Lloyds Banking Group plc (LLOY) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the Lloyds Group Banking AGM. It's great to be here with you in person. When we started planning, we weren't sure whether a physical event like this would be possible, so I'm very glad to be speaking to you this morning and grateful to you for joining. Thank you, in particular, for those of you who have traveled in to be with us and those watching on the live stream. I'm Robin Budenberg and I've been Group Chair since January, having joined the Board in October last year. So this is my first AGM with the group. Today's event follows our virtual shareholder event last week, where we provided an update on our progress in 2020 and our priorities for 2021 before answering shareholders' questions. We will follow a similar format today with 3 verbal updates from myself as Chair; William Chalmers as Interim Group Chief Executive; and Sara Weller as Chair of the Responsible Business Committee. We will then have time for questions at the end, getting through as many as we can, and conduct the formal requirements of the meeting, including voting on the proposed resolutions. So I'd now like to introduce you to our panel of Directors. On my immediate left is Kate Cheetham, our Group General Counsel; on my immediate right, William Chalmers, as I said, our Interim Group Chief Executive; and to William's right is Sarah Legg, Chair of the Board's Audit Committee; Alan Dickinson, our Deputy Chair; Sara Weller, our Board Responsible Business Committee Chair; and Catherine Woods, the Chair of the Board Risk Committee, are also available virtually to assist in answering any particular questions. So let me start on an update of our progress and our priorities as I see them. In keeping with the updates we normally provide, I'd like to cover, firstly, changes to our Board in 2020, then an overview of our performance in 2020, the resumption of our dividend, our remuneration policy, the HBOS Reading fraud, and some reflections from me as I begin my tenure as Chair and some comments on our plans for 2021. So first, changes to the group's Board. It's only fitting that I start by thanking my predecessor, Lord Blackwell, who has held the Chair role for these last 6 years. Norman's dedication and tireless work in this position means he has left us with strong governance and a clear purpose and strategy. This is also our first AGM since António Horta-Osório stepped down as chief executive. Over the last decade, he has led our transformation, delivering our purpose of Helping Britain Prosper while creating a truly customer-focused business underpinned by strong financial foundations. I'd like to thank him on behalf of the Board and wish him all the best in his new role at Crédit Suisse. Later this year, we look forward to welcoming Charlie Nunn as Group Chief Executive. As we said when announcing his appointment, Charlie will bring world-class operational, technological, and strategic expertise to build on the strengths of our existing team. In the meantime, I'd like to thank William Chalmers for assuming the responsibilities of Interim Chief Executive in this period. His steady hand will be key to setting us up for future success and allowing Charlie to hit the ground running. In addition, there have been some other changes to our Board in the last 12 months. In January this year, Catherine Woods took over the role of Chair of the Board Risk Committee. Catherine joined the Board in March 2020 and has extensive experience in the banking industry. I'd like to thank Nick Prettejohn, who held the role of Chair of the Board Risk Committee last year on an interim basis. We announced in September that Simon Henry was leaving the Board, and Sarah Legg has now taken on his role as Chair of the Audit Committee. Sarah was Group Financial Controller at HSBC until early 2019 following a long career in financial leadership roles. And finally, earlier this year, we announced that Sara Weller would retire as Chair of the Responsible Business Committee and as a Nonexecutive Director later this month. I'd like to thank Sara for her leadership and her commitment in chairing the committee since it was created in 2015. And I'm pleased to welcome Amanda Mackenzie, a Nonexecutive Director since 2018, to the role of Chair of the Responsible Business Committee following Sara's retirement. I'd like to thank all our Board members for their contribution and hard work over the past year. We announced a number of important changes, notably to the Chair and CEO roles, and the Board played a key role, providing stability, continuity and guidance. And from a personal perspective, I'd like to thank them for making me feel so welcome since I joined the group. 2020 will be remembered as a year dominated by the COVID-19 pandemic and our response to that and the economic crisis that followed. In many ways, it was the ultimate test of our commitment to the group's purpose of Helping Britain Prosper. You'll hear more from William about the variety of ways in which we have been supporting our colleagues, customers and communities through the pandemic, but I'd like to take this opportunity to recognize the efforts of every Lloyds Banking colleague who has worked through this crisis, especially those who have been serving our customers in our branches and call centers. Your response in the last year has been nothing short of monumental, and you have made me incredibly proud to become a part of this business. Thank you from me and from the group's Board for all that you have achieved. Despite the impacts of the pandemic, our financial performance has also demonstrated the group's underlying strength and the benefits of being a focused, sustainable, efficient and low-risk U.K. financial services leader. William will talk through the numbers in detail, but given the background, we were pleased to report an underlying profit of GBP 2.2 billion and statutory profit before tax of GBP 1.2 billion. We also continued our strategic investment in the group with a particular focus on digitizing our products and processes, something that proved incredibly important in helping our colleagues and customers respond to the pandemic. Regarding our dividend. Last year, following a request to all banks by the Prudential Regulation Authority, the group suspended dividends on ordinary shares and canceled the final dividend for 2019. These decisions were not taken lightly, and I'm sure will have come as a disappointment to you, our shareholders. However, our capital position has remained strong as a result. And following the PRA announcement in December, the Board was able to recommend a total ordinary dividend of 0.57p per share, the maximum allowable within the PRA guidelines. We recognize the importance of the dividend to many of our shareholders. The PRA has said that they will consider their guidance on 2021 dividends before banks announce their half year results, so the Board expects to be in a position to discuss interim dividends when it reviews the performance of the business for the first half of the year. Our position on quarterly dividends will also be confirmed at that time. The Board remains committed to future capital returns. In 2021, subject to regulatory guidance, the Board intends to grow the dividend from 2020, in line with the group's progressive and sustainable ordinary dividend policy. Now let me turn to executive remuneration, rightfully an important topic for our shareholders. As I have said, last year was a challenging one for our customers and for the economy. And it is therefore appropriate that this was reflected in remuneration across the group for 2020. In April last year, all members of the group