and of the Bank’s affairs as at 31 December 2023 and of the
Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with United Kingdom adopted
international accounting standards and International Financial Reporting Standards (IFRSs) as issued by the
International Accounting Standards Board (‘IASB’);
• the Bank financial statements have been properly prepared in accordance with United Kingdom adopted
international accounting standards and as applied in accordance with the provisions of the Companies Act 2006;
and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise the:
• consolidated income statement;
• consolidated and Bank statements of comprehensive income;
• consolidated and Bank balance sheets;
• consolidated and Bank statements of changes in equity;
• consolidated and Bank cash flow statements; and
• notes 1 to 37 to the financial statements, which include the accounting principles and policies.
The financial reporting framework that has been applied in the preparation of the Group financial statements is
applicable law, United Kingdom adopted international accounting standards, and as regards the Bank’s financial
statements, as applied in accordance with the provisions of the Companies Act 2006.
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the
financial statements section of our report.
We are independent of the Group and the Bank in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as
applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with
these requirements. The non-audit services provided to the Group and Bank for the year are disclosed in note 8 to the
financial statements. We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical
Standard to the Group or the Bank.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit
matters
The key audit matters that we identified in the current year were:
i. expected credit losses (Group and Bank);
ii. valuation of complex and illiquid financial instruments held at fair value (Group and Bank); and
iii. IT systems that impact financial reporting (Group and Bank).
Our assessment of the level of risk for each of these areas has remained consistent with the prior year.
Materiality Overall materiality used for the Group consolidated financial statements was £38.8 million, which was
determined on the basis of net assets.
Overall materiality used for the Bank financial statements was £38.8 million, which was determined on
the basis of net assets and capped at Group materiality.
Scoping Our audit scope covers 99 per cent of the Group’s revenue, 94 per cent of the Group’s profit before tax,
99 per cent of the Group’s total assets and 99 per cent of the Group’s total liabilities.
Our audit approach
Our audit approach is risk focused and structured to reflect the Group’s organisation. It can be summarised into the
following key activities that we used to obtain sufficient audit evidence required to form our opinion on the Group
and Bank financial statements:
• Audit planning and risk assessment
Our audit planning procedures considered the impact of internal and external factors affecting the Group’s
profitability and operations, key audit matters most relevant to the users of the financial statements, the appropriate
scope of audit work performed as well as the expectations and requirements of the Group’s investors and regulators.
In performing our audit risk assessments, we considered the impact of macroeconomic factors on the Group’s key
accounting judgements and sources of estimation uncertainty. The key factors considered in our risk assessments
were:
i. the impact of high interest rates, high inflation and cost of living pressures on the Group’s ECL and valuation of
certain illiquid and complex financial instruments; and
ii. changes to the regulatory and litigation environment affecting the Group’s financial reporting.
We obtained the knowledge and information required to inform our audit planning and risk assessment decision
making through regular meetings with Group Finance and the extensive use of data and technology.
• Audit work executed at component level
We have identified components based on the Group’s operating segments. The following components were subject
to audit procedures; the overseas component teams based in US, and Crown Dependencies. The Group audit team
was in active dialogue throughout the audit with the component audit teams responsible for the audit work under
the direction and supervision of the Group audit team. This included determining whether the work was planned and
performed in accordance with the overall Group audit strategy and the requirements of our Group audit instructions
to the components. We were able to satisfy ourselves that our oversight and supervision was appropriate through in-
person meetings, video-conferencing, direct onsite reviews of work completed and we have continued to attend the
quarterly meetings that our components have held with the local management.
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• Audit procedures undertaken at both Group level and Bank level
We also performed audit work on the Group and Bank financial statements, including the consolidation of the Group’s
results, and the preparation of the financial statements, as well as the Group’s entity level and oversight controls
relevant to financial reporting. Entities not covered by our audit scope are subject to analytical procedures to confirm
our conclusion that there were no significant risks of material misstatement in the aggregated financial information.
• Internal controls testing approach
Our internal controls testing approach was informed by our scoping and risk assessment activities. We have
assessed the Group’s end-to-end financial reporting processes supporting all in-scope financial statement balances
and identified relevant controls to test. This included the testing of general IT controls, process level controls and
entity level controls at the Group-level.
• The impact of climate change on our audit
In planning our audit, we have considered the impact of climate change on the Group’s operations and subsequent
impact on its financial statements. The Group sets out its assessment of the potential impact in note 3 of the Annual
Report.
In conjunction with our climate risk specialists, we have held discussions with the Group to understand their:
– process for identifying affected operations, including the governance and controls over this process, and the
subsequent effect on the financial reporting for the Group; and
– long-term strategy to respond to climate change risks and how this is factored into the Group’s forecasts.
Our audit work has involved:
– evaluating climate risk as a factor in risk assessment for potentially affected balances;
– challenging the completeness of the physical and transition risks identified and considered in the Group’s climate
risk assessment and the conclusion that there is no material impact of climate change risk on the current year
financial reporting;
– reviewing the Group’s qualitative portfolio analysis, and challenging the key assumptions used by the Group with
reference to our own understanding of the portfolios and publicly available documentation; and
– assessing disclosures in the Annual Report, and challenging the consistency between the financial statements and
the remainder of the Annual Report.
We have not been engaged to provide assurance over the accuracy of climate change disclosures. As part of our
audit procedures we are required to read and consider these disclosures to consider whether they are materially
inconsistent with the financial statements or knowledge obtained in the audit and we did not identify any material
inconsistencies as a result of these procedures.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group’s and the Bank’s ability to continue to adopt the going
concern basis of accounting included:
• using our knowledge of the Group and Bank, the financial services industry, the financial services regulatory
environment and the general economic environment including, macroeconomic pressures affecting the Group’s
operations, to identify inherent risks in the business model and how such risks might affect the financial resources
or ability to continue operations over the going concern period;
• making enquiries of Group management about the assumptions, including climate risk considerations, used in their
going concern models, and assessing the reasonableness of those assumptions and historical forecasting
accuracy;
• evaluating the Group’s strategic plans in light of the changing macroeconomic environment, short and longer term
financial budgets, funding, liquidity and capital adequacy plans including internal stress tests;
• considering the Group’s and the Bank’s operational resilience;
• reading industry data, Bank of England reports and other external information to determine if it provided
corroborative or contradictory evidence in relation to the Group’s and the Bank’s assumptions;
• reviewing correspondence and meeting with prudential and conduct regulators to assess whether there are any
matters that may impact the going concern assessment;
• testing the underlying data generated to prepare the forecast scenarios and determined whether there was
adequate support for the assumptions underlying the forecasts; and
• evaluating the Group’s disclosures on going concern against the requirements of IAS 1 - Presentation of Financial
Statements.
Based on the work we have performed. we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group's and Bank’s ability to continue as
a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the
overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
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Expected credit losses (Group and Bank)
Key audit matter description How the scope of our audit responded to the key audit
matter
Refer to notes 2, 3, 9, 12, 14 and 33 in the financial
statements
The Group has recognised £30.8 million of expected
credit losses (“ECL”) as at 31 December 2023. The
determination of ECL consists of a number of
assumptions that are inherently uncertain and require a
high degree of complex and subjective auditor
judgement, specialised skills and knowledge, complex
impairment modelling. Specifically, the impact of high
interest rates and inflation, including refinancing risk on
the ECL have been particularly judgemental in the
current economic environment.
The key areas we identified as having the most
significant level of management judgement were in
respect of:
• Multiple Economic Scenarios (‘MES’);
• Collectively assessed loans; and
• In-model adjustments (‘IMA’s’) and post-model
adjustments (‘PMA’)
Key audit matter description (continued) How the scope of our audit responded to the key audit
matter (continued)
Multiple economic scenarios
The measurement of expected credit losses is required
to reflect an unbiased probability-weighted range of
possible future outcomes.
The Group’s economics team develops the future
economic scenarios. Firstly, a base case forecast is
produced based on a set of conditioning assumptions,
which are designed to reflect the Group’s best view of
future events. A full distribution of economic scenarios
around this base case is produced using a Monte Carlo
simulation and scenarios within that distribution are
ranked using estimated relationships with industry-wide
historical loss data.
In addition to the base case, three scenarios are derived
from the distribution as averages of constituent
modelled scenarios around the 15th, 75th and 95th
percentiles of the distribution which corresponds to an
upside, a downside and a severe downside, respectively.
The severe downside is then adjusted to incorporate
non-modelled paths for inflation and interest rate
assumptions. The upside, base case and downside
scenarios are weighted at 30 per cent and the severe
downside at 10 per cent.
These four scenarios are then used as key assumptions
in the determination of the ECL allowance.
The development of these multiple economic scenarios
is inherently uncertain, highly-complex and requires
significant judgement.
The principal consideration for our determination that
the multiple economic scenarios is a key audit matter
was the high degree of management judgement which
required specialised auditor knowledge and a high
degree of audit effort in areas such as evaluating the
forward-looking information used by management and
the weighting applied.
We performed the following procedures:
• Tested the controls over the generation of the multiple
economic scenarios including those over the Group’s
governance processes to determine the base case,
different scenarios and the weightings applied to each
scenario;
• Working with our internal economic specialists:
◦ challenged and evaluated economic forecasts in the
base scenario such as the UK and US unemployment
rate, commercial real estate price growth, inflation
and forecasted interest rates, and Gross Domestic
Product in the UK and in the US through comparison
to independent economic outlooks, external analysts
and market data;
◦ challenged and evaluated the appropriateness of
management’s change in both assumptions and the
model;
◦ challenged and evaluated the appropriateness of
the methodology applied to generate alternative
macroeconomic scenarios, and including associated
weightings and assumptions within; and
◦ independently replicated the multiple economic
scenario model for UK variables and compared the
outputs of our independent model to the Group’s
output to re-test scenario generation;
• tested the completeness and accuracy of the data
used by the model;
• performed a stand-back assessment of the
appropriateness of the weightings applied to each of
the scenarios based on publicly available data; and
• evaluated the appropriateness of disclosures in
respect of significant judgements and sources of
estimation uncertainty, including macroeconomic
scenarios.
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Key audit matter description (continued) How the scope of our audit responded to the key audit
matter (continued)
Collectively assessed ECL
Except for individually assessed stage 3, The ECL is
determined on a collective basis using impairment
models.
These models use a number of significant judgements to
calculate a probability weighted estimate by applying a
probability of default, exposure at default and a loss
given default, taking account of collateral held or other
loss mitigants, discounted using the effective interest
rate.
The key judgements and estimates in determining the
ECL include:
• modelling approach, modelling simplifications and
judgements, and selection of modelling data;
• credit risk ratings which are performed on a
counterparty basis for larger exposures by a credit
officer; and
• the appropriate allocation of assets into the correct
staging taking into account any significant
deterioration
We tested the controls across the process to determine
the ECL provisions including:
• model governance including model validation;
• model assumptions;
• the allocation of assets into stages, including those to
determine the credit risk rating; and
• data accuracy and completeness
Working with our internal modelling specialists, our audit
procedures over the key areas of estimation covered the
following:
• model estimations, where we:
– evaluated the appropriateness of the modelling
approach and assumptions used;
– independently replicated the models for a sample of
portfolios and compared the outputs of our
independent models to the Group’s outputs;
– assessed model performance by evaluating
variations between observed data and model
predictions;
– developed an understanding and assessed model
limitations and remedial actions’ and
– tested the completeness and accuracy of the data
used in model execution and calibration.
• allocation of assets into stages, where we:
– evaluated the appropriateness of quantitative and
qualitative criteria used for allocation into IFRS 9
stages, including independently assessing the credit
rating of loans;
– tested the appropriateness of the stage allocation for
a sample of exposures; and
– tested the data used by models in assigning IFRS 9
stages and evaluated the appropriateness of the
model logic used.
Key audit matter description (continued) How the scope of our audit responded to the key audit
matter (continued)
In-model adjustments (‘IMAs’) and post-model
adjustments (‘PMA’) and loans individually
assessed
Adjustments are made to models to address known
model and data limitations, and emerging or non-
modelled risks. The current economic environment,
characterised by elevated cost of living pressures on
borrowers and high inflation, has increased the
uncertainty of credit losses. As a result, the amount and
timing of adjustments recognised in the model to
account for the impacts of the current economic
environment are highly judgemental and inherently
uncertain.
These adjustments require specialist auditor judgement
when evaluating the:
• completeness of adjustments; and
• methodology, models and inputs used in determining
the relevant adjustments.
Where impairment models do not incorporate all factors
relevant to estimating the ECL, adjustments are made to
address known model limitations and data limitations,
emerging or non-modelled risks and the impact of
economic uncertainty on different industry sectors. The
measurement of judgements around model
adjustments to evaluate the completeness of
adjustments, methodology and model inputs for these
adjustments is highly judgemental and inherently
uncertain.
We tested the controls over the valuation of in-model
and post-model adjustments.
We performed the following audit procedures over a
sample of model adjustments:
• evaluated the methodology, approach and
assumptions in developing the adjustments, and
evaluated the Group’s selection of approach;
• assessed the appropriateness of the model
methodologies, approach and assumptions, including
those used in developing the internal model
adjustments and post model adjustments;
• tested the completeness and accuracy of key data
used in formulating the judgements;
• performed a recalculation of adjustments; and
• evaluated the completeness of adjustments based on
our understanding of both model and data limitations,
including those related to high interest rate and high
inflationary pressures.
Key observations communicated to the Audit Committee
We are satisfied that the ECL provisions are reasonable and recognised in accordance with the requirements of IFRS
9. The calculations are based on appropriate methodologies using reasonable modelled assumptions, including
IMAs and PMAs addressing model shortcomings. Overall, we are comfortable with the Group’s conclusions in
respect of ECL.
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Valuation of certain complex and illiquid financial instruments held at fair value (Group and the
Bank)
Key audit matter description How the scope of our audit responded to the key audit
matter
Refer to notes 2, 3, 11, 31 and 33 in the financial statements
Financial instruments are classified as Level 1, 2 or 3 in
accordance with IFRS 13 ‘Fair value measurement’.
The fair value of complex and illiquid financial
instruments, involves significant judgement. The extent
of judgment applied by the Group in valuing the Group’s
financial investments varies with the nature of assets
held, the markets in which they are traded, and the
valuation methodology applied.
As at 31 December 2023, the Group has £940 million of
complex and illiquid financial instruments, consisting of
long-dated derivative contracts, illiquid debt securities
and loans to customers. The valuation of these Level 3
financial instruments uses complex valuation models as
these are without readily determinable market values
and were valued using significant unobservable inputs
that involved considerable judgment by management.
We consider these judgements to be at risk of
management bias, giving rise to a potential risk of fraud.
We tested the controls over the valuation of financial
instruments, including controls over independent price
verification and model validation controls.
We utilised our valuation specialists in our audit of the
valuation of the Level 3 portfolios and we performed the
following procedures:
• evaluated the appropriateness of derivative contracts
and illiquid debt and loans valuation methodologies;
• calculated an independent valuation for a sample of
modelled Level 3 financial instruments and compared
results of our independent estimates with the valuation
recognised by the Group;
• evaluated the consistency and appropriateness of
inputs and assumptions over time, challenging both
significant movements and non-movements where we
expected change;
• performed a stand back assessment of the
appropriateness of the assumptions, and input data
used in the valuation of Level 3 financial instruments;
and
• assessed the appropriateness of financial instruments
disclosures.
Key observation communicated to the Audit Committee
We are satisfied that the valuation of complex and illiquid financial instruments is reasonable and in accordance
with IFRS 13 Fair value measurement.
IT systems that impact financial reporting (Group and Bank)
Key audit matter description How the scope of our audit responded to the key audit
matter
The Group’s IT environment is inherently complex due to
the number of systems it operates and its reliance on
automated and IT dependent manual controls. Together,
these support a broad range of commercial, treasury
and trading products as well as the processing of the
Group’s significant volume of transactions, which impact
all account balances.
As such, IT systems within the Group form a critical
component of the Group’s financial reporting activities.
Due to the significant reliance on IT systems, effective
General IT Controls (GITCs) are critical to allow reliance
to be placed on the completeness and accuracy of
financial data and the integrity of automated system
functionality, such as system calculations.
We identified the IT systems that impact financial
reporting as a key audit matter because of the:
• pervasive reliance on complex technology that is
integral to the operation of key business processes and
financial reporting;
• reliance on technology which continues to develop in
line with the business strategy, such as the increase in
the use of automation across the Group and
increasing reliance on third parties; and
• importance of the IT controls in maintaining an
effective control environment. A key interdependency
exists between the ability to rely on IT controls and the
ability to rely on financial data, system configured
automated controls and system reports.
IT controls, in the context of our audit scope, primarily
relate to privileged access at the infrastructure level,
user access security at the application level and change
control.
Our IT audit scope included testing the Group’s IT
controls over information systems deemed relevant to
the audit based on the financial data, system configured
automated controls and/or key financial reports that
reside within it.
We used IT specialists to support our evaluation of the
risks associated with IT in the following areas:
• general IT controls, including user access and change
management controls;
• key financial reports and system configured
automated controls; and
• cyber security risk assessment.
Where deficiencies in the IT control environment were
identified, our risk assessment procedures included an
assessment of those deficiencies to determine the
impact on our audit plan. Where relevant, the audit plan
was adjusted to mitigate the unaddressed IT risk.
Where we were able to identify and test appropriate
mitigating controls over affected financial statement
line items, our testing approach remained unchanged.
In a limited number of areas, we adopted a non-controls
reliance approach and we therefore performed
additional substantive procedures.
Key observations communicated to the Audit Committee
We are satisfied that the Group’s overall IT control environment appropriately supports the financial reporting
process and control deficiencies identified in respect of privileged user access to IT infrastructure and in
application user access management were mitigated by compensating business controls.
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6. Our application of materiality
6.1 Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the
economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality
both in planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements Bank financial statements
Materiality £38.8 million (2022: £33.9 million). £38.8 million (2022: £33.9 million).
Basis for
determining
materiality
In determining our benchmark for materiality, we
have considered the metrics used by investors and
other users of the financial statements. We have
determined net assets to be the most relevant to
users of the financial statements.
The Group’s materiality represents 1 per cent of net
assets.
The Bank’s materiality represents 1 per
cent of net assets, and is capped at Group
materiality.
Rationale for
the benchmark
applied
Given the importance of these measures to investors
and users of the financial statements, we have used
net assets as the primary benchmark for our
determination of materiality.
Net assets is a key metric within the financial
statements on which the users, being the owner of the
Group, lenders and regulatory body tends to focus.
Component materiality allocated across all two
components range between £11.6 million and £12.8
million (2022: £10.2 million and £13.6 million).
Given the importance of these measures
to investors and users of the financial
statements, we have used net assets as
the primary benchmark for our
determination of materiality.
Net assets is a key metric within the
financial statements on which the users,
being the owner of the Bank, lenders, and
regulatory body tends to focus.
Component materiality allocated across
all two components range between £11.6
million and £12.8 million (2022: £10.2 million
and £13.6 million).
6.2 Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate,
uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole.
Group financial statements Bank financial statements
Performance
materiality
60 per cent of Group materiality at £23.3 million (2022:
60 per cent of Group materiality at £20.4 million).
60 per cent of Bank materiality at £23.2
million (2022: 60 per cent of Bank
materiality at £20.4 million).
Basis and
rationale for
determining
performance
materiality
In determining performance materiality, we considered the following factors:
a. the quality of the control environment and whether we were able to rely on controls;
b. degree of centralisation and commonality of controls and processes;
c. the uncertain economic environment;
d. the nature, volume and size of uncorrected misstatements arising in the previous audit; and
e. the nature, volume and size of uncorrected misstatements that remain uncorrected in the
current period.
6.3 Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £1.9
million (2022: £1.7 million), as well as any differences below this threshold, which in our view, warranted reporting on
qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing
the overall presentation of the financial statements.
7. Other information
The other information comprises the information included in the Annual Report, other than
the financial statements and our auditor’s report thereon. The Directors are responsible for
the other information contained within the Annual Report. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge
obtained in course of the audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are required to report that fact.
We have nothing
to report in this
regard.
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8. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view, and for such internal control as
the directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Bank’s ability to
continue as a going concern, disclosing as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or the Bank or to cease
operations, or have no realistic alternative but to do so.
9. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
10. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
Identifying and assessing potential risks related to irregularities
In identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-
compliance with laws and regulations, we considered the following:
• the nature of the industry and sector, control environment and business performance including the design of the
Group’s remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
• results of our enquiries of management, in-house legal counsel, internal audit and the Audit Committee, including
obtaining and reviewing supporting documentation, concerning the Group’s policies and procedures relating to:
◦ identifying, evaluating and complying with laws and regulations and whether they were aware of any instances
of non-compliance;
◦ detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or
alleged fraud; and
◦ the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations;
• discussion among the engagement team including significant component audit teams and involving relevant
internal specialists, including tax, valuations, economic, credit risk, IT and industry specialists regarding how and
where fraud might occur in the financial statements and any potential indicators of fraud; and
• understanding of the legal and regulatory frameworks that the Group operates in, focusing on those laws and
regulations that had a direct effect on the financial statements, such as provisions of the UK Companies Act,
pensions legislation and tax legislation or that had a fundamental effect on the operations of the Group, including
regulation and supervisory requirements of the Prudential Regulation Authority, Financial Reporting Council and
Financial Conduct Authority.
Audit response to risks identified
As a result of performing the above, we identified the Group’s determination of ‘expected credit loss’ and ‘valuation of
complex and illiquid financial instruments held at fair value’ as key audit matter related to the potential risk of fraud.
The key audit matters section of our report explains the matter in more detail and also describes the specific
procedures in response to those key audit matter. In common with all audits under ISAs (UK), we are also required to
perform specific procedures to respond to the risk of management override.
In addition to the above, our procedures to respond to risks identified included the following:
• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as having a direct effect on the financial statements;
• enquiring of management, the Audit Committee and in-house legal counsel concerning actual and potential
litigation and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of
material misstatement due to fraud;
• reading minutes of meetings of those charged with governance, reviewing internal audit reports and
correspondence with regulators including Prudential Regulation Authority and Financial Conduct Authority; and
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal
entries and other adjustments; assessing whether the judgements made in making accounting estimates are
indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual
or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team
members including specialists, and component audit teams, and remained alert to any indications of fraud or non-
compliance with laws and regulations throughout the audit.
Report on other legal and regulatory requirements
11. Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the Group and of the Bank and their environment obtained in the
course of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.
12. Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Bank, or returns adequate for
our audit have not been received from branches not visited by us; or
• the Bank’s financial statements are not in agreement with the accounting records and
returns.
We have nothing
to report in
respect of these
matters.
Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain
disclosures of directors’ remuneration have not been made.
We have nothing
to report in
respect of this
matter.
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13. Other matters which we are required to address
Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by shareholders at its annual general
meeting on 18th May 2023 to audit the financial statements of Lloyds Bank Corporate Markets plc for the year ended
31 December 2023 and subsequent financial periods. The period of total uninterrupted engagement of the firm is
accordingly three years.
Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in
accordance with ISAs (UK).
14. Use of our report
This report is made solely to the Bank’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Bank’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Bank and the Bank’s members
as a body, for our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.15R – DTR
4.1.18R, these financial statements will form part of the Electronic Format Annual Financial Report filed on the National
Storage Mechanism of the FCA in accordance with DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance
over whether the Electronic Format Annual Financial Report has been prepared in compliance with DTR 4.1.15R – DTR
4.1.18R.
Alan Chaudhuri (Senior Statutory Auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
19 March 2024
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Consolidated income statement
for the year ended 31 December
Note
| 2023 | 2022 | ||
| £m | £m | ||
Interest income | |||
Interest expense | ( | ( | |
Net interest income | 4 | ||
Fee and commission income | |||
Fee and commission expense | ( | ( | |
Net fee and commission income | 5 | ||
Net trading income | 6 | ||
Other operating income | |||
Other income | |||
Total income | |||
Operating expenses | 7 | ( | ( |
Impairment credit (charge) | 9 | ( | |
Profit before tax | |||
Tax expense | 10 | ( | ( |
Profit for the year | |||
Profit attributable to ordinary shareholders | |||
Profit attributable to other equity holders | |||
Profit for the year |
The accompanying notes are an integral part of the financial statements.
Statements of comprehensive income
for the year ended 31 December
The Group | The Bank | ||||
| 2023 | 2022 | 2023 | 2022 | ||
| Note | £m | £m | £m | £m | |
Profit for the year | 320 | 348 | |||
| Other comprehensive income | |||||
Items that may subsequently be reclassified to profit or loss: | |||||
| Movements in revaluation reserve in respect of debt | |||||
securities held at fair value through other comprehensive income, net of tax | 23 | 2 | – | ||
Movements in cash flow hedging reserve, net of tax | 23 | ( | 230 | (471) | |
Movements in foreign currency translation reserve, net of tax | 23 | ( | (16) | 3 | |
Total other comprehensive income/(loss) for the year, net of tax | ( | 216 | (468) | ||
Total comprehensive income/(loss) for the year | ( | 536 | (120) | ||
Total comprehensive income/(loss) attributable to ordinary shareholders | ( | 456 | (163) | ||
| Total comprehensive income attributable to other equity | |||||
holders | 80 | 43 | |||
Total comprehensive income/(loss) for the year | ( | 536 | (120) |
The accompanying notes are an integral part of the financial statements.
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Balance sheets
at 31 December
The Group | The Bank | ||||
| 2023 | 2022 | 2023 | 2022 | ||
| Note | £m | £m | £m | £m | |
| Assets | |||||
Cash and balances at central banks | 20,201 | 19,382 | |||
Financial assets at fair value through profit or loss | 31 | 21,847 | 14,642 | ||
Derivative financial instruments | 11 | 22,606 | 24,647 | ||
Loans and advances to banks | 1,726 | 2,063 | |||
Loans and advances to customers | 12 | 16,167 | 18,864 | ||
Reverse repurchase agreements | 6,020 | 5,606 | |||
Debt securities | 374 | 305 | |||
Due from fellow Lloyds Banking Group undertakings | 629 | 593 | |||
Financial assets at amortised cost | 24,916 | 27,431 | |||
Financial assets at fair value through other comprehensive income | 31 | – | 6 | ||
Property, plant and equipment | 15 | 38 | 45 | ||
Current tax recoverable | 10 | 2 | |||
Deferred tax assets | 10 | 128 | 226 | ||
Investment in subsidiary undertakings | 16 | 180 | 180 | ||
Other assets | 17 | 449 | 164 | ||
Total assets | 90,375 | 86,725 | |||
| Liabilities | |||||
Deposits from banks | 2,078 | 2,456 | |||
Customer deposits | 29,439 | 29,152 | |||
Repurchase agreements | 1 | 7 | |||
Due to fellow Lloyds Banking Group undertakings | 1,256 | 1,526 | |||
Financial liabilities at fair value through profit or loss | 31 | 19,686 | 12,578 | ||
Derivative financial instruments | 11 | 17,576 | 20,070 | ||
Debt securities in issue | 18 | 15,378 | 16,131 | ||
Other liabilities | 19 | 280 | 558 | ||
Current tax liabilities | 12 | 29 | |||
Other provisions | 20 | 15 | 25 | ||
Subordinated liabilities | 21 | 755 | 761 | ||
Total liabilities | 86,476 | 83,293 |
The Group | The Bank | ||||
| 2023 | 2022 | 2023 | 2022 | ||
| Note | £m | £m | £m | £m | |
| Equity | |||||
Share capital | 22 | 370 | 370 | ||
Other reserves | 23 | ( | ( | (314) | (530) |
| Retained profits | 24 | 3,035 | 2,810 | ||
Ordinary shareholder's equity | 3,091 | 2,650 | |||
Other equity instruments | 25 | 808 | 782 | ||
Total equity | 3,899 | 3,432 | |||
Total equity and liabilities | 90,375 | 86,725 |
1
1 The Bank recorded a profit after tax for the year of £320 million (2022: £348 million).
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Statements of changes in equity
for the year ended 31 December
The Group
| Attributable to ordinary shareholders | ||||||
| Share | Other | Retained | Other equity | |||
| capital | reserves | profits | Total | instruments | Total | |
| £m | £m | £m | £m | £m | £m | |
At 1 January 2022 | ( | |||||
| Comprehensive income | ||||||
Profit for the year | ||||||
| Other comprehensive income/(loss) | ||||||
Movements in revaluation reserve in respect of debt securities held at fair value through other comprehensive income, net of tax | ||||||
Movements in cash flow hedging reserve, net of tax | ( | ( | ( | |||
Movements in foreign currency translation reserve, net of tax | ||||||
Total other comprehensive (loss) | ( | ( | ( | |||
Total comprehensive income/(loss) | ( | ( | ( | |||
| Transactions with owners | ||||||
Dividends (note 26) | ( | ( | ( | |||
Distributions on other equity instruments | ( | ( | ||||
Issue of ordinary shares | ||||||
Total transactions with owners | ( | ( | ( | |||
At 31 December 2022 | ( | |||||
| Comprehensive income | ||||||
Profit for the period | ||||||
| Other comprehensive income/(loss) | ||||||
| Movements in revaluation reserve in respect of debt securities held at fair value through other comprehensive income, net of tax | ||||||
Movements in cash flow hedging reserve, net of tax | ||||||
Movements in foreign currency translation reserve, net of tax | ( | ( | ( | |||
Total other comprehensive income | ||||||
| Total comprehensive income | ||||||
| Transactions with owners | ||||||
Distributions on other equity instruments | ( | ( | ||||
Net issuance of other equity instruments (note 25) | ||||||
Loss on repayment of other equity instruments | ( | ( | ( | |||
Total transactions with owners | ( | ( | ( | ( | ||
At 31 December 2023 | ( |
1
1 Total comprehensive income attributable to owners of the parent was £550 million (2022: loss of £81 million).
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Statements of changes in equity continued
Attributable to ordinary shareholders
Other equity
instruments
£mThe Bank
Share
capital
£m
Other
reserves
£m
Retained
profits
£m
Total
£m
Total
£m
At 1 January 2022 120 (62) 2,725 2,783 782 3,565
Comprehensive income
Profit for the year – – 305 305 43 348
Other comprehensive income/(loss)
Movements in revaluation reserve in respect of debt securities held at fair value through other comprehensive income, net of tax – – – – – –
Movements in cash flow hedging reserve, net of tax – (471) – (471) – (471)
Movements in foreign currency translation reserve, net of tax – 3 – 3 – 3
Total other comprehensive (loss) – (468) – (468) – (468)
Total comprehensive income/(loss) – (468) 305 (163) 43 (120)
Transactions with owners
Dividends (note 26) – – (220) (220) – (220)
Distributions on other equity instruments – – – – (43) (43)
Issue of ordinary shares 250 – – 250 – 250
Total transactions with owners 250 – (220) 30 (43) (13)
At 31 December 2022 370 (530) 2,810 2,650 782 3,432
Comprehensive income
Profit for the year – – 240 240 80 320
Other comprehensive income/(loss)
Movements in revaluation reserve in respect of debt securities held at fair value through other comprehensive income, net of tax – 2 – 2 – 2
Movements in cash flow hedging reserve, net of tax – 230 – 230 – 230
Movements in foreign currency translation reserve, net of tax – (16) – (16) – (16)
Total other comprehensive income – 216 – 216 – 216
Total comprehensive income – 216 240 456 80 536
Transactions with owners
Distributions on other equity instruments – – – (80) (80)
Net issuance of other equity instruments (note 25) – – – – 26 26
Loss on repayment of other equity instruments – – (15) (15) – (15)
Total transactions with owners – – (15) (15) (54) (69)
At 31 December 2023 370 (314) 3,035 3,091 808 3,899
1 Total comprehensive income attributable to owners of the parent was £536 million (2022: loss of £120 million).
The accompanying notes are an integral part of the financial statements. Further details of movements in LBCM’s share capital and reserves are provided in notes 22, 23, 24 and 25.
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Cash flow statements
for the year ended 31 December
The Group | The Bank | ||||
| 2023 | 2022 | 2023 | 2022 | ||
| Note | £m | £m | £m | £m | |
| Cash flows from operating activities | |||||
Profit before tax | 399 | 436 | |||
| Adjustments for: | |||||
Change in operating assets | 35(A) | ( | ( | (3,331) | (1,657) |
Change in operating liabilities | 35(B) | ( | 3,614 | (2,881) | |
Non-cash and other items | 35(C) | ( | 702 | (296) | |
Tax paid | ( | ( | (96) | (58) | |
Net cash (used in)/provided by operating activities | ( | 1,288 | (4,456) | ||
| Cash flows from investing activities | |||||
Purchase of financial assets | ( | ( | (3) | (27) | |
Proceeds from sale and maturity of financial assets | 10 | 132 | |||
Purchase of fixed assets | ( | ( | (2) | (5) | |
Dividends received from subsidiaries | – | 22 | |||
Net cash (used in)/provided by investing activities | 5 | 122 | |||
| Cash flows from financing activities | |||||
Dividends paid to ordinary shareholders | 26 | ( | – | (220) | |
Distributions on other equity instruments | 25 | ( | ( | (80) | (43) |
Issue of ordinary shares | — | 250 | |||
Interest paid on subordinated liabilities | ( | ( | (58) | (25) | |
Finance Leases | ( | ( | (5) | (8) | |
Proceeds from issue of subordinated liabilities | 21 | 299 | – | ||
Repayment of subordinated liabilities | 21 | ( | (284) | – | |
Loss on repayment of other equity instruments | 24 | ( | (15) | – | |
Issue of other equity instruments | 25 | 289 | – | ||
Repurchases and redemptions of other equity instruments | 25 | ( | (263) | – | |
Net cash (used in)/provided by financing activities | ( | ( | (117) | (46) | |
Effect of exchange rate changes on cash and cash equivalents | ( | (403) | 693 | ||
Change in cash and cash equivalents | ( | 773 | (3,687) | ||
Cash and cash equivalents at beginning of year | 19,396 | 23,083 | |||
Cash and cash equivalents at end of year | 35(D) | 20,169 | 19,396 |
The accompanying notes are an integral part of the financial statements.
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Notes to the accounts
Note 1: Basis of preparation
The financial information has been prepared under the historical cost convention, as modified by the revaluation
financial assets measured at fair value through other comprehensive income, trading securities and certain other
financial assets and liabilities at fair value through profit or loss and all derivative contracts. The Directors consider
that it is appropriate to continue to adopt the going concern basis in preparing the financial statements. In reaching
this assessment, the Directors have considered the implications of climate change upon LBCM’s performance and
projected funding and capital position. The Directors have also taken into account the impact of further stress
scenarios.
With the exception of the minor amendments detailed below, as at 19 March 2024 these pronouncements have been
endorsed for use in the UK.
Future accounting developments
The following pronouncements are not applicable for the year ending 31 December 2023 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.
Minor amendments to other accounting standards
The IASB has issued a number of minor amendments to IFRSs effective 1 January 2024, including IFRS 16 Lease Liability
in a Sale and Leaseback, IAS 1 Non-current Liabilities with Covenants, and IAS 1 Classification of Liabilities as Current or
Non-current. These amendments are not expected to have a significant impact on the Group and have been
endorsed for use in the UK.
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Note 2: Accounting policies continued
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Note 2: Accounting policies continued
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Note 2: Accounting policies continued
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Note 2: Accounting policies continued
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| 2023 | 2022 | |
| £m | £m | |
| Interest income: | ||
| Loans and advances to banks | 1,066 | 360 |
Loans and advances to customers | 1,430 | 698 |
Reverse repurchase agreements | 179 | 23 |
Debt securities | 21 | 6 |
| Total interest income | 2,696 | 1,087 |
| Interest expense: | ||
Deposits from banks | (78) | (71) |
Customer deposits | (1,224) | (351) |
Repurchase agreements at amortised cost | – | (14) |
| Debt securities in issue | (1,136) | (345) |
Lease liabilities | (2) | (2) |
Subordinated liabilities | (58) | (29) |
| Total interest expense | (2,498) | (812) |
Net interest income | 198 | 275 |
Note 5: Net fee and commission income
| 2023 | 2022 | |
| £m | £m | |
| Fee and commission income: | ||
Current accounts | 3 | 4 |
Debit card fees | 5 | 5 |
Commercial banking and treasury fees | 292 | 217 |
Other fees and commissions | 3 | 2 |
Total fee and commission income | 303 | 228 |
Fee and commission expense | (39) | (36) |
Net fee and commission income | 264 | 192 |
Fees and commissions are an integral part of the effective interest rate and form part of net interest income shown
in note 4. Fees and commissions relating to instruments that are held at fair value through profit or loss are included
within net trading income shown in note 6.
In determining the disaggregation of fees and commissions LBCM has considered how the nature, amount, timing
and uncertainty of revenue and cash flows are affected by economic factors, including those that are impacted by
climate-related factors. It has determined that the above disaggregation by product type provides useful
information that does not aggregate items that have substantially different characteristics and is not too detailed.
At 31 December 2023, LBCM held on its balance sheet £4 million (31 December 2022: £6 million) in respect of services
provided to customers and £nil (31 December 2022: £nil) in respect of amounts received from customers for services
to be provided after the balance sheet date.
