Blueprint
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
(02
November 2018)
LLOYDS BANKING GROUP
plc
(Translation of registrant's name into
English)
5th Floor
25 Gresham Street
London
EC2V 7HN
United Kingdom
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports
under
cover Form 20-F or Form 40-F.
Form
20-F..X.. Form 40-F
Indicate
by check mark whether the registrant by furnishing the
information
contained
in this Form is also thereby furnishing the information to
the
Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes
No ..X..
If
"Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule
12g3-2(b):
82- ________
Index
to Exhibits
Item
No.
1 Regulatory News Service Announcement, dated 02 November
2018
re: EBA
Stress Test Results
2 November 2018
EBA STRESS TEST RESULTS PUBLISHED
Lloyds Banking Group plc (the 'Group'), together with 47 other
financial institutions across Europe has been subject to the 2018
EU-wide stress test conducted by the European Banking Authority
(the 'EBA'). The stress test does not contain a pass/fail threshold
but is instead designed to be used as an input into the supervisory
review process by assessing banks' ability to meet applicable
capital requirements under stressed conditions.
The EBA stress tests assume a severe UK economic scenario combining
significant falls in property prices and GDP, rising unemployment
and deflation. In particular, house prices and CRE values drop by
29.3 per cent and 29.5 per cent respectively, GDP falls by 5 per
cent by 2019, unemployment increases by 4.5 per cent, whilst
equities suffer a 27 per cent fall in 2018. The scenario is
also characterised by deflation, with bank rate rising to 1 per
cent and sterling remaining flat.
Result of the stress test
The Group's estimated CET1 ratio, using the CRDIV transitional
rules as implemented in the UK by the PRA, starts at a pro-forma
CET1 ratio of 14.0 per cent at 1 January 2018 (including IFRS 9 and
reflecting transitional relief benefit) and in the EBA Adverse
scenario reaches a low point of 8.55 per cent in 2020 (year
3).
The results of the PRA stress test will be disclosed later in the
year. There are material methodology differences to the EBA stress
test, which uses a prescriptive methodology and is based on a
static balance sheet as at December 2017. This significantly limits
the ability to draw direct comparisons between the two
exercises.
The Group's capital position remains strong having reported a CET 1
ratio post dividend accrual of 14.6 per cent at the recent third
quarter results. The Group also continues to be strongly capital
generative having built 162 basis points of capital in the first
three quarters of the year, and continues to expect to deliver
c.200 basis points for the full year.
Further details
The detailed results of the stress test in relation to all
participating banks under the baseline and adverse scenarios are
published on the EBA website. The disclosure tables are based on
the common format provided by the EBA.
Notes to editors
Details
of the EBA prescribed methodology for the stress test can be found
at: https://www.eba.europa.eu/-/eba-launches-2018-eu-wide-stress-test-exercise.
The methodology includes a number of conditions and assumptions
which are not reflected in the PRA stress, including:
● Assumption
of a static balance sheet
● Net
Interest Income capped at 2017 levels
● No
write offs or recoveries allowed in impairment
forecasts
● Market
risk shock floor based on historical volatility and inability to
recover in outer years
● Costs
floored at 2017 levels, subject to the exclusion of agreed
one-offs
●
A different definition of stage 3 assets which increases the level
of stage 3 assets and the impairment impact. It should also be
noted that no transitional relief is available on stage 3
assets
Results
are published in Euros and so the stress forecasts, per the EBA
methodology, are translated at a constant exchange rate of
1.1271.
Neither the baseline scenario nor the adverse scenario illustrated
in the templates should in any way be construed as a forecast, or
be directly compared to other information published by the Group.
These results do not take into account future business strategies
and management actions and is not a predictor of future financial
outcomes.
- END -
For further information:
Investor Relations
Douglas
Radcliffe
+44 (0) 20 7356 1571
Group Investor Relations Director
douglas.radcliffe@lloydsbanking.com
Corporate Affairs
Matt
Smith +44
(0) 20 7356 3522
Head of Media Relations
matt.smith@lloydsbanking.com
FORWARD LOOKING STATEMENTS
This document contains certain forward looking statements with
respect to the business, strategy and plans of Lloyds Banking Group
and its current goals and expectations relating to its future
financial condition and performance. Statements that are not
historical facts, including statements about Lloyds Banking Group's
or its directors' and/or management's beliefs and expectations, are
forward looking 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, plans
and/or results (including but not limited to the payment of
dividends) to differ materially from the plans, objectives,
expectations, estimates and intentions expressed in such forward
looking statements made by the Group or on its behalf include, but
are not limited to: general economic and business conditions in the
UK and internationally; market related trends and developments;
fluctuations in interest rates (including low or negative rates),
exchange rates, stock markets and currencies; the ability to access
sufficient sources of capital, liquidity and funding when required;
changes to the Group's credit ratings; the ability to derive cost
savings and other benefits including, but without limitation as a
result of any acquisitions, disposals and other strategic
transactions; changing customer behaviour including consumer
spending, saving and borrowing habits; changes to borrower or
counterparty credit quality; instability in the global financial
markets, including Eurozone instability, the exit by the UK from
the European Union (EU) and the potential for one or more other
countries to exit the EU or the Eurozone and the impact of any
sovereign credit rating downgrade or other sovereign financial
issues; technological changes and risks to cyber security; natural,
pandemic and other disasters, adverse weather and similar
contingencies outside the Group's control; inadequate or failed
internal or external processes or systems; acts of war, other acts
of hostility, terrorist acts and responses to those acts,
geopolitical, pandemic or other such events; changes in laws,
regulations, accounting standards or taxation, including as a
result of the exit by the UK from the EU, or a further possible
referendum on Scottish independence; changes to regulatory capital
or liquidity requirements and similar contingencies outside the
Group's control; the policies, decisions and actions of
governmental or regulatory authorities or courts in the UK, the EU,
the US or elsewhere including the implementation and interpretation
of key legislation and regulation; the ability to attract and
retain senior management and other employees; requirements or
limitations on the Group as a result of HM Treasury's
investment in the Group; actions or omissions by the Group's
directors, management or employees including industrial action;
changes to the Group's post-retirement defined benefit scheme
obligations; the extent of any future impairment charges or
write-downs caused by, but not limited to, depressed asset
valuations, market disruptions and illiquid markets; the value and
effectiveness of any credit protection purchased by the Group; the
inability to hedge certain risks economically; the adequacy of loss
reserves; the actions of competitors, including non-bank financial
services, lending companies and digital innovators and disruptive
technologies; and exposure to regulatory or competition scrutiny,
legal, regulatory or competition proceedings, investigations or
complaints. Please refer to the latest Annual Report on Form 20-F
filed with the US Securities and Exchange Commission for a
discussion of certain factors together with examples of forward
looking statements. 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 Lloyds Banking Group
expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward looking
statements. 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.
Signatures
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
LLOYDS
BANKING GROUP plc
(Registrant)
By: Douglas
Radcliffe
Name: Douglas
Radcliffe
Title: Group
Investor Relations Director
Date: 02
November 2018