executive team asked not to be considered for their bonus entitlement for 2020, a decision they made in solidarity with the communities in which we operate and in recognition of the priorities of our stakeholders. However, because we didn't meet our profit targets threshold for 2020, there was, in fact, no bonus pool. So no bonuses were paid at any level of the business. We did, however, want to recognize the tremendous hard work and commitment of our colleagues who have gone above and beyond for our customers every day and have done so under extraordinary circumstances. We have therefore given all colleagues a share award of GBP 400 and gave nearly 40,000 customer-facing colleagues a GBP 250 recognition award last summer. We've also resumed above-inflation pay increases this year for most of our people, geared towards those colleagues on lower pay. Therefore, while our senior leaders took a very significant pay cut for the year, most of our staff saw their total remuneration protected, and those at the most junior levels saw an increase on 2019. Again, this was an appropriate thing to do. I'd also like to give a brief update on the HBOS Reading fraud, understandably an important issue for many of our shareholders. We've published several updates on our website on the actions the group has taken to address the criminal activities that took place between 2003 and 2007 as well as learning the necessary lessons. I encourage shareholders to read these detailed updates, which I hope address many of your questions. Actions taken have included apologizing to the customers affected and seeking to compensate them fairly and generously. Following the independent report by Sir Ross Cranston on our initial compensation review, we have taken forward his recommendations in a further review of customer direct and consequential loss compensation by an independent panel led by Sir David Foskett. The Foskett panel has begun address -- issuing its first outcomes to customers, and we're giving them all the resources and assistance they require to provide closure for customers. We continue to cooperate fully with the ongoing Dame Linda Dobbs inquiry, which the Board set up to look at our handling of the investigations following the HBOS acquisition. Importantly, we continue to learn what we can from this situation so that we can better serve our customers and shareholders in future. That has meant being honest about the things we haven't done well, the times our culture and communications have been too legalistic or lacking in empathy, for example. I have no doubt that there will be further lessons to be learned, particularly from Dame Linda's review, before we draw this matter finally to a close. The most important thing of all, though, is to provide real closure for impacted customers. Finally, I wanted to finish with some broader thoughts as I start out as Chair of Lloyds Banking Group. Before joining, I was all too aware of the group's reach and impact in U.K. communities. Not only is Lloyds Banking Group the U.K.'s largest retail and commercial financial services provider, it is also an historic institution with an established reputation and relationships across the country. As a result, the critical role Lloyds Banking Group will play in Helping Britain Recover from the pandemic cannot be overstated. Our main responsibility is to be there for our customers and communities today, helping them through the challenging times we're in. But we also have a responsibility to be thinking about the next 5 and even 50 years, anticipating the changes we know are coming and planning for society's future prosperity. I've spoken recently about 4 key principles which I believe will underpin the U.K.'s future economic progress and which will need to be embraced by any business seeking to participate in a successful recovery, including our own. These are, first, innovation driven by technology. We saw a nearly 20% increase in customers using our mobile app at the start of the pandemic. Following these technology-driven trends has never been optional, but now it is an essential part of building a successful business. Second, the importance of local economies. We've seen a huge shift of spending away from traditional city hubs, particularly London, in the last year. 7 in 10 consumers plan to spend more on local businesses than in the previous year. We need to spread prosperity across the U.K. with a mindset shift that empowers local voices to do the right thing for local economies. Third, environmental sustainability. The green economy is expected to grow at 4x the rate of the economy as a whole, and we've seen demand for electric vehicles grow by some 2.5x in our vehicle leasing business. But I believe the moral imperative is more important than the economic trend. We must embed sustainable principles in everything we do, even when times are as difficult as they are today. And that brings me to the last principle, social purpose. Our insight suggests that 2 in 3 consumers think businesses should be doing more to help society and the environment, and that's even higher for the younger generations. This clearly is what our purpose, Helping Britain Prosper, is all about, including our ongoing work to build a more inclusive culture and support for those most in need across the U.K.'s communities. We must continue building social purpose into everything we do. All 4 of these themes were starting to emerge before the pandemic but have been dramatically accelerated in its wake. Reassuringly, they've been at the heart of Lloyds Banking Group's ethos for many years and underpin the plans we have made to Help Britain Recover in 2021. That purpose is at the heart of Strategic Review 2021, a series of commitments we outlined in February focusing on the areas of society where we believe we can make the best difference while continuing to develop Lloyds Bank Group's capabilities to create the U.K.'s preferred financial partner for personal customers and the best bank for business. Our plans are cleared -- are based on clear execution priorities for 2021 underpinned by long-term strategic vision. William will be giving more detail on these plans shortly, but having been heavily involved in the development of this strategy, the Board is highly supportive of our direction and excited about the opportunities it presents for all our stakeholders. In summary, therefore, 2020 will go down as a challenging and redefining period in U.K. history, but also as a pivotal moment for Lloyds Banking Group. Although the outlook is uncertain, the pandemic provides a unique opportunity for banks to demonstrate their commitment to customers, colleagues, the economy, and broader society. We have to support people through the very real challenges they are currently facing; although some have paid down debt and saved, many others have seen rising debt and falling financial resilience. Our plans for recovery must be sensitive to these challenges. And we also have to play our part in working to address the disparities the pandemic has underlined, particularly along regional, racial, and generational lines. Helping Britain Recover encapsulates all these responsibilities. I have great confidence in the group's direction for the years ahead. We have the right team, a clear purpose and strategic direction, and a fundamentally resilient business, all of which will drive our success as the U.K. recovers from the pandemic. I want to express my thanks again to our colleagues for their resilience and to our customers for their patience in the last year. And I'd like to thank you all for your support of the group and for listening today. I believe we have a lot to look forward to. Thank you. William?