Note 6: Net trading income
| 2023 | 2022 | |
| £m | £m | |
| Net gains (losses) arising on assets and liabilities held at fair value through profit or loss: | ||
Financial instruments held for trading | 270 | 306 |
Other financial instruments mandatorily held at fair value through profit or loss | 28 | (16) |
| Net losses arising on liabilities designated at fair value through profit or loss | (1) | – |
297 | 290 | |
Foreign exchange | 145 | 205 |
Net trading income | 442 | 495 |
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| 2023 | 2022 | |
| £m | £m | |
| Staff costs: | ||
Salaries | (167) | (148) |
Social security costs | (17) | (15) |
Pensions and other post-retirement benefit schemes | (15) | (15) |
Restructuring costs | (3) | (14) |
Other staff costs | (9) | (6) |
(211) | (198) | |
Management charges payable | (228) | (178) |
Depreciation and amortisation | (10) | (16) |
Premises and equipment | (6) | (5) |
Communications and data processing | (18) | (16) |
Professional fees | (9) | (9) |
Other operating expenses | (27) | (22) |
Total operating expenses | (509) | (444) |
| 2023 | 2022 | |
| £m | £m | |
| Fees payable for the: | ||
– the audit of the Bank’s current year Annual Report | 2.4 | 2.3 |
– the audits of the Bank’s subsidiaries | 0.5 | 0.4 |
– total audit fees in respect of the statutory audit of Group entities | 2.9 | 2.7 |
Total audit fees | 2.9 | 2.7 |
Other audit-related fees | 0.3 | 0.4 |
All other fees | 0.3 | 0.3 |
Total non-audit services | 0.6 | 0.7 |
Total fees payable to the Bank’s auditors by the Group | 3.5 | 3.4 |
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Note 9: Impairment
| Stage 1 | Stage 2 | Stage 3 | Total | |
| £m | £m | £m | £m | |
| Year ended 31 December 2023 | ||||
| In respect of: | ||||
Loans and advances to banks | – | 2 | – | 2 |
Loans and advances to customers | 9 | 10 | (1) | 18 |
Debt securities | – | (2) | – | (2) |
Financial assets at amortised cost | 9 | 10 | (1) | 18 |
Impairment charge on drawn balances | 9 | 10 | (1) | 18 |
Loan commitments and financial guarantees | 4 | 6 | – | 10 |
Total impairment credit (charge) | 13 | 16 | (1) | 28 |
| Stage 1 | Stage 2 | Stage 3 | Total | |
| £m | £m | £m | £m | |
| Year ended 31 December 2022 | ||||
| In respect of: | ||||
Loans and advances to banks | (1) | (2) | – | (3) |
Loans and advances to customers | (16) | (14) | (2) | (32) |
Debt securities | – | – | – | – |
Financial assets at amortised cost | (17) | (16) | (2) | (35) |
Impairment charge on drawn balances | (17) | (16) | (2) | (35) |
Loan commitments and financial guarantees | (4) | (7) | – | (11) |
Total impairment charge | (21) | (23) | (2) | (46) |
Note 10: Tax
(A) Analysis of tax expense for the year
| 2023 | 2022 | |
| £m | £m | |
| UK corporation tax: | ||
Current tax on profit for the year | (19) | (43) |
Adjustments in respect of prior years | – | (1) |
(19) | (44) | |
| Foreign tax: | ||
Current tax on profit for the year | (57) | (47) |
Adjustments in respect of prior years | 1 | 1 |
(56) | (46) | |
Current tax expense | (75) | (90) |
| UK deferred tax: | ||
Origination and reversal of temporary differences | (7) | (8) |
Adjustments in respect of prior years | (3) | – |
(10) | (8) | |
| Foreign deferred tax: | ||
Origination and reversal of temporary differences | (4) | 2 |
Adjustments in respect of prior years | – | (1) |
(4) | 1 | |
Deferred tax expense | (14) | (7) |
Tax expense | (89) | (97) |
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Note 10: Tax continued
(B) Factors affecting the tax expense for the year
The UK corporation tax rate for the year was 23.5 per cent (2022: 19 per cent). The increase in applicable tax rate from
2022 relates to the change in statutory tax rate effective from 1 April 2023. An explanation of the relationship between
tax expense and accounting profit is set out below.
| 2023 | 2022 | |
| £m | £m | |
Profit before tax | 427 | 477 |
UK corporation tax thereon | (100) | (91) |
Impact of surcharge on banking profits | (3) | (13) |
Non-deductible costs: bank levy | (5) | (3) |
Other non-deductible costs | (10) | (7) |
Non-taxable income | – | 15 |
Tax relief on coupons on other equity instruments | 19 | 8 |
Remeasurement of deferred tax due to rate changes | (1) | (2) |
Differences in overseas tax rates | 14 | (4) |
Other adjustments in respect of prior years | (2) | (1) |
Other | (1) | 1 |
Tax expense | (89) | (97) |
Effective tax rate | 20.8% | 20.3% |
The Group | The Bank | |||
| 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | |
| Statutory position | ||||
Deferred tax assets | 108 | 213 | 128 | 226 |
Deferred tax liabilities | – | – | – | – |
Net deferred tax asset (liability) at 31 December | 108 | 213 | 128 | 226 |
| Tax disclosure | ||||
Deferred tax assets | 129 | 233 | 128 | 226 |
Deferred tax liabilities | (21) | (20) | – | – |
Net deferred tax asset (liability) at 31 December | 108 | 213 | 128 | 226 |
t
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Note 10: Tax continued
| IFRS 9 | Fair value | ||||||
| impairments | through other | Other | |||||
| deductible in | Cash flow | Other internal | comprehensive | temporary | |||
| The Group | Tax losses | the future | hedges | derivatives | income | differences | Total |
| Deferred tax assets | £m | £m | £m | £m | £m | £m | £m |
At 1 January 2022 | 3 | 3 | 21 | 13 | 1 | 15 | 56 |
(Charge) credit to the income statement | (1) | 2 | – | (7) | – | – | (6) |
Credit (charge) to other comprehensive income | – | – | 181 | – | – | – | 181 |
Exchange and other adjustments | — | — | – | – | – | 2 | 2 |
At 31 December 2022 | 2 | 5 | 202 | 6 | 1 | 17 | 233 |
(Charge) credit to the income statement | (2) | (3) | – | (6) | – | (2) | (13) |
(Charge) credit to other comprehensive income | – | – | (90) | – | (1) | – | (91) |
Exchange and other adjustments | – | – | – | – | – | – | – |
At 31 December 2023 | – | 2 | 112 | – | – | 15 | 129 |
| Fair value | ||||||
| Accelerated | through other | Other | ||||
| capital | Cash flow | Other internal | comprehensive | temporary | ||
| The Group | allowances | hedges | derivatives | income | differences | Total |
| Deferred tax liabilities | £m | £m | £m | £m | £m | £m |
At 1 January 2022 | (19) | – | – | – | – | (19) |
(Charge) credit to the income statement | (1) | – | – | – | – | (1) |
(Charge) credit to other comprehensive income | – | – | – | – | – | – |
At 31 December 2022 | (20) | – | – | – | – | (20) |
(Charge) credit to the income statement | (1) | – | – | – | – | (1) |
(Charge) credit to other comprehensive income | – | – | – | – | – | – |
Exchange and other adjustments | – | – | – | – | – | – |
At 31 December 2023 | (21) | – | – | – | – | (21) |
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Note 10: Tax continued
| IFRS 9 | Fair value | |||||
| Impairments | through other | Other | ||||
| deductible in | Cash flow | comprehensive | temporary | |||
| The Bank | Tax losses | the future | hedges | income | differences | Total |
| Deferred tax assets | £m | £m | £m | £m | £m | £m |
At 1 January 2022 | 1 | 3 | 21 | 1 | 14 | 40 |
(Charge) credit to the income statement | (1) | 2 | – | – | – | 1 |
Credit (charge) to other comprehensive income | – | – | 181 | – | – | 181 |
Exchange and other adjustments | 1 | — | — | – | 3 | 4 |
At 31 December 2022 | 1 | 5 | 202 | 1 | 17 | 226 |
(Charge) credit to the income statement | (1) | (3) | – | – | (2) | (6) |
(Charge) credit to other comprehensive income | – | – | (90) | (1) | – | (91) |
Exchange and other adjustments | – | – | – | – | (1) | (1) |
At 31 December 2023 | – | 2 | 112 | – | 14 | 128 |
Group is not expected to be material.
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| 2023 | |||
| Contract/notional | Fair value | Fair value | |
| amount | assets | liabilities | |
| The Group | £m | £m | £m |
Trading and other Exchange rate contracts | 553,753 | 5,954 | 5,662 |
Interest rate contracts | 6,905,990 | 16,232 | 11,450 |
Credit derivatives | 1,684 | 2 | 50 |
Commodity and other contracts | 5,520 | 409 | 378 |
Total derivative assets/liabilities - trading and other Hedging | 7,466,947 | 22,597 | 17,540 |
Derivatives designated as fair value hedges | 4,200 | – | 28 |
Derivatives designated as cash flow hedges | 13,963 | 9 | 8 |
Total derivative assets/liabilities - hedging | 18,163 | 9 | 36 |
Total recognised derivative assets/liabilities | 7,485,110 | 22,606 | 17,576 |
| 2022 | |||
| Contract/notional | Fair value | Fair value | |
| amount | assets | liabilities | |
| The Group | £m | £m | £m |
Trading and other Exchange rate contracts | 453,082 | 7,707 | 7,535 |
Interest rate contracts | 5,209,757 | 16,119 | 11,769 |
Credit derivatives | 2,363 | 28 | 21 |
Commodity and other contracts | 11,565 | 766 | 696 |
Total derivative assets/liabilities - trading and other Hedging | 5,676,767 | 24,620 | 20,021 |
Derivatives designated as fair value hedges | 4,636 | – | 45 |
Derivatives designated as cash flow hedges | 16,331 | 1 | 4 |
Total derivative assets/liabilities - hedging | 20,967 | 1 | 49 |
Total recognised derivative assets/liabilities | 5,697,734 | 24,621 | 20,070 |
| 2023 | |||
| Contract/notional | Fair value | Fair value | |
| amount | assets | liabilities | |
| The Bank | £m | £m | £m |
Trading and other Exchange rate contracts | 553,753 | 5,954 | 5,662 |
Interest rate contracts | 6,905,990 | 16,232 | 11,450 |
Credit derivatives | 1,684 | 2 | 50 |
Equity and other contracts | 5,520 | 409 | 378 |
Total derivative assets/liabilities - trading and other Hedging | 7,466,947 | 22,597 | 17,540 |
Derivatives designated as fair value hedges | 4,200 | – | 28 |
Derivatives designated as cash flow hedges | 13,963 | 9 | 8 |
Total derivative assets/liabilities - hedging | 18,163 | 9 | 36 |
Total recognised derivative assets/liabilities | 7,485,110 | 22,606 | 17,576 |
| 2022 | |||
| Contract/notional | Fair value | Fair value | |
| amount | assets | liabilities | |
| The Bank | £m | £m | £m |
Trading and other Exchange rate contracts | 453,082 | 7,707 | 7,535 |
Interest rate contracts | 5,209,868 | 16,145 | 11,769 |
Credit derivatives | 2,363 | 28 | 21 |
Equity and other contracts | 11,565 | 766 | 696 |
Total derivative assets/liabilities - trading and other Hedging | 5,676,878 | 24,646 | 20,021 |
Derivatives designated as fair value hedges | 4,636 | – | 45 |
Derivatives designated as cash flow hedges | 16,331 | 1 | 4 |
Total derivative assets/liabilities - hedging | 20,967 | 1 | 49 |
Total recognised derivative assets/liabilities | 5,697,845 | 24,647 | 20,070 |
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Note 11: Derivative financial instruments continued
| Maturity | ||||||
| The Group and the Bank | Up to 1 month | 1-3 months | 3-12 months | 1-5 years | Over 5 years | Total |
| At 31 December 2023 | £m | £m | £m | £m | £m | £m |
| Fair value hedges | ||||||
| Interest rate | ||||||
| Interest rate swap | ||||||
Notional | – | – | 755 | 3,445 | – | 4,200 |
Average fixed interest rate | — % | — % | 0 . 2 6 % | 1 . 0 4 % | — % | |
| Cash flow hedges | ||||||
| Interest rate | ||||||
| Interest rate swap | ||||||
Notional | 353 | 838 | 2,486 | 8,280 | 2,006 | 13,963 |
Average fixed interest rate | 3.77 % | 0 . 7 1 % | 1 . 5 8 % | 1.52 % | 1 . 6 6 % |
| Maturity | ||||||
| The Group and the Bank | Up to 1 month | 1-3 months | 3-12 months | 1-5 years | Over 5 years | Total |
| At 31 December 2022 | £m | £m | £m | £m | £m | £m |
| Fair value hedges | ||||||
| Interest rate | ||||||
| Interest rate swap | ||||||
Notional | – | – | 1,422 | 3,214 | – | 4,636 |
Average fixed interest rate | — % | — % | 0.38 % | 0.19 % | — % | |
| Cash flow hedges | ||||||
| Interest rate | ||||||
| Interest rate swap | ||||||
Notional | 708 | 2,571 | 1,468 | 9,338 | 2,246 | 16,331 |
Average fixed interest rate | 0 . 1 7 % | 0.38 % | 0 . 8 6 % | 1.28 % | 0.93 % |
| Carrying amount of the hedging instrument | ||||
Changes in fair | ||||
| Contract/ | value used for | |||
| notional | calculating hedge | |||
| The Group and the Bank | amount | Assets | Liabilities | ineffectiveness |
| At 31 December 2023 | £m | £m | £m | £m |
| Fair value hedges | ||||
| Interest rate | ||||
Interest rate swaps | 4,200 | – | 28 | 158 |
| Cash flow hedges | ||||
| Interest rate | ||||
Interest rate swaps | 13,963 | 9 | 8 | 360 |
| Carrying amount of the hedging instrument | ||||
Changes in fair | ||||
| Contract/ | value used for | |||
| notional | calculating hedge | |||
| The Group and the Bank | amount | Assets | Liabilities | ineffectiveness |
| At 31 December 2022 | £m | £m | £m | £m |
| Fair value hedges | ||||
| Interest rate | ||||
Interest rate swaps | 4,636 | – | 45 | (278) |
| Cash flow hedges | ||||
| Interest rate | ||||
Interest rate swaps | 16,331 | 1 | 4 | (656) |
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Note 11: Derivative financial instruments continued
Change in | |||||||
| Accumulated amount of | fair value of | ||||||
| Carrying amount of | the hedged item | fair value adjustment on | the hedged item | hedged item for | Cash flow hedging reserve | ||
| ineffectiveness | Continuing | Discontinued | |||||
| The Group and the Bank | Liabilities | Assets | Liabilities | Assets | assessment | hedges | hedges |
| At 31 December 2023 | £m | £m | £m | £m | £m | £m | £m |
Fair value hedges | |||||||
Interest rate | |||||||
Fixed rate issuance 1 | 4,065 | – | 111 | – | (157) | ||
Cash flow hedges | |||||||
Interest rate | |||||||
Customer loans 2 | (123) | (20) | (2) | ||||
Central bank balances 3 | (180) | (352) | (37) | ||||
Customer deposits 4 | 18 | 5 | 5 |
| Change in | |||||||
| Accumulated amount of | fair value of | ||||||
| Carrying amount of | fair value adjustment on | hedged item for | Cash flow hedging reserve | ||||
| the hedged item | the hedged item | ineffectiveness | Continuing | Discontinued | |||
| The Group and the Bank | Liabilities | Assets | Liabilities | Assets | assessment | hedges | hedges |
| At 31 December 2022 | £m | £m | £m | £m | £m | £m | £m |
Fair value hedges | |||||||
Interest rate | |||||||
Fixed rate issuance 1 | 4,497 | – | 274 | – | 280 | ||
Cash flow hedges | |||||||
Interest rate | |||||||
Customer loans 2 | 173 | (197) | 27 | ||||
Central bank balances 3 | 509 | (534) | (49) | ||||
Customer deposits 4 | (32) | 31 | 1 | ||||
| Amounts reclassified from reserves | ||||||
| Gain (loss) | Hedge | to income statement as: | ||||
| recognised | ineffectiveness | |||||
| in other | recognised in the | Hedged cash | Hedged item | Income | ||
comprehensive income | flows will no | affected income | statement line | |||
| The Group and the Bank | income | statement | longer occur | statement | item that includes | |
| At 31 December 2023 | £m | £m | £m | £m | reclassified amount | |
Fair value hedges | ||||||
Interest rate | ||||||
Fixed rate issuance | 1 | |||||
Cash flow hedges | ||||||
Interest rate | ||||||
Customer loans | 126 | 2 | – | 22 | Interest income | |
Central bank balances | (182) | (1) | – | 376 | Interest income | |
| Customer deposits | (12) | – | – | (10) | Interest expense | |
| Amounts reclassified from reserves | |||||
| Gain (loss) | Hedge | to income statement as: | |||
| recognised | ineffectiveness | ||||
| in other | recognised in the | Hedged cash | Hedged item | Income | |
comprehensive income | flows will no | affected income | statement line | ||
| The Group and the Bank | income | statement | longer occur | statement | item that includes |
| At 31 December 2022 | £m | £m | £m | £m | reclassified amount |
| Fair value hedges | |||||
| Interest rate | |||||
Fixed rate issuance | 2 | ||||
Cash flow hedges | |||||
Interest rate | |||||
Customer loans | (189) | (4) | – | 14 | Interest income |
Central bank balances | (558) | (1) | – | 48 | Interest income |
Customer deposits | 36 | 1 | – | (3) | Interest expense |
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Gross carrying amount | Allowance for expected credit losses | |||||||
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
| The Group | £m | £m | £m | £m | £m | £m | £m | £m |
| Loans and advances to customers | ||||||||
At 1 January 2023 | 18,084 | 1,060 | 22 | 19,166 | 23 | 15 | 1 | 39 |
Exchange and other adjustments | (603) | (15) | – | (618) | – | – | (1) | (1) |
Transfers to Stage 1 | 636 | (636) | – | – | 8 | (8) | – | – |
Transfers to Stage 2 | (47) | 47 | – | – | – | – | – | – |
Transfers to Stage 3 | (2) | – | 2 | – | – | – | – | – |
| Impact of transfers | ||||||||
between stages | 587 | (589) | 2 | – | (6) | 1 | – | (5) |
2 | (7) | – | (5) | |||||
| Other changes in credit | ||||||||
quality | (1) | – | 2 | 1 | ||||
Additions and repayments | (1,804) | (263) | (14) | (2,081) | (10) | (3) | (1) | (14) |
(Credit) Charge to the income statement | (9) | (10) | 1 | (18) | ||||
Advances written off Recoveries of advances | (2) | (2) | (2) | (2) | ||||
| written off in previous | ||||||||
years | 1 | 1 | 1 | 1 | ||||
At 31 December 2023 | 16,264 | 193 | 9 | 16,466 | 14 | 5 | – | 19 |
Allowance for impairment losses | (14) | (5) | – | (19) | ||||
Net carrying amount | 16,250 | 188 | 9 | 16,447 |
Gross carrying amount | Allowance for expected credit losses | |||||||
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
| The Group | £m | £m | £m | £m | £m | £m | £m | £m |
| Loans and advances to customers | ||||||||
At 1 January 2022 | 17,366 | 47 | 29 | 17,442 | 7 | 2 | 1 | 10 |
Exchange and other adjustments | 1,183 | (10) | – | 1,173 | – | (1) | (1) | (2) |
Transfers to Stage 1 | 1 | (1) | – | – | – | – | – | |
Transfers to Stage 2 | (157) | 157 | – | – | – | – | – | |
Transfers to Stage 3 | (16) | – | 16 | – | – | – | – | |
| Impact of transfers | ||||||||
between stages | (172) | 156 | 16 | – | 3 | – | 3 | |
– | 3 | – | 3 | |||||
| Other changes in credit | ||||||||
quality | 3 | – | 2 | 5 | ||||
Additions and repayments | (293) | 867 | (22) | 552 | 13 | 11 | – | 24 |
| Charge to the income | ||||||||
statement | 16 | 14 | 2 | 32 | ||||
