Lloyds Banking Group (LLOY) Retail Shareholder Event 14 June 2019

Carla Antunes da Silva, Executive Committee member and Group Strategy, Corporate Ventures and Investors Relations Director and Douglas Radcliffe, Group Investor Relations Director presented to 40 retail shareholders in a highly successful event organised by Lloyds and ShareSoc.

After a detailed 45 minute presentation, Carla and Douglas answered questions for 30 minutes, followed by informal discussions and networking over a very pleasant buffet lunch on the 8^thfloor of the Lloyds head office in Gresham Street overlooking the London skyline.

Copies of the presentation slides are here. Lloyds 2019_sharesoc_presentation_final The key points I noted were:

Lloyds is now a simple, low risk, customer focused, UK retail and commercial bank and as part of its current strategic phase is making a more than £3bn investment to transform the Group for success in a digital world. Lloyds has around 26 million customers, and with 15.7 million digitally active customers, UK’s largest digital bank.
The new JV with Schroders will target the mass affluent-affluent customer segment (£100k + investable cash) and the High Net Worth Customers (£1m + investable cash) via Cazenove Capital. They see this as a big growth opportunity.
They are multi brand and multi channel (in this respect they are not simple!)
They are very focused on costs and cost income ratio (see slide re benchmarking).
Guidance on NIM, costs, credit quality, profitability and capital build was reiterated at Q1 (see the slides). The regulator has recently reduced their capital requirement and this may allow more to be distributed to shareholders.

There were lots of questions covering a wide range of topics.

On the role of Scottish Widows within the Lloyds Banking Group, Lloyds indicated it was an important and integral part of the Group and there were no plans to sell it.
On questions around share buy backs (to which a number of questioners were critical, preferring dividends), Lloyds said that a large number of institutional investor prefer buybacks to special dividends, including the US funds who hold c. 30% of shares. Lloyds also explained the benefits of buybacks such as the reduction in the number of shares and the value of the company thus being split among a smaller number of shares.
On the lengthy annual report and 100+ pages of notes, making it more difficult to see the key messages, Lloyds pointed out their regulatory reporting requirements but also highlighted that they have reduced the length of their releases.
On the preference for more of the presentation to be on the outlook and less on products and services offered to customers, Lloyds noted the feedback for future presentations.
On customers service, although there was one critical questioner, several others in the audience thought Lloyds and its many brands were good. Lloyds noted their strong customer satisfaction scores.
On the impact of interest rates Lloyds gave a sensitivity (25bp = +- c. £85m, optimum base rate is around 2.5% to 3%) and talked about their current planning assumption of one rise of 25bp per year over planning horizon of c. 3 years though a rate rise is now unlikely this year.
On questions around Brexit operational impact Lloyds noted the operational impact is small as the Group is mainly UK focussed. However, any impact of Brexit on the UK economy will impact the Group and potentially loan loss ratios and profits.
HBOS acquisition and rights issue. Can I have my money back? The question was neatly pivoted to say that PPI claims are now nearly finished. The impact has been huge, but further impact is limited given date for final submission of claims is set. Note from Cliff: the Lloyds Shareholder Action group is now closed to new joiners, so there is no redress available for the questioner or others in the same position who lost money.

There were no questions on the treatment of SMEs, directors’ remuneration or succession, which suggests these are not a priority for this group of investors.

After the Q&A, a buffet lunch was served with sandwiches, very nice hot sausage rolls and fresh fruit. Carla, Douglas and other executives mingled with the audience and answered further questions.

Lloyds have run retail shareholder events in the past but not recently. In a 1:1 over lunch, Douglas said that although they have not recently hosted retail events they are keen to find right formats for engagement with retail investors. I stressed to him that this sort of long term commitment and hard work results in building trust between shareholders and the company. Being prepared to allocate time for these events provides an insight into the corporate governance of the company and provides reassurance that one’s investment will be well looked after. Lloyds could become a role model for other UK companies to follow.

ShareSoc hope to be able to do more of these large company events. We think this will be of interest to many members and complement the ShareSoc growth company investor events which tend to focus on smaller companies.

My personal conclusion (I am not authorised to give advice) is that shareholders can expect good dividends, probably buy-backs and good capital discipline. The lessons of wasting money on acquisitions appear to have been learned. Brexit might be a hiccup and were it not for that the shares appear to be excellent value at 57p with 2018 eps of 5.5p

And finally, here is a picture of some of the happy attendees at lunch with ongoing discussions in the background.

Cliff Weight, Director, ShareSoc

Declaration: I own shares in Lloyds.

Post Date: June 21, 2019

John Smith says:

25th June 2019 at 11:04 am

I recently read about LLoyd where it was mentioned that the Net Interest Income in Q1 of FY2019 decreased by 3% to £3,083 mn. It ranks among the large-cap stock listed on the London Stock Exchange and a constituent of FTSE 100 index as well. I guess that this large cap stock will show the same graph as of now.