Thank you, Robin. I would like to echo your words of thanks to both Lord Blackwell and António for their very significant contributions to Lloyds Banking Group. Both have been a tremendous source of guidance and leadership for the group, and also for me personally in my time here. I'm very pleased to be here as Interim Group Chief Executive ahead of Charlie Nunn joining us as Group Chief Executive in August. My speech today will focus on 3 areas: I'll give some more detail on our performance in 2020, both in terms of our numbers and our response to the coronavirus pandemic; I'll then talk about our strategy, the outcomes of our last strategic plan and the objectives for Strategic Review 2021, which we announced in February; finally, I'll finish with a look at our performance in the first quarter of 2021, which we published at the end of April. First, our financial performance in 2020. As Robin said, while COVID-19 clearly had a significant impact during the year, our resilient business model enabled us to deliver profitability despite the challenging macroeconomic environment. The 2020 results we reported in February showed both the strength of our customer franchise and balance sheet and that our strategy has delivered. For the 2020 financial year, we reported an underlying profit of GBP 2.2 billion, and a statutory profit before tax of GBP 1.2 billion. Net income for the year was GBP 14.4 billion, down 16% on 2019, reflecting reductions in net interest income and other income as a result of the pandemic. We further reduced total costs at the same time as continuing to invest in digital projects and absorbing additional coronavirus-related expenses. Last year, I underlined the importance of this investment in digital, positioning us well to support our customers and their changing needs. We did report an elevated impairment charge for the year of GBP 4.2 billion. While this was below the range we forecast for the half year, it highlights the potential economic impact of the pandemic on our customers. For now, we remain in a stable economic environment, significantly due to the government's economic support measures. And we continue to be very well provisioned against the uncertainties ahead. Our strong balance sheet and capital position enabled us to continue to support our customers and the U.K. economy throughout 2020. We grew our lending in key segments such as mortgages, where we increased our open mortgage book by over GBP 5.2 billion across the year. We achieved our 2020 commitment of extending GBP 18 billion in gross lending to U.K. businesses, including exceeding our 3-year GBP 6 billion target of increased annual net lending start-ups. Meanwhile, we saw a GBP 39 billion increase in customer deposit balances, reflecting the strength of our trusted brands in an uncertain environment. Looking ahead, many uncertainties remain, but we saw some stability in the second half of 2020, and as I'll discuss later, the first signs of recovery in 2021. These figures demonstrate the group's underlying health and resilience, but they tell only part of the story of our efforts in 2020. All organizations had to make significant changes in response to the pandemic, and Lloyds Banking Group has been no different. We're incredibly proud of how our people and our business has adapted. We believe our response has been powerful in ensuring our customers are supported, our people are safe, and our business remains fundamentally resilient and healthy. For our customers, we adapted quickly to give them access to the services and support they needed through the channels their circumstances required. We were able to keep more than 90% of our branches open at the height of the first lockdown and have averaged 97% thereafter. At the same time, more and more customers turned to digital and online banking. Our position as the U.K.'s leading digital bank meant we were well placed to meet their needs. Indeed, we saw our active digital banking customers increase to 17.4 million, 2 million more than the prior year, with record levels of customer satisfaction. Our rapid response meant we could get help to those that needed it most. For example, we introduced dedicated phone lines for elderly customers and frontline NHS staff. By the end of Q1, we have provided around 1.3 million payment holidays for mortgages, loans, credit cards, and motor finance to customers experiencing difficulty or needing some financial breathing space. It's very good to see that the vast majority of customers who originally took a payment holiday have now returned to making payments. Inevitably, responding to such a high volume of change in a short period of time caused some disruption to our services, such as call waiting times. We sought to address these as soon as possible, and we're very grateful to our customers for bearing with us as we have adapted. For business, we listened to the challenges they're facing and stepped up our support to help them through a uniquely challenging period. We've provided over GBP 12 billion through the government-backed lending schemes by the end of Q1 as well as 34,000 capital repayment holidays to ease the financial pressures that many faced. And for our people, we committed to paying all employees in full, whatever their circumstances, to give peace of mind and help them focus on our customers. We also continue to put their mental and physical health at the top of the agenda, launching a colleague well-being portal and providing free subscriptions to the well-being app Headspace. More broadly, alongside efforts to address the impact of the pandemic, we've maintained our focus on the social and economic issues facing the U.K. society. 2020 was an important year in raising awareness of the need for significant societal change. We know that Lloyds Banking Group has a leading role to play in this process. In July, we launched our rate action plan, the first commitment of its kind by a FTSE 100 company. This includes a public goal to has specifically increased black representation in senior roles to align with the overall U.K. labor market at the same time as tackling issues like career progression, cultural awareness, and our values and behaviors. Since the launch of the plan, we've created a race advisory panel to hold us accountable as we shape and create policies to build on an inclusive culture at Lloyds Banking Group. Climate change remains one of the biggest issues facing the U.K. today. We are committed to supporting the transition to a low-carbon economy to embed sustainable principles into everything we do. A green recovery is one of the central pillars of our plans to Help Britain Recover from the pandemic. We've been on this journey for many years, providing over GBP 7.3 billion in green finance since 2016, powering the equivalent of 10.1 million homes through our support to renewable energy projects since the start of 2018. But we know the path to a low-carbon economy requires us to take a long-term view with near-term action. And that's why we've accelerated our plans to work with customers, government, and wider stakeholders to reduce the emissions we finance by more than 50% by 2030. This will set us on our path to achieve net 0 by 2050 or sooner, while also seeking to make our own carbon footprint net 0 by 2030. Sara will give some more detail on how we're seeking to be a responsible and sustainable business. In short, we believe our commitments encourage a long-term approach to climate change while recognizing the urgency that it demands. The action we've taken on all of these issues, from culture change to climate change, is part of taking our purpose to Help Britain Prosper seriously. This purpose has underpinned all of our efforts to Help Britain Recover from the pandemic, and it forms an integral part of our strategic plans for 2021. Now before I walk you through Strategic Review 2021, I'd like to acknowledge that 2020 was also the final year of our most recent strategic plan, GSR3. That was launched in 2018 to transform the group for success in a digital world. And over that