Advances written off | (1) | (1) | (1) | (1) | ||||
At 31 December 2022 | 18,084 | 1,060 | 22 | 19,166 | 23 | 15 | 1 | 39 |
| Allowance for impairment | ||||||||
losses | (23) | (15) | (1) | (39) | ||||
Net carrying amount | 18,061 | 1,045 | 21 | 19,127 |
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Note 12: Loans and advances to customers continued
Gross carrying amount | Allowance for expected credit losses | |||||||
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
| The Bank | £m | £m | £m | £m | £m | £m | £m | £m |
| Loans and advances to customers | ||||||||
At 1 January 2023 | 17,851 | 1,029 | 22 | 18,902 | 22 | 15 | 1 | 38 |
Exchange and other adjustments | (604) | (13) | 1 | (616) | – | – | (1) | (1) |
Transfers to Stage 1 | 622 | (622) | – | – | 8 | (8) | – | – |
Transfers to Stage 2 | (42) | 42 | – | – | – | – | – | – |
Transfers to Stage 3 | (2) | – | 2 | – | – | – | – | – |
| Impact of transfers | ||||||||
between stages | 578 | (580) | 2 | – | (6) | 1 | – | (5) |
2 | (7) | – | (5) | |||||
| Other changes in credit | ||||||||
quality | (2) | 1 | 2 | 1 | ||||
Additions and repayments | (1,829) | (256) | (14) | (2,099) | (9) | (4) | – | (13) |
(Credit) Charge to the income statement | (9) | (10) | 2 | (17) | ||||
Advances written off | (2) | (2) | (2) | (2) | ||||
At 31 December 2023 | 15,996 | 180 | 9 | 16,185 | 13 | 5 | – | 18 |
Allowance for impairment losses | (13) | (5) | – | (18) | ||||
Net carrying amount | 15,983 | 175 | 9 | 16,167 |
Gross carrying amount | Allowance for expected credit losses | |||||||
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
| The Bank | £m | £m | £m | £m | £m | £m | £m | £m |
| Loans and advances to customers | ||||||||
At 1 January 2022 | 17,119 | 38 | 29 | 17,186 | 7 | 2 | 1 | 10 |
Exchange and other adjustments | 1,182 | (10) | – | 1,172 | – | (1) | (1) | (2) |
Transfers to Stage 1 | 1 | (1) | – | – | – | – | – | – |
Transfers to Stage 2 | (135) | 135 | – | – | – | – | – | – |
Transfers to Stage 3 | (16) | – | 16 | – | – | – | – | – |
| Impact of transfers | ||||||||
between stages | (150) | 134 | 16 | – | – | 3 | – | 3 |
– | 3 | – | 3 | |||||
| Other changes in credit | ||||||||
quality | 2 | – | 2 | 4 | ||||
Additions and repayments | (300) | 867 | (22) | 545 | 13 | 11 | – | 24 |
| Charge to the income | ||||||||
statement | 15 | 14 | 2 | 31 | ||||
Advances written off | (1) | (1) | (1) | (1) | ||||
At 31 December 2022 | 17,851 | 1,029 | 22 | 18,902 | 22 | 15 | 1 | 38 |
| Allowance for impairment | ||||||||
losses | (22) | (15) | (1) | (38) | ||||
Net carrying amount | 17,829 | 1,014 | 21 | 18,864 |
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| The Group | ||
| 2023 | 2022 | |
| £m | £m | |
Not later than 1 year | 15 | 7 |
Later than 1 year and not later than 2 years | 10 | 8 |
Later than 2 years and not later than 3 years | 10 | 8 |
Later than 3 years and not later than 4 years | 11 | 9 |
Later than 4 years and not later than 5 years | 11 | 9 |
Later than 5 years | 190 | 178 |
Gross investment in finance leases | 247 | 219 |
Unearned future finance income on finance leases | (85) | (75) |
Rentals received in advance | (2) | (2) |
Net investment in finance leases | 160 | 142 |
| The Group | ||
| 2023 | 2022 | |
| £m | £m | |
Not later than 1 year | 5 | 2 |
Later than 1 year and not later than 2 years | 2 | 2 |
Later than 2 years and not later than 3 years | 3 | 2 |
Later than 3 years and not later than 4 years | 4 | 3 |
Later than 4 years and not later than 5 years | 4 | 3 |
Later than 5 years | 142 | 130 |
Net investment in finance leases | 160 | 142 |
| Allowance for expected credit losses | ||||
| Stage 1 | Stage 2 | Stage 3 | Total | |
| At 31 December 2023 | £m | £m | £m | £m |
| In respect of: | ||||
Loans and advances to banks | 2 | – | – | 2 |
Loans and advances to customers | 14 | 5 | – | 19 |
Debt securities | – | 2 | – | 2 |
Financial assets at amortised cost | 16 | 7 | – | 23 |
Provisions in relation to loan commitments and financial guarantees | 7 | 1 | – | 8 |
Total | 23 | 8 | — | 31 |
| Allowance for expected credit losses | ||||
| Stage 1 | Stage 2 | Stage 3 | Total | |
| At 31 December 2022 | £m | £m | £m | £m |
| In respect of: | ||||
Loans and advances to banks | 2 | 2 | – | 4 |
Loans and advances to customers | 23 | 15 | 1 | 39 |
Debt securities | – | – | – | – |
Financial assets at amortised cost | 25 | 17 | 1 | 43 |
Provisions in relation to loan commitments and financial guarantees | 11 | 7 | – | 18 |
Total | 36 | 24 | 1 | 61 |
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Note 14: Allowance for expected credit losses continued
| Allowance for expected credit losses | ||||
| Stage 1 | Stage 2 | Stage 3 | Total | |
| At 31 December 2023 | £m | £m | £m | £m |
| In respect of: | ||||
Loans and advances to banks | 2 | – | – | 2 |
Loans and advances to customers | 13 | 5 | – | 18 |
Debt securities | – | 2 | – | 2 |
Financial assets at amortised cost | 15 | 7 | – | 22 |
Provisions in relation to loan commitments and financial guarantees | 7 | 1 | – | 8 |
Total | 22 | 8 | — | 30 |
| Allowance for expected credit losses | ||||
| Stage 1 | Stage 2 | Stage 3 | Total | |
| At 31 December 2022 | £m | £m | £m | £m |
| In respect of: | ||||
Loans and advances to banks | 2 | 2 | – | 4 |
Loans and advances to customers | 22 | 15 | 1 | 38 |
Debt securities | – | – | – | – |
Financial assets at amortised cost | 24 | 17 | 1 | 42 |
Provisions in relation to loan commitments and financial guarantees | 11 | 7 | – | 18 |
Total | 35 | 24 | 1 | 60 |
| Modelled | Individually | Other | Total | |
| ECL | assessed | judgements | ECL | |
| £m | £m | £m | £m | |
At 31 December 2023 | 34 | — | (3) | 31 |
At 31 December 2022 | 61 | 1 | — | 62 |
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Note 14: Allowance for expected credit losses continued
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Note 14: Allowance for expected credit losses continued
| 2023 to 2027 | Start to | Start to | ||||||
| 2023 | 2024 | 2025 | 2026 | 2027 | average | peak | trough | |
| At 31 December 2023 | % | % | % | % | % | % | % | % |
| Upside | ||||||||
| UK Gross domestic | ||||||||
product | 0.3 | 1.5 | 1.7 | 1.7 | 1.9 | 1.4 | 8.1 | 0.2 |
UK Bank Rate | 4.94 | 5.72 | 5.61 | 5.38 | 5.18 | 5.37 | 5.79 | 4.25 |
UK Unemployment rate | 4.0 | 3.3 | 3.1 | 3.1 | 3.1 | 3.3 | 4.2 | 3.0 |
| UK Commercial real | ||||||||
estate price growth | (3.9) | 9.0 | 3.8 | 1.3 | 1.3 | 2.2 | 11.5 | (3.9) |
| US Gross domestic | ||||||||
product | 2.5 | 2.7 | 3.1 | 1.7 | 0.5 | 2.0 | 10.2 | 0.6 |
US Unemployment rate | 3.6 | 3.9 | 3.3 | 3.0 | 3.4 | 3.4 | 4.0 | 3.0 |
| Base case | ||||||||
| UK Gross domestic | ||||||||
product | 0.3 | 0.5 | 1.2 | 1.7 | 1.9 | 1.1 | 6.4 | 0.2 |
UK Bank Rate | 4.94 | 4.88 | 4.00 | 3.50 | 3.06 | 4.08 | 5.25 | 3.00 |
UK Unemployment rate | 4.2 | 4.9 | 5.2 | 5.2 | 5.0 | 4.9 | 5.2 | 3.9 |
| UK Commercial real | ||||||||
estate price growth | (5.1) | (0.2) | 0.1 | 0.0 | 0.8 | (0.9) | (1.2) | (5.3) |
| US Gross domestic | ||||||||
product | 2.4 | 1.0 | 1.4 | 1.7 | 1.6 | 1.6 | 8.0 | 0.6 |
US Unemployment rate | 3.6 | 4.3 | 4.5 | 4.4 | 4.3 | 4.2 | 4.5 | 3.5 |
| Downside | ||||||||
| UK Gross domestic | ||||||||
product | 0.2 | (1.0) | (0.1) | 1.5 | 2.0 | 0.5 | 3.4 | (1.2) |
UK Bank Rate | 4.94 | 3.95 | 1.96 | 1.13 | 0.55 | 2.51 | 5.25 | 0.43 |
UK Unemployment rate | 4.3 | 6.5 | 7.8 | 7.9 | 7.6 | 6.8 | 8.0 | 3.9 |
| UK Commercial real | ||||||||
estate price growth | (6.0) | (8.7) | (4.0) | (2.1) | (1.2) | (4.4) | (1.2) | (20.4) |
| US Gross domestic | ||||||||
product | 2.3 | (0.4) | (0.6) | 1.0 | 2.1 | 0.9 | 4.4 | 0.4 |
US Unemployment rate | 3.7 | 4.8 | 6.1 | 6.6 | 6.4 | 5.5 | 6.6 | 3.5 |
| 2023 to 2027 | Start to | Start to | ||||||
| 2023 | 2024 | 2025 | 2026 | 2027 | average | peak | trough | |
| At 31 December 2023 | % | % | % | % | % | % | % | % |
| Severe downside | ||||||||
| UK Gross domestic | ||||||||
product | 0.1 | (2.3) | (0.5) | 1.3 | 1.8 | 0.1 | 1.0 | (2.9) |
UK Bank Rate - modelled | 4.94 | 2.75 | 0.49 | 0.13 | 0.03 | 1.67 | 5.25 | 0.02 |
| UK Bank Rate - adjusted | 4.94 | 6.56 | 4.56 | 3.63 | 3.13 | 4.56 | 6.75 | 3.00 |
UK Unemployment rate | 4.5 | 8.7 | 10.4 | 10.5 | 10.1 | 8.8 | 10.5 | 3.9 |
| UK Commercial real | ||||||||
estate price growth | (7.7) | (19.5) | (10.6) | (7.7) | (5.2) | (10.3) | (1.2) | (41.8) |
| US Gross domestic | ||||||||
product | 2.2 | (2.2) | (3.0) | 0.1 | 2.5 | 0.0 | 2.3 | (4.2) |
US Unemployment rate | 3.7 | 5.5 | 8.2 | 9.3 | 9.0 | 7.1 | 9.4 | 3.5 |
| Probability-weighted | ||||||||
| UK Gross domestic | ||||||||
product | 0.3 | 0.1 | 0.8 | 1.6 | 1.9 | 0.9 | 5.4 | 0.1 |
UK Bank Rate - modelled | 4.94 | 4.64 | 3.52 | 3.02 | 2.64 | 3.75 | 5.25 | 2.59 |
| UK Bank Rate - adjusted | 4.94 | 5.02 | 3.93 | 3.37 | 2.95 | 4.04 | 5.42 | 2.89 |
UK Unemployment rate | 4.2 | 5.3 | 5.9 | 5.9 | 5.7 | 5.4 | 6.0 | 3.9 |
| UK Commercial real | ||||||||
estate price growth | (5.3) | (1.9) | (1.1) | (1.0) | (0.2) | (1.9) | (1.2) | (9.9) |
| US Gross domestic | ||||||||
product | 2.4 | 0.8 | 0.8 | 1.3 | 1.5 | 1.3 | 6.8 | 0.6 |
US Unemployment rate | 3.7 | 4.5 | 5.0 | 5.1 | 5.2 | 4.7 | 5.2 | 3.5 |
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Note 14: Allowance for expected credit losses continued
| 2022 to | ||||||||
| 2026 | Start to | Start to | ||||||
| 2022 | 2023 | 2024 | 2025 | 2026 | average | peak | trough | |
| At 31 December 2022 | % | % | % | % | % | % | % | % |
| Upside | ||||||||
| UK Gross domestic | ||||||||
product | 4.1 | 0.1 | 1.1 | 1.7 | 2.1 | 1.8 | 6.5 | 0.4 |
UK Bank Rate | 1.94 | 4.95 | 4.98 | 4.63 | 4.58 | 4.22 | 5.39 | 0.75 |
UK Unemployment rate | 3.5 | 2.8 | 3.0 | 3.3 | 3.4 | 3.2 | 3.8 | 2.8 |
| UK Commercial real | ||||||||
estate price growth | (9.4) | 8.5 | 3.5 | 2.6 | 2.3 | 1.3 | 7.2 | (9.4) |
| US Gross domestic | ||||||||
product | 1.9 | 1.9 | 3.2 | 1.5 | 0.1 | 1.7 | 6.8 | (0.6) |
US Unemployment rate | 3.7 | 3.9 | 3.1 | 2.9 | 3.4 | 3.4 | 4.0 | 2.8 |
| Base case | ||||||||
| UK Gross domestic | ||||||||
product | 4.0 | (1.2) | 0.5 | 1.6 | 2.1 | 1.4 | 4.3 | (1.1) |
UK Bank Rate | 1.94 | 4.0 | 3.38 | 3.0 | 3.0 | 3.06 | 4.0 | 0.75 |
UK Unemployment rate | 3.7 | 4.5 | 5.1 | 5.3 | 5.1 | 4.8 | 5.3 | 3.6 |
| UK Commercial real | ||||||||
estate price growth | (11.8) | (3.3) | 0.9 | 2.8 | 3.1 | (1.2) | 7.2 | (14.8) |
| US Gross domestic | ||||||||
product | 1.8 | 0.4 | 1.4 | 1.4 | 1.2 | 1.2 | 4.7 | (0.6) |
US Unemployment rate | 3.7 | 4.4 | 4.5 | 4.5 | 4.4 | 4.3 | 4.6 | 3.5 |
| Downside | ||||||||
| UK Gross domestic | ||||||||
product | 3.9 | (3) | (0.5) | 1.4 | 2.1 | 0.8 | 1.2 | (3.6) |
UK Bank Rate | 1.94 | 2.93 | 1.39 | 0.98 | 1.04 | 1.65 | 3.62 | 0.75 |
UK Unemployment rate | 3.8 | 6.3 | 7.5 | 7.6 | 7.2 | 6.5 | 7.7 | 3.6 |
| UK Commercial real | ||||||||
estate price growth | (13.9) | (15) | (3.7) | 0.4 | 1.4 | (6.4) | 7.2 | (29.6) |
| US Gross domestic | ||||||||
product | 1.7 | (0.9) | (0.6) | 0.9 | 2.0 | 0.6 | 1.9 | (1.8) |
US Unemployment rate | 3.7 | 4.9 | 6.2 | 6.5 | 6.0 | 5.5 | 6.6 | 3.5 |
| 2022 to | ||||||||
| 2026 | Start to | Start to | ||||||
| 2022 | 2023 | 2024 | 2025 | 2026 | average | peak | trough | |
| At 31 December 2022 | % | % | % | % | % | % | % | % |
| Severe downside | ||||||||
| UK Gross domestic | ||||||||
product | 3.7 | (5.2) | (1) | 1.3 | 2.1 | 0.1 | 0.7 | (6.4) |
UK Bank Rate - modelled | 1.94 | 1.41 | 0.2 | 0.13 | 0.14 | 0.76 | 3.5 | 0.12 |
| UK Bank Rate - adjusted | 2.44 | 7.0 | 4.88 | 3.31 | 3.25 | 4.18 | 7.0 | 0.75 |
UK Unemployment rate | 4.1 | 9.0 | 10.7 | 10.4 | 9.7 | 8.8 | 10.7 | 3.6 |
| UK Commercial real | ||||||||
estate price growth | (17.3) | (28.8) | (9.9) | (1.3) | 3.2 | (11.6) | 7.2 | (47.8) |
| US Gross domestic | ||||||||
product | 1.7 | (2.5) | (3.1) | 0.2 | 2.8 | (0.2) | 0.1 | (6.4) |
US Unemployment rate | 3.7 | 5.7 | 8.4 | 9.3 | 8.3 | 7.1 | 9.4 | 3.5 |
| Probability-weighted | ||||||||
| UK Gross domestic | ||||||||
product | 4.0 | (1.8) | 0.2 | 1.5 | 2.1 | 1.2 | 3.4 | (1.8) |
UK Bank Rate - modelled | 1.94 | 3.7 | 2.94 | 2.59 | 2.6 | 2.76 | 3.89 | 0.75 |
| UK Bank Rate - adjusted | 1.99 | 4.26 | 3.41 | 2.91 | 2.91 | 3.1 | 4.31 | 0.75 |
UK Unemployment rate | 3.7 | 5.0 | 5.8 | 5.9 | 5.7 | 5.2 | 5.9 | 3.6 |
| UK Commercial real | ||||||||
estate price growth | (12.3) | (5.8) | (0.8) | 1.6 | 2.3 | (3.1) | 7.2 | (18.6) |
| US Gross domestic | ||||||||
product | 1.8 | 0.2 | 0.9 | 1.2 | 1.3 | 1.1 | 3.8 | (0.6) |
US Unemployment rate | 3.7 | 4.5 | 5.0 | 5.1 | 5.0 | 4.7 | 5.1 | 3.5 |
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Note 14: Allowance for expected credit losses continued
| First | Second | Third | Fourth | First | Second | Third | Fourth | |
| Base case scenario by | quarter | quarter | quarter | quarter | quarter | quarter | quarter | quarter |
| quarter | 2023 | 2023 | 2023 | 2023 | 2024 | 2024 | 2024 | 2024 |
| At 31 December 2023 | % | % | % | % | % | % | % | % |
| UK Gross domestic | ||||||||
product | 0.3 | 0.0 | (0.1) | 0.0 | 0.1 | 0.2 | 0.3 | 0.3 |
UK Bank Rate | 4.25 | 5.00 | 5.25 | 5.25 | 5.25 | 5.00 | 4.75 | 4.50 |
UK Unemployment rate | 3.9 | 4.2 | 4.2 | 4.3 | 4.5 | 4.8 | 5.0 | 5.2 |
| UK Commercial real | ||||||||
estate price growth | (18.8) | (21.2) | (18.2) | (5.1) | (4.1) | (3.8) | (2.2) | (0.2) |
| US Gross domestic | ||||||||
product | 0.6 | 0.5 | 1.3 | 0.0 | 0.0 | 0.1 | 0.2 | 0.3 |
US Unemployment rate | 3.5 | 3.5 | 3.7 | 3.9 | 4.1 | 4.3 | 4.4 | 4.5 |
| First | Second | Third | Fourth | First | Second | Third | Fourth | |
| quarter | quarter | quarter | quarter | quarter | quarter | quarter | quarter | |
| Base case scenario by quarter | 2022 | 2022 | 2022 | 2022 | 2023 | 2023 | 2023 | 2023 |
| At 31 December 2022 | % | % | % | % | % | % | % | % |
| UK Gross domestic | ||||||||
product | 0.6 | 0.1 | (0.3) | (0.4) | (0.4) | (0.4) | (0.2) | (0.1) |
UK Bank Rate | 0.75 | 1.25 | 2.25 | 3.50 | 4.00 | 4.00 | 4.00 | 4.00 |
UK Unemployment rate | 3.7 | 3.8 | 3.6 | 3.7 | 4.0 | 4.4 | 4.7 | 4.9 |
| UK Commercial real | ||||||||
estate price growth | 18.0 | 18.0 | 8.4 | (11.8) | (16.9) | (19.8) | (15.9) | (3.3) |
| US Gross domestic | ||||||||
product | (0.4) | (0.1) | 0.6 | (0.1) | (0.1) | 0.1 | 0.2 | 0.3 |
US Unemployment rate | 3.8 | 3.6 | 3.5 | 3.8 | 4.1 | 4.4 | 4.5 | 4.6 |
| Probability- | Severe | ||||
| weighted | Upside | Base case | Downside | downside | |
| £m | £m | £m | £m | £m | |
At 31 December 2023 | 31 | 17 | 24 | 38 | 68 |
At 31 December 2022 | 61 | 25 | 39 | 74 | 199 |
| Severe | ||||
| Upside | Base case | Downside | downside | |
| £m | £m | £m | £m | |
At 31 December 2023 | 15 | 22 | 38 | 129 |
At 31 December 2022 | 22 | 33 | 97 | 517 |
| Severe | ||||
| Upside | Base case | Downside | downside | |
| % | % | % | % | |
At 31 December 2023 | 0.5 | 0.6 | 1.8 | 6.3 |
At 31 December 2022 | 0.8 | 1.1 | 14.3 | 60.0 |
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| The Group | ||||
| Right-of- | ||||
| Premises | Equipment | use asset | Total | |
| £m | £m | £m | £m | |
| Cost or valuation: | ||||
At 1 January 2022 | 14 | 30 | 84 | 128 |
Exchange and other adjustments | – | 1 | 7 | 8 |
Additions | 3 | 3 | 1 | 7 |
Disposals | – | (3) | (4) | (7) |
At 31 December 2022 | 17 | 31 | 88 | 136 |
Exchange and other adjustments | – | – | (3) | (3) |
Additions | – | 2 | – | 2 |
Disposals | (2) | (3) | – | (5) |
At 31 December 2023 | 15 | 30 | 85 | 130 |
| Accumulated depreciation and impairment: | ||||
At 1 January 2022 | 3 | 24 | 34 | 61 |
Exchange and other adjustments | – | 1 | 3 | 4 |
Depreciation charge for the year | 1 | 2 | 13 | 16 |
Disposals | – | (1) | – | (1) |
At 31 December 2022 | 4 | 26 | 50 | 80 |
Exchange and other adjustments | – | (1) | (2) | (3) |
Depreciation charge for the year (note 7) | 2 | 2 | 6 | 10 |
Disposals | (2) | (3) | – | (5) |
At 31 December 2023 | 4 | 24 | 54 | 82 |
Balance sheet amount at 31 December 2023 | 11 | 6 | 31 | 48 |
Balance sheet amount at 31 December 2022 | 13 | 5 | 38 | 56 |
| The Bank | ||||
| Right-of- | ||||
| Premises | Equipment | use asset | Total | |
| £m | £m | £m | £m | |
| Cost or valuation: | ||||
At 1 January 2022 | 5 | 29 | 70 | 104 |
Exchange and other adjustments | – | 1 | 7 | 8 |
Additions | 3 | 2 | – | 5 |
Disposals | – | (3) | (3) | (6) |
At 31 December 2022 | 8 | 29 | 74 | 111 |
Exchange and other adjustments | – | (3) | (3) | |
Additions | 1 | – | 1 | |
Disposals | – | (2) | – | (2) |
At 31 December 2023 | 8 | 28 | 71 | 107 |
| Accumulated depreciation and impairment: | ||||
At 1 January 2022 | – | 25 | 26 | 51 |
Exchange and other adjustments | – | (1) | 3 | 2 |
Depreciation charge for the year | 1 | 2 | 12 | 15 |
Disposals | – | (2) | – | (2) |
At 31 December 2022 | 1 | 24 | 41 | 66 |
Exchange and other adjustments | – | (1) | (2) | (3) |
Depreciation charge for the year (note 7) | 1 | 2 | 5 | 8 |
Disposals | – | (2) | – | (2) |
At 31 December 2023 | 2 | 23 | 44 | 69 |
Balance sheet amount at 31 December 2023 | 6 | 5 | 27 | 38 |
Balance sheet amount at 31 December 2022 | 7 | 5 | 33 | 45 |
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| The Bank | ||
| 2023 | 2022 | |
| £m | £m | |
At 1 January | 180 | 203 |
Impairment | – | (23) |
At 31 December | 180 | 180 |
The Group | The Bank | |||
| 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | |
Settlement balances | 426 | 124 | 411 | 124 |
Prepayments and accrued income | 25 | 25 | 21 | 19 |
Other assets | 19 | 23 | 17 | 21 |
Total other assets | 470 | 172 | 449 | 164 |
Note 18: Debt securities in issue
| The Group and the Bank | ||
| 2023 | 2022 | |
| £m | £m | |
Medium-term notes issued | 3,837 | 3,403 |
Certificates of deposit issued | 4,963 | 5,618 |
Commercial paper | 3,858 | 3,700 |
Amounts due to fellow Group undertakings | 2,720 | 3,410 |
Total debt securities in issue | 15,378 | 16,131 |
At 31 December 2023 £5,806 million (2022: £4,733 million) of debt securities in issue at amortised cost of the Group and
the Bank had a contractual residual maturity of greater than one year.