Stephen Burke says:

25th June 2019 at 7:25 pm

I didn’t go to this as it wasn’t convenient but I’d like to encourage sharesoc to do more events with this kind of company if they can be persuaded to engage; I’m not really interested in the likes of tiny mining or tech companies that tend to feature in seminars (not just sharesoc ones).

Group description:	SIGnet Taunton is a new group with around 10 keen members at present, with a range of investment styles and experience. We welcome new members.
Meeting Type/Venue:	In person meetings at a golf club near to the centre of Taunton.
Meeting Frequency/Timing:	We meet on the first Monday of every month at a golf club near to the centre of Taunton, 11am until 3pm with a lunch break.

Group description:	An online group for those who are new to investing, or have only been investing for a few years. Including topics such as: – What is a share or a bond, why and how to buy them. – Comparing funds, unit trusts, Investment trusts and exchange traded funds. – Portfolio management and diversification. – ISAs, pensions, SIPPS and how to save tax. – How terms such as PE ratio and dividend yield are used to value a share. – How to use technical analysis or charting.
Meeting Type/Venue:	Online using Zoom.
Meeting Frequency/Timing:	Meetings are usually held on the last Monday of the month at 7:00pm.

Group description:	An online group for those who already have some experience in investing. Covering topics such as finding companies to invest in, financial statements and ratios, valuation / margin of safety, analysis of companies and investment trusts and exchange traded funds.
Meeting Type/Venue:	Online using Zoom.
Meeting Frequency/Timing:	Meetings are usually held on the last Wednesday of the month at 7:00pm.

Group description:	The Equity Income Group welcomes investors of all levels of experience, from beginners to advanced. The focus of meetings is on dividend paying Investment Trusts, though there is also discussion around individual shares.
Meeting Type/Venue:	Meetings are held online.
Meeting Frequency/Timing:	Meetings are held every 6 weeks on a weekday between 7 and 8:30pm.

Group description:	The Group welcomes investors of all levels of experience, from beginners to advanced. The focus of meetings is on all types of income generating financial instruments, from stocks through Trusts and Funds and ETFs to retail bonds. Meetings involve presentations from members, who are also expected to lead discussions from time to time, as well as discussions on what has been bought and sold since the last meeting.
Meeting Type/Venue:	Meetings are in-person in a venue in Central London.
Meeting Frequency/Timing:	Meetings are usually held on the last Thursday of every other month, starting with an informal lunch around 1pm followed by discussions until around 5pm.

Lloyds Banking Group (LLOY) Retail Shareholder Event 14 June 2019

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Group description:	A welcoming group open to all types of investors. Typical meeting content is to have a deep dive presentation on a topic selected by the participants and a session on buy/ sell/ key lessons learnt last month.
Meeting Type/Venue:	In person at a friendly pub close to Piccadilly Circus
Meeting Frequency/Timing:	Monthly during the evening on the first Wednesday of the month.

Group description:	Our group is a broad church that contains investors of varying experience. Our members’ backgrounds are diverse and include corporate banking, engineering, teaching and the leisure industry. We generally pick a discussion topic for every meeting, e.g. housebuilders or the defence industry, and members are invited to research and discuss different aspects or companies within that industry. We also discuss stocks and investment trusts that we have bought, sold or are interested in and the reasons behind our decisions, and try to make sense of the ever changing investment environment. Discussions are robust and challenging but we are a friendly and approachable group who welcome investors of all levels – we just ask that you contribute, at whatever level you can.
Meeting Type/Venue:	Our meetings are held in a private room at a nice pub near to South Ealing tube station (Piccadilly Line), not far from Ealing Broadway (District, Central and Elizabeth Line).
Meeting Frequency/Timing:	We meet every 2 months, usually on a Wednesday morning at 11am.

Group description:	All levels of experience welcome. A typical meeting agenda includes: – Macro Environment – Trades: Members review existing positions and identify securities with promising TA entry patterns or setups and with suitable risk/reward. Any security, long, short, futures, options may be considered. The convener takes actual positions in trades and maintains his own detailed ledger, accurately measuring performance of individual securities and cumulative activity. Members are notified by e-mail prior to the entries or exits that are decided upon. Following each meeting an updated copy of the ledger is circulated together with the next meeting agenda. Members may wish to maintain similar ledgers of their own but there is no obligation to do so. – Technical Analysis: Techniques and systems used in trades. Members can request discussion of particular aspects of TA.
Meeting Type/Venue:	Online via Zoom
Meeting Frequency/Timing:	The first Tuesday of every month from 7 to 9pm

Group description:	Open to all investors / people with an interest in investing. Typical meeting will involve members talking about recent purchases, successes, failures and possible future purchases. Also with occasional visiting speakers or members making presentations on a topic of interest.
Meeting Type/Venue:	We aim to meet on the last Tuesday of each month in a private room at a pub in Playhatch. Start time 7pm with members encouraged to meet up around 6pm for a bite to eat / drink before hand, if their diaries allow.
Meeting Frequency/Timing:	7pm on the last Tuesday of the month. Meetings likely to last about two hours but with informal ‘overspill’ before / after.

Lloyds Banking Group (LLOY) Retail Shareholder Event 14 June 2019

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