period, we invested nearly GBP 3 billion to enhance the experience of our customers, accelerate the digitization of the group and transform our ways of working. As well as strengthening our position as the U.K.'s largest digital bank, demonstrated by the growth in digital customers, we increased the proportion of our products that originate through digital channels from 68% in 2017 to 85% today. We lent around GBP 40 billion to first-time buyers, significantly above our GBP 30 billion commitment. For our commercial banking clients, we exceeded our GBP 6 billion target of additional net lending to start-ups, SMEs and mid-market customers and achieved our GBP 18 billion commitment in 2020 for gross new lending to U.K. businesses. We've also driven growth across a number of our core markets, including the creation of a comprehensive insurance and wealth offering. And as part of this, we've enhanced our position in financial planning and retirement through the Schroders Personal Wealth joint venture, with an ambition to become a top 3 financial planning business provider by the end of 2025. We've also significantly grown our market shares in home insurance, corporate pensions, and individual annuities. And all of these efforts provided the foundations for the next phase of our strategy, Strategic Review 2021. At its heart, Strategic Review 2021 seeks to build Lloyds' position as the U.K.'s preferred financial partner for personal customers and the best bank for business. We will do this by unlocking coordinated growth opportunities across our core business areas of retail, insurance and wealth, and commercial banking, supported by enhancements in our key capabilities: payments, data, technology, and our people. We continue to be driven by our purpose of Helping Britain Prosper, shifting our focus in 2021 to Helping Britain Recover. And in this, we will focus on 5 key areas embedded in our businesses where we believe we can make the biggest difference to help us recognize this purpose. First, we will help rebuild household financial health and well-being by providing practical support to help our customers facing financial difficulty get back on track. Second, we will support businesses to recover, adapt and to grow. This includes developing recovery plans for our customers, supporting at least 75,000 U.K. businesses to start up in 2021 and helping at least 185,000 small businesses boost their digital capabilities through our local academies and partnerships. Third, we will expand the availability of affordable and quality homes across the U.K., providing GBP 10 billion of lending to help people buy their first home in 2021 and GBP 1.5 billion of new funding to support social housing. Fourth, we will help accelerate the transition to a low-carbon economy. Alongside the commitments I outlined earlier, 2021 will also see us expand the funding available under our green finance initiatives from GBP 3 billion to GBP 5 billion. We'll also introduce a fossil fuel-free fund to support green growth. And fifth, we will help continue to build an inclusive society and organization by setting new aspirational goals for a leadership team that reflects the society we serve. This includes 50% of senior roles being held by women, 13% by our Black, Asian and minority ethnic colleagues, and 3% specifically by Black colleagues by 2025. It is also important that we reimagine our ways of working to meet the needs of our people as we emerge from the pandemic into a world that is going to be fundamentally different. We know from recent surveys that 80% of our employees who did not previously work from home would like to do so for a material part of the week in future. When they're in the office, they want to spend time collaborating. And we will create a future-ready workspace to facilitate this while seeking to reduce our office space by around 20% over the next 3 years. Together, this will deliver a more sustainable workplace for our colleagues and for our businesses. Now stepping back, Strategic Review 2021 provides us with clear focus and targets to execute for the coming year, underpinned by long-term strategic thinking. We believe this combination will enable us to build our leadership position as the U.K.'s preferred financial partner. In addition, in executing Strategic Review 2021, we aim to deliver long-term shareholder value. We're targeting a return on tangible equity in excess of cost of equity over the medium term. Our Q1 results in April demonstrate early progress against our plans. In the first 3 months of this year, we lent nearly GBP 4 billion to first-time buyers. And in March, we recorded our biggest month for total mortgage completions since 2008. We also launched a new Halifax-branded digital first protection product, saw a 75% increase in Schroders Personal Wealth referrals as supported by our new relationship consultants. And all of this is alongside a 130% increase in users of our business finance assistant accounting proposition for commercial customers. And in April, we joined as a founding member of the Net Zero Banking Alliance to help accelerate the transition to a low-carbon economy and achieve our net 0 by 2050 ambitions. These are just a few of the indicators of how Strategic Review 2021 is helping us to achieve our broader objective of Helping Britain Recover from the pandemic. Our Q1 results also demonstrated encouraging financial progress and growth in our business. Statutory profit before tax was GBP 1.9 billion, significantly above consensus and up on both Q4 and the previous year, while net income for the quarter was GBP 3.7 billion, up 2% in Q4. In a challenging environment, the group continued to demonstrate cost discipline with total costs of GBP 1.9 billion, down 2% year-on-year, while we also spent GBP 0.2 billion in strategic investment, putting us on track to meet our target of GBP 0.9 billion in 2021. Business momentum, meanwhile, was positive, with our open mortgage book growing by GBP 6 billion in the first 3 months of the year. We saw a notable increase in our retail current accounts of GBP 5.6 billion, demonstrating our business strength in a subdued environment. Credit quality remains strong, which, together with an improved economic outlook, resulted in a net impairment credit of GBP 323 million in the quarter, driven by an overall GBP 459 million release of expected credit loss provisions. While the economic outlook remains certain -- uncertain, the continued success of the vaccine rollout and additional government support measures saw us improve our forecast for the U.K. GDP growth in 2021 from 3% to 5%. Given the solid financial performance in the first quarter of 2021, we have enhanced our guidance for the year. Based on the group's current economic assumptions, we now expect our net interest margin to be in excess of 245 basis points, net asset quality ratio to be below 25 basis points, and statutory return on tangible equity for the group to be between 8% and 10%, excluding a circa 2.5-percentage point benefit from anticipated changes in the corporate tax rate. Therefore, while we still have a lot to do to keep supporting the U.K. recovery, the first quarter shows positive progress against our plans and represents a solid start to 2021. To finish, I'd like to join Robin in paying tribute to all those who have been working for the group over the last year. Our colleagues have faced so many challenges, from working from home for the first time to implementing social distancing in branches from scratch as well as working tirelessly to support our customers and each other. They have embodied our purpose by actively contributing to the communities they're part of, often while juggling challenging responsibilities at home. Their can-do attitude and willingness to always go the extra mile has been nothing short of outstanding. The quality of our people, our clear purpose, and our bold plans for 2021 all give me great confidence in the future of our organization. So thank you all for your time, and I look forward to answering your questions later on. Thank you.