The Group | The Bank | |||
| 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | |
Settlement balances | 173 | 384 | 170 | 383 |
Lease liabilities | 38 | 45 | 30 | 36 |
Other creditors and accruals | 86 | 145 | 80 | 139 |
Total other liabilities | 297 | 574 | 280 | 558 |
| The Group | |||
| Provisions | |||
| for financial | |||
| commitments | |||
| and guarantees | Other | Total | |
| £m | £m | £m | |
At 1 January 2023 | 18 | 8 | 26 |
Exchange and other adjustments | – | – | – |
Provisions applied | – | (2) | (2) |
Charge (credit) for the year | (10) | 2 | (8) |
At 31 December 2023 | 8 | 8 | 16 |
| The Bank | |||
| Provisions | |||
| for financial | |||
| commitments | |||
| and guarantees | Other | Total | |
| £m | £m | £m | |
At 1 January 2023 | 18 | 7 | 25 |
Exchange and other adjustments | – | – | – |
Provisions applied | – | (2) | (2) |
Charge (credit) for the year | (10) | 2 | (8) |
At 31 December 2023 | 8 | 7 | 15 |
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Note 21: Subordinated liabilities
The movement in subordinated liabilities during the year was as follows:
| The Group and the Bank | ||
| 2023 | 2022 | |
| Dated subordinated liabilities | £m | £m |
At 1 January | 761 | 684 |
Issued during the year | 299 | – |
Repurchases and redemptions during the year | (284) | – |
Foreign exchange movements | (28) | 73 |
Other movements (all non-cash) | 7 | 4 |
At 31 December | 755 | 761 |
| The Group and the Bank | ||||
| 2023 | 2022 | 2023 | 2022 | |
| Number of shares | Number of shares | £m | £m | |
Ordinary shares of £1 each At 1 January | 370,050,000 | 120,050,000 | 370 | 120 |
Issue of ordinary shares | – | 250,000,000 | – | 250 |
At 31 December | 370,050,000 | 370,050,000 | 370 | 370 |
The Group | The Bank | |||
| 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | |
Revaluation reserve in respect of debt securities held at fair value through other comprehensive income | – | (2) | – | (2) |
Cash flow hedging reserve | (289) | (519) | (289) | (519) |
Foreign currency translation reserve | (24) | (4) | (25) | (9) |
At 31 December | (313) | (525) | (314) | (530) |
The Group | The Bank | |||
| Revaluation reserve in respect of debt securities held at fair value through other | 2023 | 2022 | 2023 | 2022 |
| comprehensive income | £m | £m | £m | £m |
At 1 January | (2) | (2) | (2) | (2) |
Change in fair value | 3 | – | 3 | – |
Deferred tax | (1) | – | (1) | – |
2 | – | 2 | – | |
Income statement transfers in respect of disposals | – | – | – | – |
Deferred tax | – | – | – | – |
– | – | – | – | |
At 31 December | – | (2) | – | (2) |
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Note 23: Other reserves continued
The Group | The Bank | |||
| 2023 | 2022 | 2023 | 2022 | |
| Cash flow hedging reserve | £m | £m | £m | £m |
At 1 January | (519) | (48) | (519) | (48) |
Change in fair value of hedging derivatives | (68) | (711) | (68) | (711) |
Deferred tax | 18 | 197 | 18 | 197 |
(50) | (514) | (50) | (514) | |
Net income statement transfers | 388 | 59 | 388 | 59 |
Deferred tax | (108) | (16) | (108) | (16) |
280 | 43 | 280 | 43 | |
At 31 December | (289) | (519) | (289) | (519) |
The Group | The Bank | |||
| 2023 | 2022 | 2023 | 2022 | |
| Foreign currency translation reserve | £m | £m | £m | £m |
At 1 January | (4) | (14) | (9) | (12) |
Currency translation differences arising in the year | (20) | 10 | (16) | 3 |
At 31 December | (24) | (4) | (25) | (9) |
The Group | The Bank | |||
| 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | |
At 1 January | 2,768 | 2,651 | 2,810 | 2,725 |
| Profit attributable to ordinary shareholders | 258 | 337 | 240 | 305 |
Dividends paid (note 26) | – | (220) | – | (220) |
Loss on repayment of other equity instruments | (15) | – | (15) | – |
At 31 December | 3,011 | 2,768 | 3,035 | 2,810 |
| The Group and the Bank | ||
| 2023 | 2022 | |
| £m | £m | |
At 1 January | 782 | 782 |
Issued during the year | 289 | – |
Repurchases and redemptions during the year | (263) | – |
Profit for the year attributable to other equity holders | 80 | 43 |
Distributions on other equity instruments | (80) | (43) |
At 31 December | 808 | 782 |
Note 26: Dividends on ordinary shares
The Bank did not pay a dividend in the period to 31 December 2023 (2022: £220 million)
The Directors have proposed an interim dividend of £450 million to be paid by April 2024.
Note 27: Share-based payments
During the year ended 31 December 2023 Lloyds Banking Group plc operated a number of share-based payment
schemes for which employees of LBCM were eligible and all of which are equity settled. Details of all schemes
operated by Lloyds Banking Group are set out below; these are managed and operated on a Lloyds Banking Group-
wide basis. The amount charged to LBCM’s income statement in respect of Lloyds Banking Group share-based
payment schemes, and which is included within staff costs (note 7) was £26 million (2022: £25 million).
During the year ended 31 December 2023 Lloyds Banking Group operated the following share-based payment
schemes, all of which are mainly equity-settled.
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Note 27: Share-based payments continued
Lloyds Banking Group Performance Share plan
Lloyds Banking Group operates a Group Performance Share plan that is part equity-settled. Bonuses in respect of
employee service in 2023 have been recognised in the charge in line with the proportion of the deferral period
completed.
Save-As-You-Earn schemes
Eligible employees may enter into contracts through the Save-As-You-Earn (SAYE) schemes to save up to £500 per
month and, at the expiry of a fixed term of three years, have the option to use these savings within six months of the
expiry of the fixed term to acquire shares in the Lloyds Banking Group at a discounted price of no less than 90 per
cent of the market price at the start of the invitation period.
Movements in the number of share options outstanding under the SAYE schemes are set out below:
2023 | Weighted | 2022 | Weighted | |
| average | average | |||
| Number | exercise price | Number | exercise price | |
| LBG | of options | (pence) | of options | (pence) |
Outstanding at 1 January | 1,256,918,075 | 31.30 | 1,180,563,291 | 30.63 |
Granted | 287,984,574 | 38.55 | 217,611,519 | 39.38 |
Exercised | (164,709,399) | 38.55 | (23,359,526) | 37.75 |
Forfeited | (12,862,726) | 31.78 | (20,961,259) | 29.20 |
Cancelled | (45,807,000) | 37.65 | (47,687,607) | 33.88 |
Expired | (10,318,376) | 38.25 | (49,248,343) | 46.29 |
Outstanding at 31 December | 1,311,205,148 | 31.70 | 1,256,918,075 | 31.30 |
Exercisable at 31 December | 410,368 | 39.87 | 263,302 | 47.92 |
The weighted average share price at the time that the options were exercised during 2023 was £0.48 (2022: £0.49).
The weighted average remaining contractual life of options outstanding at the end of the year was 1.58 years (2022:
1.88 years).
The weighted average fair value of SAYE options granted during 2023 was £0.09 (2022: £0.07). The fair values of the
SAYE options have been determined using a standard Black-Scholes model.
Other share option plans
Executive Share Plans - buyout and retention awards
Share options may be granted to senior employees under the Lloyds Banking Group Executive Share Plan 2003, Lloyds
Banking Group Executive Group Ownership Share Plan and Deferred Bonus Scheme 2021 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.
Participants are not entitled to any dividends paid during the vesting period.
2023 | Weighted | 2022 | Weighted | |
| average | average | |||
| Number | exercise price | Number | exercise price | |
| LBG | of options | (pence) | of options | (pence) |
Outstanding at 1 January | 20,466,471 | Nil | 14,032,762 | Nil |
Granted | 15,198,717 | Nil | 10,278,224 | Nil |
Exercised | (8,739,497) | Nil | (3,333,322) | Nil |
Vested | (765,247) | Nil | – | Nil |
Forfeited | (8,216) | Nil | (33,409) | Nil |
Lapsed | (20,973) | Nil | (477,784) | Nil |
Outstanding at 31 December | 26,131,255 | Nil | 20,466,471 | Nil |
Exercisable at 31 December | 1,148,770 | Nil | 1,638,202 | Nil |
The weighted average fair value of options granted in the year was £0.41 (2022: £0.44). 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 2023 was £0.46 (2022: £0.46). The weighted average remaining contractual life
of options outstanding at the end of the year was 6.3 years (2022: 6.0 years).
Other share plans
Lloyds Banking Group Executive Group Ownership Share Plan
The plan, introduced in 2006, is aimed at delivering shareholder value by linking the receipt of shares to an
improvement in the performance of the Lloyds Banking Group over a three-year period. Awards are made within
limits set by the rules of the plan, with the limits determining the maximum number of shares that can be awarded
equating to three times annual salary. In exceptional circumstances this may increase to four times annual salary.
At the end of the performance period for the 2021 grant, the targets had not been fully met and therefore these
awards vested in 2023 at a rate of 43.70 per cent.
The Executive Group Ownership awards were replaced by Long Term Share Plan awards in 2021.
LBG
| 2023 | 2022 | |
| Number of | Number of | |
| shares | shares | |
Outstanding at 1 January | 202,394,509 | 350,873,627 |
Vested | (66,555,435) | (50,703,778) |
Forfeited | (96,034,781) | (98,741,356) |
Dividend award | – | 966,016 |
Outstanding at 31 December | 39,804,293 | 202,394,509 |
Lloyds Banking Group Long Term Share Plan
The plan, introduced in 2021, replaced the Executive Group Ownership Share Plan and is intended to provide
alignment to the Group’s aim of delivering sustainable returns to shareholders, supported by its values and
behaviours.
The awards in respect of the 2021 grant are due to vest in 2024 at a rate of 100 per cent. Details in relation to the plan
are provided in the LBG directors’ remuneration report.
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Note 27: Share-based payments continued
LBG
| 2023 | 2022 | |
| Number of | Number of | |
| shares | shares | |
Outstanding at 1 January | 171,947,743 | 77,883,068 |
Granted | 108,551,439 | 108,513,202 |
Forfeited | (18,089,793) | (14,448,527) |
Outstanding at 31 December | 262,409,389 | 171,947,743 |
The weighted average fair value of awards granted in the year was £0.42 (2022: £0.36).
Assumptions at 31 December 2023
The fair value calculations at 31 December 2023 for grants made in the year, using Black-Scholes models and Monte
Carlo simulation, are based on the following assumptions:
| Executive | Long Term | ||
| SAYE | Share Plans | Share Plan | |
Weighted average risk-free interest rate | 4.52% | 4.36% | 3.71% |
Weighted average expected life | 3.3 years | 1.9 years | 3.6 years |
Weighted average expected volatility | 28% | 30% | 34% |
Weighted average expected dividend yield | 6.0% | 6.0% | 6.0% |
Weighted average share price | £0.44 | £0.46 | £0.52 |
Weighted average exercise price | £0.39 | Nil | Nil |
Expected volatility is a measure of the amount by which the Group’s shares are expected to fluctuate during the life
of an option. The expected volatility is estimated based on the historical volatility of the closing daily share price over
the most recent period that is commensurate with the expected life of the option. The historical volatility is compared
to the implied volatility generated from market traded options in the Group’s shares to assess the reasonableness of
the historical volatility and adjustments made where appropriate.
Share Incentive Plans
Matching shares
The Group undertakes to match shares purchased by employees up to the value of £45 per month; these matching
shares are held in trust for a mandatory period of three years on the employee’s behalf, during which period the
employee is entitled to any dividends paid on such shares. The award is subject to a non-market-based condition: if
an employee leaves within this three-year period for other than a ‘good’ reason, all of the matching shares are
forfeited. Similarly, if the employees sell their purchased shares within three years, their matching shares are
forfeited.
The number of shares awarded relating to matching shares in 2023 was 43,945,238 (2022: 43,378,504), with an
average fair value of £0.46 (2022: £0.45), based on market prices at the date of award.
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 plc shares, and were initially released over five years with 20 per cent being
released each year following the year of award. From June 2020, the fixed share awards are released over three
years with one-third being released each year following the year of award. The number of shares purchased in
relation to fixed share awards in 2023 was 1,790,243 (2022: 7,261,080) with an average fair value of £0.46 (2022: £0.47)
based on market prices at the date of the award.
The fixed share award is not subject to any performance conditions, performance adjustment or clawback. On an
employee leaving the Group, there is no change to the timeline for which shares will become unrestricted.
Since the beginning of 2023 the number of recipients of these awards has been reduced to the executive directors
only.
Free shares
An award of shares may be made annually to employees up to a maximum of £3,600. The shares awarded are held
in trust for a mandatory period of three years on the employee’s behalf, during which period the employee is entitled
to any dividends paid on such shares. The award is subject to a non-market-based condition. If an employee leaves
the Group within this three-year period for other than a ‘good’ reason, all of the shares awarded will be forfeited.
There have not been any awards made since 2021.