Thank you, William. And we'll now hear some remarks from Sara Weller, Chair of our Board's Responsible Business Committee.

Thank you. As this will be my final AGM, I'm delighted to have the chance, even in this unique way, to update you on the work of Responsible Business Committee. With the group's unique position at the heart of the British economy, we firmly believe it's our responsibility to help address the economic, social and environmental challenges the U.K. faces. COVID-19 has affected us all and transformed the society in which we live. Therefore, our priority and the focus of the Responsible Business Committee is to do what we can to help the U.K. recover in an inclusive and sustainable way. Today, I'd like to share some examples of how we've sought to live out our purpose in the past year, working with others to address vital issues like mental health, domestic abuse, and digital skills, before finishing with a look at what's coming up in the next year. To take the first of those, it's never been more important to care for mental health, well-being, and resilience given the extra pressures the pandemic has placed on us all. That's why Lloyds Banking Group moved quickly at the start of the first lockdown to increase support for our colleagues by adding to our online tools and resources, including free subscriptions to the Headspace app, which provides mental health and well-being advice. 16,000 of our people have taken advantage of this resource to date. At the same time, we continued our work with Mental Health UK to enable the charity to increase the capacity of the U.K.'s first mental health and money advice service. Sadly, the country also saw an increase in cases of domestic abuse after the start of lockdown. We sought to support colleagues going through this by introducing an emergency support service for anyone affected by domestic abuse, allowing them to access safe, secure accommodation and get professional advice on their next steps. Another area of focus has been helping businesses, individuals and charities access vital digital skills. Just before last year's AGM, we introduced a new dedicated phone line with We Are Digital, to provide guidance and remote training to customers who couldn't access our branches. The service has supported 13,000 digitally excluded people to date, helping them learn everyday digital tasks like online banking, booking appointments and having video calls with loved ones. Our Lloyds Bank Digital Academy has worked alongside these initiatives to help over 85,000 people and business owners develop their digital literacy. Finally, our independent charitable foundations stepped up their support for small and local charities during the pandemic, and we're seeing increased demands on their services at the same time as seeing incomes reduced. To support these efforts, Lloyds Banking Group committed to maintain its funding to the foundations for 2021, locking in over GBP 50 million across 2 years and giving certainty at a very uncertain time. These examples complement the fantastic individual efforts of our colleagues who stepped up as delivery drivers and emergency paramedics, among other things, to help their communities while doing their day jobs. We're incredibly proud of these efforts. However, not all the challenges of the last year resulted from the pandemic. We have continued to develop and strengthen our commitments to tackle underlying issues such as climate change. Robin and William have outlined our headline commitments to reduce our carbon footprint and help the U.K. transition to a low-carbon economy. To provide some additional detail, our latest annual report saw us publish an initial estimate of our 2018 financed emissions baseline and developed our first emissions intensity reduction ambition for the power sector. Further sector targets will be published throughout 2021. And earlier this year, Scottish Widows became the first major pensions and insurance provider to target halving the carbon footprint of all of its GBP 170 billion of investments by 2030, on its path to net 0 by 2050. Alongside these efforts, we've continued our work to build an inclusive organization that reflects the communities we serve. William has spoken today about the Race Action plan we launched in July last year and the progress we are already making. Building on this, our charitable foundation for England and Wales committed to allocate 25% of its grant funding to charities led by and serving communities of racial minorities. In the first round of grants under the new commitment, 38% of the funding was actually allocated to charities from ethnic minority backgrounds. We know we have a long way to go, but we believe these to be positive steps towards a more inclusive organization and society. As we look ahead to 2021 and beyond, the group will continue its work on the critical aspects of being a responsible business with a renewed focus on Helping Britain Recover. Importantly, we want this to be a recovery with economic stability, environmental sustainability, and social inclusivity at its heart. Our specific 2021 commitments include expanding the funding available under our green finance initiatives from GBP 3 billion to GBP 5 billion, training 6,500 colleagues to support customers with debt advice and providing GBP 10 billion of lending to help people buy their first home in 2021. Through pledges such as these, we will continue to target the areas where we can make the most difference and identify new opportunities to take a leadership role in building a more sustainable and inclusive society. There will be lots we have to learn along the way, and we may not always get it right, but we believe this to be the appropriate response to our purpose of Helping Britain Prosper and an essential component of building a successful recovery. In the year ahead, we'll therefore stay focused on embedding these principles into our strategy, our processes, and our culture. Before I close, I just wanted to say that it has been my great pleasure to chair our Responsible Business Committee over the past 6 years and to play a part in steering the contributions of the group as it helps Britain recover. Thank you for listening.

Thank you, Sara, for those remarks. And I will now say a few words about the resolutions we'll be voting on today before giving shareholders the opportunity to ask questions. Unless there are any objections, I will now take the Notice of Annual General Meeting as read. Thank you. Resolutions 1 to 18 are ordinary resolutions requiring a simple majority of more than 50% of the total votes cast to be approved, and Resolutions 19 to 25 are special resolutions and to be approved require at least 3/4 of the votes cast to be in their favor. Resolution 15 proposes that the company adopts a new deferred bonus plan. I have here a copy of the new deferred bonus plan rules. In addition, Resolution 24 proposes that the company adopts new articles of association. Again, I have here a copy of the new articles. All of the resolutions will be decided by a poll, which means that each shareholder present in person, by proxy, or corporate representative has one vote for every share held. For the purposes of the poll, we'll be using paper poll cards. When you registered downstairs today, each shareholder, proxy or corporate representative will have been given a poll card. If there is anyone who thinks they should have a poll card but does not, please raise your hand and someone will come to help. If you are a shareholder who has already lodged a former proxy, but you're here in person, you don't have to vote again now unless you want to change your vote or if you didn't originally appoint me as your proxy and the person you appointed as your proxy is not present. If you are here as a proxy, you should vote now. Please complete the poll card by writing in your full name and address in block letters and sign it where indicated. If you are here as a proxy for a shareholder, you should insert the name and address of the shareholder you represent and sign his proxy, adding below your signature your own name in block letters. Corporate representatives should complete the poll card with the full details of the name of the company they represent and provide the registrars with some form of identification and their written authority to exercise the votes. You have 3 options for each resolution. You can vote the proposed resolution -- you can vote for the proposed resolution, against the proposed resolution or you may withhold your vote. I'd remind you that while you have the choice to withhold your vote, this is not a vote in law and so does not count either for or against a resolution. Will you please complete your poll card by placing a cross in the appropriate box next to the relevant resolution, depending on how you wish to cast your vote. Completed poll cards should be placed in one of the poll boxes outside the meeting room when you leave the meeting. There is no rush, as the poll will remain open for a further 5 minutes after the meeting ends. If you are unsure what to do or require help at any time, please raise your hand and one of our stewards will be pleased to assist you. Please now complete your poll cards and vote on the resolutions. [Voting]