| 2023 | 2022 | |
| £000 | £000 | |
| Compensation | ||
Salaries and other short-term benefits | 2,823 | 2,284 |
Post-employment benefits | 76 | 74 |
Total compensation | 2,899 | 2,358 |
| 2023 | 2022 | |
| £m | £m | |
| Deposits | ||
At 1 January | 3 | – |
Placed (includes deposits of appointed key management personnel) | 1 | 6 |
Withdrawn (includes deposits of former key management personnel) | (1) | (3) |
At 31 December | 3 | 3 |
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Note 28: Related party transactions continued
| 2023 | 2022 | |
| £m | £m | |
| Assets, included within: | ||
Derivative financial instruments | – | 26 |
| Financial assets at amortised cost: due from fellow Lloyds Bank Corporate Markets Group | ||
undertakings | 359 | 350 |
359 | 376 | |
| Liabilities, included within: | ||
Due to fellow Lloyds Bank Corporate Markets Group undertakings | 45 | 47 |
45 | 47 |
The Group | The Bank | |||
| 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | |
| Assets, included within: | ||||
Financial assets at fair value through profit or loss | 54 | 22 | 54 | 22 |
Derivative financial instruments | 3,173 | 3,397 | 3,173 | 3,397 |
Financial assets at amortised cost: due from fellow Lloyds Banking | ||||
Group undertakings | 297 | 269 | 270 | 243 |
3,524 | 3,688 | 3,497 | 3,662 | |
| Liabilities, included within: | ||||
Due to fellow Lloyds Banking Group undertakings | 1,213 | 1,481 | 1,211 | 1,479 |
Financial liabilities at fair value through profit or loss | 45 | 2 | 45 | 2 |
Derivative financial instruments | 2,291 | 2,662 | 2,291 | 2,662 |
Debt securities in issue | 2,720 | 3,410 | 2,720 | 3,410 |
Subordinated liabilities | 748 | 761 | 748 | 761 |
7,017 | 8,316 | 7,015 | 8,314 | |
| Other equity instruments: | ||||
Additional tier 1 instruments | 808 | 782 | 808 | 782 |
808 | 782 | 808 | 782 |
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| Mandatorily held at | ||||||||
| fair value through | ||||||||
| Derivatives | profit or loss | Designated at | At fair value | |||||
| designated | fair value through other | Held at | ||||||
| as hedging | Held for | through profit | comprehensive | amortised | ||||
| instruments | trading | Other | or loss | income | cost | Total | ||
The Group | £m | £m | £m | £m | £m | £m | £m | |
| At 31 December 2023 | ||||||||
| Financial assets | ||||||||
Cash and balances at central banks | – | – | – | – | – | 20,201 | 20,201 | |
Financial assets at fair value through profit or loss | – | 21,692 | 297 | – | – | – | 21,989 | |
Derivative financial instruments | 9 | 22,597 | – | – | – | – | 22,606 | |
Loans and advances to banks | – | – | – | – | – | 1,753 | 1,753 | |
Loans and advances to customers | – | – | – | – | – | 16,447 | 16,447 | |
Reverse repurchase agreements | – | – | – | – | – | 6,020 | 6,020 | |
Debt securities | – | – | – | – | – | 374 | 374 | |
Due from fellow Lloyds Banking Group undertakings | – | – | – | – | – | 297 | 297 | |
Financial assets at amortised cost | – | – | – | – | – | 24,891 | 24,891 | |
Financial assets at fair value through other comprehensive income | – | – | – | – | – | – | – | |
Total financial assets | 9 | 44,289 | 297 | – | – | 45,092 | 89,687 | |
| Financial liabilities | ||||||||
Deposits from banks | – | – | – | – | – | 2,078 | 2,078 | |
Customer deposits | – | – | – | – | – | 29,439 | 29,439 | |
Repurchase agreements | – | – | – | – | – | 1 | 1 | |
Due to fellow Lloyds Banking Group undertakings | – | – | – | – | – | 1,213 | 1,213 | |
Financial liabilities at fair value through profit or loss | – | 19,675 | – | 11 | – | – | 19,686 | |
Derivative financial instruments | 36 | 17,540 | – | – | – | – | 17,576 | |
Debt securities in issue | – | – | – | – | – | 15,378 | 15,378 | |
Other | – | – | – | – | – | 38 | 38 | |
Subordinated liabilities | – | – | – | – | – | 755 | 755 | |
Total financial liabilities | 36 | 37,215 | – | 11 | – | 48,902 | 86,164 | |
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Note 30: Measurement basis of financial assets and liabilities continued
| Mandatorily held at | ||||||||
| fair value through | ||||||||
| Derivatives | profit or loss | Designated at | At fair value | |||||
| designated | fair value through other | Held at | ||||||
| as hedging | Held for | through profit or | comprehensive | amortised | ||||
| instruments | trading | Other | loss | income | cost | Total | ||
The Group | £m | £m | £m | £m | £m | £m | £m | |
| At 31 December 2022 | ||||||||
| Financial assets | ||||||||
Cash and balances at central banks | – | – | – | – | – | 19,382 | 19,382 | |
Financial assets at fair value through profit or loss | – | 14,235 | 545 | – | – | – | 14,780 | |
Derivative financial instruments | 1 | 24,620 | – | – | – | – | 24,621 | |
Loans and advances to banks | – | – | – | – | – | 2,117 | 2,117 | |
Loans and advances to customers | – | – | – | – | – | 19,127 | 19,127 | |
Reverse repurchase agreements | – | – | – | – | – | 5,606 | 5,606 | |
Debt securities | – | – | – | – | – | 305 | 305 | |
Due from fellow Lloyds Banking Group undertakings | – | – | – | – | – | 269 | 269 | |
Financial assets at amortised cost | – | – | – | – | – | 27,424 | 27,424 | |
Financial assets at fair value through other comprehensive income | – | – | – | – | 6 | – | 6 | |
Total financial assets | 1 | 38,855 | 545 | – | 6 | 46,806 | 86,213 | |
| Financial liabilities | ||||||||
Deposits from banks | – | – | – | – | – | 2,456 | 2,456 | |
Customer deposits | – | – | – | – | – | 29,152 | 29,152 | |
Repurchase agreements | – | – | – | – | – | 7 | 7 | |
Due to fellow Lloyds Banking Group undertakings | – | – | – | – | – | 1,481 | 1,481 | |
Financial liabilities at fair value through profit or loss | – | 12,578 | – | – | – | – | 12,578 | |
Derivative financial instruments | 49 | 20,021 | – | – | – | – | 20,070 | |
Debt securities in issue | – | – | – | – | – | 16,131 | 16,131 | |
Other | – | – | – | – | – | 45 | 45 | |
Subordinated liabilities | – | – | – | – | – | 761 | 761 | |
Total financial liabilities | 49 | 32,599 | – | – | – | 50,033 | 82,681 | |
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Note 30: Measurement basis of financial assets and liabilities continued
| Mandatorily held at | ||||||||
| fair value through | ||||||||
| Derivatives | profit or loss | Designated at | At fair value | |||||
| designated | fair value through other | Held at | ||||||
| as hedging | Held for | through profit | comprehensive | amortised | ||||
| instruments | trading | Other | or loss | income | cost | Total | ||
The Bank | £m | £m | £m | £m | £m | £m | £m | |
| At 31 December 2023 | ||||||||
| Financial assets | ||||||||
Cash and balances at central banks | – | – | – | – | – | 20,201 | 20,201 | |
Financial assets at fair value through profit or loss | – | 21,692 | 155 | – | – | – | 21,847 | |
Derivative financial instruments | 9 | 22,597 | – | – | – | – | 22,606 | |
Loans and advances to banks | – | – | – | – | – | 1,726 | 1,726 | |
Loans and advances to customers | – | – | – | – | – | 16,167 | 16,167 | |
Reverse repurchase agreements | – | – | – | – | – | 6,020 | 6,020 | |
Debt securities | – | – | – | – | – | 374 | 374 | |
Due from fellow Lloyds Banking Group undertakings | – | – | – | – | – | 629 | 629 | |
Financial assets at amortised cost | – | – | – | – | – | 24,916 | 24,916 | |
Financial assets at fair value through other comprehensive income | – | – | – | – | – | – | – | |
Total financial assets | 9 | 44,289 | 155 | – | – | 45,117 | 89,570 | |
| Financial liabilities | ||||||||
Deposits from banks | – | – | – | – | – | 2,078 | 2,078 | |
Customer deposits | – | – | – | – | – | 29,439 | 29,439 | |
Repurchase agreements | – | – | – | – | – | 1 | 1 | |
Due to fellow Lloyds Banking Group undertakings | – | – | – | – | – | 1,256 | 1,256 | |
Financial liabilities at fair value through profit or loss | – | 19,675 | – | 11 | – | – | 19,686 | |
Derivative financial instruments | 36 | 17,540 | – | – | – | – | 17,576 | |
Debt securities in issue | – | – | – | – | – | 15,378 | 15,378 | |
Other | – | – | – | – | – | 30 | 30 | |
Subordinated liabilities | – | – | – | – | – | 755 | 755 | |
Total financial liabilities | 36 | 37,215 | – | 11 | – | 48,937 | 86,199 | |
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Note 30: Measurement basis of financial assets and liabilities continued
| Mandatorily held at | ||||||||
| fair value through | ||||||||
| Derivatives | profit or loss | Designated at | At fair value | |||||
| designated | fair value through other | Held at | ||||||
| as hedging | Held for | through profit or | comprehensive | amortised | ||||
| instruments | trading | Other | loss | income | cost | Total | ||
The Bank | £m | £m | £m | £m | £m | £m | £m | |
| At 31 December 2022 | ||||||||
| Financial assets | ||||||||
Cash and balances at central banks | – | – | – | – | – | 19,382 | 19,382 | |
Financial assets at fair value through profit or loss | – | 14,235 | 407 | – | – | – | 14,642 | |
Derivative financial instruments | 1 | 24,646 | – | – | – | – | 24,647 | |
Loans and advances to banks | – | – | – | – | – | 2,063 | 2,063 | |
Loans and advances to customers | – | – | – | – | – | 18,864 | 18,864 | |
Reverse repurchase agreements | – | – | – | – | – | 5,606 | 5,606 | |
Debt securities | – | – | – | – | – | 305 | 305 | |
Due from fellow Lloyds Banking Group undertakings | – | – | – | – | – | 593 | 593 | |
Financial assets at amortised cost | – | – | – | – | – | 27,431 | 27,431 | |
Financial assets at fair value through other comprehensive income | – | – | – | – | 6 | – | 6 | |
Total financial assets | 1 | 38,881 | 407 | – | 6 | 46,813 | 86,108 | |
| Financial liabilities | ||||||||
Deposits from banks | – | – | – | – | – | 2,456 | 2,456 | |
Customer deposits | – | – | – | – | – | 29,152 | 29,152 | |
Repurchase agreements | – | – | – | – | – | 7 | 7 | |
Due to fellow Lloyds Banking Group undertakings | – | – | – | – | – | 1,526 | 1,526 | |
Financial liabilities at fair value through profit or loss | – | 12,578 | – | – | – | – | 12,578 | |
Derivative financial instruments | 49 | 20,021 | – | – | – | – | 20,070 | |
Debt securities in issue | – | – | – | – | – | 16,131 | 16,131 | |
Other | – | – | – | – | – | 36 | 36 | |
Subordinated liabilities | – | – | – | – | – | 761 | 761 | |
Total financial liabilities | 49 | 32,599 | – | – | – | 50,069 | 82,717 | |
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Note 31: Fair values of financial assets and liabilities
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Note 31: Fair values of financial assets and liabilities continued
| Level 1 | Level 2 | Level 3 | Total | |
| £m | £m | £m | £m | |
| At 31 December 2023 | ||||
| Financial assets at fair value through profit or loss | ||||
Loans and advances to banks | – | 4 | – | 4 |
Loans and advances to customers | – | 17,433 | 2 | 17,435 |
| Debt securities: | ||||
Government securities | 3,596 | – | – | 3,596 |
Bank and building society certificates of deposit | – | 91 | – | 91 |
| Asset-backed securities: | ||||
Mortgage-backed securities | – | 15 | – | 15 |
Other asset-backed securities | – | 61 | 7 | 68 |
Corporate and other debt securities | – | 583 | 146 | 729 |
3,596 | 750 | 153 | 4,499 | |
Treasury and other bills | 51 | – | – | 51 |
Total financial assets at fair value through profit or loss | 3,647 | 18,187 | 155 | 21,989 |
Financial assets at fair value through other comprehensive income | ||||
| Debt securities: | ||||
| Asset-backed securities: | ||||
Other asset-backed securities | – | – | – | – |
– | – | – | – | |
Total financial assets at fair value through other comprehensive income | – | – | – | – |
Total financial assets carried at fair value, excluding derivatives | 3,647 | 18,187 | 155 | 21,989 |
| Level 1 | Level 2 | Level 3 | Total | |
| The Group | £m | £m | £m | £m |
| At 31 December 2022 | ||||
| Financial assets at fair value through profit or loss | ||||
Loans and advances to banks | – | 16 | – | 16 |
Loans and advances to customers | – | 12,015 | 2 | 12,017 |
| Debt securities: | ||||
Government securities | 2,182 | – | – | 2,182 |
Bank and building society certificates of deposit | – | 76 | – | 76 |
| Asset-backed securities: | ||||
Mortgage-backed securities | – | 7 | – | 7 |
Other asset-backed securities | – | 14 | – | 14 |
Corporate and other debt securities | – | 250 | 156 | 406 |
2,182 | 347 | 156 | 2,685 | |
Treasury and other bills | 62 | – | – | 62 |
Total financial assets at fair value through profit or loss | 2,244 | 12,378 | 158 | 14,780 |
Financial assets at fair value through other comprehensive income | ||||
| Debt securities: | ||||
| Asset-backed securities: | ||||
Other asset-backed securities | – | – | 6 | 6 |
– | – | 6 | 6 | |
Total financial assets at fair value through other comprehensive income | – | – | 6 | 6 |
Total financial assets carried at fair value, excluding derivatives | 2,244 | 12,378 | 164 | 14,786 |
U
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Note 31: Fair values of financial assets and liabilities continued
| Level 1 | Level 2 | Level 3 | Total | |
| The Bank | £m | £m | £m | £m |
| At 31 December 2023 | ||||
| Financial assets at fair value through profit or loss | ||||
Loans and advances to banks | – | 4 | – | 4 |
Loans and advances to customers | – | 17,433 | 2 | 17,435 |
| Debt securities: | ||||
Government securities | 3,596 | – | – | 3,596 |
| Asset-backed securities: | ||||
Mortgage-backed securities | – | 15 | – | 15 |
Other asset-backed securities | – | 61 | 7 | 68 |
Corporate and other debt securities | – | 583 | 146 | 729 |
3,596 | 659 | 153 | 4,408 | |
Total financial assets at fair value through profit or loss | 3,596 | 18,096 | 155 | 21,847 |
Financial assets at fair value through other comprehensive income | ||||
| Debt securities: | ||||
| Asset-backed securities: | ||||
Other asset-backed securities | – | – | – | – |
– | – | – | – | |
Total financial assets at fair value through other comprehensive income | – | – | – | – |
Total financial assets carried at fair value, excluding derivatives | 3,596 | 18,096 | 155 | 21,847 |
| Level 1 | Level 2 | Level 3 | Total | |
| The Bank | £m | £m | £m | £m |
| At 31 December 2022 | ||||
| Financial assets at fair value through profit or loss | ||||
Loans and advances to banks | – | 16 | – | 16 |
Loans and advances to customers | – | 12,015 | 2 | 12,017 |
| Debt securities: | ||||
Government securities | 2,182 | – | – | 2,182 |
| Asset-backed securities: | ||||
Mortgage-backed securities | – | 7 | – | 7 |
Other asset-backed securities | – | 14 | – | 14 |
Corporate and other debt securities | – | 250 | 156 | 406 |
2,182 | 271 | 156 | 2,609 | |
Total financial assets at fair value through profit or loss | 2,182 | 12,302 | 158 | 14,642 |
Financial assets at fair value through other comprehensive income | ||||
| Debt securities: | ||||
| Asset-backed securities: | ||||
Other asset-backed securities | – | – | 6 | 6 |
– | – | 6 | 6 | |
Total financial assets at fair value through other comprehensive income | – | – | 6 | 6 |
Total financial assets carried at fair value, excluding derivatives | 2,182 | 12,302 | 164 | 14,648 |
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Note 31: Fair values of financial assets and liabilities continued
2023 | 2022 | |||||
| Total level 3 | Total level 3 | |||||
| Financial | assets carried | Financial | assets carried | |||
| assets at | at fair value, | assets at | at fair value, | |||
| Financial | fair value | excluding | Financial | fair value | excluding | |
| assets at fair | through other | derivatives | assets at fair | through other | derivatives | |
| value through | comprehensive | (recurring | value through | comprehensive | (recurring | |
| profit or loss | income | basis) | profit or loss | income | basis) | |
| The Group and the Bank | £m | £m | £m | £m | £m | £m |
At 1 January | 158 | 6 | 164 | 190 | 15 | 205 |
Exchange and other adjustments | (5) | – | (5) | – | – | – |
(Losses) gains recognised in the income statement within other income | (10) | – | (10) | (31) | – | (31) |
Gains recognised in other comprehensive income within | ||||||
the revaluation reserve in respect of financial assets at fair value through other comprehensive income | – | – | – | – | 1 | 1 |
Purchases/increases | 12 | 1 | 13 | 3 | – | 3 |
Sales/repayments | – | (7) | (7) | (4) | (10) | (14) |
| Transfers into the level 3 | ||||||
portfolio | – | – | – | – | – | – |
| Transfers out of the level 3 | ||||||
portfolio | – | – | – | – | – | – |
At 31 December | 155 | – | 155 | 158 | 6 | 164 |
(Losses) gains recognised in the income statement, within other income, relating to the change | ||||||
| in fair value of those assets held | ||||||
at 31 December | (8) | – | (8) | (31) | – | (31) |
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Note 31: Fair values of financial assets and liabilities continued
| Level 1 | Level 2 | Level 3 | Total | |
| The Group and the Bank | £m | £m | £m | £m |
| At 31 December 2023 | ||||
| Financial liabilities at fair value through profit or loss | ||||
Liabilities designated at fair value through profit or loss | – | 11 | – | 11 |
| Trading liabilities: | ||||
| Liabilities in respect of securities sold under repurchase | ||||
agreements | – | 18,101 | – | 18,101 |
Short positions in securities | 1,569 | 5 | – | 1,574 |
| Total financial liabilities carried at fair value, excluding | ||||
derivatives | 1,569 | 18,117 | – | 19,686 |
| At 31 December 2022 | ||||
| Financial liabilities at fair value through profit or loss | ||||
Liabilities designated at fair value through profit or loss | – | – | – | – |
| Trading liabilities: | ||||
| Liabilities in respect of securities sold under repurchase | ||||
agreements | – | 11,038 | – | 11,038 |
Short positions in securities | 1,504 | 36 | – | 1,540 |
| Total financial liabilities carried at fair value, excluding | ||||
derivatives | 1,504 | 11,074 | – | 12,578 |
2023 | 2022 | |||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |
| The Group | £m | £m | £m | £m | £m | £m | £m | £m |
Derivative assets | 13 | 22,160 | 433 | 22,606 | 6 | 24,050 | 565 | 24,621 |
Derivative liabilities | (10) | (17,213) | (353) | (17,576) | (8) | (19,568) | (494) | (20,070) |
2023 | 2022 | |||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |
| The Bank | £m | £m | £m | £m | £m | £m | £m | £m |
Derivative assets | 13 | 22,160 | 433 | 22,606 | 6 | 24,076 | 565 | 24,647 |
Derivative liabilities | (10) | (17,213) | (353) | (17,576) | (8) | (19,568) | (494) | (20,070) |
2023 | 2022 | |||
| Derivative | Derivative | Derivative | Derivative | |
| assets | liabilities | assets | liabilities | |
| The Group and the Bank | £m | £m | £m | £m |
At 1 January | 565 | (494) | 729 | (926) |
Exchange and other adjustments | (8) | 5 | 47 | (37) |
Gains (losses) recognised in the income statement within other income | (103) | 103 | (304) | 420 |
Purchases/increases | 19 | (14) | 58 | (46) |
Sales/repayments | (40) | 47 | (21) | 13 |
Transfers into the level 3 portfolio | – | – | 347 | (205) |
Transfers out of the level 3 portfolio | – | – | (291) | 287 |
At 31 December | 433 | (353) | 565 | (494) |
Gains (losses) recognised in the income statement, within other income, relating to the change in fair value of those assets or liabilities held at 31 December | (72) | 73 | (125) | 329 |
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Note 31: Fair values of financial assets and liabilities continued
| 2023 | 2022 | |
| £m | £m | |
At 1 January | 336 | 300 |
Income statement charge (credit) | (92) | 36 |
Transfers | (3) | – |
At 31 December | 241 | 336 |
| 2023 | 2022 | |
| £m | £m | |
Credit Valuation Adjustment | 162 | 250 |
Debit Valuation Adjustment | (31) | (48) |
Funding Valuation Adjustment | 110 | 134 |
241 | 336 |
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Note 31: Fair values of financial assets and liabilities continued
The Group and the Bank | 2023 | 2022 | |||||
| Effect of reasonably possible | Effect of reasonably possible | ||||||
| alternative assumptions | alternative assumptions | ||||||
| Carrying | Favourable | Unfavourable | Carrying | Favourable | Unfavourable | ||
| Valuation | value | changes | changes | value | changes | changes | |
| techniques | £m | £m | £m | £m | £m | £m | |
| Financial assets at fair value through profit or loss | |||||||
| Loans and | Comparable | ||||||
advances to customers | pricing | 2 | – | – | 2 | – | – |
Debt securities | Discounted | ||||||
| cash flows | 153 | 30 | (30) | 156 | 10 | (10) | |
155 | 30 | (30) | 158 | 10 | (10) | ||
| Financial assets at fair value through other comprehensive income | |||||||
| Asset-backed | Comparable | ||||||
| securities | pricing | – | – | – | 6 | – | – |
– | – | – | 6 | – | – | ||
| Derivative financial assets | |||||||
| Interest rate | Option pricing | ||||||
| derivatives | model | 433 | 6 | (3) | 565 | 9 | (7) |
433 | 6 | (3) | 565 | 9 | (7) | ||
Level 3 financial assets carried at fair value | 588 | 36 | (33) | 729 | 19 | (17) | |
| Derivative financial liabilities | |||||||
| Interest rate | Option pricing | ||||||
| derivatives | model | (353) | 14 | (15) | (494) | 17 | (19) |
| Level 3 financial liabilities carried | |||||||
at fair value | (353) | 14 | (15) | (494) | 17 | (19) | |
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Note 31: Fair values of financial assets and liabilities continued
| Carrying | Fair | Valuation hierarchy | |||
| value | value | Level 1 | Level 2 | Level 3 | |
| The Group | £m | £m | £m | £m | £m |
| At 31 December 2023 | |||||
Loans and advances to banks | 1,753 | 1,753 | – | – | 1,753 |
Loans and advances to customers | 16,447 | 16,376 | – | – | 16,376 |
Reverse repurchase agreements | 6,020 | 6,020 | – | 6,020 | – |
Debt securities | 374 | 368 | – | 184 | 184 |
Due from fellow Lloyds Banking Group undertakings | 297 | 297 | – | – | 297 |
| At 31 December 2022 | |||||
Loans and advances to banks | 2,117 | 2,117 | – | – | 2,117 |
Loans and advances to customers | 19,127 | 19,237 | – | – | 19,237 |
Reverse repurchase agreements | 5,606 | 5,606 | – | 5,606 | – |
Debt securities | 305 | 305 | – | 201 | 104 |
Due from fellow Lloyds Banking Group undertakings | 269 | 269 | – | – | 269 |
| Carrying | Fair | Valuation hierarchy | |||
| value | value | Level 1 | Level 2 | Level 3 | |
| The Bank | £m | £m | £m | £m | £m |
| At 31 December 2023 | |||||
Loans and advances to banks | 1,726 | 1,726 | – | – | 1,726 |
Loans and advances to customers | 16,167 | 16,095 | – | – | 16,095 |
Reverse repurchase agreements | 6,020 | 6,020 | – | 6,020 | – |
Debt securities | 374 | 368 | – | 184 | 184 |
Due from fellow Lloyds Banking Group undertakings | 629 | 629 | – | – | 629 |
| At 31 December 2022 | |||||
Loans and advances to banks | 2,063 | 2,063 | – | – | 2,063 |
Loans and advances to customers | 18,864 | 18,974 | – | – | 18,974 |
Reverse repurchase agreements | 5,606 | 5,606 | 5,606 | – | |
Debt securities | 305 | 305 | – | 201 | 104 |
Due from fellow Lloyds Banking Group undertakings | 593 | 593 | – | – | 593 |
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Note 31: Fair values of financial assets and liabilities continued
| Carrying | Fair | Valuation hierarchy | |||
| value | value | Level 1 | Level 2 | Level 3 | |
| The Group | £m | £m | £m | £m | £m |
| At 31 December 2023 | |||||
Deposits from banks | 2,078 | 2,078 | – | 2,078 | – |
Customer deposits | 29,439 | 29,462 | – | 29,462 | – |
Repurchase agreements | 1 | 1 | – | 1 | – |
Due to fellow Lloyds Banking Group undertakings | 1,213 | 1,213 | – | 1,213 | – |
Debt securities in issue | 15,378 | 15,273 | – | 15,273 | – |
Subordinated liabilities | 755 | 755 | – | 755 | – |
| At 31 December 2022 | |||||
Deposits from banks | 2,456 | 2,456 | – | 2,456 | – |
Customer deposits | 29,152 | 29,224 | – | 29,224 | – |
Repurchase agreements | 7 | 7 | – | 7 | – |
Due to fellow Lloyds Banking Group undertakings | 1,481 | 1,481 | – | 1,481 | – |
Debt securities in issue | 16,131 | 15,970 | – | 15,970 | – |
Subordinated liabilities | 761 | 761 | – | 761 | – |
| Carrying | Fair | Valuation hierarchy | |||
| value | value | Level 1 | Level 2 | Level 3 | |
| The Bank | £m | £m | £m | £m | £m |
| At 31 December 2023 | |||||
Deposits from banks | 2,078 | 2,078 | – | 2,078 | – |
Customer deposits | 29,439 | 29,462 | – | 29,462 | – |
Repurchase agreements | 1 | 1 | – | 1 | – |
Due to fellow Lloyds Banking Group undertakings | 1,256 | 1,256 | – | 1,256 | – |
Debt securities in issue | 15,378 | 15,273 | – | 15,273 | – |
Subordinated liabilities | 755 | 755 | – | 755 | – |
| At 31 December 2022 | |||||
Deposits from banks | 2,456 | 2,456 | – | 2,456 | – |
Customer deposits | 29,152 | 29,224 | – | 29,224 | – |
Repurchase agreements | 7 | 7 | – | 7 | – |
Due to fellow Lloyds Banking Group undertakings | 1,526 | 1,526 | – | 1,526 | – |
Debt securities in issue | 16,131 | 15,970 | – | 15,970 | – |
Subordinated liabilities | 761 | 761 | – | 761 | – |
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Note 31: Fair values of financial assets and liabilities continued
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| Related amounts where | ||||||
| set off in the balance | ||||||
| sheet not permitted | Potential | |||||
| net amounts | ||||||
| Gross | Amount | Net amounts | Cash | Non-cash | if offset | |
| amounts of | offset in | presented in | collateral | collateral | of related | |
| assets and | the balance | the balance | received/ | received/ | amounts | |
liabilities 1 | sheet | sheet | pledged | pledged | permitted | |
The Group | £m | £m | £m | £m | £m | £m |
| At 31 December 2023 | ||||||
| Financial assets | ||||||
| Financial assets at fair value through profit or loss: | ||||||
Excluding reverse repurchase agreements | 4,576 | – | 4,576 | – | (2,448) | 2,128 |
Reverse repurchase agreements | 30,029 | (12,616) | 17,413 | (75) | (17,226) | 112 |
34,605 | (12,616) | 21,989 | (75) | (19,674) | 2,240 | |
Derivative financial instruments | 22,606 | – | 22,606 | (2,970) | (13,516) | 6,120 |
| Financial assets at amortised cost: | ||||||
Loans and advances to banks | 1,753 | – | 1,753 | (1,550) | – | 203 |
Loans and advances to customers | 16,447 | – | 16,447 | (663) | – | 15,784 |
Reverse repurchase agreements | 6,020 | – | 6,020 | 12 | (6,021) | 11 |
Debt securities | 374 | – | 374 | – | – | 374 |
24,594 | – | 24,594 | (2,201) | (6,021) | 16,372 | |
Financial assets at fair value through other comprehensive income | – | – | – | – | – | – |
| Financial liabilities | ||||||
Deposits from banks | 2,078 | – | 2,078 | (1,432) | – | 646 |
Customer deposits | 29,439 | – | 29,439 | (1,791) | – | 27,648 |
Repurchase agreements at amortised cost | 1 | – | 1 | – | (1) | – |
| Financial liabilities at fair value through profit or loss: | ||||||
Excluding repurchase agreements | 1,585 | – | 1,585 | – | – | 1,585 |
Repurchase agreements | 30,717 | (12,616) | 18,101 | 102 | (18,087) | 116 |
32,302 | (12,616) | 19,686 | 102 | (18,087) | 1,701 | |
Derivative financial instruments | 17,576 | – | 17,576 | (2,125) | (11,341) | 4,110 |
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Note 32: Offsetting of financial assets and liabilities continued
£m | ||||||
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Note 33: Financial risk management
Financial instruments are fundamental to LBCM’s activities and, as a consequence, the risks associated with financial
instruments represent a significant component of the risks faced by LBCM.