We will now move to the part of the meeting where shareholders or their appointed proxies have the opportunity to ask questions. Out of respect for all shareholders, we ask that your questions keep to the order of the meeting, so they should relate to items of business before the meeting. We take customer complaints very seriously, and it's important that they are dealt with properly. As I'm sure you will appreciate, these are not something we can resolve in the room at the AGM, and it would be inappropriate to do so. There is a customer services desk downstairs in the reception hall where my colleagues are available to assist you with any specific queries on customer matters. Could I therefore ask you to raise any individual customer issues or inquiries with colleagues outside this hall after the meeting. And in the interests of other shareholders, I'd ask you to keep your questions short and refrain from delivering long speeches. If you have more than one question, please ask all your questions at the same time. If you've already registered a question at the appropriate time during the meeting, a steward will provide access to a microphone so that you may ask your question. And when called upon to ask a question, please stand. So we'll now move on to the first question, which I believe comes from Mr. Neev.

Hello. This is a question to Ms. Cheetham. Since taking office and my writing to you from June last year, why, as Company Secretary, have you not responded to my correspondence relating to the confiscation of our home, financial destruction of our businesses and pension fund? I think that the issue of compensation was raised in your speech, Mr. Budenberg. But for the last 7 years, we have had no communication or dialogue or meetings with the executive. And what are you going to do about it?

Thank you, Mr. Neev, and I'm very sorry to hear about the background to that. As I have said, customer issues are something that we shouldn't discuss in an open forum like this. I understand that you have had extensive communication with the group. And I would suggest that, after this meeting, you register your current concerns with shareholder services, and I will ask Ms. Cheetham to make sure that she looks into those once you have spoken to customer services and set out the concerns that you have. And I will make sure, as I say, that Ms. Cheetham does that.

Well, I don't think that's really quite acceptable as Ms. Cheetham is here today, and I have a letter for her with a file. I would prefer that we met with her after the meeting.

Again, Ms. Cheetham is here in her role as Company Secretary. I would suggest that you give your documents to a member of the security services here who will make sure that they do get delivered to Ms. Cheetham.

Well, again, it's not particularly satisfactory. And I did also write to her a few weeks ago and asked her to confirm that the cumulative legacy claims that the bank are currently facing are not in excess of the market capitalization of the group. I have not received a response to that question.

All the details on our contingent liabilities are set out fully in the accounts. The actual liabilities are clearly included in our accounts. There are some liabilities that we cannot forecast, and all those details are in the annual report and accounts in great detail.

And are you aware of a class action called [indiscernible]

Again, all the details that are necessary in terms of the contingent liabilities that we're aware of are set out in the annual report, and I would encourage you to look through those list. Thank you, Mr. Neev. A Mr. Canning?

Yes. Mr. Chairman, my name is Collum Canning, I'm a shareholder of the bank. I have 35 years banking experience across various banks, a fellow of the Institute of Bankers and have served in counsel of the institute for 20 years. I've gone to considerable lengths and efforts and expense to be here today. As a result of my extensive experience, I assessed various customers of Lloyds Banking Group, and always in an effort to reach a fair, deliverable, and sustainable solution for both the customer and the bank. I've witnessed customers experiencing very severe stress levels and very poor mental health as a result of their financial circumstances. Lloyds Bank needs to be aware of this and to help where possible. I can confirm customers are willing to engage and to provide up-to-date information as frequent as possible. I'm seeking a firm commitment from you, Mr. Chairman, to direct your colleague, Vanessa Murden, to fully engage with me on an ongoing basis in regard to discussing various options and possible resolutions for various customers. Ms. Murden is ignoring all of my communications. I've made multiple efforts to reach out to Ms. Murden. This included direct communications via Benedict Brogan, your Group Public Affairs Director, who was referred to me by the Business Banking Resolution Directors. And Mr. Brogan has now blocked my number on his mobile and has not returned my various messages. This cannot be permitted to continue and sends a very negative and unprofessional message. Mr. Chairman, I deal with all the banks, most of the asset service agents and directly with purchasers of loan facilities. I have not encountered such a poor attitude and bad approach from any other institution to that we experienced from Vanessa Murden. Your marketing slogan, By Your Side, is not being implemented by Ms. Murden, and this is impacting on customers' mental health. Finally, as well as your commitment to direct Vanessa Murden to engage, can I please have a few minutes after this meeting to make you aware of a particular case where mental health issues have significantly worsened for a professional gentleman who has been trying to resolve a matter with Vanessa Murden and she's refused to engage? Thank you for your time.

Thank you, Mr. Canning. And again, I should say that you addressed a similar question to us at last week's meeting, and I tried to give you a very clear response in that meeting. But to start, today, I would say the first point is that, as you say, inevitably, there are issues when we don't completely agree with complaints of our customers. And at that time, we feel the most appropriate thing is for those customers to have their appeal right to the Financial Ombudsman Service, which we are very happy to allow to -- well, it's their right to have it to take place. So I would encourage your customers to a take that route if they are not getting to the level of satisfaction they feel they should get from us. My understanding is that we have had extensive discussions with you on behalf of your customers and that we have reached the end of those discussions as far as we're concerned. As I say, I'm sorry we can't always satisfy every customer, and, as I say, we would encourage those customers to pursue their appeal rights. We have every confidence, as you would expect, in our customer complaints process; we have all the appropriate levels of governance in place to make sure that we feel that they are doing their job appropriately. Our customer complaints, and indeed the bank as a whole, is extremely focused on mental health issues, and I'm absolutely sure that any mental health issues that get raised with them are treated appropriately with a great degree of seriousness, because we really do, as a bank, take that very seriously. In terms of my role, I think the most expert people are the group involved in our customer complaints. It would -- again, as somebody with 35 years' banking experience, you would know that it would be inappropriate for me to get directly involved in those discussions. So I would again urge you to stay talking to the customer services side of things. But as I say, I fear that we've reached the end of these discussions with -- as far as your customers are concerned, and I would very much encourage them to go to the appeal process that is there exactly for this reason.

Yes. Thank you for that response, Chairman. Really, the point is that engagement is the important factor. And it's about having access to people with discretion because you have a group complaints department. It normally gives a first name and a call handling number or a ID number. They don't have discretion. I have the experience, and it's about reaching a resolution and not passing them to the ombudsman, because that is a very stressful process and it prolongs it. And really what I've asked for is a commitment from you to have somebody to engage and try that process, because every other bank dealt with does it in that way and it works. And Catherine Woods would be aware of this from her time in AIB, who have a dedicated resource to deal with the people that I deal with and that makes sense. So I'd ask you again, could you give me a commitment to have somebody contact me that could be a point of contact to give that as a pilot scheme to try it and to help people?

Thank you, Mr. Canning. And I do assure you that our customer complaints team do have discretion and use that discretion on a regular basis. One of our absolute priorities is to help people who have financial resilience issues. And in the vast majority of cases, we are able to do so. Sometimes, we cannot agree with the requests of all our customers. And in those situations, that is what the appeal group is, or the Financial Ombudsman is there to deal with. So I absolutely commit that our customer complaints team do have that discretion and do exercise it on a regular basis.

Well, again, Mr. Chairman, you use an outsourcing company called [ Moorcroft ] and I want to ask for a few minutes after your meeting, at this meeting, or a meeting, to appraise you of a particular incident, which I don't -- I think it's the right forum to do here. And that's why I wanted to make you aware of it, because it's a very serious matter for mental health. It's comments made by [ Moorcroft. ] It's approach by [ Moorcroft. ] And it needs to be addressed.

Okay. Thank you. And we have a senior member of our customer complaints team downstairs. And I would suggest you hand those details to him, and I will commit that I will speak to him after this meeting to find out more and make sure that we are dealing with it appropriately. Thank you, Mr. Canning. So I think that is the end of our questions. And we're now -- so please ensure you complete your poll cards if you wish to do so. And now we've come to the end of the question-and-answer session. Ladies and gentlemen, the proxy votes already received in respect of each resolution are shown on the screen behind me. The provisional result is that all the resolutions have been carried. And I want to thank shareholders for their continued support.

Mr. Chairman, I think one from the gentleman.

Oh, I'm sorry, there's another gentleman who would like to ask a question. I do apologize -- if we hold that. And then if we go back to the beginning, again, apologies, sir. Thank you, Kate.

Thank you. A lot of money has been spent on the investment in technology and increasing the number who use digital platforms is obviously one of the key strategic aims of the group. My question relates to the level of testing and support that goes into that to ensure that money is well spent on behalf of shareholders and does indeed improve the customer experience. The background to my question is my own customer experience this week. I have been a user of online banking for many years through the halifax.co.uk website and been very concerned about online security, have many years used a 20-character password. On Monday this week, when I tried to log into online banking, it blocked my access, and the issue appears to be that it's restricted the length of the passwords to 15 characters. Now, to me, it would seem a very simple thing to check before making a change of that nature, how many customers do have passwords longer than 15 characters, and to build into the testing a way of dealing with it. But clearly, that hasn't happened. Now yes, I will raise that concern with your customer services team. But as a shareholder, my question is, what is the testing that has gone on behind the scenes to try and avoid that type of issue and ensure that the very large sums spent in the digital area are well spent?

Thank you, sir. Very good question. And please do register your name and address at customer services, and we will follow up. It is possibly the thing that I think the Board spends as much time on as anything. We have 3 separate bodies that look at this sort of issue. We have an IT advisory forum made up of members of the Board, which focuses entirely on risk issues arising out of technology. And you are absolutely right, there are significant risk issues that can arise, and our job as a bank is to make sure that none of those come to pass. That group then reports into the Board Risk Committee, which has frequent discussions on exactly this subject, on the resilience of our systems, because, as you say, if a bank loses control -- not control, but yes, control over its systems, then the trust in that bank disappears very fast, and we have to do everything that we possibly can. And we have various different levels of control within the business and, as I say, at a governance level at the top of the business. So we take it extremely seriously, as, to be fair, do all banks, because it absolutely behooves us to do it. I understand your concern. And again, if you register your name and address, I will make sure that we follow up on that appropriately and give you an adequate response. Thank you, sir. Any other questions? Again, apologies that I missed your hand. I'm sorry about that, sir. Okay. So now we have come to the end of the question-and-answer session. Ladies and gentlemen, the proxy votes already received in each of -- in respect of each resolution are as shown on the screen behind me. The provisional result is that all the resolutions have been carried, and I want to thank shareholders for their continued support. The poll count will be conducted by our registrars, Equiniti, who will also act as poll scrutineers. It will take time to complete the poll procedure. The final results of the poll will be announced to the London Stock Exchange as soon as reasonably practical following the conclusion of this meeting and will also appear on our website. So that concludes the business of the Annual General Meeting. Thank you for attending the meeting today and for your support, which we value greatly. I'm sorry that due to procedures, I will not be able to mix with shareholders afterwards for obvious reasons, but I'd like to thank, firstly, those -- to those of you who have watched online and to those here in the room, and I wish you all a very safe journey home. Thank you very much indeed.