The primary risks affecting LBCM through its use of financial instruments are: credit risk; market risk, which includes
interest rate risk and foreign exchange risk; and liquidity risk. The following disclosures provide quantitative and
qualitative information about LBCM’s exposure to these risks.
2023 | 2022 | |||||
| Maximum | Net | Maximum | Net | |||
| exposure | Offset | exposure | exposure | Offset | exposure | |
| £m | £m | £m | £m | £m | £m | |
Financial assets at fair value through profit or loss | 21,989 | – | 21,989 | 14,780 | – | 14,780 |
Derivative financial instruments | 22,606 | (9,948) | 12,658 | 24,621 | (12,407) | 12,214 |
| Financial assets at amortised cost, net | ||||||
| Loans and advances to banks, net | 1,753 | – | 1,753 | 2,117 | – | 2,117 |
Loans and advances to customers, net | 16,447 | – | 16,447 | 19,127 | – | 19,127 |
| Reverse repurchase agreements, net | 6,020 | – | 6,020 | 5,606 | – | 5,606 |
| Debt securities, net | 374 | – | 374 | 305 | – | 305 |
24,594 | – | 24,594 | 27,155 | – | 27,155 | |
Financial assets at fair value through other comprehensive income | – | – | – | 6 | – | 6 |
| Off-balance sheet items: | ||||||
| Performance bonds, including letters | ||||||
of credit, and other transaction- related contingencies | 94 | – | 94 | 86 | – | 86 |
Irrevocable commitments and guarantees | 21,157 | – | 21,157 | 16,619 | – | 16,619 |
21,251 | – | 21,251 | 16,705 | – | 16,705 | |
90,440 | (9,948) | 80,492 | 83,267 | (12,407) | 70,860 |
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Note 33: Financial risk management continued
2023 | 2022 | |||||
| Maximum | Net | Maximum | Net | |||
| exposure | Offset 1 | exposure | exposure | Offset | exposure | |
| £m | £m | £m | £m | £m | £m | |
Financial assets at fair value through profit or loss | 21,847 | – | 21,847 | 14,642 | – | 14,642 |
Derivative financial instruments | 22,606 | (9,948) | 12,658 | 24,647 | (12,407) | 12,240 |
| Financial assets at amortised cost, net | ||||||
| Loans and advances to banks, net | 1,726 | – | 1,726 | 2,063 | – | 2,063 |
Loans and advances to customers, net | 16,167 | – | 16,167 | 18,864 | – | 18,864 |
| Reverse repurchase agreements, net | 6,020 | – | 6,020 | 5,606 | – | 5,606 |
| Debt securities, net | 374 | – | 374 | 305 | – | 305 |
24,287 | – | 24,287 | 26,838 | – | 26,838 | |
Financial assets at fair value through other comprehensive income | – | – | – | 6 | – | 6 |
| Off-balance sheet items: | ||||||
| Performance bonds, including letters | ||||||
of credit, and other transaction- related contingencies | 94 | – | 94 | 86 | – | 86 |
Irrevocable commitments and guarantees | 21,157 | – | 21,157 | 16,619 | – | 16,619 |
21,251 | 21,251 | 16,705 | – | 16,705 | ||
89,991 | (9,948) | 80,043 | 82,838 | (12,407) | 70,431 |
The Group | The Bank | |||
| 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | |
Agriculture, forestry and fishing | 1 | 1 | 1 | 1 |
Energy and water supply | 32 | 37 | 32 | 37 |
Manufacturing | 259 | 308 | 259 | 308 |
Construction | 22 | 9 | 22 | 9 |
Transport, distribution and hotels | 71 | 108 | 71 | 108 |
Postal and telecommunications | 172 | 117 | 172 | 117 |
Property companies | 604 | 625 | 604 | 625 |
Financial, business and other services | 13,500 | 16,242 | 13,500 | 16,242 |
| Personal: | ||||
Mortgages | 1,514 | 1,443 | 1,514 | 1,443 |
Other | 52 | 55 | 10 | 12 |
Lease financing | 160 | 142 | – | – |
Hire purchase | 79 | 79 | – | – |
Total loans and advances to customers before allowance for impairment losses | 16,466 | 19,166 | 16,185 | 18,902 |
Allowance for impairment losses (note 14) | (19) | (39) | (18) | (38) |
Total loans and advances to customers | 16,447 | 19,127 | 16,167 | 18,864 |
Quality classification | IFRS 9 PD Range |
CMS 1-10 | 0.00-0.50% |
CMS 11-14 | 0.51-3.00% |
CMS 15-18 | 3.01-20.00% |
CMS 19 | 20.01-99.99% |
CMS 20-23 | 100.00% |
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Note 33: Financial risk management continued
Gross Drawn exposures | Expected credit loss allowance | |||||||
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
| The Group | £m | £m | £m | £m | £m | £m | £m | £m |
| At 31 December 2023 | ||||||||
CMS 1-10 | 15,315 | 9 | – | 15,324 | 9 | – | – | 9 |
CMS 11-14 | 846 | 134 | – | 980 | 3 | 2 | – | 5 |
CMS 15-18 | 101 | 45 | – | 146 | 2 | 2 | – | 4 |
CMS 19 | 2 | 5 | – | 7 | – | 1 | – | 1 |
CMS 20-23 | – | – | 9 | 9 | – | – | – | – |
16,264 | 193 | 9 | 16,466 | 14 | 5 | – | 19 |
Gross Drawn exposures | Expected credit loss allowance | |||||||
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | |
| At 31 December 2022 | ||||||||
CMS 1-10 | 17,108 | 239 | – | 17,347 | 17 | 1 | – | 18 |
CMS 11-14 | 969 | 662 | – | 1,631 | 6 | 10 | – | 16 |
CMS 15-18 | 3 | 156 | – | 159 | – | 4 | – | 4 |
CMS 19 | 4 | 3 | – | 7 | – | – | – | – |
CMS 20-23 | – | – | 22 | 22 | – | – | 1 | 1 |
18,084 | 1,060 | 22 | 19,166 | 23 | 15 | 1 | 39 |
Gross Drawn exposures | Expected credit loss allowance | |||||||
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
| The Bank | £m | £m | £m | £m | £m | £m | £m | £m |
| At 31 December 2023 | ||||||||
CMS 1-10 | 15,052 | 3 | – | 15,055 | 8 | – | – | 8 |
CMS 11-14 | 843 | 130 | – | 973 | 3 | 2 | – | 5 |
CMS 15-18 | 101 | 43 | – | 144 | 2 | 2 | – | 4 |
CMS 19 | – | 4 | – | 4 | – | 1 | – | 1 |
CMS 20-23 | – | – | 9 | 9 | – | – | – | – |
15,996 | 180 | 9 | 16,185 | 13 | 5 | – | 18 |
Gross Drawn exposures | Expected credit loss allowance | |||||||
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
| The Bank | £m | £m | £m | £m | £m | £m | £m | £m |
| At 31 December 2022 | ||||||||
CMS 1-10 | 16,880 | 220 | – | 17,100 | 16 | 1 | – | 17 |
CMS 11-14 | 968 | 655 | – | 1,623 | 6 | 9 | – | 15 |
CMS 15-18 | 3 | 154 | – | 157 | – | 5 | – | 5 |
CMS 19 | – | – | – | – | – | – | – | – |
CMS 20-23 | – | – | 22 | 22 | – | – | 1 | 1 |
17,851 | 1,029 | 22 | 18,902 | 22 | 15 | 1 | 38 |
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2023 | 2022 | |||||
| Investment | Investment | |||||
| grade | Other | Total | grade | Other | Total | |
| The Group | £m | £m | £m | £m | £m | £m |
| Trading assets: | ||||||
| Debt securities: | ||||||
Government securities | 3,596 | – | 3,596 | 2,182 | – | 2,182 |
| Asset-backed securities: | ||||||
Mortgage-backed securities | 15 | – | 15 | 7 | – | 7 |
Other asset-backed securities | 61 | – | 61 | 14 | – | 14 |
76 | – | 76 | 21 | – | 21 | |
| Corporate and other debt | ||||||
securities | 471 | 58 | 529 | 219 | 9 | 228 |
Total trading assets | 4,143 | 58 | 4,201 | 2,422 | 9 | 2,431 |
Other financial assets mandatorily at fair value through profit or loss: | ||||||
| Debt securities: | ||||||
| Bank and building society | ||||||
certificates of deposit | 91 | – | 91 | 76 | – | 76 |
Asset-backed securities | – | 7 | 7 | – | – | – |
| Corporate and other debt | ||||||
securities | – | 146 | 146 | – | 156 | 156 |
91 | 153 | 244 | 76 | 156 | 232 | |
Treasury and other bills | 51 | – | 51 | 62 | – | 62 |
| Total other financial assets | ||||||
| mandatorily at fair value through profit | ||||||
or loss | 142 | 153 | 295 | 138 | 156 | 294 |
4,285 | 211 | 4,496 | 2,560 | 165 | 2,725 | |
| Due from fellow Lloyds Banking Group | ||||||
| undertakings: | ||||||
Corporate and other debt securities | 54 | 22 | ||||
Total held at fair value through profit or loss | 4,550 | 2,747 |
2023 | 2022 | |||||
| Investment | Investment | |||||
| grade | Other | Total | grade | Other | Total | |
| The Bank | £m | £m | £m | £m | £m | £m |
| Trading assets: | ||||||
| Debt securities: | ||||||
Government securities | 3,596 | – | 3,596 | 2,182 | – | 2,182 |
| Asset-backed securities: | ||||||
Mortgage-backed securities | 15 | – | 15 | 7 | – | 7 |
Other asset-backed securities | 61 | – | 61 | 14 | – | 14 |
76 | – | 76 | 21 | – | 21 | |
| Corporate and other debt | ||||||
securities | 471 | 58 | 529 | 219 | 9 | 228 |
Total trading assets | 4,143 | 58 | 4,201 | 2,422 | 9 | 2,431 |
Other financial assets mandatorily at fair value through profit or loss: | ||||||
| Debt securities: | ||||||
Asset-backed securities | – | 7 | 7 | – | – | – |
| Corporate and other debt | ||||||
securities | – | 146 | 146 | – | 156 | 156 |
| Total other financial assets | ||||||
| mandatorily at fair value through profit | ||||||
or loss | – | 153 | 153 | – | 156 | 156 |
4,143 | 211 | 4,354 | 2,422 | 165 | 2,587 | |
| Due from fellow Lloyds Banking Group | ||||||
| undertakings: | ||||||
Corporate and other debt securities | 54 | 22 | ||||
Total held at fair value through profit or loss | 4,408 | 2,609 |
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2023 | 2022 | |||||
| Investment | Investment | |||||
| grade | Other | Total | grade | Other | Total | |
| The Group | £m | £m | £m | £m | £m | £m |
Trading and other | 18,667 | 757 | 19,424 | 20,235 | 988 | 21,223 |
Hedging | 9 | – | 9 | 1 | – | 1 |
18,676 | 757 | 19,433 | 20,236 | 988 | 21,224 | |
| Due from fellow Lloyds Banking Group | ||||||
undertakings | 3,173 | 3,397 | ||||
Total derivative financial instruments | 22,606 | 24,621 |
2023 | 2022 | |||||
| Investment | Investment | |||||
| grade | Other | Total | grade | Other | Total | |
| The Bank | £m | £m | £m | £m | £m | £m |
Trading and other | 18,667 | 757 | 19,424 | 20,235 | 988 | 21,223 |
Hedging | 9 | – | 9 | 1 | – | 1 |
18,676 | 757 | 19,433 | 20,236 | 988 | 21,224 | |
| Due from fellow Lloyds Banking Group | ||||||
undertakings | 3,173 | 3,423 | ||||
Total derivative financial instruments | 22,606 | 24,647 |
Gross Undrawn exposures | Expected credit loss allowance | |||||||
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | |
| At 31 December 2023 | ||||||||
CMS 1-10 | 21,054 | – | – | 21,054 | 6 | – | – | 6 |
CMS 11-14 | 506 | 17 | – | 523 | 1 | – | – | 1 |
CMS 15-18 | 13 | 37 | – | 50 | – | 1 | – | 1 |
CMS 19 | – | – | – | – | – | – | – | – |
CMS 20-23 | – | – | – | – | – | – | – | – |
21,573 | 54 | – | 21,627 | 7 | 1 | – | 8 |
Gross Undrawn exposures | Expected credit loss allowance | |||||||
| Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | |
| At 31 December 2022 | ||||||||
CMS 1-10 | 15,570 | 103 | – | 15,673 | 9 | 1 | – | 10 |
CMS 11-14 | 1,150 | 351 | – | 1,501 | 2 | 6 | – | 8 |
CMS 15-18 | – | – | – | – | – | – | – | – |
CMS 19 | – | – | – | – | – | – | – | – |
CMS 20-23 | – | – | – | – | – | – | – | – |
16,720 | 454 | – | 17,174 | 11 | 7 | – | 18 |
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Note 33: Financial risk management continued
| The Group and the Bank | ||
| 2023 | 2022 | |
| £m | £m | |
Financial assets at fair value through profit or loss | 512 | 1,052 |
At 31 December 2023 | At 31 December 2022 | |||||||
| Close | Average | Maximum | Minimum | Close | Average | Maximum | Minimum | |
| £m | £m | £m | £m | £m | £m | £m | £m | |
Interest rate risk | 1.6 | 2.0 | 3.8 | 0.9 | 1.3 | 1.3 | 3.9 | 0.5 |
Foreign exchange risk | 0.1 | 0.3 | 0.9 | 0.1 | 0.1 | 0.1 | 0.4 | — |
Equity risk | – | – | – | – | — | — | — | — |
Credit spread risk | 0.2 | 0.3 | 0.5 | 0.1 | 0.1 | 0.1 | 0.3 | — |
Inflation risk | 0.5 | 0.5 | 1.0 | 0.2 | 0.6 | 0.4 | 1.1 | 0.2 |
All risk factors before diversification | 2.5 | 3.1 | 5.0 | 1.9 | 2.1 | 1.9 | 5.0 | 0.9 |
Portfolio diversification | (0.9) | (0.8) | – | – | (0.5) | (0.4) | — | — |
Total VaR | 1.6 | 2.2 | 4.0 | 1.2 | 1.6 | 1.5 | 3.9 | 0.6 |
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2023 | 2022 | |||||||
| Up | Down | Up | Down | Up | Down | Up | Down | |
| 25bps | 25bps | 100bps | 100bps | 25bps | 25bps | 100bps | 100bps | |
| £m | £m | £m | £m | £m | £m | £m | £m | |
Sterling | 0.1 | (0.1) | 0.4 | (0.6) | (0.1) | 0.1 | (0.3) | 0.4 |
US Dollar | (0.1) | 0.1 | (0.3) | 0.3 | 1.1 | (1.1) | 4.5 | (4.5) |
Euro | (0.4) | 0.4 | (1.7) | 1.7 | 0.3 | (0.3) | 1.0 | (1.0) |
Other | – | – | – | – | – | – | – | – |
Total | (0.4) | 0.4 | (1.6) | 1.4 | 1.3 | (1.3) | 5.2 | (5.1) |
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Note 33: Financial risk management continued
2023 | 2022 | |||
| Steepener | Flattener | Steepener | Flattener | |
| £m | £m | £m | £m | |
Sterling | 1.9 | (2.0) | (1.6) | 1.6 |
US Dollar | 0.3 | (0.3) | (2.6) | 2.6 |
Euro | 0.8 | (0.8) | (0.9) | 0.8 |
Other | – | – | – | – |
Total | 3.0 | (3.1) | (5.1) | 5.0 |
2023 | 2022 | |||
| Up | Down | Up | Down | |
| 25bps | 25bps | 25bps | 25bps | |
| £m | £m | £m | £m | |
Customer-facing activity and associated hedges | 0.5 | (2.4) | 2.7 | (4.3) |
Up 25bps | Down 25bps | Up 50bps | |||||||
| Customer-facing activity and | Year 1 | Year 2 | Year 3 | Year 1 | Year 2 | Year 3 | Year 1 | Year 2 | Year 3 |
| associated hedges | £m | £m | £m | £m | £m | £m | £m | £m | £m |
2023 | 0.5 | 3.7 | 5.5 | (2.4) | (5.2) | (6.9) | 0.9 | 7.4 | 10.9 |
2022 | 2.7 | 3.8 | 9.4 | (4.3) | (4.7) | (10.3) | 7.1 | 7.5 | 18.8 |
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Note 33: Financial risk management continued
2023 | 2022 | |||
| US Dollar | EUR | US Dollar | US Dollar | |
| The Group and the Bank | £m | £m | £m | £m |
Exposure | 155 | 29 | 151 | 26 |
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Note 33: Financial risk management continued
| Up to 1 | 1-3 | 3-12 | 1-5 | Over 5 | ||
| month | months | months | years | years | Total | |
| The Group | £m | £m | £m | £m | £m | £m |
| At 31 December 2023 | ||||||
Deposits from banks | 148 | 126 | 381 | 1,434 | – | 2,089 |
Customer deposits | 14,889 | 5,343 | 7,025 | 2,197 | 70 | 29,524 |
Repurchase agreements | 1 | – | – | – | – | 1 |
| Financial liabilities at fair value through profit | ||||||
or loss | 8,728 | 4,109 | 5,273 | 706 | 1,421 | 20,237 |
Debt securities in issue | 958 | 1,389 | 8,080 | 5,777 | – | 16,204 |
Lease liabilities | – | 2 | 5 | 24 | 11 | 42 |
Subordinated liabilities | 6 | 8 | 44 | 849 | – | 907 |
Total non-derivative financial liabilities | 24,730 | 10,977 | 20,808 | 10,987 | 1,502 | 69,004 |
| Derivative financial liabilities: | ||||||
Gross-settled derivatives – outflows | 81,583 | 50,528 | 42,176 | 30,881 | 13,769 | 218,937 |
Gross-settled derivatives – inflows | (79,683) | (48,953) | (41,035) | (30,685) | (14,102) | (214,458) |
Gross-settled derivatives – net flows | 1,900 | 1,575 | 1,141 | 196 | (333) | 4,479 |
Net-settled derivative liabilities | 11,913 | – | – | – | – | 11,913 |
Total derivative financial liabilities | 13,813 | 1,575 | 1,141 | 196 | (333) | 16,392 |
| At 31 December 2022 | ||||||
Deposits from banks | 45 | 341 | 535 | 1,555 | 52 | 2,528 |
Customer deposits | 18,986 | 3,152 | 4,471 | 2,534 | 78 | 29,221 |
Repurchase agreements | 7 | – | – | – | – | 7 |
| Financial liabilities at fair value through profit | ||||||
or loss | 5,212 | 2,337 | 3,625 | 710 | 1,011 | 12,895 |
Debt securities in issue | 1,639 | 1,898 | 8,489 | 3,756 | 1,322 | 17,104 |
Lease liabilities | – | 2 | 4 | 24 | 18 | 48 |
Subordinated liabilities | – | – | 293 | 334 | 134 | 761 |
Total non-derivative financial liabilities | 25,889 | 7,730 | 17,417 | 8,913 | 2,615 | 62,564 |
| Derivative financial liabilities: | ||||||
Gross-settled derivatives – outflows | 52,851 | 40,126 | 37,271 | 26,580 | 13,372 | 170,200 |
Gross-settled derivatives – inflows | (50,453) | (38,250) | (35,721) | (25,918) | (13,329) | (163,671) |
Gross-settled derivatives – net flows | 2,398 | 1,876 | 1,550 | 662 | 43 | 6,529 |
Net-settled derivative liabilities | 10,259 | – | – | – | – | 10,259 |
Total derivative financial liabilities | 12,657 | 1,876 | 1,550 | 662 | 43 | 16,788 |
| Up to 1 | 1-3 | 3-12 | 1-5 | Over 5 | ||
| month | months | months | years | years | Total | |
| The Bank | £m | £m | £m | £m | £m | £m |
| At 31 December 2023 | ||||||
Deposits from banks | 148 | 126 | 381 | 1,434 | – | 2,089 |
Customer deposits | 14,889 | 5,343 | 7,025 | 2,197 | 70 | 29,524 |
Repurchase agreements | 1 | – | – | – | – | 1 |
| Financial liabilities at fair value through profit | ||||||
or loss | 8,728 | 4,109 | 5,273 | 706 | 1,421 | 20,237 |
Debt securities in issue | 958 | 1,389 | 8,080 | 5,777 | – | 16,204 |
Lease liabilities | – | 1 | 3 | 20 | 6 | 30 |
Subordinated liabilities | 6 | 8 | 44 | 849 | – | 907 |
Total non-derivative financial liabilities | 24,730 | 10,976 | 20,806 | 10,983 | 1,497 | 68,992 |
| Derivative financial liabilities: | ||||||
Gross-settled derivatives – outflows | 81,583 | 50,528 | 42,176 | 30,881 | 13,769 | 218,937 |
Gross-settled derivatives – inflows | (79,683) | (48,953) | (41,035) | (30,685) | (14,102) | (214,458) |
Gross-settled derivatives – net flows | 1,900 | 1,575 | 1,141 | 196 | (333) | 4,479 |
Net-settled derivative liabilities | 11,913 | – | – | – | – | 11,913 |
Total derivative financial liabilities | 13,813 | 1,575 | 1,141 | 196 | (333) | 16,392 |
| At 31 December 2022 | ||||||
Deposits from banks | 45 | 341 | 535 | 1,555 | 52 | 2,528 |
Customer deposits | 18,986 | 3,152 | 4,471 | 2,534 | 78 | 29,221 |
Repurchase agreements | 7 | – | – | – | – | 7 |
| Financial liabilities at fair value through profit | ||||||
or loss | 5,212 | 2,337 | 3,625 | 710 | 1,011 | 12,895 |
Debt securities in issue | 1,639 | 1,898 | 8,489 | 3,756 | 1,322 | 17,104 |
Lease liabilities | – | 1 | 3 | 20 | 12 | 36 |
Subordinated liabilities | – | – | 293 | 334 | 134 | 761 |
Total non-derivative financial liabilities | 25,889 | 7,729 | 17,416 | 8,909 | 2,609 | 62,552 |
| Derivative financial liabilities: | ||||||
Gross-settled derivatives – outflows | 52,851 | 40,126 | 37,271 | 26,580 | 13,372 | 170,200 |
Gross-settled derivatives – inflows | (50,453) | (38,250) | (35,721) | (25,918) | (13,329) | (163,671) |
Gross-settled derivatives – net flows | 2,398 | 1,876 | 1,550 | 662 | 43 | 6,529 |
Net-settled derivative liabilities | 10,259 | – | – | – | – | 10,259 |
Total derivative financial liabilities | 12,657 | 1,876 | 1,550 | 662 | 43 | 16,788 |
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Note 33: Financial risk management continued
| Within 1 | 1-3 | 3-5 | Over 5 | ||
| year | years | years | years | Total | |
| The Group and the Bank | £m | £m | £m | £m | £m |
| At 31 December 2023 | |||||
Other contingent liabilities | 84 | 3 | 7 | – | 94 |
Total contingent liabilities | 84 | 3 | 7 | – | 94 |
Lending commitments and guarantees | 12,350 | 6,531 | 2,552 | 194 | 21,627 |
Total commitments and guarantees | 12,350 | 6,531 | 2,552 | 194 | 21,627 |
Total contingents, commitments and guarantees | 12,434 | 6,534 | 2,559 | 194 | 21,721 |
| At 31 December 2022 | |||||
Other contingent liabilities | 79 | 7 | – | – | 86 |
Total contingent liabilities | 79 | 7 | – | – | 86 |
Lending commitments and guarantees | 9,721 | 5,147 | 2,186 | 120 | 17,174 |
Total commitments and guarantees | 9,721 | 5,147 | 2,186 | 120 | 17,174 |
Total contingents, commitments and guarantees | 9,800 | 5,154 | 2,186 | 120 | 17,260 |
| 2023 | 2022 | |
| £m | £m | |
Common equity tier 1 capital | 2,725 | 2,948 |
Additional tier 1 capital | 783 | 757 |
Tier 2 capital | 601 | 580 |
Total capital | 4,109 | 4,285 |
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Note 35: Cash flow statements
(A) Change in operating assets
The Group | The Bank | |||
| 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | |
| Change in amounts due from fellow Lloyds Banking Group | ||||
undertakings | (28) | 288 | (36) | 269 |
Change in other financial assets held at amortised cost | 2,221 | (2,390) | 2,236 | (2,384) |
Change in financial assets at fair value through profit or loss | (7,217) | 7,645 | (7,205) | 7,626 |
Change in derivative financial instruments | 1,947 | (7,342) | 1,973 | (7,316) |
Change in other operating assets | (313) | 147 | (299) | 148 |
Change in operating assets | (3,390) | (1,652) | (3,331) | (1,657) |
(B) Change in operating liabilities
The Group | The Bank | |||
| 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | |
Change in deposits from banks | (375) | (1,372) | (375) | (1,372) |
Change in customer deposits and repurchase agreements | 366 | 986 | 366 | 1,400 |
| Change in amounts due to fellow Lloyds Banking Group | ||||
undertakings | (268) | (1,961) | (270) | (2,394) |
Change in financial liabilities at fair value through profit or loss | 7,108 | (4,004) | 7,108 | (4,004) |
Change in derivative financial instruments | (2,494) | 4,498 | (2,494) | 4,499 |
Change in debt securities in issue | (453) | (1,130) | (453) | (1,130) |
| Change in other operating liabilities | (266) | 118 | (268) | 120 |
Change in operating liabilities | 3,618 | (2,865) | 3,614 | (2,881) |
1
1 Includes a decrease of £7 million (2022: increase of £13 million) for the Group and a decrease of £6 million (2022: decrease of £13 million) for the
Bank in respect of lease liabilities.
(C) Non-cash and other items
The Group | The Bank | |||
| 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | |
Depreciation and amortisation | 10 | 16 | 10 | 15 |
Impairment of investment in subsidiaries | – | – | – | 23 |
Dividends received from subsidiary undertakings | – | – | – | (22) |
Allowance for loan losses (net of recoveries) | (18) | 35 | (18) | 33 |
Impairment charge/(credit) relating to undrawn balances | (10) | 11 | (10) | 12 |
Unwind of discount on impairment allowances | – | – | – | – |
Other provision movements | – | 1 | – | – |
| Foreign exchange impact on balance sheet | 273 | (454) | 268 | (442) |
Other non-cash items | 452 | 89 | 452 | 77 |
Non-cash and other items | 707 | (302) | 702 | (296) |
1
1 When considering the movement on each line of the balance sheet, the impact of foreign exchange rate movements is removed in order to
show the underlying cash impact.
The Group | The Bank | |||
| 2023 | 2022 | 2023 | 2022 | |
| £m | £m | £m | £m | |
Cash and balances at central banks | 20,201 | 19,382 | 20,201 | 19,382 |
Less mandatory reserve deposits 1 | (190) | (176) | (190) | (176) |
20,011 | 19,206 | 20,011 | 19,206 | |
| Loans and advances to banks and reverse repurchase | ||||
agreements | 3,662 | 2,353 | 3,635 | 2,299 |
Less amounts with a maturity of three months or more | (3,477) | (2,110) | (3,477) | (2,109) |
185 | 243 | 158 | 190 | |
Total cash and cash equivalents | 20,196 | 19,449 | 20,169 | 19,396 |
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Note 36: Events since the balance sheet date
There are no events since the balance sheet date to disclose.
Note 37: Other information
registered number 10399850. Lloyds Bank Corporate Markets plc’s registered office is 25 Gresham Street, London, EC2V
Lloyds Bank Corporate Markets plc and its subsidiaries form a leading UK-based financial services group, whose
businesses provide a wide range of banking and financial services in the UK and overseas.
Lloyds Bank Corporate Markets plc’s immediate parent undertaking and ultimate parent undertaking and controlling
party is Lloyds Banking Group plc which is incorporated in Scotland. Copies of the consolidated annual report and
accounts of Lloyds Banking Group plc may be obtained from Lloyds Banking Group’s head office at 25 Gresham
Street, London EC2V 7HN or downloaded via www.lloydsbankinggroup.com.
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Subsidiaries and related undertakings
In compliance with Section 409 of the Companies Act 2006, the following comprises a list of all related undertakings
of LBCM, as at 31December 2023. The list includes each undertaking’s registered office and the percentage of the
class(es) of shares held by LBCM. All shares held are ordinary shares unless indicated otherwise in the notes.
The Bank directly or indirectly holds 100 per cent of the share class and a majority of voting rights in the following
undertakings.
Subsidiary undertaking Registered office address Bank interest
Black Horse Offshore Limited 9 Broad Street
St Helier, Jersey JE2 3RR
100%
Lloyds America Securities Corporation The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington
Delaware 19801
100%
1
Lloyds International Services Limited 9 Broad Street
St Helier, Jersey JE2 3RR
100%
Lloyds Bank Corporate Asset Finance (No.1) Limited 25 Gresham Street
London EC2V 7HN
100%
Lloyds Bank Corporate Markets Wertpapierhandelsbank GmbH Thurn-Und
Frankfurt Am Main 60313
Germany
100%
Lloyds International Management Services (Jersey) Limited
(formerly Lloyds Bank International Limited)
9 Broad Street
St Helier, Jersey JE2 3RR
100%
Lloyds Corporate Services (Jersey) Limited 9 Broad Street
St Helier, Jersey JE2 3RR
100%
Lloyds Holdings (Jersey) Limited 9 Broad Street
St Helier, Jersey JE2 3RR
100%
Lloyds Securities Inc. The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington
Delaware 19801
100%
2
Nominees (Jersey) Limited 9 Broad Street
St Helier, Jersey JE2 3RR
100%
1 10,000 US Dollars No par value.
2 10 US Dollars 0.1% common.
On the 2nd January 2024 Lloyds International Services Limited, Lloyds Corporate Services (Jersey) Limited, Lloyds
Holdings (Jersey) Limited and Nominees (Jersey) Limited merged with Lloyds International Management Services
(Jersey) Limited. There is no impact to the value of the investment in subsidiary undertakings of the bank.
Performance measures
The statutory results are supplemented with performance measures that are used internally in LBCM’s monthly
management reporting. A description is given below.
Return on tangible
equity
Profit attributable to ordinary shareholders, divided by average tangible net assets. This
measure is useful in providing a consistent basis with which to measure LBCM’s
performance.
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Forward-looking statements
This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities
Exchange Act of 1934, as amended, and section 27A of the US Securities Act of 1933, as amended, with respect to the
business, strategy, plans and/or results of Lloyds Bank Corporate Markets plc together with its subsidiaries (the
Group) and its current goals and expectations. Statements that are not historical or current facts, including
statements about the Group’s or its directors’ and/or management’s beliefs and expectations, are forward-looking
statements.
Words such as, without limitation, ‘believes’, ‘achieves’, ‘anticipates’, ‘estimates’, ‘expects’, ‘targets’, ‘should’, ‘intends’,
‘aims’, ‘projects’, ‘plans’, ‘potential’, ‘will’, ‘would’, ‘could’, ‘considered’, ‘likely’, ‘may’, ‘seek’, ‘estimate’, ‘probability’, ‘goal’,
‘objective’, ‘deliver’, ‘endeavour’, ‘prospects’, ‘optimistic’ and similar expressions or variations on these expressions are
intended to identify forward-looking statements.
These statements concern or may affect future matters, including but not limited to: projections or expectations of
the Group’s future financial position, including profit attributable to shareholders, provisions, economic profit,
dividends, capital structure, portfolios, net interest margin, capital ratios, liquidity, risk-weighted assets (RWAs),
expenditures or any other financial items or ratios; litigation, regulatory and governmental investigations; the Group’s
future financial performance; the level and extent of future impairments and write-downs; the Group’s ESG targets
and/or commitments; statements of plans, objectives or goals of the Group or its management and other
statements that are not historical fact and statements of assumptions underlying such statements.
By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend
upon circumstances that will or may occur in the future.
Factors that could cause actual business, strategy, targets, plans and/or results (including but not limited to the
payment of dividends) to differ materially from forward-looking statements include, but are not limited to: general
economic and business conditions in the UK and internationally; acts of hostility or terrorism and responses to those
acts, or other such events; geopolitical unpredictability; the war between Russia and Ukraine; the conflicts in the
Middle East; the tensions between China and Taiwan; political instability including as a result of any UK general
election; market-related risks, trends and developments; exposure to counterparty risk; the impact of any regulatory
and/or legislative divergence between the UK and EU as a result of the exit by the UK from the European Union (EU)
and the effects of the EU-UK Trade and Cooperation Agreement; the ability to access sufficient sources of capital,
liquidity and funding when required; changes to the Group’s credit ratings; fluctuations in interest rates, inflation,
exchange rates, stock markets and currencies; volatility in credit markets; volatility in the price of the Group’s
securities; tightening of monetary policy in jurisdictions in which the Group operates; natural pandemic and other
disasters; risks concerning borrower and counterparty credit quality; changes in laws, regulations, practices and
accounting standards or taxation; changes to regulatory capital or liquidity requirements and similar contingencies;
the policies and actions of governmental or regulatory authorities or courts together with any resulting impact on
the future structure of the Group; risks associated with the Group’s compliance with a wide range of laws and
regulations; assessment related to resolution-planning requirements; risks related to regulatory actions which may
be taken in the event of a bank or Group failure; exposure to legal, regulatory or competition proceedings,
investigations or complaints; failure to comply with anti-money laundering, counter-terrorist financing, anti-bribery
and sanctions regulations; failure to prevent or detect any illegal or improper activities; operational risks including
risks as a result of the failure of third-party suppliers; conduct risk; technological changes and risks to the security of
IT and operational infrastructure, systems, data and information resulting from increased threat of cyber and other
attacks; technological failure; inadequate or failed internal or external processes or systems; risks relating to ESG
matters, such as climate change (and achieving climate change ambitions) and decarbonisation, including the
Group’s ability along with the government and other stakeholders to measure, manage and mitigate the impacts of
climate change effectively, and human rights issues; the impact of competitive conditions; failure to attract, retain
and develop high-calibre talent; the ability to achieve strategic objectives; the ability to derive cost savings and
other benefits including, but without limitation, as a result of any acquisitions, disposals and other strategic
transactions; inability to capture accurately the expected value from acquisitions; assumptions and estimates that
form the basis of the Group’s financial statements; and potential changes in dividend policy. A number of these
influences and factors are beyond the control of the Group or Lloyds Banking Group plc. Please refer to the Base
Prospectus for the Group’s Euro Medium-Term Note Programme and the latest Annual Report on Form 20-F filed by
Lloyds Banking Group plc with the US Securities and Exchange Commission (the SEC), which is available on the SEC’s
website at www.sec.gov, for a discussion of certain factors and risks. Lloyds Banking Group plc may also make or
disclose written and/or oral forward-looking statements in other written materials and in oral statements made by
the directors, officers or employees of Lloyds Banking Group plc to third parties, including financial analysts.
Except as required by any applicable law or regulation, the forward-looking statements contained in this document
are made as of today’s date, and the Group expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained in this document whether as a result of new
information, future events or otherwise. The information, statements and opinions contained in this document do not
constitute a public offer under any applicable law or an offer to sell any securities or financial instruments or any
advice or recommendation with respect to such securities or financial instruments.
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